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All,
Not a great week, but another good week <G>. I did open my SMOD
position Monday and then hedged it with covered calls on Wednesday
after it had jumped five points to the top of my Short Term Up Trend
Channel (STUTC). This leaves me fully invested so I don't have room
for another stock until I cover a position. I've finished my weekly
tests and looked at my watch list. I still like Techs so I looked at
that area for a replacement stock if I hit a stop or target during the
week. I decided on Silicon Valley Group Inc (SVGI). It develops,
makes, sells, and services semiconductor production processing
equipment used in fabricating integrated circuits. It also makes
products for photolithography and low pressure chemical vapor
deposition. The thought here is that the sales growth of the under
$1000 computers and the growing number of household appliances using
semiconductor chips will cause a rise in demand for chip production
equipment.
SVGI at 24 5/8 is in a STUTC with the top at 29 3/8 and the
bottom at 23 1/4. It peaked at 49 3/8 in Aug 95 and then fell to a
low of 14 5/8 in Jul 96. From there it gradually rose to 38 3/8 in
Sep 97 before it hit another bump in the road. It then fell to a low
of 18 3/8 in Dec 97. Then it broke out of its Intermediate Term Down
Trend Channel in late Jan 98 and rose to 26 before pulling back to
Friday's close. This looks like a typical break out pattern with SVGI
now being in a good entry point in the bottom half of its STUTC. I
did get a MetaStock 6.5 Coppock Curve Profit System Test Buy signal on
Feb 3, 98. The fundamentals look good with the Price/Sales at 1.19,
Debt/Equity at 0.01, Current Ratio at 3.46, 11% insider ownership, and
earnings and revenue growth turning around. 1997 earnings were
$0.03. The December first quarter earnings were $0.37 and estimated
earnings for 1998 are $1.64. Using the industry PE of 23 would give a
price target of $38 which is just under the 97 high. If I close
another position this week, I'll replace it with SVGI with a target of
38 and a stop just under the STUTC at 22 3/4.
I'll send a SVGI.GIF chart to everyone on the chart email list.
If you aren't on the list and want on, just yell.
Jim
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