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Non-Tech : Dorsey Wright & Associates. Point and Figure -- Ignore unavailable to you. Want to Upgrade?

To: Tommy Dorsey who wrote (2885)	12/13/1999 3:14:00 PM
From: Ms. X	Respond to of 9427

Continuing with the DWA walk through... Hometown Investing. This is neat page on DWA that has a map of the US that has hyper links to the stocks inherent to that state. You can also type in a stock and find out what state it is from. Some people like to invest for the home team and if you or your clients are one of those type of investor this is the place to go. From the Analyst. This is a commentary from the DWA analyst regarding the market, stocks, news stories or trade plays. An archive of past articles is available through a link on the top of the page. This is available only to individual subscribers of the basic service. Here is today's article: Tax Loss Selling Bounce Candidates: Part One Yesterday we featured Philip Morris (MO) as good potential tax loss bounce candidate. Over the next few days we would like to present you more ideas in that could experience this phenomenon. But before we get the list, let's briefly go over the basic concept again. The purpose of tax loss selling is that weak, depressed stocks get sold (typically towards the end of the year) to offset gains in one's portfolio (for tax reasons). This year, like the last few, has produced nice gains, especially if you have owned technology stocks (over the course of the year, but especially from the October lows) so where there is an opportunity to sell a laggard for tax reasons, it will likely be done. This tax loss selling brings the stock down even further, and typically all those that want to sell have already sold, and the stock finds a bottom. To expound further, the phenomenon is typically concentrated in the small-cap type stocks. Prices weaken late in the year for smallcap issues as inv estors take losses, and then bounce back in January when selling pressure stops and buying begins; from there we often see a bounce back up during the late December-January time frame. Should you play any of these stocks for this reason, be sure to stick to the reason for buying them -- that is for a bounce up. Once you get a decent bounce, take your trade. If we get to mid to late January and the stock has not given you a bounce, sell it. This is not a long term play, just for 6 weeks or so. Some lesser know aspects/thoughts of the January effect: * Small stocks tend to outperform the rest of the market by 5 1/2 % during the year's first month. * The Value Line (geom.) is down 4.5% for the year, showing the poor performance still by the broader market - stocks other than the big cap names. This compares to the Dow Jones being up 20%, the SPX up 14%; and the Nasdaq Composite - the big winner, up 63% for the year; (the NDX 100 (the top cap names in the Nasdaq) is up 72% for the year). It is YHOO and other internet names, QCOM, ORCL, AMAT, AAPL, SUNW, MSFT, INTC, DELL, CSCO and such names that are responsible for the big rise in the Nasdaq Composite, not the small cap names necessarily. * The lower the institutional ownership of the stock, the greater the January effect, suggesting that individual trading is most responsible for the effect. This makes sense in that taxes have a greater impact on individual investors than institutions. * Those with large losses in the prior year are most likely to experience the effect, suggesting tax loss selling is a driver. * The effect tends to be greater when the US dollar is strong and, conversely, weaker when the dollar is declining. * Year-end bonuses, distributions, and gifts may go into the market, providing a boost in demand. * Money managers are more likely to place riskier bets in the beginning of the year, but bring their portfolios closer into alignment with the S&P 500 as the year progresses to assure good relative performance. * Lagging money managers who fear for their jobs will cut their losses in small cap stocks and invest in blue chips to avoid ending the year at the bottom of the performance rankings. They will then look to re-establish their aggressive positions in January, thereby boosting small stocks. Stocks for January Effect: Part One Note: If the stock says "Use $" that means use a dollar amount you are willing to risk because the chart doesn't provide a good stop loss point. Symbol Name Recent Price Support Stop Comments AET * Aetna 54 9-16 54,hi 40s Use $ Topped in high 90s ABS * Albertson's 30 1-4 -- Use $ Fallen from mid 60s Play for bounce to 38 ACK * Armstrong World 29 15-16 -- 29 Buy at 33 on 3 box rev up CAT * Caterpillar 45 13-16 Lo 40s 39 Could bounce to hi 50s, Likely to be Dog of Dow CNS * Consol Stores 16 1-8 15.5 15 Fell from hi 30s, major Spt at 15 1-2, room to Low 20s CVD * Covance 9 3-4 8.5 8 Down from hi 20s DCX * Daimler Chrysler 66 11-16 66 65 Down from 108, could Bounce to high 70s DDS * Dillard Dept St. 18 3-16 18 17.5 Down from hi 30s, play For bounce to 24 area