*AV*-- This newsletter stuff really keeps me hopping all over the place. Anyway, I figure it was time to post another set of excerpts from the newsletter since I am still getting PMail inquiries.
OPENING COMMENTARY FOR DECEMBER 10, 1998
The DOW finished down 18.79 at 9009.19 on heavy volume of 700M shares. The DOW is just barely negative week to date. The NASDAQ also finished up a nice 15.67 2050.42 on light-heavy volume of 860M shares and is still up more than 45 for the week, so far. The excitement today was watching XMCM jump in its IPO and then settle down. XOOM.com opened at 31 and traded as high as 42 before closing at 34-7/16 on 4X the original IPO shares offered. Another real good IPO where it was tough to get the original institutional holders of shares to part with their shares<sarcasm>. As a matter of fact, very few large blocks actually traded and a good portion of the trades were in small 100-1000 share purchases on the retail side of the market. This was followed by the monumental move made by BCST due to the NASDAQ-100 pilot program for quarterly conferences that will be implemented in early 1999. BCST was a stock mentioned a few days ago for serious consideration based on its pull back.
We also watched NAVR (not discussed in this newsletter) which jumped up 5-1/2 to 13-3/8 on Monday, due to speculation that it might IPO its Internet business unit, give back 2-1/4 on Tuesday, and then lose another 1-3/8 on Wednesday, closing at 9-3/4 for the session. . NAVR traded 7X its average daily volume, down from 9X the previous day. From the cheap seats here, it looks like this wasn't such a hot idea since it is still backing of. I still think this back door approach to an IPO looks good but you at least need the company to file the SEC paperwork. Too far out in the distance so this was a premature run up just to see how high they could drive it with hype. We need to file this away for future reference. I think that the SEC filing, if and when it does come, will drive this stock up these 3-5/8 points or more for a nice profit. So wait, listen and watch.
UBID (up 220%) on Friday, retreated 5-3/4 (down 12%) on Monday, 4 on Tuesday, and fell 2-9/16 on Wednesday to continue its retreat. This was Day #4 with UBID closing at 48 on Friday, 42-1/4 on Monday, 38-1/4 on Tuesday, and 35-11/16 on Wednesday. Imagine how you would feel to have bought this stock at $60 on Friday (its high) only to see this stock close 1-9/16 above the lowest price in the first 4 days of trading. This is the dip after the pop. IF this stock is really worth its salt (no opinion here by me) we should be looking for a bottom and then a turn around before climbing aboard.
In answer to a subscriber question today, Triple Witching Fridays are the 3rd Fridays of March, June, September, and December of each calendar year. ON this day you have the stock options, index options, and index futures all expiring at once. As far as I am concerned, these Fridays and the days surrounding them are nothing more than aberrations in the already chaotic market mentality that produce the highest incidence of Monkey Business by the "Financial Conspirators of Wall Street". Unless you have true insider knowledge of what the major brokerages and institutions are going to do to maximize their profits in these 3 instruments, it is a risky situation to try to deal with.
I didn't take a big bite out of the market today since the stocks I was interested in were not performing the way I wanted them to. The market mavens, now touting the Tech Sector as the next gold mine, seem to be jinxing some of them. Maybe when Merrill or Smith Barney become real positive, its time to head for the hills<GG>. For me, they are just a minor distraction since I am trying to move away from the "guerilla warfare" volatility plays of the past few months and start to take mid to longer term positions in the Tech sector. This time we will have a more diversified portfolio with more shares courtesy of some of the better results of the volatility plays.
BUY SIDE
1. XXXX - still looking to average down.
2. XXX - buy on any weakness for the long run. As the industry picks up, so will this.
3. ALYD - looking to see this pathetic stock move up to 9-1/4 for the12% gain and look for the low end of the cycle to get back in.
4. CFMT - No action in price yet.
5. XXXX - replaces CY as a buy due to recent news release on ANAD
6. XXXX - in the midst of a nice downward cycle and will be intriguing at this price and well into the mid 40s.
7. Any further pullbacks in XXXXX make it a very attractive buy.
SELL SIDE
1. No sell strategy in place. Will ride out any minor storms to be positioned here.
2. SHORT VECO at $50.
(sic)
Top Tier
Stock Open Close Change Daily Range
AMAT 45-3/46 43-7/16 -2 43 1/16 - 46 ¼
ASMLF 32-1/2 31-1/2 -11/16 30 5/8 - 32 ½
KLAC 45-3/4 44-15/16-13/16 44 ½ - 46 ½
LRCX 20-11/1619-3/8 -1 ¼ 19 ¼ - 21 ¼
NVLS 57-7/16 54-3/4 -2 7/8 56 ½ - 58
TER 44-1/16 42-7/8 -1 1/16 42 ½ - 45
(sic)
IPO VIEW-More hot deals seen after watershed week - By Holly Rosenkrantz
Dec 6 (Reuters) - This week, five Internet companies are scheduled to go public, and following a pattern in cyber-offerings, nearly all are expected to soar. The five Internet companies expected this week are Xoom.com (XOOM), AboveNet Comm (ABOV), Exchange Applications (EXAP ), Internet America (OTC BB:PUNK), and Infospace.Com (INSP). Next week, Audiohighway.com (AHWY) will debut.
(sic)
Question: I was wondering if you have any opinions on MRVC as an investment at this level?
Answer: I do not actively follow MRVC but spent an hour doing some research and am quite puzzled. There is more here than meets the eye and I cannot find it. Here is a short synopsis and it would be of great help if you would feedback to me other roads to travel to get a better answer for you.
1. Business they are in looks good and promising.
2. August 28th (Big drop in Market), MRVC takes a huge dump, losing more than 50% of its value.
3. The only news that brackets this company is a Quarterly SEC filing on 8/14/98 and a rating on their $100 Million Subordinated Note on Sept 11th.
4. Stock is dragging along the bottom of its 52 week trading range, hitting the bottom on 8/31 which was another market bloodbath.
5. Nothing special happening with volume recently.
6. Stock is selling at 25% of its 52 week high.
7.Traded between 20 and 30 from last December until this past August.
8. Stock collapsed when the market tanked and has never recovered.
I do not read the SI thread on MRVC and have no idea what the general opinions there are but it looks to me that this is a diamond on the rough or is an empty gold mine being sold by con artists.
On face value, I would say there was no reason I could see from any news release why it tanked as much as it did. There is nothing to indicate why they are as low as they are unless their products had very heavy Asian installation component to it. I also see no reason why it did not recover like the rest of the stocks in that sector did. And finally, I have not been able to find any competitive product or contract with a customer that would cause a problem.
(sic)
The main story behind sluggish third quarter profit growth is the narrow Sector emphasis. Most of the damage occurred in the energy sector. Technology remains in the "sweet spot" of the investment cycle owing to modest relative valuations and a cyclical profit trough. Small and mid-cap Technology stocks in particular should benefit from early-cycle conditions in this sector. The industry recession is over. Diversified financial Services continues to grow faster than its peer group. But valuations for the sector have not improved appreciably owing to weak earnings.
(sic)
18 of 52 stocks on our screen closed in positive territory, down significantly from previous sessions. Of the 18 stocks that were up, only 8 were up more than 50 cents while 10 were down more that $1. We only have one data point but the momentum towards the negative side needs to be monitored. To go out on a limb, we had some good times in the Specialty ICs and equipment stocks and we might be coming in for a slight retreat for Triple Witching or a nice January Effect set up. I am nor concerned and will use this as an opportunity (when the prices are right) to establish more mid to longer term positions in "CORE" holdings. The fun times might be over and we enter the boring period of less volatility, more upward pricing, and less positional investing.
(sic)
LOCKED ON TARGET
A full description can be found in RadarViewâ Volume 2 Issue 27 and 31 for review.
VRSN[52, +5] - up ~13-1/4 for a 34% gain in less than a week. Will be monitored closely as not to give back these recent gains. verisign.com
MIPS[26-7/8, +1 3/8] - using lowest and highest entry prices, MIPS has provided 8% to 22% gains in a matter of 1 week.
BCST[69-3/4,+15] - stock peaked at 78-1/2 on Wednesday but trigger limit was actively set and tripped at $72, causing exit. This was prior to the run to $78.50 and if allowed to run, could have just as easily deteriorated to the close prior to exiting on the down side. BCST has provided a 33% gain in less than a week. If we were able to catch the high, it would have been a 44% gain. For those that entered Monday at 58.50 (open was 58.375, high was 59.5, low was 56, and close was 56.25) gains would have amount to 20%-33%, depending on the exit point, if an exit was taken. In Issue #35 on Friday 12/4 and Issue #36 on Monday 12/7, in the Opening Commentary, BUY SIDE, the following entries were placed:
BCST - getting real beat up lately as the internet stocks get beat up. I do not want to play the hard core internet stocks but believe there is a trading opportunity here.
BCST - small trading position which made a slight comeback on Friday.
And for those that saw the pre-market headlines or needed time to ponder and research, entry could have been achieved at $60 at the open on Wednesday or at $54.75 at the close on Tuesday. No matter how it is sliced up, a minimum 17% gain was achievable. The following news reports didn't hurt the situation.
December 9, 7:44 am EST - Nasdaq Partners With Broadcast.Com to Provide Internet Broadcasting Services for Quarterly Earnings Conference Calls
biz.yahoo.com
Broadcast.com signs deal with Nasdaq biz.yahoo.com
December 9, 3:35 pm EST - IP Equity Inc. Announces Availability of Its Internet-Based Financial Public Relations Services to Emerging Internet-Focused Companies biz.yahoo.com
Broadcast.com Inc upgraded by Hambrecht & Quist (12/9)
STM[81-1/4, +6 ¼] - Issue #34 on Dec 3rd saw this stock reverse from its downward trend. TA provided indicated a purchase in the 67-68 range if there was a pullback from the 70+ price. STN retreated through the 67-68 range and got down in the 65s prior to turning positive. A position on the upswing at $66 yields a 23% gain in one week. Profits like these should be taken or closely watched to prevent erosion.
STMicroelectronics coverage initiated by PaineWebber (12/8)
We had a really great week so far with STM, VRSN, MIPS, and BCST just getting killer profits.
For further info:
stepman@hotmail.com
Andrew |
