Invest and Trade Profitably with Jon Johnson

March 17, 2002 Weekend Newsletter

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http://investmenthouse.com/weekend/031702.htm “> Read this report online in full color with graphs

1) MARKET SUMMARY

Solid, bounce higher.

– Consolidation leads to solid bounce on above average NYSE volume.
– S&P 500 leads the indexes in the next attempt at resistance.
– Producer prices low, production rising, and sentiment back to improving.
– Subscriber Questions.

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.

WTNY (Whitney Holding–$49.48; +0.58): Regional Bank. Splits 3:2 effective 4-10-02.

STATUS: Recently broke from a two-month consolidation, and then pulled into another, shorter consolidation that served as a handle to a cup dating back to August. Friday WTNY broke out with a very strong move, taking out the prior high of 49.10 on big volume (62,300; average 29,600). Good move, and targeting 56 on this move.

PLAY: A buy up to 51.56. Stock only.

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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

NYT (New York Times–$48.09; +1.48; optionable): Media.

STATUS: Breaking out of a 7.5-month cup with handle on strong volume (1.12 million; avg. 520,200)! NYT had an orderly pullback in the handle, volume falling right along with price, until it just blasted up Friday after a quick test of the 18 day MVA at 46. The handle had been holding above the 10 day MVA (46.63). Remains a buy on the move, and our target is 57. Money flow is climbing; buying picking up as well.

BUY POINT: For the breakout was 47.59, making the stock a buy up to 50 on the breakout. From here: 48.15 on continued strong volume. Stop Advisory (7%): 44.86. Minimum breakout volume is 780,000.

POSITION: Stock and/or July $45 calls to buy (NYT GI).

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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

ICN – ICN Pharmaceuticals Inc. is currently trading at $30.11. The April $30 Calls (ICNDF) are trading at $1.75. That provides a return of about 6% if ICN is above $30 on expiration Friday in April.

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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

General Electric Co. (GE.N) is in the early stages of considering a plan to split off Employers Reinsurance Corp., its property-and-casualty insurance unit, the Wall Street Journal reported on Friday.

The move could involve an initial public offering of 20 percent of the unit later this year, the Journal said, citing people familiar with the matter.

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.

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