PremierInvestor.net Newsletter Monday 04-19-2004 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: A Quiet Monday as Investors Wait on Greenspan Watch List: MYGN, PDLI, HOV, EPIX =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 04-19-2004 High Low Volume Advance/Decline DJIA 10437.82 - 14.12 10451.76 10399.47 1.46 bln 1437/1373 NASDAQ 2020.43 + 24.69 2020.45 1991.14 1.65 bln 1749/1349 S&P 100 555.78 + 0.84 555.94 552.73 Totals 3186/2722 S&P 500 1135.82 + 1.21 1136.18 1129.84 RUS 2000 586.95 + 3.58 587.38 579.17 DJ TRANS 2923.77 - 15.70 2939.65 2911.67 VIX 15.42 + 0.48 16.08 15.33 VXO 15.08 - 0.59 16.11 15.08 VXN 21.40 - 1.15 23.49 21.17 Total Volume 3,446M Total UpVol 2,182M Total DnVol 1,224M 52wk Highs 255 52wk Lows 76 TRIN 1.84 PUT/CALL 0.67 =============================================================== =========== Market Wrap =========== A Quiet Monday as Investors Wait on Greenspan by James Brown The action on Wall Street was rather mild on Monday. Major indices traded in a narrow range as investors continue to fret over higher interest rates despite generally positive earnings news. Tech stocks did manage to out perform as the SOX semiconductor index and the NASDAQ both ended a four-day losing streak. The Dow Industrials were weighed down by a decline in McDonalds (MCD) after its Chairman and CEO Jim Cantalupo died unexpectedly of a heart attack. Investors are still focused on the situation in Iraq as Spain's new socialist Prime Minister made good on his campaign promise and ordered the country's 1,300 soldiers to return home immediately. Closer to home many in America's heartland quietly remembered the ninth anniversary of the Oklahoma City bombings were 168 people lost their lives. Global stock markets trended flat to down. The Japanese NIKKEI turned in a volatile day with an intraday drop of nearly 180 points before recovering to close down -60 points at 11,764. The Chinese Hang Seng, the English FTSE, the German DAX and the French CAC all closed within nine points of unchanged on the session. Here at home the Dow Industrials dropped 14 points to 10,437. The NASDAQ Composite added 24 points to end back above the 2000 level and breakout over its 50-dma (2014) to close at 2020. The S&P 500 added just over 1 point to close at 1135. Buying was strongest in tech stocks with software, Internets, semiconductors and biotechs all performing well. Healthcare stocks also bounced higher after their recent declines. Boosting traders interest in technology shares was an upgrade for chipmaker AMD and news that MSFT had settled an antitrust case with the state of Minnesota. Monday's weakest sectors were airlines, metals and housing stocks. Homebuilders continue to feel the heat as mortgage rates have risen sharply and investors rotate out due to growing concerns that the Fed will feel forced to raise rates. Market internals were mixed. It was an even race on the NYSE as advancers nudged past decliners 14 to 13. Up volume outpaced down volume by a small margin as well on the NYSE. The NASDAQ reported more bullish readings with advancers beating decliners 17 to 13 and up volume better than three times down volume. However, overall volume was pretty light. Chart of the Dow Industrials: Chart of the NASDAQ Composite: This is the busiest week for earnings with 179 companies in the S&P 500 reporting their first quarter results and dozens more who are not in the index. However, even though corporate reports are coming in fast and furious Wall Street remains focused on Federal Reserve governor Alan Greenspan's two congressional appearances this week. Most of the focus is on his Wednesday 10:00 AM meeting with the Joint Economic Committee but tomorrow afternoon he comes before the Senate Banking Committee. Many market pundits feel that investors are merely marking time until these two appearances are through on hopes that Alan will drop some sort of hint regarding the Fed's outlook on rates. The recent string of super-strong economic reports have created a lot of doubt on just how patient the Fed can afford to wait. Case in point this morning's Conference Board index of Leading Economic Indicators rose a predicted 0.3% in March. Drilling down into the numbers shows that demand remains strong fueled by consumers more than happy to spend their tax refunds. Some analysts are starting to suggest that the U.S. economy may be growing faster than the currently forecasted 4.3%. Speaking of growth there is almost no doubt that McDonald's Chairman and CEO Jim Cantalupo is responsible for turning around the world's largest restaurant chain. Cantalupo had come out of retirement to save the struggling fast-food giant. Some of his accomplishments involved redesigning the menu to provide healthier choices and axing the supersize menu due to a growing fervor over America's obesity problem. He was 60 years old when he died of a heart attack this weekend. MCD quickly named COO Charlie Bell as a replacement CEO and probably saved the stock from a deeper loss than the 2.5% drop it felt today. A couple of today's big earnings reports came from Dow-component MMM and drug giant LLY. MMM, known for its ubiquitous Post-it notes and Scotch tape, said worldwide sales reached a record- breaking $4.94 billion for the quarter. This beat analysts' estimates for $4.82 billion. Earnings came in at 90 cents a share compared to estimates of 87 cents and 44% higher than earnings a year ago. 3M's Chairman and CEO James McNerney Jr. was very upbeat with his comments, "Worldwide sales in local currencies increased in all seven of our businesses, and we generated double-digit increases in operating income and earnings per share. We are off to a great start in 2004." MMM also raised its Q2 guidance and its full year guidance. Unfortunately, shares of MMM didn't react much to the report. The stock added 3 cents to $83.76. I suspect investors are concerned about just how much the weak dollar influenced those results. Meanwhile Eli Lilly Co (LLY) jumped 1.3% to $73.40 after reporting earnings of 70 cents per share, beating analysts' estimates by 4 cents. LLY, known for its Prozac antidepressants, saw its numbers boosted by a fivefold increase in sales of its newly launched ED drug Cialis, which is jointed marketed by partner ICOS. Total revenues rose 17% to $3.38 billion for the quarter. Investors' lackluster reaction was probably due to LLY's inline guidance for Q2 and the year. Two more high-profile movers today were Dow-component Coca-Cola (KO) and biotech firm Imclone (IMCL). Shares of KO surged 2.06% to a new 18-month high on Wall Street's expectation that the company will make a bid to steal away Gillette's (G) CEO Jim Kilts. KO also released news that it would soon be launching Coca-Cola C2, a low-carb coke with half the calories and carbs of regular coke. The company is due to announce earnings on Wednesday and estimates for at 44 cents a share. Imclone Systems (IMCL) jumped almost 12% to $66.30 and fueled a 2.8% rise in the BTK biotech index. Sparking the move was a company announcement that the FDA had approved its most recent filing to review the company's new facility to produce its headline Erbitux drug. Not hurting the stock was a "buy" rating from Bank of America who slapped a $91 price target on IMCL. Of course Wall Street was quick to notice that IMCL is now trading above the level where Martha Stewart and Sam Waksal sold the stock back in 2001. Looking ahead to tomorrow we have a HUGE earnings day with well over a hundred well-known companies reporting their first quarter numbers. Some of the headliners are likely to be Dow components Alria Group (MO), General Motors (GM) and Pfizer (PFE) who all report before the opening bell. We'll also hear from telecom companies Lucent (LU), Motorola (MOT) and Sprint (PCS & FON). Tuesday will also bring the Chain Store sales numbers and the Redbook Retail sales numbers. Plus Fed governor Pinalto will make an appearance but it will be overshadowed by Greenspan's afternoon meeting. Trade carefully. I would probably look for continued strength in the NASDAQ tomorrow but watch those stops. ================================================================== 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 --------------------------------- Myriad Genetics - MYGN - close: 17.49 change: +0.85 WHAT TO WATCH: MYGN has been stuck in a multi-month consolidation pattern between $15 and $18.50, but it looks like that pattern could soon resolve in favor of the bulls. The stock is moving sharply higher today, helped along by the strong rally in the BTK index. Wait for a break above the top of its range with a trade at $18.60 before playing and then look for a continued run to next resistance in the $20-21 area. Look for earnings to be released in early May. --- Protein Design Labs, Inc. - PDLI - close: 25.50 change: +0.73 WHAT TO WATCH: As earnings loom nearer on May 4th, PDLI looks poised to make another run at a solid breakout, helped along today by the strong move in the Biotechnology index. Use a trigger over the $26.25 resistance and target a move towards strong resistance near $30. Use a tight stop at $24, just below the bottom of the consolidation of the past couple weeks. --- Hovnanian Enterprises Inc. - HOV - close: 37.78 change: -1.47 WHAT TO WATCH: With bond rates continuing to rise and the Housing sector looking weak, it just might be wise to try a bearish play on this heretofore bullet-proof sector. HOV reported earnings in early March and the stock has been marching steadily lower ever since. Today's negative action has the 200-dma within spitting distance and a break below there will almost guarantee a test of key support at $36. Aggressive traders can target failed rebounds below $40 for entry, while the more conservative approach will be to short the breakdown under $35.50. --- EPIX Medical Inc. - EPIX - close: 23.68 change: +1.41 WHAT TO WATCH: They say the third time's the charm and that was certainly the case with EPIX, as the stock blasted through its $23 resistance level on the third attempt, reaching new multi- year highs today. This looks like a good point for aggressive entries, looking for a continued rally up to test the all time highs in the $26-27 area. Note that the company is set to release earnings next Thursday. --- =================== On the RADAR Screen =================== URBN $22.90 - It seems nothing can stop the slide in shares of URBN, as the stock continues dropping to new multi-month lows, seemingly on a daily basis. The stock is nearing strong support at $22, and if that level gives way, then there's a long way to fall to next strong support in the $18-19 area. Use a trigger below $22 for entry. MHR $11.10 - It took over a month for MHR to solidify its breakout over the $10 resistance level, but now the bulls are picking up steam (and volume), with a breakout to new all-time highs on Monday. Momentum entries look favorable, although more conservative traders may want to try capturing a better entry on an intraday pullback near the 10-dma. Look for a continued rally into the $12.50-13.00 area. ================================================================= 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 04-19-2004 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: IMAX Split Announcement: FBTC, LACO, NSM, RBA 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 ================================================================== IMAX - short Adjust from $6.05 down to $5.75 ================================================================== Stock Splits ================================================================== Announcements ------------- FBTC declares 2-for-1 stock split Just before noon First BancTrust Corp (NASDAQ:FBTC) announced that its Board of Directors had approved a 2-for-1 stock split of its common stock in the form of a stock dividend. The dividend is payable on May 21st, 2004 to shareholders on record as of April 30th. About the company: First BancTrust Corporation is a holding company that owns all of the capital stock of First Bank & Trust, S. B., an Illinois- chartered savings bank that conducts business from its main office located in Paris, Illinois, and branch offices in Marshall and Savoy, Illinois. On September 30, 2003, the company had $226 million of total assets, $200 million of total liabilities and $26 million of stockholders' equity. (source: company press release) --- LACO deals a 2-for-1 stock split This morning before the opening bell Lakes Entertainment, Inc. (NASDAQ:LACO) announced that its Board of Directors had approved a 2-for-1 stock split of its common shares, payable in the form of a 100% stock dividend. The dividend is payable on May 3rd, 2004 to shareholders on record as of April 26th. Post-split LACO will have approximately 22.2 million shares outstanding. About the company: Lakes Entertainment, Inc. currently has development and management agreements with four separate Tribes for four new casino operations, one in Michigan, two in California and one with the Nipmuc Nation on the East Coast. Lakes Entertainment also has agreements for the development of one additional casino on Indian- owned land in California through a joint venture with MRD Gaming, which is currently being disputed by the Tribe. Additionally, the Company owns approximately 80% of World Poker Tour, LLC, a joint venture formed to film and produce poker tournaments for television broadcast. (source: company press release) --- NSM declares 2-for-1 stock split This afternoon after the market's closing bell National Semiconductor Corp (NYSE:NSM) announced that its Board of Directors had approved a 2-for-1 stock split of its common shares. The split will take effect as a 100% stock dividend and is payable on May 13th, 2004 to shareholders on record as of April 29th. About the company: National Semiconductor, the industry's premier analog company, creates high performance analog devices and subsystems. National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, imaging sensors and data conversion solutions. National's key markets include wireless handsets, displays, PCs, networks and a broad range of portable applications. With headquarters in Santa Clara, California, National reported sales of $1.67 billion for fiscal 2003, which ended May 25, 2003. (source: company press release) --- RBA declares 2-for-1 stock split This morning before the opening bell Ritchie Bros. Auctioneers Inc. (NYSE:RBA) announced that its shareholders had approved a 2- for-1 stock split of its common shares. RBA is traded on both the NYSE and the Toronto Stock Exchange. The stock will begin trading post-split in Toronto on April 30th, 2004 and begin trading post-split in New York on May 7th. The shareholder record date will be May 4th. After the split RBA will have 34 million share outstanding. About the company: Ritchie Bros. is the world's largest auctioneer of industrial equipment, operating through over 90 locations in more than 20 countries around the world. The Company sells, through unreserved public auctions, a broad range of used and unused industrial equipment including equipment utilized in the construction, transportation, mining, forestry, petroleum, marine and agricultural industries. (source: company press release) ================================================================== 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 NOK Nokia Corp (ADS) 15.30 +0.69 MO Altria Group Inc 56.45 +0.55 E Eni Spa (ADS) 104.71 +0.61 CAJ Canon Inc (ADR) 50.69 +0.58 NXTL Nextel Communcations A 25.00 +1.08 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- DDS Dillard's Inc 18.43 +1.04 MUSA Metals USA Inc 16.25 +1.90 ENER Energy Conversn Devices 12.07 +1.09 MXWL Maxwell Technologies 17.43 +1.16 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- KO Coca-Cola Co 53.00 +1.07 LXK Lexmark International 96.16 +2.31 IMCL Imclone Systems Inc 66.30 +7.03 GTK Gtech Holdings Corp 63.25 +2.49 CME Chi Mercantile Exchange 114.76 +4.78 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- G Gillette Company 38.25 -1.57 SEIC SEI Investments Company 30.25 -1.70 PBCT Peoples Bank Bridgept Ct 43.92 -1.58 CYH Community Health Systems 24.82 -2.02 BOKF BOK Financial Corp 39.97 -1.14 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- RHD R.H. Donnelley Corp 46.87 -0.48 SWIR Sierra Wireless Inc 34.29 -7.87 ================================================================= 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.
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