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May 23, 2004
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PREMIUM EDITION
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Issue #118
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| WEEK ON WALL STREET: Week In Review / by Bob Coppo |
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| Our new Week on Wall Street columnist is Bob Coppo. Bob is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com. |
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The Week on Wall Street
Friday's Action: Stocks finished with modest gains on light volume Friday, amid upbeat retail earnings and a decline in oil prices. Stocks eased in late trading, with many investors reluctant to take on positions after a choppy trading week. Major world markets reported mostly higher results on Friday. London's FTSE closed up 0.06%; Frankfurt's DAX closed down 0.19%, and Paris' CAC 40 closed lower by 0.08%. Japan's Nikkei closed up 1.92%, Hong Kong's Hang Seng closed up 2.08%, and Sydney's All Ordinaries finished up 0.45%. There were no economic reports Friday. Volume came in at 1.26 billion shares traded on the NYSE and 1.53 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 2.01, and up volume over down volume by 2.09; Nasdaq advancing issues over declining issues by 1.77, and up volume over down volume by 3.02. Leading sectors were Airlines, +2.70%, Gold Bugs, +2.33% and Chemicals +1.91%. Laggards were Oil Services, -0.68% and Energy, -0.20%. Nasdaq 100 futures closed 6.50 pts higher to settle at 1408.50, while the S&P's settled up 1.90 pts at 1092.50.
Weekly Recap: The major averages finished the week flat to mixed as investors retreated to the sidelines. Worries about soaring energy prices, talk of rising interest rates, and global turmoil provided little incentive to buy stocks.
Geopolitical events were at the forefront once again. On Monday, India's stock market sank 11% on fears that the newly elected government would stifle corporate growth. That was followed by a bombing in Turkey and the suicide bombing of the head of Iraq's Governing Council, which sent the Dow plunging to its lowest level since December 5th. Meanwhile, the price of crude oil soared to its highest level in 21 years. Bonds and gold were the only asset classes to show gains for the week.
The market spent the rest of the week in shock, trading in lackluster fashion on anemic volume. The Nasdaq had it lowest volume day of the year on Tuesday. Traders used short rallies as opportunities to take profits. Investors were unable to generate much enthusiasm to but stocks, however, as the Dow and Nasdaq remained below their 200-day moving averages.
For the week, the Dow lost -0.5%, the S&P 500 finished -0.2% lower, while the Nasdaq edged up +0.4%. The small cap Russell 2000 gained +0.4%. Next week there is little on the earnings calendar to excite investors, who will be looking ahead to the Memorial Day holiday on May 31. This weekend's G-7 meeting has received little media attention, but the results coming from the informal gathering of OPEC ministers in Amsterdam this weekend is much anticipated. Saudi Arabia is said to be planning to increase production by more than 2 mln barrels a day. That prospect sent the price of crude oil below the key $40/bbl mark Friday and helped to stabilize stocks.
Coming Crisis in the Southern Cone: The Argentine Merval Index (MERV) has been in free-fall since early March, after gaining almost 100% over the past year. Argentina has had one of the fastest growing economies in the world, second only to China. And then the government got involved. The reasons for the government intervention policies and their effects on Argentina and its neighbors are laid out in an excellent article by Grant M.ÊNŸlle of the Mises Institute titled No m‡s: The Coming Argentinian Meltdown. The lessons are clear. State manipulation of free capital markets has never been a good idea. And we know from experience that crises in emerging markets can send shock waves throughout the world.
Update on the POI Strategy: With May options expiring officially on Saturday, May 22nd, an update on the Peak Open Interest (POI) strategy is in order. The POI is simply a chart showing the strike price where the maximum OEX call and put option open interest resides in the last week before expiration. You can learn more about how we use this information to execute profitable trades at our Website. We use this strategy to trade OEX option credit spreads and started trading with the February expiration. We have made four profitable trades as of Friday. Here are the results:
| Expire |
"Spread" |
"Credit" |
% Profit |
Days Traded |
| 20-Feb-04 |
Bullish Put |
$190 |
38% |
5 |
| 19-Mar-04 |
Bullish Put |
$135 |
27% |
4 |
| 16-Apr-04 |
Bullish Put |
$130 |
26% |
4 |
| 21-May-04 |
Bullish Put |
$140 |
28% |
4 |
While we only have four trades under our belt, so far the results have been pretty impressive. The average percent profit for the four trades (not including commissions) has been 29+% and we have only been "exposed" to the market less than five days per month. The POI system has a number of advantages over buying call or put options. Most options traders end up losing money due to the inherent difficulty of consistently being on the right side of the trade and the fact that options are "wasting assets". The POI strategy overcomes most of these disadvantages by:
- Accurately defining the range where the OEX will close at expiration.
- Reducing "market exposure" to one week or less.
- Consistently returning 15% to 25% on investment per month.
- Limiting downside risk by the use of "market if touched" stop orders.
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 sold some 8,600 S&P 500 futures contracts last week to bring their net short position to -28,906 contracts. Large Traders remained net short -36,144 contracts, with the entire offsetting net long position of +65,050 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials bought some 600 contracts to bring their net long position to +20,848 contracts. Small Traders were net short -9,092 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money sell some 1,300 contracts to reverse their position to net short -187 contracts.
Commercial Hedgers were better sellers in the S&P's last week and increased their net short position, while Small Traders increased their net long position. For the intermediate term, their opposing positions should be considered bearish.
Sentiment Surveys: The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 43.6%, while the percentage of bears was 26.7%. The bullish ratio (bulls/bulls +bears) was 62%.
The latest AAII survey showed an increase to 37% bulls, and an decrease to 40% bears. The bullish ratio came in at 48%, while the 4-week moving average is 55%. 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 59%, indicating that the majority of commodity trading advisors (CTA's) remain bullish on the future direction of the S&P's.
The Short Term Outlook; 1-5 Days: We said in Thursday night's column that the odds favored making higher highs on Friday, and that happened. Friday's price action was mixed, so we don't have a clear directional bias for Monday. While the stock market managed to rally early Friday, it was somewhat disappointing that the market couldnÕt hold itÕs gains into the afternoon. The S&PÕs hit a high around 11:30 AM and then declined into the close. Traders apparently were not impressed by the decline in energy prices, or by the upgrade in the outlook for China. Even the Fed was out clarifying that they were not set to raise rates rapidly, but that didn't prompt buyers to step up. Traders were not about to second guess ahead of a weekend where almost anything could happen in the energy sector. And that makes divining short-term direction difficult.
While the oil price reached an all-time closing high on Thursday, energy shares, represented by the Energy Select Sector (XLE), hit a high back on April 27th and have been declining since. The XLE traded below its 50-day moving average for the last four days last week. Normally, weakness in energy shares suggests that some relief in the price of crude oil is forthcoming. FridayÕs announcement by Saudi Arabia that it is planning an increase in production sent crude oil back below the critical $40 mark. Any hint of weakness in energy prices is potentially bullish for the short term.
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 SPX chart below shows that the StochRSI indicator is in the NEUTRAL zone. For Monday, resistance for the S&P's comes in at 1098 and then 1104.50. Support lies at 1087 and then 1082. For the Naz, resistance comes in at 1417 and then 1426. Support lies at 1399 and then 1389.
The Intermediate Term Outlook; 2-6 Weeks: Developed by Sherman and Marion McClellan, the McClellan Oscillator is simply the difference between a 19-day ema and a 39-day ema of advancing minus declining issues. On a daily basis, the Oscillator isn't of much value, except at extreme readings. The Summation Index is a running total of the oscillator and is a longer term indication of market breadth. Both the NYSE and Nasdaq Summation Indexes have turned higher, but as the chart of the NYSI below shows, it's nothing to get too excited about yet. Since the January market top, the index has been locked in a downward sloping channel and every previous attempt to break out of that channel has so far failed.
Our Market Trend Indicator (MTI) is currently positive and trended slightly higher on Friday.
Good Trading!
Charts and data appearing in today's column are courtesy of:
StockCharts.com
Yahoo! Finance
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Last week featured our look at 10 undervalued stocks hitting 52-week lows in an oversold market. Our longer-term outlook picks from last week's chart outperformed the markets while gaining an average 2.1% on the week.
Below, you can see the performance of each pick on the week, but keep in mind these plays break from our traditional quick swing approach and provide some nice ideas for the trader who is looking to ride a core set of equities during a corrective market move to the upside. We will revisit this chart in coming months to see just how these stocks perform over time.
| Symbol |
Fri. Close / % |
Forward P/E |
52-week high/low |
Short-term Target |
Gain/ Loss for the week |
| GB |
$25.00 / -15.91% |
16.89 |
$45.15 / $24.40 |
$28.00 |
+0% |
| EDS |
$16.07 / -1.23% |
20.87 |
$15.85 / $25.44 |
$17.90 |
-1.5% |
| ADIC |
$8.13 / -19.27% |
21.39 |
$7.50 / $19.79 |
$9.80 |
+5.6% |
| BEAS |
$8.35 / -22.54% |
18.98 |
$8.26 / $15.50 |
$10.00 |
-1% |
| SFP |
$3.40 / +22.74% |
N/A |
$2.50 / $15.20 |
$4.40 |
+15% |
| KKD |
$20.76 / -2.63% |
16.48 |
$20.08 / $49.74 |
$24.00 |
-5.4% |
| CMNT |
$5.36 / -6.78% |
14.49 |
$5.35 / $11.84 |
$6.28 |
+1.6% |
| FHCC |
$15.00 / -1.51% |
10.27 |
$14.99 / $28.88 |
$17.00 |
-0% |
| NOK |
$13.19 / -2.15% |
13.06 |
$13.05 / $23.52 |
$15.00 |
-0% |
| IASG |
$4.90 / -37.58% |
8.17 |
$4.50 / $12.50 |
$6.00 |
+6.1% |
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.
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| TECH WATCH: The Growing Digital Rights Debate / by Jeff Neal, Technical Market Columnist |
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Jeff Neal is a veteran options strategist and trader with over a decade of experience in the trading business. Jeff has had a diversified business career operating a very successful management consulting business with his clients representing some of the largest companies in the world.
He has a B.S. in Computer Science from Indiana University and an MBA in Finance from the University of Indianapolis. Jeff is a writer, mentor, and options strategist for Optionetics (http://www.optionetics.com/) and as head of his own hedge fund is an active options trader in both the equity and futures markets.
Jeff Neal - Staff Writer & Options Strategist - Optionetics.com ~ Your Options Education Site
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The Growing Digital Rights Debate
By Jeff Neal
Optionetics
As more hi-tech companies continue to supply the movie and record industry with a variety of ways to exploit the new digital technology, a debate on just how to harness this digital power is starting to heat up. In particular, the discussion revolves around digital rights management technology, which is designed to prevent digital piracy as well as allow content providers a means to control how digital movies and music files can be deployed.
There are indeed some major players vying for the digital rights management market that include companies like Microsoft (MSFT), Apple (AAPL), IBM (IBM), Sony (SNE), and RealNetworks (RNWK) just to name a few. The respective offerings have left the market a bit bewildered as consumers sort out and differentiate these hi-tech products.
Just like operating systems for personal computers in the 1980s you currently have a lot of Digital Rights Management designs, models, and standards, which makes it even more difficult for the customer due to the inherent incompatibility. With the entrance of IBM to the market fray the impact appears to be forcing content publishers and device makers to actually pick a distinct side or strategy with their Digital Rights Management approach.
According to consumer advocacy group representatives, you can look for the digital rights standards issue to get quite touchy especially considering that content publishers and technology vendors currently plan to impose many restrictions on consumers. The anticipation is that a huge market shakeout will occur much like the Beta and VHS format battle over two decades ago. The debate should be heated given that consumers now enjoy the freedom of the Internet and will probably frown mightily about this proposed shift in digital rights.
IBM has come forward with a marketing plan designed to address this potentially adverse consumer sentiment and shift attitudes. Their approach, which was recently revealed in Las Vegas at a broadcasting convention, is called extensible Content Protection also known as xCP. The strategy involves making xCP part of as many movies and music files as possible. By doing do so will provide IBM an avenue to very profitable possibilities to selling digital content.
The technology will allow users to download songs and movies that will play on different devices from different companies without expiring in a specified time period. In addition, the new technology being offered by IBM can prevent piracy, collect money as well as dole out shared revenue. It is this kind of flexibility and robustness that is on the horizon that has media executives excited.
Microsoft is trying a similar approach with its Windows based DRM platform. The inherent strength Microsoft has is that the Windows Media Player software is required to play Windows formatted media. The software is currently on over 500 million PCs across the globe. Also, the company has made some powerful partnerships with Disney and Warner Brothers in regards to digital media projects that should further enhance their presence in this space.
Of course the real debate in the coming months will be consumer rights versus business rights. However it does appear major technology companies are finally addressing the market hot spot, which is providing affordable content, with fair usage and the ability to play this content on virtually any device while at the same time meeting the needs of the major media companies.
Happy Trading.
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| MARKET TA: Riding the Waves / by Dale Woodson, Technical Market Columnist |
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Dale Woodson is the editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
We encourage our subscribers to visit his site at http://www.woodsonwave.com and please see Dale's complete bio following his column.
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TIMER DIGEST’S (P.O. BOX 1688, Greenwich, CT. 06836/ 203-629-3503)
#9 LONG TERM STOCK MARKET TIMER FOR THE YEAR 2003.
#4 GOLD MARKET TIMER FOR THE YEAR 2003.
#8 STOCK MARKET TIMER FOR THE FIVE-YEAR PERIOD OF 12/31/98- 12/31/03.
#6 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/29/00- 12/31/03.
#4 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
#5 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/98- 12/31/01.
#4 STOCK MARKET TIMER FOR THE YEAR 2001.
#7 STOCK MARKET TIMER FOR THE YEAR 2000.
#5 BOND MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
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DOW
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WAVE DEGREE
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COUNT
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FROM
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DIRECTION
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TARGET
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GRAND
SUPERCYCLE
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THREE
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1784
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UP
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Year 2012
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SUPERCYCLE
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(V)
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1932 or 1942
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UP
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Year 2012*
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CYCLE
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V
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12/6/74 or 8/12/82
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UP
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Year 2012
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PRIMARY
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4
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8/24/99
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DOWN
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.618 = 5803
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INTERMEDIATE
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(A)
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8/24/99
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DOWN
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Complete @ 8062 on 9/21/01
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(B)
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9/21/01
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UP
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Complete @ 10,673 on 3/19/02
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(C)
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3/19/02
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DOWN
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Complete @ 7197 on 10/10/02
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(D)
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10/10/02
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UP
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Topping, high 10,753 on 2/19/04
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(E)
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12/31/03
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DOWN
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.500 = 6865/ .618 = 5803
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PRIMARY
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5
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NOT YET
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UP
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Year 2012
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* "…it should terminate about the year 2012"
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* "...not expected to terminate until about 2012"
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R. N. Elliott, Educational Bulletin O
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R.N. Elliott, Interpretive Letter No. 17
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October 26, 1942.
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August 25, 1941.
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Primary degree wave 2 down (1987 - 1990) running flat correction.
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Primary degree wave 3 up (1990 - 1999)
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Primary degree wave 4 down (8/24/99 -?)
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WAVE (E) DOWN UNFOLDING
The chart above illustrates how perfectly the Dow has declined from our turning point high back in February. At that time, we declared wave (D) up in the Dow as complete. Since that high, the first wave down of minor degree broke down in absolute textbook fashion. Five wave patterns to the downside followed by three waves up. Note the extension in minute wave three. At every degree, from minor to minuette, we can easily count five waves down. Each fourth wave holds below the low of the previous first wave low, fulfilling the guidelines of Elliott Wave. It doesn’t get any prettier than this, folks.
The market has been a bit choppy since that first wave low of minor degree on 3/24/04. As you can see, we label this second wave counter trend bounce as complete at the 4/27 high. From that high, the market appears to once again decline in five wave patterns. This of course, is the initial stage of wave three down
Recall from the March issue that we expected the Dow to retreat, if for no other reason than to at least fill in the gaps that remained from its most recent gains.
“…As the market has moved up over the last week, it has left some gaps to be filled. At a minimum, the market will need to come back and fill these gaps. I can’t imagine three breakaway gaps in a new upward run.”
Of course, the market once again has accommodated our forecast. At this point in time, the Dow has filled two of those three gaps. The one remaining gap lies just above the 10,000 level. Again, at the very least, we expect the market to come back and fill this last gap.
Keep in mind however, that this is a third wave. In the near term, we can expect this third wave to accelerate to the downside. Now, note the gaps to the downside in the hourly chart above. Notice how the tide has changed. The market went from gaps to the upside to gaps to the downside. This can only mean that wave two is complete, and as wave three accelerates to the downside, the previous gaps will be filled as new gaps are formed. These gaps to the downside are acceleration gaps and should not be filled in the near term. They could quite possibly remain unfilled in the intermediate term as well as this third wave gains momentum. Soon we shall see the Dow once again below 10,000.
FIBONACCI TIME SPIRAL
I’d like to revisit our Fibonacci time spiral briefly. Once again, the spiral that has called the turning point highs since 1999 has served us well. Of course, I felt extreme confidence that it would come through once more with the wave (D) high in February. Now comes the critical point of the entire bear market. To be quite honest, with all our success at calling the highs, we have not enjoyed that same jubilation at the lows. After studying the Fibonacci ratios and trying every possible combination from the August 1999 high, we had to think outside of the box. What we came up with was displayed in the January 2, 2004 report. We compared the number of days from the actual all time high (1/14/00) to the lows of waves (A) and (C). In this case, there were 618 (minus 2) days between the all time high and the wave (A) low, and 1,000 to the wave (C) low. Of course, these numbers are exact Fibonacci ratios themselves! From that point, we projected the wave (E) low to naturally occur 1,618 days from the high. That date is June 19, 2004.
Wave Relationships from 1/14/00 high
Fibonacci Target Actual Turn Date
Plus 618 days = 09/23/01 wave (A) low 09/21/01 (margin of error 2 days)
Plus 1,000 days = 10/10/02 wave (C) low 10/10/02 (direct hit)
Plus 1,618 days = 06/19/04 wave (E) low?
As you know, we expect wave (E) down to decline in a five-wave pattern to end the bear market. Waves one and two appear complete. At this point, from the wave (D) high in February, it is quite possible for this decline to bottom in five waves at or near our target date.
Before we all become giddy like third grade school girls over this possibility, I want to make one point. Once I identified the orthodox high on 8/24/99, I had confidence that the market would turn on our Fibonacci turning point highs. As April 14, 2000 approached, I eagerly anticipated a turn to the downside. As the NASDAQ topped and tumbled to the downside on that exact date, I felt a growing confidence in this sequence because I had been here before. It was much like the spiral back in 1996. That Fibonacci sequence enabled us to call the turning point highs up to the spring of 1998. Now, it was happening all over again. And, once again, just like before, the market paid its respect to these spirals. With each turning point – the Labor Day weekend of 9/4/00 and subsequently the March 2002 high, I came to expect the market to reverse itself. I had supreme confidence now. That is why there was no doubt in my mind that the market would top in wave (D) near our February turn date. Now, in the spring of 2004, I have witnessed the fibonacci spiral sequence call seven different turning point high dates covering two different major moves to the upside (one in a bull market, one in a bear market) spanning a total of more than six years. And all these dates were hit with a margin of error of just a few days – some within the exact day! It still ceases to amaze me.
So you can imagine my resolve that the market would indeed top. Now that you have a feel for my level of confidence in the fibonacci sequence in calling the tops, you can imagine I move forward with at a little trepidation as we await the oncoming bottom. Because the spiral I am using for this low is not like the one used for the high. Unlike the other spiral, it has not stood the test of time. To date, it is unproven, except for the wave (A) low. And it is outside of the box, to say the least. So I must openly admit that I do not have the same level of confidence that the market will bottom in wave (E) on June 19, 2004, as I did that the top of wave (D) would occur in February of 2002. But with that being said, each day as this wave pattern from the February high unfolds, the case for a June 19, 2004 low gains more and more credibility. At least the framework has been set. And up to this point, the market has set itself up beautifully in terms of wave pattern and price for what we anticipate to actually occur. From this point forward, a strong decline in wave three down is exactly what is needed to move this potential bottom date from possibility to probability. Of course, we will watch and wait with great anticipation.
How will we know if we are correct? At what point is the wave count negated? Thankfully, we have our Elliott wave patterns to guide us. In the near term, we remain bearish against the most recent high of 10,537 registered on 4/27. This price represents the second wave high. While a move above this price will not negate the wave count, it will cause serious damage to the prospect of a June 19, 2004 bottom. To the downside, a move below the first wave low of 10,007 will be the first indication that our wave count is correct. We know that the possibility of a panic/spike low existed fifty-five fibonacci days after the most recent (2/19/04) high. Of course, that did not materialize. The next potential day for a panic/spike low is a fibonacci eight-nine days from that high. That date is May 18, 2004. This date could possibly mark the end of wave three down. From there, the market could rebound in wave four up, only to fall to new all time lows at the end of the bear market in wave five down on June 19, 2004.
BOND MARKET
As the April 26 email alert stated, it is safe to say that the highs of early March represent the entire second wave retracement (see chart above). We remain bearish against those highs (116-11 in the June contract). It would take a move above 116-11 to negate our wave count. The bond market is in a third wave down. We had mentioned this before, but now is the time when the bond market does not move in the opposite direction of the stock market. Both are in a third wave decline. They shall fall in unison. This third wave should prove quite devastating. Recall that the first wave began from the highs of last summer (high in prices, low in rates). That first wave roughly removed some eighteen points off the bond market. That, my friends, is more than just a trim. The third wave will gain a common 1.618 relationship to the first wave at 86-14. That move will push interest rates up to prices they haven’t seen since January of 2000 (more than 6.75%).
Remember, in the first wave, it took only two months (from June to August) for the bond market to lose some eighteen plus points! And that was a first wave! Third waves are quick and powerful. Proof of such can be found with the rather large spike down on April 2nd (see chart above). We will remain short the bond market as this third wave decline continues to gain momentum. This is a bear market, so any surprises should be to the downside.
We moved to a short position in the gold market with the April 26 email alert. And not a moment too soon, I might add. This is it - one of the few times in history when everything falls in value at the same time. Of course, stocks have been in a bear market now for almost five full years. Gold, on the other hand, just ended a decades long bear market in a prolonged fourth wave that began in 1980. In the big picture, gold is in a bull market. Wave five up will surpass the third wave high of $850 registered in 1980. This fifth wave up is going to take years to play out. Within this bull market, there will be pullbacks. As reported in the April 26 email alert, the most recent move up satisfied the minimum requirement for wave five. Now, the market must correct the advances of the previous five waves up. The move below the February 2003 highs of $385 indicates that this correction is of a large degree. Remember, it took gold some three plus years to move up from the $280 level to the most recent highs near $433. The correction of that rise is underway. A fibonacci .618 retracement of this rise gives us a target price of $339.70 for gold. Remain short.
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 against the wave 2 high of 10,537. Prepare for wave 3 down.
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.
Bonds: Remain short.
Gold: Remain short.
Dale Woodson is editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
Timer Digest rates Woodson Wave Report as the #5 stock market timer and #5 bond market timer for the three-year period from 12/31/98 through 12/31/2001. Woodson broke into the top ten rated stock market timers by placing #7 in the year 2000. He followed that up with a #4 rating for the year in 2001. These ratings were achieved during a period when market timing was extremely difficult as the bull market was turning over to bear and most were caught off guard.
While there is no feeling like catching a turn on the dime, Dale especially enjoys writing the newsletter. He is most proud of the numerous correspondences complimenting him on his writing abilities. He has a real passion for his work. He knows that the market will move in certain Elliott wave patterns and fibonacci sequences. His challenge is to identify those patterns and sequences in advance, while there is still time to profit from them.
Woodson Wave Report offers monthly, quarterly and yearly subscriptions. Newsletters are delivered via email and URL links and are published on the first Friday of every month. Special interim reports are released as market conditions warrant and targets are achieved. All new annual subscribers receive two months free.
You can subscribe to Woodson Wave Report via the secure online order form link below: http://www.woodsonwave.com/orderform.html
Disclaimer: The Woodson Wave Report combines Elliott Wave analysis and Fibonacci ratios to identify turning point targets in the Dow, NASDAQ, S&P 500 cash, bond and gold markets with respect to both price and time. The monthly newsletter is generally released on the first Friday of the month and special interim reports are issued as market conditions warrant and as targets are achieved. The information contained in the report is prepared solely for informational purposes and should not be taken as an offer to buy or sell any investment vehicle. Past performance is no guarantee of future results. Woodson Wave Report is waived of any liabilities.
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| GOLD RUSH: Golden Bottom/ by John Dowdee, Ph.D., Gold Editor |
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The bulls rejoiced last week as both gold and gold stocks closed at the highest levels since early May. This resilience provided evidence that a bottom may be in place!
Gold opened the week at $378.10, dropped to a low of $374.50 (well above the $371 support level) and then surged on Friday to $387.30 before closing at $384.90. One of the major reasons for the renewed health of the bull was the decline in the dollar. The dollar dropped below its 200 day moving average to close at 90.49. Both the upward trend line and the 50 day moving average converge near 89.76, which is now major support for the dollar. If the dollar falls below this level, it will likely propel gold back to the $400 level. However, if the dollar recovers and can close above 90.50, this will not bode well for bullion. Resistance for the dollar is around 92.
Similar to the yellow metal, gold stocks, as measured by the XAU index, also made new short-term highs. The index opened at 82.32, dropped to a low of 80.72, and then sprinted to a high of 86.44 before closing at 85.82. The technical underpinning for the XAU remains weak: the 50 day moving average is below the 200 day and price is well below both averages. However, looking at the XAU weekly chart, we see that this could be a normal 50% Fibonacci retracement in an ongoing bull market. The upward trend line from 2001 is still intact. If the trend is to resume, the index should stay above 80. Strong resistance is likely to be encountered between 90 and 97. If gold can surpass $400, then it is likely that the XAU will jump above the psychologically important 100 level.
With all indications that a substantial bounce may be underway, I have started buying shares for my gold portfolio. For my blue chip allocation, I have purchased Barrick (ABX) which appears to be a good buy. For the more speculative part of the portfolio, I have purchased the junior producer Wheaton River (WHT). WHT has been range bound between $2.40 and $3.35. It closed the week at $2.75 and is above its 200 day moving average. I anticipate a move above $3.00 at which point I will begin to tighten stops.
I am a believer that the gold bull market has been weakened but is by no means dead. The dollar has been rising in anticipation of higher interest rates. Everyone believes that rates have nowhere to go but up. This appears to be a reasonable assumption based on the ballooning budget deficit and the threat of higher inflation due to runaway oil prices. However, as a contrarian, I tend to bet against the prevailing wisdom. Americans have too much credit card debt and too much mortgage debt. Corporations are also deeply in the red. A rise in interest rates could spell doom to the economic recovery and also smash the hope of President Bush being reelected. I am guessing that the Fed may surprise everyone and not raise rates at the next meeting (especially if the stock market is tanking). If this happens, stocks will likely rally, the dollar will fall, and gold will explode. Don’t get me wrong. I think the Fed will eventually begin raising rates but I think it will be slow and may not happen until after the election.
In summary, I think that a substantial bounce is underway that will (at a minimum) provide support for gold over the next several weeks. But as in all financial endeavors, there are no guarantees. Caution is the watchword. The opportunity for exceptional gains is balanced by the agony of potential losses. As always, we advise you to never depend on anyone else’s opinion. You should do your own due diligence and evaluate your risk tolerance before making decisions to buy (or sell) any stocks or funds. Best of luck!
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| MR. SWING'S PLACE: Weekly Swing Trading Ideas / by Larry Swing |
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Each week, Mr. Swing analyzes his database of more than 9,200 securities to scan for swing trading opportunities. But be warned: Do not expect a fast way to make money. Mr. Swing is going to show you how you can accumulate small gains weekly, ultimately making money through a disciplined, low-risk trading approach. While he realizes that this short-term swingtrading approach is not for everyone, he hopes that the information given at MrSWING.com will be useful to you in the near future...
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These are your Swing Trading Opportunities for this week:
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Talking Points member - Over the nearly two years that we have carried the Mr. Swing's Place column, Larry's picks have consistently put in great performances. Don't miss out on the full swing-trading content available at Mr. Swing.com. Take advantage of some of the great programs available by clicking here.
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Long Swings:
bullish
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SWINGS
^ click here
CSGS,CSG Systems Intl
TXU,TXU Corp
IMCL,ImClone Systems
CSC,Computer Sciences
IVX,IVAX Corp
MAV20 >=500000 AND CLOSE>12 AND FORCE3<= 0 AND FORCE13>=0 AND ADX10>30 AND HIGH < HIGH1 and HIGH1 < HIGH2 AND CLOSE > SMAC10 and CLOSE > SMAC20
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Short Swings:
bearish
what
is
short
selling?
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SWINGS
^ click here
VRTSE,VERITAS Software
ALL,Allstate Corp
NPSP,NPS Pharmaceuticals
EL,Lauder (Estee) Co
WFT,Weatherford Intl
MAV20 >=500000 AND CLOSE>12 AND FORCE3>=0 AND FORCE13<=0 AND ADX10>30 AND LOW >LOW1 and LOW1 > LOW2 AND CLOSE < SMAC10 and CLOSE < SMAC20 |
WINDOW
^ click here
IMCL,ImClone Systems
ATEA,Astea Intl
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5 |
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WINDOW
^ click here
IPG,Interpublic Grp Cos
PSFT,PeopleSoft Inc
AES,AES Corp
HOTT,Hot Topic
ALL,Allstate Corp
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5 |
1-2-3-4
^ click here
TXU,TXU Corp
IVX,IVAX Corp
UIS,Unisys Corp
IVX,IVAX Corp
IVX,IVAX Corp
MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)>( MDI10+ MDI20) AND LOW< LOW1 and LOW1< LOW2 AND HIGH< HIGH1 and HIGH1< HIGH2 |
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1-2-3-4
^ click here
PSFT,PeopleSoft Inc
HOTT,Hot Topic
ALL,Allstate Corp
UVN,Univision CommunicA
ANPI,Angiotech Pharmaceuticals
MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)<( MDI10+ MDI20) AND LOW> LOW1 and LOW1> LOW2 AND HIGH> HIGH1 and HIGH1> HIGH2
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CROSS
^ click here
CSGS,CSG Systems Intl
IMCL,ImClone Systems
MCK,McKesson Corp
MVSN,Macrovision Corp
MAV20 >= 500000 AND CLOSE >12 AND SMAC5 > SMAC15 AND CLOSE < SMAC5 AND CLOSE > SMAC15 AND HIGH<HIGH1 AND CLOSE > OPEN |
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CROSS
^ click here
MSFT,Microsoft Corp
SPY,S&P Dep Receipts
AMD,Advanced Micro Dev
AIG,Amer Intl Group
DD,duPont(E.I.)deNemours
MAV20 >=500000 AND CLOSE>12 AND SMAC5< SMAC15 AND CLOSE> SMAC5 AND CLOSE < SMAC15 and LOW > LOW1 and CLOSE < OPEN
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REVIVAL
^ click here
0
MAV20 >=500000 AND CLOSE>12 AND (CLOSE1 - LOW1) <= 0.1 * ( HIGH1- LOW1) AND ( CLOSE - LOW) >= 0.95* ( HIGH- LOW) AND CLOSE > SMAC15 AND CLOSE > SMAC50 |
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REVIVAL
^ click here
HCP,Health Care Prop Inv
CEI,Crescent Real Estate Eq
MAV20 >=500000 AND CLOSE>12 AND( CLOSE1 - LOW1) >= 0.9 * ( HIGH1- LOW1) AND ( CLOSE - LOW) <= 0.1 * ( HIGH- LOW) AND CLOSE< SMAC15 AND CLOSE < SMAC50 |
REVERSE
^ click here
MCGC,MCG Capital
ANN,AnnTaylor Stores
RCII,Rent-A-Center
MAV20 >=500000 AND CLOSE>12 AND HIGH2 > HIGH1 AND HIGH1 > HIGH AND LOW2 > LOW1 AND LOW1 > LOW AND CLOSE2 <= OPEN2 AND CLOSE1 <= OPEN1 AND CLOSE >= OPEN AND VOLUME>1.5* MAV20 |
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REVERSE
^ click here
0
MAV20 >=500000 AND CLOSE>12 AND HIGH2 < HIGH1 AND HIGH1 < HIGH AND LOW2 < LOW1 AND LOW1 < LOW AND CLOSE2 >= OPEN2 AND CLOSE1 >= OPEN1 AND CLOSE <= OPEN AND VOLUME>1.5* MAV20 |
TRIANGLE
^ click here
SPLS,Staples Inc
DRIV,Digital River
ICST,Integrated Circuit Sys
URBN,Urban Outfitters
MAV20 >=500000 AND CLOSE>12 AND CLOSE> SMAC20 AND HIGH2 > HIGH1 AND HIGH2 > HIGH AND LOW2 < LOW1 AND LOW2 < LOW AND HIGH1 > HIGH AND LOW1 < LOW |
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TRIANGLE
^ click here
ONE,BANK ONE Corp
T,AT&T Corp
PDLI,Protein Design Labs
DDR,Developers Diversified Rlty
SGMS,Scientific Games ClA
MAV20 >=500000 AND CLOSE>12 AND CLOSE < SMAC20 AND HIGH2 > HIGH1 AND HIGH2 > HIGH AND LOW2 < LOW1 AND LOW2 < LOW AND HIGH1 > HIGH AND LOW1 < LOW |
BREAKOUTS
^ click here
WM,Washington Mutual
IDEV,Indevus Pharmaceuticals
IST,ISPAT Intl A
ARO,Aeropostale Inc
CYBS,CyberSource Corp
MAV20 >=200000 AND CLOSE>7 AND HIGH>=MAX40 and HIGH1 <> MAX40_1 AND VOLUME>1.5 * MAV20 AND CLOSE > OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) >=0.75*( HIGH - LOW ) |
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BREAKDOWNS
^ click here
NXTL,NEXTEL CommunicationsA
SYY,Sysco Corp
MAV20 >=200000 AND CLOSE>7 AND LOW<=MIN40 AND LOW1<> MIN40_1 and VOLUME>2*MAV20 AND CLOSE < OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) <=0.25*( HIGH - LOW) |
REVERSALS
^ click here
MCGC,MCG Capital
UTEK,Ultratech Inc
MAV20 >=200000 AND CLOSE>12 AND LOW <= MIN40_1 AND VOLUME>2* MAV20 AND CLOSE > OPEN |
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REVERSALS
^ click here
0
MAV20 >=200000 AND CLOSE>12 AND HIGH >= MAX40_1 AND VOLUME>2* MAV20 AND CLOSE < OPEN |
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REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are explained in our new section called: SWINGLAB...
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REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are e explained in our new section called: SWINGLAB...
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QSII (Long) - Chart of the Week
Quality Systems Inc (QSII) – Healthcare Industry
Analysis
Fundamental Analysis:
Despite excellent prospects for growth, and an outstanding record of ROE, and a large amount of cash ($7/share), QSII trades at very low multiples. The forward P/EG ratio is a modest 0.91; furthermore, we feel that analyst expectations will fall short of reality.
Technical Analysis:
While a break below QSII’s support line would be very bearish, as longs as it holds, it is a good place to accumulate shares.
Key Levels:
Buy: Market
Stop loss: 38.97, below the support line and an upside inversion point.
Target: 59.97, slightly below the stock’s highs.
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>TRADE in the DIRECTION OF THE MARKET<
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| Mr.Swing DISCLAIMER: Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MRSWING.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the strategies described above. © Copyright 2002, MrSwing.com. All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF MRSWING.COM IS A VIOLATION OF THE COPYRIGHT LAW. |
| THE TRADER'S MINDSET: Emotions Generated By Trading / by Bennett McDowell, Columnist |
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Founder and President of TradersCoach.com, Bennett started his financial career on Wall Street with the firm J.J. Kenny Co. in 1984 after serving as an officer in the U.S. Navy. Bennett also served as a Retirement Plan Specialist with the Equitable in New York and has investment real estate experience as well. In addition, his 1979 Economics BA degree from Syracuse University in upstate New York gave him a foundation on which he was able to build a solid background in Finance.
Bennett has extensive experience in trading the financial markets and is currently an active trader including day trading the financial futures markets. He also coaches many traders through his company TradersCoach.com.
Considered an expert in technical analysis and complex computer trading platforms and applications, Bennett has educated and helped traders worldwide improve their trading. Bennett is well known for helping traders overcome sabotaging psychological issues that keep them from reaching their full potential. In addition to his educational and coaching abilities, Bennett, a registered securities broker, manages money and trades for clients throughout the United States.
Bennett released his home study course Applied Reality Trading, also known as "ART" in January 2002. His cutting-edge course teaches traders his state of the art Pyramid Trading Points, Money management, and developing the "Trader's Mindset." Bennett is also known for developing The Trader's Assistant - a premier trade-posting record-keeping system for traders, as well as writing and publishing The Survival Guide For Traders, a book on how to set up and organize your trading business.
Bennett provides private consultation/coaching services to many traders throughout the world by telephone, video conferencing, and in person. Working with Bennett, traders spend time focusing on trading system development, trading psychology, and disciplined money management.
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Emotions Generated By Trading
As traders we not only have to develop technical trading skills, but we also have to develop emotional skills for trading as well.
Emotional skills help the trader get through equity “draw-down” periods and multiple consecutive trading losses that ALL trading systems experience if traded long enough. These tough events in trading will test the emotional fortitude of any trader.
This is where confidence in your tested trading system and trading with money you can afford to risk will play an important role. If the trader did not test their trading system, then how do you think that trader will feel after four consecutive losses totaling about 8% of the trading account’s equity? Now compound this with the fact that it is not money they can afford to lose. And compound this again if your day trading and losing 8% in one day! And the 8% assumes you are controlling your risk so that each loss is only a net maximum of 2% per loss. Now, after all this, do you think they will feel anxiety and stress? I think so! Do you think that stress will create a good environment for successful trading? I don’t think so! Do you think the trader will be afraid of taking another trade for fear of another possible loss? Perhaps it might, because this kind of stress can cause the trader to “second guess” themselves and their trading system. Traders that trade with confidence will keep trading and not “second guess” themselves or their trading system.
As a trader you want to eliminate any and all emotions while trading. This even includes emotions generated by having too many market opinions as well. Emotions never help the trader! Keep emotions in your personal life and away from trading.
The best way to keep emotions in check is through creating a stress free trading environment where you accept equity “draw-down” periods and can keep trading through them in a stress-free state. You do this by testing your trading system or approach, and in my opinion, the best testing method is to “paper trade” for a long enough time that you come know the best, and the worst that your trading system produces. “Paper-trading” in my opinion is better than computer back-testing because it represents how YOU actually are trading the system or approach in a stress free environment because no real money is being used. I always say to traders, that if you are not profitable “paper trading” then you will not be profitable trading with real money. In other words, you are not ready yet to actually trade! It is far better to know you are not yet ready then to jump in head first and lose your shirt!
So the first step in getting a handle on your emotions is to create a stress free trading environment that provides a solid foundation for you to apply your trading skills, and then access how you are doing. If you create a stressful trading environment, then you are short changing yourself before you even start actually trading.
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| CONTRARIAN CORNER / by Jeff Weber, Columnist |
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I'm the "Contrarian" to the Rule: I hate to be the one that says: "I told you so". No, I'd rather gloat. Remember some columns ago, I warned you that nobody in the government would care about you, the small investor, getting ripped up by the mutual fund companies! Well, I told you so.
The mutual fund "latest" scandal has been going on for six months - see any front page headlines telling that Congress, the SEC, the NASD, the man in the moon has enacted tough new laws, regulations, guidance - sent "Please stop screwing small investor letter?" No, of course not. Remember that the latest scandal involved billions of dollars in rip offs, and the Five Fund Companies caught; agreed to pay $1.6 bullion to settle a multitude of problems??
Well, when the Mutual Fund Industry held their recent annual get-together, they were rather upbeat - and they had good reasons to be that way. The cloud hanging over them of Congress doing something about the rip off has changed into the sunshine of who gives a damn about small investors. Legislators haven't done anything and soon it will be time to campaign - not care about small investors.
Experts figure any chance of something being done has passed that "one critical hour" that time period that medics have to keep you alive - just like you, change has died - and there won't even be a funeral! Your "champion??" the SEC has enacted 16 new rules but experts say they don't go far enough to really fix the problem. And SEC rules can easily be changed in the future....and do you think the Funds might lobby for that - can you say "Big donations to Congress from Funds to help reelect incumbents????"
Neither branch of Congress is excited by this but the senate is the least excited. They pass the buck and say, let the SEC do it. This the same Congress that wants lots of audits to make sure Government employees don't buy one $20 item from Victoria Secrets with a Goverment Visa credit card (IMPAC). Congress goes after the small guy or gal; they don't try help him or her!
The Senate Banking Chairman, Richard Shelby of Alabama, has been holding numerous hearings on a bill that the House passed 418-2, rather than taking any action - check his campaign donation list this fall for big Mutual Fund contributions. Even a fellow Republican commented that it appeared Shelby was trying to run out the clock to appease campaign contributors: "Most of the money raised by his committee comes from Wall Street." That speaks for itself.
As all politicians, Shelby is skilled at the semi-lie: "I'm just being thorough."
And also like I told you before, the SEC, that mighty unchampion of small investors, always sees issues from the industry standpoint...like arbitrators do...oh, I already told you that also! There are still areas that have not changed that need to change - like the plain disclosure of fees! And some areas can't be fixed by the SEC - like soft dollars - surcharges that that funds pay when brokers execute stock trades. In the area of soft dollars, one previous SEC Chairman turned back the clock and went to laxer regulations. Congress did have some muscle back in 2002, when they championed the Sarbanes-Oxley corporate reform law - it's time for Congress to do that in 2004 for areas only they can fix - like hidden costs, policies in plain language & modernize the way Mutual Fund Companies run their funds. Until they do - stick to closed-end funds and stocks!
Here are three closed-end income funds I like this month - all these types of funds have dropped due to inflation fears:
ACM Inc F - (NYSE: ACG, $7.86)
52 week: High - $9.56 - Low $7.10
ACG closed-end fund currently paying 10.4% dividend.
ACM Managed Dollar Inc F - (NYSE: ADF, $7.47)
52 week: High - $8.60 - Low $6.80
ADF closed-end fund currently paying about 10% dividend
Alliance Wld II - (NYSE: AWF, $10.64)
52 week: High - $13.51 - Low $9.71
AWF closed-end fund currently paying about 9.5% dividend.
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| INSIDE TRACK: Weekly Insider Report / By Jeff Williams |
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| Jeff Williams is a partner with http://www.insiderreview.com For the past seven years Jeff has done extensive investment research as a member of an institutional investment team. His background consists of a degree in Finance from the University of South Florida with a minor in Economics. Jeff's everyday activities as an insider stock analyst consist of analyzing data available through a multiple of sources as it applies to all publicly traded companies. With this information he can then make short-term and long-term evaluations on a company’s present and future performance based on insider buying patterns. Each month Jeff will share with you his thoughts on stocks he believes to display the most interesting insider buying patterns. |
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Interesting Buy Patterns
Open market insider trading activity for 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.
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Do you have comments, thoughts or opinions on Talking Points that you would like to share? Email them to letters@talking-points.com.
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Weekly Stock Picks From Bob Coppo - New Feature!
Top Stock Picks for Monday, May 24th, 2004:
JNJ, LFUS
Good Trading!
Bob Coppo is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com.
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1. MCLD (McLeodUSA, Inc., Communications Services) $0.68 - Buy. We head back into the land of the spec play with this week's first pick, MCLD. "McLeodUSA, Inc. is a facilities-based telecommunications services provider offering integrated communications services to homes and businesses in 25 Midwest, Southwest, Northwest and Rocky Mountain states in the United States. The Company, operating through its subsidiaries, derives revenue from its core telecommunications and related communications services. These include local and long-distance services, dial-up Internet access services, wireless services, high-speed/broadband Internet access services using digital subscriber line (DSL), cable modems and T-carrier 1 (T1) access." With the Nasdaq last week closing back above its March lows, we feel there's a good chance for at least a short-term corrective bounce this week. Among the sectors hardest hit during the recent slide has been communications, and MCLD has taken a beating, falling 72% since its January high and 61% since March alone. It doesn't take a deep interpretive look at the stochastic to see that the stock is deeply oversold here. Keep in mind, this one is purely a technical play - the fundamentals are nothing to get excited about, as for the fiscal year ended 12/31/03, revenues fell 12% to $869 million while net loss from continuing operations totaled $300.3M vs. an income of $389.2 million. Clearly, telco is still not in the most healthy of conditions. If there is anything to latch onto in MCLD's fundamentals, it's the price-to-sales ration of 0.24 and the price-to-book (although this one may be a bit sketchy) of 0.39. Still, think of this one as a trading play only for now. Looking at the chart, MCLD bouced Friday off its new 52-week low to close above its previous May low of $0.64 and ended the day only $0.01 off its open. The MACD seems to have turned in the right direction. We like the chances of a short-term run here, with a little help from the overall Nasdaq, back to at least the 13-day MA of $0.75. We'd target the May high of $0.83 at the top end, and use the $0.64 level as a tight stop after entry. Any sustained gains in the sector overall could see MCLD move significantly higher, but keep a tight stop in place after reaching whatever target you shoot for. Short-term price target: $0.75 (12% gain) Stop loss trigger: $0.64 (6% loss)
2. UTEK (Ultratech, Inc., Semiconductors) $14.11 - Buy. Our second pick for the week ahead is another tech dredging fresh 52-week lows last week. "Ultratech, Inc. develops, manufactures and markets photolithography and laser processing equipment for manufacturers of integrated circuits and nanotechnology components located throughout North America, Europe, Japan and the rest of Asia. The Company supplies step-and-repeat photolithography systems based on one-to-one imaging technology. Markets for its photolithography products include advanced packaging and the manufacture of various nanotechnology components, including thin film head magnetic recording devices, optical networking devices, laser diodes and light emitting diodes." As one of the few true nanotech plays out there, we like UTEK going forward as a company growing revenue nicely. For the three months ended 4/03/04, net sales rose 21% to $26.6 million while net income totaled $527 thousand, vs. a loss of $983 thousand. Last week's selling overreaction came in response to the company's warning for a second quarter shortfall that will miss estimates. However, they also said UTEK sees full-year earnings of $0.35 to $0.50 per share and revenue growth of 20% to 30% from $100 million in 2003, or $120 million to $130 million. For a company growing revenues at this clip in an industry rapidly advancing, the forward price-to-earnings ratio of 28 to 40 still looks attractive to us. The typical downgrade that followed the announcement didn't help on Friday as the stock shed an additional 10% to close 22% off its May high of $18.05. Just last month, UTEK traded as high as $24.95. We'd look to enter here on the appearance of level II buying interest, using the 52-week low set Friday of $13.69 as a stop after entry. Our initial target would be the previous low of $14.91, which will serve as first resistance. A break above that level would then establish support and open the door to a possible move toward the 13-day MA, currently $16.23. Again, make sure to keep a stop in place, moving to a trailing stop after your target is reached to preserve gains. Short-term price target: $14.91 (6% gain) Stop loss trigger: $13.69 (3% loss)
| Symbol |
Fri. Close / % |
Forward P/E |
52-week high/low |
Short-term Target |
| GB |
$25.00 / -15.91% |
16.89 |
$45.15 / $24.40 |
$28.00 |
| EDS |
$16.07 / -1.23% |
20.87 |
$15.85 / $25.44 |
$17.90 |
| ADIC |
$8.13 / -19.27% |
21.39 |
$7.50 / $19.79 |
$9.80 |
| BEAS |
$8.35 / -22.54% |
18.98 |
$8.26 / $15.50 |
$10.00 |
| SFP |
$3.40 / +22.74% |
N/A |
$2.50 / $15.20 |
$4.40 |
| KKD |
$20.76 / -2.63% |
16.48 |
$20.08 / $49.74 |
$24.00 |
| CMNT |
$5.36 / -6.78% |
14.49 |
$5.35 / $11.84 |
$6.28 |
| FHCC |
$15.00 / -1.51% |
10.27 |
$14.99 / $28.88 |
$17.00 |
| NOK |
$13.19 / -2.15% |
13.06 |
$13.05 / $23.52 |
$15.00 |
| IASG |
$4.90 / -37.58% |
8.17 |
$4.50 / $12.50 |
$6.00 |
As always, do your own research before buying or selling any security. Our recommendations are for informational purposes only and are only our opinions. Make sure to read our Disclaimer
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Online issues can be found at
http://www.talking-points.com
and click on the "Past Issues" menu item.
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1. We are not brokers, investment advisors, or securities dealers. Our newsletter is provided as our personal opinions and are for informational purposes only.
2. Information on our website may contain "forward looking statements" as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.
3. Always research your own investments, and consult your investment advisor before investing.
4. Visit the Securities Exchanges Commission website and read about how to avoid internet scams.
5. Understand that we at Talking-Points.com may buy stock in the companies that we recommend in our newsletter, and may sell those shares after recommending them.
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 Talking-Points.com are only the opinions of Talking-Points.com and its representatives. These opinions are based on our research, which may be extensive or limited, done on each individual stock. Our sources include, but are not limited to, online research, company profiles, member suggestions, past performance, magazines, newspapers, analyst suggestions, broker recommendations, contact with the company, company rumors, and other similar information sources. All opinions are based on information that is accessible by the public.
Risks Involved
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Accuracy of Information is not Guaranteed
Talking-Points.com works to verify the accuracy of all information contained on its website but does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Talking-Points.com does not represent itself to be, nor is it a registered investment advisor or stock broker. As advised before, you should do your own research before making any investment decisions. Past performance of stocks profiled on this website is not a guarantee as to future performance. The performance of other members choosing to invest in any stocks profiled on this site may or may not be an indication as to your performance.
Our Positions in the Stocks Mentioned
Talking-Points.com and its representatives reserve the right to buy and sell any stock mentioned on this web site. Talking-Points.com reserves the right to buy or sell any of these profiled stocks before, during and immediately after they are posted to the site. Talking-Points.com is not responsible for any gains or losses incurred do to investing in these opinions.
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Obtaining a subscription to the emailed newsletter does not in any way create any principle-agent relationship between Talking-Points.com and the recipient. Receipt of the recommended stocks, either via email, or directly from our website, is not in any way a recommendation to buy or sell but is just the opinion of StockTalkReport.com and its representatives and should be used for informational purposes only.
Compensation Received if Any
As in compliance with the 1933 Securities Act Sect. 17 (b) any and all compensation received from a company is publicly stated.
Forward Looking Statements
Information presented on the Talking-Points.com web site and supplied through the newsletter may contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "projects", "foresee", "expects'", "will," "anticipates," "estimates," "believes," "understands" or that by statements indicating certain actions "may," "could," or "might" occur.
General Risks, Research and Types of Orders
Short-term trading can be extremely risky. It is highly recommended that when ever making a decision to buy or sell you use limit orders. As with any investment decision, careful research should be done before making any decision to invest. As with any decision to invest it is usually recommended that you use limit orders, especially in fast moving, volatile stocks. You should only invest money that you are willing to lose. We also encourage you to read up on the SEC policies regarding online newsletters. Also before investing online please visit the Securities Exchanges Commission website and read about how to avoid internet scams.
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Copyright © 2002-2003, StockTalkReport.com and Talking-Points.com
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