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Daily Newsletter, Monday, 07/23/2001

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PremierInvestor.net Newsletter                 Monday 07-23-2001
                                                  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: One break deserved another and then another
Market Sentiment: Psychological Damage e
Play-of-the-Day: AmeriPath - PATH (Bullish)
Watch List: Adding Security and Games 

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
        07-23-2001        High      Low     Volume Advance/Decline
DJIA    10424.42 -152.23 10595.40 10419.71 1.03 bln   1326/1760	
NASDAQ   1988.56 - 40.81  2047.85  1987.51 1.48 bln   1381/2347
S&P 100   614.41 - 11.18   628.07   614.07   totals   2707/4107
S&P 500  1191.03 - 19.82  1215.22  1190.50           
RUS 2000  487.70 -  5.23   489.51   482.70
DJ TRANS 2961.81 -  3.85  2982.31  2957.00
VIX        26.13 +  1.16    26.77    24.92
Put/Call Ratio      0.45
-----------------------------------------------------------------

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

One break deserved another and then another by Jeff Bailey

For the most part, today's trading was quite range-bound for many 
stocks.  Today's early optimism at the open seemed to turn sour 
as some key technical support levels gave way as sellers simply 
overwhelmed buyers.  The first "key" level of technical support 
broken to the downside came with a break in the Dow Industrials 
(INDU).  This index has been having trouble holding above its 
200-day moving average and when that level was broken to the 
downside, bulls seemed to move back into their pens and bears 
awoke from an early morning hibernation.

Dow Industrials Chart - last 10 months



The Dow Industrials (INDU) continues to have problems with the 
200-day moving average.  It sure seems like many market 
participants were watching the break below 10,575 as a reason to 
cash things in today.  Two levels of support that bears will be 
targeting from here is upward trend at 10,560 and the recent low 
found on July 11th at 10,120.  Subscribers may find it 
interesting that the recent high on the above chart was 
accomplished on May 22nd, which was five sessions after the 30-
year YIELD had peaked at 5.901% on May 15th.  It sure seems that 
too much money rolled into the bond market on that day and 
following sessions and left little cash available to drive the 
index any higher.  With the 30-year YIELD now below July 11th 
lows, I'm expecting the Dow Industrials to test the 10,120 level 
should bond YIELDS continue lower from here.  Current YIELD on 
the 30-year is 5.526%.

S&P 500 Index Chart - last 10 months



With about an our left to go in trading, selling picked up in 
stocks as market participants got the feeling that there was 
little hope for a close above the closely watched 1,200 level on 
the S&P 500 (SPX).  Todays close below 1,200 marks the first 
close below 1,200 since 1,180.  Bears will be trying to get the 
SPX to close below upward trend and will undoubtedly be targeting 
the 1,168 level, which was the recent low set on July 11th.  From 
there, equity bears will have planted the seed that the next 
level of support for weak bulls is 1,081 and that may get some 
weak longs to relinquish their stocks on a break below 1,168.  
The recent relative high on the SPX came on May 22nd at 1,315.

NASDAQ Composite Index - last 10 months




The NASDAQ tried to stay above the 2,000 level as it had been 
doing for the past six sessions, but in the last 90-minutes of 
trading the daily action in the Dow Industrials and S&P 500 put 
many bulls on the proverbial "psychiatric couch."  Upward trend 
at 1,975 is about as thin as depicted on the above chart.

The recent slough of earnings from the technology sector has been 
less than stellar and that is going to keep many of the smaller 
traders on the sidelines.  I still think the only thing that is 
going to get a bears attention is a major round of selling in the 
bond market.  Since early April, the ONLY THING I've seen that 
has indicated a higher stock market was the large amount of 
selling that occurred in the bond market.  Since May 15th when 
the 30-year YIELD hit a relative high of 5.901 YIELD, bonds have 
been attracting buyers.  

The markets have had a lot of bad news in recent weeks on the 
earning's front, but even the good news has found selling.  It 
still seems to me that bears are wearing a smile on their face as 
they look at the bond market and know that there's not a lot of 
cash coming from it that is going to compete for stocks.

By my count, the relative low for the 30-year YIELD came on March 
22nd.  The relative low for the NASDAQ was found 9 trading 
sessions later on April 5th.  The most recent relative high for 
the 30-year YIELD was found on May 15th and the NASDAQ reached 
its recent peak 5 sessions later.

If we continue seeing buying in bonds, the market is telling me 
it prefers the risk/reward of bonds over stocks, with the reward 
being a YIELD of 5.526 plus whatever type of gain can be 
accomplished on further buying in the bond.  I do think that some 
of the bullish percent data is at a level where we could see a 
reversal in bond YIELDS as the market raises cash to come into 
stocks at a lower risk level.  With that said, all a bullish 
trader has to do is wait for it to happen, while a bear will 
continue feeding until it does.


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

Psychological Damage by Jeffrey Canavan

A blow was dealt to the market psyche today when the Nasdaq 
Composite closed below 2,000.  Granted it's just a psychological 
number, and there is technical support just below, but each dip 
below this level runs the risk of spurring a selling spree.  The 
S&P 500 closing below 1,200 didn't help either.

Speaking of psychological levels, lets see where certain 
sectors/indices stand in relation to their April to May gains.

Given Back Less Than 38.2%
Russell 2000, Banks, Insurance, Retail, Drugs, Healthcare, Paper 
Products, Cyclical, Transports, REITs, and Midcaps

Given Back More Than 38.2%, but Less Than 50%
Dow Jones Industrial, Nasdaq Composite, S&P 100, Computers, and 
Airlines

Given Back More Than 50%, but Less Than 61.8%
S&P 500, Nasdaq-100, Semiconductors, Biotechnology, 
Telecommunications, Brokers, Chemicals, Gold

Given Back More than 61.8%   
Software, Networking, Disk Drives, Internets, Oil, Oil Service, 
Utilities

Today the Semiconductor and Biotechnology Indices were the 
leading losers, and are now close to dropping into that "given 
back more than 61.8%" category.  The Pharmaceutical Index was 
also a big loser today, down 2.21%, but is still safely above the 
38.2% retracement level.  The Airline Index continues to buck the 
overall trend, and was one of the only sectors in positive 
territory, up 0.27%.  Oil Service stocks also got a boost after 
reports of a possible reduction in output by OPEC.  The QQQs are 
flat after another round of earnings announcements, but tomorrow 
could bring us closer to testing support rather than resistance.

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

            Weekly   Daily     Overbought    Support  Resistance 
            Trend    Trend      Oversold                         

DJIA        Bearish  Bearish    Overbought    10,200   10,600
NASD        Bearish  Bearish    Overbought     1,940    2,125
S&P 500     Bearish  Bearish    Overbought     1,170    1,240
Rus 2000    Bearish  Neutral    Overbought       465      500

Semis       Bearish  Bearish    Overbought       525      585
Biotech     Bearish  Neutral    Overbought       490      550
Internet    Bearish  Bearish    Neutral          160      186
Networking  Bearish  Neutral    Neutral          300      365
Software    Bearish  Bearish    Neutral          180      210
Banking     Neutral  Bullish    Overbought       625      670
Retail      Neutral  Bullish    Overbought       875      920
Drugs       Bearish  Neutral    Overbought       385      410


                 Percent Change
            Last      Last       Last     Relative Strength
           5 Days    10 Days    30 Days      vs S&P 500
DJIA          -         -          -          Positive
NASD        (2.7%)    (1.2%)    (10.3%)       Neutral
S&P 500     (0.9%)    (0.6%)     (5.8%)       N/A
Rus 2000    (0.2%)    (0.7%)     (5.7%)       Neutral

Semis       (0.1%)    (1.1%)    (17.5%)       Negative
Biotech      4.1%     (8.3%)    (18.7%)       Negative
Internet    (4.7%)    (6.2%)    (22.0%)       Neutral
Networking   0.7%     (1.2%)    (21.9%)       Neutral
Software    (7.6%)   (10.9%)    (21.3%)       Negative
Banking      0.8%      0.4%      (0.5%)       Positive
Retail       0.6%      6.8%      (1.2%)       Positive
Drugs        3.1%      0.6%      (4.7%)       Neutral

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


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

AmeriPath - PATH Close:$36.70 Change:+0.70 Stop:$34.00 new

Original Comments When Selected On July 11th:

Company Description:
AmeriPath contracts with more than 200 hospitals to manage their 
anatomic pathology practices in some 20 states.  Over 400 
pathologists in AmeriPath's network diagnose diseases by examining 
cells and tissues.  The work is performed in hospitals and outpatient 
laboratories.  PATH operates more than 40 outpatient labs that 
account for some 40-percent of sales.  The company manages the non-
medical aspects of the practices, including payroll, staffing, 
supply, financial reporting, and administration.  AmeriPath 
continues to develop its regional network of practices through 
acquisitions.  They currently have 49 practices in 21 states.

Fundamentals:
Higher physician compensation and a $7.1 million merger expense 
combined to drop income 47-percent in the first three months of the 
year to $3.2 million.  But do not be fooled, this company has a 
strong fundamental picture.  Revenue in the same period jumped 32-
percent to $98.7 million.  After earning $1.16 per share on revenue 
of $330 million last year, analysts expect the company to earn $1.40 
per share on sales of $400 million in the current 2001 fiscal year.  
Next year the company is projected to earn $1.65 per share on sales 
of $445 million.  This gives the shares a current P/E of 26 and a 
forward 2001 P/E of 22.  These numbers are low in comparison to the 
industry average P/E of 38 and inline with a 2001 earnings growth 
rate of 23-percent.

Strategy:
These shares have been on a rally climbing 342-percent since May of 
2000.  On Tuesday the share pushed north once more when they closed 
above resistance at $30 on a solid spike in volume.  Wednesday 
confirmed the Bullish momentum when the shares gain 58-cents and 
closed at the session high establishing a new 52-week closing high.  
We have a target price of $36.  Former resistance at $30 has now 
become downside support with additional strong support at $28.  We 
are starting out with a stop of $27.

Updated Comments:

The strength of these shares continues to impress.  After spending 
a scant two days consolidating from its two week run from $28 the 
shares spiked up on Friday and again on Monday.  A jump in volume on 
Monday suggests these shares are ready to keep going.  Although each 
day is bringing yet another 52-week high, a point and figure 
analysis indicates a target price of $45 to $47 is reasonable.  
     
Picked on July 11th at $30.95
Gain Since Picked       +5.75   
Earnings Date            7/31 (Not Confirmed)





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

Symantec - SYMC - Close: $48.31 change: +2.38

WHY WE LIKE IT:  Last week, Symantec ran counter to the their 
security software rivals and managed to report earnings that beat 
their lowered expectation bar.  The company reported diluted 
quarterly earnings of 44-cents a share on sales of $228 million.
Analysts were expecting 41-cents on sales of $228.7 million.  
Already the dominant provider of systems utilities and security 
products for individual PC's, the company showed strong progress 
in its attempt to tackle the enterprise security business.  

POTENTIAL TRIGGER EVENT:  Investors liked what they saw in the 
earnings report SYMC shares have tacked on more than $8 bucks 
since the announcement.  However, they are a bright light in what 
has been a weak sector and we want to see more progress to ensure 
SYMC shares have the strength to continue to swim upstream.  Strong 
resistance exists through $52, however if the shares can gather the 
mojo to push through than we will become believers and a run to the 
mid-sixties seems likely. 




===

Electronic Arts - ERTS - Close:$53.10 Change:-1.48

WHY WE LIKE IT: These shares have made frequent appearances on our 
Watch List.  They make video games for all the major game console 
manufacturers and there is a battle royale brewing up between two 
deep-pocketed heavy weights for our holidays dollars.  Microsoft is 
pledging $500 million to promote their new xBox and Sony is 
unlikely to be quiet in defense of its Playstation 2 franchise.  
A sure winner in this war will be the publishers of games for the 
platforms and Electronic Arts is a big time player in this category.
Another bullish factor is that ERTS shares have gone up an 
average of 25-percent in each of the last 5 years from July 1st 
to Sept 30th.

POTENTIAL TRIGGER EVENT:  A rumor has been floating around that 
Microsoft is having technical problems in the manufacture of the 
xBox and this is putting pressure on the all the shares in this 
sector.  Microsoft vigorously denies the rumor.  Although Monday 
was a weak day for ERTS shares, they did manage to bounce off of 
significant support at $52.50.  Either a move above $55 or a dip 
below $52 would represent good entry points for a trade.  The first 
would indicate the bulls are gathering steam and the latter 
represents a low risk situation with strong support nearby at 
between $50 and $51




-------------------------
-- Continuing to Watch --
-------------------------

Some stocks on the Watch List will be carried over from one day
to the next if they continue to show potential but have not yet
breached the trigger point.  Some stocks have met our conditions 
for a trigger point but other factors hold us back from making it
a full-time stock pick.


-------------------------

Nextel Communications - NXTL - close: 17.36 change: -0.36

Friday, July 20th's write up:

WHY WE LIKE IT:  Lehman Brothers isn't doing us any favors.  A
press release came out on Friday with a Lehman analyst cutting 
their price targets on three wireless companies.  NXTL was 
one of them and its price target was cut from $32 to $21.  But
wait, they are "still bullish" on the sector.  Despite this news
NXTL shares gained over 2% and is butting heads with resistance
at $18.

POTENTIAL TRIGGER EVENT:  We're putting NXTL on the watch list
because we want to be ready when they announce earnings this week
on Tuesday, July 24th.  The stock has been consolidating but
managed to breakout above $17 on Thursday and added to its 
position on Friday.  Above $18 shares will probably rise to $20
before hitting heavy resistance there.  Keep this one on your
radar screen for a potential mid-week play.




===

Johnson and Johnson - JNJ - close: $53.60 change: -0.89

UPDATE: JNJ was added to the Watch List on Thursday, July 19th
and we've decided to carry it again.  The Drug index managed to
eke out a small gain on Friday and drug giant, Merck, announced
earnings Friday morning.  While growth was slowing, profits still
rose for MRK.  Shares of JNJ are holding up well.  If technology
falls out of favor again investors might turn to drug stocks.

Thursday, July 19th's write up:

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.




===

Qlogic Corp. - QLGC - close: 42.13 change: -4.00

UPDATE: We are uncomfortable about entering a short play on the 
day before earnings, but perhaps you are not.  If so, then the break 
below $44 we were looking for occurred Monday.  Qlogic is a big 
time volatile play and is suitable for only the most risk tolerant
of traders.  For everyone else we recommend waiting until after 
earnings are announced.

Thursday, July 19th's write up:

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.





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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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For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact advertising@PremierInvestor.net.

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


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


PremierInvestor.net Newsletter                 Monday 07-23-2001
                                                  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/5873_2.asp
=================================================================

In section two:

Split Trader
  Split Announcements: Fiserv, Inc - FISV
  New Plays: No new ST play
  Play Updates: No updates for ST
  Closed Plays: CERS, NVR

Net Bulls
  New Plays: No new play for NB
  Play Updates: Stops Updated
  Closed Plays: No closed plays for NB

Stock Bottom / Active Trader
  New Plays: No new SB plays
  Play Updates: Stops updated
  Closed Plays: No closed SB plays


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

===================
Split Announcements
===================

Just as we thought....

After regular trading on Monday, Fiserv Inc. (Nasdaq:FISV) 
announced record earnings for second quarter and a 3-for-2 stock 
split of its common shares. Premier Investor alerted readers to 
this split announcement and will continue to monitor the split 
run for lucrative Play opportunities. 

The payable date is set for August 31 and the stock is expected 
to trade on a split-adjusted basis on September 3.  There are 
currently 124 million shares outstanding, a float of 104 million, 
and 300 million shares are authorized for issuance. This marks 
the Company's sixth stock split since it began trading publicly 
in 1986.

Also announced today were the Company's earnings results for 
second quarter ended June 30, 2001. Revenue of $472.6 million 
came in 13.5% over the prior year and net income of $0.40 per 
diluted share compared to $0.34 per share for the second quarter 
of 2000. 

FISV shares closed down -1.31 to $59.94 on average volume.

About the Company:

Fiserv, Inc. is an independent, full-service provider of 
integrated data processing and information management systems to 
the financial industry. As a leading technology resource, Fiserv 
serves more than 10,000 financial services providers worldwide, 
including banks, broker-dealers, credit unions, financial 
planners and investment advisers, insurance companies and agents, 
mortgage banks and savings institutions. Headquartered in 
Brookfield, Wisconsin, Fiserv also can be found on the Internet 
at www.fiserv.com.


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

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

NVR - NVR, Inc. Close:$173.50 Change:-3.00 Stop:$174.00

The indecision we noted with Friday's doji pattern ended up 
decisively to the downside today. For those who are still playing 
this stock, note that volume has dropped off slightly but is still 
strong.  To the bull's benefit, NVR closed up two points from the 
day's low, demonstrating hesitation from the bears. We are pleased 
with our gains of $7.70 and we look forward to the next opportunity 
to play this stock. 

Picked on July 17 at $166.30
Gain since picked:     +7.70
Earnings Date           7/24 (Not Confirmed)




===

Cerus Corp - CERS Close:$68.16 Change:-2.94 Stop:$69.50

Friday's sell-off mercilessly continued through Monday, hitting our 
stop early on. The drop-off in volume today indicates that the 
current levels are likely to hold, although the failure to hit 
resistance this time around ($75) signals weakness. The next support 
is now potentially at $65.88, and trading also appears to be 
reacting to the 50-day moving average, offering weaker support at $67.86. 

Picked on July 13 at $69.25
Gain since picked:    +0.25
Earnings Date          7/24 (Not Confirmed)





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

===============
NB Play Updates
===============

  -----------------------
  NB Bearish Play Updates
  -----------------------

Change stop for Brocade (BRCD) to $33.00.


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

===============
AT Play Updates
===============

  -----------------
  Long Play Updates
  -----------------

Change Stops:
  Anadarko Petroleum (APC) to $50.00
  Laboratory Corp. of America (LH) to $84.50
  AmeriPath (PATH) to $34.00
  


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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 advertising@PremierInvestor.net.

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


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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