"Firm belief is integral to success."

-- Christina Nikolov

Name/Ticker: TMP Worldwide (TMPW)

Date: January 2, 2003

Opinion: Bearish

Current Price: $12.04

Target Price(s): $10.18, then possibily $8.00

Commentary:

Over the past three months, Wall Street's prognosticators lowered their 2003 earnings estimates for TMP Worldwide (TMPW) by 52.3%. Regardless, the shares are now 30.2% higher than they were three months ago and currently tout a p/e multiple of 32 based on those fiscal 2003 earnings.

TMPW formed a double top in January 2002 and plunged 83% over the next seven months. Then between August and October 2002, the shares traced out a double bottom and appeared to be finally bottoming. However, after surging more than 122% from October 9th to 25th, the stock eventually gave back most of those gains. (chart #1)

This stock is currently oversold on the weekly chart, while starting to bounce from an oversold condition on a monthly basis. That said, we would not be surprised to see TMPW move a little higher over the next few weeks. Of course, as the shares attempt to stage a rebound from the recent lows, we don't see upside past the $16 to $18 vicinity. 

Why? There's a 30 month downtrend connecting the peaks of 8/2000, 9/2000, 10/2000, 6/2001 and 1/2002. That long-term downtrend will perfectly coincide with the October 25, 2002 peak within the next month. What's more, the 200-day moving average also resides near the October highs and will be just above $16 by the end of this month. (chart #2)

To profit from a decline, we suggest using rallies to initiate short positions. And if you wish to trade an option based on this security, we like the June 17.50 put (Symbol: BSQRW) at $6.60. If TMPW rallies to $16 or so, you might be able to purchase this option for $4.00 or so.



Chart(s):

#1) TMP Worldwide (TMPW) Fourteen Month Daily Chart

Click the Chart for an Enlarged View

#2) TMP Worldwide (TMPW) Thirty One Month Weekly Chart

Click the Chart for an Enlarged View