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Daily Newsletter, Monday, 08/18/2003

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PremierInvestor.net Newsletter                 Monday 08-18-2003
                                                  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:      SOX Soars & Retail Roars
Play of the Day:  Surging SOX

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     08-18-2003         High     Low     Volume Advance/Decline
DJIA     9412.45 + 90.76  9419.38  9320.59 1.40 bln   1052/ 331
NASDAQ   1739.49 + 37.48  1739.59  1706.93 1.48 bln   1273/ 183
S&P 100   502.79 +  4.49   503.39   498.30   Totals   2335/ 514
S&P 500   999.74 +  9.07  1000.35   990.67
RUS 2000  480.92 +  9.00   480.92   471.92
DJ TRANS 2643.83 + 20.17  2643.91  2623.32
VIX        19.28 -  0.92    20.30    19.06
VXN        26.62 -  2.59    28.55    25.94
Total Volume 3,115M
Total UpVol  2,515M
Total DnVol    548M
52wk Highs     585
52wk Lows       67
TRIN          0.65
PUT/CALL      0.72
===============================================================

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


SOX Soars & Retail Roars
by James Brown

It was another big day on Wall Street as equity bulls muscled out
another win and put another resistance level below them, at least
for the Dow Jones Industrials.  The $INDU added 90 points to
close above the 9400 level, a feat not seen for more than a year.
This is a clear breakout of the recent trading range and should
have the bears concerned as the bulls appear to be sharpening
their horns for an attempted break out above 9500.

The NASDAQ Composite out performed the Industrials with a gain of
2.2 percent.  This also appears to be a breakout of its bull flag
consolidation pattern.  Meanwhile the S&P 500 index added nine
points to close just a quarter point away from the 1000 mark.

Contributing to the moves in the U.S. markets were strong
performances by their overseas counterparts.  The Asian stock
markets were mostly higher with the NIKKEI putting in a strong
session adding 169 points or 1.72 percent to close at 10,032.
The Hang Seng added more than 100 points to close at 10,525.
European stocks also cast a positive glow as the FTSE 100 added
nearly 25 points to close at 4272 and the DAX 30 jumped 1.84
percent to close at 3507.  It's hard not to miss all the
psychological resistance levels falling under the hooves of this
late summer bovine buying spree.

There was plenty of speculation on what sparked the rally today.
Was it a positive sigh of relief that last week's blackout was
not a terrorist event?  Or maybe it was a delayed reaction to
last week's positive economic reports.  There were some comments
that it was money that moved out of bonds last week being put to
work in equities this week.  Except we did see bond yields dip
today indicating some buying pressure there.

Whatever case you make for starting the rally it quickly spread
to become a broad-based run across most sectors.  Advancing
stocks beat declining stocks 19 to 9 on the NYSE and 21 to 9 on
the NASDAQ.  New highs swamped new lows 406 to 23.  Up volume was
better than 3 to 1 over down volume on the NYSE and more than 7
to 1 on the NASDAQ.  Total volume was actually slightly better
than in recent sessions but we are still seeing very low volume
numbers, which is to be expected this time of the year.

Chart of the Dow Jones Industrials:


Chart of the NASDAQ Composite:


Hitting a new 52-week high was the S&P Retail Index (RLX), up
1.95 percent to 357.  Lifting the sector higher was a host of
earnings news.  However, probably the most significant news bit
came from Wal-Mart (WMT) who did not report earnings but did
report that its weekly August same-store sales numbers were
looking very good.  According to WMT management sales are
"tracking" in near the high-end of previous guidance of 3 to 5
percent, which has been fueled by the annual back-to-school
season.  This pushed shares of WMT to a new 52-week high just
under $59.

Shares of Lowes Companies (LOW) also hit a new 52-week high as
the stock gapped higher above major resistance at $50 to close up
6.25 percent.  The home improvement retailer announced earnings
this morning and the results blew away consensus estimates.  LOW
turned in net income of 75 cents a share, up 28 percent.
Analysts had been expecting 69 cents.  Revenues came in at $8.77
billion, beating estimates of just $8.5 billion.  The company
guided higher for the third quarter and raised their full year
guidance to $2.24 to $2.27 a share.

These positive announcements from major retailers like WMT and
LOW have many raising expectations for another round of strong
consumer spending throughout the rest of the third quarter and
into the fourth.  It will be interesting to hear from LOW's
bigger rival Home Depot (HD), also a Dow component, who announces
earnings tomorrow morning before the bell.  Current estimates for
HD are 54 cents a share.  Plus we have the delayed Michigan
Sentiment report that comes out tomorrow morning about 9:45 AM
ET.  As one of our commentators in the MarketMonitor mentioned
today, this could be a market mover.  Traditionally, stronger
consumer sentiment is translated into stronger consumer spending.

The SOX pitched a no-hitter against the bears today as all 18
components in the semiconductor index closed in the green.
Igniting today's tech rally were strong comments from the market
research firm Gartner, Wall Street broker/analyst Smith Barney
and an optimistic article in Barron's over the weekend.  Gartner
believes that environment for the chip sector has vastly
improved.  This was echoed by Smith Barney who claims that
stronger PC demand and improving order trends overall could be
forecasting a stronger recovery for the industry.  Meanwhile an
article in Barron's gave Advanced Micro Devices (AMD) a big push.
The column claims that AMD's new chips set to launch next month
could significantly increase its market share. AMD's stock gapped
up and traded higher throughout the day to close at $8.91, up 14
percent, the largest gainer in the S&P 500 for the session.
AMD's rival and Dow component Intel (INTC) also added 4.5
percent, which contributed to the SOX's 5.15 percent rally.  The
SOX closed at a new 52-week high above resistance at 400 and 410.
Many analysts believe that it is the chip sector that tends to
lead the NASDAQ higher (or lower) so this is a positive
development for tech.  Bulls might be looking for some follow
through tomorrow with tonight's positive news from Broadcom
(BRCM).  BRCM raised their guidance for the current quarter
claiming a new digital tuner would help push revenues higher by
10 percent.  The stock is up more than a dollar in after hours
trading.

The bulls may be looking gleefully for some positive follow
through on today's technical developments but we must caution
traders that it's still a dangerous world out there.  You've
heard us cautioning traders that the VIX and VXN, both of which
hit new lows today, have been flashing a warning sign for the
bulls.  Thus far the markets have ignored them both.  However,
today's drop in the VIX put it below the 20 level, which is a
strong historical indicator of market tops.  Now this is not an
exact science as the VIX can remain low (as we've already
witnessed) for some time and the market tops can be days away
from actually forming.  The chart below is a monthly chart of the
Dow Jones Industrials and the VIX.  I've drawn a pink line for
every time the VIX fell significantly below 20 and each time
there is a near perfect correlation of a top in the Industrials.

Chart of the VIX


I'm not suggesting the market can't go higher from here.  From
all indications is looks like it can and will.  The question is
how long can the market sustain these gains without a steep
correction phase.  Trade carefully.

Watch those stop losses.

James




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


Int'l Rectifier - IRF - cls: 35.29 chng: +1.45 stop: 32.00*new*

Company Description:
International Rectifier Corporation is a designer, manufacturer
and marketer of power management products and a worldwide
supplier of a type of power semiconductor, MOSFET (a metal oxide
semiconductor field effect transistor).  Power semiconductors
process electricity into a form more usable by electrical
products.  The company's products are divided among three broad
product categories: analog integrated circuits (ICs) and advanced
circuit devices, power systems and power components.  IRF's
products are used in a range of end markets, including consumer
electronics, information technology, automotive, aerospace and
defense, communications and industrial.

Why we like it:
It certainly wasn't a day to write home about with the major
exchanges seeing by far their lightest volume of the year, but
our bullish Chip play inched its way higher by a bit over 1% and
is sneaking up on the $34 level.  At the same time, the
Semiconductor index (SOX.X), while near unchanged for the day,
appears once again to be setting up for a serious assault on
major resistance in the $400-410 area.  The top of the ascending
channel for IRF is now at $34.50, so either there will be a
strong push higher next week to break out of the top of the
channel, or we'll see a mild pullback to consolidate, while
allowing the top of the channel to move higher and allow for more
room to the upside.  While we'd prefer the former outcome, the
latter is more likely, with the SOX likely to be rejected at
least one more time from that strong resistance zone.  This close
to the top of the channel, we want to shy away from momentum
entries and will instead recommend looking for pullbacks near the
$32 area (the center of the channel) for new entries.  Note that
our stop moves up to $31 this weekend, near the top of the most
recent consolidation and well below the 10-dma ($31.71).

Why This is our Play of the Day
One look at the Semiconductor index (SOX.X) today is all it takes
to explain why IRF is our Play of the Day, as the SOX vaulted
higher by more than 5%, breaking out to new highs for the year.
IRF followed suit, breaking above the top of its ascending
channel on above average volume, tacking on 4.28% enroute to
setting its own 52-week high.  That moves the stock into the gap
left behind on June 21st of 2002 and it looks like the next
resistance of consequence will be the top of that gap near
$37.50.  In fact, if this breakout in the SOX is the real deal,
then IRF could be headed for strong resistance in the $40-42
area.  That said, we need to be on the lookout for the a near-
term pullback to provide for the next likely entry point.  A dip
back to the $33.25 area is probably too much to hope for and we
should look for a rebound from $33.75 (Friday's intraday support)
as a possible entry for new positions.  IRF may continue powering
higher from here, but momentum entries would seem to not be the
way to go now with the stock pressing (actually above) its upper
Bollinger band.  We're raising our stop to $32, as that is just
below the level of last week's breakout, as well as the 10-dma
($32.15).

Annotated Chart of IRF:



Picked on August 13th at  $32.99
Change since picked        +2.30
Earnings Date           10/30/03 (unconfirmed)
Average Daily Volume =     886 K





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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

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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 08-18-2003
                                                   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:   HNBC

Closed Plays:         NVLS

Stop Loss Updates:   IRF, LSI

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)


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

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


HNBC cashes in on a 5-for-4 split

Shortly after the opening bell, Harleysville National Corp's
(NASDAQ:HNBC) Board of Directors declared a 5-for-4 stock split
of its common shares.

The stock split will be payable on September 15th, 2003 to
shareholders on record as of September 2nd.

This is the HNBC’s fifth split in as many years.  This is the
company’s first 5-for-4 split since being listed on the NASDAQ in
1987.


About the company:
Providing Real Life Financial Solutions, Harleysville National
Corporation (HNC) has assets in excess of $2.4 billion and
operates 40 banking offices in 9 counties throughout Eastern
Pennsylvania through its three subsidiary banks - Harleysville
National Bank and Trust Company, Citizens National Bank and
Security National Bank. Investment Management and Trust Services
are provided throughout the company by Harleysville National Bank
and Trust Company. Harleysville National Corporation's stock is
traded in the over-the- counter market under the symbol "HNBC"
and commonly quoted under Nasdaq National Market Issues. For more
information, visit the HNC Web site at www.hncbank.com.
(Source: Company Press Release)


==================================================================
NetBulls - Tech Stock Plays
==================================================================

============
Closed Plays
============

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


Novellus Systems - NVLS - close: 38.23 change: +2.51 stop: 36.25

Oh, the agony!  NVLS rose just enough last week to leave us
sitting on the fence as to whether to hold or drop our bearish
play.  Well, positive action in the Semiconductor index (SOX.X)
on Monday clearly showed that we made the wrong decision.  The
SOX powered through $400 resistance at the open and then charged
higher for a 5.15% gain on the day and a new 52-week high.  NVLS
couldn't help but go along for the ride, tacking on more than 7%
to end well above resistance.  Our $36.25 stop was brutally
violated at the open and then it was a strong volume ramp right
to the closing bell, with the 50-dma at $36.38 failing to offer
even token resistance.  The failed breakdown from last week has
now come full circle and there should be no question about
pulling the plug here as the bulls are once again in full
control.

Picked on August 10th at  $33.32
Change since picked        +4.91
Earnings Date           10/20/03 (unconfirmed)
Average Daily Volume =  8.75 mln




=================================================================
Stop Loss Adjustments
=================================================================

Bullish
------------

IRF - Raise from $31.00 up to $32.00

LSI - Raise from $8.99 up to $9.25


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

DYII    Dynacq International Inc   23.25     +2.73
POWL    Powell Industries Inc      18.61     +2.43


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

AMD     Advanced Micro Devices      8.91     +1.11
CY      Cypress Semiconductor Cp   15.92     +1.62
FCS     Fairchild Semiconductor    14.34     +1.04
ASKJ    Ask Jeeves Inc             17.77     +1.68
MSCC    Microsemi Corp             17.88     +1.90
IDE     Integrated Defense Tech    17.60     +2.06
RDEN    Elizabeth Arden Inc        17.91     +1.31
RSYS    Radisys Corporation        17.92     +3.17
ADEX    ADE Corporation            16.77     +1.55
MTRX    Matrix Service Co          19.25     +1.80
EVOL    Evolving Systems Inc        8.80     +1.13


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

LOW     Lowe's Companies Inc       51.96     +3.06
TIF     Tiffany & Co               38.83     +1.03
PDCO    Patterson Dent             54.06     +2.55
FLR     Fluor Corp (New)           36.95     +1.07
VIP     Vimpel Communications (ADS)51.60     +1.85
AF      Astonia Financial Corp     31.20     +1.90
DV      Devry Inc                  29.80     +2.64
TEK     Tektronix Inc              22.02     +1.23
PCLN    Priceline.com Inc          38.26     +3.61
TUES    Tuesday Morning Corp       31.04     +1.66
TSCO    Tractor Supply Corp        61.95     +3.70
UAG     United Auto Group Inc      25.00     +1.60
DKS     Dick's Sporting Goods      41.43     +2.94
MATW    Matthews International Inc 26.65     +1.22
AEIS    Advanced Energy Ind Inc    22.45     +1.44
DGIN    Digital Insight Corp       23.17     +1.83
OTEX    Open Text Corp             34.07     +2.57
UTEK    Ultratech Inc              28.19     +2.44
ATRX    Atrix Laboratories Inc     27.17     +1.82
PLMD    Polymedica Corp            46.05     +5.01
CELL    Brightpoint Inc            31.60     +3.15


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

FE      Firstenergy Corp           27.75     -2.86
EL      Estee Lauder Cosmetics Inc 34.33     -1.12
DRS     DRS Technologies           25.30     -3.85
NFI     Novastar Financial Inc     50.60     -2.42


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

ACL     Alcon Inc                  49.85     -0.95



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

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