PremierInvestor.net Newsletter Monday 11-24-2003 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: Techs Soar as Bulls Buy The Dip Play of the Day: Thar She Blows =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 11-24-2003 High Low Volume Advance/Decline DJIA 9747.79 +119.26 9749.35 9629.87 1.59 bln 2188/ 666 NASDAQ 1947.14 + 53.26 1947.14 1907.29 1.76 bln 2249/ 880 S&P 100 519.31 + 7.54 519.33 511.77 Totals 4437/1546 S&P 500 1052.08 + 16.80 1052.08 1035.28 RUS 2000 539.51 + 13.58 539.51 525.93 DJ TRANS 2898.98 + 53.66 2899.54 2846.28 VIX 17.44 - 1.54 18.98 17.19 VXO 17.15 - 2.74 19.13 17.06 VXN 27.07 - 2.01 29.80 26.77 Total Volume 3,730M Total UpVol 3,077M Total DnVol 604M 52wk Highs 549 52wk Lows 32 TRIN 0.48 PUT/CALL 0.65 =============================================================== =========== Market Wrap =========== Techs Soar as Bulls Buy The Dip by James Brown Stocks rushed higher on Monday as investors blew a collective sigh of relief. The weekend was a quiet one with no terrorist events being reported as we approach the close of Ramadan, which should end tomorrow. This left investors with one focus and that was the host of economic reports due to be announced tomorrow and Wednesday. The underlying theme today was "buy the dip" as UBS said investor optimism rose to 20-month highs. Investors are expecting the economic news this week to be positive and reaffirm that the world's largest economy is still on its path to recovery. Asian markets were relatively flat but European exchanges reported strong gains. The English FTSE rose 1.47% and the German DAX rocketed 2.6%. Both exchanges have bounced strongly the last few days with the German DAX up more than 4% from its recent intraday lows near 3590. Bulls took their cue from their European counterparts and U.S. exchanges witnessed a very broad- based rally. The only sector not in the green today was the XAU gold & silver index, which closed down 1.59%. December gold futures fell about $5 to settle at $391.50 an ounce after the U.S. dollar improved against the yen and the euro. The buying pressure was strongest in technology stocks with the NASDAQ 100 (NDX) index rising 3.34%. All of the major technology-related sector indices ($SOX, $NWX, $INX, $GSO, $GHA, $DDX) added 3 percent or better with a few adding close to 4 percent in today's session. Investors also saw strong gains in airlines (+3.85%), biotech (+3.95%), homebuilders (+3.72%), retail (2.59%) and the HMO index (+2.54%). The rise in the DJUSHB home construction index broke through the 600 level to close at new all time highs. By the closing bell the DJIA added 119 points to settle at 9747. The NASDAQ Composite added 2.81% (53 points) to close at 1947 and the S&P 500 added almost 17 points to close at 1052. Market internals were very bullish. Advancing stocks outnumbered declining stocks 21 to 7 on the NYSE and 22 to 9 on the NASDAQ. The only big losses were in the volatility indices with the VXO (old VIX) falling 13.77% and the VIX down 8.1%. The up/down volume numbers were very optimistic with up volume approximately 5 times down volume across both exchanges. Unfortunately, total volume was rather mild and will probably continue to worsen as we head toward the weekend in this holiday-shortened week. Chart of the DJIA: Chart of the NASDAQ: Chart of the S&P 500: Surprise, surprise! As if the huge gains today didn't say it enough but UBS reported that investor optimism has soared to 20- month highs. The UBS Index of Investor Optimism jumped to 93 in November, a gain of 24 points. According to the survey 57 percent of investors are optimistic about the country's economy and 60 percent feel the economy to be in a recovery. All of this pent up optimism is great but it sets us up for one heck of a let down if any of the major economic reports this week fail to deliver. Contrarian investors, who like to run opposite the crowd have to be cringing, especially as the volatility indices plummet today. Tomorrow's economic reports will take center stage with the Third Quarter Preliminary GDP numbers, the Redbook Retail Sales report, the October Existing Home Sales figures, and the November Conference Board Consumer Confidence numbers. Paramount on the list is the GDP figures. It was only a few weeks ago that the Commerce Department reported a 7.2% annual pace from July through September. Now economists are estimating that the government could revise these numbers even higher, not lower as previously thought. Some estimate that the new upward revision could put GDP at 7.8 to 8.0 percent growth. This would be the strongest quarter since early 1984 where GDP grew at 9.0 percent. Furthermore the National Association for Business Economics believes the economy may expand by 4.5% in 2004, an upward revision from their previous 4.0% forecast. There were several companies making headlines today. Boeing (BA) led the list as it fired its CFO Mike Sears "for cause". Evidently, Sears had unethically hired one Darleen Druyun, an Air Force official. The two had communicated about future employment with Boeing before Druyun removed herself from acting as a government official in business deals regarding Boeing. Druyun was apparently involved in BA's tanker-leasing deal and the Joint Strike Fighter contract. Shares of BA closed up 3 cents on the session. Time Warner (TWX), previously known as AOL Time Warner, reported that it had sold its music business for $2.6 billion. Buying the music division was an investor group lead by Thomas H. Lee Partners, Bain Capital, Providence Equity Partners and Edgar Bronfman Jr.'s Lexa Partners. Shares of TWX rose better than 2 percent on the news. Jumping more than 5% today was Boston Scientific (BSX). Weeks ago Johnson & Johnson (JNJ) tried to get a preliminary injunction against Boston Scientific to stop development and marketing of its Taxus drug-coated stent, which would compete with JNJ's Cypher stents. The majority of analysts did not expect JNJ to win the suit but it had kept a lid on BSX's share price. Today a U.S. District Judge has denied JNJ's request. Analysts believe drug-coated stents could be a $4 billion business in the U.S. by 2005 and BSX is going to be stiff competition for JNJ. Another Dow component making the rounds was Wal-Mart (WMT). WMT affirmed that its November same-store sales were tracing inline with estimates for 3 to 5 percent growth. Most believe that this holiday season will probably be the best since 1999. Recent earnings announcements from a number of apparel stores have been strong and investors have high hopes the trend will continue. Tech investors will also be happy to hear that Novellus (NVLS), the manufacturer for tools used to make semiconductors, raised its earnings guidance after the closing bell. NVLS' CEO told investors in a mid-quarter update that expected orders were on track to rise 25% to $275 million. The company said total revenues for the quarter should actually come in at $220 million, topping analyst estimates of $217 million. NVLS raised their net income guidance to the top of their range at 6 cents, a penny above consensus estimates. The SOX added 3.6% today but given its bounce from the rising 30-dma this NVLS news could propel it to current overhead resistance near the 530 level. This hasn't been the best year for using historical trends to time market performance but once again traders are faced with a strong history for bullishness during Thanksgiving week. The general concern is that volume tends to dry up as market players go home for the holiday. The low volume will then exacerbate moves in either direction. The real danger here is the numerous economic reports on Wednesday, one of the lowest volume days of the week. A positive surprise and we may or may not get the pop higher one might be expecting. Yet a negative surprise could catch many off guard and quickly send us lower. In spite of my cautionary tone today's gains, which erased most of last week's losses, confirms that buyers are still there. The upward trend hasn't been broken just yet. Another couple of positive days and we could see NASDAQ 2000 by Thanksgiving. =============== Play-of-the-Day ( bullish ) =============== Juniper Networks - JNPR - cls: 18.30 chng: +0.88 stop: 16.90*new* Company Description: Juniper Networks, Inc. is a provider of network infrastructure solutions that transform the business of networking by converting bandwidth into a dependable and secure corporate asset. The company's products, services and solutions enable service providers and other network-intensive businesses to support and deliver services and applications on an efficient and low-cost integrated network. Products are designed and purpose-built for service provider networks and offer its customers high performance with less complexity and cost than legacy alternatives. Why we like it: When we initiated coverage of JNPR on Wednesday, it looked like the stock was ripe for a rebound from dual support at the bottom of the rising channel (now $17.00) and the 50-dma ($17.19). A couple days have passed and very little price action has transpired, with the stock holding just above $17, but not yet able to mount a credible bounce. In addition to the channel and the 50-dma, JNPR has the lower Bollinger band ($16.86) rising to provide support for that bounce. A rebound from as low as $17.00 looks good for new entries ahead of our expected bounce, first to the midline of the channel near $19 and then up to the top of the channel, now at $20.75. Risk in the play can be tightly controlled with our stop set at $16.25, just under the 10/23 intraday low. Why This is our Play of the Day We waited throughout last week for JNPR to catch a bounce from the bottom of its channel and the 50-dma ($17.23) to no avail. But that bounce arrived with conviction on Monday, with the stock gaining more than 5%, clearing both the 10-dma ($17.89) and the 20-dma ($18.12) in the process. Daily Stochastics have now turned bullish and our next upside objective will be the $19 resistance level, which also happens to be the midline of the ascending channel. Once above there, JNPR will be in position to challenge its early November highs and then perhaps take a run at the top of the channel near $21. Another dip and rebound from above the 30- dma ($17.75) can be used for new entries, as can a push above today's $18.38 intraday high. Raise stops to $16.90, which is just below the 50-dma and the bottom of the channel. Annotated Chart of JNPR: Picked on November 19th at $17.69 Change since picked +0.61 Earnings Date 1/08/03 (unconfirmed) Average Daily Volume = 10.2 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 ) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Monday 11-24-2003 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: JNPR Active Trader Plays Closed Bearish Play: PVN High Risk/Reward Plays Closed Bearish Play: CYD, TRMS Stock Split Announcement: DFG ================================================================== Stop Loss Adjustments: ================================================================== JNPR - long Adjust from $16.25 up to $16.90 ================================================================== Active Trader Non-tech (AT) section ================================================================== CLOSED PLAY ----------- Closed Bearish Play ------------------- Providian Financial - PVN - cls: 11.14 chng: +0.34 stop: 11.20 Everything was looking good for awhile in our PVN play as the stock broke down below strong support and continued lower on strengthening volume. When the stock tagged $10.00 a week ago, it looked like we were well on our way to reaching our target near the 200-dma. Alas, it wasn't to be as last Monday's dip turned out to be the bottom of the move. Strong buying volume prevailed today, driving the stock briefly through our $11.20 stop for the first close over the 20-dma since this downtrend began in late October. Clearly it's time to move on and any early weakness tomorrow should be used to close out remaining bearish positions. Picked on November 12th at $10.88 Change since picked +0.26 Earnings Date 1/28/04 (unconfirmed) Average Daily Volume = 2.92 mln ================================================================== High Risk/Reward (HR) section ================================================================== CLOSED PLAY ----------- Closed Bearish Play ------------------- China Yuchai Intl - CYD - close: 29.31 change: +3.56 stop: 29.01 With China’s Shanghai Composite gaining more than 3 percent in Wednesday’s trading, many Chinese-related stocks opened higher in U.S. trading, too. CYD was no exception, opening higher and then gaining throughout the day. Although CYD stayed within the rectangular congestion pattern that’s part of its potential bearish distribution pattern, RSI turned up and other oscillators hint at an upturn, too. These suggest that CYD might break through the top of that congestion band. Since this play has not yet triggered, we think it’s time to drop it and look for a better-performing play. Picked on Nov 19 at 26.55 Change since picked: +2.76 Earnings Date: 03/25/03 (confirmed) Average Daily Volume: 4.0 million --- Trimeris, Inc. - TRMS - close: 23.40 chng: +0.58 stop: 23.40 Continuing the rebound that began on Friday, shares of TRMS bounced hard this morning, helped along by the strength in the Biotechnology sector (BTK.X), which led the sector leaders with a 3.95% advance. TRMS shot over $24 early in the day, easily hitting our $23.40 stop before falling back a bit during the midday lull, only to come back and end right at our stop. As we cautioned over the weekend, it looked like the break from the descending channel last week portended a trend change and today's surge justified our fears. Any open positions should have been stopped out today, and we're dropping the play tonight near where we initiated coverage for a par result. Picked on November 16th at $23.20 Change since picked +0.20 Earnings Date 10/15/03 (confirmed) Average Daily Volume = 629 K ================================================================== Stock Splits ================================================================== Announcements ------------- DFG shareholders benefit from 3-for-2 split and dividend increase Before today's opening bell, Delphi Financial Group, Inc. (NYSE:DFG) announced that its Board of Directors has approved a 3- for-2 stock split of its common shares, as well as a 50% increase in their regular cash dividend. The payable date for both the stock split and dividend increase is set for December 22nd, 2003 to shareholders on record December 8th. On a post-split basis, the regular cash dividend will be $0.08 per share of common stock held. About the company: Delphi Financial Group, Inc. is an integrated employee benefit services company. Delphi is a leader in managing all aspects of employee absence to enhance the productivity of its clients and provides the related insurance coverages: group life, long-term and short-term disability, excess workers' compensation for self- insured employers, travel accident and dental. Delphi's asset accumulation business emphasizes individual fixed annuity products. Delphi's common stock is listed on the New York Stock Exchange under the symbol DFG and its corporate website address is www.delphifin.com. (Source: Company Press Release) ================================================================= 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.
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