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Daily Newsletter, Sunday, 12/21/2003

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PremierInvestor.net Newsletter          Weekend Edition 12-21-2003
                                                    section 1 of 3
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:      Going Out At The Top
Play-of-the-Day:  Ace in the hole
Market Sentiment: Ho Ho Ho...Merry Markets!


=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 12-19        WE 12-12        WE 12-05        WE 11-28
DOW    10278.22 +236.06 10042.1 +179.48 9862.68 + 80.22 +153.93
Nasdaq  1951.02 +  2.02 1949.00 + 11.18 1937.82 - 22.44 + 66.38
S&P-100  540.26 +  8.48  531.78 +  8.27  523.51 +  2.77 +  8.97
S&P-500 1088.66 + 14.52 1074.14 + 12.64 1061.50 +  3.30 + 22.92
W5000  10579.42 +114.94 10464.4 +111.88 10352.6 +  0.38 +253.34
RUT      546.88 -  0.71  547.59 +  8.58  539.01 -  7.50 + 20.58
TRAN    2987.43 +  4.02 2983.41 + 72.83 2910.58 - 10.65 + 75.91
VIX       16.42 +  0.01   16.41 -  0.68   17.09 +  0.79 -  2.68
VXO       16.05 +  0.10   15.95 -  1.39   17.34 +  0.63 -  3.18
VXN       24.89 -  0.97   25.86 -  1.19   27.05 +  1.44 -  3.47
TRIN       1.02            1.02            1.86            1.04
Put/Call   0.80            0.75            0.84            0.69
WE = week ending
=================================================================

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

Going Out At The Top
by Jim Brown

If you had asked any market pundit last March how they would
have liked the markets to finish the year I doubt you would
have gotten our current results from anybody. Any professional
who suggested on March 12th (7416) that we would see a +40%
gain in the Dow by year end would have been laughed off
the planet. Well at Friday's close we are up +38.59% from
that March low. Add in a +55% jump in the Nasdaq and you
have a spectacular year in normal market terms. Nothing
like finishing the year on a high note and going out at
the top. Wait, you mean the year is not over yet?

Dow Chart - Daily



Nasdaq Chart - Daily



While the year is not over according to the calendar it is
over as far as traders are concerned. The option expiration
climax last week was the crowning touch. On Friday the Dow
came VERY close to 10300 (10293) and very close to not only
the very optimistic upper end of my range but well over most
estimates for the year.

Remember our Guess the Dow contest last January? The average
entry for the high of the year was 9878. Pretty close on the
surface but the range of estimates was from 6970 to 13000.
40% of the readers had estimates for the year's high over
10,000 and only 13% had estimates under 9000. Over 45% of
our readers expected a close under 9000 on 12/31/03. Only
14% expected a year-end close over 10,000.

Any way you cut it the end of 2003 has definitely surprised
the majority of investors. Nobody is complaining but the
next question is where are we going in 2004? The short
story from the bullish analysts you see on TV is a gain of
+10% to +12% for the year. With the Dow at 10275 today that
would give us a range from 11,300 to 11,700 for the end of
2004. I don't know about you but that +1000 to +1400 point
gain would be very boring after the gains in 2003. Assuming
the Dow went straight up it would only need to gain 5.5
points per day to hit the 11,700 level by year end.
Obviously this is not going to happen. To put this in
perspective the average gain since March 12th 2003 has been
12.3 points per day and the markets have been very bullish.
For 2004 bullish analysts are looking for a +4.5% GDP and
about a +12% earnings growth for Q1 and Q2. Those earnings
estimates are trending down slightly. They are also well
below the Q4-2003 estimates of +21.7%. Get the picture?

The bearish commentators range from a 7500 Dow close for
2004 and 9000. I do not believe anybody has a crystal ball
that allows them to see in the future so it is up to us to
decide what we believe.

I think the key above is the 4.5% GDP and 12% quarterly
earnings. Compared to this year those earnings are
positively sparse. The last two quarters we have been
growing at +16% (Q3) to +21% (Q4) for the quarter. How?
Because the comparisons to 2002 were so bad. Any
improvement over 2002 where losses instead of earnings
were common produced a strong percentage gain. With the
strong bounce in 2003 Q3/Q4 it is going to be very hard
to produce any strong gains in 2004 Q3/Q4. It will be
easier in the other quarters but the bar is still a lot
higher.

The main things investors are going to be focused on in
2004 is the economy and the Fed. According to all the
recent reports the economy is alive and well and actually
picking up speed. We just do not know if this is seasonal
4Q speed or a real pickup in the economy. Neither does
the Fed. Based on their latest statement they are far
from convinced the economy is exploding. The comments
about no sustained pickup in employment until late 2005
is very telling. The considerable period statement has
moved the potential for a rate hike to June according to
the Fed Funds Futures. The Fed has effectively stepped
aside and turned us loose to make it on our own. Just like
a dad running beside a kids bicycle the first time without
the training wheels they have turned us loose. It is
up to business now to maintain balance and speed. The
administration has provided us one last burst of momentum
with the $165 billion tax stimulus in the Q1-2004. The
equivalent of the dad pushing us off over the top of a
hill to help with our momentum. It is entirely up to us
to add enough to that momentum to climb the next hill.

Tthe range of movement from last year is probably a
larger range than we could expect for 2004 but at least
a starting place. 2002 closed at 8341. We are up +23% from
that close and at the lows were down -11%. Considering it
was the end of a bear market that -11% drop was not bad.
If we were to see a corresponding -11% drop in 2004 that
would target 9144 as a low using Friday's close as a
starting point. A 23% intra year bounce would take us to
12,638. I think even the most ardent bulls do not expect
another +23% after our +38% rebound from the lows already.
(+23% for the year). I also think all but the most leading
edge prognosticators also expect that we could see more
than -11% downside on a temporary basis.

Normal bull markets have normal corrections of -5% or more
on a routine basis. We have not had a -5% correction in
more than ten months. We are long over due for any serious
profit taking. Using the estimates above and assuming that
most analysts hedge on the upside and downside to avoid
looking stupid later we can speculate on the ranges. The
-11% drop in 2003 was the last gasp of a three-year bear
market where we were already way oversold. This suggests
that a profit taking correction at the end of a long bull
run could be as much as 12%-15% of the index. The normal
retracement level for a strong bullish run is -38.2% of
the run. Using Friday's close a -12% dip would take us
back to 9042. Using the -38.2% retracement bracket of the
gains since the March low takes us to 9194. It should be
stressed that any dip of that magnitude is still just a
correction and not a failure of the new bull market. We
are just speculating in order to avoid being surprised.

If analysts are hedging their bets on the upside then +12%
may be light. Using a +15% gain from Friday's close puts
us at 11,800. This may be very optimistic. Making statistical
projections is one thing but when you compare them to the
charts a different reality appears. That reality based on
the charts shows 11000 to be very strong resistance. It
held for over a year in 2000 with only three short spikes
to about 11300 during that period. To move up from here
the Dow has to break the resistance at 10300 and then even
stronger resistance at 10650. Breaking through that 10650
barrier could be very hard and we should not expect a
serious attempt until late March or early April at best.
If it happens sooner then we are living a charmed life.

Dow Prediction Chart - Weekly



Merging the analysts estimates and the historical charts we
end up with some glaring targets. It appears the downside
risk should be contained in the Dow 9000-9200 range. The
upside may be capped in the 11000-11300 range. Using the
outside ranges that is a 2300 point spread. That is nearly
double the average analyst estimate of the gain (+1200) for
the year. Having the range at twice the gain makes perfect
sense to me. Unfortunately the markets rarely make perfect
sense and if it makes sense there is something wrong. The
anchor on the upside is the election. Investors are cautious
in second term election years because they are afraid of
changes after the election. This historical trend for this
predicts a flat to slightly up market for 2004. The offset
for this trend is the strong economic reports of late and
the Fed blessing for 2004. If the 1Q earnings in April are
strong (over the +12% estimate) then the election curse
could be broken. If they are only "ok" then the curse will
probably prevail. Investors are aggressive when there are
potential rewards. They tend to be conservative when the
rewards are muted.

Many class the 2003 bull market as a flight to garbage
rally. The stocks with the largest gains were the low
priced, highly leveraged issues. Many of those were up
+200% to +400% for the year. The blue chips did not join
the rally until just recently, some as late as October.
This cyclical rally added the extra boost we needed to
break over the small cap resistance seen at 500 on the
Russell-2000.

The last three weeks the small and midcaps have been
lagging the blue chips as funds rotate into the more
liquid blue chips for year end statements and January
exits. Still the Russell has not died. It is only slightly
off its highs and still very healthy. The value stocks are
strong, cyclicals are strong and market breadth refuses to
fade. We are only five real trading days from year end and
four of those days are normally bullish.

The Dow only tacked on +30 points on Friday but was up
+236 for the week. Compared to the weak performance for
the Nasdaq at +2 and -1 for the Russell it was an amazing
showing. The close at 10275 is right on the edge of my
10000-10300 range I was expecting for the rest of the year.
With four of the remaining days (24th, 26th, 29th and 30th)
bullish 65% of the time we "should" remain close to these
highs. Dec-31st has seen the Nasdaq up 29 of the last 31
years but the Dow down 5 of the last 6 years.

The wild cards here are Monday and Tuesday. The last two
days were up strongly on option expiration events with a
help from some strongly bullish economic reports. Monday
has no economic reports. Typically expirations with an
upward bias tend to produce weak Mondays. Tuesday has a
raft of economic reports including Chain Store Sales, GDP,
Personal Income, Consumer Sentiment and Monthly Mass Layoffs.
This suggests we could see some weakness on Monday that is
bought on Tuesday in advance of the four bullish days to
come. The key will be the depth of any weakness. I doubt
we will drop far and would be surprised if we broke 10100.

A word of caution however. There were multiple terror threat
warnings on Friday. Warnings against the northeast, including
NYC and Boston. Warnings against the Vatican where intelligence
suggests there will be an attack on Christmas. More warnings
in Turkey and Saudi Arabia. The US is offering free flights
out of Saudi for American government employees and
recommending all Americans leave the country. Late this
afternoon the number two man in Al-Queda released a tape
claiming a major attack was coming on the American homeland.
Analysts suggested this was more of a propaganda move than
reality but you never know. What we do know is there is an
attack in our future and the longer we go without one the
closer it gets. I mention this because it could drag on
the holiday markets. I do not expect it to push them down
but it could keep them from moving up strongly.

We are setting up for a classic January move. The markets
are poised to see some profit taking on Monday and then
move up into the end of the year. Year-end retirement cash
will begin to flow and hit the markets on the 4th-5th. This
should setup a new market high the first week of January.
The only reason it would fail to occur would simply be the
acceleration of profit taking ahead of the normal average
start on the 5th trading day of the year. Institutions
count on this cash inflow to offset their profit taking
and ease the impact of their exits. We have planned the
trades in the Top-50 Stocks CD to take advantage of this
dip as a buying opportunity.

I heard 2004 referred to by one analyst as the "Year of
Living Dangerously". Most feel a lot of good news is already
priced into the market and they are looking at January as
a barometer of the rest of the year. According to statistics
the first six weeks of the year normally sees the markets
gain +3%. A remarkable achievement considering the average
drop from the January opening high is -750 points over the
last six years. Still +3% is +308 points over the next six
weeks and that puts us right at 10600 with 10650 as strong
resistance as we near the end of the Q4 earnings cycle.

I have vastly overstayed my welcome today and I am sure
the numbers have all run together by now. I am not trying
to scare anyone or produce a bearish outlook because that
is not my desire. I am only trying to lead you through
the possible outcomes for 2004 and more importantly the
first six weeks because that is where the next money will
be made or lost. Once into February we will begin speculating
on March-April. You can't go on a road trip without a map.
It is also foolish to worry about what turn you make onto
aunt Martha's street when you are still 2000 miles away.
Let's keep our eyes on the road immediately ahead and
focus more on avoiding the potholes and finding the next
scenic turnout than worrying about the +15% gain for the
year.

If you have not signed up for the Top-50 Stocks for 2004
and the Top-20 Lottery Picks before close of business on
Monday you will not receive them before the holidays. You
will also miss out on an excellent chance to profit from
the January dip/rebound. Do it today!

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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


ACE Ltd - ACE - close: 39.64 change: +0.99 stop: 37.99

Company Description:
ACE Limited is the Bermuda-based holding company of the ACE Group
of Companies, one of the world's leading providers of insurance
and reinsurance. The ACE Group provides a diversified range of
products and services to clients through operations in nearly 50
countries around the world.(source: company press release)

Why we like it:
Looking at the DJIA and S&P 500 near their highs it can be tough
to find a bullish stock that isn't over bought and extended.  We
think we've found one with ACE.  The insurance sector has really
enjoyed a strong rally from its late November lows and has
recently broken out to new highs.  ACE has followed the index by
breaking out above the $37-38 region in early December.  The
stock then traded sideways for about three weeks and this last
Friday pushed it up and above new resistance at 39.25.

ACE has also made some headlines this month as analysts are
approving the recent news from ACE to spin off its Financial
Guaranty operations in its own IPO.  J.P.Morgan believes this
will strengthen ACE's balance sheet and the broker upgraded ACE
from "under weight" to "neutral".

Not only are the daily and weekly charts for ACE encouraging but
its P&F chart has produced a bullish double-top breakout.  We
would suggest conservative traders wait for ACE to trade above
the $40 level.  We're going to follow our own advice and use a
TRIGGER at $40.05 to open the play.  Until then we'll remain
spectators.  More aggressive traders can pick their entries above
$38.00.  Our target is early 2002 resistance at $45.00.   We'll
start the play with a stop loss at 37.99 once we're triggered.

Annotated Chart of ACE:


Picked on Dec 19th at $39.64
Gain since picked:     +0.00
Earnings Date       01/27/04 (unconfirmed)
Average Daily Volume:    1.3 million




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

Ho Ho Ho...Merry Markets!
- J. Brown

The Santa Claus rally has come early this year.  Traditionally
investors look for the markets to rise in the last two weeks of
the year and the first two weeks of the year.  The latter half of
this move is traditionally part of the January effect.

Contributing to this historical trend of a Santa Claus rally is
the fund industry's need to appease their current customers and
that means window dressing.  Money managers are going to be
dressing up their portfolios for the year-end statements.  That
means selling the losers and buying the winners.  Thus we can
probably expect current trends to merely extend their runs toward
December 31st.

Then of course we have the early January flush of cash for the
industry as investors dump what's left over from their Christmas
bonuses into their 401(k)s.  Overall this is the premium time to
be a bull within the best six months of the year.

However, astute traders might make a note in the sudden sentiment
change evidenced in the COT report (see below).  After weeks of
just churning sideways both commercial and small traders have
opened their wallets to open new positions.  There has been a
flush of new long and new shorts but the most striking
development is the flip flop in commercial trader's e-mini
positions, which have reversed from net long to net short.  This
could be indicative of the professional traders also expecting a
first quarter pull back of significant size.

We'll also note that small traders have suddenly turned very
bearish on the DJ futures.  Sounds like someone is trying to pick
a top.


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

Market Averages

DJIA ($INDU)

52-week High: 10293
52-week Low :  7416
Current     : 10278

Moving Averages:
(Simple)

 10-dma: 10068
 50-dma:  9823
200-dma:  9149

S&P 500 ($SPX)

52-week High: 1091
52-week Low :  788
Current     : 1088

Moving Averages:
(Simple)

 10-dma: 1073
 50-dma: 1053
200-dma:  983

Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1426

Moving Averages:
(Simple)

 10-dma: 1408
 50-dma: 1411
200-dma: 1259


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

No change.  The volatility indices remain near multi-year lows,
which of course signals a market top being formed (eventually).

CBOE Market Volatility Index (VIX) =  16.42 +0.26
CBOE Mkt Volatility old VIX  (VXO) =  16.05 -0.20
Nasdaq Volatility Index (VXN)      =  24.89 +0.36


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.80        988,767       792,798
Equity Only    0.61        791,236       481,898
OEX            0.80         72,757        57,998
QQQ            2.51         42,937       107,891


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

Bullish Percent Data

           Current   Change   Status
NYSE          75.3    + 0     Bull Confirmed
NASDAQ-100    65.0    - 2     Bear Confirmed
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       81.2    + 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: 0.92
10-dma: 1.01
21-dma: 1.04
55-dma: 1.07


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    1424      1449
Decliners    1384      1640

New Highs     417       152
New Lows       14        17

Up Volume    943M      816M
Down Vol.    901M      992M

Total Vol.  1876M     1838M
M = millions


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

Commitments Of Traders Report: 12/16/03

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

Finally!  The commercials are finally putting some money to work
and we're seeing strong increases in both long and short positions.
New longs soared about 50K contracts while new shorts jumped about
40K contracts.  Overall, commercials remain net short.  Small
traders have also increased their net short positions but remain
net long.


Commercials   Long      Short      Net     % Of OI
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%)
12/16/03      448,103   460,670   (12,567)   (1.4%)

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
11/18/03      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%
12/16/03      172,947   113,704    59,243    20.7%

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

We are seeing the same surge of activity in the e-minis.
Commercial traders opened another 35K long contracts but opened
72K new short contracts, tipping the scales from long to short.
In contrast the retail traders reduced their shorts and opened
another 35K longs.


Commercials   Long      Short      Net     % Of OI
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%
12/16/03      330,273   361,316    (31,043)   (4.5%)

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
11/18/03       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%
12/16/03     177,193     73,694   103,499    41.3%

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


NASDAQ-100

Again, we're seeing new money from the commercial traders.
NDX futures have seen a bump in net longs and net shorts from
both professionals and small traders.  Commercials remain
net short and small traders remain net long.


Commercials   Long      Short      Net     % of OI
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%)
12/16/03       61,343     73,153   (11,810) ( 8.8%

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
11/18/03       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%
12/16/03       28,676    15,197    13,479    30.7%

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

Commercials are hedging their bets on the DJ futures.  Both
longs and shorts saw a bump of about 3K contracts each.
Meanwhile, small traders have turned decidedly bearish. The
surge of new shorts has produced the most bearish reading
in the DJ futures since 2001.


Commercials   Long      Short      Net     % of OI
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%
12/16/03       23,509    13,880    9,629      25.8%

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
11/18/03        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%)
12/16/03        9,497    19,633  (10,136)   (34.8%)

Most bearish reading of the year: (10,136) - 12/16/03
Most bullish reading of the year:   8,523  -  8/26/03

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


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PremierInvestor.net Newsletter          Weekend Edition 12-21-2003
                                                    section 2 of 3
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 two:

Tech Stocks
  Bullish Play Updates:  NXTL

Active Trader (Non-tech)
  New Bullish Plays:     ACE
  Bullish Play Updates:  CIT, DHI, MRO
  Bearish Play Updates:  ANF

High Risk/Reward
  Bearish Play Updates:  NTES


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------


Nextel Comms - NXTL - close: 26.00 change: +0.10 stop: 24.95*new*

If "slow and steady" wins the race, then NXTL appears headed for
the winner's circle.  After pulling back to confirm new support
at old resistance just over $24, the stock has been steadily
pushing higher over the past week.  The gains haven't been
anything to get excited about yet, but the stock closed on Friday
at $26 and is closing in on the top of its rising channel again.
If the bulls can continue their push higher during the
abbreviated holiday week, we could see a breakout over the 12/1
high ($26.34) and more importantly, a breakout over the top of
the channel ($26.50).  That accomplishment would set the stage
for NXTL to increase the rate of its advance and perhaps take a
run at our $30 target before the end of the year.  We can use a
dip and rebound from the 10-dma ($25.51) as a continuation entry
point.  Raise stops to $24.95 this weekend, just below the 20-dma
($25.22) and last Monday's intraday low.

Picked on November 26th at  $25.27
Change since picked          +0.73
Earnings Date              1/15/04 (unconfirmed)
Average Daily Volume =    14.7 mln






==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------

ACE Ltd - ACE - close: 39.64 change: +0.99 stop: 37.99

Company Description:
ACE Limited is the Bermuda-based holding company of the ACE Group
of Companies, one of the world's leading providers of insurance
and reinsurance. The ACE Group provides a diversified range of
products and services to clients through operations in nearly 50
countries around the world.(source: company press release)

Why we like it:
Looking at the DJIA and S&P 500 near their highs it can be tough
to find a bullish stock that isn't over bought and extended.  We
think we've found one with ACE.  The insurance sector has really
enjoyed a strong rally from its late November lows and has
recently broken out to new highs.  ACE has followed the index by
breaking out above the $37-38 region in early December.  The
stock then traded sideways for about three weeks and this last
Friday pushed it up and above new resistance at 39.25.

ACE has also made some headlines this month as analysts are
approving the recent news from ACE to spin off its Financial
Guaranty operations in its own IPO.  J.P.Morgan believes this
will strengthen ACE's balance sheet and the broker upgraded ACE
from "under weight" to "neutral".

Not only are the daily and weekly charts for ACE encouraging but
its P&F chart has produced a bullish double-top breakout.  We
would suggest conservative traders wait for ACE to trade above
the $40 level.  We're going to follow our own advice and use a
TRIGGER at $40.05 to open the play.  Until then we'll remain
spectators.  More aggressive traders can pick their entries above
$38.00.  Our target is early 2002 resistance at $45.00.   We'll
start the play with a stop loss at 37.99 once we're triggered.

Annotated Chart of ACE:


Picked on Dec 19th at $39.64
Gain since picked:     +0.00
Earnings Date       01/27/04 (unconfirmed)
Average Daily Volume:    1.3 million




============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------


CIT Group - CIT - close: 34.82  change: +0.02  stop: 33.05*new*

Late this week, CIT began the hoped-for climb from the bottom of
its rising regression channel.  An upturn in the RSI and the MACD
histogram accompanied that move.  MACD lines verge on a bullish
cross from above signal, with bullish divergence showing up in
the form of a lower MACD low and a higher price low.  MACD lines
also challenge the descending trendline that formed over the last
couple of months. While those lines didn't break through the
trendline, the actions so far hint of strength.

Friday's trade produced a high-wave candle indicative of
indecision, however, with that candle produced just under the
recent intraday high of $35.15.  This hesitation fits with the
known weekly resistance near $35.40-35.50.  We suspect that CIT
will need strong volume to break above that resistance, with that
volume unlikely to occur during the low-volume environment
typical of a holiday week such as next week's.  Friday's volume
proved slightly below average. We wouldn't be surprised to see
CIT consolidate or pull back toward support again next week.

We're raising our stop to $33.05, just below last week's low.
Those seeking new entries could use bounces from the 10- or 30-
dma's for new entries.  Those who prefer momentum entries might
watch for a break above $35.50 on strong volume, but those
traders should be aware that the risk/reward for such entries
would not be favorable with our $37.50 target in mind.

Annotated Chart for CIT:


Picked on Dec 12 at  34.05
Change since picked: +0.77
Earnings Date:    01/22/03 (unconfirmed)
Average Daily Volume:  879 thousand



---


D.R. Horton Inc. - DHI - close: 44.15 change: +0.51 stop: 40.00*new*

There seems to be no end to the strength in the Housing stocks,
with each dip providing the opportunity for fresh bullish
entries.  Following the steep drop and rebound from the 50-dma
just over a week ago, DHI looked like it was getting ready to
make another run up the charts to challenge and possibly break
above its all-time highs near $45.  DHI cleared our $43 trigger
on Thursday and on Friday scaled the $44 level in preparation for
challenging the December highs next week.  DHI is now back in the
upper half of its 9-month rising channel, and with the daily
Stochastics and MACD having turned bullish, a run at the top of
the channel at $47 looks reasonable.  Pullbacks near the midline
of the channel can still be used for pullback entries.  Note that
there's likely to be some resistance near $45, but a breakout
over $45.40 can be used for new momentum entries.  Raise stops to
$40, just below last Tuesday's intraday low.


Picked on December 17th at  $42.69
Change since picked          +1.46
Earnings Date              1/15/04 (unconfirmed)
Average Daily Volume =    1.41 mln





---


Marathon Oil - MRO - close: 32.16  change: +0.02  stop: 30.89*new*

Fueled by stronger volume, MRO charged higher Thursday, but then
consolidated Friday.  Friday's trade produced conflicting
signals: a small-bodied candle at the top of a climb, a possible
reversal signal, and MACD lines that pushed through a months-long
descending trendline.  One speaks of potential weakness and
another speaks of strength.

MRO's candle pattern mirrors that of the XOI, the Oil Index, with
XOI's strength also evidenced by a surging-higher MACD.  That
sector strength may help MRO as it faces its November 2001 high
of $32.75 and then its May 2001 high of $33.73, but we wouldn't
be surprised to see a period of consolidation beginning now,
either. If MRO pulls back, we hope to see support confirmed above
the steeply rising 10-dma.  We've raised our stop to $30.89, jut
below that average.  New play participants could use retreats to
and bounces from that level as new entries.

Since Thursday's candle was larger than normal, candlestick
theory predicts that support may be found at the midpoint of that
candle, so it's possible that MRO may pull back no lower than
$31.71 before bouncing again.  Traders could use such pullback-
and-bounce actions as entries.  We would not suggest new momentum
entries on breakouts now that MRO is so close to our first
target.

Annotated Chart for MRO:


Picked on Dec 05 at  30.22
Change since picked: +1.93
Earnings Date:    01/27/04 (confirmed)
Average Daily Volume:  1.2 million




  --------------------
  Bearish Play Updates
  --------------------


Abercrombie & Fitch - ANF - cls: 23.71 chng: -0.68 stp: 25.25

After breaking down under $24 early last week, ANF looked like it
would make a beeline for next support near $22, so the subsequent
rebound made us a little nervous, especially as the stock neared
the $25 resistance level.  Fortunately, ANF returned to its
pattern of relative weakness on Thursday, posting a fractional
loss on a day when all the major indices posted solid gains.
That reversal turned out to be a solid entry point for the bears,
as ANF declined sharply on Friday.  It's hard not to like the
reversal from the 10-dma ($24.62) yesterday, which was followed
by Friday's 2.78% loss, bringing the stock back under the $24
level at the close.  The rollover of the past two days solidified
the $25 resistance level and subsequent failed bounces below that
level can be used for new entries.  Traders looking for momentum
entries will need to wait for ANF to break below $23 before
playing, which will take out last week's lows.  Watch for next
support to come in near $22.40 at the bottom of the early January
gap.  That should prove to be mild support though, as the real
target remains strong support at $20.  Maintain stops at $25.25
until the $23 level is broken.

Picked on December 14th at  $24.59
Change since picked          -0.88
Earnings Date              2/17/04 (unconfirmed)
Average Daily Volume =    2.29 mln






==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

============
PLAY UPDATES
============

  --------------------
  Bearish Play Updates
  --------------------

Netease.com - NTES - close: 36.35  change: -1.55  stop: 39.51*new*

Although China's Shanghai Composite lost 0.76 percent in Friday's
trading, performance in the Chinese Internet-related stocks
proved mixed on Friday, with SOHU climbing, SINA trading flat,
and NTES dropping.  Small-cap ZICA, a player among Chinese-
language Internet-related stocks, also lost ground in Friday's
trading.

An article Friday discussed the challenges faced by Internet-
related activities in countries whose native languages are other
than English.  One Korean company has launched a proprietary
keyword system that directs a Korean typing "Yahoo" to a Korean
version of the site, and many say such systems would increase
traffic to such sites.  Merely translating sites from English to
other languages does not suffice, attendees at last week's U.N.
World Summit on the Information Society concluded.  While we're
sure that these problems will be addressed, and know that some of
these companies will eventually be at the forefront of such
changes, we're focused on what's happening now.

Friday, NTES rolled over again, testing the 50 percent
retracement of the rally from 2001-2002 lows to October's high.
NTES ended the day just below that retracement level, but close
enough that we should consider it being tested rather than
violated. The lack of a late-day bounce when that level was hit
speaks of weakness, however.  RSI and stochastics echoed that
weakness, turning down again.  Both measure levels that show
oversold conditions, but both can trend at those levels while
NTES declines further.  MACD remains flat, below signal.

We're keeping a tight stop in case that bounce occurs.  We're
lowering our stop to $39.51, just above the 10-dma and Thursday's
high.  New entries could be found on a bounce and rollover from
below the 10-dma or on a drop through $36.00.

Annotated Chart for NTES:


Picked on Dec 10 at  38.96
Change since picked: -2.61
Earnings Date:    10/28/03 (confirmed)
Average Daily Volume:  4.6 million





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

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

Nation's Largest Consumer Healthcare Provider Announces 2:1 split

Before today's opening bell, PacifiCare Health Systems Inc
(NYSE:PHS) announced that its Board of Directors has approved a 2-
for-1 stock split of its common shares outstanding.

The payable date for the stock split is set for January 20th, 2004
to shareholders on record as of January 7th.  This would be PCH's
first stock split since 1987.

About the company:
PacifiCare Health Systems is one of the nation's largest consumer
health organizations with approximately 3 million health plan members
and approximately 9 million specialty plan members nationwide.
PacifiCare offers individuals, employers and Medicare beneficiaries a
variety of consumer-driven health care and life insurance products.
Currently, more than 99 percent of PacifiCare's commercial health plan
members are enrolled in plans that have received Excellent
Accreditation by the National Committee for Quality Assurance (NCQA).
PacifiCare's specialty operations include behavioral health, dental
and vision, and complete pharmacy benefit management through its
wholly owned subsidiary, Prescription Solutions. More information on
PacifiCare Health Systems is available at www.pacificare.com .
(Source: Company Press Release)


---

PROV declares 3:2 split and 50% increase in dividend

Before today's opening bell, Provident Financial Holdings, Inc
(NASDAQ:PROV) announced that its Board of Directors has approved a
3-for-2 stock split of its common shares outstanding.

The payable date for the stock split is set for February 2nd, 2004
to shareholders on record as of January 15th.  This would be
PROV's first stock split since 2002.

The company also announced a quarterly cash dividend of $0.10 per
share on the Company's post-split outstanding shares of common
stock, which calculates out to a 50% increase in their cash
dividend.

About the company:
Provident Financial Holdings, Inc. is the holding company of Provident
Savings Bank, F.S.B. (the Bank), a federally chartered savings bank.
The Bank is a financial services company committed to serving
consumers and small to mid-sized businesses in the Inland Empire
region of Southern California. The Bank conducts its business
operations as Provident Bank, Provident Bank Mortgage, and through its
subsidiary, Provident Financial Corp. Business activities consist of
community banking, mortgage banking, investment services and real
estate operations. Additional information is available at
www.myprovident.com.
(Source: Company Press Release)



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

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Copyright (c) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter          Weekend Edition 12-21-2003
                                                    section 3 of 3
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 three:

Market Watch for Week of December 22, 2003
   - Major Earnings
   - Stock Splits
   - Economic Reports

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)


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

==========================================
Market Watch for the week of December 22nd
==========================================

-----------------
Earnings Calendar
-----------------

Symbol  Co               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

ARRO   Arrow International   Mon, Dec 22  -----N/A-----       N/A
CAG    ConAgra Foods, Inc.   Mon, Dec 22  Before the Bell    0.49
RIMM   Research In Mtn Lmtd  Mon, Dec 22  After the Bell     0.17
SVU    Supervalu Inc.        Mon, Dec 22  Before the Bell    0.42


------------------------- TUESDAY ------------------------------

AM     American Greetings    Tue, Dec 23  Before the Bell    0.70
MU     Micron Technology     Tue, Dec 23  After the Bell    -0.06


-----------------------  WEDNESDAY -----------------------------

None


------------------------- THUSDAY -----------------------------

None


------------------------- FRIDAY -------------------------------

None


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Co Name              Ratio    Payable     Executable

SSYS    Stratasys Inc.            3:2      Dec  22nd   Dec  23rd
EDMC    Education Management Corp 2:1      Dec  22nd   Dec  23rd
DFG     Delphi Financial Grp, Inc 3:2      Dec  22nd   Dec  23rd
NEOG    Neogen Corporation        5:4      Dec  31st   Jan   2nd
KSWS    K-Swiss Inc               2:1      Dec  31st   Jan   2nd
ACET    Aceto Corporation         3:2      Jan   2nd   Jan   5th
AAP     Advance Auto Parts Inc    3:2      Jan   2nd   Jan   5th
JCI     Johnson Controls, Inc     2:1      Jan   2nd   Jan   5th
CLBK    Commercial Bankshares Inc 2:1      Jan   2nd   Jan   5th



--------------------------
Economic Reports This Week
--------------------------

Christmas week is here and the U.S. markets will close early on
both Wednesday and Friday.  Look for a flurry of economic reports
just before the holiday with personal income and spending, new
Michigan sentiment numbers, durable orders and new home sales.


==============================================================
                       -For-

----------------
Monday, 12/22/03
----------------
None


-----------------
Tuesday, 12/23/03
-----------------
Personal Income (BB)       Nov  Forecast:    0.4%  Previous:     0.4%
Personal Spending (BB)     Nov  Forecast:    0.7%  Previous:     0.0%
GDP-Final (BB)              Q3  Forecast:    8.2%  Previous:     8.2%
Chain Deflator-Final (BB)   Q3  Forecast:    1.7%  Previous:     1.7%
Mich Sentiment Rev (DM)    Dec  Forecast:    91.0  Previous:     89.6


-------------------
Wednesday, 12/24/03
-------------------
Durable Orders (BB)        Nov  Forecast:    0.6%  Previous:     3.3%
Initial Claims (BB)      12/20  Forecast:     N/A  Previous:     353%
New Home Sales (BB)        Nov  Forecast:   1110K  Previous:    1105K


------------------
Thursday, 12/25/03
------------------
None


----------------
Friday, 12/26/03
----------------
None


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available




======================================================
  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    39.41    +0.53
TOT     Total Sa (ADS)             90.84    +1.91
SC      Shell Transport & Trading  43.70    +0.93
RD      Royal Dutch Petrol         50.80    +1.05
BAC     Bank of America Corp       78.90    +1.02

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

SKM     SK Telecom Co Ltd          18.79    +1.13
RHAT    Red Hat Inc                14.28    +1.11
ATVI    Activision Inc             19.00    +2.59
ASPT    Aspect Communications      15.32    +1.03


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

PTR     Petrochina Co Ltd          47.05    +2.43
CVX     Chevrontexaco Corp         83.55    +1.81
BP      BP Plc                     48.17    +1.09
AXP     American Express Co        46.77    +1.77
COP     Conocophillips             63.95    +2.12

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

FDX     Fedex Ciro                 69.70    -1.31
CL      Colgate-Palmolive Co       50.30    -3.58
VNO     Vornado Realty Trust       54.00    -1.66

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

IBM     Intl Business Machine      92.73    -0.67
FBNF    FNB Financial Services     23.66    -0.93



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

*****************************************************************
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Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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Copyright (c) 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.

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