"Precision garners gain."

-- Christina Nikolov

Date: January 8, 2003

Opinion: Bearish

Current Price: $37.44

Target Price: $32.10, then possibly $29.35

Commentary:

Cooper Industries (CBE) soared 39% between October 10th and December 2nd, 2002, then transitioned into a trading range that resembles a double top. The peak of this potential pattern is $38.50 and the base is $35.30. (chart #1)

Based on the stochastic oscillator, CBE is extremely overbought on the daily and monthly charts. The last time the stochastic oscillator was this overextended on a monthly basis was May 2002. Over the next two months, the shares dove 37%. (chart #2)

Support can be found at the base of the double bottom, which is $35.30. There is overhead resistance at the pattern's peak, $38.50. We expect CBE to initially reach $32.10, but think there is a good chance the shares could eventually fall to an upside gap at $29.35. (chart #1)

To profit from this anticipated decline, we suggest the April 40 put (Symbol: CBEPH), which is currently offered at 4.50.  You might also consider the April 35 put (Symbol: CBEPG), which is currently offered at $1.90.



Chart(s):

#1) Cooper Industries (CBE)  - Seven Month Daily Chart

Click the Chart for an Enlarged View

#2) Cooper Industries (CBE)  - Thirteen Month Daily Chart

Click the Chart for an Enlarged View