PremierInvestor.net Newsletter Thursday 09-18-2003 section 1 of 2 Copyright (c) 2003, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section one: Market Wrap: NYSE Hurricane Watch List: NSC, XICO, PIXR, TYC and more! Market Sentiment: Another Round of New Highs, Please. ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 09-18-2003 High Low Volume Advance/Decline DJIA 9659.13 +113.50 9662.84 9538.28 1.84 bln 2104/1068 NASDAQ 1909.55 + 26.50 1910.51 1874.30 2.02 bln 1960/1250 S&P 100 522.60 + 7.17 522.84 515.25 Totals 4064/2318 S&P 500 1039.58 + 13.61 1040.16 1025.75 W5000 10076.16 +124.40 10076.16 9945.50 RUS 2000 519.46 + 4.36 519.48 513.21 DJ TRANS 2825.07 + 63.90 2825.07 2760.19 VIX 19.30 - 0.32 20.37 19.17 VXN 29.75 - 2.00 32.31 29.67 Total Volume 4,148M Total UpVol 3,087M Total DnVol 966M 52wk Highs 821 52wk Lows 23 TRIN 0.67 NAZTRIN 0.56 PUT/CALL 0.51 ================================================================= =========== Market Wrap =========== NYSE Hurricane Storm clouds blew over not only the east coast but also over the NYSE and in both cases left behind far less devastation than had been expected. Richard Grasso was asked to resign by the same board that thought he was worth $139 million and the exchange is going back to business as usual with hopes that the furor has passed. Isabel blew ashore with winds of 65-100 mph but mainly produced only heavy rains and minor flooding and some random damage. By this time next week Grasso and Isabel will be regulated to the back pages and the small print of the daily papers. The fallout from the Grasso event will be another month of sound bites for television reporters. Isabel is at least expected to add between $5 to $10 billion to the 3Q GDP. Dow Chart Nasdaq chart What a day! The markets celebrated a massive drop in Jobless Claims to less than 400,000 for the first time in three weeks. Well, maybe not a massive drop at 399,000 but the market did react like it was 349,000. Nobody seemed to care that the numbers from last week rose to 428,000 with a +6,000 upward revision. The headline number began with a 3 and that was all that mattered. The four-week average rose to 410,750 and a two month high and the continuing claims rose to 3.68 million and the highest level since June. The recent pattern of upward revisions to past weeks would indicate that the 399K will really be 400+ by this time next week. Two thirds of workers without jobs have now exhausted all of their benefits and are no longer counted in the 3.68 million base. This puts the real unemployed number somewhere close to ten million. The Conference Board's Leading Indicators rose +0.4% for Aug and inline with estimates but less than the +0.6% from July. This was the fourth consecutive monthly increase in the indicators but it is well off the May highs at +1.1%. Three of the four coincident components rose but the one that fell was the employment component. Conditions are improving but the rate of increase is very slow. The Philadelphia Fed Survey was the most negative report of the day and fell to 14.6 from 22.1 in August. This is a survey of conditions in the Philadelphia Fed district and this was a serious headline drop. However, there were some positives hidden in the internals. The New Orders component rose to 19.3 from 14.6 and order backlogs rose to 6.5 from 1.1. The New Orders component hit a new four-year high. While the estimate miss on the headline number and the drop from last month appeared negative the internals painted a different picture of strength still slowly building in the manufacturing sector. The only other release for the day was the FOMC minutes for the August meeting. The highlights were a clear desire to keep rates low for a much longer time than was customary, fear of potential deflation and concern over job losses. The meeting itself was uneventful and the topic of most concern was the sharp rise in rates since the June meeting. There were minor reports of small increases in various economic sectors and the committee still thought the recovery was proceeding, just very slowly. The confidence level was beginning to build without any apparent summer lag. The committee met again on Sept-15th to review their methods of communication of their policy to consumers. This was after several board members had made statements about a kindler gentler Fed with posted targets and actions when those targets were hit. The committee met and decided to make no changes to the current policy dissemination method. The "keep us in the dark" and "talk up the markets" method is going to continue. On the stock side of the news GE said orders in its plastics division fell -5% in August. The plastics division contributes about 10% to GE earnings. This is seen as a short cycle indicator of future economic activity. This comes on the heels of warnings by DD, NYT, JBX, KROL, TKR, ENTG, JILL and several others that would seem to indicate that things were not going well. Appearances can be deceiving as there were quite a few inline guidance updates and even some raised guidance and earnings beats from companies like NKE, SLR, COMS, RHAT, CAMD, JBL and CNF. BSC was the winner today with a whopper of an earnings win with earnings of $2.30 compared to analysts estimates of only $1.65. They said trading profits in bonds and their fixed income business was the reason. Several brokers have mentioned that trading volumes have been rising over the last three weeks but volume on the exchanges has not been showing any big gains until today. Another indication that things may not be as rosy as investors think was the Semiconductor Book-to-Bill report late Wednesday. The BTB number fell to 0.91 for August a drop from the previously reported 0.97 in July. Unfortunately the July number was also revised down to 0.90. Bookings fell to only $721 million and the lowest bookings since Jan-2002. While the book-to-bill is not as low as it was in that period at 0.81 it is because the billings have fallen significantly as well. When both numbers fall in tandem the BTB remains stable. Just looking at the BTB gives a false indication of the actual strength of the sector. The bookings number is the critical number as it is a precursor to what companies are going to bill 3-6 months from now. What does an 21-month low say about the strength in the semiconductor sector? I would think it meant the tech recovery was losing strength. It appears conventional wisdom does not work in this sector because the $SOX closed up for the day as investors bought semi stocks. That takes a lot of faith at this point in the face of the facts. Or, maybe most investors really do not understand the BTB and heard the sound bites that the BTB "ROSE" to 0.91 from last month's 0.90. I gave you the actual numbers, you be the judge. SUNW added to the coming jobless claims with news that they were cutting another 1080 workers amid a protracted slowdown in server sales. The move was an additional effort to return to profitability. They also cut prices on their servers and launched an aggressive advertising campaign promoting servers at 50% less than a comparable Dell product. This push is in addition to a software announcement that took aim at Windows as a replacement product. The software is priced as low as $50 a year and will be updated quarterly for life for no additional charge. The software will run on any computer capable of running Windows-2000 and is compatible with programs like Microsoft Office. While it sounds good on the surface SUNW will have to perform and on a wide scale before Microsoft will begin to get worried. SUNW was up nearly +4% today and MSFT finished down with the Nasdaq up +26. Does that tell you anything? There may not be a rush into the SUNW product but cautious investors are looking ahead. The hurricane on Wall Street has passed and Richard Grasso has gone home to count his money. It is still not clear but evidently the board asked for his resignation and he complied. That would guarantee his salary for the remainder of his term as a termination payment. This would amount to about $9 mil more. Speculation is rampant on whether he can rescind his cancellation of the $48 million in additional compensation that he said he would forgo a couple weeks ago. As an ex-employee he might not be so favorable about that concession. Either way they do not have Grasso to kick around any more and the hunt is on to find a replacement. NYSE board member Carl McCall said the co-chief operating officers would continue to run the exchange on a day to day basis. McCall is the acting lead director at the present time. He, as well as many others, have already turned down Grasso's job. Evidently nobody wants to take the hot seat for what is expected to be significantly less money. AOL Time Warner, excuse me, Time Warner voted to drop AOL from its name and change its stock symbol back to TWX. Investors wish it was that easy to erase the pain and frustration from the failed AOL merger which cost investors billions. Just changing the name will not help anyone but at least it will prevent the name AOL from popping up in every news article and stock report going forward. Out of sight, out of mind is what the board is hoping for. Guess we will not have AOL to kick around either. Now if we can just get them to quit filtering our newsletters as spam we would be ok. Tomorrow is a quadruple witching Friday and several analysts were attributing today's gains to short covering in front of those expirations. The max-pain point for the S&P was 985 and it closed at 1040. There was definitely some pain for many with that big a miss. The same level for the DJX was 91.00 and 32.00 for the QQQ. The max-pain point is the level where the most options expire worthless and insure the most profit for those that sold them. If the gains today were really from short covering then there is little to continue the bounce come Tuesday. Friday could see some follow through and Monday is settlement day. After that we will be left to our own to determine direction based on things like earning and book-to-bill numbers. Until then those traders that sold covered calls on their stocks expecting a typical September decline are faced with buying additional shares to cover the calls or buying the calls back at much higher prices. Those that sold the calls naked and are flat the stock are in serious trouble. Who would have thought that the markets would be at 52-week highs on an expiration Friday in September when they sold those calls last month? If options expiration was behind the move then Friday will have to do without help from the S&P and DJX options which ceased trading on Thursday. With the short interest on the QQQ near all time highs at 287 million shares short there is still plenty of ammo left. Regardless of the reason for the strong gains on Thursday all the indexes closed at new yearly highs. The Wilshire 5000 closed above 10,000 at 10,076 and the Dow is not far behind. The morning started off with a short dip before being pushed higher by no less than five strong buy programs. Each program brought another round of short covering and buying by bulls chasing the indexes higher. The Dow broke over 9600 and closed right at decent resistance at 9660. The Nasdaq closed well over 1900 resistance and is staring resistance at 1915, 1935 and eventually 2000 right in the face. Just imagine how strong it would have been if the semi bookings had actually risen! I am not going to try and justify the bounce today or predict the outcome for tomorrow. As an expiration Friday it could be wild or mild and volume could be strong or gone. The volume today was over two billion on the Nasdaq and 1.9 billion on the NYSE. This is very strong volume for an up move in September. The internals were equally strong with 813 new 52-week highs and only 20 new lows. Advancing volume was 3:1 over declining volume. Once the smoke cleared the reality of how strong it really was hit me. The gradual rise during the day was deceiving. +60 points of the Dow gain was due to the first buy program in the first 45 min of trading. That propelled the Dow to resistance at 9600 where is languished for an hour before another buy program popped it to 9635. It trended down from there for two hours and suckered the shorts back into the market just as another buy program hit at 1:30. The Dow traded in a narrow 20-point range for the rest of the afternoon and right at 9650 resistance. It sounds like it struggled higher and as I lived it I felt like it was struggling. Looking back after the close produced one of those moments felt by traders many times when they realize the trend they were fighting all day never faltered and the pauses and dips were only head fakes. Friday is a tossup. When a market closes at new highs the obvious thought is a follow through the next morning after the European and Asian markets rise on our gains. Add in the expiration pressures and we could see additional volatility. We just do not know which way those remaining pressures will push us. With the indexes so far above the max-pain points you would think the pressure would be up. The futures are flat in the overnight session and giving us no clue. Whichever way you feel led to trade tomorrow please be careful. I am marking next Tuesday on my calendar as the make or break day. Settlement Mondays are generally volatile but don't produce big moves. That makes Tuesday the one to watch. Now if we can just get some follow through on Friday we will be well positioned for a really big move next week. 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 --------------------------------- Norfolk SO CP - NSC - close: 20.00 change: +0.70 WHAT TO WATCH: With the Dow Jones Transportation Index reaching a level not seen since April, 2002, the index pulled many transportation stocks higher with it. NSC gained 3.63 percent, closing above $20.00 for the first time since the middle of June. The move also carried NSC above its 200-dma. Volume proved higher than the daily average. The move also confirmed an inverse H&S formation, with that confirmation setting an upside target of $22.00. The stock sports a new P&F buy signal, and will create another new signal on a trade above $22.00. A descending trendline from a June 1999 high to current levels also crosses near $22.00. Because that $22.00 number recurs often, an entry at $20.00 doesn't give us the optimal risk/reward we need to elevate this stock to play status, but we do think the move to $22.00 looks achievable. Traders might want to set a trigger on a move above Wednesday's high or a pullback and bounce from the 200-dma, currently at $19.66. --- Xicor, Inc. - XICO - close: 10.55 change: +0.51 WHAT TO WATCH: After consolidating in a bull flag, XICO broke out Thursday on slightly higher than average volume, climbing above $10.00 and finding support at its grouped 10 and 21-dma's. It looks ready to move to next resistance near $12.75, a hefty percentage gain, or perhaps all the way to next resistance near $14.00. It's on a double top breakout buy signal, created with the move over $10.50. The low average daily volume of 121,000 shares keeps this from making our "A" list, but stochastics and RSI have already turned up with the prices. MACD also curves up, halting its previous decline, but has not yet reverted to full bullish mode. Set a trigger over the 9/03 high of $10.70, or watch for a pullback and bounce from the 30-dma, currently at $9.79. Be alert to possible volatility due to the low average daily volume. --- PIXAR Inc. - PIXR - close: 72.13 change: +0.72 WHAT TO WATCH: This stock didn't make our play list because of its expense, but we notice intriguing characteristics on its chart. It's been trading in an ascending channel since May, and it's currently climbing the bottom of that channel. It looks ready now to ascend to the top of the channel again, with midline resistance near $75.00 and the top of the channel currently near $79.00. While currently in an "O" column as it consolidates, it's also on a P&F buy signal and above the bullish support line, with a P&F target above the top of the channel. Ideal entries would be on a move above Thursday's $72.51 high, confirmed by strong volume, or another pullback and bounce from the 30-dma and the bottom of the channel, near $70.40. The bullish cast of the indicators suggests that the breakout entry might be the only one offered. --- Tyco Intl. - TYC - close: 21.00 change: +0.36 WHAT TO WATCH: Thursday TYCO declared a regular quarterly cash dividend of 1.25 cents per common share, payable November 1 to shareholders of record October 1. Already sporting a P&F triple top breakout buy signal, the stock sprang from its grouped 10 and 21-dma's and challenged the $21.00 level. Daily stochastics and RSI look bullish, too, with MACD on the verge of a bullish cross above signal. Volume proved higher than the daily average. Only one chart characteristic kept this off our regular list. There's a small weekly gap from the spring of 2002, with the top of that gap at $22.00. While TYC has already retraced more than 50 percent of that small gap, traders seeking new entries might be aware of possible gap resistance at $22.00. Once above $22.00, $27.50 looks achievable. --- =================== On the RADAR Screen =================== BOBJ $29.24 - Wednesday, Business Objects announced that Fifth Third Bancorp had selected the company as its enterprise business intelligence standard. BOBJ has been finding support at its 21- dma and it consolidated just above that average the early part of the week. Having already broken out of a bull flag Wednesday, on Thursday the stock bounded above the 10-dma with indicators turning up, too. Volume was above average daily volume. We would recommend an entry at this level, except that BOBJ is just below round-number resistance at $30.00. Use a trigger over $30.00 or watch for a pullback to the 21-dma at $27.16 and a bounce from that level. S $46.21 - Sears looks as if it's ready to break out of its latest consolidation pattern. MACD lines curve upward, with RSI and stochastics already bullish. ADX remains strong, indicating that a strong trend remains in place. The P&F chart sports a buy signal. We would elevate this to watch list or play status except that the weekly chart depicts possible resistance near $47.50, with the P&F chart also indicating likely resistance near that level. We're not sure that the risk/reward outlook remains right for the play list right here, but look for a break over that resistance, verifying first that volume confirms the breakout and that MACD remains strong. VSTA $36.16 - The low average daily volume lands this stock on the RADAR Screen list, with ADV just over 120,000. All other characteristics look appealing, but low average daily volume can produce volatile and unpredictable moves in some stocks. VSTA doesn't appear to be one of those stocks. It's on a P&F buy signal, although currently in an "O" column due to the recent pullback. As it's been doing, it pulled back in a bull flag pattern, and now has begun rising. Traders could enter here with a stop just below the rising 30-dma, currently at $33.29. VSTA has been finding support at that moving average as it climbed. Target $40.00. =============================== Market Sentiment =============================== Another Round of New Highs, Please. - J. Brown The bullish locomotive running rampant on Wall Street has yet to slow down as the NASDAQ marked an 18-month high above the 1900 level and the INDU traced a 15-month high above the 9650 mark. It's becoming a common cliche these days that the path of least resistance is up. Today's rally was boosted by a better than expected drop in jobless claims. Economists had been hoping for a move down to the 410,000 level. Instead we got a drop of 29,000 to 399,000. Add another drop in mortgage rates and investors were flocking into equities. Advancing stocks beat decliners 18 to 9 on the NYSE and 19 to 11 on the NASDAQ. Up volume was almost three times down volume on the NASDAQ and more than four times down volume on the NYSE. August and September are seasonally the worst two months of the year for the equity markets. This last August bucked that trend and so far September is right on track to do the same. The recent move seems pretty convincing and bears may choose to hibernate until Q3 earnings come out. However, I have to caution our readers. Seasonal trends may not have held up very well lately but we are still approaching one of the most perilous 2- to-3 week periods the markets typically witness. This danger zone runs from September's option expiration into the first week of Q3 earnings announcements. Play the trend but keep a good eye on your risk. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9662 52-week Low : 7197 Current : 9659 Moving Averages: (Simple) 10-dma: 9516 50-dma: 9307 200-dma: 8667 S&P 500 ($SPX) 52-week High: 1040 52-week Low : 768 Current : 1039 Moving Averages: (Simple) 10-dma: 1023 50-dma: 998 200-dma: 927 Nasdaq-100 ($NDX) 52-week High: 1401 52-week Low : 795 Current : 1400 Moving Averages: (Simple) 10-dma: 1366 50-dma: 1296 200-dma: 1135 ----------------------------------------------------------------- The NASDAQ VXN has rolled back under the 30 level while the older VIX continues to sleep towards new one-year lows as the markets rally. CBOE Market Volatility Index (VIX) = 19.30 -0.32 Nasdaq Volatility Index (VXN) = 29.75 -2.00 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.51 1,058,699 542,582 Equity Only 0.47 700,389 325,880 OEX 1.13 58,584 66,447 QQQ 1.69 42,616 72,061 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 73.5 + 0 Bull Confirmed NASDAQ-100 80.0 + 2 Bear Correction Dow Indust. 83.3 + 0 Bull Confirmed S&P 500 83.2 + 1 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 0.92 10-Day Arms Index 1.13 21-Day Arms Index 1.02 55-Day Arms Index 1.01 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 1876 1907 Decliners 935 1176 New Highs 264 376 New Lows 7 3 Up Volume 1394M 1424M Down Vol. 413M 507M Total Vol. 1826M 1995M 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 Thursday 09-18-2003 section 2 of 2 Copyright (c) 2003, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= Play of the Day: Smooth As Glass Stop-Loss Adjustments: ADBE, QCOM, RSAS, TER, GOLD, GLW Active Trader Closed Play: PNRA 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 ) =============== Corning, Inc. - GLW - close: 9.76 change: +0.41 stop: 8.61*new* Company Description: Corning Incorporated is a global, diverse technology company that has been changing the world through research and technological innovation for more than 150 years. By integrating scientific discovery with market need, the company has developed leading positions in the telecommunications, information display, and advanced materials industries. The company is an industry leading manufacturer and supplier of optical fiber, cable systems and photonic components, for the telecommunications industry; and high-performance flat glass for television, information display and other communications industries. The company also develops advanced materials for scientific, semiconductor, environmental and ophthalmic markets. With more than 70 manufacturing locations, Corning employs approximately 22,000 employees worldwide. Its diverse portfolio of businesses is aligned under two major business sectors: Corning Optical Communications and Corning Technologies. Revenues for 2002 were $3.2 billion. (Source: Company Website.) Why we like it: We've been watching GLW for a while, noting the way it's been trading up within an ascending regression channel. Wednesday, GLW found support at the midline of that regression channel and moved up, achieving a new 52-week high as it did so. We think GLW might be headed up toward the top of that channel again, and maybe up toward previous $11.60 resistance. The higher volume over the last two days supports that view. The indicators have turned back up in a bullish fashion, too. We expect some hesitation as GLW approaches round-number resistance near $10.00, but a study of the weekly chart revealed that GLW has already bypassed the strongest resistance. We're setting the $8.49 stop just under the rising 21-dma and setting a target of $11.50. What's been happening to drive GLW higher? The XTC, the North American Telecoms Index, has also been performing well, although it has not yet moved above its July high, but many developments appear specific to GLW. After its July earnings, several firms upgraded GLW to a buy or initiated coverage with a buy rating. More recently, GLW announced on Monday that it had sold a large percentage of its venture capital arm to Scrimitar Capital Partners, a Saudi Arabia-based company. We suggest entries at the current level or on a pullback and bounce anywhere above $8.60. We're not sure GLW investors are in the mood to give anyone those pullback entries, however. Why This is our Play of the Day One look at the chart explains a lot, as GLW has been channeling higher for the past 11 months and with the strength in the broad market (especially the NASDAQ) this week, the stock has really started to move again, with today's 4.4% advance capping off a nice 13.6% advance in the past four days. This may not be the best area to open new positions, as a bit of consolidation may be necessary before the bulls can push through the venerable $10 level. Thursday's rally pushed the stock back into the upper half of its ascending channel, the top of which is near the $10.50 level. If the bulls can continue to charge higher, then reaching the top of the channel would represent a good location to harvest some gains. With the strong volume supporting the breakout over $9.00 this week, we would view any pullback to that level as a gift of an entry point. It just remains to be seen if we will be so fortunate to see that pullback before the stock powers above $10.00. We're raising our stop to $8.61 tonight, just under Tuesday's intraday low. Annotated Chart of GLW: Picked on Sep 17 at $9.35 Change since picked: +0.00 Earnings Date: 07/21/03 (confirmed) Average Daily Volume: 6.8 million ========================= Stop-Loss Adjustments ========================= ADBE – Raise from $37.75 up to $38.75 QCOM – Raise from $41.95 up to $42.75 RSAS – Raise from $13.50 up to $14.50 TER - Raise from $19.95 up to $20.50 GOLD – Raise from $22.99 up to $23.75 GLW – Raise from $8.49 up to $8.61 =============================== ACTIVE TRADER (AT) CLOSED PLAYS =============================== -------------------- Closed Bearish Plays -------------------- Panera Bread - PNRA - close: 44.61 change: -1.60 - stop: 44.65 We're not sure whether Wednesday's Raymond James downgrade on valuation concerns, a presentation at the Banc of America Investment Conference, or Thursday's reported 5 percent rise in same store sales led to the downtick in PNRA's price, but something left a bad taste in investors' mouths. We had noted a potential RSI H&S pattern forming. RSI did punch through the confirming neckline of that H&S formation. When we also noted possible bearish divergence on the MACD, we warned of a possible retreat to next support. We didn't expect the gap down on Thursday, however. At least the bad taste didn't linger, with the stop hit early and decisively. Picked on Sep 14 at 46.80 Change since picked: -2.19 Earnings Date: 08/07/03 (confirmed) Average Daily Volume: 497 thousand ================== 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 C Citigroup 46.65 +1.71 AAUK Anglo Amer. Plc ADR 19.68 +0.58 GDW Golden West Financial 90.05 +2.06 FON Sprint Fon Group 15.79 +0.83 COF Capital One Financial 61.55 +0.70 FD Federated Dept Stores 44.53 +0.75 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- THOR Thoratec Corp 19.23 +1.31 IDBE ID Biomedical 18.01 +2.48 PGNX Progenics Pharmaceuticals 19.17 +1.36 CENX Century Aluminum Co 12.45 +1.25 MRGE Merge Technologies 18.99 +2.38 ABAX Abaxis Inc 12.69 +1.10 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- JPM J.P.Morgan 35.74 +1.08 AXP American Express 47.08 +1.73 MER Merrill Lynch & Co 57.29 +2.13 GS Goldman Sachs 93.25 +2.25 YHOO Yahoo! Inc 37.58 +1.58 STT State Street Corp 48.10 +2.20 LEH Lehman Brothers 70.85 +1.60 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- SNP China Petro & Chemical 25.83 -1.70 CLC Clacor Inc 42.50 -3.30 ARRO Arrow Intl Inc 23.30 -1.01 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- GDT Guidant Corp 48.50 -1.47 IRF Intl Rectifier Corp 41.80 -1.19 ================================================================= 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. 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