Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: [CANSLIM] Worley's Weekend Weeview
Date: Sat, 10 Aug 2002 15:07:59 -0400
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This is a multi-part message in MIME format. - ------=_NextPart_000_000B_01C2407F.B7467EF0 Content-Type: multipart/alternative; boundary="----=_NextPart_001_000C_01C2407F.B7467EF0" - ------=_NextPart_001_000C_01C2407F.B7467EF0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable MORTGAGES Mortgage applications hit a new all time high for the week ending Aug 2, = up 6.2%. About two thirds were refinancing, suggesting some additional = equity being pulled out of home ownership, and potentially spent on = consumer goods. But the balance continues to show a strong housing = market as well. - -------------------------------------------------------------------------= - ------- ECONOMICS ISM reported its index of non-manufacturing business activity (Service = Sector) fell to 53.1 in July from 57.2, expectations were for a drop to = 55.0. The service sector represents 40% of the US economy, and over 80% = of all jobs. Sixth straight month of growth (anything over 50 is = expansion), but at a slower rate, second month in a row it grew but at a = slower rate. ISM also reported that new orders index fell to 52.6 from 56.9, however = the employment index rose to 45.8 from 44.3, so while jobs were still = being cut (below 50 means contraction), the rate of jobs being lost = continued to slow. This still marked the 17th straight month of = contraction in the job market. New claims for unemployment fell for the week, reversing the spike = higher in the prior week. The four week average also fell to 379,000 = from 386,750 (17 month low). But continuing claims rose 50,000. So new = filing slowed, but those already on unemployment continued to fail to = find jobs. PPI (Producer Price Index) dropped 0.2% overall, and down 0.3% on the = core rate (excluding food and energy). Expectations were for both to = rise 0.1%, so inflation continues to be a non-event. Major cause for the = drops was a 1.5% drop in car prices, and a 1.6% drop in the price of = light trucks. Without that, the index would have been unchanged. Preliminary report of Productivity for the Second Quarter reported as up = 1.1%, a far cry from the gain of 8.6% in Q1, but still better than = expectations of a rise of only 0.7%. How much more can be squeezed from = a shrinking labor pool before corporate America finally begins to buy = new and more efficient technology and machinery? Wholesale inventories rose 0.3% while sales rose 0.6%. Quite obviously, = the depletion of excess inventories over the past 8 or so months has = ended, the trend was obvious for some months now. And with sales still = remaining acceptable, manufacturers must now increase production both to = keep up with sales, as well as replenish inventory with new goods. So = long as the consumer keeps spending, can an improvement in employment be = far behind? - -------------------------------------------------------------------------= - ------- "M" Last week seriously broke a long losing streak on most major indexes. = The DOW and S&P500 both gained over 5%, while Naz was up 4.6%. Even the = Russell 2000 managed to rally 3%. Interestingly, gold not only was = strong, but gained $7.00 for the week. The dollar was strong against = both the Yen and Euro. Why rally now? Can it continue? Was it just the = oversold conditions (been that way for many weeks)? Was it more = corporate officials being indicted (by the time that happens the damage = is already done)? Was it the number of corporations certifying their = latest financial reports (can we trust a crook to tell us he's cheating, = and not certify)? Was it all the talk of the Feds cutting rates again (I = doubt it will happen)? Have we finally seen a bottom without = capitulation? Were valuations so much lower they were irresistible? Will = this prove to be the start of a new, long term bull market, or just = another rally in a bear market? One day does not make a trend, but we = had three strong days in a row. One week also does not make a trend, = only time is likely to answer the most important question, can this = continue? - -------------------------------------------------------------------------= - ------- FOMC While there has been much talk lately of the Feds cutting interest rates = again, only Morgan Stanley thinks there is a chance it could happen at = the meeting next Tuesday. They are confident that if not then, then at = the Sept meeting for sure. Goldman Sachs and three other banks think the = Feds will cut later this year. An even larger number of forecasters are = expecting the Feds to change the bias in favor of a future cut, as least = as a signal that they are prepared to act should July's weak economic = reports continue, and warn of a possible slip back into recession. = Personally, I don't expect any action or change by the Feds at either = this meeting or in Sept. I will evaluate possible changes either in bias = or rate after that. - -------------------------------------------------------------------------= - ------- 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 finally appears to = be stabilizing. This was the second week I used performance over the 50 = dma, rather than new highs, to screen for interesting stocks and charts, = but did not result in many new candidates. AGII - very nicely formed double bottom except that the second bottom = did not undercut the first APOL - third bottom failed to materialize, no capitulation on the second = bottom, back to the pivot, education remains strong DOCC - B2, owned and in my VR Fund FCBP - cup & handle FCN - B2 FNBP - staircase, current step is 6 weeks long HBEK - 4 step staircase, but latest one looking very weak HRB - right side of a cup may be forming NYCB - handleless cup?? OSTE - cup & handle, under $12 QSII - B3, low ADV SBMC - double bottom, broke pivot Friday on light volume SFNT - close to a pivot, RS 55 TRBS - double bottom Happy hunting, Tom Worley stkguru@bellsouth.net AIM: TexWorley - ------=_NextPart_001_000C_01C2407F.B7467EF0 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>MORTGAGES</STRONG></FONT></DIV> <DIV><FONT face=3DArial>Mortgage applications hit a new all time high = for the week=20 ending Aug 2, up 6.2%. About two thirds were refinancing, suggesting = some=20 additional equity being pulled out of home ownership, and potentially = spent on=20 consumer goods. But the balance continues to show a strong housing = market as=20 well.</DIV> <DIV> <HR> </DIV> <DIV><STRONG>ECONOMICS</STRONG></DIV></FONT> <DIV><FONT face=3DArial>ISM reported its index of non-manufacturing = business=20 activity (Service Sector) fell to 53.1 in July from 57.2, expectations = were for=20 a drop to 55.0. The service sector represents 40% of the US economy, and = over=20 80% of all jobs. Sixth straight month of growth (anything over 50 is = expansion),=20 but at a slower rate, second month in a row it grew but at a slower=20 rate.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>ISM also reported that new orders index fell to = 52.6 from=20 56.9, however the employment index rose to 45.8 from 44.3, so while jobs = were=20 still being cut (below 50 means contraction), the rate of jobs being = lost=20 continued to slow. This still marked the 17th straight month of = contraction in=20 the job market.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>New claims for unemployment fell for the week, = reversing=20 the spike higher in the prior week. The four week average also fell to = 379,000=20 from 386,750 (17 month low). But continuing claims rose 50,000. So new = filing=20 slowed, but those already on unemployment continued to fail to find=20 jobs.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>PPI (Producer Price Index) dropped 0.2% overall, = and down=20 0.3% on the core rate (excluding food and energy). Expectations were for = both to=20 rise 0.1%, so inflation continues to be a non-event. Major cause for the = drops=20 was a 1.5% drop in car prices, and a 1.6% drop in the price of light = trucks.=20 Without that, the index would have been unchanged.</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Preliminary report of Productivity for the = Second Quarter=20 reported as up 1.1%, a far cry from the gain of 8.6% in Q1, but still = better=20 than expectations of a rise of only 0.7%. How much more can be squeezed = from a=20 shrinking labor pool before corporate America finally begins to buy new = and more=20 efficient technology and machinery?</FONT></DIV> <DIV><FONT face=3DArial></FONT> </DIV> <DIV><FONT face=3DArial>Wholesale inventories rose 0.3% while sales rose = 0.6%.=20 Quite obviously, the depletion of excess inventories over the past 8 or = so=20 months has ended, the trend was obvious for some months now. And with = sales=20 still remaining acceptable, manufacturers must now increase production = both to=20 keep up with sales, as well as replenish inventory with new goods. So = long as=20 the consumer keeps spending, can an improvement in employment be far=20 behind?</FONT></DIV> <DIV><FONT face=3DArial><STRONG> <HR> "M"</STRONG></FONT></DIV> <DIV><FONT face=3DArial>Last week seriously broke a long losing streak = on most=20 major indexes. The DOW and S&P500 both gained over 5%, while Naz was = up=20 4.6%. Even the Russell 2000 managed to rally 3%. Interestingly, gold not = only=20 was strong, but gained $7.00 for the week. The dollar was strong against = both=20 the Yen and Euro. Why rally now? Can it continue? Was it just the = oversold=20 conditions (been that way for many weeks)? Was it more corporate = officials being=20 indicted (by the time that happens the damage is already done)? Was it = the=20 number of corporations certifying their latest financial reports (can we = trust a=20 crook to tell us he's cheating, and not certify)? Was it all the talk of = the=20 Feds cutting rates again (I doubt it will happen)? Have we finally seen = a bottom=20 without capitulation? Were valuations so much lower they were = irresistible? Will=20 this prove to be the start of a new, long term bull market, or just = another=20 rally in a bear market? One day does not make a trend, but we had three = strong=20 days in a row. One week also does not make a trend, only time is likely = to=20 answer the most important question, can this continue?</DIV> <DIV> <HR> </DIV> <DIV><STRONG>FOMC</STRONG></DIV> <DIV>While there has been much talk lately of the Feds cutting interest = rates=20 again, only Morgan Stanley thinks there is a chance it could happen at = the=20 meeting next Tuesday. They are confident that if not then, then at the = Sept=20 meeting for sure. Goldman Sachs and three other banks think the Feds = will cut=20 later this year. An even larger number of forecasters are expecting the = Feds to=20 change the bias in favor of a future cut, as least as a signal that they = are=20 prepared to act should July's weak economic reports continue, and warn = of a=20 possible slip back into recession. Personally, I don't expect any = action or=20 change by the Feds at either this meeting or in Sept. I will evaluate = possible=20 changes either in bias or rate after that.</DIV></FONT> <DIV><FONT face=3DArial> <HR> </FONT></DIV> <DIV><FONT face=3DArial><STRONG>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 finally appears to be stabilizing. This was the second week I used = performance=20 over the 50 dma, rather than new highs, to screen for interesting stocks = and=20 charts, but did not result in many new candidates.</FONT></DIV> <DIV> </DIV> <DIV>AGII - very nicely formed double bottom except that the second = bottom did=20 not undercut the first</DIV> <DIV>APOL - third bottom failed to materialize, no capitulation on the = second=20 bottom, back to the pivot, education remains strong</DIV> <DIV>DOCC - B2, owned and in my VR Fund</DIV> <DIV>FCBP - cup & handle</DIV> <DIV>FCN - B2</DIV> <DIV>FNBP - staircase, current step is 6 weeks long</DIV> <DIV>HBEK - 4 step staircase, but latest one looking very weak</DIV> <DIV>HRB - right side of a cup may be forming</DIV> <DIV>NYCB - handleless cup??</DIV> <DIV>OSTE - cup & handle, under $12</DIV> <DIV>QSII - B3, low ADV</DIV> <DIV>SBMC - double bottom, broke pivot Friday on light volume</DIV> <DIV>SFNT - close to a pivot, RS 55</DIV> <DIV>TRBS - double bottom</DIV> <DIV> </DIV> <DIV>Happy hunting,</DIV> <DIV></FONT><FONT face=3DArial></FONT> </DIV></DIV> <DIV><FONT face=3DArial></FONT><IMG alt=3D"" hspace=3D0=20 src=3D"cid:000a01c240a1$3e346a50$6501a8c0@TOMSBOX" align=3Dbaseline = border=3D0></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_000C_01C2407F.B7467EF0-- - ------=_NextPart_000_000B_01C2407F.B7467EF0 Content-Type: image/gif; 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