*AV*---Newsletter
Radar Trader Newsletter
High Tech Commentary-- Scan List
August 31, 1998
OPENING COMMENTARY FOR AUGUST 31, 1998 - Andrew Vance
I am sure everyone has read all the scenarios of what is in store for us with the expanding Asian Economic Crisis spilling over in Latin America and Russia. Therefore, I will not bore you with a lengthy diatribe of the situation but would rather defer to all the well versed journalists, commentators, financial analysts and political experts. However, I would like to give a very worrisome bullet outline of a terrible scenario.
Russia is folding giving it a few choices:
*Return to Communism and the Cold War. Bad situation especially with the nuclear weapons and still no hard currency and ability to finance the War Machine. Highly unlikely since they have a taste of Democracy and the rest of the world will do anything it takes to make sure that is not an option.
*Sell off it Gold reserves, of which they have enough to wreak havoc on the price, driving it down dramatically. Bad time to get rid of gold, at a low but it is one of the only things they real have. BTW - they have oil too and with plunging gold prices, they might make it back with higher oil exports since the price of oil will go up dramatically. Debeers could probably maintain a lid on the diamond issue.
*Sell its technology or weapons to the highest bidder, allowing every fanatic to have their own nuclear capability. Or worse yet, return to a wartime economy and raise funds by selling arms to warring factions around the globe. Hell, the KGB could incite a few wars, not that either the US or Russia hasn't done that before.
*Key here is the unleashing of the Russian Gold and Diamond Reserves on the open market causing the prices to drop.
What Russian Gold on the market means
*Lower gold prices will most assuredly result in higher oil prices. The beneficiaries of this will be Venezuela and the Middle Easter OPEC nations. Since Venezuela is on the brink, higher oil prices benefit that country. Higher oil prices in the Middle East will enrich the coiffures of a few men even greater.
*Russia could be an exporter of oil as long as the prices were high, at the expense of its own population. Russia then gets some of its gold back into its treasury and maybe can turn things around.
*Saddam Hussein bellies up to the bar and offers low cost oil if we lay off the sanctions. The US holds firm but the rest of the world caves in, allowing Iraq to not only sell its oil, but to get cheap gold in return for the oil. Stockpile the gold and wait for the price to go up and you have new funding for the weapons of mass destruction. Which, by the way, might be of Russian construction via a long list of go intermediary benign customers that abuse their agreements with Russia about re-selling the weapons.
Bottom Line: Russia has the power to disrupt the world order and economy more than they are given credit for. Whether it is weapons, gold, oil, or diamonds, each of this top 4 resources can ripple through to dramatic hardships for the rest of the world down the road. We need to be careful on how we handle the Russian Crisis.
The above scenarios hopefully will be avoided and never occur due to a great deal of effort by the global community to take the appropriate actions. I mention them here, in the confines of this newsletter as a warning to us all. A very famous individual once said, "Those that do not take heed of history are surely doomed to repeat it."
Vigilance and caution in the market and the political ramifications of some of this crises are warranted. Sixty years ago, during perilous economic times, a lunatic came into power and the world turned its back. Millions of lives were lost. The battle cry of "NEVER AGAIN" should be kept close to the vest these days. We have way too many lunatics that have not been adequately kept in check. Some of them have massive armies and weapons of destruction. Let's make sure we do not empower them to a point where they can unite.
My apologies for taking a political stand in a financial newsletter but, "They came for the Jews and I said and did nothing. They came for the Gypsies and again we did nothing, They came for the Poles and the Chechs no one said or did anything. Then they came for me and I realized there was no one else left."
TIMELY TOPICS
REXI finally was able to hold its own on Friday. Possibly the blood is finally finished running it the streets here. Stock finished up +5/16, which is a start at holding its head above water. Day to day, the stock was losing ground and had not touched bottom. We might infer by its graph that a gradually turn on the bottom exists. It is still trading well over its average daily volume. Management finally announced on Friday that it was implementing a stock buyback program that would repurchase up to $50 million worth of the 20.2 million common shares outstanding and $115 million of unsecured senior notes, depending on market conditions.
PWJ-No news either and it made back 5/16 of the 5-1/8 it lost the previous day. I cannot wait for the "boiler room" operations touting this stock to get back to me today. For those of you into rumors and missed the Friday issue, we have the re-surfaced Duetsche Bank AG (DBKG.F) apparent overtures towards PWJ. Scuttle butt supposedly is that they are talking rather seriously now and the deal is imminent. So here is the deal. Solid rumor and the stock was selling off. Chart indicates stock was in the high 20s around February and made a run to the mid 50s early August. All of a sudden it is an ugly stepchild and POOF, we are a $39 "bargain". Keep in mind that Aug 11th-14th this stock had 4 successive days of trading in the 1.5M-2.5M volume range while the price range of $45.625 to $53.375, a 52 week high, was achieved. You have to go all the way back to mid April to see trading volumes over 1 million shares which resulted in a positive motion of about $2-$3. Stock traded on Friday at over 1.2 million shares and a pattern may be forming.
RADAR TRADER RST SCAN LIST COMMENTARY FOR AUGUST 31, 1998
We have 10 stocks appearing on the list today, none of which really scream for attention, other than CIEN. There is no real need to be chasing and forcing trades or positions when the environment is very unstable. Russia is a very big issue, even if people do not see it as such. Given the market performance on Friday, I could mention that the list below outperformed the street and make everything look shiny and beautiful. Many of these stocks are repeat members of my list over the past week. Holding their own and actually going up under adverse market conditions could be construed as stellar. However, I will not treat the list as such nor will I heavily emphasize any stock. I was tempted to not even provide this section but thought continuity, even under adverse conditions was the appropriate course of action. There is still a very heavy cautionary stance to take in this market. See the opening commentary if you have not done so.
SMTC(17-1/2, 1 1/8)-we rethought this situation and our hats are off to one of the few companies that survived yet another day of mayhem in the market by bucking the trend and going up. Turns out, this was a safe haven for funds on Friday, trading just under 2X daily volume.
CIEN(35-5/16, +4 «)-this was to be expected given the new exchange rate for the shares relative to the TLAB merger. A number of people have put a $42-$45 price tag on this deal so this stock may, indeed still be undervalued. Definitely worth keeping a close eye on. The stock has also been a daytrader's dream by being extra volatile intra-day.
On the downside, as was mentioned previously, the lawsuits are out in force. Fri Aug 28 CIEN Milberg Weiss Bershad Hynes & Lerach LLP Announces Class Periods For Class Action Complaints - Business Wire
On the upside, CIEN was up 15 percent after the company renegotiated the terms of its acquisition by Tellabs Inc.
TLAB reduced its bid for CIEN to $4.9 billion from $7.1 billion. This comes after AT&T announced it won't use Ciena technology. Every share of CIEN will be exchanged for 0.8 share of Tellabs vs the previous 1-for-1 stock swap. The board of directors for both companies unanimously approved the merger. Stockholder vote will be held on Sept. 9. (TLAB 49, -8 7/8)
ADSK(25-3/4, +2 1/8)-while this is wonderful, we must keep in mind that ADSK has shown a great deal of weakness relative to their impending acquisition that did not seem to be well received by the street. Hopefully this positive reversal will bring the stock back to proper valuation. Autodesk is looking to be more active in selling its PSG products in the Philippines and Malaysia next year. ADSK was late in Asia with the PSG (low-cost personal solutions group) products due to piracy issues.
CYBX(6-15/16, +3/16)-At least it did not go down and held its own. That may be something to be thankful for.
THDO(3-27/32, 0) -Gamer just sitting here on the sidelines like MPRS.
MPRS(5-23/32, +1/32)-as stated above, I guess you just have to be grateful it didn't retreat in the treacherous environment.
WIND(38-7/8, +15/16)-on lower than normal daily volume this stock decides to drive in a positive direction for close to a point. WIND provided some nice positional and daytrading opportunities given its $2.375 trading range for the day.
SPLS(30-5/8, +7/8)-Good performance on a bad day. I still believe that Staples and Office Depot are the "hot spots" to shop for your back to school needs. And for the record, two kids and $150 later (not including calculator), our school supply shopping is done. Seasonal upside is still my expectation for this upcoming September quarter ending.
CEXP(10-1/8, 0)-The only reason it is mentioned here is because SPLS, above is a stock I follow. Between Office Depot, Staples, and Corporate Express, you cover a broad range of the top providers of school and office supplies. CEXP will not be a beneficiary of the back to school frenzy for supplies but it is worth watching for any weakness that might roll over into the SPLS arena.
Friday August 28, 9:22 am Eastern Time Corporate Express Posts $0.11 vs. $0.09 2Q EPS
Thursday August 27, 4:28 pm Eastern Time-Company Press Release-Corporate Express Increases Operating Profit 54% in Second Quarter biz.yahoo.com
TXCC(16-1/2, +7/8)-I am not going to go back and find out when this last appeared on the list but I can assure you it is no stranger to this list. Trading slightly under its average daily volume, TXCC started to rise from ~$13 in early July and peaked at $19.50 at the beginning of August. Since then, it has been showing a negative trend down with the exception of Friday's attempt to reverse its course once again. This stock is worth watching but I do not think anyone can safely assess in which direction it is headed next. Charts indicate a trend to the downside.
AND NOW A WORD FROM THE RADAR ROOM:
MRVC(6 13/16, -7 9/16)--shares were down 53 percent after the company warned its third-quarter revenue and income would be lower than expected. MRVC estimated revenue be down 10%-15% percent below second-quarter revenue of $66 million. Bob Lam of Bear Stearns lowered his EPS estimate for the third quarter to 12 cents from 32 cents and reduced the revenue estimate to $57 million from $67 million.
cbs.marketwatch.com
UTEK(18-7/8, -1)--will take a third quarter charge in connection with a 20 percent cut of full time employees. "Our business continues to be affected by capacity issues in the semiconductor and storage memory business and uncertainty surrounding the economic environment in Asia," said Chairman Arthur Zafiropoulo. These additional cost-cutting measures will affect 20% of its worldwide workforce (approximately 120 full-time employees). All remaining employees will be required to take two days off per month through the balance of the this year, with this program being re-evaluate d on a quarter to quarter basis depending on business conditions beginning in 1999. These actions were taken to reduce the overhead structure while preserving key R&D programs. Their goal is to focus on expense control and to continue to make investments that could provide opportunities to enhance their long-term growth potential.
The company should report this charge for the quarter ending Sept. 30, 1998 to cover costs related to these measures taken this quarter.
Xoom files for $46 million IPO--Internet community company Xoom Inc. filed with the Securities and Exchange Commission for its IPO. Xoom operates one of the fastest-growing Web sites, estimates that the IPO stock offering could raise close to $46 million. According to the SEC IPO filing, they had 3 million members as of Aug. 28 and supposedly are adding about 20,000 new members a day over the past month. Xoom requires users submit their e-mail addresses and agree to receive direct marketing advertisements.
Internet stocks continue to drop drastically amid broader market turbulence. On Friday, many of the "blue-chip" Internet companies dropped. AMZN was down 11 percent, YHOO and AOL were off more than 8 percent. BCST GCTY reached new lows.
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Prosearch 5.0* Top Stock Report 08/28/98
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1> SMTC - SEMTECH CORP COM .ESE
Price= 17.5 ( 73) AvgVl= 223.8 ( 92) 1-Dy = 106.8 ( 97)
2-Dy = 106.0 ( 98) 3-Dy = 106.0 ( 98) 4-Dy = 103.7 ( 97)
1-Wk = 106.8 ( 98) VL/30= 244.6 ( 94) 2/30 = 216.1 ( 87)
3/30 = 217.9 ( 90) 4/30 = 182.3 ( 87) 5/30 = 149.5 ( 81)
%Rnge= 63.0 ( 73) DRAvg= 63.0 ( 91) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
7> CIEN - C I E N A CORP COM .TES
Price= 35.3 ( 91) AvgVl= 5618.1 ( 99) 1-Dy = 114.6 ( 99)
2-Dy = 103.1 ( 97) 3-Dy = 103.4 ( 97) 4-Dy = 97.7 ( 68)
1-Wk = 112.9 ( 99) VL/30= 233.6 ( 94) 2/30 = 165.3 ( 77)
3/30 = 136.7 ( 69) 4/30 = 146.6 ( 77) 5/30 = 167.4 ( 87)
%Rnge= 33.0 ( 50) DRAvg= 41.0 ( 60) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
11> ADSK - AUTODESK INC COM .DSO
Price= 25.8 ( 86) AvgVl= 1341.6 ( 98) 1-Dy = 108.9 ( 98)
2-Dy = 102.7 ( 96) 3-Dy = 111.0 ( 99) 4-Dy = 106.7 ( 98)
1-Wk = 93.8 ( 42) VL/30= 120.3 ( 81) 2/30 = 99.7 ( 45)
3/30 = 120.5 ( 61) 4/30 = 154.2 ( 79) 5/30 = 153.0 ( 83)
%Rnge= 71.0 ( 77) DRAvg= 42.0 ( 62) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
17> CYBX - CYBERONICS INC COM .MED
Price= 6.9 ( 21) AvgVl= 488.7 ( 96) 1-Dy = 102.7 ( 94)
2-Dy = 104.7 ( 97) 3-Dy = 109.9 ( 99) 4-Dy = 105.7 ( 98)
1-Wk = 97.3 ( 66) VL/30= 71.3 ( 67) 2/30 = 81.9 ( 35)
3/30 = 90.2 ( 40) 4/30 = 98.9 ( 47) 5/30 = 108.7 ( 58)
%Rnge= 62.0 ( 72) DRAvg= 63.0 ( 91) ConDy= 3.0 ( 98)
Exchg= 3.0 ( 50)
21> THDO - 3DO CO COM .DSO
Price= 3.8 ( 12) AvgVl= 373.2 ( 94) 1-Dy = 100.0 ( 83)
2-Dy = 98.3 ( 67) 3-Dy = 99.1 ( 73) 4-Dy = 102.4 ( 96)
1-Wk = 106.0 ( 98) VL/30= 98.0 ( 75) 2/30 = 95.4 ( 43)
3/30 = 95.4 ( 43) 4/30 = 105.5 ( 53) 5/30 = 96.1 ( 47)
%Rnge= 75.0 ( 79) DRAvg= 76.0 ( 97) ConDy= 0.0 ( 81)
Exchg= 3.0 ( 50)
34> MPRS - MICROPROSE INC COM .DSO
Price= 5.7 ( 17) AvgVl= 232.8 ( 92) 1-Dy = 100.5 ( 87)
2-Dy = 99.4 ( 71) 3-Dy = 99.4 ( 74) 4-Dy = 100.0 ( 79)
1-Wk = 98.3 ( 70) VL/30= 88.1 ( 72) 2/30 = 73.7 ( 30)
3/30 = 60.3 ( 20) 4/30 = 81.9 ( 33) 5/30 = 92.1 ( 44)
%Rnge= 100.0 ( 99) DRAvg= 58.0 ( 86) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
35> WIND - WIND RIVER SYSTEMS INC COM .DSO
Price= 38.9 ( 93) AvgVl= 355.8 ( 94) 1-Dy = 102.4 ( 93)
2-Dy = 96.8 ( 57) 3-Dy = 95.5 ( 56) 4-Dy = 96.2 ( 60)
1-Wk = 101.3 ( 95) VL/30= 70.0 ( 66) 2/30 = 93.5 ( 42)
3/30 = 75.2 ( 29) 4/30 = 95.7 ( 44) 5/30 = 122.4 ( 68)
%Rnge= 94.0 ( 84) DRAvg= 59.0 ( 87) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
38> SPLS - STAPLES INC COM .RSP
Price= 30.6 ( 89) AvgVl= 3106.1 ( 99) 1-Dy = 102.9 ( 94)
2-Dy = 97.2 ( 60) 3-Dy = 95.5 ( 56) 4-Dy = 98.9 ( 72)
1-Wk = 96.2 ( 61) VL/30= 98.0 ( 75) 2/30 = 90.6 ( 40)
3/30 = 82.2 ( 34) 4/30 = 79.1 ( 31) 5/30 = 77.1 ( 31)
%Rnge= 88.0 ( 84) DRAvg= 54.0 ( 82) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
52> TXCC - TRANSWITCH CORP COM .ESE
Price= 16.5 ( 70) AvgVl= 327.2 ( 94) 1-Dy = 105.6 ( 97)
2-Dy = 99.6 ( 72) 3-Dy = 95.3 ( 55) 4-Dy = 95.3 ( 54)
1-Wk = 96.0 ( 59) VL/30= 77.3 ( 69) 2/30 = 84.4 ( 36)
3/30 = 78.5 ( 31) 4/30 = 68.9 ( 24) 5/30 = 64.4 ( 21)
%Rnge= 91.0 ( 84) DRAvg= 49.0 ( 74) ConDy= 1.0 ( 95)
Exchg= 3.0 ( 50)
55> CEXP - CORPORATE EXPRESS INC COM .RMC
Price= 10.1 ( 37) AvgVl= 676.1 ( 97) 1-Dy = 100.0 ( 83)
2-Dy = 97.5 ( 62) 3-Dy = 93.6 ( 41) 4-Dy = 91.0 ( 25)
1-Wk = 91.5 ( 29) VL/30= 64.3 ( 65) 2/30 = 145.8 ( 70)
3/30 = 184.2 ( 85) 4/30 = 167.3 ( 84) 5/30 = 141.0 ( 78)
%Rnge= 38.0 ( 55) DRAvg= 37.0 ( 49) ConDy= 0.0 ( 81)
Exchg= 3.0 ( 50) |
