Weekend Newsletter for July 13, 2003
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Read this report online in full color with graphs at
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1) MARKET SUMMARY
Market shows its upward bias.
– Market rebounds to close the week, but trade is light.
– Core producer prices slide yet again showing no reflation at this point.
– Market poised again after another short pullback, but is it really ready?
– 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.
KSWS (K-Swiss–$38; +0.93; optionable): Sports shoes
STATUS: Testing the breakout. KSWS has already surged for us, but now it is in another good buy position. It has formed another 5 week flying plateau just as it did in April and May, and as it did then, it is making the breakout. Last Tuesday it shot higher on volume only to fall back to test the 10 day MVA on the Friday low (36.79) and then rebound for a gain. It is showing very strong, resilient action on this breakout test. Indeed, we prefer breakout tests that are successful as they ‘prove up’ the breakout, showing buyers are ready to move right back in on a dip. Looking for KSWS to pick up some volume on the continued bounce off the 10 day MVA.
Volume: 143.606K Avg Volume: 204.454K
BUY POINT: $38.55 Volume=307K Target=$44.65 Stop=$35.85
POSITION: SWU JG – Oct. $35c (74 delta) &/or Stock.
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3) Technical Play
CTV (Commscope–$10.7; +0.1; optionable): Telecom equipment
STATUS: Testing the breakout. After breaking out of a 6-month cup with handle base and climbing on a big volume surge, CTV came back to test the move to end the week on very low, below average volume. Friday CTV showed a tight doji right over support at 10.50 (the breakout point). This is the point you want to see CTV hold the move. Excellent accumulation in the base at 8 to 2 (8 up price weeks on rising volume to 2 down price weeks on rising volume) set up the breakout. Money flow is strong and relative strength broke out as well on the move. An excellent base and breakout test, and now we look for volume to run back up as CTV bounces up from here.
Volume: 164.7K Avg Volume: 241.608K
BUY POINT: $11.08 Volume=265K Target=$13.88 Stop=$10.45
POSITION: CTV JB – Oct. $10c (67 delta) &/or Stock.
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Learn more about our Technical Trader Report!
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4) Covered Call Play
OVTI – OmniVision Technologies, Inc. is currently trading at $36.27. The August $35 Calls (UCMHG) are trading at $3.70. That provides a return of about 8% if OVTI is above $35 on expiration Friday in August.
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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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