PremierInvestor.net Newsletter Wednesday 12-26-2001 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/5361_1.asp ================================================================= In section one: Market Wrap: The "Bin Laden" tapes Watch List: APA, CPE, HRB, BPRX, CNC Market Sentiment: Retailers bring some Christmas cheer. Play-of-the-Day: One way or the other. ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 12-26-2001 High Low Volume Advance/Decline DJIA 10088.14 + 52.80 10169.09 10034.93 801 K 2066/1074 NASDAQ 1960.70 + 16.22 1983.84 1948.77 1.11 bln 2183/1494 S&P 100 587.50 + 2.31 592.84 585.19 Totals 4249/2568 S&P 500 1149.37 + 4.72 1159.18 1144.65 RUS 2000 490.19 + 4.38 490.60 485.76 DJ TRANS 2630.22 + 24.65 2632.24 2602.44 VIX 22.93 - 0.28 24.56 22.38 VXN 49.06 - 0.38 49.61 48.79 TRIN 0.93 Put/Call 0.54 ----------------------------------------------------------------- =========== Market Wrap =========== The "Bin Laden" tapes Rumor and speculation about Osamah Bin Laden being "dead or alive" impacted stock action today after Arabic news agency Al Jazeera said it had a new Bin Laden tape. That news found stocks trading off their best levels of the session with the Dow Industrials still trading up 100 points. As stocks drifted off their best levels, MSNBC reported that the recent airing of said Bin Laden tape was recorded on December 11th. Many thought "if true, the tape would have preceded the intense bombing of Tora Bora, which began December 12th that U.S. officials believe might have killed Bin Laden." As the mystery of the "Bin Laden Tapes" unfolded, it appeared that some of Bin Laden's words referred to the September 11th attacks on the World Trade Center and Pentagon as taking place "3-months ago." The "3-months ago" then had many news agencies questioning the "December 11th" date as 3-months ago is rather vague and still has many wondering just when the tape was recorded. By session's end, the Dow Industrials did finish with a 52 point gain at 10,088, which was good enough to have this major market average closing above its 200-day moving average. The first such close above this moving average since July 19th, 2001, when the Dow closed at 10,610. Stocks hold onto gains Many of the technology indexes gave back about 3/4 of their gains after the news of the "Bin Laden Tapes" existence, but still managed to close in positive territory. The Semiconductor Index (SOX.X) finished with a 1% gain at $520, after having traded higher by as much as 3.6% at 596. Sector winners included the Disk Drive Index (DDX.X) +2.5% and the CBOE Internet Index (INX.X) +2.18%. Shares of Yahoo! Inc. (NASDAQ:YHOO) gave back the bulk of it's early session gains from the $18.27 level, but still managed an impressive 5% gain and closed at $17.51. Oil service stocks (OSX.X) looked to have been the strongest sectors today with a 3.7% gain and a close that pegged near the session high of $89.41. A close above the $90 level could well se a test of the falling 200-day moving average near $96. Helping bolster the move in oil service stocks was the March Light, Sweet Crude Oil futures (cl02h) jumping 8.4% to $21.49 ahead of Friday's decision from OPEC on potential production cuts. Many are expecting a potential production cut of 1.5 million barrels per day, even without full cooperation by nonmembers. Oil Stocks (image) In the recent couple of weeks we've been alerting traders/investors that a bull may have been starting to emerge in the energy complex. That potentially bullish wedge we identified on December 13th (see 01:00 EST Update) did unfold on December 19th and the group now trades the $89 level. BJ Services (NYSE:BJS) has been one of the stocks we've identified as a leader in the group and today's 6% didn't disappoint subscribers in the least. It's been my "fundamental" view in the past that OPEC production cuts are not necessarily bullish for oil service stocks. Production cuts for the most part take away from service activity, except for the shutting in of production. That was definitely true for the latter half of 2001 as oil prices continued to fall from the high $25 per barrel range and oil service stocks got hit hard and sold on every rally attempt. With continued production cuts taking place at OPEC, we're now starting to see a bit of a base being put in on the crude oil commodity and the futures market, indicating that we may be starting to see some equilibrium between supply and demand. Should oil prices continue to rise from current levels of $19-$21 per barrel, some of the more "domestic" U.S. based companies may start seeing a pick-up in drilling activity. Should the economy start growing here in the U.S. and abroad then energy and oil service stocks may be getting ready for a sustained move higher. Integrated/Operations Oil/Gas Stocks - Sorted by volume I've put an X by some of the stocks in the above lists and will discuss each below. Amerada Hess (NYSE:AHC) $61.70 +0.94%: This was a stock I mentioned recently on OptionInvestor.com as a stock that looked to be gaining some "late favor" in the energy group. The reason I say "late favor" is that this stock recently gave its first "buy signal" on its point/figure chart at $61, the first buy signal this stock has seen since it traded $75 in late July. I'd rank this stock as a "bottom feeder" that has some room to upside resistance. On the point/figure chart, I could draw an upward channel with lower end support at $57 and upper-end resistance at $66. The downward trend (bearish resistance) is currently at $73, so there's some upside in this one. First sign of trouble would be a double-bottom sell signal at $56. Current vertical count has just been given with the recent buy signal off the bottom and indicates a potential bullish price objective of $73. Suncore Energy (NYSE:SU) $31.92 : We briefly mentioned shares of Suncore (SU) immediately following the terrorist attacks here in the U.S (see trader's corner "Spotlight on the Oil Sector." This was a stock that looked quite strong on its point/figure chart and had been and still has held upward trend (bullish support). The stock did gap higher immediately following the terrorist attacks, but then pulled right back into bullish support at $26, then reversed higher to $31, pulled back to $27, and has now moved right back up to $32. Our research showed the company was primarily a play on North America as the bulk of reserves were in Canada. We mentioned this stock as it had very little "Middle East" exposure and might be a beneficiary of potential global unrest and a potential benefactor of disruption of energy supplies to the U.S. from overseas. The current bullish price objective from a vertical count dating back to March of this year indicated a bullish price objective of $43, which still stands as a "sell signal" has not been given since October of 2000. Apache Corporation (NYSE:APA) $53.85 : Apache Corporation is an interesting stock technically. Bar chartists will be quick to pick up on the potential "reverse head and shoulders" pattern developing in this one. A break above the $55 would have the stock breaking its neckline at that level. With head in place near $40, this pattern would indicate a potential bullish objective of $70. I also liked the point and figure chart of APA and recent successful test of bullish support at $46 and subsequent "buy signal" at $50. Today, shares of APA cleared its 200-day MA of $52.50. Volume was light and it sure would have been nice for this one to break this 200-day when all market participants were here. I think $55 will be a formidable test near-term. Current vertical count is bullish to $68, and that's pretty darned close the calculation we get from the reverse head and shoulders pattern. Clear stop would be a trade at $45. Ideal entry would be for the stock to trade $55, then find a pullback near $50-51 for 1/2 position long. Then should the stock be able to break above the neckline of $55, trader/investor could average up to full position. Sunoco (NYSE:SUN) $37: Shares of Sunoco (SUN) have not been all that "exciting" of a stock, but do offer the trader some rather obvious stopping points. The point and figure chart currently shows a bullish price objective of $54, but it will most likely take a trade at $40 to get this one going to the upside. First sign of trouble on the point/figure chart comes with a trade at $34, which would be a double-bottom sell signal. One reason I profile the stock here as a potential bullish candidate is that the stock is currently trading in the middle of what looks to be a range from $32-$42. The bar-chart shows a rising 200-day MA which has been pierced to the downside 4 different times since July of this year, but each time, bulls seem to gobble the stock up and move her back to the $39 level. For the more short-term trader, I think this stock is a good bullish candidate if your looking to play the "energy" bull, with a stop just below this month's lows of $35.50. Callon Petroleum (NYSE:CPE) $6.60: This one is for the more aggressive bull that's looking for a "higher risk/reward" type of play. Today's 8% gain is what an aggressive bull looks for, but they've got to be able to take some heat too. What aggressive bulls may find compelling in this one is today's 8% rise on volume of 305,000 shares, which is about 6-times that of average daily volume of 52.9K over past 3-months. This is interesting to me considering a rather light volume broader market day due to this being a holiday week. Aggressive bulls may want to keep an eye on this one on a break above the $6.75 level. The point and figure chart has been bearish since February of this year, when shares of CPE have a sell signal at 13 and bearish vertical count indicated a potential bearish price objective of $4. The stock came close on December 3rd, when the stock traded $5.35. Again... aggressive energy bulls only on this one. A bull would gladly sell any type of near-term rally near $9. Jeff Bailey Senior Market Technician ========== Watch List ========== The PremierInvestor.net watch list is not designed to be read as full fledged stock picks. Rather we would prefer to offer it as an extra tool in today's investor toolbox. Think of it as a radar screen with your own radar operator pointing out interesting developments, technical patterns or potential plays that you may or may not have seen on your own. Due to time constraints we do glance at the news but rarely do we have time to fully read pertinent news stories, due background research and other necessary screens that investors should do before making a decision. A common exercise is to read the entry, glance at the sector and other stocks in that industry and then compare what's happening in the stock to what's happening in the broader market indices. We hope you enjoy the Watch List and that it proves to be a useful tool for your own trading success. ---------- Apache Corp - APA - close: 53.85 change: +1.52 WHAT TO WATCH: We had APA on the watch list this last weekend as a potentially bearish development. Shares had rallied right to its 200-dma and stopped. APA tried to breakthrough its resistance on Monday but couldn't do it. Fresh expectations on Wednesday about OPEC possibly cutting production had the price of oil gapping higher on the futures market, which fueled a move in the Oil and Oil Services sectors. APA rallied through its 200- dma and closed near its high. Traders may want to watch it for a potential pull back. These developments in oil and OPEC combined with a potentially recovering economy may spark a multi-week run in the oil group. Please see Mr. Bailey's wrap for additional comments. --- Callon Petroleum - CPE - close: 6.60 change: +0.49 WHAT TO WATCH: CPE is another energy play but a lot cheaper when it comes to dollars per share. The stock does look pretty extended after the three-day run up so traders will want to plan their entry carefully. We would look for a potential pull back to $6.00 or $6.10 or wait for shares to close above $6.75. Shares topped out at $6.75 several days ago and with the 100-dma descending above (currently 6.80) this could be a tough level of resistance. Volume has been very strong for the recent moves up, which is a very bullish sign. CPE is definitely one to watch. --- H R Block - HRB - close: 42.99 change: +0.18 WHAT TO WATCH: After the holidays are over people around the country will begin to focus on their taxes. When that happens there may be some attention drawn to shares of HRB. The stock has been a huge winner this year and its strength might extended through the 2002 tax preparation season. We would prefer to buy on a dip. Short-term traders may want to look for a dip to $41 or $40 while longer-term traders may to wait for a deeper round of profit taking. If you do play, don't forget your stop. --- Bradley Pharmaceuticals - BPRX - close: 19.76 change: -1.79 WHAT TO WATCH: Shares of BPRX saw a lot of volume today after its breakout on Monday above overhead resistance at $20. Unfortunately, the stock couldn't hold on to its early Wednesday gains or any of Monday's gains either. The stock has produced a bearish engulfing candlestick pattern, which may portend a reversal in the trend. We think BPRX is worth watching for a pull back to support near $16.50 to $17.00. If the stock can bounce at these levels it may be a good entry point for a long play. --- Conseco Inc - CNC - close: 3.98 change: +0.75 WHAT TO WATCH: One of the big losers in 2001, shares of CNC are trying to make a comeback. The question is whether this is a short-term rally or the beginning of something better. The stock has already produced a sizeable percentage gain from its lows near $3.25 just a week ago. Wednesday's gain of 23% puts it directly below resistance at $4.00 and one cent below its 50-dma. Traders can watch it for a breakout to the upside or a slide back to $3.50 (or lower). ================ Market Sentiment ================ Retailers bring some Christmas cheer. by Russ Moore Positive news from Wal-Mart (WMT) and Yahoo (YHOO) provided a post-Christmas lift to the markets with the DOW adding +0.5 percent, the NASDAQ +0.8 percent and the NDX +0.9 percent. The session’s gains were tempered in the late going when news of another Bin Laden tape hit the wires. Volume was very thin with only 840 million shares moving on the big board and 1.13 billion on the NASDAQ. Winners outperformed losers by a 21/11 count on the NYSE and 22/15 on the tech index. Natural gas and Oil service were the leading players on the broader markets while Internet and Networkers led the tech side. Red arrows were reserved for the gold and chemical sectors. Some market observers believe the Wal-Mart/Yahoo numbers will be the exception, and not the rule. The Instinet Redbook Research report showed retail sales for the first three weeks of December had slipped -4.5 percent versus November, and were down -0.9 percent from last December. The Bank of Tokyo-Mitsubishi retail chain-store index rose +2.9 percent from the previous week and +2.0 percent from the same week last year (how’s that for clarity). It’s obvious from today’s volume levels that market participation was limited to more fund manager “window dressing”. The real action will have to wait until next week, when commercial activity picks up and the retail investor gets back in to the swing of things. Wednesday 12/26 close: 22.93 VXN Wednesday 12/26 close: 49.06 30-yr Bonds Wednesday 12/26 close: 5.52 Total Put/Call Ratio: .58 Equity Option Put/Call Ratio: .49 Index Option Put/Call Ratio: 1.46 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 39.69 Volume/Open Interest Maximum calls: 40/114,396 Maximum puts : 40/ 88,013 Moving Averages 10 DMA 40 20 DMA 40 50 DMA 38 200 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: 587.50 Volume/Open Interest Maximum calls: 590/4,433 Maximum puts : 520/4,428 Moving Averages 10 DMA 581 20 DMA 583 50 DMA 576 200 DMA 600 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: 1149.37 Volume / Open Interest Maximum calls: 1150/37,922 Maximum puts : 1150/32,643 Moving Averages 10 DMA 1138 20 DMA 1142 50 DMA 1122 200 DMA 1167 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: 10,088.07 Volume / Open Interest Maximum Calls: 100/13,854 Maximum Puts 100/26,331 Moving Averages: 10 DMA 9,937 20 DMA 9,921 50 DMA 9,671 200 DMA 10,104 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: 588.43 Volume / Open Interest Maximum Calls: 650/ 231 Maximum Puts: 580/1,281 Moving Averages 10 DMA 578 20 DMA 586 50 DMA 570 200 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: 520.68 Volume / Open Interest Maximum Calls: 440/1,084 Maximum Puts: 470/2,006 Moving Averages 10 DMA 539 20 DMA 543 50 DMA 510 200 DMA 556 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: 385.53 Volume / Open Interest Maximum Calls: 400/525 Maximum Puts: 380/265 Moving Averages 10 DMA 381 20 DMA 387 50 DMA 391 200 DMA 390 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, 12/21. 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 12/04/01 360,315 420,919 (60,604) 21.0% 12/11/01 367,397 429,640 (62,243) 2.6% 12/18/01 391,995 456,968 (64,973) 4.3% 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 12/04/01 159,336 86,534 72,802 24.4% 12/11/01 158,490 86,717 71,773 (1.4%) 12/18/01 158,300 80,507 77,793 8.4% 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 12/04/01 42,191 51,426 (9,235) (16.5%) 12/11/01 45,468 51,392 (5,924) (35.9%) 12/18/01 55,276 58,433 (3,157) (46.7%) 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 12/04/01 11,808 8,311 3,497 (16.4%) 12/11/01 12,425 11,754 671 (81.0%) 12/18/01 17,649 18,626 (977) 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 12/04/01 22,703 10,739 10,739 (15.7%) 12/11/01 23,135 12,576 10,559 (1.7%) 12/18/01 21,919 13,810 8,109 (23.2%) 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 12/04/01 3,677 9,799 (6,122) (4.4%) 12/11/01 3,469 9,065 (5,596) (8.6%) 12/18/01 6,790 10,943 (4,153) (25.8%) Most bearish reading of the year: (7,572) - 5/08/01 Most bullish reading of the year: 1,909 - 1/16/01 Small Specs Commercials S&P 500 (Current) (Previous) (Current) (Previous) Open Interest Net Value +77,793 +71,773 -64,973 -62,243 Total Open Interest % (+32.58%) (+29.27%) (-7.65%) (-7.81%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -4,153 -5,596 +8,109 10,559 Total Open interest % (-23.42%) (-44.65%) (+22.70%) (+29.57) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value -977 +671 -3,157 -5,924 Total Open Interest % (-2.69%) (+2.78%) (-2.78%) (-6.12%) net-short net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.Commercials held steady on the SPX while continuing to reduce their net-short positions on the NASDAQ 100. Small Specs were headed the other way on the NDX as they turned net-short. Increasing divergence is of key importance and something we’ll be watching closely on the tech index. Gold: It’s easy to see why gold is so difficult to play. After two weeks of building net-long positions, Commercial players decided to take the opposite side and are now sitting with net- short contracts. Looking at the charts we see that the XAU hit a high point on 12/18.before heading south. 11/20 2,489 contracts net-short 11/27 1,738 contracts net-long 12/04 2,534 contracts net-short 12/11 13,626 contracts net-long 12/18 15,198 contracts net-short Data compiled as of Tuesday 12/11 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= SEI Investments Co. - SEIC - close: 44.46 chg: +0.19 stop: 41.99 Company Description: SEI Investments is a leading global provider of asset management and investment technology solutions. The company's innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of September 30, 2001 - SEI processes over $1.5 trillion of investment transactions daily, administers more than $243 billion in mutual fund and pooled assets, manages more than $74 billion in assets and operates 25 offices in 11 countries. (source: Company Press Release) - ORIGINAL WRITE UP: Dec. 11th, 2001 - Why We Like It: We think bullish traders can make a play in SEIC by playing the trend. Shares of the company have made a huge move from its November low to current levels but the stock has been able to shrug off any major profit taking attempts. Each time SEIC has encountered resistance shares have consolidated sideways giving the stock (and traders) time to digest the latest gains before moving higher. It appears that SEIC may be nearing the end of its most recent consolidation period and could be ready for the next leg up. Before we discuss any potential trading strategy I'd like to mention one observation I noticed in SEIC. Shares made a high near $62.50 in very late December of 2000. Since that time the stock has split 2:1, so the high was really near $120, but SEIC had also fallen to lows near $30 in April when the whole market was hitting its lows. By July 2001 shares had rallied back to the $51 level. More profit taking ensued and by mid-September SEIC was back to sub-30 levels. All of this can easily be seen on any daily chart. What I find interesting is the trend line that has developed from connecting the tops or peaks in the chart. The high last week for the stock closed near this descending trend line. Now, many readers and stock gurus will claim that this resistance, formed by the descending trend line form the Dec. 2000 to July 2001 peaks is too old. I am neither agreeing or disagreeing but thought it was an odd coincidence that SEIC happened to rally right back to this descending trend before rolling over. Opponents can easily counter that SEIC had just rallied 10% from support/resistance near $40 and was overbought and needed to rest. I can accept that line of reasoning as well. While the Dow and the Nasdaq have been in decline the last several sessions, SEIC has been basing sideways. The stock has found support at the $42 level underpinned by its 10-dma. The action on Friday leads us to believe the bulls might be ready for the next hike higher. One could argue that there is resistance near $44.00-$44.50 but we see $45 as the real level to watch. Still, a close over $44 would be encouraging (and technically over that descending trend line from top to top discussed above). While the newsletter is going to "pick" the stock here at $43.41, it wouldn't hurt to wait for shares to trade back over $44 before evaluating an entry point. More aggressive traders may want to look for dips back to the $42.50-42.60 area. We are going to start the play with a stop at $41.49 even though the low last week was $41.76. Our placement puts the stop below the stock's 15-dma (41.62). It would be fair to say that SEIC is overbought and the MACD is looking tired but as long as the trend is intact we're willing to let it ride. A glance at the point-and-figure chart does show the stock breaking out above its long-term bearish trend line and also gives the stock a bullish price objective near $73 (long-term target). We are only aiming for a 10% to 15% move. - Most Recent Update, Friday, Dec. 21st, 2001 - Interested to know how SEIC did on triple-witching Friday? See Thursday. Not good enough? See Wednesday as well. The stock has been trading in the same range for three days straight with a few minor adjustments on where it opens and closes. Volume was a bit higher on Friday and it did close over $44 but we're not really interested in new positions until SEIC can close over $44.50 or better yet $45.00. We strongly considered raising our stop due to SEIC's lagging performance but $42 remains price support. However, more risk-averse traders can try reducing their exposure by using the 15-dma (currently near 42.90) as a guide to place their stop. The 15-dma has been a good level of support since Nov. 12th, 2001. If we don't see a positive move soon we might drop the play for lack of performance. Comments on Thursday for aggressive traders still apply. - Play of the Day comments, Monday, Dec. 26th, 2001 - We are electing SEIC as the POD (play-of-the-day) for Thursday, Dec. 27th, only if it triggers our next action point. The stock has been building a bullish coil for days now and it continues to tighten. Thus a breakout, one way or the other, feels imminent. We would consider new plays based on an action point of $45.05 (we are actually thinking $45.01 but we'd like to make sure). If it trades above $45 it could both inspire new bulls to buy or scare old bears into covering their shorts. Either one works for us. Picked on December 15th at $43.41 Change since picked: +1.05 Earnings Date 10/16 (unconfirmed) ================================================================= 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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PremierInvestor.net Newsletter Wednesday 12-26-2001 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/5361_2.asp ================================================================= In section two: Net Bulls (tech stocks) Bullish Stop Adjsutments: XMSR Closed Bearish Plays: AMZN, TSM Stock Bottom (non-tech stocks) Bullish Stop Adjustments: JCP Closed Bearish Plays: SPY High Risk/Reward Bullish Stop Adjsutments: MICT Closed Bullish Plays: MCTR 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 Stop Adjustments =================== Bullish Plays ------------- XMSR - close: 18.46 change: -0.70 stop: 17.99 *new* We are raising our stop on XMSR to just under $18. The stock bounced at $18 late this afternoon after investors sold into the morning rally above $20. =============== NB Closed Plays =============== ------------- Bearish Plays ------------- Amazon.com - AMZN - close: 11.10 change: +1.27 stop: 11.10 A little holiday sales hype is to be expected but the buzz over this season's online shopping sales seems a bit overdone. Shares of AMZN gapped up this morning after YHOO told reporters prior to the opening bell that sales on their holiday shopping sites had risen over 80% this year. As you recall, analysts were growing more and more concerned last week that online sales would not be as strong as expected. Yes, everyone expected AMZN to produce decent numbers but overall the sector was expected to disappoint with little left to encourage investors for the 1Q. These numbers from YHOO may have blown those concerns away. In our weekend write up for AMZN we discussed how analysts first believed that holiday sales might hit $11B but then lowered them to $8B. These numbers from YHOO will probably push that figure higher again. Combine the comments from YHOO (if YHOO can do it, then AMZN must have done very well this season) with bullish comments from U.S. Piper Jaffray this morning and we have a recipe for shares of AMZN to move higher. AMZN's post-Christmas debut added almost 13% to the stock price on volume of 18M shares but they remain under the stock's 200-dma (for now). We are closing the play at our stop of 11.10. Picked on December 21st at $10.00 Gain since picked: -1.10 Earnings Date ---- --- Taiwan Semiconductor - TSM - cls: 16.34 chg: -0.34 stop: 16.51 An early morning sector-wide rally in the semiconductors helped lift the SOX.X to the 534 level (+3.6%) but investors sold into strength and most chip stocks were left with minor gains. TSM joined the morning rally and traded to $16.60 before leveling off between $16.50 and $16.40 for most of the day. This could be just a one-day bounce but further short trading may want to wait until the stock closes under $16 again. We are closing the play with a 99-cent move or +5.6%. Picked on December 19th at $17.50 Gain since picked: +0.99 Earnings Date 01/25 (confirmed) ================================================================== StockBottom/Active Trader (AT) section ================================================================== =================== AT Stop Adjustments =================== Bullish Plays ------------- J.C. Penny - JCP - close: 26.18 change: +0.37 stop: 25.59 *new* Investors chose to focus on the positive as dueling stories about last minute shoppers boosting sales sparred with articles renewing concerns that this was the worst Christmas shopping season in a decade. Many retailers are still expected to post declining sales while Wal-Mart (WMT), the largest retailer on the planet, claims that sales will be near the upper edge of their estimates (close to a 6% gain). Shares of JCP joined the RLX.X retail index in a post-Christmas rally. The RLX.X broke out above stiff resistance at 920 and JCP closed above resistance at $26. Unfortunately, like many equities today, JCP could not maintain most of its gains. We're going to snug our stop even tighter in hopes of protecting our current gain. With a new stop at $25.59, we should be able to keep a $2.51 move or 10.8%. If JCP keeps inching higher, we won't complain. =============== AT Closed Plays =============== ------------- Bearish Plays ------------- S&P 500 Spiders - SPY - close: 115.36 change: +0.63 stop: 116.05 As expected, Monday was pretty lethargic and the index didn't move much. The bulls returned to Wall Street on Wednesday but they met with stiff resistance after the initial rush. S&P 500 couldn't conquer resistance at $116 and but traded high enough (116.20) to stop us out. We are closing the play with a $1.40 loss. The late day dip in the markets doesn't inspire a lot of courage for tomorrow and we still suspect that a short play for the SPY may be profitable but we may not see the right entry point until mid- January. Picked on December 20th at $114.65 Gain since picked: -1.40 Earnings Date N/A ================================================================== High Risk / High Reward (HR) section ================================================================== =================== HR Stop Adjustments =================== Bullish Plays ------------- Microcell Telecomm. - MICT - cls: 2.52 chg: +0.22 stop: 2.38*new* The gift that keeps on giving. MICT added another 9.5% on Wednesday after its 9.5% gain on Monday. That puts our new HR long play at a +20% move in two sessions. For many traders that is a great move and you may want to consider taking profits now. Knowing when to sell is the hardest part of the game but it boils down to each trader's personal money management plan. We strongly considered closing MICT ourselves but have chosen to raise our stop to protect the majority of the move. Bulls should be encouraged that MICT has closed the gap between $2.00 and $2.30 plus the stock has closed over the $2.50 level, which could have been resistance. We still see resistance at $2.75 and again at $3.00 and traders should use them as guides to evaluate their exit plan. The newsletter will set its stop at $2.38, which should protect a 13% gain. Our risk is the stock gaps down below our stop at the open. Other traders may want to use tighter stops or close their position entirely. If MICT trades up to $3.00 intraday we will close the play at $3.00 for a profit. Picked on December 21st at $ 2.10 Change since picked: +0.42 Earnings Date 11/12 (confirmed) =============== HR Closed Plays =============== ------------- Bearish Plays ------------- Mercator Software - MCTR - close: 7.80 change: -0.08 stop: 7.45 The bulls are slowly losing the game for shares of MCTR. After an incredible run from October into early December the stock just can't seem to get its momentum back. The bears are controlling the battle for support or resistance at $8.00 even though the bulls are putting up a tough fight. MCTR dipped to support at $7.50 early today before bouncing back but this is the fourth consecutive close in four sessions under the $8 level. The GSO.X software index rallied up to its own 200-dma this morning and met with selling pressure. This looks pretty ominous for the group and if MCTR breaks down further it could very well see $6.00 again. We're going to pull the play now before stopping out for a small loss. Picked on December 11th at $ 7.68 Gain since picked: +0.12 Earnings Date 10/30 ================== 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. ================================================================= 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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