PremierInvestor.net Newsletter Wednesday 06-09-2004 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 Into Reverse Watch List: Seeing Red 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 WRAP (view in courier font for table alignment) =============================================================== 06-09-2004 High Low Volume Advance/Decline DJIA 10368.44 - 64.08 10431.32 10364.96 1.58 bln 681/2099 NASDAQ 1990.61 - 32.92 2019.22 1989.99 1.50 bln 795/2213 S&P 100 552.30 - 4.44 556.74 552.19 Totals 1476/4312 S&P 500 1131.33 - 10.85 1142.18 1114.76 RUS 2000 568.58 - 9.33 578.12 568.50 DJ TRANS 3028.23 - 44.17 3071.74 3027.69 VIX 15.39 + 0.38 15.46 14.56 VXO 14.57 + 0.82 14.82 14.26 VXN 22.35 + 0.09 22.52 22.08 Total Volume 3,438M Total UpVol 648M Total DnVol 2,740M 52wk Highs 167 52wk Lows 70 TRIN 1.46 PUT/CALL 0.92 =============================================================== =========== Market Wrap =========== Stocks Slide Into Reverse by James Brown After three days of gains in the stock market investors decided to take some money off the table. Wednesday's decline was very widespread affecting every stock and sector specific index. Wall Street doesn't seem happy unless it has something to worry about and today it fell back to its old favorite - interest rates. It is no longer a matter of if and when the FOMC will raise rates but a matter of how much and how fast. Everyone knew rates were going higher from their 40-year lows but now there are concerns that the Fed may hike them faster than previously expected to combat any perceived rise in inflation. The concerns over inflation sent the bond market lower, which in turn sent yields higher and that affects mortgage rates. This was not lost on the homebuilders who fell sharply for the second day in a row. Tech stocks also took a beating as traders worried that higher rates would impact corporate profits. The semiconductor sector took the brunt of the selling with a 3.24% decline after failing at resistance for the second time in two weeks. Networking, Internets, software and disk drives were all down close to 2% or more on the session. Chart of the SOX semiconductor index: Market pundits were blaming Greenspan's comments yesterday for the rise in the U.S. dollar today. That sent gold futures slipping. Gold finally settled at $384.50 an ounce, down $6.50 on the session. Gold stocks followed suit with a 5.02% loss in the XAU index and a 4.9% loss in the GOX index. Metals in general were weaker and copper futures melted for a 5.77% loss that broke through support at $1.20 and closed at $1.166 per pound. Wall Street was eagerly anticipating the May Producer Price Index (PPI) gauge on inflation. The PPI was originally scheduled to release on Friday but was moved to Thursday afternoon due to Reagan's funeral and the market's closure on Friday. Yet as of this afternoon the PPI has been delayed. If you visit the U.S. Department of Labor's website (Bureau of Labor Statistics) you'll see their notice that says the May PPI has been postponed "until further notice". This isn't new. The January, February and March PPI's were all delayed due to new challenges converting data under a new classification system. It is expected to be released sometime next week but not before Tuesday and they will announce it a day ahead before the data is released but don't be surprised if they push the announcement back again. As of today economists are expecting the PPI to rise 0.5% in May on top of April's 0.7% climb. Crude oil prices remained in the spotlight as world leaders discuss rising energy costs and its affects on the global economy at the G8 summit going on in Georgia this week. Crude oil futures initially fell this morning to new six-week lows but rebounded to close up 26 cents at $37.54 a barrel. News out this afternoon from the Department of Energy showed a rise in oil reserves and analysts are pointing to this and other factors suggesting the peak is behind us for oil prices. News that the U.S. strategic oil reserve would be full again in July or August should cool speculation since demand would slow down a bit. Speaking of slowing down the U.S. markets were not the only ones to cool off a bit today. The Japanese NIKKEI slipped 72 points to 11,449 while the Hang Seng inched down 4 points to 12,339. European stocks also traded lower. The English FTSE dropped 15 points to close under the 4500 level. The German DAX declined 21 points to breakdown down under the 4000 level. The French CAC slid almost 25 points to breakdown under the 3700 level. It looks like a "let's break support" party. Of course the NASDAQ was invited and showed up with a 33-point drop to close under the 2000 level again. The Dow Industrials dropped 64 points to close at 10,368 and the S&P 500 lost almost 11 points to close at 1131. Overall market internals in the U.S. exchanges were negative. Wednesday's action was almost a bearish mirror to Monday's gains. Declining stocks outnumbered advancers 3-to-1 on the NYSE and the NASDAQ. Down volume overshadowed up volume by more than 3-to-1 on the NYSE and by more than 4-to-1 on the NASDAQ. Overall volume came in just above 3 billion shares on both exchanges. Chart of the Dow Jones Industrials: Chart of the NASDAQ Composite: Chart of the S&P 500 Index: It is easy to point fingers at the semiconductor sector for today's declines. The SOX did lead the way down and there were plenty of headlines to help it along. First and foremost was OmniVision Technologies (OVTI). This specialty chipmaker not only issued an earnings warning for the current quarter but also said it would delay some of its filings because management was mulling over potential restatements for 2004 and 2003. Shares gapped lower and fell more than 30% to $17.63. If that wasn't enough Goldman Sachs decided to jump in and downgrade two foundry stocks, Taiwan Semiconductor (TSM) and United Microelectronics (UMC). GS lowered its rating on the two from "out perform" to "in line". TSM is the largest semiconductor foundry on the planet so this undermined confidence in the whole group. TSM slipped 4.3% to $9.24 while UMC fell 4.6% to $4.48. Advanced Micro Devices (AMD) tried to issue some good news by announcing that Lenovo Group, a Chinese PC maker, had chosen AMD's Athlon 64 and Athlon XP chips to make their PCs with but traders weren't listening. Shares of AMD fell 4.14% and painted an ominous bearish engulfing candlestick. There was plenty of action among the Dow-components as well. Boeing (BA) continued its winning ways and hit another new two- year high after Lehman Brothers upgraded the stock to "overweight". Meanwhile Coca-Cola (KO) proved to be a drag on the Dow with a 1.6% decline after announcing its No 2 executive, Steven Heyer, was leaving. Heyer is KO's president and COO but after being passed up for the CEO's job many believed he would leave for other opportunities. Last but not least were the telecoms SBC Communications (SBC) and Verizon (VZ). Both stocks traded higher today after the U.S. Justice Department announced that it would not seek to reverse an appeals court ruling that threw out the FCC's directive to force local telephone companies to lease their networks to competitors at low rates. Whew! That's a mouthful. In essence SBC and VZ will not have to share their landlines with the competition. Retail stocks are expected to see some action tomorrow as investors speculate on more M&A activity in the group. After the bell this evening Target (TGT) announced it was selling its Marshall Field's stores and nine of its Mervyn's stores to May Department Stores (MAY). TGT had been under pressure to sell off some of its under performing department stores so it can focus on its discount chain and better compete with larger rival Wal-Mart (WMT). The deal with MAY is worth $3.2 billion. TGT also announced it would spend $3 billion to buy back stock over the next two to three years. Looking ahead to tomorrow I am not expecting much. Let me rephrase that. I'm not expecting much from the bulls. Investors are still a little nervous about any potential terrorist event with the G8 Summit finishing tomorrow and the Reagan funeral on Friday. It's become normal for the markets to turn cautious ahead of any long weekend but if the weekend is quiet we can look for a relief rally on Monday. Tomorrow does bring a few small economic reports with the import/export data and the weekly initial jobless claims. Next week is options expiration so we could see some volatility as traders adjust positions ahead of Friday. Overall investor's seem to be focusing on the June 30th FOMC meeting and the Iraq handover. There doesn't seem to be a lot of impetus to buy stocks before these events. Fortunately, the latter could take on more of positive influence for stocks now that the U.N. Security Council just approved the latest resolution on Iraq's changeover. ================================================================== 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 --------------------------------- Seeing Red Newmont Mining Corp. - NEM - close: 37.51 change: -1.98 WHAT TO WATCH: Recent Fed comments have solidified the view that interest rates will start rising at the end of the month and that has lent a bid to the dollar, at the expense of gold and the mining stocks. NEM tipped over on strong volume today, smashing through last week's lows and appears headed for a test of last month's lows just under $35. Look for entries on either a break below today's closing low or on a failed bounce below the 20-dma. --- Genzyme Corp. - GENZ - close: 41.72 change: -1.38 WHAT TO WATCH: For much of the past week, GENZ has been looking like it wanted to roll over below the 50-dma and today's carnage in the BTK index got the job done. GENZ sold off hard and is now nearing the site of the May lows. We don't want to play ahead of that support test, but a break below $40.75 should provide a favorable bearish entry. Target a drop towards strong support in the $35-36 area. --- Acxiom Corp. - ACXM - close: 24.72 change: +0.58 WHAT TO WATCH: Despite all the technical damage in the broad market in recent months, ACXM is still pushing higher, finding consistent support at its 50-dma. The most recent bounce took place just above that average and today the stock poked through resistance to hit a new multi-year high. Use a trigger over today's high and target weekly resistance in the $28 area. --- Costco Wholesale Corp. - COST - close: 40.68 change: -0.63 WHAT TO WATCH: After coiling sideways since the start of the year, shares of COST are finally breaking out and are doing so on expanding volume to boot. Due to the stock's slow-moving nature, we're a bit hesitant to chase the breakout, as COST has already rallied more than $6 since its last correction. Look for a near- term pullback near the $39.00-39.50 area (which should be solid support) to provide an attractive entry and then look for a longer-term move towards next resistance in the $43 area. =================== On the RADAR Screen =================== TSN $20.47 - Ignoring the choppy pattern seen in the overall market, TSN has had a pretty impressive bullish run since the beginning of the year. It may look like a slow mover, but it is up more than 50% since the first of the year. Dips near the 30- dma have proved to be excellent buying opportunities, so look for a repeat of that pattern. Look for a continued bullish move to the $23 area. HRL $30.65 - HRL is another food-related stock that has been persistent in its climb since the start of the year, finding strong support near the 50-dma. Today's failed rally looks discouraging, but it appears to be setting up another test of the 50-dma. Look for a rebound off of that average to set up a favorable bullish entry in anticipation of a successful breakout over $31.50. PDLI $17.22 - Even before this week's weakness in the Biotech sector, PDLI was looking sickly and was struggling to hold over the 200-dma. That attempt failed on Monday and since then the stock has been continuing to deteriorate. Look for an oversold bounce to provide entry on a rollover from below the 200-dma and then target a drop towards strong support at $15. ================== 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 IBM Internat Business Mach 90.33 +0.29 UTX United Technologies Corp 87.74 -0.26 SFI Istar Financial Inc 38.86 +0.16 AVB Avalonbay Communities 55.11 +0.20 ASH Ashland Inc 51.01 +0.42 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- None --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- HSY Hershey Foods Corp 92.00 -0.22 S Sears Roebuck & Co 40.51 +0.10 ELAB EON Labs Inc 40.16 +0.24 FMD First Marblehead Corp 37.96 +2.11 MSA Mine Safety Appliance Co 35.75 +0.69 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- RHAT Red Hat Inc 25.69 -1.34 BRL Barr Laboratories Inc 37.38 -1.42 NIHD NII Holdings Inc 33.86 -0.69 ONXX Onyx Pharm Inc 38.00 -0.85 TTWO Take-Two Intera Software 27.90 -0.75 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- FO Fortune Brands Inc 74.34 -0.27 IRXL Impax Laboratories Inc 20.75 -0.54 ================================================================= 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 Wednesday 06-09-2004 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 ================================================================= In section two: Stop Loss Adjustments: IGT, ENZN Stock Splits Announcements: JOSB ================================================================== Stop Loss Adjustments ================================================================== IGT - non-tech long - Uh-oh! The action in the SOX and IGT is bearish. We don't like how IGT's MACD indicator is getting ready to roll over into a new sell signal. We're going to raise our stop loss from $38.00 to $38.50. --- ENZN - non-tech short - Hello! After all this time we finally got the breakdown we were looking for in ENZN. We can't find any specific news for the 8.2% drop but we're not complaining. We suggest traders consider taking profits now on all or some of their position. We are going to LOWER our stop loss from $14.51 to $12.91 to protect a decent chunk of the move. We are not suggesting new entries. ================================================================== Stock Splits ================================================================== Announcements ------------- JOSB fashions another stock split This morning before the market's opening bell JoS A. Bank Clothiers, Inc. (NASDAQ:JOSB) announced that its Board of Directors, who met on June 8th, declared a 25% stock dividend, which is a 5-for-4 stock split. This is JOSB's second split in six months. This new stock dividend is payable on August 18th, 2004 to shareholders on record as of July 30th. Post-split JOSB will have close to 13.3 million shares outstanding. About the company: JoS. A. Bank Clothiers, Inc., established in 1905, is one of the nation's leading retailers of men's classically-styled tailored and casual clothing, sportswear, footwear and accessories. The Company sells its full product line through 222 stores in 35 states and the District of Columbia, a nationwide catalog, and an e-commerce website that can be accessed at www.josbank.com. The Company is headquartered in Hampstead, MD, and its common stock is listed on the Nasdaq National Market under the symbol "JOSB". (source: company press release) ================================================================= 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) 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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