Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Worley's Weekend Weeview
Date: Sat, 22 Dec 2001 16:34:30 -0600
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The charts agree with you, Tom. As Andreas said the other day "the chart =
says up." Up, until it's not. It would be foolish to argue with the =
technicals here. I've learned to subsume my own "opinion" to the =
market's view of things!
Katherine
Full disclosure: no positions in homebuilders. Made money shorting them =
earlier this year, but at the time, the charts were pointing down. ;)
----- Original Message -----=20
From: Tom Worley=20
To: canslim@lists.xmission.com=20
Sent: Saturday, December 22, 2001 4:10 PM
Subject: Re: [CANSLIM] Worley's Weekend Weeview
Hi Katherine,
To a degree, I must concur. Housing starts and permits reflects the =
builder's activity (and perceptions of market) far more than actual =
sales. But many (most??) of starts reflect an actual sales contract in =
place, and most of those will go thru to a closing, since they are being =
signed at a point where the economy seems stable and more likely to =
improve than to deteriorate further. We do not now have the bubble of =
perceived artificial (or instant millionaire status from start up dot =
coms) type wealth that we saw in the late 1990s and into 2000.=20
While the sales figures for both new and existing housing have slowed =
somewhat in the past six months, they have still remained very high on =
historical annualized basis.=20
I also recognize that the starts/permits numbers are likely distorted =
by the difficulty of making seasonal adjustments. Weather has been mild =
in most parts of the country so far, and the govt has rarely been able =
to apply the seasonal adjustments accurately when that occurs.
It is my opinion that we will not begin to see any Fed rate hikes =
until next summer at the earliest. Greenspan will tolerate even hard =
evidence of growing inflation until then to be sure that the economy is =
strong enough to sustain a series of rate hikes. In fact, if Congress =
has not passed an economic stimulus package by the next Fed meeting in =
January, it's likely we will get another 25 BP cut.
I think the home builders group is anything but at the end of its run, =
and may not reach that point even in the next six months. It deserves =
watching (disclosure: I don't own any at this point).
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Saturday, December 22, 2001 1:02 PM
Subject: Re: [CANSLIM] Worley's Weekend Weeview
Hello Tom,
At last, I am compelled to comment on your excellent WWW...=20
The normal figure bandied about on spending related to new home =
purchases is 6 to 1. If I spend $100K on a new home, these dollars will =
recirculate 6 times into the economy. (Wonder how many times your =
pentium purchase recirculates?!) So, seeing a marked downturn in the =
home figures would really worry the economists. Greenspan, in =
particular, focuses on this and was quite worried when long term rates =
remained sticky, despite the lowering of short term rates. I still see =
the strength in recent home sales reflecting the "hurry up and get it =
done before the rates go up again syndrome." In Austin, for example, the =
homebuilders have been in aggressive selling mode for quite some time. =
Every day, the deal is sweetened. $10,000 in extras! First two years =
financing at 4%! Cash at close to cover your moving expenses! Free maid =
for life! (Well, I made that one up.) Bigger homebuilders make most of =
their money not on the home, but on the financing. If they are having to =
lower mortgage rates to lure the customer, their margins are going to be =
squeezed going forward. That means in the coming year, the homebuilders =
will have more difficult Q over Q or Y over Y comparisons. Also, my own =
family owns a construction business, so I have seen these cycles first =
hand. You are right that the consumer seems willing to take on the =
additional debt and I think that, along with other economic indicators, =
says that the economy is far from plunging into the depths. But these =
things don't necessarily translate into good equity investments.
Happy Holidays,
Katherine
----- Original Message -----=20
From: Tom Worley=20
To: CANSLIM=20
Sent: Saturday, December 22, 2001 10:49 AM
Subject: [CANSLIM] Worley's Weekend Weeview
HOUSING STARTS, PERMITS
Both up sharply for November, ahead of expectations. Starts were =
up 8.2%, permits 5.3%. In terms of fueling consumer spending, the =
purchase of a new home is one of the greatest factors, so strength here =
translates into increases sales of everything from building materials to =
furniture, appliances, carpet, curtains, etc. It also shows a =
willingness to commit to long term debt even in the face of high =
unemployment.=20
- -------------------------------------------------------------------------=
- -
ON ECONOMICS
Lately this topic seems to be one of contradictions more than =
consistency. The final GDP figure for the Third Quarter finishes up at a =
decline of 1.3% (worst in ten years), down more than expected even after =
the interim revision. This is a big number to overcome, and in my mind =
makes it virtually certain that the Fourth Quarter will report a =
negative number, confirming recession even by traditional standards. At =
the same time, the 11 aggressive Fed rate cuts this year seem only to =
have kept the economy from total collapse, rather than beginning a =
recovery. Yet there are signs of recovery, or at least bottoming, in =
many indicators. Does this mean we still need a Congressional mandated =
"economic stimulus" package, or will this just end up being more pork =
barrel wastage of taxpayers money? (personally I think the latter, I =
don't trust Congress with my money). Auto sales in October, with zero =
percent loans, have already proven to have cannibalized November sales, =
and likely well into next year. Yet other big purchases, such as homes, =
remain surprisingly strong. I do note here that historically people get =
greedy when mortgage rates are falling, and tend to wait to commit until =
they see rates turning up as they have, then rush to lock in the sales =
contract or loan. But then there is the Michigan Consumer Sentiment =
index, gaining ground to 88.8 from the preliminary 85.8, and up strongly =
from the 83.9 for the end of November. And it did that even as =
November's consumer spending dropped 0.7% (slightly better than expected =
and reflecting the drop in car sales) and personal income fell 0.1%, =
considerably worse than expectations of a 0.2% gain. And layoffs =
continue, and unemployment is high and expected to go even higher (to 6% =
or even 6.5%, fortunately it's a lagging indicator of the economy). =
October personal income was also revised lower by 0.1%. Still, the =
"experts" are predicting economic recovery by the middle of 2002, and =
even indicating positive growth during the first half.=20
- -------------------------------------------------------------------------=
- -
WORLEY'S WATCHLIST WANNABES
As usual, Bx means a flat line "B"ase of "x" weeks duration, IMO. =
I will mention if I see other basing formations such as a c&h, double =
bottom, LLUR, etc. Remember that I am only looking at the past six =
months of the chart, and not doing any other due diligence than to =
ensure (unless otherwise mentioned) that the stocks mentioned have both =
an RS and an EPS of 80 or better, and are close (within 10%) of their 12 =
month high.
AAON - nice cup&handle, handle now 4 weeks long, drooped down, now =
drifting up on light end of year volume
ACS - LLUR
ASFI - B2, RS under 80, in my VR fund
AGM - B5
AGY - price weakness on volume may be altering the newly started =
LLUR pattern
ALLY - same comment, same group, but the high volume is not there
AMMD - began to b/o from a saucer on volume Friday
BVF - LLUR
CAKE - B2+
CECO - B2+
CPO - nice b/o Friday to the pivot on nearly 3X ADV, earnings =
forecast for new year +31%
CVBF - breaking the pivot on a B9 on Friday with heavy volume
DFXI - B3 on a weak double bottom?
DLX - LLUR despite weak earnings
FRED - LLUR, high PE trailing, but earnings forecast at +22%
IDPH - B6, strong earnings forecast
ISLE - B3, strong earnings forecast, in my VR Fund
JNC - LLUR
LOW - B3
MHO - B2+, earnings forecast to decline next year, home builder
MIMS - really ragged LLUR but with powerful earnings forecast, low =
priced ($15)
NDN - B3
NFI - CAT LLUR
NMTC - B2+
PBY - B2+
PETM - RAT LLUR
POSS - LLUR
RYAAY - B6
RYAN - LLUR, earnings weak
SASR - up 50% in six months on a steady, consistent LLUR, but b/o =
Friday on volume violates the pattern
STJ - B4
Happy Hunting,
God bless America, and its military people
Merry Christmas to all, have a safe and happy celebration,
Tom Worley
stkguru@netside.net
AIM: TexWorley
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<DIV>The charts agree with you, Tom. As Andreas said the other day "the =
chart=20
says up." Up, until it's not. It would be foolish to argue with the =
technicals=20
here. I've learned to subsume my own "opinion" to the market's view of=20
things!</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>Full disclosure: no positions in homebuilders. Made money shorting =
them=20
earlier this year, but at the time, the charts were pointing down. =
;)</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dstkguru@netside.net href=3D"mailto:stkguru@netside.net">Tom =
Worley</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Saturday, December 22, =
2001 4:10=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Worley's =
Weekend=20
Weeview</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Hi Katherine,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>To a degree, I must concur. Housing starts and =
permits=20
reflects the builder's activity (and perceptions of market) far more =
than=20
actual sales. But many (most??) of starts reflect an actual sales =
contract in=20
place, and most of those will go thru to a closing, since they are =
being=20
signed at a point where the economy seems stable and more likely to =
improve=20
than to deteriorate further. We do not now have the bubble of =
perceived=20
artificial (or instant millionaire status from start up dot coms) type =
wealth=20
that we saw in the late 1990s and into 2000. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>While the sales figures for both new and existing =
housing=20
have slowed somewhat in the past six months, they have still remained =
very=20
high on historical annualized basis. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>I also recognize that the starts/permits numbers =
are likely=20
distorted by the difficulty of making seasonal adjustments. Weather =
has been=20
mild in most parts of the country so far, and the govt has rarely been =
able to=20
apply the seasonal adjustments accurately when that =
occurs.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>It is my opinion that we will not begin to see any =
Fed rate=20
hikes until next summer at the earliest. Greenspan will tolerate even =
hard=20
evidence of growing inflation until then to be sure that the economy =
is strong=20
enough to sustain a series of rate hikes. In fact, if Congress has not =
passed=20
an economic stimulus package by the next Fed meeting in January, it's =
likely=20
we will get another 25 BP cut.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>I think the home builders group is anything but at =
the end=20
of its run, and may not reach that point even in the next six months. =
It=20
deserves watching (disclosure: I don't own any at this =
point).</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley<BR></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Saturday, December 22, =
2001 1:02=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
Worley's Weekend=20
Weeview</DIV>
<DIV><BR></DIV>
<DIV>Hello Tom,</DIV>
<DIV> </DIV>
<DIV>At last, I am compelled to comment on your excellent WWW... =
</DIV>
<DIV> </DIV>
<DIV>The normal figure bandied about on spending related to new home =
purchases is 6 to 1. If I spend $100K on a new home, these dollars =
will=20
recirculate 6 times into the economy. (Wonder how many times your =
pentium=20
purchase recirculates?!) So, seeing a marked downturn in the home =
figures=20
would really worry the economists. Greenspan, in particular, focuses =
on this=20
and was quite worried when long term rates remained sticky, despite =
the=20
lowering of short term rates. I still see the strength in recent =
home sales=20
reflecting the "hurry up and get it done before the rates go up =
again=20
syndrome." In Austin, for example, the homebuilders have been in =
aggressive=20
selling mode for quite some time. Every day, the deal is sweetened. =
$10,000=20
in extras! First two years financing at 4%! Cash at close to cover =
your=20
moving expenses! Free maid for life! (Well, I made that one up.) =
Bigger=20
homebuilders make most of their money not on the home, but on the =
financing.=20
If they are having to lower mortgage rates to lure the customer, =
their=20
margins are going to be squeezed going forward. That means in =
the=20
coming year, the homebuilders will have more difficult Q over Q or Y =
over Y=20
comparisons. Also, my own family owns a construction business, so I =
have=20
seen these cycles first hand. You are right that the consumer seems =
willing=20
to take on the additional debt and I think that, along with other =
economic=20
indicators, says that the economy is far from plunging into the =
depths. But=20
these things don't necessarily translate into good equity =
investments.</DIV>
<DIV> </DIV>
<DIV>Happy Holidays,</DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- =
</DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dstkguru@netside.net =
href=3D"mailto:stkguru@netside.net">Tom=20
Worley</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">CANSLIM</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Saturday, December =
22, 2001=20
10:49 AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Worley's =
Weekend=20
Weeview</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2><STRONG>HOUSING STARTS, =
PERMITS</STRONG></FONT></DIV>
<DIV><FONT size=3D2>Both up sharply for November, ahead of =
expectations.=20
Starts were up 8.2%, permits 5.3%. In terms of fueling consumer =
spending,=20
the purchase of a new home is one of the greatest factors, so =
strength=20
here translates into increases sales of everything from building =
materials=20
to furniture, appliances, carpet, curtains, etc. It also shows a=20
willingness to commit to long term debt even in the face of high=20
unemployment.=20
<HR>
</FONT></DIV>
<DIV><FONT size=3D2><STRONG>ON ECONOMICS</STRONG></FONT></DIV>
<DIV><FONT size=3D2>Lately this topic seems to be one of =
contradictions more=20
than consistency. The final GDP figure for the Third Quarter =
finishes up=20
at a decline of 1.3% (worst in ten years), down more than expected =
even=20
after the interim revision. This is a big number to overcome, and =
in my=20
mind makes it virtually certain that the Fourth Quarter will =
report a=20
negative number, confirming recession even by traditional =
standards. At=20
the same time, the 11 aggressive Fed rate cuts this year seem only =
to have=20
kept the economy from total collapse, rather than beginning a =
recovery.=20
Yet there are signs of recovery, or at least bottoming, in many=20
indicators. Does this mean we still need a Congressional mandated=20
"economic stimulus" package, or will this just end up being more =
pork=20
barrel wastage of taxpayers money? (personally I think the latter, =
I don't=20
trust Congress with my money). Auto sales in October, with zero =
percent=20
loans, have already proven to have cannibalized November sales, =
and likely=20
well into next year. Yet other big purchases, such as homes, =
remain=20
surprisingly strong. I do note here that historically people get =
greedy=20
when mortgage rates are falling, and tend to wait to commit until =
they see=20
rates turning up as they have, then rush to lock in the sales =
contract or=20
loan. But then there is the Michigan Consumer Sentiment index, =
gaining=20
ground to 88.8 from the preliminary 85.8, and up strongly from the =
83.9=20
for the end of November. And it did that even as November's =
consumer=20
spending dropped 0.7% (slightly better than expected and =
reflecting the=20
drop in car sales) and personal income fell 0.1%, =
considerably worse=20
than expectations of a 0.2% gain. And layoffs continue, and =
unemployment=20
is high and expected to go even higher (to 6% or even 6.5%, =
fortunately=20
it's a lagging indicator of the economy). October personal income =
was also=20
revised lower by 0.1%. Still, the "experts" are predicting =
economic=20
recovery by the middle of 2002, and even indicating positive =
growth during=20
the first half.=20
<HR>
</FONT></DIV>
<DIV><FONT size=3D2><STRONG>WORLEY'S WATCHLIST=20
WANNABES</STRONG></FONT></DIV>
<DIV><FONT size=3D2>As usual, Bx means a flat line "B"ase of "x" =
weeks=20
duration, IMO. I will mention if I see other basing formations =
such as a=20
c&h, double bottom, LLUR, etc. Remember that I am only looking =
at the=20
past six months of the chart, and not doing any other due =
diligence than=20
to ensure (unless otherwise mentioned) that the stocks mentioned =
have both=20
an RS and an EPS of 80 or better, and are close (within 10%) of =
their 12=20
month high.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>AAON - nice cup&handle, handle now 4 weeks =
long,=20
drooped down, now drifting up on light end of year =
volume</FONT></DIV>
<DIV><FONT size=3D2>ACS - LLUR</FONT></DIV>
<DIV><FONT size=3D2>ASFI - B2, RS under 80, in my VR =
fund</FONT></DIV>
<DIV><FONT size=3D2>AGM - B5</FONT></DIV>
<DIV><FONT size=3D2>AGY - price weakness on volume may be altering =
the newly=20
started LLUR pattern</FONT></DIV>
<DIV><FONT size=3D2>ALLY - same comment, same group, but the high =
volume is=20
not there</FONT></DIV>
<DIV><FONT size=3D2>AMMD - began to b/o from a saucer on volume=20
Friday</FONT></DIV>
<DIV><FONT size=3D2>BVF - LLUR</FONT></DIV>
<DIV><FONT size=3D2>CAKE - B2+</FONT></DIV>
<DIV><FONT size=3D2>CECO - B2+</FONT></DIV>
<DIV><FONT size=3D2>CPO - nice b/o Friday to the pivot on nearly =
3X ADV,=20
earnings forecast for new year +31%</FONT></DIV>
<DIV><FONT size=3D2>CVBF - breaking the pivot on a B9 on Friday =
with heavy=20
volume</FONT></DIV>
<DIV><FONT size=3D2>DFXI - B3 on a weak double =
bottom?</FONT></DIV>
<DIV><FONT size=3D2>DLX - LLUR despite weak earnings</FONT></DIV>
<DIV><FONT size=3D2>FRED - LLUR, high PE trailing, but earnings =
forecast at=20
+22%</FONT></DIV>
<DIV><FONT size=3D2>IDPH - B6, strong earnings =
forecast</FONT></DIV>
<DIV><FONT size=3D2>ISLE - B3, strong earnings forecast, in my VR=20
Fund</FONT></DIV>
<DIV><FONT size=3D2>JNC - LLUR</FONT></DIV>
<DIV><FONT size=3D2>LOW - B3</FONT></DIV>
<DIV><FONT size=3D2>MHO - B2+, earnings forecast to decline next =
year, home=20
builder</FONT></DIV>
<DIV><FONT size=3D2>MIMS - really ragged LLUR but with powerful =
earnings=20
forecast, low priced ($15)</FONT></DIV>
<DIV><FONT size=3D2>NDN - B3</FONT></DIV>
<DIV><FONT size=3D2>NFI - CAT LLUR</FONT></DIV>
<DIV><FONT size=3D2>NMTC - B2+</FONT></DIV>
<DIV><FONT size=3D2>PBY - B2+</FONT></DIV>
<DIV><FONT size=3D2>PETM - RAT LLUR</FONT></DIV>
<DIV><FONT size=3D2>POSS - LLUR</FONT></DIV>
<DIV><FONT size=3D2>RYAAY - B6</FONT></DIV>
<DIV><FONT size=3D2>RYAN - LLUR, earnings weak</FONT></DIV>
<DIV><FONT size=3D2>SASR - up 50% in six months on a steady, =
consistent=20
LLUR, but b/o Friday on volume violates the pattern</FONT></DIV>
<DIV><FONT size=3D2>STJ - B4</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Happy Hunting,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>God bless America, and its military =
people</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Merry Christmas to all, have a safe and happy=20
celebration,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Tom Worley<BR><A=20
=
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
=
TexWorley<BR></FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY><=
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