PremierInvestor.net Newsletter Monday 06-10-2002 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 ================================================================= In section one: Market Wrap: Intel Under $10? Watch List: AHC, AMR, ABC, AET, CREE, IR, and more... Play of the Day: Not So Swift ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 06-10-2002 High Low Volume Advance/Decline DJIA 9645.40 + 55.73 9718.09 9562.54 1.22 bln 1657/1562 NASDAQ 1530.69 - 4.79 1551.80 1526.96 1.51 bln 1573/1885 S&P 100 509.03 + 1.71 513.10 505.63 Totals 3230/3447 S&P 500 1030.74 + 3.21 1038.18 1025.45 RUS 2000 469.29 - 1.22 473.50 468.60 DJ TRANS 2721.12 + 34.46 2735.67 2685.21 VIX 26.15 - 0.50 27.06 25.47 VXN 52.54 + 0.30 53.09 51.46 TRIN 1.00 PUT/CALL 0.77 ****************************************************************** =========== Market Wrap =========== INTEL UNDER $10? I was not impressed with last Friday's positive reversal. I remain bearish, and expect any strength on Tuesday or Wednesday to be replaced with more broad market weakness. I continue to believe that the Dow is far more likely to see 9250, or much lower, before it sees anything above 9900. My view on the Nasdaq is even more cautious. With INTL effectively collapsing since Friday--it is signaling that it will break its September 2001 lows--the prospects for the tech sector and, with it, the Nasdaq Composite, seem pretty gloomy. The Semiconductor Index (SOX) will need to find a serious bottom, and the ability to rebound, at the 424 region; it closed today at 437. I discuss my views for these indexes, and others, in the sections below. Today's Market: There were no economic reports, or earnings, responsible for today's up-and-down market session. The broader averages opened up, but by mid-morning the whipsaw had begun. The culprit-- again--was domestic terrorism. US Attorney General Ashcroft announced that the Justice Department had arrested an individual suspected of preparing to combine explosives and radioactive material into a "dirty bomb." Stocks dropped immediately until it was announced that this was really an old event--the arrest was made a month ago. Happy again, investors drove the averages higher, until the last hour of trading, that is. At one point, the Dow was up over 100 points, hitting 9718, before giving up more than half of its intraday gains, closing at 9645. The SPX followed the Dow's lead, hitting 1038 intraday, only to finish up just 3 points at 1031 when all the trading was through. The Nasdaq Composite spent a portion of the day crawling into positive territory, reaching a high of 1552; by the time trading was done, however, the COMPX had declined 5, finishing the Monday session at 1531. Other than the terrorist matter, news-related events were relatively muted. Here are a few that seemed to influence investors. NOKIA GUIDANCE ON TUESDAY: JP Morgan upgraded Nokia and Erickson, both makers of telephone equipment, while Merrill Lynch reported that it expected mobile handset growth to be lower than expected. Nokia offers mid-quarter guidance tomorrow, Tuesday, and this may move some of the stocks in that sector. HMO INDEX: After the close, HMO & healthcare stocks took center stage. Wellpoint (WLP) raised earnings guidance for 2002 as well as for each of the individual quarters remaining for the year: Q2, Q3, Q4. In similar fashion, Tenet Healthcare (THC)-- one of PI's long positions--said that it expects to beat the street's EPS estimates for Q4, as well as for its full fiscal year. Both stocks are associated with the recently high-flying HMO index (HMO). The otherwise attractive weekly chart of this index contains a couple of items about which traders need to aware. In particular, I'm wondering if this index is on the cusp of putting in a double top. WEEKLY PRICE CHART OF HMO INDEX So far, the HMO has NOT established a double top. It needs to reach 645, or higher, this week for a second top to be in place. Then, obviously, it will need to decline back below this level-- and close below this level--for a second top, with bearish implications, to be in place. So, no double top--yet. But as active traders this is the very kind of thing we need to anticipate. If WLP and THC are able to lead the sector, and HMO Index, higher on Tuesday as we think they will, we'll probably get a move above 645 (only 2% above Monday's 632 close). So our job will be to watch for a close on Wednesday, Thursday or Friday--or maybe even tomorrow--back below that level. GOLD AND OIL: Gold and Oil stocks were both weak today, and both are in intermediate term declines. Although crude oil futures dipped only a penny, the XOI (Oil Index) lost 1.5% and the Oil Services Index (OSX) dropped over 3%. We're expecting the entire oil complex to move lower, aggressively, in the next few days. Our "Play of the Day" for tomorrow--Swift Energy (SFY)--is an oil stock that will likely suffer if crude futures plunge later this week. Gold futures were notably weak, dropping 2%, with the June gold contract off about $6. INTEL: Perhaps one of the most under-reported topics today was the continuing decline in Intel (INTC). A weekly chart is presented below, and it is one ugly bunch of numbers. After last Thursday evening's lowered guidance, the stock has fallen like a melon dropped out my office window. INTC dropped another $0.93 today, closing near its intraday lows at $21.07. I think the plunge in this stock is being vastly underestimated, since my current technical indications for the stock suggest that it could be headed to a level well below its Sept. 2002 low of $19.08. Given the prominence this stock--and its sector--play in both the Dow and the Nasdaq, it seems to me that it will be very difficult for the averages to make much headway--except in a downward direction--if a major leader has been decapitated and eviscerated. WEEKLY PRICE CHART OF INTEL (INTC) I have noted before in this column that stocks decisively breaking below their 78.6% retracements--as INTC has done (see chart)--most frequently continue down to either their 127% or 161.8% retracements. Yes, there are other retracement levels above these, but my experience has shown me the extraordinary frequency with which the 127% and 161.8% levels are hit. We'll have a better idea in a few days if this is likely to happen to INTC. If its RSI breaks the declining support line it has used since late 2001, its downside movement will accelerate and I will have to assume that in such an environment INTC will be headed to one of these other two retracement levels ($14.58 and $8.50, respectively). Frankly, I find either one of them almost unbelievable. Is it possible INTC could actually trade under $10.00? It staggers me to entertain that prospect, but that's what my charts are telling me at this time. Getting Ready For Tuesday, June 11th. There are really no economic reports of any significance for Tuesday. We won't see much until Friday, when a series of potentially market-moving reports are released: Industrial Production, Capacity Utilization, Business Inventories and Consumer Sentiment. Otherwise, the markets are likely to be moved by technical considerations. So here are a few charts that offer my view of where key sectors and indexes may be headed in coming days. The Crude Oil Futures (CL02N) Seem Poised For More Downside. They Closed at $24.26: The weekly chart of crude oil futures illustrates that oil put in a sharp double top at $28.58 on May 14th; since then the futures have fallen consistently. When you look at this chart, you'll note that the lower Bollinger Band, and its 5-week ma, are both declining rapidly; this is usually an indication that lower prices are likely in the near-term. Crude futures seem to be headed down to either the 61.8% or 78.6% retracement, or $23.00 and $21.50 respectively. If this decline occurs over the next 1-3 weeks, we can expect fast declines in the Oil Index (XOI) and Oil Services Index (OSX) and the stocks comprising both these sectors. WEEKLY PRICE CHART OF CRUDE OIL FUTURES (CL02N) The Dow Jones Industrial Average (INDU) Looks Like It Will Move Much Lower; It Closed at 9645: I said last week that Dow MUST return--immediately--to a level within the boundaries of its triangular consolidation (that is, decisively above 9900) if it is to offer any hope of repairing last week's technical deterioration. The chart below suggests that it remains very weak, and the likelihood of a return above 9900 improbable. The Dow will do good to rebound to 9800, and that is probably pushing it. Unless something extraordinary occurs this week, I look for a decline to at least the 61.8% retracement (9166) over the next couple of weeks. WEEKLY PRICE CHART OF DOW JONES INDUSTRIAL AVERAGE S&P 500 (SPX) Closed at 1031: The SPX traded as high as 1038 today; I said last week that we might see this index move back to 1050 before more weakness sets in (though 1070 was not impossible). The Dow is pulling the strings, and I look for this index to follow its lead. If the Dow can struggle back to 9800, before more weakness hits it, which should equate to a return to SPX 1050+-. The bottom line, though, is more weakness after a short rally (is it already over?) this week. Nasdaq Composite (COMPX) Closed at 1531: I am not ready to say that the COMPX is headed straight to the 1240 region, as suggested by the weekly chart below, but as I noted last week, that remains a high probability. The weekly RSI is trending lower, and the COMPX is accompanied by a sharply declining 1) lower Bollinger Band, and 2) 5-week Bollinger Band ma. These tell me that lower levels are coming, and quickly. Now that the COMPX has broke its 78.6% retracement, the next likely stopping level, in coming weeks, is the 127% retracement, which sits at COMPX 1240. Ugly indeed. Will the index be able to rebound this week to the 1550 or 1600 resistance levels before more weakness sets in? I don't know if it can. WEEKLY PRICE CHART OF NASDAQ COMPOSITE (COMPX) The Russell 2000 Index (RUT) Closed at 469: I said on Friday that I thought the RUT might be able to rebound back into the 480-487 region, before stalling and turning down again; that is still my view. The Russell hit an intraday higher of 474 today. Once the Nasdaq and Dow start to decline this week, the RUT should be in for a more extended decline to 433, or lower. Keep your thinking caps on, and trading seat belts tight! Siegfried Brian Barger, Editor ================================================================== WATCH LIST ================================================================== The PremierInvestor.net watch list is not designed to be read as full fledged stock picks. Rather we would prefer to offer it as an extra tool in today's investor toolbox. Think of it as a radar screen with your own radar operator pointing out interesting developments, technical patterns or potential plays that you may or may not have seen on your own. Due to time constraints we do glance at the news but rarely do we have time to fully read pertinent news stories, due background research and other necessary screens that investors should do before making a decision. A common exercise is to read the entry, glance at the sector and other stocks in that industry and then compare what's happening in the stock to what's happening in the broader market indices. We hope you enjoy the Watch List and that it proves to be a useful tool for your own trading success. STOCKS WORTH WATCHING --------------------------------- Amerada Hess - AHC - close: 78.09 change: +1.36 WHAT TO WATCH: We are bearish on oil prices, and believe that they are headed lower in coming days, and weeks. AHC is likely to falter on lower oil prices, and we think this stock could be an attractive short. The stock recently completed a double top on its weekly chart, with a bearish divergence on the RSI. Today, it closed under its 50-dma. A rebound over the next few days to $81.00 is possible, but not likely. --- AMR Corporation - AMR - close: 20.60 change: +0.53 WHAT TO WATCH: Something is happening with the airlines: we are seeing signs that the sector has bottomed. A recent report of insider buying in AMR has us intrigued, on the long side. With oil prices coming down--one of the major expenses for airlines-- we think that the airlines (XAL Index) could be the one sector that advances even if the Dow weakens in coming weeks. AMR has resistance at its 50-dma, but we think that it now possesses a short-term pattern that will allow it to fracture this level quickly. We'd turn negative on AMR if it began trading below its recent support level, in the $19.50 region. --- Amerisourcebergen - ABC - close: 81.11 change: +2.47 WHAT TO WATCH: A three-day rally in shares of ABC has produced some very bullish technicals. First and foremost, the stock has plowed through resistance at $80.00 and is trading at 52-week highs. The volume backing today's move was very promising as well. At 1.76M shares, it was the largest in over a month. The oscillators are looking good as well. The MACD is on the verge of a bullish crossover, while the daily stochastics (5,3,3) are charging higher and still have plenty of room to move. Finally, the icing on this technical cake is the triple-top p-n-f buy signal that was produced by today's move. Aggressive entries can be targeted on continued strength from current levels, while patient traders may want to wait for a pullback to the $80 level. --- Aetna Inc. - AET - close: 49.08 change: +0.84 WHAT TO WATCH: A breakout could be looming for AET. The stock has been outperforming the broader market in recent weeks and looks to be headed for a retest of stubborn resistance at the $50 level. With the daily stochastics (5,3,3) powering higher and MACD about to produce a bullish crossover, we think the odds of a breakout are good. The two previous breakout attempts (late- April/early-May) were not accompanied by a bullish MACD. Entries can be evaluated on a close over $50.00, with more cautious traders may want to wait for a move above the 52-week high at $51.00. --- Cree, Inc. - CREE - close: 12.67 change: +1.67 WHAT TO WATCH: Cree issued guidance for its fourth quarter this morning, indicating better revenue and earnings. Prudential upgraded the stock on the improved guidance, and CREE enjoyed a strong day on Monday, with a huge volume surge. The stock is currently extended, but once it is above a resistance area at about $13.75 - $14.50, it enters a fast move region, with gaps, that could see it rising very quickly to the $17.50 - $18.00 region. This is a high-risk trade because of the extended nature of the stock. Traders might watch for a dip to today's low ($11.55), followed by an immediate rebound, as a signal the stock is preparing for its next push upward. --- Ingersoll Rand - IR - close: 49.33 change: +0.19 WHAT TO WATCH: IR has formed a large double top on its weekly chart and, like AHC profiled above, is sporting a bearish divergence on its RSI. The stock has closed under its 50-dma 6 of the last 8 trading sessions, and for the last three consecutive days. It has resistance in the region of its 50-dma ($50.50) and this should restrain any rebound. Once it moves below $48.25, little exists to stop IR from dropping quickly. We like this as a short play--obviously! --- Lehman Bros. - LEH - close: 60.60 change: +0.43 stop: WHAT TO WATCH: Shareholders of LEH weathered some heavy selling in late May after the stock topped out near $67. The recent action has been more palatable for the bulls, as LEH found buyers just above its bullish p-n-f support at $58. The last two sessions have seen shares move nicely off that level. With the daily stochastics (5,3,3) heading higher and MACD beginning to level out, aggressive entries can be considered at current levels. The obvious fly in the ointment here is the collection of major moving averages (50,100,200) that are bunched together between $62-$63. However, it's worth noting that on the last leg higher (late-April to mid-May), those MA's did little to impede the stock's progress. We also like the action in the Broker Dealer Index (XBD), which seems to be basing at support near 435. This happens to be where the 50% retracement level (September lows to January highs) is located. ============= MORE TO WATCH ============= ASA Ltd. - ASA - close: 32.25 change: -2.50 Shares of this South African company have lost more than 12% in the past two sessions. The volume backing the decline has been brisk; today's reading was the second highest of the year. With shares closing well under the 50-dma, there isn't any discernable support until the $28-$30 region. --- SPX Corp. - SPW - close: 123.40 change: -6.86 SPW fell more than 5% today and came to a halt just above the 200-dma. A break under this level ($123.28) could lead to a test of bullish p-n-f support at $110. The rising volume, triple- bottom p-n-f breakdown, and downtrending oscillators all suggest further selling in the near-term. =============== Play-of-the-day (BEARISH) =============== Swift Energy - SFY - close: 13.44 change: -0.59 stop: 14.27 Company Description: Swift Energy Company develops and operates oil and gas wells. Its major focus concerns onshore oil and natural gas reserves in Texas and Louisiana, and onshore oil and natural gas reserves in New Zealand. Swift owns or has interests in 1,235 wells; 854 of these wells represent 95% of its proven reserves. (source: company press release) - ORIGINAL WRITE UP: June 6th, 2002 - Why We Like It: Since October of 2000, SFY has been in an extended bear market. The price of its stock has declined from a high of $43.50 to today's new 52 week low of $13.70. This decline has been unrelenting in recent months and, more particularly, in recent weeks. It is unclear to us why this stock has failed to respond, even remotely, to the more positive movement of the XOI (Oil Index), OSX (Oil Services Index) or even recent spikes in the price of crude oil over the last couple of years. The current turbulence surrounding other oil/energy related companies like Enron and Williams Company has no doubt hurt the Swift as well. As if all this is not tragic enough for the stock, AG Edwards downgraded SFY on May 31st; this followed a similar downgrade on May 1st by both JP Morgan and Lehman Brothers. The bottom line on Swift is this: SFY stock is fundamentally about as ugly as a two-headed, bucktoothed rat, and its technical condition is no less disturbing. From May 7th through June 5th, SFY had been attempting to consolidate sideways, between roughly $14.00 - $16.00. That effort seems to have failed today-- miserably--with the stock dropping nearly 5% in the absence of any news. We are interested in shorting it because of its current technical weakness and because we believe that the price of crude oil is on the verge of a sharp drop, perhaps from the current $25.00 range to something near $21.00 over the next couple of weeks. We will enter a short position once SFY has traded below today's low of $13.70. Once this short play is triggered, we will use a very, very tight stop. Why? Technically, we think that SFY's price should simply collapse lower without any meaningful rebound. If this scenario does not occur, though, we will have to acknowledge that reversal in price is possible and we do not want to be short under such circumstances. With this in mind, our buy stop will be just above near-term resistance at $14.26. Our short-term price target is $12.15, which represents the 161% retracement of the Feb. 20th - April 2nd advance. From a reward/risk perspective, we are risking a 4% loss in the hope of receiving a fairly quick 11% gain (at a minimum), providing a nice reward/risk ratio of just about 3:1. - Most Recent Update: June 7th, 2002 - We didn't have to wait long to get triggered in SFY. The stock quickly fell below our action point at $13.69 this morning, activating this short play with a stop at $14.27. Unfortunately the bearishness was short-lived. Of all the sectors that we monitor, the OSX (Oil Service Index) posted the largest gain. SFY mirrored the sector action and rose steadily for most of the session, ultimately finishing with a gain of 2.4%. Not a bad rally...but is it sustainable? We doubt it. The trend in SFY is still decidedly bearish, with the stock setting a new multi-year low today and the MACD about to produce a bearish crossover. Keeping in mind that our profit-target is at $12.15, traders can consider new entries on a move below the $14.00 level or today's low of $13.55. - Play-of-the-Day Comments: June 10th, 2002 - As outlined by Brian Barger in tonight's Market Wrap, the near- term outlook for oil stocks is not looking bullish. Crude futures (cl02n) have been trending lower for more than two weeks. At this rate, it's just a matter of time before oil falls under its April lows of $23.30/barrel. SFY has been moving lower with the sector and dropped another 4.2% on Monday. Although the stock looks near-term oversold, there is little in the way of historical support to prevent it from falling to the $12 level. Furthermore, shares are trading at new 52-week lows and the MACD is beginning to curl lower. If the bears really start running amok in the oil sector, we wouldn't be surprised to see SFY test the $10 level. New entries can be considered on a move below today's low of $13.38, but keep those stops tight! Getting caught in a short-covering rally is about as much fun as receiving a knockout punch from Lennox Lewis. Picked on June 7th at $13.69 Gain since picked: +0.25 Earnings Date 05/01/02 (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. 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PremierInvestor.net Newsletter Monday 06-10-2002 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/f10b_2.asp ================================================================= In section two: Net Bulls Closed Bearish Plays: CMCSK Active Trader Non-Tech Stocks Play Comments: THC (bullish) Triggered Plays: FO (bearish) Closed Bullish Plays: DCX, RJR High Risk/Reward Triggered Plays: TSCO (bullish) Closed Bearish Plays: INMT Long-term Plays Bullish Play Updates: SAFC, UHS 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 Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Comcast Corp - CMCSK - cls: 24.22 chg: -1.13 stop: 26.27 CMCSK continued lower today in predictable fashion, losing 4.4% en route to yet another 52-week low. The stock also hit our profit target of $24.30, which was established in the most recent update. This closed our play for a gain of 12.8%. Not a bad one-week move! We're content to close out this play for a double-digit gain, but how much downside does CMCSK have left? It's tough to say. Although it looks like the stock will test the low end of its descending channel near $22.50, a sudden short-covering rally could be ignited by any piece of good news in the cable sector. On the other hand, it's possible the CMCSK could crash though the bottom of its channel and test the $20 level...Especially if fellow cable providers COX and CHTR continue to freefall. With this in mind, aggressive traders may want to short CMCSK on a move below today's low of $23.91. Picked on June 3rd at 27.89 Gain since picked: +3.59 Earnings Date 05/01/02 (confirmed) ================================================================= Active Trader/Non-tech Stocks (AT) section ================================================================= =============== AT Play Updates =============== Play Comments ------------- Tenet Healthcare - THC - cls: 76.09 chg: +1.27 stop: 71.72 THC traded to a new all-time high of $76.50 today. That alone is good news for this play, but it's what happened after the market closed that could really get shares moving to the upside. The company announced that it expects to "comfortably exceed" analyst expectations for both Q4 and the full year, based on cost cutting and debt reduction measures. THC doesn't trade in after-hours, but we're definitely anticipating a good-sized gap higher on this news. This should put our original profit-target at the $80 level within reach. Insofar as an "official" price target, we're going to wait to see how things play out tomorrow. Today's news creates the possibility that THC may rise well over $80.00. Triggered Short Plays --------------------- Fortune Brands - FO - close: 52.49 change: +0.41 stop: 55.17 Our short play in FO was triggered at the opening price of $51.83 this morning after the stock gapped below our action point at $52.05. Although shares quickly rallied back above the $52 level, the 50-dma at $53.14 was never in danger of being violated. Aggressive traders could target new entries on a rollover from this level, while others may want to wait for a move below today's low of $51.75. Remember that our stop is set at $55.17. =============== AT Closed Plays =============== -------------------- Closed Bullish Plays -------------------- DaimlerChrysler - DCX - cls: 46.70 chg: -0.84 stop: 46.72 Although we were hoping that Friday's bounce from the 50-dma would signal the beginning of another leg higher for DCX, the bears had other ideas. The stock was weak from the get-go this morning and violated our stop at $46.72 within the first half- hour of trading. This closed our play for a gain of 22 cents. If the recent selloff in GM is any indication, DCX may suffer more selling in the near future. With shares now under the 50- dma ($47.02), we would not be looking for new entries at current levels. Picked on May 6th at $46.50 Gain since picked: +0.22 Earnings Date 02/20/02 (confirmed) --- RJ Reynolds - RJR - close: 68.02 change: -0.52 stop: 67.94 Based on the bearish MACD and daily stochastics, we were somewhat suspicious of Friday's bounce from the 50-dma. Sure enough, RJR broke under that level ($68.29) today and briefly fell under $68.00. The stock violated our stop-loss at $67.94, which closed this play for a loss of 3.4%. This dip may eventually prove to be a bear trap (much like the dip in mid-May), but with RJR closing under the 50-dma and MACD looking bearish, we would not advise taking any long positions at these levels. Picked on May 30th at $70.34 Change since picked: -2.40 Earnings Date 04/18/02 (confirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== =============== HR Play Updates =============== Triggered Short Plays --------------------- Tractor Supply - TSCO - close: 61.70 change: +2.15 stop: 54.15 The positive momentum TSCO displayed on Friday carried over to today's session, with shares adding 3.6% and setting an all-time high of $62.79. The stock gapped above our trigger at $60.21, so we entered this play as of the opening trade at $61.25. Our stop-loss is located at $54.15. =============== HR Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Intermet Corp. - INMT - cls: 9.70 chg: +0.65 stop: 9.61 INMT gapped up this morning and quickly eclipsed our stop at $9.61, thus closing our short play for a loss of 13 cents. Although we couldn't find any news to explain the early-session strength, the company did announced this afternoon that it had sold $175M in seven-year notes. Shares remained strong all day and finished near the highs of sessions. Although INMT has managed a decent bounce from the Friday low, it still faces psychological resistance at $10.00, just above the 50-dma ($9.98). Bears should be watching for a failed rally at this level. However, be aware that the daily stochastics (5,3,3) are bullishly emerging from the oversold region. Picked on June 6th at $9.48 Gain since picked: -0.13 Earnings Date 04/11/02 (confirmed) ================================================================== LONG-TERM PLAYS (LT) section ================================================================== =============== LT Play Updates =============== -------------------- Bullish Play Updates -------------------- SAFECO Corp. - SAFC - close: 31.40 change: -0.12 stop: 29.94 Financial & Insurance company SAFECO announced last week that it's seeing a substantial increase in new business for its new auto insurance product. New policy sales are up over 40% in the states in which the product was initially presented: Arizona, Utah and South Carolina. With the auto insurance product now being introduced in Connecticut, Kansas, Indiana, Idaho and Wisconsin, SAFECO is optimistic it will experience similar results in these states as well. The new product has doubled SAFECO's reach into the auto insurance market. The company has a long-term goal of becoming a top-five national writer of auto insurance. Our time horizon on this trade is three to six months to achieve our price target(s) of $36.00 to $38.00. Short-term, the stock has been in a consolidation and it will be important that it holds support in the $30.50 - $31.00 region; a decline below this would obviously put pressure on our sell stop. Conservative traders may want to wait for SAFC to close above the 50-dma, which presently sits at $32.65, before engaging new long positions in SAFC. Picked on May 31st at $31.99 Gain since picked: -0.59 Earnings Date 04/22/02 (confirmed) --- Universal Health - UHS - cls: 49.70 chg: -0.19 stop: 43.48 The HMO Index, and our hospital stock, Universal Health, have each experienced sharp rallies in the last few weeks. UHS has moved from a short-term low of $42.57 on May 14th to today's high of $50.65. Today's trading brought USH above its 127% retracement of its April 29th - May 14th decline, before UHS reversed on the day. Even with today's reversal, we think that the stock is likely to move on up to the higher 161.8% retracement ($52.25) in the next 1-2 weeks before the stock takes another meaningful rest. If we're right, UHS could dip 1.5% to about $49.00 in the next few days before finishing its advance to the 161.8% levels. After the close today, Tenet Healthcare (THC) upped it guidance fore the current quarter, and this should provide this stock with a good rally in Tuesday's trading. Since THC is in the same sector as UHS, this news could give UHS the steam it needs to quickly move towards the $52.25 level. Traders targeting new entries need to be aware that--if UHS is able to gap up tomorrow on the heels of THC's news--much of the remaining gains (up to the $52.25 level) may be taken before a new long position can be initiated. Traders would want to keep a close stop on such a position, since there is a very good chance that UHS will stall once it reaches the $52.00+ area. Picked on April 19th at $46.60 Gain since picked: +3.10 Earnings Date 04/18/02 (confirmed) ================== Trading Ideas ================== This section contains stocks that meet criteria which may make them of interest to long and short side traders. These are not recommendations, nor have they been reviewed by PremierInvestor editors for investment potential. However, each of them has technical and fundamental characteristics that make them worthy of further review by traders and investors looking for fresh ideas. New stocks will appear daily following the market close. Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change PKX Posco 30.30 +1.22 GLH Gallaher Group 38.70 +1.00 VIP Vimpel Communications 27.80 +0.80 TRBS Texas Regional Bancshares 46.66 +0.67 NX Quanex Corp 39.62 +0.77 JOUT Johnson Outdoors Inc 19.78 +1.57 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change CREE Cree Inc 12.67 +1.67 NNDS NDS Group 13.80 +2.63 BUCA Buca Inc 19.81 +1.58 RDEN Elizabeth Arden Inc 16.23 +1.28 SSSW Silverstream Software 8.90 +3.76 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change UPS United Parcel Service 62.38 +1.01 ABC AmerisourceBergen Corp 81.11 +2.47 MGG MGM Mirage Inc 37.14 +1.03 PDCO Patterson Dental 52.41 +2.20 TSCO Tractor Supply Co 61.70 +2.15 DKWD D&K Healthcare 37.90 +1.90 CPKI California Pizza Kitchen 25.94 +1.96 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change CMCSK Comcast Special Stock 24.22 -1.13 USAI USA Interactive 23.96 -1.69 DHR Danaher Corp 66.46 -3.10 SPW SPX Corp 123.40 -6.86 ALFA ALFA Corp 24.87 -2.07 ASA ASA Ltd 32.25 -2.50 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change .. none.. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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