Option Investor
Newsletter

Daily Newsletter, Sunday, 03/28/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter          Weekend Edition 03-28-2004
                                                    section 1 of 3
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:       Fear Factor!
Market Sentiment:  Not Convinced
Watch List:        YUM, MBG, FMC, XMSR

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 03-26        WE 03-19        WE 03-12        WE 03-05
DOW    10212.97 + 26.37 10186.6 - 53.48 10240.1 -355.47 + 11.63
Nasdaq  1960.02 + 19.55 1940.47 - 44.26 1984.73 - 62.90 + 17.81
S&P-100  543.52 -  0.16  543.68 -  6.24  549.92 - 18.53 +  3.91
S&P-500 1108.06 -  1.68 1109.74 - 10.83 1120.57 - 36.29 + 11.91
W5000  10840.18 - 12.80 10852.9 -115.20 10968.2 -346.24 +141.50
SOX      479.25 + 15.90  463.35 - 21.75  485.10 - 19.15 +  1.99
RUT      572.92 +  2.18  570.74 - 12.10  582.84 - 16.70 + 13.98
TRAN    2835.90 + 49.07 2786.83 - 76.26 2863.09 - 29.98 -  9.12
VIX       17.33 -  1.82   19.15 +  0.85   18.30 +  3.82 -  0.09
VXO       17.21 -  1.95   19.16 +  0.44   18.72 +  3.92 +  0.04
VXN       23.04 -  2.95   25.99 +  0.69   25.30 +  3.22 -  0.79
TRIN       0.89            1.93            0.44            1.40
Put/Call   0.77            1.03            1.05            0.79
WE = week ending
=================================================================

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

Fear Factor!
by Jim Brown

Was it the end of the bounce or just fear of weekend event
risk that sent the indexes plummeting at Friday's close? We
will have to wait for Monday's open to tell if the highs set
Friday afternoon will be surpassed. Considering the big gains
from Thursday a simple positive close would have been bullish
and it looked like a sure thing until 3:PM. Traders capped a
very boring consolidation day with a dramatic plunge back to
negative territory. Sounds bad but it wasn't despite what the
talking heads said. The indexes ended down only single digits
and the bulls will gladly take a single digit loss for every
triple digit gain.

Dow Chart - 180 min


Nasdaq Chart - 180 min




For what it is worth the economic calendar on Friday was
relatively light. The Personal Income for February rose
by +0.4% compared to estimates for only +0.3% with upward
revisions in several components for January. This report
was generally positive although spending slowed to its
lowest rate since October. Savings were up +1.9% and that
is a product of weakening consumer sentiment in February.

The final Michigan Consumer Sentiment for March was also
released and it jumped to 95.8 from 94.4 in February and
recovered from a weaker initial number two weeks ago. This
could be seen as a consumer rebound now that the economy
appears to be getting over its February blahs. The initial
campaign blasts are history and voters are beginning to
glaze over with the claims and counter claims. Jobs still
appear to be getting stronger and there was no follow on to
the Madrid attacks. Americans have a very short memory when
it comes to things happening outside the country and this
jump in sentiment proves that. The majority of the gains
were in the present conditions component which jumped from
103.6 to 106.8 while the future expectations component was
barely changed at 88.8 from 88.5. That expectations
component is down from 100.1 in January but as I have said
before it is likely due to candidates trashing the economy
in their speeches.

There were a couple of notable stock events on Friday and
one was the jump in GE stock. GE rose $1.25 intraday after
a Merrill Lynch analyst put the stock on its Focus One list.
He said the pressure on the stock over the last several
weeks was artificial due to acquisition pressures. GE issued
nearly $4B in new stock on March 8th to cover the Vivendi
acquisition and stock has trended down almost daily since
then. That was not the extent of the problem. GE has also
agreed to buy Amersham for $9.5B in stock and that deal is
expected to close on April 8th. The Merrill analyst said
that up to 50% of the Amersham stock, representing about
150 million GE shares, is in the hands of arbitragers. He
expects about 15 million shares of GE to be shorted daily
for the next two weeks as the arbitragers continue to
hedge their Amersham position.

If you owned a share of Amersham stock worth $30 today and
you were going to be given a share of GE stock in two weeks
for every share you owned then you have the risk that GE
stock will decline during that period. Since the acquiring
company normally declines as the exchange date approaches
you can hedge your long position by shorting the GE stock.
If it was worth $30 at the announcement and you short it
at $30 then you don't care if it drops to $25 before the
exchange. You get your new GE share at $25 in exchange for
your Amersham share and you cover your short at the same
time on the market. You now have a GE share at $25 and $5
in cash and odds are good your GE will now rise with the
acquisition pressure off.

What surprised everyone was the +$1.25 jump intraday. With
the 150 million share overhead supply the upgrade from
Merrill probably caught a lot of shorts unprepared. If
the stock was going to move up over $30 then they don't
want to be hedged with shorts. See the problem? 68 million
shares of GE changed hands and while existing shorts were
running for cover those that wanted to short higher were
eagerly jumping on the wagon. The stock ended up only 40
cents but there was plenty of excitement.

On the Nasdaq the big winners from Thursday were the
losers on Friday just as you would have expected. The
majority of the losses occurred at the close and appeared
to be just normal profit taking. The biggest weakness for
the day was the Semiconductor Index which remained positive
for only about 30 min at the open and was weak the rest of
the day. The index tried to make a run to positive territory
at 4:15 but closing selling quickly sent it to the low of
the day.

The Russell was by far the strongest index with the small
caps leading the charge from the opening bell and never
looking back until the profit taking at the close. The
Russell rebounded to 575 before stalling and that is
almost exactly the resistance level where it failed the
prior week. The Dow rallied to 10250, also the beginning
of last weeks resistance and tried valiantly to break out
but was unsuccessful. The Nasdaq rallied to 1977 and only
three points below the 1980 resistance I mentioned on
Thursday night.

This is exactly what I hoped would happen only I wanted
the indexes to close in positive territory. The closing
profit taking was sharper than most expected given the
intraday gains. We wanted to move closer to resistance
and be prepared for a continuation move on Monday as
end of quarter window dressing increases. Those bulls
faced with rising indexes Friday afternoon were pleased
to see the closing drop. In hindsight I think we cleared
some intermediate sell stops on the afternoon bounce and
the drop at the close set us up for a better entry point
on Monday. The bullish viewpoint is looking for window
dressing, expecting quarter end fund flows and the
potential for positive economic reports to convince
investors the economy is growing and the correction is
over. That requires faith and it is just one viewpoint.
It also may not be a long-term view and just a potential
a trading bounce.

If that was the bullish case there is also a bearish
side. The bearish side is more technical and would point
to all the critical resistance levels ahead. The bears
would see the negative close as lack of follow through
and evidence that the resistance levels will hold. I
put those resistance levels on the charts below and you
can quickly see that moving higher will not be that easy.

Current resistance levels and Friday's close:

Resistance - close
Dow 10300 - 10219
Nasdaq 1980 - 1962
NDX 1430 - 1419
S&P 1120 - 1108
R2000 575 - 572
SOX   490 - 480

Nasdaq Chart - 45 min


Dow Chart - 45 min


S&P Chart - 45min


SOX Chart - 45min


Russell Chart - 45min


NDX Chart - 45min




The bulls expect the market to move up on Monday and I
would agree with that analysis as long as we have no
weekend events. I think the end of quarter window dressing
and fund flows will help start the week with a positive
spin. I also think the potential for a positive jobs
report on Friday will give us a positive bias. The
problem remains the resistance just overhead and the
barrage of economic reports midweek. The market has
been short term oversold and the rebound on Thursday
remedied that and the intraday bounce on Friday was
definite follow through in my view. I expected selling
into the close, just not so severe. It is that weekend
fear factor that caused profits to be booked.

I have netted out the opposing viewpoints above with
this scenario. I could see a positive Monday as we again
test resistance. That sets us up for the real test. There
will be no specific need to sell as the profit taking
already occurred on Friday. If we get to those resistance
levels above then we will see if the rebound has legs.
Another positive jump in Consumer Confidence on Tuesday
could help build investor confidence but the NAPM, PMI
and Factory Orders on Wednesday will have to confirm.
Holding at resistance until those Wednesday reports will
be tough unless the rally is real. If the bulls have
decided the bottom is behind us then all of this will
be mute and we will forge ahead regardless of the news.
Even then the bulls have an uphill battle ahead and it
is not going to be easy.

Thursday and Friday will be critical turning points
with the ISM and Jobs. The consensus estimate for the
ISM is only 60.5 and that would be the second consecutive
monthly decline. A better than expected ISM number might
really help quiet the bears. The Jobs report on Friday
is expected to produce 100,000 jobs and after seeing
estimates trounced soundly for the last several months
the pundits are being very quiet. Eventually we are
going to see a change in this number. We have had
positive job creation for the last six months despite
the actual numbers being lower than expected. While a
100K gain would sure make politicians breath better a
negative number would not be a disaster. We have put up
with the less than expected news and the outsourcing
debate for so long that a slightly negative number would
not be the end of the world. Remember the drastic drop
in the Mass Layoff report, the better than expected Help
Wanted Index and the continuing downtrend in Jobless
Claims? They could actually be signaling a real
improvement in jobs. This is what investors will be
hoping for as they decide to buy or sell stocks at
resistance next week.

There was a new threat beginning to appear on the horizon
that investors will eventually have to face. The Fed
fielded six speakers this week and more than one analyst
saw the implied warning in their speeches. The subtle
new message starting to creep into the tone of their
words is "rates have been too low for too long." They
have not come right out and said there is a change in
the wind but they appear to be prepping the bond market
to be ready. Bonds saw their biggest one-day drop for
the month on the new Fed tone.

We are at a critical turning point. A move over these
resistance levels next week for whatever reason would
be very bullish. We could see some strong short covering
and the improvement in bullish sentiment could drag buyers
back from the sidelines. We have seen the bearish sentiment
surge over the last three weeks as it does with every
correction. The gloom and doom preachers are trotted
out for every news program to do battle with the perma
bulls. The bulls have the opportunity to send them back
into hibernation for several more weeks if they can only
break through last weeks ceiling. We have ringside seats
to the greatest show on earth and next week could signal
the direction for weeks to come. Is the correction over
or just getting started? This week should provide the
answer.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


================================================
Market Sentiment
================================================

Not Convinced
- J. Brown

Whether you're a bull or a bear you have to admit that Thursday's
rally was pretty impressive.  It was very widespread and market
internals were strongly bullish.  Tech stocks really bounced
sharply.  It seemed like the Monday through Wednesday test of
support for the major averages had suddenly satisfied everyone's
need for a correction (with the Dow & S&P down more than 5% and
the NASDAQ down 11%) and AMAT's positive comments on Wednesday
night waved the big green "go" flag.   What was truly impressive
was that the markets were mildly positive through most of Friday
and only closed in the red with single digit losses in a last
hour sell-off.  But the real question is whether or not this is a
true turnaround or just an oversold bounce.

I get the feeling that many traders are not yet convinced.
They're cautiously optimistic and would like to buy the bounce
but the new background of geopolitical risk may call for a bit
more courage than they're used to summoning.  The rise in gold to
new 2 1/2 month highs over the $420 level is a sign of traders
seeking a safe haven both from terrorism risk and poor economic
data.  Now odds are that once earnings season starts all eyes
will focus on corporate profits and many of the so called experts
believe this could re-start the rally at least into early summer.
Right now I agree with them, although it's been a little
disappointing to see all the positive pre-announcements fail to
generate more good will than they have.  However, the immediate
focus is the Friday jobs report.  All the clues are suggesting it
should be positive but we've been let down so many times now no
one wants to get their hopes up (or stick their neck out).

Keep your ears open for the consumer confidence numbers on
Tuesday.  A positive reading there could help soothe investor
fears and prime the pump for a stronger launch into the earnings
season.



-----------------------------------------------------------------

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  7929
Current     : 10212

Moving Averages:
(Simple)

 10-dma: 10167
 50-dma: 10481
200-dma:  9820



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  843
Current     : 1108

Moving Averages:
(Simple)

 10-dma: 1106
 50-dma: 1134
200-dma: 1056



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1014
Current     : 1415

Moving Averages:
(Simple)

 10-dma: 1402
 50-dma: 1471
200-dma: 1382


-----------------------------------------------------------------

Volatility indices took a deeper drop than you might have
expected given the major averages closing in the red on Friday.
The culprit may be investor attitudes that the worst is behind
us and we've seen the correction everyone was looking for.

CBOE Market Volatility Index (VIX) = 17.35 -0.53
CBOE Mkt Volatility old VIX  (VXO) = 17.21 -0.55
Nasdaq Volatility Index (VXN)      = 23.04 -0.66

-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume

Total          0.77        584,342       449,027
Equity Only    0.62        482,828       300,893
OEX            1.04         21,297        22,126
QQQ            1.97         17,771        34,951


-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          70.4    + 0     Bull Correction
NASDAQ-100    38.0    + 0     Bear Confirmed
Dow Indust.   76.7    + 0     Bear Confirmed
S&P 500       72.6    + 1     Bear Confirmed
S&P 100       77.0    + 0     Bull Correction


Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


-----------------------------------------------------------------

 5-dma: 0.84
10-dma: 0.87
21-dma: 0.84
55-dma: 0.87


Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning
points.


-----------------------------------------------------------------

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1484      1546
Decliners    1346      1504

New Highs      87        79
New Lows       14        15

Up Volume    897M      737M
Down Vol.    701M      789M

Total Vol.  1610M     1546M
M = millions


-----------------------------------------------------------------

Commitments Of Traders Report: 03/23/04

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Commercial traders pared back their positions in both long and
short plays but they remain next short, which is a change in
sentiment over last week.  Small traders significantly altered
their short positions but remain net long.


Commercials   Long      Short      Net     % Of OI
03/02/04      411,932   418,936    (7,004)   (0.1%)
03/09/04      418,394   433,237   (14,843)   (1.7%)
03/16/04      454,635   449,505     5,130     0.6%
03/23/04      401,456   418,732   (17,273)   (2.1%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
03/02/04      148,383    84,135    64,248    27.6%
03/09/04      155,947    88,317    67,630    27.7%
03/16/04      159,054   115,023    44,031    25.3%
03/23/04      130,648    89,943    40,705    18.5%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

Commercial traders chopped off a large chunk of open positions
from both their longs and shorts and what was left behind is
their most bullish reading in weeks.  Small traders are still
bullish too.


Commercials   Long      Short      Net     % Of OI
03/02/04      344,805   395,112    (50,307)  ( 6.8%)
03/09/04      431,623   485,268    (53,645)  ( 5.9%)
03/16/04      472,809   574,241   (101,432)  ( 9.7%)
03/23/04      268,647   294,930    (26,283)  ( 4.7%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
03/02/04     119,382     67,453    51,929    27.8%
03/09/04     135,233     76,558    58,675    27.7%
03/16/04     192,136     96,691    95,445    33.0%
03/23/04     131,879     59,210    72,669    38.0%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

We see the same reduction in outstanding positions in the NDX
futures but commercial traders have become more bullish on
the NASDAQ while small traders have become bearish.

Commercials   Long      Short      Net     % of OI
03/02/04       49,959     41,059     8,900    9.8%
03/09/04       57,368     46,082    11,286   10.9%
03/16/04       68,285     54,899    13,386   10.9%
03/23/04       52,014     34,017    17,997   20.9%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  13,386   - 03/16/04

Small Traders  Long     Short      Net     % of OI
03/02/04       11,605     7,128     4,477    23.9%
03/09/04       15,533     8,070     7,463    31.6%
03/16/04       27,859    18,333     9,526    20.6%
03/23/04        9,884    12,887    (3,003)  (13.2%)

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Ouch! Commercial traders have switched from bullish to almost
bearish with a large drop in long positions and a big jump
in shorts.  Meanwhile small traders have moved from strongly
bearish to bullish.


Commercials   Long      Short      Net     % of OI
03/02/04       27,594    14,166   13,428      32.2%
03/09/04       26,867    12,845   14,022      35.3%
03/16/04       32,317    17,514   14,803      29.7%
03/23/04       23,048    22,119      929       2.1%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
03/02/04        6,898    15,874   (8,976)   (39.4%)
03/09/04        7,053    19,159  (12,106)   (46.2%)
03/16/04       10,002    20,970  (10,968)   (35.4%)
03/23/04        8,344     6,734    1,610     10.7%

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03

-----------------------------------------------------------------


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

YUM Brands Inc - YUM - close: 37.46 change: +0.02

WHAT TO WATCH: The parent of several fast food changes, YUM looks
ready for a bullish breakout.  The stock hit a new all-time high
in early March and then proceeded to consolidate those gains into
what appears to be a bull flag pattern.  We'd look for a move
over the $38.00 mark as a breakout from this consolidation.  If
the bull flag is to be believed we can target the $42 area.




---

Mandalay Resort Group - MBG - close: 56.07 change: +1.46

WHAT TO WATCH: MBG is flexing its relative strength muscle.  Most
of the market sold-off on Friday in the last hour of trading.
Not so for MBG.  The stock closed near its high for the session
and is challenging its earlier March highs.  Volume has been
strong on the recent ramp up lending some conviction to the move.
We'd consider dips to $55.00 or a move over $56.50 potential
entry points although we'd prefer to buy the dip.




---

F M C Corp - FMC - close: 37.09 change: +0.36

WHAT TO WATCH: We're still suggesting that traders give FMC
another look.  The stock has consistently bounced from pullbacks
to its 50-dma since the rally began back in March 2003.  FMC is
just now beginning to bounce from its latest test of the 50-dma
and its MACD is hinting at a new buy signal soon.  Granted the
stock is long-term overbought but with a tight stop we can limit
our risk.  Short-term traders can target round-number resistance
at $40.00.




---

XM Satellite Radio - XMSR - close: 27.63 change: +0.52

WHAT TO WATCH: If SIRI isn't your style then check out XMSR.  The
stock appears to be in a narrow channel higher with traders
buying each dip.  We would consider new positions here with a
target on the $30.00 mark.  Use a relatively tight stop though as
some of its oscillators look a little overbought.





-----------------------------------
RADAR SCREEN - more stocks to watch
-----------------------------------

GLW $11.06 +0.15 - Last week we had GLW on the watch list for a
bounce from the $10 level and its 200-dma.  It seems that bounce
is underway and its MACD is about to produce a new buy signal.

SAY $21.36 +1.14 - We're still bullish on SAY.  The stock appears
to have put in a significant bottom in the last couple of weeks
and the mover over 20.50-21.00 is convincing.  There is still
some resistance at $22.00 and at its 50-dma.  We'd consider
buying bounces from 20.50 or a mover over its 50-dma.

MOBE $9.04 +0.29 - MOBE is one of the few stocks that didn't see
a sharp pull back in the last hour on Friday.  Sure, there was
some pull back but it maintained most of its gains.  We'd
consider new long positions on a move over resistance at $9.35 or
a bounce from $8.00.

TOM $16.99 +0.29 - Tommy Hilfiger is coiling to breakout to new
four-year highs.  Look for a move over the $17.15 mark.


=================================================================
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) 2001-2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.





PremierInvestor.net Newsletter          Weekend Edition 03-28-2004
                                                    section 2 of 3
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:

Tech Stocks
  New Bullish Plays:     LEXR
  Bearish Play Updates:  RFMD
  Closed Bearish Plays:  VRTS

Active Trader (Non-tech)
  New Bullish Plays:     PBG
  Bullish Play Updates:  IGT, SPF
  Bearish Play Updates:  PRX
  Closed Bullish Plays:  BG

High Risk/Reward
  New Bullish Plays:     SIRI


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

=========
NEW PLAYS
=========

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

Lexar Media - LEXR - close: 15.68 change: +0.21 stop: 14.49

Company Description:
Lexar Media is a leading marketer and manufacturer of flash
memory cards, USB flash drives, card readers and ATA controller
technology for the digital photography, consumer electronics,
industrial and communications markets. The company holds over 70
issued and allowed controller and system patents, and licenses
its technology to companies including Olympus, Samsung
Electronics and Sony.
(source: company press release)

Why We Like It:
Anything related to flash memory has been a tough sector for the
bulls the last few months but we believe that the worst may be
behind it for LEXR.  The stock has build a convincing bottom over
the last several weeks.  Now if we can just see a breakout over
resistance we'll be good to go.  Fortunately for the bulls LEXR
seems to be sprinting higher on stronger volume the last two
sessions, which is usually good news.  Its point-and-figure chart
looks pretty impressive as well.  After months on consolidation
its finally built a base above P&F support and just recently
produced a new buy signal pointing toward a $20 price target.

We are going to use a TRIGGER on a breakout above its simple 200-
dma.  If and only if LEXR can trade at $16.01 will we go long and
target a move to $18.50, which is just under the January 2004
highs near $18.70.  We'll start the play with a stop loss at
$14.49 but quickly ratchet it higher after we see a convincing
breakout.

Annotated Chart:



Picked on March xx at $ x.xx <-- see trigger
Gain since picked:    + 0.00
Earnings Date       04/15/04 (unconfirmed)
Average Daily Volume:    3.5 million




============
PLAY UPDATES
============

  --------------------
  Bearish Play Updates
  --------------------

RF Micro Devices - RFMD - close: 8.27 change: -0.12 stop: 8.71

It was a pretty exciting week for the semiconductor sector.  Just
as they lead the markets lower Monday through Wednesday they lead
the markets higher on Thursday.  Now the question everyone is
asking is whether or not the failed rally pattern on Friday is
for real or just simple profit taking after Thursday's big gain.
Not surprisingly for RFMD the stock failed under the $8.50 level
on Friday.  The $8.50 mark was previous support and support
broken tends to become new resistance.  This might actually turn
out to be a new bearish entry point but given the bounce in the
NASDAQ it takes a lot of faith to initiate new short positions
right now.  More conservative traders might want to be patient
and look for continued weakness in RFMD before considering any
new positions.

Annotated Chart:



Picked on March 21 at $ 8.24
Gain since picked:    + 0.03
Earnings Date       04/20/04 (unconfirmed)
Average Daily Volume:   11.4 million




============
CLOSED PLAYS
============

  --------------------
  Closed Bearish Plays
  --------------------

Veritas Software -VRTS - close: 26.91 change: -0.48 stop: 27.90

Thursday's rally was just enough to cause some concern, but not
enough to consider a drop as the stock remained below our $27.90
stop.  But Friday's early Surge higher just clipped our stop
before the bottom fell out, as we would have expected.
Apparently that stop was just a bit too tight, because after
breaking it by only 8 cents, the stock turned sharply lower,
ending with a 1.75% loss on the day and precariously perched on
$26.90 support.  Unfortunately we have to drop the play this
weekend.  Traders still holding onto positions should use a drop
back to the $26.00-26.50 area to gain an even better exit.

Picked on February 29th at  $30.55
Change since picked          -3.64
Earnings Date              1/28/04 (confirmed)
Average Daily Volume =    6.07 mln





==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

=========
NEW PLAYS
=========

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

Pepsi Bottling Group - PBG - close: 29.70 chg: +0.86 stop: 28.44

Company Description:
The Pepsi Bottling Group, Inc. is the world's largest
manufacturer, seller and distributor of Pepsi-Cola beverages with
operations in the U.S., Canada, Greece, Mexico, Russia, Spain and
Turkey. (source: company press release)

Why We Like It:
It's pretty amazing to see PBG up nearly 50% in the last seven
months but what's more amazing is that it doesn't show any signs
of slowing down.  As a matter of fact the stock roared higher on
Friday after raising its annual cash dividend from 4 cents to 20
cents per share and declaring another 25 million-share buyback
program.  It was an impressive show of strength while the rest of
the market slipped lower in the last hour of trading on Friday.

Most of the major brokers seem pretty bullish on the stock with
three of them reiterating their buy ratings in the first week of
March.  Smith Barney upgraded PBG from "hold" to "buy" and raised
its price target from $28 to $35 after shares broke out above the
$28 level late last month.

We like the consistent trend of higher lows as investors buy the
dips toward its 30 and 40-dma's.  Volume was strongly higher than
normal on Friday's rally too, which is generally a bullish sign.
We're going to use a TRIGGER at $30.05 to open the play for us
since resistance at the $30.00 mark held several times in early
March.  Our target is going to be the $34-35 region, which are
the highs from early summer 2002.  If we're triggered we'll start
the play with a stop loss at $28.44 near its 40-dma.

Annotated Chart:




Picked on March xx at $ x.xx <-- see trigger
Gain since picked:    + 0.00
Earnings Date       04/20/04 (unconfirmed)
Average Daily Volume:    933 thousand




============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

Intl Game Tech - IGT - cls: 44.68 chng: -0.19 stop: 42.25*new*

It was with some trepidation that we stepped into our IGT play,
hoping that support near $40 would hold long enough for the next
real breakout attempt to arrive.  The first attempt failed below
resistance, but after another bounce above $40 the bulls made up
for it on Wednesday with the stock soaring right through the $43
resistance level and actually topping $45 on Thursday before the
bulls ran out of steam.  Conservative traders could certainly be
forgiven for harvesting some short-term profits near those highs,
as it seems entirely possible that IGT will now consolidate that
breakout until ready for another rally attempt.  That's the way
the stock has been performing for the past several months and
there's no reason to expect that to change now.  Note that we've
raised our stop to $42.25, as that is below where the 10-dma
($42.14) will be on Monday.  A pullback near the $43 level
(former resistance) can be used for continuation entries, but at
this point, we don't want to chase the stock higher.

Picked on March 17th at     $41.82
Change since picked          +2.86
Earnings Date              4/22/04 (unconfirmed)
Average Daily Volume =    2.30 mln




---

Standard Pacific - SPF - cls: 56.01 chg: -0.15 stop: 54.50

For the less risk averse traders the homebuilders have been a
life saver.  The group has really weathered the market volatility
pretty well.  However, that doesn't mean they're still not due
for some additional profit taking.  The group and SPF have been
consolidating gains the last three weeks and both are holding
support but losing the fight with a short-term trend of lower
highs.  This is typically a bearish pattern yet we're hesitant to
close the play since we could still see a breakout.  What makes
us a little cautious is the lack of movement in SPF and the
homebuilder group when earlier in the week we saw the strong new
home sales numbers that were better than expected.  We would
probably suggest that traders looking for new positions can still
buy dips to the $55 level but watch that trendline of lower highs
near the $56.50-57.00 area.  Longer-term look for a deeper pull
back in the sector (maybe another 5%), which will probably stop
us out for a small gain but allow for another entry closer to
support. What to watch for this week is the jobs report on
Friday.  A strong number might actually send homebuilders lower
if the market interprets it as a sign that the Fed will raise
rates sooner rather than later.  This isn't necessarily a logical
move since most builders have told investors that business is so
good that even a bump in rates won't hurt them.  Remember that
our official exit price is currently $59.50 and we'll close the
play if SPF can reach it.

Annotated Chart:



Picked on February 29 at $52.31
Gain since picked:       + 3.70
Earnings Date          02/04/04 (confirmed)
Average Daily Volume:       468 thousand




  --------------------
  Bearish Play Updates
  --------------------

Pharm. Resources - PRX - cls: 55.95 chng: +0.64 stop: 60.00*new*

Giving us the confirmation we wanted after the initial break of
the $57 level, shares of PRX continued to fall almost to $54
before catching a bounce over the past two days.  With the fresh
PnF Sell signal and a price target of $45, it looks like we've
gotten onboard this bearish play at just the right time.  There's
plenty of overhead resistance in the $57-59 area, so we don't
want to rush to tighten our stop too soon.  Next support comes in
around $52 and then $49 (at the PnF bullish support line), but in
line with that PnF price target, the next strong support looks
like $45.  Look for this current rebound to run out of steam and
roll over in the $57-58 area as the trigger point for new
entries.  Momentum traders will need to see a break under $54
before adding new positions.  We're keeping a fairly liberal stop
at $60.00, which will be above the 50-dma ($60.03) by Monday.

Picked on March 17th at     $57.83
Change since picked          -1.88
Earnings Date              2/26/04 (confirmed)
Average Daily Volume =       744 K





============
CLOSED PLAYS
============


  --------------------
  Closed Bullish Plays
  --------------------

Bunge Ltd - BG - close: 38.55 change: -0.18 stop: 37.99

The bad news here is that BG failed to participate in the market-
wide rally on Thursday.  Not one bit.  The stock is actually
producing a short-term trend of lower highs that looks rather
bearish.  The good news is that we were never triggered as we
waited for BG to trade at $40.10 or above.  While BG could still
bounce from price support near $38.00 and its 40-dma we're going
to call it quits and look for other opportunities to put our
money to work.

Picked on March xx at $xx.xx <-- see trigger
Gain since picked:    - 0.00
Earnings Date       04/29/04 (confirmed)
Average Daily Volume:    512 thousand




==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

=========
NEW PLAYS
=========

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

Sirius Sat. Radio - SIRI - close: 3.24 change: -0.01 stop: 2.75

Company Description:
Sirius Satellite Radio Inc. broadcasts digital-quality audio from
three orbiting satellites throughout the continental United
States.  The company delivers 60 streams of 100% commercial-free
music in virtually every genre and over 40 streams of news,
sports, weather, talk, comedy, public radio and children's
programming.  SIRI's broad range of music, as well as its news,
sports and entertainment programming, is not available on
conventional radio in any market in the United States.  The
company holds one of only two licenses issued by the Federal
Communications Commission (FCC) to operate a national satellite
radio system.  Its satellite radio system consists of its FCC
license, satellite system, national broadcast studio, terrestrial
repeater network and satellite telemetry, tracking and control
facilities.

Why we like it:
SIRI has made a habit of surging to new highs in a straight up,
parabolic manner, consolidating at a higher low and then
repeating the process.  Most recently, the stock surged to $4.20
in early January before crashing back to earth and beginning the
process of building a new, higher base.  After putting in a
double bottom formation near $2.60-2.65, the stock has been
steadily working its way higher, leaving behind a clean pattern
of higher lows and higher highs.  Friday's rally through the
$3.20 level took out resistance put in place over the past two
months and suggests the next strong rally is close at hand.
There is still some slight resistance near $3.30 and then again
at $3.50, but once over those two small hurdles, we can look for
the stock to make another run at the $4.00-4.20 level, with very
real potential for another breakout.

Note that the PnF chart is still on a Buy signal (although also
giving a high pole warning) with a vertical price target of
$5.50.  The issue of the high-pole warning will be negated once
SIRI trades the $3.50 level, putting the PnF chart back into a
column of X.  While aggressive traders might want to target a
rise to that $5.50 target, we're going to be more modest in our
aspirations, using $4.00 as our initial target.  Obviously if the
stock is really charging higher, we may revise that target
upwards, but we'll cross that bridge when we get there.  Look for
a dip back near the $3.00 level to provide solid entry
opportunities, while the more conservative approach will be to
enter on a breakout over the $3.30 level.  Set stops initially at
$2.75, just under the 3/11 intraday low.

Annotated Chart of SIRI:



Picked on March 28th at      $3.24
Change since picked          +0.00
Earnings Date                  N/A
Average Daily Volume =    64.5 mln




=================================================================
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) 2001-2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.






PremierInvestor.net Newsletter          Weekend Edition 03-28-2004
                                                    section 3 of 3
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 three:

Market Watch for Week of March 29, 2004
   - Major Earnings
   - Stock Splits
   - Economic Reports

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 Watch for the week of March 29th
==========================================

-----------------
Earnings Calendar
-----------------

Symbol  Co               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

EN     Enel S.p.A.           Mon, Mar 29  -----N/A-----        N/A
SCS    Steelcase Inc.        Mon, Mar 29  After the Bell     -0.05


------------------------- TUESDAY ------------------------------

BNG    Benetton Group        Tue, Mar 30  -----N/A-----        N/A
KMX    CarMax, Inc           Tue, Mar 30  Before the Bell     0.21
ELP    Co Paran Energia      Tue, Mar 30  After the Bell       N/A
MBT    Mobile Telesystems    Tue, Mar 30  -----N/A-----        N/A
SCO    Scor                  Tue, Mar 30  -----N/A-----        N/A


------------------------ WEDNESDAY -----------------------------

AM     American Greetings    Wed, Mar 31  Before the Bell     0.65
ATYT   ATI Technologies      Wed, Mar 31  Before the Bell     0.16
BBBY   Bed Bath & Beyond Inc.Wed, Mar 31  After the Bell      0.44
BBY    Best Buy Co., Inc.    Wed, Mar 31  Before the Bell     1.39
CC     Circuit City Stores   Wed, Mar 31  Before the Bell     0.36
CIG    Co Energ Minas Gerais Wed, Mar 31  -----N/A-----       0.90
E      ENI SpA               Wed, Mar 31  -----N/A-----       1.71
MON    Monsanto Company      Wed, Mar 31  Before the Bell     0.56


------------------------- THUSDAY -----------------------------

GUC    Gucci Group NV        Thu, Apr 01  Before the Bell     1.17
MSM    MSC Industrial Direct Thu, Apr 01  -----N/A-----       0.25
PIR    Pier 1 Imports, Inc.  Thu, Apr 01  -----N/A-----       0.54


------------------------- FRIDAY -------------------------------

None


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Co Name              Ratio    Payable     Executable

WGA     Wells-Gardner Elect Corp 21:20     Mar  26th   Mar  29th
HOV     Hovnanian Ent, Inc        2:1      Mar  26th   Mar  29th
MVL     Marvel Enterprises        3:2      Mar  26th   Mar  29th
APH     Amphenol Corp             2:1      Mar  29th   Mar  30th
XTEX    Crsstx nrg co, L.P.       3:2      Mar  29th   Mar  30th
GGG     Graco Inc                 3:2      Mar  30th   Mar  31st
IDSA    Industrial Services of    3:2      Mar  30th   Mar  31st
PHX     Panhandle Royalty Co      2:1      Apr   1st   Apr   2nd
TACT    TransAct Technologies Inc 3:2      Apr   2nd   Apr   5th
CACB    Cascade Bancorp           5:4      Apr   2nd   Apr   5th
UUU     Universal Security        4:3      Apr   5th   Apr   6th
DKS     Dicks Sporting Goods, Inc 2:1      Apr   5th   Apr   6th
FCFS    First Cash Finl Serv Inc  3:2      Apr   6th   Apr   7th
CRDN    Ceradyne, Inc             3:2      Apr   7th   Apr   8th
DWCH    Datawatch Corp            2:1      Apr   8th   Apr   9th
FOSL    Fossil, Inc               3:2      Apr   8th   Apr   9th
GBTS    Gateway Finl Holdings    21:20     Apr   8th   Apr   9th


--------------------------
Economic Reports This Week
--------------------------

All eyes are on Friday's non-farm payrolls (jobs) report.
Potentially a market mover is the consumer confidence number
on Tuesday and the Factory orders & Chicago PMI on Wednesday.
The April earnings season is just around the corner!


==============================================================
                       -For-

----------------
Monday, 03/29/04
----------------
None


-----------------
Tuesday, 03/30/04
-----------------
Consumer Confidence (DM)   Mar  Forecast:    86.0  Previous:     87.3


-------------------
Wednesday, 03/31/04
-------------------
Factory Orders (DM)        Feb  Forecast:    1.4%  Previous:    -0.5%
Chicago PMI (DM)           Mar  Forecast:    61.0  Previous:     63.6


------------------
Thursday, 04/01/04
------------------
Initial Claims (BB)      03/27  Forecast:     N/A  Previous:     339K
Auto Sales (NA)            Mar  Forecast:    5.5M  Previous:     5.3M
Truck Sales (NA)           Mar  Forecast:    7.9M  Previous:     7.7M
Construction Spending (DM) Feb  Forecast:   -0.1%  Previous:    -0.3%
ISM Index (DM)             Mar  Forecast:    59.8  Previous:     61.4


----------------
Friday, 04/02/04
----------------
Nonfarm Payrolls (BB)      Mar  Forecast:    100K  Previous:      21K
Unemployment Rate (BB)     Mar  Forecast:    5.6%  Previous:     5.6%
Hourly Earnings (BB)       Mar  Forecast:    0.2%  Previous:     0.2%
Average Workweek (BB)      Mar  Forecast:    33.8  Previous:     33.8

Not on the calendar but worth noting is the February PPI report that
has yet to be given a release schedule from the government.

PPI (NA)         Date TBA  Feb  Forecast:     N/A  Previous:     0.6%
Core PPI (NA)    Date TBA  Feb  Forecast:     N/A  Previous:     0.3%


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


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

ONE     Bank One Corp              54.01    -0.11
NTT     Nippon Tel & Tel (ADS)     26.78    -0.80
WFC     Wells Fargo & Co New       57.13    -0.01
BAC     Bank of America            80.27    +0.53
MRK     Merck & Co                 44.27    +0.58
MER     Merrill Lynch & Co         59.49    +0.30
HD      Home Depot Inc             37.06    -0.09
GE      General Electric Co        30.42    +0.72
MWD     Morgan Stanley             57.05    +0.50
CMCSK   Comcast Corp CI A Spcl     28.57    +1.00
JPM     JP Morgan Chase & Co       41.52    +0.02
WM      Washington Mutual Inc      42.44    -0.11
UTX     United Technologies Corp   86.31    +0.41
UN      Unilever N.V.              66.95    +0.26
ING     ING Groep Nv               21.59    -0.09
GS      Goldman Sachs Group Inc   103.76    +1.91
FBF     Fleetboston Financial Cp   44.50    +0.30


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

ATVI    Activision Inc             15.34    +0.20
AG      AGCO Corp                  20.29    +0.35
SGMS    Scientific Games Corp      18.74    -0.20

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

IACI    Interactivecorp            30.39    +0.06
EXC     Exelon Corporation         68.42    +0.65
HIT     Hitachi Ltd                78.00    +2.99
TV      Grupo Televisa Sa Gdr      46.08    +1.63
AVP     Avon Products Inc          75.12    -0.23
BBY     Best Buy Co Inc            48.22    -0.31
MBT     Mobile Telesys Ojsc (ADS) 122.60    -0.47

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

CVX     Chevrontexaco Corp         85.92    +1.24
COP     Conocophillips             67.65    +1.61
MRO     Marathon Oil Group         31.39    +0.61
AHC     Amerada Hess Corp          63.06    +0.84


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

KMI     Kinder Morgan Inc          62.09    +1.00


=================================================================
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) 2001-2004  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.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives