PremierInvestor.net Newsletter Thursday 01-31-2002 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/5047_1.asp ================================================================= In section one: Market Wrap: Boring but good! Market Sentiment: Recipe for a rally. Play-of-the-Day: Transports Flying Higher ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 1-31-2002 High Low Volume Advance/Decline DJIA 9920.00 +157.14 9922.49 9763.20 1.5 bln 2093/ 998 NASDAQ 1934.03 + 20.59 1935.17 1906.90 1.7 bln 2117/1461 S&P 100 573.49 + 9.11 573.49 564.38 Totals 4210/2459 S&P 500 1130.20 + 16.63 1130.21 1113.30 RUS 2000 483.10 + 3.38 483.10 478.51 DJ TRANS 2797.83 + 35.72 2797.83 2756.32 VIX 22.91 - 1.96 25.27 22.77 VXN 42.82 - 1.85 45.34 42.46 TRIN 0.75 Put/Call Ratio .67 ----------------------------------------------------------------- =========== Market Wrap =========== Boring but good! Wow! Did you see some of the robust gains from some of those boring stocks we talked about last week? Phelps Dodge (NYSE:PD) jumped 6% today as copper futures broke above their 200-day moving average. The world's second-largest copper producer said yesterday afternoon that it sees a balance in the 2002 copper market given the large amount of inventory restocking that will be needed once a global economic recovery picks up speed in the second half. Unfortunately I don't read every press release that comes out of Phelp Dodge, but last Friday, in the 01:00 Update http://www.PremierInvestor.net/markets/intradayupdates/012502_3.a sp we thought something might be going on in the copper market and even thought a partial position in Phelps Dodge (PD) might be worth a trader's time. Arthur Miele, senior vice president of marketing, told analysts, "We look for copper prices to trade in the $0.67-$0.72 cents per pound range in the first quarter of the year, improving as the year progresses and the recovery takes hold." March Copper futures - Daily Interval Perhaps yesterday's comments helped fuel some buying in the copper futures. Things already look a little overdone as it relates to Mr. Miele's comments on a copper price between $0.67 and $0.72 a pound. What I've done with retracement is what I call "stacking." This is a technique sometimes used by traders to get more "levels" from which to manage their trading strategies. In essence, the lower retracement (red) defines the range from $0.73 to $0.613. I like the way the March futures really seems to want to trade those ranges. Then all I did was "clone" that retracement bracket and "stack" it on top of the lower range. I can't show the chart prior to May of 2000 due to space restrictions, but I did look at the various levels of retracement to look for correlation of trading to those levels and found very good correlation at the $0.777 and $0.791 levels. Then what I've done is try and determine a level that might be considered a pivot point to base a scenario of economic growth or slowing from. A mid-point, based on retracement would be the $0.732 level. Now, if we follow Mr. Miele's thoughts, he believes that copper prices will trade between $0.67-$0.72. That's within a penny of our lower retracement bracket levels of $0.68-$0.73 so I'll cut him some slack. But now you and I perhaps have a way to keep an eye on things going forward. Mr. Miele has a bullish economic outlook for the latter half of the year. I'm always a skeptic so I will test his thesis against the charts. If you believe (like I do) that copper prices are indicative to an economy (I won't argue with the price decline from last June that correlates pretty close with what the stock markets did during that time), then prices much above the $0.73 level may well indicate an economic picture that is improving. Perhaps this will also tie in nicely with the Fed's comments regarding "weakness in demand is abating and economic activity looks to be firming," which was then offset by "the degrees of strength in business capital and household spending is still uncertain." Those Fed comments were 50/50 and that lines up perfectly with how we have retracement set up on the Copper futures. It wasn't just "copper stocks" It wasn't just copper stocks on the move today. Alcan Aluminum (NYSE:AL) jumped 4.74% to $38.86 today and Dow component Alcoa (NYSE:AA) gained 4.67%. I did some technical comparisons against these two stocks last week and felt that Alcan (AL) was the best candidate of the two for bulls to be playing from the long side. Alcan Chart - Daily Interval Every so often, I'll read a research note from a major institution that peaks my interest. On January 23rd (the "gap" above 38.2% retracement at $36) I saw a research note come across from Merrill Lynch when they raised their rating on Alcan (AL) to "near-term strong buy" from "neutral" as the firm believed earnings had bottomed out and looks for rising earnings per share and cash flow due to completion of a capital spending program and cost savings initiatives. The firm also saw an improving aluminum price outlook. I wouldn't chase the stock with a full position here, but would opt for a 1/2 position in the stock, then look to round out to full on a pullback near $37. Then follow the lot with a stop just below $35. The point and figure chart shows that $39 has been a level of resistance, but a trade there could be sign that this stock is turning the corner for a longer-term move higher. Alcan Chart - $1 box Forrest Gump said something like, "life is like a box of chocolates. You never know what you're going to get." I say "Life is like triple and quadruple top buy signals. You never know for certain what kind of move you're going to get but the odds of a mover higher are in favor of a bullish trader." And what about those transports? The Dow Transportation Average (TRAN) didn't do too bad today. Not spectacular with a 1.29% gain, but that beats the tech-heavy NASDAQ Composites 1.07% gain and even beat the highly volatile Semiconductor Index's (SOX.X) 0.72% gain, even with an Intel (INTC) upgrade today. Dow Jones Transportation Average (TRAN) - Daily Interval The TRAN sure looks like she's trying to deviate from that downward trend and the kick higher from retracement has to be encouraging. I want to have a transport trade ready for tomorrow and if you don't mind a stock that trades a little light on the volume side, but looks like she could make a strong move higher is shares of "railroad" stock Genesee & Wyoming (NASDAQ:GNWR) $31.74. Looking bullish on a break above $32.30, stop $29.95 and willing to sell strength for short-term traders at $37.00. Still and inside day In last night's market wrap, we set up a trade for shares of Qualcomm (NASDAQ:QCOM) $44.13 -1.25%. The stock traded sideway again today and built another "inside day" (traded inside of Wednesday's range of $43.00-$44.75). Still going to be looking long with MACD curling higher. Let's keep the trigger for a bullish trade at $44.75 and see if the stock can't prove something to us. It didn't prove worthy of a bullish traders cash today did it? Again... just try to find a tech stock near the lower end of retracement where a break from the bottom could find some bears rushing for cover. Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Recipe for a rally. by Russ Moore Take one part analyst upgrades, one part healthy P&G earnings, and one part improving economic data. Combine these ingredients with a pinch of "window dressing" and voila; A Wall Street rally. The DOW added +1.6 percent while the NASDAQ gained +1.1 percent and the NDX +0.7 percent. Volume was moderate with 1.52 billion shares moving on the NYSE and 1.73 billion on the NASDAQ. Advancers led decliners by a 20/10 margin on the big board and 21/15 on the tech index. Green arrows dominated the boards with oil service, financial, Internet and computer sectors experiencing solid gains. A two-day rally although welcomed by the bulls, was not enough to pull the major indices out of the red for the month of January. We can expect to hear the bears running through the streets chanting "as January goes, so goes the year". Those who scoff may want to give this some thought; over the last 50 years the January result matched the yearly result 80 percent of the time. You might think I’m becoming addicted to the volatility indices but I feel I must once again raise the yellow flag on these all- important tools. The VXN (Nasdaq 100 volatility index) hit its’ all time low of 42.95 today. The current level would suggest all is well in tech land. That may be so, but I would be very cautious about holding long positions with “no fear” in the tech markets. The VIX is at 22.91 but still has a way to go before extreme levels are reached. VIX Thursday 01/31 close: 22.91 VXN Thursday 01/31 close: 42.95 30-yr Bonds Thursday 01/31 close: 5.43 Total Put/Call Ratio: .67 Equity Option Put/Call Ratio: .55 Index Option Put/Call Ratio: 1.34 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 38.51 Volume/Open Interest Maximum calls: 39/56,325 Maximum puts : 35/73,406 Moving Averages 10 DMA 38 20 DMA 39 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: 573.49 Volume/Open Interest Maximum calls: 580/6,812 Maximum puts : 520/9,277 Moving Averages 10 DMA 572 20 DMA 580 50 DMA 583 200 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: 1130.20 Volume / Open Interest Maximum calls: 1150/26,665 Maximum puts : 1100/30,249 Moving Averages 10 DMA 1125 20 DMA 1139 50 DMA 1142 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: 9,920.00 Volume / Open Interest Maximum Calls: 98/12,644 Maximum Puts 90/17,035 Moving Averages: 10 DMA 9,786 20 DMA 9,916 50 DMA 9,938 200 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: 499.90 Volume / Open Interest Maximum Calls: 520/301 Maximum Puts: 560/530 Moving Averages 10 DMA 518 20 DMA 536 50 DMA 568 200 DMA 546 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: 558.88 Volume / Open Interest Maximum Calls: 570/970 Maximum Puts: 540/492 Moving Averages 10 DMA 533 20 DMA 553 50 DMA 543 200 DMA 554 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: 377.19 Volume / Open Interest Maximum Calls: 390/675 Maximum Puts: 380/825 Moving Averages 10 DMA 376 20 DMA 376 50 DMA 384 200 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, 02/25. 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 01/08/02 333,742 398,283 (64,541) (6.1%) 01/15/02 340,005 397,024 (57,019) (11.7%) 01/22/02 342,841 394,041 (51,700) (9.3%) 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 01/08/02 130,335 60,780 69,555 (3.1%) 01/15/02 129,987 64,311 65,676 (5.5%) 01/22/02 125,451 65,423 60,028 (8.6%) 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 01/08/02 30,786 37,457 (6,671) (13.3%) 01/15/02 32,068 34,859 (2,791) (58.1%) 01/22/02 30,671 34,103 (3,432) 23.0% 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 01/08/02 10,073 6,404 3,669 (22.5%) 01/15/02 10,230 9,782 448 (87.8%) 01/22/02 11,885 8,787 3,098 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 01/08/02 15,921 7,981 7,940 (3.9%) 01/15/02 15,866 9,175 6,691 (15.7%) 01/22/02 18,152 11,013 7,139 6.6% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 8,925 - 5/22/01 Small Traders Long Short Net %Change 01/08/02 4,380 9,188 (4,808) (9.3%) 01/15/02 4,979 8,747 (3,768) (21.6%) 01/22/02 5,424 8,969 (3,545) (5.9%) 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 +60,028 +65,676 -51,700 -57,019 Total Open Interest % (+31.45%) (+33.80%) (-6.95%) (-7.74%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -3,545 -3,768 +7,139 +6,691 Total Open interest % (-24.63%) (-27.45%) (+24.48%) (+26.72) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +3,098 +448 -3,432 -2,791 Total Open Interest % (+14.99%) (+2.24%) (-5.30%) (-4.17%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.Commercials continued their gradual reduction in net- short positions this week. Over the last couple of months we have seen the big players move as low as 4 percent net-short and then gradually increase their positions. So far, we’ve yet to see any evidence of an accumulation phase (bullish) beginning. Gold: Anyone following the behavior of gold or the XAU.X (gold and silver index), better have a whiplash collar on. The XAU hit a low of 56.85 during the week however, Friday saw the index take off and close at 59.10. Commercial activity does not seem to coincide with this type of a move but keep in mind that these figures are as of Tuesday. I’ll be interested to see what next week’s numbers show. 12/25 11,976 contracts net-short 01/01 14,555 contracts net-short 01/08 24,042 contracts net-short 01/15 53,938 contracts net-short 01/22 50,959 contracts net-short Data compiled as of Tuesday 01/22 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= Fedex Corp - FDX - close: 50.82 change: +0.62 stop: 48.75 Company Description: With annual revenues of $20 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second-largest provider of small-package ground delivery service; FedEx Freight, a leading provider of regional less-than-truckload freight services; FedEx Custom Critical, the world's largest provider of expedited time-critical shipments; and FedEx Trade Networks, a provider of customs brokerage, consulting, information technology and trade facilitation solutions. (source: company press release) - ORIGINAL WRITE UP: January 18th, 2002 - Why We Like It: We think FDX is an attractive trading buy. What does that mean? It means traders might be able to capture a short-term bounce in the stock price after the recent selling but to do so with diligent stop placement and realistic targets. As a major air freight carrier, shares of the company were obviously hit hard during the September tragedy. However, FDX has risen strongly from those September lows hitting new relative highs while stopping along the way to consolidate gains and head higher again. Earnings on December 19th were okay but were boosted by their portion of the airline bailout package. Last Friday Salomon Smith Barney downgraded FDX to a neutral. Their concerns seemed to stem from current valuations being too high ahead of actual economic recovery. The stock gapped down and fell to sellers for the next few days. On Wednesday of this week shares had reached their 50-dma near $48.75 (FDX closed at $48.70). Ending the day at its low, FDX had appeared to confirm the new downtrend on a high volume break of support at $50. The very next day the stock posted a reversal back above the $50 level on even stronger volume. This bounce off the 50-dma was confirmed with a another positive day on Friday made even more bullish by the negative market action in the broader indices. We're being optimistic but the MACD is showing a potential bullish divergence in its histogram. We are going to try and play any bounce with an initial target of $55. Our initial stop will be $48.75 or Thursday's low. Given the recent downturn in the Dow Jones, we think that a market bounce next week might accelerate any rebound in FDX. - Most Recent Update: January 31st, 2002 - As the Dow Jones Industrials have rallied back these last two days, so have the Dow Transports. Likewise, shares of FDX have rebounded but fortunately they never fell under that much selling pressure to begin with. We're still waiting for the stock to trade up to our exit price of $55 but overhead resistance has shifted from $53.50 to $54.00. - Play-of-the-Day Comments: January 31st, 2002 - We really like the bullish trend in the Transports but the Dow Jones Transport index needs to breakout above resistance at 2800. Fortunately, we think it will happen shortly. If it occurs, then FDX might have enough gas to reach our target of $55.00. Picked on January 18th at $50.82 Gain since picked: +2.73 Earnings Date 03/20/02 (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. 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PremierInvestor.net Newsletter Thursday 01-31-2002 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/5047_2.asp ================================================================= In section two: Net Bulls Bullish Play Updates: COGN Stock Bottom / Active Trader Bullish Play Updates: CHS, FDX, PBY, QMDC, TGH, UNH Bearish Play Updates: C, SIVB High Risk / High Reward Bullish Play Updates: QCOM Closed Bearish Play: MMS Split Trader split announcement: RMCF, 4-for-3 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) / Tech Stock section ================================================================== =============== NB Play Updates =============== -------------------- Bullish Play Updates -------------------- Cognos Inc. - COGN - close: 26.36 change: +0.00 stop: 23.70 Shares of COGN have been trading relatively sideways the last three days but given the volatility in the broader markets that may not be a bad thing. The GSO.X software index didn't do much today either even though MSFT posted a small gain after yesterday's intraday rebound. We think one software stock to watch for possible leadership is the recent laggard, ORCL. ORCL had some press today and we would look for the stock to breakout over the $17.50 level. If it can't then we're still left looking for leadership in the group. More conservative traders may want to consider tightening their stops on COGN and the last few sessions may offer ideas on where you'll find new support. Technically we see our short-term trading indicator of the 5-dma producing a bullish crossover against the 15-dma. Unfortunately, the MACD has flattened out. Overhead resistance remains at $27. Picked on January 25th at $25.47 Gain since picked: +0.89 Earnings Date 04/10/02 (unconfirmed) ================================================================== Stock Bottom / Active Trader (AT) Non-tech stock section ================================================================== =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Chico's F A S Inc - CHS - close: 29.95 change: +0.17 stop: 26.49 The retail sector has been a real leader in the market rebound these last two sessions if you look at the RLX.X retail index. The RLX has broken through resistance at the 940 level and looks pretty bullish. Whether investors will bite at the bullish breakout bait is the question stock pickers and traders are asking. CHS held up reasonably well during the pull back this week and found support at its ascending 5-dma. Unfortunately, we were hoping for a bit more strength in today's session but what we got was a gap higher and a slow fade into the close with a drop under the $30 level in the last half-hour. If recent trend is any indication then a pull back to $29.50 may be an entry point but this is based on a positive bias. We're still happy with our stop at $26.49 but it wouldn't bother me to tighten it up if I was a reader. The $28.00 to $28.50 level should still be good support. Picked on January 25th at $29.55 Gain since picked: -0.05 Earnings Date 03/05/02 (unconfirmed) --- Fedex Corp - FDX - close: 53.55 change: +0.39 stop: 49.99 As the Dow Jones Industrials have rallied back these last two days, so have the Dow Transports. Likewise, shares of FDX have rebounded but fortunately they never fell under that much selling pressure to begin with. We're still waiting for the stock to trade up to our exit price of $55 but overhead resistance has shifted from $53.50 to $54.00. Picked on January 18th at $50.82 Gain since picked: +2.73 Earnings Date 03/20/02 (unconfirmed) --- Pep Boys Man Moe - PBY - close: 16.45 change: +0.44 stop: 14.99 Yeah, it's about time! Shares of PBY have finally started moving along with its other industry-related competitors like AZO and ORLY. Shares of PBY dipped to $15.35 during the market weakness on Wednesday but quickly rebounded with the DJIA. Today's rally pushed the stock up another 2.74% but closed just short of its 50-dma at $16.47. This positive breakout over the $16 level has produced a bullish crossover in the MACD. We are bumping our stop from $14.99 to yesterday's low of $15.35. Traders who have been waiting for the breakout might want to look for any pull back and bounce at the $16.00 level. We are looking for an exit price of $18.00 but the next test will be to close above the 50- dma. Picked on January 18th at $16.00 Gain since picked: +0.45 Earnings Date 02/14/02 (unconfirmed) --- QuadraMed Corp. - QMDC - close: 10.46 change: -0.11 stop: 9.98 We're a bit concerned that QMDC has not participated in the recent market rebound. Shares have traded relatively sideways for the last four sessions. The recent trading activity almost looks like a very short-term pennant forming with lower highs and higher lows. This would indicate a breakout one direction or the other is imminent but it's a bit of a stretch. Given the lack of follow through for QMDC we would probably turn cautious and shy away from new positions. Conservative traders trying to protect their capital may want to inch up their stops to $10.19 but the newsletter will leave ours at $9.98. A number of healthcare stocks were up today, which makes us believe that QMDC is probably trading in closer relation to the software group of which it truly belongs. Picked on January 25th at $10.33 Gain since picked: +0.13 Earnings Date 02/28/02 (confirmed) --- Trigon Healthcare - TGH - cls: 73.53 chg: +0.24 stop: 69.99 Like the rest of the market, TGH fell to selling pressure on Wednesday morning but bounced back with the broader indices when given the chance. Thursday's session saw the stock hit new 52- week highs (74.75) but shares closed off their best levels of the day. Depending on your market outlook, healthcare may be the place to be. If you think the market may roll over again over the intermediate term then traditionally healthcare is a defensive play and investors will look to it for safety. If you think the market will continue to focus new money on stocks with steady earnings then healthcare has a lot of candidates Wall Street might focus on. We would look to the $72 level as a possible entry on a pull back. One possible catalyst for a short-term move in TGH is the up coming UBS Warburg Annual Health Care Conference. TGH's CFO, Tom Byrd, is scheduled to speak on Monday, Feb. 4th, at 1:30 p.m. Any positive comments he has to offer could filter into the stock price. Of course this is a double-edged sword if analysts perceive his comments as negative. Picked on January 11th at $71.42 Gain since picked: +2.11 Earnings Date 02/08/02 (confirmed) --- UnitedHealth Group - UNH - cls: 74.35 chg: +1.85 stop: 70.99 There is not a lot of difference between our play in TGH and our play in UNH. Both are healthcare stocks that have shown a great deal of relative strength against recent market weakness and both are at or near new 52-week highs. Both are traditional defensive plays and both have strong earnings. During the sell-off on Wednesday, the stock retreated to support near the $72 level and brave investors could have jumped again. Overhead resistance is still at $75. Picked on January 11th at $71.75 Gain since picked: +2.60 Earnings Date 01/24/02 (confirmed) -------------------- Bearish Play Updates -------------------- Citigroup Inc - C - close: 47.40 change: +0.06 stop: 49.25 The broader banking sectros, like the BIX.X and the BKX.X, have both made significant rebounds during the last two trading sessions. Citigroup has also bounced back from its Wednesday lows but with a lot less conviction. Shares of C remain under the $48 level as well as the price resistance that was previous support at $48.50. The 200-dma overhead at $48.46 supports this stance. A failed rally at the $48 level may be an attractive entry point for shorts to consider new positions. For more info on the fundamentals behind the play, check out Tuesday's write up. Picked on January 29th at $46.71 Gain since picked: -0.69 Earnings Date 01/17/02 (confirmed) --- Silicon Valley - SIVB - cls: 23.03 chg: -0.15 stop: 24.01 *new* SIVB did trade back below the $22 level during the nadir of Wednesday's market sell-off but rebounded just as fast. Personally, I find the sideways trading to be a strain on my patience level and it wouldn't bother me to drop this play for lack of movement. However, they say patience is a virtue and whether you're waiting for the right entry point or exit point it tends to pay off. Of course as short-term traders it doesn't hurt to enter passively and exit more aggressively. What does concern me is the sideways trading is giving the MACD time to flatten out and a fake or weak bullish crossover in the next few days might attract unworthy bullish attention. The recent sideways trading could just be consolidation after the big drop on heavy volume that brought it this low. Jeff made a valid point in the office that we should probably move our stop to $24.01 just to give us that one-cent edge if traders choose to let it rise to $24.00 before hammering it again. Picked on January 18th at $22.93 Gain since picked: -0.11 Earnings Date 01/16/02 (confirmed) ================================================================== High Risk / High Reward (HR) section ================================================================== =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- QUALCOMM - QCOM - close: 44.13 change: -0.56 stop: 42.49 Our contrarian high-risk long play continues to coil sideways, or as Jeff puts it, produced another inside day. Given the narrow range today we would look for a break out one way or the other very soon (like tomorrow?). We did hear a tidbit that said ABN AMRO was cautious on QCOM. Gosh, like who isn't? However, they reiterated their "add" rating and a $52 price target despite what they feel could be short-term weakness ahead. Talk about covering all your bases. We've already stated that most major brokers are negative on the group and we personally see no fundamental to own QCOM short-term either. See Thursday's original write up for more strategy tactics. Picked on January 30th at $44.69 Gain since picked: -0.56 Earnings Date 01/24/02 (confirmed) =============== HR Closed Plays =============== -------------------- Closed Bearish Play -------------------- Maximus Inc - MMS - close: 35.35 change: +1.35 stop: 35.01 The 350-point bounce in the Dow Jones from Wednesday's lows was enough to fuel a bounce in MMS up through our new stop. Shares of Maximus added almost 4% but closed below its descending 10- dma. We haven't seen any more news on the company and volume was nothing to get excited about but the move over $35 has us looking elsewhere. The point-and-figure chart shows a three-box turnaround but it could just be a speed bump on the way down. Picked on January 25th at $33.10 Gain since picked: -1.91 Earnings Date 02/05/02 (confirmed) ================================================================== Split Trader - Stock Split (ST) section ================================================================== ============= Announcements ============= How Sweet It Is, a 4-for-3 Split at RMCF Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), based in Durango, Colorado, has just declared a 4-for-3 stock split of its common stock. The timing of the press release came out within the last half hour of trading and shares moved higher on the news to close at $13.90. The Board of Directors met a few days ago and approved a 4:3 stock split payable on March 4th, 2002 for shareholders on record of Feb. 11th. The split is desperately needed to increase liquidity as the stock normally trades less than 10K shares a day. After the split takes affect RMCF will have 2.4 million shares outstanding. The stock closed at $13.90 on Thursday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=RMCF About the company Rocky Mountain Chocolate Factory, Inc., headquartered in Durango, Colorado, is an international franchiser of gourmet chocolate and confection stores and a manufacturer of an extensive line of premium chocolates and other confectionery products. (source: company press release) ================== 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 OXY Occidental Petro 25.95 +0.87 JCI Johson Controls Inc 84.06 +0.79 EPD Enterprise Products 50.49 +2.18 PDS Precision Drilling Corp 24.96 +0.85 PPP Pogo Producing Co 25.46 +0.56 AXL American Axle & Mfg 27.00 +2.00 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change WIN Winn-Dixie Stores Inc 13.35 +1.14 XOMA Xoma Ltd 11.16 +1.28 TZIX Trizetto Group Inc 14.33 +1.22 NETE Netegrity Inc 15.65 +2.48 STAR Lone Star Steakhouse 19.50 +1.08 STOR StorageNetworks Inc 5.14 +1.06 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change PG Procter & Gamble Co 81.68 +3.39 KFT Kraft Foods Inc 37.06 +1.56 BAX Baxter Intl. Inc 55.83 +2.08 LMT Lockheed Martin Corp 52.97 +2.51 ITW Illinois Tool Works 71.38 +1.39 GD General Dynamics 89.56 +4.21 UNP Union Pacific Corp 62.05 +1.82 ----------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change V Vivendi Universal 42.63 -2.27 CSR Credit Suisse Group 38.47 -1.10 KG King Pharmaceutical 36.40 -1.45 EL Estee Lauder Co 32.30 -1.30 ERTS Electronic Arts Inc 53.07 -3.83 PSD Puget Sound Energy 20.74 -1.74 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change ... none ... ================================================================= 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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