Weekend Newsletter for September 28, 2003
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/092803.htm
1) MARKET SUMMARY
Third day of selling leaves Nasdaq, SOX, SP400 standing alone at the 50 day MVA.
– Leading Nasdaq now at the 50 day MVA.
– Q2 GDP revised higher yet again as Michigan sentiment sags again.
– Market preparing to bounce this week, but just may be just in relief.
– 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.
BLUD (Immucor–$28.71; -0.7; optionable): Diagnostic substances. Splits 3:2 on 11-17-03.
STATUS: Testing the breakout. BLUD surged ahead of the split announcement and on the announcement itself. It is now testing that move, coming back to the 10 day MVA (28.65). It may try an intraday move toward the 18 day MVA (27.69) before making the next move higher. Will let it test and then rebound on rising volume through the buy point.
Volume: 471.638K Avg Volume: 212.48K
BUY POINT: $29.35 Volume=304K Target=$34.48 Stop=$28.25
POSITION: QMQ LE – Dec. $25c (60 delta) &/or Stock.
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3) Technical Play
ENDP (Endo Pharmaceuticals–$20.8; -0.52; optionable): Drugs
STATUS: Testing the breakout. ENDP is coming back to the 10 day MVA (20.61) in a test of the breakout from a nice 3 month cup base formed mid-June to mid-September. The base sported solid 5 to 2 accumulation (5 up weeks on rising volume to 2 down weeks on rising volume). The breakout was on excellent trade, and now it is coming back in an orderly test of the 10 day on mostly lower volume. Excellent money flow and a relative strength breakout on the breakout move. This is one of the sectors holding up as the market sells, and we are looking for ENDP to make the next strong move higher to step in.
Volume: 506.932K Avg Volume: 875.409K
BUY POINT: $21.75 Volume=1.3M Target=$26.12 Stop=$20.23
POSITION: IUK AD – Jan. $20c (62 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
CYD – China Yuchai Int’l. Ltd. is currently trading at $16.48. The October $15 Calls (CYDJC) are trading at $2.10. That provides a return of about 4% if CYD is above $15 on expiration Friday in October.
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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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