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<DIV><FONT color=#000000 size=2>All,</FONT></DIV>
<DIV><FONT color=#000000 size=2> We got the drop that I
was expecting this week, but now I'm confused. Are we in the process of
completing a typical four month bull market 20% correction or is this the start
of a bear market? I was definitely bearish last week as all the indices
were breaking intermediate and long term up trends which confirmed a down trend
was in process. That's still the same this week, but I'm getting mixed
signals. The NASD OTC bounced off the bottom of a 4 year long up trend
channel this week and looks like it might be establishing a bottoming
pattern. The SPX and OEX both bounced off the bottom of 2 year up trend
channels and also look like they are bottoming. The DJIA looks like it's
trying to bottom, but I don't really see any support until just under the 7200
level. The Russel Index is in free fall with no bottom is sight.
This could be typical of a bottoming pattern where the large caps lead the way
up again or it could be a bear trap. The fact that DELL, WLA and some of
the other market leaders haven't broken through the bottom of their intermediate
term up trend channels but look like they are bouncing off the bottom supports
the correction theory. The internet stocks patterns would support the bear
market theory. Since I'm uncertain, my options at this point are to either
do nothing or since I'm all cash except for my WCOM put options, I could nibble
in both directions. Nibbling is more fun and I have the large cash
position for a cushion, so that's what I'm going to do <G>.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT><FONT size=2> For
my long pick I'm going to be a little defensive and pick the oil group and more
specifically the oil services group which look like they are breaking out of a
year long down trend. My pick here is Rowan Companies (RDC) the deep water
driller that I had a position in last year. The story then is that Rowan
was in the deep water drilling niche where demand was increasing, day rates were
increasing, and they were the only one with new rigs coming on line in the
near future. That's still true although FLC is providing more
competition. Earnings held up as expected, but RDC dropped with the rest
of the oil group anyway and now has truly outstanding fundamentals.
</FONT><FONT size=2>For my short pick I'm going with Excite (XCIT) which was one
of my finalists last week. The story here is an internet, no earnings
stock, that should get crucified in a bear market.</FONT></DIV>
<DIV><FONT size=2> RDC at 12 3/8 broke out of a Short
Term Down Trend Channel (STDTC) Thursday and continued its up move Friday.
It peaked at 43.9375 nearly a year ago on 11/06/97. From there it fell to
a low of 9.0625 on 8/31/98. It then rose to its current position.
Tema Binary Wave and QStick are both negative, but rising from a negative
peak. The fundamentals are great with a PE of 5.30, price/sales of 1.29,
debt/equity of 0.34, return on equity of 26.5%, 25% sales growth, and 80% income
growth. I'll open a long position Tuesday. I'll set my target just
under last years high at 43. Since there isn't enough data yet for a good
Short Term Up Trend Channel and since I'm bottom fishing here, I'll set my stop
under the 8/31/98 low at 8 3/4.</FONT></DIV>
<DIV><FONT size=2> XCIT at 25 7/8 broke through the
bottom of it's Long Term Up Trend Channel (LTUTC) Monday on large volume.
It peaked at 55 1/2 on 7/7/98 and then fell until it broke through the bottom of
its LTUTC Monday. From there, it then tried to recover and pulled back up
above the bottom of the channel Wednesday, only to fall below it again on
Thursday. It rose to the bottom of the channel at the open Friday, but
fell again during the day. To me this looks like a typical long term trend
reversal pattern. I constructed a standard deviation Short Term Down Trend
Channel (STDTC) with the deviation set at 2 from the 8/19/98 high to the 9/1/98
low and extended it to the right. The top of the STDTC is at 30 1/2 and
the bottom of the channel can't be reached since it is below zero. The
fundamentals are what you would expect of an internet stock, 229% sales growth,
but negative earnings. It could do great in a bull market, but should get
killed in a bear market. Since this is a volatile position, I'm going to
limit my exposure by using put options instead of shorting the stock. I'll
take a position in the Feb99 20 puts (KQBND - Bid 2 7/8, Asked 2 1/4).
I'll set my stop just above the STDTC at 31 1/4 and my Target at mid channel at
15. </FONT></DIV>
<DIV><FONT color=#000000 size=2>
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Mark
Funny you should ask about Prophet. Just today somebody asked the same
question in one of the other lists. ... Oh wait... Is that you Mark? Yeah it
is.
FWIW Comments I've seen on Prophet have not been favorable. Are you having
problems with Dial?
I have heard good things about pinnacle [www.pinnacle.com] but I don't know if
they have night figures.
Good luck and thanks for the tips.
Chris
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