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Daily Newsletter, Monday, 12/23/2002

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PremierInvestor.net Newsletter                 Monday 12-23-2002
                                                  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:      A Lump Of Coal For Retail Investors
Watch List:       CSCO, LU, HD, Q, and QCOM
Play of the Day:  No P.O.D. for 12/24


******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
12-23-2002                High    Low     Volume Advance/Decl
DJIA     8493.29 - 18.03 8554.04 8462.64  1081 mln  1703/1514
NASDAQ   1381.69 + 18.64 1384.29 1358.29  1162 mln  1855/1500
S&P 100   456.06 +  0.60  459.28  453.64    totals  3558/3014
S&P 500   897.38 +  1.62  902.43  892.26
RUS 2000  389.73 +  2.85  390.05  385.41
DJ TRANS 2321.73 -  2.49 2330.70 2301.92
VIX        29.33 -  2.14   31.44   29.33
VIXN       45.89 -  2.62   49.83   45.89
Put/Call Ratio 0.58
******************************************************************


===========
Market Wrap
===========

A Lump Of Coal For Retail Investors

by Kent Barton

Mall parking lots across the country were jammed to the gills
today as Holiday shoppers scurried to make some last-minute
purchases.  Anyone who braved the crowds and long lines would
probably attest that retail business is humming along just fine.
Unfortunately for investors within the group, there's a whole lot
of evidence to the contrary.

The broader market opened flat this morning as traders digested
another round of economic data.  Durable goods purchases bounced
back with a 1.9% gain in November, following the previous month's
1.3% decline.  A large portion of the gains was attributed to
strong auto sales, which had been dropping from Q3 levels.  New
car purchases also helped to push personal spending to a 0.5%
gain, which was in-line with analyst estimates.  The University
of Michigan index, one of the key gauges of consumer sentiment,
came in at 86.7, one tenth better than expectations.

Conventional wisdom dictates that strong consumer spending is
absolutely crucial if the economy is going to avoid a double-dip
recession.  Today's numbers don't indicate any reduction in
spending, but you have to wonder how well those lagging
indicators reflect the current situation.  Monday's news out of
the Wal-Mart camp paints a far more bearish picture.  Shares of
the retail behemoth hit a new relative low after the company said
that it expects December same-store sales to come in at the lower
end of its 3%-5% growth forecast.  Adding insult to injury,
Federated Department Stores (the parent company of Bloomingdale's
and Macy's) said they would probably miss their November/December
sales targets.  The company said that sales didn't increase as
much as they had expected during the third week of December.
After-hours news wasn't much better for retail bulls.  Citing
weak sales of sporting goods and apparel, Target (TGT) said that
same-store sales had fallen well below expectations for the third
consecutive week.

Hmmmm...Slower-than-expected holiday sales for the two largest
discount retailers and a frigid December for one of the leading
department stores.  If you're getting a distinctly bearish vibe
from the entire sector you're not alone.  The retail index has
been in a steady decline for several weeks and today's news
pushed the RLX.X to new relative lows.  Wall Street, which is
always looking forward and trying to factor in future economic
developments, seems to be pricing in a decline in consumer
spending.  The fact that Americans aren't enthusiastically
whipping out their pocketbooks during the Holiday season doesn't
bode well for first quarter of 2003.

Annotated chart - Retail Index



With WMT leading the way lower, the Dow Jones was hard-pressed to
remain in positive territory.  A morning rally that took the
index above its 50-dma (8525) quickly petered out near 8550.  The
final two hours of trading had the Dow trading in a small range
without any clear direction.  Small gains in MSFT and INTC helped
to keep the Industrials above short-term support in the 8350-8400
region but news that Moody's has downgraded MCD due to their
first quarterly loss in 47 years and the press release from
Citigroup for its $1.3 billion charge did their best to make it
hard on the bulls to get any momentum.

Annotated chart - Dow Industrials:




Tech stocks as a whole faired better, as the semiconductor index
moved through resistance and finished in the green by 2.7%.  The
SOX.X has trended higher over the past three sessions and looks
poised to test its 50-dma at 312.  Looking at the broader tech
sector today's 18-point gain in the NASDAQ wasn't anything to
write home about, it's interesting to note that the index was
able to break above its 50-dma, which acted as resistance on
Friday.  This level roughly coincides with the 38% retracement
from the October low to December high.

Annotated chart - NASDAQ:




Rebalanced trading in the NASDAQ-100 commenced today.  Former
tech high-flyers such as AMCC, CHTR, VTSS, and PMCS have been
cast off in favor of companies that are actually turning a
profit.  ROST, EXPD, XRAY, LAMR, WFMI, FHCC, PETM, PIXR, APCC,
FAST, CHRW, PTEN, RYAAY, HSIC and GNTX are the additions.  Mutual
funds still have a few days left to make adjustments, so we may
see some added volatility in those stocks for the duration of the
week.  Speaking of fallen angels in the tech sector, Inktomi
(INKT) shot higher by 36% today after Yahoo (YHOO) announced that
it would buy the software company for $235 million, or $1.65 per
share.  Sharp-minded traders might remember that INKT topped out
at a whopping $241 per share in early-2000.  Today's investors
seemed to be pleased with the deal - YHOO finished the session
with a 3.7% gain.

After the closing bell this afternoon, a federal judge ruled that
Microsoft's Windows operating system would have to include Sun's
Java programming language.  SUNW posted a gain of roughly 10% in
after-hours trading.  We'll see how this plays out tomorrow, but
thus far it doesn't look like this news will weigh too heavily on
Mr. Softee.  Shares finished the extended session with a loss of
only 10 cents.

Over on Capital Hill, life began to return to normal (relatively
speaking...we're talking about Washington D.C. here) following
Trent Lott's resignation as Senate majority leader on Friday.
Sen. Bill Frist was officially chosen as his replacement this
afternoon.  The GOP, and the White House in particular, can be
very pleased with how things turned out. In contrast to Lott, who
initially opposed Bush's candidacy in 1999, Frist has close
working relationship with the Administration.  This will give the
President added leverage in pushing through his agenda, including
larger tax cuts.

Crude oil futures (cl03f) hit a new multi-month high today after
OPEC decided not to increase output until their price benchmark
remains above the $22-$28 range for 20 trading days.  The cartel
seems to view the current Venezuelan labor strike (which has
entered its fourth week) as a temporary problem that has
artificially reduced supply.  As it stands now, the country is
only exporting 10% of its previous output.  The current stalemate
has President Huge Chavez (who thus far has maintained military
support) pitted against a widespread opposition that includes
several high-level oil executives.  A resolution of the strike
would likely take a few dollars of premium out of crude futures.

Of course the longer-term worry for OPEC is the United States'
looming war with Iraq.  Continued hawkish rhetoric from the White
House and extensive military exercises in Kuwait make an invasion
appear inevitable.  At this point it's hard to imagine that crude
will retest its November lows anytime in the near future.  The
steady beating of war drums may be helping to keep a lid on the
major market indices as well.  Wall Street loathes uncertainty,
and nobody knows how an invasion of Iraq would play out.  A quick
victory could send stocks sharply higher.  Investors were so sure
of success during the first Gulf War that the market actually
rallied when the initial air campaign began.  The current
situation is quite different.  The ouster of Saddam Hussein will
entail a takeover of Baghdad.  Fighting in an urban environment
against a motivated Iraqi army protecting their homeland, U.S.
forces could face a much more difficult task than the relatively
straight-forward desert warfare that took place in 1991.  A
prolonged, expensive war in Iraq would have a disastrous effect
on the market.  These are just some of the concerns that Wall
Street has to contend with.  In any case, continued high oil
prices will not have a positive impact on the economy.

The dearth of any noteworthy economic data or earnings reports
for the rest of the week will put the focus on these geo-
political situations.  But short of any major developments,
tomorrow's abbreviated trading day will most likely see extremely
thin volume.  The last time the Dow posted a loss on the day
prior to Christmas was in 1997.  What exactly gives the market
this bullish bias during the holidays?  Institutional traders go
on vacation, leaving their less experienced counterparts in
charge with one basic command: "Don't screw anything up."
Without the major players taking large positions and pushing the
market around, retail investors have an abnormally large
influence.  On a whole this group tends to trade with a sharply
bullish bias.  Throw in a little seasonal cheer, and you've got a
recipe for a Santa Claus rally.  Of course there are no
guarantees, and the Grinch (dressed in a bear suit) might be
eagerly awaiting another failed rally.  Those who aren't taking a
well-deserved day off tomorrow should pay attention to the
aforementioned short-term resistance levels.


==================================================================
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
---------------------------------

Cisco Systems - CSCO - close: 13.44 change: +0.17

WHAT TO WATCH: If a Santa Claus rally does emerge then keep an
eye on your favorite tech stock.  Retail investors tend to play
their favorites and CSCO might be a short-term mover.  The level
to watch is the 200-dma/$14.00 level.  The 200-dma is currently
at 13.85 but with a 15-cent difference between it and the round-
number dollar mark they might as well be the same.  Shares of
CSCO bounced off its 50-dma three days ago and the MACD looks
ready to roll into a new bullish signal.  If a breakout occurs
there is stronger resistance between $15.00 and $15.50.  If
you're not able to scalp a dollar to $1.50 then you may want to
pass on this one.




---

Lucent Tech - LU - close: 1.47 change: 0.08

WHAT TO WATCH: A couple of years ago Lucent investors would not
even have noticed an 8-cent move.  Today it is worth 5.75%.  This
previous tech darling has also bounced from its 50-dma three days
ago and is poised to trade above the $1.50 mark.  Unfortunately
the stock appears to have potential resistance at $1.60, $1.80,
$2.00.  Trade carefully.  It's been prone to big percentage point
spurts.




---

Qwest Communications - Q - close: 5.69 change: +0.39

WHAT TO WATCH: Wow!  Talk about making a comeback.  Shares of Q
have rebounded from the $1.00 level in mid-August to over $5.00
in the last few months.  The stock appears to be trading in a
rising channel.  The breakout above $5.00 looks strong but this
may not be the best time to jump on the bandwagon even though
shares could inch towards the $6.00 mark before retreating.  Our
plan would be to look for a dip back to the $5.00 area before
considering a stop-protected long position.




---

Home Depot - HD - close: 24.45 change: -0.38

WHAT TO WATCH: This is not a pretty chart.  Despite the lowest
interest rate for the housing market in decades, current home
sales are not boosting shares of HD.  The stock is making new
December lows and fast approaching its November and October lows.
Shares tend to move kind of slow but if you're bearish on the
stock/group it could be worth watching for a short.




---

QUALCOMM - QCOM - close: 38.99 change: +1.31

WHAT TO WATCH: Now this is an interesting chart.  The
telecom/wireless index (YLS.X) has been able to maintain its
bullish trend despite the big pull back in recent weeks.  We see
a similar pull back in QCOM but it could be almost over.  Shares
of the wireless giant appear to be in a rising channel and the
stock has been trying to maintain support near its 50-dma (yes,
it was pierced pretty hard on Friday but it rebounded).  The last
three weeks look like a slow consolidation of previous gains and
we'd consider a long position if QCOM broke out above the $40
mark.  Its MACD should confirm our suspicions if this breakout
occurs.  Our short-term upside target would be $45.00.





===============
Play-of-the-Day
===============

No P.O.D. for 12/24


=================================================================
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 ) 2002  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Monday 12-23-2002
                                                   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
=================================================================


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)


=================
  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

ICPT    Intercept Inc              17.43     +0.87
PZZA    Papa John's Intl           27.57     +0.82
NHY     Norsk Hydro ADR            44.50     +0.62

---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------
Ticker  Company Name               Close     Change
SLVN    Sylvan Learning Sys.       16.02     +1.08

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
Ticker  Company Name               Close     Change

MATK    Martek Biosciences         26.32     +1.38
IGEN    IGEN Intl.                 44.42     +2.46
NBIX    Neurocrine Biosciences     46.86     +2.61
RGLD    Royal Gold                 23.96     +1.71
CRTK    Coorstek Inc               25.48     +2.28
RCEN    RSCS Connection            21.41     +1.01

-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------
Ticker  Company Name               Close     Change

URBN    Urban Outfitters           22.49     -1.09
SCSC    Scansource Inc             48.31     -1.05
RTH     Retail HOLDRS              69.20     -1.46

-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------
Ticker  Company Name               Close     Change

                             




=================================================================
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 ) 2002  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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