October 27, 2002 Weekend Issue
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THREE IN A ROW! Scottrade is proud to announce its THIRD CONSECUTIVE ranking as Highest in Investor Satisfaction with Online Trading Services by J.D. Power and Associates! Thank you, customers! Scottrade: Member SIPC.
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/102702.htm
1) MARKET SUMMARY
Another light session rally closes indexes out positive for the week.
– Three positive weeks off the lows.
– Economic numbers tell us what we know: housing strong but showing wear, manufacturing still in the tank.
– Another session of low volume gains inside the range.
– 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.
ALLY (Alliance Gaming–$17.7; +0.44; optionable): Not just another gaming stock
STATUS: Testing the breakout. ALLY blasted out of its base 5 sessions back and as the market has consolidated it has moved back to test 17 on lower and lower volume. This breakout comes on the heels of a 9-month base and is testing the old high. Looks ready for another move up off of this test.
Volume: 611.512K Avg Volume: 617.395K
BUY POINT: $18.12 Volume=845K Target=$21.75 Stop=$16.85
POSITION: AQL DC – April $15c (76 delta, low OI) and/or Stock.
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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
BDK (Black & Decker–$46.99; +0.5; optionable): Small tools
STATUS: Double bottom w/handle. A 6-month base demonstrating how up and down the market has been. BDK has recovered off the lows at 37 and is now moving laterally just below the middle ‘hump’ in the double bottom at 48. Accumulation is excellent at 7 up weeks on rising volume to just 3 down weeks on rising volume. Money flow continues to work higher as the stock has moved laterally on lower volume the past three sessions. BDK is not only in a good technical pattern, but it also has some of the best fundamentals in the market. Looking for a breakout over the handle high as our entry point.
Volume: 621.2K Avg Volume: 777.535K
BUY POINT: $47.61 Volume=1.2M Target=$55 Stop=$45.55
POSITION: BDK BI – Feb. $45c (66 delta) and/or Stock.
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
AIG – American International Group Inc. is currently trading at $65.41. The December $65 Calls (AIGLM) are trading at $4.40. That provides a return of about 6% if AIG is above $65 on expiration Friday in December.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Casino mogul Steve Wynn’s Wynn Resorts Ltd. raised $450 million in a troubled initial public offering, receiving final approval on Friday morning from the U.S. Securities and Exchange Commission to trade publicly.
To complete the sale, Wynn and his Japanese business partner, Kazuo Okada, were forced to slash the offering price for shares by about 40 percent over the course of the week and commit to buying close to one-third of the sale themselves.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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Scottrade: Ranked Highest in Customer Satisfaction 3 times! Apply now!
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Bookstore FIRESALE!
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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.
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