Weekend Newsletter for December 29, 2002
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/122902.htm
1) MARKET SUMMARY
Combination of forces work the major indexes lower.
– Indexes fall from trading range on more of the same concerns.
– New home sales, business profits up as economy continues a very slow recovery, but higher oil prices are again a threat.
– Make or break time at the bottom of the October consolidation range.
– Team Trades.
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.
GTK (Gtech Holdings–$29.13; +0.11; optionable): Lottery software
STATUS: Cup w/handle. GTK is moving laterally the past week after surging higher up the right side of its base. This is a continuing play we entered on that earlier surge, but as with most leaders, GTK is consolidating again, holding onto its gains as it does so. A very nice handle formation where money flow continues to run up even as the stock moves laterally during this consolidation. In addition, relative strength has broken out ahead of the stock as it works through the handle. Looks ready for more.
Volume: 260.9K Avg Volume: 620K
BUY POINT: New: $29.45 (orig. $26.15) Volume=900K Target=$30 Stop=$28.04
POSITION: GTK CX – Mar. $22.50c (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
APSG (Applied Signal–$11.36; -0.23; no options): Communication equipment
STATUS: Cup w/handle. A bit thinner volume than usual, but a very nice pattern with solid accumulation at 7 up weeks on rising volume (accumulation weeks) to 4 down weeks on rising volume (distribution weeks). It is currently working through the handle of the base, moving laterally and slightly lower on the intraday lows as it holds above the 18 day MVA (11.16). Money flow is moving up ahead of the price as the stock moves laterally, and relative strength is breaking out. Telecom has been holding up better than most sectors, and APSG is putting the finishing touches on its base as the market sells. Again, that is a sign of strength.
Volume: 54.296K Avg Volume: 36,000
BUY POINT: $12.04 Volume=85K Target=$14.55 Stop=$11.45
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
WBSN – Websense, Inc. is currently trading at $22.6. The January $22.5 Calls (DQHAX) are trading at $1.85. That provides a return of about 8% if WBSN is above $22.5 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
Falling stocks, a fitful economy, war threats and corporate accounting scandals curtailed securities underwriting and, for a second straight year, banking revenue.
The year “2002 turned out to be a tougher operating environment than any of us expected,” Goldman Sachs Group Inc. (GS.N) Chief Financial Officer David Viniar recently told investors. A meaningful investment banking rebound might not take place until the second half of 2003, he said.
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!
http://www.investmenthouse2.com/cntdir.asp?name=BookStoreSpecials
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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.
