[CANSLIM] Worley's Weekend Weeview


From: "Tom Worley" <stkguru@bellsouth.net>
Subject: [CANSLIM] Worley's Weekend Weeview
Date: Sun, 2 Mar 2003 11:35:35 -0500

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ECONOMICS
Economists started the week by cutting their forecast for this quarter =
from 2.6% growth to 2.2%, while also lowering the "fool" year forecast =
from 2.6% to 2.5%. Of course, that expectation for the year includes =
doing 3.6% in the 4th quarter, down from 4.2% originally. They saw =
little change in unemployment, and forecasted nearly a percent rise in =
lending rates, which could damage the housing market as mortgage rates =
go up as well.

Growth in the 4th quarter 2002 GDP was revised up from 0.7% originally =
reported, to 1.4%, expectations had been for a revision to 1.0%.

Sales of existing homes jumped an unexpected 3% in January to a new =
record at an annual rate of 6.09 million from an upwardly revised rate =
of 5.91 million in December. The rate had been expected to drop to 5.80 =
million. Inventories rose to a 4.5 month supply from a 4.3 month supply.

Going the other way, sales of new homes fell 15.2% in January to an =
annual rate of 914,000 from 1.08 million in December. A minor decline to =
1.05 million had been expected. While new home sales make up only a =
small portion of the total housing sector, they are crucial to the =
continued success of homebuilder stock prices.

In another contradictory signal, consumer confidence plunged to 64 in =
February from 78.8, hitting a nine year low (9 YEARS!!, that's worse =
than right after 9/11). Expected was a drop to only 77. The magnitude of =
the drop was mirrored in the expectations index, down to 65.6 from 81.1, =
and in the present situation index, down to 61.6 from 75.3.

Mostly mirroring this was Univ. of Michigan's consumer confidence report =
for February, which was revised up slightly to 79.9 from 79.2, but =
remains at a nine year low. Expectations were for no change.

And just to confuse the picture more, January's Durable Goods report =
showed a gain of 3.3% while December's report was revised down to 0.4% =
decline. A gain of only 1.3% had been expected for January. Biggest =
gainer was automotive, up over 10%.

New unemployment claims continued to rise, up 417,000 for the week, =
expected was a drop to 390K. The 4 week moving average rose again to =
399,750 while continuing claims dropped slightly to 3.38 million from =
3.42 million.

In a prelude to next week's ISM manufacturing production report, the =
NAPM-Chicago report for February fell less than expected, to 54.9 from =
56. Expected was a drop to 52.5. Prices paid continued to rise (don't =
forget the spike in last month's PPI report) while the employment index =
showed layoffs continuing, but at a slower rate.
- -------------------------------------------------------------------------=
- -------

"M"
As I speculated on this topic last week, it was questionable whether the =
two weeks of gains might be sustained. Now we know, it was not, another =
losing week and indexes struggling to stay in the neighborhood of their =
20 day moving average. Charts look like we are just muddling along, =
going no where in particular, no leadership, money moving around but not =
staying, volume remains light, lots of uncertainty yet not an avalanche =
of bearish sentiment either.  What breakouts do occur, even from =
fundamentally strong companies, also mostly fail quickly. The market =
pundits keep suggesting we will retest the October lows, so far I don't =
see evidence of that, nor do I see signs we are ready to start a =
sustained rally of any size. Economic reports this week were mixed at =
best, and did nothing to offset the bearish reports of last week. In =
particular, the data on new single family housing suggests this sector =
is finally slowing, even while existing housing remains strong. The =
builders may finally be ready for a correction, even tho past worries of =
a housing bubble have kept most from being overpriced. Iraq remains the =
overriding and compelling influence on all markets. Israel's market was =
up 2.5% in Sunday trading, I am sure a lot of that was due to Iraq =
destroying 4 (of over 100) of their missiles on Saturday, thus lowering =
the expectation of war just a bit. Until the issue of Iraq is resolved, =
I do not expect markets to reflect their fundamental nature, and right =
now the economic reports are simply not strong enough, any more than =
corporate earnings, to suggest the markets should be rallying even =
without the issue of Iraq.
- -------------------------------------------------------------------------=
- -------

JAPAN
The nomination of the new Governor for the Bank of Japan pleased few =
economists hoping for more radical efforts to shake Japan, the world's =
#2 economy, out of its third recession in a decade and end the ongoing =
deflationary cycle in which it finds itself. Conservative, "old guard", =
Toshihiko Fukui will, however, be balanced by his two new Deputies =
(Kazumasa Iwata from the Cabinet Office, and Toshiro Muto, former Vice =
Finance Minister), who are expected to bring better connections with the =
government, as well as more aggressive and radical approaches to Japan's =
problems. The compromise appointments seem to this writer that change =
will only come about rapidly and radically if Fukui's appointment is =
purely face saving figure head, and BOJ policy will be set much more by =
the new deputies. The fiscal year for everything Japanese is now a month =
away, squaring up of the books, and writing off of bad loans, and =
marking bank investment portfolios down to actual market value, could =
get ugly quickly with the Nikkei having now given up all its recent =
gains and slid under 8400. The continuing uncertainty over war against =
Iraq will continue to weaken the US dollar and strengthen the yen, =
despite recent "stealth" (please, how much stealth is there left in the =
financial world anymore?) yen/dollar intervention by Japan. This hurts =
Japanese exporters and the global competitiveness of the pricing on =
their products. Domestic consumption within Japan continues to contract, =
further hurting companies needing to increase volume even if the =
deflation prevents raising prices. To date, I have seen very little =
action on either the govt plans to buy back loans and rehabilitate the =
borrowing company, or buying large chunks of the stock portfolios from =
banks needing to build their capital reserves. I see no hope for an =
economic recovery in Japan until such time as the banking industry =
begins an honest assessment of their non-performing loans, declare those =
in default to be in default, and either force the govt to begin buying =
those loans and rehabilitate the company where possible, or else the =
lending bank(s) force the company into bankruptcy and write off the =
loan. And yes, this will also force a number of banks into bankruptcy =
themselves, as their capital reserves, on paper, are sufficient but only =
because of phony bookkeeping. There must also be an end to the cultural =
practice of buying stock from the very companies they lend to, thus =
adding to the bank loss when the company fails. Ultimately, I suspect =
this will take a new regulation from the govt as it is so deeply =
imbedded in culture. Unfortunately, I have little hope of this ever =
happening unless and until the Nikkei falls well into the 7000 range, =
and takes bank portfolios so low that even with the generous rules used =
now they still fail to meet capital requirements, and themselves fail.
- -------------------------------------------------------------------------=
- -------

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 personal 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 look at all charts that meet this general RS/EPS criteria, =
focusing on ones at or close to a new 12 month high. I consider all =
industry groups and prices, even those I will not consider for my =
personal investing. I no longer will actively consider earnings forecast =
for this year and next due the confusing data presented by DGO. I do no =
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. Rarely are any of these stocks of interest to me for my =
personal investing due size, price or industry group. I will note any =
stocks in which I have a current personal financial interest, whether =
real money or virtual reality (VR).

The population of stocks I am reviewing this weekend continues to be =
meager and depressing, but in line with the reality of new highs, and =
even stocks moving above their 200 dma.

APOL - new handle forming?, volume increasing
AVCT - continuation of a high handle??
BHE - short term staircase
BLL - long handle on the cup
ELTE - flat base, in my VR Fund, low priced, low liquidity, small cap
GAF - B7
GGP - LLUR
GIL - B8
HLTH - high handle
IMO - decent cup, nice fundies
IRM - b/o Friday on volume from a double bottom
NSCN - LLUR, own and in my VR Fund, small cap
PORT - LLUR
RBK - B5
REP - high handle
RVSN - 14 week c&h, volume drying up, low priced, low liquidity

Happy Hunting, and keep your powder dry


Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
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<DIV><FONT face=3DArial></FONT><FONT=20
face=3DArial><STRONG>ECONOMICS</STRONG></FONT></DIV>
<DIV><FONT face=3DArial>Economists started the week by cutting their =
forecast for=20
this quarter from 2.6% growth to 2.2%, while also lowering the "fool" =
year=20
forecast from 2.6% to 2.5%. Of course, that expectation for the year =
includes=20
doing 3.6% in the 4th quarter, down from 4.2% originally. They saw =
little change=20
in unemployment, and forecasted nearly a percent rise in lending rates, =
which=20
could damage the housing market as mortgage rates go up as =
well.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Growth in the 4th quarter 2002 GDP was revised =
up from=20
0.7% originally reported, to 1.4%, expectations had been for a revision =
to=20
1.0%.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Sales of existing homes jumped an unexpected 3% =
in=20
January&nbsp;to a new record at an annual rate of 6.09 million from an =
upwardly=20
revised rate of 5.91 million in December. The rate had been expected to =
drop to=20
5.80 million. Inventories rose to a 4.5 month supply from a 4.3 month=20
supply.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Going the other way, sales of new homes fell =
15.2% in=20
January to an annual rate of 914,000 from 1.08 million in December. A =
minor=20
decline to 1.05 million had been expected. While new home sales make up =
only a=20
small portion of the total housing sector, they are crucial to the =
continued=20
success of homebuilder stock prices.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>In another contradictory signal, consumer =
confidence=20
plunged to 64 in February from 78.8, hitting a nine year low (9 YEARS!!, =
that's=20
worse than right after 9/11). Expected was a drop to only 77. The =
magnitude of=20
the drop was mirrored in the expectations index, down to 65.6 from 81.1, =
and in=20
the present situation index, down to 61.6 from 75.3.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Mostly mirroring this was Univ. of Michigan's =
consumer=20
confidence report for February, which was revised up slightly to 79.9 =
from 79.2,=20
but remains at a nine year low. Expectations were for no =
change.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>And just to confuse the picture more, January's =
Durable=20
Goods report showed a gain of 3.3% while December's report was revised =
down to=20
0.4% decline. A gain of only 1.3% had been expected for January. Biggest =
gainer=20
was automotive, up over 10%.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>New unemployment claims continued to rise, up =
417,000 for=20
the week, expected was a drop to&nbsp;390K. The 4 week moving average =
rose again=20
to 399,750 while continuing claims dropped slightly to 3.38 million from =
3.42=20
million.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>In a prelude to next week's ISM manufacturing =
production=20
report, the NAPM-Chicago report for February fell less than expected, to =
54.9=20
from 56. Expected was a drop to 52.5. Prices paid continued to rise =
(don't=20
forget the spike in last month's PPI report) while the employment index =
showed=20
layoffs continuing, but at a slower rate.
<HR>
</FONT></DIV>
<DIV><FONT face=3DArial><STRONG>"M"</STRONG></FONT></DIV>
<DIV><FONT face=3DArial>As I speculated on this topic last week, it was=20
questionable whether the two weeks of gains might be sustained. Now we =
know, it=20
was not, another losing week and indexes struggling to stay in the =
neighborhood=20
of their 20 day moving average. Charts look like we are just muddling =
along,=20
going no where in particular, no leadership, money moving around but not =

staying, volume remains light, lots of uncertainty yet not an avalanche =
of=20
bearish sentiment either.&nbsp; What breakouts do occur, even from =
fundamentally=20
strong companies, also mostly fail quickly. The market pundits keep =
suggesting=20
we will retest the October lows, so far I don't see evidence of that, =
nor do I=20
see signs we are ready to start a sustained rally of any size. Economic =
reports=20
this week were mixed at best, and did nothing to offset the bearish =
reports of=20
last week. In particular, the data on new single family housing suggests =
this=20
sector is finally slowing, even while existing housing remains strong. =
The=20
builders may finally be ready for a correction, even tho past worries of =
a=20
housing bubble have kept most from being overpriced. Iraq remains the =
overriding=20
and compelling influence on all markets. Israel's market was up 2.5% in =
Sunday=20
trading, I am sure a lot of that was due to Iraq destroying 4 (of over =
100) of=20
their missiles on Saturday, thus lowering the expectation of war just a =
bit.=20
Until the issue of Iraq is resolved, I do not expect markets to reflect =
their=20
fundamental nature, and right now the economic reports are simply not =
strong=20
enough, any more than corporate earnings, to suggest the markets should =
be=20
rallying even without the issue of Iraq.
<HR>
</FONT></DIV>
<DIV><FONT face=3DArial><STRONG>JAPAN</STRONG></FONT></DIV>
<DIV><FONT face=3DArial>The nomination of the new Governor for the Bank =
of Japan=20
pleased few economists hoping for more radical efforts to shake Japan, =
the=20
world's #2 economy, out of its third recession in a decade and end the =
ongoing=20
deflationary cycle in which it finds itself. Conservative, "old guard",=20
Toshihiko Fukui will, however, be balanced by his two new Deputies =
(Kazumasa=20
Iwata from the Cabinet Office, and Toshiro Muto, former Vice Finance =
Minister),=20
who are expected to bring better connections with the government, as =
well as=20
more aggressive and radical approaches to Japan's problems. The =
compromise=20
appointments seem to this writer that change will only come about =
rapidly and=20
radically if Fukui's appointment is purely face saving figure head, and =
BOJ=20
policy will be set much more by the new deputies. The fiscal year for =
everything=20
Japanese is now a month away, squaring up of the books, and writing off =
of bad=20
loans, and marking bank investment portfolios down to actual market =
value, could=20
get ugly quickly with the Nikkei having now given up all its recent =
gains and=20
slid under 8400. The continuing uncertainty over war against Iraq will =
continue=20
to weaken the US dollar and strengthen the yen, despite recent "stealth" =

(please, how much stealth is there left in the financial world anymore?) =

yen/dollar intervention by Japan. This hurts Japanese exporters and the =
global=20
competitiveness of the pricing on their products. Domestic consumption =
within=20
Japan continues to contract, further hurting companies needing to =
increase=20
volume even if the deflation prevents raising prices. To date, I have =
seen very=20
little action on either the govt plans to buy back loans and =
rehabilitate the=20
borrowing company, or buying large chunks of the stock portfolios from =
banks=20
needing to build their capital reserves. I see no hope for an economic =
recovery=20
in Japan until such time as the banking industry begins an honest =
assessment of=20
their non-performing loans, declare those in default to be in default, =
and=20
either force the govt to begin buying those loans and rehabilitate the =
company=20
where possible, or else the lending bank(s) force the company into =
bankruptcy=20
and write off the loan. And yes, this will also force a number of banks =
into=20
bankruptcy themselves, as their capital reserves, on paper, are =
sufficient but=20
only because of phony bookkeeping. There must also be an end to the =
cultural=20
practice of buying stock from the very companies they lend to, thus =
adding to=20
the bank loss when the company fails. Ultimately, I suspect this will =
take a new=20
regulation from the govt as it is so deeply imbedded in culture. =
Unfortunately,=20
I have little hope of this ever happening unless and until the Nikkei =
falls well=20
into the 7000 range, and takes bank portfolios so low that even with the =

generous rules used now they still fail to meet capital requirements, =
and=20
themselves fail.
<HR>
</FONT></DIV>
<DIV><FONT face=3DArial><STRONG>WORLEY'S WATCHLIST =
WANNABES</STRONG></FONT><FONT=20
face=3D"Times New Roman"> </FONT></DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<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 personal assessment of the health =
of=20
CANSLIM's "M" and, as the name implies, only intended to identify some =
stocks=20
with constructive chart patterns that may be worth <STRONG><FONT=20
color=3D#ff0000>WATCHING</FONT> and learning from</STRONG> (and of =
course doing=20
your own due diligence). <FONT color=3D#0000ff><STRONG><EM>I am employed =
in=20
Operations by a US Broker Dealer, however everything presented by me is =
strictly=20
my own ideas and in no way should be taken to reflect the views or =
opinions of=20
my employer.</EM></STRONG></FONT></FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</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 look at all charts that meet =
this&nbsp;general&nbsp;RS/EPS=20
criteria, focusing on ones at or close to a new 12 month high. I =
consider all=20
industry groups and prices, even those I will not consider for my =
personal=20
investing. I&nbsp;no longer will&nbsp;actively consider&nbsp;earnings =
forecast=20
for this year and next due the confusing data presented by DGO. <FONT=20
color=3D#ff0000>I do no due diligence, that is your =
responsibility</FONT>. I will=20
note any CANSLIM patterns I see, such as c&amp;h, double (or triple) =
bottoms, or=20
flat bases (shown as Bx where "x" is the # of weeks, IMO). I will also =
note LLUR=20
(Lower Left Upper Right) even though it is not exactly a CANSLIM =
pattern. Rarely=20
are any of these stocks of interest to me for my personal investing due =
size,=20
price or industry group. I will note any stocks in which I have a =
current=20
personal financial interest, whether real money or virtual reality=20
(VR).</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>The population of stocks I am reviewing this =
weekend=20
continues to be meager and depressing, but in line with the reality of =
new=20
highs, and even stocks moving above their 200 dma.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>APOL - new handle forming?, volume =
increasing</FONT></DIV>
<DIV><FONT face=3DArial>AVCT - continuation of a high =
handle??</FONT></DIV>
<DIV><FONT face=3DArial>BHE - short term staircase</FONT></DIV>
<DIV><FONT face=3DArial>BLL - long handle on the cup</FONT></DIV>
<DIV><FONT face=3DArial>ELTE - flat base, in my VR Fund, low priced, low =

liquidity, small cap</FONT></DIV>
<DIV><FONT face=3DArial>GAF - B7</FONT></DIV>
<DIV><FONT face=3DArial>GGP - LLUR</FONT></DIV>
<DIV><FONT face=3DArial>GIL - B8</FONT></DIV>
<DIV><FONT face=3DArial>HLTH - high handle</FONT></DIV>
<DIV><FONT face=3DArial>IMO - decent cup, nice fundies</FONT></DIV>
<DIV><FONT face=3DArial>IRM - b/o Friday on volume from a double=20
bottom</FONT></DIV>
<DIV><FONT face=3DArial>NSCN - LLUR, own and in my VR Fund, small =
cap</FONT></DIV>
<DIV><FONT face=3DArial>PORT - LLUR</FONT></DIV>
<DIV><FONT face=3DArial>RBK - B5</FONT></DIV>
<DIV><FONT face=3DArial>REP - high handle</FONT></DIV>
<DIV><FONT face=3DArial>RVSN - 14 week c&amp;h, volume drying up, low =
priced, low=20
liquidity</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Happy Hunting, and keep your powder=20
dry</FONT></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></DIV></D=
IV></DIV></DIV></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><IMG alt=3D"" hspace=3D0 =
src=3D"cid:00b001c2e0d9$c051b320$6500a8c0@TOMSBOX"=20
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>

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