Can someone please tell us what happened to Data General (DGN)? We happen not to own this stock ourselves. We can't seem to get information off their website and a posting to invest.stocks newsgroup has not returned and answer.

Market Conditions

On Tuesday at about 2.15 ET we get the Fed's interest rate news. Our view is that a quarter point increase is already in the market. Therefore, there should be at least a small relief rally if that is what comes through. In the event of a no-change announcement, stocks should soar. Our view is that we are in the time frame for stocks to advance over the next few months and we see nothing in the fundamentals or the technicals to stop that happening. In particular, we note that last Friday the Dow Industrials completed a weekly Lindahl buy signal at the rising 25 and 40 week moving averages. This is often a prime entry point for a major move.

There has been a pronounced rotation in the market that deserves our attention. Certain of the most prominent high tech stocks have been acting very poorly indeed. Among the poor performers we include Microsoft, Intel, Dell, IBM and Hewlett Packard. In the meantime other high tech stocks have largely picked up the slack but it serves as a warning that so many prominent stocks are acting poorly. In the meantime, however, there has been a broadening out of the market, with many previously depressed stocks coming back to life. It should help all stocks when the majority of stocks finally stop going down. Note that the general market has been in steady decline now for the best part of 198 months as measured by the Russell 2000 index. Even the S&P 500 has really done very little for many months even as most of our recommended stocks have been doing very well. It is a popular mistake to think of the stock market generally as going up, down or sideways. For a very long time the stock market has comprised many individual stocks doing their own thing. In these conditions, you have to back winners and stay with them as long as you can and dump losers.

Many of our stocks have been doing exceptionally well this month. Oils have started to come back and in hindsight we might have given an inch or two more room to the oil service companies. Nevertheless, the redeployment has worked well anyway. QLT has come back strongly after hitting an air pocket. This is a relatively small company but we understand it has some exceptional new medical drugs in the pipeline. Meantime, after the recovery we really don't see that any significant damage has been done in the big picture, so we now see an opportunity to buy it again at a favorable price. We still nurse our holding in Novell but expect it to pay off. It's the only real dog still on the list and it's not that bad.

Stocks to Sell

Japan OTC Equity Fund (JOF). A subscriber called us about this stock.
Technically, it still looks quite good and it sells at a significant discount of about 20 percent to its underlying asset value. Nevertheless, a closer look at Japan generally and the large-cap Nikkei 225 Index has scared us. Japan's government finances look like a total catastrophe waiting to happen. In fact this could be the weak link that eventually precipitates a major world financial crisis and the next major bear market. In the meantime, we think we can do better to go back into Korea, which we previously owned.

New and renewed recommendations

Fidelity Advisor Korea (FAK) $10.25
This chart looks great. While you don't want to put too big a proportion of your portfolio offshore, the probabilities favor a double for this stock witching the next year or so.

3 Com (COMS) $34.50
We try to keep our list of recommendations manageable but here's a stock that seems to measure up on all fronts. There's an article about the company in this week's Barron's. In addition, there are now new monthly, weekly and daily buy signals after a long period of consolidation. It's very seldom that a stock comes to our attention when it is timely to buy but here everything comes together at once for a stock that fulfills our requirement of an expected double within a reasonable length of time.

Action Ratings

The following is the legend for designating immediate action for our stock recommendations. The first code is B, meaning that the stock is timely to buy but the case for doing so right here is not overwhelming. Either the stock may have got 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 five. 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. There are several stocks at conspicuous buy points that warrant noting now.
Yahoo! looks ready to explode upward. This is the one pure Internet play that we think will hang in for the long term. Four Seasons has a conspicuously low-risk entry point here.

Current Recommendations:
(Entry Date, Entry Price, Last Close, Code, Name)

Stocks marked # are eligible for Canadian RSP funds. Otherwise there is a 20pc restriction on foreign stocks held in these accounts.

B++ 99/05/12 39.75 62.06 ADI Analog Devices
B+ 99/09/07 76.88 105.25 AMAT Applied Material
B+ 99/04/06 49.00 84.50 AMCC Applied Micro Circ (split on 99/09/10 2:1)
B+ 99/08/06 78.50 89.75 AMGN Amgen Co
H 99/06/14 30.63 30.88 AOG Alberta Energy Corp #
H 99/06/14 38.28 39.36 APA Apache
B+ 99/09/07 84.94 70.88 BGEN Biogen
H 99/06/14 109.78 59.16 BPA BP Amoco Plc
B+ 99/09/07 57.69 70.63 BVF Biovail Corp #
B++ 99/11/01 53.58 59.16 C Citigroup
B++ 99/08/06 26.38 29.75 CHIR Chiron Co
B 99/05/14 40.69 68.69 CLS Celestica #
H 99/05/12 117.50 82.81 CSCO Cisco (split on 99/06/21 2:1)
B 99/06/14 14.59 19.67 CXY Canadian Occidental Petroleum #
B+ 99/10/05 22.94 25.08 DGN Data General
(acquired by EMC on 99/10/07 .3125 to 1)
B++ 99/11/01 45.50 53.00 DT Deutsche Telekom
B+ 99/04/06 132.13 80.25 EMC EMC (split on 99/05/28 2:1)
H 99/08/09 86.31 42.19 ENE Enron Corp (split on 99/08/13 2:1)
B 99/06/14 31.13 45.31 ERICY Erickson
B+ 99/04/06 51.50 78.25 FLEX Flextronics
B++ 99/11/01 41.63 43.13 FS Four Seasons
B++ 99/06/14 60.14 86.56 GLW Corning
H 99/09/07 113.75 195.00 JDSU JDS Uniphase Cp #
B+ 99/04/06 60.83 74.45 LLTC Linear Tech Corp
B++ 99/04/06 32.75 65.50 LSI LSI Logic
H 99/05/12 25.06 19.00 NOVL Novell
B+ 99/04/06 163.19 120.19 NOK Nokia (split on 99/04/09 2:1)
B 99/04/06 65.66 74.95 NT Nortel Networks # (split on 99/08/29 2:1)
B++ 99/10/05 46.69 64.06 ORCL Oracle System
B++ 99/06/14 93.56 117.31 PHG Phillips Electronics
B++ 99/05/12 106.06 107.56 PMCS PMC Sierra (split on 99/05/14 2:1)
B++ 99/05/12 49.88 39.81 QLTI QTLI Phototherapeutics #
(split on 99/10/12 2:1)
H 99/06/14 35.97 56.48 SFA Scientific Atlanta
B 99/04/06 53.75 85.69 SLR Solectron
B++ 99/08/19 129.02 179.06 SNE Sony
B 99/04/06 130.94 119.50 SUNW Sun Microsystems (split on 99/04/08 2:1)
H 99/08/06 31.00 27.50 TLM Talisman Energy Inc #
B 99/04/06 109.48 98.58 TXN Texas Instruments (split on 99/08/16 2:1)
B++ 99/10/05 50.27 58.89 WMT Wal-Mart Stores
B++ 99/09/27 186.00 205.00 YHOO Yahoo!

In addition we recommend the following Closed End Funds, based on the assumption that Third World economic downturns are not going to last forever and that their stocks are now showing superb technical strength

B++ 99/11/09 15.14 14.70 BZF Brazil Fund
B++ 99/04/06 8.88 12.75 IFN India Fund
SELL 99/04/06 8.05 12.67 JOF Japan OTC Equity Fund
B++ 99/11/09 97.06 99.75 TMX Telefonos de Mexico

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