January 2005, Volume 2 Issue 1                               Know It - Profit!


"Should You Gamble
On This Sector?"


Happy New Year!

This month's issue looks at the strongest performing sectors in the fourth quarter of 2004.

You may be surprised at what's taking off!




I compared over 70 indices against the S&P 500 using the relative strength comparison method.

The following four were the front runners for the last quarter: airlines, casino gaming, computer box makers and securities broker/dealers.




The AMEX Airline Index really took off but was too erratic for my liking. Also, since this industry is so closely linked to the world oil markets... I'll pass on it.

The PHLX Casino Gaming, PHLX Computer Box Maker and AMEX Securities Broker/Dealers indices showed solid growth over the quarter. Of the three, I believe the gaming industry is better positioned for sustained growth.






A total of 20 stocks make-up the PHLX Casino Gaming index. Only a handful were considered.





Boyd Gaming Corp was a high roller in mid-December posting an impressive 72 percent gain.

Penn National Gaming Inc and Pinnacle Entertainment Inc were good bets with solid gains of 56 percent and 49 percent, respectively.

MGM Mirage Inc had a modest gain of 38 percent... certainly not the best of the bunch but, deserving, nonetheless.






We'll go with MGM Mirage Inc (MGM). Here's why.


Although the other stocks showed stronger returns during the period, we'll discard them for the simple fact -- they're over-extended. All are in their fifth wave up... ready for a correction.






MGM is in a well established up-trend, starting from the August low.

The stock is on the verge of completing a Minor Wave (5) of a larger Intermediate Wave ... coincident with the 61.8 percent extension from Wave .

Once the price objective of $74.50 is hit, I expect MGM to correct down to the long-term trend line before trading up, again.







Where Are They, Now?...

In the November 2004 issue of Chart Wealth, I set a price objective of $14.25 for Oracle Corp (ORCL).

On 12/13/2004, ORCL (View Chart) gapped-up to close at $14.63!





Relative strength comparison analysis is an objective method for selecting stocks... but, don't use it by itself!

Apply the Three Step Set-up and you'll have a robust stock-picking plan that will support your subjective analysis, nicely.

Until next time...

Good trading,

Russ Schmidt, President
Stock-Charts-Made-Easy.com




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Stock-Charts-Made-Easy.com is not an investment advisory service, a registered investment advisor or broker-dealer and does not imply or suggest which securities you should buy or sell. You should always check with a licensed financial advisor and/or tax advisor to determine the suitability of any investment.

It should not be assumed the technical indicators, analysis techniques or trading methods presented in this newsletter will be profitable or that trading decisions based on their use will not result in losses. Past results are not necessarily indicative of future results. Examples presented in this newsletter are for educational purposes only. Any trade set-up illustrated is not a solicitation to buy or sell a security. The author, publisher and any affiliate linked to this newsletter assume no responsibility for your trading results. Remember... there is a high degree of risk in trading.


The Commodity Futures Trading Commission requires the following statement:

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.





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