Weekend Newsletter for February 22, 2004
Investmenthouse Newsletter
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Weekend Newsletter for February 22, 2004
Table Of Contents 1) MARKET SUMMARY 2) PRE-SPLIT PLAY 3) TECHNICAL PLAY 4) COVERED CALL PLAY
Stock Split Notices Investing Q & As Glossary
1) MARKET SUMMARY
Stocks continue Thursday selling, rebound to hold near support.
– NASDAQ test of 50 day MVA brings in some buyers, but no rush back into stocks.
– Consumer prices higher with healthcare and energy leading the way.
– Market holds where it needs to while semiconductors look weak once more.
Read Full Weekend SummaryLearn more about our Stock Split Report – Issued 5 Times Per Week
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. Chart by StockCharts.com
CEC (CEC Entertainment–$51.62; +1.16; optionable): Chuck-E-Cheese restaurants. Splits 3:2 on 3-16-04.
Company Profile
STATUS: Cup w/handle. CEC is trying to form the handle to an 11 week base formed at the 50 day MVA (48.33). A base forming on that support shows there is big money standing behind the stock. Maybe it is in the form of all of those parents that take their children to Chuck-E-Cheese to let them tear that place up as opposed to home. In any event, after a quiet move along the 50 day, volume has surged the past four sessions as CEC moved off that support. It is working laterally now just over 50, and will probably need 2 or 3 more sessions to work laterally before it makes the next move. With the volume and its move higher Friday, it could make the move at any point.
Volume: 294.2K Avg Volume: 181.636K
BUY POINT: $52.12 Volume=272K Target=$57.35 Stop=$49.38
POSITION: CEC FJ – June $50c (65 delta) &/or Stock.
Learn more about our Stock Split Report – Issued 5 Times Per Week
Chart by StockCharts.com
3) Technical Play
TFSM (24/7 Real Media–$2.05; -0.08; no options): Internet media viewers, players.
Company Profile
STATUS: Cup w/handle. TFSM surged on a breakout 7 sessions back, but immediately announced a shelf offering that pushed it back to the 18 day MVA (2.01). It has held there solidly, consolidating once more for the next move. Accumulation in the 8 month base is excellent at 7 to 1. Money flow dipped slightly on the pullback, but it is now leading back up ahead of price. Still looks super, and we are looking for another high volume gain over recent resistance to move into positions.
Volume: 1.62M Avg Volume: 3.235M
BUY POINT: $2.24 Volume=4.4M Target=$2.98 Stop=$2.04
POSITION: – Stock (no option chain).
Learn more about our Technical Traders Report – Issued 5 Times Per Week Chart by StockCharts.com
4) Covered Call Play
SCHN – Schnitzer Steel Industries, Inc. is currently trading at $45.94. The March $45 Calls (SQQCI) are trading at $3.10. That provides a return of about 4% if SCHN is above $45 on expiration Friday in March.
Company Profile
Learn more about our Covered Call Tables – 8 Tables Updated 5 Times Per Week
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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 asscociated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
