August 25, 2002 Weekend Edition
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http://investmenthouse.com/weekend/082502.htm “> Read this report online in full color with graphs
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.
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.
SSD (Simpson Manufacturing–$31.55; -0.25; no options): Small tools.
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).
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3) Technical Play
VARI (Varian–$34.08; -0.69; optionable): Scientific and technical instruments.
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.
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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
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.
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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
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.
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.
