PremierInvestor.net Newsletter Tuesday 07-01-2003 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: 180 Point Rebound Watch List: NVDA, ALTR, BRCM, CTXS and more! Market Sentiment: Timeframes ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 07-01-2003 High Low Volume Advance/Decline DJIA 9040.95 + 55.50 9050.82 8871.20 1.75 bln 1918/1246 NASDAQ 1640.06 + 17.30 1641.77 1598.92 1.68 bln 1656/1565 S&P 100 494.90 + 4.51 495.46 484.41 Totals 3574/2811 S&P 500 982.31 + 7.81 983.26 962.10 W5000 9409.81 + 66.90 9416.50 9227.55 RUS 2000 449.17 + 0.80 449.24 441.22 DJ TRANS 2416.30 + 3.40 2421.03 2370.58 VIX 21.29 - 0.33 23.11 21.18 VXN 30.22 - 1.01 32.46 30.02 Total Volume 3,715M Total UpVol 2,440M Total DnVol 1,216M 52wk Highs 324 52wk Lows 26 TRIN 1.15 PUT/CALL 0.96 ================================================================= =========== Market Wrap =========== 180 Point Rebound If you just looked at the closing numbers you would get a very wrong impression of the day's activity. The Dow's closing gain of a mere +55 was decent but that was nearly +180 points off the morning lows. Bad news abounded from ISM, Construction Spending and auto sales but the bulls were not going to be deterred. Dow Chart - Daily Nasdaq Chart - Daily The day started off negative with the Chain Store sales which fell -0.5% shocking analysts. This was the largest drop in months and negated the +0.6% gains from last week. With the sun out in the north east consumers went back outside to play and avoided the stores for anything other than seasonal merchandise. Strong sales of swimwear did little for overall store sales. Most retailers are just trying to hang on until the tax cut checks begin appearing in the mail box of consumers. Those and the lower withholding will help put additional cash in store registers. Unemployment is still holding back gains in year over year sales. Good news for those consumers came from the Challenger Layoff Report today, which showed the lowest number of announced layoffs since November 2000. Only 59,715 job layoffs were announced in June and the second monthly drop. This is only slightly above the rate which employers announced during the boom years of the 1990s. Challenger was very bullish about the coming prospects for the second half and said this was the first really positive signs of a recovering economy. For the first half of 2003 there were 630,532 announced layoffs. The excitement was tempered by the ISM results. The ISM for June was a serous disappointment when it came in at 49.8 compared to the consensus of 51.0. While it did not reach the consensus it did barely eek out a gain over last months 49.4. Traders were not excited and the market tanked on the news to dip under 8900 before recovering. While the headline number was indicative of a continuing decline in the economy there were some rays of hope. New Orders, Production and Employment rose and inventories dropped. If production is increasing and inventories are dropping then it would not take much to deduce a potential pickup in demand. This is only conjecture but traders were ready to grab at any straw when trading below 8900. New export orders jumped to 54.4 from 50.8 and the highest level since February. Construction Spending came in at -1.7% compared to estimates of +0.4%. This also surprised analysts especially when April was revised down from -0.3% to -0.7% as well. That makes this month's drop -2.1% from the previously announced April numbers. This is a huge number and it is the third consecutive monthly decline. This was the largest drop in spending in over a year. Private construction dropped -1.7% and public works construction -1.8%. The public sector may have topped out with state and local governments scrambling to raise taxes and cut services just to break even. There are no funds to expand in all but the rarest of cases. Economics were not the only market movers today. JPM cut estimates on GE for 2004 to become the lowest estimate at $1.66 for the full year. The consensus is $1.74. AMAT was weak after rumors made the rounds speculating on an earnings warning. There is concern that they were scrambling to make the end of the quarter and weak chip sales in June were causing another delay in chip equipment orders. IDC also added to this overhanging gloom with comments that they would be revising their estimates of global PC sales down from the current +2% for the year. They said the lack of a tech rebound and the SARS scare was continuing to depress the tech sector. There were also several mentions of technical sell signals being generated by weak performance in several Dow components. Those components were DD, EK, XOM, IBM, IP, GE, JNJ and PG. Also, cyclicals like CAT, IP and WY, to name only a few, were weak on a decreasing outlook for a second half recovery. Copper prices, a raw component in almost every electronic component and electrical device sold, has been dropping. This indicates there is no demand for copper and projects a weak cycle for manufacturers and retailers. Even the bulletproof homebuilders started the day off in the cellar. Traders feared the vehicle sales numbers would fall off the cliff after the close after Ford announced a -7.7% drop in sales for June. When the AutoData was finally released it showed an adjusted rate of 16.4 million units, up slightly from the May numbers of 16.1 million units. Removing the seasonal adjustment and sales dropped -4.3% overall. In the brand wars GMC rose +18%, Cadillac dropped -17%, Oldsmobile fell -33%, Pontiac -8.6%, Saturn -20% and SAAB rose +6.7%. Ford -6.6%, Mercury -36%, Lincoln +5%, Jaguar -4%, Volvo rose +22% and Land Rover -16%. Jeep +2%, Dodge +6%, Chrysler +9%, Mercedes +6.7%, except that the M-class SUV dropped -33%. Nissan rose +22% and Infinity +43%. You could make a case that expensive cars were slipping but Porsche rose +27%. It is not an apples to apples comparison since Porsche only sold around 5000 cars. BMW sold nearly 25,000 vehicles for an +11% increase. While the headline numbers show gains across all the car companies there are clearly some mixed results in the details. The incentives are continuing and car makers are still holding to a hopeful outlook for the second half. The most positive news today came from the financial sector. A 96-year-old judge threw out a class action case against Merrill Lynch. Investors had sued to recover losses which they said were due to tainted advice. The judge said investors were too naove and handed the big broker a win that could impact all the other class action suits currently in progress. He also said the ruling would apply to suits against MWD, GS and CSFB. The financial sector cheered with billions in potential liability possibly lifted from their shoulders. Citigroup gained +1.01, GS +2.10, MWD +1.44, LEH +1.25 and BSC +1.28. These gains are impressive only when you realize they were rebounds from significant early morning losses. These rebounds started exactly at 12:45 and you could easily point to an intraday Dow chart and see the beginning of the afternoon rally on the announcement. When the market jumped initially the news was not attributed to the court decision and shorts tried to jump back in at a higher level but the deck was stacked against them. Not only did the financials spark the market but bonds began to sell off once again and early retirement cash was being put to work. Don't buck the bulls on the first day of July. The first day of July has been up 13 of the last 14 years including today. The influx of retirement cash and late buying by index funds, who missed the cutoff on the rebalancing, help to power the July bounce. Today historically begins a bullish ten day period despite July being the start of the worst four months of the year. If the markets are going to rally they got the best possible start on Tuesday. The Dow dropped back to support at 8900, actually slightly below stronger support at 8950 but either way the weak holders were flushed at the open. The Nasdaq dropped back to very strong support at 1600 and rebounded strongly to close at 1640 and right in the middle of its trading range. Make no mistake. The economic news was bad regardless of how you spin it. There were positive internals but it came in below expectations. There were earnings warnings and downgrades to major estimates. There were repeated references to a second half recovery being weaker than expected or even AWOL one more time. Still the market rallied and rallied strongly bouncing +180 points off its lows. It is not a rally. It is just a one-day reversal but coming at the beginning of the strongest week in July it has all the earmarks of a potential bullish move. I suggested on Sunday to buy any dip above S&P 950 and the S&P bottomed at 962 on Tuesday before rebounding to close at 982. Now we are in that confirmation stage. If we go up from here I would continue to remain long. I would use 960 as my stop loss. A drop under 960 for the rest of the week would be very negative and could break the historical July trend. Even if the market continues to rise we need to remember this is only a trading rally and not the next leg in a new bull market. Just like the first week of July is normally bullish the last two weeks of July are normally bearish. We will begin to see a flood of earnings and there are some serious concerns that they will not be good. The concern is that the earnings gains have come from continued cost savings and job cuts and not from top line sales. This will be key this cycle. If there is no sales growth and no improved guidance then the fears of a fourth year with no second half recovery will soar. We are approaching a very critical period in the market. The next two weeks will be key to direction and many feel that even decent earnings and guidance will not be enough to justify the gains from the last four months. The July trends I have been discussing did not occur overnight. They have been created by innumerable cycles of hoping for a strong second half, even during boom years. The summer quarter is known for its tech depression cycle. That cycle comes from the earnings guidance in the July reporting. Tech companies look at the 2Q results, at orders for the 3Q and typically revise guidance for the rest of the year. They trade the first half of the year on hope and the last half on reality. That reality is about to appear, good or bad. The key this year is "will it be good enough" not just will it be good. The Nasdaq is up +48% from the October lows. That is not a good year, it is a good couple of years. How good will earnings have to be to sustain a continued rally from here? If the ISM had blown the doors off at 55 or 60 and showed a strong surge in orders then we could expect another quarter on hope. Instead it showed a continued economic decline. The rest of the week, both days, have serious economic reports. Wednesday has Factory Orders and Mortgage Applications but Thursday is the killer. Nonfarm Payrolls, ISM Services and Jobless Claims. This could make or break the July trend. If the Jobless Claims come in under 400K and the Nonfarm Payrolls show any improvement over May then we could be ok for another week. In April jobs were revised to zero loss and in May the number came in at only -17,000. This was significantly better than the -151,000 and -121,000 the prior two months. Could we be in for a positive jobs report? Could be. The official consensus is for a gain of +1,000 jobs. Nothing like hedging your bets and not going out on a limb. That sets us up for a potential surprise in either direction. The bottom line is a potentially rocky road ahead but one that is typically bullish due to retirement cash flowing into funds. Once that cash tapers off the outlook could change substantially. Enter Very Passively, Exit Very Aggressively! Jim Brown ================================================================== 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 --------------------------------- NVIDIA Corp. - NVDA - close: 23.85 change: +0.94 WHAT TO WATCH: After succumbing to some much needed profit taking, the Semiconductor stocks look like they are ready to run after the recent rebound from the bottom of the 5-month rising channel. NVDA has been one of the stronger Chip stocks in recent months and we're looking for a continuation of that pattern of relative strength. The stock has recently found strong support near $22.50 so another dip and rebound from above $23 looks good for new entries. --- Altera Corp. - ALTR - close: 16.91 change: +0.48 WHAT TO WATCH: Another encouraging chart pattern from the Chip sector is provided by ALTR, as the pullback from its recent highs came to a halt near strong support at $16, and it looks like the rebound is well under way. Look for upside continuation to lead to another test and possibly a breakout at $20. --- Broadcom Corp. - BRCM - close: 25.74 change: +0.83 WHAT TO WATCH: While the SOX has really pulled back from its recent highs, BRCM has held up very well and appears to be showing signs of relative strength. Holding support near $24 is encouraging, as is Tuesday's close back over the 20-dma. Use a continuation of Tuesday's strength above $25.80 to enter new positions ahead of another assault on the $28-29 resistance area. --- Citrix Systems - CTXS - close: 21.66 change: +1.30 WHAT TO WATCH: Now that's a strong rebound! After dipping below $20 again this morning, shares of CTXS really caught a bid, rising more than 6% by day's end on strong volume. Ending right on the 20-dma, the stock is set to provide a solid entry opportunity with continuation through that level. Once above $22, a renewed assault on recent resistance near $24 will be the bulls' objective. =================== On the RADAR Screen =================== XMSR $12.40 - Looking for some excitement? Then XMSR may just be your sort of play. There's been a lot of volatility lately, but after some very strong data on new subscribers was released on Tuesday the stock surged by more than 12% and looks poised for a big breakout. Should the stock break its early June high of $13.28, momentum traders will be targeting $15 and possibly $16.50. SNDK $41.62 - No end in sight? Bears are sitting in stunned disbelief, as shares of SNDK continue to charge to new highs on almost a daily basis. The bullish price target from the PnF chart is way up in the $70s, so it looks like there is still plenty of room to run. This week we've already seen a solid rebound from the bottom of the 10-week ascending channel and we're looking for another run to the top of the channel, now at $46. Look for a breakout above yesterday's high ($42.20) to facilitate new momentum entries. NANO $8.28 - This market certainly isn't lacking for breakouts and NANO gave us a powerful one already this week. Volume has been running at four times the ADV the past two days and Tuesday's session saw a breakout to new 11- month highs and it looks like a continuation above today's intraday high could lead to a test of $10.50-11.00. In case you haven't guessed, NANO manufactures components for the Semiconductor industry. =============================== Market Sentiment =============================== Timeframes - Jon Levinson Those of you who follow the live action in the Market Monitor and Futures Monitor and trade the market intraday are aware of the flightiness of the shorter period charts and indicators. My primary trading window is based on 3 minute candles, though I often switch to a 50-tick view as well to change perspective. This focus has evolved to fit my own trading style, which has evolved to fit my personality and its numerous psychoses and idiosyncrasies. Under most circumstances, the oscillators indicators I follow on that timeframe allow me to see and react to the trade setups that serve me best. Other times, they do not, such as today. As I type, my useless 26-3-18 stochastics are flatlined above the 80 level on this 3 minute chart, as the longer cycles within which it is nested push higher. Like your kids' face smushed against the side window as you drive along a highway rotary, pulling maximum G's, my little 2.6 hour cycle oscillator is smushed against the bottom of the longer cycles which bottomed just after 10AM. 2 lessons: watch the oscillators on longer timeframes to contextualize the timeframe that you're trading, and always use stops. I was sloppy with the one but not with the other today. In reviewing the data below, keep in mind that it's end-of-day data, and will fit best with your daily candle charts. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9410 52-week Low : 7197 Current : 9041 Moving Averages: (Simple) 10-dma: 9096 50-dma: 8808 200-dma: 8381 S&P 500 ($SPX) 52-week High: 993 52-week Low : 768 Current : 982 Moving Averages: (Simple) 10-dma: 986 50-dma: 956 200-dma: 893 Nasdaq-100 ($NDX) 52-week High: 1266 52-week Low : 795 Current : 1217 Moving Averages: (Simple) 10-dma: 1212 50-dma: 1170 200-dma: 1043 ----------------------------------------------------------------- The rebound in the broader markets today reinforces the feeling that bulls are still in control for now. This had the VXN falling another 3.2% just above the 30 level and fast approaching its all time lows. The VIX remains pegged near the bottom of its sideways channel between 21 and 24. CBOE Market Volatility Index (VIX) = 21.29 -0.33 Nasdaq-100 Volatility Index (VXN) = 30.22 -1.01 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.96 474,338 456,893 Equity Only 0.90 340,986 307,233 OEX 0.85 26,004 22,128 QQQ 3.13 21,594 67,647 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 70.9 + 0 Bull Confirmed NASDAQ-100 74.0 - 2 Bull Correction Dow Indust. 83.3 + 0 Bull Confirmed S&P 500 77.6 - 1 Bull Confirmed S&P 100 81.0 + 0 Bull 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 1.33 10-Day Arms Index 1.33 21-Day Arms Index 1.21 55-Day Arms Index 1.13 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 -NYSE- -NASDAQ- Advancers 1708 1636 Decliners 1113 1417 New Highs 116 132 New Lows 6 14 Up Volume 1047M 1136M Down Vol. 659M 505M Total Vol. 1728M 1671M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 06/24/03 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 After last week's quadruple witching Friday rolled around, we witnessed a HUGE collapse in outstanding positions in both longs and shorts almost across the board. For the full S&P 500 contacts, the commercial long positions dropped 114 thousand to 405K and the shorts dropped 52 thousand to 447 K. This produced the first bearish net negative (more shorts than longs) in quite a while. Small traders saw significant drops of 42K in longs to just 159 thousand and 98K short positions evaporated to leave 85K. This produced a very strong net long position. Which is exactly how these COT reports are traditionally read. The Small Traders always tend to do the opposite of the "smart money" or Commercials. Unfortunately, it is the commercials who tend to be correct most of the time, and they're newly bearish on the S&P. Commercials Long Short Net % Of OI 06/03/03 438,228 422,722 15,506 1.8% 06/10/03 456,967 455,024 1,943 0.2% 06/17/03 519,887 501,401 18,486 1.8% 06/24/03 405,382 447,526 (42,144) (4.9%) Most bearish reading of the year: (111,956) - 3/06/02 Most bullish reading of the year: 18,486 - 6/17/03 Small Traders Long Short Net % of OI 06/03/03 169,650 167,172 2,478 0.7% 06/10/03 199,356 185,403 13,953 3.6% 06/17/03 202,040 184,028 18,012 4.6% 06/24/03 159,405 85,182 74,223 30.3% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 The same scenario took place in the S&P 500 e-mini contracts. There were massive drops in outstanding positions. Commercial traders dropped 156 thousand long positions and 459 thousand short positions. This drastic reduction has produced the most bullish reading of the year for the e-minis. As expected, the small traders took the opposite role and produced the most bearish reading. This was due to a massive reduction in outstanding long positions of 382K versus a drop of just 26K in small traders' aggregate shorts. Commercials Long Short Net % Of OI 06/03/03 267,680 512,648 (244,968) (31.4%) 06/10/03 270,359 543,221 (272,862) (33.5%) 06/17/03 306,279 661,114 (354,835) (36.6%) 06/24/03 150,208 201,724 (51,516) (14.6%) Most bearish reading of the year: (354,835) - 06/17/03 Most bullish reading of the year: (222,875) - 04/01/03 Small Traders Long Short Net % of OI 06/03/03 470,655 58,420 412,235 77.9% 06/10/03 498,999 49,689 449,310 81.9% 06/17/03 466,837 70,609 396,228 73.7% 06/24/03 84,081 44,347 39,734 30.9% Most bearish reading of the year: 39,734 - 06/24/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 The same disappearing act of outstanding positions occurred in the NDX 100 futures as well. Commercials dropped some 32K in long positions and 18K in short positions but this left them with their most bearish position in quite some time. Small traders, reacting in lock step mirror image, produced their most bullish net long position with a major drop in outstanding shorts. Commercials Long Short Net % of OI 06/03/03 42,232 43,217 (985) (1.2%) 06/10/03 42,877 45,793 (2,916) (3.3%) 06/17/03 60,964 65,561 (4,597) (3.6%) 06/24/03 28,780 47,425 (18,645) (24.4%) Most bearish reading of the year: (18,645) - 6/24/03 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 06/03/03 11,407 9,092 2,315 11.3% 06/10/03 14,759 7,761 6,998 31.1% 06/17/03 29,400 23,232 6,168 11.7% 06/24/03 24,519 7,064 17,455 55.2% 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 Small traders of the DJIA futures didn't do much other than reduce a good number of outstanding positions but it was the commercials who cut a number of shorts that produced a new relative high in outstanding longs. Commercials Long Short Net % of OI 06/03/03 19,480 15,282 4,198 12.1% 06/10/03 17,368 15,263 2,105 6.5% 06/17/03 20,625 18,593 2,032 5.1% 06/24/03 19,373 11,565 7,808 25.2% 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 06/03/03 7,948 9,353 (1,405) ( 8.1%) 06/10/03 7,968 8,316 ( 348) ( 2.1%) 06/17/03 9,092 9,398 ( 306) ( 1.6%) 06/24/03 5,950 7,442 (1.492) (11.1%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01 ----------------------------------------------------------------- ================================================================= 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 Tuesday 07-01-2003 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 ================================================================= Play of the Day: Another Breakout 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) ================================================================= Play-of-the-Day (bullish) =============== Altria Group - MO - close: 46.19 change: +0.75 stop: 43.50*new* Company Description: Altria Group, Inc., formerly Philip Morris Companies Inc., is a holding company and the parent company of Philip Companies Inc. The company's wholly owned subsidiaries, Philip Morris USA, Philip Morris International and its majority-owned (84.2%) subsidiary, Kraft Foods Inc. are engaged in the manufacture and sale of various consumer products, including cigarettes, foods and beverages. The company changed its name from Philip Morris Companies to Altria Group in January 2003. Why we like it: Getting a boost from some bullish comments out of Smith Barney on Friday morning, shares of MO managed to surge through the $46 level early in the day. But with the rest of the market failing to go along for the ride, MO lost the "Big Mo" and fell back to end the day just over $45. Stepping back and looking at the daily chart, we can see another reason for the afternoon pullback, as the early surge pushed the stock through the top of its 6-week ascending channel and a drop back into that channel is not unexpected. The bottom of the channel is just over $43 now, with the 20-dma creeping up to $43.50. A continuation of the Friday afternoon weakness could set us up for another favorable entry early next week on a rebound from above the $43.50 level, most likely near $44. Intraday support seems to be building just below $44 and another strong rebound from that area would help to confirm that. Because of the way MO has been pulling back after each push to a new high, chasing the stock higher with momentum entries does not appear to be a profitable strategy. Buy the dips. As long as MO remains in this ascending channel, we want to keep our stop set just below the bottom of the channel. Raise stops ever so slightly to $42.75. Why This is our Play of the Day Continuing to show their appetite for dividend-paying stocks, investors have been gobbling up shares of MO again this week, driving the stock to a new multi-month high, and its first close over $46 since last September. The stock ended Tuesday's session right at the top of the channel we've been monitoring for the past couple weeks and also just off the high of the day. But since its reaction low of $41 on 6/13, MO has been building a slightly steeper ascending channel (not shown), the top of which will intersect our initial target of $47.50 by early next week. Tuesday's close just over $46 is right in the middle of that secondary channel, and continued strength tomorrow can be used for new entries above $46.30. Traders looking for a more conservative entry will want to watch for another dip near $45 (the bottom of the newer channel), which is the site of former resistance, now turned support. Note the multiple converging points of support just below $44 on the chart below, which give us the freedom to raise our stop to $43.50. Annotated Chart of MO: Picked on June 18th at $44.24 Change since picked +1.95 Earnings Date 07/17/03 (unconfirmed) Average Daily Volume = 12.9 mln ================== 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 BBT BB&T Corp 35.01 +0.71 GFI Gold Fields LTD (ADR) 12.76 +0.58 BGG Briggs & Stratton Corp 51.10 +0.60 ELBO Electronics Boutique 23.94 +1.00 ASCA Ameristar Casinos Inc 22.35 +1.01 ALLE Allegiant Bancorp Inc 21.00 +0.80 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- WDC Western Digital Corp 11.89 +1.59 HIL DotHill Systems 14.24 +1.14 DTAS Digitas Inc 6.14 +1.13 STAA Staar Surgical 13.62 +2.05 REFR Research Frontiers 15.77 +1.79 NUTR Nutraceutical Intl 12.55 +1.80 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- HIT Hitachi Ltd 45.45 +3.15 MRVL Marvell Technology 36.50 +2.15 NCR NCR Corp 27.13 +1.51 CME Chicago Mercantile Exch 74.57 +4.94 NATI National Instruments 39.16 +1.21 ZLC Zale Corp 45.90 +5.90 RHD R.H.Donnelley Corp 38.25 +1.78 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- PPG PPG Industries 49.69 -1.05 SPW SPX Corp 41.61 -2.45 NCEN New Century Financial 40.78 -2.66 CERN Cerner Corp 21.78 -1.02 AXE Anixter Intl 21.96 -1.47 PLMD Polymedica 37.39 -8.47 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- ABCO Advisory Board 39.10 -1.16 CBM Cambrex Corp 22.13 -0.89 ================================================================= 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.
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