July 28, 2002 Weekend Newsletter
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http://investmenthouse.com/weekend/072802.htm “> Read this report online in full color with graphs
1) MARKET SUMMARY
Friday all indexes (less the SOX) rowing together.
– Week closes out with a modest positive.
– Ready to rally or ready to tank?
– Patience while the market decides which way it wants to go.
– 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.
JILL (J. Jill Group–$24.28; +0.17; optionable): Catalog mail order.
STATUS: Flipping this one. We were looking to short JILL, but the stock rallied Thursday on some serious volume, not rolling back down at the 50 day MVA (22.93). Jill was a leader going into the July selling, and if the market is going to rally we anticipate JILL we resume that role. It may test back to the 50 day MVA this week after closing off the high the last two sessions, but then we are going to let it rally and move in if it does.
Volume: 349.6K Avg Volume: 296.545K
BUY POINT: $24.95 Volume=445K Target=$30 Stop=$23.05
POSITION: JUI LD – Dec. $20c (78 delta) and/or 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
TEN (Tenneco Automotive–$7.35; +0.29; no options): Auto parts.
STATUS: Testing the breakout. TEN is an interesting stock. In March it broke out of a 9-month cup with handle pattern and then formed an ascending wedge. It broke out of that pattern in early July, and is testing that move. It tapped the 50 day MVA and is bouncing. Good time to get in on a market leader, particularly if the market is ready to rally.
Volume: 92.2K Avg Volume: 200.181K
BUY POINT: $7.43 Volume=250K Target=$9.94 Stop=$6.85
POSITION: Stock (no option chain).
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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
NCEN – New Century Financial Corp. is currently trading at $26. The August $25 Calls (UREHE) are trading at $2.75. That provides a return of about 8% if NCEN is above $25 on expiration Friday in August.
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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
Shares in LeapFrog Enterprises Inc (LF.N) dropped sharply on Friday, a day after the educational toymaker jumped in its market debut, following disclosure it faces litigation for alleged patent infringement.
Technology Innovations LLC filed a complaint alleging that three of LeapFrog’s popular LeapPad platforms infringe on a patent it owns, according to a LeapFrog statement.
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.
