Weekend Newsletter for November 1, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/110103.htm
1) MARKET SUMMARY
No trick or treat on Friday, but a solid week even with Thursday reversal.
– Solid week closes mixed.
– More excellent economic data to end the week as important sub-indexes show important gains.
– A year of gains as market slips through October with no selling, indicative of the strength.
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.
BHE (Benchmark Electronics–$48.72; -0.36; optionable): Splits 3:2 on 11-14-2003
STATUS: Pre-split. After the big move off the 50 day MVA Tuesday, BHE has slipped back on a low volume test of the 18 day MVA (48.43), showing a doji Friday at that level. That is an indication it may be ready to resume the move, but need to see stronger, above average volume trade when it does.
Volume: 241.5K Avg Volume: 368.454K
BUY POINT: New: $50.25 (orig. $48.99) Volume=550K Target=$55.88 Stop=$47.44
POSITION: BHE AJ – Dec. 50c (35 delta) &/or Stock.
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http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
IDXC (IDX Systems–$26.2; +1.36; optionable): Health information service
STATUS: Ascending triangle. This is a pattern that shows up in a strong market. Stocks in the midst of strong moves use this pattern to consolidate. It is one of our favorites because pressure builds up from the higher lows below the constant top and the breakouts are often explosive. IDXC started a move toward a breakout Friday on a solid volume surge. Accumulation is a strong 3 to 0 in the 5 week base. Money flow is moving strong and ahead of price while relative strength is breaking out. A solid pattern and looking to jump on with a further breakout move.
Volume: 321.746K Avg Volume: 144.272K
BUY POINT: $26.32 Volume=225K Target=$31.62 Stop=$24.62
POSITION: XQW BE – Feb. $25c (65 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
NTE – Nam Tai Electronics, Inc. is currently trading at $36.11. The November $35 Calls (NTEKG) are trading at $3.10. That provides a return of about 6% if NTE is above $35 on expiration Friday in November.
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http://www.investmenthouse.com/1coveredcalls1.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.
