Weekend Newsletter for August 31, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/083103.htm
1) MARKET SUMMARY
Seven months up on the Nasdaq, closing at a 16 month high.
– Market completes the move with Nasdaq rising to July high.
– Solid sentiment, strong Chicago PMI (employment included), and evidence of some pent up demand.
– Starting September at the top of the range.
– 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.
SNPS (Synopsis–$68.21; -0.18; optionable): Technical software. Splits 2:1 on 9-24
STATUS: Testing the breakout. SNPS has the potential to be a great pre-split play. It surged from early August and has now made a pullback that held support at 65, making a higher low. Friday it rested over the 10 day MVA (67.30), showing a tight doji on very low volume. We expect it to make a breakout move attempt this week and we want to be ready for it. Super money flow and relative strength ready to breakout again.
Volume: 509.28K Avg Volume: 1.374M
BUY POINT: $69.6 Volume=2.5M Target=$77.75 Stop=$66.28
POSITION: YPQ LN – Dec. $70c (52 delta) &/or Stock.
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3) Technical Play
MOBE (Mobility Electronics–$7.50; -0.11; no options): Power adaptors, etc. for mobile computing.
STATUS: Cup w/handle. The age of truly mobile computing is just starting to emerge, finally reaching some of the promise of the computer age. MOBE is one of those companies that is riding the wave. It is now forming the handle to a short 5 week base formed after a strong break higher in late May and a strong rally. Accumulation in the short base is 2 to 0, money flow is strong, and relative strength broke out. A very strong stock and a leader. Looking for the next chance to get into it.
Volume: 528.805K Avg Volume: 520.68K
BUY POINT: $8.04 Volume=781K Target=$10 Stop=$7.48
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
APCC – American Power Conversion Corp. is currently trading at $17.92. The October $17.5 Calls (PWQJW) are trading at $1.15. That provides a return of about 4% if APCC is above $17.5 on expiration Friday in October.
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http://www.investmenthouse.com/1coveredcalls1.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.
