PremierInvestor.net Newsletter Tuesday 07-17-2001 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/425_1.asp ================================================================= In section one: Market Wrap: Applied uncertain, Intel beats and KLA-Tencor confirms Market Sentiment: Yearning For Earnings Play-of-the-Day: Brocade - BRCD (Bearish) Watch List: Keep Your Eye on Earnings! ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 7-17-2001 High Low Volume Advance/Decline DJIA 10606.39 +134.27 10628.48 10438.66 1.22 bln 1841/1204 NASDAQ 2067.32 + 38.20 2067.44 2006.80 1.66 bln 2125/1593 S&P 100 626.91 + 6.31 627.62 616.45 Totals 3966/2797 S&P 500 1214.44 + 11.99 1215.36 1196.14 RUS 2000 490.57 + 6.77 490.57 481.65 DJ TRANS 3007.08 + 44.29 3007.81 2957.78 VIX 25.36 + 0.05 26.87 25.12 Put/Call Ratio 0.63 ----------------------------------------------------------------- =========== Market Wrap =========== Applied uncertain, Intel beats and KLA-Tencor confirms by Jeff Bailey Just wait 24-hours and things will change. That's what seemed to have happened today, just 24-hours after semiconductor equipment maker Applied Materials (AMAT) had warned that visibility for the future was unclear. This morning, the PHLX Semiconductor Index ($SOX.X) was under selling pressure early and was trading down nearly 3% to 552 when KLA-Tencor (KLAC) reaffirmed its guidance and financial targets at the SemiCon West trade show in San Francisco. That news had semiconductor stocks reversing losses as the PHLX Semiconductor Index ($SOX) ended the session up 4.3% to 582. Shares of KLA- Tencor (KLAC) gained 5.4% by session's end to close at $49.20, but yesterday's gains were not enough to make back Monday's losses. Semiconductor Index Chart - last ten months There's no such thing as certainty in the market, but if you're looking for uncertainty and a whipsaw ride then the Semiconductor Index (SOX.X) is the place for speculators and high risk/reward trading. The patter of lower high and lower lows since the beginning of the summer give some hint that the longer-term outlook for the group remains suspect. We saw this yesterday with Applied Materials (NASDAQ:AMAT) saying things could improve as well as deteriorate. Today, KLA-Tencor (NASDAQ:KLAC) the worlds leading supplier of process control and yield management solutions for the semiconductor industry affirmed its guidance and said it expected to meet earnings estimates of 25-27 cent a share on sales of $430-450 million. This was welcomed news for the group and had the SOX reversing earlier losses of 2% to close just above the 50% retracement bracket. After the closing bell, the long awaited news from semiconductor chipmaker Intel (INTC) hit the wires. While the company reported earnings that showed a 76% decline in second-quarter profits on lower revenues versus a year ago, the reported earnings of 12 cents a share did beat a previously lower analyst's estimate of 10 cents. During yesterday's trading, shares of Intel traded as low as $28.08 only to recover and finish the regular session at 29.90. Once earnings had been announced, trading was brisk, but showed signs of uncertainty. Early after-hours trading took place as high as 30.70, but as I write these comments the stock has been slipping to the 29.13 level. There were other stocks that reported earnings yesterday and much of those earnings reported outside the technology sector were perhaps not as bad as many had expected. Dow component and heavy-equipment maker Caterpillar (CAT) jumped more than 6% during today's trading session to close at 53.55 after the company reported earnings of 78 cents a share, handily beating Wall Street's consensus estimates of 71 cents a share. Paper products giant and another Dow component, International Paper (IP), rose 2% to 39 after the company reported earnings of 13 cents a share. That was good enough to beat lowered estimates by Wall Street of 6 cents a share. International Paper said earnings were hurt by weak pulp and paper markets and its export competitiveness had decreased as a result of the strong U.S. dollar. Morgan Stanley Cyclical Index - last eleven months I continue to monitor and even trade many of the deep cyclical stocks on the bullish side. Not because I think I will get rich overnight, but it sure looks to be like smart money is committed to this group. Today I laughed along with Ms. Garzarelli when she said the bull market began back in October. I think Ms. Garzarelli as well as our subscribers knows that the deep cyclicals lead in an economic cycle. I also believe that institutions put their capital where risk/reward is most favorable. While there may not be 100% reward in the deep cyclicals, there are probably a lot of institutions out there that perceive this group as being "less risky." Once visibility becomes more certain in the technology sector, those stocks might begin performing bullish on a more consistent basis. Another Dow Industrials component, Johnson and Johnson (JNJ) produced a second quarter profit of 51 cents a share, but missed the average estimate of 53 cents. That didn't keep the stock from setting a 52-week high and finishing the session up 2.19% to 54.91. While earnings fell short of consensus, today's reported earnings still managed to show growth of 16% when compared to year ago earnings of 44 cents. One thing I think traders and investors can start to look for is some stability in earnings from some of the larger deep cyclicals and even some of the consumer products stocks. The market sure seems more willing to buy and stay committed to some of the bigger named cyclicals almost as if it is expecting an economic turnaround at some point. On the other hand, technology remains somewhat skeptical, as earnings visibility appears to be uncertain. Institutional money appears to continually gravitate toward and accept the lesser potential reward of the deep cyclicals, but at the same time trying to sidestep the continued potholes that seems to present itself in the technology sectors. ================ Market Sentiment ================ Yearning For Earnings Of the 52 companies that reported earnings during the day, 34 beat estimates, 9 met, and 9 missed. Of the nine companies that came up short, only two finished the day in negative territory. Overall the market responded well to earnings, but tomorrow is a new day. Intel was able to beat expectations by 2 cents a share, but the stock is trading 75 cents lower in after hours trading. The details from the conference call aren't in yet, but profits fell by 76 percent, and it looks Intel was only able to post better than expected earnings by excessive expense reduction. Gross margins are also expected to be lower in the 3rd quarter. Veritas posted a "pro forma" profit of 18 cents a share, which met analysts' expectations, but take away the creative accounting and it was a 32 cents a share loss. The software maker also lowered its revenue growth by 30% for the rest of the year. The stock is getting pummeled in after hours, down $7. Apple beat estimates, but cautioned that they will fall short of full-year estimates. Traders didn't like the news, and are making applesauce out of the stock, down $2.35. So we have two tech companies that lowered future guidance, and one that gives a mixed outlook. Theoretically that should lead to a lower open tomorrow. Sentiment indicators are neutral, with a slightly bias to the downside. While still neutral, advisory sentiment is starting to creep towards overly bullish levels. The percent of bullish advisors has moved up 3% over the past three weeks to 51%. The net percentage now sits at 26%, and has jumped 8% over the same period. ----------------------------------------------------------------- Market Volatility VIX 25.36 VXN 54.84 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total .63 721,413 451,645 Equity Only .54 633,524 341,453 OEX .83 23,992 19,811 QQQ .84 41,689 34,902 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 36 - Bear Confirmed NASDAQ-100 26 - Bear Confirmed DOW 30 -2 Bear Confirmed S&P 500 50 - Bear Alert Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 10-Day Arms Index 1.20 Extreme readings above 1.5 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 1784 1259 NASDAQ 1925 1682 New Highs New Lows NYSE 86 56 NASDAQ 92 82 ----------------------------------------------------------------- Advisory Sentiment Bullish Bearish Correction Net 51% 25.0% 24.0% 26.0% A bearish reading of 25% to 30%, combined with a bullish reading greater than 55% is typically considered bearish by contrairians. A net percentage greater than 30% is also viewed as bearish. ----------------------------------------------------------------- Commitments Of Traders Report: 07/03/01 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and 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 tend to be wrong. S&P 500 Commercial traders have stopped their bearish trend, but no enough to signal any meaningful reversals. Commercials Long Short Net % Of OI 6/26/01 307,889 379,955 (72,066) (10.48%) 7/03/01 316,543 395,410 (78,867) (11.08%) 7/10/01 309,374 385,178 (75,804) (10.91%) 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 % of OI 6/26/01 130,914 56,269 74,645 39.88% 7/03/01 133,098 54,865 78,233 41.62% 7/10/01 135,587 59,889 75,698 38.72% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 Institutions have decreased their net bearish position for seven straight weeks, and small traders are about to turn net bearish. The overall picture is still net bearish, but things are looking up. Commercials Long Short Net % of OI 6/26/01 26,263 35,690 ( 9,427) (15.22%) 7/03/01 26,544 34,880 ( 8,336) (13.57%) 7/10/01 26,688 34,640 ( 7,952) (12.97%) 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 % of OI 6/26/01 10,519 6,064 4,455 26.86% 7/03/01 10,443 7,063 3,380 19.31% 7/10/01 9,073 7,486 1,587 9.58% 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 Institutions have quickly reversed their position back to net bullish. I would like to see this trend persist for a few more weeks before I buy it. Commercials Long Short Net % of OI 6/26/01 11,371 12,759 (1,388) (5.8%) 7/03/01 12,761 14,623 (1,862) (6.8%) 7/10/01 13,743 12,999 744 2.8% 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 % of OI 6/26/01 4,756 6,341 (1,585) (14.28%) 7/03/01 4,708 5,715 (1,007) ( 9.66%) 7/10/01 5,048 7,835 (2,787) (21.63%) 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 =============== Brocade - BRCD Closed:$37.10 Change:+3.04 Stop:$39.00 New! Original Comments When Selected on July 16th: Company Description: Brocade Communications Systems, Inc. provides the infrastructure equipment and software for connecting multiple data storage devices in a storage area network (SAN). The SAN model has higher reliability because data can be redundantly stored on multiple devices and can easily be expanded by adding addition storage device to the network. The company sells through OEM partners, systems integrators, resellers and service providers. Fundamentals: In March the economic blues caused the company to reduce 2001 earnings and revenue guidance. Analysts' forecast the company will earn 29-cents per share on revenue of $524 million. This is flat against last year's earnings of 28-cents on revenue of $535 million. This gives the shares a current P/E too high for nervous investors at 121 and a forward one of 117. The industry average P/E is 110. Why We Like It: In fiscal 2000, 49-percent of total revenue for Brocade came from Compaq Computers and EMC Corporation. With each of these companies issuing earning warnings citing global weakness in corporate spending it is difficult to see how Brocade will prosper. Also problematic is a recent Merrill Lynch survey of IT executives. The survey said that 72-percent of the executives see tech spending as flat in the 2nd half of 2001 and only 18-percent seeing an increase in spending. All in all, these indications bode poorly for high-multiple growth stocks like Brocade. After bouncing off of $30 support the shares are now retracing off of $37 resistance. In each of the last two trading sessions, the bulls have been able to manufacture a test of $37 only to be pushed back by the bears. Friday saw a $37.31 high turn into a $35.84 close and a 14-cent loss. On Monday, the test was slightly lower at $37.14 and the close much lower at $34.06 and a $1.88 loss for the day. With bearish sentiment on the rise the next test should be of support at $30. If the shares break through this level the next areas of support are at $25 and $20. We will start this Bearish play with a stop at just above resistance at $37.50. Updated Comments: A boost of optimism in the market today had this play narrowly missing our stop of $37.50. The storage sector was trading with bullish enthusiasm. However in after hours trading, weak numbers from Veritas (VRTS) sent BRCD heading in our favor to as low as $35.56. We're going to move our stop up to $39 to avoid getting dropped out of the game prematurely, but we're anticipating a nice drop in BRCD shares tomorrow; more aggressive traders may want to adjust stops to $41 depending on the level of risk you're willing to take. New entrants to this play should pass on the anticipated opening dip and wait for a bargain hunter's rise to present a better entry point. Support exists at $32.73 and the before mentioned $30. Picked on July 16 at $34.06 Gain/loss since picked: -3.04 Earnings Date 8/14 (Not Confirmed) ========== Watch List ========== Altera Corp - ALTR - close: 30.64 change: +1.15 WHY WE LIKE IT: Altera produces programmable logic devices or PLDs. This is part of the semiconductor industry, which was one of the many sectors that rallied today (SOX $582.27 +24.20). If the chips are coming back then ALTR could be one to watch. We watch-listed ALTR back on July 11th, 2001. POTENTIAL TRIGGER EVENT: Shares of ALTR have been stuck in a wide range for months. However, the stock has been creating a very long, drawn out pennant formation with lower highs and higher lows (since about early April). After we put ALTR on the Watch List last Wednesday, shares gapped up the next day and closed at 32.88 off its high for the day of 33.59. That was quite a jump from our trigger of a close over $30. Since then shares have come back to fill the gap and now it appears buyers might be stepping in again. Late day buying pushed the stock to close near its high at 30.64 on Tuesday. We like ALTR and it should probably be on the play list. However, earnings are next Monday, July 23rd. Aggressive traders can follow this one on their own. Resistance is between 33.60 and 35. --- Merck Co Inc - MRK - close: 64.48 change: +1.50 WHY WE LIKE IT: We like it only if you're a VERY short-term trader. You should also consider this one if you can handle the risk of holding a short-term trade over an earnings report, which is something we rarely do. However, if you think drugs are oversold and due for a bounce then read on. MRK was putting in 52-week lows just a couple of days ago but it may have found a bottom. Bulls might be more attracted to MRK now that PFE and JNJ have announced their earnings and profits were up for both companies. Since MRK is one of the biggest drug companies out there, expectation could be building and since the stock is so beat up we could see significant upside surprises. POTENTIAL TRIGGER EVENT: Again, we repeat that normally we do not, will not hold over an earnings report except for rare circumstances. We are watch-listing this strategy instead of making it a play to reiterate our caution. Now, if you're looking for a trigger point a close over $65 should do the trick. The stock has built several days of resistance at $65 and once shares are over it the price could see $70. Look for MRK's earnings announcement on Friday morning before the bell. --- Procter & Gamble - PG - close: 69.93 change: +0.78 WHY WE LIKE IT: A.G. Lafley, president of PG, probably hoped it was a positive analyst meeting. A month ago, Lafley told analysts that he was confident that PG would meet its commitments and do what it needed to grow in the future. Investors might have panicked when word got out that the restructuring charge was to exceed $1.2 billion in the fourth quarter thus forcing PG to expect a loss. Shares fell sharply on June 15th but quickly found a bottom near $62 the next day. Once investors and analysts had time to digest the Fiscal 2002 Outlook and Growth plan that Lafley discussed their fears appeared to be eased. Buyers have been steadily eating up the stock and the gains are accelerating. POTENTIAL TRIGGER EVENT: Shares of PG spent two or three days fighting with its 200-dma but Tuesday marks the second day in a row that it has closed above it. Mild support should be found in the 68.00 - 69.00 area. Our potential trigger would be a close over $70. Earnings are not expected until August 7th and the next level of steep resistance is not until $76. --- Gemstar-TV Guide Intl - GMST - close: 49.83 change: +2.21 WHY WE LIKE IT: Summertime may be full of reruns but GMST is making a bullish run despite the season. After a discouraging fall from $55 to $20 (the low was April 3rd), GMST had a quick recovery but found itself range-bound between 35.00 and 45.00. $45 had been the key resistance to break through and the stock did so on July 12th. Directly above it was the 200-dma and two days later GMST tackled that obstacle as well. POTENTIAL TRIGGER EVENT: Breaking out and closing over the 200-dma is great news. Our trigger point now would be a close over resistance at $50. Once over $50 shares could appreciate to $55, the next level of resistance. We are concerned that the stock might be overbought after the steep $5 move in the last few days. We hope the strong volume behind the rally will continue to fuel the move even further. Earnings are not expected until the middle of August. --- Taro Pharmaceucticals - TARO - close: 84.50 change: +6.95 WHY WE LIKE IT: TARO is another returning stock from the July 11th Watch List. Overall TARO investors have plenty to be thankful for as the stock is up big over the last several months. Shares saw a big move today as fellow drug companies PFE and JNJ both announced earnings with rising profits for the quarter. Currently, TARO has a 2:1 stock split payable on July 26th, which just so happens to be the same day they are expected to announce earnings. This double- whammy could continue to spur excite for investors up to the 26th. POTENTIAL TRIGGER EVENT: Ultimate resistance is at $90 where the stock finally ran out of steam near the end of June. Since then shares have pulled back to establish new support at $75 and $80. It has also developed another level of resistance that can produce a short-term trigger for active traders. If shares close over $85 there is a good chance the stock will continue to appreciate to $90. More conservative traders could wait for a close over $90, trading the $5 appreciation for a more defined breakout. Whatever you do, we still recommend caution over the July 26th earnings and 2:1 split payable date. The stock could be victim of a "sell the news" affect. --- Electronic Arts - ERTS - close: 56.69 change: -0.76 WHY WE LIKE IT: A recent play on PremierInvestor.net, ERTS still has potential. The stock is in a growing sector as the video game boom is not expected to end for a long time. POTENTIAL TRIGGER EVENT: We're still looking to go long ERTS but we want to be choosy in our entry point. Look for a dip to 54.00 or 55.00 (and a bounce) or a close, on good volume, over $59. Move conservative traders could wait for a close over $60. Look for earnings on July 26th. --- Quaker Oats Co. - OAT - close: 88.59 change: -0.41 WHY WE LIKE IT: Who doesn't like hominy grits, cornmeal, and hot cereal? Well, okay, we're not big on grits but folks in the South say they're not bad. Evidently, investors don't appear to "hot" on Quaker Oats lately. Considering that they are in a very competitive packaged food industry its no wonder that investors and fund managers were bullish when PepsiCo offer a $13 billion merger with Quaker. Unfortunately for investors, the FTC has delayed the deal that was expected to close back on June 30th, 2001. The latest news shows that the FTC is likely to have PepsiCo divest its All Sport drink line before they acquire Quaker's Gatorade division. POTENTIAL TRIGGER EVENT: About half of Quaker's revenues come from their cereal division who's growth rate has almost come to a complete halt. Earnings are expected on July 19th and if the company reports negatively then shares could fall despite the deal with PepsiCo. Speaking of which, the longer this merger is delayed the more nervous investors are going to get. This is one time where an aggressive investor might consider holding a position over earnings but since we are discussing a short play (and your risk is technically infinite) we'd advise against it and wait for the report on the July 19th. A close below $88 would be the trigger point. ================================================================= 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 Monday 07-17-001 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/425_2.asp ================================================================= In section two: Split Trader New Plays: NVR Inc - NVR Play Updates: ATK, CERS, JCI Closed Plays: Cabletron - CS Net Bulls New Plays: Take-Two Inter. Soft. - TTWO (Bullish) Bullish Play Updates: BORL, PCLN Bearish Play Updates: Brocade - BRCD Closed Plays: IBM, ERTS Stock Bottom / Active Trader New Plays: No new SB play Play Update: LH, PATH, RAIL, SGU, THC Closed Plays: Nasdaq-100 Series Trust - QQQ ================================================================= Split Trader (ST) section ================================================================== ============ ST New Plays ============ ------------------------- New Split Candidate Plays ------------------------- NVR Inc - NVR Close:$166.30 Change:+3.39 Stop:$157.00 Company Description: The McLean, Virginia-based firm builds and markets single-family homes, townhomes, and condominiums and provides mortgage-banking services. NVR operates in 10 US states building homes under three trade names: Ryan Homes, NVHomes, and Fox Ridge Homes. Almost one- third of sales come from the Baltimore and Washington DC areas. It's NVR Mortgage Finance subsidiary offers mortgage loans for NVR customers only. To control capital risk, NVR buys purchase options on finished building lots and finds new-home buyers before it buys the lot. During the first three months of the year, the company bought approximately 849,000 of its 8.14 million shares and intends to purchase additional shares in accordance with its stock repurchase program. Fundamentals: In April, NVR said that it expects second-quarter net income to beat the year ago period by 30-percent. It also projected full-year 2001 income to increase 25-percent from 2000. The analysts' consensus estimates are for the company to earn $4.99 per share for the second-quarter that ended in June, $20.27 for the 2001 fiscal year and $22.53 in 2002. Last year the company earned $14.57. . Next year, analysts expect the company to earn $22.35 per share. Company shares have a current P/E of 11 and a forward 2001 P/E of 8. The industry average P/E is 12. The company has a low debt to equity ratio of 0.78 when compared to the 1.53 industry average. Other favorable fundamental industry comparisons are a Return on Asset ratio of 20.1-percent (industry 6-percent) and net profit margin of 7.51-percent (industry 5.03-percent). Why We Like It: Although this is a pricey stock, on a relative valuation basis it is a bargain against its competitors. And the company is buying back gobs of its stocks, which ought to make those valuations look even better as the year goes on. Despite the softening economy, unit sales in the first quarter were down only 1.3-percent and the firm was able to pass along a 7.5-percent rise in average selling price. On a fundamentals basis this Rolls-Royce stock is firing on all cylinders. On a technical basis, the shares are also strong. After breaking through support at $160 on Friday, the shares backed up slightly on Monday on low volume. On Tuesday, a strong day and a spike in volume suggest the shares are ready to begin the next leg up. The resistance levels are at even increments at $170, $175, $180, and $200. We do not see $200 as an unreasonable target, as the shares are going well and should receive a boost into the company's earnings announcement. The date of that announcement has not yet been released. Picked on July 17th at $166.30 Earnings Date N/A (Not Confirmed) =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- Alliant Techsystems ATK Close:$92.74 Gain:+0.55 Stop:$90.00 The moves haven't been explosive, but Alliant continues to move higher. The 50-day moving average looms overhead, but once that is cleared, ATK is free to run to 100. Picked on July 12th at $89.90 Gain since picked: +2.84 Earnings Date 8/9/01 === Cerus Corporation Close:$70.35 Gain:+4.50 Stop:$65.00 Cerus looked in trouble on Monday, but today's $4.50 gain helped to change that. On Monday the company reported that their European Phase III trial of the INTERCEPT Platelet System went well. The incidents of acute reactions were low, with low incident of refractoriness. I have absolutely no idea what that means, but apparently it's good. Picked on July 13th at $69.25 Gain since picked: +1.10 Earnings Date 7/24/01 === Johnson Controls Close:$81.55 Gain:+1.55 Stop:$77.50 Johnson Controls set another 52-week high today, and gained $1.55 in the process. If today's move was in anticipation of tomorrow's earnings, which are announced before the bell, it could be another good day. JCI could see some profit taking in the coming days, even if earnings come in better than expected. Picked on July 10 at $76.20 Gain since picked: +5.35 Earnings Date 7/18/01 =============== ST Closed Plays =============== ---------------------- Closed Split Run Plays ---------------------- Cabletron Systems - CS Close:$23.00 Change:-0.75 Stop:$22.00 CS shares spent Tuesday morning running from the bears and the afternoon running with the bulls. The shares bounced off the $21.90 session low to take back most of the mornings losses. For those still in this play, the late momentum and that the shares managed to close back at $35 support are encouraging indications. Unfortunately our stop was hit at $23.00, so we close out this play with a slight 90-cent loss. Picked on July 12 at $23.90 Gain since picked -1.90 Earnings Date N/A(Not Confirmed) ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ -------------- New Long Plays -------------- Take-Two Inter. Soft. - TTWO Close:$19.96 Change:+2.06 Stop:$17.50 Company Description: Take-Two Interactive Software develops and distributes games for PCs, as well as for Sony PlayStation, Nintendo, and SEGA game consoles, and also for Microsoft's new Xbox product. Other titles include Smuggler's Run, Myth 3, Mafia and Duke Nukem. Last Monday, the firm reported that it is ready to release Max Payne. They expect this product to be one of the most popular PC games of the year. Take-Two has three development subsidiaries in the US: Mission Studios, PopTop Software, and Talonsoft. The firm's two Grand Theft Auto games account for more than 15-percent of sales. Fundamentals: Last year, the company earned 88-cents per share on sales of $387 million. For the 2001 fiscal year ending in October, analysts predict the company will earn $1.01 per share in sales of $498 million and $1.24 on $597 million in 2002. This gives the shares a low forward 2001 P/E of 20 as compared to the industry average P/E of 33. In early July the company reaffirmed guidance for the third and fourth-quarters. Analysts forecast third-quarter (ends July) earnings of 4-cents per share and 61-cents for the fourth-quarter. Why We Like It: With a holiday advertising battle royale looming between Microsoft's new xBox game console and Sony's Playstation 2 there is little doubt the big winner will be the game developers who sell across all platforms. If Take-Two's Max Payne is anywhere as big as expected than this game developer is hitting its stride at just the right moment. TTWO shares had been consolidating in the $17 to $18 range for the past two weeks. On Tuesday the shares broke out in a big way with a high volume move to $19.96. The MACD technical indicator is confirming the bullish momentum with a buy signal from deep oversold territory. We believe a test of $24.36 52-week high is in the cards. Given the shares strong one-day move it is possible some slight profit taking may set in. Should this occur, a dip to $19 would present a desirable entry point. We will set our initial stop to $17.50. Picked on July 17th at $19.96 Earnings Date N/A (Not Confirmed) =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Borland Software - BORL - Close:$16.10 Change:+0.07 stop:$15.40 This morning, Borland Software announced their new TeamSource(TM) Development Services Platform. This is the company's first DSP offering. Unfortunately, the announcement failed to excite their stock price. Shares traded as high as 16.39 before closing relatively unchanged. Volume has declined for the second day in a row. There are five days left before the earnings announcement and we still might see share appreciation if the NASDAQ can stay positive through the rest of the week. However, a late breaking announcement from Microsoft on Tuesday may cause this play some heartburn. CNBC reported that Microsoft was declaring war on Java and that the popular Net programming language will not work on a future edition of Windows. Borland's JBuilder is a very popular Java development tool and a major contributor to Borland's reemergence as a tech company of note. We are tightening up our stop to $15.40. Picked on July 13th @ $15.98 Gain since picked: + 0.12 Earnings Date: 7/24/01 (not confirmed) === PriceLine.com - PCLN - close: 9.01 change: +0.27 stop: 7.00 Shares of Priceline are apparently shrugging off what some are calling bad news for the company and fellow rivals. Yesterday, USA Networks (USAI), the cable, shopping, travel and ticketing conglomerate announced that it would be buying up to 75% of web-travel destination Expedia.com (EXPE) for about $1.5 billion. What was already a fierce but growing section of the Internet landscape just got tougher. Shares of PCLN initially fell on the news but the stock has managed to rebound. Watch your stop as we grow closer to the earnings report at the end of the month. Picked on July 13th @ $ 8.70 Gain since picked: + 0.31 Earnings Date: 7/31/01 (not confirmed) ----------------------- NB Bearish Play Updates ----------------------- Brocade - BRCD Closed:$37.10 Change:+3.04 Stop:$39.00 New! A boost of optimism in the market today had this play narrowly missing our stop of $37.50. The storage sector was trading with bullish enthusiasm. However in after hours trading, weak numbers from Veritas (VRTS) sent BRCD heading in our favor to as low as $35.56. We're going to move our stop up to $39 to avoid getting dropped out of the game prematurely, but we're anticipating a nice drop in BRCD shares tomorrow; more aggressive traders may want to adjust stops to $41 depending on the level of risk you're willing to take. New entrants to this play should pass on the anticipated opening dip and wait for a bargain hunter's rise to present a better entry point. Support exists at $32.73 and the before mentioned $30. Picked on July 16 at $34.06 Gain/loss since picked: -3.04 Earnings Date 8/14 (Not Confirmed) =============== NB Closed Plays =============== ----------------- Closed Long Plays ----------------- IBM Corporation - IBM Close:$108.53 Change:+0.71 Stop:$107.00 The tale will be told late-Wednesday when Mother Blue reports earnings, however we will be sitting on the sidelines. We tightened up our stop to protect gains and an early morning drop tripped us out at $107. We close out this play with $3.15 per share gain. Picked on June 11t at $103.85 Gain since picked +3.15 Earnings Date 7/18 (Confirmed) === Electronic Arts - ERTS Close:$56.69 Change:-0.76 Stop:$56.50 Expect this play to make a quick return trip to our Bullish play list. As we reported earlier, for 5 consecutive years shares of this electronic game publisher have increased an average of 25- percent from July 1st to September 30th. This does not mean we can't play the dips. With the bears lurking around the general market and us sitting on a handsome gain we tightened up our stop to $56.50. That stop was hit early Tuesday morning leaving us with a $2.12 per share gain. We will now move this play to the Watch List as we look for another entry point. That will be either a dip back to support in the $54 to $55 range or an undeniable return of the bulls with a close above $59.00. Picked on July 7th at $54.38 Gain since picked +2.12 Earnings Date 7/26 (Confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Laboratory Corporation - LH Close:$86.40 Gain:+1.20 Stop:$79.25 Biotechnology stocks had a good day, and Laboratory Corporation jumped on board. After break through resistance on Friday, LH has continued its winning ways. As goes biotechs, so could go LH. Picked on July 13th at $83.98 Gain since picked: +2.42 Earnings Date 7/23/01 === AmeriPath - Path Close:$34.50 Gain:+1.01 Stop:$31.95 AmeriPath is the stock that just won't stop. PATH has been on a bullish run for eight straight days. It's overdue to pullback or consolidation, but we'll continue to ride the train. Picked on July 11th at $30.95 Gain since picked: +3.55 Earnings Date 7/31/01 === RailAmerica - RAIL Close:$12.50 Gain:-0.10 Stop:$10.25 Transport and cyclical stocks continue to do well, and RailAmerica has been chugging right along. Today was a minor setback, but RAIL remained above the rising 50-day moving average. Some overhead resistance sits around $13, but one more good day will clear that. Picked on June 14th at $11.41 Gain since picked: +1.09 Earnings Date N/A === Star Gas Partners - SGU Close:$21.00 Gain:-0.01 Stop:$19.50 Star Gas had a volatile day, but when all was said and done, it lost a penny. That keeps the stock in its congestion area, and waiting to explode. Picked on June 17th at $21.18 Gain since picked: -0.18 Earnings Date 7/26/01 == Tenet Healthcare - THC Close:$54.70 Gain:+0.50 Stop:$52.50 After briefly pulling back on Thursday and Friday, THC is once again moving higher. $56 will be mild resistance. Picked on June 17th at $51.09 Gain since picked: +3.61 Earnings Date 7/25/01 =============== AT Closed Plays =============== ---------------- Closed Long Play ---------------- Nasdaq-100 Series Trust - QQQ Close:$43.30 Change:+0.95 Stop:$42.00 Intel's earnings (late Tuesday) and IBM's earnings (late Wednesday) are going to be the driving force behind the tech market over the next few days. The results will likely drive the QQQ's sharply up or down. A dip to $41.54 Tuesday morning hit our $42.00 stop dropping us out of this play with a slight 35-cent per shares gain. Picked on July 6th at $41.65 Gain Since Picked +0.35 Earnings Date N/A (Confirmed) ================================================================= 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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