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PremierInvestor.net Newsletter              Wednesday 02-26-2003
                                                  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:      Uncertainty Reigns
Watch List:       AVCT, DISH, TKR, TOO, and MACR
Play of the Day:  Soundly Rejected

******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
02-26-2003                  High    Low     Volume       Adv/Dec
DJIA     7806.98 - 102.52  7925.81 7793.89    1327 mln  1270/1965
NASDAQ   1303.68 -  25.30  1331.47 1302.83    1775 mln  1260/1912
S&P 100   418.72 -   4.68  425.75  418.14      totals   2530/3877
S&P 500   827.55 -  11.02  840.10  826.68
RUS 2000  380.53 -   2.64  383.44  380.20
DJ TRANS 2039.69 -   2.14 2052.18 2029.76
VIX        37.02 +   0.90   37.50   35.97
VIXN       46.97 +   2.64   47.11   44.86
Put/Call Ratio 0.82
******************************************************************

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

Uncertainty Reigns

by Kent Barton

It may seem like a distant memory, but it wasn't too long ago
that investors could focus almost exclusively on earnings
results, economic numbers, sales reports, and other fundamental
data.  Even in the year following the 9/11 attacks, Wall Street
seemed to be more focused on finding the answers to questions
like "Are we in a double-dip recession?" and "When will the IT
sector finally recover?"  Those burning questions are still up in
the air.  But now, as words like "Blix," "Al-Samoud Missiles,"
and "Regime Change" become part of our daily lexicon, geo-
political events have become the driving force behind the
market's movement.  Sure, earnings and economic reports still
matter - just ask anyone who was holding long positions before
the abysmal Consumer Confidence numbers were released on Tuesday
morning.  But recently the market seems to have its collective
eyes glued to Fox News, CNN, and MSNBC instead of CNBC.  The geo-
political uncertainty has created a very choppy market
environment that's enough to give even the most jaded trader a
case of heartburn.  To wit: The market experienced a steep
reversal rally on Tuesday, in spite of that dismal Consumer
Confidence data.  There was no clear catalyst for that sudden
round of buying.  Depending on your bias, it was either short-
covering or bargain hunting.  In any case, many of those gains
evaporated today as the U.S. moved ever-closer to war with Iraq.
And with Dow Component HPQ gapping sharply lower this morning,
the bulls never really had a chance to extend Tuesday's gains.

Hewlett Packard's earnings report last night included a net
profit of $0.29 cents per share - one cent better than the
consensus estimate.  What spooked investors was the fact that the
company showed only a $17.88 billion increase in revenue.
Analysts had been looking for growth of $18.47 billion.  This
shortfall was especially concerning because a large amount of the
$17.88 billion figure was derived from HPQ's acquisition of
Compaq, not actual revenue growth.  Dissecting the results,
industry analysts pointed out that cash flow from operations was
quite weak.  This prompted Goldman Sachs to downgrade the stock's
rating from "outperform" to "in-line" while slashing its full-
year estimates from $1.34 to $1.29.  HPQ gapped down to a multi-
month low of $16.60 after finishing yesterday's session at
$18.18.  Shares continued to drift lower throughout the day and
ultimately finished with a loss of 15.4%.  That weakness spread
to fellow Dow techs IBM, INTC, and MSFT, making it very tough for
the index to extend yesterday's gains.

Annotated daily chart - Dow Jones:


In keeping with the recent trend, the Dow was unable to build on
Tuesday's powerful intraday reversal.  The index finished near
the worst levels of the session after giving back a large chunk
of yesterday's gains.  The bears will now be targeting the
Tuesday lows at 7720.  A violation of this level would set the
stage for a test of the multi-month lows near 7630.

In last night's Market Sentiment, Steve Price discussed how the
Dow Transports (TRAN) are commonly used to gauge the conviction
behind moves in the Industrials.  Another sector that is thought
to provide "confirmation" of broader market activity is the
financials.  Perhaps more than any other group, banking stocks
reflect investors' opinion of where the economy is headed.
Generally, any rally in the major equity indexes that isn't
accompanied by a strong rebound in the financials is thought to
be highly suspect.  The performance of domestic financial stocks
is gauged by the BIX.X, while worldwide money-center banks such
as Citigroup and JP Morgan are represented by the BKX.X.  The
Iraq drama is being played out on an international stage with
dozens of countries as the supporting cast.   As such, it's not
surprising to see that the index has come under pressure as war
in the mid-east becomes increasingly likely.

Annotated daily chart - BKX.X:


This chart bears more than a passing resemblance to the Dow
Jones, with the exception that the BKX.X has found short-term
resistance at its 38% retracement, while the 50% retracement has
put a ceiling on the $INDU.  However, it's interesting to note
that the BKX.X has recently shown a slight trend of relative
weakness.  From its relative high on February 21st to yesterday's
low, the index gave back 4.7%.  By way of comparison, the Dow
lost 4.0% from its own relative high to yesterday's low.  The BKX
continued to underperform on Wednesday.  On a technical basis,
the bears will be waiting to take advantage of either a breakdown
below the relative low of 690 or a rollover from resistance near
730.

As if financial bulls didn't have enough problems to contend
with, the brokerage group came under fire today after the Wall
Street Journal reported that Morgan Stanley is looking at a
possible SEC lawsuit accusing the company of "laddering."
Laddering involves giving IPO's to large banking customers who
have indicated a desire to buy more shares.  Already reeling from
an industry-wide decrease in trading volume, the last thing MWD
shareholders want to see is an SEC lawsuit. The airlines, another
beleaguered sector, were pressured today by speculation that AMR
could soon join UAL in Chapter 11 bankruptcy.  It's hard to
imagine that things will get much better for the group as long as
oil prices remain pegged at long-term highs.

Meanwhile, the NASDAQ gave back 1.9% amid a relatively quiet news
day for the tech sector.  The technical picture for the Composite
is similar to that of the Dow, with a clear downtrend emerging
over the past four sessions.  There are also some developments in
the semiconductor index that should have the bulls on their toes.
The SOX.X underperformed the broader market today with a loss of
nearly 3%.  Not only did the index retrace Tuesday's gains, but
it also set a new relative low.  Continued weakness in the SOX.X
could send the NASDAQ down to its own relative lows near 1260.

Annotated daily chart - SOX.X:


Across the Atlantic, British Prime Minister Tony Blair is facing
opposition from his own Labour party regarding the use of the
country's military force in an Iraqi war.  Blair has been one of
America's staunchest allies in the aftermath of the 9/11 attacks.
This loyalty has held firm, even while polls show that the
overwhelming majority of the British public opposes war without
the auspices of the U.N.  Meanwhile, the minority Conservative
party is largely in favor (favour?) of regime change.  Strange
bedfellows indeed!  That support from the Tories was enough to
pass a Parliament amendment today echoing President Bush's call
for a second U.N. resolution.  Still, with 199 members of
Parliament voting for a separate amendment opposing the war,
Blair is in some very hot water.

There were other developments today that suggest military action
will be taking place sooner rather than later.  Turkey moved its
ambassador out of Iraq and pulled its oil tankers away from the
area.  The U.S. has offered Turkey billions of dollars in aid in
exchange for the use of the country's airbases.  Saudi Arabia
also said it would allow an American air force presence within
their borders.  In Baghdad, Saddam has inexplicably refused to
comply with UN demands that he destroy the country's al-Samound
missiles, which have a range beyond that of the mandated limit.
Tony Blair speculated that he's keeping this as a trump card to
use just before military action appears imminent.  With several
thousand troops knocking on the front door, Hussein might
suddenly throw up his arms and say "Okay, I'll destroy the
missiles!  Look at how well I'm cooperating."  However, there
were reports today that the U.N. and independent weapons analysts
believe this missile might be part of a secret effort to design a
delivery system with enough range to hit Israel.  Chief U.N.
Weapons Inspector Hans Blix wants the missiles destroyed by
Saturday.  Will Hussein comply?  Stay tuned.

As a sweltering middle-eastern summer approaches, the timeframe
for war in Iraq is ticking away.  Hans Blix says that several
more months of weapons inspections are needed to ensure that
Hussein has fully disarmed - and that's assuming that they get
full cooperation.  This is simply unacceptable for President
Bush.  Despite its overwhelming military force, an Iraq invasion
would become substantially more difficult during the summer.
Analysts have even drawn parallels to World War II, when the
German army was defeated on the frozen Russian tundra.  While
this situation is vastly different, the White House does not
appear willing to delay the war much longer.  At a speech in
Washington tonight, Bush is going to discuss his belief that
regime change in Iraq will lead to greater chances for peace in
the middle-east; namely between the Israelis and Palestinians.
The President is also slated to talk about other benefits of
toppling Saddam while also seeking to allay concerns of other
Arab governments that war will plunge the region into turmoil.
To the contrary, Bush believes that regime change in Iraq will
help spread democracy to surrounding countries such as Iran.

Make no mistake: This approach represents a clear turning point
in American foreign policy.  It's true that the United States,
particularly during the Reagan years, played an instrumental role
in liberating the citizens of Eastern Europe from Soviet rule.
The key difference is the fact that those people liberated
themselves without direct assistance from the American military.
In the post-9/11 world the U.S. is taking a more pro-active role
towards eliminating perceived threats.  What does this have to do
with the stock market?  Everything.  Iraq will be the first test
for the Administration's new strategy, and a fear of the unknown
has given the market a serious case of the jitters.

Some investors are looking for a repeat of 1991, when the market
began moving higher shortly after the hostilities began.  Until
that happens we're likely to see a lot more choppy trading with a
bearish bias.  But it's equally uncertain whether Gulf War II
will be an easy victory for the U.S.  After all, urban combat
with Saddam's elite Republic guard in Baghdad would prove to be
far more difficult than the open-desert warfare that was seen
twelve years ago.  The other wild card is that Iraq could use
biological or chemical weapons on U.S troops.  But speculation
aside, there are a few technical signs that traders can watch for
to indicate that we may be approaching a market bottom.

One such indication would be a large upward spike in the
volatility index.  So far the VIX hasn't punched through its
long-term descending trend of lower lows.  A powerful move up to
the 45-50 area would suggest growing fear among investors.  This
was last seen in October, just before the Dow bounced back from a
multi-year low.  A large increase in volume, especially if it
coincided with a steep broader market sell-off, would also help
to confirm that the war worries have finally been conquered.
Lately volume has been relatively light, indicating that many of
the large institutional players are simply sitting on the
sidelines and waiting for the right time to act.  Until that
occurs it looks like the market is doomed to continue its erratic
and unpredictable behavior.  But remember...with difficulty comes
opportunity.  Savvy traders have been able to profit from the
recent gyrations.  Large intraday swings will continue to provide
actionable entry points.  Just keep an eye on those short-term
resistance/support levels, and as always, don't hesitate to cut
your losses if a trade goes sour.


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

Macromedia - MACR - close: 15.26 change: -0.41

WHAT TO WATCH: Shares of this software company continue to climb
despite a malaise across the sector.  Chart readers can see the
ascending channel and the very strong relative strength.  Bullish
traders can be encouraged that support at $15.00 held today
despite the broader market weakness.  We would consider bullish
entries here or above $15.80, but our target would only be
$17.50-18.00.  If the stock does dip, a bounce at $14.00 would be
attractive.




---

Avocent - AVCT - close: 28.34 change: +0.85

WHAT TO WATCH: Here's a stock that was up on a big down day.
Shares actually broke through overhead resistance at $28.00,
pulled back and then bounced at $28.00 again.  What makes this
significant is the $28.00 level has been overhead resistance for
YEARS.  While this is great news for the bulls and shorts could
panic and cover, the short-term channel/resistance trendling
shows the stock right at resistance as well (this is where a
annotated chart would come in handy).  Keep an eye on this one
and look to see how it reacts now that the stock has closed above
$28.00.




---

EchoStar - DISH - close: 26.39 change: -0.11

WHAT TO WATCH: Again, this is a stock that is showing very good
relative strength versus the overall markets.  Shares are up big
over the last few months and the stock has been able to make
headway in the last couple of weeks.  The trend of rising lows is
very bullish and the stock looks ready to make a run for the $30
level.




---

Timken Co. - TKR - close: 15.55 change: -0.15

WHAT TO WATCH: You wouldn't think of a steel and bearings company
as an investment these days but this stock actually looks
attractive.  Shares are WAY oversold and are just now starting to
rebound.  The selling stopped when TKR reached its October lows
near $15.00.  MACD is already positive but we would wait for
shares to get above the $16.00 mark before considering a long
play.  Our initial target would be $18.00.




---

TOO Inc. - TOO - close: 15.17 change: -0.05

WHAT TO WATCH: Here's another bottom fishing play.  Shares just
collapsed after breaching the $30 mark back in early December
2002.  The long down trend appears to have bottomed and there is
plenty of upside should investors decide to do a little bargain
shopping.  We would encourage traders to check the news to see if
there is any particular reason the stock was sold off to such and
extent, but the risks appear rather limited with a decent stop
loss.  We would consider a long play once shares recrossed the
$15.75 mark.  Conservative traders may want to wait for TOO to
close above $16.00.





=========================
Play-of-the-Day (BEARISH high-risk/high-reward play)
=========================

IDEC Pharma. - IDPH - cls: 28.57 chg: -0.94 stop: 31.38

Company Description:
IDEC Pharmaceuticals Corporation is a leader in the discovery,
development, and commercialization of targeted immunotherapies
for the treatment of cancer and autoimmune diseases. IDEC
discovered and developed the first monoclonal antibody product
(Rituxan.) and the first radioimmunotherapy product (Zevalin.)
approved in the United States for the treatment of cancer. IDEC
is a San Diego based, integrated biopharmaceutical company with
multiple products in clinical stage development and strategic
alliances in a variety of research platforms. (source: company
press release)

- ORIGINAL WRITE UP: February 4th, 2003 -

Why We Like It:
IDEC Pharmaceuticals announced earnings last Thursday that were
in-line with consensus expectations. Owing mostly to strong sales
of its cancer drug Rituxan (which is co-marketed with Genentech),
the company reported a large increase in fourth-quarter profits.
This came as no surprise, because IDEC had pre-announced two
weeks earlier that it would beat earnings by four cents. The
stock got a quick pop in reaction to that news but has since
trended lower with the BTK.X biotech index. That sector weakness
continues to plague IPDH. On Tuesday the BTK.X underperformed the
NASDAQ and moved to new multi-month lows. Shares of IDEC fared
even worse, selling off by 5.2% on relatively strong volume. This
took the stock out of a narrow range (most readily visible on a
30-minute chart) that dictated trading for more than a week.
Bringing up a point-and-figure chart, we can see that today's
decline also produced a triple-bottom sell signal. The current
bearish vertical count is $24.00. The weekly chart shows no clear
support until the $20.00 area. While longer-term traders might
want to target a move to that level, we'll be aiming for a
decline to the $24-$25 region. However, in order to avoid the
possibility of a p-n-f bear trap (and also to ensure that a
breakdown has occurred), we won't enter this play until IDPH
falls below $30.00. If we're triggered our stop-loss will be
placed at $32.82, one cent above the relative high. This sets up
a risk/reward ratio of roughly 1:2. More conservative traders
could use a stop slightly above Tuesday's intraday resistance at
$31.30.

- Last Update: February 25th, 2003 -

IDPH moved to a new relative low on Tuesday and proceeded to
bounce back into positive territory on the strongest volume in
over a month. The intraday rebound mirrored a similar move in the
BTK.X biotech index, which set its own multi-month low before
bouncing from the 310 level. This sort of action will certainly
keep the bears on their furry toes...but it's less clear whether
today's reversal is indicative of a short-term bottom in IDPH.
The stock has been marching steadily lower, with a descending
trend of lower highs providing resistance. This trendline
coincides with whole-number resistance at $30.00. Thus, we'll be
looking for that level to keep a lid on any additional gains. A
rollover from $30.00 might also give aggressive speculative
traders a chance to open new bearish positions. Our stop is
currently set at $31.38. Those looking for a little less upside
risk could use a stop just above the descending 21-dma at $30.73.
In the news this afternoon, IDEC announced a patent infringement
suit against Corixa and GlaxoSmithKline related to Bexxar,
Corixa's non-Hodgkin's lymphoma treatment. This did not appear to
have any substantial impact on the stock's trading.

- Play-of-the-Day Comments: February 26th, 2003 -

On Wednesday IDPH was soundly rejected from its descending trend
of lower highs.  The stock topped out at $29.68 in early trading
before it retraced nearly all of the previous session's gains.
Shares finished with a 3.1% loss, clearly underperforming the
NASDAQ and BTK.X biotech index.  The BTK.X remains mired in a
downward channel and looks like it could soon reach new multi-
month lows.  Traders looking to open new short positions can
watch for IDPH to move below its own relative low of $28.26.
Another failed rally near $29.75 might also yield an action
point.  This play's stop is currently set at $31.38.  More
conservative traders could use a stop slightly above whole-number
resistance at $30.00 or the descending 21-dma at $30.57.

Picked on February 13th at $29.99
Results since picked:       +1.42
Earnings Date            01/30/03 (confirmed)







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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 02-26-2003
                                                   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:

Stock Bottom / Active Trader
  Triggered Plays:      DHR (bullish)

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)


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

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

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

Danaher Corp. - DHR - close: 63.80 change: -0.52 stop: 61.49

This long play was triggered on Wednesday morning when DHR popped
up to new relative highs and reached our entry trigger at $64.36.
Shares traded to an intraday high of $64.45 before the bulls
succumbed to broader market downtrend.  Despite an steady decline
into the closing bell, the stock closed above its 50-dma and
outperformed the Dow Jones.  On Thursday we'll be looking for DHR
to bounce from the 50-dma and resume its recent uptrend.  New
entries can be targeted on a move above today's high.  Our stop-
loss is set at $61.49.





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

PDX     Pediatrix Medical          28.35     +0.66
PQE     Proquest Company           18.61     +0.58

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

URBN    Urban Outfitters           18.60     +1.60
MDCO    The Medicines Company      18.64     +1.06

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

SONC    Sonic Corp                 22.10     +1.14
TIF     Tiffany & Co               23.71     +1.42
EME     Emcor Group                48.04     +2.02
VLO     Valero Energy              39.35     +1.12
POT     Potash Corp                59.96     +2.85
ATU     Actuant Corp               36.25     +1.17

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

OMC     Omnicom Group              53.96     -3.39
RNR     RenaissanceRe              35.90     -1.08
CB      Chubb Corp                 45.75     -1.50
ABK     Ambac Finacial             46.68     -1.08
KCP     Kenneth Cole               22.75     -3.04
GAS     Nicor Inc                  30.08     -1.19

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

ADBE    Adobe Systems              27.08     -1.20
LLTC    Linear Technology          28.69     -0.80
DRYR    Dreyers Ice Cream          71.90     -0.44




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