Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Inside The Market Date: Thu, 12 Nov 92 13:00:17 EST Message-ID: <10.1992Nov12.130018@AmeriCast.com> 11/12/92 TITLE Inside The Market Dow Rises 15 As Drugs Pep Up Market; Leaders Up 9-5 As Volume Hits 240 Mil Leo Fasciocco The stock market moved broadly higher yesterday, drawing strength from the underperforming drug sector. The Dow Jones industrial average advanced 14.86 points, or 0.46%, to 3240.33. The list showed great strength as winners trounced losers 1,185 to 644. Trading rose 8% to 240 million shares - especially brisk considering it was Veterans Day. "Despite the gain, I think the Dow is churning and completing a short-term rally that began Oct. 2," said Paul Rabbitt, head of quantitative analysis at Oppenheimer & Co. in Los Angeles. "Tremendous fear created when Ross Perot came into the presidential race caused a lot of cash to be built up," said Rabbitt. "A lot of that cash now has been used up in this rally. Also, we've seen a lot of shorting by specialists lately (a bearish sign)." Rabbitt said he expects some softness in the market, especially with the big- capitalization stocks. But he's enthusiastic about a Nasdaq mark- et that he feels could continue to rally into January. Long-term, he sees the Nasdaq in a major uptrend that could last three or four years. The Nasdaq composite had a big day, soaring 1.14%, or the equal of 37 Dow points. The Standard & Poor's 500 index managed a gain of 0.86%, or 27 Dow points. Rabbitt said the powerful advance in computer stocks recently has been due to Sil- icon Valley backing Clinton, the president-elect's promise to build a $10 billion national technology network and the tendency of Democrats to use fiscal stimulus, such as tax credits, that encourage buying of high-tech devices. Rabbitt recommends being fully invested. He favors transportation stocks such as Skywest Inc., Mesa Airlines Inc., Southwest Airlines Inc., Union Pacific Corp., MS Carriers Inc., Swift Transportation Inc. and Old Domin- ion Freight Lines Inc. He also likes International Game Technol- ogy Corp.- , which rose 13/4 to 48 after reporting a 117% jump in earnings for the fiscal fourth quarter. His other picks: Circus Circus Enterprises Inc., Bombay Inc., Helig-Myers Inc., Wal-Mart Stores Co. and J.C. Penney Co. In other action, blue chip Merck & Co. pushed ahead 2 to 447/8 to help pace the drugs. Since peak- ing at 565/8 in January, the stock has been in the doldrums, and its Relative Strength has dropped to a dismal 24. Technically, Merck has been in a 10-month, intermediate- term correction after a strong two-year advance. The company has an Earnings Per Share rank of 88 and has shown a steady 24% compounded growth rate in earnings the past five years. Warner Lambert Inc. spurted 17/8 to 693/8. Several brokerage firms repeated buy recommendations on the stock, citing prospects for the company's drug Cognex, used to treat Alzheimer's disease. Recent tests may enable the drug to receive FDA marketing approval, they said. Warner's stock is close to breaking out of a three-month base at 691/2. Trading ex- panded to 547,000 shares, double normal daily volume. The stock has an Earnings Per Share rank of 84. Its Relative Strength is 48. Abbott Laboratories Inc.- climed 11/8 to 293/8, American Home Products Co. 17/8 to 683/8, Bristol-Myers Squibb Corp. 21/8 to 681/2, Carter- Wallace Inc. 11/2 to 305/8, Eli Lilly & Co. 15/8 to 621/4, Schering-Plough Corp. 23/8 to 645/8 and Pfizer Inc. 23/8 to 77. The drug stocks have done badly this year. Currently, they are a dismal 159th among the 197 groups Investor's Business Daily ranks by six-month price performance. Rabbitt said he believed yesterday's move was a "dead cat bounce." He does not like the group because of its weak price momentum. Insurance stocks, a strong group the past month on hopes of higher rates, showed further gains. Cigna Corp. rose 7/8 to 513/8 after Prudential Securities Inc. put out a buy based on benefits from Cigna's stake in health insurance. The stock has been a laggard with a Relative Strength of 40. Pro- gressive Corp., a leader with a Relative Strength of 92, moved ahead 11/4 to 817/8. It voted a 3-for-1 split and raised its dividend. Kemper Corp. rose 11/8 to 265/8, GEICO Corp. 13/8 to 601/8 and American International Group Inc. 1 to 113. Zurn In- dustries Inc. leaped 21/4 to 371/8. It was named to build a $60 million power plant in Florida that will burn wood waste and tire chips. Analysts are forecasting a rebound in Zurn's earnings for the fiscal year ending March 31 to $2.35 a share from a depressed 91 cents in fiscal 1992. EMC Corp. shot ahead 31/4 to 291/2. The company introduced Tuesday a new computer disk storage device that will boost revenues 30% a year, or $100 million. The stock has doubled the past two months. It has a Relative Strength of 96. Scientific Atlanta Inc. gained 21/4 to 34 after voting a 3- for-2 stock split and boosting its payout. Marvel Entertainment Group Inc. tacked on 25/8 to 435/8. It declared a 2-for-1 stock split last week. Computer Sciences Corp. moved up 17/8 to 751/4. Merrill Lynch & Co. recommended it. The stock's Relative Strength is only 56. Kaufman & Broad Homes Inc. rose 11/4 to 151/2 after Kemper Securites Corp. hiked its rating to a strong buy. Broker- age stocks did well. Morgan Stanley Group Inc. advanced 13/8 to 535/8, Merrill Lynch 1 to 591/2 and Quick & Reilly Group Inc. 7/8 to 223/8. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM