PremierInvestor.net Newsletter Thursday 07-19,2001 section 1 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/9640_1.asp ================================================================= In section one: Market Wrap: Microsoft's Revenues Rse 13%e Market Sentiment: At Least Somebody is Confident Play-of-the-Day: Check Point Software - CHKP (Bearish) Watch List: Drugs, Tech and Wireless ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 7-19-2001 High Low Volume Advance/Decline DJIA 10597.13 + 40.17 10679.12 10523.92 1.34 bln 1772/1266 NASDAQ 2046.35 + 30.42 2079.33 2027.11 1.97 bln 2133/1511 S&P 100 626.44 + 4.02 632.23 622.11 totals 3905/2777 S&P 500 1214.06 + 7.31 1225.04 1205.80 RUS 2000 487.64 + 3.92 491.13 483.62 DJ TRANS 2981.28 + 6.62 2998.12 2965.32 VIX 26.47 + .16 26.50 25.06 Put/Call Ratio 0.76 ----------------------------------------------------------------- =========== Market Wrap =========== Microsoft's revenues rise 13% After the close of trading, Microsoft (MSFT) reported revenues for the latest quarter completed June 30th of $6.58 billion, which represented a 13% increase compared to the same quarter a year ago. Operating income also showed growth at 2.75 billion compared to 2.55 billion in the year ago period. Shares of Microsoft had traded higher throughout the regular session and close at $72.51, but after releasing its latest quarterly earnings, the stock fell to $69.60 in after hours trading. What seemed to have found some sellers coming to the table after yesterday's release of earnings was cautionary statements by management that the current quarterly revenues might be a little lower than previously expects. Management offered guidance for the quarter ending September 30, 2001 saying that it expects revenues to come in at the $6.0-$6.2 billion range and for diluted earnings to be 39-40 cents a share. While today's earning report from Microsoft looks strong compared to some recent reports from software companies like Veritas (VRTS) and Siebel Systems (SEBL), the slightest inkling of weakness in the software groups seems to be a big reason for market participants to sell their stock. Earnings season remains busy with Sun Microsystems (SUNW) reporting better than expected earnings after the bell. The leading maker of UNIX-based workstation computers, servers and storage devices reported net income of $134 million and earnings of 4 cents a share on revenues of $4 billion. Analysts were expecting revenues to be between $3.8 and $4 billion and earnings per share of 3 cents. Yesterday's revenue and earnings from Sun Microsystems reflect what a tough 12 months it has been for many technology stocks. A year ago, shares of Sun Microsystems were trading near the $50 level and had reported net income of $717 million. There were very few stocks that really jumped out at me today that seemed to say "buy me." There were quite a few stocks that rallied to resistance levels, but the market seemed very hesitant on the buy side and unable to push them higher. I think this was more true on the technology side than anywhere. One stock that didn't have trouble finding buyers was a stock we mentioned July 12th in the 09:00 AM update. I had run a chart scan for the point and figure chart pattern "bearish signal reverse" trying to find some stock ideas that depicted a powerful chart pattern that a bullish trader might take a look at in this market environment. One of the four stocks highlighted was Pulte Homes (NYSE:PHM). On July 12th, the stock opened for trading at $42.30, today it closed at $48.01. Pulte Homes Inc. Chart - $1 box The above is a big chart of Pulte Homes (PHM) but I'm showing it for a reason. First off, lets discuss what recently took place in PHM. For those that shunned this stock because it wasn't technology, perhaps today's close at $48 after giving the bearish signal reverse pattern at $43 and 11% gain becomes interesting. Mind you, not every stock that gives this pattern doubles its price in 5-days. PHM is not a technology stock and perhaps that's exactly what the MARKET seems to like about it. The homebuilders look to be benefiting from lower bond YIELDS. Mortgage rates track the 10-year and 30-year YIELDS and recently declining bond YIELDS may be the catalyst for this stock and others in the group. As mortgage rates decline, that opens up the opportunity for homebuyers looking to upgrade the size of their home, or make buying a house more affordable for the first time buyer. What we found attractive and worth mentioning about PHM is the trade setup and technicals in the point and figure chart. The recent holding of the bullish support trend was a plus in addition to the bearish signal reversed. Now, when was the opportune time to buy PHM? When you look at the above chart, the opportune time to have bought the stock was clear back in March of 2000 when the stock broke above its bearish resistance trend (red +) and gave a triple top buy signal at $19.50. One wonders where in the heck did the money come from to buy shares of PHM back in March of 2000, when a lot of money started pouring into the bond market and driving YIELDS lower? Remember, in March of 2000, the 30-year YIELD ($TYX.X) was at 6.1% and today it's at 5.5%. I think some of the money that rolled into PHM back in March of 2000 came from some NASDAQ stocks. Where was the NASDAQ trading in March of 2000? On March 10, 2000 the NASDAQ Composite traded at a 52-week high of 5,132. Today it trades at 2,046. Aha! DIVERGENCE! I think a trader and more importantly an investor can now build some trading scenario's based on the following. When PHM and probably the entire housing group shot higher in March of 2000, the NASDAQ Composite obviously reached a peak. Could I not then build a scenario that says, "when PHM reaches its peak or breaks bullish support, the NASDAQ Composite might be ready for a recovery? Perhaps we now have another indicator to measure against in the future. Do you wish you had bought 100 shares of PHM or 1 longer-term call option on PHM when it broke above bearish resistance and traded $19.50 back in March of 2000? I wish I had. I think I could have made some good money then. Heck, a trader made decent money in the last week on the stock. Now study and understand what took place back in March of 2000 and see if this stock interests you. It's not "technology," but that might not be all that bad. Nike Chart - $1 box Using pattern recognition from PHM, a technical trader might build the case for being technically bullish in shares of Nike (NYSE:NKE). This stock has certainly been moving against the broader market trend recently. Yesterday morning in the 09:00 EST update, I pointed this stock out as a potential bullish trade based on the breaking of bearish resistance and the triple top buy signal at $46. Today I was thinking... "what could possibly be the fundamental catalyst for this stock?" Certainly not mortgage rates. All I could come up with is perhaps the stock is beginning a run just before the "back to school" shopping sprees begin. Today at 01:30 I showed a bar chart of the stock, but this Pulte Homes thing really has my interest. Finally, in a bull market, the triple top buy signal on average is profitable 87.9% of the time for an average gain of 28.7% over a 6.8 month time frame. This is according to a study conducted by Professor Earl Davis at Purdue Universty. While the broader market is by no means in a "bull market" neither is the group of stocks that Nike belongs to currently. Dorsey Wright and Associates has this stock categorized as belonging to the Textiles/Apparel group. Currently, 47% of the stocks in this group are showing buy signals on their charts after having reached the 60% level in March. You can see from the above chart that NKE was moving against the bullish percent chart back in March when the stock got hammered from $56 down to $38. That's what I call DIVERGENCE! It looks like NKE is diverging once again and the stock looks to be a leader in the group. If the group turns higher, it might just be NKE leading the charge! The Nike January 2002 $45 calls (NKEAI) closed with an ask of $7.20. I point out the January expiration just in case the economy recovers and we have a blowout holiday shopping season. Hopefully subscribers are tying to learn and apply some of the things we talk about in the market commentary. Even if a trader "only trades technology stocks," then try and use some of the pattern recognition techniques from above. If you hit big on a technology stock, then try to duplicate that result. Was there something in that chart that was a clear sign that something big was about to happen? If so, look for similar signs in other stocks. ================ Market Sentiment ================ At Least Somebody is Confident The Conference Board's Measure of Business Confidence, which tracks CEOs' confidence in the economy, climbed 7 points last quarter to a reading of 52. Readings above 50 reflect a positive outlook. Chief executives were a little less upbeat about their own industries. 22% felt that conditions have improved from last quarter, and only 60% of CEOs expect profit increases over the next 12 months, down 11% from last year. The service sector was the most optimistic, 72% expect profit increases, and the non- durable goods sector was the most pessimistic, with only 44% expecting profits to rise. Market participants were confident for most of the day, but that confidence wavered slightly towards the end of the day. They were able to regroup, and close the major indices higher. Not much, but higher. That confidence will be put to the test tomorrow after Microsoft guided revenues lower for next quarter. Good news from eBay and Sun might help to minimize the damage of poor news from Gateway and Nortel. Based on after market trading in the Nasdaq-100 (AMEX:QQQ), down $1, we should be in for a lower opening. But the markets have been languorous lately. After an initial sell off, bears may very well take their profits by lunch to get an early jump on beach traffic, leaving the markets free to drift higher. At least that's been the pattern this week; wait for an extreme to be set in the first hour, and then fade it. Options expiration tomorrow may put a dent in that pattern. ----------------------------------------------------------------- Market Volatility VIX 26.47 VXN 54.59 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total .76 935,680 711,023 Equity Only .68 769,448 523,743 OEX 1.04 41,211 42,779 QQQ .59 62,473 36,562 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 36 - Bear Confirmed NASDAQ-100 26 - Bear Confirmed DOW 30 - 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 1.11 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 1687 1334 NASDAQ 2036 1561 New Highs New Lows NYSE 143 36 NASDAQ 135 72 ----------------------------------------------------------------- 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 (Bearish) ========================= Check Point Software - CHKP Close:$39.91 Change:-0.18 Stop:$44.50 Original Comments When Selected on July 18th: Company Description: The Israeli-based company makes firewalls that form a kind of electronic moat around networks protecting them from hackers and viruses. Its FireWall-1 product protects networks from unauthorized access and security threats while its VPN-1 software sets up virtual private networks for secure internal and remote communications. The company sells its products through resellers, manufacturers and systems integrators such as IBM and EDS. Competitors include RSA Security, Symantec and Internet Security Group. Fundamentals: At its second-quarter earnings announcement on July 23rd, analysts expect the company to earn 32-cents per share on revenue of $150 million. In the same period a year ago the company earned 17-cents per shares on revenue of $91 million. For the year, analysts forecast the company will earn $1.28 per share on sales of $630 million. Last year, the company earned 84-cents per share on revenue of $425 million. The company has an estimated forward 2001 P/E of 31. The industry average P/E is 45. Why We Like It: Once the beneficiary of investors confidence in its predominate position in the recession resistant security sector, it is now being hammered as investors have realized no place is safe from corporate budget cutters. The shares have been sliced almost in half from its $80.16 high from April 19th. The catalysts have been a string of earning warnings and anemic reports from Checkpoint and its rivals. Checkpoint warned in early July that revenue, although sharply higher than last year, would be would be slightly below expectations. Late-Wednesday, competitor Internet Security Group followed through on its warnings when it reported a second- quarter loss. With the complete absence of good industry news there is also an absence of a catalyst for a bullish reversal. This means CHKP shares should remain weak at least through to its earnings report. By the end of Wednesday's trading, Checkpoint shares close of $40.09 left it staring off the edge of a precipice. Once through the $39.50 session low of last April 3rd and the $38.65 session low of April 4, 2000 there is little support until $30.00. Rising bearish sentiment is clearly in evidence. This is shown by the lack of resistance on the part of bulls during Wednesday's trading session and a spike in volume from 6 million on Tuesday to 9.5 million on Wednesday. We will set our initial stop on this Bearish selection to just above recent session highs at $44.50. Updated Comments: The teeter-totter continues for our Bearish selection as it dances near the edge at $40 with only a branch to grab at $30 to hamper its way down. The outlook has not changed much from when we first identified this play on Wednesday. A good earnings report from rival Symantec gave the bears a scare driving the shares up in morning trading to a session high of $$42.65, however the bears reasserted themselves and pushed the shares down for the better part of the remaining trading day. Although the two companies are in the software security market, they are in different parts of it. Checkpoint is strong in large-scale networks and the Internet, while Symantec derives most of its revenue from selling to individual PC's. Symantec has designs on Checkpoint's market - but it's not a factor yet. In the meantime, Checkpoints market and real rivals are suffering. We see little reason to alter our belief that Bearish sentiment is likely to increase for Checkpoint shares at least through to its July 23rd earnings release. Picked on July 18th at $40.09 Gain Since Picked +0.18 Earnings Date 7/23 (Not Confirmed) ========== Watch List ========== Johnson and Johnson - JNJ - close: 54.20 change: -0.20 WHY WE LIKE IT: The Drug sector has seen a bounce the last couple of days and JNJ is part of the reason. On Tuesday, the drug maker announced their earnings and everyone was happy to hear that profits were rising on strong sales of drugs and medical devices. Earnings would have been even better if it wasn't for JNJ's $10 billion acquisition of Alza corp. So can the stock keep up some of its recent gains? We hope so. Investors have not witnessed any massive selling now that the earnings news is out and if the technology sector rolls over traders will probably run for the safety of drugs. POTENTIAL TRIGGER EVENT: The stock saw some late day buying on Thursday despite closing in negative territory. Traders have a choice to try and target shoot into a long position with a dip between 53.00 and 53.50 or a higher close over 55.00. Keep a close eye on the remaining big drug companies that have yet to announce. MRK, SGP and BMY all have earnings coming with MRK expected tomorrow. If any of these companies falter bad enough, JNJ could fall with them even though they had a positive earnings report. --- Macrovision Corp. - MVSN - close: 70.00 change: -0.19 WHY WE LIKE IT: Looking at the chart of MVSN might make one think that they have been immune to all the trouble other software security firms have been feeling. Macrovision has avoided the selling since they specialize in video copyright technology. The stock recently broke through heavy resistance at $60 in June. The month of July has seen the stock trying to hurdle resistance at $71 while confirming a quick retest of support at $60 on July 11th (we bet that was a surprise, see a chart). POTENTIAL TRIGGER EVENT: Earnings are not expected for MVSN until July 30th. That gives us over a week to see if an earnings run will develop. Our potential trigger will be a close over $72. --- PeopleSoft Inc. - PSFT - close: 35.81 change: -3.93 WHY WE LIKE IT: PSFT is a potential short play. The stock has made a huge come back from its low of $17.50 back on March 16th, 2001. However, the trend appeared to reverse after hitting its recent high just north of $50 at the end of June. The month of July has seen PSFT suffer a 19% haircut as of Wednesday's close. Today the stock was hammered for another 9.88% loss on no news. All we could find were potential rumors of a coming lawsuit or worse - potential accounting issues. The media has not reported on the rumors but the stock fell through support and its 200-dma. Volume was huge with 23.8 million shares versus the normal 7 million. POTENTIAL TRIGGER EVENT: The chart looks pretty ugly and if the rumors are true then PSFT could be trading for a lot less soon. The trouble is rumor plays are so dangerous and short-term traders could really get whipsawed easily. Technicians could argue that PSFT has support at $35, $32.50, and $25. Well, we'd be happy to short it to $25 but these concerns could evaporate if something doesn't confirm them. Watch for a close under $35 and we'll re-evaluate. FYI: earnings are expected on July 24th. --- AT&T Wireless Svcs - AWE - close: 17.39 change: +0.84 WHY WE LIKE IT: This AT&T spin-off is finally on its own. Parent company AT&T finally set its wireless division free on July 9th. This sounds great, right? Well the logistics behind it meant a huge increase in the float of AWE shares - an increase from 800 million to 2 billion. That's a lot to swallow for a sector of the market that hasn't been doing so hot. To make things better for longer-term investors, Standard and Poors added AWE to the S&P 500 index now that the spin-off is an independent. This should help handle some of the volume as index fund managers might need to purchase a few more shares of the new addition. Through it all, most expected the stock to consolidate lower as the extra shares hit the market. The last couple of weeks have seen AWE range-bound from $15.80 to $17.20. That is until today. POTENTIAL TRIGGER EVENT: The stock gapped higher today and managed to close at the high of trading. This put it above resistance at $17.20 and above its 50-dma. The stock should appreciate to $18 and beyond that a potential move to $20. We're going to be watching AWE to see if today's close can hold and if the bulls can start to push the stock higher. Look for earnings on July 24th. --- Qlogic Corp. - QLGC - close: 45.70 change: +1.36 WHY WE LIKE IT: Qlogic has been a recent play on PremierInvestor so we'll keep this short. Shares are breaking down and yester- day's drop was on very strong volume. Today's trading looked more like an oversold bounce than anything else. With gloomy news from tech heavyweights like MSFT and EMC, QLGC could quickly feel pressure as investors look for safer havens than tech stocks (again). POTENTIAL TRIGGER EVENT: The stock price appears to have found some support near $44. Coincidentally, the 100-dma is below it at $42.90. One can argue that the stock should find support at $40 but the question is will it hold or would it just be a speed bump on the way down. Our potential trigger will be a close under $44. Expect earnings on July 24th. --- Bristol Myers Squibb - BMY - close: 55.55 change: +0.63 WHY WE LIKE IT: As we mentioned earlier, the Drug sector has managed a bounce with the positive earnings announcements from JNJ and PFE offering hope where other companies are lowering guidance. BMY's stock has responded well and is off its recent lows near $52. We like BMY because the stock is climbing on stronger than average volume. Yesterday put the stock over resistance of its 50-dma and today put the stock over resistance at $55. POTENTIAL TRIGGER EVENT: BMY is due to announce earnings on July 25th. We are merely watching to see if the rally in the stock can continue. Looking at the intraday chart, BMY looks pretty strong closing at its high for the day. Aggressive traders may want to jump at the stock now with a tight stop. Watch out for its 100-dma directly overhead at 56.54 and BMY could see more resistance at $57.50 but if the Drug sector continues to climb BMY bulls are probably hoping for a run up to $60. ================================================================= 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. 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PremierInvestor.net Newsletter Thursday 07-19-2001 section 2 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/9640_1.asp ================================================================= In section two: Split Trader Split Announcements: CHZ, SPRI, DCOM New Plays: TRC Companies, Inc. - TRR Play Updates: Raising Stops Closed Plays: Johnson Control - JCI Net Bulls New Plays: No new play for NB Bullish Play Updates: PCLN, TTWO Bearish Play Updates: CHKP, BRCD Closed Plays: No closed play for NB Stock Bottom / Active Trader New Plays: Fleming Companies - FLM (Bullish) Play Updates: LH, PATH, RAIL, SGU, THC Closed Plays: No closed plays ================================================================= Split Trader (ST) section ================================================================== =================== Split Announcements =================== Chittenden Declares Stock and Cash Dividends with Earnings Bank holding company Chittenden Corporation (NYSE:CHZ) reported on Wednesday second quarter earnings in conjunction with a 5-for-4 stock split and regular quarterly dividends. Net income of $0.55 per diluted share increased two cents over the prior year, with total net income for the 2001 second quarter of $14.3 million sinking slightly to last year's $14.5 million. The company attributes the decline to its share repurchase program. Chittenden also announced a 5-for-4 stock split, payable September 14 in the form of a 25 percent stock dividend. The Company has an extensive split history, but this will be the first split since 1997. There are approximately 27 million shares currently outstanding and a float of 20 million. As approved by the Board, CHZ shareholders of record as of August 3 will also be eligible for a quarterly cash dividend of $0.24 per share (pre-split) , to be paid on August 17. CHZ shares opened the day's trading at $33.60, just off the 52-week high of $34.09 which was hit on June 28. Trading is light, with just 8 thousand shares changing hands; the average 3-month volume is 28.8 thousand. Chittenden is a bank holding company with total assets of $3.9 billion at June 30, 2001. Its subsidiary banks are Chittenden Bank, The Bank of Western Massachusetts, Flagship Bank and Trust Company, and Maine Bank & Trust Company. Chittenden Bank also operates under the names First Savings of New Hampshire and Mortgage Service Center, and it owns The Pomerleau Agency, and Chittenden Securities, Inc === Sporting a 2-for-1 Truck bed liner and raceway company, Sports Resorts International (Nasdaq: SPRI) announced the Board of Director's approval of the company's first-ever 2-for-1 stock split. However, the motion is pending shareholder's vote to increase the number of authorized common shares to 70 million. A meeting date has not been determined but it is expected to be completed by late August. There are currently 35 million shares authorized and 24.2 million shares outstanding. SPRI shares are up +0.50 by midday trading on Thursday to $14.04. Average volume is 18.9 thousand, with the current volume at 15.9. About the Company: Previously known as The Colonel's International, Inc., Sports Resorts, through its subsidiaries, is engaged in the manufacture and sale of truck bed liners and the operation of a sports facility and raceway. The company is currently developing a plan for a $200 million sports and entertainment complex in Mt. Morris Township, Michigan. === Dime Community Announces Company's First-Ever Stock Split During regular trading today, Dime Community Bancshares, Inc. (Nasdaq:DCOM) declared a 3-for-2 stock split, payable in the form of a 50 percent stock dividend. Stockholders of record on July 31 will receive dividends on the payable date of August 21. As of the execution date on August 22, there will be approximately 17 million common shares outstanding and a float of 8.4 million. There are 45 million shares currently authorized for issuance. Dime recently released fiscal fourth quarter earnings which reportedly increased 19% year-over-year and scored as the fifth consecutive year of record performance. Earnings were $25.2 million during the fiscal year ended June 30, 2001, compared to $22.4 million during fiscal 2000, a 13% increase. Earnings per diluted share increased 19% to a record $2.26 compared to $1.90 per diluted share during the previous fiscal year. Return on average assets expanded 4 basis points to 0.97% during the year ended June 30, 2001. DCOM opened Thursday's trading at $37.40 and is up +0.80 by midday to $38.07 on heavy volume of 90.9 thousand shares. Dime Community Bancshares, Inc., a unitary thrift holding company, is the parent company of Dime Savings Bank of Williamsburgh, Brooklyn, New York, founded in 1864. ============ ST New Plays ============ ------------------------- New Split Candidate Plays ------------------------- TRC Companies, Inc. - TRR Close:$45.99 Change:+1.39 Stop:$42.00 Company Description: This environmental services firm provides management, engineering, construction, and remedial services, such as air pollution control, management of solid and hazardous waste, and infrastructure improvements. Customers of the Windsor, Connecticut-based company include private companies, utilities, and government agencies. TRC operates throughout the US, and the US government accounts for about 9-percent of sales. TRC has grown mainly through acquisitions, but its Exit Strategy Program has also created new business for the company including a $103 million contract with Consolidated Edison to clean up a site in New York City and a $21 million contract with Lockheed Martin to clean up sites in California, Massachusetts, and New Jersey. The program allows customers to assign cleanup and remediation duties solely to TRC, which provides everything from technical expertise to cost cap insurance. Fundamentals: At its fiscal fourth quarter and 2001 year end earnings report on August 8th, the company is expected by analysts to announce quarterly earnings of 32-cents per share and annual earnings of $1.90 per share. In the fiscal year ending in June 2002 the company is expected to earn $1.63 per share. Last year, the company earned 20-cent in the fourth quarter and 65-cents per share for the year. The company has a 2001 P/E of 42 and a 2002 P/E of 28. The industry average P/E is 38. The company has insignificant debt and a gross profit margin of 37.55-percent, which is twice the industry average of 16.43-percent. Why We Like It: After a sharp move up from $39 to $43.75 on July 11th the shares settled in to a period of consolidate between roughly $42.50 and $45.00. On Wednesday, the shares gave indication of a positive breakout when the stock closed up only 50-cents but on a sharp spike in volume to 169k from 74k of the previous day. Thursday saw a follow through on the bullish momentum with a $1.39 per share pop on still solid volume of 143k. The average daily volume is 169k. If the shares can maintain volume they should have enough momentum to best bullish resistance at $47.50 and put in a test of the $56.50 52-week high set on June 6th. On a fundamental basis the company is solid, with superior earnings growth. The environmental industry is booming as products and services remains strong despite the weak economy. We are setting an initial stop of $42.00. Picked on July 19th at $45.99 Earnings Date 8/8 (Not Confirmed) =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- Alliant Techsystems ATK Close:$94.90 Gain:+1.51 Stop:$93.45 NEW Alliant just keeps moving higher. Today it gained another $1.51, which put this stock above its 50-day moving average. But we are now approaching a congestion area between 95 and 100 that has posed problems in the past, so we are moving up our stop to $93.45 to lock in some profits. The stock could continue to move higher, but volume is light, and it is starting to look a little top heavy. Picked on July 12th at $89.90 Gain since picked: +5.00 Earnings Date 8/9/01 === Cerus Corporation CERS Close:$73.28 Gain:+1.97 Stop:$69.50 NEW Cerus had good day, gaining $1.97, but it was on light volume. CERS is quickly approaching resistance at $76, so we are going to move up our stop to $69.75. Picked on July 13th at $69.25 Gain since picked: +4.03 Earnings Date 7/24/01 === NVR, Inc. NVR Close:$175.00 Gain:+5.50 Stop:$167.25 NEW NVR continues to advance, and volume continues to pick up. Things are looking good. NVR did give back some of today's gains, but rallied in the last half hour of trading. $180 could present some mild resistance since it is the location of some previous lows and is the 68.2% retracement level. Just to make sure this doesn't turn into a losing pick, we are going to raise our stop to $167.25. This is just below the gap that formed two days ago, and should be hit unless the picture abruptly changes. Picked on July 10 at $166.30 Gain since picked: +8.70 Earnings Date N/A =============== ST Closed Plays =============== ---------------------------- Closed Split Candidate Plays ---------------------------- Johnson Control - JCI Close:$78.37 Change:+0.15 Stop:$77.50 Wednesday's take-no-prisoners down day tripped our $77.50 stop leaving us with a $1.30 per share gain. We had tightened up the stop as we took a trend of decreasing volume over four consecutive days as a sign the bulls were running out of fuel. However, Thursday seemed to arrest the slide and may be a sign of a bullish resurgence. Picked on July 10th at $76.20 Gain since picked: +1.30 Earnings Date 7/18 ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- PriceLine.com - PCLN - close: 8.42 change: -0.41 stop: 7.45 *new* Are those dark clouds on the horizon? Rival website destination Travelocity (TVLY) announced earnings today reporting 8 cents a share. That was 3 cents over analyst estimates. Revenues rose 76% which would have to be considered good news in any sector. Optimistically, one would hope that PCLN would have rallied on the news. It's quite possible that investors are more concerned about Pricelines' newest rival, Orbitz. The month-old, mega-site, is controlled by five airline carriers that represent almost 85% of the U.S. market. Not only could PCLN investors be concerned about losing marketshare to Orbitz but discount travel firm, Hotwire just signed a customer-sharing deal with Orbitz. Shares of PCLN hit a low of $8.04 and closed down over 4.6% on the day at 8.42. Competition may really be heating up for PCLN and we're going to raise our stop to 7.45. Picked on July 13th @ $ 8.70 Gain since picked: - 0.28 Earnings Date: 7/31/01 (not confirmed) === Take-Two Interactive - TTWO - close: 20.15 change: +0.33 stop: 17.50 If this was a video game, our warning beacon just went off. The first half of the trading day was pretty exciting with shares of TTWO up over five percent but minutes before 2:00 p.m. someone hit the "sell" button and the midday gains just evaporated. Odds are the bulls just couldn't keep the stock up as the NASDAQ continued to fade into the afternoon. In the news, TTWO announced they would acquire Hong Kong based Techcorp Limited, a game accessory and design firm. Picked on July 13th @ $19.96 Gain since picked: + 0.19 Earnings Date: late August (not confirmed) ----------------------- NB Bearish Play Updates ----------------------- Check Point Software - CHKP Close:$39.91 Change:-0.18 Stop:$44.50 The teeter-totter continues for our Bearish selection as it dances near the edge at $40 with only a branch to grab at $30 to hamper its way down. The outlook has not changed much from when we first identified this play on Wednesday. A good earnings report from rival Symantec gave the bears a scare driving the shares up in morning trading to a session high of $$42.65, however the bears reasserted themselves and pushed the shares down for the better part of the remaining trading day. Although the two companies are in the software security market, they are in different parts of it. Checkpoint is strong in large-scale networks and the Internet, while Symantec derives most of its revenue from selling to individual PC's. Symantec has designs on Checkpoint's market - but it's not a factor yet. In the meantime, Checkpoints market and real rivals are suffering. We see little reason to alter our belief that Bearish sentiment is likely to increase for Checkpoint shares at least through to its July 23rd earnings release. Picked on July 18th at $40.09 Gain Since Picked +0.18 Earnings Date 7/23 (Not Confirmed) === Brocade - BRCD Closed:$32.10 Change:+1.96 Stop:$35.00 new We did not feel the early rally on Thursday was going to have legs so we moved our stop out of harms way. The late fade on Thursday justified our belief and confirms the rising bearish sentiment. . Picked on July 16 at $34.06 Gain/loss since picked: +1.96 Earnings Date 8/14 (Not Confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ -------------- New Long Plays -------------- Fleming Companies - FLM Close:$37.30 Change:+0.76 Stop:$35.50 Company Description: Fleming supplies more products for your home than any other company you've never heard of. This Lewisville, Texas company is the nation's second largest wholesale food distributor. The company supplies brand-name and private-label food and general merchandise to about 7,000 US retailers, including mass merchandisers (Kmart is a new $4.5 billion dollar account), independent retailers, its own franchised stores (Piggly Wiggly and IGA), limited assortment stores, and convenience stores. It also owns more than 90 stores that operate under the Food 4 Less, Rainbow Foods, and Yes!Less banners. In addition, Fleming also offers a wide array of marketing, consulting, and insurance services to food retailers. After losing several of its largest customers (Randall's Food Markets, Furr's Supermarkets), the company is restructuring itself to become more efficient. It is cutting unprofitable company-owned retail chains and consolidating distribution facilities. Fundamentals: When the company reports second-quarter 2001 earnings on August 1st it is expected to have increased quarterly earnings from 35-cents per share the previous year to 42-cents. On an annual basis, the firm is expected to jump earnings from $1.56 per share in 2000 to $1.96 in 2001 and $2.57 in 2002. They have a current P/E of 24 and a forward 2001 P/E of 19. This is inline with the industry average P/E of 19. However, their earnings growth rate is well above the industry average. Their 2001 earnings growth rate is 25.6-percent against the 9.8-percent industry average. Much of this can be attributed to the success of their expense reductions and the expected $180 million in savings from the KMart deal. Why We Like It: The economy may suffer, but people have to eat making Fleming a true economic turndown resistant company. In addition, the significant progress the company has made to cut costs and the prospects of further reductions are good harbingers of the future. Also promising is conversations with Kmart about Fleming providing health and beauty products - a $2 billion opportunity. The company is also aggressively pursuing the convenience store market, and expects to increase annual sales to this area from the current $1 billion level to over $3 billion in future years. On Thursday, the stock broke out of a $35 to $36.90 range it had been in since the beginning of July. It also set a new 52-week high eclipsing the $36.90 from July 13th. The move was accompanied by solid volume of 454k traded, which is above the average volume of 422k. This suggests the shares are ready to rally into the earnings announcement. We will set an initial stop at $35.50. Picked on July 19th at $37.30 Earnings Date 8/1 (Not Confirmed) =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Laboratory Corporation - LH Close:$85.10 Change:+0.32 Stop:$82.00 LH was up $1.62 at one point today, but like many stocks today, it faded into the close. It still closed up 32 cents, but I would rather not have seen the late day weakness. The good news is that volume was like, and support is strong at $82.50, if needed. Picked on July 13th at $83.98 Gain since picked: +1.12 Earnings Date 7/23/01 === AmeriPath - PATH Close:$33.89 Change:+0.05 Stop:$31.95 AmeriPath took a breather for the second straight day. After running up for 8 straight days, it was due. Watch for PATH to take out today's low of $32.95 as an initial sign of weakness. Picked on July 11th at $30.95 Gain since picked: +2.94 Earnings Date 7/31/01 === RailAmerica - RAIL Close:$12.65 Change:+0.20 Stop:$10.25 Rail continued to consolidate for the third straight day. By holding above the 50-day moving average, it should break out to the upside. Resistance at $12.90 will be the test. Picked on June 14th at $11.41 Gain since picked: +1.24 Earnings Date N/A === Star Gas Partners - SGU Close:$20.76 Change:-0.17 Stop:$19.50 Nothing new here. The shares continue to move sideways on light volume. We are waiting for a spike volume to indicate the Bulls are ready to become active and start the next leg up.. Picked on June 17th at $21.18 Gain since picked: -0.42 Earnings Date 7/26 === Tenet Healthcare - THC Close:$54.78 Gain:-0.97 Stop:$53.75 After a nice run, these shares are starting to look tired. They may need to touch base with support at $52.50 before resuming their well established longer-term up trend. We have our stop at a snug $53.75. Picked on June 17th at $51.09 Gain since picked: +3.30 Earnings Date 7/25/01 ================================================================= 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. 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. 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