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Daily Newsletter, Monday, 03/22/2004

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PremierInvestor.net Newsletter                   Monday 03-22-2004
                                                    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 Sink Worldwide on Terror Concerns
Watch List:   ALVR, TRMS, OTEX, NANO

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     03-22-2004            High     Low     Volume Advance/Decline
DJIA    10064.75 -121.85 10186.15 10012.16 1.76 bln    602/2242
NASDAQ   1909.90 - 30.57  1929.28  1897.63 1.96 bln    645/2485
S&P 100   536.10 -  7.58   543.68   532.91   Totals   1247/4727
S&P 500  1095.40 - 14.38  1109.78  1089.49
RUS 2000  558.99 - 11.75   570.74   557.94
DJ TRANS 2750.80 - 36.03  2791.95  2746.30
VIX        21.58 +  2.43    22.67    20.61
VXO        21.43 +  2.27    22.66    20.41
VXN        27.15 +  1.16    27.79    27.06
Total Volume 4,218M
Total UpVol    430M
Total DnVol  3,740M
52wk Highs     159
52wk Lows       76
TRIN          3.32
PUT/CALL      0.97
===============================================================

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

Stocks Sink Worldwide on Terror Concerns
by James Brown

Mondays have been pretty rough for the markets this month but
this time the selling was felt globally.  Early morning news that
the Israeli military had killed a key Hamas leader in Palestine
sent stocks lower around the globe on heightened terror concerns
for retaliation.  Airlines stocks were key leaders to the
downside followed by biotech and tech-related stocks.

Last Friday the markets were focused on a heated battle between
the Pakistani military and several hundred suspected Al Qaeda
militants just outside the Afghanistan border.  It was rumored
that Osama Bin Laden's right-hand man, Ayman Al-Zawarhi, was
cornered and the reason for such stiff resistance.
Unfortunately, by Monday Pakistan was downplaying who might be
found when the fighting eventually ends after discovering that
any high-value targets may have escaped through a series of
tunnels from the rebel hideouts.

Investors were also focused on the Taiwan general election held
Saturday after Friday's shocking assassination attempt on the
current President and Vice President.  The two were shot and
injured on Friday while campaigning but neither were seriously
injured.  Now that the election is over and the incumbents won by
a very narrow margin the opposition leader Lien Chen is fighting
for a recount among allegations that the President may have faked
the assassination attempt.

The real story responsible for today's stock market weakness was
news that the Israeli government had eliminated Sheikh Ahmed
Yassin.  Yassin was considered the spiritual leader of the Hamas;
which is an extreme Islamic fundamentalist group in Palestine
whose purpose is the destruction of Israel.  Not surprisingly the
U.S. State Department has labeled Hamas as a terrorist
organization.  Some even referred to Yassin as the godfather of
the suicide bombings that have been plaguing the region for
years.  The global concern is that terrorists organizations
around the world will "retaliate" against their local
governments, U.S. interests and or the U.S. itself.  Israel has
denied the allegations that it informed the U.S. of its plans but
that has not stopped Islamic groups from pointing fingers at the
U.S. and saying we must take responsibility for the attack.  CNN
said that one Islamic website published a statement from Al Qaeda
saying they would seek revenge against the U.S.

With the Madrid bombings still fresh in everyone's memory the
natural reaction was to sell stocks and sell they did.  Asian
stocks were hit hard with the Japanese NIKKEI down 100 points to
11,318.  The Chinese Hang Seng fell 239 points to 12,550.  The
Taiwan exchange's main index fell 6.7%, its biggest decline in
eight years.  European stocks were hit hard as well.  The British
FTSE dropped 1.9% to 4333.  The French CAC fell 2.05% to 3539 and
the German DAX dropped 2.35% to 3729.  According to Bloomberg all
17 of the Western European markets closed lower and 46 of the 59
world indices they track traded lower on Monday.

The Dow Jones Industrials dropped almost 122 points to close at
10,064 up from its lows near 10,012.  The NASDAQ Composite
slipped more than 30 points to 1909 but it too rebounded from its
lows near 1897.  The S&P 500 index declined 14 points to 1095
closing under key support at the simple 100-dma and the 1100
mark.  As one would expect market internals were very bearish.
Declining stocks outnumbered advancers 22 to 6 on the NYSE and
more than 4-to-1 on the NASDAQ.  Down volume completely
overshadowed up volume by more than 12-to-1 on the NYSE and about
7-to-1 on the NASDAQ.  It was just last Monday (3/15/04) that we
witnessed heavy down volume of 9-to-1 and 10-to-1 extremes.

These are very bearish extremes and they don't bode well for the
future.  The bounce from the 10,000 level in the Dow today might
offer us a chance at an oversold rebound but I don't have a lot
of confidence on how high it can go - not with new resistance
near 10,325.  The NASDAQ produced a similar bounce from its test
of the 1900 level but odds of a rebound here are stronger with
the simple 200-dma at 1886.  Of course the NASDAQ hasn't hit this
technical support just yet so it may remain weak until it does.
The bad news/good news for tech stocks is the semiconductor
sector (SOX).  It closed under its simple 200-dma (bad news) but
it bounced from historical price support near 450 (good news).
Maybe the SOX bouncing from 450 can help the NASDAQ bounce from
1900.

What's really disturbing is the breakdown in the S&P 500 index.
It has broken support at both the 1100 mark and the simple 100-
dma.  Yes, the afternoon bounce from its lows looks like it might
continue to rebound tomorrow but this index looks like a short
with some support at 1075 and more support near its 200-dma at
the 1050 level.  One potential saving grace is the fact that the
S&P 500 is now down 5.4% from its highs.  A lot of investors have
been waiting for a "correction" from the highs in the market to
jump back in.  The S&P 500 is considered to be "the market" more
than the Dow or the NASDAQ.  The only problem is that a
correction tends to be 5% to 10%.  This is the first 5%
correction for the S&P in a year.  Meanwhile the Dow is down 6.3%
and the NASDAQ is down 11.3% from its recent highs.  The only
challenge I see here is that new terrorism fears are a growing
concern that will impact investor eagerness to buy the pull back.

Chart of the Dow Industrials:



Chart of the NASDAQ Composite:



Chart of the S&P 500:



Renewed terror concerns are no stranger to the airline stocks and
the combination of the Madrid bombings, today's event in Israel
and the rising cost of oil has sent them to new relative lows.
The XAL airline index dropped 3.2% to levels not seen since early
August 2003.  Terror concerns aside the rising price of fuel is
killing the sector.  It is estimated that for every $1 jump in
crude oil prices that the airlines lose about $500 million a year
in profits.  Right now oil is near 13-year highs in the $37-38
range and expectations are for oil to hit $40.00 a barrel soon.
This has lead both Lehman Brothers and Merrill Lynch to issue
some negative comments on the sector this morning, which only
added to the selling pressure.  One analyst suggested that the
airline industry will report a loss of more than $2 billion in
2004 instead of the previously estimated $600 million loss.
Hopefully the recent rumors that OPEC may actually postpone their
planned April production cuts are true and we'll see a pull back
in the price of crude oil; which would benefit the entire
economy.

Speaking of the economy Wal-Mart (WMT), the world's largest
retailer, seems to be doing well.  The Dow component said its
March same-store sales are still tracking near the high end of
its 4% to 6% growth range.  In their update this morning WMT said
seasonal items for Easter along with food and electronics were
their strongest categories.  WMT wasn't alone when it came to
issuing good news.  Another big cap retailer, the Limited (LTD),
pre-announced stronger earnings after the bell this evening.
Analysts had been expecting LTD to turn in 9 cents a share but
the company now sees earnings in the 11 to 13 cent range.
Boosting performance have been strong results from its Bath &
Body Works and its Victoria's Secret stores, which recently
launched a new bra line earlier this month (-Reuters).

Another Dow component making headlines was Microsoft (MSFT).  The
EU has finally decided to fine MSFT 479 million euros or $613
million for its antitrust practices.  That in and of itself is
not a big deal.  MSFT has been hoarding cash and currently sits
on more than $50 billion.  Of course MSFT doesn't believe it
should be fined at all and plans to appeal the decision.  What
concerns the market is how the EU might punish MSFT with new
regulations on how to do business in Europe.

Tomorrow could be interesting for traders.  Will the major
indices continue the feeble afternoon bounce from critical
support levels at 10,000 for the Dow and 1900 for the NASDAQ?
Will the S&P 500 rebound back over the 1100 level?  Or has the
Hamas leader elimination in Palestine already set the tone for
the week?  Tuesday is empty of any economic reports but we will
hear earnings reports from Goldman Sachs (GS) in the morning and
Red Hat (RHAT) after the closing bell.  Wednesday brings the
Durable Goods Orders and the New Home Sales numbers.  Meanwhile
it may not make the news but there will be at least three Federal
Reserve governors (Guynn, Minehan and Parry) speaking across the
country on Wednesday as well.


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

Alvarion Ltd. - ALVR - close: 12.86 change: -1.64

WHAT TO WATCH: Small cap stocks have had a great run over the
past year, but the luck of the Irish seems to have abandoned
them.  ALVR got pummeled to the tune of a more than 11% loss on
Monday and on huge volume too.  We don't want to try chasing it
lower after such a strong move down, but with the break of the
rising channel, this looks like a real change in trend.  Look for
an oversold bounce to roll over in the vicinity of $14.00-14.50
resistance and ride the stock down towards strong support near
$11.

Chart=


---

Trimeris Inc. - TRMS - close: 15.28 change: -1.23

WHAT TO WATCH: Remember last week when we looked at shares of
TRMS as a potential short candidate with its breakdown under the
$16.50 level.  We didn't get much of a rebound before the bears
slammed it lower today on strong volume.  If you missed it last
time, then another failed bounce below $16.50 still looks good
for entries into the play.  Target strong support in the $11.50-
12.00 area.

Chart=


---

Open Text Corp. - OTEX - close: 27.32 change: -1.18

WHAT TO WATCH: Breakdowns are occurring all over the place and
OTEX is just starting its own.  Monday's heavy selling punctured
support in the $27.25-27.50 area and the stock barely managed to
hang on into the end of the day.  The bad news is that the stock
clearly broke under its 50-dma for the first time this year.  Use
a trigger under today's low and target a drop to strong support
near $24.

Chart=


---

Nanometrics Inc. - NANO - close: 14.44 change: -0.95

WHAT TO WATCH: Continuing its solid bearish trend, shares of NANO
rolled over at their 10-dma on Friday and slid further today,
posting its worst close since December.  A break below $14 can be
used to trigger entries looking for a continued decline down to
strong support near $12.  Watch for possible near-term support at
the 200-dma, just under $13.

Chart=


---

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

VECO $24.90 - Like so many other NASDAQ stocks, VECO is on the
verge of another major breakdown.  Still trying to cling to
support in the $24.50-25.00 area, if that support gives way, the
stock should seek out next strong support at $22.

PXLW $13.96 - After nearly two weeks of trying to build a viable
support level, it looks like PXLW is rolling over again and
Monday's 5.5% slide on rising volume is not encouraging for the
bulls.  Entries look favorable on a break below $13.75, using a
downside target at $12, which is the bottom of the early January
gap.  Watch for potential support at the top of the gap just
under $13 on the way to that goal.

ESIO $22.30 - The past several months have seen ESIO tracing out
a huge complex H&S pattern and it looks like the break below the
neckline is about to occur.  Selling volume has been on the rise
the past two sessions and if it continues, tomorrow could see the
break of key support near $21.65.  The conservative way to play
would be to wait for a drop through $21.50 before entry.  Look
for a drop all the was to strong support near $19.


=================================================================
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 03-22-2004
                                                    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:   VRTS, BBY, PRX, HGSI

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

VRTS - short
Adjust from $30.05 down to $29.35

BBY - short
Adjust from $49.50 down to $48.10

PRX - short
Adjust from $61.00 down to $60.25

HGSI - short
Adjust from $13.20 down to $12.50


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

FNM     Fannie Mae                 75.60    +0.55
FRE     Freddie Mac                59.98    +0.82
GD      General Dynamics Corp      86.85    +0.57
AZO     Autozone Inc               84.56    +0.88
DF      Dean Foods Company         34.77    +0.53


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

USON    US Oncology Inc            15.14    +2.44


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

ELAB    Eon Labs Inc               60.95    +3.58


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

MO      Altria Group Inc           52.96    -1.71
PTR     Petrochina Co Ltd (ADS)    50.30    -1.46
MWD     Morgan Stanley             58.24    -1.37
SPY     Standard & Poors Dep Rec  109.65    -1.41
SNP     China Pero & Chem (ADS)    37.10    -1.92
ZMH     Zimmer Holdings            72.81    -2.05


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

MAC     Macerich Co                52.00    -0.33
ZLC     Zale Corporation           60.26    -0.99
LECO    Lincoln Electric Hldgs     27.01    -0.51


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





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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