PremierInvestor.net Newsletter Tuesday 09-11-2001 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/2992_1.asp ================================================================= In section one: Market Wrap: Life As We Know It Is Over? Market Sentiment: Global Shock Special Report: United We Stand Special Report: A Trader's Personal Defense: Definition of various stop orders Special Report: Historical Market Reaction to Terrorist Attacks Special Report: How your brokerage account is insured ----------------------------------------------------------------- =========== Market Wrap =========== Life As We Know It Is Over? By Jim Brown, Chief Editor Exaggeration? Only time will tell. As we all are well aware Tuesday will go down in history as a day of infamy even greater than the attack on Pearl Harbor, the bombing of the Federal building in Oklahoma and the Kennedy assassination. There is no precedent to the events that occurred on Tuesday morning. The death toll is likely to be well over 10,000 and it will be months before the pile of rubble that was once the center of the world financial markets is cleared. We may never know exactly how many people were killed or who actually gave the go signal but the impacts of those airliners will be felt for many years to come. The financial impact of course is inconsequential compared to the loss of life but it is going to be enormous. Not only did the World Trade Center house major offices for dozens of brokers and banks but also commodity exchanges, legal firms, trust companies, financial publishers, mutual funds etc. Almost a square mile of Manhattan real estate was demolished. The collapse of the twin 1300 ft tall towers showered concrete and steel for a block in every direction damaging dozens of surrounding buildings and setting them on fire from the 100,000 pounds of jet fuel that was consuming the WTC. Late news announced that World Trade 7 collapsed around 5:30 from this damage and several other buildings in the 20-30 story range were also in danger of collapse. At least a dozen buildings have been rendered unusable and will be demolished in the cleanup. Life as we know it is over? I think that is a pretty good bet. If you have ever traveled overseas you will understand what I am talking about. Citizens/travelers in other countries have no civil rights. Police and military openly carry machine guns and randomly stop and question civilians. The rules are different. Unruly, obnoxious, impolite or just plain uncooperative individuals are quickly and roughly dealt with. They have learned long ago that terrorists and hijackers must be dealt with aggressively and without mercy and that sometimes means innocent individuals and/or bystanders are caught up in the fray. When four, count them, four, state of the art airliners, fully loaded and leaving from three different airports, are hijacked by multiple terrorists armed with knives, guns and grenades on the same day, it is a wake up call for American security. Heads will roll on these security errors but it will be little comfort to the families of the victims. Americans will soon be seeing increased security, higher visibility for security forces and untold complications for lawful travelers. All of this will have little impact on stopping true terrorist activities. With the Mexico and Canadian borders wide open any real terrorist can simply walk in and setup shop. Because the terrorist war is likely to escalate on both sides Americans will be quickly rethinking their current open society as well as travel plans abroad. The FAA has grounded all flights in the US until at least noon on Wednesday. They are closing Manhattan for Wednesday and they are saying that nobody will be allowed into the area until the danger of other building collapses has passed and buildings farther away can be inspected for damage from falling debris. In Denver Colorado today the panicked public were quickly filling food stores and stocking up on nonperishable food. Lines were out of the parking lots of many filling stations as panicked drivers were filling up the vehicles. Banks around the country were reporting a run on ATM machines and several banks quickly programmed a limit on cash withdrawals on a daily basis. Fears of lost account records were cropping up everywhere prompted by CNBC showing burned account records from companies like Cantor Fitzgerald, Chase and Morgan Stanley, that were picked up on the street blocks from the WTC. Morgan Stanley quickly went on air and squelched the rumor that all the records were lost when their 50 floors of corporate office space and complete trading floor in the WTC were destroyed. They said they maintain complete copies at remote locations as do most brokers. Still, you can bet that there are tens of thousands of accounts that were not so lucky simply due to the numbers of financial firms destroyed. What will this do to the markets? How are these types of disasters handled in the financial community? We will be producing a complete range of articles today and tomorrow on how this will impact everyone. We will do our best to cover every aspect of the financial impact to our readers. The US markets never opened but the European markets still open dropped from 4-7% before closing. The German DAX fell almost -9% before a bomb threat stopped trading. US exchanges will be closed at least through Wednesday and quite probably even longer once the magnitude of the damage to the infrastructure is determined. There is a precedent for this since the markets were closed two days when Kennedy was assassinated. The US markets will not crash. Surprised? The world economy cannot afford to let the US markets crash. Even though the confidence in the strength of the US has been broken the world banks and governments have all come out in support of the US. They have pledged to inject whatever liquidity needed to insure that all market needs are met. There is a very good chance that the Fed will make an intermeeting rate cut the day the market reopens to show support and prop up the markets. Historically the markets will dip on major event but quickly rebound as bargain hunters rush in to fill the gap. Did JNJ change its product line? Did Cisco announce it was getting out of the router business? Of course not. This is a news event that will rock the markets but the basic economy has not changed. It still stinks but it is still the best economy in the world. In reality the fall out from this event could actually provide a jump start once the initial shock has passed. There are going to be major problems in several sectors, banking, brokerage and insurance, see our special report tomorrow for the details, and major gains in sectors that will benefit from the reaction to this event. Defense is the number one area which is likely to receive hundreds of billions of dollars in windfall contracts and projects. New security devices and new technology will be called on to prevent recurrences in the future. Hundreds of thousands of new security personnel will be hired, trained, equipped and put to work over the next year. Out of every catastrophe rises a stronger country. The different security agencies are now saying there is better than a 90% chance that Osama bin Laden was responsible for the highly coordinated attack. There have been several warnings of prior attacks that never appeared for reasons unknown. He has declared war on the US in the past and has been traced to numerous prior attacks. He has eluded attempts to catch him for years. The last time he bombed US embassies the US tossed a couple cruise missiles at his headquarters and called it even. I doubt that will be the result this time. Regardless of who actually did this he will likely become the highly visible target. There will not be a rock big enough to hide under or a cave deep enough to protect him. George Bush is facing a test that has no precedent. He now has a blank check and a clear directive to silence open terrorism on a global scale. The US and its allies will declare war on terrorism and it will probably be a scorched earth policy. The biggest problem for the markets next week will be the consumer. Historically terrorist attacks cause people to stay home, restrict spending and worry about the future. The keyword here is consumer confidence and it took a serious hit on Tuesday. The government will be working to put forth a strong face with a kick butt attitude and the Fed will move into aggressive mode with Fedspeak on every news outlet that will attempt to soothe fears. The panic buying across the country today will ease. OPEC said they will keep the oil markets stable. The stock market will go back to business as usual at least by next week. It has to happen. The longer markets are closed the more uneasy investors will become. As morbid as it may be the markets must reopen immediately to relieve the pressure even before they recover the bodies. What an event like this brings into focus is our mortality and the quickness of unexpected death. Each day we get up and go to work without ever considering the possibility that something outside our control could end our life and leave our families in shock. This was brought home to me especially in this event. I was in Washington DC on Monday for business. I drove by the Pentagon. I flew a United 757 out of Dulles at 10:PM last night. I came very close to changing that flight to a Tuesday morning flight to do some sightseeing. In the lottery of life my number did not come up. My flight was uneventful and I completed a book I had been reading. Hundreds of travelers today were not that lucky. Their families and the families of the office workers now number in the tens of thousands that have been horribly changed. We lost many subscribers today. How many we will not know for weeks but 183 readers have email addresses that can be traced to the WTC in a very quick search. To the families of these readers our prayers go out that your loved one was in the group that was able to escape. To those families whose loved ones lives were senselessly ended our prayers are with you. No amount of good words or well meaning intentions will help you today. Just like the Oklahoma bombing there is no way to apply reason or rational thought to those who did this. It will never make sense and it will never quit hurting. God bless you and keep you. With my deepest sympathy, Jim Brown ================ Market Sentiment ================ Global Shock By Jeffery Canavan Today's terrorist attacks in New York and Washington have sent shockwaves around the globe, and reeked havoc on international stock markets. Appalled traders unconsciously sold stocks, but it was heartening to hear statements like, "We are seeing clients phone in to void bets as they do not want to make money out of this tragedy." The London Stock Exchange evacuated its headquarters, but contingency plans allowed trading to continue. The FTSE 100 closed down 5.72%, the biggest drop since October of 1987. The German DAX suffered its biggest one-day drop, losing 8.56%, but was down 11.6% at one point during the day. A bomb threat at the Deutsche Boerse shut down late-trading on the DAX Index. The Paris Stock Exchange tumbled 7.4%. Panic buying pushed oil and gold prices higher. Brent Sea Crude rose $3.60 to $31.05 before trading was suspended and price fell back to $29.06. OPEC said it would do everything it could to maintain stability. Investors flocked to the safety of Gold, and the yellow metal closed up $15.50 to $287.00 at the London Metal Exchange. The U.S. Dollar fell sharply against the yen and euro. Trading is halted in United States tomorrow, but overseas markets will continue to trade. How those stocks react should give some indication of how U.S. stocks will open later this week. After a day like today, that seems pretty inconsequential. ================ Special Report ================ United We Stand By Eric Utley However inconsequential, I would like to send my thoughts and prayers to those impacted by Tuesday's terrible acts of terror. My heart is heavy. Central banks across the globe reassured the financial community Tuesday that the system would not be allowed to fail in the wake of the Attack on America. The U.S Federal Reserve said that it was open and providing ample liquidity to the financial system. Fed Chairman Alan Greenspan and New York Fed President William McDonough were in Basel, Switzerland, attending the Bank for International Settlements meeting early this week. While in Switzerland, McDonough was quoted by Reuters, saying that the Fed was "coping" with Tuesday's events. Greenspan was not available for comment. However, sources close to the Fed were reporting that Greenspan was in close contact with central bank officials from an undisclosed location. Furthermore, a consortium of U.S. financial market regulators said they had been in constant contact with Greenspan following the attacks. In Greenspan's absence and in the wake of Tuesday's crises, the financial media was reporting on the possibility of Americans, and, indeed, the rest of the world, losing faith in financial institutions such as banks, brokers, and insurers. The slide in the U.S. dollar during illiquid trade seemed to lend to that speculation. And, reports of long lines at automated teller machines (ATMs) in New York City heightened those fears. The fear is that people will lose faith in financial institutions to the point where they demand hard cash in place of bank deposits and other liquid assets, such as money markets. No bank keeps all of its assets in cash. Therefore, no bank can meet excessive demands for cash during times of crises, such as these. If a bank's cash is drained by withdrawals it runs the risk of failing. But, it is this American's opinion that there is little to fear in the form of a financial meltdown. Through the Fed's impeccable track record during times of crises, I believe that they will once again do the right thing. History proves that much: Most recently, the Fed injected liquidity during the Long-Term Capital meltdown in October of 1998; it did the same thing during the stock market crash of 1987. And it's doing the same thing today. In addition to its open market operations, many economists are predicting that the Fed will aggressively cut interest rates to fend off fears. Prior to Tuesday's tragic events, the consensus was for the Fed to cut rates by 25 basis points during its regularly scheduled October meeting. But some are suggesting that the Fed may move as early as Wednesday. Although the Fed has already aggressively cut rates this year, further cuts in the wake of Tuesday's attacks would only reinforce the faith in financial markets. Central banks around the globe echoed the U.S. Federal Reserve's reassurances Tuesday. The Bank of Japan in a press release said, "The Bank of Japan, in order to secure smooth settlement of funds and stability in financial markets, will do its utmost, including providing ample liquidity." Following its statement, it was reported that the Bank of Japan offered some $8.36 billion, or 1 trillion yen, through bill purchases. The European Central Bank also reported that it would be providing plenty of liquidity. Separately, American's kept their resolve during Tuesday's chain of events. Major mutual fund companies, such as Fidelity and Vanguard, reported that call volumes were much lower than normal. And that withdrawals were nothing more than average and routine. Although early, I think that small sign demonstrates the resolve of this great nation. ================ Special Report ================ A Trader's Personal Defense: Definition of various stop orders Jeff Bailey Over the past several months, investors have become very familiar with the usefulness of trailing stops and different stop loss orders that they can place on different trades they currently have open in their accounts. When the markets do open back up for trading, the type of "stop" order you may have placed on a trade should be understood. There are two different types of "stop" orders. Subscribers may want to reassess their current stop orders and understand their implications. Here is a description of the two most common stop orders. Stop-loss Order: An order placed with a broker to buy/sell when a certain price is reached. This order is designed to limit an investor's loss on a security position. Sometimes this order is called a "stop market order." Example: Let's imagine you're holding long 100 shares of ABCD in your account. You bought it at $10 and yesterday the stock closed at $10. Currently you have a "stop-loss order" to sell 100 shares of ABCD at $9. How this order could be filled. Let's imagine that there is some type of bad news that adversely affects the stock and ABCD opens at $9.50. You would still own the stock at this point. Let's imagine that the stock eventually trades $9 later in the trading session. If there were a standing bid for 1,000 shares to be bought at $9, a trade at $9 would immediately trigger your stop and your order would be activated. At that point, your order to sell 100 shares at $9 would be matched against a buyer and your stock sold. There are those occasions in a "fast market" (extremely high volume and activity in the stock) where your trade may actually not be matched with a buyer until a lower price (perhaps $8.90). Nonetheless, the STOP-LOSS ORDER is designed to have your stock sold at $9 or lower. The "stop-loss order" may have a downside that newer investors aren't aware. Let's assume the same situation occurs as outlined above, but this time, lets imagine that some type of catastrophic news hits the markets and shares of ABCD open for trading at $5. Under a "stop-loss order" your stock may be sold at $5 and not the $9 that you had thought it might be sold when you originally placed your stop. An investor that understands this type of trade execution may not want to sell the stock at $5 as he/she feels the stock will rebound to a higher price, or the investor may not be willing to take that type of loss under current market conditions. If this were the case, then there are things a trader can do currently. One thing an investor may want to do is to try and cancel their "stop-loss order" to sell 100 shares of ABCD at $9 with their broker, if they feel the stock may gap significantly below a level that they were willing to sell the underlying security for. Today (August 11, 2001), trading was halted in the U.S. and it may be difficult to cancel any open orders with your broker, but many brokerage firms will take an order that is labeled "request to cancel." Under more normal market conditions than exist today after the attack on the World Trade Center in New York, a cancellation order is often times taken and the order canceled even though the markets are closed for trading. Now, lets look at another type of "stop" order. Under current market conditions, this type of order may be more appropriate. This order is called the "Stop-Limit Order." Stop-Limit Order: A "stop-limit order" is placed with a broker to buy/sell at a specified price or BETTER. This type of stop attempts to limit the loss to a specified price, but to not sell the stock for a price LOWER than the stop-limit. Example: Let's again imagine we bought 100 shares long of ABCD at $10. At yesterday's close ABCD traded $10. Let's imagine that this time we have placed a "stop-limit order" to sell 100 shares of ABCD at $9. How this order could be filled. Let's imagine that there is some type of bad news that adversely affects the stock and ABCD opens at $9.50. You would still own the stock at this point. Let's imagine that the stock eventually trades $9 later in the trading session. If there is a standing bid for 1,000, a trade at $9 would immediately trigger your stop. At that point, your order to sell 100 shares at $9 would be matched against a buyer and your stock sold. There are those occasions in a "fast market" where your trade may actually not be matched with a buyer at $9. Let's assume the stock continues to fall to $5. If you're order did not fill at $9 as the stock traded lower, then your order will NOT fill at $8.99 or lower. However.... let's imagine that shares of ABCD did trade $9, your order was not filled and the stock fell to $8.75. At this point, you still have a standing order to sell the shares at $9. Should the stock trade higher to the $9, chances are that your order would then be filled. There have been instances when "stop-limit orders" will actually trade at $9 for a brief instant, triggering your stop, and then a buyer bids $9.05. Once the $9 level was traded (that $9 level or lower MUST trade for your order to be activated) your order becomes activated. Should a buyer step in and offer $9.05 for the stock, your stock could actually be sold for $9.05. Under current market conditions, we feel it is important for subscribers to understand the differences between these two types of "stop" orders. They execute differently and each has its advantages and disadvantages. Only you the subscriber can determine which type of "stop" order to place (if any) depending on your tolerance for risk. ================= Special Report ================= Historical Market Reaction to Terrorist Attacks Jon Farnlof In the midst of the confusion and suffering of today's tragic events, investors already made nervous about the recent bear market are questioning how the markets may react when they reopen. There is no precedent for an attack so directly upon the core of the US financial system; the headquarters of over 150 companies including major brokerages were in the World Trade Center complex. However from a historical perspective, in the days and months following large scale terrorist or military action the U.S. financial markets have proven to be resilient. The following table contains the market reaction in the days, week and year following significant terrorist events in our past: December 7th, 1941: Pearl Harbor is attacked, onset of World War II December 21, 1988: Pan Am #103 is felled by an explosive near Lockerbie, Scotland February 26, 1993: World Trade Center is bombed April 19, 1995: Murrah Federal Building in Oklahoma City is destroyed Dow Jones Industrial Average Event Day Day Day Day Week Year Date Before of After After +1 Later Later 12/07/1941 117 Closed 113 109 111 115 12/21/1988 2166 2164 2160 2168 2166 2691 02/26/199 3365 3370 3355 3400 3399 3838 04/19/1995 4127 4207 4230 4270 4300 5535 In each situation the initial reaction was negative, however the markets rebounded in a short period of time and produced solid gains within a year. In fact, according to markethistory.com, in the three weeks following 25 occurrences of US military action since 1941, the Dow Jones Industrial Average has risen by an average of 3-percent in 84-percent of those occurrences. This suggests that although terrorist or military actions may exact a terrible human toll, the longer-term market reactions are often muted by time. On an immediate personal level, it is likely the first reaction of the markets when they reopen will be to the downside. Investors need to decide if they want to allow this reaction to take them out of long positions, or to chance the volatility will pass. If history can predict the future, it may be best to wait. ================= Special Report ================= How your brokerage account is insured Jeff Bailey Many investors and traders may be trying to get information on how their brokerage accounts are insured and what type of protection they may have. Investors are never insured against stock price fluctuation, but their accounts are insured against a firm's inability to continue business. We do not believe that brokerage firms would become insolvent or that traders/investors will have to revert to the insurance that is offered through their brokerage firms. However, recent events in New York have some subscribers wondering just what type of insurance their brokerage accounts carry. Here are the basics of how your brokerage account is protected under the Securities Investor Protection Corporation (SIPC). Securities Investor Protection Corporation (SIPC) is the first line of defense in the event of a brokerage firm failure. Should a brokerage firm close due to bankruptcy, financial difficulty, or inability to continue day-to-day operations, the SIPC steps in as quickly as possible and within certain limits ($500,000), works to return to you cash (up to $100,000), stocks and other securities (up to $400,000) you had held at the firm. SIPC is a reason that many investors no longer wish to hold their securities in kind at a safe deposit. Many brokerage firms purchase additional insurance on their own to better protect their customers. Let's face it. There are individuals and corporations that may hold millions if not billions of dollars in stock or bond investments. In my conversation with a Charles Schwab associate, their brokerage firm has purchased additional insurance through Travelers Insurance to further protect their brokerage customer's accounts at values well in excess of the $500,000 SIPC limit. Every investor can call the financial institution where they currently keep their investments to find out how much insurance their brokerage firm carries. SIPC is not the Federal Deposit Insurance Corporation (FDIC). SIPC does not offer to investors the same blanket protection that the FDIC provides bank depositors. Should a member bank fail, the FDIC insures all deposits at the failed institution against loss up to a certain dollar amount. Most "savers" put their money in FDIC-insured bank accounts because they can't afford to lose their money. That's exactly the opposite of how an "investor" behaves in the stock market, in which rewards are potentially greater by taking on more risk. SIPC does not bail out investors against declining values of stocks, bonds or other securities that they hold in their brokerage accounts. Instead, SIPC replaces "missing" stocks and other securities where it is possible to do so. SIPC does not cover individuals who are sold worthless stocks and other securities. SIPC helps individuals whose money, stocks and other securities are stolen or put at risk when a brokerage firm fails. Subscribers that would like further information regarding the SIPC can visit http://188.8.131.52/sipc/index.html Storage of Records Most brokerage firms keep duplicate records of all clients' transactions/statements dating back seven years. These records are often times kept at multiple offsite storage locations, sometimes in different parts of the country, in paper or digital form. In my conversation with Charles Schwab, I was informed that they keep records dating back 10 years. Again, you should be able to contact your financial institution and inquire about their data storage and record keeping policies. The above information is provided not to panic or uncertainty among our subscribers. We want subscribers to know some of the basics that are involved in how their brokerage accounts are insured. In essence, an investor/trader does not need to panic and sell underlying securities because they feel that their brokerage firm may be adversely affected by world events. Your buy/sell decisions should only be based on your perception of the underlying security itself, not the brokerage firm that holds those securities. ================================================================= 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. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Tuesday 09-11-2001 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/2992_2.asp ================================================================= In section two: Split Trader Split Announcements: none New Plays: none Play Updates: AHC Net Bulls New Plays: none Bullish Play Updates: AMGN, RFMD Bearish Play Updates: MEDI, MMM, PSFT Stock Bottom / Active Trader New Plays: none Bullish Play Updates: CLX, MO, PEP Bearish Play Updates: ACF, FITB, TCB ================================================================= Split Trader (ST) section ================================================================== =============== ST Play Updates =============== ----------------------- Split Candidate Updates ----------------------- Amerada Hess - AHC - close @ Sept 10th: 76.92 stop: 75.80 In the shadow of such a tragedy that occurred in New York and DC on Tuesday the oil sector might be an unexpected beneficiary of buying interest. As is common when thoughts of war invade the public and more importantly the market's collective mind there is normally a surge in oil prices and this tends to be reflected in higher share prices for oil stocks. Now, if you read the commentary this evening you should know that there is a large expectation of a violent downdraft in the markets on Thursday (or whenever they reopen). AHC may or may not participate in such a sell-off which is to be determined by investors' desire to own oil stocks. Strangely enough AHC is headquartered in NYC but we don't think the disaster will affect their operations. We are going to leave our stop at 75.80 which may be too close and could leave us vulnerable a dip on Thursday. We urge everyone to read tonight's article on your options as a trader using stop losses versus stop limit orders. Picked on August 15th @ $ 78.90 Gain since picked: - 1.98 Earnings Date: N/A (not confirmed) ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Amgen Inc - AMGN - close @ Sept. 10th: 64.13 stop: 62.00 The Biotech sector continued to hold on to support at the 500 level on Monday and shares of AMGN gapped lower but managed a strong rebound to lose back above $64. As we have mentioned in the market commentary, Thursday could see a powerful dip in the markets as evidenced by the large sell-offs in the overseas stock exchanges on Tuesday. It is highly likely that AMGN could gap lower than our stop loss at $62.00, which would immediately close the play at the opening price. We urge our readers to read the article this evening on stop losses versus stop limit orders. Picked on September 6th @ $65.66 Gain since picked: - 1.53 Earnings Date: 10/25 (not confirmed) --- RF Micro Devices - RFMD - close @ Sept. 10th: 22.73 stop: 19.50 Similar to the biotech sector, the semiconductor sector is also holding on to support near the 500 level. At least it was on Monday. Shares of RFMD closed just above its 200-dma by the end of Monday's trading. Where it opens on Thursday is truly anyone's guess. We are going to leave our stop loss order at 19.50 but urge all of our readers to look over the market commentary as well as the special report on stop loss orders versus stop limit orders. Picked on September 7th @ $22.31 Gain since picked: + 0.42 Earnings Date: 10/25 (not confirmed) ----------------------- NB Bearish Play Updates ----------------------- Considering the damage done to consumer confidence by Tuesday's tragedies market analysts are left to wonder what will happen when the exchanges open for business on Thursday. MedImmune - MEDI - close @ Sept. 10th: 37.85 stop: 39.44 Shares of MEDI continue to slip as the biotech sector hangs precariously at support near 500. MEDI collapsed under support of $40 last week and Monday's close under $38 does not bode well for the rest of the week. If a sell-off ensues MEDI is likely to find a bottom near $34 or potentially $32.50. We encourage everyone tonight's market commentary as well as the trading article on stop losses versus stop limits. Picked on August 28th @ $40.46 Gain since picked: + 2.61 Earnings Date: 10/24 (not confirmed) --- 3M - MMM - close @ Sept. 10th: 102.20 stop: 104.25 MMM may not feel the affects of Tuesday's upgrade by US Warburg to "strong buy" for an indefinite period of time. As part of the DJIA the stock is likely to feel a lot of selling pressure as investors unload positions once exchanges open again on Thursday. We encourage everyone to read tonight's commentary as well as the article detailing market history surrounding tragic events for a better understanding of what we might expect. Picked on August 29th @ $106.75 Gain since picked: + 4.55 Earnings Date: N/A --- PeopleSoft - PSFT - close @ Sept. 10th: 29.14 stop: 30.25 On Monday, Salomon Smith Barney cut its targets on selected software companies with PSFT being one of them. Despite the bad news shares of the beleaguered software maker managed to close in positive territory but remained under resistance of $30. As we now look forward into the unknown of a market that has been shaken to its core by Tuesday's events one can only wonder where trading will take us on Thursday. Picked on August 31st @ $ 34.48 Gain since picked: + 5.34 Earnings Date: N/A ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== ----------------- Long Play Updates ----------------- Listed below is another group of stocks that might have held up under normal market conditions, but given expectations for Thursday are likely to be closed soon. Clorox Co. - CLX - close @ Sept. 10th: 39.28 stop: 37.00 To many investors Clorox can be seen a somewhat of a safe haven stock. When times get tough sales of soap are not likely to dwindle. Unfortunately, there is no way of knowing if this age old pattern of buying "safe" stocks will even matter when the markets open again on Thursday. We are choosing to leave our stop loss for the newsletter at $37.00 but encourage all of our readers to look over our special report on trading and the use of stop losses versus stop limit orders. Picked on September 5th @ $38.42 Gain since picked: + 0.86 Earnings Date: N/A (not confirmed) --- Philip Morris Co. - MO - close @ Sept. 10th: 48.15 stop: 45.00 New trading support at $47 may have held on Friday but it is our hope that any sell-off in MO might be stopped at the 200-dma which is currently trading at 46.15. Unfortunately there is little to guide us in determining if MO will be able to withstand the selling pressure that is likely to occur on Thursday or when the markets open next. We encourage our readers to check out the market commentary as well as the special report on stop losses versus stop limit orders for Tuesday evening. We will leave the stop loss order for the newsletter at 45.00. Picked on August 30th @ $47.94 Gain since picked: + 0.21 Earnings Date: 10/17 (not confirmed) --- Pepsi Co - PEP - close @ Sept. 10th: 46.90 stop: 46.50 Trading sideways for more than two weeks now, shares of PEP almost stopped us out on Monday but bounced 5 cents from our stop loss at 46.50. It remains difficult to predict how investors will react when markets open up again on Thursday and how they will perceive PEP. Will this be a "safe" stock to own or will all stock be sold with an unbiased fear before stability returns to the markets. In all honesty we expect to be stopped out of PEP on Thursday morning and our only concern is whether or not the stock will gap down or not. Check out tonight's article on stop losses versus stop limit orders. Picked on August 10th @ $45.66 Gain since picked: + 1.24 Earnings Date: 7/19 (not confirmed) ------------------ Short Play Updates ------------------ AmeriCredit - ACF - close @ Sept. 10th: 39.79 stop: 44.00 Already in a terrible downtrend, shares of ACF could feel even more pressure as an offshoot of our financial system. With the stock under the 200-dma just overhead acting as resistance we could see investors push shares to $37.50 or even $35.00 before finding enough support. We encourage our readers to check out the market commentary and the other special reports we have for you today and tomorrow. Picked on September 7th @ $40.00 Gain since picked: + 0.21 Earnings Date: N/A (not confirmed) --- Fifth Third Bancorp - FITB - close @ Sept. 10th: 54.56 stop: 55.80 Already under pressure the banking sector is likely to feel more weakness after the tragedy that occurred in New York. Seeing that FITB was already putting in lower highs and fighting for support at $54.00 we wouldn't be surprised to see the stock trade to $50 (or worse) during what is expected to be a very volatile market. Picked on August 28th @ $59.30 Gain since picked: + 4.74 Earnings Date: 10/15 (not confirmed) --- TCF Financial - TCB - close @ Sept. 10th: 42.50 stop: 43.25 Another regional bank that had already been in a steep decline, TCB could easily suffer more selling pressure as investors try and digest the impact of the WTC collapse will have on the banking industry. The 200-dma at 41.65 will be acting support for TCB and once below it we are likely to see shares fall to $40 and possibly $38 where there is stronger support. Picked on August 24th @ $47.60 Gain since picked: + 5.10 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. 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