PremierInvestor.net Newsletter Weekend Edition 12-07-2001 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/2660_1.asp ================================================================= In section one: Market Wrap: Not bad, not bad at all Play-of-the-Day: Rising Volume Breakout Watch List: INTC, MU, QLGC, MRVL, ADPT, VRTS, QSFT, SRNA, WEBM, EPNY, DCLK, ELNK, GTK, ITRI, PII, IKN, ITMN, BRL, CTIC, HGSI Market Sentiment: Jobs Jolt! ------------------------------------------------------------------ U.S. Market Numbers ------------------------------------------------------------------ MARKET WRAP (view in courier font for table alignment) ------------------------------------------------------------------ WE 12-07 WE 11-30 WE 11-23 WE 11-16 DOW 10049.46 +197.90 9851.56 -108.15 9959.71 + 92.72 +258.99 Nasdaq 2021.26 + 90.68 1930.58 + 27.39 1903.19 + 4.61 + 70.10 S&P-100 591.78 + 6.98 584.80 - 8.47 593.27 + 5.20 + 10.08 S&P-500 1158.31 + 18.96 1139.45 - 10.89 1150.34 + 11.69 + 18.34 W5000 10745.37 +213.92 10531.45 - 64.95 10596.40 +109.73 +189.46 RUT 481.21 + 20.43 460.78 + 2.36 458.42 + 7.11 + 13.21 TRAN 2628.26 +116.48 2511.78 - 23.12 2534.90 + 37.53 +176.68 VIX 24.89 - 1.25 26.14 + 1.36 24.78 - 2.39 - 1.59 VXN 50.18 + 1.73 48.45 - 2.36 50.81 - 4.23 - 3.55 TRIN 1.18 1.19 0.70 0.99 TICK +828 +852 +976 +750 Put/Call .78 .63 .61 .50 ------------------------------------------------------------------ WE= week ended =========== Market Wrap =========== Not bad, not bad at all This week and this day may be one to remember for year's to come. I can't begin to tell you just how BULLISH this week's BEARISH Treasury bond market action may become. There's still work to be done, but this weeks REJECTION of bonds that began Wednesday and continued today bodes well for stock down the road. Market maker bias Did you see how shares of 3D-Systems (NASDAQ:TDSC) traded today? Last night we talked about "market maker bias." Folks... I'm telling you. Today's bond market action got the attention of just about every NASDAQ market maker there is. They know there was one heck of a lot of selling in the long-end of the bond market today. They know that selling in the bond market is beginning to become a cash-generating machine. They know that there are a lot of investors that have been amazed at how powerful the recent two-month equity market rally has been. They know there is eagerness among institutional fund managers that have been sitting on the sidelines squawking about "valuations" that have seen stock surge. 3D Systems Chart - By no means should shares of 3D Systems (NASDAQ:TDSC) be a "core holding" in an investor/trader's account. I mentioned the stock and trade setup merely to give subscribers some insight into how bullish a market environment we may be entering longer-term and for you to get a feel for how some NASDAQ stocks can be traded. If you get the feeling that things can be "manipulated" a little, you're not alone. As you get some confidence and profits under your belt you can play the "manipulation game," but you need to be careful. All I really want to do here (with TDSC) is to try and get us all in the mindset of trading some levels and understanding what to look for in future trade setups. We'll follow TDSC in future sessions, but I will not concentrate on it. Should the stock continue to trade bullish in the coming weeks, then I get the feeling that my scenario for a "buy side bias" among market makers is still in play. Today there was no news that I could find to explain today's price action in shares of TDSC. For the Day Today's stock action was that of profit taking. While early morning economic data showed the jobless rate rising to 5.7%, which was more than forecasted rise of 5.6%, stocks found the news reason enough to lock in some handsome gains found in prior sessions trading. Early on the bond market seemed to "bite" on the data and we did see some money flow back into Treasuries. Then hours later, the market flushed the longer-term maturities. The bond market action (choose to ignore it if you want) is that today's jobless data was a short-term blip and perhaps the end to a longer-term trend of joblessness. In recent months, a jobless report like today's would have had the bond market surging (YIELDS falling). Instead, only the short-term maturities found buyers and hints that money moving there is looking for safety on a more near-term basis. Longer-term maturities got flushed. Now there's some money ready to buy stocks on the pullback. Weekly performance The 10-year YIELD unraveled this week and closed today with a YIELD of 5.148%. Should that action continue, look for this week's stock gain to grow in the future. The Semiconductor Index (SOX.X) jumped 10% on the week, but the bulk of those gains came Tuesday and Wednesday. On Thursday and again today, the rally in the group stalled, even though there was good news today when Intel (NASDAQ:INTC) and Advanced Micro Devices (NYSE:AMD) guided analysts higher on their revenue numbers. While last night's upward revenue guidance from Intel (INTC) found the stock losing 2.69% of its value today to close at $33.24, shares of Advanced Micro Devices (AMD) higher revenue guidance found that stock surging 9.84% to $17.85. Advanced Micro Devices - Meaningful volume on an upward move is what a bullish trader likes to see. A patient trader will look for a pullback near the $15 level for entry and use retracement to understand risk. Why did AMD hold onto gains and show such impressive performance compared to Intel (INTC)? I think "field position" as it relates to the retracement range and profit taking on the good news in Intel. Intel Chart - Retracement anchored from the same time period as Advanced Micro Devices range from the May highs to September lows gives subscribers an idea of why Intel's stock didn't perform as well as that of AMD's. Intel trades well above its 200-day moving average as well as trading outside of its May-September retracement range. Today's bullishness in AMD and lackluster performance on the same type of good news from Intel was most likely a result that Intel looks extended compared to AMD. If the bond market will hold where it is or see further selling, I like both of these stocks on a pullback, with stops outlined on the charts. A trader willing to take some potential downside heat to the $27.50 level is more than welcome to buy the stock at current levels. Longer-term, I think both of these stocks will do well, especially if the bond market continues to unravel and generate cash. The Networking Index (NWX.X) had a very bullish week and much like the Semiconductor stocks, got most of its gains on Tuesday and Wednesday, then stalled a bit on Thursday and again today. Cisco Systems Chart - I'd love to see a good round of profit taking next week in CSCO and let the MARKET remove some of the risk in a bullish trade. Once again... if bond YIELDS hang where they are or we see continued selling in them, then that gives me the confidence to pick the stock up near $19. Keep an eye on the Networking Index (NWX.X). Any move above the $22 level in CSCO coupled with a move above the 387 level in the Networking Index (NWX.X) should provide some upside action. The Networking Index should be finding support in the $313-$350 range. Transportation stocks Here's a group that could be next weeks winner. If we do see some profit taking in technology, this is a place where I think equity bulls can find some success. The bond market action hints that an economic recovery is in the making. If that's the case, then transports should benefit. Add to that the lower fuel prices and there's some catalysts in place for an upside move. On September 10th, the Dow Jones Transportation Average (TRAN) closed at 2,676. Today, the TRAN closed at its highest level since its September 10th close and the 200-day MA is just above at 2,677. Look for some bullish play selections in the PremierInvestor.net play list. Brokerage Stocks Many Wall Street gurus tell us that brokerage stocks perform well in the early phase of a bull market. This weeks performance in the Securities Broker/Dealer Index (XBD.X) should have somebody's attention. Today, the XBD.X closed right below its long-term downward trend from the September 11, 2000 high of $708. This group has followed bond YIELDS around like a lost dog for the past couple of years. A move above today's high of $524 coupled with a higher bond YIELD could see this group trade the $563 level in a hurry. Look for a buying opportunity in brokerage stocks on any dip near the 465 level. Downside Besides longer-term Treasury bonds, some downside was seen in the Drug (DRG.X) and Healthcare (HCX.X) sectors. Not much, but if the MARKET is defensive, then these stocks should have performed better. Dow Portfolio "hypothetical" $1,000 investment since 09/10/01 Today's action saw a fairly even distribution of net losses among the top 15 and bottom 15 ranked stocks. This is a sign of normal profit taking. Encouraging is that while fractional, the bottom tier didn't give back as much. In a weak market environment, the bottom tier usually outperform to the downside. For the week, the upper 15 ranked stocks added $363 in "value," while the bottom 15 added $297.73 in "value." The out performance of the upper 15 stocks on the weekly basis is sign of a bullish market and makes good sense. In a strong market environment, stronger stocks usually show the bulk of gains in an advance. Last week's "bottom 3" remain this weeks bottom three, yet each managed to squeak out a gain for the week. In our "inchworm" analogy, the tail end of the inchworm inched higher and will help provide an anchoring point in the future. When the tail of the inchworm is moving higher, you get a good feel for direction. Last Friday we noted that shares of General Electric (NYSE:GE) had fallen from our "upper 15" category and had slipped to #19. The stock lost 3 slots this week and also traded lower by $1.35 a share on the week. Last Friday we mention that traders might want to keep an eye on shares of Microsoft (NASDAQ:MSFT) for a move higher as our Dow Industrial analysis and "ranking" showed that big technology stock like held the #1, #2, and #3 slots. Last Friday, our thought was that MSFT at a #10 rank could move higher and this week the stock jumped an impressive 4 slots higher to #6. This type of continued bullishness should bode well for the Software Index (GSO.X). Individual downside moves are interesting. I think Du Pont (NYSE:DD) may need to firm up near the $42.50 level, but I look at this stocks as a "strong stock on pullback" bullish candidate. Early this week, the 200-day moving average at $43.36 acted as support. The stock has formed a double top at $45.75, but a break above that level could have the stock testing $50. Philip Morris (NYSE:MO) slipped has made it in our commentary as a "downside" stock for the past three Friday's. Last weekend, the stock made its way to our "Non-tech / Active Trader" short- play list and the stock hasn't disappointed. As Treasury bond YIELDS head higher, look for this one's higher yielding dividend to lose its shine and have the stock under further selling pressure. A break in coming days/weeks below the $41.40 level will most likely be confirmation to most that the market is not all that defensive. With the 200-day moving average rolling at $47.80, this stock is starting to look like Cisco Systems (NASDAQ:CSCO) did back in September of last year at $60. You don't think the MARKET is rolling out of "big MO" and back into CSCO do you? Only if it thinks we're headed for economic growth. If nothing else, Philip Morris (NYSE:MO) is a very good stock for traders/investors to keep an eye on. It was a big winner when the broader market indices were declining, but she's starting to slip. Jeff Bailey Senior Market Technician ========================= Play-of-the-Day (Bullish) ========================= NEW BULLISH PLAY ================= Actrade Fincl. Tech. - ACRT - cls: 30.96 change: +1.46 stop: 28.75 Company Description: Actrade Financial Technologies, Ltd., is a leading provider of electronic payment technologies that deliver financial solutions for commercial trade. Administered by the company's subsidiary, Actrade Capital, Inc., the company's leading product is the Electronic Trade Acceptance Draft (E-TAD(TM)) Program. E-TAD is an irrevocable and negotiable electronic payment obligation, issued by a buyer for a specific sum, to be paid on a definitive date through automatic debiting of a buyer's designated bank account. E-TAD technology provides online credit, payment, settlement and integration solutions. Through E-TAD, buyers can pay for purchases with terms up to six months while suppliers receive immediate payment. E-TAD facilitates commercial trade by providing a secure, streamlined payment solution for both offline and online purchases. Actrade Capital, Inc. has offices in the U.S. and Canada, through its subsidiary Actrade Capital Canada, Inc. (sources: company press release) Why We Like It: It's possible that we have misplaced ACRT in the technology section of our newsletter. Originally, a financial services company with its TAD payment service, Actrade has grown into a leading electronic financial payment player with its E-TAD product. ACRT announces its most recent earnings in late October and the company produced record earnings. Since that time, shares have gradually traded up to resistance at $30. The last couple of weeks have shown how traders have taken profits and brought the stock back down to its 200-dma near $26 before buyers stepped in to buy the dip. Now the stock has powered ahead in the last few sessions and closed over the $30 resistance level. What makes the recent rally even more attractive was the rising volume on the last two sessions. Longer-term trends, like the 50-dma about to produce a bullish crossover of the 200-dma, are also encouraging. The MACD is about to produce a bullish crossover as is the 5-dma over the 15-dma (a short-term indicator we like to watch in the office). Looking ahead we think the stock might have enough juice to get to $35. We would prefer to try and buy at a dip to $30 but as evidenced by the late day dip to $30.50 on Friday we may not get that chance. We'd be very cautious if shares fell under $30 but aggressive traders may look for a bounce at $29.50 if it occurs. We're going to put our stop at $28.75 to begin the play and adjust it higher as ACRT moves in our favor. Confirm stock direction before playing. Picked on December 7th at $30.96 Gain since picked: +0.00 Earnings Date 10/25 (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. STOCKS WORTH WATCHING --------------------------------- Intel Corp - INTC - close: 33.24 change: -0.92 WHAT TO WATCH: As the king of semiconductor stocks, INTC was a major factor in the breakout this last week for the SOX. Yet it was the SOX that helped lead the tech sector higher for much of the last couple of months. To understand how to trade or what to watch for in this and the following chip stocks we need to pay attention to the semiconductor index (SOX.X). Mid-week the SOX posted to huge rallies to burst through overhead price resistance at 550 and its 200-dma at 560. Thursday saw the index trade sideways while Friday it actually gave into some profit taking. The amazing part is the profit taking was relatively mild compared to the strong gains. Both the bulls and the bears will be watching the SOX to see if it breaks down beneath those previous resistance levels (mentioned above) that should begin to act as support. Intel will play a factor in performance of the SOX, the Dow and the Nasdaq. The stock had been under extremely heavy resistance at $33 for months. A quick look at the point-and-figure chart can attest to that. The breakout on Wednesday for INTC was an important move. If shares hold above $33 then great and more power to the bulls. Yet if the stock does see some profit taking we would look for a dip to $32 as a potential entry point to go long but keep your eye on the SOX. --- Micron Technology - MU - close: 31.75 change: -0.80 WHAT TO WATCH: Micron is another chip stock we would watch closely for weakness early next week. If shares can dip back to the $30 level we would look for the beginning of a bounce and strongly consider new long positions. The previous three weeks MU saw strong resistance at the $30 level and a bounce there would be an extremely attractive entry point for a bullish play. Both the 100 & 10-dma's are congregating near the $30 level as well. Of course you'll want to watch the SOX for this potential play too. If all goes well, we would target the $35 level or the 200-dma. --- QLogic Corp - QLGC - close: 52.97 change: -2.52 WHAT TO WATCH: QLGC is a recent successful bullish play for Premier that was closed with a move of more than four points (8.5%). The last couple of days have been pure profit taking for the stock and we are keeping our eyes open for another entry point. Shares of QLGC spent the majority of November fighting with resistance in the $50 area. Now that the stock has broken through this level should become new support. Thus, a bounce at $50, or near $50, would be our preferred new entry point for another long play. If the SOX pulls back to its own 200-dma (560) or price support (550) then QLGC may dip another 5% to allow us such an entry price. Be careful to make sure both QLGC and the SOX have actually found support at these levels and are not just trading lower. Our bullish target for QLGC, given enough time, would be $60. --- Marvell Technology Group - MRVL - close: 37.00 change: -1.46 WHAT TO WATCH: Yet another chip stock that has enjoyed the recent gains in the semiconductor sector is MRVL. The stock spent much of November building a base near the $30 level while trying to tackle resistance at $35. The strength of the sector has pushed it through but we believe traders will get another chance to buy MRVL on the bounce back at $35 again. We'll be watching for the $2.00 dip to see if buyers will indeed step in and support the stock. If they don't, we might get a better price at $33 but if this occurs we would definitely wait for confirmation that the up trend is still intact. --- Adaptec Inc - ADPT - close: 16.25 change: +0.29 WHAT TO WATCH: Shareholders in ADPT can enjoy (or suffer) the best and worst in both the chip sector (SOX) and the disk drive sector (DDX). ADPT makes chips and cards specifically designed for hard drives. Their stock price has enjoyed the tech rally these last two months and traders appear to switch back and forth from taking cues to buy and sell from the SOX.X and the DDX.X. This last week, specifically, the last four days have produced a huge surge higher. This time the move can be contributed to the most recent breakout in the DDX.X index. Readers glancing at a chart of the disk drive index can see that the group broke out from a bullish wedge through resistance at the 100 level. A dip back to 100 in the DDX.X might offer traders a chance to buy ADPT on a dip back to $15.00. Even though the MACD has just produced another bullish crossover we would wait for some kind of pull back before chasing the stock higher. --- VERITAS Software - VRTS - close: 41.46 change: -1.23 WHAT TO WATCH: Investors would be hard pressed to discuss the technology rally without considering the software sector. The GSO.X software index managed a strong rally mid-week straight to its 200-dma. Thursday was spent trading sideways and Friday produced some end of the week profit taking. Shares of VRTS traded in similar fashion and we feel they could offer traders an attractive entry point for new long plays if they pull back to support early next week. We will be watching for VRTS to dip back to the $40 or $39.50 level and begin to bounce higher again. From this level we would consider going long with a relatively tight stop and aim for a rally back towards the $45 or $47.50 area (currently the 200-dma). Keep an eye on the GSO.X for support near 180, 175 or 170. --- Quest Software - QSFT - close: 25.17 change: -1.78 WHAT TO WATCH: Shares of QSFT have been range bound between $24 and $20 through the middle of November and towards the end of the month began to tackle resistance at its 200-dma. Now that shares have broken through this level we will be watching for profit taking early next week to bring QSFT back to its 200-dma and its 10-dma, which can both be found near $24. Depending on our entry we would probably consider stops between $22 and $23. --- SERENA Software - SRNA - close: 25.42 change: -0.45 WHAT TO WATCH: SRNA is another software stock that has rewarded investors with a very strong upward trend that has rarely traded below its 10-dma in the last two months. Shares have recently broken through resistance at $25.00. This level could hold as new support but if the sector and SRNA see profit taking next week we would look for new entry points between $24.50 and $23.75. A bounce at these levels could set up for a move towards $30 over the next few weeks. --- WebMethods Inc - WEBM - close: 17.10 change: -0.90 WHAT TO WATCH: Navigating the line between software company and Internet company, WEBM has produced a tremendous rebound during the last month. The stock seems to be a little volatile so traders should expect some price swings but the current trend appears strong and WEBM might make it to its 200-dma, near $20 soon. We would be watching for the stock to dip towards the $16 level as a potential entry point for new long plays. Don't forget to play with a stop! --- E.piphany Inc - EPNY - close: 8.98 change: -0.01 WHAT TO WATCH: Some how shares of EPNY only managed to lose one cent when most technology stocks gave into Friday profit taking after the week's strong gains. This could be a show of strength for the Internet stock but we'd still prefer to try and jump in on a bounce. As an Internet company, shares probably qualify as more "high risk" than some investors would prefer. A quick glance at the chart shows that shares have been range bound between $7 and $8 for much of November and this last week produced a strong rally through the top of the channel. If given the chance we will be watching for potential entry points between $8 and $9. EPNY's first level of resistance will be its 200-dma at 9.35. --- DoubleClick Inc - DCLK - close: 11.07 change: -0.06 WHAT TO WATCH: DCLK is another Internet stock that has managed to hold on to most of its gains while other tech sectors have given into profit taking heading into the weekend. The low of Friday was a clear bounce off its 200-dma (10.62). The question is whether this level will hold up if we see the markets consolidate some more next week. We would probably look for potential new positions at dips to 10.50 (or 10.60). There is also support at $10 should the sector slip next week. DCLK will probably find resistance at $12 and again at $14. --- EarthLink, Inc - ELNK - close: 13.80 change: -0.85 WHAT TO WATCH: The Internet Service Provider, ELNK, has been left behind in the technology and Internet rally this last month. It is unclear whether investors are concerned that the same troubles that brought Excite@Home to ruin may be quietly plaguing ELNK or whether the depressed stock price is a result of ELNK's purchase of bankrupt Omnisky. The 200-dma is nearing 13.60, only 20 cents from current levels. We would watch ELNK for a breakdown below its 200-dma for a possible short play. We don't have a target but shares could fall to $11 or lower. --- Gtech Holdings Corp - GTK - close: 46.61 change: -0.47 WHAT TO WATCH: GTK is an operator of computerized lottery systems. We're unclear how they derive their income (and the watch list is only for brief appraisals of the stock price). What we do know is that the company is expected to announce earnings on Monday, Dec. 10th. The recent run could be in anticipation of a strong earnings report or it could be due to some other factor. Shares have been very strong from Sept. 21st, 2001. If the earnings report is positive and investors and analysts respond well to it, we would look for a potential entry at a dip to $45. Follow with a relatively tight stop. Wait for earnings to come first and more conservative traders may want to give the stock a couple of days to let any temporary excitement abate. --- Itron Inc - ITRI - close: 32.00 change: -1.70 WHAT TO WATCH: Itron is a communications equipment company that works with hardware and software for water and utility companies. Shares have a very strong longer-term up trend and the stock recently broke out above month-long resistance at $30. You've probably guessed it but we would watch for a pull back towards $30 as a potential entry point for a new long play. The breakout came on very strong volume while the profit taking was on very low volume. --- Polaris Industries - PII - close: 54.84 change: +0.85 WHAT TO WATCH: Maybe it's the weather. Shares of Polaris, the maker of snowmobiles and other recreational vehicles have been doing very well. PII recently broke out above very long-term resistance of 51.50 in mid-November. Soon thereafter the stock traded to 55.70. Profit taking was quick to follow and traders brought it back to $50 before buying the dip. Now the stock has slowly built its way back to resistance near $55. An upside breakout looks imminent but we would wait for confirmation. --- Ikon Office Solutions - IKN - close: 11.40 change: +0.15 WHAT TO WATCH: Shares of IKN have been on quite a tear recently. Regular readers of Premier know that we're bullish on the sector and recently did well with a long play on ODP. We'd like to move into IKN but would prefer an entry point near the $10.50 level. The stock is short-term overbought so we are waiting for the overdue profit taking to hit before we commit any capital. --- InterMune Inc - ITMN - close: 51.15 change: +1.81 WHAT TO WATCH: The drug sector hasn't been the hottest lately and even the biotech sector is looking questionable. Despite these factors, shares of ITMN have done very well and broken through resistance at $47.50. Shares closed strongly over the $50 level. There appears to be potential resistance near $55 and thus we'd rather try and grab an entry point closer to $50 or even a dip back to $47.50 but make sure it's bouncing back. We would not expect any help from the DRG.X as traders will probably rotate out of defensive issues if the tech sector remains hot. --- Barr Labs Inc - BRL - close: 77.14 change: +2.63 WHAT TO WATCH: It is has been rather uncommon lately that a company will raise earnings guidance for 2002. BRL did just that on Thursday this last week and shares have surged higher ignoring weakness in the sector. The stock has spent the last couple of weeks range bound between $70 and $75. Now shares have broken through resistance at $75 and closed above its 50-dma. Overhead hurdles for the bulls are $80, $85 and $90. Fortunately for shareholders, BRL has a tendency to trade to $90 before traders decide to take profits and bears really begin to lean on it. Buyers will be hoping for a repeat performance. --- Cell Therapeutics - CTIC - close: 26.21 change: -2.00 WHAT TO WATCH: Shares of CTIC reflect more closely with the DRG.X drug index but recent moves may have it leading to the downside. We didn't notice any new headlines related to Friday's loss but the stock is approaching its 200-dma. A close below its 200-dma or the $25.00 could signal a new bearish trend that might take the stock price to $21 or $20. --- Human Genome Sciences Inc - HGSI - close: 36.09 change: -3.92 WHAT TO WATCH: This biotech stock was a definite loss leader for the group on Friday with a 9.8% drop. The move came on news that their trials for a new drug repifermin produced disappointing results. The stock had already been showing weakness the prior week and a half and Friday's move confirmed the downtrend. HGSI saw huge volume of 7.4 million shares on Friday. The next level of support for the stock may be as low as $28 to $30. ================ Market Sentiment ================ Jobs Jolt! by Russ Moore Investors were hoping for signs of stabilization on the employment front, especially after yesterday’s improved weekly claims data. Hope turned to fear with the unveiling of an unemployment rate at 5.7 percent with 331,000 jobs lost, a level last seen in August of 95’. The disappointing number gave investors an excuse to take some profits, giving Wall Street a negative close to a positive week. The DOW was off -0.5 percent while the NASDAQ dropped -1.6 percent and the NDX -2.6 percent. Volume was light with 716 million shares changing hands on the big board and 1.3 billion shares moving on the tech index. Losers held the edge with a 16/13 victory on the NYSE and 18/15 triumph on the NASDAQ. Despite the generally negative tone, airline, oil, transportation, utility and natural gas sectors were able to post green arrows. The weak employment numbers were not enough to help the bond market with the yield on the 30yr bond reaching a one-year high. The move in treasuries was somewhat puzzling considering the increased likelihood of another Fed rate-cut on Tuesday and a continuing stream of mixed economic data. On a positive note, the Michigan Sentiment number increased to 85.8 from 83.9. Yes, today’s job number has to be viewed as a chink in the bull’s armor, but make no mistake, the bull’s have momentum going for them and it’ll take a lot more than one negative to derail this rally. VIX Friday 12/07 close: 24.89 VXN Friday 12/07 close: 50.18 30-yr Bonds Friday 12/07 close: 5.60 Total Put/Call Ratio: .78 Equity Option Put/Call Ratio: .69 Index Option Put/Call Ratio: 1.55 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 41.73 Volume/Open Interest Maximum calls: 40/144,472 Maximum puts : 40/128,860 Moving Averages 10 DMA 40 20 DMA 39 50 DMA 36 200 DMA 40 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: 591.77 Volume/Open Interest Maximum calls: 640/5,636 Maximum puts : 500/8,000 Moving Averages 10 DMA 588 20 DMA 588 50 DMA 568 200 DMA 604 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: 1158.28 Volume / Open Interest Maximum calls: 1150/50,917 Maximum puts : 1050/41,864 Moving Averages 10 DMA 1148 20 DMA 1143 50 DMA 1105 200 DMA 1174 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: 10,049.46 Volume / Open Interest Maximum Calls: 98/25,661 Maximum Puts 90/47,852 Moving Averages: 10 DMA 9,916 20 DMA 9,865 50 DMA 9,500 200 DMA 10,135 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: 601.07 Volume / Open Interest Maximum Calls: 620/ 861 Maximum Puts: 540/1,154 Moving Averages 10 DMA 603 20 DMA 592 50 DMA 544 200 DMA 537 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: 571.72 Volume / Open Interest Maximum Calls: 520/ 577 Maximum Puts: 470/1250 Moving Averages 10 DMA 542 20 DMA 531 50 DMA 479 200 DMA 559 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: 395.48 Volume / Open Interest Maximum Calls: 420/406 Maximum Puts: 360/330 Moving Averages 10 DMA 397 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, 12/07. 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 11/20/01 369,784 415,822 (46,038) 13.6% 11/27/01 371,336 421,405 (50,069) 8.7% 12/04/01 360,315 420,919 (60,604) 21.0% 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 11/20/01 140,507 86,861 53,646 9.8% 11/27/01 151,317 92,807 58,510 9.1% 12/04/01 159,336 86,534 72,802 24.4% 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 11/20/01 38,042 46,446 (8,404) (20.0%) 11/27/01 37,259 48,315 (11,056) 31.5% 12/04/01 42,191 51,426 (9,235) (16.5%) 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 11/20/01 12,933 8,230 4,703 (7.1%) 11/27/01 12,540 8,359 4,181 (11.1%) 12/04/01 11,808 8,311 3,497 (16.4%) 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 11/20/01 25,033 11,525 13,508 (3.1%) 11/27/01 24,243 11,496 12,747 (5.6%) 12/04/01 22,703 10,739 10,739 (15.7%) 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 11/20/01 3,609 10,565 (6,956) (13.3%) 11/27/01 4,228 10,630 (6,402) (8.0%) 12/04/01 3,677 9,799 (6,122) (4.4%) 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 +72,336 +58,510 -60,604 -50,069 Total Open Interest % (+29.61%) (+23.97%) (-7.76%) (-6.32%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -6,122 -4,228 +11,964 12,747 Total Open interest % (-45.43%) (-43.09%) (+35.78%) (+35.67) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +3,497 +4,181 -9,235 -11,056 Total Open Interest % (+17.38%) (+20.01%) (-9.86%) (-12.92%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.It appears the Commercial players are not ready to join the bull’s party just yet. For the third consecutive week we’ve seen the Commercials add to their net-short positions (bearish). More importantly, the Small Specs gobbled up more long contracts thereby increasing the divergence between Commercial and Small Spec players. Gold: Commercials engaged in a modest reversal as they flipped from net-long to net-short. Current holdings do not indicate a directional bias. 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 12/04 2,534 contracts net-short Data compiled as of Tuesday 12/04 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. 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PremierInvestor.net Newsletter Weekend Edition 12-07-2001 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/2660_2.asp ================================================================= In section two: Net Bulls >New Long-term Play: EMC New Bullish Plays: ACRT, XMSR Bullish Play Updates: EXEL, NXTL Bearish Play Updates: WWCA Long-term Play Update: ERICY Stock Bottom / Active Trader New Bullish Plays: CAL Bullish Play Updates: IRM Bearish Play Updates: MO Closed Bullish Plays: SEE Closed Long-term Play: ODP High Risk/Reward New Bullish Plays: MTSN Bullish Play Updates: T, TDSC Split Trader - none - ================================================================== Net Bulls (NB) Tech Stock section ================================================================== =============================== New Long-Term Tech Bullish Play =============================== EMC Corp - EMC - close: 17.17 change: -0.81 stop: 15.84 Company Description EMC Corporation is the world leader in information storage systems, software, networks and services, providing the information infrastructure for a connected world. (source: company press release) Why We Like It: We like EMC as a long-term tech play with a three to four month time horizon to achieve our goal. The stock has really been beat to death these last 15 months having fallen from the $100 level to $10 this last September and October. The good news is the worst seems to be behind it. EMC's sales suffered at the hands of stiff competition from the likes of IBM but EMC remains the number one player in the data-storage market. Corporate America's flight from IT spending this last year, coupled with stiff competition, brought EMC's 3Q net loss to almost $1 billion. It's not every day we see a $17 stock with a P/E of 350 but then valuations are never pretty at the end of a bear market. EMC management recently re-divided the company into three units as software sales now account for almost 20% of total sales and they'd like to raise that number to 30% in the next two years. Market sentiment is an important factor in EMC's future. Readers have probably heard multiple commentaries on this "tech rebound" and "economic recovery", etc. If Wall Street truly is buying tech for an economic rebound in 2002 and corporate IT spending begins to pick up again then EMC's sales should return as well. Considering that the stock market is an anticipatory machine, it will begin to discount next year's recovery now and it may have already begun. A quick glance at EMC's chart will show that the share price has begun a new bullish trend and has re-conquered its 50-dma and 100-dma. The new trend seems to be sticking to a narrow ascending channel and Friday's close put it near the bottom edge of this channel. Thus, we're choosing EMC now due to this entry point near "support". We also looked at the point-and-figure chart for EMC because we're aiming for a longer-term price objective. The p-n-f chart shows EMC has a bullish price objective of $29.00. This just happens to coincide with the descending bearish trend line on the p-n-f chart. We would encourage readers to check out the point-and-figure chart themselves. However, we are not aiming for $29.00 due to heavy resistance. A quick glance back at the daily chart shows the 200-dma is just above the $25.00 level. This alone could be sturdy resistance but there is also the matter of the large gap down in early July from $30 to $24. Instead we are going to target $23.50 as our exit point. Let someone else fight for the last $1.00 between round number resistance at $25 and the bottom of the window (where shares opened back in July when it gapped down to $24.00). One might think that EMC looks ripe for the picking. We definitely agree that it has a lot of potential but traders need to protect the capital and wisely obey their stop losses. There are at least two factors that could seriously weigh on EMC's advance. Number one, December usually sees a lot of tax loss selling and given the steep decline in shares of EMC this year, it is a strong candidate to feel this sort of pressure. Hopefully, the bullish sentiment for next year's recovery can inspire enough buyers to absorb any tax loss selling. Number two, the Nasdaq has made an incredible run and could easily produce a strong multi-day pull back due to profit taking (and/or tax loss selling). Even though EMC is traded on the NYSE it is a tech stock and will feel the pressure if investors begin to sell technology. Again, bulls can hope that the typical year-end Christmas rally comes early and keeps stocks like EMC a float. Once we make it to January, investors should be more forgiving and willing to place bets that EMC will execute on its new sales tactics and new revenue streams during the expected economic recovery (in 2002). So where do you put your stop? Placing your stop is a personal decision based on your risk tolerance. Since we're aiming for $23.50 or a +30% gain in the stock price some investors might be willing to risk 15% or place their stop near $14.60. That might make sense for you, as the $15.00 level should act as strong support. However, that seems like a lot of risk when we're trying to enter the play with it is already near the bottom edge of its ascending channel. If EMC breaks down from here, we want out and can re-consider a new position later. We've chosen to place our stop at $15.84 after carefully considering both the daily chart and the point-and-figure chart. More conservative traders could probably squeeze theirs even tighter with a stop at $15.98. We are using the low on Monday, Dec. 3rd as support. A couple of more notes for entry points are worth mentioning. More aggressive traders might look for further weakness this week and hop in on a bounce near $16.50 to $16.75. The key word in this strategy is "bounce" as in wait for shares to start trading higher again. More conservative players who prefer to see confirmation can wait for EMC to close above current resistance near $18.25 to $18.30. Picked on December 7th at $17.17 Gain since picked: +0.00 Earnings Date 10/17 (confirmed) =============== NB New Plays =============== ----------------- New Bullish Plays ----------------- Actrade Fincl. Tech. - ACRT - cls: 30.96 change: +1.46 stop: 28.75 Company Description: Actrade Financial Technologies, Ltd., is a leading provider of electronic payment technologies that deliver financial solutions for commercial trade. Administered by the company's subsidiary, Actrade Capital, Inc., the company's leading product is the Electronic Trade Acceptance Draft (E-TAD(TM)) Program. E-TAD is an irrevocable and negotiable electronic payment obligation, issued by a buyer for a specific sum, to be paid on a definitive date through automatic debiting of a buyer's designated bank account. E-TAD technology provides online credit, payment, settlement and integration solutions. Through E-TAD, buyers can pay for purchases with terms up to six months while suppliers receive immediate payment. E-TAD facilitates commercial trade by providing a secure, streamlined payment solution for both offline and online purchases. Actrade Capital, Inc. has offices in the U.S. and Canada, through its subsidiary Actrade Capital Canada, Inc. (sources: company press release) Why We Like It: It's possible that we have misplaced ACRT in the technology section of our newsletter. Originally, a financial services company with its TAD payment service, Actrade has grown into a leading electronic financial payment player with its E-TAD product. ACRT announces its most recent earnings in late October and the company produced record earnings. Since that time, shares have gradually traded up to resistance at $30. The last couple of weeks have shown how traders have taken profits and brought the stock back down to its 200-dma near $26 before buyers stepped in to buy the dip. Now the stock has powered ahead in the last few sessions and closed over the $30 resistance level. What makes the recent rally even more attractive was the rising volume on the last two sessions. Longer-term trends, like the 50-dma about to produce a bullish crossover of the 200-dma, are also encouraging. The MACD is about to produce a bullish crossover as is the 5-dma over the 15-dma (a short-term indicator we like to watch in the office). Looking ahead we think the stock might have enough juice to get to $35. We would prefer to try and buy at a dip to $30 but as evidenced by the late day dip to $30.50 on Friday we may not get that chance. We'd be very cautious if shares fell under $30 but aggressive traders may look for a bounce at $29.50 if it occurs. We're going to put our stop at $28.75 to begin the play and adjust it higher as ACRT moves in our favor. Confirm stock direction before playing. Picked on December 7th at $30.96 Gain since picked: +0.00 Earnings Date 10/25 (confirmed) --- XM Satellite Radio - XMSR - close: 12.94 chg: +0.91 stop: 11.49 Company Description: XM will transform radio, an industry that has seen little technological change since FM, almost 40 years ago. XM is offering its 100 channels of digital-quality, coast-to-coast sound for $9.99 a month. Leading manufacturers including Sony, Alpine and Pioneer are offering a broad array of XM radios including universal models that will easily enable any existing car stereo system to receive XM service (Sony Plug-n-Play, Pioneer Universal Receiver), and new AM/FM/XM systems offering many other great features. In addition, factory-installed Delphi- Delco systems will be available in Cadillac DeVille and Seville models beginning in November 2001 expanding to more than 20 GM models next year. XM's strategic investors include America's leading car, radio and satellite TV companies -- General Motors, American Honda Motor Co. Inc., Clear Channel Communications and DIRECTV. XM has a distribution agreement with General Motors to integrate XM radios into its vehicles commencing in 2001. (sources: company press release) Why We Like It: You've probably seen their commercials and didn't know it. Or maybe you have noticed their ads but didn't know where to get one. XM Satellite Radio just launched their service this Thursday, Dec. 6th, 2001. With 100 channels of digital quality music they probably have a product people will buy. If the awards XMSR has received for their product is any indication then they should benefit from a booming business. According to XMSR, their XM radio and service was named an "Invention of the Year" by Time, won Popular Sciences "Best of What's New" for 2001 in addition to several other accolades. What I think has got analysts applauding is XMSR's launch that beat out the company's only rival, Sirius Satellite Radio (NASDAQ:SIRI). XMSR claims they will have over 100,000 XM radios on the shelves for this Christmas season. One analyst from DB Alex Brown recently started the company with a "buy" and estimates that XMSR will sign up more then 375K subscribers for their $9.99 a month service. What draws us to the stock is the strong bullish wedge forming under resistance at $13.00 and the huge increase in volume both before and after the launch of their service. There are a couple of ways traders can play this one. More aggressive traders could jump in now or look for a possible dip back to $12.50 or $12.00, which is certainly a possibility. However, we feel that a breakout is imminent but instead of guessing when it will occur we're going to use a trigger point to tell us when to go long. On Wednesday, XMSR traded to $13.05 but closed at $12.78. We're going to set our trigger to go long at $13.06, only twelve cents away. Once we are triggered we'll start the play with a stop at $11.49. More conservative traders may be able to get away with stops closer to 11.90 but you'll need to make that judgement call based on the current market environment. By waiting for the stock to trade at our trigger point we can avoid any stress if shares of XMSR continue to wander under the $13.00 level for a few more days. A bullish wedge has an upside bias for a breakout but they are not guaranteed. We would consider targets between $14.65 and $15.00 (12% to 15%) but we're willing to wait and see what happens after shares trade through resistance. Ultimate resistance lies near $17.00, more than 30% away. Picked on December 7th at $ x.xx <-- see trigger point Gain since picked: +0.00 Earnings Date N/A =============== NB Play Updates =============== -------------------- Bullish Play Updates -------------------- Exelixis - EXEL - close: 15.76 change: +0.03 stop: 15.24 EXEL tested support at the 10-dma of 15.44 today, but buyers stepped back in to push the stock slightly higher on the day. Resistance at 16.00 is proving to be formidable but if shares can pierce the level, we like the stock’s chances for a continued move higher. The biotech sector posted an overall loss today but remained above the 600 level. The index needs to find strength next week or jeopardize its current bullish up trend. A close below the 600 level would make us cautious and a close below 580 would make us short-term bearish. Traders should note that today's low in EXEL ($15.35) was the same level of support shares found on Monday. We would still wait for the breakout over $16 before considering new positions. Picked on December 1st at 15.85 Loss since picked: -0.09 Earnings Date 11/13 (confirmed) --- Nextel Comm - NXTL - close: 11.96 change: -0.05 stop: 11.38 The telecom sector succumbed to some profit taking on Friday but the minor decline in NXTL suggests that the stock may have found some strength near the $11.80 level. Perhaps a breather was in order after the impressive gains posted earlier in the week. We would have preferred a close above 12.00 to reinforce buying conviction but the sideways trading over the last three days suggests that investors simply needed to digest the earlier gains. As we mentioned in Thursday's update, we'd prefer to see the stock stay above $12.00 but more aggressive traders may want to look for entry points if shares bounce at the 11.80 level again. If the Nasdaq sees more profit taking next week, NXTL could fall to 11.50. Picked on December 4th at 11.88 Gain since picked: +0.08 Earnings Date 01/23 (unconfirmed) -------------------- Bearish Play Updates -------------------- Western Wireless - WWCA - cls: 23.68 chg: +0.06 stop: 24.51 *new* The slow bleeding for WWCA has not stopped even though shares of the wireless venture posted a six-cent gain on Friday. The last couple of days have produced lower highs from Wednesday's trading in addition to lower lows. Traders are still using the 10-dma as overhead resistance and thus we would not expect WWCA to trade above $24.40. If it does we will plan to be stopped out at our new stop of $24.51. We plan to close the play for a profit the moment WWCA trades to $20.00 but we will remain flexible on exit points as long as the stock continues to move in our favor. Picked on November 10th at $26.40 Gain since picked: +2.72 Earnings Date 11/07 (confirmed) --------------------- Long-Term Play Update (bullish) --------------------- LM Ericsson Telephone Co. - ERICY - cls: 5.96 chg: -0.10 stop: 5.39 Our telecom play from early November is moving along nicely. After picking ERICY at $4.86 we are currently up over 22%. We felt the need to raise our stop while also discussing potential new entry points for new positions. Traders will want to remember that our target exit price was $7.00, which could come sooner than previously expected. Before we discuss trading details we wanted to share some positive news for ERICY. Cingular Wireless, the 2nd largest U.S. wireless operator, announced in October that it would upgrade its entire network to a European-based system that delivers Internet data faster than standard mobile networks (Reuters). As of a few days ago, analysts have estimated that Cingular's makeover will run about $4 billion and ERICY said it would claim a $2 billion-sized slice of the Cingular's deal. In addition to the Cingular news, ERICY told analysts that they are excited about potential growth opportunities in India. Now, back to trading the stock. Shares have maintained their upward trend in this bullish market environment and have reclaimed its 200-dma. This 200-dma (at 5.44) should act as support. We also see the 15-dma (5.55) acting as support and a dip to either could make great buying opportunities for new bullish positions. Our new stop at 5.39 would significantly reduce exposure at either entry. If ERICY trades to $7.00 we'll close the play for a profit. Picked on November 9th at $ 4.86 Gain since picked: +1.10 Earnings Date 10/26 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT New Plays =============== ---------------- New Bullish Play ---------------- Continental Airlines - CAL - cls: 25.77 chg: +1.60 stop: 23.75 Company Description: Continental Airlines is the fifth largest airline in the U.S., offering more than 1,900 departures daily to 122 domestic and 89 international destinations. Operating hubs in Newark, Houston, Cleveland and Guam, Continental serves more international cities than any other U.S. carrier, including extensive service throughout the Americas, Europe and Asia. (source: company press release) Why We Like It: It would appear that the airline industry is slowly gaining altitude again. The last four weeks have been very positive for many of the major players and CAL is leading the charge. There are multiple factors in the rebound. One that falls straight to the bottom line is the huge decrease in the price of oil. Oil remains under $20 a barrel and even a 10% increase would keep crude near the bottom range of where OPEC would like to see it. The airline industry is also climbing due to positive comments seen from increased traffic over October's numbers. CAL recently released their November traffic numbers and there was much improvement in the 2nd half of the month over the 1st. Demand seems to be strengthening as we move into the holiday travel season and stocks have plenty of upside between current levels and pre-9-11 prices. The XAL.X airline index is building a bullish wedge of its own and if it breaks out above 93, bulls might push it to 100. Shares of CAL have already broken out of their own bullish wedge on Friday and have closed over resistance at $25.00. We would look for a pull back on Monday to $25.00 as the preferred entry point to go long. We're going to start the play with a stop at $23.75 but will adjust it higher once the stock re-established support or moves higher in our favor. Long- term traders can look to the 200-dma near $40 (bear in mind that could take a LONG time). We are going to aim for a move to $30 (and potentially higher). Buying a bounce at $25.00 for a rally up to $30.00 looks like the best bet. Picked on December 7th at $25.77 Gain since picked: +0.00 Earnings Date 10/31 (confirmed) =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Iron Mountain - IRM - close: 45.63 change: +0.05 stop: 43.25 Our storage play edged slightly higher today, though volume in the stock was particularly anemic. We’re encouraged by the fact that shares held on to the gains of the week after breaking above the quadruple top that we highlighted yesterday. We will probably adjust our stop higher as soon as IRM can close above the $46 level. Yesterday we mentioned how traders tend to use even numbers as short-term support and resistance for the share price (in addition to round number psychological resistance like $45.00). Thus, once shares close above $46 we'll be looking for the stock to trade to $48 and then to $50. Picked on December 6th at $ 45.58 Gain since picked: +0.05 Earnings Date 01/23 (unconfirmed) -------------------- Bearish Play Updates -------------------- Phillip Morris - MO - cls: 45.08 chg: -0.24 stop: 46.56 *new* MO closed the trading session down for the fifth consecutive day as investors continued to unload the defensive position. What makes the move more convincing than usual is the heavy volume on the declines. The last three days have seen very strong volume which suggests that MO could be reaching critical mass and we could see a stronger downside breakout in the near future. On the other hand five down days in a row seems a bit much and it is a common trading maxim that stocks tend to cycle a few days one direction broken by a couple of days in the opposite direction when following a larger trend. The $45.00 level is important support and it needs to break before bears can aim for the next leg down. Thursday we mentioned using Wednesday's high as an area to adjust your stop. We're going to follow through on that suggestion and put our stop just a couple of cents above Wednesday's high. If the stock trades to our target of $42.50 we'll close the play for a profit. Speaking of profits, MO is not normally a fast moving stock. Those investors who were only looking for a 5% move in the play should be preparing to close their positions as MO is current down 4.4% from our pick price. Picked on December 1st at $47.17 Gain since picked: +2.09 Earnings Date 10/17 (confirmed) =============== AT Closed Plays =============== -------------------- Closed Bullish Plays -------------------- Sealed Air Corp. - SEE - cls: 42.29 chg: -4.61 stop: 44.95 A jury ruled against Halliburton today and awarded $30 million in damages for asbestos related claims. What does this have to do with SEE? Guilt by association. Though we haven’t been able to quantify the level of exposure that SEE has to future asbestos litigation, investors concluded today that the best course of action was to unload the stock ASAP. The ensuing 10% decline came on nearly 10 times the average daily volume, stopping us out at 44.95 on its way down. Picked on December 1st at $45.90 Gain since picked: -0.95 Earnings Date 10/24 (confirmed) --------------------- Closed Long-Term Play --------------------- Office Depot - ODP - close: 16.80 change: -0.38 stop: 16.95 As expected we were stopped out of our long-term bullish play for ODP. Unfortunately, the stock opened at $16.90 and we can only claim a move of $2.00 in the stock price but that's good enough for 13.4%. We do think the intraday bottom on Friday, at $16.50, should encourage bullish investors but further weakness could bring the stock down to $16.00 if the markets see more profit taking. We are still positive on the group and are currently looking for a new entry point in IKN. Picked on October 12th at $14.90 Gain since picked: +2.00 Earnings Date 10/17 (confirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ============ HR New Plays ============ ----------------- New Bullish Plays ----------------- Mattson Technology - MTSN - close: 8.16 change: +0.38 stop: 6.99 Company Description: Mattson Technology Inc., is a leading supplier of thermal, plasma and wet semiconductor processing equipment. The company's products combine advanced process technology on a high productivity platform, backed by industry-leading support. Since beginning operations in 1989, the company's core vision has been to help bring technology leadership and productivity gains to semiconductor manufacturers worldwide. Headquartered in Fremont, Calif., the company maintains sales and support centers throughout the United States, Europe, Asia/Pacific and Japan. (sources: company press release) Why We Like It: We like MTSN for multiple reasons. At first glance one might look at the chart and think that we've found a chip stock that isn't overextended from the huge rallies in the chip sector these last couple of weeks. Basically, that's true, but compared to the rebound shares of MTSN have seen from their October low near $3.00 it's hard to say they are not overbought. Yet long-term shareholders in the stock who didn't use a stop loss could argue that the four-month drop from $19 (June) to $3 (Oct) might still put it in the oversold category. If we use the range of $19 to $3, then a 50% retracement or bounce higher would put the stock at $11, still some 30% away. The recent change in sentiment regarding the semiconductor sector has given many investors both big and small hope that the rebound in the economy next year truly is coming and may be here sooner than expected. While that is still a much debated argument the stock market is a discounting machine that bases prices on future events not current day. The move from $3 to $8 in MTSN from October to mid- November was huge. Fortunately, the chart is telling us that MTSN has spent the last few weeks digesting those gains and is ready for the next leg up. We're placing MTSN in the high risk/high reward section of the website due to the volatile nature in the SOX.X lately. No one expected the index would rocket through resistance so easily and the group could just as easily give it all back. At the moment, the SOX has maintained its gains and closed above its 200-dma at 560, which should act as support. Even if the SOX falls below the 200-dma, it should also find support at previous resistance of 550. Using the strength of the SOX as a background, we paint a bullish trend on MTSN. The stock has been digesting gains and trading sideways between $6.50 and $7.50. Now shares have closed above the $8.00, which was resistance in mid-November and support in mid-August. Friday's close also put it above the 100-dma at 8.00. We think shares could trade anywhere from $10 to $12 near its 200-dma. However, a quick glance at the point-and-figure chart shows the descending bearish trend line is near $11.00. Thus, we'll target the $11.00 level as our exit point. We're going to start the play with a stop at $6.99. This is wider than we normally like to place stops and thus another reason this strategy belongs in the high risk section of the newsletter. Picked on December 7th at $ 8.16 Gain since picked: +0.00 Earnings Date 11/13 (confirmed) =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- AT&T Corp - T - close: 17.68 change: -0.40 stop: 16.95 Drum roll, please. Evidently, the Board of AT&T is meeting this weekend to discuss and possibly choose among the different bids for its AT&T Broadband unit. Readers know that Cox Cable, Comcast and AOL Time Warner are all bidding on the cable unit and MSFT remains a prominent player in the negotiations. It is believed that the rivalry between MSFT and AOL could lead to a premium for the broadband unit of $59 billion or more for AT&T. MSFT is willing to help Cox or Comcast seal the deal as long as AOL doesn't win the bid. The software behemoth is even willing to invest in the broadband unit if AT&T's board decides to go with their original plan of spinning it off in an IPO. Monday could be a big announcement day but if they don't announce shares could see investors sell in frustration. The trading activity on Friday was frustrating but the stock did bounce off its 200-dma and closed back above the 10-dma and the 50-dma (plus that pesky $17.50 level that's so important). If shares dip again, aggressive traders may want to look for entry points near the $17.25 level. Be aware that as a news-event strategy, shares of T are definitely high-risk as no one knows how investors will react to the deal, if any deal is made. Picked on November 29th at $17.62 Gain since picked: +0.06 Earnings Date 10/23 (confirmed) --- 3D Systems - TDSC - close: 11.75 change: +0.72 stop: 10.74 Sometimes it is down right scary! Shares of TDSC broke through its descending bearish lines of resistance and triggered our entry price of 11.52. The stock posted a 6.5% gain heading into the weekend while the rest of the tech sector, specifically the Nasdaq was feeling a little bit of profit taking. Where do we go from here? The stock rallied right to price resistance at $12.00, which was strengthened by the 50-dma at 11.98. The stock has three clear hurdles to overcome between 11.75 and our target of 13.65. There is price resistance and the 50-dma near $12.00. TDSC has potential price resistance and a retracement level at $12.50. There is potential price resistance and its 100-dma at $13.00. Each of these levels should be watched for potential resistance and we'll probably use them to gauge our stop placement as the stock moves in our favor. If we're lucky, the combination of short-covering along with some eager bullish tech buying might propel the stock through these obstacles with little delay. If the stock dips, we would look for a bounce at 11.50 or 11.25 (its 5-dma). We will leave our stop at 10.74 for the moment and wait for confirmation of the breakout. Picked on December 7th at $11.52 Gain since picked: +0.23 Earnings Date 10/17 (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 12-07-2001 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/2660_3.asp ================================================================= In section three: Market Watch for Week of December 10th - 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 10th ================================================== ------------------------ Major Earnings This Week ------------------------ Symbol Company Date Comment EPS Est ------------------------ MONDAY ------------------------ GTK Gtech Holdings Mon, Dec 10 Before the Bell 0.71 ------------------------ TUESDAY ------------------------ CMVT Comverse Technology Tue, Dec 11 After the Bell 0.11 FDS FactSet Research Sys. Tue, Dec 11 Before the Bell 0.26 IBC Interstate Bakeries Tue, Dec 11 -----N/A----- 0.39 KR Kroger Tue, Dec 11 Before the Bell 0.32 ROP Roper Industries Tue, Dec 11 After the Bell 0.56 ------------------------ WEDNESDAY ------------------------ ADIC Advanced Dig. Info. Wed, Dec 12 After the Bell 0.03 TOL Toll Brothers Wed, Dec 12 -----N/A----- 1.64 ------------------------ THURSDAY ------------------------ CIEN CIENA Thu, Dec 13 Before the Bell 0.05 COST Costco Cos Thu, Dec 13 Before the Bell 0.28 DRI Darden Restaurants Thu, Dec 13 After the Bell 0.28 HNZ Heinz Thu, Dec 13 Before the Bell 0.59 MDZ MDS Thu, Dec 13 -----N/A----- N/A ORCL Oracle Thu, Dec 13 After the Bell 0.10 TEK Tektronix Thu, Dec 13 After the Bell 0.10 ------------------------ FRIDAY ------------------------ -no major earnings- ------------------------------- Upcoming Stock Splits This Week ------------------------------- Upcoming Stock Splits This Week... Symbol Company Name Splits Payable Executable CHBS Chrisotpher & Banks 3:2 11/30 12/03 MBVT Merchants Banc 3:2 12/01 12/04 FMBI First Midwest Banc 5:4 12/03 12/04 TWRI Trendwest Resorts 3:2 12/04 12/05 -------------------------- Economic Reports This Week -------------------------- Last Friday's employment number was the big economic report that the Fed was waiting for. The Fed meets next week, on Tuesday, and is expected to cut rates again. In addition to the Fed's official announcement on interest rates, traders will focus on the November retail sales numbers on Thursday and the wholesale inflation figures. Retail inflation figures will be released on Friday. Monday, 12/10/01 ---------------- None Tuesday, 12/11/01 ----------------- Wholesale Inventories Oct Forecast: -0.3% Previous: -0.1% FOMC Meeting Wednesday, 12/12/01 ------------------- Export Prices ex-ag. Nov Forecast: N/A Previous: -0.7% Import Prices ex-oil Nov Forecast: N/A Previous: -0.7% Current Account Q3 Forecast:-$94.2B Previous:-106.5B Thursday, 12/13/01 ------------------ Retail Sales ex-auto Nov Forecast: 0.2% Previous: 1.0% Retail Sales Nov Forecast: -2.8% Previous: 7.1% PPI Nov Forecast: -0.3% Previous: -1.6% Initial Claims 12/08 Forecast: N/A Previous: 475K Core PPI Nov Forecast: 0.0% Previous: -0.5% FOMC Minutes 11/06 Friday, 12/14/01 ---------------- Business Inventories Oct Forecast: -0.4% Previous: -0.5% CPI Nov Forecast: -0.1% Previous: -0.3% Core CPI Nov Forecast: 0.2% Previous: 0.2% Industrial Production Nov Forecast: -0.5% Previous: -1.2% Capacity Utilization Nov Forecast: 74.2% Previous: 74.6% ================== 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 ACF Americredit Corp 28.61 +0.73 MDU Mdu Resources Group 26.77 +1.22 ACAS Amercian Capital 29.86 +0.60 NX Quanex Corp 27.65 +0.67 ACRT Actrade Financial Tech 30.96 +1.46 INT World Fuel Service Corp 17.59 +0.89 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change AMD Advanced Micro Devices 17.85 +1.60 ENTU Entrust Inc 10.11 +1.91 BMRN Biomarin Pharmaceuticals 14.16 +1.19 TXCC Transwitch Corp 6.34 +1.63 APOG Apogee Enterprises Inc 17.85 +1.31 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change PKX Pohang Iron & Steel 24.21 +1.01 TSG Sabre Holdings Corp 37.90 +1.22 AMR Amr Corp 23.34 +1.30 BG Bunge Ltd 23.75 +2.60 AMG Affiliated Managers Group 73.34 +1.09 RBK Reebok Intl. Ltd 26.45 +1.66 ITMN Intermune Inc 51.15 +1.81 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change GCI Gannett Co 68.23 -2.22 ALL Allstate Corp 32.15 -1.08 CSG Cadbury Schwepps 24.25 -1.03 BSX Boston Scientific Corp 25.15 -1.11 MLNM Millennium Pharmaceutical 28.41 -1.15 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- PBI Pitney Bowes Inc 40.45 -1.08 APD Air Products & Chemicals 46.65 -0.83 BDX Becton Dickinson & Co 32.50 -0.87 IMCL Imclone Systems Inc 70.45 -1.49 PECS Pec Solution Inc 34.00 -3.05 ================================================================= 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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