Weekend Newsletter for April 13, 2003
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http://www.investmenthouse.com/weekend/041303.htm
1) MARKET SUMMARY
Market finishes the week as it started: squandering rally attempts.
– Early test of the 200 day MVA resistance quickly flops.
– March retail sales stronger than expected, stronger than retail stores alone.
– A week of reversals from the high as market is not yet buying into the war providing a sustained economic surge.
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm?123 “> 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).
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.
PFCB (PF Changs–$39.65; +0.15; optionable): Trendy Chinese restaurants
STATUS: Cup w/handle. PFCB formed a 3-month base and tried the breakout in late March. It was not ready, and fell back to test the short term MVA once more. From there it shot higher again on strong volume and now is moving laterally just below resistance at 40. It continues to show solid accumulation at 5 up weeks on rising volume to 3 down weeks on rising volume with excellent money flow. It has been banging its head at the 40.50 range, and that is what we want to see it clear on some strong volume. A steady leader in the market.
Volume: 305.505K Avg Volume: 642.569K
BUY POINT: $40.68 Volume=964K Target=$47 Stop=$37.83
POSITION: HUO GH – July $40c (52 delta) &/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
LOOK (Looksmart Ltd.–$3.09; +0.21; no options): Internet information
STATUS: Cup w/handle. After surging off the October low and tripling, LOOK has now formed this 3-month base that shows solid 4 to 2 accumulation. After moving laterally along the 10 day MVA (2.85) this month, Friday LOOK shot higher and cleared its near term resistance in the handle on a very strong increase in volume. Money flow is shooting up ahead of the stock price. LOOK looks ready to start its next move.
Volume: 3.184M Avg Volume: 1.12M
BUY POINT: $3.16 Volume=1.7M Target=$3.88 Stop=$2.94
POSITION: – Stock (no option chain).
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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
OVTI – OmniVision Technologies, Inc. is currently trading at $22.66. The May $22.5 Calls (UCMEX) are trading at $1.95. That provides a return of about 9% if OVTI is above $22.5 on expiration Friday in May.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
April, it’s been said, can be the cruelest month. Since 1970, the number of new issues coming off April’s IPO production line has generally run below the yearly average.
During this 33-year time span from April 1970 through April 2002, investment bankers priced 863 IPOs, according to “The IPO Aftermarket,” a now defunct weekly newsletter. That makes an “average April” add up to 26.2 IPOs each month.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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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 – 2003 by Online Investment Services, LP. – All Rights Reserved.
