BMY - Bristol-Myers Squibb $56.63 -0.38 (-0.87)

Bristol-Myers Squibb has been largely ignored this week as the market has focused on the technology stock two-step. In fact, Drug stocks (DRG) in general have been a bit sleepy the past two days. The DRG has slipped 5.76 this week and closed today at 407.24. The longer-term attractiveness of drug stocks remains intact. BMY has a solid growth rate. Earnings are expected to show an increase of 29% when the Company reports on October 20th. With a P/E ratio of only 25.17, BMY represents a relative value to many of the previously favored technology stocks and many of its pharmaceutical competitors. We were a bit surprised that drug stocks were not stronger today after the technology stocks started falling, but we expect that scenario to improve if the NASDAQ correction continues. Last week, BMY said that it will put two of its units up for sale and one of them may be getting a bid very shortly. A British-based healthcare concern, Smith & Nephew is reportedly considering a bid for BMY's orthopedic equipment division, Zimmer. BMY continues to struggle to surpass the resistance at $59.44. This resistance was established by July's high and it was tested last week. BMY had a nice run before hitting the resistance but it likely failed to take it out because the stock was overbought and a bit extended as indicated by the RSI. The slow retreat could be just the consolidation we need to give BMY the strength to mount another charge. BMY closed just above a down sloping 200-DMA which now stands at $56.47. We will be less enthusiastic about this play if BMY cannot stay above the 200-DMA. We are keeping our stop at $52.69, which is just below the 50-DMA of $53.40. If the market stays weak, you may wish to wait for a bounce off the 50-DMA before initiating a position. The previously strong MACD is showing signs of slowing down. Although still positive, this indicator could issue a sell signal if we have a couple down days in a row. The OBV is also less than inspiring. If this short-term trend reverses, you can find a trailing stop suggestion in our In Play section. In the meantime we are hoping that BMY can hang on long enough to stage a pre-earnings rally.

Picked on September 21st @ $56.69 Change since picked -0.06

ELN - Elan Corporation $60.00 +1.38 (+5.25)

Fund managers are citing two major reasons for their bullishness on pharmaceutical and healthcare stocks. First, the demographic age groups indicate that the baby boomer generation will begin hitting retirement by next year. In other words, more elderly people, more demand for pharmaceuticals. Next, the data suggests that people will continue to live longer lives. This should provide pharmaceutical manufacturers with strong growth throughout the life of the drug patent. One firm that sees this potential is SG Cowen, which upgraded Elan shares on Monday from a Buy to a Strong Buy rating. The announcement helped Elan climb $3.75 to retest its all time highs near $60. We'll look for more resistance to come at $65, then $70. However, a quick advance through this level on good volume will offer us an additional entry point. Reconfirm entries with strength in the AMEX Pharmaceutical Index (DRG). For support, we'll now be looking at $58.50 (today's gap up) as the initial base. We'll now set our stops just below this level at $58, to protect against a trend reversal.

Picked on September 24th @ $55.25 Change since picked +4.75

MBI - MBIA Incorporated $70.44 -1.37 (-0.69)

MBIA Incorporated just last week was achieving new 52-week highs on record volume. Now it seems to be taking a breather, which is healthy as long as it doesn't come on increased volume. Tuesday's Federal Reserve meeting, coupled with profit warnings, kept the volatility alive and well in the broad markets. MBI, which provides financial guarantee insurance and investment services has been a stellar performer as of late. Last week the stock appreciated 9% and achieved a new 52-week high at $73.43 on twice its normal volume. This week investor enthusiasm seems to have cooled as evident by the rapid decline in trading volume. Tuesday's volume was recorded at 290 thousand shares, off from its average of 310K. Going forward we'd like to see trading volume increase back above the average as the stock makes another attempt at higher ground. Currently the stock has support at the 10-dma at $69.13 and the 20-dma at $68.48. Resistance is now a threat at the 5-dma at $70.78 and at the $73.50 level. The cooperation and momentum of the broad market especially the INDU and the Insurance Index (IUX) should accompany any new plays. We will retain our stop loss at $67.50 on this play. Any changes will be noted daily at our IN PLAY section.

Picked on September 28th @ $71.06 Change since picked -0.62

MXT - Metris Companies, Inc. $41.75 +3.00 (+2.25)

The Federal Reserve left interest rates alone for the third straight time and the biggest beneficiaries where the financial stocks. There is an increasing opinion that the soft landing promised could become more firm than soft. So how is this good news for financial stocks? If the Fed appears unlikely to raise rates, then companies like Metris can go about their business of borrowing money at lower rates than it loans it out to customers. Yield spreads are particularly profitable if interest rates remain stable. Also, Metris is well positioned to take advantage of the possible situation where credit becomes harder to obtain. Because the Company concentrates on providing credit services for those individuals that have the hardest time obtaining credit, a tough economic period would actually help MXT in some respects. MXT ended last week on a good note when ABN AMRO initiated coverage with a "Buy" rating. Today's news included the announcement that MXT has filed to sell $250 million in debt securities, common and preferred stock, warrants and depository shares. The size of the offering is relatively small and it should occur slowly over time so it is not likely to have a major dilutive effect upon the common stock. MXT's earnings report is just over two weeks away. If the Company meets the Street's estimates of $0.49 it would represent a nice increase over the same period a year ago, which saw earnings of $0.36. Investors are definitely starting to pay more attention to companies that can post consistent returns. As strong as today's advance was, it still fell short of establishing a new high. The old high of $42.94 was not threatened and MXT is starting to exhibit signs of some topping. Volatile swings near all-time highs can signal a short-term top. Consequently, we will continue to protect ourselves with a stop at $37.00 and watch to see if MXT can mount an earnings anticipation run. Ahead of our stop, we see support at today's low of $39.00. The MACD turned negative this week, which raises our caution flag a little higher. That negative MACD is somewhat buffered by a Money Flow that remains positive. If a new high is established this week you may wish to consult our In Play section for a trailing stop suggestion.

Picked on September 26th @ $41.06 Change since picked +0.69