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Daily Newsletter, Wednesday, 01/22/2003

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PremierInvestor.net Newsletter              Wednesday 01-22-2003
                                                  section 1 of 2
Copyright ) 2003, 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:      Slipping and Sliding
Watch List:       EDS, LU, MSFT, AMGN
Play of the Day:  Buying Opportunity?

******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
01-22-2002                  High    Low     Volume       Adv/Dec
DJIA     8318.73 - 124.17  8444.61 8306.59    1542 mln  1171/2080
NASDAQ   1359.48 -   4.77  1379.61 1358.23    1491 mln  1293/1957
S&P 100   452.10 -   4.68  445.67  445.31      totals   2464/4037
S&P 500   878.36 -   9.26  889.74  877.64
RUS 2000  380.53 -   2.64  383.44  380.20
DJ TRANS 2213.63 -  67.60 2274.31 2213.50
VIX        32.01 +   1.48   32.40   30.56
VIXN       44.16 +   0.92   45.06   42.54
Put/Call Ratio 0.73
******************************************************************


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

Slipping and Sliding

by Kent Barton

Last night the stage was set for an oversold bounce in the tech
sector.  After watching the NASDAQ give back nearly 7% over the
past four sessions, the bulls could've rallied around Tuesday
evening's strong earnings report from Motorola and the better-
than-expected semiconductor book-to-bill number.  Positive news
from JDA Software (JDAS) and Lucent (LU) also created a favorable
climate for a short-covering rally.  The Composite did manage to
post a decent gain during the middle of today's session, but
sputtered out in late-afternoon trading and finished its fifth
consecutive loss.  What happened?

For starters, Motorola took much of the wind of the bulls' sails
this morning when they released cautious comments regarding the
next quarter.  MOT may have had a great Q4, but these days it's
the forward-looking guidance that's of paramount importance for
investors.  Shares of the communications equipment provider
posted a loss of 2.5%.  However, the more vexing problem for tech
investors was a complete lack of strength in the rest of the
equity market.  The bulls just couldn't seem to find any traction
in the face of a steady drift lower in the key non-tech sectors.
The market is attempting to scale a rather large wall of worry,
and several of today's earnings reports made for a very slippery
journey.

Daily chart - NASDAQ Composite:



While the weak technical picture pictured above certainly doesn't
inspire much bullish confidence, news after the bell is likely to
give the NASDAQ an upward bias tomorrow morning.

Shares of Qualcomm were ticking higher by more than 4% in after-
hours trading after beating estimates by four cents and raising
its Q2 guidance to 34-35 cents/share.  The consensus expectation
was for earnings of 30 cents/share.  The company also raised its
2003 top-end EPS estimates from $1.20 to $1.39.  Strong earnings
and upside guidance...Not too shabby!  This news could help the
NASDAQ to find a bid on Thursday.  Especially considering how
short-term oversold the market is.

Texas Instruments (TXN) was also rising in the extended session
after the company reported earnings that were three cents better
than expectations.  Strong demand during the final weeks of 2002
was largely responsible for the upside surprise.  TXN also
updated its Q1 outlook and said they are now expecting a result
of six cents, "plus or minus a few cents."  Analysts had been
looking for three cents/share in the first quarter.  Meanwhile,
fellow chip stock Altera was trading slightly lower following
their fourth-quarter announcement.  ALTR beat estimates but gave
a Q1 estimate that was somewhat less than expected.

While the book-to-bill number was largely ignored today, the TXN
data supports the idea that demand has been picking up within the
semiconductor industry.  Of course on the other hand you have
Intel cutting capex spending and AMD doing its best impression of
a cliff diver.  But at the very least, it looks like tonight's
news could trigger a short-term bounce in the SOX.X.

Daily chart - SOX.X semiconductor index:



Non-tech earnings also continued in earnest today as many more
high-profile companies reported their quarterly results.  Banking
behemoth J.P. Morgan kicked things off with a fourth-quarter loss
of $0.20/share.  Factoring in a 13-cent restructuring charge,
this was in-line with expectations.  JPM finished the session
with a 2.8% loss and closed just above its 50-dma.  Meanwhile,
fellow Dow component Eastman Kodak offered up a snapshot of
severe fundamental weakness after missing earnings by 2 cents and
guiding lower for the first quarter.  The company also announced
additional job cuts.  EK was whacked for a loss of nearly 12%,
contributing to a triple-digit decline in the Industrials.
Pfizer (PFE) fared much better with its quarterly report and beat
estimates by a penny.  The company recorded a 46% increase in net
income, thanks in large part to strong drug sales.  This news
wasn't enough to keep the DRG.X pharmaceutical index out of
negative territory.

Another earnings-induced decline was seen in shares of General
Dynamics.  As you might expect, the company's defense division
did quite well.  Pentagon expenditures on warships, weapons
systems, and military vehicles raised the company's profit.
Unfortunately for shareholders, GD's aerospace unit saw a huge
revenue decline related to weakness in the business jet market.
The bottom line showed a profit of $1.21/share, 12 cents below
than expectations. Shares lost 12% after plummeting through long-
term support near $72.

Speaking of jets, the XAL.X airline index was pushed into a
nosedive yesterday after Northwest Airlines (NWAC) reported a
quarterly loss that was 41 cents wider than consensus
expectations.  However, it was this morning's announcement from
AMR that sent the sector into an utter tailspin.  The world's
largest airline reported a narrower fourth-quarter loss and a
modest increase in revenue.  Those are decent results, but Wall
Street is far more concerned with the outlook for future growth.
Unfortunately that outlook is extremely gloomy.  According to
AMR's Chairman and CEO Don Carty, "Clearly, results such as the
ones we reported today are unsustainable."  Carty went on to
state that a "permanent shift" in the airline industry would
demand a reduction in annual costs by at least $4 billion.  Talk
about a Catch-22!  AMR must aggressively cut costs in order to
avoid the same fate as UAL...But these reductions will make
continued revenue growth extremely hard to come by.  This applies
for most of the other major airline companies as well.  Investors
responded by slashing nearly one quarter off of AMR stock.  On
the other end of the spectrum, Southwest Airlines, one of the few
profitable carriers, reported earnings that were 2 cents better
than expectations.  The company still had a very difficult
quarter and suffered a 33% decline in net income.  LUV finished
with a 4% loss.

Daily chart - XAL.X airline index:



Airlines (and the transportation sector in general) are also
being pressured by the sustained high price of oil.  February
crude oil futures (cl03g) reached new relative highs and closed
above $34.00/barrel.  Yesterday the first signs of cracks in the
Venezuelan strike appeared when tanker captains agreed to go back
to work.  This should help to boost the country's oil exports
from the current amount that's trickling out.  But with 90% of
oil workers remaining on the picket line, there's still no end in
sight for the labor stoppage.  Sector giant Sclumberger missed
earnings by a nickel, citing "the absence of any significant
growth in energy demand."  This news pushed both the OIX.X oil
index and OSX.X oil service to multi-week lows.  Of course the
other major catalyst for rising oil prices is the looming war
with Iraq.  During a speech in Missouri today President Bush
reasserted that the country has weapons of mass destruction.  But
unless the U.N. inspectors find the proverbial "smoking gun,"
he'll face an uphill battle in finding international (and
domestic) support for an invasion.  Meanwhile, some pundits
continue to speculate that Saddam Hussein might relinquish his
power and go into exile with full immunity from persecution
related to his various war crimes.  Obviously this would be the
optimal solution for both the U.S. and Iraq, not to mention the
equity market.  But as the saying goes, if it sounds too good to
be true...it probably is.  The chances of Hussein willingly
stepping down are next to nil.  We're talking about a power-
hungry dictator who idolizes Josef Stalin and once ordered an
assassination attempt on his own son.  Perhaps a coup within his
regime would be more likely, but in the past he's managed to
squash any threats from within.

Everything will be coming to a head next week with Bush's State
of the Union address on the 28th, one day after the critical UN
deadline.  The related uncertainty has made it very easy for
potential bulls to retract their buy orders and play the waiting
game.  The growing geo-political tension is also reflected in the
volatility index (VIX.X), which has moved sharply higher over the
past week.  Technically, the Dow and NASDAQ are both looking
painfully oversold on a short-term basis, and the latter index
might possibly find some buying on the positive TXN and QCOM
news.  The NASDAQ seemed to be held back by the rest of the
market today and should be able to move back towards the 1400
area on Thursday if the overall equity climate is more favorable.
Meanwhile, the Dow is trading just above support in the 8200-8300
range.  It would take a serious bearish effort to push the index
below this region.

Daily chart - Dow Jones



Tomorrow will bring another round of earnings.  Noteworthy
announcements include Dow components CAT and T before the bell,
followed by tech heavyweights AMZN, AMGN, and KLAC after the
market closes.  Barring any major downside surprises, the major
indices (and the tech sector in particular) look poised to
retrace some of their recent losses.  Short-term traders might be
able to take advantage of such a rebound, but bear mind in that
any sustainable, multi-day rally probably won't happen ahead of
next week's UN deadline.


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

Electronic Data Systems - EDS - close: 16.76 change: -0.19

WHAT TO WATCH: We had EDS on the watch list (radar screen) over
the weekend and bulls were looking (hoping) for a bounce near the
bottom of the channel near the $18 mark.  Unfortunately, news
that the SEC has launched a formal investigation into an earnings
shortfall (Reuters) put shareholders on the defense and the stock
is suffering.  Now that shares have literally fallen through the
bottom of the rising channel the stock could easily see more
profit taking.  To make matters worse, Fitch has downgraded EDS'
senior debt rating.  We would look for initial support near the
$15 area but with bad news like this the stock may not stop until
fall 2002 lows.




---

Lucent - LU - close: 1.81 change: +0.13

WHAT TO WATCH: Shares of Lucent were higher today after the company
surprised the street with better than expected earnings
numbers.  Despite a triple digit loss in the Dow Industrials, LU
managed to maintain a 7.7% gain.  The stock might be worth
looking into for a very short-term trade.  We would not be
surprised to see the bulls carry it forward before hitting
resistance at the $2.00 mark, which would be a 10% gain from
current levels.  If you prefer a more patient entry wait and see
if shares come back to the 50-dma near the $1.50 area and look
for a bounce.




---

Microsoft Corp - MSFT - close: $51.00 change: -0.33

WHAT TO WATCH: Shares of MSFT continue to languish below their
200-dma after their disappointing earnings revelations last week.
Dividend or no dividend, if the stock drops below the $50 mark it
could be a decent short candidate.  Bears will probably speculate
on a move to the $45 level.




---

Amgen Inc - AMGN - close: $52.50 change: +1.63

WHAT TO WATCH: Bucking the trend are shares of biotech company
Amgen.  The market may be falling but AMGN has been close to
hitting new relative highs.  The stock came very close to
breaking out above very tough resistance today.  The $53 mark is
the level to watch and a move above could see shorts covering in
a hurry.  To add more fuel to the fire, AMGN is expected to
announce earnings tomorrow.  Any good news could really get this
stock moving!  Trade cautiously.





=========================
Play-of-the-Day (BULLISH non-tech play)
=========================

Boston Scientific - BSX - close: 44.67 change: +0.87 stop: 40.99

Company Description:
Boston Scientific is a worldwide developer, manufacturer and
marketer of medical devices whose products are used in a broad
range of interventional medical specialties. (source: company
press release)

- ORIGINAL WRITE UP: December 19th, 2002 -

Why We Like It:
A glance at the daily chart for BSX reveals that investors have
had an insatiable appetitive for shares of this medical device
company. What's driving the stock higher? The current uptrend can
be traced back to early-October, when a federal judge ruled
against Guidant (GDT) in a case involving drug-coated heart
stents. Guidant is competing with Boston Scientific to bring the
lucrative gizmos to market. The judge's ruling significantly
delayed GDT's research, effectively leaving BSX and JNJ as the
only major players. Meanwhile, BSX has moved ever-closer to FDA
approval of its own stents. On November 18th the company reported
that its TAXUS IV product had shown positive results in a safety
study. More positive news arrived nine days later, when Guidant's
appeal of the previous decision fell flat. This second ruling
helped to propel the stock to new 52-week highs. Technically, we
like how BSX has bounced back after pulling back to the bottom of
its ascending regression channel. The stock showed good relative
strength today and closed at levels not seen since 1999. The
rising volume and MACD (which is poised to give a bullish
crossover) bode well for a continuation of the existing uptrend.
In terms of upside potential, we'll be aiming for a rally to the
$50.00 level. Shorter-term traders may want to target a move to
the all-time highs near $47.00. Our entry trigger for this play
will be set at $44.01. If shares reach this level our stop will
be located at $40.99, just below the December lows. This creates
a risk/reward ratio of roughly 1:2. Those with slightly more
conservative strategy could use a stop just below $41.50.

- Last Update: January 21st, 2003 -

Tuesday proved to be quite an eventful day for BSX.  We'll take
it from the top.  The session started off on a bullish note as
shares gapped higher and pegged a new multi-year high of $46.82.
Investors appeared to be applauding Monday's FDA approval of
Boston Scientific's heartburn treatment device.  However, this
news wasn't enough to take the stock above $47.00.  You'll recall
from previous updates that we've been expecting these 1999 highs
to provide resistance.  Nimble short-term traders may have been
able to take profits before shares moved back towards $46.00.
The stock gravitated towards this level until about 12:30 EST,
when BSX announced its preliminary fourth-quarter results.  The
company reported EPS income of 31 cents, which was in-line with
analyst estimates.  Shares initially spiked down on the news but
quickly moved back into positive territory.  That's plenty of
action for one day, but there was more news to be had before the
closing bell.  Shortly after 2:00 EST, word came from Europe that
the EU had green-lighted Boston Scientific's Taxus drug-coated
heart stent.  Sounds like a positive development, doesn't it?
However, the stock traded contrary to expectations and actually
sold off on the news.  The fact that shares traded lower on an EU
approval of one of their key products indicates that this news
had already been priced in.  There was also some speculation on
CNBC that investors may have frowned on some forward-looking
statements contained in the preliminary report.  The final Q4
earnings announcement will be made on February 4th.  Glancing at
a 15-minute chart, we see that BSX has moved back to the $43.50-
$44.00 area of congestion.  Traders looking to reduce downside
risk could use a stop slightly below this region of likely
support.  We're maintaining our stop at $42.22, under the 50-dma.

- Play-of-the-Day Comments: January 22nd, 2003 -

Shares of BSX rebounded nicely today after moving lower on the
initial reaction to yesterday's EU stent approval news.  A
brokerage upgrade combined with a rising NASDAQ to push shares
higher on Wednesday morning.  The stock was able to rally up to
the $46.00 level before being dragged lower by the broader market
in afternoon trading.  Shares finished with a 2.1% gain, easily
outperforming both the Dow Jones and DRG.X pharmaceutical index.
If the overall equity climate is more bullish on Thursday we
think BSX will be able to muster another attempt at the $47.00
level.  Glancing at the daily chart, we see that shares found
intraday support at the bottom of the ascending regression
channel.  We'll be looking for shares to remain above this level
tomorrow.  If BSX is going to continue it's multi-month uptrend
then the pullback created by yesterday's decline may have offered
an entry point.  Long entries could be targeted at current
levels, using a stop just below $44.00 (or $43.74, depending on
your risk tolerance.)

Picked on December 20th at $44.01
Results since picked:       +0.99
Earnings Date            02/04/03 (confirmed)







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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 ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter               Wednesday 01-22-2003
                                                   section 2 of 2
Copyright ) 2003, 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
  Triggered Plays:       EXPE (bearish)

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

Triggered Plays
---------------

Expedia Inc - EXPE - close: 63.98 change: +0.36 stop: 68.01

This long play was activated on Wednesday at $63.37 after EXPE
broke under its 200-dma.  Shares managed to rebound with the
NASDAQ during the middle of the session before giving up a large
chunk of its intraday gains during the final two hours.
Technically, we're pleased with the way shares were unable to
move above $65.00 on an intraday basis.  We'll be looking for
this level to provide resistance if shares head higher on
Thursday.  Our stop is set at $68.01.





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

JBSS    John Sanfilippo            12.52     +1.04
NNDS    NDS Group                   7.64     +1.14

---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------
Ticker  Company Name               Close     Change

CKFR    Checkfree Corp             19.90     +3.18
JDAS    JDA Software               11.83     +2.86
PXWL    Pixelworks Inc              7.84     +1.70
TTI     Tetra Technologies         19.36     +1.36
GBBK    Greater Bay Bancorp        18.25     +1.07

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

BRL     Barr Labs                  79.50     +2.09
FIC     Fair Isaac                 45.50     +2.70
COH     Coach Inc                  32.48     +3.31

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

ROST    Ross Stores                43.10     -1.06
CAT     Caterpillar                44.45     -1.62
WHR     Whirpool                   53.52     -1.61
SSP     E.W. Scripps               81.06     -2.48
AZO     Autozone Inc               61.10     -2.60
IR      Ingersoll-Rand             38.83     -2.53
TXT     Textron Inc                40.27     -1.72

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

PHM     Pulte Homes                50.87     -0.78
MRX     Medicis Pharmaceutical     51.03     -0.67
LEA     Lear Corp                  36.92     -0.63
AIG     American Intl.             60.40     -1.00
FSNM    First State Bancorp        23.75     -2.04




=================================================================
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 ) 2003  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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