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Play of the Day (For Tuesday)
Interactive ELY
Monday, February 26, 2001

ELY - Callaway Golf $24.70 +$0.71

Sunday's Comment:

Callaway Golf (ELY) is a leading designer and manufacturer of high quality, premium priced, golf clubs. The company's golf clubs have been favorably received by both professional and weekend golfers on the basis of performance and ease of use. In addition to a strong product line, greater efficiencies in golf- club manufacturing have kept ELY's profit margins on the upswing. These efficiencies are expected to translate into a 40% increase in earnings this year. In turn, this has created plenty of upside momentum for the stock. Clearly the stock is a momentum play now that higher levels are being confirmed by an expansion in volume. Friday, ELY soared to a new 52-week high of $24 on excellent volume of 701,300 shares. A move above this level in the upcoming week could be a good signal for momentum traders to resume their buying. That said, we'll look for potential entry points to arise when ELY pushes though $24 on good daily volume above the 3-month average of 480,000 shares. Support will reside at $22.50, propped by recent highs and the 10-dma of 22.41. ELY's strong uptrend is bolstered by good readings in the MACD and OBV indicators, which suggests that a continued sustainable move is likely. We'll set our stops at $20 for downside protection.

Monday's Update:

Since reporting its annual financial results a month ago, Callaway has moved ahead $4.50, or 24 percent, to Monday's close of $24.70. What's more, over the past seven months, Callaway has more than doubled in price from its July 2000 low of $11.88. We think that Callaway still has the legs to run further. The stock's long-term and intermediate uptrends are bolstered by a strong MACD and positive On-Balance Volume, which suggests that Callaway could go higher. To that end, with yesterday's $0.71 advance, Callaway has broken $24, a resistance level it had been trying to pass through for the past three trading sessions. As for the downside, Callaway appears to have support at its 10-day moving average of $22.78, followed by its most recent consolidation base of $22.00. Traders considering a position in Callaway should look for strong volume, 200,000 shares or more traded by noon EST, on a move through yesterday's intra-day high of $24.81 before placing their trades.

Picked on February 25th @ $23.99
Change since picked 0.71
Stop Loss @ $20.00

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