Weekend Newsletter for January 13, 2002

http://www.investmenthouse.com/weekend/011302.htm “> click here or on link for full report with graphs on our website
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In The News: TradingSolutions’ neural network models are profiting from the opportunities in this volatile market. See the performance figures!

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1) MARKET SUMMARY

Greenspan attempts to talk down interest rates.

– Greenspan talks to bond market.
– Stocks fade on Greenspan’s economic outlook.
– Economy: We are forgetting some important details in the renewed Washington wrangling.

http://www.investmenthouse.com/1weekendmarketsummary.htm “> Click here or on link for our full Weekend Market Summary

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2) Stock Splits

Be sure to read our Stock Splits Manual. 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.

LIZ (Liz Claiborne–$52.60; -0.37; optionable): Splits 2:1 effective 1-17-02.

STATUS: After an excellent move last Friday over its November-December highs at 52, LIZ has held steady, showing four consecutive dojis before a slightly more active day Friday. The stock hit over its recent high (and buy point) Friday (53.45), but turned back to close, although still holding comfortably over its 10 day MVA (52). We have anticipated the possibility of a test of 52, but the split is effective Thursday, so we are watching for it to hold here and start a quick run, watching carefully the stock’s high of 54.95.

PLAY: A move over 53.50, with stock and/or April $50 calls to buy (LIZ DJ).

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3) Technical Play

MROI (Mro Software–$23.34; +0.84; optionable): Applications.

STATUS: Just off the bottom of a 22-month base, and in an ascending wedge that formed subsequent to a cup with handle breakout. The breakout was on strong volume but that has decreased in the pattern and though slightly higher Friday is still way below average at 123,400 (avg. 230,000). Friday, on this rising volume, MROI was bouncing up from the 18 day MVA (22.52). We are looking for a breakout over 25 (the December high is at 25.84). Good money flow and high relative strength. Target: 30

BUY POINT: 25.13 on volume of 311,000 or higher. Stop: 23.37 (7%)

POSITION: Stock and/or March $20 calls to buy (UPJ CD).

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http://www.investmenthouse.com/1tech1.htm “> Click here to learn more about our Technical Trader Report
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4) Covered Call Play

THQI – THQ Inc. is currently trading at $45.88. The February $45 Calls (QHIBI) are trading at $4.40. That provides a return of about 8% if THQI is above $45 on expiration Friday in February.

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http://www.investmenthouse.com/1coveredcalls1.htm “> Click here to learn more about our Covered Calls Service
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5) IPOs

Clean room equipment maker Kyodo-Allied Industries Ltd said on Friday its public offer to raise net proceeds of S$2.7 million ($1.5 million) via the issue of 18 million new shares at S$0.20 was 388 times subscribed.

This is the first initial public offering in Singapore this year after a dire 2001 when the market slumped 16 percent.

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http://www.investmenthouse.com/1ipo.htm “> This story continued in our IPO Forum
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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.
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