March 31, 2002 Weekend Newsletter
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http://investmenthouse.com/weekend/033102.htm “> Read this report online in full color with graphs
1) MARKET SUMMARY
The week ends as the week was.
– Sluggish finish to a sluggish week.
– Weak rise at the end of the week leaves indexes in less than promising patterns.
– Economic news continues its strength.
– 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.
AMAT (Applied Materials–$54.27; +2.30; optionable): Splits 2:1 on or about 4-17-02.
STATUS: Big gapping move up! Since breaking out of its December-February range, AMAT has formed a pennant, which is something of a handle to a cup dating back to the April 2001 high of 59.10. AMAT has been holding nicely over the 18 day MVA (50.96), and today gapped up and continued to run, tapping just over the March high at the intraday high of 54.40. Looking for a continued pre-split run. Strong money flow and relative strength broke out; target is 58.50.
PLAY: Over 54.60, with stock and/or May $50 calls to buy (ANQ EJ). Stop (7%): 50.87
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3) Technical Play
CMOS (Credence Systems–$21.96; +0.90; optionable): Chip Equip.
STATUS: Breaking out from a 15-week reverse head and shoulders pattern. Volume was up to 1.07 million (avg. 738,400) with the stock closing just over the buy point of 21.65. This pattern is part of CMOS’ two-year base; early this month the stock crossed over its 200 day MVA and used the 18 day MVA for support in the right shoulder. Money flow is strong, and relative strength is breaking out ahead of price, which is bullish. Target: 25.74
BUY POINT: 22.25 on volume of 1.1 million or higher; a buy on the breakout up to 22.73. Stop Advisory: 21.14
POSITION: Stock and/or August $20 calls to buy (CQS HD).
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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
FTI – FMC Technologies, Inc. is currently trading at $19.79. The April $20 Calls (FTIDD) are trading at $1.20. That provides a return of about 6% if FTI is above $20 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
Though volume remained relatively light, the market for initial public offerings in the first quarter of 2002 produced some notable successes – including the $3.9 billion offering from Travelers Property Casualty (ticker: TAP.A) – and set the stage for a promising spring, with several companies filing new offerings.
The first three months of the year saw 15 IPOs, which raised a total of $9 billion. Volume was down from the previous quarter, which saw 27 deals and produced $10.2 billion, however, came close to matching the 17 deals in the first quarter of 2001 and surpassed the total proceeds for that period, which were $6.9 billion.
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.
