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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: hpeace who wrote (3188)	7/17/1997 7:23:00 PM
From: Robert Graham	of 14162

So am I. Technicals indicated that there may be a short term drop in price, which there was today. This may be an excellent opportunity to jump into this stock. I find that, tehcnically speaking, when a price breaks out of a resistance level or trend line and then retreates back to its breakout point, some substantial movement will occur. If at this point it breaks down through where it originally broke out, particularily under increasing volume, then the stock will tend to make a substantial move down. Otherwise, if the price at this point bounces and starts its move up under increasing volume, then this usually means there will be a good short term run up of the stock. I looked at IBD and saw the earnings ranking and relative strength ranking well into the 90's. with an Acum/Dist ranking of "A". Add to this a split announcement (which caused the stock to initially jump something like 4 or more points) coupled with a positive earnings surprise (fundamental reason), and its previous good run up with good momentum (momentum players apparently are involved with this stock), I beleive you have a recipe for a good candidate for a short term trade. Furthermore, back a couple days ago it broke through its 52-week high with a good volume spike. I will look more closely at the charts tonight and check out current news headings for this company, along with basic fundamental information. I do see this company has substantial debt compared to equity. Current trendline at 79 and support at 75. Current price at approximately 79 3/4. Major breakout occured from the resistance line at the price of 75 with a volume spike over double the average volume for this stock. There is still some possible downside for this stock. I would wait until the price bounces and starts moving up. Then look at what happens to the volume. Whats nice about this stock is that it can not only be a split play, but also a momentum play too. This stock has been in an uptrend for over 2 years now (according to my 2 year snapshot of the stock). Bob Graham

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