Option Investor

Daily Newsletter, Thursday, 10/02/2003

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PremierInvestor.net Newsletter                Thursday 10-02-2003
                                                   section 1 of 2
Copyright (c) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment

In section one:

Market Wrap:      A Round of Applause Please
Watch List:       SVU, LAVA, MTZ, TE and more!
Market Sentiment: Count Down to Jobs

MARKET WRAP  (view in courier font for table alignment)
      10-02-2003           High     Low     Volume Advance/Decline
DJIA     9487.80 + 18.60  9511.06  9427.65 1.53 bln   1900/1244
NASDAQ   1836.22 +  4.00  1842.55  1823.64 1.60 bln   1734/1401
S&P 100   511.20 +  0.87   512.14   507.77   Totals   3634/2645
S&P 500  1020.24 +  2.02  1021.87  1013.38
W5000    9887.36 + 27.80  9900.72  9820.28
RUS 2000  503.20 +  2.88   504.25   499.76
DJ TRANS 2743.67 +  7.30  2751.39  2727.75
VIX        20.80 -  0.27    21.45    20.71
VXN        31.25 -  0.08    31.70    31.08
Total Volume 3,384M
Total UpVol  2,043M
Total DnVol  1,254M
52wk Highs  514
52wk Lows    23
TRIN       0.79
NAZTRIN    1.05
PUT/CALL   0.78

Market Wrap

A Round of Applause Please

The October rally continued to the consternation of bears
everywhere. After the nearly +200 point gains on Wednesday
the Dow shook off some early weakness and rallied to tack on
another +18 points and close very near the 9500 resistance
level. The indexes traded on both sides of zero several times
during the day but the only score that matters is the one at
the final gun. Chalk a big one up for the bulls because they
held the high ground.

Dow Chart

Nasdaq Chart

The Jobless Claims came in higher than expected but the pencil
pushers managed to slip it in just below 400K at 399,000. The
claims from last week were revised up +5,000 to 386k and that
is where they are likely to stay. The storm week will be chalked
up as an economic blip and this week will probably end up
revised over 400K next week. I can't remember off hand a drop
in a revision recently. They are all revised up. Continuing
claims rose again to 3.67 million and the highest level since
July. The multiple economic reports lately with declining
employment components and the rising continuing claims would
indicate future weakness in claims. The nonfarm payrolls on
Friday is expected to be weak as well.

Factory Orders fell -0.8% and more than double the consensus
estimates of -0.3%. Nondurable Orders fell -0.51% and Durable
Orders fell -1.11%. Communications equipment fell to -4.89%
from +11.78 in July and aircraft and parts to -2.50%, up from
-13.89 in July. Computers dropped to +3.21 from +9.22 in July.
Industrial machinery rose +5.78 from -8.31 and was the strongest
component change. Still, a -0.8% headline number is a material
change from the +2.0% gain in July. This report showed that
the economy is still expanding from the late 2001 lows but the
pace of expansion is very anemic. This report only represents
orders to U.S. factories and with the change to overseas
manufacturing it is hard to determine what the balance of
orders really reflects.

For Friday the big report is the nonfarm payrolls. The official
consensus estimate is for a drop of -25,000 jobs. The whisper
numbers I have heard are as high as -100,000. This has set
the stock market up for a positive surprise or at least a
non event. If everybody expects worse than -25K then a -40,
-50 even -75K number could be met with a yawn. Ok, we knew
that, so what else is new? Basically we spend a week posturing
in front of the release and then the outcome is ignored.

The only other material release on Friday is the ISM non
manufacturing Services Index. The consensus is 62.8 and a
decline from 65.1 in August and July. Services appear to
have peaked in July/August and could be trending down if the
consensus numbers are correct. Since July/August were the
highest numbers posted since the creation of the index six
years ago any decline is likely to be ignored unless it falls
under 60. Any number over 60 represents a strong expansion
and a strong contribution to the GDP for the balance of the
year. If anything, the ISM Services represents the true state
of the economy. With more and more manufacturing done outside
the U.S. we are turning into a service economy. Unless there
is a disaster I expect this release to be spun to the bulls
advantage by analysts.

IBM announced today that it was cutting 720 jobs and initially
lost ground in the market but recovered to down only -50 cents.
PSFT announced it was cutting 7% of its staff after completing
the merger with J.D. Edwards. That could be up to 1000 jobs
in an effort to save $207 million in 2004. PSFT also got signs
of a reprieve from the Oracle death sentence. The Justice Dept
is reportedly preparing a challenge to Oracle's hostile bid
for the company. This would end the attack and allow PSFT to
breathe again. Many customers were reluctant to buy their
software because they were afraid Oracle would end up with
the company and force the customers into an Oracle solution.

Techs got another sunburn today after a Merrill Lynch analyst
penned a scathing open letter to Sun Micro. The analyst said
SUNW had reached a point of crisis and was bloated, unfocused
and likely to suffer further loss of market share. He said
the company would dwindle into irrelevance and eventually be
bought for its installed user base. He said the SUNW CEO,
Scott McNealy's brash and contrarian personality was getting
old and he needed to clean up his act. He suggested SUNW cut
5-7000 jobs and quickly, spin off Java and narrow its focus.
SUNW fired back that the analyst did not understand the SUNW
business and if he had attended any of the Sun conferences
he would know what they were focusing on. They called the
attack a broken record and suggested the analyst try another
tune. SUNW finished the day down a nickel.

There were rumors on the street today that the gains we saw
on Wednesday were partly due to a very large buy program
by Goldman Sachs. They were said to be accumulating big cap
stocks all day for a large customer. There is no way to
verify this rumor although it was mentioned on CNBC several
times. Also helping the markets was growth estimates by
MMM of +12% to +14% for 2004. 3M affirmed the prior estimates
and said the economy was showing signs of improvement. A DB
analyst said 3M was closer to the beginning of a high-growth
transformation than the end.

These types of comments helped to maintain a bullish posture
in the markets on Thursday. News of the big buy program
helped to give bulls confidence that big bets were still
being made at the beginning of the October tribulation
period. This buying in front of the most volatile two weeks
of the year smells of the plunge protection team at work but
tracking them down is harder than getting evidence of aliens
on the X-Files. The PPT exists but the secrecy surrounding
their actions is better than that surrounding Area-51 in

The positive mood is contagious and the bulls pulled off
a real trick by posting additional gains for the second
consecutive day in October. Last year the first day of
October saw a +340 point Dow gain and the 2nd day a -180
point loss leading to -743 points over the next seven days.
We have successfully evaded the reversal drop so far but a
two day string of gains is hardly a string.

Regardless of the reason or the season the Dow did manage
to test strong resistance at 9500 a total of four times on
Thursday. While it failed each time it did not fail far.
The Dow closed at 9488, only -12 points from the critical
level and stretching its move over the 50 DMA to +22 points.
The Dow closed less than 200 points from the September high
of 9686. A pretty convincing performance all things

The Nasdaq was far less exciting but still clung to positive
territory. After bouncing off the 50 DMA earlier in the
week it rallied to close at 1836 with a +4 point gain but
still well off the 1913 52-week highs. The Nasdaq traded
in only a 19 point range and much of that range was early
in the day. The SUNW attack and an earnings warning from
NTIQ helped to restrain the eagerness to buy. Ironically
there were numerous upgrades to tech stocks and many with
new coverage started. Helping to restrain the gains were
technical considerations where stocks bouncing over the
last two days were nearing resistance again. With the high
profile SUNW warning this week there may be some rethinking
of the lofty expectations.

The major hindrances to the current market are jobs, bonds
and valuations with many stocks at new highs on hopes of
strong earnings. On Thursday 516 stocks hit new 52-week highs.
That was the highest level in over a week. While the jobs
number tomorrow is likely to be ignored it was a cloud over
the market today. Bonds sold off sharply at the open and
gave back all the gains from the last two days. They did
improve slightly on the day but the continuing confusion
on foreign currency challenges, conflicting economic data
and tomorrows Jobs report had them on the run. Fed President
Moskow gave them the afternoon boost after saying the "job
market was weak despite an upturn in household data." Another
Fed President Santomero added to the worry saying "structural
unemployment was an ongoing worry." In the war of words
Dallas Fed President McTeer while acknowledging weak jobs
said "We can't keep having growth that fast (3Q) without
producing job growth pretty soon." This positive outlook
was the primary cause for the spike in yields at the open.
Not to be left out Ben Bernanke also said that "employment
was a major concern" for the Fed.

The September Jobs report will be the first look at a
massive revision to previous payroll numbers as the Bureau
of Labor Statistics attempts to include data that falls
outside the normal payroll sample. The revision is made
each June but we could get the first clue with the Sept
report and the initial revision data. Economists are
hoping for an upward adjustment of +200,000 jobs over the
12 month period ending in June. The adjustment comes from
matching federal data with state unemployment filings.

Personally, I think the barrage of Fed heads all speaking
out on employment on a single day was an attempt to cushion
the blow for Friday's report. The Fed gets a 24-48 hour
advance look at most reports and this literal barrage of
employment comments on the same day sure appears to
concentrated to be coincidental. Either way the report
has been filed and the numbers will hit the wires at 8:30
tomorrow morning. The overnight futures are flat and it
appears there is a lack of concern. Traders have either
gone flat or placed their bets and we are waiting for the
cards to be shown.

The problem that concerned me on Thursday was volume. The
combined volume was only 3.4 billion shares across all
markets. This was the lowest volume on record since Sept-15th
and the day before the FOMC meeting. Just like that Monday we
are not seeing any rush to place bets. Traders are either
confident in their positions or flat. The lack of volume
is a problem for the bulls as it takes lots of volume to
overcome upward resistance. Tuesday and Wednesday were
examples of a complete direction change. On Tuesday there
was 4.1 billion shares, 3.1B down volume, 1.0B up volume
and the Dow lost -105, Nasdaq -37. Yesterday there was
4.0 billion shares, 3.1B up volume, 0.9 down volume and
the Dow gained +194, Nasdaq +45. Exactly opposite days
by volume.

Market Breadth Last 30 Trading Days

People have been asking why the market is so hard to predict
lately. First, because it has not been following normal
calendar trends. The second reason is the stall at the top.
Since September 1st we have been trading in a narrow range
between 9400-9600 with the drop over the last week being the
only major move out of that range. Take a look at the sheet
above. It is the total market breadth for the last 30 days.
Over the last 30 trading days over 110 billion shares have
changed hands and the total points gained in that period
was +61 on the Dow and +56 on the Nasdaq. Notice also the
huge shifts in up and down volume. One day there are 900M
in one direction and the next day it is over 3B. (The volume
columns are in millions) What you should derive from this
exercise is that when markets are at or near the top traders
are nervous. Both bulls and bears are afraid of that next
big move and they are quick to buy the dip or sell the top
and do it in a hurry. Note also the increase in the range
of point swings as we near the top of the chart. If you do
not like one days massive move just wait and it will reverse.
There is a lot of information in this sheet if you take the
time to review it. It tells the psychology of the market
without even looking at a real chart.

I put this together for one reason. You can easily see the
increasing volatility and bipolar swings in the U/D volume.
Next week begins the two most volatile weeks of the year
and the odds are good the numbers at the top two weeks from
now will be even more bipolar. Nobody knows which way we
are going or how far but the odds are we are going to be
moving fast and we are likely to cover the same ground
more than once. Keep those seatbelts fastened!

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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.


Supervalu - SVU - close: 24.47  change: +0.47

WHAT TO WATCH: After producing a double-top-breakout P&F buy
signal, SVU consolidated, building a base from which to climb.
We think it's ready.  After establishing $23.30 as support, SVU
began moving up early this week, and it now looks ready to
challenge next resistance.  RSI and 21(3)3 stochastics both roll
into full bullish mode.  Look for a climb above the 21-dma at
$24.52 as an entry, setting a $23.30 stop.  Look for an expansion
of volume and confirm strength in the RLX, the retail index.


Magma Design Automation - LAVA - close: 18.58 change: -0.22

WHAT TO WATCH: Late last week, LAVA fell below a months-long
ascending trendline.  It consolidated a few days, and then
dropped to $18.00 this week.  With the oscillators on the GSO.X,
the software index, trying to turn up, it looks as if it might be
time for a bounce and rollover entry in LAVA, perhaps on a
rollover under $19.50.  The P&F chart shows a bullish signal
reversal.  On a rollover entry, target $16.50 and set a stop just
over the 50-dma.  Confirm weakness in the GSO.X.  LAVA reports
near October 29 or 30, so watch for a confirmation of its
earnings date, exiting the play before earnings.


Mastec, Inc. - MTZ - close: 11.71 change: +0.80

WHAT TO WATCH: Mastec broke out of its bull flag Wednesday and
has tacked on a couple of points since Tuesday's close.  As might
be expected, it's on a P&F buy signal, and a trade above $12.00
will create a new buy signal.  We'd prefer a pullback entry since
MTZ has made such big percentage gains.  MACD, stochastics, and
RSI evidence argue that the breakout entry might come first, on a
breakout over $12.00.  After breaking out, MTZ tends to
consolidate in a bull flag.  On a breakout entry, consider a stop
just beneath 50% of the rise from the 9/29 low to the peak.  If a
pullback entry occurs first, look for a pullback and bounce from
above $10.50.


Teco Energy Inc. - TE - close:  change:

WHAT TO WATCH: Thursday, TE announced that it had completed the
sale of a power station.  The stock broke out over its $14.00
resistance on strong volume, and it looks ready to break out over
the $14.20 high from late September.  It's got a double-top-
breakout P&F buy signal.  Momentum entries might be sought on a
climb above that recent $14.20 high with an initial stop at
$13.30 and a target of $16.50.  The P&F chart shows resistance at
that level, resistance that also shows up on the bar chart.  The
less-than-optimal risk/reward situation puts this entry in the
high-risk category.  TE reports October 23, so plan to close the
play before then.


On the RADAR Screen

ATU $61.89 - Too expensive for our regular play list, ATU broke
to a new high this week, adding another X to its ascending triple
top breakout P&F buy signal.  What sent the stock higher?  It
reported earnings that beat expectations on Wednesday, and also
announced a 2-for-1 stock split for shareholders of record on
October 10.  We'd like to see the stock pull back to $59 and
bounce from there, but it looks to be setting up for an old-
fashioned split run.  It has popped above an ascending regression
channel and appears ready to go vertical.  New entries could be
found on any pullback and bounces from above $59.00, but those
pullback entries might not be offered.  New entries can also be
found on a move above Thursday's high.  Whatever the entry, this
is an aggressive play, and it might be appropriate to take
profits quickly when offered.  Plan to exit ahead of that October
10 date.

DISH $39.13 -   Sporting an ascending triple top breakout buy
signal on the P&F chart and an ascending regression channel on
the bar chart, DISH looks ready to break out of its latest bull
flag.  New entries can be found on a pullback and bounce from the
30-dma or on a move above $40.00, which would confirm the bull
flag breakout.  $39.00 appears to have been the strongest
resistance on the weekly chart.  Target $45.00, although a brief
pullback, perhaps in the form of another bull flag, should be
expected as DISH approaches the top of its regression channel,
currently near $42.00.

FNSR $2.61 - Here's one for the aggressive bulls.  In the middle
of September, FNSR gapped above its rising regression channel.
It spent the next several weeks filling that gap, but now looks
ready to move up again.  This week, FNSR found support at its 30-
dma, then its 21-dma, and Thursday, it managed a climb above its
10-dma.  Stochastics made a bullish kiss and RSI tilted up again.
MACD lines appear on the verge of a bullish cross.  New entries
can be found on retreats and bounces from its 21-dma at $2.35 or
on a break out over $2.75.  It has a triple top breakout signal,
and a trade above $3.00 will create a new buy signal.  Some
traders might prefer to wait for that trade above $3.00 and that
new P&F buy signal.  Earnings were early in September.

Market Sentiment

Count Down to Jobs
-J. Brown

The markets hit the pause button as investors decided to wait and
see what tomorrow's September jobs report will reveal.
Economists are expecting the Labor Department's employment report
to show the U.S. economy losing jobs for the eighth month in a
row.  Current estimates, per a Bloomberg survey, are for a loss
of 25,000 jobs last month and a jump in unemployment to 6.2
percent, up from 6.1 in August.  Should this number come in
significantly weaker than expected then look for turmoil in
stocks as investors hit the sell button in a knee-jerk reaction
to lock in profits.  If the report is positive, then it's off to
the races as Wall Street heads into the Q3 earnings reporting

Looking at today's action the overall mood was still somewhat
optimistic as the major indices tended to drift higher into the
afternoon.  The lack of profit taking on yesterday's big moves is
encouraging.  Recent comments from the Chicago Federal Reserve
President and the Dallas Federal Reserve President regarding
strong growth for the U.S. economy for the remainder of this year
and throughout 2004 helped soothe investors concerns.


Market Averages


52-week High:  9686
52-week Low :  7197
Current     :  9487

Moving Averages:

 10-dma: 9447
 50-dma: 9365
200-dma: 8705

S&P 500 ($SPX)

52-week High: 1040
52-week Low :  768
Current     : 1020

Moving Averages:

 10-dma: 1013
 50-dma: 1003
200-dma:  932

Nasdaq-100 ($NDX)

52-week High: 1406
52-week Low :  795
Current     : 1337

Moving Averages:

 10-dma: 1345
 50-dma: 1311
200-dma: 1150


It appears the recent rise in the volatility indices was a
false alarm.  Both have rolled back over as the markets rebound
from Tuesday's lows.

CBOE Market Volatility Index (VIX) = 20.80 –0.27
Nasdaq Volatility Index (VXN)      = 31.25 –0.08


          Put/Call Ratio  Call Volume   Put Volume

Total          0.77        495,796       384,012
Equity Only    0.55        386,713       213,906
OEX            1.53         16,855        25,892
QQQ            0.67         25,310        17,140


Bullish Percent Data

           Current   Change   Status
NYSE          72.0    + 0     Bull Confirmed
NASDAQ-100    72.0    - 3     Bear Confirmed
Dow Indust.   83.0    + 3     Bull Correction
S&P 500       77.2    + 1     Bull Confirmed
S&P 100       79.0    + 1     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  1.20
10-Day Arms Index  1.34
21-Day Arms Index  1.25
55-Day Arms Index  1.07

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


Market Internals

            -NYSE-   -NASDAQ-
Advancers    1698      1676
Decliners    1109      1372

New Highs     228       149
New Lows       12        12

Up Volume    988M      829M
Down Vol.    496M      730M

Total Vol.  1521M     1593M
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


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


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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PremierInvestor.net Newsletter                Thursday 10-02-2003
                                                   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:     New Highs

Tech Stocks Closed Play:  UTSI

Active Trader Closed Play:  FMX

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 )

Zimmer Holdings - ZMH - close: 56.18 change: +0.48 - stop: 53.90

Company Description:
Zimmer, based in Warsaw, Indiana, is a worldwide leader in the
design, development, manufacture and marketing of reconstructive
orthopaedic implants and trauma products. Orthopaedic
reconstruction implants restore joint function lost due to
disease or trauma in joints such as knees, hips, shoulders and
elbows. Trauma products are devices used primarily to reattach or
stabilize damaged bone and tissue to support the body's natural
healing process. Zimmer manufactures and markets other products
related to orthopaedic surgery. For the year 2002, the Company
recorded worldwide revenues of $1.37 billion. Zimmer was founded
in 1927 and has more than 3,600 employees worldwide. (Source:
Company Press Release.)

Why we like it:
Tuesday, medical device company MDT affirmed FY04 estimates and
said it would provide quarterly sales information later this
week.  The CEO claimed that the company doesn't need acquisitions
to meet its goals.  ZMH is pursuing a policy of acquisition, and
expects to close the deal to acquire Centerpulse on Thursday.
MDT declined Tuesday, and so did ZMH, but it's unclear whether
MDT's guidance had anything to do with ZMH's decline.
Performance proved mixed in the sector, with STJ and GDT gaining
while ZMH and SYK declined.

Wednesday, the RXP, the Morgan Stanley Health Care Products
Index, gained ground, and so did many of the medical-device
makers.  That included ZMH.

ZMH's chart depicts a symmetrical triangle forming at the top of
ZMH's rise.  Symmetrical triangles often prove to be continuation
patterns, with the presumption being that the break will be in
the direction of the move that preceded the triangle's formation.
That's not always true, of course, so play participants should
watch the lower trendline of that triangle, too.  The triangle
forms above the midline support of the regression channel,
another bullish sign, but it's still possible that ZMH might
retreat to that midline again.  We've raised our stop to $53.90,
just below the rising 21-dma (in blue on the chart).  New entries
could be sought on a break above the symmetrical triangle's upper

Why This is our Play of the Day
The move has come in rather staccato fashion, but ZMH looks like
it finally broke out on Thursday, registering a new closing high,
its first ever above $56.  The stock isn't tearing up the charts,
just gradually advancing a bit at a time.  That is nice because
it provides occasional pullbacks for fresh entries.  Most
recently, ZMH dipped back to the 10-dma near $55 and rebounded
smartly on Wednesday.  If the past points to the future, then we
want to look for successive rebounds from the vicinity of the 10-
dma (currently $55.22) as viable entry points.  Now that we have
our stop at break even, it's just a matter of ratcheting that
stop up, keeping it below the 20-dma  For now, we'll leave that
stop at $53.90, but look to tighten it if we see more strength
going into the weekend.

Annotated Chart of ZMH:

Picked on Sep 17 at   53.87
Change since picked:  +2.31
Earnings Date:    07/23/03 (confirmed)
Average Daily Volume:  1.81 million


  Closed Bearish Plays

UTStarcom, Inc. - UTSI - cls: 34.26 chng: +2.35 stop: 34.10*new*

Leave it to an upgrade to ruin a perfectly enjoyable bearish
play.  As of yesterday, our UTSI play looked to be resting up for
another leg down the chart.  That was before this morning's Buy
rating from BofA, which sent the stock soaring.  Fortunately, we
tightened our stop last night and that took us out of the play
with a small gain.  Nothing like what existed last night, but a
gain is a gain.  While the stock did retrace sharply throughout
the session, we're still advocating an exit here with our
violated stop.  Look for additional weakness of Friday to provide
a better exit point.

Picked on September 24th at  $35.08
Change since picked           -0.82
Earnings Date              10/23/03 (confirmed)
Average Daily Volume =     3.82 mln


  Closed Bullish Plays

Femsa Fomento - FMX - close: 37.60 change: -0.08 - stop: 36.59

Grupo Modelo, Mexico's top brewer, announced Wednesday that it
expected a 5 percent increase in U.S. beer sales, and also
announced a price increase on two brands.  These are the Corona
brands discussed in Wednesday's writeup.  BUD, which owns a
portion of Modelo, dropped on the news, and so did FMX.  Both
dropped on heavier-than-average volume, too, although FMX's
volume far exceeded that of its U.S. counterpart.

Although it's possible that FMX will again find support at its
200-dma or even at the 30-dma, today's bearish candle offers
nothing that supports a bullish entry in the play.

Picked on Sep 24 at  38.46
Change since picked: +0.86
Earnings Date:    07/28/03 (confirmed)
Average Daily Volume:  299 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

PBR     Petroleo Brasileiro Sa     24.26     +1.05
HNZ     H. J. Heinz Co             35.24     +0.64
LEN     Lennar Corp                82.75     +0.60
WEN     Wendy's Intl Inc           34.20     +1.10
LEA     Lear Corp                  57.14     +2.67
PNP     Pan Pacific Retail         43.79     +0.74

Breakout to Upside (Stocks $5 to $20)

CMVT    Comverse Technology Inc    16.27     +1.26
RMBS    Rambus Inc                 18.07     +1.03
ALKS    Alkermes Inc               14.77     +1.04
CGFW    Cyberguard Corp            11.46     +1.13
DGII    Digi Intl Inc               7.91     +1.11

Breakout to Upside (Stocks over $20)

MBT     Mobile Telesys            81.40     +3.00
MYL     Mylan Labs                41.46     +2.46
GGP     General Growth Properties 73.25     +1.10
ASH     Ashland Inc               35.54     +1.66
THO     Thor Industries           58.86     +2.86
CNX     Consol Energy             20.09     +1.13
NFLX    Netflix Inc               40.97     +6.46

Breakout to Downside (Stocks over $20)


Recently Overbought With Bearish Signals (Stocks over $20)

TROW    T.Rowe Price               40.95     -1.11
STRA    Strayer Education          95.49     -3.30

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