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Week ending May 4, 2001

IN SUMMARY STOCKS COMMODITIES
BUYS... GX, MOT Coffee, Euroyen, Note/ Bond Spread
SELLS... small .COM stocks Palladium
HOLDS... ATMS, AVCI Heating Oil/ Unleaded Gas Spread

STOCKS

NASDAQ- I am sick of hearing analysts say "this economy is strong.  Now is a good time to buy."  They say this simply because the market was up big for the day, because now that the market is starting to turn back down, those same analyst "experts" say "this economy is going to tumble a while yet and you should wait to buy until the end of the year."  I have concluded that I know as much about the market as they do... or at least I'm honest about it when I say "I don't know what the market will do."  

For the month of May, I will be honest with you.  I don't know what the market will do.  I will not be surprised if we have a correction in the near future where the Nasdaq could dip back down to around 1700.  However, I will not be surprised if the market keeps going up for a while longer, possibly as high as 2700.  The Feds cut interest rates unexpectedly a couple weeks ago which has had a positive effect on the market, and they may again around May 10.  The latest stat showed that the American economy grew 2% the first quarter which is a positive sign that we are exiting the slump.  I personally believe we have seen the market bottom, indicated on the chart with the circles.  As with any slow period, the big-name companies are the first to show positive gains which we are beginning to see.  Therefore, I suggest investing in large corporations and wait to buy the smaller companies until the end of the year unless the smaller company has outstanding fundamentals and is in a promising industry.

 

 

 

 

 

ATMS- Tidel Tech. is in a sideways trend right now, termed as "noise".  It is a hold right now, but if it breaks up out of the trend, buy the stock because the fundamental numbers look very appealing.  If it breaks below the support line, sell.  Rumor has it that Tidel will announce some positive news, such as new clients, around May 10th, so be watching this stock because it may begin its move soon.
AVCI- Stay out of Avici right now, or if you already own it, hold for long term.  We are seeing the same thing here as with Tidel Tech.  It is in a sideways channel, "noise", so if it breaks above- buy; if it breaks below-sell.  Seven different law firms are currently suing Avici on behalf of shareholders.  Evidently Avici reported numbers but left out other information to make their stock look more appealing.  Avici stock  has dropped 95% in the last 12 months.  To reiterate, do not buy!!! 

 

Don't need chart.  Stay out of Avici.

 

 

 

 GX- Ok, not the best color combination, but it catches your attention.  Global Crossing is an excellent value right now.  It has a bright future ahead.  If you are in it for the long term, buy now!!!  Global Crossing crossed the line of resistance, which indicates a buy.  I will not be surprised if it turns downward in the near term.  If/when it goes back down, I am buying!!!
MOT- As you can see, Motorola's 23% tumble a month ago was short lived.  Like I said in my last newsletter, it was worthless news.  Much of the news in this uncertain market is worthless, but some is valuable.  You have to use your noodle to decipher the difference. Motorola is an excellent value right now because they are at an 8 year low.  It has dropped 80 percent this year.  They are the leading company in wireless communications, which is the "buzz word" industry for this year.  It will do very well.  Again, I believe the bottom has been reached (circle on chart).  When Motorola dips back down, this is another company I will buy.

 

 

COMMODITY LOWS

 COMMENTS
chart COFFEE Coffee has broken through the 6-month line of resistance.  Lookout!  Excellent time to buy!  Using the Ken Robert's theory, Coffee could climb as high as 85 before it turns back down.  Looking at the 30-year chart, coffee has only reached 60 two other years since 1975.  However, every time that coffee has a long term low, such as this one, it has a minor correction (up 20 to 40 points), then drops back down.  A year or so later it skyrockets and in many cases climbs 2 to 5 times its low price within the next 6 months.  If you missed this opportunity, be patient.  There will be another one within about a year that may pay off much greater!  The chart below is September 2001 futures.
chart CORN Watch
chart SOYBEANS No apparent pattern.
chart OJ No apparent pattern.
chart COTTON Watch
chart OATS Watch
chart WHEAT Watch.
chart LUMBER Watch
chart EUROYEN The Euroyen may be an excellent purchase.  The Euroyen is the interest rate of Japan as compared with Europe.  I heard that Japan's economy is in a 16 year low, and they have lowered interest rates almost to zero.  In other words, Japanese may borrow money for virtually no interest.  We know that Japan's interest rate will not drop below zero because no one will pay someone else to borrow money from them.  The Euroyen is calculated essentially by subtracting the interest rate from 100.  Therefore, it is highly unlikely that the Euroyen will go above 100 unless Europe's entire economy goes to pot.  Currently the price of the Euroyen is 99.915.  Please correct me if I'm wrong... a $20 profit/loss is accrued per tick, so if the Euroyen climbs to 100 which is highly unlikely, the most you will lose per contract is approximately $1700 if I did my math correctly.  However, within the last three years, the Euroyen has been as low as 98.9.  There is a HUGE opportunity here in my opinion.  The use of options would be a good choice here.
chart LIVE CATTLE/ PORK BELLIES SPREAD If reaches -17 again, Buy LC, sell PB.
chart 10-YEAR T-NOTE/ 30-YEAR T-BOND SPREAD If hits 0 again, Buy 10-Yr T-Note, Sell 30-Yr T-Bond because we know that it will not remain at 0.  It has to be in positive ground due to economics.
chart HEATING OIL/ UNLEADED GAS SPREAD Buy heating oil, sell unleaded gas, but not yet.  It has never reached this low (-.38) since 1985.  Currently the price is -.30 because the May contract expired.  The price of unleaded gas generally climbs at a higher rate than heating oil during the summer, and then vice versa during the winter.  I expect the spread to widen as the summer continues.  If the gap is still wide towards the end of the summer, I strongly suggest getting in it then.  Right now, sit and watch.

 

 

COMMODITY HIGHS

 COMMENTS
chart PALLADIUM It is currently on its way south, but it has a long way to go.  It would be a good selling opportunity.
chart FEEDER CATTLE No apparent pattern.  If hits 90 again, sell.
chart PORK BELLIES Going south.
chart 10-YEAR T-NOTE Watch