PremierInvestor.net Newsletter Wednesday 08-28-2002 section 1 of 2 Copyright © 2002, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section one: Market Wrap: Cautious Watch List: CHIR, DIA, FE, KLAC, SHW and more... Play of the Day: Banking on Weakness ******************************************************************* MARKET WRAP (view in courier font for table alignment) ******************************************************************* 08-28-2002 High Low Volume Advance/Decl DJIA 8694.09 -130.32 8823.99 8646.19 1371 mln 773/1965 NASDAQ 1314.38 - 33.40 1340.01 1312.25 1338 mln 955/2231 S&P 100 462.53 - 8.62 471.15 459.99 totals 1728/4196 S&P 500 917.87 - 16.95 934.82 913.21 RUS 2000 389.38 - 8.07 397.45 389.38 DJ TRANS 2313.38 - 69.98 2382.64 2299.00 VIX 36.23 + 3.50 36.96 33.88 VIXN 54.70 + 4.69 56.26 51.53 Put/Call Ratio 0.88 ******************************************************************* =========== Market Wrap =========== Bulls couldn't make progress in today's session as the NYSE fell -130.32 to close at 8694.09. The Nasdaq followed suit, declining -33.40 to 1314.38, and the S&P 500 stumbled -16.95 finishing the day at 917.87. NYSE advancing issues totaled 773 versus 1965 decliners. The Nasdaq witnessed 954 over-achievers and 2223 spoilers. Market volume continued to weigh in lightly with 1.3 billion shares traded on both the NYSE and Nasdaq. Nortel Networks (NYSE:NT) announced today that the company would be laying off 15% of its workforce, which translates to 7,000 jobs. Further, Hewlett-Packard (NYSE:HWP) pointed out that tech spending still remains near the trenches. Bottom line, confidence in technology based businesses still remains weak with demand yet to increase for IT products. Prudential Financial nicked its fiscal 2002 earnings estimates on behalf of Intel (NYSE:INTC) for the remainder of this year and 2003. The Prudential Analysts' are currently traveling in Taiwan, attempting to decipher company specific outlooks. The Prudential analyst Hans Mosesmann also cut fourth quarter estimates on Advanced Micro Devices (NYSE:AMD), stating a worse than expected supply overhang in China. Indictment hoe! Scott D Sullivan (former WorldCom CFO) was indicted on charges that he allegedly helped to architect the multibillion-dollar accounting fraud that led to WorldCom's bankruptcy. The ex-CFO was also accused of making false statements to the SEC along with former WorldCom director of accounting Buford Yates Jr. Federal prosecutors allege that Sullivan and Yates (along with three other un-named suspects) made false entries into the WorldCom ledger, attempting to meet analysts' expectations. The ABC News/Money magazine survey of consumer comfort came in flat at -11 for the most recent week. The good news is that consumer comfort did not falter in light of weaker than expected consumer confidence numbers yesterday. However, overall confidence remains near a six-year low, which alludes to greater uncertainty of the overall market. With mortgage re-financing at highs, consumer retrieval of gained equity on real estate, spending ought to be higher than the numbers are reporting. Conversely, because the stock market is at such low levels, and the labor markets are still in disarray, consumers are opting to save instead of splurge. The MBA Mortgage Applications Survey reported that mortgage and re-financing demand declined slightly from last week's high. Even with the drop, this weeks numbers are the second highest ever, only behind the previous week of August 16th. Re-financing and purchasing applications have now exceeded the surprisingly strong numbers of November 2001. Thus, when we talk about a decline, we are talking about a pullback from historical highs. Leading the decline this week were purchasing applications, which fell by 7% from the prior week. The 30-year fixed mortgage loan fell by two points to 6.16%, down 64 basis points from one year ago. Overall, the housing market remains incredibly robust, with this week's decline hardly even making analysts wince. Continued re-financing should aid consumers in strengthening their personal balance sheets and obtaining added expendable income. Uncomplicated access to financing and low mortgage rates has made the real estate market the investment du jour. Of slight concern, the drop in the purchasing index indicates that home prices could begin to assuage if demand does not begin to pick up. One possible reason for the softening in purchasing applications could be the substantial increase in home prices over the last few months. Some "would be" homeowners are being edged out of the market by higher sticker prices. While demand for homes remains broadly stout, a more modest pace of applications is expected for the near future. However, the important number to remember is 7%. Once interest rates rise above 7%, demand could quickly taper, and may well cause a pullback in the real-estate market. Metro and costal areas that have viewed rapid appreciation of housing prices could be impacted greater than rural communities. The American Petroleum Institute (API) and the Energy Information Agency (EIA) reported weekly oil and gas inventories today. Crude inventories increased +0.3 according to the EIA and +2.9 by the API. Both agencies also reported that distillate inventories and gasoline inventories decreased. The reports are neutral to bearish for crude, flat for gasoline, and neutral to bullish for distillates. Increased imports helped crude inventories to swell, though high demand for gasoline during the driving season caused gasoline inventories to decline. Distillate inventories decreased with nearly 4 million bpd used over the last week. In light of potential supply issues, the current "war premium" is figured at roughly $6.00 per barrel. Although the U.S. presently has adequate inventories of gasoline and distillates compared to a year ago, the cushion could quickly be eroded if a supply speed bump were to be encountered. However, OPEC is currently overproducing at a rate of 2 million barrels a day, exceeding existing quotas. Supply is the main concern of oil enthusiasts, as demand will certainly not slow with the winter approaching. Further, continued talk of a strike on Iraq, and lack of support for quota increases by OPEC president Rilwanu Lukman, could have oil futures enduring in the $28.00 per barrel area. OPEC's contemporary range for oil is $22-28.00; clearly the market is paying a premium because of supply side fears. If Middle East tensions are miraculously relieved, supply issues could quickly fade, causing the price of oil to rapidly decline. All eyes are on SUPPLY. Revisiting the decrease in distillates... A continued decline in distillate inventories could indicate manufacturing growth, as many distillates and distillate by-products are used to create consumer products. For example, distillates are separated from crude to assist in creating products like plastic and polyester. Products derived from chemicals containing oil distillates include: Velcro, Silly Putty, polyethylene, rubber, PVC, Saran, Teflon, Nylon, Rayon, Cellophane, Bakelite, and Celluloidä. Watch for the next set of Industrial Production numbers on September 17th to improve if verification of manufacturing expansion is to surface. Fuel for Thought I would quickly like to revisit a few sentences from a previous wrap on July 17th 2002. "...let's talk about jet fuel... Yes, jet fuel. Last week, the market reported that part of the rational behind the decline in oil stocks was due to the decrease in demand of jet fuel by commercial airlines. However, the oil and gas inventory numbers today point out that jet fuel refinery production is up to 1.6 million barrels per day. This is the HIGHEST level of production since September 11th. So then, we have a lack of demand, but increased production? The speculation is that the U.S. Government has been buying and storing jet fuel for a possible (some say anticipated) attack on Iraq." As of today (Wednesday the 28th), jet fuel is still being produced at a rate of 1.6 million barrels per day. It's true that a good portion of this is due to the summer traveling season. However, military production continues to increase over this time last year. PRODUCT Week of August 02 09 16 23 Military Jet Fuel....................... 152 128 182 160 Military Jet Fuel PADD 1................ 0 0 0 0 Military Jet Fuel PADD 2................ 6 15 16 15 Military Jet Fuel PADD 3................ 118 89 127 106 Military Jet Fuel PADD 4................ 4 4 5 5 Military Jet Fuel PADD 5................ 24 20 34 34 Military Jet Fuel 4-WK AVG.............. 168 156 157 156 Military Jet Fuel PADD 1 4-WK AVG....... 0 0 0 0 Military Jet Fuel PADD 2 4-WK AVG....... 17 17 16 13 Military Jet Fuel PADD 3 4-WK AVG....... 108 102 110 110 Military Jet Fuel PADD 4 4-WK AVG....... 4 4 4 5 Military Jet Fuel PADD 5 4-WK AVG....... 39 34 27 28 Source: EIA summary of weekly petroleum data for week ending August 23, 2002. http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/we ekly_petroleum_status_report/current/txt/wpsr.txt Regarding Technicals Today's market witnessed declines across the board. One of the only positive notes was the U.S. Dollar, which was able to close positive +0.35 cents, finishing at 107.12. The Greenback has been under pressure over the last three trading sessions, but has found support on the 50-dma at $106.82. Potentially in a consolidation phase, we would like to see the greenback gain momentum to feel as though foreign investors trust the dollar once again. Treasuries were paid a visit from buyers, as the 30-year yield lost -0.58, closing at 5.009% and the 10-year yield declined -0.64 to finish the session at 4.218%. As previously mentioned, the Market Volatility Index (VIX.X) could move higher. Daily Stochastics recently recoiled into the oversold region, and have begun trending upwards in the last two sessions. Chart of: Market Volatility Index, Daily. Chart= Chart of: Gold, Daily. Chart= Gold has been consolidating for the last few months, and has recently held support on the ascending trend line. A breach of the 50-dma (on the upside) could indicate further flight to safety. Daily Stochastics are mid-range, and do not help to indicate the future direction of the precious metal. The $315.00 region seems to draw attention, as the breakout above $315.00 last May, was followed by a temporary move above $330.00. The consolidation triangle (highlighted by red ascending and descending lines) will be an important factor to watch for a change in trend. Chart of: Semiconductor Index, Daily. Chart= Today's news on Intel and Hewlett-Packard did not bode well for bulls in the semiconductor index (SOX.X). The SOX recently failed at descending resistance and the 50-dma. With mid-quarter reports being dispersed by several companies over the next few weeks, the sector could see additional selling if future guidance remains gloomy. Daily Stochastics are entering the oversold region, and could bring auxiliary technical bears off the fence. Regrettably, until companies begin to see potential revenue growth, the SOX might continue to head south. However, I would like remind investors that sometimes, it is darkest just before dawn. Over all, the market seems to have unearthed weakness in the last two trading sessions, and bears could be poised for a statistical drop in the final two days of August. As Jeff Bailey pointed out in today's mid-day update, http://www.PremierInvestor.net/markets/intradayupdates/082802_1.a sp the concluding two days of August are historically very bearish. In fact, according to the Stock Traders Almanac the "last two days of August (have been) murderous five years in a row". Also, the Almanac points out that the historical change in September since 1950 is -0.6%, with 19 positive months and 32 negative months. Bears could definitely be waiting in excitement for the next few weeks to arrive. Will they be fulfilled, or will bulls hold their ground? Tomorrow will certainly bring a piece of the puzzle, as the U.S. Bureau of Economic Analysis' releases the GDP numbers in the morning. In terms of technical analysis, cautious bulls would like to see Treasuries sell, gold taper, the VIX falter, and financials rally...before dedicating further capital. Bears will probably be looking to trade with the trend, attempting to catch the downside momentum in the SOX, and GSTI Software Index (GSO.X). Short traders are additionally encouraged with the Nasdaq Composite closing below the 50-dma at 1314.38. Further, the Nasdaq 100, S&P 500, Oil index (XOI.X), DJ US home Index (DJUSHB), CBOE GSTI Software Index (GSO.X), Combined Telecom Index (IXTCX), S&P Retail Index (RLX.X), and the Oil Service Sector Index (OSX.X) all fell below their 50-dma's today. Also, Point & Figure chartists will notice that the Dow and the S&P 500 gave triple bottom sell signals today. 8750 has served as support for the Dow in recent trading, but in today's session, when the Dow tried to trade above 8750, bears held the index down. Keep in mind two things: 1. Volume has been very light, and 2. We are about to enter the last to days of August. With tomorrow's release of the GDP numbers, employment data, and Alan Greenspan making comments in the morning, investors should proceed with caution and watch for volume! Mark Whistler Editor Questions or comments? mwhsitlerPremierInvestor.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 --------------------------------- Chiron Corp - CHIR - close: 38.44 change: -1.23 WHAT TO WATCH: CHIR exploded from its July lows near $26.50 and gained more than 60% in less than a month. With the daily stochastics falling and the MACD about to cross at very high levels, a pullback to psychological support at $35.00 (or even the 50-dma at $34.13) seems likely. Biotech giant AMGN received a boost on Wednesday morning after the European Commission green- lighted two of its drugs. Prior to last Friday, this news alone probably would've sent the biotech group trading higher. The biotech index had been in a multi-week uptrend and briefly popped above the 400 level. However, recent action has seen the BTK begin to retrace those gains. CHIR is likely to lead the way if the index head towards the August lows at 330. Bearing in mind that there's some possible congestion in the $37-$38 range, short entries can be gauged on a move under $38.00. Chart = --- Diamonds Trust - DIA - close: 87.08 change: -1.42 WHAT TO WATCH: If you've read tonight's Market Wrap, you're already aware that the Dow Jones produced a triple-bottom point- and-figure sell signal today. That's not a good sign...Especially considering that the index recently failed to move above bearish resistance! Today's close under the 50-dma (8750) is a negative technical development that could lead to more selling in the near-term. The Dow's MACD is looking bearish as well, with the indicator beginning to roll near the baseline. The last time this happened (late-May), a brutal two-month downtrend ensued. A similar decline may or may not be in the cards, but short-term traders could be looking for a retest of the August lows near 8050. Short entries in the Dow Jones tracking stock (DIA) could be targeted on a move below today's low (86.58) or a rollover from the 50-dma at $87.62. On a more fundamental level, the broader market will probably have a tough time posting any sizable gains ahead of the 9/11 anniversary. Chart = --- eBay Inc - EBAY - close: 55.37 change: -1.83 WHAT TO WATCH: We strongly considered adding EBAY as a short play last night, but bullish p-n-f support at $55 ultimately convinced us to hold off. The bears certainly had their way with the stock today, as EBAY declined by 3.1% and underperformed the NASDAQ. Investors did not appear to be pleased with today's news that the company had bought out an Australian Partner for $65 Million. Technically, EBAY is looking awfully weak. The MACD is in the early stages of a bearish crossover and daily stochastics (5,3,3) are headed towards the lower band. The p-n-f support mentioned above may very well help to put a floor under the stock. However, a break under $55.00 could give aggressive traders a chance to open short positions. The July lows near $51 provide a possible near-term profit-target. Chart = --- FirstEnergy Corp - FE - close: 34.67 change: +0.52 WHAT TO WATCH: FirstEnergy announced on Monday that they were anticipating 2003 earnings to come in at the $3.70-$3.90 range. This represents an increase over the consensus estimate of $3.58. This news has helped to keep shares of FE above the 200-dma at $33.92. Shares outperformed the Dow Jones today and rose 1.5% on the strongest volume in two weeks. These are indications that the stock may soon stage a breakout above resistance at $35.00. Such a development could eventually lead to a retest of the 2002 highs near $39. Long entries can be evaluated on a move above the July high of $35.12. Oscillators are overbought, so be sure to keep tight stops. Chart = --- KLA-Tencor - KLAC - close: 33.34 change: -0.86 WHAT TO WATCH: With the SOX.X semiconductor index selling off sharply from its 50-dma, there is no shortage of possible bearish plays in the chip sector. KLAC looks especially compelling. Shares have broken under short-term support near $35.00 and are trading at multi-month lows. Today's action created a quadruple- bottom breakdown on the p-n-f chart, and the MACD just produced a bearish crossover. Bulls will argue that daily stochastics have already reached the lower band, but with the SOX.X looking like it wants to test its July lows near 285, this oscillator could easily remain pinned in the oversold extreme. The 52-week lows in the $29-$30 region provide a short-term profit target to aim for. Bearish entries can be considered if KLAC falls under today's low of $33.23. Tomorrow's mid-quarter update (after the bell) from fellow chip-maker NVLS will likely have a large impact on KLAC, so traders may want to wait until Friday before placing any bearish bets. Chart = --- Sherwin Williams - SHW - close: 26.65 change: -0.62 WHAT TO WATCH: Who spilled the red paint?! After briefly spiking above $30.00 nine days ago, SHW has seen nothing but weakness. Although the stock is already looking oversold, recent strong volume indicates that more downside is in store. The recent bearish MACD crossover bolsters the negative outlook. Aggressive short-term traders could watch for a move under today's low of $26.50. This would clear the way for a test of bullish p-n-f support at $25.00. A continued decline in the broader market could see SHW break though that level and move toward the 2002 low at $23.50. Chart = --- Staples Inc - SPLS - close: 12.97 change: -1.01 WHAT TO WATCH: Office Depot announced this morning that back-to- school sales are thus far below expectations. This news seemed to provide a perfect excuse for investors to bail of out of SPLS. Shares got whacked for a 7.2% loss and closed at levels not seen since last October. Volume was extremely heavy; today's reading of 13.2M was the highest in over a year! Given the accelerating downside momentum, double-bottom p-n-f breakdown, and lack of underlying support, SPLS appears to be on a crash course with the September low of $11.02. Short-term traders could target a move to this level, with a break of today's low ($12.86) providing a possible action point. Of course, if Staples releases bad news of their own (certainly not out of the question, judging by today's volume), there's no telling how far the stock could fall. Chart = --- Symantec Corp - SYMC - close: 30.04 change: -0.60 WHAT TO WATCH: Today's Legg Mason upgrade of SYMC fell on deaf ears. Pressured by a hefty 3.6% decline in the GSO.X software index, shares of the computer security company gave back nearly 2%. If the sector downtrend continues, SYMC may fall below critical long-term support in the $29-$30 area. A trade at $29.00 will create a spread-triple sell signal on the point-and- figure chart. Traders can think about legging into short positions if this occurs. Although such a breakdown may prove to be a bear trap, a continued sell-off in the software group could quickly have SYMC falling to the next level of psychological support at $25.00. Chart = --- QUALCOMM - QCOM - close: 27.31 change: -1.27 WHAT TO WATCH: QCOM has proven to be somewhat resilient over the past few months, with shares repeatedly gravitating towards the $30.00 region. The recent sell-off from this level has led to the possibility that shares may retest the relative lows near $24.00. QCOM underperformed the NASDAQ today and closed under the 50-dma at $27.56. Bearish action in the MACD and daily stochastics (5,3,3) is hinting towards further weakness. On a sector-related note, the YLS.X wireless index has begun to rollover from its descending trendline. The index also closed below its 50-dma on Wednesday. With the NASDAQ also looking weak, QCOM looks like a good short below today's low of $27.20. Chart = =============== Play-of-the-Day (Non-tech BEARISH play) =============== Citigroup Inc - C - close: 33.15 change: -1.05 stop: 35.66 Company Description: Citigroup, the preeminent global financial services company with some 200 million customer accounts in more than 100 countries, provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. (source: company press release) - ORIGINAL WRITE UP: August 23rd, 2002 - Why We Like It: Fallout from the WorldCom blowup continues to plague Wall Street. New York's Attorney General, who already has former Salomon Smith Barney analyst Jack Grubman on the hot set for his cozy relationship with the beleaguered telecom company, is now said to be targeting Citigroup CEO Sandy Weill. The Wall Street Journal reported on Friday that in an effort to become one of the lead underwriters of the AT&T Wireless IPO, Weill urged Grubman to reevaluate his rating on AT&T. This isn't what investors want to hear. Investigations targeting Martha Stewart are one thing...Charges of unethical (or illegal) conduct by the head of an international bank is another! Fellow banking giant JPM doesn't seem to be faring much better. On Thursday, Moody's placed their credit rating under review for a possible downgrade. Overall it seems there just aren't many reasons to buy financial stocks. The recent news merely adds to the apprehension that investors have about what other skeletons might be hiding in the closet. Combine those worries with a teetering Latin American economy, and you've got a very uncertain picture...And boy, does Wall Street hate uncertainty! Technically, it looks like C is poised to head lower. The stock rallied sharply from its July low of $24.48, aided by the IMF's bailout of Brazil and a powerful rebound in the Dow Jones. The past week, however, has seen shares unsuccessfully attempt to move over the 50-dma ($35.64). We believe the subsequent rollover has offered an attractive entry point to go short. Our bearish aspirations are bolstered by the MACD (which is curling lower from the baseline) and downtrending daily stochastics. Point-and- figure chartists will also note that C remains under bearish resistance at $37. By entering this hypothetical short trade on a move under $33.50, we're aiming to capture a breakdown to the $30.00 region. Bulls will point out that possible support lies in the $32.70-$33.00 range. In light of the recent negative news and weak technical picture, we don't expect more than a small bounce from this area. If the stock does rally, our upside risk will be limited by a stop at $35.66, just above the descending 50-dma. A more conservative strategy could utilize a stop slightly above psychological resistance at $35.00. - Most Recent Update: August 27th, 2002 - Salomon Smith Barney, Citigroup's investment banking unit, admitted last night that it had given thousands of shares in IPO's to various WorldCom executives. While this was certainly not a positive development, today's action suggests that the news may have already been priced into C. The stock outperformed the Dow Jones and finished the session with a 20-cent loss. Volume was somewhat light at 14.8M shares, suggesting a lack of intuitional participation. Technically, C remains weak. Shares have not attempted to move above the descending 50-dma ($35.35), and near-term resistance seems to have formed in the $34.50- $34.70 region. The MACD and daily stochastic oscillators also hint towards further weakness. If C heads lower, a move under the relative low at $33.40 might provide an action point to enter new bearish positions. However, note that possible support lies at $33.00. - Play-of-the-Day Comments: August 28th, 2002 - In the "too little, too late" department, Citigroup announced tonight that it's considering changes in its IPO allocation procedures. The revelations of preferential treatment for WorldCom executives have proven to be a public relations disaster, as investors are bombarded with daily congressional hearings and the video footage of a defensive Jack Grubman being chased by an inquisitive reporter. With the Dow Jones suffering a triple-digit decline today, shares of C didn't have a prayer. The stock declined by 3% and is now in danger of falling below the $32.75 support level, which is most readily visible on a 60- minute chart. A break below this area (specifically, the relative low of $32.69) could set the stage for a test of psychological support at $30.00. Our stop for this play remains set at $35.66. Picked on August 26th at $33.49 Results since picked: +0.34 Earnings Date 07/17/02 (confirmed) Chart = ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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 advertising@PremierInvestor.net. ***************************************************************** Copyright © 2002 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Wednesday 08-28-2002 section 2 of 2 Copyright © 2002, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section two: Net Bulls Tech Stocks Stop Adjustments: MXIM, QLGC (Bullish) Closed Long: MIL Active Trader Non-Tech Stocks Triggered Plays: CB, COX, RTH (Bearish) Closed Long: SWFT Split Trader SPX: 2-for-1 split announcement CBNJ: 3-for-2 split confirmation 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 Tech Stocks (NB) section ================================================================= =============== NB Play Updates =============== Stop Adjustments ---------------- Maxim Int. - MXIM - close: 31.56 change: -2.32 stop: 35.06 *new* Shares of MXIM were hammered for a 6.8% loss on Wednesday. The stock was pressured by a sharp decline in the SOX.X, which still seems to be suffering from Tuesday's negative INTC comments. In light of today's action, we're going to lower our stop to $35.06. This should protect a small gain from our original entry point. A rollover from today's high ($33.00) may offer an opportunity to add short positions. Keep in mind that we'll close this play if MXIM trades at or below our profit-target at $30.10. Chart = --- QLogic Corp - QLGC - close: 34.68 change: -1.23 stop: 37.91 *new* With QLGC falling by another 3.4% today, we feel it's prudent to tighten our stop-loss. Our new stop is set at $37.91, slightly above yesterday's high. More aggressive traders could force QLGC to trade above the 50-dma at $38.44. The fact that shares closed below psychological support at $35.00 on Wednesday bodes well for the bears. New short entries can be gauged on a move below today's low at $34.14. Our profit-target is located at $30.51. Chart = =============== NB Closed PLay =============== Closed Long Play ================= Millipore Corp - MIL - cls: 36.01 chg: -0.84 stop: 36.45 With the overall tech sector looking weak, biotech bulls received a ray of hope this morning after the European Commission approved Amgen's anemia and neutropenia treatments. AMGN did initially trade higher on this news, but the BTK.X biotech index traded in a lackluster fashion for most of the day. Shares of MIL saw weakness shortly after the opening bell and quickly eclipsed our stop at $36.45. Our long play was closed for a loss of 57 cents, or 1.5%. That's just fine with us. We had added this play based on MIL's recent uptrend. By keeping a tight stop-loss, we were able to exit the hypothetical trade as soon as the bears began to assert themselves. Judging by the declining MACD and daily stochastic oscillators, a near-term retest of the $35.00 level appears likely. Picked on August 9th at $37.02 Results since picked: -0.57 Earnings Date 07/16/02 (confirmed) Chart = ================================================================= Active Trader/Non-tech Stocks (AT) section ================================================================= =============== AT Play Updates =============== Triggered Plays --------------- Chubb Corp - CB - close: 61.75 change: -1.25 stop: 65.01 Shares of CB followed the IUX.X insurance index lower on Monday and posted a loss of 1.9%. Our short play was activated when the stock reached the $62.49 mark in morning trading. Traders can target new entries on a move under today's low ($61.21), but keep in mind that the $60.00 level may provide some measure of support. Our stop is located at $65.01. Chart = --- Cox Communications - COX - close: 24.96 change: +0.24 stop: 27.02 The requisite condition for activating this short play - a trade at $24.64 - was met early Wednesday morning. COX saw its worst levels of the day shortly after the opening bell and finished the session with a small gain. Although shares were relatively strong versus the broader market, the bulls could not muster a close above psychological resistance at $25.00. If COX reverses course on Thursday, a move under $24.00 would open the door for a test of the $22.00 region. In the event that the stock manages to buck the recent downtrend, our upside risk is limited with a stop at $27.02. There was no substantial news in the cable sector today. Chart = --- Retail HOLDRS - RTH - close: 80.30 change: -0.70 stop: 83.56 The RLX.X retail index saw further selling on Wednesday, with TGT, LOW, and HD all posting losses. The RTH suffered a 0.86% decline and closed well below the 50-dma at $81.00. This short play was activated when RTH reached our entry trigger at $80.70. Shares moved under psychological support at $80.00 on an intraday basis, hinting towards continued weakness during tomorrow's session. A move under today's low ($79.86) might provide an action point to enter new bearish positions. Our stop-loss is set at $83.56. Chart = =============== AT Closed Play =============== Closed Long Play ================= Swift Trans. - SWFT - cls: 17.38 chg: -0.47 stop: 17.54 In a rare move, we gave SWFT additional breathing room last night by lowering our stop ten cents. This is because we were willing to harbor slightly more risk in order to force SWFT to trade below the near-term support region near $17.60. However, with the Dow Transports (TRAN) declining by nearly 3% on Wednesday, SWFT was unable to maintain support. This play was closed for a hypothetical loss of 2.6% when our stop was violated during the first half-hour of trading. Shares followed the TRAN lower and finished with in the red by 2.6%. Given the recent rollover from the 50-dma and negative oscillators, the transports appear to be headed for lower levels. In addition to weakness in the broader market, the group may be feeling the effects of a long-term uptrend in crude oil futures (cl02v). SWFT will have a tough time rebounding if the sector action remains bearish. Picked on August 19th at $18.01 Results since picked: -0.47 Earnings Date 07/25/02 (confirmed) Chart = ================================================================== Split Trader (ST) section ================================================================== Split Announcements ------------------- After a 19-year drought, SPX announces a 2-for-1 stock split After the marked closed today, SPX Corp. (NYSE: SPW) announced that its board of directors had approved a 2-for-1 stock split. The split will take the form of a stock dividend and will be distributed on October 24, 2002 to shareholders of record on October 1, 2002. Post-split trading will commence on October 25, 2002. It's been quite awhile since SPX had a stock split. The most recent offering came in 1983, when the Dow Jones was trading under 2,000 and Ronald Reagan was in his first term. Today's announcement follows a powerful multi-year uptrend that has seen shares nearly triple in just four years. Year-to-date, however, the stock has lost more than 19%. The stock closed at $110.25 on Wednesday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=SPW About the company SPX Corporation is a global provider of technical products and systems, industrial products and services, flow technology and service solutions. (source: company press release) --- Community Bancorp of New Jersey Offers 3-for-2 Stock Split. At 4:00 PM EST today, Community Bancorp of New Jersey announced that its board of directors declared a three for two stock split. The split will be issued to shareholders of record on September 10th, 2002. The payment date for the stock dividend is also September 10th, 2002. The announcement comes in lieu of an "out standing year" and is intended to increase marketability and liquidity of the company's common stock. CBNJ most recently declared a stock split of 5% in April. Today's announcement follows a longer-term up trend that has seen shares rise from $10 to $19.00 in four years. Year-to-date, CBNJ has gained 1.8%. The stock closed at $19.49 on Friday. For a current quote, click here: http://user.financialcontent.com/pin1/quote.cgi?account=pin1&ticker=CBNJ About the company Community Bank of New Jersey is a $280 million-asset state charted community bank established in 1997, which operates from its corporate headquarters at 3535 Highway Nine, Freehold Township, New Jersey 07728, and six branch locations in Colts Neck, Howell, Freehold Borough, Freehold Township, Manalapan, Matawan, and Shrewsbury. (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 None --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- Ticker Company Name Close Change NWRE Neoware Systems Inc. 18.72 +2.03 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- Ticker Company Name Close Change ITMN Intermune Inc. 22.66 +4.66 EASI Engineered Support Systems 52.40 +1.91 COCO Corinthian Colleges Inc. 34.20 +2.18 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change GLYT Genlyte Group Inc. 37.16 -2.95 MGAM Multimedia Games Inc. 21.76 -2.43 ATVI Activision Inc. 26.69 -2.05 TARO Taro Pharmaceuticals 28.65 -1.26 RGA Reinsurance Group of Amer. 28.56 -1.04 VIP Vimpel Communication Ads 23.23 -1.72 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- Ticker Company Name Close Change MERQ Mercury Interactive 24.51 -1.43 LLL L-3 Communications 47.17 -0.63 NLS Nautilus Group Inc. 30.60 -1.89 AA Alcoa Inc. 25.07 -1.63 BARZ Barra Inc. 35.15 -1.10 CCL Carnival Corporation 25.00 -0.90 BRL Barr Laboratories Inc. 67.00 -2.48 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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 advertising@PremierInvestor.net. ***************************************************************** Copyright ) 2002 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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