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Free Weekend Newsletter for January 13, 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

LIZ (Liz Claiborne--$52.60; -0.37; optionable): Splits 2:1 effective 1-17-02.
Company Profile
STATUS: After an excellent move last Friday over its November-December highs at 52, LIZ has held steady, showing four consecutive dojis before a slightly more active day Friday. The stock hit over its recent high (and buy point) Friday (53.45), but turned back to close, although still holding comfortably over its 10 day MVA (52). We have anticipated the possibility of a test of 52, but the split is effective Thursday, so we are watching for it to hold here and start a quick run, watching carefully the stock’s high of 54.95.
PLAY: A move over 53.50, with stock and/or April $50 calls to buy (LIZ DJ).

Click here for more information on our Stock Split Report!

MROI (Mro Software--$23.34; +0.84; optionable): Applications.
Company Profile
STATUS: Just off the bottom of a 22-month base, and in an ascending wedge that formed subsequent to a cup with handle breakout. The breakout was on strong volume but that has decreased in the pattern and though slightly higher Friday is still way below average at 123,400 (avg. 230,000). Friday, on this rising volume, MROI was bouncing up from the 18 day MVA (22.52). We are looking for a breakout over 25 (the December high is at 25.84). Good money flow and high relative strength. Target: 30
BUY POINT: 25.13 on volume of 311,000 or higher. Stop: 23.37 (7%)
POSITION: Stock and/or March $20 calls to buy (UPJ CD).

Click here for more information on our Technical Traders Report!

THQI - THQ Inc. is currently trading at $45.88. The February $45 Calls (QHIBI) are trading at $4.40. That provides a return of about 8% if THQI is above $45 on expiration Friday in February.
Company Profile

Click here for more information on our Covered Calls Service!

Clean room equipment maker Kyodo-Allied Industries Ltd said on Friday its public offer to raise net proceeds of S$2.7 million ($1.5 million) via the issue of 18 million new shares at S$0.20 was 388 times subscribed.

This is the first initial public offering in Singapore this year after a dire 2001 when the market slumped 16 percent.

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