INFO--- see end
Subject:
Mid-Morning Comments
Date:
Wed, 20 May 1998 11:57:01 -0700
From:
"mike king" <kingm@ccweb.net>
To:
<Undisclosed.Recipients@esus.ccweb.net>
20 May 1998 1000 hrs Las Vegas Time
Mid-Morning Economic Comments
" Lack of Money is the Root of all Evil."
----------------George Bernard Shaw
All news has been good. The Fed didn’t raise rates. Dell had great earnings, 44 cents vs
the 42 cents expected by analysts. Revenues rose to $ 3.9 billion vs $ 2.6 billion last year as Dell
surpassed Hewlett Packard as the third largest computer maker. In every geographic area Dell
sales outpaced market growth by 3 to 6 times. They claim to be second in numbers to Compaq.
Economic numbers continue buoyant with little in the way of inflation.
The Dow rallied 2.49 points above yesterday’s high of 9,113.44 to 9,115.93, but has
since softened, much like yesterday and is currently 9.22 higher to 9,063.87. Transports, which
seriously lagged the market the past two weeks strengthened, up 31.55 to 3,391.33. Nasdaq,
which was up 14.25 yesterday, is off 16.47 today. Only 2 of the ten volume leaders are higher,
Ascend and Novell, while all the others are losers including DELL, with the great earnings, off 2
23/32’s, Intel off 2 7/8, Cisco, down 1 «, and Microsoft, off 15/16.
The Diffusion Index, a ratio of high P/E multiple stocks divided by low ones, is weakening, an
indication that an overall top is near. However, don’t bet all the family jewels on the short
side unless you can be very nimble. That’s why we like using Puts as our method of testing
the waters. You know exactly what you can lose and no more on a specific trade.
The Dell June 90 Puts are a buy at the $4-5 level. We expect a decline to the $ 86-87 level where
there should be support. However, make no mistake, the mkts remain very bullish.
Meanwhile, Dressbarn ( DBRN) came out with great earnings 41 cents for the qtr about 5%
better than expected, although the stock is down 2 13/16 to 27 3/8 as it did get a bit rich.
However, most of our other Retail favorites are better. Gucci ( GUC ) is up _ to 46 11/16, Paul
Harris ( PAUH ) is 15 1/8, up 1/16, Costco ( COST ) is up 7/16 to 54 9/16. The May Co is off
3/16 to 64 ¬. Kohls Corp ( KSS ) is hugging its all-time highs, up 1 « to 45 7/16. Saks is off
1/16 to 24 3/16, but still about 3 higher from our recommendation to buy just a couple weeks ago.
Abercrombie & Fitch ( ANF ) is up 1/16 to 42 3/8 and AptarGroup ( ATR ) is off « to 65 ¬.
They have all tacked on 20-25% to their value the past year. Nothing wrong with that....They are
a lot slower in movement than the techs but you can sleep better and you don’t have to
worry so much about the trend. UHAL, another of our favorites is trading at 331/4. If you
haven’t bought it already you might give it consideration.
Bulletin Board stocks we like today: AVRI, TEXN and TEIM. Teim is at just a nickel. Your
chances of making a windfall profit, buying a little OTC BB stock at a dime and selling for $ 100 is
much better than winning either Slots, Megabucks or the Lottery. You’re not supposed to
use your food money. Timing is everything. Knowing when to buy is more important than what to
buy.
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