Prime Stock Advisory Letter for December 3rd, 1998

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 lower yesterday.  It significantly lower earlier in the day before a late day rally helped it recover some of its losses.  In my opinion I feel a good portion of these late day rallies is a result of short sellers covering their positions before the end of the day to avoid any overnight risk.  From a technical stand point it appears that the market has reached a turning point as in the process of moving lower.  I feel that this will be a correction that is healthy for the market in the long run.  From a fundamental standpoint the P/E on the S&P 500 was reported 31 times earnings in this weekends Barons.  The market is definitely at a very high valuation and needs to move to more reasonable levels.  The Bottom Line:  The market should move lower.
 

Company:   Gillette Co.       Symbol: 'G'        Closing Price: $45.00/share.
YH: $62.625       YL: $35.31      EPS: $0.92     P/E: 48.9     Forecasted EPS: N/A
Dividend: $0.51      Yield: 0.11%     Ex Dividend: 10/29/98
Price Targets:  $38.69 & then $36.25       Upside Stop:  $46.125
Options Recommendation: December 50 Puts,  Symbol 'GXJ' @ $5.375/contract.

Company Description: This company is a major producer of consumer products.

Recent News:  12/1  Gillette refill blades share up less than expected..

Our Analysis: Gillette is a component of the Morgan Stanley Consumer Index 'CMR',  which I have rated as moving lower from its current levels.  The shares of Gillette have been in a down \ward trend recently.  They should continue to move lower and test $38.69/share,  the point from which they gapped higher in mid October of this year.  If the shares close below that level then they should continue to move lower and test $36.25/share,  the point from which they gapped higher in late September of this year.  The company recently reported that its share of replacement razor blades was less than expected.

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