PremierInvestor.net Newsletter Wednesday 08-06-2003 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: Below the Trendlines 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) ================================================================= 08-06-2003 High Low Volume Advance/Decline DJIA 9061.74 + 25.42 9134.57 8997.11 1.75 bln 1212/1995 NASDAQ 1652.68 - 20.82 1675.46 1648.42 1.84 bln 1610/1607 S&P 100 488.13 + 1.47 492.70 484.68 Totals 2822/3602 S&P 500 967.08 + 1.62 975.74 960.84 RUS 2000 453.91 - 3.54 458.24 452.79 DJ TRANS 2533.81 - 10.05 2556.31 2526.38 VIX 23.30 - 0.81 25.88 23.11 VXN 34.42 + 0.19 35.98 33.84 Total Volume 3,875M Total UpVol 2,372M Total DnVol 1,442M 52wk Highs 157 52wk Lows 92 TRIN 0.80 PUT/CALL 0.88 ================================================================= =========== Market Wrap =========== Below the Trendlines Jonathan Levinson In a tale of two markets, the Dow added 25 points today and the Nasdaq lost nearly 21. Both results were surprising, as it appeared possible this morning that we might see a full-fledged meltdown following John Chambers' less-than-stellar attempt to talk up CSCO's most recent results, and the selling frenzy in the futures following the cash close yesterday. 20 day 30 minute INDU The Dow's 30 minute candlechart is open to interpretation, to say the least. However, the strong bounce off the morning low violated the downtrend off Thursday's high, and the close left us right on that trendline for a retest with the oscillators lagging the closing drop. 20 day 30 minute COMPX The equivalent chart of the COMPX avails itself of no such bullish interpretation, although the descending channel from Thursday could be construed as a bull flag. The CSCO-show effectively prevented the breakout we saw today in the INDU, and note the strong stochastic divergence on the closing sell candle. The up-phase in progress from this morning's opening low aborted early on both indices, a bearish development on the COMPX and the INDU. 6 month daily chart of the INDU Zooming out to the 6 month chart of the Dow, we see that today's 25 point gain did nothing to correct the damage done by yesterday's trendline break. The oscillators are in downphases, and it will take a strong push from the bulls to regain the trendline and reverse the sell signals on the stochastics and macd. 6 month daily chart of the COMPX We have the same setup on the 6 month Nasdaq chart, except that today took the index lower still, and paints a pretty unequivocal picture. While the optimistic bull flag drawn on the 30 minute chart above is not technically incorrect, I find it difficult to think bullish thoughts about the index when looking at the daily chart. A bounce and even possible trendline retest is possible from here, but the onus has clearly shifted from the bears to the bulls. The Mortgage Bankers Association (MBA) announced this morning that seasonally-adjusted demand for mortgage refinancings, the MBA refinancing index, declined 2.4% for the week ended July 31 following the previous week's 32.9% drop. Demand for loans with which to buy homes, the Purchase index, rose 6.9% following the previous week's 3.5% loss. The Application index rose 1.1% following the prior week's 24.9% decline, posting its second lowest reading for the year. The average interest rate for a 30- year fixed rate mortgage rose to 6.37% from 5.87%, a 50 basis point increase in one week. Given the continued rise in yields and the fact that most home equity borrowers probably aren't watching the stochastics, Macd and ADX on the Ten and Thirty year yield charts, I'm thinking that the uptick is simply stragglers and latecomers to the market who had been procrastinating. I do not expect to see home borrowing and refinancing activity continue to advance side-by-side a climb in yields. On that basis, so long as bonds continue along their downtrend, I expect to see mortgage activity and overall borrowing contract. Whether this is the cause or the effect of an overall contraction in liquidity, or rather in the availability of money to the financial system, is a chicken-or-egg question worthy of bounteous discussion. But the result is the same, which is good enough for us traders. With a contraction in liquidity comes what the Fed has been calling "dis-inflation," and for an idea of the effects of dis-inflation on the markets, take your charts of Jan-June and turn them upside down. You'll see the US Dollar Index rising, mortgage and refi activity falling, yields rising/bonds dropping, stocks dropping, gold falling. I believe that the efforts to avoid or at least ease the effects of the former will cause the latter, gold, to outperform, but I do not believe that commodities will be exempt from price declines in an overall deflationary. If dollars come to be worth more, then assets valued in those dollars will sell for fewer of them. It's worth recalling a quote from Vice president JP Morgan Chase, Peter Smith: "Gold is nobody else's paper." This applies to commodities and "hard assets" in general. The fear of deflation derives from its potential to cause a descending spiral in a high-debt economic environment such as we have currently. If liquidity contracts and bond prices drop, yields will increase, requiring higher payments from debtors. At the same time, as money is increasing in value/becoming harder to come by, business investment softens, and unemployment persists. This causes debtors to default on their debt, which ultimately pressures creditors holding that paper, and so on. This is the trend that the Fed has been fighting. In such an environment, hard assets are not vulnerable to default. While their return on investment might be poor, their return OF investment is far more certain than in the case of paper assets. Updated chart of Total Consumer Credit Outstanding Total Loans and Leases at Commercial Banks Bank Prime Loan Rate 1949-2003 The above discussion is intended to put some context behind the current market action we've been seeing and the recent releases from the Fed. One would think that equities would be far weaker than they have in fact been, and I'm not suggesting that we grit our teeth and go short, awaiting a certain crash. We've been seeing the beginning of an uptick in economic activity in some of the reports of the past few weeks, and as even Doug Noland has speculated, the aggressive inflation of the money supply by the Fed and aggressive consumer spending even on foreign goods, must have at least some stimulative effect on the economy. For example, discount air carrier JBLU reported today that its July load factor rose 2.8% over July 2002's level to 90.6%, with a 79% increase in traffic and a 74% increase in capacity. We've also seen declines in the initial jobless claims data in recent weeks. Furthermore, more directly related to the markets themselves, the aggressive inflation of the money supply, lowering of rates and expansion of debt serve to inflate the price of all financial assets. This effect was, in my view, the cause of the rally in stocks and bonds this spring. While the value of stocks and bonds may not be increasing or even diminishing, their price rises as increasing amounts of money seek different investments. For this reason, and given the huge stakes, traders, particular options and futures traders, must remain nimble. The equity and commodity markets are very small relative to the treasury and currency markets, and each ripple in those larger markets is a potentially huge wave in equities and commodities. The Energy Department reported that U.S. crude oil inventories rose by 2.9 million barrels to 280.2 million in the week ended August 1. Yet again, analysts got it wrong, predicting a drop for the week. The American Petroleum Institute (API) reported a 1.6 million barrel gain for the same period. Gasoline inventories dropped by 2.7 million barrels to 201.8 million barrels according to the Energy Department, with the API reporting a 4.5 million barrel drop. Distillate supplies gained 1.7 million barrels to 119.1 million barrels, with the API reporting a lower 400,000 barrel increase to 116.1 million barrels. The second day of this quarter's record 60B treasury auction saw 18B in five year treasury notes sold at a 3.30% yield, compared with last quarter's 2.68% yield. The notes were well-received at that rate, generating a bid-to-cover ratio of was 2.48 vs. the average over the previous four quarters of 1.86. The demand was unexpected after the softness in seen yesterday, with three year notes generating a mere 1.32 bid-to-cover. The strength in treasuries throughout the day, with no apparent assistance from the Fed via its open market operations, bodes well for tomorrow's 18B ten year note auction. We have the following economic data due tomorrow: Report Briefing Market Prior Expects Expects Aug 07 8:30 AM Initial Claims 08/02 - 400K 395K 388K Aug 07 8:30 AM Productivity-Prel Q2 - 3.5% 4.0% 1.9% Aug 07 10:00 AM Wholesale Inventories Jun -0.2% 0.0% -0.3% Aug 07 3:00 PM Consumer Credit Jun - $5.5B $6.0B $7.3B Today's session left us with more questions than it answered. Was the decline in the Nasdaq merely CSCO-related, or does it represent the confirmation of the trendline break yesterday? I believe that the failure of the Dow to put together more than a 25 point gain following its trendline break yesterday points to something beyond CSCO. More puzzling, however, was the strong bid in treasuries and the positive reception of the 5 year treasury auction. The Fed did not add reserves via its open market operations this morning, and if treasuries were being bought by "value" players looking for bargains at current yields, then we have perhaps witnessed the bottom in treasuries. I'm at a loss to explain it, as the 18B of new 5 year paper should have drained liquidity from stocks and bonds, compounding yesterday's losses. We'll watch the ten year auction tomorrow for clues, but for the moment, it remains puzzling. As Jeff Bailey noted in a comment from a reader, the Fed is meeting tomorrow, and while the Fed Funds futures are predicting zero possibility of a rate cut, perhaps some of the bid in bonds today was frontrunning the possibility. I do not know. The economic data tomorrow before the cash open should go a long way toward determining market direction. Initial claims are expected to come in relatively low, and an upside surprise could move economic concerns back to the forefront of the market's attention. 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 BSC Bear Stearns Companies 67.81 +1.61 NCEN New Century Financial 23.92 +1.00 HELE Helen of Troy 18.36 +0.68 SIGI Selective Insurance 26.96 +1.45 GOLD Randgold Resources 22.39 +1.63 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- PDII PDI Inc 18.24 +1.10 AUO AU Optronics 10.25 +1.05 EVOL Evoling Systems Inc 7.77 +1.50 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- DRIV Digital River 22.50 +2.33 DVN Devon Energy Corp 49.62 +2.77 TOL Toll Brothers Inc 28.23 +1.76 PLNR Planar Systems 24.49 +1.73 ZMH Zimmer Holdings 50.43 +3.13 BKST Brookstone Inc 26.70 +2.97 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- AET Aetna 52.70 -4.97 LAMR Lamar Advertising 31.14 -2.21 WPI Watson Pharmaceuticals 37.58 -1.37 OHP Oxford Health Plans 37.12 -1.94 TARO Taro Pharmaceutical 49.58 -1.12 CVH Coventry Health Care 46.95 -3.32 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- SNDK Sandisk Corp 52.02 -4.88 SRDX Surmodics Inc 33.66 -1.55 YUM Yum! Brands 29.07 -0.47 MGA Magna Intl Inc 74.00 -0.84 CR Crane Co 24.00 -0.47 AAP Advance Auto Parts 66.50 -1.60 ================================================================= 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 (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form
PremierInvestor.net Newsletter Wednesday 08-06-2003 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 ================================================================= Tech Stocks Bullish Play Updates: ALTR Active Trader (Non-tech) New Bearish Plays: FDP Bullish Play Updates: CTAS, NEM Bearish Play Updates: DAL, GPT, JPM Closed Bearish Plays: HOV High Risk/Reward New Bearish Plays: SOHU Bullish Play Updates: BEAS SplitTrader/Announcements Split Announcement: CHDX ================================================================== Net Bulls (NB) Tech Stock section ================================================================== ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- Altera Corp. - ALTR - close: 18.89 change: -0.12 stop: 18.69 What a difference half a week makes. At the end of last week, the SOX rose and ALTR rose even higher on a relative basis, moving up a greater percentage than the semiconductor index. Wednesday, ALTR outperformed to the downside, losing 0.63 percent on a day the SOX lost 0.28 percent. Monday, ALTR introduced the Nios(R) Development Kit, Stratix (TM) Professional Edition, meant to give hardware engineers tools to accelerate development of complex, high-performance designs. It also announced that one of its products would replace a previous version of processor in a line of Intervac's night-vision cameras. New products or not, ALTR succumbed to the weakness in the tech- related stocks. Wednesday, ALTR opened only two cents off our stop. It moved up, piercing through the 21-dma, but fell back just below that average. Volume did not pick up as ALTR fell this week, and the indicators don't yet look fully committed to the downside move. A fall beneath current support will probably tug them down into full bearish mode, however, but we'll be stopped out of the play if that happens. We're keeping our stop at $18.69, and would not suggest new entries at this time. Annotated Chart for ALTR: Picked on August 3 at 19.75 Change since picked: -0.86 Earnings Date: 07/22/03 (confirmed) Average Daily Volume: 8.2 million ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bearish Plays ----------------- Fresh Del Monte Prod. - FDP - cls: 26.20 chng: -0.31 stop: 27.50 Company Description: Fresh Del Monte Produce, Inc. is primarily engaged in the worldwide sourcing, transportation and marketing of fresh and fresh-cut produce. The company's products include bananas, pineapples, cantaloupe, honeydew, watermelons, grapes, non- tropical fruits (including citrus, apples, pears, peaches, plums, nectarines, apricots and kiwi), plantains, Vidalia sweet onions and various greens. FDP sources its products primarily from Central and South America and the Philippines. The company also sources products from North America, Africa and Europe and distributes its products in Europe, the Asia-Pacific region and South America. Why we like it: With the broad markets showing their most concerted bout of weakness of the past several months, we've got a technical setup that is just too good to pass up. Shares of FDP have just effectively put in a double top in the $28-29 area and over the past several sessions have fallen right to the neckline (just below $26) between the those two recent highs. Adding to the bearish picture is the daily Stochastics. While the late July price high is higher than the mid-July high, Stochastics put in a lower high this time around and that is classical bearish divergence. It isn't a guarantee of a breakdown, but it does hint that when price does break support, it ought to do so with more force. While a case could be made for the neckline being at $26, we're drawing it a bit more conservatively at $25.80 (erroneously labeled as $27.80 on the chart below), which coincides with the 7/21 intraday low. Adding to the significance of this support level is the 50-dma, which is currently $25.61, but rising to roughly $25.74 by Thursday. On the outside chance that FDP might rebound from the $26 level, we're setting a trigger of $25.70, as the stock will have to break horizontal support and the 50-dma to exercise that trigger. Once FDP does break down, we'll be looking for an initial target of $24, but we're really looking for the stock to fall low enough to test and possibly break into the $20.75-23.00 gap from early June. Aggressive traders can enter on the initial breakdown, while more conservative traders may want to wait for a failed bounce to confirm newfound resistance in the $26.00-26.50 area. Initial stops are set at $27.50, which is above the 20-dma ($27.20) and the 10-dma ($27.49), both of which are now rolling over and should act as overhead resistance going forward. Annotated Chart of FDP: Picked on August 6th at $26.20 Change since picked +0.00 Earnings Date 10/28/03 (unconfirmed) Average Daily Volume = 548 K ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- Cintas Corp. - CTAS - close: 38.95 change: -0.38 stop: 38.50 That's twice CTAS has faked us out with a breakout over $40 and a subsequent failure. Today's drop back and close below $39 doesn't look encouraging either, especially with volume running solidly above the ADV. We're still willing to give the stock the benefit of the doubt though, as there's the potential for a rebound from just above our $38.50 stop. The bottom of the 7/24 gap is $38.54 and the 20-dma has now risen to $38.52, so if there is to be a solid rebound, that will be the place. Aggressive traders that want to buy a rebound from that level will need to see strong volume on the rebound in order to have any confidence that it is more than a weak bounce, especially with daily Stochastics and MACD now clearly in bearish rollovers. The best approach for new entries is to make CTAS prove it has bullish intentions by rallying back over the $40 level and closing over the 200-dma. Picked on July 30th at $39.90 Change since picked -0.95 Earnings Date 10/14/03 (unconfirmed) Average Daily Volume = 1.17 mln --- Newmont Mining - NEM - cls: 36.88 chng: +1.13 stop: 35.15*new* Gold bugs rejoice! While there wasn't much life in the price of the yellow metal on Wednesday, with the August futures contract ending at $350, our NEM play caught a very strong rebound from the 10-dma ($35.92), ending the day at $36.88, a new 5-year high. We've been looking for entries either on a bounce from just above $35 or on a breakout through last week's intraday high of $36.90. So far, this week has provided both, with Monday's intraday low of $35.29 and today's intraday high of $37.00. Volume was on the high side as well, confirming the strength of the breakout, and once over $37, NEM should be able to make steady progress towards our $39 target. Traders still looking for new entries will want to look for either another rebound from the 10-dma or a clean break above $37. Raise stops to $31.15, just below the bottom of the recent consolidation pattern. Picked on July 23rd at $35.28 Change since picked +1.60 Earnings Date 7/31/03 (confirmed) Average Daily Volume = 4.47 mln -------------------- Bearish Play Updates -------------------- Delta - DAL - close: 10.51 change: -0.28 stop: 12.01*new* Being a bigger company isn't necessarily better in the world of airliners. DAL calls itself the leading U.S. carrier across the Atlantic and the world's second largest airline if using passengers carried as a measurement. When U.S. airliners reported July traffic this week, the low-fare carriers reported better numbers than their larger competitors. DAL traffic decreased 2.7 percent month-over-month. However, DAL's load factor, the percentage of seats filled, rose 4.9 percent as the carrier trimmed seats offered by 8.5 percent. Average fares remained soft across the industry, one source stated. Tuesday, a car bomb targeting one of Jakarta's top hotels killed 14, reviving terrorism fears. DAL dipped at the open, but then attempted a recovery in the middle of the day, with much talk on CNBC centering on how little affected the airlines had been by the bombing. The effect of the bombing and the decreased traffic shows up on the chart, however. Monday, DAL broke through the bottom of a "b" distribution pattern. Since then, it's been dropping slowly toward last week's $10.31 low and the support that might be expected at $10.00. We expect a first bounce attempt at $10.00. We are therefore keeping a rather wide stop but are lowering it to $12.01. New entries can be sought on a bounce and rollover anywhere under $11.20. We would not suggest a momentum entry on a drop through last week's low as our target lies only $1.51 below DAL's current level. We're targeting $9.00, just above $8.80 support and the bottom of a rising regression channel from DAL's weekly chart. Annotated Chart for DAL: Picked on July 30 at 11.15 Change since picked: -0.64 Earnings Date: 07/17/03 (confirmed) Average Daily Volume: 3.3 million --- Greenpoint Fin. - GPT - close: 49.66 change: +0.68 stop: 51.01 Treasuries rebounded in Wednesday's trading. Wednesday's auction of five-year notes went better than the previous day's auction of three-year notes. In addition, the Mortgage Bankers Association released its market composite index of mortgage loan applications, showing an increase of 1.1 percent. Market pundits think some would-be homeowners are scrambling to get into homes before interest rates rise any higher, although they deemed today's increase a modest one. The refi portion dropped 2.4 percent. Both developments probably helped GPT's national mortgage business. GPT rose 1.39 percent on heavier-than-average volume, topping the 0.87 percent rise in the BKX, the PHLX/KBW Bank Sector Index. The DJUSHB, the Dow Jones U.S. Home Construction Index, rose an even greater 4.01 percent, however, showing the impact of the modest increase on this group. Despite Wednesday's gains, GPT remains below the neckline of its H&S formation and within the "b" consolidation formation. Even with Wednesday's gains, prices closed below $50. MACD remains bearish, crossing below zero for the first time since March. However, stochastics and RSI hint that GPT has not yet completed its test of $50.00 and the H&S neckline. Both the 21- and 50-dma's now gather just over our 51.01 stop, and would lend pressure to GPT should it rise to test next resistance. We're keeping our stop at $51.01. Traders looking for a new entry could target a drop below the bottom of the "b" distribution pattern, but should be aware of next possible support at $47.00. Annotated Chart for GPT: Picked on August 3 at 49.37 Change since picked: +0.29 Earnings Date: 07/15/03 (confirmed) Average Daily Volume: 581 thousand --- J.P. Morgan Chase - JPM - close: 32.99 change: +0.23 stop: 35.25 After giving us the breakdown we were looking for, JPM is hanging onto the $33 level by its fingernails, but it almost seems inevitable that we'll get the big breakdown we've been expecting. The stock has successfully broken below the neckline (which was actually at $34) of the Head & Shoulders pattern that was built over the past 2 months and the minimum downside objective is $30. Now that we've gotten the initial breakdown, we can look to open new positions on a failed rebound below the $34.00-34.50 area or on a break below Monday's intraday low of $32.40. Once below $32, downside momentum should continue to increase, leading to the test of $30 support. Monitor the Broker/Dealer index (XBD.X) for signs of sector weakness, as now that $550 support has been broken, it should offer stiff resistance. Picked on July 30th at $33.36 Change since picked -0.37 Earnings Date 10/15/03 (unconfirmed) Average Daily Volume = 9.55 mln ============ CLOSED PLAYS ============ -------------------- Closed Bearish Plays -------------------- Hovnanian Ent. - HOV - close: 51.08 change: +2.68 stop: 50.25 The success of Wednesday's bond auction lit a fire under the Housing stocks, with the $DJUSHB index vaulting sharply higher to gain nearly 4% on the day. After performing quite well over the past few weeks, our bearish play on HOV caught fire as well, launching higher by more than 5.5%, clearing the 10-dma and our 50.25 stop in a single bound. There should be no question about closing this successful play tonight, as the bearish trend appears to have ended. Picked on July 16th at $54.25 Change since picked -3.17 Earnings Date 08/27/03 (unconfirmed) Average Daily Volume = 1.06 mln ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bearish Plays ----------------- SOHU.com, Inc. - SOHU - close: 32.27 change: -1.84 stop: 35.01 Company Description: SOHU.com is one of China's most recognized and established Internet brands and indispensable to the daily life of millions of Chinese who use the portal for e-mail, alumni club, short messaging services, news, search, games, browsing and shopping. Apart from continuous product and services development, SOHU.com also concentrates its efforts on making the Internet ubiquitously available, whether in the office, at home or on the road. SOHU.com, established by Dr. Charles Zhang, one of China's Internet pioneers, is in its seventh year of operation. (Source: Company Press Release.) Why We Like It: The early part of the summer treated SOHU well. SOHU ramped up into its inclusion in the Russell 2000 on July 10. It even added to its gains over the next few days. From early June until its high on July 15, SOHU had gained 73 percent as it climbed from 25.02 to 43.40. After pulling back slightly before its July 23 earnings, it ramped up again after posting strong second-quarter results, although it could not quite achieve its previous high. Still, that was an amazing performance. However, that advance wasn't nearly as amazing as the climb from last year's prices. Until last November, SOHU traded below $5.00. If you're a SOHU investor sitting on such big gains and with a memory of the last Internet bubble, that's not amazing. That's alarming. We think it's time for the shorts to profit, and intend to be among those profiting. SOHU dropped 5.39 percent in Wednesday's trading, and was joined by other declining Internet- related ADR's such as NTES and IIJI, stocks that dropped 4.23 percent and 9.22 percent, respectively. SOHU's drop did technical damage on the chart, too, pushing it below its 50-dma, horizontal support, and an ascending trendline. Oscillators are in full bear roll. It's on a triple bottom breakdown P&F sell signal. We're targeting $26.50, just above next support. Entries can be made at the current level or on a rollover anywhere below $35.00. Annotated Chart for SOHU: Picked on August 6 at 32.27 Change since picked: 0.00 Earnings Date: 07/23/03 (confirmed) Average Daily Volume: 4.6 million ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- BEA Systems - BEAS - close: 12.89 change: -0.22 stop: 12.74 It's hard to believe that BEAS has been teasing us, stuck between support and resistance for over 2 weeks now, but it has. Breakout attempts over the $13.50 level have been short-lived, each time coming back to test support. We've been systematically removing risk from the play by raising our stop just below the 20-dma. Well it looks like that irresistible force is about to meet the immovable object, with price getting ever closer to breaking the 20-dma. We're keeping our stop in place at $12.74, which is just a nickel below our picked price. If BEAS taps that level, we'll take our leave of the play. After the sideways action of the past 2 weeks, we aren't advocating new entries unless the stock can close back over the $13.30 level. More conservative traders may want to wait for a breakout over $14 before playing. Don't forget, the company is a late reporter for earnings and their report is due out next Thursday. Picked on July 20th at $12.79 Change since picked +0.10 Earnings Date 8/14/03 (confirmed) Average Daily Volume = 10.8 mln ================================================================== Split Trader - Split Announcements ================================================================== Announcements ------------- CHDX medicates shares with a 2-for-1 stock split This morning ahead of today's trading session, Chindex International Inc's (NASDAQ:CHDX) Board of Directors declared a 2- for-1 stock split of the company's common shares. The company's stock split will be payable on September 2nd, 2003, to shareholders on record as of August 18th. The stock is up 200% over the past two months. This is CHDX's first 2-for-1 split. In 2000 and 2002 the company announced a 11:10 split. They also announced a reverse split (1- for-8) in 1999. About the company: The Company is a leading American company in healthcare in the Chinese marketplace including Hong Kong. It provides representative and distribution services to a number of major multinational companies including Siemens AG (diagnostic color ultrasound scanners under the Acuson and Siemens brand names), Becton-Dickinson (including vascular access, infusion and critical care systems), Johnson & Johnson (clinical chemistry analyzers), and Guidant (interventional cardiology products including stents, balloon catheters, and guide wires). It also provides healthcare services through the operations of its private hospital corporation in China. With twenty years of experience, more than 600 employees, and operations in the United States, China and Hong Kong, the Company's strategy is to expand its cross-cultural reach by providing leading edge healthcare technologies, quality products and services to China's professional communities. (Source: Company Press Release) ================================================================= 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 (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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 "firstname.lastname@example.org"
Option Investor Inc