PremierInvestor.net Newsletter Tuesday 11-25-2003 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: Bulls Back In Control Watch List: JCOM, IR, LEA, WYE and more! Market Sentiment: Markets Hold Their Gains ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 11-25-2003 High Low Volume Advance/Decline DJIA 9763.94 + 16.20 9795.21 9723.79 1.65 bln 2112/1099 NASDAQ 1943.04 - 4.10 1956.20 1942.02 1.81 bln 1918/1358 S&P 100 519.54 + 0.23 521.74 517.97 Totals 4030/2457 S&P 500 1053.89 + 1.81 1058.05 1049.31 W5000 10300.96 + 29.20 10336.42 10250.62 RUS 2000 543.18 + 3.67 544.33 539.17 DJ TRANS 2923.32 + 24.30 2931.87 2888.99 VIX 16.71 - 0.73 17.87 16.40 VXO (VIX-O)16.29 - 0.86 17.25 15.96 VXN 25.99 - 1.08 27.33 25.55 Total Volume 3,722M Total UpVol 2,327M Total DnVol 1,263M 52wk Highs 695 52wk Lows 25 TRIN 0.87 NAZTRIN 1.16 PUT/CALL 0.63 ================================================================= =========== Market Wrap =========== Bulls Back In Control Chalk up another bullish day for the broader markets and one more day within striking range of the 52-week highs. While the Nasdaq did finish in negative territory due to a sell program at the close it was still a bullish day to retain most of the gains from Monday. Using the broader averages the markets have stretched their winning streak into two days and there are two historically bullish days still ahead. Dow Chart Nasdaq Chart The economic reports for the day began with another blowout GDP estimate which was revised up to +8.2% for the 3Q. The estimate was for a revision to +8% so traders were pleased. The futures spiked to morning highs on the news but the news was quickly sold. That high lasted until the 3:PM bounce as traders consolidated gains from yesterday. The GDP number showed a growth rate at a 20-year high and it is not surprising that there was a murmur of disbelief on the trading floor. While the numbers indicate a veritable explosion in the economy the anecdotal evidence from those companies that just reported earnings would suggest that the real economy grew at a much slower rate. The majority of the gains in today's number were related to a better than expected gain in inventory levels to -$14.1 billion from -$25.8 billion. Corporate profits rose +11.8%. The main supporter of the economy is still the consumer and Q3 saw a jump of +26.5% in durable-goods consumption that was funded by the tax rebates. This consisted largely of strong auto sales. We already know that auto sales have slacked off in the 4Q as well as retail sales. The good news is that business investment is picking up and we could be seeing the rotation from consumer to business for economic support. The +11.8% jump in corporate profits was the strongest jump since 1985. The biggest problem with the upgrade in the Q3-GDP is the ratcheting up of the 4Q expectations. With numbers hitting 20 year highs for Q3 almost any number for Q4 is going to be a let down. Consumers are still buying the economic recovery story with the Consumer Sentiment number jumping to 91.7 for November from 81.7 in October. This was well over the estimates for a gain to 85.0. This really caught traders off guard and they did not know how to react to it. The initial spike ran into strong selling resistance just like earlier GDP. This was the highest sentiment reading since Sept-2002. Current conditions jumped from 67.7 to 80.1 but the number of consumers planning on buying a new car or home shrank. Overall the sentiment number was very positive considering the growing terror threats and the worsening conditions in Iraq. Existing home sales dropped -5% in October to 6.35 million units on an annual basis. While this was a big drop it was from a record breaking pace. The major factor was the jump in interest rates. Homebuilders are still predicting strong sales of new homes through 2005 so it remains to be seen if this is the start of a new trend or just a pause to survey the economic landscape. Also adding to the positive attitude was another gain in the NY-NAPM report to 227.3 from 226.4. While this was not a huge jump it was the third consecutive gain. The gain in the headline number was remarkable considering that the manufacturing component which fell to 54.4 from 90.0 in October. Current conditions also fell to 51.9 from 58.2. The overall numbers may show continued expansion but there were cracks in the foundation. This is what traders fear the ISM will show next week. They will not have to wait until next week to get a glimpse of the current conditions. Because of the Thanksgiving holiday the economic calendar for the rest of the week has been accelerated into Wednesday. There are twelve major reports on Wednesday morning. 7:00 Mortgage Applications 8:30 Jobless Claims 8:30 Consumer Comfort Index 8:30 Durable Goods 8:30 Personal Income 9:45 Consumer Sentiment 10:00 Chicago PMI 10:00 Help Wanted Index 10:00 New Home Sales 10:00 Monthly Mass Layoffs 10:30 ECRI Weekly Leading Index 12:00 Fed Beige Book The mutual fund scandal chalked up another first today. Regulators issued a death penalty sentence to Security Trust Company for illegal trading. STC is a Phoenix based trust bank and they let hedge funds trade as late as 9:PM for the 4:PM price. The reason they received the death sentence was the way they did it. They clearly knew it was wrong and engineered a way to hide the trades as retirement plan contributions. They allowed Canary Capital Partners to trade in up to 400 mutual funds and generated profits for Canary of over $85 million. They also worked a deal to get a cut of the profits from Canary to handle the illegal trades. Security Trust is a custodian for more than 2500 retirement plans with more than $13 billion in assets. The regulators told them to close the doors by March 31st 2004, which would give investors time to move to another firm. Putman reported that investors withdrew $9 billion from their firm last week and that was the biggest withdrawal period so far. That brings the total withdrawals to over $30 billion since Oct-31st. The next report will be on Dec-1st. If the acceleration continues this could put additional pressure on the market. The closing of Security Trust may create additional fear among investors that they could get caught in a fund in trouble and lose money. While this is extremely remote investor psychological sentiment is very fragile. While most are not old enough to remember runs on banks they have repeatedly heard horror stories now more fiction than fact about how investors were wiped out. This could accelerate the run on mutual funds now in trouble with regulators. While there is no shortage of money for funds it is the rotation that could hurt stocks. There is definitely plenty of money available to float the markets. According to ICI the total inflows year to date were $123 billion compared to net outflows at the same period in 2002 of -$26 billion. Small wonder the market is near its highs again. SSB cut chip stocks and chip makers yesterday based on valuation claiming they were up +92% year to date. NVLS countered that over valuation with their earnings claiming that their 4Q bookings were up +25% and well above their prior +5% to +10% estimates. They claimed that the recovery was for real and not a head fake. Still, the Nasdaq struggled today and then led the sell off at the close. The Dow opened positive on the GDP news but quickly fell into negative territory. It ran back into positive territory on the Consumer Sentiment news but was immediately hit with selling and again fell back into negative territory. The buyers stepped in once again and managed to break the 9750 resistance again before lunch but could not hold it. Not until 2:PM did the Dow manage to creep over that strong resistance level and make an assault into the close. A buy program coupled with some short covering powered the Dow to 9795 and only a handful of points away from 9800 but the bulls could not hold it. The Nasdaq followed the same pattern around 1950 resistance and managed to touch 1956 before the sell trigger was pulled. That sell trigger was the VXO. (old VIX) In the Market Monitor we had been watching the VXO slide all day as the bullish internals built to the afternoon climax. We had been betting that the VXO could break to a new five year low below 16.0 before the close. That happened at exactly 3:35 PM. That is exactly when the sell program was triggered that sent the averages plummeting before the close. The Dow dropped -30 points from 9790 to 9760 and the Nasdaq from 1954 to 1942. Now the question for tomorrow is why? Is there a deeper problem confronting us or was it just a program driven sell based on the extremely low levels of the VXO. Based on the timing of the VXO tick I am pretty confident the drop was a sell program triggered by the VXO at 16.00. This is an extreme level of bullishness and one where a sell off is almost guaranteed. It is the equivalent of everyone on the Staten Island ferry not only standing on the same side of the boat but leaning over the rail as well. The problem is what happens in the morning. There are not typically any major program trades in the last 30 min of trading. This sets up the potential for another volley at the open on Wednesday. Adding to the confusion are the twelve economic reports at the open or shortly thereafter. The day before Thanksgiving is typically bullish the sentiment building up to this event was fairly bullish as well. Internals were strong with 2:1 advancing volume to declining volume and new 52-week highs nearing 700 again. We have had two days of strong internals and that relief rally may be getting tired. In my opinion the stage is set. On Sunday I told you to expect a relief rally this week if there were no terror events over the weekend. That rally was right on schedule. I told you that the rebound would run into resistance beginning around 9725 and we hit that level at 10:15 on Monday and could not get above it until just before Monday's close. We still struggled between 9725 and 9750 most of Tuesday. Now that we have broken out of that range we are facing even stronger resistance at 9800-9820. The major pressure on the markets last week was due to the terror warnings. No attack over the weekend prompted the relief rally. However, every piece of positive news that spiked the market attracted strong selling pressure. Tonight as I type this the airwaves are being bombarded with warning after warning about a new terrorist threat for the Thanksgiving period. They are talking about chemical and biological threats being imminent and that ties in with the Al-Queada boast that they are planning an attack that will kill up to 100,000 Americans. I could see a scenario where good economic news Wednesday morning would spike the markets back to near the 9800 level and that bounce would attract some serious selling. Mutual funds are still under pressure. There are strong terror alerts on every channel. The markets are near their highs and there is a long weekend ahead of us. With the heaviest travel and shopping days of the year beginning tomorrow there is a perceived amount of increased risk for civilians whether it is real or not. We have been fortunate that they have not chosen to strike again in the U.S. but we all know the clock is ticking. While the markets are normally bullish on either side of Thanksgiving these are not normal times. They sold the news today and I am betting they will sell it again tomorrow. Nothing fundamental has changed and until the economic reports say so the markets should continue to trend up. If we do see some cautionary profit taking on Wednesday it should just be profit taking and not a change in the trend. Institutional investors with huge profits are just trying to get to the year end without taking a hit. As long as the outlook remains overall positive we should be ok. If we had any negative reports tomorrow I do not think it would matter. They might help spark some profit taking that would not have occurred on a positive report but investors are optimistic. They will believe the first couple of bad reports are just blips in an uptrend and continue to buy the dips. So that leaves us with the terror wild card again and this close to the highs it could promote extra caution. I suggest you do the same. Watch for a spike at the open on good news and snug up your stops. Then sit back and relax and start thinking about aunt Martha's turkey or who is going to win the football game and let the markets take care of themselves. Enjoy your Thanksgiving and we will start our diet next week. 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 --------------------------------- j2 Global Communications - JCOM - close: 28.28 change: +2.39 WHAT TO WATCH: It wasn't that long ago that we were playing JCOM to the downside, but over the past couple weeks the stock has been building a nice base just above strong support at $25. Today's 9% rebound feels a bit too big to chase higher, but it does look encouraging to see the stock finally break above its 6- week descending trendline. A dip and rebound from above the 10- dma should make for a solid entry, with a stop placed just below $25. Target an initial move back to $32, with an outside chance of a stronger move up to challenge the 50-dma, now at $35.47. --- Ingersoll Rand - IR - close: 61.86 change: +1.42 WHAT TO WATCH: Remember a few weeks back when we were playing IR to the upside, waiting for that elusive breakout? Well, it finally arrived today, with the stock managing a 2.34% gain on above-average volume. We could see a near-term pullback to confirm support now near $60, but IR has the looks of a stock that is ready to charge higher. Last week's rebound from the bottom of the rising channel and the 50-dma should carry through and take the stock back into the upper half of the channel. Momentum entries can be taken on a move through $62.15 (just over today's intraday high), initially targeting $64 and possibly a rise to the top of the channel at $66. --- Lear Corp. - LEA - close: 59.95 change: +1.15 WHAT TO WATCH: Speaking of breakouts, LEA really delivered today, clearing a month's worth of resistance enroute to a nearly 2% gain. While the stock may not advance at the rapid rate seen over the past two sessions, a push above today's high looks to have high odds of testing the October highs just above $63. Enter on the breakout and take a quick targeted exit when those highs are reached. --- Wyeth - WYE - close: 37.75 change: -1.10 WHAT TO WATCH: In marked contrast to the rest of the market, the Pharmaceutical index (DRG.X) is having a hard time making any upward progress. Within this weak sector, WYE is really setting itself apart by drilling down to fresh 7-month lows on increasing volume. While the stock is now sitting on potential support, it looks like the $34 level is the real bearish target. Failed bounces below the $40 level will make for the best entries into this well established downtrend. =================== On the RADAR Screen =================== MME $61.25 - Rather than being turned back by resistance just over $61, MME plowed right on through on Tuesday, helped by the strength in shares of UNH. The two stocks are now linked due to the planned merger and the strength in both stocks on a fairly quiet day in the market hints at further upside to come. A dip and rebound from the $59.50-60.00 area will make for the best entries, with the $64-65 area looking like a viable upside target. TIN $56.57 - Benefiting from the renewed bullishness in Housing stocks, TIN has started the week out well. Moving to a new 52- week high on Tuesday, the stock appears destined to test the $60 resistance level. New positions on a dip and rebound from above the $55 level make the most sense, although momentum traders should be able to make breakout entries work with a stop just under the 20-dma. BOL $49.84 - How's your vision? The bulls are seeing green and on Tuesday drove shares of the eyecare company to the highest level since early 2001. The rebound that began on Friday is partially due to the settlement of a patent infringement suit, but with the trade at new multi-year highs today, the breakout is taking on a life of its own. Look for a continued rally to next resistance near $53-54. =============================== Market Sentiment =============================== Markets Hold Their Gains - J. Brown The U.S. stock markets held their gains today after an incredible rally on Monday. For some just holding its gains may be a let down, especially after the favorable economic reports out this morning. However, for many professional traders just hoping to end the year at current levels today could be viewed as a victory. The big numbers today were not coming from the NYSE and the NASDAQ but from the Commerce Department. The GDP growth for last quarter was revised up to 8.2%, a full percentage point above the preliminary reading of 7.2%. This is absolutely incredible and the fastest growth rate since the first quarter of 1984. Another "economic" number blowing past estimates was the November Consumer Confidence figures. Analysts had been looking for a reading at 85.0. November confidence numbers came in at 91.7. This is great news for the economy and Wall Street and it bodes very well for this coming holiday shopping season, which is estimated to be the best since 1999. Overall the market internals were bullish with advancing stocks outpacing decliners 19 to 9 on the NYSE and 18 to 12 on the NASDAQ. Up volume beat down volume and new highs continued to surge despite some minor profit taking. But not everything was bullish. The volatility indices continue to crash. The VXO (the old VIX) broke under the 16.00 level intraday and closed at 16.29 for the first time in years. This blinking, flashing, buzzing warning light is starting to sound like a police siren. Traders should be very careful. The volatility indices don't drop this low very often and are usually strong clues to a change in market direction. There's nothing to stop the indices from hitting even lower lows but investors should keep an eye on it and the major indices. It's definitely a warning to tighten stops and reconsider new long positions. Tomorrow will be all about the flood of economic reports. Those still working on Wall Street and not en route to family for the holidays will be focusing on the Michigan Consumer Sentiment numbers and the Chicago Purchasing Managers survey. Additional reports scheduled to announce are Initial jobless claims, October Personal Income and Spending, October Durable Goods orders, October Help Wanted Index, October New Home Sales, and the Beige book. Happy Thanksgiving! ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9903 52-week Low : 7197 Current : 9763 Moving Averages: (Simple) 10-dma: 9724 50-dma: 9666 200-dma: 8968 S&P 500 ($SPX) 52-week High: 1063 52-week Low : 768 Current : 1053 Moving Averages: (Simple) 10-dma: 1046 50-dma: 1037 200-dma: 963 Nasdaq-100 ($NDX) 52-week High: 1453 52-week Low : 795 Current : 1411 Moving Averages: (Simple) 10-dma: 1399 50-dma: 1392 200-dma: 1223 ----------------------------------------------------------------- It's been a LONG time since the VXO (old VIX) traded under the 16 level and that occurred today as the volatility continued to crash. This observation was a key factor for some veteran traders to cover or tighten stops. This screams market turning point but it could go lower, which it seems to have developed a habit of doing. CBOE Market Volatility Index (VIX) = 16.71 -0.73 CBOE Mkt Volatility old VIX (VXO) = 16.29 -0.86 Nasdaq Volatility Index (VXN) = 25.99 -1.08 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.62 688,827 430,183 Equity Only 0.48 549,189 263,896 OEX 1.25 19,658 24,570 QQQ 2.45 18,220 44,603 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 72.7 + 0 Bull Confirmed NASDAQ-100 72.0 + 4 Bear Correction Dow Indust. 80.0 + 0 Bull Correction S&P 500 79.4 + 1 Bull Confirmed S&P 100 78.0 + 0 Bull Correction Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-dma: 0.94 10-dma: 1.22 21-dma: 1.14 55-dma: 1.15 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 1927 1845 Decliners 906 1262 New Highs 243 223 New Lows 13 13 Up Volume 1140M 1072M Down Vol. 472M 718M Total Vol. 1626M 1826M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 11/18/03 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 Will it never end? The commercial traders refuse to move any positions or make any more big bets in the full S&P futures contracts. They've been oscillating in the current range for weeks. Small traders have bumped up both their short and long positions but they remain relatively equidistance from each other. Commercials Long Short Net % Of OI 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%) 11/18/03 393,893 414,442 (20,549) (2.5%) 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 10/28/03 137,791 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% 11/18/03 147,842 80,047 67,795 29.7% 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 The e-minis are seeing some action. Commercials upped their short positions but not by too much. Small traders also raised their short positions by 10K contracts (almost 20% of outstanding shorts). Commercials Long Short Net % Of OI 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%) 11/18/03 249,286 264,083 (14,797) ( 2.9%) 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 10/28/03 123,569 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% 11/18/03 95,119 61,975 33,144 21.1% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercial traders are still stuck in limbo with outstanding longs and shorts in NDX futures barely budging the last few weeks. Meanwhile small traders have turned more bullish with a nice jump in outstanding long positions. Commercials Long Short Net % of OI 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%) 11/18/03 35,608 49,689 (14,081) (16.5%) 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 10/28/03 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% 11/18/03 32,034 10,356 21,678 51.3% 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 Ditto here as well...commercials are not making any new big bets and keeping the number of long and short contracts relatively unchanged. Small traders appeared to have scaled back on longs and inched up their shorts. Commercials Long Short Net % of OI 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% 11/18/03 20,746 11,080 9,666 30.4% 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 10/28/03 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%) 11/18/03 5,655 8,607 (2,952) (20.7%) 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. 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PremierInvestor.net Newsletter Tuesday 11-25-2003 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: Breakout, Consolidate, Breakout Stop Loss Adjustments: FLIR Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Play-of-the-Day (bullish) =============== FLIR Systems - FLIR - close: 34.70 change: +0.87 stop: 32.00*new* Company Description: FLIR is engaged in the design, manufacture and marketing of thermal imaging and stabilized camera systems for a wide variety of commercial, industrial and government applications. The company's products are divided into two categories, which include the thermography products and imaging products. In the Thermography division, FLIR manufactures products that are sold to commercial, industrial, research and machine vision customers. For industrial customers, FLIR has developed thermography systems that feature accurate temperature measurement, storage and analysis. The Imaging division caters to military, law enforcement, surveillance and security customers. Why we like it: It is amazing after all the bullish action in recent months, but even when the broad market is undergoing a bout of profit taking, there are still stocks trading not only at 52-week highs, but all- time highs! FLIR had a rough patch from August-late October before launching sharply higher in response to the company's strong earnings report, reaffirmation of Q4 estimates and announcement of the acquisition of Indigo Systems. Since then, FLIR has been consolidating in a broad range between $30-33, resting up for the next move. That move got started on Friday, with the stock breaking out to the upside and closing at a new all-time high. The recent trade at $33 generated another PnF Buy signal and along with the current bullish vertical count of $40, points to more bullish action ahead. There should now be firm support near $32, as that former resistance switches sides. Not only that, but the 10-dma ($32.18) and 20-dma ($31.94) have converged at that level and are moving higher. That means a pullback and bounce from near $32 can be used for new entries. We're hesitant to recommend momentum entries at this point, as price ended solidly above the upper Bollinger band on Friday, which suggests at least a mild pullback before FLIR continues significantly higher. We'll keep our eye out for a bullish run that can take the stock up to that $40 price target, but we'll use a less aggressive target of $38 for the play. Set stops initially at $31, just below the 11/13 low. Why This is our Play of the Day Breaking out to new all-time highs last Friday was enough to finally push FLIR onto our bullish playlist and after just one day of consolidation yesterday, the stock followed through with another breakout to another new high on Tuesday. The stock's 2.5% gain was all the more impressive given the lackluster trade across the broad markets and we could very easily see new highs again this week. Aggressive traders got a nice entry point this morning on the early (and fleeting) dip to just below $33 before the steady climb to close near the high of the day. Successive dips and rebounds from $33.50 or even as low as $33 should make for additional solid entries into the play. With price well above the upper Bollinger band ($33.35) new entries on another breakout seem a bit too aggressive right here. Buy the dips and then ride the stock to new highs, looking for an eventual target of $38. Our stop rises to $32 tonight, just below the $32.25 support and the 20-dma ($32.23). Annotated Chart of FLIR: Picked on November 23rd at $33.90 Change since picked +0.00 Earnings Date 1/21/03 (unconfirmed) Average Daily Volume = 422 K ================================================================= Stop Loss Adjustments ================================================================= FLIR - long Adjust from $31.00 up to $32.00 ================== 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 BCS Barclays Plc (ADR) 34.90 +0.60 MWD Morgan Stanley 55.13 +0.90 ONE Bank One 43.45 +0.52 GCI Gannett Co Inc 86.69 +0.89 PNC PNC Financial 54.36 +0.54 MHP McGraw-Hill Companies 68.50 +0.83 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- MMR McMoran Exploration 17.90 +1.40 DSCO Discovery Labs 8.09 +1.31 HDTV Spatialight Inc 5.99 +1.04 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- STI Suntrust Banks Inc 71.55 +1.19 ITW Illinois Tool Works 78.22 +2.84 NKE Nike Inc 67.17 +2.50 PX Praxair Inc 72.15 +3.31 SUN Sunoco Inc 47.65 +1.10 IVX IVAX Corp 21.60 +1.03 STZ Constellation Brands 34.00 +1.30 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- WYE Wyeth 37.75 -1.10 WM Washington Mutual 44.99 -1.56 GD General Dynamics 79.94 -1.06 AGN Allergan Inc 71.76 -2.24 BSC Bear Stearns 71.53 -2.10 ICBC Independence Community 36.75 -1.99 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- . 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