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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (7436)	8/2/1998 7:09:00 PM
From: Sergio H	Respond to of 29382

Jim, thanks for the deepness of your response. That red and green thing, first you see it and then you don't. Glad I shared my thoughts with you :-) Not everything is that simple. If we were to take a straigh line approach and apply it to TA then it would only be necessary to look at the chart and see if the trend was up or down. I try to examine the market conditions, the sector and the stock when evaluating current factors and influences. I thank you for your opinion. Perception Jim. Sergio

To: James Strauss who wrote (7436)	8/2/1998 7:14:00 PM
From: Sergio H	Read Replies (1) \| Respond to of 29382

Jim, if you've put away those colored circles and the blinkers, here's another APCO factor, from today's NY Times. Also applies to STVI, CADE........ect.: August 2, 1998 MARKET WATCH Winning Stocks Are Losing Momentum ------------------------------------------------------------------------ Forum Join a Discussion on The Stock Market ------------------------------------------------------------------------ By GRETCHEN MORGENSON EW YORK -- For stock market investors, great earnings news is no longer good enough. In a big reversal from last year at this time, stocks of companies posting exceptionally positive earnings surprises are underperforming the market rather than outperforming it. According to Credit Suisse First Boston, stocks of companies posting truly upbeat earnings surprises -- those exceeding analysts' expectations by 10 percent or more -- underperformed the Standard & Poor's 500-stock index by an average 0.6 percent in the second quarter. In the comparable period a year earlier, stocks in companies with especially good earnings news outperformed the index by 12.5 percent. The turnabout is intriguing because investors in recent years have made a killing by buying stocks in companies whose numbers beat the Street's. This strategy, the dogma of momentum investors and day-traders, appears to be losing its punch. "Chasing positive earnings surprises has worked only occasionally over the last few quarters," said Christine A. Callies, the chief investment strategist who did First Boston's analysis of stock performance after earnings surprises. "Something has changed." Of the 84 percent of S&P 500 companies that have reported second-quarter results, 24 percent posted positive surprises. Only 6 percent dropped earnings bombs. That is strong performance compared with last year's. In the second quarter of 1997, 28 percent of the S&P 500 companies reported positive surprises, while 10 percent came in well under Wall Street estimates. The First Call Corp., which compiled these figures, considers a surprise to be 5 percent above or below the consensus. Consider Dollar Thrifty Automotive Group, the car rental company, with $850 million in sales. On Wednesday, the company reported second-quarter earnings of 38 cents a share, almost 9 percent above analysts' expectations. Revenue grew 6.7 percent from the year-earlier period. Dollar Thrifty's stock drifted down 25 cents a share on Wednesday, to $14.25. The shares ended last week at $13.875, down 4.3 percent on the better-than-expected earnings news. Investors may have been reacting to a statement by Dollar Thrifty's chairman, Joseph E. Cappy, that rental revenues in the company's Florida operations had been weaker than expected. If so, they were ignoring Cappy's comment that the company was seeing improved pricing trends in the summer months. Of course, the market may just be weakening over all. But if investors are fleeing stocks of companies issuing great earnings reports, several theories may explain why. "Investors are either becoming more distrustful of companies reporting positive surprises or worried about the complexity of the Asian situation," Ms. Callies said. Investors may also be acting on their increasing suspicions that much of the analysis coming out of Wall Street is superficial at best. Or they may suspect that some of the companies reporting earnings surprises may in fact have orchestrated them by guiding analysts lower in their estimates earlier in the quarter. That way the company has a better chance of beating expectations. Finally, sky-high stock prices may make investors nervous; good news is as good a reason as any to take profits. Whatever the case, chasing upbeat earnings news is a deal less profitable than it once was.