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Daily Newsletter, Monday, 08/11/2003

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PremierInvestor.net Newsletter                 Monday 08-11-2003
                                                  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:      Dog Days
Play of the Day:  Slip Sliding Away

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     08-11-2003         High     Low     Volume Advance/Decline
DJIA     9217.35 + 26.26  9251.59  9146.62 1.20 bln   1700/1082
NASDAQ   1661.51 + 17.48  1668.06  1646.59 1.19 bln   1927/1139
S&P 100   495.12 +  1.32   497.66   491.93   Totals   3627/2221
S&P 500   980.59 +  3.00   985.46   974.21
RUS 2000  459.27 +  5.33   459.27   453.94
DJ TRANS 2579.03 +  6.79  2597.80  2570.74
VIX        21.42 +  0.13    22.43    21.16
VXN        32.12 +  0.09    33.50    31.36
TRIN          0.62
PUT/CALL      0.93
===============================================================

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

Dog Days
by James Brown

Wall Street finds itself smack dab in the middle of the Dog Days
of Summer and we witnessed the lowest volume day of the year.  Of
course the FOMC meeting tomorrow may have something to do with
the low volume today but we'll get to that in a moment.  The
Industrials squeaked out another 26 point gain to make the
current rally stretch to four days in a row. Much of the
afternoon bounce in the $INDU was probably owed to 3M's
announcement to split its stock in September.  Meanwhile last
week's losers were this week's gainers as the tech sector was
generally green today.  All the major tech averages including the
DDX disk drive index, the GHA hardware index, the GSO software
index, the INX Internet index, the NWX networking index and the
SOX semiconductor index all turned in positive sessions.  Leading
the way were the storage and chip stocks.

Lending their efforts to help boost the U.S. markets were
generally positive world indices.  Japan begins a traditional
weeklong holiday today but that didn't stop the NIKKEI index from
adding 1.72% or +160 points to close at 9487.  Plus the Hang Seng
index rallied 1.49% or +148 points to break back above the 10,000
mark to 10,093.  European markets were mostly positive but the
gains were rather muted probably an extension of the range
trading here domestically before the FOMC meeting tomorrow.

Not helping stocks was another drop in the bond market, which
drove yields higher again with the 10-year note yielding 4.371%
and the 30-year yielding 5.296%.  Market internals were actually
much more positive than the closing numbers may lead you to
believe.  On the NYSE advancers beat decliners 17 to 10 and on
the NASDAQ gainers trumped losers 19 to 11.  Up volume beat down
volume by a margin of 2-to-1 on the NYSE and by nearly 4-to-1 on
the NASDAQ.   Despite it all the Dow Industrials remain below
overhead resistance at 9300 and the NASDAQ Composite, which
appeared to snap a losing streak, is still below the 1675 and the
1700 levels (not to mention its simple 50-dma).

Chart of the Dow Jones Industrials:


Chart of the NASDAQ Composite:



Most of the newsworthy stocks making headlines today were in the
technology sector but stealing the show was conglomerate 3M
(NYSE:MMM).  Shares of MMM spiked higher with a late afternoon
push after the company announced a 2-for-1 stock split.  This is
the first stock split in nine years for the highest dollar stock
in the Dow Industrials.  MMM last split 2-for-1 in April of 1994.
MMM's strong $1.95 gain on the day was crucial to the Dow's 26-
point gain on the session.  MMM burst out of a short-term bull
flag consolidation pattern and looks ready to breakout above
current resistance at $142.  Shares are currently overbought but
with any shorts still in this high flyer probably looking for the
exits it could get even more overbought.  The split will take
place on September 29th for shareholders on record as of
September 22nd.

Giving the software sector a boost today was an upgrade for
Oracle (NASDAQ:ORCL) from Merrill Lynch.  MER's analyst lifted
ORCL from a "neutral" to a "buy" citing limited downside risk and
plenty of benefit should the economy continue its gradual
recovery.  Looking at the chart of ORCL it may take some faith to
invest new capital as shares have fallen from $14 in mid-June to
just above $11 late last week.  Of course the timing of the
upgrade may not be that bad given the stock was near serious
support.  Shares bounced more than three percent today but still
closed under its simple 200-dma.

Believe it or not we still have corporate earnings to contend
with.  While we may miss the "Dude, you're getting a Dell!"
commercials we don't want to miss DELL's earnings report.  The PC
giant will be announcing earnings after the bell on Thursday.
What they have to say about end-user demand, especially during
this back to school period, will help set the stage for any
future technology moves throughout the third quarter.  Current
DELL estimates are for 24 cents a share.  Additional tech
earnings to watch this week are Applied Materials (AMAT) and
Maxim Integrated (MXIM) who both announce tomorrow.

This is also a heavy week for retail business earnings
announcements.  The S&P Retail index (RLX) is currently near 52-
week highs.  The RLX appears to have broken out of a bull flag
consolidation pattern but any follow through on the move will
depend on corporate results.  Tomorrow is a busy day with
earnings from May Department stores (MAY), Abercrombie & Fitch
(ANF), J.C.Penney (JCP), T.J.Maxx (TJX) and OfficeMax (OMX).  The
headline announcement to watch will be Wal-Mart's (WMT), which
comes out on Wednesday.  WMT announced today that they appeared
to be "on track" to meet its August same-store sales growth.  The
news helped spike shares of WMT up to a new 52-week high early in
the session before its gains faded into the close.  Also
announcing on Wednesday will be Ann Taylor (ANN) and Federated
Dept Stores (FD).

The biggest event this week also hits tomorrow and that is the
FOMC meeting.  Everyone expects the Fed to leave interest rates
unchanged at 1%, a 45-year low.  A surprise cut could be seen
rather poorly.  Everyone would wonder what the Fed saw that
scared them enough to cut rates again.  The real focus will be on
what the Fed has to say about current conditions and where they
see the economy headed.  The challenge here is that productivity
was very high in the second quarter.  Strong productivity gains
coupled with low utilization capacity does not create a need for
businesses to hire new staff.  Everyone knows that as we approach
this coming election year the number one topic will become job
growth.  We'll probably hear more comments about how the Fed is
ready to be accommodative and their biggest concerns are
inflation falling too low.  The good news is that we probably
have yet to see the bulk of any impact from those child tax
credit (refunds) hitting the economy.  Although the early signs
point to families spending those checks at stores like Wal-Mart,
which should be good news for the retail earnings announcements
this week.

As traders our concern could be another "sell the news" event
with the FOMC even though there doesn't appear to be any news to
sell just yet.  Thus far the traditional late-July to early
October market sell-off has not yet occurred.  We could be seeing
some signs of it in the NASDAQ but investors don't seem worried
yet, at least not from what the VIX and VXN are telling us.  As
Jim pointed out on Sunday, the longer we can trade sideways the
better chance we have of building a new base before what is
expected to be a ramp up into the fourth quarter.  Unfortunately,
we're starting to hear more "professionals" calling for a
retracement of one third to one half of the March to June gains.
Should the Dow/NASDAQ/SPX really breakdown then traders will need
to be ready to switch to bearish strategies.

Watch those stop losses.

James



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


Sharper Image - SHRP - close: 24.30 change: -0.35 stop: 26.75

Company Description:
Sharper Image is a specialty retailer that is nationally and
internationally renowned as a leading source of new, innovative,
high-quality products that make life better and more enjoyable.  A
significant and growing proportion of sales are of proprietary
products created by the Company's product development group,
Sharper Image Design.  The Company operates over 130 stores
throughout the United States, mails millions of its award-winning
catalogs each month and advertises through other direct response
media including television.  The Company's products may also be
purchased on the Internet via its online store at
sharperimage.com.  The Company also has an online auction site
where consumers can place bids to win Sharper Image products at
lower prices; the auction site is accessed from the home page of
the Company's Web site.  The Company also markets its products
through business-to-business sales for corporate marketing
programs and wholesale customers.  (Source:  Company Press
Release.)

Why we like it:
We're basing this play on technical considerations seen in SHRP's
chart.  Friday, SHRP broke through the neckline of a clean and
well-formed head-and-shoulders formation.  Along the way, it also
broke through support at 25.75 and 25.00, falling 4.35 percent on
almost double daily average volume.  Meanwhile, the $RLX gained
1.52 percent.

The target of the H&S formation projects down just below SHRP's
200-dma at $20.68, but we'll be targeting $21.00, just above that
level.  That H&S neckline gives us a well-defined stop to watch,
too, and we're setting our stop at $26.75, a point above the
neckline.  Entries can be made at the current level or on a
rollover anywhere beneath $25.00.

What happened to SHRP?  We're not sure.  Thursday, SHRP announced
an 11 percent increase in July in same-store sales.  Total sales
rose 20 percent from the year-ago period.  Internet sales jumped
60 percent.  The company said it still expected Q2 earnings to be
at 2 to 3 cents per share, and the CEO characterized this
statement as "confirming our increased guidance."  The CEO
mentioned the great momentum.

Is there something disturbing buried in this report?  Is it that
June same-store sales climbed 15 percent and total company sales
increased 28 percent, greater than July's numbers?  SHRP's July
same-store sales certainly increased more than those of most other
retailers we checked, with the exception of CHS, with that
company's same-store sales increasing 15.7 percent.  SHRP is on a
P&F buy signal, but has reversed into an "O" column and is in
danger of giving a high-pole warning if it drops too much further.

This stock looks primed to fall, but it needs to do so quickly.
The company will announce earnings August 21, and we'll be closing
the play ahead of that earnings announcement.

Why This is our Play of the Day
Shares of SHRP caught our attention late last week after the sharp
downward move from the $28 resistance area and the bearish picture
was further solidified by the break of the 2-month Head &
Shoulders pattern neckline at $25.50.  That break drew in some
pretty strong selling volume on Friday and despite gains across
all the major indices and the Retail index (RLX.X) on Monday, the
stock slid lower along the lower Bollinger band, which is starting
to peel off to the downside.  While aggressive traders can look to
enter on a continued deterioration below the $24 level, they'll
need to be on the lookout for an oversold rebound from the $23.25
area, the site of strong resistance on the way up and likely to be
pretty firm support on the way down.  A rebound from that area
should find plenty of overhead supply in the $25.50-26.00 area and
a rollover there would make the best case for new bearish entries.
Once below the $23.25 support, look for SHRP to seek out strong
support near $21, which is just above the 200-dma ($20.69).

Annotated Chart of SHRP:



Picked on Aug 10th at   $24.65
Change since picked:     -0.00
Earnings Date:        08/21/03 (confirmed)
Average Daily Volume:    260 K





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DISCLAIMER
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This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Monday 08-11-2003
                                                   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
=================================================================

Split Announcement:   MMM

Stop Loss Updates:    NEM

Trading Ideas
  There will be no Trading Ideas today due to technical
  difficulties. Please look for them again tomorrow.


==================================================================
 Split Trader/ Stock Splits
==================================================================

-------------------
Split Announcements
-------------------


MMM sticks a 2-for-1 stock split... on a post-it note!

Late in this afternoon's trading session, 3M's (NYSE:MMM) Board of
Directors declared a 2-for-1 stock split of its common shares.  3M
also announced a quarterly cash dividend of $0.66 per share,
payable September 12th, 2003, to shareholders on record by August
22nd.

The stock dividend will be payable to September 29th, 2003 to
shareholders on record as of September 22nd.

This is the MMM's first stock split in nine years.

About the company:
Every day, 3M people find new ways to make amazing things happen.
Wherever they are, whatever they do, the company's customers know
they can rely on 3M to help make their lives better. 3M's brands
include icons such as Scotch, Post-it, Scotchgard, Thinsulate,
Scotch-Brite, Filtrete, Dyneon and O-Cel-O. Serving customers in
more than 200 countries around the world, the company's 70,000
people use their expertise, technologies and global strength to
lead in major markets including consumer and office; display and
graphics; electronics and telecommunications; safety, security and
protection services; health care; industrial and transportation.
(Source: Company Press Release)


==================================================================
Stop Loss Updates
==================================================================


Long play
---------

NEM - We are raising our stop loss from $36.15 to $36.90.



==================================================================
  Trading Ideas
==================


! Please note !

  There will be no Trading Ideas today due to technical
  difficulties. Please look for them again tomorrow.







=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************

Copyright 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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