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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/051803.htm
1) MARKET SUMMARY
Market stalls again at resistance on lack of buyers.
- A batch of weak economic data puts a lid on the Friday action.
- Consumer prices show continued erosion even as consumer confidence continues improvement.
- Overall action solid but more trouble signs as small caps and chips fall hard.
- Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 "> Click here or on link for our full Weekend Market Summary
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2) Stock Splits
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.
CEDC (Central European District--$32.7; +0.01; no options): Basic Materials. Splits 3:2 on 6-2-03.
STATUS: Test breakout. Solid move up off the 10 day MVA (31.12) on above average volume Thursday, CEDC held steady Friday on lower, average volume. CEDC held up very well in the Friday selling, and we are looking for a continued move higher this week on the back of its solid accumulation during its 3-month base and outstanding money flow that is rising ahead of the price.
Volume: 143.911K Avg Volume: 131.237K
BUY POINT: New: $32.92 (orig. $31.78) Volume=186K Target=$36.55 Stop=$30.65
POSITION: - Stock (no option chain).
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Learn more about our Stock Split Report - Forbes.com Best of the Web Online Edition says: ". . . seek out the Stock Split Report . . ."
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
AOS (A.O. Smith--$31.37; -0.08; no options): Electric motor and water heater equipment.
STATUS: Testing the breakout. AOS formed a 3-month cup with handle from January to mid-April, breaking out at that time and rallying higher. It started its second leg higher six sessions back and then spent last week in an orderly test of that move, sliding back to hold above the 10 day MVA (31.03). Friday it showed a hammer doji as volume jumped back above average. AOS sported solid 7 to 2 accumulation in its base (7 up weeks on rising volume to 2 down weeks on rising volume) and is showing excellent money flow. Relative strength broke out with the stock. Very nice test and we are looking for the price to rally with the volume. Very nice.
Volume: 147.7K Avg Volume: 90.597K
BUY POINT: $31.65 Volume=136K Target=$37.65 Stop=$30.25
POSITION: - Stock (no option chain).
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
NCEN - New Century Financial Corp. is currently trading at $41.76. The June $40 Calls (UREFH) are trading at $3.30. That provides a return of about 4% if NCEN is above $40 on expiration Friday in June.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
The cardinal rule for investing comes from a veteran portfolio manager. It is this: When a company's management tells you they have a problem --- believe them!
Last week's aborted attempt to price an IPO underscored this axiom.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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BOOK STORE SPECIAL OFFERS!
We are now offering "Special Offers" each week in our Book Store! You will not find these specials on our web site. They are only available by clicking the link below in this Weekend Newsletter!
http://www.investmenthouse2.com/cntdir.asp?name=BookStoreSpecials
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The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or 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 portfolios of writers for this issue 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. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
Copyright 1997 - 2003 by Online Investment Services, LP. - All Rights Reserved.
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