Weekend Newsletter for November 9, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/110903.htm
1) MARKET SUMMARY
Big economic news again unable to provide sustained gains.
– Another good news open reverses though the action was quiet and several sectors rallied.
– Jobs reports (August, September & October) demonstrate continued underestimation of the economy.
– No reversal, but still struggling at the top of the range.
– 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.
KSWS (K-Swiss–$42.55; -0.7; optionable): Athletic shoes and apparel. Splits 2:1 on a date to be announced.
STATUS: Testing the breakout. KSWS blasted higher two weeks back on some solid news regarding earnings, rallying over 44 on that move. It has now come back to test the 18 day MVA (42.32) on lower, below average volume, holding at that level Friday. This point is also price support from the high on the left side of the base. That makes it a very likely place where the stock will hold and start the next move.
Volume: 110.365K Avg Volume: 183.772K
BUY POINT: $43.28 Volume=225K Target=$49.85 Stop=$42.22
POSITION: SWU AH – Jan. $40c (77 delta) &/or Stock.
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3) Technical Play
CTEL (City Telecom (HK)–$9.55; +1.02; no options): Hong Kong telecom services
STATUS: Breakout. CTEL is breaking out of a combo cup followed by ascending triangle. It formed a 13 week cup sporting excellent 4 to 0 accumulation. It broke from that in mid-October, but then slipped into the current 4 week triangle showing more excellent accumulation (3 to 0). Friday it made the initial breakout move on very strong trade, blasting through 9. Surging money flow and a relative strength breakout as well. Very, very solid move, and we are looking at picking up positions on a continued move higher.
Volume: 522.083K Avg Volume: 85.181K
BUY POINT: $9.62 Volume=128K Target=$11.62 Stop=$8.95
POSITION: – Stock (no option chain).
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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
SNIC – Sonic Solutions is currently trading at $17.6. The November $17.5 Calls (QNIKW) are trading at $0.80. That provides a return of about 4% if SNIC is above $17.5 on expiration Friday in November.
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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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