Option Investor
Newsletter

Daily Newsletter, Monday, 01/05/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter          Weekend Edition 01-05-2004
                                                    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:      Greenspan Says No New Bubble
Play of the Day:  The Home Stretch

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     01-05-2004            High     Low     Volume Advance/Decline
DJIA    10544.07 +134.22 10544.07 10411.85 2.01 bln   1941/ 931
NASDAQ   2047.36 + 40.68  2047.36  2020.78 2.34 bln   2082/1025
S&P 100   557.31 +  7.32   557.31   549.99   Totals   4023/1956
S&P 500  1122.22 + 13.74  1122.22  1108.48
RUS 2000  568.92 +  8.07   569.48   560.85
DJ TRANS 3028.63 + 20.47  3031.56  3007.76
VIX        17.49 -  1.16    18.49    17.44
VXO        16.71 -  1.88    17.85    16.69
VXN        23.89 -  0.94    25.29    23.76
Total Volume 4,750M
Total UpVol  3,514M
Total DnVol  1,116M
52wk Highs    1135
52wk Lows       12
TRIN          0.65
PUT/CALL      0.68
===============================================================

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

Greenspan Says No New Bubble
by James Brown

The first real day of trading for 2004 started with a bang as
U.S. markets launched to an early start as investors breathed a
sigh of relief that there were no terror events over the weekend.
Today's rally was very broad based and fueled by almost forty
fresh broker upgrades, many of them targeting tech stocks.  Some
positive news from the semiconductor industry and encouraging
comments from Bernanke and Greenspan over the weekend helped set
the stage.  Last week the S&P 500 ended its sixth consecutive
weekly gain, the longest streak in nearly six years, and if
Monday's performance is any indication we may see a seventh week.

The U.S. markets weren't the only ones making headway.  The first
Monday in 2004 witnessed global markets also ending with gains.
The Asian exchanges were very strong with the Japanese NIKKEI
adding 148 points to close at 10,825, despite a new three-year
low for the dollar against the yen.  The Hong Kong Hang Seng
index soared 203 points to break above the 13,000 mark.  European
exchanges turned in more muted gains with the English FTSE up 3
to 4513 and the German DAX up 17 to 4035.

Market internals here at home were very bullish.  28 out of the
30 Dow components closed higher.  Altria (MO) and Wal-Mart (WMT)
were the only losers.  Money managers put their funds to work in
technology stocks with strong gains across the board for
semiconductors, software, internets, hardware and networking.
Wall Street firm SG Cowen helped set the mood with a number of
upgrades.  Cowen raised chip stock KLAC, PC maker DELL and
software giant MSFT to "strong buy".  The advance-decline figures
closed with 19 winners for every 9 losers on the NYSE and 20
advancers for every 10 decliners on the NASDAQ.  We also saw a
return of volume with more than 2 billion shares trading on both
exchanges (4.3 billion total).  More importantly up volume was
better than 3 times down volume on the NYSE and more than 2.6
times down volume on the NASDAQ.  Joining the advance was crude
oil; up $1.26 to $33.78 a barrel and February gold futures added
$8.70 to close at $424.80 an ounce.

Chart of the DJIA:



Chart of the NASDAQ:



Wall Street did have some economic numbers to absorb today with
the December auto and truck sales figures and the November
construction spending data but all three reports were
overshadowed by this weekend's comments from Fed governor Ben
Bernanke and Fed chairman Alan Greenspan.  In a speech on Sunday,
Bernanke essentially reassured investors that the FOMC would do
whatever it takes to leave interest rates low and keep the
domestic economic recovery on track.  He also reiterated that the
government was not concerned over the U.S. dollar's decline and
suggested that the greenback's open market slide has been
"orderly".  Furthermore there was little reason to worry about a
"crisis" for the dollar.

His words helped grease the dollar for yet another decline on
Monday and currency traders were happy to oblige.  The U.S.
dollar hit a new all-time low against the euro trading near
$1.2679 after hitting $1.2697 midday.  The greenback fell to an
11-year low against the British pound and a new three-year low
against the Japanese yen despite the Bank of Japan's attempt to
slow the drop by selling yen.  By the end of the day the dollar
had dropped against all 16 major currencies.

Yet stock investors continued to turn a blind eye to the dollar's
woes.  Any why not?  Greenspan essentially gave them a free pass
with his comments over the weekend.  He said that we were NOT in
a new bubble (emphasis mine).  In fact he congratulated the Fed's
approach to dealing with the bubble's "consequences" and not the
bubble itself as having been successful.

There were plenty of stocks making headlines today.  Leading the
pack was Siebel Systems (SEBL).  The software vendor, known for
its "eBusiness" applications that help companies run call centers
and track customers, raised its fourth quarter estimates.  SEBL
now expects sales to jump six percent above its October
projections with earnings-per-share numbers to rise by five
percent.  This equals about 8 cents a share on revenue of $365
million.  Investors greeted the news enthusiastically as new
evidence that a turnaround in IT spending was indeed underway.
Shares of SEBL added 10 percent to close at $15.39 while the
software sector (GSO.X) added 3.49%.

The semiconductor sector turned in a strong session as well with
the SOX adding 3.6%, surging strongly off the 500 level.
Powering the move was a new report from the Semiconductor
Industry Association (SIA) who reported that worldwide chip sales
in November rose 26% from a year ago to $16.1 billion.  This was
the fourth monthly gain in a row with strong growth in flash
memory, up 11.2%.  As mentioned earlier, chip equipment maker
KLA-Tencor (KLAC) enjoyed a fresh "strong buy" rating from SG
Cowen.  The analyst at the Boston firm actually raised both KLAC
and AMAT to "strong buy" ratings on his belief that semiconductor
manufacturers will raise capex spending by 40 percent this year.

Serving up its own "blue-light special" today were shares of
Kmart (KMRT).  The company reported that its November and
December sales numbers had been very strong and that strict
inventory management had resulted in "significant profit".  The
company reemerged from bankruptcy last May and shares began
trading under the new symbol last June.  The "profit" will be
close to $200 million, before a $50 million one-time profit from
real estate.  This is encouraging news but sales have continued
to slump with same-store sales dropping 13.5% and total sales
falling 26% to just $5.1 billion.  Yet investors were too
enamored with the idea of a profit and got a little excited as
the stock soared 26.6% (more than $6) to $29.12.  Its larger
rival Wal-Mart (WMT) also made some after-market news by
announcing a $7 billion stock buyback program to replace an
earlier $5 billion plan.

Tomorrow should be interesting.  We might get some more news from
the 2004 Detroit car show that opened today.  The field is
growing crowded with a number of new product launches but
investors rewarded shares of GM, F and DCX with gains today.
Meanwhile Wall Street will be looking for the ISM services index
to come in at 60.8 for December, above its 60.1 reading for
November.  We'll also hear from the November factory orders
report, which is expected to slip after last month's 2.2% gain.
We could end up seeing a "sell the news" reaction no matter what
the ISM Services index comes out to be but historical trends
suggest the first several days of January are normally bullish
ones.  Right now there is a lot of excitement that the upcoming
fourth quarter earnings season will unwrap a number of positive
surprises but odds are very good that we will see some strong
sell the news reactions in response no matter what those earnings
results turn out to be.  Look for Dow component Alcoa (AA) to
open earnings season with its own report on Thursday after the
close.



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

Nextel Comms - NXTL - close: 28.94 change: +1.08 stop: 27.50*new*

Company Description:
Nextel has come a long ways since its humble beginnings as a radio
dispatch company.  Providing mobile phone service, two-way radio
dispatch, and paging services to business users; all through one
Motorola handset, the company is growing into a major digital
wireless services provider.  NXTL's digital network (Digital
Mobile Network) constitutes one of the country's largest
integrated wireless communications systems utilizing a single
transmission technology.  NXTL has specialized mobile radio
spectrum holdings in and around every major business and
population center in the U.S., including all of the top 50
metropolitan areas.

Why we like it:
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.

Why This is our Play of the Day
There seems to be no end in sight to the rally in shares of NXTL,
as the stock once again broke to new recent highs on Monday,
helped along by strength in both the overall Wireless sector and
the broader NASDAQ.  After consolidating near $28 for the past few
sessions, the bulls charged ahead today, lifting the stock to just
below $29 and very near our eventual target of $30.  Recall that
the top of the February 2001 gap ($29.56) is likely to present
some stiff resistance the first time it is tested, so we want to
use a move into the $29.50-30.00 area to harvest gains and exit
the play.  Needless to say, with such a small distance between the
current price and that goal, we are NOT advocating new positions
at this time.  In order to keep the incremental risk/reward ratio
balanced, we're raising our stop to $27.50 tonight, which is just
below last Tuesday's intraday low and will be below the 10-dma
($27.32) by tomorrow.

Annotated Chart of NXTL:


Picked on November 26th at  $25.27
Change since picked          +3.67
Earnings Date              2/19/04 (unconfirmed)
Average Daily Volume =    12.9 mln
Chart:





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

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

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

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


Copyright ) 2003  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter          Weekend Edition 01-05-2004
                                                    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:  ACE, MRO, NXTL, NVDA, ANF, GES

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


ACE - long
Adjust from $39.00 up to $39.70

MRO - long
Adjust from $32.49 up to $32.90

NXTL - long
Adjust from $26.50 up to $27.50

NVDA - long
Adjust from $21.00 up to $22.00

ANF - short
Adjust from $25.25 down to $25.05

GES - short
Adjust from $13.40 down to $13.00


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

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

Value Plays With Bullish Signals
---------------------------------
Ticker  Company Name               Close     Change


XOM     Exxon Mobil Corporation    41.58    +0.95
C       Citigroup                  49.79    +0.79
TOT     Total Sa (ADS)             95.46    +2.21
SC      Shell Transport & Trading  45.99    +0.70
SBC     SBC Communications         27.05    +0.91


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

SEBL    Siebel Systems Inc         15.39    +1.40
BMC     BMC Software Inc           19.76    +1.11
RHAT    Red Hat Inc                19.57    +1.20
CIG     Comp Energetica Mines      19.85    +1.05
NET     Networks Associates Inc    16.00    +1.04

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

UBS     UBS. Ag Ord. Shares        69.55    +1.63
VZ      Verizon Communications     36.27    +1.02
COP     Conocophillips             67.25    +1.77
EBAY    Ebay Inc                   64.62    +1.62
SAP     SAP Ag (ADS)               44.38    +2.08

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

LLY     Eli Lilly & Company        70.19    -1.05
UNH     Unitedhealth Group Inc     56.20    -2.84
AFL     Aflac Inc                  34.95    -1.15
FO      Fortune Brands Inc         69.65    -1.15
ATH     Anthem Inc                 73.71    -2.57

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

LMT     Lockheed Martin Corp       50.09    -0.61
ZMH     Zimmer Holdings            69.37    -0.63
ACL     Alcon Inc                  59.35    -0.47
FPL     FPL Group Inc              64.19    -0.84
DG      Dollar General Corp        20.56    -0.24


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

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

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

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

Copyright 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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives