PremierInvestor.net Newsletter Wednesday 09-19-2001 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/3658_1.asp ================================================================= In section one: Market Wrap: Market thoughts Market Sentiment: Turnaround Play-of-the-Day: SBC Communications Inc - SBC (Bullish) Watch List:.ITRI, BLL, HRB, CMVT ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 9-19-2001 High Low Volume Advance/Decline DJIA 8759.13 -144.27 8945.47 8480.21 1.67 bln 1228/1926 NASDAQ 1527.80 - 27.28 1568.22 1451.31 1.83 bln 1440/2300 S&P 100 518.85 - 7.95 529.92 500.87 Totals 2668/4226 S&P 500 1016.10 - 16.64 1038.91 984.62 RUS 2000 503.20 - 8.46 413.44 391.38 DJ TRANS 2165.86 - 51.21 2247.68 2104.63 VIX 43.22 + 0.72 47.62 40.80 VXN 76.93 + 2.19 78.28 72.84 TRIN 0.88 Put/Call 0.67 ----------------------------------------------------------------- =========== Market Wrap =========== Market thoughts by Jeff Bailey I want to continue to update everyone on what looks to be taking place. Here's a look at what I feel are some of the more important events and dynamics taking place and builds on what we talked about last week during the markets trading halt. Bonds: We did see some buying in bonds today. The YIELD on the 13-week, 5-year and 10-year were all lower. The YIELD on the 30- year was higher, so we are still seeing some selling in the long end. In essence, the MARKET has been shedding some of the longer-end Treasuries (riskier part of bond market). The 5-year YIELD is lower today than it was on Monday and this has me believing that many market participants are nervous regarding the state of things. Currency: This is what is a little unnerving and what I think had the market seeing some hefty selling before Dow Industrials 8,480 was achieved (38.2% retracement). The US$ was weak against most foreign currencies today and this needs to change. The US$ lost nearly 0.65% versus the Swiss Franc and this is exactly what we DID NOT want to see. There's enough warning here as it relates to our earlier commentary regarding US$/Swiss Franc to have us only looking for a short-term rally. Tomorrow, if we see Dow Futures rally in pre-market and then see the US$ gain some strength back verses the Swiss Franc, then that should help fuel a rally as some "fears" are calmed. As we look at the 10-minute chart of the US$/Swiss Franc, you can see how its price action really affected things today. Remember that Dow Futures were positive this morning. Note how the 10-minute chart shows a gap down in the currency chart (US$ strong vs. Swiss Franc), but as soon as the Swiss Franc showed strength, that's when the Dow Industrials and other indexes went south. The reason I show the 10-minute chart is to NOT make day trader's out of everyone, but to drive home the point of how many traders may be making buy/sell decisions or at least shaping their trading scenarios. Swiss Franc (Dec 2001 Futures) - 10-minute chart The 10-minute chart shows us a history of just how fast the markets are to react to "market moving" events and gives traders and investors interesting insight into how the Swiss Franc/US$ relationship gives hint to how the MARKET is thinking about things. Traders need to remember that the above currency chart ends at 03:00 PM EST, and stocks were still trading until 04:00 PM EST today. A trader that begins to build some trading scenarios using the Swiss Franc/US$ relationship perhaps draws a conclusion that today's late session rally in the Dow Industrials was technical and perhaps just some short covering and locking in of profits at a retracement level. To have that short covering continue and build into a rally, a trader will want to see the US$ gain back some ground against the Swiss Franc. Industrials rally from rolling retracement With 90-minutes left in the trading session, the markets turned rather decidedly, but equity bulls need to remain cautious. Was it a technical bounce, or was it news that the United States had dispatched warplanes to the Persian Gulf? We'll never know for sure, but for the first time since markets resumed trading here in the U.S. on Monday, we can now start putting together some BULLISH trading strategies for a short-term trading rally. On Monday, when the Dow Industrial Average (INDU) broke below its March lows of 9,106, investors dug deep into their toolbox of trading techniques and began rolling down their retracement brackets. In today's OptionInvestor.com's "market monitor" we made comment that the Dow Industrials had just tested the 8,481 level and perhaps some buy programs had been triggered. Dow Industrials Chart - last nine months Last week we used some historical research to try and get a grasp of how certain groups of stocks/commodities acted during similar market environments. We can do the same thing on a more technical level as it relates to the Dow Industrials too. One could argue that the 30 components of the Dow Industrials are somewhat representative of the U.S. economy or at least a stock investors "best choice" for stock stability in tough economic times. In late March, the Dow Industrials looks like they were going in the tank. "Things will only get worse" was the general consensus. All of a sudden, something changed and the Dow Industrials staged an impressive three-day rally. Do you see some of the technical similarities in the above chart from March that present themselves today? Now, history is no guarantee of the future, but how should a trader have played that move back in March? No, he/she shouldn't have "loaded the boat" and just held on. Let's be rational and really look at a more prudent investment/trading strategy. What we did or should have done in March, is exactly what we do or might want to do tomorrow. That would be..... dip our toe in the water with a bullish trade or two, with the mindset of a 3-day rally (if the Dow Industrials rally to 9,700 for 10 days then we can take that too), but if history doesn't repeat itself, I don't want to have loaded the boat and get stopped out on a break below today's low (note today's low of 8,480 came just under 38.2% retracement of 8,481). Levels of Oversold Now we pull in some bullish percent data. Since we're looking at the Dow Industrials, lets get a feel for how "oversold" the Industrials are as it relates to the percentage of stocks in the Dow Industrials (there are just 30 stocks in the Dow) that currently have their point/figure charts showing a buy signal. Here we see that there are just 6 stocks of the 30 that have their charts showing a "buy signal." Those symbols are Johnson and Johnson (JNJ), Coca Cola (KO), McDonald's (MCD), Proctor Gamble (PG), SBC Communications (SBC), and AT&T (T). Hmmmm....two telecom stocks in the Dow Industrials and both showing buy signals on their point and figure charts. Probably means nothing. Dow Industrials Bullish % Chart - 2% scale The bullish percent chart for the Dow Industrials gives hint that we're not as "oversold" as we were back in late March of this year. As we look at other index bullish percent charts though, perhaps this gives hint that this is then EXACTLY where a bullish trader should be concentrating. The NASDAQ-100 bullish percent ($BPNDX) chart is more OVERSOLD than it was in March (based on the bullish percent data) as is the S&P 500 bullish percent ($BPSPX). I'll argue until I'm blue in the face! I must say that is makes me a little angry when I get an e-mail saying "who cares about that boring stock?" I learned a long time ago that I don't trade/invest in a stock because it's "flashy." I trade a stock because I think I can make money in it! I've seen "boring" stocks drastically outperform the market to the upside only because the MARKET was interested in it, even though some traders/investors never considered the stock because it just wasn't considered "flashy enough." Under current market conditions, most traders/investors should be looking for stocks where they can limit downside losses to a MINIMUM, while exposing their capital to a stock that is gaining favor where they have the best probability of realizing a gain. Where traders/investors get into trouble is that they focus on their losses and try to make those losses back in one quick swoop. When the "3-day rally" doesn't occur, they're stuck with another loser that the MARKET wasn't interested in to begin with. Market Psychology Right now, a bullish trader wants to eliminate as many "negatives" as possible. Let's identify some easy ones. Consumer confidence is negative, so perhaps anything "retail" or sensitive to a consumer's luxury spending can be eliminated (as it relates to the scenario of a 3-day rally). While I don't consider Wal-Mart (NYSE:WMT) or Home Depot (NYSE:HD) as retailers that sell "luxury" type items, consumers may be cutting back on their spending habits as they're starting to wonder about how secure their current job is. Confidence in the stock: Has this stock been around long enough or during "war time?" Do they stand a chance of being around if the U.S. ends up in a world war? Yes, it's "simple logic," but try listing any pros and cons of the stock as it relates to current market environment and the potential 3-day rally. Think risk/reward Think risk first. At what point will I call it quits and how much upside does the stock have to a level of resistance? I'm not thinking that a stock that fell $10 in the past three sessions will regain the entire $10 loss in a three-day rally. Too often, traders/investors get in the mindset similar to playing a competitive sport. "I only play to win." In investing/trading, we play to win, but more importantly (especially in this current market environment) we're playing NOT TO LOSE. I often write about the bullish percent as "field position" and how a good football coach calls the appropriate play depending on field position and where the ball is. RIGHT NOW, the bears have the ball and they've scored a touchdown. The trader/investor looking to get the ball back (perhaps tomorrow) is going to start with a conservative play as they would have very poor field position. Those that know anything about football are not going to be calling for the "triple reverse flee-flicker." Nope, what the smart trader/investor will want to be looking for is "fullback up the middle" and if he breaks through for a 10-yard gain, then great. Move the chains (move up our stop) and put some distance between us and the goal line. Some Dow Stocks that look attractive Let's go back to that "2 telecom stocks in the Dow Industrials, both showing buy signals on their charts." Telecom..... why is that? Is it because of all the phone calls being made across the country to touch base with our loved ones and make sure everything is OK? Is it because we understand just how short life is and want some comfort? Maybe it's because sales reps have had their expense budgets cut back and now pick up the phone and ask for the order, rather than jump on a plane and go shake hands. Maybe its because the sector really has seen its bottom, has retrenched and is running lean. We could go on and on. SBC Communication (NYSE:SBC): SBC Communications looks to have found a double bottom at the $38 level (April low and June low), but at $45, this stock might not fit our scenario for a 3-day rally. Nonetheless, the stock looks strong and has been performing well relative to the Dow Industrials. AT&T (NYSE:T): Aha! Now this may be a way for a trader to play the "telecom" strength, and shares of T just recently came very close to a 52-week low set back in December of last year near $16.18. My thinking here as it relates to an oversold bounce and short-term trading rally is this..... AT&T has been around for several war time era's. As "bad" as things are right now, the stock DID NOT set a new 52-week low on Monday. Even though the Dow Industrials have traded lower every day since the markets opened for trading, AT&T's low was seen on Monday at $16.50. Tuesday's low was $17.46 and today's low was $17.75. At $17.99, a trader might look long the stock tomorrow should the Dow look strong at the opening of trading. Hand the ball off to the fullback (T), and if she can get out to the $20 yard-line, that's more than a 10% gain from the $17.99 level. ================ Market Sentiment ================ Turnaround by Jeffrey Canavan A rash of earnings warnings coupled with economic and political uncertainty sent the Dow tumbling before a late-day rally took hold. A 144-point drop may not look good, but considering the Dow was down over 420 points, it was a small victory for bulls. Adobe's (ADBE) $4 drop contributed to a 2.86% decline in the software sector after the company gave less than inspiring guidance for the fourth quarter. Take Two Interactive Software (TTWO) also warned of lower fourth quarter revenues due to changes that would need to be made to the content of some of its more violent upcoming video games. Electronic Arts (ERTS) also got caught up in the selling, losing 5.89%. Symantec was the one bright spot, up 3.74%, on the company's detection and repair solutions for the Nimda virus. Semiconductor Index Daily Chart Software stocks had a rough day, but semiconductors were the worst performing tech sector of the day, closing down 3.76%. Rambus (RMBS) and Motorola (MOT) posted small gains, but $2 drops by KLA-Tencor (KLAC), Novellus (NVLS), and Applied Materials (AMAT) dragged the sector lower. The sector was able to bounce off a fitted 61.8% retracement at 389, and move higher to close at 418. Halfway between two retracement levels, the SOX looks like a 50/50 proposition right now. Wireless Telecom Index Daily Chart But not all was glum in techland, anything that didn't require a wire did well. The Wireless Telecom Index (YLS) posted a 2.24% gain. Handset makers, service providers, and chipmakers all did well, but will they continue to do so? While wireless stocks haven't fallen with the rest of the market, they have just consolidated between 80 and 82 for the past five days. If the rest of the market rebounds, these stocks might get left behind. Oil and oil service stocks fell again today, losing 4.13% and 7.74% respectively. A possible decrease in demand due to a slowing economy continues to weigh on oil stocks. Gold stocks finished up 0.36%. They're not falling, but they're not posting consecutive gains either. A snapback rally should see beaten down sectors do well, but until then some of the boring Dow stocks like Procter and Gamble, Alcoa, and Coke look like the safest long plays. *************************Sector Watch**************************** Support Close Resistance DJIA | 8,650 | | 8759 | | | | 9,110| NASD | 1,490 | | 1528 | | | | 1,670| S&P 500 | 1,000 | 1016 | | | | | 1,100| Rus 2000 | 385 | | 403 | | | | 455| Semis | 385 | | 419 | | | | 538| Biotech | 405 | | | 438 | | | 475| Internet | 90 | | 96 | | | | 105| Networking | 217 | 225 | | | | | 260| Software | 100 | | | 124 | | | 159| Banking | 565 | | | | 583 | | 595| Retail | 695 | | | 725 | | | 765| Drugs | 365 | | 374 | | | | 410| Support Alerts: Rus 2000, Semis, Software, Biotech, Biotechs Resistance Alerts: ____________________________________________________ | Long | Short | Strength | Relative | | Term | Term | of | Strength | | Trend | Trend | Trend | vs S&P 500 | DJIA | Bearish | Bearish | Strong | Negative | NASD | Bearish | Bearish | Strong | Negative | S&P 500 | Bearish | Bearish | Strong | -- | Rus 2000 | Bearish | Bearish | Strong | Negative | Semis | Bearish | Bearish | Strengthening | Negative | Biotech | Bearish | Bearish | Weak | Negative | 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 | Bearish | Bearish | 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 | Oversold | 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 | Sell | AP OB = Approaching Overbought AP OS = Approaching Oversold ***************************************************************** ========================= Play-of-the-Day (Bullish) ========================= SBC Communications Inc - SBC Close:$45.65 change:+1.35 Stop:$44.00 Original Comments When Selected on September 18th: Company Description: SBC is a telecommunications holding company selling a wide range services through subsidiaries. After Verizon, SBC is the second largest local phone company with 61 million phone lines in 13 states. It sells through Pacific Bell in California, Southwestern Bell in Texas and Ameritech in Illinois. Its newly formed venture with BellSouth called Cingular Wireless makes it the second largest wireless provider (behind Verizon again) with 21 million subscribers in 38 states. SBC also provide DSL services with Covad and Prodigy and long distance services in Connecticut, Kansas, Texas and Oklahoma. It also has an international presence with partial ownership of telecoms in 20 countries. Fundamentals: Last year, the firm earned $2.26 per share on sales of $51.4 billion. This year analysts expect the company to earn $2.36 per share on sales of $56.7 billion and $2.55 on $64.4 billion in 2002.With a current P/E of 20 and a forward 2001 one of 19, SBC shares are under valued when compared to the industry average P/E of 26. SBC has indicated an annual per share dividend of $1.02 (or 2.13-percent). Why We Like It: In this nervous market, investors are beginning to rediscover the attractive valuation of the well-established telecoms. They also feel the telecoms will benefit from decreased business travel. The bullish momentum of SBC shares began with a $2.43 gain the day before Tuesday's disaster and has continued in the two days following the reopening of the markets. Tuesday $1.35 gain produced a triple top breakout and fractured the $44.87 200-day moving average. A point and figure analysis shows these shares are performing better than the S&P 500 and its peers in the North American Telecommunications Index ($XTC). We have a bullish price target of $51 with resistance at $48. Long-term investors can start this play with a stop at $41, which would represent a reversal of SBC's long-term bullish up trend. Short-term traders should start with a $44 stop just below the before mentioned 200 dma. Updated Comments: The session low of $44.90 represented a slight dip to just above the $44.82 200-day moving average. That this support level held is promising for longs and presents an attractive entry point. With support so nearby, longs can enter this play with a tight $44.00 stop, presenting limited risk. If the long overdue traders rally makes its appearance the relative strength of this play should make it a strong performer. Picked on September 18th at $45.65 Gain since picked: - 0.36 Earnings Date 10/22 (Not Confirmed) ========== Watch List ========== Itron, Inc - ITRI - close: 19.60 change: +1.67 WHAT TO WATCH: Most of us have probably never heard of Itron Inc. but its stock has been showing incredible strength over the last three sessions making gains in each of them. To steal a line from MarketGuide's business description, "Itron Inc. is a provider to the utility industry of data acquisition and wireless communications solutions for collecting, communicating and analyzing electric, gas and water usage". The stock has been in a long-term up trend since late December of last year and while it has seen some consolidation and dips shareholders should be impressed with its $4 to $20 appreciation. In late July, shares of ITRI dipped to $14.50 intraday before bouncing back to $20 in the next few days. The stock has seen very strong resistance at the $20 level and the few times the bulls have been able to breakthrough it the bears took it back down the next day. As of this Monday the intraday low was $14.25 and the stock has bounced back to $19.60. The bulls are making another run at resistance and if they are successful we want you to be aware of it. We would watch for two consecutive closes over the $20 level or a better strategy would be to wait for two closes over $21 which is also strong resistance. You'll be missing the 5% move from 20 to 21 but it might forecast that the stock could be ready for another stronger move up. The past year has shown moves of 20% to 30% or more when it successfully breaks out above resistance. On the positive side, the company also announced its efforts in a stock buy back program this week. --- Ball Corp. - BLL - close: 56.10 change: +1.09 WHAT TO WATCH: Many of our readers who work in the technology field are probably familiar with the Ball Corp. through its Ball Aerospace division. What a lot of investors don't know is that the majority of their revenues come from food packaging. More correctly, Ball is one of the world's largest suppliers of metal and plastic packaging for food and beverages (example: aluminum cans). Ball announced 2000 sales of $3.7 billion, of which $3.3B came from packaging and only $400 million from its aerospace division. Their technology division focuses on civil space and defense systems. We are unsure how a slowing economy might affect the packaging operations if at all and some may see it as a potential defensive play. On the other hand, anything defense related is going to get positive press as the U.S. pursues its new anti-terrorist agenda. Looking at the chart, one can see the slow steady long-term trend is up. The stock appears to be prone to 5 and 10% corrections and for weeks it battled with overhead resistance at $50. However, the bulls broke through resistance in mid-August and the share price quickly ran up to $58. We've seen a pullback to $54 and the last two days have seen positive closes. Both traders and investors can keep this stock on their watch list as potential entry points to go long exist with a pullback to $54, $52.50 or a more bullish close over $58. If the markets remain sour, a dip to $50 might be a tempting entry point but overall market conditions should be considered. --- H R Block Inc. - HRB - close: 36.21 change: -0.79 WHAT TO WATCH: HRB is not new to the watch list but we have not listed it for a while. The stock showed incredible strength over the last year which has probably helped more than one shareholder sleep easier at night. Last Friday the company announced a 15 million share buy back program but said the plan was not in response to Tuesday's attacks. Whether that is believable or not, management believes their stock is undervalued. This is the second buy back program for HRB in recent months as last March they announced a 12 million share plan that has almost been completed. We wanted to list it on the watch list as the stock has been hovering near its 50-dma. HRB's share price has not closed below its 50-dma since November of 2000 and in the past purchasing shares when they traded near this moving average proved to be a great entry point. Obviously, we're in a different market environment and profitable investors may be tempted to take some money off the table if the markets worsen but so far the stock has been resilient this week. If you're a trader, this looks like a decent entry point to go long with a stop at or near $35 (since shares can still penetrate the 50-dma, it has yet to close below it). Overhead resistance is at $39. --- Comverse Technology - CMVT - close: 24.25 change: +1.58 WHAT TO WATCH: Is the bad news over? We saw CMVT get hammered in July after warning that earnings would be significantly less than expected. The stock had been stuck in limbo under resistance at $30 until they confirmed the bad news with their earnings report in late August. Earnings were indeed down and investors were not happy with numbers 20% less than the year before. The next several sessions saw sustained selling in CMVT. Now it appears that CMVT may have found a bottom at $20. This is purely speculation and what we are witnessing could just be an oversold bounce and short covering but its possible shares might trade up to $27.50 or even $30 again. There is resistance at 25.75 but if the tech sector rallies it might be the case of a "rising tide lifts all boats". Keep your eyes on it if this sector interests you or you like to do a little bottom-fishing. ================================================================= 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 Wednesday 09-19-2001 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/3658_2.asp ================================================================= In section two: Split Trader Split Announcements: GenesisIntermedia Postpones Stock Split New Plays: none Play Updates: no active plays Closed Plays: none Net Bulls New Plays: Qualcomm - QCOM (Bullish) Bullish Play Updates: none Bearish Play Updates: Stops Updated Closed Plays: none Stock Bottom / Active Trader New Plays: Suiza Foods - SZA (Bullish) Bullish Play Updates: none Bearish Play Updates: Stop Updated 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 =================== Wednesday, September 19, 2001 2:30 PM ET GenesisIntermedia Postpones Stock Split The Board of Directors of GenesisIntermedia (Nasdaq: GENI) announced that it will postpone indefinitely the previously announced 3-for-1 stock split. Originally announced on September 5, 2001, the Board agreed that due to unfavorable market conditions they would wait until further analysis to execute the split. GENI shares were trading at $17.33 upon the declaration of the split and have traded as low as $13.05 since that time. The company appears to be under SEC scrutiny for its questionable involvement with Adnan Khashoggi. Khashoggi was a financial middleman in the Iran-Contra scandal and numerous other endeavors. Please read the original split announcement for further details. Original Announcement: 09/05/01 Geni's Looking for a Little Magic GenesisIntermedia, Inc. (Nasdaq:GENI; Frankfurt:GIA) announced a 3-for-1 stock split today in what some consider a desperate attempt to bolster the stock and to maintain the minimum requirements for its Nasdaq listing. Nevertheless, it would be difficult to argue that the Board's announcement is motivated by recent altercations with the SEC. On Tuesday the Board issued a letter to the shareholders that reiterated current corporate endeavors and a reminder that the company had been added to the Russell 2000 Index in July. Sounds great until you get to the part that states their concern about the massive short selling of common shares. Chairman and CEO Ramy El-Batrawi encouraged shareholders to take their shares off the street and into certificates, stating, " By doing this, a short seller would not be able to borrow your stock for short sales without your permission. When your stock is held in a margin account, brokers can loan it out." In a Bloomberg article that was also issued September 4, it was cited that Saudi financier Adnan Khashoggi (financial middleman in the Iran-Contra scandal) forfeited $7 million in inside trades to help GENI repay his loan. As the second-largest shareholder in the company, the SEC became aware of potential problems as Khashoggi's actions raised several issues under U.S. securities laws. According to a former SEC commissioner, using inside information would be the prime violation. According to Bloomberg, Khashoggi's holding company Ultimate Holding Ltd. has lent as much as $49 million to Genesis, which currently maintains a $9.3 million negative net worth. During the first six months of this year Ultimate surrendered almost $7 million in short-swing profits to Genesis. These are profits accumulated solely from buying and selling GENI shares. The article stated, "In an interview with Bloomberg News in January, Ramy El- Batrawi, chief executive of Genesis, said he has known Khashoggi for about 15 years and worked with him "on deals" between 1988 and 1993. He said the two speak "almost every day." El-Batrawi expressed surprise that Khashoggi's name had been listed on Ultimate's filings with the U.S. Securities and Exchange Commission. `It's strange that it came out,' the Genesis CEO said. `He wanted a low profile'." Genesis issued its last stock split just six months earlier. That split was also a 3:1 announced at the $19 level. At the execution date, shares began trading at $7.45 and continued to escalate to the current price of $17.70. There are currently 23.3 million shares outstanding and a float of 9.8 million - 20.6 percent of which is short interest. The current stock split is payable September 24, 2001. ================================================================== Net Bulls (NB) section ================================================================== ============ NB New Plays ============ -------------- New Long Play -------------- Qualcomm - QCOM Close:$45.00 Change:-1.37 Stop: $42.00 Company Description: Qualcomm created the code-division multiple access (CDMA) standard for wireless networks. CDMA-based networks account for 12-percent of the worlds' mobile subscribers. Qualcomm collects royalties for CDMA use and makes CDMA-based products such as chipsets and software. Although, the US is a Qualcomm stronghold, it is working hard to expand in Asia, in particular China, off of its dominance in South Korea. This effort got a big boost when China Unicom, China's second largest wireless operator, awarded $1.46 billion in contracts for equipment to build a cdma-based network. The Chinese adoption of cdma is seen as crucial for Qualcomm, because as it is also critical for the adoption of cdma throughout Asia. Unfortunately, on the heels of the good news was an announcement that Verizon Wireless was switching from cdma to a rival technology based on wCDMA. Fundamentals: Analysts project the company, which earned $1.05 in the fiscal year ended September 2000, will earn $1.04 in 2001 and $1.28 in 2002. This gives the company a forward P/E of 43. Why We Like It: This is a pure traders play. On Wednesday, Qualcomm shares put in a double bottom when they bounced off of the $42.75 session low set last April 4th with a dip to $42.60 before closing at $45.00. For short-term traders who think that today's late rally may finally spark a 2 or 3-day rally on Thursday, QCOM shares are a good choice to consider. These are volatile shares and wireless stocks are showing some strength, so any form of rally should result in a quick move to the $53 to $57 range, yet the successful test of the April low means that quality support is nearby. We are starting this play with a $42.00 stop, just below the April and Wednesday lows. The volatility of this play means it is for aggressive nimble traders only. Good or bad it won't be around for long. Picked on September 19th at $45.00 Earnings Date N/A (Not Confirmed) =============== NB Play Updates =============== ----------------------- NB Bearish Play Updates ----------------------- Stops Updated: MediImmune Inc (MEDI) from $36.00 to $35.50 Minnesota Mining & Manufacturing (MMM) from $97.00 to $96.00 Mercury Computer Systems (MRCY) from $38.50 to $37.75 ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ AT New Plays ============ -------------- New Long Plays -------------- Suiza Foods - SZA Close:$57.01 change:+0.61 Stop:$54.00 Company Description: Suiza Foods Corporation, based in Dallas, is the nation's leading dairy processor and distributor, producing a full line of company- branded and customer-branded products. National brands include International Delight®, Second Nature®, Naturally Yours®, Mocha Mix®, Sun Soy(TM), kidsmilk(TM) and fitmilk®. Regional brands include Adohr Farms®, Barbe's®, Broughton®, Brown's Dairy(TM), Country Delite®, Country Fresh®, Dairy Gold®, Dairymen's®, Flav-O- Rich®, Garelick Farms®, Hygeia®, Lehigh Valley Farms®, London's®, Meadow Gold®, Model Dairy®, Oak Farms®, Poudre Valley®, Robinson®, Schenkel's All Star Dairy, Schepps®, Shenandoah's Pride®, Suiza Dairy®, Swiss Dairy(TM), Louis Trauth Dairy®, Tuscan® and Velda Farms®, as well as Celta® in Spain. Suiza also sells products under partner or licensed brands in certain regions, including Borden®, Foremost® and Pet®. Suiza Dairy Group manufactures its products in 67 plants in 29 states. Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation's largest manufacturers of rigid plastic containers. In April 2001, Suiza Foods announced it had agreed to purchase rival Dean Foods (DF) for $1.5 billion and will assume $1 billion worth of debt. Pending antitrust approval, the company likely will take on the Dean Foods name. Dean shareholders have already approved the deal, Suiza shareholders will vote on September 21. Fundamentals: Last year, Suiza earned $3.86 per share on sales of $5.8 billion. Dean Foods (DF) earned 51-cents on $4.4 billion. As single entities, analysts have 2001 earnings forecasts of $4.24 for SZA and 72-cents for DF. Using these existing estimates, the combined entity should have 2001 earnings of $4.96 per share on sales in excess of $10 billion. Compared against Suiza's current share price, the combined company would have a 2001 P/E of 11.49 against the industry average of 25.35 and SZA's current single entity 2001 P/E of 13.4. Why We Like It: Suiza shares looks good for both long-term investors and short-term traders. For long-termers, the shares have been on a well- entrenched up-trend since December 2000. Multiplying Suiza's current 2001 P/E forecast against the expected earnings of the combined company gives a 6 to 12-month price target of $66.46. This is consistent with brokers' targets in the range of $64 to $68 and our point and figure derived bullish price objective of $63.00. Traders and investors will appreciate that the shares are currently at an attractive entry point. In the last three trading sessions, the shares rebounded off of the bottom of their upward trading channel that has been in effect since mid-May. A move to the upper end of this channel would put the shares at approximately $60 to $61. To add it up, this gives us a short-term price target of $60 and a longer-term one of $66. Traders can establish a position with a $55 stop, which is just underneath the $55.66 50-day moving average and the recent $55.55 session low set when the market reopened on Monday. Investors can go as low as $54 for a stop. Picked on September 19th at $57.01 Earnings Date 11/07 (Not Confirmed) =============== AT Play Updates =============== ------------------ Short Play Updates ------------------ Stop updated: AmeriCredit Corp. (ACF) $38.96 to $35.50 ================== 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 TLS Telstra Corp Ltd Ads 13.20 +0.85 HNP Huaneng Power Intl Inc 21.10 +1.27 SZA Suiza Foods Corp 57.01 +0.61 HIW Highwood Properties 24.60 +0.55 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change AWE AT&T Wireless Group Inc 15.00 +1.02 TNOX Tanox Inc 16.35 +1.29 VSAT Viasat Inc 18.59 +2.73 MOVI Movie Gallery 19.57 +2.90 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change VZ Verizon 53.90 +2.20 VRSN Verisign inc 42.90 +2.58 ADC Aon Corp 37.74 +1.05 NOC Northrop Grumman Corp 97.00 +2.25 CSC Computer Sciences Corp 35.65 +2.65 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change XOM Exxon Mobil Corp 38.41 -1.07 TOT Total Fina Elf Sa 66.00 -3.40 RD Royal Dutch Petrol 48.05 -2.63 LLY Eli Lilly 75.50 -2.46 HBC Hsbc Holdings Plc 48.75 -1.43 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change IMO Imperial Oil 27.31 -0.72 SU Suncor Energy 29.25 -1.32 SQA-B Sequa Corp Class B 56.25 -1.00 ================================================================= 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. 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