 |
 |
 |
 |
 |
|
| Trader Wizard Perspective Daily global capital markets advice "Blog" posted before the NYSE morning bell and throughout the trading day. | ||
 | ||
| Who is Trader Wizard? | ||
 | ||
| Trader Wizard's Mission
My goal with this Ezine, other than enjoying the challenge of a weekly ‘buy or sell’ recommendation, is to continue the independent investor information, education and facilitation process started with Trader Wizard. | ||
| ||
| Articles by Trader Wizard | ||
 | ||
|
More About VIX The Bear's return Where is Nautilus? Where to from here? India Stocks re-visited Trouble for GOOG Buyers Rally or Window Dressing? Investor Strategy for Brazil Is Boeing Order A Big Deal? A Technical Look At The Dow Portfolio Management Tactics | ||
| ||
| Security Traders - Writers Guild | ||
 | ||
Security Traders - Recommended reading:The Stock Market Jungle
| ||
 |
 |
 |
| |
| BUY or SELL Recommendation on Honeywell | |
 |
Honeywell (NYSE: HON) Sept 24 close: $35.34 RECOMMENDATION: SELL Strategy: Buy HON=MG January 2005 Puts Strike@35 Price to be calculated at the market close September 24 (HON=MG Jan-05 close @ $1.70) OneChicago Single Stock Futures (HON1C): HON1C Z4 (Dec 04) $35.42 Among general reading, here is material I used to make this decision: EasyStock Interactive charts: Monthly, Weekly, Daily, Hourly, 30-Minute plus Reuters data at Yahoo Finance and the ValueLine study. Also Motley Fool discussion of PEG. |
| The case for selling (the stock): | |
 |
1. 2003 Earnings were $1.56, 2004 (est) are flat ($1.65) and 2005 are just $2.10. But HON for six years, 1997 through 2002, had earnings from $2 up to $2.83. Where’s the growth? In fact the 3-year earnings growth rate is negative. 2. The PEG ratio, at 1.62 (Reuters) to 2.14 (ClearStation), is too high. 3. The PE (ttm) of 22 is well above my fair value calculation of 18, and the Forward PE (to Dec-05) is above 17, so the stock is priced to perfection in the upper 30’s. 4. Half the free cash flow ($1.35 bil) is paid out in dividends ($645 mil), so there is little room to expand the dividend yield, which makes HON hardly a value play. 5. Current price is below 50-day MA and may soon test its 200-day MA ($34.88) 6. Topping MACD and STO technical indicators in short-term data series will likely carry over to Weekly data charts, particularly if VIX and VXN volatility indicators continue to move up. 7. Guru analysis by Lynch is at 0%. 8. The war theatre appears to be worsening in the days leading up to free elections in Iraq. At the same time, defense budgets are being cut back, including overseas military bases and Iraqi combat operations. The positive storyline for this industry has peaked. |
| The case against selling (the stock): | |
 |
1. The recent technical strength in the Aerospace & Defense industry may continue should the current Administration be re-elected, which is what the polls reflect. |
| Trader Wizard's expectation for this trade: | |
 |
|
| Trader Wizard Profit & Loss: | |
 |
|
|
| |
