PremierInvestor.net Newsletter Thursday 01-15-2004 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: Confusion Reigns Watch List: MER, GENZ, TXN, AET Market Sentiment: Sell The What? ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 01-15-2004 High Low Volume Advance/Decline DJIA 10553.85 + 15.50 10592.74 10477.18 2.21 bln 1597/1650 NASDAQ 2109.08 - 2.10 2121.61 2088.10 2.22 bln 1646/1516 S&P 100 560.42 + 0.65 562.96 556.96 Totals 3243/3166 S&P 500 1132.05 + 1.53 1137.11 1124.50 W5000 11036.78 + 13.80 11080.04 10959.60 RUS 2000 586.36 + 0.24 587.31 579.30 DJ TRANS 3018.48 - 13.10 3032.01 3001.04 VIX 15.56 - 1.19 17.31 15.49 VXO (VIX-O)16.23 - 0.47 17.31 16.04 VXN 22.64 - 0.53 24.03 22.18 Total Volume 4,827M Total UpVol 2,413M Total DnVol 2,200M 52wk Highs 921 52wk Lows 12 TRIN 1.00 NAZTRIN 0.88 PUT/CALL 0.58 ================================================================= =========== Market Wrap =========== Confusion Reigns Good news, Bad news and news overload all combined to confuse investors on Thursday. The earnings parade began with some tech leaders and while the earnings were good the guidance was questionable to some. Techs crashed, soared and crashed again as volatility returned to the stock market. Expectations for more tech earnings after the close today kept a floor under the afternoon selling. After yesterday's news you would have expected the opposite. Earnings runs appear to be alive and well. Dow Chart - Daily Nasdaq Chart - Daily The markets are in "hold your breath" mode as we await the various earnings announcements. With each release there is the normal rapid fire trading as winners and losers quickly exchange shares while the talking heads on TV weigh the opposing benefits of each line item on the announcement. The magnitude of the tech announcements over the last two days has left tech investors in a daze. There were four big techs last night, IBM this morning and four more techs tonight. The consensus of opinion on tech earnings appears to be the 4Q was a decent quarter with strong buying in December. The general guidance is positive with comments like "starting to see a pickup in IT spending" and several firms have raised their outlook. If everything is so positive then why did the markets end flat today? First we need to review the economics for the day. You could not have asked for better results in most cases but there are still some questionable signs about the recovery that worry analysts. Jobless Claims continued to fall at 343,000 and a drop of -11K for the week. The four-week moving average fell to 348,000 and the first time under 350K since early 2001. Continuing claims also fell to 3.13 million and that suggests we may be seeing some hiring. If historical trends continue we should see a pickup in Nonfarm Payrolls soon. In 1992 during the last post war recovery we saw a sharp pickup in new jobs once claims fell under 350K a week. Still far too soon to draw conclusions but we are on the right track. The Consumer Price Index only rose +0.2% in December and the Core rate rose only +0.1%. This makes the core inflation rate for all of 2003 only +1.1% and a 40-year low. The index should slow again for January after the impact of mad cow on our beef prices. The headline inflation rate of +1.9% is a 16-year low. The Fed is on track with the claim of no inflation in sight despite the rapid acceleration in commodity prices. However, inflation tends to appear suddenly and you can bet it will not stay at multi-decade lows for long if this recovery really catches fire. But, that is a problem for the post election Fed. The NY Empire Manufacturing Survey soared to 39.2 and a record high. This was well above the consensus estimate of 34.5. The manufacturing industry in New York suddenly seems to be exploding with 86% of survey respondents reporting new orders last month. Shipments have increased for five consecutive months. Prices paid jumped to 28.2 from 12.5 but prices received only rose to 3.9 from -1.0. Seeing a trend here? You can sell anything if you give it away. With costs rising but prices remaining low it will put a squeeze on profits if it continues. The employment component fell slightly but the average workweek jumped to 19.0 from 6.6. This suggests the need to add employees in the future now that hours are rising. The Philly Fed Survey echoed the results in the NY Survey. The headline number jumped to 38.8 from 30.2 when the consensus was looking for a slight decline to 29.0. This was the highest reading since 1993. Contrary to the NY Survey there were some larger signs of inconsistency. Employment fell along with the average workweek. The six-month outlook also fell. Unfilled orders fell to 10.7 from 15.5. New Orders dropped slightly and shipments fell to 33.1 from 39.6. The only component that rose materially was prices paid which again suggests a profit squeeze. The bottom line was an increasing manufacturing environment but increasing at a slower rate. The weak components could have been due to a seasonal influence but we have to wait until February to find out. The MAPI index of future business activity rose to 77 for December and suggests that manufacturing activity is about to surge. This was the highest number on record for the entire 31 years of the index. Typically the MAPI index predicts business conditions 3-6 months in the future. The MAPI index is a quarterly index and the prior number for the quarter ending in September was 68. The advance shipments component jumped to 91 for December. This projects shipments for the 1Q of 2004. Backlogs rose to 67% from 51% in Sept. Unlike the NY and Philly surveys the MAPI survey is a forecast based on the last quarter where the others are current conditions surveys. The monthly retail sales for December came in at +0.5% and below consensus of +0.8%. If you take out autos the increase was only +0.1%. This was not an exciting December but we already knew that from the weekly numbers. Were it not for the reported surge in the week before Christmas it would have easily been negative. While on the surface it looks bad it is deceiving. The headline number compares sales to the prior month. If you compare it to the prior December you get a healthy +6.7% growth. It is all in how you report it. It was the best fourth quarter for non-auto sales since 1999. Surprised? Oct/Nov were still seeing the cash from tax rebates and mortgage refinancing. Had it not been for December dragging down the numbers the quarter would have been much higher. This will create some seriously tough numbers for comparisons in 2004 for both the 3Q and 4Q. Economic reports due out Friday include Business Inventories, Industrial Production and Consumer Sentiment. What a day for stock news! I am not going to rehash the earnings from last night except to show how investors voted their approval. INTC -0.33, YHOO -0.30 and a big recovery from a -2.50 intraday loss. QLGC -2.68 and AAPL -1.35. The losses would have been a lot bigger had it not been for IBM and their strong earnings and guidance. This reversed the tech sector depression helped lead the markets back from the depths. IBM posted surprisingly strong results and by changing their release date after the close on Wednesday caught everybody off guard. Services contracts, which had been rumored to be a weak point in December, soared and beat estimates by a wide margin. The backlog of service orders rose to a monster $120 billion. IBM earned $1.56 per share with estimates only $1.50. Only $1.50? Obviously any company would be thrilled to earn $2.7 billion. For the first time in years IBM gave a long term outlook and suggested analysts were light on estimates. That put the squeeze on those suggesting that IBM was mired in problems and on those short the stock. The only real problem for those results was the currency translation issue. IBM reported a +9% jump in revenue to $25.9 billion. If you remove the currency impact that number drops to only a +1% gain at $23.9 billion. That is nearly a $2 billion windfall because of the low dollar. Obviously investors did not care that the headline numbers were so grossly misstated because IBM rose +3.71 to 94.05. Revenues from global services, 44% of IBM total revenue, increased +8% to $11.4 billion. However, the revenue gain for services was ENTIRELY due to currency translation. Software revenues grew +12% on the surface but only +2% without the currency benefit. Despite the strong earnings and strong gain in stock price I would not be surprised to see some weakness ahead as the numbers are reviewed. The gains on Thursday were obviously on strong short covering due to the headline number. Traders did not suddenly decide to buy 20 million shares just because they beat estimates by six cents on currency translation. I read the earnings report forward and backward and I cannot find ANY statement of how much of the EPS was due to currency translation. I guess they would rather we not know. Keep an eye on IBM over the next couple weeks. After the bell today we saw earnings from JNPR, SUNW, CREE, RMBS and TMTA. All met or beat estimates. CREE beat estimates by +2 cents and raised guidance. The chip sector had started the day out in the hole after Intel and a sector downgrade by SG Cowen. Smith Barney removed Intel from their focus list and added to the opening depression. CREE helped to change that sentiment with their guidance. CREE upped guidance for the current quarter to 17-19 cents per share when analysts were only expecting 15 cents. RMBS beat the street by three cents and said revenue for the current quarter would be slightly higher. TMTA posted a loss of -13 cents after items and inline with estimates. They guided analysts to a loss of 11-12 cents for the current quarter. The big guns were SUNW and JNPR. SUNW posted a smaller than expected loss but they refused to give any guidance. They said that business was pretty much on track and they had seen some upside surprise in the 4Q. CFO McGowan said the +14% sequential growth was the best quarter since 1998. The markets did not react strongly to Sun's earnings due to the lack of guidance. Scott McNealy did take a shot at IBM and their optimistic outlook. He said IBM must have a lot of economists on staff whose salaries are getting bundled into the price of IBM products. He said he couldn't see the future and unlike IBM he cannot predict future economic recovery. JNPR was the star of the after hours earnings show. They beat estimates by +2 cents and said they expect to easily beat analyst estimates for the 1Q. Whoa! JNPR said they expect to make +8 cents for the 1Q and that is +3 cents over current estimates. The conference call was positive and very upbeat. It is 1999 all over again except that customers are buying only what they need when they need it and that is keeping the sales healthy on an ongoing basis. JNPR has recently signed some big contracts and has partnered with Lucent to produce products helping them both. Business is good but they are trying not to get too excited just in case it changes. JNPR was the leading reason for an upsurge in futures after the close and they were still moving up at 8:PM. Intel said they were seeing an uptick in enterprise purchases and IT budgets were increasing. IBM suggested they were finally seeing the first signs of a real IT recovery. They had said last quarter that they were not. CREE upgraded guidance and JNPR hinted that they might double the estimates. Sure looks like the bulls are back. Happy days are here again seems to be the common thread from tech earnings, manufacturing surveys and inflation gauges. The Fed is on hold for the rest of 2004 or so the current conventional wisdom says. Bonds are moving up again and yields on the ten year note closed at 3.97% and a 3-month low. What is wrong with this picture? Even with all the good news the Dow gained barely +15 points and the Nasdaq finished in the red. That is actually good news considering the gap and crap at the open. The less than expected guidance from last nights earnings prompted a sell the news event that knocked the Dow back below 10500 and the Nasdaq back to 2088 before the buying began. The morning drop was swift and the afternoon rebound was strong but slower. Unfortunately the internals do not show the same strength. Volume was equally split between advancing and declining and it was heavy. Advancing and declining issues were even. The Dow, Nasdaq, Russell and Wilshire all set new 52-week highs by a handful of points but pulled back again at the close. The pullback was no surprise with more tech earnings on tap. After the morning drop I was surprised the pullback was not stronger on fear of those earnings. We are poised to breakout of the recent resistance highs. It is the third week of January and we have traded generally within 100 points of 10500 for the entire month. There has been no historical January dip and time is running out. Friday is option expiration and Monday is an exchange holiday. Next week is a massive deluge of earnings but we already know what they are going to say. All the factors are in place for a strong surge or a strong drop. Neither direction is a sure thing. The churning at the resistance highs is a potential sign of distribution. It represents indecision and proven by the return of volatility. This is good because it means the entire investing public is no longer bullish. There is a growing undercurrent of confusion. If you bought stocks over the last three months expecting strong earnings in January then you got your wish. Now what? So far the guidance has been for continued growth and those that were planning on selling the bounce are now thinking about holding until April. Those that were on the sidelines hoping for a nice dip to buy are trapped. Chase the new highs or continue sitting out? Tough question. I know the minute I go long the top will be in place. If I remain short we will go higher. Millions of others are thinking the same thing tonight. This is creating a very shallow bottom. You saw the drop on Tuesday to under Dow 10400. It was bought with reckless abandon once traders were sure it was not going deeper. Buyers are waiting. The only plateau we have not crossed to the upside is the Dow highs from 2002. The actual intraday high was 10673 but there was nearly a month of range bound trading between 10500 and 10650. Dow 10600-10650 is generally considered the critical resistance range from that period. Ironically we have traded for all of January in the same general range between 10500 and 10600 with only a couple minor dips to the downside. We have not yet tested 10600 completely with all four attempts to move over 10580 turned back. This means the jury is still out on any move higher. Until that 10600-10650 level is behind us we are still trapped in a range. The January expiration cycle could have had something to do with the gains since Tuesday's lows. In December we saw the same thing. The markets had gone higher than expected and option sellers were trapped with shorts that had to be covered. Countless traders probably rolled those positions forward thinking they could escape the trap for sure during the January dip. With no dip in January the trap is squeezing ever tighter. With Friday an expiration day and Monday a holiday there is no way to predict market direction. I am watching futures rise as I type this and it looks like we are going to gap open again tomorrow assuming GE earnings before the bell are not unbelievably bad. Since they almost never miss or warn I can't imagine that will happen. The three economic reports are probably not serious market movers considering the good news we have already seen this week. That leaves us watching for expiration gyrations with some possible profit taking before the close. On expiration Friday in December we had a gap open, intraday slump and a strong rally into the close. January expiration is a tossup and a day best watched from the sidelines. Entering new plays could be very risky. There is also the risk of being long over a three day weekend. Sounds like a good day to plan your trades for next week instead. Enter Passively, Exit Aggressively. Jim Brown Editor ================================================================== 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 --------------------------------- Merrill Lynch & Co. - MER - close: 59.59 change: +1.18 WHAT TO WATCH: MER didn't have enough strength on Thursday to break its own resistance near $60, but it is poised to do so if the Financial bulls can continue today's run. Use a trigger at $60.50 and target strong resistance in the $65-66 area. MER is set to report earnings next Wednesday, so keep that in mind in evaluating risk. --- Genzyme Corporation - GENZ - close: 52.64 change: +1.84 WHAT TO WATCH: Gaining an impressive 3.6% today, shares of GENZ accomplished something more important -- breaking 2 years worth of resistance at $52 and setting the stage for a rally up to challenge the stock's all-time highs just above $60. Either a pullback to $50 support or a continued breakout can be used for new entries depending on your risk profile. --- Texas Instruments - TXN - close: 33.65 change: +1.17 WHAT TO WATCH: As if the strength in the Semiconductor sector wasn't enough, TXN has been benefiting from the rise in the Wireless sector as well. With strong bullish trends in both sectors, it is no wonder TXN broke to a new recent high on Thursday. A pullback near $32 would be a gift of an entry point, ahead of a continuation up to next resistance near $35-36. Longer-term, the stock looks like it could run all the way to strong resistance near $40. Make a mental note that the company is set to release earnings on January 26th. --- Aetna Inc. - AET - close: 69.80 change: +1.56 WHAT TO WATCH: New highs, here we come. Ever since its selloff last summer, AET has been steadily working its way higher in a steady advance. The strong rally of the past two days has put the stock at a new closing high and just below its 7/30/03 all- time high ($70.25). Pullbacks into the $67-68 area can be used for rebound entries, while momentum traders will need to wait for a break above that July high. --- =================== On the RADAR Screen =================== ELBO $25.35 - Looking a bit suspicious in its price weakness the day after an upgrade to the video game companies, ELBO proceeded to drop into its early January gap today. Apparently the video game retailers aren't looking quite as healthy and ELBO looks headed for the $22.50 support area. LU $4.47 - LU is not a stock for the faint of heart and it hasn't been since falling from grace back in 2000. But with Networking stocks leading the pack higher lately, LU has been soaring and broke into the gap left behind in June of 2002. That opens the door for a rally towards the top of the gap and strong resistance near $5.00. It is definitely a "quick & nimble" play for the momentum set. GLW $12.42 - It's been easy finding strength in Networking- related stocks lately with the strength in the overall sector. GLW just capped off a strong rebound from the $10 area by breaking out to its best level since late 2001. And it looks like there really isn't strong resistance until the $13.50 area, which just happens to coincide with the top of the rising channel that has been in place since October of 2002. =============================== Market Sentiment =============================== Sell The What? - J. Brown Sell the News! I've been warning that investors are likely to sell the Q4 earnings news no matter how good the numbers are and that's exactly what we got today. Granted IBM was the exception this morning but investors were caught unawares by the surprise announcement when Big Blue was supposed to report next week. Fellow headliners Intel, Yahoo and Apple were all lower on the day but YHOO managed to pare its losses. Overall the markets were mixed. This heaviest selling hit the XAU gold & silver index again with a 4% loss on Thursday. This is the fourth consecutive day of losses. The index appears to have broken its rising channel and a number of gold stocks suddenly look like shorts breaking through support. Is it a bear trap or are gold bugs finally cashing in on the big ramp up in gold with a nascent bounce in the dollar forming? The XNG natural gas index was the second worst performing sector on the session with a 1.88% drop. The move doesn't look good for natural gas stocks as the rally appears to have run out of gas and the group looks ready to fall of a cliff. Other notable losers were the XAL airlines index and the OIX and OSX oil and oil services indices. The XAL took a hit after DAL dropped 5.59% on a downgrade from Deutsche bank. Meanwhile the OIX has been in a rocket-propelled rally higher and is finally starting to see some profit taking. Winners on the session were the NWX networking index (+1.77%), the BIX banking index (+1.55%), the XBD broker-dealer index (+1.21%) and the SOX semiconductor index (+1.61%). The NWX was up in anticipation of JNPR's earnings after the bell and the company beat estimates by 2 cents. Another strong day from Nortel (NT) and Lucent (LU) didn't hurt the sector any. The BIX was up on the JPM-ONE merger news and the XBD was up on the expectation for further consolidation and that means M&A fees. Evidently Intel did a good enough job with their post-earnings spin to give the SOX a lift even though shares of Intel closed lower. Today really was a toss up. The urge to sell on yesterday's earnings news was countered by last night's merger announcement and IBM's stellar earnings announcement this morning. Plus positive economic data with another week of lower initial jobless claims is a feel good boost for investor sentiment. The tug-of- war is evident in the NYSE advance-decline numbers with losers edging out winners nearly 8 to 7. The NASDAQ was closer with advancers nosing past decliners 16 to 15. Tomorrow we'll see more of the same but I believe investors may still have a bullish bias. GE's pre-market earnings report will influence the tone of the session and likely overshadow the handful of economic data with business inventories, industrial production, capacity utilization and the Michigan sentiment numbers. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10592 52-week Low : 7416 Current : 10553 Moving Averages: (Simple) 10-dma: 10507 50-dma: 10068 200-dma: 9353 S&P 500 ($SPX) 52-week High: 1137 52-week Low : 788 Current : 1132 Moving Averages: (Simple) 10-dma: 1124 50-dma: 1078 200-dma: 1005 Nasdaq-100 ($NDX) 52-week High: 1545 52-week Low : 795 Current : 1532 Moving Averages: (Simple) 10-dma: 1515 50-dma: 1439 200-dma: 1298 ----------------------------------------------------------------- Oh well...bears who had been hoping that the recent bottom in the volatility indices may have indicated a top are disappointed once again. The VXO appears to be channeling lower with a steady trend of lower highs. CBOE Market Volatility Index (VIX) = 15.56 -1.19 CBOE Mkt Volatility old VIX (VXO) = 16.23 -0.47 Nasdaq Volatility Index (VXN) = 22.64 -0.53 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.66 1,083,341 715,875 Equity Only 0.52 843,879 442,894 OEX 0.93 50,558 46,803 QQQ 2.20 42,812 93,989 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 77.4 + 0 Bull Confirmed NASDAQ-100 81.0 + 0 Bull Confirmed Dow Indust. 86.7 + 0 Bull Confirmed S&P 500 87.0 + 0 Bull Confirmed S&P 100 85.0 + 0 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: 1.15 10-dma: 1.00 21-dma: 0.94 55-dma: 1.05 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 1397 1581 Decliners 1581 1459 New Highs 294 218 New Lows 8 3 Up Volume 1148M 1070M Down Vol. 982M 1079M Total Vol. 2164M 2198M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 01/06/04 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 12/09/03 396,882 420,859 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%) 01/06/04 403,721 408,729 (5,008) (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 12/09/03 172,178 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% 01/06/04 142,844 83,518 59,326 26.2 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 12/09/03 294,006 288,385 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%) 01/06/04 175,489 240,865 (65,376) (15.7%) 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 12/09/03 142,173 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% 01/06/04 139,433 51,909 87,524 45.7% 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 12/09/03 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% 01/06/04 42,892 37,801 5,091 6.3% 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 12/09/03 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% 01/06/04 8,035 17,911 ( 9,876) (38.1%) 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 12/09/03 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% 01/06/04 15,697 9,497 6,200 24.6% 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 12/09/03 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%) 01/06/04 5,713 8,105 ( 2,392) (17.3%) Most bearish reading of the year: (10,136) - 12/16/03 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= 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. 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PremierInvestor.net Newsletter Thursday 01-15-2004 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 Adjustments: None Closed Plays: AGE, MRO Stock Splits: MOG.A, CTX 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 Adjustments ================================================================= None ================================================================= Closed Plays ================================================================= A G Edwards - AGE - close: 36.14 change: +1.39 stop: 36.25 News that federal and state regulators are searching AGE's headquarters for information on its mutual fund trading failed to faze investors and the stock has reversed directions. Normally, an SEC investigation is bad news but the JPM-ONE merger news has sent the financial world on fire and everyone is thinking who's next to be gobbled up. We have not technically been stopped out of this play (stop 36.25) but given the strong rebound from the $34 level on big volume we're going to cut our losses now. Picked on Jan 11th at $34.48 Gain since picked: +1.66 Earnings Date 12/18/03 (confirmed) Average Daily Volume: 576 thousand --- Marathon Oil - MRO - close: 33.50 change: -0.46 stop: 33.25 In an impressive display of strength, MRO followed through after its initial break over the $30.50 level, eventually stretching up to $34 resistance. The way the stock had been plowing through resistance levels, we actually thought MRO might power its way through this one as well, especially the way Crude Oil has been rallying of late. But this week has finally seen some weakness in the price of Crude and MRO finally rolled over from the $34 level after nearly two weeks of being stalled there. Today's close under the 10-dma ($33.91) is the first such sign of weakness since this rally began in late November, which is confirmed by daily oscillators rolling over into convincing sell signals. We're still sitting on a solid 10% gain from our picked price, so let's harvest those gains and look for the next winning play. Picked on December 5th at $30.22 Change since picked: +3.28 Earnings Date: 01/27/04 (confirmed) Average Daily Volume: 1.06 mln ================================================================= Stock Splits ================================================================= Announcements ------------- Moog Launches a 3-for-2 Split Just before the opening bell Moog Inc (NYSE: MOG.A) announced that its Board of Directors had approved a 3-for-2 stock split for both Class A and Class B shares. The split will be effective as a 50% stock dividend. The payable date is February 17th, 2004 for shareholders on record as of January 26th. Post-split Moog will have 25.9 million shares outstanding. About the company: Moog Inc. is a worldwide manufacturer of precision control components and systems. Moog's high-performance actuation products control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles and automated industrial machinery. (Source: Company Press Release) --- Centex (CTX) Sets 2-for-1 Split Date Centex Corp (CTX) previously announced back on November 18th, 2003 a 2-for-1 stock split pending shareholder approval. That approval will be voted on by shareholders at a special meeting on February 25th, 2004. After shareholders approve an increase in authorized shares from 100 million to 300 million CTX plans to set the payable date for the stock split as March 12th, 2004. The shareholder record date for the split will be February 29th. About the company: Through its subsidiaries, Dallas-based Centex, a Fortune 250 company, ranks as one of the nation's premier companies in the Home Building, Financial Services, Home Services and Construction Services industries. (Source: Company Press Release) ================== 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 WYE Wyeth 44.65 +0.57 MWD Morgan Stanley 59.81 +1.19 ABN ABN Amro 24.32 +0.62 FRE Freddi Mac 60.48 +1.01 WM Washington Mutual 41.81 +1.14 KRB MBNA Corp 27.00 +0.72 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- LTXX LTX Corp 17.96 +1.10 TNOX Tanox Inc 17.79 +1.27 DCGN Decode Genetics Inc 9.90 +1.23 LMNX Luminex Corp 11.57 +1.28 XING Qiao Xing Univ Telephone 14.65 +1.47 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- IBM Intl Business Machines 94.02 +3.71 ONE Bank One 50.42 +5.20 GS Goldman Sachs 101.14 +1.76 STI Suntrust Banks 72.63 +2.63 LEH Lehman Brothers 82.77 +2.40 DHR Danaher Corp 93.47 +3.31 COF Capital One 67.10 +2.31 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- NEM Newmont Mining 42.59 -2.06 AU Anglogold Inc 41.15 -1.22 AAPL Apple Computer 22.85 -1.35 FCX Freeport Mcmoran 35.86 -2.83 PD Phelps Dodge 70.93 -2.77 QLGC QLogic Corp 47.68 -2.68 NAP National Processing 20.72 -3.23 ANT Anteon Intl 32.74 -1.02 RS Reliance Steel 30.58 -1.97 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- NXTL Nextel Communications 26.92 -1.82 PCU Southern Peru Copper 45.15 -3.65 PDS Precision Drilling 45.97 -1.19 DVN Devon Energy 56.89 -2.06 ASML ASML Holdings 21.30 -0.49 BBOX Black Box Corp 49.30 -0.30 ================================================================= 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. 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