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All,
I've been playing with my MetaStock 6.5 profit system tests for
the last few weeks and decided to make some changes last night. I've
switched from exponential moving averages to variable moving averages.
I modified my existing expert, explorations, and system tests; and
added a triple moving average system test. If you have MS6.5 and want
to import my expert, tests, and explorations, just yell and I'll email
the import files.
My overall portfolio was up just a little last week. I did open
an INTC position and was stopped out of my BORL LEAP calls during the
week. That left me with BSC, CHB, INTC, IOM, PAYX and SPF stock;
BTTRX and DHIYX bond funds; MADGF and PFE LEAP calls; and a some cash.
This week I want to add another LEAP call position and maybe one
more stock position. I picked The HomeStake Mining Company (HM) for
the LEAP. Most of you will remember that I have nibbled on Gold
stocks a couple of times last year and I think it's time to try again
<G>. Although it's too early to tell for sure, my spot gold chart
looks like gold may have bottomed. We might have the long awaited
gold price bottom. I tested several gold stocks and none tested good
on any of my MetaStock system tests. I then looked at low price
producers. HM would have turned profits in the past just using trend
channels for entry and exit points, so I chose it.
I like Rowan Companies Inc (RDC) for a new stock position when/if
it can break out of the Short Term Down Trend Channel (STDTC) that it
closed at the top of Friday. I made a good profit on RDC last year
and would like to repeat that again <G>. The story on RDC is the same
as it was last year. It's the only company with new large deepwater
drilling rigs coming on line the next couple of years and deep water
drilling rates are exploding upward.
HM closed at 9.062 Friday. It broke through the bottom of a long
Intermediate Term Down Trend Channel (ITDTC) in late December and fell
to a multiyear low of 7.687 on 1/12/98. It then rose and broke out of
the top of its STDTC last Tuesday and broke back through the bottom of
the ITDTC Friday and touched its 21 day variable moving average. The
21, 55, and 233 day variable moving averages' slopes are all
flattening. This is typical of a V bottom, but is still pretty thin
evidence. I'm bottom fishing and this is definitely a speculation on
my part. However, coupled with the turn up in spot gold prices and
liking the idea of a gold hedge against the rest of my portfolio, I
decided to open a position in HM Jan2000 10 LEAP calls (LHMAB Bid
2.062, Asked 2.437). Since there isn't enough data for a good short
term up trend channel, I'll set my stop just under the multiyear low
at 7 1/2.
RDC closed at 27 and is much more typical of my normal selection
process <G>. It's in a STDTC with the top at 27 1/8. It's also in an
Intermediate Term Up Trend Channel (ITUTC) with the top at 46 1/8 and
the bottom at 23 1/8. It bounced off the bottom of the ITUTC last
Monday and rose to its current position at the top of the STDTC. I
currently have a open MetaStock ROC,ADXR,S/C sell signal in place
that occurred in late December, but I'm hoping it will reverse soon.
Tema ROC 55 looks like it made a negative peak last week and Tema(S/C)
flattened indicating that a reversal could be coming. I'm going to
open a position when/if RDC breaks the STDTC. In fact, if RDC makes a
good up move Monday morning, I'll open the position Monday after noon.
The fundamentals still look good with Price/Sales at 3.22, PE at
16.83, Debt/Equity at 0.46, 31% insider ownership, good revenue
growth, and an earnings explosion in progress as deep water drilling
day rates continue to soar. If I open a position, I'll set the target
at 46 and the stop at 22 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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