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Daily Newsletter, Tuesday, 01/28/2003

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PremierInvestor.net Newsletter                 Tuesday 01-28-2003
                                                   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:      Not What I Expected
Market Sentiment: What Goes Down
Play-of-the-Day:  Deflating Price Action

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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01-28-2002                  High    Low     Volume       Adv/Dec
DJIA     8088.84 +  99.28  8144.00 7991.07    1438 mln  2091/1189
NASDAQ   1342.18 +  16.91  1346.50 1321.44    1381 mln  2064/1237
S&P 100   434.65 +   5.18  436.15  429.47      totals   4155/2426
S&P 500   858.54 +  11.06  860.76  847.48
RUS 2000  373.17 +   4.59  373.44  366.59
DJ TRANS 2165.44 +  21.43 2172.09 2141.26
VIX        35.74 -   4.03   38.68   35.52
VIXN       46.75 +   0.34   47.52   45.82
Put/Call Ratio 0.62
-----------------------------------------------------------------

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

Not What I Expected

Linda Piazza

Good news!  The Commerce Department tallied new home sales at an
annualized rate of 1.082 million, rising from November's revised rate
of 1.045 million.  Inventories fell to 3.8 months' worth from
November's 3.9 months' worth.  The median price rose.

Looking beneath the numbers, however, showed flat sales in the South
and declining sales in the West and Northeast.  Only the Midwest saw
increased sales, with that region's surge offsetting the troubling
results in other regions.

Looking beneath the numbers proved advisable when studying the durable
goods number, too.  The 0.2% increase in December orders disappointed
economists who had expected a 0.8% gain, but the number was even worse
than it appeared on the surface.  Commercial aircraft accounted for
much of the 0.2% increase, but aircraft orders can be volatile.
Positive December ISM numbers had led many to expect stronger growth in
durable orders, with some forecasting a 1.0% rise.

Many look to the non-defense capital goods portion of the durable goods
number as a better measure of economic strength.  That component showed
a 2.85% gain, but commercial aircraft orders contribute to this
component, too.  With aircraft orders backed out of the non-defense
capital goods component, it fell 0.1%.  Orders for cars and
communication equipment declined.  Inventories rose, perhaps indicating
that capital goods aren't being shipped as orders slow.

The day's release of economic numbers also included the consumer
confidence number.  That measure slipped to 79 in January from a
revised 80.7 in December, meeting forecasts.

Again, it proved important to look beneath the headline numbers.  While
the component that measures current conditions rose from December's
69.6 level to 75.4, the portion that measures expectations for the next
six months plummeted to 81.4 from December's 88.1.  Some blamed the 6%
unemployment rate for the decline in consumer confidence.

How did the markets react to these numbers?  Markets climbed into the
10:00 ET time period, but began falling toward the day's lows as
markets digested the numbers.  Most markets then traded in a tight
range until late in the session when short-covering drove them up
toward new highs.  Markets closed slightly off those highs.  Moderate
volume levels registered 1.45 billion shares on the NYSE and 1.41
billion on the Nasdaq.

With markets showing short-term oversold conditions, I expected
stronger short-covering today ahead of Bush's State of the Union
address.  Perhaps shorts were enticed to hold their positions by rumors
that Bush will use tonight's forum to unveil evidence that Iraq
possesses weapons of mass destruction.

Others discount that possibility, saying that Colin Powell will reveal
the evidence within the next several days.  The U.N. Security Council
begins debates on Iraq tomorrow, with France, Germany, Russia, and
China urging that the inspectors be given enough time to complete their
work.  Russia reportedly hinted that it might change its position if
evidence of Iraqi duplicity were presented. The outcome of the debates
should prove interesting.  On Wednesday, Hans Blix surprised many by
the frank tone of his address to the U.N. and by his enumeration of
instances in which Iraq had failed to be forthcoming.

The FOMC meeting concludes tomorrow.  While few suggest that interest
rates will change, CNBC and Bloomberg guests speculated today that
market participants will pay special attention to the bias statement.
Currently, the Fed maintains a neutral bias.

Ahead of the U.N. Security Council debates and the FOMC statement, the
world's attention focuses on Bush's address tonight.  Today saw the
FTSE 100, the CAC 40, and the DAX post small gains, but markets across
the world have plummeted lately as they react to fears that the U.S.
will immediately engage Iraq in a war.  Powell set out a timetable
yesterday, saying that Bush would spend this week conferring with world
leaders and that a decision on the appropriate next step would be made
the following week.

While it's not certain that Bush will reveal his new evidence tonight,
he will use his address to convince the U.S. public and potential
allies of the need for action sooner, rather than later. Acutely aware
of his father's perceived shortcomings when dealing with the U.S.
economy, he'll also push his economic agenda.  Aides claim that half
his speech will be devoted to his economic package, including relief to
the elderly facing expensive prescription medication costs.  That
economic package will assume greater importance as recession talk
revives ahead of the expected flat GDP number on Thursday.
Recession talk has swirled around Japan and Germany for some time
now as the world's second and third-largest economies struggle
with grim outlooks.  Today, Taiwan Semiconductor (TSM), the
world's largest contract microchip maker, reported an
unexpectedly sharp fall in Q4 net profit, but insists that it
will see a recovery begin by Q2 in 2003.

When insurer Assicurazioni Generali announced earnings last week
that included write downs of its stock investments, analysts
concluded that other insurers could be suffering from disastrous
stock investments.  Trader talk this week concluded that
worldwide, insurers were probably selling equities to preserve
funds needed to pay claims.  Today, Fujitsu, Japan's number one
PC maker, reported losses that it attributed both to slowing
sales and to the devaluation of its marketable securities.

Why should we be concerned about what's happening in these
economies?  First, if companies throughout Europe and Asia suffer
from devaluations of their marketable securities, that's likely
happening in the U.S., too.  In addition, insurers and other
companies selling securities to maintain their reserves might be
selling dollar-denominated assets, as has been theorized of late
as foreign investors pull out of the U.S. market.  Also, as these
other economies weaken, our exporters and multinational companies
suffer.

What do the charts say about our economy?  Since we rarely look
at the Wilshire 5000, let's take a look at the broadest of our
markets.  Because most of us are not as familiar with the
Wilshire's chart as we are with others, we can view these charts
with a less biased outlook and the other indices will be covered
in the Index Trader Wrap.

First, let's look at the weekly chart, courtesy of Q-charts.
Notice the green descending trendline, a line that has capped the
Wilshire since early 2000.  Notice that the 21(3)5 stochastics
are just now rolling down from overbought levels while MACD rolls
down from beneath the zero level.  RSI also turns down.  While
some might argue that the Wilshire made a double bottom in July
and August, note that the Wilshire failed in its effort to move
above the peak between the double bottoms, failing to confirm
that double-bottom pattern.  The outlook is bearish.

Wilshire 5000 Weekly Chart:


Next, let's look at a daily chart.  Although it's often possible
to argue about the exact location of the neckline of a head-and-
shoulder pattern, it's clear that the Wilshire broke through its
neckline on Friday.  I've marked that neckline in green.

Of special interest is the behavior of the RSI and MACD
oscillators.  Since late summer, these oscillators had been
forming a series of higher lows.  I've marked those higher highs
in red.  When the Wilshire broke through its neckline, these
oscillators also fell through their ascending lines, confirming
the weakness in the Wilshire.  With that evidence and with the
break of the H&S neckline, the intermediate-term outlook for the
broader markets is bearish.

Note, however, that the 21(3)3 stochastics are buried at oversold
levels and appear to be hinging up.  RSI turned up, too, and
faces the new resistance at that broken trendline.  On the price
chart, today's white candle is a harami, completely contained
within the bigger red candle that preceded it. A harami indicates
indecision, an inside day.  It's possible that tomorrow could see
an upside break of that inside day or harami, but that upside
break should stop short of that broken neckline.  Based on this
evidence, selling rallies still seems the best policy in the
intermediate term

Wilshire 5000 Daily Chart:


What about the short-term outlook? For that, I've dialed down to
a 60-minute chart.  I've included both the 21(3)3 and 5(3)3
stochastics.  The shorter-term 5(3)3 stochastics show that
today's action relieved much oversold pressure, with the 5(3)3's
moving all the way up into overbought levels.  The 21(3)3
stochastics are just now moving up out of oversold territory, but
note that the last move out of oversold territory brought these
stochastics only up to current levels before they turned down
again. RSI flattened today at levels near where they last turned
down.  MACD, however, dipped far into oversold territory and is
clearly turning up.

What's happening to price while all this occurs?  Today saw
prices moving up in a regression channel that formed higher highs
and higher lows.  This regression channel moved counter to the
prevailing move, which was sharply down.

That's bullish, right?  Not necessarily.  It fits the classic
definition of a bear flag formation.  We won't know for sure if
it's a bear flag until it breaks out to the upside or breaks down
out of that formation.  Most often, bear flags tend to break down
no later than halfway up the previous movement.  I've marked the
midpoint of the previous movement in red.  The neckline of the
H&S formation sits above that, marked in green.

Wilshire 5000 60-minute Chart:


I can see two scenarios tomorrow for the Wilshire 5000 and
therefore for our broader markets.  One is that the Wilshire
confirms the bear flag formation by falling through the
regression channel and then below yesterday's lows.

Another scenario sees the Wilshire push through the top of that
channel, rising to test the midpoint of the previous decline, at
8230, or perhaps rising to test that broken H&S neckline.  I
would expect failure at one of those levels, however, with the
ultimate direction being the same as that in the previous
scenario:  down.

While the COMPX and NDX charts show that they're outperforming
the broader markets, charts of the two S&P's look similar to the
Wilshire's.

Be careful trading ahead of Thursday's GDP number and
geopolitical developments that might change the markets' outlook.
Prepare for possible sharp short-covering rallies by determining
your stops ahead of the trading day, but don't be fooled into
believing that the longer-term outlook has changed.  That outlook
will change someday.  I'll be watching the patterns I've outlined
to pinpoint the moment when that outlook changes.  Now you'll be
watching, too.


================
Market Sentiment
================

What Goes Down
by Steven Price

We were bound to get some consolidation at some point and Tuesday
was that day.  After a sell-off of 800 Dow points in eight
sessions, we finally got a bounce back through the 8000 support
level that was broken on Monday.  With a full slate of economic
data for traders to digest this week, as well as a Federal
Reserve meeting and plenty of happenings on the Iraq front, the
market finally got a bounce ahead of the President's State of the
Union address.  While we can expect some stumping for his new
economic stimulus package, everyone will be looking for clues
about what the timetable for an Iraqi invasion will be.  There
was some tough talk from U.S. officials on Monday, following Hans
Blix's report on what he considered to be a lack of substantive
cooperation from the Iraqis in regard to weapons inspections and
this will be the President's chance to deliver his message
personally.

A couple of economic reports helped the markets this morning.
The Consumer Confidence report, which hit its lowest point in
nine years, still came in slightly above expectations.  The
reading of 79.0 came in above the consensus of 78.5, but the
internals of the report still paint a gloomy picture.  While it
was a positive that the present situation index improved from
69.6% to 75.4%, the expectations index fell from 88.1 in December
to 81.4 in January.  There was an increase in the percentage of
consumers expecting fewer jobs, while there was a decrease in the
percentage of those expecting more jobs. According to Lynn
Franco, Director of The Conference Board’s Consumer Research
Center, “Overall readings continue to reflect the country’s
lackluster economic activity. Now, with the threat of war
looming, consumers have grown increasingly cautious about the
short-term outlook.”  The report is one indication of consumers'
willingness to spend.  Still, since the report was slightly
better than expected, one of the big recipients of those consumer
dollars, the retail sector, got a boost.  The Retail Index
(RLX.X), which sunk to a new 52-week closing low on Monday,
gained 3.24, to make almost all of Monday's loss.

The other positive economic data released today, which was a
positive both in its upside surprise and in its basic data, was
the new home sales report.  New home sales rose 3.5% in December,
to an annualized rate of 1.082 million.  This helped set a record
for 2002, which was mostly due to forty-year low mortgage rates.
It also came on the heels of positive home re-sale data released
on Monday.  The number seems in contrast to the results of may
very unofficial reader survey here at OI, which indicated a
slowing around the country.  However, that survey may not have
been so far off, as the gains were concentrated mostly in the
Midwest, but were flat or declined for the rest of the country.
The increase did, however, cross most pricing plateaus, with
homes priced from $150k to $199k accounting for 25% of sales and
homes over $300k accounting for 23%.

The durable goods report, which reflects demand for high-cost
items such as computers, non-defense capital items and
automobiles, showed a mild gain of 0.2%.  This was below
expectations for a gain of 0.8% and followed a downwardly revised
1.5% drop in November.  It was not terribly encouraging and
underscored the lack of spending in the economy.  Still, it was
not enough to hold back the rally ahead of the President's
address.

With the data that was released today confirming that the economy
remains in a slump (with the exception of housing), the most
likely reason for the broad market rally was a round of short
covering ahead of the President's speech.  With a steep market
drop ahead of tonight's comments, there are undoubtedly many
short sellers looking to protect some of their gains in case of a
big rally.  While the reasons behind any rally remain unclear,
one impetus might be talk of an invasion in Iraq being further in
the future than anticipated.   Bush will be pushing his economic
plan, as well, which could also lead to a snap back from oversold
conditions after a steep drop in a short period of time. Today's
jump in the markets was nice, but it by no means made up a
significant portion of recent losses and the overall trend
remains down. In any case, the State of the Union address while
we are on the verge of war should be considered a possible
market-moving news event and shorts were wise to lock up at least
some of their recent gains.

The bounce actually ran out of steam after cracking the Dow 8100
barrier twice intraday and another late day push was not enough
to maintain that level on a closing basis. In fact, any rollover
from a bounce below the 8200 breakdown level looks like a short
opportunity.  I've talked ad nauseam about the head and shoulders
pattern I believe we are seeing in the Dow/SPX/OEX and if we get
resistance at the neckline break, that should be good for shorts
down to the 7500 range.

We could see some schizophrenic trading tomorrow, following the
President's speech and ahead of the conclusion of the FOMC
meeting and the UN meeting on Iraq.  Traders can keep an eye on
that 8200 level for signs of just how much conviction bulls can
muster.  Once we're above that level, it's anybody's guess, as
we'll be back into serious congestion in the 8200-8300 range.
That range could provide more resistance and a move into it would
still be less than a 50% retracement of recent losses, however,
the picture would become cloudier once we are above previous
support.
-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8088

Moving Averages:
(Simple)

 10-dma: 8419
 50-dma: 8572
200-dma: 8835

S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  858

Moving Averages:
(Simple)

 10-dma:  888
 50-dma:  904
200-dma:  937

Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     : 1001

Moving Averages:
(Simple)

 10-dma: 1027
 50-dma: 1048
200-dma: 1043
-----------------------------------------------------------------

The Semiconductor Index (SOX.X):  The Semiconductor Index was
actually one of the laggards in today's rally.  While it did show
a gain after finishing below 280 on Monday, that gain was a mere
2.50 points.  More importantly, the intraday rebound attempts
found resistance at 284, indicating that the former support level
around 281-284 may now be providing resistance to any rebound
attempt in the sector. While the Nasdaq Composite tacked on 17
points, chip stocks like Intel (+0.13), QLGC (+0.11) and Texas
Instruments (+0.58) showed only minor gains, as did chip
equipment maker KLAC (+0.13).  After the bell, however, equipment
maker CYMI beat estimates by a penny and traded up 0.90 from its
close of $32.96.

52-week High: 393
52-week Low : 214
Current     : 282

Moving Averages:
(Simple)

 21-dma: 309
 50-dma: 321
200-dma: 358
-----------------------------------------------------------------

Market Volatility

The VIX has been very, well, volatile the last few days.  After
breaking out above resistance at 35 on the breakdown below Dow
8200/OEX 440 last Friday, it soared up to 40 on Monday's
continued sell-off.  As we rallied today, it dropped hard, all
the way back to 35.52.  The significance? We just found support
at prior resistance (35), indicating the equity bounce to the
previous breakdown level may be just an oversold bounce back to
its former level of support, which may now act as new resistance.
Neatly contrarian, wouldn't you say.

CBOE Market Volatility Index (VIX) = 35.52 -4.25
Nasdaq-100 Volatility Index  (VXN) = 46.73 +0.14
-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.62        531,599       330,219
Equity Only    0.46        419,669       193,988
OEX            1.10         15,078        16,658
QQQ            0.20         75,382        15,769
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          46.7    - 3     Bull Confirmed
NASDAQ-100    50.0    - 2     Bear Confirmed
Dow Indust.   36.7    - 3     Bear Confirmed
S&P 500       49.2    - 5     Bull Correction
S&P 100       46.0    - 4     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  1.35
10-Day Arms Index  1.50
21-Day Arms Index  1.32
55-Day Arms Index  1.31


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 they do, they can signal significant market turning
points.
-----------------------------------------------------------------

Market Internals

        Advancers     Decliners
NYSE       1851          1030
NASDAQ     2003          1175

        New Highs      New Lows
NYSE        75               94
NASDAQ      94               81

        Volume (in millions)
NYSE       1,698
NASDAQ     1,393
-----------------------------------------------------------------

Commitments Of Traders Report: 01/21/02

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

Commercials added similar amounts to both sides, ending the
period slightly less short, but not by a significant percentage.
Small traders also added similar amounts to both sides, finishing
the period with an additional 1,000 long contracts overall.

Commercials   Long      Short      Net     % Of OI
12/31/02      410,968   462,782   (51,814)   (5.9%)
01/07/03      411,542   455,538   (43,996)   (5.1%)
01/14/03      411,052   453,164   (42,112)   (4.9%)
01/21/03      415,028   456,885   (41,857)   (4.8%)

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year: ( 16,472) - 10/01/02

Small Traders Long      Short      Net     % of OI
12/31/02      139,383    75,640    63,743     30.0%
01/07/03      143,169    83,895    59,274     26.1%
01/14/03      144,182    92,358    51,824     21.9%
01/23/03      148,227    95,356    52,871     21.7%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 114,510 - 3/26/02

NASDAQ-100

Commercials decreased long positions by 1,000 contracts, while
adding almost 5,000 contracts to the short side.  Small traders
added 5,000 contracts to the long side, while reducing shorts by
1,500.

Commercials   Long      Short      Net     % of OI
12/31/02       31,399     44,387   (12,988) (17.1%)
01/07/03       37,966     48,156   (10,190) (11.8%)
01/14/03       38,057     45,060   ( 7,003) ( 8.4%)
01/23/03       37,174     49,789   (12,615) (14.5%)

Most bearish reading of the year: (15,521) -  3/13/02
Most bullish reading of the year:   9,068  - 06/11/02

Small Traders  Long     Short      Net     % of OI
12/31/02       19,841     5,009    14,832    60.1%
01/07/03       19,708     8,453    11,255    40.1%
01/14/03       20,757     8,320    12,437    42.8%
01/23/03       25,852     6,764    19,088    58.5%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Commercials added 1,000 contracts to the long side, while
reducing shorts by 1,400.  Small traders added approximately 600
contracts to both sides, leaving the net virtually unchanged.

Commercials   Long      Short      Net     % of OI
12/31/02       15,940    11,253    4,687      17.2%
01/07/03       16,210    11,333    4,877      17.7%
01/14/03       17,804    12,427    5,377      17.8%
01/23/03       16,901    11,031    5,870      21.0%

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
12/31/02        4,997     6,553    (1,556)   (13.5%)
01/07/03        4,963     8,334    (3,371)   (25.4%)
01/14/03        4,552     7,697    (3,145)   (25.7%)
01/23/03        5,120     8,282    (3,162)   (23.6%)

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 BEARISH non-tech play))
===============

Air Products - APD - close: 40.37 change: +0.40 stop: *text*

Company Description:
Air Products serves customers in technology, energy, healthcare
and industrial markets worldwide with a unique portfolio of
products, services and solutions, providing atmospheric gases,
process and specialty gases, performance materials and chemical
intermediates. The company is the largest global supplier of
electronic materials, hydrogen, helium and select performance
chemicals. (source: company website)

Why We Like It:
Shares of Air Products spent the latter part of 2002 bouncing
around between $40 and $46.  This range actually tightened in
late December and early January, as APD spent several weeks
trading in the $42-$44 region.  It wasn't until last Wednesday
that the stock finally broke to the downside.  The catalyst for
this decline was the company's earnings report.  Air Products
showed a boosted profit on increased sales, but missed consensus
estimates by once cent.  Investors have had a clear bearish bias
on APD ever since.  Similar selling pressure has been seen in
shares of chemical giants DD and DOW.  DuPont reported their own
quarterly earnings today and rose a paltry 27 cents after it beat
estimates by three pennies.  The recent action in chemical stocks
is a reflection of economic uncertainty on Wall Street.  Is a
dreaded "double-dip" recession just around the corner?  Nobody
knows for sure, but as long as economic data remains sluggish
(i.e. today's weaker-than-expected durable goods orders), the
large institutional buyers will be hesitant to bet on a recovery
in the manufacturing sector.

Technically, we like APD as a bearish play because the stock is
on the verge of breaking through key support in the $40.00
region.  Shares rebounded from this level on multiple pullbacks
in the second half of 2002.  Pulling back to a weekly chart, we
see that the next level of possible support is down at the 2001
lows near $32.00.  For the purposes of this play we'll target a
move to the $33.00 area.  Shorter-term traders could aim for a
test of the p-n-f bearish vertical count of $36.00.  One caveat:
The recent losses have pushed the daily stochastics into oversold
territory.  This indicates that APD might see some short-covering
at current levels.  However, we think the stock will succumb to
another wave of selling once support gives way.  We're placing an
entry trigger at $39.84 (one cent under yesterday's low) in order
to confirm a breakdown.  If the play is activated we'll use at
stop at $43.02, just above the descending 50-dma.  More
conservative traders could a stop slightly above Friday's high of
$42.15.

Annotated daily chart - APD:



Picked on January xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           01/22/03 (confirmed)







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PremierInvestor.net Newsletter                  Tuesday 01-28-2003
                                                    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
  Bearish Play Updates:  EXPE

Stock Bottom / Active Trader
  New Bearish Plays:     APD
  Bullish Play Updates:  FRX
  Bearish Play Updates:  JWN
  Closed Bearish Plays:  DLX

High Risk/Reward
  Bullish Play Updates:  XLNX


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

===============
NB Play Updates
===============

  --------------------
  Bearish Play Updates
  --------------------

Expedia Inc. - EXPE - cls: 64.08 chg: +1.15 stop: 66.56 *new*

EXPE continues to gravitate towards its 200-dma.  In a
potentially positive technical development, shares closed below
this moving average on Monday.  The stock looked poised to break
under the relative low and move towards the $60.00 area.  These
bearish expectations were dashed by today's rebound in the equity
market.  But in spite of the 1.8% gain, shares did not come close
to breaking out of the multi-week downtrend.  EXPE has instead
been consolidating in a relatively narrow range over the past
week, with neither the bulls nor the bears showing any resolve.
The MACD and daily stochastics (5,3,3) are both somewhat flat and
not giving any hint of where the stock is headed next.  Once EXPE
does pick a direction, we think the movement could be swift.
We've tightened our stop to $66.56, which should keep potential
losses limited to roughly 5.0%.  This is also above the 21-dma at
$65.92.  Traders looking for new entries can continue to watch
for a break under $62.76.

Picked on January 22nd at $63.37
Results since picked:      -0.71
Earnings Date           02/05/03 (confirmed)






==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

============
AT New Plays
============

  -----------------
  New Bearish Plays
  -----------------

Air Products - APD - close: 40.37 change: +0.40 stop: *text*

Company Description:
Air Products serves customers in technology, energy, healthcare
and industrial markets worldwide with a unique portfolio of
products, services and solutions, providing atmospheric gases,
process and specialty gases, performance materials and chemical
intermediates. The company is the largest global supplier of
electronic materials, hydrogen, helium and select performance
chemicals. (source: company website)

Why We Like It:
Shares of Air Products spent the latter part of 2002 bouncing
around between $40 and $46.  This range actually tightened in
late December and early January, as APD spent several weeks
trading in the $42-$44 region.  It wasn't until last Wednesday
that the stock finally broke to the downside.  The catalyst for
this decline was the company's earnings report.  Air Products
showed a boosted profit on increased sales, but missed consensus
estimates by once cent.  Investors have had a clear bearish bias
on APD ever since.  Similar selling pressure has been seen in
shares of chemical giants DD and DOW.  DuPont reported their own
quarterly earnings today and rose a paltry 27 cents after it beat
estimates by three pennies.  The recent action in chemical stocks
is a reflection of economic uncertainty on Wall Street.  Is a
dreaded "double-dip" recession just around the corner?  Nobody
knows for sure, but as long as economic data remains sluggish
(i.e. today's weaker-than-expected durable goods orders), the
large institutional buyers will be hesitant to bet on a recovery
in the manufacturing sector.

Technically, we like APD as a bearish play because the stock is
on the verge of breaking through key support in the $40.00
region.  Shares rebounded from this level on multiple pullbacks
in the second half of 2002.  Pulling back to a weekly chart, we
see that the next level of possible support is down at the 2001
lows near $32.00.  For the purposes of this play we'll target a
move to the $33.00 area.  Shorter-term traders could aim for a
test of the p-n-f bearish vertical count of $36.00.  One caveat:
The recent losses have pushed the daily stochastics into oversold
territory.  This indicates that APD might see some short-covering
at current levels.  However, we think the stock will succumb to
another wave of selling once support gives way.  We're placing an
entry trigger at $39.84 (one cent under yesterday's low) in order
to confirm a breakdown.  If the play is activated we'll use at
stop at $43.02, just above the descending 50-dma.  More
conservative traders could a stop slightly above Friday's high of
$42.15.

Annotated daily chart - APD:



Picked on January xxth at $xx.xx <- see text
Results since picked:      +0.00
Earnings Date           01/22/03 (confirmed)





===============
AT Play Updates
===============

  --------------------
  Bullish Play Updates
  --------------------

Forest Labs - FRX - close: 51.40 change: +0.37 stop: 49.74

When we initially entered this hypothetical trade we knew that
further broader market weakness could drag FRX down to the bottom
of the January 3rd gap.  Our expectation was that buyers would
emerge near this level, which coincides with psychological
support at $50.00.  The bulls did not let us down on Tuesday.
Shares rebounded from a morning low of $50.15 before finishing
with a small gain.  This created a hammer candlestick on the
daily chart.  That's a possible reversal formation, but we'll
need to see some follow-through on Wednesday to confirm the
bounce.  It's also important to note that FRX traded relatively
weak versus the DRG.X pharmaceutical index today.  The stock
found resistance at its 50-dma ($51.51) and wasn't able to break
the short-term pattern of lower lows and lower highs.  This trend
will need to be broken if shares are going to move back towards
the relative high at $53.39.  Given the technical uncertainty, we
would not advise taking new long entries at this time.

Picked on January 24th at $53.01
Results since picked:      -1.61
Earnings Date           01/16/02 (confirmed)




  --------------------
  Bearish Play Updates
  --------------------

Nordstrom Inc - JWN - close: 18.37 change: +0.29 stop: 19.06

Our short play in Nordstrom was triggered yesterday at $17.98
when shares of the department store retailer reached new multi-
month lows.  The stock managed to move back above the $18.00
level before the closing bell.  JWN saw further buying today as
both the Dow Jones and RLX.X posted gains of 1.2%.  The retail
group was buoyed by this morning's release of the consumer
confidence index.  Ticking in at 79.0, the reading was the worst
in nine years.  As bad as that sounds, the number was a full half-
point better than consensus expectations.  This shows
possible stabilization in confidence following a steep decline
during the summer months.  While that's potentially positive for
the sector, retail bulls aren't out of the woods just yet.  We
have yet to see much concrete evidence of improving sales, and
with the Iraqi war looming on the horizon it's hard to imagine
that consumers will be rushing to the malls.  If JWN continues
higher tomorrow we'll be looking for shares to lose momentum
below the 21-dma at $18.83.  Very speculative traders could
target fresh entries on a rollover from this moving average.
Less aggressive traders will probably want to wait for a move
under yesterday's low ($17.87) before considering new short
positions.

Picked on January 27th at $17.98
Results since picked:      -0.39
Earnings Date           02/20/02 (confirmed)





===============
AT Closed Plays
===============

  --------------------
  Closed Bearish Plays
  --------------------

Deluxe Corp. - DLX - close: 39.99 change: +0.70 stop: 41.34

After nearly two months, it's time to say farewell to DLX.  Last
week the stock began firming up after reaching a multi-month low
of $38.45.  The relative strength that was displayed on Friday
carried over into this week, as shares outperformed the Dow Jones
over the past two sessions.  Today's action in particular
convinced us to drop DLX.  Shares broke through short-term
resistance near $39.80 and moved above previous support at
$40.00.  Although the stock closed a penny below this level, it
looks like the bulls may have a clear shot at the 21-dma ($40.73)
if the market continues to recover tomorrow.  Deluxe announces
earnings during the market on Thursday, so even without this
technical strength our timeframe for playing DLX would be
limited.  We're closing this hypothetical trade at today's
closing price for a gain of 3.1%.  Traders who have become
familiar with how DLX behaves may want to keep an eye on the
stock in the aftermath of the earnings report; a rollover from
the $40.00 might present another bearish entry point.  Note,
however, that both the MACD and daily stochastics are hinting at
further upside.

Picked on December 4th at $41.28
Results since picked:      +1.29
Earnings Date           01/30/03 (confirmed)






==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

===============
HR Play Updates
===============

  --------------------
  Bullish Play Updates
  --------------------

Xilinx Inc - XLNX - close: 20.91 change: +0.48 stop: 19.49

You'll recall from last night's play description that we'd been
looking for XLNX to rebound from support at $20.00.  This level
was tested on Tuesday morning, shortly after XLNX set an early-
session high of $20.90 (one cent below our trigger price.)  Aided
by a rebound in the SOX.X semiconductor index, the stock
proceeded to bounce sharply from its intraday low of $20.11.
Shares were not turned away on their second attempt to move above
yesterday's high.  Following the break above this level (which
activated our long play at $20.91), XLNX also moved through
short-term resistance just below $21.00.  The SOX.X, on the other
hand, still faces resistance at 286.  While XLNX is looking
technically ripe for a continued bounce, more gains will be tough
to come by if the index can't stage a more convincing rally.  A
positive reaction on Wall Street to tonight's State of the Union
speech might be just what the chip bulls need to get the ball
rolling.  If this turns out to be the case, new entries can be
targeted on a move above today's high of $21.25.  Our stop is
located at $19.49.

Picked on January 28th at $20.91
Results since picked:      +0.00
Earnings Date           01/21/03 (confirmed)







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