BMY - Bristol-Myers Squibb $58.38 +0.00 (+2.13)

We are certainly thrilled to have a position that is going sideways while the overall market is breaking down to annual lows. The drug stocks in general continue to outperform the overall market due to their stable earnings and relatively low valuations. The AMEX Pharmaceutical Index (DRG) managed to gain 1.18 points and close at 416.22. Which is a phenomenal performance when one considers that the S&P 500 (SPX) dropped an incredible 34.8 points to 1329.8. BMY is slated to report their earnings on October 19th and estimates are suggesting that BMY will report a solid quarter that shows some pretty decent growth. BMY is still well off its 52 week high of $79.25, so perhaps this recent consolidation will give the stock the strength it needs to stage a more substantial rally. Yesterday, BMY got some bad news when the SEC informed the Company that they will be investigating a possible insider trading violation. The SEC believes that certain individuals with access to confidential information concerning the Company's application to the FDA regarding its hypertension drug Vanlev, may have engaged in insider trading between November of last year up until the present. The potential fallout from this scandal may go a long way to explaining why BMY is not trading closer to its high. Technically, BMY still looks pretty good. The stock approached the $59.44 resistance level yet again today. If the market had not collapsed so severely, it appears that this resistance would have been surpassed. The RSI had previously been indicating an overbought condition. The recent consolidation has alleviated this condition and there is now room for the stock to rally before becoming overbought again. The MACD issued a buy signal today. Money Flow and OBV, although not particularly impressive, have both firmed up lately. We have a stop out there at $52.69 and if the stock can break out on the heels of a market recovery, you may wish to check our In Play section for a trailing stop suggestion. If we are not stopped out we will exit this position just prior to the earnings release.

Picked on September 21st @ $56.69 Change since picked +1.69

IGT - International Game Technology $33.56 +0.31 (+0.19)

Casino gaming designer, International Game Technology held up relatively well considering the recent market action. On Thursday, shares of IGT traded in a tight range on average volume while the major US indices sold off. On the positive side, IGT stayed above support, which keeps the upward trend in tact. The company is expected to formally announce earnings on 11/7 before the bell. However, IGT has already given investors an earnings surprise by pre-announcing, so the remaining upside may be limited. Hopefully, we will get a split announcement with the earnings report. IGT currently has enough shares to split, although it is at the low end of its historic split range. In the meantime, there is support at the 10/4 close of $33.13, with additional support at $32.69, the 9/27 close. Resistance has come in just above the 5-dma at $34 and then the 10/9 high of $35. We would like to see a bounce off of $33.13 or a move above $34 on midday volume of at least 300,000 shares before we open new positions. Our stops remain at $32.50 as protection.

Picked on Oct 10th @ $34.88 Change since picked -1.31

MRK - Merck and Company Incorporated $77.19 +0.69 (+1.13)

As one of the best performing sectors over the last 6 months (up 43%), we think there are a couple of significant reasons for strength in the drug sector. First, drug stocks have been great defensive plays over volatile market conditions. This makes sense, as drugs are not tied into cyclical fluctuations. Next, earnings for the group have been steadily growing. For MRK, the company beat Wall Street estimates by .04 last quarter and are expected to grow earnings by 15% in 2001, despite loosing patent protection on some drugs. For our play, shares are still continuing to edge higher, forming a tight consolidation around the $77 mark. A strong advance above this level, combined with good volume (5.0m shares or better) could trigger an advance to higher prices. If this scenario does unfold, we'll look to open new positions. As for support, look for the key foothold to be found at $75 (previous highs), bolstered by the 10-dma of $75.33. Without risking further losses, we recommend placing a hard stop for price declines through $73.25. Look for buy opportunities if good volume follows a sharp bounce from our mentioned levels of support. For now, we'll use chart indications (support & resistance) to indicate our buys/sells, since October earnings (10/23) are still a couple of weeks away.

Picked on October 1st @ $76.06 Change since picked +1.13

SGR - Shaw Group Inc. $77.75 +3.00 (+7.75)

On Thursday Shaw Group ignored the selling in the broad markets and instead chose to hit a new high on huge volume. While the Dow Jones Industrial Average (INDU) and the NASDAQ were in a tailspin, SGR was trading higher on 60% increased volume. Intra-day the stock hit $79.38 before cooling slightly in the afternoon session. On Wednesday, SGR received an upgrade and a "buy" rating from the investment firm of CS First Boston. That positive outlook coupled with the quarterly earnings due out next week on 10/19 seems to have gained the attention and support of investors. The higher oil prices have not hurt either, as now more oil companies may look to expand their pipelines (SGR's specialty). As we near next week's earnings report, we will look for continued buying interest reflected by rising volume. At its present location the stock has resistance at Thursday's high of $79.38. Support is now noted at $75.00, the 5-dma at $73.08 and then at the 10-dma at $69.84. If you are considering opening a new play on SGR, look for the stock to conquer resistance on good volume and watch the news closely, as current events centered in the Middle East are very volatile at this point. A relief rally on the INDU on Friday could really help lift this stock higher, while further selling could trigger investors to do some profit taking. In order to secure a profit on this play we will now adjust our stop loss to $75.00. Please check our IN PLAY section for any adjustments to our stops.

Picked on October 10th @ $72.63 Change since picked +5.12