Prime Stock Advisory Letter for February 2nd, 1999

Today's Comments:  The overall market moved slightly lower yesterday.  From a technical perspective the overall market continues to look very positive.  I am expecting the Dow Jones Industrial Average 'INDU' to continue to move higher and test its previous closing high of 9,643.32  If it is able to close above that level then I have a near term target level on the Dow Jones Industrial Average 'INDU' of 10,052.94  Our longer term target level on the Dow Jones Industrial Average is 11,136.87  Our similar target levels on the S&P 500 'SPX' are 1,347.09 and 1,416.22 respectively.  The NASDAQ 100 Index 'NDX' is in a very strong upward trend and has exceeded our measured target levels.  I am expecting this index to continue to move higher as the other major market indices move towards our stated target levels.  The Bottom Line:  The overall market should move higher.
Recommendation

Company: Southwest Securities     Symbol: 'SWS'    Closing Price: $32.125/share.
YH: $34.75    YL: $15.625    EPS: $1.96     P/E: 16.3    Forecasted EPS: $2.42
Dividend: $0.28   Yield: N/A     Ex Dividend: 12/11/98
Price Targets:  $37.875 & then $41.00       Downside Stop:  $30.375
Options Recommendation:  None Available.

Company Description: This company operates a regional brokerage firm and clears trades for other brokerage firms including day trading firms.

Recent News:  1/29  Southwest Securities 2nd qtr net $0.57 vs. $0.50/share.
1/07  Raymond James ups its rating on Southwest Securities from a "HOLD" to a "BUY"
12/29  Southwest Securities up 16%,  Internet Related unit cited.

Our Analysis:  The shares of 'SWS' gapped higher on the open of trading yesterday.  They finished the day by closing above a key upside resistance level on heavier than normal trading volume.  In the process they completed a series of 'cup pattern' with measured moves to our stated price target levels.  This company recently reported record second quarter earnings.  In addition to its traditional brokerage business,  this firm clears trades for other smaller securities firms.  This allows it to profit from the trading volume of other firms.  Southwest Securities 'SWS' also operates the on-line brokerage firm Sovereign Securities, Inc.


The Sterling Investments series of newsletters is produced by Sterling Investment Services, Inc.  If you would like to receive a chart on any index or stock mentioned in this report please contact us at the below mentioned numbers.  We also offer custom research reports on any stock investment that you may desire information on.  To receive further information on these services please visit our web page at:  www.sterlinginvestments.com   If you would like to contact us our # is 800-275-6901,  fax # (404)-816-8830  Email address is: enelson@sterlinginvestments.com  Sterling Investment Services may hold positions in the securities recommended or may be providing consulting services to the companies mentioned within this report.

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