PremierInvestor.net Newsletter Tuesday 07-06-2004 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: Earnings Surprise Watch List: Chips, Software, Drugs oh my! Market Sentiment: Investors Turn Wary ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 07-06-2004 High Low Volume Adv/Dcl DJIA 10219.34 - 63.50 10280.26 10191.40 1.46 bln 1192/1932 NASDAQ 1963.43 - 43.20 1995.40 1958.69 1.89 bln 784/2273 S&P 100 543.33 - 3.84 547.17 541.76 Totals 1976/4205 S&P 500 1116.19 - 9.19 1125.38 1113.21 W5000 10896.09 -101.50 10997.55 10870.11 SOX 439.14 - 18.31 457.31 435.23 RUS 2000 572.41 - 10.31 582.72 571.47 DJ TRANS 3116.49 - 29.70 3146.39 3113.91 VIX 16.25 + 1.17 16.75 16.13 VXO (VIX-O)16.17 + 1.08 16.94 15.55 VXN 22.11 + 2.22 22.38 21.41 Total Volume 3,653M Total UpVol 488M Total DnVol 3,126M Total Adv 2229 Total Dcl 4747 52wk Highs 145 52wk Lows 140 TRIN 2.45 NAZTRIN 3.76 PUT/CALL 1.08 ================================================================= =========== Market Wrap =========== Earnings Surprise by Jim Brown The market reacted strongly to the continued flurry of earnings warnings and definitely surprised traders. The constant drone of company after company warning that large corporations are not spending money has soured expectations and traders took their wrath out on stocks. Dow Chart - Daily Nasdaq Chart - Daily SOX Chart - Daily The past has come back to haunt us as earnings and economics continue to deteriorate. Both are slipping from their highs from the last couple quarters and are still well above crisis levels but traders always want more. The ISM Services this morning dropped to 59.9 from 65.2 in May and was well under consensus estimates of 63.0. The internal components showed mostly gains with New Orders, Deliveries, Employment and Exports continuing to rise. Imports shrank to 56.5 from 59.5. Problem areas were a +3.5 jump in inventory levels to 57.5 and the highest Prices Paid component since records were started in 1997. The mixed message of a new high in employment and a new high in prices paid was even more confusing with the substantial drop in the headline number. This was the first drop under 60 in six months and at 59 it is still well into expansion territory. Analysts claim the dip is a lag caused by higher energy prices and the argument sounds reasonable to me. Next month will be a critical indicator if the decline from 68.4 in April extends to a third month. The only other economic number was the Challenger Layoff Report and the news was good. Layoffs in June dropped to 64,343 and nearly -10,000 below May. This was the lowest level for the year and compares to June's -59,715 from last year which was also the lowest for 2003. This is a seasonal trend where layoffs decline in late spring, early summer and then rise again in the fall. Do not be surprised if we see this number begin to rise next month. YTD announced layoffs are down -25% compared to 2003 and that is definitely a good sign. Unfortunately planned hiring declined to only 38,377 from May's 55,307. The sudden increase in earnings warnings will put the need to cut expenses right back in the forefront and cutting employees produces strong permanent cost reductions. The mixed economics did nothing to rescue the markets from the pain of continued earnings warnings. With the quarter over companies now know what the final sales numbers were and for many their expectations fell short. The two major names leading the drop this morning were VRTS and CNXT. Since VRTS just affirmed estimates only three weeks ago the warning was definitely a real surprise. VRTS saw $4 billion in market cap erased today and distrust of management soared to a new high only weeks after the company recovered from a prior accounting scandal that cost the CFO his job. According to VRTS sales are normally concentrated in the last part of the quarter and anticipated order flow did not materialize. Multiple companies have said corporations are just not committing to new expenditures because of the uncertainty in the economy. Major software purchases are definitely in that category. CNXT lost -40% of its value after warning of weak sales in the broadband wireless market. CNXT said it would only earn two cents instead of the five cents analysts had expected. Intel, the target of choice lately, was cut by Lehman on fears that PC demand for the back to school season was weak. Lehman also said problems in the Grantsdale chipset would also impact profits. Intel has been the daily target for the last week as each analyst gets his 15 min of fame for his downgrade. Other warnings/downgrades before the open included MUSE, EMBT, KVHI, LSCC, AMCC, BRCM and BOBJ. BRCM lost nearly -$4 on the Lehman downgrade of the sector. After the bell today the warning parade continued with KANA, JDAS, ASCL, SCUR, FILE, TFX, WDHD and NTPA. The damage is not restricted to the chip and software sector but it is definitely concentrated in those areas. The SOX dropped another -4% on the news and closed well under 450 support at 439. This is a major break in the chips and only a week after the Semiconductor Association said billings rose +36.9% compared to the same month last year. The problem appears to be perception that the peak has passed. The analysts are quoting order and backlog surveys that suggest April was the peak in chips and the sector will decline into 2005. Many analysts are now noting that institutional investors are exiting chips in expectations of the end of the cycle. Earnings warnings have been thicker than mosquitoes at a summer picnic. How thick is a cause for discussion and there is no clear consensus. A report on CNBC today quoted 43 of 60 S&P pre-announcements as warnings. They were claiming it was the worst warning series since March of 2003. However, First Call said that though Thursday night there were only 1.4 negative outlooks for every positive outlook. They claim that overall 981 companies had issued guidance, 344 positive, 148 inline and 489 negative. For the S&P they quoted a ratio of 0.8 to 1 negative to positive. First Call said that was the lowest ratio since they began tracking eight years ago. Something does not compute. If warnings are so few then why is the market imploding on every warning? Could it be that hopes were simply too high after the last four quarters of very strong performance? If you answered yes to that question give yourself a gold star. The market was priced to perfection assuming the economy was in breakout mode with good times ahead. We celebrated the monster job gains in April/May and the markets pulled out of the May decline on the assumption that the early signs of cracks in the economics were just superficial. Earnings in Q1 hit +26% and Q1 GDP was +4.4%. No challenge there. Suddenly they are quoting only +19% for Q2 and possibly lower and as little as +5% for Q4. (First Albany) Earnings deceleration is rapidly increasing and those that are warning are some high profile names. It also does not help that almost every analysts has taken it upon himself to downgrade techs in some fashion. Is this smoke or is it real? We really won't know until next week. We do get earnings from AA, DNA, ACN and YHOO tomorrow and GE on Friday but the real parade of blue chips does not start until next week. If the ratio of warnings is really that low then in theory the earnings will surprise to the upside and everyone will breathe easier once again. Of course there is always the chance this will be an inline quarter and you know how well investors react to only inline performance. The challenge is of course the guidance and not really the earnings. Beginning with Q3 the comps to Q3/Q4-2003 become very tough and posting double digit growth will become increasingly harder to accomplish. Thus the very low earnings estimates for the 4Q amid the weakening economics. As if the market did not have enough to worry about today there was a huge amount of news. Sabotage in Iraq and troubles in Norway and Nigeria sent oil prices soaring once again to near the $40 level. The trial in Russia and tax claims against oil giant Yukos has sent ripples through the sector. The Kremlim hit them with a $3.4 billion tax bill and caused a shake up on the board. While nobody expects a slowdown in exports there is always that possibility for a company in turmoil. The sharp jump in oil prices did not help stock market sentiment. Kerry announced John Edwards as his running mate and the anti business complainers came out of the woodwork. On every channel and every medium were talking heads claiming Edwards would be bad for business and the fight was on. In what may have been a good move for Kerry on one front by adding the young, handsome trial lawyer it was a negative on another. The Bush camp was quick to point out that Edwards was the second choice and had repeatedly claimed he would not accept a VP position. But then he is a politician and his lips were moving. Part of the market drop today was the uncertainty principle as the chances of a Kerry win and the impact of a Kerry/Edwards administration were weighed. According to a recent survey 92% of Wall Street analysts wanted to see a Bush win to continue the market rebound. A new study by the Wharton School of Business showed that in general it makes no difference which administration is in power with only the year surrounding the election highly volatile. The survey showed a +3.74 jump in the month after the election if a republican won and only a +1.59% rise for a democrat. However, in the year following the election a democrat win averaged a +7.55% gain compared to a +1.28% gain for republicans. The study went on to show that since 1897 the Dow had gained nearly twice as much under democratic administrations. Since 1945 the S&P had averaged a +10.7% annual return under the democrats and only +7.6% under republicans. Please remember that statistics can be skewed to show anything the researcher wants to portray and this survey did not take into account things like who controlled congress. It is widely known that a divided term with opposing forces in control will produce gridlock and very little damaging legislation can make it through successfully. It also did not take into account things like wars and 9/11. Regardless the markets reacted to the Edwards announcement three weeks before the convention and it may continue to react in the weeks ahead. According to one report today mutual fund cash is nearing record lows. TrimTabs claims inflows to equity funds have increased over the last six weeks with $2.3 billion added to stock funds last week. AMGData claimed +$3.8 billion for the same week ended June 30th with $2.25 billion going into the iShares Russell 2000 Index fund alone. TrimTabs claims +$9 billion inflows for the entire month of June. Most of the money is coming out of bond funds with a highly anticipated rate hike driving investors from bonds to equities. Money market funds lost -$48 billion according to AMGData. Despite all the shuffling of deposits it is rumored that funds are walking a tight rope between being fully invested and retaining cash for disbursements. This suggests a positive bias but it is sure not showing up in the markets. This weeks fund flows will be very telling. The markets are on the verge of some critical technical damage. I said on Sunday the Dow could move to 10150 and the Nasdaq could see 1965 without any material change in status. I did not expect it to happen in only one day. The Dow hit 10191 intraday and the Nasdaq fell to 1959 and closed just above critical at 1967. We have definitely seen a change in the trend and that change was led by techs. The Nasdaq has seen 1962-1964 as support since May 26th and that support has held through three separate tests. As long as this test holds, the range for the last six weeks will be intact. A break here by the Nasdaq could easily take us back to 1900. This is a critical support level that must be defended if the bulls have any hope of a summer rally. The Dow fell to 10200 and barely recovered into the close. This is well below the recent range support at 10300 but it is still within the broader range of 10100-10500. This 10200 level is decent support but a break here could see Dow 10K very quickly. Personally I think the selling is overdone. I think it was a knee jerk reaction to several high profile warnings as well as outside events like oil, the elections and the almost unanimous downgrade of the chip sector. I think all the expectations of upside earnings surprises has been removed from the market and earnings risk has been negated. However we still have three days before real earnings volume will appear and the truth begins to come out. I looked at the internals today and they were terrible. The declining volume across all markets was 6:1 over advancing. Decliners beat advancers 2:1 but compared to the volume figures it was not that bad. Stocks that warned got crushed on heavy volume. (VRTS -9.55, -36%, 81 million shares) but other than chips the rest of the market was passive. The TRIN closed at 2.45 and the Nasdaq TRIN at 3.76. The put call ratio is 1.08. All of these indicators suggest the market is very oversold and a relief bounce could be in our future. Many blue chip stocks have declined to very strong support and they appear to be holding this support. Intel at $26 is at its 200wk average and at strong horizontal support. Can it be knocked lower? Yes but it will take a lot more negativity to push it over the cliff. IBM at $86 has imploded on chances it would warn but $86 is strong support and its warning window has passed. IBM announces earnings Thursday of next week. In short I think the pressure should ease tomorrow. We could always have some new event appear or some new warning from a high profile company but the Intel story is over. The SOX story is over. The software sector has been decimated but the JDAS warning tonight could still produce weakness. Further serious drops from here will require some new event. That event may be just fear of the event risk around the democratic convention or a real earnings miss from some blue chips next week. I doubt YHOO earnings tomorrow night will tank the market since it has already dropped -$4 from its highs of $36.50 last week and $32 is strong support. It can fall more but earnings expectations have already been removed. My thought process for a trading play would be to buy the dip. However, my long-term outlook is still for weakness ahead. I think the summer event risk coupled with investor apathy will continue to give us a range bound market with risk to the downside as the summer progresses. How do you play that market? Very carefully! Until we find out where the next rebound will fail we are in unstable territory. I would be very surprised if it was much over 10300 and a lower high in that range would send a very negative signal to traders. Until we see what those 300+ companies actually say with earnings next week I would be very cautious about any long positions. Enter Passively, Exit Aggressively. Jim Brown Editor ================================================================== 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, Software, Drugs oh my! National Semiconductor - NSM - close: 18.99 change: -1.32 WHAT TO WATCH: Ouch! The Lehman Brothers downgrade for the semiconductor sector this morning hit NSM pretty hard. Shares slipped 6.5% and broke support at the $20.00 level and its simple 200-dma. Volume was almost three times the average. We'd watch NSM for a breakdown through major support at $18.00. A break there and the stock could fall toward $15.00. --- Chinadotcom - CHINA - close: 6.74 change: -0.27 WHAT TO WATCH: The 3.85% drop on Tuesday confirms the recent breakdown through support near $7.00. With Chinese Internet stocks falling out of favor we could see CHINA slip toward the recent lows near $6.00. Keep in mind that YHOO is due to report earnings after the bell on Wednesday and any positive surprises could spark a rally across the sector. Of course a disappointment will only help the bears. --- Mylan Labs - MYL - close: 20.07 change: -0.15 WHAT TO WATCH: Generic drug makers like MYL have been suffering from legal setbacks by major drug makers trying to protect their patented products for as long as possible. The trend in MYL looks pretty bearish and a drop through $19.93 or the recent low near $19.80 could be a new entry point for bears to short it. The next support level appears to be the $17.00 region. --- Citrix Systems - CTXS - close: 17.95 change: -0.92 WHAT TO WATCH: Software stocks were hammered today by a number of earnings warnings, namely VERITAS. The recent weakness in CTXS was followed by another 4.87% drop on strong volume today. The move breaks through support at $18.30 and $18.00 leaving CTXS vulnerable to a drop towards minor support at $16.75 and heavier support near $15.00. Its P&F chart is very negative with a bearish triangle breakdown pointing toward a long-term target of $12.00. Earnings are expected on July 21st. =============================== Market Sentiment =============================== Investors Turn Wary - J. Brown Our week is not off to a good start. The 63-point drop in the Industrials broke support at the simple 50-dma and extended the sell signal in the Dow's MACD. The NASDAQ's 2% decline looks even worse breaking support at the 2000 mark and its simple 200- dma not to mention the rest of its moving averages and a new sell signal on its MACD. The S&P 500 followed suit with a close under its 40 and 50-dma's. The technical damage gets even worse if you look at some of the sector-specific indices. The DDX disk drive index has hit new yearly lows under the 100 level. Hardware stocks in the GHA index lost 3.5% and broke through support at the 200-dma, the 240 mark and produced a new MACD sell signal. Software stocks look even worse with the GSO index falling more than 5% to hit new seven-month lows. The semiconductor SOX index fell almost 4% to break support at the 450 mark. The list goes on but you get the point. Tech stocks lead the way down with an outbreak of new earnings warnings from VRTS, CNXT and MUSE. After the closing bell on Tuesday there were more with ASCL, KANA and SCUR all warning as well. Investor confidence is taking a beating here. Lehman Brothers helped push tech stocks into bearish territory with its pre-market downgrade of the semiconductor sector. A disappointing ISM services number didn't help. Of course the story of the day was John Kerry choosing John Edwards as his running mage, a move the business world was not happy to see. Tomorrow there is hope for a rebound if Dow-component Alcoa (AA) can start the day off with a positive earnings report. If not then YHOO has a chance to inspire courage with its own earnings report after Wednesday's closing bell. Yet there is danger here too since expectations are pretty high for YHOO and if they don't reach them tech stocks could sink again on Thursday. Be careful. Investors aren't finding much reason to buy stocks and the surge in crude oil prices undermines both consumer and business confidence. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 8996 Current : 10219 Moving Averages: (Simple) 10-dma: 10358 50-dma: 10245 200-dma: 10172 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 960 Current : 1116 Moving Averages: (Simple) 10-dma: 1133 50-dma: 1119 200-dma: 1099 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1204 Current : 1445 Moving Averages: (Simple) 10-dma: 1488 50-dma: 1451 200-dma: 1443 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 16.25 +1.17 CBOE Mkt Volatility old VIX (VXO) = 16.17 +1.08 Nasdaq Volatility Index (VXN) = 22.11 +2.22 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 1.08 654,782 705,568 Equity Only 1.00 499,103 499,144 OEX 0.93 30,695 28,687 QQQ 6.90 27,412 189,250 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 66.7 + 0 Bear Confirmed NASDAQ-100 50.0 + 0 BULL ALERT Dow Indust. 70.0 + 0 Bear Confirmed S&P 500 64.2 - 1 Bear CORRECTION S&P 100 66.0 - 1 Bear CORRECTION 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: 1.95 10-dma: 1.44 21-dma: 1.18 55-dma: 1.14 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 1005 763 Decliners 1805 2281 New Highs 63 28 New Lows 29 61 Up Volume 336M 148M Down Vol. 1216M 1747M Total Vol. 1565M 1914M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 06/29/04 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 It would appear that no one wanted to make any big bets this week with the Iraq handover, the FOMC meeting and the Jobs report. Commercial traders remain slightly bearish and small traders remain bullish. Commercials Long Short Net % Of OI 06/08/04 397,294 452,904 (55,610) (6.5%) 06/15/04 428,905 444,197 (15,292) (1.8%) 06/22/04 407,842 415,462 ( 7,620) (0.9%) 06/29/04 405,273 413,351 ( 8,078) (0.9%) 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 06/08/04 158,373 92,794 65,579 26.1% 06/15/04 169,595 115,336 54,259 19.0% 06/22/04 124,985 89,934 35,051 16.3% 06/29/04 129,978 94,535 35,443 15.7% 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 Commercial traders have tempered their bearishness a bit but they remain very bearish on the e-minis. Likewise small traders are still very bullish. One group is going to be terribly wrong here and odds are in favor of the big traders. Commercials Long Short Net % Of OI 06/08/04 367,191 409,246 (42,055) (5.4%) 06/15/04 440,867 522,546 (81,679) (8.5%) 06/22/04 229,290 446,974 (217,684) (32.2%) 06/29/04 258,443 447,505 (189,062) (26.7%) 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 06/08/04 140,191 84,649 55,542 24.7% 06/15/04 216,759 147,247 69,512 19.1% 06/22/04 243,444 58,389 185,055 61.3% 06/29/04 236,492 47,780 188,712 66.3% 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 are relatively neutral on the NASDAQ-100 with a small bullish bias. Meanwhile small traders have turned a bit more bearish on the group. Commercials Long Short Net % of OI 06/08/04 64,747 41,178 23,569 22.3% 06/15/04 78,542 54,341 24,201 18.2% 06/22/04 40,397 37,413 2,984 3.8% 06/29/04 41,078 37,194 3,884 4.9% Most bearish reading of the year: (21,858) - 08/26/03 Most bullish reading of the year: 25,160 - 06/01/04 Small Traders Long Short Net % of OI 06/08/04 9,716 29,594 (19,878) (50.6%) 06/15/04 15,794 35,880 (20,086) (38.9%) 06/22/04 9,311 9,950 (639) ( 3.3%) 06/29/04 7,437 11,904 (4,467) (23.1%) Most bearish reading of the year: (20,270) - 06/01/04 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Not much change for the commercial traders. They remain bullish on the Dow Industrials. Small traders have turned a little more bearish on the index. Commercials Long Short Net % of OI 06/08/04 24,636 25,821 (1,185) (2.3%) 06/15/04 30,438 24,766 5,672 10.3% 06/22/04 26,808 19,752 7,056 15.2% 06/29/04 27,278 20,512 6,766 14.1% 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 06/08/04 8,325 6,431 1,894 12.8% 06/15/04 13,942 20,953 (7,011) (20.1%) 06/22/04 5,626 7,798 (2,172) (16.2%) 06/29/04 4,930 7,682 (2,752) (21.8%) Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ================================================================= 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 ) 2003 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Tuesday 07-06-2004 section 2 of 2 Copyright (c) 2004, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= Stop Adjustments: BORL, DPMI, SOHU, VISG Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) ================================================================= Stop Loss Adjustments ================================================================= BORL - tech stock short - With BORL's 5% drop today on strong volume we're going to Lower our stop from $8.31 to $8.11 --- DPMI - tech stock short - Heads up! We were TRIGGERED at $18.75 this morning shortly after the open at $18.77. Shares of DPMI dropped to within 2 cents of our target at $16.52. The move comes on huge volume that is four times the average. Unfortunately, DPMI also produced a massive bounce. Be VERY careful if you're looking for new plays. A roll over under $19.00 might work as a new entry point. Lower stop from $20.50 to $19.51 --- SOHU - high risk/reward short - SOHU dropped another 4.15% on Tuesday so we're going to LOWER our stop loss from $20.01 to $18.41. It might be a good time to take profits ahead of YHOO's earnings on Wednesday night. If YHOO surprises to the upside it could spark a rally in the Internet sector. SOHU is down about 19% from our picked price. --- VISG - high risk/reward short - We have been TRIGGERED in VISG at $7.95. Tuesday's 5.5% drop was a breakdown through support at $8.00. Our initial stop is at $8.51 but more conservative traders might want to consider stops near $8.30. ================== 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 KFT Kraft Foods Inc 31.55 +0.53 OXY Occidental Petro 48.86 +0.57 CNQ Canadian Natural Res 31.25 +0.65 APA Apache Corp 45.30 +1.57 DVN Devon Energy 68.81 +0.63 APC Andarko Petroleum 59.75 +0.68 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- NNI Nelnet Inc 19.63 +2.42 SMRT Stein Mart Inc 16.93 +1.08 CALM Cal-Maine Foods 15.09 +1.53 CDR Cedar Shopping 12.55 +1.15 LWAY Lifeway Foods 19.24 +2.00 ESMC Escalon Medical 11.42 +2.27 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- KMRT Kmart Holding 81.65 +4.00 DRL Doral Financial 36.58 +1.31 BRO Brown & Brown 44.48 +1.55 VLCCF Knightsbridge Tankers 30.96 +1.54 CMN Cantel Medical 24.68 +2.60 DWSN Dawson Geophysical 25.20 +1.70 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- KYO Kyocera Corp 81.28 -3.51 LLTC Linear Technology 35.21 -1.53 BRCM Broadcom 39.37 -3.78 ABC AmerisourceBergen 54.00 -1.55 SFA Scientific-Atlanta 31.30 -1.53 MERQ Mercurty Interactive 46.17 -1.83 IRF Intl Rectifier 35.90 -1.76 MTD Mettler Toledo 46.83 -1.53 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- ADSK Autodesk 40.43 -1.68 HNT Healthnet Inc 25.60 -0.62 SFNT Safenet Inc 25.35 -1.40 CET Central Securities 22.71 -0.23 ================================================================= 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. 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