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Daily Newsletter, Tuesday, 09/30/2003

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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

-----------------------------------------------------------------




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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
==================


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