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 24, 2001

Momentum investors had every excuse in the world to take profits out of the nice run in the shares of this major lottery systems supplier. Yesterday's market declines were characterized by profit taking in many of the recently strong stocks. The fact that GTK declined modestly and finished today only $0.48 below its 52-week high highlights the stock's impressive relative strength. That said traders should probably be wary of a more substantial correction if GTK drops below the support provided by the 10-DMA, which closed today at $36.50. New trades might be considered if GTK crosses over $38.18 with first hour trading volume approaching 100,000 shares. Looking at GTK's technical indicators, we note that the MACD has flattened. This could result in a sell signal if the MACD weakens further. The RSI continues to reflect a severely overbought condition that doesn't seem to bother traders. Momentum is a powerful thing and we are happy to stay with GTK as far as the ride will take us. If a new high is established tomorrow, do not be surprised if there is some profit taking late in the day ahead of the three day weekend.

Picked on April 20th @ $29.79
Change since picked +7.91
Stop Loss $35.50

May 22, 2001

The momentum continues to the upside for this lottery equipment and services leader. GTK has exhibited some excellent relative strength and continued its winning ways again today. The stock pulled back only $0.07 even though there was some profit taking pressure seen across many sectors. Additionally, GTK has been able to establish new 52-week highs during both Monday's and today's trading sessions. Today's high print was $38.10. It was not terribly surprising that GTK was unable to close in positive territory today. We have pointed out in the last several updates that GTK is extremely overbought according to its RSI. Nevertheless, momentum traders may still be able to make a profit if they go long tomorrow on the condition that GTK can trade through $38.10, accompanied by first hour trading volume exceeding 75,000 shares. Just be wary if GTK starts to pull back following the establishment of a new high. A repeat of today's action tomorrow is very possible due to the overbought condition. If GTK starts to sell off in the early going, one should probably pay attention to the 10-DMA of $36.10. If this support is violated, our stop at $35.50 could be quickly executed.

Picked on April 22nd @ $29.79
Change since picked +7.68
Stop Loss $35.50

May 20, 2001

A nice surge into the close on the NYSE enabled GTK to come very close to establishing a new high. The current 52-week high of $36.80, which was established on May 10th, is providing resistance. GTK might enjoy a nice rally if the stock can trade above $36.80 and accomplish this move with midday volume exceeding 150,000 shares. We have decided to raise our stop just in case the above mentioned resistance proves too tough for GTK. Our new stop is at $35.50, which is just below the nice support offered by the rising 10-DMA. Although the MACD is still positive, it is starting to level off from its steep ascent that began back in early April. The OBV is still quite strong and is suggesting that money could continue to flow into the stock. Our main concern is the RSI, which, incredibly, has stayed at levels suggesting an overbought condition for more than two weeks.

Picked on April 20th @ $29.79
Change since picked +6.82
Stop Loss $35.50