Prime Stock Advisory Letter for January 26th, 1999

Today's Comments: The overall market moved moderately higher yesterday after several days of moving lower.  From a trading stand point the overall market continues to look as if a short term top has been formed and the market will move lower over the course of the next few days.  The Telecommunications indices moved sharply lower due to a sell off in the Baby Bells companies that was caused due to unfavorable ruling by the US Supreme Court allowing increased competition in the local telephone markets.  This is seen as a favorable ruling for the long distance carriers.  I have always maintained that politics was the largest single influence on the market,  and this court case shows how it can affect a single sector.  One continuing point of concern is that a larger stocks with the heaviest volume within our database are moving lower instead of higher.  The Bottom Line:  The market should move lower.
Recommendation

Company:  PSINet, Inc.       Symbol: 'PSIX'       Closing Price: $34.75/share.
YH: $36.75    YL: $7.125     EPS: ($3.06)     P/E: N/A     Forecasted EPS: ($3.29)
Dividend: N/A   Yield:  N/A      Ex Dividend: N/A
Price Targets:  $40+ & then $52.0625         Downside Stop:  $31.875
Options Recommendation: February 30 Calls,  Symbol 'SQPBF' @ $5.875/contract.

Company Description: This company is a global Internet Access Provider 'ISP'.

Recent News:   1/20  PSINet acquires added Fiber Network capacity in Canada
1/18  PSINet acquires fiber throughout Europe to expand its global reach.

Our Analysis: PSINet, Inc. 'PSIX' is a component of the CBOE Internet Index 'INX',  and the Amex Inter@ctive Index 'IIX'.  The shares of 'PSIX' set a new closing high yesterday.  They are currently in a strong upward trend that should easily carry them another $5+ higher.  A few days earlier the shares of 'PSIX' completed a long term cup pattern with a measured move to our upper price target of $52.0625/share.  The company has recently announced several acquisitions that are designed to increase its global reach.


The Sterling Investment series of newsletters is produced by Sterling Investment Services, Inc.  If you would like to receive a chart on any index or stock mentioned in this report please contact us at the below mentioned numbers.  We also offer custom research reports on any stock investment that you may desire information on.  To receive further information on these services please visit our web page at:  www.sterlinginvestments.com   If you would like to contact us our # is 800-275-6901,  fax # (404)-816-8830  Email address is: enelson@sterlinginvestments.com  Sterling Investment Services may hold positions in the securities recommended or may be providing consulting services to the companies mentioned within this report.

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