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All,
I've poured over my indices and have decided that nothing much
changed last week. All the indices are in Intermediate Term Up Trend
Channels (ITUTCs), there is sideways or downwards movement in all the
indices, and the large caps are holding up better then the small caps.
That means my plan of gradually reducing my large cash position is OK,
I should still be going long, and should probably invest mostly in
well known, large cap market leaders. This week I'm going to go with
the Airline Group. The entire group has been strong for the last six
months, but did correct back to the bottom of its up trend channel
form mid-Apr to mid-May. It now looks like it's trying to move again.
Since the load factors are good and increasing and the fuel costs are
still down, it should be a good summer for the air lines. I like the
chart of U.S. Air (U) the best right now.
U at 70 is in an ITUTC with the top at 88 5/8 and the bottom at
66 1/2. It's also in a Long Term Up Trend Channel. It started this
accelerated ITUTC last Sep. and rose to an all time high of 82 1/8 on
4/16/98. It then fell to the bottom of the ITUTC in early May and
bounced up breaking the Short Term Down Trend Channel on 5/13/98. It
then bounced along the bottom of the ITUTC hitting it twice more in
May before making a strong move up last week to Friday's high which
was the highest price in a month. The momentum has been rising for a
couple of weeks and is nearing zero. Widner's support and resistance
had been falling, but both turned up last week. The fundamentals are
good with price/Sale of 0.68, debt/equity of 2.02 which is good for an
airline, 34% insider ownership, single digit annual revenue growth,
but over 300% earnings growth last year. I'm expecting a move back to
the top of the ITUTC. I'll open a position Monday with a target of 88
and a stop at 65 3/4.
I'm going to drop the entry strategy I was playing with and just
go back to taking a position at the open like I used to do. The entry
strategy wasn't paying off that well and was sometimes hard to do if I
couldn't track the market in the mornings. Taking a position at the
open meets my "keep it simple, stupid" strategy <G>.
I'll send a U.GIF chart to everyone on the chart email list. If
you aren't on the list, and want on it, just yell.
Jim
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