PremierInvestor.net Newsletter Monday 07-30-2001 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/073001_1.asp ================================================================= In section one: Market Wrap: Stocks Traded Tight Range Market Sentiment: ARF! Play-of-the-Day: AmeriSource Health - AAS (Bullish) Watch List: Volume Holds The Key ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 07-30-2001 High Low Volume Advance/Decline DJIA 10410.72 - 14.95 10440.48 10361.45 1.07 bln 1678/1451 NASDAQ 2017.84 - 11.23 2039.01 2009.94 1.36 bln 1848/2049 S&P 100 618.89 - 1.27 621.73 616.80 totals 3526/3500 S&P 500 1204.52 - 1.30 1209.05 1200.41 RUS 2000 484.71 - 0.30 485.54 481.34 DJ TRANS 2912.22 + 2.34 2918.06 2906.04 VIX 24.03 - 0.70 25.07 23.99 Put/Call Ratio 1.72 ----------------------------------------------------------------- =========== Market Wrap =========== Stocks Traded Tight Range Stocks traded in a tight range today as bulls and bears seemed to lack conviction and were unable to really get any type of a move going. Earlier in the day, the Semiconductor Index (SOX.X) seemed to try and assert itself as the tech leader, but by sessions end, the group finished up fractionally with the AMEX Disk Drive Index (DDX.X) leading the sector gainers list with a rise of 1.74% to close at 84.77%. Disk Drive Index - last 10 months The DDX.X used to be a group of stocks that trader loved to trade. When the PC industry does well, this group of stocks does well. Group components are some names that traders will remember, but have long forgotten. Like many industries that go have their up and down cycles, these stocks have seen better times. The group seems to have its supporters at the $78-$80 level and there's some upside to retracement levels at $96 and $104. Those stock symbols that are components of this group include ADPT, ADIC, HTCH, IOM, FLSH, MXO, DSS, RDRT, SNDK, and STK. Some of the above stocks can provide wild trading from time to time. Shares of Disk Drive Index component of Hutchison Technology (NASDAQ:HTCH) jumped 6.8% today to $18.50 and this stock has been acting well relative to the group and the market on a longer-term basis. The stock is rather thinly traded and provides wild swings. Today's volume of 401,400 shares is well above the 3-month average daily volume of 103,000 shares. Hutchinson Technology Chart - last 10 months Hutchinson's chart is interestingly bullish as there aren't too many computer related technology stocks that are trading above both their 200-day and 50-day moving averages. The company manufactures the bulk of the industries suspension system assemblies using proprietary technology that facilitates the precise specifications that are critical to maintaining microscopic clearance between the head and disk. What may be interesting to investors is how this group of stocks (disk drives) is acting relative to its demand channel and some of the personal computer makers. From time to time we've talked about similar technicals developing in shares of Dell Computer (NASDAQ:DELL). While Dell Computer doesn't buy suspension assemblies direct fro Hutchinson (HTCH), most of the world's disk drive manufacturers do. Dell Computer Chart - last 10 months Shares of Dell Computer (NASDAQ:DELL) have been quietly inching higher in recent months and have diverged from the recent NASDAQ decline in July. A bullish trader in Dell would have like to see the stock break above its 200-day moving average in late June on BIG volume of 75,000,000 shares plus, but the recent pullbacks to 61.8% retracement indicated that the stock may be getting some sponsorship. Earning for Dell Computer are due on August 16th (unconfirmed at this point) and we may have to wait until then for institutions to really cast their vote for the stock on a longer-term basis. Still, it's interesting to note that a disc drive component stocks is acting well along with a personal computer manufacturer. Could it be that this sector of technology is starting to turn around? Looks like signs of a turnaround are in the making to me. Of the major PC manufacturers Dell Computer (DELL), Apple Computer (NASDAQ:AAPL), Compaq Computer (NYSE:CPQ) and Gateway Computer (NYSE:GTW) shares of Dell look to be the most technically sound. Should the remaining three-horsemen start to mimic some of the technicals found in Dell, look to play some of the disk drive stocks in unison. As for the broader market today, there really didn't seem to be any market moving stocks doing much. The current market environment seems to be lacking any type of "market moving news" to really get traders off their stools. Tomorrow after the bell, KLA-Tencor (NASDAQ:KLAC) is expected to release earning after the closing bell and that might be the only technology stock that traders are looking to for some type of blockbuster news. The average estimate of analysts are looking for the company to report earnings of 26 cents a share, which is well below last year comparison quarter when the company reported a profit of 47 cents a share. Today, shares of KLAC finished the session with a 2.46% gain to close at $55.24 after trading as high as $57.20. ================ Market Sentiment ================ ARF! The dog days of summer are upon us, and Jim Oberweis, President of Oberweis Asset Management, sums up the prevailing market sentiment, "The biggest thing on investors' minds is how busy the golf course is." Paltry Volume of 1.3 billion on the Nasdaq echoes that sentiment. Now that earnings season is drawing to a close, it's up to economic data to spur some market interest. On the slate for this week is personal income, the Chicago Purchasing Managers Index, consumer confidence, and unemployment claims. Now that we have enough rate cuts under our belt, investors want to see these numbers coming in better than they have in the past. Semiconductor Index Daily Chart But can these economic numbers spark enough interest to push sectors past resistance? The Semiconductor Index (SOX.X) was one of today's better performing sectors, up 0.65%, but look at the overhead resistance - downtrends, moving averages, retracement levels, and a stochastic that is quickly approaching overbought. That's asking a lot of economic data. If the SOX can climb above 615, it could be viewed as a small double bottom, but a trading range between 615 and 530 looks just as probable. Not all sectors have as much resistance converging in one area, but there is enough resistance nearby to limit the upside of most sectors. Listless days like today don't help. *************************Sector Watch**************************** Weekly Daily Overbought Support Resistance Trend Trend Oversold DJIA Bearish Bearish Oversold 10,200 10,600 NASD Bearish Bearish Neutral 1,940 2,125 S&P 500 Bearish Bearish Neutral 1,170 1,205 Rus 2000 Bearish Bearish Neutral 465 485 Semis Bearish Bearish Neutral 550 615 Biotech Bearish Bearish Neutral 490 550 Internet Bearish Bearish Oversold 140 170 Networking Bearish Neutral Neutral 300 365 Software Bearish Bearish Neutral 180 200 Banking Neutral Neutral Neutral 625 670 Retail Neutral Bullish Neutral 875 920 Drugs Bearish Neutral Neutral 380 410 Percent Change Last Last Last Rel Strength Point and 5 Days 10 Days 30 Days vs S&P 500 Figure Signal DJIA (1.5%) (1.2%) (2.6%) Neutral Buy NASD 1.5% (0.6%) (0.5%) Neutral Sell S&P 500 1.1% 0.2% (0.8%) N/A Sell Rus 2000 0.4% 0.2% (2.1%) Neutral Sell Semis 8.6% 8.5% (0.5%) Neutral Sell Biotech 1.8% 6.0% (11.3%) Negative Buy Internet (10.7%) (14.8%) (19.2%) Negative Sell Networking 0.4% 1.1% (5.3%) Neutral Buy Software 4.7% (3.3%) (7.2%) Negative Sell Banking 1.6% 2.4% 4.5% Positive Buy Retail 1.9% 2.6% 5.0% Positive Buy Drugs 0.8% 4.0% (2.6%) Neutral Sell ***************************************************************** =============== Play-of-the-Day =============== AmeriSource Health - AAS Close:$59.47 Change:+0.86 Stop:$56.50 NEW Original Comments When Selected on July 26th: Company Description: The Chesterbrook, Pennsylvania-based firm is the holding company for AmeriSource Corp., the forth-largest distributor of pharmaceuticals and health care products in the US (McKesson HBOC is the largest). AmeriSource supplies hospitals, managed care facilities, drugstores, nursing homes, clinics, supermarkets, and mass merchandisers through nearly 25 distribution facilities. The company also offers a variety of value-added products to enhance its own profitability and bolster customer loyalty. These include the ECHO Suite, which is a software system for ordering and inventory management assistance; the Family Pharmacy program, which provides online shopping through familypharmacy.com and helps connect independent and small chain drug stores to various merchandising and other services; and Pharmacy Healthcare Solutions, which offers hospital consulting aimed at improving operational efficiency. The federal government, which includes the Veterans Administration, accounts for about 20-percent of sales. AmeriSource has announced that it is acquiring Bergen Brunswig, a major drug-distributor rival. The company created by the merger will be called AmeriSource-Bergen. Pending regulatory approval (expected sometime this summer) the combined entity will have revenues in the vicinity of $35 billion. Under the terms of the agreement, which has been unanimously approved by both Boards of Directors, each share of Bergen Brunswig common stock will be converted into 0.37 share of AmeriSource-Bergen common stock while each share of AmeriSource common stock will be converted into one share of AmeriSource-Bergen common stock. The new Company will have approximately 103 million shares outstanding, with current AmeriSource shareholders owning approximately 51-percent of the combined company and current Bergen Brunswig shareholders owning about 49-percent. Fundamentals: Earnings projections have not been made for the combined entity. However, AAS Chairman David Yost said, " This combination of two strong, service-oriented companies boosts our confidence that we can achieve a long-term earnings per share growth objective of about 20 percent." As a separate entity AAS is expected to earn $2.27 per share on sales of $13.8 billion in the fiscal year ending in September 2001. Last year, the company earned $1.89 on sales of $11.6 billion. Bergan Brunswig (BBC) is expected to earn 80-cents per share on sales of $20.2 billion. Last year, BBC earned 60-cents per share on sales of $22.8 billion. Why We Like It: The combination of these two companies ($34 billion in sales) should put it on a par with the industry giant McKesson HBOC (MCK $35.3 billion in sales). Investors evidently like the merger, since it was announced in March, AAS shares have climbed steadily from near $43.39. To be fair, AAS shares have been on a solid winning streak since hitting $12.00 on March 14th of 2000. Wednesday saw the shares reverse a dip when the companies reported solid reports. On Thursday, the shares built on the momentum and seem poised for the next leg up. In the short-term, if the shares can push through $59 while maintaining strong volume (725k is daily average), then they are likely to make a run at resistance at $62.50 and the longer-term upper trend line at about $65.00. We suggest traders wait for this break of $59 before taking a position. Solid support from a bearish reversal exists at $55.00, the 200-day moving average of $50.99 and the lower trend line at about $50.00. We will start this Bullish play with a stop at $52.00. Updated Comments: Monday produced the break above $59 we were waiting for. Volume was solid at 747k traded. Our outlook remains the same. We see a test of $62.50 and possibly $65.00. We are tightening our stop to $56.60 Picked on July 26th at $57.50 Gain Since Picked 1.96 Earnings Date 7/25 (Confirmed) ========== Watch List ========== Wellpoint Health Network - WLP close: $105.50 change: +2.49 WHAT TO WATCH: This one has been stair stepping up since mid-May. After consolidating within a tight range for the last two weeks, Monday's strong move on rising volume suggests these shares are ready for the next leg up. Watch for a solid volume move above $106 to provide bullish confirmation. --- International Flavors & Fragrances - IFF close: $28.53 change: +0.69 WHAT TO WATCH: These shares closed Monday a hair above big time resistance at $28.00 to close just 2-cents short of setting a new 52-week high. However volume was lame at 201k shares traded (a normal day id 417k). So we are uncertain if these shares can maintain their bullish momentum. If they can, we have a bullish price target of $37. Our bullish trigger will be a close above $29.00 and volume above 300k. --- THQ Inc. - THQI close: $52.26 change: -2.63 WHAT TO WATCH: We are watching this video game publisher as a potential short. We want to be careful; generally we are bullish on the games business with holidays and an advertising battle between Microsoft and Sony for dominance in the game console looming. Still, the deteriorating technical picture for these shares gives us the impression they want to at least test support at $46 and possibly $40. The jury is not in yet, although the shares dropped $2.63 on Monday, they did so on light volume of 433k traded, (average is 739k). This could be a temporary respite after three consecutive gainers or the beginning of a bear mauling. The price is right now, so the time to consider a short would be any kind of a down day with a spike in volume. ------------------------- -- 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. ------------------------- Vitesse Semiconductor - VTSS - close: 19.62 change: +0.30 UPDATE: No change from Friday. Friday, July 29th's write up: WHAT TO WATCH: With semiconductors in the news lately and the semi index making gains, traders are watching for stocks that have room to move. VTSS has been very beat up and the stock has been trying to pick its way higher after its recent low near $15 a couple of weeks ago. Our potential trigger to watch on VTSS is a strong close over $20. If this is accomplished, watch for resistance at $22 and $24. --- Micromuse - MUSE - close: 14.78 change: -0.31 UPDATE: This one could be slipping away. Friday, July 29th's write up: WHAT TO WATCH: Talk about beat up, MUSE has been crushed along with several other has-been high flyers. This software solutions company received a string of downgrades after warning that revenues would drop in the current quarter and there was no relief until March 2002. It's possible investors feel there isn't any bad news left to damage this company's prospects and the stock gained over 11% in Friday's trading. After spending two days bouncing at $13 these hopeful investors might be right. The stock has resistance at $16 and again at the top of its gap at $17.50. Watch for a close over $16 and let the stock fill the gap if we're lucky it might be able to trade to $20 before pulling back. --- Rite Aid - RAD - close: 8.97 change: -0/09 UPDATE: No change from Friday. Friday, July 29th's write up: WHAT TO WATCH: The retail drug store chain with 3800 stores has seen a very strong move from its late December 2000 low of 1.50. With a run like that it's no surprise to see the stock consolidating from its high of $10 last month. The stock appears to have finished retracing and has cleared resistance at $9. Conservative traders may want to wait another day to confirm the move but we are encouraged by the very high volume on Friday. 7.2 million shares traded versus the average 4.1 million. Depending on your time horizon, traders can play the short-term move as it makes a run for $10 or wait for the stock to clear $10 and see how far it can go. --- Cisco Systems Inc. - CSCO - close: 18.89 change: -0.17 UPDATE: The recent strength may be running out of steam, but its not dropped off our radar yet. Thursday, July 26th's write up: WHAT TO WATCH: It seems that everyone is watching Cisco these days. The stock has been unable to mount a serious comeback after its recently failed rally from $14 to $24 (April/May). Traders should be watching for CSCO to close over resistance at $20. Short-term players can probably play the 10% move to $22 wherein lies the next level of serious resistance. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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.
PremierInvestor.net Newsletter Tuesday 07-30-2001 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/073001_2.asp ================================================================= In section two: Split Trader Split Announcements: Pool Corp. - POOL New Plays: No new plays for ST Play Updates: See Play of Day - AmeriSource- AAS in section 1 Closed Plays: No closed plays for ST Net Bulls New Plays: No new NB Plays Play Updates: Stop updated for RF Micro Devices (RFMD) Closed Plays: InterCept Group - ICPT Stock Bottom / Active Trader New Plays: Professional Detailing - PDII (Bearish) Play Updates: Stops updated Closed Plays: Anadarko Petroleum - APC ================================================================= Split Trader (ST) section ================================================================== =================== Split Announcements =================== POOL shares have no problem swimming upstream The Board of Directors of SCP Pool Corp. (Nasdaq:POOL) announced a 3-for-2 split of its common stock. The additional shares will be distributed on September 7, 2001 and the stock is expected to trade on a split-adjusted basis on September 10, 2001. The resultant outstanding shares will total 25.7 million. Chairman of the Board, stated, "This marks the fourth stock split since SCP's initial public offering in October 1995. We are gratified that the Company's continued growth has enabled the Board to declare another stock split." The three prior splits were announced when trading was at $25 - $35. After breaking out of a long-term channel in 1999, shares have almost quadrupled in price. The 52-week range runs from $22.75 to $39.50. Today, POOL closed down -0.04 to $38.56 on light volume of 24 thousand shares; the 3-month average volume is 132,500. About the Company: SCP Pool Corporation is the largest distributor of swimming pool supplies and related products. Through 164 service centers in the United States and Europe, the Company distributes more than 60,000 national brand and private label products to over 38,000 customers. =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- See Play of Day - AmeriSource - AAS in section 1 ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Change stop for RF Micro Devices (RFMD) from $25.00 to $26.50 =============== NB Closed Plays =============== ----------------- Closed Long Play ----------------- The InterCept Group - ICPT - close: 33.50 change: -1.50 Our initial play write-up cautioned to wait for a break above $36 before going long and we hope you took the warning to heart. The stock tripped our tight stop of $33.75 on Monday and continued down to close the day at $33.50. Low volume will probably keep ICPT trapped in its current range for a while. Picked on July 27th @ $35.00 Gain since picked: -1.25 Earnings Date: 7/25 (not confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ --------------- New Short Plays --------------- Professional Detailing - PDII Close:$63.12 Change:-1.58 Stop:$68.00 Company Description: Professional Detailing, Inc. provides customized product detailing programs and other marketing and promotional services to the United States pharmaceutical industry. This allows pharmaceutical firms to focus on drug development rather than sales and marketing. Fundamentals: For the 3 months ended 3/31/01, revenues totaled $173.1M, up from $71.3M. Net income rose 95% to $10.9M. Revenues reflect the recording of product sales of Ceftin for the first time. Earnings were partially offset by higher facilities expansion and field selling expenses. For the 2001 fiscal year the company's net income is expected to increase 22-percent. Analysts project company earnings to rise from $2.40 in 2001 to $3.14 in 2002. This gives PDII shares a low current P/E of 29 and a forward 2001 P/E of 22. Why We Like It: This former profitable Bearish selection earned its way back on the short list when it produced a downside break of support at $65.00. The stock had been hugging this level for the last six trading sessions. This follows a drop from $90.70 reached at the end of June. The culprit is contract cancellations including one from Pfizer, which was responsible for 5-percent of revenue. A Point and Figure analysis suggests a bearish target objective of $55 with the possibility of a meltdown to $48.00. We will watch as it approaches support at $60. However, rising selling momentum appears sufficient to punch through. Protection from a surprise Bullish reversal exists between $65.00 and $67.00. We will start this play with a stop at just above this level at $68.00. Picked on July 30th at $63.12 Earnings Date N/A (Not Confirmed) =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Updated stops: GBC Bancorp (GBCB) from $28.50 to $29.50 RailAmerica (RAIL) from $11.50 to $12.00 =============== AT Closed Plays =============== ---------------- Closed Long Play ---------------- Anadarko Petroleum - APC Close:$57.80 Change:-0.76 Stop:$57.50 We enjoyed a very lucrative run with Anadarko last week and are pleased to take our six point gains off the table. The stock had begun to run out of gas on Friday so our stops were tightened, but the downgrade by First Union was the final kicker to end this run-up. Picked on July 20th at $51.50 Gain since picked: +6.00 Earnings Date 7/26 (not confirmed) ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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.
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