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Daily Newsletter, Tuesday, 07/06/2004

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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

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


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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:
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Copyright ) 2003  PremierInvestor.net. and
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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


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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

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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.





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