Option Investor
Newsletter

Daily Newsletter, Sunday, 05/30/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter          Weekend Edition 05-30-2004
                                                    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:       What A Difference A Week Makes
Market Sentiment:  Ready for the Weekend
Watch List:        Chips, Pork and Video Games

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
        WE 5-28         WE 5-21         WE 5-14         WE 5-07
DOW    10188.45 +221.71 9966.74 - 46.13 10012.9 -104.47 -108.23
Nasdaq  1986.74 + 74.65 1912.09 +  7.84 1904.25 - 13.71 -  2.19
S&P-100  545.13 + 10.80  534.33 -  1.14  535.47 -  1.88 -  3.53
S&P-500 1120.64 + 27.08 1093.56 -  2.10 1095.66 -  3.03 -  8.61
W5000  10926.36 +301.26 10625.1 -  9.61 10634.7 - 51.33 -107.62
SOX      488.86 + 30.68  458.18 +  7.19  450.99 -  6.02 + 13.52
RUT      568.28 + 22.47  545.81 +  2.05  543.76 -  4.80 - 11.24
TRAN    2948.01 + 82.26 2861.75 + 12.86 2848.89 +  2.71 - 40.26
WE = week ending
=================================================================

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

What A Difference A Week Makes
by Jim Brown

I predicted last Sunday that there was a bounce building
in our immediate future. I outlined the reasons I thought
the selling was over and why I thought we would rally. I
suggested it would slow in the SPX 1020, Dow 10200 range
and that is where we stopped. Unfortunately after several
weeks of declines and a rebound as predicted the future is
far less clear.

Dow Chart - Weekly


Nasdaq Chart - Weekly



The economics for the week were a definite surprise. With
a number of reports coming in weaker than expected the
markets shrugged them off and continued higher. The bad
news bulls appear to be back in charge. The weaker than
expected reports continued on Friday with the Consumer
Sentiment dropping to 90.2 and the lowest level since Oct
2003. Expectations were for a gain to 95.0 but analysts
were quick to downplay the release. The common refrain was
that sentiment was "news event" driven and did not reflect
the true nature of the recovery. I will agree with them on
that except that they always pound the table with delight
when it is higher than expected. The increasing pessimism
is coming from the Iraq prisoner scandal, rising gas prices
and up until this week the falling markets. The Michigan
survey is taken from 500 respondents. The preliminary number
is from the first 250 respondents and the final number from
the total of all 500. The swing from the preliminary release
in May to the final number was about -8 points and a very
large swing over the last two weeks. This correlates with
the ABC News/Money Magazine poll that also dropped sharply.

Conversely the Personal Income and Spending numbers released
on Friday showed income was twice the level of spending and
up +4.8% year over year. Income rose +0.6% and spending only
+0.3%. This was the highest increase in spending since the
end of 2000. Inflation as shown by the PCE Deflator rose only
+0.1% for the month pushing the core PCE to only +1.4% year
over year. This is one of Greenspan's favorite indicators
and is showing almost no inflation. This could allow the Fed
to remain patient for an extended period of time.

The NY-NAPM rose for the ninth straight month in May but the
rate of increase slowed slightly. In May the index hit 287.1
a gain of +4.9 points and a new record high. However current
conditions fell to 59.7 from 70.9 and manufacturing conditions
fell to 52.7 from 80.3. The quantity of purchases fell to 56
from 75. The worst drop was the six-month outlook, which fell
from 85.7 to 62.5. Probably the biggest highlight that the
outlook is slipping was the Production Materials Buying Policy
which fell from 150 days to only 40 days of inventory. This
could be seen in two ways. Either production has ramped up
so strongly that managers cannot keep a longer supply on
hand OR the future prospects have fallen off so sharply that
managers are afraid to keep more raw materials on hand. When
you consider the drop in the other components I think the
latter is likely the case. It appears the New York recovery
may be topping.

The strongest survey for the week was the PMI, which rose to
68.0 and a level not seen since Jan-1988.  This report helped
to push the weakness in many of this weeks releases to the
background with a +6 point jump over expectations. The New
Orders component rose to 74.4 and the highest level since
1983. To keep pace with the increasing demand the employment
component rose +4 points. Where the NY report showed a
slowing rate of manufacturing growth the Chicago PMI shows
an exploding rate of growth. This suggests the national ISM
next week could also be stronger than expected. This would
help continue the bullish optimism in the markets. The only
downside was the soaring prices paid component to 80 and the
highest level since 1995.

On Thursday the weaker than expected GDP at 4.4% was a small
disappointment but still strong. The 2Q GDP is only expected
to be in the +3.5% to +4.0% range but the strong PMI and a
strong ISM next week could go a long way towards raising
those estimates. That ISM for May will be released at 10:00
on Tuesday. The other material reports are Factory Orders
and Productivity on Thursday and Jobs on Friday. The Jobs
report is the biggest hurdle with consensus estimates at
+233,000, slightly less than the +288K for April.

Unless the Jobs report was over +350K the odds of the Fed
reacting before the June-30th meeting are slim. Currently
the odds of a quarter point rate hike at the June meeting
are 92%, down from 94% last Sunday and 100% several weeks
ago. This is still a virtual certainty in Fed terms but a
lower than expected ISM or Jobs could decrease the odds
even further.

With economics mixed but still improving where it matters
and strong earnings the markets pulled a recovery out of
the hat last week. The Dow rallied to resistance at 10220
and came to a dead stop on Thursday. Friday's high was just
below that level at 10216 but support at 10175 was also
very strong. The Nasdaq was by far the stronger index with
a +120 point gain from the prior weeks lows. The Nasdaq
went out Friday at its highs at 1988 and very close to the
2000 level once again. That 2000 level, actually 2000-2025,
is very strong resistance and coupled with that 10200-10300
resistance level on the Dow could easily limit upward
movement next week. The SPX came to a halt at 1121 right
on schedule and the Russell at 570. All of these levels
are strong resistance. However, closing at very strong
resistance on a Friday with three day weekend event risk
ahead was bullish. The major qualification was the holiday
volume at only 2.5 billion shares across all markets. The
NYSE only traded 1.2B and the Nasdaq 1.09B. These levels
are -38% below Tuesday's level at 4.01B for the strong
gain. The rally volume was also only moderate and lacking
in conviction.

The Nasdaq has now closed up +6 consecutive days and is
nearing that stronger resistance mentioned above. With the
summer doldrums ahead that trend is not likely to continue
much longer. The summer doldrums are commonly known as
June-August. Over the last five years the S&P has lost
an average of -2.5% over those months. To put that in
perspective it would only be -28 points from Friday's
close. Hardly a tidal wave of selling and suggests that
doldrums is a proper name.

Offsetting the potential for three months of aimless
wandering is the election year trend. Since 1900 there
has been a summer rally in 73% of election years with an
average gain of +7% according to Ned Davis Research. Now
we have a choice between aimless wandering and a +7% avg
gain. Who is right? Actually historical norms are only
accurate over extremely long periods. Short-term views
can be skewed significantly by current events and market
trends. The doldrums trend I mentioned above simply
reflects the bear market for three of the last five
years. No surprise that the average was down. The longer
election year trend since 1900 covers only 25 election
year cycles and multiple major wars and economic disasters.
With 73% of those years (18) showing a gain compared to
27% (7) showing a loss that is not really a trend you can
count on. It is better than a coin toss but only slightly.
Add in the June-30th Fed meeting, Iraq turnover and Olympics
and the recent terror warning and the election year trend
is probably nullified.

With the Nasdaq and the Russell each up +4% for the week
and the SOX up +7% you could easily make a case that the
market is overbought. Buyer conviction is far from strong
with the put/call ratio 1.05 and the TRIN 1.13 at Friday's
close. Low volume, lack of conviction but closing at the
highs on a holiday Friday. What a conflicting picture!
I had gone into Friday afternoon thinking we were going
to see a closing sell off on profit taking but other than
some light chop there was no real attempt to take them down.
There were several attempts to take them higher but those
also failed but not very decisively. It appears there is
no conviction on either side.

When there is no conviction we need to look at the real
support and resistance and the longer term trend to decide
the probable outcome. Each of the major indexes are nearing
their downtrend resistance dating back to early 2004. This
will be a key test for next week. The Nasdaq has been down
trending since January and that trend line is currently
2020. With round number resistance at 2000 to slow any new
gains the 2020 level could be tough. Support is well below
at 1940 & 1920. The path of least resistance for the Nasdaq
is not up or down but sideways. It is right in the middle
of a large range and we could wander in this 1940-2020 range
for all of June while waiting for the month end events to
unfold.

Nasdaq Chart - Daily




The Dow has monster resistance at 10300-10350 and heavy
congestion between 10300-10550. The upward path for the
Dow is going to be much more difficult than the Nasdaq.
The +2% gain (+222) for the Dow was only half the Nasdaq
gain and stopped right at 10220 resistance for the last
two days. Most of the Dow recovery was based on only a
very few stocks. UTX, AIG, INTC, HD, KO, AXP and MMM
carried the index with many of the other issues flat to
down. The Dow has very low relative strength when compared
to the other indexes. With strong resistance from 10220-
10350 and support well below at 9900 the Dow also has a
big range available for movement over the next four weeks.
The path of least resistance is down for the Dow to
something around the 10100 level.

Dow Chart - Daily




The two indexes that helped the rally the most were the SOX
and the Russell. Both tacked on some serious gains but both
are nearing some serious resistance. The SOX reached downtrend
resistance on Friday at 490 and with the +7% gain for the week
is definitely overbought. We could easily see some profit
taking in chip stocks.

SOX Chart - Daily


Russell Chart - Daily




The Russell is also very extended from the May base around
535 and the +35 point gain was extreme. 570 is strong
resistance and could act to blunt any further gains next
week.  The small caps set a lower high on Friday and were
very choppy all afternoon. This suggests indecision and a
lack of fund buying. When funds buy or sell the Russell the
direction and speed leaves no doubt. There was definite
doubt on Thr/Fri.

Based on the market information above I think the rebound
is about over and profit taking should follow. With the
weekend event risk over and a positive ISM on Tuesday we
could easily see a move higher but with all the multiple
resistance levels across all the indexes the odds of a
major move higher are not high. I believe instead we
could see a range bound market with risk to the downside
until Friday's Jobs report. Everyone is expecting a blowout
report and I have already heard one 500K prediction. The
expectations are very high and potential for disappointment
high as well. That is where we run into trouble. If the
number did come in at 500K the Fed would almost certainly
act immediately. In this case a blowout could be dangerous.
Then there is also the persistent rumor that there will be
a rally after the first cut because it means the Fed has
begun to act and the economy is strong. If the number is
well below the estimates the Fed may remain on hold and
that could also rally stocks. This is a very tough week
to call except for the obvious. My best analysis says that
any move higher early in the week will fail and we will
remain range bound until the Jobs report.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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

Ready for the Weekend
- J. Brown

Friday's action was mixed and witnessed some mild profit taking
but stocks ended the week on an up note.  Meanwhile investors
were eagerly leaving early for the long Memorial Day weekend
after a choppy month.  The Dow Industrials ended the week up 2.2%
but down 37 points for the month.  Meanwhile the NASDAQ Composite
added 3.9% for the week and 66 points for the month (3.4%).

Fueling the week's positive move was a steady drop in crude oil
from its all-time high on Monday.  Oil did bounce a bit on Friday
but remained under the $40.00 per barrel mark.  Thursday and
Friday's markets were also boosted by generally positive economic
data.  Thursday was the 4.4% GDP reading while Friday unveiled
strong consumer spending and a very strong Chicago PMI number.

The rally this week is encouraging but many of the sector
specific indices are trading right under resistance.  We'd like
to see the rally continue but we could be due for a little more
rest (a.k.a. consolidation), especially for tech stocks.

Next week is short with the markets closed on Monday for Memorial
day.  However, the remaining four days of the week could be
exciting.  Tuesday will bring the ISM report and Thursday unveils
the ISM services number and the Factory report.  Another
potential market mover will be the Thursday night mid-quarter
update from Intel (INTC).  Yet the spotlight will be clearly
focused on Friday's non-farm payrolls report.  Conjecture on how
strong the jobs number will or won't be will consume the
financial media for the next several days.  The result of the
jobs report could very well set the tone for June.

Judging from the declines in the volatility indices investor
sentiment is pretty bullish but the major indices have significant
overhead resistance to deal with.  Watch those stops losses.

Don't forget to say thank you to all the men and women serving
in the armed forces this weekend.  Happy Memorial Day!



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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8679
Current     : 10188

Moving Averages:
(Simple)

 10-dma: 10029
 50-dma: 10246
200-dma: 10064



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  946
Current     : 1120

Moving Averages:
(Simple)

 10-dma: 1101
 50-dma: 1116
200-dma: 1085



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1165
Current     : 1466

Moving Averages:
(Simple)

 10-dma: 1422
 50-dma: 1438
200-dma: 1426



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

CBOE Market Volatility Index (VIX) = 15.50 +0.22
CBOE Mkt Volatility old VIX  (VXO) = 15.82 +0.29
Nasdaq Volatility Index (VXN)      = 21.33 -0.17


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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.05        388,547       407,570
Equity Only    0.70        325,223       228,402
OEX            1.16         12,858        14,818
QQQ            1.45         28,509        41,263


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

Bullish Percent Data

           Current   Change   Status
NYSE          63.8    + 0     Bear Confirmed
NASDAQ-100    38.0    + 2     BULL ALERT
Dow Indust.   66.7    + 0     Bear Confirmed
S&P 500       60.4    + 1     Bear Confirmed
S&P 100       61.0    + 0     Bear Confirmed



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: 0.71
10-dma: 0.96
21-dma: 1.00
55-dma: 1.07


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    1617      1575
Decliners    1192      1453

New Highs      80        79
New Lows       22        14

Up Volume    725M      698M
Down Vol.    641M      497M

Total Vol.  1392M     1217M
M = millions


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

Commitments Of Traders Report: 05/25/04

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

Not much movement from the commercial traders.  It looks like
they shifted a handful of money from shorts to longs.  Conversely
the small traders have rotated some money from longs to shorts.


Commercials   Long      Short      Net     % Of OI
05/04/04      397,964   417,175   (19,211)   (2.4%)
05/11/04      401,365   421,672   (20,307)   (2.5%)
05/18/04      394,352   423,258   (28,906)   (3.5%)
05/25/04      400,713   420,764   (20,051)   (2.4%)

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
05/04/04      137,112    80,201    56,911    21.6%
05/11/04      135,534    76,987    58,547    27.5%
05/18/04      139,647    74,597    65,050    30.4%
05/25/04      136,086    79,060    57,026    26.5%

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

There was a big drop in longs by the commercial traders but
it was coupled with a significant drop in shorts too.  They
remain net bullish on the S&P 500.  Small traders have grown
net bearish after last week's bullish reading.


Commercials   Long      Short      Net     % Of OI
05/04/04      316,840   370,781    (53,941)  ( 7.8%)
05/11/04      378,696   362,887     15,809     2.1%
05/18/04      390,484   357,157     33,327     4.5%
05/25/04      353,722   336,406     17,316     2.5%

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
05/04/04      119,308     74,407    44,901    23.2%
05/11/04      101,199     94,408     6,791     3.5%
05/18/04       62,216     87,269    25,053    16.8%
05/25/04       91,515    100,759   ( 9,244)  ( 4.8%)

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


NASDAQ-100

Commercial traders have upped their long positions and remain
net bullish on the NDX.  Small traders have likewise upped their
short positions and remain net bearish.


Commercials   Long      Short      Net     % of OI
04/27/04       54,196     33,948    20,248   23.0%
05/04/04       56,931     35,209    21,722   23.6%
05/18/04       58,376     37,528    20,848   21.8%
05/25/04       59,891     37,630    22,261   22.8%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  22,261   - 05/25/04

Small Traders  Long     Short      Net     % of OI
05/04/04       10,247    24,764   (14,517)  (41.5%)
05/11/04        9,716    21,072   (11,356)  (36.9%)
05/18/04        9,843    18,935   ( 9,092)  (31.6%)
05/25/04       10,184    20,653   (10,469)  (33.9%)

Most bearish reading of the year: (14,517) - 05/04/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Commercial traders are adding to their short positions while
small traders are adding to their longs, which is generally
par for the course.  Guess who is right more often?  Yup,
the commercial traders.


Commercials   Long      Short      Net     % of OI
05/04/04       24,296    22,181    2,115       4.6%
05/11/04       22,614    21,507    1,107       2.5%
05/18/04       22,257    22,444   (  187)     (0.4%)
05/25/04       23,578    24,632   (1,045)     (2.2%)

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
05/04/04        6,262     8,155   (1,893)   ( 9.2%)
05/11/04        7,009     7,640   (  631)   ( 4.3%)
05/18/04        9,098     6,591    2,507     16.0%
05/25/04        9,623     6,614    3,009     18.5%

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

Chips, Pork and Video Games


Mindspeed Technologies - MSPD - close: 5.17 change: +0.27

WHAT TO WATCH: Semiconductor stocks have turned in a huge week
and the SOX index managed to breakout over its simple 200-dma on
Friday.  The rally in chips has been strong enough to lift
struggling MSPD from its consolidation under resistance at $5.00.
The four-day rally in MSPD culminated in a breakout over the
$5.00 mark but under early May resistance at $5.25.  Its P&F
chart is still bearish but this might be worth watching for the
speculator out there.




---

Smithfield Foods - SFD - close: 28.99 change: +0.10

WHAT TO WATCH: This pork producer/distributor has been getting
high on the hog.  Shares broke out over major resistance at
$28.00 this week to hit new all-time highs.  The next stop
appears to be the $30.00 level but we'd look for a dip back
toward $28.25 as a potential entry point.  Coincidentally its P&F
target is $30.50.  Watch for earnings due out on June 9th.




---

American Eagle Outfitters - AEOS - close: 28.96 change: +0.56

WHAT TO WATCH: Retail stocks have turned in a strong week and the
RLX retail index is nearing its all-time highs.  The rally hasn't
been lost on shares of AEOS, which have surged from $26.00 to
close at its highest levels in more than two years near $29.  We
like the recent consolidation of its gains between $28 and $29
and think a breakout over $29.00 might be worth another look.




---

Midway Games Inc - MWY - close: 10.84 change: +0.48

WHAT TO WATCH: MWY has seen a huge rally in its shares from $8.00
just a seven sessions ago to nearly $11 on Friday.  Volume has
been decent and the breakout over $10.00 is very encouraging.
What really looks tempting is its P&F chart, which has produced a
new quadruple top breakout buy signal.  We're not sure what's
driving the rally unless it's reaction from the recent E3
convention (a.k.a. the super bowl of video games).  We would look
for a pull back to consider entries but the intraday chart isn't
showing much weakness.






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

IMOS $9.40 +0.28 - IMOS is another semiconductor stock that
caught our attention on Friday.  The four-day rally has given
IMOS enough momentum to just barely breakout over its 50-dma.
Look for a move over $9.50.

FMC $40.57 +0.29 - FMC has produced a new buy signal in its MACD
but shares still traded under resistance at its 50-dma and the
$41 level.  Look for a breakout.

FNSR $1.99 +0.19 - FNSR has seen a HUGE move in the last few days
from $1.50 to $1.99.  Volume has been decent and the stock has
broken through technical resistance at its 40 and 50-dma's.  This
might be worth watching.

CEN $22.40 +0.18 - CEN is once again challenging major resistance
at $22.50.  Shares have failed here multiple times over the past
few months.  A breakout could put the shorts on the run.

BWS $41.33 -0.27 - A pull back to previous resistance, now new
support at $40.00 might be a buying opportunity.  Use a tight
stop and look for the bounce.


=================================================================
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 05-30-2004
                                                    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
  Bullish Play Updates:  NXTP
  Bearish Play Updates:  JNPR


Active Trader (Non-tech)
  Bullish Play Updates:  AAI, SBUX, IGT
  Bearish Play Updates:  ENZN
  Closed Bearish Plays:  IP

High Risk/Reward
  New Bearish Plays:     NOVL
  Bullish Play Updates:  VRSN


Stock Splits
  Announcements:         None


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


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

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

Nextel Partners - NXTP - cls: 16.31 chng: +0.21 stop: 14.90*new*

We patiently waited and NXTP rewarded our patience with a very
convincing breakout rally last week.  Tuesday's broad market
rally pressed the stock right up to its prior highs from early
May and then through the balance of the week, the bulls continued
to show their conviction, breaking the stock over the $16 level
on Friday.  Despite Friday's light volume, this looks like a real
breakout and we'll look for the stock to continue up towards our
$17.50 target next week. Tuesday's action is likely to still be
rather lackluster and we can take advantage of any weakness to
initiate new positions on a pullback and rebound from the $15.40-
15.70 area, which should now be solid support. Note that the 10-
dma ($15.50) is now right in the middle of that support zone,
with the 20-dma ($14.97) now reinforcing very strong support at
$15.  We'll raise our stop this weekend to $14.90, just under the
20-dma.

Picked on May 9th at        $15.38
Change since picked          +0.93
Earnings Date              4/28/04 (confirmed)
Average Daily Volume =    2.41 mln





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

Juniper Networks - JNPR - close: 20.95 change: +0.20 stop: 22.05

Considering the strong rebound in the overall market last week,
even on the NASDAQ, we're pretty pleased with the way JNPR has
been acting.  The stock rebounded on Tuesday to just graze the
20-dma (now at $21.59) and then the stock spent the rest of the
week falling back towards support, cracking under the 200-dma
($21.18) on Thursday and holding below that average all day on
Friday.  Daily oscillators are showing the stock's weakness as
they once again begin to roll over without having reached
overbought territory and it appears the $20 support level should
be challenged early next week.  Of course, it is possible that
the bulls will prevail and launch the stock upwards from a new
base near current levels, but volume patterns don't share that
view.  We'll stay the course, maintaining our stop at $22.05,
just over the top of last week's apparently failed rally attempt.
Traders looking for entries can continue to use failed rebounds
below the 20-dma as opportunities to add new positions.

Picked on May 12th at       $20.92
Change since picked          +0.03
Earnings Date              4/21/04 (confirmed)
Average Daily Volume =    12.6 mln





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


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

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

AirTran Holdings - AAI - close: 13.92 change: -0.35 stop: 12.75

With the broad market once again showing strength on Thursday,
our new AAI play lifted just enough to satisfy our entry trigger,
hitting a high of $14.30.  But with many traders electing to
leave early for the long weekend, there just wasn't enough
interest to build on Thursday's breakout, and the stock drifted
back down ahead of the weekend.  This should be setting up a
favorable entry into the play on a dip into the $13.50-13.75
area, where the 10-dma ($13.53) and 200-dma ($13.72) are about to
meet.  Traders looking to enter on renewed strength should now be
looking for a move over Thursday's high to give the all-clear
signal.  Support should be very strong at $13 now, and we have
the 20-dma ($12.96) and the 30-dma ($12.74) rising to reinforce
that support level, while at the same time protecting our stop.

Picked on May 26th at       $13.87
Change since picked          +0.05
Earnings Date              4/27/04 (confirmed)
Average Daily Volume =    1.44 mln




---

Starbucks Corp. - SBUX - cls: 40.60 chng: +0.58 stop: 38.40*new*

It looks like we set up our SBUX play just in the nick of time,
as the stock finally pushed through the $40 level on Thursday
(satisfying our entry trigger in the process) and then building
on those gains on Friday.  The stock actually rose above the $41
level early in the day on Friday, but couldn't hold altitude
ahead of the risk-laden long weekend.  Although SBUX closed well
off its intraday high, it was nice to see support materialize
near the $40.50 level and that lends credence to the notion that
this breakout is the real deal.  After last week's breakout, we
should now see very strong support in the $39.50-40.00 area,
making pullback entries near that area look appealing.  Traders
looking to enter on renewed strength will want to wait for a move
above Friday's high, but as we saw from the intraday pullback,
that type of entry in this stock is subject to quick pullbacks.
Our preference now that the initial breakout has occurred is to
target pullbacks for entry.  Note that we've raised our stop
slightly to $38.40, which is just under the 50-dma ($38.46), as
well as last Tuesday's intraday low.

Picked on May 26th at       $39.67
Change since picked          +0.93
Earnings Date              7/21/04 (unconfirmed)
Average Daily Volume =    2.88 mln




---

Intl Game Tech. - IGT - close: 39.30 chg: +0.10 stop: 37.85 *new*

Looks like IGT has been hitting the snooze alarm all week.
Somebody tell it that stocks are on the move higher again!  The
lack of participation in this week's market rallies should be
setting off alarms in your head.  Monday we were off to a good
start with a move toward resistance at $40 and a gap above its
100-dma.  Tuesday looked even better with a slow crawl higher and
a late day breakout over $40 to trigger us at $40.05.
Unfortunately, since then it's been a minor drift lower toward
$39 again.  Shares of IGT closed Friday exactly two cents from
when we listed it a week ago.

We still like IGT for its fundamentals and we're still waiting
for the credit upgrade from Moody's but we need to be cautious.
A few days of consolidation in a tight $1.00 range is okay but
Friday's action looks like a potential failed rally at the $40
level again.  Its technicals are starting to roll over into
bearish trends and that makes us uneasy.  We would suggest that
traders not make any new positions until we see IGT traded above
$40.10.  More conservative traders might actually want to wait
and see if IGT can close above its simple 40-dma near $41.  This
moving average was significant support on the way up so it could
be resistance now.

We're going to raise our stop loss to $37.85.  Remember, be
patient here and look for the move above $40 again.  We might
actually close the play if it closes under $39.00 even though our
stop loss is $37.85 (that's how cautious we feel right now).

Annotated Chart:



Picked on May 25 at $40.05
Gain since picked:  - 0.75
Earnings Date     04/22/04 (confirmed)
Average Daily Volume:  3.3 million




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

Enzon Pharma. - ENZN - close: 14.37 change: -0.14 stop: 15.01*new*

Hmm... ENZN has us scratching our head somewhat.  The news out a
week ago Friday about the FDA accepting the application to review
ENZN's Onco TCS drug failed to produce any move.  Furthermore the
stock didn't move much last Tuesday when the market rallied so
strongly.  Yet Wednesday shares shot higher on no news and the
markets were trading sideways.  Thursday the markets were up
again and ENZN trades lower.  We're not complaining about the
failed rally at $15.00 and its 40-dma but we're beginning to lose
patience.  The $14.00 level is still support and its 200-dma is
inching higher.  If we don't get some action in ENZN in the next
few days we're going to close it and look for something that's
moving!  Time is money.  At this time we're NOT suggesting new
positions.  Meanwhile we are going to lower our stop a tad to
$15.01.

Annotated Chart:



Picked on May 19 at $13.95
Gain since picked:  + 0.42
Earnings Date     05/06/04 (confirmed)
Average Daily Volume:  727 thousand




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


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

International Paper - IP - cls: 41.93 chng: -0.24 stp: 41.50

Oops!  We neglected to write the drop for when we should have.
After having lowered our stop to $41.50, we somehow forgot to
take note of that lowered stop when doing the midweek updates.
IP surged through the 50-dma on Tuesday and that was our first
warning that something was amiss with the play.  The next day,
the bulls just kept on driving the stock higher until running
into resistance at the 100-dma on Thursday.  Any open plays
should have been stopped out last week, but for those of you that
may have neglected to note the lowered stop, the last line of
defense is the declining trendline at $42.45, just under our
initial stop of $42.50.  With the stock's strong rise last week,
we're admitting defeat and moving on.

Picked on May 19th at       $40.25
Change since picked          +1.68
Earnings Date              4/23/04 (confirmed)
Average Daily Volume =    2.85 mln





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

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

  -----------------
  New Bearish Plays
  -----------------

Novell Inc - NOVL - close: 8.98 change: -0.10 stop: 9.91

Company Description:
Novell, Inc. is a leading provider of information solutions that
deliver secure identity management (Novell Nsure(TM)), Web
application development (Novell exteNd(TM)) and cross-platform
networking services (Novell Nterprise(TM)), all supported by
strategic consulting and professional services (Novell NgageSM).
Active in the open source community with its Ximian. and SUSE.
LINUX brands, Novell provides a full range of Linux products and
services for the enterprise from the desktop to the server.
(source: company press release)

Why We Like It:
Investor reaction to NOVL's earnings has not been positive.  The
company reported its Q2 earnings on Monday night.  Earnings were
inline with expectations excluding one-time charges.
Unfortunately, Wall Street was looking for more since NOVL has
been trying to establish its LINUX business and compete with
RHAT.  Looking deeper into the earnings report investors learned
that half of its profits were due to currency exchange rates and
its accounts receivable grew so much as to produce a negative
cash flow for the company.  Furthermore its flagship product,
NetWare, continue to see sliding sales growth.

The trend in the stock was already negative with NOVL failing
twice at its 50-dma before its earnings report came out.  After
the report shares gapped lower but managed to hold support at its
simple 200-dma.  That was until Friday.  This Friday NOVL closed
under its 200-dma and the $9.00 mark.  Its P&F chart is very
bearish and points to a $5.00 price target.  We're going to
suggest short positions at current levels with an immediate
target of $8.00 and a potential target of $7.00.  Our stop loss
is wider than we'd like at $9.90 (above the 10-dma) and more
conservative traders MIGHT be able to get away with a stop above
$9.50.

Annotated chart:



Picked on May 30 at $ 8.98
Gain since picked:  - 0.00
Earnings Date     04/22/04 (confirmed)
Average Daily Volume:  5.4 million




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

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

Verisign Inc. - VRSN - cls: 18.12 chng: -0.02 stop: 17.40*new*

Doesn't it seem like we've been here before?  VRSN rose again
last week, but fell just shy of tapping its $19 resistance level
and then tipped over on Thursday, falling right back to its
short-term rising trendline.  Friday's session provided little
guidance about what to expect as we head into next week, as the
stock managed to hold onto support at that trendline, which is
now right on top of the 10-dma ($18.10). One thing is clear
though.  VRSN will either rebound from support again or the trend
of higher lows will be broken.  We aren't advocating new entries
at this point, even though it might prove profitable to buy this
dip ahead of an expected rebound.  VRSN's uptrend appears to be
losing steam, as demonstrated by its inability to notch a
significantly higher high last week.  Conservative traders may
want to just harvest a minor gain on another failure below the
$19 level.  We'll keep the play active, looking for another
rebound next week, but we are trimming our risk by raising our
stop to $17.40, just under the 5/21 intraday low, as well as the
converged 30-dma ($17.42) and 100-dma ($17.45).

Picked on May 5th at        $17.40
Change since picked          +0.72
Earnings Date              4/22/04 (confirmed)
Average Daily Volume =    2.66 mln





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

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

None


=================================================================
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 05-30-2004
                                                    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 May 31st, 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 May 31st
==========================================

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

Symbol  Co               Date           Comment      EPS Est

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

Market Holiday - No Earnings Due


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

BNS    Bank of Nova Scotia   Tue, Jun 1  -----N/A-----         N/A
PLL    Pall Corp.            Tue, Jun 1  After the Bell       0.39
RYAAY  Ryanair Holdings      Tue, Jun 1  -----N/A-----        0.03
UNFI   United Natural Foods  Tue, Jun 1  -----N/A-----        0.20


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

ABS    Albertson's           Wed, Jun 2  -----N/A-----       0.11
CWP  Cable & Wireless PLC    Wed, Jun 2  Before the Bell      N/A
CMVT  Comverse Technology    Wed, Jun 2  After the Bell      0.02
HOV  Hovnanian Ent, Inc.     Wed, Jun 2  After the Bell      1.03
MDZ  MDS Inc.                Wed, Jun 2  -----N/A-----        N/A
NMGa  Neiman Marcus Group    Wed, Jun 2  After the Bell      1.40


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

KWD    Kellwood Company      Thu, Jun 3  After the Bell       0.89
MBG    Mandalay Resort Group Thu, Jun 3  -----N/A-----        1.10
SKIL   SkillSoft Corporation Thu, Jun 3  After the Bell       0.02
COO    The Cooper Companies  Thu, Jun 3  After the Bell       0.59


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

PNY    Piedmont Natural Gas  Fri, Jun 4  -----N/A-----        1.01


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

Symbol  Co Name              Ratio    Payable     Executable

IDEX    IDEX Corp                 3:2      May  28th   May  31st
CEDC    Central European Dist     3:2      May  28th   May  31st
QCRH    QCR Holdings, Inc         3:2      May  28th   May  31st
CNQ     Canadian Natural Res Lmtd 2:1      May  28th   May  31st
PVTB    PrivateBancorp, Inc       2:1      May  31st   Jun   1st
BNN     Brascan Corp              3:2      May  31st   Jun   1st
GSBC    Great Southern Bancorp    2:1      Jun   1st   Jun   2nd
BR      Burlington Resources      2:1      Jun   1st   Jun   2nd
FNLC    First Natl Lincoln Corp   3:1      Jun   1st   Jun   2nd
PCBC    Pacific Capital Bancorp   4:3      Jun   8th   Jun   9th
ZLC     Zales                     2:1      Jun   8th   Jun   9th
MOGN    MGI Pharma Inc            2:1      Jun   9th   Jun  10th
SFCC    SFBC International, Inc   3:2      Jun  10th   Jun  11th
HE      Hawaiian Electric Ind     2:1      Jun  10th   Jun  11th
BXX     Brooke Corp               2:1      Jun  10th   Jun  11th
SSP     E.W.Scripps               2:1      Jun  10th   Jun  11th
PVA     Penn Virginia Corp        2:1      Jun  10th   Jun  11th
PNM     PNM Resources             3:2      Jun  11th   Jun  12th


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

The first week of June is a big week for economic data.  Wall
Street will focus on the ISM index on Tuesday and the Factory
orders and ISM services number on Thursday.  Yet the one report
everyone will talk about and point to all week will be the
non-farm payrolls report on Friday.

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

----------------
Monday, 05/31/04
----------------
None - Market Holiday -


-----------------
Tuesday, 06/01/04
-----------------
Construction Spending (DM) Apr  Forecast:    0.4%  Previous:     1.5%
ISM Index (DM)             May  Forecast:    61.5  Previous:     62.4


-------------------
Wednesday, 06/02/04
-------------------
Auto Sales (NA)            May  Forecast:    5.4M  Previous:     5.2M
Truck Sales (NA)           May  Forecast:    7.9M  Previous:     7.8M


------------------
Thursday, 06/03/04
------------------
Initial Claims (BB)      05/29  Forecast:    337K  Previous:     344K
Productivity Rev. (BB)      Q1  Forecast:    3.7%  Previous:     3.5%
Factory Orders (DM)        Apr  Forecast:   -1.0%  Previous:     4.3%
ISM Services (DM)          May  Forecast:    66.0  Previous:     68.4


----------------
Friday, 06/04/04
----------------
Nonfarm Payrolls (BB)      May  Forecast:    215K  Previous:     288K
Unemployment Rate (BB)     May  Forecast:    5.6%  Previous:     5.6%
Hourly Earnings (BB)       May  Forecast:    0.2%  Previous:     0.3%
Average Workweek (BB)      May  Forecast:    33.8  Previous:     33.7


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

MRK     Merck & Co                 47.44    +0.01
HBC     HSBC Holdings Plc          73.97    +0.16
DCM     NTT De CO Mo (ADR)         18.69    +0.24
AIG     American Internat Group    73.20    +0.40
UTX     United Tecnonologies Corp  84.27    +0.18


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

ASF     Administaff Inc            16.64    +0.14

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

UNH     Unitedhealth Group Inc     65.10    +0.67
AMZN    Amazon.com Inc             48.29    +0.67
AZO     Autozone Inc               86.418    +1.79
MIK     Michaels Stores Inc        52.48    +1.16
PCP     Precision Castparts Corp   46.85    +0.62


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

CAI     CACI Internat Inc          36.76    -0.72
STAR    Lone Star Steakhouse Sal   25.53    -0.36


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

THX     Houston Exploration Co     47.40    +0.40


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