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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Shell R. Poust who wrote (13512)	1/27/2001 12:01:34 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Hello Shell, Let's take a look at the technicals and fundamentals for ERICY Market Phase or Trend By the looks of the 3-year ERICY weekly profile chart, ERICY is still in a markdown market phase with sideways being the best immediate scenario. Take a look below from JAN. 2000 thru JAN. 2001. ERICY 209.15.73.188[M,A]WBLLYYMY[DF][PD20,2!C50][VC60][IUB14!LG] First, you will see the extreme RSI readings over 70 going back to Oct. 1999 thru about March before the major dump started. The current RSI remains below a 50 reading and is leveled off in the low range for ERICY. OBV is about the same. In one word, FLAT! No new money moving in at all! Second, price support broke down at the $20 level recently. It appears it may be ready to fall below the $12.00 price level by indicated by the forming of the descending triangle. Indeed, another technical bearish chart sign. 209.15.73.188[M,A]WBLLYYMY[DF][PD20,2!C50][VC60][IUB14!LG] Third, the expo. moving average (the between the upper & lower BBs) is still in a nose dive south! I would bet ERICY will fall below $10 and will be some time before the recovery and start of a markup phase. The upper and lower BBs are still quite far apart and appear to be closing somewhat. Meaning, because the bands are so wide the premies on the options contracts are quite high at this point. Fourth, you recall the phrase, "a rising tide raises all ships?" Well, the telecommunications industry group is not exactly in a rising tide at this point. Indeed, the major overall index for the group is in a markdown phase with a recent dead cat technical rebound. The retest of the lows is next. Notice the upper and lower BBs in this next link in which they are still coming in closer towards each other. There are plenty of sellers at that 250 index marker. 209.15.73.188[M,A]DACLYYMY[DF][PD20,2!C20][VC60][IUB14!LG!LF] ERICY FUNDAMENTALS ERICY has a 25.5% annual growth rate and still has fat to cut. NASDAQ: (ERICY : $11 1/4) (ERICF : $11) $88,088 million Market Cap at January 26, 2001 Ranks 92nd in the Fortune 500 on Revenue & 121st on Profit. Employs 103,290. Trades at a 7% Discount PE Multiple of 45.0 X, vs. the 48.5 X average multiple at which the Cellular & Telephone Services Sub-Industry is priced. Conclusion It may be a tad bit early to jump on ERICY. I did noticed a LEAPs Spreads combination in my reports that you might want to keep an eye on and perhaps leg into a spread later. But, buy the ERICY leap when the stock bottoms and remains at the $10 level: ERICY price is at $11.25 now. Using the number today as a rough calculation buy the Jan03 $10.00 CALL (VYDAB) @ less than $4.59, wait for some appreciation in the LEAP and then write (sell) the call spread Jul $15.00 (RQCGC)@ $0.79 or more (+17.24% to +23.5% profit). If you are called out you can add another +5. or so for a +28% profit. Again, these are rough numbers. What's important to note is that the JAN03 ERICY LEAPs are showing a very cheap price to buy into. Any readers out there that would like to view these reports should check out the 2-week free trial freebie. 2-WEEK FREE TRIAL OFFER - LEAPS SPREADS REPORTS 209.15.73.188 Lurkers have asked me to list my email address: mailto:coveredcallswins@aol.com?subject=2-week-free-trials-post-#15242223