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Play of the Day (For Monday)
Interactive Chart
Sunday, March 04, 2001

BAX - Baxter International Incorporated $93.33 (+3.93)

Sunday's Comment:

The mapping of the human genome was a giant leap forward for the biotech industry. Using a DNA recipe to successfully cure a disease, however, is proving to be a great deal more challenging. In spite of this, Baxter is finding out that its also a great deal more rewarding. The company's genetic therapies for life-threatening diseases are due to improve earnings by 20% annually and expand gross profits margins to 60%. This is in stark contrast to the company's 5% earnings growth it has achieved as a medical supply business. As for our play, BAX shares kept climbing on Friday and set a new all time high of $93.48. The leg up came on fairly good volume of 1,537,400 shares traded and leads us to believe that there are still plenty of buyers to lift the stock higher. A positive MACD and higher highs in the OBV indicator have also helped to confirm the potential for more gains. So, with that said, we'll expect to see the next key level of resistance to appear at the $95 mark. Look for a potentially harder barrier to come at the century mark, which can often times mark the peak of a rally. Consider using a trailing stop strategy, should the stock bounce sharply from either of these levels. Support is at the 5-dma of $91.89 and then at the 10-dma of $90.70. We'll look for potential entry points to occur when BAX rallies through resistance or bounces from support on good midday volume of at least 900,000 shares. Our stop of $89 will provide us with downside protection.

Picked on March 1st @ $92.61
Change since picked +0.72
Stop Loss @ $89.00

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