December 30, 2001 Weekend Newsletter
http://www.investmenthouse.com/weekend/123001.htm “> click here or on link for full report with graphs on our website
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1) MARKET SUMMARY
Indexes log three gains in a row on lukewarm session.
– Another positive session Friday, but hardly inspiring.
– New Year is coming. Big caps under some duress as small caps look better.
– Economy keeps showing more and more signs of recovery.
– Subscriber Questions.
– Team Trades.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> Click here or on link for our full Weekend Market Summary
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2) Stock Splits
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.
HRH (Hilb Rogal & Hamilton; $56.40; 0.00; optionable): Insurance Brokers. Splits 2:1 effective 1-2-02.
STATUS: After a hard drop through the 50 day MVA (56.27) last week, HRH has made a run back up, taking out that level Thursday after a second consecutive move up. Friday it rested, holding the 50 day with a tight doji. One more session before the split, but after this rest it could give us another quick play. Watching some possible resistance in its November range of 58-60, with the high up at 62.75.
PLAY: 57, with stock.
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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
ERTS (Electronic Arts–$61.73; +2.58; optionable): Software.
STATUS: ERTS broke out over its down trendline (connecting May, July, October and November highs) in late November for a nice breakout run up to the December high 66.92. It pulled back to the 50 day MVA for three weeks then bounced from the support Friday on rising volume (2.4 million; avg. 3.2 million). Looking for a move back up to the breakout high for an initial target. The stock pulled back below the May high (at the start of the down trendline), but we like the hold above the trendline and the 50 day MVA. Money flow and buying look good.
BUY POINT: 62.25 (over the intraday high) on continued rising volume. Stop: 57.89 (7%)
POSITION: Stock and/or March $55 calls to buy (EZQ CK).
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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
MWD – Morgan Stanley Dean Witter & Co. is currently trading at $56.87. The February $55 Calls (MWDBK) are trading at $4.40. That provides a return of about 5% if MWD is above $55 on expiration Friday in February.
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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
Clean room equipment maker Kyodo-Allied Industries Ltd said on Friday it will launch its initial public offer for a listing on Sesdaq, the Singapore Exchange second board, on Jan. 4.
Kyodo-Allied, which designs and makes a wide range of air distribution and ventilation products for the semiconductor, data storage, pharmaceutical and biomedical industries, is a joint venture between the company’s founder Charles Lee and Japan’s Kyodo Industry Co Ltd. It has production lines in Singapore and Malaysia spanning a total area of over 13,000 square metres.
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http://www.investmenthouse.com/1ipo.htm “> This story continued in our IPO Forum
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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, 1998, 1999, 2000, 2001 by Online Investment Services, LP. – All Rights Reserved.
