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Subject: Inside The Market
Date: Mon, 23 Nov 92 12:15:13 EST
Message-ID: <1.1992Nov23.121514@AmeriCast.com>


11/23/92


TITLE Inside The Market #m#gm#m#S&P 500 And NYSE Set Record
Highs; Dow Climbs 18 Points In Heavy Trading

Leo Fasciocco The stock market rose broadly Friday in heavy trad-
ing as several of the averages, such as the Standard & Poor's
500- stock index and NYSE composite, reached all-time highs.  The
S&P 500 index rose 3.04 points, or 0.72%, to close at a record
426.65. The prior high was 425.27 set September 14. The NYSE com-
posite gained 0.66% to a new high of 234.78. Trading swelled by
17% to 256 million shares due to the expiration of futures and
options.  The more publicized Dow Jones industrial average rose
17.83 points, or 0.56%, to 3227.36. The Dow is 186 points from
its all-time closing high of 3413 made June 1. It has been lag-
ging the major averages.  General Electric Co.-
 jumped 17/8 to 80 to pace the Dow. It voted to increase its
quarterly dividend to 63 cents a share from 59 cents. The stock
has been locked in a ten-month trading range between 72 and
803/4. Its Relative Strength is 59.  Goodyear Tire & Rubber Co.
raced ahead 23/8 to 71 and International Business Machines Corp.
rebounded 1 to 621/4. Walt Disney Co., which Thursday reported a
27% increase in earnings for the fiscal fourth quarter ended Sep-
tember 30, added 1/2 to 413/8.  The broad list showed gainers
topping losers 1,090 to 699 with gaming, retail, newspaper, rail-
road and some oil stocks doing well. The advance-decline line has
been trending higher for the past six months.

"The market's rise was due to arbitrage program buying, bargain-
hunting and short-covering," said Dennis Jarrett, chief market
analyst at Kidder Peabody & Co.  "I expect the market to consoli-
date," he added. "However, there is a chance of a buying frenzy
if portfolio managers sense the market is getting away from them
late in the year. They will need to buy to protect performance.
"I have been traveling and talking to money managers, and some of
them who are not positioned to take advantage of a rise in
small-capitalization stocks are feeling frustrated. However, they
may be pressured to participate if they move higher." Jarrett
also speculated that if the Dow industrials start to come on it
may signal the end of the rally in the overall market because the
blue chips are the laggards. And the laggards are usually the
last ones to move during a rally phase.  In other trading, ITT
Corp. moved ahead 21/8 to 703/4 on four times average daily
volume. The move was a breakout from an eight-month consolida-
tion. Analyst Phua Young of Lehman Brothers Inc. said there was
no news to account for the rise. He is bullish on the stock and
sees it climbing to 80 in the next nine to 12 months.

A year ago, directors approved a management incentive compensa-
tion program tied to ITT achieving a 15% return on equity by the
end of 1995, Young said. The ROE this year will be a dismal 5%
due to hurricane costs, he said. ITT owns Hartford Insurance Co.
Young said he expects ITT to show flat earnings for the fourth
quarter and $3.50 a share for 1992. Next year, he's projecting a
big 71% surge to $6 a share.  Brilliance China Auto drove ahead
15/8 to hit a new high at 287/8. The stock of the Chinese maker
of minibuses has been a hot issue since being offered in the U.S.
at $16 seven weeks ago. The company owns a 51% interest in
Shenyang Jinbei Passenger Vehicle Manufacturing Co.  Technically,
the stock is acting very strong. After peaking at 281/4 five
weeks ago, it consolidated nicely for three weeks and Friday em-
erged from the base. It has a Relative Strength of 84.  Shenyang
controls 40% of the minibus market in China. About 90% of the
firm's minibuses are sold to the government and cooperative agen-
cies. They are used to transport workers and as police vans and
ambulances.  In 1991, it sold 11,778 minibuses. In its registra-
tion, Brilliance China said it expects its minibuses to remain in
demand. Second- quarter earnings were up 122% and rose 133% in
the first quarter.

Wing Yip, who follows the China market, points out that stocks of
many Chinese firms are "very expensive," selling at
price/earnings ratios of 30 to 50. Brilliance China's p/e ratio
is 45.  Yip said the high multiples for Chinese stocks are due to
China's high currency risk, which has caused locals to buy stock
rather than hold currency. "A high p/e ratio isn't always bad,"
said Yip. "It's important to look at company's business. In the
U.S., computer stocks sell with a high p/e ratio."

Tribune Co. pushed ahead 11/8 to 481/8, a 52-week closing high.
Raymond Katz of Lehman Brothers is forecasting an 86% jump in
Tribune's earnings for the fourth quarter to 82 cents a share
from 44 cents a year ago.  That would be one of the largest quar-
terly gains in years. He said 11 cents a share will be picked up
from a one-time payment from the baseball expansion. Tribune owns
the Chicago Cubs. Also, Katz sees a rise in advertising.  Next
year, he is forecasting a jump in earnings to $2.85 a share from
an expected $2.05 a share this year. He said the stock could move
to the mid-50s but sees some problems there because the converti-
ble preferred will be "in the money" at that level.

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