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Daily Newsletter, Monday, 11/10/2003

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PremierInvestor.net Newsletter                 Monday 11-10-2003
                                                  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 Markets Misstep

Play of the Day:  Poised For A Break

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     11-10-2003            High     Low     Volume Advance/Decline
DJIA     9756.53 - 53.26  9824.38  9736.90 1.49 bln    950/1875
NASDAQ   1941.64 - 29.10  1973.08  1939.73 1.74 bln    995/2124
S&P 100   518.77 -  1.93   521.28   517.85   Totals   1945/3999
S&P 500  1047.11 -  6.10  1053.65  1045.58
RUS 2000  533.21 -  9.75   543.30   533.18
DJ TRANS 2953.25 - 26.04  2996.66  2952.99
VIX        17.62 +  0.69    17.88    17.53
VXO        17.95 +  0.39    18.40    17.87
VXN        26.49 +  1.29    26.56    26.15
Total Volume 3,569M
Total UpVol    947M
Total DnVol  2,555M
52wk Highs     600
52wk Lows       30
TRIN          1.41
PUT/CALL      0.91
===============================================================

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

Monday Markets Misstep
by James Brown

Monday felt rather slow for many traders but the trend was 
negative from the beginning and only began to pick up speed by 
the afternoon's close.  This was especially true for the tech-
heavy NASDAQ, which lost nearly 1.5 percent.  The selling was 
widespread with only the utility, natural gas and insurance 
indices managing to close in the green.  The heaviest selling hit 
technology with biotech, semiconductors, and hardware taking the 
most damage.  Homebuilders put together back-to-back losses as 
investors took profits and even the airlines felt some turbulence 
today.  

Pressuring stocks were comments from Lehman Brothers over Dow 
component Hewlett-Packard (HPQ) and a survey over technology 
spending that suggested corporations were still cautious.  
Chicago Fed President Michael Moskow's encouraging comments made 
from Prague today merely reconfirmed that the FOMC would keep 
interest rates low but were not enough to inspire new buying from 
the bulls.  Meanwhile President Bush has a decision to make on 
his steel tariffs after the World Trade Organization (WTO) 
issued a final ruling that the U.S. tariffs are illegal.  The 
President levied import tariffs in March of 2002 and they are not 
scheduled to end until March 2005.  The European Union (EU) is 
threatening $2.3 billion in tariffs of their own if Bush doesn't 
lift his steel tariffs by mid-December.  A Bloomberg article 
notes that it is a tough choice for Bush who is trying to protect 
the steel industry in Ohio and Pennsylvania.  The EU's looming 
sanctions would hit industries in Florida and N. Carolina knowing 
they are politically important states to his re-election.  

Monday turned out to be a downer for the markets worldwide.  
Asians stocks were lower with the Japanese NIKKEI falling 124 
points to 10,504 after their country's recent election.  Hong 
Kong's Hang Seng also closed lower.  German and English market 
indices lost ground as well, both closing lower by almost one 
percent.  Oil prices shot higher midday but were unable to 
maintain their gains.  Traders speculate the rise was concern 
over the weekend terrorist car bombing in Saudi Arabia and yet 
another pipeline explosion in northern Iraq.  

Market internals for U.S. markets were certainly bearish.  The 
NYSE reported 18 losers for every 9 advancing stocks compared to 
22 declining issues per 9 advancing stocks on the NASDAQ.  Down 
volume was better than 2.5 times up volume on both exchanges.  
Gold surged $3.10 to close at $386.70 an ounce while the dollar 
fell against the yen.  Bonds continued to drift lower, which 
pushed yields higher.  Bonds had to absorb the government's 3-
year note auction today and we'll see a $16 billion 5-year note 
auction on Wednesday and another $17 billion in 10-year notes on 
Thursday.  

Chart of the DJIA:


Chart of the NASDAQ:



Twenty-three out of thirty Dow components were lower today with 
HPQ leading the declines down 4.3 percent to $22.01.  Dan Niles, 
a well-known analyst with Lehman Brothers, issued cautious 
guidance for HPQ's first quarter numbers.  Meanwhile Goldman 
Sachs wasn't hot on a key exec leaving HPQ and suggested 
investors may want to sell if the stock reaches $25.  
The Forester Research IT spending survey offered mixed messages.  
At least 32 percent of the 800 IT managers polled planned to 
increase spending next year but growth was only estimated at 4 
percent.  

Management at Germany's Infineon Technologies, a chipmaker, also 
produced some mixed messages today.  The company announced 
earnings that beat by a penny.  While they see increased demand 
and 18% growth for next year their CEO cautioned on becoming 
overly enthusiastic.  Closer to home Dow-component Intel (INTC) 
received an upgrade from J.P.Morgan from "neutral" to "over 
weight" but shares failed to rally on the news.  Even Merrill 
Lynch tried to offer positive comments by raising price targets 
on several chip stocks (LLTC, MCHP, MXIM, SMTC, and XLNX) but 
they too failed to rally.  As a matter of fact, all 18 stocks in 
the SOX semiconductor index closed in the red, pulling the SOX 
down nearly 3 percent for its first significant decline in two 
weeks.  

It wouldn't be a Monday if we didn't have merger news and a story 
or two from the weekend copy of Barron's (or as some traders like 
to call it Bear-ons).  Our Monday merger hails from the printing 
industry.  R.R. Donnelley & Sons (DNY), printer for Sports 
Illustrated and TV Guide, announced it would buy Canadian printer 
Moore Wallace Inc for $2.8 billion in stock.  The Barron's 
stories making the rounds today involved two tech companies.  
Adobe Systems (ADBE), famous for its graphical-arts software, was 
portrayed as a company investors should be wary of since ADBE 
management has yet to curb their high-volume of stock option 
grants to employees.  Barron's said the company issued options 
from 2000 through 2002 that total more than 20 percent of the 240 
million shares outstanding.  This is about ten times the average 
for a large company and certainly dilutive to shareholders.  The 
bigger Barron's story was a positive spotlight on Intl. Business 
Machines (IBM).  The article speculated that IBM shares could 
reach $100 as the company continues to be one of the best plays 
to catch any increase in IT spending.  This pushed IBM to be the 
second best performer in the Dow.  

Looking ahead to tomorrow the stock market will have to run on 
its own as the bond markets will be closed for Veteran's day.  
Not that it is likely to matter.  Investors are already looking 
ahead to Friday's economic reports.  It seems without constant 
stimulation investors are prone to take profits.  What we 
believed to be compelling price magnets at Dow 10K and NASDAQ 2K 
may not be as strong as we thought.  Topping the headlines 
tomorrow will likely be earnings reports from apparel retailers 
Abercrombie & Fitch (ANF), J.C.Penny (JCP), May Dept. Stores 
(MAY) and TJX Companies (TJX).



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

Flamel Tech. S.A. - FLML - cls: 24.15 chng: -0.79 stop: 27.50

Company Description:
Flamel Technologies S.A. is a biopharmaceutical company 
principally engaged in the development of two polymer-based 
delivery technologies for medical applications. The company's 
Micropump technology is a multi-particulate technology for oral 
administration of small molecule drugs with applications in 
controlled release, tastemasking and bioavailability enhancement. 
FLML has three major products based on its Micropump technology: 
Asacard, a controlled-release formulation of aspirin for the 
treatment of cardiovascular disease; Metformin XL, a controlled-
release form of Metformin that is in development for use for the 
treatment of Type II diabetes, and Genvir, a controlled-release 
acyclovir for the treatment of genital herpes. In addition, Flamel 
has developed new herbicide delivery systems and has patented a 
biomaterial, ColCys.

Why we like it:
While FLML has been continuing in its downward trek over the past 
week, the rate of descent has been slowing and the bulls did their 
best to hold the line just below $24 over the past 3 days.  The 
stock has fallen into the gap left behind in late August, an we're 
expecting a continuation down to the bottom of that gap just above 
$21.  Before that happens though, we might be in for another 
failed bounce to the 10-dma ($26.12).  A rollover near that level 
would be the next solid entry setup.  On the other hand, a drop 
under $23.95 can be used for momentum entries, targeting the 
bottom of the gap.  The last rebound failed at $27.50, so that's 
where we're keeping our stop this weekend.  A move above that 
level would break the pattern of lower highs and be an early sign 
that the downward trend has ended.

Why This is our Play of the Day
It looks like the bulls got trapped this morning into thinking 
there might be some upside follow-through to Friday's mild gains.  
That early bounce ran out of steam just below $26, with the 10-dma 
($25.92) once again providing resistance.  After that rejection, 
FLML headed south throughout the remainder of the day, ending very 
near its low of the day and posting a new closing low for the 
move.  The stock looks poised to finally break sharply lower and 
for traders that missed out on today's gift of an entry point, the 
next best thing may be a solid break below today's intraday low 
($23.85), looking for continuation down to the bottom of the gap 
at $21.30.  Right now, the only real obstacle to that achievement 
is mild support near $22.50.  Additional failed bounces below the 
10-dma can still be used for fresh entries, with risk easy to 
manage with our stop at $27.50.  Traders entering on a breakdown 
move may want to use a tighter stop at $26.25, just over today's 
intraday high.

Annotated Chart of FLML:

 

Picked on November 2nd at $25.25
Change since picked        -1.10
Earnings Date            1/29/04 (unconfirmed)
Average Daily Volume =  1.60 mln



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

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

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



PremierInvestor.net Newsletter                  Monday 11-10-2003
                                                   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
=================================================================

Stop Loss Adjustment: MXO

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)


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


MXO - short
adjust stop from $14.05 to $12.98



==================================================================
  Trading Ideas
==================

XTO     XTO Energy Inc             24.70    +0.58
MWI     Moore Wallace Incorp       16.15    +0.90
RWT     Redwood Trust Inc          54.71    +3.61
GOLD    Randgold Resources Ltd     23.38    +0.56


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

TTEC    Teletech Holdings Inc       9.59    +1.22
GCO     Genesco Inc                18.69    +1.31
IMOS    Chipmos Tech Bermuda        7.57    +1.09
ABAX    Abaxis Inc                 10.99    +1.14


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

ASH     Ashland Inc                39.22    +1.01
ODSY    Odyssey Healthcare Inc     31.15    +1.41
GLDN    Golden Telecom Inc         26.30    +1.02
KWK     Quicksilver Resources      27.80    +1.43


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

STX     Seagate Tech Hldgs         20.26    -1.48
PCAR    Paccar Inc                 74.72    -1.63
HNP     Huaneng Power Intl Inc     58.60    -1.58
WHR     Whirlpool Corp             66.53    -3.19
HAR     Harman Intl Ind Inc       125.20    -6.30


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

KYO     Kyocera Corp               61.00    -1.59
ADBE    Adobe Systems Inc          43.42    -1.61
DBD     Diebold Inc                55.00    -1.02
BDK     Black & Decker Corp        46.30    -1.24
NAV     Navistar Internat Corp     40.09    -1.22


=================================================================
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.

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