Welcome ARCHIVE Morning Update Chat Room Charting FAQ's

NEWSLETTER & Oscillator Programs

Hello out there stock charting fans. As I stated in my Thursday update of 10-01-98, I thought the most
constructive behavior for the market would be that the major averages would go down and touch their lower
trading bands and then come up and close at or very near their highs for the day. That’s exactly what
happened.
In addition to that, many of the leading stocks in the two strongest groups the Internets and the Biotech’s
closed very near or at their highs on near record volume. This is very constructive behavior as well. This
should be a very hot week in these stocks and groups starting on Monday morning. I also think that the
market should respond well to the double bottom test as well.
During the day, I could see the strength in the market after the bottom touch and then YHOO and AMZN and
XCIT started to have very strong moves with volume, so I could not resist and jumped back into these three. I
do not suggest this for the average investor.
Earnings are due out this week on YHOO and BGEN. YHOO is expected to post .09 per share which would be
a leap of 900% over the same period a year ago and if the street likes the numbers when released on
Wednesday this stock could y to $160. Then again if the street is not happy with the numbers then the stock
could crash to $95 or so. This will be the markets rst numbers on a major technology company this quarter,
so it will be important to watch and see what happens. If the market embraces the numbers on YHOO, then
most of the other internet stocks could go wild as well.
Excite Inc. XCIT is the markets next favorite stock in this group as well as AMZN. I suspect, it will be these
two stocks that will explode if YHOO goes YAHOO!. Also Inktomi INKT, and C M G Information Systems CMGI
should go wild as well.
Biogen is expected to post strong earnings numbers of .49 for this past quarter. This would be a jump in
earnings over the same period last year of 85%. This stock could very well go up to $80 on this number.
Earnings are due out on this company after the bell on Friday.
On another note, I would like to make sure that everyone realizes that we are still in a tough bear market. We
probably won’t be out of this any time soon. We have major resistance at the descending trend lines and
moving average lines and they pose a good threat here soon. This however, doesn’t mean that you can’t make
money here in this type of market. You just have to be in the few stocks that are making very good progress
against the tide. You must make sure, that your stocks don’t get sloppy. When a stock breaks a trend line to
the upside, it’s imperative that your stock do it with massive force. This signals market convection in your
stocks move. There should be no hesitation in you stock when it goes north of a line break. If there is, you
may want to consider jumping out as fast as you can. Others will see this hesitation and begin selling, so it’s
you or them, before the stock breaks down. In a stronger market, this is less so, but still so.
Remember to never buy a stock by more than 1 to 2 points past a trend line break. I mean never. If it goes
below that trend line by 1 to 2 points after the break to the upside, then you are out, no questions asked!.
Don’t ever remove your stops. You will pay the price. I always say, sell 20 to 30% of your position as the stock
moves up 20 %. However in this tough market, I would consider lowering that mark to 10%. This will assure
you of a least a small pro t should the stock retreat to the trend line and you decide to cut and run.
This market is more for the active trader and not the passive "investor". That time will come, but not today.
Having said that, I still have my 79 year old father in YHOO and AMZN. He has made a killing on AMZN and
YHOO over the past 9 months.
WEEKLY STOCK PICKS
YAHOO! (YHOO) - $127

This stock is the new 800 pound gorilla on the block. This stock has replaced Dell as your "go to stock".

Amazon.Com (AMZN) - $110

This stock is still performing well but can get a little sloppy at times. Your next major buy point is at $120.25 to $122.25.
After the trend line break, it should never come back down. Keep your stop losses in places on this stock and all stocks at 1
to 2 points.
Excite Inc. (XCIT) - $39

This stock responds well to the market moves and the group. Very high volume on this stock on Friday and the stock closed
strong. First buy point is at $41. Then the rst major buy point is at $45.75. Keep your stop losses in place.

Biogen Inc. (BGEN) - $66

One of the leaders in the Biotech move. Stock has earnings due out on Friday and if better than expected which is .49 this
stock could explode. Buy point is here and keep your stops in place.
Sepracor Inc.(SEPR) - $61

Stock is a little bit more sloppy that BGEN. But it could still move from here. This would be a good time to buy at $61. Then
buy again as it breaks into new highs at $72. If I say to buy at 61, this means at $61 or $62, not $65. Control your emotions.
Maintain discipline.
Lexmark Int’l Group (LXK) - $70

One of the few computer related stocks to fair well in this sell off. The stock has snapped back very nicely and has set up to
blast into new highs. Earnings are due out October 20 and if all goes well and the market health improves, this stock could
move up 10 to 20 points. 66 million shares total on this big board stock. P/E of 25 and the company is growing at 155% over
a 5 year period. Buy point is at $74.75.
Well folks that it for this week. I’ll have more for you during the week.
Dan

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