Weekend Issue for December 15, 2002
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/121502.htm
1) MARKET SUMMARY
Bah, humbug and Christmas is still 12 days away.
– Friday the thirteenth continues the low volume selling.
– Deflation fears rise based on the PPI, but the PPI does not support those fears.
– Sentiment in Michigan is better than expected.
– Large caps, large cap indexes look sniveling, but small caps and breakout stocks hold fast and even improve on the session.
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> Click here or on link for our full Weekend Market Summary
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Try “The Daily” with no risk for 2 weeks!
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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.
EXPD (Expeditors Intl.–$33.9; -0.1; optionable): Air delivery & freight
STATUS: Testing the breakout. EXPD is showing some big upside volume spikes the past two weeks as the stock moves laterally below 34 and climbs the 10 day MVA (33.60). It is marching up the short term MVA after making its breakout in mid-November. These volume spikes are what we call ‘get ready’ spikes, meaning that the stock is under accumulation as it continues its lateral move. Looking for a big breakout here. This is another example of the economic recovery showing up in economically sensitive stocks; EXPD has rallied well, but is now preparing to rally again. That indicates stocks appear ready to price in more economic recovery.
Volume: 1.284M Avg Volume: 610K
BUY POINT: $32.08 Volume=750K Target=$38 Stop=$32.45
POSITION: URP BF – Feb. $30c (62 delta) or URP EF – May $30c (62 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
JEC (Jacobs Engineering–$36.12; 0; optionable): Heavy construction
STATUS: Cup w/handle. Very solid as JEC continues to work laterally over the 10 day MVA (35.75) in the handle to its 7-month base. Money flow continues to move up as the stock trades sideways on lower and lower volume. Very promising pattern, and we are waiting for that breakout.
Volume: 170.9K Avg Volume: 290.227K
BUY POINT: $36.75 Volume=465K Target=$42 Stop=$34.18
POSITION: JEC DF – April $30c (80 delta, low OI) 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
ESV – Ensco International Inc. is currently trading at $30.13. The January $30 Calls (ESVAF) are trading at $1.80. That provides a return of about 6% if ESV is above $30 on expiration Friday in January.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Ford Motor Co.’s (F.N) board of directors has formed a committee to study a stock deal worth about $8 million to chairman and chief executive Bill Ford Jr., the company said on Thursday.
Bill Ford sent an e-mail message to employees explaining his purchase of 400,000 shares of Wall Street firm Goldman Sachs Group Inc. (GS.N) during its initial public offering in 1999, and vowing to never do anything to harm the company or employees’ trust in him, a source familiar with the message said.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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BOOK STORE SPECIAL OFFERS!
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http://www.investmenthouse2.com/cntdir.asp?name=BookStoreSpecials
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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.
