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All,
I've finished my weekly MetaStock tests and came up with several new
additions to my watch lists. For example, I like AccuStaff and Tosco Corp but
I want a high tech to replace ASND that I was stopped out of this week and
they don't fill that bill. In thinking of high tech, I wanted a theme to go
with as well as a good stock. I'm convinced that the semiconductor industry
has put their pricing and capacity problems behind them and should have a few
years before facing them again. However, the good semiconductor companies
like Intel already have a lot of that priced in. Therefore, I decided to look
at the small cap companies that support and supply the semiconductor
fabricators. I came up with one of my old favorites LTX Corp (LTXX). LTX
designs, manufactures, and markets automatic test equipment to test digital,
linear, and mixed signal integrated circuits and discrete semiconductor
components. They suffered during the last year as the semiconductor
fabricators worked their way through their problems, but should benefit from
the coming switch over to the next generation semiconductors.
LTX at 5.562 is in a Short Term Up Trend Channel (STUTC) with the top at
6.55 and the bottom at 5.40. This channel is based on limited data since a
triple bottom around four two weeks ago and I don't trust it yet. However, I
do believe that the triple bottom will hold. LTX has good fundamentals with a
0.83 price to sales ratio; 0.25 debt to equity ratio; 24% insider ownership;
and revenue growth over 25% last year. Earnings are negative due to a 9.3
million inventory write off and a 6.8 million charge for product line
restructuring. That should have cleared the decks, time will tell. It broke
out of an intermediate term down trend last November and has essentially been
moving sideways since then with a short term up trend followed by a short term
down trend. The short term down trend was broken Tuesday. It is also in a
long term down trend channel with the top at 8.29, but that gives it enough
room for a good profit before hitting that resistance. I got a MetaStock
RSquared, LinRegSlope, CCI on 5/12/97 just before the short term down trend
breakout. RSquared is at 0.76 and rising indicating a strong trend is
forming. S/C and CCI are positive and rising indicating that the trend is up.
I'm going to open a position Monday. I'll set the initial target at just
under the long term down trend channel at 8 and the initial stop just under
the triple bottom at 3.75.
I'll send a LTXX.GIF chart to everyone on the e-mail list. If you're not
on and want on, just yell. The only obligation is participation in this
e-mail forum.
Jim
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