Stockscores.com Perspectives
For the week ending April 14th, 2000
In this week?s issue:
- Commentary: Disaster Relief
- Feature Strategy: Finding Some Safe Havens
- Tip of the Week: Sector Scanning
- How to subscribe to the Stockscores.com Perspectives Daily Edition
***Stockscores.com Commentary***
A few weeks ago, I told the readers of the Daily Edition that I had moved into
a 100% cash position. For the next three weeks, I have been telling those
readers that I just could not find anything for them to buy. In fact, the only
stock that I recommended this past week was a short sell on PFTI, which moved
down 45% over the next two days.
It seems I could have told them to short just about anything.
I have felt a little bit guilty the past few weeks, as there was not a whole
lot of content to the Daily Edition newsletter. When people pay, they want to
see some substance. Oddly, it seems the greatest value they may have received
recently is to receive nothing at all.
As I am sure you are all aware, this week was the worst in NASDAQ history. The
sell off on the Dow today was swift and sure. It was not caused by a strong
inflation, poor earnings did not cause it, and it was not caused by a major
catastrophe. Simply, everyone running for the door at once caused it.
Over the past few weeks, market psychology has been slowly setting up a state
of fear. Today, fear reached its maximum and margin calls compounded the
problem as leveraged shareholders were ordered to liquidate. The losses are
big, unless you owned cash.
People with cash have gunpowder to take advantage of the abnormal selling and
buy the bounce.
I expect there is a tremendous trading opportunity around the corner. When the
selling pressure subsides, the money that is sitting on the sidelines will rush
back in to the market to buy stocks that have been hammered lower. Short-term
traders who can call the bounce will profit, so long as they sell to lock in
the quick profit.
I say so long as they sell because I expect that it will be some time before we
see sustained up trends in the broad market of stocks. The psychology of the
market has been hurt during this sell off, and it will take time to heal the
wounds.
If you have the bravado to try and play the bounce, I suggest watching the
market for the day when the market looks like it is going to close above where
it opened. And then start to snap up individual stocks that are doing the same.
Stick to the market leaders that have good liquidity, as the sidelined cash
will rush for the quality. Make the quick trades, and get back in to cash.
Enough Said.
***Stockscores.com Feature Strategy of the Week***
Suppose you are a fund manager and you have to invest in something. Other than
bonds, where can you park capital and have a decent chance of escaping the
strong selling pressure.
Given the market volatility this week, I am suggesting reader?s try two simple
strategies.
First, return to the Stockscores Sector Watch tool to find stocks that are not
participating in the overall market downturn.
In the US, the strongest sector according to the Stockscores.com system is the
Utility stocks. As you do a quick scan through the stocks that make up this
sector, look for the stocks that have good scores themselves, and are breaking
out of trading ranges, preferably to new highs.
My top pick in this sector is Northeast Utilities, NU on the NYSE, which has a
98 score.
On the Canadian markets, the leading group is Oil and Gas, which I expect will
be a leader in the months to come as investors take advantage of the strong
earnings that this sector should enjoy. I like Newport Petroleum, T.NPP,
Bonavista Petroleum (T.BNP) and Encal Energy (T.ENL).
A second strategy is to simply scan for all stocks with a score greater than or
equal to 95, and with a minimum volume of $500,000. A few weeks ago, this scan
would reveal a few hundred stocks. Today, it reveals 15.
Of the stocks that are revealed, I think these ones look the best and are worth
doing your due diligence on.
American Home Products - AHP
DPL Incorporated - DPL
Northeast Utilities - NU
Lindsay Manufacturing - LNN
The market weakness that we are seeing will pass, and we will see lots of
opportunities for profits in the future. In the meantime, fly to quality. And
if you can?t find any, fly to the Caribbean and sit on the beach.
***Stockscores.com Site Tip of the Week***
The Sector Watch tools showcases the average scores of stocks in a set industry
group, however the number of stocks in that group is limited. If you are
interested in seeing a lot of other stocks in a sector that is showcased in the
Sector Watch, try using the Market Scan and the Industry field. Although the
choices are limited, you can look at the top scoring stocks in a particular
sector. For example, Energy stocks are doing reasonably well in the Sector
Watch, so try scanning for the top scoring energy stocks using the Market Scan
tool. You will find some pretty good-looking stocks.
***Stockscores.com Perspective Daily Edition***
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***References***
To get the Stockscore on any of over 20,000 North American stocks:
stockscores.com
For a background on the theories used by Stockscores:
stockscores.com
For strategies that can help you find new opportunities:
stockscores.com
To scan the market using extensive filter criteria:
stockscores.com
To build a portfolio of stocks and view a slide show of their charts:
stockscores.com
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Disclaimer
__________
This is not an investment advisory, and should not be used to make investment
decisions. Information in Stockscores Perspectives is often opinionated and
should be considered for information purposes only. No stock exchange anywhere
has approved or disapproved of the information contained herein. There is no
express or implied solicitation to buy or sell securities. The writers and
editors of Perspectives may have positions in the stocks discussed above and
may trade in the stocks mentioned. Don't consider buying or selling any stock
without conducting your own due diligence. |
