Weekend Newsletter for March 2, 2003
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http://www.investmenthouse.com/weekend/030203.htm
1) MARKET SUMMARY
Market continues its lack of commitment.
– Bouncing like a ball, the market closes out a flat month.
– Economic data improving, but market is not buying it.
– We closed downside positions just in case, but there are obstacles as well as possibles to a war next week.
– 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–$25.21; +0.41; optionable): Independent oil and gas. Splits 4:3 on 3-19-03.
STATUS: XTO rallied sharply off of 23 two weeks back, hitting 26 on that run. It has come back last week to test that move, holding the 10 day MVA on the Friday low (25.02) and bouncing slightly. This is good action to set up the next pre-split run, though it may take another day or two at this level before it is ready given that it just now fell back.
Volume: 678.3K Avg Volume: 809.5K
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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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
DISH (Echostar–$26.33; +0.18; optionable): Satellite systems.
STATUS: Cup w/handle. Working in a 2-month handle to the 10-month base showing solid accumulation at 10 up weeks on rising volume to 7 down weeks on rising volume. The past two months accumulation is 2 to 0. Excellent pattern and money flow is out ahead of the price as it works laterally in the handle. Earnings are Tuesday (March 4), and that may be the catalyst to break it out.
Volume: 2.674M Avg Volume: 3.801M
BUY POINT: $27.05 Volume=4.8M Target=$31.12 Stop=$25.16
POSITION: UAB FE – June $25c (64 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
NCEN – New Century Financial Corp. is currently trading at $26.63. The April $25 Calls (UREDE) are trading at $3.30. That provides a return of about 7% if NCEN is above $25 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
Endurance Specialty Holdings Ltd., a property and casualty reinsurance company formed after the Sept. 11 attacks, raised $220.8 million in just the fourth IPO this year.
The Bermuda-based company sold 9.6 million shares for $23 each, below the expected range of $25 to $27 each, according to an official at investment bank Goldman Sachs Group, which managed the sale with Merrill Lynch.
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.
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