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Daily Newsletter, Thursday, 07/17/2003

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PremierInvestor.net Newsletter                Thursday 07-17-2003
                                                   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:      KO, CAT, UTX
Watch List:       NVDA, YHOO, CI, AOL and more!
Market Sentiment: Barometer Falling

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      07-17-2003           High     Low     Volume Advance/Decline
DJIA     9050.82 - 43.80  9113.57  9017.84 2.01 bln    741/2464
NASDAQ   1698.02 - 50.00  1729.59  1693.47 1.89 bln    704/2522
S&P 100   494.80 -  6.27   501.07   493.10   Totals   1445/4986
S&P 500   981.73 - 12.36   994.00   978.60 
W5000    9443.32 -136.00  9579.32  9418.10
RUS 2000  459.93 - 13.75   473.68   459.93 
DJ TRANS 2543.34 - 54.20  2596.99  2539.01   
VIX        22.82 +  0.53    23.47    22.34   
VXN        35.47 +  1.48    36.35    34.74 
Total Volume 4,221M
Total UpVol    614M
Total DnVol  3,565M
52wk Highs  280
52wk Lows    40
TRIN       1.19
PUT/CALL   0.89
=================================================================

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

KO, CAT, UTX

Nice try against overwhelming odds. Dow components KO +1.85,
CAT +4.90 and UTX +1.50 struggled vainly to keep the Dow from
crashing after IBM failed to paint a rosy picture with their
earnings on Wednesday night. IP and XOM were the only other
Dow stocks in positive territory but only fractionally. With
25 of the 30 stocks in the red it was remarkable the Dow only
lost -43 points. 

Dow Chart


Nasdaq Chart


It was a good day economically but you could not tell from the 
market direction. The Jobless Claims fell to 412,000 but still
extended its string of weeks over 400K to twenty-two. There was
an unexpected drop in continuing claims of -117,000 and the 
prior week was revised down -47,000. Nobody appears to know 
why but they are not complaining considering last weeks numbers
were near records. Analysts keep saying the last two weeks of
claims are skewed by auto plants being shut down for the summer
retooling and we will see a huge drop in the next couple of weeks.
They have no excuse for the prior 20 weeks or at least none that
holds water. Still 412,000 was a significant change from the 
prior week's 441,000. Maybe things are getting better. 

New residential construction soared to an annualized rate of
1.80 million units but this should not surprise anyone even the
analysts. With interest rates at 45 year lows a month ago and
expected to go lower it is a sure bet any builder with a lot was
starting to turn dirt. Strike while the iron is hot WOULD have
been the plan. With rates rocketing the demand for homes could
take a sudden downturn before those slabs are even dry. There
could be a glut of homes by fall. Look for Greenspan to pull 
some rabbit out of his hat if rates continue to climb because
this would be a severe blow to the sputtering economy. 

The strongest report came from the Philly Fed Survey which 
jumped to 8.3 from 4.0 in June. This should have been a huge
positive for a market in the dumps but we saw an immediate sell
off. Why? The whisper number was over 10.0 and traders were
disappointed that conditions were not better. Remember, the
current market is priced to perfection and in some cases better
than perfection and traders are frustrated when that perfection
does not come to pass. There were some negatives with prices
paid dropping sharply as well as inventories. Prices received
still showed contraction and unfilled orders fell to 3.5 from
7.9. It was a positive report but still had some cracks in the
foundation. 

While the economics were mildly positive the biggest influence
on the market was the lackluster guidance from IBM on Wednesday
night. According to analysts IBM missed earnings by a penny 
despite their claims to the contrary. Almost every component of
the earnings announcement drew fire from analysts. They derived
strong gains from currency conversions and that is not a normally
recognized profit center. They continued to lose money in the
chip business and services bookings fell. One analyst said IBM 
actually missed estimates by as much as -12% when all factors
were considered. That equates to a clean 85 cents when estimates
were for 98 cents. Other analysts view it differently but none
viewed it as strongly positive. All would have liked to see a 
stronger top line. Without the currency gains the growth would 
be an anemic +3% not 10% as claimed. 

The real killer was their lack of optimism. CFO John Joyce said
demand is good but not robust and he was NOT holding out hope
for an economic recovery over the next five months. He also said,
"I don't have to remind investors that second-half recoveries were
expected in 2001 and again in 2002. We are going to take a more
pragmatic view." Turn out the lights the party's over. At least
that was the investor sentiment towards IBM on Thursday. The
stock lost -3.41 and led the Dow decline. 

Helping the negative outlook was a warning from Nokia before the
open that knocked -3.55 of a $17 stock. There were numerous other
warnings as well as several strong reports as dozens of companies
announced. The mixed messages only succeeded in convincing many
traders that we may be seeing a stabilization of the economy but
we are NOT seeing a strong recovery. July is normally when 
expectations meet reality and it is not a pretty picture. With 
growth for the economy expected to be 3-5% for the second half 
earnings are expected to be up significantly. With companies 
still giving cautious guidance or worse now that they can see 
order flow for the next quarter it simply drives home the no 
strong recovery picture.

The Manpower CEO said today that they were seeing NO signs of an
economic recovery yet. They typically see job requirements 90-120
days in advance and there has not been any pickup in expectations. 
The travel sector is still in the tank. The transportation sector
is losing ground. Boeing announced another 5,000 worker layoff
today. According to IDC PC demand in the 2Q was up +7.6% and
according to Gartner Group it was up +10.6%. This could actually
be bad news. The surge could have been in anticipation of a post
war rebound that fizzled. Also, where is the surge in profits
from the jump in PC demand? Answer: It is a buyers market and 
there is no profit. Without a substantial increase in demand that
will support higher prices the tech companies could be left to 
tread water until the 2H of 2004. There it is out, I said it. 
I expect the term "second half recovery in 2004" to begin to 
appear more often in the mainstream press over the next couple 
months. It would be funny if it were not so painful. 

I deviated from the topic above but the main problem with the
markets this week is simply "inline won't cut it." With the great
expectations for the 2003 recovery it does not excite investors
to hear inline or flat guidance. One trader said today after a
disappointing earnings release, "if this keeps up everyone will
be long on nothing." Bingo! In a market priced to perfection and
facing expectations that look like a ski jump from the bottom it
is rapidly becoming clear that those expectations may be 
impossible to obtain. Not only are the earnings tough to produce
but the quality of earnings is being called into question even
quicker. 

IBM was a prime example. Numerous earnings components were seen
by analysts as one time events or the product of cost cutting and
not repeatable. COF got killed after posting earnings of $1.23
and blowing away estimates of $1.11. Analysts said fears of losses
from the growing unemployment and a maturing loan portfolio were
to blame for the -$7 loss. COF committed the unforgivable sin of
not raising its guidance. Correct, it did not warn but simply said
they were comfortable with estimates. They said the effort to 
attract better credit borrowers would offset gains in other areas. 
Guilty, of giving accurate guidance, penalty -$7. 

I am not trying to beat a dead horse here and I am sure you are
getting the picture. The economy is stable, maybe recovering but
recovering very slowly. It is not recovering at the pace that
would justify the recent 50% rally in tech stocks. This does not
mean we are not going to see a year end rally. It only means that
we should see the normal July adjustment period. As the July
earnings reality dawns, investors will continue to readjust their
valuations to fit that reality. If that means EBAY needs to trade
at $95 instead of $115 then it will eventually settle at $95. If
the 3% real growth for IBM is only worth $75 then it will be a
long time before it sees $87 again. 

The Dow closed at 9053 today and over -200 points below the Monday
high. No big deal really. A 200 point drop from the high but only
-70 points from Friday's close. This is not a material drop, yet. 
What was holding it up was the hope that earnings would surprise
to the upside. The hope that Intel would guide much higher. The
hope that IBM was setting the globe on fire. And finally the hope
that Microsoft would announce a windfall profit and strong 
guidance. Intel "no recovery yet, no major upgrade cycle, no pickup
in IT spending." IBM "not holding out hope for a recovery over the
next five months." And finally Microsoft tonight, "not expecting
a marked improvement in the economic environment" and "we may be
seeing indications that the spending environment has stabilized
but IT budgets remain tight." They missed estimates by a penny
and guided lower by a penny for the next quarter. They also said
factors that helped profits in the past would disappear this year.
Could that be a pre-warning warning for future quarters? MSFT
closed the after hours up only +16 cents and S&P futures fell
from their post MSFT bounce at 982 to 978.50 as I write this. 

Friday we get the Michigan Consumer Sentiment and Semiconductor 
Book-to-Bill report and a handful of earnings before the market 
opens. Last week we saw a relief rally after a four-day slide. 
That rally was in anticipation of good news. Now that the news
is out I would doubt we get anymore rocket rides and instead
we could see some short covering or profit taking as the week 
draws to a close. I do not expect to see 9250 again any time
soon and there is a good chance support at Dow 9000 is about to
break. With 70% of the S&P still to report there will still be
fireworks but they may have lost their market moving potential. 
Technicians tell us that market drops on low volume are nothing
to worry about. Thursday's volume was above average and decliners 
beat advancers 3:1. New 52-week lows rose to a level not seen 
since May-23rd. New highs fell to only 25% of the July-14th level.
For those that are watching the internals are changing. Follow
the internals. 
   
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: 22.00 change: -1.16

WHAT TO WATCH: After leading the NASDAQ higher, Semiconductor 
stocks got hammered on Thursday, posting a loss of more than 4%.  
NVDA had been one of the stronger stocks in the sector until 
today, and the stock got hit for a 5% loss, ending right at the 
$22 support level.  More importantly though, the stock broke and 
stayed below the 50-dma throughout the day.  Look for a break 
below today's intraday low to be good for a quick trip down to 
the $20 level.




---

Yahoo! Inc. - YHOO - close: 30.61 change: -1.24

WHAT TO WATCH: The bullish run in YHOO (and the rest of the 
Internets) was truly impressive over the past few months, but now 
it is time to pay the piper.  The recent run up to the $35 level 
looks like a blowoff top, and on Thursday, the stock broke down 
out of its ascending channel and delivered nearly a 4% loss on 
the day.  $30 has been the key support level for the past month 
and that level is even more important now, as it is the site of 
the 50-dma.  Use a trigger of $29.90 and look for a quick 
pullback into the $27.50-28.00 level.




---

Cigna Corp. - CI - close: 40.55 change: +0.40

WHAT TO WATCH: Bottom fishing, anyone?  Shares of CI got slammed 
lower over the past week, with the real thrust occurring on 
Monday after the company's earnings warning the prior Friday.  
Since then, BofA has cut their price target and S&P cut the 
company's debt rating.  Despite all that negative press and a 
negative market the past 2 days, the stock just won't break the 
$40 level.  So we're looking to play it for an aggressive short-
term bounce back towards the $43-44 resistance level.  Use a 
tight stop at $39 just in case support fails.




---

AOL Time Warner - AOL - close: 28.35 change: -1.95

WHAT TO WATCH: In contrast to many of the other leading Internet 
stocks, AOL is still working higher within its 5-month ascending 
channel.  The stock got a boost from a new Buy rating from 
Merrill Lynch this morning and despite the weakness in the rest 
of the market, managed to hang onto a small gain at the close.  
There are a couple ways to play -- dip buyers can target a 
rebound from the bottom of the channel ($16.10), while a breakout 
over $17 can be used by the momentum set.  Target a quick rise to 
the $18 resistance level ahead of earnings next Wednesday.





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

CAH $65.01 - Health Care stocks were one of the bright spots on 
Thursday, with the HMO index actually posting a gain.  CAH caught 
our attention, as the stock is holding support right at the 
bottom of its 6-week channel.  This looks like a good risk/reward 
setup to play for a rebound back towards the top of the channel 
at $70 ahead of earnings on July 31st.

ATH $76.40 - Another recently strong HMO stock, ATH has pulled 
back with the HMO index and today found strong support at $75, 
also rebounding back over the 50-dma.  This is an aggressive 
rebound play, where we're looking for a rally up to test 
resistance at $80 ahead of the company's July 31st earnings 
release.

VRTS $27.65 - Looking for a quick momentum play?  VRTS got 
hammered lower on Thursday and came to rest right on its 50-dma 
and just above major resistance at $27.25.  A breakdown below 
these measures of support could see a quick downside continuation 
to next support near $25.75 ahead of the company's earnings 
report next Wednesday.




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


Barometer Falling
 
"On the djx daily candlesticks this looks like 3 black crows a 
highly reliable bearish pattern. The BP% crossover yesterday is 
glaring at me. Increasing volume on the declines is also 
confirming. Better yet the vix is climbing. Looking very 
bearish."
 
This email came in as I was looking over the daily charts for 
material tonight.  Reader Dan managed to encapsulate exactly what 
I see.  On the daily candles, we have the VIX and VXN crossing 
above their 20 and 50 day MAs, with the BPSPX (bullish percent)
and BPCOMP right at the top, the former leading the latter off 
their highs.  Other breadth indicators, including the McClellan 
oscillator, are also sending bearish messages for equities.
 
Rather than rehash the data for you, I'll provide what is 
hopefully some enlightenment on it.  As a novice, I used to look 
at such data and begin planning my bearish trades immediately, 
waiting for the charts to tank.  As a function of the greater 
lesson of patience, I've learned to read the data in broader 
terms.  Just as we had dips and corrections throughout the rally, 
we will have spikes, bounces, and upside corrections on the way 
down.
 
Experienced traders will not expect an immediate plunge or crash, 
although such cannot be ruled out.  Instead, they will note that 
the breadth, sentiment and volatility data are indicating the 
beginning of a possible change in trend, with all that such 
implies.  Just as a falling barometer doesn't mean that there's a 
twister blowing in within the next minute, it does signal the 
time to begin checking the windows, battening down the hatches, 
and preparing for foul weather.
 
The various indicators we follow are issuing similar signals for 
traders.  The actual timing and trading signals will have to come 
from more accurate, minute indicators such as we follow in the 
intraday Market Monitor and Futures Monitor.


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

Market Averages

DJIA ($INDU)

52-week High:  9353
52-week Low :  7197
Current     :  9050

Moving Averages:
(Simple)

 10-dma: 9127
 50-dma: 8949
200-dma: 8445

S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     :  981

Moving Averages:
(Simple)

 10-dma:  996
 50-dma:  972
200-dma:  901

Nasdaq-100 ($NDX)

52-week High: 1316
52-week Low :  795
Current     : 1255

Moving Averages:
(Simple)

 10-dma: 1279
 50-dma: 1205
200-dma: 1065


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

There is little to say here regarding the volatility indices that
Jon didn't already cover in the commentary above.  We do indeed
see both rebounding from their lows but they have yet to make new
relative highs above the early June highs.  

CBOE Market Volatility Index (VIX) = 22.82 +0.53
Nasdaq-100 Volatility Index  (VXN) = 35.47 +1.48

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.89        938,695       839,522
Equity Only    0.81        684,346       559,684
OEX            0.73         65,122        48,142
QQQ            3.49         47,057       164,665


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

Bullish Percent Data

           Current   Change   Status
NYSE          72.9    + 0     Bull Confirmed
NASDAQ-100    81.0    + 0     Bull Confirmed
Dow Indust.   83.3    + 0     Bull Confirmed
S&P 500       78.8    - 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  0.99
10-Day Arms Index  1.11
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     700       617
Decliners    2126      2432

New Highs      54       130
New Lows       25         8

Up Volume    375M      170M
Down Vol.   1587M     1694M

Total Vol.  1975M     1874M

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

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



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Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter                Thursday 07-17-2003
                                                   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
=================================================================

Play of the Day:  Wait For The Bounce

Closed Plays:     BRCM, SNPS, EELN


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  (bearish)
===============

Hovnanian Ent. - HOV - close: 53.75 change: -0.50 stop: 59.25

Company Description:
Hovnanian Enterprises constructs and markets single-family 
detached homes and attached condominium apartments and townhouses 
in more than 196 new home communities in New Jersey, Pennsylvania, 
New York, Maryland, North Carolina, Texas and California.  The 
company offers a wide variety of homes that are designed to appeal 
to the full range of buyers, from first-time to luxury buyers.  
Additionally, HOV provides financial services, including mortgage 
banking and title services to the homebuilding operations 
customers.  The company does not retain or service the mortgages 
it originates, but rather sells them and the related servicing 
rights to investors.

Why we like it:
We've run this drill so many times, you probably know the script 
by heart.  The housing boom of the past couple years has been 
largely fueled by continued falling rates, but that dynamic is 
changing and not in favor of the bulls.  Despite the Fed's 
promises to not raise rates, bonds have come under heavy selling 
pressure recently and that means yields are rising.  In just one 
short month, the yield on the benchmark 10-year Note has jumped 
from below 3.1% to today's intraday high of nearly 4.1%.  That's a 
huge move for such a short period of time and it will likely put a 
major crimp in a continued low interest rate environment.  Rising 
rates are likely to slow down both home purchases and refinancing 
activity and investors seem to be getting that message loud and 
clear this week, with the $DJUSHB index falling sharply yesterday 
and just barely holding onto support near $430 today.  If the 
index loses the 50-dma on a closing basis, then bears are likely 
to get more aggressive and will probably be targeting a break of 
$400 for a retest of the $395 breakout level from May.

Out of the universe of Housing stocks, HOV caught our attention 
for a couple of reasons.  First of all, it is showing weakness 
relative to other players in the space and the $DJUSHB, breaking 
below major support today just over $55 and falling into the late-
May gap.  In the process, the stock broke below its 50-dma 
($56.45), one of the first stocks in the sector to break that 
important measure of support.  With the stock falling into its gap 
today, a continued drop to the bottom of the gap near $52 seems 
quite likely.  The other thing that appeals to us about this play 
is that the company doesn't release earnings until the end of 
August.  That means we have a decent amount of time for this one 
to play out without having such external influences to deal with.  
The biggest problem with this play is the volatility that has 
become normal in the sector.  Despite our expectations for 
continued weakness, we have to factor in the very real possibility 
of a sharp rebound after the past two days slide.  The situation 
seems to be different this time around with the sharp rise in 
Treasury yields, but we need to prepare for that volatility just 
the same.  So we're starting out with a wider stop than we'd 
prefer at $59.25, as that is just above the descending trendline 
from the June highs.  One possible entry point would be to target 
a failed rebound near the 50-dma, while an aborted rally below the 
$58 level would provide a better, if more aggressive entry.  
Traders looking to capitalize on continued weakness need to wait 
for a drop under $53.50 before chasing the stock lower.  While 
we're expecting to find minor support near $52, our target for HOV 
will be a retest of the $46-47 support area from the middle of 
May.

Why This is our Play of the Day
Despite strong Housing Starts data this morning, the Dow Jones 
Home Construction index ($DJUSHB) couldn't buck the bearish trend 
in the overall market and turned in a 1.96% decline for the day, 
closing below the important $430 support level for the first time 
since early June.  The strength in bond yields seems to still be 
working its bearish black magic on the group and our new play on 
HOV got off to a solid start, continuing the slide that really got 
started on Tuesday.  But we really would have expected to see more 
weakness today, and the fact that we didn't hints that HOV will 
indeed find some support near the bottom of its late-May gap just 
above $52.  The real tell will be how strong a rebound the bulls 
can mount off of that level.  We're not looking to chase the stock 
lower, but instead want to pounce on the rebound failure following 
that bounce.  The top of that gap near $55.50 is one likely target 
area for new positions, as is the 50-dma (currently $56.74), just 
above yesterday's intraday high.  Until we see either a decisive 
break below $52 or a lower high failure, we've still got to keep a 
fairly wide stop.  We're leaving our coverage stop at $59.25 for 
now, which is just above the descending trendline that began with 
the mid-June high.

Annotated Chart of HOV:


Picked on July 9th at    $54.25
Change since picked       -0.50
Earnings Date           08/27/03 (unconfirmed)
Average Daily Volume =    976 K



=================================================================
Net Bulls / Tech Stocks
=================================================================

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

  --------------
  Closed Bullish
  --------------


Broadcom Corp. - BRCM - close: 25.43 change: -1.91 stop: 26.50

Last night we raised the possibility that the Semiconductor 
sector (SOX.X) might be running out of steam after failing to 
hold the $400 level.  That certainly seems to be the case today, 
as the SOX shed more than 4% and looks destined to test and 
possibly break down below the bottom of its ascending channel.  
Shares of BRCM fared even worse, losing nearly 7% today and 
stopping us out right at the open.  The stock gapped down below 
its descending trendline (which should have provided some 
support) as well as the 20-dma ($26.63) and never looked back.  
We knew that this group's relative strength would fail eventually 
and apparently today was the day.  That's what stop losses are 
for, though.

Picked on July 2nd at    $27.16
Change since picked       -1.73
Earnings Date           07/22/03 (confirmed)
Average Daily Volume =  13.9 mln




---

Synopsis, Inc. - SNPS - close: 60.69 change: -2.92 stop: 63.20

So much for the SNPS' strong fundamentals and recent relative 
strength.  Yesterday's incipient weakness really bloomed today, 
with the SOX leading the loser parade with a 4.17% loss and not 
to be outdone, SNPS tallied up a 4.59% slide by the closing bell.  
Starting the day with a gap below the 20-dma, which we thought 
should provide some support, SNPS triggered our $63.20 shortly 
thereafter, making us thankful we tightened it up earlier in the 
week.  There was very little buying interest throughout the day, 
and the stock took out numerous levels of support, closing at its 
low of the day and the past two day's weakness has wiped out an 
entire month's worth of methodical gains.  Today's sharp drop 
after the recent strength is a neon reminder of the necessity of 
using stops.

Picked on June 25th at   $63.59
Change since picked       -2.90
Earnings Date          08/20/03 (unconfirmed)
Average Daily Volume = 1.52 mln





=================================================================
High Risk-Reward Plays
=================================================================

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

  --------------
  Closed Bullish
  --------------


E-LOAN - EELN - close: 5.70 change: -0.74 stop: 5.99 

There was little news to facilitate the 11.5 percent decline in 
shares of EELN today except for the broad-based selling pressure 
across market sectors.  The INX Internet index fell some 3.5% 
while the BKX banking index lost 1.47%.  As one of the best 
performers in 2003, shares of EELN are a prime candidate for 
profit-taking and that's exactly what happened.  The stock opened 
at $6.15 and we were quickly stopped out at $5.99 for a 46 cent 
loss.  The late day push lower is probably forecasting a move to 
its 50-dma and quite possibly a retest of the $5.25-5.00 level of 
support.

Picked on  July 9 at $6.46
Change since picked: -0.76
Earnings Date:    07/24/03 (confirmed)
Average Daily Volume:  2.7 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

JCI     Johnson Controls Inc       92.34     +4.32
ASD     American Standar Cos       75.00     +1.40
NAP     National Processing Inc    18.15     +1.53

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

PECS    Pec Solution Inc           18.00     +2.13
SCTC    Systems & Computer Tech    11.43     +1.52
SLNK    SpectraLink Corp           14.88     +3.81

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
CAT     Caterpillar                63.58     +4.94
ALL     Allstate Corp              39.20     +1.70
TV      Grupo Televisa Sa          35.82     +2.05
GDT     Guidant Corp               49.91     +3.40
IR      Ingersoll Rand             52.38     +3.81
HSY     Hershey Foods              73.10     +1.30
AAPL    Apple Computer             20.90     +1.03

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

KFT     Kraft Foods Inc            28.81     -1.99
SAP     SAP Ag (ADS)               28.10     -2.60
FDC     First Data Corp            40.64     -2.11
FRX     Forest Labs                46.67     -2.37
PGR     Progressive Corp           67.12     -6.08
COF     Capital One Financial      48.20     -7.12

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

DOX     Amdocs Ltd                 23.92     -1.78
ISIL    Intersil Holding           25.35     -3.11
EFX     Equifax Inc                24.90     -1.20
NFI     Novastar Financial         68.25     -3.45
DISH    EchoStar Communications    34.95     -2.29
UTSI    UTStarcom Inc              37.98     -2.01
FDS     Factset Research           45.31     -1.72
SINA    Sina Corp                  24.50     -3.70
SAH     Sonic Automotive           23.05     -0.74
JCOM    J2 Global Comm.            44.62     -5.33
NRP     Natural Resources Ptnrs    32.70     -1.05



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