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All,
An unusual week. I started out Monday fully invested and hit an
all time high in my portfolio. The portfolio slipped back the next
two days before recovering some on Thursday and Friday. During the
week I hit targets on DELL and ERICY and stops on EGGS, HBOC, and U.
The good news was that I did have profits on everything with a small
profit on HBOC, good profits on ERICY and U, a great profit on DELL,
and a fantastic profit on EGGS. The bad news was that I ended the
week with over 70% cash even though I added EGRP and SORC to my
portfolio. I now have stock positions in EGRP, MLT, and SORC and LEAP
calls on CPQ.
I studied the charts of my indices and clearly didn't get the
message if the market was trying to tell me something <G>. All the
indices were showing strong short, intermediate, and long term up
trends. Therefore, I want to get back in a little quicker then usual
and will open a couple of positions per week. I think it's time for
the small caps to start to move, but I may be wrong in that there is
still a lot of money coming into the large caps. To hedge my bet,
I'll try to keep about a 50'50 balance between the two.
This week I like Schwab (SCH) and Bright Point (CELL). Schwab is
a large cap ($9.6 Billion) in my favorite brokerage group and gets a
lot of their business from the internet (yes, I'm still playing that
theme). CELL is a small cap ($800 million) stock with a great growth
rate that distributes wireless hand sets and related items.
SCH at 41.25 is in a Short Term Up Trend Channel (STUTC) with the
top at 44 3/4 and the bottom at 35. It hit an all time high of 44 1/4
last December then drifted down for six months to a low of 29.562 on
6/25/98. That low was right on the bottom of its Long Term Up Trend
Channel (LTUTC). It then bounced up and broke the Intermediate Term
Down Trend Channel today on great volume. I got a MetaStock
Support/Resistance, CMO Buy signal on 7/14/98. I'm looking for a
reversal of the intermediate term trend and a breakout to new all time
highs within the next few weeks. The support and resistance and CMO
indicators look like the reversal process has started. The
fundamentals are good with a Price/Sales of 4.11, Debt/Equity of 0.55,
25% return on equity, 45% insider ownership, and good revenue and
earnings growth. I'll take a long position at Mondays open with a
stop under the STUTC at 34 3/4. I'm not going to set a target as I
hope SCH will run into new high territory.
CELL at 17 1/4 is in a STUTC with the top at 19.50 and the bottom
at 14.78. It hit an all time high of 24 1/4 on 10/15/97. It then
formed a wide base by falling, rising, and falling again to a low of
11.875 on 6/26/98. That low was just a point above the bottom of its
LTUTC. From there, it made a strong up move on good volume to its
current position, breaking out of its Short Term Down Trend Channel
(STDTC) the first week in July. The fundamentals on this one are
great with a Price/Sales of 0.63, Debt/Equity of 0.77, 17% Return on
Equity, 20% insider ownership, and annual revenue and earnings growth
of over 75%. I'll take a long position on Monday's open with a stop
just under the STUTC at 14 3/4. My initial target is just under the
old high at 24, but if it moves up good, I may let it run to see if it
can also break out to new all time highs.
I'll send GIF charts to everyone on the email list. I'm going to
attach both charts to the same message, so some of you might not get
them due to the length of the email. Yell if you don't get the
attachments.
Jim
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