TESTWeekend Newsletter for November 9, 2003

Investmenthouse Newsletter

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Free Weekend Newsletter for October 26, 2003

Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY

Free Stock Split Notices Investing Q & As Glossary

1) MARKET SUMMARY
Market loses ground thanks to MSFT, but there was underlying resilience.

– Microsoft earnings knock stocks to the 50 day MVA.
– Money supply contracting & causing interest rates to rise, deficit criticism overblown.
– Nice volume bounce off 50 day by indexes as leading stocks do the same. Ready already?

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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). 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. Chart by StockCharts.com

ADTN (Adtran–$66.54; +0.38; optionable): Telecom equipment. Splits 3:2 on 12-16-03.
Company Profile
STATUS: Test 50 day MVA. After peaking at 75 in early October, ADTN has dropped back with the rest of the market the past two weeks, coming to rest just over the 50 day MVA (64.12). The move back was on lower, below average volume. This is where you want to see a stock hold and start back up on rising volume if it is going to make another move. Thus we want to see it make a strong jump on strong volume. Our target initially is the prior high at 75.
Volume: 693.046K Avg Volume: 1.035M
BUY POINT: $66.77 Volume=1.1M Target=$75 Stop=$63.98
POSITION: RQA LM – Dec. $65c (60 delta) &/or Stock.
Click here for more information on our Stock Split Report!

Chart by StockCharts.com

3) Technical Play
ADVP (AdvancePCS–$49.05; +1.73; optionable): Specialized health services.
Company Profile
STATUS: Ascending triangle. ADVP is trying to make the breakout from an 8 week base that has used the 50 day MVA (44.58) as support on the lows. Accumulation in the short base is 3 to 0 (3 up weeks on rising volume to 0 down weeks on rising volume). Friday ADVP reached down to the 50 day on the low and then rebounded on above average volume for a solid gain. Making the breakout from the base, we are looking to move in and follow the money flow higher.
Volume: 2.984M Avg Volume: 2.057M
BUY POINT: $49.18 Volume=3.1M Target=$59 Stop=$46.98
POSITION: QVC DJ – Mar. $50c (51 delta) &/or Stock.
Click here for more information on our Technical Traders Report! Chart by StockCharts.com

4) Covered Call Play
NCEN – New Century Financial Corp. is currently trading at $35.34. The November $35 Calls (UREKG) are trading at $1.95. That provides a return of about 5% if NCEN is above $35 on expiration Friday in November.
Company Profile
Click here for more information on our Covered Calls Service!

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