GTK is a world wide supplier of computerized on-linelottery products and services. As of 2/99, the Company has contracts to supply and/or operate lottery systems for 29 U.S. customers and 52 customers outside the U.S. For the 39weeks ended 11/25/00, total revenues fell 7% to $690.6M. Net income fell 73% to $17.3M. Revenues reflect a decrease in the sales of lottery terminals. Earnings also suffered from a $40M special charge and lower gross margins.

April 22, 2001

Although there are very few players that win the lottery, the ones that always win in this game of chance are those companies that supply the machinery to run these highly regulated sweepstakes. In addition, more and more states are now jumping on board the lucrative gravy train of starting and running a state lottery. GTECH has been enjoying this trend by providing the necessary equipment for governments in the U.S. and around the world to set up their own "numbers" games. GTK has been in a steady up trend despite posting earnings on April 6th that showed a decrease in profits of 6 pennies to $0.79 from the same quarter a year ago. That said, analysts believe that GTK will increase their profits for the whole year by 33%. Ever since November, GTK has been moving steadily higher and has been finding excellent support along its 40-DMA, which is now located at $27.56. Three of our favorite technical indicators, the MACD, Money Flow and OBV are all steadily rising and point towards a continuation of the positive momentum. GTK may prove to be an excellent buy if it can establish a new high above $29.95 on Monday with first hour trading volume exceeding 50,000 shares. If GTK gaps up to $32.00 or higher on the open, traders may want to wait for a little pullback to around $29.50 before initiating positions.

Picked on April 22nd @ $29.79
Change since picked +0.00
Stop Loss $26.75

May 17, 2001

GTK fell just short of establishing a new high above $36.90 today after enjoying only a modest advance during yesterday's monster rally on the NYSE. GTK has been finding really good support along its rising 10-DMA. Since this moving average closed today at $35.31, we have decided to raise our trailing stop to $35.00. A couple of technical factors continue to offer bulls encouraging signs that GTK may have some more room to rally. The MACD is still positive and moving higher after threatening to issue a sell signal. The OBV is very strong, indicating that there is more buying on up days than there is selling on down days. That said, the RSI is still a concern because it is indicating an extremely overbought condition. Nevertheless, the beauty of using trailing stops is that we can enjoy the ride as far as it will take us until the inevitable pullback. Traders might profit from a breakout if GTK can trade through $37.00 tomorrow and accomplish this feat with first hour trading volume exceeding 100,000 shares.

Picked on April 22nd @ $29.79
Change since picked +6.61
Stop Loss $35.00

May 15, 2001

GTECH never really got going today, even though it reported some good news concerning its ongoing operations. GTECH was awarded a five-year contract extension with the Rhode Island Lottery to continue providing the state with lottery equipment and online services. Nevertheless, GTK was able to add only $0.11 to its share value. Technically speaking, GTK has started to pullback in an attempt to consolidate its most recent rally. That said, GTK appears to have found some support at $35.00 and is still one of the strongest looking stocks in this market. Momentum traders looking for a buy are probably including GTK on their short list of candidates. GTK may be a compelling buy tomorrow if it can hold the $35.00 support and trade through its 52-week high of $36.80. New positions might be more enticing if the new high is accompanied by midday volume exceeding 150,000 shares. The longer-term technical picture still looks pretty good. The OBV is still advancing and the MACD is maintaining its rally. However, the RSI is indicating an extremely overbought condition that may have to be corrected before GTK can make its next advance.

Picked on April 22nd @ $29.79
Change since picked +5.71
Stop Loss $34.00

May 13, 2001

Lottery equipment leader GTECH finished the week with a little profit taking. In our last report, we suggested that the stock might be due for a pullback because the Relative Strength Indicator was at a level that suggests an extremely overbought condition. The low volume of 70,800 shares traded during Friday's drop, however, indicates that the sellers had very little conviction in getting rid of shares. It appears that buyers were just taking a break. Looking ahead to this week, traders will probably want to make sure that the $35.00 support established last week holds before attempting to add to positions. A drop below this support could result in the execution of our $34.00 stop. Momentum traders may be interested in trying to capture some quick profits if GTK can establish a new high by trading over $37.00. This potential trade could be even more enticing if it occurs in the first hour of market action, accompanied by volume exceeding 100,000 shares.

Picked on April 20th @ $29.79
Change since picked +5.57
Stop Loss $34.00