PremierInvestor.net Newsletter Thursday 10-23-2003 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: Back From The Brink Watch List: T, ELBO, MDC, MTH and more! Market Sentiment: Bewildered. ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-23-2003 High Low Volume Advance/Decline DJIA 9613.13 + 14.90 9622.16 9551.73 2.05 bln 1527/1651 NASDAQ 1885.51 - 12.60 1893.20 1874.11 1.93 bln 1316/1839 S&P 100 514.88 + 1.48 515.59 511.21 Totals 2843/3490 S&P 500 1033.77 + 3.41 1035.44 1025.87 W5000 10029.20 + 21.90 10047.48 9955.10 RUS 2000 510.49 - 2.66 513.55 506.81 DJ TRANS 2828.52 + 10.50 2828.78 2799.99 VIX 17.68 + 0.01 18.51 17.48 VXO VIX-O 19.10 + 0.04 19.99 19.02 VXN 26.09 + 0.41 26.57 25.58 Total Volume 4,269M Total UpVol 1,729M Total DnVol 2,485M 52wk Highs 271 52wk Lows 30 TRIN 1.12 NAZTRIN 2.26 PUT/CALL 0.85 ================================================================= =========== Market Wrap =========== Back From The Brink If you had told me at 2:AM with the Nikkei off -550 points and our futures falling through the floor that the Dow would only drop -50 points at its worst and close up +15 I would have thought I was dreaming. Sometimes reality is stranger than fiction and today was definitely one of those days. Dow Chart Nasdaq Chart Nikkei Chart We had yet another math miracle before the open with Jobless Claims. The number came in at 386,000 and a four-week low. You should be confused. Last weeks number was a multimonth low at 384,000 and the week before that was even lower at 382,000. Each was trumpeted as new cycle lows. Unfortunately the 382K from three weeks ago was revised up to 388K the next week. The 384K from two weeks ago was revised up to 390K. These revisions make today's 386K the new four week low at least until it is revised up next week. Using the +6k revision average that should put today's number near 392K. Either way there is a slight upward trend in the claims but nothing serious. A better number to gauge the strength of the job market was the Monthly Mass Layoffs for September which came in at 868 and considerably better than the prior two months. 82,647 workers were laid off in September compared to 133,839 in August and 226,435 in July. This is a definite improvement in the trend. Whether it means the pace of cost cutting has slowed as we approach a seasonal increase in business or that companies just don't have as many workers they can cut is unclear. Either way the slow down in the pace of layoffs should help ease the pressure in the job market. The lack of real economic reports today left the markets to fixate on earnings and Wednesday earnings were less than exciting on several front. Companies warning or missing estimates included some high profile names like JPM, MRK, THC, WHR, SGP, KLAC, STX and ERTS to name a few. We had the obligatory comments about "no signs of an economic recovery yet" from Dow component Dow Chemical. SNE said they had 50% excess capacity for the current demand. Bucking the trend UPS saw a strengthening in shipments. While these high profile bad apples drew the headlines the overall earnings were still strong. With over 300 of the S&P companies reported the number meeting or beating estimates is around 64%. If you have been reading my commentary you know that is down from 92% two weeks ago and 66% last week. Still strong but slipping as the smaller companies report. I have not seen Chuck Hill on CNBC this week but should he appear with a lowered estimate for 3Q earnings the sentiment could get a lot worse. Guidance for the 4Q from those 300+ companies has 36% guiding higher, 22% guiding inline and 42% warning. This means just under half of all companies are warning and very close to the historical trend. In other words the ratios are not as good as some analysts hoped. You have also seen me quote the earnings estimates for the 4Q as +20% to +25% growth based on First Calls published summaries. The 4Q estimate as of the close today had dropped to +18%. Still strong but maybe a hint of further trimming to come. After the bell today Microsoft announced earnings that beat the street by a penny and initially caused their stock to rise. The company raised guidance slightly and bragged about strong enterprise sales. They said that "while IT spending was only improving slowly over the quarter they did see increasing strength across the consumer sector". The raised guidance left little for traders to be excited about. MSFT raised full year estimates to a range of $1.10-$1.12. The analyst community was already expecting $1.11 so the fanfare fell on deaf ears. The stock began to fall almost immediately once the guidance was disseminated without waiting for the conference call. One factor suggested as accelerating the drop was a more than double than expected drop in unearned or deferred income. This line item is normally used as a slush fund for earnings that can be "adjusted" as needed to make earnings targets. Deferred income is money received before the product is shipped. If a corporation ordered a large amount of various software products late in the quarter, possibly some in short supply or not yet released then Microsoft does not claim the income until the software is shipped. There is always a backlog as companies preorder new products or products for conversions from legacy systems. This "order backlog" is seen as an indicator of strength for Microsoft. High backlog equals lots of orders, low backlog means excess product on hand. (simple explanation) Microsoft had guided analysts to expect a drop of $300 million in this number. The actual drop was over $600 mil and twice Microsoft estimates. Considering MSFT had net profits of $2.6 billion for the quarter I would not think this is a critical problem. Just something for the analysts to question to earn their 15 min of fame. Most informative was their raised guidance. They are only expecting PC growth in upper single digits for 2004. This is not going to be exciting for the tech outlook. They also projected a drop in subscribers to their MSN Internet service. A couple more less than positive comments included, "we missed some forecasts and you (analysts) should be concerned" and "we are not expecting any significant revenue growth for the rest of the year." MSFT closed the after hours session at $27.54 and down nearly -1.50 from the regular session close. Wednesday's earnings and market action led to massive drops overseas. The Nikkei suffered the biggest one-day drop of (-554) since 9/12/01 and the day after the WTC attack. This was a huge event and all the Asian and European markets suffered. To some extent it was triggered by our drop on Wednesday. Still the outlook looked VERY negative at the open and a triple digit Dow drop looked like a certainty. When the Dow opened down -50 it was immediately met with a very large buy program that consumed immense amounts of selling volume as it powered the markets higher. Within 20 min the Dow was back in positive territory and the buying stopped. Almost immediately another drop began and again only 10 min later another large buy program blasted the average to a new high. Bears were dumbfounded and shorts thinking they had a free ride after the drop in Asia were starting to think about covering. Over the next hour the indexes bled points but very slowly as nobody knew what was happening. About 11:20 the Dow touched a new low and immediately was met with more buy programs. By noon traders were glazed over and the Dow was stuck just below 9600 where it hovered for two hours. Traders simply did not know what was happening. Shorts and longs alike were afraid to trade and volume slowed to a crawl. About 2:PM there appeared to be a surge in short covering in front of MSFT earnings but the bears gained confidence when the Dow could not break to a new high. They were able to knock it down once again but each dip was met with new buy programs. Market on close orders were weighted to the buy side and bears gave up. S&P Futures were 1032 at the cash close and they managed to close the Dow back over 9600. Amazing. Unfortunately once the earnings began to hit the wire the selling began again in earnest and once MSFT spoiled the party the futures hit a new low for the day at 1018.75 and significantly down from the close. As I type this at 6:30 they have recovered to 1021.50, -7.50 with Nasdaq futures down -17.00. What a day. Volume was very strong with over 2 bil shares on the NYSE and 1.93B on the Nasdaq. Because of the huge buy programs the down volume was only 4:3 over up volume. It appeared at the close that somebody with big money had rescued the markets just when they needed it worst. The reaction to the after hours earnings brings that rescue back into question. There are multiple reasons for the after hours negativity. First, MSFT did not uphold the standard set by Intel and Yahoo. Great earnings expectations had been priced into the market and we are seeing those great expectations slowly deteriorate into just good news sprinkled with some weaker than expected guidance. Is this going to cause a further dip? Odds are good but after today I would not bet on it. Deep pockets bought the open this morning to hold up the markets. Not to buy stock at bargain prices but to hold up the market. Think about it. If you were going to buy billions of dollars in stock today and the market was showing a triple digit drop before the open, possibly a -200 day or more, then why would you buy immediately at the open at -25? Would you not rather wait for an hour or so to get a better price? Wouldn't you be afraid that the negativity at the open could cause that drop AFTER you spent those billions and put you in a significant loss before the day was over? Any reasonable trader with far less money at stake would have waited for the drop to slow before buying the dip. This smacks of market manipulation by somebody. Somebody with very deep pockets. The conspiracy theorists, including me, were speculating that the Fed could be propping up the markets to keep the recovery hopes alive. Another possibility is Japan. With the Nikkei tanking -5% overnight from multiyear highs on fears about a weak U.S. recovery then what better way to spend some of those billions in dollars they have been hoarding than to buy the U.S. market. They have been spending billions each week trying to control the currency rates and boosting our markets would certainly help their markets. Another possibility was mutual fund related. Funds have been beaten so badly for the last two years that they are scared. They are riding a huge rally wave that could have been about to crumble. Investors had poured in more than $4.3 billion into funds each of the last two weeks and funds had a vested interest in keeping the markets up. A sharp correction could stem the flow of money and blunt investor sentiment for a couple more months. The only question is did the funds have enough money to orchestrate the massive buying and head off the opening crash? If so which one? Was it a team effort and if so then how did they coordinate it? Far too many questions and no answers. The real question is what about tomorrow? What a tossup! We have yet to see how the Asian markets are going to respond to tonight's earnings. Futures have stabilized at about 1021 for the time being and while negative they have at least quit falling. Traders are confused. Each time the markets reached resistance today the retail buyers disappeared. The buy programs provided the reversal momentum but nobody jumped on the train at the highs. Shorts were never forced to cover because resistance levels were never broken. If Asia shakes off the earnings from MSFT and others and their oversold conditions from Thursday then we may have a chance. If the deep pockets from this morning are still around at the open on Friday then they might be able to build on any Asian gains. If the reverse happens and Asia tanks again then it may take more than deep pockets to slow us down at Friday's open. T.G.I.F, at least most big drops do not occur on Fridays. Fridays are not immune but they tend to be less severe. Traders leaving early for the weekend and trying to capture profits for the week tend to equalize the opposing pressures. Odds favor a range bound day without a big move in either direction but then odds favored a huge drop at the open today and it did not happen. Amazing how that VXO at 17.50 worked on Wednesday. But then most assume it was just a coincidence. (grin) Now that MSFT has announced the earnings week is winding down and there will be little to capture investor attention. Less than 50 companies report on Friday and there are no major names. With six days left in October I would not count this month out just yet. Keep your fingers crossed and 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 --------------------------------- AT&T Corporation - T - close: 19.16 change: -0.35 WHAT TO WATCH: The pre-emptive rally in shares of T has been smashed into non-existence, as investors have run for the exits in the past 3 days. First breaking below $20, the stock suffered further technical damage on Thursday by falling through the 200- dma and it appears headed significantly lower, perhaps into the $15-16 area. The best entries will likely come from a failed rebound below $20. --- Electronics Boutique - ELBO - close: 29.25 change: -1.61 WHAT TO WATCH: With all the weakness being seen in the shares of the video game stocks, it's no surprise to see shares of ELBO getting hit hard in the past couple days. Today's break of the 20-dma/50-dma is a significant blow to the bulls and it appears headed for $25-26. Optimum entries would come on a failed rebound below those moving averages. --- MDC Holdings - MDC - close: 65.99 change: +1.32 WHAT TO WATCH: Shares of MDC have been consolidating right at all-time highs following a sharp runup in early October. After two weeks of chipping away at $65 resistance, the stock broke out today and on strong volume. Look for upside continuation to $70 and possibly even to the $75 area. --- Meritage Corp. - MTH - close: 57.82 change: +1.82 WHAT TO WATCH: Another breakout! MTH has been whipping around near its all-time highs in volatile fashion over the past couple weeks, but the bulls certainly asserted control today. The stock shot higher on strong volume, resulting in a new closing high. Entries near current levels look good, with the next upside target in the $61-62 area. =================== On the RADAR Screen =================== JBLU $61.80 - Sell the news! Strong earnings and revenue growth wasn't enough for investors in JBLU today, as they rushed to lock in profits because the results weren't "good enough". That broke the stock's rising trendline and it looks like there could be more downside in store. There's solid support in the $59-60 area, but if that gives way, it could be a steep slide lower. Target a drop to $57 near-term. SMTC $21.19 - The earnings warning from KLAC last night sent shock waves through the entire Chip sector and SMTC wasn't immune, suffering a 4.4% loss on Thursday. This could be just the tip of the iceberg and continuation below the 20-dma looks like a sure bet to test major support near $18.50. The best entries will come from a failed bounce near $22. ICOS $42.40 - Biotechs have not been faring well recently, but shares of ICOS are bucking the trend of weakness and continuing to consolidate near strong resistance at $43.50. A breakout over that level looks like a solid entry setup. While there's some additional resistance in the $45-46 area, the stock looks capable of making a run to the $50 level. =============================== Market Sentiment =============================== Bewildered. - J. Brown Investor sentiment today can probably best be summed up in one word: confused. The massive declines in the Japanese NIKKEI last night (down more than 500 points) should have sent our own markets into free fall. This is especially true considering the earnings miss and lowered guidance from KLAC last night. Yet despite all the negativity the $INDU managed to close in the green and the NASDAQ cut its losses in half. Market veterans immediately began to wonder what magic was afoot. Jim does an excellent job in the wrap tonight discussing some of the theories on why our markets didn't melt down today so I won't belabor the point. Potentially contributing to the mixed markets were the positive jobless claims number today and expectation over MSFT's earnings. However, now that MSFT has announced, the news is not sitting well with investors. Friday is liable to be weak with most of the selling focused on tech issues. Next week is the last full week of October. While we will continue to hear from corporate earnings there are numerous economic events that are likely to take center stage, not the least of which is the FOMC meeting on the 28th. Trade carefully! ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9850 52-week Low : 7197 Current : 9613 Moving Averages: (Simple) 10-dma: 9730 50-dma: 9523 200-dma: 8799 S&P 500 ($SPX) 52-week High: 1053 52-week Low : 768 Current : 1033 Moving Averages: (Simple) 10-dma: 1042 50-dma: 1020 200-dma: 943 Nasdaq-100 ($NDX) 52-week High: 1439 52-week Low : 795 Current : 1378 Moving Averages: (Simple) 10-dma: 1407 50-dma: 1356 200-dma: 1178 ----------------------------------------------------------------- The VXO has rebounded from its recent lows as have the VIX and VXN. Together they all remain very "oversold" for lack of a better term indicating the markets are still primed for more weakness. CBOE Market Volatility Index (VIX) = 17.68 +0.01 CBOE Mkt Volatility (old vix)(VXO) = 19.13 +0.07 Nasdaq Volatility Index (VXN) = 26.09 +0.41 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.85 579,837 493,493 Equity Only 0.72 493,194 354,797 OEX 1.45 15,490 22,420 QQQ 2.28 21,291 48,493 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 73.2 + 0 Bull Confirmed NASDAQ-100 75.0 - 3 Bear Correction Dow Indust. 83.3 + 0 Bull Correction S&P 500 79.2 - 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-dma: 1.21 10-dma: 1.09 21-dma: 1.09 55-dma: 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 1321 1281 Decliners 1482 1771 New Highs 102 140 New Lows 10 13 Up Volume 1049M 613M Down Vol. 943M 1286M Total Vol. 2003M 1927M 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 ----------------------------------------------------------------- ================================================================= 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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PremierInvestor.net Newsletter Thursday 10-23-2003 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 Stop Loss Adjustments: TTWO 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 ) =============== Take-Two Interactive - TTWO - cls: 37.20 chg: -1.23 stop: 39.50*new* Company Description: Headquartered in New York City, Take-Two Interactive Software, Inc. is an integrated global developer, marketer, distributor, and publisher of interactive entertainment software games and accessories for the PC, PlayStation. game console, PlayStation.2 computer entertainment system, the Xbox. video game system from Microsoft, Nintendo GameCube(TM) and Nintendo Game Boy Advance. The Company publishes and develops products through its wholly owned subsidiary labels: Rockstar Games, Gotham Games, Gathering, Joytech and Global Star. The Company maintains sales and marketing offices in Cincinnati, New York, Toronto, London, Paris, Munich, Vienna, Milan, Sydney, Amsterdam and Auckland. (source: company press release) Why we like it: It looks like we may have caught a top in shares of TTWO, as this aggressive bearish play is definitely moving in our favor. After last Friday's downdraft, the stock found support just below $39 and rebounded on Tuesday to close just under $40. That bounce turned out to be a great entry, as TTWO gapped down today and proceeded lower into the close, shedding nearly 4% by the end of the day. So far, it is just normal profit taking after running to new all-time highs recently. But we could be looking at a sell-the news event in the wake of competitor ERTS' earnings report after the close. ERTS is trading down nearly $5 after beating estimates, guiding higher and announcing a stock split. That definitely looks like selling the news. TTWO is trading down in sympathy, currently at $37.00 in the afterhours session vs. its $38.43 regular session close. There's some pretty decent support in the $36-37 area and a near-term rebound would not be surprising. Conservative traders may look to harvest some near- term gains on a rebound from that area. Our next viable shot at a solid entry point is likely to come from a failed rebound in the $38.50-39.00 area. Lower stops to $40.90, which is just above yesterday's intraday high. Why This is our Play of the Day Just as we noted in last night's update, TTWO began the day under some pretty stiff selling pressure this morning, which drove the stock as low as $35.10 before the buy-the-dip crowd showed up. Hopefully some of you took advantage of that dip to lock in some gains before the rebound. Today's big drop left behind a sizable gap ($36.72-38.43) and today's close back inside that gap hints at a pending fill of that gap. We're looking for any rise to the top of the gap to meet with stiff resistance from the combination of the top of the gap and the 20-dma ($38.25) and that's where we'd recommend looking for new entries. We're still looking for an eventual decline into the $33-34 area near-term with a very real possibility of a droop down to fill the early September gap between $30-32. Annotated Chart of TTWO: Picked on October 19th at $39.34 Change since picked -2.14 Earnings Date 12/03/03 (unconfirmed) Average Daily Volume = 1.08 mln ================================================================== STOP LOSS ADJUSTMENTS ================================================================== TTWO - Adjust from $40.90 down to $39.50 ================================================================== Stock Splits/Announcements ================================================================== Countrywide Declares 4-for-3 Split Before today's opening bell, Countrywide Financial Corporation's (NYSE:CFC) Board of Directors declared a 4-for-3 stock split of its common shares, and announced a new cash dividend. The payable date on the stock split is December 17th, 2003 to shareholders on record December 2nd. CFC also announced that they would increase their cash dividend to $0.20. The payable date on the cash dividend is December 1st, 2003 to shareholders on record November 12th. About the company: Founded in 1969, Countrywide Financial Corporation is a member of the S&P 500, Forbes 500 and Fortune 500. Through its family of companies, Countrywide provides mortgage banking and diversified financial services in domestic and international markets. Mortgage banking businesses include loan production and servicing principally through Countrywide Home Loans, Inc., which originates, purchases, securitizes, sells, and services primarily prime- quality loans. Also included in Countrywide's mortgage banking segment is the LandSafe group of companies that provide loan closing services. Diversified financial services encompass capital markets, banking, insurance, and global, largely through the activities of Countrywide Capital Markets, a mortgage- related investment banker; Countrywide Bank, a division of Treasury Bank, NA, a banking entity offering customers CDs, money market accounts, and home loan products; Balboa Life and Casualty Group, whose companies are national providers of property, liability, and life insurance; Balboa Reinsurance, a captive mortgage reinsurance company; Countrywide Insurance Services, Inc., a national insurance agency offering home-related insurance products; and Global Home Loans, a European mortgage banking joint venture in which Countrywide holds a majority interest. For more information about the Company, visit Countrywide's website at www.countrywide.com. (Source: Company Web Site) --- KSWS seeks shareholder approval for a 2-for-1 stock split Before today's opening bell, K-Swiss Inc. 's (NASDAQ:KSWS) announced its Q3 earnings report and in that announcement included plans for a 2-for-1 stock split. KSWS Board of Directors is calling for a special meeting of stockholders to be held in early to mid-December 2003. The purpose of the meeting is to approve an increase in authorized shares. Once approved the Board will declare a 2-for-1 stock split to be enacted as a 100% stock dividend. KSWS last split 2-for-1 in June 2002. About the company: K-Swiss Inc. designs, develops and markets an array of athletic footwear for high performance sports use, fitness activities and casual wear under the K-Swiss brand. The Company also designs and manufactures footwear under the Royal Elastics and National Geographic brands. Royal Elastics, a wholly owned subsidiary, is the leading innovator of slip-on, laceless footwear. National Geographic Footwear, under an exclusive license from the National Geographic Society, offers outdoor-oriented and casual footwear. (Source: Company Press Release) ================== 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 VZ Verizon Communications 33.24 +0.77 KMB Kimberly Clark Corp 51.94 +0.66 WSH Willis Group Holdings 32.75 +0.75 HET Harrah's Entertainment 44.51 +2.11 IRGI Inveresk Research Group 24.00 +2.33 AZR Aztar Corp 22.25 +2.94 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- QSFT Quest Software 14.71 +1.25 NUS Nu Skin Enterprises 15.10 +1.35 THER Therasense Inc 16.82 +4.30 LNCE Lance Inc 11.80 +1.14 CACS Carrier Access Group 10.07 +1.93 MTXX Matrixx Initiatives 13.87 +2.16 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AZN Astrazeneca Plc 48.90 +2.53 LLY Eli Lilly & Co 65.10 +4.32 DOW Dow Chemical Co 36.22 +1.37 GDW Golden West Financial 98.68 +3.00 ZMH Zimmer Holdings 62.00 +3.28 COF Capital One Financial 62.48 +2.38 CFC Countrywide Financial 104.43 +8.77 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- SNE Sony Corp 34.49 -2.66 CL Colgate-Palmolive Co 53.19 -4.57 ACL Alcon Inc 53.16 -3.57 KLAC KLA-Tencor 53.49 -4.56 PLD Prologis 29.43 -1.86 MERQ Mercury Interactive 43.84 -5.22 HSC Harsco Corp 37.50 -1.36 POWI Power Integrations Inc 34.30 -3.95 AMMD American Medical Systems 20.61 -2.62 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- PD Phelps Dodge Corp 54.88 -1.12 JBLU JetBlue Airways 61.80 -6.16 ZBRA Zebra Technologies 56.28 -2.12 SMTC Semtech Corp 21.19 -0.98 ================================================================= 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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