PremierInvestor.net Newsletter Tuesday 01-08-2002 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/3659_1.asp ================================================================= In section one: Market Wrap: NASDAQ holds gain as S&P 500 and Dow slip Market Sentiment: Mixed signals produce mixed markets. Play-of-the-Day: Another Bad News Break ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 1-8-2002 High Low Volume Advance/Decline DJIA 10150.55 - 46.50 10211.23 10121.35 1.2 bln 1630/1518 NASDAQ 2055.74 + 18.64 2060.23 2027.34 1.8 bln 1993/1600 S&P 100 592.50 - 1.91 596.24 590.64 Totals 3623/3118 S&P 500 1160.71 - 4.10 1167.60 1157.46 RUS 2000 497.90 + 4.72 497.90 491.21 DJ TRANS 2823.34 + 1.95 2838.43 2800.41 VIX 22.55 + 0.38 23.09 21.87 VXN 47.45 - 0.44 48.87 47.33 TRIN 1.92 Put/Call Ratio .64 ----------------------------------------------------------------- =========== Market Wrap =========== NASDAQ holds gain as S&P 500 and Dow slip The NASDAQ Composite (COMPX) managed to eek out a gain of 18 points lead by software stocks, while the S&P 500 (SPX.X) and Dow Industrials (INDU) slipped lower as Argentina worries weighed on financials. Software stocks got a boost today after Kronos Inc. (NASDAQ:KRON) $57.27 (+6% ) said it expected to post fiscal first-quarter earnings above analysts' estimates, due in part to increased market penetration. Kronos executives said it expects to report earnings of 27-30 cents a share on revenue of $74-$76 million. Earnings estimates ranged from 16-25 cents, with an average estimate of 19 cents. Kronos Incorporated Chart - Daily Interval I know that I've talked about shares of Kronos (KRON) at some point (perhaps it was on OptionInvestor.com) and the strong technicals that had me thinking this stock looked to be of several leaders (including MSFT and PSFT) in the software sector. At the time, I had "rolled up" retracement as the stock was breaking to new relative highs and we needed some levels to monitor for targets. As you can see, this stock sure has a habit of rallying to a retracement level, then pulling back and finding support at a past level of retracement. Look for pullbacks in the $50-$54 range should the stock bounce off retracement near $60. First sign of trouble would be a break back below $50. Microsoft Corporation Chart - Daily Interval Shares of Microsoft (NASDAQ:MSFT) have been bumping against the $70 level the past three sessions. Last week we noted the GSTI Software Index (GSO.X) broke above the 192 level and the index traded up 1% today. If MSFT can break above the $70.02 level a rally to the $73.50 level isn't out of the question. In late November, shares of MSFT pulled in and bounced off its 200-day MA and recently found support at its 50-day MA. This is a "favorite" among many institutions and a stock that often times can spark a technology rally. Yesterday and today, MSFT founder Bill Gates unveiled the company's newest offerings of an operating system (CE.NET) for next-generation wireless smart devices and PC-based home entertainment systems at the Consumer Electronics show in Las Vegas. Microsoft hopes to take a bite out of Apple's (NASDAQ:AAPL) consumer market share where Apple has had a lead with traditional Internet video. Argentina's move to devalue puts pressure on U.S. Banks Banking stocks with an "international flavor" were under some selling pressure today after Argentina said it may end up devaluing its peso currency and allow borrowers to repay smaller dollar loans with pesos. Today, analysts felt such a move could cost banks like FleetBoston Financial (NYSE:FBF) $34.60 (-2.56%) and Dow component Citigroup (NYSE:C) $49.50 (-3.67%) hundreds of millions of dollars. FleetBoston (FBF) could take a $500-$600 million charge on its $1.9 billion consumer loan portfolio if people repay dollar loans of under $100,000 in pesos instead of US dollars. In essence, banks would get less money back if U.S. dollar loans were converted to pesos. Plus, a devaluation of would mean struggling Argentinean companies will have to find more cash to repay dollar debts, in the country's widening fiscal crisis. FleetBoston is one of the biggest players in the region and wants to take the charge in the 4th quarter, which could delay the reporting of results by one week past its January 16th date in order to sort out Argentina's impact on earnings. Citigroup (C) could also take losses on retail loans in Argentina because of the government move to devalue its currency. Citigroup (C) has said in the past that its exposure to the region is too small to itemize separately and declined comment on today's stock price action. Merrill Lynch analyst, Judah Kraushaar said, "The dramatic events in Argentina including the rise of populist president and an economic program that could especially burden the local banks have forced us to reevaluate our estimates on the two U.S. Banks with the most exposure (C and FBF)." Kraushaar cut his 2002 earning's estimate on Citigroup by 5 cents to $3.30 a share and his 2002 estimates on FleetBoston by 10 cents to $3.15 a share. This assumes a 20% loss rate on the banks' retail loans and an additional 3%-5% loss on commercial loans. Both Citigroup and FleetBoston are components of the KBW Bank Sector Index (BKX.X) with Citigroup making up a 27% weighting in the index and FleetBoston making up a 3.79% weighting. These two stocks not only impacted the BKX.X negatively today, but also had other financial stocks finding some selling pressure simply based on "sector association." In recent weeks, it has been widely "publicized" that both companies had exposure to Argentina, but today's earnings revisions by Merrill Lynch seemed to be a newfound "revelation" that the MARKET didn't like. FleetBoston Financial Chart - Daily Interval Shares of FleetBoston (NYSE:FBF) look quite bearish and recent volume indicates that many are looking for the door until a chaotic Argentine government makes some type of decision what it is doing with its currency. Bearish traders looking to short the stock may want to wait for a break below the $34.30 level. This one is best left for more aggressive bears. On December 19th, shares of FleetBoston jumped above their 50% retracement of $37.87 to a post-terrorist attack high of $38.80. That was the day FBF said it would take a $150 million charge in the 4th quarter against earnings to write off some of its Argentine debt. I get the distinct impression that the MARKET doesn't know what to make of things as it relates to Argentina and who can blame it! Will they devalue or won't they? If they do, then by how much? Will they stop pegging the Argentine peso to the U.S. dollar? There are a lot of questions that have yet to be answered and as long as this uncertainty looms, I'd expect volatility. Bearish traders can look to short FBF, but I'd follow with a tight stop just above the $36.50 level and look to play the prevailing trend. Gold hasn't budge... yet. As Citigroup and FleetBoston fell on worries in Argentina, I was keeping a close eye on the February 2002 Gold Futures (gc02g). The future rose fractionally today, but are creeping higher at $280 as I write. This may play into Friday nights observations that the Gold/Silver Index (XAU.X) and some gold stocks might be this week's upside surprise. Today, the Gold/Silver Index (XAU.X) gave back all of Monday's gains, but now the commodity is starting to creep higher. A move above the $282.10 level in the February Gold Futures contract could spark a rally in gold stocks. February Gold Futures Contract - Daily Interval The February Gold futures contract finished today's trading at $279.20, but are creeping higher at $280 for January 9th trading. It's very difficult to say what type of impact, if any, today's Argentine "revelation" could have on things here. If nothing else, a move above the $282.10 level could create a brief yet powerful short-squeeze in the commodity on a move above the $282.10 level. In Friday's wrap I mentioned shares of Placer Dome (NYSE:PDG) $11.64 which closed today right at Friday's close of $11.64. I have retracement resistance at $12.01, which correlates rather well with the February Gold futures chart and resistance there at $282.10. Any bullish trades in PDG can be followed with a stop just below the recent pullback near the 200-day moving average of $10.63. Factory orders fell 3.3% in November Taking a backseat to today's Argentina news was the 3.3% decline in factor orders for November. The decline was mostly attributed to orders for defense related equipment to more normal levels. Transportation orders fell 17.3%, largely because defense aircraft orders plunged 82.4% in November, after rising a staggering 491.6% in October. Excluding the volatile transportation segment, factor orders fell just 0.2% after a 1.8% rise in October. Inventories of factory goods dropped by 0.9% in November, marking 10 months in a row of declines. Shipments of goods fell 0.6% after rising 2.3% in October. One of the best gauges for forecasting trends in business investment are orders for non-defense, non-aircraft capital goods. Today's numbers showed a rise of 3.2% after an October gain of 5.8%. Shipments of these so-called core capital goods dropped 1.6% in November after rising 2.1% in October. All in all, today's economic numbers had very little impact on the financial markets and perhaps reflect just how mixed the numbers are. A bull or bear could point to any of today's numbers and make their case for future market direction. What I take from it all is that the economy looks to be in a recovery mode, but not depicting an economic boom by any means. The continued decline in factory orders gives a glimmer of hope that businesses may be ready to increase their capital spending and boost production to fill orders. Some analysts feel that many producers will not want to risk loss of market share that could result from getting caught short on inventories. Looking ahead You never know what to expect day to day. Today's "Argentina news" did seem to weigh on the financials and that had an impact on the broader market averages. I do think that the Argentina news has been factored into things, but it is an ever-evolving story that has yet to reach a final chapter. That in itself will most likely keep some of the multinational banks in check near- term and may put a damper on things until we get the full story on how this debacle plays out. The software sector looks as if it is best positioned to be the catalyst for a bullish move in the NASDAQ, but I feel Microsoft (NASDAQ:MSFT) is going to have to make a move above the $70 level to make it happen. I do NOT think the Argentina "crisis" will have a high impact on this sector or other technology sectors, but only the psychology of the market. I'm still keeping an eye on shares of General Electric (NYSE:GE) that have dipped back below the $40 level (closed at $38.95) and violated their rounding higher 50-day moving average to the downside at $39.35. This to me is a negative and has me cautious on the broader market, as any further decline will most likely put some pressure on the Dow Industrials and perhaps investor psychology. I'm not looking to trade/invest in GE at this time, but do feel we need to continue to monitor things here. Risk/reward for bulls or bears is 50/50 in this one as support looks firm at the $36 level and resistance firm at $42. Stocks could trade just as they did today ahead of Thursday's jobless claims number for the week ending December 29th. Economists expect a number near 426,000, which would be lower than the previous report of 447,000. Then on Friday, we'll get a look at some "inflation" numbers with the release of the Producer Price Index (PPI) where economists expect a decline of 0.2% and a core rate for a slight increase of 0.1%. In all, economists aren't expecting any type of inflationary numbers here. I don't see any "blockbuster" earnings on the horizon. Clayton Homes (NYSE:CMH) and KB Home (NYSE:KBH) are expected to report earnings on Thursday before the opening of trading. Analysts expect CMH to report earnings of 20 cents a share, and KBH to report earnings of $1.83. It would most likely take some type of big miss or upside surprise to have a meaningful impact on the broader markets. After the close of trading technology stocks Cree Research (CREE), Rambus (RMBS) and Rational Software (RATL) will report earnings. Cree and Rambus both are considered "semiconductor" stocks, while Rational is obviously software. Results from these three could impact sector action Friday. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Mixed signals produce mixed markets. by Russ Moore Investors were given a basket of mixed information to sift through resulting in a win for the tech team and a loss for the blue chips. The NASDAQ ended with a +0.9 percent gain while the NDX added +1.0 percent. The DOW closed lower for the second day in a row, posting a loss of -0.5 percent. The big board saw 1.23 billion shares change hands while the NASDAQ moved 1.86 billion. Winners inched past losers by a 16/15 count on the NYSE and 20/16 on the tech index. Concern’s over Argentina’s impact on the U.S financials, specifically Citigroup (C), and FleetBoston Financial (FBF) took its toll on the entire group. Other sectors under pressure included oil, oil service, utility and cyclical. Retailers were up after Tiffany (TIF) announced its’ fourth quarter earnings would come in at the upper end of its’ previously reported range and, that it was encouraged by rising consumer confidence. Tech action saw chips moving north on the heels of Altera’s (ALTR) "modest growth" forecast. BMC software (BMC) provided the catalyst for the software sector after Monday’s comment that it expects to beat analyst’s expectations for its’ third-quarter earnings. Factory orders were off -3.3 percent for November versus the -2.9 expected. Earnings announcements will kick in to overdrive next week and the actual earnings may not be as bad as some people think. Remember that these are earnings based on drastically reduced expectations. The real focus will be directed towards "visibility". As I said last night, investors have moved past the "on faith" earnings, and are ready to hear some real guidance. More "fluff" is unlikely to satisfy the average investor’s appetite and may spark a significant sell-off. Tuesday 01/08 close: 22.55 VXN Tuesday 01/08 close: 47.45 30-yr Bonds Tuesday 01/08 close: 5.49 Total Put/Call Ratio: .64 Equity Option Put/Call Ratio: .50 Index Option Put/Call Ratio: 2.28 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 41.49 Volume/Open Interest Maximum calls: 40/128,603 Maximum puts : 40/102,148 Moving Averages 10 DMA 40 20 DMA 40 50 DMA 39 200 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: 592.50 Volume/Open Interest Maximum calls: 590/4,781 Maximum puts : 580/5,291 Moving Averages 10 DMA 590 20 DMA 585 50 DMA 581 200 DMA 599 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: 1160.71 Volume / Open Interest Maximum calls: 1150/40,029 Maximum puts : 1150/40,653 Moving Averages 10 DMA 1157 20 DMA 1147 50 DMA 1134 200 DMA 1166 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: 10,150.55 Volume / Open Interest Maximum Calls: 100/13,796 Maximum Puts 100/29,194 Moving Averages: 10 DMA 10,126 20 DMA 10,026 50 DMA 9,832 200 DMA 10,095 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: 559.80 Volume / Open Interest Maximum Calls: 660/ 354 Maximum Puts: 580/1,150 Moving Averages 10 DMA 576 20 DMA 576 50 DMA 580 200 DMA 540 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: 583.82 Volume / Open Interest Maximum Calls: 440/ 847 Maximum Puts: 500/2,328 Moving Averages 10 DMA 551 20 DMA 550 50 DMA 529 200 DMA 555 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: 374.33 Volume / Open Interest Maximum Calls: 400/525 Maximum Puts: 360/835 Moving Averages 10 DMA 380 20 DMA 381 50 DMA 389 200 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, 02/04. 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 12/18/01 391,995 456,968 (64,973) 4.3% 12/25/01 412,581 471,239 (58,658) (9.7%) 01/01/02 338,288 407,107 (68,729) 17.1% 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 12/18/01 158,300 80,507 77,793 8.4% 12/05/01 152,521 79,444 73,077 (6.1%) 01/01/02 127,419 55,576 71,843 (1.6%) 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 12/18/01 55,276 58,433 (3,157) (46.7%) 12/25/01 55,250 47,476 7,774 01/01/02 29,801 37,497 (7,696) 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 12/18/01 17,649 18,626 (977) 12/25/01 15,810 25,687 (9,877) 01/01/02 10,649 5,913 4,736 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 12/18/01 21,919 13,810 8,109 (23.2%) 12/25/01 15,492 7,335 8,157 .6% 01/01/02 15,820 7,553 8,267 1.3% 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 12/18/01 6,790 10,943 (4,153) (25.8%) 12/25/01 4,293 9,086 (4,793) 15.4% 01/01/02 3,368 8,668 (5,300) 10.6% 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 +71,843 +73,077 -68,729 -58,658 Total Open Interest % (+39.26%) (+31.50%) (-9.22%) (-6.64%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -5,300 -4,793 +8,267 8,157 Total Open interest % (-44.03%) (-35.82%) (+35.37%) (+35.73) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +4,736 -9877 -7,696 +7,774 Total Open Interest % (+28.60%) (-23.80%) (-11.44%) (+7.49%) net-short net-short net-short net-long What COT Data Tells Us ---------------------- Indices:.Interesting changes this week as the Commercials increased their net-shorts on the S&P 500 (bearish) while the Small Specs added to their net-long percentage. Increasing divergence is what we’re looking for and we’ll be watching this one closely over the coming weeks. Elsewhere, Commercials did a flip-flop on the NASDAQ 100 with a change to net-short contracts. Once again we see increasing divergence between the Commercials and the Small Specs as the Small Specs went net-long on the tech index. Gold: No significant changes this week. 12/04 2,534 contracts net-short 12/11 13,626 contracts net-long 12/18 15,198 contracts net-short 12/25 11,976 contracts net-short 01/01 14,555 contracts net-short Data compiled as of Tuesday 01/01 by the CFTC. ========================= Play-of-the-Day (Bearish) ========================= Metro One Telecom. - MTON - cls: 28.40 chg: -1.65 stop: 31.51 Company Description: Metro One Telecommunications, Inc. is the leading developer and provider of Enhanced Directory Assistance and other enhanced telecom services. The Company operates a network of call centers located strategically throughout the U.S. Metro One handled approximately 343 million requests for information during the first nine months of 2001 and approximately 302 million requests for the entirety of 2000. (source: company press release) Why We Like It: The same downgrade that knocked us out of NOK also knocked shares of MTON below its support at the $30 level. The stock was already in a steady downtrend and was trying to hold at the $30 despite trading below its 200-dma. With Merrill's comments that the wireless section will likely see declining sales in 2002, investors have taken this negative sentiment and applied it to MTON, a company that services all those wireless customers and providers. As a short, we like the breakdown today and volume was almost double the average. It is possible that shares could rally back up to $30, but if they roll over under $30 we would see it as just a better entry point. Our initial target will be $25 but the stock could drop to $22.50. Earnings are expected in February. Confirm stock direction before committing any capital. Picked on January 8th at $28.40 Change since picked: +0.00 Earnings Date 02/07/02 (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. 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PremierInvestor.net Newsletter Tuesday 01-08-2002 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/3659_2.asp ================================================================= In section two: Net Bulls New Bearish Play: MTON Bullish Play Updates: SFA Closed Bullish Play: NOK Stock Bottom / Active Trader Bullish Play Updates: APA, BGP, LAB, NCOG, PDG, UVN Bearish Play Updates: ADRX Closed Bearish Plays: SEIC High Risk / High Reward New Bullish Play: APCC Bullish Play Updates: ADCT Split Trader - none - 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 New Plays =============== ---------------- New Bearish Play ---------------- Metro One Telecom. - MTON - cls: 28.40 chg: -1.65 stop: 31.51 Company Description: Metro One Telecommunications, Inc. is the leading developer and provider of Enhanced Directory Assistance and other enhanced telecom services. The Company operates a network of call centers located strategically throughout the U.S. Metro One handled approximately 343 million requests for information during the first nine months of 2001 and approximately 302 million requests for the entirety of 2000. (source: company press release) Why We Like It: The same downgrade that knocked us out of NOK also knocked shares of MTON below its support at the $30 level. The stock was already in a steady downtrend and was trying to hold at the $30 despite trading below its 200-dma. With Merrill's comments that the wireless section will likely see declining sales in 2002, investors have taken this negative sentiment and applied it to MTON, a company that services all those wireless customers and providers. As a short, we like the breakdown today and volume was almost double the average. It is possible that shares could rally back up to $30, but if they roll over under $30 we would see it as just a better entry point. Our initial target will be $25 but the stock could drop to $22.50. Earnings are expected in February. Confirm stock direction before committing any capital. Picked on January 8th at $28.40 Change since picked: +0.00 Earnings Date 02/07/02 (unconfirmed) =============== NB Play Updates =============== -------------------- Bullish Play Updates -------------------- Scientific Atlanta - SFA - cls: 26.88 chg: +0.06 stop: 24.73 Fortunately for the bulls, shares of SFA have been able to hold onto Friday's gains with the possibility that $26.50 might hold as new support. However, today's activity makes us believe shares might still dip to $26 before trading higher. The good news for investors was the upgrade from "hold" to a "buy" by ABN AMRO. The broker believes SFA's sales should improve and gave the stock a $35 price target. We're enthusiastic that SFA has weathered the recent pull back in the market but still expect a dip soon. Confirm stock direction or look for the bounce before considering new plays. Our exit price at $29.00 still stands. Picked on December 28th at $24.73 Change since picked: +2.15 Earnings Date 01/17/02 (confirmed) =============== NB Closed Plays =============== -------------------- Closed Bullish Plays -------------------- Nokia Corp - NOK - close: 23.87 change: -1.43 stop: 24.39 A downgrade from Merrill Lynch on the wireless sector was NOK's undoing. Merrill's analyst believes that the mobile infrastructure market will be down five percent in 2002. While they felt that ERICY would be most vulnerable they did reiterate their "neutral" stance on Nokia. Shares of the stock gapped down this morning and traded towards the $23.50 level (not the $20.40 seen on many quote services). We would have been stopped out at $24.39. Picked on January 3rd at $26.90 Gain since picked: -2.51 Earnings Date 10/19/01 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Apache Corp - APA - close: 49.05 change: -0.69 stop: 45.99 Our Apache trade was off to a good start on Monday with shares rallying higher to the $50 level. The stock appeared to see some profit taking today as the price of oil has drifted lower this week. On a positive note, APA said they made another significant discovery in Egypt again and this may have mitigated some of the selling pressure APA felt. A dip to $48 looks buyable or if you prefer a breakout over $50. Confirm stock and market direction before considering new investments. Picked on January 4th at $48.54 Change since picked: +0.51 Earnings Date 10/25/01 (confirmed) --- Borders Group Inc - BGP - cls: 21.10 chg: +0.36 stop: 19.99*new* News has been quiet for the Borders Group. This has not deterred investors and a positive Tuesday in the retail sector helped push the fourth positive close in a row for shares of BGP. Short-term traders willing to take a 3% to 4% gain should adjust their stops to protect one. The close above $21 is positive for BGP and puts the move at 5% from our picked price. Those who bought the dip on Jan. 2nd could have a bigger gain. At this point we would expect another dip. A bounce might occur near the $20.50 area. We are going to plan on exiting at the $22.00 mark. More conservative traders may want to aim for $21.80 to beat the crowd. Keep an eye on the RLX.X. If the sector can power higher then it may be able to postpone any profit taking in BGP for another day or two. We have adjusted our stop to $19.99, which should reduce our risk to six cents. Picked on December 27th at $20.05 Change since picked: +1.05 Earnings Date 03/14/02 (unconfirmed) --- Labranche & Co Inc - LAB - close: 35.21 change: -0.65 stop: 33.74 As we expected, the big move in the broker/dealer sector (XBD.X) last week has met with profit taking this week. The index has slipped two days in a row which in turn has led shares of LAB down towards the $35.00 level we saw as a potential entry. Continue to watch the XBD. Another 10-point loss would bring it back to what should be support. If the sector does slip again, LAB might fall to $34 but we would prefer to see the stock consolidate near $35 (a sign of relative strength). The company released news that they would release earnings on January 18th, 2002, which is a week and a half away. Now would be a good time for any sort of earnings run to start. Readers should confirm the direction of the index and the stock before considering new long positions. Picked on January 4th at $36.11 Change since picked: -0.90 Earnings Date 01/18/02 (confirmed) --- NCO Group, Inc. - NCOG - close: 24.74 change: -1.02 stop: 22.87 We did mention a pull back between $24.50 and $24.00 in our weekend write up which is exactly what we got on Tuesday. Monday's positive move put the stock just below potential resistance at $26. The weakness in the financial sector on Tuesday led traders to take profits in NCOG before buyers stepped in to lift shares off their intraday lows. This looks like a good entry point for new long positions once you confirm the stock is moving your direction. Very conservative traders could try and put their stop just under $24 but we are going to leave ours under $23. Picked on January 3rd at $24.17 Change since picked: +0.57 Earnings Date 11/06/01 (confirmed) --- Placer Dome - PDG - close: 11.64 change: -0.21 stop: 10.90 We're right back where we started with PDG. The stock traded higher on Monday but seemed to struggle at the 11.90 level. Tuesday produce some selling in the XAU.X Gold/Silver index and PDG slipped to 11.53 intraday before bouncing near the close. In our play-of-the-day update last night we mentioned that PDG might pull back to the 11.60 to 11.50 level and interested bulls might use that as an entry point. The stock needs to confirm its upward trend now that we've got a pull back from the original breakout over the 11.50 level. Picked on January 4th at $11.64 Change since picked: +0.00 Earnings Date 10/24/01 (confirmed) --- Univision - UVN - close: 40.09 change: -0.70 stop: 38.99 Shares of UVN have followed the Dow's lead with two negative trading sessions to start the week. The stock has pulled back to the $40 support level it bounced off of late last week. It is a potential entry point for new long plays but we would be cautious here and really look for some sort of bounce higher. A move under $40 would be disappointing and probably make me wait before committing any capital. More conservative traders might be able to shave another 50 cents off the stop price but we're going to leave ours at $38.99. Picked on December 28th at $40.89 Change since picked: -0.80 Earnings Date 11/06/01 (confirmed) -------------------- Bearish Play Updates -------------------- Andrx Group - ADRX - close: 64.18 change: -1.35 stop: 67.02*new* What do you want to hear first? The bad news or the bad news. As we suspected on Friday, something appeared sour over at ADRX and the company confessed on Tuesday that this quarterly earnings report would be "significantly lower" than analysts estimates. It was quite a confession. ADRX has said that sales of their asthma inhaler, albuterol, have dropped substantially to $7M in the 4Q from $21M in the 3Q. Tough competition from Schering- Plough (NYSE:SGP) has been eroding sales. ADRX also confessed that litigation with AstraZeneca (NYSE:AZN) over a generic version of anti-ulcer medicine Prilosec has been slow and costly. Third, ADRX announced that their estimated launch of a generic version of Glucophage, a diabetes treatment created by Bristol- Meyers Squibb, has been delayed by the drug's creator through legal action and FDA arguments. We were surprised to see that only one broker, Gruntal & Co, released a downgrade on the news. What surprises us more was the strong rebound in the stock price today. Shares gapped down to 61.76 and then rallied all the way back above the $64 level. We suspect that tomorrow may be the day of truth for ADRX. The stock remains under price support of $65 and its 200-dma (64.67). Investors will either choose to buy the stock believing that there is no more bad news left, or they will sell the stock and our short play will finally kick into high gear. Bears will want to confirm the stock direction first but we expect more weakness. We are going to lower our stop to $67.02, or just above Monday's high. Picked on January 4th at $64.14 Change since picked: -0.04 Earnings Date 10/25/01 (confirmed) =============== AT Closed Plays =============== -------------------- Closed Bullish Plays -------------------- SEI Investments - SEIC - cls: 42.24 chg: -1.96 stop: 42.99 Two big down days with strong volume doesn't paint a very positive picture for SEIC. Shares rallied on Friday with the rest of the broker/dealer sector, which the stock tends to follow, but the two big down days this week have out performed the XBD.X to the downside. At this point in the game we would suspect that SEIC may need to retest support at $40 again. We were unable to uncover any news or comments that may have affected the stock negatively, which makes the breakdown even more ominous. We are closing the play with a 42-cent loss. Picked on December 15th at $43.41 Change since picked: -0.42 Earnings Date 10/16 (unconfirmed) ================================================================== High Risk / High Reward (HR) section ================================================================== =============== HR New Plays =============== ---------------- New Bullish Play ---------------- American Power Conversion Corp - APCC - cls: 16.02 chg: +0.37 stop: 15.19 Company Description: Founded in 1981, American Power Conversion is a leading provider of global, end-to-end availability enhancement solutions which include surge suppressors, uninterruptible power supplies (UPS), DC-based power systems, precision cooling equipment, cabling and connectivity solutions, power conditioning equipment, related software, professional and consulting services for Nonstop Networking(TM), as well as power purchasing solutions through energyOn.com, The World's Online Energy Store(SM). APC's comprehensive products, services and accessory offering, which is designed for both home and corporate environments, improves the availability, manageability and performance of sensitive electronic, network, communication and industrial equipment of all sizes. APC, which is headquartered in West Kingston, Rhode Island, reported sales of $1.48 billion for the year ended December 31, 2000. (source: company press release) Why We Like It: There appears to be a surge in electronic equipment stocks and one of them is APCC. Shares have bounced strongly from their base of support near $14 and the close over $16 was a technical victory for the bulls. With earnings only three weeks away, the current rally may be able to keep the momentum rolling. We would look for a pull back to the $15.75 to $15.50 level or a confirmation of the breakout over $16.00 as a potential entry point. We are placing this in the high-risk section for a couple of reasons. First, the stock has been up a few sessions in a row and could be due for a pull back. Second, the stock looks like it has been trading in an ascending channel and currently shares are near the top of that channel. If this is true, then the stock should pull back to the $14.50 level or bottom of the channel. Some of us believe the rising volume and rising MACD may be a good indication that shares can keep the rally moving. Traders will want to confirm stock direction before committing any capital. We will start the play with a stop at $15.19 or a few cents below Friday's low. Our initial target is $18 but expect resistance at $17. Picked on January 8th at $16.02 Change since picked: +0.00 Earnings Date 01/31/02 (unconfirmed) =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- ADC Telecommunications - ADCT - cls: 5.50 chg: -0.18 stop: 5.06 Nothing new to report for ADCT from our Monday update. The stock pulled back to $5.35 intraday before bouncing near the close. The newsletter's exit price is $5.90 and we'll close the play if the stock trades there intraday. Picked on January 3rd at $ 5.06 Change since picked: +0.44 Earnings Date 11/28/01 (confirmed) ================== Trading Ideas ================== This section contains stocks that meet criteria which may make them of interest to long and short side traders. These are not recommendations, nor have they been reviewed by PremierInvestor editors for investment potential. However, each of them has technical and fundamental characteristics that make them worthy of further review by traders and investors looking for fresh ideas. New stocks will appear daily following the market close. --------------------------------- Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change GMT Gatx Corp 34.47 +0.87 NVR Nvr Inc 199.00 +3.25 TOM Tommy Hilfiger Corp 16.00 +0.86 BOBE Bob Evans Farms Inc 25.94 +0.91 FTO Frontier Oil Corp 17.75 +0.85 HOC Holly Corp 20.00 +0.72 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change DDS Dillard's Inc 17.74 +1.20 RNWK Realnetworks Inc 7.11 +1.06 PLUG Plug Power Inc 12.04 +3.38 HELE Helen Of Troy Ltd 15.00 +2.70 MDTH Medcath Corp 17.05 +1.26 HYGS Hydrogenics Corp 9.50 +1.51 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change AFL Aflac Inc 25.54 +2.42 INFY Infosys Technologies 75.26 +3.05 RJR RJ Reynolds Tobbaco 58.50 +1.04 TIF Tiffany & Co 34.84 +1.95 NCR Ncr Corp 43.45 +1.79 JWN Nordstrom Inc 22.37 +1.56 BLDP Ballard Power Systems Inc 34.96 +4.55 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change C Citigroup 49.50 -1.89 NOK Nokia Corp 23.87 -1.43 HMC Honda Motor Co 79.50 -1.05 CAT Caterpillar Inc 51.35 -1.80 AT Alltel Corp 59.10 -1.90 GP Georgia Pacific Corp 25.66 -2.05 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change COF Capital One Financial Corp 54.41 -0.89 ORI Old Republic Intl 27.15 -0.75 NST Nstar 44.40 -0.73 GRMN Garmin Ltd 20.25 -0.68 ================================================================= 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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