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All,
Last week's pick didn't turn out too good as NSOL closed below my stop
Thursday. I'll close my position tomorrow morning. The good news is that
my portfolio was up almost 5% for the week which eases the pain somewhat
<G>.
I looked for another internet stock to replace NSOL, but couldn't find
any I like that was at a good entry point. Then I looked at some of my old
favorites and narrowed my list to Best Buy (BBY), Chase (CMB), Federal
Express (FDX) and Home Depot (HD). I liked all four, but finally decide on
FDX because it had the lowest Price/Sales ratio and was the closest to the
bottom of its channel. That means the risk is lower and I can enter a
larger position. The story on FDX is that it's a stealth internet play. If
internet sales continue to explode as everyone predicts they will, someone
has to deliver all those packages. After the U.S. Postal Service, FDX seems
to be the carrier that most are choosing.
FDX at 96 1/8 is in both a Long and Intermediate Term Up Trend Channel
(ITUTC). The top of the ITUTC is at 120 1/2 and the bottom is at 93 3/8.
It bounced off the bottom of its LTUTC on 10/9/98 to start the current
ITUTC. It then rose to a high of 93 1/8 on 12/23/98 to form the top of the
ITUTC. It then went on to form a CANSLIM type cup and handle formation
currently being at what I hope is the end of the handle <G>. It did set a
new all time high a couple of weeks ago and then moved sideways and slightly
down to test the cup breakout point and the bottom of the ITUTC. Since the
ITUTC was formed it has successfully tested the bottom five times so it is
well formed and the odds favor it holding. FDX is less than 3 points away
from the bottom of the ITUTC, looks like it is trying to rise, and the 13
and 55 day StochRSI are rising from an over sold condition. Everything
looks good for a low risk entry. I'll open a position Monday morning some
time after the open. I'll set my initial target just under the top of the
ITUTC at 120 and my stop under the bottom at 92 3/4.
I'll send a FDX.GIF chart to everyone on my chart email list. If you
aren't on the list and want on, just yell.
JimG
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