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Daily Newsletter, Sunday, 01/04/2004

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PremierInvestor.net Newsletter          Weekend Edition 01-04-2004
                                                    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:      Happy New Year, I Think
Play-of-the-Day:  Renewed Fears over Renewals
Market Sentiment: A Mild Hangover


=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 01-02        WE 12-26        WE 12-19        WE 12-12 
DOW    10409.85 + 85.18 10324.6 + 46.45 10278.2 +236.06 +179.48 
Nasdaq  2006.68 + 33.54 1973.14 + 22.12 1951.02 +  2.02 + 11.18  
S&P-100  549.99 +  7.21  542.78 +  2.52  540.26 +  8.48 +  8.27  
S&P-500 1108.48 + 12.21 1096.27 +  7.61 1088.66 + 14.52 + 12.64  
W5000  10777.86 +115.48 10662.4 + 82.96 10579.4 +114.94 +111.88  
RUT      560.85 +  5.75  555.10 +  8.22  546.88 -  0.71 +  8.58  
TRAN    3008.16 +  8.49 2999.67 + 12.24 2987.43 +  4.02 + 72.83  
VIX       18.22 +  0.83   17.39 +  0.97   16.42 +  0.01 -  0.68  
VXO       17.94 +  1.36   16.58 +  0.53   16.05 +  0.10 -  1.39  
VXN       24.51 +  0.56   23.95 -  0.94   24.89 -  0.97 -  1.19  
TRIN       1.01            0.79            1.02            1.02  
Put/Call   0.76            0.86            0.80            0.75  
WE = week ending
================================================================= 

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

Happy New Year, I Think
by Jim Brown

The Dow surged at the open on Friday on relief that there 
were no terrorist events over the holiday. The first economic
present of the new year came in the form of the ISM report
and investors cheered once again while any shorts from 
before the holiday were squeezed out of the market. A
new year and already a new high. Happy New Year! 

Dow Chart


Nasdaq Chart


The ISM report lost no time in putting investor fears to rest
that the economy had softened in the fourth quarter. The index
rose to 66.2 from 62.8 and well over consensus estimates of
61.0 on the strength of surging new orders. This is the 
highest ISM since July 1950. New Orders surged to 77.6 from
73.7 and Employment rose to 55.5 from 51.0. This is the 2nd
month over 50 for employment after 38 months in decline. 
Orders were higher than production for the fourth straight
month. Only 10% of those surveyed saw a decline in production.
There was no bad news in this report and investors should have
breathed a huge sigh of relief. The questionable economics over
the last two weeks were suddenly history and the hope for a
fourth quarter earnings surprise began to firm.

The good news pushed the Dow to a new high at 10527 and a 
level not seen since March 2002. The Nasdaq soared to 2022
and a level not seen since January 2002. The excitement was
short lived and sellers started to appear around noon. The 
reasons were many and the end result was a Dow close -118
points below the highs for the day but still above the 
current psychological 10400 level. 

One of the reasons for the Dow decline was IBM. A Bear Stearns
analyst predicted IBM would miss its December quarter bookings
by as much as $2 billion. IBM had blessed a $14 billion estimate
in mid-October but the Bear analyst is now expecting only $12 
to $13 billion. IBM has not helped the situation with a refusal
to comment on the $14B estimate earlier this month with a 
"timing remains uncertain on various deals" dodge. IBM lost 
-$1.13 on Friday.

Russell Chart


Other big cap Dow stocks with large drops were MMM, PG
and WMT. The Dow finished with a -44 point loss while the 
Russell closed with a +4 point gain. If you remember we saw
a rotation out of small caps and into blue chips over the 
first three weeks of December as some fund managers shifted
assets into highly liquid issues. The funds benefited from 
the gains in the Santa rally and were positioned in the 
liquid issues if they decided to exit.

Apparently some did decide to exit early on Friday as shown 
by the index imbalances. Helping them decide to take the 
plunge was an almost constant news of flight cancellations 
somewhere on terrorist fears. 11 flights have been cancelled
in the last four days. The urge to hold 2003 profits over the
weekend with these kinds of fears proved too much for some
even on the positive ISM news. 

Also helping the decline was a worry that the spotlight is
now back on the Fed. With the prior Fed comments being based
on expectations for slow and steady growth the ISM spoiled
the outlook with the fastest growth in manufacturing in over
20 years. Bonds were hammered on the positive implications
and analysts were tripping all over themselves to raise GDP
estimates for the 4Q. The first look at the 4Q GDP will be
Jan-30. If the economy has suddenly gone from a sputtering
four cylinder to a purring V12 then the Fed's "considerable 
period" qualification may be in jeopardy. The head Fed is 
speaking on Saturday in San Diego on the U.S. economy and 
current monetary policy risk. The bond groupies will be all
ears. Fed funds futures were expecting a 25 point rate 
increase by July but that assessment could change very 
quickly based on his speech. The next Fed meeting is a 
two-day affair on Jan-27/28th. Conveniently two days before
the GDP report.  

Demonstrating the rate fears were the home builders which
took a serious hit. CTX -3.25, RYL -3.56, PHM -2.67, HOV
-4.16 and NVR -33.25 to name a few. Financial stocks also
took a hit on the worry about a rate change ahead. 

It is hard to draw any real conclusions for 2004 based on
one low volume day with lots of terror news. Friday was 
just a blip on the radar screen not a trend change. There
were some disturbing chart patterns but it was just one
day. The Dow may have broken 10525 but the important event
was the closing hold above 10400. This level has been 
support for the last three days and it remained support. 
This is key because institutions could have chosen to sell
in volume but didn't. Total volume across all exchanges 
was only 3.3 billion and it was 5:3 in favor of advancers
despite the negative finish on the Dow, S&P, OEX and 
Wilshire. The headlines do not always tell the story. 

The real story was the pullback to support with continued
terror fears. It could have been much worse but support
held. The wild card here is of course the light volume.
This was a retail day, not an institution day. Retail
traders were putting their year end bonuses to work and
buying stocks in the beaten down sectors. Drug stocks
soared after being ignored during the tech rally in the
fourth quarter. This could be a double-edged sword. Drugs
are defensive and the surge today could be seen as a move
into safety in advance of a potential January dip. 

Before I get into my outlook for next week I need to clear
up something. I got a couple emails over the last couple
weeks saying I was too bearish and I should not be telling
people the market will crash in January. Excuse me? I am
not trying to be bearish and I am not telling anybody the
market will crash in January. I apologize if it came across
that way but I guess one persons profit taking dip is a
crash for others. Secondly, I don't know if the market is
going to dip in January any more than anybody else does. 
I do expect it to dip based on historical trends. I do not
expect it to crash. Assign your own meanings to the terms
dip and crash based on my outlook below. I analyze the
market, compare it to current and historical trends and 
draw conclusions. I report these conclusions, good and 
bad, and explain my rationalism behind them. As an 
investor you should take these conclusions and compare 
them to your market view and make your own decisions. 
Finally, if I were bearish then my picks in the Top-50 
& Top-20 should reflect that. They are all long plays. 

My outlook for January is based on historical trends. 
Over the last six years those trends have been for a 
January high to be established in the first 3-5 days. 
This has been followed by a drop of between -550 and 
-1050 points over the next several weeks. Obviously a
drop of -550 points would barely break 10,000 and would
be insignificant to the current market. Hardly a crash.
Should the market reach the other extreme from the 10527
high on Friday it would push us right back to decent
support at 9500 and would still be less than a 10%
correction. Still no crash. So where does reality actually
lie? That correct answer today would be worth millions.
What would you do on Monday if you knew in advance that
the Dow would hit 9500 in two weeks? Unless you are Osama
and know of an impending attack that answer will remain
hypothetical. 

I will try to be as specific as possible with my current
outlook. The reasons for a profit taking dip remain the
best Dow year since 1996, best S&P since 1998 and third
best Nasdaq year in history. This does not even take into
consideration that the first three months of the year were
down. We recovered the earlier losses and rebounded to 
those gains after the March lows. There is considerable 
profit on the table and funds coming out of a bear market
need to show some gains and produce some new marketing
materials showing those gains. Up until Friday the good
economic news was priced into these gains. The December
ISM may have given them one more up leg or maybe not. The
worry about the Fed accelerating their rate schedule could
offset the ISM bounce. Funds also know that these profits
could go up in smoke in an instant if a major attack did
appear. Also, many "analysts" think the current market is
very overbought citing a current PE of 38 for the Nasdaq. 
In short there are plenty of reasons for some profit taking
ahead. 

Offsetting the potential for profit taking is the hope 
that the Jobs Report next Friday will be a blowout based
on the ISM gains. One more positive economic point for
the recovery and one more negative for the Fed if it came
to pass. Add in the lack of any serious earnings warnings
and very few warnings in general and the 4Q earnings 
appear to be on track to surprise to the upside. Factor in 
the coming $165 billion in first quarter tax stimulus and
the stars are aligned for a continued gains according to
the bulls. 

You can decide which scenario you like best and invest
accordingly. However, if recent January trends repeat the
Dow could easily test 9500 before January is over. Does
that mean I am bearish? No, it just means that historically
we could test 9500 before the end of January. I personally
think it will produce a significant buying opportunity for
2004. I think investors should consider it an opportunity
and not a dip or crash. 

Dow Chart - Weekly



To balance the scales today we need to look at the upside 
potential as well. The Dow has taken out resistance on
almost a daily basis for the last three weeks. Since 10,000
was broken the Dow has been on a constant upward march. The
last two days of December saw a plateau reached and held at
10400 and despite the intraday selling on Friday that level
still held. Moving up from here could be a problem. The 
10525 level reached on Friday is exactly the downtrend
resistance line from Jan-2000. There is even more significant
horizontal resistance at 10650 which was the high for all
of 2002. Were it not for the current very extended conditions
my outlook might be more positive but I believe we are going
to have a tough time moving above the 10650 level without
some profit taking first to create that next buying 
opportunity.

S&P Chart - Weekly



Wilshire 5000 - Weekly



Next week is full of economic reports but the only one that
really matters is the Jobs Report on Friday. We may get some
volatility on the others but it is only a prelude to the 
Friday report. What we are likely to see is simply a very 
volatile market in general as both the bulls and the bears 
are scared to commit to a position. Friday was a throw away
day with most fund managers on vacation after a long year. 
Next week is going to be a pivotal week as those managers 
come back to work to implement their plans for 2004. They 
will first have to wade through the inflow of year end 
retirement cash and decide how/when to put it to work. 
Index funds do not have that luxury. They receive cash and
spend it. Their goals are a lot different as they only have
to mimic the market and not time it. This year-end cash 
inflow to index funds normally provides the liquidity needed
to produce those early January highs. The hold at support 
on Friday could be the launch point for a Monday bounce. I 
am sure many retail traders could not bring themselves to 
go long on Friday with continuous newscasts about flight 
cancellations. If we make it to Monday with no event those
traders will breathe a sigh of relief and step up to the 
line if conditions are positive. I am sure you can see there
are a lot of "ifs" for next week and odds are good we could
move quickly in both directions.   

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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


MedcoHealth Solutions - MHS - close: 33.23 chg: -0.76 stop: 34.51

Company Description:
Medco Health Solutions, Inc. (www.medcohealth.com) is the 
nation's largest pharmacy benefits manager, based on its 2002 net 
revenues of approximately $33 billion. Medco Health assists its 
customers to moderate the cost and enhance the quality of 
prescription drug benefits provided to millions of members 
nationwide. Its customers include private and public-sector 
employers and healthcare organizations, including about 190 of 
the Fortune 500 companies. (source: company press release)

Why We Like It:
The early excitement over the MHS IPO and the passing of the 
Medicare Prescription Drug Benefit bill is over.  Shareholders 
may now be more concerned with keeping some of their early won 
profits instead of watching them evaporate under new fears.  
Currently, MHS is still fighting with the government over a fraud 
case, which currently looks like will head to trial.  Prosecutors 
believe they have a very tight, well-researched case, which 
doesn't bode well for MHS.  However, the larger concern for MHS 
could be contract renewals.  The company has several major 
contracts up for renewal soon and after last week's surprise 
announcement from ABC about losing a major drug supply contract 
MHS shareholders could be worried it could happen to them.

We're going to use a TRIGGER at $32.94.  That's one cent below 
Friday's low.  If and only if MHS trades at 32.94 will we open 
the play.  More aggressive traders may want to consider failed 
rallies under $34.00-34.25 as potential entries.  Our initial 
target is the $30.00 level.  If triggered we'll open the play 
with a stop at $34.51.

Annotated Chart:


Picked on Jan xth  at $xx.xx <-- see trigger
Gain since picked:     +0.00
Earnings Date       00/00/00 (unconfirmed)
Average Daily Volume:    1.6 million





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

A Mild Hangover
- J. Brown

U.S. stock indices opened 2004 with a mild hangover from the New 
Year holidays as prices trended flat to down by Friday's close.  
Any traders not taking a holiday of their own were probably 
surprised that the extremely positive ISM manufacturing numbers 
didn't spark a stronger bullish response.  The December ISM 
report unveiled the economy's factories are humming with a 
reading at 66.2. This is the highest level since December 1983.  
Most of you already know that any reading above 50 represents 
expansion and December report was the sixth month in a row to 
show economic expansion for the manufacturing sector.  

Despite the lackluster closing numbers the market internals were 
bullish on Friday.  Advancers outpaced decliners 15 to 13 on the 
NYSE and 18 to 12 on the NASDAQ.  Up volume outweighed down 
volume on both exchanges and strongly so on the NASDAQ.  

Traditionally the first several days of January are bullish but 
the market's been in need of a pull back for weeks now.  It's 
going to be an interesting tug-of-war, especially with a week 
full of economic reports.  Monday will bring the vehicle and 
truck sales numbers for December as well as the construction 
spending numbers.  Factory orders and the ISM services index, 
probably the most important report of the week, will come out on 
Tuesday.  There is a flurry of reports on Thursday and Friday but 
the most significant one should be the unemployment numbers.

Overall I think investors are excited but cautious especially as 
we approach the up coming earnings season.  Tread carefully.


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

Market Averages

DJIA ($INDU)

52-week High: 10527
52-week Low :  7416
Current     : 10409

Moving Averages:
(Simple)

 10-dma: 10357
 50-dma:  9922
200-dma:  9250

S&P 500 ($SPX)

52-week High: 1118
52-week Low :  788
Current     : 1108

Moving Averages:
(Simple)

 10-dma: 1099
 50-dma: 1062
200-dma:  993

Nasdaq-100 ($NDX)

52-week High: 1479
52-week Low :  795
Current     : 1463

Moving Averages:
(Simple)

 10-dma: 1449
 50-dma: 1417
200-dma: 1277


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

Wow! We're starting to see some big moves in the volatility 
indices.  The VXO (old VIX) surged 6% and looks ready to move 
higher.  The VIX looks ready to follow suit and the VXN is 
still stuck near its lows.

CBOE Market Volatility Index (VIX) =  18.65 +0.34
CBOE Mkt Volatility old VIX  (VXO) =  18.59 +1.08
Nasdaq Volatility Index (VXN)      =  24.83 +0.34


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.75        650,305       490,925
Equity Only    1.89        545,682       288,114
OEX            1.38         21,680        29,874
QQQ            3.97         18,242        72,438


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

Bullish Percent Data

           Current   Change   Status
NYSE          76.7    + 1     Bull Confirmed
NASDAQ-100    73.0    + 3     Bear Correction
Dow Indust.   86.6    + 7     Bull Confirmed
S&P 500       84.0    + 1     Bull Confirmed
S&P 100       84.0    + 2     Bull Confirmed


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: 0.82
10-dma: 0.88
21-dma: 1.01
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    1515      1821
Decliners    1293      1225

New Highs     367       202
New Lows       16         2

Up Volume    790M     1147M
Down Vol.    620M      404M

Total Vol.  1440M     1574M
M = millions


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

Commitments Of Traders Report: 12/22/03

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

Was it a one-week blip?  The surge in long positions by 
commercial traders have evaporated.  Was a sudden change of
heart or did they just get caught up in the holiday spirit?
Of course there was an equally strong disappearing act in
commercial short positions so maybe they're just confused.
Small traders have really cut back on their shorts and in
effect become extremely bullish.


Commercials   Long      Short      Net     % Of OI
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%
12/22/03      400,066   405,240    (5,174)   (0.6%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03
 
Small Traders Long      Short      Net     % of OI
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%
12/22/03      147,537    81,596    65,941    28.8%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

Wow!  The disappearing act in the full contracts (above)
is nothing compared to the drop in contracts below.  Commercial
traders really reduced their outstanding long positions in the
e-mini's and that's not a bullish development. Right on cue,
the small traders cut back on their short positions.


Commercials   Long      Short      Net     % Of OI 
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%)
12/22/03      128,801   213,021    (84,220)  (24.6%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
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%
12/22/03     125,248     43,482    81,766    48.5%

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


NASDAQ-100

We see the same contract evaporation in the NDX futures as well.
Commercial long contracts lost 1/3 of their number but short
contracts were cut in half.  That actually sounds bullish.  


Commercials   Long      Short      Net     % of OI 
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%)
12/22/03       40,277     36,452     3,825    5.0%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
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%
12/22/03       22,656    14,544     8,112    21.8%

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

This time it is the small traders that drastically reduced
their short contracts.  They probably got tired of losing 
money.  Commercials followed suit.


Commercials   Long      Short      Net     % of OI
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%
12/22/03       14,088     9,998    4,090      17.0%

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
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%)
12/22/03        6,915     8,983  ( 2,068)   (13.0%)

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 01-04-2004
                                                    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
  New Bullish Plays:     MXO
  Bullish Play Updates:  NXTL, NVDA, PLCM

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

High Risk/Reward
  Closed Bearish Plays:  NTES

Stock Splits
  Announcements:        MRX


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

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

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


Maxtor Corp - MXO - close: 11.68 change: +0.58 stop: 10.85

Company Description:
Maxtor Corporation (www.maxtor.com) is one of the world's leading 
suppliers of hard disk drives and data storage solutions. The 
company has an expansive line of storage products for desktop 
computers, storage systems, high-performance Intel-based servers, 
and consumer electronics. Maxtor has a reputation as a proven 
market leader, built by consistently providing high-quality 
products and service and support for its customers.
(source: company press release)

Why We Like It:
The hard drive/computer storage device sector was a big winner in 
2003 but many of the key players peaked early in the fall and hit 
significant profit taking.  Now investors are moving back into 
the group with strong expectations that the tech sector will be a 
leader in 2004 as the IT spending drought finally ends.  MXO 
could be a lead dog for the group after some recent analyst 
comments highlight the company as best positioned to benefit from 
the next PC upgrade cycle.  The stock looks cheap at only 12.7 
times its estimated 2004 earnings and one analyst at Thomas 
Weisel thinks MXO could trade as high as 20 times its 2004 
earnings.  

We also like the high-volume rallies that should indicate really 
buying interest for MXO.  Friday's gain pushed shares up and 
through its simple 50-dma after three days of basing above new 
support at $11.00.  We're going to target a move to the $14.00-
15.00 range.  We'll try and limit our risk with a stop loss at 
10.85, less than a dollar from its current position.  

Keep your ears open for any positive comments this week.  MXO 
management is due to speak at the RBC Capital Markets 2004 System 
Area Networks conference on Tuesday and the Sixth Annual Needham 
Growth conference on Thursday.

Annotated Chart:


Picked on Jan 4th  at $11.68 
Gain since picked:     +0.00
Earnings Date       01/20/04 (confirmed)
Average Daily Volume:    4.5 million





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

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


Nextel Comms - NXTL - close: 27.86 change: -0.20 stop: 26.50*new*

Early on Friday, it looked like NXTL was going to launch its next 
upward leg.  But when the broad market rally fizzled, so did 
NXTL, promptly giving back all of its opening gains.  That 
pullback found support near $27.80, prompting a rally back 
through the $28 level.  But for the remainder of the day, NXTL 
traded in a narrow range between $27.75-28.10, as the 
consolidation of the past few days continued.  The stock has been 
trading in a pattern of a sharp thrust upwards, followed by a few 
days of consolidation, before the pattern repeats.  So right now 
we're in a waiting pattern, anticipating the next sharp upward 
leg.  Entries on weakness make the most sense, with a logical 
entry point being a pullback near the $27 area.  This area offers 
historical resistance-turned-support, the top of the broken 
channel ($26.90) and the 10-dma ($27.02).  Note that we've 
aggressively tightened our stop to $26.50, as we'll want to be 
out of the play if that support zone is violated.

Picked on November 26th at  $25.27
Change since picked          +2.59
Earnings Date              2/19/04 (unconfirmed)
Average Daily Volume =    13.4 mln



---

NVIDIA Corp. - NVDA - close: 23.08 change: -0.12 stop: 21.00

That initial breakout over the $22 level was precisely what we 
were expecting from NVDA when we initiated coverage a little over 
a week ago.  Jumping aboard on the initial breakout was the only 
entry point offered, as the stock got even more over-cooked the 
next day with its gap higher.  Finally running out of steam just 
over $24, it looks like NVDA is finally going to drop back and 
hopefully give a continuation entry.  Look for initial support 
near $22.75 (bottom of Monday's gap) to the site of the 10-dma 
($22.50).  A rebound from that area can be used for initiating 
new positions, while more aggressive traders can even target 
entry in the $22.00-22.25 area on a confirmation of that old 
resistance area acting as newfound support.  Breakout entries 
over $24 might work, but until NVDA fills in some of the chart 
space left behind in the ramp from $22-24, that approach carries 
undue risk.  Maintain stops at $21.

Picked on December 24th at  $21.80
Change since picked          +1.28
Earnings Date              2/05/04 (unconfirmed)
Average Daily Volume =    5.65 mln



---

Polycom, Inc. - PLCM - close: 19.69 change: +0.17 stop: 18.40

With weakness across the board for the broad market, it's hard to 
be disappointed with the action in PLCM on Friday.  While there 
wasn't enough buying interest to push the stock through our $20 
trigger, or even the 50-dma ($19.91), it was encouraging to see 
the stock manage a gain.  The overall picture remains the same, 
with a breakout over $20 likely to garner enough follow-through 
to push at least to the $21 resistance area and quite possibly 
our $22 target.  As noted on Wednesday, the best entry point will 
be on the initial breakout over resistance, while more 
conservative traders may want to wait for a subsequent pullback 
and rebound from new support (old resistance) in the $19.50-20.00 
area.  Initial stops should still be placed at $18.40, just under 
the 100-dma ($18.58).

Picked on December 31st at  $19.52
Change since picked          +0.17
Earnings Date              1/28/04 (unconfirmed)
Average Daily Volume =    1.51 mln





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

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

  -----------------
  New Bearish Plays
  -----------------


MedcoHealth Solutions - MHS - close: 33.23 chg: -0.76 stop: 34.51

Company Description:
Medco Health Solutions, Inc. (www.medcohealth.com) is the 
nation's largest pharmacy benefits manager, based on its 2002 net 
revenues of approximately $33 billion. Medco Health assists its 
customers to moderate the cost and enhance the quality of 
prescription drug benefits provided to millions of members 
nationwide. Its customers include private and public-sector 
employers and healthcare organizations, including about 190 of 
the Fortune 500 companies. (source: company press release)

Why We Like It:
The early excitement over the MHS IPO and the passing of the 
Medicare Prescription Drug Benefit bill is over.  Shareholders 
may now be more concerned with keeping some of their early won 
profits instead of watching them evaporate under new fears.  
Currently, MHS is still fighting with the government over a fraud 
case, which currently looks like will head to trial.  Prosecutors 
believe they have a very tight, well-researched case, which 
doesn't bode well for MHS.  However, the larger concern for MHS 
could be contract renewals.  The company has several major 
contracts up for renewal soon and after last week's surprise 
announcement from ABC about losing a major drug supply contract 
MHS shareholders could be worried it could happen to them.

We're going to use a TRIGGER at $32.94.  That's one cent below 
Friday's low.  If and only if MHS trades at 32.94 will we open 
the play.  More aggressive traders may want to consider failed 
rallies under $34.00-34.25 as potential entries.  Our initial 
target is the $30.00 level.  If triggered we'll open the play 
with a stop at $34.51.

Annotated Chart:


Picked on Jan xth  at $xx.xx <-- see trigger
Gain since picked:     +0.00
Earnings Date       00/00/00 (unconfirmed)
Average Daily Volume:    1.6 million





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

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


ACE Ltd - ACE - close: 41.15 change: -0.27 stop: 39.00

Hmm... Friday's performance was better than we'd expected.  
Shares of ACE appeared to form a short-term top on New Year's Eve 
and we were looking for the stock to consolidate back toward the 
$40.00 level.  Early strength on Friday was a surprise but 
resistance at $42.00 held again for the second time in two days.  
We still like the bullish trend in this insurance stock but 
traders might do better to wait for the dip to $40.00 and then 
buy the bounce.  We're going to keep our stop loss at $39.00.

Annotated Chart:


Picked on Dec 22nd at $40.05 
Gain since picked:     +1.10
Earnings Date       01/27/04 (unconfirmed)
Average Daily Volume:    1.3 million




---

CIT Group - CIT - close: 35.83  change: -0.12  stop: 33.98

With heavy equipment companies such as DE, CAT, CMI, and CNH 
printing red candles on Friday, CIT printed its own version of a 
red candle.  CIT provides financing for heavy-equipment 
purchases.  CIT's version was a dark-cloud cover, a type of 
candle in which price opens higher than the previous day's white 
candle, but then declines and closes at or below the midpoint of 
the previous day's range.  CIT barely met the criteria, closing 
exactly at the midpoint of Wednesday's range.  This tends to be a 
reliable reversal signal, and CIT does tend to pull back after 
giving reversal signals, so we expect that pullback to occur.

Oscillator evidence clouds the picture.  MACD pushed up through 
its descending trendline, and Friday's action did not turn it 
back down again.  RSI did hook over, however, and the fast 
stochastics line did, too.  Stochastics did not produce a bearish 
kiss and neither stochastics nor RSI was pulled down out of 
territory indicating overbought conditions.  

Still, we think it likely that CIT may be headed down to test its 
gap and establish support.  We're keeping our stop at $33.98.  
Pullbacks to and bounces from the bottom of the rising channel 
near $34.50 would be possible new entries, but verify that volume 
is higher on bounces than on declines before entering.

Annotated Chart for CIT:


Picked on Dec 12 at  34.05
Change since picked: +1.78
Earnings Date:    01/22/03 (unconfirmed)
Average Daily Volume:  879 thousand




---


Marathon Oil - MRO - close: 33.25  change: +0.16 stop: 32.49*new*

MRO went into consolidation mode this week, with Friday's candle 
continuing that consolidation.  We note upper shadows on the last 
three candles and a flattening MACD to go with those upper 
shadows.  As we've mentioned before, MRO has far outstripped its 
rising moving averages, and hasn't slipped down to reestablish 
support at its 10-dma for two weeks, so we think it's probably 
time for that test to occur.  We're raising our stop to $32.49, 
just below the rising 10-dma.  Because $33.75 represents both our 
first target and possible resistance from the weekly chart, and 
because MRO has outstripped those moving averages by such a great 
distance, it's possible that MRO will retreat more deeply.

The XOI Oil Index also consolidates, but its consolidation takes 
place just above recently surmounted resistance at 560.  Like 
MRO, however, the XOI has outstripped its moving averages and may 
be due for a pullback.  Bounces from MRO's 10-dma still offer 
possible new entries, but those entries remain risky with $33.75 
resistance just overhead.  Some might prefer to wait for momentum 
entries on breakouts above that resistance, confirming a volume 
expansion on the breakout.

Annotated Chart for MRO:


Picked on Dec 05 at  30.22
Change since picked: +3.03
Earnings Date:    01/27/04 (confirmed)
Average Daily Volume:  1.2 million





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


Abercrombie & Fitch - ANF - cls: 24.15 chng: -0.56 stp: 25.25

Through the last two weeks of December, our ANF play has been 
rather tedious, consistently grinding higher, right up to the $25 
resistance level.  The bears stood their ground on Wednesday, 
turning back a bullish advance on that level and then they really 
leaned on the stock on Friday, completing the reversal from 
resistance with a 2.26% drop.  Adding to the bearish tone, the 
stock closed back under the 20-dma ($24.42), with daily 
Stochastics (5,3,3) giving a bearish cross and it looks like this 
is the rollover we've been waiting for.  Traders that took 
advantage of the rollover from resistance likely got the best 
possible entry into the play.  Another failed bounce and rollover 
below $25 can be used for fresh entries, while momentum traders 
will need to wait for a break back under $23.90 before playing.  
Recall that there is potential support near $23 enroute to our 
initial $22 target, just below the bottom of the January 2003 
gap.  Continue to monitor the Retail index (RLX.X) for weakness, 
which will confirm overall sector weakness, adding to the 
pressure on shares of ANF.

Picked on December 14th at  $24.59
Change since picked          -0.44
Earnings Date              2/17/04 (unconfirmed)
Average Daily Volume =    2.25 mln




---


Guess?, Inc. - GES - close: 12.00 change: -0.07 stop: 13.40

Look at the closing numbers and you'd think that nothing much 
happened with our GES play on Friday.  You'd be way off base, 
though.  The stock surged sharply higher at the open, buoyed by 
the positive market sentiment after an uneventful (from a 
terrorism standpoint) New Year.  When the initial buying surge 
ran out of steam near the $12.85 level though, there was nothing 
to hold the stock aloft.  The initial plunge took GES down to 
about $12.10 and when the initial bounce attempt failed, the 
stock fell to close at $12.00, only a penny above its intraday 
low.  So while no progress was made on a closing basis, it is 
clear that strong resistance exists just below the $13.00 level.  
The Retail index (RLX.X) got hit by a strong wave of selling as 
well, as price reversed abruptly from above the $382 level to 
lose more than 2% by the closing bell.  Recall that we're using a 
trigger for the play at $11.80, so we haven't been triggered yet.  
Wait for the break below that level before playing, looking for 
initial support to be found near $11.00 enroute to our initial 
target at $10.  Look for continued weakness from the RLX to 
confirm new entries.  Maintain stops at $13.40.

Picked on December 31st at  $12.07
Change since picked          -0.07
Earnings Date                  N/A
Average Daily Volume =       229 K





============
CLOSED PLAYS
============

  --------------------
  Closed Bullish Plays
  --------------------

D.R. Horton Inc. - DHI - close: 41.57 change: -1.69 stop: 41.50

While the rest of the market has held firm over the past week, 
Housing stocks have come under some pretty in recent days.  DHI 
looked like it might hold onto support near the $43 level on 
Wednesday, but Friday's 3.3% slide in the $DJUSHB index was just 
too much.  The stock followed suit with its own loss of $3.9%, 
ending below the 50-dma again on very strong volume.  Despite the 
close above our $41.50 stop, the intraday low of $41.39 violated 
that stop, so we've no choice but to drop the play.  If still 
holding open positions, look for a rebound on Monday (similar to 
what was seen on December 11th) to provide for a more palatable 
exit point.

Picked on December 17th at  $42.69
Change since picked          -1.12
Earnings Date              1/15/04 (unconfirmed)
Average Daily Volume =    1.43 mln





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

============
CLOSED PLAYS
============

  --------------------
  Closed Bearish Plays
  --------------------

Netease.com - NTES - close: 40.91  change: 3.99  stop: 39.51

With China's Shanghai Composite climbing 1.35 percent and Hong 
Kong's Hang Seng gaining 1.79 percent in Friday's trading, the 
stage was set for a strong performance in Chinese Internet-
related stocks.  SOHU, SINA, CHINA, NTES, and even small cap ZICA 
participated.  NTES soared on strong volume.  Unfortunately, 
those gains erased early-week weakness in NTES and popped it 
above our stop.  The 50 percent retracement of the year's rally 
has proven to be support too strong to be easily broken.

Friday's gains turned up RSI, and MACD even shows a tendency to 
hook up from below signal.  Most troubling to those short the 
stock, however, was the close above the 200-dma and the round-
number resistance at $40.00.

Picked on Dec 10 at  38.96
Change since picked: +1.95
Earnings Date:    10/28/03 (confirmed)
Average Daily Volume:  4.6 million





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

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

MRX splits shares 2-for-1

During today's trading session, Medicis Pharmaceutical (NYSE:MRX) 
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 23rd, 2004 
to shareholders on record as of January 12th.  On a post split 
basis, MRX will have approximately 55 million shares outstanding.

About the company:
Medicis is the leading independent specialty pharmaceutical company in 
the United States focusing primarily on the treatment of 
dermatological, pediatric and podiatric conditions, and aesthetics 
medicine. Medicis has leading branded prescription products in a 
number of therapeutic categories, including acne, asthma, eczema, 
fungal infections, hyperpigmentation, photoaging, psoriasis, rosacea, 
seborrheic dermatitis and skin and skin-structure infections. The 
Company's products have earned wide acceptance by both physicians and 
patients due to their clinical effectiveness, high quality and 
cosmetic elegance. (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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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.




PremierInvestor.net Newsletter          Weekend Edition 01-04-2004
                                                    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 January 5, 2004
   - 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 January 5th
==========================================

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

Symbol  Co               Date           Comment      EPS Est

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

SONC   Sonic Corp.           Mon, Jan 05  After the Bell      0.30
WAG    Walgreen              Mon, Jan 05  -----N/A-----       0.25


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

STZ    Constellation Brands  Tue, Jan 06  After the Bell      0.79


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

MON    Monsanto Company      Wed, Jan 07  Before the Bell     0.01
RI     Ruby Tuesday          Wed, Jan 07  After the Bell      0.33
SDX    Sodexho Alliance S.A. Wed, Jan 07  Before the Bell      N/A


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

AA     ALCOA Inc             Thu, Jan 08  After the Bell      0.34
EMMS   Emmis Communications  Thu, Jan 08  Before the Bell     0.14
INFY   Infosys Tech LTD      Thu, Jan 08  After the Bell      0.51
LNR    LNR Property          Thu, Jan 08  Before the Bell     0.80
MSM    MSC Industrial Direct Thu, Jan 08  -----N/A-----       0.22
RPM    RPM International Inc Thu, Jan 08  After the Bell      0.29


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

None


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

Symbol  Co Name              Ratio    Payable     Executable

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 5:4      Jan   2nd   Jan   5th
NRGY    Inergy GP, LLC            2:1      Jan  12th   Jan  13th
HRBT    Hudson River Bancorp, Inc 2:1      Jan  15th   Jan  16th
TARR    Tarragon Realty Investors 5:4      Jan  15th   Jan  16th
FRK     Florida Rock Industries   3:2      Jan  16th   Jan  19th


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

The first full week of 2004 is full of economic reports.  Vehicle
sales on Monday, ISM on Tuesday, Same-store sales on Thursday and
that's just a few on the list.  Plus, investors will be preparing
for the next earnings season.


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

----------------
Monday, 01/05/04
----------------
Auto Sales (NA)            Dec  Forecast:    5.7M  Previous:     5.6M
Truck Sales (NA)           Dec  Forecast:    8.0M  Previous:     7.8M
Construction Spnding(DM)   Nov  Forecast:    0.5%  Previous:     0.9%


-----------------
Tuesday, 01/06/04
-----------------
Factory Orders (DM)        Nov  Forecast:   -1.4%  Previous:     2.2%
ISM Services (DM)          Dec  Forecast:    60.8  Previous:     60.1


-------------------
Wednesday, 01/07/04
-------------------
None


------------------
Thursday, 01/08/04
------------------
Initial Claims (BB)      01/02  Forecast:    345K  Previous:     339K
Wholesale Inventories (DM) Nov  Forecast:    0.5%  Previous:     0.5%
Consumer Credit (DM)       Dec  Forecast:   $4.6B  Previous:    $0.9B
December Same-Store Sales reports


----------------
Friday, 01/09/04
----------------
Nonfarm Payrolls (BB)      Dec  Forecast:    140K  Previous:      57K
Unemployment Rate (BB)     Dec  Forecast:    5.9%  Previous:     5.9%
Hourly Earnings (BB)       Dec  Forecast:    0.2%  Previous:     0.1%
Average Workweek (BB)      Dec  Forecast:    33.9  Previous:     33.9


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

TOT     Total Sa (ADS)             93.06    +0.55
MRK     Merck & Co                 46.90    +0.70
PTR     Petrochina Co Ltd (ADS)    62.91    +5.86
GSK     Glaxosmithline Plc (ADR)   46.82    +0.20
SNP     China Petro & Chem (ADS)   49.80    +5.39


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

None


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

INFY    Infosys Technologies (ADS) 99.00    +3.60
VIP     Vimpel Communcation (ADS)  74.50    +1.00


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

CAH     Cardinal Health Inc        59.83    -1.33
ABC     Americourcebergen Corp     53.84    -2.31
MUR     Murphy Oil Corp            63.83    -1.48

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

None



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



DISCLAIMER

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