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Daily Newsletter, Monday, 04/05/2004

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PremierInvestor.net Newsletter                   Monday 04-05-2004
                                                    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:  Markets Rise Again on Monday
Watch List:   BRKT, BVSN, PXLW, PDLI

===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     04-05-2004            High     Low     Volume Advance/Decline
DJIA    10558.37 + 87.78 10558.59 10465.63 1.72 bln   1422/1442
NASDAQ   2079.12 + 21.95  2079.12  2054.34 1.72 bln   1955/1192
S&P 100   562.86 +  4.76   562.86   557.89   Totals   3377/2634
S&P 500  1150.57 +  8.76  1150.57  1141.64
RUS 2000  606.39 +  2.94   606.42   601.71
DJ TRANS 2955.67 - 10.99  2966.26  2937.95
VIX        14.97 -  0.67    16.64    14.81
VXO        13.88 -  1.68    15.76    13.88
VXN        21.11 -  0.24    22.33    20.97
Total Volume 3,829M
Total UpVol  2,617M
Total DnVol  1,138M
52wk Highs     596
52wk Lows       42
TRIN          0.45
PUT/CALL      0.67
===============================================================

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

Markets Rise Again on Monday
by James Brown

A new record high on the ISM services index and strong business
optimism keep the markets in the green after last week's rally.
Although volume was light stocks shot higher in the last hour of
trading while bonds sold off again on the stronger economic news.
In contrast the ISM numbers sent the dollar higher, which
pressured gold futures to a new two-week low.

Investors ignored a new wave of violence in Iraq and chose to
focus on the start of next week's earnings season.  A positive
pre-announcement from Cigna sent the healthcare sector higher.
The industry also benefited from news that WellChoice was
considering a merger with Oxford Health.  Healthcare stocks were
the best performers followed by disk drives, biotechs, software
and defense stocks.  Investors continued to sell interest-rate
sensitive issues like mortgage lenders and homebuilders.

Global markets were higher today boosted by the U.S. markets'
strong performance last Friday.  The Japanese NIKKEI soared 142
points and broke through psychological resistance at the 12,000
mark a few times before closing at 11,958.  European stocks were
generally higher as well.  The English FTSE added 15 to close at
4480.  The German DAX cemented its breakout over the 4000 level
with a 41-point gain to 4048.  The French CAC followed with a 41-
point rally of its own to 3781.

The Dow Industrials, the NASDAQ Composite and the S&P 500 were
green the vast majority of the session but the three churned
sideways until a last-hour rally sent them to their highs for the
day.   Market internals were mixed as advancing stocks tied
declining stocks 14 to 14 on the NYSE.  On the NASDAQ, winners
outnumbered losers 19 to 12.  The volume numbers were more
bullish as up volume measured almost twice down volume on the
NYSE and nearly three times down volume on the NASDAQ but overall
volume totals were light.

The Dow is up more than 550 points from its March 24th intraday
low.  While today's move is a breakout over resistance at 10,500
and confirms the Friday move above its simple 50-dma there's no
denying the index is very short-term overbought.  Furthermore it
is approaching more resistance levels in the 10,600-10,750 range
of congestion from January and February this year.  The NASDAQ is
in a similar position just to a larger extreme.  The Dow is up
5.58% from its March lows.  The NASDAQ is up 9.4% from its March
lows near 1900.  The tech-heavy index did clear minor resistance
at the 2060-2070 level today and should be clear for that last 20
points to the 2100 level but breaking 2100 may be a challenge, at
least not without some consolidation first.

Chart of the Dow Industrials:



Chart of the NASDAQ Composite:



The S&P 500 has turned in a very impressive run.  The index is up
6 out of the last 8 sessions with a gain of 5.4%.  The challenge
now is the February-March resistance at the 1160 level.  The
breakout over its 50-dma looks great and it managed to close over
the 1150 mark today but like its peers this looks very overbought
and due for a pull back.  Meanwhile the small-cap Russell 2000
(RUT)'s 8.8% gain from its March lows has almost managed to keep
pace with the rebound in the NASDAQ.  However, unlike the other
indices the RUT has broken out over its first quarter resistance
to new all-time closing highs.  This is very impressive and says
a lot about the breadth in this rally but it too looks in need of
a rest.

Chart of the S&P 500 Index:



Chart of the Russell 2000:



Inspiring investor confidence today was the ISM non-manufacturing
index or services index.  Economists had been looking for the ISM
services number to rise from 60.8 in February to 61.2 in March.
The markets were surprised to see the index come in at 65.8
percent, a new all-time record.  This was extremely bullish for
the economy as 15 of the 17 industries surveyed reported gains
and confirms that consumer spending is still very robust.  The
closely watched employment component rose from 52.7% to 53.9%.
New orders jumped from 60.3 to 62.8 and the prices paid component
spiked from 57.2 to 65.7 percent.  All told it was the 12th
consecutive month of expansion for the ISM services index and the
sixth month in a row for strength in the services employment
index (Readings over 50 indicate growth).

Wall Street was also encouraged to hear from the Conference
Board's index of business confidence.  The survey polls more than
100 CEOs and management confidence soared in the first quarter to
73 from the fourth quarter's reading at 66.  Today's number was
the highest reading since 1983.  The survey also revealed that at
least half of the CEOs said they planned to begin hiring again
this year.

Continuing with the theme of good news Cigna Corp (CI) raised its
first quarter earnings estimates to $1.75-1.95 per share.
Consensus analyst estimates were significantly lower at $1.33 per
share.  In CI's press release the company said "stronger than
anticipated performance from the company's health-care business"
lead to the higher outlook.  The news launched an 11% gain in
Cigna's stock to $67.55, a new one-year high.  It also inspired a
4.55% rally in the HMO.X healthcare index to 993.60, a new all-
time high.  CI probably can't claim all the credit for investors'
positive outlook for healthcare stocks.  A Wall Street Journal
article revealed that WellChoice (WC) was considering a bid to
buy Oxford Health Plans (OHP).  Shares of OHP rallied 15% to
$57.97 on massive volume while shares of WC slipped 36 cents to
$37.09.

It wouldn't be a Monday without merger news and today was
J.C.Penney's turn to announce one.  JCP has long been seeking a
buyer for their Eckerd drugstore chain.  The problem was solved
when they found two buyers.  JCP will sell its Northeast and Mid-
Atlantic stores to Canadian firm Jean Coutu Group for $2.4
billion.  It will sell the remaining stores throughout the
southern states to CVS Corp (CVS) for $2.2 billion.  The news
didn't do much for shares of JCP but investors cheered the
acquisition for CVS, the nation's No 2 drug store operator, whose
shares jumped 7.4% to $37.35.

Monday's remaining big headliners were BA, NT and CPTH.  Boeing
Co (BA) rallied 1.67% and broke out over resistance at $42 and
its 50-dma after announcing it was close to a deal with the U.S.
Air Force that would allow BA to start bidding again for
government contracts.  You may remember that last summer the Air
Force recalled a $1 billion contract after it was discovered that
BA had illegally gained thousands of pages of documents from its
rival Lockheed Martin.

Meanwhile Nortel Networks (NT) relations with the Securities and
Exchange Commission took a turn for the worse.  Last October NT
said it would have to restate some of its previous earnings but
the markets took the news pretty well.  The SEC decided to look
into it but it remained an informal investigation.  About three
weeks ago NT announced it was putting its CFO on paid leave and
launch an independent audit.  Investors were less forgiving and
sent the stock lower.  Today shares of NT fell 3.65% to $6.06
after the SEC stated it had initiated a formal probe into the
accounting issue.

Falling under today's category for biggest percentage gain is
probably Critical Path (CPTH).  Shares of CPTH soared 150% to
$5.08 after announcing a deal with conglomerate General Electric
(GE).  CPTH makes security software for identity management and
news that it had won a contract with GE gave investors a huge
boost of confidence.

Speaking of confidence investors are feeling pretty bullish right
now.  The markets are breaking out above resistance.  Earnings
expectations are strong and negative pre-announcements have been
few and far between.  We've actually seen a strong number of
positive upside guidance.  Case in point, Kellogg Co (K) raised
its Q1 and full year numbers after the bell this evening citing
strong sales momentum with double-digit sales growth in the first
quarter.  Kellogg is upping its FY 2004 numbers to $2.07-2.11
versus $2.05 to $2.09.  Focusing back on the larger picture the
recent string of economic news has been good.  The jobs number
last Friday has done a lot to confirm the economic recovery and
today's ISM service index blow out is another sign of strong
growth.  As a matter of fact some economists are starting to
think that 4% GDP growth may be too low.  There was chatter today
that the second quarter may come in closer to 5.5% growth if the
current trends remain in place.  Furthermore the short-term
picture looks good.  According to the Stock Traders Almanac the
bulls have historical trends as a tailwind.  April is the single
best month for the Dow Industrials with an average gain of 1.9%
over the last 50 years.  Plus the Passover/Easter holiday week is
typically bullish and the Thursday before Good Friday has been up
five years in a row.

How do we reconcile all this bullish momentum with the fact that
the indices are so overbought?  That's a great question.  While I
expect the general trend for stocks to remain up, especially as
we move into earnings season, the odds of us seeing some "sell-
the-news" reactions as companies report is strong.   Tomorrow
we'll hear from Dow component Alcoa (AA) who reports earnings
after the close.  Current estimates are for AA to earn 42 cents
per share, up from 23 cents last year.  Tech investors will be
watching YHOO and RIMM who report after the bell on Wednesday.
Currently analysts expect YHOO to report 11 cents a share versus
3 cents a year ago and RIMM is expected to earn 49 cents compared
to a loss of 7 cents a year ago.  Both YHOO and RIMM have seen
some very big bounces off their late March lows and unless they
just crush the numbers and the revenue estimates and issue
positive comments for the current quarter then I'd expect them to
see some profit taking.

Let me repeat, I think the trend is still up despite being
overbought but the gains might get smaller as we approach the
10,600-10,700 level on the Dow and the 2100 level on the NASDAQ
and the 1160 level on the S&P 500.  Look for the parade of
earnings to hit full force next week.


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

Brooktrout, Inc. - BRKT - close: 22.39 change: +1.17

WHAT TO WATCH: Continuing its very bullish trend of the past
several months, BRKT has moved sharply higher over the past two
sessions, breaking out today to its best levels since late 2000.
Given the sharply increasing volume, this looks like a breakout
with room to run.  Look for a breakout over today's high to
extend first to the $25-26 area and then towards strong
resistance near $30.




---

BroadVision Inc. - BVSN - close: 35.89 change: +0.21

WHAT TO WATCH: After being pummeled with the broad market selloff
last month, shares of BVSN are showing renewed signs of life,
having bounced convincingly from the 200-dma and has been
rallying for the past two days.  Use an entry trigger above
today's high and look for a rally back to the 50-dma and then
towards resistance in the $7.75-8.00 area.




---

Pixelworks Inc. - PXLW - close: 17.89 change: +0.19

WHAT TO WATCH: To say PXLW has been rallying would be an
understatement, as the stock has rebounded from below $14 to
above




---

Protein Design Labs Inc. - PDLI - close: 25.86 change: +1.41

WHAT TO WATCH: Biotech bulls took a much-needed rest through much
of the month of March and PDLI rested as well, trading in a nice
consolidation band until touching the 50-dma almost 2 weeks ago.
That got the buyers moving and PDLI broke out strongly today,
blasting through the March high to close at the best level in
over 2 years.  Use a trigger over today's high for entry and
target the $30 level.




---

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

FDRY $18.82 - While Networking stocks saw a bit of a positive
move on Monday, FDRY soared by more than 8.5%, smashing through
its 2-month descending trendline and it looks like the stock is
on the mend.  Entries look more favorable on a pullback near $18
ahead of a rally up to first resistance near $20 and then the
200-dma near $22.

ABRX $20.63 - After struggling and consolidating for the past 6
months, ABRX finally looks like it is ready to move following
today's strong move through the 200-dma.  Use a trigger over
$20.75 and target a run to the $24 resistance level.

ALVR $13.36 - Shares of ALVR have not been acting right in recent
weeks, with the technicals worsening with the breakdown out of
the rising channel.  But after one bounce at the $12 level and
today's strong rebound, it looks like the bulls have drawn their
line in the sand.  Aggressive bulls can target entries near
current levels, looking for a rally back to the bottom of the
broken channel near $15 and possibly as high as $16.  The more
conservative approach would be to wait for a breakout over the
50-dma before playing.


=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

*****************************************************************


Copyright 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.





PremierInvestor.net Newsletter                   Monday 04-05-2004
                                                    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:   LEXR, SIRI


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

LEXR - high tech long
 Raise stop from 16.00 to 16.95
 Prepare to EXIT at 18.50

---

SIRI - long
Adjust from $3.15 up to $3.40


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

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

Value Plays With Bullish Signals
---------------------------------
Ticker  Company Name               Close     Change

TOT     Total Sa (ADS)             93.86    +0.76
BP      BP Plc                     52.95    +0.95
CMCSK   Comcast Corp CI A Spcl     28.70    +0.75
NTT     Nippon Tel & Tel (ADS)     30.20    +1.93
CVX     Chevrontexaco Corp         89.06    +1.03
BAC     Bank of America Corp       81.25    +0.74


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

BVF     Biovail Corp               17.75    +1.74
RYAN    Ryans Family Steak House   18.66    +1.13
TSU     Tele Celular Sul Partici   16.71    +1.33
GMAI    Greg Manning Auctions      17.16    +2.06
NTRT    Netratings Incorporated    12.88    +1.70

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

BG      BG Plc                     31.88    +1.31
CVS     CVS Corp                   37.35    +2.57
MBT     Mobile Telesys OJSC (ADS) 138.00    +3.94
HDI     Harley-Davidson Inc        55.59    +2.75
AET     Aetna Inc New              94.70    +3.50


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

CFC     Countrywide Financial      87.92    -3.33
UNP     Union Pacific Corp         58.62    -1.19
SPG     Simon Property Group       55.82    -1.98
IRE     Governer & Co Bk Ireland   50.30    -1.10
EOP     Equity Office Prop Trust   27.59    -1.26

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

SPG     Simon Property Group       55.82    -1.98
VNO     Vornado Realty Trust       57.48    -1.91
SOV     Soverign Bancorp           20.77    -0.36
UPC     Union Planters Corp        29.19    -0.58
KIM     Kimco Realty Corp          47.50    -2.55


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