SPX Corporation is a global provider of industrial products and services, technical products and systems, service solutions and vehicle components. For the fiscal year ended 12/31/00, net sales fell 1% to $2.68B. Net income before extra. item rose 84% to $198.3M. Revenues reflect lower sales of technical products and systems. Net income reflects a $98M gain on the issuance of Inrange stock, lower interest expense and lower S/G/A costs.

April 12, 2001

SPX produces automotive specialty service tools and equipment for franchised and independent vehicle dealers. After a complete makeover in 1996, the company revamped its business intent from being merely a supplier of automotive products to providing integrated vehicle service solutions. From this period, annual earnings for the company grew sharply, gaining 24% for each of the past five years. Although SPX has fallen significantly from its all time highs, the company has never declared a stock split, though we expect one could be forthcoming given its high stock price. We also like the fact that the stock is coming off a sharp “V” bottom formation, which managed to take out the intermediate high of $95.70 in today’s session. The technical indicators also paint a bullish picture, with a extended crossover in the stochastic and the MACD issuing a mid-week buy signal. So, bearing all this in mind, should shares continue to show upside strength in the week ahead, we’ll look for resistance to occur at the 50-dma of $98.06, followed by a stiffer challenge at the century mark. Support will come at the $95 mark. Look to time entries when SPW bounces off support or breaks above the 50-dma on volume of at least 240,000 shares traded by midday. We’ll set our initial stop at $90 to minimize our downside risk.

Picked on April 12th@ $96.31
Change since picked 0.00
Stop Loss @ $90.00

April 19, 2001

SPW continued an ascent to higher levels on Wednesday, gaining 5% to close at a one month high of $99.85. More importantly, the stock was able to advance above last week’s consolidation and could now be ready to overtake the century mark. In Thursday’s trading session, however, SPW shares did take a breather, but still managed to close higher by 5 cents. Volume was held under the three-month average, as 362,500 shares were traded. In the last hour of trading, the stock saw some pretty impressive buying, which suggests that traders were fighting to get in before a potential follow through tomorrow. Bolstering the possibility of a further run are positive readings in both the MACD and On Balance Volume. So, what we’d like to see now is for momentum players to start hitting the offer and lift trading volume above its three-month ADV of 488,400 shares. This will add strength to the run and could potentially attract more attention to the stock as we near the May earnings report. Of course, this would be the best-case scenario, but we like what we see thus far. Keeping this in mind, we’ll now look for an important psychological test to come at $100. An entry point could come when SPW shares move swiftly through this level on midday volume of at least 245,000 shares. A sharp bounce off support at $99 could also present a low-risk entry, when followed by similar midday volume. We’re recommending that stops be lifted to $98, which will help to protect profits.

Picked on April 12th@ $96.31
Change since picked +3.59
Stop Loss @ $98.00

April 17, 2001

To keep up with global demand for technical products, specifically in storage area networks (SAN’s), SPW’s recent billion-dollar investment in R&D should bode well for the company’s future. It is technically significant that SPW bounced off its 5-DMA of $94.88, which has been providing good trendline support over the past couple of weeks. A sustained bounce off this level will be a good indication that the stock has found a short-term bottom and will likely trend higher. In addition, it appears as if SPW is finding further price support at $95. In the event of a deeper pullback, however, we feel there is plenty of additional support at $92, bolstered by the 20-dma of $92.46. We’ll feel comfortable adding to positions if SPW can bounce sharply off either of these moving averages. A good entry point for momentum investors could present itself if SPW moves above its 50-DMA of $97.85. This trade becomes more enticing if it is accompanied by midday volume of at least 240,000 shares. We also like the fact that that the OBV is holding strong.

Picked on April 12th@ $96.31
Change since picked –1.14
Stop Loss @ $90.00