Weekend Issue for December 8, 2002
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/120802.htm
1) MARKET SUMMARY
No jobs, no Treasury Secretary, no chief economic advisor, yet market recovers.
– Market recovers from a series of surprises with a bounce off the 50 day MVA.
– Employment lags still.
– O’Neill forced out. That is good, that is bad.
– After a week of consolidation, a heavy news load, and a 50 day MVA test, indexes poised to recover.
– 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).
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.
PSUN (Pacific Sunwear–$27.71; -0.01; optionable): Announced a split 12-5-02
STATUS: Attempting the second breakout. After the wild action Thursday PSUN gapped lower but managed to turn back to close flat. Volume backed off but was strong as PSUN held the 10 day MVA on the low and recovered. Ready for the move.
Volume: 1.412M Avg Volume: 995.181K
BUY POINT: $28.05 Volume=1.5M Target=$33 Stop=$25.95
POSITION: PVQ FE – June $25c (71 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
AFCO (Applied Films–$19.52; -0.22; optionable): Semiconductors
STATUS: Testing the breakout. Unlike many chips, AFCO was very stingy with its gains last week, holding solidly above the 10 day MVA on much lower, below average volume. Friday it showed a doji with a long tail right over the 10 day MVA at 18. Accumulation is positive and money flow is strong. Really like that it held onto the gains. Nice.
Volume: 118.1K Avg Volume: 175K
BUY POINT: $20.85 Volume=225K Target=$25 Stop=$18.79
POSITION: UOF DW – April $17.50c (55 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
HLT – Hilton Hotels Corp. is currently trading at $13. The January $12.5 Calls (HLTAV) are trading at $1.05. That provides a return of about 5% if HLT is above $12.5 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
Investors cheered the debut of Chicago Mercantile Exchange Holdings Inc. (CME.N), the first major U.S. financial exchange to go public, on Friday, sending its shares up 17 percent on the New York Stock Exchange.
The offering by CME, the world’s No. 2 futures exchange, lived up to its advance billing as one of the year’s hottest IPOs, as its shares in their first day of trading led all gainers on the New York Stock Exchange in percentage terms.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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BOOK STORE SPECIAL OFFERS!
We are now offering “Special Offers” each week in our Book Store! You will not find these specials on our web site. They are only available by clicking the link below in this Weekend Newsletter!
http://www.investmenthouse1.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.
