Option Investor
Newsletter

Daily Newsletter, Tuesday, 07/15/2003

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Tuesday 07-15-2003
                                                   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:      Bond Blues Back
Watch List:       ULBI, CLZR, NANO, DHI and more!
Market Sentiment: Bullish or bearish?

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      07-15-2003           High     Low     Volume Advance/Decline
DJIA     9128.97 - 48.20  9238.01  9091.30 1.91 bln   1048/2182
NASDAQ   1753.21 -  1.60  1777.78  1742.10 1.87 bln   1413/1793
S&P 100   504.07 -  1.12   508.56   501.82   Totals   2451/3975
S&P 500  1000.42 -  3.44  1009.61   996.67
W5000    9640.98 - 35.60  9727.87  9605.24
RUS 2000  475.93 -  2.10   480.85   474.47
DJ TRANS 2573.97 +  1.10  2596.86  2565.46
VIX        21.84 +  0.43    22.34    21.30
VXN        33.95 +  0.06    34.59    32.81
Total Volume 4,018M
Total UpVol  1,430M
Total DnVol  2,407M
52wk Highs  744
52wk Lows    22
TRIN       0.87
PUT/CALL   0.54
=================================================================

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

Bond Blues Back

It is not nice to tease the bond junkies especially when they are
holding the fate of the economy in their hands. Greenspan talked
a big bluff and said all the right things but his words fell on
deaf ears. The bond bulls ran for cover despite threats of lower
rates ahead.

Dow Chart - Daily


Nasdaq Chart - Daily


Economic reports were good but traders did not applaud. The weekly
Chain Store Sales rocketed +0.9% for the week ended July 12th and
produced the largest back to back weekly gains since April. Summer
weather and steep discounting reportedly produced the gains. Stores
saw increased traffic as rains dried up in the eastern part of the
country.

The Monthly Retail Sales jumped +0.5% and was inline with estimates
despite a dip in auto sales. Some employers have already started
reducing tax deductions for workers and that money is finding its
way into the stores. While that may be the case on a very limited
basis the far more likely reason was the current weather and the
massive discounting to blow out Easter, Mothers Day and Fathers
Day goods that were not sold due to bad weather then.

The NY Empire State Manufacturing Survey posted the third monthly
consecutive gain and was strongly positive at 22.6. That was the
official spin on the headline number. That headline number actually
fell from 27.6 in June and inventories, back orders, delivery times,
prices received and employment all dropped into negative territory.
Unfilled order backlog fell to -5.7 from +2.6. Delivery fell to
-6.4 from +3.1. Employment fell to -8.6 from zero. Prices received,
you know that "unwelcomed decrease in inflation" fell to -14 as
pricing power continues to erode. The six-month outlook began to
erode as well with a drop to 52.5 from 58.9. I am not saying this
was a negative report but it was not as positive as the talking
heads tried to spin it.

The biggest economic news for the day was not a report but a speech
by Greenspan to Congress. The event was not without controversy and
a major amount of grandstanding. Greenspan touted the numerous ways
he felt the economy was poised to recover and the panel pointed out
the numerous things he had done wrong and why the plan would fail.
It was not your regular "praise meeting" full of "we have the utmost
respect for you" comments. Panel members continually pounded him
with verbal assaults so severe that other members publicly
apologized for their behavior. Yes, it is an election year and
Alan was forced to be the fall guy for the reelection crowd.

Alan said the FOMC was prepared to make substantial additional rate
cuts to keep the economy on track and to use other weapons at their
disposal for a long time to come. Unfortunately nobody believed him.
With the Fed funds rate at 1.00% he admitted that any additional
rate cuts could hurt interest rate sensitive businesses like money
market funds as well as destroy retirement investments for millions
of people who depend on CDs and short term interest bearing accounts
for income. Alan did not win any friends there and the bond junkies
laughed behind his back at what they considered an obvious bluff.

He also shot himself in the foot on the threat to use other weapons
after he closed the speech with "However, given the now highly
stimulative stance of monetary and fiscal policy and well-anchored
inflation expectations, the Committee concluded that economic
fundamentals are such that situations requiring special policy
actions are most unlikely to arise." If the situation is most
unlikely to arise then the bond market promptly ignored it and
rushed to sell their bonds. The Ten year sold off a full two points
and the 30-year a full three points. Yields on the 30-year nearly
hit 5% and the ten year hit 3.968%. The interest sensitive stocks
got killed with home builders selling off substantially along with
utilities. It was a rout as bonds hit three-month lows and gave
no indications that anything was going to change. Suddenly the
Fed's carefully crafted plan to keep interest rates low simply
disintegrated before their eyes. With refinancing applications
falling -22% last week and rates soaring this week there could be
an even bigger drop off ahead. The refi consumer as the pillar of
the recovering economy has died. It is now time for the business
community to step up to the table or the winter may begin early.

Adding to the concern was the newly released budget numbers showing
the deficit for 2003 to be -$455 billion and 2004 to be -$475
billion. Oh, did you know that the 2004 numbers do not include any
spending for Iraq? Considering it is currently costing $4 billion
a month and the best estimates are for another 2-3 years then we
could easily add $50 billion to every estimate for years. That
puts us well over $500 billion for 2004 without trying. Greenspan
was asked if we could tax cut ourselves back into prosperity and
I do not need to tell you the answer. Long-term investors are very
worried that this massive debt load coupled with a sputtering
economy could combine to squelch the recovery before it starts.
(just reporting here, not expressing an opinion) If the economy
was firing on all cylinders then deficit spending would add to the
fuel and power the rocket. The bottom line was bond junkies running
for cover and selling bonds with both hands.

This is normally good for the market if that cash is headed for
equities but there was no cash flowing in that direction today.
The problem it appears is the carry trade. That means hedge funds,
mutual funds, large corporate borrowers, etc, borrow short term
money from various sources like Japan where interest rates are
near zero and buying long term bonds in the U.S. That works well
as long as bonds are going up or are stable but with bonds falling
through the floor those trades have to be unwound quickly. The
key level according to the bond junkies is a 4.0% yield on the
ten year. Should that level be broken the amount of debt that
would begin to unwind could be over a trillion dollars. This
massive fund shift could cause ever escalating rates to the point
where they spiral out of control and begin to feed on themselves.
What a wonderful web of interrelated dependencies we feed on.

The point here is the Fed has lost control and they are at the
mercy of the markets. They really do not have any bullets left in
their gun and the bluff is not working. Greenspan will have an
opportunity to try and improve his delivery and restate his case
when he repeats his testimony to the Senate. Don't look for any
new facts to appear but the delivery should be drastically
different. He will have seen the bond drop today and be trying
to grasp at any straw to recover control. Going to be an uphill
task.

The earnings week is in full swing with over 25% of the S&P
announcing earnings this week. The companies already announced
have run the gamut of massive charges from companies like Boeing,
massive losses from derivatives like FNM and massive warnings like
Lucent but what else is new. Add in the funny numbers like the ETN
gains from tax rate changes and just plain earnings misses from
companies like RMBS. It is not your normal earnings season but
after the bell today we saw the first major tech try to steal
some positive headlines.

INTC beat the street by a penny and edged slightly past revenue
estimates. They raised their gross margin estimates for the
remainder of the year due to product mix and the slow demise of
the AMD competition. BUT, after a rocket ramp in the futures after
the announcement, Andy Bryant, the Intel spin doctor appeared on
CNBC and said it was not a recovery yet. He said it was more like
a return to normalcy where the tech improvements over the last
two years were starting to pay off in profits. Intel stock paused
for a few moments and then soared ahead as shorts raced to cover.
The futures however rolled over immediately and have been drifting
down ever since. Remember the good news from YHOO and JNPR were
met with selling as the good news was already priced in. The Intel
news may have surprised those that were expecting a normal 2Q miss
as has occurred in the past and that lack of a miss is powering
the INTC stock.

Also hurting the after hours trading were misses or warnings from
LU, TER, SCHL, PHTN, ELON, IKON, CDN, PVSW and Motorola. Several
companies met or slightly beat estimates and guided inline with
estimates. Inline will get you nothing in a market that is priced
to perfection. If you cannot guide higher and beat then you are
toast. Wait, YHOO and JNPR beat and guided higher and they were
still clobbered. Get the point?

Besides an instant replay of Greenspan on Wednesday we will get
the CPI, Business Inventories, Industrial Production, Housing
Index and Mortgage Survey. All the majors will be out before the
market opens and should provide plenty of economic fodder for the
bond bulls to chew on instead of Greenspan. The big gun for
tomorrow is IBM after the close. That could be one more nail in
the coffin if they do not blow the doors off their estimates.
Offsetting the INTC gains in the Dow will be weakness in Citigroup
after they announced at the close a $6 billion buy of Sears
troubled credit card division. C was trading down after hours.
Also, MO is still under pressure after an Illinois court said the
previous court was in error when it changed the bond requirement.

The markets are poised to run but the direction is unclear. It
was announced today that the recent "fat finger" trades in the
Dow and S&P futures were real trades and were not errors after all.
This is a sobering thought. The volume of trades required to push
the Dow futures to near 8600 last week and the S&P to 990 on Monday
are huge. These are normally dealt out in small doses and the
multiple large sell orders hitting the market all at once have
scared many traders out of taking long positions. This undercurrent
of uncertainty right at the time that the market normally peaks in
July is giving added influence to the dance with the Fed.

I have talked about it for several weeks now and the time is at
hand. This is the week that would typically see the July peak and
the beginning of the July slide. Once IBM, MSFT and the other 25%
of the S&P companies announce this week the earnings outcome for
all companies will be known. There will be no reason to wait
around for the next surprise because there will be no more
surprises. Sure some will beat and some will miss but historically
the majority of the good earnings come this week from the giant
blue chips. That leaves the rest of the pack bringing up the rear.

If you are watching a marathon with tens of thousands of runners
once the leaders cross the finish line the excitement fades. You
may still have a friend that you are waiting for buried deep in
the pack but the rest of the faces become a blur once the leaders
break the tape and draw the crowd of reporters. All attention will
be on INTC, IBM and MSFT and then bonds and then the second half
economy. If the bulls are going to pull a July rally out of their
hat then this is the week to do it. If they can't do it this week
then it is all over but the shouting. The next ramp job typically
begins in August and that gives traders a couple weeks or more to
shuffle portfolios based on the July results and guidance for the
remainder of the year. Did I mention this is option expiration
week as well?

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
---------------------------------

Ultralife Batteries - ULBI - close: 11.40 change: +1.40

WHAT TO WATCH: After trading in a gradually rising range for the
past 6 weeks, shares of ULBI broke out on huge volume on news the
company had landed a $2.7 million battery order from the
military.  We don't want to chase the stock higher at this point,
but a pullback and rebound above $10.00 should afford a solid
entry point.




---

Candela Corporation - CLZR - close: 14.22 change: +1.57

WHAT TO WATCH: Definitely out of step with the rest of the market
on Tuesday, shares of CLZR soared on the heels of a Needham
upgrade from Hold to Buy.  Buying volume surged to four times the
ADV and the stock added more than 12% to reach its best level
since early 2000.  Look for a pullback to fill today's gap to set
up a solid entry ahead of the next push up the charts.  Take note
of the way CLZR has been trading for the past several months --
surge to a new high, consolidate and repeat.




---

Nanometrics Inc. - NANO - close: 9.03 change: +1.03

WHAT TO WATCH: Strength is still the dominant theme in the
Semiconductor sector, and NANO is using that strength to its
advantage, vaulting to another new high for the year on Tuesday
with a nearly 13% gain.  Note the similar pattern with NANO,
which is break out, consolidate and repeat.  Look for this move
to consolidate near the $8 level to provide entry before the next
breakout, which ought to take the stock over $10.




---

D. R. Horton - DHI - close: 28.35 change: -1.95

WHAT TO WATCH: Housing stocks got slammed on Tuesday as Treasury
yields soared.  This yield action is going to be very bad for
housing growth, if it continues, and that was reflected in the
very bearish trade in the Housing index ($DJUSHB).  DHI got
smacked for a more than 6% loss, bringing it right back to major
support at $28.  A break below that level may find some support
at the 50-dma, but then looks vulnerable all the way to $25 and
possibly $23.50.




---

===================
On the RADAR Screen
===================

JBHT $44.51 - No, it isn't Jabba the Hut!  JBHT is a trucker and
in case you haven't noticed, these stocks have been on the move
lately on the continued expectation of economic recovery.  JBHT
broke out big time following a blowout earnings report this
morning.  Look for that gap to fill back into the $41-42 area and
then ride the wave higher.

VSEA $35.50 - While it only has a little over a week to go until
reporting earnings (7/24), it is hard to argue with the VSEA
price chart, as the bulls continue to stamp out a pattern of
higher lows and higher highs.  Today's gap needs to fill, but
then there could be a strong breakout if the stock can get over
major resistance near $37.50.

GLDN $30.09 - Is it a top forming or are the bulls just prepping
for another breakout?  It's hard to tell right now, but just
based on the strong volume since GLDN last broke out near the $25
level, this is another bullish setup.  Use a trade above $30.55
as a trigger.




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


Bullish or bearish?
 
Equities declined today as treasuries made huge moves lower and
the US Dollar Index moved higher.  We also witnessed a large
spike in options volatility for the Nasdaq 100 as measured by the
QQV, which added just under 10% to close at 30.45, while the VIX
gained .43 to 21.84 and the VXN .06 to 33.95.
 
We generally expect to see an increase in options volatility on a
down day, but the spike in the QQV was out of the ordinary. 
Meanwhile, the CBOE put to call ratio was printing extreme
readings, but to the downside, with the equity put to call ratio
below .40 for most of the session, and the total put to call
ratio barely clearing .50.
 
The spike in the QQV is a panic-type indication, while the put to
call data reflected just the opposite.  How do we read it?
 
Options volatility increases as options premium increases.  On
its own, it indicates that one of the two parties to a trade
wants the contract badly enough to pay extra for it.  The put to
call ratio at low levels indicates a predominance of call volume
over put volume.  It appears that the market was willing to pay
more for QQQ calls today in particular.  The VIX and VXN made
gains, but nothing approaching that of the QQV.
 
To determine whether the action was bullish or bearish depends on
which party was doing the buying.  If it was institutions buying
back QQQ calls of which they were short, the action would appear
bullish to me, while if it was dip-buyers actively going long QQQ
calls in anticipation of a blast higher, it looks more bearish.


-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High:  9353
52-week Low :  7197
Current     :  9128

Moving Averages:
(Simple)

 10-dma: 9131
 50-dma: 8928
200-dma: 8431

S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     : 1000

Moving Averages:
(Simple)

 10-dma:  996
 50-dma:  970
200-dma:  899

Nasdaq-100 ($NDX)

52-week High: 1316
52-week Low :  795
Current     : 1294

Moving Averages:
(Simple)

 10-dma: 2380
 50-dma: 1200
200-dma: 1061


-----------------------------------------------------------------


There isn't much more to say about the VIX and VXN tonight that
Jon didn't already mention above.  As expected on the down market
day, these two both edged higher but not by any significant amount.

CBOE Market Volatility Index (VIX) = 20.72 -0.81
Nasdaq-100 Volatility Index  (VXN) = 32.80 -0.86

-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.54        738,400       395,388
Equity Only    0.40        602,842       241,528
OEX            0.66         39,943        26,619
QQQ            0.38         73,599        28,096


-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          73.1    + 0     Bull Confirmed
NASDAQ-100    81.0    + 1     Bull Confirmed
Dow Indust.   83.3    - 3     Bull Confirmed
S&P 500       80.0    + 1     Bull Confirmed
S&P 100       83.0    + 1     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  1.10
10-Day Arms Index  1.06
21-Day Arms Index  1.18
55-Day Arms Index  1.14


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    1020      1354
Decliners    1856      1666

New Highs     185       300
New Lows       12         3

Up Volume    605M      772M
Down Vol.   1212M     1113M

Total Vol.  1831M     1905M

M = millions


-----------------------------------------------------------------

Commitments Of Traders Report: 07/08/03

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

There was little change last week in the large S&P contracts.
It appears both big and small traders are waiting to see how the
initial burst of Q2 earnings come in and how investors react to
them.


Commercials   Long      Short      Net     % Of OI
06/17/03      519,887   501,401    18,486     1.8%
06/24/03      405,382   447,526   (42,144)   (4.9%)
07/01/03      415,976   453,005   (37,029)   (4.3%)
07/08/03      415,053   453,720   (38,667)   (4.5%)

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
06/17/03      202,040   184,028    18,012     4.6%
06/24/03      159,405    85,182    74,223    30.3%
07/01/03      150,232    75,937    74,295    32.8%
07/08/03      152,239    74,749    77,490    34.2%

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 holds true for the commercials here in the e-minis,
as they appear to be waiting before making any big commitments.
However, we've seen a drastic turnaround in the small traders
sentiment going from extremely bullish to know the most bearish
in months.


Commercials   Long      Short      Net     % Of OI
06/17/03      306,279   661,114   (354,835)  (36.6%)
06/24/03      150,208   201,724    (51,516)  (14.6%)
07/01/03      175,893   216,993    (41,100)  (10.5%)
07/08/03      192,815   224,124    (31,309)  ( 7.5%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  (41,100)  - 07/01/03

Small Traders Long      Short      Net     % of OI
06/17/03      466,837    70,609   396,228    73.7%
06/24/03       84,081    44,347    39,734    30.9%
07/01/03       57,639    67,449     9,810     7.8%
07/08/03       56,394    72,090    15,696    12.2%

Most bearish reading of the year:   9,810   - 07/01/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

NASDAQ futures remain in a holding pattern.  Commercials
remain net short and small traders remain net long.


Commercials   Long      Short      Net     % of OI
06/17/03       60,964     65,561    (4,597)  (3.6%)
06/24/03       28,780     47,425   (18,645) (24.4%)
07/01/03       28,662     48,265   (19,603) (25.5%)
07/08/03       30,489     48,311   (17,822) (22.6%)

Most bearish reading of the year: (19,603)  - 07/01/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
06/17/03       29,400    23,232     6,168    11.7%
06/24/03       24,519     7,064    17,455    55.3%
07/01/03       26,777     8,498    18,279    51.8%
07/08/03       26,136     9,035    17,101    48.6%

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

Ditto here too.  There's almost no change in the commercials'
net long position in the Industrial futures and there is
a small bump in the small traders net short position.


Commercials   Long      Short      Net     % of OI
06/17/03       20,625    18,593    2,032       5.1%
06/24/03       19,373    11,565    7,808      25.2%
07/01/03       20,504    11,871    8,633      26.7%
07/08/03       20,752    11,860    8,892      27.3%

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
06/17/03        9,092     9,398    (  306)   ( 1.6%)
06/24/03        5,950     7,442    (1,492)   (11.1%)
07/01/03        5,799     6,822    (1,023)   ( 8.1%)
07/08/03        5,005     8,093    (3,088)   (23.6%)

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 07-15-2003
                                                   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 New High


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)
===============

Synopsys, Inc. - SNPS - cls: 65.91 change: +0.38 stop: 63.20*new*

Company Description:
Synopsis is a supplier of electronic design automation software to
the global electronics industry.  The company's products are used
by designers of integrated circuits (ICs), including system-on-a-
chip ICs, and the electronic products (such as computers, cell
phones, and internet routers) that use such ICs to automate
significant portions of their chip design process.  SNPS' products
offer its customers the opportunity to design ICs that are
optimized for speed, area, power consumption and production cost,
while reducing overall design time.

Why we like it:
While it didn't provide the follow through to the upside that we
expected after scaling the $64.25 resistance, SNPS is making a
convincing show of wanting to continue its rally.  The mid-week
swoon found support at the 10-dma (now at $63.52) and the stock
rebounded to close at $64.50.  This is encouraging, as old
resistance in the $63.50-64.00 area now seems to be providing
support for the next leg up the chart.  The only fly in the
ointment appears to be the fact that Friday's rebound came on
light volume that barely topped half of the ADV.  Bargain hunters
can continue to target shoot new entries on intraday dips above
the 10-dma, while those looking for a momentum entry will need to
wait for a decisive rally through the Wednesday's intraday high
($65.67) before jumping into the fray.  On a move severe dip, the
$62 level should provide strong support, so we're maintaining our
stop at $61.75.

Why This is our Play of the Day
Amidst all the wild gyrations already witnessed this week, it has
been rather amazing to see how well the Semiconductor index
(SOX.X) has held up so far.  Gapping back above $400 at
yesterday's open, and then holding it over both of the past two
sessions' closes is pretty impressive in light of the weakness in
the rest of the market.  Our SNPS play hasn't been any slacker
either, consistently creeping higher.  Yesterday's close above
$65.50 was another new closing high, followed by yet another today
after the stock found resistance again at $66.  Given the steady
rate of rise over the past several weeks, we're looking for SNPS
to continue what appears to be a very sustainable climb rat.
Successive dips near the $64 level can be used to initiate new
positions in anticipation of a run towards our initial $68 target.
Note that we've raised our stop to $63.20 tonight, which is just
below last Thursday's intraday low ($63.35) and the 20-dma
($63.22).

Annotated Chart of SNPS:




Picked on June 25th at   $63.59
Change since picked       +2.32
Earnings Date          08/20/03 (unconfirmed)
Average Daily Volume = 1.51 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

STT     State Street Corp          44.80     +0.80
MTG     MGIC Investments           53.47     +1.77
MHK     Mohawk Industries Inc      57.90     +0.80
RDN     Radian Group               42.74     +2.08
PMI     The PMI Group              30.94     +0.81
UHS     Universal Health Services  46.08     +1.38

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

HMA     Health Mgmt Assoc          19.70     +1.04
ASYT    Asyst Technologies         10.79     +1.13
EPIQ    EPIQ Systems               19.62     +1.82
VIRL    Virage Logic Corp          10.69     +2.25
ZIGO    Zygo Corp                  10.18     +1.38
DRXR    Drexler Technology         16.74     +1.12

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

MWD     Morgan Stanley             48.73     +1.40
MER     Merrill Lynch & Co         53.80     +2.39
ACN     Accenture Ltd              20.55     +1.70
GILD    Gilead Sciences            69.11     +1.86
BG      Bunge Ltd                  30.18     +1.23
LRCX    Lam Research Corp          22.31     +1.39
RMBS    Rambus Inc                 20.17     +1.27

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

AZN     AstraZeneca Plc            39.80     -1.95
SC      Shell Transport & Trading  37.30     -1.07
MO      Altria Group               40.50     -1.46
GSK     GlaxoSmithKline (ADR)      37.60     -2.00
BA      Boeing Co                  33.44     -1.14
FRX     Forest Labs                49.25     -5.08

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

IMDC    Inamed Corp                55.00     -1.25
DNEX    Dionex Corp                39.54     -0.65
CRR     Carbo Ceramics Inc         38.40     -0.20







=================================================================
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.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives