PremierInvestor.net Newsletter Tuesday 06-26-2001 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/8888_1.asp ================================================================= In section one: Market Wrap: Bond Market Is A Bear's Biggest Worry Market Sentiment: Proceed With Caution Play-of-the-Day: F5 Networks FFIV Watch List: Software Is One Of Our Fav Groups plus a bio and chip ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 06-26-2001 High Low Volume Advance/Decline DJIA 10473.28 - 31.74 10534.21 10394.72 1.19 bln 1780/1294 NASDAQ 2064.43 + 13.75 2068.15 2017.34 1.65 bln 2043/1697 S&P 100 629.44 - 2.49 632.03 623.85 totals 3823/2991 S&P 500 1216.68 - 1.84 1220.70 1204.64 RUS 2000 490.56 + 6.63 490.82 482.19 DJ TRANS 2645.05 - 2.82 2663.74 2606.26 VIX 23.35 + .10 24.50 23.33 Put/Call Ratio 0.66 ----------------------------------------------------------------- =========== Market Wrap =========== Bond Market Is A Bear's Biggest Worry -- Jeff Bailey If you're an equity bull, you like what you saw today from the bond market. The last couple of weeks, we've seen bond yields (I stress YIELD) fall as many market participants fled to the safety of treasury bonds. The buying of bonds drives YIELD lower and that's what we've seen the past couple of weeks. Many traders believe that the market is a forward-looking creature and often times have discounted current events. If that's true, then the continuing flow of earnings warnings and disappointments is of little use to a bearish trader. What a bearish trader is monitoring at this point is bond YIELDS. While it would seem that market bears have little to worry about with all the bad news that keeps coming in the form of poor corporate earnings, a market bear is watching bond YIELDS as if they were a porcupine. While a bear may view a porcupine as food, a bear also knows a porcupine can inflict wounds if approached from the wrong angle. Many investors/traders have been pushed into mutual funds or has moved to cash in recent months and the bearish trader probably doesn't feel like he/she has much competition right now from new money pouring into the market. What a bearish trader is monitoring is the hundreds of millions of dollars sitting in treasury bonds that is drawing anywhere from 4.5% to 5.6% interest per year from the 5-year Treasury bond ($FVX.X) all the way out to the 30-year Treasury bond ($TYX.X). What took place today and the selling we saw in bonds has to have the bears getting a little nervous once again. I'm a firm believer that earnings can help a stock trade higher, but the real cause for a stock moving higher is more buyers than sellers, thus the effect of a higher stock price. This morning, bond YIELDS were lower and this indicated that buyers were back in the bond market. With that said, stocks opened lower and looked like they were headed south. All of a sudden, sellers stepped into the bond market and YIELDS on the three major maturities listed above started to rise (selling in bonds causes YIELD to rise). Not long after YIELDS turned green and got positive for the session, we started to see stocks firm. At one point, the Dow Industrials ($INDU) were bouncing around the 10,400 level, but as the session progressed, the selling continued in the bond market and stock firmed further. By sessions end, the Dow Industrials closed at 10,472 and actually traded as high as 10,534. I'm sure that tomorrow's Fed meeting and long awaited news on interest rates had something to do with today's action. What an equity bulls want to see continue from here on out is the same type of action. I'd pay more attention to the bond market on the grand scheme of things than the stock market. By this I mean that the bond market action will have a more longer-lasting effect on things than what stocks actually do on a day-to-day basis. Too often we've seen a nice rally in stocks fail only because money flows back into bonds (driving yield lower). Equity bears know this all too well and until we see the "releasing of the grip" on the safety and security of bonds on a longer-term basis, equity bulls are going to be faced with a sideways stock market made up of minor rallies and pullbacks like we've seen lately. While the longer-term always starts with the short-term, yesterday's action in the bond market may give hint that there are some good day's ahead for stocks in the near future. I'll be watching bond YIELDS closely tomorrow. Should we see a follow through day and continued selling in bonds, then I think that will bode well for stocks. I do think it is somewhat foolish to start thinking that a simple rate cut by the Fed tomorrow is going to scare bearish traders away. What will have bears scampering down the trail and into the woods is higher bond yields. Much like the south end of a northbound porcupine. ================ Market Sentiment ================ Proceed With Caution -- Jeff Canavan cautious \Cau"tious\, Attentive to examine probable effects and consequences of acts with a view to avoid danger or misfortune; prudent; circumspect; wary; watchful; as, a cautious general. That's the word Goldman Sachs used to describe their stance on technology stocks. They see continued weakness, noted some evidence that suggests we could be near a bottom, and then added that when the recovery does happen, it will be more moderate. Quite the revelation. discriminating \d-skrm-ntng\, Able to recognize or draw fine distinctions; perceptive; showing careful judgment or fine taste; separating into distinct parts or components; analytical. Cautious is a good way to approach the markets these days, but a discriminating palate is needed for selecting stocks. There are a few good long candidates, a few good short candidates, and a lot stuck in the middle. With the market lacking direction, it's too close to call what Greenspan's...I mean the market's sentiment is. Market Volatility VIX 23.25 VXN 54.01 Put/Call Ratio Total .66 Equity Only .58 OEX .85 QQQ .37 Bullish Percent Data: Readings above 70 are considered overbought, and readings below 30 are considered oversold NYSE 48 NASDAQ-100 34 DOW 58 S&P 500 54 10-Day Arms Index 1.33 Readings above 1.25 are bullish, and readings below .85 are bearish. These signals don't occur often and tend be early, but when the do, they can signal significant market turning points. Advancers Decliners NYSE 1780 1290 NASDAQ 2038 1700 New Highs New Lows NYSE 113 47 NASDAQ 111 88 Advisory Sentiment Bullish Bearish 51% 30.6% Commitments Of Traders Report: 06/19/01 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange. 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 tend to be wrong. S&P 500 Commercials Long Short Net %Change Open Interest 6/05/01 323,109 400,509 (77,490) 13.1% 510,122 6/12/01 353,074 423,257 (70,183) (9.4%) 562,025 6/19/01 301,376 371,121 (69,745) (0.6%) 457,618 Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: (41,144) - 5/1/01 Small Traders Long Short Net %Change 6/05/01 154,233 76,632 77,601 10.5% 6/12/01 167,720 100,610 67,110 (13.5%) 6/19/01 128,296 56,038 77,258 (7.7%) Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 Commercials Long Short Net %Change Open Interest 6/05/01 25,098 36,433 (11,335) (1.5%) 51,660 6/12/01 33,586 44,234 (10,648) (6.1%) 68,245 6/19/01 23,480 34,097 (10,617) (0.3%) 47,202 Most bearish reading of the year: (15,521) - 3/13/01 Most bullish reading of the year: (1,825) - 1/02/01 Small Traders Long Short Net %Change 6/05/01 11,217 10,062 1,155 (60.3%) 6/12/01 18,374 16,264 2,110 82.7% 6/19/01 14,284 8,403 5,881 178.7% Most bearish reading of the year: (1,028) - 1/02/01 Most bullish reading of the year: 8,460 - 3/13/01 DOW JONES INDUSTRIAL Commercials Long Short Net %Change Open Interest 6/05/01 22,717 16,888 5,829 0.3% 35,257 6/12/01 24,724 18,485 6,239 7.0% 37,886 6/19/01 12,346 10,470 1,876 (69.9%) 22,611 Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 8,925 - 5/22/01 Small Traders Long Short Net %Change 6/05/01 3,881 8,132 (4,251) 0.6% 6/12/01 5,332 9,637 (4,305) 1.3% 6/19/01 3,844 7,555 (3,711) (13.8%) Most bearish reading of the year: (7,572) - 5/08/01 Most bullish reading of the year: 1,909 - 1/16/01 =============== Play-of-the-Day =============== F5 Networks FFIV $17.04 +1.55 Stop: $16.25 Original comments when selected: Get a head nod from mother Merrill and good things happen to your stock. This is exactly what happened for shares of FFIV this past week, as the brokerage behemoth initiated coverage of the Seattle, WA based firm with a Buy rating and $22.00 price target. Merrill noted in its research report that " FFIV is the comeback kid and its technology is starting to see broader adoption by enterprise customers." That's the kind on endorsement you want from a firm with 15,000 brokers pushing stock. As for the fundamentals, on 4/19 FFIV said it had a loss in the second quarter ended March 31 of 19 cents a share. Expectations by analysts polled by Thompson / First Call Financial were for the company to lose 22 cents in the period. FFIV is refocusing on their channel partners, increasing their OEM business and has won major contracts at new and existing corporate accounts. The action plan has obviously worked, as revenues rose 10 percent sequentially, helping best consensus handily. Looking at the chart, things are certainly looking up. The close Friday at $15.01 represents the highest settlement since February 2, 2001, and is only $1.99 below the yearly high close for shares. Furthermore, FFIV finished a mere 9 cents off of the day's high print, and volume (781K) was well above the 30-day average trend (462K). Moreover, a bullish crossover of the 10 & 21 dma's ($12.52, $12.44) occurred, giving us even more reason to get long the stock. Sure, the networking sector is in the gutter, but the relative strength from selected players in the group is significant, and while we may have to take some heat near term, a 13% pop to at least $17.00 looks to be in the cards. The 200-dma ($18.83) looms overhead, and will likely be a difficult obstacle for shares of surpass. However, we would gladly settle for something just below this mark, and believe its reasonable to assume it will happen. Stochastic readings are planted firmly in the accumulation range, showing a 96(%k) as of the close Friday. Certainly, adding this type of stock as a long when the NDX set the lowest close since 4/24 takes some guts. With the Fed meeting on the horizon, now is the time to step up the plate. Update from original comments: F5 took off like an F-14 Tuesday, trading as high as $17.06 intraday, and inching ever closer to surpassing critical resistance at the 200-dma. ($17.51) From our entry at $15.01, we sit pretty with a gain of $2.03 or 13.5% as of today's close. Other than the announcement of the company reporting earnings on 7/25, we could find no reason for the nice bump higher today. The settlement north of $16.69 means this one is off to the races. A move above $17.81 would produce a share price not seen since December 18th, when the shares were in the teeth of the tech slide. Our stop moves to $16.25. Picked on June 17th at $15.01 Gain since picked: 2.03 Earnings Date 7/19 (Not Confirmed) ========== Watch List ========== CHKP – Check Point Software, Inc. $51.37 +2.84 WHY WE LIKE IT: Not only is Check Point in one of our favorite groups right now, it also has a very attractive chart to boot. After putting in a double bottom near the $42.50 level, shares are again on the rebound, poised to put the $50.00 well behind them. Even with the stock getting a downgrade yesterday, the forward momentum has continued, with the 21-dma ($48.88) taken out in today's session. POTENTIAL TRIGGER EVENT: This one is easy: A close above the $51.50 mark and this stock will be on the play list. The relative strength is just too strong to ignore. With nothing but clear sailing from $51.50 to the 50-dma at $57.46, this occurrence should be good for an easy 10%. === BORL – Borland Software, Inc. $14.10 +0.78 WHY WE LIKE IT: Our focus continues to be in software, and with the huge interest building in the group, why not? This morning's comments from Bear Steans & Co., in which the company called BORL is an inexpensive play on enterprise Java and adoption of next generation distributed application architectures, should certainly help attract attention to the stock. POTENTIAL TRIGGER EVENT: We'd like to see BORL pull back and bounce off of the $12.50 level, although this seems unlikely with the momentum in the sector. As such, a surge and settlement above the $14.50 mark would also entice us to add shares as a new long position, as volume in the stock looks to be on the rise. === QLGC – Qlogic, Inc. $57.74 +2.79 WHY WE LIKE IT: Recent selling in the storage group has certainly taken its share of market cap away from names such as EMC, BRCD and QLGC. Compared to some of the other stocks in the sector, however, QLGC has fared much better. After closing below the crucial 50-dma at $47.29 on 6/19, shares are back on the rise, although the gains have been on declining volume. POTENTIAL TRIGGER EVENT: A finish north of $58.31, the closing price from 6/12, might trigger our interest enough to add QLGC as a new play. We would want to see volume north of the 30-day average though, which would constitute at least 6.7 million shares crossing the tape. Ideally, a settlement above $60.00 would offer better risk characteristics in a long position. === GENE – Genome Therapeutics, Inc. $13.45 +0.34 WHY WE LIKE IT: An upgrade from Ladenburg Thalmann back on 5/23 appears to have run its course, with most of the weak hands being shook loose in the recent decline from $17.00. The stock comes to our attention as a bullish crossover of the 50 & 200 dma's ($10.52, $13.44) appears eminent. Shares of the biotech concern have also formed a bullish pennant on the daily chart, two strong technical signals that definitely need to be monitored. POTENTIAL TRIGGER EVENT: A break and close back above the $14.00 mark on participation of at least 1.2 million shares would satisfy the bullish pennant formation, allowing for a break towards, and likely above recent highs near $17.00. A settlement by the BTK.X back over the 200-dma or 605 level might also be worthy to give GENE a shot. ================================================================= 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. 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PremierInvestor.net Newsletter Tuesday 06-26-2001 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/8888_2.asp ================================================================= In section two: Split Trader Split Announcements: New Plays: Biomet, Inc. BMET (Bullish) Play Updates: One Slightly Good, One Slightly Bad Closed Play: Closed Lowe In Black NetBulls New Plays: Qualcomm QCOM (Bearish) Play Updates: Indecision Over Fed Puts Indecision in Charts Stock Bottom / Active Trader New Plays: No new stock bottom plays Play Updates: Hovering Near Resistance and Support Closed Plays: ELN, WMI ================================================================= Split Trader (ST) section ================================================================== ============ ST New Plays ============ ------------------------- New Split Candidate Plays ------------------------- Biomet, Inc. BMET $48.79 +1.65 Stop: $46.50 The Warsaw, Indiana-based company makes orthopedic medical devices, including reconstructive products (hips, knees, and shoulders), fixation devices (bone screws, pins, and plates), and supports and braces; such products account for about 60-percent of sales. The company also makes operating room supplies and through its 3i subsidiary dental reconstructive implants. Subsidiary EBI markets electrical stimulation and external fixation devices, which are used to speed the healing of broken bones. Another subsidiary, Walter Lorenz Surgical, sells craniofacial implants and bone substitute material for craniomaxillofacial surgery. US accounts for some 70-percent of Biomet's product sales; Europe accounts for another 25-percent At its fiscal fourth-quarter 2001 earnings announcement schedule for 2:00pm EST on Monday, July 9th, analysts are expecting the company to announce positive results. The consensus estimate is for the firm to report quarterly profits of 33-cents per share on revenue of $284 million. For the year, this would bring the company to earnings of $1.34 per share on sales of $1 billion. Next year, analysts expect the firm to earn $1.37 per share on sales of $1.2 billion. These results would give the company a P/E of 40.7. BMET shares have been on a roll after hitting $35.50 on April 4th. Tuesday's move through support at $48 on solid volume of 1.6 million shares suggest the shares are ready for the next leg up. The session high of $48.94 came within a penny of the 52-week high set June 20th. Although the shares clearly are carrying a lot of bullish momentum, conservative traders can wait for additional confirmation of this momentum through a close above $48.95 on solid volume. Support from a bear attack is at $46.50. Picked on June 25th at $48.79 Earnings Date 7/09 (Confirmed) =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- ADVP - Advance PCS, Inc. $62.05 +0.57 s/l $58.95 Since adding ADVP on Friday last week, things have not yet panned out like we had hoped. Thus far, we are down only $0.75 however. We had thought momentum buyers would follow the firm's announcement of an agreement to provide pharmacy benefit management services to Chicago-based Health Care Service Corp. Volume was light in the $1.34 decline Monday, and this gives us some solace. Support is with the 50-dma at $60.65 and then with the 10-dma at $59.82. Next Earnings: 8/28/01 === ESI - ITT Educational Serv., Inc. $44.40 +0.30 s/l $41.50 Shares of ESI finally caught a bid on Monday, tacking on $1.75 on volume that was more than 78% higher than normal. We found no news to spur the buying binge, but we like what we see on the chart. The push higher fulfills the bullish pennant we have been discussing with ESI, and now that the pattern has been satisfied, ESI should be clear for higher ground. Support remains firm with the 21-dma at $41.32. Next Earnings: 7/19/01 =============== ST Closed Plays =============== ---------------------- Closed Split Run Plays ---------------------- LOW - Lowes Corporation $75.80 +0.30 s/l $76.00 After setting a fresh 52-week high last Thursday, Lowes has pulled in its horns a bit, and just enough to hit our stop loss at $76.00 Monday. With the stock set to split next week on 6/29, we would have had to exit soon anyway. We leave all smiles, however, snagging $2.00 or 2.7% for subscribers in the 12 trading days we played the stock. Picked on June 7th @ $74.00 CLOSED OUT @ $76.00 ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ --------------- New Short Plays --------------- Qualcomm QCOM $53.45 -0.90 Stop: $55.50 Qualcomm created the code-division multiple access (CDMA) standard for wireless networks. CDMA-based networks account for 12-percent of the worlds' mobile subscribers. Qualcomm collects royalties for CDMA use and makes CDMA-based products such as chipsets and software. Although, the US is a Qualcomm stronghold, it is working hard to expand in Asia, in particular China, off of its dominance in South Korea. This effort got a big boost recently when China Unicom, China's second largest wireless operator, awarded $1.46 billion in contracts for equipment to build a cdma- based network. The Chinese adoption of cdma is seen as crucial for Qualcomm, because as it is also critical for the adoption of cdma throughout Asia. Unfortunately, on the heels of the good news was an announcement that Verizon Wireless was switching from cdma to a rival technology based on wCDMA. Rumors of this set QCOM shares on a dive from the June 6th close of $65.00 to $48.45 on June 20th. Analysts project the company, which earned $1.05 in the fiscal year ended September 2000, will earn $1.04 in 2001 and $1.33 in 2002. This gives the company a forward P/E of 51. Although the shares had recovered somewhat from their recent slide to reach a high of $55.29 on Monday, it appears the bullish move was short-lived. An earnings warning from chipmaker Applied Micro Circuits (AMCC) already short-circuited the bullish rally, but further warnings late-Tuesday from chipmakers Vitesse (VTSS) and Xilinx (XLNX) should ensure the stuffing is knocked out of any remaining bullish momentum. Weak support to halt the bearish slide should be encountered at $51.00. More significant support should be found at $48.00. Resistance to a bullish resurgence is at the recent $55.29 high. Conservative traders can look for a close below $53.45 on volume greater than 10.5 million shares for further confirmation of bearish sentiment. Picked on June 26th at $53.45 Earnings Date 7/26 (Not Confirmed) =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Yahoo! Inc. YHOO $19.14 -0.63 Stop: $17.25 Yahoo shares backed off of resistance on better than average volume of 10.5 million shares. When we made this play a Bullish selection we suggested conservative traders wait for a confirmation of bullish momentum via a move above $21 on solid volume. We are still waiting for that move. Fortunately all was not bearish on Tuesday, the shares seesawed for much of the day before a final bullish swing into the close. Much will be decided in the market reaction to whatever moves the Fed makes on Wednesday. A positive reaction may be sufficient to give Yahoo shares a push through resistance at $20 to $20.50, while a negative reaction and close below $19.14 may signal the bears have taken control. Support in the event of a bearish reversal exists at $17.50. Picked on June 25th at $19.77 Gain since picked 0.63 Earnings Date 7/11 (Not Confirmed) === Applied Materials AMAT $50.21 +0.34 Stop: $47.88 Our Bullish play has been performing well with a $1.16 gain since its selection last Thursday. The chart pattern and technical indicators look solid including volume at 19 million shares traded. The only cloud on the horizon was Tuesday's after-the-bell warning from chipmakers Xilinx (XLNX) and Vitesse (VTSS). AMAT shares were able to shake off Monday's warning from AMCC to put in a positive day, but it remains to be seen if they can do this two days in a row. The after-hours market had AMAT shares down only slightly; a similar reaction during regular trading on Wednesday may be a longer-term bullish sign. Just in case we are going to tighten our stop to $47.88. Picked on June 22nd at $49.05 Gain since picked 1.16 Earnings Date 8/14 (Not Confirmed) ----------------------- NB Bearish Play Updates ----------------------- Computer Sciences Corporation CSC $34.50 -0.20 Stop: $36.00 CSC shares have moved into congestion. This means bullish and bearish sentiments are evenly matched and the shares are moving sideways in a tight trading range until one side prevails. Assuming some form of news does not appear to change investor perceptions, most often the sentiment in control immediately prior to the congestion regains control. For CSC shares, the bears were in firm control, so the odds favor a resumption of the slide. As usual volume will be the key as it normally drops as the congestion continues and spikes when the shares have selected a direction. CSC shares are following the traditional pattern as volume has dropped three days in a row since entering congestion from Friday's 2.76 million to Tuesday's 1.5 million. The daily average is 1.4 million. A close above $35.25 on high volume would be a sign the bulls are taking control, a close below $33.15 on a volume spike would signify bearish sentiment is rising. Picked on June 21st at $35.00 Gain since picked: 0.50 Earnings Date N/A (Not Confirmed) === Getty Images, Inc. GETY $24.76 -0.13 Stop: $27.00 After Monday's sharp decline, bargain hunters and seller fought to a near standoff on Tuesday. The sellers were in control in the opening minutes driving the shares down to $23.75 before bargain hunters were able to bring the shares back to almost breakeven for the day. Closing momentum slightly favored the bears. Volume was solid 439k shares traded, although lower than the 498k daily average. The chart shows a doji candlestick pattern formed on Tuesday indicating indecision on the part of investors. Looking forward, a close above $25.00 on good volume would suggest the bulls are winning the tug-of-war, while a close below $24.75 on a spike in volume would favor the bears. The next levels of support remain at $23.00 and $20.00. Resistance to a bull run is at $26.45. Picked on June 25th at $24.89 Gain since picked 0.13 Earnings Date N/A (Not Confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- BEAS - BEAS Systems, Inc. $31.40 +0.37 s/l $25.00 Our trade in BEAS, while not significantly higher than when we picked it, still looks strong. Shares of the asp software provider are holding steady near the $30.00 level, and this shows steadfast support and excellent relative strength in comparison to the balance of the tech sector. Should the FED give the market what it wants (50 Bps), look for BEAS to trade $32.50 by the end of the week. Firm support remains near $28.00. Next Earnings: 8/14/01 === CTXS - Citrix Systems, Inc. $31.98 +0.16 s/l $26.50 One could search high and low and still not find a chart that displays as much strength as CTXS's. Since adding the stock back on 6/20, are up a tidy $1.84 or 6.1%. However, we don't think CTXS is done yet. We wouldn't even considering selling the stock until our objective at $37.50 is achieved. Higher highs have been achieved every day but one since we played the stock, and interest in the group is healthy. This stock is primed for an explosive upside move. Next Earnings: 7/18/01 === FFIV - F5 Networks, Inc. $17.04 +1.55 s/l $12.75 F5 took off like an F-14 Tuesday, trading as high as $17.06 intraday, and inching ever closer to surpassing critical resistance at the 200-dma. ($17.51) From our entry at $15.01, we sit pretty with a gain of $2.03 or 13.5% as of today's close. Other than the announcement of the company reporting earnings on 7/25, we could find no reason for the nice bump higher today. The settlement north of $16.69 means this one is off to the races. Our stop moves to $16.25. Next Earnings: 7/25/01 === ISRG - Intuitive Surgical, Inc. $11.25 +0.65 s/l $10.00 When we added ISRG back on 6/17, we had expected some near term weakness due to the huge run up that occurred just before playing the stock. We tightened up our stop just in case the selling continued, but this has not been the case. While we are only up $0.20 from our entry, we still feel strong about the near term potential for shares. Now that the euphoria from the FDA approving the company's da Vinci system for radical prostatectomy is over, fundamental traders should start to focus on earnings, which will undoubtedly follow suit considering the very positive momentum with ISRG. Our stop loss remains at $10.00. Next Earnings: 7/24/01 === MEDI - Medimmune, Inc. $45.75 +1.56 s/l $40.00 Short term traders have stepped into MEDI and sold the stock since when we added shares as a long position on 6/21. However, the 10-dma has held as firm support, with shares bouncing firmly off this level both Monday and Tuesday. MEDI still has the pesky 200-dma at $48.16 to deal with, a level the stock has not been above since 11/27/00. With institutional interest high in the company, this is one long position you should put away and forget about. The up trend is firmly in place and unless some disastrous news hits the company, higher prices should follow. Next Earnings: 7/25/01 === RATL - Rational Software, Inc. $27.54 +0.40 s/l $24.50 We added RATL just last evening, and so far are up $0.40. The prospects are high for software stocks to continue garnering more and more attention with every semiconductor earnings warning, and RATL's chart certainly has the characteristics that could drive the price for a share of stock higher. Our single concern remains the fact prices have been increasing while volume is decreasing, but with the FOMC slated to cut rates tomorrow, it could be of little consequence. We leave our stop loss at $24.50. Next Earnings: 7/11/01 === THC - Tenet Healthcare, Inc. $50.20 -0.20 s/l $49.75 THC came precariously close to our stop loss Tuesday, trading within a nickel of $49.75. We are a little concerned with the breaching of the 10-dma ($50.74), as this is the first time shares of THC have been below this support point on a closing basis since 5/23. The recent sell off leaves us with a loss of $0.89 on the trade. Should Alan and the boys not give the market what it wants, THC could quickly return to favor. Hey, maybe earnings do matter after all. Next Earnings: 7/25/01 === TJX - TJX Companies, Inc. $32.65 -0.62 s/l $31.00 Retailer TJX is again nearing support near of 50-dma ($32.74), although we believe the test will be successful again, considering the impact lower rates should have on the sector in the last quarter of 2001. TJX recently reported that June same store sales were up 8% over the same period last year, though YTD sales were reported to be flat. As consumer sentiment continues to improve, retailers should be the primary beneficiary, and thus shares prices might continue to improve. Next Earnings: 8/14/01 === VPHM - Viropharma, Inc. $29.79 -0.21 s/l $27.00 In the classic reversal pattern, shares of VPHM have bounced nicely off of the key 200-dma ($24.84) and pushed towards higher levels. Since our entry at $29.94 on 6/22, we now sit a mere $0.15 in the minus column. Volume in the stock is a problem however, with a minuscule 200K traded since Monday. For the up trend in shares to continue, participation will definitely need to improve. A closing north of $33.00 would represent a bear reversal pattern on a point & figure chart, and could help the volume numbers increase. Our stop moves to $27.00. Next Earnings: 7/26/01 === SHLR - Schuler Homes, Inc. $13.35 -0.22 s/l $11.94 Since adding Schuler just last night, things are proceeding about as we had planned. Share of the Hawaii based company lost a meager $0.22 in trading Tuesday, and stay plotted above the 21- dma. With the FOMC slated to lower rates yet again tomorrow, a move that will undoubtedly help spur new home sales, SHLR should continue its recovery towards higher prices. Support is strong with both the 21 and 10 dma's, plotted at $13.32 and $12.90, respectively. Next Earnings: 8/9/01 =============== AT Closed Plays =============== ---------------- Closed Long Play ---------------- WMI - Waste Management, Inc. $29.87 +1.40 s/l $29.51 Our brief stint with WMI comes to a happy end, and this is a testament to the use of stop loss triggers. Since our last update on Sunday, shares of WMI have taken a beating, losing $0.60 or 2.06%. Our stop loss was triggered with ease in the decline, but not before we cleared $1.00 or 3.5% for our readers. WMI is now well below support levels, and could trade to $27.00 where we might consider the stock again if a bounce occurs. Picked on June 6th @ $28.51 CLOSED OUT @ $29.51 Changed Since Picked = +1.00 or + 3.5% Best Change = +1.87 or + 6.5% === ELN - Elan Corp, Inc. $60.75 +1.39 s/l $60.75 Shares of ELN reversed in sharp fashion last Thursday, and the selling continued long enough to hit our stop loss at $60.75 when the stock breached the 10-dma ($60.88) Monday. With the BTK.X losing the 600 level, its not surprising to see leading names in the sector succumb to pressure. We walk away with a minor spanking on this trade, losing $1.61 or 2.5%. Picked on June 18th @ $62.36 CLOSED OUT @ $60.75 Changed Since Picked = -1.61 or - 2.5% Best Change = +2.64 or + 4.2% ================================================================= 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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