Weekend Newsletter for November 16, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/111603.htm
1) MARKET SUMMARY
Leadership stocks head for a deeper test, old economy searching for a breakout.
– Another try for a high is turned back with techs, chips leading the move back down.
– Economic news not as good as hoped, but October was still solid.
– Make or break time for the large cap indexes.
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.
DIOD (Diodes–$28.9; -2; no options): Splits 3:2 on 11-26-03
STATUS: Test 10 day MVA. DIOD is showing excellent action, shooting higher Wednesday and Thursday on strong trade. In the Friday selling it took a breather that tapped the 10 day MVA (28.01) on the low and then rebounded sharply. Volume backed off on the pullback just as it should. Looking for it to continue the move this week.
Volume: 162.542K Avg Volume: 56.618K
BUY POINT: New: 30.05 (orig. $26.08) Volume=75K Target=New positions: $35 (orig. positions: $31.25) Stop=$25.94
POSITION: – Stock (no option chain).
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3) Technical Play
FLSH (M-Systems Flash Disk–$21.7; -0.01; optionable): Semiconductor memory chips
STATUS: Ascending triangle. FLSH is moving up the 18 day MVA (20.82), making higher lows below a more or less constant high at 22. Accumulation is solid at 3 up weeks on rising volume to 0 down weeks on rising volume. Money flow is strong and relative strength has broken out and has remained solid. Waiting for solid breakout from the pattern.
Volume: 253.923K Avg Volume: 366.966K
BUY POINT: $22.22 Volume=450K Target=$26.65 Stop=$21.08
POSITION: FFU DX – Apr. $22.50c (51 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
UNTD – United Online Inc. is currently trading at $17.71. The December $17.5 Calls (QABLW) are trading at $1.50. That provides a return of about 8% if UNTD is above $17.5 on expiration Friday in December.
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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.
