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<DIV><FONT color=#000000 size=2>All,</FONT></DIV>
<DIV><FONT color=#000000 size=2> The market did move up
yesterday and I did open my DELL position at 56 3/8. So far so good, now
if it will just follow through <G>. I took a long look at the
indices last night and they are acting right for my theory. To expand it a
little, I believe the DJIA is trying to set up a volatile sideways or horizontal
channel trading range between 7500 and 8000. The DJIA is not near the
bottom of any of my trend channels but both the OEX and SPX are bouncing off the
bottom of long term channels. There is , however, some support for the
DJIA near 7500 from the Jan lows and resistance above 8000 from last falls
highs. Looking at the daily action, the DJIA has tested the 7500 level
three times in the last two weeks so it does look like a bottoming action.
With the volatility we have seen, I fully expect another test of the 8000 level
soon. However, this is still a somewhat tenuous theory and a long way from
reality. I will commit to positions to play the theory, but want to do so
more cautiously then usual with very close stops. That means any stock I
pick must be close to the bottom of the channel since I set my stops under the
channel and preferable has just bounced up a little. Also I'm only going
to play the large market leaders in groups I'm interested in.
</FONT></DIV>
<DIV><FONT color=#000000 size=2> Even with the large
DELL position and my normal size RDC position, I'm still over 50% cash and want
at least one more position to play the bounce I'm hoping for. I think the
brokers and financial service groups have been over punished and over sold
lately so that's the group for this weeks pick. I narrowed my list to
Schwab and Travelers Group (TRV) and decided on TRV since it is so over sold and
since Sandy Weill always bounces back. I only wish I had ridden his coat
tails more in the past <G>. TRV is going to be the true financial
services giant when the merger with Citicorp is completed.</FONT></DIV>
<DIV><FONT color=#000000 size=2> TRV at 40 7/8 broke out
of a Short Term Down Trend Channel Friday on good volume. It's also in a
Long Term Up Trend Channel (LTUTC) with the top at 80 3/8 and the bottom at
38. It peaked at 73 3/8 on 4/6/98 and then went into a four month CANSLIM
cup type formation but failed to breakout in Jul and then went into a tail spin
to a low of 36.4375 Friday morning before the good up move. Looking at the
chart, the last week shows a typical Equivolume reversal pattern with TRV
bouncing off the bottom of the LTUTC twice on high volume. It closed at
the lows on the first bounce, but closed at the highs yesterday. The
Support/Resistance and CMO indicators look like the beginning of a reversal
pattern. The fundamentals are better than ever with the PE at 12.1,
price/sales at 1.1, return on equity at 17.5%, 5 yr. revenue growth rate at 49%
and 5 yr. earnings growth rate at 19%. TRV just kept growing while the
stock price dropped. That's why I think it's so over sold and such a
bargain right here. I'll take a long position at Monday's open, set my
target just under the top of the LTUTC at 80 and my mental stop just under it at
37 3/4. I'd like to hang on to this one as a long term core position if it
will let me so I'll wait until a good short term up trend channel forms before
moving my stop up to it. </FONT></DIV>
<DIV><FONT color=#000000 size=2> I'm sending a TRV.GIF
chart to everyone on my email chart list. If you're not on the list, and
want on, just yell.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>Jim </FONT></DIV></BODY></HTML>
</x-html>From ???@??? Sat Sep 12 13:11:33 1998
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In a message dated 98-09-12 13:52:33 EDT, you write:
<< To expand it a little, I believe the DJIA is trying to set up a volatile
sideways or horizontal channel trading range between 7500 and 8000. >>
Jim,
Your trading range theory has support from another direction. The 20 day
Bolliger Bands for the DJIA are about 250 percent of the 200 day average. It
seems likely that the width of the Bands will move back towards the mean in
the near future.
Dan
Pocatello, ID USA
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