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Daily Newsletter, Thursday, 12/04/2003

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PremierInvestor.net Newsletter                Thursday 12-04-2003
                                                   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:      Warning Season Begins
Watch List:       LXK, XLNX, BLL, NFLX and more!
Market Sentiment: Late Day Turn

MARKET WRAP  (view in courier font for table alignment)
      12-04-2003           High     Low     Volume Advance/Decline
DJIA     9930.82 + 57.40  9933.86  9865.78 1.84 bln   1563/1620
NASDAQ   1968.80 +  8.60  1971.25  1942.67 2.11 bln   1436/1748
S&P 100   527.56 +  3.14   528.01   524.42   Totals   2999/3368
S&P 500  1069.72 +  4.99  1070.37  1063.15 
W5000   10431.96 + 29.60 10437.68 10362.72
RUS 2000  544.15 -  1.04   545.89   537.23 
DJ TRANS 2938.02 -  1.50  2944.22  2914.20   
VIX        16.30 -  0.33    16.83    16.29
VXO (VIX-O)16.56 +  0.26    17.37    16.50
VXN        26.81 -  0.53    27.45    26.70 
Total Volume 4,264M
Total UpVol  2,195M
Total DnVol  2,018M
52wk Highs  444
52wk Lows    25
TRIN       1.05
NAZTRIN    1.11
PUT/CALL   0.72

Market Wrap

Warning Season Begins

It was a strange day in the markets with the opening bounce 
fading midday and taking the indexes down to initial support
before a series of buy programs in the last hour rescued the
bulls from a dismal fate. That rescue ran into trouble after
the close with warnings from two companies that tanked the 
futures in the overnight session. 

Dow Chart

Nasdaq Chart

Russell-2000 Chart

The bad news started early with a jump in Jobless Claims 
by +11,000 to 365,000 and an upward revision to last weeks
numbers to +354,000. It was not a material bounce but we 
all know how traders count on new trends continuing. The 
two consecutive weeks of declines gave traders hope and the 
return to early November levels weakened those hopes. If 
the Nonfarm Payroll report was not tomorrow I do not think
traders would have been so nervous. Continuing claims also
rose to 3.38 million. Actually the internal numbers were
great. 47 states and territories reported a drop in claims
while only six reported increases. The overall decline in
claims may have unintended consequences. It appears now that
lawmakers will NOT vote for a fourth extension of benefits
and that means over a million more workers will no longer
have any unemployment income. This could further depress
the retail sector as those on the bubble tighten their
wallets even further. 

Also depressing sentiment was the lighter than expected 
Retail Sales for November. The monthly sales came in at
+3.6% and slightly below already lowered estimates. The
Discount stores, Wholesale Clubs and Drug Stores were the
only real gainers. Apparel and Footwear lost ground from 
October. Estimates for December are for a +4% to +4.5% 
gain and while this is up from November it is still below
the late summer months in the 5.5% range. Only a few stores
said the post Thanksgiving sales were strong. Wal-Mart 
specifically did NOT mention post holiday sales and DID
say sales in early November were stronger. Read between
the lines and you can probably decide that last weekend
was a disappointment for them. Complicating the situation
was the fact that last November was the weakest month of
the year for chain stores with December the second worst.
This makes the comparisons much easier for the current
period and they were only able to grow +3.6%. Does not
look good for the retail sector. The Retail Index was down
nearly -6% from the Dec-2nd high to today's lows. They
did benefit from the end of day buy programs and bounced
nearly +10 points off the 365.46 low. Also, more than
half of retailers MISSED their November projections. The
retailers said sales were slower due to lower inventory 
levels, fewer sale items and smaller promotions. Sounds
like the retailers saw the decline coming. Leading the 
decline in the retail sector were WMT, HD, LOW, JCP, FD 
and ANN. Going against the trend was Target which gained
nearly $1 on its results.     

National Semi announced earnings this morning and said
profit was up tenfold on lower costs and strong sales from
North America and the Asia Pacific region. Wall Street was
expecting 32 cents and NSM posted 36 cents. NSM said they
expected 4Q revenue to rise +3% to +5%. Suddenly traders
were shocked back to reality and the stock dropped over
-$3 on the news. Great sales, great profit but only +4%
growth? Traders dropped it like a hot skillet and despite
an end of day rebound it closed under $42 and well under
yesterday's nearly $45 high. This put even more focus on
Intel and their mid quarter update after the close. 

Intel shocked investors after the close and the shock could
carry over to Friday's open. They raised their revenue range
to $8.5B-$8.7B from $8.1B-$8.7B. ($8.4B avg to $8.6B)
This is not what shocked investors because everyone had
already expected them to raise the range. Many had hoped 
they would raise the upper end but Intel is smarter than
that. They give the wide range in their first estimate and
then adjust it to the center as the quarter progresses. 
What shocked analysts was the announcement of a $600 
million charge for unsold inventory and good will in their
wireless communications and flash memory business. They 
said growth in that business was less than previously 
expected. The charge will lower their earnings by six 
cents for the 4Q. Andy Bryant said they were seeing 
"normal" seasonal growth with good demand for processors.
Analysts never want to hear that growth is normal. Intel
dropped -$1 in after hours and all the other chip stocks 
followed suit.

The problem is the perception of the charge. Intel would
want you to believe it was "not normal business" and 
therefore their -6 cent earnings drop would not be a 
warning but an adjustment. Some analysts differ on that
view. Since Intel is a chip company and that is a large
portion of their business they feel at least a portion
of the charge is "normal course" and represents a warning.
Either way Intel still said the microprocessor business
was still strong and strong enough to raise estimates
slightly. With the NSM slow growth comments and the INTC
earnings charge there is a good chance the semi sector
will not be a leader to the upside on Friday. 

Another tech stock held an analyst update on Thursday but
failed to update anything. IBM spent a considerable amount
of time bragging on IBM and trying to suggest there was
a tech revolution underway but in the end they never gave
any revenue or earnings guidance. It was a pep rally for
analysts and nothing of substance. This suggests this
thought process. If they had any good news they would have
wanted to give it. Companies only disguise the bad news. 
IBM rarely updates guidance in these analyst meetings so
we really can't draw too any negative conclusions despite
thinking about them. IBM did rise +1.12 after the dog and
pony show. 
Jet Blue warned after the close saying that the airline
industry was faced with a challenging revenue environment.
They said capacity additions by the major carriers were 
producing lower fares and more vacant seats. Western 
routes were said to be under the greatest strain. Airlines
have been under pressure from rising fuel costs and there
are starting to be rumors of lower than expected bookings
for the coming holiday travel season. This warning came 
after Raymond James cut Southwest Airlines (LUV) neutral
from buy saying that drops in November airfares could 
continue into December. 

The Nortel CEO said that they expected to see some growth
in the telecom sector in 2004 but they did not expect it
to be strong. He said there was "no spending boom" in the
near future. He also said prospects for Nortel's optical
division were weak. NT dropped about 20 cents on the news
to $4.40. Considering the downplay I thought this was a
positive sign that investors had already priced in the 
bad news. 

Despite all the bad news the markets crawled out of the
gates and picked up speed around 10:AM. The Dow moved 
over the critical 9900 level and reached initial resistance
from yesterday at 9925 before stalling. For two hours the
Dow struggled to cling to 9925 while the Nasdaq was heading
lower. The Dow finally collapsed around 1:PM and fell to 
support at 9875. This was not a big drop but the fall 
from 9925 represented a lower high and the beginning of a 
potential roll over. The 9875 level was support Wednesday
morning again Wednesday afternoon at the close. It began
as support again this morning so the afternoon retest was
a critical fourth test of support. 

The Nasdaq touched 2000 right on schedule on Wednesday and
almost immediately started down as expected. It fell to
a low of 1942 on Thursday, -59 points from the Wednesday
high. That 1945 level was initial support and provided a
resting place for over an hour before the rebound began. 

At exactly 3:PM we saw the first of three broad based buy
programs hit the market and A/D line gained +1600 issues
over the next hour. The rebound caught everyone by surprise
and the speed of the program spikes left most speechless
and stopped out of their shorts. The Nasdaq rebounded to 
early morning resistance at 1970, still well off the 2000
highs from Wednesday but +28 points off the lows and back
in positive territory. There was speculation it was short
covering before the Intel update and the Jobs Report on
Friday. I don't buy this based on the three distinct buy
programs and the breadth of each. I suspect it was funds
putting November month end money to work ahead of any
potential Santa Claus rally. There was also a rumor at 
2:55 that MSFT was going to announce a huge share buyback
and raise their dividend. MSFT stock jumped +2% in the 
last hour of trading and a new high for the month.    

The Dow was the real winner in terms of gains. The rebound
off the 9875 support propelled it to a 9934 close and only
8 points below its intraday 19-month high of 9942 from
Wednesday. While the Dow failed to touch 10,000 when the
Nasdaq hit 2K it was now poised to make another try on
Friday. I saw "was" because there are three big hurdles
in its path. 

The first hurdle was the Intel earnings warning. Even if
it was not a warning it was less than exciting for traders
who were expecting just a boost in estimates. The S&P 
futures fell almost immediately to 1065.50, about -4 points
off the close. The Nasdaq futures fell -10 points. Those
levels have eased some as the dip buyers speculate on 
the morning Jobs report. 

The second hurdle is the Jobs report itself. The whisper
number is about +200,000 jobs and the official estimates
are for a gain of +140,000. This sets up the market for
a potential disappointment much like the Jobless Claims
today. Even if we get another gain in jobs of say +50K or
so it will still be less than expected and not a vertical
ramp into a wonderland of full employment. With the 
expectations so high we run the risk of any number being
sold as already priced into the market. A really good 
number would be seen as negative because of the Fed meeting
on Tuesday. It would be seen as accelerating the Fed's 
decision to raise rates or at least change their bias to
raising rates. This is where a good number can be bad and
a bad number can be good. Lately the good news has been
sold as readily as the bad news so the bottom line is
that flipping a coin for direction would have a better
chance of success than guessing this outcome. 

The third hurdle is the continuing flood of terror alerts.
It seems like every Thr/Fri we get another round of warnings
about potential impending attacks. Tonight was no exception.
I know that we have had a hundred warnings to every real
event but they keep filling the airwaves with them because
they are breaking news. Whether they come to pass or not
there is always the fear by fund managers that months of
gains could be wiped out on any real event only days before
2003 closes. This has got to be weighing on many managers
and with the recent market weakness and the weekend 
approaching there may not be any incentive to be bullish 
Friday morning. 

I told you on Tuesday I expected a continued bounce this
week to 9900/2000 and both occurred. I predicted a sell 
off in the Nasdaq once that 2000 level was touched and
it played out as expected. I suggested that we would then
see a dip into next week in preparation for any potential
Santa Claus rally. The bounce back to 9934 at the close 
leaves us right on the verge of either a test of 10,000
before the decline begins or looking at an opening drop
on the Intel news, or both. We have seen some serious
selling in the Russell-2000 yesterday and today. The buy
programs at the close erased an eight point drop on the
Russell and brought it back to the 545 level but still 
down for the day. The Russell tends to be a leading 
indicator for fund movement. When they decide to exit
many funds dump the smaller and less liquid small caps
first. The -12 point drop from yesterday's highs, (-20
at the lows for today), is a significant drop. However, 
one funds exit could be another's entrance. We will not
know until real support is violated at 520 and that is
several days away even in a directional market. This is
just something else to keep your eye on. One measure of
market internal strength is the new 52-week highs. I
mention this often because it shows the breadth of the
market leaders. A decline in the new highs means the 
leaders are losing support. On a day where the Dow closed
at a new two-year high you would expect the new individual
highs to be strong. Beginning with Monday the new highs
across all markets were 1254, 1113, 902 and today only
444. To put that in perspective the Dow failed to break
9900 on Monday or Tuesday but new highs were over 1100
each day. Yesterday and today when the Nasdaq and Dow
hit new highs the individual stock highs were dropping
drastically. The new highs today were only 1/3 of the
new highs on Monday. Does that indicate continued bullish
internals to you?

The market direction for Friday will be determined by the
Jobs Report, fear of the Fed and whatever damage is remaining
from the Intel news tonight. The Nikkei opened down nearly
-70 points but recovered to even in the first hour. No
obvious indication of Intel concern there. If I were flat
tonight I would find it very hard to go long on Friday. 
With very strong resistance at 10,000 just ahead and known
resistance at Nasdaq 2000 I just do not see a compelling
reason to buy stocks. Odds are much better we can buy them
cheaper next week as warning season accelerates. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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.


Lexmark Intl. - LXK - close: 77.20 change: +0.96

WHAT TO WATCH: Pulling back to confirm support at the 20-dma on 
Thursday, LXK looks poised to take another run at the $80 
resistance level.  A breakout above there could have the stock 
challenging $90 going into the end of the year.  Conservative 
traders will want to wait for that breakout before playing, while 
those with a more aggressive stance can enter on bounces from 
above $75.  Use a tight stop just under the 30-dma.


Xilinx, Inc. - XLNX - close: 37.62 change: +0.88

WHAT TO WATCH: If you think there's more upside in the 
Semiconductor rally, then XLNX looks like a good strong horse to 
ride.  There was plenty of volatility on Thursday, but if 
investors can shake off their disappointment over the INTC news 
tonight, a breakout could be in the offing ahead of the weekend.  
Use a trigger over $38 and target a rally into the $41-42 area.


Ball Corp. - BLL - close: 58.80 change: +1.49

WHAT TO WATCH: Blast off!  Shares of BLL really went vertical 
over the past couple sessions, with the assistance of rising 
volume.  This move looks a bit extended to chase higher, 
especially with the stock nearing its all-time high of $59.22.  
But a pullback and rebound from new support near $57 should set 
up a nice continuation entry ahead of the real breakout to new 
all-time highs.


Netflix - NFLX - close: 48.04 change: -1.73

WHAT TO WATCH: What goes up, must come down.  NFLX had an amazing 
rally over the past year, but clearly it was too far, too fast.  
Investors are confronting that reality and NFLX is pulling back.  
Thursday's drop halted right at the 50-dma, but that looks like a 
temporary pause on the way to testing support at $44.  That level 
should also fall to the bears' assault, and will open the door to 
a drop towards the $40 level.  Aggressive entries can be taken on 
a rebound failure below $50, while the more conservative approach 
will be to wait for a break below $44.

On the RADAR Screen

LF $27.36 - Competition is cramping LF's style and the pain can 
be seen in the price chart as shares of the children's education 
company have fallen precipitously since mid-October.  Another 
breakdown arrived on Thursday, with LF ending at its lowest level 
since May.  Continued weakness should have the stock making its 
way towards the $24-25 area and possibly falling all the way to 
the $22.50 level.

DLTR $29.99 - The discount Retailers have not been doing well 
lately, and DLTR has been right in the thick of the selling 
frenzy.  Today the stock broke below its 200-dma and that opens 
the door for a continued slide down to next strong support at 
$25.  Look for a possible rebound off the $28 level, which could 
set up new entries on a rollover below the 200-dma.

SUNW $4.54 - Fans of the underdog will love this one.  SUNW has 
been beaten down by just about every form of competition 
imaginable in the past few years, but the stock is actually 
making an attempt at a recovery, breaking out to new multi-month 
highs on Thursday.  This one is only for the aggressive players 
out there, but those with the stomach can target a rally towards 
the $5.50 level, where the stock topped out in June.

Market Sentiment

Late Day Turn
- J. Brown

Bears seemed almost gleeful at the intraday weakness today but 
victory was snatched from their jaws with a late day turnaround 
that pushed the DJIA back to 9930 and the NASDAQ back to 1968.  
Market internals were mixed but generally bearish.  Advancing 
stocks slipped below declining stocks 1393 to 1410 on the NYSE 
and 14 to 16 on the NASDAQ.  Up volume tripped below down volume 
on the NYSE by a close margin but out paced down volume on the 

Airlines and Gold stocks suffered the heaviest selling while 
investors found strength in Oil Service stocks and Natural Gas 
issues.  Odds are good that Airlines stocks (XAL) will see new 
weakness tomorrow.  After the bell JetBlue Airways (JBLU) warned 
and lowered its margins for the current quarter.  

Meanwhile chip stocks might lead the way lower for tech tomorrow 
as investors were not happy with Intel's mid-quarter update 
tonight.  The SOX index had pulled back to the 500 level and 
bounced but we wouldn't be surprised to see it test its 50-dma 
soon near 485.

Investor sentiment is certainly mixed.  The early holiday cheer 
on December 1st has faded replaced by concerns that retailers may 
not be doing as well as expected.  Wal-Mart continues to see 
declines on extremely high share volume.  Tech-retailer Best Buy 
helped lead the decliners behind Abercrombie & Fitch, who had 
reported a 13% decline in November same-store sales.  

The big focus tomorrow will be the employment report.  Will the 
small up tick in the ISM employment component translate into new 
jobs overall?  And how will these numbers affect the Fed's 
decision next Tuesday on interest rates?  These are the questions 
currently on investors' minds.


Market Averages


52-week High:  9933
52-week Low :  7197
Current     :  9930

Moving Averages:

 10-dma: 9787
 50-dma: 9700
200-dma: 9027

S&P 500 ($SPX)

52-week High: 1071
52-week Low :  768
Current     : 1069

Moving Averages:

 10-dma: 1056
 50-dma: 1042
200-dma:  970

Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1432

Moving Averages:

 10-dma: 1414
 50-dma: 1398
200-dma: 1237


Without any follow through on the recent selling these "fear"
indices remain near extreme lows.  We're still susceptible to 
stronger declines.

CBOE Market Volatility Index (VIX) = 16.30 -0.33
CBOE Mkt Volatility old VIX  (VXO) = 16.56 +0.26
Nasdaq Volatility Index (VXN)      = 26.81 -0.53


          Put/Call Ratio  Call Volume   Put Volume

Total          0.72        682,634       489,126
Equity Only    0.57        584,895       330,837
OEX            0.79         21,062        16,645
QQQ            1.13         25,084        28,372


Bullish Percent Data

           Current   Change   Status
NYSE          73.8    + 0     Bull Confirmed
NASDAQ-100    74.0    - 1     Bear Correction
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       81.8    + 0     Bull Confirmed
S&P 100       80.0    + 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: 0.95
10-dma: 0.96
21-dma: 1.12
55-dma: 1.12

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


Market Internals

            -NYSE-   -NASDAQ-
Advancers    1393      1418
Decliners    1410      1651

New Highs     199       182
New Lows       10        12

Up Volume    872M     1075M
Down Vol.    920M      972M

Total Vol.  1806M      2082M
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


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


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


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PremierInvestor.net Newsletter                Thursday 12-04-2003
                                                   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:           Breakdown!

Stop Loss Adjustments:     SLAB, FLIR

Stock Split Announcements: ACET

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  ( bearish )

Silicon Labs. - SLAB - close: 46.55 change: -1.63 stop: 48.50*new*

Company Description:
Silicon Laboratories designs, manufactures and markets proprietary 
high-performance mixed-signal integrated circuits (ICs) for the 
wireless, wireline and optical communications industries.  The 
company initially focused its efforts on developing ICs for the 
personal computer modem market and is now applying its mixed-
signal and communications expertise to the development of ICs for 
other high growth communications devices, such as wireless 
telephones and optical network applications.

Why we like it:
There's no escaping the fact that the bullish tone in the markets 
really hasn't begun to crack.  So if we're going to play the 
downside, we need to zero in on pockets of relative weakness.  The 
Semiconductor index (SOX.X) has definitely been a source of 
relative strength, leading the NASDAQ to graze the 2000 level on 
Wednesday before the late-day reversal.  The SOX stretched up to 
the $535 resistance level again before being sent sharply lower in 
the final two hours, losing 1.44% on the day.  This could be the 
beginning of a significant rollover in the SOX, but we need to 
pick on a relatively weak stock in the sector until there are more 
concrete signs of weakness.  SLAB fits that bill, having been in a 
persistent downtrend since late October.  The stock seemed to find 
support near the $45 level in late November and staged a decent 
rebound.  But the buyers ran out of gas just below $50 and SLAB 
rolled over just under the 20-dma (now at $49.51.  

The PnF chart went bearish in early November and the current 
bearish price target is $39, giving the stock room to fall.  But 
in order to really get moving to the downside, the bears are first 
going to have to overcome support near $45.75, which is both the 
site of the ascending trendline from the 9/30 and 11/20 lows, as 
well as the 100-dma ($45.80).  Additional support will be found at 
$45, which is the location of the PnF bullish support line.  Once 
SLAB breaks these measures of support, it could be a swift trip 
down the charts, with next significant support coming in at $40 
and then $38.  There should now be strong resistance in the 
$47.50-48.50 area, so aggressive entries can be taken on a failed 
bounce below that zone.  More conservative traders will need to 
wait for a break of the trendline or even a drop under $45 support 
before playing.  We'll target a drop into the $39-40 area as our 
optimum exit point, while using an initial stop at $50, just over 
the top of last week's failed rally.

Why This is our Play of the Day
Talk about arriving just in the nick of time, our SLAB play sure 
performed nicely out of the gates on Thursday.  The stock had been 
trading poorly relative to the overall Semiconductor index (SOX.X) 
and looked ready for a breakdown under the $45.75 trendline and 
then $45 support.  That breakdown arrived early on Thursday, as 
the stock plunged in response to some pretty heavy selling on the 
SOX.  There was a late-day rebound in both the SOX and SLAB, but 
not nearly enough to undo the technical damage inflicted, with 
SLAB closing well below the broken $45 support level as well as 
the 100-dma ($45.92).  Look for this rebound to fail below the 
dual measures of resistance at the broken trendline and the 100-
dma, and that will be the cue for initiating new positions.  The 
way the stock snapped back from its intraday low just below $43 
hints that breakdown entries below that level are probably not the 
most prudent strategy.  Remember, our first target on the play is 
in the $39-40 area, at which point, it would be wise to take those 
gains off the table.  If this breakdown is the real deal that we 
think it is, the stock shouldn't have the ability to reach the 20-
dma (now at $48.95).  We're lowering our stop to $48.50 tonight, 
which will be above the 20-dma by tomorrow.

Annotated Chart of SLAB:

Picked on December 3rd at   $46.55
Change since picked          -2.29
Earnings Date              1/19/04 (unconfirmed)
Average Daily Volume =    1.24 mln

Stop Loss Adjustments

SLAB - short
Adjust from $50.00 up to $48.50

FLIR - long
Adjust from $32.65 up to $33.20

Stock Split Announcements


ACET markets a 3-for-2 split and increases dividend by 11%

During today's session, Aceto Corporation (NASDAQ:ACET) announced 
that its Board of Directors has approved a 3-for-2 stock split of 
its common shares and a new cash dividend of $0.17, which is an 
11% increase over last year's dividend (to be paid semi-annually). 

The payable date for the stock split is set for January 2nd, 2004 
to shareholders on record as of December 17th.  Fractional shares 
of the stock split will be paid in cash.  After the stock split 
ACET will have approximately 15.7 million shares.  The cash 
dividend will be paid on January 2nd, 2004.

About the company:
Aceto Corporation, which was incorporated in 1947, is a global leader 
in the distribution and marketing of pharmaceutical and specialty 
chemicals used principally in the agricultural, color, pharmaceutical, 
surface coating/ink and general chemical industries. With offices in 
nine countries, Aceto Corporation distributes over 1,000 chemicals in 
these and other fields. For more information, please visit 
www.aceto.com. (Source: Company Press Release)

  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

VZ      Verizon Communications     33.19     +0.95
CVX     ChevronTexaco              77.78     +1.68
SBC     SBC Communications         24.01     +0.86
COP     ConocoPhillips             59.63     +1.23
BLS     Bellsouth Corp             27.43     +0.74
GM      General Motors             46.48     +0.94

Breakout to Upside (Stocks $5 to $20)

SBL     Symbol Technologies        15.81     +1.19
ISSX    Internet Security System   18.60     +1.80
ORB     Orbital Sciences           11.01     +1.17
OMCL    Omnicell                   15.01     +1.85
LCAV    LCA-Vision                 19.60     +1.99
TRCI    Technology Research        19.92     +2.55

Breakout to Upside (Stocks over $20)
QCOM    Qualcomm                   49.10     +4.63
DCX     DiamlerChrysler            41.07     +1.63
NOC     Northrop Gruman            94.42     +2.54
BR      Burlington Resources       53.56     +2.47
APD     Air Products & Chemicals   50.55     +1.45
UCL     Unocal Corp                33.75     +1.32
ASD     American Standard Cos     101.58     +1.82

Breakout to Downside (Stocks over $20)

BBY     Best Buy Co                54.20     -3.22
SNDK    SanDisk Corp               68.41     -3.49
FDO     Family Dollar Store        34.88     -2.22
CECO    Career Education           36.54     -2.94
JBLU    JetBlue Airways            31.38     -1.37
CHS     Chico's FAS Inc            34.69     -2.18
COCO    Corinthian Colleges        57.52     -4.56
ANF     Abercrombie & Fitch        24.75     -2.53
ICST    Integrated Circuit Systems 27.04     -1.59

Recently Overbought With Bearish Signals (Stocks over $20)

S       Sears Roebuck              52.64     -2.22
NSM     National Semiconductor     41.88     -1.62
FD      Federated Dept Stores      48.54     -1.07
XMSR    XM Satellite Radio         23.36     -1.33
APPX    American Pharma            33.78     -2.52
WPI     Watson Pharmaceuticals     47.26     -0.65
CYN     City National Corp         62.44     -0.86
URBN    Urban Outfitters           35.69     -2.52

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