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Daily Newsletter, Wednesday, 06/16/2004

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PremierInvestor.net Newsletter                Wednesday 06-16-2004
                                                    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 Snooze Despite Strong Economic Data
Watch List:   Snooze Fest

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)
===============================================================
     06-16-2004            High     Low     Volume Advance/Decline
DJIA    10379.58 -  0.85 10393.42 10355.51 1.43 bln   1580/1634
NASDAQ   1998.23 +  2.63  2002.07  1990.57 1.38 bln   1228/1384
S&P 100   553.43 +  0.64   554.38   552.07   Totals   2808/3018
S&P 500  1133.56 +  1.55  1135.28  1130.55
RUS 2000  570.07 +  2.15   570.15   566.64
DJ TRANS 3059.24 + 19.40  3059.24  3035.21
VIX        14.79 -  0.26    15.22    14.48
VXO        14.66 -  0.34    15.35    14.48
VXN        20.39 -  0.49    21.38    20.13
Total Volume 3,038M
Total UpVol  1,470M
Total DnVol  1,485M
52wk Highs     184
52wk Lows      103
TRIN          1.15
PUT/CALL      0.69
===============================================================

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

Stocks Snooze Despite Strong Economic Data
by James Brown

Wednesday's market action can be summed up in one word: boring.
The major averages traded sideways with the Dow Jones Industrials
in a 40-point range, the NASDAQ in a 12-point range and the S&P
500 index in a 5-point range for the day.  Some traders expressed
frustration that today's economic reports, which showed the
economy was improving, couldn't get a rally going.  Others were
surprised that sabotage in Iraq failed to spike oil prices.  The
overall feeling among professional investors is that there is
little impetus for people to buy stocks ahead of the June 30th
FOMC meeting and Iraq handover.

There were a handful of economic reports out today.  Traders were
looking for a lead on the interest-rate sensitive homebuilders
when the housing starts and building permit data came out.  The
Commerce Department reported that May's housing starts slipped
0.7% to an adjusted rate of 1.97 million from April's 1.98
million.  This was ahead of economists' forecasts.  Meanwhile
builder permits surged to new 31-year highs.  Economists were
expecting builder permits to slip due to higher interest rates
but they came in up 3% at an adjusted rate of 2.077 million
permits.  Unfortunately, the DJUSHB home construction index
closed lower by 1% despite the positive news for the sector.

The Federal Reserve was busy today with its report on May
industrial output and capacity utilization.  Economists were
forecasting that output would rise 0.8%.  U.S. factories and
mines actually pushed out a 1.1% gain to 116.9 on the Fed's
output index, which was the biggest one-month surge in six years.
The capacity numbers were also a surprise.  Economists were
looking for capacity utilization to jump from 77.1% to 77.4% in
May.  The Fed reported that utilization hit 77.8%, the best
number since May 2001.

This afternoon the Federal Reserve released its Beige book
report, named for the color of its outside cover.  The report
unveiled that retail sales in most districts were "generally
positive".  The Beige book also confirmed that manufacturing
activity rose across all twelve districts in April and May.  The
report stated that inflation was tame, business was up and the
labor market was improving as business continued to hire at a
stronger pace.  For the full report click here:
link

Counteracting all this positive economic news has been a new wave
of violence in Iraq.  President Bush reiterated today that the
next few weeks would be tough as our enemies in Iraq stepped up
the intensity level ahead of the June 30th handover.  Terrorists
have been targeting Iraqi leaders in the new government as well
as kidnapping Westerners.  Last Saturday Iraq's Deputy Foreign
Minister was gunned down in Baghdad.  On Sunday one of Iraq's
education ministers was shot dead.  Today Iraq's security chief
for its northern oil fields was murdered in the city of Kirkuk.
Today also marked the second explosion on one of Iraq's major
pipelines in its port city of Basra.  The latest bomb is said to
have caused a large amount of damage and will shut down all
exports for the next seven to ten days.  The shutdown is
estimated to cost the Iraqi people $60 million a day in crude oil
sales.

Most market pundits were surprised that the oil export shutdown
in Iraq, which had grown to 1.6 million barrels a day, did not
send oil futures higher.  July contracts for crude actually
slipped lower midday but rebounded to close up 23 cents to $37.65
a barrel.  Saudi officials asked non-OPEC members to raise
production to offset the Iraq closure but most experts believe
it's just talk.  The vast majority of oil producers, OPEC or not,
are already pumping at or near maximum production levels.  The
situation was not lost on oil and oil service stocks.  The OIX
oil index rose 1.43% as it neared new three-year highs.  The OSX
oil services index soared 2.68% to become the best performing
sector on the session.  The XNG natural gas index also rose more
than 1% to hit new three-year highs.

Oil stocks weren't the only ones moving higher.  Defense stocks,
represented by the DFX index hit new all-time highs.  Plus,
biotech stocks (BTK.X) gained 1.44%.  The BTK broke through its
simple 200-dma and closed above the psychological, round-number
500 level.  Overall market internals were mixed to positive.
Advancing stocks outnumbered decliners 3-to-2 on the NYSE and 8-
to-7 on the NASDAQ.  Up volume outweighed down volume on the NYSE
but it was reversed on the NASDAQ.  Overall volume was extremely
low at less than 2.8 billion shares on both exchanges.

Chart of the Dow Industrials:



Chart of the NASDAQ Composite:



There were several high profile earnings announcements in the
last 24 hours.  At the top of the list was software giant Oracle
(ORCL).  ORCL reported last night and beat estimates by a penny
while edging past revenue expectations.  Wall Street's reaction
was mostly positive with a handful of brokers reiterating their
"buy" rating for the stock.  Unfortunately, ORCL proved to be a
drag on the NASDAQ and the GSO software index as the stock sunk
more than 3% to close at $11.35.  Comments out today reflected
concerns over some of its licensing revenues, which were softer
than expected.

Wall Street firm Bear Stearns (BSC) announced earnings this
morning and beat analysts' estimates of $2.23 by 26 cents.
Revenues jumped almost 18% from $1.5 billion to $1.72 billion,
bypassing estimates at $1.57 billion.  BSC said its fixed-income
and bond trading business helped push results past the street's
expectations.  The company also announced that it has received a
notice from the SEC that the regulators were considering action
against BSC for its involvement in the mutual fund scandal.
Shares of BSC gapped lower but managed to close positive by 72
cents at $80.15.

Consumer electronics retailer Best Buy Co (BBY) reported earnings
of 34 cents per share, which bested estimates by a penny.
Revenues climbed more than 17% to hit $5.47 billion, also above
estimates.  Overall the quarter reflected a 65% jump in earnings
over the same period a year ago lead by strong sales of digital
cameras and flat-panel TVs.  Analysts raised concerns over BBY's
"reward zone" plan for loyal customer discounts and this lead to
BBY's 2% decline to $52.

Wednesday's big winner was Cyberonics (CYBX).  The stock soared
78% to close at $34.81 after an FDA advisory panel voted 5-2 in
favor of CYBX's VNS system as a treatment for depression.  The
VNS system, already in use for some epilepsy patients, is a
medical device surgically implanted to send electrical current to
the vagus nerve.  The FDA normally follows decisions made by its
advisory panels and Wall Street expects this to open up the
massive depression market for CYBX.  Contributing to the 78% jump
in price was CYBX's small 16.6 million share float and the stocks
high short interest, which was close to 20% of the float.

A few after hours headlines that traders will want to follow come
from Ford and Jabil Circuit.  Ford Motor Co (F) raised its Q2
earnings forecast to 45-50 cents per share based on strong growth
in its financing arm.  Consensus estimates were at 42 cents per
share.  Meanwhile Jabil Circuit (JBL) reported its Q3 earnings
that were inline with estimates at 26 cents per share.
Unfortunately, the company issued Q4 guidance that was below
analysts' estimates and the stock sank 10% in after hours
trading.

The late Wednesday news above might produce a bifurcated market
tomorrow.  Blue chips could creep higher on the Ford news while
tech stocks are likely to sink on the JBL news.  All the while
Wall Street will be wading through more economic data.  Thursday
brings the weekly initial jobless claims, the leading economic
indicators for May, the Philly fed survey and the Semi Book-to-
Bill report.  Yet overshadowing them all will be the delayed May
Producer Price Index (PPI).  If that's not enough we're also
expected to hear from Federal Reserve governor Moskow as he
speaks on the economy.

Hopefully the upward drift we saw in stocks Wednesday afternoon
will blossom into a new surge higher tomorrow but don't bet on
it.  Friday is options expiration and stocks will probably
gravitate to their nearest strike price.  One thing that
continues to concern us are the volatility indices.  The lower
they creep the closer we get to our next sell-off.


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

Snooze Fest

Chesapeake Energy Corp. - CHK - close: 14.40 change: +0.47

WHAT TO WATCH: With the Natural Gas index (XNG.X) breaking out to
new highs, CHK is really gaining some traction, blasting sharply
higher over the past couple days and ending today at new multi-
year closing highs.  Trigger entries on a break over $14.50 and
target a move to the $16.00-16.50 area, the site of next
significant resistance.




---

MicroStrategy Inc. - MSTR - close: 41.25 change: -2.86

WHAT TO WATCH: Long gone is the incredible strength MSTR showed
throughout 2003, as the stock has been in a persistent decline
since the middle of March.  After rolling over just below the 50-
dma a couple weeks ago, the stock has been dropping back towards
key support at $43, which was brutally smashed on very strong
volume today.  This looks like the beginning of the next leg down
for the stock.  Entries look favorable either on a break below
$41 or a failed rebound near $43.  Target an initial drop to
$37.50 and then possible down to $35.




---

QLogic Corp. - QLGC - close: 26.03 change: -1.60

WHAT TO WATCH: Following its break to fresh 52-week lows, QLGC
staged an impressive rebound right to the 50-dma before rolling
over once again.  Buyers tried to support the stock near $28, but
that attempt failed miserably, with the stock smashing to new 52-
week closing lows today.  This looks like the beginning of the
next major breakdown and the $20 level looms as a viable target,
as bears set their sights on the 2002 lows.




---

RSA Security - RSAS - close: 20.07 change: -0.32

WHAT TO WATCH: Rising right to resistance near $19.25 on Monday,
RSAS caught a serious updraft yesterday, blasting above $20 on
strong volume.  Today's mild consolidation session looks
constructive as well.  We'd be hesitant to chase the stock
higher, but a pullback and rebound in the vicinity of $19 looks
like a good bullish entry point ahead of an expected rally
towards next resistance in the $22-23 area.





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

APA $42.70 - The strength in the Natural Gas sector sent shares
of APA higher today, resulting in a breakout over solid
resistance at $42 and the 50-dma.  With weekly Stochastics
looking bullish again, this looks like a good spot to play the
upside, seeking a rally back to test the April highs near $46.

SINA $39.60 - While it may seem a bit risky due to the size of
the rebound already seen off the May lows, SINA looks ready to
launch its next upward leg.  Trigger entries on a breakout over
last week's highs just over $42, which can be viewed as a
confirmed H&S bottom formation.  While the initial target should
be for a move into the $46-48 area, the H&S formation suggests an
upside target in the vicinity of $58.

WMB $11.94 - While the stock had a rather muted session today,
WMB is holding just under key resistance in the $12.30-12.40 area
after a very strong rally from the $8.50 area since late
February.  A breakout to new recent highs can be used for bullish
entries in anticipation of another strong upward leg to next
resistance in the $14-15 area.


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

XOM     Exxon Mobil Corporation    44.73    +0.65
SC      Shell Transport & Trading  44.96    +0.75
RD      Royal Dutch Petrol         51.33    +0.91
GSK     Glaxosmithkline Plc (ADR)  42.48    +0.53
MWD     Morgan Stanley             52.14    +1.01


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

NRD     Noranda Inc                17.49    +1.43
ODSY    Odyssey Healthcare Inc     19.47    +1.75
ALVR    Alvarion Ltd               12.10    +1.54
HLEX    Healthextras Inc           16.84    +1.39

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

SLB     Schlumberger Ltd           62.23    +2.31
BTY     British Telecommun Plc     35.81    +1.10
SOTR    Southtrust Corp            34.68    +1.36
AAPL    Apple Computer Inc         32.74    +2.05
BNN     Brascan Corporation        27.25    +1.23


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

BBY     Best Buy Co Inc            52.04    -1.04
SYMC    Symantec Corp              40.77    -1.65
RIO     Companhia Vale Do Rio Doce 44.00    -1.35
ADBE    Adobe Systems Inc          44.66    -1.03
KRI     Knight-Ridder Inc          73.70    -1.02


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

BG      Bunge Ltd                  35.98    -1.00
KCI     Kinetic Concepts Inc       47.86    -2.34
KWD     Kellwood Co                41.04    -2.63


=================================================================
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 06-16-2004
                                                    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:  TTEC

Net Bulls (Tech Stocks)
  New Bullish plays:    BRCM


Active Trader (Non-tech Stocks)
  New Bearish Plays:    LEN


==================================================================
Stop Loss Adjustments
==================================================================

TTEC - tech stock long -
  Raise stop from $7.49 to $7.85


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

---------
New Plays
---------


  New Bullish Plays
  -----------------

Broadcom Corp. - BRCM - close: 43.79 change: +0.95 stop: 41.00

Company Description:
Sitting in the sweet spot between the Broadband and Semiconductor
sectors, BRCM is a provider of highly integrated silicon
solutions that enable broadband digital transmission of voice,
video and data to and throughout the home and within the business
enterprise.  These integrated circuits permit the cost-effective
delivery of high-speed, high-bandwidth networking using existing
communications infrastructures that were not originally designed
for the transmission of broadband digital content.  Using
proprietary technologies, the company designs, develops and
supplies integrated circuits for several markets including
digital cable set top boxes, cable modems, high-speed office
networks, home networking, and digital subscriber lines.

Why we like it:
In bold defiance of the weakness we've been seeing in the
Semiconductor sector (SOX.X), BRCM has been continuing to test
resistance at the $44 level and the recent pattern of higher lows
suggests that a breakout is coming sooner, rather than later.
After dropping to test the bottom of its 5-month range near
$36.50 in late May, the stock soared back near the $42-43 area
and has been building a pattern of higher lows and higher highs
since then.  The stock's strength is also seen on the PnF chart,
with a fresh Buy signal last month that currently carries with it
a bullish price target of $56.  Once clear of the $44 resistance
level, there will be one possible resistance point to deal with
at $45 and then it should be clear sailing to the $49-50
resistance area, which held numerous tests throughout 2001 and
early 2002.

Each time the stock has neared the $44 level in recent months,
the bears have knocked it back, giving us a clean level to use
for a trigger.  We'll use the $44 level as a trigger for entry,
and aggressive traders can enter on the initial breakout, while
those with a more conservative approach will want to wait for a
subsequent pullback to test the $42.50-43.00 area as newfound
support.  With strong resistance in the $49-50 area, we'll
suggest harvesting gains in that area when reached.  The PnF
chart says that further upside from there is possible, but it
appears unlikely without a significant pullback from that
resistance level first.  Looking at the chart below, we can see
that the ascending trendline connecting the lows over the past
few weeks should offer support on any pullback, with the 20-dma
($41.72) reinforcing that support.  We'll set our stop initially
at $41, under that rising trendline and the June 3rd intraday low
of $41.05.

Annotated Chart of BRCM:



Picked on June 16th at      $43.79
Change since picked          +0.00
Earnings Date              4/22/04 (confirmed)
Average Daily Volume =    8.09 mln



==================================================================
Active Trader (AT) Non-Tech Stock section
==================================================================

---------
New Plays
---------

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

Lennar Corp. - LEN - close: 42.90 change: -0.68 stop: 46.50

Company Description:
Lennar Corporation has two core businesses, homebuilding and
financial services.  The company's homebuilding operations
include the sale and construction of single-family attached and
detached homes, as well as the purchase, development and sale of
residential land directly and through its unconsolidated
partnerships.  Its financial services subsidiaries provide
mortgage financing, title insurance, closing services and
insurance agency services for both buyers of its homes and
others, and sell the loans they originate in the secondary
mortgage market.

Why we like it:
After running to new all-time highs in mid-March, shares of LEN
tipped over into the current downtrend at just about the same
time that bonds began to sell off and yields began to rise.
There's a direct connection between the action of the Housing
stocks and interest rates.  With the Fed's next decision on
interest rated just 2 weeks away, we could be setting up for some
real fireworks in the sector.  It appears investors have been
preparing themselves for a tightening of Fed policy on interest
rates, and that can be seen in the persistent downtrend that has
developed in LEN over the past 3 months.  The Dow Jones Home
Building index ($DJUSHB) has been in a similar trend, and it is
on the verge of dropping to challenge its May (and January) lows
in the $530-540 area.  Turning to LEN's PnF chart, we can see how
bearish the supply/demand dynamic has become.  The selloff from
the March highs created a large Sell signal, bringing with it a
downside target of $27.  With the bullish support line all the
way down at $35, clearly the stock still has quite a ways to
fall.

The most recent rally attempt stalled out just over the $46 level
and in the end the 200-dma ($45.88) won out as resistance.
Yesterday's earnings report did little to dissuade the bears from
their vendetta on the stock, as price slid back under the $43
level on nearly triple the average daily volume today.  That $46
area is now going to be stiff resistance, with the 50-dma
($46.17) about to cross down through the 200-dma and with strong
historical resistance now in the $46.00-46.50 area.  We want to
force LEN to prove itself to us by breaking down to new recent
lows, so we're going to use an entry trigger at $41, just under
the mid-May low.  Note that the trade at $41 will create a fresh
PnF Sell signal, reinforcing the bearish picture there as well.
Aggressive traders can enter on the initial breakdown, while the
more conservative traders can wait for a subsequent failed
rebound in the $42-43 area.  While there are some points of mild
support at higher levels, we're setting our sights on solid
support in the $36-37 area as our initial target.  If the stock
really gains some downside momentum, then we can look for a
decline near the $35 bullish support line, although at that
point, we should be looking to aggressively harvest gains before
the expected rebound.  Our stop will initially be placed at
$46.50, just over the top of the most recent failed rebound, as
well as both the 200-dma and the 50-dma.

Annotated Chart of LEN:



Picked on June 16th at      $42.90
Change since picked          +0.00
Earnings Date              6/15/04 (confirmed)
Average Daily Volume =    1.94 mln



=================================================================
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.






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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