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Case #36:
Double Trouble


By Barbara Eisner Bayer (MF Venus)

The sun's twilight glow spilled lusciously onto my shoulders as I loaded the car. Tonight was MY night, my time to ignore what's for dinner, avoid the broken lock on the porch door, and forget that my son Jimmy called his teacher the world's only living brain donor. Tonight the only thing I live and breathe for is TEAM TENNIS!

Sure my team was 1 and 8, and sure my personal record was only slightly better (2 and 6), but hey, it's not about winning or losing; it's about freely running under the sky and hitting a little yellow ball as hard as you can to a place where no opponent can get it. It's about strengthening the heart, developing the muscles, streaking the hair, and ..... okay, so I lied. It's about WINNING! And this night, let me assure you, I was gonna WIN!

I arrived early at the courts -- enough time to center myself, prepare my game plan, and, of course, make sure I looked really cute in my new tennis dress. I sat down, closed my eyes and began some deep breathing while repeatedly chanting my mantra -- *No one can return MY balls.* I was snapped out of my reverie by the offensive popping sound of bubble gum being chewed. I looked up, startled, to see a set of vitriolic twins who I vaguley remembered having played in the past.

"Hi there, we're your opponents, Smile n' Dial. Haven't we see you before?" snarled Smile.

"Oh yeah," cackled Dial, "you're the one with the powerful two-handed backhand, inconsistent forehand, and underperforming portfolio, hee hee hee. How's the market treating you?"

My face reddened. They closed in on me until there was a twin on either side, breathing hot air on my neck.

"I got a stock for you. It can't miss; it's once in a lifetime," whispered Smile.

"Oh, don't tell her... she doesn't need to make that much money," babbled a bubble-popping Dial.

"Nah, I'm gonna let her in on this one. Because I like her... and since we crushed her last year, we owe her. It's gonna be BIGGER THAN MICROSOFT!" touted Smile.

As much as I tried to resist, I found my ears irresistibly perking up. After all, Smile and Dial are successful stockbrokers, I thought -- they MUST know something, or else how could they possibly stay in business!

"It's a biotech company that makes implants for healing tennis elbow. It's called Elbonics [Nasdaq: ELBOW], and they're going to make a fortune. With two consecutive positive earnings quarters, a P/E of 15 and a relative strength of 66, it's a potential gold mine."

My head began spinning with the image of bouncing yellow balls being replaced by bouncing dollar signs. I was all ready to reach for my checkbook, when I looked up to see my doubles partner, Ms. Motli Fool, arrive. (Y'know I really like that girl, but who plays tennis in multi-colored tights, a bell-fringed vest and a jester's cap? Sheesh!)

"Howdy-do, partner. I see we're playing those terrible twins who stop at nothing to get what they want, be it a tennis match or a stock purchase. I couldn't help overhearing what they were saying to you. Girl, put that checkbook back in your bag and reach back in for your brain. They are misleading you because:"

1) Relative strength is totally insignificant as a determining factor in stock selections.

2) 66 is too for high a relative strength number - the lower the number, the better.

3) Relative strength is calculated so infrequently that by the time the numbers get to you they are outdated.

4) Relative strength measures the stock price performance by ranking with the market as a whole. The higher the ranking the better, and 66 is too low for a Foolish investment.

Enter your selection in the field to the lower right, and get immediate feedback on the answer!


The answer is 4.

Relative Strength is the price strength of an individual stock compared with the strength of an industry index or a general market index. In general, a stock acting stronger than its industry or the market as a whole is a bullish sign for that stock. Likewise, an industry index acting stronger than a market index is bullish for stocks in that industry. Relative strength is typically measured for calculating an index of a stock's price to its industry or market index over a period of time.

The ratings are calculated by the The Investor's Business Daily's computer. The criteria is the percentage increase in price over the past 52 weeks for every company listed in the paper. They then rank them on a 1-99 basis, 99 going to a stock with the greatest rise in price. The ratings are refigured every day.

We played a helluva match that night, crushing those stock touters 6-3, 6-1. And y'know, Motli was right about the stock as well. She usually is. How could I play doubles -- or the market -- without her?

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