Weekend Newsletter for April 27, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/042703.htm
1) MARKET SUMMARY
Downgrade vultures take their shots.
– Downgrades, weak GDP provide excuse to bank some gains.
– Q1 GDP up but weaker, housing starts mixed, sentiment up.
– Lower volume, modest downside breadth indicate the selling was not as bad as it felt.
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.
TSCO (Tractor Supply–$41.83; +0.66; optionable): Ranch supply for ranchers & city slickers.
STATUS: Cup w/handle. Bucked the market Friday, rising in the handle of the 5-month base though volume was still well below average. That is okay; we want to see the big volume surge as TSCO moves through the breakout point. We are still looking at an aggressive buy point before the actual breakout to take some new positions if volume rises. Then we look for the actual breakout over the handle high (43.45) as the next entry point. A nice pattern from a nice performer.
Volume: 171.647K Avg Volume: 401.815K
BUY POINT: $42.25 Volume=603K Target=$50.75 Stop=$39.29
POSITION: QTF GH – July $40c (60 delta) or QTF JI – Oct. $45c (44 delta) &/or Stock.
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
APH (Amphenol Corp.–$44.19; -0.96; optionable): Electronics
STATUS: Testing the breakout. APH drove out of a 4.5 month flat base a week back, running to 46 on the high with some good volumes. In the late week selling APH gave back some of the gains on lower, below average volume as APH tests the breakout. Excellent 7 to 3 accumulation (7 up weeks on rising volume to 3 down weeks on rising volume) in the base is complemented by relative strength breaking out and solid money flow. This action could be viewed as the formation of a handle to what is now a cup base. Very solid action and we are looking for a turn back up on rising volume to enter. This is a more aggressive position than a breakout over the recent high, but we really like the action. The next buy point would be over the prior high (46.18).
Volume: 108.8K Avg Volume: 130.604K
BUY POINT: $44.25 Volume=150K Target=$51.25 Stop=$42.25
POSITION: APH GI – July $45c (48 delta) or APH GH – July $40c (80 delta) &/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
ERES – eResearch Technology, Inc. is currently trading at $30.05. The June $30 Calls (UDBFF) are trading at $1.95. That provides a return of about 7% if ERES is above $30 on expiration Friday in June.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
“(IPO) Share volume were squeezed in the boom years,” blared the headline of a major newspaper.
Now that raised an eyebrow or two.
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!
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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.
