PremierInvestor.net Newsletter Weekend Edition 11-30-2001 section 1 of 3 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/8321_1.asp ================================================================= In section one: Market Wrap: The fuse has been lit Play-of-the-Day: New Eleven Month High! Watch List: JAKK, MOVI, KTC, BBY, ABGX and more! Market Sentiment: Stuck in Neutral ------------------------------------------------------------------ U.S. Market Numbers ------------------------------------------------------------------ MARKET WRAP (view in courier font for table alignment) ------------------------------------------------------------------ WE 11-30 WE 11-23 WE 11-16 WE 11-11 DOW 9851.56 -108.15 9959.71 + 92.72 9866.99 +258.99 +284.46 Nasdaq 1930.58 + 27.39 1903.19 + 4.61 1898.58 + 70.10 + 82.75 S&P-100 584.80 - 8.47 593.27 + 5.20 588.07 + 10.08 + 18.00 S&P-500 1139.45 - 10.89 1150.34 + 11.69 1138.65 + 18.34 + 33.11 W5000 10531.45 - 64.95 10596.40 +109.73 10486.67 +189.46 +280.40 RUT 460.78 + 2.36 458.42 + 7.11 451.31 + 13.21 + 5.03 TRAN 2511.78 - 23.12 2534.90 + 37.53 2497.37 +176.68 + 74.03 VIX 26.14 + 1.36 24.78 - 2.39 27.17 - 1.59 - 3.64 VXN 48.45 - 2.36 50.81 - 4.23 55.04 - 3.55 - 2.60 TRIN 1.19 0.70 0.99 0.90 TICK +852 +976 +750 +784 Put/Call .63 .61 .50 .74 ------------------------------------------------------------------ WE= week ended =========== Market Wrap =========== The fuse has been lit There were no fireworks today, even though last night I felt there might well be some. Maybe today's market was like a firecracker. The "fuse" has been lit and perhaps it's now burning. The questions remain..."Will the fuse stay lit and what type of powder charge is at the end of the fuse?" After the beginning of trading for stocks, we did see that 5-year Treasury YIELD ($FVX.X) break below the 4.076% YIELD level. The session low for YIELD was 4.019% and closing YIELD was at 4.055%. Based on last night's market wrap, the fuse in the 5-year YIELD and a potential scenario for liquidity concern is now lit. Next week we need to be monitoring this "fuse" to see if it's still burning (YIELD falling from buying in the bond is my scenario for falling equity prices) or if the MARKET is willing to sell that bond and generate some liquidity for further purchase of stocks. Remember... it's not just the 5-year YIELD. We need to be watching the 13-week, 10-year and 30-year also. I've talked about "domino theory" and we're definitely seeing it at work here right now. The 13-week is the "safest" of the Treasuries and YIELD there is now at 1.73%. This is the LOWEST YIELD for this bond this year! Do you sense the domino effect taking place? The 13-week YIELD is at a new low. The 5-year YIELD is just starting to break some levels of short-term support as money may not like the 1.73% YIELD in the 13-week and opts for the higher YIELD of the 5-year at 4.05%. Is the 10-year YIELD next at 4.744%? I'm not sure on this one and not too sure it matters right now. The reason I'm focusing a bit more on the 5-year right now is that we can really see the difference in the risk/reward between the 13-week/5-year, but the risk/reward between the 5-year and 10-year is entirely different. The risk is the difference of 5-years, while the reward difference is that of the YIELD. If we stack the "dominos" from 13-week, 5-year and 10-year YIELD, we get 1.73%, 4.05% and 4.74%. In my opinion, today's action in the bond market was a near-term negative for stocks. If YIELDS continue lower (further buying in Treasuries), I think this negative grows near-term. Does this mean we take our chips off the table and just go home? No way! I think PremierInvestor.net has shown subscribers that under any market condition we can make some money for traders and investors. I spent a lot of time again tonight on the bond market, but that's where I'm seeing some of the more "important" events taking place right now to give guidance on near-term market action. Today, stocks were rather range bound and quite mixed. There wasn't a heck of a lot that took place on a broader scale. Just before 03:00 PM EST, we did get our upside alert in shares of AT&T (NYSE:T) as bullish at $17.79 as discussed in Wednesday's market wrap. When the stock was trading $17.80, I ran a quick relative strength calculation vs. the S&P 500 and the reading was the needed 15.50 to have the RS chart in a column of X's. The stock faded in the last hour of trading to close at $17.46. This is a near-term disappointment, but not a failure. There's not too many stocks I'm bullish on right now, but I won't let the last hour of trading in T have me thinking I've made a drastic mistake. In Wednesday's wrap, T was ranked #18 in our Dow portfolio based on Sept. 10th close and today's ranking is #16. Here alone you can see some of the short-term RS improvement in the stock vs. some others. Let's quickly discuss something here related to AT&T at $17.80 action point and that of bond YIELDS. During the trading session, a trader monitoring T as bullish sees the stock breaking above his/her identified action point, but bond YIELDS are lower and view that as a potential broader stock market negative. Do I trade against my "bond indicator" or take the trade? This is a dilemma you will be faced with more than once from here on out. My vies is ALWAYS trade the stock, then your other indicator. Why is this? Turn the table and imagine you are short X-number of shares of T and you're stop was at $17.80. Do you risk a move against you just because your "indicator" is telling you that broader market negativity is present? Your answer should be NO! You would stick with your plan and remove that risk from your account and close the trade. OK... but that is removing risk from your account. What about adding risk to your account with a bullish trade in shares of AT&T (T)? This is where trade size and risk management plays such an important role in your account management. While the stock was "telling" me to buy it based on previous analysis and trade set up, today's bond market action played against a bullish scenario for the broader market and not all of our stars were aligned. What can I do? I can limit my trade size. Again.. if your trading discipline is that you usually put $5,000 (whatever amount you usually invest/trade) in a stock trade, then today a trader may have only put $2,500 in the trade (reduced their capital exposure). What if bond YIELDS reverse course on Monday based on something that happens over the weekend? What if AT&T gets some type of blockbuster bid for their broadband assets? A trader may want some bullish exposure when their previous analysis was "bullish above $17.79." If one of your offsetting indicators for taking a trade bullish is telling you to be careful (like bond YIELDS are perhaps telling us) then don't take the trade, or do take the trade, but just scale back your exposure. Don't necessarily let one of your indicators being negative keep you from taking a trade. If 5 indicators are saying "buy" and one is saying "be careful" then be careful, but don't let that 1 negative be the overriding determiner. Dow Portfolio "hypothetical" $1,000 investment since 09/10/01 The Dow Industrials had a net loss of 1 stock from those that have been able to close above the September 10th close. That one stock was General Electric (NYSE:GE). This week, PremierInvestor.net dropped the stock from its bullish play list at $39.90, just under the $40 level we thought was its pivot point. Ironic that shares of General Electric (NYSE:GE) would fall from the top #15 and actually close back below its September 10th close. Sounds like a good stock to have cut from the portfolio with a 20-cent a share loss from profile at $40.10. General Electric looks to also be an attractive stock for bears to be taking a look at too. One notable upside mover this week was AT&T (NYSE:T), which moved up 5 slots this week to #16. Also notable are shares of Merck (NYSE:MRK) and its move back into the "upper 15". Shares of Merck "drugs" are more of a "defensive" name and it's starting to rotate back up the scale. Merck Company Chart - $1 box The point and figure chart of MRK is looking compelling for a longer-term investor. The stock is beginning to rotate up the scale in our Dow Portfolio and a trade at $69 would be a double- top buy signal just outside of its longer-term bearish resistance trend. That trading at $64, which gave the double-bottom sell signal right on our upward blue trend is beginning to look like a "bear trap." The reason I think this, is that the chart is showing us two separate "low pole" warnings. You can almost imagine that there is some type of institutional buying that has kicked in at the $61-$68 level to get that big position built. Then that momentum carries over for awhile from momentum traders for a couple of points higher, and then the big pullback. This type of action is very congruent with how longer-term institutional buying is done. Buy it up, stop.... let it pull back. Buy it up, stop.... let it pull back. The "bear trap" is created by the specialist to get some liquidity for another big bullish order that gets the last of the weak hands out of the stock, then the longer term move begins. One to keep an eye on for longer-term investors. Last Friday we noticed that shares of Hewlett Packard (NYSE:HWP) had fallen back to the #6 slot after a prior-week ranking of #1. We thought that rotation lower was simply a case of profit taking and that looks to have been the case based on this week's action. Shares of HWP made a nice move higher in the past two sessions from the $20 level and have battled back to a #2 ranking. The stock gained $1.05 on the week. It's interesting to note that "big tech" in the Dow Industrials dominates the #1, #2 and #3 slots. The other "big tech" stock, Microsoft (NASDAQ:MSFT), finished the week in the #10 slot, which was where the stock was at last week. Even so, the stock did lose $0.50 per share on the week. With big tech looking strong, bullish traders may want to keep an eye on MSFT as bullish should we get a snap back higher in bond YIELDS next week. If "big tech" is where it's at, then why not look to a stronger stock that also looks to have been pulling back on profit taking in recent weeks. On Wednesday, shares of Microsoft pulled right into its 200-day moving average at $62.80, then bounced to the $65 level on Thursday. The relative strength chart of MSFT vs. the Dow Industrials is still in a column of X's with a reading of RS=6.52. A RS reading of 7.00 would have the stock giving a RS "buy signal." This would have us making the observation that MSFT hasn't just been outperforming the Dow Industrials on a near-term basis, but beginning a stage of longer-term out performance. Another stock mentioned in last Friday's wrap was Philip Morris (NYSE:MO). Commentary there had us looking at a "high pole" warning and observation that a bullish count back in August of 2000 had been achieved earlier this year. This week, shares of Philip Morris (MO) did trade that double bottom sell signal at $45, but has since rallied right back up to a rounding 200-day moving average of $47.82. Now we have the bar chart and its longer-term moving average (the 200-day MA) and a break below longer-term upward trend on the point and figure chart (bullish support). This stock is sure acting like it is beginning to enter a stage of longer-term distribution. This one looks like a relatively "lower risk" short candidate with a stop just above a 3-box reversal of $48. This trade would play very much into some bond YIELD action. Last week we thought that the 4.91% dividend of MO might be at risk on a move higher in YIELD. The stock did finish the week higher by $0.27 a share as Treasury YIELDS fell this wee, but the longer-term bearish picture developing in the chart of MO is what we're after. Should we get a snap back higher in YIELD next week, look for this stock to see some selling pressure. What will be even more interesting is if YIELDS head lower and MO does also. That will give us even greater hint that the shares are losing sponsorship longer-term. Philip Morris (MO) is a great "market contrary" stock. It provides better "information" on the longer-term basis, as it is very "defensive" type of stock. Philip Morris Chart - The above chart of Philip Morris (MO) is a weekly interval chart. The retracement bracket was "fitted" from the "anchor" and "fit" points indicated on the chart. It's charts and retracement like that found in the Philip Morris (MO) chart that really convinces me that the MARKET trades levels. That recent rally in early October near 19.1% retracement looks suspicious, as if the MARKET was determined to sell that $51.78 level. With the 200-day moving average rolling near $48, a bearish trade with a stop just above that 200-day MA provides a "low risk" and potentially high return type of trade for a short. I'd want a tight stop on a bearish trade right now with the action we've been seeing in bond YIELDS, but if institutions are looking to get out of the stock that got in from the $19-$34 range, this one could have some downside. Weekly averages and sector updates The weekly market watch we do every Friday remains rather perplexing, but extremely fascinating! What in the world is going on with those disk drive stocks? The Disk Drive Index (DDX.X) was the most impressive "technology" related index this week. After a $1 drop last week (that was a pullback?) the index managed to gain 3.2% on the week. Remember our bullish play in Hutchinson Technology (NASDAQ:HTCH) from a couple of weeks ago that got stopped out just under a bullish trader's entry after a terrible earnings report? Hutchinson finished the week at $20.97, which is just about $1 higher than where traders were stopped out of a break-even trade. Even after a horrible quarterly earnings announcement on November 6th. Out of the last 10-week, the Disk Drive index (DDX.X) has been down only 1 week out of the last 10! Read-Rite Corporation (NASDAQ:RDRT) $6.70 +0.29 today. Here's a stock in the disk drive sector for aggressive bulls to keep an eye on. On Monday, shares of RDRT broke a downward trend dating back to January of this year. The stock rallied right up to resistance at $6.70, which is 50% retracement. On Tuesday, the stock stuck its head above that level, but just couldn't make the move higher. RDRT has been trading in a tight range all this week, but next week might be a break-through. This stock can move when it gets going. With Hewlett Packard (HWP) and International Business Machines (IBM) holding the #2 and #3 slot in our Dow Industrials portfolio, it sure seems like the disk drive stocks are exhibiting some of the same type of bullishness. A strong surge from RDRT near-term could see a run to the $9 level and that would be a 34% move from today's close. For an aggressive bull, that may be enough near-term upside potential for bullish entry on a break above $6.70 and a stop below the 61.8% retracement level of $5.80. A momentum trader could also trade the stock at $6.71 and follow with a very tight stop just under today's low of $6.50. It's one of the few stocks in the sector right now where the technicals look like the stock is coming out of a base and tight range of consolidation where risk can be controlled. The only other equity index that really showed some gusto this week to the upside was the Gold/Silver Index (XAU.X). What's up with that? There's no inflation in the economic data at all. Perhaps the action their is just short covering, but it may also be some input from the market that economic growth is on the horizon and that might begin bringing some inflation into the picture. The technicals are still rather bearish for the group, as the 200-day MA and 50-day MA are just ahead at the $55 level. Risk/reward in any type of sector trade right now is 50/50 and I'm not much for trying to pick an extreme bottom so I'm staying away from the group right now. Engelhard (NYSE:EC) $27.95 +1.85% today. Here's a "gold-related" stock that a bullish trader might want to be monitoring near- term. While I'd classify the stocks as a "chemical" stock and be monitoring the Chemical Index (CEX.X) along with the Gold/Silver Index (XAU.X), the company also provides services to precious and base metal customers. Overhead supply is thin and this one has really battled back from a September 21st low of $18.20 to current trading levels of $27.95. A move above the November 23rd relative high of $28.15, could see a test of the 52-week high at $29.20 set on May 17th. I'd consider this a "momentum trader's" stock. Catalyst for further bullishness could come from either the Gold/Silver index catching fire, or further bullishness in the Chemical Index (CEX.X). The CEX.X is battling with a long- term downward trend right here at $430, but a CEX.X move above the $440 level combines with a break to a new 52-week high in EC could have the stock making further gains. If you consider yourself a "bull rider" that is looking for a wild ride, this might fit the bill. This week's sector losers were the Networking (NWX.X) and Fiber Optic (FOP.X) indexes. This makes some sense as both are closely associated and there is some overlap of sector components. Trading in these stocks has been very choppy the last two weeks, but a short-term lower trend is beginning to develop. We've been trying to manage all trades (bullish and bearish) in the technology space with some rather tight stops considering the volatility that these types of stocks have. Cisco Systems (NASDAQ:CSCO) $20.45 +2.81% today. You can't talk "networking" without mentioning Cisco Systems (CSCO). While the Networking Index (NWX.X) traded lower this week, shares of Cisco managed to gain 86 cents a share on the week (+4.38%). The stock has been trading above its 200-day MA for 13 sessions now (broke above 200-day on 11/13 at $19.35) and is beginning to look as if a longer-term corner is being negotiated. Next week, the company will hold "private" meetings with financial analysts and the stock looks to be moving ahead of those meeting today. CEO Chambers has been saying that he's comfortable with guidance and trader talk is that next week's meetings with analysts and any positive comments from Chambers could create further bullishness. Natural gas related stocks as characterized by the Natural Gas Index (XNG.X) suffered a 5.5% loss this week. The thus far mild winter in the U.S. had created little stimulus for natural gas demand and the still present weak economic climate at the industrial level remains a problem. The current debacle that is taking place with Enron (NYSE:ENE) isn't helping things and has stocks in this group whipping around on a daily basis. An experience trader that is watching things closely on an hourly basis can make some money on the swings taking place in the sector, but it is very difficult for us to profile a stock in the group right now. The "Enron impact" and daily news about who has potential negative exposure and who doesn't is about as clear as a bat's eyesight, so we're tending to stay out of the group right now until all of Enron's problems are out on the table. It doesn't look as if the company knew what was going on and I don't think the MARKET has a much better clew right now either. With so much uncertainty, I'd rather not try and blow our account up with a trade in the group. We've talked a lot about bond YIELDS this week, so everyone is pretty much up to date on things there. The 10-year YIELD fell rather sharp this week and this has me cautious on the broader market. This is the "fuse" that I feel has now been lit for a broader market decline near-term. I don't think the recent decline is necessarily "bad news" for stocks longer-term as YIELDS can always reverse themselves, but near-term I think liquidity is going to play a partial role in how the broader market averages perform. We'll watch and comment on how things develop here in the sessions ahead, but this week's lower bond YIELDS did seem to impact some of the broader market averages as the New York Composite (NYA), Dow Industrials (INDU), S&P 500 (SPX.X) and S&P-100 (OEX) all showed declines of 1% or more. The more tech heavy NASDAQ Composite (COMPX) and NASDAQ-100 (NDX) did show gains, but those stocks can often times carry some momentum. If cash/liquidity is the fuel that drives momentum, then bullish traders there most likely want to see some selling in bonds next week. Well.... it's 01:30 AM EST and I'm tired. Going to go home and get some sleep. Will the might Buffalos of Colorado be able to pull off another upset this weekend against the Longhorns of Texas in the Big 12 Championship? Have a great weekend! I'll be out of the office on Monday, but back on Tuesday. Eric Utley will be filling in for me. Jeff Bailey Senior Market Technician ========================= Play-of-the-Day (Bullish) ========================= NEW BULLISH PLAY ================= Sealed Air Corp - SEE - close: 45.90 change: +0.91 stop: 43.99 Company Description Sealed Air is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems including such widely recognized brands as Bubble Wrap(r) air cellular cushioning, Jiffy(r) protective mailers and Cryovac(r) food packaging products. (source: company press release) Why We Like It: We did well with the Bemis (NYSE: BMS) play so we decided to look for other players in the packaging industry. SEE is one of the biggest and we've had our eyes on it for a couple of weeks. The stock has been struggling to breakout above serious resistance at $45 and Friday finally produced the buy signal we were looking for. The move up came on volume of 621K versus the average of just 374K. Technically, we should be able to get by with a stop just under $45 since resistance broken should become new support. However, to give us a little room to get the play going we're going to place our stop just under Thursday's low and price support of $44. The stock doesn't have any new resistance until it reaches the $52 area but we suspect the $50 mark may act as psychological level where traders may decide to take profits. This will be our first target but we're going to try and let SEE run as far as it can. The point-and-figure price objective for SEE is pretty lofty. A bounce off us $45 could be a great entry point for a new long play. We'll adjust our stop as the play moves in our favor. Picked on November 30th at $45.90 Gain since picked: +0.00 Earnings Date 10/24 (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. --------------------------------- JAKKS Pacific - JAKK - close: 24.99 change: -0.01 WHAT TO WATCH: We strongly considering added JAKK as a bullish play this weekend and if I was more of a WWF wrestling fan you probably could have twisted my arm. This toy maker is known for its action figures of WWF personalities (this is just one line of products). The stock has a great trend and shares recently broke out above resistance at $24.00. There was a little bit of profit taking on Friday but buyers stepped in by the close. It looks a little overbought and we'd prefer to jump in near the 10-dma but considering the holiday shopping season there may be buyers looking for positive press during the month to justify the rally or add more fuel for the next move up. --- Movie Gallery - MOVI - close: 24.98 change: -0.17 WHAT TO WATCH: With over 1000 stores in over 30 states, this movie rental company should benefit from both the cold weather and America's new tendency to stay home. We like the recent retest of support at the 50-dma but did not like the failed rally at $26.00 on Friday. Look for another dip back to the 50-dma or wait for shares to close over $26. --- Korea Telecom - KTC - close: 23.25 change: +0.05 WHAT TO WATCH: This stock has produced a powerful run from early October and this last week saw some profit taking after shares hit resistance at $25. The last time KTC fell near its 15-dma it quickly rebounded and short-term traders enjoyed a nice gain. We think KTC may try it again and a move up from here to $25 would not be a bad move. Be prepared for the stock to gap up and down at the open each morning. --- Best Buy Co Inc - BBY - close: 71.39 change: +1.14 WHAT TO WATCH: The retail sector (RLX.X) may be stuck in a two-week trading range but BBY is not going to wait for them. Shares of this technology-focused retail story have been hot through October and November and currently set at 52-week highs. $70 had been overhead resistance and BBY had hurdled it. The question is where to next. Consider a stop under its 10-dma, intermediate horizon players should look to the 15-dma. FYI, if you like BBY but think the price is too high, check out Ultimate Electronics (NASDAQ: ULTE). This stock is making a similar move and just crossed its 200-dma a few days ago. --- Abgenix Inc - ABGX - close: 36.00 change: +0.35 WHAT TO WATCH: The biotech bulls are still fighting and the BTK.X has produced its second day bouncing off its ascending bullish support line. There are several biotech stocks that have strong bullish trends, have broken out above resistance, or are approaching overhead resistance. Check out these stock: GILD, MLNM, ABT, CEPH, BVF. ------------------- More Worth Watching ------------------- We saw several stocks this weekend that really looked attractive or appear to be fast approaching potential entry points for both bullish and bearish plays. The following list provides some of my favorites from the hundreds of charts we looked at this weekend. Good Luck. Bullish Trends -------------- (note, many of these look overbought despite their bullish patterns. Be careful and look for confirmation.) MCDT - McDATA Corp PNRA - Panera Bread Company MRCY - Mercury Computer Systems DLX - Deluxe Corp. GMST - Gemstar-TV Guide Intl. JNJ - Johnson & Johnson (potential reversal) AZO - Autozone Inc ADVS - Advent Software Inc AT - Alltel Corp BRCD - Brocade Communications Systems GCI - Gannett Co Inc INTC - Intel Corp (just crossed major resistance) Bearish Trends -------------- DRXR - Drexler Technology Corp. JCP - J.C. Penny Corp PLCM - Polycom Inc PRSE - Precise Software Solutions AEOS - American Eagle Outfitters COF - Capital One Financial ================ Market Sentiment ================ Stuck in Neutral by Russ Moore Stuck in Neutral. Mixed markets prevailed on this last day of November with the blue chips carrying the load while tech stocks took a day off. The DOW struggled to get out of first gear, ending with a modest gain of +0.2 percent while the NASDAQ slipped -0.1 percent, and the big cap NDX dropped -0.2 percent. Volume was moderate with 1.27 billion shares trading on the NYSE and 1.72 billion shares moving on the NASDAQ. Market breadth was barely negative with losers edging winners by a 16/15 margin on the big board, and 19/18 on the tech index. Airline, biotech, chemical, forest and paper, gold, retail, transportation and oil sectors enjoyed upside moves on the broader markets. Hardware and networking sectors managed to buck the negative trend on the tech side. Trim Tabs reported outflows of 6.0 billion dollars on all equity funds, while U.S. dominated equities had outflows of 4.4 billion dollars. A revision to third quarter GDP put investors in a cautious mood from the outset. However, a reaffirmation of Home Depot’s fourth quarter target helped to offset the negative news. We continue our journey in range-bound land as we look for the next market-moving catalyst. A Bin-laden capture, a big-cap earnings warning, or an economic shocker i.e. employment number, are the likely candidates. VIX Friday 11/30 close: 25.87 VXN Friday 11/30 close: 48.45 30-yr Bonds Friday 11/30 close: 5.27 Total Put/Call Ratio: .63 Equity Option Put/Call Ratio: .56 Index Option Put/Call Ratio: 1.24 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 39.65 Volume/Open Interest Maximum calls: 40/137,163 Maximum puts : 40/111,108 Moving Averages 10 DMA 39 20 DMA 38 50 DMA 34 200 DMA 41 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: 584.80 Volume/Open Interest Maximum calls: 640/5,322 Maximum puts : 500/7,320 Moving Averages 10 DMA 588 20 DMA 583 50 DMA 560 200 DMA 606 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: 1139.45 Volume / Open Interest Maximum calls: 1150/41,365 Maximum puts : 1050/43,554 Moving Averages 10 DMA 1143 20 DMA 1131 50 DMA 1090 200 DMA 1178 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: 9,851.56 Volume / Open Interest Maximum Calls: 98/26,087 Maximum Puts 90/48,246 Moving Averages: 10 DMA 9,878 20 DMA 9,744 50 DMA 9,356 200 DMA 10,157 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: 605.00 Volume / Open Interest Maximum Calls: 620/ 751 Maximum Puts: 540/1,155 Moving Averages 10 DMA 598 20 DMA 585 50 DMA 527 200 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: 518.95 Volume / Open Interest Maximum Calls: 520/ 752 Maximum Puts: 470/1586 Moving Averages 10 DMA 519 20 DMA 518 50 DMA 461 200 DMA 562 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: 396.93 Volume / Open Interest Maximum Calls: 420/406 Maximum Puts: 360/330 Moving Averages 10 DMA 398 20 DMA 395 50 DMA 392 200 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, 11/30. 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 11/13/01 381,539 421,284 (39,745) 1.2% 11/20/01 369,784 415,822 (46,038) 13.6% 11/27/01 371,336 421,405 (50,069) 8.7% Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: (41,144) - 5/1/01 Small Traders Long Short Net %Change 11/13/01 136,047 87,645 48,402 (4.9%) 11/20/01 140,507 86,861 53,646 9.8% 11/27/01 151,317 92,807 58,510 9.1% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 NASDAQ-100 Commercials Long Short Net %Change 11/13/01 38,751 49,257 (10,506) 23.9% 11/20/01 38,042 46,446 (8,404) (20.0%) 11/27/01 37,259 48,315 (11,056) 31.5% 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 11/13/01 11,568 6,505 5,063 55.1% 11/20/01 12,933 8,230 4,703 (7.1%) 11/27/01 12,540 8,359 4,181 (11.1%) 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 11/13/01 24,145 10,204 13,941 (0.6%) 11/20/01 25,033 11,525 13,508 (3.1%) 11/27/01 24,243 11,496 12,747 (5.6%) 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 11/13/01 4,094 12,121 (8,027) (7.8%) 11/20/01 3,609 10,565 (6,956) (13.3%) 11/27/01 4,228 10,630 (6,402) (8.0%) 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 +58,510 +53,646 -50,069 -46,038 Total Open Interest % (+23.97%) (+23.59%) (-6.32%) (-5.86%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -4,228 -6,956 +12,747 13,508 Total Open interest % (-43.09%) (-49.07%) (+35.67%) (+36.94) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +4,181 +4,703 -11,056 -8,404 Total Open Interest % (+20.01%) (+22.22%) (-12.92%) (-9.95%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.We’ve seen the Commercials add to their net-short positions for the second week in a row after being stationary for a month. Is this a bearish sign? Too early to tell, but as we said last week, a failure to go net-long (bullish) is an indication of caution, and one that must be respected by longer- term players. Gold: Last week we highlighted the fact that Commercials reducing their net-short positions by a wide margin could indicate a bounce is around the corner. Looking at the XAU (gold and silver index) this week we see that the index has enjoyed a 5 percent gain. Nothing to get too excited about, however, with the Commercials going net-long (bullish) this week, it’s worth monitoring. 10/30 33,199 contracts net-short 11/06 35,435 contracts net-short 11/13 23,637 contracts net-short 11/20 2,489 contracts net-short 11/27 1,738 contracts net-long Data compiled as of Tuesday 11/20 by the CFTC. ================================================================= 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. 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PremierInvestor.net Newsletter Weekend Edition 11-30-2001 section 2 of 3 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/8321_2.asp ================================================================= In section two: Net Bulls New Bullish Plays: NVDA, EXEL New Bearish Plays: EXAR, FLIR Bearish Play Updates: QCOM, RLRN, WWCA Stock Bottom / Active Trader >New Long-term Play: SEPR New Bullish Plays: SEE New Bearish Plays: MO, SPY Closed Bearish Plays: LFG, PB High Risk/Reward New Bullish Plays: QLGC New Bearish Plays: ITWO Bullish Play Updates: T Closed Bullish Plays: AKLM Closed Bearish Plays: TRDO, VSNX Split Trader - none - ================================================================== Net Bulls (NB) Tech Stock section ================================================================== =============== NB New Plays =============== ---------------- New Bullish Plays ---------------- NVIDIA Corp. - NVDA - cls: 54.64 chg: +1.03 stop: 52.75*see note* Company Description: NVIDIA Corporation, located in Santa Clara, CA, is the global leader in advanced graphics and multimedia processing technology for the consumer and professional computing markets. Its 2D, 3D, video and multimedia capabilities make NVIDIA one of the premier semiconductor companies in the world. NVIDIA offers a wide range of products and services, delivering superior performance and crisp visual quality for PC-based applications such as manufacturing, science, e-business, entertainment and education. (source: company press release) Why We Like It: NVDA has been a trading favorite among active investors and long- term shareholders alike. The company's association with MSFT's Xbox puts it in a growing industry with earnings projections very strong over the next few years. Shares have rallied up to the $55 level in early November only to pull back to 47.50 in a two- week round of profit taking. The stock is back at $55 and looking to breakout above it. On Thursday the big news for NVDA was its inclusion in the S&P 500 index replacing the ailing Enron. S&P 500 inclusion announcements usually bring a lot of attention and buying pressure to the stock. Fund managers who run index funds have to buy shares of the company to correctly track the index. This in turn brings a lot of short-term momentum traders and other portfolio managers who are also trying to track and beat the S&P 500. Thus NVDA saw over 40 million shares in volume on Thursday. Yet according to a strategist at Prudential, S&P 500 index managers only needed to buy 12M shares. It was interesting to note that NVDA was the fourth largest stock in the S&P 400 mid-cap index and those fund managers, who track the S&P 400, will need to sell 5.6M shares as it leaves the index. However, all of this is nice to know but according to Standard & Poor's they don't set a time limit on when fund managers have to buy their shares of a new addition so there could still be institutional money out there looking for the right time to buy. We think NVDA is building a bullish pattern below resistance at $55 and could breakout above it at any moment. We've decided that to protect us from going long before the breakout occurs we won't officially "select" NVDA until the stock trades to $50.45, which is above Thursday's high. If and when we are triggered we'll start the play with a stop at 52.75, five cents under Friday's low. We know we're sacrificing 80 cents but we'd rather wait for the stock to trade above resistance first. There is still a chance the $56 level could prove too strong as it did earlier in the month. Another interesting note bulls will want to know is that as soon as NVDA trades $56.01 it will trigger a triple top breakout buy signal on the point-and-figure chart. More aggressive or longer-term traders might want to consider potential entries now with stops under the $50 level or 10%. Picked on November 30th at $ x.xx <-- see trigger Gain since picked: +0.00 Earnings Date 11/08 (confirmed) --- Exelixis Inc. - EXEL - close: 15.85 change: +0.32 stop: 14.85 Company Description: Exelixis, Inc. is a leading worldwide genomics-based drug discovery company focused on product development through its expertise in comparative genomics and model system genetics. An outstanding team of company scientists has developed multiple fungal, nematode, insect, plant and vertebrate genetic systems. Exelixis' proprietary model systems and comparative genomics technologies address gene function by using biologically relevant functional genomics information very early on in the process to rapidly, efficiently and cost-effectively translate sequence data to knowledge about the function of genes and the proteins that they encode. The company has a significant internal cancer discovery and drug development program, through which a number of compounds are expected to complete screening by the end of the year. Exelixis believes that its technology is broadly applicable to all life science industries, including pharmaceutical, diagnostic, agricultural biotechnology and animal health and the company has active collaborations with Aventis CropScience, Bayer, Bristol-Myers Squibb, Elan Pharmaceuticals, Pharmacia, Protein Design Labs, Scios and Dow AgroSciences, and is building its internal development program in the area of oncology. (source: company press release) Why We Like It: EXEL is a biotech/drug stock that appears to be ignoring the volatility in the DRG.X and the BTK.X. A quick glance at the chart and traders can see that it trades as a biotech company based on its human genome research. The stock has an amazingly strong up trend and the ascending channel has been very strong through the last two months. There was some volatility in the middle of November but this was due to EXEL's announcement that it would be buying Genomica, a genome-software maker. Wall Street appears to have blessed the deal and why not? EXEL is buying Genomica for $110 million in stock when Genomica had slightly over $110 million in assets. We don't see any risk there. Two days ago the stock broke out above resistance between $15.25 and $15.50. It quickly traded to $16 but pulled back. Friday saw the stock run up towards the $16 level again. We believe that EXEL could trade towards the $17.50 to $18.00 level. To start the play we'll put our stop at $14.85 or below the $15.00 support level. Longer-term players may want to look at something under the 15-dma. Aggressive traders may want to look for dips between $15.50 and $16.00 as entries and the rest of us will probably look for the stock to break $16.00. It will be a good idea to keep an eye on the BTK.X. The biotech sector bounced higher on Friday and the bullish trend is still intact but the index is near the bottom edge of its ascending channel. Picked on November 30th at $15.85 Gain since picked: +0.00 Earnings Date 11/13 (confirmed) ---------------- New Bearish Plays ---------------- Exar Corp - EXAR - close: 19.80 change: -0.54 stop: 21.10 Company Description Exar Corporation designs, develops and markets high-performance, high-bandwidth analog and mixed-signal silicon solutions for the worldwide communications infrastructure. Leveraging its industry- proven analog design expertise, system-level knowledge and standard CMOS process technologies, Exar provides OEMs innovative ICs addressing wide area network transmission standards such as T/E carrier, ATM and SONET. Additionally, Exar offers ICs for both the serial communications and the video and imaging markets. The Company is based in Fremont, CA, had fiscal 2001 revenues of $113 million, and employs approximately 288 people worldwide. (source: company press release) Why We Like It: Something seems rotten at EXAR. The semiconductors have been leaders in the market's rally this fall but EXAR has been giving it all back during one of the best Novembers on record. The big move came in mid-November when EXAR broke down below its 200-dma and price support at $22. A few days later it re-tested the 200- dma but this time as resistance and failed. Now the stock has fallen below the $20 price level. What attracts us to EXAR is the clear breakdown and the close under $20. Unfortunately there are a few factors that do make us pause. We put a retracement tool on the chart using the intraday low from 10/03/01 to the intraday high on 11/08/01. Using this as our range to measure the rally, shares of EXAR have pulled back to a perfect 61.8% retracement (Thursday's and Friday's low). This is obviously a level some bulls are trying to defend the stock at and buy the dip. Unfortunately for the bulls the stock closed below the 50% retracement level of 20.28. The 10-dma has been acting as overhead technical resistance for a couple of weeks and this would be a "safer" position to short the stock at but that would require traders to wait for EXAR to trade up and roll over at the $21 level. We would suggest that traders watch the SOX but EXAR doesn't appear to be drawing any strength from the SOX this month (I suggest you watch it anyway). We see this short as a very quick trade and something that will hopefully come to pass in a few days. Our target is $17.00 or the 80.1% retracement level. We're going to initiate the play with a stop at $21.10, a couple of cents over the 10-dma. Normally, we don't like to have this much exposure but in round numbers we're risking $1.30 to make $2.80. We would expect the $20.25 to $20.50 level to suppress any rally attempts and traders should confirm stock direction before playing. We will lower our stop as the stock confirms the current trend again. Picked on November 30th at $19.80 Gain since picked: +0.00 Earnings Date 10/18 (confirmed) --- FLIR Systems - FLIR - close: 40.15 change: -1.84 stop: 42.55 Company Description FLIR Systems, Inc. is a world leader in the design, manufacture and marketing of thermal imaging and stabilized camera systems for a wide variety of thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security. (source: company press release) Why We Like It: The company may have won some recent contracts and is bound to see even more business with the huge home defense and military bill signed by Congress last month but the excitement is over. At least it is temporarily over. We can not find what caused the big dip in mid-November from $45 to $35 but the stock rallied right back to its short-term and 50-dmas and began to roll over again. We feel that it would be "safer" if FLIR confirmed its new negative trend by closing under the $40 level but once it breaks $40 it could fall at a quick pace and no one wants to chase stocks. It would not be a bad idea to set a trigger (mental or otherwise) for the stock to trade under $40 before committing capital or evaluating a bearish entry. The stock is clearly rolling over on a grander scale and we would expect it to find support at $35, which is our target. Thus we are going to start the play with a stop at $42.55. If FLIR trades to $35.00 intraday we'll close the play. FYI, we would encourage traders to check out the point-and-figure chart on FLIR. The bearish price objective looks to be about $18.00 and the stock just added a fresh column of O's. Picked on November 30th at $40.15 Gain since picked: +0.00 Earnings Date 10/25 (confirmed) =============== NB Play Updates =============== -------------------- Bearish Play Updates -------------------- QUALCOMM - QCOM - close: 58.72 change: +0.30 stop: 60.61 Per our update from Thursday, we did see a rally in QCOM early Friday morning but shares rolled over at the $60.00 level (high was 60.05). This looks a lot like a failed rally attempt and bears may begin to lean on the stock soon. We would still feel more comfortable if QCOM was below its 200-dma (currently 57.73) but this support could fall early on Monday. Glancing through the news stories for QCOM today dug up some dirt from the investment banker, CSFB. They noted that QCOM appears to have more downside risk than upside potential at current levels. Gosh, we agree with them. Traders should confirm stock direction if you are looking to start new bearish positions. Our target to exit the position is $52.50. Be aware that a strong news event like the capture or death of Bin Laden could spark a strong market rally so keep your stops in place. Picked on November 28th at $57.29 Gain since picked: -1.43 Earnings Date 11/06 (confirmed) --- Renaissance Learnings - RLRN cls: 24.98 chg: -0.12 stop: 26.11*new* Shares of RLRN are still drifting sideways. The stock is really fighting to hold on to the $25.00 level but we've seen just barely perceptible lower highs the last three days in a row. With the MACD starting to flatten out and the MACD histogram aiming for neutral combined with the 10-dma closing in on the stock price we feel that a move one way or the other is imminent. Thus we're going to lower our stop to $26.11, which is a penny over the Nov. 27th high. If the stock does rally we would expect the 10-dma at 25.75 to act as overhead resistance. Traders should confirm stock direction before committing new capital and we would only do so with shares under $25. Our target is still $20.00 area but we'd probably take a 10% gain at this point. Picked on November 23rd at $25.16 Gain since picked: +0.18 Earnings Date 10/15 (confirmed) --- Western Wireless - WWCA - cls: 24.57 chg: -0.39 stop: 25.51*new* Once again our patience is thrown a small reward as WWCA takes another step down. Shares fell to a low of $24.00 before bouncing higher in the last hour of trading. We feel that as long as the trend is in affect we can continue to snug our stops lower when circumstances permit and eventually we'll either be stopped out for a profit or exit at our target near $20. Today we are pulling our stop down a little bit lower to $25.51, which is just above the 10-dma. Traders still looking for bearish entries can evaluate anything under $25.00. Premier is currently up almost 7% in the play. Picked on November 9th at $26.40 Gain since picked: +1.83 Earnings Date 11/07 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =================================== New Long-Term Non-Tech Bullish Play =================================== Seprecor Inc - SEPR - close: 49.90 change: +0.17 stop: 44.90 Company Description Sepracor Inc. is a research-based pharmaceutical company dedicated to treating and preventing human disease through the discovery, development, and commercialization of innovative pharmaceutical products that are directed toward serving unmet medical needs. Sepracor's drug development program has yielded an extensive portfolio of pharmaceutical candidates that are focused on the treatment of respiratory, urology, and central nervous system disorders. Sepracor's corporate headquarters are located in Marlborough, Massachusetts. (source: company press release) Why We Like It: We are choosing SEPR as a long-term bullish play due to its defensive nature and its longer-term bullish trend as seen in the point-and-figure chart. However, before we discuss the p-n-f chart, a few readers are probably wondering what happened to the stock back in early November when it gapped down and shares went from $54 to $44 in just a few days. At that time the company announced they would be raising $400 million in a private debt offering convertible into SEPR common stock at a $60 price per share. The sell-off was not unusual as investors fear that convertible debt into stock can dilute their own holdings. Some investors actually buy the convertible and short the common stock, which can put even more downward pressure on the equity. Bulls defended the price at the $44 level and SEPR put in a new base over the course of two weeks. SEPR actually has something to offer to the short-term trader as well. The last few sessions have shown the stock coiling bullishly under the $50 resistance level. The stock looks ready to breakout above it and if it does we would expect a run to $54 and eventually $57. Short-term traders should also note the MACD just produced a bullish crossover while the 5-dma's bullish crossover the 15-dma also supports the short-term trend. The company's product line helps make it a defensive play and investors typically move into this sector if the broader markets begin a prolonged pull back. The point-and-figure chart for SEPR actually has a bearish price objective but it is the first sell signal in a bullish trend. A common interpretation usually says that the first sell signal in a bullish trend is the buying opportunity before the next leg up. We already see a current column of X's lending credence to this strategy. If we use the previous bullish price objective SEPR should have a long-term target of $71. However, if SEPR trades above $54 then it will produce a new bullish count with a long- term target of $100. We would conservatively aim for $60 to $65 over the next few months as the p-n-f targets could take a year or more to come to fruition. Picked on November 30th at $49.90 Gain since picked: +0.00 Earnings Date 10/19 (confirmed) =============== AT New Plays =============== ---------------- New Bullish Play ---------------- Sealed Air Corp - SEE - close: 45.90 change: +0.91 stop: 43.99 Company Description Sealed Air is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems including such widely recognized brands as Bubble Wrap(r) air cellular cushioning, Jiffy(r) protective mailers and Cryovac(r) food packaging products. (source: company press release) Why We Like It: We did well with the Bemis (NYSE: BMS) play so we decided to look for other players in the packaging industry. SEE is one of the biggest and we've had our eyes on it for a couple of weeks. The stock has been struggling to breakout above serious resistance at $45 and Friday finally produced the buy signal we were looking for. The move up came on volume of 621K versus the average of just 374K. Technically, we should be able to get by with a stop just under $45 since resistance broken should become new support. However, to give us a little room to get the play going we're going to place our stop just under Thursday's low and price support of $44. The stock doesn't have any new resistance until it reaches the $52 area but we suspect the $50 mark may act as psychological level where traders may decide to take profits. This will be our first target but we're going to try and let SEE run as far as it can. The point-and-figure price objective for SEE is pretty lofty. A bounce off us $45 could be a great entry point for a new long play. We'll adjust our stop as the play moves in our favor. Picked on November 30th at $45.90 Gain since picked: +0.00 Earnings Date 10/24 (confirmed) ---------------- New Bearish Plays ---------------- Philip Morris Co - MO - close: 47.17 change: +0.19 stop: 48.11 Company Description Philip Morris is the world's largest tobacco firm. It owns half of the US tobacco market and the Marlboro name is one of the world's most recognizable brands. It also makes the Benson & Hedges, Parliament, and Virginia Slims brands. Outside of tobacco, Philip Morris owns 84-percent of Kraft Foods, the world's second largest food company that makes leading brands such as Jell-O, Kool-Aid, Maxwell House, and Post cereal. In 2000 the company bought Nabisco, adding brands such as Chips Ahoy, Oreo, and Ritz to Kraft's food portfolio. In addition, Philip Morris owns Miller Brewing, the second largest US beer producer. (source: company press release) Why We Like It: It's going to take more than a new name to help shares of MO. Those of you who already know, please bear with us but Philip Morris Companies Inc. decided a few weeks ago to change their name to "Altria". According to reports, the name is loosely based on the Latin word "altus" which means "high". Maybe MO's management is planning for a day when the U.S. gov't approves the legalization of marijuana because they are certainly not talking about their stock price. Speaking of their stock price, we put a channeling tool on the chart from its peak back in mid-October. Wouldn't you know it. Shares of MO just topped out near the top of the channel. True technical traders would probably put their stop above today's high. That might work but we're going to give MO a little more room and place ours at $48.11, which is above the 200-dma. Comparing both the daily chart and the point-and- figure chart, which shows a column of O's just breaking its bullish support line, we surmised that investors may be selling the stock since there is plenty of time to pick it up again later for its dividend. We are going to target the $43 area but short- term traders may want to get out at $44. The stock doesn't move that fast unless it's going down but we still expect this could take a couple of weeks to reach our goal. Check out this weekend's market wrap for Mr. Bailey's comments on MO. Picked on November 30th at $47.17 Gain since picked: +0.00 Earnings Date 10/17 (confirmed) --- S&P 500, SPDRS - SPY - close: 114.05 change: -0.82 stop: 115.05 Company Description Essentially, the S&P 500 SPDRS is a tracking stock that allows investors to trade the S&P 500 index like a stock instead of trading the SPX options or actually buying the S&P futures contracts. The SPY trades just like a stock. Why We Like It: We have decided to put our money where our mouth is, theoretically speaking of course. If you've been reading our market commentary then you know that we're concerned about the market's failure to overcome resistance. A market pull back could be in the cards and we want to be ready to profit from it. There are a number of analysts that are calling for a retest of the September lows. We're not that bearish, at least not in this write up, but a small three or four day dip wouldn't hurt. If we get a few 4Q earning warnings next week traders could use them as an excuse to sell and look for new bullish entries on the bounce or at support. Looking over the hundreds of charts that we normally do on the weekend did reveal just how many stocks are looking tired and trade precariously close to support already. We are going to target the $110 level on the SPY with a stop at $1.00 above Friday's close. Confirm market direction before starting any new positions. Picked on November 30th at $114.05 Gain since picked: +0.00 Earnings Date N/A =============== AT Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Landamerica Finl Group - LFG - cls: 24.50 chg: -0.50 stop: 25.01 It appears that we were too conservative with our stop at $25.01. If we had used the 10-dma as our guide to place our stop then we might still be in this short play. The stock gapped up to $25.15, traded to a high of $25.23 and then sold off throughout the rest of the day. The close under $25.00 should be encouraging for bears still in the play. Take note that the 10- dma is 25.13 and LFG did trade a little above it. A more aggressive approach would be to use the 15-dma, which LFG has not touched in weeks, as a placement guide for your stop. Needless to say we are stopped out and will look for new strategies elsewhere. FYI, traders should take note of the IUX.X insurance index which reversed its breakout above the 200-dma on Thursday. Picked on November 27th at $23.74 Gain since picked: -1.27 Earnings Date 10/24 (confirmed) --- Panamerican Bev Inc - PB - cls: 14.55 chg: +0.24 stop: 14.65 Did we say $14.65 as our stop? We meant to say $14.66. Okay, we're kidding but that corner of our mind that really enjoys the X-files is starting to think there is a conspiracy out there. PB showed a little volatility early in the morning with a quick trade up to $14.50 before dipping back to $14.20. However, by mid-afternoon PB traded up to $14.65, our stop. We double checked CCE's performance and the stock had rallied up to its 200-dma before pulling back. We are a little disappointed, as we're still negative on the group. Traders still interested in following bearish strategies on PB can look for the 10-dma at 14.80 to act as resistance. Picked on November 23rd at $14.95 Gain since picked: +0.30 Earnings Date 10/30 (confirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ============ HR New Plays ============ ----------------- New Bullish Plays ----------------- QLogic Corp - QLGC - close: 49.54 change: -0.40 stop: -see notes- Company Description QLogic Corporation is changing the way the world views Storage Area Networks (SANs), serving OEMs, VARs and system integrators with the broadest line of SAN and NAS infrastructure components in the industry. With over 15 years of enterprise storage experience, the company delivers a full range of Fibre Channel switches, PCI host bus adapters, controller silicon and management chips for systems and peripherals, as well as the QLogic Management Suite of SAN management software solutions. (source: company press release) Why We Like It: Okay, so we're expecting a market pull back. Then why are we adding QLGC as a long play? The trend on the stock is still bullish and until the market pull back does occur we could get a quick move higher in both QLGC and the SOX index. Traders should look over the SOX. The group did trade lower on Friday but the current up trend has not been broken. The index could trade up to the 550 level again and that could spur QLGC to new four-month highs. Shares of QLGC have been fighting with the $50 resistance level for over four weeks. This has prompted us to add a trigger for this bullish play. Friday's high was 50.59 but bulls were unable to keep it above the $50 mark. Therefore we will set our trigger at 50.65. If we are triggered, we'll start the play with a stop at 47.90 or a little more than 5%. Our target is near $60 but if the market does begin to rollover we may try and get out near the $55 area. There is always the possibility of a market pull back and QLGC still breaks out. Picked on November 30th at $ x.xx <- see trigger Gain since picked: +0.00 Earnings Date 10/23 (confirmed) ---------------- New Bearish Play ---------------- I2 Technologies - ITWO - close: 5.74 change: -0.40 stop: 6.26 Company Description For more than a decade, i2 has been a leader in supply chain management. i2 has extended its technology and expertise to Dynamic Value Chain Management -- solutions to help companies collaborate on decision-making processes not only across functions within a single company, but across multiple companies. i2 solutions span the value chain interactions, including customer relationship management, supply chain management and supplier relationship management. (source: company press release) Why We Like It: It is easier to see on a 30 minute or hourly chart but ITWO appears to have created a head-and-shoulders pattern through the majority of November and Friday's close just broke the neckline. The breakdown below the $6.00 price support level and the close below Nov. 12th's intraday low of $5.80 looks pretty bearish as well. Normally, we would expect some support from the 50-dma which is trading near 5.25. Plus there could be some price support near 5.50. However, if we're trading from the head-and- shoulders pattern then we believe that ITWO could reach the $4.50 level. If the sector (GSO.X) breaks down below support at 170, ITWO's descent could be magnified or accelerated. We considered putting a stop above Thursday's high of $6.40 but felt that a stop at $6.26 should work considering the previous support level of $6.00 should now act as resistance. As usual, confirm stock direction before playing. Picked on November 30th at $ 5.74 Gain since picked: +0.00 Earnings Date 10/16 (confirmed) =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- AT&T Corp - T - close: 17.49 change: -0.13 stop: 16.65 After waiting months and months for high-speed cable Internet service to come to my neighborhood I am within hours of a possible shutdown of service. Yes, I am an ExciteAtHome cable subscriber. AT&T offered $307 million for the beleaguered company but creditors claim this is below fair market value. Evidently there is a midnight deadline for some sort of deal to be made. No one seems to know if AtHome will decide to unplug its 4 million subscribers or leave them turned on while the company negotiates with AT&T, Comcast and Cox Communications all of which have subscribers that receive cable-Internet access through AtHome. Readers should recognize that both Comcast and Cox are both bidders for AT&T's broadband cable division. As an end-user who has waited a very long time for this service I agree with FCC Chairman Michael Powell who feels that to just pull the plug would be very unfair to the consumer and very detrimental to the cable-Internet industry. AT&T has tried to let their subscribers know that they are working on an alternative while pursuing discussions with AtHome. Shares of T spent much of the day trading higher until someone flashed the "sell" signal in the last hour and prices plummeted to close below our crucial $17.50 level. We would encourage traders to be cautious. Depending on your tolerance for risk one could look for potential entries above the 200-dma (currently 17.30) or the $17.00 level. Don't forget that Monday is supposed to be a big day for AT&T. Wall Street is expecting a revised bid from Comcast and two new bids from AOL Time Warner and Cox Communications. Picked on November 29th at $17.62 Gain since picked: -0.13 Earnings Date 10/23 (confirmed) =============== HR Closed Plays =============== -------------------- Closed Bullish Plays -------------------- Acclaim Entertainment - AKLM - close: 5.47 change: -0.19 stop: 5.49 As the magician waved his magic wand over his hat, the audience waited breathlessly to see what had been plaguing the stock in a sector that was seeing rapid gains. Don't like the colorful version? A few days ago we felt the game makers for the likes of Nintendo, Sony and Microsoft might be a good place to look for a bullish play. We chose AKLM for its low stock price and strong trend. However, the last couple of days had shown the stock slipping lower while its industry rivals were trading higher. There had not been any news that ATVI or ERTS was stealing market share from AKLM so we were perplexed by the lack of strength. AKLM spent most of Friday morning in a range between 5.52 and 5.70 until a news story about AKLM and its auditors hit the wires. Accountants at KPMG offered their opinion about AKLM being a going concern. In ten minutes shares of AKLM fell from the $5.70 level to $3.79, losing 33% of its value. The stock battled back to only lose 19 cents but the damage was done. Evidently AKLM has been in some rough times and if revenues don't come in as projected they will have to seek additional funding or cut expenses including staff. Those interested in the sector may want to keep theirs eyes on ATVI (+7% today) and ERTS (+4% today). We don't advise chasing either of these stocks but keep your eyes on them for the appropriate breakouts or dips. We closed the play on AKLM with a 51-cent loss. Picked on November 23rd at $ 6.00 Gain since picked: -0.51 Earnings Date 10/24 (confirmed) -------------------- Closed Bearish Plays -------------------- Intrado Inc - TRDO - close: 27.35 change: +1.45 stop: 27.51 This has not been a good Friday for us. It feels more like Friday the 13th rather than the 30th. Shares of TRDO took off today in a strong rally through the top of its trading channel and its 5, 10, and 15-dmas. Was there any news for a company that provides 911 operations support systems services? No, there wasn't. We glanced at another leading stock in this industry and there was little change in the stock price. Shares did find resistance at the $28 level but that was more than high enough to stop us out at 27.51 for a 28-cent loss. We did make one interesting observation. Connect a descending bearish line of resistance from the intraday high on October 26th, 2001 to today's high and you'll see that it acts as resistance near the intraday highs on November 7th and 19th as well. TRDO could still make a good short but bears will need to be vigilant with their stops and entries. We would target the $24 - $25 level. Picked on November 23rd at $27.23 Gain since picked: -0.28 Earnings Date 10/25 (confirmed) --- Visionics Corp - VSNX - close: 12.70 change: +1.20 stop: 12.41 Yes, VSNX gave us yet another surprise move in our bearish high risk/return section. However, this time we have a culprit. Fellow security company INVN won a hefty airport security contract and traders bid INVN up 24% by Friday's close. Not wanting to be left out in the cold should VSNX announce a similar contract win, bulls jumped into shares of VSNX in the last hour of trading pushing the stock up over 10%. We are very suspicious of today's move without a positive catalyst directly affecting VSNX. As it stands now Premier is out of the play with a 46-cent loss but we'll keep our eye on it for future developments. Picked on November 27th at $11.95 Gain since picked: -0.46 Earnings Date 11/14 (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. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Weekend Edition 11-30-2001 Section 3 of 3 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/8321_3.asp ================================================================= In section three: Market Watch for Week of December 3rd - Major Earnings - Stock Splits - Economic Reports 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) ================================================================= ================================================== Market Watch for the week of December 3rd ================================================== ------------------------ Major Earnings This Week ------------------------ Symbol Company Date Comment EPS Est ------------------------ MONDAY ------------------------ JDEC J.D. Edwards Mon, Dec 3 -----N/A----- 0.04 JWa John Wiley & Sons Mon, Dec 3 Before the Bell N/A ------------------------ TUESDAY ------------------------ ABS Albertson's Tue, Dec 4 Before the Bell 0.44 AZO AutoZone Tue, Dec 4 After the Bell 0.60 CCTVY Carlton Comm. Tue, Dec 4 -----N/A----- N/A NAV Navistar Inter. Tue, Dec 4 Before the Bell 0.08 ------------------------ WEDNESDAY ------------------------ SNPS Synopsys Wed, Dec 5 After the Bell 0.36 ------------------------ THURSDAY ------------------------ FCEa Forest City Enter. Thu, Dec 6 -----N/A----- 0.90 IDT IDT Corporation Thu, Dec 6 After the Bell N/A NSM National Semi. Thu, Dec 6 -----N/A----- -0.31 SXC 6 Cont. Ho. & Res. Thu, Dec 6 -----N/A----- N/A ------------------------ FRIDAY ------------------------ PNY Piedmont Natural Gas Fri, Dec 7 -----N/A----- -0.42 ------------------------------- Upcoming Stock Splits This Week ------------------------------- Upcoming Stock Splits This Week... Symbol Company Name Splits Payable Executable EPIQ EPIQ Systems 3:2 11/30 12/03 PSC Phil. Suburban 5:4 12/01 12/04 ASFC Astoria Financial 2:1 12/03 12/04 PBG Pepsi Bottling 2:1 12/04 12/05 CACI CACI Intl 2:1 12/06 12/07 LYTS LSI Industries 3:2 12/06 12/07 ITG Investment Tech 3:2 12/07 12/10 -------------------------- Economic Reports This Week -------------------------- There may be a number of economic reports out this week but Wall Street will probably spend much of its time betting, talking, and arguing over the Fed's decision at the FOMC meeting on Dec. 11th. Earnings have dwindled to a handful of companies but we approach that wonderful time of year called "warnings season" which always precedes earnings season. There may be a few corporations that surprise investors early in December. Monday, 12/03/01 ---------------- Auto Sales Nov Forecast: 6.8M Previous: 7.8M Truck Sales Nov Forecast: 7.9M Previous: 9.8M Personal Income Oct Forecast: 0.1% Previous: 0.1% Personal Spending Oct Forecast: 1.9% Previous: -1.8% NAPM Index Nov Forecast: 41.9 Previous: 39.8 Construction Spending Oct Forecast: -0.5% Previous: -0.4% Tuesday, 12/04/01 ----------------- None Wednesday, 12/05/01 ------------------- NAPM Services Nov Forecast: 42.5 Previous: 40.6 Thursday, 12/06/01 ------------------ Initial Claims 12/01 Forecast: N/A Previous: 488K Productivity-Rev. Q3 Forecast: 2.6% Previous: 2.7% Factory Orders Oct Forecast: 1.0% Previous: -6.2% Friday, 12/07/01 ---------------- Nonfarm Payrolls Nov Forecast: -210K Previous: -415K Unemployment Rate Nov Forecast: 5.6% Previous: 5.4% Hourly Earnings Nov Forecast: 0.2% Previous: 0.1% Average Workweek Nov Forecast: 34.0 Previous: 34.0 Consumer Credit Oct Forecast: $1.5B Previous: $3.2B ================== 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 CCL Carnival Corp 26.11 +0.54 CTX Centex Corp 45.19 +3.29 LEN Lennar Corp 37.20 +1.20 LEA Lear Corp 35.75 +0.57 DHI D.R.Horton Inc 28.02 +2.01 MDS Midas Inc 12.45 +1.15 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change ATYT Ati Technologies 12.25 +1.30 AW Allied Waste Ind. 11.84 +1.10 EVC Entravision Comm. 12.00 +1.06 GETY Getty Images Inc 19.85 +1.30 FLWS 1-800-Flowers.com 14.46 +1.21 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change HD Home Depot Inc 46.65 +2.63 LOW Lowe's Companies Inc 45.31 +1.79 AT Alltel Corp 65.08 +1.03 ERTS Electronic Inc 60.46 +2.45 BDK Black & Decker Corp 37.04 +1.49 NDN 99 Cents Only Stores 38.50 +1.44 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change RTRSY Reuters Group 57.80 -2.00 BSC Bear Stearns Co 57.50 -2.30 DBD Diebold Inc 38.79 -1.53 SCHL Scholastic Corp 43.45 -1.05 LE Land's End Inc 45.95 -4.23 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- DHR Danaher Corp 58.65 -1.55 WL Wilmington Trust Corp 60.60 -1.34 TXI Texas Industries Inc 34.75 -0.44 TALX Talx Corp 21.41 -0.30 ================================================================= 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.
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