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Profiting from Spidey-Sense

By Jeff Clark
Wednesday, March 28, 2007

It's not always easy to tell when a stock's price is about to get squashed like a bug. But sometimes, it's posted on a marquee...
 
In just over one month, Hollywood's most anticipated, sure-fire blockbuster – Spider-Man 3 – will be released in theaters all over the country. And, if history is any sort of a guide, shares of Marvel Entertainment (MVL) ought to top out at about the same time.
 
The first Spider-Man movie debuted on May 3, 2002. It was the biggest opening weekend in Hollywood history. Teenagers camped out overnight to get tickets. Theaters were packed. The consumption of popcorn delayed the ethanol boom by at least two years. And $6 boxes of Jujubes flew off of concession-stand shelves.
 
Fortunes were made – but not by shareholders.
 
As you can tell from the following chart, the biggest opening weekend in the history of Hollywood was a bust for Marvel shareholders...
 
 
 
MVL shares, which peaked at a split-adjusted $5.50 on May 2, 2002, fell immediately and eventually lost 50% of their value.
 
The same thing happened again on June 30, 2004.
 
Spider-Man 2, the biggest sequel in the history of Hollywood, led to a similar sequel in Marvel stock...
 
 
 
Once again, the stock peaked just ahead of the movie release... then nosedived for the next several weeks. This time the stock lost "only" 40% of its value.
 
Care to guess what's likely to happen when Spiderman 3 hits theaters in about six weeks?
 
Marvel shares are up over 70% in the past eight months. And the web-spinners on Wall Street are claiming that fortunes are about to be made. But it's a tangled web they weave.
 
Flies that get tangled in a spider's web don't fare too well. Neither do investors that get caught in a web of hype.
 
The Spider arrives in six weeks. Perhaps it's time to start thinking like an exterminator.
 
Best regards and good trading,
 
Jeff Clark




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Market Notes
More new highs for steel: Chaparral, United States Steel, IPSCO, and Companhia Siderurgica Nacional (SID).
 
Brazilian and Mexican stocks jump in addition to SID: Companhia de Bebidas Das Americas, Mexico Equity, Grupo Radio Centro, and Telefonos de Mexico all hit new highs.
 
Oil pipeline companies still rising: Magellan Midstream, Enbridge Energy, and TEPPCO at new highs.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%