PremierInvestor.net Newsletter Thursday 06-28-2001 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/4963_1.asp ================================================================= In section one: Market Wrap: It started with bonds and ended with Microsoft! Market Sentiment: Rally, Window Dressing, Asset Allocation, or Court Ruling? Play-of-the-Day: Echelon Corporation ELON Watch List: Airlines, Wireless and Software ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 06-28-2001 High Low Volume Advance/Decline DJIA 10564.73 +131.37 10646.45 10438.66 1.30 bln 1882/1213 NASDAQ 2125.32 + 50.72 2157.32 2096.88 1.93 bln 2319/1398 S&P 100 635.33 + 8.89 640.63 626.69 totals 4201/2611 S&P 500 1225.82 + 15.13 1234.44 1211.07 RUS 2000 502.99 + 7.41 503.31 495.58 DJ TRANS 2765.56 + 65.36 2780.21 2700.78 VIX 22.58 - .99 23.34 21.65 Put/Call Ratio 0.50 ----------------------------------------------------------------- =========== Market Wrap =========== It started with bonds and ended with Microsoft! by Jeff Bailey Today was a bullish traders dream. Everything a bullish trader could have hoped for unraveled today, but it was a progression of events that started with the bond market and ended up with a favorable court ruling for Microsoft (NASDAQ:MSFT). The first "alert" that selling was occurring came from the 5-year bond as its YIELD began to rise sharply just after the open of trading. The bond market opens at 8:30 am EST, which is one-hour ahead of the stock market open. 5-year YIELD chart - 60-minute interval Even though the Fed cut rates yesterday, we did see selling in the 5-year bond as indicated by a rising YIELD. While the Fed controls and sets interest rate policy, the bond MARKET decides on bond YIELD buy purchasing or selling. An equity trader that understand the supply/demand characteristics of the stock market knows all too well that the only thing that drives a stock price higher is a greater number of buyers than sellers. For buying to happen though there has to be cash. One place cash can be raised is through the selling of Treasury bonds and boy did we see some selling in bonds today! We saw it yesterday too, but felt that we needed to see a continuation for stocks to benefit and that's exactly what happened. 10-year YIELD chart - 60-minute interval While the 5-year saw sellers show up almost from the open, it took about 3 hours until the YIELD on the 10-year turned higher. Early in today's session you got the distinct feeling that everyone was looking at each other like a herd of deer trying to decide if they should cross the highway. Once the first deer bolted across, the rest of the crowd seemed to follow! Stocks looked to be on a roll and then all of a sudden you could almost feel a brief surge higher in stocks when shares of Microsoft (NASDAQ:MSFT) were halted. The stock was halted as early news hit the wires that the company was about to receive what many viewed a favorable ruling from the federal appeals court. The stock was halted so that all market participants could digest the news that the appeals court did indeed reverse Judge Thomas Penfield Jackson's decision ordering the breakup of the company. Microsoft Chart - 60-minute interval You can see from the above chart of MSFT just how wild things got today. In the first three hours of trading, the stock actually traded below yesterday's close. When bond YIELDS started to rise, the stock also firmed up and began heading higher. Then the stock really started getting active when "rumor" began to circulate that the company was about to receive a favorable court ruling. When the stock opened back up for trading, nearly 25- million shares traded hands in an hour! Where in the heck did that kind of money come from? Some came from bonds probably. And perhaps, some came from today's BEARISH play of the day in the "Stockbottom" portion of the newsletter! Kerr McGee Chart - 60-minute interval Energy stocks came under more selling pressure today and PremierInvestor.net investors have to feel pretty good about their account today! The CBOE Oil Index (OIX.X) lost 2.69% of its value while shares of Kerr McGee (KMG) outperformed to the downside by losing 3.94%! We might expect some buyers to be lurking near the $62.52 level as I'm pretty sure we're not the only ones that thought this stock was going down hard today. At some point those that shorted up at $70 will want to lock in gains and that may have the stock getting a bit of a bounce. What one never knows for sure though is when some buying will occur. Suffice it to say, it wasn't today! ================ Market Sentiment ================ Rally, Window Dressing, Asset Allocation, or Court Ruling? By Jeffrey Canavan Was today the start of a new rally, or merely an end of quarter anomaly? The way the markets faded into the close tends to make me believe the later. If you believe in statistics, the last day of the second quarter has been down 7 out of the last 10 years. The performance of Microsoft today also clouds the picture. After the entire ruckus that surrounded the software maker's court ruling, Microsoft finished up a meager $1.60. What's good for GM is good for America use to be the mantra chanted on Wall Street, but that credo has been updated to - what's good for Microsoft is good for America. As you can tell, my market bias for tomorrow was leaning towards the bearish side, and then PMC Sierra warned that their loss would be wider than expected for the current quarter. That cinched it, the market is heading lower tomorrow...no...wait a second...PMC Sierra is $3 higher in after hours trading. I've stopped trying to rationalize these reactions to earnings, and my best guess at the market's sentiment is that that the bulls may lack conviction, but the bears look afraid to pull the trigger. I leave you with some of PMC Sierra's financial data to play analysts with. Revenue Cash Flow Inventory (in millions) 03/26/00 $114 $ 23 $ 9 06/25/00 $161 $ 54 $13 09/24/00 $198 $114 $32 12/31/00 $220 $182 $54 04/01/01 $119 $-21 $63 07/19/01* $ 93 ? ? Assuming an optimistic 15% growth rate, how many quarters would it take for PMC to get back to $220 million in revenues? Answer - 7 quarters ----------------------------------------------------------------- Market Volatility VIX 22.44 VXN 48.71 Put/Call Ratio Total .50 Equity Only .40 OEX 1.35 QQQ .41 Bullish Percent Data: Readings above 70 are considered overbought, and readings below 30 are considered oversold NYSE 42 NASDAQ-100 34 DOW 54 S&P 500 44 10-Day Arms Index 1.24 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 1878 1216 NASDAQ 2308 1407 New Highs New Lows NYSE 152 37 NASDAQ 137 45 Advisory Sentiment Bullish Bearish 51% 30.6% CBOT Commitment Of Traders Data as of 6/19/01 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) Net Value +72258 +67110 -69745 -70183 % of OI (+39.20%) (+25.01%) (-10.37%) (-9.04%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Net Value -3711 -4305 +1876 +6239 % of OI (-32.56%) (-28.76%) (+8.2%) (+14.44%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Net Value +5881 +2110 -10617 -10648 % of OI (+25.92) (+6.09%) (18.44%) (-13.68%) net-long net-long net-short net-short ------------------------------------------------------------------ ========================= Play-of-the-Day (Bullish) ========================= Echelon Corporation ELON $28.33 +2.33 Stop: $26.10 Original comments when first selected: Strong bullish momentum compels us to revisit this former Bullish selection. Echelon wants to control your world, or at least your washing machine and air conditioner. The Sunnyvale, California- based company designs, markets and services products that allow industrial equipment, household devices and building environments such as assembly line robots, security devices, thermostats, pumps and valves to communicate with each other and the Web. The company's technology gets imbedded into control systems that allow them to be connected through a network. Customers include Honeywell, Siemens and Johnson Controls. For the first quarter, Echelon reported an increase in earnings from a loss of $651 thousand to a gain of $22 thousand. Revenue rose 10-percent to $12.6 million. For the year, analysts forecast earnings of 19-cents per share on sales of $79 million. This is a big improvement over last year's earnings of 0.00-cents per share on revenue of $47 million. Analysts expect the good times to continue, they project 2002 earnings of 71-cents per share on sales of $174 million. This gives the firm a forward P/E of 136 for 2001 and 37 for 2002. This compares well with the industry average P/E of 88 and is reasonable given the company's projected sales growth of 66-percent for 2001 and 112-percent for 2002. This company's strong financial improvement has not gone unnoticed by investors. After dropping to $8.00 on April 4th the shares rebounded to set a new 6-month closing high of $25.66 on May 22nd. Since then the shares have been locked in a trading range bounded approximately by $21.50 and $26.00. Wednesday's move represents the fourth time since entering the channel that the shares have tested $26.00. We believe in this case, the fourth time is the charm. Wednesday's $26.00 close set a new 6-month closing high and did so on the third consecutive day of rising volume. In addition, Wednesday's volume of 556k was well above the 398k daily average. Another sign that we like was strong intraday behavior on Wednesday's 1-minute chart. The shares ended the day as solid as it began with nary a dip in between. Toss the anticipated strong July 19th earnings report into the picture and ELON shares have clear bullish momentum and the means to maintain it. Updated comments: Turns out the fourth time was the charm. Our newest Bullish selection had a big start. We felt the shares were prime to break resistance at $26.81 and this would set up a test of $29.00. With a session high of $29.53 on Thursday, this is exactly what we got. Volume was more than double the 410k daily average at 993k shares traded. This bodes well for a possible break of $29.00. If this occurs, the next target would be the early November high of $33.63 with an outside shot at the October $39.25 high. However, traders should wait for the $29 break on solid volume before getting in. Support from a bearish reversal should be found within the gap created from yesterdays $26.00 close and Thursday's $27.00 open. We are moving our stop to $26.10. Picked on June 27th at $26.00 Gain since picked 2.33 Earnings Date 7/19 (Not Confirmed) ========== Watch List ========== FRNT – Frontier Airlines, Inc. $12.61 +0.20 WHY WE LIKE IT: With the economy still in a downtrend, you might wonder why any airline stock is worth paying attention to. First of all, Frontier Airlines low fare, no frills approach is appealing simply due to consumers tightening their purse strings in these times of uncertainty. Secondly, the fact that oil and gas prices are in a virtual free fall only boosts an airlines profit margins, as behind payroll, fuel prices top the expense category on the income statement. POTENTIAL TRIGGER EVENT: While the bounce off of the possible floor at $10.75 is impressive, volume totals have yet to impress, giving reason for doubt. Shares of the Denver-based airline look susceptible to retrace to $12.00 -$12.50, where we would consider adding them if volume totals neared 400k. --- PVTL – Pivotal Corp. $16.45 +0.46 WHY WE LIKE IT: As the Microsoft decision works its way into investors psyche, we expect software companies could continue to catch a bid. Canadian-based Pivotal is a leader and the e-CRM field of the sector, and have been quoted as Siebel System's only real competitor by Tom Siebel himself. Recent weakness in the stock in light of such encouraging news for the group could be an excellent time to watch the stock's price action. POTENTIAL TRIGGER EVENT: We would want to see one more day of higher highs before giving PVTL as shot as a new long position, despite all of the good news in the sector. The recent sell-off has been swift and sudden, and we suspect the company's thin stock float and largely institutional shareholder base has something to do with this. In any event, a long position in PVTL would require a tight stop loss, as the stock looks susceptible to $12.00 in the event a rally failed. --- CREE – Cree, Inc. $24.34 +2.35 WHY WE LIKE IT: A day trader's favorite, the volatility in shares of CREE are definitely appealing with the Nasdaq Composite surging north of the 2100 level. Even with the recent bad news in the semiconductor sector, CREE should outperform the broader market if the buying in tech continues. To the extent we don't get more warnings this week from the semi's, a $30-handle appears reasonable near term. POTENTIAL TRIGGER EVENT: We would like to see CREE breach its 50- dma at $25.98, where we would turn our head and hit the Buy button. As we mentioned, volatility is VERY high in this stock, but can also reward you handsomely if you are on the right side of the tape. Previous settlements above the 50-dma have proved to be the time to get on board this wildly swinging stock, and we would not want to fight recent historical price action when this event occurred. --- AWE – AT&T Wireless, Inc. $16.57 +0.55 WHY WE LIKE IT: With AT&T finally cutting the cord on AWE, interest is high in the stock. On July 9th, AT&T will exchange all outstanding tracking shares for a common stock and issue a special distribution of .3218 AWE shares for every T share. The company is also receiving index manager attention due to its inclusion in the S&P 500 index after the close Friday. POTENTIAL TRIGGER EVENT: Today's move is seen as a clear breakout, and we should probably add the stock as a new play this evening. In fact, there is very little to suggest that shares won't continue their uphill climb until $17.50. The single fact that holds us back is the $0.39 gap higher this morning, which we suspect was caused by retail buyers, or weak hands. Should AWE pull back to the down sloping trendline near $16.00, we might give it a spot on the play list. ================================================================= 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.
PremierInvestor.net Newsletter Thursday 06-28-2001 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/4963_2.asp ================================================================= In section two: Split Trader New Plays: BISYS Group Inc. BSYS Play Updates: ADVP, BMET, ESI Closed Plays: There are no new closed plays NetBulls New Play: There is no new NetBulls play Play Updates: YHOO, AMAT, ELON, CSC, GETY Closed Plays: There are no new closed plays Stock Bottom / Active Trader New Plays: Corning, Inc. GLW Play Updates: BEAS, CTXS, FFIV, ISRG, MEDI, RATL, SHLR, THC, TJX, VPHM, KMG Closed Plays: There are no new closed plays ================================================================= Split Trader (ST) section ================================================================== =================== Split Announcements =================== ============ ST New Plays ============ ------------------------- New Split Candidate Plays ------------------------- BISYS Group Inc. BSYS $59.91 +2.14 Stop: $57.00 This Little Falls, New Jersey-based firm is an IT outsourcing company for more than 11,000 financial institutions and corporations including banks, mutual funds, insurance companies, and retirement plans. Its BISYS's TotalPlus products and services offer transaction processing and document imaging (it is a leading provider). The company also offers mutual fund and retirement plan distribution, administration, and fund accounting services. They are also a major distributor of life insurance, annuities, group health, and long-term care products. Seeking to be the single source for all its clients' outsourcing needs, BISYS adds to its stable of products and services through acquisitions. The company's purchase of HML added professional certification training, continuing education, and other support services to BISYS Insurance and Education Services division. Other purchases include Pictorial Holdings, the parent company of a provider of professional certification and licensing and maker of compliance software products; Ascensus Insurance Services, a distribution services provider for life insurance products; and retirement plan administrator Universal Pensions. BISYS has customers throughout the US and in several other countries, notably the UK. The analysts' consensus estimate for the July 30th fiscal fourth quarter earnings report is for the firm to earn $0.47 per share on sales of $194 million. On an annual basis, analysts expect the firm to earn $1.47 per share on sales of $698 million and $1.78 on $849 million in 2002. Last years earnings were $1.23 per share. This give firm an estimated 2001 P/E of 40.7. This is a premium over the industry average P/E of 18. However, this premium is warranted given the company's 29-percent earning growth rate for the current year against the industry average of 9.9-percent. This play came to our attention as a potential split candidate. The company split last September when the shares hit $78.00. Although the share price is not currently at that level, a great technical picture and the coming earnings announcement may give it the bullish momentum to get there. The shares pushed right through $58 resistance to set a new closing high for the year at $59.91. Volume at 1.01 million shares traded was over double the 486k daily average suggesting the buying sentiment is strong. The former $58.00 resistance level is now support in the event of a bearish reversal. We are implementing a stop at $57.00. Picked on June 28th at $59.91 Earnings Date 7/30 (Not Confirmed) =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- ADVP - Advance PCS, Inc. $63.70 -0.43 s/l $61.00 New The healthcare business is booming, and shares of ADVP continue to impress. Since our last update, ADVP has taken out its weekly high, closing Wednesday at $64.13, and now looks poised to take out the 52-week high at $68.60. Support resides with the 21 & 50 dma's ($61.16, $60.96), and these moving averages are rising, a very bullish sign. Our stop moves to $61.00. Next Earnings: 8/28/01 Chart = === BMET - Biomet, Inc. $48.45 +0.81 s/l $46.50 Our two day stint with BMET has been rather uneventful, and shares were unable to set a new 52-week high in trading Wednesday, missing the mark by a mere penny. As of today's close, we sit with a loss of 34-cents. The company is scheduled to release earnings on 7/9/01, and this could possibly result in an earnings run. The strength in the chart is amazing, with support at the 10 & 21 dma as firm as hickory wood. Next Earnings: 7/19/01 === ESI - ITT Educational Serv., Inc. $43.75 -0.24 s/l $41.50 Since fulfilling the bullish pennant formation back on 6/25, shares of ESI have traded basically sideways. We would like to see ESI take out the high from 6/5 ($44.90), in order to break out of the $42-$45 trading range, freeing the stock to work its way higher. With little news and the tech sector garnering interest, shares of ESI may have a hard time doing this. Volume has been on this decline since Monday's gain, signaling waning interest. Our stop remains at $41.50. Next Earnings: 7/19/01 ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Yahoo! Inc. YHOO $19.38 +0.65 Stop: $17.25 Yahoo shares resumed a bullish bias and are poised once more to tackle important upside resistance in the range of $20 to $20.50. Our initial recommendation for conservative traders still holds to wait for a move above $21 on solid volume before taking a position. This breakout would confirm bullish momentum and place resistance levels at $25.94 and $30 square in our sights. If this break does not occur, the shares are liable for a pullback and in that case downside support is at $17.50. Picked on June 25th at $19.77 Gain since picked (0.39) Earnings Date 7/11 (Not Confirmed) === Applied Materials AMAT $49.57 +1.10 Stop: $48.10 New After a brief foray with the bears on Wednesday, our Bullish selection is back on track. On Thursday, the shares once again tackled resistance at Tuesday's $50.21 close and $51.00 session high. A jump in volume to 22 million, which is well above the daily average of 17 million, suggests the bulls have momentum and a breakthrough is a good possibility. This would set up a test of the next area of resistance between $54.50 and $55.00. We are lifting our stop slightly to just below recent lows at $48.10. Picked on June 22nd at $49.05 Gain since picked 0.52 Earnings Date 8/14 (Not Confirmed) === Echelon Corporation ELON $28.33 +2.33 Stop: $26.10 New Nice start for our newest Bullish Selection. We felt the shares were prime to break resistance at $26.81 and this would set up a test of $29.00. With a session high of $29.53 on Wednesday, this is exactly what we got. Volume was more than double the 410k daily average at 993k shares traded. This bodes well for a possible break of $29.00. If this occurs the next target would be the early November high of $33.63. Support from a bearish reversal should be found within the gap created from yesterdays $26.00 close and Thursday's $27.00. We are moving our stop to $26.10. Picked on June 27th at $26.00 Gain since picked 2.33 Earnings Date 7/19 (Not Confirmed) ----------------------- NB Bearish Play Updates ----------------------- Computer Sciences Corporation CSC $34.91 +0.41 Stop: $36.00 CSC shares remain in congestion. Although there is the slightest of bullish bias evident, it is not strong but does bear watching and forces us to put out the caution flag. A close above $35.25 on strong volume would indicate a rise in bullish sentiment, whereas a close below $33.15 would suggest the bears are in full control. We will maintain our stop at $36.00, just in case the bulls win out Picked on June 21st at $35.00 Gain since picked: 0.09 Earnings Date N/A (Not Confirmed) === Getty Images, Inc. GETY $25.00 0.00 Stop: $26.00 New No change in the stock price or our outlook for Getty Images. Bulls and bears are locked in a tug-of-war and neither is able to produce a lasting move. On an intraday basis the bulls made their move early on Thursday when they pushed the shares to the $25.60 session. They were able to hold most of the gain until the final hour of trading when the bears were able to drive the shares back to dead even. We are hopeful the late bearish move will carry into Friday's trading. Given the narrow trading range the shares are operating in we are comfortable tightening our stop loss to $26.00. Picked on June 25th at $24.89 Gain since picked (0.11) Earnings Date N/A (Not Confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ -------------- New Long Plays -------------- GLW – Corning, Inc. $15.80 +1.15 Stop: 14.00 Sector – Communications Equipment Corning Incorporated is a global, technology-based company that operates in three broadly based business segments, Telecommunications, Advanced Materials and Information Display. The Telecommunications Segment produces optical fiber and cable, optical hardware and equipment, photonic modules and components and optical networking devices for the worldwide telecommunications industry. The Advanced Materials Segment manufactures specialized products with properties for customer applications, utilizing glass, glass ceramic and polymer technologies. This is not the old Corning peddling baking ware and other kitchen-use dishes. No, this is the Corning creating leading-edge technologies for the fastest-growing markets of the world's economy. Or at least that was the story last year. As evidenced by the chart of the daily stock price over the past year or so, demand was either sharply overstated or has drastically dried up for GLW's optical fiber, cable and photonic products for the telecommunications industry, and this is reflected in company's EPS estimates going forward. Last year, the company reported EPS of $0.31 for the June 2000 quarter. This year, those numbers are estimated to be roughly 1/2 of that number, as consensus forecasts are for GLW to post $0.18. In fact, with year over year EPS declining by 28.41%, buying this company on a fundamental basis takes some forward-looking thinking. The company does appear to be forming a bottom, both from a technical and fundamental basis, with $12.60 acting as a floor, the new 52-week low set just seven days ago. Since this took place, however, volume has been surging, driving share prices higher, now up nearly 30% since June 20th. Plain and simple, we think the floor has been seen in GLW. Both stochastics and MACD readings are plotted firmly in the bull camp, with the later showing a bullish cross of the trigger line in today's session. Volume surpassed the 30-day average trend yet again Thursday, and GLW also put the 10-dma ($14.36) behind it for the second time in four sessions. Considering the positive bias in the markets thanks to the MSFT announcement, we think GLW trading 15% higher near term could be a reality. We've set a loose stop down at $14.00 so the stock can work its way higher. Our target for the trade is $19.00, almost 16% away from current pricing. Average Daily Volume = 12.1 mln 52-week: High = $113.33 Low = $12.60 Next Earnings 08-24 est = 0.18 versus = 0.31 =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- BEAS - BEAS Systems, Inc. $31.96 +1.00 s/l $25.00 BEA has been lagging other names in the software group such as CTRX and RATL, but our resolve to be long the stock remains firm. Despite the company's CEO saying that business was excellent and prospects were high going forward, investors still remain skeptical. As one analyst put it: BEA is priced for perfection, and with so many failing to perform, its easy to see why the stock is stuck in a mire near $31.00. Perhaps an excellent earnings report will light a fire under the stock. We doubt you'll have to wait that long, and BEA only needs volume to improve to get its stock back near the 50-dma at $36.30. We are basically flat on the trade and our stop remains at $25.00. Next Earnings: 8/14/01 === CTXS - Citrix Systems, Inc. $34.45 +1.22 s/l $32.15 Since our last update on CTXS, shares have continued their winning ways. When we last updated the play, we mentioned that you could search high and low and still not find a chart as strong as that of CTXS's. Well, the stock's relentless assault on higher ground makes that task even harder now, with CTXS tacking on another $0.00 since Tuesday. With the market catching a bid, specifically the software sector, the resistance at $36.00 may fall by the wayside in quick order. Our stop moves to $32.15. Next Earnings: 7/18/01 === FFIV - F5 Networks, Inc. $18.30 +0.61 s/l $17.88 All we can say about FFIV is Oh my! The stock's previous slow ascent has transformed into an explosive attack on higher ground, with the 200-dma now well below shares to act as support. With little to hold the stock back until $27.00, it should continue to perform. Our stop moves to $17.88 so as to protect the $3.29 or 22% gain we now sit with on the trade. Next Earnings: 7/25/01 === ISRG - Intuitive Surgical, Inc. $13.43 +0.31 s/l $12.05 ISRG's robotic, minimally invasive surgical system dubbed da Vinci continues to gain attention in the medical community, as well as in the investment community. ISRG exploded on Wednesday, tacking on $1.87 in heavy trading. The surge was prompted by initiation of coverage from brokerage house UBS Warbug, who rated ISRG a strong buy and placed a 12-month price target on the stock of $16.00. From our entry at $11.05, we now sit with a gain of $2.38. Our stop moves to $12.05 on the trade. We think $15.00 is a realistic objective in the next few sessions. Next Earnings: 7/24/01 === MEDI - Medimmune, Inc. $47.43 +2.26 s/l $40.00 Medimune is still lacking the participation needed to push its shares above the key-200 dma at $47.84. Since adding the stock back on 6/21, volume has only surpassed the 30-day average count one time, and appears to be shrinking still. The biotechnology index (BTK) did catch a bid Thursday, however, and the index now holding back above the 50-dma at 585 bodes very well for MEDI going forward. We are down $0.05 since adding MEDI and our stop remains at $40.00. Should the BTK be able to close above 618, MEDI could be off to the races. Next Earnings: 7/25/01 === RATL - Rational Software, Inc. $29.21 +1.22 s/l $28.20 New RATL still looks strong, with shares adding $1.67 since our last update on Tuesday. The software sector has been buoyed by upbeat comments from Oracle CEO Larry Ellison, although RATL's participation has not traded at levels that could spur a big upside move. Volume is still coming in below the 30-day average daily count, although we won't argue with the steady price appreciation seen in the stock. New has been thin, but the technical work being done is impressive. With the close at $29.08 today, RATL has cleared prior resistance and should slowly work its way towards $37.27, the 200-dma. Again, the move is susceptible to failure due to a lack of volume. Our stop moves to $28.20. Next Earnings: 7/11/01 === SHLR - Schuler Homes, Inc. $12.75 -0.75 s/l $11.94 Surprisingly, we are down a touch on our trade of Shuler Homes. We think its only a matter of time, however, before investors realize the benefit lower interest rates will have on homebuilders like Shuler's business. With the FED lowering short term rates by .25% again yesterday, mortgage rates should follow in short order. With housing now affordable than ever due to lower rates, more and more people should bite the bullet and take the plunge into the housing market. Apparently, the renewed interest in technology is holding back share prices in SHLR near term. Our stop remains at $11.94. Next Earnings: 8/9/01 === THC - Tenet Healthcare, Inc. $51.36 +0.46 s/l $49.75 After coming within a mouse hair of our stop loss at $49.75 Tuesday, THC has recovered in typical fashion, climbing back above the 10-dma at $51.04. Shares are now back on the rise again, although with volume on the decline as share prices have risen, coupled with technology catching a bid due to both the rate reduction from the FOMC and the Microsoft ruling being overturned, THC could have trouble getting traders interest. Our stop remains at $49.75, and we up only slightly ($0.27) on the position. Next Earnings: 7/25/01 === TJX - TJX Companies, Inc. $32.32 +0.14 s/l $31.70 New The picture of frustration, shares of TJX appear to be stuck in a downtrend, and have now clearly broken support of the 50-dma, settling below this mark for the prior two trading sessions. We are apt to close the position now, taking our loss and moving on. However, we'll give TJX a couple more days on the play list, holding shares in anticipation of the S&P retailing holding support of its 200-dma at 846. We've moved our stop up to $31.70, to protect from further losses. Next Earnings: 8/14/01 === VPHM - Viropharma, Inc. $29.15 +0.55 s/l $27.00 Another flat position for us, shares of VPHM have traded sideways since we added them on 6/22. We have hope for the stock though, as the BTK is again showing signs of life with its surpassing of the 50-dma in Thursday's session. News on the stock has been non- existent since we last updated the play, and this has perhaps added to the lackluster price action. Volume has also been a problem, with daily totals being well below the 30-day average count each day since we added the stock as a long play. Our stop remains at $27.00 for VPHM. Next Earnings: 7/26/01 ------------------ Short Play Updates ------------------ KMG - Kerr-McGee Corp. $63.00 -2.59 s/l $66.00 New Kudos to Jeff Bailey for his excellent choice of KMG as a new short position last evening. After losing support of the crucial 200-dma on Wednesday, KMG continued free-falling, shedding another $2.59. With natural gas and gasoline prices in a virtual freefall, shares of KMG could continue to give up ground. Shareholders might put up a fight at $62.50, but considering the weak tone in the sector, we doubt this support will hold. Our stop moves to $66.00. Next Earnings: 7/26/01 ================================================================= 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. 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