Weekend Newsletter for February 16, 2003

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Free Weekend Newsletter for February 16, 2003

TABLE Of Contents 1) MARKET SUMMARY 2) POST-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY 5) IPOs 24% Returns! Guaranteed by Law!Click Here For Details! NO FEE IRAS

Free Stock Split Email Notices Investing Q & As Glossary

1) MARKET SUMMARY

Market recovers from mid-morning selling on sharp afternoon short rally as terror threat reduced.
– No further selloff as short covering rally resumes in afternoon session as big money squared positions ahead of weekend.
– Modest improvements in economic reports, but consumer sentiment on the decline.
– Lower upside volume, narrow breadth, explosive price surge point to short covering ahead of the uncertain weekend.
– Rally if nothing happens this weekend? Already had some of that relief move Friday.- 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

ESI (ITT Educational–$26.34; +0.54; optionable): Education and training services.
Company Profile
STATUS: Testing the breakout. ESI broke out of a double bottom with handle and subsequent trading range in January, finally catching some strong volume to blast it higher. It rallied up to 28 on that excellent volume, and in the recent selling it has pulled back on much lower volume. That action shows that there are few sellers on the pullback as the market sold off. More people wanted to hold the stock than sell it. Once those eager sellers are going ESI is free to move back up. Friday it held near 26 and the 18 day MVA (26.19) and then started back up. Accumulation in the base it broke from was solid at 8 accumulation weeks to 3 distribution weeks. We really like tests of breakouts, particularly in weaker upside markets; the test shows the breakout is holding, that there are still investors ready to buy into the stock even after the breakout.
Volume: 411.5K Avg Volume: 339.601K
BUY POINT: $26.75 Volume=509K Target=$32.12 Stop=$24.88
POSITION: ESI GE – July $25c (64 delta, low OI) &/or Stock.
Click here for more information on our Stock Split Report! Chart by StockCharts.com

3) Technical Play
NATI (National Instruments–$33.22; +0.31; optionable): Computer peripherals.
Company Profile
STATUS: Pennant. NATI has formed this 3-month pattern as part of a larger 12 month base. Last week NATI showed much better volume, moving well above average as it held over support at 32. We are looking at this as a trade and prefer the options as we get more leverage. Very nice accumulation at 9 up weeks on rising volume to just 4 down weeks on rising volume. Money flow is excellent and moving up ahead of the stock price.
Volume: 460.496K Avg Volume: 275.961K
BUY POINT: $34.05 Volume=425K Target=$39 Stop=$31.67
POSITION: SJQ FF – June $30c (71 delta, low OI) &/or Stock.
Click here for more information on our Technical Traders Report! Chart by StockCharts.com

4) Covered Call Play
VLO – Valero Energy Corp. is currently trading at $35.72. The March $35 Calls (VLOCG) are trading at $2.45. That provides a return of about 5% if VLO is above $35 on expiration Friday in March.
Company Profile
Click here for more information on our Covered Calls Service!

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5) IPOs On Jan. 30, 2003, Telkom filed for a global offering of 139.25 million ordinary shares at R33.50 to R40.90 each. Four ordinary shares equal one American Depositary Share (ADS). At current exchange rates, the offering price in the United States would be US$15.50 to US$18.70 each. The underwriting is expected to raise US$591.8 million.
The company will not receive any of the proceeds from the sale of the stock. Instead, the selling shareholder will reap the rewards, if any.(This IPO story is continued on our website in the IPO Forum.)


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