PremierInvestor.net Newsletter Tuesday 07-02-2002 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/g02b_1.asp ================================================================= In section one: Market Wrap: Grrrrrrowl! Market Sentiment: How Low Can It Go? Play-of-the-Day: Accelerating Losses ----------------------------------------------------------------- U.S. Market Numbers ----------------------------------------------------------------- MARKET WRAP (view in courier font for table alignment) ----------------------------------------------------------------- 07-02-2002 High Low Volume Advance/Decline DJIA 9007.75 -102.00 9135.82 8960.54 1.71 bln 687/2334 NASDAQ 1357.85 - 46.00 1396.25 1356.03 2.66 bln 887/2630 S&P 100 470.11 - 8.85 479.59 468.24 Totals 1564/4964 S&P 500 948.09 - 20.56 968.65 945.54 RUS 2000 432.84 - 14.89 447.73 432.53 DJ TRANS 2619.88 - 80.00 2709.01 2617.11 VIX 33.69 + 3.13 34.64 31.33 VXN 59.57 + 2.12 61.93 58.95 TRIN 2.33 PUT/CALL 1.08 ----------------------------------------------------------------- =========== Market Wrap =========== Grrrrrrowl! It was a sea of red across my trading screen today, with one exception. The U.S. Dollar Index (dx00y) 106.80 +0.27% showed the U.S. Dollar gaining marginal ground against the foreign currencies, but not nearly enough to hold back a tide of selling. The most notable impact the modest gains in the dollar had in today's market was to precious metals stocks, which found the Gold/Silver Index (XAU.X) 70.27 -6.5% leading sector declines. That's right! The one sector that broader market bears felt might be the "big winner" on a total market collapse, found traders scrambling to salvage any type of profit left in a stock and selling the group. As marginal as the U.S. Dollar's gains have been the last two sessions, "gold bugs" appear to be abandoning their favorite names. Gold/Silver Index Chart - Daily Interval I don't see any bearish plays in the precious metals sector in the PremierInvestor.net play list, but I'd look to start implementing some bearish trades in this group should the U.S. Dollar continue to stabilize and the XAU.X rallies back above the $73.61 level near-term. In past trading, I've noted on an intra-day basis that gold stocks tend to lead the commodity (up and downs). I see this again today as Gold stocks (the underlying equities) outpaced declines in the futures market. As such, I use the futures as "confirmation" of a move. December Gold Futures (gc02z) - Daily Interval Before a trader starts getting overly bearish on gold stocks (the equities), I'd want to see a break of upward trend in the futures market of the commodity itself. After all, this is what the gold producers revenues/profits will be based off of. Near-term, if December gold (the chart above) begins finding formidable resistance at the 320 level, look to enter some partial short positions in gold stocks that may rally due to some short- covering. If December gold breaks below the $308 level, that could bring on a good flushing longer-term to $295. It's interesting to note that the current bearish vertical count for the December futures contract is currently $295 and ties in rather well with the above 61.8% retracement bracket. Subscriber's may want to note that Barrick Gold (NYSE:ABX) $18.44 -3.85% traded "strong" RELATIVE to the Gold/Silver Index (XAU.X) 70.27 -6.55%. In the past, I've mentioned that Barrick Gold (ABX) is a "hedger" and that it will hedge future production by selling gold futures short. In essence, it is not unlikely that Barrick may actually be selling the December Gold Futures (gc02z) today at $315/oz. Then, when December expiration rolls around, if they sold 1,000 oz. worth of futures at today's $315.40 level, they would have to deliver 1,000 oz. of gold on that contract. If gold prices were to fall to $295/oz, then they were "hedged" on 1,000 oz and can either deliver against the contract, or buy it back for a gain, should gold prices fall below the $315.40 level. Conversely, should demand be outstripping supply and a hunger for the underlying commodity continue, then any "hedging" and selling at $315.40 would have somewhat of a negative impact should gold prices rise by December expiration. Current action looks bearish for gold stocks and if we were to see Gold futures start finding resistance at $320 or break its upward trend, then gold stocks themselves become suspect. One stock I'd look to short is AngloGold (NYSE:AU) $25.47 -7.68% on a rally back near the $28 level. This was a stock I personally traded bullish as well as did the PremierInvestor.net play list last week. While the stock experienced short-term bullishness while the U.S. Dollar weakened, the stock never could break out of a consolidation base from $28-$30. This hints that the stock is out of favor in the group and a likely bearish candidate on rallies. If December Gold can stay below the $320 level, then I'd look to short AU on any type of short-covering rally. May be a "heads up" for bears If you're short some stocks, then chances are you're not too disappointed with today's action as the Dow Industrials (INDU) fell 102 points (-1.12%), the S&P 500 dropped 20 points (-2.12%) and the broader NASDAQ Composite shed 45 points (-3.27%). I would at least use today's bearishness in gold stocks as a reason to NOT be complacent with short positions in general (gold stocks or otherwise). Again, this had been a group that traded rather strong despite broader-market bearishness. I'm sure as heck not going to use the bearishness we're seeing in gold stocks to get bullish on the broader-markets. Not yet at least. But some of the negativity we see in gold may be a sign that the MARKET looks for the U.S. Dollar to firm and any continued firming or recovery above the 108.50 level could lift the broader markets. It would be ludicrous to think that a 2-day firming in the U.S. Dollar Index (dx00y) is the beginning of a longer-term move, but to think that the U.S. Dollar Index (dx00y) can't bounce back to the 111 level should have any bear thinking again. While a U.S. Dollar rebound by itself wouldn't be enough in my book to have stocks staging any type of major rally, a recovering U.S. dollar could lift some clouds that have weighed on stocks since January and acted a bit like a sledge hammer in recent weeks. As such, we're going to be tightening down some stops in our bearish profiled trades. Good news for Polycom bears! Bearish traders in Polycom (NASDAQ:PLCM) $10.90 -1.97% from our bearish play list see that the stock broke to yet another 52-week low today. Bearish traders were treated to a tasty dessert in after-hours trading when the company warned on its upcoming 2nd quarter earnings saying that revenues for the quarter are going to be between $124-$126 million and pro forma earnings will be between $0.13 and $0.14 a share. Both were well below consensus estimates of $140.4 million and $0.20 EPS. Polycom Chart - Daily Interval We've been taking some 5% and 6% "lumps" from the bullish side of our play list in recent weeks as the broader market averages bleed red and the river runs south. With that in mind, we're going to continue to be aggressive with our stops when we get some gaps lower. It looks like PLCM is going to gap lower near $7.50 tomorrow morning and from profiled $11.80, we don't think a trader should risk a 36% gain (if stock opens at $7.50). As such, we're going to simply suggest that traders monitor tomorrow morning's open, add $0.35 to the opening trade and place a stop profit order at that level. For instance, if the stock does open at $7.50, then a stop at $7.85 could be placed. Market Internals The bullish % charts still tell a story of internal weakening, but some large amounts of risk are slowly being removed. Today's action leaves the more volatile and faster changing NASDAQ-100 Bullish % ($BPNDX) still in "bear confirmed" status, but now at just 10%. Yes, it can always go to a 0% reading like it did back in September, but "market risk" runs high for bearish traders and gains need to be protected and losses cut quickly in this part of the market. The still rather narrow, but less technology exposed S&P 100 Bullish % ($BPOEX) fell to 33% today, from yesterday's reading of 35%. In essence, this group of stocks saw a net loss of 2 stocks to sell signals on their charts. This market is also in "bear confirmed" status, but has yet to reach a more oversold level below 30%. Still defensive for any bullish trades, but lots of market risk has been reduced from March's 78% reading. The broader yet S&P 500 Bullish % ($BPSPX) fell to 36.47% bullish today, down from Monday's reading of 38.88%. We are well off of the March highs and "overbought" reading of 76%, but still far enough from the September low readings of 16% to understand there's still some downside risk present. And the broadest of broad indicators still finds a net gain of stocks to new sell signals in the NYSE Composite Bullish % ($BPNYA) and NASDAQ Composite Bullish % ($BPCOMPQ). The NYSE Bullish % ($BPNYA) fell to 46.8% from Monday's 48.58% reading and remains in a "bull correction" status. In September, this indicator reached a low level of 26% before reversing up to 64% in May. It takes EXTREME levels of bearishness to push this broader market indicator below the 34%. The NASDAQ Composite Bullish % ($BPNYA) fell to 38.14% from Monday's reading of 39.41%. There's still some downside risk to be realized here as this market holds more technology stocks and has the ability to reach more oversold levels of 30% on a historical basis. September low reading was 22%, while January's most bullish reading came at 56% and March's reading of 54%. If this were a football game, then the "bears" have the ball right now and look to be at mid-field. What can turn things around? I still think the only danger for bears right now are other bears coming in and covering some short positions in stocks that are just simply technically oversold and present too much risk to let profits slip away. The only thing I see that could create some type of prolonged rally would be for continued strengthening in the U.S. %, but that strengthening would have to be coupled with selling in U.S. Treasuries, where the cash sold from Treasury bonds would then potentially rotated to equities. That sure has heck didn't happen today though did it? Say what you will about CNBC and sometimes lack of suitable market commentary from time to time, but their analyst in the Treasury pits (Rick Santelli) really does give some good insight into things. He was almost holding back some laughter today, but you could really sense the excitement in his voice when the benchmark 10- year YIELD ($TNX.X) 4.74% was slipping lower early in the session. I'm paraphrasing a bit, but he was eluding to the action in the Treasuries as rather "nonsense" but the buying in Treasuries was purely based on investor's "fear of equities" and bond traders were buying bonds because investors were giving them money to buy them! In other words, even though it may have been retail customers plowing cash into bonds today, the demand was there and drove prices higher (YIELD lower as a result). Once again, stocks really seemed to suffer the consequences and were starved for cash. As long as the 10-year YIELD stays back below the 4.8% level, I think bearish equity traders will continue to find some success. Tomorrow's economic data The MARKET seems to have a mind of its own and one has to wonder if the economic data gets listened to anymore. Monday's stronger-than-expected ISM data sure didn't seem to. Nonetheless, tomorrow's economic data has initial jobless claims due out before the opening bell. Consensus looks to be 388K for the week ended June 29th and it will probably take every bit of that if not a number near 360K to get some attention. Then at 10:00 AM ESM, the ISM Services report is due out. Consensus is for a reading of 58.2%. While this is an important number, the ISM report from Monday leaves little surprise here and most economists still put more focus in the industrial side of things, which was reported on Monday. An "industrial" we'll get when May Factory Orders are released at 10:00 AM EST. Consensus is for a 0.6% gain, up marginally from a previous gain of 0.4%. Jeff Bailey Senior Market Technician PremierInvestor.net ================ Market Sentiment ================ How Low Can It Go? By Eric Utley I bet that question is on the minds of a lot of investors these days. Let’s take a look at some of the numbers being run through the minds of investors tonight. The Nasdaq-100 (NDX.X) in triple digits at 964, the first time it’s closed in triple digits since January of 1998. The S&P 500 (SPX.X), of course, is in triple digits, too. But the level that concerns technical analysts most is 940, which is near where the index closed Tuesday. The 940 level is being watched by most chartists on the Street for its implications of a break of the long-term head and shoulders that is so obvious on the weekly chart. IBM (NYSE:IBM) last traded at $68 and change; Intel (NASDAQ:INTC) was going for $16.50; a share of Lucent (NYSE:LU) costs you a buck or two; a share of WorldCom (NASDAQ:WCOME) sells for a dime these days. It’s simply amazing to think from where we’ve come in the last two and a half years. Yet for one reason or another, the public keeps hope alive. The public refuses to throw in the towel. And until the public quits, until all hope is lost for stocks, until stocks is a four-letter word, the market is going to go lower. We’ve talked about the need for capitulation in this column. Indeed, the signs have been in the numbers, but each time they’ve proven premature. The readings in the ARMS Index (INDEX:TRIN) are once again in extreme overbought territory, but this indicator has a lot of credence this year in my opinion. The bullish percent figures are dropping to near historic lows, with the Nasdaq-100 bullish percent ($BPNDX) a stock away from single digits. The advancing versus declining volume was horrendous Tuesday. Some 90 percent of Tuesday’s volume was down volume. And forget about the new high/new low index. All signs point to the inevitable washout, but each time the market stares into the abyss, it’s brought back by that lingering hope of a rally. I’m not smart enough to predict if or when a capitulation will come, so thereafter the market can begin the healing process. It seems we’re getting closer with each passing day. But I’m starting to question whether or not we get a capitulation in this bear market. John Bollinger, one of the few CNBC guests that I pay attention, held an interview last week in which he suggested that this bear market would not end with a big washout event. I’m starting to agree with him. A slow bleed lower seems like the course ahead. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 11350 52-week Low : 8062 Current : 9008 Moving Averages: (Simple) 10-dma: 9241 50-dma: 9791 200-dma: 9811 S&P 500 ($SPX) 52-week High: 1316 52-week Low : 945 Current : 948 Moving Averages: (Simple) 10-dma: 986 50-dma: 1049 200-dma: 1099 Nasdaq-100 ($NDX) 52-week High: 2071 52-week Low : 1089 Current : 964 Moving Averages: (Simple) 10-dma: 1034 50-dma: 1185 200-dma: 1397 Bank ($BKX) The BKX was the best performing sector on my list today. It lost 1.37 percent for the day. Pretty sad state of affairs. The BKX was propped up by J.P. Morgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Banc of America (NYSE:BAC). 52-week High: 924 52-week Low : 691 Current : 804 Moving Averages: (Simple) 10-dma: 825 50-dma: 865 200-dma: 844 Gold ($XAU) The XAU was the worst performing sector during Tuesday’s slide in stocks. Not even the once defensive gold stocks could muster a bid. They got slammed for 6.55 percent! Leading downside movers included Gold Fields (NYSE:GFI), Agnico Eagle Mines (NYSE:AEM), Anglogold (NYSE:AU), Harmony Gold (NASDAQ:HGMCY), and Placer Dome (NYSE:PDG). 52-week High: 89 52-week Low : 49 Current : 70 Moving Averages: (Simple) 10-dma: 76 50-dma: 79 200-dma: 64 ----------------------------------------------------------------- Market Volatility The VIX finished much higher relative to the VXN Tuesday. The VIX gained more than 10 percent, while the pop in the VXN was good for just under 4 percent. The key here is if the two can take out their relative highs hit last week. CBOE Market Volatility Index (VIX) - 33.64 +3.08 Nasdaq-100 Volatility Index (VXN) - 59.59 +2.14 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 1.08 561,563 606,082 Equity Only 0.92 418,184 382,308 OEX 1.64 26,742 44,034 QQQ 0.86 55,355 47,345 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 47 - 2 Bull Correction NASDAQ-100 10 - 3 Bear Confirmed DOW 30 + 0 Bull Alert S&P 500 36 - 2 Bear Confirmed S&P 100 33 - 2 Bear Confirmed 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 1.67 10-Day Arms Index 1.76 21-Day Arms Index 1.49 55-Day Arms Index 1.39 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 804 2468 NASDAQ 881 2598 New Highs New Lows NYSE 50 220 NASDAQ 33 304 Volume (in millions) NYSE 1,805 NASDAQ 2,718 ----------------------------------------------------------------- Commitments Of Traders Report: 06/18/02 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 Get this, S&P commercials grew less bearish by a wide margin last week. They brought in their net short position by about 18,000 contracts. Not by surprise, small traders grew less bullish by about 12,000 contracts. Commercials Long Short Net % Of OI 06/04/02 369,298 440,027 (70,729) (8.6%) 06/11/02 388,751 457,018 (68,267) (8.1%) 06/18/02 437,530 487,956 (50,426) (5.4%) Most bearish reading of the year: (111,956) - 3/6/02 Most bullish reading of the year: ( 36,481) - 10/16/01 Small Traders Long Short Net % of OI 06/04/02 167,713 58,885 108,828 48.0% 06/11/02 174,357 69,464 104,893 43.0% 06/18/02 181,178 88,517 92,661 34.3% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 114,510 - 3/26/02 NASDAQ-100 Nasdaq commercials eased off of their recent bullishness by adding back a few more shorts. Small traders went in the opposite direction by adding a few more longs than shorts. Commercials Long Short Net % of OI 06/04/02 47,875 39,100 8,775 9.3% 06/11/02 45,946 36,878 9,068 10.9% 06/18/02 54,816 49,169 5,647 5.4% Most bearish reading of the year: (15,521) - 3/13/01 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 06/04/02 12,162 21,420 (9,258) 27.2% 06/11/02 14,561 25,330 (10,769) 27.0% 06/18/02 20,883 29,153 (8,270) 16.5% Most bearish reading of the year: (10,769) - 06/11/02 Most bullish reading of the year: 8,460 - 3/13/01 DOW JONES INDUSTRIAL Dow commercials bought into the weakness last week to the tune of more than 3,000 contracts added to their net bullish position. Small traders made the money. They added to their net short position by more than 4,000 contracts. Commercials Long Short Net % of OI 06/04/02 20,564 16,169 4,395 11.0% 06/11/02 20,369 17,172 3,197 8.5% 06/18/02 25,995 19,115 6,880 15.1% 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 06/04/02 7,114 9,639 (2,525) (14.7%) 06/11/02 7,500 9,925 (2,425) (13.9%) 06/18/02 5,379 11,813 (6,434) (37.2%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01 ----------------------------------------------------------------- =============== PLAY-of-the-Day ((new Active Trader BEARISH play)) =============== XL Capital - XL - close: 81.61 change: -1.42 stop: *text* Company Description: XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis. As of March 31, 2002, XL Capital Ltd had consolidated assets of approximately $30.6 billion and consolidated shareholders' equity of approximately $5.5 billion. (source: company press release) Why We Like It: There's certainly no shortage of ugly-looking sectors in the current market environment, and the insurance group is no exception. Visual evidence of this weakness can be seen in the IUX.X insurance index, which suffered a hefty 2.5% loss today. The lack of historical data (the IUX did not trade from January- June) makes it tough to gauge support levels, but a break under 280 will take the index to all-time lows. XL showed up on our bearish radar screens tonight after it fell to a new multi-month low. Although the daily stochastics are already pinned at oversold levels, we believe the stock is poised for a more substantial breakdown. A glance at the daily chart for XL reveals that the stock is currently in a "fast-move" region dating back to last September/October, when shares exploded from $61 to $95 in less than a month. With shares trading at new relative lows, there's little to prevent XL from rapidly retracing some of these gains. The descending triple- bottom point-and-figure sell signal also portends more weakness in the near-term. Given the stock's steady decline, we don't expect the bulls to put up much of a fight at the $80 level. Our expectation is that XL will decline to the $70-$75 region over the next few weeks. Those who are wildly optimistic could target the September lows near $61, but it would probably take some catastrophic company- specific news for this to occur. We won't enter this play until XL falls below today's low of $80.90. If triggered, our initial stop will be located at $85.02. This is above both Friday's high and psychological resistance at $85.00. Mega-conservative traders could use a stop just above today's afternoon high of $82.07 and wait for a trigger under the $80 mark. Picked on July xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/29/02 ================================================================= 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. 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PremierInvestor.net Newsletter Tuesday 07-02-2002 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/g02b_2.asp ================================================================= In section two: Net Bulls Bearish Play Updates: AT, FDC Stock Bottom / Active Trader New Bearish Plays: ABT, FLR, XL Bullish Play Updates: N, SPF Bearish Play Updates: AIG, CBE, GR Closed Bullish Plays: RCII Closed Bearish Plays: ZLC High Risk/Reward Bullish Play Updates: SNE Bearish Play Updates: ALO, MYG, PLCM, PPL, QLGC Closed Bearish Plays: CCK 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 =============== -------------------- Bearish Play Updates -------------------- Alltel Corp - AT - close: 43.41 change: -1.43 stop: 47.47 The Combined Telecom Index (IXTCX) continues to trade downward almost on a daily basis, and today was not different. The IXTCX declined 4% today, and weakness in this index pulled most telecom stocks, including Alltel, down with it. But even with today's sharp decline, Alltel has now formed a potentially bullish double bottom on its daily chart, accompanied by a positive RSI divergence. Additionally, both recent bottoms occurred right at the key 161.8% retracement of the May 13 - May 28th advance. Still, some technicians prefer to see double bottoms a bit wider apart than this one for AT, which occurred four days apart. With the MACD still gaining speed, we could see the $40 level soon. However, given the broader markets incredibly oversold condition, a rebound in this stock is possible, we feel that it should be stopped by resistance in the $46.25-$47.00 region. Our current buy stop is above this while conservative traders could use the 10-dma as a stop ($46.67) and extremely conservative traders could use the $45.00 mark as place to consider stops but if you do, be prepared to exit on any market bounce tomorrow. We are setting our official short-term profit target at $40.50. Picked on June 26th at $44.50 Change since picked: +1.09 Earnings Date 04/25/02 (confirmed) --- First Data Corp - FDC - cls: 35.91 chg: -0.65 stop: 36.65 *new* Although the broader market continues to look weak, we are noticing that some stocks, like FDC, have established patterns that may allow them to reverse sharply over the next day or two. Specifically, FDC has now formed a potential double bottom on its daily chart. In order to protect the gains we have in this position, we're lowering our buy stop to a level just above today's high, and yesterday's close, $36.65. If we are stopped out, this will still provide us with a modest 3.8% gain. Additionally, we are adding a short-term official profit target of $34.30. This level is a good 80 cents above the key 61.8% retracement ($33.50) of FDC's extended September 2001 - April 2002 advance. We may rescind this in a few days; short term, though, we want to take profits in the event the broader market dives sharply lower, since such a decline may be followed by a sharp snap-back rebound. We would discourage new positions at this time, given the possibility of a short covering rally. Those traders who have a bit more faith in the bearish pattern developing for FDC may want to stock with wider stops and targets. The $38 level should continue to act as resistance as should the 200-dma currently at $38.25 but the $35 level is acting as support thus new shorts are probably best considered on failed rallies at $38 or breakdowns below $35.00. Once below $35, aggressive traders could target the $30 area. Picked on June 24th at $38.09 Gain since picked: +2.18 Earnings Date 07/11/02 (confirmed) ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============= AT New Plays ============= ----------------- New Bearish Plays ----------------- Abbott Laboratories - ABT - cls: 36.78 chg: -0.52 stop: *text* Company Description: Abbott Laboratories manufactures and sells a wide range of healthcare products and pharmaceuticals. Why We Like It: Abbott travels with some fairly ugly company--the Pharmaceutical Index (DRG) for one, as well as other drug stocks like MRK, PFE, and LLY. Each of these, possesses powerfully negative technicals, particularly their weekly RSI's, which are effectively pinned in oversold territory--and this is the region in which severe sell offs frequently occur. Surprisingly, ABT has so far been able to avoid the "water fall" declines that have hit other drug stocks in recent days. Granted shareholders are still looking at a 28% drop since ABT broke support at $50 in mid-May. We think ABT's "good fortune" is just about over, though, and it seems likely it will soon begin its own accelerated decline in price. Here's why: since June 12th ABT has been slowly meandering higher, building a pattern of higher lowers. While volume has been a lot higher than average during the last couple of weeks it has been nothing like the sharp spikes we have seen on the quick drops. Chart pattern recognition makes this look suspiciously like a bear flag (a slightly rising channel-like consolidation that breaks down into the preceding down trend). Once ABT breaks this pattern of higher lows, the sharp downward price acceleration evidenced by its weekly RSI is likely to kick in. The result: a "waterfall" decline in price that is fast, aggressive and painful. And we want to be there to short ABT when this breakdown occurs. Our strategy for shorting ABT is as follows: 1) short positions should be taken on a move below $35.85, which is just below its rising trend line, 2) we will not short ABT if it gaps below $35.50, and 3) once the short position is triggered, we'll use a buy stop placed a dollar above the break down point, and resistance, at $36.95. We are looking for a fairly quick decline to at least $32.00, which is at the bottom of its weekly regression channel as well as its lower Bollinger Band (5-wma, 1.7sd) on its weekly price chart. We plan to exit at our official price target of $32.25. Picked on June xxth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 07/11/02 (unconfirmed) --- Fluor Corp. - FLR - close: 36.46 change: -1.22 stop: *text* Company Description: Fluor Corporation provides a diverse array of engineering, procurement and construction services, as well as total asset management, to corporations on a global basis. Why We Like It: On the news front, Flour has been as quiet as a church mouse. No earnings pre-announcements. No downgrades. Accounting questions? Nope, nothing there either. Fundamentally, we don't have a knob on which to hang our short-inclined hat. But like so many of the other stocks we have profiled in Premier Investor in recent days--both as new plays and Watch List candidates--this stock is displaying a pattern that has broken down time after time in recent weeks. Since May 17th FLR has been oscillating higher, producing a pattern of higher lows. Our experience has been that when the trend line under these lows is pierced, the result is considerable price weakness. In the last two weeks FLR attempted on several occasions to break above its declining 50-dma, as well as its near-by flat 200-dma. It failed, and FLR now sits, once again, atop the rising trend line of higher lows formed since May 17th. The daily RSI has already broken its trend line; since this indicator will frequently break out, or down, a day or two before prices, we feel there is a very good chance that FLR will begin its breakdown within just a day or two. Our strategy will be as follows: 1) short positions should be assumed as FLR breaks below its trend line (that is, below $35.95), 2) but we will not short FLR if it gaps below $35.75, and 3) once short, we'll employ a buy stop at $37.36. We believe FLR is capable of declining to at least $32.00, and $30.00 is definitely not out of the question. Picked on July xxth at $xx.xx <- see text Change since picked: +0.00 Earnings Date 07/30/02 (confirmed) --- XL Capital - XL - close: 81.61 change: -1.42 stop: *text* Company Description: XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis. As of March 31, 2002, XL Capital Ltd had consolidated assets of approximately $30.6 billion and consolidated shareholders' equity of approximately $5.5 billion. (source: company press release) Why We Like It: There's certainly no shortage of ugly-looking sectors in the current market environment, and the insurance group is no exception. Visual evidence of this weakness can be seen in the IUX.X insurance index, which suffered a hefty 2.5% loss today. The lack of historical data (the IUX did not trade from January- June) makes it tough to gauge support levels, but a break under 280 will take the index to all-time lows. XL showed up on our bearish radar screens tonight after it fell to a new multi-month low. Although the daily stochastics are already pinned at oversold levels, we believe the stock is poised for a more substantial breakdown. A glance at the daily chart for XL reveals that the stock is currently in a "fast-move" region dating back to last September/October, when shares exploded from $61 to $95 in less than a month. With shares trading at new relative lows, there's little to prevent XL from rapidly retracing some of these gains. The descending triple- bottom point-and-figure sell signal also portends more weakness in the near-term. Given the stock's steady decline, we don't expect the bulls to put up much of a fight at the $80 level. Our expectation is that XL will decline to the $70-$75 region over the next few weeks. Those who are wildly optimistic could target the September lows near $61, but it would probably take some catastrophic company- specific news for this to occur. We won't enter this play until XL falls below today's low of $80.90. If triggered, our initial stop will be located at $85.02. This is above both Friday's high and psychological resistance at $85.00. Mega-conservative traders could use a stop just above today's afternoon high of $82.07 and wait for a trigger under the $80 mark. Picked on July xth at $xx.xx <- see text Gain since picked: +0.00 Earnings Date 04/29/02 =============== AT Play Updates =============== -------------------- Bullish Play Updates -------------------- Inco Ltd. - N - close: 21.78 change: -0.50 stop: 21.38 N looked technically strong last week but thus far hasn't been able to overcome the broader market weakness. Shares were hit with a 2.2% loss today, nearly doubling the decline on the Dow Jones. The stock trended lower for most of the session and finished near the worst levels of the day. On a more encouraging note, today's decline was not backed by strong volume. The bears may have trouble gaining much traction as long as shares remain above the 50-dma ($21.46). Aggressive traders can target new entries on a bounce from this level, but be sure to first confirm that the broader market indices are bouncing. Fighting the tape is usually a losing proposition. Picked on June 14th at $21.42 Change since picked: +0.36 Earnings Date 04/16/02 (confirmed) --- Standard Pacific - SPF - close: 32.30 change: -2.11 stop: 31.70 This long play was activated on Monday when SPF traded at $35.41. The company announced this morning that its June orders rose 75%, due in large part to acquisitions in Florida. That's the sort of fundamental strength that gave us a bullish bias on the stock. Investors, however, paid little heed to the strong numbers. SPF moved lower with the DJUSHB homebuilding index and gave back 6.1% to close under the 50-dma. Given the bearish turn in the MACD and daily stochastics, it appears likely that we'll be stopped out of this play within the next few sessions. A full-fledged short-covering rally in the broader market could save us from this fate, but until that occurs we would not be looking to open new positions. Ultra- aggressive traders could consider entries on a move above the 50- dma at $33.21. Picked on July 1st at $35.41 Change since picked: -3.11 Earnings Date 07/23/02 (unconfirmed) -------------------- Bearish Play Updates -------------------- American Intl - AIG - cls: 65.42 chg: -1.70 stop: 67.39 *new* AIG continues to be pressured by the top of its descending regression channel. Shares of the insurance company underperformed the Dow Jones on Tuesday and pulled back by 2.5% The bulls seemed to throw in the towel after AIG fell under the 50-dma at $67.38. Shares stair-stepped lower for the entire session and hit our entry trigger of $65.48 in the final half- hour of trading. Today's close was the lowest in over two weeks, and the stock now looks poised to fill its June 15th gap. A severe decline in the broader market (like the one we had today) could quickly send AIG to the bottom of its regression channel. We're going to set an official exit price near this region, at $61.26. Traders still looking to get short can wait for break under today's low of $65.31, or potentially better, wait for shares to trade under the $65.00 mark or consider another failed rally at the 50-dma ($67.36). Note that we're placing our stop just above this level, at $67.39. More patient traders should probably leave their stops above the top of the descending channel currently near $68.50 to $69.00. P-n-f enthusiasts may be interested to know that a trade at $65.00 will produce a triple-bottom sell signal. Picked on July 2nd at $65.48 Gain since picked: +0.06 Earnings Date 07/25/02 (unconfirmed) --- Cooper Ind. - CBE - close: 37.71 change: -1.51 stop: 40.01 *new* Much like Martha Stewart's career, CBE appears to be building downside momentum. Shares have trended lower following Friday's bearish reversal, and today's 3.8% decline resulted in the lowest close since March. Although the relative low of $37.00 may provide some support, the downtrending MACD and daily stochastics (5,3,3) suggest that CBE may be due for a more severe decline. New entries can be gauged on a failed rally at the 200-dma or a break under today's low of $37.45. To this end, we're going to place a profit-target at $36.01. Although shares could fall below this level, we'd prefer to close the play on a sharp intraday spike lower. In order to lessen our upside risk, we're also moving our stop to $40.01, about 60 cents above the 200-dma. Picked on June 24th at $39.81 Gain since picked: +2.10 Earnings Date 04/23/02 (confirmed) --- Goodrich - GR - close: 25.77 change: -0.70 stop: 28.01 *new* Last week we speculated that the recent ramp-up in the DFX.X defense index might have been a result of end-of-quarter window dressing. This led us to believe that the index would head lower after the temporary buying dried up. Our theory seems to have been confirmed by the past two days of declines on the DFX, which has given back all of last week's gains. GR followed the sector lower on Monday and closed well under the 200-dma ($27.12). Today's action resulted in more technical damage, as shares lost another 2.6% and set a new relative low. The recent reversal in the daily stochastics (5,3,3) portends further weakness ahead. A glance at the bar chart shows that GR is resting on loose support at $25.60. A break below this level would place the stock in a "fast-move" region, which could quickly result in a retest of the January lows near $24.00, although one would need to watch the $25.00 mark for any psychological support. With this in mind, we're going to set an official profit-target at $24.16. We'll close this play if shares trade at or below that level. Also note that we've tightened our stop to $28.01, slightly above Friday's high. Picked on June 24th at $26.95 Change since picked: +1.18 Earnings Date 07/24/02 (unconfirmed) =============== AT Closed Plays =============== -------------------- Closed Bullish Plays -------------------- Rent-A-Center - RCII - close: 55.33 change: -0.57 stop: 55.24 By all appearances RCII looked to be headed for the $60 level yesterday. Our play was triggered at $58.13 after the stock moved to a new relative high. On Friday the shares had closed over the 50-dma, the MACD had crossed bullish and daily stochastic oscillators were trending higher. Thus the odds seemed good that RCII would trade higher over the next few sessions. The broader market, however, had other ideas. RCII fell sharply after its Monday morning spike and was unable to buck the steady downtrend in the Dow Jones. Shares violated our stop-loss at $55.24 this morning, thus closing our play for a loss of 4.9%. The technical developments that led us to choose RCII as a long play (breakout from consolidation, strong technicals) were nullified by the past two days of declines. The strong volume behind today's decline does not instill much bullish confidence. Nonetheless, it'll be interesting to see how RCII performs in a positive market environment. We'll be keeping an eye on the stock to see if it can break above the Monday high of $58.26. Picked on July 1st at $58.13 Change since picked: -2.89 Earnings Date 07/29/02 (unconfirmed) -------------------- Closed Bearish Plays -------------------- Zale Corporation - ZLC - close: 38.24 change: -0.26 stop: *text* Shares of ZLC experienced a sharp short-covering rally yesterday. Fortunately, this play was never activated. We considered leaving our entry trigger ($36.24) in place, but the upward reversal in the oscillators and close above the 200-dma ultimately convinced otherwise. Aggressive traders could still consider shorting a move below Friday's low. We're content to part ways with ZLC tonight and move on to more attractive short candidates. Picked on June xxth at $xx.xx <- see text Change since picked: +0.00 Earnings Date 08/13/02 (unconfirmed) ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== =============== HR Play Updates =============== -------------------- Bullish Play Updates -------------------- Sony - SNE - close: 50.00 change: -1.55 stop: 47.48 Sony gapped up sharply on Friday, on the heels of stronger industrial production numbers in Japan, but since then it has consolidated. Actual and psychological support of $50.00 treated the stock kindly today, and we feel there is a good chance that this level, or something close, will support SNE in coming days. Our stop remains at $47.48, just under the 200-dma. Please remember that our official profit target is the area surrounding the 50-dma, which sits at $54.64. Picked on June 28th at $52.70 Gain since picked: -2.70 Earnings Date 10/24/02 (unconfirmed) -------------------- Bearish Play Updates -------------------- Alpharma, Inc - ALO - cls: 15.25 chg: -0.93 stop: 16.25 *new* The Pharmaceutical Index (DRG) continues to be particularly weak, trading down 2.5% today. ALO has recently displayed a greater relative weakness than the DRG. Today was no different. The stock successfully doubled the decline in the DRG, falling nearly 6%. Naturally, we were delighted. With today's plunge, Alpharma has now broken below an important rising trend line that had previously offered important support to the stock since Mid- March. This breakdown indicates to us that the stock is likely to begin a sharp decline, one that has the ability to eventually take it below $10.00 (although short-term traders should be happy with $14, near the March lows). Short term, though, we want to be prepared to take gains in the event the market experiences a one-day "meltdown" and then reverses. With this in mind, our official profit target for ALO is now $11.25. If this is not hit in the next few days, we will likely adjust this to something closer to $10.00. Please note that we have adjusted our buy stop downward, to $16.25. After the close today, Noven Pharmaceuticals raised guidance and it is possible that this action will beneficially affect other drug stocks, like ALO. Our new stop level is just above today's high and yesterday's close, as well as the trend line that ALO violated today. Picked on June 26th at $15.95 Change since picked: +0.75 Earnings Date 07/29/02 (unconfirmed) --- Polycom - PLCM - cls: 10.90 change: -0.22 stop: *see text*new* We had recently forecasted a decline in PLCM to the $8.25 level, or lower. After the close today, the company warned Wall Street that it expected to present earnings lower than consensus, and the stock promptly gapped down below $8.00 in after hours trading; at 7:30pm EDT, it is trading at between $7.45 - $7.50. When we apply Fibonacci retracements to the stock, we think that a decline all the way down to $4.50, or lower, is possible. Given this--and the likelihood of a sharp gap downward at the open--we are going to dramatically lower our buy stop, and we are going to "trail" this stop behind the stock as follows: 1) we will set our initial new buy stop AFTER tomorrow's open, 2) this stop will be placed $0.35 above the opening price. If the stock trades down, as we expect, our trailing stop will be lowered as well, being $0.35 above the lowest intraday price. We will continue this process until the trade is stopped out, whether that is tomorrow or some other future date. With PLCM likely to experience extreme volatility tomorrow, we would discourage any new short positions at this time. Those traders who can't monitor the position tomorrow or use a true trailing stop may just want to consider closing their positions at the open, which should still be a significant gain. Picked on June 27th at $11.80 Change since picked: +0.90 Earnings Date 07/18/02 (unconfirmed) --- PPL Corp - PPL - close: 31.86 change: -0.33 stop: 32.40 *new* We noted on Friday that PPL's several day advance had brought it to a level that was outside the upper boundary of its most recent regression channel. We said that such moves usually precede 1) a strong breakout in the stock or 2) the stock's last gasp before starting to tumble lower. In PPL's case, it was the latter. After watching its volume decline steadily during last week's rebound, PPL is now beginning to experience rising volume as it declines. This supports our continued bearish outlook and short position. Our official profit target remains at $24.75, and we will cover this position in the event that it drops to this level. We've also decided to lower the buy stop to a point just above today's high and yesterday's low--$32.40. Thus if we're wrong, we're out with an 80-cent loss. We would discourage any new short positions in PPL until the stock has declined back below near term support at $31.00. Picked on June 19th at $31.60 Gain since picked: -0.26 Earnings Date 7/18/02 (unconfirmed) --- Maytag - MYG - close: 39.79 change: -2.24 stop: 42.30 *new* Maytag confirmed today that it would release Q2 earnings on July 16th. Unfortunately for shareholders, the stock dropped over 5% on heavy volume along with the broad market weakness. Today's decline had MYG closing at the lower end of the modest support it has before it falls into a "fast move region" below $39.50. The strong volume with today's decline could mean investors are getting out while they still have some profits left YTD. Either that or investors are expecting MYG to offer its own recall as rival Whirlpool (WHR) did today for 17,000 washer/dryer units. We think it is only a matter of a day or two before the stock is dropping rapidly toward its 200-dma--now at $36.05. We have moved our buy stop down to $42.30. Please note, though, that once MYG drops below $37.00, we are going to use a trailing stop process in which our stop will be set $0.70 above MYG's intraday low. If, for example, MYG were to gap down to $36.95, our stop becomes $37.65; the stop is then lowered as the stock trades down. We will use this trailing stop process to eventually take us out of the trade. If MYG can break through support at the 200-dma, we think that a further decline to $32.50 is possible. The trailing stop method will help us to potentially capture this move, should it occur. Picked on June 56th at $41.82 Change since picked: +2.03 Earnings Date 07/16/02 (confirmed) --- QLogic Corp - QLGC - close: 34.43 change: -1.46 stop: 40.27 We don't know if it was the name of the firm, or just the overwhelming weakness of the Semiconductor sector, but yesterday's initiation of coverage by Punk Ziegel & Co ("Buy" rating) has done little to help QLogic. Today's opening weakness caused our short position in the stock to be triggered as QLogic traded down to, then below, $34.68. On the day, the Semiconductor Index (SOX) traded down slightly over 5%, while QLGC dropped 4%. The SOX continues to look technically very weak, and we doubt that tonight's after hours Q2 EPS warning from Bell Micro (BELM)--which itself is part of the semiconductor complex--is likely to help matters when trading begins tomorrow morning. We expect the sector, and QLGC, to be under pressure from the opening bell. Our initial buy stop is at $40.27; as we noted last night, this level is above both near term resistance and psychological resistance at the $40.00 level. Although we think the stock can eventually decline to the $24.00-$25.00 region in coming weeks we are going to use a trailing stop process to take us out of the trade as follows: 1) once QLGC trades below $32.00 our buy stop will be placed $1.00 above this, and 2) as QLGC trades lower, our stop will follow it lower, always just $1.00 above the intraday low until we are stopped out of the trade. The reason for the tight stop is the extremely oversold condition of the semiconductor index (SOX). The SOX came within just a few points of touching its intraday Sept. 2001 lows. Considering its three big losses in a row, we could expect a sharp pull back. While this group may not be able to breakout of the current downtrend it could easily rally back to the 380 level (it closed at 348). On the bearish side, we could also see the index break through its Sept. lows and then QLGC could really play catch up. New short positions can be entered on a move below today's low of $33.17. Traders shorting the stock at this level may wish to employ our trailing stop approach in order to manage risk. Picked on July 2nd at $34.68 Gain since picked: +0.25 Earnings Date 08/06/02 (unconfirmed) =============== HR Closed Plays =============== -------------------- Closed Bearish Plays -------------------- Crown Cork Seal - CCK - close: 5.56 change: -0.59 stop: 7.41 We recently articulated an official exit price for our short position in CCK of $5.56. CCK hit that level during today's decline, during which Crown Cork reached an intraday low of $5.32. While CCK might move lover in coming days, the stock closed right on top of its 200-dma. With this kind of close, we feel that the odds of a sharp rebound are increasing. Our preference is to take the gains and not look back. We close this trade with a $1.75 gain, or 23.9%. We may revisit this stock if a rebound back to resistance, near $6.75, fails in coming days. Picked on June 20th at $7.31 Change since picked: +1.75 Earnings Date 07/18/02 (unconfirmed) ================== 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 BTI British American Tobacco 22.51 +0.86 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change .. none .. --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change CHTT Chattem Inc 32.58 +1.35 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change PEP Pepsico Inc 47.75 -1.27 VZ Verizon Communications 37.17 -1.07 CAH Cardinal Health Inc 54.41 -2.89 ADP Automatic Data Processing 40.60 -1.61 DNA Genentech Inc 29.95 -2.30 PNC PNC Financial Services 49.58 -2.06 SLC Sun Life Financial Svcs 20.38 -1.31 SYK Stryker Corp 49.26 -2.47 USAI USA Interactive 20.66 -1.59 NTRS Northern Trust Corp 41.00 -1.98 MCK Mckessen Corp 30.75 -1.25 LLTC Linear Technology Corp 28.19 -2.05 FD Federated Dept. Stores 36.19 -1.54 EL Estee Lauder Cos Inc 32.50 -3.10 CSC Computer Sciences Corp 40.45 -1.23 BDX Becton Dickinson & Co 30.98 -2.80 DGX Quest Diagnostics Inc 75.01 -5.59 LH Laboratory Corp 40.30 -2.66 ACS Affiliated Computer Svc 43.48 -2.17 SPW SPX Corp 105.86 -7.12 PDCO Patterson Dental 46.69 -2.59 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change AZO Autozone Inc 72.96 -3.59 CINF Cincinnati Financial Corp 44.95 -1.46 PHM Pulte Homes Inc 54.97 -2.97 CTX Centex Corp 54.54 -3.56 ADS Alliance Data 23.70 -1.45 HRH Hilb Rogal & Hamilton 40.84 -4.31 WHI W Holding Company 22.18 -1.10 NCEN New Century Financial 30.14 -2.58 CHG CH Energy Group Inc 47.88 -1.36 NFI Novastar Financial 28.29 -5.70 GSK GlaxoSmithKline PLC ADR 41.04 -1.34 UOPX Univ. Of Phoenix Online 26.25 -2.75 ================================================================= 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.
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