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All,
A choppy week for the market in which my portfolio dropped a
little. However, I wasn't stopped out of any positions and now have
AOL, BBY, DELL, INTC, and SMOD stock, CPQ LEAP calls, and about 30%
cash. Also, the market action reinforced my thoughts that we have
seen the market low for a while. The Dow Jones Industrial Average
(DJIA), for example, is typical of the indices that I watch. It
dropped Friday to test the 8/5 and 8/11 lows and they held. In fact ,
it spiked through the bottom of the long term channel interday only to
pull back and close well above the bottom of the channel. That's
another indication that we have seen the lows for this correction.
However, to play it safe, I'm going to stick with the large cap market
leaders again this week. I may begin to add some small cap spice next
week if we have a good week in the market. This week I'm going to
move to the Drug & Pharmaceutical group and pick Warner-Lambert
Company (WLA).
WLA at 71.8125 is in an Intermediate Term Up Trend Channel
(ITUTC) with the top at 90 1/8 and the bottom at 69. It's another
momentum play that hit an all time high of 85.9375 on 7/20/98. It
then pulled back to a low of 68.5 on 8/4/98 and has essentially moved
sideways from there, getting close to the bottom of its ITUTC and
breaking out of its short term down trend channel Wednesday. It may
still move down a little more to touch the bottom of the ITUTC, but it
also may not and this looks like a good entry point to me. The
PDI-MDI and directional movement indictors look like they are trying
to signal the start of a new short term up trend. The fundamentals
are OK with the price/sales a little high at 6.27, the debt/equity
good at 0.59, 7% insider ownership, good earnings and revenue growth,
and a pipeline full of new products. I'll open a position Monday.
I'll set my target just under the top of the ITUTC at 90 and my stop
just under the bottom of the ITUTC at 68 3/4. I'll move the stop up
to under the bottom of the short term up trend channel just as soon as
it forms <G>.
Jim
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