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Daily Newsletter, Monday, 10/27/2003

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PremierInvestor.net Newsletter                 Monday 10-27-2003
                                                  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:      Monday's Merger Madness
Play of the Day:  Breakout

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     10-27-2003            High     Low     Volume Advance/Decline
DJIA     9608.16 + 25.70  9663.79  9584.54 1.64 bln   1896/ 905
NASDAQ   1882.91 + 17.32  1890.66  1873.62 1.50 bln   2017/1058
S&P 100   510.77 -  0.48   514.69   509.98   Totals   3913/1963
S&P 500  1031.13 +  2.22  1037.75  1028.91
RUS 2000  515.35 +  8.92   516.15   506.43
DJ TRANS 2841.39 + 14.14  2862.07  2823.89
VIX        18.05 +  0.34    18.18    17.74
VXO        19.10 +  0.17    19.35    18.53
VXN        26.12 +  0.67    26.81    26.00
Total Volume 3,434M
Total UpVol  2,339M
Total DnVol  1,016M
52wk Highs     440
52wk Lows       25
TRIN          1.44
PUT/CALL      0.64
===============================================================

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


Monday's Merger Madness
by James Brown

It was a very busy day on Wall Street that echoed the glory days
of the late 90's where Merger Monday's were commonplace.  The
markets were buoyed at the open on the merger news but stocks
faded from their highs by the close.  Earnings reports from three
Dow components and a better than expected home sales report were
not enough to keep the bulls focused.  Caution ahead of
tomorrow's FOMC meeting and news of four more lethal car bomb
attacks in Iraq weighed on investor confidence.

U.S. exchanges got a boost from a strong Japanese NIKKEI index,
which added 1.15% or 118 points to close at 10,454.  The Hang
Seng was also positive, up 13 points.  European exchanges joined
their Asian counterparts with the German DAX adding 1.87% or 64
points to close at 3517.  The London FTSE closed higher by 12
points.  By the end of today's session the DJIA was up almost 26
points to 9608.  The NASDAQ added 17 points or 0.92% ending at
1882 and the S&P 500 squeaked out a 2-point gain to close at
1031.

Market internals were positive with advancing stocks outnumbering
declining stocks nearly 19 to 9 on the NYSE and 20 to 10 on the
NASDAQ.  Up volume was strong on both exchanges, measuring almost
2-to-1 versus down volume on the NYSE and not quite 3-to-1 on the
NASDAQ.  Total volume was modest with 1.6 billion shares trading
on the Big Board and 1.5 billion on the NASDAQ.  Crude oil
futures closed below the $30 a barrel mark, down 24 cents on the
session while gold futures dropped $1 to $388.20 an ounce.

Chart of the DJIA:


Chart of the NASDAQ:


Mergers Aplenty

Launching the markets to an early lead was news that Bank of
America (BAC) would pay $47 billion in stock to buy FleetBoston
Financial (FBF).  Together the two would become the nation's
biggest consumer bank and their union would rank as the third
largest merger (in financial value) behind the Travelers-Citicorp
merger and Nations-BankAmerica merger, which both occurred in
1998.  The acquisition would give FBF shareholders 0.5554 shares
of BAC stock for each share of FBF owned, which equates to a
41.5% premium for FBF over Friday's close.  Together the two
banks would hold 9.8% of the nation's banking deposits, which is
just below the 10% cap set by federal regulators. However, if the
merger is approved the new entity can certainly grow their
business beyond the 10% level.  A merger of this size is going to
come under a lot of federal scrutiny but management believes it
will be completed in the first half of 2004.  As expected shares
of FBF soared today, ending higher by more than 23% while shares
of BAC dropped more than 10% as traders worried that the company
may have paid too high a price for growth.

The BAC-FBF news sent the financial sector in motion.  Several
regional banks like Coamerica Inc, KeyCorp, PNC Financial,
Soveriegn Bancorp and SunTrust Banks all rose on speculation that
further consolidation will make them takeover targets.  The
broker-dealer sector also jumped on the news.  Big Wall Street
houses Goldman Sachs, Merrill Lynch and Morgan Stanley, all with
large investment banking arms, were trading higher since
additional M&A activity means big business for them.

Speaking of big business, the two largest Blue Cross Blue Shield
providers also announced a merger today.  Anthem (ATH) announced
it would buy its larger rival WellPoint Health Network (WLP) for
more than $16 billion in cash and stock.  In a somewhat
convoluted agreement, ATH is buying WLP for nearly $24 in cash
and one share of stock for each share of WLP.  Yet WLP
shareholders will own more than 53% of the new entity and the
combined corporation will be call WellPoint Inc.  The merger will
create the nation's largest health insurer.

Another health insurance merger was announced today with
UnitedHealth (UNH) declaring its intent to purchase Mid Atlantic
Medical Services (MME).  The agreement has UNH spending $18 in
cash and 0.82 shares of its stock for each share of MME, which
gives MME shareholders a 16% premium over Friday's closing price.
All told the deal will measure about $3 billion.  The two health
insurance mergers today had shares of Oxford Health (OHP) trading
higher on takeover speculation.

Monday's merger news wasn't confined to financials and
healthcare.  Technology companies also got into the act.
Symantec (SYMC) has agreed to buy On Technology (ONTC) in a deal
worth $100 million in cash.  Meanwhile Ciber (CBR) announced it
is buying SCB Computer Technology (SCBI) for $90 million in cash
and stock.  Plus, the Internet empire built by Barry Diller
expands to France as InterActive Corp (IACI) declares plans to
buy Anyway.com, a French subsidiary of Canadian tour operator
Transat for almost $63 million.

As if that wasn't enough merger news R.J. Reynolds Tobacco (RJR)
announced after the closing bell today their plans to buy rival
cigarette maker Brown & Williamson, a division of British
American Tobacco (BTI).  RJR plans to spend $2.6 billion in cash
and stock for a 58% ownership in the new company to be named
Reynolds American.  The new entity will have 30% slice of the
U.S. cigarette market with $10 billion in sales a year under
their combined brands American Spirit, Camel, Kool, Lucky Strike,
Pall Mall and Winston.

Earnings News

The breakout of merger news overshadowed earnings announcements
from three Dow components.  American Express (AXP) turned in Q3
earnings that beat estimates by a penny with 59 cents a share.
Revenues were strong and the company guided to the high end of
previous forecasts for the full year but investors seemed
disappointed that results weren't stronger.  Shares lost 1.82%.

Fellow Dow component International Paper (IP) fared poorly as
well.  Shares lost more than 1% after reporting Q3 earnings that
were worse than year-ago levels and missed current estimates by a
penny.  IP's net income of 24 cents a share was hurt by weak
demand and pricing for its paper and packaging products.
Management was quoted as saying the fourth-quarter "looks tough".

The third Dow component to announce today was consumer products
giant Procter & Gamble (PG).  The company reported Q3 earnings
that rose 20% over a year-ago period but only managed to beat
current estimates by a penny.  Net income came out to be $1.26 a
share with revenues up 12.9% to $12.2 billion, which was above
analyst estimates.  PG said its third quarter was boosted by
strong demand for its heartburn drug Prilosec and cost cutting.

Housing Market Hot

Counter balancing the lackluster earnings news was a better than
expected existing home sales report.  Home sales in September
were on fire as sales rose an unexpected 3.6% to a record-setting
6.69 million annual pace.  New home sales were flat at $1.145
million, but remained at a very strong pace.  Analysts had been
estimating small declines in September home sales.  Mortgage
rates are up off their 40-year lows from June but homebuyers are
taking advantage of rates that remain near historically low
levels.  It is a common train of thought that home sales create
demand for appliances, home furnishings and furniture.  Thus, the
high pace of home sales is yet another clue to the improving
economic picture and strong consumer demand.

Terrorist Threat

It may have been a positive Monday on Wall Street but it was a
bloody one in Iraq.  The media is reporting that four attacks/car
bombs have hit three Iraqi police stations and one Red Cross
building in Baghdad.  The violence claimed another 30 to 35 lives
and wounding more than 230, mostly Iraqis.  The Iraq situation
may no longer be a factor influencing the markets but if
conditions continue to heat up it is unclear how it may affect
the future of American consumer confidence and investor
sentiment.  Crossing the wires this evening is another warning
from the U.S. government urging citizens to avoid all non-
essential travel to Saudi Arabia due to "credible" information
regarding terrorist activities.  This in and of itself should not
affect trading in the U.S. exchanges but should extremists strike
down a passenger plane entering or leaving Saudi then we could
see a sharp reaction in the markets.

Tomorrow

Hopefully we'll see some follow through on the rebound from
Friday's low but a lot may depend on earnings news and economic
reports out tomorrow.  The Durable Goods Order report will be out
before the opening bell.  Shortly after the open should be the
Consumer Confidence report.  Later in the afternoon will be the
FOMC meeting on interest rates.  Everyone is expecting the Fed to
leave rates unchanged at the 41-year low of 1% but all eyes and
ears will be focused on what they have to say about the economy,
the recent signs of improvement and any new concerns over the d-
word (deflation).  Overall the rash of merger news today is a
healthy sign of stronger investor confidence.  These big
corporations would not be making these kinds of acquisitions if
they didn't think the economy wasn't improving.



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


INTL Game Tech - IGT - cls: 31.57 chng: +0.45  stop: 29.25*new*

Company Description:
IGT (www.IGT.com) is a world leader in the design, development
and manufacture of microprocessor-based gaming and lottery
products and software systems in all jurisdictions where gaming
and lotteries are legal.  (Source:  Company Press Release.)

Why we like it:
While IGT made little headway the end of the week, we were
gratified to see it maintain support during the broad market
declines.  Friday, IGT even eked out a gain, and it gained on
larger-than-average volume.  The candle was a high-wave candle,
one indicative of indecision, often seen during a consolidation
period.

Although IGT could not hold onto all its gains Friday, it moved
above $31.50 Friday morning, triggering this long play.  Our stop
remains $28.79, but conservative traders might consider raising
the stop to $29.24, just below the rising 21-dma and the top of
the October 13 gap.

Friday's high-wave candle and the indecision it implies indicate
that the stock could dip to support again.  New entries could
still be considered on a pullback and bounce from anywhere above
that 21-dma.  Those preferring a momentum entry might wait for a
move above Friday's high.  Both stochastics and RSI have begun
trending, so they offer little help in gauging market direction
now, as is typical of a trending stock.

Why This is our Play of the Day
Friday's foray over our $31.50 trigger was an encouraging sign
for our play, but today's rally and close above that level was
even more constructive.  The stock is in the process of breaking
above a bullish triangle that has been building since the sharp
upward surge on October 13th that came on the heels of the
Merrill Lynch upgrade to Buy.  Volume is looking solid and the
stock is clearly outperforming the rest of the market.  We're
looking for IGT to solidify the breakout in progress with another
upward push and close above today's $31.69 intraday high.
Depending on your trading style, either a breakout above that
level or a pullback and rebound from above the 10-dma ($30.87)
look attractive for new entries.  We're raising our stop to
$29.25 tonight, which is right at the top of the 10/13 gap and
just below the rising 30-dma ($29.29).  Keep in mind that time
will be working against us on this play, as IGT is set to release
its quarterly results on November 4th, giving us just over one
week to play.

Annotated Chart of IGT:


Picked on October 22nd at  $31.00
Change since picked         +0.57
Earnings Date            11/04/03 (confirmed)
Average Daily Volume =   2.45 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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Newsletter, or any Premier Investor Network newsletter please
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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 10-27-2003
                                                   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
=================================================================

High Risk/High Reward
  Closed Bearish Plays: GILD

Stop Loss Adjustments:  IGT

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)


==================================================================
High Risk/High Reward
=====================

  --------------------
  Closed Bearish Plays
  --------------------


Gilead Sciences - GILD - close: 57.42 change: -0.99 stop: 60.51

GILD has been all over the map in the past week, with alternating
white and black candles, as the bulls and bears have slugged it
out.  The bears seem to be gaining the upper hand as of Monday's
close, with price going out right at major support.
Unfortunately, we don't have the luxury of time to wait around
for this one to play out, as GILD is set to release its quarterly
results tomorrow after the closing bell.  The stock could break
down hard following the announcement, or it could rebound -- we
just don't know.  That's a big part of why we always exit open
plays ahead of earnings.  It's just too risky to hold over the
announcement.  Take advantage of any early price weakness to exit
the play for a small gain and then watch the excitement from the
sidelines tomorrow night.

Picked on October 15th at  $59.58
Change since picked:        -2.16
Earnings Date:           10/28/03 (confirmed)
Average Daily Volume:    3.55 mln





==================================================================
Stop Loss Adjustments
=====================


IGT – Raise from $28.79 up to $29.25


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

SBC     SBC Communications Inc     23.48    +0.54
WLP     Wellpoint Health Network   91.09    +7.16
SHW     Sherwin-Williams Co        32.27    +0.81
OHP     Oxford Health Plans Inc    45.99    +1.54


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

FMT     Fremont General Corp       16.35    +1.33
CTV     Commscope Inc              14.60    +1.70
TALK    Talk America Holdings Inc  15.39    +1.32
COB     Columbia Laboratories      10.13    +1.38


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

FBF     Fleetboston Financial Cp   39.20    +7.40
SYY     Sysco Corp                 33.24    +1.25
CHA     China Telecom              32.56    +2.13
STI     Suntrust Banks Inc         67.22    +3.72
KSS     Kohl's Corp                54.15    +1.78


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

BAC     Bank of America Corp       73.57    -8.29
UNH     Unitedhealth Group Inc     51.40    -1.85
FDC     First Data Corp            35.21    -1.17
STX     Seagate Tech Hldgs         21.00    -1.25
ATH     Anthem Inc                 71.05    -6.21
MYL     Mylan Laboraties Inc       26.19    -1.21

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

HIBB    Hibbett Sporting Goods     27.03    -0.56
BMI     Badger Meter Inc           32.75    -1.65



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