May 9, 2004


Issue #116

Greg Fry
   Greg Fry

Latest Updates:

No new updates this week.

Thanks again for subscribing to Talking Points Premium Edition!



Back to top

Never Pay For Another DVD ... Get Them All For FREE!

Please visit the site of this week's Sponsor by clicking on the banner above.

If you are interested in placing an ad in Talking Points, or are interested in receiving information about ad rates, please send your inquiry to

WEEK ON WALL STREET: Week In Review  /   by Bob Coppo

Back to top

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 on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site,

Bob Coppo
Week on Wall Street
The Week on Wall Street

Friday's Action:   Stocks finished the day in negative territory, ignoring positive employment data, as interest rate fears continued to pressure the markets. Major world markets closed mostly lower on fears of U.S. interest rate increase timing. London's FTSE ended down 0.39%; Frankfurt's DAX closed down 0.35%, and Paris' CAC 40 closed 0.02% lower. Japan's Nikkei closed down 1.15%, Hong Kong's Hang Seng closed down 0.83%, and Sydney's All Ordinaries closed down 0.16%. In economic news, April Non-farm Payrolls were higher by 288,000. The Unemployment Rate for April dropped to 5.6% while Hourly Earnings were higher by 0.3%. Finally, March Wholesale Sales were up 2.7%. Volume came in at 1.65 billion shares traded on the NYSE and 1.65 billion shares traded on the Nasdaq. Market breadth was negative, with NYSE declining issues over advancing issues by 12.29, and down volume over up volume by 7.99; Nasdaq declining issues over advancing issues by 2.83, and down volume over up volume by 1.73. Leading sectors were Semiconductors, +1.00%. Laggards were Gold/Silver, -5.22%, Airlines, -4.52%, and REIT's,-3.46%. Nasdaq 100 futures closed 13 pts lower to settle at 1406, while the S&P's settled down 17.50 pts at 1095.50.

Weekly Recap:   Stocks came under pressure for a second week, as a spike in interest rates continued to weigh on the major averages. The sharp rise in rates was the result of an FOMC directive on Tuesday that hinted at the likelihood of a rate increase no later than August and a stronger than expected April employment report on Friday that suggested a rate increase could come as early as June. Crude oil futures nudging $40.00/bbl, continued talk of China looking to curb its growth and a strengthening dollar acting as a drag for earnings growth gave investors more reasons to sell stocks rather than buy them.

Friday's market sell-off occurred on moderate volume. The depressed semiconductor sector was a notable exception with a gain of 1.0% for the day. Its divergence from the broader trend, and the relatively light volume associated with the broader sell-off, could very well be an early sign that the recent correction in the stock market is nearing an end. Chip stocks were one of the best-performing industry groups with a gain of 3.26% for the week. The only group to do better was Internet software, which gained 3.95%. The jump in interest rates took its toll on economically sensitive issues such as autos, construction materials and home improvement. The dollar's strength depressed gold stocks, as the gold price slipped below $380 the ounce. The list of weak groups was broad based, which simply underscored the general lack of buying interest.

For the week, the Dow lost -1.1%, the S&P 500 finished -0.8% lower and the Nasdaq slipped -0.1%. The small cap Russell 2000 lost -2.0%. Next week, important large cap earnings releases include Cisco's fiscal Q3 report after the close on Tuesday, Wal-Mart's Q1 report before the open on Thursday and Dell's Q1 report after the close on Thursday. Economic reports that revolve around employment and inflation include the PPI, Initial Jobless Claims, CPI, and Capacity Utilization.

The Jobs Report Chain Reaction:   We said in Thursday night's column that a strong jobs report would have the predictable effect of pushing interest rates sharply higher, and that certainly came to pass. The monthly chart of the 10-yr T-note shows that bond yields have decisively broken a four-year down trendline. The latest surge in yields started last month with a stronger-than-expected March jobs report. The April figures released Friday morning showed 288,000 new jobs created and the unemployment rate dropping to 5.6%. Market reaction was not surprising. Bond prices fell sharply as yields rose. Rising yields boosted the Dollar, which pushed gold and gold shares lower again. The stronger dollar also weakened commodity prices and weighed on material stocks, which were the day's weakest group. Rate-sensitive financials and home building stocks were also under heavy pressure. Areas of relative strength were consumer staples and healthcare.

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 May OEX options contracts with two weeks 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 April, it closed just -0.9% 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%
21-May-04 550.00 TBD TBD TBD

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 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 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 sold some 9,900 S&P 500 futures contracts last week to bring their net short position to -19,211 contracts. Large Traders remained net short -37,700 contracts, with the entire offsetting net long position of +56,911 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials bought some 1,500 contracts to bring their net long position to +21,722 contracts. Small Traders were net short -14,517 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money buy some 500 contracts to bring their net long position to +2,115 contracts.

Commercial Hedgers were better sellers in the S&P's last week, and increased their net short position. For the intermediate term, their position should be considered bearish.

Sentiment Surveys:   The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 46.4%, while the percentage of bears was 23.7%. The bullish ratio (bulls/bulls +bears) was 66.2%.

The latest AAII survey showed a decrease to just 39% bulls, and an increase to 27% bears. The bullish ratio came in at 59%, while the 4-week moving average remains high at 70%. 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 63%, 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 lower lows on Monday, but the S&P's have a better chance of closing higher on the day. Breadth on the NYSE Friday was extremely lopsided. Declining issues swamped advancers by better than 12:1 and volume associated with declining issues was 88% of total volume. Following Thursday's 4:1 decline/advance reading, Friday's breadth figures suggests that selling pressure may be reaching exhaustion. This type of action rarely results in a sustained sell-off, as everyone who had a mind to sell did so on Friday. Rather, extremely lopsided breadth often relates to a trend inflection point, with the SPX trading higher within three sessions. The NYSE McClellan Oscillator also hit an extreme reading of -274. The McClellan isn't of much value to short-term traders except at extreme readings. Values of -200 or less often coincide with swing lows for the SPX.

The OEX Volatility Index (VXO) surged 8% Friday and fired a CRV3 buy signal. Developed by Larry Connors, the CRV3 uses moving average bands to measure extreme VXO readings. It has been about 70% accurate in predicting a higher OEX close when the VXO reverts below its upper band. The VXO also closed above its upper bollinger band, which is also a short-term buy signal for the OEX and the SPX.

SMT's Pivot Point Forecast; 1-2 Weeks:   Our Pivot Point RS indicator is currently on a BUY signal. Our next Pivot Point is forecast to occur on or near May 21st.

The 60-mn NDX chart below shows that the StochRSI indicator is in the BUY zone. For Monday, resistance for the S&P's comes in at 1105.50 and then 1123. Support lies at 1084 and then 1078. For the Naz, resistance comes in at 1420 and then 1442. Support lies at 1390 and then 1383.

The Intermediate Term Outlook; 2-6 Weeks:   The ratio of the Australian Dollar to the Euro has been a good predictor of the intermediate-term trend of the US stock market. The A$ is heavily influenced by commodity prices, which have been declining. The XAD:XEU Ratio has been in free-fall since early April, coinciding with the overall weakness in US stock prices.

Our Market Trend Indicator (MTI) is currently negative and trended lower again on Friday.

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

LAST WEEK'S PICKS: Back In the Green

Back to top

Last week's Fresh Picks stopped our losing streak while outperforming the markets for an average gain per pick of 1%.

Three of the four recommendations finished the week on the correct side of the line, led by the performance of our reiterated buy, ELX, that tacked on a healthy 6% over the five sessions. Close on its heels came drive-maker WDC, adding 4%. Tech play RFMD also wrapped the week with a profit, although its gains came in at less than 1% on the week.

The lone black eye came in the form of retailer BBA as we were stopped out on this one with a 7% loss.

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

TECH WATCH: Biotech Companies Ready For A New Round of Capital / by Jeff Neal, Technical Market Columnist

Back to top

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 ( 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 - ~ Your Options Education Site

Jeff Neal
Tech Watch

Biotech Companies Ready For A New Round of Capital

With the continued good news coming out of the drug sector these days, many venture capital firms are starting to show a lot of enthusiasm for some of the biotech startups. Just recently InKine Pharmaceutical Company (INKP) announced the completion of a Phase IV study evaluating Visicol tablets in patients with Irritable Bowel Syndrome. Visicol tablets are currently approved to cleanse the bowel prior to colonoscopy procedures. The pills are a better alternative to drinking thick liquids. The significance of this announcement is that it goes a long way in helping the company toward getting Visicol approved as a laxative, which is a much larger market.

Consider also the positive news released by the large biotech firm Genentech (DNA). This major drug player said that its cancer drug Tarceva drastically improves survival rates for some lung cancer patients. The announcement spurred heavy demand for not only Genentech shares but also put a hefty surge into its partner’s stock OSI Pharmaceuticals (OSIP).

This wave of good news has prompted many venture capital firms to not only take notice but start to aggressively deploy funds into the biotech sector. The goal of course is to uncover the next Genentech story and potentially reap the enormous profits from such start-ups. Of course they are exercising some caution especially after the dot-com or “dot-bomb” fiasco just a few years ago.

Even though the $943 million in new money provided to biotech pursuits in the first quarter of this year was slightly down from the $1.1 billion figure posted in the fourth quarter which broke a trend of quarter to quarter increases the momentum for venture capital money into biotech is extremely strong. One of the main reasons is the huge stock gains achieved by Genentech and OSI Pharmaceuticals.

Thus far the actual performance of these new biotech start-ups have been average at best. Consider since July of 2003 the average climb of these newly public biotech companies have appreciated 6 percent while the NASDAQ index has appreciated 24 percent over the same period. However, the recent wave of good news events within this sector has many venture capital firms ready to pull the trigger.

According to market experts this upsurge in venture capital money for biotechs is still unlikely to reach to $28.5 billion figure that was pumped in during the year 2000 at the zenith of the dot com craze. However, the long anticipated IPO of Goggle should help keep the recent momentum flowing.

In addition, the biotech sector continues to show signs of growth. For example, many of the large biotech companies that provide large laboratory equipment, consumable reagents and supplies are demonstrating tremendous growth. These results are a great sign as it suggests that spending among academic and corporate labs continues at a strong pace.

The Biotech Index ($BTK) continues to do very well, especially as compared to the NASDAQ. As this index retraced back to its 100-day month moving average over a month ago the index quickly rebounded and advanced firmly above these price levels. At the same time the NASDAQ dropped to its 200 day moving average in March before showing any life at all. Now that the earnings figures are coming in strong for many of the large biotech companies, there appears to be enough investor enthusiasm to maintain an upward trend in these issues. This should fuel even more interest of the venture capital firms for biotech start-ups going forward. With the large baby boom generation starting to retire and the continued innovations we are seeing in the biotech field makes this a potentially very hot sector to watch in the future.

Happy Trading.

MARKET TA: Riding the Waves / by Dale Woodson, Technical Market Columnist

Back to top

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 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 -?)





It is now safe to say that those early March highs that threatened the highs in the bond market from June of last year represent the entire second wave retracement. Recall that we became concerned about our wave count, as a move above the highs of last June would cause us to rethink that count. The move up surpassed the .618 retracement level. But remember, second waves can retrace up to 100% of the previous first wave. The price action since those highs indicates that the bear market in bonds in back in force and the third wave down is in its initial stages.

In the short term, allow for a counter trend bounce higher (to hold below 116-11). Once that retracement is complete, expect a third of third wave – a powerful thrust to the downside. We will move to a short position in anticipation of that decline. More details and charts in the May newsletter.


While the most recent move up ($433 on 4/1) satisfied the minimum requirement for the fifth wave (a move above the third wave high - $432 on 1/6), we expected one more push up to new highs, then a reversal. From the April 3 report:

“This is a fifth wave and we will need to move to a short position soon…We will remain long gold for one more move up to new highs. After that, prepare for a reversal to the downside.”

To be honest, we expected this move to go a bit higher. Of course, the reversal has occurred without the move higher first. We can count five waves to the downside. While the intermediate and long term direction for gold remains up, for the near term, expect the decline to continue, as the market must correct five waves up. Move to a short position in the gold market. Details and charts will follow in the May report.


As long as the February high of 10,753 holds, the trend remains down in the stock market. Charts and details will follow in the May newsletter.

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 as wave 2of (E) up is topping. Prepare for wave 3 down. Wave 2 up should not move above 10,753.


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: Move to a short position.

Gold: Move to a short 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:

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: Gold Bear Attacks Again/ by John Dowdee, Ph.D., Gold Editor

Back to top

Gold Bear Attacks Again

Last week the golden bear attacked again, sending the bull reeling. There is no doubt that the bear has won most of the recent battles, with the price of bullion falling $50 an ounce in a month. Is the bull dead or just badly wounded? That is the key question and unfortunately, there are no easy answers.

Gold opened the week at $387.60 and the goldbugs breathed a sigh of relief as bullion sprinted to $395.30. But on Friday, the dollar rallied back to over 91 and the bottom fell out of the gold market. The yellow metal plunged all the way to $377.70 before recovering slightly to close the week at $379.10.

As we discussed last week, on a longer term weekly view, gold does not look nearly as bad. The bull market began in early 2001 with gold selling for about $255 an ounce. Over the next three years, gold experienced a tremendous bull market, romping all the way to $433 (an increase of over $175 per ounce) with only one major corrections (in early 2003 when gold fell by $50 an ounce). As shown from the weekly chart, gold has retraced less than 38% of the overall bull market and has retraced about 50% of the last leg up. Neither of these numbers is inconsistent with a correction in a bull market. So the gold bull may not be dead and may yet recover. Note also that gold may have traced out a potential double bottom at $377 which would also be positive. But be careful; this is an extremely treacherous market.

Gold stocks, as measured by the XAU, look ever worse than bullion. The XAU opened the week at 81.91 and like gold, appeared to be on the way to better health. However, stocks plummeted after reaching a high of 86.65 and closed the week near bottom tick at 78.03. The great gold mining explosion that rocketed the XAU from the low 40s to over 113 in a little over 3 years has now been 50% retraced in just a few weeks. Not a pretty picture!

Those that tried to catch the falling knife last week were likely cut badly. I was! I did not take my own advice and tried to play the bounce that never materialized. Currently, both gold and the XAU are extremely oversold and “should” bounce soon. However, “should” does not mean they will. They can easily become even more oversold! A lot depends on the dollar. If the dollar continues to rally, it will not bode well for the precious metals. However, if the dollar sinks back below its 200 day moving average (as I believe is likely), then the long awaited gold bounce could occur.

I still believe the correction we are experiencing is near the end and by the end of this year, I would expect new highs to be made (gold over $431 and the XAU above 113. However, it is very dangerous to bet against the ongoing down-trend. The conservative approach is to wait until a new up-trend is established. If you are a risk taker and can withstand losses, then you can bottom fish at what are (hopefully) bargain prices (but I would maintain tight stops).

It should be noted that gold is much more volatile than most equities. The opportunity for exceptional gains is balanced by the agony of potential losses. Only time will tell. As always, we caution that 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

Back to top

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 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. Take advantage of some of the great programs available by clicking here.

Long Swings:

^ click here


Short Swings:


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

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...

ERES (Long) - Chart of the Week
Larry Swing

ERES:  E Research Technology Inc.

E Research Technology provides:

  • Cardiac safety technologies and services for use in clinical trials.
  • Services and technologies for the collection, analysis, and distribution of data from clinical trials.


    Fundamental Analysis:

    Recent Growth and Profitability Changes

    Over the past three years, ERES’s results have been extraordinary.  The company has produced excellent top and bottom line results.  Earnings have grown from 2c/share for the quarter two years ago to 20c/share last year; revenues during the same quarters were 8.4 million and 26.1 million, respectively. 


    Profit margins have increased from negative levels 4 years ago to over 20% for the latest quarter.


    Industry Growth

    Industry experts project growth of over 50% per year for ERES’s ECG market.  The collection, analysis, and distribution software that ERES is marketing may grow even more quickly as larger pharmaceuticals begin adapting the technology.  We expect that adoption will be relatively fast, noting that ERES:

    • Has positive long-term relationships with many pharmaceutical companies.
    • May present a strong argument in favor of their technology, as it results in rapid and significant cost savings.

    Analyst consensus anticipates 40% EPS growth per year over the next five years.



    Revenue Growth

    ERES has continued to produce a large and increasing number of new contracts for their services in Phase 1 trials.  Furthermore, because of the nature of the industry (specifically, risk aversion to unproven resources) we expect that ERES will continue to benefit from their increasingly well-known name, and from an increasing number of happy clients.  Growth will beget growth. 


    Share Repurchase

    ERES has announced a plan to buy 500,000 shares.  This is generally a positive indication, as it suggests that management feels the shares are undervalued.


    Earnings Beaten

    In the most recent earnings announcement, ERES beat estimates by 2c (Actual of 20c vs Estimate of 18c).


    Earnings Estimate Increases

    Analysts have recently raised their earnings estimates for ERES.  This year’s consensus EPS has risen from 85c to 89c over the past 30 days; similarly, next year’s consensus EPS has risen from $1.09 to $1.23.



    There is a strong trend towards outsourcing of IT activities in the health care industry.  ERES is poised to profit from this trend.



    ERES has a market capitalization of 1.13 Billion, cash holdings of $62 million, and virtually no debt.


    The company trades at a forward P/E ratio of 26.83.  Using the long-term expected EPS growth rate, this places the company with an attractively low forward P/EG ratio of 0.67.  (Generally, a forward P/EG ratio of approximately 1 is reasonable.)


    Technical Analysis


    After more than 5 years spent consolidating, ERES broke out from its large trading range.  During the rise prior to the breakout, the stock rose from 0.83 to 6.49.  Following the breakout, the stock rose to a high of 37.40.  The entire move from 0.83 lasted nearly 3 years (from 04/2001 to 01/2004).  The consolidation that has followed the move has developed favorably for bulls. 


    Note:  Consolidation is often seen as a


    Elliot Waves

    We expect:

    • A strong 3rd wave upwards (see monthly chart)
    • A strong 5th wave upwards (see daily chart)

    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


    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



    Volume studies support this view.  Contrary to prior action, volume has recently begun following the strong upward moves in the stock; this is a bullish sign.


    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



    ERES had been consistently outperforming the NASDAQ on a beta-adjusted level until it topped on October 30th (eerie).  The stock fell from a high of 33.73 on Oct 30 to a low of 20.67 on December 10th.  The decline represented a sharp negative divergence from the NASDAQ.  Since then, the stock has begun to again converge with the NASDAQ.  During the past seven weeks alone the stock has risen from 25.68 (March 22, 2004) to close at 33.00 yesterday—a gain of 28.5%, which compares favorably with the NASDAQ’s 3.2% gain.  We expect the stock to continue repairing its divergence with the NASDAQ.


    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


    It should be noted that it is possible to read the situation differently—thinking that what we have called “divergence” is in fact not; rather, it is the stock converging with the NASDAQ after having diverged for a long period of time.  Our form of divergence analysis, however, generally gives a positive weight to long-term divergences, and a negative weight to short-term divergences, and thus supports our argument.  Our divergence analysis technique has been derived from numerous academic studies that show short-term underperformance is (on average) reversed, and intermediate-term out-performance (on average) continues.


    Key Levels:


    We feel that the stock is a good buy at current levels. 


    We might change our view of the stock if either the fundamental picture or the technical picture changed drastically.  However, we would be for now content with a very loose stop loss level of $25.49, slightly below the most recent major upside inversion point. 


    A target for the trade could be placed at $49, slightly below the psychological resistance level of $50, and near a forward P/EG ratio of 1.



    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 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, 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: Normal Equity Draw-Down Or Pilot Error? / by Bennett McDowell, Columnist

    Back to top

    Founder and President of, 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

    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
    Normal Equity Draw-Down or Pilot Error?

    As a trader you will need to learn how to distinguish between normal equity draw-down and pilot error in your trading.  When getting stopped out in a trade, look closely at your trading signals and how you reacted to them. 

    Be honest with yourself and decide one of two things:

    1.)   Equity Draw-Down - Was this a normal part of your system’s allowable equity draw-down, meaning you followed the system to the letter, did not misread any signals and did not hesitate in acting on those signals?

    2.) Pilot Error - Was this trade influenced in any way by your psychology, possibly hindering the success and profitability of the outcome?  Did you inadvertently misread a signal due to haste or inexperience?

    If you decide that the losses are due to normal equity draw-down, you should feel good knowing that you did everything right.  This is a normal part of doing business as a trader.  But, how will you react to this psychologically?  How will you react on the third, fourth or fifth normal equity draw-down stop out? Will it cause you anxiety or will you be able to handle it?

    Handling draw-down periods is a lot like being a doctor. For example, it must feel the same for the doctor or surgeon that does everything right and then has a patient that still dies.  It’s hard not to feel frustrated or depressed, yet you must be able to handle your emotions and keep going by knowing you did everything possible. 

    Will this psychology affect future trades creating doubt in your own ability and doubt in your trading system?  If you know you did everything right, it’s important to have the confidence and the strength to get “back in the saddle.”  Experience with equity-draw downs will make this easier as time goes by. The key is to expect them and prepare emotionally before they happen.

    Now, what if you determine that your drawn-down was instead due to pilot error?  You may have missed a signal or your emotions clouded your judgment.  We’re all human and every trader experiences pilot error.

    The difference between experienced traders and the novice trader is that the experienced professionals recognize it more quickly and take action to correct the problem ASAP.  Those traders that have more experience also have fewer and less severe pilot error incidents.

    Let’s face it, no one likes getting stopped out, unless they’re a masochist.  But the reality is that it’s a part of doing business and whether the stop out is due to draw-down or pilot error, you learn something either way. 

    Try to let your trading psychology develop into a support system as opposed to a handicap.  The more you learn about your own emotions and psychology the more successful you will be in the market. Strive to arrive at an emotional state or mindset where your wins and losses do not cause behavior swings from manic to depressive. In other words, keep an “even-keel” emotionally whether your winning or losing. And be able to determine if equity “draw-down” periods are caused by “pilot-error,” or if they are in line with your trading model.


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

    Copyrighted © 2003, Inc. All rights reserved.

    CONTRARIAN CORNER / by Jeff Weber, Columnist

    Back to top

    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

    Famous old joke goes something like this: "Geez, I'm getting married, my father is a murderer, my mother sells drugs, my sister is a prostitute - gees, should I tell her about my cousin, the Financial Planner?"

    For any joke to be funny, there has to be a kernel of truth behind the joke, heck, I'm not going to give you a kernel, here's the whole ear of corn! Do you what "boiler plate" means? - basically a manufacturer stamps out thousands of the same, exact design. It might be fine for boilers, valves for your car, but it's not really fine when a financial planner gives you, the investor, a boiler plate, when you were expecting a custom portfolio exactly to your wishes. And it's even worse if it is a very expensive boiler plate!

    Well, there are Financial Planners and there are FINANCIAL PLANNERS!!! A guy by the name of Ken Fisher is a FINANCIAL PLANNER! He is not the guy at the corner office in Mayberry helping the local folks. Ken is big-time coast-to-coast and he wants to be Bigger! Ken advertises any way he can - Internet Marketing (Spam?), direct mail (junk?) and radio advertising in which he praises his illustrious career as a Forbes magazine columnist (heck, I'm a columnist). He has grown into a 650-person business (can you say big salary/commission costs) and is now one of the big boys of the money-management business.

    Ken Fisher sells "customized portfolios" to the rich (I guess no money in custom portfolios for the poor). He is quite successful at it - his company manages $20 billion in client money which has gone up 500% from four years ago. His 12,000 customers have to have $500,000 which he just raised to $750,000!!! Hey, all of Ken's former 500 K guys - I'll manage your portfolio real cheap and you'll make real profits! Many people hire him because he emphasizes the "custom portfolio" he will create for them.

    Hey, the idea of having a custom portfolio does sound good! Ken claims his custom portfolios do much better than ordinary mutual funds. He asserts Fisher Investments has beaten the market often by a wide margin in most of his previous years in business. These "claims" plus tons of advertising have brought him lots of business. Fisher, like many other money managers, used the Bear Market to his advantage by seeking disgruntled investors with his fabulous claims. Money from investors has flowed in at a much higher rate since the Big Bear Market a few years ago.

    But is Fisher Investments really Fishy Investments? Many serious questions have been raised about what Fisher is actually doing for his investors (to his investors?). Is Fisher really giving clients a "customized portfolio"? Many former clients and Fisher former employees have said Fisher's advertised promises are coming up a bit short of the truth. If these claims are correct, then Fisher may have violated ethics and laws in his quest for the Holy Grail of client cash.

    Even that pansy defender of the small investor, the non-mighty SEC is doing an investigation into Fisher Investments. One former Fisher counselor claimed that 99% of the custom portfolios looked like the other 99% of the custom portfolios - only 1% of the portfolios were really customized - giving the other 99% a bad name! The counselor thought that strange since the individual wishes of the 99% were actually different from each other and thus how could an identical custom portfolio be giving the clients what they wanted - not what Fisher wanted. That other 99-pound weakling of investor protection - the NASD - is also looking into this.

    Fisher like 105% of all persons in the financial industry vigorously denies these assertions. Of course, the former employees were out to get tell the truth? Fisher states the 99% claim "the same" is a lie and illogical ..doesn't say if 98% would be true. Read this one - Fisher states even if clients' portfolios do look similar (identical?) they have been customized to each individual's objectives and needs. Fisher says he has never had a regulatory problem with the SEC - not many have because ain't looking out for you! - they are cream puffs - who goes to jail based on an SEC investigation?

    But how can someone like Fisher even attempt something like this? - won't he be found out and punished if this what he is doing? No, of course not. Because like most nonexistent protections from the SEC for investors; you could drive a Tank through the loopholes and gray area between black and white without the SEC even noticing! How is this for dense foggy language? For you see separate-account managers dwell in a Twilight Zone in which all the buzz words have no useful definition whatsoever. You think "customized portfolio is clearly spelled out - hell no. Here's the "fog from the Feds" guys like Fisher take to the bank - Feds say that advisors are required to manage accounts on the basis of a client's "financial situation and investment objectives and in accordance with any reasonable restrictions". Hey, get my tank! Of course Financial Planners are supposed to "uphold the highest standards in the security industry (what a low standard) in terms of their culpability". Hey, where's the profit in doing that????? So customizing can be something as slight as tweaking the portfolio. At best, guys like Fisher advertise Mt. Everest and give you a molehill but the SEC don't know the difference. Semi-honest planners will at least try to convey to you they don't spend hours planning that custom portfolio - I don't know what Fisher's clients are told. But some of them seem a little angry.

    One former client has filed a class-action suit (smart, knows the SEC won't do anything) to get to the bottom of this. He alleges that Fisher's claims of providing "personal or customized portfolio services and a customized portfolio" are false. Instead of getting advisor designed portfolios; Fisher is selling boiler plate portfolios (that is a lot easier to do and would, of course, be a lot more profitable). One client did win an arbitration case (God, he must have had compelling evidence!!!) and collected $136,000 in damages. See if you think Fisher gave this guy a "custom portfolio" based on his wishes. The client wanted retirement savings put into conservative investments that would not fall more than a 10% but Fisher put his money into stocks right in the middle of the Big Bear Market and I guess the guy found his investments went down a lot more than the 10% he wanted!

    Remember my previous column - almost all arbitrators are pro-financial business and anti-investor? Well, this arbitrator stated the evidence supported the former client's claim and the arbitrator found that Fisher's portfolios were not always custom-tailored to the client's wishes. Then the arbitrator remembered who is supposed to please and said he really didn't mean that 80% of Fisher's clients had a boiler plate (almost exactly the same portfolio) but rather he meant 80% had a global orientation - ha!

    Further Fisher Fishy Facts - several former employees told the SEC that they think Fisher's advertising leads clients to believe that their portfolios are reviewed by the Holy Trinity at Fisher and tailored by them for the clients' wishes. Here's what Fisher's ad says - you be the judge - "each client's investment counselor will communicate your needs to Ken (Fisher), the rest of the investment policy committee, and our securities traders". However, former employees say most of the portfolios don't even get to the Committee let alone Ken (based on a 2,080 hour work year divided by 12,000 clients, Ken would be able to spend 10 minutes, 40 seconds customizing every portfolio based on clients' wishes...and that assumes he does nothing else! - you think he's imputing valuable thoughts to 12,000 portfolios a year? Fisher's site promises his company takes multiple factors into account. One former client quit after he discovered his custom portfolio was the same as his parents even though they were 30 years older than him anddidn't have the sameclient wishes.

    Again that fine political talent of not answering the question is understood by Fisher who says the vast majority of his clients are satisfied with his methods (does that answer the question of whether their portfolios are uniquely customized to their needs and wants and that all the people review them that Kens claims review them in his ads?? Again, you be the judge! I will leave you with this - I manage a couple of hundred thousand dollars for one client - have since Aug 02 - his emails call me friend, he is inviting me to his place in Oklahoma when I return to Texas next month for a barbeque. How many of the 12,000 clients call Fisher a friend and plan to invite him for a barbeque? Again, you be the judge.

    Here are three stocks I like this month:

    Delta Air - (NYSE: DAL, $5.38)
    52 week: High - $16.05 - Low $5.35

    DAL has contract with government to fly federal employees from Europe to America and the military - real cheap now.

    Merck - (NYSE: MRK, $46.37)
    52 week: High - $60.10 - Low $40.57

    MRK strong drug company, pays good dividend, cheap now - good long-term conservative AIM stock.

    Amgen - (Nasdaq: AMGN, $56.95)
    52 week: High - $72.37 - Low $56.26

    AMGN another good long-term AIM stock - big in biotech.

    INSIDE TRACK: Weekly Insider Report / By Jeff Williams

    Back to top

    Jeff Williams is a partner with 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 IGT April 2004

    International Game Technology

    International Game Technology is engaged in the design, development, manufacturing, distribution and sales of computerized gaming machines and systems products in all jurisdictions where gaming is legal. The Company operates in two lines of business, Product Sales and Proprietary Gaming. Product Sales encompasses the design, development, manufacturing, marketing, distribution and sales of computerized gaming products and systems. Revenues in this segment are generated from the sale of gaming machines, systems, parts, conversion kits, content fees, equipment and services. Proprietary Gaming includes the design, development, manufacturing, marketing and distribution of the Company's proprietary games under a variety of recurring revenue pricing arrangements, including wide area progressive systems, stand-alone participation and flat fee equipment leasing and rental and hybrid pricing or premium products that include a recurring fee attached to a for-sale game.

    Neil Barsky, 46, has served on the board of directors since March 2002. Mr. Barsky is founder and managing partner of Alson Capital Partners, a New York City investment management firm. Through September 30, 2002, Mr. Barsky was managing partner and co-founder of Midtown Capital Partners, LLC. Between 1993 and 1997, Mr. Barsky was an equity research analyst at Morgan Stanley, specializing in real estate, gaming and lodging. Prior to joining Morgan Stanley, Mr. Barsky was an award-winning reporter at the Wall Street Journal. Mr. Barsky has an MS from Columbia University's Graduate School of Journalism and a BA from Oberlin College. Mr. Barsky is a member of the Audit and the Nominating and Corporate Governance Committees.

    You will notice in Barsky's profile above that he was previously an equity research analyst at Morgan Stanley, specializing in real estate, gaming and lodging.  The fact that he is now buying a large amount of stock in a gaming stock that he is now on the board of is quite interesting.  You will notice on the chart that the stock has pulled back substantially during the past week.  Barsky bought into this dip.  Taking into consideration his knowledge as a gaming analyst and being on the board, we believe Barsky sees a much higher stock price down the road.

    From our Readers:

    Back to top

    Do you have comments, thoughts or opinions on Talking Points that you would like to share? Email them to

    FRESH PICKS: On the Prowl

    Back to top

    Weekly Stock Picks From Bob Coppo - New Feature!  

    Top Stock Picks for Monday, May 10th, 2004:
    We have no buy signals for Monday.

    Good Trading!

    Bob Coppo is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site,

    1. KKD (Krispy Kreme Doughnuts, Inc., Rstaurants) $22.51 - Buy. As the markets continue to tank amid rate-hike fears and uncertainties in Iraq, big-name bargains have started to appear in the list of 52-week lows. As of Friday, there were an amazing 423 NYSE stocks finding new lows versus just 27 reaching 52-week highs. This is the type of unbalanced ratio we like to see, signaling a slew of opportunities are on the horizon. Among those making lows, there are quite a few worth looking at. We start off this week with former Street darling KKD. "Krispy Kreme Doughnuts, Inc. is a specialty retailer of doughnuts. The Company's principal business is owning and franchising Krispy Kreme doughnut stores, where it makes and sells over 20 varieties of doughnuts, including its signature Hot Original Glazed and nine other prescribed varieties. Each of its stores is a doughnut factory with the capacity to produce from 4,000 dozen to over 10,000 dozen doughnuts daily. The Company also sells in its stores drip coffee, other beverages, other bakery items and collectible memorabilia such as tee shirts, sweatshirts and hats. As of February 2, 2003, there were 276 Krispy Kreme stores, of which 270 were located in 37 states in the continental United States, five were located in eastern Canada and one was located in Australia." KKD is planning and executing global expansion now, and isn't going away anytime soon. For the fiscal year ended 2/01/04, revenues rose 35% to $665.6 million while net income increased 71% to $57.1 million. For a company continuing to grow its numbers at such a rapid clip, the forward price-to-earnings ratio here of just 16.31 represents quite a bargain. Friday, the stock took a massive beating on news the company now expects 2005 numbers to come in approximately 10% short of prior guidance on increasing consumer demand for lower carb foods. Management numbers are strong, with a return on equity of 15% and a return on assets of 10%. Shorts have pounced on KKD on its way down, with 24% of available shares short as of April 7. With the stock now tremendously oversold and, in our view undervalued, all this sets up for a nice bounce in the future. Friday's close came at the bottom end of the intraday range, so be extremely cautious on entry as you may not want to be on the receiving end of a falling knife. However, watch for an increase in buying and once the reversal appears, look to enter. Friday's selloff came on massive volume, nearly 2500% above normal daily volume, so we are hopeful the selling will end as quickly as it began. The $22 level represents the lowest mark since 2001 and we imagine it won't stay down here for long. Look to the former 3-year low of $25 as an initial target, with much higher returns possible for those with a longer-term outlook . Short-term price target: $25.00 (11% gain) Stop loss trigger: $21.00 (7% loss)

    KKD Chart

    2. NOK (Nokia Corporation, Communications Equipment) $13.88 - Buy. Our second pick for the week ahead is another sold-off blue chip in the form of cellular giant NOK. "Nokia Corporation is a mobile communications company primarily offering voice-centric mobile telephones, enhanced communicators, entertainment and gaming devices and media and imaging telephones. Effective January 1, 2004, the Company reorganized its structure and now includes four business groups: Mobile Phones, Multimedia, Networks and Enterprise Solutions. Mobile Phones develops mobile telephones for all major standards and customer segments in over 130 countries." We view NOK as another big-name bargain buy at current 52-week lows, following a 40% share-price collapse since peaking in March at $23.52. With a stochastic showing deeply oversold here and a forward price-to-earnings ratio of just 13.74, we view NOK as a solid long-term hold with an eye on averaging down on drops from here. For the short-term trader, we'd recommend waiting for the dust to settle and for a reversal to appear before jumping in with both feet. Friday's close came at the very bottom of the stock's intraday range, so there could still be more to the downside before NOK turns northward once again. Remember, at these levels, there's no support built in below. Overhead resistance will be in play until the stock can pierce back above its former low of $14.05 and stay there. Still, we like the risk-reward potential here. Short-term price target: $15.40 (11% gain) Stop loss trigger: $12.90 (6% loss)

    NOK 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

    List Maintenance:

    Back to top

    Online issues can be found at
    and click on the "Past Issues" menu item.


    Back to top

    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 may buy stock in the companies that we recommend in our newsletter, and may sell those shares after recommending them.

    6. Small-cap companies, micro-cap companies, penny stocks and/or thinly traded shares are highly risky and volatile investments. You risk losing some or all of the money you invest.

    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 are only the opinions of 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 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. 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 and its representatives reserve the right to buy and sell any stock mentioned on this web site. reserves the right to buy or sell any of these profiled stocks before, during and immediately after they are posted to the site. 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 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 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 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.

    Copyright © 2002-2003, and