"Risk is a partner of progress."

-- Christina Nikolov

Name/Ticker: Valuevision Media (V V T V)

Date: January 2, 2003

Opinion: Bearish

Current Price: $15.22

Target Price(s): $12.50, then possibly lower

Commentary:

Over the past three months, Wall Street's prognosticators cut their 2003 earnings estimates for Valuevision Media (VVTV) by 31.6%. Regardless, the shares are now 30% higher than they were three months ago and tout a p/e multiple of 46 based on fiscal 2003 projections.

The technical picture doesn't look any better. First of all, VVTV is overbought on the daily chart, while backing off an overbought level on the weekly chart. Should the shares equal or exceed the November peak in the near future, the stochastic oscillator most likely won't confirm that move. (chart #1 and #2)

This overbought condition couldn't have come at a worse time, since the shares are closing in on an area where we see tremendous overhead resistance. There were at least a half dozen instances since mid-2000, when the shares reversed course after confronting the $16 level. (Chart #2) It doesn't appear on any charts accompanying this commentary,  but VVTV also staged an abrupt reversal when confronted by $16 in January 1994.

Considering the negative fundamental and technical pictures, this stock will have a difficult time surmounting the $16 level. Actually, in our opinion there is a better chance VVTV will hit $12.50 before reaching $16.50.

To profit from a potential decline, we suggest the March 17.50 put (Symbol: UVROW), which is currently offered at $3.10.



Chart(s):

#1) Valuevision Media (VVTV) Twelve Month Daily Chart

Click the Chart for an Enlarged View

#2) Valuevision Media (VVTV) Thirty Month Daily Chart

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