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 24, 2001

The maker of car parts got into a wreck on Thursday, as shares fell $0.64 on heavy volume of 880,000 shares traded. Momentum has certainly shifted for LEA, as evidenced by the three down days in a row. Today's move lower triggered our stop at $35, so we exit the play with a small loss.

Picked on April 24th @ $36.20
Profit/Loss = -1.20 (-3%) (Stopped out Thursday @ $35.00)
Best Profit = +2.30 (+6%)

May 22, 2001

Lear might face some turmoil in the near term since the Ford (NYSE:F) recall might have traders turning sour on the auto stocks. That being said, LEA still looks technically strong despite today's $1.00 sell off. LEA's MACD almost issued a buy signal on Monday and the gap formed on 5/17 is offering good support at the $36.50 level. We will note, however, that resistance at $38 once again stymied LEA. In fact, shares of LEA hit $38 right at the open, never to return. Traders interested in opening new positions in the automotive parts supplier could either wait for a pullback to support at $36.56 or more aggressive momentum traders could wait to see if LEA can conquer the $38 level on volume of over 450,000 shares before pulling the trigger. Our stops remain at $35.00 to protect against a reversal.

Picked on April 24th @ $36.20
Change since picked +0.80
Stop Loss @ $35.00

May 20, 2001

Lear is starting to convince us that it’s sometimes better to be the tortoise rather than the hare. In other words, LEA just keeps plodding along. On Friday, it added $0.30 to its share value to close at $37.60. What’s more, LEA is starting to put out feelers to challenge its 52-week high of $38.50. To that end, it traded as high as $38.10 on Friday after trading as high as $28.25 on Thursday. LEA’s mini-rally has put it well-above its 10-dma at $36.47, which had been tough resistance. With that out of the way, the next level of resistance will be the 52-week high. As for support, LEA has its 20-dma at $36.35 followed by its recent consolidation base 35.00. At this point, we think LEA may be in a position to challenge resistance based on the strength of its MACD and On-Balance Volume. With that said, 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 $38.10 or a bounce off the 20-dma before placing their trades.

Picked on April 24th @ $36.20
Change since picked +1.40
Stop Loss @ $35.00