PremierInvestor.net Newsletter Wednesday 12-05-2001 section 1 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/6716_1.asp ================================================================= In section one: Market Wrap: A "nice" bullish rally? Watch List: ISSX, CNXT, RYL, INTU, SUNW, JCI, ATML, AMTD, MGAM, PLAB, SLOT, RATL, PCAR, UVN, TGT, MCTR, SEAC, LAMR, NETA, VAL, XLK, IBM, IVGN, VAR, IMMU, SRV Market Sentiment: Tech tornado Play-of-the-Day: -none- ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 12-05-2001 High Low Volume Advance/Decline DJIA 10114.29 +220.45 10142.32 9891.35 1.75 bln 2063/1098 NASDAQ 2046.84 + 83.74 2056.81 1980.30 2.72 bln 2420/1272 S&P 100 597.70 + 12.07 599.38 585.63 Totals 4483/2370 S&P 500 1170.35 + 25.55 1173.62 1143.77 RUS 2000 479.42 + 11.58 480.43 467.84 DJ TRANS 2612.49 + 77.64 2618.47 2531.40 VIX 24.79 - 0.54 24.79 23.62 VXN 47.44 - 0.60 48.90 46.57 TRIN 0.34 Put/Call 0.44 ----------------------------------------------------------------- =========== Market Wrap =========== A "nice" bullish rally? What was that? I think last night's and this morning's thoughts of a "nice" bullish rally for stocks on the premise of what a higher bond YIELD might have on things was a bit of an understatement. Today, bond YIELDS unraveled and stocks surged, as the Dow Industrials broke above the psychological resistance level of 10,000 and vaulted to their 200-day moving average of technical resistance just before session's end. Dow Industrials Chart - In the first hour of trading, the Dow Industrials (INDU) sliced through psychological resistance of 10,000. At 03:30 PM EST, the Dow traded the 10,142 level, which was just shy of the 200-day moving average. Subscribers still need to be cautious of the technicals here, but the Dow has got some momentum. Momentum that is similar to that found in mid-April of this year when the Dow rallied right up to its 200-day MA. What followed was a period of consolidation before the next leg higher. Look for bond market action to play an important role going forward, just as it seemed to do today. The 200-day MA didn't just come into play in the Dow Industrials. Today we saw the very same 200-day moving average present itself as resistance in the S&P 500 Index (SPX.X). Also interesting is a level of retracement pointed out in the November 26th market wrap near 1,175. S&P 500 Index Chart - A move above the 1,175 level in the S&P 500 (SPX.X) now sets the stage for bullishness to 1,318 (let's say 1,300 as conservative). Again... a good test of technical resistance. Traders will note the two different colors of retracement. The "red" is a rolled up retracement which was actually anchored at the $939 level and the 50% retracement level for the "red" retracement was fit at the 1,552 level. This is a more advanced technique of retracement based on longer-term trading (see Nov. 26th market wrap), but its very interesting how the 19.1% retracement from the red bracket, along with the 200-day MA seemed to come into play today. I "turned off" the red 0% and 50% levels as their numbers overlapped the blue levels and made it difficult to read the chart. Not to confuse things, but it is IMPORTANT for subscribers to read and understand the November 26th market wrap. Retracement levels on the above chart are from that commentary. What's also quite interesting is the "normal" retracement we've been using prior to that commentary on November 26th. This will help solidify how important current trading levels are as it relates to the S&P 500 Index. S&P 500 Index (SPX.X) - near-term retracement The above chart is that of the SPX with retracement we have been using for months. Here we used "fitted" retracement. Look how important the 1,170 level was back in July and August. During that time, the 1,170 level sure acted like support, but when broken to the downside, all heck broke loose! Now we've got a rally going and today's close came right at the 1,170 level! There's an old saying in technical analysis that "support broken becomes resistance." If equity bears are on the cusp of caving in the action point for further upside may well be the 1,175 level. A trade at 1,175 may trigger some extreme "buy programs" and really get things rolling for the bulls. Oh my! Another 200-day moving average! It's amazing isn't it! Is it a coincidence that the 10-year YIELD rallied right up to its 200-day moving average? I guess you could call it a coincidence, but only if you don't think that bond market action has anything to do with liquidity and stock market action. 10-year YIELD Chart - We thought this morning's higher YIELD in the bond market might hold good things in store for stocks today, and boy did it ever! The ferocity that YIELD jerked higher gives hint that there was some "oomph" behind the selling. Equity trader are really starting to get the feeling that a move above the 5.0% level could see further unraveling in the bond market and perhaps set the stage for a new bear market in bonds and a bull market for stocks. There's still so much time and lots of work to be done! Often times, a day like today will have an investor/trader feeling like they've missed the boat. Believe me... there's a lot of work yet to be done for trader/investors to claim a new bull market. While I view today's action as very bullish, there are still some levels of resistance that need to be violated to the upside. Many levels are "longer-term" trends and moving averages. There are plenty of stocks, with plenty of upside left in them, that we have yet to trade. Powerwave Technologies - Those that think the bull market has left them behind, need only look at some longer-term charts. The weekly chart of Powerwave Technologies (NASDAQ:PWAV) looks as if the stock is still in a base building phase. This one still looks like a bull would be very early, but a break above the $21.50 level could really have the stock on the move. Don't feel like you need to chase stocks that you feel are overextended or might pull back. There are plenty of stocks still in bases. Should bullishness continue to build in the markets, there will be plenty of opportunities and plenty of upside to participate in. The worst thing a "bullish only" investor/trader can do right now is dump their entire account back into stocks at what could be a near-term level of resistance, get a pullback in the market and then get discouraged and pull the plug on things. The best strategy remains to slowly leg into positions, be willing to take profits off the table when targets are achieved (bullish or bearish) and trade with discipline. Find a pattern that is working in your favor and play that pattern until it fails you. Once failed (eventually pattern will fail), assess what went wrong and look to correct things. Looking ahead Tomorrow, an equity bull wants to see some follow through in selling for bonds. I would be somewhat surprised if we see the same type of conviction behind further bond market selling, but you just never know. I want to approach each day with the "anything can happen" attitude right now. I think subscribers know what to look for based on the different retracement levels and moving averages discussed above, along with future action in the bond market. To think that "valuation concerns" talk in the media is going to go away anytime soon, would be stretching things. We're going to hear that type of talk for the next couple of months. It will take some blowout number in a technology stock like we witnessed today in shares of Autozone (NASDAQ:AZO) $79.15 +18.8% in the "auto parts" category to get bears back into hibernation. I can't tell you the number of times I heard that Intel (NASDAQ:INTC) was overvalued in 1998 and 1999 as the stock doubled in price, then doubled again a year later. Eventually, the stock was trading at an "attractive multiple" and that's when it was time to be concerned. In the end, the only thing that mattered for a trader/investor was to monitor their risk and levels of support. When a stock starts doing something that most think is unwarranted, that's the time to be concerned. Recently we profiled shares of Intel as a short on PremierInvestor.net and dropped the play at a $0.65 cent loss. While we were wrong on Intel, we weren't wrong on our stop. I'm all for "listening" to the media, but I want to test the reports against what I observe in charts we look at on a daily basis. Does the MARKET agree/disagree with what we hear in the media? In the end, it's only what the MARKET thinks of the stock we're short or long that really matters. Jeff Bailey Senior Market Technician ========== 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. ---------- Internet Security Systems - ISSX - close: 37.00 change: +3.10 WHAT TO WATCH: There is no way of know what direction the markets will head tomorrow morning but if the momentum continues bulls could take the indices higher. If this occurs, ISSX might be able to reach resistance at $40 (a 10% move). If profit taking ensues, then traders should be looking for shares to find support between $34.50 and $35.00. The 200-dma could be a factor at 33.25 but that's strong move down from here. Trade cautiously. --- Conexant Systems - CNXT - close: 17.50 change: +1.19 WHAT TO WATCH: One of the many chip stocks that helped lead the market higher today, CNXT has broken out to new 10-month highs. The stock "should" see resistance at $19.00 and $20.00 (in addition to the $18.00 already discovered today). The huge volume would make one think there is more upside in the current move higher. If there is, trade very carefully. We would look for the stock to pull back to support at $16.00, or worse case $15.00. Below $15.00 we're not interested and we'll have to re-evaluate. --- Ryland Group - RYL - close: 66.70 change: +2.80 WHAT TO WATCH: There was talk today about the home building sector and RYL has been on quite a roll lately. The stock looks very overbought in the short-term but the stock just broke out to a new 52-week high. If one were to draw a trend line from the peaks starting back in February 2001, it would tell us that RYL might be able to trade to $72.50. We'd feel more comfortable buying on a dip (bounce) back at $62.50 but the volume today could be telling us that the momentum is not over yet. Be cautious. --- Inutit Inc - INTU - close: 44.88 change: +1.15 WHAT TO WATCH: The software sector has made a huge move from the September lows and INTU has enjoyed a nice rebound. The stock ran from under $30 to almost $47.50 in early November. Since that peak, INTU has retraced to find new support between $39 and $40. This last week has uncovered a new rally attempt and shares are trading under the $46 resistance level. Traders should watch INTU for a potential entry point. We would prefer to buy on the dip near $43. Expect resistance at $46 and $47.50 and keep your eye on the GSO.X. Keep in mind that INTU receives a large portion of their income from its financial software and tax filing products. With the end of the year in sight, there could be a renewed interest in the stock. --- Sun Microsystems - SUNW - close: 14.57 change: +0.83 WHAT TO WATCH: Huge volume in SUNW pushed shares higher today, though the advance still leaves the stock under its 200-dma. If the news from Intel’s mid quarter conference tomorrow suggests that a bottom has in fact been reached, the entire tech sector may add a third day to the current rally. MACD has flattened out and, though Stochastics indicate shares are slightly over bought, fundamentals and the simple fact that tech appears to be back, might just portend further advances in the former high flyer. We would look for SUNW to breakthrough its 200-dma just above the $15 mark or bounce off support at $14. The latter may be an entry point. Only aggressive traders should consider chasing it higher. --- Johnson Controls - JCI - close: 80.96 change: +2.06 WHAT TO WATCH: Two days of increasing upside volume has allowed JCI to recapture its 10-dma and the $80 level. Now the stock is threatening short-term upside resistance at 81.75. Stochastics have crossed over with yesterday’s bounce and MACD suggests that a new upward sloping trend could be at the helm. The 52 week high of 81.77 isn’t far away and if the current momentum holds, it should be easily attainable. JCI is a large conglomerate and if you feel like the market is getting away from you this may be a stock to watch that hasn't move too far yet. We would wait for shares to close above $82.00 to make sure the breakout over resistance is not a fake out. JCI recently increased its dividend and is scheduled to report earnings on January 18th. --- Atmel Corp. - ATML - close: 8.70 change: +0.46 WHAT TO WATCH: If you're like many traders, you probably feel like the chip sector has taken off without you. Dozens of semiconductor stocks are up huge over the last two days and going long now could prove harmful. There is a money rotation theory that believes traders may decide to take profits in chips stocks that have made huge gains over the last couple of days and rotate into other chips stocks that have been lagging the group. If this is true then ATML could attract some attention even if the SOX decides to pull back. This isn't to say that ATML hasn't made any gains. On the contrary, the stock has rebounded nicely from price support at $8 bolstered by its 50-dma. Very short- term or aggressive traders may want to aim for the 12% difference between current levels and overhead resistance at $9.75. Beyond that gains become difficult as the $10 mark could prove to be a sturdy psychological mark to tackle made even tougher by the 200- dma just above it. --- Ameritrade - AMTD - close: 6.48 change: 0.55 WHAT TO WATCH: A bull market is just what the online brokerage industry has been waiting for. This strength in the tech market could resupply the long vanquished commissions that once freely flowed into AMTD’s bottom line. The stock cruised through short- term resistance at the 10-dma, pushing past the 200-dma of 6.36 on strong volume. While we don’t see AMTD returning to 10.00 anytime soon, if shares can surpass 7.00, buyers may run the stock up to 8.00. Either way, small money moves still translate into big percentage gains. Keep your eye on two things. No. 1, watch the $7.25 to $7.35 level for resistance. No. 2, watch the XBD.X securities broker/dealer index for confirmation. Don't forget your stop! --------------- CHECK THESE OUT --------------- As you may have guessed, with a huge market wide rally on massive volume, there were dozens upon dozens of bullish breakouts and patterns emerging. We have listed a few worth looking at for continuations of the current trend or for pull backs and possible entry points on the bounce. Near the bottom are a few bearish developments for short traders. Bullish Moves ------------- (legend: rez = overhead resistance) MGAM - great trend, very overbought. PLAB - nice breakout over $29 and $30, still resistance close by. SLOT - nice rebound over 62.50, rez at 65.00 and 66.50. RATL - love the bounce off 15-dma and breakout over 200-dma & $20. PCAR - is the cup and handle over? rez at $65, need confirmation. UVN - great trend, not too volatile, rez @ $40. entry at $35-$36? TGT - retail is hot. rez at $40, wait for breakout. MCTR - I'm speechless. Short-squeeze? strong vol. Very High Risk! SEAC - big move today. Prefer a pull back to $32. LAMR - nice break over 200-dma. rez at $40, possible buy at $38. NETA - beautiful breakout. traded right to a fitted retracement level of resistance. prefer to buy a bounce at $23.50 or $24. VAL - nice move over $40. definitely worth watching. XLK - another breakout over price rez ($25) and 200-dma (25.50) volume was very strong. not a fast price mover. IBM - incredible breakout. in blue sky territory. Bearish Moves ------------- IVGN - failed rally at rez of $70, closed below 200-dma VAR - closed below its 200-dma and 50-dma IMMU - bearish engulfing candlestick pattern. tech. support @ $22. SRV - 2nd day below 200-dma, could fall to $5.00? ================ Market Sentiment ================ Tech tornado by Russ Moore Tech tornado. Investors were swept up in the tech buying euphoria, pushing the NASDAQ through the 2000 mark and taking the other major indices along for the ride. The NASDAQ added +4.3 percent, hitting levels last seen in August. The big-cap NDX was up +5.3 percent and the DOW gained +2.2 percent. Volume was extremely heavy, (another positive sign for those of bullish persuasion), with the NYSE seeing 1.72 billion shares trade hands, and the NASDAQ moving 2.69 billion shares. Needless to say, market breadth was positive as winners outpaced losers by a 21/11 margin on the big board and 24/13 on the tech index. Chip, networking, software, and hardware sectors were the biggest winners on the tech side while brokerage stocks enjoyed healthy gains on the broader markets. Drug, healthcare and insurance sectors gave back a little. Monday’s economic data was considered a positive sign going forward but was tempered by non-market news that prevented a rally on Wall Street. Today, investors received another piece of upbeat news with the NAPM non-manufacturing index rising to 51.3 percent versus last month’s 40.6. Keep in mind that a number above 50.0 is indicative of economic expansion. We spoke yesterday of the NASDAQ’s ability to lead the markets to higher ground and we certainly saw evidence of that today. The DOW and SPX, currently sitting just under their 200DMA’s will need to clear those hurdles in order to keep this rally going. The bulls have entered the china shop, and the bears are the china. Yes folks, the bulls are on a roll and, if the non-tech indices can crack their respective resistance levels, we might be in for a sustained rally. VIX Wednesday 12/05 close: 24.79 VXN Wednesday 12/05 close: 47.44 30-yr Bonds Wednesday 12/05 close: 5.36 Total Put/Call Ratio: .62 Equity Option Put/Call Ratio: .50 Index Option Put/Call Ratio: 1.64 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 42.85 Volume/Open Interest Maximum calls: 40/146,900 Maximum puts : 40/118,745 Moving Averages 10 DMA 39 20 DMA 39 50 DMA 35 200 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: 597.70 Volume/Open Interest Maximum calls: 640/5,513 Maximum puts : 500/7,817 Moving Averages 10 DMA 587 20 DMA 586 50 DMA 565 200 DMA 605 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: 1170.35 Volume / Open Interest Maximum calls: 1150/45,212 Maximum puts : 1100/50,013 Moving Averages 10 DMA 1144 20 DMA 1138 50 DMA 1099 200 DMA 1176 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: 10,114.29 Volume / Open Interest Maximum Calls: 98/26,190 Maximum Puts 90/47,812 Moving Averages: 10 DMA 9,881 20 DMA 9,815 50 DMA 9,442 200 DMA 10,143 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: 609.63 Volume / Open Interest Maximum Calls: 620/ 636 Maximum Puts: 540/1,160 Moving Averages 10 DMA 600 20 DMA 589 50 DMA 538 200 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: 585.80 Volume / Open Interest Maximum Calls: 520/ 754 Maximum Puts: 470/1563 Moving Averages 10 DMA 528 20 DMA 525 50 DMA 470 200 DMA 560 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: 395.33 Volume / Open Interest Maximum Calls: 420/406 Maximum Puts: 360/330 Moving Averages 10 DMA 399 20 DMA 395 50 DMA 394 200 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. ========================= Play-of-the-Day (none) ========================= No play of the day for Thursday, Dec. 6th, 2001. With the huge rally in the markets, many of our long plays are looking extended and if the rally continues the short plays are probably not the best place to be. ================================================================= 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 Wednesday 12-05-2001 section 2 of 2 Copyright © 2001, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= To view this email newsletter in HTML format with imbedded charts and graphs, click here: http://www.PremierInvestor.net/htmlemail/6716_2.asp ================================================================= In section two: Net Bulls Bullish Play Updates: EXEL, NVDA, NXTL Closed Bearish Plays: QCOM, RLRN StockBottom/Active Trader Bullish Stop Adjsutments: SEE Bearish Stop Adjsutments: MO High Risk/Reward Bullish Play Updates: T, QLGC 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 Play Updates ================ -------------------- Bullish Plays -------------------- EXEL - close: 15.60 change: +0.00 stop: 15.24 *new* We were very disappointed in EXEL on Wednesday. The entire market is in rally mode and EXEL spends the day trading sideways. We think traders should be cautious. The BTK.X added 2.7% and closed back above its ascending bullish trend line and EXEL does nothing! Only aggressive traders should consider bounces at $15.00 as potential entry points, which should be support. Despite this technical and price level of support we are raising our stop to $15.24. This will reduce our risk to 61 cents. Until EXEL breaks out above the $16.00 mark we're not going to feel comfortable with this long play. Picked on November 30th at $15.85 Gain since picked: -0.25 Earnings Date 11/13 (confirmed) --- NVDA - close: 62.83 change: +4.69 stop: 60.98 *new* Two big days in a row like this will make traders spoiled. NVDA is up more than $9 in two days (16.7%). We didn't officially "pick" NVDA until it triggered $55.45 so we're only up $7.38 or 13.3%. The big moves have been fueled by incredible rallies in the chip sector. The SOX.X led another huge move with a 41.6 point gain of 7.6%. The index broke out above price resistance and above its 200-dma. The sector and many of its components are very overbought short-term and need to pull back but short covering could keep the rally going. The question is for how long? We are going to raise our stop and put an exit target on NVDA. First of all, we are raising our stop to $60.98, which is just below the bounce near $61 that occurred just after 2:00 PM ET. This should protect a gain of $5.53 or 9.97%. Now, if the rally's momentum carries through in the morning hours on Thursday we want to be ready. Thus, we're placing an exit price of $64.90 on NVDA. If the stock trades to this level we'll close the play for a profit of almost 9.5 points or 17%. Picked on December 4th at $55.45 Gain since picked: +7.38 Earnings Date 11/08 (confirmed) --- NXTL - close: 12.25 change: +0.37 stop: 11.38 *new* Considering the velocity of the rally in the tech sector today we would have expected a little bit more than a 3% move in NXTL. Don't get us wrong. We're not complaining. The stock added to the powerful move on Tuesday and shares are above the important $12 level. However, given the recent positive moves, we want to raise our stop to 11.38, which will limit our exposure to 50 cents should the stock suffer any undue profit taking. Picked on December 4th at $11.88 Gain since picked: +0.37 Earnings Date 01/23 (unconfirmed) =============== NB Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Qualcomm - QCOM - cls: 61.99 chg: +2.08 stop: 60.61 Another strong day in the tech sector translated into an upside breakout in shares of QCOM. Unfortunately, the impressive move took out our short position early on in the session as better than expected economic data took the major averages to multi- month highs. Additional upside resistance is only 50 cents away at 62.50 and if profit taking ensues in the near future, QCOM will likely move back into its trading range. For now, though, tech is too hot to short as cash comes off the sidelines and flows into equities. We’re anticipating the effects of tax loss selling that could take place during the month and with QCOM down significantly from its 52 week high, that time could arrive soon if the major markets don't breach their 200-dma's. Picked on November 28th at 57.29 Loss since picked: -3.32 Earnings Date 11/06 (confirmed) --- Renaissance Learning - RLRN - cls: 27.53 chg: +2.38 stop: 26.11 Tech stocks were red-hot on Wednesday and the GSO.X software index closed up 6%. The bull stampede on Wall Street was sparked by positive economic reports this morning and bears decided today was a good day to cover. We turned cautious in Tuesday's update when shares closed over its 10-dma and the stock produced a powerful reversal in today's rally. We would have been stopped out early this morning at $26.11. Picked on November 24th at 25.16 Loss since picked: -0.95 Earnings Date 10/15 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =================== AT Stop Adjustments =================== Bullish Plays ------------- SEE - close: 46.75 change: +0.90 stop: 44.95 *new* Shares of SEE enjoyed today's rally to the tune of 1.96%. The stock has broken above the $46 resistance level and we believe bulls are aiming for $50. We've chosen to raise our stop to 44.95 as both $46 and $45 should act as support. For those readers who have been following the packaging industry, BMS also broke out to a new high and BLL, a stock we desperately wanted to add last night, also produced a strong gain off of support. Bearish Plays ------------- MO - close: 46.14 change: -0.51 stop: 47.25 *new* With investors believing an economic recovery is on the way and a potential bottom in the tech sector there is no reason not to rotate money out of defensive issues. MO's share price should continue to be a victim of this line of reasoning and so far the stock has been moving our direction. We would have preferred to see the stock close below $46 but today's move was enough confirmation that we are lowering our stop to $47.25, which is a few cents above Tuesday's high. ================================================================== High Risk / High Reward (HR) section ================================================================== ================ HR Play Updates ================ -------------------- Bullish Plays -------------------- AT&T Corp - T - close: 17.57 change: -0.02 stop: 16.95 *new* We are becoming increasingly frustrated over T's lack of response to the bidding developments over its broadband division. The majority of their cable-Internet subscribers have been moved to T's own network but we never saw that as a major issue in the first place. The stock did rally to the $18.00 level but came all the way back to close flat on the day. I know this is supposed to be a "high risk/high reward" play but I'm beginning to feel that the risks are mounting. We are raising our stop to $16.95, which is just below the $17.00 and the 15-dma at 17.08. Confirm stock direction before considering new plays. Picked on November 29th at $17.62 Gain since picked: -0.05 Earnings Date 10/23 (confirmed) --- QLogic Corp - QLGC - close: 56.18 change: +3.23 stop: 54.98 *new* QLGC proved our point in Tuesday's update. There is nothing to say shares "have to" come back before they trade higher. Of course QLGC's rally was accentuated by the rally in the SOX.X. The chip index soared almost 42 points to gain 7.6%. This sent the index rocketing through price resistance at 550 and its 200- dma at 561. Are the chips stocks short-term overbought? You betcha, but that doesn't mean they can't go higher first. We would NOT suggest traders chase these issues but if you're currently in the play we can tweak our strategy. First of all, we are raising our stop to $54.98. This should ensure a gain of $4.33 or 8.5%. Currently, the newsletter is up $5.53 or 10.9%. Now that we have raised our stop we're going to reconfirm our target. If the rally's momentum can carry through on Thursday then we'll close the play if QLGC can trade to $60.00. However, we are going to add an amendment to this strategy. If QLGC trades above $59.00 we will raise our stop to $57.45. It is entirely possible that QLGC trades higher in the morning and we're stopped out at $57.45. Picked on December 4th at $50.65 Gain since picked: +5.53 Earnings Date 10/23 (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 DT Deutsche Telekom 18.14 +0.69 BA Boeing Co 35.89 +0.51 TMX Telefonos De Mexico 34.65 +1.06 P Phillips Petroleum Co 58.66 +2.01 KYO Kyocera Corp 80.70 +7.20 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change TSM Taiwan Semiconductor 19.08 +1.55 ORCL Oracle Corp 15.37 +1.57 SPLS Staples Inc 18.73 +1.33 CCE Coca-Cola Enterprises 19.50 +1.63 NTAP Network Appliance Inc 19.25 +2.41 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change TXN Texas Instruments Inc 33.50 +2.50 SGP Schering-Plough Corp 37.35 +1.35 IBM Intl. Business Mach 121.40 +4.76 HD Home Depot 49.90 +2.20 DELL Dell Computer 29.67 +1.59 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change CCR Countrywide Credit 40.15 -2.01 IVGN Invitrogen Corp 64.99 -3.42 VAR Varian Medical Systems 67.00 -2.05 IMMU Immunomedics Inc 22.17 -1.86 WFSI Wfs Financial 20.50 -2.25 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- BAX Baxter Intl. 50.30 -1.08 RTN Raytheon Co 32.36 -0.79 IMMU Immunomedics 22.17 -1.86 ================================================================= 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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