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Daily Newsletter, Thursday, 08/14/2003

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PremierInvestor.net Newsletter                Thursday 08-14-2003
                                                   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:      Got Power?
Watch List:       TOL, HCA, CFC, AGIX and more!
Market Sentiment: Low Volatility

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      08-14-2003           High     Low     Volume Advance/Decline
DJIA     9310.56 + 28.80  9334.57  9218.82 1.43 bln   1945/1238
NASDAQ   1700.34 + 13.73  1700.34  1681.52 1.30 bln   1877/1276
S&P 100   498.22 +  2.93   499.11   493.28   Totals   3822/2514
S&P 500   990.51 +  6.48   991.91   980.36
W5000    9540.78 + 59.51  9548.40  9449.91
RUS 2000  471.22 +  3.75   471.22   466.55
DJ TRANS 2621.90 + 23.02  2627.35  2596.08
VIX        20.51 -  0.11    21.53    20.22
VXN        29.27 -  1.00    31.59    29.10
Total Volume 2,933M
Total UpVol  1,893M
Total DnVol    973M
52wk Highs  388
52wk Lows    86
TRIN       1.09
NAZTRIN    1.05
PUT/CALL   0.80
=================================================================

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

Got Power?

If you live in the Northeast chances are you are reading this
newsletter a little later than usual due to the lack of power.
Fortunately the markets had closed when the disaster began and
the disruption was minimal. The disaster is going to occur on
Friday morning if the power does not come back online soon. The
challenge is not going to be the NYSE computer systems but the
massive dislocation of thousands of traders and support staff.

Dow Chart - Daily


Nasdaq Chart - Daily


When the lights went out in New York at the close on Wednesday
it immediately created an urge to exit the city even if walking
was the only mode of transportation. Trains, subways, airports
and communication were immediately knocked out and streets and
bridges were jammed with pedestrians moving quickly away from
town. Even cell phones ceased to function without base station
support. With hundreds of trains and subway cars stuck in
tunnels the urge to find ANY alternative exit in case it was
a terrorist attack was strong. People were literally running
away from the city. At one point authorities estimated there
were over 20,000 people jamming streets around a single ferry
terminal to New jersey.

New York is a commuter city and with no way out people were
literally lining up by the thousands at bus lines and ferries.
The problem will come tomorrow when these same people try to
get back into the city to pick up their lives where they left
off. Since the problem appears to be a grid failure from the
heat generated overload there is always the possibility of
another failure on Friday. That possibility may only be in
the minds of citizens but it could wreak havoc to the normal
business cycle. Many New Yorkers may simply decide to stay
home and that could be the best decision. This means that
trading on expiration Friday could be very hectic at the open
followed by very light trading the rest of the day. With many
funds and institutional traders in the New York area those
operations could be running with a skeleton staff. The city
of New York has assured everyone the power will be restored
sometime tonight but should it not return the sentiment impact
could be strong.

Because the outage covered multiple states there were about
a dozen airports closed. Some estimates were between 7-10%
of all U.S. airline traffic for the day was either delayed,
rerouted or cancelled. Planes headed for the Northeast were
rerouted to airports several states away in some cases. This
means those passengers will not make connections and not be
home until tomorrow night. Planes scheduled to be in some
other part of the country for the start of business tomorrow
will still be somewhere in the Northeast. Flights from Miami,
Dallas, LA etc will not be there because the planes were
grounded overnight in the Northeast. It could be Monday
before all the equipment can be rerouted to catch up with
their schedules.

The morning started off calmly with Jobless Claims rising to
398,000 and last weeks claims revised up by +6,000 to 396,000.
This was the fourth week under 400K but we are rising steadily
toward that number. In the last four weeks beginning with July
19th we had 391K, 392K, 396K and ending with 398K this week.
Analysts have made a big deal about the four weeks under 400K
but you can see by the numbers we are moving up again. Also,
the prior three weeks were adjusted to account for historical
automaker layoffs for retooling in July. Now that this period
is over we could see these numbers begin to rise again. The
four-week moving average rose to 3.63 million. 29 states
reported an increase in claims for the week.

The PPI came in as expected at +0.1% with the core rate at
+0.2%. Core intermediate prices fell slightly and have posted
no gains since the first quarter. This is normally a leading
indicator for consumer inflation and it is showing a move
toward deflationary conditions instead. Prices for finished
consumer goods also fell. There is nothing in this report to
excite either the bulls or the bears as the changes are minimal.

The minutes to the June FOMC meeting were released and the Fed
heads were pleased that their "unwelcome fall in inflation"
statement had pushed interest rates so low. The minutes showed
no indications that they had a clue rates would rebound so
quickly. They were confused as to why the economy had not
rebounded and felt sure it would soon. Still stuck in denial
it seems. The 25 point cut in June was not unanimous and
Parry voted for a 50 point cut and one member voted for no
cut. The main concern was the wording of the statement to make
sure they clearly expressed the reason for the cut. In other
words they spent a large amount of time trying to say deflation
without using the D word. We now know they miscalculated by
only cutting 25 points when the bond market clearly wanted a
50 point cut. When their actions failed to match their words
the bond market revolted.

The FOMC minutes did not excite the bond market and bonds
fell significantly. Yields on the 10-year rose to a new
52-week intraday high at 4.668% and closed at 4.586%. This
is much higher than the August 1st panic highs. This two-day
sell off after the FOMC meeting this week shows the bond market
is still not impressed with the Fed's action or lack of action.
The problem is still rampant selling or dumping of bonds by
mortgage lenders, funds, institutions and even countries.
There are rumors that the rising deficit, which could approach
a trillion dollars next year, has caused several countries to
dump debt. Rumors are that Japan and China have told the U.S.
they were not going to buy U.S. debt until the deficit is
under control. Suddenly there are only sellers and no buyers.
The 23 primary dealers that took down the majority of the
$60 billion in the bond auction last week at a 10-year yield
of 4.36% are seriously underwater.

Ten Year Yields


The markets performed very well despite several high profile
problems. TGT missed earnings by a penny before the open and
while that contributed to the morning dip it was quickly
shrugged off. MMM was cut by Smith Barney on valuation
concerns. CSFB cut techs in general on worries about demand
but the Nasdaq shook it off early. The Dow moved over 9300
and stayed there most of the day despite the soaring bond
yields. The Nasdaq closed back at 1700 with Dell earnings
looming over the market at the close. It was a very positive
day with a strong bid under the market but not enough volume
to push it higher.

Dell reported earnings inline with estimates but the entire
event was ignored due to the power outage which occurred
about 4 min later. Dell reported 24 cents and said demand
had stabilized but had not significantly improved. Michael
Dell said CEO optimism was increasing but not enough for him
to characterize it too strongly. He said it would take a
couple more quarters before he expected budgets to begin to
increase. Michael, would that be before the second half of
2005? Dell saw margins shrink due to a slowing in the rate
of decline in computer parts. Many components are already
selling for much less than the cost to manufacture them but
factories cannot afford to stop production due to the expense
of restarting and rehiring when demand returns. This means
costs are not going to get any cheaper and we could get a
further margin squeeze on any future demand.

When you can buy a 125GB Maxtor hard drive for $89 and 256MB
of DDR memory for $39 there is no margin left. When Dell
sells a 2.2GHZ Pentium IV with a free flat panel monitor for
$599 how much money do you think they make? Analysts think $20
bucks or less. They make their money on the laptops, servers
and accessories. It would not take much of a component cost
increase to put the squeeze on Dell. With computers now a
highly competitive commodity and consumers constantly being
bombarded with low price specials it will be difficult to
command higher retail prices when the trend changes. Most
consumers will balk before paying over $599 for a long time
after the costs change.

Volume continued to be extremely low with total volume under
3.0 billion for the 4th time in five days. The volume has
been under the 50DMA for 17 of the last 25 days. This is
summer when volume normally slows but it has been much
slower than normal. The good news is the steady climb in
the markets on this low volume.

Tomorrow we have some critical reports. The most critical for
me is the Capacity Utilization. It has been 74.3 for the last
two months and a low not seen since 1983. Analysts are hoping
for a bounce over 75% but will probably be happy with anything
higher than 74.3. Any drop in this number and bad things will
happen because it would indicate more potential layoffs and
a further unwelcome decline in inflation as competition
increases. It would mean no need to upgrade or buy new
equipment and no increase in capital spending. Also closely
watched will be the first Michigan Sentiment for August. The
final July reading was 90.9 and with other surveys showing a
drop in sentiment analysts are worried the headline number
could drop into the middle 80s. The New York Empire State Mfg
Survey also showed a drop last month to 22.6 and if it follows
the last NY NAPM report it could fall back below 20. All of
these reports are at a critical stage and this could be a
turning point for the markets if they were to show weakness.

Friday is also option expiration day and from the late reports
on the news it appears the markets will open for business at
the regular time. The maximum pain numbers where the most
options expire worthless are either at or below the current
market levels, OEX 495.00, QQQ 31.00 as examples. This should
keep the indexes pretty close to level unless the economic
news is very good. Expiration Fridays lately have been tame
but the economics at the open will rule. Might be a good day
for New Yorkers to stay home after all.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor



==================================================================
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
---------------------------------

Toll Brothers - TOL - close: 27.30 change: -0.42

WHAT TO WATCH: The Dow Jones US Home Construction Index, the
DJUSHB, rose 0.67 percent Wednesday, with builders such as Beazer
(BZH) and Ryland (RYL) participating in the gains.  TOL was a
conspicuous loser among the group, however, dropping on more than
double average daily volume.  TOL managed to pull out a close
just above the 21-dma at $27.27, but dropped below the 50-dma at
$28.55.  The declines over the last two days have produced big
volume, turning down the stochastics, MACD, and RSI.  If the
homebuilders finally succumb to lowered demand due to rising
interest rates, TOL might be outperform to the downside.  We see
support below at $26.00, but a drop below $26.00 should send TOL
down to test its 200-dma just above $23.00.  Careful, though, as
it's still on a P&F buy signal.




---

HCA Inc. - HCA - close: 36.80 change: -0.72

WHAT TO WATCH: HCA is tagged the No. 1 U.S. hospital chain, and
as befits the first place winner in any category, it's been
gathering some attention over the last week.  Late last week,
Merrill Lynch raised its rating on HCA to "buy" from "neutral."
Early this week, Bank of America raised its price target to
$40.00 from $35.00.  We're not recommending this for a bullish
play, however, as HCA may be rolling over just below its 200-dma.
While the 10-, 21-, and 50-dma's all slant up in bullish fashion,
the 200-dma dives down to meet HCA at its current level and has
not yet flattened.  RSI turns down, and on-balance volume does
not yet show a pickup in interest for this stock as it rises.
HCA also currently trades in the $37-38 resistance zone from its
weekly chart.  While we don't think HCA will crater, we do think
it may be due to a pullback to the ascending trendline that's
been forming since April.  That trendline currently crosses at
$32.40.  Traders interested in playing the downside on HCA might
watch for a push through the 10-dma, currently at $36.04, with a
stop just above the 200-dma, currently at $37.58.




---

Countrywide Fin. Corp. - CFC - close: 66.50 change: +0.45

WHAT TO WATCH: On August 11, CFC said its daily mortgage
applications in July fell 22 percent month-over-month.  The
company experienced an increase in funded loans as interest rates
leaped up and buyers rushed to close mortgages, but the company
expects home refinancing volume to drop in the fourth quarter,
leading to a drop in mortgage production.  The company expects
new purchase volume to remain high.

CNC has been trading in a descending regression channel since
early June.  On Thursday, CFC fell through its 10-dma, and it's
threatening to fall beneath the midline of that regression
channel.  A fall through $65 will send CFC through that midline
and also get it past the support in early August.  Target $60.00,
the bottom of the regression channel, but be careful of gap
support near $63.00.  A stop can be set just above either the 10-
or 21-dma.




---

AtheroGenics - AGIX - close: 12.15 change: -0.37

WHAT TO WATCH: AGIX printed a double-bottom breakdown on its P&F
chart, and its candlestick chart looks ugly, too.  The company
announced plans to sell $75-80M in notes in a convertible debt
offering, and the stock has been dropping since on big volume.
We'd like to see AGIX bounce back up to broken support at $13.00
and roll over there so that we could place stops just above that
support and the descending 10-dma.  Aggressive traders could
short the stock on a move below $11.60, looking for a drop to
$10.30.




---


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

MMC $51.02 - Former mutual fund darlings haven't been in favor
with investors opening quarterly statements over the last couple
of years, but we wonder if some investors aren't reconsidering
MMC.  It's been trading in a regression channel that retraced a
little more than 38.2 percent of its March to June rally, and it
may be ready to break out.  Last week's trading brought the
weekly candle down to plumb strong weekly support, and then the
stock rebounded.  For the last couple of days, it's been finding
support at its 21-dma.  It hasn't cleared its 50-dma, however,
and we're looking for a move above that average, currently at
$51.43, before we consider the breakout confirmed.  We also want
to see stronger volume than we've been seeing.  Stops could be
placed just below the 21-dma.

GLW $7.96 - Could GLW be trying to break to the upside again?
The oscillators predict that it is.  So does the P&F chart, but
there's also the possibility that the stock is forming a H&S on
the daily chart with the current rise being the right shoulder.
To preclude that possibility, a bullish trader should wait for a
break above the $8.20 resistance before considering the breakout
confirmed.  Stops should be set close by, but several moving
averages group just under GLW's current price, providing close
stops.  There's P&F resistance near $10.50 so profit would need
to be taken by that point.  A bullish trader would have to deal
with resistance offered at the July high of $8.85.

NAV $41.63 - Due to report earnings Friday, NAV is on a P&F buy
signal and has been climbing an ascending trendline since March.
We think the stock is overextended now, but after earnings, we're
looking for a pullback to that supporting trendline, currently
near the support at $37.00.  The 50-dma rises strongly underneath
that trendline.  The 21-dma measures $38.65 currently, so it's
possible that NAV won't pull back all the way to $36.  Although
NAV has violated that trendline on a single day's candle on a
couple of occasions, we would not suggest a bullish entry after
such a violation.




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

Low Volatility
Jonathan Levinson

Today gave us another light volume day, and a very low volatility
day.  The put to call ratio finished lower by .06 at .72,
indicating a predominance of calls over puts relative to
yesterday.

The VIX (S&P Volatility Index) was lower by .11 to 21.11, while
the VXN (Nasdaq Volatility Index) dropped 1 to 29.27, and the QQV
(NDX Volatility Index)  dropped a reported 2.14 or 8.81%, but
closed at 22.14, having opened at 29.79.  The closing value is an
alltime low for that volatility index.  I suspect that there is
bad data in play, except that we observed these readings for the
last hour of trading, and it appeared to be behaving as normal,
other than the low levels.  The intraday low was below 21.

Regardless of the actual levels, this being options expiration
week, it's possible to imagine almost any distortion within the
options market as commercial option traders position their
accounts for the expiry of August contracts.  As we discuss in
the Market Monitor every month, prices tend to gravitate toward
and eventually become pinned at or near the strike prices that
will cause the greatest value of puts and calls to expire
worthless.  For a few days of each month, it is clear that the
derivative "tail" wags the underlying "dog".

If the QQV values are correct, then traders were aggressively
dumping QQQ puts and calls, lowering their price and hence their
implied volatility.  This creates a buyer's market, as volatility
does not tend to remain at extreme low levels for long, and as it
increases, so necessarily does the price of QQQ options.


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

Market Averages

DJIA ($INDU)

52-week High:  9361
52-week Low :  7197
Current     :  9310

Moving Averages:
(Simple)

 10-dma: 9186
 50-dma: 9149
200-dma: 8565

S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     :  990

Moving Averages:
(Simple)

 10-dma:  979
 50-dma:  989
200-dma:  914

Nasdaq-100 ($NDX)

52-week High: 1316
52-week Low :  795
Current     : 1251

Moving Averages:
(Simple)

 10-dma: 1235
 50-dma: 1243
200-dma: 1100


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


The VXN dropped 1 point to 29.27, within half a point of its year
low.  The VIX as well is within 1 point of its year low.  As the
maxim goes, "When the VIX is low, it's time to go, when it's high,
time to buy."  This refers not to options, but to the underlying.
The current low levels on the VIX, VXN and QQV are extreme, and
indicate that the INDU, S&P and COMPX are toppy.

CBOE Market Volatility Index (VIX) = 20.51 –0.11
Nasdaq-100 Volatility Index  (VXN) = 29.27 –1.00


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.70        713,453       502,875
Equity Only    0.53        470,196       248,421
OEX            1.03         39,019        40,269
QQQ            1.20         35,518        42,473


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

Bullish Percent Data

           Current   Change   Status
NYSE          68.6    + 0     Bull Confirmed
NASDAQ-100    65.0    + 1     Bear Confirmed
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       74.6    + 1     Bull Correction
S&P 100       82.0    + 2     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  0.84
10-Day Arms Index  1.01
21-Day Arms Index  0.98
55-Day Arms Index  1.10


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    1803      1845
Decliners     999      1164

New Highs     173       181
New Lows       30        13

Up Volume    906M      828M
Down Vol.    466M      435M

Total Vol.  1400M     1286M
M = millions


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

Commitments Of Traders Report: 08/05/03

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

Commercial traders appear to be pruning some long positions and
moving that money to the short side.  As expected we see just
the opposite from the small trader.


Commercials   Long      Short      Net     % Of OI
07/15/03      414,020   453,033   (39,013)   (4.5%)
07/22/03      411,206   442,131   (30,925)   (3.6%)
07/29/03      405,429   445,114   (39,685)   (4.7%)
08/05/03      395,633   450,988   (55,353)   (6.5%)

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
07/15/03      148,716    70,279    78,437    35.8%
07/22/03      155,891    76,466    79,425    34.2%
07/29/03      155,216    73,030    82,186    36.0%
08/05/03      159,971    72,951    87,020    37.4%

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 bulls in the commercial group continue to add to their
positions here but we did see an increase in short positions
as well.  This is the most bullish the commercials have been
in quite some time.  Meanwhile the large spread between longs
and shorts for the small traders narrowed a bit.


Commercials   Long      Short      Net     % Of OI
07/15/03      214,274   218,765    ( 4,491)  ( 1.0%)
07/22/03      249,392   249,386          6     0.0%
07/29/03      272,659   216,166     56,493    11.6%
08/05/03      310,662   249,004     61,658    11.0%

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:   61,658   - 08/05/03

Small Traders Long      Short      Net     % of OI
07/15/03       45,372    54,654    (9,282)   (9.3%)
07/22/03       45,945    76,071   (30,126)  (24.7%)
07/29/03       44,437    93,144   (48,707)  (35.4%)
08/05/03       56,663    95,919   (39,256)  (25.7%)

Most bearish reading of the year: (48,707)  - 07/29/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

"Smart" money didn't do much last week as positions remain
relatively the same but we saw some small traders eliminate
a few long positions in the NDX.


Commercials   Long      Short      Net     % of OI
07/15/03       28,467     49,154   (20,687) (26.7%)
07/22/03       32,502     48,139   (15,637) (19.4%)
07/29/03       31,456     50,294   (18,838) (23.0%)
08/05/03       32,813     52,383   (19,570) (23.0%)

Most bearish reading of the year: (20,687)  - 07/15/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
07/15/03       26,489     8,004    18,485    53.6%
07/22/03       27,321     8,844    18,477    51.1%
07/29/03       25,691     7,810    17,881    53.4%
08/05/03       22,188     7,783    14,405    48.1%

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

More shades of limbo here as well with the commercials
not making any new commitments and the small traders
holding steady going on a month now.


Commercials   Long      Short      Net     % of OI
07/15/03       21,607     7,855   13,752      46.7%
07/22/03       22,198     8,176   14,022      46.2%
07/29/03       23,696     9,572   14,124      42.5%
08/05/03       23,981     9,264   14,717      44.3%

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
07/15/03        5,475     9,717   (4,242)   (27.9%)
07/22/03        6,110    10,898   (4,788)   (28.2%)
07/29/03        5,744    11,601   (5,857)   (33.8%)
08/05/03        5,716    10,422   (4,706)   (29.2%)

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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PremierInvestor.net Newsletter                Thursday 08-14-2003
                                                   section 2 of 2
Copyright (c) 2003, All rights reserved.
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The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

Play of the Day:     This One's a Classic

Split Announcements: MDU, URBN,

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

SOHU.com - SOHU - close: 30.44  change: -1.98 stop: 34.30

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:
SOHU climbed Wednesday, but it did so without its companions SINA
and NTES, other Chinese Internet stocks.  Those stocks dropped in
Wednesday's trading.  Although SOHU's volume measured just a
little more than 3/4 of average daily volume, we don't like the
way it outperformed other stocks in this space.

We still think SOHU appears to be forming the right shoulder of a
possible head-and-shoulder formation.  Although MACD still turns
down, RSI and stochastics have picked up as SOHU tests
resistance.  A phalanx of moving averages slopes down to meet
SOHU's advances, with some of those averages just above SOHU's
current prices.  Further gains should be hard won, but the
increased volume last week and outperformance of peers this week
worries us.

Last week, many participants in this play may have taken gains
when SOHU dipped within $0.43 of our target.  We hope other
investors will soon have the opportunity to do so.

Why This is our Play of the Day
In classic bear-flag behavior, SOHU has been climbing in a series
of higher highs and higher lows toward resistance.  As it climbs,
it appears to be forming the right shoulder of a possible head-
and-shoulder formation.  It's hard to endure those bear-flag
climbs when you're short a stock, and we were feeling the pain
ourselves yesterday, but today should have eased the fears of
SOHU shorts.  SOHU fell back, achieving both a lower high and a
lower low.  Although volume was not strong, it equaled SOHU's
volume on Wednesday as it was climbing.  Most technicians feel
that volume confirmation is not as important in declines as it is
in rallies.

SOHU's 6.11 percent drop says all that needs to be said.  Other
Chinese Internet-related stocks dropped by more modest
percentages on Thursday, but they had a head-start on SOHU,
dropping on Wednesday when SOHU climbed.  SOHU had to play catch-
up.

The 10-dma proved too much for SOHU to surmount today.  Although
there was no news about SOHU on Thursday, one investment advisor
in the last week had been speaking out in favor of high P/E tech
stocks, saying investors shouldn't be afraid of those high P/E's.
SOHU's P/E ratio stands at 82.27 according to one source.
Another Chinese Internet-related stock, NTES, has a P/E ratio of
113.87, and SINA has a P/E of 125.61.  While we appreciate the
advice, we remember hearing something similar back in late 1999,
back when we were seeing other stocks shoot from $4.00 to more
than $40.00 in less than a year, as SOHU did.  We remember what
happened when the profit-taking ensued that time, and we'd rather
be short than long this stock.

While it's possible that SOHU will continue trading in that bear
flag up into the right-shoulder level of the potential H&S, we do
believe it will round over into that right shoulder.  We've set
our stop at the 50 percent retracement of SOHU's steep fall, and
believe SOHU should drop out of the bear flag before reaching our
stop.  Entries can be made at current levels or on a rollover
anywhere under $34.00.

Annotated Chart of SOHU:


Picked on August 6 at 32.27
Change since picked:  -1.83
Earnings Date:     07/23/03 (confirmed)
Average Daily Volume:   4.6 million


=================================================================
Stock Split Announcements
=================================================================

MDU leaks out a 3-for-2 stock split and increases dividend

During today's trading session, MDU Resources Group Inc's
(NYSE:MDU) Board of Directors declared a 3-for-2 stock split of
its common shares.

The stock split will be payable on October 29th, 2003 to
shareholders on record as of October 10th.  Fractional Shares
will be paid in cash as of market close on October 10th.

MDU also announced a 6.3% increase in its quarterly dividend,
increasing from $0.24 per share to $0.255 cents per share.  This
measures out to be an annualized $0.06 increase per share.  The
Payable date for this dividend is October 1st, 2003 to
shareholders on record as of September 11th.

This is the MDU’s first stock split since mid-1998.

About the company:
MDU Resources Group, Inc. provides energy, value-added natural
resource products and related services that are essential to our
country's energy, transportation and communication
infrastructure. MDU Resources includes natural gas and oil
production, construction materials and mining, a natural gas
pipeline, electric and natural gas utilities, utility services,
energy services and domestic and international independent power
production. For more information about MDU Resources, see the
company's Web site at www.mdu.com or contact the investor
relations department at investor@mduresources.com.
(Source: Company Press Release)

---

URBN outfits a 2-for-1 stock split

Before today’s opening bell, Urban Outfitters Inc's (NASDAQ:URBN)
Board of Directors declared a 2-for-1 stock split of its common
shares.

The stock split will be payable on September 19th, 2003 to
shareholders on record as of September 5th.

This is the URBN’s Second 2:1 split since the second quarter of
1996.


About the company:
Urban Outfitters, Inc. (NASDAQ:URBN), is an innovative specialty
retailer and wholesaler which offers a variety of lifestyle
merchandise to highly defined customer niches through 54 Urban
Retail stores in the United States, Canada, and Europe; an Urban
catalog and web site (www.urbn.com); 40 Anthropologie stores in
the United States; an Anthropologie catalog and web site
(www.anthropologie.com); and Free People, the Company’s wholesale
division, which sells its product to approximately 1,100
specialty stores, department stores and catalogs, as well as
through one Free People store. The wholesale division sells its
products under two labels: Free People and bdg.
(Source: Company Press Release)


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

DCX     Daimlerchrysler Ag         36.90     +0.62
KMB     Kimberly Clark Corp        50.26     +1.35
KR      Kroger Company             18.28     +0.58
MGA     Mafna International Inc    78.70     +0.74
AZO     Auto Zone Inc              86.45     +0.75
TCB     TCF Financial Corp         46.07     +1.03
LEA     Lear Corp                  53.93     +1.92
SNA     Snap-On Inc                28.91     +0.56
BBOX    Black Box Corp             43.36     +1.49
MBRS    Memberworks Inc            36.84     +3.89
RSTI    Rofin-Sinar Tech Inc       19.22     +2.12
IPSU    Imperial Sugar Company      8.86     +1.67


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

TKLC    Tekelec                    15.80     +1.35
PBY     Pep Boys Manny Moe & Jack  16.04     +1.24
KSU     Kansas City Southern       12.95     +1.03
ORBK    Orbotech Ltd               17.22     +1.01
MOSY    Monolithic Sys             10.53     +1.06
ECLG    Ecollege.com               13.30     +1.29
NTST    Netsmart Technologies       8.37     +1.53

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

TM      Toyota Motor Corp (ADS)    55.63     +2.33
HBC     HSBC Holdings Plc          65.30     +1.02
IACI    USA Interactive            35.93     +1.20
DHR     Danaher Corp               75.94     +1.51
RIO     Companhia Vale Do Rio Doce 36.78     +1.52
KKD     Krispy Krene Doughnuts     47.68     +2.65
GNTX    Genetex Corp               37.45     +1.18
GTK     Gtech Holdings Corp        41.00     +1.29
BOW     Bowater Inc                42.78     +1.52
CAI     CACI International Inc     43.09     +3.41
KYPH    Kyphon Inc                 24.09     +1.15
KIND    Kindred Healthcare Inc     29.74     +2.09
QSII    Quality Systems Inc        39.77     +2.63

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

EL      Estee Lauder Cos Inc       35.45     -1.71


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

STX     Seagate Tech Holdings      20.70     -1.00




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