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Daily Newsletter, Monday, 10/20/2003

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PremierInvestor.net Newsletter                 Monday 10-20-2003
                                                  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:      Good Start to a Long Week
Play of the Day:  Last Chance

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     10-20-2003            High     Low     Volume Advance/Decline
DJIA     9777.94 + 56.15  9777.94  9705.57 1.43 bln   1572/1227
NASDAQ   1925.14 + 12.78  1925.16  1905.39 1.53 bln   1571/1511
S&P 100   521.43 +  3.31   521.43   516.94   Totals   3143/2738
S&P 500  1044.68 +  5.36  1044.69  1036.13
RUS 2000  521.44 +  0.10   523.34   521.44
DJ TRANS 2856.79 +  9.51  2860.53  2833.97
VIX        17.04 -  1.75    18.07    17.04
VXO        18.16 -  1.03    19.69    18.02
VXN        24.78 -  4.06    26.61    24.59
Total Volume 3,255M
Total UpVol  1,929M
Total DnVol  1,257M
52wk Highs     445
52wk Lows       21
TRIN          0.79
PUT/CALL      0.62
===============================================================

===========
Market Wrap
===========


Good Start to a Long Week
by James Brown

The heaviest week for the Q3 earnings torrent is off to a good
start.  Among the hundreds of companies that will be announcing
this week today's numbers from 3M, Citigroup, Lexmark and Texas
Instruments are casting a positive glow for stocks.  Thankfully,
investors were paying more attention to the earnings numbers than
the disappointing economic indicators unveiled today.  The
biggest winners were found in hardware, airlines, and
semiconductors but the major indices all caught a second wind
late in the session lifting them higher by the close.

Doing their best to provide a tailwind for U.S. indices were
positive results from foreign exchanges.  Asian exchanges were
strongly higher.  The Hang Seng jumped 103 points to close at
12,147.  The Japanese NIKKEI rose 123 points or 1.12% to close at
a 16-month high of 11,161.  The rise was boosted by jump in the
dollar against the yen thanks to comments from Treasury Secretary
John Snow.  European exchanges were also green.  The British FTSE
just barely added 3.5 points to close at 4347 and the German DAX
added 1.2% to close at 3559.  Meanwhile gold futures added $2.20
to close at $374.40/ounce.  Crude oil futures dove $1.23 to
$30.43 a barrel after Iran hinted it may choose to leave OPEC at
some future undisclosed date.

Monday's session was mostly sideways as major averages traded in
a tight range before the late day rally appeared.  The positive
earnings news seems to be soothing any bullish fears that the
recovery may not occur instead of igniting any new rally
momentum.  We heard some talk last week and we're hearing it
again today that the markets may have already "priced in" the
strong earnings expectations.  The market internals reflected the
sideways action.  Advancers beat decliners 15 to 12 on the NYSE
while winners just barely outnumbered losers 1571 to 1511 on the
NASDAQ.  Up volume did out perform down volume but over all
volume was modest.

Chart of the DJIA:


Chart of the COMPX:


The major economic report for the day and probably the week was
the Leading Economic Indicator index (LEI) produced by the
private research group, The Conference Board.  The index of
leading economic indicators fell 0.2 percent in September, a
negative surprise to almost everyone.  Most estimates had been
for a result of unchanged after the index rose 0.4 percent in
August.  This was the first decline since March, which if you
remember the nation was holding its breath for the start of the
war in Iraq.  The markets chose to ignore the negative surprise
probably because the general trend is still bullish.  Ken
Goldstein, an economist with the Conference Board, suggested that
we should only worry if the LEI continues to decline in October.
For the full statement click here:
http://www.conference-board.org/economics/press.cfm?press_ID=2249

Have you ever wondered what it would be like to have everyone
analyzing your every word?  Obviously President Bush and Alan
Greenspan fall into this club but U.S. Treasury Secretary John
Snow seems to be making a lot of headlines too.  Today Snow's
comments rippled across the financial markets again after the
London-based Times newspaper published an interview with the
secretary.  Sending the dollar to its best one-day gain in months
against the yen were Snow's comments that the recent G7 financial
summit's agreement on flexible currencies was not a U.S. plan to
weaken the dollar.  As noted above the Japanese NIKKEI average
enjoyed a strong session on the dollar's strength.  Mr. Snow also
remarked on his concern if U.S. interest rates did not begin to
rise soon.  Many economists believe rising interest rates are
indicative of a stronger economy.  Snow may get his wish pretty
soon.  If you look at the chart below you'll notice that the
yield on the 10-year note looks ready to breakout to a new
relative high above that multi-year trendline.

Chart of the 10-year bond yield:


One of the lead stories today was the Q3 earnings report from Dow
component 3M (MMM).  Investors doing their homework might be
picking up some mixed messages.  Consensus estimates were for 79
cents a share.  MMM turned in 83 cents compared to 69 cents a
year ago.  According to the company overall sales reached an all-
time high for the third quarter in a row.  Furthermore the
company raised their estimates for the fourth quarter to a range
of 73 to 75 cents, compared with current estimates of 73 cents.
MMM also raised their full year estimates to 3.05-3.07, above
consensus of $3.01.  The company attributed currency rates for a
3.9 percent gain in Q3 sales (Thank you, Mr. Snow).  It certainly
sounds like good news and the stock was the third biggest gainer
in the DJIA behind Hewlett Packard (HPQ) and AT&T (T).  However,
it looks like everyone is choosing to ignore comments from MMM's
own CFO who said the company "remains very cautious" for 2004
because they still aren't seeing much of a recovery in
manufacturing.  Hmm....that doesn't sound very bullish does it?
It will be interested to see if any of the Wall Street analysts
choose to follow up on this comment.

Markets were also interested to hear from financial services
behemoth, Citigroup (C).  Citigroup announced earnings this
morning, which hit a new record.  Q3 results beat estimates by a
nickel with 90 cents a share and up 20 percent from a year ago.
Unfortunately, analysts were disappointed with C's relatively
flat revenue numbers.  The stock lost ground but closed up off
its lows, -26 cents to $48.12.

Lending strength to the hardware sector was a very strong
earnings report from printer manufacturer Lexmark Intl (LXK).
LXK beat estimates by a dime with 79 cents a share.  The stock
shot higher with a 10 percent gain to $74.00 with a rosy outlook
for the fourth quarter.  LXK now expects Q4 earnings to be in the
85 to 95 cent range compared to analysts' estimates of just 82
cents.

Announcing after the close tonight and potentially driving market
direction was the earnings report from Texas Instruments (TXN).
The chipmaker reported very strong results of 25 cents a share,
beating estimates by 3 cents and more than doubling last year's
result of 11 cents.  More importantly revenues were up 13 percent
to $2.53 billion compared to estimates for 2.4 billion.  The
world's largest mobile-phone chipmaker said gross margins jumped
by 3.2 percent to 40.7 percent and overall orders rose 15 percent
with chips orders growing by 21 percent.  The stock was up 7
percent in after hours trading to $27.45 and might be able to
lead the SOX index to a new high tomorrow.  A strong SOX is
exactly the kind of push the NASDAQ needs to reach the 2000 mark.

Tomorrow the markets will trade solely on earnings news without
any economic reports on the calendar.  The late afternoon bounce
coupled with the TXN report above certainly paints a bullish
picture for Tuesday.  Keep in mind that tomorrow morning is
crowded with more earning reports.  Let's hope none of them
implode with enough force to derail what could be a nice rally
tomorrow.  Just a few of the dozen to look for are Dow component
SBC who announces before the opening bell.  Later look for Amgen
(AMGN) and Amazon.com (AMZN).



===============
Play-of-the-Day  ( BULLISH )
===============


Sony CP ADR - SNE - close: 37.85 change: +0.45 - stop: 34.49

Company Description:
"We are not here to be logical.  Or predictable.  We're here to
pursue INFINITE possibilities."  So begins a paragraph on Sony's
website, with that paragraph describing the corporate philosophy.
Based in Japan, Sony Corporation develops, designs, manufactures
and sales electronic equipment, as well as instruments and
devices sold in consumer and industrial markets.

Why we like it:
A Japanese newspaper reported Friday that Sony and Samsung
Electronics will form a joint venture for the purpose of making
television liquid crystal display panels, and Sony gained in
Japanese trading.  Buoyed by its success in the Nikkei, SNE
opened at $38.00 in U.S. trading, above the midline of its
regression channel.  When U.S. markets declined, SNE fell back
from its opening high, but managed to hold above Thursday's
close.

As SNE again approaches its September high, RSI and stochastics
move up.  Both still have room to run before indicating
overbought conditions for SNE.  MACD flattens above signal, and
may hint at a slight upward curve.  We do notice however, that
the blue 21-dma has made a bearish cross of the 30-dma.  Moving
averages crosses usually occur late in a movement, and SNE's
bull-flag pullback probably produced this one.  Just in case,
however, we're raising our stop to $35.49, below those two moving
averages.  With earnings less than a week away, new entries might
be too risky for most, but aggressive traders could consider
entries on a move above the September high, if accompanied by
strong volume.

Why This is our Play of the Day
Friday's rejection from the $38 resistance level was not very
encouraging for SNE bulls, but Monday's price action leaves us
with a nice setup going into tomorrow.  SNE traced an inside day,
and all we have to do is trade in the direction of the break of
that pattern.  Unfortunately, any positions taken on the break of
that pattern will have to perform quickly, with earnings set to
be released on Thursday.  A dip and rebound from above $37.30
(Friday's intraday low) can be used for aggressive entries,
although the more conservative play would be to wait for a break
above $38.04 (Friday's intraday high) before playing.  An even
more conservative approach would be to wait for a clean breakout
over the September high ($38.30) before tagging along to the long
side.  While we're maintaining our stop at $34.49, more
conservative traders may want to consider a tighter stop at
$36.00, which is just below last week's intraday lows and the 20-
dma ($36.12).

Annotated Chart of SNE:


Picked on October 10th at $36.59
Change since picked:       +1.26
Earnings Date:          10/23/03 (confirmed)
Average Daily Volume:   1.12 mln





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DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                  Monday 10-20-2003
                                                   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
=================================================================


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)


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

WLP     Wellpoint Health Network   83.32    +0.83
ATH     Anthem Inc                 76.89    +3.87
DTE     DTE Energy Co              36.31    +0.52
CTL     Centurytel Inc             36.61    +0.89

---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------

UNA     Unova Inc                  19.21    +1.20
AZR     Aztar Corp                 19.01    +1.97
WRLD    World Acceptance Corp      15.75    +1.04
CHIC    Charlotte Russe Hldg Inc   13.47    +1.17

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------

SYK     Stryker Corp               81.48    +2.50
LXK     Lexmark International      74.00    +6.75
VAR     Varian Medical Systes Inc  60.75    +2.93
LNCR    Lincare Holdings Inc       39.26    +1.34
HAS     Hasbro Inc                 21.70    +1.06

-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------

AMGN    Amgen Inc                  61.89    -1.12
UN      Unilever N.V.              57.25    -3.52
UL      Unilever Plc               33.16    -1.97
ECA     Encana Corp                36.92    -1.05
XL      XL Capital Ltd             70.35    -3.02
AGN     Allergan Inc               75.05    -1.38

-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------

OMC     Omnicom Group Inc          75.14    -1.11
ECA     Encana Corp                36.92    -1.05
RIO     Companhia Vale Do Rio Doce 45.70    -0.60
CNQ     Canadian Natural Res Ltd   43.45    -0.67



=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************

Copyright 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

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