April 18, 2004


Issue #113

Greg Fry
   Greg Fry

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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.

Bob Coppo
Week on Wall Street
The Week on Wall Street

Friday's Action:   Stocks finished mostly higher despite a negative capacity utilization number that pushed the market lower in early trading. The mixed economic data lessened fears of inflation and allowed interest-rate sensitive shares to recover. Major world markets closed mostly higher. London's FTSE closed up 0.71%; Frankfurt's DAX closed up 0.73%, and Paris' CAC 40 closed up 0.77%. Japan's Nikkei closed up 0.20%, Hong Kong's Hang Seng closed down 0.17%, and Sydney's All Ordinaries Index closed down 0.04%. In economic news, Building Permits in March rose 1.9% and Housing Starts rose 6.4% to 2.0 mil units, higher than expected. Industrial Production declined 0.2% while Capacity Utilization fell to 76.5% down from 76.7%. Finally, Consumer Sentiment for April decreased to 93.2 from 95.8. Volume came in at 1.49 billion shares traded on the NYSE and 1.88 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 2.71, and up volume over down volume by 1.87; Nasdaq advancing issues over declining issues by 1.07, and down volume over up volume by 2.40. Leading sectors were REITs, + 1.79%, Banks,+1.38% and Gold Bugs, +1.23%. Laggards were Internets, -3.48%, Disk Drives, -2.88% and Semiconductors, -1.76%. Nasdaq 100 futures closed 2.50 pts lower to settle at 1453.50, while the S&P's settled up 9.10 pts at 1134.10.

Weekly Recap:   Stocks struggled last week, hit by concerns over rising interest rates. On Friday, Richmond Fed President Broaddus tried to allay those fears with dovish commentary on inflation and the Fed's willingness to remain patient before pulling the tightening trigger. With weaker than expected industrial production, capacity utilization and consumer sentiment reports, the market looked as if it half-believed him. When the retail sales and CPI reports for March checked in this week stronger than expected, it simply fanned the flames. Rate concerns settled down somewhat in the latter part of the week, but overall, the prospect of a higher interest rate environment clearly bothered investors.

Rate-sensitive sectors like financials, utilities, and home building were among the biggest laggards, along with the semiconductor and telecom equipment groups, which were hit by valuation concerns and some uninspiring earnings reports from Intel and Nokia. The Dow outperformed the more volatile Nasdaq Composite and Russell 2000 by a wide margin, suggesting that investors were more risk averse this past week. Those concerns prompted a rotation into more defensive-oriented groups like drugs, biotechs, and tobacco. Buying interest was also seen in the energy and basic materials sectors.

For the week, the Dow edged up 0.1%, the S&P 500 finished -0.4% lower and the Nasdaq fell -2.8%. The small cap Russell 2000 lost -2.4%. Next week, more than 500 companies are scheduled to release their results, including 11 Dow components. A G-7 meeting is also scheduled, and there are a number of Fed speakers on the docket, including Alan Greenspan who will testify before the Senate Banking Committee and the Joint Economic Committee. All in all, there shouldn't be any shortage of trading catalysts.

The Reluctant Fed:   Although the Fed Funds Futures are indicating a very low probability of a rate hike occurring within the next month (Fed Funds Futures are currently pricing in just 8% odds of a 1/4 point hike at the May 4th, 2004 FOMC meeting), shorter-term yields have risen sharply relative to longer-term yields over the past two weeks. The chart of the 5-year yield index divided by the 30-year yield index illustrates this. The recent sharp rise in the FVX:TYX ratio is probably a sign that the market is beginning to discount a hike in the Fed Funds Rate, which may help to explain the recent plunge in the gold price.

But the upward trend of inflation-protected securities, represented by the Vanguard Inflation Protected Securities Fund, relative to the performance of the non-inflation-protected 30-year T-Bond indicates an increasing desire by investors to pay for inflation protection. The chart below shows that investors are concerned about future inflation and are willing to pay up for that protection.

The Fed will most likely wait to hike interest rates once bond prices break decisively lower, regardless of what is happening with GDP growth, employment growth, or the presidential election. The only question is how much of a decline in the bond market will be needed before the Fed is forced to act. They probably won't act until the pressure becomes a lot greater than it is right now, most likely not until T-Bonds drop below their August, 2003 low of 102.50.

The Peak Open Interest Indicator:   The Peak Open Interest Indicator (POI) has predicted where the S&P 100 Index (OEX) will close on options expiration day with a high degree of accuracy. The OEX tends to be attracted to price levels where the largest amount of open interest exists. The indicator is simply a chart showing the amount of call and put options open at each strike price in any given expiration month. Typically, a stock or index will be attracted to the strike price that has the most combined open options contracts for the front month, or the month closest to expiring. What makes this indicator particularly useful for the OEX is its low implied options volatility index. Below is a chart of the POI for the April OEX options contracts with one week to go before expiration.

A review of some previous months' options activity illustrates how the indicator functions. February's expiration saw the OEX close at 564.88, only -0.90% from peak open interest at the 570 strike level. In March, the 550 strike held the most open interest. The OEX was once again attracted to that strike level, this time closing at 543.88, or just -1.15% away. In fact, over the past 13 months, only twice (November 2003, and March 2004) did the OEX close more than one percent away from its peak strike price on expiration day. Below is a table of the previous 13 months of data displaying this phenomenon.

Expire "Target" "Actual" Pt Diff % Diff
18-Apr-03 450.00 453.72 +3.72 +0.83%
16-May-03 480.00 475.72 -4.28 -0.89%
20-Jun-03 500.00 502.40 +2.40 +0.48%
18-Jul-03 500.00 501.50 +1.50 +0.30%
15-Aug-03 500.00 498.30 -1.70 -0.34%
19-Sep-03 520.00 520.62 +0.62 0.12%
17-Oct-03 520.00 518.12 -1.88 -0.36%
21-Nov-03 520.00 511.78 -8.22 -1.58%
19-Dec-03 540.00 540.26 +0.26 +0.05%
16-Jan-04 560.00 564.72 +4.72 +0.84%
20-Feb-04 570.00 564.88 -5.12 -0.90%
19-Mar-04 550.00 543.68 -6.32 -1.15%
16-Apr-04 560.00 554.94 -5.06 -0.90%

The peak strike level will obviously change as expiration draws closer. But that does not diminish the usefulness of this indicator. Of note is the fact that the peak strike level does not normally changed at least one week prior to expiration. One strategy employing this indicator is be to put on either a bearish call spread or bullish put spread. For example, in February, a trader could have put on a bullish put spread, selling the Feb 560 Put and simultaneously buying the Feb 555 Put. The spread credit was good for $190 per contract. Since the OEX closed at 564.88 and above the 560 strike, both puts expired worthless. The trader would have received the full credit amount less commissions. A $5,000 investment (10 contracts) would have returned $1,900 for a 38% gain. The March peak open interest settled at the 550 strike during the last week before expiration. We recommended opening a Bullish Put Spread, selling the Mar 540 Put and buying the Mar 535 Put, for a $1.35 credit. Since the OEX closed at 543.68 on expiration, both of our options expired worthless and we captured the full credit, less commissions. We were only "in the market" for four days and realized a 27% return on the trade.

The April peak open interest settled at the 560 strike during the last week before expiration. We recommended opening a Bullish Put Spread on Tuesday, April 13th, selling the Apr 550 Put and buying the Apr 545 Put, for a $1.30 credit. Since the OEX closed at 554.94 on Friday, both of our options expired worthless and we captured the full credit, less commissions. We were only "in the market" for four days and realized a 26% return on the trade.

If you would like to receive timely updates on this strategy, just send an email to info@stockmarkettimer.com and ask to be put on our distribution list. There is no cost or obligation.

The COT Report:   The latest Commitments of Traders report from the CFTC shows that Commercial Hedgers bought some 3,000 S&P 500 futures contracts last week to bring their net short position to -7.083 contracts. Large Traders remained net short -39,667 contracts, with the entire offsetting net long position of +46,750 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials sold some 500 contracts to bring their net long position to +19,712 contracts. Small Traders were net short -12,750 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money sell some 200 contracts to bring their net long position to just +753 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 50%, while the percentage of bears was 22%. The bullish ratio (bulls/bulls +bears) was 69.4%.

The latest AAII survey showed an increase to 64% bulls, and a decrease to just 14% bears. The bullish ratio came in at 82%, while the 4-week moving average remains high at 68%. 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:   Friday's price action favors making higher highs on Monday. The Semiconductor Index was one of the worst performing sectors Friday, and unfortunately, that was bad news for the Nasdaq once again. The SOX is now testing its 200-day moving average where it has found support in the past. The 5-day RSI closed below 25%, an area from which we would expect to see a short-term bounce. The SOX:NDX is also in oversold territory, closing below its lower bollinger band and with its 5-day RSI at an extreme low of just 17.4%. If the chip stocks can catch a bid on Monday, then the sector should lead the NDX higher, as the SOX front-run the broader based NDX.

The semiconductors have been under pressure by Hong Kong's Hang Seng Index, which has dropped 4.4% in just the past three days. The HSI is heavily weighted with chip stocks, so weakness in that index is often reflected in the SOX. The HSI closed on support and should now either consolidate or move higher.

SMT's Pivot Point Forecast; 1-2 Weeks:   Our Pivot Point indicator on a buy signal. Our next Pivot Point forecast is scheduled to occur on or near April 26th.

The 60-mn NDX chart below shows that the StochRSI indicator is in the NEUTRAL zone. For Monday, resistance for the S&P's comes in at 1140.50 and then 1145. Support lies at 1126.50 and then 11117. For the Naz, resistance comes in at 1463.50 and then 1474. Support lies at 1442.50 and then 1432.

The Intermediate Term Outlook; 2-6 Weeks:   Our Market Trend Indicator (MTI) is currently positive and trended slightly higher on Friday.

od Trading!

Charts and data appearing in today's column are courtesy of:

LAST WEEK'S PICKS: Moving Sideways

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Last week's Fresh Picks blew away the major indices with an average gain of 6% each over the five sessions.

Our beaten-down bio-med play DFIB scored on a nice news-driven pop early Tuesday, hitting our target price of $3.58 for an 8% gain after being mentioned on Briefing.com's In Play. after DFIB announced that WellPoint, the nation's second largest health insurer, has included 84 Cardiac Science Powerheart(R) AEDs as part of its private access defibrillation program in 51 WellPoint facilities.

Our second pick, APT, also looked strong, closing the week with a 4% gain and ending Friday just $0.02 off its intraweek high. We still like the chances on this one, although we're concerned about the dwindling volume and would suggest keeping a tight stop on the table.

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 ended the year. 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.

TECH WATCH: Satellite Radio Growth / 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

Jeff Neal
Tech Watch

Jeff's Tech Watch column will return next week.

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.

Dale Woodson

Dale Woodson
Market TA columnist

TIMER DIGEST’S (P.O. BOX 1688, Greenwich, CT. 06836/ 203-629-3503)

















Year 2012



1932 or 1942


Year 2012*



12/6/74 or 8/12/82


Year 2012





.618 = 5803





Complete @ 8062 on 9/21/01





Complete @ 10,673 on 3/19/02





Complete @ 7197 on 10/10/02





Topping, high 10,753 on 2/19/04





 .500 = 6865/ .618 = 5803





Year 2012

* "…it should terminate about the year 2012"

* "...not expected to terminate until about 2012"

R. N. Elliott, Educational Bulletin O

R.N. Elliott, Interpretive Letter No. 17

October 26, 1942.



August 25, 1941.

Primary degree wave 2 down (1987 - 1990) running flat correction.

Primary degree wave 3 up (1990 - 1999)



Primary degree wave 4 down (8/24/99 -?)




From the 3/20 report:

“…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.


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.


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.


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.

GOLD RUSH: Golden Bear Roars/ by John Dowdee, Ph.D., Gold Editor

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Golden Bear Roars

For the last several weeks, we have been lamenting about the uncertainty in the gold market. This week the roar of the golden bear has cleared the picture considerably. Unfortunately, the new landscape does not bode well for the bulls.

Last week, gold opened quietly on Monday at $421.50. On Tuesday, a higher than expected retail sales report sent the dollar soaring and caused bullion to plummet to $405.50. On Wednesday, the yellow metal continued to slide, crashing through the psychologically important $400 level and falling all the way to $397. Thursday saw a drop to $396.20 followed by a slight recovery. On Friday, gold regained the $400 level to close at $401.60.

Although the price of gold has dropped by more than $30 over the last few weeks, the overall pattern is not that terrible. As shown in the longer term chart, the bull is wounded (below the 50 day moving average) but the bull market is still intact, well above the 200 day moving average. In fact, gold has only corrected by about 20%, which is the least of the Fibonacci retracement levels. A “normal” bull market correction would take bullion to the 38% retracement level around $365.

The very long term chart illustrates the golden jinx when the price of gold is above $400. This happened in 1990, 1993, 1996, and now in 2003 and 2004. Will the curse once again cause the gold bulls to flounder or will this time be different? To throw off this oppressive yoke, gold will have to surpass $433. Over the long term, I believe this is a likely scenario. The U.S. is sporting record deficit spending. When this is coupled with eye popping levels of consumer debt, the stage is set for a sell off in equities, a potential recession, and a collapse of the dollar. If this occurs, gold should soar. However, it may be many months before this scenario come to fruition and it is certainly possible that gold may sink to the mid $300 levels before the bull market resumes.

Gold stocks, as measured by the XAU index, did not fare as well as the precious metal. The XAU crashed though the 50 day and 200 day moving averages as easily as a knife cuts bread. The index opened the week at 101.83 but quickly fell to a low of 93.12, a loss of almost 9%! So far, the Fibonacci 38% retracement level has stopped the decline, creating a potential double bottom around 92. The XAU tried to recover, made it to the underside of the 200 day moving average but then bounced downward to close the week at 95.18.

Last week we counseled that if you were accumulating gold stocks, you needed to keep one finger on the trigger and sell at the first sign of trouble. If you followed this advice, you hopefully sold early on Tuesday and missed most of the carnage.

We are now at an interesting juncture. If gold can maintain $400, then the XAU is likely to bounce. The dollar index seems to be pulling back and has a bearish divergence with the MACD. If the dollar pulls back below 89, the gold bull has a chance to recover. However, if gold drops below $400 and the XAU below 92, then all bets are off. If you are a brave sole and nimble on your feet, you may want to play this potential bounce by buying Barrick Gold (ABX). ABX has shown good relative strength and is still above its 50 and 200 day moving averages. If gold recovers, ABX should do well, but if gold sinks, it will eventually bring ABX down.

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!

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...

These are your Swing Trading Opportunities for this week:

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.

Long Swings:

^ click here


Short Swings:


^ click here
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MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5
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MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5
^ click here
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

^ click here

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

^ click here

^ click here

^ click here
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
^ click here
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
^ click here
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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 )
^ click here
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)
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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...


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...

AMGN - Chart of the Week
Larry Swing



Following AMGN’s decline from the high of 66.88 (02/02/2004) to the low of 57.79 (03/24/2004), the stock consolidated within a relatively tight, and continuously contracting range.  This pattern may be represented as a bear flag.  The validity of this pattern is substantiated by the bearishly following volume, which rose sharply during the stock’s decline (signaling a high information content to the decline), then declined as the stock consolidated.


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 


While we find the bear flag to be a generally good signal, we usually do not use it independently, because there is a fairly high “whipsaw” rate—the stock is reasonably likely to decline below the pivot point of the pattern, then to rise back above the pivot point.  However, in this instance, we expect the likelihood of a whipsaw occurring to be low, since the pivot point of the bear flag coincides with support represented by the trend-line from the low of 56.76 (12/11/2003) to the recent low at 57.79 (03/24/2004).


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


Key Levels:


Stop short:  57.74, slightly below the low of the pattern.


Stop loss:  60.26, slightly above “b”.


Target:  50.25, above psychological support at 50, and the technically derived target (2x the low of the pattern minus the high of the pattern) at 48.7.


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: How To Align Your Beliefs With the Market / 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.


The Trader's Mindset Columnist
We All Trade By Our Unique "Beliefs”
How To Align Your Beliefs With The Market


You may not even realize it, but you trade in accordance with your own belief system.  And if you are not successful, it is because you are trading with a trading system that is not in alignment with your unique beliefs about the markets.  Also, some of your beliefs may not be valid for use in the markets.  Let me explain:

First let's define what a person's "belief system" is. A person's belief system is a set of sometimes conscious and sometimes unconscious rules we have about life, trading, money, relationships, etc., etc.  Beliefs shape how you see or interpret reality.  Every one of us has a unique set of beliefs which make up our belief system.  Our upbringing, our environment, life experiences, etc. all come together to form our belief system.  So we can basically say that our personality is shaped by our belief system. In fact, just about everything we do is shaped in some way by our belief system.

Great traders are those traders that can accept who they are, thus accepting their beliefs both positive and negative.  Because once you can accept yourself as you are, you also accept and take responsibility for yourself and both your positive and negative beliefs.  You can realize your short comings and strengths as well.  This can help you determine how to successfully trade the markets.

Thus, by “accepting” yourself, you can actually help your trading by aligning both your positive beliefs and negative beliefs with not only your trading system, but the markets themselves.

Let's say for example that you do not like to go with the crowd, you are “a loner” in life, and you do not like to conform to authority figures, corporate environments, etc.  In other words, you have a belief about going with the crowd that you do not like (the reasons may be unknown for you, but if you dig deep enough, you can find out why). Do you think you will be a good trend trader?  Do you think you will like to trade with trend and go with the crowd of traders trading with this trend?

I doubt it! Because in this example, your beliefs are in direct conflict with going with the crowd so to speak. And in the markets that would mean trading with the the trend. Thus as a trader, if you are using a trend following trading system, you are trading in direct conflict with your beliefs. And success will be highly unlikely. In fact you will probably fight a trending market the entire way!  And chances are you will not be successful and feel like once again you are the victim of the masses!!!

Now let's see how to approach the market by aligning that same “loner” belief system with the markets to be successful.  Step One: is to accept yourself as having that belief to begin with.  Step Two: once you accept your beliefs, find a set of trading entries or a trading system that satisfies those beliefs. In this example, that would be to find trades that allow you a low risk entry to counter trend trade the trends or use corrections in the trend to get a good, unique entry to take advantage of other traders which represent the crowd so to speak.  That way you are not trading with the crowd, but you are either trading against the crowd (countertrend trading) or taking advantage of the trend (crowd) by getting in at a better price in relation to the other traders.  The point here is to find a way for your trading entries to satisfy your beliefs thus aligning your beliefs with the markets!  If you can do this successfully, then you don't need to change your beliefs!

However, there are times when you may want to attempt to change your beliefs. This will be a personal decision that only you can make.  A quick example of this is one from my own trading:

For the longest time I struggled with getting out of trades too soon.  Technically I would make great entries and set well defined stops, but it was hard for me to stay with trades for a long enough time to see big money.  I finally overcame this by confronting reality and being brutally honest with myself and my beliefs.  The problem was not with my abilities or technical evaluations, it was with my emotions structured by my belief system.  In fact, my technical analysis was usually right on the mark.  But time and time again, I would get out too soon because my emotions and anxiety took over and literally would force me out of the trade to take a quick profit. I wanted to take that quick profit emotionally before the market reversed and took it away from me. 

I had to change my beliefs about money, fear, and how the markets work.  When trending, markets usually correct, and then trend, correct again, and then trend again.  So I had to change my beliefs about the market to accept this.  And also change my beliefs about taking a quick profit verses letting the market give me all it wants before the trend ends.  Of course intertwined in my unrealistic beliefs about the market, was the fear of losing money, etc., etc.,etc.!  Well, that was a belief that I wanted to change and worked on it until I did!  It was a slow process and even today, I sometimes get the urge to take a quick profit, but instead of doing that, I will wait for the market to tell me when to exit my profitable trades. Now I insure I do not trade on an emotional level. If you find yourself trading based on your emotions, you need to stop trading and get help with your trading.

So take some time, get to know yourself, your beliefs (both negative & positive), accept them, and own them.  Then decide on which ones to change and which ones to align with the markets.  I think you will find amazing results just as I did!

Remember also that trading systems are nothing more than the "tools" you will use to trade well.  Use trading systems that align your beliefs with that of the markets.  One note here is that our home study trading course called "Applied Reality Trading ™" does just that, it helps to match your beliefs with trading signals so that you are trading in alignment with not only your beliefs, but the market as well!

Remember this; "Nothing in life worth doing comes easy or else everyone would be doing it!"

Bennett McDowell, President
Free Video – Trading The Perfect Business!
10755-F Scripps Poway Parkway, #477
San Diego, CA. 92131

Copyrighted © 2003 TradersCoach.com, Inc. All rights reserved.

CONTRARIAN CORNER / by Jeff Weber, Columnist

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As a leading contrary investing expert, Jeff has written own investing book, I Guarantee You Will Buy Low Sell High and Make Money, which shows you when to buy and sell the stocks he recommends in his book. You can order the book by clicking on the title and it comes with a free one-year subscription to his newsletter, one month of coaching articles, and one year free email support.

Jeff Weber of JJJ Investing Services
Jeff Weber
Jeff Weber
Contrarian Columnist

It's Called Arbitration because it's Arbitrary!

Why would all the stock brokers want to use arbitration to settle disputes with you - the customer? Is it because you would get a fair hearing? Is it because you would get a speedy hearing? Of course not! It's because arbitration works very well for the brokers.

Here's a typical arbitration investor situation. Poor middle class guy from New Jersey wants to make money in the 1990's Bull Market. Here's what happened to him - this is the typical outcome for the small investor in an arbitration case. He has a tech-rich portfolio that plummeted as we roll into the 2000s and our poor investor blames his broker for churning his account with lots of unauthorized trades (in my investing system, you make the trades!). He brings a claim against Prudential Securities (his piece of the rock) with an arbitration panel administered by the NASD, the forum investors are required to use when they have disputes with their broker. The arbitration panel found Prudential guilty as charged but without any explanation, awarded our guy only $25,000 or 3% of the $800,000 he lost. His lawyer thought the panel accidently left off a zero. His lawyer then asked for an explanation and the panel refused.

Believe it or not our investor then got a break. Our investor appealed to the U.S. District Court and what happened was very rare but wonderful! The judge, instead of rubber stamping the panel decision, demanded to know the reasoning. Noting the strong evidence of Prudential's liability, she ordered the panel to justify its "incomprehensible" decision which if a jury verdict, she would have tossed out. She said:"Such a meager award shocks the conscience of this court - hear, hear!!

The judges blistering opinion sent shock waves (I hope on the Richter scale an 8.0 or higher) through the securities industries which has routinely used arbitration to screw over investors for years. People are actually doubting the fairness of securities arbitration. Why? Oh simple things like, "arbitrary, unexplained decisions, biased arbitrators and pro-investor panelists unfairly kicked off the panels - hey, who do you think the NASD National Association of Security Dealers wants on their panel. Sorry, there is no (NASC) National Association of Screwed Investors they can turn to for an arbitration hearing.

Is the arbitration system really blind lady justice with the balanced scales? No, of course not! But at least the issue of investors screwed once by the broker and a second time by arbitrators is getting seriously looked at. Last year investors filed a record 8,945 arbitration cases with the NASD (National Association of Screwed-Up Decisions) not because they wanted to - the had to thanks to adhesion contracts forced on them by their broker.

In theory, Americans have a constitutional right to demand a jury trial for any dispute over $20. But standard brokerage agreements (I thought the constitution was the supreme law of the land but it's obviously broker agreements!) require investors to bring any dispute with brokers to arbitration panels, most of which are administered by the NASD, which regulates??? brokerages.

Of course, the arbitration panel has been touted by the securities industry as a (easy way to screw investors when we're caught red-handed) as a cheap, quick way to adjudicate disputes. Securities shysters note that the system is particularly efficient in disposing of merit less claims (hey, there are some bad investors out there too!). Arbitration has worked fairly once in a blue moon but generally investors get screwed royally. The reality is there is overwhelming industry bias in favor of the brokers.. kind of like the Feres doctrine - no military person can sue a military hospital regardless of how grossly negligent the care received is - naturally military doctors and hospital like the Feres Doctrine!!

Here's the facts again, judge for yourself! The NASD statistics show money awarded only 54% of the time. Claimant lawyers scoff at that figure, noting that cases awarding even a fraction of an investor's losses are counted as wins - and the NASD doesn't publish data on the dollar value of an award as a percentage of the loss - like our guy above getting 3% of his losses - would you count that as an investor victory? No, of course not, but NASD does!!!

And that is the major beef - where's the beef? - as investors get lots of moral victories but no cash victories. One Kansas claimant lawyer states:"Arbitration panels don't care what the law is. There's an "NASD common law"? which means an investor never gets over half his money back, even in the worse cases (many worst cases!)

Why should arbitration panels give any facts that went into their decision when courts have also screwed investors over (one fired guy left a big knife covered in ketchup on his bosses desk saying: "After I pulled this court of my back, I realized it was yours'>. Courts have said arbitrators - that's (traitors) - don't have to explain their decisions which are subject to reversal only if they make gross legal (not moral, not ethical) decisions "manifest disregard" of the law. "The law is an ass" - Shakespeare.

Of course, broker's shysters have already perverted what arbitration is supposed to be! NASD touts arbitration as a low-cost, informal way to resolve disputes. Then their shysters (the 99% who ruin it for the other 1%) frequently file pre-hearing motions that are not authorized by the rules, driving up investors' costs. Even Ms NASD, Fienberg, acknowledges that abuses occur. One common complaint is that brokerage firms stonewall investors' requests for documents relevant to their cases. Also the arbitration panels try to wear out the investors by arbitrarily dragging out hearings over a large number of separate sessions, sometimes weeks or months apart - way to additionally screw investors!

And one more way they try to screw the investor (will they ever run out of ways?). Frequently broker-shysters file motions to dismiss claims before they even get to arbitration. And one more way - arbitrations who show any pro-investor sentiments are quickly fired. One arbitrator said he was fired without explanation when he criticized the NASD for not complying with a subpoena. And ladies and gentlemen of the jury - think you'd get a fair shake and your losses back from a panel? OK, stop laughing!!!

Here are three stocks very low-priced stocks I like this month:

C & D Tech - (NYSE: CHP, $16.48)
52 week: High - $23.43 - Low $11.20

CHP cheap now.

El Paso - (NYSE: EP, $6.99)
52 week: High - $9.89 - Low $5.97

EP another good cheap energy play - will recover from problems

Earthlink - (Nasdaq: ELNK, $8.75)
52 week: High - $11.49 - Low $5.70

ELNK low-priced, another good one for the risk-taker.

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.

Jeff Williams
Inside Track Columnist

Interesting Buy Patterns

Open market insider trading activity for FCFC 11/19/03 through 03/30/04

FirstCity Financial Corporation

FirstCity Financial Corporation is a financial services company with offices throughout the United States and Mexico and a presence in France. The Company began operating as a specialty financial services company focused on acquiring and resolving distressed loans and other assets purchased at a discount relative to the aggregate unpaid principal balance of the loans or the appraised value of the other assets (Face Value). The Company has acquired, for its own account and through various affiliated partnerships, pools of assets or single assets (collectively, Portfolio Assets) with a Face Value of approximately $7.1 billion. The Company is engaged in two principal businesses, Portfolio Asset acquisition and resolution, and consumer lending through its minority investment in Drive Financial Services LP.

Robert E. Garrison II has been a Director of FirstCity since May 1999. Mr. Garrison is the President, Chief Executive Officer and director of Sanders Morris Harris Group. Previously, Mr. Garrison served as Executive Vice President and director of Harris Webb & Garrison and also served as Chairman, Chief Executive Officer, and director of Pinnacle Management & Trust Co. Mr. Garrison co-founded both of these companies in 1994. Both Harris Webb & Garrison and Pinnacle Management & Trust Co. are subsidiaries of Sanders Morris Harris Group. In addition, Mr. Garrison serves as Chairman of the Board of BioCyte Therapeutics, a cancer diagnostic and therapeutic company focused on breast, ovarian, and prostate cancer. Mr. Garrison serves as a director of TeraForce Technology Corporation, Inc., a public defense electronics company, Somerset House Publishing, First Capital Bank, and is a member of the Finance Committee of Memorial Hermann Hospital System. He has over 36 years of experience in the securities industry. Mr. Garrison is a Chartered Financial Analyst.

An interesting trade by Garrison. His last trades were back in 2000 and 2001 all under $3.It is interesting that he has done nothing for some years and now all of a sudden comes in and purchases a large amount of stock and near the stocks recent high.  This is similar to a pattern we saw with FLBK which we put out in February.  Those of you that bought that one know the stock was bought out at a nice profit only a month later.  At the very least this buying suggests a strong earnings report ahead followed by a higher stock price.

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FRESH PICKS: On the Prowl

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Weekly Stock Picks From Bob Coppo - New Feature!  

Top Stock Picks for Monday, Apr 19, 2004:
We have 27 buy signals for Monday. Here are the top two.

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.

1. CCMP (Cabot Microelectronics Corporation, Chemical Manufacturing) $37.11 - Buy. We start off what looks to be another volatile, uncertain week with an oversold chemical manufacturer making fresh 52-week lows ahead of earnings. "Cabot Microelectronics Corporation is a supplier of high-performance polishing slurries used in the manufacture of integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). CMP is a polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are built upon silicon wafers, and is a necessary step in the production of advanced ICs. The Company's CMP products are used for a number of applications, such as polishing insulating layers, the tungsten plugs that go through the insulating layers and connect the multiple wiring layers of IC devices and copper wiring." On Friday, the stock lost 3.4% to close at the low end of its intraday range in a session that saw the stock touch a new 52-week low of $36.81. In recent times, the company has shown strong growth on rising revenues and income - for the three months ended Dec. 31, 2003, revenues rose 33% to $76.3M while net income rose 25% to $11.6 million. The stock received an analyst upgrade in late February, and will release earnings on April 22. With the selling that has ravaged the stock through the month, it appears that investors are banking on a large miss come earnings. We like the odds here of a bounce from a company that has shown 22% average growth over the last five years, with forward estimates of 30%. The average eps estimates for the current quarter range from $0.39 on the low end to $0.55 on the top, with an average estimate of $0.46 on revenue of $76.4 million and $315.64 million for the year ($1.96 eps). If CCMP can hit the average estimate, it would mean the stock is trading at a price-to-earnings ratio of 18.9, a number we find attractive in a company with growth of 20-30%+. A number of other fundamentals appeal to us here as well, including profit and operating margins of 14.8% and 22% respectively and return on assets and equity of 13.5% and 15.75%. Technically, the stock is deeply oversold here, and has broken below previous support in the $40 range, which is troubling as that level will now act as resistance. There is a huge short position here, with 30% of available shares on that side of the fence as of March 8. As we said, we believe The Street has factored an earnings miss into the share price here, and if CCMP can deliver on estimates, it will likely lead to a flood of short covering which could drive a bounce quite nicely. We would look to the March low of $40.49 as an initial target, with a move above that level opening the door to a longer hold and possible run to the March high of $45.76. Still, don't just buy and forget about this one - keep a close eye on earnings with an after-hours order in place in case things go south. Short-term price target: $40.45 (9% gain) Stop loss trigger: $36.00 (3% loss)

CCMP Chart

2. LVLT (Level 3 Communications, Inc., Communications Services) $3.63 - Buy. Our second play for the coming week is in the form of telco pick LVLT, a survivor of the telco meltdown of the last several years making new 52-week lows. "Level 3 Communications, Inc. and its subsidiaries (Level 3) engage primarily in the communications and information services businesses. The Company is a facilities-based provider of integrated communications services. It has created the Level 3 Network, an advanced, international, facilities-based communications network, by constructing its own assets and also through a combination of purchasing and leasing of facilities." For fy 2003, LVLT grew revenues and shrunk losses nicely, as revenues rose 29% to $4.03 billion while net loss from continuing operations before acct. change fell 16% to $721 million. On Friday, LVLT lost nearly 6% and hit a new 52-week low intraday of $3.55 before closing at $3.63. The entire space took a pretty ugly beating last week on negative analyst comments and a fairly broad retreat from all things tech as The Street rotated into more conservative issues on inflationary concerns, a rising consensus that the Fed will raise interest rates, and escalating violence in Iraq. This has left much of the telco stocks at or near fresh lows and earger to bounce unless the overall market tide continues to suck them lower. LVLT is set to announce first quarter earnings on April 29. In the last month, the company has made a number of new partnerships, including service deals with companies like Y3K Secure Enterprise Software, Inc., and broadband VoIP and video communications service provider 8x8. LVLT recently announced that it will start to offer Internet-phone service in the top 300 U.S. markets before the end of the year on a wholesale basis to independent local phone companies, cable companies and other nontraditional local phone providers which would then compete directly with the larger carriers. LVLT also recently announced that it has acquired the wholesale dial access business of ICG Communications, Inc, a Denver-based communications company. While all the growth is impressive, the fundamentals of LVLT still are not, which is why we are looking at this as a trading play only at this point in time. There is still a mountain of debt on the books to the tune of $5.38 billion, a problem that continues to plague most telcos, with a price-to-sales ratio of 0.65 being pretty much the only attractive key fundamental number to us. Still, the chart here is clearly showing oversold, and we'd look for a coming short-term bounce across the board in telco on any Nasdaq move higher. There's nothing at all in the way of support below here, though, so either keep a tight stop in place if you choose to enter at current prices, or use a stop-buy order to grab it once it gets back above its March low of $3.71. We would lean toward the latter course of action for now, and take a second look later if it continues lower in the coming week. If LVLT can get back above the $3.71 mark, we'd look to the February low of $4.12 as our initial target. Short-term price target: $4.10 (13% gain) Stop loss trigger (if bought at current price): $3.40 (6% loss)

LVLT Chart

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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