Option Investor
Newsletter

Daily Newsletter, Tuesday, 07/20/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                  Tuesday 07-20-2004
                                                    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:      Cash Talks in After Hours
Watch List:       --first four symbols here -- and more!
Market Sentiment: Bargain Shopping

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      07-20-2004           High     Low     Volume   Adv/Dcl
DJIA    10149.07 + 55.00 10155.63 10072.68 1.75 bln 1893/1324
NASDAQ   1917.07 + 33.20  1917.07  1885.80 1.63 bln 2103/ 995
S&P 100   539.65 +  3.36   539.81   535.10   Totals 3996/2319
S&P 500  1108.67 +  7.77  1108.88  1099.10
SOX       423.47 + 10.20   423.48   413.13
RUS 2000  564.19 +  9.46   564.25   554.73
DJ TRANS 3154.75 + 49.60  3155.33  3104.84
VIX        14.17 -  1.00    15.57    13.98
VXO (VIX-O)14.58 -  0.37    15.85    14.45
VXN        20.91 -  1.30    22.30    20.66
Total Volume 3,670M
Total UpVol  2,782M
Total DnVol    818M
Total Adv  4450
Total Dcl  2702
52wk Highs  145
52wk Lows   202
TRIN       0.72
NAZTRIN    0.39
PUT/CALL   0.65
=================================================================

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

Cash Talks in After Hours
by Jim Brown

The weakness from the last several days finally wore off
just prior to the Greenspan testimony and the major indexes
recovered some of their losses. That was not the big story
of the day. After the close the richest company in the U.S.
decided to return $75 billion to shareholders over the next
four years.

Dow Chart



Nasdaq Chart



The markets started off in negative territory after New
Home Construction dropped to only 1.80 million units and
well below consensus of 1.98 million and the May rate of
1.97 million. This is a massive drop considering how
strong the sector has been recently. This was also the
biggest drop since Feb-2003. Single-family starts were
the hardest hit and new permits are also down. With the
June decline closing out Q2 we now have two consecutive
quarters of declines in housing. The long awaited
collapse of the housing bubble may be closer than we
previously thought.

The drop in June was led by single family but the multi
family units were also down with a decline of -3.7%. The
rental sector has been seeing a rise in vacancy rates
that depressed new construction but that should end
soon. The baby boomers will be selling their family
homes and moving into cheaper rentals and condos in
an effort to get by on social security. This should
boost the multi family market over the next five years.

The housing sector was understandably weak today but
not as bad as you would have expected. The downtrend
has been predicted for months and this was just real
confirmation of that trend. BZH fell below support at
$90 but quickly recovered. CTX hit a new nine-month
low at $41 and its downward trend accelerated but the
drop was still minimal. Dominion Homes had telegraphed
this weakness last week when it said they were seeing
a significant rise in order cancellations. They are
predominantly located in the Midwest and this appears
to be where the general economic slowdown in May/June
originated.

The general housing slowdown came from the sudden
increase in rates back in April when the ten-year yield
jumped from its 3.65% March low to the 4.9% high in May.
We saw a rush to buy houses in April as buyers tried to
lock in prices and rates but it appears many of those
sales were cancelled in May/June. Since May the rates
have been falling and we saw a new three month low of
4.51% on Monday. This should help builders unload
current inventory but the dropping housing starts
suggests they are not in a hurry to build into the
increasing economic uncertainty.

Further consumer weakness was seen in the Chain Store
Sales at +0.2% for the last week. Since May-29th the
total weekly increase in sales has amounted to only
-0.1%. With sales flat and due in most part to the
rising oil prices they are not likely to get better
any time soon. Oil rocketed to $41.95 today before
pulling back on profit taking and there is nothing
to keep it from going higher. This was very near the
$42.30 high set on the last bounce in May. OPEC is
pumping well over the levels seen in May and the
price is still rising.

Even 99 Cents Only stores (NDN) found conditions tough
in the last quarter. They missed earnings by a penny
on an overall revenue increase of +14% but same store
sales were down -2.5% and costs were higher. Growing
competition helped to shrink margins.

Schwab (SCH) jumped in early trading after missing
estimates by a penny on weak volume. The CEO resigned
and Charles Schwab was picked to come back in to run
the company and revive sagging revenues. The company
said price cuts needed to stay competitive had produced
a -30% drop in net income on 20% fewer revenue producing
trades. The CFO said job cuts would likely continue
despite more than -10,000 jobs already eliminated
since the 2000 market bubble. Schwab said "mixed
securities market returns, continuing geopolitical
uncertainties and concerns about rising interest rates
all weighed on client engagement during much of the
quarter. Client daily average revenue trades declined
by 20% from the first quarter." Welcome to summer
trading in 2004.

Russell Chart



The big news for the morning was the impending testimony
by Greenspan to the Senate Banking Committee. Stocks
recovered off their early morning lows as speculators
took positions hoping for some good news and shorts
covered just in case that good news appeared. The SOX
rose +2.47% to 423 and well off its 408 lows from
Monday. This helped pull the Russell back from the
brink at 551 on Monday to close at 563 today and
back over the 560 resistance level. The Nasdaq was
the beneficiary of all this good news and after
trading at 1870 on Monday it recovered to close at
1914, back over 1900 and just above 1910 resistance.
The Dow recovered to 10150 and with the news after
the bell it should be substantially higher tomorrow.
This was all in motion before the Greenspan testimony
and stocks got a further substantial boost after the
close.

The Greenspan ramp on the hope of a cooling interest
rate calendar was served a small disappointment with
the prepared comments where he continued to suggest
the Fed was prepared to act aggressively if the need
arose. There was plenty of boiler plate about the
measured pace wording just to assure investors they
were not going to race ahead but the message was
clear, more rate hikes ahead.

Overall Greenspan's testimony was positive with the
headline sentence proclaiming economic developments
in the U.S. "have been" quite favorable in 2004 and
there is support for the view the expansion will be
self-sustaining. He said inflation was not a problem
and the recent jump in the numbers was a transitory
move due to the spike in energy prices. (I assume he
meant transitory if oil does not break $32 this week)

Greenspan also said the jump in hiring in the last
six months was encouraging although the rate has
eased. According to Manpower, who beat earnings by
+4 cents, (+2 cents was due to currency translation),
the outlook was not as great and they guided lower
for Q3 on lower than expected revenues. Kelly Services
also warned that the future job expectations may be
weaker. Greenspan warned that lower demand and higher
unit labor costs could pressure profits for the rest
of 2004.

Greenspan said the Fed was prepared to act aggressively
to maintain prices but warned that weak production and
the weak demand was going to depress prices companies
could receive on their goods. This would shrink future
profit margins until demand returned. He suggested GDP
was running at a 3.5% to 4% rate. Unfortunately the
strong drop in housing today could impact that GDP by
up to a point by Q4. The building community consumes
vast amounts of raw materials, furniture, fixtures
and appliances. A continued slowdown like we saw
today could have a serious ripple down impact.

He repeated the obituary on deflation and explained
the risk was mostly due to the stock market crash and
the reduction of capital available to spend on consumer
goods. I think that is a pretty good assumption.

Greenspan continued to repeat the mantra that the Fed
had maintained abnormally low rates for an extended
period of time and that accommodation had benefited
the economy significantly. No complaints there. However,
he also maintained that the Fed needed to remove that
accommodation at a measured pace to bring Fed policy
back in line with reality. Nothing he said suggested
they were going to pass on the expected rate hike on
August 10th but he also said nothing to indicate it
could be the +50% analysts previously expected. It
seems a sure thing now that another 25 points will
be added in August and the markets simply need to
accept it. With bonds already pricing in three more
hikes there should not be any material impact from
an August hike.

He did make a point that there were potential outside
risks (as in another terrorist attack) and the Fed
would quickly react to assess and manage these events
if they occurred. Interesting that he added that
statement as we near the conventions and Olympics.

The market gains into the testimony were shredded as
the various comments came out but in the end we moved
higher again just before the close. With a flurry of
tech earnings after the bell investors did not appear
in a hurry to exit. Considering the after hours events
it was a good choice.

MOT rose after reporting gains in market share from
rivals in the cell phone market and upgrading guidance
for next quarter. SUNW also moved higher after posting
a profit and revenue actually rose for the first time
in 13 quarters. SANM jumped after beating the street
and said demand for its high end products was increasing.
Etrade beat the street by a mile at +31 cents compared
with estimates of +13 cents with results helped by the
sale of its ATM business. MCHP beat the street and
raised its dividend. PXLW beat by a penny as did STX,
STK and WEBX.

Not all the news was good. TXN reported inline and
guided slightly lower for next quarter. RFMD beat the
street and warned for the current quarter. Still all
in all the tech news was good and techs should have
had a good day on Wednesday.

It was this last piece of news that gave us the biggest
bounce. Microsoft jumped in front of its Thursday
earnings announcement with the cash spending plan we
have been expecting. Considering the amount of cash
they have to spend it was the mother of all cash
disbursement programs. Microsoft announced they were
going to issue a one time $3.00 dividend and raise
their quarterly dividend to eight cents per quarter.
They also announced a $30 billion stock buyback
program. The total benefit package amounts to $75
billion over the next four years.

This gave MSFT a real shot in after hours trading with
the last trade at $29.81 for about a +1.60 jump from
the close. With futures moving higher overnight on the
positive tech/chip earnings and the Microsoft news the
odds are very good this Microsoft announcement will
produce a strong bounce at the open. For those in the
Editors Play on Microsoft be sure to tune into the
Market Monitor in the morning for exit directions.

While this may appear a strong move by Microsoft and
you would think the stock will rocket higher we may
be surprised. The news has been expected for over a
month and the stock has already moved from its support
at $26 to trade at the mid $28 range on expectations.
Because the buyback is going to be spread over four
years it may receive a lukewarm welcome from MSFT
investors. The $3 one-time dividend would be slightly
less than the amount the stock has risen from the
$26 support in May to the overnight close at $29.81.
We could easily see investors take profits now on
the expectation that the dividend is already priced
in. Had the buyback been over the next six months
then we could have seen some real movement but over
four years may produce a yawn from the more impatient
types. Funds holding MSFT will receive a windfall and
probably will not change positions. I seriously doubt
they will run out and buy more at the inflated price
regardless of the hype. It will be interesting to
see how Mr. Softee trades tomorrow.

For Wednesday we have Greenspan testimony again at
10:00 and he will get to change anything he felt he
said wrong today. Since there was nothing of material
impact to the market I doubt he will change anything
in his prepared remarks. The markets will still hold
their breath during the Q&A to see if anything new
appears.

The three days beginning today are the three heaviest
days for earnings in this cycle. I believe everyone
knows now that the Q2 was good for business despite
the end of quarter slump. Most companies are guiding
inline but we are seeing an increase in those guiding
flat to lower. No surprise there. We only have three
trading days left before the democratic convention
begins and the odds are good we will see some selling
once tomorrows bounce runs its course. We should see
some serious knee jerk short covering at the open and
it remains to be seen if it will have legs. I would
definitely not be a buyer this week. I believe
discretion is called for this week and I would not
be a buyer for other than a day trade until after the
convention is over. I suspect there are quite a few
others who believe the same way. This does not mean
they won't nibble at some longs just in case nothing
happens. I would like to believe that the security is
so tight that nothing could possibly happen but I am
not willing to risk my capital on that premise. There
will always be another trade.

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

Financial services to Telecom

AT&T Corp - T - close: 14.31 change: -0.32

WHAT TO WATCH: It doesn't look good for shares of T.  The stock
failed to participate in the market's bounce today.  T has slowly
been slipping lower under a stream of lower highs as traders sell
any strength at the 21-dma. Its MACD is close to producing a new
sell signal again.  As ugly as T looks right now it is worth
noting that shares have support in the $13.50 region (April 2003
lows) and the $13 level also happens to be its P&F bearish
target.  It is very possible for those targets to be surpassed
and the relative weakness here looks tempting.  Thursday could
produce some volatility with the crowd of telecom-related stocks
announcing earnings.




---

World Acceptance Corp - WRLD - close: 19.27 change: +0.76

WHAT TO WATCH: WLRD might be worth doing a little due diligence
on.  The recent breakout over its simple 200-dma and the $19.00
level looks encouraging.  We would not consider bullish plays
until WRLD broke through the $20 mark or maybe the April highs
near $20.31.  Such a move should break through heavy P&F chart
resistance and clear the way for a move toward $23.50-24.00.




---

Humana Inc - HUM - close: 17.60 change: +0.40

WHAT TO WATCH: Healthcare stocks have been pretty strong the last
couple of weeks or in HUM's case they haven't slipped lower the
last few days.  HUM has actually been consolidating its mid-July
gains in a tight trading range above the $17 mark.  Today's move
leaving it above $17.50 is encouraging but we're worried about
resistance at its simple 100-dma just under $18.00.  Look for the
breakout and consider targeting the 200-dma under $20.




---

Americredit Corp - ACF - close: 20.41 change: +0.77

WHAT TO WATCH: ACF, like WRLD, is a financial services company.
ACF's daily chart has produced a new buy signal on its MACD
indicator.  Plus, the 3.9% rally today pushed it above
psychological resistance at $20.00.  There is still historical
resistance near $20.50 and traders may want to look for a close
over $20.50 as confirmation.  The P&F chart is bullish with a
$28.50 price target.





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

BCO $32.30 +0.32 - Once again Brinks has pulled back to the
bottom of its rising channel.  This looks like an entry point.

ROG $63.73 -1.27 - Rogers lack of bounce today and its close
under the simple 50-dma looks bearish.  However, we'd be careful
here.  ROG has closed under the 50-dma in the past only to
rebound immediately.  If it fails to rebound consider it a
possible bearish candidate.  Unfortunately, we're concerned the
100-dma could also be support.


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

Bargain Shopping
 - J. Brown

The NASDAQ turned in a pretty good session but the Dow's 55-point
gain really doesn't reflect the oomph behind today's bounce.
Investors were out doing some bargain shopping.  All the major
tech sectors were strongly higher in the 2%-3% range.  Yet
considering how oversold these groups were I'm surprised it
wasn't higher.  Can you blame the bounce on Greenspan's positive
comments about the economy?  Maybe but the rebound actually
started before he began speaking in the afternoon.  Alan's
outlook for growth certainly doesn't hurt stocks here.

Overall the market internals were pretty bullish.  Advancing
stocks outpaced decliners 17 to 10 on the NYSE and 2 to 1 on the
NASDAQ.  Up volume was more than double down volume on the NYSE
and more than four times down volume on the NASDAQ.  Those are
some strong numbers.

Investors should still be cautious here but we could easily see
the rebound continue at least short term. Many of the tech-
related sector indices have been sinking for two or three weeks
straight so a multi-day bounce is in order.  Just be sure to
follow up your stops if you decide to open bullish plays.  There
are plenty of bears just looking at the bounce as a new entry
point to get short.

Tomorrow will be another huge day for corporate earnings but
Greenspan will steal the stage Wednesday morning with day two of
his bi-annual appearance before Congressional and Senate
committees.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8996
Current     : 10149

Moving Averages:
(Simple)

 10-dma: 10183
 50-dma: 10217
200-dma: 10205



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  960
Current     : 1108

Moving Averages:
(Simple)

 10-dma: 1109
 50-dma: 1116
200-dma: 1104



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1204
Current     : 1421

Moving Averages:
(Simple)

 10-dma: 1422
 50-dma: 1447
200-dma: 1447



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

CBOE Market Volatility Index (VIX) = 14.17 -1.00
CBOE Mkt Volatility old VIX  (VXO) = 14.58 -0.37
Nasdaq Volatility Index (VXN)      = 20.91 -1.30


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.66        811,128       531,659
Equity Only    0.57        673,255       386,264
OEX            1.09         16,542        17,981
QQQ            0.65         29,844        19,476


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

Bullish Percent Data

           Current   Change   Status
NYSE          64.2    - 1     Bear Confirmed
NASDAQ-100    42.0    - 1     Bear Confirmed
Dow Indust.   63.3    - 3     Bear Confirmed
S&P 500       58.8    - 1     Bear Confirmed
S&P 100       61.0    - 2     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: 1.41
10-dma: 1.34
21-dma: 1.27
55-dma: 1.19


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    1742      2054
Decliners    1058       969

New Highs      97        32
New Lows       31        53

Up Volume   1185M     1371M
Down Vol.    532M      246M

Total Vol.  1750M     1634M
M = millions


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

Commitments Of Traders Report: 07/13/04

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Not much movement going on in the Commercial traders' positions
for the large S&P futures contracts.  They remain net bearish
but by a small margin.  Small traders remain net bullish but
have upped their shorts a bit.


Commercials   Long      Short      Net     % Of OI
06/22/04      407,842   415,462   ( 7,620)   (0.9%)
06/29/04      405,273   413,351   ( 8,078)   (0.9%)
07/06/04      402,952   416,526   (13,574)   (1.7%)
07/16/04      407,166   416,869   ( 9,703)   (1.2%)

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
06/22/04      124,985    89,934    35,051    16.3%
06/29/04      129,978    94,535    35,443    15.7%
07/06/04      132,423    90,748    41,675    18.7%
07/16/04      133,935    95,787    38,148    16.6%

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 reduced their long positions in the
e-minis raising their net bearish positions several percentage
points.  Small traders are still very bullish.


Commercials   Long      Short      Net     % Of OI
06/22/04      229,290   446,974   (217,684)  (32.2%)
06/29/04      258,443   447,505   (189,062)  (26.7%)
07/06/04      287,442   423,583   (136,141)  (19.1%)
07/16/04      265,142   427,017   (161,875)  (23.4%)

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
06/22/04      243,444     58,389   185,055    61.3%
06/29/04      236,492     47,780   188,712    66.3%
07/06/04      219,321     58,567   160,754    57.8%
07/16/04      225,410     57,699   167,711    59.2%

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 upped their long positions a bit boosting
their bullish stature on the NDX.  Small traders reduced both
their longs and shorts but the drop in long positions actually
left them move bearish.


Commercials   Long      Short      Net     % of OI
06/22/04       40,397     37,413     2,984    3.8%
06/29/04       41,078     37,194     3,884    4.9%
07/06/04       42,245     37,343     4,902    6.2%
07/16/04       44,211     37,007     7,204    8.9%

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
06/22/04        9,311     9,950      (639)  ( 3.3%)
06/29/04        7,437    11,904    (4,467)  (23.1%)
07/06/04        9,345    16,527    (7,182)  (27.8%)
07/16/04        7,847    15,243    (7,396)  (32.0%)

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

Commercial traders are not making any big moves with their
INDU futures positions and they remain net bullish.  Meanwhile
small traders have turned a bit more bearish, the most we've
seen in weeks.


Commercials   Long      Short      Net     % of OI
06/22/04       26,808    19,752    7,056      15.2%
06/29/04       27,278    20,512    6,766      14.1%
07/06/04       27,214    20,775    6,439      13.4%
07/16/04       27,773    20,573    7,200      14.9%

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
06/22/04        5,626     7,798   (2,172)   (16.2%)
06/29/04        4,930     7,682   (2,752)   (21.8%)
07/06/04        5,969     8,227   (2,258)   (15.9%)
07/16/04        5,292     9,068   (3,776)   (26.3%)

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 07-20-2004
                                                    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, BOBJ, FLML
Closed Plays:     KCS
Stock Splits:     LM, WIRE

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 -
 No change in stop at $7.36
 Be prepared to exit/double check stops.
 BORL is bouncing.

---

BOBJ - tech stock short -
 We were TRIGGERED at this morning's open
 when BOBJ hit $19.74.  Unfortunately,  that
 proved to be the low of the day as BOBJ
 rebounded with the tech sectors.

---

FLML - high risk/reward short -
 Comment:  double check your stops.
 Ours is at $20.06.  We can't find any catalyst
 for the move but FLML rallied 9.8 percent on
 big volume today.  That's a warning sign for
 the bears!


=================================================================
Closed Plays
=================================================================

KCS Energy - KCS - close: 13.75 change: -0.13 stop: 13.69

Readers already know we had been growing cautious on KCS the last
few sessions.  The stock was slowly consolidating and hinting at
a drop through the bottom of its rising channel.  Its MACD was
also hinting at a new sell signal.  Well now the MACD sell signal
is clearly evident and KCS has broken mild support at its simple
10-dma.  Today's early morning weakness triggered our stop loss
at $13.69.  We would still keep KCS on our watch list for a
potential bullish play with a bounce from its simple 100-dma.

Picked on July 04 at $13.64
Gain since picked:   + 0.11
Earnings Date      05/05/04 (confirmed)
Average Daily Volume:   562 thousand




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

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

LM announces dividend hike and 3-for-2 stock split

Shortly after today's opening bell, Legg Mason, Inc (NYSE:LM)
announced that its Board of Directors had approved a 3-for-2 stock
split of its common shares in the form of a 50% stock dividend.
The Board also announced a 50 percent increase in their quarterly
cash dividend.

The payable date for the stock split is September 24th, 2004 to
shareholders on record as of September 8th.  This would be LM's
first stock split since the 3rd quarter of 1998.

The BoD also approved their 24th consecutive year of dividend
increases, by raising their quarterly cash dividend to
$0.15/share, from $0.10/share.  The new quarterly dividend is
payable on October 25th, to shareholders on October 7th.

About the company:
Legg Mason, Inc., headquartered in Baltimore, is a holding company
that provides asset management, securities brokerage, investment
banking and related financial services through its subsidiaries.
(source: company press release)

---

WIRE declares 3-for-2 stock split

After today's closing bell, Encore Wire Corporation (NASDAQ:WIRE)
announced that its Board of Directors had approved a 3-for-2 stock
split of its common shares in the form of a 50% stock dividend.

The payable date for the stock split is August 16th, 2004 to
shareholders on record as of August 6th.  The Board stated that
fractional shares resulting from the split would be paid in cash.

The split announcement comes after shareholders voted to increase
the number of authorized shares from 20 million to 40 million.

About the company:
Encore Wire Corporation manufactures a broad range of copper
electrical wire for interior wiring in homes, apartments,
manufactured housing and commercial and industrial buildings.


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

GSK     GlaxoSmithKline            39.93     +0.57
HD      Home Depot                 33.98     +0.71
AXP     American Express           49.05     +0.60
IBM     Intl Business Machines     86.28     +0.98
KFT     Kraft Foods                31.68     +0.55
TGT     Target Corp                43.39     +0.65

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

GLW     Corning Inc                12.74     +1.47
AMTD    Ameritrade                 10.71     +1.32
URI     United Rentals             18.84     +1.12
TEN     Tenneco Automotive         14.23     +1.88
IDBE    ID Biomedical              10.35     +2.51
ALDN    Aladdin Knowledge          18.85     +3.38

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

CNI     Canadian Natl Railway      44.90     +2.28
ZION    Zions Bancorp              64.17     +1.02
DNB     Dun & Bradstreet           56.62     +4.02
TK      Teekay Shipping            40.23     +1.40
NPO     Enrpo Industries           24.14     +1.54
ULBI    Ultralife Batteries        21.84     +1.35

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

BSX     Boston Scientific          34.78     -1.37
FRX     Forest Labs                50.18     -2.32
ACE     Ace Ltd                    40.26     -1.67
XL      XL Capital Ltd             71.87     -2.51
RE      Everest Re                 74.83     -6.13
HU      Hudson United              35.90     -1.29
PTP     Platinum Underwriters      29.25     -1.50
TASR    Taser Intl                 31.04     -5.28

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

PCL     Plum Creek Timber          31.92     -1.15
BER     W.R.Berkley                41.01     -2.77
RYN     Rayonier Inc               44.60     -1.09
NBP     Northern Borders           39.92     -2.08
PD      Phelps Dodge               76.94     -2.28


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





DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives