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Daily Newsletter, Wednesday, 07/30/2003

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PremierInvestor.net Newsletter                Wednesday 07-30-2003
                                                    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:      "A notch"

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)

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
     07-30-2003         High     Low     Volume Advance/Decline
DJIA     9200.05 -  4.41  9236.54  9164.97 1.64 bln    628/ 960
NASDAQ   1720.91 - 10.46  1733.40  1717.07 1.52 bln    502/ 994
S&P 100   497.29 -  0.56   499.80   496.19   Totals   1130/1954
S&P 500   987.49 -  1.79   992.62   985.96
RUS 2000  472.80 -  0.80   474.23   470.93
DJ TRANS 2606.22 - 12.15  2620.52  2598.15
VIX        20.72 +  0.49    21.06    20.54
VXN        30.86 +  0.70    31.42    30.86
Total Volume 3,342M
Total UpVol  1,163M
Total DnVol  2,096M
52wk Highs     435
52wk Lows       58
TRIN          1.38
PUT/CALL      0.80
=================================================================

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

"A notch"
Jonathan Levinson

The markets closed lower by a notch, while the summary of the
Fed's Beige Book found that the economy edged higher by a notch.

20 day 30 minute INDU


The Dow closed lower by all of 4 points, while the COMPX dropped 
10.  The narrowing pennant formations are setting the markets up
for a big move in either direction, and with a plethora of 
economic data commencing tomorrow, the break could come at any 
time.

20 day 30 minute COMPX


The Energy Department reported that U.S. crude inventories rose 
by 1 million barrels to 277.3 million for the week ended July 25, 
while the American Petroleum Institute reported a 400,000 barrel 
decline to 276.6 million barrels. In either case, analysts got it 
wrong, expecting a larger increase.  Gasoline inventories fell by 
3.3 barrels to 204.5 million barrels according to the Energy 
Department, while the API reported a 2.1 million barrel drop to 
206.3 million barrels. The big news, however, was the most recent 
set of data concerning mortgage and refi activity.

The Mortgage Bankers Association (MBA) announced that seasonally-
adjusted demand for mortgage refinancings, the MBA refinancing 
index, dropped 32.9% for the week ended July 24.  Demand for 
loans with which to buy homes, the Purchase index, dropped 3.5% 
following last week's 1.1% loss.  The Application index dropped 
24.9%.  The average interest rate for a 30-year fixed rate 
mortgage rose to 5.87% from 5.72%.

As I have been discussing for the past several weeks in our 
Wednesday market wraps, this trend poses significant risks to the 
economy and to the market, as the liquidity generated by debt 
origination has been providing fuel with which to support the 
financial system.  Further more, the rapid rise in interest rates 
comes against the backdrop posted below.  I won't rehash this 
material, and strongly encourage you to review recent Wednesday 
market wraps for a more detailed discussion.  Here are some 
highlights:


Chart of Total Consumer Credit


Chart of Unemployment Rate



Chart of US Bankruptcy Filings



Chart of State and Local Surplus or Deficit



Against this backdrop, GE CEO Jeff Immelt made statements in an 
interview worth repeating (and attributing to him).  Note that GE 
owns CNBC, on which channel the interview took place:

"I'm pretty optimistic. It is not that every thing is perfect.  
I still see the U.S. on a slow economic growth trend. I don't 
see anything negative as I look at the economy today..." 

Photo of Jeff Immelt



I beg to differ, and while charts are always  open to 
interpretation, those posted above appear pretty unequivocal.  
The quote was released last night in a Reuters story at 7:05PM.  
One would be hard pressed to find a clearer example of manifest 
editorial bias.

The President spoke today and was optimistic about the economy, 
saying that he expected his tax cut package to stimulate 
productivity and job growth.  "There's still work to do, but I'm 
optimistic about the future and I believe you'll see more jobs 
created and that will be good for the country," he said.
Regarding the deficit: "We would have had deficits with or 
without tax cuts for this reason: the slowdown in the economy, 
the decline in the stock market starting March of 2000, plus the 
recession, reduced the amount of revenues coming into the federal 
Treasury."

Donald Grimes, economist at the University of Michigan's 
Institute of Labor and Industrial Relations, released a study 
today noting that U.S. economic recovery since the end of the 
recession in November 2001 has been substantially more drawn-out 
than the recovery period of the early 1990s. "The current jobless 
recovery has lasted nearly twice as long and has resulted in 
three times as many job losses compared to the economic recovery 
in 1991-92.  While most people would attribute the continued 
weakness to job losses in information technology industries, 
states that have suffered the greatest during the post-recession 
period are not technology-based states, but are industrial states 
in the Midwest," he said.   Grimes noted that California, home of 
the tech revolution, saw significantly greater job losses in the 
early '90s than it has since 2000.

Rather than rehash the debt and money supply situation, with
which material we should by now be thoroughly familiar, the 
following is a longer term view of the markets we follow.  I'm 
hoping to gain some perspective on the recent market action, 
particularly as the treasury and commodity markets continue to 
diverge from equities during weeks past.

SPX 33 year monthly


The long term Nasdaq and S&P 500 charts speak for themselves.  
Note that the unwinding of the tech bubble brought the COMPX to a 
76.4% retracement off its alltime high, while the SPX stopped at 
the 50% line.

COMPX 33 year monthly



The weekly charts reflect the toppiness that we've been following 
for weeks in the tri-weekly Sentiment Wraps.  

SPX 3 year weekly


COMPX 3 year weekly


Noteworthy is that bond yields have recently rallied very 
strongly, bonds selling off sharply with no corresponding action 
in either direction from equities which have drifted mostly 
sideways during that time.  Recall that bonds and stocks rallied 
together through most of this year, and so the recent action from 
the larger treasury market is so far baffling.  My interpretation 
is that the selloff in treasuries has yet to reach equities, but 
I can think of arguments on the other side as well.

Ten year note yield 3 year weekly


The strong uptrend in gold does not bode well for equities, in my 
opinion.  Note that the weekly chart of the Dec '03 contract 
reveals a continuation pennant forming so far.


Gold 3 year weekly



The Federal Reserve Board's Beige Book was released at 2PM EST, 
and caused a brief stir of buying for a few minutes.  The report 
found that the U.S. economy is showing some signs of improvement, 
with 8 out of 12 districts reporting "somewhat stronger growth."  
The manufacturing sector looked stronger with Philadelphia and 
Richmond and calling an end to the downturn in production, though 
goods prices throughout the country still appeared soft.  The 
report noted the jump in automobile inventories in June and July.  
Overall, the report noted that economic activity had picked up "a 
notch."  There are no doubt windowless offices filled with 
harried quants attempting to discern what percentage of GDP 
corresponds to "a notch".

The inability of the report to spark more that a fleeting bid no 
doubt owes itself to the more negative "hard" data we've been 
following, including initial and continuing jobless claims, the 
current account deficit, the CPI and the PPI.  Statements like 
"inflation remains tame" and "consumer spending is lackluster" 
did nothing to rally bonds, contrary to what one might otherwise 
have expected.  The markets all but ignored the Beige Book, but 
what I find to be most interesting is its reflection of the Fed's 
view on current and ongoing economic conditions.  The full report 
can be accessed at 
http://www.federalreserve.gov/fomc/beigebook/2003/20030730/default.htm.

As Jeff Bailey noted in the 3:15 Market Update, "The word that 
showed up most often was "mixed" and as one subscriber has pointed 
out in the past, where I use quotation marks too frequently and 
perhaps improperly, we can envision the late Chris Farley in a 
Saturday Night Live skit using his fingers to signify quotation 
marks around today's release of the Fed Beige Book Data, which 
contains little hard data points..."

The bottom line is that the Fed pulled out the stops quite some 
time ago.  The more than tripling of the money supply inside of 
15 years, the lowering of rates to 45 year lows, the aggressive 
ongoing daily intervention via Fed repo agreements, all indicate 
a Fed increasingly open to exercising strong measures, while the 
charts on unemployment, state budgets, personal borrowing and 
bankruptcies tell a sad tale of the failure of those measures so 
far. It is my sincere hope that the optimistic "mixed" story in 
the Beige Book and in the mainstream financial media's spin 
thereon is both well-founded and an indication of brighter  times 
to come.  However, in light of the proliferation of "hard" data 
to the contrary and the new threats posed by rising rates, a 
weak dollar, and the other factors discussed above, the Fed's 
Beige Book sounds more like the placative tone of an airline 
steward than an objective report of the current and future 
conditions facing us.

In other news, the Investment Company Institute reported that net 
inflows into stock funds totaled $18.7 billion in June, topping 
$11.9 billion of inflows during May.  This data follows over 1 
year of mostly negative inflows since March 2002.  Trimtabs is 
estimating that the trend will continue, projecting inflows of 
$8.5 billion for this month. 

We have the following economic data due tomorrow:

               Report                   Briefing  Market    Prior
                                        Expects   Expects
Jul 31 8:30 AM Chain Deflator-Adv. Q2 -     1.0%      1.4%   2.4%
Jul 31 8:30 AM Employment Cost Index Q2 -   0.9%      1.0%   1.3%
Jul 31 8:30 AM GDP-Adv. Q2 -                1.5%      1.5%   1.4%
Jul 31 8:30 AM Initial Claims 07/26 -       410K      400K   386K
Jul 31 10:00 AM Chicago PMI Jul -           53.0      53.8   52.5
Jul 31 10:00 AM Help-Wanted Index Jun -       37        37     36


Today's session gave us an inside day following a very light week 
for economic data.  Tomorrow and Friday are much heavier, and 
with tension building with today's price compression within what 
is proving to be a persistent trading range, the stage is set for 
a big move either way.  If this year has taught us anything, it's 
patience and open-mindedness.  The markets could blast to the 
upside as easily to the downside, although I personally find the 
latter to be the more likely outcome.  With the indices just 
below their year highs, volatility very low and beginning to 
climb, bullish percents toppy and bears hesitant to go short, the 
downside appears for the moment to be the path of lesser 
resistance. We'll keep close on our stops in case The Great 
Humiliator disagrees.

See you at the bell!


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

MGA     Magna Intl Inc             75.62     +0.55
BXP     Boston Properties          43.35     +0.54
BPO     Brookfield Properties      22.60     +0.65
LUK     Leucadia National          38.47     +1.17
GXP     Great Plains Energy        28.86     +0.54
ALEX    Alexander & Baldwin        28.68     +0.57

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

TKLC    Tekelec                    14.85     +2.46
CSGS    CSG Systems Intl           14.86     +1.65
ITMN    Intermune Inc              18.80     +2.21
PSTI    Per-Se Technologies        13.53     +1.34
HGR     Hanger Othropedic          13.72     +1.10
INVX    Innovex Inc                14.29     +1.29

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
MAY     May Dept Stores            24.46     +1.01
BEC     Beckman Coulter            43.70     +1.33
ORLY    O'reilly Automotive        37.73     +1.52
MLM     Martin Marietta            38.40     +4.16
CRL     Charles River Labs         37.13     +4.42
FRK     Florida Rock Industries    49.00     +2.50
MATK    Martek Biosciences         49.76     +3.30

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

AVE     Aventis                    51.64     -1.75
BVF     Biovail Corp               36.85     -1.65
GRMN    Garmin Ltd                 38.51     -8.10
EXPD    Expeditors Int             32.99     -2.66
RCI     Renal Care Group           34.95     -2.40
LDR     Landauer Inc               38.98     -1.48

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

SILI    Siliconix Inc              41.97     -1.48
LFG     LandAmerica Fncl Grp       46.22     -2.12
SCHN    Schnitzer Steel            44.10     -3.14
MNST    Monster Worldwide          23.42     -1.36
SAFM    Sanderson Farms            29.65     -0.48



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PremierInvestor.net Newsletter                Wednesday 07-30-2003
                                                    section 2 of 2
Copyright ) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

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

In section two:

Tech Stocks
  Bullish Play Updates:  MU, PLNR
  Closed Bearish Plays:  STX

Active Trader (Non-tech)
  New Bullish Plays:     CTAS
  New Bearish Plays:     DAL
  Bullish Play Updates:  HSIC, NEM, PETM
  Bearish Play Updates:  HOV

High Risk/Reward
  Bullish Play Updates:  BEAS


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

Micron Technology - MU - close: 14.35 change: -0.17 stop: 13.90

As good as last week's breakout move in shares of MU looked, the 
ensuing action has made it clear that another test of support is 
necessary to provide the conviction necessary to continue the 
move.  After pulling back from just below $16, the stock is 
finding consistent intraday support just above $14 and 
fortunately the 20-dma ($14.11) has risen enough to help 
reinforce that support.  Making things more difficult for the 
bulls though, is the Semiconductor index (SOX.X) pulling back for 
another apparent test of its months-long ascending channel.  The 
bottom of that channel at $378 looks like it could be in for 
another test as support tomorrow morning, and if it fails, our MU 
play will likely have a hard time holding over $14.  But if the 
support holds, then we could be presented with another solid 
entry with MU rebounding from known support and the SOX 
rebounding for another run at the key $400 resistance level.  New 
entries near that known support look attractive on a risk-reward 
basis, especially with our stop set at $13.90.  Recall that our 
first target will be for a run at last week's highs and a test of 
resistance near $16.50.  That would make a good point for 
conservative traders to harvest some gains.

Picked on July 23rd at   $15.38
Change since picked       -1.03
Earnings Date            9/17/03 (unconfirmed)
Average Daily Volume =  11.4 mln



---

Planar Systems - PLNR - cls: 24.01 chg: +0.05 stop: 22.49*new*

On Wednesday, PLNR's 0.21 percent gain occurred on lighter-than-
average volume.  That's okay because Tuesday's volume was up 50% 
over average daily volume.  Investors had already shown their 
interest in accumulating the stock.  They have been driving the 
price right up to $24.20 resistance since July 18.  Pullbacks get 
shallower with each assault. PLNR's "p" accumulation pattern has 
resolved into a bullish right triangle with a rising support line 
and a flat resistance line.  The typical outcome of such a 
triangle is an upside breakout and that's what we hope to see.  

Light volume or not, PLNR's percentage gains still outperformed 
those of the XCI, the Amex Computer Technology Index, with that 
index losing 0.58 percent.  On PLNR's daily chart, indicators 
have moved into territory showing overbought conditions, but 
haven't yet turned down.  Oscillators rarely give good signals in 
a trending market anyway.  Aggressive traders seeking a new entry 
might enter on a momentum push above 24.20 resistance.  We're 
raising our stop loss to $22.49.

Annotated Chart for PLNR:


Picked on July 20 at $23.89
Change since picked:  +0.12
Earnings Date:     07/16/03 (confirmed)
Average Daily Volume:   174 thousand




============
CLOSED PLAYS
============

  --------------------
  Closed Bearish Plays
  --------------------


Seagate Tech. - STX - cls: 20.86 chg: +0.36 stop: 21.01

Late last week, STX competitor Western Digital trumped a joint 
bid by STX, Hitachi, and Alps Electric to buy the assets of 
bankrupt Read-Rite Corp.  A GS analyst didn't think the lost 
opportunity would adverse affect Alps' earnings.  He didn't 
mention STX, but the company's investors certainly haven't 
appeared discouraged, either by that development or by the flood 
of new stock that began hitting the market late last week.  

Investors haven't exactly been encouraged, either, with STX's 
Wednesday gains made on about three-fourths average daily volume.  
No matter what the volume levels, however, STX keeps chugging up 
the underside of its violated trendline and that means trouble 
for our short play.  Most disturbing is the way it's been using 
the 21-dma as support the last two days.

STX's advance this week turned the stochastics back up, but RSI 
and MACD remain more inconclusive.  The candles have grown 
smaller, too, as STX climbed.  That evidence, coupled with the 
lower volume, may indicate some hesitation to drive STX back to 
previous highs, but that's a dim hope.  STX now trades less than 
$.30 below our stop and we see no reason to wait out that extra 
$.30.  We're closing the play tonight.  

Picked on July 23 at 19.50
Change since picked: +1.36
Earnings Date:    07/15/03 (confirmed)
Average Daily Volume:  3.1 million





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

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------


Cintas Corp. - CTAS - close: 39.90 change: +0.61 stop: 37.50

Company Description:
Cintas Corporation is primarily a corporate identity uniform 
company that also provides ancillary services.  The company 
provides a highly specialized service to businesses of all types, 
from small service and manufacturing companies to major 
corporations that employ thousands of people.  CTAS classifies 
its businesses into two operating segments: Rentals and Other 
Services.  The Rentals operating segment designs and manufactures 
corporate identity uniforms that it rents, along with other 
items, to its customers.  The Other Services segment involves the 
design, manufacture and direct sale of uniforms to its customers, 
as well as the sale of ancillary services, including sanitation 
supplies, first aid and safety products and services.

Why we like it:
While there really hasn't been much of a hint of an improvement 
in the job market in recent months, CTAS is defying the 
government statistics and has been steadily working higher over 
the past month.  The $40 level is major resistance, and handily 
turned back the stock the last time it seriously challenged this 
level in the middle of June.  But with a positive earnings report 
and inline guidance under its belt a couple weeks ago, the stock 
has once again been building a series of higher lows and higher 
highs and is right back at that $40 resistance level.  Making 
this level all the more pivotal is the 200-dma, which currently 
rests at $40.27.  Yesterday's Consumer Confidence report put a 
dent in the recent bullishness, but after pulling back to just 
above $37.50, found eager buying interest that propelled CTAS 
back over $39 by the closing bell.  CTAS attempted to break that 
resistance on Wednesday, but fell back after tracing an intraday 
high of $40.18.

This leaves us with the perfect setup for a momentum breakout, 
and we're setting our trigger at $40.30, just over the 200-dma.  
There's likely to be some interim resistance near $42, which can 
most clearly be seen on the PnF chart, where that level proved to 
be strong support last year.  CTAS also will have to contend with 
the bearish resistance line at $41 before solidifying any strong 
breakout, but it looks like the recent bullish pattern should win 
out.  As a point of reference, the bullish price target from the 
PnF chart is $47, but we're setting our sights just a bit lower, 
looking for a rally to major resistance at $45.  Momentum traders 
will want to jump on the initial breakout over the 200-dma, while 
those with a more conservative approach will want to wait for a 
subsequent pullback to confirm the $39-40 level as newfound 
support before entering.  Once triggered, we'll set our stop 
initially at $37.50, which is just below yesterday's reaction 
low, as well as the 20-dma (currently $37.58).  Keep an eye on 
the Initial Claims report tomorrow morning and the Nonfarm 
Payrolls and Unemployment Rate report on Friday for a clue to 
investor sentiment.  An unexpected improvement in any of these 
reports may be just the catalyst to deliver the breakout over 
resistance.

Annotated Chart of CTAS:


Picked on July 30th at   $39.90
Change since picked       +0.00
Earnings Date           10/14/03 (unconfirmed)
Average Daily Volume =  1.11 mln
Chart:


  -----------------
  New Bearish Plays
  -----------------


Delta Air Lines - DAL - cls: 11.15 chg: -0.22 stop: 12.21

Company Description:
Delta Air Lines, the world's second largest airline in terms of 
passengers carried and the leading U.S. carrier across the 
Atlantic, offers 5,734 flights each day to 444 destinations in 79 
countries on Delta, Song, Delta Express, Delta Shuttle, Delta 
Connection and Delta's worldwide partners.  (Source:  Company 
Press Release.) 

Why We Like It:
Back in June, DAL broke out of a bull flag and zoomed toward 
recent highs, but soon slammed into resistance and headed down 
again.  Its high-flying days turned out to be short-lived.
 
DAL paused a few days at the midline support of a huge regression 
channel from its weekly chart, but it couldn't take flight again.  
It broke through the support.  Then it idled again near its 200-
dma, forming a "b" distribution pattern.  It's been clinging to 
levels near its 200-dma, but has now had two consecutive closes 
below that important moving average.  We think the "b" 
distribution pattern will soon break to the downside.  It might 
be accompanied by other airliners' stocks as it dives, since the 
XAL, the airline index, matched DAL's 1.93 percent drop on 
Wednesday with a 2.57 percent drop of its own.

DAL investors have reason to abandon the stock.  Last week, the 
company announced a decision to stop dividend payments.  It had 
been making regular dividend payments since 1949.  It also 
announced plans to convince holders of two notes due in 2004 and 
2005 to keep those notes a bit longer and not require payment.  
S&P announced that it had assigned a "B" rating to the proposed 
$683.5 million 10% senior notes meant to convince those holders, 
with that rating being two notches below Delta's corporate debt.  
The press release includes phrases such as "reflect financial 
damage from substantial losses over the past two years, a heavy 
debt and lease burden" and other gloomy language.  In addition, 
DAL and United said they would end their frequent-flyer deal.  

On the daily chart, MACD looks bearish.  After such a prolonged 
downdraft, stochastics and RSI remain buried in levels indicating 
oversold conditions, of course.  It's possible that DAL will 
attempt one more try at its 200-dma or the $12.00 level, but we 
think that attempt will be a failed one.  Traders can enter at 
current levels or on a rollover anywhere underneath $12.00.  
We're targeting $9.00, just above the support offered by the 
rising regression channel.  Conservative traders might want to 
take profits or watch carefully as DAL approaches $10.00.  

DAL just printed a new P&F double-bottom breakdown sell signal, 
and it's below its bearish resistance line.  The P&F target lies 
below our $9.00 target, although we don't have a final count 
because the stock has not yet reversed into an "X" column.

Annotated Chart for DAL:


Picked on July 30 at 11.15
Change since picked:  0.00
Earnings Date:    07/17/03 (confirmed)
Average Daily Volume:  3.3 million




============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------


Henry Schein - HSIC - cls: 58.83 chg: +0.14 stop: 55.45 *new*

Friday we mentioned that HSIC might breeze past the resistance 
just above $57, and that's what it did.  HSIC marched right to 
the top of its ascending regression channel this week, with that 
channel rising toward our 59.90 target.  With earnings scheduled 
for next Tuesday, we needed HSIC to climb quickly, and it's 
conceded to our wishes.

Although Wednesday's volume proved lighter than normal, Tuesday's 
1.87 percent climb was on almost double the average daily volume.  
MACD kicked up again, although RSI flattened and stochastics show 
the slightest tendency to flatten, too.  We can't trust those 
oscillators too much, however, as they've been behaving similarly 
ever since May, when RSI and stochastics first climbed up into 
the zone indicating overbought conditions.  The fluctuations 
haven't retarded HSIC's climb so far.

Still, with this play scheduled to close out at the end of this 
week, we're raising our stop to 55.45.  Since the play has 
performed handsomely already, conservative players might begin 
taking profits at current levels or might consider setting an 
alternative stop at 56.49 or even at 56.99. We would not suggest 
new entries at this time.

Annotated Chart for HSIC:



Picked on July 27 at $56.75
Change since picked:  +2.08
Earnings Date:     08/05/03 (confirmed)
Average Daily Volume:   346 thousand



---

Newmont Mining - NEM - cls: 35.44 chng: -0.54 stop: 33.75

Following last week's breakout to new 5-year highs, we've been 
looking for a decent pullback to provide the next palatable entry 
into our NEM play, and it looks like it is setting up right now.  
A failure to push higher on Monday resulted in a drop back to 
just above $35 and the stock has been finding consistent support 
in the $35.20-35.30 area over the past few days.  Pressuring the 
stock over the past few couple days has been the pullback in the 
price of gold from its $365 resistance level.  The yellow metal 
has been trading in a neutral wedge since tracing its February 
high of $390, but given the bullish action in the gold stocks, 
we're leaning to a bullish resolution of this pattern.  While a 
successful rebound from this area might make for a decent entry, 
we've still got the potential for a deeper pullback to the 10-dma 
($34.44) or the top of last week's breakaway gap at $34.00 before 
the bullish move continues.  So long as gold doesn't break the 
bottom of its wedge at $344 (also the site of the 200-dma) a 
deeper pullback in NEM should just be the setup for a better 
entry.  Wait for the rebound in both NEM and gold before entry 
and maintain stops at $33.75, just below the top of that gap.  
The primary wrinkle in our plans is the company's earnings 
report.  The company has moved up its earnings release from 
August 5th to tomorrow before the open.  Normally we'd drop the 
play ahead of earnings, but it's too late for that.  Let the stop 
do its job if the report is poorly received and wait for the 
initial post-report volatility to ease before entering new 
positions.

Picked on July 23rd at   $35.28
Change since picked       +0.16
Earnings Date            8/05/03 (unconfirmed)
Average Daily Volume =  4.36 mln




---

PETsMART, Inc. - PETM - cls: 19.56 chg: -0.36 stop: 18.29

We said last week that we weren't choosing PETM because its 
symbol gave us a warm-and-fuzzy feeling, and it's a good thing 
that wasn't our reason.  Friday, PETM bounced from the midline 
support of its rising regression channel, and that upward move 
continued Monday.  Tuesday and Wednesday, however, PETM dropped 
back below $20 and the midline support. Its 1.81 percent loss 
exceeded the 0.36 percent loss seen on the RLX, the retail index. 
That cooled some of our warmth for the play.

But it didn't cool all our warm feelings.  PETM's drop on 
Wednesday stopped at an ascending trendline that could be drawn 
from the July 1 low to the current position.  Wednesday's drop 
also occurred on less than half the average daily volume.  It 
felt like a pullback.  How deep will that pullback take PETM?  
Historical support, the rising 21-dma, and the rising bottom 
channel support should hold PETM above our $18.29 stop.  

MACD flattened, but stochastics and RSI both react to the 
pullback.  Stochastics made a bearish kiss but haven't yet rolled 
down.  They might not do so, as they sometimes remain pinned at 
overbought levels for long periods in trending stocks.  Those 
watching for a new entry could target a bounce anywhere north of 
$19.00 or could enter on another move through $20.00.

Annotated Chart for PETM:


Picked on July 27 at 19.99
Change since picked: -0.44
Earnings Date:    08/28/03 (confirmed)
Average Daily Volume:  1.4 million




  --------------------
  Bearish Play Updates
  --------------------

Hovnanian Ent. - HOV - cls: 51.13 chng: +0.13 stop: 52.30*new*

Over the past week, the Dow Jones Home Construction index 
($DJUSHB) has been gravitating to the $425 level as bond yields 
continue to hold near their 52-week highs.  At the same time, our 
HOV play has continued to drift lazily lower.  The 10-dma (now at 
$51.72) has been providing intraday resistance, while the stock 
continues to find intraday support just above $50.  At this 
point, it looks like things could go either way, so we're erring 
on the side of caution and tightening our stop, while at the same 
time allowing for the expected breakdown to materialize and take 
us deeper into the profit zone.  Our stop moves lower to $52.30 
tonight, which is above both the 10-dma and yesterday's intraday 
high.  Should HOV rally above that level, we'll want to take a 
quick exit, preserving a modest gain.  The only way we want to 
consider new entries here is on a breakdown under $50, which 
should be good for a quick run down to our eventual $45-46 target 
area.

Picked on July 16th at   $54.25
Change since picked       -3.12
Earnings Date           08/27/03 (unconfirmed)
Average Daily Volume =  1.02 mln





==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

BEA Systems - BEAS - close: 13.30 change: -0.22 stop: 12.35*new*

After a convincing breakout through the $13.25 level last week, 
our BEAS play has been struggling to sustain further gains.  It 
has made a couple forays up into the $13.65-13.75 area, but 
without the support of broad market strength, each of these 
bullish attempts have been turned back.  On the bullish side of 
the coin though, it has been encouraging to see intraday support 
beginning to build near the site of last week's breakout, hinting 
that the stock wants to put in another bullish performance ahead 
of earnings on August 14th.  There's a short-term ascending 
channel that can be drawn on the intraday chart, with the bottom 
of the pattern at $13.20, and aggressive bulls may want to 
consider new positions on a rebound from that area in 
anticipation of a run at the $14 resistance level.  Conservative 
traders may want to harvest gains near that level on a failure to 
break out, while aggressive traders can still consider breakout 
entries on a move through $14.00.  As we've been doing over the 
past week, we're continuing to ratchet our stop up to $12.35, 
keeping it just below the 20-dma ($12.46).  Setting it at that 
level gives us a bit of additional cushion and keeps us under 
last Monday's $12.37 intraday low.

Picked on July 20th at   $12.79
Change since picked       +0.51
Earnings Date            8/14/03 (confirmed)
Average Daily Volume =  11.1 mln








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