PremierInvestor.net Newsletter Wednesday 09-10-2003 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: A Somber Mood 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) ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 09-10-2003 High Low Volume Advance/Decline DJIA 9420.46 - 86.74 9504.95 9400.38 1.87 bln 867/1981 NASDAQ 1823.81 - 49.62 1859.21 1823.81 1.99 bln 765/2309 S&P 100 508.77 - 5.15 513.92 508.08 Totals 1632/4290 S&P 500 1010.92 - 12.25 1023.17 1009.74 RUS 2000 501.76 - 11.81 501.73 501.76 DJ TRANS 2705.27 - 26.92 2734.85 2704.05 VIX 21.26 + 1.58 21.34 20.21 VXN 33.16 + 2.78 33.38 31.52 Total Volume 4,375M Total UpVol 716M Total DnVol 3,613M 52wk Highs 317 52wk Lows 13 TRIN 2.18 PUT/CALL 1.00 ================================================================= =========== Market Wrap =========== A Somber Mood by James Brown The weather over Wall Street began to darken yesterday afternoon. By the opening bell on Wednesday the clouds had turned stormy and investors turned sour on stocks and fled to the safety of bonds. The dip became a full-fledged rout after a new tape from Osama Bin-Laden aired over the Al-Jazeera network. The downpour of selling puddled in technology issues but the profit taking was market wide with only the DRG.X drug index and the UTY.X utility index escaping to close in the green. Overseas markets shared the mood with losses in Asia and European bourses. The Hang Seng led the pack with a 236-point drop to 10,810. U.S. exchanges witnessed internals turn bearish on the eve of the 9/11 attacks. Declining stocks washed away advancing issues almost 20 to 8 on the NYSE and 23 to 7 on the NASDAQ. Down volume flooded over up volume by 4-to-1 on the NYSE and 6.5- to-1 on the NASDAQ. New highs evaporated to a measly 126 while new lows clocked in at eleven. Chart of the S&P 500: Chart of the DJIA: Chart of the NASDAQ Composite: Semiconductor stocks lead the markets lower with a 5.3 percent drop in the SOX index. The trouble began yesterday after the market close. Texas Instruments (TXN) and Xilinx (XLNX) gave their mid-quarter updates and investors choose to sell the news. TXN's forecast was for a 6.3% jump in Q3 sales but traders were probably hoping for more of a blowout akin to Intel's +17% forecast at their mid-quarter update last week. TXN also guided to the upper end of their revenue range but that wasn't enough for Wall Street. XLNX merely reaffirmed previous estimates. Investors felt that this news was already priced into the stocks and chose to take some off the table. TXN lost 7.5% and XLNX dropped 5.6%. A downgrade of Micron Technology (MU) by SoundView to a "neutral" didn't help matters. MU lost more than 9 percent. OptionInvestor.com has been cautious the last couple of weeks and told reader to expect the upgrade parade by honey-tongued analysts to slowly turn bitter as valuation concerns became the new trend. We've certainly seen that new trend begin and with Wall Street still sliding into earnings warning season it could get worse. Meanwhile we could be left to hear brokerages talk out of both sides of their mouth. Case in point: Smith Barney's networking analyst downgraded Nortel Networks and Juniper Networks while upgrading higher price targets on Cisco Systems, Foundry Networks and Extreme Networks. Then again maybe Smith Barney is just trying to separate the wheat from the chaff. Trading tomorrow is expected to be subdued due to the 9/11 anniversary but we can still expect some economic reports. Before the opening bell we'll hear the latest weekly jobless claims. Economists are hoping for a decline towards the 400,000 level from last week's 413,000. Also before the open the August export/import prices will come out and the July trade balance figures will be announced. Tomorrow's two-year anniversary of the 9/11/2001 terrorist attacks will have most U.S. exchanges all observing moments of silence to remember the fallen. The NYSE, NASDAQ and AMEX will observe four separate one-minute breaks. The moments of silence will occur at: 8:46 a.m. ET - The first plane, American Airlines flight 11, hit the North Tower. 9:03 a.m. ET - The second plane, United flight 175, hit the South Tower. 9:59 a.m. ET - The South Tower fell. 10:29 a.m. ET - The North Tower fell. While the markets may be active, we do not want to forget the 9:43 a.m. ET crash of American Airlines Flight 77 into the Pentagon. Our prayers still go out to the families and individuals who are dealing with the vacancy and emptiness of lost loved ones. ================= 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 COF Capital One Financial Cp 58.91 +2.86 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- AH Armor Holdings Inc 17.32 +1.26 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AVE Aventis 54.07 +1.16 ATN Action Performance Cos 24.70 +1.45 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- WM Washington Mutual Inc 37.19 -1.67 TXN Texas Instruments Inc 23.43 -1.90 PHG Koninklijke Phillips Elec 23.68 -1.33 NCC National City Corp 30.30 -1.51 HON Honeywell Int 28.09 -1.02 OMC Omnicore Group Inc 78.12 -2.15 WY Weyerhaeuser Co 58.84 -3.00 GDW Golden West Financial 84.80 -3.21 DVN Devon Energy Corp 51.02 -1.63 ADBE Adobe Systems Inc 36.39 -1.64 UVN Univision Communications 34.33 -2.42 CF Charter One Financial 30.50 -1.27 CMA Comerica Inc 47.46 -1.12 VNO Vornado Realty Trust 46.73 -1.07 SFA Scientific-Atlantica Inc 33.86 -3.16 MGG MGM Mirage Inc 35.05 -1.32 ITT ITT Industries Inc IN 60.97 -1.40 FTN First Tennessee National 38.97 -2.00 RSH Radioshack Corp 28.06 -1.26 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- WFC Wells Fargo & Co New 50.04 -0.95 INTC Intel Corp 27.66 -1.13 TXN Texas Instruments 23.42 -1.90 USB US Bancorp 23.66 -0.34 FOX Fox Entertainment Group 31.30 -0.95 CHA China Telecom 27.17 -1.58 APD Air Products & Chemicals 47.14 -0.81 PFG Principal Financial Group 31.21 -1.02 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form
PremierInvestor.net Newsletter Wednesday 09-10-2003 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 ================================================================= Tech Stocks New Bearish Plays: SNPS Bullish Play Updates: FDC Closed Bullish Plays: COHU Active Trader (Non-tech) New Bullish Plays: TARO Bullish Play Updates: GOLD, WPI Closed Bullish Plays: CC Closed Bearish Plays: ABC High Risk/Reward New Bearish Plays: EASI, NIHD Bullish Play Updates: INSP, ORB, QCOM, TER ================================================================== Net Bulls (NB) Tech Stock section ================================================================== ========= NEW PLAYS ========= ----------------- New Bearish Plays ----------------- Synopsis, Inc. - SNPS - close: 64.13 change: -2.66 stop: 68.05 Company Description: Synopsis is a supplier of electronic design automation software to the global electronics industry. The company's products are used by designers of integrated circuits (ICs), including system- on-a-chip ICs, and the electronic products (such as computers, cell phones, and internet routers) that use such ICs to automate significant portions of their chip design process. SNPS' products offer its customers the opportunity to design ICs that are optimized for speed, area, power consumption and production cost, while reducing overall design time. Why we like it: After being numbed into a near coma state over the past few weeks, traders were treated to some real action in the market on Wednesday, with the Semiconductor index (SOX.X) getting pummeled to the tune of a 5.3% loss as some serious profit taking came to Wall Street. The selling was broad-based too, with few stocks in the sector able to avoid the carnage. After tracing a double top just below $70 over the past month, the stock had already been starting to show some weakness relative to the SOX, drifting lower over the past week. But today's nearly 4% slide sealed the deal, with SNPS giving a fresh PnF sell signal as it briefly dipped below the $64 support. That gives us a tentative bearish vertical count of $58 to work with, which coincides nicely with the strong support at $58-59 from June and July. Speaking of support, SNPS has some right here in the $63-64 area, so a near- term rebound is certainly a possibility. But with strong resistance now in the $66-67 area, any rebound should be short lived. Adding some more juice to the mix, SNPS is due to split its shares 2-for-1 on September 23rd. This seems a bit early for traders to be jumping ship, but as the split date nears, we could see traders sell the stock to avoid the typical post-split depression. That's certainly what transpired in the last few days leading up to EBAY's recent split. The best setup for entries into the play will likely come on a failed rally in the $66-67 area, as broken support now becomes resistance. Reinforcing this resistance level are the 10-dma ($67.65) and 20- dma ($67.43), both of which are now curling over and coming down to meet the stock. Another reason to be so cautious about chasing the stock lower until it has a chance to consolidate today's big drop is that price closed well below the lower Bollinger band ($64.83) and we need to allow some time for the bands to expand, making room for that continued downward move. Set stops initially at $68.05, which is just above yesterday's intraday high. Annotated Chart of SNPS: Picked on September 10th at $64.13 Change since picked +0.00 Earnings Date 11/19/03 (unconfirmed) Average Daily Volume = 1.23 mln ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- First Data Corp. - FDC - close: 40.39 change: -0.98 stop: 39.50 We were afraid this might happen, especially after the past two sessions where FDC was unable to hold above the $41.50 resistance. With a bit of weakness creeping into the broad market, FDC couldn't help but slide lower as well, losing more than 2.3% and retracing nearly all its gains since the breakout last week. This is where we'll find out whether we're being given another chance to enter to the long side or if that breakout was just a bull trap. Look for a rebound from above the $40 level (aided by the 10-dma at $40.12) as an opportunity to add new longs, but keep stops set at $39.50. A break below that level would constitute a fall back into the pre-breakout zone, as well as a fall under the 20-dma and the 50-dma. Traders looking to enter on strength will still need to wait for a breakout over $42. Picked on September 3rd at $41.01 Change since picked -0.62 Earnings Date 10/16/03 (unconfirmed) Average Daily Volume = 4.53 mln ============ CLOSED PLAYS ============ -------------------- Closed Bullish Plays -------------------- Cohu, Inc. - COHU - close: 21.33 change: -1.28 - stop: 21.40 Credit Suisse First Boston raised IBM's recommendation to an outperform rating from its previous neutral, and the techs soared on Monday. COHU didn't benefit. Tuesday, COHU printed a doji just above its 10-dma, and then Wednesday's trade printed a bearish candle that violated our stop near the end of the trading day. COHU's 5.35 percent drop matched the SOX's 5.32 percent drop. The SOX also violated its 10-dma and recent support just above 443. It looks as if it's time for some profit-taking in the SOX and any semi-related stocks. MACD, RSI, and stochastics confirm the bearish short-term outlook for COHU Picked on Aug 24 at 21.80 Change since picked: -0.47 Earnings Date: 07/26/03 (confirmed) Average Daily Volume: 154 thousand ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bullish Plays ----------------- Taro Pharm. - TARO - close: 54.65 change: +1.19 stop: 51.00 Company Description: Taro Pharmaceuticals Industries is principally engaged in the production, research and development and marketing of pharmaceutical products. The Israeli company operates in Israel and through Israeli, North American and European subsidiaries. TARO manufactures, markets and distributes OTC and prescription pharmaceuticals, offering topical corticosteroids and antifungal cream products. Why we like it: It was hard to find any pocket of strength in the market on Wednesday, as the broad market's rounded out the most concerted 2-day selloff we've seen in many weeks. But shares of TARO put in a stellar performance, adding 2.22% to cap off a nice 3-day rally that has now propelled the stock higher by nearly $4. In the process, the bulls managed to deliver a breakout over the $54 resistance and the 50-dma ($53.65) in one fell swoop. When TARO trades $55, it will put the stock back on a PnF Buy signal and that should produce a tentative bullish price target of $64, and if achieved, that would put TARO at fresh all-time highs. But before contemplating any such lofty goals, the bulls will first have to reach the $59-60 area, the site of the June/July highs and our initial target. With price coming to rest just below the upper Bollinger band on Wednesday, TARO may have a bit of a challenge pushing immediately higher, but aggressive momentum traders can certainly play on a breakout over $55, which will give that PnF Buy signal. The more conservative approach will be to buy a pullback to support, as the rebound should provide a springboard through the $55 level. A mild pullback to the 50-dma is one entry possibility, while a more attractive entry may be possible on a dip back to the $52.50-53.00 area, delineated by the 10-dma ($52.95) and the 20- dma ($52.43). The ascending trendline connecting the early August and early September lows should hold as final support on any serious pullback, so setting our stop just below there at $51 should keep us safely in the play. Look for strengthening volume to confirm the stock's bullish intentions, along with a continued rebound in the Pharmaceutical index (DRG.X). Annotated Chart of TARO: Picked on September 10th at $54.65 Change since picked +0.00 Earnings Date 10/23/03 (unconfirmed) Average Daily Volume = 386 K ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- Randgold - GOLD - close: 24.31 change: -0.72 - stop: 22.70 After ending last week with a chart that gave conflicting signals, GOLD found support at its ascending regression channel and moved up again. Wednesday, the weakness in the markets seemed to catch all equities, including those in the HUI, the gold bugs index. Both GOLD and the HUI opened near the day's highs and then fell as the afternoon downdraft swept through the markets. Gold also fell during the day, closing just above $380. We see conflicting signals on GOLD's chart. It maintains a rather steep ascending trendline. The moving averages climb steeply beneath GOLD's current price. Price oscillates around a trendline that had been in place for many months, establishing that former resistance as support. This looks like consolidation, except for Wednesday's bearish engulfing candle. That worries us. Oscillators flatten, not giving many clues as to final direction. It's possible that those oscillators will drift down, relieving overbought pressure while GOLD consolidates near the current level or below, near stronger support. With both the 10-dma and the 21-dma rising below the current price and our stop, GOLD should find support above that stop. We do note, however, that while stochastics and RSI flatten, they may be setting up a series of lower highs, a potential signal that price will weaken, too. Those seeking a new entry might get an opportunity to buy on a pullback and bounce from above $23.00, but check first to be sure that $180 support has held on the HUI. Annotated Chart for GOLD: Picked on Aug 24 at 23.40 Change since picked: +0.91 Earnings Date: 08/12/03 (confirmed) Average Daily Volume: 360 thousand ---- Watson Pharma. - WPI - cls: 43.52 chng: -0.81 - stop: 41.49*new* WPI had a big day Monday. The company presented at the Bear Stearns Healthcare Conference. The company also gained FDA approval for a generic form of the Percocet pain reliever manufactured by Endo Pharmaceuticals. The company announced that it would launch the generic version by late 2003. In response, the stock gained 7.24 percent Monday. Tuesday started out pretty well, too. MSDW raised WPI to equalweight. Perhaps equalweight wasn't strong enough, however, because WPI pulled back, and continued the pullback Wednesday. A pullback was inevitable, and this one hasn't yet retraced even half Monday's big gains, a bullish sign if that support continues to hold. So far, support has held above the July high, too. MACD continues to curve up, although both RSI and stochastics look less bullish. The 10-dma climbs above our new stop at $41.49. We notice that the $DRG, the pharmaceutical index, performs well, too. Under these conditions, new entries could be sought on a pullback and bounce from anywhere above $42.40. Annotated Chart for WPI: Picked on Aug 27 at 40.74 Change since picked: +2.78 Earnings Date: 08/05/03 (confirmed) Average Daily Volume: 1.1 million ============ CLOSED PLAYS ============ -------------------- Closed Bullish Plays -------------------- Circuit City - CC - close: 9.95 change: -0.24 - stop: 9.85 Ouch. Along with WMT and BBY, CC received a downgrade early this week. Sanford Bernstein downgraded the stock to a market perform rating from its previous outperform, citing valuation concerns. Noting that CC was recovering, the analyst also said that the stock had already discounted a substantial portion of the value gained from that recovery. Wednesday CC came within four cents of our stop. The $RLX showed weakness, too, falling beneath recent support. Although the $RLX may find support at $340, CC set its earnings release for September 17. That gives it too little time to recover before the earnings release, and we're closing the play now. Picked on Aug 31 at $10.43 Change since picked: -0.48 Earnings Date: 09/17/03 (confirmed) Average Daily Volume: 2.8 million -------------------- Closed Bearish Plays -------------------- AmerisourceBergen - ABC - close: 58.05 change: +0.93 stop: 57.50 That's what we get for being greedy and going for the gusto. ABC came within 60 cents of hitting our profit target last Friday and we opted to hold out for one more push down. Alas, it wasn't to be, and the stock rebounded smartly on Monday and then continued to march higher right into today's close, which fell just short of the converged 20-dma and 200-dma. But that was above our $57.50 stop and we're out of the play for a modest gain. The action over the past few days should be a reminder that when we're sitting on a nearly 10% gain, right above important support, we ought to just take it. All positions should now be closed, especially with buying volume starting to pick up. Picked on August 10th at $60.00 Change since picked -1.95 Earnings Date 10/23/03 (unconfirmed) Average Daily Volume = 1.41 mln ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bearish Plays ----------------- Engineered Sup. Sys. - EASI - cls: 58.82 chng: -2.95 - stp: 63.59 Company Description: Engineered Support Systems, Inc. is a diversified supplier of high-tech, integrated military electronics, support equipment and logistics services for all branches of America's armed forces and certain foreign militaries. The Company also serves a variety of commercial customers. (Source: Company Press Release.) Why We Like It: Tuesday, EASI announced that BA had awarded it a contract valued at $1.6 million plus options that would add an additional $0.5 million. The contract is for a Synthetic Instrument Measurement Unit (SIMU) and includes work to be performed over an 11-month period. The SIMU combines six classical instruments into one and the company believes it will set the standard for test measurement equipment in its field. Perhaps the contract amount disappointed, because AG Edwards downgraded the stock to a hold from a buy. Investors reacted by sending the stock down 4.78 percent on slightly higher-than- average volume. The DFI.X, the defense index, cooperated by declining, too. EASI has a gap to fill. The stock gapped up on its earnings and then rose vertically without stopping to build support. Wednesday's decline took it below the 10-dma, and the next strong support appears to be at the top of that gap. Last week's candle was also a larger-than-normal candle, and candlestick theory suggests that support might be found at the midpoint of such candles. That support would be found at $52.00, so that's where we're setting our profit target. We've set our stop at $63.59, just above Monday's high. One caution concerns the low average daily volume, making this an aggressive play. Another caution shows up when examining the P&F chart. EASI remains on a P&F buy signal and it has not yet achieved the $71.00 target from the first buy signal. It has, however, reversed into an "O" column, and the P&F chart also demonstrates the lack of near support. Entries can be found at the current level or on a bounce and rollover anywhere under $61.00. Annotated Chart for EASI: Picked on Sep 10 at $58.82 Change since picked: -0.00 Earnings Date: 08/26/03 (confirmed) Average Daily Volume: 228 thousand ---- NII Holdings - NIHD - close: 60.69 change: -3.31 - stop: 66.75 Company Description: NII Holdings, Inc., a publicly held company based in Reston, Va., is a leading provider of mobile communications for business customers in Latin America. NII Holdings, Inc., has operations in Argentina, Brazil, Mexico and Peru, offering a fully integrated wireless communications tool with digital cellular service, text/numeric paging, wireless Internet access and Nextel Direct Connect(SM) service, a digital two-way radio feature. NII Holdings, Inc., trades on the NASDAQ market under the symbol NIHD. Why We Like It: We don't know whether it was Argentina's default of its payment to the IMF, Nokia's warning about soft sales of mobile phones, or NIHD's decision to sell $100 million in convertible notes, but something hit the stock hard. On Wednesday, NIHD dropped 5.17 percent, closing beneath its 10-dma for the first time since early August. NIHD is on a P&F buy signal, but has reversed into an "O" column and there's only air below the current level, down to about $52.00. MACD lines made a bearish cross, and the RSI headed down long ago. The 21(3)3 stochastics have turned down, and appear to be ready to roll down out of territory signaling oversold conditions. Still, the light average daily volume and the P&F buy signal make this a high-risk play. We hope it will also be a high-reward one, sinking to our $52.00 target. Enter on a move below $60.00 or on a bounce and rollover anywhere below $63.50. Annotated Chart for NIHD: Picked on Sep 10 at $60.69 Change since picked: -0.00 Earnings Date: 07/30/03 (confirmed) Average Daily Volume: 183 thousand ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- InfoSpace.com - INSP - close: 18.90 change: -0.35 - stop: 17.00 Tuesday, INSP hit our stated first target of $19.50, so conservative traders have probably already happily taken profits. MACD confirmed the breakout, and continues to look strong. Monday, INSP announced that the company would return to its roots as a yellow page and white page directory, and would rework its site as a destination for yellow pages. The company intends to attract local advertising dollars, a potential $14 billion pot. The company decided to focus on the yellow pages and white pages when it calculated that 85 percent of its traffic went to those pages. Investors liked the idea, and INSP added 6.81 percent on more than double the daily average. Tuesday continued those gains, but Wednesday INSP printed an inside-day candle or harami. That candle rests on the support offered by regression channel INSP formerly occupied. That inside day offers traders both a new possible entry and a new possible exit. While we're keeping our official exit at $17.00, traders familiar with inside-day formations might elect to exit if INSP drops below Tuesday's $18.46 low, although it might be a good idea to give the downside test a little leeway to ensure that any drop was not a trap. New entries could be sought on a move above Tuesday's high. One caution exists for those considering new entries, however. The YIH, the Internet Infrastructure HOLDRS Index, and XIS, the Industry Standard 100 Internet Index, two indices of which INSP is a component, dropped sharply on Wednesday. Before considering new entries, confirm that these two indices have regained their footing. Annotated Chart for INSP: Picked on Sep 7 at $17.19 Change since picked: +1.71 Earnings Date: 07/30/03 (confirmed) Average Daily Volume: 347 thousand ---- Orbital Sciences - ORB - close: 9.05 change: -0.15 - stop: 8.49 After last week's announcements of new contracts, ORB's press department has been quiet this week. We were interested in the reaction of the defense-related stocks after President Bush's speech Sunday night. Whether impacted by his speech or not, both ORB and the $DFI.X, the Amex Defense Index, climbed Monday. Both retreated on Wednesday, however. ORB's retreat looks like nothing more than oscillation within its ascending regression channel. The 10- and 21-dma's rise to support price. Even with Wednesday's decline, MACD tries to peek above the descending trendline that has been capping its highs. We do note, however, that the $DFI.X closed beneath its 10-dma, so traders might also keep a watchful eye on this index, especially those traders considering new entries. Those new entries can be found on a pullback and bounce from above $9.00. Annotated Chart for ORB: Picked on Sep 3 at $9.18 Change since picked: +0.17 Earnings Date: 07/22/03 (confirmed) Average Daily Volume: 347 thousand ---- Qualcomm - QCOM - close: 40.62 change: -1.20 - stop: 39.99 Monday, QCOM charged up the chart. Tuesday, Nokia raised its earnings target, but the CFO commented that phone prices would soften in the current quarter. The effect of that announcement was heard throughout Europe, when bourses turned down. It was also felt by QCOM. Although the stock held above its 10-dma Tuesday, it could not do so Wednesday, and closed below that average for the first time since early August. The XTC, the North American Telecommunications Index, also felt the effect and also closed below its 10-dma on Wednesday. $520 support held on the XTC, but it's possible that this index might retreat as low as $500 if the $520 support fails. Such a retreat might also carry QCOM down, perhaps as low as $40.00, although we hope to see that round-number support to hold, especially as it's also the neckline of QCOM's inverse H&S. Those seeking new entries could target a pullback and bounce from above $40.00, but they should also be aware of the possibility that QCOM could be setting up a possible regular H&S with a neckline near $40.00. If QCOM hits that level and moves up, profits should be guarded near the $41.50 possible right-shoulder level. Verify that the XTC has found support, too, before considering new entries. Annotated Chart for QCOM: Picked on Aug 27 at 41.00 Change since picked: -0.38 Earnings Date: 07/23/03 (confirmed) Average Daily Volume: 10 million --- Teradyne Inc. - TER - close: 19.71 change: -1.32 stop: 17.89 After all the bullish action in the Semiconductor index (SOX.X) over the past few weeks, Wednesday's 5.3% selloff was a rude awakening to the bulls. The SOX plunged below possible support at $455 and then $444 to close at its lowest level since 8/26. After its nearly vertical ramp of the prior 5 sessions, it wasn't surprising to see the profit taking hit shares of TER as well, but the more than 6% slide left behind an ugly looking candle on the daily chart. If last week's breakout was the real deal, then TER should find solid support near $19, which should be further supported by the 10-dma ($18.99). A rebound from above that level looks good for new entries, although the dip probably shouldn't be bought if the SOX is continuing to fall. If the SOX breaks below $435, then it will probably continue down to its 50- dma near $408, and that would have a strong negative impact on our play. Keep stops set at $17.89 for now. Picked on September 3rd at $20.11 Change since picked -0.40 Earnings Date 10/14/03 (unconfirmed) Average Daily Volume = 2.88 mln ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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