PremierInvestor.net Newsletter Tuesday 09-30-2003 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: Trouble in Paradise Watch List: EBAY, DHI, MMC, LLY and more! Market Sentiment: Confidence Concerns ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 09-30-2003 High Low Volume Advance/Decline DJIA 9275.06 -105.20 9378.10 9230.47 1.78 bln 1402/1528 NASDAQ 1786.94 - 37.60 1812.81 1783.46 1.87 bln 1087/1735 S&P 100 498.56 - 6.46 505.02 496.57 Totals 2489/3263 S&P 500 995.97 - 10.61 1006.58 990.36 W5000 9649.68 - 93.30 9742.98 9595.20 RUS 2000 487.68 - 5.03 492.71 483.56 DJ TRANS 2673.86 - 36.40 2709.55 2671.03 VIX 22.72 + 1.05 23.26 22.03 VXN 32.83 + 2.17 32.83 31.17 Total Volume 3,979M Total UpVol 2,999M Total DnVol 933M 52wk Highs 130 52wk Lows 14 TRIN 1.90 NAZTRIN 2.73 PUT/CALL 1.06 ================================================================= =========== Market Wrap =========== Trouble in Paradise Those analysts predicting a +6.0% GDP for the 3Q received a serious shock this morning when several economic reports came in much lower than expected. There is a rising concern that the economic recovery tripped in late August and slid face first into September. The markets tried to rally off the lows as the bad news bulls showed up in volume but they ended up giving back yesterday's gains to close down substantially. Dow Chart Nasdaq Chart S&P Chart The morning opened negatively with the Chain Store Sales down -0.4% and the third straight week in the negative column. Most retailers were generally below plan for the week. Last week analysts said the drop was due to the hurricane. This week they said it was more likely a drop due to weakening financial conditions and not the hurricane. Some analysts said spending last week was actually helped by hurricane repairs and the numbers still came in weak. The Bank of Tokyo lowered estimates once again for September to +3.5%, down from earlier estimates of +5% and +5% growth in August. Wal-Mart, who has repeatedly said sales were running ahead of plan, guided analysts to a lower range for earnings. Analyst's estimates were for 47 cents and Wal-Mart guided them to 45-47 cents OR a quick calculation shows us a median of 46 cents and a penny less than the street. Jobs are still falling as you will see below and consumers are beginning to hoard money again now that the tax rebate checks are gone. The NY-NAPM report was flat at 222.2, up only a fraction from the August 221.70. There were some positive internals with the current conditions component rising to 51.1 and the first time over 50 this year. The rest of the internals were mixed and analysts had hoped for a generally better showing but they were still happy to see the improvement in some key indicators. Not so positive was the Chicago PMI, which fell to 51.2 from 58.9 in August. This was very negative and the lowest reading since April and only marginally over the 50 boundary for expanding conditions. New orders fell to 53.2 from 60.5 and employment fell to 45.3 from 51.2. The employment drop is the most critical component as it indicates management is not expecting rising demand in the near future. Last month was the first time in three years that employment rose over 50 and it could not hold the gains. This would indicate the early quarter bounce in the economy could have been failing as the quarter closed. Also shocking analysts was the drop in Consumer Confidence to 76.8 from 81.7 and well under the consensus of 82.0. The bulk of the decline came in the expectations component which fell to 88.4 from 94.9. This is a large drop and represents a material shift in sentiment. Consumers planning to buy a home fell to 2.9 from 4.1, a car 5.4 from 6.6 and a major appliance to 26.7 from 32.5. This decline in purchasing trends is substantial with the home buying component at its lows for the year. The auto number and appliance numbers are at three year lows and the auto manufacturers were making announcements after the close to support this outlook. Overall the headline number was the lowest level since March. This was not a good report in any context. Ford announced after the close that they would be cutting -12,000 jobs citing increased competition and falling sales. Daimler Chrysler also announced they were planning to layoff "thousands" in the near future. Numbers due out tomorrow are expected to show auto sales falling to an annualized 16.8 million units. Ford said it was also going to cut -3,000 contractors. Sales concessions were said to have run as much as 20% of the list price in September as dealers were told to push the inventory out the door and get ready for the new models. High dollar cars were rumored to have been offered at 30% discounts to unload the inventory. It does not appear the consumer is coming to our rescue again. One sun rose in the east this morning and another crashed into oblivion. SUNW warned that current quarter earnings would be less than expected and that it was going to take a $1 billion charge. SUNW said it reflects a "particularly difficult quarter for the company due in part to intense market and competitive dynamics." Analysts were expecting a -2 cent loss for the quarter and SUNW said it was now expecting a -7 to -10 cent loss. SUNW lost nearly -15% on volume of 163 million shares to lead the Nasdaq to a -37 point loss. ETS, a network equipment manufacturer, warned that they would miss earnings and blamed it on the hurricane. While I would be skeptical that a hurricane in the last two weeks of the quarter would cause a miss, that was the excuse. The sector took it on the chin on the one bad apple principle. The SUNW warning of a dismal quarter did not help the overall tech sentiment and ETS just added to the gloom. Also not helping sentiment was an announcement from the SEC that they were investigating FNM/FRE for possible evidence of fraud. There are several agencies currently targeting those firms not only for evidence of wrong doing but also for evidence of liquidity. The OFHEO (oversight committee) said FRE had sufficient liquidity as of June-30th. Glad to hear that a quarter later. The committee said they had $29 billion in capital compared to the $4.7 billion required. How that capital was impacted by the bond implosion is yet to be disclosed. The major indexes closed the quarter in positive territory stretching the consecutive strings of positive quarters to . two. Yes, two, back-to-back positive quarters. So what? It was the first time in three years that this has happened. Break out the bubbly! It was a squeaker for the S&P which started the quarter at 975 and at one point this morning appeared it could challenge that level today. It was not to be and somebody bought the dip and held the indexes up to push them into the record books and create good press for mom and pop investor. I say somebody because the Feds were in the market today. The Fed intervened on behalf of the Bank of Japan to stabilize the rising Yen. The BOJ said they had spent 4.457 trillion yen in the last six weeks to keep the yen from climbing against the dollar. ($40 billion dollars) This was the first intervention by the BOJ since the G7 meeting in Dubai called for more flexible exchange rates and discouraging intervention. With the dollar diving today on the bad economic news the BOJ was forced to act to keep the Yen at 110 to the dollar and the current line in the sand. Ten Year Yields Once the economic news hit the fan bonds soared with the Ten Year yields dropping a full 140 basis points. While this is a positive for the bond market and the housing market it could be a negative for the stock market. Cracks are beginning to appear in the economic recovery picture and it appears there could be a concerted effort to sell stocks and buy bonds in process. The markets may have finished the quarter with a gain but they finished the day with a loss and at the low for the month. There was a definite attempt to buy the dip intraday but it failed as darkness approached. Some claimed that the intraday buying was last ditch end of quarter window dressing from funds that wanted to show stocks on the books but not willing to buy at higher risk levels over the last couple weeks. While that could be true it paints a bleak picture for the coming week. For those that were trying to hold on until September closed the pressure is off. The first day of October is known for losses as the window undressing begins. Ironically the following two days are typically up. The Dow closed under 9300, the S&P under 1000 and the Nasdaq well under 1800 again. The Dow and SPX are well under their 50 DMA and the Nasdaq is pressing it at 1779. The drops are beginning to worry traders as they are occurring on stronger volume with today's move on over 4.1 billion shares. The down volume was 3:1 over up volume. The VXO (old VIX) hit 24.98 today and is showing an increasing level of fear in the market. The new VIX hit a high for the month at 23.26 despite its lower volatility. Even more amazing was the TRIN which closed at 1.90 and the Nasdaq TRIN at 2.73. These are very oversold indicators but odds are good they will get more oversold before the week is out. On Wednesday we are facing the ISM report and the consensus is for a headline number that is flat with last months 54.7. If it holds there the carnage may be spared. That was the highest reading since the 55.2 in December-2002 and the same reading in June-2002. March through June-2003 were under 50 and showing contraction with July at 51.8, a squeaker back above the line and then the large spike to 54.7 in August. There are quite a few analysts that expect the ISM to drop several points below consensus but any number over 51 should keep the bears at bay. As long as traders can grasp at the "over 50" economic expansion hope we should not see any fresh new economic selling. We also get construction spending and layoffs tomorrow. The worry for the week is that the nonfarm payrolls on Friday will break 100K in job losses. The current estimate is -25K but the whisper number is growing. This puts the bears on the defensive. With negative expectations for the ISM and Jobs it sets up a potential relief bounce if the numbers are not as bad as the whisper numbers. This means bears are probably not as likely to short heavily into the announcements. The risk of disaster is more on their heads than the bulls. The bulls already know this is a bad season and the recent reports and earnings warnings have them in bunker mode. The wild card tomorrow is the window undressing, if any, and then the wait for Friday. If you are long the 100 DMA on the S&P is at 988 and the 25% retracement level at 977. Both of those levels should provide some support but we are in October. This month is known for some monster drops but it is also known as the "bear killer" month. Investors know to buy the October dip and ride it into January and hopefully that will happen again this year. For tomorrow, ISM is the morning focal point then we are on our own until we see if the institutions are undressing or not. The ISM could help make up their minds. If the number drops in the 50 range it could convince many investors that the recovery is in danger and profits in hand now allows for selective buying later. 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 --------------------------------- eBay, Inc. - EBAY - close: 53.64 change: -2.01 WHAT TO WATCH: Shorting the volatile Internet stocks is not for the faint of heart, but EBAY is giving us a price pattern that is just too good to pass up. Ever since early July, each rally attempt has been turned back at slightly lower levels and yesterday's rebound attempt was no exception, with a sharp retracement from its descending trendline. The best entry strategy is to enter on a failed bounce below $56 and then hold for a test and likely breakdown below $50. --- D.R. Horton - DHI - close: 32.70 change: +0.80 WHAT TO WATCH: Falling bond yields are injecting new life into the Housing sector, with the $DJUSHB index looking like it wants to make a run at the June highs near $482. DHI is ahead of the game though, hitting a new all-time intraday high today before pulling back into the close. If the stock can manage a close over $33, then odds are good that higher levels are in store. The PnF chart is bullish, with a vertical count in the ozone. Look for a near-term rally into the $36-37 area, accompanied by the DJUSHB index breaking out to new highs. Remember, the key here will be for bond yields to continue their descent. --- Marsh Mclennan Co. - MMC - close: 47.61 change: -0.83 WHAT TO WATCH: Shares of MMC can't seem to shake off the blues (or the reds, as the case may be), as it has been locked in a persistent downtrend since posting its relative highs in mid- June. Each trip near the descending trendline (also the site of the 30-dma and 50-dma) results in a quick bearish reversal. While aggressive traders might want to enter on a break below the 200-dma, the more conservative approach will be to target entries on another failed bounce near $49, using a stop just over the 50- dma. --- Eli Lilly and Co. - LLY - close: 59.40 change: +1.20 WHAT TO WATCH: Diverging from the broad market on Tuesday, LLY finally put in a positive day after nearly 3 weeks in the red. We've been expecting this rebound and actually waiting for it. Look for the rebound to be short-lived and when it runs out of steam, a rollover in the $60-61 area should make for an attractive short entry. Target a move down to the $54-55 area. --- =================== On the RADAR Screen =================== GTK $42.85 - There's no question that GTK looks extended, but it has been looking that way for months now, as price continues to work higher in a steady ascending channel. Look for a new entry on a dip near $41, with support likely to come in from the dual influence of the center of the rising channel and the 50-dma. GTK isn't a fast-moving stock, but a continuation up to the $45 level seems reasonable. BUD $49.34 - This short's for you! Shares of BUD have been consistently finding support near $50 for the past 3 months, but that trend came to a quick end on Tuesday, with the stock breaking down on heavy volume. Entries can be considered on either a failed rebound below $50.50 or on a break below today's intraday low ($49.20). BUD tends to move slowly, but it gets there eventually. Target a move down to $46. CTAS $37.01 - After several months of working slowly higher in an ascending channel, CTAS broke down below the bottom of that channel late last week on the same day that it broke the 200-dma. Yesterday's rebound attempt stalled right at the bottom of that broken channel and the stock is headed south again. Another failed bounce near $38 would be ideal for new entries, with $35 being the logical first target on the downside. =============================== Market Sentiment =============================== Confidence Concerns - J. Brown The September Consumer Confidence numbers were much worse than expected and the report immediately spooked jumpy investors into another round of selling. Economists had been looking for a dip to 80.7 in September, down from 81.7 in August. What we got was a drop to 76.8 in September. Compounding the consumer confidence issue was the chain-store-sales index, which fell for its third week in a row. More than 2/3rd's of the U.S. economy is powered by the consumer and low consumer confidence does not translate into sales. Adding fuel to the fire was last night's earnings warning from Sun Microsystems (SUNW). Investors did not react kindly to the news and SUNW was joined by two more tech companies Enterasys Networks (ETS) and Regeneration Technologies (RTIX) with their own earnings warnings. Market internals were bearish as investors fled from equities into the perceived safety of bonds and gold. The yield on the 10-year note fell to 3.94 percent as bonds surged. Gold rallied most of the session and many are speculating that the weak dollar environment could drive gold to the $400 level by year's end and possibly the $450 level by the end of 2004. We don't have much longer before the Q3 earnings season begins but until then the markets will be driven by the parade of economic reports and the new focus on currency fluctuations between the dollar/yen/euro. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9686 52-week Low : 7197 Current : 9275 Moving Averages: (Simple) 10-dma: 9471 50-dma: 9351 200-dma: 8695 S&P 500 ($SPX) 52-week High: 1040 52-week Low : 768 Current : 995 Moving Averages: (Simple) 10-dma: 1016 50-dma: 1002 200-dma: 931 Nasdaq-100 ($NDX) 52-week High: 1406 52-week Low : 795 Current : 1303 Moving Averages: (Simple) 10-dma: 1355 50-dma: 1308 200-dma: 1146 ----------------------------------------------------------------- As expected the drop is the broader markets is driving a move higher for the fear indices. CBOE Market Volatility Index (VIX) = 22.72 +1.05 Nasdaq Volatility Index (VXN) = 32.83 +2.17 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 1.06 496,585 527,325 Equity Only 0.95 362,216 344,880 OEX 0.71 34,990 24,713 QQQ 3.24 30,416 98,565 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 71.3 - 1 Bull Confirmed NASDAQ-100 75.0 - 4 Bear Correction Dow Indust. 80.0 + 0 Bear Confirmed S&P 500 76.8 - 2 Bull Confirmed S&P 100 78.0 - 2 Bull Correction 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 1.66 10-Day Arms Index 1.32 21-Day Arms Index 1.19 55-Day Arms Index 1.06 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 1308 1233 Decliners 1526 1886 New Highs 72 85 New Lows 14 11 Up Volume 537M 365M Down Vol. 1212M 1484M Total Vol. 1780M 1861M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 09/23/03 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 The latest option/futures expiration appears to have reduced some outstanding positions and commercial shorts saw the biggest drop. Suddenly, professional longs are dead even with shorts. Meanwhile, small traders closed a large chunk of long positions. Commercials Long Short Net % Of OI 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%) 09/23/03 395,123 397,858 ( 2,735) (0.0%) 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 08/26/03 170,424 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% 09/23/03 139,482 87,981 51,501 22.6% 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 We have a major reversal in the works here. Commercial long positions dropped about 260K, instantly changing sentiment to bearish. Small traders had a change of heart and suddenly went excessively long, which is ironic now that the SPX just broke support. Commercials Long Short Net % Of OI 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% 09/23/03 109,417 204,026 ( 94,609) (30.2%) 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 08/26/03 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%) 09/23/03 175,750 62,558 113,192 47.5% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 The recent expiration appears to have reduced the number of outstanding positions but sentiment remains bearish for commercials and bullish for small traders. Commercials Long Short Net % of OI 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%) 09/23/03 32,648 42,565 ( 9,917) (13.2% 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 08/26/03 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% 09/23/03 17,862 9,880 7,982 28.8% Most bearish reading of the year: (10,769) - 06/11/02 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL The same can be said for the $INDU futures with outstanding positions dropping, the sentiment remains the same with commercials feeling bullish. However, small traders are feeling a lot more neutral with a drop in short positions. Commercials Long Short Net % of OI 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% 09/23/03 15,911 9,123 6,788 27.1% 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 08/26/03 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%) 09/23/03 7,505 7,779 ( 274) ( 1.8%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= 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 ) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Tuesday 09-30-2003 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: Failed Bounce! Tech Stocks Closed Bullish Play: ADBE 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 ( Bearish ) =============== Biovail Corp. - BVF - close: 37.15 change: -0.99 stop: 40.00 Company Description: Biovail Corporation is a pharmaceutical company engaged in the development, manufacture and marketing of medications utilizing advanced drug delivery technologies for the treatment of chronic medical conditions. The company's primary focus is on three major areas: cardiovascular (including Type II diabetes), central nervous system and pain management. The company also has a full- service independent Contract Research Division that provides clinical research and laboratory testing services for its product development projects and for third-party international and domestic pharmaceutical companies, including several developmental partners. Why we like it: Normally defensive stocks like Pharmaceuticals and Health Care related issues have provided no shelter for investors during this latest round of selling, as the Pharmaceutical index (DRG.X) headed straight south last week, barely holding above its 200-dma on Friday. Shares of BVF have been trying to put in a bottom over the past 2 months, rebounding from the 200-dma on 3 different occasions. That all came to a screeching halt last week, as selling in the broad market intensified the downward move already in progress and the stock ended the week with an 11% loss. The real key was the break of the 200-dma (currently $38.77) on Wednesday, which opened the door for the stock to continue sharply lower and Friday's close just fractionally eclipsed the closing low from late July. The stock went back on a PnF Sell signal with yesterday's trade below $38, and the current vertical count is $30. After last week's sharp slide, BVF seems overdue for an oversold rebound. The extent of that rebound will give us an idea of the viability of this play to the downside. Look for a rebound failure in the $38.00-38.75 area to provide the best entry point, with additional resistance provided at the 200-dma. Traders that would prefer to enter on weakness will want to wait for a decline under $35, which will take out the late-July and early-May lows. After that support gives way, look for BVF to make its way down to the $30 level, which in addition to being the current PnF vertical count, is also the site of strong historical support. Given the fact that a near-term bounce is likely, place stops initially at $40.00, which will be above the 50-dma (currently $40.10) by early next week. Why This is our Play of the Day " Look for a rebound failure in the $38.00-38.75 area to provide the best entry point, with additional resistance provided at the 200-dma." That line from our initial writeup over the weekend encapsulates the action in BVF so far this week. The bulls managed to stage a decent bounce yesterday, which came to a halt just over $38. When the sellers returned early this morning, that was the cue to get in on the short side. There was a weak midday bounce that rolled over near $37.75 before BVF continued down to end at the low of the day. While we'll need to see a break under $36 to confirm serious weakness, with a fresh PnF Sell signal and a failed rebound below resistance and the 200- dma, the bearish prospects for this stock are looking good. Successive failed bounces below the 200-dma still look good for entries, and aggressive traders can look to climb aboard on the drop through $36. Don't forget to exercise caution though, with the potential for a near-term bounce from $35 before the stock really tips over. Annotated Chart of BVF: Picked on September 28th at $36.75 Change since picked +0.40 Earnings Date 10/28/03 (unconfirmed) Average Daily Volume = 2.00 mln =========== TECH STOCKS =========== -------------------- Closed Bullish Plays -------------------- Adobe Systems - ADBE - close: 39.39 change: -0.81 stop: 39.25 ADBE finally caved in to the selling in the Technology market on Tuesday. After holding up above the $40 support level for more than a week, the weakness in the overall Software index (GSO.X) finally pushed ADBE over the edge and it gapped below that $40 level at the open. Tapping our stop shortly after the open, the stock then rebounded and found resistance below $40 before declining back to end just fractionally above our $39.25 stop. With a violated stop and volume at its highest level in nearly 3 weeks, there's just no way to justify a continued bullish stance on the stock. Traders still holding open positions will want to take advantage of any rebound on Wednesday to gain a more favorable exit point. Picked on September 17th at $40.47 Change since picked -1.08 Earnings Date 12/10/03 (unconfirmed) Average Daily Volume = 3.11 mln ================== Trading Ideas ================== We're sorry. There will be no Trading Ideas tonight. Due to technical difficulties the Trading Ideas section is down for the evening. Please look for it tomorrow. Thank you. ================================================================= 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 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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