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 17, 2001

In Tuesday’s write up, we said that LEA was consolidating near its base at $35.00. We also said that we doubted that LEA would see much price action Thanks to the Fed, we were wrong on both accounts as buyers came into the market to take LEA over $37.00. What’s more, there appears to be some enthusiasm behind LEA’s advance, as it was accompanied by average volume of 500,000 shares, which is 100,000 greater than the three-month average daily volume of 400,000. More impressively, LEA’s mini-rally has put it above its 10-dma at $36.54, which had been resistance. The next level of resistance will be the May 4th high of $38.50, which LEA challenged today. As for support, LEA has its 20-dma at $36.22 followed by the aforementioned consolidation base of 35.00. 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 $38.25 or a bounce off the 20-dma before placing their trades. To prevent excess losses, we’ve moved our stop loss to $35.00

Picked on April 24th @ $36.20 Change since picked +1.10
Stop Loss @ $35.00

May 15, 2001

Last week, we were concerned that Lear might rollover because it traded lower six-consecutive sessions. However, it’s now starting to look like LEA may just be consolidating near its previous consolidation base at $35.00. We were encouraged that today’s advance came on above-average volume of 560,800 shares traded, which was 120,000 shares greater than the three-month daily average of 440,000. Still, LEA could run into resistance at its 10-dma at $36.46. This is a level LEA has been unable to breach over the past five sessions. As for support, LEA has the aforementioned consolidation base of 35.00. 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 or a bounce off of $35.00 before placing their trades. But to be honest, given LEA’s technical picture, we doubt it will offer much price action.

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

May 13, 2001

Things are not looking great for LEA at this point. On Friday, Lear notched its fifth straight day of losses by falling $0.37 on volume of 270,000 shares. There are two separate forces at work that may serve to salvage LEA from the sell off blues. First, Friday’s retail report showed unexpected strength in car sales. This may boost shares of LEA from a fundamental standpoint. Second, from a technical standpoint, the RSI and stochastic are both telegraphing a turnaround, based on the fact that LEA is oversold. Support should be showing up at $35. We would suggest waiting until LEA can show that selling pressure has subsided before initiating any new plays. A turnaround would be marked by a rally up through the 10-dma (now at $36.50) on daily volume of at least 450,000 shares. If LEA slips any further, we have stops set at $33.88 to limit our downside risk.

Picked on April 24th @ $36.20
Change since picked –0.55
Stop Loss @ $33.88