PremierInvestor.net Newsletter Monday 12-10-2001 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/2205_1.asp ================================================================= In section one: Market Wrap: Sleepy Session Ahead of the Fed Market Sentiment: Rally on hold Play-of-the-Day: XMSR Watch List: AVID, EMIS, RYN, PFGI, ASGN, CSGS ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 12-10-2001 High Low Volume Advance/Decline DJIA 9921.45 -128.01 10075.61 9921.45 1.19 bln 965/2152 NASDAQ 1992.12 - 29.14 2036.54 1989.68 1.65 bln 1336/2311 S&P 100 581.24 - 10.54 591.94 581.22 Totals 2301/4463 S&P 500 1139.93 - 18.38 1158.31 1139.66 RUS 2000 474.18 - 7.03 481.21 473.50 DJ TRANS 2599.10 - 29.16 2645.54 2590.92 VIX 26.00 + 1.11 26.65 25.22 VXN 52.12 + 1.94 52.15 50.54 TRIN 1.56 Put/Call 0.57 ----------------------------------------------------------------- =========== Market Wrap =========== Sleepy Session Ahead of the Fed The major averages attempted to rally early Monday morning, but failed to follow-through above overhead congestion. The triple digit loss in the Dow Jones Industrial Average (INDU) and nearly 1.5 percent dip in the Nasdaq (COMPX) might have you think that Monday was a wild session. But it wasn't. Following the early morning rally attempt, stocks drifted lower throughout the session, ultimately closing near their day lows. The drifty action of the tape was indicative of traders stepping to the sidelines ahead of the FOMC's announcement on interest rates Tuesday afternoon. Volume totals reflected the non-commitment on the part of traders. Only 1.2 billion shares traded on the NYSE, while 1.65 billion exchanged on the Nasdaq market. The totals are well below the recent daily volumes. The Federal Reserve will announce its decision on rates at 2:15 p.m. EST. The market is expecting another 25 basis point reduction in short-term interest rates Tuesday afternoon. In addition, the market will be listening for guidance from the Fed. While nothing short of vague, traders will nevertheless turn to the release accompanying the decision on rates for insight into being Alan Greenspan. Tomorrow's announcement, more than any other this year, will be read into by Wall Street very carefully. There's a growing consensus that the economy may be over stimulated from monetary and fiscal stimuli. While Main Street continues suffering through loss of jobs and a lousy economy, Wall Street is growing worried about the prospects of inflation. That's why traders will scour the Fed's release tomorrow afternoon, searching for indications of what the Fed's opinion is of the U.S. economy and when they may begin to raise rates in an attempt to fend off inflation. The Fed Fund Futures contract is currently anticipating a hawkish monetary policy by next summer. Despite the prospects of another rate cut, bonds were modestly higher Monday, evidenced by lower yields in the longer-dated securities. The short-end of the yield curve, however, was slightly lower. The 13-week Bill Yield (IRX) finished at 1.68%. The shorter-dated securities had been aggressively bought last week. Today's action in the IRX was most likely a product of profit taking and rotation into longer-dated securities. Without any economic news Monday morning, stocks were left to their own devices and earnings guidance. The biggest of companies, General Electric (NYSE:GE), reaffirmed its financial goals for fiscal 2001. The company said it would hit its revenue target and EPS goals for the year and would achieve double-digit growth for fiscal 2002. The company hosts its analyst meeting next week, when more details about the current quarter and forecasts for next year may become available. Despite the reaffirming of its financial targets, shares of GE finished lower by almost 1 percent. JDS Uniphase (NASDAQ:JDSU), the beleaguered optical networking equipment maker, said Monday morning that its sales would continue to slump until its fiscal third-quarter, which ends in March. The company reported that it expects another 10 to 15 percent drop in revenues in the meantime. But that March quarter will represent the bottom in sales for the current slowdown in spending. The attempt to call the bottom didn't appease traders. JDSU finished 5.5 percent lower on relatively active volume. The stock added pressure to an already weak Networking Index (NWX), which lost more than 3 percent on the day. The most recent victim in the energy sector was Calpine (NYSE:CPN). An article in the New York Times over the weekend suggested that similarities existed between Calpine and Enron, which should give investors reason to worry. Investors in the energy sector, already nervous after the Enron debacle and Haliburton (NYSE:HAL) issues, took the Times' warning to heart and knocked shares of Calpine down to the tune of nearly 17 percent. The stock finished Monday at a two year low. Calpine hosted a conference call after the bell in an attempt to soothe and reassure investors that it is not like Enron. Poor Enron. The words of Calpine's CEO seemed to help as the stock gained about 35 cents in the evening session. The Packard Foundation voted against the proposed Hewlett-Packard (NYSE:HWP) - Compaq (NYSE:CPQ) merger. Both stocks were lower on the news. HWP seemed to track the weak tech sector Monday, but CPQ's 14 percent drop was more than market-related. The drop in CPQ seemed to reflect a growing consensus that the merger will never be. In the Biotechnology (BTK) space, Protein Design Labs (NASDAQ:PDLI) dropped by nearly 19 percent. The company reported the full results of its Phase II cancer drug, Remitogen. Of the 25 test patients, only one showed a positive response to the treatment. The poor showing of PDLI's Remitogen followed the release of poor data for its leukemia drug last Friday. The stock was the target of several analyst downgrades and weighed on the BTK as PDLI is one of the components of the index. The BTK finished lower by 4.26 percent. Away from individual company news weighing on the market, Banc of America's "market guru" reduced his weighting of stocks in his recommended portfolio to 55 percent from 60 percent. Tom McManus suggested to take the five percent from stocks and to put it into bonds, which is interesting noting the recent weakness in Treasuries. Noting the recent retreat in bonds, McManus said that higher long-term rates could pose a challenge to the consumer, the group that has been busy refinancing homes and spending. McManus added that the sell-off in bonds puts into question stock valuations. With the exception of GE's two bits, the news flow was fairly negative Monday. It's no wonder stocks finished lower. It's a wonder that they didn't fare worse. The selling Monday was very contained and routine, the boring type. Stocks drifted lower throughout the day on relatively light volume. There weren't any major earnings warnings (JDSU isn't major), just a bit of bearishness here and there. Moreover, the trends in the major averages are intact, which means we could be nearing another entry point, possibly ahead or shortly after the Fed's announcement tomorrow. The Dow finished about 20 points away from its ascending trend line that has been in place since September 21. Another bounce from the line at 9900 be the entry point that buyers have been waiting for. A breakdown below 9900, however, could send up a red flag and have the bears ready to pounce. Weakness below the 9800 level could negate the Dow's trend and cause the bulls to re-think their strategy. The COMPX is in a similar position. The tech-heavy index is about 40 points away from the ascending trend line of its regression channel. A bounce from the 1950 area could be the entry point into tech stocks. But a breakdown below that level, confirmed by a decline below 1900, could give the bears incentive to short tech stocks. With the Dow and COMPX approaching key support levels, the bulls better be ready to step in. That could happen before or after the Fed's official announcement on rates tomorrow afternoon, which may have been partially to blame for the weakness Monday. Whatever the reason was, stocks pulled back in a normal, routine, profit taking fashion today. The light volume on negative news didn't reveal conviction on the part of sellers. Rather, the bulls took the day off, opting to wait for the Fed's decision on rates. The contained selling pressured the major averages closer to key support levels, where the bulls may return tomorrow. The beauty of entering BULLISH plays near key support levels is that risk is relatively easy to manage with tight stops just below the support levels. That way, risk isn't a four-letter word. Eric Utley Premier Investor ================ Market Sentiment ================ Rally on Hold Russ Moore Wall Street was draped in yellow as investors chose to play a cautious hand ahead of tomorrow’s FOMC interest rate decision. The major indices struggled throughout the day with the DOW closing –1.3 percent lower, and the NASADAQ dropping –1.4 percent. Big cap tech stocks faired no better, giving the NDX a loss of –1.7 percent. Volume was light with only 1.17 billion shares moving on the big board and 1.67 billion shares trading on the tech index. Market breadth favored losers by a 22/10 margin on the NYSE and a 23/13 difference on the NASDAQ. Today’s action failed to produce a single sector in positive territory. Biotech, forest and paper, biotech and networking sectors took the hardest hit. Trim Tabs news was mixed. On the hand you had U.S. equity inflows of 4.2 billion for the three days ending December 6. On the other hand we had corporate investors giving off bearish signals by their lack of buying. Last week offered nothing in the way of cash takeovers coupled with falling buyback announcements. Tomorrow’s FOMC meeting is expected to produce a quarter point rate cut. Should the Fed decide to hold the line on easing, look out below. If Mr. G. and company go the other way a raise rates by a half-point we should see the return of the bulls. VIX Monday 12/10 close: 26.00 VXN Monday 12/10 close: 52.12 30-yr Bonds Monday 12/10 close: 5.58 Total Put/Call Ratio: .62 Equity Option Put/Call Ratio: .57 Index Option Put/Call Ratio: 1.00 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 41.00 Volume/Open Interest Maximum calls: 40/143,890 Maximum puts : 40/132,058 Moving Averages 10 DMA 40 20 DMA 40 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: 581.24 Volume/Open Interest Maximum calls: 640/5,553 Maximum puts : 500/8,038 Moving Averages 10 DMA 587 20 DMA 588 50 DMA 569 200 DMA 603 Fibanocci Retracements Relative High: 680.03 (05/22/01) Relative Low: 480.07 (09/21/01) 38% 556.14 50% 579.65 62% 603.55 === S&P 500 (SPX) 52-Week High: 1530.01 52-Week Low: 965.80 Current close: 1139.93 Volume / Open Interest Maximum calls: 1150/51,158 Maximum puts : 1050/41,659 Moving Averages 10 DMA 1146 20 DMA 1144 50 DMA 1107 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: 9,921.45 Volume / Open Interest Maximum Calls: 98/25,661 Maximum Puts 90/47,842 Moving Averages: 10 DMA 9,910 20 DMA 9,881 50 DMA 9,521 200 DMA 10,131 Fibanocci Retracements Relative High: 11,350.05 (05/22/01) Relative Low 8,062.34 (05/21/01) 38% 9,308.92 50% 9,693.99 62% 10,085.60 == Biotech Index (BTK) 52-Week High: 811.61 52-Week Low: 383.28 Current close: 575.45 Volume / Open Interest Maximum Calls: 620/ 548 Maximum Puts: 540/1,151 Moving Averages 10 DMA 599 20 DMA 593 50 DMA 547 200 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: 559.37 Volume / Open Interest Maximum Calls: 520/ 577 Maximum Puts: 470/1250 Moving Averages 10 DMA 545 20 DMA 534 50 DMA 483 200 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: 390.56 Volume / Open Interest Maximum Calls: 420/400 Maximum Puts: 360/320 Moving Averages 10 DMA 396 20 DMA 395 50 DMA 394 200 DMA 391 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. ========================= Play-of-the-Day (Bullish) ========================= XM Satellite Radio - XMSR - close: 12.95 chg: +0.01 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) - ORIGINAL WRITE UP: Dec. 7th, 2001 - 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 judgment 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. - Play-of-the-Day Update, Dec. 10th, 2001 - The good news for bullish investors is that XMSR started out of the gates very strong this morning, quickly trading to its high for the day at $13.68. This triggered our entry price at $13.06 and put us hypothetically "long" the stock. The bad news is the early morning gains evaporated under a two pronged attack. First of all, XMSR closed on another 11.5M shares in a secondary offering, which brought in $129 million in new financing. Now this is probably good news for the company and will provide more operating capital but investors never like to hear that the company is taking on new debt and that their own shares may become more diluted. However, probably the greatest culprit was another day of profit taking for the Nasdaq that brought the index back below the 2000 level. We like XMSR and feel that traders may want to watch for new entry points if shares dip back to the $12.50 - $12.25 level or wait for the stock to trade back above the $13 mark. It will be important for XMSR to show strength at the $12 support level as a breakdown there would violate its bullish trend. Picked on December 10th at $13.06 Gain since picked: -0.11 Earnings Date N/A ========== 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. ----------- Avid Tech. - AVID - close: 12.89 change: +0.99 WHAT TO WATCH: AVID hasn’t seen its 200-dma in over six months, until today. Serious volume thrust the stock through resistance at 12.24 and, though we tried to find any news to explain the move, none was forthcoming. The company is engaged in the development, marketing, selling, and support of a wide variety of software and systems related to digital content. We have to wonder what is in the works when significant levels of resistance are surpassed, particularly when the move is without news and on nearly 10 times the average number of shares. --- Emisphere Tech. – EMIS - close: 30.60 change: +1.51 WHAT TO WATCH: Deutsche Banc Alex Brown upgraded shares of EMIS to a buy this morning and shares responded by breaching upward resistance at 30.00 but not enough to tackle the current double (now triple) top near $31.50. There were more block trades today than the average total number of trades over the last 65 days. Are the big players getting in or did they sell into today’s rally? Though EMIS traded at a 52-week high an hour after the market opened, shares saw some profit taking later in the session. If trading tomorrow reaffirms today’s low of 29.26, it might be time to take a closer look at this one. --- Rayonier – RYN – close: 46.70 change: +0.90 WHAT TO WATCH: A positive article in the online version of Barron’s over the weekend helped push shares of wood products giant RYN to the brink of a 52 week high today. The article cited the bottoming in the price of pulp, consolidation in the industry, as well as potential benefits associated with an IRS ruling. With the 52 week high looming only 1.00 away, a push through resistance at this level could be indicative of further gains in the coming weeks. --- Provident Financial – PFGI – close: 24.33 change: +0.31 WHAT TO WATCH: No, not Providian Financial! PFGI is engaged primarily in commercial, retail, and mortgage banking instead of providing credit cards for the high-risk market. As such, and in light of both the long series of interest rate cuts and the rebounding economy, PFGI looks poised for a nice rebound in share price. Four of the last five days have finished to the upside and today’s close marks the intersection of the 10 and 50-dma. Resistance looms at 25.00, but tomorrow’s Fed announcement could provide the impetus to break through that level. We shall see. --- On Assignment Inc. – ASGN – close: 21.71 change: +0.41 WHAT TO WATCH: ASGN broke above long-term resistance at the 200- dma on December 5th and has continued higher every day since, filling a sizeable gap that occurred back in the middle of June. Last week’s employment news was not particularly encouraging overall but if the market anticipates a rebound in employment, it will likely voice its opinion in this particular industry segment. With the gap back in June having been filled and strong support now evident at the 200-dma, we like ASGN’s chances for further moves in the coming weeks as well but currently the stock does look overbought in the short-term and we would look for a pull back before committing new capital. A bounce at $20.50 or $20.00 may be the ideal entry point. --- CSG Systems – CSGS – close: 35.36 change: 0.75 WHAT TO WATCH: We’re putting CSGS on the watch list for a few reasons. First, shares have bounced back nicely after reaching a low at the end of November. Second, today’s close was right at short-term upward resistance. And third, shares have retraced half of the sizeable gap down that took place back on October 30th. A move above the 50-dma (35.89) would represent the first time the stock eclipsed such a level in over five months and could provide the needed support for further advances. Traders will also want to watch price resistance at $36.25 which has stopped the bulls twice in the last month. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Monday 12-10-2001 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/2205_2.asp ================================================================= In section two: Net Bulls Closed Bullish Plays: EXEL, NXTL Closed Bearish Plays: WWCA High Risk/High Reward New Bullish Play: LSTR Closed Bullish Play: T Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Net Bulls (NB) section ================================================================= =============== NB Closed Plays =============== -------------------- Closed Bullish Play -------------------- Exelixis Inc. - EXEL - cls: 15.40 chg: -0.36 stop: 15.24 The +4% loss in the BTK.X biotech index has confirmed a reversal in the bullish trend that has lasted over two months for the sector. As per our comments on the weekend, with the BTK under 580 we are now very cautious as the sector looks like it could fall to the 550 level. In response to the profit taking that affected the sector, shares of EXEL slipped to support at $15.00 before bouncing off its lows. The MACD is starting to rollover and shares could consolidate back to price support near $14 or its 200-dma at 13.80. We were stopped out of the play at 15.24 for 61 cent loss. Traders should be very cautious about new long positions while the BTK.X is falling. Picked on December 1st at 15.85 Change since picked: -0.61 Earnings Date 11/13 --- Nextel Comm. - NXTL - cls: 11.20 chg: -0.76 stop: 11.38 Today’s activity in NXTL was particularly disappointing given the fact that shares appeared to find support near 11.80 last week. We were a little nervous that there would be some profit taking in the Nasdaq today, especially if the average gave the 2,000 level back. There was no specific news to explain the -6.35% decline in NXTL. Odds are today's move was profit taking in the stock after last week's advance. It will be important for the bulls that NXTL maintain support at the $11 level. Below $11, the stock violates its bullish trend and shares will likely consolidate back to the $10 - $9.50 level. Picked on December 4th at $11.88 Change since picked: -0.50 Earnings Date 01/23 -------------------- Closed Bearish Play -------------------- Western Wireless - WWCA - cls: 25.56 chg: +1.88 stop: 24.51 A month long downward spiral in WWCA finally came to an end today with shares finishing almost 8% higher on the session and stopping us out at 24.51. The move came on the heels of Friday’s advance and pushed the stock back above its 10-dma for the first time in over one month. Today’s gains erased much of our profit on the short, however, tightening the stop along the way down helped guarantee that we walked away with a profit of over 7% on the play. Does this mean that a bottom in the stock has in fact been reached? We’ll probably need another day or so before we receive confirmation of the bottom, but if volume continues to improve and the stock continues to close to the upside, WWCA could provide a compelling argument for a short-term long play to catch the bounce higher. Look for resistance at $27.50 and its 50-dma near 28.57. Picked on November 10th at 26.40 Gain since picked: +1.89 Earnings Date 11/07 ================================================================== High Risk/High Reward (HR) Section ================================================================== =============== HR New Plays =============== ---------------- New Bullish Play ---------------- Landstar System - LSTR - close: 73.26 chg: +0.99 stop: 69.50 Company Description: Landstar System, Inc. is headquartered in Jacksonville, Florida. The Landstar carrier group, comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., and Landstar Ranger, Inc., delivers excellence in complete over-the-road transportation services. The Landstar multimodal group, comprised of Landstar Express America, Inc. and Landstar Logistics, Inc., delivers excellence in expedited, contract logistics and intermodal transportation services. (source: Company Press Release) Why We Like It: With the price at the pump under $1.00 per gallon in many areas of the country, the cost of operations in the transportation sector has fallen dramatically compared to just six months ago. As a result, our attention to the sector has begun to mount and we think we may have found a stock that has some room to run. With a bullish price objective over $80 and strong support just under 70.00, LSTR poses a compelling argument in terms of risk versus reward if the bulls can execute. Consider that late last week shares dipped down to successfully test the 200-dma. Now that support has been established at this level and an economic turn around appears to be in the offing, LSTR could be poised for a nice run higher. We would have preferred to enter the trade closer to the 70.00 mark but with Stochastics still in a comfortable trading range, shares are far from overbought at current levels. We also like the looks of its MACD starting to reverse course and we could see a bullish crossover soon. The MACD's histogram is certainly indicating a new leg higher may be in the works. We also like the recent bullish crossover in the 50-dma over LSTR's 200-dma. Another positive indicator that bulls can look to was Monday's bullish "engulfing" candlestick pattern. We are placing LSTR on the high risk/reward section of the website due to its low average volume of just 52K a day. Normally, we prefer to play stocks with at least 100K a day in average volume. Active traders may want to look for a pull back to the $72 level or even a dip to its 50-dma (70.50), but hopefully, given all the positive indicators shares will trade up from here. We are going to start the play with a stop at $69.50, which is just under price support of $70 and its 200-dma. If you think the lows of the last few days might hold, more conservative traders might tray placing their stop under the 71.50 level. We anticipate resistance at several levels including 76.00, the high in mid-November, 78.00, the highs in August, and 80.00, notice the intraday highs in July. Picked on December 10th at $73.26 Gain since picked: +0.00 Earnings Date 01/10 (unconfirmed) =============== HR Closed Plays =============== -------------------- Closed Bullish Play -------------------- AT&T - T - close: 16.90 change: -0.78 stop: 16.95 With the big buildup going into the weekend and news that the Board of AT&T would be mulling over its prospects, Wall Street was looking for news that T had agreed to sell its broadband unit. When that news failed to appear it was no surprise that the stock sold off as a result. In fact, shares gapped down in light of the announcement, breaking multiple levels of support including the 10, 50, and 200-dma on the way down. There is no question that investors had banked on some positive news this morning and, when it did not arrive, many chose to bail out. Our stop of 16.95 was triggered relatively early on in the session, as shares dove out of their recent bullish trend. The close at 16.90 brought shares back to the previous levels of consolidation that were seen in late November. Evidently, someone at T said that there was "no guarantee" that a deal would be reached and the company may decide to keep the broadband unit themselves. For traders looking for a "buyout bid" to prop up the stock price this was exactly what the did not want to hear. In addition to the lack of news on a new owner for the unit, the Wall Street Journal ran an article claiming that AT&T has lowered their forecasts for the broadband unit which would have further weakened any investors confidence in the stock price. Picked on November 29th at 17.62 Loss since picked: -0.67 Earnings Date 10/23 ================== 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. 12/10/01 ================== 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 WW Watson Wyatt & Co 21.00 +0.53 MBRS Memberworks Inc 12.73 +1.33 CRFT Craftmade Intl 14.82 +1.57 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change TOM Tommy Hilfiger Corp 14.52 +1.02 SBYN Seebyond Technology 7.09 +1.39 KROL Kroll Inc 16.49 +1.67 IDNX Identix Inc 10.35 +1.30 VSNX Visionics Corp 18.08 +5.39 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change SWK The Stanley Works 45.70 +2.17 MHK Mohawk Industries 53.40 +3.13 WWCA Western Wireless Corp 25.56 +1.88 ITG Investment Technology 41.22 +2.15 ASF Administaff Inc 34.55 +1.25 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change PFE Pfizer Inc 41.34 -1.76 AOL AOL Time Warner 31.00 -1.98 KR Kroger Co 23.30 -1.30 AFL Aflac Inc 25.10 -1.05 IDPH Idec Pharmaceuticals 64.81 -3.94 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- SBR Sabine Royalty 21.00 -0.51 FISB First Indiana Corp 24.02 -0.95 SCL Stepan Co 23.45 -0.80 ================================================================= 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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