Option Investor

Daily Newsletter, Thursday, 12/11/2003

Printer friendly version
PremierInvestor.net Newsletter                Thursday 12-11-2003
                                                   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:      Santa Came Early
Watch List:       BBY, QLGC, CD, WAT and more!
Market Sentiment: Party Like It's 1999

MARKET WRAP  (view in courier font for table alignment)
      12-11-2003           High     Low     Volume Advance/Decline
DJIA    10008.16 + 86.30 10026.53  9920.97 1.70 bln   2231/ 899
NASDAQ   1942.32 + 37.70  1945.92  1903.93 1.74 bln   2258/ 851
S&P 100   530.16 +  4.83   531.44   525.33   Totals   4489/1750
S&P 500  1071.21 + 12.16  1073.63  1059.05
W5000   10430.54 +134.80 10448.80 10295.70
RUS 2000  542.92 + 14.43   542.93   528.49
DJ TRANS 2965.90 + 53.20  2970.09  2910.84
VIX        16.74 -  1.13    17.95    16.51
VXO (VIX-O)15.86 -  1.47    17.16    15.66
VXN        26.44 -  1.40    28.05    26.34
Total Volume 3,812M
Total UpVol  3,286M
Total DnVol    472M
52wk Highs  456
52wk Lows    36
TRIN       0.45
NAZTRIN    0.38
PUT/CALL   0.66

Market Wrap

Santa Came Early

Nobody really knows why but Santa came early to the markets
and left a load of goodies for all the nice bulls. The Dow
opened up and never looked back and there were as many
excuses as there were points on the board but the bottom
line was a complete lack of sellers.

Dow Chart - Daily

Nasdaq Chart - Daily

This bullish bounce was surprising on the surface because
the primary economic report for the day was negative. The
Jobless Claims jumped to 378,000 for the week and the first
time over 370,000 since mid October. On the surface this
would appear negative as the second consecutive weekly gain
but analysts were quick to dismiss the number as skewed by
the Thanksgiving holiday. They felt many newly unemployed
workers may have put off applying for benefits during the
holiday week and that pushed the current reporting week
higher. For the first time in recent memory the prior
week's number at 365,000 was not revised upward. The four
week average moved up to 364,750 and continuing claims
rose to 3,346,000. The Jobless Claims were ignored despite
it being the highest number in six weeks. When the bulls
want to buy do not confuse them with the facts.

Helping boost the sentiment was a larger than expected
bounce in the Retail Sales for November by +0.9%. The
consensus had been for only a +0.6% gain. While this is
still well off the highs from the summer there were worries
that it could have been worse. Auto related sales boosted
the headline number which would have been only +0.4%
without autos. Helping build investor confidence was the
+7% increase in year over year sales and suggests that
this holiday season will be the best since 1999. This is
contrary to the recent dire predictions of retail weakness.
This turnaround in retail sentiment helped inspire traders
and put the spirit of Christmas into their holiday stock

The Business Inventory number rose by +0.4% for October
and was twice the consensus estimates. This was the second
month of gains for inventories and sales rose at an even
faster rate at +0.7%. This pushed the inventory to sales
ratio to 1.35 and an all time low. This suggests that the
4Q GDP could already be building to stronger than expected

The last economic report was the Import and Export Prices
which rose unexpectedly by +0.4%. While the FOMC minutes
discussed below claim there is no danger of inflation there
are several signs of the inflation monster creeping back
into the picture. Import and Export Prices is one of them.
A +1.1% increase in petroleum prices helped fuel the
headline number but ex-energy the prices still rose +0.3%

The biggest impact to the market came from the FOMC minutes
for October that were released at 2:PM. The outlook expressed
in the minutes was for continued growth and shock that
the growth was so strong in the 3Q. However, there were
some surprises. Some of the members expressed willingness
to change the bias if the economy continued to strengthen
in the 4Q. We saw that morphing of the bias in the Dec-9th
announcement when they tied inflation to that considerable
period statement.

Other surprising views included a doubt that employment
will rise substantially until LATE 2005. This is a huge
change in expectations. Last month we had every Fed head
on the panel making speeches about growing employment
and how jobs will follow the recovery. Nobody said they
would follow two years later. The other statement causing
excitement was a very distant view of any inflation problem.
They felt the economy was growing too slow to produce any
inflationary conditions for quite some time. This was
interpreted by many as late 2004 or even early 2005.
This was a huge positive for the market. With the bond
market keying on jobs as the primary reason for the Fed
to not raise rates and inflation not expected to be a
problem for a long time the obvious conclusion was the
Fed is not going to raise rates for an even longer period
than originally thought. I had mentioned earlier that due
to the election any hike had to be in March or before
and after today's Fed minutes release it is extremely
unlikely that hike will happen. The conventional wisdom
tonight is no rate hikes until 2005. We speculated about
this last week and now it almost appears to be a sure
thing. If there was any bad news it was the traders
pricing this into the market and setting themselves up
for a monster disappointment if conditions suddenly
change in March.

Overall the Fed was very optimistic about the economic
outlook but almost unbelievably calm about the potential
for inflation. If you believe them inflation is on
hold until after the election. Quite a coincidence. They
feel business spending is filling the gap the consumer
created in the 4Q and will continue to grow. The biggest
shocker was their outlook was so far reaching going to
late 2005 in some areas and they were not seeing any
need to make changes for quite some time. This is a
major relief to the bond market and to the equity
market. Thank you Santa.

Tech stocks got a boost from Cisco after CEO Chambers
said they were seeing a rise in orders and a rise in
budgeting for 2004. PC box makers also got a boost
from an IDC survey that said PC shipments for 2003 are
going to be +9% higher than 2000, which was a record
year and +11.4% over last year. Notebook computers are
the hot item with desktops lagging. Dell said customer
traffic for the first week of December totaled nearly
five million visitors compared to only four million in
the same week last year. HPQ CEO Carly Fiorina also
said this week that holiday sales were going well.

I have mentioned this several times in the past but I
think it bears repeating. I think the PC makers are all
beating each other up on price point and nobody is really
making any real money. We bought two 2.0GHZ computers
over the last couple weeks to replace some Y2K 600mhz
models. We paid $289 plus shipping for 2.0GHZ Intel,
256MB ram, 40GB disk and all the bells and whistles.
(no monitor) Considering the computers I replaced cost
me over $2000 each three years ago where is the profit?
Using the ratios above the box makers have to sell seven
boxes today to equal the gross revenue of only one box
three years ago. Like the HWP CEO said last week, Dell
is trapped in an ever increasing price/commodity struggle
with no way out. While that is obviously a biased view it
does have a lot of truth. This is why Dell and others are
rapidly trying to branch out into consumer electronics,
cameras, printers, plasma TVs, etc. Computers have no
profit left and they have to sell 25% more each quarter
just to break even. If it were not for the boom in
notebooks the PC makers would be in serious trouble.

Despite the problem mentioned above the tech stocks took
off on the double dose of good news about rising IT budgets
and higher PC shipments. The SOX bounced +2.54% on the
news that Taiwan Semiconductor said 4Q sales would beat
forecasts and hit a record high. This was an unusual move
and came on the heals of cautious comments on Tuesday by
TSM and United Microelectronics that November sales would
be flat or down from October. The semiconductor sector
had dropped strongly on the earlier news and TSM sought
to correct the impression that business was bad. I guess
it is all in how you report the numbers. November could
be flat to down but maybe it was flat to down from a
strong October. Maybe December orders surged strongly.
It just seems strange to caution on Tuesday and then
guide higher on Thursday.

The markets blasted out of the gate this morning and the
Dow came very close to 10,000 at 9993 but was unable to
break that psychological level. The Dow traded sideways
with a very slight negative trend until the ten-year note
auction concluded badly and it dropped to near 9960. When
the Fed minutes were released and investors got a glimpse
of a distant future without rate hikes and no inflation
it was too much for those undecided investors to take.
The Dow surged to break 10K and traded over that level
into the close. While the close over 10K was the first
close over that level since May-24th 2002 it was barely
convincing. The 10026 high lasted for about 20 min before
the profit taking began. Even then it was very light profit
taking and they managed to hold the 10K level. The Nasdaq
tacked on +37 points but was unable to touch the 1950
resistance level.

In reality neither the drop yesterday or the bounce today
is relative to anything but the reporters. According to
sources that claim to know there was a large mutual fund
unloading some major positions on Tue/Wed after the first
touch of 10,000. They concluded their selling yesterday
afternoon and the rebound began. This makes sense to what
we saw intraday today. The market did not move up prior
to the FOMC minutes in normal fashion. The gains were
slow and methodical with no bouts of selling. There were
only a couple of noticeable buy programs and no sell
programs. In fact there was almost no selling at all.

The market internals were very lopsided with only one
missing ingredient. The advancing volume was 6:1 over
declining volume. Very bullish under any conditions.
The declining volume across ALL markets was only 472
million shares with 3.3 billion in advancing volume.
What was missing was volume. With only 3.7 billion shares
overall that is less than the 4.1 billion on the down
day on Wednesday. Those volume levels are well below
the 4.5 billion share days we were seeing when the
market was rising in October. Also light were the new
52-week highs. Despite a 5:2 advancer over decliner ratio
the new highs across all markets were only 468. This is
well below the 1100-1200 levels back on Dec 1st/2nd.

The most bullish factor I saw was the +14 point jump in
the Russell-2000. This was very strong and indicates a
new round of buying by funds. At this stage in December
this is very bullish. The RUT retraced nearly all the
selling for week in only one day.

Where are we going from here? This is the $64 question
tonight. The Dow closed right on psychological resistance
at 10000 and the Nasdaq is stuck under 1950 resistance.
The Wilshire 5000 did NOT set a new high and only managed
to retrace to 10450 resistance. The high was 10506 last
week. The S&P also failed to reach a new high. With the
Dow standing out in the crowd I glanced at the Dow stocks
for a hint of what happened. CAT soared +1.94 on news that
their Chairman and CEO would retire and be replaced by a
30 year veteran. Home Depot rose +1.45 on news of a new
$1 billion share buyback and news that they had $5 bil
in cash at the end of the 3Q despite completing a $3 bil
buyback since July-2002. UTX jumped +1.00 on new guidance
to +14% earnings growth. AA jumped +.92 on news that
China wanted to import more raw aluminum and that a
supply shortfall in China was causing a spike in the price.
Finally MO rose +.78 on a favorable court ruling and BA
spiked on a contract win. Those six Dow stocks accounted
for +56 points of the +86 points the Dow gained. Not
exactly a strong showing.

This produces some conflicting indications. Breadth was
strong but new highs were weak. The Dow broke to a new
high that just happened to be over 10,000 but all the
other indexes failed to follow suit. On the surface it
would appear that a Santa rally had begun. Considering
that sentiment is a surface commodity anyway the positive
press tonight could help stimulate buyer interest on
Friday. The Nikkei opened up +140 points and our futures
are positive in the overnight session. All seems well
with the market.

I suggested on Tuesday that the Dow would probably test
strong support at 9850 before beginning the Santa rebound.
On Wednesday the low was 9882. Evidently there were enough
traders watching the 9850 support level that they jumped
in front of that level and the race was on. It helped to
have that mutual fund run out of stock there as well.
I have to admit I am surprised. I did not think the Dow
would close over 10K until next week or even Christmas
week. Now that we are there the markets may lack motivation
for any future gains. The distinct lack of any short
covering makes me wonder if anyone believes there could
be a higher high in our future. Now that we have closed
over 10K there is congestion all the way to 10,300. It
will not be a walk in the park to higher ground. My view
for the rest of the year was to remain range bound between
9700-10000. The minor move over 10K has not changed my
view but I may need to raise the upper boundary depending
on Friday's action. Economic reports for Friday include
the PPI, International Trade and Consumer Sentiment. None
should be market movers unless there is a significant
change in the readings. If you are not in the markets
tonight I would probably not go long at the open. You
may want to err on the side of caution and wait until
Monday to see if the apparent bullishness holds until
next week. We saw what profit taking from one fund can
do and as long as we hold at the 10K level without moving
higher we have a bulls eye on our back and carrying a sign
saying bears are sissies. It is dangerous to tempt fate
this close to year end.

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.


Best Buy Company - BBY - close: 53.35 change: +1.37

WHAT TO WATCH: Let the Santa Claus rally begin!  Just one day
after breaking down out of its long-term rising channel, BBY was
back in favor with the bulls, rebounding better than 2.5% to
close back inside the channel.  This looks like a great
aggressive entry point for a rally back towards resistance, first
at $57.50 and then just below $60.  Use a tight stop just under
yesterday's low.


Qlogic Corporation - QLGC - close: 52.36 change: +1.14

WHAT TO WATCH: QLGC looked like a great rebound candidate on
Tuesday and it still does after today's 2.2% advance.  Any dips
back near the $51 area should make for a solid entry point and
based on the bounce from just above the rising trendline, stops
at $50 should work just fine.  Target a rally back to the $56-57


Cendant Corp. - CD - close: 21.18 change: +0.34

WHAT TO WATCH: Traders that have been waiting for a decent
pullback in CD's persistent uptrend of the past several months
got just what they wanted over the past week, as the stock fell
to test the 50-dma yesterday.  The rebound from that level
continued today and with daily Stochastics just beginning to turn
up, this looks like a solid entry for a run back at the recent
highs above $22 and quite possibly a breakout to run up and test
next resistance in the $24-25 area.


Waters Corp. - WAT - close: 33.20 change: +1.08

WHAT TO WATCH: Ever since rebounding from just above its 200-dma
in late September, WAT has been climbing steadily higher.
Today's action produced an impressive breakout, which came on
strengthening volume to boot.  While there is plenty of
resistance on the way up, WAT now looks capable of taking a run
at $36 resistance area.

On the RADAR Screen

ALL $41.75 - With a big surge of volume, shares of insurer ALL
managed a major breakout today and posting their best close since
mid-2001.  This breakout looks like it has room to run up to the
$45 resistance area that presented stiff resistance in early

JP $49.37 - Breakout, consolidate and repeat.  That's what JP has
been doing for months now and Thursday's session saw the stock
break out again to reach another new 52-week high.  Entries make
the most sense on a slight pullback near $48.50, which can then
be followed by a stop just under the 30-dma.  Target a rally up
to the $51-52 area.

BDK $48.66 - Home improvement stocks may have been weak lately in
sympathy with the selloff in the Housing sector (until today, of
course), but shares of BDK have remained strong.  So strong in
fact, that the stock broke out to new 52-week highs today.
Entries near $48 look attractive on a dip and rebound that
confirms this former resistance as new support.  Based on the
strength shown in the PnF chart, look for BDK to rally to the $50
resistance and then continue higher in breakout fashion.

Market Sentiment

Party Like It's 1999
- J. Brown

Wow!  The Dow Jones Industrial Average traded above the
psychological 10,000 mark on Tuesday of this week but could not
hold it.  The very first time the DJIA traded above 10,000 was
March 16, 1999. Back then the index couldn't close above the big
five-digit round number either.  It was two weeks later on March
29th, 1999 that the DJIA finally closed above the 10K level.

This time it only took two days for the index to actually close
above this mark.  Most veteran traders will tell you it's just a
number.  They're right but it's a number with significance.
Untold thousands of traders big and small had been planning on
shorting the market when the Dow hit 10,000.  They tried on
Tuesday and tried on Wednesday but they couldn't get any downside
moment.  Now the index has closed above it and we could see a
short-squeeze as bears panic to close positions before they get
away from them.

Back in 1999 it only took six weeks for the DJIA to run from
10,000 to 11,000.  Short-squeeze or not I don't know anyone
expecting a repeat performance.  However, we could very well see
a continuation of the current rally.  As Jim said, it looks like
the Santa Claus rally may have started a little early.  Market
internals were VERY bullish.  Advancing stocks crushed decliners
21 to 7 on the NYSE and 22 to 8 on the NASDAQ.  Up volume was
almost 7 times down volume on the NYSE and it was 8 times down
volume on the NASDAQ.  Those are some pretty hefty numbers and
indicate just how wide and deep the rally was today.

Contributing to investor confidence this week has been two high
profile stock buy backs.  Normally, companies offer stock buy
backs because they're confident about future performance and it
enhances shareholder value.  This week both Lowe's (LOW) and
rival Home Depot (HD) announced $1 billion stock buy backs
(each). That sounds like a pretty big vote of confidence.
Hopefully we'll see a similar vote of confidence tomorrow in the
University of Michigan consumer sentiment numbers.  Analysts are
expecting it to rise from 93.7 to 96.0.

Meanwhile, look for some follow through in the software rally
tomorrow.  After the bell tonight Adobe Systems (ADBE) beat
earnings estimates and guided higher for the first quarter.


Market Averages


52-week High: 10026
52-week Low :  7416
Current     : 10008

Moving Averages:

 10-dma: 9902
 50-dma: 9759
200-dma: 9078

S&P 500 ($SPX)

52-week High: 1074
52-week Low :  788
Current     : 1071

Moving Averages:

 10-dma: 1065
 50-dma: 1048
200-dma:  976

Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1416

Moving Averages:

 10-dma: 1416
 50-dma: 1407
200-dma: 1247


There is absolutely NO FEAR in the markets right now as traders
pushed the DJIA back above the 10,000 mark and the S&P 500 back
towards its yearly high.  This sent the volatility indices back
toward their multi-year lows.

CBOE Market Volatility Index (VIX) = 16.73 -1.14
CBOE Mkt Volatility old VIX  (VXO) = 15.86 -1.47
Nasdaq Volatility Index (VXN)      = 26.15 -1.69


          Put/Call Ratio  Call Volume   Put Volume

Total          0.67        767,216       514,764
Equity Only    0.50        589,907       297,193
OEX            0.92         40,403        43,783
QQQ            1.57         31,180        48,862


Bullish Percent Data

           Current   Change   Status
NYSE          73.9    - 1     Bull Confirmed
NASDAQ-100    67.0    - 1     Bear Correction
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       80.2    - 1     Bull Confirmed
S&P 100       79.0    - 1     Bull Correction

Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


 5-dma: 1.22
10-dma: 1.12
21-dma: 1.15
55-dma: 1.14

Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning


Market Internals

            -NYSE-   -NASDAQ-
Advancers    2142      2282
Decliners     688       788

New Highs     210       145
New Lows       15        26

Up Volume   1490M     1545M
Down Vol.    218M      192M

Total Vol.  1733M     1766M
M = millions


Commitments Of Traders Report: 12/02/03

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

Long and short interest continues to flat line from the
commercial traders.  Everyone seems to be waiting for the year
to end before changing their bets.  Small traders have grown
slightly more optimistic.

Commercials   Long      Short      Net     % Of OI
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%)
12/02/03      394,531   414,223   (19,692)   (2.4%)

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
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%
12/02/03      154,788    85,776    69,012    28.7%

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

Wow!  We're actually seeing some action here in the e-minis.
Commercial traders have reversed from being net short to
net long.  This is bullish news.  Small traders have added
strongly to both their long and short positions and remain
bullish as well.

Commercials   Long      Short      Net     % Of OI
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%)
12/02/03      283,199   268,833     14,366     2.6%

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
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%
12/02/03     119,555     77,609    41,946    21.3%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


Much like the large S&P contracts above, commercial traders
have fallen asleep.  There is very little change in positions.
Meanwhile, small traders have reduced positions on both
sides of the equation.

Commercials   Long      Short      Net     % of OI
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%)
12/02/03       35,569     48,552   (12,983) (15.4%)

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
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%
12/02/03       21,594     9,429    12,165    39.2%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02


The same story appears to hold true for DJ futures.  The
overall trend is flat with commercials slightly bullish
and small traders generally bearish.

Commercials   Long      Short      Net     % of OI
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%
12/02/03       21,128    12,379    8,749      26.1%

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
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%)
12/02/03        6,667     9,302   (2,635)   (16.5%)

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

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:


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                Thursday 12-11-2003
                                                   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:           Finally!

Stop Loss Adjustments:     -none-

Stock Split Announcements: KSWS

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  )

Marathon Oil Corp - MRO - close: 30.87  change: +0.41  stop: 28.75

Company Description:
Marathon Oil Corporation is an energy company engaged in the
worldwide exploration, production and transportation of crude oil
and natural gas. Through its 62 percent ownership of Marathon
Ashland Petroleum LLC, the company also refines, markets and
transports petroleum products in the United States. (Source:
Company Press Release)

Why we like it:
On October 10, MRO created a spread triple top breakout buy signal
on the P&F chart, with a preliminary price target of $54.00. That
was enough to draw our interest, but MRO also broke above a
descending trendline that had been in place since early 1998.
That really caught our interest, but breakout plays have not been
particularly successful lately.  Since early October, however, MRO
has been consolidating, building a base above that broken
trendline.  Late in November, as President Bush's energy bill was
blocked, MRO declined with other energy stocks, but even that
setback did not take MRO below the support it had been
establishing just below $29.00.  About a week ago, MRO climbed
back above its 30-dma and began building a slightly higher base
above $29.50.

Now that it's done all this careful prep work, it looks ready to
break to the upside.  MRO closed the week above $30.00.  The XOI,
the Oil Index, has already broken above its October high,
suggesting that MRO, one of its component stocks, might also break
above its October high.

We do note the tall upper shadows on recent days, however.
Although we would ordinarily suggest triggering this play on a
move above October's $30.55 high, those tall upper shadows suggest
that pullback entries might be better, buying on intraday dips to
and bounces from the 10-dma. Although the $54.00 preliminary
target on the P&F chart suggests that a $35.00 target would be a
modest and logical target, we do note that the $33.75 level has
been a swing top on many MRO advances on a monthly chart, so we
expect considerable volatility as that level is approached.  We
suggest that conservative traders set an automatic profit stop at
$33.75, our first target.

Analysts disagree about MRO's prospects, with Goldman Sachs
reiterating its underperform rating in late October while other
firms have proposed buy or hold ratings for the company's stock.
Late Thursday, MRO issued a press release dissociating itself with
the troubled Russian company Yukos Oil Co.  MRO said that although
MRO had once been part of a joint venture with Yukos to explore
opportunities outside Russia, that joint venture had been
dissolved late last year when Yukos decided to concentrate on
opportunities within Russia.  MRO continues discussions with
Russia's state-owned Rosneft, however, with the company
maintaining an interest in pursuing opportunities inside Russia as
well as outside Russia.  In another release this week, the company
said that the U.S. government had allowed it to take steps to
extend its license agreements with Libya, with those licenses
currently set to expire in 2005.  The company also introduced its
new CFO.

Why This is our Play of the Day
With the price of both crude oil and natural gas holding at or
near recent highs, MRO had the backing it needed to finally break
out above the $30.50 resistance level that has been keeping the
stock in check since late 2001.  Breaking out on strong volume and
closing near the high of the day are both plusses for the bulls
and it looks like the rally can now continue up towards next
resistance near $32.50 on the way to our $33.75 target.  A brief
pullback and rebound from above $30 can be used for new entries.
Maintain stops at $28.75 for now.

Annotated Chart of MRO:

Picked on December 5th at  $30.22
Change since picked:        +0.65
Earnings Date:           01/27/04 (confirmed)
Average Daily Volume:    1.07 mln

Stop Loss Adjustments


Stock Split Announcements


KSWS steps into a 2:1 stock split and doubles quarterly dividend

During today's trading session, K-Swiss Inc. (NASDAQ:KSWS)
announced that its Board of Directors has approved a 2-for-1 stock
split of its common shares outstanding, as well as doubled their
cash dividend.

The payable date for the stock split is set for December 31st,
2003 to shareholders on record as of December 22nd.

The Quarterly cash dividend is now $0.02 per share (annual
dividend is 8 cents). The payable date for the new quarterly
dividend is set for January 15th, 2004 to shareholders on record
by December 31st, 2003.

About the company:
K-Swiss Inc. designs, develops and markets an array of athletic
footwear for high performance sports use, fitness activities and
casual wear under the K-Swiss brand. The Company also designs and
manufactures footwear under the Royal Elastics and National Geographic
brands. Royal Elastics, a wholly owned subsidiary, is the leading
innovator of slip-on, laceless footwear. National Geographic Footwear,
under an exclusive license from the National Geographic Society,
offers outdoor-oriented and casual footwear.
(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

TOT     Total Sa (ADS)             85.93     +0.52
RD      Royal Dutch                48.17     +0.67
MO      Phillip Morris             53.08     +0.77
UTX     United Technology          89.25     +0.98
BLS     BellSouth                  27.69     +0.73
MET     MetLife                    33.88     +0.52

Breakout to Upside (Stocks $5 to $20)

BVF     Biovail Corp               19.74     +1.55
IKN     Ikon Office Solutions      10.60     +1.80
ATI     Allegheny Technologies     10.64     +1.64
HLEX    HealthExtras               14.01     +1.29
MAPX    Mapics Inc                 13.00     +1.14
SORC    Source Info Mgmt           10.52     +1.17

Breakout to Upside (Stocks over $20)

DHR     Danaher Corp               85.62     +2.92
RCL     Royal Caribbean            33.19     +1.49
SAY     Saytam Computer            24.74     +1.85
X       U.S.Steel Corp             30.00     +1.77
MBG     Manadalay Bay Resort       44.60     +1.32
PII     Polaris Industries         90.87     +1.69
DP      Diagnostic Products        46.73     +1.29

Breakout to Downside (Stocks over $20)

BRL     Barr Labs                  74.40     -1.60
PPDI    Pharmaceutical Products    26.64     -1.90
MMP     Magellan Midstreams        50.90     -2.75
CAE     Cascade Corp               21.86     -2.14

Recently Overbought With Bearish Signals (Stocks over $20)

NCX     Nova Chemicals             24.46     -0.27
AVD     American Vanguard          31.65     -2.15

To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support

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:


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.


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