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April 4, 2004
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PREMIUM EDITION
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Issue #111
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| WEEK ON WALL STREET: Week In Review / by Bob Coppo |
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| Our new Week on Wall Street columnist is Bob Coppo. Bob is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com. |
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Friday's Action: Stocks finished sharply higher Friday as traders were encouraged by a payroll report that showed employment last month rising at its fastest pace in nearly four years. Major world markets posted mostly higher results on Friday. London's FTSE closed up 1.24%; Frankfurt's DAX closed up 2.11%, and Paris' CAC 40 closed up 1.91%. Japan's Nikkei closed up 1.13%, Hong Kong's Hang Seng finished up 0.44%, and Sydney's All Ordinaries Index closed down 0.19%. In economic news, Nonfarm Payrolls in March rose by 308,000 jobs, much higher than anticipated, the Unemployment Rate rose to 5.7% from 5.6% and Hourly Earnings rose 0.1%. Volume came in at 1.61 billion shares traded on the NYSE and 2.21 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 1.11, and up volume over down volume by 2.74; Nasdaq advancing issues over declining issues by 2.26, and up volume over down volume by 6.69. Leading sectors were Hardware, +6.09%, Semiconductors, +3.73%, Airlines, +3.59%, and Biotechs, +2.82%. Laggards were Gold/Silver, -0.99% and Gold Bugs, -0.66%. Nasdaq 100 futures closed 36.50 pts higher to settle at 1495, while the S&P's settled up 8.50 pts at 1142.10.
Weekly Recap: The March Employment Report capped what had already been a good week for the market. The March numbers were well ahead of consensus estimates of 120K and delivered a message that all aspects of the economy are strong. Not surprisingly, the stock market and the dollar rallied on the news, while the Treasury market took a beating. The benchmark 10-yr note fell more than 2 full points, bringing its yield up to 4.15%. Homebuilders were ahead 1.2% for the week before the jobs report, but with the sharp backup in interest rates, they got hammered on Friday amid concerns the jump in rates would crimp demand for new homes. Homebuilders weren't alone, as other rate-sensitive sectors, like financials and utilities, also suffered. Employment services were among the standouts for obvious reasons.
Prior to Friday, the Dow, Nasdaq, S&P 500 and Russell 2000 were up 1.6%, 2.8%, 2.2% and 3.9%, respectively. The bullish bias was helped along by some end-of-quarter window dressing by fund managers. Besides the jobs report, the other key events of the week were the OPEC meeting and a reshuffling of the components in the Dow. The former occurred on Wednesday, and as anticipated, OPEC stuck by its decision to cut production by 1 mln barrels per day, effective April 1. Crude futures for May, however, dropped 3.8% for the week to $34.39/bbl as speculators unwound some of their positions. Reports that the Bush administration may suspend rules for some states that mandate cleaner burning gasoline provided some relief.
For the week, the Dow gained +2.5%%, the S&P 500 finished +3.0%% higher, while the Nasdaq rose 5.0%%. The small cap Russell 2000 gained
+5.3%%. Next week will be a shortened trading week, with the market closed Friday ahead of the Easter holiday. On the earnings docket, some of next week's major reports include Alcoa, Genentech, Yahoo, Abbott Labs and General Electric.
Is Gold on its way to $500?: Gold took a hit Friday with the jump in interest rates as a result of the strong jobs report. But the gold price in euros appears to be in the process of completing a bottom that would create a technical target of around 390 euros. The 390 level roughly correspond to the top of a 5-year upward-sloping channel. This action suggests that the gold price in terms of the euro looks bullish as far as the next several months are concerned. The gold price in terms of the Swiss Franc also looks bullish. Gold is correlated more closely to the Swiss Franc than to any other major currency. In Swiss Franc terms, gold recently broke out from a 4-year consolidation pattern and has now created a technical target of around 640.
At current exchange rates, a euro gold price of 390 and a Swiss Franc gold price of 640 correspond to a US Dollar gold price of $480 to $500. Any sizeable rally in the gold price would most likely occur in parallel with strength in the European currencies against to the US Dollar. If the Dollar should weaken further against European currencies, which appears likely, then the $480-$500 becomes a reasonable upside target range for the gold price in Dollar terms.
A Conservative Approach to Long Term Investing: Our investment philosophy has always been to diversify our capital between high risk and more conservative vehicles. We believe conservative investing should be viewed with an eye towards retirement. The ideal investment vehicle would preserve capital while still generating acceptable long term growth. America First Investor has developed just such an investment model. Based on a Nobel prize winning theory of asset allocation and sector rotation, the model has produced solid results over the last two years. In 2002, the AFI model produced gains of 82.3% while the bench mark S&P 500 Index lost 23.4%. In 2003, the model outperformed the S&P again, gaining 43.9% to 26.4%. But just as important, the maximum monthly draw-down was only 5.1%, while the average draw down was less than 3.0%. Compare that to an average monthly gain of 4.0% and an impressive 88.9% win to loss ratio and you get an idea of just how solid this model is.
Since its inception on January 2, 2002 to March 25, 2004 the America First Investor Portfolio gained a solid +188%. During this same time period, a buy-and-hold strategy with the S&P 500 Index lost -5%. On a quarterly basis, the AFI model produced steady equity growth, even during the bear market of 2002.
America First is offering first time subscribers a FREE 30-day Trial. To learn more, click HERE.
The COT Report: The latest Commitments of Traders report from the CFTC shows that Commercial Hedgers bought some 12,600 S&P 500 futures contracts last week to bring their position to net short -12,637 contracts. Large Traders remained net short -35,538 contracts, with the entire offsetting net long position of +48,175 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials bought some 3,100 contracts to bring their net long position to +21,057 contracts. Small Traders were net short -7,623 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money buy some 500 contracts to bring their net long position to +1,462 contracts.
Commercial Hedgers were better buyers in the S&P's last week, but still remain net short. For the intermediate term, their position should be considered a bearish sign.
Sentiment Surveys: The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 46%, while the percentage of bears registered 25%. The bullish ratio (bulls/bulls +bears) came in at 64.8%.
The latest AAII survey showed an increase to 55% bulls, and a decrease to 22% bears. The bullish ratio came in at 71%, while the 4-week moving average remains high at 57%. One thing to note about the AAII survey is that, while membership in this organization is quite large as investor groups go, the number of members that actually participate in the survey is very small. Thus, large fluctuations in survey results from week to week are not uncommon.
The latest Market Vane survey came in at 66%, indicating that the majority of commodity trading advisors (CTA's) remain bullish on the future direction of the S&P's.
The Short Term Outlook; 1-5 Days: We said in Thursday night's column that the odds favored making higher highs on Friday, and that happened. Friday's price action favors making higher highs on Monday, but the Naz has a better chance of closing lower on the day. Friday's price action may have been a little too much too fast. The NASD McClellan Oscillator hit a high of +182, an overbought reading that often precludes a pullback. The NASD Thrust Oscillator gave a sell signal Friday, as did the NYSE Up Volume indicator. Volatility tanked on the rally, with the VXO and VXN dropping 9.3% and 8.8% respectively. In the process, both fired CRV3 sell signals. The VXN gapped lower Friday and closed below its lower bollinger band, while the NDX:VXN Ratio closed above its upper band. That combination is a bearish sign for the NDX over the short term.
From a technical standpoint, the Nasdaq Comp closed above its upper bollinger band and just below resistance formed by the March highs. The 5-day RSI closed over 80% (overbought territory), and it also left an upside gap in the process. Gaps always get filled, sooner or later. How soon this one gets filled should be determined early next week.
SMT's Pivot Point Forecast; 1-2 Weeks: Our Pivot Point forecast is currently on a sell signal. Our next Pivot Point is forecast to occur on or near April 12th.
The 60-mn NDX chart below shows that the StochRSI indicator is in the SELL zone. For Monday, resistance for the S&P's comes in at 1149 and then 1154. Support lies at 1136 and then 1127.50. For the Naz, resistance comes in at 1507 and then 1514. Support lies at 1483 and then 1465.
The Intermediate Term Outlook; 2-6 Weeks: The Risk Aversion Indicator, represented by the NDX:Dow Ratio, has been a good forecaster of the general market trend over the last couple of years. As the chart below shows, the ratio crossed below its 70-day exponential moving average at the end of January, coinciding with the yearly high for the Nasdaq Composite on Jan 26th. The slope of the EMA is still trending down, but with the recent rally in the NDX, the ratio has broken out to the upside. Until the EMA turns upward however, the current action appears to be a counter-trend rally in a generally downward trending market.
Our Market Trend Indicator (MTI) is currently positive and trended higher on Friday.
Housekeeping: Our telephone number has changed. The new number is 303-470-0411
Charts and data appearing in today's column are courtesy of:
StockCharts.com
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Last week's Fresh Picks came through for an average gain per pick of 7.5%.
Our return to energy yielded a solid payoff with DYN, which eclipsed our target price to keep on climbing into Friday, closing the week with a 12% gain. Breaking through overhead resistance early in the week, DYN's gain opens the door to a run even higher.
Our rare foray into the blue-chip world with our longer-term rec on MSFT also was profitable, as the tech leader ended the week with a 3% gain.
Make sure to also have a look at the Track Record page on the site for our 2003 monthly breakdown showing each and every Fresh Pick from the year, along with its price when recommended and where it's trading at today. For specific targets and stops, please see the archives.
Have you traded any of our recommended plays along the way? We'd love to hear from you and how you did. Please send your stories to comments@talkingpoints.com.
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| TECH WATCH: The Internet and the Telecom Transformation / by Jeff Neal, Technical Market Columnist |
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Jeff Neal is a veteran options strategist and trader with over a decade of experience in the trading business. Jeff has had a diversified business career operating a very successful management consulting business with his clients representing some of the largest companies in the world.
He has a B.S. in Computer Science from Indiana University and an MBA in Finance from the University of Indianapolis. Jeff is a writer, mentor, and options strategist for Optionetics (http://www.optionetics.com/) and as head of his own hedge fund is an active options trader in both the equity and futures markets.
Jeff Neal - Staff Writer & Options Strategist - Optionetics.com ~ Your Options Education Site
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With the new high speed Internet access comes a true overhaul in our general phone service. Consider being temporarily located in Mexico City but having a permanent residence in Chicago. The upcoming Internet paradigm will allow you to receive and make phone calls using your Chicago number. That means, for example, anyone trying to get a hold of you in Mexico City need only call your Chicago number. This makes it much easier to communicate with friends, family and associates from just about anywhere in the world.
At the heart of this emerging technology is what is called Voice over Internet Protocol, or VoIP, and it promises to have a major impact on traditional phone communications. It also heralds the beginning of the end of calls made over copper wires and the dominance of traditional telecom companies in this space.
To implement this technology the customer has to be provided with a phone adapter that connects regular fax and phone equipment to the wires from DSL or cable hook-up. Given the inevitability of this new technology, you have a variety of firms jockeying for position to offer the service. These companies are coming primarily from the telephone and cable sector.
Many telecommunications analysts predict that the VoIP technology will be bigger than the telephone itself and promises to have a very profound and lasting effect on the industry. One only needs to look at the telecommunication industry numbers to see that this technology is just in its infancy. With well over 160 million home phones plus over 150 million cellphone users, the market is indeed virtually untapped considering slightly more than 120 thousand subscribers are currently using Internet calling. This very large market potential promises to bring in many more firms to service this customer need.
VoIP produces voice at the other end by transforming the voice or speech into units of digital information and converting back to speech at its destination. Users of this technology report no difference in quality or mechanics than placing a regular phone call.
The companies that provide this service utilize the current phone network to call traditional phones. However, for participants that possess the Internet technology on both sides the legacy phone system can be circumvented completely. Users have the choice of using their current phone numbers or choosing another one.
The result of this choice is the transformations of local numbers and with the technology spreading globally to places like England and Switzerland means you could live in Dallas, Texas yet possess an English or European phone number.
Needles to say the Internet calling buzz has many companies brainstorming on how best to exploit this growing market. Most of the major phone companies already have started offering some kind of Internet calling service for their business customers.
The VoIP technology offers cheaper rates and with none of the burdensome regulations the phone companies have, provides a major problem for companies like Verizon Communications, Qwest Communications, SBC Communications, and Bellsouth Corporation. It is like another attack from a different front given the current heated competition these companies face everyday with the cable companies for broadband subscribers.
Look for early entrepreneurial successes such as Vontage Holdings Corp. out of Edison, NJ, but as the market evolves one can anticipate the major phone and cable companies to address this space quite aggressively. The bottom line is that subscribers should benefit from this fierce competition by reducing their communication service costs. It remains to be seen what impact it will have on the large companies given the apparent lack of pricing power. As with past technological revolutions the best plays may indeed be the smaller unregulated entrepreneurial firms. Stay tuned because the telecommunication sector is about to go through some far reaching changes.
Happy Trading.
Jeff Neal
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
jeff@optionetics.com
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| MARKET TA: Riding the Waves / by Dale Woodson, Technical Market Columnist |
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Dale Woodson is the editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
We encourage our subscribers to visit his site at http://www.woodsonwave.com and please see Dale's complete bio following his column.
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TIMER DIGEST’S (P.O. BOX 1688, Greenwich, CT. 06836/ 203-629-3503)
#9 LONG TERM STOCK MARKET TIMER FOR THE YEAR 2003.
#4 GOLD MARKET TIMER FOR THE YEAR 2003.
#8 STOCK MARKET TIMER FOR THE FIVE-YEAR PERIOD OF 12/31/98- 12/31/03.
#6 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/29/00- 12/31/03.
#4 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
#5 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/98- 12/31/01.
#4 STOCK MARKET TIMER FOR THE YEAR 2001.
#7 STOCK MARKET TIMER FOR THE YEAR 2000.
#5 BOND MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
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DOW
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WAVE DEGREE
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COUNT
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FROM
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DIRECTION
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TARGET
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GRAND
SUPERCYCLE
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THREE
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1784
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UP
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Year 2012
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SUPERCYCLE
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(V)
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1932 or 1942
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UP
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Year 2012*
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CYCLE
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V
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12/6/74 or 8/12/82
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UP
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Year 2012
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PRIMARY
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4
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8/24/99
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DOWN
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.618 = 5803
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INTERMEDIATE
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(A)
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8/24/99
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DOWN
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Complete @ 8062 on 9/21/01
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(B)
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9/21/01
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UP
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Complete @ 10,673 on 3/19/02
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(C)
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3/19/02
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DOWN
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Complete @ 7197 on 10/10/02
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(D)
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10/10/02
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UP
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Topping, high 10,753 on 2/19/04
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(E)
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12/31/03
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DOWN
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.500 = 6865/ .618 = 5803
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PRIMARY
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5
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NOT YET
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UP
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Year 2012
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* "…it should terminate about the year 2012"
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* "...not expected to terminate until about 2012"
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R. N. Elliott, Educational Bulletin O
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R.N. Elliott, Interpretive Letter No. 17
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October 26, 1942.
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August 25, 1941.
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Primary degree wave 2 down (1987 - 1990) running flat correction.
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Primary degree wave 3 up (1990 - 1999)
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Primary degree wave 4 down (8/24/99 -?)
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“…wave (E) down had just begun…the first wave down in that decline is still unfolding… A Fibonacci 34 days from the top gives us a target date of 3/24/04 while a Fibonacci 55 days marks 4/14/04 for a possible target.”
The Fibonacci gods have smiled upon us once again as the Dow appears to have completed the first wave down of this major decline at the 3/24/04 low just above the 10,000 mark. A Fibonacci .382 retracement of this decline gives us a target price of 10,300 for this upward correction, while -.618-retracement points toward 10,408. Keep in mind this is a bear market and surprises should be to the downside.
WAR AND THE STOCK MARKET – ONE YEAR LATER
It has been exactly one full year since the war in Iraq began. How many times have you heard phrases like “the market fell on fears of war” or “the main direction of the market is up and it will continue to rise unless some shock like war occurs”? Once again, the experts were wrong. We all know the only things that actually move the market are human emotions like hope greed and fear. An actual war more often times marks a low point, despite the popular belief that it can actually signal the start a decline. As the chart above so perfectly illustrates, if anything, war moves the market up, not down. We talked about this factor a year ago, as it became obvious that war in Iraq was imminent. From the March 7, 2003 report from Woodson Wave.
“The direction of the stock market is not a result of war. In fact, the cause and effect is just the opposite. War is a product of the stock market. Just as peace reigns at the top of bull markets, wars tend to occur at the bottom of bear markets, usually near the bottoms of c waves…”
It is safe to say that the war in Iraq started much closer to a bottom than to a top. It is also safe to say from the chart above that the direction of the stock market was definitely up, not down after the war began. And lastly, as the chart below illustrates, wars do tend to occur near the bottom of c waves. Instead of looking toward events and outside noise for market turns, at Woodson Wave we focus on a more reliable source – the Fibonacci sequence. And, once again, as the spiral called for a top, the market has accommodated.
Sure, we all know that the market moved up from the beginning of the war exactly one year ago. We also know that the always-reliable Fibonacci weekly spiral called the top of wave (D) to within nine days. Since that top, we have seen some intense selling pressure in the markets. This of course, is the last wave down in the now five-year old bear market. The good news is that it could end this year. The bad news is the worst is yet to come. And if you think about, the good news is actually bad news because if the bear market does end this year (as we expect) that means the decline will most surely be a devastating one.
Wave (E) down is the worst. It’s the wave that will bring everyone to his or her knees. At the bottom, it should definitely fall below the low of wave (C) at 7197. Our long-standing Fibonacci target for this decline is 5803. And if we connect the lows of wave (A) and (C) and allow for a “thrust” below that trend line, which is common in triangles, then the target is even lower still.
But for now let’s focus on the near term. In the near term, wave (E) down has just begun. It should shape up to be a five-wave decline. The first wave down in that decline is still unfolding. It is difficult to label the first through third waves of this decline, as there are several possibilities. However, the most recent price action has taken on the definite shape of a triangle. And triangles always appear as fourth waves. We can expect one more decline in wave five to develop in the next few days to complete the initial decline in wave (E). A fibonacci 34 days from the top gives us a target date of 3/24/04 while a fibonacci 55 days marks 4/14/04 for a possible target.
We have viewed the rise from the lows of last August as a corrective wave. The most recent top occurred last June. Our stance from the February 7, 2004 report:
“Recall that in the big picture, bonds moved lower in a steep decline from last June to the August lows… while wave two up can certainly move higher and maintain the wave count…”
Move higher is certainly what the market has done. In fact this move higher is about to challenge the entire wave count. Remember second waves can retrace up to 100% of the preceding first wave. The move up in the bond market frankly surprised us and we moved to a neutral stance, expecting this rise to terminate soon. So far, it has yet to do so. At this point, the retracement has moved well past the .382 and .618 fibonacci levels. Not far away is the high of last June. Once that high is eclipsed, we will need to rethink the count.
The chart below illustrates the sharp decline from the highs of last June. The move up from the lows of last August hardly resembles a motive wave, as overlaps are aplenty. However, it would take a move above the highs of last June to eliminate our count. We maintain a neutral position as we wait for the wave pattern to unfold.
We have maintained a short position in the gold market against the early January high. We count the current decline as a fourth wave. This decline, as it is a fourth wave, should not violate the price territory of the first wave. In other words, this decline should hold above the $380 level. A Fibonacci .382 retracement gives us a target of $398.57 for the decline while a Fibonacci .618 pullback points toward $377.73 in the April contract. To date, the low for this move is $388.20, right between our two targets. This brings us to another common Fibonacci target level that we would like to mention – the .500 retracement. A fifty per cent retracement gives us a target price of $388.15, within a mere five cents of the actual low. Combine this with the fact that the three-wave pattern appears complete at that low, and we can label the fourth wave as complete. The first indication that our wave count is correct will be a move above the third wave high of $432.30. Woodson Wave moves to a long position in the gold market.
Positions for rating services:
The “positions for rating services” below are assumed positions taken for rating services such as Timer Digest to rate our newsletter and rank us against other market timing newsletters. While the Elliott wave patterns and fibonacci ratios have implications regarding the overall direction and turning points in the markets, a reader is not justified
in inferring that any trading advice is given. Woodson Wave Report, LLC does not offer specific trading recommendations.
Long-term counts are found on weekly and/or monthly charts and generally cover a time period of years to decades.
Intermediate-term counts are found on daily and/or weekly charts and generally cover a time period of weeks to years.
Short-term counts are found on daily and/or hourly charts and generally cover a time period of days to hours.
Dow:
Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
NASDAQ:
Long term: Remain short expecting wave (E) down to new lows
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
S&P 500:
Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
Bonds: Remain neutral.
Gold: Move to a long position.
Dale Woodson is editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
Timer Digest rates Woodson Wave Report as the #5 stock market timer and #5 bond market timer for the three-year period from 12/31/98 through 12/31/2001. Woodson broke into the top ten rated stock market timers by placing #7 in the year 2000. He followed that up with a #4 rating for the year in 2001. These ratings were achieved during a period when market timing was extremely difficult as the bull market was turning over to bear and most were caught off guard.
While there is no feeling like catching a turn on the dime, Dale especially enjoys writing the newsletter. He is most proud of the numerous correspondences complimenting him on his writing abilities. He has a real passion for his work. He knows that the market will move in certain Elliott wave patterns and fibonacci sequences. His challenge is to identify those patterns and sequences in advance, while there is still time to profit from them.
Woodson Wave Report offers monthly, quarterly and yearly subscriptions. Newsletters are delivered via email and URL links and are published on the first Friday of every month. Special interim reports are released as market conditions warrant and targets are achieved. All new annual subscribers receive two months free.
You can subscribe to Woodson Wave Report via the secure online order form link below: http://www.woodsonwave.com/orderform.html
Disclaimer: The Woodson Wave Report combines Elliott Wave analysis and Fibonacci ratios to identify turning point targets in the Dow, NASDAQ, S&P 500 cash, bond and gold markets with respect to both price and time. The monthly newsletter is generally released on the first Friday of the month and special interim reports are issued as market conditions warrant and as targets are achieved. The information contained in the report is prepared solely for informational purposes and should not be taken as an offer to buy or sell any investment vehicle. Past performance is no guarantee of future results. Woodson Wave Report is waived of any liabilities.
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| GOLD RUSH: Golden Uncertainty / by John Dowdee, Ph.D., Gold Editor |
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Golden Uncertainty
Last week gold and gold stocks tried to break above resistance and both were able to eek out new highs by a few tics. However on Friday it was announced that over 300,000 new jobs were created in March, which far exceeded expectations. This led to an explosion in equities, a collapse of the bond market, and an upward thrust by the dollar. The price of bullion plummeted. Now, rather than following through with another leg of the bull market, both gold and gold stocks have left us with a lot of uncertainty. Here’s what happened.
The yellow metal opened the week at $423 and sunk almost immediately to $417.70. The bull then gained strength and romped to a high of $433, surpassing the high of $431.30 made in January. On Friday, gold sunk out of the gate to $418.50 but then recovered to close at $422.50. On the positive side, bullion is still above the 50 day moving average and both the 50 day and 200 day averages are increasing. However, the collapse on Friday leaves a double top around the $431 to $433 area. Until the gold prices rises above this resistance, we will remain neutral. If gold falls below the psychologically important $400 level, this would be bad news for the bulls and could signal a long hard summer of lower prices.
Gold stocks, as measured by the XAU index, exhibited similar patterns. The XAU opened the week at 102.97, fell to a low of 101.68, and then sprinted to 106.36, taking out the top made last February (105.24). It should be noted that the XAU, unlike gold, did not make a new multi-month high (around the 114 level). This divergence is potentially bearish since stocks typically lead bullion. On Friday, the XAU suffered the same fate as gold, gapping lower to 102.24 before recovering to close the week at 104.30. The late recovery on Friday was a hopeful sign. However, like the metal, stocks have also left a double top. To resume the bull market with confidence, the XAU must close above resistance at 114. A drop below 100 would not bode well.
Last week I stated that I had begun to accumulate stocks and discussed that Barrick (ABX) was one of my favorite “blue chip” miners. ABX showed excellent relative strength last week. It opened the week at $23.11 and closed at $24.10, about a 4% gain. It was even able to buck the tide on Friday and squeeze out a small gain for the day. The other stock we mentioned as a momentum play was Glamis (GLG). This selection also did well, breaking above resistance and gaining for the week.
In summary, even in the face of uncertainty, I am continuing to climb the “wall of worry” and I still recommend accumulating stocks. But caution is the watchword. I am keeping my finger on the trigger and will not hesitate to sell if support is breached.
Remember that gold stocks are volatile and are not for everyone. You should never depend on anyone else’s opinion. You should do your own due diligence and evaluate your risk tolerance before making decisions to buy (or sell) any stocks or funds. Best of luck!
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| MR. SWING'S PLACE: Weekly Swing Trading Ideas / by Larry Swing |
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Each week, Mr. Swing analyzes his database of more than 9,200 securities to scan for swing trading opportunities. But be warned: Do not expect a fast way to make money. Mr. Swing is going to show you how you can accumulate small gains weekly, ultimately making money through a disciplined, low-risk trading approach. While he realizes that this short-term swingtrading approach is not for everyone, he hopes that the information given at MrSWING.com will be useful to you in the near future...
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These are your Swing Trading Opportunities for this week:
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Talking Points member - Over the nearly two years that we have carried the Mr. Swing's Place column, Larry's picks have consistently put in great performances. Don't miss out on the full swing-trading content available at Mr. Swing.com. Take advantage of some of the great programs available by clicking here.
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Long Swings:
bullish
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SWINGS
^ click here
HMA
MAY
NPSP
HDI
SPF
MAV20 >=500000 AND CLOSE>12 AND FORCE3<= 0 AND FORCE13>=0 AND ADX10>30 AND HIGH < HIGH1 and HIGH1 < HIGH2 AND CLOSE > SMAC10 and CLOSE > SMAC20
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Short Swings:
bearish
what
is
short
selling?
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SWINGS
^ click here
DF
MAV20 >=500000 AND CLOSE>12 AND FORCE3>=0 AND FORCE13<=0 AND ADX10>30 AND LOW >LOW1 and LOW1 > LOW2 AND CLOSE < SMAC10 and CLOSE < SMAC20 |
WINDOW
^ click here
GG
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5 |
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WINDOW
^ click here
DIS
LAVA
CHU
VRC
ADRX
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5 |
1-2-3-4
^ click here
MAY
APPX
FAST
NKE
MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)>( MDI10+ MDI20) AND LOW< LOW1 and LOW1< LOW2 AND HIGH< HIGH1 and HIGH1< HIGH2 |
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1-2-3-4
^ click here
BMY
ABI
MYOG
AGN
IBC
MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)<( MDI10+ MDI20) AND LOW> LOW1 and LOW1> LOW2 AND HIGH> HIGH1 and HIGH1> HIGH2
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CROSS
^ click here
HTCH
GG
AEM
HDI
K
MAV20 >= 500000 AND CLOSE >12 AND SMAC5 > SMAC15 AND CLOSE < SMAC5 AND CLOSE > SMAC15 AND HIGH<HIGH1 AND CLOSE > OPEN |
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CROSS
^ click here
BMY
UTSI
DISH
ALVR
VRC
MAV20 >=500000 AND CLOSE>12 AND SMAC5< SMAC15 AND CLOSE> SMAC5 AND CLOSE < SMAC15 and LOW > LOW1 and CLOSE < OPEN
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REVIVAL
^ click here
BMET
AEM
SSRI
ARXX
MAV20 >=500000 AND CLOSE>12 AND (CLOSE1 - LOW1) <= 0.1 * ( HIGH1- LOW1) AND ( CLOSE - LOW) >= 0.95* ( HIGH- LOW) AND CLOSE > SMAC15 AND CLOSE > SMAC50 |
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REVIVAL
^ click here
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MAV20 >=500000 AND CLOSE>12 AND( CLOSE1 - LOW1) >= 0.9 * ( HIGH1- LOW1) AND ( CLOSE - LOW) <= 0.1 * ( HIGH- LOW) AND CLOSE< SMAC15 AND CLOSE < SMAC50 |
REVERSE
^ click here
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MAV20 >=500000 AND CLOSE>12 AND HIGH2 > HIGH1 AND HIGH1 > HIGH AND LOW2 > LOW1 AND LOW1 > LOW AND CLOSE2 <= OPEN2 AND CLOSE1 <= OPEN1 AND CLOSE >= OPEN AND VOLUME>1.5* MAV20 |
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REVERSE
^ click here
SIMG
UNM
IGL
RDN
PMI
MAV20 >=500000 AND CLOSE>12 AND HIGH2 < HIGH1 AND HIGH1 < HIGH AND LOW2 < LOW1 AND LOW1 < LOW AND CLOSE2 >= OPEN2 AND CLOSE1 >= OPEN1 AND CLOSE <= OPEN AND VOLUME>1.5* MAV20 |
TRIANGLE
^ click here
CNB
KMG
INVN
MAV20 >=500000 AND CLOSE>12 AND CLOSE> SMAC20 AND HIGH2 > HIGH1 AND HIGH2 > HIGH AND LOW2 < LOW1 AND LOW2 < LOW AND HIGH1 > HIGH AND LOW1 < LOW |
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TRIANGLE
^ click here
WYNN
MAV20 >=500000 AND CLOSE>12 AND CLOSE < SMAC20 AND HIGH2 > HIGH1 AND HIGH2 > HIGH AND LOW2 < LOW1 AND LOW2 < LOW AND HIGH1 > HIGH AND LOW1 < LOW |
BREAKOUTS
^ click here
TIBX
RIMM
VISG
PAYX
WIND
MAV20 >=200000 AND CLOSE>7 AND HIGH>=MAX40 and HIGH1 <> MAX40_1 AND VOLUME>1.5 * MAV20 AND CLOSE > OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) >=0.75*( HIGH - LOW ) |
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BREAKDOWNS
^ click here
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MAV20 >=200000 AND CLOSE>7 AND LOW<=MIN40 AND LOW1<> MIN40_1 and VOLUME>2*MAV20 AND CLOSE < OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) <=0.25*( HIGH - LOW) |
REVERSALS
^ click here
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MAV20 >=200000 AND CLOSE>12 AND LOW <= MIN40_1 AND VOLUME>2* MAV20 AND CLOSE > OPEN |
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REVERSALS
^ click here
XMSR
SCHN
AG
ASF
MAV20 >=200000 AND CLOSE>12 AND HIGH >= MAX40_1 AND VOLUME>2* MAV20 AND CLOSE < OPEN |
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REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are explained in our new section called: SWINGLAB...
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REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are e explained in our new section called: SWINGLAB...
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GGP (Long) - Chart of the Week
Analysis:
The Short-Term Technical Perspective:
GGP recently broke out of a bull flag. The flag formed following a strong trend with rising volume that petered off well during the consolidation phase of the flag. This is a very good signal for the stock, and is confirmed by the presence of bull flags in many other stocks within the Real Estate sector.
SwingTracker
MrSwings Real-Time Stock Charts RISK-FREE TRIAL featuring one-click access to Larry Swing's profit-generating indicators - Force Index, EquiVolume, True Strength Index
The Long-Term Technical Perspective:
GGP has formed dozens of successful bull flags over the past several years, as it has continued up on a steady trend. This trend appears to be intact. As such, the long-term view also looks bullish.
SwingTracker
MrSwings Real-Time Stock Charts RISK-FREE TRIAL featuring one-click access to Larry Swing's profit-generating indicators - Force Index, EquiVolume, True Strength Index
Fundamental Analysis:
The stock has a relatively low P/EG ratio of 1.41 (in comparison to 2.21 for the industry), earnings growth is accelerating, analyst estimates are trending upwards, and the company has very manageable debt levels. We believe the company to be undervalued, especially in light of nearly ten years of continuous profits from the company.
Key Levels:
Buy: Market
Stop Loss: 34.47, just below the recent downside inversion point (the high of the flag before the breakout).
Target: Our target places the company more in line with competitive firms. Specifically, we are 44.97. This level is slightly below a P/EG ratio of 1.8, given current earnings.
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>TRADE in the DIRECTION OF THE MARKET<
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| Mr.Swing DISCLAIMER: Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MRSWING.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the strategies described above. © Copyright 2002, MrSwing.com. All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF MRSWING.COM IS A VIOLATION OF THE COPYRIGHT LAW. |
| THE TRADER'S MINDSET: The Trader Within / by Bennett McDowell, Columnist |
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Founder and President of TradersCoach.com, Bennett started his financial career on Wall Street with the firm J.J. Kenny Co. in 1984 after serving as an officer in the U.S. Navy. Bennett also served as a Retirement Plan Specialist with the Equitable in New York and has investment real estate experience as well. In addition, his 1979 Economics BA degree from Syracuse University in upstate New York gave him a foundation on which he was able to build a solid background in Finance.
Bennett has extensive experience in trading the financial markets and is currently an active trader including day trading the financial futures markets. He also coaches many traders through his company TradersCoach.com.
Considered an expert in technical analysis and complex computer trading platforms and applications, Bennett has educated and helped traders worldwide improve their trading. Bennett is well known for helping traders overcome sabotaging psychological issues that keep them from reaching their full potential. In addition to his educational and coaching abilities, Bennett, a registered securities broker, manages money and trades for clients throughout the United States.
Bennett released his home study course Applied Reality Trading, also known as "ART" in January 2002. His cutting-edge course teaches traders his state of the art Pyramid Trading Points, Money management, and developing the "Trader's Mindset." Bennett is also known for developing The Trader's Assistant - a premier trade-posting record-keeping system for traders, as well as writing and publishing The Survival Guide For Traders, a book on how to set up and organize your trading business.
Bennett provides private consultation/coaching services to many traders throughout the world by telephone, video conferencing, and in person. Working with Bennett, traders spend time focusing on trading system development, trading psychology, and disciplined money management.
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The Case For "Opinion-Less" Trading
It seems the more traders try to predict, the more it can’t be done. Just like we cannot predict future life events, we cannot predict future market events. The fantasy or “holy grail” that many traders believe is that we can predict the future of price activity. The reality is that we just cannot! Hopefully, I’m not bursting any bubbles out there, but better to hear it now than lose a ton of money later!
The greatest traders are those who realize this concept, accept it, believe it, and therefore trade based on the current reality in the market vs. the fantasy or market opinions, and always use stops and risk control. Great traders grasp the concept of risk and probabilities in trading. They also grasp the concept of money management, stop-loss setting, and simplification. In addition they understand that trading is both a science and an art!
If trading were just science, you could buy a mechanical trading system, start it, walk away, and come back and be rich. And if that system did exist, believe me, it would be so expensive that you and I could not afford to buy it, in fact it would probably be kept so secret that we would not know it exists! Now, don’t get me wrong, there are some good technical science tools on the market today, but remember, they are tools only, not “holy grails.”
When I began my trading career, I used many trading indicators. My trading indicators indeed gave me indications that prices or trends may change, but they really did very little to help me consistently time those changes accurately enough to make money. In fact, if trading indicators and high powered computers where the answer alone, then why do 90% of the current traders loose money consistently using these indicators and computers? And isn’t it interesting that this is the approximately the same percentage of losing traders before computers even existed!
Let’s take a few examples that may help illustrate what I mean:
Example One: Let’s say your trading and bullish divergence just occurred in an MACD oscillator you are using while prices are currently in a down trend. Right away you the trader will now be forming an opinion in your mind that the market is going to reverse and start a new trend upward. Thus you now have an opinion in your mind that prices should change from its current downtrend to an uptrend. So, you look for a reason to go long, an entry signal. Well one comes along and you take it. You think to yourself that you would not have normally taken that signal if you did not see bullish divergence but with bullish divergence you feel you should. Well, prices continue downward even lower and the bullish divergence remains bullish so you stay with your long position. Can’t go much lower you say to yourself. Well it does go lower and now you’re worried but you do not want to sell and take the now large loss, so you hold on. After all, the MACD divergence is still bullish but not as much as before. Well soon the divergence turns into no divergence and instead the trend down becomes apparent and you now must sell out. You now feel depressed, frustrated, and let down by your MACD oscillator! In fact if the oscillator was not even there you would never had been tricked into taking the trade to begin with!
Example Two: You get a trading signal to go long but this time your stochastic oscillator indicates that prices are way overbought already, so you do not take the long position. The so called overbought stochastic oscillator formed an opinion in your mind to not take the trade. Now you sit there and watch a great uptrend happen right before your eyes and the stochastic oscillator remains overbought during the entire 10 point uptrend! Had you never looked at the stochastic oscillator, you would not have had an opinion, and would have gone long.
Example Three: You see bearish divergence on the MACD oscillator so you form an opinion that the uptrend is ending and now you look to get out of your long position right away. So you use a trailing stop and exit the market. Only to find prices reverse and go higher, the MACD oscillator turn bullish, and you are left scratching your head.
I could go on and on but I think you get the idea. And that idea is that oscillators form opinions and opinions are not always in the best interest of the successful trader. You as a trader want to be like for example the “tail on a dog” which follows the dog everywhere the dog goes without knowing where the dog is going. All “un-grounded” market assessments form opinions and this includes Elliott Wave theory, and any and all forecasting methods. It is my experience that it is better to trade the current realities of the market you are trading then try to forecast market direction. Instead, learn to listen to what the market is actually saying to you, the realities of the current moment.
When you trade you want to create an environment without opinions! And furthermore that means it’s best to avoid reading financial newspapers, watching financial T.V., or listening to financial news in any format while trading.
News forms opinions, trading oscillators form opinions; analysis forms opinions, analysts form opinions, etc., etc. As traders, we really do not know how the markets will react to news and financial recommendations. If we think we do, then we are forming an opinion about the news! How many times have companies come out with great earnings and sold off right after the announcement. And when it does the news commentator comes out and says well the stock ran up already in expectation of the good numbers and then sold off. And if the stock continued upward, the news commentator would say, good earnings drove the market upward, etc., etc. They operate on 20/20 hindsight. We as traders do not have this luxury. The less opinions you have, the better trader you will be! And it is that simple!!!!
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| CONTRARIAN CORNER / by Jeff Weber, Columnist |
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George Bush's "Leave No Child Behind" Program
The SEC's "Leave Investors Way Behind" Program
Probably both are working well most of the time. Since William Donaldson took over as Chairman of the SEC, have investors or Big Boys benefited more? One day he sat around with a dozen of his top SECers and decided to figure out what the SEC was doing well & what need improvement (for who?) Realize that legends like John Kennedy's father and William O. Douglas have chaired the SEC. Donaldson comes more from the Kennedy side of the house ( the Big Boy side) kind of like Willie Sutton regulating banks - he knows a lot about them. So he starts out with me as someone who never met a small investor and wouldn't care much about us. But in America, a person is presumed innocent until proven guilty so I will look at his track record and see if he is really trying to help small investors.
Immediately what comes to me is "The Dirty Dozen", a great movie. Now remember in the movie, the dozen were all hardened criminals that Major Lee Marvin converted into good soldiers for a dangerous mission that succeeded. Let's see if the SEC dirty dozen has been on a mission to reform Big Boy Abusers. Strike one again; the SEC dozen, why is Elliot Spritzer so busy reforming Big Boys by himself - why isn't the SEC doing what Elliot is doing?
Well, what has the SEC been doing since Chairman Donaldson arrived? Remember Donaldson didn't have much to succeed - remember the disaster with Harvey Pitt?
Well, unbiased critics say they are surprised themselves by Donalson becoming a quiet crusader for reform and an able manager who has greatly restored morale after the Harvey debacle. But he only has momentum - a Don Quitote manager -; he's tilting at the Big boy windmills but none have fallen yet. There has been quite a pattern of corruption, insider trading, companies cooking the books. I don't think individual investors are viewing Donaldson as their Savior yet from the Big Boys. Can Chairman Donaldson keep reform a hot issue with Congress and the other parties needed or will the lobbyists defeat this quiet crusader and water any reforms down so that it's basically business as usual. Time will tell. Think business wants any serious reforms? Of course not and with their billions and elections coming up in November; think Congress, the president, will support tough reforms and dry up the campaign coffers? You figure it out. Business is still grousing about 2002's Sarbanes-Oxley law and implementation has been pushed back. You judge this statement for yourself: Chairman Donaldson says no pressure from the White House to postpone or lessen reforms. But what happens if the economy goes south before the election - remember what cost George W.'s dad the election? - No, it wasn't winning the Gulf War! If things in Iraq are still going bad for the U.S.; think George W. wants to do anything that hurts the economy? - I don't think so!
Even the Big 5 Commissioners don't see eye to eye. Many votes favoring small investors were only won by a 3-2 vote. And pat Donaldson on the back. He has been siding with the two Democratic Commissions - Harvey Goldschmid and Roel Campos, constantly favoring reform. The two Republican Commissioners constantly vote to favor the Big Boys by advocating "hands-off" let the Big Boys police themselves - but even Police Departments have Internal Affairs Units - big brokers, mutual fund companies don't!
And maybe the reason Chairman Donaldson is even doing anything is because the New York Attorney General, Eliot Spitzer, is making him look bad because Eliot actually does things that benefit small investors like getting mutual fund companies to lower expenses - I haven't heard of the SEC getting any fees lowered. And another reason he can appear bold is because rumors say he won't stay on if Bush wins a second term. He is 72.
A plus apparently is the SEC's planned hiring of hundreds of new lawyers and investigators. Donaldson did get President Bush to raise the SEC's budget about 12% to cover the salaries. Another plus is that Chairman Donaldson forced the NYSE to disclosure Grasso's compensation package of around $180 million. Congress gives him good marks for supporting good corporate practices. But there are thorns when you find roses - some pension funds are angry he hasn't imposed outside regulation over the NYSE. And Spitzer has criticized him for refusing to make mutual fund companies cut their management fees which are large as you learned in my article last week.
And don't tee off the Big Boys too much - when Donaldson suggested shareholders should have other options besides selling their shares or launching a proxy fight if they don't like what the company is doing; The Business Roundtable, which includes some of President Bush's biggest backers (contributors) is very against that change.
But the Big Boys come up with more small investor abuses all the time and the SEC is hard pressed - like the US Army I work for - to have enough troops for all the battles - maybe if we freed some investigators from drug task forces... An example of getting around the rules is at NASDAQ where they cleverly price stocks in fractions of a penny (like gas pumps) and this creates havoc on orderly trading and allows sneaky trading to go on. Remember, like the fire department, you can only go to the fire when somebody calls it in.
Thank you ladies and gentleman of the small investors' jury. Chairman Donaldson's fate lies in your hands - do you find him guilty or not guilty of failing to protect small investors?
Here are three stocks I like this month and one is even look good for margining:
Amazon.com - (Nasdaq: AMZN, $46.09)
52 week: High - $61.15 - Low $24.13
AMZN down a third from the high and one of the best in an evergrowing field of successful Internet comapnies that make profits.
Intel - (Nasdaq: INTC, $28.12)
52 week: High - $34.60 - Low $16.56
INTC very strong in recent Business Week showing their plan for the future and it looked really good- down a little in price also.
Microsoft - (Nasdaq: MSFT, $25.85)
52 week: High - $30.00 - Low $23.60
MSFT a repeater - stock very low - bad news of European fine figured in the stock - they're here to stay and great long-term play. Microsoft can adjust to Europe and still keep growing - probably secretly working on joint Linux/Windows operating system right now for the future.
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| INSIDE TRACK: Weekly Insider Report / By Jeff Williams |
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| Jeff Williams is a partner with http://www.insiderreview.com For the past seven years Jeff has done extensive investment research as a member of an institutional investment team. His background consists of a degree in Finance from the University of South Florida with a minor in Economics. Jeff's everyday activities as an insider stock analyst consist of analyzing data available through a multiple of sources as it applies to all publicly traded companies. With this information he can then make short-term and long-term evaluations on a company’s present and future performance based on insider buying patterns. Each month Jeff will share with you his thoughts on stocks he believes to display the most interesting insider buying patterns. |
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Interesting Buy Patterns
Open market insider trading activity for TGT 12/08/03 through 03/17/04
Target Corporation
Target Corporation is a general merchandise retailer in the United States comprised of three operating segments: Target, Mervyn's and Marshall Field's. Target is an upscale discount chain that aims to provide quality merchandise at attractive prices in clean, spacious and guest-friendly stores. As of February 1, 2003 (fiscal year end 2002), there were 1,147 Target stores operating in 48 states. Mervyn's is a promotional, middle market, neighborhood department store with 264 operating stores as of February 1, 2003. Marshall Field's is a traditional department store chain operating 64 stores in eight states as of February 1, 2003. The Company also offers credit to qualified guests in each of its business segments. These credit card programs strategically support Target's core retail operations and are an integral component of each business segment. In addition to its proprietary credit card programs, Target began a national rollout of the Target Visa credit card during 2001.
William W. George is the former Chairman of the Board and Chief Executive Officer of Medtronic, Inc., a therapeutic medical technology company. He joined Medtronic in 1989 as President and Chief Operating Officer. He was elected Chief Executive Officer in 1991 and Chairman of the Board in 1996. He retired from his position as Chief Executive Officer in April 2001 and as Chairman of the Board in April 2002. He is a director of The Goldman Sachs Group, Inc. and Novartis AG. He has been a director with TGT since 1993.
Impressive to see a director that has been with the company since 1993 buying so much stock. It is also noteworthy that this is by far the largest purchase that George has made. His previous largest purchase being 5,000 shares at $27 on 02/21/03. That trade worked out well. We suspect that George is once again buying because he sees solid business conditions going forward and a higher stock price in the coming months.
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Do you have comments, thoughts or opinions on Talking Points that you would like to share? Email them to letters@talking-points.com.
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Weekly Stock Picks From Bob Coppo - New Feature!
Top Stock PickS for Monday, Apr 05, 2004:
PBCP
Good Trading!
Bob Coppo is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com.
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1. QLGC (QLogic Corporation, Semiconductors) $32.05 - Buy. We start off the week with a quality tech name that got hammered to a new 52-week low during last week's market rally. QLogic Corporation designs and develops storage networking infrastructure components sold to original equipment manufacturers (OEMs), resellers and system integrators. The Company's products include the SANblade host bus adapters (HBAs), SANbox Fibre Channel Switches and SANsurfer Management Suite HBA and Switch management software. QLogic's Fibre Channel HBAs support small computer systems interface (SCSI) protocol, Internet protocol (IP), virtual interface (VI) and fiber connection (FICON) protocol. In addition, QLogic designs and supplies controller chips used in hard drives and tape drives. The selloff came in the form of a huge gap down at the open on Wednesday, when the stock closed the day off more than 22% on huge volume. The drop was inspired by a reduced earnings outlook warning announced by QLGC, which ended March as the second-worst performing S&P 500 stock, narrowly edged out of the dubious honor by Sun Micro. The storage-networking company's lower fourth-quarter outlook was blamed on weaker than expected demand and specifically projected fourth-quarter earnings of $0.36 per share on $128 million in revenue, while earlier guidance had called for earnings of $0.36 to $0.39 per share on revenue of between $138 million and $141 million. The fall came in a week that saw the broader markets advance impressively, perhaps too impressively. We think the buying last week may result in a sideways or slightly downward trend this coming week, and so are looking exclusively at stocks that didn't participate in last week's gains. As QLGC sold off, the stock moved into deeply oversold territory, and, we believe, also is now undervalued with a forward price-to-earnings ratio of an attractive 20.28. A number of other fundamentals add fuel to our rec here, including strong management numbers of a 16% return on equity and 15% return on assets to go along with a 25% profit margin and 37% operating margin. The selling continued on Thursday and the better part of Friday, but turned around toward the close as selling volume declined and bottom feeders moved in, driving the stock to close the day in the green by almost 2%. We like the chances of a bounce here, set up by the big volume gap down on typical Street overreaction to the warning and analyst downgrades that followed. We'd look to use Friday's 52-week low water mark as the downside support stop trigger, with an initial upside target of Wednesday's high of $34.90. A move above that level would open the door to a filling of the gap, landing the stock somewhere short of $40. Short-term price target: $34.901 (9% gain) Stop loss trigger: $31.00 (3% loss)
2. TSIC (Tropical Sportswear International Corporation, Apparel, accessories) $1.08 - Buy. Our first pure spec play in a while comes in the form of clothing maker TSIC. Tropical Sportswear International Corporation is engaged in the marketing, design, manufacture and distribution of branded and retailer private branded apparel products that it sells to retailers in all levels and channels of distribution. The Company produces core lines of casual and dress-casual pants, shorts, denim jeans and woven and knit shirts for men, boys and women. The company is trying to get its house in order by implementing a number of strategic moves, as announced in March. CEO Michael Kagan said that: "During the first quarter, the Company set certain plans in motion to further reduce overhead. A reduction in personnel from November to January is expected to lower employee-related costs by approximately $6.4 million per annum. The full effect of this reduction should occur during the third quarter of this fiscal year. In addition, the Company has decided to transition its Tampa, Florida cutting operations to contractors in the Dominican Republic and Honduras. The phase out of the Tampa, Florida cutting operations is expected to be completed during March 2004." The stock is dragging bottom on extremely light volume after trading off since December. What caught our eye here was the purchase of 80,000 shares by TSIC president Christopher Munday on March 4, the first insider activity since Aug. 03. The stochastic and RSI both point to this one as being very oversold, and due for a bounce. The fundamentals are marred by a huge debt load, but otherwise the stock is now trading below book and at a ridiculous price-to-sales ratio. With the amount of debt carried, however, it's tough to endorse as anything other that a trading play, but the upside potential looks attractive. With a new 52-week low in place, you have to keep in mind that there is absolutely nothing in the way of support here, so keep stops tight and consider waiting for entry on a reversal. Keep a close eye on volume and level II activity for buy orders coming in. We can't imagine it could go much lower here, but the market is still at its core a gamble by nature. There's only 8 million shares in the float, and roughly 20% were short as of March 8, so any turn could be quick and explosive. This is, once again, a trading play and more than likely not a stock to fall in love with for the long term until the fundamentals improve, so keep your target realistic. Our initial target here is the 13-day MA of $1.23 with a break above opening up the secondary target of the 50-day MA, $1.43. If purchased at current levels, we'd look to use the $1.00 mark as a stop. Short-term price target: $1.23 (14% gain) Stop loss trigger (if bought at current price): $1.00 (7% loss)
As always, do your own research before buying or selling any security. Our recommendations are for informational purposes only and are only our opinions. Make sure to read our Disclaimer
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Online issues can be found at
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and click on the "Past Issues" menu item.
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1. We are not brokers, investment advisors, or securities dealers. Our newsletter is provided as our personal opinions and are for informational purposes only.
2. Information on our website may contain "forward looking statements" as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.
3. Always research your own investments, and consult your investment advisor before investing.
4. Visit the Securities Exchanges Commission website and read about how to avoid internet scams.
5. Understand that we at Talking-Points.com may buy stock in the companies that we recommend in our newsletter, and may sell those shares after recommending them.
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7. We disclose any and all compensations received from companies profiled or mentioned on the site in accordance with the 1933 Securities Act Section 17 (b).
Our Picks
The stocks profiled on Talking-Points.com are only the opinions of Talking-Points.com and its representatives. These opinions are based on our research, which may be extensive or limited, done on each individual stock. Our sources include, but are not limited to, online research, company profiles, member suggestions, past performance, magazines, newspapers, analyst suggestions, broker recommendations, contact with the company, company rumors, and other similar information sources. All opinions are based on information that is accessible by the public.
Risks Involved
Investing in stocks involves risk. You should consult a qualified financial advisor or stock broker before making any decisions to invest. Stocks reviewed on this website or through email are for informational purposes only. You should do your own thorough research before making any investment decisions.
Accuracy of Information is not Guaranteed
Talking-Points.com works to verify the accuracy of all information contained on its website but does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Talking-Points.com does not represent itself to be, nor is it a registered investment advisor or stock broker. As advised before, you should do your own research before making any investment decisions. Past performance of stocks profiled on this website is not a guarantee as to future performance. The performance of other members choosing to invest in any stocks profiled on this site may or may not be an indication as to your performance.
Our Positions in the Stocks Mentioned
Talking-Points.com and its representatives reserve the right to buy and sell any stock mentioned on this web site. Talking-Points.com reserves the right to buy or sell any of these profiled stocks before, during and immediately after they are posted to the site. Talking-Points.com is not responsible for any gains or losses incurred do to investing in these opinions.
Our Relationship to You as a Subscriber
Obtaining a subscription to the emailed newsletter does not in any way create any principle-agent relationship between Talking-Points.com and the recipient. Receipt of the recommended stocks, either via email, or directly from our website, is not in any way a recommendation to buy or sell but is just the opinion of StockTalkReport.com and its representatives and should be used for informational purposes only.
Compensation Received if Any
As in compliance with the 1933 Securities Act Sect. 17 (b) any and all compensation received from a company is publicly stated.
Forward Looking Statements
Information presented on the Talking-Points.com web site and supplied through the newsletter may contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "projects", "foresee", "expects'", "will," "anticipates," "estimates," "believes," "understands" or that by statements indicating certain actions "may," "could," or "might" occur.
General Risks, Research and Types of Orders
Short-term trading can be extremely risky. It is highly recommended that when ever making a decision to buy or sell you use limit orders. As with any investment decision, careful research should be done before making any decision to invest. As with any decision to invest it is usually recommended that you use limit orders, especially in fast moving, volatile stocks. You should only invest money that you are willing to lose. We also encourage you to read up on the SEC policies regarding online newsletters. Also before investing online please visit the Securities Exchanges Commission website and read about how to avoid internet scams.
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