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Play of the Day (For Tuesday)
Interactive Chart
Monday, April 30, 2001

AYE - Allegheny Energy $51.16 +0.56

Sunday's Comment:

Allegheny Energy, Inc. is a diversified utility holding company that provides electric generation and distribution services in Maryland, Ohio, Pennsylvania, Virginia and West Virginia. The stock has performed well over the past year after hitting a 4-year low of $23.62 on 3/10/00. On Friday, shares of AYE hit an all-time high of $51.30, representing a 117% gain from the low. The stock has posted gains in the last four sessions following its earnings announcement on Monday evening. On Thursday night, the company sold 12.4 million common shares in a stock offering at $48.25 per share, raising $598.3 million in gross proceeds. We believe that AYE could continue to trend higher now that it has cleared the earning announcement and the stock offering. We are also looking for a stock split out of the Annual Meeting on May 10th. The company already has enough shares for a split with 260 million shares outstanding and 123 million shares issued. Going forward, AYE has support at Thursday's intra-day high of $49.20 with stronger support at $48.17, the 10-dma. Resistance is currently at Friday's intra-day high of $51.30 and then possibly $53. Traders may consider opening new positions on a bounce off of $49.20 or a breakout above $51.30 on volume greater than 300,000 shares by noon. We plan to place stops at $47 as downside protection.

Monday's Update:

We think Allegheny could climb further thanks to continued strength in the energy sector and the stock's stout technical indicators, which are showing strong momentum on a positive MACD and up-trending On-Balance Volume. At current levels, Allegheny has support at its 10-day moving average at $48.49, with additional support provided by an intermediate trendline formed in late March. Since Allegheny is trading at all-time high levels, there is no obvious resistance overhead, though the stock could run into some resistance at the psychologically-significant $55 level. Traders considering a position in Allegheny should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through Monday's intra-day high of $51.16 or a bounce off $50 before placing their trades.

Picked on April 29th @ $50.60
Change since picked +0.56
Stop Loss @ $47.00


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