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Hello out there stock charting fans. A very tumultuous week in the market this past week as the averages test
the old highs set back in July. Even though all the indicators such as put to call ratio, Arms index and Bull to
Bear gures suggest a market that may fall, Friday’s strong action suggests that we may power though the
double top that the market is looking at right now.
On Monday, as many of you know, I sold all of my Internet stocks and stood 100% in cash. The Internets
began to drop like hot Potatoes late Monday and continued their sharp slide throughout the week. Many
Internet stocks were down 20 to 40 points just this week alone.
The good news is that Computer hardware stocks were up fairly strong during the week. It would appear that
we nally have contenders for new leadership in the market. All this is happening while the public is fully
entrenched in the Internets. I doubt many people know that there is a possible changing of the guard
underway as I write.
All during the week, I was keeping a very close eye on the Computer hardware stocks and I must say, I was
extremely impressed by the massive and continuos large blocks of trades taking place. 20,000, 30,000,
50,000 shares block trades going by my screen all day long on these stocks.
I have not seen the big Institutions being so aggressive to own stocks in any group, since the rotation from
the big cap stocks to the NASDAQ back in April 97. As you may remember, we had a very strong market from
April 97 to the massive sell off in October 97. That move in stocks was lead by the Oils, Computer hardware,
and some Telecomms.
So in this issue, I will list many stocks in this group that are showing tremendous strength. One word of
caution though, many companies in this group have told Wall Street that earnings going forward, are going
to be lower than this past year. Many stocks, in this group are being bid up in anticipation of higher earnings
in 2000 not 1999. A possible, buy the rumor, sell the news scenario.
I would also like to note the Telecomm group had a nice shot in the arm this week as Lucent Technologies LU
leaped out of it’s Cup and Handle formation that I e-mailed to you last week. On Friday, it was up 7 points, on
very high volume. I would call this a successful clearing of the base formation. We should see much higher
prices on this stock in the next month or two.
A few other stocks in this group that took off in unison with LU was Tellabs TLAB and E C I Telecomm LTD
ECILF both in the Telecomm group. I will highlight these two stocks for you in the weekly picks section
below.
Weekly Stock Picks
C D W Computer Centers (CDWC) - $88

This stock exploded out of the base back in October. The company is a direct marketer of microcomputer products. Earnings
are up 32% to .79 and revenues were up 43% to 462 million dollars. Only 9.5 million shares oat on this stock. The stock is
set to move out of a nice high level consolidation area. There is an old saying on Wall Street, " once a stock touches $90 it
goes right to $100. As soon as this stock leaves it’s base here at $88, I expect it to go right to $100. Buy point is at $89 and
pay no more than $92.
Broadcom Corp. (BRCM) - $93

A somewhat erratic stock. But it has the earnings growth to expect higher prices in the future. I would much prefer that we
get another 2 weeks on the base before it goes. Sometimes this happens and sometimes it doesn’t. Revenues are up 467% to
52 million dollars and earnings are up 343% to .17. Only 8 million shares total outstanding, so this stock could really get
going one day soon. The company designs and sells chips for the broadband Telecomm market. Buy point is when the stock
touches $98 on up to $101.
Orbotech LTD. (ORBKF) - $40

This stock is in the Semiconductor Equipment group. I gave this stock to you 4 weeks ago as it was acting very frisky. I gave
you the buy point back then at $40. Friday, it touched that point. I think it could still be a buy here as it is still at $40.
Earnings are some of the biggest in the group. Last quarter the earnings were up only 7%, but the .75 is a large number.
Revenues were up 17% to 58 million. The stock sports a P/E of 14 and only 10 million shares oat.
Tellabs Inc. (TLAB) - $60

This stock fell apart in the August and September bear market. The stock fell from $93 to a low of $31 mostly on the bad
news about the Ciena merger and a few other items. The stock roared back strongly and now has based about 5 weeks. I gave
you the buy point a week ago and the stock is set to go through it this week. A P/E of 35 and the stock is growing at about a
60% annual rate. Earnings for the last quarter were up 44% to .49 and revenues were up 37% to 423 million. The company
just released a press release saying that earnings for the upcoming quarter are to be about .58. The group is warming up, so I
expect this stock to be higher is a month or so. Buy point is $61.50 to $64. This is a big cap stock with 193 million shares
total.
E C I Telecom LTD (ECILF) - $39

Another Telecom stock that looks strong. These two Telecom stocks, don’t have the growth rate that they used to but the low
P/E and the moderate growth rates make these stocks look attractive. Earnings for the last quarter were up 33% to .56 and
revenues were up 24% to $210 million. I expect this stock to get to $50 in a month or less. 72 million shares total and a P/E
of 19. The stock broke out of the base on Friday with the rest in the group, so it’s a little extended now. May have to wait for
a 1 to 2 point pull back.
Allergran Inc. (AGN) - $63

I have been keen on this stocks movement for many months now. A very nice tight base for the past 10 weeks. Only a 4 point
price variation over the past 6 weeks. The company manufactures eye care products. Earnings are up 50% to .51 and
revenues are up, but only modestly to $321 million. Strong medical product group with an RS of 90 and the stock has a RS of
94. This will increase when the stock moves out of the base. Buy point is $65 to $67.
Century Tele Enterprises (CTL) - $58

This stock is one of the best growing stocks on the NYSE. Earnings are up 31% to .59 and revenues are up 84% to $402
million. The chart formation is text book and the stock will be higher this week. I still have it in my big cap portfolio. Buy
point is now on up to $61. I repeat, this stock will be higher this week and next. 89 million shares oat and the company is in
the strong Telecom service group.
Sanmina Corp. (SANM) - $55

This stock has exploded out of it’s base and with good reason. Earnings are up 999% to .41 and revenues are up 21% to 194
million. The stock is in the strong Semiconductor Equipment group. There are 47million shares that oat with the public. The
only place I see to be a buy point, would be here. Not the best place to buy per my "Golden Rules", but may be the only place
for sometime. I think this stock could shoot to $70 and fast.
Since many of the Semi stocks are extended now, I will only list them here by tick so you can download them
to your data base. When the stocks form the proper base, I will list them for you in a mid-week update and
provide you with a safe entry point.
INTC,TER, NSM, STK, MU, ASMLF, HMTT, HDCO, NSIT, VTSS, KLAC, LLTC, MOLX, NVLS, PRIA, PLAB, VECO.
Some other stocks that I think warrant strong attention due to their positive earnings are MXIM, MCRL, NTAP,
PMCS, QLGC, SANM, TXCC, UNPH, XIRC, SIPX, GNSSF, MWHS. ETEC, ORBKF, CREE, XYLN
As you may remember, I gave you Flextronics FLEX { formerly FLEXF } as a stock pick back 5 weeks ago in this
group. The stock was at $51 back then and today it’s $75. Not a bad pick if you ask me. It looks to be one of
the leaders in this group.
Another pick in this group was Qlogic QLGC which was trading at $70. Today, 7 weeks later, it’s at $112, just
off the highs at $120 set two weeks ago. It has also announced a 2 for 1 split. I do recall mentioning that I
thought this stock would get to $120 in this opening move. With this group getting stronger, this stock still
has a long life in front of it.
For those of you who like high stakes buying and selling during the day. I think you could get a few quick
points out of CREE. Buy point will come quick and fast and will be at $41.50 to $43. Pay no more and as
always set your stops at no more than - 2 points from you buy point, in this case it would be $39.50.
In the software area this week I like LHSG, INTU, KRON, LGTO, MAST. CHKPF is moving fast!
Two other Telecom stocks that look very good are CMVT and VOD and of course NOKA. All are on the move,
and I hope to have more for you on these during the week.
I think most of the Internets are basing right now and others in this group are dead. But be careful, as the
group is very explosive. Some could turn and run like AMZN might, just because of the 3 for 1 stock split due
out in 4 weeks.
For many of my new subscribers, may I remind you to see the Golden Rules in the member services area.
Remember to cut your losses fast at no more than 2 to 3 points below the "buy point". Never believe in your
stocks.
Have more for you during the week.
Daniel J. Zanger ... Chartpattern.com

Copyright © 2021 Daniel J. Zanger

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