PremierInvestor.net Newsletter Thursday 02-07-2002 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/8881_1.asp ================================================================= In section one: Market Wrap: Technicals looking DEFENSIVE Market Sentiment: Confidence crumbling. Play-of-the-Day: Imminent Breakout ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 2-7-2002 High Low Volume Advance/Decline DJIA 9625.44 - 27.95 9743.05 9624.12 1.4 bln 1403/1681 NASDAQ 1782.10 - 30.61 1824.07 1781.73 2.0 bln 1384/2124 S&P 100 548.69 - 1.51 555.82 547.24 Totals 2787/3805 S&P 500 1080.17 - 3.34 1094.03 1078.44 RUS 2000 458.40 - 4.01 463.14 458.09 DJ TRANS 2604.60 - 17.38 2633.08 2604.60 VIX 27.33 - 0.87 28.53 26.52 VXN 50.90 + 1.84 51.11 49.14 TRIN .68 Put/Call Ratio .85 ----------------------------------------------------------------- =========== Market Wrap =========== Technicals looking DEFENSIVE Despite some economic data that continues to show some improvement or stability on the economic front, the technicals of the major market averages still look very defensive and suspect to lower prices ahead. Tonight we're going to take a look at the major market averages, discuss the potential downside risks and identify levels where things may turn more bullish. For now, our stance would be for any bullish traders to stay very short-term focused and bearish traders to continue to pick away at stocks in the tech arena that break critical support levels or have bearish chart patterns associated with their charts. Lets start with the most widely follow market average in the Dow Jones Industrials (INDU). The current bearish vertical count that traders/investor should be assessing downside to is the $9,050 level and resistance looks firm at the $9,950 level. Today, the Dow Industrials shed 28 points to close at $9,625. Current risk/reward assessment for a bullish trade would be $-575 risk, to $325 reward. In my book, this is not favorable for any type of bullish trades except shorter-term traders that can quickly adapt to a changing market environment. Dow Industrials Chart - $50 box The double bottom sell signal back in January (O column falling below a prior O column) at the $9,900 level as seen two failed rally attempts at that level and currently looks to be firm resistance. With investor confidence somewhat shaky due to all of the Enron hearings being broadcast on television and other media outlets, brief intra-day rallies are still finding sellers. Longer-term trend remains bullish at the $9,350 level, but if we were to see a break of that trend, then further downside would most come to the $9,050 level. We will note that retracement we've been using on our bar chart would show a retracement support level at $9,460, which also correlates pretty close with the bullish support trend of the point and figure chart. Dow Industrials Chart - Daily Interval Bar chartists may find very close correlation with support and resistance levels identified in the point and figure chart, with levels found from conventional retracement. The past three sessions, the Dow Industrials have been able to hold the $9,600 level. If we were to see a trade below that level, I do believe a rather quick decline to the $9,460 level is possible. Near-term, I feel that bears are going to press the issue and try to push the Dow Industrials lower and further put pressure on investor psychology and get the bulls to cave in. As harsh as this may seem, I do feel that bulls were warned back in December when the bullish percent charts were at or above "overbought levels." The broader NASDAQ Composite (COMPX) now looks to be in free-fall mode and yesterday's "lack of visibility" from Cisco Systems (CSCO) is starting to have technology investors looking for the door. NASDAQ Composite Chart - Daily Interval The tech-heavy NASDAQ Composite continues to have trouble holding a previous sessions low and the "external" technicals continue to look weak. It seems so evident now how our warnings back in December that the NASDAQ-100 Bullish Percent ($BPNDX) was signaling "overbought" and how important it was for traders of 4- lettered stocks to be tightening up their stops in bullish trades. That was very close to the $1,973 level and here we are at $1,782. What is rather concerning is how the NASDAQ Composite Bullish Percent ($BPCOMPQ) from www.stockcharts.com is nowhere close to what would be considered "oversold" levels based on historical readings. Unless there is some type of bullish market event like the capture of terrorist Osama Bin Laden, I do not see a near-term catalyst for a meaningful move much above the $1,868 level. I would once again exercise extreme caution for stock in this index, particularly those with loftier valuations. What bothers me most for bulls trying to swim against what is looking more and more like a powerful river current running south is the still rather high levels of the NASDAQ Composite Bullish Percent ($BPCOMPQ). As of tonight, roughly 44.10% of the stocks in this market currently hold a buy signal on their point and figure charts. The internals look week and are still at a relatively high level. In late January, this indicator turned back into a column of O's and as history has shown, followed the faster moving NASDAQ-100 Bullish percent into "bear confirmed" status. NASDAQ-Composite Bullish % Chart - 2% box I still here some analysts in the media saying that the NASDAQ Composite is "oversold." According to the above point and figure "bullish percent" chart, an "oversold" reading wouldn't come until a reading of 30% or lower. Today's action has the bullish % reading on the broader NASDAQ at 44.10% so there is still substantial internal weakening that could occur. The bullish percent for the NASDAQ Composite still dictates a very defensive posture. Very short-term trading rallies can be found, but until we see some type of upward (X column) reversal, the defensive team should be on the playing field. Only the broader New York Stock Exchange (NYSE) Composite ($BPNYA) finds its bullish percent chart in a bullish phase. The Bullish Percent for the NYSE ($BPNYA) currently has a reading of 50.22% of the stocks in that market holding a buy signal on their point and figure charts. Should we see a reading of 48%, this part of the market would then turn back into a "bear confirmed" status. On hold Right now, I like our play list as it is and am wanting to move more into a "preservation" of capital mode from the bullish side of things. I am very pleased with the recent decision of trading out of one "HMO stock" in Trigon Healthcare (NYSE:TGH) $77.23 +0.29, and rolling to "HMO stock" PacifiCare Health Systems (NASDAQ:PHSY) $21.26 +4.98%. Tomorrow, I think bearish traders should have a very close eye on our "tech short" play in Celestica (NYSE:CLS). Today's trading was an "inside day" and I believe a break below yesterday's low could have the stock seeing some hefty downside action. Please! Do not over leverage. Stay within your discipline and do not trade abnormally short in any one stock. Celestica (CLS) is an OEM for Cisco (CSCO). I do think some short-term bulls may decide to exit their positions near-term as Cisco (CSCO) basically gave flat guidance for the upcoming quarter and did not give further guidance. Shares of CLS did rally from the $23 level in September and looks to be rolling over. Bulls in the stock are undoubtedly looking at other technology stocks take a beating and a break of today's low could have bulls in the stock looking for the exits. As you can see from our play list, all of our "tech long" plays have been stopped out and losses kept rather small. We have one technology long still in play in Cognos (NASDAQ:COGN) $27.10 +2.65%, but we are going to move our stop up under the trade as the broader NASDAQ market action dictates. If the market loves the stock, then we won't get stopped out, but if the broader NASDAQ negativity prevails, we'll let the stock sell itself as it triggers our stop. This takes the emotion out of our trade under current market conditions; this is a very good thing. For educational information on the "inside day" or "bullish percent" understanding, please visit the "Bailey's Basics" section of the site. The "inside day" trading technique is at the top of the list and the bullish percent educational piece is near the bottom under the heading "Understanding risk is key." Jeff Bailey Senior Market Technician To view these two Bailey Basic's articles click below: Understanding Risk Is Key http://www.PremierInvestor.net/education/baileysbasics/110800_6.asp The "Inside Day" Trading Technique http://www.PremierInvestor.net/education/baileysbasics/092701_1.asp ================ Market Sentiment ================ Confidence crumbling. Russ Moore Investors are having a tough time determining in whom they should place their trust. Who can blame them? After all, the Enron scandal has brought to light an apparent "web of deceit" which stretched from the boardroom down to Wall Street. What’s it going to take to restore investor confidence? There’s no easy answer however, a visible improvement in the economy and time are the likely candidates. We’re already seeing signs of, dare I say it, "bottoming" in the economy and once the Enron dust has settled, many of the disenchanted investors will start to test the waters again. In the meantime, we’re probably in for the same type of action witnessed over the last three months. Since November 1, 2001, the S&P 500 has spent 31 days going up, and 32 days going down. Today’s performance was more of the same with a modest rally attempt on the DOW getting trampled on late in the day. The index finished with a loss of -0.3 percent. The NASDAQ struggled throughout the session, giving up -1.7 percent. The NDX slipped - 2.2 percent. Volume was solid with 1.42 billion shares trading on the NYSE and 1.96 billion on the NASDAQ. Losers outpaced winners by a 17/14 margin on the big board and 21/14 on the tech index. Today’s economic data had a positive slant, with initial jobless claims continuing their descent, and consumer credit falling $5.1 billion dollars. The encouraging data was offset by the "limited visibility over the short-term" comment from Cisco CEO, John Chambers. Investors chose to focus on the negative, rather than the positive, understandable, given the current market environment. We can expect that trend to continue until the Enron issue is put to bed. VIX Thursday 02/07 close: 27.68 VXN Thursday 02/07 close: 51.01 30-yr Bonds Thursday 02/07 close: 5.42 Total Put/Call Ratio: .85 Equity Option Put/Call Ratio: .77 Index Option Put/Call Ratio: 1.15 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 35.19 Volume/Open Interest Maximum calls: 40/56,136 Maximum puts : 35/55,721 Moving Averages 10 DMA 37 20 DMA 38 50 DMA 39 200 DMA 40 Fibanocci Retracements Relative High: 43.24 (12/06/01) Relative Low: 27.20 (09/21/01) 38% 37.22 50% 35.31 62% 33.37 === S&P 100 Index (OEX) 52-Week High: 834.93 52-Week Low: 491.70 Current close: 548.69 Volume/Open Interest Maximum calls: 580/7,973 Maximum puts : 520/9,420 Moving Averages 10 DMA 561 20 DMA 570 50 DMA 580 200 DMA 597 Fibanocci Retracements Relative High: 600.80 (01/04/02) Relative Low: 480.07 (09/21/01) 38% 554.05 50% 539.83 62% 525.37 === S&P 500 (SPX) 52-Week High: 1530.01 52-Week Low: 965.80 Current close: 1080.19 Volume / Open Interest Maximum calls: 1150/26,862 Maximum puts : 1100/24,846 Moving Averages 10 DMA 1108 20 DMA 1122 50 DMA 1137 200 DMA 1163 Fibanocci Retracements Relative High: 1176.97 (01/07/02) Relative Low: 944.75 (09/21/01) 38% 1087.63 50% 1060.54 62% 1032.99 == DJIA (INDU) 52-Week High: 11,518.83 52-Week Low: 8,235.81 Current close: 9,625.44 Volume / Open Interest Maximum Calls: 98/12,208 Maximum Puts 90/20,484 Moving Averages: 10 DMA 9,756 20 DMA 9,800 50 DMA 9,916 200 DMA 10,091 Fibanocci Retracements Relative High: 10,300.15 (01/07/02) Relative Low 8,062.34 (09/21/01) 38% 9,445.31 50% 9,181.25 62% 8,912.71 == Biotech Index (BTK) 52-Week High: 811.61 52-Week Low: 383.28 Current close: 457.21 Volume / Open Interest Maximum Calls: 520/326 Maximum Puts: 520/606 Moving Averages 10 DMA 494 20 DMA 515 50 DMA 556 200 DMA 545 Fibanocci Retracements Relative High: 625.15 (12/06/01) Relative Low: 410.54 (09/21/01) 38% 543.17 50% 517.85 62% 494.09 == Semiconductor Index (SOX) 52-Week High: 1280.84 52-Week Low: 362.00 Current close: 515.96 Volume / Open Interest Maximum Calls: 580/2,137 Maximum Puts: 500/2,175 Moving Averages 10 DMA 542 20 DMA 541 50 DMA 546 200 DMA 553 Fibanocci Retracements Relative High: 606.88 (01/09/02) Relative Low: 343.93 (09/27/01) 38% 506.43 50% 475.40 62% 443.85 == Pharmaceutical Index (DRG) 52-Week High: 455.28 52-Week Low: 339.49 Current close: 367.28 Volume / Open Interest Maximum Calls: 390/690 Maximum Puts: 380/825 Moving Averages 10 DMA 372 20 DMA 375 50 DMA 381 200 DMA 390 Fibanocci Retracements Relative High: 407.83 (11/26/01) Relative Low: 353.67 (09/21/01) 38% 384.78 50% 378.88 62% 372.87 ***** CBOT Commitment Of Traders Report: Friday, 02/01. 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 01/15/02 340,005 397,024 (57,019) (11.7%) 01/22/02 342,841 394,041 (51,700) (9.3%) 01/29/02 345,583 401,923 (56,340) 9.0% Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: (41,144) - 5/1/01 Small Traders Long Short Net %Change 01/15/02 129,987 64,311 65,676 (5.5%) 01/22/02 125,451 65,423 60,028 (8.6%) 01/29/02 128,826 63,127 63,127 5.1% 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 01/15/02 32,068 34,859 (2,791) (58.1%) 01/22/02 30,671 34,103 (3,432) 23.0% 01/29/02 31,577 33,651 (2,974) (13.3%) 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 01/15/02 10,230 9,782 448 (87.8%) 01/22/02 11,885 8,787 3,098 01/29/02 9,709 8,293 1,416 (54.2%) 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 01/15/02 15,866 9,175 6,691 (15.7%) 01/22/02 18,152 11,013 7,139 6.6% 01/29/02 19,956 12,171 7,785 9.0% 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 01/15/02 4,979 8,747 (3,768) (21.6%) 01/22/02 5,424 8,969 (3,545) (5.9%) 01/29/02 5,872 9,709 (3,837) 11.1% 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 +65,699 +60,028 -56,340 -51,700 Total Open Interest % (+34.23%) (+31.45%) (-7.54%) (-6.95%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -3,837 -3,545 +7,785 +7,139 Total Open interest % (-24.63%) (-24.63%) (+24.23%) (+24.48) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +1,416 +3,098 -2,074 -3,432 Total Open Interest % (+7.86%) (+14.99%) (-3.18%) (-5.30%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.On a percentage basis we saw little change in the S&P Commercial activity. The Commericals have been fluctuating between 4 and 9 percent net-short for months, while the Small Specs float between 28 and 38 percent net-long. . Gold: The gold index (XAU) continued its bullish move this week closing at 62.80. We did see the Commercials unload 40 percent of their short contracts while still remaining in a net-short position. 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 01/29 31,515 contracts net-short Data compiled as of Tuesday 01/29 by the CFTC. ========================= Play-of-the-Day (Bullish) ========================= UnitedHealth Group - UNH - close: 75.10 change: +0.50 stop: 71.75 Company Description: UnitedHealth Group is a diversified health and well-being company that provides a broad spectrum of resources and services to help people improve their health and well-being through all stages of life. (source: company press release) - ORIGINAL WRITE UP: January 11th, 2002 - Why We Like It: Another healthcare player that some of the analysts in our office think might be a winner is UNH. Shares have been working through a lot of congestion near the $70 level but at the same time it looks like it has been building support between $68 and $68.50. MACD has bottomed near the zero line and is about to turn bullish. We also like the bullish pattern on the point-and- figure chart for UNH. More conservative players may want to wait for shares to actually conquer the $72.50 level but we think dips back to $70 may be entry points as well. We're also going to play this one with a relative tight stop at $68.49. We don't have an earnings date yet but we expect an announcement in late January. - Most Recent Update: February 7th, 2002 - Another healthcare play, UNH continues to coil under the $75 level. We are expecting an upside breakout very soon. Shares have been trading so tightly that conservative players can look at a move under the 10-dma (near $74) as a short-term breakdown. Longer-term players may still want to look for a pull back to $72 but it may not occur in the near future. We would consider a bounce at $74 a strong potential entry for a short-term play. There are a couple of more healthcare companies announcing earnings next week and they might add a little more emphasis to any upside moves if they are as positive as the last round of announcements. - Play-of-the-Day Comments: February 7th, 2002 - With investors fleeing to defensive issues and shares of UNH coiling in a way that makes us believe a breakout is imminent it shouldn't be a surprise to see the stock as our play of the day for Friday. Once shares breakout above $75, its next level of resistance will likely be near the $77.50 area. Our ultimate goal is currently the $80 mark. Picked on January 11th at $71.75 Gain since picked: +3.35 Earnings Date 01/24/02 (confirmed) ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Thursday 02-07-2002 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/8881_2.asp ================================================================= In section two: Net Bulls Bullish Play Updates: COGN Bearish Play Updates: CLS Stock Bottom / Active Trader Bullish Play Updates: CHS, HRB, PHSY, UNH Bearish Play Updates: C, SIVB Closed Bullish Play: FDX High Risk / High Reward Bearish Play Updates: QCOM Closed Bearish Play: GE Split Trader announcement: TRR, 3-for-2 stock split 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: 27.10 change: +0.70 stop: 26.37*new* Time and again in our play write ups and our market commentary we discuss how even a good stock can fall if the market or sector comes under selling pressure. We believe this may begin to occur in COGN. Shares of the software company have been very strong the last couple weeks when in contrast the GSO.X software index has fallen eight out of the last ten sessions. When a sector is sinking it can become a lead weight around the neck of even the strongest swimmers. COGN looks like it's about to run out of strength. It hasn't happened yet but we are going to raise our stop to just under today's low. This should protect a very small gain in the play but more importantly it should protect capital. If and when the software sector can find a bottom then COGN might be a good stock to watch for an entry point. At this time, we would expect COGN to find some support at its 30-dma near $26.00 but if that fails then the $24 level might support it. Looking at the GSO.X, we see that it is very short-term oversold and overdue for a bounce but it may continue to fall to the 160 level (another four points) before finding any strength. Picked on January 25th at $25.47 Gain since picked: +1.63 Earnings Date 04/10/02 (unconfirmed) -------------------- Bearish Play Updates -------------------- Celestica - CLS - close: 38.82 change: -0.74 stop: 42.85 The market's reaction to CSCO's earnings report is not a good sign for CLS or for the market as a whole for that matter. As we mentioned in the initial write up, CLS is an OEM for CSCO and several of the largest tech companies in business. With the Nasdaq gunning for six down days in a row it is easy to see that investors are running from tech issues. The last couple of sessions have shown CLS fail twice at a rally attempt back over the $40 level. We feel that today's move merely confirms the breakdown from Tuesday and we should see CLS trading to $35 over the next week or two. If you're still looking for confirmation then a close under $38 would be another possible entry point but we'd prefer to short it here now that is has failed at $40 again. More conservative traders could use a tighter stop near the $40.00 to $40.50 area if they want to reduce risk. Picked on February 5th at $39.40 Gain since picked: +0.58 Earnings Date 01/31/02 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) Non-tech stock section ================================================================== =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Chico's F A S Inc - CHS - cls: 32.01 chg: +0.73 stop: 28.98 *new* While we have already received the January sales numbers for CHS, the majority of the retail world released their January sales numbers today and they were good. A few retailers are raising their guidance due to the strength of business. Since the consumer is such a large part of GDP this should be a very positive sign for the economy. However, despite the great report investors still hit the sell button and WMT, S, and TGT were all trading lower while ANN and even the beleaguered GPS posted gains. Chico's also posted a nice gain but ended well off its intraday high of $32.99. We are going to bump up our stop to $28.98 but more conservative traders can certainly play with a tighter stop. We're also going to add an exit price of $34.75 and if shares trade there intraday over the next week or two we'll close the play. Traders still looking for an entry point might consider a dip to the $31 level. FYI, keep an eye on the RLX.X. It has slowly been drifting down to its 50-dma, which has been a rally point for bulls in the recent past. Picked on January 25th at $29.55 Gain since picked: +2.46 Earnings Date 03/05/02 (unconfirmed) --- H R Block - HRB - close: 46.79 chg: -0.16 stop: 44.25 HRB keeps trying to post gains but the stock seems to have trouble holding on to them by the close. Shares reached to $47.88 today but failed to hold even the $47 level. Nevertheless we are still optimistic on the play and feel the high lows that HRB has been building is indicative of current buying interesting. On Wednesday, HRB came out with a positive press release that should help boost revenues as well as strengthen their weaker quarters. The tax preparation giant is branching out to offer more services. This year when Americans begin to stream into their local HRB office to file their taxes they'll see a host of new services like financial planning, mortgages, brokerage services and wealth management. A dip to $46 might be a good entry point and conservative investors might want to consider adjusting their stops under the 15-dma to reduce their risk. We're leaving ours at $44.25. Picked on February 5th at $47.01 Gain since picked: -0.21 Earnings Date 02/27/02 (unconfirmed) --- PacifiCare Health - PHSY - cls: 21.26 chg: +1.01 stop: 18.75*new* Our new addition to the long play list is off to a strong start today. Shares of PHSY powered higher for a 4.98% gain after breaking out above the $20 resistance level. If you missed the Wednesday write up we would encourage you to check it out as we discuss why the stock is climbing and while also discussing the additional risks associated with PHSY. A pull back to $20 should be buyable but closing near the high of the day is a strong side for another rally attempt tomorrow morning. We are considering an exit point near $23.25, which is just under the early November high. We have bumped out stop up 50 cents to $18.75. Picked on February 6th at $20.25 Change since picked: +1.01 Earnings Date 02/13/02 (confirmed) --- UnitedHealth Group - UNH - cls: 75.10 chg: +0.50 stop: 71.75 Another healthcare play, UNH continues to coil under the $75 level. We are expecting an upside breakout very soon. Shares have been trading so tightly that conservative players can look at a move under the 10-dma (near $74) as a short-term breakdown. Longer-term players may still want to look for a pull back to $72 but it may not occur in the near future. We would consider a bounce at $74 a strong potential entry for a short-term play. There are a couple of more healthcare companies announcing earnings next week and they might add a little more emphasis to any upside moves if they are as positive as the last round of announcements. Picked on January 11th at $71.75 Gain since picked: +3.35 Earnings Date 01/24/02 (confirmed) -------------------- Bearish Play Updates -------------------- Citigroup Inc - C - close: 44.14 change: +0.14 stop: 47.01 *new* Citigroup and both the banking indices (BIX.X and BKX.X) all posted small gains today but don't let the numbers fool you. All three of them appear to have actually signaled a failed rally at their 5-dma's. Additionally, C is developing resistance at the $45.25 level. We still believe that C will continue its descent and just one of the reasons that may help it trade lower is its involvement in the Enron scandal. According to reports hitting the newswires today, Citigroup along with a "who's who of finance" including J.P. Morgan, Merrill Lynch and Credit Suisse First Boston were all limited partners in what will surely become known as the infamous LJM2 Co-Investment Fund. If you were watching the Enron hearings on T.V. today you may have heard about the LJM2 deal. This was the Enron partnership that was producing an annual return of almost 60% for its investors. We doubt that Citigroup as a corporation will have any liability from the LJM2 deal but public opinion and investor confidence can be hard to regain. Remember that two of the major reasons were are playing C is the backlash to C's exposure to Enron, which is about $1 billion, and its exposure to the Argentina crisis, which is worth about $1.3 billion in capital and $6 billion in assets and loans. However, of its Enron risk about $650 million was secured debt to Enron. There were also a number of unsecured loans to the energy giant. Citigroup has already taken a write down to the tune of $228 million in Enron losses but this only represents 50% of its unsecured exposure. And let's not forget about C's exposure to the Global Crossing bankruptcy. We are going to lower our stop to $47.01 but wouldn't be against a tighter stop. The $46.50 or $46.00 level look like good ideas. Picked on January 29th at $46.71 Gain since picked: +2.57 Earnings Date 01/17/02 (confirmed) --- Silicon Valley - SIVB - cls: 21.80 chg: +0.63 stop: 23.01 *new* It has finally occurred. The breakdown under the $22 support level has finally happened for SIVB. The stock dropped early on Wednesday morning and spent most of the day trading near $21.20. Shares rebounded with the banking sectors today but traded right to previous support at $22 before rolling over again. Very conservative traders may consider a tight stop near $22.20. We are going to be a bit more aggressive and moves ours down to $23.01. We're still looking for a drop to $20 and our exit price of $20.05 is still good. Picked on January 18th at $22.93 Gain since picked: +1.13 Earnings Date 01/16/02 (confirmed) =============== AT Closed Plays =============== -------------------- Closed Bullish Play -------------------- Fedex Corp - FDX - close: 51.78 change: -1.48 stop: 51.89 Seeing an easy mark, Morgan Stanley decided to hit FDX with a downgrade while the Dow Transports index continues to fall from its failed rally at the 2800 level. Fedex had been holding up rather well during the last couple of session where the Transports had been showing weakness. Well Wednesday showed that traders were willing to take some profits after the recent run up from the last bounce off the 50-dma. The Premier newsletter came within ten cents of hitting our exit price of $55.00 on Tuesday but today's gap down stopped us out. Morgan Stanley issued a "neutral" rating from an "out perform" and stated they felt all the short-term good news was in the stock. In response, FDX gapped down to $52.45 and then traded shortly thereafter through our stop at $51.89. This closes the play with a positive move of $1.07. At this point we wouldn't be surprised to see FDX trade to the $50 level. Picked on January 18th at $50.82 Gain since picked: +1.07 Earnings Date 03/20/02 (unconfirmed) ================================================================== High Risk / High Reward (HR) section ================================================================== =============== HR Play Updates =============== -------------------- Bearish Play Updates -------------------- QUALCOMM - QCOM - close: 39.11 change: -1.49 stop: 42.05 Has the next leg down for QCOM started again? Both the IXTCX combined telecom index and the YLS.X wireless index posted marginal gains while QCOM lost yet another 3.6%. This is the first close under the $40 level since its October closing low of $38.46. A glance at the 30-minute interval chart shows how the stock has been struggling with the $41 level the last three days and today's session shows selling pressure picking up into the close. Today's drop comes after two pieces of positive news hit the wires today. One was word that QCOM struck a deal with Verizon Wireless (VZ) for VZ to launch new applications on QCOM's BREW platform. Secondly, there was a positive article about QCOM by BusinessWeekOnline, which tried to make the argument that QCOM may be a buy for long-term investors. The author proceeded to make several positive observations about QCOM's future business. We don't doubt that QCOM will be a major player in the wireless market for the foreseeable future and the market environment will eventually turn around. However, in the meantime, short-term traders like ourselves should be able to benefit by playing the trend. At the moment, that trend is down. If you're looking at a possible bearish play but want more confirmation wait for QCOM to drop under the $39 level. We would expect a possible move to the $35 level but October's low could act as support. Currently, the newsletter is up about 7.8% on the play. Picked on February 1st at $42.46 Gain since picked: +3.35 Earnings Date 01/24/02 (confirmed) =============== HR Closed Plays =============== -------------------- Closed Bearish Play -------------------- General Electric - GE - close: 37.20 change: +0.24 stop: 37.51 We have to say that GE's quick reaction to the mere suggestion that they might be next on the accounting questions list has worked - at least temporarily. Remember, we never actually suspected that GE may have accounting issues but were merely trying to play the suggestion that the largest conglomerate in the world might have some tough to understand accounting issues. Shares have rallied right to overhead resistance at the previous support between $37.50 and $38.00. We had our stop on the lower end of that range and have been stopped out. The stock my still be susceptible to weakness if the broader markets continue to drop out from under GE. Picked on February 4th at $35.00 Gain since picked: -2.51 Earnings Date 01/17/02 (confirmed) ================================================================== Split Trader - Stock Split (ST) section ================================================================== ============= Announcements ============= TRR Adds 3-for-2 Split with Earnings After the close of the market today, TRC Companies, Inc (NYSE:TRR) announced their Q2 earnings report for 2002. The company boasted strong revenue and earnings growth and announced a 3-for-2 stock split. TRR's Board of Directors approved the 3-for-2 stock split for shareholders on record of February 19th, 2002. The payable date for the split will be March 5th, which means we can probably expect TRR to trade at its new post-split price on Wednesday, March 6th. The stock closed at $37.35 on Thursday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=TRR About the company TRC provides technical, financial risk management and construction services to industry and government, primarily in the United States market. The Company's main focus is in the areas of infrastructure improvements and expansions, environmental management and power development and conservation. (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 JNY Jones Apparel Group Inc 34.18 +2.08 PNW Pinnacle West Capital 41.63 +0.64 TGIC Triad Guaranty Inc 41.60 +1.10 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change AG Agco Corp 16.56 +1.55 IDXC IDX Systems Corp 12.66 +1.13 AVID Avid Technology Inc 12.70 +1.18 WNC Wabash National Corp 10.07 +1.44 IDN Intelli Check Inc 14.46 +1.38 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change NVS Novartis 36.09 +1.05 JNY Jones Apparel Group Inc 34.18 +2.08 WON Westwood One Inc 33.22 +1.12 OHP Oxford Health Plans Inc 39.60 +1.86 STZ Constellation Brands Inc 49.92 +1.92 ANN Ann Taylor Stores Corp 40.94 +2.86 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change DNA Genentech Inc 46.90 -1.08 LEH Lehman Brothers 58.47 -1.38 TJX TJX Companies Inc 37.00 -2.97 IDPH IDEC Pharmaceuticals 51.95 -1.35 WHR Whirlpool Corp 63.46 -2.04 ADRX Andrx Corp 50.27 -4.78 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change LOW Lowe's Companies Inc 43.58 -1.58 FDX Fedex Corp 51.78 -1.48 JCI Johnson Controls Inc 80.85 -3.28 CDN Cadence Design Systems 22.81 -0.74 CTX Centex Corp 56.00 -1.49 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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