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: Fri, 20 Nov 92 13:33:51 EST Message-ID: <11.1992Nov20.133351@AmeriCast.com> 11/20/92 TITLE Inside The Market Market Up Even Though IBM Falls 13/4; Investor's Business Daily Index At High Leo Fasciocco The stock market rose slightly yesterday in a quiet session despite con- tinuing weakness in International Business Machines Corp., which fell 13/4 to 613/8, an 11-year low. The Dow Jones industrial average inched ahead 2.16 points, or 0.07%, to close at 3209.53. The average traded in a narrow range during the day. Gainers led losers 952 to 798. Volume totaled a heavy 219 million shares, the same as the day before. The Dow's poor action since it peaked at 3391 in early September has been due in part to IBM, which has tumbled 25 points during that time. The stock is a major com- ponent of the Dow. But the Dow's weakness has masked solid strength in the broad market. The Dow is trading below its 200- day moving average line. But the Standard & Poor's 500 index and the Investor's Business Daily 6000 index - which is making new highs - are both above their 200-day lines - a bullish develop- ment (see charts page 15). Also, the number of NYSE stocks now trading over their 200-day lines has improved to 52%. Michael Burke, editor of Investors Intelligence of New Rochelle, N.Y., is positive on the market and says his firm has been fully invested for the past eight weeks. He sees the market going higher and the number of stocks trading over their 200-day moving averages ris- ing to 60% or 70%. "There is still a lot of pessimism that has to be worked off," said Burke. "The latest reading on bullish in- vestment advisers is 46.2%. I expect that to rise to 50% to 60% before a correction sets in." Burke is also encouraged by the fact the stock market is weak early in the week. He said that means investors who make decisions over the weekend still are le- aning to the sell side. He takes that as a contrary sentiment in- dicator that is actually bullish for the market. Service Mer- chandise Co., a catalog showroom merchandiser, shot ahead 1 to 123/4, a new high. Trading swelled to 1.5 million shares - five times normal. Analysts told Investor's Business Daily the rise was due to hopes of a "positive earnings" surprise in the fourth quarter following Chairman Ray Zimmerman's disclosure at a meet- ing sponsored by Nashville broker Morgan Keegan that Christmas sales are looking better than in the past few years. Service Merchandise operates 359 showrooms and gets the bulk of its earn- ings in the fourth quarter. Currently, the consensus on the Street is the company will show a gain in fourth-quarter earnings to 95 cents to $1 a share compared with 89 cents last year. Analyst J. Gary Dennis of J.C. Bradford & Co., who has been bull- ish on the stock, is looking for 97 cents. Dennis recommended the stock at 87/8 in July. His 12-month target for the stock, based on 1993 earnings of $1.09 a share, was 13. So the stock appears to be ahead of itself. That's how it looks to Tom Thomson of Wheat, First, Butcher & Singer Inc. He lowered his rating on the stock, feeling it was "fully priced." Technically, the stock has been strong, but it is extended from a base breakout at 93/4 seven weeks ago. CML Group Inc., a retailer of apparel and exer- cise equipment, drove ahead 13/4 to 325/8. The stock has had a sensational tenfold runup from 3 in October 1990 and has gone through two 2-for-1 stock splits. Earnings growth the past three quarters has shown a dramatic acceleration from 21% to 120% to 200%. Despite the stock's surge, analyst Margaret Gilliam of First Boston Corp. has been bullish on it because of an expected 25% growth rate and retail expansion of CML's Nordic Track exer- cise equipment. The consensus on the Street is for CML to post a 27% increase in earnings for the fiscal year ending July 31 and a 29% gain next year. Advanced Micro Devices Inc. leaped 11/2 to 177/8. It announced plans to build a $700 million semiconductor plant in Austin, Texas, that should begin production in 1993. Analyst Millard Phelps of Hambrecht & Quist Inc. said the move was made to keep up with demand. He noted AMD is second to Intel in chip-making and Intel is already out of capacity. AMD's stock tumbled from a high of 211/2 earlier this year to 73/8 in July on an adverse rulling involving rights to Intel's 287 mathcoproces- sor chip. Phelps said AMD's terrific rebound has been due to short-covering and more interest in the stock. He feels AMD is worth $20 on a fundamental basis and thinks further legal rulings about chips have been taken into account. AMD's earnings this year are expected to be up 57%. Campbell Soup Co. rose 15/8 to 431/2 on double normal daily volume. It reported a 22% increase in fiscal first-quarter earnings to 62 cents a share, 2 cents better than Street expectations. It also raised its quarterly dividend to 22 cents a share from 191/2 cents. The stock has been trending higher since June, when it was 35, despite a heavy dose of insider selling in the third quarter. It has an Earnings Per Share rank of 91. Signet Banking Corp. advanced 17/8 to 421/8 on triple normal dai- ly volume. The move was a breakout from a four-month base. Donaldson, Lufkin & Jenrette Securities Inc. made bullish com- ments on the stock and projected 1992 earnings of $3.90 a share, 15 cents more than consensus estimates. 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