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Daily Newsletter, Monday, 07/14/2003

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PremierInvestor.net Newsletter                 Monday 07-14-2003
                                                  section 1 of 2
Copyright (c) 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:      Stock Fever
Play of the Day:  New Closing High

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     07-14-2003         High     Low     Volume Advance/Decline
DJIA     9117.15 + 57.56  9278.41  9126.45 1.81 bln   1159/ 637
NASDAQ   1754.82 + 20.89  288+.10  1748.88 2.01 bln   1525/ 460
S&P 100   505.19 +  2.71   511.34   502.48   Totals   2684/1097
S&P 500  1003.86 +  5.72  1015.41   998.14
RUS 2000  479.03 +  5.26   481.37   473.77
DJ TRANS 2572.89 + 27.31  2583.16  2545.28
VIX        21.41 +  0.69    21.80    20.60
VXN        33.89 +  1.09    34.23    32.08
Total Volume 4,067M
Total UpVol  2,893M
Total DnVol  1,120M
52wk Highs     938
52wk Lows       16
TRIN          0.82
PUT/CALL      0.62
===============================================================

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

Stock Fever

By 9:30 this morning, twenty percent of Dow stocks had reached
52-week highs.  Those six Dow stocks had been joined by 515 other
stocks making new 52-week highs.  Zero new 52-week lows had been
produced on either the NYSE or the Nasdaq.  By the end of the
day, 796 NYSE and Nasdaq stocks had hit 52-week highs, while only
7 had slumped to 52-week lows.  Advancing/declining and up/down
volume ratios showed strong numbers but had eased somewhat from
their feverish levels earlier in the day, when the Nasdaq saw up
volume that measured 16 times down volume.

The reasons behind the strong open proved so numerous that I'll
probably miss one or two.  Stock fever began rising as the Asian
markets opened.  After the Nikkei's biggest one-day loss ever on
Friday, the Nikkei rebounded 120.28 points.  A study of the
Nikkei's daily chart showed that Friday's decline had stopped at
9600.96, just above the key 9600 support level.  Tech stocks
gained in Asia and in Europe.  Perhaps stock fever, or tech fever
at least, had begun even before Asian markets opened, when
Barron's spoke positively of Sony's prospects this weekend.
Smith Barney upgraded European semiconductors to marketweight
from underweight, adding its improved outlook on semiconductors
to Merrill Lynch's upgrade of INTC.  The CA World 2003 Semicon
West conference began today, and CNBC mentioned positive buzz
about increasing demand from the customers of the semiconductor
equipment group.

Bank of America (BAC) and Citigroup (C) reported earnings that
cheered investors, and C followed by saying that the company
would increase its quarterly dividend to $0.35/share.  CIBC
upgraded Merck (MRK) to sector perform from sector underperform,
pepping up another sector.  Bear Stearns added to the fever pitch
by upgrading Johnson & Johnson (JNJ) to outperform from peer
perform.

Numerous companies also added to the excitement by announcing M&A
activity.  Boise Cascade (BCC) announced a surprising decision to
buy OfficeMax (OMX), the third-largest retail office supply chain
store in the U.S., for a 25 percent premium over Friday's closing
price.  BCC said the acquisition would add $0.15-.30 before costs
to 2004 earnings, but with costs factored in, the impact on
earnings would be neutral for 2004.  Market pundits weren't
surprised by the news that Yahoo (YHOO) would buy Overture
(OVER), however, as rumors of YHOO's purchase of OVER had been
circulating for months.  YHOO's stock-and-cash deal offered a 13
percent premium over OVER's Friday close.

As the day progressed, the fever pitch of news continued.  On
Friday, Cigna (CI) had attempted to dose the stock fever with a
little sobering reality, warning that it would miss profit
expectations for 2003 and for the current quarter.  Today a
spokesperson blamed medical inflation.  Later in the afternoon,
Bob Pisani of CNBC posted a chart of CI put activity over last
week, pointing out the unusual put-buying activity as last week
progressed and raising the specter of insider trading.

If the markets paid attention to negative news, they punished
only the stocks in question.  YHOO lagged and so did CI.  Boeing
(BA) and Continental Airlines (CAL) sank after CAL announced that
it would be postponing delivery of 36 Boeing 737's.  While these
individual stocks sank, the indices held support.  Stocks had
zoomed up in the morning, but the tight ranges above support put
traders to sleep until 3:00 ET.

At 3:00 ET, markets dived so quickly that traders awaiting
bearish entries missed their opportunities unless they had orders
waiting.  Reportedly in yet another snafu related to electronic
trading at the Chicago Mercantile, an erroneous e-mini sell order
was entered, resulting in the quick drop.  Just as happened with
the erroneous electronic order with the YM contract on July 3,
markets attempted a recovery but were unable to recover prior
levels and closed near the lows of the day.

SPX Five-Minute Chart:


The quick drop obviously dampened bullish sentiment.  That's
evidenced on this five minute chart by the bear-flag formation
that set up after the first five-minute drop and then the fall
out of that bear flag.  A quick pop pushed the SPX higher into
the close, but that pop could be setting up another potential
bear flag.

SPX 60-minute chart:


A study of this chart shows that the SPX dropped to the steepest
of its ascending trendlines and bounced.  A further study shows
that stochastics and RSI turned down, while hourly ADX shows a
near bearish cross of the -DI by the +DI.  Near crosses don't
count, however, and we must wait for confirmation.  Still, the
oscillators and ADX hint at further testing of that steepest
trendline if not a fall through that level.  A fall through 1000
predicts a try for 990, the site of the lower of the two
ascending trendlines.

The SPX daily chart shows a market that's still range-bound, as
predicted by the modest 17.91 ADX level and the flat MACD.

Daily Chart of the SPX:


Although today's 1015.41 high matched the June 17 1015.33 high,
presenting the possibility that the SPX will form a double top,
double top formations require a confirming fall through the
trough between the two tops.  That's a long way away for the SPX.
In the meantime, however, today's long upper shadow pierced the
descending trendline, but the candle's body fell below the
trendline.  The candle's small real body rests at the bottom of
the day's range.  That's a bearish candle formation when it comes
after an ascent, but it can be argued that the SPX is not
ascending, but instead is consolidating.  Because that candle's
implications are not as bearish when it occurs during
consolidation, it perhaps predicts only a continuation of the
range-bound trading or consolidation.

Consolidation could mean further testing of the upper trendline
or a return to next support.  RSI currently challenges the top of
its ascending trendline, and watching RSI behavior around its own
trendline can confirm or perhaps predict the SPX behavior.  An
RSI push up through that trendline could mean further testing of
upside resistance, while a rollover could mean a test of support.

If the descending trendline holds as resistance, the SPX could be
setting up a bearish right triangle with a flat bottom near 972-
975.  I mentioned this possibility this weekend and today's equal
high doesn't negate the possibility since the candle's body
formed back under the trendline.  In addition to the 1000 and 990
support shown on the hourly chart, 984 might be considered
support.  Historical support can also be found at that 972-975
zone.  The 959-962 level represents the 25 percent retracement of
the rally, but also now represents the confirmation level for the
potential double-top formation.

To sum up the varied evidence, the retreat from resistance, the
descending hourly oscillators, the low daily ADX, and the flat
daily MACD point to consolidation, perhaps in the form of a
retreat down to next support or in a rise to test today's
resistance.  They do not as yet predict either a steep climb or a
steep descent, although that could change as a result of economic
numbers and earnings releases that continue to impact the market
this week.  This weekend's wrap detailed multiple layers of
overhead resistance, including 1010 and 1015, near the June high.
Above that is the resistance implied by the midline of the rising
regression channel, somewhere between 1023 and 1027 depending on
how quickly the SPX should rise, and then further resistance near
1045-1050.

As is often true, the OEX daily chart shows many of the same
formations.

Daily Chart of the OEX:


MACD remains flat on the OEX daily chart as it does on the SPX
chart.  CCI remains green on this chart, but squiggles around the
flatline, not giving a clear signal.  RSI squiggles around 50,
also not giving a clear signal, and there's no clear-cut
descending trendline on this RSI that we can watch for further
information.  The prediction remains the same for the OEX,
however:  consolidation for now within a top described by the
descending trendline and either 500, 498, 491, or 485 support.
Beyond that and the economic reports due over the next several
days, it's difficult to predict further action.

The DJI played catch-up with the other indices today.  Last week,
it closed beneath its 21-dma, unlike the S&P's and the tech-
related indices.  Today the DJI gapped above its 21-dma and
closed above it, although the daily DJI candle showed the same
bearish configuration and the same retreat from the descending
trendline.  Unlike the S&P's, though, the DJI did not approach
its previous high, and so has not yet set up the possibility of a
double-top formation.  The potential of a bearish right triangle
remains, however.

Daily Chart of the DJX, as a proxy for DJI:


The DJI shows one difference from that of the two S&P's.  I've
included 5(3)3 stochastics on this DJX chart to show how near
they are to making a bullish kiss in mid-fall.  Although the OEX
5(3)3 stochastics also show a slight upturn, the DJI is nearer
than the two S&P's to displaying a bullish kiss.  This evidence
is tentative as yet as stochastics often redraw themselves in a
maddening manner, but it offers a first hint that the DJI could
attempt another test of its descending trendline.  The upturned
RSI does the same and is more trustworthy, so watch for an upside
break of the RSI descending trendline or a rollover beneath it.

I included possible support and resistance levels for the DJI
this weekend.  A recap should mention new possible support at the
21-dma at 91.36, backing up historical support at 91.50.  As I
mentioned this weekend, support might be found in 50-point
increments down to 8950.  The 25 percent rally retracement lies
at 8880, some support exists between 8710-8740, and the 38.2
percent retracement and 200-ema lie between 86.20 and 86.60.

In this weekend's wrap, I mentioned that an upside break of 9200
would see next resistance at last week's 9260 level, but today's
high was 9278, overshooting that 9260 level.  Next levels of
resistance might be found at 9300, 9350, and 9400.

Unlike the DJX and the two S&P's, the ADX level on the NDX
remains above 30, indicating a trending market.  The buying
pressure line (orange) has turned down, possibly indicating an
imminent change.  That change has not arrived, however, and it's
dangerous to anticipate signals.  In late June, +DI also
declined, bringing ADX down with it, but there was never a
bearish cross of the lines and ADX flattened.  It has not,
however, risen again as the NDX broke out of its bull flag to the
upside, so this does bear watching.

Daily chart of the NDX:


The NDX could not maintain 1300.  I haven't included the 60-
minute chart, but it shows the NDX falling at the end of the day
to plumb its opening gap but then pushing above that gap at the
close.  Hourly ADX has declined below 30, with +DI and -DI
approaching a bearish cross but not yet having completed that
cross.

As was true this weekend, NDX direction proves difficult to
predict.  Daily RSI and MACD point to the possibility that the
NDX still has more upside, or at least more time to spend testing
the current highs.  Tech fever has been strong.  With INTC
reporting tomorrow, that fever may be tempered or else reach
malarial levels.

INTC reports tomorrow after the close, and it will be joined by
MOT, PHTN, RFMD, and TER along with a myriad of other stocks
reporting before the open and after the close.  The SEMICON West
conference continues.  Before the bell, the July NY Empire
Manufacturing Index will be released at 8:00 and June retail
sales will be released at 8:30.  As I mentioned this weekend, the
biggest impact on the markets may be the Greenspan testimony on
monetary policy before the House.  That testimony begins at 10:00
ET.  Nothing I see on the charts can predict how markets might
react if Greenspan says something that either cools that stock
fever or sends it to malarial levels.  Be careful.

Linda Piazza


===============
Play-of-the-Day  (bullish)
===============


Graftech - GTI - close: 6.50 change: +0.17 stop: 5.79 *new*

- Company Description -
Graftech International Ltd. is one of the world's largest
manufacturers and providers of high quality natural and synthetic
graphite and carbon based products and services, offering energy
solutions to industry-leading customers worldwide engaged in the
manufacture of steel, aluminum, silicon metal, automotive products
and electronics. They have 13 manufacturing facilities in 7
countries and are the leading manufacturer in all of their major
product lines. They produce graphic electrodes that are consumed
primarily in the production of steel in electric arc furnaces, the
steel making technology used by all "mini-mills," and for refining
steel in ladle furnaces. We also produce carbon electrodes that
are consumed in the manufacture of silicon metal and cathodes that
are used in the production of aluminum. In addition, we develop
and manufacture natural graphite for use in materials and
components for proton exchange membrane fuel cells and fuel cell
systems and thermal interface products for computer,
communications and other applications. GRACELL (TM), GRAFOIL(R),
and eGRAF(TM) are our trademarks. (Source: Company press release.)


- Most Recent Update on GTI, July 13, 2003 -
Is GTI setting up another bull flag?  Could be.  GTI leaped above
one of our two triggers on Monday, but has since subsided in a
pattern that looks a lot like a bull flag.  Volume dropped off,
too, as often happens as this consolidation pattern forms.

The 10-dma rose sharply under GTI's current price.  From
Wednesday through Friday, GTI probed the 6.00 level, stopping
just above that level and springing up again.  We like this
action as well as the action of the MACD, still turning up.  RSI
appeared to hinge up, too, after flattening for most of the week.
That hinge only hints at an upturn in prices, though, so we'll
have to wait until next week to see whether its promise is
fulfilled.  Stochastics have flattened but haven't yet turned
down below 70.

We couldn't find any news directly concerning GTI this week, but
if Morgan Stanley's downgrade of the European steel industry hurt
GTI, the chart hasn't shown the impact.  Those seeking new
entries could target an upside breakout of the potential bull
flag, waiting until a confirming move over last week's 6.50 high,
but traders seeking this entry should set an alternative stop,
too, since our profit target is 7.35.  After a breakout of the
flag, those aggressive traders could set alternative stops at
5.99 or 6.19.  Conservative traders who first entered at 6.20
could consider that alternative 5.99 stop, too.  We're raising
our official stop to 5.79, just below the 6.00 support from last
week and the rising 10-dma.

- Why This is our Play of the Day, July 14, 2003 -
The strong market action this morning lifted shares of GTI to new
highs not seen in months.  While the stock sank back from its best
levels of the day it still gave us another new closing high.
Volume was pretty decent and shares could be ready for their next
leg higher.

Picked on  July 6 at  $6.06
Change since picked:  +0.44
Earnings Date:     07/24/03 (confirmed)
Average Daily Volume:  391 thousand








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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

*****************************************************************
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Newsletter, or any Premier Investor Network newsletter please
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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Monday 07-14-2003
                                                   section 2 of 2
Copyright (c) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

Active-Trader/Non-tech
  Closed Bearish Play:  WFMI


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)


==================================================================
Active Trader/ Non-tech plays
==================================================================

============
CLOSED PLAY
============

  ---------------
  CLOSED BEARISH
  --------------

Whole Foods - WFMI - close: 48.95 change: +1.07 stop: 48.51

It appears that bears got spooked early this morning with the
positive earnings reports from C & BAC shooting pre-market
futures higher.  The broader market indices certainly made
sizeable gains early in the session before falling back towards
the close.  The early morning jump in WFMI at $48.40 was quickly
followed by a ramp up to $49.48.  PremierInvestor would have been
stopped out at $48.51.  While this looks like a failed rally in
the making the technical damage done to the stock's recent trend
is not worth a follow up for bearish trades.  Traders have until
the 30th of July before WFMI announces earnings.

Picked on June 13 at $49.44
Change since picked:  -0.49
Earnings Date      07/30/03 (unconfirmed)
Average Daily Volume: 1.6 million






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

C       Citigroup                  47.12     +0.97
BAC     Bank of Ameica             83.46     +0.58
ONE     Bank One                   39.21     +1.16
KRB     MBNA Corp                  23.26     +1.27
SNP     China Petrol & Chemical    26.30     +0.57
NCC     National City Corp         34.10     +0.83

---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------

CLS     Celestica                  17.82     +1.32
IBN     ICICI Bank Ltd              8.65     +1.08
ZGEN    Zymogenetics Inc           14.50     1.06
ELON    Echelon Corp               18.30     +3.63
CCRT    Compucredit Corp           14.06     +1.13
VVTV    ValueVision Media          15.92     +1.05

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------

WFC     Wells Fargo & Co           53.03     +1.15
AXP     American Express           45.40     +1.44
STI     Suntrust Bank              62.35     +1.18
GILD    Gilead Sciences            67.25     +7.97
BEN     Franklin Resources         43.24     +1.21
MGA     Magna Intl Inc             73.79     +1.52
FNF     Fidelity National Financial33.57     +1.67

-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------

VZ      Verizon Communications     37.50     -1.27
SSP     E.W. Scripps Co            84.91     -3.99
CI      Cigna                      41.04     -3.45
BCC     Boise Cascade              21.87     -1.56

-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------

GCI     Gannett Co                 76.80     -1.17
ELAB    Eon Labs Inc               37.20     -1.70





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