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Free Weekend Newsletter for November 18, 2001

Free Stock Split Email Notices       Investing Q & As       Glossary

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.

Chart by StockCharts.com

PSC (Philadelphia Suburban--$29.04; -0.11; no options): Water utility. Splits 5:4 effective 12-3-01.
Company Profile
STATUS: Continues to consolidate. PSC looks to be primed for another move, now that it has pulled laterally over its 10 day MVA (28.99) for the last week, testing the breakout from its cup with handle/ascending wedge pattern. We got a volume spike Tuesday as the stock made a small move up, and volume has decreased markedly (54.900 Friday; average 80,200) as the stock has pulled back slightly the last two sessions. Friday it tested its 18 day MVA at its low of 28.82 before pulling back up to close with a loose doji. Good action, and we will see if it can spring from support and take out the consolidation high. As it makes its move we are watching the recent (mid-October) intraday spike at 30.80, but if it can make it past that level, we are targeting 34. Money flow and buying are excellent.
PLAY: A buy point of 29.75 on above average volume, stock only. Stop: 28.50 (50 day MVA at 27.91). The aggressive can jump in as the stock takes out the recent closing high at 29.50, still wanting above average volume. Stop: 28.50.

Click here for more information on our Stock Split Report!

MRVL (Marvell Technology--$32.80; +4.02; optionable): Semiconductor
Company Profile
STATUS: Broke out of a cup with handle Friday, but remains within our 5% limit for buying on a breakout. Besides, volume was very strong at 5 million (avg. 1.7 million), and news was out after the bell on the company’s strong earnings, suggesting this move can be followed up with another strong move on the breakout. Highs at the start of this most recent base (the stock is inside a much larger, 15-month base) are at 35, and our target is at 38. MRVL shows huge money flow, and relative strength is breaking out ahead of price. Buying looks good as well.
BUY POINT: Buy point was 31.63, making the stock a buy up to 33.21 on the breakout. Stop from here: 30.50 (7%).
POSITION: Stock and/or December $30 calls to buy (UVM LF); next month out is February. Deltas unavailable.

Click here for more information on our Technical Traders Report!

NYCB - New York Community Bancorp is currently trading at $25.30. The December $25 Calls (NQKLE) are trading at $1.60. That provides a return of about 6% if NYCB is above $25 on expiration Friday in December.
Company Profile

Click here for more information on our Covered Call, Credit Spread and Leaps Service!

The Aluminium Corporation of China Ltd (Chalco) plans to launch a US$300-500 million initial public offering in Hong Kong on Monday, sources close to the deal said on Friday.

Chalco is the world's third largest alumina refiner and China's largest primary aluminium producer. It is seeking dual listing in New York and Hong Kong.

(This IPO story is continued on our website in the IPO Forum.)