The Option Investor Newsletter Monday 11-03-2003 Copyright 2003, All rights reserved. 1 of 2 Redistribution in any form strictly prohibited. In Section One: Wrap: November Opens Strong Futures Wrap: Uncle Buck's Revival Index Trader Wrap: Manufacturing puts its best hoof forward Posted online for subscribers at http://www.OptionInvestor.com ******************************************************************* MARKET WRAP (view in courier font for table alignment) ******************************************************************* 11-03-2003 High Low Volume Advance/Decline DJIA 9858.46 + 57.34 9896.16 9802.38 1.66 bln 1979/ 854 NASDAQ 1967.70 + 35.49 1969.26 1941.31 2.06 bln 2107/1035 S&P 100 524.01 + 4.03 525.42 519.98 Totals 4086/1889 S&P 500 1059.02 + 8.31 1061.42 1050.71 RUS 2000 537.84 + 9.62 537.84 528.22 DJ TRANS 2940.73 + 27.62 2947.79 2913.81 VIX 16.55 + 0.45 16.70 16.22 VXO 17.01 - 0.14 17.43 16.72 VXN 25.38 + 0.49 25.95 25.15 Total Volume 4,163M Total UpVol 3,129M Total DnVol 991M 52wk Highs 1167 52wk Lows 19 TRIN 0.71 PUT/CALL 0.63 ******************************************************************* November Opens Strong by James Brown It was another busy Monday with the bulls once again in control. As the mutual fund scandal claimed another victim, this time at Putnam Investments, Wall Street chose to ignore the news and focus on positive economic data. The ISM report beat economists' estimates and turned in its best pace since January 2000. Cementing the positive mood was a strong showing for business construction that also turned in its best numbers in a year. The icing on the cake was Sunday's chip sales numbers, which were the strongest in 13 years. At the end of the day the tech-heavy NASDAQ closed at 21-month highs. The S&P 500 and the DJIA closed at 17-month highs. U.S. markets got a big boost from their overseas counterparts. The Japanese NIKKEI may have stumbled 135 points to 10,559 but its Hong Kong neighbor the Hang Seng index added 196 points to close at 12,386. Across the Atlantic were gains in the British FTSE, up 1.05% to 4332. Meanwhile the Germans lead the charge with a 2.42% gain in the DAX. The Dow Jones Industrials Average closed up 57 points at 9858, almost breaking 9900 intraday. The NASDAQ Composite added 35.49 points or 1.83% to close at 1967. The S&P 500 added more than 8 points to follow through on Friday's close above technical resistance at 1050. The SPX closed at 1059. Today's biggest gainers were in technology lead by the Semiconductor index (SOX) and followed by stocks in Networking, Internet and Hardware sectors. Non-technology winners were heavy in homebuilders and the broker-dealer sectors. Selling was concentrated in gold stocks, oil services and the healthcare sector. Market internals were very bullish. Advancing issues whipped decliners almost 20 to 8 on the NYSE and 21 to 10 on the NASDAQ. New Highs soared to 817 versus new lows of just 16. Up volume was very bullish coming in at three times down volume on both exchanges. Chart of the DJIA: Chart of the NASDAQ COMPX: The big economic event for the day was the ISM index. Released at 10:00 AM ET the ISM manufacturing index rose to 57 percent, beating estimates of 55.4 percent and jumping 3.3 percent from September's reading. October was the fourth consecutive month of gains. Readings above the 50 mark indicate that business was improving or holding steady. October's reading at 57 is the best pace since January 2000. Manufacturers have seen business improving due to the need to refill low customer inventories. October's reading put customer inventories falling to 39 percent, a record low only matched by May 2002. Investors cheered the new orders component, which rose to 64.3 percent in October from 60.4 percent in September. This is the best pace since June 1994. Optimists also noted the strong jump and nine-year high in the export component, which rose to 59.6 up from 52.9 in September. Overall it was a very strong report and yet another stepping stone the markets needed to hear to keep the momentum alive. With inventories so low the manufacturing sector should be humming throughout the rest of 2003 as they race to replenish the country's inventories. Bulls also cheered the positive construction spending numbers that came out today. Construction spending rolled out at +1.3 percent versus estimates for a gain of just +0.4%. Economists noted that private non-residential building construction rose 2.5%, which is the biggest gain in a year. Today's biggest winners were in the chip sector as the SOX index rose 3.87% and closed at levels not seen since May 2002. The rally was fueled by a 6.5% jump in global chip sales for September, according to the Semiconductor Industry Association (SIA). The rise in sales was the biggest monthly improvement since 1990. The SIA also said quarterly revenues soared more than 17 percent to $43.3 billion compared to a year ago. Technology bulls will be looking for more good news from the SIA when the industry group releases its long-term outlook for 2003 through 2006. Nowadays we can't have a Monday without some merger news and today was no different. Chips stocks also got a boost from news that Conexant Systems (CNXT), a broadband chip producer, would buy GlobespanVirata (GSPN). GSPN shareholders will get almost 1.2 shares of CNXT for each share of Globespan, which at Friday's prices valued GSPN at a 14% premium. There was also merger news in the energy sector. Exelon (EXC), a Chicago-based energy company, announced it would buy Illinois Power from Dynegy (DYN) for $425 million. Both EXC and DYN rose higher on the news. Bulls were definitely in control on this first trading day for November but not everything closed in the green. The strong economic numbers in the ISM boosted the dollar and suddenly traders felt less inclined to buy gold as a safety hedge. The U.S. dollar surged to one-month highs against the euro and the yen. Meanwhile December gold futures dropped $7.50 to close at $377.10 an ounce. The XAU gold & silver index fell 2.13%. All together these influences sent bonds lower and the yield on the 10-year note jumped to 4.36%. Oddly enough the markets seemed to ignore the growing mutual fund fiasco. The growing firestorm over fraud charges for illegal trading forced Putnam Investments to fire CEO Lawrence Lasser, who lead the company for 18 years. Lasser was one of the highest paid industry professionals earning more than $160 million over the past six years. NY State Attorney General Elliot Spitzer said the bloodletting isn't over. At a Senate subcommittee on financial management the high-profile prosecutor called the mutual fund industry a "cesspool" and suggests that funds should surrender all fees that were collected while these illegal trading abuses were being practiced. Normally the first three to five days of the month are bullish as mutual funds put new money to work and this can be exceptionally true in November as they begin a new fiscal year. The breakout to new highs on the $INDU, NASDAQ and the technical breakout over 1050 on the S&P 500 should have bears running scared again. It wouldn't surprise us to see sellers just step back and wait for the Dow to hit 10,000 and the NASDAQ to hit 2,000 before attempting to short these round-number psychological resistance levels. The impulse to short these levels may be compounded by the new lows we are witnessing in the VXO. The combination will likely be too much for bears to resist, even in their current state of pain. The next couple of days could prove interesting. ************ FUTURES WRAP ************ Uncle Buck's Revival Jonathan Levinson The US Dollar Index sprang to life, jumping more than 1% in less than 1 hour. Gold and treasuries were sold, and equities rallied. Daily Pivots (generated with a pivot algorithm and unverified): Note 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. 10 minute chart of the US Dollar Index Weekend news of setbacks in Iraq and new official allegations of widespread wrongdoing in the mutual fund industry was washed away on bullish US manufacturing data, and I'll let the chart speak for itself with respect thereto. Gold, silver and the CRB all sold off in US Dollars, as did the euro, swiss franc, yen and CDN dollar futures. Daily chart of December gold The extent of the US Dollar rally is well-reflected in the chart of December gold. The pullback was not unexpected, but as usual, the speed and extent of it was. Dec gold printed a low at 376.70, and was trading –7.10 or –1.85% at 377.50 as of this writing. We have sell signals on the oscillators with a bearish divergence thrown in for good measure. December silver was pummeled for 2.39% as of this writing at 4.994, with an intraday low of 4.911. Daily chart of the ten year note yield Bonds sold off, with the TNX adding 6.7 bps to close at 4.368%. While the small gap above Fibonacci resistance was interesting, the action in treasuries continues to build suspense within the narrowing pennant, and direction will be a tossup until either the lower or upper trendline is broken. The oscillators are reflecting this narrowing range, flipping from bearish to bullish kisses just as they did last week for gold. Daily NQ candles In the weekend Futures Wrap, we observed that the (then) 52 week highs presented a convenient level against which shorts could base their positions, and that a move above them could ignite a short covering frenzy, cause the intraday oscillators to begin trending and turn the daily chart oscillators up onto bullish buy signals from an aborted downphase. This is exactly what occurred. The VXO hit and maintained ludicrously low levels below 17, and shorts panicked as expected. The only surprise was that shorts couldn't panic more, and that more bulls didn't pile on to the breakout to new 52 week highs. The Nasdaq broke 2B shares' volume and outperformed the S&P/Dow indices, both price-wise and volume-wise. Notwithstanding the breakout and the new buy signal on the daily, the bearish interpretation somehow survived, with the move not surpassing the upper trendline on the old bear wedge we've been following since the 1300 low in October. While nominal new price highs were made today, the resistance area appears to be intact. 30 minute 20 day chart of the NQ The NQ 30 minute chart gave us our truncated downphase and the break above the previous double top 52 week highs, with an intraday high of 1448. The surge to the high appears to have marked the top of the oscillator upphase on this timeframe, and sets up a bearish divergence on the Macd. The higher price high against the lower Macd tends to precede price corrections, and combined with oscillator rollovers on this timeframe, I'm favoring downside tomorrow. 1435 is first support, followed by 1420, 1415, 1410 and 1392. Daily ES candles The ES had a good day as well, but also failed at the top of that daily bear wedge resistance. The oscillators flipped up on buy signals, still no sign of weakness in 7 sessions. The wedge projects down to 987, but could be broken at any time to the upside. 1038-40 is key support, and resistance is now at 1061 ES with an intraday high of 1060.50. Volume on the NYSE was a mere 1.36B shares despite the breakout price action, and it looks more like short covering occurred today than any real bullish buying- with the VXO below 17 for much of the session, I'm not surprised, but a breakout remains distinctly possible so long as 1040 isn't violated to the downside. 20 day 30 minute chart of the ES The ES also peaked in the afternoon, making a marginal new high at 1060.50 above the morning high of 1059.75. The afternoon failure sealed a bearish Macd divergence and kicked off an oscillator downphase within what appears to be a bearish rising wedge projecting to 1016. The support line at 1056 was violated after the cash close, with the 4:15PM print at 1054. If the downphase on this chart gains any price traction, we should see 1052 support taken out, setting up a test of 1044, followed by the critical 1038-40 support level. Needless to say, a bounce from 1052 would be very bullish, but it's becoming increasingly difficult to contemplate realistic bullish scenarios with the VXO so vastly oversold. 150-tick ES The end of day selloff is the most interesting feature of the intraday chart, as it refutes all of the buying that occurred since 10AM. Everyone who bought and held since 10AM was underwater at 4:15PM, which is classic distribution action. Yet another golfclap for the specialists is in order. Daily YM candles Same picture on the YM. Note that the YM, which has led to the upside during the past week, lagged the NQ today, with the NQ up 1.52%, YM up .48% and ES up .43%. 20 day 30 minute chart of the YM Numbers don’t lie, and I just had to adjust the column width on my pivot template to allow for YM R3 at 10040. While there are good technical and fundamental reasons to expect a decline from here, how many are gunning for the big round number targets of Dow 10,000 and Nasdaq 2,000? Logic and reason are but two of the plethora of things that equity markets ignore in the short term. For tomorrow, we will watch to see if the continued strength in the dollar lifts or hinders equities and bonds. I expect commodities to continue to get sold on dollar strength, as it’s a direct relationship. Between bonds and equities and the dollar, however, we need to see how the trend continues to develop. I don’t expect bonds to diverge from stocks for long, because, again, I believe this to be a bear market rally. If the spring rally was liquidity driven, with a weak dollar buoying stocks and bonds, then a strong dollar should reverse it. "Should" is not a good word for the markets, and so we look to tomorrow for further clues. ******************** INDEX TRADER SUMMARY ******************** Manufacturing puts its best hoof forward The major equity indices finished today's session with gains, while the U.S. dollar jumped against major foreign currencies with the U.S. Dollar Index (dx00y) 93.68 +1.02% gaining 0.95 points after the Institute for Supply Management (ISM) said its manufacturing diffusion index rose 3.3 points in October to 57.0, the strongest monthly gain since December 1999. The news out of the manufacturing sector had the S&P 500 Index (SPX.X) 1,059.02 +0.79% breaking to new highs, as October's gains in the ISM helped increase bullish optimism that the recently reported Q3 Gross Domestic Product annual growth of 7.2% may have the manufacturing sector carrying further momentum into the fourth quarter. While October's 57.0 reading was well above economists' forecast of 55.9 and September's 53.7, the new orders component gained to 64.3, while production rose to a 62.6 reading; both signaling further expansion. With new orders still ramping, a low inventories reading of 44.5 showed demand pulling inventories off the shelf and had backlogs continuing to rise to 53.5. Employment continues to struggle, but did show modest improvement in October with a 47.7 reading. The ISM says payroll is considered neutral at 47.5. The prices paid component continued to bounce either side of 55.0 as pricing power for output remained weak. The weaker dollar, which hit multi-year lows in October versus the yen and euro helped boost new export orders to 59.6, as did stronger global growth. It didn't take bulls long to get some early tests of WEEKLY R1s in the pivot matrix, helped in part by a bullish report this morning out of the Semiconductor Industry Association (SIA) showing year-over-year growth up from 14% to 17%. ThinkEquity felt the data was surprisingly bullish as the robust September replaced the month of June, where the data suggests the strength appears to have held up in October. ThinkEquity also felt the lunar new year coming much earlier than normal (late January) may also have been responsible for the stronger results. The SIA data also hinted that high-performance analog demand was strong, which reinforced ThinkEquity's belief that during the second half of the chip recovery underway, company's like Texas Instruments (NYSE:TXN) $29.93 +3.49% and STMicroelectronics (NYSE:STM) $27.22 +2.17% were large cap names that might benefit most ahead of quarterly earnings out of Dell Computer (NASDAQ:DELL) $36.52 +1.44% and Cisco Systems (NASDAQ:CSCO) $21.71 +3.72%, where ThinkEquity looks for both companies to upwardly revise guidance. The Semiconductor Index (SOX.X) 515.77 +3.87% was today's sector winner, while a rebound in the dollar found the AMEX Gold Bugs Index ($HUI.X) 208.86 -3.37% today's sector loser. Pivot Analysis Matrix - While nothing is certain, today's close above the 1,051.20 level for the December S&P futures contract (sp03z) marks the first close above this key level of resistance and looks to have a bullish bias now building to 1,073.30. This would be pretty close to the cash SPX MONTHLY R1 of 1,071.01, where we also see some overlapping support forming at the MONTHLY Pivot of 1,033.49 and WEEKLY S1 of 1,035.57. Lets keep WEEKLY S1 and MONTHLY Pivot in our minds as we enter a new week and new month, where new 52-week highs most likely has sellers few with the major indices showing strength above what had been deemed a cement ceiling the last couple of weeks. Still, bulls should not be complacent, but once again will have confidence to buy a pullback, with the thought the bears will also be looking to limit exposure as a new 52-week high has been witnessed. December S&P futures (sp03z) - Daily Interval Ability of S&P futures (sp03z) to settle above 1,051.20 builds bullish bias to 1,073.30. It would appear that recent pullback in sp03z seemed to find settlement very close to 1,029.10 as if traders were trying to square up positions at that level, and today's ability to settle above 1,051.20 gives upside to 1,073.30. Note the 4-point disparity between future and cash, as this ties to important support for October at the MONTHLY Pivot in the SPX (cash) at 1,033.49. S&P 500 Index (SPX.X) - Daily Interval SPX traded WEEKLY R1 today, and while bullish, also shows similarity to original scenario that SPX might duplicate its mid- September trade and new 52-week high. MACD above signal gives confirmation to upward trend, but Stochastics now "overbought" should have swing-trade bull looking to guard profits, raise some cash, and look for new bull entries on pullback, where Stochastics at "oversold" have been good entries. I've found it difficult to precisely forecast "trough" pullback points as Stochastics oscillator can move quickly to oversold, where 1,044 becomes near-term support, while 1,033-1,035 a much nicer bullish entry point, both with targets back higher to 1,068-1,069. In a past Index Trader Wrap, I did think an AGGRESSIVE BEAR could look for a partial bearish position if/when the SPX made a new high similar to that found in mid-September, like we saw today, but I'd prefer to let tomorrow's trade develop and try to get a good action point for weakness for a trade entry on Wednesday. An AGGRESSIVE BEAR might look for an entry tomorrow, but higher at 1,068-1,069, where from that point, I would think high likelihood of SPX pullback to at least 1,044-1,047. Today's trade saw a net gain of 2 stocks to reversing point and figure buy signals in the broad S&P 500 Bullish % ($BPSPX). Still "bull confirmed" status at 80.4%. S&P 100 Index (OEX.X) Chart - Daily Interval MSFT getting nice bounce from its 200-day SMA, but GE finds resistance at trending lower 21-day SMA ($29.08) and looks like it wants to trade its 200-day SMA of $27.91. This gives mixed look to OEX's two largest-weighted stock and has me thinking OEX MAX WEEKLY gain of 527, so not excited about any new bullish positions here. Look for pullback entry once again near 513, where WKLY S1 now marks this summer's (June) relative highs. Today's trade saw no net change in the narrower S&P 100 Bullish % ($BPOEX). Still "bull correction" status at 79%. Dow Industrials Chart (INDU) - Daily Intervals The price-weighted Dow Industrials traded overlapping resistance of 9,896.3, and didn't get some needed help today from its heavyweight PG, which traded a 52-week high yesterday, but fell back today. INDU as well as PG may need to reload, but I think destiny calls for PG to trade $100.00, when INDU trades 10,000. On Friday, AT&T (NYSE:T) $18.87 +1.50 traded $18.50 and that was a double-bottom sell signal. That had the very narrower Dow Industrials Bullish % ($BPINDU) slipping 3.33% to 80.00%. There was no change on the bullish % chart (2% box scale), but still "bull correction" status at 80.00%. NASDAQ-100 Tracking Stock (QQQ) Chart - Daily Intervals QQQ edged up to a 52-week high, but not euphoria I would have thought on semiconductors. Ideal pullback entry would be $34.49- $34.60 ahead of CSCO's earnings. CSCO did break to new 52-week high today, and on bullish guidance going forward, could get the more "euphoric" QQQ pop to $36.61-$36.85 level. QQQ targetto $36.61-$36.85 also a potential should MSFT fill to the upside its recent gap lower. Hey! With Sun Microsystems (NASDAQ:SUNW) $4.38 +11.1% getting a bounce in recent session, MSFT looks "cheap" on fundamental comparison. Today's trade saw a net loss of 1 stock to a point and figure sell signal as the NASDAQ-100 Bullish % ($BPNDX) slipped lower by 1% to 76.00%. Still "bear correction" status and would take a further bullish reading of 82% to achieve "bull confirmed," while a lower reading of 72% is needed to reverse back lower to "bear confirmed." 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. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ******************* 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. You may also fax the information to: 303-797-1333 ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Monday 11-03-2003 Copyright 2003, All rights reserved. 2 of 2 Redistribution in any form strictly prohibited. In Section Two: Stop Loss Updates: LOW, QLGC, JBLU Dropped Calls: None Dropped Puts: None Play of the Day: Call - LOW Watch List: A few high dollar NDX components Updated on the site tonight: Market Posture: One Small Step for Man, One Giant Leap for Wall Street ------------------------------------------------------------ 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 ------------------------------------------------------------ ***************** STOP-LOSS UPDATES ***************** LOW - call Adjust from $57 up to $58 QLGC - call Adjust from $52.99 up to $55.50 JBLU - call Adjust from $60.51 down to $59.50 ************* 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 - CALL ********************** Lowe's Companies - LOW - close: 58.93 change: -0.52 stop: 57.00 Company Description: As a retailer of home improvement products, Lowe's has a specific emphasis on retail do-it-yourself and commercial business customers. The company specializes in offering products and services for home improvement, home decor, home maintenance, home repair and remodeling and maintenance of commercial buildings. Why we like it: As we expected, LOW gave us that breakout over $59 last week, with price stretching all the way up to $59.95 before the bulls lost their nerve. Since achieving that peak on Tuesday, the stock has been gradually drifting back down, and it looks like old resistance in the $58.00-58.50 area is being tested to see if it can now hold as new support. Traders that didn't take the initial breakout over $59 are now getting a second chance to enter the play. Rebounds from above $58 look viable as new entry points, so long as our $57 stop is not violated. With just over 2 weeks to go until the company reports earnings on November 17th, there's still plenty of time for the stock to achieve our upside target of $65. More cautious traders may want to wait for a break above $60 before jumping aboard with new positions. Watch for continued strength in the Dow Jones Housing index ($DJUSHB) and the Retail index (RLX.X) to confirm continued bullishness in shares of LOW. Why This is our Play of the Day Positive economic data this morning had the bulls feeling frisky and that was enough to poke both the Dow Jones Home Construction index ($DJUSHB) and the Retail index (RLX.X) to fresh highs. The $DJUSHB is at all time highs and the RLX (currently $389) is within spitting distance of its $394.50 all-time high. So it would have been a real surprise to have NOT seen LOW break out to new all-time highs of its own. Fortunately, we weren't surprised, as the stock tacked on 1.9% and closed above $60 for the first time ever. The top of the rising channel (now at $61.75) and the upper Bollinger band ($60.07) are still presenting some resistance, but we're looking for LOW to continue marching higher right into its November 17th earnings announcement. It appears there is now strong support at $58.50, the site of former resistance, so intraday dips and rebounds from above that level look attractive for new entries. While we're targeting $65 for the play, keep in mind that reaching that level ahead of earnings will require a breakout from the rising channel. With the top of the channel likely in the $62.50-63.00 area at the time of the company's earnings report, more conservative traders may want to harvest gains on any push up into that area ahead of the earnings announcement. Raise stops to $58 tonight, which is below both last Friday's intraday low and the supportive 20-dma at $58.32. Suggested Options: Shorter Term: The November 60 Call will offer short-term traders the best return on an immediate move, as it is currently at the money. Longer Term: Aggressive traders looking to capitalize on an extended rally will want to look to the December 65 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 December 60 Call. BUY CALL NOV-55 LOW-KK OI= 2323 at $5.60 SL=2.75 BUY CALL NOV-60 LOW-KL OI=11100 at $1.70 SL=0.60 BUY CALL DEC-60 LOW-LL OI= 1078 at $2.65 SL=1.25 BUY CALL DEC-65 LOW-LM OI= 469 at $0.80 SL=0.40 Annotated Chart of LOW: Picked on October 23rd at $58.65 Change since picked: +1.40 Earnings Date 11/17/04 (unconfirmed) Average Daily Volume = 3.89 mln ------------------------------------------------------------ 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 ------------------------------------------------------------ ********** Watch List ********** A few high dollar NDX components Electronic Arts - ERTS - close: 98.73 change: -0.21 WHAT TO WATCH: We continue to keep our eyes on ERTS. The stock failed to hold on to its rally over the $100 mark last week but today produced a nice bounce from the 96 level and its 50-dma. There was some negative news from a video game retailer today, which probably weighed on ERTS's gains. Look for a move back above the $100 level. Chart= --- Paccar - PCAR - close: 79.40 change: +0.32 WHAT TO WATCH: Once again PCAR is fighting with its simple 50-dma just overhead. This time its technical resistance coincides with the $80 round-number level. A breakout could be worth playing but look for additional resistance just under $82. Bears could seek aggressive entries on a move below $78 but watch out for PCAR's trend of higher lows. Chart= --- Amgen Inc - AMGN - close: 61.15 change: -0.61 WHAT TO WATCH: We are posting AMGN back on the watch list because shares have failed to break above its 200-dma again. The stock is oversold and does have a short-term trend of higher lows but there doesn't seem to be much conviction from the buyers. Bulls can look for a move over $63.00. Bears may want to wait for a drop back under $60 before evaluating plays. Chart= ************** MARKET POSTURE ************** One Small Step for Man, One Giant Leap for Wall Street To Read The Rest of The OptionInvestor.com Market Posture Click Here http://www.OptionInvestor.com/marketposture/mp_110303.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. You may also fax the information to: 303-797-1333 ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
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