05/02/2003 12:00 am EST
"As the month ended, mutual funds tried to paint the tape," says Mark Cook, editor of the short-term trading service, Cookfax . "This means that stocks are artificially pushed in one direction or the other to show gains or losses as portfolio adjustments are made. Many times these moves are protracted, therefore once the extensions and pressures release, a sharp volatile move ensues. Be very careful of this environment, it is high risk. On an intermediate term basis, we are seeing a market that is indeed having an infusion of cash associated with month's end. This month has the potential to be the most overbought as far as my 17 years of keeping the number. The month of May promises to be a unique if not historic month. You, who have been long-term subscribers, know this is a very bearish scenario. The mere fact that we are entering into the May period is bearish. Couple this with the extreme overbought condition of the market and any negative catalyst could send this market into an uncontrolled downward spiral."
"Arrow Financial (AROW NASDAQ) continues to prove that smaller is safer in the banking world," says Roger Conrad, editor of The Utility Forecaster; "Like other lenders, the upstate New York-based bank suffered from the compression of interest rate spreads in the quarter. But it nonetheless posted a 9.3% boost in first-quarter 2003 earnings, thanks to continued gains in loan growth and quality and by adding deposits. Deposits, the bedrock of assets, increased 13.3%. Arrow remains by far my favorite financial stock for income and growth."
"We continue to look for $50.50 in 2003 earnings," says Joe Battipaglia of Ryan Beck & Co. "Trough S&P 500 earnings are likely behind us at $46 for last year. Analysts are currently looking for $53.81 according to First Call--down from $55 at the start of the year. While the quarterly progression in year-over-year earnings growth demonstrates a lethargic advance from the past six quarters, we are reasonably confident that the trough has passed. It now stands to reason that the historical relationship between market multiples and bond yields will begin to reassert itself. Despite a trimming of 2003 earnings forecasts, spread between the ten-year Treasury and the forward earnings yield on the S&P 500 is currently higher than the ten-year bond yield which suggests that equities are more attractively priced than the Treasury bond at this juncture."
"While not all our indicators are bullish, enough of them are to keep us viewing this market with a positive slant," says Larry McMillan, editor of The Options Strategist. "Overhead, there is a lot of resistance for the market to work through. But it is possible for it to do so. If it does, and $OEX closes above 490, say, that would most certainly indicate we are in a new bull market. Sound unlikely? Perhaps. But if it happens, remember where you heard it. Accordingly, we want to buy an $OEX bull spread. We suggest buying3 $OEX May 450 calls (OXBEJ) and selling 3 $OEX May 480 calls (OXBEP) for a debit of 10.00 or less. Note that we are biddingbelow the current market value because we expect the market to decline initially. As for individual stocks, we suggest buyingCisco calls. Buy 7 CSCO May 12.5 calls (CYQ EV) at 1.80 or less. Stop yourself out if CSCO closes below 12.5."
"We are now recommending three new telecommunications stocks," says John Bollinger's Capital Growth Letter. "It has been the leading sector for many weeks . This sector has endured an unrelenting four-year bear market, a bear market that looks to have ended in October of 2002. Since then telecomm has built a base, and has broken out of that base over the last three weeks. We'll keep them in a separate package just like the energy stocks. These packages are sector bets primarily, so it makes sense to bundle them and to think of them as a bundle to a certain extent. The new stocks are Level 3 Communications (LVLT NASDAQ), Citizens Utilities (CZN NYSE), and Arris Group (ARRS NASDAQ). Long distance, wireless, and communication technology are amongst the top groups in the sector and we recommend one stock from each."