PremierInvestor.net Newsletter Wednesday 03-03-2004 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: Stocks Churn Ahead of Intel and Jobs Report Watch List: BSX, TRMS, BBY, COH 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) =============================================================== 01-28-2004 High Low Volume Advance/Decline DJIA 10468.37 -141.55 10658.43 10437.78 2.29 bln 740/2166 NASDAQ 2077.37 - 38.67 2128.00 2073.15 2.30 bln 840/2263 S&P 100 559.49 - 7.66 569.55 558.27 Totals 1580/4429 S&P 500 1128.48 - 15.57 1149.14 1126.50 RUS 2000 583.91 - 11.26 598.46 582.84 DJ TRANS 2967.68 - 73.54 3044.87 2964.88 VIX 16.78 + 1.43 40.13 15.29 VXO 17.10 + 1.78 17.11 15.24 VXN 25.16 + 2.13 25.21 22.83 Total Volume 5,145M Total UpVol 1,040M Total DnVol 3,963M 52wk Highs 636 52wk Lows 12 TRIN 1.39 PUT/CALL 0.85 =============================================================== =========== Market Wrap =========== Stocks Churn Ahead of Intel and Jobs Report by James Brown A slight majority of stocks turned around early morning weakness on Wednesday to close mildly higher as major indices ended the session near unchanged. Uninspiring economic news coupled with caution ahead of Intel's mid-quarter update on Thursday night and the jobs report on Friday morning kept stocks in neutral. Meanwhile the media coverage of the Walt Disney shareholder vote to keep embattled CEO Michael Eisner reached a frenzied state. Global markets were generally lower lead by a 277-point decline in the Chinese Hang Seng index. The U.S. dollar continued its gains against the euro while trading close to unchanged versus the yen. Crude oil futures slipped 86 cents to $35.80 a barrel after the U.S. Department of Energy and the American Petroleum Institute reported a rise last week in crude oil supplies of 1.6 to 2.0 million barrels compared to previous estimates for a decline. Gold slipped $1.10 to $392.70 an ounce and copper futures plummeted 5.1% to $1.301 a pound, erasing last week's gains. Market internals for the U.S. exchanges were mixed. Advancing stocks just edged past decliners by a narrow margin on the NYSE while the A/D line was virtually even on the NASDAQ. Overall volume was soft but down volume outweighed up volume on both exchanges. The volatility indices traded higher on the early morning weakness but reversed course as stocks pared their losses. The Dow Jones Industrial Average closed up 1.63 points to 10,593 and traded in a relatively tight 60-point range. The index held support at the 10,550 level and its 50-dma once again. The S&P 500 followed the Dow with a 1.93-point gain to 1,151, regaining all of this morning's losses and holding above support at its 40- dma. The tech-heavy NASDAQ was hampered by selling in the semiconductor sector but only lost 6 points to close at 2033. Trading in the NASDAQ Composite was limited to a 19-point range. Insurance, biotechs and bank stocks were the strongest sectors while investors rotated out of chips, Internets, networking and hardware issues. Chart of the DJIA: Chart of the NASDAQ: The major economic reports out this morning were the Institute for Supply Management's non-manufacturing index (or services index) and the Fed's Beige Book report. The January ISM services index came in at 65.7, a record high. Economists were expecting a drop to 63 percent in February. The actual number was 60.8, a bullish reading but worse than expected. Readings over 50 indicate expansion and growth and February's 60.8 marks the 11th consecutive month of growth for the services index. On Monday investors were encouraged by a better than expected reading in the manufacturing sector's employment index. Today's services employment component slipped from 53.4 in January to 52.7 in February, which bolsters the very cautious enthusiasm for this Friday's employment report. The Federal Reserve's Beige Book report, which reports on economic conditions from the Fed's 12 regional districts, was largely ignored. The report was positive and suggested that employment was improving albeit slowly. Expectations for a strong Q1 GDP number are still alive but no one seems to be expecting any blow out job number gains. Speaking of jobs Disney CEO Michael Eisner may be in for a tougher fight than he thought to keep his. Today was Disney's annual shareholder meeting where investors voted to re-elect Eisner. Since Eisner was running unopposed for the top spot at Disney dissidents seeking his removal made their voices known by "withholding" their votes. Of the 1.779 billion votes cast about 771.7 million or 43% of the vote elected to oust Eisner. This was an unprecedented occurrence and will likely force the Board of Directors to reconsider their support for Eisner. Adding to the pressure to remove Eisner, who has lead Disney for 20 years, was a statement from California's CalPERS pension fund who asked Michael to step down by the end of the year. Comcast Corp (CMCSA), who issued an unsolicited bid to buy Disney a couple of weeks ago, wasted no time and quickly issued a statement telling the Disney board and shareholders that Disney's management should meet with Comcast to reconsider their "generous" proposal. Disney (DIS), a Dow component, lost 11 cents on the session to close at $26.65. Another Dow component doomed to suffer the spotlight tomorrow is Intel Corp (INTC). Intel will hold their mid-quarter update Thursday after the closing bell. Earlier this week on Monday a J.P.Morgan analyst downgraded INTC due to slower notebook sales and product delays. JPM also suspects that Intel will not raise guidance tomorrow for the first time in almost a year. Setting the tone was Xilinx's mid-quarter update on Tuesday night. Xilinx, another semiconductor maker, only narrowed their guidance to the top of their previous range and investors punished the stock with a 3.99% loss today. If Intel fails to raise guidance or somehow inspire investors again Friday could be a very tough session for tech stocks. Caution ahead of tomorrow's meeting drove both Intel and the SOX semiconductor index to a 1.89% loss. Intel and the sector are likely to trade sideways to down tomorrow and this could be a wet blanket on any attempted bounce in the NASDAQ tomorrow. I'm not expecting a lot of excitement tomorrow. We do have a few economic reports but nothing too inspiring. The January Factory Orders report is expected to dip 0.6% from December's 1.1% gain. The Q4 productivity numbers are forecasted to rise 2.7%, which would confirm an earlier preliminary reading. The weekly initial jobless claims are expected to drop 5,000 to 345,000 this week. The real focus will remain on Intel's report Thursday night and the Jobs report Friday morning. Estimates are for unemployment to remain unchanged at 5.6% while the non-farms payroll report is expected to show a gain of 125,000 new jobs in February. I would hesitate to initiate new bullish positions, especially in tech stocks until after the Jobs report. ================================================================== 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 --------------------------------- Boston Scientific Corp. - BSX - close: 43.15 change: +0.95 WHAT TO WATCH: Choppy action in the broad market certainly isn't holding BSX back, as it continues to set one new high after another. After a late February dip, the stock is marching higher again and is on the verge of breaking out. Use a trigger over the February high ($43.60) and look for a rally into the $47-48 area. --- Trimeris Inc. - TRMS - close: 18.12 change: +0.50 WHAT TO WATCH: Disappointment over the progress of TRMS' HIV drug sent the stock into a nosedive last fall, continuing the plunge that began at the end of July. But it looks like it has finally reached bottom, as demonstrated by the lack of negative price action following its recent earnings report. TRMS broke over the 50-dma today and looks poised to challenge the post earnings high at $18.89. If TRMS is able to scale that resistance, look for a move to fill the gap to $20 and possibly test $21 resistance. --- Best Buy Company Inc - BBY - close: 54.31 change: +0.24 WHAT TO WATCH: The consolidation pattern of the past few months may be coming to an end, as BBY inches closer to key resistance at $55.50, right at the bottom of its early December gap. A break above that level should be good for a run back to the $59- 60 resistance area, which is now right at the bottom of the broken channel. --- Coach Inc. - COH - close: 42.47 change: +0.47 WHAT TO WATCH: Briefly halted below the $40 resistance level late last month, shares of COH blasted higher on Monday and haven't even begun to look back yet, with the stock closing at a new all- time high today. It may be a bit too aggressive to chase the stock higher, but a pullback near $40 would provide a great entry for new bullish positions. Target a rally up to the $45-46 area. --- =================== On the RADAR Screen =================== FLML $24.33 - The past few months have seen a see-saw battle between the bulls and bears in FLML, but it looks like the bears are winning, with the recent pattern of lower highs. Today's drop may be the end of the latest feeble rebound and if price breaks under last week's lows at $23, we can look for a quick drop to $20 support. PMCS $19.68 - Technology stocks just aren't looking very healthy right now and PMCS broke solidly below both the 100-dma and horizontal support just below $20 today. Look for continued weakness to pressure the stock down towards strong support near $17.50. Failed rebounds in the $20.00-20.50 area will provide the best entries. FNF $39.62 - It doesn't take a genius to see that shares of FNF look pretty extended up here, but that doesn't mean another strong breakout isn't lurking around the corner. The stock pushed up very near its recent highs on Wednesday, and looks poised for a breakout to new all-time highs. Use a trigger over $40. ================== 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 SBC SBC Communications Inc 25.41 -0.07 VZ Verizon Communications 39.01 -0.45 BLS Bellsouth Corp 28.68 -0.13 AET Aetna Inc New 81.21 +0.32 KIM Kimco Realty Corp 48.50 +0.00 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- ELN Elan Corp Plc 16.36 -0.64 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- HIT Hitachi Ltd 69.14 -0.36 IGT Internat Game Technology 42.07 -0.58 RIG Transocean Inc 30.87 -0.28 HB Hillenbrand Industries 69.21 +0.01 ACV Alberto-Culver CI B 45.20 +1.55 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- HBC HSBC Holdings Plc 77.75 -1.03 LOW Lowe's Companies Inc 55.68 +0.40 NYB New York Community Bancorp 32.75 -0.30 MERQ Mercury Interactive Corp 46.10 -0.73 WFSI WFS Financial Inc 41.48 -0.08 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- 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 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Wednesday 03-03-2004 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: LIN, ARA Net Bulls (Tech Stocks) New Bearish Plays: NVLS Active Trader (Non-tech Stocks) New Bullish plays: HAL Stock Splits Announcements: CNT ================================================================== Stop Loss Adjustments ================================================================== LIN - raise stop to $33.75 -- plan to exit at $36.25 ARA - raise stop to $34.95 -- plan to exit at $37.75 ================================================================== Net Bulls (NB) Tech Stock section ================================================================== --------- New Plays --------- New Bearish Plays ----------------- Novellus Systems - NVLS - close: 31.15 change: -0.79 stop: 34.00 Company Description: Providing equipment for advanced Semiconductor manufacturing, NVLS focuses on advanced, high-productivity thin film deposition systems and surface preparation systems used in the fabrication of integrated circuits. Utilizing Chemical Vapor Deposition (CVD), Physical Vapor Deposition, electroplating, photoresist strip and residue removal systems, the company's products provide high film quality while attaining the high levels of productivity required to meet the semiconductor industry's need for high- volume, low-cost wafer production. Why we like it: Even on a nominally flat day, the Semiconductor index (SOX.X) just couldn't hold it together, shedding nearly 2% to close right on the $500 support level. This is the key sector for the Techs and the fact that it is continuing to deteriorate does not bode well for the bulls. Among Chip stocks, NVLS has been exceptionally weak following its meltdown at the end of January. Since then the stock has been trading in what appears to be a continuation flag pattern and today's break below the bottom of the trading range for the past several weeks suggests a continuation of the slide that preceded the consolidation. NVLS is below all of its moving averages to the point that nothing longer-term than the 30-dma ($34.03) is even part of the near- term equation. One particular thing worth noting though is that the 50-dma ($37.26) did cross under the 200-dma ($37.71) on Monday, and this is typically a bearish omen. The PnF chart offers no hope for the bulls either, with the strong sell signal generated in late January producing a bearish price target of $19. A trade at $31 will reinforce the current bearish picture with another PnF Sell signal and with price well below the bullish support line, the bears should be able to have some fun. The only fly in the ointment is the scheduled mid- quarter update from INTC after the close tomorrow. Any surprises there could produce some volatility, meaning that conservative traders may want to wait for the outcome from that news event before playing. With today's break of recent support, we aren't going to use a trigger on NVLS. Momentum traders can enter on a break under $31 (preferably after the INTC news is out of the way), while a bounce back into the $32-33 resistance area will provide a better entry price. The 10-dma ($32.39) and 20-dma ($32.89) should reinforce this resistance area, unless there is a big positive surprise from INTC tomorrow. We're initially placing our stop at $34, which will be above last week's intraday high and will be above the 30-dma by tomorrow. While initial support will likely be found in the $27-28 area, we're targeting a continued fall to $26, the site of the lows from last spring. Annotated Chart of NVLS: Picked on March 3rd at $31.15 Change since picked +0.00 Earnings Date 1/26/04 (confirmed) Average Daily Volume = 6.48 mln ================================================================== Active Trader (AT) Non-Tech Stock section ================================================================== --------- New Plays --------- New Bullish Plays ----------------- Halliburton Hldg. - HAL - close: 31.50 change: -0.40 stop: 30.00 Company Description: Halliburton Company provides a variety of services, products, maintenance, engineering and construction to energy, industrial and governmental customers. The company operates in two business segments: energy services group and engineering and construction group. The energy services group provides a wide range of discrete services and products, as well as integrated solutions to customers for the exploration, development and production of oil and gas. The engineering and construction group provides onshore operation, offshore operation, government operation, operations and maintenance services and infrastructure services to energy and industrial customers and government entities worldwide. Why we like it: After several months of consolidation, HAL shook off the effects of the bad press surrounding its contract awards in the Middle East and broke out strongly over the $25 level in mid-December. Since then, we've seen the stock trading in a methodical manner, producing a clean ascending channel that promises to lead the stock up to next firm resistance near $35. After pushing to new highs on Monday, HAL rolled over near the midline of its rising channel and has now pulled back right to the bottom of that channel, just above the supportive 20-dma ($31.07). With the PnF chart solidly bullish with a vertical price target of $40.50, it is clear that there is plenty of upside for us to take advantage of and our $35 target for the play certainly seems reasonable. HAL is not a fast moving stock, but the price action is methodical, making it an ideal candidate for a longer-term play. The pullback of the past two days is setting up the next bullish entry point. But with daily Stochastics just beginning their trek from overbought towards oversold, we can afford to be patient in seeking that entry. Look for a drop to the $31 area to provide the best entry into the play, but keep in mind that it may require a few days to work off the near-term overbought condition and for price to reverse back upwards. We're using a fairly tight stop at $30, as that is just below the reaction low from February 24th, as well as the 30-dma ($30.53). Should both of those levels give way, we can rightly assume that HAL will need to regain its footing before continuing upwards. If price rebounds strongly from current levels to hit the top of the channel (currently at $34), we'd recommend harvesting some gains and then look to re-enter on the next pullback to the bottom of the channel. Annotated Chart of HAL: Picked on March 3rd at $31.50 Change since picked +0.00 Earnings Date 1/29/04 (confirmed) Average Daily Volume = 3.86 mln ================================================================== Stock Splits ================================================================== Announcements ------------- CNT announces a 2-for-1 split After today's closing bell CenterPoint Properties Trust (NYSE:CNT) announced that its Board of Directors had approved a 2-for-1 stock split and a cash dividend of 78 cents per share. The 2:1 split is subject to shareholder approval and a vote to increase the number of authorized shares from 50 million to 120 million. CNT's annual shareholder meeting will be May 18th, 2004 and the shareholder vote on the split will be held then. If approved management will then announce the record and distribution dates. The cash dividend of 78 cents per share is payable on April 14th, 2004 to shareholders on record as of April 7th. About the company: CenterPoint is a publicly traded real estate investment trust (REIT) and the largest industrial property Company in the 1.3 billion-square-foot Chicago regional market. The Company and its affiliates currently own and operate approximately 36 million square feet and own or control an additional 3,267 acres of land upon which 50.1 million square feet could be developed. The Company is focused on providing unsurpassed tenant satisfaction and adding value to its shareholders through customer driven management, investment, development and redevelopment of warehouse, distribution, light manufacturing buildings and logistics infrastructure. The first major REIT to focus on the industrial property sector, CenterPoint had a total market capitalization of approximately $2.7 billion as of December 31, 2003. (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.
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