PremierInvestor.net Newsletter Tuesday 10-28-2003 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: Did You Blink? Watch List: S, JCOM, MBI, SBUX and more! Market Sentiment: Strong Volume for the Bulls ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-28-2003 High Low Volume Advance/Decline DJIA 9748.31 +140.20 9749.94 9609.72 2.07 bln 2182/1026 NASDAQ 1932.26 + 49.40 1932.26 1892.43 2.08 bln 2236/ 964 S&P 100 518.64 + 7.87 518.64 510.77 Totals 4416/1990 S&P 500 1046.79 + 15.66 1046.79 1031.13 W5000 10181.20 +154.00 10181.26 10027.22 RUS 2000 525.85 + 10.50 525.86 515.35 DJ TRANS 2883.27 + 41.90 2885.06 2841.48 VIX 16.82 - 1.23 17.89 16.77 VXO (VIX-O)17.84 - 1.26 19.17 17.71 VXN 25.00 - 1.12 26.22 24.78 Total Volume 4,480M Total UpVol 3,304M Total DnVol 1,116M 52wk Highs 670 52wk Lows 30 TRIN 0.76 NAZTRIN 1.03 PUT/CALL 0.75 ================================================================= =========== Market Wrap =========== Did You Blink? If you blinked you missed it. Last Tuesday the VXO closed at 17.82 after hitting 17.50 intraday. The Dow dropped -250 points to trade under 9500 three days later. If you blinked you missed it and the Dow closed today within four points of last Tuesday's close at 9749. Unfortunately the VXO closed at 17.84 again today. Does that mean we are headed down? Dow Chart Nasdaq Chart S&P Chart Before we tackle the VXO question again we need to wade through the economic reports. Chain store sales fell again and by a larger margin than the prior two weeks. Sales posted a -0.9% drop and prompted the Bank of Tokyo to lower estimates for October yet again to +2.5% to +3.0%. They had been as high as +5% just three weeks ago. The lack of tax checks, tax holidays and mortgage refinancing is impacting sales. Despite reportedly strong Halloween sales the retailers are still seeing overall weakness. October sales are on track to be less than half the September levels. The advance Durable Goods report came in less than expected at +0.8% when estimates were for +1.0%. This was the third monthly gain in four months but it was also another month in a down trend from the June highs. The jump in June was +2.5% followed by +1.6%, -0.1% and September's +0.8%. The gains were mostly in the private sector with defense orders falling -26.7%. Inventories fell again for 31 of the last 32 months and back orders rose for the seventh time in eight months. There are positive internals and the falling inventory number will eventually spark a demand rally. They have been saying that for much of the last 32 months but eventually it has to come true. The rising back orders indicate that production is not keeping up with the pace of new orders and that is a very positive sign. Also positive was the +4.1 jump in Consumer Confidence to 81.1 after a -4.7 dip last month. The present situation component rose to 66.8 from 59.7 a much bigger gain than the + 2 point jump in the expectations component to 90.7. Those planning to buy an auto jumped to 6.7 from 5.4 last month. Analysts attribute that to the new model year and another round of heavy advertising of new incentives. The recovery in the headline number instead of a continued downtrend was met with a long sigh of relief and a short term spike in the markets. The spike did not last and we retreated to neutral territory to wait for the FOMC announcement at 2:15. That FOMC announcement came as expected and only slightly changed from the prior months statement. They did say that spending is firming and the labor market appears to be stabilizing. The bad news was that business pricing power and increases in core consumer prices remains muted. They continued the statement about the risks of sustainable growth remain roughly equal but the unwelcome fall of inflation was the greatest concern for the near future. No change there. The comment the bond market was keying on was the no policy change for a "considerable period." This is Greenspeak for we are not going to raise rates for several more months. The bond market soared on the news and the analyst chatter is predicting no increase until the end of the first quarter. According to the Fed Funds Futures they are not expecting a 25-point rate increase until May-2004. After today's Fed announcement the fourth quarter is open for clear sailing in the bond and equity markets according to the analysts. The next meeting is Dec-9th but the Fed rarely changes policy in December to prevent a holiday spending backlash. In reality the Fed may try to keep rates at this level through next summer to continue to pump the markets and ease the deficit in front of the election. Nothing like a wave of stock profits to fill the income tax coffers. The major stock news today was Sony's announcement they were going to lay off 20,000 workers or 13% of their work force. This had been rumored with statements over the last couple weeks about a 50% excess in capacity in their factories. The fire in California is depressing insurance companies despite claims that they have plenty of reserves to deal with the expected $1 billion in claims. Allstate is the largest insurer at risk with 14% of the homeowners insurance in California. It will be months before the total of the damage is known. Helping boost the markets today was new estimates that the chip sector would grow by +14% in 2003 and +15-20% in 2004. The SOX rocketed +29 points to 490.40 and a new 52-week high. This pushed the Nasdaq to a +49 point gain. TSM delivered the good news that plants were running at almost full production to keep up with demand. TSM also said they were going to raise capex spending to between 25% and 30% of next years revenue. That could be as much as $2.2 billion up from $1.2 billion in 2003. TSM net income soared +380% over last years levels. They saw wafer shipments increase +12% in the 3Q. This is what the market needed. Good news to back up the Intel profits three weeks ago. The news from the smaller chip makers has been spotty with guidance changes both up and down. TSM is the world's largest chip foundry and that is the one you want to hear brag. The markets received even more bullish news from Charles Biderman at TrimTabs.com. He said that fund inflows were running at a record rate for October and could reach $30 billion. This is just barely behind the record for any month which stands at $35 billion from Feb-2000. He said the merger activity was strong and new offerings were light which increases both sentiment and cash. The thought of investors pouring billions into the market in hopes of an October dip was too much for the bears to handle. The indexes opened up on the semiconductor news and rallied into the FOMC announcement. For 30 min after the Fed news the buyers and sellers fought for control across a very narrow range but once the Dow crossed above 9675 it was all over for the bears. With the bulls pressing the averages higher the shorts began to cover and it was a race to the close. The Dow closed at 9745 and only 100 points from the Oct-15th high. The Nasdaq closed at 1931 and only 35 points from its October high of 1966. This is a major event for the market but it came at a price. The VXO (old VIX) closed at 17.84 and in danger territory. The S&P closed at 1046 and only 4 points from very strong resistance. While neither of these events are earth shaking they are important. The markets break resistance all the time and we all know how many levels of significant resistance the S&P has had to break since October of last year at 768. While it has broken through countless resistance levels, some several times, the VXO has only traded in the 17s once before today. This is an indicator of extreme bullish sentiment. Is that always bad? Normally it is bad. However, these are not normal conditions and bullish sentiment can get even higher. In July of 1998, the last time we had levels this high the VXO traded at 18 or below for two weeks while the market made new highs. The break finally came when the VXO traded intraday at 16.73. Prior to the advent of Internet trading in Dec-96 the VXO spent months at a time below 18. The lack of volatility came from a Dow that had stocks like Bethlehem Steel and Sears and all trades have to be screened by a broker over the phone. There were less than 20 million brokerage accounts and everyone was an investor not a trader. An investor made a dozen trades a year maybe and a trader 4-5 a week. This brings us back to the future. We are not in the pre Internet days and we have Nasdaq stocks in the Dow and Internet stocks in the Nasdaq. Volatility is a fact of life that we have to live with. That sets up a serious unknown for tomorrow and for the rest of the week. The futures sold off after the close but after a +140 point day you would expect that. Looking at the internals for today and they were extreme. Extremely bullish! The volume was high with over 2 billion shares traded on the NYSE and the Nasdaq. Advancers beat decliners by better than 2:1. Advancing volume across all exchanges was better than 3.3 billion with declining volume only 1.1 billion. This 3:1 ratio was strong, not as strong as traders would really like to see for a confirmation day but this was not a normal day. There was a FOMC meeting right in the middle. Traders took half the day off waiting for the announcement and still traded over 4 billion shares. This was very bullish in my opinion. We now have a directional problem. It appears on the surface and on the internals that we could test resistance at S&P 1050 and Dow 9850 as early as tomorrow. This would drive the VXO even lower. A break of that resistance could ignite a new 4Q rally. All thoughts of an October dip and end of fund year portfolio rebalancing would be forgotten. Actually I think part of the rally today was investors who had been expecting a bigger pull back than 9500 now chasing the indexes. If funds really have $30 billion or more inflows in October then they are awash with cash. Many had been hoarding cash to either buy the dip or cover withdrawals and neither has occurred. This leaves us with a potentially explosive scenario. We could see funds/investors throw cash at the market the rest of the week and continue to chase it higher. I could easily see new highs in place before Friday. I could also see a VXO induced sell off but I have far less confidence in it today than I did last Tuesday when I would have taken all bets. What I would be worried about is Monday. Next week is the economic reports from hell week with both ISM reports and the Nonfarm Payrolls leading the list. It is also the first week in the new year for mutual funds. There is a train of thought that they did not sell stocks in October because they wanted to go out at the top with a full portfolio to show massive gains on fund statements and be fully invested. Many of those stocks are very extended and could easily be targets for dumping once the statement date has passed. This is just speculation but one scenario that needs to be considered. If buyers continue to chase prices then the VXO could continue to plummet. The lower it goes the higher the risk. While there may not be an event on Wednesday it will only be a matter of time before we see another bout of profit taking. Hopefully it will be from much higher levels. I personally think the economic numbers, while weak, are slowly improving and while much of it is already priced in there is still room to grow. Every extended bull market continues to rally over the groans of the analysts claiming stocks to be over valued. Instead of climbing the wall of worry about economics and earnings the wall becomes disbelief that the market is running away from them. They begin to capitulate and chase prices driving the markets into one final feeding frenzy. That frenzy normally culminates in an extremely low VXO and a new high in the market. In this case that target for me is still Dow 10,000. I would be very surprised if we made it over on the first attempt but I would not be surprised to see that attempt this week. Just keep looking over your shoulder if we move higher because Friday's goblins may be after more than candy. 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 --------------------------------- Sears Roebuck Co. - S - close: 51.71 change: +1.69 WHAT TO WATCH: Positive economic news had the Retail index charging higher right from the open on Tuesday and S is perfectly poised for a breakout move tomorrow. Today's 3% rise pushed the stock back over the midline of its rising channel, and a trade at $52 would have the stock hitting its best levels since summer of 2002. Trigger entries on the breakout move and look for a near- term rally to the top of the channel at $55, possibly followed by a rally to challenge the all-time highs near $60. --- j2 Global Communications - JCOM - close: 29.39 change: -1.82 WHAT TO WATCH: There's something very wrong with JCOM, the way it continues to fall in contrast to the rising market. The key is last week's earnings report. The earnings were actually alright, but the company guided below consensus and the stock has been in free fall ever since. A break below the $29 support level should have $25 coming into play shortly thereafter. Aggressive traders could even target a continued slide to major support near the 200-dma. --- M B I A Inc. - MBI - close: 59.55 change: +0.67 WHAT TO WATCH: Getting ready for a breakout! Shares of MBI have been consolidating in a tight sideways pattern for the past few weeks, and today's gain has the stock right on the verge of breaking out to new all time highs. The 2002 high of $60.11 is the only thing standing between the stock and blue-sky territory. Wait for the breakout and then look for a momentum play, using $65 as the first upside target. Position management is easy on this one, as we can use a tight stop of $57.75, just under the recent consolidation lows. --- Starbucks Corp. - SBUX - close: 31.00 change: +0.99 WHAT TO WATCH: Another breakout! We've had our eye on SBUX for awhile now, looking for a viable pullback entry. All the market was willing to give us was a dip back to just under $30 and today's breakout looks like a momentum entry. SBUX won't move quickly, but it sure has been consistent over the past year. Look to enter on a pullback near $30 and then hold for a continuation of the rally up towards $35. =================== On the RADAR Screen =================== IR $60.00 - Another breakout candidate? You bet! IR handily beat earnings estimates last week and is in has been making steady progress towards major resistance at $60. The stock closed right at that level on Tuesday and continuation of this rally looks great for a momentum entry. Target a move up to next resistance at $65, using a stop at $57.50, just under the bottom of Monday's gap. HOV $80.90 - The parade continues, with the Housing index ($DJUSHB) continuing to charge to new all-time highs. HOV followed suit on Tuesday, cresting the $80 level for the first time and closing strongly. This is definitely not for the faint of heart, already up more than $15 since the first of the month, but with added risk comes greater potential returns. Look for this rally to continue up towards the $90 level, using the recent lows near $74.75 as a stop. PKI $18.25 - Apparently investors liked what PKI had to say in their earnings report last week, as the stock rebounded smartly from its 50- dma and then broke out with conviction over the past two days. A pullback near $17.50 would make for the best entry setup right now, although momentum entries over $18.40 could work as well. Target major resistance at $20. =============================== Market Sentiment =============================== Strong Volume for the Bulls - J. Brown It was a nice day for bullish traders with a strong pop at the open and a trend that crept higher all day before rushing even stronger into the close. What caused the rally? Take your pick. Another positive durable goods order report continued to show the manufacturing sector in this country is improving. The consumer confidence numbers this morning were positive removing any fears that investors could have about the consumer starting to pull back. This was in spite of lower weekly retail sales numbers, which did very little to hold back the 2.73% rise in the RLX retail index. Speaking of investors, TrimTabs.com, the industry expert on mutual fund inflows and outflows, noted that Americans have been pouring money into funds this October and the total could hit $30 billion. That would be a very bullish month indeed. Wall Street also got good news from the chip sector with Taiwan Semiconductor, the largest chip foundry on the planet, reporting strong demand and raising their capex spending plans. Now when was the last time you heard a tech company raising their capex numbers? Exactly, it's been a while. Of course we did have the FOMC meeting this afternoon, didn't we? Normally the markets tend to trade sideways ahead of the fed but today's trend was definitely upward. As expected the FOMC chose to leave rates unchanged at 41-year lows of 1 percent. More importantly the Fed had positive things to say about the job market stabilizing and the stream of economic reports pointing to the recovery. Up volume whooped up on down volume 3-to-1 on the NYSE and almost as badly on the NASDAQ. The advance/decline numbers were very bullish at 19/9 on the NYSE and 22/8 on the NASDAQ. Total volume was very strong with more than 2 billion shares trading on both exchanges. You're probably heard it before, but volume is a tool for the bulls. Investors and analysts want to see the markets climb higher on strong volume because it indicates conviction. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9850 52-week Low : 7197 Current : 9748 Moving Averages: (Simple) 10-dma: 9699 50-dma: 9541 200-dma: 8812 S&P 500 ($SPX) 52-week High: 1053 52-week Low : 768 Current : 1046 Moving Averages: (Simple) 10-dma: 1039 50-dma: 1023 200-dma: 945 Nasdaq-100 ($NDX) 52-week High: 1439 52-week Low : 795 Current : 1420 Moving Averages: (Simple) 10-dma: 1400 50-dma: 1363 200-dma: 1182 ----------------------------------------------------------------- Uh-oh. The VXO (old vix) has rolled back over and closed under the 18 level. Yet I doubt this is a turning point just yet. Look for the VXO as well as the VIX and VXN to move lower the next couple of days as the market averages follow through on this recent bounce. CBOE Market Volatility Index (VIX) = 16.82 -1.23 CBOE Mkt Volatility old VIX (VXO) = 17.84 -1.26 Nasdaq Volatility Index (VXN) = 25.00 -1.12 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.75 713,166 532,300 Equity Only 0.66 563,950 374,757 OEX 1.08 21,766 23,399 QQQ 3.24 32,054 103,958 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 72.9 + 0 Bull Confirmed NASDAQ-100 75.0 + 0 Bear Correction Dow Indust. 83.3 + 0 Bull Correction S&P 500 78.6 + 0 Bull Confirmed S&P 100 78.0 + 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: 1.13 10-dma: 1.13 21-dma: 1.06 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 1920 2200 Decliners 903 881 New Highs 257 282 New Lows 17 7 Up Volume 1519M 1477M Down Vol. 480M 571M Total Vol. 2025M 2069M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 10/21/03 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 09/30/03 395,713 397,577 ( 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%) 10/21/03 394,176 411,246 (17,070) (2.1%) 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 09/30/03 144,681 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% 10/21/03 136,643 88,290 48,343 21.5% 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 09/30/03 163,828 218,991 (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%) 10/21/03 226,985 236,906 ( 9,921) ( 2.2%) 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 09/30/03 131,698 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% 10/21/03 168,236 56,564 111,672 49.7% 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 09/30/03 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%) 10/21/03 36,314 43,305 ( 6,991) ( 8.8%) 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 09/30/03 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% 10/21/03 16,917 9,750 7,167 26.9% 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 09/30/03 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% 10/21/03 16,876 9,037 7,839 30.3% 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 09/30/03 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%) 10/21/03 5,392 8,842 (3,450) (23.1%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. 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PremierInvestor.net Newsletter Tuesday 10-28-2003 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: Charging Higher Stop Loss Adjusments: BDK, IGT Tech Stocks (NB) Closed Bearish Plays: UTEK Active Trader (Non-Tech) Closed Bearish Plays: MHK High Risk/High Reward Closed Bullish Plays: MPS Stock Splits/Announcements: LYTS Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Play-of-the-Day ( Bullish ) =============== Black Decker - BDK - close: 47.77 change: +0.87 stop: 45.20*new* Company Description: Headquartered in Towson, Md., Black & Decker is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. (Source: Company Press Release) Why we like it: October 22, BDK reported earnings that showed sales and profit climbing. The company raised estimates for the fourth quarter. The stock surged, leaping above $44.00 and closing just under $46.00. As it climbed, it created a P&F bullish triangle breakout. It also climbed above the neckline of an inverse H&S that had been building since early 2002. The H&S formation appears somewhat malformed, but the breakout on strong volume confirms the neckline. Thursday and Friday, price consolidated just above historical support/resistance, further confirming the stock's strength. RSI and stochastics have moved into territory indicating overbought conditions, but can stay pinned there for some time in a strongly trending stock. MACD lines separate and turn up from above signal, also confirming strength. The chart suggests two entries. After a period of consolidation, BDK might resume its climb, and new entries could be found on a move above Friday's high, also an area of light resistance on the weekly chart. With such strong gains to consolidate, it's possible that the consolidation could involve a pullback, perhaps to the $44.75 level. A pullback and bounce from above $44.50 would offer an entry, too. We expect some resistance near $48.00, but will target $49.50. Why This is our Play of the Day Last week's breakout was clearly one with some follow-through, as shares of BDK have solidified the break above $46 and are approaching next resistance near $48. Should BDK break above that barrier, then it should be an easy run to $50. Recall we're looking to exit the play and harvest gains on a move into the $49.50-50.00 area. So traders looking to initiate new positions will need to either enter on a pullback and rebound from above $46 or enter on a breakout above $48, looking for a quick "hit and run" type of play. Since $50 is major resistance on the weekly chart, we're betting BDK won't be able to break above there on the first attempt and harvesting gains makes the most sense. In light of the proximity of the eventual target, we're tightening our stop to $45.20, just below last Thursday's intraday low. Annotated Chart of BDK: Picked on October 26th at $46.16 Change since picked +1.61 Earnings Date 11/04/03 (confirmed) Average Daily Volume = 2.45 mln ================================================================= Stop Loss Adjustments ===================== BDK – Adjust from $43.74 up to $45.20 IGT – Adjust from $29.25 up to $29.74 ================================================================= Tech Stocks (NB) ===================== -------------------- Closed Bearish Plays -------------------- Ultratech Stepper - UTEK - close: 30.90 change: +1.12 stop: 30.75 It didn't matter how good the technical setup looked for a downside play in shares of UTEK last Friday. The bulls decided that $28 was the point to step up and buy the stock aggressively and that's precisely what they did, pushing the price right back up to the 50-dma by yesterday's close. At that point, the play still looked like it might roll over, but any thoughts of that happening were dashed with a gap up open this morning and a subsequent 3.76% gain, which violated our stop. Obviously, we're dropping UTEK tonight, as a busted play. Picked on October 26th at $28.23 Change since picked +2.67 Earnings Date 1/15/04 (unconfirmed) Average Daily Volume = 408 K ================================================================= Active Trader (Non-Tech) ======================== -------------------- Closed Bearish Plays -------------------- Mohawk Industries - MHK - close: 73.89 change: +2.39 stop: 72.50 Apparently breaking critical support and giving a fresh PnF Sell signal is the new battle cry for the bulls. That's precisely what MHK handed to us last week, before turning on a dime and running sharply higher over the past four sessions. Today's 3.3% gain was particularly painful, as MHK ran more than $1 beyond our stop and looks like it has further upside in store. Any open positions should have already been stopped out, but for those still holding on, we'd suggest using any weakness tomorrow as an opportunity to trim losses and exit. Picked on October 22nd at $68.92 Change since picked +4.97 Earnings Date 1/15/04 (unconfirmed) Average Daily Volume = 398 K ================================================================= High Risk/High Reward ===================== -------------------- Closed Bullish Plays -------------------- MPS Group INC. - MPS - close: 9.88 change: -0.68 stop: 9.49 Although we printed MPS’s earnings date for all to see, we neglected to officially close the play Monday night. Tuesday, MPS reported Q3 earnings that rose 13%, meeting forecasts, but the company said that Q4 earnings would come in below projections. Revenue fell. MPS gapped down, but did not hit our stop until shortly before the FOMC decision was announced. After that decision was announced, MPS bounced with other stocks, moving back above our stop. The decline was on strong volume, but that strong volume included spikes both near the opening declines and then when MPS climbed into the close. MPS did manage a close above its 50-dma and a long-term ascending trendline, but RSI turns down strongly. Stochastics produced a bearish kiss, but did not fully turn down from levels indicating overbought conditions. MACD threatens a bearish cross, too, but from above signal. Those oscillators create doubt about MPS’s ability to climb back over $10-10.10 resistance. Picked on Oct 15 at $10.40 Change since picked: -0.66 Earnings Date: 10/28/03 (confirmed) Average Daily Volume: 466 thousand ================================================================= Stock Splits/Announcements ========================== LYTS sheds light on a 5-for-4 stock split Before today's opening bell, LSI Industries Inc.'s (NASDAQ:LYTS) Board of Directors declared a 5-for-4 stock split of its common shares. The payable date on the stock split is November 14th, 2003 to shareholders on record November 7th. This is LYTS's first stock split since 2001. About the company: LSI Industries, headquartered in Cincinnati, is an integrated design, manufacturing, and imaging company supplying its own high-quality lighting fixtures and graphic elements for both exterior and interior applications primarily in North America. The Company's major markets are the petroleum / convenience store market, the multi-site retail market (including restaurants, automobile dealerships, and national retail accounts), and the commercial / industrial lighting market. LSI employs approximately 1,600 people in sixteen facilities located in Ohio, California, Georgia, New York, Kansas, Kentucky, Oregon, Rhode Island, South Carolina, Tennessee, Texas and Washington. The Company's common shares are traded on the Nasdaq National Market under the symbol LYTS. (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 GS Goldman Sachs 92.25 +4.06 STGS Stage Stores 30.25 +0.66 HOV Hovnanian Enterprises 80.90 +1.80 BWA Borg Warner 77.00 +1.24 NXTL Nextel Communications 23.32 +0.95 USB US Bancorp 27.22 +0.54 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- TSM Taiwan Semiconductor 11.56 +1.12 AMKR Amkor Technology 19.38 +3.19 ACF Americredit Corp 13.16 +1.15 CHINA Chinadotcom Corp 10.38 +1.44 CMOS Credence Systems 16.30 +1.93 STLD Steel Dynamics 19.29 +1.45 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- TXN Texas Instruments 29.35 +1.25 AMAT Applied Materials 22.55 +1.83 BTI British American Tobacco 24.89 +2.87 STI SunTrust Banks 68.90 +1.68 BBBY Bed Bath & Beyond 42.91 +1.46 TXT Textron Inc 48.78 +1.02 MCHP Microchip Technology 31.72 +3.52 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- APD Air Products & Chemicals 44.50 -1.61 ATH Anthem Inc 69.05 -2.00 OHP Oxford Health Plans 41.63 -4.36 RCII Rent-A-Center 31.30 -3.07 SAH Sonic Automotive 22.00 -4.84 GPI Group 1 Automotive 33.76 -1.34 JCOM J2 Global Communications 29.35 -1.86 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- KZL Kerzner Intl Ltd 37.12 -1.67 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. 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