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 10, 2001

Lear continues to loss ground despite Monday’s positive news that it has inked a deal with Germany’s BERU Group to jointly design and develop tire pressure monitoring systems for the global automotive market. We are beginning to become a little concerned because today’s selling came on volume of 416,000, which was inline with the three-month average daily volume of 443,000 shares (past recent sell offs have come on below average volume). Adding to our concerns is the MACD, which turned negative today. At this point, LEA is supported by its 20-dma at $35.56, followed by the bottom of its recent consolidation range at $35.00. The good news is the stochastic is beginning to show the stock to be oversold. As for resistance, LEA could run into a little trouble at its 10-dma of $36.54 with bigger trouble following at its 52-week high of $38.50. Should LEA breach this level, though, 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 the 10-dma at $35.56 or a bounce off support at the 20-dma at $35.56 before placing their trades.

Picked on April 24th @ $36.20
Change since picked -0.18
Stop Loss @ $33.88

May 8, 2001

Lear has succumbed to some profit taking this week after gaining two dollars this past Friday. Still, we’re not terribly concerned. The sell off that occurred during Monday’s and today’s sessions occurred on below-average volume of 325,000 shares. What’s more, LEA’s MACD is remains positive and its On-Balance Volume, which is flattening, hasn’t reversed course. At this point, LEA is supported by its 20-dma at $35.12, followed by the bottom of its recent consolidation range at $35.00. Overhead, LEA has immediate resistance at Friday’s intra-day high of $38.50. Should LEA breach this level, 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 today’s intra-day high of $37.60 or a bounce off support at $35.00 before placing their trades.

Picked on April 24th @ $36.20
Change since picked +0.17
Stop Loss @ $33.88

May 6, 2001

Lear added $2.10 on strong volume of 575,000 shares during Friday’s session and more importantly, managed to breakout of its pennant formation. Early in the week Lear was named supplier of the year by General Motors (NYSE:GM) and on Thursday, was highlighted on the front page of Investors Business Daily. The IBD article pointed out that LEA is a great growth story in a narrow industry with few competitors. The article also points out that even though the U.S. auto industry may be slowing, the demand for interior auto parts (Lear’s specialty) is still cooking along. This is due to the auto industry trend towards adding more bells and whistles as well as safety features to the interior spaces of American cars and trucks. No wonder buying interest has picked up again. Looking at the chart, no real resistance comes in until the psychological $40-level and then the $50-level. Since Lear closed at the highs of Friday’s session, traders might want to wait for a pullback to the $37.75-$38.00 range before initiating new positions. Chasing the stock much beyond $39.50 would expose a trader to the risk of an 8% retracement back to Lear’s base at around $36.60 so be patient if the stock decides to gap higher.

Picked on April 24th @ $36.20
Change since picked +2.30
Stop Loss @ $33.88