PremierInvestor.net Newsletter Tuesday 11-18-2003 section 1 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 one: Market Wrap: Do You Hear Singing? Watch List: MGAM, TTWO, SYMC, RJR and more! Market Sentiment: Is The Top Behind Us? ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 11-18-2003 High Low Volume Advance/Decline DJIA 9624.16 - 86.70 9750.46 9622.39 1.62 bln 1288/1850 NASDAQ 1881.75 - 27.90 1926.00 1881.75 1.86 bln 1183/1929 S&P 100 512.22 - 4.01 518.82 512.09 Totals 2471/3779 S&P 500 1034.15 - 9.48 1048.77 1034.00 W5000 10082.84 - 89.60 10227.18 10081.66 RUS 2000 521.68 - 4.53 531.39 521.58 DJ TRANS 2866.95 - 26.20 2915.34 2866.95 VIX 19.11 + 0.51 19.17 17.78 VXO (VIX-O)19.90 + 1.08 19.90 18.33 VXN 29.65 + 1.84 29.71 27.88 Total Volume 3,805M Total UpVol 1,060M Total DnVol 2,605M 52wk Highs 318 52wk Lows 32 TRIN 1.58 NAZTRIN 1.79 PUT/CALL 0.76 ================================================================= =========== Market Wrap =========== Do You Hear Singing? Some traders claimed to be hearing the proverbial fat lady singing today but I am not convinced. There were numerous reasons for the drop but none of them were catastrophic. The markets simply need a breather and the opportunity to rotate into different sectors. While the four day Dow drop may seem like a disaster if you are long it is only a blip in the longer term trend. What does bother me is the weakness into the close and events on the horizon so grab those reading glasses and let's get started. Dow Chart Compx S&P Chart The morning economic reports were not very positive. The Chain Store Sales for last week fell -0.8% and gave back two thirds of the prior weeks gains. Overall the trend for the last two months has been very choppy with excuses the norm and sales weak. The Bank of Tokyo left the estimates for the month at +4.0% but they are going to have to hurry. Fortunately the Thanksgiving shopping is still ahead and there is a good chance there will be a rebound. Inflation is still at 40-year lows according to the Consumer Price Index, which was released this morning. The index was flat at +0.0% with the core rate only +0.2%. This raised the rate for the last twelve months to only +1.3% and only a tenth of a point from the +1.2% 40-year low in September. On the surface this frees the Fed from worrying about the inflation monster for at least another month. The bad news is that the real prices we pay were rising with beef prices at a 24 year high. The internal number that skewed the results was a -3.9% decline in energy prices. That offset some of the other gains but you can bet the Fed knows how to count and will be looking at the internal components. The home building market may be losing some of its luster according to the NAHB numbers for November which dropped to 69 from 72 in September. While this is still high it shows the pressure from the higher mortgage rates. The buyer traffic fell to 46 from 52 and was the largest drop of any component. CTX bucked the number today with a positive outlook and suggesting that the boom will last. They said that 2005 was looking very strong. This enthusiasm carried over into their stock price which jumped +2.08 to 101.38 on the outlook and a 2:1 stock split announcement. The Fed is apparently not worried about the creeping inflation and two Fed heads actually brought up the deflation potential again. There comments on deflation/inflation along with comments about being on the sidelines for some time were welcomed by bond traders. Bonds were bought to the relief of everyone but that did not help stocks. Strong earnings from Home Depot failed to help the markets out of their slump. HD credited tax check liquidity and several natural disasters as well as an overhaul of their stores for the strong sales in all sectors. Sales were up nearly +15% with earnings at 50 cents beating estimates by four cents. HD lost -50 cents on the day after trading up strongly at the open. The biggest factor dragging on the market was the various terror alerts and incidents. With Ramadan ending next Tuesday it is almost a sure thing there will be an escalation in events over the next week. The threats are coming fast and furious and most are directed at friendly Arab nations and the U.S. There was a strong rumor during the day that traders were moving to the sidelines due to the Bush trip to London. Even with security at the highest possible level it is still more risky than the same exposure in the U.S. Traders were worried that putting Bush at higher risk during the last week of Ramadan was too tempting a target for terrorists. This trip had been planned for 18 months so plenty of time for them to get their act together. Some of the biggest targets are the various oil fields and pipelines in Arab world. Saudi Arabia is said to be very concerned that their pipelines could be attacked as well as other critical points. Oil prices are rocketing as the worry filters through the markets. Oil finished over $32 today and a multi month high. The growing terror threat is also causing a run on the gold markets. Some say the Arabs are buying gold as insurance against an oil knockout. There is also the growing fighting in Iraq and a continuing flood of insurgents from other countries. Several military analysts are predicting a war with Syria soon. Evidently they are not cooperating with the U.S. and are harboring terrorists. Any U.S. attack on ANY other country in the region would seriously destabilize the region and weaken support among other Arab countries. I seriously doubt this is going to happen since the Iraq conflict is getting worse instead of better but the rumors are flying. Another challenge is the falling dollar. With the Euro at a two year high over the dollar it makes it more profitable to sell oil to Europe instead of the U.S. This means the prices we pay to offset the weaker dollar will be higher. Also, according to the money watchers the money flow into the U.S. markets from abroad has nearly stopped. The monthly average inflows into the bond market for the prior four months had been $39 billion. In October only $5 billion was invested in our bonds. This is the equivalent of a trickle. The same is said to be true of inflows into stocks. Overseas investors are becoming increasingly worried that the U.S. will not be able to fund the deficit, which could swell to $4 trillion according to some estimates, without selling massive amounts of debt over the next couple of years. They are also worried that the Fed is going to be forced to raise rates to combat inflation and that will stall the recovery and make the deficit worse. Add in soaring oil prices and terrorist threats of 100,000 American deaths in a coming attack and foreigners think the risk is too great. Foreign investors were also hit with trade sanctions against China and worries that the U.S. is becoming more protectionist. This was triggered when the U.S. imposed temporary "safeguard" trade sanctions against textile products from China on Tuesday. Under China's WTO accession agreement there was a provision for caps on imports if the flow of goods became unbalanced. U.S. manufacturers requested the sanction be imposed and that limits imports to 7.5% of last years levels. Much of China's textile exports are from state-owned firms subsidized further by state-owned banks. Profit is not a motive but employment of the population. Dumping of these products into the U.S. market harms U.S. manufacturers. The dollar hit a five month low against the Euro at $1.19 to buy 1 Euro. This 20% difference is well above the historical highs of 80 cents to the Euro and is causing havoc on the currency markets. George Soros is short the dollar and has been taking every chance possible to hammer it even more. The world events are simply adding to the pressure. Nikkei Chart The Nikkei rallied +110 points last night to near 9900 but the gain was minor compared to the -1500 points the index had lost from the October highs. The rebound on Tuesday may have only been a dead cat bounce or a small relief rally. The continuing global pressures could continue to press the Nikkei down to real support at 9500. Any decline like this overnight would put some serious pressure on our markets. Our markets do not need any more pressure. They are on the verge of cracking and need for those mysterious buyers who always seem appear at critical points to show up at the bell tomorrow. The Dow, Nasdaq and SPX all closed under their critical 50 day moving averages. This has provided support since March. The indexes only broke that support by a few points on a day where the Dow lost -86 points but it was a very negative day. It was not that bad in points lost but it appeared to be an acceleration of the recent down trend. The Dow has closed down for four consecutive days on good economic news. The total loss is only -220 points but that drop has put us right on the verge of breaking that strong support. The closing sentiment was negative and we closed on the lows of the day. The Dow at 9624 is well below the lofty levels near 9900 just three days ago. The Dow 10,000 hopes have been dashed and replaced with Dow 9500 fears. Looking at the charts tonight those fears could easily come true this week should the markets not be able to mount a rebound at tomorrows open. Helping depress the open already was late news of 47 currency traders being arrested in New York for scamming small investors. Details are very sketchy at 7:PM but there is plenty of film footage of handcuffed traders being loaded into FBI vans. The futures dropped substantially on the news and are now near their closing lows. There was also more mutual fund news after the close with claims that the founder of Strong Funds had been accused of front running his funds purchases. According to reports he bought large quantities of small cap stocks that his funds were going to buy and then resold them at a profit when the fund went into the market to buy stock. This came on top of news that the Janus International CEO had been terminated along with several managers for improper trades. It was also announced that investors withdrew another -$7 billion from Putman in the last week making more than $25 billion over the last three weeks. Putman's assets were down almost -10% and Calpers announced they were withdrawing another $1.2 billion in managed assets. With withdrawals coming in faster than deposits it is no wonder the equity markets are under pressure. Need more reasons for financials to be under pressure? FRE was under pressure after it was announced that Federal investigators are looking into investment transactions that were arranged by major investment banks like LEH, MWD, MER and Citibank. Apparently they structured temporary transactions to move profits off the FRE books so that FRE would not have to report windfall profits from derivative transactions. In one instance Citibank was said to have hidden $700 million in profits so that FRE could report earnings inline with estimates. Many of the banks earned fees in excess of $25 million a year for assisting in these transactions. In a week where all the news has been bad there was one highlight. Merrill Lynch upgraded GE to buy with a target of $33. Surprised? Merrill Lynch cut estimates on GE just last week from $1.65 to $1.60 for the year. With the upgrade the same analyst now believes GE will hit $1.85 earnings in 2005. His reason for the upgrade? The double-digit earnings growth from his lowered estimate last week. Duh! This analyst had a buy on GE from $57 all the way down to $22 when he went to neutral. GE was over $28 when he cut it last week and $27.50 when he upgraded it today. GE jumped to a high of $28.92 on the upgrade and declined to 28.50 at the close. Guess they had bought all the GE they wanted on the way down and needed to lighten the load some. Wednesday could be exciting. We do not have any major economic announcements but there is sure to be a flurry of news events to rile the markets. If the Dow can hold over 9600 we have a chance of pulling out of this slump. Just remaining flat could give the bargain hunters confidence and we could see a relief bounce. However, with Bush overseas, the end of Ramadan still a week away and breaking news on the continuing trading scandals we are not likely to breakout into a new bullish trend. We just need to consolidate peacefully and let time pass. The week before Thanksgiving has been bullish for the last 10 years but it is going to have to hurry to close this week in positive territory. Regardless of the market move tomorrow the overall market health is still strong. This is a normal profit taking event helped by the strong news flow. Unless the Dow breaks below 9000 the uptrend is still intact. Until the end of Ramadan next Tuesday I would not be in a hurry to buy the dips. Just look at it as research time and a future buying opportunity. Enter Very Passively, Exit Very Aggressively! Jim Brown ================================================================== 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 --------------------------------- Multimedia Games, Inc. - MGAM - close: 44.11 change: +1.39 WHAT TO WATCH: After 3 consecutive days of steady losses in the broad market, it's tough to find solid bullish play candidates, but MGAM certainly qualifies. After dipping near the 10-dma, the stock caught a solid bounce and appears ready to break out to new highs. Use a trigger above $44.90 and look for a move up towards the 450 level. --- Take-Two Interactive - TTWO - close: 33.47 change: -2.63 WHAT TO WATCH: That giant sucking sound is the rush of investors out of video game stocks on the heels of disappointing sales. TTWO plunged over the past two days and the stock is right on the verge of breaking another key support level. Trigger entry on a drop below $32 and target a move down to strong support at $28 near the 200-dma. There's the potential for a bounce from the $30 area, but based on the strong volume on today's slide, it may take a bit of time for this decline to come to a stop. --- Symantec Corp. - SYMC - close: 61.35 change: -4.71 WHAT TO WATCH: Competitive comments from CA had shares of SYMC plunging sharply lower on Tuesday and this is definitely too large a move to have us interested in a chase. But the break below strong support on huge volume also speaks of a move that is for real. Look for a failed bounce under the 50-dma (preferably near $64) to provide for a lower risk entry, in anticipation of a drop to support near $57 and then $55. --- RJ Reynolds Tobacco Hlds - RJR - close: 51.01 change: +0.08 WHAT TO WATCH: Tobacco stocks have been back in style lately and RJR has had an impressive recovery from just below $30 just a few months ago. Each consolidation near recent highs leads to a breakout and RJR looks ready to do it again. Use a trigger above $51.75 and target next resistance in the $55-56 area. =================== On the RADAR Screen =================== QCOM $45.43 - It may seem strange to mention QCOM in a bullish light after losing nearly 3% on Tuesday, but we've got our eye on the bigger picture. QCOM was due for a bout of profit taking, but technically still looks strong, holding above the bottom of its channel and the 50-dma. This current weakness may turn out to be the prelude to a great long entry on a rebound from strong support in the $44-45 area. AMZN $48.50 - We mentioned AMZN as a bearish candidate last week, and we were looking for a failed rebound from $55 for entry. That lined up almost perfectly before the stock began plunging lower, ending at $48.50 today. This looks like too much of a downward move to chase right now, but a failed bounce below the 50-dma ($52.96) could be just the ticket for a continuation entry on the way to breaking below $45 and drilling all the way down to $40. BCR $76.01 - Marching steadily lower after breaking the $78 support level, BCR looks like it may just be getting started. While the 50-dma may provide some mild support near $75, this stock looks destined to come back and retest strong support in the $72 area. There's no need to get in a hurry or chase BCR lower though. The best entries will come on the heels of a failed bounce that stalls out below the 20-dma. =============================== Market Sentiment =============================== Is The Top Behind Us? - J. Brown The major U.S. stock indices (DJIA, S&P 500, and the NASDAQ Composite) have all broken their rising simple 50-dma's. This is certainly a bearish technical development and given the rise in the volatility indices one begins to wonder if the markets have finally put in a short-term top. Market internals were bearish as the DJIA and NASDAQ closed lower for their fourth decline in a row. Decliners out paced advancing stocks 17 to 11 on the NYSE and 15 to 14 on the NASDAQ. The Big Board saw most of the selling with down volume twice as strong as up volume. Only four of the 30 Dow Jones Industrial components closed in the green. Yesterday's late day bounce appeared to have "buy the dip" written all over it but the follow through failed to appear Tuesday morning. Making headlines were growing concerns over the U.S. dollar, which is trading near its lows against the Japanese yen and the euro. The weak dollar is fueling the rise in gold and the shiny metal is trading above the $400 mark in after hours tonight. Looking at the technical indicators below (in the sentiment) traders will notice that the short-term 5-dma on the ARMS index or TRIN is fast approaching the 1.50 level. Typically readings over 1.50 tend to be bullish buy signals but last time the 5-dma hit the 1.65 mark before the markets turned. Plus, these TRIN signals tend to be a little early. It sounds like we have farther to fall. Levels to watch involve the 1020 area on the SPX, the 1840-1850 area on the NASDAQ, and the 9500 mark on the DJIA. A breakdown below these support levels could denote a possible trend change and not just profit taking. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9903 52-week Low : 7197 Current : 9624 Moving Averages: (Simple) 10-dma: 9777 50-dma: 9644 200-dma: 8924 S&P 500 ($SPX) 52-week High: 1063 52-week Low : 768 Current : 1034 Moving Averages: (Simple) 10-dma: 1050 50-dma: 1035 200-dma: 958 Nasdaq-100 ($NDX) 52-week High: 1453 52-week Low : 795 Current : 1364 Moving Averages: (Simple) 10-dma: 1417 50-dma: 1389 200-dma: 1213 ----------------------------------------------------------------- We are finally beginning to see the volatility indices react and the market top could now be behind us. The question now is will the selling continue? CBOE Market Volatility Index (VIX) = 19.11 +0.51 CBOE Mkt Volatility old VIX (VXO) = 19.90 +1.08 Nasdaq Volatility Index (VXN) = 29.65 +1.84 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.76 745,954 565,047 Equity Only 0.63 568,928 355,730 OEX 0.87 49,631 43,197 QQQ 0.84 45,598 38,306 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 72.9 - 1 Bull Confirmed NASDAQ-100 68.0 - 4 Bear Confirmed Dow Indust. 80.0 + 0 Bull Correction S&P 500 79.2 - 2 Bull Confirmed S&P 100 79.0 - 1 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: 1.46 10-dma: 1.29 21-dma: 1.20 55-dma: 1.14 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 1133 1410 Decliners 1701 1570 New Highs 167 166 New Lows 21 28 Up Volume 501M 521M Down Vol. 1091M 634M Total Vol. 1602M 1173M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 11/11/03 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 Commercial traders continue to stall on making any big bets. They remain slightly net short in the big S&P contracts. We see the same hesitation in the small traders with little overall change. Commercials Long Short Net % Of OI 10/21/03 394,176 411,246 (17,070) (2.1%) 10/28/03 391,596 412,498 (20,902) (2.6%) 11/04/03 391,079 415,136 (24,057) (3.0%) 11/11/03 389,965 415,259 (25,294) (3.1%) 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 10/21/03 136,643 88,290 48,343 21.5% 10/28/03 137,791 76,791 61,000 28.4% 11/04/03 137,829 78,206 59,623 27.6% 11/11/03 136,072 74,249 61,823 29.4% 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 Hmm... now we are seeing some action in the e-minis. Commercial traders have eliminated 12K short contracts and upped their longs by 7K. This has narrowed the gap but they remain net short. Small Traders have made big changes and reduced a big chunk (40K) of their long positions and 12K of their shorts but they remain net long. Commercials Long Short Net % Of OI 10/21/03 226,985 236,906 ( 9,921) ( 2.2%) 10/28/03 220,171 260,644 (40,473) ( 8.4%) 11/04/03 242,409 270,785 (28,376) ( 5.5%) 11/11/03 249,864 258,503 ( 8,639) ( 1.7%) 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 10/21/03 168,236 56,564 111,672 49.7% 10/28/03 123,569 59,742 63,827 34.8% 11/04/03 135,525 63,006 72,519 36.5% 11/11/03 94,649 51,815 42,834 29.2% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Unfortunately we still don't see any big changes in the NDX futures from the Commercial traders. They have slowly been upping their short positions, which is bearish for the tech-heavy NDX. Meanwhile small traders are at their most bullish in four weeks. Sounds like a potential top. Commercials Long Short Net % of OI 10/21/03 36,314 43,305 ( 6,991) ( 8.8%) 10/28/03 36,168 46,272 (10,104) (12.3%) 11/04/03 34,159 48,293 (14,134) (17.1%) 11/11/03 35,889 49,201 (13,312) (15.6%) 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 10/21/03 16,917 9,750 7,167 26.9% 10/28/03 21,640 8,830 12,810 42.0% 11/04/03 24,132 9,703 14,429 42.6% 11/11/03 26,212 10,730 15,482 41.9% 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 Commercials still aren't making big bets in the INDU futures and remain net long. Small traders are hedging their bets a bit by upping their longs and reducing their shorts by about 1,000 contracts each. Commercials Long Short Net % of OI 10/21/03 16,876 9,037 7,839 30.3% 10/28/03 20,504 11,366 9,138 28.7% 11/04/03 21,756 11,903 9,853 29.3% 11/11/03 20,209 11,660 8,549 26.8% 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 10/21/03 5,392 8,842 (3,450) (23.1%) 10/28/03 5,295 8,864 (3,569) (25.2%) 11/04/03 5,099 9,160 (4,061) (28.5%) 11/11/03 6,105 8,201 (2,096) (14.7%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. 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.
PremierInvestor.net Newsletter Tuesday 11-18-2003 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: New Lows Stop Loss Adjustments: TRMS Stock Split Announcements: CTX Trading Ideas We're sorry. There will be no Trading Ideas tonight. ================================================================= Play-of-the-Day (Bearish) =============== Trimeris, Inc. - TRMS - cls: 23.20 chng: -0.73 stop: 25.00*new* Company Description: Trimeris is a biopharmaceutical company engaged in the discovery and development of a class of antiviral therapeutics called viral fusion inhibitors (Fis). The company's most advanced product candidates, T-20 and T-1249, are for the treatment of human immunodeficiency virus (HIV), type I. T-20 is a first-generation FI that prevents HIV from entering and infecting cells, while T- 1249 is a rationally designed second-generation FI in an earlier stage of development. Using its proprietary viral fusion platform technology, TRMS has identified and filed patent applications disclosing numerous discrete peptide sequences that appear to inhibit fusion for several viruses. Why we like it: The bulls made innumerable attempts over the past 2 years to break shares of TRMS to the upside on hope and hype over the company's Fuzeon AIDS treatment. The last attempt was in the middle of July and when that failed, the stock fell back to strong support near $40. Things took a nasty turn in mid-September though, as TRMS broke below that level and then continued to slide all the way to $24, with that decline capped off by a sharp gap lower on news that the company's Fuzeon drug sales had been smaller and slower than expected. After recovering from the bad news, investors bid the stock up to the $28 level, filling in the gap in preparation for another slide to support. That was the perfect setup for a double bottom bounce, except that there was no bounce this time around. TRMS plunged through the $24 support and are now resting at the March 2001 reaction low. If the stock breaks $23.00, then there really is no significant support to be found until $20. But the $20 support may be insufficient to stem this slide, with investors apparently losing interest with TRMS' disappointing debut of Fuzeon still weighing on the stock. Next support below there comes in at roughly $18, giving us a viable risk-reward setup, where we can target $20 to the downside, using a stop at $25.50, just above the $25 resistance of the past 4 days and the 20-dma ($25.47). We're going to forgo using a trigger with TRMS, as we may be able to get a better entry prior to that breakdown. Any failed bounce below $24 looks good for aggressive entries, although more conservative traders will want to wait for the break below $23 before playing. Why This is our Play of the Day Shares of TRMS were already looking pretty weak when we initiated coverage over the weekend, and the weakness in the broad market has certainly helped things along. That $23 support gave way yesterday morning and we were encouraged by the complete lack of participation in the late-day bounce. The bulls gave the upside a feeble shot this morning, but the old support at $23 had turned to resistance and the stock sold off from there, ending the day at its low and at the lowest point since late 1999. Of course the weakness in the Biotechnology sector (BTK.X), which lost 2.27% today, didn't hurt. It certainly looks as if TRMS is well on its way to our $20 target. Successive failed rebounds below $23.25 look viable for new entries, while momentum traders still have enough downside potential to work with that a break below $22 can be used for aggressive entry as well. We're lowering our official stop to $25, which will be below the 20-dma ($25.06) by tomorrow. More conservative traders may want to use a tighter stop at $24.40, just over the 10-dma ($24.34). Annotated Chart of TRMS: Picked on November 16th at $23.20 Change since picked -1.10 Earnings Date 10/15/03 (confirmed) Average Daily Volume = 629 K ================================================================= Stop Loss Adjustments ================================================================= TRMS - short Adjust from $26.25 down to $25.00 ================================================================= Stock Split Announcements ================================================================= ANNOUNCEMENT ------------ CTX proposes 2-for-1 stock split Shortly before today's opening bell, Centex Corporation (NYSE:CTX) announced that its Board of Directors has approved a 2-for-1 stock split of its common shares. The split is subject to shareholder approval. As of yet, the shareholder meeting has not yet been scheduled, but is anticipated to take place within the next 120 days. The BoD hopes to increase the authorized common shares from 100 million to 300 million. Upon approval of the stock split, CTX will have approximately 125 million shares outstanding The company will also keep their annual cash dividend at 16 cents a share but will pay it on a post-split basis (effectively doubling it). About the company: Through its subsidiaries, Dallas-based Centex, a Fortune 250 company, ranks as one of the nation's premier companies in the Home Building, Financial Services, Home Services and Construction Services industries. (Source: Company Press Release) ================== Trading Ideas ================== We're sorry. There will be no Trading Ideas this evening. ================================================================= 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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