PremierInvestor.net Newsletter Wednesday 10-17-2001 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/9137_1.asp ================================================================= In section one: Market Wrap: Recent Anthrax reports have bulls jittery Market Sentiment: Markets continue their journey on thin ice. Play-of-the-Day: Could Be Time to Buy Food Watch List: QQQ, CHKP, CVC, HCR, CMA, WM ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 10-17-2001 High Low Volume Advance/Decline DJIA 9232.97 -151.26 9489.33 9226.95 1.44 bln 1143/1964 NASDAQ 1646.34 - 75.73 1754.01 1646.34 2.26 bln 1415/2215 S&P 100 554.67 - 9.47 569.15 554.26 Totals 2558/4179 S&P 500 1077.09 - 20.45 1107.12 1076.57 RUS 2000 424.49 - 10.04 437.23 424.48 DJ TRANS 2228.50 - 69.22 2302.24 2228.50 VIX 37.12 + 1.90 37.23 34.23 VXN 67.11 + 3.10 67.11 63.48 TRIN 1.48 Put/Call 0.63 ----------------------------------------------------------------- =========== Market Wrap =========== Recent Anthrax reports have bulls jittery Stocks were firmly higher at the beginning of today's trading session on the heels International Business Machines' (NYSE:IBM) earnings, but renewed fears of anthrax exposure in Washington, DC had equity bulls pulling the carpet out from under stocks by session's end. S&P 500 back below 1,082 In the last hour of trading, stocks picked up some downward momentum as the S&P 500 Index (SPX.X) fell back below the 1,082 level and closed at 1,077. Early in the session, the SPX had rallied to a multiple week high of 1,107 when news from Washington DC hit the wires that the House of Representatives would be shut down for five days as it undergoes a security sweep following news that dozens of staff in Senator Tom Daschle's office were stricken by the bacteria. Later, New York officials reported that anthrax was found in Governor George Pataki's midtown offices and this helped exacerbate today's reversal in stocks. S&P 500 Index Chart - Today's 1.86% decline in the SPX doesn't appear to be much of a decline in percentage terms, but for some stocks the declines were higher. First reports of anthrax at the civilian level occurred on October 12th and while the SPX did dip below the 1,082 level that day, the index did not close below that level. Today's anthrax news looks to have market participants a little more eager to part with some profits they've found in stocks the past couple of weeks as uncertainty weighs on the market's psyche. Greenspan said it best In today's comments before a congressional panel, Federal Reserve Chairman Alan Greenspan stated the obvious when he said, "nobody has the capacity to fathom fully how the effects of the tragedy of September 11th will play out in our economy." But humans have a "remarkable capacity to adapt to extraordinarily adverse circumstances." Mr. Greenspan also added that businesses, investors and consumers have begun the process of adjusting to "altered perceptions of risk." With Mr. Greenspan's comments in mind, I believe it becomes of utmost importance for traders and investors to measure the risk in their accounts by some type of level. For some it is a fixed "percentage" of their exposed investment portfolio that they are comfortable or at least willing to risk in the current market environment. We knew before today that there is the potential for future terrorist threats and attacks. I stress the word "potential." While the recent anthrax news has been fairly prevalent in the media, there has not been any tie to terrorists. The retracement levels we've identified in our market commentary can also help traders and investors assess risk. While some traders and investors perceive retracement brackets as some crazy method for identifying support and resistance levels, I prefer to use the retracement bracket as a way to assess risk. In our chart above, we've been commenting on that retracement in the S&P 500 Index for weeks. For example, on September 27th, the SPX closed above the 1,011 level. At that time a bullish trader began assessing risk/reward (so did bearish traders). A bullish trader may have said, "reward is 1,082 and risk is to 940." Trader/investors that thought risk to 940 was too much, may have then placed a 4% decline below the 1,011 level as their stop, or assessed risk to $970. With one level of "reward" recently having been achieved at the 1,082 level the tables may have turned. As Mr. Greenspan pointed out (I have too, but Mr. Greenspan carries more weight) "nobody has the capacity to fathom fully how the effects of the tragedy of September 11th will play out in our economy." Applied Materials Chart - Last night we knew that Intel (NASDAQ:INTC) and International Business Machines (NYSE:IBM) had reported earnings and after- market participants were responding favorably. What we didn't know was that today's headlines were going to be plastered with "anthrax contamination." However, we did "know" that anthrax and potential terrorist activities could adversely affect market conditions at any given point in time and decided to set a relatively tight stop under the trade (which was triggered by session's end) at $32.45. Little good that does, it was a loser! Yes, Applied Materials (NASDAQ:AMAT) was a losing trade and this is not good. So why even bother trading long in an uncertain market environment? This is a very good question and only a question that each individual can answer on their own. Over the past week we've had several good reasons to trade bullish in some stocks where we could control our risk and where trade set-up was favorable given the market environment at the time. Only by a discipline of trailing stops, understanding levels of risk/reward and NOT getting "greedy" with profits are we going to be able to survive. As recently as Friday's market wrap, we did an exercise in pattern recognition between PeopleSoft (NASDAQ:PSFT) and Harmonic, Inc. (NASDAQ:HLIT). Both stocks offered bullish traders some good upside action AFTER we had profiled these two stocks in intraday commentary or in PremierInvestor.net's play list. Both of these stocks got hit to the downside today and both are right back at levels where we first identified them as potential bullish candidates. Only by a methodical and disciplined approach of following these stocks higher with a trailing stop is a bullish trader now profitable. Some action was bearish before today's anthrax scare There was some action at the opening of today's trading that has me somewhat concerned near-term for bullish traders. Yes, PeopleSoft (NASDAQ:PSFT) was downgraded this morning before the stock opened for trading at $27.96, but the MARKET seemed awfully eager to sell the stock just below our 61.8% retracement level of $30.37, which we felt was a level to be looking for some market maker resistance. When we first mentioned the stock as bullish in the October 10th "market wrap" we had identified $30 as a potential bullish target. The next day, shares of PSFT traded as high as $29.54, but three days later the stock set higher lows, but was just unable to achieve anything above the $29.54 level. "Somebody was-a-selling" and today we have a pretty good idea who! Morgan Stanley who came with today's downgrade to "outperform" from "strong buy." eBay Inc. - last seven months In last Thursday's 01:30 EST Update, I wrote an update regarding shares of eBay Inc. (NASDAQ:EBAY) as a subscriber had "gotten caught short" in the stock from the $46 level and was beginning to get a little nervous with the stock trading $60. In that article we discussed the point/figure chart of eBay and also mentioned the retracement bracket overlaid on the bar chart as displayed above. At $60 we felt a trader that was short the stock needed to be assessing risk to $63 (very near our 19.1% retracement level of $62.86). Even though this morning's broader NASDAQ was bullish, eBay sure seemed to find some eager sellers at the open. This action is "suspicious" at best. It makes sense that there were profit takers willing to sell broader market strength (heck, if we had profiled EBAY as a bullish play at $50 or $54, we'd have had a tight stop for sure). I don't necessarily think today's action in EBAY could be blamed on anthrax news, the stock didn't act all that bullish to begin with. Shorts were getting squeezed from $50 to $63 so why would they quit covering this morning with such bullishness. Only explanation was that risk/reward became unfavorable and sellers were ready, willing and able to lock in gains at our retracement level. Valuation? I'd argue that the fundamentals for EBAY did not change that much between last night's close of $61.60 and this morning's open of $61.79. I think what we saw here today was that the stock had just gotten too profitable and risk/reward just wasn't there after a 37% move from $45. We've been eager to set tight stops and sell 10%-18% gains considering market conditions, let alone 37% gains. While today's "anthrax scare" didn't help the stock, I'll argue that it was just the right time for profit takers to step in and sell some strength at the open based on broader market bullishness. Going forward Considering today's action, I think market participants (especially bulls) are going to be a little jittery near-term. Last week we were more eager to play some technology stocks that had formed a rather tight pattern of consolidation where a break higher would have bulls running to cover and provide the needed demand for a move higher. Some of the eagerness to sell stocks like PSFT, EBAY, HLIT and other stocks that had been acting bullish in previous sessions before today's anthrax scare will have us looking to play the bearish side of things near-term. For the past 18-months, bulls have started to get wise to the idea that stocks just don't keep going up and the pattern of new 52-week lows weighs heavy on their minds. Bearish traders will undoubtedly prey on this psychology. The key for us will be to minimize our risk and try our best to control it. Perhaps some subscribers were willing to take some risk in bullish trades like PSFT, HLIT and AMAT. As long as we were not "sky is the limit" trading, then we perhaps got two nice profits opportunities (PSFT, HLIT) and one loser (AMAT). Now we're going to slowly turn and try the other direction. Mind you, not all stocks are going to be winners to the downside. Don't think we weren't watching shares of Suiza Foods (NYSE:SZA) today to see how it was trading. We've characterized this stock as "defensive" and this morning, the first hour of trading saw this stock jump from $58.80 to $60.75 in the first hour of trading. The stock has pulled back close to where we originally profiled the stock as bullish on September 19th at $57.01 and were eventually stopped out for a profit at $62.50 after a nice little run higher in a difficult market environment where "defensive" food stocks did well. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Markets continue their journey on thin ice. Russ Moore Today’s action was another glaring example of how fragile the current market environment is. The markets got off to a great start thanks to big blue and a “not so bad” Intel report. A positive start, which had the DOW up 100 points in the first thirty minutes, was quickly erased however, after another Anthrax scare. The markets never recovered with selling pressure intensifying into the close and the DOW ending with a loss of -1.6 percent. The NASDAQ and NDX shed -4.4 and 6.4 percent respectively, due to a weak performance in the chip sector. Volume was up with 1.42 billion shares moving on the NYSE and 2.04 billion shares trading on the NASDAQ. Market breadth had losers outperforming winners by a 20/11 margin on the big board and 22/14 spread on the tech index. Broader markets saw paper, retail, airline, cyclical and biotech sectors taking the largest hit while chip, Internet and software bore the brunt of negative action in the tech arena. Housing starts were slightly higher than expected coming in with a gain of +1.7 percent. Building permits were headed in the other direction with a decline of -3.0%. Investors seem ready, willing, and able to push this market higher, but the growing uncertainty over non-market issues is a thorn in every investor’s side, and could cause a prolonged bout of choppy, volatile market action. VIX Wednesday 10/17 close: 37.15 VXN Wednesday 10/17 close: 66.24 30-yr Bonds Wednesday 10/17 close: 5.37 Total Put/Call Ratio: .72 Equity Option Put/Call Ratio: .60 Index Option Put/Call Ratio: 1.23 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 32.45 Volume/Open Interest Maximum calls: 30/85,440 Maximum puts : 33/79,816 Moving Averages 10 DMA 32 20 DMA 31 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: 554.67 Volume/Open Interest Maximum calls: 600/8,677 Maximum puts : 500/8,489 Moving Averages 10 DMA 554 20 DMA 538 50 DMA 568 200 DMA 626 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: 1077.09 Volume / Open Interest Maximum calls: 1050/17,145 Maximum puts : 1050/21,991 Moving Averages 10 DMA 1079 20 DMA 1049 50 DMA 1110 200 DMA 1213 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: 9,232.95 Volume / Open Interest Maximum Calls: 100/27,519 Maximum Puts 100/38,806 Moving Averages: 10 DMA 9,226 20 DMA 8,957 50 DMA 9,630 200 DMA 10,337 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: 480.57 Volume / Open Interest Maximum Calls: 520/ 323 Maximum Puts: 440/2003 Moving Averages 10 DMA 479 20 DMA 460 50 DMA 490 200 DMA 541 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: 428.62 Volume / Open Interest Maximum Calls: 490/2,241 Maximum Puts: 390/2,132 Moving Averages 10 DMA 435 20 DMA 407 50 DMA 500 200 DMA 589 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: 397.38 Volume / Open Interest Maximum Calls: 400/605 Maximum Puts: 360/628 Moving Averages 10 DMA 394 20 DMA 386 50 DMA 389 200 DMA 395 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 10/12 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 9/25/01 357,873 407,036 (49,163) (24.9%) 10/02/01 365,200 408,567 (43,367) (11.7%) 10/09/01 369,049 407,804 (38,755) (10.6%) 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 9/25/01 122,613 71,721 50,892 (29.7%) 10/02/01 124,249 73,882 50,367 (1.1%) 10/09/01 122,292 74,539 47,753 (5.2%) 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 9/25/01 26,761 36,812 (10,051) (1.8%) 10/02/01 26,703 37,699 (10,996) 9.4% 10/09/01 24,662 38,020 (13,358) 21.5% 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 9/25/01 10,699 6,580 4,119 251.0%) 10/02/01 10,918 6,804 4,114 (0.1%) 10/09/01 11,948 7,012 4,936 20.0% 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 9/25/01 20,013 7,806 12,207 (8.5%) 10/02/01 22,755 10,124 12,631 3.5% 10/09/01 24,873 10,194 14,679 16.2% 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 9/25/01 4,530 12,621 (8,091) 4.9% 10/02/01 4,731 11,868 (7,137) (12.1%) 10/09/01 3,517 12,294 (8,777) 23.0% 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 +47,753 +50,367 -38,755 -43,367 Total Open Interest % (+24.26%) (+25.42%) (-4.99%) (-5.60%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -8,777 -7,137 +14,679 12,631 Total Open interest % (-55.51%) (-43.00%) (+41.86%) (+38.42%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +4936 +4114 -13,358 -10,996 Total Open Interest % (+26.03%) (+23.21%) (-21.31%) (-17.07%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.Commercials have once again reduced their net-short positions, albeit by a small percentage. Are they moving to a net-long accumulation position? Only time will tell. Gold:.Commercials continue to hold a significant number of net- short contracts, and up until today, we did see the gold index fall a substantial amount. Today’s Anthrax scare had investors running for cover and the safety of gold once again, and the index enjoyed a nice gain. . 9/18 49,456 contracts net-short 9/25 36,638 contracts net-long 10/02 67,122 contracts net-short 10/09 64,729 contracts net-short Data compiled as of Tuesday 10/09 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= Suiza Foods - SZA - close: 59.35 change: +0.75 stop: 57.90 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. Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation's largest manufacturers of rigid plastic containers. (source: company press release) - Most Recent Comments on October 16th, 2001 - If you thought going long at 59.43 with a stop at 57.50 was a good entry then jumping in at 58.60 should look great. Our defensive food play slipped on us this Monday as techs took the spotlight again. SZA rallied higher early this morning but again it looks like investors ignored it to focus on other sectors. Why play a defensive stock when techs stocks are all in rally mode? Good question. We're interested in SZA because like every stock/sector/market, it moves in cycles. The stock has sold off to its 50-dma and this is the third day it has been trading above this support. If it wasn't for today's spike this morning we'd probably be a bit more concerned that the chart was showing lower highs. To be honest, it wouldn't hurt to wait for the turnaround to begin before initiating a position. However, to make the risk/reward scenario even better we're going to slide our stop right up to 57.90. The last three days have seen the low at or near 58.40 and this will allow for a 50 cent leeway. SZA will probably see interest the first significant down day in the broader markets. Until then be patient. Monday's Update: The bulls finally breathed some life back into shares of SZA this morning with a strong rally to over $61. Unfortunately, the growing anthrax scare sent shares sliding with the rest of the markets. We like SZA as the play of the day for tomorrow because this is the fourth day that support at the 50-dma has been holding and if the markets continue to slide into the weekend a defensive play like SZA could see increased buying pressure. Conservative traders should consider waiting until shares close above $60. Picked on October 12th at $59.43 Gain since picked: -0.08 Earnings Date 11/07 (confirmed) ========== Watch List ========== The PremierInvestor.net watch list is not designed to be read as full fledged stock picks. Rather we would prefer to offer it as an extra tool in today's investor toolbox. Think of it as a radar screen with your own radar operator pointing out interesting developments, technical patterns or potential plays that you may or may not have seen on your own. Due to time constraints we do glance at the news but rarely do we have time to fully read pertinent news stories, due background research and other necessary screens that investors should do before making a decision. A common exercise is to read the entry, glance at the sector and other stocks in that industry and then compare what's happening in the stock to what's happening in the broader market indices. We hope you enjoy the Watch List and that it proves to be a useful tool for your own trading success. --- Nasdaq-100 Tracking Stock - QQQ - close: 32.45 change: -2.51 WHAT TO WATCH: The Nasdaq composite may have slipped 4% but the NDX (Nasdaq 100) fell over 6% and the QQQs slipped over 7%. If you're feeling bearish on the tech sector you may consider trading the QQQs. Some speculate it could probably fall back to $30. If the 7.5% trade isn't enough to pull the trigger then consider playing options on the QQQs. --- Check Point Software - CHKP - close: 29.12 change: -3.05 WHAT TO WATCH: CHKP turned in a very bearish performance today. The bearish engulfing candlestick appears to be setting this stock up for a trade back to $25.50. The GSO software index also took a dive and both the index and CHKP will be influenced by what MSFT says in their earnings report on Thursday. We would consider this a short with a very tight stop, say $31.10. --- Cablevision Sys - CVC - close: 36.05 change: -1.63 WHAT TO WATCH: We highlighted CVC as a possible short play on Monday's watch list and the stock is really look weak with Today's trading. The breakdown on Monday has been confirmed and the stock dropped another 4% on very big volume. Who knows how far this bearish trend could take it. --- Manor Care - HCR - close: 23.29 change: -1.46 WHAT TO WATCH: Manor Care is under performing its sector and the breakdown of its 200-dma yesterday was confirmed today with a 5.8% drop on strong volume. A quick glance at the chart shows potential support at $19 and $20. Could be a nice short with a stop at 24.25. --- Comerica Inc - CMA - close: 47.26 change: -1.77 WHAT TO WATCH: CMA is another financial stock that is in a painful spiral downward. Last week the stock set support at $48 and rallied up towards $53. Now the stock has broken below $48 and is at levels not seen since last November. --- Washington Mutual - WM - close: 33.01 change: -4.09 WHAT TO WATCH: Investors are a tough crowd. Profits were up but WM missed estimates by a penny. WM suffered a bad case of sell the news powered by the anthrax scare which sent shares falling more than 11%. Wednesday's close was on very strong volume and the stock is now below September's support of 33.70. Looks like a bearish play. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Wednesday 10-17-2001 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/9137_2.asp ================================================================= In section two: Net Bulls Closed Bullish Plays: AMAT, CSCO, QCOM Stock Bottom / Active Trader Closed Bearish Play: LTR 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) ================================================================= Net Bulls (NB) section ================================================================== ============ NB Plays ============ -------------------- Closed Bullish Plays -------------------- Applied Materials Inc - AMAT - close: 32.14 change: -2.31 stop: 32.45 In uncertain times the grip of fear and the unknown can have investors hitting the sell button before anyone takes the time to assess crisis events and their potential affects on the stocks they are selling. The new evolution in the anthrax scare in our capital was the culprit today. The Nasdaq and many tech stocks, including AMAT, opened the day higher before succumbing to a steady day of selling pressure. We thought AMAT would be able to pull through without being stopped out but with less than 20 minutes left in the session the stock took a sharp dive lower and traded through our stop at 32.45. The candlestick pattern created today for AMAT and many stocks was a bearish engulfing pattern. One might expect shares of AMAT to trade down to $30 to find support again before the bulls try and get another rally going. Let's hope it doesn't trade much lower. Picked on October 11th at $34.45 Gain since picked: -2.00 Earnings Date 11/13 (not confirmed) --- Cisco Systems - CSCO - close: 15.60 change: -1.37 stop: 15.85 If you were frustrated that you missed your chance to buy CSCO near $15, you may get your chance again shortly. Shares of CSCO produced a similar trading pattern to AMAT (above) with a higher open before giving in to selling pressure throughout the day. Our long play on CSCO almost survived but the last half hour of trading sent shares spinning lower and through our stop. If you elected to play with a stop at 15.50 (per our discussion yesterday) you're still in the play but we fear you will likely be stopped out tomorrow. The stock has closed back below its 50-dma while producing its own bearish engulfing candlestick pattern. We would expect the stock to slip back to support at $15 (or lower). We'll keep our eyes open for new entry points once investor sentiment turns positive again. Picked on October 16th at $16.97 Gain since picked: -1.12 Earnings Date 11/05 (not confirmed) --- QUALCOMM Inc - QCOM - close: 46.70 change: -3.15 stop: 47.00 All aboard. Next stop for the QCOM train is $45.00. If we have enough passengers and fuel it may decide to revisit the $40 level again. Sounds crazy doesn't it. It was only a couple of days ago that investors were feeling confident and tech stocks were making very strong gains. Suddenly, the always emotional market has turned fearful again. Today's trading pattern for QCOM is very bearish like many tech stocks and we would expect the stock to slip to $45 at the minimum and potentially further. This means we can look for another long play when it has re-established support. Picked on October 16th at $49.85 Gain since picked: -2.85 Earnings Date 11/06 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Plays =============== -------------------- Closed Bearish Play -------------------- Loews Corp - LTR - close: 47.76 change: -0.15 stop: 48.50 Shares of LTR continue to trade under overhead resistance between $48 and $48.50 but a late day rally to 48.59 triggered our stop. The 50-dma (at 48.87) should continue to put pressure on the stock price and the MACD has yet to cross over into positive territory even though the trend is current positive for the indicator (the histogram has gone sideways). Considering the strength LTR showed today compared to the rest of the market shorts may want to wait for a breakdown below $45. Picked on October 12th at $46.01 Gain since picked: -2.49 Earnings Date N/A (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 UBS Ubs Ag 45.38 +0.66 HI Household Intl 57.16 +1.16 CEG Constellation Energy 27.97 +0.63 MUR Murphy Oil Corp 81.30 +1.10 TKS Tomkins 10.23 +0.83 BTU Peabody Energy 30.20 +1.49 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change CDN Cadence Design Systems 20.00 +1.40 INFS Infocus Corp 17.16 +2.82 SURE Surebeam Corp 11.25 +2.44 IONA Iona Technolgies 12.08 +1.48 CURE Curative Health Services 11.90 +1.21 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change IBM Intl Business Machines 102.90 +1.05 EDS Electronic Data Sys 60.50 +1.59 DHR Danaher Corp 55.47 +1.07 YUM Tricon Global 47.60 +1.10 CEC Cec Entertainment 37.40 +2.48 ACAM Acambis 36.35 +7.34 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change LLY Eli Lilly & Co 75.00 -4.00 AOL AOL Time Warner 30.81 -2.69 SAP Sap 26.56 -2.00 KMB Kimberly Clark 54.25 -1.33 GD General Dynamics 83.75 -7.35 LLTC Linear Technology 37.04 -4.04 ------------------------------------------------------------ Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------------------------- Ticker Company Name Close Change WY Weyerhaeuser Co 49.04 -1.67 MGA Magna Intl 51.91 -2.41 MERQ Mercury Interactive 22.94 -4.52 NAV Navistar Intl 29.88 -1.72 ================================================================= 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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