Weekend Newsletter for July 21, 2002
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http://investmenthouse.com/weekend/072102.htm “> Read this report online in full color with graphs
1) MARKET SUMMARY
Further selling becomes dumping late Friday.
– Slow motion rollover turns into a freefall.
– Despite the selling, big techs still show relative strength.
– Economic news remains upbeat, and that is good for the future.
– What will the next upside rally look like?
– Subscriber Questions.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> Click here or on link for our full Weekend Market Summary
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http://www.investmenthouse.com/1daily1.htm “> Try “The Daily” with no risk for 2 weeks!
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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–$65; -2.26; no options): Regional banks; Splits 3:2 on 8-6-02.
STATUS: HBHC had indeed capped out on this first pre-split run on Thursday, and it was time to close it out Friday. The selling was on some heavier, above average volume. Now we may get another shot at a second pre-split run. A lot will depend upon how the stock performs at the 18 day MVA (64.52) down to 62 where there is some support from previous prices and the 50 day MVA. A higher low here at the 18 day MVA down to 64 would be a good entry point for another move toward the split.
Volume: 62.4K Avg Volume: 29.136K.
BUY POINT: After a test of 64, $64.50. After a test of 62, 62.50. Volume=38K Target=$73.65 Stop=$67.
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
CLS (Celestica–$21.35; -0.65; optionable): Circuit boards.
STATUS: Test 18 day MVA. CLS is another stock showing relative strength in the market, rising Thursday on strong volume and some good news, and then just pulling back a hair Friday on lower volume, holding the 18 day MVA on the low (20.84) and rebounding as the rest of the market burned. It has some resistance at the 50 day MVA (24.06), but it is showing good strength.
Volume: 3.021M Avg Volume: 2.348M.
BUY POINT: $22.05 Volume=3.5M Target=$27.55 Stop=$20.25.
POSITION: CLS LW – Dec. $17.50 call (75 delta, low OI) and/or Stock.
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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
LOW – Lowes Companies, Inc. is currently trading at $38.19. The August $37.5 Calls (LOWHU) are trading at $3.00. That provides a return of about 7% if LOW is above $37.5 on expiration Friday in August.
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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
In business for more than 30 years, restaurant chain Red Robin Gourmet Burgers (proposed ticker: RRGB) owns and operates 90 restaurants and another 99 are operated under franchises or license agreements in the U.S. and Canada. By 1995, company-owned restaurants under-performed sales at franchisees by 23%. To help the faltering business, the company hired its top performing franchisee, Mike Snyder to bring his magic to the whole company. Under his leadership the restaurant chain was recapitalized in May 2000 when it acquired Snyder’s 14 franchise units and private equity firm Quad-C invested $25 million in the company.
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.
