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Daily Newsletter, Monday, 01/12/2004

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PremierInvestor.net Newsletter                   Monday 01-12-2004
                                                    section 1 of 2
Copyright (c) 2004, 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:  Earnings Eagerness
Watch List:   Techs Lead Again

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     01-12-2004            High     Low     Volume Advance/Decline
DJIA    10485.18 + 26.29 10491.63 10444.15 2.84 bln   1735/1115
NASDAQ   2111.78 + 24.86  2112.52  2085.15 2.27 bln   2061/1050
S&P 100   559.41 +  2.86   559.61   556.22   Totals   3796/2165
S&P 500  1127.23 +  5.37  1127.85  1120.90
RUS 2000  583.01 +  7.81   583.01   575.20
DJ TRANS 3019.28 + 30.34  3023.20  2987.79
VIX        16.82 +  0.07    17.46    16.79
VXO        16.25 +  0.31    17.05    16.17
VXN        22.56 -  0.45    24.26    22.45
Total Volume 4,495M
Total UpVol  3,245M
Total DnVol  1,183M
52wk Highs     915
52wk Lows       13
TRIN          1.01
PUT/CALL      0.79
===============================================================

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

Earnings Eagerness
by James Brown

Once again tech stocks lead the rally as investors eagerly await
the Q4 earnings season to hit full swing.  Consensus estimates
are for a 20% to 22% jump in quarterly earnings and it is this
strong level of optimism that helped the markets weather such an
abominable jobs report last Friday.  The NASDAQ closed Monday
with a 1.19% gain settling at 2111.  The Dow Jones Industrials
added just 26 points or 0.25% to close at 10485 and the S&P 500
inched up 5 points.  Backing up the NASDAQ's gains was strong
buying across the various tech sectors with internets,
semiconductors and networking issues drawing the most interest
all of which were up more than three percent.

European markets were generally lower on the session as the
dollar managed some meager gains against the euro and the British
pound despite hitting new lows intraday.  The Japanese markets
were closed for a holiday.  I did notice that the gold and silver
index was down 1.65% even though February gold futures were only
off 20 cents to $426.60 an ounce.  As a matter of fact silver hit
new six-year highs with an intraday peak of $6.71 an ounce before
closing at $6.617.  Recent discussion in the rise of silver
suggest a strong part of the metal's rally is being driven by the
global economic recovery.  Of course that recovery may begin to
stumble if oil doesn't halt its current climb.  Crude oil rose
another 41 cents to $34.72 a barrel on Monday.

Investors have a right to feel cautious given the overextended,
way-overdue-for-a-pullback conditions in the major indices but
the market internals today were very bullish.  There were 17
advancers for every 11 decliners on the NYSE and winners had a 2
to 1 edge over losers on the NASDAQ.  New highs hit 815 compared
to just 16 new lows on the two exchanges.  Overall volume was
decent but more importantly up volume was nearly twice down
volume on the NYSE and more than four times down volume on the
NASDAQ.  I will note that the volatility indices added to
Friday's gains but that might be explained by this Friday's
triple-witching expiration and some increased put buying from
investors seeking to protect positions from any earnings
disasters.

Chart of the DJIA:



Chart of the NASDAQ:



As is typical during any earnings week there were plenty of story
stocks but some of the bigger headlines were produced by broker
ratings.  Merck & Co (MRK), a Dow component, was the second worst
performer in the $INDU losing 2.6% to close at $45.90.  The drop
was spurred by bearish comments from Credit Suisse First Boston
who downgraded the stock from "neutral" to "under perform".  The
CSFB analyst felt the company's estimates were too optimistic for
its domestic sales and a pipeline with not enough new candidates.
This put pressure on the DRG drug index, which marked its third
day of losses.

CSFB wasn't so critical of Merck's rival Bristol-Myers Squibb
(BMY).  The broker raised their rating from "under perform" to
"neutral" believing BMY is better positioned for growth with a
number of drugs currently in development.  Another drug company
making news is Dendreon (DNDN), which soared 25% to $11.44.  DNDN
offered very promising results from its Phase III trials on
Provenge, a treatment for patients with advanced prostrate
cancer.  The report unveiled an 89% success rate in increased
survival time for those patients with less aggressive forms of
the disease (Reuters).  The company expects to complete its
current Phase III trials in late 2004 to early 2005 and hopes to
get Provenge on the market in 2005.  At least one analyst firm
followed up the news with a "strong buy" for DNDN.

We can blame broker ratings for the best and worst performers in
the Dow Jones Industrials today as well.  The worst performer was
Alcoa (AA), which closed down 3.4% to $35.97.  A Prudential
analyst cut the stock to an "under weight" from "neutral weight"
claiming that aluminum prices would likely fall and AA would
probably miss its 2004 and 2005 estimates.  Meanwhile the best
performing Dow component was Caterpillar (CAT).  CAT turned out a
2.48% gain bouncing strongly from its $80 level of support after
Merrill Lynch raised their Q4 earnings estimates.  We'll get to
hear CAT's results on January 23rd.

Odds are that tomorrow will bring more of the same.  An after the
bell earnings pre-announcement tonight by StorageTek (STK) should
keep tech stocks in the spotlight.  STK believes that profits
will surpass 55 cents a share on revenues of more than $650
million for the quarter.  Analysts had been looking for 50 cents
a share on just $603 million.  The stock was trading sharply
higher in after-hours markets and this news could easily fan the
flames for the rally in disk drives, storage and hardware stocks.

Economists will also be looking for the latest data on import and
export prices for December tomorrow morning but these reports are
rarely market-moving events.  Wednesday is another story with the
PPI for December, the trade balances for November and the Fed's
Beige Book report.  We'll also be hearing plenty of chatter about
the major earnings announcements due out the rest of the week.
Wednesday brings us Delta Airlines (estimates -1.67/share), Apple
(estimates +14 cents/share), Intel (estimates +28 cents/share)
and Yahoo! (estimates 11 cents/share).  Thursday we'll hear from
Sun Microsystems (estimates -0.04 cents/share) and Bank of
America (estimates +1.77/share).  Before the bell on Friday we'll
hear from General Electric who is expected to turn in 45 cents a
share.

Trade carefully.  Investors are holding stocks with the
expectation that earnings will be a blow out.  Even if they
deliver on the fourth quarter numbers if companies fail to guide
higher it could be a painful run for the exits.


================
Play of the Day
================

With the new year we've decided to implement some improvements
to the Premier Investor Newsletter.  Instead of providing just
one "play of the day" we are going to provide a daily watch
list instead.  This will provide you the reader with MORE
candidates to watch for potential moves the following trading
session.


==================================================================
WATCH LIST
==================================================================

The PremierInvestor.net watch list is not designed to be read
as full fledged stock picks.  Rather we would prefer to offer
it as an extra tool in today's investor toolbox.  Think of it
as a radar screen with your own radar operator pointing out
interesting developments, technical patterns or potential plays
that you may or may not have seen on your own.  Due to time
constraints we do glance at the news but rarely do we have
time to fully read pertinent news stories, due background
research and other necessary screens that investors should do
before making a decision.  A common exercise is to read the
entry, glance at the sector and other stocks in that industry
and then compare what's happening in the stock to what's
happening in the broader market indices.  We hope you enjoy
the Watch List and that it proves to be a useful tool for your
own trading success.

STOCKS WORTH WATCHING
---------------------------------

Lowes Companies - LOW - close: 26.34 change: +0.52

WHAT TO WATCH: Pressured by the weakness in the housing sector
over the past week, shares of LOW are on the verge of a
significant breakdown.  If the 200-dma fails as support, the
stock should quickly seek out next support near $47.50-48.00.  If
the sector continues to trade poorly, we can even look for a
decline towards strong support at $45-46.




---

CDW Corporation - CDWC - close: 68.12 change: +4.21

WHAT TO WATCH: The bulls rejoiced on Monday, sending CDWC soaring
through resistance to a more than 6.4% gain on very strong
volume.  That represents a break through resistance all the way
back to late 2000.  With earnings looming large on January 21st,
we could be looking at continued strength over the next week.
Aggressive traders can chase the stock higher, but the more
prudent approach would be to wait for a pullback near the $64-65
level first.  Initial resistance is found near $70, and then we
can look for a rally up towards the $75 level.



---

MBIA Inc. - MBI - close: 62.15 change: +2.52

WHAT TO WATCH: After finding strong resistance at $60 for the
past few months, shares of MBI broke out on very strong volume on
Monday, closing well above that mark and at new all-time highs.
A pullback to confirm that old resistance as new-found support
will set up attractive entries as the stock soars into blue-sky
territory.  Earnings are in early February.




---

Xilinx, Inc. - XLNX - close: 42.47 change: +2.02

WHAT TO WATCH: While it isn't for the faint of heart, XLNX has
been outperforming the overall Semiconductor sector (SOX.X) for
some time now.  The stock assumed that leading role again on
Monday, posting a 5% gain to move through the bulk of its
resistance from 2002.  It looks like the bulls have now set their
sights on challenging those highs near $47, so aggressive traders
may want to go for the gusto and chase it higher into its
earnings report next Wednesday.




---

===================
On the RADAR Screen
===================

FDX $68.19 - Was it a bear trap?  Following Friday's breakdown
below the 200-dma, shares of FDX gapped higher on Monday and
finished strong with a 4.8% gain, ending well above the 200-dma
on strong volume.  If it was a bear trap, we can look for
continue strong buying to propel the stock through resistance at
$70 to test stronger resistance in the $72-73 area.  That could
make for a quick little hit and run play.

HAR $76.00 - There seems to be no end in sight for the rally in
HAR.  Even after its 2-1 split last month, the stock has just
consolidated near its highs.  Monday's session saw a major
breakout over $76 resistance on strong volume.  Once again at new
highs, HAR looks like it still wants to run.  Note that there's
just over 2 weeks until earnings on 1/28.

PMCS $22.65 - As we enter earnings season, momentum favorites of
old are coming into play.  PMCS is on the verge of a breakout to
new 52-weeks highs.  Trigger on a breakout over $23 and target a
move into the $26-27 area ahead of earnings next Monday.


=================================================================
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 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                   Monday 01-12-2004
                                                    section 2 of 2
Copyright (c) 2004, All rights reserved.
Redistribution in any form is strictly prohibited.

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

Stop Loss Updates:  None
Closed Plays:   ELAB, MHS


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


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

None


==================================================================
Closed Plays
==================================================================

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

Eon Labs Inc. - ELAB - close: 50.37 change: +3.81 stop: 49.50

We should probably be thankful that ELAB never gave us a decent
entry point, especially after today's 8% surge.  Recall that we
were looking for a failed rally in the $47-48 area.  The stock
never quite got there on Friday and then today it gapped right
through that zone, opening above $49 and quickly tripping our
$49.50 stop.  Driving the sharp upward move was the company's
raised guidance.  The increase was a significant too, with new
estimates of 38-41 cents per share vs. the old guidance of 33-36
cents.  We'll count ourselves lucky in not being in the play and
let this one go.

Picked on January 7th at    $45.65
Change since picked          +4.72
Earnings Date              2/19/04 (unconfirmed)
Average Daily Volume =       284 K




---

MedcoHealth Solutions - MHS - close: 34.40 chg: +1.46 stop: 34.51

Argh!  Shares of MHS looked poised for yet another move lower
after failing three times in as many days at its simple 10-dma
last week.  Unfortunately, Monday brought an unexpected upgrade
from Lehman Brothers.  LEH raised their rating from "equal
weight" to "over weight" and raised their price target from $33
to $40.  Shares of MHS quickly climbed to $34.80 and stopped us
out.

Picked on Jan 5th  at $32.94
Gain since picked:     +1.36
Earnings Date       02/11/04 (confirmed)
Average Daily Volume:    1.6 million




==================================================================
  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)             91.30    +0.87
XOM     Exxon Mobil Corporation    40.86    +0.57
SBC     SBC Communications Inc     26.83    +0.63
CAJ     Canon Inc (ADR)            49.08    +0.63
BAY     Bayer Aktien               31.43    +0.54


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

SKS     Saks Holdings Inc          16.38    +1.01
LPX     Louisianna-Pacific Corp    20.00    +1.20
TKLC    Tekelec                    18.90    +1.39
ALGN    Align Tech Inc             19.79    +1.29
THOR    Thoratec Corporation       15.47    +1.04


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

NAB     National Australia Bank   118.50    +1.68
OXY     Occidnetal Petro Cp        44.15    +1.15
PBR     Petroleo Brasileiro Sa     33.99    +1.03
FDX     Fedex Corp                 68.19    +3.15
KB      Kookmin Bank               42.69    +2.29


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

PTR     Petrochina Co Ltd (ADS)    49.95    -4.13
SNP     China Petro & Chem (ADS)   40.00    -3.90
LOW     Lowe's Companies Inc       51.51    -1.49
AA      Alcoa Inc                  35.97    -1.28
MTB     M&T Bank Corp              92.99    -1.88


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

PFE     Pfizer Inc                 35.61    -0.45
ENL     Reed Elsevier Nv           24.64    -0.32
ESPD    Espeed Incorporation CI A  22.54    -0.60

=================================================================
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 2004  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.

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