Weekend Newsletter for April 6, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/040603.htm
1) MARKET SUMMARY
Noncommittal trade ahead of another weekend.
– Market on hold ahead of another weekend of war.
– Unemployment holds steady as jobs shrink yet again.
– Another nervous, low volume session ahead of the weekend.
– 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).
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.
FCN (FTI Consulting–$46.8; -0.3; optionable): Management services. Splits 3:2 on 6-5-03.
STATUS: Testing the breakout. FCN has made a solid move up the 10 day MVA (46.17), running up over 48 Thursday and then reversing. It continued to pull back Friday. Thursday and Friday trade was lower, falling below average. We are looking for a test of the 10 day MVA to hold and provide another bounce higher. An 18 day MVA (45.43) test would be better. We want to see the stock test lower and then rally back on stronger volume.
Volume: 206.4K Avg Volume: 268.731K
BUY POINT: Test from 46.17 to 45.43, then $46.35 on the way back up. Volume=400K
Target=$52 Stop=$45.25
POSITION: FCN FI – June $45c (70 delta, low OI) &/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
BBA (Bombay Company–$5.65; +0.3; no options): Home furnishings
STATUS: Cup w/handle. BBA is looking solid in a 3-month base that also resembles a reverse head and shoulders with that early January dip and recovery before falling lower. Whatever you call it, the base looks good with 3 to 1 accumulation and money flow moving up ahead of the stock price as it works on its handle over the 18 day MVA (5.27). This base has been formed on top of an earlier and larger base from May to December 2002; that is very solid action as the stock uses the old base as support to build further gains. Excellent.
Volume: 119.4K Avg Volume: 219.046K
BUY POINT: $5.78 Volume=329K Target=$6.98 Stop=$5.30
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
LOW – Lowes Companies, Inc. is currently trading at $43.15. The May $42.5 Calls (LOWEV) are trading at $2.50. That provides a return of about 5% if LOW is above $42.5 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
This year’s first quarter ends on Monday, March 31, 2003. It was not a bountiful one for the IPO market.
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.
