Lear Corp. designs and manufactures interior systemsand components for automobiles and light trucks. Lear has in-house capabilities in seat systems, floor and acoustic systems, door panels, headliners, and instrument panels. For the FY ended 12/31/00, revenues rose 13% to $14.07B. Net income increased 7% to $274.7M. Revenues reflect new programs and increased production. Earnings were partially offset byincreased interest expenses.

April 24, 2001

Stocks sensitive to interest rates should benefit in this lower interest rate environment, which is one reason we’ve added LEA to the Current Play list. Another reason is that LEA made a strong break above formerly tough resistance at the $35.00 level on 951,300 shares traded, which was more than twice the three-month daily average of 443,000. Credit Lyonnis and Prudential Securities can take much of the credit for trader interest in LEA, as both firms upgraded the stock today. More importantly to us, though, the stock looks very good technically. LEA has been riding a 45-degree uptrend line since early April, moving from $28 a share to today’s close of $36.20. What’s more, LEA is showing no inclination to backpedal. To that end, the stock should gain support from former resistance at $35.00, with additional support being provided by the 10-dma at $33.74. As for resistance, it looks like clear sailing until the April 1999 highs of $50 (though it could hit mild resistance at the psychologically-significant $40 level). Traders considering a position in LEA should look for strong volume, 250,000 shares or more traded by noon EST, on a move through Tuesday’s intra-day high of $37.80 or a bounce off support at $35.00 before placing their trades.

Picked on April 24th @ $36.20
Change since picked 0.00
Stop Loss @ $33.88

May 3, 2001

The trend is your friend, at least according to automotive supplier Lear. In Tuesday’s write-up we were whining (ever so slightly) that LEA’s stock was consolidating between $35 and $36, which had us a little concerned that it may be ending its recent strong run despite being ensconced in a bullish pennant formation. However, on Wednesday LEA closed above $36, as it did today. At this point, LEA is supported by its 10-dma at $35.88, followed by the bottom of its recent consolidation range at $35.00. Overhead, LEA has immediate resistance at Wednesday’s intra-day high of $36.55. After that, there is little to slow it down until the April 1999 highs of $50 (though it could hit mild resistance at the psychologically-significant $40 level). Traders considering a position in LEA should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through $36.55 or a bounce off support at $35.00 before placing their trades.

Picked on April 24th @ $36.20
Change since picked +0.20
Stop Loss @ $33.88

May 1, 2001

Today, Lear announced that it was named a General Motors Supplier of the Year because of its superior performance in quality, service, technology and price. Not that the kudos from GM did much for LEA’s stock, which closed down $0.07 to $35.93. For the past five sessions, LEA has been stopped at the $36.00 level. Today, the stock was stopped at $35.93. Lear appears to be consolidating between $35 and $36 and is forming a bullish pennant, which has us thinking the stock is biding its time before making a move higher. To that end, LEA has been riding a 45-degree uptrend line since early April. At this point, the stock has gained support from former resistance at $35.00. Overhead, LEA has immediate resistance at $36, and then it’s smooth sailing until the April 1999 highs of $50 (though it could hit mild resistance at the psychologically-significant $40 level). Traders considering a position in LEA should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through today’s intra-day high of $36.40 or a bounce off support at $35.00 before placing their trades.

Picked on April 24th @ $36.20
Change since picked -0.27
Stop Loss @ $33.8

April 29, 2001

Lear was bitten by yet another analyst downgrade on Friday after just being downgraded by two other brokerage firms on Thursday. This time around it was Goldman Sachs that lowered its rating on the big automotive parts supplier. Goldman removed LEA from its recommended list and tacked a new rating of market perform upon our play. The good news throughout all this pessimism is that the stock has held its own. In fact, after being down almost $1.00 on Friday, LEA rallied to close up by $0.06. This is a great sign that buyers are supporting the stock. It seems as if most buyers are stepping up at the 5-dma, now at $35.79, since LEA has bounced off this level twice over the last week. The technical picture on Lear is still looking very good. The recent churning in the stock has resulted in Lear tracing a handle to accompany its cup formation. These chart patterns can result in powerful moves to the upside if a breakout occurs on strong volume. Therefore, we will watch for LEA to breach the $36.20 level on volume of at least 600,000 shares by the end of the day. If it looks like the stock is going to close above this level, this is your lower risk entry signal. Our stops remain at $33.88 to protect against a reversal.

Picked on April 24th @ $36.20
Change since picked -0.22
Stop Loss @ $33.88