Here's that newsletter that you refer to
Feb 23, 1998 - The Right Line Split Report - Special Update
**********************************
NOTES FROM THE EDITOR
**********************************
I wanted to share a few thoughts about the upcoming few trading days that couldn't wait until tomorrow night when I normally send out the first update of the week.
Merck (MRK) - This morning CNBC mentioned that The Right Line Split Report had suggested that MRK was an imminent split candidate. This apparently sent rumors flying everywhere. I have no idea how they got this information or why they chose to air it.
This comment combined with news that its Singulair medicine, a once-a-day pill for the prevention and treatment of asthma, received marketing approval from the FDA. The net result was MRK gaining 5.93 to 130.625 on the day. Not a bad day at all.
However, after the bell some news was announced that will probably impact most all the drug stocks tomorrow. How much of an impact is difficult to say. SmithKline Beecham (SBH) announced that they have broken off merger talks with Glaxo Wellcome (GLX). The SmithKline press release lays the blame for the merger's failure with Glaxo, claiming that, on Feb 20, "Glaxo indicated that it was not prepared to proceed on the agreed basis." SmithKline went on to say that "discussions since February 20 have revealed a number of differences between the companies, including differences in the approach to the possible merger, management philosophy and corporate culture," leading SmithKline to conclude that their differences with Glaxo were "insurmountable."
In after hours trading GLX fell by nearly two and a half points, GLX ADRs closed at 62-7/16 but slipped to 60 shortly after the company said it nixed what was to be the biggest business deal in history. ADRs of SmithKline Beecham were trading at 66, unchanged from their closing price, after the company said the merger was off. American Home Products (AHP) were unchanged by the news, trading at their closing price of 91-1/2.
Pfizer Inc (PFE), Warner-Lambert Co (WLA) and Merck & Co Inc (MRK) traded near their closing prices after the break up of the deal. This is good news. Remember a few weeks ago how the entire sector rallied had on news of the merger? Lets hope that this news doesn't throw a wet blanket on the good momentum generated today in the sector.
This has the potential to be a net negative to the sector and could well pull down several of the drug stocks. Use care tomorrow and don't let your gains evaporate in MRK. With the CNBC airing the split rumor, it is conceivable that the Merck Board of Directors could postpone their decision regarding a split. Keep your stops set and stick to your trading plan. Certainly a dip tomorrow could present an good buying opportunity, but there isn't any reason to give back profits! Further, nearly a six point gain today is an excellent trade.
On that note, here is another bit of information.
Pfizer (PFE) - My request for information regarding PFE's board of directors (BOD) meeting produced three possibilities.
One subscriber emailed and said she called and found that "the next shareholders meeting Apr. 23rd. The meeting for the board is held very tightly I was told. However they meet with frequency I was told."
Another told me; "I called Investor relations at (800) 733-9393 and was told there is no BOD scheduled yet, but usually they are held at quarterly dividend times. That makes March and June possible BOD dates."
And lastly and the most interesting is this one!
"There is a PFE BOD meeting this Thursday."
This presents an interesting situation. Ideally if we get a bit of a pullback in the drug sector due to the failed merger talks, this would provide an excellent buying opportunity.
Here is what I said Sunday about PFE:
Pfizer (PFE) - PFE is NEW to our split candidate group. Thursday I said to keep an eye on PFE as it is looks ready to move. Friday it moved well, adding 1.18 to 87.31 and setting a new high in the process. Next week if the Drugs stay strong, PFE could move nicely. Also, if you are uncomfortable with playing MRK, trading sympathy stocks like PFE, WLA, BMY or ABT would work. If MRK announces a split and soars, it will pull the entire sector up with it. If not, you have a lower risk trade. On 04/24/97 PFE announced at their last split at $90 per share. It is now very close to this date. I need to obtain the next Board of Directors meeting date! If you know it for certain, email me ASAP! Sometimes these can be hard to get and takes a bit of detective work. Optionable.
Monday, PFE added 2 to 89.375 setting a new all time high and finishing at its high of the day.
Since their last split was announced in April of 97, odds lean towards an April announcement. However, if MRK announces a split, PFE may well follow suit and perhaps we could get a double this week, or none! Same trading tactics as previously stated. Now isn't the time to get reckless. Plan your trade and trade your plan.
**********************************
TRADING NOTES
**********************************
The Nasdaq was hot Monday. The DOW was flat but as I have noted before, the DOW is not indicative of what the overall market is doing. The Nasdaq surged 23 points (+1.37%) to close at 1751, eclipsing its 10/9/97 record close of 1745.85. Today's new record high close for the S&P 500 was 1038.14. The DOW, which is weighted down with two oil companies - Chevron and Exxon - ended down 3.74 to 8410.
Tomorrow could be interesting with Alan Greenspan due up to the plate. Stay on your toes! He could turn this market on a dime if he says something that spooks the market.
Microsoft (MSFT) - MSFT soared 4 to an all-time high of 81 5/8 or for those of you who bought before its 2-for-1 stock split took effect, it soared 8 to 163.25! The rise came despite news that MCI Communications (MCIC), Sprint (FON) and America Online (AOL) have received subpoenas from the Justice Department in its ongoing probe of the software giant.
Dell (DELL) - DELL continues to amaze as it added 4 11/16 more to an all-time high of 130 15/16!
Lucent Technologies (LU) - LU continued to roar, adding 5.25 to 107.75.
Amazing.
America Online (AOL) - AOL was hot too, continuing to rally, up 4.43 to 123.875. Adjective not required.
Intel (INTC) - Not to be outdone, INTC rallied 2 3/8 to 94 3/16.
Nokia (NOK.A) - Up 3.31 to 100.
As expected, airline stocks were led by UAL Corp. (UAL), which climbed 3 _ to 89 while AMR Corp. (AMR), Delta Air Lines (DAL) and Northwest Airlines (NWAC) all jumped well over 1 _ thanks falling oil prices. Alaska Air jumped 3.62 to 55.875. Airborne (ABF) surprisingly fell .50 to 38.187.
Eli Lilly (LLY) - LLY rebounded from some recent weakness to rise 2 5/8 to 64 ¬.
Warner Lambert (WLA) - WLA finally got going, up 2.62 to 147.44.
Medtronic (MDT) - MDT was CS First Boston initiated coverage of MDT with a "long-term buy" rating as MDT added .50 to 53.625.
As expected, all the oil and drilling stocks had a BAD DAY. The Philadelphia Oil Service Index (OSX) ended down 3.80 to 95.77, while the AMEX Oil Index (XOI) shed 9.01 to 444. Among individual names, more than $2 declines were suffered by Schlumberger (SLB), Smith International (SII), and Diamond Offshore (DO), while Camco (CAM) fell 3 3/8 to 53 3/8. Not time yet for these stocks, especially when other sectors are performing as well as they are.
**********************************
TRADING RESOURCES
**********************************
I neglected to include this piece on the TICK yesterday. Here it is.
THE "TICK"
This is a simple yet extremely important intra-day indicator. It computes the entire NYSE stock exchange. The TICK is a market indicator based on the number of stocks whose last trade was an uptick or a downtick.
The TICK is the difference between the number of issues (or stocks)
trading with the last trade higher (an uptick) from the previous price
and issues (or stocks) trading with the last trade lower (a downtick)
for the previous price. For example, there are 4000 stocks trading on
the NYSE. Of the 4000 stocks traded, 2400 are traded up 1/8 or a 1/16
from the previous price (an uptick) and 1600 stocks traded down 1/8 or
1/16 from the previous price (a downtick). The net result is
2400-1600=+800 or a positive +800 TICK.
A trader uses the TICK as an indicator of market sentiment or psychology to try to interpret the market's trend. It's kind quick look to see if there is net buying or selling going on. The tick must be used in real time for trading purposes. On a 15 minute delay it is completely useless and is probably dangerous. The tick can jump 5-600 points in minutes, especially during program trading.
During the big selloff in October, I think the TICK went as low as -1900 (but am not positive), the lowest I can recall.
One service I use is Interquote, which is a tick by tick real time fee based quote service. It refreshes the TICK every few seconds. The ticker symbol I input is $TICK, and this can vary depending on the service you use. PCQuote Marketwatch, an inexpensive real time quote service provides the TICK in their "Top 10" section both for NYSE and Nasdaq. The Nasdaq also has its own TICK.
You can see the tick in real time (I think) at this URL:
quote.com
Just type in the word "tick" in the symbol and it will graphically depict the tick indicator as well as the numeric data to the right side.
Also it is listed on a delayed basis at:
tradepbs.com
**********************************
Best of luck and have a Great Week!
**********************************
For Subscription Information or to Subscribe, Send an Email to:
subscribe@rightline.net
The Right Line Split Report
rightline.net
Fax: 512-255-1052
Voice: 512-255-9055
**********************************
DISCLAIMER
The Right Line Split Report is a information service for investors and traders and is not a recommendation to buy or sell securities, nor an offer to buy or sell securities. The publishers of The Right Line Stock Report are not brokers and are not acting in any way to influence the purchase of any security. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. It is possible at this or some subsequent date, the publishers of The Pro Right Line may own, buy or sell securities presented. The Pro Right Line, or its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The Right Line Split Report. The publishers of The Right Line Split Report recommend that anyone trading securities should do so with caution and consult with a broker before doing so. Past Right Line Split Report performance may not be indicative of future performance. Securities presented in The Right Line Split Report should be considered speculative with a high degree of volatility and risk. The Right Line strongly encourages anyone who chooses to invest do so only after educating themselves in strict trading discipline including stringent adherence to minimizing losses by using at a minimum both mental and automatic stop loss orders. Failure to do so can result in significant loss of investment capital.
Any REDISTRIBUTION of the above information, without The Right Line's
written consent, is STRICTLY PROHIBITED. Copying and/or electronic
re-transmission of The Right Line Split Report in whole or in part
without written permission of The Pro Right Line Corp. is a violation of copyright law. Receiving this report either in hardcopy or electronic format constitutes agreement to the stated terms and conditions.
Copyright c 1998 The Pro Right Line Inc. - All Rights Reserved |
