Weekend Issue
http://www.investmenthouse.com/weekend/112501.htm “> click here or on link for full report with graphs on our website
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1) MARKET SUMMARY
Friday gives a late Thanksgiving rally. Is it a turkey?
– A Thanksgiving rally a day late.
– Holiday sales off and running, driven by discounts.
– German factory orders log biggest drop in 15 years as U.S. gets ready to declare the recession official on Monday.
– Good war news but no great war news this weekend.
– Indexes want to try resistance again, but are they ready?
– Subscriber Questions.
– Team Trades.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> click here or on link for our full Weekend Market Summary
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http://www.investmenthouse.com/1daily1.htm “> Try “The Daily” with no risk for 2 weeks!
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2) Stock Splits
Be sure to read our Stock Splits Manual. 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.
HRH (Hib Rogal–$60.38; +1.49; no options): Insurance brokers. Splits 2:1 effective 1-2-01.
STATUS: HRH made a huge move up in October from the 42 range, forming a pennant in recent weeks. Friday the stock made a nice move up from support at the short-term
MVA’s (10 & 18 day at 58.80 and 58.17), with volume still very low (even for a holiday short session, 33,000; average 153,200). Close to the breakout, and on that move we are targeting 72.
PLAY: 60.91 on volume of 205,000, with stock. Stop: 57.50.
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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
BAC (Bank of America–$64.99; +1.41; optionable): Money Center Banks.
STATUS: Financials in improving economies. BAC is up from the lows (just above 35) in a lengthy base dating from mid-1998, highs near 90. The stock had a very nice run up from the October lows (52 range), consolidated above the 10 day MVA for the last week after hitting resistance at 64, then Friday broke through with a nice move up. Volume was lower at 2 million (avg. 6.5 million), but had been stronger and rising the previous session (which was higher than that of Tuesday). Thus, since trading was so light on Friday we will look for volume to surge back in and continue pushing the stock up. It needs to get over the August high at 65.54, top price at the start of this cup-type base (with a double-bottom at the lows). We are looking at a target of 75 after the breakout. BAC shows strong money flow and high relative strength.
BUY POINT: 65.67 on volume of 7 million or higher. Stop: 61.07 (7%); 50 day MVA is currently at 60.54.
POSITION: Stock and/or January $65 calls to buy (BAC AM). Deltas unavailable at the time of this writing.
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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
EDO – Edo Corp. is currently trading at $25.03. The January $25 Calls (EDOAE) are trading at $2.20. That provides a return of about 10% if EDO is above $25 on expiration Friday in January.
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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
The Athens stock exchange approved the initial public offering of the Public Power Corporation (PPC) for listing on the bourse’s main market, it said on Friday.
PPC will offer 23 million existing shares and issue another 12 million new shares of which 3.7 million will be privately placed.
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http://www.investmenthouse.com/1ipo.htm “> This story continued in our IPO Forum
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http://www.investmenthouse.com/bookstore.htm “> FIRESALE! IN OUR BOOKSTORE!
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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, 1998, 1999, 2000, 2001 by Online Investment Services, LP. – All Rights Reserved.
