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All,
All I can say is WOW <G>. I never thought that the market would
move this far, this fast and now all signals are go! The DJIA finally
joined the crowd - the other indices I watch that are in Short Term Up
Trend Channels (STUTCs) - by breaking out of its Horizontal Channel
(HC) at mid week on good volume and then charging on up Thursday and
Friday. The DJIA now has clear sailing for a run to its all time high
just above the 9400 level. Meanwhile, the small cap indices are still
in a steeper STUTCs and look like they will continue to do a little
better than the large caps. To me, that means I should continue to
move the weighting of my portfolio toward the small caps while still
keeping a core of large cap stocks. My strategy of finding Christmas
Specials - small cap stocks that have dropped over 50% in the last
year, have good fundamentals, and are now showing signs of moving up -
has worked well so I'll also continue that method for choosing the
small cap stocks. I only have enough cash left for one more position
before I'm fully invested again and I want to use that for another
small cap stock. This week I narrowed my choice to Integrated Device
Tech. (IDTI) and a newcomer to my watch list, P-COM Inc. (PCMS). I
finally decided IDTI, but it was a tough choice.
IDTI at 7 3/8 is in the middle of a Short Term Up Trend Channel
(STUTC) with the top at 9 and the bottom at 5 7/8. It set an all time
high of 33 1/2 way back on 8/16/95 then went into a multiyear down
trend to a double bottom of 4 1/8 on 9/10/98 and 9/17/98. From there
it rose to break out of its Intermediate Term Down Trend Channel in
early October. It then pulled back a little before making another
charge that had it breaking out of its Horizontal Channel Friday on
good volume, thereby giving a Trader Vic type buy signal. I then
constructed the MetaStock standard deviation STUTC from the left of
the 10/14/98 candlestick to the right of Fridays candlestick, set the
deviation at 2, and extended it to the right. I got a MetaStock Tema
Binary wave Composite, QStick buy signal on 10/16/98. Technically,
this looks like a good entry point to me. The fundamentals are quite
good also except for earnings which I'm hoping will turn around. The
price/sales is at 1.0 which is less than 20% of the industry average,
the debt/equity is good at 0.53, the book value is $6.08, the 5 yr.
revenue growth is flat, but the 5 yr. sales growth is at 20%. I'm
going to open a long stock position Monday with the initial target at
16 which is just under the 52 week high and the stop just under the
STUTC at 5 3/4.
I'll email a IDTI.GIF chart to everyone on my chart email list.
If you aren't on the list and want on, just yell.
JimG
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