August 11, 2002 Weekend Newsletter
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http://investmenthouse.com/weekend/081102.htm “> Read this report online in full color with graphs
1) MARKET SUMMARY
Flat lining on a late summer Friday.
– Low volume Friday to start the consolidation.
– Prepare for consolidation of the recent gain.
– Interesting views on the Tuesday FOMC meeting, but that is about all they are.
– Is the climate really right for a longer term bottom?
http://www.investmenthouse.com/1weekendmarketsummary.htm “> 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).
For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term “would I buy this stock at this juncture?” position. Now there are times when a hot stock splits and investors pile in to get in while the stock is ‘cheaper.’ We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.
Remember, everything we do has to pass muster with the market that day … don’t fight the market on these plays. Here’s a post-split play to watch and our current analysis.
JAH (Jarden–$23.04; -0.25; no options): Rubber & Plastics
Play Date: 07/27/2002
STATUS: Testing the breakout. JAH gave us a strong move on good volume in late July and has since moved laterally and slightly lower, testing the 10 day MVA (22.81) on Friday’s close. Volume has tapered lower and lower on the test. At the same time accumulation and money flow remain strong. Another basic sector of the economy that is performing well, and JAH looks ready to resume its move.
Volume: 30.8K Avg Volume: 89.045K
BUY POINT: $21.2 Volume=130K Target=$25.35 Stop=$21.85
POSITION: Stock (no option chain).
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http://www.investmenthouse.com/1stocksplits1.htm “> Click here to learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
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3) Technical Play
FSH (Fisher Scientific–$28.52; +0.86; optionable): Wholesale electronics
STATUS: Reverse head and shoulders. Made the breakout from the 6-week pattern Friday on a solid volume move that continued a Thursday surge higher on stronger volume as well. Accumulation is good in the pattern at 3 up weeks on rising volume to 1 falling week on rising volume. Money flow is excellent and leading the way. It might test back to the 200 day MVA (28.17) it jumped over Friday before moving higher as the market tests the move it just made.
Volume: 366.2K Avg Volume: 236.045K
BUY POINT: $28.76 Volume=350K Target=$33 Stop=$26.75
POSITION: FSH LE – Dec. $25call and/or Stock
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http://www.investmenthouse.com/1tech1.htm “> Click here to learn more about our Technical Trader Report
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4) Covered Call Play
HON – Honeywell Inc. is currently trading at $32.75. The September $32.5 Calls (HONIZ) are trading at $2.10. That provides a return of about 6% if HON is above $32.5 on expiration Friday in September.
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http://www.investmenthouse.com/1coveredcalls1.htm “> Click here to learn more about our Covered Calls Service
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5) IPOs
U.S. House Financial Services Committee Chairman Rep. Michael Oxley said on Friday he plans to subpoena documents from Citigroup Inc. (C.N) regarding shares sold in initial public offerings that may have been bought by executives at now bankrupt WorldCom Inc. (WCOEQ.PK).
The response to a July 23 request for documents was incomplete and Oxley wants information on how Citigroup’s securities unit Salomon Smith Barney or its telecommunications analyst Jack Grubman allocated IPO shares, or if Grubman’s clients were given special treatment with access to IPOs, the panel said in a statement.
http://www.investmenthouse.com/1ipo.htm “> . . . continued . . .
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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 – 2002 by Online Investment Services, LP. – All Rights Reserved.
