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Guy,
I'll probably need good luck since I've been wrong before and
will be again, but the similarities to the Oct97 correction bottom
sure struck me. If I'm right I wanted to start getting out of my
large cash position and have some small caps for spice. If I'm wrong,
I wanted to have the protection of industry leaders, close stops, and
a good size cash cushion. My decision to begin easing back in with a
mix of small cap and large cap industry leaders was my compromise <G>.
Jim
-----Original Message-----
From: Guy Tann <grtann@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Saturday, August 08, 1998 6:14 PM
Subject: RE: Weekly Pick
>Jim
>
>Good luck! We're trying to figure out if this recovery will be a
'normal'
>33% or even 66% pull back as in the start of a bear move, or truly
the end
>of the move down.
>
>Fundamentals, and being a technician, you know what I think of them
:) , are
>still shaky IMHO. A-D line and New Highs vs. New Lows still look
bearish.
>Asia still looms as a damper. OTOH, our economy seems strong,
interest
>rates are still down and we seem to be the favorite haven of those
third
>worlders with no place else to go to protect themselves and their
assets,
>hence the strength in the DOW and other prime equities. Finally,
with the
>strength in those internet plays you mentioned, leads me to believe
that
>this bull move isn't over yet since those share prices have
discounted the
>hereafter, not just the future :) . We really need a 'blow off' and
while
>it looks like it has already happened, I think we further to go.
>
>We have a friend's daughter who went to work for Amazon a year or so
ago.
>She got a bunch of options, so that when the stock hit $25 or so, she
was a
>millionaire. At it's current price, she's got a lot more than
that....
>
>As an aside. Remember, never ignore the old man's dreams :) .
>
>Regards
>
>Guy
>
>
>
>-----Original Message-----
>From: owner-metastock@xxxxxxxxxxxxx
[mailto:owner-metastock@xxxxxxxxxxxxx]
>On Behalf Of Jim Greening
>Sent: Saturday, August 08, 1998 10:17 AM
>To: Metastock
>Subject: Weekly Pick
>
>All,
> Another down week and hopefully the last for a while <G>. I was
>stopped out of SCH and SORC which left me over 80% cash with stock
>positions in only BAR and TRV and LEAP calls on CPQ. The reason I
say
>"hopefully the last", is that I think we had our blow-off correction
>bottom Wednesday when we had a high volume day with the DDI being
down
>almost 200 points during the day to touch the bottom of its Long Term
>Up Trend Channel (LTUTC) only to recover and close up a little for
the
>day. It then had high volume days Thursday and Friday, although not
>quite as high, with the Average up again Thursday and up strong
Friday
>during the day and then holding on to close up a little. To me, that
>looks like a typical blow-off bottom pattern. Also, the rest of the
>indices I follow show similar patterns near or on the bottom of
>intermediate or long term up trends. Also, the overall market is
over
>sold with almost 70% of all stocks at or under their 200 day moving
>averages. The small cap stocks are down almost 30% for the year.
>It's really only the large cap. market leaders that have been strong
>this year.
> That means that my new positions should still be long. The real
>question is should I stick with the market leaders or is it time to
go
>with the small caps. The answer is that I don't know <G>.
Therefore,
>I'll compromise and split my new positions between large cap momentum
>plays and small cap value plays. Then I can weight my portfolio one
>way or the other later. The internet group has been hot all year but
>corrected back to the bottom of their Intermediate Term Up Trend
>Channel (ITUTC) during the last month. This group also looks like it
>completed its correction Wednesday. The chip stock group has been
>weak for a long time, but showed signs of life during the last month.
>This week's picks from those groups are America On Line (AOL) and
>Smart Modular Products (SMOD).
> AOL at 111.875 is in a long and intermediate up trend and just
>broke out of a Short Term Down Trend Channel (STDTC). The top of the
>ITUTC is at 150 and the bottom is at 97. It hit an all time high of
>140 1/2 on 7/21/98 and then pulled back to the bottom of the ITUTC
>during the day Wednesday. From their it started back up and broke
out
>of it's STDTC on good volume Friday. The indicators support my
theory
>that a short term trend change is in progress. This is a pure
>momentum play on an internet stock so, as expected, the Price/Sales
is
>extremely high at 10.94. The rest of the fundamentals look good with
>Debt/Equity of 0.84, 27% insider ownership, actual earnings this
year,
>and five year average annual growth of over 100% and this years
>revenue growth still over 50%. I'll set the target just under the
top
>of the ITUTC at 149. I'll set the initial stop just under the bottom
>of the ITUTC at 96 3/4. Once there is enough data for a good Short
>Term Up trend Channel (STUTC), I'll move the stop up to under it.
> SMOD at 18 1/4 just broke out of a year long down trend. It
>peaked at 44.56 on 10/8/97 and then went into a free fall all the way
>back to a low of 12.06 on 7/14/98. From there it rose to break out
of
>its Intermediate Term Down Trend Channel (ITDTC) a week ago Thursday,
>then it pulled back under the channel again to a low of 15 3/8 on
>Wednesday before rising above the ITDTC again on Friday. The
>fundamentals are great, as they should be for a value play, with a
>price/sales of 1.04, No debt, 53% insider ownership, and annual
>revenue and earnings growth both over 70%. I'll set my target at 44,
>just under the 97 high. There isn't enough data for a STUTC yet, but
>there is a lot of resistance just over 15 so I'll set my initial stop
>under it at 14 3/4 and keep it there until there is enough data for a
>good STUTC.
>
>Jim
>
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