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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (37554)	7/10/2002 11:58:58 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68252

11:38 ET Movie Gallery (MOVI) 17.61 -0.54: Unless you live in a rural or secondary market, there is a good chance you've never heard of Movie Gallery. Be that as it may, MOVI isn't a mom-and-pop operation in the video rental business. With a total of 1,560 video specialty stores in 42 states and five Canadian provinces, Movie Gallery has a sizeable, and leading, presence in the rural and secondary markets where its larger competitors, Blockbuster (BBI) and Hollywood Entertainment (HLYW), haven't bothered to penetrate to any great degree. Like those competitors, MOVI has been on a roll for some time now, having benefitted from the emergence of DVD technology, the boom in the video game industry, the nesting trend following 9/11, and the consumer's penchant for finding cheaper forms of entertainment in a difficult economic climate. Fittingly, MOVI boosted its Q2 guidance this morning, saying it expects pro forma net income per diluted share to be in a range of $0.24-0.26 versus its prior projection of $0.23-0.25 (consensus $0.24). The growth of its store base and the transition to DVD, which led to a 1.3% increase in same-store sales for Q2, were cited for the upwardly revised guidance. This news, however, has failed to ignite its stock so, naturally, one has to wonder why MOVI's positive pre-announcement hasn't generated more excitement. While it is conjecture on our part, Briefing.com is inclined to attribute the lackluster response to three factors. First, the market isn't too enamored these days with companies that report pro forma earnings, which exclude what are considered by many to be legitimate expenses. Secondly, the tone of the broader market has been so poor of late that investors have found little reason to put their capital at risk. The third factor is MOVI's technical condition which, in a nutshell, isn't too great. Last week, MOVI broke below its 50-day simple moving average (currently 19.29). Though the stock rebounded above that mark the day after it was violated, the recovery try was rebuffed in short order. In our view, it is disconcerting that MOVI's position has deteriorated further in the wake of the company's positive earnings news. Accordingly, we would be reluctant to commit new money at this time. Key support is found at MOVI's 200-day simple moving average (currently 16.27).-- Patrick J. O'Hare, Briefing.com