Stockscom Report for Sunday Aug 11 2002

Publisher: Colin Alexander     Editor: Ken Wilson

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

 

Market Synopsis

Compared to weeks of late, this past week was one of relative quiet. Very little new economic data was released and the upcoming week contains much of the same. Perhaps the only noteworthy item this week is the Fed meeting on Tuesday to render a decision on interest rates. Few expect any change in interest rates following this meeting, however there are many expecting the Fed to reveal a bias change with a view to lowering interest rates a quarter point by December if the economy continues to show the sluggishness of late.

 

This coming week is notable for one more item – August 14^th - the date by which the top corporate officials must rubber stamp their financial statements attesting to their validity. This concept of top corporate officers having to certify their financial statements is more silliness that only serves to duplicate already existing laws. Undoubtedly, the leaders of both Enron and WorldCom would have signed off on their respective financial statements if they had been subjected to the same regulations.

 

Looking at the markets, the three majors have all reached significant points on their charts. The Dow and S&P have crossed their 25-day moving averages with the Dow exceeding the previous high by only a slim margin. The Nasdaq is still attempting to gather the strength needed to overcome the 25-day moving average, a level, which it reached but fell away from on Friday. The Nasdaq needs to clear this hurdle on a closing basis in order to establish a line of resistance. Friday’s action was a continuation of the strength displayed of late. A negative start to the day was replaced by rising equity prices culminating in a positive finish for both the S&P 500 and the Dow.

 

Technically the charts still suggest strongly that caution is the overriding character at this point. While Dow stocks such as Caterpillar, United Tech and Dupont have performed well of late, there is no need or overwhelming reason to leap into action. Both the Dow and the S&P are approaching near-term overbought levels and as such, they could be subjected to some retracement in the days ahead.

 

Our Stock Picks

The stop losses of $7.80 on AOF and $11.20 on MUO are maintained. We also use a stop of $29.00 on SYMC seeing how there has been a floor created at that level.

 

Our own cautious entry into equities is doing well at this time with only SYMC looking particularly weak. Looking at the OBV daily chart, we suspect that SYMC will either turn around immediately or will test the $29.00 level and exit us. FBR on the other hand serves notice that a few additional shares might be added, but since we’re in a very careful mode, we choose to ignore that sign for the moment. Similarly AMGN is performing quite well under the circumstances, but until we see some concrete action in the general indexes to solidify these recent gains, we’ll continue to express strong caution.

 

New Buy Recommendations:

 

None.

 

New Short Sales

None.

 

Stock Positions to Sell/Exit:

 

None.

 

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
02/01/01	Acm Government Opportunity Fund	AOF	7.99	9.11	B++
07/29/02	Amgen	AMGN	43.80	47.73	B
07/29/02	Friedman Billings Ramsey	FBR	9.30	9.95	B
02/01/01	Pioneer Interest Shares	MUO	11.95	11.65	H
07/29/02	Symantec	SYMC	32.81	30.83	B