Prime Stock Advisory Letter for December 28th, 1998

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Today's Comments:  The overall market was essentially unchanged in a light trading session on Thursday.  It is important to understand who actually shows up to trade on days like last Thursday.  It has been my expereince that the people who show up actually have specific agenda or a goal to accomplish.  This would explain the movement in several high flying Internet releated issues that moved sharply lower.  It is my suspicion that the move lower in these issues is the result of wholesale brokerage firms that had been short the shares of these stocks and took advantage of the opportunity to push them lower and cover their shorts at lower prices.  The light volume on Thursday makes some of Thursday's movements susceptable to corrections.  I am looking for this to be another light week,  with most people leaving early on Thursday with the market closed on Friday.  I am expecting the market to continue to move higher atleast until the Dow Jones Industrial Average 'INDU' reaches its previous closing high of 9,374.27  At this level on the Dow Jones Industrial Average 'INDU'reaches an area of resistance which could cause the overall market to pause in its advance.  The Bottom Line:  The overall market should move higher.  

Company:  Donaldson Lufkin/Jenrette        Symbol: 'DLJ'       Closing Price: $40.125/share.
YH: $63.75    YL: $20.375     EPS: $2.94     P/E: 13.6     Forecasted EPS: $2.84
Dividend: $0.25       Yield:  N/A      Ex Dividend: 1/3/99
Price Targets:  $42.75  & $45.375        Downside Stop:  $38.125
Options Recommendation: January 35 Calls,  Symbol 'DLJAG' @ $6.00/contract.

Company Description: This company is a major brokerage firm.

Recent News:  12/22  Online brokers report strong trading volume.
12/21  US financial stocks gain in broad market rally

Our Analysis: 'DLJ' is a component of the Amex Broker/Dealer Index 'XBD',  which I have rated as moving higher from its current levels.  The shares of 'DLJ' closed above a key upside resistance level on Thursday.  They should continue to move higher and test $42.75/share,  a point of upside resistance established in mid November of this year.  If they close above that level then they should continue to move higher and test $45.375/share,  the point from which they gapped lower in late August of this year.  Most of the Internet brokerage firms have reported better than expected trading volumes.  'DLJ' is a leader among the online brokerage firms with its DLJ Direct.

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