PremierInvestor.net Newsletter Monday 02-25-2002 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/022502_1.asp ================================================================= In section one: Market Wrap: Transports held tough. Can they hold the spotlight? Watch List: GFF, IMCL, PH, COST, CAT, WMT Market Sentiment: Optimism heading South. ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 02-25-2002 High Low Volume Advance/Decline DJIA 10145.71 +177.56 10172.62 9966.36 1.30 bln 1931/1182 NASDAQ 1969.88 + 45.34 1776.61 1730.92 1.70 bln 1934/1658 S&P 100 563.78 + 9.74 565.83 554.04 Totals 3865/2840 S&P 500 1109.43 + 19.59 1112.71 1089.84 RUS 2000 468.19 + 3.12 468.20 464.56 DJ TRANS 2777.39 + 51.74 2782.50 2727.01 VIX 23.28 - 1.61 24.69 22.75 VXN 44.07 - 4.50 48.08 44.07 TRIN 0.59 PUT/CALL 0.75 ----------------------------------------------------------------- =========== Market Wrap =========== Transports held tough. Can they hold the spotlight? Today's existing home sales number had broader market bullishness in play as investors scrambled to buy some stocks with the thought that this early economic report might have a bullish impact on Wednesday's testimony of Federal Reserve Chairman Alan Greenspan. Existing home sales were much stronger than the consensus estimate among economists that were looking for a number near 5.19 million. Instead, investors found that existing home sales jumped 16.2% to 6.04 million and that spurred a broad market rally. In Friday's market wrap, we mentioned that some Fed watchers felt that this week's early economic data may have a significant impact on Mr. Greenspan's testimony on Wednesday and today's number sure looks like bulls got dealt an ace on their first card. Not only did the stronger than expected existing housing number come into play on Mr. Greenspan's testimony, but market participants that have been playing the economic numbers from recent weeks may have gotten a boost from bears looking to cover some positions. Subscribers need look no further than the Dow Transportation Average (TRAN) 2,777 +1.89% for some sign of confirmation that the economic cards are still being dealt and in play. There is still quite a bit of work to be done, but investors continue to get some confirmation from this group that all today's broader market bullishness wasn't all short covering. For the third time in as many weeks, this group of stocks is trying to break clear of our downward trend dating back to May of 1999 and in our book, these technicals still look rather bullish. Dow Jones Transportation Average - Daily Interval The Dow Jones Transportation Average (TRAN) has been here before. Breaking above downward trend dating back to 1999, only to be turned back lower. Bulls may get a run this time as today's action has our MACD just crossing above the signal and this could bring some momentum players into the group. The next hurdle to clear is the relative high from January 4th near 2,840. If that's broken to the upside and holds on a closing basis, it will most likely get some market attention. Leaving the gate! Subscribers that have been biding some time and looking to hide out from the volatility in technology stocks see that one of our longer-running transportation plays in shares of Airborne Inc. (NYSE:ABF) $18.08 +8.91% left the proverbial "gate" today as the stock lifted off to a new 52-week high on heavy volume. I can't find one bit of news to explain today's action and am left to believe that subscribers are simply holding a strong stock in a strong sector with very little overhead supply in the way. Airborne Freight Chart - Daily Interval Today's 8.9% gain in Airborne (ABF) is impressive and rivals many gains found in a lot of technology stocks. Today's impressive volume undoubtedly came not only from bulls buying, but also some bears calling it quits as the stock has been setting 52-week high for the past week and may have been concerning to bearish traders that were losing resistance levels. Today's existing home sales number undoubtedly created part of the catalyst for bears to close out some positions. We're willing to let a winner run if she wants to, but under current market conditions we'll take a more cautious approach and raise our stop just under retracement of $17.73. If the broader TRAN will cooperate, bullishness there should help serve as a waive and help push one of the stronger transports up into our target zone on retracement. CNF Inc. Chart - Daily Interval Subscribers that have been with us a while will find CNF Inc. (NYSE:CNF) $31.31 +2.95% a familiar name in the transportation sector. This is a stock we first mentioned as bullish back in December of last year. This stock represents a different bullish technical play as a "strong stock on pullback" in a group that has been holding tough. One thing I liked about the trade was the level where the recent pullback came to at $30. In past commentary we talked about the impressive volume in early December at the $30 level and bullish trades in CNF at current levels offered a very good risk/reward trade. My thinking is "those institutions that took some meaningful positions from $28- $30 probably weren't going to let those positions just collapse and would be around to support the stock at $30, if they still believed in the stock." We see some very similar technicals in CNF that we see in the TRAN, with CNF perhaps lagging a bit and ANF actually leading. Sometimes a bull that is having some success in a sector will spread some bets within the group. As Paul Revere said, "One if by land, two if by air." Our play list has the ground and air transportation exposure if the transports are ready to confirm an economic recovery. Only as good as.... The next day's rumor or economic report. OK, that's enough "bull" now what about the bearish trades? Well... a "rising tide can lift all boats" and that's what happened to just about every bearish play we are currently carrying as active on our play list. With the NASDAQ Composite up 2.62% it would be tough to not have some technology bears seeing some daily losses today. This is something we had planned for in Friday's market wrap when we discussed just how "uncertain" both bulls and bears were. What made things a little more painful for the bears today was early session news out of Tyco (NYSE:TYC) $29.50 +7.27% that the U.S. District Court, District of New Hampshire, granted Tyco's motion to dismiss all of the claims asserted in shareholder suits brought against the company and certain officers and directors under the federal securities laws. The allegations in the suits were based on criticisms of Tyco's disclosures and accounting practices. There was undoubtedly some relief by the broader investment public in today's ruling that planted the seed that "maybe there has been an overreaction to some of the accounting allegations, and now a bear needs to worry about the economic data." Now, before some of our bearish subscribers try reaching across the table with their claws and taking an angry swipe at me, we have talked about the possibility that stocks have been under pressure due to "accounting concerns" and perhaps not necessarily some of the economic data. We still feel as always that it is safer to trade bearish in stocks that are technically weak, but we've got some rather tight stops on trades that are showing some good profits and will stick with stops on our recent bearish trades. But if I'm sitting at the same card table that the markets were today, then bulls were definitely dealt an ace card in the existing home sales data, while bears were dealt a duce if they're just counting on the "accounting worries" to keep stocks under pressure. I had my eye on all of our plays today (long and short). I was rather impressed that shares of PMC Sierra (NASDAQ:PMCS) $16.55 +3.43% traded in negative or unchanged levels for the bulk of the session, but only turned decidedly to the upside in the last 90- minutes of trading. Action here really smelled of short covering into the close, just in case another ace card was dealt to the bulls tomorrow morning in the form of Consumer Confidence at 10:00 AM EST. I do note that the Semiconductor Index (SOX.X) gained an impressive 5.85% today and PMCS lagged that move most of the session. Subscriber's have a nice gain going in this trade and we're protecting that with a tight stop at $17.26. I'm not convinced that "all is well in technology land" at the end of today's trading. While both of our "software" bearish plays in Check Point Software (NASDAQ:CHKP) $29.90 +5.17% and Microsoft (NASDAQ:MSFT) rallied against us, I'm focusing a bit more on Microsoft's action today as it represents a much broader pulse on the software market than does Check Point. We have a diverse subscribership at PremierInvestor.net that has varying time horizons for their trades. For a short-term trader, they may have been hard pressed to hold a short in MSFT after the first two hours of trading and stronger than expected economic data, but there may have been an interesting technical development right near the close that a shorter-term trader may want to watch for tomorrow, especially if they are a little nervous about Microsoft (MSFT) extending a run from our retracement level near $57.50. Microsoft Chart - 60-minute interval It sure looks like somebody was watching the 60-minute chart of MSFT and willing to be a seller at the still trending lower 50-pd moving average. Throughout the day I was rather "surprised" that the bellwether in the software sector and largest weighted NASDAQ-100 component lagged a both the GSTI Software Index (GSO.X) $158 +3.89% and NASDAQ-100 Trust (AMEX:QQQ) $35.01 +4.04% gains. Now, today's 1.87% gain isn't overly bearish from Microsoft (MSFT), but it does raise an eyebrow as to why this stock just didn't present itself as a leader the entire session. At this point, I'm just not ready to get crazy about technology stocks. In fact, it may take a couple of days or even weeks before I turn "crazy on technology stocks." With that said, there is one stock that strikes me as interesting and its just the kind of "crazy" idea that might have some merit. The stock is SanDisk (NASDAQ:SNDK) $15.15 +5.06%. Last week I was looking for "triangle" patterns and found a triangle developing in the point/figure chart of SanDisk (SNDK). What has me interested in the stock is a little blurb I heard on the radio this morning about the potential growth still to come in the digital camera market. I was just getting out of the shower and had the towel stuck in my ear, but there was something said on the radio about the number of homes in the U.S. that currently have a digital camera. I'm too familiar with this as I recently bought a new laptop computer and I had to buy some SanDisk flash memory cards and a flash memory card reader from SanDisk in order to download pictures from the digital camera. I've written before how sometimes the "smoke stack smoking" theory that some old-time investors have used to identify investment opportunities happens to actually work. The smoke stack smoking theory is based off of the thought that "if the industrial smoke stack at XYZ widget is really smoking" then that must mean they're hard and work and turning out widgets at a fast pace. That must then mean that they're filling orders and earnings will flow to the bottom line. I need to try and dig up some type of "fundamental" information on this one to see if there really is something taking place, but a trade at $16.50 may be a very bullish trade for shares of SanDisk (SNDK). This would be a "very early" entry into a technology long and right now I'm in no hurry to get long technology. There's plenty of time for that! SanDisk Chart - $0.50 and $1 box I've been keeping an eye on shares of SanDisk (SNDK) in recent sessions, as the stock has actually held rather tough despite some technology weakness. Relative strength has been strong and a break of longer-term downward trend at $16.50 could have bears running for cover and bulls taking over. This one can move when it gets going and might be a stock that aggressive technology bulls have been waiting patiently for. Setting an upside alert at $16.50 for 1/2 bullish position, and targeting $21 on such a trade, with a stop at $13.50. Jeff Bailey Premier Investor ================================================================== WATCH LIST ================================================================== The PremierInvestor.net watch list is not designed to be read as full fledged stock picks. Rather we would prefer to offer it as an extra tool in today's investor toolbox. Think of it as a radar screen with your own radar operator pointing out interesting developments, technical patterns or potential plays that you may or may not have seen on your own. Due to time constraints we do glance at the news but rarely do we have time to fully read pertinent news stories, due background research and other necessary screens that investors should do before making a decision. A common exercise is to read the entry, glance at the sector and other stocks in that industry and then compare what's happening in the stock to what's happening in the broader market indices. We hope you enjoy the Watch List and that it proves to be a useful tool for your own trading success. STOCKS WORTH WATCHING --------------------------------- Griffon Corp - GFF - close: 18.44 change: +1.31 WHAT TO WATCH: Construction and manufacturing issues rose nicely today in response to the positive home-starts news, and GFF was no exception. Moving over resistance just below $18, it rallied on high volume to new 52-week highs. With no overhead supply, additional positive economic news this week could power shares higher. Ideally, we’d like to see shares pull back and bounce from $18 before considering an entry. However, it is sometimes seen as a bullish indicator for tomorrow when the stock closes at its high for the day. --- ImClone Systems Inc - IMCL - close: 14.73 change -0.97 WHAT TO WATCH: Anticipation of a crucial meeting with the FDA tomorrow weighed heavily on IMCL, as it shed over 6%. The purpose of the meeting will be to re-evaluate Erbitux, an experimental colorectal drug that the FDA refused in December. IMCL currently sits just above its yearly-lows at $13.77 from February 8th, 2002. A negative reaction to the FDA conference could see this level abandoned quickly, as investors abandon any hope for the drug. Alternatively, encouraging words from the FDA could see shares quickly bounce back to the upper-teens or more. We see two ways to play this meeting or more correctly the reaction to it (this means we would NOT take a position ahead of the meeting as that would be akin to gambling and you'd have more fun at Vegas). Of course we would already consider this a high- risk play just due to its nature. After the meeting, if shares break down under $14.00 we'd consider a short play as the stock could quickly retreat to the $12 or $10 levels. Likewise, if the reaction is favorable the a position near $15 (if you can get it) might be a good bullish entry with a relatively tight stop. Our short-term upside target would be $19.75 to $20.00. The problem with either attempt is that shares could easily gap one way or the other. --- Parker Hannifan - PH - close: 51.13 change: +1.01 WHAT TO WATCH: The breakout in PH began last week when shares started moving higher on rising volume. It's that sort of action that has attracted even more bullish attention that has now culminated into a true high-volume breakout. Friday's session saw PH close above the $50 level, which had acted as resistance for months. The last time shares were near this level was back in May of 2001. Monday's performance confirms the move with extreme volume nearing two million shares also confirming investor sentiment. We searched for some sort of news lifting the stock and came up with an alliance and equity investment by PH in Japanese company Taiyo Ltd. It is not within the scope of the watch list to research each stock in depth but we'd say Wall Street's reaction was positive. A pull back to the $50 level might be an attractive entry point for a new long play. The point-and-figure chart confirms the breakout above $50. --- COSTCO - COST - close: $44.40 - change: -0.83 WHAT TO WATCH: COST stuck out like a sore thumb during today’s trading session, as its price declined in the face of positive economic news and gains by most other retail stocks. This relative weakness is intriguing, especially considering that the daily stochastics are looking bearish as well. Most importantly, COST is threatening to break below its ascending channel that started in November. However, we see this pull back to the bottom of the channel as a possible bullish entry point. Our bias is bullish so we'd expect the stock to maintain support at $44. Yet shares have dipped below the 50-dma more than once on its recent up trend and therefore we would need to give it a little more room. A dip to $43.00 or $43.50 would not be out of the question but we would look for the beginnings of a bounce before committing any capital. If shares do breakdown in the face of a bullish sector, bears might be able to scalp a couple of points to its 200-dma just above $40 but we're not sure it's worth your time to do so. Optimistically, we'd like to see a move to the top of the channel near $48. Keep an eye on the Retail Index (RLX.X), as a move over resistance at $950 may create a sector rally that lifts COST from the bottom of its channel. --- Caterpillar Inc. - CAT - close: 56.06 change: +3.38 WHAT TO WATCH: CAT rallied today on heavy volume of 5.2 million shares versus the average of just 1.6 million and is now less than a point away from attacking new 52-week highs. Given the strength of today’s rally, a move above last May’s high at $57 is not out of the question. Aggressive traders may want to consider a position when CAT closes above $57. However, we’re anticipating some consolidation before this occurs and would evaluate an entry on bounces from $54. --- Wal Mart - WMT - close: 60.65 change: +0.70 WHAT TO WATCH: WMT has been one of the strongest retail performers since late September and is now trading near new 52- week highs. We like how shares have continually bounced from the 20-dma and 30-dma's. Plus, the daily stochastics look positive despite a MACD that is vacillating sideways. Shares have been consolidating between 59-61 recently and we suspect further positive retail sentiment will power WMT above $61. Of course with WMT, as the biggest component in the RLX index, it could be vice versa. A volume-confirmed breakout over this level would be a good time to evaluate an entry or look for a dip back to $59. ================ Market Sentiment ================ Optimism heading South. by Russ Moore Another bear market rally is being played out on Wall Street while volume, and investor optimism, continue to fade. The markets posted their second winner in a row thanks to upbeat earnings announcements from GM, Qualcomm and Eastman Kodak. The DOW closed the session with a gain of +1.8 percent. The NASDAQ was the beneficiary of a soaring chip sector (+5.85 percent), and ended the day with a +2.6 percent rise. The big cap NDX added +3.8 percent. Volume was light with 1.32 billion shares moving on the NYSE and 1.62 billion on the tech index. Market breadth was positive as winners outpaced losers by a margin of 19/12 on the big board and 19/17 on the NASDAQ. Most sectors rode the bullish wave with oil service and financials heading the list on the broad markets and the chip sector leading the tech side. Gold and drug stocks were under modest selling pressure. The impact from an almost daily dose of "accounting issues" is starting to make its presence felt. A joint effort survey from UBS and Gallup organization shows investor optimism slipped 23 points over the last month. When asked about the financial markets over the next 12 months, investor optimism came in with a reading of 50, down 10 from January’s level. More importantly, 34 percent of those surveyed said they were less inclined to invest in stocks as a result of the various accounting challenges. The rather negative sentiment portrayed in the survey will change, given enough time. Another factor which may lead to an increase in optimism is a move by the big players i.e. Commercials, in to an accumulation phase. Such a move would see volume levels return to normal and investors pushing the buy buttons, unwilling to miss out on the next rally. VIX Monday 02/25 close: 24.89 VXN Monday 02/25 close: 48.57 10-yr Bonds Monday 02/25 close: 4.85 Total Put/Call Ratio: .75 Equity Option Put/Call Ratio: .62 Index Option Put/Call Ratio: 1.88 === NASDAQ 100 Index (NDX/QQQ) 52-Week High: 103.51 52-Week Low: 28.19 Current close: 35.00 Volume/Open Interest Maximum calls: 40/129,622 Maximum puts : 37/132,270 Moving Averages 10 DMA 35 20 DMA 36 50 DMA 38 200 DMA 39 Fibanocci Retracements Relative High: 43.24 (12/06/01) Relative Low: 34.97 (02/08/02) 38% 38.13 50% 39.11 62% 40.10 === S&P 100 Index (OEX) 52-Week High: 834.93 52-Week Low: 491.70 Current close: 563.78 Volume/Open Interest Maximum calls: 580/6,809 Maximum puts : 520/6,535 Moving Averages 10 DMA 559 20 DMA 559 50 DMA 574 200 DMA 593 Fibanocci Retracements Relative High: 600.80 (01/04/02) Relative Low: 546.13 (01/30/02) 38% 567.00 50% 573.44 62% 579.99 === S&P 500 (SPX) 52-Week High: 1530.01 52-Week Low: 965.80 Current close: 1109.43 Volume / Open Interest Maximum calls: 1100/37,922 Maximum puts : 1100/43,726 Moving Averages 10 DMA 1102 20 DMA 1103 50 DMA 1127 200 DMA 1155 Fibanocci Retracements Relative High: 1176.97 (01/07/02) Relative Low: 1077.78 (02/06/02) 38% 1115.67 50% 1127.37 62% 1139.27 == DJIA (INDU) 52-Week High: 11,518.83 52-Week Low: 8,235.81 Current close: 10,145.71 Volume / Open Interest Maximum Calls: 100/20,880 Maximum Puts 96/36,077 Moving Averages: 10 DMA 9,927 20 DMA 9,837 50 DMA 9,916 200 DMA 10,048 Fibanocci Retracements Relative High: 10,300.15 (01/07/02) Relative Low 9,529.46 (01/30/02) 38% 9,823.86 50% 9,914.80 62% 10,007.28 == Biotech Index (BTK) 52-Week High: 811.61 52-Week Low: 383.28 Current close: 487.52 Volume / Open Interest Maximum Calls: 520/952 Maximum Puts: 520/932 Moving Averages 10 DMA 497 20 DMA 494 50 DMA 534 200 DMA 543 Fibanocci Retracements Relative High: 625.15 (12/06/01) Relative Low: 450.20 (02/07/02) 38% 517.03 50% 537.67 62% 558.66 == Semiconductor Index (SOX) 52-Week High: 1280.84 52-Week Low: 362.00 Current close: 538.74 Volume / Open Interest Maximum Calls: 500/2,047 Maximum Puts: 500/1,397 Moving Averages 10 DMA 542 20 DMA 542 50 DMA 544 200 DMA 547 Fibanocci Retracements Relative High: 606.88 (01/09/02) Relative Low: 499.09 (01/22/02) 38% 540.26 50% 552.98 62% 565.91 == Pharmaceutical Index (DRG) 52-Week High: 455.28 52-Week Low: 339.49 Current close: 382.79 Volume / Open Interest Maximum Calls: 400/300 Maximum Puts: 380/500 Moving Averages 10 DMA 380 20 DMA 376 50 DMA 378 200 DMA 389 Fibanocci Retracements Relative High: 403.83 (11/26/01) Relative Low: 365.22 (02/08/02) 38% 379.93 50% 384.51 62% 389.17 ***** CBOT Commitment Of Traders Report: Friday, 02/22. 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 02/05/02 347,583 401,569 (53,986) (4.3%) 02/12/02 355,276 412,868 (57,592) 6.6% 02/19/02 355,905 772,569 (60,759) 5.5% 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 02/05/02 128,235 64,404 63,831 1.1% 02/12/02 126,730 59,902 66,828 4.7% 02/19/02 130,856 63,311 67,545 1.1% 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 02/05/02 32,357 35,405 (3,048) 2.5% 02/12/02 32,712 34,841 (2,129) (30.1%) 02/19/02 33,871 35,690 (1,819) (14.6%) 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 02/05/02 10,416 8,173 2,243 58.2% 02/12/02 9,009 7,415 1,594 (29.0%) 02/19/02 9,966 8,073 1,893 18.8% 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 02/05/02 21,868 12,068 9,800 25.9% 02/12/02 26,811 16,488 10,323 5.3% 02/19/02 29,606 17,953 11,653 12.9% 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 02/05/02 5,764 10,528 (4,764) 24.2% 02/12/02 4,562 10,038 (5,476) 15.0% 02/19/02 4,654 10,431 (5,777) 5.5% 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 +67,545 +66,828 -60,759 -57,592 Total Open Interest % (+34.79%) (+35.81%) (-7.86%) (-7.50%) net-long net-long net-short net-short Small Specs Commercials DJIA futures (Current) (Previous) (Current) (Previous) Open Interest Net Value -5,777 -5,476 +11,653 +10,323 Total Open interest % (-38.29%) (-37.51%) (+24.50%) (+23.84) net-short net-short net-long net-long Small Spec Commercials NASDAQ 100 (Current) (Previous) (Current) (Previous) Open Interest Net Value +1,893 +1,594 -1,819 -2,129 Total Open Interest % (+10.49%) (+9.71%) (-2.61%) (-3.15%) net-long net-long net-short net-short What COT Data Tells Us ---------------------- Indices:.Commercial and Small Spec positions remain virtually unchanged this week. Gold:.Ditto for the gold market as Commercials continue to hold a good supply of net-short contracts. Gold has come off its highs but still remains relatively strong. In the past, Commercial activity has been reasonably accurate in determining the price movement on the precious metal however, this time we're stumped. 01/22 50,959 contracts net-short 01/29 31,515 contracts net-short 02/05 58,180 contracts net-short 02/12 62,223 contracts net-short 02/19 60,054 contracts net-short Data compiled as of Tuesday 02/19 by the CFTC. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. 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PremierInvestor.net Newsletter Monday 02-25-2002 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/022502_2.asp ================================================================= In section two: NetBulls Tech Stocks Closed Bearish Plays: CLS StockBottom Non-tech Stocks Stop/Notes adjustments: ABF High Risk/High Reward Split Trader Announcements: Update on CUB 3-for-1 Approval 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) ================================================================= =============== NB Closed Play =============== ------------------- Closed Bearish Play ------------------- Celestica - CLS - close: 34.05 change: +1.41 stop: 34.05 We knew it would happen sooner or later. CLS finally bounced after falling from $39.00 to a low of $31.76 during Friday's session. The late day bounce in the Nasdaq on Friday continued into Monday's session fueled by a number of positive comments and brokerage upgrades of different tech stocks. This lifted the Nasdaq by 45 points or 2.6%. Celestica also rebounded with the market and added 4.3%. The Premier Investor newsletter would have been stopped out at $34.05. This closed the play with a move of $5.35 or a move of 13.5%. From our point of view this looks like an oversold bounce and bears may do some short covering but they're probably already looking for new entries. The Nasdaq remains under its 10-dma at 1792 and round-number resistance at 1800. CLS is also under a lot of resistance and failed to clear the 50% retracement level from its September low to its December high range. Just above this 50% retracement is the $35 mark, which could also act as resistance but then a lot of stocks are bouncing back to their 10-dma before rolling over again. As you can see our bias is still bearish for the stock. Picked on February 5th at $39.40 Gain since picked: +5.35 Earnings Date 01/31/02 (confirmed) ================================================================= AT Active Trader/Non-tech plays ================================================================= =================== AT Stop Adjustments =================== Bullish Plays ------------- Airborne Inc - ABF - close: 18.08 change: +1.48 stop: 17.65 *new* The transports section rally strongly today with the positive market lifting several stocks in the group. The Dow Tranports rallied over 50 points and are quickly approaching the 2800 level of overhead resistance. Strangely enough, shares of ABF rallied almost 9% on extremely heavy volume of 1.6 million shares. This is an incredibly strong breakout for the stock with no company specific news to attribute to it. Immediately one begins to wonder what institutions see in the future if they are willing to make this kind of bet today. We strongly considered closing the play out tonight since our original target was close to the $18 level. Individual traders who have already done so or choose to take profits tomorrow should be congratulated for sticking to their trading plan. With shares closing near the high for the day it would lead us to believe that shares will at least be strong again tomorrow morning. However, the odds of at least some profit taking after such a big move are very high. Therefore we are going to raise our stop to $17.65, which should protect a move of 10% in the play. One way to play the move today would be to take profits in ABF and rotate into a new bullish position on Fedex (FDX) since FDX just now broke out over its recent resistance level. Picked on February 11th at $16.05 Gain since picked: +2.03 Earnings Date 02/01/02 (confirmed) ================================================================= Split Trader / Stock Splits (ST) section ================================================================== ------------------- Split Announcements ------------------- Split Update: Cubic Corp (AMEX:CUB), which had already announced a 3-for-1 stock split on Feb. 13th, 2002, came out with an update for investors. At the time of the announcement, there was no payable date set as the split was tentative on shareholder approval. The Board of Directors announced today the date of a special shareholders' meeting for April 17th, 2002 to ratify the 3:1 split. ================== 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 BAC Bank Of America 63.25 +1.93 RY Royal Bank of Canada 31.18 +1.29 COC Conoco 27.98 +0.66 MAY May Department Stores 36.45 +1.01 UCL Unocal Corp 36.40 +0.87 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change ABF Airborne Inc 18.08 +1.48 RKT Rock-Tenn Co 19.55 +1.05 IWOV Interwoven Inc 6.78 +1.22 GFF Griffon Corp 18.44 +1.31 SNS The Steak N Shake 15.10 +1.45 EFTD FTD.com Inc 8.74 +1.05 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change PG Proctor & Gamble Co 87.37 +1.77 SLB Schlumberger Ltd 59.68 +2.33 LOW Lowe's Companies Inc 47.48 +1.44 GM General Motors 55.48 +2.37 CAT Caterpillar Inc 56.06 +3.38 MHP McGraw-Hill Companies 67.16 +1.26 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change TJX TJX Companies Inc 34.05 -1.72 MCK McKesson Corp 33.96 -1.42 HGSI Human Genome Sciences 21.90 -1.63 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change LLL L-3 Communications 108.79 -2.01 ================================================================= 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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