Weekend Issue
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/081703.htm
1) MARKET SUMMARY
While there is not much to take from the actual market action Friday from a volume or price perspective, what it did not do told the real story.
– No volume power, but blackout fails to phase stocks.
– Factory production, CPI continue the string of positive economic data.
– Market continues positive action as it works toward September and the continued rally to come.
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> 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).
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.
COH (Coach–$54.91; +0.98; optionable): High end handbags, etc. Splits 2:1 on 10-2-03.
STATUS: Pre-split 50 day MVA test. COH was at the 50 day MVA (51.79) when it announced its split. It has enjoyed a nice though hesitant move up since then. Last week it cleared the 18 day MVA (53.46) and then moved laterally over that level to close the week. This area provides a good launch point for the stock to begin its pre-split move. Indeed, volume was up Wednesday to average as COH was starting higher. It edged higher after a 10 day MVA test Friday, and it looks ready to make its move. Just want to see some rising volume through the buy point.
Volume: 403.7K Avg Volume: 904.789K
BUY POINT: $55.32 Volume=950K Target=$63.75 Stop=$53.34
POSITION: COH KK – Nov. $55c (54 delta) &/or Stock.
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
PDII (PDI, Inc.–$24.25; -0.45; optionable): Business management services
STATUS: Testing the breakout. PDII gapped out of a 15 month base in July and rallied up to 28. A very strong move on positive news and positive earnings. After a torrid run this month PDII is edging back on much lower volume. It is trying to hold at 24, a point that is even above the 10 day MVA (22.76). With this move, of course, money flow, accumulation, and relative strength are excellent. This is the second test of the short term MVA after the big gap higher, a very good entry point for a stock that is moving very well, showing leadership potential. Remember, we are looking for those stocks that are showing they have the ability to lead the mext move.
Volume: 59.7K Avg Volume: 148.915K
BUY POINT: $25.06 Volume=223K Target=$30 Stop=$23.28
POSITION: PKU AI – Jan. $25c (56 delta) &/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
PLMD – Polymedica Corp. is currently trading at $41.04. The September $40 Calls (PMIH) are trading at $2.90. That provides a return of about 5% if PLMD is above $40 on expiration Friday in September.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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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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