IACI (Long)...

Interactive Corp is a multinational internet firm that is divided into four segments, namely media/advertising, match (personals), ServiceMagic (online marketplace), and Emerging Businesses (mainly Shoebuy and Pronto). They report earnings again on 9 February before the open, and they do not pay a dividend. IACI is optionable with tight strikes and decent bid/ask spreads, open interest, and volume.

IACI passes the Joseph Piotroski screen with 100%. It doesn't score above 60% on any other screen, but the Piotroski screen is very hard to pass, so I'm naturally interested.

IACI broke out this week decisively above resistance at $21, leaving a gap and drift setup. I expect this gap to get filled in the short term, but I view a pullback to $21 as a tremendous buying opportunity because $21 has been resistance since May 2008 and IACI has carved out a sloppy head and shoulders bottom on the weekly chart, with $21 as the neckline and $13 as the bottom. This makes for a 'measured move' of $8 ($21-$13), which makes for an upside target of $29 ($21+$8). And, wouldn't you know it, that correlates with significant resistance from 2007. I've provided a weekly and daily chart here.

Given the longer-term nature of this pattern, I'm considering some longer-dated options here, which I would subsequently spread against more near-dated options. The January 2011 options are actually pretty cheap.





Position: none

Disclaimer: This is not a recommendation and is presented for informational purposes only.