Weekend Newsletter for July 14, 2002
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http://investmenthouse.com/weekend/071402.htm “> Read this report online in full color with graphs
1) MARKET SUMMARY
Market shows some life: a blip on the EKG.
– Early momentum stifled at very near resistance as techs try to lead.
– Very ho-hum session as so-so earnings and mixed economic reports fail to inspire.
– Lack of punch on an upside attempt leaves the indexes vulnerable for another decline.
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> 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).
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.
HBHC (Hancock Holding–$63.84; +1.79; no options): Splits 3:2 on 8-8-02. Regional bank.
STATUS: Just announced a split and bounced off of the 50 day MVA on rising, above average volume after testing the move to a new high in June (at 67.50). The neat thing about the move is that the stock has been in a big, 4.5 year base and broke out of it with that June move on huge volume. It is now testing that breakout with the move down to the 50 day MVA. This makes the pattern even more appealing.
Volume: 39K Avg Volume: 25.59K
BUY POINT: $64.05 Volume=38K Target=$73.65 Stop=$59.57
POSITION: Stock (no option chain).
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http://www.investmenthouse.com/1stocksplits1.htm “> Click here to learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
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3) Technical Play
HNR (Harvest Natural Resources–$4.89; +0.09; no options): Independent oil and gas.
STATUS: Cup w/handle. Nearing a 3-year high, HNR is moving through this base after blasting off from 1.50 in March. This base is giving it a good rest after the move, with accumulation ongoing throughout. Accumulation weeks lead distribution weeks 5 to 0; excellent accumulation during this rest stop in the move. 7.55 is our initial target as it represents some former price tops and bottoms in years past, but it can move higher for us longer term.
Volume: 56.8K Avg Volume: 203.545K
BUY POINT: $5.15 Volume=305K Target=$7.55 Stop=$4.39
POSITION: Stock (no option chain).
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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
CYMI – Cymer, Inc. is currently trading at $30.92. The July $30 Calls (CQGGF) are trading at $2.55. That provides a return of about 6% if CYMI is above $30 on expiration Friday in July.
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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
General Electric Co (GE.N) has delayed plans to split off its property-and-casualty insurance operations, the Wall Journal reported on Friday citing people familiar with the matter.
GE was earlier this year considering splitting off Employers Reinsurance Corp, which underwrites the risk of other insurers, with a partial initial public offering, the paper said.
http://www.investmenthouse.com/1ipo.htm “> . . . continued . . .
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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.
