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Daily Newsletter, Monday, 01/26/2004

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PremierInvestor.net Newsletter                   Monday 01-26-2004
                                                    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:  Momentum is positive
Watch List:   FRNT, CTXS, LRCX, LNCR

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     01-26-2004            High     Low     Volume Advance/Decline
DJIA    10702.51 +134.22 10705.18 10702.51 1.82 bln   1668/1199
NASDAQ   2153.83 + 29.96  2153.83  2115.34 1.93 bln   2000/1094
S&P 100   573.44 +  8.03   573.44   565.29   Totals   3668/2293
S&P 500  1155.37 + 13.82  1155.38  1141.00
RUS 2000  601.50 +  5.36   601.50   592.46
DJ TRANS 3066.71 -  6.23  3074.45  3037.70
VIX        14.55 -  0.29    15.78    14.52
VXO        14.32 -  0.55    15.28    14.21
VXN        20399 -  0.28    22.77    20.99
Total Volume 4,160M
Total UpVol  3,012M
Total DnVol  1,088M
52wk Highs     934
52wk Lows        6
TRIN          0.51
PUT/CALL      0.58
===============================================================

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

Momentum is positive
by James Brown

Overheard in a conversation between to bearish traders about the
current rally, "It can't be bargained with!  It can't be reasoned
with!  It doesn't feel pity, or remorse, or fear.  And it
absolutely will not stop, ever!"  Okay, I'm joking.  I didn't
actually hear that but anyone short this market might feel that
way (and my apologies to any Terminator fans).  Investors
definitely appear fearless as they quickly stepped in to buy
Friday's and last week's dip.  The Dow Jones Industrials added
134 points to breakthrough resistance and close at 10,702.  Only
one Dow component closed in the red and that was Alcoa, which
lost 5 cents on the session.  The strongest performers in the Dow
were HPQ +3.24%, MRK +3.1% and GE +2.8%.

The NASDAQ posted a strong rally as well, up nearly 30 points or
1.4%.  This puts both the DJIA and the NASDAQ at 2 1/2 year highs
while the S&P 500's rally leaves it at 22-month highs.  Positive
earnings news and a better than expected existing home sales
numbers helped fuel a widespread rally today.  Only a handful of
sectors closed negative.  Under performing were gold and silver
stocks, airlines, utilities and transports.  Investors focused
their buying power on networkers, hardware (think LXK, HPQ &
IBM), semiconductors and tech stocks in general.  Even the dollar
managed a bounce against the euro after Friday's rumors that the
G7 summit next week might finally address the soaring euro.  This
put more pressure on gold, which fell $1.30 to $406.70 an ounce.

The U.S. stock markets had to power today's rally on their own.
Overseas markets weren't much help.  Asian stocks traded mostly
lower with the Japanese NIKKEI down 96 points to 10,972 and the
Chinese Hang Seng down 23 points to 13,727.  European stocks
lagged as well.  The British FTSE fell 15 points to 4445 and the
German DAX dropped 23 points to 4128.  The ramp higher today in
the DJIA and the NASDAQ really began to pick up speed in the
afternoon and by the close market internals had turned strongly
positive.  The NYSE reported nearly 17 winners for every 12
losing stocks.  Meanwhile advancers out numbered winners almost
20 to 11 on the NASDAQ.  Up volume was about 2.7 times stronger
than down volume on both exchanges.

Chart of the Dow Jones Industrials:



Chart of the NASDAQ:



The only economic data out this morning was the December Existing
Home Sales report.  Economists were looking for a small jump of
0.3 percent to 6.08 million but were surprised with a 6.9% jump
to 6.47 million (at an annualized rate).  The historically low
interest rates continue to fuel a strong increase in home
ownership and that's great news for the economy.  Home sales tend
to generate additional consumption with new furniture, new
appliances, etc.  This was the largest one-month jump in existing
home sales since January 2001.  Later this week we'll get to hear
the December new home sales figures due out on Wednesday.
Estimates are looking for a small rise to 1.1 million, up from
1.082 million in November.  This mid-week report should have an
affect on the homebuilders.

Not quite an economic "event" but any time Alan Greenspan talks
Wall Street is going to want to listen.  Today he spoke to a
conference in London via satellite.  He didn't say much about the
Fed's monetary policy but strongly suggested that the various
free-market governments should avoid the recent signs of
protectionism (hint, hint to the U.S. government).  He also
discussed the "creative destruction" of capitalism as we rotate
from old technology to new technology. Jobs will also have to
follow this process.  He was confident that the U.S. can generate
new job growth but not "without a high degree of pain" for those
in the job-losing segment in this technology creation job-
shifting turnover process.  We'll hear from Alan again this week
as the Federal Reserve begins its two-day FOMC meeting tomorrow.
The decision on interest rates will be announced on Wednesday
afternoon and no one really expects any change.  Of course there
is a lot of conjecture over the Fed making any changes in their
bias and if they will continue to use the "considerable period"
wordage.

The Fed meeting this week is expected to take center stage but it
is going to have to share it with a parade of earnings
announcements.  This week alone some 30% of the S&P 500 companies
are expected to report.  American Express (AXP), a Dow component,
reported today and beat estimates by a penny with 60 cents a
share.  Revenues were up 14% to $7.07 billion and above consensus
estimates.  AXP cited strong fee growth for its financial
advisory unit and its credit card business for its performance.

Also announcing earnings today was drug giant Schering-Plough
(SGP).  SGP reported net loss of 12 cents per share, which was
worse than expected.  Revenues dropped almost 18% to $1.95
billion, below analysts' forecasts.  The company also guided
lower for 2004 but this was old news and shares actually turned
higher painting a bullish engulfing candlestick pattern with a
bounce off its simple 50 & 200-dma's.

Another drug giant making headlines today was Merck & Co (MRK), a
Dow component.  MRK was up more than 3% after Barron's published
a positive story over the weekend suggesting the stock was
undervalued to its peers.  Some investors also see MRK as a
potential takeover or merger target and news of Sanofi-
Synthelaob's hostile bid for Aventis (AVE) might be contributing
to MRK's strength.  Sanofi (SNY) is a French drug company who
announced a $60 billion hostile takeover offer for fellow French-
based Aventis.  AVE's board of directors rejected the bid
claiming it doesn't accurately reflect their company's value.
The AVE website stated SNY's bid only represents a 3.6% premium
from their recent closing price.  The merger news and MRK's
performance today pushed the DRG drug index to a new relative
high and levels not seen since last June.

One of the biggest earnings reports out today was released very
early this morning.  I'm referring to Lexmark Intl (LXK).  The
printer manufacturer reported earnings of  $1.05 a share, which
were 13 cents better than expected.  Revenues were also above
estimates at a record setting $1.37 billion for the quarter.  LXK
said its December quarter showed the fastest growth since first
quarter 2000.  "Our fourth-quarter revenue growth was
significantly over our guidance, driven by strong printer sales,"
said Paul J. Curlander, Lexmark chairman and chief executive
officer. "Lexmark's earnings for the quarter exceeded our
expectations as we achieved higher revenue and were able to hold
gross profit margins fairly stable both sequentially and year-to-
year." (source: LXK's press release).  "While we do see some
indications of market improvement, we continue to remain cautious
due to the uncertain economic environment and the potential for
aggressive price competition."  LXK's caution did not rub off on
investors and shares soared more than 7% to $84.50, breaking out
over major resistance at $80.  Their strong earnings news also
lifted shares of rival Hewlett-Packard (HPQ) boosting shares
3.24%.

The closing bell brought even more earnings news and making
headlines were NVLS, TXN and MCD.  Novellus Systems (NVLS), a
manufacturer of semiconductor production equipment, announced
earnings of 7 cents a share, which was significantly better than
last year's 2 cents a share and above current estimates by a
penny.  Revenues came in at $226.5 million and beat analysts'
estimates but the company warned that the current quarter could
turn soft.  The stock fell 7.6% after hours as it issued earnings
guidance at 8 cents a share versus analysts' current range of 7
to 11 cents for the first quarter.

Eclipsing NVLS' report was Texas Instruments (TXN).  Analysts
were looking for 19 cents a share on revenues of $2.72 billion.
When TXN's earnings report first hit the wires it sounded like
net income hit 22 cents, or 3 cents better than expected.
Unfortunately, the real number was closer to 20 cents.  TXN did
beat but only by a penny.  However, revenues were above estimates
at $2.77 billion and above their own guidance from December in
the 2.64-2.76 billion range.  Unfortunately, shares were lower in
after hours trading despite guiding higher for the current
quarter's net income and revenues.  It is notable that TXN plans
to raise its capex spending from $800 million to $1.1 billion in
2004.

McDonalds (MCD) served up its December quarter's earnings results
after the bell and met estimates at 35 cents a share.  The real
net income number was 10 cents a share due to a 25-cent charge
for its sale of Donatos Pizzeria back to its founder.  Q4 same-
store sales numbers were up 7.4% and revenues for the quarter
were up 16.8% to $4.56 billion, above estimates of 4.33 billion.
This is a definite improvement over last year's Q4 loss, its
first quarterly loss ever.  Sounds like the Mad Cow scare never
really hit MCD and their current "I'm loving it" ad campaign
might be working.  Its rival Burger King has seen two months of
slipping same-store sales, down 5.4% in November and down 6.9% in
December.

One of the biggest stories out this evening is Agilent
Technologies (A).  The company came out with an upside surprise
and raised its earnings guidance from 5-to-15 cents a share to
20-to-24 cents a share.  It now expects revenues to hit $1.63-
1.68 billion, above estimates of $1.61 billion.  Agilent is a
manufacturer of electronics and testing equipment and this
positive surprise may counterbalance the disappointing news we
got from NVLS tonight.  Agilent's press release unveiled these
comments, "We have not seen the normal seasonal decline in first
quarter activity," said Ned Barnholt, Agilent chairman, president
and chief executive officer. "Both semiconductors and
semiconductor capital equipment have been particularly strong. We
have also been successful bringing the benefits of lower
structural costs to Agilent's bottom line."  The stock closed at
$33.91 during the normal session but shot to $39.90 after the
news before settling near $37.98 in after hours trading.

It will be interesting to see how investors react to these
various earnings announcements out tonight but the markets will
also have to digest a handful of major reports out tomorrow
morning as well.  Announcing before the opening bell is
Caterpillar (CAT), Countrywide Financial (CFC), DuPoint (DD),
Lockheed Martin (LMT), Merck & Co (MRK), SBC Communications (SBC)
and Xerox (XRX) just to name a few.  Wall Street will also have
to interpret the Conference Board's consumer confidence index.
Estimates are for a jump from 91.3 in December to 95.1 in
January.  On top of it all the New Hampshire Democratic primary
will be held tomorrow night and will almost guarantee some
volatility on Wednesday.  Whoever wins will be the frontrunner
for the Democratic nomination and thus the major competitor to
the current President.  We already know it's going to be a close
race this November and merely having one democratic candidate to
focus on will create the one thing the stock markets hate -
uncertainty!

Let me finish with a quote from billionaire George Soros from an
interview on Bloomberg TV.  Whether you love him or hate him he
has accurately summed up what we and other market pundits have
been saying for a while.  "Whether stocks are overvalued or not
doesn't actually determine whether they go up or they go down...
so they may be overvalued, but they can get a lot more
overvalued, and I would say that right now the momentum is
positive."


==================================================================
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
---------------------------------

Frontier Airlines - FRNT - close: 10.47 change: -0.85

WHAT TO WATCH: Just when it looked like FRNT might have found a
bottom, Merrill Lynch came out with a downgrade this morning,
driving the stock down to the $10 support level.  Support doesn't
really get strong until $9 and if that level fails to support the
price, then FRNT looks vulnerable to next support near $8.00.
With earnings due out on Thursday, we can use a failed rebound
below the 10-dma and target $9 initially.




---

Citrix Systems - CTXS - close: 21.02 change: -0.83

WHAT TO WATCH: Solid earnings from CTXS last week were enough for
a brief pop above resistance, but clearly the sellers were lying
in wait and the stock has been headed straight down ever since.
After breaking back under the 50-dma on Friday, price fell under
the 200-dma today and looks headed for a breach of major support
near $20.  Use a trigger under $20 and then target next
significant support near $17




---

Lam Research - LRCX - close: 28.45 change: -0.61

WHAT TO WATCH: Semiconductor stocks have been consistently losing
strength over the past couple weeks, and LRCX is no exception.
After beating estimates in its earnings release last week, the
stock has been trading poorly, smashing through the 50-dma last
Friday and continuing down today.  Today's rebound from the
$27.50 level looks feeble and a rollover and break below that
level should have the stock seeking out next support at $25
enroute to a test of the 200-dma.  Use a trigger at $27.50.




---

Lincare Holdings - LNCR - close: 31.69 change: +1.12

WHAT TO WATCH: Our recent bearish play on LNCR didn't work out
like we expected, but the stock looks like it is going to give us
another chance, this time to the long side.  Monday's action saw
the stock pushing through the 50-dma for the first time since the
big gap in late November and price is now nearing significant
resistance at $32.70.  Use a trigger above that level and target
a run at the bottom of the gap near $35.50.  Earnings are set to
be released on February 10th.




---

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

PMCS $23.63 - Buy the dip?  The post-earnings dip stopped
promptly at the 10-dma and PMCS is seeing a solid rebound from
the $22.50 level as old resistance becomes new support.  Look for
new entries on another test of that level, which should lead to a
breakout to new recent highs above $25.

GE $34.14 - After languishing for much of the past year, shares
of GE are finally starting to shine again.  Breaking out over the
$33 level was just the beginning and with the broad market
breaking out big time today, it looks like a run at the next
strong resistance near $37.50 is in the cards.

CSCO $28.20 - Leading Networker CSCO is giving us a chance at a
continuation entry here in advance of a run to new recent highs
ahead of the company's earnings report on February 3rd.  It's a
short-term play and therefore aggressive, but with the strength
that has been seen in the group and with CSCO leading the way, a
breakout over $30 does not seem unreasonable ahead of the
announcement.  Use dips near the 10-dma as the preferred entry
strategy, with a tight stop at $27, just under the last two days'
intraday lows.


=================================================================
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 01-26-2004
                                                    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
Split Announcement:  CCBI, MSCC, SBGA


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


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

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

CCBI banks on a 4-for-3 stock split

Around lunchtime this morning Commercial Capital Bancorp, Inc.
(NASDAQ:CCBI) announced that its board of directors had approved a
4-for-3 stock split in the form of a stock dividend.

The payable date or distribution date for the split is February
20th, 2004 for shareholders on record as of February 6th.

Fractional shares resulting from the split will be paid in cash.
The split will increase the number of shares outstanding to 29.9
million.

About the company:
CCBI, headquartered in Irvine, CA, is a multifaceted financial
services company which provides financial services to meet the
needs of its client base, which includes income-property real
estate investors, middle market commercial businesses, and high
net-worth individuals, families and professionals. At December 31,
2003, CCBI had total assets of $1.7 billion, was the 4th largest
multi-family lender in California during the 12 months ended
September 30, 2003 (source: Dataquick Information Systems) and had
originated approximately $3.1 billion in multi-family and
commercial real estate loans through December 31, 2003. Commercial
Capital Bank, the Company's bank subsidiary, was the fastest
growing banking organization in California, based on percentage
growth in total assets over the 36 months ended September 30,
2003. (Source: Company Press Release)

---

Microsemi (MSCC) chips up a 2-for-1 split


Right at today's closing bell Microsemi Corp (NASDAQ:MSCC)
announced that its Board of Direcors had approved a 2-for-1 stock
split.  The split will be enacted as a stock dividend.

The payable date or ex-dividend date should be February 9th, 2004
for shareholders on record as of February 6th.  The stock split
will raise the number of shares outstanding to 58.9 million.

About the company:
Microsemi is a leading designer, manufacturer and marketer of high
performance analog and mixed-signal integrated circuits and high
reliability discrete semiconductors. The company's semiconductors
manage and control or regulate power, protect against transient
voltage spikes and transmit, receive and amplify signals.
Microsemi's products include individual components as well as
integrated circuit solutions that enhance customer designs by
improving performance and reliability, battery optimization,
reducing size or protecting circuits. The principal markets the
company serves include implanted medical, military/aerospace and
satellite, notebook computers and monitors, automotive and mobile
connectivity applications.  (Source: Company Press Release)

---

Summit Bank (SBGA) declares 3-for-2 split

Just before the stock market's open this morning Summit Bank Corp
(NASDAQ:SBGA) announced that its board of directors had approved a
3-for-2 stock split in the form of a 50% stock dividend.

The split will increase shares to 5.6 million shares outstanding.
The payable date or distribution date will be February 17th, 2004
for shareholders on record as of February 9th.

The Board also increased its quarterly cash dividend to 10 cents
per share from .0867 cents, to be paid on a post-split basis.  The
cash dividend will be distributed on February 27th for
shareholders on record as of February 19th.

About the company:
Summit's banking subsidiary, The Summit National Bank, provides
banking services to various growing ethnic communities in the
Atlanta, Georgia, and the South San Francisco Bay area of
California markets, including the Asian-American market. The
Summit National Bank has four branches in the metropolitan area of
Atlanta, Georgia and two branches in the South San Francisco Bay
area. In addition to the Asian-American market, Summit's niche
specialties include small business lending and serving other
ethnic markets including European- and Latin-American individuals
and businesses. Summit also provides international trade services
for local customers that import and export products throughout the
world.  (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

XOM     Exxon Mobil Corporation    41.55    +0.51
C       Citigroup                  50.93    +0.61
ONE     Bank One Corp              52.50    +0.98
WFC     Wells Fargo $ Co New       58.04    +1.20
BAC     Bank of America Corp       82.24    +0.97


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

TSN     Tyson Foods Inc            14.99    +1.49
TCP     Telesp Celular Participa    9.64    +1.39
CIG     Companhia Energetica Mines 19.51    +1.15
STHLY   Stet Hellas Tele Sa ADS    18.52    +1.02
ADIC    Advanced Digital Info      19.22    +1.23


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

AVE     Aventis                    75.10    +2.10
SLB     Schlumberger Ltd           61.06    +1.29
G       Gillette Company           37.91    +1.61
SYY     Sysco Corp                 37.55    +1.21
KMB     Kimberly Clark Corp        58.50    +1.95


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

SNY     Sanofi-synthelabo (ADS)    34.30    -2.71
SOV     Soverign Bancorp Inc       22.93    -1.25
XMSR    SM Satellite Radio Hldgs   24.87    -1.15
AIN     Albany International A     32.50    -2.50
VECO    VECO Instruments Inc       31.24    -1.52


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

NWL     Newell Rubbermaid Inc      23.08    -0.57
IPR     Internat Power Plc (ADS)   23.42    -0.48
XLU     SPDR Utilities Select      23.65    -0.14
IRGI    Inveresk Research Group Inc24.49    -0.81
CYBX    Cyberonics Inc             32.42    -4.78


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