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Daily Newsletter, Tuesday, 12/16/2003

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PremierInvestor.net Newsletter                 Tuesday 12-16-2003
                                                   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:      New Dow High, Ho, Ho, Ho!
Watch List:       MO, FD, GD, COF and more!
Market Sentiment: Blue Chips Cheer the CPI

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      12-16-2003           High     Low     Volume Advance/Decline
DJIA    10129.59 +106.70 10137.63 10023.34 1.84 bln   1892/1361
NASDAQ   1924.29 +  6.00  1927.09  1901.66 1.81 bln   1577/1670
S&P 100   534.75 +  4.28   535.17   530.47   Totals   3469/3031
S&P 500  1075.13 +  7.09  1075.94  1068.04
W5000   10441.40 + 56.20 10447.74 10366.46
RUS 2000  537.74 +  2.49   537.77   529.44
DJ TRANS 2967.28 + 16.50  2970.44  2942.01
VIX        15.93 -  1.30    17.45    15.90
VXO (VIX-O)15.70 -  1.21    17.11    15.60
VXN        26.15 -  0.92    27.59    25.88
Total Volume 3,949M
Total UpVol  2,286M
Total DnVol  1,597M
52wk Highs  347
52wk Lows    36
TRIN       0.88
NAZTRIN    0.85
PUT/CALL   0.68
=================================================================

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

New Dow High, Ho, Ho, Ho!

Great economic reports did what Saddam's capture could not.
The Dow set a new closing 52-week high and came within two
points of breaking yesterday's spike high. It definitely did
not hurt to have the Saddam news clear out all the resistance
between 10,000 and 10,140 and pave the way for today's gain.
Maybe Osama will volunteer to surrender and clear the next
resistance all the way to 10,250. Now that would be a holiday
treat.

Dow Chart


Nasdaq Chart



The morning reports began with the Consumer Price Index and
more evidence the Fed may be on the right track with their
no inflation in sight position. The headline number fell
-0.2% and well below the estimates for a small increase.
The core rate fell -0.1% and pushed the trailing 12-month
number to a 38 year low of only 1.1%. The -3.0% drop in
energy prices helped to offset the continued rise in food
prices. We are exporting more food than normal due to the
mad cow problems in other countries and that extra demand
is continuing to raise our prices at home. Used car prices
are falling through the floor with another -2.3% drop. Those
new car deals are flooding the market with older models and
dealers are having to give them away. The headline number
would have been even lower except for a sharp rise in
college tuition. Bet your glad to hear that. The main
reason for the drop in produced goods prices remains the
excess capacity.

Prices down and production up, what a perfect world. That
is what traders thought when the Industrial Production
number blew out at +0.9% compared to estimates for only
a +0.4% gain. The two prior months were also revised
upward. The +0.9% jump in the headline number was the
strongest gain since 1999. Suddenly there is a real
recovery underway and traders celebrated. Capacity
Utilization also jumped to 75.7% from 75.1% and suggests
a significant jump in demand and the highest rate in more
than a year. (these numbers do not move fast) Production
has now risen for five of the last six months. If you
remember exports were up +$500 million last week which
indicates the global picture is improving and that
production is showing up here.

Adding to the positive economic picture was yet another
upside surprise in Housing Starts. Single-family homes
set another record with overall housing starts hitting
an annualized 2.07 million units. October numbers were
also revised upward. Since housing impacts dozens of
other industries like lumber, roofing, appliances and
electrical components to name just a few, this is a very
good view of the potential fourth quarter GDP. The dip
in mortgage rates back down to decent levels again is
spurring one more building cycle. Homes started in Nov
will be completed in the spring and just in time for the
buying cycle to begin again. With $165 billion in tax
stimulus scheduled to hit in the first quarter you can
bet there will be buyers waiting. The only obstruction
to this process could be a Fed rate hike in March. This
is the last meeting they can safely raise the rates before
the election. The Fed is not stupid and they recognize
this and the psychological impact it will have on home
buyers. I doubt they will be anxious to trip up the
consumer just before the summer doldrums appear. This
inventory buildup is poised to give the economy another
quarter (Q2) of improvement.

The morning started off rocky despite the great economics
with more negative retail news. Wal-Mart warned yesterday
that sales would be at the low end of plan and gave traders
a clue that December was not going to set any records.
Target followed up with a warning that sales were slowing
as well. Today Sears was downgraded due to reported heavy
discounting and slowing sales. Reports surfaced that high
dollar toys, really high dollar like Harley Davidson motor
cycles, snowmobiles and ATVs were down between -5% to -9%.
Pier One said sales were not going well and would be down
-4% to -8% for December. This retail hiccup gave investors
a headache despite the positive economic news.

Add to this headache a Merrill downgrade of the chip sector
on valuation concerns and it is not surprising the Nasdaq
was the weaker performer.

The Dow roared out of the gate despite an earnings warning
from HON. The company guided down for 2003 and 2004 saying
higher employee costs would hurt performance. HON dropped
significantly at the open but only held the Dow back for
a couple minutes. HON immediately recovered all its losses
but then shed them again as the volume picked up. The
Nasdaq did not fare so well due to the chip downgrade and
fell from the start to come very close to support at 1900
before recovering to close up for the day. In reality the
Dow reached back and plucked the Nasdaq from danger with
its +100 point gain. Dow 10084 remained resistance most of
the day with the Nasdaq and Russell holding the Dow back.
Once that resistance broke everyone joined the party.

That party came to a halt at 10137.64, less than 2 points
from Monday's Saddam spike high. Had that Saddam spike not
cleared out significant resistance to that level today and
probably this week would have looked a lot different. If
you remember last Friday we closed right below resistance
at 10050 and internals were turning weaker. The outlook
for this week was a move higher but nothing impressive.
The Saddam spike cleared the way for better gains than
we could have made on our own.

If you look at the market internals and charts of the major
indexes you will see a troubling divergence. On December
2nd the Russell-2000 hit its high for the year. On Dec 3rd
the Nasdaq hit 2000 and both indexes immediately headed
lower. From that day forward the OEX (top 100 blue chips)
and the Dow started moving higher. Why? The answer is right
in plain sight. Portfolio managers know there is a profit
taking dip coming in January. Despite knowing there is
trouble ahead they do not want to go into the year end
in cash. They still have to be invested so those year end
statements and advertising literature looks impressive.
The way to do this is rotate out of the small caps and
techs and into blue chips. They can get out of the most
volatile stocks early and into the highly liquid stocks
in advance of the decline. Who would not want to own a
fund with IBM, MMM, GE, UTX, CAT, KO, MO and PG in it
when most are at 52-week highs? This allows the funds to
dress up their statements and still participate in any
further market gains with their flight to quality. Once
January begins they can be poised to exit those highly
liquid blue chips in a heartbeat without much risk.
Exiting $10 million in IBM is only a downtick on the
chart but exiting $10 million in a low volume small cap
is a major blow to the price. Anyone notice NTE today?
Or YRK, GWW or INFY? These low volume stocks got seriously
whacked on the slightest bit of news but they were just
those leaders where the incentive to exit and take profits
was accelerated by events. Multiply that by many of the
small caps and you get the picture. Funds want to be in
something liquid in January, not something that will drop
-10% if five funds decide to exit at once.

Russell-2000 Chart


Nasdaq Chart


Dow Chart


OEX Chart




With the Dow closing at a new 52-week high the obvious
question is what now? There are 5.5 trading days before
Christmas and another 3.5 days before January. The odds
are very strong that there will be major profit taking
by the second week of January. We are counting on that
in the Top 50 Stocks for 2004 renewal special. We are
targeting specific entry points on key stocks for January
to produce the most gains for the first quarter. Now if
everyone but the retail traders knows there will be profit
taking in January once the 2003 tax year and calendar year
ends then why should the Dow go higher?

The Dow "should" continue to see gains due to the rotation
out of small caps and into blue chips as I described above.
Funds want to be invested for year end statements AND they
are expecting the historical pop on Jan-5th from year end
retirement contributions. TrimTabs.com is estimating over
$10 billion in inflows between Dec-29th and Jan-9th. This
cash bonanza will provide one last bounce and the volume
needed to exit gracefully. For historical reference I
checked the highs for January for the last six years. In
Jan-2003 the high for the month was set on the 8th trading
day. In 2002 the high was set on the 4th day, 2001 the 3rd,
2000 the 9th, 1999 the 5th and 1998 the 2nd day. The average
high for all six years was made on the 5th day. That targets
Jan-7th for 2004 but we have had a bigger gain in 2003 than
any of the other prior years. This would suggest an earlier
exit for less risk. Personally I am targeting the 5th or 6th
for the January high.

I got sidetracked on the short-term topic. Yes, I think
we will see a higher Dow between now and year end despite
the rotation we are seeing in the small caps. How much
higher? There is significant resistance beginning at
10,200 to 10,300. That would be my target range for the
next three weeks. If we get to 10200 I am going short
and I am doubling down at 10250 and backing up the truck
at 10300. My only question is where will the cheating
start? We are not the only ones that can look at a
historical chart and count. With 9,000 mutual funds and
thousands of mini-funds and hedge funds there has got to
be some with enough profits that they want to beat the
pack to the door. Once this cheating starts it may be
difficult for the rest to maintain discipline until
January.

To complicate things we have the elusive Santa rally.
This is probably the most abused and over used term
mentioned in holiday trading. The official Santa rally
timeframe is considered to be the last five trading days
of December and the first two days of the new year. Those
seven days have averaged a +1.5% gain in the S&P since
1950. Even at these levels, S&P 1075, that +1.5% is a
whopping +16 points. Not exactly a banner week. Retail
traders hear the term Santa Claus rally and conjure up
visions of strong gains and a prosperous new year. As I
have outlined above the real result of the Santa Rally
is to line up the sheep for the slaughter. I do not
intend to be a sheep and hope you feel the same way.

The VXO closed at 15.70 today. That is a low not seen
since November 1996 in pre-Internet trading days. When
sentiment is that lopsidedly bullish the danger is very
real. I know you have heard it before because we have
been flirting with 16.0 for over a month. It is off
the scale for the reasons mentioned above. The VXO is
calculated on the OEX, the top 100 blue chip, most highly
liquid stocks. Sound familiar?

There are no material economic reports for Wednesday and
it will be left up to earnings warnings or news reports
to move the market. The strong gain today could give
traders another opportunity to lighten up but the more
likely prospect will be just holding the high ground.
Every dip today was met with decent volume and the same
is probably true for Wednesday. Regardless of what happens
tomorrow or the rest of the week we are trading on a tight
wire at these rarified levels. Everyone has high hopes for
the end of the year but there is always the chance for a
bolt of lightning out of a blue sky that changes the
picture instantly. Party on but be prepared to hit the
exits if the punchbowl suddenly runs dry.

Time is growing short for the end of year renewal special.
Our goal is to have the Top 50 Stocks for 2004 in your
hands before the holidays. They will be mailed by priority
mail on Monday Dec-22nd so you can have the entire holiday
period to review it and plan your trades. TIMING IS CRITICAL.
Do not delay. We based the entry points for each of the
stocks on the expected January dip. Don't miss out on
this opportunity to profit. Full details below.

Jim Brown


==================================================================
WATCH LIST
==================================================================

The PremierInvestor.net watch list is not designed to be read
as full fledged stock picks.  Rather we would prefer to offer
it as an extra tool in today's investor toolbox.  Think of it
as a radar screen with your own radar operator pointing out
interesting developments, technical patterns or potential plays
that you may or may not have seen on your own.  Due to time
constraints we do glance at the news but rarely do we have
time to fully read pertinent news stories, due background
research and other necessary screens that investors should do
before making a decision.  A common exercise is to read the
entry, glance at the sector and other stocks in that industry
and then compare what's happening in the stock to what's
happening in the broader market indices.  We hope you enjoy
the Watch List and that it proves to be a useful tool for your
own trading success.

STOCKS WORTH WATCHING
---------------------------------


Altria Group - MO - close: 54.21 change: +0.85

WHAT TO WATCH: There seems to be no end in sight for this rally
in the Tobacco stocks and MO is now creeping above strong
resistance at $54.  With investors favoring large and stable
stocks heading into the end of the year, MO looks like it could
make a run at its 2002 highs near $58.  A dip back to the $52-53
area will make for the best entry, with stops placed just under
the $50 mark.




---

Federated Department Stores - FD - close: 44.27 change: +1.05

WHAT TO WATCH: Looking for a Retail rebound?  In contrast to the
rest of the Retail index, shares of FD found strong support near
$42.50 on Tuesday, setting up an aggressive rebound play.  Look
for entries on another rebound from above $42 and target a move
back up towards the 50-dma.  Use a tight stop at $41.50.



---

General Dynamics - GD - close: 85.67 change: +1.35

WHAT TO WATCH: throughout the past several months, shares of GD
have been consolidating just below major resistance near $87
while building a bullish wedge.  Look for a breakout over $87 to
confirm the pattern and enter looking for a quick move towards
the next level of resistance near $95.




---

Capital One Financial - COF - close: 56.50 change: +1.04

WHAT TO WATCH: If there is going to be a Santa Claus rally, it is
likely to be led by the Financials.  COF is giving us a nice
entry setup too, as the stock has pulled back right to strong
support in the $55-56 area and begun its rebound.  Each apparent
breakdown below support in recent months has found solid support
near this level, so it makes sense to try playing the rebound one
more time.  Target entries as near to support as possible and
look for a rally back near the $60 level at the 50-dma.





===================
On the RADAR Screen
===================

BBY $49.52 - Retail stocks have fallen out of favor with
investors in a big way this week and BBY has now broken down
solidly out of its rising channel and below the 100-dma.  With
earnings tomorrow, look for some near-term volatility, but a
failed rebound back near the $52 level could be just the thing
for a nice bearish entry heading into the end of the year.

CTAS $45.99 - Following the November breakout above the top of
its rising channel, CTAS has been basing just above that channel.
But Tuesday saw a break and close back inside the channel and
with earnings due out tomorrow, it looks like the stock is
shaping up for a directional move.   Given the strong rally over
the past several months, we're looking for a downside play.  A
break below $45.50 should get the ball rolling, with CTAS making
its way towards the bottom of its channel near $42.

BAC $77.50 - Another Financial stock attempting to get a rally
going, BAC pushed through solid resistance at $77 on Tuesday and
with renewed strength in the Banking index (BKX.X), BAC looks
like it could make a run towards strong resistance at $82.
Pullbacks near $76-77 will afford the best entry.



===============================
Market Sentiment
===============================


Blue Chips Cheer the CPI
- J. Brown

The big event today was the Consumer Price Index (CPI) for
November.  The price for consumer goods dropped 0.2 percent in
November, which marked the biggest drop since April.  The big
headline today was the drop in the "core rate" of inflation,
which discounts the volatile food and energy prices.  November's
"core" rate fell 0.1 percent for the first drop since December
1982.  Obviously inflation is NOT an issue right now and the
market's cheered.  With no visible signs of inflation the Federal
Reserve will be content to sit on their hands.  If we can make it
past the March FOMC meeting the markets could have clear sailing
until the first quarter of 2005 before we have to worry about
interest rate hikes.

Contributing to the strong economic news was an improving
industrial production rate, which grew 0.9 percent.  This was the
best improvement in four years.  To make it a Tuesday trifecta of
positive economic news the utilization numbers were also positive
with a rise from 75.1 to 75.1.

The strong economic data overshadowed a couple of earnings
warnings but it doesn't take a rocket scientist to notice the
NASDAQ under performing the DJIA the last couple of days.
Investors seem less inclined to buy the dip in some of 2003's
high flyers and instead are moving into big cap blue chip names.


-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10139
52-week Low :  7416
Current     : 10129

Moving Averages:
(Simple)

 10-dma: 9968
 50-dma: 9789
200-dma: 9112

S&P 500 ($SPX)

52-week High: 1082
52-week Low :  788
Current     : 1075

Moving Averages:
(Simple)

 10-dma: 1067
 50-dma: 1050
200-dma:  979

Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1403

Moving Averages:
(Simple)

 10-dma: 1408
 50-dma: 1409
200-dma: 1253


-----------------------------------------------------------------

As predicted last week, the VXO has hit a new low, closing at
15.70.  The VIX and VXN also remain near their lows.

CBOE Market Volatility Index (VIX) = 15.93 -1.30
CBOE Mkt Volatility old VIX  (VXO) = 15.69 -1.22
Nasdaq Volatility Index (VXN)      = 26.15 -0.92


-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.68        814,131       556,412
Equity Only    0.50        634,957       315,241
OEX            1.21         37,667        45,663
QQQ            1.08         47,889        51,482


-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          74.1    + 0     Bull Confirmed
NASDAQ-100    68.0    + 1     Bear Confirmed
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       80.8    + 0     Bull Confirmed
S&P 100       81.0    + 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: 0.94
10-dma: 1.14
21-dma: 1.12
55-dma: 1.10


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


-----------------------------------------------------------------

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1687      1510
Decliners    1174      1573

New Highs     169       115
New Lows       13        15

Up Volume   1091M      930M
Down Vol.    678M      843M

Total Vol.  1815M     1786M
M = millions


-----------------------------------------------------------------

Commitments Of Traders Report: 12/09/03

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

There is just a hint of bearishness in the Commercials who have
upped their short positions. Right on cue the small traders have
increased their long positions but to a greater extent.


Commercials   Long      Short      Net     % Of OI
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%)
12/09/03      396,882   420,859   (23,977)   (2.9%)

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
11/11/03      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%
12/09/03      172,178    99,484    72,694    26.8%

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 spread is narrowing between longs and shorts in the
commercials.  The opposite is happening in small traders'
positions with longs surging more than 20K contracts.


Commercials   Long      Short      Net     % Of OI
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%
12/09/03      294,006   288,385      5,621     1.0%

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
11/11/03       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%
12/09/03     142,173     76,171    66,002    30.2%

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


NASDAQ-100

There is a similar surge in commercial positions for the NDX
as seen in the S&P futures.  Small traders also increased
long and shorts but leaning heavily on new longs.


Commercials   Long      Short      Net     % of OI
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%)
12/09/03       39,612     51,443   (11,831) (13.0%)

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
11/11/03       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%
12/09/03       25,842    10,228    15,614    43.3%

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

DOW JONES INDUSTRIAL

There is little to report for DJ futures by commercial
traders but small traders have significantly increased their
short positions.


Commercials   Long      Short      Net     % of OI
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%
12/09/03       20,378    11,934    8,444      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
11/11/03        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%)
12/09/03        6,858    12,006   (5,148)   (27.3%)

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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Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                 Tuesday 12-16-2003
                                                   section 2 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
=================================================================

Play of the Day:   Is It For Real?

Stop Adjustments:  SIRI, SLAB, DLTR, NTES, UTEK

Stock Split:       HOV


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 )
===============

Netease.com - NTES - close: 37.85 change: -1.15 stop: 41.80*new*

Company Description:
NetEase.com, Inc. is a leading China-based Internet technology
company that pioneered the development of applications, services
and other technologies for the Internet in China. Our online
communities and personalized premium services have established a
large and stable user base for the NetEase Web sites which are
operated by our affiliate. As of September 30, 2003 we had
approximately 144 million accumulated registered accounts, and our
average daily page views for the month ended September 30, 2003
exceeded 329 million. (Source: Company Press Release.)

Why we like it:
With the 200-dma and the 50 percent rally retracement to provide
support, NTES climbed laboriously toward next resistance, but no
one wanted to help it along.  Volume proved less than half average
daily volume.  Other Chinese Internet-related stocks SINA, SOHU,
and ZICA gained Thursday and Friday, but NTES printed a small-
bodied candle, closing lower.  SINA, SOHU, and ZICA each face
resistance just overhead, too, with SINA and SOHU each printing a
doji or small-bodied candle on Friday.

NTES has not yet triggered this play by falling through
Wednesday's $38.24 low.  We want to remind readers, too, of the 50
percent rally retracement at about $36.40, a level at which we
expect to see a strong bounce attempt.  Some traders might want to
wait for a drop through that important retracement level before
entering.

Why This is our Play of the Day
After falling to the 200-dma (now at $39.00) last week, NTES
really tried to put in a credible rebound.  The post-Saddam
capture rally was the best the bulls could manage, but after
gapping up near $41.75 yesterday morning, the stock headed back
down, once again coming to rest on the 200-dma.  This time there
was no bounce though, as price sliced through that average on
Tuesday, making it the first close under the 200-dma ever.  There
does seem to be a lack of conviction on the breakdown though, as
volume ran just over half the ADV on the past two days.  Failed
rebounds below $41 and especially below the 200-dma can be used
for new entries, while momentum traders can still use a break to
new lows as an entry.  With this breakdown, it should now be safe
to lower our stop to $41.80, just above yesterday's intraday high
and well above the 10-dma at $40.78.

Annotated Chart of NTES:



Picked on December 10th at    $38.96
Change since picked:           -1.11
Earnings Date:               1/27/04 (unconfirmed)
Average Daily Volume:       4.31 mln



=================================================================
Stop Loss Adjustments
=================================================================

SIRI - long
Adjust from $2.05 up to $2.10

SLAB - short
Adjust from $46.75 down to $46.00

DLTR - short
Adjust from $30.90 down to $30.25

NTES - short
Adjust from $43.01 down to $41.80

UTEK - short
Adjust from $28.00 down to $27.50



=================================================================
Stock Splits
=================================================================

Announcements
-------------


HOV Constructs a 2-for-1 Split

During today's trading session, Hovnanian Enterprises Inc
(NYSE:HOV) announced that its Board of Directors has approved a 2-
for-1 stock split of its common shares outstanding.

The Board is seeking shareholder approval at its annual meeting,
which is expected to take place on March 5th, 2004.  The stock
split is expected to take place in March, if approved.

Shares of HOV have tripled over the past year and the 2:1 split
will double the number of shares outstanding to just over 60
million.

About the company:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian,
Chairman, is headquartered in Red Bank, New Jersey. The Company is one
of the nation's largest homebuilders with operations in Arizona,
California, Florida, Maryland, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia.
The Company's homes are marketed and sold under the trade names K.
Hovnanian, Washington Homes, Goodman Homes, Matzel & Mumford, Diamond
Homes, Westminster Homes, Fortis Homes, Forecast Homes, Parkside
Homes, Brighton Homes, Parkwood Builders, Summit Homes, Great Western
Homes and Windward Homes. As the developer of K. Hovnanian's Four
Seasons communities, the Company is also one of the nation's largest
builders of active adult homes.
(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

WFC     Wells Fargo & Co           57.15     +1.07
SC      Shell Transport & Trading  41.76     +0.65
GSK     GlaxoSmithKline            45.23     +0.53
RD      Royal Dutch                48.75     +0.81
CVX     ChevronTexaco              80.70     +1.75
MWD     Morgan Stanley             57.92     +0.79

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

CVG     Convergys Corp            16.47     +1.30
ATVI    Activision Inc            16.48     +1.44
ACO     Amcol Intl Corp           17.49     +1.24
IPSU    Imperial Sugar Co         14.08     +1.88

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

UTX     United Technologies       93.52     +1.97
CAT     Caterpillar               81.02     +2.50
LEH     Lehman Brothers           74.56     +2.16
MUR     Murphy Oil Corp           63.49     +1.57
SKE     Spinnaker Exploration     30.64     +1.23
NX      Quanex Corp               43.50     +1.15
MTLM    Metal Management          32.98     +1.79

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

BBY     Best Buy Co               49.52     -3.05
CMX     Caremark Rx               25.01     -1.26
FDO     Family Dollar Stores      32.65     -1.07
DOX     Amdocs Ltd                22.00     -3.27
ADVP    AdvancePCS                51.90     -3.35
SNDK    SanDisk Corp              55.25     -5.61
GWW     W.W.Grainger Inc          44.80     -3.80
CTSCH   Cognizant Tech            42.70     -2.18
PIR     Pier 1 Imports            20.72     -1.79

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

IRF     Intl Rectifier Corp       47.55     -1.21
SHI     Shanghai Petrochemical    34.40     -1.39
PII     Polaris Industries        86.20     -3.80
TASR    TASER Intl                83.00     -3.00
LSTR    Landstar System           37.19     -1.57




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