Weekend Issue for September 15, 2002

Investmenthouse Newsletter

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Free Weekend Newsletter for September 15, 2002

TABLE Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY 5) IPOs No Inactivity Fees! $7 Trades!

Free Stock Split Email Notices Investing Q & As Glossary

1) MARKET SUMMARY
Mixed bag Friday, but mostly due to a few big misses.

– Market continues to trade in narrow range.
– The consumer remains the sole economic mainstay, showing stronger sales, weaker sentiment.
– What is behind the plunging interest rates, and are they good or bad?
– Market testing the lows in an orderly manner.
– Subscriber Questions.

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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

SPW (SPX Corp.–$107.61; -2.38; optionable): Auto parts and other stuff. Splits 2 for 1 on 10-30-02.
Company Profile
STATUS: May be ready now with another pullback under its belt and showing a tight doji Friday. After a move lower a doji can signal a momentum change is coming. Volume was a bit higher (though still well below average) and the stock moved to close just below its 50 day MVA (108.40), but it has toyed with that level as it rolls up and down over the past 4 weeks. We are looking for the roll back up to take positions on this pre-split. If it only gets to 115, the options will give us a good return. If it makes it to 118, a great return.
Volume: 287K Avg Volume: 610.816K.
BUY POINT: $110.45 Volume=425K Target=$118.75 Stop=$109.55.
POSITION: SPW JB – Oct. $110c (preferred to stock given the price).
Click here for more information on our Stock Split Report! Chart by StockCharts.com

3) Technical Play
PENN (Penn National Gaming–$20.12; +1.28; optionable): Gambling machines.
Company Profile
STATUS: Cup w/handle. Starting to breakout from a 4.5 month base with some rising above average volume. The breakout will put PENN at an all-time high, a point where there is no resistance from unhappy holders. Indeed, most everyone holding PENN should be happy as the stock is the best in its group fundamentally and technically. Relative strength is breaking out on this move as well, and we are looking at taking positions on a further move up on even stronger volume.
Volume: 423.679K Avg Volume: 292.166K.
BUY POINT: $20.25 Volume=480K Target=$24.35 Stop=$18.65.
POSITION: UQN AC – Jan $15c (81 delta) and/or Stock.
Click here for more information on our Technical Traders Report! Chart by StockCharts.com

4) Covered Call Play
S – Sears Roebuck and Co. is currently trading at $45.2. The October $45 Calls (SJI) are trading at $3.00. That provides a return of about 7% if S is above $45 on expiration Friday in October.
Company Profile
Click here for more information on our Covered Calls Service!

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5) IPOs
Following the first anniversary of the 9-11 terrorist attacks issuers are expected to get back to the work of going public. Depressed financial markets and the latest round of investigations into the allocating and pricing of IPOs created an unfavorable environment for new offerings to price. IPO volume has been relatively weak all year, but weakness deteriorated into a bleak environment for new issues. The persistent volatility in the Nasdaq and the Dow extended this year’s end of summer break. Market conditions weighed on poor sentiment to the extent that this summer seems downright dismal. However, even though it may seem like the worst period for IPOs in the past few years, the absence of deals from mid-August to mid-September is merely a repeat of last year’s end of summer shut down. The major difference is that last year filings held up while this year they have dwindled to just one or two new filings per week. The upside now is that in spite of less than ideal market conditions underwriters will likely price at least one deal this month.
(This IPO story is continued on our website in the IPO Forum.)

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