Weekend Newsletter for July 6, 2003
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Read this report online in full color with graphs at
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1) MARKET SUMMARY
Cold water hits the market early.
– Warnings, downgrades, economic data set stage for a down session.
– Employment report disappoints, but the real economic report was a hit.
– Market set at support for the coming week, but how long can it rally?
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).
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.
CMTL (Comtech Telecom–$27.75; -0.75; no options): Telecom equipment. Splits 3:2 on 7-15-03.
STATUS: Testing the 18 day MVA. CMTL continues to test the 18 day MVA (27.34). It showed a big doji at that level Tuesday, and it looked as if CMTL was ready to make the next strong move higher. That did not pan out as it came back once again to test the 18 day MVA Thursday. It still is holding that level, and pre-splits tend to build momentum toward the actual split, so we are looking for a strong move up over the 10 day MVA (28.26) showing high volume to take positions.
Volume: 106.028K Avg Volume: 188.545K
BUY POINT: $28.45 Volume=350K Target=$32.72 Stop=$26.46
POSITION: – Stock (no option chain).
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3) Technical Play
LSCP (Laserscope–$7.63; -0.02; no options): Medical appliances.
STATUS: Flying plateau. LSCP continues in its 5 week base that formed after the breakout of a year long cup with handle. The breakout came in early May with a huge volume move that carried it from 5.50 to 8. Accumulation in that base was outstanding at 12 to 5 (12 up weeks on rising volume to 5 down weeks on rising volume). In the current base accumulation is solid at 2 to 0. Money flow is strong and relative strength is moving up for a breakout as well. After a strong volume move Monday it has come back on very low volume to test the 18 day MVA, closing at that level Thursday on very low volume and showing a ‘hammer’ doji. Looks very ready to make the move we are looking for.
Volume: 33.3K Avg Volume: 101.636K
BUY POINT: $8.25 Volume=140K Target=$10 Stop=$7.67
POSITION: – Stock (no option chain).
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
KMX – Circuit City-CarMax, Inc. is currently trading at $30.46. The August $30 Calls (KMXHF) are trading at $2.10. That provides a return of about 6% if KMX is above $30 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.
Copyright 1997 – 2003 by Online Investment Services, LP. – All Rights Reserved.
