The Option Investor Newsletter Monday 10-06-2003 Copyright 2003, All rights reserved. 1 of 2 Redistribution in any form strictly prohibited. In Section One: Wrap: Earnings Eve Futures Wrap: A Quiet Monday Index Trader Wrap: All eyes on the highs Posted online for subscribers at http://www.OptionInvestor.com ******************************************************************* MARKET WRAP (view in courier font for table alignment) ******************************************************************* 10-06-2003 High Low Volume Advance/Decline DJIA 9594.98 + 22.67 9624.91 9562.53 1.21 bln 1811/ 984 NASDAQ 1893.46 + 12.89 1894.22 1876.00 1.36 bln 1949/1089 S&P 100 517.04 + 1.87 518.24 514.62 Totals 3760/2073 S&P 500 1034.35 + 4.50 1036.48 1029.15 RUS 2000 516.72 + 4.44 516.74 510.97 DJ TRANS 2796.67 + 11.82 2806.50 2781.45 VIX 19.51 + 0.01 20.69 19.45 VXN 29.42 + 0.22 30.21 29.32 Total Volume 2,818M Total UpVol 1,983M Total DnVol 776M 52wk Highs 707 52wk Lows 19 TRIN 0.89 PUT/CALL 0.66 ******************************************************************* Earnings Eve by James Brown It would have been a rather uneventful Monday but positive earnings news from the likes of PeopleSoft (PSFT) and Knight Trading Group (NITE) renewed investor enthusiasm for the Q3 earnings season finally upon us. Motorola and Rambus chipped in with some positive headlines of their own and Wall Street managed to stretch its winning streak to four in a row. The Yom Kippur holiday was reflected in the very low volume, about 25 percent less than the market's three-month average, with just 1.3 billion shares trading on the big board and slightly more trading on the NASDAQ. Shallow gains were widespread with only the semiconductors, biotechs and healthcare stocks slipping into the red. Most of the buying was concentrated in technology, brokers and airlines. Strong traffic numbers from JetBlue (JBLU) helped lift the XAL airline index to a new yearly high. The DJIA added 22 points to close at 9594. The NASDAQ added almost 13 points to close at 1893 and the S&P 500 inched up 4.5 points to close 1034. All three are very close to their 52-week highs. Asian exchanges contributed to the positive mood with a strong gain in the Hang Seng index but European bourses were down slightly as the dollar continued to slip against the euro. Domestically the advance-decline numbers were positive. The NYSE recorded 18 winners for every 9 losers. The NASDAQ turned out 19 advancers for every 10 losers. Up volume significantly out paced down volume on both the NYSE and the NASDAQ. There was another surge in new yearly highs with 612 between the two exchanges. There were only 12 new yearly lows. Chart of the DJIA: Chart of the NASDAQ: Raising the Bar Shares of PeopleSoft (PSFT) surged another 3.1 percent to breakout above the $20 level after raising their Q3 earnings guidance for the second time in two months. Last month PSFT had raised their guidance to 10-to-11 cents a share and most analysts readjusted their estimates to match the 11-cent figure on estimated revenues of $589 million for the quarter. Today the company said they will top their latest projections. PSFT's CEO said the combination of PeopleSoft and recently acquired J.D.Edwards was "already exceeding our expectations". The stock is now trading above the $19.50-a-share hostile takeover by software rival Oracle (ORCL). PSFT is expected to announce its Q3 results in the next two-to-three weeks. Another stock breaking out to new highs on raised earnings guidance is Knight Trading Group (NITE). The company is a market maker for a wide range of securities and the rebound in trading volumes has really boosted its business. The company's press release also remarked on the progress they feel they're making with institutional clients. Consensus estimates had been for 11 to 12 cents a share. NITE now sees Q3 earnings in the 16 to 21 cent range. The good news boosted shares of NITE by more than 15% and the XBD broker dealer index gained 1.85%. Chipping In Now that he's on the way out Motorola (MOT) CEO Chris Galvin seems to be a lot more agreeable to making improvements at his company. Analysts and investors have been suggesting that MOT spin off its semiconductor business for a long time. This morning, the company finally announced that it would. The Semiconductor Products Sector (SPS) division of MOT currently represents about 18% of their overall sales but it also accounts for a large portion of their operating losses. Details were not readily available but investors will probably have more to digest at MOT's October 14th earnings announcement. The stock jumped almost 10 percent to a new 52-week high on today's news. Rambus (RMBS) is another chip stock hitting new 52-week highs today. Actually, the stock hit a 2 1/2 year high after rising almost 38 percent in today's session to close at $25.80. Fueling the move was news that the U.S. Supreme court refused to hear an appeal by rival chip-maker Infineon Technologies (IFX) after the company lost its fraud case against RMBS. The courts also reopened RMBS' counter-suit that IFX was involved in patent infringement. Bouncing Back It was a bullish Monday around the board with oil, gold and bonds all bouncing back to join stocks in the green. Crude oil futures were green again in what has been a sharp two-week climb from the $26.50 level to back above the $30 mark. Concerns that Saudi Arabia might cut production to prepare for the eventual coming to market for Iraqi oil has combined with investor fears over trouble in Venezuela and new threats of strikes in Nigeria. Add growing turmoil with Israel sending planes to bomb terrorists in Syria and gunfire on the Israel-Lebanon border and we have what could be a recipe for new highs in crude oil. Meanwhile both gold and bonds bounced back after painful sessions last Friday. Gold close up $3.30 to $373.30 and the yield on the 10-year note dropped to 4.151%. Tomorrow will be the starting gun for Q3 earnings announcement. The major company to watch will be Dow component Alcoa (AA) who reports after the close on Tuesday. Consensus estimates are for 30 cents a share, which is 15 percent better than last year. We'll also hear from PepsiCo (PEP) who reports before the opening bell. Estimates for PEP are 62 cents. After the market will be fast-food giant Yum! Brands (YUM), who is better known for their Taco Bell, Pizza Hut, KFC and Long John Silver's fast food outlets. Estimates for YUM are 52 cents a share. Despite the onset of Q3 earnings tomorrow's headlines will likely be dominated by one event. You guessed it, the state of California's governor recall election. Will the recall pass? Will Arnold get the vote? Who will be the first to file a lawsuit contesting the results? Oh the myriad of questions we'll be forced to listen to late into the evening tomorrow. Sounds like a good reason to just turn off the T.V. ************ FUTURES WRAP ************ A Quiet Monday - Jane Fox I am pinch hitting for Jonathan today for he is taking the day off for Yom Kippur. Since his format works I will try to stick with it as best as I can. Regarding pivot matrix: The support, pivot and resistance levels above are derived from the high, low an regarding pivot matrix: The support, pivot and resistance levels above are derived from the high, low and closing price levels by a simple mathematical formula. They are not intended to be predictive of market turning points or to serve as targets, but rather represent the range retracement levels as generated by the pivot algorithm. Do not think of them as market "calls" or predictions. Like any technically-derived indicator or price level, the pivot matrix values should be regarded as decision points at which to evaluate current market conditions. Visit us in the Futures Monitor for our realtime views of the various markets covered here. d closing price levels by a simple mathematical formula. They are not intended to be predictive of market turning points or to serve as targets, but rather represent the range retracement levels as generated by the pivot algorithm. Do not think of them as market "calls" or predictions. Like any technically-derived indicator or price level, the pivot matrix values should be regarded as decision points at which to evaluate current market conditions. Visit us in the Futures Monitor for our realtime views of the various markets covered here. 5-minute ES chart: The day started out real slow and by 7:30ET I was wondering if I should just go back to bed. But even with the low volume and ES's small range of only 8 points (from a low of 1027 to a high of 1035), the day had a bullish tone to it. 1028, as early support, made all sorts of trouble for bears, of which I was not surprised. I keep a database of daily highs and lows to help determine where price could find support or resistance throughout the day and 1028 has been tagged as a daily high on six separate occasions. No other single number has as many daily highs or lows attached to it. Overnight highs of 1031 (blue line) also came into play today serving up resistance until approximately 12:20ET when price broke through. And once broke, ES marched straight up and tagged 1035 only to quickly return to 1031, just to make sure it was still there (support), then bounced back to 1034 where it closed. 5-minute NQ chart: From the database of daily highs and lows I mentioned earlier I determine areas or zones where dates cluster. I call these support and resistance zones. Some days price will confirm these zones and some days they don't. Today they did. The double top you see in the 1385-1387 zone would have been confirmed by a trade below the 1378-1380 zone and the projected price down to 1371 the top of the 1366-1371 zone. Unfortunately (or fortunately depending on if you were a bear or a bull today) the double top did not confirm and NQ made a double bottom in the 1378-1380 zone. This one did confirm but too late in the day. Daily ES chart: The thing that bothers me the most about this chart is the MACD divergence. Each of the last two higher highs in price has been met with a lower high in MACD and I put a lot of sway to MACD divergences. An OI reader noted last week that if MACD were to cross down here again it would be in line with the MACD trendline (magenta line) and in line with another MACD lower high while price is making at least equal highs. If price blasts through to new yearly highs it needs to invite MACD to the party. I don't use stochastics a lot but the same story can be told with stochastics. Daily NQ chart: The exact same story in NQ as in ES. Lower MACD highs in and higher price highs. Something has to give and if we get another MACD cross I will be turning in my bullish horns in for bear claws. Ok on to other future's markets. $US dollar index - daily chart: US Dollar index's low on September 30th was 93.42 a level not seen since January 1997. However, it does look like it is starting to stabilize. MACD is trying to cross back up but even if it does, it is so far below the 0 line I would not read too much into it, albeit will be the first time since August 14th it would have made a bullish cross. Yen vs. Dollar chart: Last week Japanese authorities intervened to stop the yen appreciation against the US dollar and more intervention is expected, which may put the US economic recovery at risk. Much of our recent growth has been due to an unsustainable burst in capital spending by large companies, likely due to pent up demand. We need low prices on Japanese goods to help consumer- spending pick up the slack when large company's capital spending starts to wane. Gold futures - daily chart: On Friday afternoon I heard someone on CNBC say the daily range in Gold was the largest one-day range in 16 years. I have not been able to verify this statistic but I know Gold did take a huge drubbing on Friday. However, it did stabilize somewhat today and did not made new lows. The loss on Friday caused MACD to cross down, albeit above the 0 line. But if Gold can hold here, making a higher low and MACD crosses back up, we could have another run at September 25th highs of 393. Crude Oil futures - daily chart: Crude oil futures continued to rise, after Nigeria announced a strike to protest plans to reduce gasoline subsidies. This raises the possibility of renewed violence and disruptions to crude oil production. Higher prices were also supported by fears of an escalation in the Middle East after Israel attacked a training camp for Islamic terrorists located on Syrian territory; the Israeli retaliation followed a suicide attack claiming 19 lives in the northern city of Haifa. As a result, the Crude Oil contract hit a high of $30.80 in today's trading but retreated and ended up forming a bearish doji. Stochastics have crossed in very overbought territory but MACD is a long ways off from crossing. Wheat contracts - daily chart: A selloff in the Hard Red Spring Wheat Contract began Friday after the U.S. International Trade Commission ruled imports of Canadian-subsidized hard red spring wheat, used for making flour and bread, are harming American farmers, which clears the way to begin imposing a tariff. The Canadian government said it will launch a North American Free Trade Agreement challenge of the ruling and is considering legal options. Well that is it for today. Jonathan will be back tomorrow. ------------------------------------------------------------ Quit paying fees for limit orders or minimum equity • No hidden fees for limit orders or balances • $1.50 /contract (10+ contracts) or $14.95 minimum. • Zero minimum deposit required to open an account • Free streaming quotes Go to http://www.optionsxpress.com/marketing.asp?source=oetics24 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ******************** INDEX TRADER SUMMARY ******************** All eyes on the highs Compared to Friday's trade, today's Yom Kippur holiday found the major indices creeping higher on light volume, where gains for the major indices were really a recouping of Friday's last hour pullback. All eyes are on the highs and bears look jittery where economic news early this week is August related and it won't be until Thursday that weekly jobless claims and September import/export data give traders fresh economic data to trade on and after breaking above their MONTHLY Pivots last week, the major indices now sit on MONTHLY R1's as near-term support, with new 52-week highs in reach. Pivot Matrix - I would have to view the MONTHLY pivots as formidable support the remainder of the month. The main reason for this thinking is the rather impressive move higher from the found from the major indices, where we first witness the Dow Industrials, SPX and OEX making the breaks higher, as well as last Thursday's jump higher from the MONTHLY Pivot in the QQQ after Friday morning's nonfarm payroll data. Levels that I would deem more significant on a swing trade basis is that I feel the major indices as it relates to the SPX would have near-term upside to its WEEKLY R1, but with Stochastics now "overbought," it would not be unlikely to see some giveback of those types of gains to the WEEKLY Pivots, where I would currently look to protect gains with bullish stops just under tomorrow's correlative MONTHLY R1's and DAILY S1/S2 correlative levels. S&P 500 Index Chart - Daily Interval The SPX may be finding some near-term resistance at our cloned downward trend, but bulls that traded long above the MONTHLY Pivot at 1,010 should feel comfortable (no complacent) with a stop just under MONTHLY R1 of 1,025, which was quickly discussed as a bullish stop in Friday morning's 09:00 AM EDT intra-day update. Late Thursday, in the final hour of trade, the SPX intra-day chart showed the SPX declining to 1,029.15. I like the idea of a 1,025 stop, as that would most likely protect a bull's gains and a turn lower from "overbought." Today's trade saw no net change in the broader S&P 500 Bullish % ($BPSPX), where its status remains "bull confirmed" at 77.60%. S&P 100 Index Chart - Daily Interval American Express (NYSE:AXP) $46.45 -0.08% was the only financial component in the OEX to find a loss by session's end, with the Broker/Dealer Index (XBD.X) 627.52 +1.85% leading financial sector gains after electronic broker Knight Trading Group (NASDAQ:NITE) $13.95 +15.28 sparked gains after the company said it would see a stronger quarter due to increasing trade volumes for equities. Last week, the S&P Banks Index (BIX.X) 315.29 +0.84% showed strength in their WEEKLY and MONTHLY pivots and look to be closing in on their 52-week highs of 317.94, which would be right at the correlative levels noted in the matrix. This BIX.X has gained just over 5% in the past three-weeks, and for the OEX to clear its WEEKLY R1, I would think the BIX.X needs to make a bold break above its WEEKLY R1, where a strong round of short-covering could see a test of WEEKLY R2 at 323 in the BIX.X. I'm still keeping an eye on Washington Mutual (NYSE:WM) $39.85 +1.78% for strength above $40.00 and I would think an OEX/SPX index trader should keep an eye on the stock to get a feel for potential short-covering and bullishness for the stock should it be able to clear the $40.00 level. Today's trade saw not net change in the narrower S&P 100 Bullish % ($BPOEX), which remains "bull correction" status at 78%. Dow Industrials (INDU) Chart - Daily Interval Aluminum maker Alcoa (NYSE:AA) $28.27 +0.42% has risen $2.46 per share, or 9.5% since it last reported quarterly earnings on July 8, when the company beat estimates by 2 cents a share, when it reported EPS of $0.27 (excluding one-time charges), and will be the first Dow component to kick off quarterly earnings after tomorrow's closing bell. AA did slip to a post quarterly earnings low of $24.00 two-weeks after it last reported earnings, and such slippage might equate to a Dow pullback to its MONTHLY pivot of 9,400 should the company not exceed current estimates for $0.30 per share, where most analysts feel higher aluminum prices should help results. While AA carries the 23rd highest weighting in the Dow 30, its earning report and comments on the state of both the U.S. and global economic trend could set an early tone for some of this quarter's deeply rooted in the economy non-ferrous metals producers/manufacturers. In Thursday evening's Market Monitor, I discussed a bullish trade in copper producer (non-ferrous metals sector) Phelps Dodge (NYSE:PD) $51.85 +2.04% from the $49.31 level and the stock has set two consecutive session 52-week highs, so I would think the MARKET is looking for some upside surprises, or positive news from this group of stocks. Today's trade saw no net change in the very narrow Dow Industrials Bullish % ($BPINDU). Still "bull correction" status at 83.33%. NASDAQ-100 Tracking Stock (AMEX:QQQ) - Daily Interval The QQQ edged higher today and recouped Friday afternoon's pullback to now challenge Friday's highs. Shorts may be in a fix on a break above the $34.50 level as there was little volume in today's session that an overly short bear could cover into. While I've marked our cloned downward trend as a potential bullish target for a "blow off" type move on short-covering, I do think the $35.00 level is a good target for a "get out early" type of trade on strength as we see some overlap in the WEEKLY R1 and the WEEKLY retracement itself, but $35.00 is also a nice round psychological number. I must admit that I was a bit surprised by PeopleSoft's (NASDAQ:PSFT) $20.43 +3.12% upside earnings warning as it is often very difficult to make a large acquisition like PSFT did of JD Edwards, begin integrating the two operations, and still give some hint of an upside earnings surprise. PSFT did not say what the amount of the upside surprise was, and I can only guess, it is to help PSFT's less than friendly rival Oracle (NASDAQ:ORCL) $12.19 +1.75% and its CEO Larry Ellison lose a little sleep until PSFT reports earnings later this month. Current estimates are for PSFT to have earned $0.11 per share, where earnings for October 16th, after the market's close, has not yet been confirmed by PSFT. Today's trade saw no net change in the NASDAQ-100 Bullish % ($BPNDX) where status remains "bear confirmed" at 73%. Jeff Bailey ------------------------------------------------------------ optionsXpress has "...a lot of bang for the buck."--Barron's • $1.50 /contract (10+ contracts) or $14.95 Min. No hidden fees • Easy screens for spreads, collars, or covered calls! • Contingent, Stop Loss, Trailing stop, or OCO • 8 different online tools for options pricing, strategy, and charting Go to http://www.optionsxpress.com/marketing.asp?source=oetics25 Note: Options involve risk. 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The Option Investor Newsletter Monday 10-06-2003 Copyright 2003, All rights reserved. 2 of 2 Redistribution in any form strictly prohibited. In Section Two: Stop Loss Updates: AAMZN, RYL Dropped Calls: None Dropped Puts: None Play of the Day: Call - RYL Watch List: A Few Four-Lettered Stocks Updated on the site tonight: Market Posture: Green with Envy ------------------------------------------------------------ WINNER of Forbes Best of the Web Award • optionsXpress voted Favorite Options Site by Forbes • Easy screens for spreads, collars, or covered calls • Free streaming quotes • Real-time option chains, charts + calculators Go to http://www.optionsxpress.com/marketing.asp?source=oetics21 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ***************** STOP-LOSS UPDATES ***************** AMZN - call Adjust from $49.50 up to $52.50 RYL - call Adjust from $74.00 up to $76.00 ************* DROPPED CALLS ************* None ************ DROPPED PUTS ************ None ------------------------------------------------------------ VOTED one of "Best Online Brokers" (4 stars)--Barron's • optionsXpress's "order-entry screens...go far beyond... other online broker sites"--Barron's • 8 different online tools for options pricing, strategy, and charting • Access to options specialists via email, phone or live chat online • Real-Time Buying Power, Account Balances or Cancels Go to http://www.optionsxpress.com/marketing.asp?source=oetics22 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ********************* PLAY OF THE DAY - PUT ********************* The Ryland Group - RYL - cls: 81.00 chng: +2.75 stop: 76.00*new* Company Description: The Ryland Group is a homebuilder and mortgage-finance company that has built more than 175,000 homes. Additionally, the Ryland Mortgage Company (RMC) has provided mortgage financing and related services for more than 155,000 homebuyers. Currently, Ryland homes are available in more than 260 communities in 21 markets across the United States. Why we like it: From the "Nick of Time" file, we clearly initiated coverage on RYL with perfect timing. The stock absolutely exploded upwards on Wednesday, moving to new all-time closing highs. Over the past two days, the bulls have been struggling with resistance at $79 and it now remains to be seen whether there is more upside in store. The strong selling in the bond market on Friday drove RYL down to an intraday low of $76.06, but the powerful bullish sentiment drove the stock right back up to resistance before a slight drop into the close. Conservative traders should have taken advantage of the strength towards the end of the week to lock in some gains and that still remains our advice. With price still above the upper Bollinger band, entering at this altitude is not advisable. With the $DJUSHB index ending the week at another new high, RYL still looks like it could continue higher, so we're maintaining our stop at $74. Traders unwilling to give the play that much room to the downside can use a tighter stop at $76, just under Friday's intraday low. The PnF bullish price target is $91, so there is still substantial potential upside. But the best approach for traders still looking for new entries would be on a rebound from the $75-76 area, which should now be solid support. Why This is our Play of the Day Those unstoppable Housing stocks just keep on churning higher, and Monday's strong breakout in the Dow Jones Home Construction index ($DJUSHB) was no small feat. The index vaulted higher by 2.83% to close at yet another all-time high of $515. Our RYL play has been flirting with the $79 resistance level ever since reaching that zone of resistance last Wednesday. Today's price action finally gave us the breakout we've been waiting for, with RYL ending the day at $81, a 3.5% gain for the day. If the PnF chart is to be believed, there's still some more room to run as well. The vertical count of $91 is looking more reasonable by the day. That said, RYL is up sharply (15%) in the past 6 sessions and conservative traders should be looking to harvest some gains up here, and especially into further strength. RYL does look like it has some more room to run, but a bout of profit taking may be necessary first. We're raising our stop to $76 (just below last Friday's intraday low) but note that may be a bit too wide for some. If that stop seems to wide to you, then you are one of those that should be harvesting some gains up here, with price extended well above the upper Bollinger band. We want to look for new entries on a dip and rebound from the vicinity of $77.50- 78.50, not on further strength. Suggested Options: Shorter Term: The October 80 Call will offer short-term traders the best return on an immediate move, as it is slightly in the money. Note that October strikes expire in less than two weeks. Longer Term: Aggressive traders looking to capitalize on an extended rally will want to look to the November 85 Call. This option is currently out of the money, but should provide sufficient time for the stock to move higher without time decay becoming a dominant factor over the short run. More conservative long-term traders will want to use the November 80 Call. BUY CALL OCT-80 RYL-JP OI= 833 at $3.10 SL=1.50 BUY CALL OCT-85 RYL-JQ OI= 288 at $1.05 SL=0.50 BUY CALL NOV-80 RYL-KP OI= 149 at $5.60 SL=3.50 BUY CALL NOV-85 RYL-KQ OI= 65 at $3.20 SL=1.50 Annotated Chart of RYL: Picked on September 30th at $72.18 Change since picked: +7.89 Earnings Date 10/21/03 (unconfirmed) Average Daily Volume = 832 K ------------------------------------------------------------ We got trailing stops! • Trade online with trailing stops at optionsXpress, at no extra cost • Trailing stops based on the option price or the stock price • Also place Contingent, Stop Loss, and "One Cancels Other" orders • $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees! Go to http://www.optionsxpress.com/marketing.asp?source=oetics23 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ********** Watch List ********** A Few Four-Lettered Stocks Electronic Arts - ERTS - close: 99.57 change: +1.29 WHAT TO WATCH: Hmm... interesting dilemma here for the bears. Not only are shares of ERTS butting up against the $100 mark, which is traditionally a strong psychological support/resistance level (in this case its resistance) but they're also near the top of its ascending channel (also resistance). Smells like a perfect place to short this high-flying tech stock but ERTS' rally from its February lows is littered with carcasses from bears who tried to short this winner. We're not buyers or bears here but if it pulls back to its simple 30-dma then we'll be tempted. Actually, we'll be tempted if it just dips to the $95 mark but don't tell anyone. Earnings are about 2 1/2 weeks away. Chart= --- Synopsys Inc - SNPS - close: 27.60 change: -1.26 WHAT TO WATCH: Shares of SNPS are cascading lower after a recent 2-for-1 stock split. The stock has broken support at its 50-dma, at the $29 and $30 price levels, which had been support in the past, and it is about to break into the gap from last May. Shares look very oversold but are approaching the simple 200-dma and additional support/resistance at $26.00. We'd keep an eye on this one for an oversold bounce. Chart= --- Genzyme Corp - GENZ - close: 49.31 change: +0.21 WHAT TO WATCH: Biotech traders in GENZ have about 10 days left before the company announces earnings before the bell on the 15th. Shares have been consolidating sideways between $45 and $50(51) for a few weeks now while the weekly chart suggests a pattern of higher lows and lower highs (as does the P&F chart). It is certainly possible that the stock could continue to oscillate sideways as investors wait for the Q3 earnings news but eventually we should see a move one way or the other. Chart= --- Veritas Software - VRTS - close: 34.29 change: +0.36 WHAT TO WATCH: PeopleSoft's positive news today should continue to cast a positive glow for the software sector and VRTS could use the help. VRTS has been stuck in a bullish flag consolidation pattern for the last five weeks but looks ready to breakout to the upside. Its MACD is just about ready to produce a new buy signal while stochastics and RSI are already bullish. More aggressive traders could use a move above $34.50 to go long while traders looking for a little more momentum might want to wait for a move over $35.00. Earnings are still a couple of weeks away. Chart= ************** MARKET POSTURE ************** Green With Envy To Read The Rest of The OptionInvestor.com Market Posture Click Here http://www.OptionInvestor.com/marketposture/mp_100603.asp ******************* FREE TRIAL READERS ******************* If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is $49.95. The quarterly price is $129.95 which is $20 off the monthly rate. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.OptionInvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "Contact Support" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. 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