Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: [CANSLIM] Worley's Weekend Weeview
Date: Sat, 3 Aug 2002 11:04:04 -0400
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This is a multi-part message in MIME format. - ------=_NextPart_000_00CD_01C23ADD.7B1D33D0 Content-Type: multipart/alternative; boundary="----=_NextPart_001_00CE_01C23ADD.7B1D33D0" - ------=_NextPart_001_00CE_01C23ADD.7B1D33D0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable RECESSION REALLY HAPPENED!! It's official, the government has revised the GDP figures for year 2001 = (how come this is any different than a corporation revising its = financial accounting?? why aren't they hauled before Congress and = grilled as well??) and now confirm that we had three quarters of = economic contraction (negative growth, if you prefer the govt double = talk). Amazing that it took them this long to do the math, but they = have now decided that the four quarters of 2001, on an annual basis, = were minus 0.6% (from plus 1.3%), minus 1.6% (from plus 0.3%), and minus = 0.3% (from minus 1.3%). They left the 4th qtr unchanged at plus 2.7%, = maybe they will do something with that in a year or so. Makes you wonder = just have far we can trust current GDP reports and numbers. And these = are the people we trust not only to figure out what we owe in taxes, but = how to spend it as well!!!=20 Talk of a double dip into recession is also heating up, more economists = are now expecting that a Fed rate hike will not happen until next year, = most mentioned is second and third quarter. And Goldman Sachs, which was = the first to forecast (besides me, that is) unchanged rates the rest of = the year now expects a 75 basis point CUT by year end, most likely after = the August or Sept meeting. I wonder how many will actually benefit from = further rate cuts, my adjustable mortgage is already at the minimum, = can't go lower. And rates for new loans have not fallen as much as the = Feds already cut. With the Fed rate at 1.75% now, anybody seen credit = cards advertising rates under 5%?? - -------------------------------------------------------------------------= - ------- ECONOMICS - A BLEAK WEAK WEEK Conference Board says its Consumer Confidence Index fell more than = expected for July, ending at 97.1. Expectations were for a drop from = 106.3 to only 101.5. The Chicago NAPM Index dropped sharply to 51.5 in July from 58.2, well = under expectations of a drop to 56.7. The Chicago index is often a = barometer for the national ISM Index, which confirmed it Thursday with a = drop from 56.2 down to 50.5 (against an expectation of 55.0). It's not = contraction yet, but another month like this and it will be. It was a bad week for economics, and hopes for a swift, much less = strong, recovery. The first estimate of the GDP for second quarter came = in at a 1.1% annual growth rate, well below forecasts of 2.2 to 2.8%. = And First Quarter was revised down to 5.0% from 6.1%. One bright spot in = the Q2 report was a 2.9% growth in business spending on software = equipment, first gain since Q3 of 2000. Factory orders in June fell 2.4%, expected was a drop of 1.7%. Unemployment held steady at 5.9% as expected, however new jobs creation = was well under expectations of 60,000, with only 6,000 total. But this = would have been much better had the June report not been revised upward = by 30,000 jobs. And unemployment is a lagging indicator, with it = increasing typically during the first six months or so of a recovery = from recession, so guess we are doing better than the norms with any = jobs creation (how's that for the "glass half full" perspective, as long = as you are not one of the ones still unemployed??). Personal income in June rose 0.6% (ok, who got mine??) while personal = spending rose 0.5%. Other reports suggest increases were on non durable = goods, altho reports also show the consumer is still willing to spend on = the big ticket non durable goods merchandise. - -------------------------------------------------------------------------= - ------- "M" During July, more than 100 corporations announced stock buyback plans, = including MRK and HD, totaling over $43 billion dollars. This was the = second largest total for one month, only eclipsed by last September. WON = likes corp buybacks, and could be another sign of a bottom. Offsetting = this is an estimated $50 billion outflow from mutual funds during July, = as well as continued outflow of foreign investment money. The FRB Valuation Model, now becoming more popular because it includes = employee options costs, pegs stocks as 30% undervalued. And the DOW, = NYSE Composite, NYSE Financial, DJ Utilities (flight to safety??) and = S&P500 managed to end the week with a small gain, even while the NASDAQ = and Russell 2000 finished slightly lower for the week, and the SOX Index = continued down sharply. - -------------------------------------------------------------------------= - ------- WORLEY'S WATCHLIST WANNABES=20 This list is in no way intended to recommend any stocks to the group. It = is a part of my regular assessment of the health of CANSLIM's "M" and, = as the name implies, only intended to identify some stocks with = constructive chart patterns that may be worth WATCHING and learning from = (and of course doing your own due diligence). I am employed in = Operations by a US Broker Dealer, however everything presented by me is = strictly my own ideas and in no way should be taken to reflect the views = or opinions of my employer. I typically list stocks with both RS and EPS ranking of 80 or better, = and try to exclude stocks undergoing any merger / acquisition / buyout = scenario. I no longer will actively consider earnings forecast for this = year and next due the confusing data presented by DGO. I do no other due = diligence, that is your responsibility. I will note any CANSLIM patterns = I see, such as c&h, double (or triple) bottoms, or flat bases (shown as = Bx where "x" is the # of weeks, IMO). I will also note LLUR (Lower Left = Upper Right) even though it is not exactly a CANSLIM pattern. The population of stocks I am reviewing this weekend remains small and = weak. I used performance over the 50 dma throughout the week, and found = it gave a better picture than sticking only to stocks making new highs. ALAB - funnel pattern back to the flat base ANDE - holding up well, boring grain company with low forecasts, I let = this one go too soon!! APOL - double bottom AROW - extreme behaviour, excessive double bottom on an ascending base BLUD - LLUR, just keeps on pumping CTSH - channeling (draw a line along the highs and lows) DCOM - for learning only, failed double bottom pattern, below the center = point on volume DOCC - my only "gem" I own, building a high base possibly DORL - double bottom FCN - sloppy LLUR getting sloppier FSTW - consolidating, has not filled in the big gap up, in my VR Fund PORT - LLUR SBMC - nice double bottom, pivot approaching SSNC - consolidation, in my VR Fund Happy hunting, and good luck Tom Worley stkguru@bellsouth.net AIM: TexWorley - ------=_NextPart_001_00CE_01C23ADD.7B1D33D0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2716.2200" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial><STRONG>RECESSION REALLY = HAPPENED!!</STRONG></FONT></DIV> <DIV><FONT face=3DArial>It's official, the government has revised the = GDP figures=20 for year 2001 (how come this is any different than a corporation = revising its=20 financial accounting?? why aren't they hauled before Congress and = grilled as=20 well??) and now confirm that we had three quarters of economic = contraction=20 (negative growth, if you prefer the govt double talk). Amazing = that it=20 took them this long to do the math, but they have now decided that the = four=20 quarters of 2001, on an annual basis, were minus 0.6% (from plus 1.3%), = minus=20 1.6% (from plus 0.3%), and minus 0.3% (from minus 1.3%). They left the = 4th qtr=20 unchanged at plus 2.7%, maybe they will do something with that in a year = or so.=20 Makes you wonder just have far we can trust current GDP reports and = numbers. And=20 these are the people we trust not only to figure out what we owe in = taxes, but=20 how to spend it as well!!!<STRONG> </STRONG></FONT></DIV> <DIV><FONT face=3DArial><STRONG></STRONG></FONT> </DIV> <DIV><FONT face=3DArial>Talk of a double dip into recession is also = heating up,=20 more economists are now expecting that a Fed rate hike will not happen = until=20 next year, most mentioned is second and third quarter. And Goldman = Sachs, which=20 was the first to forecast (besides me, that is) unchanged rates the rest = of the=20 year now expects a 75 basis point CUT by year end, most likely after the = August=20 or Sept meeting. I wonder how many will actually benefit from further = rate cuts,=20 my adjustable mortgage is already at the minimum, can't go lower. And = rates for=20 new loans have not fallen as much as the Feds already cut. With the Fed = rate at=20 1.75% now, anybody seen credit cards advertising rates under 5%??</DIV> <DIV><STRONG> <HR> </STRONG></DIV></FONT> <DIV><FONT face=3DArial><STRONG>ECONOMICS - A BLEAK WEAK=20 WEEK</STRONG></FONT></DIV> <DIV><FONT face=3DArial>Conference Board says its Consumer Confidence = Index fell=20 more than expected for July, ending at 97.1. Expectations were for a = drop from=20 106.3 to only 101.5.</FONT></DIV> <DIV><FONT face=3DArial></FONT><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>The Chicago NAPM Index dropped sharply to 51.5 = in July=20 from 58.2, well under expectations of a drop to 56.7. The Chicago index = is often=20 a barometer for the national ISM Index, which confirmed it Thursday with = a drop=20 from 56.2 down to 50.5 (against an expectation of 55.0). It's not = contraction=20 yet, but another month like this and it will be.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>It was a bad week for economics, and = hopes for a=20 swift, much less strong, recovery. The first estimate of the GDP for = second=20 quarter came in at a 1.1% annual growth rate, well below forecasts of = 2.2 to=20 2.8%. And First Quarter was revised down to 5.0% from 6.1%. One bright = spot in=20 the Q2 report was a 2.9% growth in business spending on software = equipment,=20 first gain since Q3 of 2000.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Factory orders in June fell 2.4%, expected was a = drop of=20 1.7%.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Unemployment held steady at 5.9% as expected, = however new=20 jobs creation was well under expectations of 60,000, with only 6,000 = total. But=20 this would have been much better had the June report not been revised = upward by=20 30,000 jobs. And unemployment is a lagging indicator, with it increasing = typically during the first six months or so of a recovery from = recession, so=20 guess we are doing better than the norms with any jobs creation (how's = that for=20 the "glass half full" perspective, as long as you are not one of the = ones still=20 unemployed??).</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Personal income in June rose 0.6% (ok, who got = mine??)=20 while personal spending rose 0.5%. Other reports suggest increases were = on non=20 durable goods, altho reports also show the consumer is still willing to = spend on=20 the big ticket non durable goods merchandise.</FONT></DIV><FONT = face=3DArial> <DIV> <HR> </DIV> <DIV><STRONG>"M"</STRONG></DIV> <DIV>During July, more than 100 corporations announced stock buyback = plans,=20 including MRK and HD, totaling over $43 billion dollars. This was the = second=20 largest total for one month, only eclipsed by last September. WON likes = corp=20 buybacks, and could be another sign of a bottom. Offsetting this is an = estimated=20 $50 billion outflow from mutual funds during July, as well as continued = outflow=20 of foreign investment money.</DIV> <DIV> </DIV> <DIV>The FRB Valuation Model, now becoming more popular because it = includes=20 employee options costs, pegs stocks as 30% undervalued. And the DOW, = NYSE=20 Composite, NYSE Financial, DJ Utilities (flight to safety??) and = S&P500=20 managed to end the week with a small gain, even while the NASDAQ=20 and Russell 2000 finished slightly lower for the week, and the SOX = Index=20 continued down sharply.</FONT></DIV> <DIV><FONT face=3DArial><STRONG> <HR> WORLEY'S WATCHLIST WANNABES</STRONG>=20 <DIV><FONT face=3DArial>This list is in no way intended to recommend any = stocks to=20 the group. It is a part of my regular assessment of the health of = CANSLIM's "M"=20 and, as the name implies, only intended to identify some stocks with=20 constructive chart patterns that may be worth WATCHING and learning from = (and of=20 course doing your own due diligence). <FONT = color=3D#0000ff><STRONG><EM>I am=20 employed in Operations by a US Broker Dealer, however everything = presented by me=20 is strictly my own ideas and in no way should be taken to reflect the = views or=20 opinions of my employer.</EM></STRONG></FONT></FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>I typically list stocks with both RS and EPS = ranking of 80=20 or better, and try to exclude stocks undergoing any merger / acquisition = /=20 buyout scenario. I no longer will actively = consider earnings=20 forecast for this year and next due the confusing data presented by DGO. = I do no=20 other due diligence, that is your responsibility. I will note any = CANSLIM=20 patterns I see, such as c&h, double (or triple) bottoms, or flat = bases=20 (shown as Bx where "x" is the # of weeks, IMO). I will also note LLUR = (Lower=20 Left Upper Right) even though it is not exactly a CANSLIM = pattern.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>The population of stocks I am reviewing this = weekend=20 remains small and weak. I used performance over the 50 dma throughout = the week,=20 and found it gave a better picture than sticking only to stocks making = new=20 highs.</FONT></DIV> <DIV> </DIV> <DIV>ALAB - funnel pattern back to the flat base</DIV> <DIV>ANDE - holding up well, boring grain company with low forecasts, I = let this=20 one go too soon!!</DIV> <DIV>APOL - double bottom</DIV> <DIV>AROW - extreme behaviour, excessive double bottom on an ascending=20 base</DIV> <DIV>BLUD - LLUR, just keeps on pumping</DIV> <DIV>CTSH - channeling (draw a line along the highs and lows)</DIV> <DIV>DCOM - for learning only, failed double bottom pattern, below the = center=20 point on volume</DIV> <DIV>DOCC - my only "gem" I own, building a high base possibly</DIV> <DIV>DORL - double bottom</DIV> <DIV>FCN - sloppy LLUR getting sloppier</DIV> <DIV>FSTW - consolidating, has not filled in the big gap up, in my VR = Fund</DIV> <DIV>PORT - LLUR</DIV> <DIV>SBMC - nice double bottom, pivot approaching</DIV> <DIV>SSNC - consolidation, in my VR Fund</DIV> <DIV> </DIV> <DIV>Happy hunting, and good luck</DIV> <DIV> </DIV></FONT></DIV> <DIV><FONT face=3DArial><IMG alt=3D"" hspace=3D0=20 src=3D"cid:00cc01c23aff$0229f1d0$6501a8c0@TOMSBOX" align=3Dbaseline=20 border=3D0></FONT></DIV> <DIV><FONT face=3DArial>Tom Worley<BR></FONT><A=20 href=3D"mailto:stkguru@bellsouth.net"><FONT=20 face=3DArial>stkguru@bellsouth.net</FONT></A><BR><FONT face=3DArial>AIM: = TexWorley</FONT></DIV></BODY></HTML> - ------=_NextPart_001_00CE_01C23ADD.7B1D33D0-- - ------=_NextPart_000_00CD_01C23ADD.7B1D33D0 Content-Type: image/gif; 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