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Free Weekend Newsletter for January 6, 2002

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

SYMC (Symantec--$68.89; -0.47; optionable): Splits 2:1 effective February 1.
Company Profile
STATUS: Bounced up nicely Thursday, but stopped short of the handle high, Friday showing a doji after testing back to the 18 day MVA (66.69). Volume was up again and strong at 2.97 million (average 2.53 million), and we could see a test of the 18 day again before we get a breakout move. Plenty of time before the split, and we are looking for the breakout over the handle high of 71. Target: 80.
PLAY: Breakout: 71.12 on volume of 3.8 million, with stock and/or February $65 calls to buy (SYQ BM - low open interest). Stop: 66.14.

Click here for more information on our Stock Split Report!

EDSN (Edison Schools--$20.54; +1.33; optionable): Education services.
Company Profile
STATUS: EDSN is in a year-long base and just recently broke back over resistance that has held it down since March, the 200 day MVA (19.32). The stock was moving in a flat base above its 50 day MVA when it headed over the resistance, and Friday broke out of the pattern as volume ripped up to 1.2 million (avg. 727,000). The pivot point was 20.64, making the stock a continued buy on this strong move (up to 21.67). We are looking for a move up to a target at 25. Showing big money flow and decent buying.
BUY POINT: 20.60 on continued rising volume. Stop: 19.16 (7%)
POSITION: Stock and/or March $20 calls to buy (USD CD).

Click here for more information on our Technical Traders Report!

PIR - Pier 1 Imports Inc. is currently trading at $18.7. The February $17.5 Calls (PIRBW) are trading at $2.00. That provides a return of about 5% if PIR is above $17.5 on expiration Friday in February.
Company Profile

Click here for more information on our Covered Calls Service!

Chinese outdoor advertising firm MediaNation Inc plans to raise HK$700 million-1.03 billion (US$90 million-132 million) by issuing 271 million shares in an initial public offering (IPO) in Hong Kong, banking sources said on Friday.

The shares would be priced between HK$2.60 and HK$3.80 each and represent more than 40 percent of the company's enlarged issued share capital, the sources said. MediaNation's investors are mainly venture capital funds.

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