Investment Technology provides automated equity trading services and transaction research to institutional investors and brokers through its wholly owned subsidiary, ITG Inc. For the 3 months ended 3/31/01, revenues rose 21% to $91.7M. Net income rose 32% to $21.0M. Revenues benefitted from increased commissions from Client Site Products and the Electronic Trading Desk. Earnings also reflect a $1.9M gain on the sale of ITG Europe.

May 16, 2001

By lowering the costs of trading for institutions, ITG provides their clients with an edge in the highly competitive financial services industry. This is because the lower trading costs can be passed onto the clients in the form of lower management fees. ITG has also benefited from increased coverage by the brokerage community. Since the first of the year, three additional brokerage firms have picked up ITG. Just recently the stock was initiated with a "buy" rating from Bear Sterns. Turning to ITG's impressive chart, the stock has just successfully broken out of a symmetrical triangle formation. This is usually a bullish sign for a stock, and according to the width of the triangle, the next stop for our new play is $70. Traders might want to consider initiating new plays in ITG if the stock can settle back at least $1.00 on low volume of less than 100,000 shares by midday, with a subsequent bounce into the close. Otherwise, aggressive traders might want to see if ITG can conquer resistance at $55.00 on volume of at least 150,000 by midday before initiating new positions. We are setting our initial stop at $51.40 to protect on the downside.

Picked on May 16th @ $54.52
Change since picked +0.00
Stop Loss @ $51.40

May 24, 2001

ITG succumbed to more selling pressures on Thursday and triggered our stop at $51.40. The fact that ITG failed to breakout on Tuesday probably had something to do with today's sell off. We will continue to monitor ITG for split possibilities and future plays opportunities.

Picked on May 16th @ $54.52
Profit/Loss = -3.12 (-6%) (Stopped out Thursday @ $51.40)
Best Profit = +2.11 (+4%)

May 22, 2001

We have one word for today's action in ITG, disappointing. The stock started the day well above pesky resistance at $55, but could not hold onto its gains. The early rise and subsequent drift lower into the close left a bearish hammer formation on ITG's chart. This usually doesn't bode well for a stock in the short term, so we will watch for support at $54 to hold up amid more selling pressure. We will also watch for volume to dry up on any further moves lower. An actual close above $55 is what ITG desperately needs to keep its upward momentum going. It has been turned back by this resistance level five times in a row, so short sellers may be starting to circle. However, given the fact that the AMEX Broker/Dealer Index held up today, we remain optimistic that ITG will persevere. Traders should wait for a close over $55 on volume of at least 300,000 shares traded before initiating new positions.

Picked on May 16th @ $54.52
Change since picked -0.02
Stop Loss @ $51.40

May 20, 2001

On Friday, Jeffries Group analyst Charlotte Chamberlain said that ITG stands to benefit from the recent Instinet (INET) IPO, if only because it’s a better company. According to Chamberlain, ITG has booked a 32 percent annual growth rate in pre-tax income over the past four years, compared with 9 percent for Instinet. We guess she is suggesting that ITG should be afforded a higher value, which we agree. Unfortunately, though, the market doesn’t, as ITG lost $0.71 to close at $53.89. Despite the kudos from Chamberlain, we think ITG might take a breather after this week’s strong run. In fact, ITG is now bumping up against resistance at $55.00, so it’s possible that it might want to consolidate between $52.50 and $55.00 before attempting another leg up. At this point, ITG has support provided by its 10-dma at $52.16 followed by additional support at its last consolidation base at $50. Traders considering a position in ITG should look for a move through resistance at $55.00 or a bounce off Wednesday’s intra-day low of $52.50 on volume of 100,000 shares traded by noon EDT before placing their trades.

Picked on May 16th @ $54.52
Change since picked -0.63
Stop Loss @ $51.40