Weekend Newsletter for March 16, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/031603.htm
1) MARKET SUMMARY
Market pauses ahead of weekend.
– Market takes a breather ahead of weekend after a strong surge.
– Economic data continues to erode as sentiment hits decade low.
– Waiting for a follow through session if it will come.
– 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).
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.
XTO (XTO Energy–$25.03; +0.07; optionable): Independent oil and gas. Splits 4:3 on 3-19-03
STATUS: Testing the 50 day MVA (24.75). XTO has dropped all the way to the 50 day, undercutting it on the Friday low but then rallying back on rising, above average volume. This is exactly the type of signal we look for on a pre-split play. We will look to pick it up on the bounce higher to catch a run into and maybe through the near term split.
Volume: 1.106M Avg Volume: 817.136K
BUY POINT: $25.55 Volume=1.2M Target=$28.75 Stop=$24.33
POSITION: XTO EX – May $22.50c (91 delta) &/or Stock.
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
QLGC (Qlogic–$38.52; -0.41; optionable): Storage networks
STATUS: Testing the breakout. QLGC moved laterally for 4 weeks as the market sold, riding just below the 200 day MVA (36.45). Thursday it blasted over the 200 day, and Friday it tested up toward the November to January down trendline (39.50) and just stalled around with the rest of the market. We are looking for QLGC to test back early this week as the market takes a breather before trying a follow through move (& on more war uncertainty). After the test back toward 38 we will look at positions on the next strong move up.
Volume: 9.705M Avg Volume: 8.642M
BUY POINT: Test back to 38 to 37.50, then $38.25 on the way up. Volume=11M Target=$44.88
Stop=$35.94
POSITION: QLC GU – July $37.50c (60 delta) &/or Stock.
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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
FIC – Fair Isaac is currently trading at $45.77. The April $45 Calls (FICDI) are trading at $2.85. That provides a return of about 5% if FIC is above $45 on expiration Friday in April.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Sweeping Up Hoover’s.
As the sun sets in the Western sky, we tearfully bid a sad farewell to Hoover’s (Nasdaq: HOOV)IPO.
The company, incorporated in 1990 as The Reference Press, Inc., launched Hoover’s Online in 1995. On Monday, March 3, 2003, its shareholders approved a merger with Dun & Bradstreet (NYSE: DNB). On Dec. 5, 2002, Dun & Bradstreet announced an offer to buy Hoover’s for $117 million, or $7 a share.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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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.
