"Imagination is the fountain of possibility."

-- Christina Nikolov

Name/Ticker: Cymer Inc. (CYMI)

Date: January 2, 2003

Opinion: Bearish

Current Price: $34.58

Target Price(s): $29.17, $26.22, $25.27 and $16.31

Commentary:

Over the past three months, Wall Street's prognosticators bulldozed their 2003 earnings estimates for Cymer Inc. (CYMI) by 59.6%. Regardless, the shares are now 72.8% higher than they were three months ago and tout a p/e multiple of 81 based on fiscal 2003 projections.

Cymer's shares rocketed ahead by 138% between the October 9th low and the December 2nd peak, then quickly surrendered about 35% of that gain. That drop pushed the stock back to fairly significant support near $30. (chart #1)

When we applied Fibonacci Retracement to CYMI's price action, we found it very accurately predicted almost every reversal over the past five months. The combined effect of November's peak ($38.91), a downside gap ($36.64) and the 61.8% Fibonacci Level ($39.60) will cause the shares to stall as they approach $40. (chart #2)

Eventually, there is a good chance CYMI will fill upside gaps at $26.22 and $25.27.

To profit from the anticipated decline, we suggest the August 40 put (Symbol: CQGTH), which is currently offered at $9.80. If the stock challenges $40, you might be able to purchase this option for around $8.



Chart(s):

#1) Cymer Inc. (CYMI) Three Month Daily Chart

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#2) Cymer Inc. (CYMI) Ten Month Daily Chart

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