PremierInvestor.net Newsletter Thursday 09-04-2003 section 1 of 2 Copyright 2003, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section one: Market Wrap: Dr Deflation Strikes Again Watch List: CLS, HD, DHI, MACR and more! Market Sentiment: Impressive Disbelief ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 09-04-2003 High Low Volume Advance/Decline DJIA 9587.90 + 19.40 9609.09 9541.72 1.82 bln 1779/1402 NASDAQ 1868.98 + 16.10 1870.00 1848.95 1.87 bln 1858/1367 S&P 100 516.18 + 1.68 516.72 513.04 Totals 3637/2769 S&P 500 1027.97 + 1.70 1029.17 1022.19 W5000 9967.22 + 20.10 9975.58 9912.29 RUS 2000 512.56 + 1.85 512.56 508.99 DJ TRANS 2757.15 - 4.30 2763.17 2743.01 VIX 19.89 - 0.54 21.24 19.86 VXN 30.91 - 0.28 32.16 30.75 Total Volume 3,977M Total UpVol 2,953M Total DnVol 1,328M 52wk Highs 872 52wk Lows 21 TRIN 1.03 NAZTRIN 0.38 PUT/CALL 0.68 ================================================================= =========== Market Wrap =========== Dr Deflation Strikes Again Not one, not two but three Fed heads took to the podium today and tried to talk up the economy and talk down bond yields. We will not know if they were successful for sometime but the impact on the stock market sent it back to new 52-week highs once again. Ben Bernanke went on record not once but twice on Thursday saying there was a good chance the Fed could cut rates again. Somebody pinch me I must be dreaming. Dow Chart Nasdaq Chart S&P Chart This was a day full of surprises. In fact I am surprised we are not butting heads at 9700 instead of 9600. There was good news, great news and just enough lingering economic problems to keep the plot in motion. The morning started with the Jobless Claims which "surprised" everyone (except us) with a reading over 400,000 once again. Actually I expected it next week but it appears enough workers went back to job hunting for the Fall to turn the tide a week early. The headline number was 413,000 and last weeks number was revised up to 398,000 and just nipping under the 400K level. The four-week moving average broke the 400K barrier once again at 402,000 and continuing claims rose again to 3.663 million the highest level in eight months. Get this, the Labor Dept actually said the short week prevented some numbers from being reported and the 413K would be revised next week. Duh! And what is different from any other week? This is setting up next week as a pivotal number for the markets. The Factory Orders for July jumped +1.6% compared to estimates of only +0.7%. This is the highest level since May-2001. Nondurable orders rose +2.4% and shipments +2.5%. What the heck is going on here? We are actually seeing the economic reporting for the bounce that Intel said they saw in July. This number is a very lagging indicator and could decline in August but investors have their sights set on Dow 10,000 and they are not going to be deterred by old data. The key here is the positive trend and one that is not likely to go negative again. The ISM Services blew past estimates of 62.0 with a headline number of 65.1, which matched last months surprise number. The global services business has been trending up so this number was expected to be strong but nowhere near this strong. New Orders rose to 67.6 while inventory fell to 49.0 from 49.5. This is setting up a strong future bounce when that inventory needs to be replenished. One component throwing the number out of line was the rise in prices to 55.7 from 50.6. This is primarily due to higher oil prices being passed through to the consumer. This distorted the headline number to the upside. Productivity rocketed +6.8% in the 2Q according to the revision posted on Thursday. This was higher than estimates of +6.3% and most of the increase was due to higher output numbers. This is a two edged sword. While the output and productivity is increasing it is doing so at the expense of more job cuts. Hours worked fell another -5.9%. We are likely to see more evidence of this with the Jobs Report on Friday. The current unemployment rate is around 6.2% or nine million workers out of work. I will get to the differing outlooks later but the Jobs report is the key for tomorrow. The estimate is for a gain of +10,000 jobs. The whisper number has been heard for a loss of as many as -50,000 jobs. Even if we get a drop in jobs the unemployment number is likely to fall as more and more workers decide to give up looking. We will get to hear Elaine Chao go on CNBC once again to tell viewers that the drop in unemployment is good for the economy and proof the administrations employment program is working. It makes no difference what the numbers are tomorrow because she will say the same thing and she will probably quote the numbers wrong once again. I do not know whose idea it was to put her in front of a camera but they need to be demoted. More disposable camera fodder I assume. Elaine Chao The Jobs Report is the last major economic report for the week and it is before the open. Elaine is not the only one confused about jobs as different Fed governors voiced different opinions about the jobs future today. Ben Bernanke said he expected the jobs picture to remain bleak through Q4 of 2004 at the worst. McTeer said he felt the growing economy would increase jobs before the year end and drop the unemployment rate under 6%. Obviously if there is a difference in opinion at the top the outlook is very cloudy. The term Jobless Recovery has turned into Jobloss Recovery in common usage. Historically employers will not want to add new hires until they are confident the recovery and demand is here to stay. We are still a long way from that stage now. There was so much news today the following paragraphs may seem unconnected but I need to get it all out. Retail sales was stronger again at +5.1% and many of the majors reported strong gains in same store sales. Wal-Mart reported a +6% gain in sales BUT, and here is the key, they lowered estimates going forward. The late summer binge and a stronger than expected back to school rush just as tax checks and tax cuts hit consumers produced the perfect retail storm. While rejoicing most retailers are cautioning that the majority of the impact from those factors has already been seen. Most retailers traded down because expectations were for an even greater gain in sales. Investors are never satisfied. Home buyers got a boost from Hovnanian (HOV) who said they were able to raise prices due to demand outstripping supply. Whoa! What happened to that bursting housing bubble? This is just a historical trend when interest rates spike up. Buyers rush to snap up available homes and lock in rates before any further increases. If Bernanke was able to put some fear into bonds again today then that interest rate window may be opening again soon. The chip stocks were back in form today after a brief hiatus. The fear of the Intel mid quarter update tonight was diffused by AMD saying business was picking up despite concern over a potential lack of staying power. Cypress Semi said demand was picking up although prices were still dropping. National Semi reported earnings of 15 cents and said current quarter bookings were the strongest in the last ten quarters. UBS upgraded most of the chip stocks this morning and added to the euphoric stupor. This kept the Nasdaq from selling off at the close on fear of Intel. Intel came through in the clinch despite the four days of back tracking by the officers after the August update. It appears the caution was misplaced and Intel raised its guidance to the top of the previous range and affirmed the gross margin at 56%. Considering the expected revenue is between $7.6-$7.8 billion that is a massive profit. Pass the chips please, I think we are about out of dip. Of course once all the good news is out there is nothing for investors to look forward to. Futures are up only slightly in after hours on the news. An August survey of CIOs showed that 46% planned on increasing their hardware budget while only 15.5% were planning on decreasing it. Security software was the big winner with 51% planning on increasing spending on security. Spending on infrastructure software fell to only 28.6% down from 33.2% in July. The total for the study projected an increase of +6.4% in IT spending over the next 12 months compared to only +4.5% for the same study in July. This matches the Dell comments earlier in the week that there was improvement but no meaningful pickup in spending. Intel also said the product mix was responsible for the improvement in guidance more than unit volume. Laptops are still leading and those chips are more expensive than desktop computers. Cisco added their voice to the "orders improving" chorus but Chambers was quick to add it could only be temporary and may not be sustainable. The caution across tech land is very thick and I think everybody is looking behind the increase in orders to see if there is anything in the pipeline but they are afraid to look real close. The Fed heads were at it today on all fronts. Mcteer, Gramlich and Bernanke all spoke with Bernanke wielding the biggest hammer. His speech summarized several outside groups that do economic projections and on average suggested the GDP would grow at a 4.7% rate through Q4-2004. Not exciting but decent. Where he drew the most attention was commenting on rate changes. He said he could see no "significant" rate hike in the near future. OK, does that mean we are going to be quarter pointed to death every month? Not according to Ben. He even went so far as to say the next change could be another rate cut. This slammed bond yields along with his comments again that inflation was not the enemy but the return of an unwelcome drop in inflation. This failure to use the D word in repeated Fed head speeches just amazes me. They don't trust us with the D word. We might hurt ourselves so they are spelling it out so only the financially educated among us can figure it out. Get real. Bernanke has tackled the deflation monster so aggressively he has earned the title of Dr Deflation in some circles. Just in case he did not make himself clear in the morning speech he repeated his comment about the next move could be a rate cut in a late day appearance. Get this, he also said it was not the size of the cut that mattered but how the Fed talked about it. Bingo! This is exactly where the Fed floundered in June and the bond market penalized them for it. It appears Ben has taken it upon himself to be the standard bearer for the Fed and to preach to the choir every chance he gets. Might not be a bad strategy for a promotion should Greenspan not get the nod for a new term. Go get them Ben! The markets extended their run and closed at new 52-week highs. Will wonders never cease? The Nasdaq stretched its winning streak to seven days and a feat not seen since Feb of 2000. The Nasdaq is closing in on 1900 and even the bullish traders are wondering when the pause will appear. The Dow traded over 9600 several times and tacked on a respectable +19 points but the excitement seems to be fading. It could have been fear of Intel keeping the wallet on the hip. Now that Intel has passed the test we will see if the bulls can hold the line for one more day and the Nasdaq stretch its streak to eight. The blue chips were mixed today with MMM getting killed to the tune of -2.61 on valuation concerns but was offset by PG +2.63 on another guidance increase. IBM spiked back over $88 and GE is about 30 cents away from a new 52-week high. Speaking of new highs there were 1186 yesterday across all markets and 872 today. This compares to only 21 new lows today. This market breadth is tremendous but the A/D line is only marginal at 4:3 advancers over decliners. The volume today was nearly a billion shares less than the total market volume yesterday but still decent. Wednesday's volume was the strongest since June. It appears we are in the eye of the perfect storm across the broader markets. Internals are good, volume is decent, economics continue to improve and tech stocks are raising guidance. The Fed is talking rate cuts, yields are dropping and we are in earnings warning season with no warnings. What else could go right? Multiple press conferences of fraudulent insider trading by mutual funds and hedge funds as well as massive bond trading allegations failed to deter investors. Bullishness has risen to 55.5% with bearishness only 18.2% according to Investors Intelligence. These are very bad numbers on a contrarian view. The VIX closed under 20 once again and nobody seems to care. Should they? Apparently not if all the possible factors are lining up in favor of stocks. At least that is the predominant view. If the economy is on fire and several estimates for the 3Q are now over +5% GDP growth then damn the technicals and full speed ahead. Shucks, Martha, 10,000 is just over the hill. We can get there before we run out of gas. In a month where the term "new highs" is seldom mentioned the markets are setting them on a daily basis. There appears to be nothing to hold them back. Professional traders are dumbfounded over the lack of weakness despite the good news. It is simply a law of the market that pullbacks on profit taking occur routinely. Except, when the bulls are charging. With nothing but green pastures in sight each bearish stand is promptly trampled into the dirt. The wall of worry has turned into a super highway and traders simply see no reason to sell. Today was a prime example. With Intel after the close and the Jobs Report before the open you would have thought there would be some cautious profit taking but it did not happen. Right at the close when you would have expected it to happen we had Dr Deflation promising another rate cut if economic conditions did not continue to improve. Instead of taking profits traders were adding to positions. Pass me some more of them chips Martha. I can't wait to see if those Fed boys will speak at the NFL halftime tonight. Do you think they will bump Britney so Dr Deflation can speak again? All seriousness aside there is no reason for the markets to sell off other than profit taking. There is also no real resistance other than psychological between here and 10,000. What am I missing? I feel as clueless as the dummy they send to the kitchen for more drinks in a Scream movie never to be seen alive again. Traders are acting like a corral full of bulls fighting to get on the ramp to the truck thinking it was going to a greener pasture just a few hundred points away. They just don't know it could be going to the slaughter house instead. Or is it? Just how high is high? Using four different ways to calculate the potential top on the S&P we get a surprising confluence of numbers. Using the Bollinger bands on a monthly chart we should see an intersection of price with the top band somewhere in the 1140 range. Using a target from the reverse head and shoulders from 2002-2003 we project 1140 again. Coincidence? Taking a Fib retracement from the 2000 high to the 2002 low we run into the 50% level at 1160. Finally using a horizontal resistance from 1998, 2001 and 2002 highs we top out at 1175. I am not saying we are going to be anywhere close any time soon but if we did continue up this is where the granddaddy of all resistance levels appears to converge. Somewhere in the 1140-1175 range and it promises to be serious resistance. Now, with that in perspective Keith's 1060 possibility for this current rally looks like a real possibility. (Keith gives Elliott Wave projections in the Futures Monitor.) S&P Monthly resistance chart Friday could be a pivotal day in the markets. We could easily go either way a couple hundred points and nobody knows which way. The Jobs report is already factored in despite what Elaine says on CNBC tomorrow. The 413,000 Jobless Claims today accomplished that task. Unless it is a disaster it will be taken as just one more month in the Jobloss Recovery and a necessary mile marker in the road to 10,000. Once that is out of the way the direction will be up to the bulls. The bears have no strength and every dip they manufacture is quickly bought. Until the bulls tire of the game and garner more profits than they want to risk we are still in dip buying mode. The bulls have shaken off their fear of the calendar and until that fear returns we are likely to see even more higher highs and higher lows. Just remember that some of the worst sell offs came when the markets were the most bullish. Keep those seatbelts fastened and those stops in place. Enter Very Passively, Exit Very Aggressively! Jim Brown ================================================================== 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 --------------------------------- Celestica - CLS - close: 19.40 change: +1.15 WHAT TO WATCH: With Semiconductor stocks continuing to soar amid myriad upgrades, shares of CLS are getting with the program, breaking out to their best level in nearly a year. With volume rising sharply, this looks like the beginning of a move that has some significant upside. While there is some resistance in the $20.00-20.50 area, a breakout over that obstacle should have room to run to the $25 level. A pullback into the $18.50 area will provide the best entries, although with the strong volume on Thursday, a continued rally from here is certainly possible. Chart= --- Home Depot - HD - close: 34.24 change: +1.45 WHAT TO WATCH: Could the fourth time be the charm? HD has been turned back thrice from the $34.75 level, but the strong advance on Thursday (with volume more than double the ADV) amidst another strong rally in Housing stocks could be the beginning of the eventual breakout. Wait for a breakout over $34.75 before playing and target an initial move to $38. Chart= --- D. R. Horton - DHI - close: 32.79 change: +0.96 WHAT TO WATCH: With continued strong housing numbers, the Home Construction index ($DJUSHB) is looking strongly bullish again, gaining nearly 2% on Thursday. DHI is the first stock in the group to break its June highs and the stock is now in new high territory. Target entries on a mild pullback into the $31.50- 32.00 area (confirming that old resistance is new support) and then look for an initial move up to the $35-36 area. Chart= --- Macromedia, Inc. - MACR - close: 27.09 change: +1.05 WHAT TO WATCH: Breaking out to new yearly highs is one thing, but MACR is looking to raise the bar. The stock broke out to new yearly highs on Wednesday, and with volume running very strong, the bulls used that momentum to drive the stock over $27 on Thursday, ending just shy of the highs from May and December of 2001. Aggressive traders can target entries on a rise over $27.25 (the 12/01 highs), while those with a more conservative stripe will want to wait for a move over the $27.65, which will better the May 2001 high. Look for an initial move into the $30- 31 area, with a solid chance of reaching next strong resistance in the $34-35 area. Chart= =================== On the RADAR Screen =================== DCLK $12.60 - If there was any doubt about Internet stocks making their comeback, the likes of DCLK should remove all doubt. The stock blasted through its June highs today on better than double its average volume, and it looks like a sure bet to test its 2002 highs near $13.75. But the way these stocks have been rallying lately, the stock looks like it could reach for next resistance near $15. CMVT $17.86 - Everywhere you turn, Technology stocks are breaking out, and CMVT is joining the party with this week's move over $17. Look for a mild pullback to confirm support in the $16.50- 17.00 area and then jump aboard for the ride up to next strong resistance at $20. GE $31.32 - It isn't just Technology that has gotten the bulls' attention, as even stodgy old GE is making bullish strides. While the stock hasn't yet broken its June highs near $31.75, once it does so, it should set the stage for a swift move up into the $33-34 area, with $36 being the high-end target, as it is strong resistance from 2001-2002. Wait for the breakout before playing and make sure the buying volume remains strong. =============================== Market Sentiment =============================== Impressive Disbelief - J. Brown Once again the morning began with a truckload of positive analyst comments for the tech sector. This time the focus was chip stocks, which helped propel the SOX index to a 2.5% gain. This in turn kept the NASDAQ afloat to strike its seventh consecutive gain in a row. The NASDAQ Composite was joined by the Russell 2000 and the Wilshire 5000 in this feat of sequential gains. Bullish investors found the market's ability to maintain its gains impressive. On the other hand, bearish traders were left dumbfounded in disbelief. One might suspect the berth of this rally is fading as several major market indices ended the day down fractionally in the red. However, the after hours mid- quarter update from Intel was mildly positive and could set the markets up to make it eight in a row for the NASDAQ. We've said it before... several of the major indices and plenty of individual equities are looking very extended and in need of some consolidation. The bullish percent numbers below, with many at 5-year extremes, support this notion. Playing the trend is great but be patient and wait for the right entry point. We still have a busy economic day tomorrow with nonfarm payrolls, the unemployment number, hourly earnings all coming out before the opening bell. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9609 52-week Low : 7197 Current : 9587 Moving Averages: (Simple) 10-dma: 9410 50-dma: 9214 200-dma: 8623 S&P 500 ($SPX) 52-week High: 1029 52-week Low : 768 Current : 1027 Moving Averages: (Simple) 10-dma: 1007 50-dma: 992 200-dma: 922 Nasdaq-100 ($NDX) 52-week High: 1376 52-week Low : 795 Current : 1373 Moving Averages: (Simple) 10-dma: 1332 50-dma: 1270 200-dma: 1121 ----------------------------------------------------------------- Unfortunately, it's just more of the same. The VIX is back under 20 and the VXN has developed a habit of gapping at the open only to fade into the close. CBOE Market Volatility Index (VIX) = 19.89 -0.54 Nasdaq Volatility Index (VXN) = 30.71 -0.28 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.68 676,086 458,851 Equity Only 1.10 554,715 611,450 OEX 1.33 17,836 23,640 QQQ 4.08 24,642 100,559 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 71.7 + 0 Bull Confirmed NASDAQ-100 78.0 + 2 Bear Correction Dow Indust. 80.0 + 0 Bull Correction S&P 500 80.2 + 1 Bull Confirmed S&P 100 87.0 + 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 1.92 10-Day Arms Index 1.79 21-Day Arms Index 1.45 55-Day Arms Index 1.38 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 1551 1768 Decliners 1268 1317 New Highs 222 266 New Lows 10 3 Up Volume 980M 1372M Down Vol. 786M 493M Total Vol. 1796M 1877M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 08/26/03 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 There is no significant change in the long or short positions for the large S&P futures contracts. We continue to see the commercials or "smart money" inch up their short positions while retail traders inch up their long positions. Since they both tend to take the opposite sides of the market, this is normal. Commercials Long Short Net % Of OI 08/05/03 395,633 450,988 (55,353) (6.5%) 08/12/03 399,414 456,767 (57,353) (6.7%) 08/19/03 404,665 455,381 (50,716) (5.9%) 08/26/03 410,378 472,987 (62,609) (7.1%) 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 08/05/03 159,971 72,951 87,020 37.4% 08/12/03 158,821 71,040 87,781 38.2% 08/19/03 162,034 87,064 74,970 30.1% 08/26/03 170,424 76,967 93,457 37.8% 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 In contrast we're seeing the commercials add strongly to their long positions in the e-minis. The latest reading shows the most bullish position in a very long time. Just as expected the small traders has loaded up on short positions and this marks the strongest net short position for months. Commercials Long Short Net % Of OI 08/05/03 310,662 249,004 61,658 11.0% 08/12/03 306,014 217,233 88,781 17.0% 08/19/03 296,971 235,779 61,192 11.5% 08/26/03 338,766 234,841 103,925 18.1% Most bearish reading of the year: (354,835) - 06/17/03 Most bullish reading of the year: 103,925 - 08/26/03 Small Traders Long Short Net % of OI 08/05/03 56,663 95,919 (39,256) (25.7%) 08/12/03 62,534 106,403 (43,869) (26.0%) 08/19/03 90,428 125,980 (35,552) (16.4%) 08/26/03 52,131 120,853 ( Most bearish reading of the year: (48,707) - 07/29/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercials remain net short on the NASDAQ 100 futures while small traders are still swinging for the fences with heavy net longs. Commercials Long Short Net % of OI 08/05/03 32,813 52,383 (19,570) (23.0%) 08/12/03 34,374 53,015 (18,641) (21.3%) 08/19/03 32,107 53,665 (21,558) (25.1%) 08/26/03 33,991 55,849 (21,858) (24.3%) Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 08/05/03 22,188 7,783 14,405 48.1% 08/12/03 23,957 7,871 16,086 50.5% 08/19/03 25,607 10,134 15,473 43.3% 08/26/03 26,108 8,864 17,244 49.3% 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 The flurry of short positions for the DJ Industrials two weeks ago have mostly evaporated, meanwhile the small trader has eliminated a few short positions as well. Commercials Long Short Net % of OI 08/05/03 23,981 9,264 14,717 44.3% 08/12/03 24,942 9,878 15,064 43.3% 08/19/03 21,088 18,984 2,104 5.3% 08/26/03 24,586 10,386 14,200 40.6% 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 08/05/03 5,716 10,422 (4,706) (29.2%) 08/12/03 6,933 13,248 (6,315) (31.3%) 08/19/03 15,717 9,143 6,574 26.4% 08/26/03 14,115 5,592 8,523 43.2% Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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PremierInvestor.net Newsletter Thursday 09-04-2003 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 ================================================================= Play of the Day: Still Running Stop Loss Update: FMC Stock Split Announcement: CCBI 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 ( BULLISH ) =============== FMC Corporation - FMC - cls: 24.89 chng: +0.44 stop: 24.30*new* Company Description: FMC Corporation is a diversified, global chemical company providing solutions, applications and products to a wide variety of end markets. The company operates in three distinct business segments. Agricultural Products' principal focus is on insecticides and herbicides. Specialty Chemical consists of the company's biopolymers and lithium businesses and focuses on food ingredients that are used to enhance texture, structure and physical stability, pharmaceutical additives for binding and disintegrant use and lithium specialties for pharmaceutical synthesis and energy storage. The company's Industrial Chemicals division manufactures a range of inorganic materials, including soda ash, hydrogen peroxide, specialty peroxygens and phosphorus chemicals. Why we like it: Good things happen when preparedness meets opportunity, and our FMC play appears to be a good example of that. We initiated coverage last weekend as the stock had risen to just below the $25 resistance level and looked ready for a breakout. We played it cautiously with an entry trigger of $25.10, just over the recent intraday highs and we didn't have to wait long for that trigger to be tripped. After an initial rejection just below that level yesterday morning, the bullishness in the broad market yesterday afternoon pushed the stock through that level on robust volume, resulting in a close at $25.22. Confirming that breakout was both increasing volume and today's continuation to just below the $25.50 level. Intraday pullbacks near the 10-dma (currently $24.70) look like good continuation entry points, while more aggressive traders can enter on a continued rally through the $25.60 level (just above today's intraday high). Keep in mind that we're initially targeting the $27.50 level, so for the momentum traders out there, make sure to weigh risk vs. reward before playing. Note that our stop is currently set at $24.00, as a break below there would require a break of both the 20-dma and last week's intraday low ($24.06). Why This is our Play of the Day Clearly we added FMC to our bullish play list at the perfect time, as it moved through our initial trigger on Tuesday and despite the pause in the broad market rally, this stock has continued running higher. Yesterday's session saw the stock pause just below the $25.50 level, and the bulls continued the buying spree today, tacking on another 1.8% to end just below $26, just off the intraday high. Volume has been robust the past 2 sessions as well, running at its best levels of the past month. Should this bullish action continue, our $27.50 profit target should be achieved early next week. After the gains this week, it is hard to justify new entries into further strength, but a pullback to the $25 area could be just what the doctor ordered for a new entry. Note that the 10-dma ($24.86) has been acting as support since the middle of August and should provide support on the next pullback as well. We'll continue ratcheting our stop up just behind the 20-dma ($24.33), so it rises to $24.30 tonight. Annotated Chart of FMC: Picked on August 31st at $24.89 Change since picked +1.06 Earnings Date 10/28/03 (unconfirmed) Average Daily Volume = 254 K ================================================================= Stop Loss Updates ================================================================= FMC - long Adjust from $24.00 up to $24.30 ================================================================= Stock Splits ================================================================= Announcements: ------------- CCBI finances a 3-for-2 stock split Minutes before the opening bell, Commercial Capital Bancorp, Inc's (NASDAQ:CCBI) Board of Directors declared a 3-for-2 stock split of its common shares. The stock split will be payable on September 29th, 2003 to shareholders on record as of September 15th. The stock split will increase the company's shares outstanding to 22,327,507 from approximately 14,885,005. This is CCBI's first stock split since being listed in 2002. About the company: CCBI, headquartered in Irvine, CA, is a multifaceted financial services company which provides financial services to meet the needs of its client base, which includes income-property real estate investors, middle market commercial businesses, and high net-worth individuals, families and professionals. At June 30, 2003, CCBI had total assets of $1.4 billion, was the 3rd largest multi-family lender in California during the 12 months ended March 31, 2003 (source: Dataquick Information Systems) and has originated approximately $2.5 billion in multi-family and commercial real estate loans through June 30, 2003. Commercial Capital Bank (the "Bank"), the Company's bank subsidiary, was the fastest growing banking organization in California, based on percentage growth in total assets over the 36 months ended March 31, 2003 (source: www.fdic.gov). The Bank has full service banking offices located at the Company's headquarters in Irvine, Rancho Santa Margarita, Riverside, and loan origination offices in Sacramento, Corte Madera (Marin County), Oakland, Burlingame, Woodland Hills, Encino, Los Angeles, Irvine, and San Diego, CA, and plans to open a banking office in La Jolla, CA in September of 2003. Commercial Capital Mortgage, Inc. ("CCM"), the Company's mortgage banking subsidiary, funds and sells those loans which the Bank elects to assign to CCM. ComCap Financial Services, Inc., the Company's NASD registered broker dealer, provides fixed income and mortgage-backed securities advisory and brokerage services to corporations, high net-worth individuals and other financial institutions. Commercial Capital Asset Management, Inc., the Company's asset management subsidiary, provides asset management services to alternative investment funds, made available to accredited investors. (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 HOV Hovnanian Enterprises 66.11 +0.86 RYL Ryland Group 72.15 +2.39 CHKP Check Point Software 20.39 +1.30 BZH Beazer Home 87.20 +0.80 LEN Lennar Corp 71.59 +1.99 BPOP Popular Inc 39.02 +0.54 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- CLS Celestica Inc 19.41 +1.16 DCLK DoubleClick 12.56 +1.07 ELN Elan Corp 5.88 +1.01 IDTI Integrated Device Tech 14.57 +1.19 CCRT Compucredit Corp 17.65 +1.03 ONXX Onyx Pharmaceuticals 19.74 +1.22 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- PBR Petroleo Brasileiro 23.74 +1.01 CHIR Chiron Corp 54.78 +1.93 INFY Infosys Technologies 62.92 +4.24 ABS Albertson's Inc 22.86 +1.90 NSM National Semiconductor 32.00 +3.18 HAR Harman Intl Inc 100.50 +1.46 FDRY Foundry Networks 22.12 +1.35 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- BAC Bank of America 76.24 -1.76 LLY Eli Lilly 61.04 -1.06 BSX Boston Scientific 58.68 -1.32 TLB Talbots Inc 35.36 -2.79 ANPI Angiotech Pharmaceutical 39.56 -2.04 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- MAY May Dept Stores 26.82 -1.35 PSUN Pacific Sunwear 33.18 -1.85 ANN Ann Taylor Stores 33.10 -1.67 ERES Eresearch Tech 31.18 -2.74 DG Dollar General 21.94 -0.63 FINL Finish Line Inc 27.15 -0.75 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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. 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