PremierInvestor.net Newsletter Monday 09-17-2001 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/2068_1.asp ================================================================= In section one: Market Wrap: Treasuries hold firm in wake of nervous market Market Sentiment: Down But Not Out Play-of-the-Day: RF Micro Devices - RFMD (Bullish) Watch List:.CSCO, NOK, CHKP, EBAY, KO ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 9-17-2001 High Low Volume Advance/Decline DJIA 8920.70 -684.81 9580.32 8883.40 2.6 bln 471/2820 NASDAQ 1579.55 -115.75 1629.10 1579.28 2.3 bln 795/3174 S&P 100 529.10 - 29.48 558.58 527.83 Totals 1266/5994 S&P 500 1038.77 - 53.77 1092.54 1037.46 RUS 2000 417.67 - 23.06 440.73 417.67 DJ TRANS 2271.68 -404.81 2675.47 2267.01 VIX 44.77 + 10.17 47.70 39.76 VXN 73.26 + 9.42 99.32 70.96 TRIN 0.98 Put/Call Ratio 1.14 ----------------------------------------------------------------- =========== Market Wrap =========== Treasuries hold firm in wake of nervous market by Jeff Bailey The U.S. Treasury Bond market once again becomes a key indicator for traders and investors to be following. Perhaps this market, more than any other in the world will give future hint of what to expect going forward. Today's actions by the Fed and its 50-basis point interest rate cut is designed to stimulate economic activity as the Fed eases monetary policy, but it is also designed to perhaps make Treasury bonds less attractive going forward. "Less attractive" as it relates to upside profit potential, but not necessarily as it relates to the MARKET'S perception of risk. I've said before that the bond market by itself is not necessarily an indication going forward of how stocks will perform. Traders that understand that the 30-year YIELD is the "riskiest" part of the treasury market may begin making some assumptions going forward. One assumption by recent activity after the WTC and Pentagon bombings is that there is confidence longer-term (we didn't see YIELDS rise precipitously, which would have been indication of selling in this bond) when the 30-year bond market began trading again last week. Today's action was rather tightly bound in the 30-year, giving hint that a lot of traders have yet to make a market moving decision as it relates to money invested here. I'd suggest that traders try and think of the 30-year as "the riskiest" of the treasury bonds. As the maturities shorten (10- year $TNX.X and 5-year $FVX.X) we get closer to the "less risky." Once you've got that mindset, then we start getting a better picture of how the MARKET perceives things. As we do this, we'll want to watch other sectors that are sensitive to interest rates and the economy to begin making a more prudent "market call." Let's face it. Recent activities have perhaps created a "new ballgame" and market environment that hasn't been seen for some time. The 30-year YIELD ($TYX.X) finished today's trading with a YIELD of 5.407%. Some stock investors can take this as a partial positive that this YIELD has not violated its YIELD lows set back in March of 5.217%, but there are other factors/influences that traders need to be monitoring going forward. I'd argue that a massive selling of these bonds (higher YIELD) would have indicated a lack of "trust" by the MARKET that the U.S. would be able to make its debt payments. My thoughts are this. If the riskiest bond remains relatively unchanged, then the MARKET at this point is thinking rationally and isn't worried at this point regarding the foundation of the underlying U.S. Government. As long as that is intact, then there's always hope for the companies that reside on its shores and who's earnings are reported in U.S. dollars. This is very basic, but the foundation from which we build going forward. 30-year Treasury Bond YIELD - Weekly interval If we look at the 30-year YIELD by itself, it sure doesn't look as if the MARKET is showing any type of dramatic worry longer- term regarding the U.S. Governments ability to pay the stated rate of interest on bonds previously issued with a 30-year maturity. Let's look at two reasons different scenarios for why this bond YIELD currently just sits here and hasn't made that much of a move. Good Scenario: As mentioned. Under current market conditions and events, I would view the 30-year action as positive. The MARKET hasn't pulled the plug on this bond (sold it) and the MARKET has scrambled to gobble it up either (buy it). In essence, there is very little taking place in the past couple of trading sessions and the market appears to be acting rational. Eventually some type of trend will become more evident and there will be other sectors we will monitor to begin building some type of analysis. Bad Scenario: We must now monitor direction in this bond. I chose the 30-year ($TYX.X) only because it is perceived as the "riskiest" YIELD to be buying. What we will want to monitor is its direction and then other groups of stocks that are interest rate and economic sensitive like banks, retailers and some of the deep cyclicals. Once we get a directional move from the 30-year, we will immediately begin monitoring the 10-year YIELD ($TYX.X) and 5-year YIELD ($FVX.X). As we get closer to maturity we can better understand what the market is saying about the bond MARKET as it relates to RISK in the bond market. The "Bad Scenario" could come in one of two forms. One bad scenario would be that we see a rush of buying in these bonds as investors feel "this is the only investment I'm comfortable with!" The other "Bad Scenario" is that we see a rush of selling in these bonds as market participants begin hoarding precious metals or simply running to cash. This will be easily identifiable should it occur as depicted by supply/demand. Should other sectors we feel need to be acting strong, not show price appreciation, then we'll know that something "bad" is happening. Commodities: In last Friday's sector profile, we talked about gold stocks and the commodity itself. We discussed how the "true hedge" was perhaps not found in gold stocks, but the commodity. Based on past history dating back to the Persian Gulf War, we made note of the decline in gold stocks, even though the commodity itself moved higher during that time period. Perhaps today's action in the October 2001 Gold contract and 5.37% gain gives hint that some short-term players were active here. I believe a trader/investor MUST monitor the gold commodity, and then begin weighing its action against that found in the bond market. I believe we would NOT want to see this commodity continue to make too much of a move above the $320 level. I would note too, the bullish price objective for the October Gold contract is $291. Today's close at $290.30 is very close to a level that may have originally been "foreseen" by the market. I'm not saying that the MARKET foresaw recent events here in the U.S. However, if the MARKET believes there is little further reason to "hoard" the commodity, then those that bought lower, may well be sellers based on the knee-jerk reaction higher. The Gold/Silver Index (XAU.X) of stock gained 2.5% today. This looks very similar to past history for the moment (1 day into trading) and now we begin monitoring things here as it relates to Friday's commentary on the sector. Currencies We've also talked about currency as it relates to the US$ versus other major currencies. This relationship should also be monitored closely from here on out. With the Fed aggressively cutting rates in the United States (to improve liquidity and stimulate the economic environment) US investors need to monitor the strength of their dollar vs. other major currencies. We've discussed how a weaker US dollar may benefit some companies based here in the US that sell their products overseas, but we also need to understand what a weaker dollar may be saying about investor's "faith" in the greenback. Will it continue to be one of the stronger currencies that investors around the world would want to hold? Many market participants view Switzerland and its government perhaps more "neutral" than any government when it comes to certain types of politics (this point can be argued, but its a general belief). We've all heard about "Swiss Bank Accounts" that some investors hold where their assets are less likely to be seized by a government. Some traders and investors monitor the US$ vs. Swiss Franc to get a feel for market psychology toward the US greenback. As you can see from the chart that follows, last Tuesday's events had the September Swiss Franc futures contract (sf01u) jumping in strength vs. the US$. As markets in the United States were halted for trading, perhaps that "uncertainty" had the Swiss Franc contract gaining further strength. US$ vs. Swiss Franc (Sept. 2001 contract) Back in July, the Swiss Franc began gaining strength vs. the US$, perhaps due to the uncertainty of the US economy (break of downward red trend). Investors/trader will note the sharp increase in value of the Swiss Franc vs. the US% when it jumped to $0.625 (taking $0.625 to buy 1 Franc). At the end of that day's trading, the contract settled at $0.60, but when markets in the US remained halted, the Franc gained further (uncertainty in US markets?). My current analysis here is much like that of the commodity in gold. I wouldn't want to see much of a move higher in this currency as it relates to world confidence in the US$. This currency relationship will be worth monitoring to help us get a grip on market psychology as it relates to confidence in the US currency. Other currencies We discuss the Swiss Franc above mostly because of its governmental "neutrality" over history toward asset flows in times of uncertainty. The thinking here is that any "belief" of any type of ongoing concern might be shown here. Imagine if you will that you are a billionaire, have more money/assets than you know what to do with, but think there is some type of risk and want to move some assets toward Switzerland and its historic "neutrality." To do this, you would have to convert your asset into Swiss Franc if you wanted to "benefit" from that neutrality. Summary of today's events Suffice it to say, that many chalkboards have been partially wiped clean as recent events here in the U.S. have many investors reviewing their game plans and previous investment strategies. No, they haven't been entirely wiped clean, but some damage control and contingency plans have most likely been put into place. It was obvious that airline stocks were going to get hit to the downside today, but nobody knew for certain how much. The AMEX Airline Index (XAL.X) closed down 40% to 69.81 and finished at its session low. Some reality checks came when Continental Airlines (NYSE:CAL) said it would not pay current debt interest payments. Many believe that this is posturing by Continental's management as it awaits Congress' announcement regarding on any type of industry "bail out" news. We've said before that "the market hates uncertainty" and there are plenty of uncertainties in the group that will not be answered for some time. Perhaps today's announcement from Continental is little different than some insurance companies saying that they may not pay some insurance claims immediately, as they await some type of ruling as it relates to "acts of war" regarding insurance policy clauses. The S&P Insurance Index (IUX.X) fell 4.84% to 653. Right now, it is probably these two groups that face the most uncertainty going forward. Both could be affected by government rulings in each of their industries. This is why I feel it is important to once again take some time and get subscribers "up to speed" on what I feel are some of the basic building blocks of the Treasury bond market and currency markets. For many financial markets, these two items become the foundation for what many stock prices and markets are built upon. Without a strong foundation, then stock markets will become vulnerable. Right now, it becomes important for subscribers to have a strong foundation of how we monitor the foundation. We need to be aware of certain "cracks" that may develop. Right now, I'd say there are a few cracks (as it relates to a weakening US$). Today was basically the first day of a relatively "wiped clean" chalk board and it will take several days, if not weeks or months to begin getting a clearer picture of where things are headed. The investor looking to "play it safe" in stocks is trying to come up with investment ideas that are somewhat removed from things. Some ideas I had this morning in shares of Campbell Soup (NYSE:CPB) and Office Depot (NYSE:ODP) were just a couple of stocks that came to the top of my mind from past commentary. Of course, "playing it safe" has done little to create wealth in our country. I remember excerpts from several of Bill Gates' writings regarding the formation and concept of Microsoft (NASDAQ:MSFT). There were several times of uncertainty and risks that he and his then private investors took before success was eventually found. Each decision was based on risk/reward, with a timeframe in mind. Each move/decision was strategic and not decided on a whim. Each decision was monitored closely and success or failure was measured. Today was the first day that investors/traders were able to trade after a four session halt. There were some that needed to sell some stocks (sell risk) as it related to their strategies and account management. We knew this going into the trading session. Hopefully we've armed traders with some knowledge on how to hedge risk going forward should things begin to unfold unfavorably. Any trader that is hedging a position would rather lose money on the hedge than lose money on the underlying investment. We need to understand that there was undoubtedly a lot of hedging taking place today as traders got some positions squared up. For some market participants to not do so could have been damaging to their accounts longer-term. As traders and investors we can now begin to better comprehend many things that took place today. All in all, I don't think there were many broader-market surprises. Many market analysts expected declines of 8-10% for the major indices. Many were "relieved" that the markets didn't drop more than they did. Some were "disappointed" that the markets didn't finish the later hours of trading stronger. I think both camps are willing to call today's trading a tie. As it relates to a recent article regarding stop-market and stop- limit orders, today's session made some sense. I think there were many that lifted their stop market orders, digested things and when some of the broader markets did regain some earlier losses found at the open of trading, some hedge strategies or selling into what recovery there was then took place. If trading and investing truly is an "endgame," then I do believe that cooler heads prevailed today and the market acted very rational given recent events. ================ Market Sentiment ================ Down But Not Out by Jeffrey Canavan The Dow posted its biggest point drop ever on heavy volume, but the fact that the trading went smoothly made today a success. As expected, anything associated with travel sold off today. Airlines, cruise lines, online travel sites, nothing was exempt. So does a 40% drop make these stocks an attractive buy? Based on US Airways cutting 20% of its workforce and reducing 23% of its flights, airline stocks might be flying low for a while. But then there is the pending government bailout package. Does that mean today's buying in teleconferencing stocks was justified? There might be a small increase in the use of teleconferencing, but I doubt Avistar Communications' business will double. Security stocks, anything that scans, X-rays, or detects, will most likely see an increase in orders, but probably not enough to justify Viisage Technology's 142% advance or ICTS International's 113% one day climb. Perhaps on a pullback these stocks might be an interesting longer-term play. Gold stocks looked like a safe bet when they rose 6% out of the gate, but that fact that they only closed up 2.50% makes the safety of gold a little less safe. The safe stocks today were not just defense stocks, but defensive stocks. Some of the S&P 500 stocks that closed in positive territory included Merck (MRK), Cardinal Health (CAH), Pepsi (PEP), Unilever (UN), Phillip Morris (MO), Proctor and Gamble (PG), and Heinz (HNZ). A defensive posture looks best for bulls and bears alike until market direction becomes a bit clearer. *************************Sector Watch**************************** Support Close Resistance DJIA | 8,650 | | | 8921 | | | 9,110| NASD | 1,490 | | | 1580 | | | 1,670| S&P 500 | 1,000 | | 1039 | | | | 1,100| Rus 2000 | 405 | | 418 | | | | 455| Semis | 453 | 463 | | | | | 538| Biotech | 445 | | | 461 | | | 475| Internet | 90 | | | 96 | | | 105| Networking | 217 | | 227 | | | | 260| Software | 130 | 132 | | | | | 159| Banking | 565 | | | | 586 | | 595| Retail | 695 | | 721 | | | | 765| Drugs | 375 | | 383 | | | | 410| Support and resistance levels have been reset due to Monday's trading. Support Alerts: Resistance Alerts: ____________________________________________________ | Long | Short | Strength | Relative | | Term | Term | of | Strength | | Trend | Trend | Trend | vs S&P 500 | DJIA | Bearish | Bearish | Strengthening | Negative | NASD | Bearish | Bearish | Strong | Negative | S&P 500 | Bearish | Bearish | Strong | -- | Rus 2000 | Bearish | Bearish | Strong | Neutral | Semis | Bearish | Bearish | Strengthening | Negative | Biotech | Bearish | Bearish | Weak | Neutral | Internet | Bearish | Bearish | Strong | Negative | Networking | Bearish | Bearish | Strong | Negative | Software | Bearish | Bearish | Strong | Negative | Banking | Bearish | Bearish | Strong | Neutral | Retail | Bearish | Bearish | Strong | Negative | Drugs | Neutral | Neutral | Weak | Positive | _____________________________________ | Short-Term | | Point and | | Overbought/ | Momentum | Figure | | Oversold | | Signal | DJIA | Oversold | Falling | Sell | NASD | Oversold | Falling | Sell | S&P 500 | Oversold | Falling | Sell | Rus 2000 | Oversold | Falling | Sell | Semis | Oversold | Falling | Sell | Biotech | AP OS | Falling | Sell | Internet | Oversold | Falling | Sell | Networking | Oversold | Falling | Sell | Software | Oversold | Falling | Sell | Banking | Oversold | Falling | Sell | Retail | Oversold | Falling | Sell | Drugs | Oversold | Falling | Buy | AP OB = Approaching Overbought AP OS = Approaching Oversold ***************************************************************** ========================= Play-of-the-Day (Bullish) ========================= RF Micro Devices - RFMD Close:$23.09 change:+0.36 Stop:$19.50 Original Comments When Selected on September 7th: Company Description: RF Micro Devices designs, develops, manufactures and markets proprietary radio frequency integrated circuits for wireless communications applications, including cellular and PCS. The shares have been bolstered by bullish comments from Merrill Lynch citing RF Micro shares as a good way to play a recovery in the wireless sector. They cited the company's growing market share as a supplier to wireless equipment giants Siemens, Samsung and Qualcomm. Fundamentals: For the fiscal year ended in March 2001, net income decreased 30-percent to $35 million on a 16-percent jump in sales to $335.4 million. The company earned 20-cents per share. Revenues reflect increased demand for handset and broadband products. Earnings were offset by increases in research & development, and marketing expenses. For the 2002 fiscal year, the company is expected lose 4- cents per share on sales of $347 million and to earn 25-cents per share on $530 million in 2003. Why We Like It: It's tough to select a bullish tech play in a plunging market. Still, active investors looking for something to keep in their hip pocket to play in a snap back rally should consider RFMD shares. The semiconductor sector has been performing well of late when compared to the general market and even managed to squeak out a slight .46-percent gain in Friday's market plunge. RFMD shares did better with a 6-percent one-day increase. This is consistent with the shares behavior since last April. During down and up days the shares have performed well relative to the general market and semiconductor peers. With the markets approaching the April lows, RFMD shares should outperform in a rally. Another attractive feature of the shares is that a point and figure chart has them hovering just above their bullish trend line at $21.00. With support so nearby, traders playing a bounce can limit risk by placing a stop at near $20. We are placing our initial stop a hair lower at $19.50. Should the market turn, even a short-lived traders rally could push the shares up to resistance at $26 and possibly $28 resulting in a nice gain. Updated Comments: Any tech play that can pull out a 36-cent gain on the ugliest of days deserves to be the Play-of-the-Day. After joining the rest its tech peers with a much lower opening price of $20.15, the shares managed to push to a $24.40 session high before lunch. Although the shares gave back some of those gains, they managed to find support at $22.50. This level held despite five intraday attempts by the bears to drive the shares lower. The next few days ought to see some form of tradable tech bounce and the relative strength RFMD share are exhibiting should mean a solid performance is ahead. Picked on September 7th at $22.31 Gain since picked + 0.77 Earnings Date 10/16 (Not Confirmed) ========== Watch List ========== Cisco Systems - CSCO - close: 14.00 change: -0.47 WHAT TO WATCH: Effective immediately. Those were the terms from CSCO on last Thursday when they announced a two-year $3 billion buy back program. Based off of CSCO's September 10th close of $14.47, the $3B would equal over 200 million shares. As the volume leader today on the NASDAQ, CSCO traded over 112 million shares on Monday alone. Obviously, the company is not going to spend the money all at once. The board gave themselves two years and they can purchase stock from time to time as they see fit in the open market. This is still encouraging news for investors and hopefully this move by management will help put a bottom in the share price. Monday's low today was a little bit less than last April's low (today's low was $13.00) but the stock managed a comeback to close at $14. We would be watching the stock over the next several days for a positive close over $15 or even better a close over $16 as potential entries to consider a long position. --- Nokia Corp. - NOK - close: 15.44 change: +1.69 WHAT TO WATCH: Shares of NOK gained over 12% on Monday bucking the trend on Wall Street including other cell phone makers. As the biggest maker of cell phone handsets, many investors believed that the role cell phones took in last Tuesday's tragedy will confirm American's belief that everyone needs a phone as a source of communication and as one news article put it a "security device". Volume was very strong today and we would be watching for a confirmation of Monday's move. The previous sell-off in August was so orderly there are several clear levels of potential support and resistance. We can probably anticipation trading resistance at each $1 level but there is stronger resistance at $18 and again at $20. Look for a close over $16 before evaluating a potential long play. --- Check Point Software - CHKP - close: 30.60 change: -2.39 WHAT TO WATCH: For those speculators out there, we wanted to highlight CHKP. One stock in an already very weak sector has piqued our curiosity. The GSO.X software index gapped down below support of 140 and sold off from there to close at 131 and change. CHKP also gapped down but at the market's worst, support at $30 for the stock held up. It's possible this may be the bottom for CHKP. The bears have been trying to get the stock to stay under $30 for days and have not succeeded (yet). Nimble traders might want to consider a potential trade to capture the trading range between $30 and $33.25. If you're looking out several days or weeks on the horizon, we could wait for the stock to close above $33.50 (or $35) and see if the stock can appreciate to $38 or $40. We still need to keep an eye on the GSO. CHKP may have found a potential bottom for now but if the sector keeps falling, buyers may not be able to support the stock forever. We would probably qualify this as a risky trade but a stop at $29 should be sufficient. --- eBay Inc - EBAY - close: 49.40 change: -5.17 WHAT TO WATCH: In a purely technical play, we see shares of EBAY under support of $50 and its 200-dma as strong weakness. However, if the market rebounds tomorrow, the stock could bounce back to $53 or $54 which would be at or near the down trending line of resistance. If the stock doesn't respond, the downside could be $45 or even $42.50 in the short-term. On a fundamental note, some believe that EBAY's "Auction for America" to raise $100 million in 100 days for the relief effort might raise brand awareness and attract new clients. --- Coca Cola Co - KO - close: 50.20 change: +0.25 WHAT TO WATCH: You've probably heard it before. In times of market uncertainty investors usually flee to consumer staple stocks who have strong steady earnings. People may stop traveling for the time being but they will not stop drinking sodas. After the initial dip to just under the $49 level, shares of KO saw buying interest late in the day. Price resistance would be around $50.65 but the real hurdle for the bulls is probably the 200-dma directly overhead at 50.45. Volume was very high today at 10 million shares and a breakout on another strong volume day could portend the next bullish leg up for KO. No one has accused KO's stock of being a real fast mover lately but we might see a 10% gain in the next few weeks. We would wait for the close over the 200-dma before considering an entry point. ================================================================= 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 Monday 09-17-2001 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/2068_2.asp ================================================================= In section two: Split Trader Split Announcements: none New Plays: none Play Updates: none Closed Plays: Amerada Hess Corp - AHC Net Bulls New Plays: none Bullish Play Updates: See Play-of-the Day RFMD Bearish Play Updates: Stops updated Closed Plays: Amgen Inc - AMGN Stock Bottom / Active Trader New Plays: Campbell Soup Co - CPB (Bullish) Bullish Play Updates: none Bearish Play Updates: Stops Updated Closed Plays: PepsiCo, Inc. - PEP 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 ================================================================== =============== ST Closed Plays =============== ---------------------------- Closed Split Candidate Plays ---------------------------- Amerada Hess Corp - AHC Close:$75.35 Change:-1.57 Stop:$75.80 As expected, the reopening of the equity markets brought a wave of selling that was broad based and indiscriminate. Normally energy shares benefit from the higher prices that usually accompany global events, but this time even oil stocks sold off. On Monday, AHC shares blew through their $76.09 200-day moving average and our $75.80 stop that was hiding just below. For traders who are riding out today's volatility, strong support exists near $74, but if the shares make it through this level the next area of support is at $70. Picked on August 15th @ $ 78.90 Gain since picked: - 3.10 Earnings Date: N/A (not confirmed) ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- See Play-of-the-Day RF Micro Devices (RFMD) ----------------------- NB Bearish Play Updates ----------------------- Stops Updated: MedImmune (MEDI) from $39.44 to $37.86 Minnesota Mining & Manufacturing (MMM) from $104.25 to $99.00 Peoplesoft (PFST) from $30.25 to $28.65 =============== NB Closed Plays =============== ----------------- Closed Long Plays ----------------- Amgen Inc - AMGN Close: 60.85 Change: -3.28 Stop: $62.00 Defense was the name of the game on Monday and high-priced biotechs were crushed as investors stampeded to safer areas of healthcare and to stuff money under their mattresses. This represented an abrupt reversal for AMGN shares and it took out our $62.00 with a $61.03 open. The only solace one can find for longs who were committed to riding out this anticipated volatility, was that the shares did manage to rebound off of their $59.75 session low and spent much of the day hovering near $60.80 support. This suggests the shares may be in the process of regaining their footing. Picked on September 6th at $65.66 Gain since picked - 4.63 Earnings Date: 10/25 (Not Confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ -------------- New Long Plays -------------- Campbell Soup Co - CPB Close:$28.35 change:+0.09 Stop:$27.00 Company Description: Campbell Soup is the sells more soup than anyone else in the world with a 70-percent share of the US market. Yet this company is about more than just the condensed canned soup featured so prominently in Andy Warhol's art. They also make ready-to-serve and microwaveable soups in resealable and pop-top containers, Pace picante sauce, Pepperidge Farm cookies and goldfish crackers, Godiva chocolates, V8 beverages, Prego spaghetti sauce, Swanson broths, and Franco-American sauces and SpaghettiOs. Campbell's food service unit sells soup and buns to fast-food restaurants and cafeterias. Descendants of John Dorrance, who invented condensed soup, own about 50% of Campbell. Fundamentals: The company has been sacrificing some short-term earnings in exchange for using its strong cash flow to strengthen their competitive position through strategic acquisitions. After earning $1.55 per share in the fiscal year ended July 2001, analysts anticipate the firm will earn $1.29 in 2002 and $1.35 in 2003. CPB shares sell for a current P/E of 18 and a forward 2002 P/E of 22. The industry average P/E is 25. The company has indicated an annual per share dividend of 90- cents (or 3.17-percent). Why We Like It: The fall and winter months bring consumers to soup and the bulls to shares of this soup maker. The following tables show the total point gain or loss for Campbell by month and also the average gain or loss: Total Point Gain by Month for Campbell Soup (1992-2001) January ($22.98) February ($ 2.08) March $ 3.65 April ($ 5.29) May $ 5.66 June $ 2.21 July ($ 0.58) August ($ 9.94) September $ 7.31 October $21.31 November $16.50 December ($ 1.88) Average Point Gain Average Percentage Gain January ($2.30) (5.70%) February ($0.21) (0.21%) March $0.36 1.31% April ($0.53) (1.79%) May $0.57 2.04% June $0.22 0.06% July ($0.06) (0.24%) August ($1.10) (1.80%) September $0.81 3.81% October $2.37 7.26% November $1.83 5.48% December ($0.19) 0.39% Clearly, September through November are the months to own a position in CPB. However this year, the shares have been in a slow motion rally since mid-August. And despite Monday's record breaking drop in the DOW, Campbell Soup shares managed to squeeze out a 9- cent gain. It stands to reason that long investors looking for a defensive place to park some money will be looking favorably on a high dividend play such as Campbell Foods. Traders should wait for a break above resistance at $28.75 or a dip back to $27.75 before taking a position. On the upside path, significant resistance exists at the $29.77 200-day moving average and at the early-May high near $31.00. If the shares can push through $31, we see a bullish target in the $33 to $34 range. We will start this play with a stop at $27.00, which is just below the $27.33 50-day moving average and to the lower end of the late-June/early July congestion. Picked on September 17th at $28.35 Earnings Date 9/06 (Confirmed) =============== AT Play Updates =============== ------------------ Short Play Updates ------------------ Stops Updated: AmeriCredit (ACF) from $44.00 to $38.96 TCF Financial (TCB) from $43.25 to $43.00 =============== AT Closed Plays =============== ---------------- Closed Long Play ---------------- PepsiCo, Inc. - PEP Close:$47.90 Change:+1.00 Stop:$46.50 This stinks. A morning swoon to the session low just of $46.26 just clips our $46.50 stop, before shares of this defensive play reverse direction and close out the ugliest of days with a $1.00 per share gain. Fortunately, we were left with a 84-cent gain on this bullish selection. We don’t plan on waiting long to add this solid defensive play back on the play list, but at this point it is best to wait to see if it can clear $48.00 resistance. If it can, we believe these shares are still on track to make a good run through their $49.94 52-week high on their way to our $60 bullish price target. An equally attractive entry point would be any dip to the $44 - 45 range. Picked on August 10th at $45.66 Gain since picked + 0.84 Earnings Date 7/19 (Not Confirmed) ================== 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 FTE France Telecom Ads 28.70 +1.10 RJR Rj Reynolds Tobacco 58.72 +1.10 FNF Fidelity National Financial 25.40 +1.19 BPT Bp Prudhoe Bay Royal Tr 16.51 +0.61 CDCY Compudyne Corp 13.00 +4.75 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change NOK Nokia Corp Ads 15.44 +1.69 BTI British Amer Tob Plc 18.12 +1.22 WSH Willis Group Holdings 19.25 +1.65 FAF First American Corp 19.05 +1.40 VPI Vintage Petroleum 19.95 +1.46 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change FNM Fannie Mae 77.60 +2.15 AHP American Home Products 59.73 +1.56 WM Washington Mutual 36.89 +1.95 LMT Lockheed Martin 43.95 +5.63 GD General Dynamics 82.90 +6.93 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change XOM Exxon Mobil Corp 40.15 -1.09 WM Wal-Mart Stores 44.00 -2.23 C Citicorp 39.60 -2.85 TOT Total Fina Elf Sa 69.60 -2.28 SGP Schering-Pluogh Corp 35.95 -1.24 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change KFT Kraft Foods Inc 32.90 -0.85 TLM Talisman Energy 33.60 -5.88 SUN Sunoco Inc 36.95 -0.89 MKC Mccormick & Co 43.15 -2.15 NXY Nexen Inc 23.30 -2.30 ================================================================= 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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