Why am I talking about newspaper stocks when they are all just “dead men walking”?  Because I am a short-term trader and I am looking for both stocks to bounce in the near term.  Very few sectors have had as much bad news as the newspaper sector and any good news could make them soar.  Many pundits are talking about an economic recovery…why shouldn’t newspapers share in that as well?  I don’t have a crystal ball, but both companies bear watching.

Gannett Co., Inc. (GCI), the nation’s largest newspaper publisher and parent of USA Today, is a highly diversifed media company.  They have interests in newspapers; national, regional and local.  They have a strong online presence through sites like Careerbuilder.com which they own and they run over 20 television stations.   They, like other newspaper companies, have suffered with the decline of advertising revenues, but with drastic cost cutting and restructuring, they even managed to post a small profit in Q1 of 2009.

GCI’s chart doesn’t make anyone very confident, but it doesn’t scare me off, either.  The stochastics indicate that the stock is highly oversold.  The MACD is showing bearishness, but it is hanging around the zero line and could turn quickly.  Volume is holding steady, but any increases could help drive the stock.  The stock dropped through a big support level at $4 and the next support level is $3.    Resistance is at $4, $5 and $5.50.

Lee Enterprises, Inc. (LEE), is an old line company (founded in 1890) and has established itself as publisher of both newspaper and online content in many midsize markets across the US.  It publishes 49 daily newspapers, over 300 weekly and specialty publications in 23 states.  LEE is in a much more precarious financial condition than GCI with high debt and losses piling up.  LEE is, by far, the riskier of the two companies, but we are talking short term only.  The chances of LEE filing Chapter 11 are slim, but I hope my readers watch it closely.

LEE’s chart looks very much like GCI’s (i.e. It is off significantly from its high and is looking bearish).  From the chart it looks like their is support at the 45 to 50 cent level with resistance at 80 to 85 cents.  Stochastics indicate it is oversold and the MACD is definitely bearish.  Like GCI, if they get good news or some buying hits the stock, it could rocket.

I would recommend putting both on your radar.  They may have farther to fall, but I believe that they have some bounce left in them.

Good luck and Great Trading,

Jeffrey Dean

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