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Daily Newsletter, Tuesday, 10/21/2003

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PremierInvestor.net Newsletter                Tuesday 10-21-2003
                                                   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:      Eight Days and Counting
Watch List:       NSM, QCOM, IGT, TXN and more!
Market Sentiment: Where'd the Rally Go?

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      10-14-2003           High     Low     Volume Advance/Decline
DJIA     9747.64 - 30.30  9784.31  9736.68 1.84 bln   1736/1373
NASDAQ   1940.90 + 15.80  1952.48  1922.78 1.71 bln   1818/1345
S&P 100   521.76 +  0.33   523.23   520.17   Totals   3554/2718
S&P 500  1046.03 +  1.35  1048.57  1042.50
W5000   10164.76 + 24.50 10185.54 10125.44
RUS 2000  525.53 +  4.09   526.42   521.44
DJ TRANS 2864.86 +  8.01  2872.36  2854.72
VIX        16.55 -  0.49    17.23    16.19
VXO (VIX-O)17.82 -  0.34    18.77    17.43
VXN        24.35 -  0.43    25.07    23.86
Total Volume 3,798M
Total UpVol  2,327M
Total DnVol  1,411M
52wk Highs  526
52wk Lows    19
TRIN       1.03
NAZTRIN    0.68
PUT/CALL   0.70
=================================================================

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


Eight Days and Counting

The Dow closed down for the day on weakness in SBC and T and
the Nasdaq closed up on strength in semiconductors. If you
average the broader markets you get one more day very close
to the highs for the year with only eight trading days left
in October. This is more amazing than AMZN beating earnings.

Dow Chart


Nasdaq Chart


What a day. For day traders it was several hours of sheer
boredom interspersed randomly with several minutes of total
confusion. The end result was a one-point gain on the S&P.
I could have gone to the movies and saved the brain damage.
The Dow opened down after AT&T and SBC shared their results
with the world and told us that nobody is phoning home. Heck,
according to them many more homes don't have a phone to call.
SBC said it lost -323,000 land lines in the last quarter and
it may have to review its dividend policy. SBC missed estimates
by two cents. Not all the news was bad. They added +365,000
DSL lines and +745,000 wireless lines at its Cingular unit.
Those new customers required more expensive infrastructure
so costs rose during the quarter.

AT&T announced a charge of $125 million after disclosing
that two employees concealed charges during 2001 and 2002.
AT&T did slow the rate of its decline suggesting that the
worst was over. AT&T reported earnings of 53 cents, more
than double the same quarter last year. Revenue fell -8.1%
for the quarter. AT&T claims lower expenses from several
years of restructuring were the reason for the better
earnings. Unfortunately AT&T saw revenue drop in its
business segment by -6.2%. They said they saw no signs of
a recovery in capital spending by businesses. T fell -1.07
in regular trading. Both T and SBC are Dow components and
kept the index in the red for the day with the aid of CAT,
BA, GM and Citigroup.

GM was hurt by earnings from Daimler Chrysler that posted
a loss of nearly $1.8 billion for the quarter. The U.S. unit
posted a profit on the strength of prior cost cutting and
restructuring efforts. The massive loss weighed on the sector
after DCX said competition was still very intense and they
would do what was necessary to sell cars. The Mercedes unit
sales were flat. Last week Harley Davidson was also lowering
future production growth. Is this a sign of the current
economic times or those to come?

AMTD and SCH reported earnings and while the earnings were
not exciting the statistics were. SCH said trading volumes
were up slightly but that new account numbers were still
disappointing. New accounts fell -23% at Schwab. AMTD said
trading volume in October was down about -10% from September
levels. Schwab CFO said they are not expecting investors to
continue to ramp up. Both companies were downbeat about the
lack of new investor enthusiasm. Etrade also reported last
week that new account openings were falling. If all three
of the top brokers say investor participation is waning
then it could be a sign there is still some doubt the market
rebound is going to stick. Others think that the lack of new
investors is related to unemployment, falling wages and lack
of investing income.

JCOM dropped -10.39 after raising its guidance to $1.03 for
the year. Analysts had already built in aggressive growth
and were expecting $1.00 to $1.19 per share. The -20% drop
knocked the stock back to $33 and a level where brokers are
falling all over themselves to recommend it with a $50 price
target. JCOM sports a compound annualized growth rate over
50% and better than 40% free cash flow. Never heard of them?
Heard of eFax? That is one of their products. I have watched
them soar from $8 to $48 over the last 10 months and kept
saying I would buy them on a pullback. Looks like it is time.
The 100DMA is just over $30 and I would love to see it there.

The 800lb gorilla left for the week is MSFT on Thursday
after the close. There was a big press splash today on the
release of the new Office product. MSFT is launching a $150
million ad campaign hoping that consumers will part with up
to $499 for the full version. MSFT has 400 million users of
its Office products and generated $9.2 billion in revenue
over the last year. The last Office suite had the slowest
acceptance rate of any release. This suggests that consumers
may not rush out and buy a new copy when their Office-2000/XP
still works just because the new one is available. MSFT saw
a huge ramp into the 2000 product due to Y2K but while the
computers may have increased in speed on a factor of ten over
the last four years the ways you write a letter, work with
a spreadsheet or receive email have remained the same. I
doubt MSFT will starve if consumers do not rush out to
stand in line to buy the new software. MSFT announces later
in the earnings cycle this quarter and there is a sneaking
suspicion that they might not be as bullish as everyone
hopes. The lack of a PC upgrade cycle and the slow IT
recovery could be hurting them. Also, the vastly increased
speed of servers means fewer are needed now than in the past
and that means fewer expensive licenses. Intel said the higher
volume of laptops was driving their profits but laptops
typically come preloaded with a MSFT bundle at a discount
to list. Plus, laptops do not feed the onsite network and
require fewer network fees. Also, in order to use the new
features of the Office product, corporations must purchase
a new server product that retails for $5,619 per server. With
the SUNW Office clone at $79.95 per copy along with the free
OpenOffice product this will not be a slam-dunk sale for MSFT.

Last night the Semiconductor Book-to-Bill number for September
was announced at 0.95 and now 13 consecutive month at less
than breakeven. Orders climbed +3.9% in September and was
the second consecutive rise after four down months. This
is encouraging but hardly something to shout about. On
a year over year basis orders are still down -8.5% and
shipments are down -23%. The 0.95 number was only a slight
improvement over the 0.92 in August. This could be the start
of a trend but it is not a blast off. Once the BTB passes
breakeven, more orders than shipments, then we will have
something to be excited about. There was some good news in
a VLSI survey showed that global chip fabrication plants were
reaching 90% capacity and may need to upgrade equipment soon.
A large amount of chip capacity was taken offline or converted
to other uses when the tech bubble collapsed.

The only economic report today was the weekly Retail Sales
and they came in flat. The Bank of Tokyo was quick to lower
the forecast for October once again. The yo-yo outlook has
gone from +4.5%-5.0% to only 3.0% at present.

The Nasdaq rose on the strength of TXN earnings but overall
the broader market strength was flat. 92% of companies who
reported earnings last week were meeting or beating estimates.
That number has dropped to about 66% this week as the quality
of companies reporting diminishes and the number of smaller
companies reporting increases. The blue chips are slowly
dwindling with MSFT the remaining figurehead of note on
Thursday. This quality fade is still not critical as 66% is
a very respectable level.

The Dow has now traded for nine days in the 9700 range with
a brief sprint to 9848 and a brief dip to 9650. Throughout
all this the price magnet remains 9750 and that is exactly
where it closed today. The lack of gains on strong earnings
news is seen by many as positive. They feel that is shows a
lack of unbridled bullish enthusiasm and more of a cautious
optimism. The main point seen as positive is the lack of a
drop. Given some high profile misses and the October time
frame it is seen as remarkable by some.

The Nasdaq price magnet is 1940. It has traded within 30
points of that level since October 9th and ended there again
today. The TXN news offset the weak book-to-bill numbers
and the SOX is only a couple points away from a new high.
The Nasdaq will face another challenge tomorrow. AMZN
announced earnings tonight and beat estimates by a penny.
This was the first non holiday quarter that AMZN has posted
a profit and it squeaked out a $52 million gain on revenue
of $1.13 billion. It dropped in after hours to $58 after
trading as high as $61 during the day. AMZN only guided
analysts to $5.75-$6.25 billion for 2004 and analysts had
already expected $6.1 billion. While that is not much of a
difference it was seen as conservative guidance and not
exciting enough to justify the recent +200% gain in the
stock. However, remember EBAY? The outlook was not exciting
and it took a tumble but has nearly recovered the loss
through Tuesday. Something I have been reporting but over
looked by the public is the foreign exchange gains. This
quarter more than 50% of AMZN profits were due to the weak
dollar and gains in currency exchange. Without the gains
AMZN earnings would have only been +0.05 cents. Is this
relative to investors? AMZN traded down -$2 in after hours
and Nasdaq futures are down only slightly (-3.00) at 8:PM.

Several readers have asked if it was time to back up the
truck and buy puts based on the VIX at 16.55. Historically
anything under 17.50 is a trigger point for a huge put
buying opportunity. However, the VIX you see quoted in print
these days is NOT the VIX that you have watched for the last
decade. On Sept-22nd the CBOE changed the way the VIX is
calculated to be based on SPX options and not OEX options.
They also changed the calculation method to include more
strikes and added some complicated math. The bottom line
is the current VIX at 16.55 cannot be compared to the old
VIX. The new calculation has taken some of the volatility
out of the indicator in anticipation of offering options
on it in the near future.

Now the good news. The old VIX, now called the VXO for VIX
Old hit 17.43 today. Hit, not closed under 17.50. The close
was 17.82 and in my book that is close enough for government
work. Do you back up the truck? No, because the VXO is only
one indicator of market sentiment. It is showing that there
is no fear in the market and almost nobody expects the market
to drop. When these conditions exist it can take several days
for a market event or it can take weeks. There is not a trip
wire that gets pulled and suddenly the bottom falls out. We
may see a market reaction as there are normally some sell
programs that are triggered on a close under 17.50 but then
again this is not a normal market and we did not close under
17.50. That number is not magic. It could be 17.82 or 16.82
that draws sellers but 17.50 does tend to act like a target.
The key to remember is it may not be immediate. There have
been times when it stayed at relatively low levels for days.
The last time we saw it this low (17.43) was July-20, 1998.
It traded in the 16.43-17.80 range for about eight days
before blasting off to a high of 60.63 in October.

Sure, sure but this is different! Is it? Jul-20th was the
3rd week of an earnings month and the market was at new highs.
OK, it was not October but the other two conditions should
make you think twice. Never ignore the VXO. Never say it
can't happen.
VIX/DOW Charts


The overnight futures are tame at 8:30 with just a small drop.
There are several hundred companies still to report this week
with MSFT the spotlight on Thursday. The only economic report
tomorrow is Weekly Mortgage Applications and not a market
mover. We will be left to fixate on earnings and see how the
crowd reacts to the AMZN news. Volume was low again today and
there is still no conviction on either side. Something big is
about to happen and there are no clues in sight. Or is there?
You decide.

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

National Semiconductor - NSM - close: 39.28 change: +0.71

WHAT TO WATCH: Not for the timid, NSM has been tearing up the
charts for the past couple months now, greatly outpacing the
strength in the Semiconductor index (SOX.X), which itself broke
to new highs today.  Use a breakout above $40 to trigger new
entries and look for a run to the $45-46 area.




---

Qualcomm Inc. - QCOM - close: 45.33 change: +0.83

WHAT TO WATCH: The company at the core of the CDMA technology is
on the cusp of another breakout and the entry setup couldn't be
more perfect.  If QCOM can clear $46, then it has a solid shot at
hitting the $50 level ahead of earnings in early November.




---

International Game Technology - IGT - close: 31.42 change: +0.66

WHAT TO WATCH: While the weekly chart may give you vertigo, IGT's
daily chart is a thing of beauty, as the stock is once again
breaking out to new all-time highs.  Today's close was a new
closing high, but we'd prefer to use a trade above $31.50 (the
10/13 intraday high) for an entry trigger.  Look for a rally to
the $35 area ahead of earnings on November 4th.




---

Texas Instruments - TXN - close: 27.28 change: +1.61

WHAT TO WATCH: Following a positive reception of its earnings
report last night, shares of TXN gapped sharply higher this
morning.  The stock wasn't able to hold onto its intraday gains,
but today's breakout looks constructive.  Ideally, we'll see the
gap filled in and then a resumption of the rally towards the $32
area.  Traders looking to enter on strength will want to target a
breakout over $28, while bargain hunters can look for a dip and
rebound from the $26 area to signal an entry point.






===================
On the RADAR Screen
===================

MGAM $35.18 - That's right, we actually managed to find a solid
bearish candidate.  MGAM has not been acting like a winner
lately, as it has really started to pick up some downside
momentum in the past week.  A sharp increase in selling volume
dropped MGAM right to $35 support, but if this trend continues,
$30 at the bottom of the September gap looks like a viable
target.

MHK $70.00 - Beating earnings estimates last week wasn't enough
to keep MHK afloat, especially after the company lowered its
guidance.  Last Friday saw a sharp selloff to the $70 level, but
a rebound yesterday had the bears looking timid.  Not so today,
as they took back all of Monday's gains and a breakdown appears
imminent.  Entries near current levels look favorable, with $65
being the logical first target.

MMC $46.40 - The breakdown we've been expecting for the past
several weeks finally arrived on Tuesday, following the company's
less than stellar earnings report.  MMC broke under its 200-dma
and now appears headed for that $42 level.  Use a failed rebound
below the 200-dma or a break under $45.50 as an entry strategy,
looking for a quick gain as selling volume builds.



===============================
Market Sentiment
===============================


Where'd the Rally Go?
- J. Brown

Gosh!  It seemed like only yesterday evening we were all excited
for a continuation of the afternoon rally and investors had Dow
10,000 in their eyes.  Oh wait!  It was just yesterday.  The
strong Texas Instrument earnings had the technology bulls
grinning but the rally was disconnected by some disappointing
telecom numbers.

Dow component AT&T (T) lost 5 percent after their earnings report
unveiled an 8.1 percent drop in revenues.  Another Dow component
SBC Communications (SBC) slid almost 2 percent after missing
estimates by 2 cents with net income of 37 cents a share.
Together the two of them keep the Dow in the red.  Yet believe it
or not the markets generally had a good day.  At one point nearly
every sector was green except for two or three stragglers, which
were only fractionally lower.

As expected the session was driven by earnings news before,
during and after the close.  A couple of major announcers after
the closing bell today were AMGN and AMZN.  AMGN's numbers were
pretty good and should give the BTK, which was up 3 percent
today, more fuel to run higher tomorrow.  AMZN also turned in
good numbers depending on which ones you want to believe.
Estimates had been for 10 cents but the whisper number was
evidently 12 cents.  The company turned in 11 cents but this was
before items.  Take out all the charges and AMZN only earned net
income at 4 cents a share.  Shares were down in after hours but
it will be interesting to see if the profit taking lasts longer
than tomorrow.  AMZN guided higher for the holiday quarter
estimating sales near $1.91 billion versus 1.78 billion a year
ago.

Regarding investor sentiment there was a lot of talk made about
the volatility indices or fear index.  The NASDAQ's VXN dropped
to a new all-time low at 24.35 but this index really isn't old
enough for traders to trust it yet.  The new VIX, based off the
S&P 500, fell to a new low at 16.55.  Yet again this index is
only a few weeks old and investors are unsure how to read it.
The old VIX, now the VXO, dropped to 17.82.  This is an extreme
level of fearlessness and practically yelling that we're near a
market top.  The last time the old VIX was at this level was mid
July in 1999.  Within two or three days the markets rolled over
and dropped for three weeks straight.  The S&P 500 lost about 100
points in the down turn after the VIX's signal.

I'm not saying the markets are going to roll over tomorrow but
this rally's days may be numbered in the single digits.  Don't
worry.  As Jim mentioned in his weekend wrap a good-sized
consolidation would only set us up for a buying opportunity into
the traditional holiday ramp up.


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

Market Averages

DJIA ($INDU)

52-week High:  9850
52-week Low :  7197
Current     :  9747

Moving Averages:
(Simple)

 10-dma: 9740
 50-dma: 9504
200-dma: 8786

S&P 500 ($SPX)

52-week High: 1053
52-week Low :  768
Current     : 1046

Moving Averages:
(Simple)

 10-dma: 1042
 50-dma: 1017
200-dma:  941

Nasdaq-100 ($NDX)

52-week High: 1439
52-week Low :  795
Current     : 1422

Moving Averages:
(Simple)

 10-dma: 1408
 50-dma: 1350
200-dma: 1174


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

The NASDAQ's VXN dropped to a new all-time low at 24.35 but this
index really isn't old enough for traders to trust it yet.  The
new VIX, based off the S&P 500, fell to a new low at 16.55.  Yet
again this index is only a few weeks old and investors are unsure
how to read it.  The old VIX, now the VXO, dropped to 17.82.
This is an extreme level of fearlessness and practically yelling
that we're near a market top.

CBOE Market Volatility Index (VIX) = 16.55 -0.49
Nasdaq Volatility Index (VXN)      = 24.35 -0.43


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.70        773,759       540,023
Equity Only    0.59        648,197       380,941
OEX            1.00         12,693        12,673
QQQ            2.10         33,143        69,700


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.8    + 0     Bull Confirmed
NASDAQ-100    78.0    + 0     Bear Correction
Dow Indust.   83.3    + 0     Bull Correction
S&P 500       81.0    + 0     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-dma: 1.12
10-dma: 1.07
21-dma: 1.16
55-dma: 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    1544      1784
Decliners    1258      1283

New Highs     170      1021
New Lows        7        25

Up Volume    967M     1214M
Down Vol.    829M      496M

Total Vol.  1810M     1727M
M = millions


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

Commitments Of Traders Report: 10/14/03

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

Unfortunately we're still not seeing much change in sentiment
for the Commercials in the big S&P futures.  They remain slightly
net short.  Small traders aren't making many moves either and
they remain net long.


Commercials   Long      Short      Net     % Of OI
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%)
10/14/03      391,972   410,299   (18,327)   (2.3%)

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
09/23/03      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%
10/14/03      133,940    86,418    47,522    21.6%

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

It's the same story here.  Commercials increased their positions
in both longs and shorts but remains slightly net short.  Small
traders trimmed some short positions and opened 30K more long
contracts just in time for the late week weakness.


Commercials   Long      Short      Net     % Of OI
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%)
10/14/03      221,897   233,066   ( 11,169)  ( 2.5%)

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
09/23/03      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%
10/14/03      161,208    59,213   101,995    46.3%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Sorry...no big changes for the Commercial traders here either.
They remain net short while the Small Trader remains net long.


Commercials   Long      Short      Net     % of OI
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%)
10/14/03       34,639     41,880   ( 7,241) ( 9.5%)

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
09/23/03       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%
10/14/03       16,822     9,046     7,776    30.1%

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

No one seems willing to make any big bets.  Commercials have
been stuck in the same range for weeks now and remain net long
the DJ futures.  Small traders took some money out of their long
and dumped some of it into shorts but not much.


Commercials   Long      Short      Net     % of OI
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%
10/14/03       16,595     9,433    7,162      27.5%

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
09/23/03        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%)
10/14/03        6,427     8,495   (2,068)   (13.9%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   8,523  -  8/26/03

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




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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                Tuesday 10-21-2003
                                                   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:     Inside Inside Day

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


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


Factset Research - FDS - close: 44.48 change: -0.42 - stop: 46.01

Company Description:
FactSet Research Systems Inc. is a leading provider of global
financial and economic information, including fundamental data on
tens of thousands of companies worldwide. Combining more than 200
databases into its own dedicated online service, the Company also
provides the tools to download, combine and manipulate the data
for investment analysis. The Company, headquartered in Greenwich,
Connecticut, was formed in 1978 and now conducts operations from
seventeen locations worldwide including Boston, New York,
Chicago, San Mateo, London, Tokyo, Hong Kong, Sydney and
Frankfurt.  (Source:  Company Press Release.)

Why we like it:
In early September, FDS reported Q4 earnings that beat estimates.
Revenues rose from 51.7 million in the year-ago period to $57.6
million in Q4.  However, that earnings release was followed by
downgrades from CSFB and Morgan Stanley.  FDS had reached an all-
time high early in September and then declined slightly.  It had
been headed up to test that all-time high again when earnings
were released and the downgrades hit.  Falling to support near
$43.00, FDS bounced, but then began rounding over into a shape
that looks suspiciously like the right shoulder of a head-and-
shoulder formation.  While price was declining, that decline
created a P&F sell signal with a downside target of $43.00, which
accounts for the bounce from that level in late September.  Now
FDS trades in an O column again, and a trade below $43.00 will
create a new P&F sell signal.  It will also confirm the H&S
formation by falling below the neckline.

Two entries suggest themselves.  Since many H&S patterns form a
second right shoulder, it's possible that FDS will again bounce
and then roll down through the neckline.  The 21-dma has been
capping recent rises, so entries on bounces and rollovers from
that moving average would be appropriate.  It's also possible
that FDS will fall through the neckline without first bouncing
into a second right shoulder, offering momentum entries on a move
below $43.00.

Why This is our Play of the Day
Friday's sharp selloff seemed like it might be a bit overdone in
the near-term and that view certainly seemed to play out on
Monday, as FDS rebounded back over $44 to trade a perfect inside
day.  But then Tuesday's session traded completely inside of that
inside day, giving us a "double inside day" to work with.
Traders that want to play the formation can look to enter short
on a break below yesterday's intraday low ($44.10) or Friday's
intraday low ($43.55) in an attempt to get in a bit earlier than
the clear breakdown, which comes on a trade below $43.  Failed
rebounds below the converged 10-dma ($45.50) and 20-dma ($45.57)
can be used for more aggressive entries.  Remember, the break of
$43 also constitutes a bearish H&S breakdown.  While there is
some possible support near $41, we're looking for a decline to
the vicinity of the 200-dma (currently $37.93).

Annotated Chart of FDS:


Picked on October 18th at $43.65
Change since picked:       +0.83
Earnings Date:          12/16/03 (confirmed)
Average Daily Volume:      346 K



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

WYE     Wyeth                      45.80     +1.20
COF     Capital One Financial      61.78     +0.72
DGX     Quest Diagnostic           62.80     +2.30
CTX     Centex Corp                91.83     +1.83
MME     Mid-Atlantic Medical       55.60     +0.88
RYL     The Ryland Group           83.55     +1.93

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

NCI     Navigant Consluting Inc    14.83     +1.25
WNC     Wabash National Corp       19.73     +1.01
RETK    Retek Inc                  10.25     +1.57
AWA     America West Holdings      13.30     +2.15
GVHR    Gevity Hr Inc              17.96     +1.59
PSEM    Pericom Semiconductor      11.75     +1.26

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

TXN     Texas Instruments          27.28     +1.61
SLB     Schlumberger Ltd           51.36     +1.52
ADI     Analog Devices Inc         44.86     +1.84
CNI     Canadian Natl Railway      56.20     +1.42
TIF     Tiffany & Co               44.57     +1.47
COH     Coach Inc                  33.87     +2.43
PD      Phelps Dodge Corp          57.80     +1.18

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

MMC     Marsh & Mclennan Cos       46.40     -1.98
MEL     Mellon Financial           29.83     -2.62
MHK     Mohawk Industries          70.00     -1.76
AVY     Avery Dennison Corp        50.28     -2.22
EAT     Brinker Intl               29.60     -4.21
KMX     Carmax Inc                 31.05     -1.32
JCOM    J2 Global Communications   33.45     -10.39
MHC     Manufactured Home Comm     38.00     -2.74

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

ROST    Ross Stores Inc            51.85     -1.33
CTSH    Cognizant Tech             42.15     -1.73
NTES    Netease.com                59.50     -8.05
SINA    Sina Corp                  37.70     -3.76
MGAM    Multimedia Games Inc       35.18     -2.82
TJX     TJX Companies              20.98     -0.22
NMGA    Neiman Marcus              46.50     -0.76



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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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