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Daily Newsletter, Monday, 07/02/2001

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PremierInvestor.net Newsletter                 Monday 07-02-2001
                                                  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
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To view this email newsletter in HTML format with imbedded
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In section one:

Market Wrap: Today's trading lacked grand finale 
Market Sentiment: Tech Sectors Test Resistance 
Play-of-the-Day: BISYS Group Inc., BSYS (Bullish)
Watch List: Taxes, Spin Cycle and Telecom

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
        07-02-2001        High      Low     Volume Advance/Decline
DJIA    10593.75 + 91.32 10638.87 10467.38 1.11 bln   1600/1471
NASDAQ   2148.72 - 11.82  2181.05  2140.65 1.51 bln   1555/2234
S&P 100   639.96 +  7.94   642.08   632.02   totals   3155/3705
S&P 500  1236.72 + 12.34  1239.78  1224.03           46.0%/54.0%
RUS 2000  498.39 - 14.25   513.28   498.25
DJ TRANS 2806.50 - 27.06  2836.63  2802.80
VIX        20.29 -  1.34    21.58    20.26
Put/Call Ratio      0.60
-----------------------------------------------------------------

===========
Market Wrap
===========

Today's trading lacked grand finale by Jeff Bailey

Last year I went to a fireworks display on the 4th of July and 
left disappointed.  I had been accustomed to a late barrage of 
fireworks filling the sky as the show came to an end.  At one 
point today, the stock market looked like it might be set for an 
explosive rally into the close of trading, but by session's end 
many traders walked away like I did a year ago at the end of the 
aforementioned fireworks display, unfulfilled and somewhat 
disappointed.

Today's fireworks show started off with what seemed like a dud.  
Shares of Minnesota Mining & Manufacturing (NYSE:MMM) were 
analogous to one of those yellow-colored "stink bombs" when the 
company announced it wasn't going to meet analysts estimates on 
it's recently completed quarterly earnings due to economic woes 
around the globe and the adverse affect of a strong U.S. dollar.  
At the open, shares of MMM traded $109.25, but by session's end 
the stock looked like a pop bottle rocket as it rallied to the 
$117.26 level and actually posted a gain of 2.76%!

Minnesota Mining & Manufacturing - last eleven months



There are technical challenges ahead for MMM at the $120 level, 
but I like to monitor stocks that have bad news and follow their 
progress or deterioration.  The longer-term trend and 200-day 
moving average (thin red at $108) remain below the stock and 
should offer support.  I'd consider the shorter-term trend to be 
negative at $120, but a break above that level considering an 
earnings warning my give hint that market participants feel the 
economy is recovering and good things lie ahead for the stock.  
This might also be true for other stocks rooted in the deep 
cyclical category.

Part of today's comeback in 3M might have been found in today's 
National Association of Purchasing Management report, which still 
showed the economy was in low gear, but may be entering a turning 
point and starting to recover.  The June reading for this 
indicator showed the index rose to 44.7%, which is above May's 
reading of 42.1%.  The string of monthly reading below 50%, which 
is indicative of a slowing economy stands at eleven.  However, 
Junes reading is the highest since last November and that seemed 
to have stocks finding life by mid-session.

One item I wanted to see by sessions end was for the S&P 500 
(SPX.X) to close above the 1,241 level.  I derived this "magic 
number" from a retracement technique called "fitting" that I used 
recently for shares of Rational Software (NASDAQ:RATL).  My 
thoughts here are that the markets will often times trade levels, 
and by fitting a retracement bracket to a stock or market index, 
we can begin setting tests for a particular stock or index to 
uncover levels of support or resistance.  Today, I really though 
a close above the 50% retracement bracket at 1,241 would bring on 
further bullishness, but it looks like we're going to have to set 
this test for yet another day.

S&P 500 Index - last nine months



The last 13-sessions of trading for the S&P 500 has been range-
bound between 1,203 and 1,241.  It sure looks like there were 
quite a few market participants that were buying the 1,241 level 
back in early May.  Then on June 14th, that 1,241 level (support) 
was violated to the downside and has since been acting very much 
like resistance.  I'm thinking that there is a lot of money 
sitting on the sidelines right now waiting for the break above 
the 1,241 level.  At this point, I'd rather wait for the break to 
the upside before aggressively accumulating stocks and tread 
lightly in those stocks that have reached what looks to be the 
upper end of a trading range.  This is EXACTLY what I wrote about 
last Thursday as it related to our "fitted" retracement technique 
in shares of Rational Software (NASDAQ:RATL).  We couldn't figure 
out why the stock wasn't moving higher, but the retracement 
bracket hinted that bullish traders had better be careful!

Rational Software Corporation - last six months



Earlier today it was 3M that warned and tomorrow morning it will 
be shares of Rational Software (NASDAQ:RATL) that will be under 
selling pressure at the open.  I'm not a big proponent of buying 
stocks with bad news, but I will want to see how the stock 
responds early in trading.  Should the stock test the $21.25 
level early in the trading session and trade some big volume 
(10,000,000 shares or more) and start to bounce, don't be totally 
surprised if the stock finishes above $23.30.  While this stock 
is not nearly as technically strong as 3M, experienced traders 
are aware that most of the bad news comes out at the bottom.  You 
don't have to trade this stock to learn from it, but if we start 
seeing more stocks act like 3M acted today, the market might be 
finding a bottom.  

Remember today's NAPM report and how it has been coming in under 
50% now for eleven months.  This tells us that the economy has 
been "slowing" for eleven months.  What's interesting is that the 
NASDAQ Composite reached its peak on March 10, 2000 when it 
traded 5,132 and declined rapidly to a May 24, 2000 low of 3,042, 
well before the NAPM data fell below the 50% level.  It sure 
seems that the market knew the decline was coming before the NAPM 
data signaled rapid slowing.  My guess is the market will also 
signal a recovery well before the NAPM data shows strengthening.  
All we need is more earnings warnings and higher stock prices for 
further verification.  Whenever the market gets good news and 
stock prices fall, that's when I get worried.  When the market 
gets bad news and stock prices rise, that's when I begin thinking 
the fireworks display is going to be good, and the grand finale 
will be that much better.  If the SPX can close above the 1,241 
level soon, then this might just be a 4th of July to remember!


================
Market Sentiment
================

Tech Sectors Test Resistance by Jeffrey Canavan

The Nasdaq Composite tried to finish the day in positive 
territory, but was held down by biotechnology stocks.

The Biotechnology Index (BTK.X) has been battling with the 200-
dma for the past three days, and lost the battle today.  The war 
can still be won, since support looks strong at 570, oscillators 
look oversold, and prices are above a rising 50-dma.  A close 
above 625, and getting the bullish percent data off of bear alert 
status would help to clear up the picture.  There are still some 
bullish stocks in the group, but overall the sector is neutral.

Internet, software, networking, and semiconductors tried to put 
in a good showing today, but faded into the close.  That could be 
because they are pegged at the their May downtrends, and the 
holiday-shortened week may lack the necessary volume to push 
these sectors through resistance.  Muddying the picture even more 
are short-term stohastics that are suggesting these sectors are a 
little overbought, but longer-term MACDs and bullish percent data 
are oversold.  A brief pullback before another attempt at the May 
downtrends could be the scenario that plays out for these 
sectors.

The trend for energy stocks continues to be straight down, but 
pharmaceutical stocks were able to put a temporary stop to their 
skid, closing up 1.73%.   The financial sector looks overbought, 
but continues to be the strongest sector, with insurance stocks 
doing especially well. 

*************************Sector Watch****************************

            Weekly   Daily      Overbought   Support  Resistance 
            Trend    Trend      Oversold                         

DJIA        Bearish  Neutral    Oversold      10,400   10,800
NASD        Bearish  Neutral    Overbought     2,000    2,200
S&P 500     Bearish  Neutral    Neutral        1,200    1,250
Rus 2000    Neutral  Neutral    Oversold         480      500

Semis       Neutral  Neutral    Neutral          545      660
Biotech     Neutral  Neutral    Oversold         570      625
Internet    Neutral  Neutral    Neutral          160      186
Networking  Bearish  Bearish    Neutral          314      380
Software    Neutral  Neutral    Neutral          210      241
Banking     Bullish  Bullish    Overbought       640      670
Retail      Bearish  Bearish    Oversold         840      880
Drugs       Bearish  Bearish    Oversold         375      400


                          Percent Change
             Last 5 Days   Last 10 Days      Last 30 Days 
DJIA            (1.0%)        (1.1%)           (6.6%)
NASD             4.8%          8.1%            (2.3%)
S&P 500          1.5%          2.3%            (4.3%)
Rus 2000         2.9%          1.6%            (1.6%)

Semis            5.6%          5.9%            (3.3%)
Biotech          3.4%          2.8%            (0.3%)
Internet         2.5%         10.5%           (13.4%)
Networking       5.5%          7.9%           (22.4%)
Software         6.1%         11.9%            (0.6%)
Banking          1.4%          4.1%             2.9%
Retail          (0.4%)        (0.8%)           (4.4%)
Drugs           (2.1%)        (4.6%)           (6.0%)

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


=========================
Play-of-the-Day (Bullish)
=========================

BISYS Group Inc. BSYS $60.66 +1.66 Stop: $57.50

Original Comments When Selected:

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.  

Updated Comments:

BSYS shares reacted positively on Monday to positive comments from 
First Union Security.  The broker reaffirmed their "strong buy" 
rating and has a target price of $67.00.  The company cited BISYS's 
strong internal growth in excess of 15-percent and the positive 
impact of their acquisition program.  BISYS recently announced 
their fourth acquisition of the year.  The Pennsylvania-based 
Toner Organization, adds over 7,000 agents to the 100,000 agents 
using the BISYS application platform and an estimated $5 to $10 
million in revenue to the BISYS balance sheet.

The strong move of the shares on Monday created a new 52-week 
high of $60.75.  This topped the previous high of $60.65 set just 
last Thursday.  Also encouraging to BISYS longs was that the close 
of the day was just off the high at $60.66.  Add to this strong 
above average volume of 527k shares traded and it is clear BISYS 
shares have plenty of bullish momentum.  Support in the event of 
a bearish reversal is nearby at $59 and $58.  Our price objective 
agrees with First Union at $67. 

Picked on June 28th at $59.91
Gain Since Picked:       0.75
Earnings Date            7/30 (Not Confirmed)





==========
Watch List
==========

HRB - H&R Block Inc.  $68.41 +3.86

WHY WE LIKE IT:  There is no denying that the trend on HRB has
been bullish ever since it took off on Nov. 30th, 2000.  While
there has been a few bumps in the road it has certainly turned
in an enviable performance over the last several months.  Bulls
definitely have a strong grip on this stock.

POTENTIAL TRIGGER EVENT:  Look for a pull back.  Today the stock
surged almost 6% on volume of 1.2 mm versus normal volume of 545K.
Checking the news doesn't offer many clues to explain the sudden
charge in share price.  Split traders should know that HRB has a
2:1 split coming on August 1st which can't hurt investors' 
enthusiasm for the stock.  Today's move is too much to chase HRB
and we'd like to see the stock pull back on a dip.  The stock 
had seen heavy resistance at 65 and today is a clear breakout.
It should now find support at 65 and a bounce back to 65 before
the next leg up would make a good entry point.  




---

WHR - Whirlpool Corp.  $64.60 +2.10

WHY WE LIKE IT:  It's been said before.  This is a real company
with real products and real profits.  Plus it's up 85% from last
October but who's counting?  WHR's chart or more specifically
its investors make it a little more easy to identify entry and
exit points.  When reading the chart there is always noise but
opportunities exist for traders willing to watch this stock.

POTENTIAL TRIGGER EVENT:  With the share price building on higher
lows from the recent pull back in June the stock is approaching
resistance again at the 65.00 - 65.50 level.  A solid break
above this would be a clear signal for bulls.  Look for a speed
bump at 67.50 and more resistance at 70.





---

TTIL - TTI Team Telecom International  $20.85 +1.41

WHY WE LIKE IT:  Everyone has heard about telecom's woes and while
TTIL appears to be bucking the trend with rising revenues the 
share price looks to be guilty by association.  At least until
recently.  The stock has just put in five positive sessions in
a row.  While we are encouraged by this event the stock is staring
at heavy resistance at $22.

POTENTIAL TRIGGER EVENT:  The 7.25% move today is a bit steep 
but bulls will note it was made on twice average volume today.
Optimists will also claim that the stock has finally regained
the $20 level after its protracted fall from $22 to $10 that 
started in February.  Interested traders probably need to keep
their eye on this one for a day or two as the stock might need
to consolidate before tackling the $22 level again.





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DISCLAIMER
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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

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Newsletter, or any Premier Investor Network newsletter please
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Copyright  2001  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.


PremierInvestor.net Newsletter                  Monday 07-02-2001
                                                   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/070201_2.asp
=================================================================

In section two:

Split Trader
  New Plays: No new Split Trader play this issue.
  Play Updates: ESI, BSYS - Change in recommended stops 
  Closed Plays: ADVP - Long-term Up, Short-term Out

Net Bulls
  New Plays: No new NetBulls play this issue.
  Play Updates: No play updates this issue.
  Closed Plays: ELON - Profit Taking Hits Echelon

Stock Bottom / Active Trader
  New Plays: QLogic (QLGC) (Bearish)
  Play Updates: No play updates this issue.
  Closed Plays: No closed ST/AT plays this issue


=================================================================
Split Trader (ST) section
==================================================================

===============
ST Play Updates
===============

  -----------------------
  Split Candidate Updates
  -----------------------

ITT Education Services (ESI) stop change from $41.50 to $41.88.
BISYS Group Inc., (BSYS) stop change from $57.00 to $57.50.

===============
ST Closed Plays
===============

  ----------------------------
  Closed Split Candidate Plays
  ----------------------------

AdvancePCS ADVP $61.15 -2.90  Stop: $61.00

ADVP shares are retracing after failing to take out resistance at 
$65.  We closed out his play when it hit our stop at $61.00.  
Although the longer-term bullish trend from last December is still 
intact, there is little doubt that in the short-term the bears 
are in the driver's seat.  Monday's intraday behavior was weak 
from the opening bell through to the close.  There was no company 
specific news to account for the bears mauling what had been a 
very bullish picture.  However, the next levels of down side 
support are at $58.75, $57.21 and $54.41.

Picked on June 22nd at $62.82
Gain since picked:      (1.82)
Earnings Date            8/28 (Not Confirmed)





==================================================================
Net Bulls (NB) section
==================================================================

===============
NB Closed Plays
===============

  -----------------
  Closed Long Plays
  -----------------

Echelon Corporation ELON $28.04 -2.72 Stop: $28.00 

Our bullish selection had a nice run, but the shares became over 
extended on Friday and became vulnerable to some profit taking.  
In anticipation of this possibility we had tightened up our stop 
to $28.00 and the journey to Monday's session low of $27.60 tripped 
it.  We officially close out this play with a gain of $2.00 per 
share.  For those still in this play, the longer-term up trend 
remains intact as long as the shares remain above the lower trend 
line at approximately $24.00.  However, before it gets there the 
shares would have to go through significant support between $26 
and $27. 

Picked on June 27th at $26.00
Gain since picked        2.00
Earnings Date            7/19 (Not Confirmed)





==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

============
AT New Plays
============

  ---------------
  New Short Plays
  ---------------

QLogic QLGC $62.53 -1.92 Stop:70.00

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. 

In May, 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.  For the year, the company earned $1.03 
per share on sales of $358 million.  For the fiscal first-quarter 
ending in June, the company is projected to earn 23-cents per 
share on sales of $95 million.  In the year ago quarter, the 
company earned 21-cents per share on revenue of $77 million.  The 
consensus estimate of analysts for the current fiscal year is for 
the company to earn $1.05 on sales of $422 million.  This gives the 
shares a P/E of 61.

Qlogic shares have been on a roll since the early April low of 
$17.81.  However, the past two days have shown signs of a topping 
pattern.  Each day has produced a failed test of resistance at 
the 200-day moving average currently at $65.81.  After reaching a 
$66.16 high about midday last Friday, the shares faded badly into 
the $63.60 close.  Monday was more of the same with a midday high 
of $65.67 slumping into a $62.53 close.  The trend of failed highs
and tests with lower closes suggests selling sentiment is on the 
rise.  Conservative traders can wait for additional bearish 
confirmation with a close below $60 on volume in excess of 6.6 
million shares traded.  If the shares can produce this $60 break 
we have a bearish price objective in the range of $54 to $47.     

Picked on July 2nd at $62.53
Earnings Date           N/A (Not Confirmed)
 



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=================================================================
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.




DISCLAIMER

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

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

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