August 25, 2002 Weekend Edition

Investmenthouse Newsletter

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Free Weekend Newsletter for August 25, 2002

TABLE Of Contents 1) MARKET SUMMARY 2) POST-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY 5) IPOs
Free Stock Split Email Notices Investing Q & As Glossary

1) MARKET SUMMARY
No rally attempt to close the week.

– Friday ends the week without ever seeing positive light.
– Low volume is nice, but large point loss tarnishes consolidation session.
– Low volume, volatility on through September 11.
– Economic reports roll in this week.
– Subscriber Questions.

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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. Chart by StockCharts.com

SSD (Simpson Manufacturing–$31.55; -0.25; no options): Small tools.
Company Profile
STATUS: Cup w/handle. After giving us a good move pre/post-split, SSD hit our target, topped out, and is now forming a handle to the bigger 17-week base. Accumulation in the base is 4 rising weeks on rising volume versus 3 down weeks on rising volume; all it takes is positive accumulation for the base to work.
Volume: 13.2K Avg Volume: 21.311K.
BUY POINT: $32.1 Volume=32K Target=$36.85 Stop=$30.85.
POSITION: – Stock (no option chain).
Click here for more information on our Stock Split Report! Chart by StockCharts.com

3) Technical Play
VARI (Varian–$34.08; -0.69; optionable): Scientific and technical instruments.
Company Profile
STATUS: Still moving in that very flat consolidation of the early August breakout, holding the 10 day MVA as volume continues to dry up as you want in a consolidation. Money flow is still very strong and way out in front of the movement of the stock.
Volume: 239.952K Avg Volume: 423.166K.
BUY POINT: $35.25 Volume=415K Target=$40 Stop=$32.78.
POSITION: IUA KF – Nov. $30 c (70 delta) and/or Stock.
Click here for more information on our Technical Traders Report! Chart by StockCharts.com

4) Covered Call Play
OMC – Omnicom Group Inc. is currently trading at $61.55. The September $60 Calls (OMCIL) are trading at $5.00. That provides a return of about 6% if OMC is above $60 on expiration Friday in September.
Company Profile
Click here for more information on our Covered Calls Service!

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5) IPOs
A Chinese court has jailed the former president of a soon-to-list bank for seven years for taking bribes, state media said on Friday, the latest financial official to fall in a crackdown on corruption.
The Beijing court found Duan Xiaoxing, former head of state-run Huaxia Bank, had taken bribes worth $9,000 in return for illegally approving loans of 150 million yuan ($18 million), said the latest edition of Caijing Magazine.
(This IPO story is continued on our website in the IPO Forum.)

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