PremierInvestor.net Newsletter Monday 11-05-2001 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/5932_1.asp ================================================================= In section one: Market Wrap: Cisco's pro-forma beats estimates Market Sentiment: Cisco and the Fed Play-of-the-Day: Failed Rally in Sector Could be Clue Watch List: MER, RNR, CELG, HGSI, GTK, TK, MRCY, PG ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 11-05-2001 High Low Volume Advance/Decline DJIA 9441.00 +117.50 9476.40 9326.20 1.19 bln 2045/1074 NASDAQ 1793.60 + 47.90 1801.55 1768.29 1.70 bln 2131/1408 S&P 100 566.68 + 6.69 569.77 559.99 totals 4176/2483 S&P 500 1102.84 + 15.64 1106.72 1087.20 RUS 2000 437.54 + 4.47 438.24 433.07 DJ TRANS 2284.72 + 38.06 2291.78 2245.49 VIX 32.09 - 0.31 32.94 31.20 Put/Call Ratio 0.42 ----------------------------------------------------------------- =========== Market Wrap =========== Cisco's pro-forma beats estimates Networking giant Cisco Systems (NASDAQ:CSCO) reported pro forma earnings after the close that beat estimates by 2 cents. Analysts were looking for pro forma earnings of 2 cents and tonight 4 cents has the stock bid higher to $18.50 in after-hours trading. Cisco reported pro forma net income of $332 million, whish was down 76% from year ago pro forma net income of $1.4 billion. Pro forma results exclude acquisition charges, payroll taxes on stock options, investments, and excess inventory benefits. Revenues also fell from year-ago levels. For the most recent quarter, sales came in at $4.4 billion, down 32% from $6.5 billion in the same period last year, but edging higher than previous quarter revenue of $4.3 billion. Revenues came in slightly higher than analyst's revenue estimates of $4.186 billion. Cisco Systems Chart - We profiled shares of Cisco (CSCO) as bullish on October 25th at $17.74 after the stock had traded just above our 50% retracement level of $17.45, but the stock just couldn't hold that level and we were stopped out. However, the pullback near 38.2% retracement of $15.93 did find buyers and the stock has been moving higher since. Our original near-term bullish targets were near the $18.96 level or falling 200-day MA, currently at $20.02. The steep decline of the 200-day moving average is going to be a BIG challenge for the stock soon. Should we get a break above the 200-day MA on more than 200 million shares, the stock might be turning the corner longer-term. Support should be firming near $16. Opting for others While some traders were willing to play Cisco before today's after-the-bell earnings, we thought it best to try our hand in some other technology stocks. One that I personally liked was Adaptec (NASDAQ:ADPT) as it had a "storage" flavor and perhaps mixed well with some of the strength we had seen in the Disk Drive Index (DDX.X) as of late. Adaptec Inc Chart - This weekend, we added shares of Adaptec (NASDAQ:ADPT) to the "Tech / Internet Stocks" long play section of PremierInvestor.net play list as momentum continued to build in the Disk Drive Index (DDX.X) last week. This stock is not for the faint of heart, but technicals looked favorable for a move higher. New section of newsletter! Some subscribers felt we didn't have enough aggressive tech plays, so we added a new section to the PremierInvestor.net newsletter called "High Risk/High Reward." I see one of our play-writers didn't like one of the Disk Drive Index (DDX.X) components, but we still felt a trade at $20.10 would be an action point for a bull looking to play momentum in the group. The bulk of the plays you find in the "High Risk/High Reward" section will have action points where we look for certain levels up or down to trigger sharp stock price action based on certain characteristics we're finding in the corresponding sector, then carrying over that sector analysis with the stock. Hutchinson Technology Chart - We felt a break above $20.10 might move some bears toward the door and create some "buy side" pressure in shares of Hutchinson Tech (NASDAQ:HTCH) as the Disk Drive Index (DDX.X) has been on a run. As pointed out in Friday's "Market Wrap" stocks in this sector can move when they get some momentum behind them. As you can see from our retracement bracket, the high/low of our bracket was actually established from a 3-month range dating back to May of 2000. Wow! From May 23, 2000 to August 31, 2000, shares of HTCH surged nearly 153% during that time. Today, the stock jumped 8.5% (5.5% from $22.10 action point) and looks to be breaking out of consolidation. Retracement at $21.67 and $24.50 are near-term upside targets for the more aggressive trader. But I want something boring! No problem! I love "boring" stocks that tend to not have a history of dramatic price movements. Some traders/investor prefer stocks that have more gradual price movements to them based on a historical price action. For the most part, four-lettered stocks are going to be a little more volatile as their market (NASDAQ) is going to be more volatile. Market makers may be constantly adjusting inventory in some of these stocks, trading levels on a more active basis and just plain "moving stocks around" to create some liquidity for institutional orders. However, "listed stocks" on the New York Stock Exchange (NYA.X) tend to trade less volatile. The bulk of trading takes place at the post on the NYSE and orders come to one point, where the specialist matches buyers and sellers together. Many call the NYSE the "true market" where a buyers/sellers truly come together and buy/sell the stock listed on that exchange. Often times, subscribers that prefer the "less volatile and boring" type of stock will turn to the "Non-Tech/Active Trader" section of our play list. It's probably the "non-tech" portion that has some of the stocks profiled there, less volatile. Yes, we list them as "active trader" but these stocks tend to have less volatility to them, and perhaps more appropriate for the swing-trader or intermediate-term trader. One way to see if a stock is "volatile" or more "boring" is to look at a point and figure chart of a stock. The point and figure charting system tends to remove noise from a stock's chart as only meaningful movements in price are actually charted. For example, the chart of Clorox (NYSE:CLX) might be considered less volatile. The point and figure chart depicts that too. If you pull up a chart of CLX on the point/figure chart, you'll get to see two-years worth of data on the screen. If you pull up a chart of eBay Inc. (NASDAQ:EBAY) you'll only see just 6-months worth of data. The lesser amount of time you see on the chart of EBAY is due to the volatility of the stock as the chart often times whips around as it puts together 3-box reversals. But just because a stock isn't "volatile" doesn't mean a trader/investor can't make money. Sometimes a stodgy stock like Clorox (NYSE:CLX) can make some nice moves, up and down in a rather short period of time. Clorox Company Chart - $1 box Every day, a bar chart gives you a bar that records that day's activity. A point and figure chart will culminate trading, day after day as long as there is not a 3-box reversal. A neat feature that www.stockcharts.com offers, is for the technical analyst to actually "turn on" the volume and understand how much volume it took to move the stock in the direction of trading. As you can see, shares of CLX moved higher from $31-$39 in a 4-month time frame and it took approximately 551 million shares of volume to do so. The recent pullback to $35 came on relatively light volume of 184 million shares, until the most recent upward move to $38 reversed the chart 3-boxes and now has us back in a column of X's. While buyers and sellers coming together create volume, price action is determined only by supply demand factors. You can see from the above chart that there isn't a lot of volatility in shares of Clorox. While I can't print the entire chart of Clorox in the newsletter screen, we can look back to April of last year on the above chart. If we tried doing that with many four-lettered stocks, we'd need a much wider field of view as those stocks commonly whip around and give 3-box reversals on a more frequent basis. Tomorrow we get FOMC Tomorrow, at around 2:15 pm EST, we'll get news from the Federal Open Market Committee (FOMC) on interest rates. Many economists feel that a 25-basis point cut has been factored into the market at this point. Some also feel that a more aggressive Fed cut of 50 basis points may also have been factored into the market. The big question is will the market "sell the news?" If anyone knew that for sure, the questions would never be posed and we would all be rich as there would never be any uncertainty and we'd be trading stocks like Adaptec (ADPT) day in and day out, consistently booking 8% gains every day. Unfortunately, we don't know how the market is going to respond to tomorrows FOMC decision. We consistently try to teach subscribers how to manage their trading/investing account toward one goal. If you're goal for every trade is to make 8% consistently, while limiting losses to 4%, then you've got some positions with nice gains in them. We understand that subscribers don't play each of our trades and that's OK. However, we try and not only manage our current play list as if it were an account, but also try and put ourselves in the seat of the trader that may have just taken that one single trade by itself. If I bought both Adaptec (ADPT) and Hutchinson (HTCH) today and find myself with some gains, I'm more prone to set a tight stop on one of them to help assure a profit and let the other one try and run should group momentum persist. However, should the market decide to "sell the news" I'm most likely booking a profit in one of the stocks with my tight stop, taking some heat with the other trade on the pullback, but my account is still very much intact. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Cisco and the Fed, a dynamic duo responsible for a positive showing on Wall Street. The upcoming FOMC meeting and the anticipation of after the bell earnings from Cisco Systems helped drive the NASDAQ to a +2.7 percent gain. The big cap NDX surged +3.8 percent while the blue chip DOW added +1.3 percent. Volume was on the light side with 1.18 billion shares trading on the big board and 1.69 billion shares moving on the NASDAQ. Market breadth was positive as winners out-dueled losers by a 20/11 count on the big board and a 21/14 margin on the tech index. The boards were painted green today, with only gold, oil service and natural gas finishing on the downside. Biotech and utilities were very strong on the broader markets while networking, hardware, software, and Internet sectors led the way for the tech team. The NAPM non-manufacturing index came in at 40.6 versus the 46.4 expected, and a far cry from last month’s 50.2. Tech bulls will be happy with Cisco’s after hour’s earnings announcements. The tech behemoth came out with earnings per share of 4 cents, beating the street by 2 cents. Tomorrow’s FOMC meeting is expected to deliver a .25 to.50 bps rate cut. Fed Funds Futures are showing a 100 percent chance of a quarter point cut and a sixty- percent chance of a half point cut. Trim Tabs reported 3.2 billion dollars in equity fund redemptions for the three days ending November 1/01, and remains bearish on the markets. Sentiment may favor the bullish side, however, continued equity outflows along with soft volume has me just a bit skeptical about the strength behind the bulls. VIX Monday 11/05 close: 32.09 VXN Monday 11/05 close: 59.08 30-yr Bonds Monday 11/05 close: 4.86 Total Put/Call Ratio: .64 Equity Option Put/Call Ratio: .46 Index Option Put/Call Ratio: 2.22 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 36.76 Volume/Open Interest Maximum calls: 35/63,762 Maximum puts : 33/74,279 Moving Averages 10 DMA 35 20 DMA 34 50 DMA 33 200 DMA 43 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: 566.68 Volume/Open Interest Maximum calls: 560/5,828 Maximum puts : 480/8,321 Moving Averages 10 DMA 557 20 DMA 557 50 DMA 554 200 DMA 617 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: 1102.81 Volume / Open Interest Maximum calls: 1100/17,563 Maximum puts : 950/22,604 Moving Averages 10 DMA 1084 20 DMA 1083 50 DMA 1082 200 DMA 1198 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: 9,441.03 Volume / Open Interest Maximum Calls: 94/25,347 Maximum Puts 92/20,576 Moving Averages: 10 DMA 9,318 20 DMA 9,297 50 DMA 9,348 200 DMA 10,246 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: 575.19 Volume / Open Interest Maximum Calls: 580/ 517 Maximum Puts: 420/1,576 Moving Averages 10 DMA 545 20 DMA 515 50 DMA 496 200 DMA 538 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: 503.07 Volume / Open Interest Maximum Calls: 570/ 506 Maximum Puts: 420/ 801 Moving Averages 10 DMA 466 20 DMA 453 50 DMA 463 200 DMA 577 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: 392.59 Volume / Open Interest Maximum Calls: 420/ 284 Maximum Puts: 400/1000 Moving Averages 10 DMA 393 20 DMA 394 50 DMA 388 200 DMA 393 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 11/02 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 10/16/01 378,866 415,289 (36,423) ( 6.0%) 10/23/01 377,177 413,658 (36,481) 0.1% 10/30/01 377,468 413,729 (36,261) (0.06%) 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 10/16/01 124,568 73,779 50,789 6.3% 10/23/01 127,016 71,212 55,804 9.9% 10/30/01 123,546 71,225 52,321 (6.2%) 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 10/16/01 27,398 40,397 (12,999) (2.7%) 10/23/01 29,920 40,358 (10,438) (19.7%) 10/30/01 32,055 45,574 (13,519) 29.5% 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 10/16/01 12,901 6,893 6,008 21.7% 10/23/01 11,567 6,934 4,633 (22.9%) 10/30/01 12,725 6,475 6,250 34.9% 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 10/16/01 25,402 10,267 15,135 3.1% 10/23/01 25,568 11,832 13,736 (9.2%) 10/30/01 25,872 12,556 13,316 (3.1%) 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 10/16/01 4,514 12,104 (7,590) (13.5%) 10/23/01 4,902 11,900 (6,998) (7.8%) 10/30/01 4,261 11,220 (6,959) 0.0% 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 +52,321 +55,804 -36,261 -36,481 Total Open Interest % (+26.86%) (+28.15%) (-4.58%) (-4.61%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -6,959 -6,998 +13,316 13,736 Total Open interest % (-44.95%) (-41.65%) (+34.65%) (+36.73%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +6,250 +4,633 -13,519 -10,438 Total Open Interest % (+32.55%) (+25.04%) (-17.41%) (-14.85%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.For the third week in a row, Commercials have shown little change in their net-short positions on the S&P 500. We did see the Small Specs and Commercials move in opposite directions on the NASDAQ 100 with the Small Specs adding to their net-longs and the Commercials increasing their net-shorts. Gold: No significant changes on Commercial positions. 10/02 67,122 contracts net-short 10/09 64,729 contracts net-short 10/16 51,816 contracts net-short 10/23 25,191 contracts net-short 10/30 33,199 contracts net-short Data compiled as of Tuesday 10/30 by the CFTC. ========================= Play-of-the-Day (Bearish) ========================= Manor Care - HCR - close: 21.72 change: -0.23 stop: 22.55 *new* Company Description: Manor Care, Inc., through its operating group HCR Manor Care, is the leading owner and operator of long-term care centers in the United States. The company's 58,000 employees provide high- quality care for residents and patients through a network of more than 500 long-term care centers, assisted living facilities, outpatient rehabilitation clinics and home health care offices. Alliances and other ventures supply high-quality pharmaceutical products and management services for professional organizations. The company operates primarily under the respected Heartland, ManorCare and Arden Courts names. Manor Care is committed to being the preeminent care provider in the industry. (source: company press release) - Most Recent Comments on November 2nd, 2001 - The healthcare sector is trading in a very similar pattern to the drug sector. Both rallied right up to their 200-dma on Thursday and both failed to trade above this key resistance on Friday. With two historically defensive sectors poised to rollover our suspicions that money is rotating out of these groups could be confirmed shortly. The good news is our bearish pick, HCR, is leading the way lower. Friday's session found the stock losing another 4.68% by the close. This puts the newsletter's gain in the short-play at 9.4% or 2.28 points. Some of you maybe wondering if its too late to go bearish on HCR. We don't think so. $22.50 was a key support level that fell to strong selling in Friday's session. The loss came on very strong volume of 1.1 million shares versus the average of 681 thousand shares. A closer look at the intraday charts show there was heavy selling pressure at 23.30 and 23.25. Could HCR bounce on Monday? Absolutely, but we would expect 22.50 to act as new resistance and $23.00 will also act as resistance. We are lowering our stop to 23.40 but more conservative traders could use the 22.50 or 23.00 as potential stops. The next level of support should be $20. However, if the healthcare does see a serious pullback HCR may aim for its bearish price objective of $16.00. - Monday Update - The action in the S&P Healthcare index (HCX.X) and the Drug index (DRG.X) lead us to believe the failed rally today (as both failed to close over their 200-dma yet again) is forecasting the next move down will be soon. The challenge is no one knows how the markets will react to the FOMC decision on rate cuts tomorrow. Thus we are lowering our stop to 22.55 on HCR which will help protect a gain of 6.9% in this bearish play. We're choosing it as the Play-of-the-Day for Tuesday because a strong move down in the HCX could lead HCR to support at $20. If HCR trades to $20.05 intraday then we will be out of the play. That means we're giving up opportunity for it to breakdown below $20 but we can re-evaluate a new entry at a later date. Picked on October 26th at $24.23 Gain since picked: +2.51 Earnings Date 10/26 (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. ----------- Merrill Lynch - MER - close: 48.68 change: +1.88 WHAT TO WATCH: Volume for MER has been slowly climbing while the stock posted its third gain in a row. Monday's trading marks a confirmation of Friday's (2nd) breakout attempt above resistance at $46.00. Today's close put it above the previous high of $48 on Oct. 26th. Bulls and Bears will be watching the stock and how it reacts to the $50 level which should be very tough resistance for the stock. A failed rally may see bears lean on it while a breakout could have shorts running for cover and inspire bulls to jump on. The Securities Broker/Dealer index (XBD.X) has been stuck in a trading range since mid-October and today's action set it right below the upper channel of resistance at 460. A breakout in the sector could really fuel a move in select issues. --- RenaissanceRe Holdings LTD - RNR - close: 103.70 change: +3.45 WHAT TO WATCH: Given the current market environment there are probably not a lot of investors that look for $100 stocks to buy. As this is just the watch list, we've not done an in-depth review of RNR's internals but the stock really took off after the Sept. 11th attacks. The surge from $70 to $100 only took a couple of weeks and since then the stock has been digesting its gains in range-bound fashion. Now the stock has broken out above resistance to a new high. FYI: RNR is a property catastrophe reinsurer. RNR doesn't start paying until its customers' claims for a specific event exceed certain amounts. --- Celgene Corp - CELG - close: 36.54 change: +1.96 WHAT TO WATCH: We've been watching this biotech for days and on Friday the office team discussed the odds of the stock making a breakout with $35 being tough resistance. The point-and-figure chart looks good and today's action should have shorts ready to cover tomorrow. If we get a dip to $35 that could be the entry point to go long or look for shares to stay above 36.50 if you want confirmation. Upside target would be $40 to $42.25. I would consider a stop at 34.50 (10 cents under today's low). --- Human Genome Sciencies - HGSI - close: 44.43 change: +2.24 WHAT TO WATCH: With the biotechs enjoying today's rally, the bullish wedge on HGSI made another tight coil higher. Readers should be able to easily identify overhead resistance at $45. This allows for a very clear trigger point. If you like the sector consider this strategy (always adjust for your own needs)... We would put a trigger to go long if HGSI trades 45.10. Once filled, place a stop at 43.45 which is just under the handle formed in today's afternoon trading. If shorts decide to cover the stock could trade to $50 in a day or two. --- Gtech Holdings - GTK - close: 43.04 change: +1.90 WHAT TO WATCH: Feeling lucky? GTK makes lottery systems and it appears the lottery business is good. The stock recently broke out above resistance at $40 to set new 52-week highs. Even better, the stock's performance today put it above the old highs formed back in January of 1998. Volume has been stronger the last couple of days which is a good sign for the bulls. You'll need to set your stop based on your time horizon. --- Teekay Shipping - TK - close: 26.30 change: -1.29 WHAT TO WATCH: With the price of oil dropping, the market is leaning on the oil equities. One of them is TK, who provides transportation services with the world's largest fleet of medium sized oil tankers. The stock is in a significant down trend and it's only getting worse as volume picks up. The previous three sessions saw the stock trying to hold on to the $27.50 level but today's drop to 26.30 came on big volume. These are levels not seen since April of 2000. We would consider a short with a stop just above 27.50 or 28.00 to limit exposure in any oversold bounce. --- Mercury Computer Sys - MRCY - close: 44.87 change: -1.95 WHAT TO WATCH: This computer hardware stock is looking tired. Shares have rolled over at the $50 level and today's action was fueled by negative comments from Prudential. The close under $45 may be the clue traders were looking for to vacate their positions or add to bearish ones. We think the stock could fall to $40 but the point-and-figure chart shows a fresh sell signal that could forecast a move down to $35. --- Procter & Gamble - PG -close: 76.93 change: +0.93 WHAT TO WATCH: We highlighted PG on the watch list last Wednesday with notes the stock would probably trade up to overhead resistance of $77 (to $77.50). The whole sector of consumables have been very strong lately and this level will really be a telling move on the strength of the recent trend. Odds are there will be some bears trying to short it heavily but if the stock can breakout above 77.50 those same bears will likely cover. Bulls will want the stock to close above this key level. Keep your eyes on it. ================================================================= 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 Monday 11-05-2001 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/5932_2.asp ================================================================= In section two: Net Bulls Closed Bullish Play: VRTS New Bullish Stop Adjustments: ADPT Stock Bottom/Active Trader New Bullish Stop Adjustments: CLX, HON New Bearish Stop Adjustments: HCR, PPDI, (BMY - target notes) Closed Bearish Plays: DME High Risk/High Reward New Bullish Stop Adjustments: HTCH 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 Closed Plays =============== -------------------- Closed Bullish Plays -------------------- VERITAS Software - VRTS - close: 33.74 change: +2.78 stop: 27.75 Not again! Last time we picked VRTS the next day it was up about 10.5% and then the Nasdaq handed us a three day losing streak that stopped us out. Now we're in the similar situation. Do we take a gain even if we are short from our target of $35? MSFT looks encouraging, the GSO software index looks encouraging. VRTS could take off tomorrow. Unfortunately, $35 is tough resistance. I tend to believe VRTS could consolidate for a few more days building more of a bullish wedge but that would put a potential low at $29.00. If you have a longer time horizon for a bullish position on VRTS then don't be shaken out by reaction. A close above $35 would probably have shorts running but we don't want to see this gain turn into a loss. We'll keep an eye on a new entry short or long on VRTS as it tends to be a mover. Picked on November 2nd at $30.96 Gain since picked: +2.78 Earnings Date 10/16 (confirmed) =========================== NB Bullish Stop Adjustments =========================== Adaptec - ADPT - close: 13.85 change: +0.99 stop: 13.50 *new* With ADPT up over 7% today we're going to put a fairly tight stop on the play. We're going to raise our stop to 13.50 which will protect a 5% move. If you have a longer term perspective on the play consider a stop at just under $13 or maybe $12.50. If ADPT trades to $15.00 intraday we're going to close the play. ================================================================= Stock Bottom / Active Trader (AT) section ================================================================== =========================== AT Bullish Stop Adjustments =========================== Clorox - CLX - close: 38.26 change: +0.25 stop: 36.85 *new* We are moving our stop up below the $37 support level. We would expect CLX to potential traded back to $38 or $37.50 before moving higher. --- Honeywell - HON - close: 31.98 change: +0.83 stop: 29.00 *new* With the confirmation of a second day above the 50-dma we are raising our stop from 28.50 to 29.00 for HON. If the stock pulls back we would look for support at $31 and $30. =========================== AT Bearish Stop Adjustments =========================== Bristol Myers - BMY - close: 53.27 change: +0.23 stop: 54.60 This is not a new stop on BMY as 54.60 protects a nice gain already in BMY. However, we are confirming that if BMY trades to $51.00 intraday we will close the play for a profit. With the action in the Drug Index today the next down move for the sector could be soon. --- Manor Care - HCR - close: 21.72 change: -0.23 stop: 22.55 *new* The action in the S&P Healthcare index (HCX.X) and the Drug index (DRG.X) lead us to believe the failed rally today (as both failed to close over their 200-dma yet again) is forecasting the next move down will be soon. The challenge is no one knows how the markets will react to the FOMC decision on rate cuts tomorrow. Thus we are lowering our stop to 22.55 on HCR which will help protect a gain of 6.9% in this bearish play. We're choosing it as the Play-of-the-Day for Tuesday because a strong move down in the HCX could lead HCR to support at $20. If HCR trades to $20.05 intraday then we will be out of the play. That means we're giving up opportunity for it to breakdown below $20 but we can re-evaluate a new entry at a later date. --- PPDI - close: 25.04 change: -0.96 stop: 27.25 *new* We are lowering our stop 50 cents to 27.25. Today's action confirmed the breakdown. Could consolidate for a day or two as bears try to force it below $25. =============== AT Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Dime Bancorp Inc - DME - close: 34.25 change: +1.35 stop: 34.05 A broad-based rally across several sectors in Monday's trading was enough to send shares of DME up over 4% following the lead set by the S&P banking index (BIX). The banking index turned in a powerful day with the sector trading right up to previous resistance at 595 set in late October. A breakout above this level for the BIX could signal a new bullish trend for banks yet at this resistance level the market could see another round of selling as recent gains in banks consolidate with the index pulling back to 575. For DME, we were stopped out a few minutes after 12 o'clock as the stock trade above the $34 level in a similar pattern to Washington Mutual. Bulls shouldn't get too excited yet for DME as the stock still has resistance in the 34.70 to 34.75 area. This is in addition to the 200-dma just over $35. Picked on November 1st at $32.69 Gain since picked: -1.36 Earnings Date 10/15 (confirmed) ================================================================= High Risk/High Reward (HR) section ================================================================== =========================== HR Bullish Stop Adjustments =========================== Hutchinson Tech. - HTCH - close: 21.22 chg: +1.67 stop: 18.75 With the move in the disk drive sector today we were triggered in our long play at $20.10 for HTCH. This bullish breakout came on exceptionally high volume for the stock. We're adjusting the stop from below $18 to $18.75. Look for confirmation if you're looking for a new position. We could see a dip tomorrow. ================== 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 MER Merrill Lynch & Co 46.68 +1.88 AXA Axa ADS 23.65 +0.75 UNM Unumprovident Corp 24.52 +1.11 PPL PPL Corp 36.00 +1.42 KCIN Kpmg Consulting 13.70 +0.75 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change NTAP Network Appliance Inc 17.00 +2.01 CNXT Conexant Systems Inc 12.39 +1.20 VTSS Vitesses Semiconductor 11.19 +1.30 MCDTA McData 17.30 +1.87 BGP Borders Group Inc 16.41 +1.55 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change TBH Telecom Brazil 30.29 +3.09 SEBL Seibel Systems Inc 20.81 +3.52 MI Marshall & Ilsley Corp 60.62 +1.57 PCAR Paccar Inc 59.00 +3.19 IDTI Integrated Device Tech 32.48 +2.98 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change BAX Baxter Intl 46.33 -2.67 APA Apache Corp 49.05 -1.92 CYTC Cytyc Corp 23.81 -3.21 PIXR Pixar 34.95 -1.75 MRCY Mercury Computer Sys 44.87 -1.95 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- none with enough volume to trade safely ================================================================= 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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