Weekend Issue for September 22, 2002

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1) MARKET SUMMARY

Lots of volatility and volume in a tight range.

– Modest bounce accompanied by high volatility and high volume.
– Profit warnings and layoffs. And the mainstream economists thought that was behind us.
– It will be a dicey week but we expect upside at first before more September selling resumes.

http://www.investmenthouse.com/1weekendmarketsummary.htm “> 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.

EASI (Engineered Support–$57.75; +0.92; optionable): Defense. Splitting 3:2 on Oct. 31 (Boo!)

STATUS: Testing the breakout. Still testing the breakout, holding above the 10 day MVA on the close (57.58). This is the first test since its breakout, and it is a good entry point as discussed with HSIC. Again it is a market leader in the right sector at the right time and the split adds to that momentum.

Volume: 216.25K Avg Volume: 205.681K.

BUY POINT: $58.95 Volume=304K Target=$66 Stop=$56.25.

POSITION: UFE KL – Nov. $55c (70 delta) and/or Stock.

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http://www.investmenthouse.com/1stocksplits1.htm “> Click here to learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
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3) Technical Play

APOL (Apollo Group–$42.49; -0.01; optionable): Education and training.

Play Date: 08/15/2002.

STATUS: APOL continues to win for us and is now forming a very tight, lateral consolidation along the 10 day MVA, testing the 18 day MVA on the lows (41.80). Still solid accumulation and great money flow. Education is hot and we are looking for this group to deliver some more breakouts as they are one of the market leading groups right now. Check out CECO and COCO as well.

Volume: 2.703M Avg Volume: 2.28M.

BUY POINT: New positions: 43.55 Volume=3.3M Target=$50 Stop=$41.50.

POSITION: AKA KY – Nov. $36.625 c (75 delta) and/or Stock.

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http://www.investmenthouse.com/1tech1.htm “> Click here to learn more about our Technical Trader Report
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4) Covered Call Play

GME – Gamestop Corp. is currently trading at $20.05. The October $20 Calls (GMEJD) are trading at $1.45. That provides a return of about 8% if GME is above $20 on expiration Friday in October.

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http://www.investmenthouse.com/1coveredcalls1.htm “> Click here to learn more about our Covered Calls Service
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5) IPOs

Upstart medical technology company Liposcience Inc. delayed a $75 million initial public stock offering planned for late Thursday, deepening the worst market for IPOs in a decade.

Raleigh, North Carolina-based Liposcience now hopes to sell its shares on Monday, according to Merrill Lynch, the investment bank managing the sale. Liposcience expects to raise $70 million to $80 million from the sale of 5 million shares at $14 to $16 a share.

http://www.investmenthouse.com/1ipo.htm “> . . . continued . . .

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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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