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Daily Newsletter, Monday, 03/08/2004

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PremierInvestor.net Newsletter                   Monday 03-08-2004
                                                    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:  Singing The Monday Blues
Watch List:   LLTC, ISIL, LRCX, INTC

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     03-08-2004            High     Low     Volume Advance/Decline
DJIA    10529.48 - 66.07 10634.29 10526.89 1.55 bln   1108/1744
NASDAQ   2008.78 - 38.85  2058.25  2008.78 2.03 bln   1017/2051
S&P 100   563.67 -  4.78   569.98   563.53   Totals   2125/3795
S&P 500  1147.20 -  9.66  1159.94  1146.97
RUS 2000  592.51 -  7.03   603.12   592.34
DJ TRANS 2868.65 - 24.42  2894.23  2859.31
VIX        15.79 +  1.31    15.83    14.54
VXO        15.33 +  0.53    15.35    14.49
VXN        24.08 +  2.00    24.11    22.82
Total Volume 3,997M
Total UpVol    909M
Total DnVol  2,872M
52wk Highs     704
52wk Lows       12
TRIN          1.70
PUT/CALL      0.82
===============================================================

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

Singing The Monday Blues
by James Brown

The markets struggled to find direction on Monday for most of the
session as investors peered through a post-jobs report hangover.
Last Friday the major indices all performed relatively well
despite the abysmal jobs number but now that Wall Street has had
the weekend to think about it investors seem a little more
apprehensive.  What was a divided market this morning turned into
a market-wide rout lead by steep losses in Dow components Intel,
General Electric and Eastman Kodak.

Foreshadowing today's loss in the U.S. exchanges was a failed
rally in the Japanese NIKKEI index.  The NIKKEI rallied to a new
high hitting levels not seen since the summer of 2002 before
reversing sharply and closing down 34 points to 11,502 about 140
points off its highs for the session.  In contrast the Chinese
Hang Seng index added 118 points to close at 13,573.

European stocks were mostly higher as the dollar fell against the
euro for the second session in a row.  Boosting buying pressure
in German stocks were rumors that J.P.Morgan (JPM) might be
interested in buying Deutsche Bank.  These rumors followed
similar speculation last week that Citigroup may be interested in
the German firm.  Speaking of Deutsche Bank the firm upgraded
their earnings outlook for mobile-phone maker Nokia (NOK).  Both
NOK and rival Ericsson (ERICY) had broken out to new two-year
highs last week and despite the Deutsche news neither NOK or
ERICY could build on last week's gains.  The Gartner research
group estimates that handset sales could surge to 560 million
phones in 2004, a 10% increase above last year's record-setting
510 million units.

Today's losses in the Dow Industrials (-66 points) and the NASDAQ
Composite (-38.8 points) do not bode well for the rest of the
week.  The Dow closed under its simple 50-dma, a level of
technical and psychological support, for the first time since
last November.  For many traders this is a major test of
confidence and if the Dow fails to rebound in the next couple of
sessions it may be their signal to sell.  Fortunately, the Dow
has bounced from short-term support above 10,520 twice in the
past couple of weeks and there is additional support in the
10,400-10,500 range.  Too bad the short-term trend of lower highs
doesn't inspire a lot of confidence.

Chart of the Dow Jones Industrials:



The pull back in the NASDAQ today had a lot more sting to it.
The index lost 1.89% lead by heavy losses in semiconductors and
the rest of the tech sector.  Intel is the major villain in this
story.  The chip giant (INTC) broke through major technical and
psychological support at its simple 200-dma today.  Technicians
will note that today's 4.45% drop was fueled by twice the average
volume, which suggests the decline isn't over yet.  A lot of
traders forgot about Intel on Friday as the markets reacted to
the jobs report but memories of last Thursday's disappointing
mid-quarter update came flooding back as investors turned
cautious ahead of Texas Instruments and TriQuint's updates after
the bell this evening.  Intel is a Dow component, a NASDAQ-100
component and a SOX component so its decline was a huge drag on
the markets.

Chart of Intel:



Tomorrow will be a critical day for tech traders as the NASDAQ
tests the 2000 level again and its simple 100-dma.  Many
investors were optimistic that the NASDAQ's gain last week,
breaking a six-week losing streak, was the beginning of its next
leg higher.  Unfortunately, last week's failure at its simple 50-
dma overhead looks pretty ominous and sets another lower high in
its consolidation pattern.  Even its MACD indicator, which had
produced a new buy signal late last week has reversed again back
into bearish territory.

Chart of NASDAQ:



Overall market internals were pretty negative but that's not a
big surprise given the widespread declines.  The advance-decline
numbers were positive early on but by the closing bell losers
outnumbered winners 17 to 11 on the NYSE and 2 to 1 on the
NASDAQ.  Down volume was more than double up volume on the NYSE
and almost four times up volume on the NASDAQ.  Total volume was
light at 1.55 billion on the NYSE but over 2 billion on the
NASDAQ.

Bullish broker calls for cyclical stocks and Dow components
Caterpillar (CAT) and United Technologies (UTX) help boost both
stocks to early gains and the two were some of the best
performers in the Dow.  Prudential upgraded CAT from "under
weight" to "neutral weight" and raised its price target to $86
while upping their earnings estimates for 2004 and 2005.
Meanwhile SG Cowen suggested that investors buy UTX ahead of its
March 18th analyst meeting.  Unfortunately, these gains faded by
the close leaving both stocks with rather unappealing failed
rally patterns.  Contributing to the overall bearish tone were
defensive comments from both Merrill Lynch and Smith Barney.  The
latter told clients that they expect the S&P 500 to close near
1,025 by the end of 2004 - an 11% drop from Friday.  Merrill
Lynch's defensive comments suggested investors turn toward more
traditional safe haven stocks like health care and drugs.

Intel was not the only drag on the Dow Industrials.  Hefty
declines from General Electric and Eastman Kodak sapped the
strength from any rebound attempts and the two look almost
guaranteed to weigh on the index tomorrow.  Driving the drop in
shares of GE was the company's announcement to issue another 118
million shares of stock worth about $3.8 billion in order to pay
for its deal to buy Vivendi's entertainment assets.  GE already
has 10.08 Billion shares outstanding so another 118 million isn't
that big of an increase but investors still don't appreciate it
when a corporation dilutes the value of their stock.  Once the
deal is complete GE's NBC television network will own the Bravo
channel, CNBC, MSNBC, Telemundo, the Sci-Fi channel, and the USA
channel in addition to Vivendi's Universal theme parks.  The bad
news for shareholders is that today's drop looks pretty damaging.
The 2.86% decline was powered by 27.4 million shares, well above
the norm, and the move broke through support at $32.00.  If I had
to speculate a test of the 200-dma near $30.00 would not be out
of the question.

The drop in shares of Eastman Kodak is investor's response to EK
lowering their 2004 earnings outlook after purchasing the digital
print division of Heidelberger Druckmaschinen A.G.  EK now
expects to earn $2.05 to $2.35 a share in 2004, down from $2.25
to $2.55 per share even though the Heidelberg unit should boost
revenues by $175 million for the year.  EK tried to soften the
news by reaffirming their earnings estimates of $3.00 a share for
2006 but traders weren't buying it and sent the stock lower by
3.45% on very strong volume to test its simple 200-dma.

One stock that hasn't seen its simple 200-dma in several months
is Berkshire Hathaway (BRK.A and BRK.B).  Berkshire and its
widely admired CEO Warren Buffett were making headlines on Monday
after the second richest man in the world (He's worth about $42
billion) released his annual letter to shareholders over the
weekend.  Berkshire profits almost doubled in 2003 but you would
not have expected it if you read the Oracle of Omaha's letter
last year.  Summarizing last year's letter after Berkshire
reported record earnings and revenues in 2002 Buffett said that
it was a "banner year" but called the (2002) results abnormal and
not to expect it next year.  This year's letter is remarkably
similar with Buffett still echoing his mantra that he can't find
anything exciting to invest in (regarding stocks).  Furthermore
Buffett said that his stock's performance "will fall far short of
what it has been in the past."  It looks like investors are on to
his ruse of under promising and over-delivering as shares of
Berkshire's Class A stock rose $1,000 to $94,000 a share, just
under its recent all-time highs last month near $96,000.

Medical device makers also made the headlines today after a
federally sponsored study showed that ICD's were very successful
in reducing the risk of death for a "wide range of heart failure
patients".  The National Institute of Health launched the study
back in 1997 with more than 2500 patients.  At $25,000 per
device, ICD's are implantable cardiac defibrillators that zap the
heart back to normal after detecting any irregular heartbeats
that could prove fatal.  The top three manufacturers of ICD's,
Medtronic (MDT), Guidant (GDT) and St. Jude Medical (STJ), were
all halted prior to the report and all three traded higher
afterwards.  The study's findings are likely to double the number
of potential customers for ICD treatment.

It wouldn't be a Monday without some merger news and today is no
different.  The biggest deal today was BellSouth's (BLS)
agreement to sell its stake in 10 Latin American mobile phone
businesses to Spanish telecom Telefonica SA for $4.2 billion in
cash and $1.5 billion in assume debt.  A close second was
Extended Stay America's (ESA) deal to be acquired by the
Blackstone Group for $3.1 billion.  Coming in third was
J.M.Smucker's (SJM) announcement to buy International Multifoods
(IMC) for $500 million plus $340 million in assumed debt.  Last
but not least is Corvis, an optical networking equipment
producer, who announced plans to buy Focal Communications for
$101 million in stock.

Overshadowing all the merger news were the after hours mid-
quarter updates from Texas Instruments and TriQuint
semiconductor.  After last Thursday's bomb from Intel investors
were leery that TXN and TQNT might disappoint.  TXN had
previously guided Q1 earnings to the 16 to 22 cent range on
revenues of $2.72 to $2.95 billion.  In tonight's conference call
they tightened earnings to 19 to 22 cents, which is essentially
above the 19-cent consensus reported by Thomson Financial.  TXN
also tightened their revenue guidance to $2.84-2.95 billion above
average estimates at $2.85 billion.  TQNT followed suit by
raising their revenue guidance from $81-83 million to $85-87
million but reaffirmed their earnings guidance for a loss of 1-
to-2 cents per share.  Hopefully this is enough to stem the blood
flowing from the SOX semiconductor sector, which many technicians
believe tends to lead the NASDAQ.

Tomorrow will be all about testing support and whether or not the
major indices can remain within their recent trading ranges or
whether we see a new relative low.  Hopefully the chain store
sales numbers, the Redbook retail sales report and the Richmond
Fed manufacturing index, all reporting tomorrow will do their
share to boost investor morale and reverse today's losses.


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

Linear Technology Corp. - LLTC - close: 37.21 change: -1.89

WHAT TO WATCH: After spending the past four months building a
broad topping formation, shares of LLTC finally broke down today,
pressured by the selling in the SOX.  With volume topping 8
million shares, this was a heavy selling session, as price broke
under the 200-dma and key support at $39.  This opens the door
for a continued slide down to strong support in the $32-33 area.
Entries look favorable on either a failed bounce below the 200-
dma or on a break below $37.




---

Intersil Corporation - ISIL - close: 22.93 change: -1.35

WHAT TO WATCH: Let the selloff begin!  Monday's drop in the SOX
had a major impact on ISIL, with the stock shedding 5.6% to post
its worst close since early June.  The break under $23 smashed
key support and it looks like $20 is in play in the near term.
Use a trigger under today's low.




---

Lam Research Corp. - LRCX - close: 23.83 change: -1.23

WHAT TO WATCH: Looking weak but above solid support last week, we
were hesitant to list LRCX as a candidate until it broke support
at $24.  With the SOX weakness today, that support level fell and
it looks like the 200-dma should now be resistance.  There's
potential support near $22.50, but $20 looks like the realistic
downside target for this move.  A failed bounce below the 200-dma
would provide the ideal entry point.




---

Intel Corp. - INTC - close: 29.20 change: +2.89

WHAT TO WATCH: After breaking the $30 support and finding
resistance at that level in late February, INTC was certainly
looking like a viable bearish candidate, but the 200-dma was a
concern.  The stock sliced right through that level today and it
looks like $25 is the next downside target.  Use a trigger under
$27.25.




---

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

A $33.62 - Friday's rebound from the 50-dma was promptly reversed
today and A now looks like a solid breakdown play in process.
Use a trigger under $33 and look for the stock to fall to the $28
area before finding solid support.

GE $31.83 - With today's high-volume break below the $33 floor
that has been building for the past several weeks, GE looks like
it is in trouble.  The nascent decline won't be straight down, as
support will likely be found both at $31 and then the 200-dma
just over $30.  But following today's breakdown, solid support in
the $28-29 area may be a target worth shooting for.

PMCS $17.96 - Selling in the Technology sector hit PMCS pretty
hard on Monday, with the stock shedding more than 5% on volume
that more than doubled the ADV.  That slide dropped the stock to
key support and if $17.50 gives way, then a continued drop
towards strong support at $15 seems likely.  Watch for a
potential short-term rebound from the 200-dma at $16.43.


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

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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                   Monday 03-08-2004
                                                    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:   None
Split Announcement:  HOV, MTLM


Trading Ideas:       See Note

==================================================================
Stop Loss Updates
==================================================================

None


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

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

Hovnanian builds a 2-for-1 stock split

 Very early this morning homebuilder Hovnanian Enterprises, Inc.
(NYSE:HOV) announced that its Board of Directors had approved a 2-
for-1 stock split of its common stock.

The stock split will affect both Class A and Class B shares
whereas shareholders will receive one extra share be share held.
The split, in the form of a stock dividend, will be distributed on
March 26th, 2004 to shareholders on record as of March 19th.


About the company:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S.
Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The
Company is one of the nation's largest homebuilders with
operations in Arizona, California, Florida, Maryland, New Jersey,
New York, North Carolina, Ohio, Pennsylvania, South Carolina,
Texas, Virginia and West Virginia. The Company's homes are
marketed and sold under the trade names K. Hovnanian, Washington
Homes, Goodman Homes, Matzel & Mumford, Diamond Homes, Westminster
Homes, Fortis Homes, Forecast Homes, Parkside Homes, Brighton
Homes, Parkwood Builders, Summit Homes, Great Western Homes and
Windward Homes. As the developer of K. Hovnanian's Four Seasons
communities, the Company is also one of the nation's largest
builders of active adult homes.  (Source: Company Press Release)

---

MTLM recycles a 2-for-1 stock split


About 15 minutes before this morning's opening bell Metal
Management Inc. (NASDAQ:MTLM) announced that its Board of
Directors had approved a 2-for-1 stock split of its common stock.

The split will take effect as a stock dividend payable on April
20th, 2004 to shareholders on record as of April 5th.  The
company's Class A Warrants (NASDAQ:MTLMW) will also be affected.


About the company:
Metal Management is one of the largest full service metals
recyclers in the United States, with approximately 40 recycling
facilities in 13 states.
 (Source: Company Press Release)


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

We're sorry but the Premier Investor Trading Ideas
column is temporarily unavailable.  Please check back
with us tomorrow.


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

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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