Option Investor

Daily Newsletter, Thursday, 01/15/2004

Printer friendly version
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

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

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


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.


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

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


Market Averages


52-week High: 10592
52-week Low :  7416
Current     : 10553

Moving Averages:

 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:

 10-dma: 1124
 50-dma: 1078
200-dma: 1005

Nasdaq-100 ($NDX)

52-week High: 1545
52-week Low :  795
Current     : 1532

Moving Averages:

 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


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


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


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

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:


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                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


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

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


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

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:


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.


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