PremierInvestor.net Newsletter Wednesday 11-12-2003 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: Striking Distance 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) ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 11-12-2003 High Low Volume Advance/Decline DJIA 9848.83 +111.04 9859.34 9729.42 1.66 bln 2182/ 644 NASDAQ 1973.11 + 42.36 1973.11 1935.86 1.84 bln 2330/ 784 S&P 100 524.19 + 5.53 524.76 518.56 Totals 4512/1428 S&P 500 1058.53 + 11.96 1059.10 1046.57 RUS 2000 540.66 + 12.09 540.66 528.57 DJ TRANS 2953.20 + 25.96 2953.95 2923.80 VIX 16.75 - 0.79 17.85 16.55 VXO 16.99 - 1.01 18.56 16.79 VXN 25.55 - 1.00 26.81 25.32 Total Volume 3,854M Total UpVol 3,263M Total DnVol 543M 52wk Highs 586 52wk Lows 26 TRIN 0.60 PUT/CALL 0.80 ================================================================= =========== Market Wrap =========== Striking Distance by James Brown It appears that word of the rally's demise has been premature. Buyers came back into the markets with a vengeance. The S&P completely erased the last three days of losses while the Dow and the NASDAQ Composite came close to accomplishing the same feat. Buying was strong in technology stocks as semiconductors, hardware, Internets and software all posted strong gains. Yet even the fervor for tech issues couldn't out pace the rally in gold. December gold futures shot up nearly $7 to $395 an ounce. The last time gold came close to the $400 mark was March 1996. World indices were mostly positive but none of them put in the same kind of performance that U.S. stocks produced. The DJIA gained 111 points (+1.14%) to close at 9848. The S&P 500 added 12 points (+1.15%) to close at 1058 putting it within four points of its 52-week high. The tech-heavy NASDAQ added more than 2 percent to close at 1973 and within striking distance of NASDAQ 2000. It was a very broad based rally with nearly every sector index closing in the green, several up two percent or more, except for the UTY utility index, which dropped fractionally. Advancing stocks outnumbered decliners almost 22 to 6 on the NYSE and 23 to 7 on the NASDAQ. Up volume outpaced down volume 5-to-1 on the NYSE and 8.5-to-1 on the NASDAQ. That's not quite the bullish internals that Jim was looking for in his wrap last night but they're close. Chart of the DJIA: Chart of the NASDAQ: Wednesday was filled with a multitude of headlines. Most of them positive and they fueled the rally through out the session. The move in gold was a big one. Oddly, the rally in gold isn't necessarily a "plus" for stocks in general as it is typically seen as a defensive play against bearish markets and a weak dollar. The $6.90 jump in December gold futures put it close to the $400 mark and pushed the shiny metal to levels not seen in seven years. The dollar's strong drop against the euro powered the move in gold and many are expecting it to break the $400 mark soon. Goldbugs have been "predicting" such an event would occur for months and a close above the $400 level would be a huge psychological breakout. The hunger for the commodity pushed the XAU gold & silver index up 5.57% to 101.86. The XAU index hasn't traded this high since October of 1997. Bonds were also making headlines. The bond market was closed for Veteran's day yesterday and traders were interested to see how the market reacted to Wednesday's $16 billion 5-year note auction after Monday's 3-year auction turned out mediocre. Fortunately, there was strong demand for the new 5-year notes. Some suspect it was safe-haven buying as things heat up in Iraq again. By the end of the day bonds were higher across the board, which pushed yields lower. Tomorrow we'll see the government auction off another $17 billion in 10-year notes. After today's auction demand is expected to be strong. There were dozens of individual stories driving stocks higher and as expected most of them sprang from the tech sector. Semiconductor stocks got another shot in the arm after Gartner Inc said their forecast predicted global chip sales to rise 20 percent next year. The SOX semiconductor index rose 3.36% to its best closing high in over a year as all 18 components closed with a gain. We may see the rally continue tomorrow. After the bell today Applied Materials (AMAT), the world's biggest chip equipment maker, announced earnings that beat estimates by a penny. Net income may have dropped 90 percent from a year ago but the company says it's turning a corner and orders for next quarter should rise 20%. New orders rose strongly last quarter and the company's book-to-bill ratio hit 1.05-to-1 for the first time in a year. The stock was trading higher after hours. Tech investors also heard good news from IBM's CEO Sam Palmisano. In an analyst meeting today Sam said he was "very optimistic" about the long-term growth for IT. Shares of IBM rose 1.48% to close back over the $90 level. Another hardware stock making headway was Lexmark Intl (LXK), the computer printer maker. LXK was upgraded from a "neutral" to a "buy". The UBS analyst also raised their price target for LXK from $80 to $88. Shares surged over 4 percent and broke resistance at $75. Yet another bullish development for technology investors was news that Cisco Systems (CSCO) would buy Latitude Communications (LATD) for $80 million. Companies tend to hold on to cash unless business conditions are improving (not that $80 million is a lot of cash to CSCO). One technology stock forgotten in all this enthusiasm is Microsoft (MSFT). Shares of MSFT, while closing 18 cents higher today, have really under performed its peers in the GSO software index as well as its fellow Dow components. Some suspect the recent weakness could be some of these troubled funds trying to raise cash for redemptions and the easiest place to do that are highly liquid stocks like MSFT. The ongoing anti-trust suit that MSFT continues to face with EU regulators is just a good excuse take money out. Another Dow component making headlines was drug giant Merck & Co (MRK). Shares of MRK were hit with new selling this morning after the company disclosed it would cease research for its MK- 0869 compound, better known as "substance P", which was being developed for depression. MRK said Phase III trials had failed to prove the treatment performed any better than the placebo. Major Wall Street analysts were split on their opinion of how this would affect MRK going forward. Surprisingly, shares of MRK were positive by the closing bell. Traders have a lot to look forward tomorrow and Friday. Thursday will bring economic reports on import/export prices, trade balance and the weekly initial jobless claims, which are expected to come in near the 365,000 mark. We'll also hear from the largest retailer on the planet Wal-Mart (WMT), who reports earnings before the opening bell. Estimates for WMT are 47 cents a share. Thus far WMT's weekly sales figures have been tracking inline. WMT's rival Target (TGT) will also be announcing earnings tomorrow morning. Estimates for TGT are 33 cents a share. One of the higher profile earnings announcements tomorrow will be Dell (DELL). DELL announces after the closing bell on Thursday and estimates are for 26 cents a share with revenues close to $10.5 billion. What DELL has to say about business going forward could have a big impact on tech stocks for Friday. Friday will bring the Michigan Sentiment numbers and the PPI report. One comment on the AMAT earnings tonight...normally, with the chip group so overbought one can expect a sell the news reaction but with the NASDAQ so close to 2000 it may be just the excuse traders need to finally tag that psychological level. ================= 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 WFC Wells Fargo & Co New 56.73 +0.80 GSK Glaxosmithkline Plc (ADR) 45.18 +1.22 XL XL Capital Ltd 74.57 +2.09 KMI Kinder Morgan Inc 52.92 +0.79 HET Harrah's Entertainment 47.49 +1.69 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- PDG Placer Dome Inc 16.79 +1.06 AMD Advanced Micro Devices 18.08 +1.46 STLD Steel Dynamics Inc 19.78 +1.03 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- NTT Nippon Tel & Tel (ADS) 23.60 +2.25 DCM NTT De Co Mo (ADR) 22.75 +1.52 SI Siemens Aktien 70.82 +1.01 NEM Newmont Mining Corp 43.96 +1.70 LXK Lexmark Intl 76.10 +3.12 CSC Computer Sciences Corp 44.19 +3.40 COH Coach Inc 37.89 +1.47 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- WFMI Whole Food Markets Inc 58.73 -1.26 ENR Energizer Holdings 36.51 -1.09 NTLI NTL Inc 57.27 -2.78 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- NJ Nidec Corp (ADR) 100.45 -0.45 NFX Newfield Exploration 40.55 -0.19 VVC Vectren Corporation 23.35 -0.28 NVGN Novogen Ltd (ADS) 23.71 -2.37 ================================================================= 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 (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form
PremierInvestor.net Newsletter Wednesday 11-12-2003 section 2 of 2 Copyright ) 2003, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section two: Tech Stocks New Bullish Plays: CTSH Bearish Play Updates: FLML Active Trader (Non-tech) New Bullish Plays: RSH New Bearish Plays: PVN Bullish Play Updates: IR Bearish Play Updates: BG, STT, T High Risk/Reward New Bullish Plays: STLD Bullish Play Updates: AU, GNTX, RAD Bearish Play Updates: MXO ================================================================== Net Bulls (NB) Tech Stock section ================================================================== ========= NEW PLAYS ========= ----------------- New Bullish Plays ----------------- Cognizant Tech. - CTSH - close: 46.86 change: +2.37 stop: 42.75 Company Description: Cognizant Technology Solutions Corporation delivers full lifecycle solutions to complex software development and maintenance problems that companies face as they transition to e- business. These information technology (IT) services are delivered through the use of a seamless on-site and offshore consulting project team. The company's solutions include application development and integration, application management and re-engineering services. Among CTSH's prominent clients are ACNielsen Corporation, ADP, Inc., Brinker Int'l, Computer Sciences, The Dun & Bradstreet Corporation, First Data Corporation and Nielsen Media Research. Why we like it: One look at the weekly chart of CTSH is likely to cause all but the most unabashed bull to get vertigo. The stock is up more than 100% from its April lows in nearly a straight line. Steadily working higher in an ascending channel for the past 6 months, the stock has consistently found support at the bottom of that channel ($42.90) and/or the 30-dma ($43.18). The dip in late October barely dipped below the 20-dma (then at $40.80) before finding support and tearing up the chart to tag a new high just shy of $48. Well, don't look now, but CTSH looks like it is ready to give the upside another run. Yesterday's dip to the 20- dma (now at $44.09) was enthusiastically bought today, with the stock surging higher by more than 5%, with the stock closing just below its low of the day. More importantly, today's close puts CTSH just below it's all time high of $47.70, and it looks like a real breakout is brewing. Normally, in this sort of situation, we'd use a breakout trigger to enter the play, but with the strength of the ascending channel, we're going to pass on the trigger and look for entry on either a pullback or a breakout from here. Momentum traders that are comfortable waiting for a breakout before entry will want to use a $47.75 trigger. Those looking for a pullback entry will want to focus on the $44.50 area, as that should now be strong support, backed up by the rising 20-dma. Regardless of entry strategy, we'll be using a stop just below the lower edge of the rising channel at $42.75. Based on the steady ascent, this could be a longer-term play. Our initial target will be $50, but we're really looking for upside continuation into the $52-53 area. Annotated Chart of CTSH: Picked on November 12th at $46.86 Change since picked +0.00 Earnings Date 1/20/04 (unconfirmed) Average Daily Volume = 1.03 mln ============ PLAY UPDATES ============ -------------------- Bearish Play Updates -------------------- Flamel Tech. S.A. - FLML - cls: 24.73 chng: +1.50 stp: 26.25 Well, that's frustrating, don't you think? FLML was chugging along in a cooperative manner, moving well into its August gap by yesterday afternoon. The bulls counter-attacked today though, with FLML vaulting higher to the tune of 6.45% on stronger volume. This defines the $23 level as stronger support than initially expected, but the jury is still out as to whether this is a reversal or a one-day bounce. Despite the rebound, we are encouraged by the fact that the stock once again was rejected at the 10-dma ($25.11). This could be the setup for another bearish entry point near resistance based on the nascent rollover at the close. Look for more price weakness in the morning before initiating a new position though. If FLML pushes back above the 10-dma though, odds are good that we're seeing a reversal and will likely be forced to exit the play. Maintain stops at $26.25 as the $26 level has been solid resistance for over a week now. Picked on November 2nd at $25.25 Change since picked -0.52 Earnings Date 1/29/04 (unconfirmed) Average Daily Volume = 1.61 mln ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bullish Plays ----------------- RadioShack - RSH - close: 32.15 change: +0.66 stop: 30.30 Company Description: Fort Worth-based RadioShack Corporation is the nation's most trusted consumer electronics specialty retailer of wireless communications, electronic parts, batteries and accessories as well as other digital technology products and services. With more than 7,000 outlets nationwide, it is estimated that 94 percent of all Americans live or work within five minutes of a RadioShack store or dealer. The company's knowledgeable sales associates and brand position -- "You've Got Questions. We've Got Answers.(R)" -- support RadioShack's mission to demystify technology in every neighborhood in America. For more information on the company, visit the RadioShack Corporation Web site at www.radioshackcorporation.com. Why We Like It: Monday, Prudential reiterated its overweight rating of RSH, mentioning a $34.00 target, but we have another target in mind: a P&F target. Last week, RSH completed an ascending triple top breakout buy signal, with a current upside target of $41.00. We want to capture a portion of that climb, setting our target at $36.00. RSH also announced a contract with ATC Logistics and Electronics, with that contract expected to add 300 new RadioShack jobs. With retailers expecting a strong holiday season, the RLX climbed Wednesday, and RSH participated. After breaking above its early September high, it's been consolidating just above the breakout level. MACD turns up strongly, and RSH looks ready to break out. Trigger the play on a breakout above this week's $32.25 high. Annotated Chart for RSH: Picked on Nov 12 at 32.15 Change since picked: +0.00 Earnings Date: 10/21/03 (confirmed) Average Daily Volume: 1.2 million ----------------- New Bearish Plays ----------------- Providian Financial - PVN - cls: 10.88 chng: -0.12 stop: 11.55 Company Description: As one of the top ten US credit card companies, PVN issues mainly secured credit cards to more than 12 million customers, many of whom have spotty credit histories. The company also offers standard and premium crecit cards to those with better credit. In addition to credit card products, the company also offers a suite of loan products and membership services. Soliciting new customers via direct mail, phone calls, and online advertising, PVN has more than $27 billion in assets under management and over 14 million customers. Why we like it: Financial stocks may have been performing well throughout the broad market rally, but PVN stumbled badly after being downgraded to Neutral by UBS the day after their earnings report. That sent the stock plunging from $13 to just below $11 before a mild bounce commenced. That bounce failed at the $11.50 level and has been rolling over in the past few days. Based on today's fractional break of the 10/30 low, it looks like the consolidation pattern of the past 2 weeks is going to resolve itself to the downside. When it does, we'll have a nice little flag pattern working in our favor. Frequently, midway through a large move, a stock will build a sideways consolidation pattern and then when it breaks in the direction of continuation, we can calculate an end target based on the pattern. The distance traveled after the break should be roughly equal to the distance traveled leading into the consolidation. The initial move in the case of PVN was roughly $2, from $13 down to $11. If the stock breaks to the downside, then we should see continuation down to roughly the $9 level. We're going to use a trigger for PVN at $10.80, which is just below today's intraday low. Entries taken on the initial break look good for momentum players, while more timid traders might get fortunate enough to see a subsequent failed rebound from the $11.00-11.25 area. While we're targeting a drop to the $9 area (very near the 200-dma), we would be remiss if we didn't point out the reality that there is some mild support near $10.50 and significant support closer to $10. By the time that $10 support is reached, we should have enough cushion in the play to allow us to hold on for lower levels ahead. Risk-reward is favorable as well, with a nice tight stop at $11.55, which is just above the high of the consolidation pattern of the past couple weeks. Annotated Chart of PVN: Picked on November 12th at $10.88 Change since picked +0.00 Earnings Date 1/28/04 (unconfirmed) Average Daily Volume = 2.79 mln ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- Ingersoll-Rand - IR - close: 60.39 change: +1.76 stop: 58.30 The price action in IR was certainly not encouraging early this week, with the stock falling precipitously on Monday and losing a bit more ground yesterday, trading within 10 cents of our $58.30 stop. But the bulls defended support at the 30-dma ($58.55) today and sent the stock higher by a full 3%, once again closing over $60. Today's rebound certainly looks convincing, especially with the close near the day's high and daily Stochastics trying to reverse back into a bullish climb. The best entries into the play have been coming on the pullbacks and today's rebound may have been the best shot we're likely to get. Momentum entries can still be taken on a breakout over $61.80, which would have IR back in the top of its rising channel. That breakout would have us looking at IR finally having a real shot at rallying towards the top of its channel, now at $65.25. If entering new positions on a breakout, look for increasing volume to confirm bullish conviction. Picked on October 29th at $60.68 Change since picked -0.29 Earnings Date 1/21/04 (unconfirmed) Average Daily Volume = 1.20 mln -------------------- Bearish Play Updates -------------------- Bunge Limited - BG - close: 26.00 change: -0.12 stop: 27.55 After an encouraging start to the play, BG has been trying our patience over the past week, rebounding from just above $26 and coming close to hitting our stop yesterday. Wednesday's action delivered a tight consolidation candle, and with daily Stochastics (5,3,3) looking weak near overbought territory, this could prove to be the rebound entry patient traders have been waiting for. The 20-dma ($27.30) and the 30-dma ($27.49) should now act as resistance and as long as BG rolls over below $27.50, the rollover can be used as a fresh entry. More conservative traders may want to wait for a break below $26.60 before entering though, as that would show some bearish conviction with the break below this week's intraday lows. We're still targeting a drop into the $24.00-24.50 area, but we'll definitely need to see heavier selling volume to make that happen. Maintain stops at $27.55. Picked on November 2nd at $27.10 Change since picked -0.36 Earnings Date 1/29/04 (unconfirmed) Average Daily Volume = 500 K --- State Street Corp. - STT - cls: 50.35 chng: -0.07 stp: 51.75*new* To say that our STT play has been a disappointment so far would be an understatement, as the stock has been chopping along in a tight range between $49.75-51.65 for over a week now. Our trigger at $49.35 has still not been reached, so we remain comfortably on the sidelines, waiting for STT to prove its intentions. There is a definite pattern of lower highs over the past several sessions, but that could be either a pattern of weakness or we could be witnessing a bullish descending triangle forming on the chart. The action plan remains the same. We need to wait for the trigger to be hit, and then momentum entries below that level can be considered. More cautious traders can look for a failed bounce after that trigger is hit, with a likely entry in the $50-51 area. With last Friday's intraday high of $51.65, we can lower our stop to $51.75 and improve the potential risk-reward ratio, with our downside target remaining at $44-45. Picked on November 5th at $50.74 Change since picked -0.39 Earnings Date 1/13/04 (unconfirmed) Average Daily Volume = 1.65 mln --- AT&T - T - close: 19.37 change: +0.30 stop: 20.05 Tuesday, Lehman initialized T at an overweight rating with a $24.00 price target, but the day's candle was a doji printed just above the 200-dma. That candle indicated uncertainty about moving the stock higher. The Lehman rating countered the JP Morgan underweight rating last week. Wednesday, matters changed. T announced a $7.5 million networking contract it received from the Skanska USA Building, with Skanska being a commercial construction and project development company. The contract will run over three years. Investors reacted by sending T higher, but we wonder if the gains were specific to T or if T was riding on the coattails of other telecommunications stocks. NTT's strong performance in Japan after its earnings release probably helped all telecommunications stocks. The North American Telecoms Index $XTC also gained today. The pop back above the 200-dma and the rising daily oscillators look worrisome. We do note that volume did not pick up as T rose, so that volume did not confirm the gains. On Wednesday, T found resistance at its 21-dma as well as from the late October gap. We also notice that the current climb could be another bear flag rising into resistance. If so, we hope to see it turn down below $20.00 and our stop. Those considering new entries should probably wait until a rollover beneath the 200-dma again. Annotated Chart for T: Picked on Oct 29 at 19.07 Change since picked: +0.30 Earnings Date: 10/21/03 (confirmed) Average Daily Volume: 7.0 million ================================================================== HIGH RISK/HIGH REWARD (HR) section ================================================================== ========= NEW PLAYS ========= ----------------- New Bullish Plays ----------------- Steel Dynamics - STLD - close: 19.78 change: +1.03 stop: 17.99 Company Description: Steel Dynamics, Inc. [provides] a broad range of flat-rolled products to the market, including light gauge micro-alloyed and high strength steels for demanding automotive applications. (Source: Company Press Release.) Why We Like It: Late last week, the World Steel Dynamics said it expected a world-wide shortage of steel in Q1 of the next year. Across the globe, shares of steel manufacturers have risen. U.S. steel manufacturers have been in the news, too, as countries demanded that Bush remove the steel tariffs he enacted to protect U.S. steel manufacturers. Wednesday, STLD broke above weekly resistance that had held since mid-1999, and it did so on volume that was more than double average daily volume. As if that weren't enough to pique our interest, we notice that STLD produced a double-top breakout signal back in March with an upside target of $57.00. While we have no intentions of hanging around through the twists and turns that might eventually bring STLD up to $57.00, we wouldn't mind hanging on for an upside target of $25.00. Because STLD has not yet had a reversal from the X column that formed that P&F target, the target might go higher. It's also possible that STLD will pull back at some point into that first three-box reversal, so we're placing this entry in the high-risk, high-reward category. MACD bearish divergences have abounded in stocks and indices as they've added to recent gains, but not in STLD. MACD has followed prices higher, not signaling divergence. RSI and 5(3)3 stochastics already trend at levels indicating overbought conditions, as would be expected in a strongly trending stock. We have a quandary about the entry for this stock. While $20.00 is clearly important round-number resistance, Wednesday's strong volume confirms the importance of the breakout over that long- term weekly resistance. While we're reluctant to enter just ahead of $20.00, we think pullbacks and bounces from above $19.00 would make ideal entries. Such entries might not be offered, however, and in that case, strong-volume moves above $20.00 would make appropriate momentum entries. We're setting a stop at $17.99, just below the rising 21-dma. Annotated Chart for STLD: Picked on Nov 12 at 19.78 Change since picked: +0.00 Earnings Date: 10/22/03 (confirmed) Average Daily Volume: 359 thousand ============ PLAY UPDATES ============ -------------------- Bullish Play Updates -------------------- AngloGold - AU - close: 43.43 change: +2.63 stop: 39.25*new* With the CBOE Gold Index $GOX gaining more than 6 percent on Wednesday, AU did not want to be left behind and tacked on a 6.45 percent gain. Climbing on volume that was about 50 percent higher than normal, AU climbed within $1.60 of our $45.00 target. MACD looks strong. While stochastics have moved into territory indicating overbought conditions, they can remain pinned at that level while a stock trends. In that condition, stochastics downturns may not signal selling opportunities but rather imminent consolidation. It looks as if AU should probably consolidate the recent gains, but we're not sure if that's going to happen. We've raised our official stop to $39.25, just below the apex of the triangle from which AU broke, triggering our long play. More conservative traders might want to set their stops higher, perhaps just below $40.00 or even just below Tuesday's $40.41 high. We would not suggest momentum entries at this point, but pullbacks and bounces from above $41.50 might be appropriate entries for new plays. Confirm strength in the $GOX first. Annotated Chart for AU: Picked on Nov 7 at 41.10 Change since picked: +2.33 Earnings Date: 10/31/03 (confirmed) Average Daily Volume: 1.0 million ----- Gentex Corp - GNTX - close: 41.99 change: +1.80 stop: 39.15*new* Automakers performed strongly Wednesday, and this long play benefited from their strength. GNTX added 4.48 percent, climbing on almost double the average daily volume. The pullback earlier in the week established support at $40.00. MACD turns up strongly, and GNTX looks ready to climb. Further pullbacks and bounces from the $40.00-41.00 level would provide new entries on this well-performing bullish play. Our target remains $45.00, and we're raising our stop to $39.15, just below the rising 21-pma. Conservative traders might set a higher stop, perhaps below Tuesday's pullback low. Annotated Chart for GNTX: Picked on Oct 29 at 39.69 Change since picked: +2.30 Earnings Date: 10/15/03 (confirmed) Average Daily Volume: 520 thousand ---- Rite Aid - RAD - close: 6.21 change: +0.14 stop: 5.75 RAD pulled back Monday, but by Wednesday, it was climbing again. With the Retail Index RLX moving up to challenge $390.00 resistance, RAD added to the gains made Tuesday when it bounced from its 10-dma. That pullback provided for new entries, but we wish volume were picking up with the climb. We think investors might be waiting for another move over recent highs, so look for an explosion of volume to confirm breakout entries. As we mentioned last week, P&F resistance lies at $6.50, so some might prefer to wait for a break over $6.50 for momentum entries. Annotated Chart for RAD: Picked on Nov 05 at 5.95 Change since picked: +0.26 Earnings Date: 09/25/03 (confirmed) Average Daily Volume: 3.5 million -------------------- Bearish Play Updates -------------------- Maxtor Corp. - MXO - close: 11.90 change: +1.03 stop: 12.98 MXO has certainly gone out of its way to not deliver an actionable entry point into the play so far, with last week's decline continuing down to south of $11 by yesterday's close. The rebound we were waiting for finally arrived today with the stock vaulting higher by nearly 9.5%, and that rebound came on volume 50% over the ADV and very close to the levels seen on the decline of the past few days. MXO's rebound halted just below the critical $12 level today and this could either be the entry point we want or the beginning of a reversal move. If the stock powers higher again tomorrow and moves through the $12.50 level, then we'll want to stand aside. However, a rollover from the $12.00-12.25 area looks viable for an aggressive downside entry, with an eye towards a drop down to the $10 support level. Remember, we don't just want to see into strength on the rebound, despite the fresh PnF Sell signal. Wait for the rollover before playing and maintain stops at $12.98, just over the 50-dma. Picked on November 9th at $12.15 Change since picked -0.25 Earnings Date 1/20/04 (unconfirmed) Average Daily Volume = 3.94 mln ================================================================= 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 (c) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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