Prime Stock Advisory Letter for December 31st, 1998

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Today's Comments:  The overall market moved slightly lower yesterday.  It appeared that overall there was a round of profit taking,  most notably in the high tech sector.  I am expecting trading volume to be light today due to the New Year's Eve holiday.  The overall technical picture of the market continues to remain positive.  How ever I do have some concerns that if the Dow Jones Industrial Average 'INDU' fails to set a new closing high and turns lower that it will have put a "Triple Top" in place.  This is a bearish chart pattern that takes its name from the fact that a chart of a stock or index will show three failed attempts to move beyond a specific price level.  Looking at the current chart of the Dow Jones Industrial Average 'INDU' it appears that the chart is forming what is known as a "cup pattern with a handle". This chart pattern takes its name from the fact that it looks like a profile or cross section of a cup.  It is normally a very bullish pattern.  My concern comes from the fact that on July 17th of this year the Dow Jones Industrial Average closed at 9,337.97  on November 23, the 'INDU' closed at 9,374.27  This was a 36.30 point difference in closing highs, and represents an approximately 0.4% difference.  Not enough to be significant in my opinion.  On December 29th the Dow Jones Industrial Average closed at 9,320.98.  This was 16.99 points from the July 17th closing high.  This represents an approximately 0.2% difference, and once again not enough to be significant in my opinion.  At this point if the Dow Jones Industrial Average can close above the 9,374.27 level then I believe the market will move significantly higher.  If we fail to close above that level within the next few trading session then I believe the market will move lower and consolidate some more before it eventually retests the current highs. The next few trading session will let us know what the market does.

Company:  Fox Entertainment Group        Symbol: 'FOX'       Closing Price: $23.94/share.
YH: $23.94      YL: $19.375     EPS: $0.24      P/E: 99.7      Forecasted EPS: $0.65
Dividend: N/A        Yield: N/A       Ex Dividend: N/A
Price Targets: $29.50         Downside Stop: $22.375
Options Recommendation: January 20 Calls,  Symbol 'FOXAD' @ $4.125/contract.

Company Description: This company is one of the major television networks within the United States and a major movie studio.

Recent News:  12/30  Twentieth Century Fox 1998 Worldwide Box office 2.69 Billion
12/16  Fox Sports nears sellout of Super Bowl Ads.

Our Analysis: The shares of 'FOX' came public recently in an IPO priced at $22.50/share.  Merrill Lynch was the lead underwriter on the IPO.  They set a new closing high yesterday.  In the process they completed a cup pattern with a measured move to $29.50/share.  Due to the fact that this is a recent IPO there is a no overhead resistance on the charts of the stock.  This means the shares of 'FOX' could easily surpass our stated price target.  The continued success of the company's television network and movies produced by the company should help increase the earnings of the company and attract investors to the stock. 

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