FRE securitizes mortgages it has purchased and resells them to investors in the form of guaranteed mortgagepassthrough securities. FRE is also engaged in the purchase& retention of mortgages and guaranteed mortgage securities.For the 9 months ended 9/30/00, revenues rose 24% to $21.91B. Net income before extra. item applic. to Common rose 14% to $1.74B. Results reflect higher mortgage securities balances, partially offset by greater borrowings.

December 28, 2000

Freddie Mac (Federal Home Loan Mortgage Corp.) buys mortgages from lenders, packages these mortgages into securities and then sells them to investors. The company also guarantees performance on these securities. We are picking this play up as a momentum play as it approaches its recently established new 52-week high at $70.13. On December 18, FRE achieved that level and promptly retreated to the $64.00 range. After building up some steam the stock now look a poised to make another run at taking our the 52-week high. The stock has been making consistent gains since late summer and with earnings coming up in January we are looking for momentum to drive the stock higher. If you are considering opening a new position in FRE, you might consider entry points off support found at recent consolidation of $67.25. Below that the 10-dma at $66.37 should offer support as well. Resistance, as mentioned, is at $70.13. Look for this level to be conquered on good volume over the average of 3.5 million shares. It might be wise to coordinate a new play on FRE with positive movement in the Dow Jones Industrial Average (INDU) and the NYSE Financial Index (NF). We will place our protective stop just below support at $64.50.

Picked on December 28th @ $68.94
Change since picked 0.00
Stop Loss at $64.50

January 4, 2001

Freddie Mac did not like Wednesday's surprise rate cut by the Federal Reserve, or the implications that we are already in a recession. Thus, the stock sold off and triggered our stop at $64.50. We will continue to watch FRE for better trading opportunities in the future.

Picked on December 28th @ $68.94
Profit/Loss -4.44 (-6%) (Stopped out Wednesday @ $64.50)
Best Profit +1.19 (+2%)

January 3, 2001

Hit stop, write up to follow.

January 2, 2001

The first trading day of the New Year seemed like deja vu from last year as far as the broad markets were concerned. Freddie Mac felt the cold breeze of sell orders blowing through the market, which resulted in nearly a 4% decline for the stock. Freddie Mac posted better than a 50% return to investors last year, not bad considering some companies lost much more than that amount. On Tuesday, the company that securitizes mortgages found support at the 10-dma at approximately $66.00, a former level of consolidation. The selling was legitimate with 4.3 million shares changing hands, which is well above the three-month average of 3.4 million. This momentum play will need to change direction soon in order for us to remain interested. For the remainder of the week, we'd like to see a bullish bias ensue with volume rising with the stock. Look for a bounce off support at $66.00 or the 20-dma at $65.22 as a possible entry point for a new play. Resistance will likely be encountered at the 10-dma at $66.75, then the 5-dma at $67.58 and finally up at $68.00. Watch for the major markets to rally on good volume with support coming from the small indices, specifically the NYSE Financial Index (NF). We will keep our protective stop just below support at $64.50.

Picked on December 28th @ $68.94
Change since picked -2.63
Stop Loss at $64.50

December 31, 2000

Freddie Mac ended the year with a 51% gain as well as trading at its 52-week high. Freddie Mac gave it the old college try on Friday and was able to match its 52-week high price of $70.13, which was accomplished just 11 days earlier. Like many other stocks on the day, the crucial element was absent, namely the volume. The stock only traded at 50% of it average 3-month volume of 3.4 million shares when on Friday it recorded a meager 1.7 million. Additionally the stock was swimming against the flow of traffic when it achieved its high of the day as the broad markets had already begun to drift lower. FRE securitizes mortgages it has purchased from lenders and resells them to investors in the form of guaranteed mortgage passthrough securities. Next week we will look for further signs of strength in the form of stronger momentum coupled with greater volume. As of Friday's close, the stock has support at $68.00, which represents a mild consolidation area followed by the 5-dma at $67.20 and then the 20-dma at $64.90. Resistance will be the 52-week high of $70.13. Watch for the major markets to rally on good volume with support coming from the small indices, specifically the NYSE Financial Index (NF). We will place our protective stop just below support at $64.50.

Picked on December 28th @ $68.94
Change since picked -0.06
Stop Loss at $64.50