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All,
I sure hope I've got my email send settings in my new Outlook Express
where everyone will get this message with no problems <G>. Yell, if there
is a problem.
Another great week in the market. During the week Travelers hit my
target so I closed my Travelers LEAP calls at over a 100% profit. IOM also
pulled back to the bottom half of the up trend channels so I also bought my
covered calls back at a nice 30% two week profit. That leaves me with CHB,
CPU, DHIYX, IOM, NPD, OSU, PAYX, and SPF stock and bond positions. I also
have MADGF and PFE LEAP calls. I've looked at my portfolio closely and
have decided to close out OSU Monday at a small profit and search for
better opportunities since it has been moving sideways for the last five
months. This week I want to add both a stock and LEAP call position. For
the stock my pick is Bear Sterns (BSC) and for the LEAP calls my pick is
Ascend Communications (ASND). The story on BSC is that brokerages should
continue to coin money if we are going back into the momentum type up
market we had earlier this year and I think we are for a few months at
least. The story on ASND is the take over rumors that were flying the last
couple of days.
ASND at 28.937 is in a Short Term Up trend Channel (STUTC) with the
top at 34 3/8 and the bottom at 25 1/2. However, the STUTC is only based
on a few days worth of data, so it's not well formed. ASND hit an all time
high of 80 1/4 in January then started falling on earnings problems to a
low of 20 last week. It broke out of a short term down trend channel on
Thursday with a good up move on strong volume. Then it jumped up again
Friday on strong volume and broke out of an intermediate term down trend.
It's still about 5 points below the top of a Long Term Down Trend Channel
(LTDTC). RSquared is at 0.29 and rising, Tema(S/C) is at -136 and rising
and Tema MFI is at -7.5 and rising which indicates an up trend being
formed. A more conservative play would be to wait for the LTDTC to be
broken and the STUTC to firm up more, but I'm going to take a small
position here with 5 calls in case the Lucent take over at 40 rumors are
true. I'll add to the position when/if the LTDTC is broken. The
fundamentals are looking much better with Price/Sales a little high at
4.17, no debt, 12% insider ownership, and triple digit long term revenue
and earnings growth. Revenues continued to rise in the last three quarters
while earnings faltered. Earnings were negative for the March and June
quarter, but turned back positive at $.20 in September. So the numbers
look decent even if the take over rumors turn out to be false. I'm going
to buy five Jan99 40 calls (VSDAH - 3.875 bid, 4.25 asked) Monday morning.
It looks like there is major resistance at the 56 to 60 level, so I'm going
to set my Target at 55. Of course, if there is a take over, I'll close the
position after the take over is announced. I'll set my stop just under the
STUTC at 24 3/4.
BSC at 46 7/8 is another momentum play. It broke out of a small
CANSLIM type cup formation Friday to an all time high on good volume. It's
short, intermediate, and long term trends are all up. The top of the STUTC
is at 49 3/8 and the bottom is at 41 3/8. The indicators support the
formation of a strong up trend with the Tema(ROC) just turning positive,
the Tema MFI rising towards zero from a negative peak, and the ADXR above
21 and rising. A more conservative play would be to wait for a pull back
to the bottom of the STUTC, but that might not happen until a much higher
level, so I'm going to take an initial position here. The fundamentals
look great with a P/E of 9, Price/Sales of 0.92, Return on Equity of 25%,
debt/equity is the only down side being high at 7.06, insiders owning 14%,
22% annual revenue growth, and 28% annual earnings growth. I'll open a
position Monday with no target, but a stop just under the STUTC at 40 3/4.
I'll send charts to everyone on the email list. If you aren't on the
list and want on, just yell.
Jim
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