PremierInvestor.net Newsletter Tuesday 09-16-2003 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: Unchanged But Changed Watch List: VIP, AME, MCHP, FRED and more! Market Sentiment: All Aboard! ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 09-16-2003 High Low Volume Advance/Decline DJIA 9567.34 +118.50 9571.13 9449.16 1.72 bln 2312/ 902 NASDAQ 1887.26 + 41.60 1887.87 1848.41 1.80 bln 2186/1067 S&P 100 517.36 + 7.40 517.59 509.96 Totals 4498/1969 S&P 500 1029.32 + 14.51 1029.66 1014.81 W5000 9979.05 +136.10 9980.60 9842.92 RUS 2000 515.66 + 9.02 515.91 507.64 DJ TRANS 2773.38 + 40.40 2775.43 2732.06 VIX 19.31 - 0.94 20.85 19.25 VXN 31.66 - 1.27 33.44 31.24 Total Volume 3,800M Total UpVol 3,145M Total DnVol 582M 52wk Highs 552 52wk Lows 21 TRIN 0.53 NAZTRIN 0.40 PUT/CALL 0.66 ================================================================= =========== Market Wrap =========== Unchanged But Changed The Fed left rates unchanged today but there was a change in the statement. It was very subtle and just enough to tilt the scales but traders completely ignored it. Tuesday was governed by several large program trades that caught the market by surprise and left many shorts running for cover at the close. Dow Chart Nasdaq Chart The day started off negative with the Retail Sales report and a decline of -0.3%. Wal-Mart and Target held up the sector or it would have been much worse. Back to school sales continued to provide the majority of their gains. The 9/11 anniversary did not really impact sales and life continued as normal. The numbers were also boosted by heavy sales of building supplies on the east coast in preparation for the hurricane. This was the first negative week after three consecutive weeks of gains. The Bank of Tokyo is now projecting gains for September of only +3.5% to +4% which is down from their +5% earlier estimate. It is going to be harder for retail sales to grow over the next month because the tax checks are over and the refinancing boom has bust. Consumers should be in conservation mode for the holiday purchases in December. The NAHB Housing Index fell to 68 in September from 71 in August. This is a minor decline and 68 is still the second highest number since early 2002. The outlook by the builders may be eroding but it is still high. The components showed that buyer traffic dropped to 20 from 55 and single family sales dropped to 73 from 77. The only component that did not drop was the six-month outlook which remained at 78 and the same as the prior month. With the drop in buyer traffic from 55 to 20 I am amazed the headline number did not drop any more. Builders are still hoping the rising economy will offset rising rates and keep the momentum moving. They are shifting their marketing to adjustable rate mortgages in an attempt to diffuse the impact of the rate increase. The Consumer Price Index rose only +0.3% for August and the majority of that increase was due to energy prices. The core rate showed only a +0.1% gain and emphasizes the lack of pricing power for corporations and the potential for an "unwelcome fall in inflation". The lack of inflation will do nothing to prevent the Fed from taking stronger action if needed to fuel the economy. The core rate at only +0.1% was so low that it pushed the 12 month inflation rate down to only +1.3%. This is the lowest rate since 1966. At only +0.1% there is very little room before we start seeing negative numbers and true signs of deflation. The economy needs to put in a floor here, draw line in the sand or make goal line stand. Choose your metaphor. The FOMC meeting ended with no change in interest rates as expected. The statement was a carbon copy of last months statement with one small but important exception. Today's release specifically said labor conditions were weakening instead of labor conditions are mixed. Other than that they repeated the same comments from the last two meetings of risks are basically balanced between inflation and an "unwelcome fall in inflation" but all things considered there is still a minor risk of the latter. They still do not trust us with the "D" word. Still the mere mention, regardless of how minor, of the D phrase kept the bond market to only a minor loss. The key point here is that the Feds are either cautiously optimistic that the economy is still recovering or they are still behind the curve or they just have their heads buried in the sand. They did realize that after seven months of jobs losses and increasing jobless claims that the labor market was weakening instead of mixed. The Fed also issued the coded sentence that there were no rate changes coming any time soon to keep the market from worrying that any economic bounce could jumpstart the rate hike cycle. This is critical considering the real funds rate is already negative and has been for most of the last 2 years. Also, this is one of the longest periods of low rates over the last 50 years. The M2 money supply has expanded more quickly in the last three year period than any other period in history. Many analysts think the "labor market weakening" statement was a clue that the Fed could actually cut rates again if the Oct jobs report was negative. The markets had a mixed reaction to the announcement at first but then rallied strongly into the close on a monster buy program. Conspiracy theorists were flocking to the theory that the Fed was pumping money into the market to make it appear the market was excited about the Feds decision. The Fed announcement was actually preempted by another news event on the west coast. Two of the top three pension funds in California with assets of nearly $300 billion in stocks, called for the resignation of Richard Grasso and a reduction in his announced pay package. They were quickly followed the North Carolina Treasurer, claiming he represented 700,000 pensioners, and the New York State Controller who claimed he represented 960,000 fund holders. This brings to about a dozen the number of major players calling for his resignation and in some cases the resignation of the board. Now that the top players in the country have gone on the offensive and pledged an aggressive fight using all the methods at their disposal, Richard's days are numbered. The reluctance to release details of the pay package until pressed by authorities and then the bits and pieces release already make the board and management look guilty. The pressure is rising and although they did not do anything legally wrong the appearance of abuse and cover up will probably lead to a big announcement soon. Grasso has refused all interview requests since the resignation demands began to increase. Expect this to take center stage on Wednesday right behind the hurricane. After the bell MCHP affirmed a lower range of estimates for earnings. Prior estimates were for sales to increase from +1% to +6% and they narrowed the range to +2% to +5%. Earnings were still expected to be 17 cents. Dell's CFO, Kevin Rollins, was interviewed on CNBC and he was not as upbeat as Michael Dell. He tried to carefully express both caution and confidence without stepping on his boss's toes. He said demand was stable but there was no real growth. He also said they were seeing growth in performance but not in price. The interviewer asked him specifically again if that meant that revenue would not increase and Kevin tried to dodge the bullet by repeating that they were seeing growth in performance and launched a sales pitch for Dell. Interesting interview where they actually discussed the fact that Michael Dell may be more bullish about expectations than facts would allow but it was very carefully worded. I think Michael must hold training classes on how to speak to the media to turn every interview into a sales pitch and how to divert pointed questions. The recall election is not off. At least according to the ninth circuit court. Instead of waiting to see if the parties to the recall suit would appeal the three judge ruling the 9th circuit gave the parties a limited amount of time to file a 15 page position paper from which the court would decide to take the case or pass. The court stayed the order from the lower court halting the election and told everyone to consider the election as back on until they ruled on the appeal. The court can pass and open the door for a supreme court appeal. Spitzer is on the prowl again and they woke up the mutual fund community today by filing not only civil charges but criminal charges against Theodore Sihpol a broker for BAC until he was fired last week. They are claiming that traders "stole" money from fund holders by allowing late trading. He faces up to 25 years in prison. Spitzer and colleagues claim there will be many more charges against dozens if not hundreds of fund personnel. The wake up call has caused some real grief from people expecting a hand slap and a fine. Real jail time on multiple charges with minimum sentencing provisions will cause some sleepless nights tonight. There will be more sleeplessness tonight for those that were caught off guard by the strong rally today. There was a strong move up at the open accompanied by a buy program at 9:50. This produced some short covering that pushed the Dow to strong resistance at 9500 where it traded sideways in a ten point range until the Fed announcement. After the announcement the Dow dropped only to the bottom of that range and another buy program triggered to push the Dow to the 9525 range where it held on strong but declining volume for 30 minutes only to blast off on yet another apparent buy program to 9560. When the 9525 buying began the shorts began covering in earnest and pushed the Dow and the Nasdaq to six day highs. Almost the entire drop for the last six days since the September 8th closing high was recovered in one day on negative news. There are quite a few bears still short and scratching their heads tonight. The S&P Emini came to a dead stop at 1028 with very strong resistance at the 1030 level and the contract high. The Dow closed at 9563 and only a very short 37 points away from very strong resistance at 9600. 9607 was the recent 52-week high. The Nasdaq rallied +41 points and came to rest only one point below the recent 52-week high. This very bullish day completely surprised almost everyone. However, if you look at the candles on the charts above I am sure you will agree it was not normal buying patterns. Let's reconstruct. Retail Sales declined and the Bank of Tokyo lower their estimates for September. The core rate of the CPI rose only +0.1% and could not get any closer to an unwelcome fall in inflation. The NAHB Housing Index showed buyer traffic fell to 20 from 55. The Fed said the labor market was weakening and deflation was still a greater threat than inflation. We are in the most dangerous six weeks of the year. If all of this is bullish then I am missing the boat. So what prompted the markets to retest the current highs? What prompted the strong program buys that triggered the massive short covering? Maybe I should start believing the conspiracy theorists. It was certainly not excitement that Grasso may be on his way out or that Spitzer could file charges against hundreds of traders. Ok, let's assume the economy is in a stealth recovery. We are getting cautious comments from quite a few companies that are affirming estimates but not specifically raising them. Earnings warnings are very low on a historical basis. We have analysts quoting +7% GDP for the 3Q with no evidence to support it. Great, I hope we get it. The problem I see that this is already priced into the market. Literally every major analyst agrees with this concept. Also, almost all analysts agree that a rally over the traditional Sept/Oct period would be strongly bullish. Unfortunately nobody can explain why it would happen. Nobody can explain why we are not seeing any real profit taking. The only scenario that makes sense is the new bull market scenario. Scrap the concept of waiting for valuation because stocks are always over valued at this stage of a market cycle. Forget the normal historical market cycles because they are only serving to produce dips to buy. Stocks are going up because people want to buy them. They want them to go up. After three years of a bear market they are tired of the bearishness. They have bought the recovery scenario lock stock and barrel. 2004 will be a banner year according to the rising six month sentiment expectations. That is the bullish view, buy the dip. The bearish view sees all the negatives I mentioned above and keeps trying to short the resistance. Been there, done that, today. Many are scared of shorting the tops now because of the numerous breakouts. They are waiting for the dips to gain speed and after 2-3 days of a downtrend they finally get suckered back into a short position. Just as they get comfortable with the trend the trend changes but just slow enough to keep them short until the last minute. We had five days of weakness on the Dow totaling about -220 points. No big deal but enough to make traders think that Dow 9000 was possible again. This was especially true when we were trading in the high 9300s last week. Shorts are like that frog in a pan of cold water. Just as they are getting comfortable and adding to their positions the price begins to rise little by little but always with a hint of a continued down trend. These represent the bearish equivalent of buying opportunities or shorting opportunities. After a couple days of sideways movement to lull them to sleep we got the big morning bounce on bad news. Their fear factor rises but surely this is temporary. We always get a sell off just before the Fed announcement. What, no sell off? That is ok we will see a monster sell the news event because the Fed cannot say anything positive for fear of spooking the bond market. The news is out, the market drops slightly and maybe they add to their positions thinking the crash is about to occur. Suddenly a massive buy program kicks the Dow up +60 points and their pain threshold increases exponentially. Short covering begins on heavy volume but the majority are still locked into that final lie. Don't worry the Dow will fail again at 9600, Nasdaq 1890, S&P 1030. That was the prior highs and very strong resistance. Shucks, I am going to average down and add to my positions if we hit that level. Replay that scenario every week for the last six months and just change the economic reports and the prices and you will see why we are threatening to break out again. All the indications for the bear point to a failure in the economy, a failure on price and a failure based on the calendar. None of which has yet to come true. Most retail bulls are oblivious to the complicated forces in the market. They have a winning plan and they are following it carefully. Buy the dip. It worked for years and it is back. Martha, take the funds out of the money market we are going to make it all back. Actually the Fed is supporting this plan. If they can keep talking the market up and not scare anybody with the D word then investors will feel prosperous again and they will spend money and pay taxes with those profits. The only problem with this scenario is that it will only work until it quits and nobody knows when that will be. Eventually institutions will decide they have ridden the bull long enough and start taking profits. Actually, the activity over the last several days had looked an awfully lot like some institutions were taking profits. It looked like we were in a distribution phase. Distribution occurs when institutions want to exit a large position without tanking the market. If they think the market is near a top they will start feeding each bounce with a fraction of their position. Say they wanted to sell 20 million shares of MSFT or GE. Just placing an order for 20 million shares would knock us back to July in a heartbeat and they would end up getting far less than current value. Instead they start dumping smaller blocks of 5, 10, 20, 50,000 shares into the market at a slow enough rate to keep the market from tanking but fast enough to get them out as high as possible. By distributing these multimillion share positions to the retail investors in thousands of smaller chunks they get out quietly. The signs of distribution are heavy volume and no movement. This is exactly what we have been seeing over the last several days. Today especially. There were several periods of huge volume for a prolonged time with no movement. The bulls were buying hard but somebody was feeding them in volume. The bounce in the late afternoon was on very heavy volume and it appeared as though the 9525 and 9550 pause levels were particularly heavy. Of course this is all speculation on my part because nobody knows what it powering the market. We could have just been seeing some asset allocation programs coupled with short covering triggered by those programs. The key to the puzzle is still tomorrow. Regardless of the reasons we did close at or near the highs. If the gains today were based on program trades of some sort then tomorrow could see a reversal. If it was really a flood of new money into the market then tomorrow could see a break to a new high once again. Shorts will be sitting with their finger on the trigger at the open. They are in a very dangerous position this close to a breakout. Let one major buy program hit at the open and it could be off to the races. The economic news tomorrow is light with only Residential Construction and Mortgage Applications and the Semi Book-to-Bill after the close. We are on our own for direction and the futures are perfectly flat at 9:PM. It could be an exciting day if you are on the right side of the market. It could be painful if you are on the wrong side. The Nikkei rose +179 points at the open tonight to break 11,000 for the first time in 14 months. This could be our first clue. Dow 9600 is the key at the open. Once broken the next stop could be 10,000. The key word there is "broken". Enter Very Passively, Exit Very Aggressively! Jim Brown Editor ================================================================== WATCH LIST ================================================================== The PremierInvestor.net watch list is not designed to be read as full fledged stock picks. Rather we would prefer to offer it as an extra tool in today's investor toolbox. Think of it as a radar screen with your own radar operator pointing out interesting developments, technical patterns or potential plays that you may or may not have seen on your own. Due to time constraints we do glance at the news but rarely do we have time to fully read pertinent news stories, due background research and other necessary screens that investors should do before making a decision. A common exercise is to read the entry, glance at the sector and other stocks in that industry and then compare what's happening in the stock to what's happening in the broader market indices. We hope you enjoy the Watch List and that it proves to be a useful tool for your own trading success. STOCKS WORTH WATCHING --------------------------------- Vimpel Communications - VIP - close: 57.80 change: +1.07 WHAT TO WATCH: Another day, another new closing high for VIP. Just one of the soaring Russian wireless telephone service providers, VIP has more than doubled in the past year and looks to be breaking out again. Either a pullback near the 10-dma or a breakout over $58.10 can be used for new entries. The PnF chart remains quite bullish with a price target completely out of reach in the near term ($95). Target a near term move to the $65 area. --- Ametek Inc. - AME - close: 42.66 change: +1.09 WHAT TO WATCH: The third time's the charm. Over the past few weeks, shares of AME have been turned back from the $42.75-43.00 area, and price is once again returning to that zone of resistance after Tuesday's sharp rise. Things appear different this time around though, as volume is really starting to build. Target an entry on a breakout over $43 and look for an initial move into the $45-46 area. --- Microchip Technology, Inc. - MCHP - close: 28.10 change: +1.30 WHAT TO WATCH: Semiconductor stocks are surging again and the SOX closed right at the pivotal $460 resistance level on Tuesday. MCHP has been banging its head on resistance in the $28.00-28.70 area for nearly a month and it looks like a breakout is overdue. Tuesday's strong buying volume and nearly 5% gain looks like the beginning of a bigger move. Wait for a breakout over $28.75 before playing and then look for a move to the $32 level. --- Fred's Inc. - FRED - close: 34.98 change: +1.51 WHAT TO WATCH: This type of price pattern is becoming all-too- familiar, as every dip is being aggressively bought. FRED had quite a tumble from its recent peak near $37, but the bulls picked up the pieces, bought the stock back at the 30-dma and it looks like Rally-Ho all over again. Look for entries on a pullback near the $33.75-34.00 area and then look for a test and likely breakout over the $37 level. --- =================== On the RADAR Screen =================== URBN $49.50 - It seems there is no holding back the Retailers and URBN is just one more that seems to be catching the bulls' attention. After being turned back near $50, the stock came back to find support near $45 and it is once again nearing resistance. Look for a breakout before going long. CSCO $21.29 - Surprise, surprise, CSCO charged to a new 52-week high on Tuesday and it won't take much more upside and it will be setting multi-year highs. Look for pullback into the $20.50- 20.75 area and then target a move to $24, near the site of the May 2001 highs. ETR $54.21 - If you're looking for a solid trend, it's hard to argue with that provided by ETR. Sure it gets a bit volatile at times, but the stock has been consistently hitting higher highs for the past year. Speaking of higher highs, it looks like those could arrive later this week with a breakout over $54.75. Wait for the breakout and then target a move to $60. =============================== Market Sentiment =============================== All Aboard! - J. Brown Investor sentiment is getting pretty simple these days. If it goes up, buy it! If it pulls back, buy it! If it goes sideways, wait for it to go up or pull back. I say this tongue in cheek but any veteran trader knows this can't last for very long but until it changes, enjoy the ride. The FOMC's decision to hold interest rates at 1 percent was no surprise and the markets cheered with a 118-point rally in the DJIA and a 2.2 percent rally in the NASDAQ. Analysts continue to harp on their positive expectations for strong corporate profits the next two quarters and beyond so money keeps flowing into stocks. Market internals were very bullish with advancing stocks punishing losers 20 to 7 on the NYSE and 21 to 9 on the NASDAQ. Up volume was 6 times down volume on the NYSE and almost as strong on the NASDAQ. Volatility indices, which are supposed to measure investor fear fell lower today as the markets rallied. From the looks of it, investors are pretty fearless and again this is a warning signal that veteran traders will recognize as a clue to be careful. Play the trend but don't get caught when the trend changes. Fortunately for the bulls, it feels like the current trend still has some legs underneath it. A couple of items to be aware of tomorrow: The homebuilders have been strong with interest rates still near historical relative low. We're going to see the housing starts and building permit numbers tomorrow before the opening bell. Plus, nearly everyone has jumped on the bullish bandwagon for semiconductors. We're going to see the latest book-to-bill ratio tomorrow night after the bell. Let's hope they're good. Many believe the chips tend to lead the markets either higher or lower. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9609 52-week Low : 7197 Current : 9567 Moving Averages: (Simple) 10-dma: 9512 50-dma: 9291 200-dma: 8660 S&P 500 ($SPX) 52-week High: 1032 52-week Low : 768 Current : 1029 Moving Averages: (Simple) 10-dma: 1022 50-dma: 997 200-dma: 926 Nasdaq-100 ($NDX) 52-week High: 1387 52-week Low : 795 Current : 1382 Moving Averages: (Simple) 10-dma: 1362 50-dma: 1292 200-dma: 1132 ----------------------------------------------------------------- No surprises here. The volatility indices both took a dive with the markets in rally mode. These are suppose to measure investor fear and right now the markets are pretty much fearless. CBOE Market Volatility Index (VIX) = 19.31 -0.94 Nasdaq Volatility Index (VXN) = 31.66 -1.27 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.66 705,925 464,376 Equity Only 0.50 555,642 276,726 OEX 1.20 34,893 41,948 QQQ 0.98 71,870 70,308 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 73.1 + 0 Bull Confirmed NASDAQ-100 78.0 + 0 Bear Correction Dow Indust. 83.3 + 0 Bull Confirmed S&P 500 81.8 + 0 Bull Confirmed S&P 100 88.0 + 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 1.19 10-Day Arms Index 1.17 21-Day Arms Index 1.02 55-Day Arms Index 1.02 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 2051 2134 Decliners 779 968 New Highs 180 309 New Lows 10 4 Up Volume 1441M 1476M Down Vol. 240M 250M Total Vol. 1693M 1779M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 09/09/03 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 No change in sentiment for the commercial traders here. Meanwhile small traders forked out a little more cash to increase both their long and short positions. Commercials Long Short Net % Of OI 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%) 09/09/03 418,958 486,209 (67,251) (7.4%) 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 08/19/03 162,034 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% 09/09/03 176,401 81,444 94,957 36.8% 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 Commercial traders in the e-minis continue to pump up their long positions. The last numbers show the most bullish posture in quote sometime. Meanwhile the small trader has rotated a little bit of money from short back to long. Commercials Long Short Net % Of OI 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% 09/09/03 370,909 237,610 133,299 21.9% Most bearish reading of the year: (354,835) - 06/17/03 Most bullish reading of the year: 133,299 - 09/02/03 Small Traders Long Short Net % of OI 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%) 09/09/03 59,692 130,270 (70,578) (37.1%) Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercial traders are increasing their bets on the NDX but they're still beating more heavily on a move lower. Small Traders are also active with larger net positions but they're still beating on the bulls. Commercials Long Short Net % of OI 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%) 09/09/03 44,677 62,369 (17,692) (16.5%) 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 08/19/03 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% 09/09/03 28,788 13,370 15,418 36.6% 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 No change in investor sentiment for the professional traders here. There is little change for the small trader but they have bumped up their long positions a tad. Commercials Long Short Net % of OI 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% 09/09/03 25,807 10,756 15,051 41.2% 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 08/19/03 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%) 09/09/03 7,429 13,796 (6,367) (30.0%) 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 ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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PremierInvestor.net Newsletter Tuesday 09-16-2003 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: Bread Is Rising Stop-Loss Adjustments: INSP, QCOM, RSAS, TER, PNRA, TARO, WPI Stock Split Announcements: MYL 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 ) =============== Panera Bread - PNRA - close: 47.68 change: +0.82 stop: 44.65*new* Company Description: Panera Bread Company owns and franchises bakery-cafes under the Panera Bread and Saint Louis Bread Co. names. The Company is a leader in the emerging specialty bread/cafe category due to its unique bread combined with a quick, casual dining experience. (Source: Company Press Release.) Why we like it: We know. PNRA has a P/E ratio of 53.79. However, PNRA's chart shows some interesting characteristics, and the company has been the recipient of many buy ratings since late July. When reporting earnings August 7, PNRA raised FY03 guidance. For a few days afterward, mild profit-taking ensued, but that profit taking took PNRA only down to next support. After falling back near the July high in a bull flag, PNRA rebounded Thursday and Friday. It gained 2.68 percent Friday, and looks ready to challenge the recent $47.40 high. RSI turned up, and stochastics hooked back up again. Volume was slightly higher than average. Best of all, perhaps, is PNRA's P&F chart, showing a recent bullish triangle breakout. While we expect some mild hesitation near $50.00, PNRA's original P&F buy signal predicted a far higher target. PNRA looks ready to achieve all-time highs, so we'll follow the stock up as it climbs, letting our stop take us out. For now that stop will be set at $43.99, just below recent consolidation. Traders can enter at the current level since it represents a breakout of the bull flag. Conservative traders might wait for a move over that $47.40 recent high, watching to see that volume confirms the breakout. Why This is our Play of the Day So far this week, PNRA's valuation has gotten just a bit richer, as the stock continued last week's rebound from the $45 area and after a failed breakout above $47.40 on Monday, the bulls got the job done on Tuesday, closing the session at a new all-time high. It certainly looks like the stock is destined for higher levels and the half-century mark ($50) is looming closer by the day. Intraday dips into the $46.00-46.50 area can be used for continuation entries, supported by the 10-dma ($46.49). With strength prevailing though, a continuation above Tuesday's high ($47.79) can be used for momentum entries. With the breakout to new highs, we can safely raise our stop to $44.65, which is just below both the 20-dma (44.95) and last Thursday's $44.72 intraday low. Annotated Chart of PNRA: Picked on September 14th at $46.80 Change since picked: +0.00 Earnings Date: 11/05/03 (confirmed) Average Daily Volume: 571 K ========================= Stop-Loss Adjustments ========================= INSP – Raise from $17.74 up to $18.50 QCOM – Raise from $40.50 up to $41.95 RSAS – Raise from $12.50 up to $13.50 TER - Raise from $18.35 up to $19.25 PNRA – Raise from $43.99 up to $44.65 TARO – Raise from $52.75 up to $54.25 WPI - Raise from $41.49 up to $42.90 ========================= Stock Split Announcements ========================= MYL announces 3-for-2 stock split Before today's opening bell, Mylan Laboratories Inc's (NYSE:MYL) Board of Directors declared a 3-for-2 stock split of its common shares. The payable date on the stock split is October 8th, 2003 to shareholders on record September 30th. Fractional shares will be paid in cash. This is Mylan's 11th stock split, said the company's CEO, Robert Coury. About the company: Mylan Laboratories Inc. is a leading pharmaceutical company with four subsidiaries, Mylan Pharmaceuticals Inc., Mylan Technologies Inc., UDL Laboratories Inc. and Bertek Pharmaceuticals Inc., that develop, manufacture and market an extensive line of generic and proprietary products. (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 FRE Freddie Mac 55.08 +0.78 MCK McKesson Corp 35.03 +0.53 LEN Lennar Corp 74.62 +2.37 MHK Mohawk Industries 73.20 +0.94 PHM Pulte Homes Inc 68.64 +1.37 OHP Oxford Health Plans 37.78 +1.07 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- LEXR Lexar Media 19.50 +1.91 RSAS RSA Security 15.11 +1.14 BID Sotheby's Holding 11.61 +1.14 TSAI Transaction Sys 17.52 +1.41 TTMI TTM Technologies 12.73 +2.33 NLS Nautilus Group 13.80 +1.80 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- TM Toyota Motor 66.80 +3.80 MWD Morgan Stanley 51.36 +2.28 SNE Sony Corp 38.00 +1.08 QCOM QUALCOMM 44.89 +1.44 ERTS Electronic Arts 93.14 +4.34 FAST Fastenal Co 42.23 +1.80 BLC Belo Corp 25.64 +2.15 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- GILD Gilead Sciences 61.86 -4.15 BG Bunge Ltd 27.37 -2.74 JOE Saint Joe Co 31.95 -1.95 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- ACL Alcon Inc 52.75 -1.12 COO Cooper Companies 42.19 -0.69 ================================================================= 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. 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