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Daily Newsletter, Monday, 12/22/2003

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PremierInvestor.net Newsletter                 Monday 12-22-2003
                                                  section 1 of 2
Copyright (c) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section one:

Market Wrap:      Markets Shrug Off Terror Alert
Play of the Day:  Stalling Or Resting?

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     12-22-2003            High     Low     Volume Advance/Decline
DJIA    10338.00 + 59.78 10338.00 10255.26 1.50 bln   1783/1040
NASDAQ   1955.80 +  4.78  1958.74  1941.62 1.25 bln   1585/1480
S&P 100   542.28 +  2.02   542.28   538.66   Totals   3368/2520
S&P 500  1092.94 +  4.28  1092.94  1086.14
RUS 2000  549.37 +  2.49   549.37   544.86
DJ TRANS 3005.27 + 17.84  3005.63  2982.40
VIX        16.94 +  0.52    17.31    16.61
VXO        16.20 +  0.15    16.91    16.10
VXN        24.75 -  0.14    26.36    24.70
Total Volume 3,140M
Total UpVol  1,963M
Total DnVol  1,130M
52wk Highs     662
52wk Lows       19
TRIN          0.82
PUT/CALL      0.98
===============================================================

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

Markets Shrug Off Terror Alert
by James Brown

The markets shrugged off the government's announcement to elevate 
the terror alert level to "orange", its second highest rating.  
The Dow Jones Industrials saw some initial strength and then 
pulled back to spend a good portion of the day in a narrow 25-
point range above the 10,250 level.  A strong afternoon buying 
spree lifted the DJIA to a 59-point gain and its highest close 
since May 17, 2002.  The S&P 500 also enjoyed another new 19-
month high but the NASDAQ continued to lag behind.  Year to date 
the INDU and the S&P 500 are up about 24 percent while the NASDAQ 
is up 46 percent.  Investors are locking in gains from the 
NASDAQ's tremendous year and rotating into big cap, highly liquid 
cyclical stocks, which are more heavily concentrated in the DJIA 
and SPX.

Contributing to the Dow's gains were big moves in General Motors 
(GM), McDonald's (MCD) and Honeywell Intl (HON).  Overall 22 of 
the 30 Dow components closed in the green.  The strongest buying 
was seen in homebuilders, broker-dealers, defense stocks and 
software.  Lagging the markets were declines in natural gas, 
retail stocks and the airlines; the latter closed relatively flat 
despite the terror warnings.  Foreign markets did not seem too 
concerned over the raised alert level and the Asian markets 
closed higher with the NIKKEI up almost 90 points to 10,372 and 
the Hang Seng up 116 points to 12,487.  The FTSE followed with a 
small gain of its own but the German markets were down despite 
comments that the rise in the dollar had not yet hurt German 
exporters.  Gold futures rose $1.40 to $411.30 an ounce and crude 
oil for February delivery dropped over a dollar to $31.90 a 
barrel.

Market internals for U.S. exchanges were mixed but generally 
positive.  Stocks were strong on the NYSE (think Dow and plenty 
of S&P components) where advancers out paced declining stocks 
almost 18 to 10.  The advance-decline line on the NASDAQ spent 
most of the session in negative territory but pulled it out by 
the close with nearly 16 winners for every 15 losers.  Again we 
see buyers in the NYSE with 419 new highs but only 116 new highs 
on the NASDAQ.  Up volume was nearly 2-to-1 down volume on the 
NYSE while just 7-to-5 on the NASDAQ.

Chart of the DJIA:


Chart of the NASDAQ:


It truly is a testament to the strength in the markets to pull 
out yet another gain on top of last week's rally after the 
Department of Homeland Security raised the terror alert rating to 
"high" or "orange" status.  It hasn't been this high since May.  
Homeland Security Secretary Tom Ridge said that the most recent 
information suggest that Al Queda and those in their network were 
planning attacks that could be more devastating than those of 
September 11th.  The DFI and DFX defense indices climbed on the 
news.  Considering that this is the Christian and Jewish holiday 
season in the U.S. I'm surprised that the alert level wasn't 
raised sooner.  It's probably a good thing for the economy that 
it was not.  While I doubt the "orange" alert status will deter 
desperate shoppers it may slow down some of the more casual 
spending from consumers with nothing better to do during 
Christmas break but cruise the malls.  It will be interesting to 
hear next month if retailers report a drop in traffic during the 
last week and a half of December. 

Speaking of retail the titan of retailing, Wal-Mart (WMT), did 
not have good things to share this morning.  WMT reported that 
same-store sales are tracking toward the low end of their 3 to 5% 
range.  It has not been a good month for WMT.  On December 1st 
the company warned that the holiday season was not off to as 
strong a start as they had hoped.  Yes, sales were up and Black 
Friday produced another new record for one-day sales volume but 
management had been expecting more.  The company warned again in 
mid-December that weekly sales were tracking toward the low end 
of their range.  In response investors took the stock from $56 
near Thanksgiving to $50.50 about a week ago.  Propping up the 
stock today, despite WMT's guidance, were comments from Goldman 
Sachs.  The Goldman analyst believes the worst may be behind the 
company and its "underperformance may nearly be over."  

Adding to today's bullish sentiment was another Wall Street firm, 
UBS, who released their monthly investor optimism index.  UBS 
said optimism rose for the second month in a row, hitting 104 in 
December, up from 93 in November.  Bears will shake their heads 
in collective disbelief but from those surveyed by UBS at least 
75 percent believe that stocks will do better in 2004 than they 
did in 2003.  That's pretty optimistic.  I wonder what they'll be 
thinking in January or February after the expected first quarter 
correction occurs?

One of the biggest stories of the day was Ford Motor Co (F).  The 
company said it will take a $1.6 billion charge in Q4 in strong 
part due to their Viseon (VC) spin-off's healthcare costs but 
told Wall Street that its full year 2003 earnings outlook should 
improve fueled by "continued cost savings" and strong sales from 
their redesigned F-150 pickups.  The optimistic earnings guidance 
from Ford lifted Dow component and larger rival General Motors 
(GM) to a 4% gain and a new 52-week high.  

It wouldn't be a Monday without some merger news.  This week's 
merger falls in the drug sector.  Drug behemoth Pfizer (PFE) has 
agreed to buy Esperion Therapeutics (ESPR) for $35 a share in 
cash.  The $1.3 billion deal sent shares of ESPR to a 52% gain, 
closing at $34.53.  ESPR has been developing some new treatments 
involving "good" cholesterol or HDL.  It's a strong defensive 
move by Pfizer, who makes Lipitor, the best-selling drug on the 
planet.  Lipitor works by lowering LDL or bad cholesterol.  

The PFE-ESPR deal wasn't alone today.  Provident Financial (PFS), 
the New Jersey-based holding company for Provident Bank, 
announced plans to buy First Sentinel Bancorp (FSLA) for $642 
million in cash and stock.  

Tomorrow does bring a few economic reports into the picture for 
any traders not yet on holiday vacation.  Economists will be 
looking for the November personal income numbers to rise 0.4 
percent while November spending is expected to rise 0.7 percent.  
We'll also get the revised reading on the University of 
Michigan's consumer sentiment numbers for December.  Economists 
are looking for an upward revision from 89.6 to 91.0.  Lastly, 
we'll hear the final revised growth rate for the third quarter, 
expected to remain unchanged at 8.2%.  

Historically the last two weeks of December are up as the Santa 
Claus rally comes to pass.  Most traders are on holiday and these 
low volume days tend to float higher both on last minute window 
dressing and retail trading.  However, the DJIA is up more than 
700 points from its Thanksgiving low near 9600 without much of a 
rest.  Thus, the index is very extended and overdue for a pull 
back.  It would not surprise me at all to see some minor selling, 
at least in the INDU and the S&P 500. We should still have 
another three weeks of bullish optimism so short-term traders 
might want to focus in on their favorite stocks to trade and look 
for the dip.



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

D.R. Horton Inc. - DHI - close: 44.20 change: +0.05 stop: 40.00

Company Description:
D.R. Horton is a national builder that is engaged primarily in the 
construction and sale of single-family homes in 39 markets and 23 
states in the U.S.  The company designs, builds and sells its 
homes on lots developed by it and on finished lots that it 
purchases, ready for home construction.  DHI also provides title 
agency and mortgage brokerage services to its homebuyers.  It does 
not retain or service the mortgages that it originates, but sells 
the mortgages and related servicing rights to investors.

Why we like it:
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.

Why This is our Play of the Day
Just like the rest of the market, the Housing sector ($DJUSHB) saw 
a steady climb throughout the day, gaining 1.55% by the closing 
bell and getting very close to a test of the early December highs 
in the $622-623 area.  Similar to the action in the $DJUSHB, 
shares of DHI have been climbing since the rebound off the 50-dma, 
and are now getting quite close to a test of the early December 
highs just above $45.  The problem is that the stock didn't really 
participate in the sector move on Monday and that could be 
signaling some near-term weakness.  If so, then we'll want to 
capitalize on any near-term weakness to initiate new entries on a 
dip and rebound in the $43 area, which is the site of the midline 
of the rising channel, as well as the 10-ema ($42.96) and the 20-
dma ($43.09).  Momentum traders will need to sit on their hands 
until DHI is able to clear $45.40, preferably with the DJUSHB 
breaking out as well.  Maintain stops at $40.

Annotated Chart of DHI:
 

Picked on December 17th at  $42.69
Change since picked          +1.51
Earnings Date              1/15/04 (unconfirmed)
Average Daily Volume =    1.42 mln
Chart:




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DISCLAIMER
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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 ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.



PremierInvestor.net Newsletter                  Monday 12-22-2003
                                                   section 2 of 2
Copyright (c) 2003, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

Stop Loss Updates:  - None -

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


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

- None -


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

PTR     Petrtochina Co Ltd (ADS)   50.46    +0.90
MWD     Morgan Stanley             57.06    +1.05
FNM     Fannie Mae                 73.45    +2.83
SNP     China Petro & Chem (ADS)   40.28    +1.42
CAJ     Canon Inc (ADR)            46.12    +1.47


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

F       Ford Motor Co              16.79    +1.55
RHAT    Red Hat Inc                18.61    +1.12
AGIX    Atherogenics Inc           14.78    +1.28


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

FNM     Fannie Mae                 73.45    +2.83
SLB     Schlumberger Ltd           54.65    +1.52
GM      General Motors Corp        52.41    +2.05
RIO     Companhia Vale Do Rio Doce 58.65    +2.30
MCO     Moody's Corporation        60.17    +1.23


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

FCX     Freeport Mcmoran C&G B     39.56    -1.71
NTE     Nam Tai Electronics        28.36    -2.26
SASR    Sandy Springs Bancorp      37.66    -2.12


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

PUB     Publicis Groupe Sa (ADS)   32.29    -0.22
PENN    Oenn National Gaming Inc   23.00    -2.20





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To stop receiving this PremierInvestor.net Newsletter,
send email to remove@PremierInvestor.net
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact advertising@PremierInvestor.net.

*****************************************************************

Copyright 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.



DISCLAIMER

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