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Daily Newsletter, Monday, 05/24/2004

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PremierInvestor.net Newsletter                   Monday 05-24-2004
                                                    section 1 of 2
Copyright (c) 2004, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section one:

Market Wrap:  Stocks Slide Sideways as Oil Rises
Watch List:   Drifting Along


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
     05-24-2004            High     Low     Volume Advance/Decline
DJIA     9958.43 -  8.31 10045.45  9927.14 1.41 bln   2060/ 780
NASDAQ   1922.98 + 10.89  1934.41  1915.56 1.40 bln   1883/1139
S&P 100   534.04 -  0.29   538.02   532.62   Totals   3943/1919
S&P 500  1095.42 +  1.85  1101.71  1091.77
RUS 2000  551.72 +  5.91   552.76   545.81
DJ TRANS 2865.36 +  3.61  2889.51  2854.86
VIX        18.08 -  0.41    18.82    17.96
VXO        18.31 -  0.85    18.97    18.05
VXN        24.33 -  0.57    25.58    24.26
Total Volume 3,205M
Total UpVol  2,175M
Total DnVol    967M
52wk Highs     104
52wk Lows      130
TRIN          0.87
PUT/CALL      0.77
===============================================================

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

Stocks Slide Sideways as Oil Rises
by James Brown

Monday turned out to be a relatively quiet session.  The lack of
any decision from the OPEC meeting could have pushed the market
lower but news that Saudi Arabia would volunteer to raise
production lent the stock market early strength.  The Dow
Industrials opened strongly and quickly traded to 10,045.  The
NASDAQ gapped open and rushed to 1934 but these would prove to be
the high for the day.  The rally faded into the lunchtime lull
before bulls managed a meager afternoon rally into the close.
The Industrials ended the session down 8 points while the NASDAQ
closed up almost 11 points.

Action overseas was mixed.  The Japanese NIKKEI stepped up 31
points to 11,101 while the Chinese Hang Seng added 86 to 11,662.
The German DAX lost 36 points to close at 3867.  The English FTSE
slipped 2.5 points to 4428.  Meanwhile the French CAC added 21 to
end at 3628.

Here at home the sector-specific averages showed a much more
bullish front with only the DRG drug index and the IUX insurance
ending in the red. Energy stocks were Monday's best performers.
The OSX oil services index gushed +4.38%.  The XNG natural gas
index rose +2.31% and the OIX oil index added nearly 2%.  Gold's
XAU index turned in a solid day with a 1.37% gain and the
homebuilders rallied 3.2% to breakout over resistance at the 560
level.

Monday's market internals support the widespread drift higher
with advancing issues outnumbering decliners 5 to 2 on the NYSE
and 18 to 11 on the NASDAQ. Up volume overshadowed down volume
with 866 million to 393 million on the NYSE and 942 million to
461 million on the NASDAQ.  Overall volume was extremely light.

Chart of the Dow Industrials:



Chart of the NASDAQ composite:



Over the weekend investors were listening for news out of the
OPEC and G7 meetings.  The world's seven top economic powers met
at the G7 meeting and unanimously agreed that oil prices needed
to come down to support the world economy.  As a group they asked
OPEC to increase production.  Unfortunately, OPEC wasn't
listening.  The oil cartel's informal meeting in Amsterdam over
the weekend failed to produce any decisions even though all the
members agreed that crude prices are too high.  Only Saudi, the
cartel's largest and most influential member, said they would
boost production.  The Saudis said they would raise production
from 7.1 million to 9.1 million barrels per day starting in June.
Furthermore Saudi said they'd be willing to ramp up to 10.5
million a day if necessary.

This was obviously welcome news and one would have expected the
price of oil to drop on the announcement.  Not so!  Crude oil
prices rose 4.5% to close at $41.72 a barrel.  This is an all-
time high.  The markets are essentially stating their belief that
Saudi alone cannot keep up with global demand.  Plus, we have to
deal with growing risks to the oil infrastructure.  Just this
weekend there were three closures.  A pipeline in Washington
State was closed due to a fire.  The Mars oil platform, located
in the Gulf of Mexico, was closed due to an oil spill.  Third,
there were a couple of news agencies reporting that Iraq's
northern pipeline was shut down due to another terrorist bombing.

OPEC will get another chance to vote on oil production at the
formal June 3rd meeting in Beirut.  However, even if the
remaining cartel members decide to join Saudi Arabia and boost
production we probably won't see any benefit in time to save us
from record high gas prices during this summer's driving season.
Thus, energy prices will remain a drag on our own economic
rebound.

Monday's second biggest story was the legal defeat for the
tobacco industry.  Altria Group (MO), parent of Phillip Morris,
and the rest of the tobacco stocks were hit hard today after
federal judge Gladys Kessler decline to limit the amount of fines
the government might be able to impose in the upcoming trial set
to begin in September.  Right now government prosecutors are
seeking a disgorgement of profits to the tune of $280 billion.
Prosecutors claim that MO and the rest of the industry defrauded
smokers by lying about the health risks and by marketing their
product to kids who became addicted.  The decision today is the
fourth legal defeat for the tobacco industry in two weeks.
Shares of MO dropped 8.86% to $44.95.  RJR fell 6.16%.  CG lost
2.99%.

Mitigating MO's affect on the Dow Industrials were positive moves
in Alcoa, Boeing and Caterpillar.  Alcoa (AA) rose 2.44% to
$30.20 after news broke that the company plans to open a smelting
operation in Trinidad.  Boeing (BA) jumped 2.67% to $44.56 after
CSFB upgraded the stock to an "outperform" and raised its price
target to $52 on positive expectations for BA's new 7E7 line of
aircraft.  Caterpillar (CAT) climbed 1.32% to $74 after Merrill
Lynch upgraded the stock from a "neutral" to a "buy" with a long-
term price target of $102.

It wouldn't be a Monday without some merger news.  Today's big
merger hails from the drug sector.  Omnicare (OCR), a
prescription drug provider to nursing homes, added 3.7% by the
close after announcing a $1.5 billion unsolicited offer to buy
NeighborCare (NCRX) for $30 a share.  Normally the acquirer's
stock price goes down when such deals are announced.  To see
OCR's price rise on the news means the street would strongly
approve of the union.  Shares of NCRX jumped 54% to $27.19 and
the company said they are considering the offer.  The second M&A
announcement today came from Denver-based Forest Oil Corp (FST).
FST said it would pay $330 million for Wiser Oil Co (WZR).  The
deal values WZR AT $10.60 per share.

Looking ahead to tomorrow Wall Street will continue to focus on
the oil issue since the record high gasoline prices undermines
our own GDP growth.  Plus, the markets will have a chance to
react to the President's speech on Iraq tonight at 8:00 PM ET.
Tomorrow also brings the Consumer Confidence numbers and the
Existing home sales report.  If Bush doesn't drop any more word
bombs and the consumer confidence numbers come in reasonably well
I'm cautiously optimistic for a positive day tomorrow.  I don't
expect any big moves in the Dow but I'm encouraged by what I see
in many of the smaller sector-specific indices.


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

Drifting Along

Yahoo Inc. - YHOO - close: 29.43 change: +0.88

WHAT TO WATCH: Strength in Internet stocks helped send YHOO
surging to fresh multiyear highs today and it looks like the next
bullish run may be underway.  A pullback to test broken
resistance in the $28.75-29.00 area as new support will provide
the best entries, although those looking to enter on strength can
trigger entries on a breakout over today's high.  In either case,
target a move to next strong resistance near $35.




---

Human Genome Sciences Corp. - HGSI - close: 10.34 change: -0.35

WHAT TO WATCH: This past month has not been kind to investors in
second-tier Biotechnology stocks and HGSI has had a nearly
straight down decline, violating numerous support levels in the
process.  The last one to fall was the $11 level late last week
and the stock appears to be picking up steam.  A failed rebound
below $11 would be the ideal entry point, but a drop below
today's low could work as well.  Watch for potential round number
support at $10, but HGSI looks destined for a trip down to next
major support in the $8.50 area.




---

Intl Game Technology - IGT - close: 39.82 change: +0.50

WHAT TO WATCH: After finding strong support near the $36 level a
couple weeks ago, shares of IGT have been making steady upward
progress and are nearing a key level of resistance.  A breakout
over $40 looks like a good point to lay out bullish bets, looking
for a rally back towards strong resistance near $44.  Set stops
initially just under the $38 level and watch for potential
resistance at the 50-dma.




---

Sina Corp. - SINA - close: 32.59 change: +2.58

WHAT TO WATCH: Helped along by the strength in the overall
Internet sector on Monday, shares of SINA vaulted through the $32
resistance level, confirming that the recent downtrend is going
to see a serious challenge.  Aggressive traders can enter on a
push through today's high, while better entries will be seen on a
pullback and successful test of the $30 level as newfound
support.  Target a rally to the 200-dma near $37, also the site
of the multi-month descending trendline.





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

KMRT $51.00 - After a week of consolidating near its highs in a
classic continuation flag pattern, KMRT broke out today, trading
strong throughout the session.  The measuring objective from this
breakout has the stock poised for upside continuation to the $56
area.  Entries look favorable on a retest of the top of the flag
near $49 or on a breakout over today's high.

OCR $40.60 - While the downtrend of the past few months is still
in force, shares of OCR seem to have reached a turning point.
Today's strong rally through the 200-dma puts the stock within
striding distance of major resistance at $42, the site of both
the 50-dma and the descending trendline.  Use a trigger over that
level for entries and then look for a rally back to the $46-47
area.  Note the possibility of resistance in the $44-45 area
though.


=================================================================
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send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

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

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

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

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 05-24-2004
                                                    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:   MAGS, TARO (SEE NOTE)
Split Announcement:  WGR announces 2-for-1 split


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

MAGS - long
Adjust from $12.50 up to $16.50

---

TARO - non-tech short play -
We were triggered in this short play when TARO traded at $40.94.
Lower stop from $43.60 to $43.00.


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

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

WGR announces 2-for-1 split

Twenty minutes before the closing bell Western Gas Resources, Inc.
(NYSE:WGR) announced that its Board of Directors had approved a 2-
for-1 stock split.

The split will take place in the form of a stock dividend.  This
dividend is payable on June 18th, 2004 to shareholders on record
as of June 4th.  Post-split the company will have 73.6 million
shares outstanding.

The Board also approved a quarterly cash dividend of 5 cents per
share to be paid on a post-split basis.  The record date for the
cash dividend is June 30th.

About the company:
Western is an independent natural gas explorer, producer,
gatherer, processor, transporter and energy marketer providing a
broad range of services to its customers from the wellhead to the
sales delivery point. The Company's producing properties are
located primarily in Wyoming, including the developing Powder
River Basin coal bed methane play, where Western is a leading
acreage holder and producer, and the rapidly growing Pinedale
Anticline. The Company also designs, constructs, owns and operates
natural gas gathering, processing and treating facilities in major
gas-producing basins in the Rocky Mountain, Mid-Continent and West
Texas regions of the United States. (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

TOT     Total Sa (ADS)             93.03    +2.53
HBC     HSBC Holdings Plc          71.08    +0.24
PTR     Petrochina Co Ltd (ADS)    46.08    +1.70
DCM     NTT De Co Mo (ADR)         18.05    +0.09
UBS     UBS Ag Ord. Shares         71.76    +0.90


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

ANPI    Angiotech Pharmaceutical   19.63    +0.12
NKTR    Nektar Therapeutics        18.52    +0.39
BYH    Sinopec Beijing Yanhua Petro12.99    +0.55

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

WM      Washington Mutual Inc      43.52    +0.32
BRCM    Broadcom Corp CI A         40.90    +0.15
MRVL    Marvell Technology Group   44.46    +0.37
PETC    Petco animal Supplies      30.74    +0.62
BGG     Briggs & Stratton Corp     73.91    +0.95


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

MDT     Medtronic Inc              47.35    -0.37
FRX     Forest Laboratories Inc    58.50    -0.70
CMI     Cummins Inc                55.60    +0.92
STRA    Strayer Education Inc     114.46    +0.83


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

SDS     Sungard Data Systems Inc   26.70    +0.52
MYL     Mylan Laboratories Inc     22.30    -0.41
BPOP    Popular Inc                42.32    +0.07


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