PremierInvestor.net Newsletter Tuesday 01-27-2004 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: Volatility Returns Watch List: NCC, IACI, STX, EP Market Sentiment: No Shortage ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 01-27-2004 High Low Volume Advance/Decline DJIA 10609.92 - 92.60 10701.77 10609.92 2.10 bln 1405/1835 NASDAQ 2116.04 - 37.80 2152.75 2116.04 2.14 bln 1336/1936 S&P 100 567.15 - 6.29 573.44 567.15 Totals 2741/3771 S&P 500 1144.05 - 11.32 1155.37 1144.05 W5000 11177.42 -104.40 11281.80 11177.42 RUS 2000 595.17 - 6.33 601.50 594.93 DJ TRANS 3041.22 - 25.50 3074.18 3033.34 VIX 15.35 + 0.80 15.44 14.74 VXO (VIX-O)15.32 + 1.00 15.41 14.75 VXN 23.03 + 2.04 23.07 21.60 Total Volume 4,634M Total UpVol 1,533M Total DnVol 3,054M Total Adv 3139 Total Dcl 4258 52wk Highs 905 52wk Lows 6 TRIN 1.19 NAZTRIN 2.02 PUT/CALL 0.87 ================================================================= =========== Market Wrap =========== Volatility Returns After a +134 point gain on Monday to a new two year high the Dow slipped -92 today as put buyers outweighed call buyers almost 3:1. The Nasdaq gave back all its gains from Monday and returned to the low 2100s on weakness in the semiconductor sector. Volatility may have been higher today but it is still at relatively low levels. Considering our markets are at two year highs this is not surprising. When the bulls are running the volatility gets trampled. Dow Chart - 120 min Nasdaq Chart - Daily The economic calendar was slim today with only two reports. The Chain Store Sales showed a jump of +1.1% for the week after three weeks of decline. The Southwest was the strongest region as blizzard conditions and severe cold hampered those consumers in the Northeast. The ICSC raised it estimates for all of January to a gain of +4.0% to +4.5%. This is a +1% gain over the prior +3.0% to +3.5% estimates. The Consumer Confidence hit an 18 month high at 96.8 but was less than consensus expectations at 98.5. The December decline was reversed on the strength of a gain in the present conditions component. Not all components were rosy. Plans for new purchases slipped slightly and availability of jobs only increased slightly. The lower than expected headline number may have been influenced by the blizzards across the country. Fighting the elements tends to depress consumers and makes them less receptive to shopping. We all know shopping is a mood elevator for at least half the population. Confidence should continue to rise as long as employment continue to improve. Once the tax refunds start flowing the urge to spend will also grow. Kraft (NYSE:KFT) did not help confidence when they announced they were cutting -6,000 jobs including 1,300 salaried jobs over the next three years. They will take a charge that will impact their earnings for these layoffs. The news was all about Martha Stewart and earnings today. Since we are all Martha'ed out I will not bore you with what she had for lunch or how many powder room breaks she had. We will concentrate instead on the real news with several Dow stocks announcing earnings. Merck (NYSE:MRK) announced a fourth quarter profit that fell -26% due to a decline in sales and charges for recent job cuts. MRK posted +62 cents per share and reaffirmed its 2004 full year estimates. MRK traded up fractionally for the day and up +1.50 for the week to $47.35. It looks like new life is coming back into the stock after being a Dow dog for the last six months. Drug stocks are normally defensive and MRK could be benefiting from the rotation out of chips. Another Dow component, DuPont, lost -50 cents despite beating the street and issuing an upbeat outlook for the year. SBC lost -74 cents to close at $26 after posting a drop in profits and rising employee costs. The results were inline with estimates and were uninspiring. Investors are watching the decline in the telecom sector as each of the major players reports. Wire lines are dropping and with them the monthly and long distance revenues. McDonalds gained +17 cents inline with expectations on an increase in sales due to a restructured menu. Salads and chicken are beating out hamburgers as the high profit items. The biggest loser on the Dow was Caterpillar despite a surge in revenue to $6.47B from $5.38B and beating estimates by +3 cents. The drop in stock price was due to the retirement of their CEO and new guidance. The company said they did expect 2004 earnings to jump +40% and revenue +12%. They did not give short term guidance as they had in the past and simply said 2004 will be strong. This prompted some analysts to suggest they were hiding a weak first half. Also, much of their gains were due to currency translation benefits from the weak dollar. Other major earnings of note with misses or lowered guidance included BK, LMT, CNF, RTN and DJ. After the bell we saw another flurry of tech earnings and most were positive. AMZN est +0.29, act = +0.29 inline, raised guidance BRCM est +0.16, act = +0.19 beat FLEX est +0.14, act = +0.17 beat, raised guidance +3 cents AFCI est +0.09, act = +0.10 beat ADVP est +0.55, act = +0.55 inline EFII est +0.21, act = +0.27 beat CYMI est +0.00, act = +0.04 beat ERTS est +1.20, act = +1.26 beat MENT est +0.31, act = +0.30 miss MLNM est -0.31, act = -0.30 beat MGAM est +0.48, act = +0.48 inline PXLW est +0.09, act = +0.06 miss NTIQ est -0.01, act = -0.04 miss HRS est +0.49, act = +0.50 beat ELX est +0.23, act = +0.24 Raised guidance +2 cents RHI est +0.03, act +0.03 inline NET est +0.21, act +0.26 beat AV est +0.05, act +0.07 beat The two biggest newsmakers were AMZN and BRCM. Amazon did report blowout 4Q revenue and its first ever back to back quarterly profit. Proforma earnings were 29 cents and that was inline with the consensus estimates. They raised the Q1 revenue estimates to $1.39B to $1.49B and well above prior estimates at $1.32B. Unfortunately they did not provide profit estimates. Analysts are expecting +16 cents for Q1 and with higher sales you would think they would be inline or maybe even beat. Analysts were worried that margins may not be as good in the 1Q due to product mix. Also the company benefited greatly from currency translation issues in the 4Q. $98 million in revenue and $6 million in profit came from currency gains. With the decline in margins and higher shipping costs there were plenty of questions for AMZN. They also said there was a disturbing rise in inventory levels which could be pointing to a slow down in sales. AMZN traded down -$3 in after hours. BRCM beat the street by +4 cents but the stock dropped sharply on news they were going to issue $750 million in new stock or debt. That was quickly reversed when they raised guidance on the conference call and suggested sales could grow as much as +10% in the 1Q. The +10% number works out to $527 million and well above the prior estimate of $463 million. The company said they saw substantial new bookings late in the 4Q and early in the 1Q and that new enterprise spending could provide a big opportunity. They are planning on issuing 30 million new shares to enable a future acquisition. Four companies bought more than 48% of Broadcom's output. Dell, Cisco, HPQ and Motorola each bought more than 10% with HPQ the most at 15%. MSFT dropped -55 cents on news that the EU may issue a negative ruling against Microsoft and try to substantially change the way Microsoft does business. This is old news but the European Commission did confirm it was wrapping up its investigation. The EC has a draft decision and those are normally used to exercise leverage against the company in advance of the final ruling. Microsoft said it was in active talks to insure a positive resolution. Sounds like they are in a tight spot and the EU/EC is applying the screws. The EU has threatened to force Microsoft to strip Media Player out of Windows to give RealNetwork and Apple a more competitive opportunity. Overall earnings have been very strong. The best in ten years according to some analysts. First Call said earnings were coming in at +25% so far and could rise to as much as +27% as some smaller companies announce next week. This is a very strong quarter and helped by a weak comparison to Q4-2002. The average company beating estimates is beating by +19% compared to an average of +6% in normal quarters. The only problem is in the guidance. Because the good results have been expected for two months many stocks are seeing their prices battered when they announce. When expectations are so high it takes almost super human guidance to attract new buyers after the announcement. Guidance has been good with quite a few companies raising their outlook but it has not been exceptional. SOX Chart - Daily Some of the stocks getting hit the worst on good news have been the semiconductor stocks. The sector is well off its highs with the SOX dropping -7% in just the last five days. This includes the monster gains from Monday's romp that were completely erased on Tuesday. At 517 the SOX is very close to ending the month with a loss. The high of 560 was set back on the 12th. NVLS posted earnings on Monday night and dropped -5.85 on Tuesday. KLAC lost -1.70, PHTN -3.66, MXIM -3.05, CCMP and UTEK about -$3 each. SNDK continues to sink lower with another -2.20 today. If the SOX is the leading indicator for the Nasdaq then it is no surprise that the Nasdaq gave back all its gains from Monday and is down for the week with a -37 point drop today. There was a rumor making the rounds today that PMCS was seeing an order slowdown from Cisco, which is its biggest customer. Are we doomed to drop from here? Not necessarily. Remember earnings are excellent. It is just that investor profits are in the excellent category as well. Remember also that we have a Fed meeting underway that will end at 2:15 Wednesday afternoon. There is high risk that the Fed will change its bias statement and traders are just taking some profits off the table in advance. I am just surprised it did not happen on Monday. The afternoon buy program that triggered the short squeeze was entirely out of character. The bounce that ensued simply gave investors one more chance to exit at two year highs and dodge a fickle Fed statement. Tomorrow afternoon we will either get the "considerable period" statement or we won't. With the market at two year highs and earnings the best in ten years my bet is we get a new bias. If they are ever going to get a free shot this is it. The bullish sentiment is still so strong it is nearly bulletproof. According to Fed watchers there is almost no chance of a rate hike so they are playing the rate lottery with OTM options. As long as there is a "considerable period" statement they are looking at six months before the Fed will hike rates. Should that statement disappear and language about strong economy and rising employment appear in its place then bonds will die. By changing the statement they are loading the rate hike gun. It does not mean they are cocking it but just the presence of a loaded gun is enough to strike fear in the bond markets and by association the equity markets. Nobody expects any hikes this year so this is all just positioning and speculation but the best of all worlds is already priced into the market. Any change in the bias could cause temporary movement. That movement could be a couple hours or a couple days but is not likely to be lasting. Bond yields have already spiked up over the last three days on fear in advance of the meeting. Any market shakeup should be brief based on the current bullish sentiment. That sentiment could change at any time but it won't be because the Fed says the economy is strong. If it changes it will simply be due to the overbought conditions and lack of a catalyst to move higher. Let's face it, Monday's move was very bullish. The Dow moved over two year resistance highs to close at 10700. This clears the way to 11,000-11,300 for the next serious resistance. The Tuesday drop held over 10600 and still in bullish territory. The flaw in Monday's rally was the Nasdaq which stopped at 2150 resistance once again and the Russell which stopped at 600 resistance. These are strong levels for both indexes considering their overbought conditions. The market drop on Tuesday was literally led by the SOX. This sunk the Nasdaq and dragged IBM and INTC and the Dow down with it. CAT did not help either. However, help is on the way. The SOX got help from the BRCM earnings tonight and the 517 close is only +2 points above support at the 50 dma. This is the key point to watch in the morning. As long as the 50dma at 515 holds the Nasdaq is not going very much lower. The Nasdaq has strong support itself in the 2085 to 2110 range. We do not need to start worrying until the Nasdaq trades below 2085. The Dow has strong support at 10600, 10500, 10400 and 10300. We would have to see a serious trend change to break all those levels. The biggest potholes in our future are the Fed announcement at 2:15 and the GDP on Friday. The economic calendar heats up beginning on Thursday and continues into next week. Recently economics have been market favorable and until that changes traders need not fear the normal reporting cycle. The GDP has the biggest potential. A number under +4.5% would be a shocker especially after the strong earnings. Analysts are now expecting another blowout and that expectation could be the biggest hurdle. The Fed will have advance notice of the GDP in their meeting and will have already acted accordingly. Expect some volatility to appear when the Fed announcement is made at 2:15 and then a choppy market the rest of the day regardless of the announcement. Sanity should return by Thursday but that does not mean the markets will be directional. Friday is month end and window dressing should keep us in the current range if there are no economic disasters. For the rest of the week keep your eyes on the SOX and 515. As long as we do not stray too far away from that level we are still in striking distance of a new high. Should it break that level on good news then profit taking could take it down to 475 with a pause at 500. Use it as your market guide and you will not be far wrong. 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 --------------------------------- National City Corp. - NCC - close: 34.99 change: +0.04 WHAT TO WATCH: Weakness in the broad market kept shares of NCC rather subdued on Tuesday, but the stock still managed a positive close and look very close to a bonified breakout. The stock has been trading strongly since issuing better than expected earnings on January 15th and it looks like there's more upside to come. Use a trigger over today's $35.20 high and look for a continued rally towards the $40 level. --- InterActive Corp. - IACI - close: 32.99 change: -0.97 WHAT TO WATCH: Rolling over from the $35 resistance level last week, shares of IACI took one more stab at that level yesterday before being firmly rejected at the descending trendline that connects the highs since July. The stock looks primed for a breakdown here and using a trigger at $32 should capture most of the move, while avoiding the potential risk of a rebound from the 50-dma. Target a drop to at least $30, with potential for a retest of the December lows near $28.50. --- Seagate Technology - STX - close: 16.51 change: +0.26 WHAT TO WATCH: Was the selloff overdone? Shares of STX got pummeled in the wake of last week's earnings miss, but rather than continue south, the stock has found support near $16 and looks poised to break into the gap left behind last Wednesday. Use a trigger of $16.75 and target a move near $19, where the 50- dma currently resides. --- El Paso Corp. - EP - close: 9.10 change: -0.39 WHAT TO WATCH: It looks like bullish enthusiasm of EP's sale of 25 power plants on January 16th may have been overdone and the stock retraced sharply on Tuesday, nearing the top of the gap from the 16th. Use a trigger under $9.00 for entry and target the bottom of the gap near $8.40 for a quick hit-and-run play. --- =================== On the RADAR Screen =================== MU $15.71 - Ignoring the weakness in the rest of the Chip sector, MU gapped sharply higher on Tuesday following an upgrade to Buy at Smith Barney. While the stock couldn't hold onto all of its gains, it did manage to close above $15.50 for the first time in over a year. Look for bullish follow through to the $17.50-18.00 area. MXO $9.86 - In the wake of disappointing earnings, MXO fell sharply to the 200-dma where it has been trying to build support. But the stock weakened further the past two days, giving two consecutive closes below that average and it looks like lower levels ahead. Look out for potential support near $9.40, after which a drop to the $8.50 area seems likely. SOTR $34.54 - After a truly impressive run over the past couple weeks, SOTR ran out of steam in the midst of today's broad market decline. But despite that dampening factor, the stock still managed to close in positive territory. Use a near-term pullback near $33.50-34.00 to establish long positions ahead of the breakout over $35, with $37.50 being a viable target. =============================== Market Sentiment =============================== No Shortage - J. Brown There seems to be a growing number of analysts suggesting that investors begin to "trim" their portfolio. Take some money off the table, maybe scale down or get rid of those stocks that are under performing. Oh, it's not that they're bearish. Most stock analysts you hear from are bullish but everyone keeps looking at the horizon for the long overdue correction. Any event is suddenly a good excuse to do a little profit taking and this week has no shortage of events. You could take last night's earnings reports from TXN or NVLS. Despite a decent report investors sold the news on TXN and they absolutely ran for cover after NVLS warned. If chip stock earnings aren't your style then the Conference Board's consumer confidence index could be your event. Economists were looking for a rise to 98.5 in January, up from 91.7 in December. What we got was a rise to 96.8. This is the highest consumer confidence since July 2002 but it's still a disappointment. Not a big enough event? There's nothing bigger than an FOMC meeting. The current two-day meeting is schedule to end tomorrow and we'll get the Fed's decision on interest rates Wednesday afternoon. No one expects any change in rates so the focus is all on their bias going forward. Will they use the "considerable period" language or not? Want more? Tomorrow we'll get the Durable goods order for December. Economists are expecting a rise of 2% to erase November's decline. We'll also hear the new home sales numbers. Estimates are for a small rise to an annualized rate of 1.1 million homes. If this report misses expect some bloodshed in the homebuilders. There is definitely a lot of investors to digest on top of the parade of earnings. Speaking of which investor reaction has been rather normal. After a huge eight- week run higher in the Dow and S&P 500 investors are choosing to sell the news. Today's action certainly felt bearish. Advancers lost to decliners 12 to 16 on the NYSE and 19 to 12 on the NASDAQ. Down volume washed over up volume on both exchanges (3:1 on the NASDQ). Technical oscillators for a large number of sector indices have turned or are rolling over into sell signals. Notable losers are the GHA.X, SOX.X, and the IUX.X. Not because they had the biggest losses, well the SOX actually wins that honor with a 4.14% drop; but because their MACD's have the freshest sell signals. Also notable was the XAU's gain of 1.92%. Gold was the strongest sector today but if you look at the XAU's performance it looks like a failed rally at 100. Be careful there! ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10701 52-week Low : 7416 Current : 10609 Moving Averages: (Simple) 10-dma: 10577 50-dma: 10180 200-dma: 9436 S&P 500 ($SPX) 52-week High: 1155 52-week Low : 788 Current : 1144 Moving Averages: (Simple) 10-dma: 1139 50-dma: 1091 200-dma: 1014 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 795 Current : 1519 Moving Averages: (Simple) 10-dma: 1537 50-dma: 1454 200-dma: 1315 ----------------------------------------------------------------- Volatility is creeping upward, which is expected after a down day in the markets. Unfortunately, these indices aren't signaling any major changes. CBOE Market Volatility Index (VIX) = 15.35 +0.80 CBOE Mkt Volatility old VIX (VXO) = 15.32 +1.00 Nasdaq Volatility Index (VXN) = 23.03 +2.04 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.87 762,179 666,311 Equity Only 0.65 653,867 421,537 OEX 1.77 16,387 29,006 QQQ 5.67 18,722 106,156 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 78.7 + 0 Bull Confirmed NASDAQ-100 78.0 - 1 Bull Confirmed Dow Indust. 93.3 + 0 Bull Confirmed S&P 500 88.4 + 0 Bull Confirmed S&P 100 88.0 + 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: 0.99 10-dma: 0.95 21-dma: 0.95 55-dma: 1.04 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 1247 1216 Decliners 1618 1908 New Highs 329 275 New Lows 9 2 Up Volume 827M 512M Down Vol. 1181M 1631M Total Vol. 2022M 2153M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 01/13/04 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 Wow! We've seen a mild reversal in the commercial traders' positions. They've moved from mildly net short to mildly net long. That's an encouraging sign for more strength in the markets. Small traders have grown a bit more cynical with a slight increase in short positions but they remain net long. Commercials Long Short Net % Of OI 12/22/03 400,066 405,240 (5,174) (0.6%) 01/06/04 403,721 408,729 (5,008) (0.6%) 01/13/04 405,558 411,361 (5,803) (0.7%) 01/23/04 422,135 407,626 14,509 1.7% 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 12/22/03 147,537 81,596 65,941 28.8% 01/06/04 142,844 83,518 59,326 26.2 01/13/04 149,057 90,571 58,486 24.4% 01/23/04 141,107 100,090 41,017 17.0% 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 Commercials are starting to up their bets on the e-minis with almost 40K new longs and 44K new shorts. Small traders in turn reduced their bets but remain net long. Commercials Long Short Net % Of OI 12/22/03 128,801 213,021 (84,220) (24.6%) 01/06/04 175,489 240,865 (65,376) (15.7%) 01/13/04 196,858 263,845 (66,987) (14.5%) 01/23/04 233,867 307,122 (73,255) (13.5%) 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 12/22/03 125,248 43,482 81,766 48.5% 01/06/04 139,433 51,909 87,524 45.7% 01/13/04 191,241 62,711 128,530 50.6% 01/23/04 187,270 57,196 130,074 53.2% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 There is very little change in commercial traders' positions here and the same holds true for the small traders. Commercials Long Short Net % of OI 12/22/03 40,277 36,452 3,825 5.0% 01/06/04 42,892 37,801 5,091 6.3% 01/13/04 41,829 38,547 3,282 4.1% 01/23/04 42,823 39,442 3,381 4.1% 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 12/22/03 22,656 14,544 8,112 21.8% 01/06/04 8,035 17,911 ( 9,876) (38.1%) 01/13/04 9,705 12,539 ( 2,834) (12.7%) 01/23/04 9,180 11,371 ( 2,191) (10.7%) 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 Commercials are also hesitant to make any big changes to their net bullish stance on the Dow. Meanwhile small traders grow a little more bearish. Commercials Long Short Net % of OI 12/22/03 14,088 9,998 4,090 17.0% 01/06/04 15,697 9,497 6,200 24.6% 01/13/04 16,501 8,724 7,777 30.8% 01/23/04 16,403 9,252 7,151 27.9% 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 12/22/03 6,915 8,983 ( 2,068) (13.0%) 01/06/04 5,713 8,105 ( 2,392) (17.3%) 01/13/04 6,496 9,970 ( 3,474) (21.1%) 01/23/04 6,068 10,183 ( 4,115) (25.3%) 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 Tuesday 01-27-2004 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 Play Updates: AMAT Closed Plays: JNPR Stock Splits: CALM, CEO, EXC, MPX, SCHN, SLFI 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 ================================================================= Play Updates ================================================================= ----------- Tech Stocks ----------- -------------------- Bullish Play Updates -------------------- Applied Materials - AMAT - close: 22.02 change: -0.92 stop: 23.69 Investors decided to sell the news when it came to TXN's earnings last night and they ran for the exits after NVLS' earnings report. This put selling pressure on the SOX index and AMAT dipped to $21.86, triggering our play at $21.95. While AMAT's technical indicators are bearish we're cautious because of the late day rebound back above the $22.00 mark. As discussed in Sunday's play description AMAT has a very long-term rising trendline of support and it crosses right at the $22 level. Until there is a confident breakdown through this level bears are in danger of initiating plays right at a short-term bottom. Trade carefully here. Picked on January 27 at $21.95 Gain since picked: +0.07 Earnings Date 02/18/04 (unconfirmed) Average Daily Volume: 29 million ================================================================= Closed Plays ================================================================= ---------------- High Risk/Reward ---------------- -------------------- Closed Bearish Plays -------------------- Juniper Networks - JNPR - close: 28.78 change: -0.58 stop: 30.00 It looked good on paper. JNPR certainly had the potential to break down as it neared the top of its post-earnings gap, but the broad market strength yesterday negated that possibility and today's early surge back above $30 spelled the end for this aggressive play. We'll count ourselves lucky that our entry trigger was never hit, turning the play into nothing more than an academic exercise. Picked on January 25th at $27.98 Change since picked +0.80 Earnings Date 4/15/04 (unconfirmed) Average Daily Volume = 9.72 mln ================================================================= Stock Splits ================================================================= Announcements ------------- CALM cracks open a 2-for-1 split A couple of hours before this morning's opening bell Cal-Maine Foods, Inc. (NASDAQ:CALM) announced that its Board of Directors had approved a 2-for-1 stock split. The split is subject to shareholder approval. The Board has suggested amending the number of authorized shares from 30 million to 60 million for its common stock and 1.2 million to 2.4 million for its Class A shares. A special shareholders meeting is scheduled for April 14th, 2004 to vote on the increase in authorized shares. Should it be approved, the record date for the stock split will be April 14th. No distribution has been set. About the company: Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing and sale of fresh shell eggs. The Company, which is headquartered in Jackson, Mississippi, currently is the largest producer and distributor of fresh shell eggs in the United States and sells the majority of its shell eggs in approximately 26 states across the southwestern, southeastern, mid-western and mid- Atlantic regions of the United States (Source: Company Press Release) --- CEO gushes with a 5-for-1 stock split Hong Kong-based CNOOC Limited (NYSE:CEO) announced plans to split its stock 5-for-1 so that each share of stock will be divided into five new shares. The CFO of the company said the split is designed to increase liquidity and attract more retail investors. There will be a shareholder meeting on March 16th, 2004 to vote on the stock split approval. Traders should note that CEO is traded on the NYSE as an American Depository Receipts (ADRs). If the split is approved each ADR, which currently represents 20 shares of CNOOC's Hong Kong stock (worth HK$0.10), will be increased to represent 100 subdivided shares at HK$0.02. No shareholder record date or payable date was made available. About the company: Incorporated in Hong Kong in August 1999, CNOOC Limited (SEHK: 883; NYSE: CEO) is the dominant producer of crude oil and natural gas offshore China. CNOOC Limited is also one of the largest independent crude oil and gas exploration and production companies in the world. As of December 31, 2002, its net proved reserves were 2.0 billion barrels-of-oil equivalents and its net production averaged 353,102 BOE per day for the first nine months of 2003. CNOOC Limited has interests in 45 crude oil and gas properties in four major producing areas: Bohai Bay, Western South China Sea, Eastern South China Sea and East China Sea. The Company is a major oil and gas company in China with slightly over 2,047 employees. The Company has become the largest offshore producer in Indonesia after the acquisition of Indonesian assets. (Source: Company Press Release) --- EXC charges up a 2-for-1 stock split After today's closing bell Exelon Corp's (NYSE:EXC) Board of Directors declared a 2-for-1 stock split of its common shares. The board also announced a quarterly cash dividend of $0.55 per share. The cash dividend is payable on March 10th, 2004 to shareholders on record as of February 15th. EXC's dividend rate has increased 20% over the past twelve months. No record date or payable date was given for the 2:1 stock split. About the company: Exelon Corporation is one of the nation's largest electric utilities with approximately 5 million customers and more than $15 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid- Atlantic. Exelon distributes electricity to approximately 5 million customers in Illinois and Pennsylvania and gas to more than 440,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC. (Source: Company Press Release) --- MPX floats a 3-for-2 stock split After Tuesday's closing bell Marine Products Corp (AMEX:MPX) announced that its Board of Directors had approved a 3-for-2 stock split of its common shares. Shareholders will receive one extra share for each two shares held. The distribution date for the split will be March 10th, 2004 for shareholders on record as of February 10th. Fractional shares will be paid in cash. The Board also announced a quarterly cash dividend increase to 6 cents per share. The payable date for the cash dividend is also March 10th but will be paid on a pre-split basis. The record date for the cash dividend is also February 10th. About the company: Marine Products is a leading manufacturer of fiberglass boats, including Chaparral pleasure boats and Robalo sport fishing boats. (Source: Company Press Release) --- SCHN forges a 3-for-2 stock split Twenty days after Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) reported its first quarter earnings numbers its board of directors has approved a 3-for-2 stock split. The stock split will affect both its Class A and Class B common shares. The split will be payable as a stock dividend and the dividend is payable on March 25th, 2004 to shareholders on record as of March 4th. Fractional shares will be paid in cash. About the company: Schnitzer Steel Industries, Inc. is one of the nation's largest recyclers of ferrous metals, a manufacturer of finished steel products and a leading self-service auto parts and dismantling company. The Company, with its joint venture partners, processes approximately 4.9 million tons of recycled ferrous metals per year. In addition, the Company's steel mill has an annual production capacity of approximately 700,000 tons of finished steel products. The Company and its joint venture partners operate primarily along the West Coast and Northeastern seaboard of the United States. (Source: Company Press Release) --- SLFI announces 5-for-4 stock split This afternoon Sterling Financial Corp (NASDAQ:SLFI) announced record earnings for the quarter and a 5-for-4 stock split. The split will take effect as a 25% stock dividend. The payable date for the split is February 20th, 2004 for shareholders on record as of February 6th. SLFI's last stock split was also 5:4 and paid on June 4th, 2002. About the company: Sterling Financial Corporation is a family of financial services organizations that operates 55 banking locations in south central Pennsylvania and northern Maryland, through its affiliate banks, Bank of Lancaster County, N.A., Bank of Hanover and Trust Company, First National Bank of North East, Bank of Lebanon County, and PennSterling Bank, located in Berks County, PA. In addition to its banking affiliates, Sterling's affiliates include Town and Country Leasing, LLC, Lancaster Insurance Group, LLC, Equipment Finance LLC, a specialty commercial finance company, Sterling Financial Settlement Services Company, Sterling Financial Trust Company, which manages over $1 billion in assets, Church Capital Management, a Registered Investment Advisor with assets under management of nearly $700 million and Bainbridge Securities, a NASD securities broker/dealer. In January 2004, Sterling announced the acquisition of StoudtAdvisors, Inc.; an employee benefits brokerage and consulting company. (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 WM Washington Mutual 44.75 +0.73 CFC Countrywide Financial 83.24 +1.01 DGX Quest Diagnostic 82.82 +4.69 MGA Magna Intl Inc 83.11 +0.64 ITT ITT Industries 75.45 +1.09 LH Laboratory Corp 41.65 +0.85 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- XRX Xerox Corp 15.16 +1.21 SEM Select Medical Corp 17.68 +1.09 TIVO Tivo Inc 11.00 +1.21 NGEN Nanogen Inc 13.32 +1.71 TWTR Tweeter Home 10.20 +1.26 PTIX Performance Tech Inc 17.17 +1.11 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AVY Avery Dennison 61.18 +4.14 WAT Waters Corp 38.86 +1.47 BLL Ball Corp 60.30 +1.27 FIC Fair Isaac Inc 58.94 +3.94 TGN Texas Genco Holdings 35.12 +1.67 SLAB Silicon Labs 51.57 +7.57 GGG Graco Inc 47.87 +1.02 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- BK Bank of New York 31.53 -1.56 BAX Baxter Intl Inc 29.40 -1.81 RYAAY Ryanair Holdings 49.31 -3.93 ROK Rockwell Automation 33.29 -1.78 NVLS Novellus Systems 34.40 -5.85 DJ Dow Jones & Co 49.57 -1.90 PIXR Pixar 64.30 -2.23 XMSR XM Satellite Radio 23.08 -1.79 LRCX Lam Research 27.26 -1.19 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- IR Ingersoll-Rand 68.05 -3.42 CBE Cooper Industries 56.30 -1.47 BMC BMC Software 20.52 -1.02 OSG Overseas Shipholding 36.00 -2.38 SYD Sybron Dental Specialties 29.80 -1.85 UN Unilever N.V. 68.11 -0.40 ARM Arvinmeritor Inc 25.19 -0.61 ================================================================= 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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