The Premier Advisory for Active Traders  

Sample Issue

(Any or all of the positions mentioned in this issue may have been closed out at this time.)

COMMENTARY:

Generally it was a poor day for the market. The bulls saw no reason to go to work. The telecom sector was by far the weakest, as two prominent components of the group, Ericsson and Lucent, announced a combined reduction of 23,000 employees. The financial sector was also very weak.

The DJI closed down 120 at 10136 and the Nasdaq Composite lost 38, closing at 1758. The advance-decline ratio on the DJI and the Nasdaq was almost 2 to 1, in favor of decliners. Total volume was only about average, however, down-volume on the Nasdaq was a big 87% of total volume. The tech and telecom sectors are definitely the primary drag on this entire market. What’s worse is, I don’t see that changing. 

Worldcom slashed their full-year revenue expectations and Ericsson posted a loss in the first quarter and announced projected losses for the rest of the year. The bleeding in the telecom sector continues. In my opinion, there will be no Worldcom two years from now. Poor management plagues much of the communications sector. They paid outrageous prices for their acquisitions, which only a fool would have done. Wall Street applauded such foolishness as the corporate expansions made their stocks soar. Management did this to make their own stock options worth billions. This was not done on behalf of the shareholders.

My experience with several telecom companies makes me think they are run by something akin to the Mafia. They overcharge you consistently, and then you have to spend hours trying to get it corrected. Sprint PCS even charges you $5 if you want to speak to a live person.

Financial stocks were also hurt today because of Argentina's financial crisis. Banks in Argentina were closed on Friday and officials said that they could be closed through April 29. The government has proposed that all the money in people’s savings account be forcibly converted to 10-year government bonds. The people are protesting in the streets, as they know that in 10 years, the money will only be good for wallpaper. I consider this legalized theft. Argentina is melting down. Is it realistic to believe that this will not impact it’s trading partners in Latin America? Of course not.

Microsoft's chairman Bill Gates took the stand today in the company's anti-trust lawsuit with the states. He exaggerated somewhat the impact of what the states want. However, I support the free market. The states want MSFT to open the source code to Windows. That’s like confiscation of private property without proper compensation.

On earnings, over a third of the S&P 500 companies will report earnings this week which will give the market a ton of data to digest. Most companies have met or surpassed their earnings expectations, but they remain very cautious on the future. This is why the major indices aren't moving higher on the good earnings news. The economy is in recovery, but the excesses of the late 1990’s will require a long economic recovery to work off.

Let’s look at our current positions:

CURRENT POSITIONS - LONGS:

Note: All in all, our longs did nicely today.

AGNICO-EAGLE MINES (AEM)—Gained 0.19, closing at 14.42, which is new multi-year high. The precious metal sector was strong today. Hold for now.

DURBAN DEEP (DROOY)—Had a nice gain of 7%, closing at 4.13, which is new multi-year high. I would hold. It was reported that the company will report lower than expected earnings, but that didn't negatively affect the stock.

GOLDCORP (GG)—Had a gain of 0.06, closing at 17.06. The stock looks like it will try to push through the 17.20 area where it ran into some resistance a few weeks ago. If it can break through, it could go to the 18.50 area. I would hold.                                                  

IOMEGA CORPS (IOM)—A new recommendation from Friday. Opened at 13.46 where you may have purchased. Hit an intraday high of 13.62. Closed at 13.21. I would hold. OK for new positions.

ISLE OF CAPRIS CASINOS (ISLE)—A new recommendation from Friday. Opened on an up gap at 21.20 where you may have purchased. Closed at 20.85, off its highs but with a gain of 0.35. OK for new positions.

KB HOME (KBH)—A new recommendation from Friday. Opened at 46.67 where you may have purchased. Had a nice gain of over 5%, closing at 48.88. One major homebuilder reported great earnings surprises today.  Tomorrow, two other prominent homebuilders release earnings. They could also bring positive surprises. I would sell on a rally to the 50.75 area.

L-3 COMMUNICATIONS (LLL)—Declined 0.56, closing at 121.65 on very light volume. The 120 area is support. I would hold.

MAGELLAN HEALTH (MGL)—Had a very nice gain of over 7%, closing at 8.55.Chart still looks excellent. I would sell if it gets to the 9.10 area.            

MANDALAY RESORTS (MBG)— A new recommendation from Friday. Opened at 34.75 where you may have purchased. Had a gain of 0.18, closing at 34.99, a new high. I would hold.

NOBLE INTERNATIONAL (NOBL)—Declined 0.20, closing at 15.10 on light volume. I would hold.                       

RAYTHEON (RTN)—Declined 0.56, closing at 39. Had a high of 40.08 before turning lower. Volume was below average. I would hold.                                                   

ROCKWELL COLLINS (COL)—Declined 0.23, closing at 23.75. The pattern is one of indecision. It’s just not able to make progress. I would sell tomorrow. We have a small gain.   

STERICYCLE (SRCL)—Had a gain of 0.36, closing at 62.86. The stock is still holding above its 50 day M.A. I would sell in the 64 area.  

New Subscribers: You may wish to implement any of the positions marked "OK for new positions".

CURRENT POSITIONS - SHORTS:

Note: Our short sales had a very nice day overall.

ADVENT SOFTWARE (ADVS)—Declined 0.46, closing at 51.13. The stock hit support right at its 200 day M.A. and had a low of 49.16. That leaves a potentially positive candlestick, which suggests a brief bounce. Volume was very heavy. I would close out in the 50 area. We have a 7% gain.     

COMPUTER ASSOCIATES (CA)—Had a gain of 0.24, closing at 19.35. Our target was the $16 area. We’ll watch it closely.

EMC CORP (EMC)—Declined over 6%, closing at 10.05. We have 9.5% gain. This sector has serious problems. I would hold.                                                    

HI/FN INC. (HIFN)—Had a small gain of 0.06, closing at 10.56. I would hold.

OPTIMAL ROBOTICS (OPMR)—Had a gain of 0.19, closing at 17.70. I would hold with a stop of 18.39, close only.                                   

New Subscribers: Confine your shorting to new recommendations below.

NEW RECOMMENDATIONS - SHORT:

BROCADE COMMUNICATIONS (BRCD)—Closed at 24.95. The stock now has a pattern of lower highs on rallies. Once the $22 support area is broken, the stock should tumble. I would sell short early tomorrow.

CABLEVISION (CVC)—Closed at 25.80. The technicals are terrible. Today's close set a new low for the month as well as for the bear market. I would sell short tomorrow.

CIENA CORPS (CIEN)—Closed at 8.03. It also has a pattern of declining highs on rallies. The stock should go to the $5 area at minimum. I would sell short tomorrow.

F5 NETWORKS (FFIV)—Closed at 13.08. The technical pattern is absolutely dismal. There is some support in the $10 area. Thereafter, next support is in the $5 area. Judging by my technicals, it should reach that latter area, sometime this year. I would sell short early tomorrow.

CONCLUSION:

Technically, the Nasdaq looks very poor. All the over-owned communications stocks are being sold, but there are only few buyers. Choosing the right sectors is more important than ever. How the Argentina situation effects the markets will be important to see.

Best regards,

Bert Dohmen

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WHAT “AREA” MEANS IN SMARTE-TRADER:

When I give advice to buy or sell in certain price area, I do it so that not all of our orders are sitting at exactly the same price.  By “area”, I mean a range.  Our rules of thumb are as follows:

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