Option Investor

Daily Newsletter, Tuesday, 09/09/2003

Printer friendly version
PremierInvestor.net Newsletter                Tuesday 09-09-2003
                                                   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:      Trend Change?
Watch List:       GPI, TIN, ISPH, TSCO and more!
Market Sentiment: Chalk It Up

MARKET WRAP  (view in courier font for table alignment)
      09-09-2003           High     Low     Volume Advance/Decline
DJIA     9507.20 - 79.10  9584.95  9490.84 1.77 bln   1234/1958
NASDAQ   1873.43 - 15.20  1886.27  1867.81 2.29 bln   1363/1835
S&P 100   513.92 -  4.10   518.02   512.95   Totals   2597/3793
S&P 500  1023.17 -  8.47  1031.64  1021.14
W5000    9932.85 - 77.70  9991.02  9914.10
RUS 2000  513.57 -  3.56   517.13   512.51
DJ TRANS 2732.19 - 29.50  2767.01  2730.80
VIX        19.68 +  0.89    20.02    19.20
VXN        30.38 +  0.83    31.26    29.91
Total Volume 4,383M
Total UpVol  1,495M
Total DnVol  2,838M
52wk Highs  659
52wk Lows    10
TRIN       1.63
NAZTRIN    0.87
PUT/CALL   0.82

Market Wrap

Trend Change?

Markets are down two out of three days but we are far from a
new bear market. Despite the selling and the change in internals
we are still stuck in the trading range we have seen for the
last week. The major difference was in the internals which
could be a leading indicator of future direction. As we creep
quietly deeper into September traders are looking for any clue
as to when the historical trends may appear.

Dow Chart

Nasdaq Chart

Economically this was not a good day. Not bad, but not good
either. The Wholesale Trade report was slightly below consensus
at +0.4% but down from last month at +1.6%. Inventories remained
unchanged for the second month but the inventory-to-sales ratio
returned to its record low of 1.52. This would tend to show
pessimism that the recovery may not hold because nobody is
stocking up for future sales. This is a mixed message because
historically very low inventory numbers would spark a huge spike
in manufacturing if demand suddenly increased. Without a recovery
in sales that manufacturing bounce will not occur. The drop in
sales from +1.6% in June to only +0.4% in July would be more
troubling were it not for the many corporate references to a
pickup in business in July. Did it really pickup or was it just
a temporary post SARS bounce? We will have to wait for the August
data to see for sure.

The Richmond Fed Manufacturing Survey rose to zero in August
from -7 in July. While this was overall positive it was only
barely so. The biggest gain was in the New Orders, which became
less negative at -4, up from -13. The Backlog of Orders dropped
from -17 to -20 but the six month outlook rose to 31 from 28.
Smaller backlogs, order flow still negative but getting better
with the outlook still improving. This was disappointing when
measured by the ISM gains and all the components were below
their June values. This only reflects the manufacturing in the
Richmond area but it is not in agreement with the ISM. It could
be a sign that the ISM is in trouble for August.

Chain Store Sales continued to rise at +0.5% as back to school
sales were still ringing the registers. This was the largest
gain in five weeks but now that the Labor Day shopping weekend
has passed we could see some weakness ahead. The BOT-M lowered
estimates for September to a +3.5% gain from +4.0% after WMT,
S and TGT lowered estimates for September. Tax rebate checks
have slowed and mortgage refinancing has dropped more than
-80%. This will reduce the flow of spending cash until the
year end holiday season begins. We will get another look at
the REFI index tomorrow with the Mortgage Application Survey.
The REFI index has dropped to 1981 from the May high of 9977
and loans started in May/June would have already closed by
now. Only 30 days ago the index was 4145 and we have seen a
50% haircut since then. Goldman lowered its outlook on retail
stocks saying the leading consumer indicators were slowing
and retail stocks were trading above their five year average.
Goldman downgraded most retail sectors to cautious from
neutral except for supermarkets and drug stores which they
left at neutral. They cut HD, LOW, FD and MAY to inline.
Part of the downgrade on HD and LOW was due to mortgage rates
and the impending deceleration in housing turns. Merrill
jumped on the valuation downgrade wagon with a SELL on

Nokia depressed the market at the open after the CFO said that
phone prices were falling. NOK still said earnings would come
in at the high end of expectations but the falling prices
comment touched quite a few players. Falling prices puts
pressure on chip and component makers as well as profitability
of other phone makers like QCOM, ERICY and MOT and service
sellers like Verizon and AT&T. Increasing competition was
given as the reason by Nokia. Falling prices can mean lack
of general demand and the sector ripples were light but broad.

DB upgraded CSCO before the bell but it closed in negative
territory despite a valiant try to hold the higher ground.
The networking index fell -2.2% with CMVT and LU losing -6%
while FDRY bucked the trend at +4.1%. 12 of the 15 stocks
declined. 11 of 13 stocks in the communication index fell as
well. Most of this weakness was attributed to the Nokia news
but there was also fall out in the communication sector on
news that WCOM had reached agreement to come out of bankruptcy
leaner and meaner. This is frustrating for other companies
who were hoping the company would be liquidated to cut down
on competitors.

After the close today XLNX and TXN issued mid quarter updates
and the outlook was not as positive as traders had hoped.
XLNX said sales of its programmable chips would be flat to
only slightly higher and inline with prior guidance. XLNX
fell in after hours trading. TXN refined its guidance to the
high end of its prior levels. TXN had said revenue would be
in the $2.29 to $2.49 billion range and they narrowed that
range to $2.39 to $2.49 billion. Earnings were expected to be
in the 20-22 cent range, up from the 18-23 prior guidance.
TXN fell -1.60 in after hours as traders were expecting the
new guidance to be outside the prior range.

USB began the worry over tech valuations with comments that
the current prices reflected a PE of 31 based on NEXT years
earnings and those earnings were still questionable. They
said the historical PE for this time in the cycle was 28.
Salomon however raised chips yesterday based on an acceleration
of earnings anticipated for 2004. It is all in the timing as
one man's over bought could easily be another's breakout.

The NOK warning this morning was only one of a the few
warnings we have had so far this quarter. According to First
Call only 20% of the pre announcements have been negative
compared to a normal 25% average. This should mean the 3Q
earnings are going to be better than expected but then WHAT
is actually expected? The market appears to be expecting a
blowout quarter after Intel guided up twice. Unfortunately
if you examine the earnings of the S&P companies the numbers
do not add up. For the 3Q the S&P earnings are expected to
jump +12% but revenue is only expected to rise +1.2%. The
4Q earnings are expected to rise +20% but revenue is only
expected to rise +2.3%. Obviously the earnings ramp is huge
and any slowing of revenue growth could be dangerous. The
earnings are predicated on drastically reduced costs and
higher productivity. (fewer workers) Everything is priced
to perfection and any cracks in that perfection model could
get ugly.

The current market has risen +2200 Dow points since the March
lows. The Nasdaq has risen +650 points. In 1998 and the start
of the great bubble the Dow only rose +1920 points, +25% from
the lows. In 1999 the Dow gained +2400 points, or +27%. The
current Dow has rallied +29% from the March lows. This is more
than either of the bull market bubble years and has done so
without any material pullback. In 1998, admittedly a strong
bull market the Dow lost -1966 points from the July high to the
October lows but recovered all of it to close the year higher.
In 1999, another strong bull market, the Dow dropped -1389
points from the August high to the October lows and recovered
all of it to close the year higher. What is driving professional
traders crazy is the total lack of selling this year after a
+29% gain in the Dow and a +51% gain in the Nasdaq in only
six months.

What is different this time? The early 1998 Dow low was 7450
and only 34 points higher than our low in March. The market
levels are basically the same. Where are the bears? Where are
the profit takers? Where is the normal September weakness from
portfolio rebalancing? The bullishness is so rampant there
are simply no sellers. While this is not a healthy trend it
can be self perpetuating. The main difference between our
current conditions and 1998/1999 is the Internet explosion
and the Y2K build out. PCs were flying off dealers shelves
at an average price of about $2500 to beat the Y2K bug and
allow buyers to surf the net with amazing speed on their
new 56K modems. One hundred million PCs were sold. Quite a
tech wave for those new surfers. The difference this time
around is that we do not have a wave. Investors are buying
techs like there is no tomorrow but the wave powering earnings
is more of a ripple. Certainly nothing you could surf. Computers
cost $750 now fully equipped but the dot.com surplus is still
with us. I threw away two dozen 1999 computers last month
because I could not sell them. The 450mhz Y2K computers were
scrap compared to what you can buy today for $399 new.

My only point tonight is this. We have had a huge move in
the last six months without any serious profit taking. Over
$3 trillion in gains have been made in the Wilshire-5000
since March without any serious pullback.  We are moving
into the most dangerous six week period on the calendar and
nobody appears worried. The 15 EMA on the VIX touched 20
today after the VIX closed under 19.0 last night. The last
time this happened was Sept-5th 2000 and EXACTLY at the Dow
high before the -1745 drop over the next six weeks to the
October 18th low. The last time before that was July-20, 1998
and EXACTLY the Dow high before dropping -1900 points to the
Oct-8th low. You can choose to ignore the VIX if you want
and you can believe we are going to hit 10,000 before 9,000.
What we believe is immaterial. The market will continue to
move based on what the herd decides to do not what the various
indicators and historical calendar trends say it should do.
The market exists for many as the great humiliator and any
of us who put our thoughts in print on a daily basis have
been the object of that humiliation many times over. All we
can do is point out what COULD happen and then get out of the
way. An informed trader is a better trader.

The buying in the futures markets today was unbelievable. The
numbers of contracts coming in at bid on every minute dip
were several times the number we have seen over the last week.
The dip buying was simply amazing but the market finished
down. Is this a change in the trend? The most telling news
for me was the Nasdaq volume at 2.2 billion shares. This was
the second highest volume since May. Down volume beat up
volume but only slightly at 6:5. 52-week highs at 369 beat
lows at 1. Yes, one. The NYSE on the other hand had nearly
2 billion shares but the down volume was 3:1 over up volume.
52-week highs 204, lows 5. Despite the increase in down
volume the internals were still very bullish on both exchanges.
It was disguised because the indexes fell but it was still
bullish. At least that is what it appears on the surface.
Many would point to the massive volume over the last five
days, over 4 billion shares across all markets each day, and
the lack of upward movement and suggest there was serious
distribution underway at the top. Selling is very heavy but
so is the buying in order to hold these levels and somebody
is going to be wrong.

What direction you believe in will not change with this article.
That is fine I am not trying to tell anyone that we are going
up or down. I am only trying to alert you to the possibilities.
Nothing is ever guaranteed. In 1995 and 96 there was no October
dip. In 1994 it was so small as to be insignificant to the
overall picture. In 1997 and the beginning of the Internet
trading revolution it was only -1300 points. There is no right
answer to what lays ahead. If you are prepared there is also
no danger. Keep those stops tight and think about some index
puts for insurance. Remember the Boy Scout motto and "Be

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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.


Group 1 Automotive - GPI - close: 39.96 change: +1.54

WHAT TO WATCH: It seems one automotive stock after another keeps
finding its way onto our bullish list and GPI is just the latest.
The stock has been steadily ascending since March, leaving a
trail of higher highs and higher lows in its wake.  Tuesday's
breakout over $39.50 puts the stock at fresh 52-week highs and a
further rally above $40 should have the $45 level and possibly
the 2002 high of $50 in play.  A breakout over $40 or a pullback
into the $38.50-39.00 should both work well for new entries.


Temple Inland - TIN - close: $51.70 change: +1.70

WHAT TO WATCH: Basic Materials rule!  That certainly seems to be
the message the markets are sending, with one Basic Materials
stock after another breaking over major resistance.  TIN is just
the latest to log fresh 52-week highs, as the stock delivered a
3.4% gain on Tuesday on volume that more than doubled the daily
average.  Regardless of the root cause behind the move, this is a
trend that looks like it has some room to run.  A pullback to
confirm support near $50.00-50.50 will provide the best entries
ahead of a continued rally up to major resistance in the $56-58


Inspire Pharmaceuticals - ISPH - close: 17.75 change: +1.93

WHAT TO WATCH: Biotechs were on fire again on Monday and in a
delayed reaction, shares of ISPH blasted higher on Tuesday to the
tune of more than 12%.  Of course a new FDA approval and a new
$25 price target from Deutsche Securities didn't hurt.  This
appears to be too large a move to chase, but it was a major
breakout, clearing resistance going back to January of 2001.  A
pullback to confirm new support in the $16.25-16.50 area should
provide a solid entry for the next leg up.


Tractor Supply Company - TSCO - close: 33.70 change: -1.35

WHAT TO WATCH: See, we can still find bearish plays!  TSCO has
had one heckuva run over the past several months and it looks
like it is time for a breather.  After tagging a new high at $36,
the stock has been rolling lower and shed nearly 4% on Tuesday on
volume that nearly quadrupled the ADV.  While there is some mild
support to be found in the $32 area, we're thinking the stock
looks vulnerable to its 50-dma just below $29.  A failed rebound
below $35 will provided the best entries, although there's
certainly nothing wrong with a momentum entry below Tuesday's
intraday low.


On the RADAR Screen

MATK $52.00 - It certainly seems the Biotechs can do no wrong
lately and MATK bears that out with a fresh all-time closing high
on Tuesday and volume expanding nicely.  A brief pullback near
$50 may provide a favorable entry into this strong bullish run.

MEDI $36.53 - After breaking down out of its 8-month ascending
channel last month, shares of MEDI appear to have found their
footing again, with the 200-dma providing strong support near
$33.  The buyers have been getting active again and with buying
volume on the rise, the stock looks poised to make a run at its
recent highs in the $40-41 area.

AAP $68.90 - Not everything is coming up roses in the Automotive
sector.  AAP has been in strong rally mode since the March lows,
but the effects of a downgrade after such a strong rally can be
painful.  The stock broke down hard on Tuesday and is now poised
just above its 50-dma.  A break below that average should havew
the stock seeking out the $60 level as the profit taking moves
into high gear.

Market Sentiment

Chalk It Up
- J. Brown

A less than stellar mid-quarter update from Nokia and a round of
downgrades from Wall Street helped set the tone today.  Despite
the sour mood and declines across most major indices and sectors
the losses were not overwhelming.  Most commentators merely
chalked it up to long overdue profit taking.

I'm prone to agree with them.  The DJIA managed to stem its
losses and close above the 9500 level while the NASDAQ is still
trading above 1850; even the S&P 500 is still above 1020.  Does
that mean aggressive bears aren't speculating on further
declines?  No, it doesn't but there are still plenty of investors
willing to buy the dip.  The sterner mood set by Wall Street
analysts this week merely has buyers being more selective in
their choices.

I realize this is starting to sound stale but I would expect
weakness ahead of the 9/11 anniversary on Thursday, especially
given the strength of the markets in August and the first week of
September.  Who's to say the big spike in gold today wasn't a
little pre-9/11 ramp up by speculators?

I'll be impressed if the major indices can hold these levels and
just trade sideways the next couple of sessions.  In the
meantime, bullish traders should probably be waiting for that
next big intraday dip (and bounce) from their favorite equities
to trade.  Just be careful - the next round of valuation
downgrades could hit your pet stock next.


Market Averages


52-week High:  9609
52-week Low :  7197
Current     :  9507

Moving Averages:

 10-dma: 9474
 50-dma: 9252
200-dma: 8643

S&P 500 ($SPX)

52-week High: 1032
52-week Low :  768
Current     : 1021

Moving Averages:

 10-dma: 1015
 50-dma:  994
200-dma:  924

Nasdaq-100 ($NDX)

52-week High: 1387
52-week Low :  795
Current     : 1370

Moving Averages:

 10-dma: 1351
 50-dma: 1281
200-dma: 1126


No change here.  As would be expected the volatility indices crept
higher on the market weakness.

CBOE Market Volatility Index (VIX) = 19.37 -0.52
Nasdaq Volatility Index (VXN)      = 30.70 -0.21


          Put/Call Ratio  Call Volume   Put Volume

Total          0.83        634,583       523,614
Equity Only    0.67        521,716       347,457
OEX            1.47         19,503        28,820
QQQ            3.97         16,692        66,222


Bullish Percent Data

           Current   Change   Status
NYSE          72.4    + 0     Bull Confirmed
NASDAQ-100    80.0    + 1     Bear Correction
Dow Indust.   86.7    + 0     Bull Confirmed
S&P 500       81.8    + 0     Bull Confirmed
S&P 100       89.0    + 0     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  1.15
10-Day Arms Index  0.95
21-Day Arms Index  0.94
55-Day Arms Index  1.05

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


Market Internals

            -NYSE-   -NASDAQ-
Advancers    1014      1252
Decliners    1793      1819

New Highs     191       278
New Lows        6         4

Up Volume    408M      907M
Down Vol.   1315M     1281M

Total Vol.  1743M     2204M
M = millions


Commitments Of Traders Report: 09/02/03

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

More of the same for commercial traders in the large S&P
futures contracts, but we do see a slight bump in short
positions.  There is barely any change between longs
and shorts for the small traders.

Commercials   Long      Short      Net     % Of OI
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%)
09/02/03      417,973   482,392   (64,419)   (7.2%)

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
08/12/03      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%
09/02/03      169,030    75,748    93,282    38.1%

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 bullish trend of growing long positions for the
commercials in the e-minis has continued.  The latest
report shows drop of 10K short positions and 9K new
long positions.  Locksteppening in the opposite direction
are the small traders with a big jump in short positions
to the most bearish we've seen them in a long time.

Commercials   Long      Short      Net     % Of OI
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%
09/02/03      347,724   224,011    123,713    21.6%

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  123,713   - 09/02/03

Small Traders Long      Short      Net     % of OI
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   (68,722)  (39.3%)
09/02/03       56,709   134,094   (77,385)  (40.6%)

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


Commercials caught part of the stampede fever and added
some long positions to their NDX futures.  Meanwhile
small traders rotated some money out of longs and into
shorts but no big change.

Commercials   Long      Short      Net     % of OI
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%)
09/02/03       37,002     55,379   (18,377) (19.9%)

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
08/12/03       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%
09/02/03       23,168    10,561    12,607    37.4%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02


No serious changes among the commercial traders while
small traders have grown fur and drastically reduced their
bullish positions.  The spike in shorts have them looking
for a INDU drop.

Commercials   Long      Short      Net     % of OI
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%
09/02/03       25,462    10,447   15,015      41.8%

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
08/12/03        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%
09/02/03        6,629    13,402   (6,773)   (33.8%)

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 Contact Support

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:


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


Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                Tuesday 09-09-2003
                                                   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

Play of the Day:     Into Space

Closed Plays:        TWR

Stop-Loss Adjustments: FDC, GOLD, INSP

Stock Split Announcements:  PLMD

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 )

InfoSpace.com - INSP - cls: 18.65  chng: +0.89 stop: 17.00*new*

Company Description:
InfoSpace, Inc. (Nasdaq:INSP) provides wireless and Internet
software and application services. The Company develops software
technologies that enable customers to efficiently offer a broad
array of network-based services under their own brand to any
device.  (Source: Company Description)

Why we like it:
The recipient of a positive mention in Business Week this week,
INSP climbed Friday to a closing high not seen since March 2002.
It also gained on high volume, with MACD strength confirming the
move.  While climbing this week, the stock created a double-top
breakout P&F buy signal.  It's been maintaining an ascending
regression channel for many months, and this week moved back
across the midline.  It appears to be headed toward the top of
the channel again.

We wish the YIH, the Internet Infrastructure HOLDRS Index, and
XIS, the Industry Standard 100 Internet Index, two indices of
which INSP is a component, had gained Friday, too.  However,
they've each recently broken above their consolidation patterns
and may have been pausing to gather strength again.  The COMPX,
too, retreated after its own hard, fast run up the charts.

In addition to the positive mention in Business Week, INSP's name
has been included in other papers:  court papers requiring the
co-founders to repay the company $247 million for illegal stock
sales.  On Thursday, the co-founders appealed the decision.

Entries can be found at the current level or after a pullback and
bounce from above $16.00.  We're setting the stop at $15.75 and
our first target at $19.50, just below the expected resistance at

Why This is our Play of the Day
Last week's breakout in shares of INSP had us eyeing more upside,
with an initial target of $20.  Little did we suspect just how
quickly that target would be achieved.  Opening right at Friday's
close on Monday, the stock pushed sharply higher early in the day
and you had to be quick to get an entry, but there it was.  As if
that 6.8% gain wasn't exciting enough, the stock followed through
with a gap and run up to $20.25 this morning (a 10.3% intraday
gain) before backing off considerably at the end of the day to
post 'only' a 4.8% gain.  Now that our first target has been
achieved, this looks like a good point to harvest gains for those
that were quick enough to get that early entry.  INSP looks like
it could work still higher, perhaps up into the $22-23 area,
based on the very strong volume (more than triple the ADV) again
on Tuesday.  But this is not the place to be looking for new
entries.  Look for a pullback to consolidate near $18, or perhaps
as low as $17.35-17.40.  We're raising our stop to just below
break even tonight at $17.00, which is just below yesterday's
intraday low and will also be below the 10-dma (currently $16.70)
by tomorrow.

Annotated Chart of INSP:

Picked on September 7th at  $17.19
Change since picked:         +2.06
Earnings Date:            07/30/03 (confirmed)
Average Daily Volume:        369 K

Closed Plays

High Risk/High Reward

  Closed Bullish Plays

Tower Automotive - TWR - close: 4.90 change: +0.00 stop: 4.75

We certainly can't complain about the performance we've gotten
from TWR over the past couple weeks, as the stock has vaulted
higher by nearly 20% from our picked price.  Last week's breakout
brought the stock up to tag our conservative exit target of $4.80
and since then, we've been aggressively tightening the stop,
forcing it to either rise to reach our ultimate target of $5.00
or trigger our stop.  The bulls gave it an honest effort again on
Tuesday, rallying the stock up to $4.92 at the close.
Unfortunately, that followed the opening dip down to $4.71, which
triggered our stop at $4.75.  No matter, we're out with a nice
gain and ready to find a fresh candidate.  Traders that are still
holding open positions should look to close out the play first
thing tomorrow morning.

Picked on August 20th at   $4.10
Change since picked        +0.80
Earnings Date           10/21/03 (unconfirmed)
Average Daily Volume =     532 K

Stop-Loss Adjustments

FDC – Raise from $38.50 up to $39.50

GOLD – Raise from $22.49 up to $22.70

INSP – Raise from $15.75 up to $17.00

Stock Split Announcements

PLMD medicates its shareholders with a 2-for-1 stock split

Before today's opening bell, PolyMedica Corp 's (NASDAQ:PLMD)
Board of Directors declared a 2-for-1 stock split of its common

The stock split will be payable on September 29th, 2003 to
shareholders on record as of September 19th.  After the stock
split PLMD will have approximately 25 million shares of common
stock outstanding.

This is PLMD's first stock split since the two splits they
announced in 1996.

About the company:
PolyMedica is a rapidly growing national medical products
company. The Company is best known through its Liberty brand name
and innovative direct-to-consumer television advertising to
seniors with diabetes and respiratory disease. Building on its
technology-based operating platform and compliance management
focus, PolyMedica continues to expand its product offerings in
these chronic disease and other categories.
(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

WYE     Wyeth                      47.12     +0.76
BTY     British Telecom            29.90     +0.60
PHS     Pacificare Health Sys      54.26     +1.51
PKN     Petrokazakhstan            18.62     +1.25
LZB     La-Z-Boy Inc               24.12     +0.97
LEND    Accredited Home Lenders    20.32     +1.52

Breakout to Upside (Stocks $5 to $20)

XMSR    XM Satellite Radio         16.10     +1.52
QLTI    QLT Inc                    17.13     +3.15
NKTR    Nektar Therapeutics        13.50     +1.91
REMC    Remec Inc                  11.78     +1.10
ISPH    Inspire Pharmaceuticals    17.75     +1.93
BWC     Belden Inc                 19.90     +1.04

Breakout to Upside (Stocks over $20)

AVE     Aventis                    52.91     +1.38
MEDI    MedImmune Inc              36.53     +1.37
MYL     Mylan Labs                 38.50     +1.02
NVDA    NVIDIA Corp                20.74     +1.20
TIN     Temple Inland              51.70     +1.70
RIMM    Research In Motion         34.55     +6.31
PRX     Pharmaceutical Resources   67.55     +8.40

Breakout to Downside (Stocks over $20)

BSX     Boston Scientific          57.90     -1.20
MAY     May Dept Stores            25.20     -1.14
AZO     AutoZone Inc               86.03     -3.76
ITT     ITT Industries Inc         62.37     -2.56
GLH     Gallaher Group             34.51     -1.24
CPS     Choicepoint                34.31     -5.04

Recently Overbought With Bearish Signals (Stocks over $20)

LOW     Lowe's Companies           51.92     -1.78
TYC     Tyco Intl                  20.20     -0.55
COH     Coach Inc                  55.93     -1.18

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

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:


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


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


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

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

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives