Weekend Newsletter for December 22, 2002
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/122202.htm
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.
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.
DAKT (Daktronics–$14.1; +0.18; optionable): Scientific & Technical instruments
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.
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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
NTII (Neurobiological Technology–$6.48; -0.12; no options): Biotechnology
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).
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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
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.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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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 column is continued at:
http://www.investmenthouse.com/1ipo.htm
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BOOK STORE SPECIAL OFFERS!
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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 – 2002 by Online Investment Services, LP. – All Rights Reserved.
