Ah, now where were we? Right, trying to ignore that mess they call the
TheStreet.com Internet Sector
index) and thinking about some decent picks for the second annual TA/Fundy Contest, or TF II for short.
column I introduced the first five entries, plus my own choice. Today, the second five. The object is to come up with a stock pick based on a combination of fundamental analysis and TA. (For more details, see this previous
column.) So without further ado, here goes:
The sixth pick of our contest is a nice play on the resurgent oil sector. I'd been eyeing that patch myself, so I was glad
to my attention.
My choice is FLC. I strongly believe that the price of oil has bottomed (and these drillers follow it closely).
From a TA perspective, I like the higher highs and higher lows and the bounce off the 50-day moving average. Entry point is 9 7/8 (June 11 close).
Long FLC at 9 7/8; sell on 12/7/99. (I am long FLC.)
This next selection has been coming up a lot in stock discussions, but until recently I had no idea what it did other than go up.
clarify the situation for me.
Conexant Systems (CNXT) - Get VanEck Vectors ChinaAMC SME-ChiNext ETF Report just released an upside earnings and revenue alert on June 8 for its third quarter and is making a successful transition over to a product mix similar to that of Broadcomundefined. -- Steve Bond
I like Conexant because it produces key components (digital cellular and PCS power amplifiers) for the new-generation CDMA cellular phones produced by Qualcomm (QCOM) - Get QUALCOMM Incorporated Report and other manufacturers. -- Jeff Warren
For entry, I'd like to enter today Wednesday, after a surge (up 6+) on high volume due to news of a positive earnings advisory. -- Jeff Warren
(Note: Steve was already long prior to the contest, so we'll use Jeff's entry.)
I'd like to stick with it for six months. -- Jeff and Steve
Long CNXT at 51 (Thursday's opening price); sell on 12/7/99. (I am long CNXT.)
If there's one nice theme I've noticed, it's that
readers are not afraid to look at markets outside the U.S. The Japanese market, for one, has been strong lately, and
decided to play it.
Well, this time I put my money where my mouth was. Looking at the Nikkei in the last couple days, I'd say we had a classic GBS breakout in which we could be in for a nice 3,000-point move. So I checked the Japanese stocks available to me and bought a basketful. One that has gone for a classic breakout was Hitachi (HIT) . The fundamentals? Well, do we buy the Japanese economic improvement? We've heard it before. However, this time they seem to be giving a real serious stimulus try and putting their money where their mouth is. The chart says buy. The fundamentals say the Japanese are throwing their money down, too. More Japanese B.S? Another heartbreak? All I can say is the Japanese government loses along with me if I'm wrong. I hope not. Those folks are due for a break after paying for the excesses.
(Antoinette bought after the breakout, and the price then was 81 5/16.)
Sell on the close below the 50-day MA. This may really be a three-month and not a six-month stock, but hey, I'm happy.
Long HIT at 81 5/16; sell if HIT closes below its 50-day MA. (I am long HIT.)
You have to love a person who is still willing to bet on the Net even after the recent carnage.
gives his take:
Inktomi (INKT) is an Internet infrastructure company that is generally neutral across the board .The Swiss of the Internet, you could say. It competes with very few Internet players yet supplies many with search technology and other services.
In at 86, a buck above support at 85, and hold for six months.
Long INKT at 86; close on 12/7/99. (I am long INKT.)
Our final entry is a longtime favorite of many and has held up surprisingly well lately.
sums up the rationale:
Buy it with a resting stop market order at 120. It's in congestion now, and if/when it breaks out, I want to be on board. Sell if it closes below the 50-day moving average.
Buy CSCO at 120 stop; once long, sell if CSCO closes below its 50-day moving average.
So, a pretty attractive list, I'd say. Some Internet, some technology, some gambling and some oil. Throw in a few foreign plays, my lone Internet short, and I think you have a very solid portfolio. As I said when I introduced the contest, though, this is the advanced version of the TF contest. Meaning, these stocks will have to sink or swim with possibly no help from the market.
Contestants, good luck! I'll update this portfolio from time to time and let you know how the entrants stand.
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he was long R&B Falcon, Conexant, Hitachi and Inktomi, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take, Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at