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Stockscom Report for Thursday June 6 2002

Publisher: Colin Alexander     Editor: Ken Wilson

Subscriptions and Administration: Pierre Fichaud (toll-free: 866-487-9711)

 

Market Synopsis

 

The markets are setting up for a test of the September lows and another bout or attempt at capitulation. Capitulation is when investors of all stripes throw in the towel and sell what they own out of fear. We saw an example of this back in September, however since we’re already starting from the absolute bottom of September, it is more than likely that the new bottom will be much deeper.

 

This evening Intel announced that their revenues would be far less than earlier imagined once the second quarter ends at the end of this month and this has sent analysts scrambling to calculate how much damage this will do to their stock price in the morning. Additionally, Intel mentioned that gross margins which had been predicted to be in the neighborhood of 53% would now be closer to 49% and this is due partly to the large price cuts initiated by Intel in May on Pentium chips. The price cuts were a direct response to very lackluster sales of PC’s, which is where the lion’s share of Intel’s income comes from. Immediately after this revelation, the Nasdaq 100 futures contract for June traded around 30 points lower in anticipation of a dreadful morning (and afternoon) of trading on Friday.

 

Perhaps if this were the only worrisome item, we’d have more confidence, but tomorrow morning also brings the release of May’s unemployment data and with the numbers of weekly new claims that we’ve seen and the fact that the number of continuing claims has reached new highs, we suspect that the unemployment picture will be equally alarming therefore doing nothing but encouraging the bears on Wall St to tear down equities even further.

 

While our charts have with few exceptions held up quite reasonably in this frustrating swing downward, we see no reason to stand in the road of an oncoming truck. At times like these, it’s essential to remember that above all else when investing, it is absolutely imperative to preserve capital. In the most likely event that unemployment data is viewed as largely negative, the market will open lower and we are advising that all stocks be liquidated EXCEPT for AOF, MUO and all gold stocks which naturally will soar higher tomorrow on the back of the weak market. (If you only have gold stocks in your portfolio, you can pretty much disregard this entire report).

 

 

Our Stock Picks

The stop losses of $7.80 on AOF and $11.20 on MUO are maintained.

 

 

New Buy Recommendations:

 

None.

 

New Short Sales

None.

 

Stock Positions to Sell/Exit:

 

All except AOF, MUO and gold equities.

 

List of Current Stock Recommendations:

Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S where positions should be retained. S+ and S++ indicate stocks for which there is a technical case to add to the positions with plusses adding weight similar to long positions. The maximum number of plus signs is 2.

Stocks marked # are eligible as Canadian content in Canadian RSP funds. Otherwise there is a 30 percent restriction on foreign stocks held in these accounts.

Date of Entry	Name	Symbol	Entry Price	Current Price	Action Rating
22/04/02	Acclaim Entertain.	AKLM	5.79	5.25	H
02/01/01	Acm Government Opportunity Fund	AOF	7.99	8.98	B
10/08/01	Agnico-Eagle Mine	AEM #	10.85	16.75	B
22/04/02	Aspect Comms.		4.92	4.63	H
03/11/02	Caterpillar	CAT	59.08	52.27	H
22/04/02	Cobalt	CBZ	15.15	20.55	B
03/18/02	Dupont	DD	48.70	46.00	H
10/22/01	Glamis Gold	GLG #	3.28	9.30	B
10/08/01	Gold Fields ADR*	GFI	4.97	13.93	B
03/18/02	Johnson & Johnson	JNJ	64.70	61.35	H
03/11/02	Modis Prof. Srvcs	MPS	7.75	8.26	B
03/04/02	Moore Corp	MCL #	11.50	14.25	B
02/01/01	Pioneer Interest Shares	MUO	11.95	11.70	H
03/11/02	United Tech	UTX	75.32	68.87	H

 

*Gold Fields changed their symbol to GFI from GOLD