Weekend Newsletter for March 30, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/033003.htm
1) MARKET SUMMARY
Week of downbeat news keeps market under wraps.
– Market consolidates on a week of negative news.
– Confidence lower but not tanking as personal spending results indicate.
– Monday gap lower was the extent of the damage for the week.
– Troops slow advance ahead of RG showdown, but market seems to be adjusting to the idea.
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.
TTC (Toro–$70.75; +0.49; optionable): Motorized farm and home tools. Splits 2:1 on 4-15-03
STATUS: Testing the breakout. After the Thursday test toward the 18 day MVA (69.59), TTC started higher Friday but could not muster volume. If some volume comes in we will look at new positions on this good breakout test.
Volume: 61.8K Avg Volume: 98.041K
BUY POINT: New: 70.88 (orig. $70.05; $68.85) Volume=137K Target=$76.55 Stop=$65.35
POSITION: TTC FM – June $65c (72 delta, low OI) &/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
PNRA (Panera Bread–$31.5; +0.13; optionable): Special eateries
STATUS: Cup w/handle. PNRA formed a base from May to December 2002, but could not make the breakout stick. It tanked and formed the current base and is now forming a lateral consolidation or handle after breaking over the 200 day MVA (31.00). Volume has backed off on the lateral move last week. Good accumulation at 5 up weeks on rising volume to 3 down weeks on rising volume. PNRA can run like the wind when it gets started, and we are looking for it to run to the prior highs as our initial target once it starts the move.
Volume: 353.434K Avg Volume: 859.955K
BUY POINT: $32.35 Volume=1.2M Target=$37.84 Stop=$30.09
POSITION: UPQ HF – Aug. $30c (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
COO – The Cooper Companies, Inc. is currently trading at $30.24. The May $30 Calls (COOEF) are trading at $1.90. That provides a return of about 6% if COO is above $30 on expiration Friday in May.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Between the bagpipes squealing up Fifth Avenue on St. Patrick’s Day and the rockets’ red glare that lit up the Baghdad night skies just two days later, the stock market staged one of the most powerful weekly rallies ever seen.
Only the IPO market was missing in action. Not one deal was done. The week ended with the first day of spring, but so far, no signs of life are stirring in the IPO market.
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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