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All,
Another interesting week! I opened my U.S. Air position Monday,
but was stopped out of my IFMX stock and my MADGF LEAP call positions
so am almost 80% cash. Right now I only have MER and U stock
positions and LEAP calls on CPQ. I looked at the indices long and
hard, but didn't see any reason to change my strategy. I'll continue
to ease back into long positions at only one new position for week.
I'll concentrate on
larger cap, market leaders for now. This week I'm going to add a
little spice to my portfolio by moving into the more volatile internet
group, but will pick a stock that actually has some revenues, is the
leader in its niche, and has a good reward/risk ratio. After a lot of
looking, I chose Amazon (AMZN).
AMZN split 2 for 1 last week and closed Friday at 44 1/4. It is
in an Intermediate Term Up Trend Channel (ITUTC) with the top at 59
1/8 and the bottom at 41 3/8. It has been in an intermediate and long
term up trend every since it became public and had enough data to
establish those trends. AMZN went public in May97, moved sideways for
a couple of months then began its climb to the top of the ITUTC and an
all time high of 49.9375 on 4/14/98. From there it moved mostly
sideways, but also slightly down to the bottom of the ITUTC on
5/27/98. It bounced up on good volume and then paralleled the bottom
of the ITUTC to it's Friday close. The Tema PDI-MDI are still
negative, but are moving up from a negative peak. The other
directional movement indicators also look like a short term up move is
due. This is a high risk, volatile concept stock with extremely large
revenue increases, but no real earnings yet. The fundamentals aren't
as good as I'd like with the Price/Sales at 9.1, and the Debt/Equity
at 3.9, but this is offset by the 88% insider ownership and over 800%
annual revenue growth. I'm going to open a position at the open
Monday. I'll set the initial target just under the top of the ITUTC
at 59 and the stop just under the bottom of the ITUTC at 40 3/4 which
will give a good reward/risk ratio of over 4.
I'll send a AMZN.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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