The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Feb. 27, 1997)

Ugly, Uglier, Ugliest.

The overall market continued to be concerned after Alan Greenspan's Humphrey-Hawkins testimony yesterday before the Senate. The Fed chairman painted a rosy picture of the economy, but then warned investors that sooner or later, our current wonderful conditions will be no more.

So the market has hit an ugly stretch. Whether it's another temporary blip like we saw after Greenspan's similar comments in December or a more important signal of interest rate hikes to come, only someone with a better crystal ball than mine can say.

More locally, APPLIED MAGNETICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APM)") else Response.Write("(NYSE: APM)") end if %> got even uglier today. If you've been following this story, Applied Magnetics soared since we started following it in early January, nearly doubling. In the last week or two, though, it's slipped quickly, dropping through our imaginary stop-loss test yesterday at $44.25.

Today, it's down another 16%, nearly 36% below its recent closing high price of $59. The free fall started right before Applied Magnetics announced a hostile takeover bid for competitor READ-RITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %> and hasn't shown signs yet of deploying the parachute. It didn't help any when First Albany downgraded the stock yesterday all the way to a "sell."

The ugliest, though, is the continuing debacle in 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %>. Already halved in the last month on the warning that 3Com's future revenues and earnings aren't as attractive as analysts previously believed, yesterday the networking giant announced a huge merger with modem powerhouse U.S. ROBOTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USRX)") else Response.Write("(Nasdaq: USRX)") end if %>.

Given 3Com's already debased currency (its stock price), the market greeted the news with even more skepticism. The stock plunged another 10% today. At $35, the stock is now 56% below its December 9 high of $80 1/8.

The February volatility has taken a toll on the players in the Thoroughbred Stock Challenge as well. While there are still some fabulous year-to-date returns, the majority of players have seen a slight set-back this month. Make sure you get your entry for the March game in by Monday's opening bell. March wraps up our first quarterly contest, but even if you're not entered in the quarterly race, you can still make your mark in the monthly game and stake out your place in the Hall of Fame.

Monthly Growth Screens
(Jan. 3 to present)
11.94% Relative Strength
10.41% Low Price/Sales
 8.42% YPEG Potential
 6.29% S&P 500 Index
-1.36% Investing for Growth
-14.98% Unemotional Growth
-15.23% EPS Plus RS
-17.80% Formula 90

Annual Value Screens
(Jan. 1 to present)
7.67% Dogs of the Dow
7.39% Dow Jones Ind Avg
5.95% Beating the S&P
4.02% Unemotional Value
4.02% Beating the Dow
3.76% Dow Combo
2.13% Foolish Four