(PRWEB) November 1, 2001
October 29, 2001
An Update of the 10.1.01 Newsletter
Using, AXXel Knutson’s
VTAR™
["Volume Trade Analysis Research"™]
“Manage the riskÂ…the profits will take care of themselves”
“In this business, being right is not as important as making moneyÂ…consistently, and one of primary tenets of the quest is the avoidance of the ‘obvious risk’”
Securities offered through
First Allied Securities, Inc.
Member NASD & SIPC
197 Mountainview Road – Warren – NJ – 07059
Email: axxel@blast.net or tradingweapon@aol.com
Telephone: 908.647.5750 FAX: 708.585.6185
First Allied is registered in all states. Mr. Knutson is registered in all states + Puerto Rico and Washington, DC
TradingWeapon™ VTAR™ [Volume Trade Analysis Research™] TradingWeapon & TradingEngine is Trade and service marked by and owned by Axxel Knutson.
© 1999-2001 all rights reserved, AXXel Knutson
["Tradingweapon.com" is the business name for AXXel Knutson, who is a Registered Principal of an independently owned office of Supervisory Jurisdiction [OSJ] with First Allied Securities, Inc. TradingWeapon.com offers all of its securities business through First Allied Securities, Inc., a member of the NASD/SIPC. Bear Stearns Securities Corp. is the clearing agent for First Allied. Securities. Inc.
The Most Important Buy Point Since August, 1981 [10.1.01 & 10.20.01 BBC "World Service"
Update: 10.19.01 No change.
Update: 10.29.01 No change. We expect some weakness in the Nasdaq Composite [1750] and in the Dow [9510]. We are seeing the market broaden out, note the recent strength in the Value Line Arithmetic Index [VLE-1113]. To the upside, oils, natural gas, gold and other precious metals including palladium [see North American Palladium -PAL-5.23]. Intel [INTC-24.18] cutting prices over the weekend zapped the semis.
“In August of 1981 with the Dow at 888 it was a market environment of doom and gloom.
Someone named Granville was predicting a Dow 375 and nowhere was anyone looking for an up moveÂ…well, almost no one. Now 2001: The Dow clunked 685 points on September 17 the first day of resumed trading, 17 more on 9/18 and 144 to the downside on 9/19. During this drop the Fed poured money into the system with $ 11.7 billion in loans to banks for the week ending 9/12 setting records for liquidity increases by the Fed. On the 14th the Fed stepped up to the plate and bought $ 80 billion in Treasuries and mortgage-backed securities and those of U.S. Agency. Add to this the Fed entered into a $ 50 billion arrangement with the European Central Bank. In effect the cost of overnight borrowing is down to almost nothingÂ…make that 1%! All of this is inflationary in the intermediate term as government spends money for defense [no bang for that buck vs. investment in private industry related to efficiency]. Rates on 10 Year bonds have already started a move up in anticipation of increasing long-term interest rates. But given the dramatic growth of the 90′s the economy can afford this shift as long as it does not become permanent.
A recession is commonly defined as two consecutive quarters of declining GDP and we are likely to see that take place in the second half of 2001 even though the revised GDP numbers for the April-June period were revised upward to a growth rate of 0.3% from the reported 0.2%, hardly a reason to jump for joy. Business investment off the cliff at an un-revised negative 14.6% rate on the heels of the negative 0.2% crunch of Q1 and that represented a decline of 1.99 percentage points in the overall GDP numbers. Inventories continued their shrinkage and posted the largest drop since 1983. Consumer spending rose at the un-revised 2.3% rate-that will most certainly tank in the second quarter and is in part, the reason for the decline in stock prices in the previous week. Imports to the USA dropped 8.4% and that is an upward revision from the previously reported 7.7%
The rate of inflation as measured by the price index for personal consumption rose at 1.3% a slight revision downward. The first quarter was + 3.2%. We have cut rates 8 times this yearÂ…look for number nine in October. So we have benign inflation, consumers resisting the need to use plastic and all manner of negative news, war, pestilence, a measurable drop in stock prices on high volumeÂ…and we have raised out market signal to “Strong Buy.” This is as important a buy point for U.S. and FTSE shares as we have seen since 1981. We were right thenÂ…I think we will be right again.
We can expect that Defense will gain about $ 70 billion over the most recent budget + $ 17 ½ billion for airlines and $ 20 billion for New York City. Nevertheless, in the short-term in a recession [let's call it what it is] fiscal stimulus is just the ticket at the moment. And now, in 2001 with the Dow not only having seen Dow 3,000 but Dow 11,500+ we can now suggest our long-term objective of Dow 25,000 is still very much a target. On the BBC “World Service” upon which I regularly comment, I moved my market stance from “Accumulate” to “Strong Buy” a week ago Friday, September 21st at about 8300 for the Dow and 1480 on Nasdaq Comp and just under the important break point of 1000 for the S & P 500. With the exception of the Monday following that week, the market has held together and advanced. We think that will likely continue. Here is the 1981 AXXel forecast-See the button below:
Button produced by AXXel Knutson, CEO of The Capital Defense Group in 1981 with the Dow at 888
Not since the malaise of the late 70′s and early 80′s have I seen a buy signal this strong. We have everything in place for that signalÂ…measurable disbelief in our economy’s ability to provide growth and jobs, the biggest weekly decline in the Dow since 1933 off 14.3% to 8,236, a recession in this the third quarter of about -0.5% and -0.7% for Q$ -2001. Significant and sustained negative price movement in stocks and dramatic increase in volume-all to the downside, novice investors looking for shorts and puts-look at the VIK index-and horrible news both economic and otherwise. The only thing lacking for a better signal would be if my secretary, Bubbles LaRue quit because she couldn’t afford the repairs on her broken down Rolls [actually, Rolls never "break down." There are TIMES when they "fail to proceed."]. The Brits have the marketing down on the Rolls don’t they? Fail to proceed, indeed. This market “failed to proceed.”
Nasdaq Composite chart courtesy of http://www.clearstation.com
We are now going to look at the groups, quickly.”
AEROSPACE AND DEFENSE
Lockheed Martin [LMT-43.30] Strong Buy. The recent $ 46 high looks easy. Is 60 easy? Probably. Update 10.19.01 $ 47.05 retraced to $ 45-no change. Update: 10.29.01: $ 52.50. Sell. We have the newsÂ…what more do we want? We will likely come back.
General Dynamics [GD-87] and triple digits the target. Stronger than LMT. Update 10.19.01 $ 82.40 interesting break to the $ 79+ range. Strong Buy. Update: 10.29.01: $ 86.50 still in the base. Accumulate.
Northrop Grumman [NOC-100.45] the top choice in the group. Strong Buy. With the base at $ 80, it is unlikely to test that range. Large supplier of radars, and the U.S. Air Force’s new F-22 Raptor fighter, the unmanned Global Hawk and the new DD-21 destroyer for the Navy. Update 10.19.01 $ 104.80 – holding well and a buy point could be the break of $ 100 if it occurs. Update: 10.29.01: $ 103.45, let’s exit for the moment. Would like to buy sub $ 90.
Raytheon [RTN-33.95] the producer of Tomahawk cruise missiles and its radars cruise along with F-14, F-15, F/A-18′s and the B-2. Add also the F-117 stealth fighter and the U-2. Strong Buy. Update 10.19.01 $ 35.65 minor break as well and that appears over. Update: 10.29.01: $ 33.85 we can exit here as well. New buy point is a break of $ 30.
Alliant Techsystems [ATK-83.75] is the producer of size of solid=propellant rocket motors and bullets. Call these consumables. The base is $ 70. Strong buy right here. Update 10.19.01 $ 85.62 here the break took it to about $ 83. No change in opinion. Update: 10.29.01: $ 88.67 we are going to sell to re-buy the break of $ 75. Maybe it happens, maybe it doesn’t.
Drs Technologies [DRS-34.80] Here is the news PARSIPPANY, N.J. -(Dow Jones)- DRS Technologies Inc. (DRS) received a $ 3.8 million contract from the U.S. Army to provide infrared thermal imaging systems for Abrams M1A2 battle tanks. In a press release Wednesday, DRS said its Second Generation Forward Looking Infrared system will be part of the system enhancement software on the Abrams M1A2, the Army’s fully digital ground combat vehicle. The defense technology company said the system provides day and night
vision capabilities enhancing surveillance ranges, “increasing target acquisitions and significantly reducing fratricide.” The base $ 20 then $ 25-28. The recent high about $ 40. The buy point here and on any break of $ 30. Update 10.19.01 $ 37.63 a strong break but that appears finished. There was no break of $ 30, but $ 32 is close enough. Strong Buy. Update: 10.29.01: $ 39.00 we shall exit for the same reason as ATK above. To re-purchase sub $ 30.
Engineered Support Systems [EASI-46.05] Engineered Support Systems, Inc. engineers and manufacturers a wide range of electronics and military support equipment for various branches of the U.S. military and commercial customers. The base is 35-40 and the lift off is impressive. One can trade it from here and accumulate size sub $ 40. This tells the story here: “ST. LOUIS, Sep 24, 2001 /PRNewswire via COMTEX/ — Engineered Support Systems, Inc. (Nasdaq: EASI) has received an order totaling $ 5.8 million for production of its Chemical Biological Protected Shelter (CBPS) system under an existing contract with the U.S. Army. This order includes funding of certain engineering change proposals (ECPs) on the 113 units currently in production plus the exercise of an option for the production of an additional 10 CBPS units, according to Michael F. Shanahan, Sr., Chairman and CEO. Update 10.19.01 $ 46.25 no break of the forth number, but it now looks as if this is as good as we can do in terms of purchaseÂ…so purchase. Update: 10.29.01: $ 49.27 no change.
Hi-Shear Technology [HSR-2.30] on a watch list only. Here is why: from a recent news release: “Hi-Shear’s electronic firing product revenues for the Patriot Advanced Capability (PAC-3) anti-missile program doubled during fiscal year 2001 reflecting the significant upgrades that the United States Army is making to its National Missile Defense program. The PAC-3 anti-missile is a surface to air missile, which offers increased range and accuracy as compared to current missile systems. This missile program is scheduled to expand rapidly from low rate production to full production over the next several years dependent on
defense department appropriations. Hi-Shear’s participation is the result of its ongoing investment to provide an array of the most advanced missile firing systems. Update 10.19.01 $ 3.70 more than a worthy trade. Accumulate sub $ 3.50. Doubtful to see a break of three. Update: 10.29.01: $ 2.70 we have the break of $ 3.00 and we are looking for the break of $ 2.00 for an opinion change from “accumulate” to “buy.”
Allied Research [ALR-15.60] and off the stable base at $ 9.00. the buy point is sub ten and useful for traders only until then. Here is why: “DJS Allied Research Gets $ 17 Million In Ammunition/Components Orders VIENNA, Va. -(Dow Jones)- Allied Research Corp.’s (ALR) defense unit, Mecar S.A., received $ 17 million in new orders from several unidentified customers for ammunition and components. In a press release Tuesday, the defense and commercial electronic security company said the orders call for various types of large caliber ammunition and components ranging from 105mm to 155mm systems.” [Source: Dow Jones]. Update 10.19.01 $ 13.90 we are not at a break of ten and it is unlikely to go there. But it can break from here and that IS the buy point. Update: 10.29.01: $ 16.10 a nice move off the correction from $ 13, but we shall exit to re-purchase sub $ 12.00.
Esco Technologies. Inc. New Comment [ESE-26.65] a terrific double bottom at the sub $ 23 level. Very nice track record and management positive statements about the quarter moved the stock from sub $ 23 to the current number. We would prefer to accumulate under $ 25. Here are the quarterly numbers. ESE is a supplier of engineered filtration products to the process, health care and transportation markets.
