January 20, 2002 Weekend Newsletter
http://www.investmenthouse.com/weekend/012002.htm “> click here or on link for full report with graphs on our website
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In The News: TradingSolutions’ neural network models are profiting from the opportunities in this volatile market. See the performance figures!
http://www.investmenthouse1.com/cntdir.asp?name=PerformanceFigures ” > Click Here For Performance Figures
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1) MARKET SUMMARY
Good earnings now and stronger economic numbers versus possible weaker recovery.
– Two competing themes in the market, one result.
– Distribution, breakouts failing, bulls falling but not enough: bias still downside.
– Inevitable plunge to the lows?
– Market: closed below consolidation ranges; volume lower, but pre-holiday Friday.
– 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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http://www.investmenthouse.com/1daily1.htm “> Try “The Daily” with no risk for 2 weeks!
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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.
FRED (Fred’s Inc–$39.89; +1.08; no options): Apparel. Splits 3:2 effective February 2.
STATUS: Has made a strong bounce. A steady climb up since its last stock split in June, hitting 43.86 early this month before pulling back to test below its 50 day MVA (36.89), from where this move began. With pre-split moves we get nice runs like this, and with the volatility of pre-splits volume is not always as large a factor as it is with other plays. Volume was down Friday at 193,300 (average 211,000), but we will continue to ride existing positions until the stock gives us a signal that it is coming back (like a doji, a gap up and reversal, etc.). The aggressive can look at a continued move from here, but if we get a pullback that holds the short-term MVA’s (38.77), we can also look for a move up from there.
PLAY: Aggressive: A move over 40.20, with stock. Stop: 37.75. Pullback: After a hold of the short-term MVA’s, a move back over 39.50. Stop: 36.83
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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
SFA (Scientific-Atlanta–$26.70; +2.90; optionable): Telecom Equip
STATUS: Strong earnings and upgrades started SFA on its move Friday. The stock is in a little double bottom (of 6 weeks), more of a flying ‘w’ since the right dip does not undercut the first. On the whole the pattern is in SFA’s larger 17-month base and currently is below the 200 day MVA (33.07). The middle hump high is at 28.18, and on the strong move we are looking for a breakout over that price for a trade up to the 200 day. It may form a handle first. Either way is okay. Volume was quite strong at 8 million (avg. 2.1 million). Relative strength breaking higher as is buying.
BUY POINT: 28.31 on continued strong volume. Stop: 26.33 (7%)
POSITION: Stock and/or March $25 calls to buy (SFA CE).
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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
BMET – Biomet Inc. is currently trading at $30.16. The February $30 Calls (BIQBF) are trading at $1.35. That provides a return of about 4% if BMET is above $30 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
Malaysia’s leading mobile phone operator Maxis Communications Bhd is planning an initial public offer of its shares by the middle of this year, its advising banker said on Friday.
The unlisted Maxis, which has over two million phone users, is 70-percent owned by Usaha Tegas, the privately-held investment vehicle of local tycoon Ananda Krishnan — who built the world’s tallest building, Kuala Lumpur’s Petronas Twin Towers.
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http://www.investmenthouse.com/1ipo.htm “> This story continued in our IPO Forum
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http://www.investmenthouse.com/bookstore.htm “> FIRESALE! IN OUR BOOKSTORE!
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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, 2002 by Online Investment Services, LP. – All Rights Reserved.
