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Daily Newsletter, Wednesday, 02/18/2004

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PremierInvestor.net Newsletter                Wednesday 02-18-2004
                                                    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:  Lots of News for a Slow Day
Watch List:   DO, TYC, SGR, MU

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)
===============================================================
     02-18-2004            High     Low     Volume Advance/Decline
DJIA    10671.99 - 42.89 10720.51 10646.96 1.76 bln   1075/1774
NASDAQ   2076.47 -  3.88  2088.51  2072.19 1.76 bln   1271/1811
S&P 100   568.33 -  2.91   571.57   567.56   Totals   2346/3585
S&P 500  1151.82 -  5.17  1157.40  1149.42
RUS 2000  591.48 -  3.00   595.41   590.40
DJ TRANS 2901.08 - 19.66  2920.83  2890.49
VIX        15.59 +  0.19    15.76    15.30
VXO        15.74 +  0.18    16.14    15.29
VXN        23.73 -  0.14    24.22    23.49
Total Volume 3,884M
Total UpVol  1,466M
Total DnVol  2,367M
52wk Highs     608
52wk Lows       14
TRIN          1.11
PUT/CALL      0.78
===============================================================

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

Lots of News for a Slow Day
by James Brown

The major averages closed in the red again for the third day in
four sessions.  It would appear to be plain old profit taking
after yesterday's market-wide rally.  Investors shrugged off
negative housing data and focused on headlines in the technology
and biotech sectors.  The Dow Jones Industrials lost nearly 43
points to close at 10,671 as 23 of its 30 components turned
lower.  The NASDAQ dropped less than four points to 2076 and the
S&P 500 dropped 5 to 1151.

The best performers today were the biotech stocks,
semiconductors, hardware and software.  Meanwhile selling was
heaviest in gold stocks, natural gas and oil services.
Influencing gold was the U.S. dollar, which hit a new all-time
low against the euro in early trading before strongly rebounding.
Sending the dollar higher were comments that the Bank of Japan
would continue to intervene as the yen near a three-year high
against the dollar and comments from French President Chirac that
hinted at possible intervention or similar strategies to stem the
rise of the euro against the dollar.

Overall stocks only posted mild losses but market internals were
bearish.  Declining stocks outpaced advancers 17 to 10 on the
NYSE and 3 to 2 on the NASDAQ.  Down volume surpassed up volume
by 2 to 1 on the NYSE and 10 to 7 on the NASDAQ.  The good news
is probably the bullish pattern of higher lows on the major
averages.  The DJIA dropped toward the 10640 level and bounced.
The S&P 500 followed suit with a bounce from its intraday low
near 1149.  The NASDAQ also managed a decent bounce in the last
two hours of trading.

Chart of the DJIA:



Chart of the S&P 500:



Chart of the NASDAQ Composite:



Today's main economic data was the housing starts number.  The
Commerce Department reported an 8% drop to a seasonally adjusted
rate of 1.9 million homes in January.  Wall Street was expected a
dip so the report was largely ignored.  Granted this was the
lowest level since August but the housing starts have been very
strong and hit a 20-year high in December.  Also noteworthy was
the 4.9% jump in mortgage applications for last week.  The
Mortgage Bankers Association of America provided the breakdown
with a 2.9% jump in applications for home purchases and a 6.4%
jump in refinancings applications.  Homebuilders initially traded
lower on the news but eventually climbed higher throughout the
day eliminating most of their losses.

While hardcore traders seem to feel the trading session turned
out rather boring there were a number of stories making
headlines.  Grabbing the spotlight early on was Rambus (RMBS).
Shares of RMBS added more than $9.00 to jump 35% near 3-year
highs at $34.93 after an administrative law judge with the FTC
dismissed an antitrust case against the company.  The judge
produced a 330-page decision on the case where prosecutors were
trying to prove that RMBS violated antitrust laws by helping set
industry standards for memory chips while simultaneously pursuing
patents for their designs.  One analyst estimated that this
decision could help RMBS garner $3 billion a year in royalty
payments.

Almost topping RMBS' gain was Irish drug company Elan (ELN).
Shares of ELN rallied 34% and its marketing partner Biogen Idec
(BIIB) added 20% after ELN announced that it would pursue FDA
approval for its multiple sclerosis (MS) drug Antegren a year
ahead of schedule.  The two drug makers are halfway through a
two-year clinical study of Antegren and based on the one-year
results they decided to go ahead with the approval process.  MS
treatments are a multi-billion a year business and the handful of
companies that compete in this niche traded lower.

Going the opposite direction was Dobson Communications (DCEL), a
mobile phone service provider for rural areas.  Shares of DCEL
dropped 36.6% on 29 times its average volume after reporting
fourth-quarter earnings that were much weaker than expected.  The
average analyst estimate was for a loss of 5 cents a share.  DCEL
turned in a loss of 53 cents a share compared to a profit of 28
cents a share last year.

The truly big surprise today was El Paso (EP), the largest U.S.
natural gas pipeline operator.  Shares of EP fell almost 18%
after the company sliced its proven natural gas reserves estimate
by more than 40%.  Proven reserves are the estimated quantities
that a company believes is recoverable from its current fields.
Why they're called "proven reserves" when they're estimating the
amount of fuel they can extract from the ground sounds like a
mystery to me.  EP said their earnings would be affected by a $1
billion pre-tax charge for its fourth quarter.  If you recall it
was just last month that Royal Dutch-Shell Group reduced its
proven reserve estimates by 20 percent.  Yup, you can almost hear
the herd of lawyers stampeding towards El Paso's Houston
headquarters with briefcases brimming with shareholder lawsuits.

Speaking of lawsuits IBM traded lower today (-0.95%) after a
federal judge ruled against Big Blue in a pension lawsuit on
behalf of 140,000 older employees.  In the 1990's IBM moved to a
"cash balance" pension plan; which the judge felt didn't
accurately give older employees their share of benefits.  The
decision could cost IBM $6 billion in retroactive benefits but
the company plans to appeal.

While we're on the topic of legal issues the SEC finally reached
an agreement with Wall Street's top five specialist firms to fork
over $240 million.  Bear Wagner, which is part of Bear Stearns,
FleetBoston Financial, La Branche, Speer Leeds Kellogg, which is
part of Goldman Sachs, and Van de Moolen are the five firms which
will divulge a total of $155 million in perceived ill-gotten
gains and another $85 million in penalties to settle allegations
that the firms jumped in ahead of its customers while processing
their orders.  As is typical with these types of SEC settlements
none of the firms will either admit or deny any wrongdoing and
hope this settlement will reduce the number of civil lawsuits
from investors.

All of the above are certainly big stories but the ones investors
were most eager to hear occurred after the closing bell.  The
semiconductor sector was able to maintain its gains today because
traders were eager to hear from Applied Materials (AMAT) and
Broadcom (BRCM).  Last night BRCM announced that it would hold a
conference call today after the closing bell to discuss their
"stronger business outlook".  This was highly unusual and shares
of BRCM added 7.3% on the session in anticipation of the event.
Even though the first quarter is only half over BRCM's CFO raised
their first-quarter revenue forecasts from +10% to an estimated
+16-18% as rising demand for broadband and wireless communication
chips exceed previous estimates.  BRCM wouldn't offer any
guidance past the first quarter but did say that the second
quarter should be strong.

BRCM's announcement is certainly bullish for the chip sector but
the one-two punch that could really drive the SOX tomorrow is
AMAT's earnings.  The largest chip equipment maker on the planet
announced net income, minus one-time charges, of 12 cents a
share.  This is 4 cents above the 8-cent analyst estimates and
significantly better than its breakeven results from last year.
New orders for the quarter rose 32%.  Furthermore AMAT's CFO said
new orders will likely rise 30% in the second quarter and they
will probably beat analysts' estimates.  This of course will
force a round of upward revisions for the company as the analyst
community readjusts their forecasts.  The company expects Q2
earnings in the 17-19 cent range, which is well above current
estimates at 11 cents a share and sales were likely to rise 20%
from Q1 levels.

AMAT was trading higher after hours and it could lead the SOX to
a new relative high, which in turn should lead the NASDAQ higher.
Fortunately none of tomorrow's economic reports are expected to
be a surprise and we only have a handful of earnings to worry
about.  So what's on our plate for Thursday?  The Philly Fed
manufacturing survey will probably be the big report tomorrow.
Estimates are for a small dip from January's reading.  The PPI
was supposed to report tomorrow but a new industry classification
system has caused a delay in the report.  Thursday will also
bring the Leading economic indicators index and the weekly
jobless claims.  After Thursday's close will be the semi book-to-
bill report.  Everything looks pretty good and as long a Wal-Mart
doesn't surprise us with any negative comments in their earnings
report before the open tomorrow I believe we'll challenge these
short-term resistance levels.


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

Diamond Offshore Drilling, Inc. - DO - close: 24.33 change: -0.40

WHAT TO WATCH: When we looked at DO last week, the stock appeared
ready to break out over the $23.50 resistance level and that's
precisely what happened, with the stock surging up to the $25
level yesterday.  It looks like the expected pullback is now
under way, which will pave the way for new entries on a
successful test of the $23.00-23.50 area as newfound support.
After entry, look for upside continuation to the $27.50
resistance level.




---

Tyco International, Ltd. - TYC - close: 28.80 change: -0.45

WHAT TO WATCH: Another recent visitor to our Watch List was TYC,
as the stock has been steadily working its way higher over the
past 11 months.  After breaking out over the $28.50 resistance
level, it looks like TYC is ready to come back and test the
$27.50 level as new support.  Target entries on a rebound from
that level and then look for the rally to continue up towards the
$35 area, which is both the site of strong historical resistance,
as well as the 200-week moving average.




---

Shaw Group Inc. - SGR - close: 12.38 change: +0.36

WHAT TO WATCH: After stalling out near the $14 level, SGR has
pulled back to strong support and has started out the week with a
bang, rebounding strongly from the 200-dma.  It looks like the
stock is headed back for a retest of the upper boundary of the
range of the past few months near $14 and a breakout over the 50-
dma should be a good trigger for new entries.




---

Micron Technology Inc. - MU - close: 16.42 change: +0.38

WHAT TO WATCH: Following its breakout over the $15.50 resistance
level last month, MU has been consolidating near its highs in a
constructive manner, preparing for the next leg up.  The stock is
trading much better than the overall Semiconductor sector and a
breakout over $17 should kick off a rally up towards strong
resistance near $20.  Use a trigger of $17.10.




---

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

CTIC $8.82 - There's something wrong with CTIC, as the stock
continues to work its way lower, moving opposite to the overall
Biotechnology sector.  Today's break of the $9.00 support level
and the 50-dma looks quite bearish, especially with the increase
in volume.  Entries look good on a failed rebound near $9.00,
with a downside target of $7.50-8.00.

CELG $40.04 - CELG is another Biotechnology stock that is
exhibiting significant relative weakness and it is coming up on
an important test of support.  Should the 200-dma be violated,
CELG looks like it should fall to $35 and possibly as low as $32.
Use a trigger of $38.50, which is below both the 200-dma and the
mid-January reaction low.

TGT $42.29 - After several failed attempts over the past several
months, TGT finally achieved the breakout over $42 that we've
been expecting.  Price may be a bit extended right here, but a
mild pullback to confirm support in the $40.50-41.00 area looks
good for bullish entries.  Target a rally up to the $45-46 area,
the site of the stock's 2002 highs.


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

MWD     Morgan Stanley             61.60    +1.01
UTX     United Technologies Corp   97.36    +1.83
BRG     BG Plc                     28.11    +0.63
GDW     Golden West Financial     108.05    +1.01
ETR     Entergy Corp               59.47    +1.13


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

ELN     Elan Corp Plc              11.80    +3.00
OI      Owens Illinois Inc         13.82    +2.49
PRV     Province Healthcare Co     16.99    +1.06


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

BIIB    Biogen Idec Inc            53.23    +8.97
ERTS    Electronic Arts Inc        46.66    +1.76
BRCM    Broadcom Corp CI A         42.46    +2.90
NTAP    Network Appliance Inc      23.63    +1.36
CMX     Caremark Rx Inc            32.00    +1.40


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

TEVA    Teca Pharm Ind             64.71    -2.49
A       Agilent Technologies       35.98    -1.51
OMC     Omnicom Group Inc          80.16    -1.76
MHS     Medco Health Solutions     31.85    -3.35
MRH     Montpelier Re              35.65    -2.10


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

NVS     Novartis Ag (ADS)          46.16    -0.86
SAP     SAP Ag (ADS)               42.59    -0.74
KIM     Kimco Realty Corp          46.30    -0.50


=================================================================
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.

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Copyright 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter                Wednesday 02-18-2004
                                                    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:  TSS, ANN, LIN, ARA

Net Bulls (Tech Stocks)
  New Bullish plays:    VTSS

Stock Splits
  Announcements:       ASFI, CEC, COCO


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

TSS - no change, still untriggered

ANN - non-tech long
 raise stop from 41.40 to 42.25

LIN - non-tech long
 raise stop from 29.99 to 31.00

ARA - non-tech long
 raise stop from 31.99 to 32.50


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

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


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

Vitesse Semicon. - VTSS - close: 9.05 change: +0.57 stop: 8.10

Company Description:
Vitesse Semiconductor Corporation is a designer and manufacturer
of silicon solutions and optical devices used in the networking,
communications and storage industries worldwide.  It works to
specifically address the requirements of system designers and
original equipment manufacturers (OEMs) by providing high-
performance, integrated products that are ideally suited for use
in enterprise, access, metro and core applications.  The company
has a wide variety of products that are primarily sold into four
areas of the communications infrastructure: storage, enterprise,
metro and long haul.  VTSS' products include physical media
devices; physical layer devices; framing, mapping and other
overhead processing functions; network processors and traffic
managers; switches; enterprise local area network (LAN) products,
and storage and serial backplane products.

Why we like it:
While the Semiconductor index (SOX.X) continues to languish after
the recent bout of profit taking, VTSS is flexing its muscles
again today, breaking out from its month-long consolidation in
the $7.75-9.00 area.  The stock has really made some dramatic
strides up the chart since bottoming in October of 2002 below $1.
That's right, in just the past 15 months, VTSS has vaulted higher
to the tune of 1100%!  You might think we're nuts for considering
a bullish play on a stock that has moved so far already, but the
chart suggests that the bulls aren't done yet.  The PnF chart
recently completed an Ascending Triple Top breakout and with
price well above the bearish resistance line, it looks like full
bull ahead.  Of course, it doesn't hurt that today's breakout
came on volume nearly double the ADV.  Gazing at the price chart,
we can see that the stock will have to confront resistance at the
$10 level, but the way VTSS has been working through each
resistance level, we're thinking that may just provide
consolidation before continuing upwards to stronger resistance in
the $11.00-11.50 area.  And if the SOX can shake off its lethargy
and rejoin the bullish party, a continued bullish run to the
$12.50-13.00 area is not out of the question.

If we view the recent price action as a consolidation flag
following the rally from $6.00 to $9.00, that would give us a
vertical price objective of $12, assuming an equal move for the
stock after today's nascent breakout.  Since the breakout has
already occurred, we're not going to use a trigger for the play.
Aggressive traders can enter on a break over today's $9.19 high,
although the better entry strategy looks like a pullback and
rebound from the $8.50 area.  In addition to historical support
near that level, we have both the 10-dma ($8.50) and 20-dma
($8.40) reinforcing support at that level.  We'll use an initial
stop of $7.95, which is just below Friday's intraday low, as well
as the 30-dma ($7.98)  Should VTSS continue today's breakout
without pause, then we'll look to adjust our stop upwards to just
below Friday's intraday low.

Annotated Chart of VTSS:



Picked on February 18th at   $9.05
Change since picked          +0.00
Earnings Date              1/22/04 (confirmed)
Average Daily Volume =    5.92 mln




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

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

ASFI declares a 2-for-1 stock split


Midday on Wednesday Asta Funding Inc (NASDAQ:ASFI) reported that
its Board of Directors had approved a 2-for-1 stock split of its
common stock.

The split, payable as a 100% stock dividend, will be payable on
March 23rd, 2004 to shareholders on record as of March 9th.  Post-
split ASFI will have 13.3 million shares outstanding.

The cash dividend of 6 cents will be halved to 3 cents per share
and paid post-split on May 1st to shareholders on record as of
March 31st.  This is ASFI's first stock split.


About the company:
Based in Englewood Cliffs, NJ, Asta Funding, Inc., is a leading
consumer receivables asset management company that specializes in
the purchase, management and liquidation of performing and non-
performing consumer receivables. (Source: Company Press Release)

---

CEC dishes out a 3-for-2 split

After market close today, Texas-based CEC Entertainment Inc
(NYSE:CEC) reported that its Board of Directors had approved a 3-
for-2 stock split of its common stock.

The split announcement was reported amid CEC's Q4 financial
statements and has a payable date of March 15th, 2004 to
shareholders on record by February 25th.  Fractional shares will
be paid in cash.

This would be CEC's first stock split since their 3-for-2 split
in 1999.

About the company:
CEC Entertainment, Inc. operates a system of 468 Chuck E.
Cheese's restaurants in 48 states, of which 420 are owned and
operated by the Company.

---

COCO graduates with a 2-for-1 stock split


Prior to this morning's opening bell Corinthian Colleges Inc.
(NASDAQ:COCO) announced that its Board of Directors had approved a
2-for-1 stock split of its common stock to be enacted as a stock
dividend.

The payable date for the split is March 23rd, 2004 for
shareholders on record as of March 4th.


About the company:
Corinthian Colleges, Inc. is one of the largest post-secondary
education companies in North America, and serves the large and
growing segment of the population seeking to acquire career-
oriented education to become more qualified and marketable in
today's increasingly demanding workplace. Corinthian's colleges
offer master's, bachelor's and associate's degrees and diploma
programs in a variety of fields, with a concentration on careers
in healthcare, business, criminal justice and technology.
Corinthian operates 84 colleges and two continuing education
centers in 21 states in the U.S., and 46 colleges and 15 corporate
training centers in seven Canadian provinces.
 (Source: Company Press Release)


=================================================================
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.

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