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May 30, 2004
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PREMIUM EDITION
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Issue #119
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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 mixed but little changed Friday, as investors sifted through economic reports that showed consumer sentiment unexpectedly lower while Midwest factory strength was at a 16-year high. Trading was light ahead of the holiday weekend. Major world markets posted mixed results on Friday. London's FTSE closed down 0.51%, Frankfurt's DAX closed down 0.27%, and Paris' CAC 40 finished lower by 0.74%. Japan's Nikkei closed up 1.29%, Hong Kong's Hang Seng closed up 1.11%, and Sydney's All Ordinaries finished up 0.18%. In economic news, Personal Income in April rose 0.6% while Personal Spending showed a gain of 0.3%. Consumer Sentiment (final) for May was revised to 90.2 from 94.2 and the Chicago PMI for May rose to 68.0 from 63.9 in April. Volume came in at 1.17 billion shares traded on the NYSE and 1.25 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 1.37, and up volume over down volume by 1.21; Nasdaq advancing issues over declining issues by 1.09, and up volume over down volume by 1.38. Leading sectors were Oil Services, +1.55%, Semiconductors, +1.32% and Disk Drives, +0.86%. Laggards were Airlines, -1.24%, Gold/Silver, -0.73% and Drugs, -0.54%. Nasdaq 100 futures closed unchanged to settle at 1467.50, while the S&P's settled down 2.40 pts at 1120.30.
Weekly Recap: Stocks put in a winning performance last week, supported by a drop in interest rates and easing oil prices. Gains were made despite a warning from government officials that al-Qaeda terrorists are in the U.S. preparing to launch a major attack this summer. Technically, the major averages made some encouraging headway, as they climbed back above their 200-day simple moving averages on positive breadth.
The yield on the benchmark 10-yr T-note fell back to 4.60% at one point, or roughly 16 basis points below its close the prior week. The improved showing in the bond market came from a number of items, including trader talk that the FOMC might stand pat on the fed funds rate at its June meeting. Bonds, however, closed the week on a down note, as the stronger than expected Chicago Purchasing Manager's Index, which precedes the national ISM Index this coming Tuesday, tempered bond trader's enthusiasm and sent the yield on the 10-yr up to 4.65%. Even so, the 10-yr yield was still much improved from the prior week. Crude oil futures hit a new record high before easing somewhat, despite assurances from Saudi Arabia that it would boost its own output by 8.0% from April levels and encourage OPEC to raise production quotas by at least 2 mln barrels per day. That good news was later discounted by concerns that neither Saudi Arabia, OPEC nor the refiners have the capacity necessary to meet the rising level worldwide demand for oil and gas.
For the week, the Dow gained +2.2%, the S&P 500 finished +2.5% higher and the Nasdaq rose +3.9%. The small cap Russell 2000 gained +4.1%. Next week, which is shortened by the Memorial Day holiday, the most important item on the docket is Friday's May Employment Report.
Corporate Profits Coming Under Pressure?: The upturn in corporate profits beginning in early 2003 (see graph below) undoubtedly spurred last year's stock market rally. But Thursday's GDP report contained some disturbing data about corporate America. For one thing, while the GDP was revised upward from 4.2% to 4.4%, it came in below expectations. The upward revision was primarily the result of inventory accumulation rather than inventory sales. Business investment was revised downward from 7.2% to 5.8%. That's not a good sign for an expanding economy. The chain deflator was revised upward to 2.6% from 2.5%, suggesting that inflation is rising while business investment is softening. Worst of all, it was reported that domestic corporate profits fell from $81.4 billion reported in the fourth quarter of last year to just $14 billion in the first quarter of this year. The GDP report didn't receive much media attention, but in most respects, it was a dismal report. If the decline in corporate profits is the start of a trend, the performance of the stock market will most certainly suffer.
SMT's Market Trend Indicator: Our Market Trend Indicator (MTI) is an intermediate term indicator for the general US stock market. Based on the trends of more than 8,000 underlying stocks, it generates buy and sell signals for the major market averages. Over the past year, it showed gains of some 93% trading the Nasdaq 100 tracking stock (QQQ) using the standard 50% margin. The results for 2004 year-to-date are shown in the table below:
| Position |
Enter |
Exit |
% Gain |
Cum Gain |
| Long |
1/02/04 |
1/22/04 |
12.2% |
12.2% |
| Short |
1/22/04 |
2/04/04 |
12.4% |
26.1 |
| Long |
2/04/04 |
3/25/04 |
-5.0% |
19.8 |
| Long |
3/25/04 |
4/22/04 |
8.4% |
29.9% |
| Short |
4/22/04 |
5/11/04 |
9.0% |
41.6% |
| Long |
5/11/04 |
Open |
6.2% |
50.4% |
The MTI consistently outperforms a buy-and-hold strategy. The indicator is updated daily and is available to subscribers of our Basic Service. To learn more about the MTI and the other market timing indicators available to our subscribers, click HERE.
The COT Report: The latest Commitments of Traders report from the CFTC shows that Commercial Hedgers bought some 8,900 S&P 500 futures contracts last week to bring their net short position to -20,051 contracts. Large Traders remained net short -36,975 contracts, with the entire offsetting net long position of +57,026 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials bought some 1,400 contracts to bring their net long position to +22,261 contracts. Small Traders were net short -10,469 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money sell some 900 contracts to bring their short position to -1,054 contracts.
Commercial Hedgers were better buyers in the S&P's last week, while Small Traders were better sellers. For the intermediate term however, their opposing net positions should still be considered bearish.
Sentiment Surveys: The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 42.4%, while the percentage of bears registered 27.3%. The bullish ratio (bulls/bulls +bears) was 60.8%.
The latest AAII survey showed a decrease to 36% bulls, and an increase to 40% bears. The bullish ratio came in at 47%, while the 4-week moving average dropped to 49%. 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: We said in Thursday night's column that the odds favored making higher highs on Friday, but the Naz had a better chance of closing lower on the day. We made higher highs, and the Naz closed unchanged. Friday's price action was mixed, so we don't have a clear directional bias for Tuesday. In last week's commentary, we said that any hint of weakness in energy prices would be potentially bullish for the short term. That certainly happened last week, as the oil price dropped from an all-time closing high on Monday of $41.72 to below $40 on Friday. The oil price is poised to fall further in the near-term, with support coming in at the $37.50 level. If that happens, stock prices should benefit.
Also helping the stock market last week was the action of the US Dollar. For some time now, stocks have been moving in the opposite direction to the dollar, i.e., when the dollar is weak, stocks rise. This is not necessarily a normal inter-market relationship, but as long as it persists, we need to take notice. The dollar fell below its 50-day moving average last week and now has near-term support at the 87.50 level. Continued weakness in the dollar should also benefit stocks.
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 Tuesday, resistance for the S&P's comes in at 1126 and then 1130. Support lies at 1116 and then 1113. For the Naz, resistance comes in at 1478 and then 1484. Support lies at 1455 and then 1447.
The Intermediate Term Outlook; 2-6 Weeks: After trading below its 40-week moving average for most of May, the Nasdaq Composite ended the month above not only that average, but also above its 10-week sma. The Comp has trend-line resistance at the 2025 level, which it needs to clear for the current upleg to continue, but the chart below is showing some promise. For one thing, the Comp bounced off a three-point support line going back to the October, 2002 low. The other positive is the Commodity Channel Index, which is turning up from oversold territory for the first time in over year.
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
Economagic.com
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Last week's Fresh Picks split the line with one stock hitting our stop-loss trigger and the other pushing convincingly through our target price.
Telco play MCLD fell short of our expectations and hit the suggested stop loss trigger for a 6% loss while semicon pick UTEK went the other direction, eclipsing our target to finish the week with an 8% gain.
Meanwhile, out bottom-feeder list from two weeks ago has performed as expected, with all 10 picks in the green, including standout performaces from SFP, now up 66% over the two weeks, and IASG up 22%. Overall, our list has combined for an average profit per pick of 13.3% for the two week period.
| Symbol |
Fri. Close / % |
Forward P/E |
52-week high/low |
Short-term Target |
Gain/ Loss for the 2 weeks |
| GB |
$25.00 / -15.91% |
16.89 |
$45.15 / $24.40 |
$28.00 |
+9% |
| EDS |
$16.07 / -1.23% |
20.87 |
$15.85 / $25.44 |
$17.90 |
+2% |
| ADIC |
$8.13 / -19.27% |
21.39 |
$7.50 / $19.79 |
$9.80 |
+11% |
| BEAS |
$8.35 / -22.54% |
18.98 |
$8.26 / $15.50 |
$10.00 |
+3% |
| SFP |
$3.40 / +22.74% |
N/A |
$2.50 / $15.20 |
$4.40 |
+66% |
| KKD |
$20.76 / -2.63% |
16.48 |
$20.08 / $49.74 |
$24.00 |
+3.4% |
| CMNT |
$5.36 / -6.78% |
14.49 |
$5.35 / $11.84 |
$6.28 |
+13% |
| 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 |
+4.3% |
| IASG |
$4.90 / -37.58% |
8.17 |
$4.50 / $12.50 |
$6.00 |
+22% |
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: Fighting Spam / 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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Fighting Spam
By Jeff Neal
Optionetics
As spam continues to be a thorn in the side of many email users, many technology companies are lining up to provide solutions to combat this growing concern. The variety of companies that are delivering spam range from the latest diet plans to investment ideas. Essentially spam originates from just about every type of entity doing business on that Internet. Not every company utilizes spam but virtually every industry certainly does.
Well, now it seems that some companies are offering ways to battle this unwanted influx of emails. One such spam-fighting tool is called the bonded sender that comes from IronPort, a privately owned company in San Bruno, California. Microsoft is currently using this latest technology to reduce spam and allow legitimate emails to be delivered.
The bonded sender software does not concentrate on filtering email content rather the basic idea behind this program is that legitimate mass emailers will be willing to risk their money to guarantee the integrity of their respective content. To do this they would post a bond that puts them on a list that would allow mail at the network level to proceed through. The bond fee structure is based on the quantity of mail delivered.
In addition, a company cannot just buy their way onto the list. Firms must go through and pass a screening procedure. Once on the list if a number of complaints start coming through for a particular company the bonds are then debited costing that firm money. If the problems persist and the company reaches a certain threshold level they are then removed from the list.
The concept has seemed to caught on with many companies as the list of bonded sender participants include such names as eBay, NASDAQ, Major League Baseball, and Warner Music just to name a few. Even though it is much too early to tell if the bonded sender will be effective Microsoft claims that the amount of spam has been reduced significantly since implementing the bond sender program.
Another approach being offered by an e-mail service called ZoEmail blocks spam from illegitimate senders while allowing mail in from senders given special keys. The technology is based on patented technology from AT&T labs and is touted to be able to forever end spam problems.
The ZoEmail technique involves reformatting the e-mail address. Given that most e-mail addresses consist of a username and domain components, ZoEmail generates another piece they call the key. The key is comprised of randomly created or user generated numbers and letters. This information is then inserted in between the user name and domain and is now an e-mail address tied to a specific sender. An e-mail coming in without the proper key is not allowed through.
In order to set the senders you want e-mail from the user has to send mail through ZoEmail. The first time this is done a key is assigned to the recipient and is then posted to the user’s ZoEmail address book. The recipient to be able to send e-mail to the user must either write down the keyed address or post it in their contacts folder.
The ZoEmail service allows the user to organize keys in all sorts of different ways. The keys can be tied to an expiration date and of course if the user wishes they could delete the recipient’s key at anytime. The service is relatively cheap and has gained traction among many e-mail users. The cost is around $12.00 per year for 12 MB of storage and $19.00 per year for 50 MB of storage.
Spam has been such an issue for so long that it is obvious that there are an abundance of e-mail users that are seeking relief. Going forward look for more and more innovative solutions to be offered to address the spam problem.
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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THIRD WAVE DOWN STILL UNFOLDING
In our blueprint for wave (E) down in the May 10 report, we had proposed an ideal wave structure that labeled this third wave as complete today, May 18, 2004. Wave one came to completion a fibonacci 34 days after the wave (D) high on 3/24/04. A fibonacci 89 days from that high marks today, May 18, 2004. As I write this at midday, the market appears stuck in a fourth wave, which upon completion, will yield to wave five down. The end of this third wave is near and should come to completion within the next day or so.
The May 13 email alert noted that the Dow had just completed wave iii of v of 3 down. The chart above illustrates that point. Of course, third waves are always followed by fourth waves. Note that the fourth wave high should hold below the previous first wave low. In this case, that mark is 10,285. The fibonacci retracement levels for this fourth wave remain as stated in the May 13 email alert at 10,055 and 10,180.
At a minimum, the wave v of 3 should break below the 9853 low of wave iii for completion. Wave 3 will gain equality with wave 1 at Dow 9788 and this third wave will gain a fibonacci 1.1618 ratio to wave one at Dow 9326.
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 Rally/ by John Dowdee, Ph.D., Gold Editor |
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Golden Rally
As predicted, last week the gold rally continued, moving relentlessly higher from a low of $384.20 to a high of $398 before pulling back slightly to close at $394.90 (just slightly above the 200 day moving average). Since bottoming in early May at 371.30, the yellow metal has streaked upward by over $25 an ounce. As shown by the weekly chart, gold took out the long term resistance at 390.80 (the top made in February of last year). This bodes well for the gold bull. The next major resistance is the psychologically important $400 level.
One of the major reasons for the golden strength was the weakness in the dollar. The dollar plummeted below the 200 day moving average, the 50 day moving average, and the long term upward trend line to close the week at 88.90. The next support is 87.50 followed by the double bottom support around 85. Major resistance is at 90. It is likely that, at a minimum, the dollar will remain weak over the next few weeks which is positive for gold.
Gold stocks, as measured by the XAU index, are still technically weak but improving. The index has increased by 16% since the low earlier this month but it could not yet climb above the 50 day moving average. The index opened the week at 86.04, dropped to 85.27, and then bounded to 91.31 before bouncing off resistance and closing at 89.81. Momentum (as illustrated by the MACD) has increased dramatically and is above the peak levels make at the double top (a bullish divergence). To keep the rally alive, the XAU needs to get above the 50 day moving average at 91.41. The next resistance would then be the 200 day moving average at 96.87.
One of the junior stocks that we have discussed many times is Wheaton River (WHT). This stock has consistently moved back and forward in the range between $2.40 and $3.35, providing excellent opportunities for swing traders. After the market closed on Thursday, Coeur d’Alene Mines (CDE) offered $2.5 billion dollars (about $3.28 per share) to take over Wheaton. This bid represents a 12% premium over the $2.91 closing price of WHT. However before jumping onto a “sure thing”, recognize that this is a complex deal which may not be consummated. Wheaton had previously agreed to merge with Iamgold. The CDE takeover is contingent on WHT breaking free from this previous agreement (in a related move, Golden Star has offered to buy Iamgold). With the auction started, it would not be surprising to see other bidders step up to the plate.
In summary, I think that a bounce is underway that will 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
AAPL,Apple Computer
CMVT,Comverse Technology
BC,Brunswick Corp
KEY,KeyCorp
WHR,Whirlpool 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
MDT,Medtronic, Inc
T,AT&T Corp
BSG,BISYS Group
INTU,Intuit Inc
CBRL,CBRL Group
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
BIIB,Biogen Idec
KEY,KeyCorp
ESV,ENSCO Intl
HIG,Hartford Finl Svcs Gp
CHB,Champion Enterprises
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5 |
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WINDOW
^ click here
BEAS,BEA Systems
MO,Altria Group
MDT,Medtronic, Inc
ADM,Archer-Daniels-Midland
PDLI,Protein Design Labs
MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5 |
1-2-3-4
^ click here
STX,Seagate Technology
KEY,KeyCorp
WHR,Whirlpool Corp
FNF,Fidelity Natl Finl
AH,Armor Holdings
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
AMGN,Amgen Inc
T,AT&T Corp
KKD,Krispy Kreme Doughnuts
EDS,Electronic Data Systems
BSG,BISYS Group
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
XOM,Exxon Mobil
HAL,Halliburton Co
XLE,S&P Sel Energy SPDR Fund
VRSN,VeriSign Inc
SLB,Schlumberger Ltd
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
AMGN,Amgen Inc
MDT,Medtronic, Inc
ADM,Archer-Daniels-Midland
PBR,Petroleo Brasileiro S.A. ADS
PDLI,Protein Design Labs
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
PHRM,Pharmion Corp
AAP,Advance Auto Parts
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
ADM,Archer-Daniels-Midland
CPB,Campbell Soup
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
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 |
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REVERSE
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MAV20 >=500000 AND CLOSE>12 AND HIGH2 < HIGH1 AND HIGH1 < HIGH AND LOW2 < LOW1 AND LOW1 < LOW AND CLOSE2 >= OPEN2 AND CLOSE1 >= OPEN1 AND CLOSE <= OPEN AND VOLUME>1.5* MAV20 |
TRIANGLE
^ click here
EL,Lauder (Estee) Co
RHAT,Red Hat Inc
CA,Computer Assoc Intl
ADSK,Autodesk, Inc
TOL,Toll Brothers
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
PEP,PepsiCo Inc
SEPR,Sepracor Inc
ONXX,ONYX Pharmaceuticals
BEN,Franklin Resources
GB,Wilson Greatbatch Tech
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
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UTSI,UTStarcom Inc
DITC,Ditech Communications
CDWC,CDW Corp
NAP,Natl Processing
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
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MAV20 >=200000 AND CLOSE>7 AND LOW<=MIN40 AND LOW1<> MIN40_1 and VOLUME>2*MAV20 AND CLOSE < OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) <=0.25*( HIGH - LOW) |
REVERSALS
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MAV20 >=200000 AND CLOSE>12 AND LOW <= MIN40_1 AND VOLUME>2* MAV20 AND CLOSE > OPEN |
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REVERSALS
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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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HDV (Long) - Chart of the Week
Larry’s Swing Recommendation For Monday May 31, 2004:
Hovnanian Enterprises Inc. has been selected as one of my top (long) swing ideas for this week. To reduce your capital outlay and increase your leverage, I recommend buying this Company’s call options to maximize short-term profitability.
Please read on for more trade details…
Recommended Option Swing Play:
Hovnanian Enterprises Inc. (NYSE:HOV)
Industry: Construction Services Sector: Capital Goods
Employees: 2,370 Market Cap: 2.16 Billion
Institutional Ownership: 50.1%
Insider Ownership: 48.6%
Shares Issued & Out: 61.08 Million
Company Information: www.khov.com
Option Summary:
Option Information: www.optionsxpress.com
Option Symbol: HOVFF Type: CALL Exchange: AMEX
Strike Month: JUNE 2004 Strike Price: 30.00
Swing Trade Information:
Trade Strategy: Buy Call Options (Short-Term : Bullish)
Trade Targets: Common (7%) / Option (50%+)
Trade Composition: 40 % Technical / 60 % Fundamental
Trade Duration: 1 to 15 days
Entry Strategy: Buy HOVFF When HOV Trades Above $35.35
I recommend that traders buy the call options (symbol:HQVFF) when the underlying common stock (symbol:HOV) trades “just above” this stock’s 1-day pivot: $35.31.
Exit Strategy: Sell HOVF When HOV Trades Up 7%: Short-Term Target: $38.00
I recommend that traders close out their call option positions once the underlying common (HOV) trades up 7% from your equivalent entry price.
Stop-Loss: Place a 3% Mental Stop-Loss Limit: (Based On The Common )
If the common stock falls 3% below the equivalent entry price of the common, I recommend selling all of your options to minimize losses. Alternatively, if the common appreciates in value I recommend moving your protective stop up. Try to keep your stop about 3% from the stock's intra-day high. This is the best way to protect your profits and minimize potential loss.
Urgent: Don’t forget to write down the equivalent entry and target price of the underlying common stock, when you purchase your options. Read entire article before initiating your position please!
Risk/s: poor market conditions; sector price weakness; poor financial results June 2, 2004
For More Help: *see Larry’s trading tips at the bottom*
Company Summary:
Hovnanian Enterprises, Inc. designs, constructs and markets single-family detached homes and attached condominium apartments and townhouses in planned residential developments in the United States. It primarily markets and builds homes for first-time buyers, first-time and second-time move-up buyers, luxury buyers, active adult buyers and empty nesters.
10 Swing Catalysts:
1. Strong Earnings Expected (6/03/2004)- Hovnanian Enterprises Inc., the leading national homebuilder, will release earnings for the second quarter ended April 30, 2004 after the close at the New York Stock Exchange on Wednesday, June 2, 2004. The Company will webcast its fiscal second quarter earnings conference call at 11:00 a.m. (EDT) on Thursday, June 3, 2004 via the Hovnanian’s Web site at www.khov.com.
First Call’s mean Q2 earnings estimate from 3 different Wallstreet Analysts for HOV is $ 1.03 per share, which is up from $ 0.80 per share reported in Q2 of 2003. Analysts are estimating that revenues will rise to 905.86 million in Q2 of 2004 versus 679.82 million in sales reported for Q2 03. In summary, Analysts are expecting revenues and earnings to rise by 33.2% and 28.7%, respectively in Q2 of 2004.
2. Raised Guidance (Recent) – The consensus earnings per share estimate on HOV for fiscal 2005 was raised from 5.37 to 5.44 per share on the weekend or May 29th of 2004. Also, broker CSFB upgraded Hovnanian’s stock on May 19, 2004 from “underperform” to “neutral”. Not to mention the average recommendation rating on HOV from Wallstreet Analysts improved 0.3 or from 2.0 to 1.7 (Buy Rating).
3. Strong Financial Performance - HOV’s 5 year revenue and earnings growth rates has been impressive at 27.8% and 45.9%, respectively. The firm has had eight consecutive years of earnings per share increases as follows: $4.12; $3.93; $2.14; $1.15 ;0.75 ;0.58; and $-0.16.
4. Strong Performance Following Earnings Surprises- The firm’s stock has appreciated 11.4% within 30 days of reporting an earnings surprise; on average. (Real Stats. Thomson Financial)
5. Strong Earnings Growth – HOV’s earnings are expected to grow by 29% this quarter and by 29% next quarter. Analysts are expecting HOV to grow earnings by 18% in fiscal 2004 and by 7.4% in fiscal 2005. The firm’s long term (5 yr.) estimated earnings growth rate at 25.8% is 83% above the industry average of 14.05%. This high deviation warrants higher valuation for HOV.
6 Strong Earnings Surprise History – HOV has reported an average earnings surprise of 18.2% over the last 5 quarters. HOV’s earnings surprise history is as follows:6.1%;7.3%;13.4%;29%;and 35%.
7. Undervalued Fundamentally- Based on my fundamental research of Hovnanian., I believe HOV is currently UNDERVALUED. HOV’s PEG ratio (which compares its current p/e ratio with its earnings growth rate) is 0.28 and 136% above the industry average peg ratio of 0.66.
8. Analyst Upgrade Potential- If HOV surprises on May 2, 2004, it is possible that one or more brokers will initiate with a “Buy Rating” or other current Analysts may upgrade, accordingly.
9. Undervalued Technically- Based on my technical analysis of HOV, my research indicates the stock is about 50% overbought. HOV is showing a HIGH VOLUME ALERT, with a 5 to 30 day volume ratio of 119%, indicating rising volume studies. The stock has strong momentum in the short-term and is displaying a bullish 45 degree accumulation pattern. Strong earnings news on June 2nd. could facilitate a high volume break above resistance; at the stocks 50 day moving average ($37.53).
10. Rising Sentiment For Call Options- The stock’s current put to call volume ratio and its current put to call open interest ratio are both falling, indicating bullish or rising investor sentiment in the short term. HOV’s put to call volume ratio is 0.51 and its p/c open interest ratio is 0.90. The stock’s call option open interest (OI) is strong at 24,005 contracts, providing very good liquidity for call option swing traders.
Fundamental Summary:
2001 2002 2003 2004 2005
Revenue: (mil.) $1741.9 $2551.3 $3201.8 (mean forecast)
Earnings Per Share: 1.12 2.12 3.93 4.99 5.44
Swing Alerts:
30-Day Moving Average Break-Out: Friday May 28/04
Potential “Break-Out” Above Major Resistance: $37.51 (50 dma)
High Volume Alert: 5 to 30-day Volume Increase (+119%)
Positive 30/15 Day Stochastics Break-Out
Positive 8/17/0 Day MACD Break-Out
Swing Statistics & Ratings:
Recent Close: $35.30 on 428,300 shares traded
After-Hours Close: $35.30 on 0.00 shares traded
10-Day Average Volume: 974,00 (Good Liquidity)
5 to 30 day volume increase: 119% (Bullish)
Short Term Technicals: 70% Buy Bias (Bullish)
Avg. 1 mth. Perform. After Earnings Surprise:11.5% (Very Bullish)
Investor Sentiment: Put/Call OI Ratio= 0.06 (Bullish)
9-Day RSI: 73.6 and rising (Very Bullish)
Short Position Of Share Float:15.8% (Neutral)
Average Analyst Recommendation: 1.7 (Very Bullish)
Mean Analyst Price Target: $52.17 (Bullish)
Overall Rating: Bullish
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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: How To Handle Your Emotions While 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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How To Handle Your Emotions While Trading
To be successful you must learn how to master your emotions and be able to stay calm when trading. Emotions mishandled by the trader can negatively affect their trading. Let’s take a look at how we can handle our emotions without denying them.
We cannot turn our feelings on and off like a light switch, it just is not that easy. As human beings we get into trouble with our feelings when we deny them or try and hide from them. This quick solution of denying our feelings usually cause the individual to have bigger emotional problems down the road. You can’t sweep your feelings under the carpet forever; eventually you have to clean under that carpet! So how do we control our feelings without denying them? This is the real question!
Well the answer is multi-dimensional. First of all, if you get frustrated or angry at being stopped out at a loss or when you’re experiencing draw down, then your expectations need to be adjusted. Being stopped out is a normal part of trading. If you get stopped out more than the norm, you need to know how to go about correcting the problem. Maybe you need to switch time frames, lower your position size, etc. That is the “art” of trading, it is not an exact science, and there is a lot of judgment and discipline that come into play here. If your expectations are realistic, then chances are your trading should not make you angry or frustrated.
Perhaps your frustration, anger, depression or whatever is causing your emotional problems has nothing to do with trading. Maybe it has to do with a relationship not going well, money problems, not feeling physically well, feeling tired, burned out, and a host of other issues outside the trading arena.
When you feel any negative emotions, try and notice the feelings and connect with them. Don’t run from them or hide from them or deny them. That just creates bigger emotional problems in the future. Once you feel your negative emotions, try and sense where they are coming from. Is it a past or current trading event that caused them or a personal issue? It is also important to note that personal problems have a way of sabotaging our trading.
Once you feel you have isolated the cause of your frustration or anger, get close to it and really feel it, grasp it, and see where it is coming from. Doing this usually will calm you and take the power away from the emotion. Try and keep your trading to a minimum until your negative emotions no longer have any power left in them.
If after trying this, you cannot seem to find the cause, you may need to reach out for help. We at TradersCoach.com can be of help to you in this area through our private consultations designed to uncover negative psychological issues sabotaging your trading. If you have some deep personal issues, you may want to go to a licensed psychologist to resolve them.
I like to tell this story to illustrate just how emotions can creep into your trading and sabotage it without you even knowing it. I had a client who came to me for help. He was smart, had a very good trading approach, had enough risk capital to trade, and could not seem to get profitable.
He was becoming angry, frustrated and depressed because he could not figure out why he was not trading well. He would get out of winning trades on emotion way too soon. He would always rationalize his reasons for getting out too soon or staying in losing trades too long past their stop loss exits.
After weeks of working with him, we discovered that his beliefs about trading were not positive but negative. Furthermore, we discovered that his beliefs were based on what his parents, specifically that of his father had programmed into him at an early age. His parents believed that to be successful in America, one had to work a structured 9 to 5 job at a major corporation being an executive, accountant, lawyer, or doctor.
When my client traded he was not fitting this pre programmed profile of what he “should” be to be successful. Therefore, when he traded, he would feel the negative emotions created by his belief system about being a failure if he was a trader. And since he felt Mom and Dad were always right and had to be respected, he could not question Mom and Dad’s incorrect beliefs. Therefore trading created anxiety and tension because it was in direct conflict with what his Mom and Dad taught him. He did not feel he was doing something worthwhile, so he felt he did not deserve to be successful and make profits. And don’t ever think our links to our parents in some form or fashion don’t stay with us for a lifetime, because they do!
The key to helping him was to slowly show him that his parent’s beliefs really were not realistic, especially in our society today. I would use examples of all sorts of people in our society who did not work “regular” jobs but made tons of money and by all our societal means where successful. After he acknowledged this, then the next step for him was to actually believe it. We can acknowledge anything; change comes when we actually believe it. Meaning we had to replace his unrealistic beliefs about success with realistic beliefs. This took some additional time, but it did happen and when it did his trading turned around. This is a great example of illustrating how our beliefs about trading, money, and success can influence our trading. At times the trader may be unaware of their negative beliefs that are sabotaging their trading.
If you’re feeling angry, uptight, frustrated, hopeless, depressed while trading, stop trading and try to get to the bottom of your problems. There are no short cuts in this area either. You will not develop “The Trader’s Mindset” which is the Holy Grail to trading unless you master your mind and learn to notice and resolve your emotion issues.
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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 NFI 04/29/04 through 05/05/04
NovaStar Financial Inc.
NovaStar Financial Inc. is a specialty finance company that originates, invests in and services residential nonconforming loans. The Company operates through three separate but inter-related units: mortgage lending and loan servicing, mortgage portfolio management and branch operations. The Company offers a range of mortgage loan products to borrowers (nonconforming borrowers) that generally do not satisfy the credit, collateral, documentation or other underwriting standards prescribed by conventional mortgage lenders and loan buyers, including government-sponsored entities such as Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac). NovaStar retains interests in the nonconforming loans it originates through its mortgage securities investment portfolio. Through its servicing platform, the Company then services all of the loans it retain interests in, in order to better manage the credit performance of those loans.
Gregory T. Barmore has served on the Board of Directors since 1996. Since 1997, he has been a director and is currently Chairman of the Board of Directors of Mortgage Electronic Registration Services, Inc. (MERSCORP, Inc.), Vienna, Virginia, a company which acts as nominee in county records for mortgage lenders and servicers. He retired as Chairman of the Board of GE Capital Mortgage Corporation (GECMC), a subsidiary of General Electric Capital Corporation (GE Capital) headquartered in Raleigh, North Carolina in 1997. He was responsible for overseeing the strategic development of GECMC's residential real estate-affiliated financial business, including mortgage insurance, mortgage services and mortgage funding. Prior to joining GECMC in 1986, Mr. Barmore was Chief Financial Officer of Employers Reinsurance Corporation (ERC), one of the nation's largest property and casualty reinsurance companies and also a subsidiary of GE Capital.
We like these purchases by Barmore. NFI took a pretty good beating lately on negative news that they may have not been licensed to do business in certain states. When stocks go down like this, it is encouraging to see some sort of insider buying surface which often suggests that things are going to be ok. In the case of Barmore, he has been around long enough to know the value of this company. We doubt he would be buying if he did not see things stabilizing going forward. He is also very knowledgeable in the finance area, previously being the CB of GE Capital Mortage Corporation. NFI currently has a dividend yield around 15%. We suspect this may put a floor on the stock. Perhaps Barmore does not see this dividend being cut. It is also encouraging that almost all of Barmore's previous purchases in NFI have worked out. His buying indicates value at the current price level and upside in the months ahead.
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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 Tuesday, June 1st, 2004:
We have no new buy signals for Tuesday.
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. CERS (Cerus Corporation, Biotechnology and Drugs) $2.16 - Buy. We start off the holiday-shortened week with an undervalued, oversold biotech play that is off 81% over the last 52 weeks, but that may be turning the corner for a short-term run. "Cerus Corporation is developing medical systems and therapeutics based on its proprietary Helinx technology for controlling biological replication. The Company's most advanced programs are focused on systems to enhance the safety of blood products used for transfusion. The Intercept Blood System, based on the Company's Helinx technology, is designed to inactivate viruses, bacteria, other pathogens and white blood cells." With CERS, we like a combination of factors, including some decent fundamentals, insider activity, and technical chart movement. We certainly like the fact that insiders have started nibbling here, with the share price at all-time lows (it traded at $59 in April 2002). The decline in share price has driven the stock to well below cash-per-share on hand, and to a price-to-book of just 0.88. Normally when stock is valued below cash, there tends to be a mountain of debt on the other side of the equation. While CERS does have debt, it also has a decent ratio of 1.76 to offset it. By all indications, the stock is quite undervalued here, especially while continuing to grow revenue at 13+%. Earlier this month, the company announced first quarter numbers showing net loss for the quarter of $9.2 million, or $0.42 per share, compared to a net loss of $17.2 million, or $1.07 per share, for the first quarter of 2003. The reduction in the net loss for the quarter was due primarily to increased funding received under cooperative agreements with the U.S. Armed Forces and reduced operating expenses. This month, the stock has lost nearly half its value despite mid-month headlines saying its experimental Intercept system, designed to make plasma transfusions safer, proved effective in patients with a rare blood disorder. Apparently, analysts weren't thrilled with these results, talking the stock lower. At this point, we love the risk-reward, with a MACD showing signs of coming off the bottom and an RSI and stochastic showing the stock as deeply oversold. We would consider this a bit more than a pure short-term technical play, and believe that it has potential for a longer term uptrend. We would target the 13-day moving average as an initial goal, around $2.40, with a move above opening the door to a run toward the May high of $3.06. Below $2.10 there's zero support, so keep the stops tight just below that level. Short-term price target: $2.40 (11% gain) Stop loss trigger: $2.05 (5% loss)
2. CURE (Curative Health Services, Inc., Healthcare Facilities) $10.52 - Buy. Our second pick for the week ahead is a healthcare facilities play that took a massive hit last week. "Curative Health Services, Inc., through its two business units, seeks to deliver high-quality results and satisfaction for patients experiencing serious or chronic medical conditions. The Company's Specialty Pharmacy Services business unit provides pharmacy products to patients with chronic and critical disease states and related services to help these patients manage the healthcare process. The Company's Specialty Healthcare Services business unit is a disease management company in engaged in the area of chronic wound care management." For the three months ended 3/31/04, revenues rose 13% to $65.6 million while net income fell 8% to $3.1 million. What caught our eye here, in addition to Friday's 16% decline, has been a solid amount of insider buying over the last couple months at prices ranging from $11.40 to $12.50 per share, significantly above Friday's close. Looking at the fundamentals, the stock looks undervalued here, trading at just 0.73x sales and just below book value of $11.47 per share. Other positives as far as the fundamentals go are the profit margin of 5.76%, operating margin of 9.54%, return on assets of 5.85% and return on equity of 9.37%. Friday's bleeding was spurred by a report that a proposed change in reimbursement for blood clotting therapies in California's Medicaid program could hurt its earnings by 10% or more. Earlier this month, Curative said it expected earnings excluding one-time items of $1.05 to $1.10 per share in 2004. Assuming a 15% reduction in earnings going forward, this would still leave CURE with a forward P/E here in the 12 range, still quite attractive. It looks to be another case of The Street overreacting to a negative headline, creating a buying opp for those who like to swoop in when everyone else is bailing out in a panic. Looking at the chart over the last 6 months, CURE is prone to a volatile range between $11.50 to $14 or so, and we;d look to the low-end of that range as an initial target here. We'd first target the previous May low of $11.11, followed by the February low of $11.62. We'd use a stop somewhere just below Friday's intraday low of $10.35. Short-term price target: $11.10 (6% gain) Stop loss trigger: $10.20 (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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