PremierInvestor.net Newsletter Tuesday 11-20-2001 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/8734_1.asp ================================================================= In section one: Market Wrap: Internets and Semiconductor lead tech lower Market Sentiment: Getting ready for the holidays Play-of-the-Day: Entry Point, Entry Point ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 11-20-2001 High Low Volume Advance/Decline DJIA 9901.38 - 75.08 9976.73 9893.49 1.3 bln 1451/1678 NASDAQ 1880.51 - 53.91 1930.21 1877.79 1.9 bln 1363/2246 S&P 100 590.03 - 5.04 595.65 589.61 Totals 2814/3924 S&P 500 1142.66 - 8.40 1152.45 1142.17 RUS 2000 453.90 - 3.81 458.82 453.76 DJ TRANS 2489.44 - 43.08 2530.67 2484.33 VIX 25.93 + 1.13 26.55 24.97 VXN 51.41 + 1.14 51.69 50.05 TRIN 1.51 Put/Call Ratio .60 ----------------------------------------------------------------- =========== Market Wrap =========== Internets and Semiconductor lead tech lower Internet stocks as depicted by the CBOE Internet Index (INX.X) and semiconductor stocks (SOX.X) fell, in what looks to be a good old fashioned round of profit taking. Perhaps the recent action in the PremierInvestor.net play list has subscribers trading some of the recent action in these two sectors and the downside might not be over yet. Here's a quick look at the sector components that make up these two indexes. We've sorted the components my their weighting to help give subscribers a good feel for just how the daily action of each stock can actually impact the outer appearance of the sector index itself. CBOE Internet Index Components - sorted by weighting The CBOE Internet Index (INX.X) traded down 10.7 points today, or 7.47% to close at $132.73. As you can see, there weren't any stocks in the index that showed green today. Recently, PremierInvestor.net had profiled index component AOL Time Warner (NYSE:AOL) as bullish, but subscribers were stopped out with a 4.98% gain last week at $36.90 as the stock traded just shy of our near-term bullish target. AOL is the 5th heaviest weighted stock in the index and today's decline of 2.06% wasn't that bad considering some of the other types of declines found in the group. I like to trade some of the stocks in the group from time to time, and use the index action to help gain a perspective of just how aggressive the market is feeling. Today's action gives hint that some aggressive bulls are pulling in the horns as many of the stocks in the group have had some nice runs. eBay Chart - Share of eBay (NASDAQ:EBAY) look to be having trouble near the $62 level. This was a level we talked about in early October as potential resistance, when the stock was headed higher at the $54 level. It still looks like there are some sellers around and has this stock high on my list of bearish candidates in the Internet space. Near-term target for bearish traders is the $54 level, which correlates nicely with retracement, 50-day and 200-day moving averages. Would follow with a stop just above today's open of $61.60. eBay RS vs. Internet Index - The recent number of relative strength "sell signals" on the EBAY chart vs. the INX.X gives hint that the stock may be seeing some liquidation by bulls and not just profit taking. In May (red 5) thru early October (red A) shares of EBAY outperformed the INX.X considerably and showed good relative strength. Now we're starting to see some divergence of that trend as the INX.X has had a nice rally, but EBAY seems to have lagged that move, making the stock a good candidate for bearish traders. Semiconductor Index Components - sorted by weighting Also weak today were the semiconductor stocks. Recently we've been alerting subscribers that the bullish percent charts for this sector as followed by Dorsey/Wright and Associates reached the "overbought" levels above 70% bullish. The bullish percent readings monitor a much broader base of semiconductor related stock that the 16 components listed above. However, understanding how the index is weighted gives subscribers a good understanding of the internals of the Philadelphia Semiconductor Index (SOX.X). Much like the Internet Index (INX.X) there weren't any stocks in the index showing green by session's end. We profiled shares of Intel (NASDAQ:INTC), the #8 heaviest weighted stock in the index as bearish in the "High Risk / High Reward" section of the site. It was our first "toe dip" for a short in the sector for some time and we wanted to try and avoid a stock that might be overly volatile. While the bullish percent charts hint that the group is due for a pullback, some of the smaller stocks are quite volatile. By playing bearish in shares of Intel (NASDAQ:INTC) we may not feel like we're going to get rich overnight, but chances of getting crushed by any continued bull run in the sector were less likely. Today's action in the SOX.X is interesting in that the greater percentage of the declines were found in the more heavily weighted index components. For the most part, the losses were relatively evenly distributed. This gives hint that the bulk of today's selling was orderly and hints of profit taking. Shares of KLA-Tencor (NASDAQ:KLAC) fell a greater percentage than the other components. KLAC had risen approximately 66% from its early October lows ($29 to $50), while shares of Intel (NASDAQ:INTC) have risen 55% from its October lows near $20 ($20- $31). Today's action makes sense in the scope of profit taking. A bearish trader short shares of Intel (INTC) near $30 doesn't need a complete revisit of the lows to make some nice percentage gains. By shorting shares of Intel (INTC) we are also better able to monitor both ends of the inchworm as it relates to sector movement. Today the Semiconductor Index (SOX.X) "inchworm" moved lower. Semiconductor earnings After the close of trading, fellow Semiconductor Index (SOX.X) component Analog Devices (NYSE:ADI) reported fourth-quarter pro- forma earnings of $52.8 million, or 14 cents a share, compared to year-ago earnings of $206.5 million or 54 cents a share. Today's results beat analyst's estimates of 12 cents a share. Revenues for the latest quarter fell 47% from year-ago levels at $423.3 million. While shares of ADI finished the regular session at $41.91, after hours trading had the stock trading lower at the $40 level. The chipmaker said it expected first-quarter 2002 revenue to decline about 5% to $400 million, with earnings per share falling to the 11-cent per share level. Sales aren't expected to grow until the second quarter of next year, the company said. Tomorrow's outlook Tonight's earnings (or lack thereof) and quarterly guidance from Analog Devices (NYSE:ADI) should have some pressure on semiconductor stocks at the open of trading. This will most likely put some pressure on other technology stocks as they tend to have a "group think" mentality from time to time. The recent bullish percent reading on the NASDAQ-100 at 78% has been climbing and is now very close to the levels found in late April and early May of this year. The tech part of the market is ripe for a good round of profit taking and ADI's comments about improvements not showing up for about 3-6 months will most likely give short-term traders a reason to take profits if they haven't begun doing so already. However, the market seems to have a history of trading relatively bullish the day after Thanksgiving and the following Monday. I'm a big believer of trying to lock in some profits relatively early on at least a partial position in some bearish plays in the technology space. I like to do this to get a feel for things going forward. I also need to understand that we continue to see some fairly hefty selling in the longer-end of the Treasury bond market and there continues to be some cash raised there. If that cash being raised is to buy some technology names on a pullback, I don't want to necessarily be thinking "retest of the lows" and let a potential 10% gain in a bearish trade slip away. Bull's might want to think, "boring" Today I noticed shares of Whole Foods Market (NASDAQ:WFMI) jumped 6.16% and broke to yet another 52-week high. The stock is on a run and now it looks like it is starting to pull others in the group higher. I'd look to play this trend near-term. Perhaps it makes sense that we're going to see some tech profits role to the more "predictable" earnings near-term, while tech digests/gives back some gains. One stock that I'd have my eye on for a bullish trade is shares of Kroger (NYSE:KR) here at $24.99. The stock has been trading either side of its flat 200-day MA and pressure looks to be building in this one. With the recent action in fellow grocer Whole Foods Market (WFMI) I've got a "buy side" bias toward the group. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Getting ready for the holidays by Russ Moore Getting ready for the holidays. Market participants seemed more interested in squaring their positions than pushing the markets in a particular direction. Getting “flat” ahead of what will be a five-day weekend for many, was the key catalyst behind today’s action, resulting in a choppy session and a negative close across the board. The blue chip DOW slid -0.8 percent while the NASDAQ dropped -2.8 percent and the NDX -4.2 percent. Volume prognosticators were fooled once again as 1.31 billion shares traded hands on the big board while 1.96 billion shares were exchanged on the tech index. Market breadth was negative with losers outpacing winners by a 17/15 margin on the NYSE and a 22/14 count on the NASDAQ. Winning sectors included drug, gold, healthcare, oil, oil service, utility and natural gas. Tech sectors were painted red with chip, networker, software and Internet being the weakest areas. September trade data came in with an $18.69 billion deficit, much narrower than the $24.2 billion expected by economists. The October leading indicators showed an increase of +0.3 percent versus expectations of unchanged. Let’s not read much into today’s action, after all, we knew the markets were due for some profit taking and with the holidays on our doorstep this was a perfect time to go flat and enjoy a worry free weekend. VIX Tuesday 11/20 close: 25.93 VXN Tuesday 11/20 close: 51.41 30-yr Bonds Tuesday 11/20 close: 5.31 Total Put/Call Ratio: .60 Equity Option Put/Call Ratio: .47 Index Option Put/Call Ratio: 1.78 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 38.62 Volume/Open Interest Maximum calls: 40/145,543 Maximum puts : 40/ 79,037 Moving Averages 10 DMA 38 20 DMA 37 50 DMA 33 200 DMA 42 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: 590.03 Volume/Open Interest Maximum calls: 580/3,919 Maximum puts : 500/6,323 Moving Averages 10 DMA 584 20 DMA 572 50 DMA 553 200 DMA 610 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: 1142.66 Volume / Open Interest Maximum calls: 1200/32,177 Maximum puts : 1050/43,244 Moving Averages 10 DMA 1132 20 DMA 1110 50 DMA 1077 200 DMA 1186 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: 9,901.38 Volume / Open Interest Maximum Calls: 98/25,243 Maximum Puts 90/50,685 Moving Averages: 10 DMA 9,749 20 DMA 9,546 50 DMA 9,256 200 DMA 10,194 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: 584.10 Volume / Open Interest Maximum Calls: 580/ 777 Maximum Puts: 540/1,146 Moving Averages 10 DMA 578 20 DMA 568 50 DMA 509 200 DMA 536 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: 494.12 Volume / Open Interest Maximum Calls: 640/366 Maximum Puts: 600/609 Moving Averages 10 DMA 521 20 DMA 497 50 DMA 453 200 DMA 567 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: 395.51 Volume / Open Interest Maximum Calls: 420/406 Maximum Puts: 360/320 Moving Averages 10 DMA 392 20 DMA 392 50 DMA 388 200 DMA 392 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 11/16 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 10/30/01 377,468 413,729 (36,261) (0.06%) 11/06/01 376,807 416,063 (39,256) 8.2% 11/13/01 381,539 421,284 (39,745) 1.2% 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 10/30/01 123,546 71,225 52,321 (6.2%) 11/06/01 132,106 81,208 50,898 (2.7%) 11/13/01 136,047 87,645 48,402 (4.9%) 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 10/30/01 32,055 45,574 (13,519) 29.5% 11/06/01 39,410 47,890 (8,480) (37.0%) 11/13/01 38,751 49,257 (10,506) 23.9% 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 10/30/01 12,725 6,475 6,250 34.9% 11/06/01 11,406 8,143 3,263 (47.7%) 11/13/01 11,568 6,505 5,063 55.1% 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 10/30/01 25,872 12,556 13,316 (3.1%) 11/06/01 25,977 11,951 14,026 5.4% 11/13/01 24,145 10,204 13,941 (0.6%) 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 10/30/01 4,261 11,220 (6,959) 0.0% 11/06/01 3,569 12,281 (8,712) 25.2% 11/13/01 4,094 12,121 (8,027) (7.8%) 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 +48,402 +50,898 -39,745 -39,256 Total Open Interest % (+21.64%) (+23.86%) (-4.95%) (-4.95%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -8,027 -8,712 +13,941 14,026 Total Open interest % (-49.50%) (-54.97%) (+40.59%) (+36.98%) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +5,063 +3,263 -10,506 -8,480 Total Open Interest % (+28.01%) (+16.69%) (-11.94%) (-9.71%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.Commercial players have apparently gone on an extended vacation. The Commercial net-short positions on the S&P 500 have been stuck around the 4.95 percent range for five weeks. Other than the usual gyrations of the Small Specs on the NASDAQ 100, significant moves have been absent. Gold: Only a slight reduction in net-short Commercial positions . 10/16 51,816 contracts net-short 10/23 25,191 contracts net-short 10/30 33,199 contracts net-short 11/06 35,435 contracts net-short 11/13 23,637 contracts net-short Data compiled as of Tuesday 11/13 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= POTENTIAL NEW BULLISH PLAYS & STRATEGY ====================================== We are going to try and use any market pull back and profit taking to our advantage. Considering that the November/December season is one of the most historically bullish times of the year for Wall Street then we're going to look for dips as potential entry points. The strategy here is to watch for pull backs in these stock to our specified target entry ranges. We've added suggested stops even though we're looking bounces in these areas. This means we would consider plays only when shares begin to tick back up. If we do get a bounce in our range we'll take the worst or highest end as our entry. If the stock bounces in our range and then rolls over and trades through our stop then we'll take the bottom end of our range as our entry to calculate any losses. Look for more in-depth write-ups on Wednesday or Friday for those stocks that hit our triggers. ====================================== Nokia Corp - NOK - close: $23.42 change: -1.20 stop: -see update- Company Description: Nokia is the world leader in mobile communications. Backed by its experience, innovation, user-friendliness and secure solutions, the company has become the leading supplier of mobile phones and a leading supplier of mobile, fixed and IP networks. By adding mobility to the Internet Nokia creates new opportunities for companies and further enriches the daily lives of people. (source: company press release) Why We Like It: Currently poised at its 200-dma, we like NOK's new bullish trend and the stock has not violated its 15-dma in weeks. We are looking for a pull back to $23.00 to $22.50 as our range. If we do get the bounce we're looking for we'll start the play with a stop at $22.40. Remember to look for the bounce to begin. Look for support near $22.80 to $22.75. Picked on November ?th at $xx.xx Gain since picked: +0.00 Earnings Date 10/19 (confirmed) --- PMC - Sierra - PMCS - close: 20.83 change: -2.38 stop: -see update- Company Description: PMC-Sierra is accelerating the broadband revolution. PMC-Sierra is a leading provider of high speed broadband communications semiconductors and MIPS-based processors for Access, Metro Transport and Optical Transport network equipment that make up the backbone of the Internet. The company offers worldwide technical and sales support, including a network of offices throughout North America, Europe and Asia. The company's quality system is registered with the Quality Management Institute to the ISO 9001 standard. As co-founder of the SATURN® Development Group, PMC-Sierra works with over 30 other member companies to define and develop interoperable, standard-compliant solutions for high speed networking applications. (source: company press release) Why We Like It: The SOX.X has been drifting lower for five days in a row with Tuesday's drop of over 5% a strong indication that traders are more than willing to take profits off the table. It looks like there will be some more profit taking for the sector after ADI's negative news this evening. We will be looking for a potential bullish entry point if PMCS can bounce between $19.50 and $19.00. If we do get the bounce we'll start the play with a stop at $18.90. More conservative traders may want to look for the bounce and then wait for shares to trade back above the $20 level which could prove to be short-term round number resistance. Picked on November ?th at $xx.xx Gain since picked: +0.00 Earnings Date 10/18 (confirmed) --- Symantec Corp - SYMC - close: 62.28 change: -1.76 stop: -see update- Company Description: Symantec, the world leader in Internet security technology, provides a broad range of content and network security software and appliance solutions to individuals, enterprises and service providers. The company is a leading provider of client, gateway and server security solutions for virus protection, firewall and virtual private network, vulnerability management, intrusion detection, Internet content and e-mail filtering, remote management technologies and security services to enterprises and service providers around the world. Symantec's Norton brand of consumer security products is a leader in worldwide retail sales and industry awards. Headquartered in Cupertino, Calif., Symantec has worldwide operations in 37 countries. (source: company press release) Why We Like It: Shares of SYMC had been consolidating its huge October gains near the $60 level. However, Monday's market rally higher helped spark the breakout shares of SYMC were looking for and the stock traded near $65. We think the GSO.X software index may be one of the sectors to lead the markets higher over the next few weeks so we'll be looking for entry points in SYMC as one of the stronger issues in that index. Our entry range for SYMC will be a bounce between $60.50 and $59.50 with expectations for the stock to trade near $60.00. If we do get triggered we'll start the play with a stop at $59.40. Keep an eye on the GSO.X. We need to see the index hold the 160 level. Picked on November ?th at $xx.xx Gain since picked: +0.00 Earnings Date 10/17 (confirmed) --- VERITAS Software - VRTS - cls: 36.81 chg: -4.34 stop: -see update- Company Description: VERITAS Software Corporation provides essential storage software solutions that enable customers to protect and access their business-critical data. The company, which was added to the Nasdaq-100 Index in January 1999 and to the S&P 500 Index in March 2000, has more than 5,500 employees in 103 offices worldwide, and is ranked among the world's top 10 software companies based on revenue and market capitalization. (source: company press release) Why We Like It: Using the same strategy as SYMC above, if the GSO.X can pull back to the 160 level then we might get an opportunity to buy VRTS at the bottom of its ascending trading channel. VRTS is more volatile than SYMC but then the reward is probably greater as well. We will be looking for a bounce in the $34.50 to $33.50 area. If we get triggered we'll initiate the play with a stop at $33.40. Keep an eye on the GSO.X. Picked on November ?th at $xx.xx Gain since picked: +0.00 Earnings Date 10/16 (confirmed) ================================================================= 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. 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PremierInvestor.net Newsletter Tuesday 11-20-2001 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/8734_2.asp ================================================================= In section two: Net Bulls New Bullish Plays: - please see the POD in section one - Bullish Play Updates: GMST, JNPR, LGTO Bearish Play Updates: WWCA Closed Bullish Plays: CIEN Stock Bottom / Active Trader Bullish Play Updates: GE, IKN High Risk / High Reward New Bearish Plays: EBAY Bullish Play Updates: SBAC Bearish Play Updates: INTC Split Trader - none - Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Net Bulls (NB) section ================================================================== =========== NB New Play =========== - please see the Play of the Day in section one - =============== NB Play Updates =============== -------------------- Bullish Play Updates -------------------- Gemstar-TV Guide - GMST - close: 26.29 change: -1.04 stop: 24.99 The enthusiasm from Monday tried to carry the markets early this morning but profit taking quickly overwhelmed any buyers and Wall Street saw a broad market pull back. GMST managed a bounce midday near $26 but another wave of selling pushed it back down to $25.50 near its 5-dma. The good news was the nice end of day surge back over $26. If the markets continue to dip tomorrow we would be looking for potential new entry points in GMST. $25.00 and $25.50 may be the levels to watch for another bounce. Any bounce near $25.00 would be a low risk opportunity considering our stop at 24.99. Picked on November 16th at $25.54 Gain since picked: +0.75 Earnings Date 11/14 (confirmed) --- Juniper Networks - JNPR - close: 25.02 change: -1.55 stop: 24.49 JNPR is yet another casualty to the tech sector pull back on Tuesday. The networking sector produced broad declines with the index dropping 5.5%. JNPR fell back 5.8% after Monday's positive jump up to $26.57. Even though shares of JNPR have dipped below its 5-dma (short-term indicator) and fell to 24.92, we are encouraged that the stock closed at $25. If JNPR can hold the $25.00 level it may be setting up for a new potential entry point. We would not be recommending any new positions until we start to see a bounce in the Nasdaq and the NWX.X. It wouldn't take much for the stock to fall to $24.00. Yet if it did we'd probably keep an eye on it for a bounce and entry point there as well. However, since this would stop us out at $24.49 we'll have to re-evaluate the overall market atmosphere if this develops. Picked on November 16th at $25.60 Gain since picked: -0.58 Earnings Date 10/11 (confirmed) --- Legato Systems - LGTO - close: 10.77 change: -0.08 stop: 9.98 Go LGTO! While the rest of the market was trying to force its way higher during the morning hours, shares of LGTO pulled back slightly to find support near $10.60. Then when the rest of the tech sector started to sell-off LGTO began to trade higher and cleared the $11 mark. For most of the afternoon LGTO remained there above $11 but last minute profit taking brought the stock back under this pivotal level. Shares remain above its 5-dma (a very short-term indicator) and the move higher appeared to be fueled on stronger than average volume. Keep an eye on the stock as the 10.60 to 10.50 level may be strong enough support to encourage new entries. However, we would hesitate to commit new capital to tech stocks if the Nasdaq continues to slide on Wednesday. Picked on November 8th at $10.47 Gain since picked: +0.30 Earnings Date 10/23 (confirmed) -------------------- Bearish Play Updates -------------------- Western Wireless - WWCA - cls: 26.15 chg: +0.10 stop: 27.01 Here we go again. Last week we suffered through a horizontal trading channel as the stock consolidated its recent losses. Then on Friday it seemed the bearish trend would continue. The last two days have only show the stock to be consolidating sideways again. The only good news for the bears is the apparent selling pressure near $26.20. In addition to this new level of resistance WWCA should see overhead obstacles at $26.25 and $26.50. Confirm stock direction before initiating new positions and play with stops! Picked on November 9th at $26.40 Gain since picked: +0.25 Earnings Date 11/07 (confirmed) =============== NB Closed Plays =============== -------------------- Closed Bullish Plays -------------------- CIENA Corp. - CIEN - close: 19.08 change: -2.08 stop: 20.74 We were THIS close to reaching our target of $21.95 for this bullish CIEN play. The high today at 21.71 was hit early this morning before 10:30 AM ET but this last effort to trade higher quickly withered. Shares of CIEN fell viciously from the high and bounced once near $20 before completing its descent under its 5-dma. CIEN's 9.8% loss was one of many such declines in the networking sector. The AMEX Networking index fell 5.5% while notables JDSU slipped 9.3%, GLW dropped 6.5% and TLAB dropped over 10%. At the high today at 21.74 our CIEN play was up over 15% from our picked price of $18.77. Fortunately we raised our stop yesterday in Monday's newsletter to $20.74. This allowed us to capture almost 2 points and more than a 10% move in the stock. It is unclear how far the various tech sectors may slide if the NASDAQ continues to fall tomorrow. Usually the day before and after Thanksgiving are "up" days. We might actually look for a bounce in shares of CIEN near $18.00 which could be a possible entry point for more aggressive traders. We'd also be interested if CIEN closes back over $20. Picked on November 14th at $18.77 Gain since picked: +1.97 Earnings Date 12/13 (not confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- General Electric - GE - close: 41.10 change: -0.15 stop: 39.90 Believe it or not shares of GE don't look that bad. The DJIA may have sold off today but GE actually broke out above resistance at $41.60 late afternoon before pulling back at the close. In the news today was word on NBC's planned acquisition of Spanish- language network Telemundo Communications Group. GE's NBC television operations announced last month their plan to purchase the company and U.S. antitrust regulators told reporters they would not oppose the deal. There are more than 35 million Spanish-speaking people in the U.S., or about 13% of the population. The recent trading action shows GE coiling higher with higher lows as it attempts to breakout over the $41.60 level. Picked on November 8th at $40.10 Gain since picked: +1.00 Earnings Date 10/24 (confirmed) --- Ikon Office Solutions - IKN - cls: 9.75 chg: -0.25 stop: 9.70 *new* Uh oh, part two. As of Friday we were concerned that shares of IKN were acting too weak to stay on the bullish play list. Monday's performance started to cement this perspective. IKN merely traded sideways to close at $10.00 while the rest of the market rallied higher. The broad market profit taking today only confirmed our new suspicions. The stock has closed below its 15- dma while its MACD has produced a bearish crossover. I planned to drop it today but Mr. Bailey has convinced me to give it one more chance with a very tight stop. The new game plan on IKN is to place a stop at $9.70. If shares can reverse course near the open tomorrow we'll be fine. Otherwise we'll be out at 9.70, as long as shares don't gap down at the open, for a 50-cent loss. Picked on November 12th at $10.20 Gain since picked: -0.45 Earnings Date 10/25 (confirmed) ================================================================== High Risk / High Reward (HR) section ================================================================== ============ HR New Plays ============ ----------------- New Bearish Plays ----------------- eBay Inc - EBAY - close: 59.11 change: -3.00 stop: 61.60 Company Description eBay, Inc. is the World's Online Marketplace. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay, as well as on Half.com, eBay's site dedicated to fixed price trading. eBay enables trade on a local, national and international basis with customized sites in markets around the world. (source: company press release) Why We Like It: We are looking for a quick short-term pull back in shares of EBAY now that it has broken through support at $60.00 and $59.50. If you read the wrap this evening you already know that EBAY has been lagging the Internet index (INX.X) and is currently on a relative strength sell signal. It would appear that sellers have a lid on the stock at $62.50 and the recent highs form a double top at that level. The strategy is based on a potential follow through in today's broad market profit taking. The Internet sector has always been susceptible to momentum traders as bears have made and lost fortunes shorting them. Our first target area is $55, which is just above the 50-dma and 200-dma (53.99 and 53.46, repectively). However, if shares close below the 200-dma EBAY could fall to $52 to $50. We're going to start the play with a stop at 61.60. We strongly suggest that short traders confirm stock direction. If there is a small bounce, look for a failed rally at $60. This strategy is not for everyone. Use caution. Picked on November 20th at $59.11 Gain since picked: +0.00 Earnings Date 10/18 (confirmed) =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- SBA Communications - SBAC - close: 11.13 change: -0.47 stop: 9.65 Our new bullish addition to the high risk/high reward section is holding up well. Monday saw an 8.8% surge higher and the stock cleared to major resistance levels at 11.29 and 11.50. Shares of SBAC attempted to hold on to most of its gains on Tuesday but the negative performances in the broader markets was just too much and the stock began to fall back near the close. Fortunately SBAC managed to find some support north of $11.00. The question is will this level hold up tomorrow if the Nasdaq adds a second day of profit taking? If the stock does pull back we would look for bounces at $10.50 and $10.25 as potential entry points to go long. Wait for the bounce to begin! Picked on November 16th at $10.66 Gain since picked: +0.47 Earnings Date 11/13 (confirmed) -------------------- Bearish Play Updates -------------------- Intel Corp - INTC - close: 29.95 change: -1.04 stop: 31.31 *new* The profit taking in the semiconductor sector picked up speed today. The SOX.X topped out five days ago and has consistently been drifting lower that is until today. The broad market pull back on Tuesday sent the SOX falling 5.8%. This 30-point drop put it under the 500 level at 493 but the index remains above the previous relative low on Nov. 12th at 488. In sympathy with the index shares of Intel also fell on Tuesday losing 3.35%. The stock remains above its 10-dma but bears should be encouraged by its close under the $30 level. At this point we're considering a new higher target to exit the play. Previously we were looking for INTC to drop to $27.70 but $28.00 is looking more feasible. This would be a 9% move from the picked price. To reduce our risk we're going to lower the stop to $31.31, which is a cent above Monday's high. Confirm stock direction before considering new positions. Remember, this entire play is based on a short- term pull back in the chip sector. This might culminate in a follow through dip tomorrow. Adjust your trade accordingly but watch out for any quick reversals as the trend in the market and INTC is still bullish. Picked on November 15th at $30.78 Gain since picked: +0.83 Earnings Date 10/16 (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 UCL Unocal Corp 33.85 +1.84 APA Apache Corp 47.33 +2.15 PMI Pmi Group Inc 61.40 +0.83 TSCO Tractor Supply Co 28.85 +2.00 DOM Dominion Resources 20.28 +0.75 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change HRC Healthsouth Corp 14.19 +1.50 RCL Royal Caribbean Cruises 16.10 +1.09 RI Ruby Tuesday Inc 19.68 +1.33 NTCT Netscout Systems Inc 8.40 +1.05 INVN Invision Technologies 19.56 +1.14 OSIS Osi Systems Inc 16.90 +1.97 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change UNH Unitedhealth Group Inc 70.74 +3.34 MON Monsanto Co 33.00 +1.26 WFMI Whole Foods Market Inc 43.05 +2.50 VAL Valspar Corp 39.48 +1.54 TBL Timberland Co 37.84 +1.28 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change VOD Vodaphone Group 25.14 -1.56 FTE France Telecom 39.95 -4.65 DE Deere & Co 38.75 -2.82 TOY Toys R Us Inc 22.01 -1.61 NDE Indymac Bancorp Inc 21.62 -1.06 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- KO Coca-Cola Co 49.00 -0.47 KLAC Kla-Tencor Corp 45.84 -3.90 JBL Jabil Circuit Inc 24.96 -1.82 ================================================================= 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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