PremierInvestor.net Newsletter Tuesday 04-30-2002 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/d30b_1.asp ================================================================= In section one: Market Wrap: I'll call it like I see it Market Sentiment: Renewed Confidence? Play-of-the-Day: Playing the tech bounce ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 04-30-2002 High Low Volume Advance/Decline DJIA 9946.22 +126.35 10006.28 9818.90 1.54 bln 2214/ 942 NASDAQ 1688.23 + 31.30 1697.03 1652.93 1.86 bln 2248/1312 S&P 100 532.40 + 5.56 536.02 525.93 Totals 4462/2254 S&P 500 1076.92 + 11.47 1082.51 1063.52 RUS 2000 510.67 + 10.13 510.68 500.09 DJ TRANS 2704.72 + 9.88 2718.55 2683.84 VIX 23.78 - 2.33 26.64 23.49 VXN 42.86 - 2.26 45.59 42.70 TRIN 0.74 PUT/CALL 0.80 ----------------------------------------------------------------- =========== Market Wrap =========== I'll call it like I see it While today's rally for stocks was nice, I'm hesitant to say that stocks have found a definitive bottom. I try and view the market as unbiased as I can, but when I look across the board, all that impresses me from today's "rally" was the action in the Forest/Paper Products Sector ($FPP.X) and perhaps the deeper cyclicals as a whole. April was a rough month for the bulls. The broader New York Composite ($NYA.X) fell 4.3% for the month, and it could have been worse if not for today's 1% recovery. Another broader market index had the NASDAQ-Composite ($COMPX) suffering a 8.5% decline and today's 1.8% recovery seems rather miniscule considering this month's decline. The S&P 500 (SPX.X), what most participants refer to as "the market" fell 6.3% in April. Larger-cap technology as depicted by the NASDAQ-100 ($NDX.X) fell a staggering 12.1% during the month. Hey, its only one day right? We can't expect the broader market averages to recoup all that they lost over April. Today's biggest sector gainer had the Biotech Index (BTK.X) finishing up 3.98% at 436. For the month of April, this sector got hit rather hard with a 12.8% decline, but not nearly as hard as the GSTI Software Index (GSO.X), which lost 20% for the month or the Combined Telecom Index (IXTCX), which fell 19.7% for the month. Today's 2.5% gain in the GSO.X and 2.3% gain in the IXTCX didn't look like bulls were eager to look for bottoms, but more like some shorts locking in some gains from April's shower of good fortune. Shares of software maker Oracle Corporation (NASDAQ:ORCL) $10.04 -3.7% trader weak today and closed at a new 52-week low. The stock was under pressure most of the session after senior vice president of Oracle product industries and Latin America sales, Sebastian Gunningham, decided to leave the company to take a position with a small software company based in Miami. Hey, its only one day right? We can't expect the broader market averages to recoup all that they lost over April. Nope, but the rally that impressed me most today was that found in the Forest/Paper Products Index (FPP.X) and 2.99% gain. That was less than the 3.98% gain in the biotechs, but when one considers that the FPP.X fell just 2.2% in April, today's gains erased about 1/2 of April's losses and hints to me that this sector lacks aggressive sellers found in other sectors that could squash a more prolonged rally. Forest/Paper Stocks - Today's volume and price action The above list of stocks are names that might be categorized as "forest/paper" stocks. Those with a (FPP) next to the stock's symbol are components of the Forest/Paper Index ($FPP.X). On the far right of the chart, I've simply placed two prices. The number on the left would be a price level where a point and figure "sell signal" would take place and invalidate the current bullish count. The price on the right is the current bullish vertical count. Those stocks currently trading below a bearish resistance trend from the point and figure chart are marked "Below Trend." Today I'm noting that both TIMBZ and CRO traded against the sector and both also trade below trend. What a trader investor can do with the above data is begin looking at stocks in the group that have favorable longer-term risk/reward ratios. That is, the risk for a bull to a sell signal, measured against a longer-term price objective using the bullish vertical count technique. I consider (as do many) the forest paper stocks as deeper cyclicals. Currently, I'm not ready to place any large bets on the above names, but I want to note today's bullishness along with April's more bullish performance relative to the broader market averages. Smurfit-Stone Container - $0.50 box The above chart of Smurfit-Stone Container (NASDAQ:SSCC) $16.24 +4.37% helps "explain" the risk/reward levels outlined. A trade at $14, would be a "sell signal" (column of O exceeding a previous column of O) and also break the upward trend or bullish support. I do think that shares of SSCC have pulled back, due to broader market weakness and not necessarily due to "stock specific" reasons. The stock has been strong relative to the market (S&P 500), which hints the stock is still under accumulation longer- term and perhaps lacks aggressive sellers. Little change since Friday One thing I noticed today when I was tabulating the broader market and index performances for April was that the NYSE Composite ($NYA.X), S&P 500 Index ($SPX.X), S&P 100 Index ($OEX.X) and Russell 2000 ($RUT.X) closed at exactly the same levels as Friday! The Dow Industrials ($INDU) are 36 points higher than Friday's close, the NASDAQ Composite (COMPX) is up a whopping 5 points and the NASDAQ-100 ($NDX.X) is up just over 27 points. To take today's action and build the scenario that a bottom is in place and valuations are now cheap, would be a leap of faith for me. A trader looking to trade many technology stocks long must carefully try and ascertain what stocks are most likely to have bears covering and risk/reward then becomes the ultimate determination for such analysis. I'm willing to take the risk and ride the tails of the bear! Traders that have perhaps built some gains in their account by shorting some stocks this past month, may now be seeing some trades they currently have on (on the bearish side) have been firming a bit. This type of observation will have some aggressive traders turning into short-term bulls and looking to play the short-term demand shifts that can take place under a short-covering rally type of market environment. One stock I came across today was in the biotechnology space. Shares of ImClone Systems (NASDAQ:IMCL) $16.10 +7.3% have probably had enough bad news to choke a horse. All I'm noting today is that the stock hasn't fallen below it's February 8th low of $13.77, despite all the bad news. ImClone Systems Chart - Daily Interval I would not encourage any subscriber to try and "build your account" off of a bullish trade in ImClone (IMCL) but volume has been rather light the past three sessions and considering the drubbing the market took yesterday (Monday) the stock didn't break to new lows. An aggressive, yet disciplined bull looking to ride the coattails of a potential short-covering rally might find an action point on the break above the $16.87 level of retracement. The trader would go in with the very short-term view and look for a "pop" to the $19.90 level and exit BEFORE the downward trend or $19.97 retracement level is encountered. Any break below today's low of $14.72 or the 52-week low of $13.77 must be honored with a stop. Again... if you're a bull and looking to buy the bottoms, you'd better be disciplined. With action points, stops and targets. More economic data! Tomorrow's economic data has the ISM coming out during market hours at 10:00 AM. Economists are looking for a reading of 55.0%. Also due out at 10:00 is construction spending (consensus for a gain of 0.1%) and Domestic Vehicle Sales (consensus of 13.3 million). Jeff Bailey Senior Market Technician ================ Market Sentiment ================ Renewed Confidence? By Eric Utley The market felt like it wanted to rally even before the release of consumer confidence. Maybe the buyers were ready to do just that: Buy! Of course the end of the month may have played a role in Tuesday's rally. Those crazy fund managers like to do crazy things at the end of the month to try to make their portfolios look better than they actually are. In fact, a lot of late last week's and yesterday's weakness may have been attributable to end of the month selling of major positions by the funds. That selling appeared to have run its course this morning. I was watching Qwest Communications (NYSE:Q) all day out of curiosity more than anything. It traded below $4.50 this morning on what appeared to be further heavy liquidation. Then that selling stopped and the stock rebounded for about $1 before settling in for the day. Multiple the action in Q a couple of hundred times, and maybe the consumer confidence number really didn't have anything to do with the rally. Despite the strong confidence number, however, Treasuries finished slightly higher. The benchmark 10-year yield (TNX.X) finished at 5.091%. You'd think that bond traders would be a bit more nervous if the consumer confidence number actually meant anything to the economy, wouldn't you? The most interesting, in my opinion, and maybe even the most telling indicator of this market is the CBOE Market Volatility Index (VIX.X). Once again, the VIX (read: fear) imploded during Tuesday's rally. The VIX dropped by nearly 9 percent on the 1.05 percent pop in the S&P 100 (OEX.X). The lack of skepticism in the face of rallies shows the crowd's willingness to buy into the attempt. That's not the stuff that bottoms are built on. Complacency remains a problem, which is why any rally from here should not hold. Sure, we could see the market move higher for a week or so with as oversold as stocks have become. But it will be a trading rally and nothing more until we see a wall of worry built. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 11350 52-week Low : 8062 Current : 9946 Moving Averages: (Simple) 10-dma: 10065 50-dma: 10273 200-dma: 9929 S&P 500 ($SPX) 52-week High: 1316 52-week Low : 945 Current : 1077 Moving Averages: (Simple) 10-dma: 1099 50-dma: 1127 200-dma: 1129 Nasdaq-100 ($NDX) 52-week High: 2071 52-week Low : 1089 Current : 1277 Moving Averages: (Simple) 10-dma: 1324 50-dma: 1412 200-dma: 1491 Biotech ($OSX) The BTK was the day's best performing sector with its 3.98 percent pop. But the index is hovering just above its yearly lows, which tells me that Tuesday's strength was primarily a product of short covering. The best performing shares in the group included Millennium Pharmaceuticals (NASDAQ:MLNM), OSI Pharmaceuticals (NASDAQ:OSIP), Protein Design Labs (NASDAQ:PDLI), ImClone (NASDAQ:IMCL), Gilead Sciences (NASDAQ:GILD), and Enzon (NASDAQ:ENZN). 52-week High: 676 52-week Low : 411 Current : 436 Moving Averages: (Simple) 10-dma: 457 50-dma: 488 200-dma: 519 Gold and Silver ($XAU) The XAU measurably fell for the second consecutive session on what appeared to be sector rotation. Spot prices fell back after running up past the $310 per ounce level. The XAU was Tuesday's worst performing sector with its 3.78 percent plunge. Leading to the downside included shares of Harmony Gold (NASDAQ:HGMCY), Placer Dome (NYSE:PDG), American Eagle Mines (NYSE:AEM), Gold Fields (NASDAQ:GOLD), and Newmont Mining (NYSE:NEM). 52-week High: 74 52-week Low : 78 Current : 49 Moving Averages: (Simple) 10-dma: 74 50-dma: 68 200-dma: 59 ----------------------------------------------------------------- Market Volatility Pretty amazing! The VIX traded right up to its simple 200-dma yesterday and again today before plunging back to earth. While I find the rally in the VIX promising as it relates to finding a bottom in stocks, I can't get past the fact that each time stocks even hint at a run complacency returns to the VIX in a big way. Selling rallies will continue working so long as we observe the lack of stick in the VIX. The VXN is showing a little bit more fear, which may mean that we're closer to a bottom in tech related shares than the S&P 100 types of stocks. CBOE Market Volatility Index (VIX) - 23.78 -2.33 Nasdaq-100 Volatility Index (VXN) - 42.88 -2.24 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.80 578,779 462,089 Equity Only 0.69 500,810 319,460 OEX 0.88 16,195 14,254 QQQ 1.57 36,828 57,916 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 63 + 0 Bull Confirmed NASDAQ-100 28 + 0 Bear Confirmed DOW 53 + 0 Bear Alert S&P 500 62 - 1 Bear Alert S&P 100 57 + 1 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 1.48 10-Day Arms Index 1.41 21-Day Arms Index 1.45 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 2214 942 NASDAQ 2248 1312 New Highs New Lows NYSE 161 69 NASDAQ 195 108 Volume (in millions) NYSE 1,312 NASDAQ 1,959 ----------------------------------------------------------------- Commitments Of Traders Report: 04/16/02 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 The spread between S&P commercials and small traders narrowed during the most recent reporting period. Commercials added a few more longs than shorts, resulting in a small reduction in the group's net bearish position. Meanwhile, small traders added quite a few short positions, coming off of the group's yearly high in bullishness. Commercials Long Short Net % Of OI 04/02/02 313,294 406,337 (93,403) (13.0%) 04/09/02 320,101 411,075 (90,974) (12.4%) 04/16/02 322,578 411,245 (88,667) (12.1%) 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 04/02/02 149,449 43,139 106,310 55.2% 04/09/02 151,237 47,678 103,559 52.1% 04/16/02 150,529 50,424 100,105 49.8% 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 less bearish during the most recent reporting period. The group added a number of long positions, while maintaining last week's short position. Net, however, the group is still bearish. Small traders went in the opposite direction by adding more shorts than longs, for a decrease in the group's net bullish position. Commercials Long Short Net % of OI 04/02/02 26,211 31,840 (5,629) (9.7%) 04/09/02 28,985 35,221 (6,236) (9.7%) 04/16/02 32,024 35,723 (3,699) (5.5%) 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 04/02/02 10,615 7,769 2,846 15.5% 04/09/02 11,640 8,353 3,287 16.4% 04/16/02 12,458 10,572 1,878 8.2% 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 grew less bullish during the most recent reporting period by reducing their number of longs and increasing their number of shorts. The group's net bullish position dropped by about 1,100 contracts. Small traders added slightly more longs than shorts for a reduction in the group's net bearish position. Commercials Long Short Net % of OI 04/02/02 18,717 12,549 6,168 19.7% 04/09/02 19,393 13,445 5,948 16.7% 04/16/02 19,080 14,267 4,813 14.4% 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 04/02/02 5,192 9,007 (3,815) (26.9%) 04/09/02 5,459 9,340 (3,881) (26.2%) 04/16/02 5,644 9,448 (3,804) (25.2%) 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 ((BULLISH play)) =============== Titan Corp - TTN - close: 22.86 change: +0.69 stop: 20.99 Company Description: Headquartered in San Diego, The Titan Corporation creates, builds and launches technology-based businesses, offering innovative technical solutions. For more than 20 years, Titan has provided comprehensive information systems solutions and services to the Department of Defense and intelligence agencies. Today, three of Titan's four core businesses develop and deploy communications and information technology solutions and services for both government and commercial customers. (source: company press release) - ORIGINAL WRITE UP: April 12th, 2002 - Why We Like It: These days it's a bit difficult to find a tech stock that's threatening to break to new near-term highs, but TTN fits the bill (that's near-term as in relative, not 52-week highs). Recent strength in the stock can be attributed to the fact that TTN provides services to both the commercial and defense sectors. A scan of news releases for the company shows four defense contracts have been awarded in the month of April; The most recent being a $103M IT contract from the Air Force that was announced today. This propelled shares of TTN higher by 5.6 percent and set up what could be an attractive entry point. The stock closed right at the $21 resistance level, which has kept a lid on every attempted rally since early February. The 200-dma at $21.18 provides additional resistance. We think the recent flurry of contracts could power the stock above this level, but want to verify a breakout first. For this reason, we're going write this play with a trigger at $21.26. If TTN trades at or above this level, we'll go long with a stop at $19.74. This should prevent us from getting trapped in a reversal. P-n-f chartists may notice that the stock has bearish resistance at $22. This would be logically be the next level of resistance after the 200-dma, but we think the momentum created by the breakout above $21 will be enough to carry it though $22. Such a move would also create a double-top breakout on the p-n-f and put our profit target of $25.50 within reach (although expect resistance at $24). Be sure to monitor events in the Mid East, as a deterioration of the regional tensions (can it get much worse?) could spotlight the defense sector even more. - Most Recent Update: April 30th, 2002 - Shares of TTN were looking strong last Friday following a positive earnings report, but were dragged down by negative sentiment in the broader tech market. Nonetheless, TTN finished the day with a gain, and we were looking for that relative strength to come into play if the NASDAQ rallied. Sure enough, today's tech strength translated into some nice gains for TTN. Shares added over 3 percent on stronger than average volume and closed within striking distance of the near-term high at $23.20. If the oscillators are any indication, bulls will soon push the stock above this level: Both the MACD and daily stochastics are beginning to curl higher with ample room to move. Aggressive short-term traders could target a move over $23.20, but look out for possible resistance to emerge near $24. - Play-of-the-Day Comments: April 30th, 2002 - A plummeting NASDAQ erased Friday's post-earnings rally in TTN. When short-covering finally hit the tech sector today, the stock outperformed with a 3.1 percent gain. We think a continuation of today's NASDAQ rally could push TTN above it's Friday high of $23.20. This would help to confirm a move over bearish p-n-f resistance at $23. Picked on April 15th at $21.26 Change since picked: +1.60 Earnings Date 04/25/02 (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. 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PremierInvestor.net Newsletter Tuesday 04-30-2002 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/d30b_2.asp ================================================================= In section two: Net Bulls Bullish Play Updates: SNE, TTN Bearish Play Updates: BRCM, CA, DPMI, KRON, SRNA Stock Bottom / Active Trader Bullish Play Updates: CTEC, SII Bearish Play Updates: JPM, MER, GDT, V High Risk/Reward Bullish Play Updates: AMAT, GNCMA Closed Bearish Play: CVC Split Trader Stock Splits AWR: 3-for-2 split announcement SLFI: 5-for-4 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 - close: 54.20 change: -1.28 stop: 51.25 Although the Nikkei index put in a strong performance on Tuesday, SNE gapped down over a point to start today's session. Weighing on the stock were concerns that large Japanese exporters would suffer from the rising yen, which is at a near-term high versus the dollar. Shares bounced from $53.50 and trended higher for the rest of the session. Today's 2.3 percent may prove to be a buying opportunity if those export worries quickly blow over. Of course there is always the possibility that investors merely overreacted to news that SNE was taking a one percent stake in RNWK as part of an alliance to distribute digital media. Technically, and on an hourly chart, we noticed that SNE is currently sitting above an ascending trendline. We're anticipating that continued Nikkei strength will fuel a rise from this level. Picked on April 4th at $53.01 Gain since picked: +1.19 Earnings Date 04/25/02 (confirmed) --- Titan Corp - TTN - close: 22.86 change: +0.69 stop: 20.99 Shares of TTN were looking strong last Friday following a positive earnings report, but were dragged down by negative sentiment in the broader tech market. Nonetheless, TTN finished the day with a gain, and we were looking for that relative strength to come into play if the NASDAQ rallied. Sure enough, today's tech strength translated into some nice gains for TTN. Shares added over 3 percent on stronger than average volume and closed within striking distance of the near-term high at $23.20. If the oscillators are any indication, bulls will soon push the stock above this level: Both the MACD and daily stochastics are beginning to curl higher with ample room to move. Aggressive short-term traders could target a move over $23.20, but look out for possible resistance to emerge near $24. Picked on April 15th at $21.26 Change since picked: +1.60 Earnings Date 04/25/02 (confirmed) -------------------- Bearish Play Updates -------------------- Broadcom Corp - BRCM - close: 34.50 change: +1.65 stop: 36.76 Hmmm... bears should probably start to get cautious on BRCM as the stock really out performed the index today in the market's rally today. While the SOX traded up to its 200-dma and rolled over again, shares of BRCM added five percent and tried to maintain the majority of its gains before the close. Longer- term, chart readers can see the trend developing in shares of BRCM. Draw a trendline from the top in January 02 across the top in March and extended it forward and you'll see it connect with the top in mid-April. There is a similar trend line across the bottom of BRCM from the February 02 low to the early and late April lows although this trajectory is a lot milder. Essentially, if the sector (SOX) does not breakdown under support at 500, then BRCM may be left to stew in its own juices and that pot looks like a continuing consolidation between these two trendlines until we get the eventual breakout one way or the other. Currently, our stop at $36.76 is inside this triangular formation and we will be stopped out if BRCM trades up to the top of the trendline before rolling over again. More aggressive traders can alter their strategy as they see fit. We did not hear anything positive or negative from BRCM's CEO speech at the technology conference on Monday and are left to speculate if there was anything said that could have had an affect on the stock price today. More conservative traders could use the $36 level to place their stops but if the market continues its rebound tomorrow then you're almost guaranteed to be closed out of the trade. Picked on April 24th at $34.84 Gain since picked: +0.34 Earnings Date 04/17/02 (confirmed) --- Computer Assoc. - CA - close: 18.60 change: +0.90 stop: 19.05 The overall bearish trend for CA still looks intact but the rebound in the Nasdaq and the software sector today was enough to fuel a five percent gain in CA. More aggressive traders willing to take the heat can use the declining 50-dma as a guide for stop placement $19.31 or even use the natural $20 level as a guide. We are going to keep our stop at the $19.05 trigger and fully expect to be stopped out if the Nasdaq continues to rebound tomorrow. We were almost stopped out today as the stock rallied to $18.94 before stepping back into the closing bell. This is a real judgement call for traders. We don't expect the rally to last but then the market is known for fooling everyone and doing the unexpected. The temptation would be to widen your stops and keep the play alive with the anticipation that the stock will roll over again with the markets. However, the disciplined thing to do is honor your stops, wherever you have them set and follow your game plan. If shares rally up to $20 and begin to roll over again then we can consider new bearish positions. Picked on April 18th at $18.49 Gain since picked: +0.49 Earnings Date 05/14/02 (unconfirmed) --- DuPont Photomasks - DPMI - close: 38.98 change: +1.89 stop: 40.01 Shares of DuPont Photomasks have been in a relative free fall for the last several sessions with a slight pause at the 200-dma. With the stock moving our direction we lowered our stop to the $40.01 level on Monday night to reduce our exposure given the expectation that the SOX and the Nasdaq were going to produce an oversold rally. The oversold rally did materialize and the SOX rallied up to its 200-dma before beginning to roll over again. The challenge now is trying to forecast how to play DPMI without knowing if the Nasdaq and the tech sectors will be able to keep the rally alive for another day. Shares of DPMI did gain almost five percent today, which out performed the SOX, but they closed at the $39 level. Our biggest concern is that DPMI might rally tomorrow, stop us out at $40.01, and then fail again at the 200- dma like the index. Since we do not believe in widening a stop once it has been tightened we'll have to live with that decision. Those traders who are aggressive enough to take the risk might want to consider placing their stop just north of the 200-dma (41.34) on DPMI. In the news, DPMI announced that it will be presenting at the Merrill Lynch Hardware Heaven conference in San Francisco on May 2nd, 2002 at 11:15 a.m. PST. Picked on April 26th at $39.47 Gain since picked: +0.49 Earnings Date 04/24/02 (confirmed) --- Kronos Inc. - KRON - close: 40.59 change: +0.78 stop: *text* We remain untriggered in this bearish play on KRON and for good reason. Buyers have been exceptionally resilient in defending KRON at the $39 level for the last several sessions. The rally today in the Nasdaq and software group has fueled a move back over the $40 mark for KRON and currently shares are staring at the 200-dma. We feel that if KRON closes above its 200-dma we'll drop the open-untriggered play and merely keep KRON on our internal watch list. We would expect stronger overhead resistance at the $42.50 level should KRON find new strength. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/23/02 (confirmed) --- SERENA Software - SRNA - cls: 13.65 chg: +0.44 stop: 14.01 *new* We all know nothing goes down in a straight line, but in an effort to keep a tight control on our risk, we have been tightening our stops on a lot of winning and losing trades. We are doing the same with SRNA even though a two or three day oversold rally is not something that would disrupt the current downtrend. Our new stop will be $14.01 and odds are very high that if the Nasdaq continues to rebound tomorrow we will be stopped out. Meanwhile, more aggressive traders who are willing to take the heat might want to consider placing their stops near the 10-dma at $14.77 or above price resistance at $15.00. There hasn't been any change in the fundamentals for the software group and the rally is likely to be made up of short-covering or aggressive bulls trying to pick a bottom. In the news, SRNA reported that they had appointed a new chairman of the board, replacing the company's founder. Keep an eye on the GSO.X software index for an idea of investor interest in the group. Picked on April 23rd at $14.94 Gain since picked: +1.29 Earnings Date 02/21/02 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Cholestech - CTEC - close: 18.10 change: -1.23 stop: 17.98 *new* D'oh! We hate it when that happens. CTEC opened the week with a trade at our trigger at $20.05, which triggered this long play with a stop at $17.49. Shares proceeded to move back under the $20 level, which acted as resistance for the rest of the session. Today's trading was downright ugly, as CTEC faded the RXH.X healthcare index and lost 6.4 percent. Due to the large decline, we're going to get defensive and move our stop up to $17.98. We expect this level to be violated tomorrow, but shares will first have to trade under possible support at $18. We could not uncover any news or reason for the sharp decline. Picked on April 29th at 20.05 Gain since picked: -1.95 Earnings Date 04/24/02 --- Smith Intl. Inc - SII - close: 70.05 change: -0.61 stop: 65.49 Shares of SII spent the last two sessions consolidating some of last week's move higher. The stock briefly dipped under previous resistance at $70 today, but bounced back to close over that level. Today's 0.86 percent decline mirrored a similar move in the OSX.X oil service index, which shed 0.81 percent. Driving the group lower was a decrease in the price of oil (cl02m). Technically, we like how the $70 level has held, and aggressive traders may want to consider an entry on a bounce from this level. Those looking for bullish confirmation could wait for a move above the near-term high of $71.68. Picked on April 26th at $71.29 Gain since picked: -1.24 Earnings Date 05/02/02 (confirmed) -------------------- Bearish Play Updates -------------------- J.P. Morgan - JPM - close: 35.10 change: +0.76 stop: 38.01 Monday's test of the 50-dma (currently at $34.10) proved to be a short-term bottom for shares of JPM. Today's 126-point gain on the Dow Jones helped to push JPM to a 2.2 percent gain. Although shares finished solidly in the green, today's action was somewhat encouraging for the bears. A failed intraday test of the $36 level led to a steady decline in late-afternoon trading. This leads us to believe that the move higher may have a temporary short-covering event. Relatively low-risk entries can be considered at current levels, so long as your stop is nestled just above $36. More patient traders may want to wait for a break below the near-term low at $34.00, but note that JPM may find support at the April low of $33.10. We are happy to report that the recent trading finally caused the rollover we had been anticipating on the PnF chart to appear. Picked on April 24th at $35.40 Gain since picked: +0.30 Earnings Date 04/17/02 (confirmed) --- Merrill Lynch - MER - close: 41.94 change: -0.17 stop: 46.06 Today's fractional loss in MER is rather conspicuous when one considers that the Dow Jones was up by 1.2 percent today. Shares briefly traded above $43 during the lunch hour, but hungry bears gnawed on the stock for the remainder of the session. Yesterday's trading was also promising, as MER sold off sharply after filling in the April 25th gap. New entries can be evaluated on another rollover from $43 or a move under the near- term low of $41.30. A move under this level could lead to a test of psychological support at $40. Readers doing some research on this stock probably noticed that MER received an upgrade from a hold to a buy this morning but shares failed to react to it, which further demonstrates the grip bears probably have on the stock. Short-term traders probably want to consider taking profits if MER slips toward the $40 mark. Picked on April 24th at $43.72 Gain since picked: +1.78 Earnings Date 04/17/02 (confirmed) --- Guidant Corp - GDT - close: 37.60 change: unch stop: *text* Judging by the way GDT failed to participate in today's broader market rally, it may just be a matter of time before this play is triggered. The stock has attracted little in the way of buying interest over the past two sessions. Shares continued to falter at the $38 level, which acted as solid resistance on Friday. It was also interesting to see that GDT couldn't trade higher even though the RXH.X healthcare index tacked on 2 percent. If this trend of relative weakness continues we'd expect GDT to fall under our trigger price of $36.94. If/when this happens, our initial stop will be set at $40.01. Picked on April xth at $xx.xx Gain since picked: +0.00 Earnings Date 04/18/02 (confirmed) --- Vivendi Universal - V - close: 32.12 change: -0.37 stop: 36.01 V hit a 52-week low after gapping lower this morning. Pressuring the stock was news that the company had absorbed a 17 billion euro write-down charge for Q1, as well as continued concerns over a share buyback program. Shares moved higher with the market as the session progressed but ran into a literal wall of resistance at $32.20. Today's relative weakness is promising, and aggressive traders could consider new short positions if shares rollover from current levels. However, be advised that we expect the bulls to attempt a defense of the $30 level. Not only is this level psychological support, but it also roughly coincides with the midline of V's descending regression channel. We think the stock could eventually fall as far as $25, but cautious traders may want to lock in gains if shares bounce from $30. We wouldn't be surprised to see V rebound up towards the $33 level if the broader markets continue to show strength tomorrow. Picked on April 24th at $33.35 Gain since picked: +1.13 Earnings Date 04/24/02 (confirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- Applied Materials - AMAT - close: 24.32 change: +0.38 stop: *text* We watched our screens closely on Monday, waiting for AMAT to enter our trigger range between $22.99-$22.00. Shares came close to that level in afternoon trading, but bottomed out at $23.37. AMAT moved higher in today's trading as tech stocks put in a strong performance. Frankly, this rally smacks of short-covering and revealed little in the way of bullish conviction. The SOX topped out at its 200-dma and trended lower for the rest of the session. Large buyers may want to see a retest of the 500 support level before committing capital. AMAT traded in a similar fashion and sold off after failing to move of the 50-dma. If semiconductors continue to move lower tomorrow we may see the stock once again approach our trigger. If this occurs when the SOX is hovering above 500, cautious traders may want to wait for the index to bounce from that level before going long. Picked on April xth at $xx.xx <- see text Change since picked: +0.00 Earnings Date 05/14/02 (confirmed) --- General Communication - GNCMA - cls: 9.98 chg: +0.19 stop: *text* Today's NASDAQ rally helped boost GNCMA nearly 2 percent, but the stock was unable to move over resistance at $10. This continued a trend of lower highs that began on April 16th. On a more bullish note, shares managed a nice bounce from support at $9.50. In any case, we'll continue to wait for GNCMA to trip our trigger at $10.31. This means that the stock must break both the aforementioned trend and the 200-dma at $10.13 before we go long. If we do get triggered, our stop will be set at $9.39. We did find it interesting that news of WCOM liquidating 40 percent of its stake in GNCMA earlier this month did not have a negative affect on the stock price. The new story said that WCOM sold more than 2.5M shares of GNCMA over a two-day period on April 10th and 11th at $9.00 a piece. Chart observers will notice the huge spike in volume those two days. Even more interesting was that GNCMA rallied the next three days after the sale. Picked on April xth at $xx.xx <- see text Gain since picked: +0.00 Earings Date 04/24/02 (confirmed) =============== HR Closed Plays =============== ------------------- Closed Bearish Play ------------------- Cablevision - CVC - close: 23.50 change: +1.03 stop: 23.51 Today's rebound in the NASDAQ and Dow Jones helped CVC recoup some of its recent losses with a 4.5 percent gain. Although shares closed a cent below our stop at $25.51, a brief intraday move over that level closed out this play for a gain of 10.4 percent. Given the fact that CVC bounced from the bottom of its descending channel at $22, we wouldn't advise short positions at this time. However, the downtrend is still firmly intact and a rollover from the channel's midline near $26 would pique our interest. Picked on April 22nd at $26.24 Gain since picked: +2.73 Earnings Date 05/02/02 (confirmed) ================================================================== Split Trader (ST) section ================================================================== Split Announcements ------------------- American States Water makes a splash with 3-for-2 split American States Water Co. (NYSE: AWR) announced this morning that its Board of Directors had approved a 3-for-2 stock split. The split will be payable on June 7, 2002 to stockholders of record on May 15, 2002. The Board also declared a quarterly dividend of $0.325/share, to be payable on June 1, 2002 to stockholders of record on May 8, 2002. AWR has not split since it began trading in 1998. The company announces its Q2 earnings report before the bell on May 7, 2002. Shares closed at $39.26 on Monday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=AWR About the company American States Water Company is a holding company that, through its subsidiaries, provides water service to 1 out of 30 Californians located within 75 communities throughout 10 counties in Northern, Coastal and Southern California and to approximately 11,000 customers in the city of Fountain Hills, Arizona and portions of Scottsdale, Arizona. (source: company press release) --- Sterling Financial declares 5-for-4 stock split Sterling Financial Corp. (NASDAQ: SLFI) announced a 5-for-4 stock split on Tuesday morning after the markets opened. The split will take the form of a 25% stock dividend and will be payable on June 3, 2002 to stockholders of record on May 15, 2002. SLFI most recently split in 1999, also a 5-for-4 offering. Shares are approaching 52-weeks highs and have gained 4.4%, YTD. The stock closed at $25.07 on Monday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=SLFI About the company Sterling Financial Corporation is a multi-bank holding company that consists of a family of financial services organizations, which includes Town & Country Leasing, Inc., Lancaster Insurance Group, LLC, and Equipment Finance, Inc. (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. 04/30/02 ================== Trading Ideas ================== Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change PEG Public Service Enterprises 46.35 +0.54 DHI D.R. Horton Inc 25.80 +0.67 SFI Istar Financial Inc 31.10 +0.80 SFG Stancorp Financial 58.50 +1.77 CBCF Citizens Banking Corp 33.20 +0.60 UBSI United Bankshares Inc 32.00 +1.10 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change TSN Tyson Foods Inc 14.02 +1.02 CBZ Cobalt Group 19.30 +1.95 ALLY Alliance Gaming Corp 14.88 +1.26 WTS Watts Industries Inc 18.21 +1.16 CAO CSK Auto Corp 15.25 +1.11 SIE Sierra Health Services 19.50 +3.50 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change UN Unilever N.V. 64.70 +2.34 RTN Raytheon Co 42.30 +2.24 NOC Northrop Grumman Corp 120.66 +4.67 RIG Transocean Sedco Forex 35.50 +1.40 FTN First Tennessee Natl. Corp 38.66 +1.19 STZ Constellation Brands Inc 60.40 +2.65 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change AZN Astrazeneca 46.55 -1.53 LLY Eli Lilly & Co 66.05 -2.25 SGP Schering Plough 27.30 -1.11 MU Micron Technology 23.70 -2.75 FDX Fedex Corp 51.67 -2.14 VLO Valero Energy Corp 43.16 -2.14 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change NE Noble Drilling Corp 43.35 -1.74 AMGP Amerigroup 30.55 -2.65 JJSF J&J Snack Foods Corp 38.52 -1.98 SNE Sony Corp 54.20 -1.28 NEM Newmont Mining Corp 28.51 -1.33 PLFE Presidential Life Corp 24.90 -0.73 ================================================================= 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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