PremierInvestor.net Newsletter Monday 03-01-2004 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: March Opens Bullish Watch List: MACR, SNDK, BBY, JPM =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 03-01-2004 High Low Volume Advance/Decline DJIA 10678.14 + 94.22 10695.55 10582.22 1.76 bln 2182/ 665 NASDAQ 2057.80 + 27.98 2057.80 2032.64 1.68 bln 2091/1025 S&P 100 569.43 + 4.89 570.18 564.54 Totals 4273/1690 S&P 500 1155.97 + 11.03 1157.48 1144.94 RUS 2000 594.77 + 9.21 594.77 585.56 DJ TRANS 2916.61 + 14.42 2916.61 2886.89 VIX 14.44 - 0.11 15.05 14.40 VXO 14.18 - 0.58 14.94 14.15 VXN 22.54 - 0.30 24.02 22.54 Total Volume 3,862M Total UpVol 3,086M Total DnVol 709M 52wk Highs 839 52wk Lows 15 TRIN 0.69 PUT/CALL 0.74 =============================================================== =========== Market Wrap =========== March Opens Bullish by James Brown Investors came back from the weekend in a buying mood and sent the Dow to one of its best gains in 7 weeks and the NASDAQ above short-term resistance at 2050. Fueling the market-wide rally was the ISM index that reported growth in the manufacturing sector for the 10th month in a row. The markets were also encouraged by a stronger employment component in the ISM as they look forward toward this Friday's employment report. Even the semiconductor index overcame early losses due to an Intel downgrade and closed higher with a 2% gain. According to the Stock Traders Almanac the first trading day in March has been up 6 out of the last 8 years. We can now scratch another point in the up column. The Dow Jones Industrials added 94 points to close at 10,678. The NASDAQ surged nearly 28 points to 2057 and the S&P 500 added 11 points to close at 1155. The rally was very wide spread with every major index closing higher save for the BTK biotech index, which lost 0.07%. Buying interest was very strong in homebuilders, airlines, oil and gas, semiconductors and retail stocks. Global markets were generally positive as well. The Japanese NIKKEI added another 229 points on top of Friday's 2.1% gain to close at 11,271 - a new twenty-month high for the index. The Chinese Hang Seng added 11 points to close at 13,918. European stocks were higher as the dollar added 0.4% against the euro. The British FTSE jumped almost 45 points to 4,537 and the German DAX added 36 to 4054. The gain in the dollar puts the brakes on gold today. Gold futures had rallied above $400 an ounce earlier in the session but couldn't hold it and closed at $399.60 an ounce (+2.80 for the day). Gold wasn't the only commodity making a move today. Platinum rallied to $902 fell back to $895 and then rallied again in the afternoon to close up $18.70 to $906.80 an ounce - a twenty-four year high. Silver broke above the $7.00 level intraday and closed up 3.4% or 23 cents to $6.945 an ounce. This was the best level since February 1998 for the metal. Copper surged another 3.9% or 5.25 cents a pound to $1.3985. This is an eight-year high for the metal and helped drive shares of Phelps Dodge (PD) a copper miner to new all-time highs at $89.81 (+4.11% today). Not to be out done by the metals crude oil rose 70 cents to $36.86 a barrel, the highest since its pre-Iraq war spike in March 2003. Normally when crude prices trade above $30 a barrel it's tough for OPEC to keep its members from pumping more than their agreed to quotas but oil has risen more than $4 a barrel since their last meeting in February where they agreed to reduce their quotas another 4% starting in April. I've mentioned it before but it's amazing that the economy has been able to absorb this sort of increase. The rising cost of oil affects numerous sectors from manufacturing to transports. I'm honestly surprised that the airlines whose profits are directly affected by fuel costs have been able to trade sideways with oil skyrocketing. It won't be long and consumers are going to feel the sting of higher oil prices at the pump and that will weigh on retail sales and consumer confidence. Market internals were very bullish today and bode well for the strength in this rally. Advancing stocks outnumbered losers 3 to 1 on the NYSE and 2 to 1 on the NASDAQ. New highs surged to 645 versus 11 new lows between the two exchanges. One of the most bullish internals is how up volume sprinted past down volume by more than 4-to-1 on both exchanges. The daily chart for the Dow Jones Industrials looks pretty encouraging with its short-term oscillators (RSI and stochastics) curling higher from oversold. We could see the index challenge resistance at 10,750 soon. The rally in the NASDAQ was enough to push the Composite back above its simple 50-dma and its technicals suggest we could see a run toward resistance in the 2090 range. Chart of the DJIA: Chart of the NASDAQ Composite: The single biggest factor in today's rally was probably the ISM index. Economists had been expecting a dip to 62.1% from January's 20-year high at 63.6%. Remember that readings over 50 indicate growth and expansion. The headline number was worse than expected at 61.4% but investors cheered anyway. February's ISM marked the 10th month in a row for an expanding manufacturing sector and the fourth month in a row for a reading over 60. The New Orders component slipped to 66.4 from 71.1 and prices paid rose to 81.5 from 75.5 but the component that drew the most excitement was the employment index component. Manufacturing employment rose to 56.3% in February from 52.9% in January. This was the best reading in 16 years for the employment component and sparked renewed enthusiasm for this Friday's unemployment/jobs report. Currently the forecast on Friday is for unemployment to hold steady at 5.6% while the economy is expected to add 125,000 new jobs last month. The ISM wasn't the only economic report out today. The U.S. Commerce Department also released figures for January construction spending and personal income and spending numbers. Construction spending fell 0.3% to an annual rate of $931.2 billion, its first decline in eight months. The decline was lead by a 0.8% drop in business construction as residential construction spending remained strong. Meanwhile personal spending rose 0.5% in January, which was inline with estimates. Personal income rose 0.2%, which was below estimates. Monday's biggest story stock was Sepracor (SEPR). Before this morning's opening bell SEPR announced that it has received a conditional "approvable" letter from the FDA for its insomnia treatment called Estorra. While it is unknown what sort of conditions the FDA set for SEPR to market its new drug the company did say that additional patient testing would not be needed. SEPR now plans to ramp up its sales forces and marketing costs to launch Estorra by mid-2004. Analysts were very bullish on the news with Deutsche Securities, Lehman Brothers, Morgan Stanley and Standard & Poor's all upgrading the stock. One analyst expects that Estorra could grab 25% of the $2 billion market currently lead by insomnia drugs Ambien and Sonata, produced by Sanofi-Synthelabo (SNY) and King Pharmaceuticals (KG), respectively. Shares of SEPR gapped higher on the news and continued to rally ending the session up 56% to $44.30. Medimmune and AAIPharma were two drugs stocks also making headlines today. Unfortunately for shareholders in the two companies their stocks went south. Medimmune (MEDI) lost 6.18% after lowering its earnings estimates due to increased R&D costs. The company plans to increase R&D to 20% of sales but this will reduce Q1 earnings to 40-43 cents a share, which is below estimates of 54 cents per share. MEDI expects full year 2004 earnings in the 50-60 cents a share range, which is well below estimates of 94 cents. Investors were also concerned that Wyeth (WYE) may back out of its FluMist marketing partnership with MEDI after a disappointing launch last year. Meanwhile AAIPharma (AAII) announced it had hired an independent auditor to investigate "sales abnormalities" in its recently launched Brethine and Darvocet drugs. Brethine is an asthma treatment and Darvocet is a painkiller. AAII withdrew their 2004 earnings guidance given the ongoing investigation and S&P lowered their credit rating on the stock. Shares of AAII dropped 36% to close at $9.77. The big news for tech stocks this morning was a downgrade for both Intel (INTC) and its rival Advanced Micro Devices (AMD). A J.P. Morgan analyst downgraded Intel from "over weight" to "neutral" over concerns for notebook PC sales and product delays. Intel will take center stage on Thursday evening this week with its mid-quarter update but the JPMorgan analyst does not expect Intel to raise guidance for the first time in nearly a year. JPM also downgraded AMD from "neutral" to "under weight". Shares of AMD recouped most of its losses but still closed down 11 cents to $14.89. INTC was stronger and added 1.67% or 49 cents to close at $29.69. Contributing to strength in the chip sector was news from the Semiconductor Industry Association (SIA) who reported that January's global chip sales rose 27% over a year ago period to $15.6 billion. This was a 2.4% decline from December levels but the pull back was expected and SIA stands by their 2004 forecasts for 19.4% sales growth. Readers may remember that it was just last week that the Gartner research group raised their 2004 semiconductor sales forecast to +23% growth. Tomorrow will be interesting. Bulls will be looking for some follow through on today's rally. After six weeks of sideways to down trading we're probably overdue for the bounce anyway. Tuesday we'll hear the auto and truck sales numbers but most investors will be focused on Wednesday's ISM services index and the Fed's Beige Book report. Overall traders sound pretty confident as I keep hearing comments about what a great environment this is for stocks with low interest rates, rising earnings and a recovery economy. Or if you prefer a little Greenspeak we can call it a "vigorous expansion". ================================================================== 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 --------------------------------- Macromedia Inc. - MACR - close: 19.85 change: -0.59 WHAT TO WATCH: Trading in an ever tightening consolidation band for the past several months, MACR has begun its next downward leg, reversing from the descending trendline connecting it's highs of the past few months on Friday. That downward move picked up steam on Monday, with volume clearly on the rise. Look for price to continue down until reaching support near the $17.50 level. Entries near current levels look good (although another rejection below $21 would be better), but be sure to use a stop just over the 200-dma in case of a bullish break from the consolidation pattern. Chart= --- Sandisk Corp. - SNDK - close: 28.30 change: +2.88 WHAT TO WATCH: Is the long and persistent downtrend in shares of SNDK finally coming to an end? The stock appears to have put in a double bottom near $24, confirmed by today's breakout over the $27.50 level. The next obstacle to clear is near-term resistance at the converged 50/200-dmas. Once through that barrier, SNDK should be good to run back to test strong resistance near $35, so we definitely want to use a trigger over the 200-dma. Chart= --- Best Buy Company - BBY - close: 54.19 change: +0.94 WHAT TO WATCH: The past few months have seen BBY trading in an ever-narrowing consolidation range, with each low getting successively higher, as the rallies continue to be turned back from resistance near $55. This time it looks like things could be different and if the stock can break out over the bottom of the early December gap ($55.50) we could be off to the races. Use a trigger above that level and target a near-term move to close the gap at $57.50, before continuing up to test the $60 level once again. Chart= --- JP Morgan Chase & Company - JPM - close: 41.53 change: +0.51 WHAT TO WATCH: In case you hadn't noticed, Financial stocks are continuing to surge higher and JPM is no exception. Finding support at former resistance near $40 last week, the stock vaulted higher into the weekend and completed its breakout with Monday's surge over the $41.50 level for the first time since the summer of 2001. Look for continued bullishness to carry JPM up to next resistance near $44 and quite possibly as high as $46 in the weeks ahead. Chart= --- =================== On the RADAR Screen =================== LEN $52.06 - Going along for the ride with the rest of the Housing sector on Monday, LEN finally broke above its early December highs to once again reach new all-time highs. Entries look good at this point either on a continued breakout over $52.50 or on a pullback to confirm new support near $50. AFFX $35.14 - Shares of AFFX have been on a strong bullish run since the start of the year, but despite that extended condition, the stock once again broke out to new recent highs and closed over its 200-week moving average. Look for continuation entries on a pullback near $33 support and then ride the rally higher towards next resistance near $38.50. IDTI $17.40 - Although it has been lagging the rebound in the overall NASDAQ, shares of IDTI have put in a pretty convincing base near $16 over the past month and it looks like the rebound is under way. Use an entry trigger over the 50-dma and look for the breakout to carry IDTI up near the $20 resistance level. ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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 advertising@PremierInvestor.net. ***************************************************************** Copyright 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Monday 03-01-2004 section 2 of 2 Copyright (c) 2004, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= Stop Loss Updates: ANN, LIN, ARA, SPF, XMSR Closed Plays: None Split Announcement: UUU Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================== Stop Loss Updates ================================================================== ANN, raise stop from 42.99 to 43.50 LIN, raise stop from 32.00 to 32.75 ARA, raise stop from 33.50 to 34.50 SPF, raise stop from 47.50 to 49.99 XMSR, raise stop from $22.00 up to $23.00 ================================================================== Closed Plays ================================================================== None ================================================================== Stock Splits ================================================================== Announcements ------------- UUU announces 4-for-3 split This morning before the opening bell Universal Security Instruments, Inc. (AMEX:UUU) announced a 4-for-3 stock split in the form of a 33.3% stock dividend. The dividend is payable on April 5th, 2004 to shareholders on record as of March 15th. Fractional shares will be paid in cash. About the company: UNIVERSAL SECURITY INSTRUMENTS, INC. (www.universalsecurity.com ), founded in 1969, is a worldwide marketer of safety and security products directly and through its 50%-owned Hong Kong joint venture. (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 TOT Total Sa (ADS) 93.90 +1.91 SC Sgell transport & Trading 42.97 +0.88 RD Royal Dutch Petrol 50.61 +1.02 NTT Nippon Tel & Tel (ADS) 24.25 +0.97 MO Altria Group Inc 58.18 +0.63 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- FON Sprint FON Group 19.21 +1.48 CYTC CYTYC Corporation 18.75 +2.26 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- TM Toyota Motor Corp (ADS) 70.70 +1.57 E Eni Spa (ADS) 101.34 +2.52 BF BASF Ag (ADS) 54.92 +1.46 OXY Occidental Petro Cp 46.43 +2.03 GIS General Mills Inc 47.19 +1.21 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- HCA HCA Inc 41.20 -1.32 WPPGY WPP Group Plc (ADR) 54.70 -1.41 UNP Union Pacific Corp 62.51 -1.13 MEDI Medimmune Inc 24.10 -1.59 HEW Hewitt Associates 31.41 -1.14 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- CTXS Citrix Systems Inc 20.74 -0.51 ANAT American National Insur 92.29 -2.12 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to remove@PremierInvestor.net ================================================================= 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 advertising@PremierInvestor.net. ***************************************************************** Copyright 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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