PremierInvestor.net Newsletter Tuesday 06-19-2001 section 1 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/061901_1.asp ================================================================= In section one: Market Wrap: Market has a mind set Market Sentiment: Deciphering the Data Play of the Day: Bearish on QLGC Watch List: PLMD, IVGN, ACDO, ERTS ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 06-19-2001 High Low Volume Advance/Decline DJIA 10596.67 - 48.71 10740.79 10563.66 1.17 bln 1500/1543 NASDAQ 1992.66 + 4.03 2057.19 1978.25 1.97 bln 1589/2159 S&P 100 626.66 + 2.19 634.40 624.18 totals 3089/3702 S&P 500 1212.58 + 4.15 1226.11 1207.71 RUS 2000 489.73 - 1.80 495.63 488.71 DJ TRANS 2660.58 - 36.84 2703.60 2654.54 VIX 24.92 - .91 25.71 24.63 Put/Call Ratio 0.73 ----------------------------------------------------------------- =========== Market Wrap =========== Market has a mind set Lately, the market seems to have a mind of its own. Regardless of what kind of news we get, the market seems to be thinking about levels. Late Monday's "lack of bad news" from Oracle (NASDAQ:ORCL) and the company announcing earning of 15 cents a share versus estimates for 14 cents a share got a positive response early. Shares of Oracle ended the session higher with a 12.9% gain to finish at $16.76, but some of the widely followed indexes didn't fair as well. The Dow Industrials jumped at the open, but found sellers at the 10,740 level and finished the session at 10,596. I find today's trading very correlative with that of a retracement bracket overlaid on top of the Dow Industrials ($INDU) from the January 14, 2000 high of 11,750 and the March 22, 2001 low of 9,106. What we're finding is that the 61.8% retracement level at 10,740 seems to be a point of contention where the bulls are having a tough time overcoming selling at that level. Until that 10,740 level is broken to the upside it sure looks like this index is looking a tired. Who can blame it though after a very impressive move from the 9,106 level to a recent high of 11,345 or 24% gain in just two months? Dow Jones Industrial Average - last eleven months Today's high of 10,740 correlates with the 61.8% retracement level from our retracement bracket. It's almost as if market participants had determined beforehand that it would sell this basket of stocks at that level. Right now, I'd say we should be looking for this index to be somewhat range bound between the 10,428 and 10,740 level and look for accumulation. If we think about where we've been in recent months it seems reasonable that things need to take a rest. It would be a good sign for the longer-term if this index could begin building a base of consolidation between the 10,400 and 10,700 levels from which to mark another advance. For now, a retest of the 10,400 level would not surprise me and I would not rule out a possible test of the 10,116 level or 38.2% retracement level should we get some further earnings warnings in the coming week. Just remember that there are undoubtedly some shorts still holding some bearish positions in stocks below the 10,000 level and should be willing to close out positions as buyers near that level should that time come. The NASDAQ Composite (COMPX) did manage to finish up on the day, but it too found selling into early morning strength. I'd remain skeptical of holding big positions in many technology stocks still and feel that the 1,960 level needs to hold to have me the least bit bullish for many four-lettered stocks. A retracement bracket on this index does little good as it does not give me any levels to monitor, so I'm looking at relative highs and lows to help me establish levels I feel traders should be monitoring. NASDAQ Composite Index - last eleven months The NASDAQ Composite is setting just on top of what I feel is a key area of support should a summer rally be in the cards. The fact that MACD has fallen below the zero level has me cautious of implementing bullish trades and any trading near current levels (bullish or bearish) should be followed with relatively tight stops. Should the NASDAQ be able to put in a positive session tomorrow, we could see bearish trades begin to lock in some short-term profits thinking that their risk to an upside move of 2,250 is a possibility. Look for some extreme volatility here in the next couple of sessions. Jeff Bailey Senior Analyst ================ Market Sentiment ================ Deciphering the Data By Jeffrey Canavan Commitments of Traders data can be a little deceiving if you just focus the net position of traders, or it can be downright confusing if you don't follow the data on a regular basis. Let's wade our way through it, and see if we can make some sense of it. Currently commercial traders (institutions) are net short S&P 500 futures by 70,183 contracts. This may look bad on the surface, but lets go back in time a little to see how this developed. The most bearish S&P 500 reading of the year was (111,956) on 3/6/01. Institutions continued to get less bearish as the year progressed, and lowered their net short position to (41,144) on 5/1/01. Things were looking up, but then out of nowhere the net bearish position fell back down to (72,034) on 5/15/01. How could institutions be getting more bearish when we were on the brink of a new raging bull market? Lets suppose we all manage a $1 billion worth of stock. Perhaps the market looks a little over extended on 5/15/01 and due for a pullback. There is also the threat of the upcoming warning season that could ravage our portfolio, so how could we protect our assets? We could write 10 million covered calls on the stock we own, or we could short some S&P futures to give us a little insurance. As warning season starts to unwind, we can start to unload some of our insurance, and the net short position should start to drop. That could help to explain why the commercial net short position improved by 9.4% last week to a reading of (70,183), and the S&P 500 continues to hold above 1,200. If the S&P 500 remains above 1,200 I would like see that confirmed by a further improvement in the net bearish position of commercial traders. The Dow continues to be the only index with a commercial net long position, but even the bearish reading in the Nasdaq-100 managed to improve by 6%. The market volatility indices are also telling us that the current market sentiment is more cautious, than panicked. Even with the Dow closing in negative territory, the VIX fell to a less fearful reading of 24.92. The Nasdaq-100 Volatility Index (VXN.X) did the same, and fell to a reading of 55.24. In conclusion, I would currently call the market sentiment cautiously optimistic, but that is contingent on some key support levels holding. === VIX Tuesday 06/19 close: 24.92 VXN Tuesday 06/19 close: 55.24 30-yr Bonds Tuesday 06/19 close: 5.69 Total Put/Call Ratio: .73 Equity Option Put/Call Ratio: .53 Index Option Put/Call Ratio: 1.42 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 33.60 Current close: 41.82 Volume/Open Interest Maximum calls: 50/98,296 Maximum puts : 40/51,984 Moving Averages 10 DMA 44 20 DMA 46 50 DMA 45 200 DMA 61 === S&P 100 Index (OEX) 52-Week High: 834.93 52-Week Low: 548.16 Current close: 626.66 Volume/Open Interest Maximum calls: 650/4,788 Maximum puts : 600/5,817 Moving Averages 10 DMA 640 20 DMA 649 50 DMA 644 200 DMA 686 === S&P 500 (SPX) 52-Week High: 1530.01 52-Week Low: 1081.19 Current close: 1212.58 Volume / Open Interest Maximum calls: 1250/12,190 Maximum puts : 1200/24,448 Moving Averages 10 DMA 1241 20 DMA 1258 50 DMA 1244 200 DMA 1313 === DJIA (INDU) 52-Week High: 11,518.83 52-Week Low: 9,047.56 Current close: 10,596.67 Volume / Open Interest Maximum Calls: 114/ 5,956 Maximum Puts 108/13,093 Moving Averages: 10 DMA 10,843 20 DMA 10,948 50 DMA 10,799 200 DMA 10,627 ***** CBOT Commitment Of Traders Report: Friday 06/15 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts on the Chicago Board Of Trade. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs are not. Extreme divergence between each signals a possible market turn in favor of the commercial trader’s direction. Small Specs Commercials S&P 500 (Current) (Previous) (Current) (Previous) Open Interest Net Value +67110 +77601 -70183 -77490 Total Open Interest % (+25.01%) (+33.61%) (-9.04%) (-10.71%) net-long net-long net-short net-short Small Specs Commercials DJIA futures Open Interest Net Value -4305 -4251 +6239 +5829 Total Open interest % (-28.76%) (-35.39%) (+14.44%) (+14.71%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 Open Interest Net Value +2110 +1155 -10648 -11335 Total Open Interest % (+6.09%) (+5.43%) (-13.68%) (-18.42%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices: Commercials did lighten their net-short positions on the S&P but not by a notable amount. Gold: Commercials continued to lessen their net-short positions dropping 32,000 contracts since May 29. Inflation concerns may usher in a new wave of buyers and it looks like the Commercials are thinking along those lines. 5/15: 13,915 contracts net-short 5/22: 65,250 contracts net-short 5/29: 68,443 contracts net-short 6/05 42,314 contracts net-short 6/12 36,544 contracts net-short Data compiled as of Tuesday 06/12 by the CFTC. =============== Play of the Day =============== Bearish Play ------------ QLogic QLGC $46.99 -1.91 (-5.12 this week) - Company Description - QLogic chips, switches and adapters help keep data flowing between computers and storage devices. Although the company sells components for IDE and storage area network (SAN) Fibre Channel technologies, the bulk of their sales come from their SCSI (small computer system interface) adapters used to manage communication inside a computer with its hard disks, scanners and tape drives. Principal customers include Fujitsu (30-percent of sales), Sun Microsystems (13-percent), Dell, IBM and Compaq. - Play Write Up - Last month, the firm reported that fourth-quarter earnings, adjusted for a sales discount to Sun Microsystems, increased 55- percent from the year ago period to 27-cents per share. Analysts had forecast earnings between 25 to 29 cents per share according to First Call. Gross revenue rose 55-percent from the previous year to $100.5 million. QLogic shares broke important support to the downside on heavy volume. This suggests it is prime for further declines and thus a easy Bearish selection. Since hitting $47.79 on May 30th, the shares rallied spending much of last week bouncing off of resistance at $60.00. This week the shares began to correct. Tuesday's move past the earlier $47.79 low represents a technical bearish reversal, confirmed by well above average volume. This puts the next levels of resistance at $40 and $35 well within target range. Picked on June 19th at $46.99 Gain since picked 0.00 Earnings Date N/A (Confirmed) ========== Watch List ========== PLMD - Polymedica, Inc. $39.02 +4.06 PolyMedica Corporation is a national medical products and services company best known through its Liberty brand name. The Company serves the senior chronic disease marketplace and focuses on Compliance Management using its Technology Platform to help seniors manage their disease more effectively. Like a fire was lit underneath them, shares of PLMD took off like a rocket today, surpassing the all-important 200-dma ($36.36) in the process. The stock vaulted ahead by $4.06 or 11.6% in the session, but volume was only average in the ascent, causing reason for some suspicion. Looking at the fundamental picture for reasons of the impressive move up the chart, we can see that back on May 15th the company reported record earnings per share (diluted) of $2.18 for the fiscal year ended March 31, 2001, a 57% gain from earnings per share (diluted) of $1.39 in fiscal 2000. Earnings for the fiscal fourth quarter came in at $0.61, lower than the company's pre-announced $0.63 expectations, a likely reason the stock did not continue its ascent when the results were announced. MACD readings on the daily chart remain across the trigger line and in positive territory, although faster moving stochastics made a bearish cross near the 80 plot, potentially signaling a near term reversal. We would be interested in adding shares of the medical equipment company in the event shares can settle above the $40.00 level on volume north of 640k, the average daily share count over the past 30-days. Conversely, should the BTK.X break the key 50-dma (575), PLMD could offer an excellent opportunity from the other side of the tape. --- IVGN - Invitrogen Corporation, Inc. $67.77 -5.74 Invitrogen Corporation develops, manufactures and markets more than 10,000 products for the life sciences markets. The Company's products are principally research tools in reagent and kit form, biochemicals, sera, media, and other products and services, which the Company sells to corporate, academic and government entities. Despite positive coverage from conservative brokerage firm Bear Stearns & Co. back on May 23rd, shares of IVGN look to be headed for lower ground. In trading Tuesday, the stock lost support of two key support levels, namely the 50 & 200 dma's ($69.72, $69.01). More crucial to watch was the increased participation in the $5.74 decline, with 3.6 mln shares changing hands in the session, 389% more than the 30-day average count. These two, definitively negative technical factors, coupled with the BTK.X perched precariously above its own 50-dma (575) could spell significantly lower prices for IVGN in the near term. Looking at the oscillating indicators for further confirmation, MACD readings on the daily chart made a bearish cross back on June 8th and are headed decidedly south, now only 0.58 from the zero plot. Stochastics are also in the gutter, with %K seen at a bearish 8.1 as of today's close. Minor support resides for IVGN at $64.75, the relative low from 5/4/01, but we doubt it would hold, considering pressure from the bid side of the tape. Firmer support exists near $60.00, and it would be reasonable to assume an objective near this point should a closing below $67.00 is seen. Despite the company beating earnings estimates by 20% back on 4/26, the chart pattern is clearly telling traders that money is being taken off of the table, and we want pay attention in order to profit from the liquidation. A trip to support near $60.00 from our proposed entry at $67.00 would represent gains of 10.4%. --- ACDO - Accredo Health, Inc. $33.05 -2.65 Accredo Health, Incorporated provides specialized contract pharmacy and related services pursuant to agreements with biotechnology drug manufacturers relating to the treatment of patients with certain costly chronic diseases. Despite a healthcare sector that is showing clear signs of momentum, shares of Memphis, TN based Accredo Health are bucking the trend, losing key support today by compromising $33.00, representing the 50 day simple moving average. After the company reported record earnings back on 4/30 of $.18 per diluted share, the ninth time the company exceeded consensus estimates in as many quarters, an attempt was made by bulls to take out the 200-dma near $40.00. Despite increasing volume in the effort from the low $30's to $39.37, ACDO failed to settle above this key resistance mark and quickly retreated, although the 16.5% decline from 6/6/01 has come on participation that is well below the average 30-day share count. In fact, in the prior 8 trading sessions, ACDO has not traded above the 30-day volume trend one single time. Oscillating indicators are showing very bearish readings, with %K plotted at 10.06 as of Tuesday's close, and MACD showing a bearish cross as well. The company is slated to present at a First Union analyst conference on June 28th, and any positive mutterings from the CEO David Stephens could provide very volatile price surges in the stock, considering the tiny 22.7 million share float. With the company sporting a 46% EPS growth for fiscal 2001 (June), keeping tabs on ACDO could prove a lucrative endeavor. While the negative technical pattern would negate us adding the stock as a long at current levels, the next few days price action should provide better clues. Excellent support resides at $30.00 and then at $28.00, and so long as volume does not pick up if the selling continues, an excellent risk/reward scenario would develop for a long position in ACDO. --- ERTS - Electronic Arts, Inc. $58.00 +1.35 Electronic Arts operates in two principal business segments: EA Core and EA.com. Through EA Core, the Company creates, markets and distributes interactive entertainment software for a variety of hardware platforms. Have you seen the stocks in the electronics sector lately? Names like THQI and TTWO, as well as ERTS, have been on absolute fire, with the group heating up in anticipation of Microsoft's long awaited debut of the X-Box gaming console. Mr. Softie has put aside an advertising budget of $500 million dollars for this highly touted product, so sales are expected to be strong. When you couple this budget with Nintendo and Sony's, which are $250 million combined, it is easy to see the sweet spot all of these companies are in. Indeed, the industry is expected to grow from 300 million today to $2 billion by 2004, fueled largely by a surge in on-line gaming, an segment of the market that ERTS currently owns outright. Looking at the technical snapshot, after hitting a fresh 52-week high of $63.75 on 5/22, ERTS retreated sharply, losing support of the 50-dma ($58.16) back on 6/11. Of note in the decline is the fact that in spite of losing this key support on a closing basis, shares of the company did not compromise the sharply up sloping trendline formed from the most recent lows in early January 2001. Volume in the sell-off was also diminishing, providing more bullish ammunition looking forward. While the $1.35 advance today breached the 50-dma to the upside, ERTS failed to close back above, instead finishing just below at $58.00. Participation was also lackluster, with only 1.9 million shares crossing the tape as compared to the 2.7 million average count over the prior 30 sessions. Should ERTS be able to settle above $60.00 on volume near 3 million shares, one could assume an attempt at new 52-week highs would be attempted, and we would want to add the stock as a new long position. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. 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PremierInvestor.net Newsletter Tuesday 06-19-2001 section 2 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/061901_2.asp ================================================================= In section two: Split Trader Play Updates: LOW (Split Run); BJ, ESI, MTG (Candidates) Closed Plays: EPIQ (Candidate) Net Bulls New Plays: QLGC (Short) Play Updates: RETK, MVSN (Longs); DIGL, PMCS, STOR, SFA (Shorts) Closed Plays: EPIQ (Long) Stock Bottom / Active Trader New Plays: CMVT (Short) Play Updates: FFIV, BEBE, WM, WMI (Longs) Closed Plays: CB (Long) & CSCO (Short) ================================================================= Split Trader (ST) section ================================================================== =============== ST Play Updates =============== ----------------- Split Run Updates ----------------- LOW - Lowes Companies, Inc. $75.96 +1.41 s/l $68.00 Shares of Lowes continued their winning ways today, as selling in to strength in technology only benefited the retailing sector. Volume was well above average, with 3.1 million share changing hands, some 19.2% above the 30-day average share count. From our entry at $74.00, we are sitting on a gain of $1.96 or 2.65%. Perhaps a positive note on LOW from Steven Goldman, market strategist at Weeden Securities added to the $1.41 advance Tuesday. Firm support still resides at the 10-dma ($73.40), which, by the way, is on the rise. Picked on June 7th @ $74.00 Change Since Picked 1.96 Stop Loss @ $68.00 ----------------- Candidate Updates ----------------- BJ - BJ's Wholesale Club $53.74 -0.41 s/l $53.25 With technology fading since our last update, retailers have shined, including our play in BJ. Since our last update 6/17, BJ has tacked on another $0.94 or 1.78%. We now sit with a gain of 11.2% since our entry at $48.31 on 5/26/01. There have been no news related stories to associate to the higher prices, and the 10-dma continues to provide support in the stock's ascent. Considering shares hit yet another 52-week high again today, we have tightened our stop loss to $53.25 to protect the gains achieved. Picked on May 27th @ $48.31 Change Since Picked 5.43 Stop Loss @ $53.25 --- ESI - ITT Educational Systems $42.48 -0.50 s/l $40.00 Our play in ESI has gone practically nowhere since Sunday, losing on a mere $0.32 . Like reasons for the lackluster price appreciation include a lack of participation from investors and traders, with the 30-day average volume trend in steady decline. Shares still sit just underneath the 10-dma ($43.15), but appear to be developing a bullish pennant formation on the daily chart, perhaps signaling an attempt near term on the 52-week high of $44.90. As of today's close, we are sitting on a loss of $1.22 or 2.7%. Picked on June 12th @ $43.70 Change Since Picked -1.22 Stop Loss @ $40.00 --- MTG - MGIC Investment $73.40 +0.23 s/l $72.50 After closing at the high last Friday on heavy volume, MGIC has seen trader's interest peter out, and this is reflected in the stock price. In the past two trading sessions, MGIC has lost $0.98 or 1.32%, decreasing our gain to 4.3%. Volume was healthy both Monday and Tuesday, and support still resides with the 10-dma ($72.67) initially, and then with the 21-dma ($70.32), although compromising this level would trigger our newly adjusted stop at $72.50. Picked on May 31st @ $70.37 Change Since Picked 3.03 Stop Loss @ $72.50 =============== ST Closed Plays =============== ---------------------- Candidate Closed Plays ---------------------- EPIQ - EPIQ Systems, Inc. $31.14 -3.50 s/l $31.00 EPQI saw a flood of sellers late in the session, with shares losing more than $3.00 in the last hour of trading. We could find no reason for the mass exodus late in the day, but the fact that volume was well above average makes us happy to have had a firm stop. While EPIQ managed to settle above our stop trigger, we would be surprised if the fury of sellers do not return in the morning. The 21-dma was compromised with the$ 3.35 decline. Picked on Jun 14th @ $35.10 CLOSED OUT @ $31.00 Profit/Loss = -4.10 or -11.68% Best Profit = +2.29 or + 6.5% ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ ------------- Bearish Plays ------------- QLogic QLGC $46.99 -1.91 (-5.12 this week) - Company Description - QLogic chips, switches and adapters help keep data flowing between computers and storage devices. Although the company sells components for IDE and storage area network (SAN) Fibre Channel technologies, the bulk of their sales come from their SCSI (small computer system interface) adapters used to manage communication inside a computer with its hard disks, scanners and tape drives. Principal customers include Fujitsu (30-percent of sales), Sun Microsystems (13-percent), Dell, IBM and Compaq. - Play Write Up - Last month, the firm reported that fourth-quarter earnings, adjusted for a sales discount to Sun Microsystems, increased 55- percent from the year ago period to 27-cents per share. Analysts had forecast earnings between 25 to 29 cents per share according to First Call. Gross revenue rose 55-percent from the previous year to $100.5 million. QLogic shares broke important support to the downside on heavy volume. This suggests it is prime for further declines and thus a easy Bearish selection. Since hitting $47.79 on May 30th, the shares rallied spending much of last week bouncing off of resistance at $60.00. This week the shares began to correct. Tuesday's move past the earlier $47.79 low represents a technical bearish reversal, confirmed by well above average volume. This puts the next levels of resistance at $40 and $35 well within target range. Picked on June 19th at $46.99 Gain since picked 0.00 Earnings Date N/A (Confirmed) =============== NB Play Updates =============== -------------------- Bullish Play Updates -------------------- Retek Incorporated. RETK $39.60 +2.35 (+2.45 this week) This weekend we reported that the candlestick chart for Retek formed a doji pattern on Friday. This pattern signifies indecision on the part of traders. We also said that this is a positive sign for our Bullish selection, as indecision is better than the bearish bias they had been experiencing and may suggest the bulls are getting ready to make a turn at the controls. This indecision usually resolves itself over the next couple of days following the appearance of the doji. Although on Monday the shares managed to end in the black, the 10-cent gain was too slender to consider it confirmation of a bullish reversal. However, in the closing minutes of trading on Monday, the shares moved from $36.50 to the $37.25 based on an analyst rating change to strong buy by Paul Rabbit. This bullish momentum combined with the positive after market reaction to the Oracle earnings report, carried into Tuesday. On Tuesday, the shares gapped up $2.10 and managed to hold those gains into the close. The strong move pushed the shares above resistance at $39.00. Several levels of resistance exist between $40 and $43, leading us to conclude the likelihood of a retracement is definite. Therefore we are tightening our stop to a tight $38.75. Picked on June 7th at $38.67 Gain since picked 0.93 Earnings Date N/A (Not Confirmed) === Macrovision Corporation MVSN $54.29 -0.51 (+0.34 this week) MVSN shares march to the top of their trading range near $60 may be short-circuiting. Tuesday started well enough when the shares reached $57.79 in the early minutes of the trading day. Unfortunately, this turned out to be the session high as the shares performed poorly through the remainder of the day. The sudden onset of bearish momentum and the late fade by the general market is not a good sign for Wednesday. We are tightening our stop to our breakeven point of $53.95. Picked on June 17th at $53.95 Gain Since Picked 0.34 Earnings Date 7/30 (Not Confirmed) -------------------- Bearish Play Updates -------------------- Scientific-Atlantic SFA $42.05 +0.70 (-0.12 this week) The flag of caution we have on this bearish play is still waving. The tug of war between bulls and bears ended in a slight gain. However, the shares spent the opening of Tuesday's trading day climbing $1.94 to reach the session high of $43.29 and then gave back much of that gain before the close. This gives us reason to not put away the bearish case just yet. Volume has dropped 5 sessions in a row. Tuesday's volume of 2.4 million shares is dead even with the daily average. Clearly the shares are beginning to form a basing pattern of sideways movement, but it is not evident which way the shares will break when they resume a bullish or bearish bias. For our part, we will maintain a stop at $43.88 to protect our $7.13 per share gain to date and stay in the play to leave us open to further gains should the bears will win out. Picked on June 12th at $49.18 Gain since picked 7.13 Earnings Date 7/19 (Not Confirmed) --- StorageNetworks STOR $13.61 -0.72 (-3.29 this week) As a bearish play, this is the gift that keeps giving. Every time the shares begin to show signs of bottoming out they find a new bottom. This weekend we identified Friday's move through $16.35 as significant and should portend a test of $15. Monday's close of $14.33 set up $12.50 as the next level of support and Tuesday's move to $13.61 puts it well along the way to giving it a test. One more, volume dropping from 4.7 million on Thursday to 2.46 million suggests the bears are losing momentum. However, we have seen this before so we have reason to stick around. To protect our handsome $8.39 gain, we will move our stop to $16.50, which is just above Monday's $16.49 session high and Tuesday's $16.26 session high. Picked on May 17th at $22.00 Gain since picked 7.13 Earnings Date N/A (Not Confirmed) --- PMC Sierra PMCS $24.85 -0.26 (-2.21 this week) Our Bearish selection is $4.40 to the positive side since its selection on June 14th. A spike in volume from Monday's 5.9 million shares traded to 8.86 million and the shares close below support at $25 are good signs the selling pressure will continue. The next levels of downside support are the early April lows at about $20.00. For those considering a little bottom fishing we remind you that even at these depressed levels the shares are selling for a sky-high forward P/E of 430. Picked on June 14th at $29.25 Gain since picked 4.40 Earnings Date N/A (Not Confirmed) --- Digital Lightwave DIGL $28.40 +1.53 (-1.50 this week) Despite Tuesday's move to the black, we remain $2.51 per share to the positive side on this Bearish selection. For the moment, selling pressure is stalled out against support at $27.50. The shares have tested this level during each of the last two trading sessions to no avail. Volume is still well above the 1.8 million daily average at 2.6 million share traded suggesting there is still quite a bit of volatility in this play, but is not clear as to which direction this volatility will manifest itself. We will ensure we stay in the black on this play by setting our stop at $29.91. . Picked on June 17th at $30.91 Change since picked 0.00 Earnings Date 7/17 (Not Confirmed) =============== NB Closed Plays =============== -------------------- Closed Bullish Plays -------------------- EPIQ Systems EPIQ $31.14 -3.35 (-4.86 this week) EPIQ shares fell of a cliff yesterday tripping our stop in the process. There was no company specific news to account for the drop. The likely cause was a bout of profit taking by traders who have enjoyed the shares strong move from $14.00 last February. Support exists to stem the downward move at $31 and $30. Picked On June 14th at $35.10 Gain Since Picked (4.10) Earnings Date............7/19 ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ New Short (Bearish) Play ------------------------ CMVT - Comverse Technology, Inc. $53.60 -2.42 s/l $58.00 Sector - Software Comverse Technology, Inc. designs, develops, manufactures, markets and supports computer and telecommunications systems and software for multimedia communications and information processing applications. The Company's products are used in a broad range of applications by wireless and wireline telephone network operators, government agencies, call centers, financial institutions and other public and commercial organizations worldwide. The Company provides enhanced services platform products, digital monitoring and recording systems for call centers, customer relationship management applications, public networks and government agencies, network signaling software for wireless, wireline and Internet communication services known as Signalware, and other telecommunications hardware and software products and services. Despite better than expected earnings from technology stalwart Oracle after the bell Monday, traders quickly sold into strength, solidifying the bearish sentiment of most on Wall Street as we approach the FOMC meeting next Tuesday and Wednesday. Shares of Comverse are displaying extreme weakness, finishing near the lows of the session Tuesday on volume that was well above average. CMVT also broke support near $55.00 that had halted shares in the most recent declines, opening the door for lower ground in the near term. Speculation that Cicso Systems CEO John Chambers was hinting at continued weakness in the sector in an interview with Reuters today could further CMVT's plunge as early as Wednesday, and traders willing to go short could not ask for a better looking chart. Oscillating indicators are in the gutter with the $2.42 loss today, and it is very likely CMVT retests the 52-week lows at $44.84. With no floor in site until the high $40's, the time to get on board the sinking ship CMVT is now. With short term market indicators displaying extremely oversold conditions (ARMS 10-day), we have set a tight stop loss at $58.00 in the event a snapback rally occurs. Our objective for the short sale is $49.00, and we feel this is easily achievable within the next few days, if not tomorrow. Average Daily Volume = 5.5 mln 52-week: High = $124.75 Low = $44.84 Next Earnings 09-03 est = 0.43 versus = 0.36 =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- FFIV - F5 Networks, Inc. $13.55 -1.56 s/l $12.00 Shares of FFIV suffered liquidation pressure throughout the session Tuesday, finally ending at $13.55, down $1.56 or 10.3%. The close brings the stock to support of the converged 10 & 21 dma's ($13.17, $12.70), but the settlement a mere 15 cents off of the day's low could be indicative of more pressure in the morning. With traders selling into any rally in technology, FFIV could well trigger our stop at $12.00 near the opening bell Wednesday. Stochastics showed a bearish cross and volume was above the 30-day average share count, technical indicators you don't want to see with a long position. Next Earnings: 07/19/2000 --- BEBE - Bebe Stores, Inc. $29.75 -0.25 s/l $28.25 Despite a largely positive story on retailers including BEBE last Sunday, shares of the company have continued to decline this week. Janet Kloppenburg, an analyst at Robertson Stephens, said..." "We continue to believe bebe currently offers one of the most exciting, fashion-forward and appealing merchandise assortments in the mall." Since our last update, BEBE has shed $0.68, compromising the 10-dma ($30.53) in the process. MACD readings also are showing a bearish cross, which could be indicative of lower ground in the near term. As such, we have adjusted our stop loss to $28.25 to minimize losses if the selling continues. Picked on June 8th @ $30.80 Change Since Picked -1.05 Stop Loss @ $28.25 --- WM - Washington Mutual $38.97 +1.07 s/l $37.08 WM is one of the few financials that has preformed as one would expect the sector to have since the fed began its aggressive rate cutting actions in January. Today, yet another 52-week high was achieved at $38.97, and was done so on healthy volume totals of 5.9.3 million shares, 51 % above the average 30-day share count. The stock has now clearly broken out of its most recent trading range between $36 and $37, and technically has nothing to hold it back from continuing its recent trend. The only news released since our last update was the announcement of Kerry Killinger's intent to speak at a Friedman, Billings, Ramsey & Co. investment conference in September. We have ratcheted our stop loss to break even effective today. As of the close, we sit with a $1.89 or 5.1% gain. Picked on June 15th @ $37.08 Change Since Picked 1.89 Stop Loss @ $37.08 --- WMI - Waste Management, Inc. $29.47 +0.24 s/l $28.75 WMI has given up ground, albeit slightly, since we last discussed the stock Sunday. The shorter term moving averages are still offering support in the assault on new yearly highs, the last of which was set on Friday 6/15 at $29.98. A settlement was announced today by Arthur Anderson related to an audit of Waste Management that took place for the years 1993--1996, in which the company restated its financial statements. While WMI was never a party to the suit against Arthur Anderson, it is seen as more water under the bridge related to the myriad of suits brought after the 1998 accounting scandal. As of the close Tuesday, we sit with a gain of $0.96 or 3.3%. We have lifted our stop to $28.75 effective today. Picked on June 6th @ $28.51 Change Since Picked 0.96 Stop Loss @ $28.75 =============== AT Closed Plays =============== ---------------- Closed Long Play ---------------- CB - Chubb Corp. $78.21 -0.04 After apparently topping out at $79.37 last Friday, CB has seen little but sellers surrounding their post as evidenced by the recent chart action. Shares set their second consecutive day of lower lows with the $-0.04 decline Tuesday, triggering our stop down at $78.25 in the process. In the end, we still managed to grab $2.05 or 2.6%; not a killing, but still a gain. In this market, we'll take it. Picked on May 30th @ $76.20 CLOSED OUT @ $78.25 Profit/Loss = +2.05 or +2.6% Best Profit = +3.17 or + 4.1% ----------------- Closed Short Play ----------------- CSCO - Cisco Systems, Inc. $16.64 +0.14 Our stint with networking behemoth Cisco Systems comes to an end today, but not before we bagged a tidy 21.8% for our readers. We had steadily ratcheted our stop loss lower as the stock was crumbling, and for some time, it seemed we would never get hit. Leave it Oracle to give the Nasdaq a boost today, getting just enough traders willing to put in a bid for some CSCO to hit our stop loss. No disappointments here, however, as 21% in this market is something worth smiling about. Picked on Jun 5th @ $21.54 CLOSED OUT @ $17.00 Profit/Loss = +4.54 or +21.8% Best Profit = +5.21 or + 24.1% ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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