ITT Educational Services offers associate, bachelor and master degree programs and non-degree diploma programs to approximately 27,500 students, and has 70 institutes located in 28 states. For the 3 months ended 3/31/01, revenues rose 16% to $93.8M. Net income before acct. change increased 20% to $4.8M. Revenues reflect higher student enrollment & tuition rates. Earnings also reflect increased interest income.

June 12, 2001

This provider of post-secondary degree programs has been edging higher all year. This could be due to the emphasis that current administration has been putting upon educational programs or it could be that ITT provides much needed technology training that has been in great demand. Either way, institutions have certainly been gobbling up this stock, providing good buying support along the way to a year-to-date gain of 98%. The stock is also the leader of the commercial-school sector based upon earnings growth and relative strength. Turning to the chart, we like the way ESI has just made a breakaway gap. The stock gapped higher on 6/4/01 and has not looked back. It has also formed a flag formation that has us looking towards $48 as the near term price objective. Traders interested in initiating a new position in our education play could look to do so on a close above resistance at $44.50. There is weak resistance at $45 as well, but if volume continues to come in at around 250,000 shares, we don't think it will pose a problem. However, more conservative traders may want to go in with a half position on a breach of $44.50, and then go in with the other half on a breach above $45. Our initial stop is placed at $40.00.

Picked On June 12th @ $43.70
Change Since Picked 0.00
Stop Loss @ $40.00

June 14, 2001

Unfortunately for our newer play, we weren't able to capture any breathing room today. Sellers ruled the session, as the stock lost $1.30 to $42.80. However, volume on the pullback was so weak (only 79,000 shares were traded) that we won't start worrying just yet. ESI also found good support at its 10-dma at $42.81. With today's dip, ESI's MACD has started to roll over, but there is plenty of time to avoid a sell signal as long as ESI holds support around $42. Going forward, it has become more important for ESI to prove that it still has buying support. To do this, we need ESI to close over resistance at $44.50 on volume of at least 250,000 shares for the day.

Picked On June 12th @ $43.70
Change Since Picked -0.90
Stop Loss @ $40.00