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PremierInvestor.net Newsletter                Wednesday 12-24-2003
                                                    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:      Mad Bulls Take Day Off

Trading Ideas
   ! Holiday Schedule notice

    PremierInvestor's Trading Ideas section will continue
    on Tuesday, December 30th, 2003.

    Have a happy holiday!

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
12-24-2003               High      Low
DJIA    10305.12 -32.81 10341.48 10305.12
NASDAQ   1969.23 - 5.55  1974.31  1964.88
S&P 100   542.01 - 1.41   543.42   541.71
S&P 500  1094.04 - 1.98  1096.02  1092.73
RUS 2000  552.35 - 2.68   555.03   552.23
DJ TRANS 2990.15 -16.46  3007.27  2985.08
VIX        16.65 + 0.16    16.77    16.66
VXO        16.12 + 0.55    16.25    15.69
VXN        23.33 - 0.16    23.77    23.09
TRIN          1.34
PUT/CALL      0.70
=================================================================

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

Mad Bulls Take Day Off
Jonathan Levinson

With volume barely exceeding 600M Nasdaq shares and 500M on the
NYSE, there was little to see and little to do.  The Dow had a
weak session, with the Transports breaking below 3000 on a
closing basis.  The absence of a significant selloff was
impressive in light of news of a mad-cow disease outbreak (no,
that's cows, not bulls), as well as disappointing durable goods
orders and new home sales.  Traders didn't do much of anything
today, and if that trend continues, Friday could see more or the
same.

Volatility set more lows today, with the VXO spending a good part
of the session below 16.  Despite this, we saw no new highs out
of the indices, and if it were a higher volume, full session, it
would have looked like preliminary confirmation of a top on the
Dow and SPX.


Daily chart of the Dow




The daily chart of the Dow looks like a correction waiting to
happen, bullish or bearish.  Support at 10300 held today, and
below that, 10280 and 10200 are the next trendline resistance
areas to watch.  First price confluence is way below at 10000,
followed by 9880.  Upside resistance begins at 10350 until 10400.
Suffice it to say that without volume, those upper limits are
very unlikely to be tested this year.


Daily chart of the Nasdaq



The Nasdaq was stronger than the Dow today, but it has a lot of
ground to make up after lagging so badly this month.  The daily
cycles are in an upphase, nowhere near as toppy as on the Dow.
Support at 1935, 1900 and 1880 are the key levels to watch, below
which any decline should accelerate.


It was announced overnight that a single case of Mad Cow Disease
had been identified in Washington State.  With further tests
pending, the major importers of US beef issued import bans,
including Japan, South Korea, Russia, Taiwan, Malaysia,
Singapore, Australia and others, while the US ordered a recall of
at least 10,000 pounds of meat.  Almost as rapid was UBS analyst
David Palmer's defense of MCD and other industry-sensitive
stocks, as he went on record to say that "If the stocks open as
weak as we expect, then we believe this could provide an even
more compelling entry point for McDonald's," Palmer said. "We
would also view this positively for Wendy's (which already has
tremendous near-term momentum. In addition, we believe the likely
beef cost decrease could prove particularly propitious for
Brinker, which has significant exposure to rising beef costs in
2004."  MCD closed lower by 5.22%, and cattle futures closed
limit down.  Little mention was made of a Senate Agriculture
subcommittee discussion of America's vulnerability to terrorism
targeting the food chain.  For more on this connection, see
http://www.newsmax.com/archives/articles/2003/11/19/165032.shtml.

In economic news, the Mortgage Bankers Association (MBA) released
the Weekly Mortgage Applications Survey for the week ending
December 19.   Its Market Composite Index of mortgage loan
applications, which comprises mortgage and refi applications,
decreased by 6.8% to 631.2 on a seasonally adjusted basis from
677.2 in the previous week. On an unadjusted basis, the Index
decreased by 7.7 percent compared with last week and was down
34.7 percent compared with the same week one year earlier.  This
decline occurred despite a decrease in the average contract
interest rate for a 30 year fixed mortgage from 5.71% to 5.62%.

At 8:30 it was announced that durable goods orders for November
dropped 3.1%, the largest drop since September 2002 and well
below expectations for a .6% increase.  This drop follows four
months of consecutive rises, however. October's durable goods
orders were revised higher to a 4 percent gain. Orders for
computers and other electronics sank 10.8 percent, including a 40
percent drop in communication equipment orders. A quick drop in
equity futures on the report's release was stayed by the release
of the initial claims data a few moments later.

Initial jobless claims dropped in the latest week to an expected
353,000 new claims, bringing the 4 week moving average of initial
claims to 361,750 and continuing claims down 38,000 to 3,269,000,
the lowest level since September 2001.  These are still high
absolute numbers, but represent a marked improvement over the
400K+ readings that dominated a few months ago.  I've attached a
chart of initial claims from the Office of Workforce Security:

Chart of initial jobless claims




In other news, Italy's largest food group, Parmalat, filed for
bankruptcy protection under an emergency government decree,
following allegations of fraud and accounting irregularities
estimated above $10B.

The Commerce Department reported that new home sales dropped 2.4%
to a seasonally adjusted annual rate of 1.08 million, the slowest
sales pace since May. There were 363,000 new homes on the market
rose to 363,000, the highest in more than seven years.  New home
sales came in at 1.08M, vs. expectations of 1.12 million. The
median sales price was up 15.5% year-over-year to a record
$209,200, another indication of the effects of the Fed's
reflationary efforts.

News of an explosion at the Baghdad Hotel was met with a yawn, as
was the majority of the news today.  While the markets did move,
there was little conviction in either direction. Until traders
and volume return, we can expect more of the same, barring more
significant external news.  Here's my prayer for an uneventful
holiday season.  See you on Friday.



=================
  Trading Ideas
=================

! Holiday Schedule notice

PremierInvestor's Trading Ideas section will continue on Tuesday,
December 30th, 2003.

Have a happy holiday!


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

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

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

*****************************************************************
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Newsletter, or any Premier Investor Network newsletter please
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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                Wednesday 12-24-2003
                                                    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
=================================================================

In section two:

Tech Stocks
  New Bullish Plays: NVDA
  Bullish Play Updates:  NXTL


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


High Risk/Reward
  Bearish Play Updates:  NTES


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

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

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

NVIDIA Corp. - NVDA - close: 21.80 change: -0.16 stop: 19.90

Company Description:
NVIDIA Corporation designs, develops and markets 3D graphics
processors, graphics processing units and related software that
set the standard for performance, quality and features for every
type of desktop personal computer user.  Used in a wide variety
of application including games, the Internet and industrial
design, the company's products were the first to incorporate a
128-bit multi-texturing graphics architecture.  This design
approach delivers to users a highly immersive, interactive 3D
experience with compelling visual quality and stunning effects at
real-time frame rates.  NVDA sells its products to major PC
manufacturers such as Compaq, Dell, Gateway, Hewlett-Packard and
IBM.

Why we like it:
Following better than expected earnings in early November, shares
of NVDA shot sharply higher, from near the $18 area to near $22
on a large gap move.  Since then the stock has been consolidating
that powerful move between $19.50-22.00, while waiting for the
longer-term moving averages to catch up.  At the same time, the
Semiconductor index (SOX.X) has undergone some much needed
consolidation, finding very strong support near $475 and it is
just about to break back above the $500 level that has been a
price magnet since late October.  Over the past couple months,
NVDA has formed a nice double bottom near $19.50, and a break
above near-term resistance at $22.25 would confirm that
formation.  The PnF chart is already bullish, with the Buy signal
generated in early November pointing to a bullish price objective
of $36.  That bullishness will be confirmed with a trade at $23,
which would create a fresh PnF Buy signal.

Rarely do we get a stock that is so clearly poised right at such
a clear inflection point, but we're not going to pass up the
opportunity.  When NVDA breaks above our $22.25 trigger, momentum
traders can initiate positions, looking for a rally up to the
$25-26 resistance area.  Those with a more cautious approach will
want to look for a pullback to the $22 support level following
the initial breakout.  In the event of a more substantial
pullback, there should be solid support found near $21, near the
convergence of the 10-dma ($21.12), 20-dma ($20.91) and 30-dma
($20.76).  Set stops initially at $19.90, just under the December
16th intraday low.  Over the next few days, the 50-dma ($19.72)
will rise to help protect that stop.

Annotated Chart of NVDA:



Picked on December 24th at  $21.80
Change since picked          +0.00
Earnings Date              2/05/04 (unconfirmed)
Average Daily Volume =    6.09 mln




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

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


Nextel Comms - NXTL - close: 26.86 change: -0.14 stop: 25.50

The quiet consolidation pattern that NXTL has been in for the
past couple weeks broke on Thursday, with the stock blasting
through the top of its rising channel to set a new 52-week high.
That breakout was somewhat reminiscent of the breakout above the
channel on December 1st.  But there's an important difference
this time around.  NXTL has now broken solidly above resistance
left behind after the plunge in February 2001, and more
importantly, Friday's price action held above the top of that
channel, rather than dropping back inside, as we saw in early
December.  Slight pullbacks into the $26.00-26.50 area can be
used for new entries, while momentum traders can consider new
positions on a breakout over $27.10.  We're still looking for a
continued rally up towards the top of the gap from 2001 near $30.
Maintain stops at $25.50.

Picked on November 26th at  $25.27
Change since picked          +1.59
Earnings Date              2/18/04 (unconfirmed)
Average Daily Volume =    14.3 mln




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


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

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

D.R. Horton Inc. - DHI - close: 43.67 change: -0.48 stop: 40.00

The initial rebound off the 50-dma support continued up near the
$44 level and got our DHI play off to a good start.  But with
volume drying up as the holiday draws near, there just hasn't
been enough enthusiasm to keep the rally driving higher,
especially this close to the stock's all-time highs near $45.
Today's action saw the stock dip to the midline of its rising
channel just above $43 and rebound slightly, helped along by
additional support offered by the 10-dma ($43.26) and the 20-dma
($43.10).  Another dip near the $43 level looks like a decent
entry point, although we do need to beware of the daily
oscillators, which are starting to tip over.  If they give
bearish crosses on Friday or early next week, then a deeper
pullback may be in order, with support near the 50-dma ($41.32)
likely to be tested.  Maintain stops at $40 for now.

Picked on December 17th at  $42.69
Change since picked          +0.98
Earnings Date              1/15/04 (unconfirmed)
Average Daily Volume =    1.41 mln



--


CIT Group - CIT - close: 34.35  change: -0.04  stop: 33.05

U.S. heavy construction equipment manufacturers have been
reporting increased sales, with analysts suggesting that federal
tax changes and aging construction equipment have prompted those
improving sales figures. Doubt about the sustainability of the
sales remains, however, with some of those sales tied to the
strong residential housing sector. Heavy equipment companies such
as CAT, CNH, and DE failed to benefit from those increased sales,
and CIT, which finances equipment, also failed to benefit
benefit.

We had speculated late last week that CIT might not yet have
completed its consolidation and that speculation turned out to be
true.  CIT settled into a symmetrical triangle within its rising
regression channel.  MACD turned down along a descending
trendline and stochastics also turned down into a full bearish
roll.  RSI squiggles along at a neutral 55-ish reading.

So far, CIT's price chart follows the same pattern it did in mid
November, with the resolution of that pattern being another push
higher.   In November, CIT first reached down and touched its 30-
dma, in black on the chart, and CIT may do that again.  We're
keeping our stop just below the rising 50-dma, currently at
$33.06, but conservative traders might raise stops to a point
just under the 30-dma and the bottom of the rising channel.
Because of the continued consolidation just above the 30-dma and
the rising channel, new entries are possible at the current
level.

Annotated Chart for CIT:



Picked on Dec 12 at  34.05
Change since picked: +0.30
Earnings Date:    01/22/03 (unconfirmed)
Average Daily Volume:  879 thousand



-----

Marathon Oil - MRO - close: 32.55  change: +0.39  stop:
31.49*new*

After three days consolidating just above $32.00, MRO moved up
again on Wednesday.  Although the holiday saw light volume on the
exchanges, MRO managed to trade far more than half its average
daily volume, predicting that volume might have been strong on a
non-holiday trading day.  Perhaps helping MRO was the
conciliatory stature taken by the Libyan government this week,
with Libya perhaps posturing for a lifting of U.S. sanctions.
Libya apparently wants U.S. oil companies to return to their
abandoned operations in Libya.  MRO was active in Libya before
the imposition of the sanctions and the company has been trying
to extend its exploration permits, set to expire in 2005.

MACD remained bullish, and RSI and stochastics have begun to
trend at levels indicating overbought conditions, as often
happens with a strongly trending market.  MRO has far outstripped
its rising moving averages, however.  Wednesday's upper shadow
indicates that it might hesitate here while those averages play
catch-up. Dips down to and bounces from the rising 10-dma could
still be used as entries, but they're risky entries since the
first target is just overhead at $33.75.  We're raising our stop
to $31.49, just below that rising 10-dma.

Annotated Chart for MRO:



Picked on Dec 05 at  30.22
Change since picked: +2.33
Earnings Date:    01/27/04 (confirmed)
Average Daily Volume:  1.2 million




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

Abercrombie & Fitch - ANF - cls: 24.07 chng: -0.10 stp: 25.25

After numerous forays both sides of the $24 level in the past
couple weeks, it is clear that this level is now acting more as a
price magnet than either support or resistance.  With volume
getting lighter by the day, it is getting harder to read much of
anything into the price action and Wednesday's session was
particularly bad.  ANF traded less than 15% of its ADV, with
price confined to less than a 30-cent range.  ANF did end with a
slight loss on the day, and it is encouraging to see the 10-dma
($24.38) still acting as consistent resistance.  But viewed on an
intraday basis, we can see that the stock is just building a
neutral wedge over the past couple weeks and that pattern could
break in either direction.  So long as resistance holds, we
maintain our downside bias, and look for failed rally attempts
below the 10-dma to provide new entries.  Momentum traders will
still need to see a break below $23 before playing, but that will
likely have to wait until next week for at least a token
improvement in the volume patterns.  Continue to monitor the
Retail index (RLX.X) for weakness, as the current price action
suggests a rollover into next week, which should help to pressure
ANF.  Maintain stops at $25.25

Picked on December 14th at  $24.59
Change since picked          -0.52
Earnings Date              2/17/04 (unconfirmed)
Average Daily Volume =    2.31 mln




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


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

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

Netease.com - NTES - close: 38.17  change: +1.29  stop: 39.51

The planned or recent introduction of IPO's such as Tom.com and
Ctrip.com (CTRP) has focused attention again on the performance
of the Chinese Internet-related companies such as NTES, SINA,
SOHU, and CHINA.  All moved higher from their opening levels on
Wednesday, including NTES.  Particularly worrisome to this play
is the fact that NTES rose after spending a few days testing the
50 percent retracement of this year's rally.  That Fib level
serves as a typical turnaround point in many reversals.

Volume proved average for a holiday-shortened trading period.
The rise was strong enough to turn RSI back up again, and
stochastics made a bullish kiss from within territory indicating
oversold conditions.  Stochastics haven't yet been tugged out of
that territory and MACD remains flat, but the turnaround at
significant possible support can't be ignored, either.  We've
positioned our stop close overhead, so will be stopped out of
this position quickly should NTES try to rise.  Because our
worries about that 50 percent retracement levels have been
validated by the last week's trading, those seeking new entries
should wait for a roll down below that level, setting a trigger
just below Friday's $35.26 intraday low as a trigger for the
entry.

Annotated Chart for NTES:



Picked on Dec 10 at  38.96
Change since picked: -0.79
Earnings Date:    10/28/03 (confirmed)
Average Daily Volume:  4.6 million




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

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

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

*****************************************************************
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Newsletter, or any Premier Investor Network newsletter please
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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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