PremierInvestor.net Newsletter Thursday 08-09-2001 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/8476_1.asp ================================================================= In section one: Market Wrap: Market's uncertain regarding stem cell stocks Market Sentiment: To Hold or Not to Hold Play-of-the-Day: Chevron Corp. - CHV Watch List: Innie, Minnie, Miney, Moe. ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 8-9-2001 High Low Volume Advance/Decline DJIA 10298.56 + 5.06 10312.19 10205.56 1.10 bln 1725/1358 NASDAQ 1963.32 - 3.04 1971.61 1941.24 1.43 bln 1680/1985 S&P 100 607.83 + 0.30 608.74 602.76 Totals 3405/3343 S&P 500 1183.43 - 0.10 1184.71 1174.68 RUS 2000 474.17 + 1.55 474.17 469.50 DJ TRANS 2834.63 - 47.41 2885.96 2830.64 VIX 23.64 - 0.72 25.01 23.42 Put/Call Ratio 0.76 ----------------------------------------------------------------- =========== Market Wrap =========== Market's uncertain regarding stem cell stocks by Jeff Bailey Shares of publicly traded stocks involved with stem cell research found buyers ahead of President Bush's scheduled announcement on whether he will allow federal funding for the controversial, yet promising research. Shares of StemCells Inc. (NASDAQ:STEM) jumped 36% to close at $6.45, while shares of Aastrom Biosciences (NASDAQ:ASTM) surged 26% to close at $2.25 and Geron (NASDAQ:GERN) vaulted higher by 15% to $14.94. While today's gains are impressive impressive, the charts of these three stocks indicate that uncertainty does exist. After you look at their financial statements, you certainly see why these stocks are traded purely based on the promises that stem cell research may provide. When traders or investors begin thinking of where to place their bets on such a speculative venture, what's the best way to place your bet? Unless you are well read on the topic or you're a biologist that understands this research it would be tough to make an educated bet on which company (if any of these three) will be the winner. If however we feel that the MARKET is all knowing, then perhaps there's something in the charts that might lead us down the path of stem cell prosperity. Geron Corporation - $1 and $0.50 box I'm not playing favorites, but I did glance at the financials of the three companies mentioned above. Geron Corporation (GERN) reported revenues of $1.8 million for the three months ended March 31, 2001 (most revenue of the three) and approximately 108 institutions own 19% of the stock's float. (STEM 26 inst. 7% of float, ASTM 25 inst. 5% of float). I'm guessing that the some of the institutions that own these stocks have analysts with biomedical backgrounds that understand the technology much better than I do. A betting trader might want to try and stack as many odds in his favor as possible if he is going to speculate and a very brief process of elimination does show this company with the largest base of revenue (they lost $7.4 million on the bottom line for quarter ending 03/31/01). Next closest was Aastrom Biosciences with quarterly revenue of $653 million. Institutional sponsorship is also greater for Geron (GERN) by a rather wide margin. To me, the appearance of greater institutional sponsorship at least give some resemblance of interest. If things work out for the company and President Bush's decision is favorable for further stem cell funding, then I at least have the feeling there are approximately 108 institutions that are familiar with the company and its stem cell process. Thinking of shorting a biotech? Think again please. While some biotech stocks may not be around a year from now and sometimes their research seems far-fetched. A trader is wise to play the bearish side ONLY with options. A friend of mine was very well informed regarding solid tumor therapies being developed by several young biotechnology companies. He "knew" that the company he was buying stock in had the "blockbuster" treatment that would cure solid tumor cancer. He also "knew" that a company by the name of EntreMed Inc. (NASDAQ:ENMD) and their solid tumor treatment didn't hold a candle to the competition. While my friend "knew" all of this, the market felt differently about his knowledge. EntreMed, Inc. Chart - December 1999-January 2000 While some traders and investors "knew" that EntreMed's treatments and trials were suspect, the market sure seemed to think differently. My education and thoughts on shorting biotechs didn't begin just recently (December 2000). No, my beliefs were founded long ago, but EntreMed's stock price action over time has at least warned me of the danger. If you're thinking that "this only happens to the other guy" please reconsider. I love to short stocks, but I'll leave the shorting of biotech stocks to those with very deep pockets. If you think a run from $34 to $69 is bad, then look at the chart below. EntreMed Inc. Chart - Spring of 1998 This was my first observation on an up close view of what can happen when a trader is short a biotech stock. In my years of trading, I had never witnessed anything like it. My friend (even before this day) had explained to me that EntreMed's technology was years behind other technologies. Things can change quick overnight for a biotech stock if the MARKET thinks the company has a blockbuster therapy or drug for saving/extending lives. Again... a good way to play these types of stocks is with options (if options are available on the stock). Since risk is unlimited in a short, I prefer to play the downside in a biotech stock with a put option. From the bullish side, the most you can lose is your initial investment. Perhaps this is a good lesson on risk management that will save you lots of headaches and cash. I'm not "friend bashing" in the above commentary. This friend truly is knowledgeable on the various processes and treatments of solid tumor cancer treatment methods and how the drugs are designed to attack the cell or starve its blood supply. The other thing I learned from EntreMed is "trade what you observe, not what you believe." ================ Market Sentiment ================ To Hold or Not to Hold by Jeffrey Canavan That's the question facing the markets on Friday. We've heard enough people spout that the bottom is here and the worst is over, but now is the time for them to put their money where their mouth is. But should we? Dow Jones Industrial Daily Chart The Dow gained five points today. Not great, but considering the Dow was down over 80 points today, it was a small victory. What that price action formed was a hammer. This one-day candlestick pattern signals that perhaps buyers have been able to wrestle back control from sellers. This pattern is just a potential turning point, and requires bullish confirmation tomorrow. Should that fail to happen, like it did on June 11th, keep a close eye on support in the 10,200 to 10,120 area. Nasdaq Composite Daily Chart Similar story over at the Nasdaq, early morning sell off followed by an afternoon rally. The Nasdaq finished 3 points in negative territory, but formed what is known in candlestick lingo as a doji. Same interpretation as the hammer, after an extended decline, buyers have fought back to end the day in a draw, signaling a possible turning point. Combined with a stochastic, one-day candle patterns have done a good job of marking turning points (see chart above). If the Nasdaq doesn't turn, monitor support at 1,934 for signs of additional weakness. So if buying at support and selling at resistance has been the way to play this market, we should be at a buying point, most likely a short-term one. Going long in the face five straight days of selling is a tough thing for any trader to do, and can lead to painful losses if done too soon. Since the bond market opens before the stock market, look for rising bond yields as a potential reversal sign. The PPI number also comes out before the bell, so keep an eye on how bonds and stock index futures react to that news. The first hour of trading has been an awful indicator of how the day is going to go, so it might be wise to wait for all the rookies to place their orders first. Depending on your trading time frame, bears may want to consider lowering stops or locking in profits should we get a reversal. Aggressive bulls may want to consider small long positions (1/4 the size of normal) as market conditions dictate. Conservative bulls should start lining up long candidates with good risk/reward ratios and support close by. Based on today's up and down trading, and the fact that tomorrow should be a light volume summer Friday, getting an early jump on weekend traffic doesn't sound bad either. ----------------------------------------------------------------- Market Volatility VIX 23.64 VXN 48.15 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total .76 584,760 446,984 Equity Only .69 491,696 341,601 OEX 1.09 19,619 21,363 QQQ 1.61 35,901 57,962 1.61 is one of the most bearish readings in the triple Qs this year. Another possible sign of a turning point? ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 34 - Bear Confirmed NASDAQ-100 50 - Bull Alert DOW 36 - Bull Alert S&P 500 54 - Bull Confirmed 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 ----------------------------------------------------------------- 5-Day Arms Index 0.96 10-Day Arms Index 1.21 21-Day Arms Index 1.13 55-Day Arms Index 1.07 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 1723 1363 NASDAQ 1681 1984 New Highs New Lows NYSE 143 59 NASDAQ 55 99 ----------------------------------------------------------------- Advisory Sentiment Bullish Bearish Correction Net Change 52.6% 23.7% 23.7% 28.9% -0.4% 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: 07/31/01 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. COT data can be found at www.cftc.gov. 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 There were no significant changes in the bullish percent data this week. Commercials Long Short Net % Of OI 7/17/01 336,836 403,561 (66,725) ( 9.01%) 7/24/01 317,241 392,146 (74,905) (10.56%) 7/31/01 335,532 409,352 (73,820) ( 9.91%) 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 7/17/01 122,525 50,211 72,314 41.86% 7/24/01 141,372 61,665 79,717 39.26% 7/31/01 129,648 54,552 75,096 40.77% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 There were no significant changes in the bullish percent data this week. Commercials Long Short Net % of OI 7/17/01 26,721 37,225 (10,504) (16.43%) 7/24/01 27,396 39,198 (11,802) (17.72%) 7/31/01 28,009 39,613 (11,604) (17.16%) 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 7/17/01 11,680 8,183 3,497 17.61% 7/24/01 12,170 7,744 4,426 22.23% 7/31/01 11,216 8,938 2,278 11.30% 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 There were no significant changes in the bullish percent data this week. Commercials Long Short Net % of OI 7/17/01 14,145 12,963 1,182 4.4% 7/24/01 16,080 12,812 3,268 11.3% 7/31/01 17,748 13,669 4,079 13.0% 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 7/17/01 5,255 9,144 (3,889) (27.01%) 7/24/01 5,599 9,526 (3,927) (25.96%) 7/31/01 5,049 9,079 (4,030) (28.52%) 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) ========================= Chevron Corp. - CHV Close:$90.59 Change:+0.58 Stop:$93.00 Original Comment When Selected on August 2nd: Company Description: The third largest US integrated oil company (behind Exxon Mobil and Texaco) runs more than 8,100 gas stations and has proved reserves of 5 billion barrels of oil and 9.5 trillion cu. ft. of natural gas. It will expand even further by buying Texaco, and the new ChevronTexaco will be the world's fourth-largest integrated oil company, behind Exxon, Mobil, Royal Dutch/Shell, and BP. Overseas, Chevron is pursuing an exploration and production strategy in such lucrative areas as Kazakhstan and Angola, and it holds a 50-percent stake in Caltex, a global refiner and marketer jointly owned by Texaco. Chevron has also combined its chemicals operations with those of Phillips Petroleum. Fundamentals: Analysts forecast the company will earn $7.86 per share in 2001 and $5.98 in 2002. Last year, the company earned $8.13 per share. The company has a current P/E of 11 and a forward 2001 P/E of 12. The average P/E for the industry is 14. Why We Like It: The shares are showing a topping pattern with consecutive trading sessions of lower closes and session highs. After a sharp move up from $84.75 on July 24th the shares are over extended and ready to test lower levels. The next support level is the 200-day moving average of $87.77. Critical support exists for the shares at $85; if the bears pick up steam, a move through this level would make likely a test of $80. Updated Comments: Oil stocks got a brief reprieve today, and Chevron gained 54 cents. That wasn't even enough to recoup 50 percent of yesterday's losses. As the 50-day moving average continues to fall, this stock still looks like a good short candidate. Picked on August 2nd at $91.05 Gain since picked: +0.52 Earnings Date N/A ========== Watch List ========== QUALCOMM - QCOM - close: 65.72 change: +0.63 WHAT TO WATCH: Honestly? You should be watching the NASDAQ. Shares of QCOM have held up pretty well the last few days only dipping on Wednesday when selling pressure was the strongest. If the NASDAQ can reverse course and begin its multi-day journey back to the top of its trading range (2100) then QCOM might be able to breakthrough resistance at $69/$70 and really have room to move. On the other hand if the NASDAQ collapses further then QCOM will not be immune for long and shares could trade as low as $57.50 or worse. --- Check Point - CHKP - close: 40.51 change: +0.81 WHAT TO WATCH: With the GSO software index hovering at support near 180 and shares of CHKP hovering at $40 the stock could go either way. If the NASDAQ rallies up, then CHKP could trade up to $45/$46. If the NASDAQ breaks down then CHKP could drop to $35 again. Not a bad move either way if you can catch it. --- Qwest Comm. - Q - close: 24.29 change: +0.09 WHAT TO WATCH: Investors should be looking for a close over $25. You upward target depends on how much you believe in the company's fundamentals. Many analysts feel that the sell-off in Qwest shares are way overdone. From the end of April, shares have fallen from almost $42 to $23 just a few days ago. One possible culprit was a sell-off in rival Global Crossing (GX). Last week GX announced they would be forced to slash their own growth outlooks. In contrast Qwest just confirmed their own growth outlook for 2002 two days ago (Reuters). We feel that we might be looking at a potential bottom in Q so it's worth keeping an eye on the stock over the next few days (market permitting). --- Texas Instruments - TXN - close: 34.20 change: +0.54 WHAT TO WATCH: There always seems to be trading opportunities in the semi stocks and TXN may be one to watch now. Keeping your eyes on the NASDAQ and the SOX, TXN could go either direction. If the sector/market rallies, then TXN could return to $38 or its 200-dma (38.31). If the sector/market falters, then TXN could fall to support near $30/$29.50. --- Intl. Business Machines - IBM - close: 104.08 change: -0.11 WHAT TO WATCH: Yet another stock teetering on support, IBM bounced off support at $103 for the sixth time since the middle of July. Today marked the fifth down day in a row for the stock and its second day under its 200-dma (104.36). The broader market will be the key but whatever direction IBM decides to go traders could see several points. Upper resistance is at $110 while short-term support is scattered between 103 and 100. However, below 100 the stock could fall to 95 or 90. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. 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PremierInvestor.net Newsletter Thursday 08-09-2001 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/8476_2.asp ================================================================= In section two: Split Trader Split Announcements: CONMED (CNMD), John Nuveen Co. (JNC) New Plays: General Dynamics Corp - GD (Bullish) Play Updates: SBIB, SSP Closed Plays: None Net Bulls New Plays: Ebay - EBAY (Bullish) Bullish Play Update: Microsoft Corp. - MSFT Bearish Play Updates: SPOT, PSFT Closed Plays: None Stock Bottom / Active Trader New Plays: Newmont Mining Corp - NEM (Bullish) Bullish Play Updates: GCI, RAIL Bearish Play Updates: BZH, CHV, RIG Closed Plays: None Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Split Trader (ST) section ================================================================== =================== Split Announcements =================== CONMED Declares Stock Split The Board of Directors of medical technology company CONMED Corporation (Nasdaq:CNMD) announced its approval of a 3-for-2 stock split of its common shares, payable in the form of a 50 percent stock dividend on September 7, 2001. Upon the expiration date of September 10 there will be 25 million shares outstanding and a float of 11.5 million. The last split announced was a 3:2 in December 1995 at the $30 level. On August 1, CONMED announced that its subsidiary, Linvatec Corporation, released the UltraSorb Suture Anchor for rotator cuff repair, offering many advantages over current suture products. Joseph J. Corasanti, President and CEO of CONMED comments, "Our shoulder surgery offering is among the fastest growing of any of our arthroscopic products. The bioabsorbable UltraSorb implant adds to the depth of our shoulder line because of its ease-of-use and strong fixation capabilities." Approximately 400,000 rotator cuff repairs are performed globally each year. Upon today's split announcement, shares traded down -0.71 after opening lower to $30.92. 133 thousand shares change hands on the average. About the Company: CONMED is a medical technology company specializing in instruments and implants for arthroscopic sports medicine, and powered surgical instruments for orthopedic, ENT, neuro-surgery, and other surgical specialties. The Company is also a leading developer, manufacturer and supplier of advanced medical devices, including RF electrosurgery systems used in all types of surgery, ECG electrodes for heart monitoring and minimally invasive surgical devices. Headquartered in Utica, New York, the Company's 2,400 employees distribute its products worldwide from eight manufacturing locations. (company press release) === Money Manager John Nuveen Company Declares Stock Split, Increases Share Buyback Program During regular trading on Thursday, The John Nuveen Company (NYSE: JNC) announced a 3-for-2 stock split of its common stock, payable September 27, 2001. This is the Company's first split announced since public trading began in 1992. JNC also authorized an increase in its common share buyback program for up to 2.75 million additional shares in the open market. Approximately 290,000 shares are currently available for purchase under the previous program. The Company has also declared a regular quarterly cash dividend of $0.36 per share to be paid September 14 to shareholders of record as of September 4. Fractional shares will be paid out in cash. Chairman and CEO Tim Schwertfeger comments, "We are very pleased that Nuveen's continued growth and strong performance have created the opportunity for a stock split. This action is a reflection of our confidence in the continuing momentum of our business. The high quality orientation of our investment products, particularly in today's market environment, positions us well with financial advisors and their affluent and high net worth investors seeking to rebalance and moderate risk in their portfolios. We believe that over time the split will help to create a more liquid market in our Company's stock for current and prospective shareholders." The John Nuveen Company currently has 31 million shares outstanding, a float of 3.4 million, and 150 million shares authorized for issuance. The stock averages a volume of 38 thousand shares on a 3-month basis and has a 52-week range of $43.00-$63.80. JNC closed up +0.33 to $63.05 on Thursday. ============ ST New Plays ============ ------------------------- New Split Candidate Play ------------------------- General Dynamics Corp - GD Close:$83.85 Change:+1.84 Stop:$79.00 Company Description: Falls Church, Virginia-based defense manufacturer operates in four primary areas: marine (warships and nuclear submarines), aerospace (business jets), information systems and technology (command and control systems), and combat systems (tanks and amphibious assault vehicles). Almost 60-percent of its revenue comes from the US government, and it is the largest shipbuilder for the US Navy. The company's Bath Iron Works subsidiary builds the Navy's class DDG 51 destroyers. Another subsidiary, Electric Boat, builds Seawolf class attack subs. The company's Land Systems subsidiary builds the M1 series tank. GD has been focusing on its commercial aircraft and defense-related electronics operations, but it's also expanding into munitions for tanks and other weapons systems. The company has announced a tender offer good through August 17th of 22 million shares for rival Newport News Shipbuilding (NNS). This equates to approximately $2.1 billion, or 10 times operating earnings. Fundamentals: Analysts forecast the firm will earn $4.56 per share on sales of $11.9 billion and $5.17 on $12.5 billion in 2002. Last year, the company earned $4.03 on $10.4 billion. This gives the company a current P/E of 20.8 and a forward 2001 one of 18. This is inline with the industry average P/E of 20. Other fundamental industry comparisons are gross profit margin (company: 23.89-percent, industry: 19.48-percent), return on equity (24.4-percent, 4- percent), price/sales ratio (1.55, 0.89), price/book ratio (4.18, 2.58), price/cash flow ratio (14.42, 11.65) and debt/equity ratio(0.28, 0.87). Why We Like It: This defense monster has one of the best balance sheets in the industry and strong cash flow. The shares have been consolidating just short of resistance at $84 in a range of roughly $84 to $81.50. On Thursday, the shares put in a strong day from the opening bell through to the close with nary a dip in-between. Volume spiked from 595k on Wednesday to 920k on Thursday. This is consistent with other recent bullish indications; as the shares have consolidated, on down days volume has been consistently lower than on up days. Taken as a whole, it looks as if the bulls are gearing up for another run at besting $84. Conservative traders can wait for a close above $85 before taking a position. Our longer-term price objective is $95; intermediate resistance is at $88.00. We will begin with a stop at $79. Picked on August 8th at $83.85 Earnings Date 10/17 (Not Confirmed) =============== ST Play Updates =============== ----------------- Split Run Updates ----------------- Sterling Banc. - SBIB - close: 21.84 change: -0.35 stop: 21.35 *new* If you remember our write up on Tuesday (Aug. 7th) we felt that SBIB might make a good trade up into its payable split date of September 19th. However, with the continuing broader market declines, only the rarest of stocks even with an upcoming split will not be able keep a strong uptrend. If the Dow and the NASDAQ break down below strong support then we could see a sharp round of panic selling as SBIB investors rush in to lock in any profits from the last several weeks. The last few days have almost produced what some candlestick fans might call an "evening star". This is a potential bearish reversal signal. We think it's just a little profit taking from the big breakout three days ago. However, to better protect trading capital we suggest moving the stop up. The newsletter will place ours just under the 10-dma (which is at 21.41) or 21.35. Traders with a bullish bias should be hoping for a bounce at 21.50. There is more support at 21 but we'd rather be out sooner and re-evaluate later. Picked on August 7th @ $ 22.09 Gain since picked: - 0.25 Earnings Date: N/A ----------------------- Split Candidate Updates ----------------------- E W Scripps - SSP - close: 70.05 change: -0.08 stop: 69.00 *new* The company put out a press release with July's revenues with mixed results. Revenues for July were $112M, down 1.9% from a year ago. Newspaper revenues were down 2% versus a year ago. However, Scripps Networks, their TV division, saw revenues up 15% to almost $27M. Shares dipped in early trading but bulls managed to keep the stock above support of $70. If you haven't looked at a chart of SSP lately, maybe you should. The stock has been holding up rather well compared to the rest of the market. Considering the current environment we're going to snug our stop up very tight at $69. This should limit our exposure just under $1.25. Picked on August 2nd @ $ 70.21 Gain since picked: - 0.16 Earnings Date: 7/12/01 ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ -------------- New Long Play -------------- Ebay - EBAY Close: $62.84 Change: +0.45 Stop: $59.00 Company Description: eBay Inc. has developed a Web-based community in which buyers and sellers are brought together in an auction format to buy and sell items such as antiques, coins, collectibles, computers, memorabilia, stamps and toys. Fundamentals: For the 3 months ended 3/31/01, revenues rose 79% to $154.1M. Net income totaled $21.1M, up from $1.8M. Results reflect an increased number of registered users, higher gross merchandise sales and improved operating margins. For the 2001 fiscal year the company's net income is estimated to increase 114-percent, while it is anticipated that 2002 net income will rise by 60-percent. Analysts expect company earnings to rise from $0.45 in 2001 to $0.72 in 2002. The current P/E is 139 and the forward P/E is 87. Strategy: After reaching a near term high of $71.30 in the middle of June, shares of EBAY took a well deserved breather, retracing recent gains back down to support at $60.00. The consolidation phase that the stock has seen this month has dragged shares under the 20 and 50 DMAs and could represent a strong opportunity for investors at current levels. Perusing through technical indicators, Stochastics show that EBAY has returned to what could be a profitable trading range. With MACD sitting at the break even line and support being reinforced over the last three weeks, all that remains is a catalyst to remind buyers. We like EBAY at current levels and are convinced that if buyers return to the tech markets in the month of August, the blue chip types are likely to be some of the strongest beneficiaries. Bearing this in mind, as well as the strong support we see at $60.00, we'll place our stop at $59.00. Short-term traders might wish to wait for a minor pullback, but resistance probably won't arrive until shares clear $65.00. It is at this approximate level that a short-term exit would be most favorable. However, the longer-term investor may wish to hold on until the next level of resistant at $69.00 or longer until the recent high of $71.30 is reached. Either way, do remember to protect the downside with a stop at $59.50. Picked on August 9th $62.84 Earnings Date 10/18 (Unconfirmed) =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Microsoft Corp. - MSFT - close: 65.01 change: +0.15 stop: 64.00 As usual there was a rain of news articles about Microsoft relating to everything from the court case, the Windows XP launch, the icon debate and AOL and MSN's customer satisfaction. The stock didn't move much which probably helped both the Dow and NASDAQ remain above their current support levels. The intraday low did come within 30 cents of our stop but we remain in the play. As long as you keep a tight stop this may be a good entry point if you just have to trade something. Otherwise, look for shares to cross back over $66 or $67 before making any moves. Picked on August 2nd @ $67.45 Gain since picked: - 2.44 Earnings Date: 07/19 (confirmed) ----------------------- NB Bearish Play Updates ----------------------- PanAmSat Corp. - SPOT - close: 32.38 change: +0.43 stop: 34.00 As you know, Hughs Electronics (GMH) owns a majority stake in SPOT. EchoStar (DISH) is trying to purchase GMH for its DirecTV division. However, a study was just released that said if this merger came to pass, the new marriage would create monopolistic conditions for certain areas of the population. This was the exact argument DISH tried to use against News Corp's bid to acquire GMH. Shares of SPOT managed a small gain on the day but the stock closed off its highs and below resistance in the 33.00-33.50 area. More conservative traders looking to capitalize on any move may want to wait for shares to fall below 31.50 to confirm SPOT's weakness. Picked on August 3rd @ $31.58 Gain since picked: - 0.80 Earnings Date: N/A --- PeopleSoft - PSFT - close: 40.71 change: +1.20 stop: 45.50 PSFT managed a small bounce today after falling 6.5% on Wednesday during the software sector's punishing decline with the NASDAQ's breakdown mid-week. The retracement from $45 to $40 is complete and PSFT almost hit its 200-dma yesterday with a low of 38.54. Mid-afternoon today a story was released that said the U.S. Dept. of Defense had made a deal with PSFT to use the PeopleSoft 8 Human Resources Management Systems for DoD's 3.1 million military personnel HR and payroll needs. This is likely to be a significant account for PSFT but details including the final contract amount was not released. Alas the good news could not shake PSFT's stock out of its trend of lower highs. Bears should be looking at two key levels now for the next move down. $40 is the first hurdle followed by the 200-dma currently at 38.23. New entries should be made carefully as the stock will likely find some amount of support in 2.50 increments (40.00, 37.50, 35.00, 32.50, etc...). Picked on August 7th @ $42.38 Gain since picked: + 1.67 Earnings Date: N/A ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ -------------- New Long Plays -------------- Newmont Mining Corp - NEM Close:$20.50 Change:+1.36 Stop:$18.50 Company Description: The company is the world's second largest gold producer, its Carlin (Nevada) Trend and other North American operations produce about 65-percent of its total gold production. Newmont acquired Battle Mountain Gold, with four mines (two in Canada and one each in Bolivia and Australia) in 2001. Newmont also has a 51-percent stake in Peru's Yanacocha Mine and produces gold through operations in Mexico (44-percent owned La Herradura), Uzbekistan (50-percent owned Zarafshan-Newmont), and Indonesia (80-percent owned Minahasa). Batu Hijau, a 56-percent owned Indonesian mining project, produces gold and copper. Newmont's proven and probable reserves total 66.3 million ounces of gold and 6.1 billion pounds of copper. Over the next five years, the company has plans: to produce at least 5 million oz. annually; reduce cash costs to below $160 an oz.; raise annual production at Yanacocha in Peru to over 2.5 million oz.; cut the ratio of net debt to total capital to 25% to 30% within three years; and reinforce its commitment to community development, environmental responsibility and employee safety. Fundamentals: Analysts project the company will lose 9-cents per share this year on sales of $1.7 billion and to earn 35-cents on $1.9 billion in 2002. Last year, the company lost 8-cents on $1.55 billion. Analysts estimate the company will sport earnings growth of 28.5 percent for the next five years as opposed to the industry average of 13.86-percent. Why We Like It: There are a number of factors boosting the shares of gold producers; a weakening dollar, slumping US equities and low yielding bonds are losing their attraction for many investors. In addition consumption is outstripping production and gold inventories at COMEX warehouses are dropping. This has driven gold futures to climb $6 an ounce on Thursday to their highest level in six weeks. Newmont Mining shares joined in and pulled out of a base to gain $1.36 on the day. Trading volume 74-percent higher than the daily average, suggests the bulls are running. With strong momentum and a positive business outlook, we have a shorter -term price target of $24 and a longer term one of $29.00. Conservative traders can wait for a break above $21 to present an attractive entry. Picked on August 9th at $20.50 Earnings Date 11/1 (Not Confirmed) =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Gannett GCI Close:$67.18 Gain:-1.93 Stop:$66.50 NEW Media stocks attracted some selling today after Dow Jones & Co. reported that advertising lineage in the Wall Street Journal fell 30%. Since Gannett derives a good portion of its revenues from advertisers, today's drop was mostly due to that news. Support at $68 was lost, so in light of this new data, we are raising our stop to $66.50. Picked on August 3rd at $68.53 Gain since picked: -0.62 Earnings Date N/A RailAmerica RAIL Close:$13.30 Gain:+0.20 Stop:$12.00 RAIL had a decent day, gaining 20 cents to $13.30. That moves the stock further away from support, but resistance at $13.77 is still a hindrance. The 50-day moving average flattening out, and the CEO selling 80,000 shares flashes some signs of caution for this stock. Picked on July 14th at $11.41 Gain since picked: +1.72 Earnings Date N/A ------------------ Short Play Updates ------------------ Beazer Homes BZH Close:$64.74 Gain:+0.97 Stop:$70.00 Beazer gained 97 cents today, but failed to climb back above the 50-day moving average, and long-term up trend. If poor housing data comes out next week, this stock could be doomed. Canadian housing starts fell 13.7% percent last month. Picked on August 6th at $65.08 Gain since picked: +1.98 Earnings Date N/A --- Chevron CHV Close:$90.59 Gain:+0.58 Stop:$93.00 Oil stocks got a brief reprieve today, and Chevron gained 54 cents. That wasn't even enough to recoup 50 percent of yesterday's losses. As the 50-day moving average continues to fall, this stock still looks like a good short candidate. Picked on August 2nd at $91.05 Gain since picked: +0.52 Earnings Date N/A --- Transocean Sedco Forex RIG Close:$29.75 Gain:+0.50 Stop:$36.50 Oil Service stocks also got a break from the selling, and RIG gained 50 cents. That doesn't even put a dent in the recent losses. The trend for this stock still looks bearish. Picked on July 31st at $32.29 Gain since picked: +2.65 Earnings Date N/A ================== Trading Ideas ================== This section contains stocks that meet criteria which may make them of interest to long and short side traders. These are not recommendations, nor have they been reviewed by PremierInvestor editors for investment potential. However, each of them has technical and fundamental characteristics that make them worthy of further review by traders and investors looking for fresh ideas. New stocks will appear daily following the market close. --------------------------------- Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change MGA Magna International Inc 64.20 +0.70 ROST Ross Stores Inc. 25.18 +1.08 PC Perez Companc Sa 13.50 +0.57 PSS Payless Shoe Stores 57.78 +0.68 FED Firstfed Financial Corp 34.25 +1.19 WTSLA Wet Seal Inc Cl A 15.40 +1.70 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change DDS Dillards Inc 16.51 +1.37 WFII Wireless Facilities Inc 9.69 +1.72 GERN Geron Corp 14.94 +2.04 OATS Wild Oats Markets Inc 11.95 +1.78 STEM Stemcells Inc 6.45 +1.72 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change AEG Aegon Nv 29.46 +1.40 TJX Tjx Companies Inc 35.35 +1.32 NFS Nationwide Fin Srvc Inc 46.45 +1.01 ASD American Standard Cos 70.25 +1.99 NEM Newmont Mining Corp 20.50 +1.36 GPT Greenpoint Financial Corp 43.70 +1.45 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change GS Goldman Sachs Group 80.05 -1.75 GPS Gap Onc 25.60 -1.57 PVN Providian Fin Corp 46.12 -1.12 BBY Best Buy Co Inc 61.53 -1.37 CVC Cablevision Systems Cl A 51.85 -2.00 TSS Total System Services 31.97 -1.21 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change RX Ims Health Inc 24.80 -0.45 TROW T Rowe Price Assoc. 36.85 -0.50 SPW Spx Corp 121.60 -3.52 PNR Pentair Inc 36.37 -0.18 RNF Raymond James Financia l28.60 -1.90 HBC Hsbc Holdings Plc 59.15 -0.75 ================================================================= 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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