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Prime Stock Advisory Letter for January 21st,
1999
Today's Comments: The overall market finished yesterday slightly
higher. The high tech issues continue to perform well, although it
looks like the Internet issues may pullback slightly. After the close
of trading Ameritrade 'AMTD' reported better than expected earnings,
and there is a rumor circulating that Lycos 'LCOS' may be seeking an investment
partners. This will probably strengthen the brokerage stocks and
cause some concern over the strength of the more traditional Internet stocks.
I recieved a call from a subscriber yesterday about stops on an options
position. I beleive it is very important to maintain stops on all
positions. Once a position has moved profitable I adjust my stops
to protect those profits. Usually this initial move places the stops
about 3/8ths from my original entry point. As the profits increase
I will continue to adjust my stops to continue to protect those profits.
I follow the same proceedure with options. The only main difference
with options is that I usually set my downside stop @ $1.00/below my entry
point on stock opptions and $2.00/below my entry point on index options.
This limits my risk to $1.00/contract on stock options and $2.00/contract
on index options. From a technical perspective it looks as if the
S&P 500 'SPX' should move higher, but I am not getting a confirmation
from the Dow Jones Industrial Average 'INDU'. The Dow Jones Industrial
Average still looks as if it may move lower. This diveregence between
the 2 indices causes me some concern about the overall market. This
is from the fact that the Dow Jones Industrial Average is designed to be
a future indicator of the economy and the S&P 500 is designed to track
the movement of the overall market. A strong move upwards by the
Dow Jones Industrial Average 'INDU' would confirm the upward movement in
the S&P 500 'SPX'. And vise versa a move lower in the S&P
500 'SPX' would confirm the move lower in the Dow Jones Industrial Average
'INDU'. My thoughts are that are the picture concerning the divergence
in these 2 indicies will be clarified in the next trading day or two.
Recommendation
Company: CBS Corp. Symbol:
'CBS' Closing Price: $36.00/share.
YH: $36.625 YL: $18.00
EPS: $1.37 P/E: 26.3
Forecasted EPS: $0.69
Dividend: $0.20 Yield: 0.55%
Ex Dividend: 2/1/99
Price Targets: $50.00 Downside Stop:
$34.875
Options Recommendation: February 30 Calls, Symbol 'CBSBF'
@ $6.625/contract.
Company Description: This company operates the CBS Television
network and is a major operator of radio stations in the United States.
Recent News: 1/19 CBS rides dual '60 Minutes'
to victory in Nielsen ratings.
Our Analysis: The shares of 'CBS' set a new closing high on Wednesday.
In the process they completed a cup pattern with a measured move to our
stated price target of $50.00/share. 'CBS' has been benefitting from
improving television rating. 'CBS' is a co owner of the Marketwatch.com
financial web site that recently came public in a highly sought after IPO.
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