PremierInvestor.net Newsletter Thursday 10-09-2003 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: Happy Birthday Watch List: WGO, MYG, CLE, CHS and more! Market Sentiment: Happy Anniversary ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-09-2003 High Low Volume Advance/Decline DJIA 9680.01 + 49.10 9768.69 9633.20 1.96 bln 1985/1225 NASDAQ 1911.90 + 18.10 1936.93 1899.21 2.10 bln 1917/1280 S&P 100 518.48 + 1.94 523.41 516.51 Totals 3902/2505 S&P 500 1038.73 + 4.95 1048.28 1033.78 W5000 10092.92 + 54.30 10183.38 10038.58 RUS 2000 521.34 + 5.66 526.40 515.68 DJ TRANS 2850.73 + 59.10 2876.46 2792.97 VIX 18.82 - 0.36 19.28 18.26 VXN 28.84 - 0.32 28.99 27.79 Total Volume 4,377M Total UpVol 2,947M Total DnVol 1,343M 52wk Highs 1060 52wk Lows 14 TRIN 0.74 NAZTRIN 0.75 PUT/CALL 0.76 ================================================================= =========== Market Wrap =========== Happy Birthday My how you have grown in one year. October 10th 2002 was the bottom of the two year bear market and the birth of the new bull that we are experiencing now. The Dow bottomed at 7197 and has rebounded +2483 points (+34.5%) in the last 12 months. The Nasdaq bottomed at 1108 and has gained +804 points (+72.5%) to threaten 2000 once again. The S&P hit 769 before rebounding to 1038 today. (+34.9%) The million-dollar question is this, "what is the average rebound from a bear market bottom?" Dow Chart Nasdaq Chart S&P Chart Before I answer that question we need to wade through the market data for today and there was not a lot. In fact it was pretty limited. Jobless Claims fell to 382,000 and -13,000 below estimates. This was the lowest level in eight months. You would have thought they had said 382,000 people found new jobs last week from the market reaction. Futures exploded despite the upward revision to 405,000 for the prior week. Analysts were quick to point out that a slight drop in layoffs was a big leap from a pickup in hiring. Continuing claims fell only -7,000 to 3.63 million. Jobs are still tough to find and until that changes we should not expect the Jobless Claims to continue dropping significantly. The market rose on a stabilization of employment not a jobs celebration. A reader sent me an analysis of the jobs situation from a viewpoint I had not considered. The nonfarm payrolls rose +57,000 last week for the month of September. He was from a hurricane state where according to him there was more than 57k workers hired to rebuild just the damage in his state. He speculated that across all the states with damage there would have been many more than that hired and that the employment would not be long term. If this is true then the Jobless Claims would have also been impacted and the October Jobs report could show a reversal of those gains. Just a different point of view from the trenches. Another positive for Thursday was a very strong Chain Store Sales number for September. The headline number rose +5.9% and well over the +3.5% number that had been reported as the official estimate. Even better was the breadth of the gains. All components saw bigger gains from August except discount stores which, while still strong at +5.8%, slowed slightly from the +6.4% rate in August. Apparel, department stores and wholesale clubs had their best month in over two years. Total store sales growth rose +10.8% and the fastest growth since Jan-2001. While analysts were rushing to upgrade earnings estimates again the Bank of Tokyo was warning that growth in October could slow to 4.5%-5.0%. They also had said they expected September to be 3.5%-4.0% in their last weeks estimate. Sales in September were up on the remaining tax rebate checks and colder weather in the north east which prompted early fall clothing purchases. October will see a boost from 307,000 autoworkers getting bonus checks of $3,000 from signing a new contract. That is nearly $1B being paid out but a small fraction of the previous tax rebate. Also helping cheer the bulls was the jump in the MAPI Survey to 68% for Q3 and the highest level in two years. This was the seventh consecutive quarter of expansion in the manufacturing outlook. All components except for inventory and profits increased. Shipments rose to 80 from 70, New Orders to 69 from 53 and Order Backlog to 69 from 56. This is very bullish but it is over a long period of time. This is a quarterly number but it shows the continued improvement in the sector. The low inventory number continues to predict a faster ramp up in production soon. However, the profits component will continue to suffer as reports out today outlined increasing capacity in China. Their exports to the U.S. now exceed $150 billion per year and are impacting nearly every sector of U.S. manufacturing. Import Prices fell slightly by -0.5% compared to estimates of +0.2%. The majority of the change was due to falling energy prices early in the month. The falling dollar also helped. Meat prices continue to rise due to an import ban on Canadian cattle and lumber prices rose due to the hurricane and increased buying by the government. Seems we have to supply all the plywood and sheetrock for Iraq due to the lack of a lumber industry in the desert. Oil prices are beginning to rise again so any dip in these numbers could only be temporary. Yahoo powered the markets higher today with its better than expected earnings and improved guidance. Short covering was rampant in YHOO, AMZN and EBAY with AMZN roaring to a high of $59 and EBAY sprinting to within $3 of its all time high of $63. You would think bubble mania had returned to Internet stocks except it was broad based across all sectors. There was over 1000 new 52-week highs and only 15 new lows. Earnings estimates were being ratcheted up yet again and as one trader said, "expectations are higher than when Adam met Eve." Those expectations took a slight hit when the CEO Conference did not produce any evidence of future confidence. The IP CEO was on CNBC several times bragging about cost cutting but saying he saw no sustainable increase in orders. The various surveys taken by attendees showed they expected the economy to remain flat to only slightly up over the next year. Participants were equally divided between those that were seeing a slight increase ahead and those seeing a slight decline. The biggest hindrance to future gains was seen as a growing excess in global manufacturing capacity and increased price competition. Despite the calming influence of the CEO Conference the markets roared into the stratosphere and new 52-week highs all around with the Dow up +140 at noon. Dow 10,000 comments were flying and traders were back slapping each other on their good fortune. Then Uncle Ben took to the podium. Ben Bernanke took the stage in London and the headline on the wire services was "Bernanke says, Too soon to say if the recovery was sustainable." Like an under age drinking party with cops at the door the party goers raced for the exits. While the -100 point drop from the highs was dramatic it was not material. The damage to the bears psyche was already done and bulls rushed to buy the dip. New highs and better than expected earnings were just signs of the future according to the bulls. The dollar rallied overseas overnight, gold fell and bonds were selling off. All positives for the equity market. There simply seems to be nothing on the horizon to put out this fire regardless of how high it blazes. The bears continued to claim over valuation in excess of bubble market levels in some cases and no surge in IT spending. The bear battle cry is "good news priced in". With better than expected earnings apparently the order of the day it is hard to convince traders that better times may not be ahead. The problem will remain until the pony appears. If your daughter spends the month before her birthday buying riding clothes, boots, whips, helmets, etc in anticipation of getting a pony for her birthday there will be hell to pay if the pony does not appear. Today it looks like the earnings will appear on schedule and until there is reason to worry the bulls will continue to party. Just how long can they party? For the answer to the initial million dollar question consider the following facts. The average bear market lasts 6-12 months. The bear market that ended on Oct-10, 2002 was the longest bear market on record since the great depression. According to Ned Davis Research the average bear market is 418 days while the average bull market lasts 673 days. The average bear market knocks -31% off the Dow while the average bull market adds, are you ready, +81% to the Dow. If the last bear market was the worst ever knocking -4553 points off the Dow high of 11,750 (-38.7%) then might we expect at least the average bounce of +81%? If your answer was yes then take a deep breath before calculating the answer. If the averages hold the Dow could hit 13,026 in the next 307 days. While I doubt it and I am sure even then most blatant bulls doubt it that is what the averages predict. Obviously, we cannot rely on averages except over very long periods as in decades or dozens of bull/bear markets. Averages are the tools of statisticians and historians. Historically October is known for dramatic dips but the biggest dip we have seen so far is the -23 point drop on Wednesday. So far in October the Dow is up exactly +400 points with bullish sentiment in the extreme. I confess I thought we were going negative for the day when the afternoon drop began. I see no reason for it but we don't always know the reason in advance. When profit taking begins in earnest it can take on a life of its own and there does not have to be a reason. We are roaring into the last three weeks of October with option expiration week just ahead. If there was ever a period of time to be cautious this is it. We will get GE earnings on Friday but no fireworks are expected there. That sets up a potential for a negative surprise if they caution about economic conditions. GE is normally seen as a proxy for the economy and as such the earnings are critical. Not for the earnings because everybody expects an inline report but for the guidance. GE reported two weeks ago that orders for its plastics division were down -5% and plastics supplies 10% of GE earnings. The plastics division is also seen as a proxy for the market because nearly every manufactured product contains plastic. Once the GE earnings are public tomorrow morning the potential for a bout of profit taking increases for Friday. Even if GE earnings are positive there may be just too much profit for traders to resist the urge to take some off the table. Dow 9600 would be the best estimate of a target and it would probably be bought heavily. The flood of earnings does not really begin until next week and traders are looking forward to some big names like INTC on Tuesday and IBM on Wednesday along with over 250 other companies. Market Breadth Volume for Thursday was strong with nearly 4.4 billion shares traded. Advancing volume was 2:1 over down volume. I posted the market breadth spreadsheet above last week to show how the market had been changing sides daily. From Aug-22 through Oct-2nd there was 109 billion shares traded. In the last five days we added nearly 20 billion shares. Note the update for this week that the top eight days have been very strong volume wise and most of that volume has been on the upside. This market breadth is very bullish but with the big jump at the open traders would like to have seen a much stronger imbalance to the upside. It was strong but market technicians want to see 4:1 or 5:1 up volume on breakouts to confirm the move. This increases the potential for some cautious profit taking on Friday. Whether this potential comes true or not it has definitely been an exciting October week already and we still have three weeks to go! As I said last time, keep those seatbelts fastened as our thrill ride gains speed. 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 --------------------------------- Winnebago Industries Inc. - WGO - close: 50.33 change: +1.33 WHAT TO WATCH: Apparently consumers can still afford those luxury items and even having the summer travel season winding down hasn't put a damper on investors' appetite for shares of WGO. Not only is the stock challenging its August highs just above $50, but this is the site of major weekly resistance going back to early 2002. Use a break above today's intraday high ($50.75) to initiate new positions and look for a near-term move to $55. --- Maytag Corp. - MYG - close: 28.32 change: +0.73 WHAT TO WATCH: With Housing stocks and the Home Improvement Retailers like LOW and HD soaring to new highs, shares of MYG are starting to catch the bullish fever and have rallied smartly over the past 7 sessions, coming right up to near-term resistance near $28.50. Look for a breakout over that level to have upside into the $31-32 area heading into earnings. This is a more aggressive play though, as the company is set to report its results next Thursday, meaning that the move will have to occur quickly. --- Claire's Stores, Inc. - CLE - close: 38.76 change: +3.03 WHAT TO WATCH: There was lots of positive news in the Retail arena on Thursday and CLE added to the positive tone with an upside guidance revision for the October quarter, leading to a more than 8% rally. This isn't the sort of move we want to chase, especially after such a large gap. But a pullback to fill the gap and confirm broken resistance at $36 as new support would provide an ideal entry point ahead of a continued rally into earnings in early November. --- Chico's FAS Inc. - CHS - close: 35.31 change: +2.75 WHAT TO WATCH: Delivering a powerful breakout from a bullish wedge pattern was enough to put smiles on the bulls' collective faces, as the stock gained nearly 8.5% to close at new all-time highs. As is the case with CLE, we can't justify new entries after such a strong upward move, but a pullback and rebound from $33.50-34.00 would be a great continuation entry. Target a move to the $40 area ahead of earnings on November 26th. =================== On the RADAR Screen =================== TARO $62.05 - Where are the shorts? That's what the bears want to know, as TARO has blasted through major resistance near $59 and is surging to new all-time highs. It feels like a bit of a chase right here, but a pullback into the $59-60 area could make for a very nice entry ahead of a final run into earnings on October 23rd. ISLE $20.52 - It seems everyone is up for a little fun and games lately, and ISLE is trying to make a break into the big time. After consolidating between $19-20 for more than a month, buying volume is on the rise and a breakout appears imminent. Look for a move above $20.65 before playing and target a move to $22-23. AA $29.68 - One of the first to report earnings, AA certainly didn't disappoint, beating estimates by 3 cents. After a bit of indecision, investors are bidding the stock higher and drove it to fresh 52-week highs on Thursday. Enter on either a pullback near $29 or breakout over $30, looking for a move to the $33 level in the weeks ahead. =============================== Market Sentiment =============================== Happy Anniversary - J. Brown It was one year ago today that both the DJIA and the NASDAQ Composite marked their closing lows for the bear market. The following session, October 10th, 2002, saw additional weakness in the morning and then a surge higher. That rally was the beginning to a bull market that has lifted the DJIA almost 2400 points or nearly 33%. The NASDAQ has gained almost 800 points or more than 71%. How appropriate that both indices tagged new one-year highs today. As one can imagine the current bull market both excites and scares some investors. Is it too late to get in? Did I miss it? Are some of the concerns that patient investors have been feeling as they watch the markets climb. Others dove in and are relishing the heady gains in tech stocks. Yahoo's earnings news after the bell last night brought back fond memories of the bubble days (if you're bull) and concerns that it could all pop (if you're a bear). Considering that AMZN is trading near levels not seen since May of 2000 and EBAY came within a couple of points of its all-time bubble highs near March of 2000 it's not a surprise why some might fear for valuations. Fortunately, we have some enthusiastic economic news to support much of the positive attitude. This morning opened with a positive surprise in the initial jobless claims. First-timers dropped to 382,000, which is the lowest level since February 8th. Enthusiasm that corporations might begin hiring again could really keep the rally going. The super strong September same- store sales numbers is another encouraging factor for investors. Many analysts are now very positive on the upcoming Q4 holiday sales season. Plenty of stores do the vast majority of their yearly revenues in just the last two months of the year. It's no secret that more than 2/3rds of this country's GDP is based on the consumer so it's good news that we're actually seeing an increase in sales. However, not everyone was cheering. Skeptics were quick to point out that September's same-store sales numbers only look this good because last September was so bad. Market internals today were bullish with advancers out numbering decliners almost 18 to 10 on the NYSE and 18 to 12 on the NASDAQ. Up volume was very strong today. Readers hear us talk about the strong breadth of the markets but may not realize what this means or looks like. The bullish percent is a measure of how many stocks are currently on a point-and-figure chart buy signal. Currently, the bullish percent reading for the S&P 500 has been and is still at 5-year extremes near 80 (out of 100) and actually looks poised to climb higher. This technically a bearish reading, but it's been pegged there for quite some time. Tomorrow will bring the September PPI numbers but Wall Street will also be watching for General Electric's earnings report. GE used to be considered a proxy for the market as a whole because it is so big and has so many different business divisions across different sectors. The last couple of years there has been a disconnect but once again commentators are looking to GE as a market indicator. It certainly brings back (bullish) memories but be careful. The markets are definitely short-term overbought and are in need of a rest. The new low on the VIX is concerning and the candlestick on on the DJIA looks like a potential one-day reversal pattern. There is no reason to chase new highs. Be patient and wait for your entry point. As one financial commentator said today, this bull market could easily have another 12 to 24 months to go. If you missed your entry point there will be another one. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9768 52-week Low : 7197 Current : 9680 Moving Averages: (Simple) 10-dma: 9507 50-dma: 9406 200-dma: 8733 S&P 500 ($SPX) 52-week High: 1048 52-week Low : 768 Current : 1038 Moving Averages: (Simple) 10-dma: 1021 50-dma: 1007 200-dma: 936 Nasdaq-100 ($NDX) 52-week High: 1418 52-week Low : 795 Current : 1396 Moving Averages: (Simple) 10-dma: 1356 50-dma: 1322 200-dma: 1159 ----------------------------------------------------------------- The DJIA and the NASDAQ Composite both tagged new highs today and in a mirrored reflection of the two, the VIX hit a new low. Bullish traders should be careful. The candlesticks on the indices above look like potential one-day reversal patterns and the new low in the VIX doesn't help matters. CBOE Market Volatility Index (VIX) = 18.82 -0.36 Nasdaq Volatility Index (VXN) = 28.84 -0.32 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.76 789,341 601,330 Equity Only 0.61 633,635 387,421 OEX 1.16 36,187 41,950 QQQ 3.89 18,087 70,429 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 73.2 + 0 Bull Confirmed NASDAQ-100 77.0 + 3 Bear Confirmed Dow Indust. 83.3 + 0 Bull Correction S&P 500 80.0 + 2 Bull Confirmed S&P 100 79.0 + 0 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 0.89 10-Day Arms Index 1.05 21-Day Arms Index 1.18 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 points. ----------------------------------------------------------------- Market Internals -NYSE- -NASDAQ- Advancers 1787 1859 Decliners 1041 1227 New Highs 274 216 New Lows 13 5 Up Volume 1289M 1352M Down Vol. 596M 658M Total Vol. 1913M 2061M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 09/30/03 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 Wow! It looks like the commercials traders went to sleep. There was almost no change in either the number of longs or number of short positions. Everyone must have been waiting on the September Jobs report. Small Traders were upping their bets with small increases in both longs and shorts but still heavily long. Commercials Long Short Net % Of OI 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%) 09/30/03 395,713 397,577 ( 1,864) (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 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% 09/30/03 144,681 96,801 47,880 19.8% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 We did see some movement in the e-minis. Commercials added about 50K new longs while only adding 14K new shorts. Small Traders took some money off the table with a redemption in their longs by more than 40K. However, small traders are still heavily bullish. Commercials Long Short Net % Of OI 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%) 09/30/03 163,828 218,991 ( 55,163) (14.4%) 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 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% 09/30/03 131,698 65,259 66,439 33.8% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Much like the large S&P futures contracts, the commercial traders appear to be asleep with very little change this last report. Small traders were also comatose with just a couple of thousand new long contracts. Commercials Long Short Net % of OI 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%) 09/30/03 33,571 42,993 ( 9,422) (12.3%) 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 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% 09/30/03 19,803 9,917 9,886 33.3% 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 There seems to be a theme here for commericals... no movement. This time the small traders joined them in their sit back and wait mode. Commercials Long Short Net % of OI 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% 09/30/03 16,561 8,932 7,629 31.5% 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 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%) 09/30/03 7,578 8,125 ( 547) ( 3.5%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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PremierInvestor.net Newsletter Thursday 10-09-2003 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: Testing Resistance 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 ) =============== TYCO Intl. - TYC - close: 21.73 change: +0.38 stop: 19.99 Company Description: Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. (Source: Company Press Release.) Why we like it: Tuesday, as opening statements began in the trial of TYC ex-CEO Dennis Kozlowski, we counted six articles focusing on the trial. TYC nevertheless managed another bounce from its rising trendline that day. Wednesday ended with TYC again above that trendline, but the doji's short lower shadow would probably not count as a bounce. On a day when the Dow lost 0.25 percent, we're satisfied with TYC's minimal 0.05 percent loss. TYC's climb this week has been so gradual that it could more nearly be described as consolidation. In keeping with that consolidation, the indicators flattened, with stochastics and RSI flattening along trendlines they had previously violated. Still, we can't ignore that doji sitting at the top of TYC's most recent climb. Such doji indicate indecision, but they can also signal a trend change. This one's opening and closing prices are positioned in the middle of the small gap from mid-September. TYC perhaps had trouble battling its way above that gap, especially as the weak performance of the broader markets offered it little momentum. If that doji does signal a potential reversal, however, the first line of defense will lie at the moving averages grouped between $20.21 and $21.00. Conservative traders might position their stops beneath the 30-dma, while more aggressive traders might feel comfortable with our current $19.99 stop, just below the rising 50-dma. Because of those small- bodied candles and Wednesday's doji, traders might wait for a break above $22.00 for new entries. Why This is our Play of the Day Certainly, a breakout to new 52-weeks would have been preferable, but in light of the sharp retracement in the overall market at the end of the day, we're willing to cut TYC some slack. The early strength was enough to propel price up to exactly match the intraday high from 9/24 before falling back to end very near the opening price. This $22 level is a key resistance level and a breakout above there should be good for upside continuation, first towards $25, which is both the site of the May 2002 highs, as well as the top of the April 2002 gap. TYC continues to work higher in an ascending channel that has been building since the March lows, so dips near the bottom of that channel (currently $20.50) can be used for new entries. Additionally, momentum entries on a breakout over $22 look attractive here. For now, we're maintaining our stop at $19.99 and looking for a run at the $25 level. Annotated Chart of TYC: Picked on Sep 21st at $21.90 Change since picked: -0.17 Earnings Date: 11/04/03 (confirmed) Average Daily Volume: 9.54 mln ================== 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 PTR PetroChina Co Ltd (ADS) 36.90 +0.99 CHL China Moble Ltd 15.08 +0.57 KTC KT Corp 21.00 +0.54 IR Ingersoll-Rand Ltd 58.51 +1.06 LEN Lennar Corp 85.43 +1.06 MYG Maytag Corp 28.32 +0.73 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- AMR A M R Corp 14.85 +1.50 DDS Dillard's Inc 16.07 +1.37 NWAC Northwest Airlines 11.93 +1.39 ALGN Align Tech Inc 15.38 +1.89 MTSN Mattson Technology 10.78 +1.05 DJO DJ Orthopedics 15.45 +1.45 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- YHOO Yahoo! Inc 42.75 +3.96 IACI InterActive Corp 37.71 +1.30 AMZN Amazon.com 57.86 +2.16 AA Alcoa Inc 29.68 +1.01 TJX TJX Companies 21.20 +1.11 FD Federated Dept Stores 45.60 +1.20 FDO Family Dollar Stores 42.40 +1.02 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- KSS Kohl's Corp 53.00 -1.89 CA Computer Associates 25.95 -3.01 IMDC Inamed Corp 68.38 -2.49 ODSY Odyssey Healthcare 28.45 -1.62 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- MAR Marriott Intl Inc 43.10 -1.64 KIND Kindred Healthcare 38.66 -1.48 IRM Iron Mountain Inc 35.92 -0.30 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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