Option Investor
Newsletter

Daily Newsletter, Monday, 12/08/2003

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                 Monday 12-08-2003
                                                  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:      Investor focus: FOMC or Dow 10K?
Play of the Day:  It's Alive!

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     12-08-2003            High     Low     Volume Advance/Decline
DJIA     9965.27 +102.59  9970.16  9859.57 1.44 bln   1890/ 910
NASDAQ   1948.85 + 11.03  1948.94  1926.94 1.56 bln   1623/1430
S&P 100   527.67 +  4.16   527.95   523.51   Totals   3513/2340
S&P 500  1069.30 +  7.80  1069.59  1060.93
RUS 2000  543.04 +  4.03   543.15   536.52
DJ TRANS 2929.47 + 18.89  2930.95  2906.70
VIX        16.54 -  0.55    17.59    16.52
VXO        16.31 -  1.03    17.73    16.13
VXN        27.55 +  0.50    28.35    27.55
Total Volume 3,389M
Total UpVol  1,932M
Total DnVol  1,351M
52wk Highs     567
52wk Lows       30
TRIN          1.19
PUT/CALL      0.93
===============================================================

===========
Market Wrap
===========

Investor focus: FOMC or Dow 10K?
by James Brown

Stocks ended the day higher as bulls piled on the gains while a 
large section of the east coast was still digging out from this 
weekend's blizzard.  The weather may have been to blame for the 
low volume but the rally was widespread.  Only the Internets and 
gold stocks closed in the red and only with minor declines.  The 
strongest buying was concentrated in homebuilders, banks, natural 
gas, defense and airlines.  The airlines enjoyed a nice rebound 
when JetBlue Airways (JBLU) did its best impression of a dead-cat 
bounce (+7.5%) after two analysts upgraded the stock this 
morning.  The FOMC meeting tomorrow and the strong drop in the 
U.S. dollar dominated the headlines.  

The new lows in the U.S. dollar wreaked havoc in the Asian 
markets.  A low dollar means Asian goods become less competitive 
here in the U.S., the world's biggest importer.  The Japanese 
NIKKEI average lost 328 points or 3.16% to 10,045.  The Hong Kong 
Hang Seng followed with a 137-point loss to 12,177.  The same 
weak-dollar export pressure hit Europe to a lesser degree.  The 
English FTSE lost 7 points to 4359 and the German DAX dropped 35 
points to 3806.  Meanwhile, futures for platinum reached 23-year 
highs breaking above the $800/an ounce level.  Gold futures 
remain strong near their highs at $407 an ounce.  Bonds pulled 
back as money appeared to rotate into equities.  The yield on the 
10-year note rose to 4.278%.  

The Dow Jones Industrial Average (DJIA) added 102.5 points to 
close at an 18-month high.  The venerable index is just 35 points 
away from the 10,000 mark - an easy reach for excitable bulls 
tomorrow.  The NASDAQ followed with an 11-point gain to 1948 and 
the S&P 500 added 7 points to close at 1069.  Market internals 
eventually closed bullish.  Advancing stocks outpaced decliners 2 
to 1 on the NYSE and 16 to 14 on the NASDAQ.  Up volume lead down 
volume but the difference wasn't that spectacular.  

Chart of the DJIA:



Chart of the NASDAQ:



The rebound in technology stocks was impressive today.  The 
NASDAQ index was under water a good portion of the session after 
a survey unveiled less than exciting news for I.T. spending.  
Considering the strong pace for economic growth this past year 
and the expectations for growth next year investors are looking 
for business spending to pick up steam.  Unfortunately, 
technology spending is likely to end up lukewarm according to a 
Gartner-SoundView technology survey.  Overall they estimate 
capital spending to be up 1.6 percent in 2004 with the largest 
companies estimating budgets to be flat or down.  

The U.S. dollar is moving at a strong pace too, a strong pace 
downward.  It was a rough day for the dollar.  It hit new three-
year lows against the yen (107.26), a new seven-year low against 
the Swiss franc (1.266), a new 11-year low against the British 
pound (1.73) and a new all-time low against the euro (1.2239).  
As a matter of fact this was the seventh straight record low 
against the euro.  A low dollar makes U.S. investments much less 
appealing to foreign investors and a report out today from the 
Bank of International Settlements showed a very significant chunk 
of OPEC funds being repatriated out of dollars.  In a note out 
this morning Citigroup agreed that the U.S. dollar was likely to 
see even more declines.  However, they offered an upbeat picture 
for the future claiming the recovery was well on its way and we 
should see a strong surge in job growth in the next few quarters.  

This week's big event takes place tomorrow.  No, I'm not talking 
about Dow 10,000 although that could certainly take place and 
there are plenty of traders just waiting to short this 
psychological level.  I'm referring to the FOMC meeting, which is 
set to conclude at 2:15 PM ET.  No one expects the Federal 
Reserve to lift rates from their 40-year lows at 1% so the 
market's entire focus will be on their post-meeting comments.  
Will Greenspan & Co keep the "considerable period of time" 
language in their message to the markets?  Will they replace it 
with something else?  What will they say about the incredibly 
strong economic growth in the last quarter?  Will they hint that 
a rate hike may be nearer than expected?  Do they know the 
whereabouts of Saddam and if he's been captured?  Just kidding.  
There was a Saddam rumor going around today that some traders 
were blaming for the sharp rise this afternoon.  

Normally I would expect the markets to be subdued and trade in a 
narrow sideways fashion ahead of the Fed meeting tomorrow as we 
wait for their outlook.  However, the Texas Instruments (TXN) 
news after the bell tonight could change things.  Chips stocks 
were at a pivotal level with the SOX hovering near the 500 mark 
just above its simple 50-dma.  We could see a strong bounce 
tomorrow now that TXN has raised their earnings guidance.  
Earnings estimates had been for 18 to 20 cents a share on 
revenues of $2.49 to 2.70 billion.  Strong consumer demand is 
likely to drive TXN's fourth quarter net income to 25-27 cents a 
share on revenues of $2.64 to 2.765 billion.  It's possible this 
can spark a run in Dow component Intel.  Intel had closed under 
its 50-dma today so maybe tonight's TXN news can scare some 
shorts into covering early tomorrow.  

Whatever happens be prepared for a "sell the news" affect if the 
Fed doesn't say anything material.  This caution is even more 
important if the Dow does reach the 10,000 mark.  



===============
Play-of-the-Day  ( Bearish )
===============

FuelCell Energy - FCEL - cls: 12.45 chng: -0.59 stop: 14.05*new*

Company Description:
FuelCell Energy, Inc. (www.fuelcellenergy.com), based in Danbury, 
Connecticut, is a world-recognized leader for development and 
commercialization of high efficiency fuel cells for electric power 
generation. The Company's Direct FuelCell(R) (DFC(R)) technology 
eliminates external fuel processing to extract hydrogen from a 
hydrocarbon fuel. This results in a product whose cost, combined 
with high efficiency, simplicity and reliability, results in 
product advantages for stationary power generation. The Company 
has been developing DFC technology for stationary power plants 
with the U.S. Department of Energy through the National Energy 
Technology Laboratory, whose advanced fuel cell research program 
is focused on developing a new generation of high performance fuel 
cells that can generate clean electricity at power stations or in 
distributed locations near the customer, including hospitals, 
schools, data centers and other commercial and industrial 
applications.  Its wholly owned subsidiary, Global Thermoelectric 
Inc., is a leader in the development of solid oxide fuel cell 
(SOFC) products and the world's largest manufacturer and 
distributor of thermoelectric stationary power generators for use 
in remote locations. (Source:  Company Press Release)

Why we like it:
For almost two weeks, FCEL struggled to climb above resistance at 
$14.00, but finally prices succumbed to late-week weakness and 
rolled down. Although volume wasn't particularly strong, volume on 
the late-week declines proved higher than volume on the earlier 
days as FCEL tested that resistance, and that's a good sign for 
our bearish play.  While volume confirmation is not as important 
in bearish plays as it is in bullish plays, it's nice to have as 
long as it's not so large as to suggest accumulation at low 
prices.

We'd like to see that downside gather speed ahead of FCEL's 
(unconfirmed) earnings release December 16 before the market 
opens. To speed up the downside, FCEL needs to fall below the 
November low.  Those considering new entries could look for a 
momentum entry on a fall below $12.72, that November low, but 
should also consider that momentum or breakout entries have not 
proven as successful in recent trading as they have in some 
periods.

Why This is our Play of the Day
FCEL's consolidation over the past two weeks certainly looked like 
a bearish continuation pattern, but we just couldn't be sure until 
price finally broke support.  That break came first thing this 
morning, with the stock plunging all the way to $12 before finding 
some buying support.  If not for the end of day rebound in the 
NASDAQ, the stock likely would have ended at the low of the day, 
possibly even breaking down further.  As it was, FCEL caught an 
end-of-day buying spurt back up near the $12.50 level, but not 
enough to negate the breakdown.  Resistance should now come into 
play near $13.00 and should be very firm at $13.50.  Rollover 
entries at either of those levels look attractive now that the 
breakdown is in progress.  Note that we've lowered our stop to 
$14.05, just above strong resistance that held throughout the past 
two week's consolidation.  There's the potential for some mild 
support near $11.50 and then FCEL should make steady progress 
towards strong support at $10.

Annotated Chart of FCEL:
chart:
 


Picked on Nov 28 at     $13.46
Change since picked:     -1.01
Earnings Date:        12/16/03 (unconfirmed)
Average Daily Volume:    926 K
Chart:




=================================================================
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 12-08-2003
                                                   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 Updates:  FCEL, SLAB, JNPR, ZBRA

Closed Plays:       JCP

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)


==================================================================
Stop Loss Updates
==================================================================

FCEL - short
Adjust from $14.85 up to $14.05

SLAB - short
Adjust from $48.50 up to $48.00

JNPR - long
Adjust from $17.20 up to $17.50

ZBRA - long
Adjust from $59.98 up to $61.00


==================================================================
Active Trader/Non-tech plays
==================================================================

Closed Plays
------------
   
   Closed Bullish Play
   -------------------


J.C. Penney Co. - JCP - close: 24.06  change: -0.29  stop: 23.95

By late morning Monday, JCP had followed the RLX, the S&P Retail 
Index, down to its day's low, violating our stop.  The S&P retail 
index verged on completing a H&S top, but the decline slowed just 
ahead of that confirmation.  JCP also slowed its decline as it 
approached an ascending trendline that began building in August.  
That trendline and the 50-dma provided enough bounce power to 
keep JCP from a more precipitous fall.  

JCP's recent rollover from a higher high was accompanied by lower 
highs on MACD, RSI, and stochastics, so if JCP should gather 
enough strength to attempt a real bounce, we would now question 
the sustainability of that bounce.  MACD, stochastics, and RSI 
remain bearish.
 
A snowstorm in the Northeast over the weekend may have prompted 
the decline.  Anecdotal evidence pointed to empty stores over the 
weekend as driving conditions made shopping nearly impossible.  
Some retailers even closed their doors.  The National Retail 
Federation credits the Northeast with producing 25 percent of the 
customer base for retailers.  While retailers expected to catch 
up as the holidays approached and clothing retailers even 
expected to benefit from stronger sales of warm clothing, 
investors didn't care.  That snowstorm caused lost profits for an 
important pre-holiday weekend, and they dumped the stock.    

Picked on Nov 21 at  24.45
Change since picked: -0.39
Earnings Date:    11/11/03 (confirmed) 
Average Daily Volume:  2.5 million





==================================================================
  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

XOM     Exxon Mobil Corporation    37.40    +0.62
MO      Altria Group Inc           52.44    +1.02
PTR     Petrochina Co Ltd          43.25    +2.15
CVX     Chevrontexaco Corp         48.61    +0.61
BP      BP Plc                     44.40    +0.80
UTX     United Technologies        88.55    +0.82


---------------------------------------
Breakout to Upside (Stocks $5 to $20)
---------------------------------------

MEE     Massey Energy Company      17.79    +1.09

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------

SNP     China Petro & Chem (ADS)   35.20    +1.95
INTU    Intuit Inc                 51.80    +1.65
TXT     Textron Inc                53.95    +2.80
PCL     Plum Creek Timber Reit     28.15    +1.08


-------------------------------------------
Breakout to Downside (Stocks over $20)
-------------------------------------------

AVP     Avon Products Inc          62.67    -5.40
S       Sears Roebuck & Co         47.93    -1.03
HMA     Health Management Assoc    23.12    -2.89
CHS     Chico's Fas Inc            33.21    -1.80

-----------------------------------------
Recently Overbought With Bearish Signals (Stocks over $20)
-------------------------------------------

PHG     Koninklijke Philips Elec   28.69    -0.27
BTY     British Telecommun Plc     30.17    -0.19
EL      Estee Lauder Cos Inc       38.80    -0.14



=================================================================
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.



DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives