PremierInvestor.net Newsletter Wednesday 10-10-2001 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/1554_1.asp ================================================================= In section one: Market Wrap: Bull jumps and Fannie May Buyers Flee. Market Sentiment: Bust out day. Play-of-the-Day: Tenet Healthcare - THC Watch List: QQQ, NVDA, DD, XLNX, EMLX, IMNX, NSIT, ODP, MTG, CSCO, FLEX, ERICY, NOK ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 10-10-2001 High Low Volume Advance/Decline DJIA 3204.86 +188.42 9252.90 9000.14 1.30 bln 2239/ 871 NASDAQ 1626.26 + 56.07 1626.99 1558.81 1.83 bln 2385/1214 S&P 100 554.76 + 12.92 555.42 539.80 Totals 4624/2085 S&P 500 1080.99 + 24.24 1081.62 1052.70 RUS 2000 421.66 + 12.98 421.66 408.68 DJ TRANS 2228.61 + 99.94 2228.80 2126.97 VIX 33.46 - 2.53 36.64 33.25 VXN 66.19 - 0.07 69.14 66.19 TRIN 0.53 Put/Call 0.64 ----------------------------------------------------------------- =========== Market Wrap =========== Bull jumps and Fannie May Buyers Flee. In last nights market wrap we thought the Dow Industrials needed to make a meaningful move above the 9,105 level for market psychology to improve and it didn't take long for bulls to get off the couch and begin thinking they've found "the cure." What's impressive near-term about the move higher is that we didn't necessarily get any bullish market moving news. Yes, there were "rumors" that some major institutional accounts were going through some asset allocation away from Treasury bonds and into stocks, but other than that there wasn't that much good news to provide today's catalyst. Dow Industrials Chart - last nine months This morning's low came in the first hour of trading, but we're noting the trade near 9,000 at 9,000.14. I'd argue that psychology plays a very important role in how markets trade/perform and it wouldn't surprise me in the least that 9,000 now becomes important psychological support, with 9,105 becoming technical support. Now... Sigmund Freud would never exclaim, "The patient is cured" after his patient's first visit, nor a second visit. A patient is only cured after he/she achieves certain levels of progress or is able to gather himself after a set back. We want to continue to challenge the indexes, and monitor their progress. Those that have seen the movie "What about Bob" will understand the term "baby steps." Why did the Dow Industrials find a session high at 9,252.90? Who in their right mind would sell any Dow stocks when the index was breaking what looks to have been a key resistance level break to the upside? This is where it is sometimes helpful to look at different time frames. On August 7th, 14th and 27th, the Dow Industrials had a tough time making any type of meaningful move above its 200-pd moving average on the 60-minute interval chart. This now becomes our next hurdle to be monitoring for further signs of strength. Dow Industrials - 60-minute chart The above chart of the Dow Industrials is plotted on a 60-minute interval. We continue to show the 50-pd MA (thin blue) and 200- pd MA (thin red) with retracement overlaid. Note how an institutional trader trading on this time frame may be using the 50-pd and 200-pd MA's to his advantage. If the 200-pd MA was "resistance" back in August, we need to monitor this seemingly important moving average near-term. We can also look back (upper left hand part of chart) and understand that we need more than a 25 point move above the 200-pd MA at 9,255 for bulls to be getting euphoric. At the same time, think about bears that have yet to cover on the move above 8,481, then above the 50-pd MA at 8,541 and now on the break above 9,105. Perhaps that type of thinking helps explain this morning's first hour push higher from 9,000.14 (at 50-pd MA) to 9,158 in just 60-minutes! Hogwash! There's no way the market is trading off the 60-minute time interval! NASDAQ Composite Chart - 60-minute interval There's too much correlation with the 50-pd and 200-pd on the 60- minute interval to be a mere coincidence. Note some of the similarities found here in the NASDAQ Composite (COMPX) on the 60-minute interval that we're seeing in the Dow Industrials. Traders are traders and they monitor levels and moving averages. With MACD turning higher above the zero level and crossing over, I'm leaning toward a bullish day for the NASDAQ tomorrow. PeopleSoft - 60-minute interval I like the way that the 60-minute chart for PeopleSoft (NASDAQ:PSFT) correlates with the NASDAQ Composite (COMPX) and the two together makes for some confident trading. A break above the 200-pd MA at $25.70 sets in motion the potential to achieve the $30 level (perhaps $30.37 but not trying to squeeze every last cent from the trade) and a $4.30 gain on a $25.70 investment would represent a nice percentage move of 16%. A trailing stop just under the $23.60 level gives some room for the trade to play out. Should the NASDAQ Composite want to get overly bullish in the coming sessions, then all the better. Finally.... "Fannie gets spanked." Yes, there was a pun intended, but we're going to use the lower price action in shares of Fannie Mae (NYSE:FNM) to indicate some bullishness going forward. In Friday's market wrap "Fannie Mae, now in play," we thought shares of FNM might see some downside should we also see a higher YIELD in the 10-year. We also mentioned PeopleSoft (NASDAQ:PSFT) in that wrap. Today's action in FNM to the downside looks to be boding well on a very narrow perspective for the possibility of a further move higher in bond YIELDS. It is often said that in a bull market, all stocks will trade higher. While this may be "true" (we know it's not) the best test for a scenario is to also have some stocks you think will trade lower in a new bull market, just to provide a test and continue monitoring your scenario. Fannie Mae Chart - Today's divergence in Fannie Mae (FNM) plays into our scenario for the potential of higher YIELDS in the bond market. There's still a lot of work to be done before bearish traders in FNM start celebrating, but today's loss of 3% when the Dow gained 2% and the S&P 500 gained 2% gives hint that some market participants may be thinking what we were on October 5th. What bearish traders want to see near term is a break back below the 200-day moving average like they witnessed on August 24th. The heavier the volume the better, to give indication that bulls are once again starting to loosen their grip on the stock. What I find most interesting about today's action in FNM is what took place in the last hour of trading. For the most part, the stock tracked the bond market very closely during the entire session. However, the bond market closes at 03:00 pm EST and stocks continue to trade until 04:00 pm EST. In the last hour of trading (without the bond market to guide traders in FNM) shares of FNM fell from $81.40 to a session low of $80.30 before closing at $80.45. My thinking going into tomorrow's open is that market participants may have wanted out of the stock in the event that bond YIELDS were higher in the morning. If that's the case, then we may want to have a technology stock like PeopleSoft (PSFT) on our list for a potential bullish trade and be correlating against many of the technicals outlined in the Dow Industrials, S&P 500 and NASDAQ Composite. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Bust out day. by Russ Moore After several days of tight range trading, the markets made a break to the upside led by a major buy program from Goldman Sachs. The DOW ended the session with a +2.1 percent gain while the NASDAQ added +3.6 percent and the NDX +4.8 percent. Volume picked up with the NYSE doing 1.29 billion shares and the NASDAQ trading 1.85 billion shares. Winners took it to the losers with a 22/9 victory on the big board and a 24/12 margin on the tech side. Plenty of green across all sectors with gold and utilities the only weak areas. August wholesale inventories came in with a decline of -0.1 percent, in line with estimates. Wholesale sales were up +0.6 percent. Yesterday I wrote that the markets were moving in a narrow range, poised to break out one way or the other. Today’s action was indeed a major breakout, but based on what? I did hear talk of some promising earnings numbers, and a another month of declining inventories as possible reasons for the jump, but that doesn’t wash. The real reason was the reallocation of stocks from bonds as highlighted by Austin in today’s Market Pulse. Whatever the reason, investors have to be careful of jumping on the bullish bandwagon prematurely. We are operating under a tenuous cloud, and with conditions currently sitting on the overbought side, it would take very little to topple the indices. VIX Wednesday 10/10 close: 33.46 VXN Wednesday 10/10 close: 66.19 30-yr Bonds Wednesday 10/10 close: 5.36 Total Put/Call Ratio: .73 Equity Option Put/Call Ratio: .65 Index Option Put/Call Ratio: 1.22 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 32.50 Volume/Open Interest Maximum calls: 30/88,562 Maximum puts : 30/71,335 Moving Averages 10 DMA 30 20 DMA 30 50 DMA 35 200 DMA 45 Fibanocci Retracements Relative High: 51.95 (05/22/01) Relative Low: 27.00 (09/21/01) 38% 36.60 50% 39.57 62% 42.59 === S&P 100 Index (OEX) 52-Week High: 834.93 52-Week Low: 491.70 Current close: 554.76 Volume/Open Interest Maximum calls: 600/7,465 Maximum puts : 500/8,114 Moving Averages 10 DMA 541 20 DMA 532 50 DMA 574 200 DMA 628 Fibanocci Retracements Relative High: 680.03 (05/22/01) Relative Low: 480.07 (09/21/01) 38% 556.14 50% 579.65 62% 603.55 === S&P 500 (SPX) 52-Week High: 1530.01 52-Week Low: 965.80 Current close: 1080.99 Volume / Open Interest Maximum calls: 1050/18,168 Maximum puts : 1050/25,477 Moving Averages 10 DMA 1056 20 DMA 1040 50 DMA 1122 200 DMA 1218 Fibanocci Retracements Relative High: 1315.93 (05/22/01) Relative Low: 944.75 (09/21/01) 38% 1086.75 50% 1130.62 62% 1175.23 == DJIA (INDU) 52-Week High: 11,518.83 52-Week Low: 8,235.81 Current close: 9,240.86 Volume / Open Interest Maximum Calls: 100/26,616 Maximum Puts 100/38,720 Moving Averages: 10 DMA 8,998 20 DMA 8,910 50 DMA 9,742 200 DMA 10,367 Fibanocci Retracements Relative High: 11,350.05 (05/22/01) Relative Low 8,062.34 (05/21/01) 38% 9,308.92 50% 9,693.99 62% 10,085.60 == Biotech Index (BTK) 52-Week High: 811.61 52-Week Low: 383.28 Current close: 475.43 Volume / Open Interest Maximum Calls: 460/ 326 Maximum Puts: 440/2002 Moving Averages 10 DMA 459 20 DMA 453 50 DMA 493 200 DMA 544 Fibanocci Retracements Relative High: 811.61 (09/25/00) Relative Low: 383.28 (03/22/01) 38% 546.22 50% 596.57 62% 646.71 == Semiconductor Index (SOX) 52-Week High: 1280.84 52-Week Low: 362.00 Current close: 428.59 Volume / Open Interest Maximum Calls: 490/2,871 Maximum Puts: 390/2,129 Moving Averages 10 DMA 390 20 DMA 410 50 DMA 515 200 DMA 591 Fibanocci Retracements Relative High: 710.78 (05/22/01) Relative Low: 343.93 (09/27/01) 38% 484.50 50% 527.18 62% 570.57 == Pharmaceutical Index (DRG) 52-Week High: 455.28 52-Week Low: 339.49 Current close: 397.28 Volume / Open Interest Maximum Calls: 400/705 Maximum Puts: 360/628 Moving Averages 10 DMA 392 20 DMA 382 50 DMA 388 200 DMA 396 Fibanocci Retracements Relative High: 448.43 (12/29/00) Relative Low: 339.49 (03/22/01) 38% 382.22 50% 395.69 62% 409.03 ***** CBOT Commitment Of Traders Report: Friday 10/05 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts on the Chicago Board Of Trade. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs are not. Extreme divergence between each signals a possible market turn in favor of the commercial trader’s direction. S&P 500 Commercials Long Short Net %Change 9/18/01 406,387 471,823 (65,436) (20.8%) 9/25/01 357,873 407,036 (49,163) (24.9%) 10/02/01 365,200 408,567 (43,367) (11.7%) Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: (41,144) - 5/1/01 Small Traders Long Short Net %Change 9/18/01 172,988 100,531 72,457 (5.6%) 9/25/01 122,613 71,721 50,892 (29.7%) 10/02/01 124,249 73,882 50,367 (1.1%) Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 Commercials Long Short Net %Change 9/18/01 35,497 45,731 (10,234) (8.0%) 9/25/01 26,761 36,812 (10,051) (1.8%) 10/02/01 26,703 37,699 (10,996) 9.4% Most bearish reading of the year: (15,521) - 3/13/01 Most bullish reading of the year: (1,825) - 1/02/01 Small Traders Long Short Net %Change 9/18/01 22,876 21,702 1,174 (56.6%) 9/25/01 10,699 6,580 4,119 251.0%) 10/02/01 10,918 6,804 4,114 (0.1%) Most bearish reading of the year: (1,028) - 1/02/01 Most bullish reading of the year: 8,460 - 3/13/01 DOW JONES INDUSTRIAL Commercials Long Short Net %Change 9/18/01 28,425 15,077 13,348 7.5% 9/25/01 20,013 7,806 12,207 (8.5%) 10/02/01 22,755 10,124 12,631 3.5% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 8,925 - 5/22/01 Small Traders Long Short Net %Change 9/18/01 7,335 15,044 (7,709) 46.1% 9/25/01 4,530 12,621 (8,091) 4.9% 10/02/01 4,731 11,868 (7,137) (12.1%) Most bearish reading of the year: (7,572) - 5/08/01 Most bullish reading of the year: 1,909 - 1/16/01 Small Specs Commercials S&P 500 (Current) (Previous) (Current) (Previous) Open Interest Net Value +50,367 +50,892 -43,367 -49,163 Total Open Interest % (+25.42%) (+26.19%) (-5.60%) (-6.43%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -7137 -8091 +12631 +12207 Total Open interest % (-43.00%) (-64.11%) (+38.42%) (+43.88%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +4114 +4119 -10,996 -10,051 Total Open Interest % (+23.21%) (+23.84%) (-17.07%) (-15.81%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.No significant changes this week although we did see the Commercial players continue to reduce their net-short contracts on the S&P 500. We will wait until the Commercials have moved into net-long positions before we raise the bullish flag.. . Gold:.Another wild reversal took place this week as the Commercials are once again net-short. We have seen gold level off over the last week and it will be interesting to see if this bearish stance by the Commercials, pays off. 9/04 49,839 contracts net-short 9/11 No Data. 9/18 49,456 contracts net-short 9/25 36,638 contracts net-long 10/02 67,122 contracts net-short Data compiled as of Tuesday 10/02 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= Tenet Healthcare - THC - close: 61.25 change: +1.37 stop: 57.00 Original Comments When Selected On October 4th: Company Description: This is one of the largest hospital chains in the US. Tenet owns or operates about 110 hospitals in 17 states, as well as one in Barcelona, Spain. In addition, subsidiaries own or operate clinics, HMOs, a PPO, home health care programs, a managed care insurance company, outpatient surgery centers, and rehabilitation and specialty hospitals. In response to decreased Medicare funding (more than 30% of Tenet's revenues), the company is closing its medical practice management business and is divesting facilities to cut costs. Tenet has formed a joint venture with Ventro to sell medical supplies to health care providers on the Internet Fundamentals: Analysts forecast the company will earn $2.84 per share in the current fiscal year ending May 2002 and $3.34 in 2003. They project revenue of $13 billion for 2002. In the fiscal year ended May 2001 the company earned $2.30 on sales of $12.1 billion. The shares have a forward 2001 P/E of 21. These are inline with the industry average P/E of 22. On October 3rd, at its fiscal first quarter earnings report the company easily beat analysts 64-cents per share earnings estimates by 3-cents per share. In addition to the quarterly earnings of 67-cents per share, the company reported a 14-percent jump in quarterly revenue to $2.89 billion as compared to the year-ago quarter. Other first quarter metrics were equally positive from the year ago quarter, gross margins increased from 17 to 19-percent, cash flow from operations increased 80-percent, admissions were up 5.9-percent. The company also raised earnings guidance citing "accelerating demand" for hospital services, as the baby boomer generation gets older. The firm sees the year's earnings from operations growing by at least 25 percent. In July, the company forecast "high-teens" profit growth for fiscal 2002. The company also reaffirmed it long-term growth rate in the mid-to-high teens. Why We Like It: What's not to like about these shares. Particularly in light of the stream of companies painting dour business pictures, for Tenet business couldn't be better, and an aging population says business will continue on an upswing for a long time. What have also been going up for a long time are THC shares. A monthly chart shows these shares have risen unabated since kissing $15.37 in August 1999. On Thursday, the sparkling earnings report pushed the shares through $60 resistance on above average volume. In the short-term we have a $66.00 price target. Short-term traders can use a stop at $57.00; investors in for the long-term can consider a $52 stop. Update: Shares of THC are building on what should be new technical support at $60. This level hasn't been tested enough for us to feel comfortable in moving up our stop so we'll leave the stop at 57.00. However, we're selecting THC as the play of the day because the S&P Healthcare index (HCX) broke through its 200-dma (at 824) which had been overhead resistance for the sector for the last few days. This could provide a catalyst for the bulls and should be the bears on the defensive if not in a route. We would look for the HCX to trade up to 835 before encountering serious resistance again. THC is in blue sky territory. Picked on October 4th @ $ 60.22 Gain since picked: +1.03 Earnings Date: 10/03 (confirmed) ========== Watch List ========== Nasdaq-100 Tracking Stock - QQQ - close: 32.50 change: +1.41 WHAT TO WATCH: It's not everyday we see a 4.5% rally in the QQQ. The Nasdaq composite gained 3.5% or 56 points but this set the stage for the NDX, Nasdaq 100 index, which the QQQ is based on, to trade up 60 points to close over the 1300 level. If you're feeling bullish about the tech sector or want to try and trade the Nasdaq's move up, keep an eye on the QQQ and the NDX. The Q's are still below last April's lows of 33.60, which equate to the NDX lows of 1348 on the same day. The Q's also have price resistance at $33 while the NDX has resistance at 1350. Both are just below their 30-dma's but the engulfing candlestick pattern that appeared by the close of Wednesday's trading is bullish for the short-term future. Look for confirmation of the move up with a close over the 30-dma or price resistance. The QQQ will have to deal with its 50-dma currently at 35.80. --- NVIDIA - NVDA - close: 34.25 change: +2.07 WHAT TO WATCH: One of the several stocks that has been unduly beaten up by the market is NVDA. The stock has great fundamentals and incredible upside in their revenue picture over the next few years and yet the market brought them down to 22.50 just days ago. Since then savvy investors have jumped in to buy the artificially induced dip and the stock has rocketed back above the $30 level. Yes, we know there have been some negative press about MSFT's XBox release data but who doesn't believe that the Xbox will sell like hotcakes for the next few years? The company announced more positive news today with a new deal between NVDA and IBM. IBM will be using NVDA cards for the new IBM workstations. Sounds like they are broadening their revenue stream to more big customers. We elected to put NVDA on the watch list because the stock has been unable to breakthrough overhead resistance at the $35 level which is bolstered by the 200-dma at 34.67. A close over $35 could be a good entry point to go long. Our short-term upside target would be $40 after a potential pullback at 37.50. If you choose to play, use a stop. NVDA is expected to announce earnings on Nov. 8th. --- Du Pont - DD - close: 39.51 change: +1.47 WHAT TO WATCH: This Dow Jones component normally isn't that volatile of an issue but today saw the stock move almost 4%. We are highlighting DD merely due to its technical breakout pattern. The stock closed at 38.39 on Sept. 10th. Today is the first day since the attacks it has closed over this level despite several attempts in the last few days. Bulls will also notice the very strong volume helping propel shares higher in Wednesday's session. Trader's should be watching the 200-dma at 39.70 and overhead resistance at $40. A close over $40 could be an entry to go long. Or if you'd rather play a dip, look for a potential pullback to 38.00 - 38.50. DD is expected to announce earnings on October 24th. --- Xilinx - XLNX - close: 29.35 change: +2.85 WHAT TO WATCH: 10.75% is a mighty big move for a stock that has already seen a strong rebound from its lows of $20 on Sept. 27th. We like the bullish pattern XLNX is displaying but are cautious about its commitment to hold these gains without a confirmation in volume. The chip sector enjoyed a strong move up today which fueled rallies in several chip stocks. XLNX positive move today produced an engulfing candlestick pattern that is normally a bullish forecast for the short-term future. Optimistically cautious, we would look for a dip back to 27.50 or a close over price resistance at $30. If buyers can get the stock over $30 it might have a chance to run to $35. Be careful. XLNX is expected to announce earnings on October 18th. --- Emulex Corp. - EMLX - close: 17.13 change: +0.79 WHAT TO WATCH: Yet another tech stock that has seen huge gains since its lows in the first few days of October. One might imagine the risk of profit taking after seeing that EMLX traded between 8.50 and 9.00 for almost a week and now its bouncing at $16.00. The last three days show that shares of EMLX have been unable to conquer its 50-dma. Bulls can cautiously look for long plays above the 50-dma (17.54) or over $18 but our first short-term target is only $20, which would be an 11% move from $18. Bears should be looking for the stock to fail at its 50-dma again and/or close under $16.00. Both shorts and longs should be aware that EMLX is expected to announce earnings on October 18th which is one week away. --- Immunex Corp. - IMNX - close: 22.06 change: +1.27 WHAT TO WATCH: The year 2001 has not been kind to Immunex. Starting a dismal decline in the month of March that ended with a gap down to its 52-week low under $11, the stock has been trading sideways for the last several months. Finally, shareholders have seen some improvement with the recent rally in the biotech sector. Today could prove to be a new catalyst for IMNX. Positive press about a new deal with Danish biotech company Genmab coupled with a +4% move it the BTK helped aid IMNX through its 200-dma. The new trend up has most moving averages edging higher and the 200-dma was the last obvious hurdle between the stock and a prolonged bullish run up to 27.50 - 30.00. Our concern with this breakout play on IMNX is the BTK.X. The biotech sector has seen great gains since late September and the late last week saw natural profit taking allowing it to back up and digest the new move up. Today's trading brought the BTK back to overhead resistance near 480 which it was unable to successfully penetrate last week. A confirmation in the BTK would add confidence to this potential long in IMNX. We would be looking for a short-term trade between now and its earnings report on October 17th. A pullback to 21.50 or its 200-dma at 21.25 might be a good entry point as well. --- Additional Stocks to Watch -- Recent market action has us seeing a lot of potential trades develop. Many of them look like long plays but bears can scan for failed rallies or breakdowns through support. Below are several stocks with just some brief comments without looking at the news. ---------------------------------- Insight Enterprises - NSIT NOTE: Up big today with a 12.68% gain, the stock had been making a nice bottoming pattern with the top edge of the recent trading range at $16.00 and the bottom edge at $13.00. A close over $16 might be a trade but we'd expect a few more days of consolidation with higher lows. Earnings near 10/25/01 --- Office Depot - ODP NOTE: Up trend is still intact. Appears to have found support near 13.50. Overhead resistance is $15.00. Earnings are expected on 10/17/01. Potential short-term bullish trade. --- M G I C Invest - MTG NOTE: MTG has been hammered recently. The company announced earnings today and they didn't look that bad. We have not done any in-depth research but stock is definitely oversold. Potential dead cat bounce here. Look to January lows as eventual support if 52.50 doesn't hold. --- Cisco Systems - CSCO NOTE: The tech stock that appears on almost everyone's list is CSCO. The stock is still looking bullish with higher lows as it coils for a breakout above 15.25. Yes, there is some resistance at 16.00 and the 50-dma is 15.97 but beyond that traders could see a move to 18.00. Earnings are expected on 11/05/01. --- Flextronic - FLEX NOTE: After building a new base of support at $19.00 for the last few days, shares of FLEX took off today with an 11.5% gain. The 50-dma is the level to watch at 21.35. The stock closed at 21.40 but we don't know yet whether it will hold. We see a potential move from $22 to $25. Earnings unknown. --- LM Ericsson Telephone Co. - ERICY NOTE: After spending a month trading below the $4 level shares, or more correctly, the ADRs have mounted a new rally to try and take this level. Shares closed at 4.01 but we want to see confirmation. This is a low dollar play for traders and the trigger is simple. $4 has been a very important level and a second day above this mark could be a good entry point to go long. Shares should be able to reach the 50-dma at 4.50 and beyond that a potential move to $5, a 10% and 20% gain respectively. --- Nokia Corp. - NOK NOTE: Not to be outdone by rival ERICY, NOK also made a big move today rallying past its own 50-dma and overhead price resistance at 17.50. Volume was strong and this could be the breakout technical players are looking for. More cautious investors might want to look for a dip. --- More stocks to watch that are setting up for bullish moves or have broken through overhead resistance include the following: Lucent - LU Sprint - PCS AT&T Wireless - AWE Home Depot - HD Altera - ALTR ================================================================= 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. 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PremierInvestor.net Newsletter Wednesday 10-10-2001 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/1554_2.asp ================================================================= In section two: Split Trader New Plays: none Play Updates: Closed Plays: ChevronTexaco - CVX Net Bulls New Plays: none Bullish Play Updates: new stop for EASI Bearish Play Updates: none Closed Plays: eBay Corp. - EBAY Stock Bottom / Active Trader New Plays: none Bullish Play Updates: Bearish Play Updates: new stop for SYY Closed Plays: Lincare - LNCR 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 Play Updates =============== ---------------------- Closed Split Candidate ---------------------- ChevronTexaco - CVX - close: 93.45 change: +2.56 stop: 87.75 The price of sweet crude oil spent yet another day curling ever tighter. A breakout one way or the other would seem to be expected tomorrow based on the pattern but we can't claim that oil has ever been that predictable. Another equity that has been unpredictable is CHV. We've honestly been expecting the stock to have pulled back at resistance near $89 or $90. Instead the stock has plowed right through it. The merger with TX appears to have shareholders and analysts enthusiastic about the future of the two companies. We apologize for not publishing the new symbol, CVX, last night. The stock has traded right to overhead resistance at 93.50 to 94.00. This time we're not taking any chances and are closing the play with a result of 8.7 points or greater than a 10% move. Investors interested in keeping CVX in their portfolio could look for a dip to $92 or even $90 as natural profit taking and potential new entries to go long. There is very strong resistance at $98. Keep an eye on oil and the Mid-East conflict. Picked on September 27th @ $ 84.75 Gain since picked: + 8.70 Earnings Date: 10/25 (not confirmed) ================================================================== Net Bulls (NB) section ================================================================== =============== NB Play Updates =============== ----------------------- NB Bullish Play Updates ----------------------- Stop changed for EASI from 48.25 to 49.50. looks like momentum is slowing down. =============== NB Closed Plays =============== -------------------- Closed Bearish Plays -------------------- eBay Corp. - EBAY - close: 56.88 change: +2.49 stop: 57.00 We had expected shares of EBAY to succumb to resistance at the $55 level while the 50-dma continued to drift down providing some measure of "protection" for shorts near 55.50. Unfortunately, excitement over the upcoming YHOO earnings release and a very positive market with the NASDAQ up over 3.5% proved too much for the bears and the bulls ruled the day. We almost held on to the short but late in the day EBAY hit 57.06 triggering our stop at 57.00. Bears looking for another entry should watch for a failed rally attempt at resistance of $60. Picked on October 8th @ $54.39 Gain since picked: - 2.61 Earnings Date: 10/18 (not confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== ----------------- Bearish Play Updates ----------------- Stop changed for SYY from 27.75 to 26.50. strong bounce at $25.00, need to protect capital. 30-dma is 26.35. =============== AT Closed Plays =============== ------------------- Closed Bearish Play ------------------- Lincare - LNCR - close: 24.79 change: +1.14 stop: 25.00 The market rally today was not kind to the shorts. It's hard to trade bearish when the Dow gains 188 points and the Nasdaq gains 56. LNCR appeared to have broke through major support at $24 three days ago. The next day it attempted a rally to regain this level but failed. Yesterday's mediocre slip looked like a good entry for a bearish move. Unfortunately, the S&P Healthcare Index (HCX) traded up through its own 200-dma which had been major overhead resistance. This was a definite factor as bulls suddenly found themselves looking at a technical breakout for the sector. Whether it can last is another story and one might expect LNCR to rollover again at $26 or $27. We will take a wait and see approach. The HCX could trade to 834 before its next level of resistance and until then healthcare bulls could have free reign. Picked on October 9th at $23.65 Gain since picked: -1.35 Earnings Date 10/18 (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 TOT Total Fina Elf 72.60 +2.60 MWD Morgan Stanley Dean Witter 50.60 +1.34 MER Merrill Lynch 42.67 +0.93 SPC Saint Paul Companies 47.03 +1.36 KMG Kerr-Mcgee 55.67 +1.68 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change ALA Alcatel 12.84 +1.42 IFX Infineon Tech 14.25 +1.01 SSCC Smurfit-Stone Container 13.19 +1.04 RATL Rational Software 14.05 +2.62 EMKR Emcore Corp 9.83 +1.87 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change QCOM Qualcomm 44.90 +4.05 FDC First Data Corp 65.98 +3.54 ITW Illinois Tool Works 56.00 +2.01 HDI Harley Davidson 47.67 +5.08 TXT Textron Inc 35.84 +1.70 ----------------------------------------- Breakout to Downside (Stocks over $20) ----------------------------------------- Ticker Company Name Close Change RTN Raytheon Co 33.80 -1.41 MBI Mbia Inc 47.88 -1.61 WPI Watson Pharmaceuticals 52.94 -3.17 USM U.S. Cellular 45.70 -1.30 FAST Fastenal Co. 55.69 -2.40 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change TXU Txu Corp 45.64 -1.05 SPI Scottish Power 23.20 -0.25 WBST Webster Financial 31.96 -0.41 NBY Nbc Capital Corp 31.48 -0.42 ================================================================= 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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