Option Investor
Newsletter

Daily Newsletter, Wednesday, 02/11/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                Wednesday 02-11-2004
                                                    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:  The Picture Has Brightened
Watch List:   NVLS, BSX, IGT, JPM

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)


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     02-11-2004            High     Low     Volume Advance/Decline
DJIA    10737.70 +123.85 10746.88 10572.59 2.12 bln   1923/ 911
NASDAQ   2089.66 + 14.33  2089.66  2064.77 2.00 bln   1853/1238
S&P 100   572.39 +  6.04   573.20   565.01   Totals   3776/2149
S&P 500  1157.76 + 12.22  1158.89  1142.33
RUS 2000  597.07 +  4.24   597.08   590.14
DJ TRANS 2951.93 + 30.07  2951.97  2910.47
VIX        15.39 -  0.55    16.16    15.26
VXO        14.88 -  0.67    16.26    14.80
VXN        23.53 -  0.97    24.77    23.40
Total Volume 4,721M
Total UpVol  3,298M
Total DnVol  1,358M
52wk Highs     858
52wk Lows        5
TRIN          0.57
PUT/CALL      0.68
===============================================================

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

The Picture Has Brightened
by James Brown

"...the picture has brightened." sums up the day and Greenspan's
perspective on the U.S. economy.  The excerpt was part of Federal
Reserve Chairman Alan Greenspan's official comments before
congress in day one of a two-day semiannual meeting. Alan's
positive speech sent the markets soaring while broker-dealers and
media stocks traded higher on the $66 billion Disney takeover bid
by cable-giant Comcast.

The one-two punch of Greenspan's speech and the Disney bid sent
the markets to new highs.  The Dow Jones Industrials added 123
points to close above resistance at 10,700 and hit levels not
seen since June 2001.  The S&P 500 also broke out to a new one-
year high above January's resistance near 1155.  The NASDAQ
lagged behind with a 14-point gain but it closed over minor
resistance at 2075 and the index looks poised to take another
swing at the 2150 level.

Overall the rally was very widespread.  Every major sector closed
higher except for the HMO index, which fell 2%.  Investors were
pouring money into broker-dealers, homebuilders, gold and mining,
semiconductors and retail stocks.  Market internals were
naturally bullish with advancers outrunning decliners by more
than 2-to-1 on the NYSE and 3-to-2 on the NASDAQ.  New highs
exploded to 665 between the two exchanges.  Up volume was four
times down volume on the NYSE and more than twice down volume on
the NASDAQ.  Traders want to see rallies support by strong volume
and we got that today with more than 4 billion shares trading
between the two exchanges.

Chart of the DJIA:



Chart of the NASDAQ:



Chart of the S&P 500:



The new closing high for the DJIA is very bullish.  This breaks
the major resistance near 10,700 from March 2002 and paves the
way for the Dow to run towards its next overhead barrier in the
10,900-11,000 range.  The NASDAQ also looks good.  The move
through resistance in the 2050-2075 range has set us up for a run
toward overhead resistance at 2150.  Today's close puts the
NASDAQ above all its major moving averages on both its daily and
weekly chart save for the 21-dma.  The S&P 500 has followed the
Dow's lead and broken through to a new one-year high above
January's resistance.  Overhead resistance on the SPX is
virtually nonexistent between here and the 1175 level dating back
to December 2001-March 2002.

This week the markets have been exceptionally Greenspan-centric.
Monday and Tuesday the markets traded cautiously ahead of his
appearance for fear of what he might say.  Today they soared
higher on his bullish comments for the economy and a reiteration
of the Fed's plan to be patient.  When commenting on how the
situation has changed from his last visit to congress Alan said,
"Since then, the picture has brightened. The gross domestic
product expanded vigorously over the second half of 2003 while
productivity surged, prices remained stable, and financial
conditions improved further. Overall, the economy has made
impressive gains in output and real incomes; however, progress in
creating jobs has been limited."  More importantly Alan followed
up with, "Looking forward, the prospects are good for sustained
expansion of the U.S. economy."  That's exactly what the markets
want to hear from him.

Alan also commented on the "growing confidence of business
executives in the durability of the expansion" and the "favorable
financial conditions" that lead to a turnaround in business
spending.  Of course Greenspan couldn't dodge the jobs question,
mainly where are they?  His response was that "stunning increases
in productivity" had been a surprise and allowed businesses to
meet increasing demand "without stepping up hiring".  However, he
quickly pointed out that "employment will begin to grow more
quickly before long as output continues to expand."  Essentially
he believes that productivity increases are going to become
harder and harder to squeeze out and as the expansion continues
managers will become more confident in its "durability" and
"firms will surely once again add to their payrolls."  Following
his appearance there is always a lot of discussion as the markets
dissect his comments and I heard some analysts suggesting that
the U.S. could produce between 2 million and 3 million jobs by
the end of the year.

Speaking of jobs some believe that Disney's CEO Mike Eisner's job
may be on the line.  The big story today was an unsolicited $66
billion all-stock bid by Comcast cable (CMCSA) to buy Disney
(DIS).  Evidently Comcast's CEO Brian Roberts had pitched the
idea of a merger to Eisner earlier this week but Mike turned him
down.  In response Comcast decided to take it to the Disney
shareholders and Board of directors by making it public.  The $54
billion deal, plus $12 billion in assume debt, offers 0.78 shares
of Comcast's Class A stock for each share of Disney stock.
Should the deal go through it would form the largest media
company on the planet, eclipsing media titan Time-Warner's $40
billion in revenues and $79 billion market cap.

What really makes this interesting is not only the timing of the
bid but Wall Street's reaction to it.  Based on yesterday's
prices the Comcast offer values Disney at $26.47 a share, almost
a 10% premium from Tuesday's close.  Yet shares of DISNEY shot up
14.6% to 27.60, which means Wall Street believes there may be a
bidding war between Comcast and other media giants looking to buy
up Disney's brand and assets.  A few of the companies considered
as potential buyers are Viacom, News corp., Time-Warner and even
Microsoft since the software company is still sitting on a $50
billion pile of cash and has expressed an interest in the media
business.  Right now Viacom seems to be the most viable
alternative to Comcast who will probably end up raising its bid.
A combined Comcast-Disney business has immediately raised some
antitrust concerns.  Such a media conglomerate would own ABC,
Disney Channel, E! entertainment, the Golf channel, ESPN sports
network, Disney's film studio, Disney's Touchstone movie studio,
Disney's theme parks, cruise ship business, the most enviable
portfolio of cartoons and movies on top of a cable business with
21 million homes, and 5 million high-speed Internet customers.

The merger news completely overshadowed earnings reports from
both Disney and Comcast.  DIS reported earnings of 33 cents a
share, which was a dramatic improvement from last year's 2 cents
and above current estimates at 23 cents a share.  Revenues soared
past analysts' estimates to $8.5 billion for the quarter.
Meanwhile Comcast reported earnings of 17 cents a share, where
were also dramatically better than last year's loss of 7 cents
and well above current estimates for a net profit of 3 cents per
share.  Comcast's revenues jumped more than 58% to $4.74 billion.

Another major earnings report out today was Dow component Coca-
Cola Co (KO).  KO reported before the opening bell with 38 cents
a share, but minus one-time charges their EPS was 46 cents, or 2
cents above the estimates.  Revenues surpassed the estimate but
investors sold the news as analysts comments turned negative over
a drop in operating income and an 8% jump in expenses.  Also
noteworthy was an earnings pre-announcement from Hewlett-Packard
(HPQ).  Speculation had been growing over HPQ's earnings but the
company wasn't due to report until next week on Feb. 19th.  We
don't know whether HPQ management got tired of the rumors  or
whether they wanted to steal some of Dell's thunder but they pre-
announced an hour before today's close.  For the quarter ending
January 31st HPQ will report earnings of 35 cents a share, which
is in line with estimates on revenues of $19.5 billion.  The news
quickly took the wind out of the stock and shares fell steadily
into the close.

Tomorrow should be interesting.  The new highs on the Dow and the
SPX above January's resistance could spark another round of short
covering and inspire bulls who had been waiting for another dip
to finally jump on board for fear they'll miss the train.  We'll
also hear the latest weekly jobless claims, the January retail
sales figures, business inventories and the Treasury budget
numbers.  However, eclipsing them all will be Alan Greenspan's
second appearance, this time before the senate.  As Jim mentioned
in the monitor today the Q&A section is likely to be tougher and
this is still a wild card event should he stumble and issue the
wrong comment.  Personally, after today's speech I feel that any
Greenspan-risk has sunk considerably.  That leaves us with just
Dell's earnings report after the close.  Let's hope Michael Dell
has some positive comments for us!


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

Novellus Systems Inc. - NVLS - close: 34.11 change: +1.29

WHAT TO WATCH: With the Semiconductor index rebounding nicely
from its 50-dma, NVLS is beginning to solidify and looks ready to
reclaim some of its recent losses.  Note the strong support that
has been found near $32 over the past 2 weeks.  Use a trigger
over today's high and target a move to the 200-dma near $37.50.




---

Boston Scientific Corp. - BSX - close: 42.94 change: +0.98

WHAT TO WATCH: After rallying near the $42.50 level just over a
week ago, shares of BSX have been in consolidation mode, holding
very near their highs.  With the strong surge in the broad market
on Wednesday, the stock broke out and looks like it has room to
run, especially in light of today's close at new all-time highs.
Use either a pullback to $42 support or a breakout over $43.25 to
gain entry.




---

International Game Technology - IGT - close: 38.05 change: +0.89

WHAT TO WATCH: IGT has been a consistent performer over the past
year, continually rallying to new highs, consolidating and then
repeating the process.  The stock has been consolidating for the
past couple weeks and with today's rebound off the 20-dma, it
looks ready to break out again.  Use a trigger over $38.60 for
entry.




---

J.P. Morgan & Company - JPM - close: 40.27 change: +0.79

WHAT TO WATCH: Brokerage stocks led the charge today as investors
cheered Greenspan's Humphrey Hawkins testimony.  JPM pushed right
to resistance on strong volume and a breakout over $40.50 could
really get things moving.  Use a trigger at $40.55 and target a
rally to next resistance at $45.




---

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

CBSS $40.75 - The longer a consolidation lasts prior to a
breakout, the stronger that breakout tends to be.  CBSS has been
banging into the $40 resistance level since early December, so
today's breakout on very strong volume looks like it has room to
run.  The stock is already at new all-time highs, so entries look
good either on a breakout over today's high or on a pullback and
successful rebound from the $40 level.

ORLY $39.43 - Since selling off during the month of December,
ORLY has been building a solid base just above the 200-dma.
Buyers sent the stock higher on Wednesday and it looks like a
pending breakout.  Use a trigger over $40 and target a rally to
the $44 area, near the December highs.

DY $25.04 - It's tough to find a viable bearish candidate in such
a strong market, but DY certainly seems to fit the bill, losing
3% to close at its low today in contrast to the rest of the
market.  Use a trigger at $24.50 and target a drop to the 200-
dma.  Watch for potential near-term support at $22 on the way
down.


==================
  Trading Ideas
==================

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

Value Plays With Bullish Signals
---------------------------------
Ticker  Company Name               Close     Change

TOT     Total Sa (ADS)             92.53    +0.54
LEH     Lehman Bros Hldg           86.89    +0.94
GDW     Golden West Financial     107.12    +0.63
AET     Aetna Inc New              71.60    +0.56
LH      Laboratory Cp Am Hldgs     44.20    +0.72


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

None


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

DE      Deere & Co                 64.50    +1.50
AMG     Affiliated Managers Grp    86.96    +1.36
TASR    Taser Omt;                 49.70    +1.29


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

None


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

WEC     Wisconsin Energy           33.46    -0.53


=================================================================
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                Wednesday 02-11-2004
                                                    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
=================================================================

In section two:

Stop Loss Adjustments:  ANN, LIN


Net Bulls (Tech Stocks)
  New Bullish plays:    AMZN


Active Trader (Non-tech Stocks)
  New Bullish plays:    BA


Stock Splits
  Announcements:        None


==================================================================
Stop Loss Adjustments
==================================================================

ANN, non-tech long
  raise stop from 39.50 to 41.40

---

LIN, non-tech long
  raise stop from 29.00 to 29.99


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

---------
New Plays
---------


  New Bullish Plays
  -----------------

Amazon.com - AMZN - close: 47.14 change: +1.55 stop: 44.00

Company Description:
Amazon.com is a website where customers can find virtually
anything they want to buy online.  The company lists millions of
unique items in categories such as books, music, DVDs, consumer
electronics, toys, software, computer and video games, lawn a
patio items, kitchen products and wireless products.  Through its
Amazon Marketplace, Auctions and zShops services, any business or
individual can sell virtually anything to AMZN's approximately 30
million cumulative customers.

Why we like it:
"Sell the news" was investors' reaction following AMZN's earnings
report last month and the stock plunged from above $55 all the
way down to the 200-dma (currently $45.39) before finding any
tangible support.  That support has held up well and the stock
saw a nice round of buying on Wednesday, good for a 3.4% advance.
With the broad market in full rally mode, AMZN looks like it
could gather speed to the upside and a run back to the $55 level
looks quite possible.  There will be a battle with resistance in
the $51.50-52.50 area, as that is the site of the clustered 20-
dma ($51.44), 30-dma ($51.80), 50-dma ($51.54) and 100-dma
($52.60).  AMZN has shown an amazing ability to charge through
major resistance levels over the past year, so we'll give the
stock the benefit of the doubt and expect it to do the same this
time around.

Note that daily Stochastics are just starting to emerge from
oversold territory and with today's expanding volume, we could
see a strong move towards that resistance, perhaps even later
this week.  The stock posted its best close in over a week today,
but we'll play on the cautious side and use a trigger just over
today's high ($47.36) before considering an entry.  Use a trigger
of $47.50 and then set an initial stop at $44.00, just under the
200-dma and the 2/04 intraday low.  As noted above, there's
likely to be resistance near the $52 level, so conservative
traders may want to harvest gains on the first hint of weakness
near that level.  But we're going to go for the gusto and target
a rally back up to the $55 level, where AMZN ought to find strong
resistance.

Annotated Chart of AMZN:



Picked on February 11th at  $47.14
Change since picked          +0.00
Earnings Date              1/27/04 (confirmed)
Average Daily Volume =    9.84 mln



==================================================================
Active Trader (AT) Non-Tech Stock section
==================================================================

---------
New Plays
---------

The Boeing Company - BA - close: 44.49 change: +0.89 stop: 41.49

Company Description:
One of the world's major aerospace firms, BA operates in three
principal segments: commercial airplanes, military aircraft and
missiles, and space and communications.  Commercial airplanes
operations involves the development, production and marketing of
commercial jet aircraft, principally to the commercial airline
industry.  The Military Aircraft and Missiles division is
involved in the research, development, production, modification
and support of military aircraft, including transport and attack
aircraft.  The Space and Communications segment is involved in
the research, development, production, modification and support
of space systems, rocket engines and battle management systems.

Why we like it:
Despite the recent abrupt selloff in the DOW Transports ($TRAN),
shares of BA have been amazingly resilient.  The selloff in the
TRAN only dropped BA back to its first level of support near
$41.50 and the stock stabilized there, even before the TRAN
stopped falling.  Over the past week, the stock rallied back to
resistance just south of $45 and it looks like a breakout to new
52-week highs could come any day now.  Once through that level of
resistance, BA may find some mild resistance near $46 and then it
should be clear sailing up to $48 and then $50, which is the site
of the 2002 highs.  The PnF chart certainly says there is plenty
of room to run, with the Buy signal generated last summer giving
a vertical price target of $62.  The stock has been so consistent
in recent months, that it hasn't printed so much as a 3-box
reversal since September.

Clearly, we want to make the stock prove its intentions before
playing, so we're setting our entry trigger at $45.05, just over
last Friday's intraday high.  Aggressive traders can enter on the
initial breakout, while those looking for a better entry will
want to wait for a subsequent pullback to confirm new support in
the $43.50-44.00 area.  The reason the pullback entry may make
more sense is due to the potential for a mild pullback following
the first test of that mild resistance at $46.  While there is
some resistance at $48, based on the way the stock has been
trading, we're expecting a move to the upper end of that $48-50
resistance zone to put in a bona fide test of the 2002 highs.
We're setting our stop initially at $41.49, which is just below
its recent consolidation lows, as well as the 50-dma ($41.66).

Annotated Chart of BA:



Picked on February 11th at  $44.49
Change since picked          +0.00
Earnings Date              1/29/04 (confirmed)
Average Daily Volume =    3.19 mln


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

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

None


=================================================================
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 (c) 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.

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