Prime Stock Advisory Letter for January 7th, 1999

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Today's Comments:  The market saw a very strong broad based rally yesterday that pushed the Dow Jones Industrial Average to a record close.  From a technical perspective the market continues to look very positive.  Fundamentally the market is trading at a very high valuation that tends to make me a little on the nervous side,  but then a gain it is important to remember that  stocks do not move lower simply because they are over valued.  It generally takes an external event to trigger the selling to drive things lower.  This could be the up coming impeachment trial of President Clinton.  While it has been 130 years since the last Presidential impeachment trial,  there have been 12 Federal Judges who have had impeachment proceedings brought against them.  This indicates that there is some history to guide the current proceedings.   While it is widely expected that President Clinton will survive these proceedings,  any surprises could adversely affect the market.  Until then I expect the market to continue to move higher.  The Internet continues to be the hottest sector of the market and will probably remain the hottest sector until the market starts to demand earnings and earnings growth from them. The Bottom Line:  The market should move higher.

Company: Polo Ralph Loren     Symbol: 'RL'       Closing Price: $20.25/share.
YH: $31.375     YL: $15.875      EPS: $1.31      P/E: 15.4     Forecasted EPS: $1.44
Dividend: N/A      Yield: N/A      Ex Dividend: N/A
Price Targets: $23.875 & $27.00       Downside Stop: $18.125
Options Recommendation: January 17 1/2 Calls,  Symbol 'RLAW' @ $3.00/contract.

Company Description: This company is a major fashion design firm that has widened its product base to include apparel, fragrances, accessories, and home products.

Recent News:  1/6  Ronald Barron Grp.  Boosts stake in Ralph Loren to 36.9%
12/17  Polo Ralph Loren to Open showroom in Milan

Our Analysis: I was mildly surprised to notice that Ralph Loren had its own line of paint at the local Home Depot 'HD' store where I shop.  The shares of 'RL' gapped higher on the open of trading yesterday.  In the process they closed above a key upside resistance level on heavier than normal trading volume.  They should continue to move higher and test $23.875/share,  the point from which they gapped lower in early November of this year.  If they close above that level then I expect them to continue to move higher and test $27.00/share,  the point from which they gapped lower in mid August of this year.  Yesterday the Ronald Baron Group announced it increased its stake in 'RL' to 36.9%