Option Investor
Newsletter

Daily Newsletter, Wednesday, 07/28/2004

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                Wednesday 07-28-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Sometimes the Market Can Make You Dizzy
Futures Wrap: See Note
Index Trader Wrap: Mixed Mocha Monogamy


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
      07-28-2004           High     Low     Volume   Adv/Dcl
DJIA    10117.07 + 31.93 10146.86  9994.22 1.87 bln 1318/1495
NASDAQ   1858.26 - 10.84  1869.00  1832.12 1.77 bln 1160/1842
S&P 100   536.46 +  0.93   538.06   529.48   Totals 2478/3337
S&P 500  1095.42 +  0.59  1098.84  1082.17
SOX       402.91 +  2.60   405.71   393.21
RUS 2000  541.20 -  3.41   544.61   534.57
DJ TRANS 3086.33 + 22.73  3097.41  3034.94
VIX        16.15 -  0.40    17.41    15.94
VXO (VIX-O)15.88 +  0.18    17.56    15.39
VXN        24.87 +  0.56    25.60    24.42
Total Volume 3,646M
Total UpVol  1,424M
Total DnVol  2,183M
Total Adv  2478
Total Dcl  3337
52wk Highs   75
52wk Lows   200
TRIN       1.24
PUT/CALL   0.68
*******************************************************************

Sometimes the Market Can Make You Dizzy.
Jane Fox

The markets were able to pull back from the brink of disaster
powering higher in the last hour of trading to erase almost all
of the day's earlier losses. The market is not sure where it
wants to go and in the meantime it is making traders dizzy while
it tries to figure it out.

A weak report on durable goods, a negative call on the technology
sector and a run-up in oil prices started the day off with a
bearish tone but traders turned bullish late in the day after
major indexes failed to break through intraday lows reached
Monday.

The Commerce Department released its June's orders for durable
goods (products meant to last three years or longer) at 8:30 this
morning. The number showed a rise of 0.7% to $191.7 billion last
month but fell shy of economists' expectations for a 1.5-2.5
percent increase.

Morning trading was also affected by violence in Iraq and jitters
over the supply of oil. A suicide attack in Iraq killed more than
60 people and wounded scores more. And on the other side of the
world, Yukos, Russia's largest oil producer, may have to halt its
main production units in days because of a court order stemming
from its $3.4 billion tax bill. OPEC is pumping close to capacity
so the prospect of losing nearly two million barrels a day, the
amount Yukos's pumps a day, is critical. September crude Oil
futures hit a high of $43.05 a barrel, an all time high.

Then to top it all off this morning UBS technology strategist Pip
Coburn said the Nasdaq could sink as much as 20% in the next 12
months. Analysts were looking for a final and wonderful
summer/fall rally inspired by improved IT spending, fostering
investor visions of new technologies, upward growth rates and
higher multiples but that dream is not materializing, according
to Mr. Coburn.

The Beige Book, a summary of economic activity prepared for use
at the central bank's next Federal Open Market Committee meeting
on Aug. 10, was released at 2:00. It reported that the U.S.
economy has cooled off in June and July as consumer spending,
especially on autos, slowed significantly after a big surge in
early spring.

The report showed 5 of the 12 Federal Reserve districts reported
economic activity had "slowed somewhat," while growth rates in
most other districts ranged from modest to solid. Slower growth
was reported in the New York, Cleveland, Richmond, Kansas City
and San Francisco districts.

EARNINGS

On the earnings front, Time Warner's (TWX) profit fell 27%, due
to large gains earlier in the year, however, revenue climbed and
the company raised its outlook for the year.

Due to robust demand for its digital cable and high-speed
Internet services, Comcast Corp (CMCSA), the largest U.S. cable
operator, had a 2nd quarter profit and revenue growth of 10%.

The company that abandoned Seattle for Chicago, Boeing Co. (BA)
saw a 2nd quarter profit and raised its forecasts for this year
and next. This was due to defense orders continuing to cushion
the aerospace giant from the slump in the commercial-aircraft
market.

Conoco Phillips (COP) reported a 75% increase in profit in the
2nd quarter due to rising prices for oil and natural gas and
improved margins at U.S. gasoline refineries.

On to the charts.

Although the morning started out what looked like another bearish
day, the buyers appeared around 2:00ET and put on the rocket
boosters. The markets gained back what they lost and then some.

Let's start with NYA.

Annotated Daily Chart of the NYA:



I think this is the most encouraging market of all because of the
clearly formed reverse head and shoulders. The projected target
is 7157. (Taking the low of the head, 6211 and a neckline at
6684. 6684-6211 = 473 then 473 + 6684 = 7157.)

Notice also the MACD is confirming the higher low that forms the
right shoulder.

Annotated Daily Chart of the SOX:



This is probably the worst looking chart but we do have some
things that will encourage the bulls. The regression channel I
have drawn starting from the high of 560.60 has contained the SOX
all year and with the bullishness we have seen the last couple of
days I don't see any reason as to why it should not at least
retest the channel highs at 467. If the SOX can overcome the last
swing high at 430, which just happens to be the channel midpoint,
the channel's high should be no problem.

Annotated Daily Chart of the Nasdaq:




This chart is not much better looking than the SOX chart and has
not adhered to the channel as well as SOX as.

When the COMPX made a higher high and low at the end of June many
were thinking yearly highs were the next stop just as long as the
lows on June 14th held. But alas the June 14th lows did not hold
and it has been almost a straight line down since June 30th.
However, like the SOX this market is in for a bounce, at least,
and the top of the channel is not out of the picture.

Annotated Daily Chart of the Russell 2000:



Since the last swing low is closer to the May 17th swing low I
think we will have to call this a double bottom and not a reverse
H&S like we have in the NYA. Do you see why I stated the NYA is
the stronger market because this last swing low has retraced
further than it has in the NYA.

Annotated Daily Chart of the Dow:



Here we have another reverse H&S with a projected target of 11222
(10537 - 9852 = 685. 10537 + 685 = 11222) and a MACD that
supports the formation also.

Annotated Daily Chart of the SPX:



Although this chart is very similar to the NYA, RUT and the DOW
there are subtle differences. Look at the MACD. In the SPX the
MACD is making an equal low whereas the MACDs in the other three
are making higher lows.

After-hours developments

Express Scripts (ESRX) stumbled in after-hours after saying it is
under probe by Vermont's attorney general and the state of New
York. ESRX is currently down -12.00.

InfoSpace Inc. (INSP) jumped after reporting a quarterly profit,
versus a loss in the same period a year ago. INSP is currently up
+4.36.

JDS Uniphase Corp. (JDSU) rose, after it posted a smaller
quarterly loss than a year ago. JDSU is currently up +0.20

Tomorrow's Earnings and Economic Releases

AT 8:30 tomorrow morning, the Department of Labor releases its
usual initial claims number, this one for the week of 7/23.  Last
week's release saw a dip to 339K, and the expectations for this
week aren't far off that number, at 340K.  The Q2 Employment Cost
Index will also be released at 8:30, with expectations for a 0.9
percent rise after the previous quarter's 1.1 percent rise.  At
10:00, market watchers interested in the employment outlook will
be scrutinizing June's help-wanted index, with the number
expected to climb to 40 from May's 39.

More than 300 report Thursday, many of those capable of producing
market-moving news. Some of the bigger names reporting Thursday
are BOL, BMY, CCE,DCX, LTR, NOC, RTN and WMI.

The outlook going forward is definitely bullish in the short-
term. Longer term the bulls have a lot to prove and a lot of
resistance to overcome. Time will tell if the buyers out there
have the commitment to take the market higher than just a short
term burst. But for now that is all we have.


***************
FUTURES MARKETS
***************

Futures wrap is not emailed due to the excessive number of charts.
It may be read on the website at this address.
http://www.OptionInvestor.com/indexes/futureswrap.asp


************************Advertisement*************************

Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade Market Monitor Signals
Personal Service and Education


**Services available for Foreign Traders including Canada**

http://www.OneStopOption.com

**************************************************************


*****************
INDEX TRADER WRAP
*****************

Mixed Mocha Monogamy

The major indices finished mixed, where the coffee served up
today could be best described as a new Starbucks flavor named
"Mixed Mocha Monogamy."

The very broad NYSE Composite ($NYA.X) 6,538 +0.16% scratched out
a 10-point gain with breadth finishing even at 16 to 16, while a
late-afternoon bid had the also very broad NASDAQ Composite
(COMPX) 1,858 -0.57% finishing down 10 points with internals
finishing at their best readings of the session, but negative
with decliners outnumbering advancers by a 9 to 5 margin.

This morning's June durable goods data found a negative response
early.  While May's previously reported 1.6% decline was revised
up to show a more modest decline of 0.9%, Junes 0.7% gain was
half the 1.5% forecast.

Intra-day traders did NOT need a cup of coffee to see some action
and volatility in today's trade.  Traders needed a cup of coffee
to stay away today as the Dow Industrials (INDU) 10,117 +0.31%
fell from 10,080 to 10,000 by lunchtime, then traded a session
high of 10,146, a 146-point swing back higher in just under 2.5
hours.

Market Snapshot / Internals - 07/28/04 Close



The only bullish signs I see from the internals is that for a
second-straight session, the number of new lows at the NASDAQ
didn't exceed Monday's lows of 259.

To view that as a bullish sign takes a 1/2-pint of Bailey's Irish
Cream in your cup of coffee, but a key ingredient to a cup of
Mixed Mocha Monogamy.

The Semiconductor Index (SOX.X) 399.49 -0.85% came within a
couple of points of its WEEKLY S2, with today's component
casualty (coffee grounds at the bottom of the cup) being LSI
Logic (NYSE:LSI) $5.06 -13.35% with Smith Barney downgrading the
stock to "sell" from "hold" and cutting their price target to
$4.50 from $7 after the company guided below consensus and
confirmed its chipsets are not going to be in the next generation
of the Sony PlayStation platform.

Pivot Analysis Matrix - Daily Intervals



Perhaps the "easiest trade" among sectors today was in gold
stocks, when the Dollar Index (dx00y) 89.75 -0.04% moved higher
at the open to test those correlative levels of resistance, but
came just shy of MONTHLY R1 to reverse lower.

Heck.... Dow component Alcoa (NYSE:AA) $31.52 +1.12% began
showing some bid on the dollar's turn lower, moving off the
$30.80 level, consolidating just below $31.00, and when the Beige
Book was released, AA found a nice bid as the Dow Industrials
(INDU) began lifting from their DAILY S1.

More earnings and economic data tomorrow, where early on, the OEX
would show some correlations at DAILY/WEEKLY Pivots bound by
WEEKLY R1 and DAILY R1.

At 08:30 AM EDT, second-quarter employment cost index is expected
to show a 0.9% gain compared to prior 1.1% gain.  At the same
time, weekly initial jobless claims will be released with
economists' forecasting 340,000 new filings compared to 339,000 a
week ago.

Then at 10:00 AM EDT, the June Help Wanted Index is expected to
show a gain to 40 from 39, where the number of new job postings
in some of the nations largest newspapers were to have gotten a
little thicker.

Hey... did you know that some economists actually judge the
health of an economy by how thick the classified ads section is?

Some "top of mind" job-related stocks that traders will often-
times follow are on-line job poster Monster Worldwide
(NASDAQ:MNST) $21.14 -1.74%, which traded a rather large range
from $23.58 to $19.69 in today's session.  Paychex (NASDAQ:PAYX)
$29.79 -0.86%, which sets on an upward trend from its October
2002 low to March 2003 pullback low is another stock trader's
will monitor for the market's outlook on job creation.  Paychex
offers payroll services to business.

Jeff Bailey


************************Advertisement*************************

Stock Option and Futures Brokerage

OneStopOption teams the best trading technology with varying
levels of professional assistance at very competitive prices.
Commission costs are comparable to discount brokerage and
tailored to individual customer needs.

The power of one brokerage group with experience and expertise
in the Securities* and Futures Markets offers unprecedented
convenience for traders.

Access To All Futures Markets            Toll Free 888-281-9569
Stock Option Principals

www.OneStopOption.com

**************************************************************


*******************
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                Wednesday 07-28-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Watch List: Steel to Networking and more!
Stop Loss Updates: CEPH, DISH
Dropped Calls: None
Dropped Puts: None


**********
Watch List
**********

Steel to Networking and more!

___________________________________________________________________

How to use this watch list:
  Readers can use the candidates below as a springboard for their
  own research.  Many are in the process of breaking support or
  resistance or in the process of starting new trends or
  extending old ones.  With your own due diligence these could be
  strong potential plays.
___________________________________________________________________


Nucor - NUE - close: 82.90 change: +2.59

WHAT TO WATCH: There has been a lot of buying interest in the
steel business with demand high due to growing economies here at
home and abroad.  Prudential recently raised its price target on
NUE from $85 to $100.  We like the breakout over the $80.00 mark
but NUE feels a bit overbought here.  Consider buying a pull back
and a bounce near $80 again.  Its P&F chart target is currently
$88.

Chart=


---

Ball Corp - BLL - close: 71.00 change: +1.42

WHAT TO WATCH: It was a good day for BLL.  Shares bounced back
above round-number resistance at $70.00 when the company
announced a 2-for-1 stock split, increase in its cash dividend
and a stock buyback.  We'd be tempted to consider long plays now
but we want to wait and see how investors react to the company's
earnings due out tomorrow morning.  Estimates are for $1.43 a
share.  BLL's P&F chart is currently bullish with a $98 target.

Chart=


---

Coach Inc - COH - close: 42.35 +0.20

WHAT TO WATCH: High end retailer COH appears to be bouncing from
the bottom of its slowly rising channel.  Coincidentally it's
also bouncing from psychological support at $40.00 and technical
support at the simple 200-dma.  Short-term technicals are edging
higher and its MACD is hinting at a new buy signal soon.  While
we are tempted to consider bullish positions here and target a
move back to $46-47 the company is due to report earnings on
August 3rd so that doesn't give us much time.

Chart=


---

F5 Networks - FFIV - close: 26.20 change: -0.75

WHAT TO WATCH: Networking FFIV has managed to rally back to the
top of its descending channel.  Normally this would be the spot
to consider bearish positions.  Yet the breakout over $25.00 and
its simple 40 and 50-dma's looks pretty bullish.  Bears
fortunately have more technical resistance a the top of the
channel and above that at the simple 100 and 200-dma's.  We'd
only consider bullish plays on a breakout above the 200-dma.
Bears may want to watch for a drop back through $25 and target
$20.

Chart=



-----------------------------------
RADAR SCREEN - more stocks to watch
-----------------------------------

AGN $72.95 +0.95 - AGN is extremely oversold falling from the
$92.50 region in mid-June to $71 this past week.  We're starting
to see signs of a bounce.

NTES $35.61 +2.60 - Heads up!  NTES is breaking out from its
recent trading range and moving into the gap.

SINA $26.37 +2.14 - SINA, another Chinese Internet, climbed more
than 8.8% while its MACD produced a new "buy" signal.

SOHU $17.75 +0.82 - SOHU, yet another Chinese Internet, rose
nearly 5% as it coils under resistance at $18.00.

EBAY $78.79 +0.33 - EBAY is back above its 10-dma but still under
new resistance at $80.00 and its 100-dma. Shares could go either
way.


************************Advertisement*************************

Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade ket Monitor Signals
Personal Service and Education


**Services available for Foreign Traders including Canada**

http://www.OneStopOption.com

**************************************************************


*****************
STOP-LOSS UPDATES
*****************

CEPH - put play -
 Heads up!  CEPH has broken its down trend of lower highs
 and has closed above the $50.00 mark and its simple 10-dma.
 This bullish breakout looks very dangerous.  Conservative
 traders may want to exit now.  Now change in our stop at $52.01.

---

DISH - put play -
 Lower stop from $29.55 to $29.26


*************
DROPPED CALLS
*************

None


************************Advertisement*************************

Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

Live Broker and Online Trading Available     888-281-9569

http://www.OneStopOption.com

**************************************************************


************
DROPPED PUTS
************

None


************************Advertisement*************************

Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

Live Broker and Online Trading Available     888-281-9569

http://www.OneStopOption.com

**************************************************************


*******************
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



DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives