Prime Stock Advisory Letter for November 5th, 1998

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Position Statement: In our Prime Recommendation Letter we attempt to identify the recommendation with the highest probability of moving higher.  We recommend that stop orders be placed at the time of purchase,  and once the position has moved profitable we recommend a stop be placed a minimum of 3/8th above the purchase price and moved higher as the position moves higher.

Today's Comments:  The overall market moved moderately higher yesterday.  The rally was broad based and affected most of the sector indices I track.  After the close of trading Cisco Systems announced better than expected earnings. This morning the Bank of England lowered interest rates.  These are both positive developments for the stock market.  In addition to this the trend of the market remains strongly higher.  The Bottom Line:  The overall market should move higher.

Company:  ModaCad, Inc.      Symbol: 'MODA'       Closing Price: $16.00/share.
YH: $25.625       YL: $6.00      EPS: ($0.20)     P/E: N/A     Forecasted EPS: N/A
Dividend: N/A      Yield:  N/A       Ex Dividend: N/A
Price Target:  $22.50 & then $24.25       Downside Stop:  $14.125
Options Recommendation: None Available.

Company Description: This company has developed an online retail mall..

Recent News:  10/23  Modacad's Fashiontrip web site sees a 290% increase in traffic.
10/06  Modacad and Hewlett Packard in OEM integration pact

Our Analysis:  This company has developed 3-D photorealistic virtual reality software.  It has codeveloped an Internet mall with Intel Corp. known as fashion trip.  The web site is www.fashiontrip.com.  The company has signed many other retailers to participate in this project.  Modacad recieves advertising revenue from this site in addition to a sales commission from products sold from the site.  This should allow Modacad to easily return to profitability.  Modacad's 3-D technology provides a barrier to entry from competition.  The stock sold off during the recent market decline and has since rebounded to its previous levels.  I am looking for the shares to move higher and test $22.50/share a former point of upside resistance set in late July of this year.  If the shares close above that level then I expect them to continue to move higher and test $24.25/share.

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