Weekend Newsletter for December 22, 2002

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Free Weekend Newsletter for December 22, 2002

TABLE Of Contents 1) MARKET SUMMARY 2) POST-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY 5) IPOs 24% Returns! Guranteed by Law!Click Here For Details! NO FEE IRAS
Free Stock Split Email Notices Investing Q & As Glossary

1) MARKET SUMMARY
Selling gives way to a relief bounce.
– Relief rally fueled by expirations, rebalancing.
– Q3 GDP up 4% as expected but still mostly led by the consumer.
– Rally was pleasant, but same obstacles overhang the market: slow economic recovery and a war that seems inevitable.
– Subscriber Questions.See full story.Try “The Daily” with no risk for 2 weeks!
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. Chart by StockCharts.com

DAKT (Daktronics–$14.1; +0.18; optionable): Scientific & Technical instruments.
Company Profile
STATUS: Testing the breakout. Tried to make the move over 14 stick but could not quite hit the buy point. DAKT moved in a very tight flat base since May, sporting excellent accumulation at 6 up weeks on rising volume to just 2 down weeks on rising volume. In November DAKT blasted off, breaking out of the base on some massive volume. It flew up to 15, tested back to the 18 day MVA (now at 13), and has ridden up that MVA since. We are looking for a break over 14 on volume as our entry point. This is one of the hottest sectors in the market.Volume: 131.5K Avg Volume: 58.59K
BUY POINT: $14.54 Volume=150K Target=$17.45 Stop=$13.52
POSITION: QKC GV – July $12.50c (79 delta) and/or Stock.
Click here for more information on our Stock Split Report! Chart by StockCharts.com

3) Technical Play NTII (Neurobiological Technology–$6.48; -0.12; no options): Biotechnology.
Company Profile
STATUS: Testing the breakout. NTII exploded out of its 8-month cup base in November, shooting from 4 to 6.50 in 4 sessions. It successfully tested that breakout in early December with a fairly steep drop that held the 18 day MVA on the low. It has moved to a new 2-year high and is making another test of the short term MVA. Stocks tend to make 4 rotations off of these levels before testing deeper toward the 50 day MVA. As NTII gives about $2 on each move off the short term MVA, that leaves us plenty of upside remaining on this move. Our first target is for the initial move, but we will let it test the short term MVA again if it is acting right, i.e., pulling back on lower volume, and ride it up further from there.Volume: 57.9K Avg Volume: 65K
BUY POINT: $6.74 Volume=90K Target=$8.25 Stop=$6.18
POSITION: – Stock (no option chain).
Click here for more information on our Technical Traders Report! Chart by StockCharts.com

4) Covered Call Play FIC – Fair Isaac is currently trading at $40.4. The January $40 Calls (FICAH) are trading at $2.45. That provides a return of about 5% if FIC is above $40 on expiration Friday in January.
Company Profile
Click here for more information on our Covered Calls Service!

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5) IPOs Endurance Specialty Holdings Ltd., a property and casualty insurance and reinsurance firm with about $1.9 billion in total assets, filed on Friday to raise $200 million in an initial public offering.
The Bermuda-based holding company plans to use the net proceeds to provide additional capital to subsidiaries, repay a portion the outstanding debt under credit facilities and for other general corporate purposes, it said in a filing with the U.S. Securities and Exchange Commission.(This IPO story is continued on our website in the IPO Forum.)

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