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Play of the Day (For Tuesday)
Interactive Chart
Monday, March 12, 2001

UVV - Universal Corp. $39.82 -0.17

Sunday's Comment:

There is strong evidence that investors and money managers alike still hold large cash positions. After attempting to rally "value" technology stocks, many were burned later in the week as the NASDAQ made a new low. This set of circumstances helps to explain why UVV continues to rally. This tobacco merchant and distributor of lumber and building products is trading at a very low P/E of 10.22. Investors are extremely risk adverse these days and UVV offers a relative value. UVV actually managed to establish a new 52-week high of $39.00 during a day that saw the Dow Jones Industrials (INDU) drop 213.63 points. This fact may encourage the momentum-trading crowd to jump on board. UVV may really start to roll if it can climb above the $39.50 resistance level established way back in June of 1998. A good time to initiate a position might be when UVV looks like it is going to close above this resistance and has crossed 100,000 shares in daily volume. After a lengthy ascent, the MACD has cooled off but remains positive. OBV is currently making new highs and could be forecasting continued new highs for the stock. The RSI is brushing the top end of its range. Therefore, we would be cautious about picking up the stock if it starts slipping in the early going on Monday, especially if UVV slips below the support offered by the 10-DMA of $38.13.

Monday's Update:

Since reporting its quarterly earnings results a month ago, Universal has moved ahead nearly 20 percent to Monday's close of $38.82, as tobacco proves to be a safe haven from the free-fall in the tech economy. Despite this recent strong move higher, though, we think that Universal could move higher still. The stock appears to have solid support from its 10-dma, which has been lifting the share price higher for the past month. What's more, this uptrend is bolstered by a positive MACD and and strong On-Balance Volume, suggesting the stock has the legs to go higher. As for the downside, Universal appears to have support at its recent consolidation range at $37.00 followed by its 40- day moving average, currently at $35.00. Traders considering a position in Universal should look for higher-than-average volume, 40,000 shares or more traded by noon EST, on a move through yesterday's intra-day high of $39.20 before placing their trades.

Picked on March 11th @ $38.99
Change since picked +0.02
Stop Loss @ $37.00

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