Prime Stock Advisory Letter for November 9th, 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 on Friday.  There was solid strength in the market,  with the Biotech,  Healthcare, High Tech, Transportation, Gaming, Retail,  Telecommunications, and Chemicals Indices moving higher.  Therw was weakness in the Airline, Financial, and the Gold/Silver Indices.  We received a Sell Signal on the Amex Airline Index 'XAL".  The overall trend of the market continues to remain positive.  It appears that the market should continue to rally and test its previous highs.  The Bottom Line:  The Market Should Move Higher.
 

Company:  Digital River, Inc.       Symbol: 'DRIV'       Closing Price: $13.625/share.
YH: $14.00     YL: $5.00   EPS: ($0.90)      P/E: N/A     Forecasted EPS: ($0.87)
Dividend: N/A      Yield:  N/A      Ex Dividend: N/A
Price Target:  $14.625 and then $16.25     Downside Stop:  $10.625
Options Recommendation: None Available.

Company Description: This company provides electronic commerce systems.

Recent News:  11/05  Amazon.com expected to start selling software on line. 
10/20  Digital River reports record sales for 9 months and third quarter.
10/13  Digital River to sell IBM Software in Europe.

Our Analysis: Digital River recently came public through an IPO priced at $8.50/share in early August of this year.  B.T. Alex Brown & Sons was the lead underwriter of the IPO.  The shares of 'DRIV' set a new yearly high on Friday.  In late October the shares of 'DRIV' completed a cup pattern with a measured move to our lower price target of $14.625/share.  If the shares close above that level then they should continue to move higher and test $16.25/share.  There are rummors that Amazon.com 'AMZN' is looking to begin selling software electronically over the web.  An analyst at Robertson Stephens mentioned that Digital River would be a good fit for Amazon.com to acquire if it wanted to start selling software over the web.

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