December 1, 2002 Weekend Issue
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THREE IN A ROW! Scottrade is proud to announce its THIRD CONSECUTIVE ranking as Highest in Investor Satisfaction with Online Trading Services by J.D. Power and Associates! Thank you, customers! Scottrade: Member SIPC.
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/120102.htm
1) MARKET SUMMARY
One last rally attempt comes up short.
– Nasdaq stalls at 200 day MVA as Thanksgiving move runs out of steam.
– A bit of a breather ahead before the holiday rally resumes.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> 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.
WERN (Werner Enterprises–$22.07; -0.49; no options): Trucking
STATUS: Cup w/handle. WERN has been working hard on a 10-month cup w/handle base, trying its first breakout in June and then continuing to work on the pattern. It ran to an intraday high in October and then slipped into the month-long handle. Thursday it started a breakout move, jumping up on the good economic news. Friday it just sat around with nothing to drive it, but it did not sell off. Accumulation in the base excellent at 12 accumulation weeks to 7 distribution weeks. Seems that WERN has been trying to price in an economic recovery this year and it looks as if it is finally ready to get serious about it.
Volume: 92.893K Avg Volume: 365K
BUY POINT: $22.75 Volume=550K Target=$27.35 Stop=$21.16
POSITION: QEH ED – May $20c (74 delta, low OI) and/or Stock.
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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
DMRC (Digimarc–$15.77; -0.18; optionable): Security software
STATUS: Cup w/handle. Moving through an 8-month base sporting excellent accumulation at 8 up weeks on rising volume (accumulation) to 3 down weeks on rising volume (distribution). The security software sectors is performing very well (a necessary service), and the accumulation in DMRC is indicative of that need. Money flow is very strong in this stock and relative strength is showing a positive divergence, i.e., it is higher at this stock price than it was when the stock was at $20 back in April. Very nice base, and the handle looks good with a test of the 10 day MVA on the Friday low (15.75).
Volume: 33.078K Avg Volume: 65.681K
BUY POINT: $17.01 Volume=100K Target=$20.45 Stop=$15.65
POSITION: DQT EC – May $15c (66 delta, low OI) and/or Stock.
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
LOW – Lowes Companies Inc. is currently trading at $41.5. The January $40 Calls (LOWAH) are trading at $3.40. That provides a return of about 5% if LOW is above $40 on expiration Friday in January.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Infinity Property & Casualty Corp., which is planning an initial public offering of as much as $350 million, said on Wednesday it filed to sell $180 million in senior notes.
It said in a Securities and Exchange Commission filing it plans to use the proceeds from the offering to repay a promissory note to its parent company, insurance provider American Financial Group Inc. (AFG.N), and working capital.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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Scottrade: Ranked Highest in Customer Satisfaction 3 times! Apply now!
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Bookstore FIRESALE!
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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.
