Prime Stock Advisory Letter for January 13th, 1999

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Today's Comments:  The overall market moved sharply lower yesterday.  It appeared to be a round of profit taking combined with concerns over the Brazilian economic troubles that sent the market the market lower.  There are concerns that Brazil will devalue its currency and this could have a major negative impact on the US economy.   While the market continues to look good from a technical perspective,  the lack of resistance to its move upward also leaves its vulnerable to a significant move lower when a pullback occurs.  After the close of trading yesterday Intel & Yahoo! both reported better than expected earnings.  While both of these stocks where trading higher in aftermarket trading,  my concerns are that the Brazilian problem could over shadow the good news from these 2 companies.  Early Futures are sharply lower and most European markets are 2-3% lower.  

Company: Telefonos De Mexico.      Symbol: 'TMX'       Closing Price: $43.875/share.
YH: $58.46     YL: $32.75     EPS: N/A      P/E: N/A      Forecasted EPS: $5.20
Dividend: $1.50     Yield: 3.41%     Ex Dividend: N/A
Price Targets: $42.81 & then $33.50       Upside Stop: $45.875
Options Recommendation: Options Pick: January 45 Puts,  Symbol 'TMXMI' @ $1.50/contract.

Company Description: This company is the Mexican telephone company.

Recent News:   Mexican Stocks drop on the open on Brazil fallout

Our Analysis: 'TMX' is a component of the Amex N.A. Telecom Index 'XTC',  which I have rated as moving lower from its current levels.  The shares of 'TMX' gapped lower on the open of trading yesterday.  They closed below a key support level on heavier than normal trading volume.  They should continue to move lower and test $42.81/share,  a point of downside support established in mid June of this year.  If they close below that level then they should continue to move lower and test $33.50/share,  a point of downside support established mid September of this year.  The shares of 'TMX' have come under pressure due to the concerns over the Brazilian economy.