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This was an interesting week in which I added AOL, AMZN, and ATHM to my
portfolio and was stopped out of AMZN and RDC. I hate to add a stock and
delete it in the same week like AMZN, but I guess that's the way the system
works and it has been successful for me. The good news is that my portfolio
is up again for the week. As long as that continues to happen I won't
complain -- too much <G>.
January is over and so is my experiment with the small cap beaten down
stocks for the January effect. The only one I have left in my portfolio is
MDM which is up a little over 20%. Along the way I closed COHU for a 11%
gain, ROW for a 10% loss, IDTI for a 6% loss, SDTI for a 80% gain, SIF for a
15% gain, SHRP for a 15% loss, and RDC for a 27% loss. That's not bad
overall, but we didn't have any of the triple digit gainers I was looking
for. Looking at the indices, it still seems that the market is favoring the
large cap, solid earning, market leaders, so that's where I'll concentrate
except for a few bottom fishing expeditions that I can't seem to resist <G>.
For example, I'm still watching the oil stocks for their long awaited turn.
I'm still a little concerned about the way the DJI is acting, as it
keeps falling below the bottom of its Short Term Up Trend Channel (STUTC)
and then crawls back up into the channel only to fall through the bottom
again. The result of this action is that it is paralleling the bottom of
the channel up which isn't all that bad, but I would feel better if it would
climb back into the channel and stay. To offset that we have the NASD OTC
Index which keeps setting new all time highs. To me, that means I should
continue to cautiously add long high tech momentum type plays. However, I
have enough Internet exposure and wanted to look into some other high tech
areas this week. I think that I've done that by finding Hughs Electronics
Corp (GMH).
Hughes Electronics' operations are overflowing with space. This
publicly traded commercial electronics unit of General Motors (GM) is
charting the heavens to establish itself as the market leader of the
commercial satellite services industry. It has made almost 40% of the
world's commercial satellites currently in operation, transmitting
everything from telephone calls and video conferences to TV news reports and
TV programming. Its subsidiary DIRECTV is the largest satellite-TV
broadcaster in the US, offering more than 185 channels of programming to
more than 3.6 million customers. Its equipment arm is a top supplier of
wireless phone networks and cellular mobile systems. It also owns 81% of
PanAmSat, a 17-satellite (with six more expected by late 1999) global
network and supplier of satellite-based business networks, and is developing
SPACEWAY, a global geostationary spacecraft system providing business and
consumer telecommunications services. It has been divesting its other
electronics interests to focus on communications.
GMH at 49 1/4 is in a well defined STUTC. I constructed the STUTC from
the 12/18/98 low to the 1/18/98 high using the MetaStock Standard Deviation
channel. The top with the deviation set at 2 is 57 1/8, the bottom with the
deviation set at 1 is 48.92. GMH made an all time high of 57.88 on 5/13/88
and then went into an intermediate term down trend to a low of 30.38 on
10/08/98. From there it recovered and pulled back again to the 12/18/98 low
then moved steadily up and broke out of the down trend channel on 12/31/98.
It then went on up to define the current STUTC. The Tema Binary wave and
Qstick are both positive and rising with the Binary Wave making an
especially strong showing. The fundamentals are OK with the price /sales a
little high at 8.97, and debt/equity great at 0.09. It's sales and earnings
have been negative as it shed its other businesses, but the recent strong up
move suggests that most of that is behind it and the decks should be cleared
for new growth. I'll open a position some time Monday. I'll set my initial
target just under the top of the STUTC at 57 and my stop just under the
bottom of the STUTC at 48 3/4.
I'll send a GMH.GIF chart to everyone on my email chart list.
JimG
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