Weekend Newsletter for May 11, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/051103.htm
1) MARKET SUMMARY
A nice way to end the week.
– Market bounces as expected, salvaging the week.
– Senate tax package a mass of illogic which, based on senator comments, is no surprise.
– Market well positioned to start the week with smart bounce off 10 day MVA.
– 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.
UNH (Unitedhealth Group–$93.49; +1.28; optionable): Health care plans. Splits 2:1 on 6-19-03.
STATUS: Cup with handle. This is a pre-split that just happens to be in a good pattern as well. UNH is in the handle of a 7-month base showing solid 7 to 3 accumulation. It has been working on the handle, the lateral and slightly lower trading range that shakes out the final sellers, the past 3 weeks. Volume has been trailing off, down all last week on lower and lower below average trade. That is very good handle action as it shows fewer and fewer sellers even as the stock moves lower. Pretty soon the sellers are gone and good old supply and demand takes over and the stock breaks out. Looking for a stronger volume break higher to initiate some positions.
Volume: 871.6K Avg Volume: 2.31M
BUY POINT: $93.74 Volume=2M Target=$100 Stop=$91.22
POSITION: UHB FR – June $90c (72 delta) or UHB IS – Sept. $95c (49 delta).
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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
BCR (C.R. Bard–$63.39; +1.7; optionable): Medical instruments.
STATUS: Ascending triangle. For the past 1.5 years BCR has worked through a cup base and the stock is now back up to the high in the base, moving through a 2-month ascending triangle. Since November it has put together solid 8 to 3 accumulation, using the 50 day MVA (61.48) as the support in the base as it moves toward a breakout over 64. The long term pattern for BCR the past 4 years is a large ascending triangle that has used the 200 day MVA as support. After a lower volume test of the 50 day once again, BCR made a higher low Friday, starting back up on a strong volume surge. Solid accumulation, solid money flow, and it looks as if BCR is ready for that new high.
Volume: 369.7K Avg Volume: 317.818K
BUY POINT: $64.25 Volume=477K Target=$73.75 Stop=$61.55
POSITION: BCR JM – Oct. $65c (44 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
APPX – American Pharmaceutical Partners is currently trading at $23.28. The June $22.5 Calls (AQOFX) are trading at $2.50. That provides a return of about 8% if APPX is above $22.5 on expiration Friday in June.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
The IPO market is a feast and most suckers are starving. If you don’t believe it, look at the numbers.
The 2003 IPO Scorecard, as of April 30, 2003, showed bankers had priced only five IPOs for the year to date. Admittedly, that’s not much to brag about, especially when one flips back through the years. Last year, the IPO pipeline turned out 24 IPOs through the first four months, according to available records.
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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End the Year $200,000 Richer
Cash in no matter what the Street throws at you.
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BOOK STORE SPECIAL OFFERS!
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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.
