PremierInvestor.net Newsletter Monday 07-01-2002 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/g01b_1.asp ================================================================= In section one: Market Wrap: I Remain Bearish. Period. Watch List: ABT, ACV, AET, BRCD, LEN, IVGN, and more... Play of the Day: It's Just Logical ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 07-01-2002 High Low Volume Advance/Decline DJIA 9109.38 -133.47 9327.10 9106.89 1.42 bln 1134/2098 NASDAQ 1403.50 - 59.41 1459.84 1402.51 2.97 bln 1125/2396 S&P 100 478.94 - 11.16 492.39 478.34 Totals 2259/4494 S&P 500 967.50 - 21.17 994.46 967.43 RUS 2000 446.67 - 14.92 461.55 446.03 DJ TRANS 2697.03 - 31.79 2734.12 2691.87 VIX 30.58 + 1.45 30.70 28.63 VXN 58.02 + 0.07 58.76 56.55 TRIN 2.19 PUT/CALL 0.85 ****************************************************************** =========== Market Wrap =========== I remain bearish. Period. Today's weak market action seems to have now readied the market for another stiff drop in coming days. Sure, I could be wrong. But today's bad news only got worse after-hours. From negative technical patterns on the market's "Generals" to rumors about more pre-announcements, things look simply lousy. In addition to weakness in the major indexes that I discuss below, I am observing potentially negative technical developments in major stocks like Microsoft, IBM, Intel, Oracle and GE. These stocks are leaders. Well, they had been, anyway. More renewed weakness in them, though, is likely tip the scales on the entire market, sending everything lower, harder, faster. Here's why I'm concerned about each of these stocks. INTEL: A few weeks ago I asked the rhetorical question: Intel under $10? That remark was not meant in jest. INTC began falling out of a small consolidation pattern today. With both its weekly and daily RSI in oversold territory, INTC is ready to reach maximum downward acceleration in its price. As I have said before in this column, the RSI can get pinned to the floor, much like a car accelerator, before a stock actually begins to rebound out of oversold conditions. It has been my experience that the most vicious declines occur when both the weekly and daily RSI's are in (or pinned to) oversold readings. ORACLE: Oracle has been a bit of a tech leader since early June, when it started slowly rising. The stock has been registering a series of higher lows most of the month; a break below the trend line under these lows (which now sits at about $8.20), is likely to produce an ugly decline in the stock. Another day or two of weakness and ORCL could be below that level. MICROSOFT: Like ORCL, MSFT has been producing a series of higher lows, except its pattern is longer, extending over two months. Although MSFT is not showing a decidedly negative pattern right now, a drop below its "rising lows" trend line, at about $50.20, becomes very negative. MSFT is $2.50 from such a potential breakdown. GENERAL ELECTRIC: Like Intel, GE has deteriorating RSI's on both weekly and daily charts. For the past four weeks the stock has been struggling to stay in a sideways consolidation between roughly $28.00 - $31.00. Today's 2% decline has set the stage for a move out of that pattern--downward. IBM: The stock possesses the same general technical concerns as that mentioned for INTC and GE. IBM looks like it is ready to undergo a decline that pins its weekly and daily RSI into deeply oversold readings. The impact on its price would not be pretty. When I look at these charts and those of several indexes mentioned below--COMPX, SOX, OSX, RUT, TNX, VIX--I keeping coming back to only one conclusion: the markets are set for more severe weakness in coming days. Today's Market: The ever-witty and undeniably knowledgeable Jeff Bailey gave us a good summary of this morning's key economic reports during his 1 pm intraday update. And I am hardly one to try to improve on his fine wordsmithing. Jeff noted that "the manufacturing sector grew in June for a fifth straight month, following 18 months of declines. The Institute for Supply Management (ISM) said its ISM Index rose to 56.2% from 55.7% in May, the highest reading since February 2000." Jeff went on to add that, "The employment component nearly reached the 50% level that would indicate hiring in the sector, rising to 49.7% from 47.3%. Economists say that this data may bode well for this Friday's release of non-farm payrolls and jobless data reports." The implications of all this is that the economy continues to chug along. Readings in the ISM data over 50% indicate that economic conditions are improving. The Dow generally anticipated these good economic readings, and moved higher just before the reports were released. After the news was out, though, investors were more interested in selling than buying, and the selling pressure began pulling most of the major indexes down with only two exceptions: homebuilding and the gold stocks. When the closing bell rang, many of the major indexes closed at or near their lows. The Dow dropped 133 points, finishing at 9110, while the S&P 500 shed 21 points, finishing the day at 969. The NASDAQ Composite was hit for a 4% loss, closing at 1404. And the Russell 2000 was no help today. It dipped a spot over 3.5%, dropping 15 points, closing at 448. As I discuss in the following section, today's weakness has set the stage for a fairly difficult July 4th holiday. Although I could certainly be fooled, the markets seem set for more weakness into the end of this week. If there was one item that seemed to weigh heavy on the markets today, it was WorldCom. Let's face it: this stock is old news, so how could it put a black pall over the entire market? WorldCom had been halted for the last 3 trading days, and when trading began today, the stock showed us that it was not going to lose its news value just yet: it immediately lost 90% of its value, trading down to $0.06 after receiving a de-listing notice from the Nasdaq. WCOME (their new trading symbol) set a volume record with over 1.5 billion shares traded; the NASDAQ set a record as well, with over 3.0 billion shares traded today. There were other events and announcements that helped shape the negative tone of today's trading. Here's a quick review of a few of them: Lazard Freres began coverage of Brocade (BRCD) with a "Sell" rating. Salomon Smith Barney beefed up their growing list of companies likely to present negative earnings pre-announcments. Included in the list are ALTR, CSC, TXN, XLNX, BBY, CC, CSCO, CSGS, DELL, IBM, MSFT, MU, and QCOM. Did they miss anybody? Siebel Systems (SEBL) had 2002 and 2003 earnings estimates cut by Bank of America. Prudential (PRU) was downgraded by Merrill Lynch. EDS (EDS) plunged $6.70 to $30.45 on continuing concerns about its earnings-related exposure to WorldCom. Investigators have not yet found any credible record that Martha Stewart had placed a stop-loss order with her broker as she has claimed, regarding her sale of IMCL stock. 3M (MMM) raised guidance this morning. Holy-Moly!--I guess these things still happen sometimes! Fairchild Semiconductor (FCS) was downgraded by Prudential Getting Ready For Tuesday, July 2nd. With the absence of any economic reports tomorrow, we can expect the market to start Tuesday's trading handicapped by today's miserable performance, and a variety of negative news items that snuck out after the close. I have a hard time understanding how the market might find a glimmer of hope on which to trade positively tomorrow. Things look simply depressing if you are bullish. We are grateful we are not. These are the announcements which came after today's close. You don't need to have an MBA to recognize the basic thrust of all this news: decidedly negative for Tuesday: MIPS Technology (MIPS) warned that it would have a greater loss in Q4 than originally expected. AmeriPath (PATH) said that it expects increased malpractice expenses over the next year; they lowered earnings guidance for Q3 & Q4 as a result. Grocer Supervalu (SVU)--after reporting lower than expected earnings--said that it would restate their earnings for the last three fiscal years. Now, I know a grocer is hardly one of the market's "generals." But this admission is likely to give investors one more reason to believe that executives with the morals of "Wall Street's" Gordon Gecko are now governing the entirety of the stock market. Airborne Freight (ABF) guided lower, slicing more than two thirds off previous EPS consensus. Office equipment maker Herman Miller (MLHR) reported better than expected earnings, although revenues fell 37%. Rational Software (RATL) lowered earnings guidance for its upcoming quarter. It was down about 20% in after-hours trading. You may recall that we had a short position in this stock last week, which we closed with a 16% gain. Dang, wish we were sill in it! With those late afternoon news items as a backdrop, here are my (clearly bearish) thoughts on a variety of indexes and sectors, and the way the might fare over the next few days. Ten Year Treasury Note Yields (TNX): The TNX finished today at 4.82%. Remember that we are using the TNX as a forecasting tool for the equity markets. The 4.90% - 4.95% level continues to be "resistance" and another decline to the 4.40% - 4.60% yield seems likely in coming days. Since the stock market has followed T- note yields, our reading on this is the more weakness in the equity markets is likely in coming days, and this weakness will push yields down again (and T-note prices up). US Dollar Index (DX00Y): The DX00Y closed today at 106.51. The Dollar may attempt to rebound to the 107.75 level over the next few days. In general, though, I think it is more likely that it will turn lower very soon, this time dropping quickly to about the 102 level. I expect a reading of 102 to be reached at about the same time that that the VIX reaches its top readings, and the Dow finds a meaningful bottom. The Market Volatility Index (VIX): The VIX rose to 30.58 today. The index continues to look like it will go higher in coming days, supporting our belief that the markets will trade lower. As readers may remember, I have been of the opinion that the VIX needs to hit the 38 - 42 level before we're likely to have a summer bottom established in the stock market. Although a move to that region remains possible, I'm going to back pedal a bit and suggest that a move to 34 -35 could also give us the market bottom for which we've been looking. The key, obviously, is the ability of the VIX to reverse sharply. Until we see a fairly sharp reversal in the index, it is going to work higher. The Dow Jones Industrial Average (INDU): The Dow ended today at 9110 If the Dow closes below 9000 in the next day or two, my expectation will be that a decline to 8600 - 8800 will be underway. If it were able to remain above 9000 on a closing basis, a rebound to either 1) 9450- 9500 or 2) 9800 would be possible over the next 1+ week. With all of my other bearish views, I am not a big fan of the 9450+ view. The Dow Jones Transportation Average (TRAN): The TRAN closed today at 2700. I said last Wednesday that a rebound in the TRAN to 2700 - 2725 was likely and that if it stalled and turned down at that level the TRAN was likely to then be headed back to the 2425 region. My view has not changed; thus far, the TRAN has stalled right in the 2700 - 2725 region. Airborne Freight's lowered guidance tonight has probably set the stage for the 2425 level. The NASDAQ Composite (COMPX): The COMPX finished today at 1404. My previous forecast that the COMPX would rebound to the 1450 - 1475 region and then turn down was fairly close to the mark; it reached 1486 before reversing sharply. Today's decline has now put the COMPX on a ledge and its looking down a the potential of a sharp plunge. The COMPX must rebound back above 1445 in the next day or two, or the likelihood of this plunge substantially increases. It will be very negative for the COMPX if it gaps down at tomorrow's open. As I have said previously, the index seems to be headed for 1250, or lower, before it has found a bottom. The Russell 2000 (RUT): The RUT closed at 448. I noted last Wednesday that the RUT had formed a potentially bullish pattern: double bottom with a bullish divergence on the RSI. I said that in order for this pattern to become operational, though, the RUT needed to trade above 470. It could not do this. Technically, the RUT now appears ready for another short-term decline that takes it to the 430 level. A decline to 405 cannot be dismissed. The Semiconductor Index (SOX): The SOX closed at 367. I said last Wednesday that 400 was resistance, and that a failed rally to this level was likely to produce much more misery for the index. It effectively failed in this region on Friday, and every indication tonight is that the SOX is ready to collapse again. If it cannot struggle back above 392 on Tuesday or Wednesday, another dive is likely. Don't expect the September lows to halt its decline, either. I would not expect the index to find a meaningful bottom until it has declined to at least the 127% Fibonacci retracement (of its Sept. 2001 - March 2002 advance). That level is 265. The Defense Industry Index (DFX): The DFX closed at 193. I have told you that the 200 level remains stiff resistance for this index, and the DFX was turned back down--again--at that level. A new round of weakness in DFX is at hand. Once the DFX is below 188, expect it to be pulled down another 6% to 177. The Dow Jones US Home Construction Index (DJUSHB): The Home Building Index closed at 383. Important support remains at 370. I said last week that if the index could begin trading above 380, it would suggest it was capable of a new short-term advance, to the 415 region. It is now ready to begin that advance; however, the weakness in the other sectors of the market should encourage traders to be extremely judicious with any long positions taken in this sector. The Oil Services Index (OSX): The OSX finished today at 91. I am bearish on the OSX as long as it remains below 105--and it seems like it will for quite some time. The index has formed a large head and shoulders top from which it began to break down last Friday. Unless the index returns to a reading greater than 95-- immediately--it will be headed to the 79.5 level, or lower. The Gold and Silver Index (XAU): The XAU closed today at 75.20. I remain bearish on the XAU until it is back above 85--and I don't expect to see that level for a while. Could I be wrong? Sure, but the index would need to rebound back above 80 in the next few days in order to avoid a short term drop to about 65. ------------------ Keep those trading seat belts tightened! Siegfried Brian Barger, Editor brian@PremierInvestor.net ================================================================== 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 --------------------------------- Abbott Laboratories, Inc. - ABT - close: 37.30 change: -0.35 WHAT TO WATCH: The pharmaceutical sector, as illustrated by the DRG Index, has been in a harsh, extended decline since March. Stocks like Merck, Johnson and Johnson, Pfizer, Abbott Labs-- among others--have suffered deep pullbacks during this period. Abbott has been slowly moving higher since a steep sell-off in the stock during the June 10th - June 12th time period. ABT's deteriorating technical condition suggests to us that it will break down, and out of, this three-week consolidation in coming days. Traders looking to short ABT may want to wait until it is trading below recent lows of $35.76. An initial stop above Friday's high ($39.85) would be prudent, though traders would want to move that stop down aggressively as the stock begins its decline. --- Alberto Culver - ACV - close: 48.30 change: +0.50 WHAT TO WATCH: ACV had a rough go of it in late June, but shares recently found support at the 200-dma ($48.10). A testament to the strength of this support is the fact that ACV actually finished with a 1% gain today - not too bad, considering the Dow Jones gave back 133 points. A broader market rebound could fuel a further rise in the stock's price. With this in mind, we think ACV now offers a favorable risk/reward setup for a bullish trade. Short-term traders could take positions at current levels with a stop just under the relative low of $47.70. We'd be targeting an upside move to the $52-$53 region, although we will concede to the bears that the $51 to $53 levels are pretty congested. Alternatively, if ACV trades under $47.50, shorts could target a move to the $45 level for a quick move. --- Aetna, Inc. - AET - close: 46.51 change: -1.46 WHAT TO WATCH: After hitting a 52 week high on June 19th, Aetna began a slide that now has the stock struggling to move back above its 50-dma. The stock's price pattern is mirroring the HMO Index (Morgan Stanley Health Care Payors Index) which began pulling back after producing a double top on its weekly chart that was accompanied by a bearish RSI divergence. AET's 50 dma is hinting at potential weakness, and traders will want to see if the stock can move back above this resistance in coming days. A move below June 26th's low of $45.01 is likely to indicate that AET has indeed rolled over. If this occurs as we think it will, we'll be looking for a decline to the $40.00 to $38.50 support region, or possibly the 200-dma near $37.00. --- Automatic Data Proc. - ADP - close: 42.21 change: -1.34 WHAT TO WATCH: Shares of this business service company tumbled to a new multi-month low today. At this point it appears likely that the stock will test its September low of $41.00. If this level fails, ADP could quickly drop into the $35-$40 region. Aggressive traders could take bearish positions on a move under today's low of $42.00, while others may want to wait for a break under $41.00. This would be a speculative play, based purely on the technical breakdown. --- Brocade Communications - BRCD - close: 16.20 change: -1.28 WHAT TO WATCH: Lazard Freres isn't exactly one of the bigger names when it comes to Wall Street advisors, but investors seemed to pay a lot of attention when the firm issued a "sell" rating on BRCD today. Shares of the storage company fell 7.3% and reached a new multi-month low of $16.16. Other than possible psychological support at $15.00, there's not much to prevent a retest of the September lows near $12.50. Aggressive traders could target a decline below $16.00, which would create a double- bottom sell signal on the p-n-f chart. --- Central Parking Corp. - CPC - close: 22.00 change: -0.85 WHAT TO WATCH: After slicing downward, and through, its flat 50- dma on June 4th, parking lot manager CPC has been primarily trading sideways between $21.50 - $23.00. We think the stock is preparing to break down out of this consolidation in coming days. A move below the June 26th low of $21.60 is likely to start this process, pulling the stock down initially to the 200-dma (and psychological support) at about $20.00. We think it's possible that CPC is likely to go down even further to a key retracement at $18.30 before it will be ready for a new upward phase. --- DKWD - D & K Healthcare Resources - close: 30.50 change: -4.76 WHAT TO WATCH: As you might suspect, today's 13.5% decline in shares of DKWD created some severe technical damage. The stock fell below the 50-dma (which had previously provided support) and also violated historical support at the $32.00 level. There wasn't any company-specific news to explain the decline, but shares may have been pressured by auditing concerns revolving around CAH, a fellow medical supplier. Short entries could be evaluated on a failed rally back to $32, while aggressive traders could actually target bullish positions on a rebound from the 200-dma ($28.91). --- Lennar Corporation - LEN - close: 63.30 change: +2.10 WHAT TO WATCH: Homebuilder Lennar underwent a considerable consolidation from March until mid-June. A few days ahead of its June 19th earnings report, though, the stock began moving briskly upward, closing above its 50-dma. It shot upward to all time highs after beating earnings estimates and raising guidance for FY02 on the 19th. Today, LEN broke out of a small post-earnings consolidation, doing so on strong volume. Long positions in the stock can be initiated at current levels, though a pullback to support at $61.00 is very possible, and patient traders might look for this to occur. Once a long position is assumed, a sell stop placed just below the $57.00 support region would be a good idea. The rising 50-dma sits at $55.80, and an alternate stop level would be just below this support. Ideally, a position in this stock would be coordinated with a rebounding stock market. --- LIZ Claiborne - LIZ - close: 31.14 change: -0.66 WHAT TO WATCH: Since late April, LIZ has been mired in a relatively gentle consolidation that has seen it trade on either side of its rising 50-dma. In the last week, the stock has been struggling to stay above the 50-dma, and subsequently break out of this consolidation--and to new highs. Volume has been improving in the recent week, and we think there is a good chance the stock will break out soon. However, traders should not take long positions until the stock is above its recent high of $32.46. Sell stops could be initially placed at about $29.95; this level is below support, the 50-dma, and psychological support at $30.00. --- Intl Game Tech - IGT - close: 54.20 change: -2.50 WHAT TO WATCH: Mirroring similar declines in fellow gaming stocks MGG and HET, IGT has spent the past month trending lower. The stock was hit for a 4.4% loss today and is danger of falling below the near-term low of $53.91. Short entries could be targeted on a move under this level. Although support may emerge near the April low of $53.35 or the psychologically important $50 level, we think IGT could eventually reach the bottom of its descending regression channel near $46. This outlook is not based on any particular technical indicator, but rather on stock's steady downtrend and inability to string together more than 2-3 days of gains. P-n-f chartists, however, may want to note that a trade at $53.00 will create a double-bottom sell signal. --- Invitrogen Corp - IVGN - close: 28.83 change: -3.18 WHAT TO WATCH: The BTK.X biotech index is not a picture of health. It was whacked for a 7.3% loss today and is trading at fresh multi-year lows. If there's a bottom in sight for the sector, we sure as heck don't see it! IVGN underperformed the index and dropped almost 10% today on the strongest volume in nearly a month. This did some severe technical damage, as shares fell under what had been reliable support at $30.00. The move also produced a double-bottom sell signal on the p-n-f chart. Considering the technical breakdown and continued weakness in the biotech group, we suspect IVGN could reach the $25 level in a matter of days. Short positions can be evaluated on a break below today's low of $28.69. Don't want to risk playing a stock that could suddenly pop on positive drug news? Take a look at BBH--that's the Biotech HOLDR--which looks like a short below $76.60. =============== Play-of-the-day (New High-Risk/Reward BEARISH Play) =============== QLogic Corp - QLGC - close: 35.89 change: -2.21 stop: *text* Company Description: QLogic builds semiconductor products, and provides leading companies like IBM, Dell, Compaq and others with its products. Why We Like It: We can be brief here: the semiconductor sector is a mess. The SOX (Semiconductor Index) is technically weak, as are most of its component stocks. The index is displaying extremely weak daily and weekly RSI's, and the chances are good that the SOX will experience sharp selling in coming days. Although QLogic has been the recent beneficiary of positive comments by brokerage firms--like today's Thomas Weisel's positive comments on its business outlook--the stock is technically weak like its sector. It has been trading beneath both its 50-dma and 200-dma since mid-June. Unlike the SOX and stocks like INTC or LSI, though, GLGC has not suffered the extreme selling that has hit its sector. It has more room to fall, we think, than some of the other semiconductor-related stocks. Our strategy will be to short QLGC on a move below its recent low of $34.68. Please note, though, that we will not short QLGC if it gaps below $34.25. Once we are in the play an initial buy stop will be placed at $40.27, which is above both near term resistance and psychological support at the $40.00 level. We are looking for the stock to decline to the $24.00-$25.00 region in coming weeks before attempting a serious rebound. Picked on June xxth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 08/06/02 (unconfirmed) ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright © 2001 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Monday 07-01-2002 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/g01b_2.asp ================================================================= In section two: Stock Bottom / Active Trader Triggered Plays: RCII, SPF (bullish) High Risk/Reward New Bearish Plays: QLGC Stop Adjustments: CCK, PLCM (bearish) Closed Bullish Plays: AMD, ORCL Split Trader ACMR: 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) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== =============== AT Play Updates =============== Triggered Long Plays -------------------- Rent-A-Center - RCII - close: 55.90 change: -2.11 stop: 55.24 Our long play in RCII was activated this morning when shares hit our entry trigger at $58.13. By using a trigger, we were hoping to decrease the likelihood that we'd get caught in a selloff if the stock consolidated some of its gains from last week. Unfortunately the bullish momentum quickly faded after the first half-hour of trading. Shares reversed course and finished the session with a 3.6% loss. Despite today's decline, RCII continues to look technically bullish. If the broader market rebounds tomorrow we'd expect the stock to move back over its 50-dma at $57.42. Considering that our stop is set at $55.24, relatively low-risk entries could be targeted on a bounce from current levels. Keep in mind that given the current market environment, we'd hesitate to try and catch stocks while they are falling and would prefer to see some sign of strength. A move back over $58 is probably the best bet with RCII. Picked on July 1st at $58.13 Change since picked: -2.23 Earnings Date 07/29/02 (unconfirmed) --- Standard Pacific - SPF - close: 34.41 change: -0.67 stop: 31.70 The necessary conditions for going long on SPF were met this morning when the stock rose above $35.40. Shares hit a new 52- week high before a declining Dow Jones helped to sink SPF for a 1.9% loss. On Tuesday we'll be watching for SPF to move over today's high of $35.73. New entries can be considered on a break above this level or on a pullback to the 50-dma at $33.23. Remember that our stop is located at $31.70. Picked on July 1st at $35.41 Change since picked: -1.00 Earnings Date 07/23/02 (unconfirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ============ HR New Plays ============ ----------------- New Bearish Plays ----------------- QLogic Corp - QLGC - close: 35.89 change: -2.21 stop: *text* Company Description: QLogic builds semiconductor products, and provides leading companies like IBM, Dell, Compaq and others with its products. Why We Like It: We can be brief here: the semiconductor sector is a mess. The SOX (Semiconductor Index) is technically weak, as are most of its component stocks. The index is displaying extremely weak daily and weekly RSI's, and the chances are good that the SOX will experience sharp selling in coming days. Although QLogic has been the recent beneficiary of positive comments by brokerage firms--like today's Thomas Weisel's positive comments on its business outlook--the stock is technically weak like its sector. It has been trading beneath both its 50-dma and 200-dma since mid-June. Unlike the SOX and stocks like INTC or LSI, though, GLGC has not suffered the extreme selling that has hit its sector. It has more room to fall, we think, than some of the other semiconductor-related stocks. Our strategy will be to short QLGC on a move below its recent low of $34.68. Please note, though, that we will not short QLGC if it gaps below $34.25. Once we are in the play an initial buy stop will be placed at $40.27, which is above both near term resistance and psychological support at the $40.00 level. We are looking for the stock to decline to the $24.00-$25.00 region in coming weeks before attempting a serious rebound. Picked on June xxth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 08/06/02 (unconfirmed) =============== HR Play Updates =============== Stop Adjustments ---------------- Crown Cork Seal - CCK - close: 6.15 change: -0.70 stop: 7.01 *new CCK was hammered for a 10.2% loss today on no discernable news. Bulls may have decided to throw in the towel after shares failed to move over the $7.00 level. The Premier Investor newsletter is currently up 15.8% on this play, and short-term or conservative traders may want to consider challenging CCK with a very tight stop. We're moving ours to $7.01 - safely above today's high. An alternative stop loss for traders looking to protect additional gains would be $6.61, or just above the afternoon highs for CCK. Also note that we're raising our official profit- target to $5.56 in order to stay above the rising 200-dma. This means we will exit the play with a gain if shares trade at or below $5.56. Picked on June 20th at $7.31 Change since picked: +1.16 Earnings Date 07/18/02 (unconfirmed) --- Polycom - PLCM - close: 11.12 change: -0.87 stop: 12.01 *new* Shares of PLCM dropped 7.2% today en route to a new 52-week low. In light of this development, we're going to tighten our stop to $12.01, three cents above the intraday high. New aggressive short entries could be considered on Tuesday if PLCM falls under $11.00, but take note that we'll probably see some short-covering if/when shares reach the $10.00 level, which would also be a good spot for short-term premier readers to consider taking profits. Picked on June 27th at $11.80 Change since picked: +0.68 Earnings Date 07/18/02 (unconfirmed) =============== HR Closed Plays =============== -------------------- Closed Bullish Plays -------------------- Advanced Micro Dev. - AMD - cls: 9.14 chg: -0.58 stop: 9.47 Due to the volatile nature of the semiconductor group, we elected to place a relatively tight stop on AMD after its strong Friday rally. This level ($9.47) was violated in morning trading as shares sank lower with the semiconductor index (SOX.X). Our play was closed for a gain of 22 cents, or 2.3%. Although it's possible that AMD could eventually fill in the June 19th gap, traders need to be aware of psychological resistance at $10.00. This level also roughly coincides with the top of the descending regression channel that has dictated AMD's range since early March. Considering that the SOX.X appears to be headed for a test of its September Lows near 345, we think odds are good that AMD will continue to move lower in the near-term. Bulls can take heart in the fact that today's 5.9% decline was backed by the lightest volume in over two weeks. Of course, this may simply be a function of the typical pre-holiday malaise on Wall Street. Picked on June 28th at $9.25 Gain since picked: +0.22 Earnings Date 07/17/02 (unconfirmed) --- Oracle Corp. - ORCL - cls: 9.00 chg: -0.47 stop: *text* Last week we added ORCL as a long play in an attempt to capture a breakout over the $10.00 level. Although the stock made a valiant effort to accomplish this feat, it just wasn't able to buck the negative trend in the tech sector. Shares fell by nearly 5% today and closed just above the 50-dma at $8.93, which was also the intraday low. Although ORCL may bounce from this level, it'll have a tough time rising in the face of a plummeting NASDAQ. The daily stochastics (5,3,3) are beginning to drop from the overbought region, suggesting more weakness ahead. Traders still feeling bullish on software may want to check out MSFT, which has held up relatively well versus the NAZ. If you have not noticed, Premier was never triggered in a long play in ORCL as the stock never traded above our $10 trigger point. Picked on June xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 06/18/02 (confirmed) ================================================================== Split Trader (ST) section ================================================================== Split Announcements ------------------- A.C. Moore Crafts a 2-for-1 Stock Split Prior to the opening bell this morning, A.C. Moore Arts & Crafts, Inc. (NASDAQ: ACMR) announced that its Board of Directors had authorized a 2-for-1 stock split. The additional shares will be paid on July 31, 2002 to stockholders of record on July 15, 2002. This marks the first split for ACMR since it began trading in 1997. The stock has gained 60% year-to-date and is currently trading near its all-time high of $48.60. ACMR closed at $47.35 on Friday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=ACMR About the company A.C. Moore operates arts and crafts stores that offer a vast selection of arts, crafts and floral merchandise for a wide range of customers. The Company operates 65 stores in the eastern United States. (source: company press release) ================== Trading Ideas ================== This section contains stocks that meet criteria which may make them of interest to long and short side traders. These are not recommendations, nor have they been reviewed by PremierInvestor editors for investment potential. However, each of them has technical and fundamental characteristics that make them worthy of further review by traders and investors looking for fresh ideas. New stocks will appear daily following the market close. Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change AGY Argosy Gaming Co 29.00 +0.60 UIL UIL Holdings 56.35 +1.89 JOSB Jos A Banks Clothiers 18.39 +0.57 SGDE Sportsman's Guide Inc 9.55 +0.61 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change BYBI Back Yard Burgers Inc 12.22 +1.07 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change SIAL Sigma-Aldrich Corp 51.35 +1.20 LEN Lennar Corp 63.30 +2.10 NWN Northwest Natural Gas 30.03 +1.28 HARB Harbor Florida Bancshares 24.40 +3.59 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change LLY Eli Lilly & Co 53.76 -2.64 CAH Cardinal Health Inc 57.30 -4.11 ADP Automatic Data Processing 42.21 -1.34 EDS Electronic Data Systems 30.45 -6.70 NOC Northrop Gruman 118.19 -6.81 FD Federated Dept. Stores 37.73 -1.97 CSC Computer Sciences Corp 41.68 -6.12 DGX Quest Diagnostics Inc 80.60 -5.45 ABC AmerisourceBergen Corp 71.19 -4.21 HOT Starwood Hotel & Resort 31.45 -1.44 GPC Genuine Parts Co 33.63 -1.24 LAMR Lamar Advertising 32.95 -4.26 FBN Furniture Brands Intl 29.00 -1.25 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change PIXR Pixar 40.61 -3.49 SR The Standard Register 32.25 -1.94 KNGT Knight Transportation 20.77 -2.42 HBHC Hancock Holding 62.41 -4.97 RAS Resource Asset Invest Tr. 21.74 -1.99 ================================================================= 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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