PremierInvestor.net Newsletter Tuesday 08-28-2001 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/4875_1.asp ================================================================= In section one: Market Wrap: Major averages show little signs of strength Market Sentiment: Stocks and Confidence Drop Play-of-the-Day: OM Group, Inc. - OMG (Bullish) ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 8-28-2001 High Low Volume Advance/Decline DJIA 10222.03 -160.32 10382.83 10214.34 .98 bln 1232/1868 NASDAQ 1864.96 - 47.43 1916.28 1864.72 1.41 bln 1337/2303 S&P 100 594.13 - 10.09 604.59 593.95 Totals 3569/4171 S&P 500 1161.51 - 17.70 1179.68 1161.17 RUS 2000 474.20 - 4.73 479.27 473.99 DJ TRANS 2831.13 - 0.78 2838.52 2807.81 VIX 24.02 + 1.58 24.23 22.51 VXN 48.74 + 1.52 49.46 47.79 Put/Call Ratio 0.88 ----------------------------------------------------------------- =========== Market Wrap =========== Major averages show little signs of strength by Jeff Bailey Recent rallies for some of the broader market averages have been short lived and traders are left with a very range bound market. The Dow Industrials have held up relatively well, but look to be challenging recent lows yet again. With MACD below the zero level, I'd remain very cautious for getting overly bullish as it looks like market bears were laying in wait on the recent rally to the 50-day moving average. A break below the 10,120 low (July 11th low) could see the Dow Industrials slip and test our 38.2% retracement of 9,983. Dow Jones Industrial Average - last 10 months With the Dow Industrials closing below the 10,250 level and our 50% retracement, tomorrow becomes an interesting day for traders to be monitoring. The recent rally looks like bears were in wait and sold stocks into the strength of the rally. According to the Stock Traders Almanac, the last two days of August have been murderous the past four years in a row. S&P 500 Index Chart - last 10 months A comparison between the Dow Industrials (INDU) and the above chart of the S&P 500 shows us that the SPX has less sponsorship. Today's action has the SPX back below our long-term downward trend dating back to September 1, 2000. The rallies above that trend have seemed dramatic when they've happened, but you sure get the feeling that those rallies were used as selling opportunities. A dramatic sell-off here could have the SPX trading down to the 1,134 level at 80.9% retracement. This also correlates relatively closely to the bearish price objective from our point and figure charts (10-point box) dating back to June. NASDAQ Composite Index Chart - last 9 months Yesterday's intra-day rally came close to our 50% retracement bracket level of 1,940. This was a horizontal level that had been acting like support in July, but once broken now looks to be serving as resistance. This should put many traders on the defensive if they were not already there. A good short-term gutter washing could see this index retreat to the 80.9% retracement level of 1,753. There were very few technology sectors that didn't show some weakness today. With the NASDAQ Composite trading lower by 2.48%, the GSTI Software Index (GSO.X) was today's downside winner as this index lost 3.76% and led the major sector decliners. This is not unexpected in a declining market as we have noted in past sessions just how weak this sector is RELATIVE to the market (as characterized by the S&P 500). Semiconductor stocks (SOX.X) and Biotechs (BTK.X) lost 2.84% and 2.22% respectively and their leadership was missed for the first time in 5 sessions. In the near-term, equity bulls will get a good feel for where things go from here. If one or both of these sectors are unable to lead, the I would expect continued weakening for the NASDAQ Composite. I continue to get the feeling that there are times when sectors like the semiconductors and biotechs want to show leadership, but their exertion of strength gets squashed by the poor performance from groups like the Internets (INX.X) (getting close to another 52-week low), Networking (NWX.X) and GSTI Software Index (GSO.X). The current game in technology is to continue to trade the Semiconductors and Biotechs for strength, while trading short/put the Internets, Networking and Software sectors on weakness. I continue to like select names in some of the "old economy" types of stocks. Shares of Nike (NYSE:NKE) make an attractive "strong stock on pullback" candidate as that stock has had a tendency to pull back in small increments, then makes a sharp move higher to a new relative high. Office Depot (NYSE:ODP) just barely set a new 52-week high today of $14.06 after gapping higher back in mid-July at $12. Deere Co. (NYSE:DE) traded lower by 0.59% today after the company announced plans to cut employees and close plants, yet the stock is up nearly 16% from its June and July lows. In a nutshell, there are stocks like those mentioned above that have been looking like they were gaining institutional sponsorship in recent months that continue to hold tough. The longer they are able to hang in there, the greater potential they have for becoming the leaders on the next market advance. I think the same is true with many biotech and semiconductor stocks as it relates to technology. While I'm not a big fan of networking stocks, there is one name that I'm impressed with. The fundamental investor might want to do some homework on shares of SpectraLink Corporation (NASDAQ:SLNK) as earnings/sales are growing and the company has very little debt. In essence, the company looks well positioned and managed considering other stocks in the sector. Technicals show good relative strength vs. the S&P 500 and sector and a trade at $17.50 would have the stock giving a triple top buy signal above bullish support trend. Today's announcement that it has joined Cisco's Architecture for Voice and Video Integrated Data "AVVID" helped the stock gain 3% and close at $16.55. Support looks to be firming at the $14 level. A break above the $18.18 level puts the stock back at a 52-week high with overhead supply dating back to March 2000 from $20-$30. ******************************************************************* *********************************************************** FREE ONLINE SEMINAR - Wednesday, August 29 at 10:00 Pacific Online Spread Trading *********************************************************** Here we go again - FREE, FREE, FREE Last week was a huge success - here is another one! PreferredTrade will be conducting a LIVE trading seminar during the market hours on Wednesday. And it is FREE!! Learn about online spread trading using the direct access Preferred Trade system. Ask your questions LIVE. Here are the instructions to attend: No need to register all you have to do is show up. 1. Click on this link: http://www.premierinvestorseminars.com/seminar/entrance.asp 2. Click on Join Meeting for the meeting titled: Trade using Online Spreads by PreferredTrade 3. The password is: spreads It will be a good idea to sign on 15 minutes before the start. ******************************************************************* ================ Market Sentiment ================ Stocks and Confidence Drop by Jeffrey Canavan A decline in consumer confidence was not what a jittery market needed, but that's what they got. The Conference Board reported that consumer confidence fell to a four-month low of 114.3 in August amid concerns about unemployment. Wall Street was hoping for a slight increase in consumer confidence, and went into sell mode when they didn't get what they wanted. Intel tried to inject some positive news into the market by saying they expect a seasonal improvement in second half demand, but the stock still closed down 50 cents. Nasdaq Composite Daily Chart Intel couldn't help the Nasdaq Composite either, which lost 2.48% and closed on its low. Today's drop erases most of Friday's gains, and sets up the composite for a test of last week's low at 1817. S&P 500 Daily Chart Just when it looked like the S&P 500 might be able to hold above 1,177, it drops 1.50% and also erases all of Friday's gains. That puts the S&P 500 within 8 points of last weeks low. While charts are nice, today's action was all about economic data, and tomorrow should be more of the same. The tone will be set early when revised 2nd Quarter GDP numbers are released at 8:30AM EST. Expectations are for flat growth, and anything less could spark another selling spree. Gateway may be able to help computer stocks tomorrow after announcing that they expect to be pretax profitable in Q4 by exiting the European market and cutting 25% of its global workforce. The stock is up 49 cents in after hours trading. ----------------------------------------------------------------- Market Volatility VIX 24.02 VXN 48.74 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total .88 398,269 349,369 Equity Only .80 349,708 278,525 OEX 1.12 10,697 12,021 QQQ .89 37,260 33,106 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 34 - Bear Confirmed NASDAQ-100 24 - Bear Confirmed DOW 36 +6 Bull Alert S&P 500 48 - Bull Correction S&P 100 38 - Bull Correction 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 1.10 10-Day Arms Index 1.30 21-Day Arms Index 1.38 55-Day Arms Index 1.27 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 1230 1874 NASDAQ 1338 2301 New Highs New Lows NYSE 100 50 NASDAQ 47 94 Volume (in millions) NYSE 982 NASDAQ 1,414 ----------------------------------------------------------------- Advisory Sentiment Bullish Bearish Correction Net Change 46.9% 30.2% 22.9% 16.7% -3.2% 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: 08/21/01 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 Flat line. Commercials' net position hasn't budged in three weeks. Commercials Long Short Net % Of OI 8/07/01 331,881 406,210 (74,329) (10.07%) 8/14/01 337,327 411,504 (74,177) ( 9.91%) 8/21/01 342,332 416,372 (74,040) ( 9.76%) 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 8/07/01 128,454 53,191 75,263 41.43% 8/14/01 130,432 55,750 74,682 40.11% 8/21/01 134,280 58,785 75,495 39.10% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 Commercials have gotten slightly more bearish. It looks like a range is setting up between (8,000) and (10,000). See chart below. Commercials Long Short Net % of OI 8/07/01 28,867 38,956 (10,089) (14.88%) 8/14/01 29,909 37,822 ( 7,913) (11.68%) 8/21/01 30,348 38,964 ( 8,616) (12.43%) 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 8/07/01 9,715 8,098 1,617 9.08% 8/14/01 11,165 9,508 1,657 8.02% 8/21/01 10,499 7,576 2,923 16.17% 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 Commercials are closing in on their most bullish reading of the year, 8,925 set back on May 22nd. Commercials Long Short Net % of OI 8/07/01 18,644 13,733 4,911 15.2% 8/14/01 21,652 15,856 5,796 15.5% 8/21/01 22,710 14,625 8,085 21.7% 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 8/07/01 4,841 9,909 (5,068) (34.36%) 8/14/01 4,441 8,528 (4,087) (31.51%) 8/21/01 5,059 10,410 (5,351) (34.59%) Most bearish reading of the year: (7,572) - 5/08/01 Most bullish reading of the year: 1,909 - 1/16/01 COT Commercial Net Position Charts ----------------------------------------------------------------- ========================= Play-of-the-Day (Bullish) ========================= OM Group, Inc. - OMG - close: 65.52 change: -0.28 stop: 63.00 Original Comments When Picked On August 21st: Company Description: OM Group produces metal-based specialty chemicals. Their products (produced from cobalt, copper, platinum, gold, rhodium, and nickel) are used in airbags, circuit boards, batteries, paints, and memory disks. In addition, the company makes coloring agents for pigments, ceramics, and glass, and specialty powders used for alloys in jet engines and to enhance the cutting edges of precision tools. OMG has expanded into precious metals-based materials by acquiring Degussa Metals Catalysts Cerdec. Fundamentals: For the second-quarter ended last June the firm reported record earnings and sales per diluted share. Net sales for the period increased to $216.6 million compared to $273.5 million a year ago, while net income jumped to $20.2 million, or $.83 per diluted share, from $18.4 million, or $.76 per diluted share, in the 2000 second quarter. The company predicts that excluding the effects of acquisitions, the firm will earn 83 to 87-cents per share in the third-quarter and $3.32 to $3.42 for 2001. The company is undervalued when compared to its peers. It has a forward 2001 P/E of 19 and a current one of 22. The industry average P/E is 27. In addition, it has a PEG of 1.32 as opposed to the industry average of 2.76. Why We Like It: How can you not like a stock that so ignored the post-Fed cut market slide. OMG shares not only gained $2.90 on the day, they broke through significant resistance at $63.40 and set a new 52- week high. This move was not a low volume rally. The trading volume at 113k was well above the 101k daily average. Considering the shares are still undervalued, our $73 price target is a reasonable goal. Our $60 stop is appropriate for short-term traders; long-term investors may consider a stop at just below the $58.93 200-day moving average. Updated Comments: This stock just keeps on chugging. Who knew that metal-based specialty chemicals would have such a draw? Today's mild 28 cent loss really demonstrated the stock's strength again. Chart readers should notice that the shares have been trading in a tight channel for the month of August. If the trend continues we might see a little more consolidation before the next move up. Technically we would consider it buy here but you might get a better price if you wait for a dip to $64 which is near the bottom of the channel. Yesterday we moved our stop up to $63 after the stock's positive close. Picked on August 21st @ $ 64.50 Gain since picked: + 1.02 Earnings Date: N/A (not confirmed) ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. 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PremierInvestor.net Newsletter Tuesday 08-28-2001 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/4875_2.asp ================================================================= In section two: Split Trader Split Announcements: Protein Design Labs, Inc. - (PDLI) New Plays: St Jude Medical. - STJ (Bullish) Play Updates: NVDA, AAS, AHC, GD, LEN, OMG, THQI Closed Plays: none Net Bulls New Plays: MedImmune Inc - MEDI (Bearish) Bullish Play Updates: Integrated Silicon - ISSI (Bullish) Bearish Play Updates: none Closed Plays: ImClone Systems - IMCL (Bullish) Stock Bottom / Active Trader New Plays: Fifth Third Bancorp - FITB (Bearish) Bullish Play Updates: NEM, PEP, ULTE Bearish Play Updates: PCAR, TCF 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 =================== Tuesday, August 28, 2001, 5:16 PM ET Protein Design Labs Surprises with a 2-for-1 Stock Split After Tuesday's closing bell, Protein Design Labs, Inc. (NASDAQ:PDLI) announced its Board of Directors' approval of a 2- for-1 stock split of its outstanding shares. The payable date is set for October 9, 2001 and the stock is expected to trade on a split-adjusted basis on October 10, 2001. The number of outstanding shares will increase to approximately 88 million and the float will effectively double to 71 million. PDLI currently has 250 million shares authorized for issuance. Protein Design announced their last 2:1 stock split when shares were trading at $186.75. At the current price of $59 it comes as a bit of a surprise that the Board would execute another split. Whatever the reason, you can't argue with the fact that it will make the stock more liquid. Earlier this month Lehman cut its outlook on the Company after PDLI reported lower Q2 profits. Analyst Bill Tanner at SG Cowen also reduced profit targets but was also stated as being optimistic about PDLI as becoming "a dominant player" in their particular segment of biotechnology. The Company has successfully developed breast cancer treatment medications and other drugs for the prevention of disease and infections. Shares closed the day off 81 cents at $59.41 and slid to $59.01 in after hours trading. ============ ST New Plays ============ ------------------------- New Split Candidate Play ------------------------- St Jude Medical. - STJ Close: $69.85 change:+1.35 Stop:$65.50 Company Description: St. Jude Medical designs, manufactures, and markets medical devices primarily for cardiac care. Products include heart valve disease management devices, cardiac rhythm management and interventional cardiology devices. Fundamentals: For the 3 months ended 3/31/01, revenues rose 10% to $326.1M. Net income rose from $15.8M to $47.1M. Revenues reflect higher bradycardia and Angio-Seal products sales. Earnings also reflect the absence of a $26.1M special charge. For the 2001 fiscal year the company's net income is expected to increase 21-percent. Analysts expect company earnings to rise from $2.20 in 2001 to $2.56 in 2002. This gives STJ shares a current P/E of 36 and a forward P/E of 27. Why We Like It: One month ago shares of STJ reached a 52-week high just over $72.00 and investors cashed in, driving shares down -10% in a little over one week. The declines came on strong conviction and took shares down to the 50 DMA of $63.82. But that was as far as the shares would go. Buyers stepped in to support the price as a continued shift into defensive sectors saw an influx of cash that has pushed the stock above short-term resistance just under $68.00. Now we find out that consumer confidence is beginning to wane and the likelihood of a downward revision in the GDP looms prior to tomorrow's open. STJ is well positioned, well run, and the stock looks to be a solid momentum play that can capitalize on the shift in investor's fortunes. It's difficult to speculate if and when STJ will announce a stock split and it may not play any role in the direction of the shares over the coming weeks. However, trading just under the 52 week high with the earnings date a month and a half away, the chances certainly exist. While this play is intended for those with a longer-term focus, one could extrapolate a strategy that hones in on the short-term as well. A retest of the 52-week high would likely be the best exit place, should this type of strategy cater to your liking. A longer-term trade strategy might utilize psychological levels for one's target price and it is in this vein that we would look to $80.00 as a potential exit price. The stop is under the 50 DMA at $65.50. Picked on August 28th at $69.85 Earnings Date 10/17 (Not Confirmed) =============== ST Play Updates =============== ----------------- Split Run Updates ----------------- NVIDIA Corp. - NVDA - close: 87.08 change: -1.15 stop: 83.00 *new* Shares of NVDA have finally completed their bounce from $80 to the top of its current trading channel at $90. The closest thing we got to a dip was the Monday morning low near $83. The stock traded higher on positive news with a new product for home-PC users and every technophile's desire to run DVDs, T.V. and their own home movies on a computer. The NASDAQ's late afternoon run up didn't hurt either. The stock completed our short-term target of $90 early this morning, okay it was $89.95 but that's close enough. The 1.15 slide today wasn't bad in the face of a broad market sell-off. We're still very bullish on NVDA but grow more concerned about the market environment on a daily basis. We're going to move our stop up to $83 which is just under Monday's low. If you're interested on buying on a dip we suggest looking for a bounce near the $85 level. Traders could also wait for a positive close over $90 which is current resistance. Next major target will be $100. Remember, we will likely close this play before its Sept. 11th 2:1 stock split to avoid any post-split depression. Picked on August 22nd @ $ 84.79 Gain since picked: + 2.29 Earnings Date: 8/14 (confirmed) ----------------------- Split Candidate Updates ----------------------- AmeriSource - AAS - close: 64.60 change: -0.40 stop: 64.00 Current long position holders could hardly get better news than Standard & Poor's decision to add AmeriSource to the S&P 500 index. The stock gapped up on the news and traded in a very narrow range Monday. We slid our stop up to $64 on Monday to help protect our $5 gain in the play. For those traders new to the game, when a stock is added to the S&P 500 index, all the index mutual funds that track the market are forced to buy shares of the new addition so their fund can correctly say they are mirroring the S&P 500. Now there isn't any specific time period that these index funds have to buy shares of the new addition but normally there is a strong surge of buying (and volume) when they announce and another surge when the stock is actually added to the index. This will happen for AAS on August 29th. Since there are so many index funds that track the S&P 500 there should be strong buying pressure for the next few weeks. However, this is not a no-lose situation and more than once we've seen stocks plummet under weak market conditions despite the positive news. Looking at today's action we saw the stock gap up to 66.50 before falling to what appears is potentially new support at 64.50. Since most stocks have a tendency to fill gaps like the one created on Monday, we would be very cautious about new positions at this time. Picked on August 17th @ $ 59.00 Gain since picked: + 5.60 Earnings Date: N/A (not confirmed) --- Amerada Hess - AHC - close: 77.90 change: -0.10 stop: 75.80 If you are feeling optimistic you might say AHC has been showing good relative strength versus the broader markets. The stock remains in a tight trading channel and if you're really bullish you might argue the stock is trying to build on some higher lows. We're feeling somewhat neutral on AHC until it offers us a clean trigger point to go long again. A decent close over resistance at $79 would be the green light. If you missed the newsletter yesterday we moved our stop up to 75.80. Picked on August 15th @ $ 78.90 Gain since picked: - 0.59 Earnings Date: N/A (not confirmed) --- General Dynamics - GD - close: 81.46 change: -1.14 stop: 79.00 Here we go again. Shares of GD have clearly rolled over again. This is not surprising with the Dow's decline weighing heavily on investors minds. This play is starting to feel a little more risky and traders are urged to use caution. If you like the company and believe the stock has good upside potential if the market turns around then consider a short-term trade on a bounce. We would be looking for a bounce at the $80 level. This would make for a decent risk/reward entry point with our stop at $79. Unfortunately, at this point a bounce at $80 is probably going to stall at $83.00 again. More patient or conservative investors should remain waiting for the positive close over $85. Picked on August 8th @ $ 83.85 Gain since picked: - 2.39 Earnings Date: 10/17/01 (not confirmed) --- Lennar - LEN - close: 41.62 change: +0.01 stop: 40.66 Monday saw existing home sales come in slightly below consensus estimates and the news sent a shudder through the housing sector. The housing market has been a pillar of strength for the U.S. economy and while most analysts believe it will remain healthy any slow down will likely be yet another nail in the coffin for any prolonged market rebound. On Friday we warned of a small consolidation and LEN's ability to hold steady on Tuesday showed strength although volume was very light. Yesterday we moved our stop up to 40.66 (our entry) which is near the 10-dma. The MACD continues to strengthen for LEN and we're not quite ready to call it quits based on one economic report. The stock still has bullish potential and a bounce at $41 may be a good new entry point. With our new stop at 40.66 your potential risk should be extremely limited. Picked on August 16th @ $ 40.66 Gain since picked: + 0.96 Earnings Date: 09/19/01 (not confirmed) --- OM Group, Inc. - OMG - close: 65.52 change: -0.28 stop: 63.00 This stock just keeps on chugging. Who knew that metal-based specialty chemicals would have such a draw? Today's mild 28 cent loss really demonstrated the stock's strength again. Chart readers should notice that the shares have been trading in a tight channel for the month of August. If the trend continues we might see a little more consolidation before the next move up. Technically we would consider it buy here but you might get a better price if you wait for a dip to $64 which is near the bottom of the channel. Yesterday we moved our stop up to $63 after the stock's positive close. Picked on August 21st @ $ 64.50 Gain since picked: + 1.02 Earnings Date: N/A (not confirmed) --- THQ Inc - THQI - close: 51.99 change: -0.18 stop: 46.00 The rebound for THQI continued on Monday but not before shares traded down to $50 offering nimble investors a nice entry point for the next leg up. The stock seems to have hit a speed bump at the 50-dma or $53.25. Like many stocks on this list, shares showed relative strength today in the face of market weakness. Traders have several options to pick a bullish play on THQI. Consider another bounce at the $50 mark if the NASDAQ slides lower tomorrow or you can wait for the stock to clear one or both of its two nearest hurdles - 53.25 or 55.00. Our target will be the $60 mark where bulls will find steep resistance. Picked on August 24th @ $ 51.45 Gain since picked: + 0.54 Earnings Date: N/A (not confirmed) ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ --------------- New Short Play --------------- MedImmune Inc - MEDI Close:$40.46 Change:-1.13 Stop:$42.75 Company Description: MedImmune is an unusual biotech firm -it is profitable and has five products on the market. Its flagship product, the injectable Synagis (90-percent of sales), helps prevent respiratory syncytial virus (RSV), a major cause of pneumonia and bronchiolitis in infants. Also on the market are RespiGam, another RSV treatment; CytoGam, which prevents and treats cytomegalovirus disease in kidney transplant patients; and Ethyol, which reduces damage caused by some chemotherapy agents. Products under development include vaccines for urinary tract infections, tissue transplant rejection, cancer, and two forms of human papillomavirus that are major causes of cervical cancer. Fundamentals: Last year, the company earned 67-cents per share on sales of $540 million. This year, the consensus estimate is for earnings of 81- cents on $630 million and $1.06 on $815 million. Why We Like It: On a fundamental basis, MedImmune is one of the stronger biotechs. However, a bullish run has gotten the shares a head of themselves and they are now vulnerable to a pullback. The shares sell for 50 times their 2001 earnings estimate. As a comparison, the industry average for profitable biotechs is 33. This lofty valuation in the midst of a bear will make it difficult for the shares to gain traction. With limited upside potential, we see a tradable bearish situation. After setting a $33.20 session low on August 8th, the shares rose solidly but seem to have run out of gas at $41.70. They have been bouncing against that level for the past four trading session. The bulls' officially gave up control on Monday morning when the shares nearly kissed the $42.73 200-day moving average with the $42.69 session high. They've weakened since and broke the $40.98 50-day moving average on Tuesday. We see it likely existing selling pressure will produce a short-term test of support in the $36 to $37 range. If the selling picks up momentum, a close under $33 would imply a test of our longer-term $28 bearish objective. Normally we would set our stop at $42, but since the 200-day moving average is so close we will take advantage of its protection with a $42.75 stop. Picked on August 28th at $40.46 Earnings Date N/A (Not Confirmed) =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Integrated Silicon - ISSI - cls: 15.86 chg: -0.39 stop: 15.25 The semiconductor index (SOX) may have added to its recent gains on Monday but its 200-dma proved to be a tight lid on the sector. Tuesday was no different with the 200-dma proving to be the top for the SOX before the profit taking began knocking the index for a 2.84% loss and placing it under the 600 level. ISSI showed a similar pattern with a positive move up on Monday above key resistance at $16 only to lose it again today. We moved our stop up to 15.25 on Monday to help protect our capital from any unexpected bad news in the sector. Shares of ISSI have been outperforming its sector and thus bullish traders should continue to watch it or potential trades. We would look for a dip between potential support at 15.50 and the stock's 10-dma at 15.37. This would provide a very tight risk/reward scenario on a new play. However, more patient or conservative investors should wait for the stock to close over $16 again before considering a new long position. Picked on August 16th @ $15.10 Gain since picked: + 0.76 Earnings Date: N/A =============== NB Closed Plays =============== ----------------- Closed Long Plays ----------------- ImClone Systems - IMCL - close: 51.88 change: -2.18 stop: 52.00 Don't say we didn't warn you. The Biotech index (BTK.X) pulled back on Tuesday after stalling in Monday's session. If the sector follows a normal retracement pattern then we could see the index continue to dip to 530 (a 38.2% retracement) or even 520 (really 521, a 50% retracement of the last week's rally but including Monday's high). Shares of IMCL outpeformed the index on Monday with a big day and a new recent high near $54 but that left shares vulnerable to a 4% round of profit-taking today. Depending upon your outlook we were fortunately or unfortunately stopped out today when shares traded through our stop at 52.00. We had moved the stop up to $52 in Monday's newsletter. We still like the look of IMCL but bullish traders need to be patient. Keep an eye on the BTK.X for a new level of support. If you're lucky you might get a bounce at $51 for IMCL but another dip in the BTK index or even the NASDAQ could push IMCL shares down to $50. Oh, and by the way, I'm eating my words from Friday's write up as we speak. Picked on August 23rd @ $49.48 Gain since picked: + 2.52 Earnings Date: N/A ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ --------------- New Short Plays --------------- Fifth Third Bancorp - FITB Close:$59.30 Change:+0.10 Stop:$62.00 Company Description: Fifth Third Bancorp, through its affiliate banks, operates over 1,000 branches in Florida, Arizona, Kentucky, Illinois, Michigan and Ohio. The company also offers insurance (credit, health and accident), investment services (mutual funds, trust and brokerage) and processes credit card transaction. Fundamentals: Last year, the company earned $1.88 per share on revenue of $3.3 billion. This year, the firm is expected to earn $2.37 on revenue of 3.7 billion and $2.77 on $4.3 billon in 2002. It has a forward 2001 P/E of 25, which is significantly higher than the industry average of 16. Why We Like It: Regional banks in general are looking very weak. Sector shares had been benefiting from a resilient real estate market and falling interest rates. Traders are becoming concerned that the poor economy is finally reaching the home sale market and that the Fed may be nearing the end of this cycle of cutting interest rates. Having been driven up so far, banks are looking painfully overvalued. FITB shares have moved from below $30 in March of 2000 to a 52-week high of $64.77 on August 15th. After stalling out at that level since then, the shares began tumbling from above $64. The bulls attempted to right reverse direction at the $59 support level, but after some initial success in the morning hours on Tuesday, the shares faltered badly. Despite the 10-cent gain, it is clear the bears are in charge. Downside support should occur at the 200-day moving average of $56.48. We have a bearish price target of $53. Aggressive traders can get in now; conservative ones should wait for the break below $59. Picked on August 28th at $59.30 Earnings Date 10/15 (Not Confirmed) =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Newmont Mining NEM Close:$20.93 Gain:-0.56 Stop:$20.40 Gold came under pressure this morning as the dollar strengthened. The dollar eventually faded, but the damage was already done for gold and gold stocks. The overall market weakness didn't help either. The dollar is stuck at 113. If it breaks down gold stocks should be golden, if not, Newmont might be fools gold. Picked on July 14th at $20.50 Gain since picked: +0.43 Earnings Date 11/1/01 (unconfirmed) --- Pepsi PEP Close:$46.68 Gain:-0.20 Stop:$46.50 Pepsi keeps holding in there as the market sells off around it. Unfortunately each little decline brings this stock closer to our stop. If the overall market has one or two more days like today might be too much for this soda stock to handle. Picked on August 10th at $45.66 Gain since picked: +1.02 Earnings Date N/A --- Ultimate Electronics ULTE Close:$28.05 Gain:-0.95 Stop:$27.25 Ultimate Electronics wasn't so ultimate today. Granted a $1 drop wasn't too bad under today's market conditions, but we are not encouraged by the fact that the stock lost the support of the 50-day moving average. Picked on August 24th at $28.55 Gain since picked: -0.50 Earnings Date N/A ------------------ Short Play Updates ------------------ PACCAR PCAR Close:$54.05 Gain:-0.68 Stop:$56.00 PACCAR got back on track today by falling 1.24%. Taking out some relative lows around $53 would be even better. A few more days like today, and we'll be there. Picked on August 17th at $55.46 Gain since picked: +1.41 Earnings Date N/A --- TCF Financial TCB Close:$46.53 Gain:-0.08 Stop:$49.00 Bank stocks tried to rally after yesterday's decline, but finally finished the day in negative territory. TCB has now broken below the 50-day moving average, and the fundamental outlook for banks doesn't look good. Picked on August 24th at $47.60 Gain since picked: +1.07 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 FE Firstenergy Corp 32.10 +0.60 NZ Nz Corporation 7.90 +0.60 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change MIMS Mim Corporation 11.73 +1.62 BSML Britesmile Inc 10.75 +1.50 PCYC Pharmacyclics Inc 19.95 +2.01 ESA Extended Stay Amer Inc 16.87 +1.37 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change ATVI Activision Inc 37.56 +2.15 PII Polaris Industries 50.90 +1.60 XL XL Capital 79.70 +1.68 RVDP Riverdeep Group 25.50 +2.79 ACTN Action Performance 27.32 +1.21 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change MOVI Movie Gallery 25.36 -2.39 BEN Ben Franklin Resources 41.38 -1.24 EMN Eastman Chemical 39.95 -1.01 CORS Corus Bankshares 52.00 -4.43 SGY Stone Energy 40.66 -1.74 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change NEM Newmont Mining 20.93 -0.56 WWY William Wrigley Jr Co 50.25 -0.65 GIS General Mills Inc 44.53 -0.17 UTR Unitrin Inc. 37.41 -1.00 TOT Total Fina Elf Sa 72.98 -1.44 ================================================================= 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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