PremierInvestor.net Newsletter Thursday 10-16-2003 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: Under Whelming Watch List: STCR, WEBX, XMSR, JBHT and more! Market Sentiment: Tug of War ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-16-2003 High Low Volume Advance/Decline DJIA 9791.72 - 11.30 9823.42 9730.38 1.71 bln 1848/1314 NASDAQ 1950.14 + 11.00 1951.76 1930.28 1.76 bln 1822/1355 S&P 100 523.51 + 1.37 525.06 520.44 Totals 3670/2669 S&P 500 1050.07 + 3.31 1052.94 1044.04 W5000 10210.84 + 36.00 10234.32 10152.12 RUS 2000 529.64 + 2.29 530.49 526.05 DJ TRANS 2872.58 + 8.90 2891.61 2865.78 VIX 17.19 - 0.50 18.05 16.86 VXO VIX-O 19.12 - 0.14 19.83 18.70 VXN 25.47 - 1.30 27.13 25.37 Total Volume 3,729M Total UpVol 2,332M Total DnVol 1,313M 52wk Highs 675 52wk Lows 16 TRIN 0.97 NAZTRIN 0.94 PUT/CALL 0.65 ================================================================= =========== Market Wrap =========== Under Whelming That was the term used to describe earnings reports from several Dow components that failed to live up to the great expectations. IBM, CAT and MO failed to impress investors and between the three they were responsible for over -50 Dow points. Take those three stocks out of the mix and the Dow would have set another new high. Interesting statistic but if small consolation to those expecting a continued rally. Dow Chart Nasdaq Chart S&P Chart It was a day of mixed economics but those that were positive were very positive. The Jobless Claims dropped to 384,000 and an eight month low. Ring a bell? That is because last weeks claims were also an eight month low at 382,000 but those numbers were revised up +6,000 to 388K. That took away the eight month title and passed it to this week with a higher number. Just word games but the bottom line was two consecutive weeks under 400K and the four-week moving average fell to the lowest level since February. Continuing claims rose to 3.67 million and a level not seen since June-28th. Layoffs may be easing but jobs are still hard to find. Last week the markets rallied strongly on the drop to 382,000 claims but this week they barely noticed. The Manpower CEO said that despite some recent signs of minor improvement he was unable to call an end to the current labor problems. His company is a leading indicator of job growth and he said improvement was still weak. The Consumer Price Index jumped +0.3% in September with energy prices continuing to rise. The core CPI rose only +0.1% and pushed the annual rate to a new 38 year low of +1.2%. Obviously the pricing environment remains very weak and this prompted Fed Governor Parry to warn that inflation could fall further and that deflation was still the bigger risk. The markets ignored his comments. Business Inventories fell more than expected at -0.4% compared to estimates of only a -0.1% drop. While this is a cause for concern this was August data and the market does not normally react to it. The same information is reported in several other reports on a more timely basis. This was the fourth consecutive monthly drop in inventories. Total business sales also fell in August by -0.2%. The inventory-to-sales ratio is at an all time low of 1.36. This would indicate a rapid buildup could occur if demand were to increase. That increase has yet to happen. Industrial Production rose +0.4% as expected but August was revised from a minor gain to a minor loss at -0.1%. This indicates only a very minor pickup in manufacturing. Automakers were responsible for the majority of the gains with incentives enticing even more consumers to upgrade. Capacity Utilization rose only slightly to 74.8% from 74.5% in August. With 25% excess capacity there is no need to buy more equipment or upgrade plants. This excess capacity is contributing to the decline in prices and drop in inflation. The NAHB Housing Index rose to 72 from 68 in September and jumped to the highest level since December 1999. The dip in mortgage rates over the last month prompted a quick rebound in housing activity. All components of the index were up. The seasonal activity also helped with homes hitting the market from the spring starts. While these numbers are up the number of new mortgage applications is already slipping and could be the beginning of a long term trend. Of course the housing bears have been claiming this for many months and the sector continues to grow. The most bullish report was the Philly Fed Survey, which blew away estimates of 16.0 with a headline number of 28.0. This was far better than anyone had expected and was the fifth consecutive month of expanding conditions. Shipments, New Orders and Employment rose strongly. However, inventories fell to -2.5 and the six month outlook fell to 55 from 66. This mix of conditions indicate that there may have been a burst of activity but the long term outlook has not really improved. Because most manufacturers receive orders and bids for orders many months in advance the business they received last month was expected many months ago. They are now looking at orders for 3-6 months from now and without some increase in demand soon those orders may not come through. Several analysts mentioned today that the 1Q-2004 could actually be weak as the real 4Q business patterns are reviewed. Everyone is expecting a strong 4Q but as of yet it is still just an expectation. If it appears on schedule then we could be off to the races but if it is weaker than expected then the 1Q could see yet another round of cost cutting. Last night we got earnings from IBM and as the headline to this article said, the results were less than exciting. The company met estimates and even said they could see hiring 10,000 new employees next year. Investors were not impressed. The key comment came from the CEO who said that although he was seeing signs of stabilization "it was too soon to call it a recovery." When coupled with Intel's comments that they were seeing strength in Europe/Asia but the U.S. orders were still soft you can see why tech investors were becoming worried. 4% of IBM earnings came from currency gains and not sales. Dow component IBM lost -3.46 for the day. Another Dow component Caterpillar lost -4.02 after raising its outlook for 2003 to $3.00. Sounds good but analysts were already expecting CAT to make $3.15 and the stock was punished severely. CAT said retirement of $40 million in bonds and higher costs offset gains in sales. They stressed gains made in cost cutting but that does not normally please investors. KO missed estimates by two cents despite a +2% gain in profits from currency gains. They were upbeat about sales and outlook but the two cent miss knocked nearly -$1.00 off the stock at the open. It recovered to close at $44.99 and +50 cents off its lows. Another Dow component, MO, reported earnings of +1.22 per share and beat the street by a penny but sales were slipping. Revenue jumped +4.7% to $20.9billion but primarily due to a favorable currency gains of +$940 million. Again, not a normal gain and MO dropped at the open but regained most of the losses by the close. Dow component HON reported earnings that dropped -20% but were inline with analysts estimates. They also guided inline with analyst estimates for Q4. Yet another Dow component UTX beat the street by three cents on the strength of its elevator business overseas. UTX was one of the strongest gainers with a +70 cent bounce to a new 52-week high. After the close there was a flurry of tech earnings as over 200 companies reported today. The overall tech earnings were positive tonight with BRCM, XLNX, AMD, AVID, DCLK, LEXR, PMCS, PLCM, RMBS, WEBX, FCS and ATML all beating the street. Only PXLW missed estimates. EBAY was the biggest company to report. They hit their numbers and raised THEIR estimates for revenue but their estimates for Q4 were for less than analysts had expected. EBAY dropped nearly -$4 in after hours. EBAY has a habit of disappointing analysts who constantly expect them to earn more. The estimates are always more than EBAY's and almost always sets up a failure situation. Despite the few high profile misses today earnings are coming in above expectations with 92% of the S&P companies either meeting or beating estimates. This is a very strong ratio but they are competing against a very weak 2002-Q3. Despite the weak comparisons First Call said the overall results were +6.4% above expectations. Top line growth is running at +8% and bottom line growth at +18%. There is positive momentum in almost all sectors. IDC reported today that PC shipments had risen +15% in Q3 with the strongest gains in Europe. In the U.S. growth was primarily in government and the consumer sector with slow growth in the business sector. IDC had previously projected +10.4% growth. The incentive was blowout specials and extreme competition in consumer PCs. Dell grew sales +27.9% with HPQ hot on their trail with a +28% gain. The combined sales of the next three vendors did not come close to those numbers. Dell is still in the top spot in the U.S. but HPQ is closing the gap according to IDC with strong momentum going into the 4Q. Dell's total market share for the quarter was 17.4% on 6.67 million units compared to HPQ at 17.1% and 6.55 million units. Not everyone was positive with NOK saying sales would be flat or only up slightly. They reported that prices were still falling due to intense competition. Maytag lost ground after saying that competition from cheaper products primarily in the vacuum cleaner sector had impacted results. They are closing plants and restructuring in an effort to lower costs to compete more effectively in the market. They are shifting their manufacturing to Mexico to benefit from the cheaper labor. Sounds familiar. Analysts expected 57 cents and MYG posted only 46 cents. HDI continued to fall on reports of stagnant sales and fears they would miss 4Q estimates. Sales slipped in the 3Q from the prior year and analysts fear they are a leading indicator for a slow down in the consumer sector. HDI is normally exempt from economic conditions as they are normally back ordered on their popular models. They announced plans to only increased the 2004 production estimates by +8.9% and contrary to historical double digit trends. If the sales growth trend has changed it could project weakness in the other high end toys and luxury cars. While the earnings picture is really very positive the mixed messages from a few high profile misses and opposing economic signals worked to keep the Dow locked in its trading range for one more day. The Dow has been trading between 9700-9800 for the last six days. It closed once again under 9800 and could either be poised to rocket ahead or begin profit taking once earnings are over. The Dow has been very strong and the bulls are still supplying an underlying bid on every dip. The Nasdaq managed to close at a new 52-week high but still below the intraday high set yesterday. The flurry of great tech earnings after the close are being overshadowed by the guidance change by EBAY and the massive after hours drop. The Nasdaq futures are down -4.00 but like IBM last night the broader strength in chips could offset the EBAY loss by morning. Friday is option expiration and the volume today was very light. The direction for the averages is still up for grabs and after more than 200 companies reporting earnings today the good news is likely to be priced in. With 92% of companies beating estimates, as expected, there may not be enough excitement left to push the indexes much higher. I speculated this week that Thursday could be the market high and next Tuesday the pivotal day once expiration settlement has occurred. I still believe that Tuesday will be critical and it remains to be seen if the indexes will trend down from here on year end fund selling over the next two weeks. The lack of any upward progress over the last week could be telegraphing a cooling of the bullish sentiment. This cooling is far from a sure thing. I receive emails daily suggesting Dow 11,000 could be reached soon. With earnings estimates still rising for the 4Q, now officially at +22%, unofficially at +26%, there is plenty of reason to expect more gains before the year is out. However, once earnings are "perceived" to be over for this quarter the urge to take some cash off the table could be strong. Using the roller coaster analogy from Tuesday, after a long climb we are beginning to level out. We still cannot see over the top to glimpse what is ahead but the tension is building. If the normal trend is buy the rumor, sell the news then what rumors are investors going to buy next week? Friday is flat economically with only Residential Construction and the final revision of the October Consumer Sentiment. Neither should be market moving. Next week is blank economically with only the Semi Book-to-bill on Monday night of importance. This leaves nothing to stimulate investors except for more earnings and we already know how that book ends. Typically the farther we get into earnings the weaker they become. The bigger blue chips with the best earnings announce first with the crowd of small to midcaps stretched over the next three weeks. There are still some big names left for investors to follow so we have not reached the credits on the earnings movie yet. You do sit through the credits when you go to the movies, right? We still have MSFT, AMZN and MMM leading a list of over 700 companies that will announce next week. There will be plenty of news but the question is will it be enough news to power the markets higher? Keep those seatbelts fastened. 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 --------------------------------- Starcraft Corp - STCR - close: 33.51 change: -0.48 WHAT TO WATCH: This pick up truck and SUV maker has been channeling lower in a great bull flag consolidation pattern. Bulls just need to see a convincing breakout above its trend of declining highs to put shorts on the run. STCR's MACD indicator just turned bullish today as the stock price flirts with its simple 50-dma. Earnings are tough to nail down so do your homework. Our target would be $40.00. --- WebEx Communications - WEBX - close: 25.32 change: +2.10 WHAT TO WATCH: Closing at new 18-month highs and surging higher by 9 percent were shares of WEBX just hours before their Q3 earnings report. After the bell this afternoon the company announced earnings of 18 cents/share beating estimates by 4 cents. Revenues were up strongly and the company gave an upbeat guidance for the fourth quarter. The question now is whether or not that was a strong enough report to keep the shorts on the run. Shares have been enjoying a short squeeze with the latest numbers reporting short interest over 40% of the float. --- XM Satellite Radio - XMSR - close: 20.31 change: +1.48 WHAT TO WATCH: XMSR has also been hitting new highs in the month of October and shares hit a new one-year high today. We noticed that volume started coming in strong in the second half of the session fueling the rally. The $21 level has been resistance since November of 2000 and shorts could be panicking with the stock so near a multi-year breakout. XMSR also has very strong short interest near 40% of the float. --- J.B.Hunt Transport - JBHT - close: 25.02 change: -1.25 WHAT TO WATCH: Trucker JBHT has been rolling higher for months. Its double bottom in February and March of this year near $11.50 set the stage for a powerful rally to $28.50 last week. Now shares are under pressure as investors take profits. JBHT reported Q3 earnings on Tuesday of this week and the results were great. Revenues jumped to $622 million. Earnings were exceptional at 41 cents compared to last year's 21 cents and current estimates for 32 cents a share. Unfortunately, JBHT warned that the Q4 '03 would mirror last years where earnings slipped about 20% and the company would probably face another driver shortage. The stock has broken its rising channel and support at the simple 50-dma and the $26.00 mark. A 38.2% retracement of the March-October run would put JBHT near $22.00. =============================== Market Sentiment =============================== Tug of War - Linda Piazza Thursday, those who believe in an improving economy engaged in a tug-of-war with those who believe differently. With the sides equally weighted, U.S. bourses soon settled into the pin-them-to- a-number trading pattern that has become typical of Thursday's trading during option expiration week. Early earnings and economic releases did little to arm either side with more strength than the other. September CPI met expectations of a 0.1 percent increase, and core CPI increased 0.3 percent, slightly higher than the expected 0.2 percent increase. Initial claims fell 4,000 from the previous week's number, and capacity utilization and industrial production met expectations. The Nikkei closed above 11,000 for the first time in a month, but the European markets were headed down. Markets weighed IBM's outlook against Ford's. After digesting the various earnings reports, economic reports, and foreign market performances, market participants wrestled the markets to equilibrium levels . . . until the noon release of the October Philadelphia Fed number. At a surprisingly high 28, that Philadelphia Fed number far exceeded the previous month's 14.6 number and the expected 15.6- to-16 figure. Orders, hours worked, shipments, the number of manufacturers reporting improved business conditions, and the number of factories expecting to hire new workers in the next six months all rose. The release of that number armed the bulls and weakened the knees of the bears, initiating a wave of short- covering that drove the Dow from its 9758 level at noon to a high of 9823 an hour later. The S&P 500 spiked from 1047 to a high of almost 1053. Not one to be left out of a short-covering party, the COMPX scrambled from 1940 to almost 1952. Within two hours, however, the bears had managed to tug the bullish side back, with all three indices testing their pre- release levels again. Then shorts capitulated and the bulls sent the markets up again, although none of the markets reached their early afternoon highs. By the close, advancing issues had beat declining issues by 19:13 on the NYSE and 18:13 on the Nasdaq. Up volume beat down volume on both exchanges, and the new highs had reached 564, measured against only 14 new lows. Bullish sentiment prevailed. The battle may not be finished. After-hours reports included EBAY's warning that the company might miss Q4 earnings and SUNW's wider Q1 loss balanced against AMD's narrowing of its Q3 loss to 9 cents. Fortunately for those dizzied by the tug of war, earnings and economic reports lighten on Friday. Most earnings will be reported before the bell. Also released before the bell will be September building permits and housing starts. Building permits are issued when excavation begins and normally lead the housing starts figure. Although these were not market-moving numbers in the past, they have sometimes gained that status in recent months as the housing sector has become so important in our economy. They have been coming under closer scrutiny as the specter of rising interest rates looms over the sector. The prior numbers were 1.886 million building permits and 1.82 million housing starts, and the expectation is for a lower 1.835 million building permits and a higher 1.827 million housing starts. Housing starts had declined last month, but building permits had picked up, indicating that residential construction might remain strong several months out. Just after the market opens, the Preliminary October Michigan Sentiment number will be released. The previous number was 87.7, and expectations are for 88.2 for October. At 2:00 ET, the September Treasury Budget will be released, with expectations varying widely. However, with tomorrow being an option expiration Friday, we expect to see an early effort to establish an equilibrium level and hold the markets at that level throughout the day. Whether that effort will be any more successful than Thursday's effort remains to be seen. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9850 52-week Low : 7197 Current : 9791 Moving Averages: (Simple) 10-dma: 9697 50-dma: 9467 200-dma: 8767 S&P 500 ($SPX) 52-week High: 1053 52-week Low : 768 Current : 1050 Moving Averages: (Simple) 10-dma: 1040 50-dma: 1014 200-dma: 940 Nasdaq-100 ($NDX) 52-week High: 1439 52-week Low : 795 Current : 1426 Moving Averages: (Simple) 10-dma: 1401 50-dma: 1339 200-dma: 1169 ----------------------------------------------------------------- Hmmm... we're seeing new all-time lows on the Nasdaq's VXN and new lows for the adjusted VIX near 17. The old VIX (now VXO) is still flashing caution signs at 19. CBOE Market Volatility Index (VIX) = 17.19 -0.50 CBOE Market Volatility Index (VXO) = 19.11 -0.15 Nasdaq Volatility Index (VXN) = 25.47 -1.30 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.65 1,050,740 678,903 Equity Only 0.51 757,559 385,965 OEX 1.17 43,019 50,509 QQQ 7.71 29,874 51,017 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 73.8 + 0 Bull Confirmed NASDAQ-100 79.0 + 0 Bear Correction Dow Indust. 83.3 + 0 Bull Correction S&P 500 80.9 + 0 Bull Confirmed S&P 100 78.7 + 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 0.98 10-Day Arms Index 0.94 21-Day Arms Index 1.13 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 1661 1771 Decliners 1145 1285 New Highs 299 313 New Lows 13 6 Up Volume 1007M 1086M Down Vol. 609M 646M Total Vol. 1660M 1760M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 10/07/03 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 After two weeks of little movement we're beginning to see commercial traders edge toward a more bearish position. Looking at the small traders we see a reduction in short positions and they remain overall net bullish. Commercials Long Short Net % Of OI 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%) 10/07/03 390,232 402,964 (12,732) (1.6%) 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 09/09/03 176,401 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% 10/07/03 138,644 88,018 50,626 22.3% 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're definitely seeing a small trend in the commercials' positions in the e-minis. Long positions have jumped strongly, outpacing new short positions, and the overall net short attitude is dwindling. Retail traders remain heavily net long. Commercials Long Short Net % Of OI 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%) 10/07/03 212,273 225,377 ( 13,104) ( 3.0%) 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 09/09/03 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% 10/07/03 134,990 63,560 71,430 36.0% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 We're still not seeing much movement in commercials willing to commit one way or the other in the NDX. They're currently net short but the margin is fading. Small traders haven't changed much either and remain net long. Commercials Long Short Net % of OI 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%) 10/07/03 33,253 40,861 ( 7,608) (10.3%) 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 09/09/03 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% 10/07/03 18,182 9,688 8,494 30.5% 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 It's the same story here in the DJ futures. There is little change between the commercials or the small traders over all positions. Commercials Long Short Net % of OI 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% 10/07/03 16,277 9,528 6,749 26.2% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 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%) 10/07/03 7,392 7,910 ( 518) ( 3.4%) 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 10-16-2003 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: Pushing Higher Tech Stocks Closed Bearish Plays: HTCH Stock Splits/Announcements: LSTR 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 - TYC - close: 22.35 change: +0.45 stop: 20.79 - 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.) - Most Recent Update on TYC, Oct 15, 2003 - Although press releases with TYC in the headline still tended to center on Kozlowski's trial, one press release this week noted that the US Court of Appeals for the Ninth Circuit affirmed a $24 million judgment against Bourns, Inc., with that judgment in favor of TYCO Electronics. Bourns manufactures electronic components, and the suit involved misappropriated trade secrets and interference with employee contracts. It was filed by Raychem, predating TYCO Electronics' purchase of Raychem. TYC also announced that it was hiring Trammell Crow (TCC) to help the company develop a plan to cut its real estate costs. The company also announced a $4 million deal awarded to one of its units, Tyco Healthcare Group. While these developments occurred, TYC consolidated beneath the $22.00 resistance. Wednesday's drop on big volume looked worrisome, but a study of the intraday chart showed a huge volume spike early in the day when TYC was moving up toward $22.00. The majority of the day's volume occurred on that move. Other indicators proved inconclusive, as stochastics begin to trend in overbought territory, MACD flattens, and RSI tries to turn down. The downturn in RSI may be troublesome, however, as it's turning down from a lower high while price is making an equal high. That could be bearish divergence if the RSI rollover continues. New entries can still be sought on pullbacks and bounces from above $21.25, while those who prefer to enter on momentum can wait for a breakout above this week's $22.09 high. - Why This is our Play of the Day - Despite the steady stream of potentially negative press releases and news articles shares of TYC just keep on climbing. The trend of higher lows has blossomed into a breakout over the $22.00 level and the $22.09 mark we suggested as a trigger yesterday. Volume was decent with 11.4 million shares compared to the average of just 8 million. Traders can hope for some follow through on the breakout tomorrow but if the markets are weak, look for a dip back to $22 as an entry point. Annotated Chart for TYC: Picked on Sep 21 at 21.90 Change since picked: +0.45 Earnings Date: 11/04/03 (confirmed) Average Daily Volume: 8 million ================================================================== Net Bulls (NB) Tech Stock section ================================================================== -------------------- Closed Bearish Plays -------------------- Hutchinson Tech. - HTCH - close: 35.29 change: +1.87 stop: 34.75 Unfortunately, our caution on HTCH was justified today. There appeared to be no news-driven reason for the run up but HTCH surged 5.59% today. The move pushed through resistance at its 21 & 30-dma and resistance near $34.50. HTCH's MACD now looks bullish. We've obviously been stopped out at $34.75. Picked on October 8th at $32.20 Change since picked +3.09 Earnings Date 11/03/03 (confirmed) Average Daily Volume = 503 K ================================================================== Stock Splits/Announcements ================================================================== LSTR lands a 2-for-1 stock split Before today's opening bell, Landstar System, Inc's (NASDAQ:LSTR) Board of Directors declared a 2-for-1 stock split of its common shares. The payable date on the stock split is November 13th, 2003 to shareholders on record November 3rd. This is LSTR's second stock split since being listed on the NASDAQ in 1993. About the company: Landstar System, Inc. is a non-asset-based provider of transportation capacity delivering safe, specialized transportation services to a broad range of customers throughout North America. The company identifies and fulfills shippers' needs through the coordination of individual businesses comprised of independent sales agents, business capacity owners, and other transportation capacity providers. The term, business capacity owner, refers to Landstar's independent contractors who operate a small business and provide the equipment necessary to haul freight. (Source: Company Web Site) ================== 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 ALL Allstate Corp 39.90 +0.73 PGR Progressive Corp 75.35 +0.85 HRB H&R Block Inc 47.00 +1.25 TXT Textron Inc 47.15 +0.64 LUK Leucadia Natl 40.54 +0.69 UDI United Defense Industries 30.51 +1.39 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- ADIC Advanced Digital Info 17.63 +1.11 GNSS Genesis Microchip 16.50 +1.30 NENG Network Engines Inc 10.00 +1.11 MNTG Mtr Gaming Group 10.88 +1.03 CCRD Concord Communications 18.04 +1.74 WJCI WJ Communications 6.10 +1.44 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- UNH UnitedHealth Group 53.38 +2.05 FO Fortune Brands 62.63 +1.88 QLGC QLogic Corp 53.89 +2.41 RDN Radian Group 50.90 +1.40 BCR C.R.Bard Inc 76.83 +3.53 CYN City National Corp 56.95 +3.21 XMSR XM Satellite Radio 20.31 +1.48 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- IBM Intl Business Machines 89.28 -3.46 CAT Caterpillar Inc 74.33 -4.39 AAPL Apple Computer Inc 23.25 -1.57 MIL Millipore Corp 41.92 -6.00 JBHT JB Hunt Transport 25.02 -1.25 DLX Deluxe Corp 39.29 -1.71 PNR Pentair Inc 36.85 -3.21 FBAN FNB Corp 32.70 -2.38 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- S Sears Roebuck & Co 48.80 -2.61 DE Deere & Co 56.91 -1.97 IR Ingersoll-Rand Ltd 57.81 -1.82 B Barnes Group Inc 27.43 -0.42 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. 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