PremierInvestor.net Newsletter Tuesday 04-16-2002 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/d16b_1.asp ================================================================= In section one: Market Wrap: Bear's run ends at six Market Sentiment: Bulls back in control? Play-of-the-Day: Placing our bets ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 04-16-2002 High Low Volume Advance/Decline DJIA 10301.32 +207.65 10308.17 10100.11 1.35 bln 2234/ 939 NASDAQ 1816.79 + 63.01 1816.91 1779.29 1.57 bln 2555/1042 S&P 100 561.29 + 13.57 562.20 547.72 Totals 4789/1981 S&P 500 1128.37 + 25.82 1129.40 1102.55 RUS 2000 522.95 + 10.21 522.96 512.74 DJ TRANS 2881.40 + 78.75 2883.69 2803.04 VIX 20.30 - 2.08 21.72 19.92 VXN 39.44 - 2.43 40.75 39.05 TRIN 0.39 PUT/CALL 0.64 ----------------------------------------------------------------- =========== Market Wrap =========== Bear's run ends at six In Thursday's market wrap I said we'd quickly review this month's play selection and look at both open and closed profiled trades. While I was gone on a brief vacation a lot has changed and it is very enlightening how our play list really does depict the market's action and perhaps helps us "call the market." I will cover the bearish portion of our play list at the bottom of the wrap, but I want to quickly discuss some of last weeks market average/index action and tie it in with today's action. My observation as of the end of today's close is that market action was driven by massive short covering along with an evenly distributed round of bullish buying in sectors that had been getting some support from the bulls. One of the "key" sectors I felt bulls and bears should be monitoring last week for bullishness that could well spark a short covering rally in the broader market was the deeper cyclicals as depicted by the Morgan Stanley Cyclical Index (CYC.X). That sector continued to trade strong and actually bucked the broader market trend last week with a 2.1% gain. Also strong last week were the Dow Transports (TRAN) with a 3.5% weekly gain, which was partially helped by a 3.9% weekly gain from the Airline Index (XAL.X). If this is beginning to sound a little like our Friday market wraps then you're right on track. There's a lot of action that is confirming some earlier thoughts that the our "key" sectors to be monitoring (cyclicals and transports) might hint the MARKET'S perception of future economic strength. Today's bullish market action certainly brings many of those earlier thoughts into play. Let's quickly review what we would have been looking at as of Friday's close. I want to do this not only as a historical reference, but I truly feel it gives us insight into what took place today. We'll do a little bit of "rear view mirror" forecasting, but tie it into what we've been talking about for several months and recent weeks. What looks apparent to me is that the Cyclicals (CYC.X) truly are trying to pull the broader market averages and even the technology stocks out of a rut. I will confess that the Semiconductors (SOX.X) were not really in a "rut" but had been under some selling pressure from "bearish" technology psychology that was really brought on by the telecoms (XTC.X and IXTCX) as well as the various "subgroups" of telecommunications (wireless, fiber optic and networking). Weekly market averages/sector performance (Friday's closes) Today's "sector winner" was the North American Telecom Index (XTC.X) 602.96 +10.23%. Our potential short-covering rally alert from Thursday morning's 09:00 AM update and instruction to "tighten down those stops" in some bearish trades now looks to have been early by a couple of days, but the +10% gain the XTC.X really drives home the thought that the bulk of today's upside action or at least a very meaningful part of it was due to short covering. To think that today's telecom action was some type of sudden "realization of excellent value" would have to be checked against similar thought of "excellent value" the week ending March 22nd when the XTC.X closed near a 52-week low, then suffered further declines the following two weeks. I won't try and argue with the market that many of these stocks are perhaps "oversold" and due for a bounce, but I'm not wringing my hands with anxiousness to establish bullish positions in this group of stocks with the thoughts that I've got a bunch of bulls behind me to help lead a stampede higher. Instead, I do feel that last week's ability for the Airlines (XAL.X), broader Dow Tranpsortation Average (TRAN) and Morgan Stanley Cyclical Index (CYC.X) to trade strong and post weekly gains did have the proverbial "head of the snake" moving forward and help create a catalyst for short covering to take place in many of the beaten down technology stocks. Today, the Dow Transports (TRAN) gained 2.8% and the Morgan Stanley Cyclical Index (CYC.X) gained 2.42%. While these types of gains seem minimal to what the North American Telecom Index (XTC.X) did today, we have to remember that the XTC.X got clocked to the downside and new 52-week lows last week, while bulls made some gains in the cyclicals. By quickly reviewing the "weakest sector" of the market in the North American Telecom Index (XTC.X) and what I feel is perhaps the "strongest sector" and also more meaningful for a pulse on economic growth (at least the MARKET'S perception) and the Cyclical Index (CYC.X) I get the feeling that both the "tail" (telecoms) and head (cyclicals) are moving higher. Once again, I'll have a very close eye on the Cyclical Index (CYC.X) tomorrow. The index closed strong and finished the session above the last week's relative highs of 587.21 with a close today at 587.78. I feel a trade above the 590 level will then set the stage for a test of March highs. Should we then see a break above the $600 level for this group, then the wheels could start to loosen for the bears. Morgan Stanley Cyclical Index Chart - Daily Interval While technology stocks "firmed" yesterday, they bounced strong today and bulls got some "confirmation" from the cyclicals or at lest some confirmation of leadership. It's very tough for market rallies to take hold without some type of leadership group taking the reins. The cyclicals appear to be one of the more economically sensitive groups that are confirming a scenario that the MARKET still believes in a scenario of economic growth going forward. In our play list, we've profiled fellow Cyclical Index (CYC.X) component Phelps Dodge (NYSE:PD) $39.92 +2.09% as a representative stock. Another "cyclical" stock I like for bulls is shares of Du Pont (NYSE:DD) $48.10 +2.64%. Technicals for Du Pont (DD) are very similar to what we're seeing in the CYC.X itself. I like the stock as bullish tomorrow below $48.50 for 1/2 bullish position and would follow any bullish trades with a stop at $44.90. Then look for a break above the $50.50 level and round out to a full position. While the longer-term bullish vertical count from the point and figure chart is $68, my near-term bullish target would be the $54 level. Du Pont Chart - Weekly Interval The weekly interval chart of Du Pont (DD) hints of a reverse head and shoulders pattern. Back in December, we identified a similar technical pattern is oil/gas producer Apache Corp. (NYSE:APA) just below the $50 level. It may be interesting to note the current longer-term bullish count for Du Pont (DD) is $68. The price projection from a reverse head and shoulders pattern on the bar chart would be approximately $67 if taken from the neckline at $50 and using $33 as the head. Look for a bullish play profile from our "play writers" in the longer-term bullish play section of our play list. Some "headline numbers One "headline" that I mentioned in earlier commentary today at OptionInvestor.com that I simply forget to mention in the 01:00 EST Update at PremierInvestor.net was that the Bank of Canada raised its overnight lending rate 25 basis points today to 2.25%. This announcement was made at approximately 09:00 AM EST. This is meaningful as it marks the first rate hike by a major central bank since the terrorist attacks on September 11th. Today's rate hike by the Bank of Canada didn't seem to come as a surprise to many "global rate watchers" but does hint that a major central bank sees some type of economic recovery taking place in the future and is taking back some of the rate cuts provided in the past 16 months. Another "headline" number close to home was today's Industrial Production for March which showed a gain of 0.7%, which was better than most economists consensus number for a 0.5% gain. This stronger than expected Industrial Production number most likely helped boos the deeper cyclicals as well as move some bears off their bar stools and cover some short positions. Also released was the Capacity Utilization data which came in at 75.4%, also better than or at least fractionally higher than the consensus estimates for 75.1%. Economic bulls don't mind seeing some gains in industrial production as it hints that producers are bringing some production lines back online. There's still plenty of room/capacity in the production system before inflation becomes a concern. Most economists look for numbers higher than 82-85% capacity to begin signaling some type of potential inflation or higher production costs coming into play. A quick review of this morning's construction numbers looks to have been somewhat ignored by the markets today, if not downplayed as somewhat of a blip. In this morning's 09:00 update we alluded to some economists "explanation" for the weakness in the housing starts and building permits for March, as a bit of a pullback from the warmer weather and more robust numbers found in January and February. Some of those thought from economists this morning seemed to help "calm" the fears of bulls. Play list review I wanted to review both the bullish and bearish play lists as they stand for the month of March, but I'm already past my "editor's deadline" and want to at least make some notes as to what has taken place here. I've written before that I like to keep track of each of our profiled trades that actually were triggered or would have been played by our subscribers. I treat each trade as if we hypothetically would have place $5,000 into each trade (long or short) as this helps me see the play list as if it were my account. By reviewing the trades, I can make sure that I and our play writers are on the right side of things. We will never win on every trade. However, it is our goal to win on the bottom line. In a more bearish market environment like we've experience up until today, I would expect our bearish play list to be the better performer. The thinking is that if the MARKET is going down, then our bearish play list had better be generating some bearish gains for our subscribers. At the same time, I would not be surprised if our bullish play selections were having "some difficulty." While I hate to lose money on any trade, I still want to see some type of performance from the bullish section that is RELATIVELY better than what the MARKET would have given a trader/investor. Here's a quick look at our bearish selections up to today's close. Again, each play is "calculated" with a hypothetical $5,000 placed in each trade. The number of shares will be rounded lower so that a subscriber would not have invested more than their hypothetical stated discipline of $5,000 in each trade. While this may "assume" we're dealing with a $50,000 account, a subscriber dealing with more or less can still see the percentage gain/loss based on a steady investment discipline for each play. Bearish plays dropped and those still profiled Those that are "colored" as black are plays that should be closed as the profiled stops were triggered or the plays were simply close out. The Micron Technology (NYSE:MU) bearish play is still "open" and I've left it colored as pink. In essence, this is still considered "money at risk." Last week we were alert to a potential short-covering rally like we're currently in. As you can see, we had a nice run going of six consecutive "wins" (W/L is win/loss) and now we see two consecutive "Ls" as both SAP and CSGS were stopped out. While I "believe" that SAP will give some type of cautious outlook as both PeopleSoft (PSFT) and Kronos (KRON) guided lower on earnings and their stocks got hammered, we set a stop on SAP where we felt the stock should not trade. However, the stock traded that level and we were stopped out. No matter how much I may "believe" the stock is headed lower, I've learned that the MARKET doesn't always agree with me on things and it is best not to try and fight the market. What's left in our play list right now is one open bearish play. Yes, we moved down our stops rather tight, but that's because we were perhaps alert to a short-covering rally. This type of "action" also helps us see that there is an underlying bid or strength to the current bullishness. If that bullishness is "real" then I feel our remaining bullish plays that are open (9 of them) should do well if we're on the right side of things. As it stands at today's close, our play list was bullish 9 plays and bearish 1 play. This has me making the observation of bullishness in the market. The "running total" would be a running total (excluding commissions) that a $5,000 exposure to each bearish play would show from date of profile until closed out. As you can see, and has been pointed out in the past, a successful trader doesn't necessarily need to bat a high average to be deemed a success. Of the 16 plays dropped from the bearish list, 9 were winners while 7 were losers. What is important for most traders/investors is the "running total" for their account. While the above only represents the "bearish" side of things, I will point out that our "bullish" running total currently shows that of the closed plays, a hypothetical loss of $-456.87 is showing. While trades still open and "marked to the market close" has the running total showing a loss of $-207.56. I will discuss the "bullish plays" and April action tomorrow. Please note the above mentioned "bullish play running total" does not include gains/losses of play listed in the "Long-Term Plays" list (SPLS, PETM, UNM, HC). Lastly, I've put some "green" and "red" checkmarks by "percentage gains/losses" that I find interesting. I don't like the 9.18% loss from our bearish play in CSG Systems (NASDAQ:CSGS) $26.44 +7%, but a loss so steep and so soon after profile also hints that we perhaps have hit a near-term bottom where shorts were looking to lock in gains. This loss also comes in unison with SAP Aktiengesell (NYSE:SAP) $35.41 +6.11% triggering our stop and hints that there may indeed be a lot of stocks currently rising with the tide. From here, the strength of the tide will most likely be determined by what some of the stronger stocks in the market will do going forward. One stock I want to make special mention of in our past bearish play selection is Cisco Systems (NASDAQ:CSCO) $15.58 +3.79%. I didn't look at the stock during today's trading session as it is not anywhere close to being on my radar screen as a bullish play. However, I did look at the stock after the close, expecting to see the stock trading $16.00. While the past is no guarantee of the future, I would certainly have thought Cisco (CSCO) would have gained more than 3.7% on a day when the NASDAQ-100 (NDX.X) gained 4.34%. The relative underperformance of CSCO today gives hint that the MARKET is perhaps still very cautious of many technology stocks and even networking stocks. The Networking Index (NWX.X) gained 6.65% and it is rare to see CSCO not lead this sector. Again, this hints that a lot of the bullishness found among technology stocks was most likely due to short covering in some very beaten down names. Jeff Bailey ================ Market Sentiment ================ Bulls Back In Control? By Eric Utley Tuesday's rally was broad and deep. Only one sector on my list finished lower for the day. That was the Gold and Silver Sector Index (XAU.X) -- a defensive sector that we'd expect to finish lower on strength in stocks. Technology was particularly strong. Pops of 5, 6, even 10 percent were seen in the tech and telecom segments of the market. TI's (NYSE:TXN) and Novellus' (NASDAQ:NVLS) reports after the bell Monday inspired a massive short covering rally in the Semiconductor Index (SOX.X). When the buying was done, the SOX.X finished 5.58 percent higher. Whoa, Nelly! The most constructive thing that I observed Tuesday was the gain in the Nasdaq-100 Bullish Percent ($BPNDX). The indicator added 5 stocks, or 5 percent, for the day, which placed it only two stocks away from a reversal back into bull confirmed. That's what I'm looking for over the coming days when deciding whether or not to get bullish on tech stocks. The next step would be a shift into a bullish market, which would have me increasing my long exposure in tech. The short-term ARMS Index numbers I've been harping on worked off a lot of the oversold condition that has been in place for several days. Follow-through tomorrow would put this indicator well away from its previous extreme levels. The only major cause for concern that I found with Tuesday's rally was the implosion of fear once again. The CBOE Market Volatility Index (VIX.X) dropped 9.29 percent for the day. It was almost as if the last four weeks of pain in the S&P 100 (OEX.X) was forgotten in just one day. That kind of unbridled enthusiasm for stocks is not the type of sentiment on which bottoms are formed. Yes, I'm willing to trade to the upside, but I'm more inclined to take quicker profits given the dearth of fear. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 11350 52-week Low : 8062 Current : 10301 Moving Averages: (Simple) 10-dma: 10231 50-dma: 10220 200-dma: 9949 S&P 500 ($SPX) 52-week High: 1316 52-week Low : 945 Current : 1128 Moving Averages: (Simple) 10-dma: 1119 50-dma: 1127 200-dma: 1135 Nasdaq-100 ($NDX) 52-week High: 2071 52-week Low : 1089 Current : 1414 Moving Averages: (Simple) 10-dma: 1371 50-dma: 1439 200-dma: 1513 Telecom ($XTC) The XTC was the best performing sector in Tuesday's session. It gained 10.23 percent for the day. WHOA! Better-than-expected earnings news induced a massive short covering rally in the group. But before you get too excited about the move in telecom, take note of the index's 52-week low and high in relation to its current quote. Sector leaders included Nextel (NASDAQ:NXTL), WorldCom (NASDAQ:WCOM), Sprint (NYSE:FON), MCI Worldcom (NASDAQ:MCIT), and Qwest (NYSE:Q) 52-week High: 1028 52-week Low : 534 Current : 603 Moving Averages: (Simple) 10-dma: 792 50-dma: 636 200-dma: 579 Gold and Silver ($XAU) Tuesday's worst performing sector was the XAU. Its 0.99 percent loss was minor, but enough for the dog of the day. Strength in stocks caused a rotation out of the defensive XAU. Leading to the downside included shares of Agnico Eagle Mines (NYSE:AEM), Meridian Gold (NYSE:MDG), Apex Silver Mining Limited (NYSE:SIL), and Placer Dome (NYSE:PDG). 52-week High: 73 52-week Low : 49 Current : 69 Moving Averages: (Simple) 10-dma: 69 50-dma: 66 200-dma: 58 ----------------------------------------------------------------- Market Volatility Not by surprise, the massive rally in stocks resulted in an implosion of implied volatility. The VIX dropped nearly 10 percent Tuesday. While the strength in stocks was welcome, the lack of skepticism made the rally suspect. Fear in the Nasdaq-100 (NDX.X) has imploded in the last three days. The VXN dropped back below 40 Tuesday, losing nearly 6 percent for the day. CBOE Market Volatility Index (VIX) - 20.30 -2.08 Nasdaq-100 Volatility Index (VXN) - 39.47 -2.40 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.64 706,620 448,855 Equity Only 0.51 579,042 295,390 OEX 0.98 36,646 35,732 QQQ 0.61 50,074 30,644 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 66 + 0 Bull Confirmed NASDAQ-100 40 + 5 Bull Correction DOW 63 + 0 Bear Alert S&P 500 71 + 1 Bull Confirmed S&P 100 68 + 0 Bear Alert Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-Day Arms Index 1.42 10-Day Arms Index 1.47 21-Day Arms Index 1.30 55-Day Arms Index 1.24 Extreme readings above 1.5 are bullish, and readings below .85 are bearish. These signals don't occur often and tend be early, but when the do, they can signal significant market turning points. ----------------------------------------------------------------- Market Internals Advancers Decliners NYSE 2234 939 NASDAQ 2555 1042 New Highs New Lows NYSE 240 12 NASDAQ 277 38 Volume (in millions) NYSE 1,356 NASDAQ 1,574 ----------------------------------------------------------------- Commitments Of Traders Report: 04/09/02 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and Chicago Board of Trade. COT data can be found at www.cftc.gov. 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 tend to be wrong. S&P 500 S&P commercials' net bearish position dropped by about 2,500 contracts during the most recent reporting period. But the group remained decidedly bearish. Even more disconcerting for the bulls was the revelation that the spread between commercials and small traders remained near a one-year high. Small traders grew slightly less bullish, but not by a lot. The group only reduced its net bullish position by about 3,000 contracts. Commercials Long Short Net % Of OI 03/26/02 317,671 410,186 (92,515) (12.7%) 04/02/02 313,294 406,337 (93,403) (13.0%) 04/09/02 320,101 411,075 (90,974) (12.4%) Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: ( 36,481) - 10/16/01 Small Traders Long Short Net % of OI 03/26/02 148,111 40,409 107,702 57.1% 04/02/02 149,449 43,139 106,310 55.2% 04/09/02 151,237 47,678 103,559 52.1% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 107,702 - 3/26/02 NASDAQ-100 Nasdaq commercials grew slightly more bearish last week. The group added about 600 contracts to their net bearish position. Small traders went the other direction by adding to their net bullish position. The position gained about 600 contracts. Commercials Long Short Net % of OI 03/26/02 25,275 33,880 (8,605) (14.5%) 04/02/02 26,211 31,840 (5,629) (9.7%) 04/09/02 28,985 35,221 (6,236) (9.7%) Most bearish reading of the year: (15,521) - 3/13/01 Most bullish reading of the year: 7,774 - 12/21/01 Small Traders Long Short Net % of OI 03/26/02 12,760 6,264 6,496 34.1% 04/02/02 10,615 7,769 2,846 15.5% 04/09/02 11,640 8,353 3,287 16.4% Most bearish reading of the year: (9,877) - 12/21/01 Most bullish reading of the year: 8,460 - 3/13/01 DOW JONES INDUSTRIAL Dow commercials reduced their net bullish position by a small amount during the most recent reporting period. They did it through adding more short than long positions. Meanwhile, small traders remained relatively flat. Commercials Long Short Net % of OI 03/26/02 17,973 12,539 5,434 17.8% 04/02/02 18,717 12,549 6,168 19.7% 04/09/02 19,393 13,445 5,948 16.7% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 03/26/02 5,818 9,308 (3,490) (23.1%) 04/02/02 5,192 9,007 (3,815) (26.9%) 04/09/02 5,459 9,340 (3,881) (26.2%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01 ----------------------------------------------------------------- =============== PLAY-of-the-Day ((New BEARISH play)) =============== Intl Game Tech - IGT - close: 55.85 change: -2.50 stop: *text* Company Description: IGT is a world leader in the design, development and manufacture of microprocessor-based gaming products and software systems in all jurisdictions where gaming is legal. (source: company press release) Why We Like It: IGT first garnered our attention on April 3rd, when the stock gapped below support at $60. The catalyst for the decline was a downgrade from Merrill Lynch. Shares managed to fill in most of the gap, but sold off sharply after failing to maintain the $60 level, which was the top of the gap and thus resistance. What earned this stock a position on our Play List was today's 4.26 percent decline, which pushed shares below the April 3rd low of $56.25. We couldn't find any news to explain the decline, but Wall Street seems to have a decidedly negative bias on the stock. With shares in a month-long downtrend and firmly below the 200- dma, we're included to agree. A move below $55 could open the door for a decline to psychological and p-n-f support at $50. This would be a move of almost 10%. However, in order to confirm a breakdown below psychological support at $55, we're going to place a trigger at $54.94. If IGT trades at or below this level we'll go short with a stop at $58.51, just above today's high. This will also force the stock to trade above the 200-dma at $58.16. We'll close this play if IGT reaches our profit target of $50.06. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/23/02 (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. 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PremierInvestor.net Newsletter Tuesday 04-16-2002 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/d16b_2.asp ================================================================= In section two: Net Bulls Bullish Play Updates: SNE, TTN Bearish Play Updates: MU Closed Bearish Plays: SAP, SFA Stock Bottom / Active Trader New Bearish Play: IGT Bullish Play Updates: PD, PDQ, PHM, WMT Closed Bullish Play: DOL Closed Bearish Play: CSGS High Risk/Reward New Bullish Play: AMZN Bullish Play Updates: HIG, LUV Bearish Play Updates: CVC Split Trader Stock Splits CNBC: 21-for-20 split announcement HCBK: 2-for-1 split announcement 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 -------------------- Sony Corp (ADR) - SNE - cls: 53.70 chg: +1.53 stop: 49.99 Shares of SNE bounced higher on Monday as the NIKKEI regained the 11K mark. This was a relief as we had cinched up our stop loss to just under $50 on the weekend as the Japanese markets slid under this support level on Friday. The strong rally in the U.S. markets today really helped fuel a strong move for SNE as tech stocks lead the charge higher. The last couple of sessions have actually shown increasing volume and the MACD is about to produce a bullish crossover. We're are feeling pretty positive about this play now that is has establish strong support at $50 and our short-term target to $60 looks reasonable. Traders can confirm market direction tomorrow and consider new entries at these levels. Picked on April 4th at $53.01 Gain since picked: +0.69 Earnings Date 04/25/02 (unconfirmed) --- Titan Corp - TTN - close: 22.00 change: +0.71 stop: 19.74 We were triggered on Monday when shares of TTN traded through our $21.26 suggested entry price. The stock pulled back from its Monday highs but still managed to close above its 200-dma. This was a bullish sign for investors and with the market in rally mode today the stock shot up at the open, pulled back toward the previous day's close and rallied higher again. Unfortunately, it didn't quite make it above $22.00. This was a resistance level we had identified in the original write up this weekend with the 100-dma. It also represents bearish resistance on the PnF chart but we do expect shares of TTN to burst through it. Although the recent strength has the stock short-term overbought and we'd like to see it pull back to the $21.50 to $21.00 area and bounce again. This would be a great opportunity to consider new entries. Picked on April 15th at $21.26 Change since picked: +0.74 Earnings Date 02/12/02 (confirmed) -------------------- Bearish Play Updates -------------------- Micron Technology - MU - cls: 30.11 cng: +1.41 stop: 30.36 *new* As positive comments begin to pop out of the chip sector now that Intel's earnings are out, the market has reacted very positively to the group. The SOX has turned in a very strong reversal moving back up above the 600 level. We are encouraged that MU has been a bit more subdued that many of its counterparts but shares still gained 4.9 percent on Tuesday. The close above $30 for MU is also a concern and we are going to lower our stop. If the market believes (even if for a few days) that the chip sector might be recovering then we don't want to be short MU with a wide stop. We're going to use today's high as our guide and place our stop at $30.36. Odds are very good that we will be stopped out tomorrow but if this were the case the loss would be 51 cents. We would not recommend new positions at this time. Picked on April 5th at $29.85 Gain since picked: -0.26 Earnings Date 03/21/02 (confirmed) =============== NB Closed Plays =============== -------------------- Closed Bearish Plays -------------------- SAP Aktiengesell - SAP - cls: 35.41 chg: +2.04 stop: 35.31 The very strong three-day rally in the software group began to show up in shares of SAP on Monday. The stock bounced higher from support at the 200-dma and then gapped higher today as the U.S. markets burst into a charge. The longer-term supply/demand PnF chart has not changed yet but the MACD is started to reverse course and edge higher. The move on Tuesday was enough to close above SAP's 50-dma and stop us out at $35.31. We are skeptical that this reversal in the software group will hold but it may continue for a few more days yet. Traders should be aware that we suspect SAP might have earnings this week (April 18th) but we can't confirm it. Picked on April 9th at $33.28 Gain since picked: -2.03 Earnings Date 04/18/02 (unconfirmed) --- Scientific Atlanta - SFA - cls: 23.11 chg: +2.61 stop: *text* Without truly positive news for SFA today, the 12.7 percent gain on Tuesday smells of short-covering. Shares were almost vertical all day long as bears panicked to cover their positions. SFA actually managed to close above its 50-dma and now we are left to speculate if the 200 and 100-dma just below $25.00 will be resistance. The Premier newsletter was never triggered in the play so we have nothing at risk in our hypothetical portfolio but with earnings for SFA expected on Thursday we are going to drop the play and look for other opportunities. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/18/02 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT New Plays =============== ---------------- New Bearish Play ---------------- Intl Game Tech - IGT - close: 55.85 change: -2.50 stop: *text* Company Description: IGT is a world leader in the design, development and manufacture of microprocessor-based gaming products and software systems in all jurisdictions where gaming is legal. (source: company press release) Why We Like It: IGT first garnered our attention on April 3rd, when the stock gapped below support at $60. The catalyst for the decline was a downgrade from Merrill Lynch. Shares managed to fill in most of the gap, but sold off sharply after failing to maintain the $60 level, which was the top of the gap and thus resistance. What earned this stock a position on our Play List was today's 4.26 percent decline, which pushed shares below the April 3rd low of $56.25. We couldn't find any news to explain the decline, but Wall Street seems to have a decidedly negative bias on the stock. With shares in a month-long downtrend and firmly below the 200- dma, we're included to agree. A move below $55 could open the door for a decline to psychological and p-n-f support at $50. This would be a move of almost 10%. However, in order to confirm a breakdown below psychological support at $55, we're going to place a trigger at $54.94. If IGT trades at or below this level we'll go short with a stop at $58.51, just above today's high. This will also force the stock to trade above the 200-dma at $58.16. We'll close this play if IGT reaches our profit target of $50.06. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/23/02 (confirmed) =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Phelps Dodge - PD - close: 39.92 change: +0.82 stop: 38.49 PD headed lower on Monday, continuing a decline that began on Friday when its CEO issued negative comments concerning U.S. copper mining. Shares dipped below the 50-dma but managed to move back above that level before the session ended. Dip-buyers were rewarded today, as the stock gained 2.09 percent to close at just under $40. The CYC.X cyclical index also put in a strong performance today and closed at near-term highs. This could open the door for a move to 600 in the index. Given the strong sector, we think entries in PD can be evaluated if the stock trades above $40. More cautious traders may want to wait for a move above the recent high of $40.93. Picked on April 10th at $40.24 Gain since picked: -0.32 Earnings Date 04/24/02 (confirmed) --- Prime Hospitality - PDQ - close: 13.59 change: +0.44 stop: 12.84 PDQ keeps see-sawing up and down, but we'll be happy as long as the net result is positive. Shares rallied 3.34 percent today and regained all of Monday's losses. Although volume was a bit light, we're certainly not going to argue with the highest close in three weeks. Hopefully momentum is building in anticipation of next week's earnings. Entries can be considered at current levels, but more conservative traders may want to wait for a move about the March highs near $14. We'll be watching the Marriott (MAR) earnings release on Thursday, as this could have an impact on the sector. Picked on April 12th at $13.53 Gain since picked: +0.06 Earnings Date 04/25/02 (confirmed) --- Pulte Homes - PHM - close: 49.47 change: -0.36 stop: 47.49 Today's 0.63 percent decline in the DJUSHB housing index stuck out like a sore thumb amidst the sea of green sectors. The negativity can be attributed to this morning's economic data, which had housing starts and building permits both coming in under expectations. The broader market rally propped up the sector and may have prevented more substantial selloff. PHM was triggered yesterday after a brief jaunt above $50. Shares gapped down sharply at the open, but quickly fought their way back above $49. All in all, the sector and stock weathered the bad news pretty well. We have all heard talk about a housing bubble but at the moment, the market expects the FOMC to postpone their next interest rate hike until August. This would easily give the homebuilders a continuing chance to capitalize on the relatively low interest rate environment and the upcoming summer selling/building season. If homebuilders resume their march higher tomorrow, entries can be considered on a move above Monday's high of $50.57. Picked on April 15th at $50.13 Gain since picked: -0.66 Earnings Date 04/23/02 (confirmed) --- Wal-Mart Stores - WMT - close: 60.00 change: +0.07 stop: 57.95 Trading in WMT was somewhat lackluster today, despite a 207-point gain on the Dow Jones. We couldn't find any specific news to explain the relative weakness, but retailers in general underperformed the market today. It actually wasn't too surprising to see some money rotate out of the sector after strong earnings from TXN, NVLS, and FON put the spotlight on tech stocks. Technically, WMT is still hovering near the bottom of its ascending regression channel. Today's close at $60 is positive. Another close under this level would have us a bit worried. Entries can be evaluated if the stock heads higher, but be aware of possible resistance near $62. Picked on April 12th at $61.23 Gain since picked: -1.23 Earnings Date 02/19/02 (confirmed) =============== AT Closed Plays =============== ------------------- Closed Bullish Play ------------------- Dole Food CO. - DOL - close: 30.83 change: +0.09 stop: N/A We've given this stock more than enough time to perform, but its time is up. DOL has gone flat and traded narrow range between $30.50 and $31.00 over the past two weeks. The company announces earnings before the bell on Thursday, so we're closing this play tonight. As much as we'd hate to drop the stock just before it gets a nice earnings-induced pop, the technical picture just doesn't warrant taking that risk. Traders may want to take a look at DOL's competitor, CQB. This stock has been more volatile and is approaching near-term highs. Picked on March 1st at $30.94 Gain since picked: -0.11 Earnings Date 04/18/02 (confirmed) ------------------- Closed Bearish Play ------------------- CSGS Systems - CSGS - close: 26.44 change: +1.73 stop: 26.51 A bevy of positive earnings announcements and conference calls had the markets in an uproar today. This put bears on the defensive from the opening bell and shares of tech, telecom and related stocks moved higher across the board. Combine this bullish market atmosphere with news last night that a Colorado judged had dismissed a complaint by AT&T Broadband against CSGS (both Englewood, CO based companies) and we're surprised that CSGS didn't rally higher than its 7 percent gain today. Although AT&T Broadband could still try and take CSGS to arbitration the dismissal is a big win for CSGS. Aggressive traders could actually consider long plays now that shares have reversed and aim for a quick rebound to the $30 level of resistance, which now seems likely. Shares of CSGS stretched just high enough late in Tuesday's session to stop us out at $26.51. Picked on April 12th at $24.28 Gain since picked: -2.23 Earnings Date 04/29/02 (unconfirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== =============== HR New Plays =============== ---------------- New Bullish Play ---------------- Amazon.com - AMZN - close: 14.01 change: +0.12 stop: 12.80 Company Description: Amazon.com opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be the world's most customer-centric company, where customers can find and discover anything they might want to buy online. Amazon.com and sellers list millions of unique new and used items in categories such as electronics, computers, kitchen and housewares, books, music, DVDs, videos, camera and photo items, toys, baby and baby registry, software, computer and video games, cell phones and service, tools and hardware, travel services, magazine subscriptions and outdoor living items. (source: company press release) Why We Like It: We are bringing back this previous winner for us because it looks like shares are offering active traders another opportunity to go long. The stock has been in consolidation and profit taking mode for five weeks. It has taken that long for shares to pull back from the top of its ascending long-term channel to the bottom of the same channel. The recent bounce at the 100-dma was confirmed with a quick three-day rally. Despite the strength, shares of AMZN are hovering at their 50-dma as if the stock is not sure whether it wants to continue climbing or rollover again. Tuesday's strength in the Nasdaq and multiple tech sectors has brought renewed attention to the Internet group and AMZN might garner some extra interest as it approaches its next earnings announcement after January's announcement of its first "profitable" quarter (no snickering, please). Technically the stochastics look bullish and the MACD is close to producing a bullish crossover. We suspect that if the Nasdaq can keep the rally going for a couple of weeks then AMZN might be able to post some strong gains. However, we have not yet decided if we will hold over the earnings report expected next Tuesday. Our initial profit target is for a move towards the $17 level but the top of the channel is closer to the $19 - $20 area. While we will start the play with a stop at $12.80, which is below Friday's low, we will not "enter" the play until AMZN trades at or above our trigger point. This trigger point will be $14.35, or 5 cents above today's high. More conservative traders might want to consider using $14.51 or $14.66 as their trigger points to go long, as both represent potential short-term overhead resistance. Picked on April Xth at $xx.xx <-- see text Change since picked: +0.00 Earnings Date 04/23/02 (confirmed) =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- Hartford Financial - HIG - cls: 68.65 chg: +1.12 stop: 66.49 A pullback in the insurance group had HIG moving lower yesterday. Shares briefly dipped below the 50-dma, and came within 30 cents of our stop before moving higher in afternoon trading. The bounce continued into today's session, as HIG added 1.65 percent. The successful test of the 50-dma bodes well for this play. Previous bounces from this level have portended a string a positive days. Traders looking to go long could consider taking positions at current levels, but be aware that the bears may continue to defend resistance at $70 and it may be more prudent to wait for a close over $70. Premier Investor is currently up 4.4 percent on this play. Earnings are coming up next Monday. Picked on March 13th at $65.74 Gain since picked: +2.91 Earnings Date 04/22/02 (confirmed) --- Southwest Airlines - LUV - cls: 18.93 chg: +0.43 stop: 17.99 A sudden reversal of fortune for deposed Venezuelan President Hugo Chavez had airline stocks moving lower yesterday. The failed military coup means that instead of ignoring OPEC, the fourth-largest producer of oil will continue to toe the cartel line. As could be expected, oil (cl02k) traded higher on the news. Airlines, after popping higher on Friday, quickly gave back most or all of their gains. LUV dropped back below $19 and fell as low as $18.30 before finding buyers. Today's price action was more positive, as shares gained back 2.32%. We'd be looking for another close over $19 to confirm bullish sentiment. LUV also releases earnings on Thursday. Since this is a high- risk play, we're going to go ahead and hold over the announcement. Conservative traders may want to bail out tomorrow. Frankly, we don't think the chances of a post-earnings sell-off are too high. DAL announced today and only fell 1.26% despite missing Q1 estimates. But just to be safe, we'll be tightening our stop tomorrow ahead of earnings. Picked on April 4th at $18.94 Gain since picked: -0.01 Earnings Date 04/18/02 (confirmed) -------------------- Bearish Play Updates -------------------- Cablevision - CVC - close: 28.45 change: +0.95 stop: *text* Today's enthusiastic telecom rally spread to the beleaguered cable sector. CMCSK, SFA, and even the hapless ADLAC moved higher. CVC rallied as well, with a 3.45 percent gain. Since shares never traded below our trigger at $26.24, we have the advantage of sitting back to see how things play out. We mentioned in the original update that a rollover near $29 could present as entry point. We're not going to move our trigger up just yet, but another failed rally near $30.00-$29.50 could convince us otherwise. A close over $30 would indicate that the bulls are a bit more in control, and we'll drop this play if that occurs. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 05/14/02 (unconfirmed) ================================================================== Split Trader (ST) section ================================================================== Split Announcement ------------------ Center Bancorp announces 5% stock dividend, boosts quarterly dividend Center Bancorp Inc. (NASDAQ: CNBC) announced at its annual shareholders' meeting today that the Board of Directors had declared a 5% stock dividend. This is equivalent to a 21:20 stock split. The Board also announced an increase in the quarterly cash dividend rate from $.143/share to $.17/share. This represents an increase of about 19%. The stock dividend will be payable on June 1, 2002 to stockholders of record on May 17, 2002. The cash dividend will be distributed on August 1, 2002 to stockholders of record on July 18, 2002. This marks the eighth time in the last eleven years that CNBC has paid a stock dividend or split its common stock. Shares last split 21:20 in May 2001. CNBC closed at $21.65 on Monday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=CNBC About the company Center Bancorp Inc., through its wholly owned subsidiary, Union Center National Bank, Union, New Jersey operates thirteen banking locations. Banking centers are located in Union Township (6 locations), Berkeley Heights, Madison, Millburn/Vauxhall, Morristown (2 locations), Springfield, and Summit New Jersey. (source: company press release) --- Hudson City announces 2-for-1 stock split, increases dividend Hudson City Bancorp, Inc (NASDAQ: HCBK) released earnings today. In addition to earnings, the Company announced that its Board of Directors had declared a 2-for-1 stock split. The split will come in the form of a 100 percent stock dividend on its common stock, and will be paid on June 17, 2002 to shareholders of record on May 24, 2002. Furthermore, the Board of Directors declared a quarterly cash dividend of $0.16/common share. This is a one-cent increase over the dividend offered last quarter. The payable date for the cash dividend is June 3, 2002, to shareholders of record on May 10, 2002. This marks the first time HCBK has split since it began trading in 1999. The stock closed at $35.48 on Tuesday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=HCBK About the company Hudson City Savings Bank is a well-established community banking institution with a long standing tradition of service excellence. With assets in excess of $11 billion, it has 81 full-service branches throughout 14 New Jersey counties making it the largest savings bank headquartered in New Jersey. (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. 04/16/02 ================== Trading Ideas ================== Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change DT Deutsche Telekom 15.07 +0.87 AEG Aegon 24.75 +0.55 CBSS Compass Bancshares 33.81 +0.51 OHP Oxford Health Plans Inc 43.25 +0.68 RL Polo Ralph Lauren 30.64 +1.09 FVB First VA Banks Inc 57.16 +0.98 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change AWE AT& Wireless Services 9.43 +1.18 GMH General Motors Corp 16.78 +1.18 FON Sprint Fon Group 16.26 +2.79 PCS Sprint Corp PCS Group 12.60 +2.58 ENTG Entegris Inc 18.64 +1.64 EAGL EGL Inc 18.63 +1.65 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change TM Toyota Motor Corp 56.60 +1.75 NSM National Semiconductor 36.24 +2.84 MGA Magna Intl. Inc 76.92 +1.87 ETN Eaton Corp 87.85 +3.34 ACF Americredit Corp 45.50 +3.22 MAN Manpower Inc 40.22 +1.24 ASMI ASM Intl. N.V. 28.34 +2.44 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change ADP Automatic Data Processing 53.25 -1.65 HRB H&R Block Inc 41.95 -2.53 ACS Affiliated Computer Svc 50.55 -1.95 BSG BISYS Group Inc 32.25 -1.05 MGAM Multimedia Games Inc 26.24 -8.98 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change HNT Healthnet Inc 26.00 -1.05 HCP Health Care Property Inv. 41.40 -1.88 GGG Graco Inc 42.48 -1.86 HTHR Hawthorne Financial Corp 30.75 -1.75 ASN Archstone-Smith 28.06 -0.57 MEG Media General 66.25 -0.61 ================================================================= 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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