June 13, 2004


Issue #121

Greg Fry
   Greg Fry

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

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

Bob Coppo
Week on Wall Street
The Week on Wall Street

Thursday's Action:   Stocks remained in positive territory throughout Thursday's session, albeit on light volume. The improving technology sector and positive corporate earnings reports helped propel the market in spite of increasing oil prices. Major world markets closed mixed. London's FTSE closed down 0.08%; Frankfurt's DAX closed up 0.63%, and Paris' CAC 40 closed higher by 0.33%. Japan's Nikkei closed up 1.10%, Hong Kong's Hang Seng closed up 0.67%, and Sydney's All Ordinaries finished higher by 0.07%. In economic news, Initial Jobless Claims saw an increase of 12k. Import prices rose 1.6%, while export prices rose 0.3%. The PPI report was postponed. Volume came in at 1.66 billion shares traded on the NYSE and 1.37 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 1.27, and up volume over down volume by 1.51; Nasdaq advancing issues over declining issues by 1.04, and up volume over down volume by 1.27. Leading sectors were Natural Gas, +1.97%, Oil Services, +1.24% and Commodities, +1.16%. Laggards were Airlines, -3.97%, Broker/Dealers, -0.70% and Hospitals, -0.40%. Nasdaq 100 futures closed 10.50 pts higher to settle at 1482, while the S&P's settled up 5.10 pts at 1136.50.

Weekly Recap:   Stocks closed out the shortened trading week, due to market closures for President Reagan's funeral, with respectable gains. Despite the media's tendency to attribute the gains to the so-called "Reagan Rally", stocks moved higher in large part due to moderating oil prices, a robust economic outlook, a continuation of reassuring earnings news, and a sense that multiple interest rate hikes have already been priced into the market.

Fed Chairman Greenspan caused some consternation among market participants when he told an international monetary policy panel in London that the FOMC is prepared to do what is needed to fulfill its obligations to achieve price stability. Greenspan added that the FOMC's commitment to a measured rise in rates is conditional and can be revoked if the central bank's judgment proves misplaced. The reminder put the market on notice that a "measured pace" by the FOMC can be 50 basis points as easily as it can be 25 basis points. Trading in the fed funds futures market reflected the latter assessment. July fed funds futures now have a 61% probability of a 50 bps move at the June 29-30 meeting. The stock market, however, held its own in the face of the prospect of more aggressive rate hikes. The bond market also held up, suffering only modest losses that bumped the yield on the 10-yr note to 4.79% from 4.77%.

For the week, the Dow gained +1.6%, the S&P 500 finished +1.2% higher, and the Nasdaq rose +1.1%. The small cap Russell 2000 edged up +0.2%. Next week the economic calendar has a full slate, as some reports that were due Friday were rescheduled. Monday, we get Retail Sales and the Trade Balance, Tuesday the PPI, CPI, Business Inventories, Empire State Index and Mich Sentiment, Wednesday Building Permits, Housing Starts, Capacity Utilization and Industrial Production and Friday the Current Account. All in all, investors will have plenty of economic news to digest.

Contango Anyone?:   The terms "contango" and "backwardation" are used in the commodity futures markets to describe a rather simple concept first put forth by Professor Holbrook Working of the Stanford University Food Institute. A commodity market is said to be in backwardation when the spot, or cash, price is at a premium to the front month futures contract and where the front month price is at a premium to the later months. Backwardation occurs when markets are tight, i.e., when demand exceeds supply and prices must be bid higher to draw supplies out of storage. A commodity market is in contango when the spot price is trading at a discount to the front month futures contract and each subsequent futures contract is cheaper. In that case, supplies are plentiful and storage is bid for rather than for the commodity itself.

Despite all the media rhetoric, the oil futures market has gone "contango". It was only a month ago that the July/August contracts were in backwardation. Crude oil has begun bidding for storage and a commodity bidding for storage is not in short supply. To the contrary, it is a commodity in excess.

Crude oil in the US is not in tight supply. Rather, refining capacity and tanker vessels are in tight supply. There has not been one new refinery built in the US since 1976 (and none are on the drawing boards), while the backlog for new VLCC tankers is currently 5-7 years. Crude oil prices are likely to decline, especially since the SPR (strategic petroleum reserve) is about to be topped up. But don't expect refined product (gasoline) prices to abate anytime soon. Refinery margins are skyrocketing and tanker rates have seen a ten-fold increase, with no sign of relief for either. Those of us who bought shares of NAT and VLCCF have watched those share prices double since the first of the year. Despite what some politicians would have us believe, we can thank the regulators and the interveners, not the oil companies, for high gasoline prices at the pump.

Update on the POI Strategy:   With June options expiring officially on Saturday, June 19th, 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. The current POI resides at the OEX 550 strike. With just 8 days to go until expiration, the probability that the POI will change is diminishing.

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 so far this year. Here are the results:

Expire Spread Credit % Profit Days
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 for less than one week each 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:

  • Defining the range where the OEX will close at expiration.
  • Limiting "market exposure" to one week or less per month.
  • Consistently returning 15% to 25% on investment per month.
  • Controlling downside risk by the use of "market if touched" stop orders.

If you would like to receive timely updates on this strategy, including specific trade recommendations, please 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 commitments release scheduled for Friday June 11, 2004 has been rescheduled for Monday June 14, 2004 due to the US National Day of Mourning for former President Ronald Reagan.

Sentiment Surveys:   The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 49.5%, while the percentage of bears was 20.2%. The bullish ratio (bulls/bulls +bears) was 71%.

The latest AAII survey showed an increase to 55% bulls, and an decrease to just 16% bears. The bullish ratio came in at 72%, while the 4-week moving average is 57%. One thing to note about the AAII survey is that, while membership in this organization is quite large as investor groups go, the number of members that actually participate in the survey is very small. Thus, large fluctuations in survey results from week to week are not uncommon.

The latest Market Vane survey came in at 67%, 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 Wednesday night's column that the odds favored making lower lows on Thursday, but the S&P's had a better chance of closing higher on the day, and that's what happened. Thursday's price action favors making higher highs on Monday. On a short term basis, the indicators are painting a mixed picture. On the positive side, the CBOE equity put/call ratio came in at an extreme high of 1.01 Thursday, as small investors loaded up on put options. That's usually a short-term bullish sign, as small traders are more often wrong in anticipating market direction. On the negative side, our Stock Picks scan continues to languish, with virtually no new buy signals for the last three days. That's often a sign that the market is topping out. Also potentially negative was the action of the VXO, which fired a second CVR3 sell signal in the last three days. While the VXO failed to close below its lower bollinger band, nonetheless, it's in deep oversold territory, and that's potentially bearish for the stock market.

The chart below shows the Dow running up against trendline resistance one more time. The trendline has contained every rally since the senior average topped out back in February, and it may just do so again.

SMT's Pivot Point Forecast; 1-2 Weeks:   Our Pivot Point RS indicator is currently on a SELL signal. Our next Pivot Point is forecast to occur on or near June 18th.

The 60-mn NDX chart below shows that the StochRSI indicator is in the SELL zone. For Monday, resistance for the S&P's comes in at 1140 and then 1144. Support lies at 1128 and then 1125. For the Naz, resistance comes in at 1490 and then 1499. Support lies at 1472 and then 1460.

The Intermediate Term Outlook; 2-6 Weeks:   The weekly chart of the Nasdaq Composite Index shows the trendline support and resistance lines converging. The COMPQ encountered resistance at the top trendline right at the 2025 level we had mentioned recently. A breakout will eventually occur either to the upside or the downside as the two lines meet. But until that happens, we can expect more range-bound trading. The one positive is the fact that the index has managed to stay above both its 50 and 200-day moving averages.

Our Market Trend Indicator (MTI) is currently positive and trended slightly higher on Thursday.

Good Trading!

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

LAST WEEK'S PICKS: Split Decision

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2% -3%Last week's Fresh Picks continued our two-week trend of splitting the line with one stock hitting our stop-loss trigger and the other finishing the week in the green.

Communications equipment maker WSTL hit the tight suggested stop loss trigger for a 3% loss while GRMN went the other direction and closed out the week with a 2% gain.

Make sure to also have a look at the Track Record page on the site for our 2003 monthly breakdown showing each and every Fresh Pick from the year, along with its price when recommended and where it ended the year. For specific targets and stops, please see the archives.

Have you traded any of our recommended plays along the way? We'd love to hear from you and how you did. Please send your stories to comments@talkingpoints.com.

TECH WATCH: Techs Tighten Up On Intellectual Property / by Jeff Neal, Technical Market Columnist

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Jeff Neal is a veteran options strategist and trader with over a decade of experience in the trading business. Jeff has had a diversified business career operating a very successful management consulting business with his clients representing some of the largest companies in the world.

He has a B.S. in Computer Science from Indiana University and an MBA in Finance from the University of Indianapolis. Jeff is a writer, mentor, and options strategist for Optionetics (http://www.optionetics.com/) and as head of his own hedge fund is an active options trader in both the equity and futures markets.

Jeff Neal - Staff Writer & Options Strategist - Optionetics.com ~ Your Options Education Site

Jeff Neal
Tech Watch

Techs Tighten Up on Intellectual Property
By Jeff Neal, Optionetics.com

Intellectual property is a very important asset within the hi-tech world and the abundance of recent lawsuits in this area shows how serious technology companies, especially the smaller ones, are taking it. Just recently, for example, a company claiming it owns the rights to a portion of the JPEG file format, which is used to store digital images, filed lawsuits against numerous high-tech firms including such big names as Apple and Dell.

The company that is making the claim is Forgent Networks a software vendor based out of Austin, Texas. Since the JPEG format is so prevalent the rights to this particular intellectual property will be huge. In addition, there are many more lawsuits that are still pending demonstrating how just aggressive technology firms have become in protecting these types of assets.

In Forgent’s case it has a lot to gain with this lawsuit with little downside risk given the company appears to be strapped for cash from the recent downturn in tech spending the previous three years. A victory in this case allowing Forgent royalties from the JPEG file format usage would be a tremendous boost to their cash flow at a time when it is desperately needed.

The prospects seem promising given many companies want to take care of these lawsuits now as technology spending improves as well as a rosy outlook for future profitability. Forgent is encouraged further by the recent litigation success of Eolas Technologies, which won a patent case against Microsoft with an award in excess of $520 million.

Indeed the patent lawsuits extend to many small technology firms seeking retribution for the taking of their intellectual assets as borne out by the Friskit and NeoMedia lawsuits. The Friskit company is challenging RealNetworks and its merger partner Listen.com claiming it invented the method of creating customize play lists used by the new service just recently launched by RealNetworks.

The NeoMedia case contends that a company called Virgin Entertainment as well as some other smaller companies named violated its patent that links a particular product with a particular website. The company asserts that that Virgin Megastores and others are in violation because they offer their customers an opportunity to scan a bar code contained on CD and then be able to here it over the Internet which is exactly the technology their patent protects.

Another case involves a company that claims to have part ownership rights to the Linux operating system. The firm is called the SCO Group and has pursued the litigation avenue against AutoZone, IBM, and DaimlerChrysler. The SCO Group is also a firm strapped for cash and is hoping a large award settlement would alleviate their financial troubles.

It is incumbent upon these technology companies to have their facts inorder before going to court because patent lawsuits are generally very expensive and quickly drain a small company’s cash reserves. Another hurdle for the small technology company especially going after a large company with deep pockets is the fact they can continue to fight and drag out the lawsuit until sometime a smaller firm can no longer afford to go on. That is also why on average that most of these patent type lawsuits are settled for relatively small awards or amounts.

However, there are times when the awards for patent violations can be quite enormous—like when Intergraph, a small chipmaker, received $225 million from Intel back in March. It is these type stories that will continue to keep the intellectual property litigation pipeline full. Especially when a company is struggling for cash and sees a potential violation of their patent asset that they spent so much money on to obtain.

Happy Trading.

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

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Dale Woodson is the editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.

We encourage our subscribers to visit his site at http://www.woodsonwave.com and please see Dale's complete bio following his column.

Dale Woodson

Dale Woodson
Market TA columnist

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

















Year 2012



1932 or 1942


Year 2012*



12/6/74 or 8/12/82


Year 2012





.618 = 5803





Complete @ 8062 on 9/21/01





Complete @ 10,673 on 3/19/02





Complete @ 7197 on 10/10/02





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





 .500 = 6865/ .618 = 5803





Year 2012

* "…it should terminate about the year 2012"

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

R. N. Elliott, Educational Bulletin O

R.N. Elliott, Interpretive Letter No. 17

October 26, 1942.



August 25, 1941.

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

Primary degree wave 3 up (1990 - 1999)



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





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.

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

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Golden Consolidation

The best way to view gold’s action last week is to look at the dollar. The dollar opened week at 88.98 and stayed around 88 for a couple of days. Then on Wednesday, the dollar rallied as Greenspan said that the Fed would do “what is required” to combat inflation, in other words, they would be willing to aggressively raise rates if inflation gets out of hand. This strength in the dollar sent gold reeling, down over $6.00 for the day. Gold stocks, as measured by the XAU index, followed suit with the XAU falling over 4 points. On Thursday gold recovered slightly to close the week at $386.60 while the XAU inched up to 83.85. All the markets were closed on Friday in memory of President Regan.

Although not a good week for gold, both stocks and bullion stayed within their respective consolidation ranges that we discussed last week: gold between $370 and $400 and the XAU between 75 and 91. As long as these limits are not violated, I will remain cautiously optimistic about the precious metals. Over the short term, my portfolio continues on hold—I am not buying or selling until I can see a clearer trend.

However, over the long term, I am extremely bullish because I believe the dollar has entered a bear market that could last for years. For sure, there will strong rallies along the way, but overall, the path of least resistance will be down. This is one of the primary reasons I think gold will reach a $1000 an ounce before the end of the decade.

To see why I am so negative on the dollar, let me give you an analogy. Suppose that a modern day alchemist figured out how to cheaply transmute lead into gold and being a philanthropist, he distributed gold to everyone. Pretty soon, since every family have all the gold they desired, the price would sink to near zero. Of course this is a fairy tale and could never happen with bullion but the dollar is a different story. The government has a way of generating more and more dollars at practically no cost—it is called the printing press. And over the last few years, these presses have been running full bore! And just as precious metals would lose their value if they were too plentiful, the same is true with paper dollars. With an inflated supply, the dollar has to go down—big time.

Why did the Fed permit the printing of so many greenbacks? The reason was to keep the economy out of deflation, which looked like a distinct possibility back in 2002. But now it is time to pay the piper. The Fed is now seeing inflation around the corner but unfortunately it may be too late. Trade deficits are soaring and public debt is becoming debilitating. Sooner or later the dollar will be driven down and when this happens, the precious metals will be the beneficiary.

So over the long term, I believe that gold (and especially gold stocks) will offer opportunities for exceptional gains. However, the ride will not be smooth and the potential rewards will often be offset by the agony of 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!

MR. SWING'S PLACE: Weekly Swing Trading Ideas / by Larry Swing

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Each week, Mr. Swing analyzes his database of more than 9,200 securities to scan for swing trading opportunities. But be warned: Do not expect a fast way to make money. Mr. Swing is going to show you how you can accumulate small gains weekly, ultimately making money through a disciplined, low-risk trading approach. While he realizes that this short-term swingtrading approach is not for everyone, he hopes that the information given at MrSWING.com will be useful to you in the near future...

These are your Swing Trading Opportunities for this week:

Talking Points member - Over the nearly two years that we have carried the Mr. Swing's Place column, Larry's picks have consistently put in great performances. Don't miss out on the full swing-trading content available at Mr. Swing.com. Take advantage of some of the great programs available by clicking here.

Long Swings:


^ click here
QQQ,Nasdaq -100 Trust Ser 1
INTC,Intel Corp
SPY,S&P Dep Receipts
GE,Genl Electric
NOK,Nokia Corp ADS


Short Swings:


^ click here
D,Dominion Resources
ETM,Entercom CommunicationsA
ESMC,Escalon Medical Corp
CBI,Chicago Bridge & Iron N.V.

^ click here
GPS,Gap Inc
USB,U.S. Bancorp
SOV,Sovereign Bancorp
NET,Networks Associates

MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 > MDI10 AND HIGH < SMAC5
^ click here
ETM,Entercom CommunicationsA
FBN,Furniture Brands Intl
MANT,ManTech InternationalA

MAV20 >=500000 AND CLOSE>7 AND ADX10 > 30 AND PDI10 < MDI10 AND LOW > SMAC5
^ click here
INTC,Intel Corp
C,Citigroup Inc
JPM,J.P. Morgan Chase & Co
BRCM,Broadcom CorpA

MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)>( MDI10+ MDI20) AND LOW< LOW1 and LOW1< LOW2 AND HIGH< HIGH1 and HIGH1< HIGH2

^ click here
SYY,Sysco Corp
EAT,Brinker Intl
TRB,Tribune Co.
ETM,Entercom CommunicationsA
LZB,La-Z Boy

MAV20 >=500000 AND CLOSE>12 AND ( ADX10+ ADX20)/2 > 30 AND ( PDI10+ PDI20)<( MDI10+ MDI20) AND LOW> LOW1 and LOW1> LOW2 AND HIGH> HIGH1 and HIGH1> HIGH2

^ click here
EBAY,eBay Inc
MRK,Merck & Co
GPS,Gap Inc
USB,U.S. Bancorp
AA,Alcoa Inc


^ click here
DISH,EchoStar CommunicationsA
PSUN,Pacific Sunwear of Calif
KMX,CarMax Inc
ETM,Entercom CommunicationsA
FBN,Furniture Brands Intl


^ click here
SPY,S&P Dep Receipts
GE,Genl Electric
MRK,Merck & Co
BAC,Bank of America

MAV20 >=500000 AND CLOSE>12 AND (CLOSE1 - LOW1) <= 0.1 * ( HIGH1- LOW1) AND ( CLOSE - LOW) >= 0.95* ( HIGH- LOW) AND CLOSE > SMAC15 AND CLOSE > SMAC50
^ click here

MAV20 >=500000 AND CLOSE>12 AND( CLOSE1 - LOW1) >= 0.9 * ( HIGH1- LOW1) AND ( CLOSE - LOW) <= 0.1 * ( HIGH- LOW) AND CLOSE< SMAC15 AND CLOSE < SMAC50
^ click here
DNA,Genentech Inc
MATK,Martek Biosciences
NKTR,Nektar Therapeutics
CEPH,Cephalon Inc
FIC,Fair Isaac

^ click here
GR,Goodrich Corp

^ click here
DIA,DIAMONDS Trust,Series1
STN,Station Casinos
STLD,Steel Dynamics

^ click here
^ click here
DDS,Dillards IncA
KNGT,Knight Transportation
HTLD,Heartland Express

MAV20 >=200000 AND CLOSE>7 AND HIGH>=MAX40 and HIGH1 <> MAX40_1 AND VOLUME>1.5 * MAV20 AND CLOSE > OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) >=0.75*( HIGH - LOW )
^ click here
AUO,AU Optronics ADS
ACTL,Actel Corp
REGN,Regeneron Pharmaceuticals
IMGG,Imergent Inc

MAV20 >=200000 AND CLOSE>7 AND LOW<=MIN40 AND LOW1<> MIN40_1 and VOLUME>2*MAV20 AND CLOSE < OPEN AND VOLUME1 < MAV20 and ( ( CLOSE - LOW ) ) <=0.25*( HIGH - LOW)
^ click here

DNA,Genentech Inc
MATK,Martek Biosciences
CYBX,Cyberonics Inc

^ click here
TGT,Target Corp


REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are explained in our new section called: SWINGLAB...

REVIVAL (Track1) + REVERSE (Track2) + TRIANGLE (Track3) are different scans developed by MrSwing.
Try for yourself to find the LIST that fits you the BEST...
Tracks, Breakouts & Reversals are e explained in our new section called: SWINGLAB...

NSM (Long) - Chart of the Week
Larry Swing

National Semiconductor Corp. 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:

National Semiconductor Corp. (NASDAQ:NSM)
Industry: Semiconductors   Sector: Technology

Employees: 9,800  Market Cap: 8.02 Billion
Institutional Ownership: 85.07%
Insider Ownership: 2.0%
Shares Issued & Out: 358.77 Million
Company Information: www.national.com

Option Summary:
Option Information:www.optionsxpress.com
Symbol: NSMFW   Type: CALL   Exchange: AMEX
Strike Month: JUNE 2004   Strike Price: 17.50

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 NSMFW When NSM Trades Above $22.65
I recommend that traders buy the call options (symbol:NSMFW) when the underlying common stock (symbol:NSM) trades “just above” its 1-day resistance level at $22.44

Exit Strategy:  Sell NSMFW When NSM Trades Up 7%: Swing Target: $24.25
Short-Term (3 month target: $26.00)

I recommend that traders close out their call option positions (NSMFW) once the underlying common (NSM) trades up 7%.

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.


Note: You should move your mental stop up as the common stock rises. The best way to protect your intra-day profit is to keep your stop-loss price about 3% from the common’s intra-day high.

Urgent: Don’t forget to write down the equivalent entry and target price of the underlying common stock, once you purchased your options. I highly recommend you made an informed trading decision by reading this entire article before initiating your option positions. Thank-you!  

poor market conditions; sector price weakness; poor financial results June 10, 2004; and Company reduced forward guidance June 10, 2004.

Need More Help: *see Larry’s trading tips at the bottom*

Company Summary:
National Semiconductor Corporation designs, develops, manufactures and markets an array of semiconductor products, including a line of analog, mixed-signal and other integrated circuits (ICs). These products address a variety of markets and applications, including amplifiers, personal computers (PCs), power management, local and wide area networks (LANs and WANs), flat panel and cathode ray tube (CRT) displays and imaging and wireless communications.

Swing Catalysts: 

1.Strong Earnings Expected (6/10/2004)-  National Semiconductor Corp. (NSM), a leading independent supplier of semiconductor products and other electronic devices, will release their fiscal 2004 fourth quarter and year-end results (ended May 31 2004) on Thursday, June 10, 2004 at 1 pm Eastern Standard Time.


First Call’s mean 2004 fourth quarter estimate from 18 different Wallstreet Analysts is $ 0.29 per share up from $ 0.06 per share reported in Q4 of 2003. Analysts are estimating revenues to be about 559.07 million in Q4 of 2004 versus 425.30 million reported in Q4 of 03. In summary, Analysts are expecting a 383.3% increase in earnings and a 31% increase in sales from National Semiconductor in Q4 of 2004. These performance numbers are well above industry averages. 


2. Strong Earnings Growth Rates – NSM’s earnings are expected to grow by 388.5% this quarter and by 193.4% next quarter. Analysts are expecting the Company’s earnings to grow by 1127.5% for fiscal 2004 and by 45.9% next year (fiscal 2005). The firm’s long term (5 yr.) earnings growth estimate is 15%, which is 11% above the industry average of 13.5%.


3. Positive Earnings Surprise History – National Semiconductor has beat analyst earnings guidance estimates the last 4 quarters, posting an average earnings surprise of 27.55%. The Company’s last 4 earnings surprises were as follows, from first to last):+14.6%;+13.2%;+42.8%; and +39.5%.


4. Positive Earnings Per Share Momentum - Wallstreet Analysts have made 21 upward earnings revisions on NSM’s short and long-term outlook. Analyst’s mean Q4 2004 earnings per share estimate has risen 26% from $0.23 per share to $0.29 per share in the last 90 days.

5. Strong Performance Following Earnings Surprise - The firm’s stock has appreciated 15.3% within 30 days following an earnings surprise (on average). Also, NSM has appreciated 16.9% within 90 days of posting an earnings surprise (on average). Stats. By Thomson Financial 


6. Good Financial Strength– NSM’s balance sheet is in very good condition. The firm has minimal long term debt with a current debt to equity ratio of 0.014. The firm also has a positive working capital position with a current ratio of 3.25.  Also, with free cash flow from operations at 388.5 million and a cash position of 793.1 million, management is managing their cash flow quit well.


7. Positive Target Price Momentum – Wallstreet Analysts covering National Semiconductor have raised their average 52 week price target on NSM 15% from $22.25 to $25.53 in the last 30 days.


8. Strong Price Performance – National’s stock NSM appreciated 8.3% in the last 3 months, outperforming 82% of industry competitors. The stock has risen 104.5% in the last 12 months, outperforming 68% of industry peers.


9. Undervalued Fundamentally- Based on my fundamental research of National Semiconductor, I believe NSM is currently UNDERVALUED. NSM’s revenue and earnings growth rates along with their operating margins are above industry peers by a minimum of 14%. In addition, the price earnings multiple (p/e) for NSM is currently 20.2, which is 21% below the industry average p/e of 25.69. Therefore, I conclude that NSM is undervalued by a minimum of 15% in the short-term based on comprehensive fundamental analysis. 

10. Undervalued Technically- Based on my technical evaluation of NSM, short-term indicators are showing a 78% buy rating. NSM’s short and intermediate trends are both bullish with the Relative Strength Index (RSI), Commodity Channel Index (CCI) and Average Directional Index (ADX) all showing short-term buy signals. We have experienced increased price momentum since NSM broke through major resistance (50 dma) on June 4, 2004 at $21.69. “If” NSM reports positive earnings and guidance on June 10th.,  I expect a high volume test and possible break to a new 52 week high above $24.34. 

11. Analyst Upgrade Potential- If NSM announces earnings in-line or above guidance on June 10th., I am expecting one or more analysts to initiate or raise their recommendation on this stock.  


12. Excellent News Coverage - NSM in the last 4 business days has appeared in news commentaries from: CBS Marketwatch; Forbes.com; Network World Fusion; The Motley Fool.com; Man Securities; Investors.com; Comtex; Net Security.com; The Subway.com and The Street.com etc.

13. Rising Investor Sentiment- 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. NSM’s put to call volume ratio is currently 3.81 and its p/c open interest ratio is 1.00. NSM’s total call option open interest (OI) is strong at 83,007 contracts, providing excellent liquidity for option swing traders. 

Fundamental Summary:

                             2001     2002      2003      2004    2005   2006
Revenue: (mil.)        $2112.6 $1494.8 $1672.5     (mean forecast)       
Earnings Per Share:   0.62     -0.35      -0.09    0.80      1.16    1.21


Earnings Data:

Earnings Year-To-Date: 0.49 per share
Q4 reporting June 10, 2004  1 pm EST.:
Q4 Earnings Estimate: 0.29  vs. 0.06 in Q4 of 03.

# quarterly earnings per share (EPS) increases in 5 years: 13

Average P/E = 20.2  versus Industry Avg. P/E=25.69

EPS % Change In Last 4 Qtrs: +830%

Earnings Rank In Industry: 92%


Swing Alerts:
Positive 50 Day Moving Average Break-Out: June 4, 2004

New 6 Week High: June 8, 2004

Positive 8/17/0 Week MACD Break-Out: June 8, 2004

Potential Break-Out Above Resistance (52 Wk. High at $24.34)

Other Statistics & Ratings:
Recent Close: $22.35 on 7.26 million shares     (Very Good Liquidity)
After-Hours Close: $22.27 on 95,800 shares       ( Very Active)
10-Day Average Volume: 7.82 million shares    (Very Good Liquidity)
1 to 30 day volume increase: 187.8%                (Very Bullish)

Short-Term Technicals: 78% Buy Rating                 (Bullish)
Avg. 30 day Performance After Surprise:15.3%    (Very Bullish)

Investor Sentiment: Put/Call OI Ratio= 0.36        (Very Bullish)
9-Day RSI: 64.0 and rising                                    (Bullish)
Short Position of Share Float: 8.31%                  (Below Average)
Community Sentiment: 88 long/13 short            (Very Bullish)

Average Analyst Recommendation: 2.2                  (Bullish)
Overall Rating:                                                       Very Bullish



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: Don't Lose Your Perspective / by Bennett McDowell, Columnist

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Founder and President of TradersCoach.com, Bennett started his financial career on Wall Street with the firm J.J. Kenny Co. in 1984 after serving as an officer in the U.S. Navy. Bennett also served as a Retirement Plan Specialist with the Equitable in New York and has investment real estate experience as well. In addition, his 1979 Economics BA degree from Syracuse University in upstate New York gave him a foundation on which he was able to build a solid background in Finance.

Bennett has extensive experience in trading the financial markets and is currently an active trader including day trading the financial futures markets. He also coaches many traders through his company TradersCoach.com.

Considered an expert in technical analysis and complex computer trading platforms and applications, Bennett has educated and helped traders worldwide improve their trading. Bennett is well known for helping traders overcome sabotaging psychological issues that keep them from reaching their full potential. In addition to his educational and coaching abilities, Bennett, a registered securities broker, manages money and trades for clients throughout the United States.

Bennett released his home study course Applied Reality Trading, also known as "ART" in January 2002. His cutting-edge course teaches traders his state of the art Pyramid Trading Points, Money management, and developing the "Trader's Mindset." Bennett is also known for developing The Trader's Assistant - a premier trade-posting record-keeping system for traders, as well as writing and publishing The Survival Guide For Traders, a book on how to set up and organize your trading business.

Bennett provides private consultation/coaching services to many traders throughout the world by telephone, video conferencing, and in person. Working with Bennett, traders spend time focusing on trading system development, trading psychology, and disciplined money management.


The Trader's Mindset Columnist
Don’t Lose Your Perspective!

In counseling financial traders, I have noticed an interesting condition that occurs in their learning process.

The condition usually presents itself after a trade where a large loss occurs. Symptoms occur when the trader feels a loss was serious thus causing feelings of inadequateness and feeling sorry for themselves. The trader feels crushed, frustrated, victimized, and guilty about their large loss. Even a string of smaller losses can cause this condition as well, but it is usually large losses that cause it. I call this condition, “Losing Your Perspective.”

At this crucial stage, the trader must not lose their perspective, for if they do, they spiral into a state of depression making it much more difficult to recover. At this point, many traders give up on trading. Before the problem gets this far, traders need to either seek help, or be emotionally strong enough to help themselves.

Losing your perspective is worse than the money you lost! Why? Because losing your perspective is similar to losing your soul. You are all you have, so if you give up on yourself by losing your perspective, you have failed! You only fail if you give up! Many traders that lose their perspective begin to feel like total losers not only in trading but in life. It is sad to see traders that have lost their soul because they lost money on a trade!

Here are a few guidelines to help keep you from losing your perspective.

  • Trade only with money you afford to risk
  • Always use stop-losses when trading
  • Expect some losses and keep them small
  • Stay objective
  • Enjoy the process of trading and learning to trade
  • Be able to laugh at yourself
  • Have balance in your life
  • Have activities outside of trading
  • Don’t think about trading all the time
  • Focus on skill development, not money
  • Be humble
  • Let go and have fun trading

These points all have one major objective, to segregate trading into a manageable segment of your life and not make trading your entire life. This way, you stay objective, balanced, and fresh when trading. This is much healthier than making trading all you have in your life. Usually a well balanced person will outperform an unbalanced person whether it be trading, athletics, or a business venture.

It is good to be a focused trader. This focus gives us the energy and drive to excel, but be careful and look for the signs of becoming obsessed with trading. You do not want the obsession to take over your soul. For as soon as it does, you are setting yourself up for a big fall because trading or any endeavor will never be able to fill the void that is causing your obsession. Obsessions usually occur when personalities lack self esteem.

So remember, never lose your perspective. But if you feel you are, then immediately take some time off from trading and begin to follow the guidelines above to regain your soul and confidence.

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

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

CONTRARIAN CORNER / by Jeff Weber, Columnist

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

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

Same O Same O

Remember a while ago, that business would fight any reforms brought about by the latest round of scandals? Well, they are. This time I am actually going to support some of business’s beefs against the government. I am not a fan of Big Government either when they act silly. So let’s see what businesses don’t like coming from the gov!

Remember that investor confidence was very low, there were multi-billion dollar restatements, many, many investors lost money – as I said – the usual thing. Investors are still pushing hard for reforms but now some CEOs and Boards of directors are putting up a fight. The SEC hasn’t decided anything yet. So let’s see what’s going on.

Now I have to give credit to many companies who have made reforms on their own and now use a much more accurate accounting system. But one area where the opposition has dug in its’ heals is the idea of shareholder’s being favored over management. The opposers say the cure is as bad as the disease or worse. So they don’t oppose because reform is not needed; they just don’t like the reform proposed by the SEC. As one CEO says reforms are needed but this one is toxic to companies running their businesses

Managers sense they have a chance of winning – the Business Roundtable criticized the California Public Employees retirement System for withholding support from directors at 2,400 companies because their auditors had also done some consulting work – ala Exxon. Blanket withholding without any evidence of misdoing is wrong! One director even penned an article against withholding support for his fellow director – the legendary Warren Buffet.

Some directors are being more aggressive than complaining – they are ignoring them! When many companies heard complaints about large stock options to top management, they gave their folks options anyway. Yahoo and eBay gave out mucho options and other did too. Other directors still fight the proposal of expensing options – a change from current rules. Frankly, I think how options are handled should be the companies’ decision – not the SEC – any investors who don’t like it can sell their shares.

But the biggest opposition is to shareholders electing directors. Despite widespread support by shareholders, companies are fighting this proposed change very hard. Probably can’t kill the change but hope to really water it down. Again I disagree with blanket changes – one size does not fit all but some is needed here.

Also Sarbanes-Oxley Act is very expensive to smaller companies – many of them are going private. That does not help investors – smaller companies should be exempt from that law.

Basically, companies fee they are done enough over the last few years since WorldCom, Exxon and Tyco. Over two-thirds of execs feel the reforms are too strict and percentage is growing. Thus I feel investors and directors will have conflict in the future. But that’s good – each company and their investors can come to a compromise without the SEC using a sledgehammer when only a hammer is needed.

Here are three stocks I like:

Nortel Network (NYSE: NT, $3.97)
52-week High - $8.50 52-week Low - $2.68
Nortel has had a roller-coaster read but will be great stock for the long-term.

Yahoo (Nasdaq: YHOO, $32.40)
52-week High - $13.53 52-week Low - $33.01
Yahoo split recently, going up again – getting into Search Engine business.

Cisco Sys (Nasdaq: CSCO: $23.83)
52-week High - $29.39 52-week Low - $16.52
Will be big player in VOIP – Internet phoning – which is in its infancy and will grow tremendously in the next few years.

INSIDE TRACK: Weekly Insider Report / By Jeff Williams

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Jeff Williams is a partner with http://www.insiderreview.com For the past seven years Jeff has done extensive investment research as a member of an institutional investment team. His background consists of a degree in Finance from the University of South Florida with a minor in Economics. Jeff's everyday activities as an insider stock analyst consist of analyzing data available through a multiple of sources as it applies to all publicly traded companies. With this information he can then make short-term and long-term evaluations on a company’s present and future performance based on insider buying patterns. Each month Jeff will share with you his thoughts on stocks he believes to display the most interesting insider buying patterns.

Jeff Williams
Inside Track Columnist

Interesting Buy Patterns

Open market insider trading activity for 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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FRESH PICKS: On the Prowl

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Weekly Stock Picks From Bob Coppo - New Feature!  

Top Stock Picks for Monday, June 14th, 2004:

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

1. CTLM (Centillium Communications, Inc., Communications Equipment) $3.18 - Buy. We start off the week with a spec play in the communications / semicon space, CTLM. "Centillium Communications, Inc. provides semiconductor products that enable broadband communications, a high-speed networking of data, voice and video signals, for consumers and business enterprises. The Company's product portfolio includes silicon integrated circuits and associated software that are used in communications equipment for several broadband markets, including digital subscriber line (DSL) and Voice over Packet (VoP) applications. It is also developing a family of optical access products initially targeting opportunities to build optical infrastructure in the Fiber-To-The-Premises (FTTP) market" In fact, CTLM just last week unveiled its full line of optical access solutions for the burgeoning Fiber-to-the-Premises. The stock took a beating last week, losting close to 20% over the four sessions, despite the optical rollout announcement, and now is trading within $0.18 of its 52-week low of $3.00. Over the last 52 weeks, CTML shares are now off a whopping 69%. While the fundamentals are nothing to get overly excited about, we do like the 19% annual revenue growth and the fact that the company is carrying no debt and $2.29 per share in cash. This puts the stock at about 1.4x book and an attractive 1.07x sales. In mid-May, the stock hit its 52-week low of $3.00 and made a nice upward move from there of more than 20% to peak at $3.74 just a week ago. Since then, the stock endured a weeklong slide but volume during the decline has been nothing out of the ordinary, so we are hoping to attribute the selling to traders taking profits on positions picked up at the low last month. We would look to the $3.00 mark as a key point of support, and would not hold the position beyond that point. Following last week's selling, we are hopeful of a bounce this week assuming overall market cooperation, and would look to the 13-day MA of $3.43 as an initial target, with a move through that point opening the door to a run toward the June high of $3.74.. Short-term price target: $3.43 (8% gain) Stop loss trigger: $3.00 (6% loss)

CTLM Chart

2. UTEK (Ultratech, Inc., Semiconductors) $15.02 - Buy. Our second pick for the week ahead is "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." Again, we love the growth here. For us, growth is a key component in tech plays, perhaps even more important than traditional valuation tools such as price-to-earnings, etc. For the three months ended 4/03/04, net sales rose 21% on higher unit volumes to $26.6 million while net income totaled $527,000 vs. a loss of $983,000. Year-to-year revenue is growing at a massive 46% with the stock now trading at a forward price-to-earnings ratio of just 16.88 Additionally, the company has over $8.00 per share in cash / cash equivelants, and a very manageable debt-to-equity of just 0.013. Other fundamentals of note include a profit margin of 8.67% and strong management numbers of a return on equity of 4.98 and a return on assets of .4.1. Couple all this with a chart showing UTEK to be oversold and trading at the bottom end of its 52-week range, and it looks like this one is a solid buy candidate for the intermediate term. We like the looks of the MACD here, pointing higher, and an RSI showing plenty of upside potential from here. The stock closed Friday at just $0.01 shy of its 13-day MA of $15.03. A move above that line would add fuel here and set up a run to the 50-day MA of $17.68, our initial target point. We would look to use the June low of $13.59 as a stop. Short-term price target: $17.68 (18% gain) Stop loss trigger: $13.59 (10% loss)

UTEK Chart

As always, do your own research before buying or selling any security. Our recommendations are for informational purposes only and are only our opinions. Make sure to read our Disclaimer

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