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Free Weekend Newsletter
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Table Of Contents
1) MARKET SUMMARY
2) PRE-SPLIT PLAY
3) TECHNICAL PLAY
4) COVERED CALL PLAY
5) IPOs
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The following Investment Newsletter is provided by the InvestmentHouse.com family of websites which include StockSplits.net, CoveredCall.Com and TechnicalTraders.com.
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Investing Q & As
Glossary
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1) MARKET SUMMARY
All three major indexes fell significantly Friday after receiving more mixed economic news.
- Markets react negatively to some better economic news.
- What was the ‘bad’ economic news that caused the market to sell?
- What is the problem with the market?
- Subscriber Questions
- Team Trades
Click Here to read the full text of our Weekend Market Summary. Topics this weekend include: The Economy, The Markets, This Week's Economic Calendar; What To
Expect This Week In The Markets and our popular Team Trades column.
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2) STOCK SPLITS
Be sure to read our Stock Splits Manual. Playing stock splits can be very profitable, but it takes know-how.
Our stock split service focuses on three main types of plays: 1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).
We play pre-split plays as short-term plays. We get in when the technical indicators show us things look right, grab as much as we can, and get out, always being conscious of resistance and support. These stocks are highly volatile at this time, and can turn on you quickly. Don’t let good profits disappear. Watch for turns, especially when a stock trades in a wide range and finishes off its high. That is a sign these stocks often give you that they are running out of steam. We usually get out and ask questions later. We can always get back in. We like to play in the money calls, preferably two strike prices in the money as this usually gives us a greater delta (the percent an option will mover versus the stock’s movement). We prefer deltas of 75 or better. This means if the stock moves 1 point, the option should move three-fourths of that point. That means up or down.
Remember, wait to see the stock start to move up. Don't just blindly make a play and don’t try to guess tops and bottoms. We can look at indicators to give us a clue as to what will happen, but we need the stock to confirm it for us.
Here's a pre-split play to watch and our current analysis.
APOL (Apollo Group--$54.75; -0.19; optionable): Splits 2:1 effective February 6.
STATUS: Training services. Since breaking out of its pennant pattern last week the stock has pulled in a lateral consolidation of dojis, showing another such candlestick pattern Friday. The split is Tuesday, but the stock could give us another good move out of this consolidation. The recent high on the breakout is 57. Still showing excellent money flow and relative strength, with decent buying.
PLAY: A move over 55.75, with stock and/or March or May $50 calls to buy (OAQ CJ or OAQ EJ).
Company Profile
Chart by StockCharts.com
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3) TECHNICAL PLAY
THQI THQI (Thq Inc--$29.94; +2.25; optionable (QHI)): Software
Company Profile
STATUS: Breaking out of a 14-month cup with handle on good volume (1.17 million; avg. 280,363), beating the buy point of 28.88. Relative strength broke out, and money flow is a new high levels. Remains a buy on the breakout.
BUY POINT: Up to 30.32 on the breakout, on continued strong volume.
POSITION: Stock and/or June $25 or $30 calls to buy (QHI FE or FF).
Chart by StockCharts.com
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4) COVERED CALL PLAY
SEIC SEI Investments is currently trading at $86.13. The Mar $85 Call (QEICQ) are trading at $7.38. That provides downside protection of 8% and a return of about 8% in about a month if SEIC is above $85 on expiration Friday in March.
Company Profile
Chart by StockCharts.com
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5) IPOs
In many ways, the IPO calendar for next week looks the same as it has for most of this year: only a few companies are on the list, most of them in the biotech and energy sectors. As has been the case for awhile now, not a single tech stock is in sight.
But there is one important difference this time around, and it may mean that a lot more people are paying attention to the IPO market than usual. It all comes down to one offering: KPMG Consulting (proposed ticker: KCIN).
(This IPO story is continued on our website in the IPO Forum.)
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Good Investing! See you right here next week!
Your Friends at
InvestmentHouse.com
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For return calculations on our covered call, credit spread or put plays Click Here.
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The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Eric J. Aafedt of Online Investment Services, LP., or Jon Johnson of Split Ventures, Ltd. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Eric J. Aafedt or Jon Johnson may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. Eric J. Aafedt and Jon Johnson do not receive compensation in any manner from any of the companies that are discussed in this newsletter.
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