PremierInvestor.net Newsletter Wednesday 07-28-2004 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: Sometimes the Market Can Make You Dizzy. Watch List: Bakers, Steel and more! Trading Ideas Value Plays With Bullish Signals Breakout to Upside (Stocks $5 to $20) Breakout to Upside (Stocks over $20) Breakout to Downside (Stocks over $20) Recently Overbought With Bearish Signals (Stocks over $20) =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 07-28-2004 High Low Volume Adv/Dcl DJIA 10117.07 + 31.93 10146.86 9994.22 1.87 bln 1318/1495 NASDAQ 1858.26 - 10.84 1869.00 1832.12 1.77 bln 1160/1842 S&P 100 536.46 + 0.93 538.06 529.48 Totals 2478/3337 S&P 500 1095.42 + 0.59 1098.84 1082.17 SOX 402.91 + 2.60 405.71 393.21 RUS 2000 541.20 - 3.41 544.61 534.57 DJ TRANS 3086.33 + 22.73 3097.41 3034.94 VIX 16.15 - 0.40 17.41 15.94 VXO (VIX-O)15.88 + 0.18 17.56 15.39 VXN 24.87 + 0.56 25.60 24.42 Total Volume 3,646M Total UpVol 1,424M Total DnVol 2,183M Total Adv 2478 Total Dcl 3337 52wk Highs 75 52wk Lows 200 TRIN 1.24 PUT/CALL 0.68 =============================================================== =========== Market Wrap =========== Sometimes the Market Can Make You Dizzy. Jane Fox The markets were able to pull back from the brink of disaster powering higher in the last hour of trading to erase almost all of the day's earlier losses. The market is not sure where it wants to go and in the meantime it is making traders dizzy while it tries to figure it out. A weak report on durable goods, a negative call on the technology sector and a run-up in oil prices started the day off with a bearish tone but traders turned bullish late in the day after major indexes failed to break through intraday lows reached Monday. The Commerce Department released its June's orders for durable goods (products meant to last three years or longer) at 8:30 this morning. The number showed a rise of 0.7% to $191.7 billion last month but fell shy of economists' expectations for a 1.5-2.5 percent increase. Morning trading was also affected by violence in Iraq and jitters over the supply of oil. A suicide attack in Iraq killed more than 60 people and wounded scores more. And on the other side of the world, Yukos, Russia's largest oil producer, may have to halt its main production units in days because of a court order stemming from its $3.4 billion tax bill. OPEC is pumping close to capacity so the prospect of losing nearly two million barrels a day, the amount Yukos's pumps a day, is critical. September crude Oil futures hit a high of $43.05 a barrel, an all time high. Then to top it all off this morning UBS technology strategist Pip Coburn said the Nasdaq could sink as much as 20% in the next 12 months. Analysts were looking for a final and wonderful summer/fall rally inspired by improved IT spending, fostering investor visions of new technologies, upward growth rates and higher multiples but that dream is not materializing, according to Mr. Coburn. The Beige Book, a summary of economic activity prepared for use at the central bank's next Federal Open Market Committee meeting on Aug. 10, was released at 2:00. It reported that the U.S. economy has cooled off in June and July as consumer spending, especially on autos, slowed significantly after a big surge in early spring. The report showed 5 of the 12 Federal Reserve districts reported economic activity had "slowed somewhat," while growth rates in most other districts ranged from modest to solid. Slower growth was reported in the New York, Cleveland, Richmond, Kansas City and San Francisco districts. EARNINGS On the earnings front, Time Warner's (TWX) profit fell 27%, due to large gains earlier in the year, however, revenue climbed and the company raised its outlook for the year. Due to robust demand for its digital cable and high-speed Internet services, Comcast Corp (CMCSA), the largest U.S. cable operator, had a 2nd quarter profit and revenue growth of 10%. The company that abandoned Seattle for Chicago, Boeing Co. (BA) saw a 2nd quarter profit and raised its forecasts for this year and next. This was due to defense orders continuing to cushion the aerospace giant from the slump in the commercial-aircraft market. Conoco Phillips (COP) reported a 75% increase in profit in the 2nd quarter due to rising prices for oil and natural gas and improved margins at U.S. gasoline refineries. On to the charts. Although the morning started out what looked like another bearish day, the buyers appeared around 2:00ET and put on the rocket boosters. The markets gained back what they lost and then some. Let's start with NYA. Annotated Daily Chart of the NYA: I think this is the most encouraging market of all because of the clearly formed reverse head and shoulders. The projected target is 7157. (Taking the low of the head, 6211 and a neckline at 6684. 6684-6211 = 473 then 473 + 6684 = 7157.) Notice also the MACD is confirming the higher low that forms the right shoulder. Annotated Daily Chart of the SOX: This is probably the worst looking chart but we do have some things that will encourage the bulls. The regression channel I have drawn starting from the high of 560.60 has contained the SOX all year and with the bullishness we have seen the last couple of days I don't see any reason as to why it should not at least retest the channel highs at 467. If the SOX can overcome the last swing high at 430, which just happens to be the channel midpoint, the channel's high should be no problem. Annotated Daily Chart of the Nasdaq: This chart is not much better looking than the SOX chart and has not adhered to the channel as well as SOX as. When the COMPX made a higher high and low at the end of June many were thinking yearly highs were the next stop just as long as the lows on June 14th held. But alas the June 14th lows did not hold and it has been almost a straight line down since June 30th. However, like the SOX this market is in for a bounce, at least, and the top of the channel is not out of the picture. Annotated Daily Chart of the Russell 2000: Since the last swing low is closer to the May 17th swing low I think we will have to call this a double bottom and not a reverse H&S like we have in the NYA. Do you see why I stated the NYA is the stronger market because this last swing low has retraced further than it has in the NYA. Annotated Daily Chart of the Dow: Here we have another reverse H&S with a projected target of 11222 (10537 - 9852 = 685. 10537 + 685 = 11222) and a MACD that supports the formation also. Annotated Daily Chart of the SPX: Although this chart is very similar to the NYA, RUT and the DOW there are subtle differences. Look at the MACD. In the SPX the MACD is making an equal low whereas the MACDs in the other three are making higher lows. After-hours developments Express Scripts (ESRX) stumbled in after-hours after saying it is under probe by Vermont's attorney general and the state of New York. ESRX is currently down -12.00. InfoSpace Inc. (INSP) jumped after reporting a quarterly profit, versus a loss in the same period a year ago. INSP is currently up +4.36. JDS Uniphase Corp. (JDSU) rose, after it posted a smaller quarterly loss than a year ago. JDSU is currently up +0.20 Tomorrow's Earnings and Economic Releases AT 8:30 tomorrow morning, the Department of Labor releases its usual initial claims number, this one for the week of 7/23. Last week's release saw a dip to 339K, and the expectations for this week aren't far off that number, at 340K. The Q2 Employment Cost Index will also be released at 8:30, with expectations for a 0.9 percent rise after the previous quarter's 1.1 percent rise. At 10:00, market watchers interested in the employment outlook will be scrutinizing June's help-wanted index, with the number expected to climb to 40 from May's 39. More than 300 report Thursday, many of those capable of producing market-moving news. Some of the bigger names reporting Thursday are BOL, BMY, CCE,DCX, LTR, NOC, RTN and WMI. The outlook going forward is definitely bullish in the short- term. Longer term the bulls have a lot to prove and a lot of resistance to overcome. Time will tell if the buyers out there have the commitment to take the market higher than just a short term burst. But for now that is all we have. ================================================================== 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 --------------------------------- Bakers, Steel and more! Interstate Bakery - IBC - close: 9.75 change: -0.37 WHAT TO WATCH: IBC has been consolidating between $10 and $11 for close to three months. Today shares broke down through the bottom of this trading range to hit new one-year lows. Volume was above average on the drop and we suspect that IBC remains vulnerable to more selling. There is some support near $9.00 but we'd probably target a drop to $8.00. Its P&F chart actually points to a $5.00 target. Watch out for earnings. They are expected on August 2nd. --- Banta Corp - BN - close: 38.98 change: -2.62 WHAT TO WATCH: BN fell more than 6% on more than double its average volume as investors reacted to its earnings report out last night. Today's decline broke through multiple support levels and produced a new sell signal on its P&F chart. The P&F chart vertical count points to a $30 target. We don't like to chase stocks so traders may want to watch for a bounce/failed rally back near the $40 level. --- Carpenter Tech - CRS - close: 40.15 change: +1.09 WHAT TO WATCH: CRS is another metal producer hitting new highs. Shares are up more than 20% in the last three sessions after its earnings report last Friday. The company reported earnings of 73 cents a share compared to 23 cents a year ago and well above analysts' estimates at 45 cents. We would keep our eyes on it for a dip back to the $37.50 range and look to buy a bounce. The recent rally has produced a strong breakout on its P&F chart, which now points to a $51 target. --- Zenith National Insurance - ZNT - close: 43.05 chg: +1.33 WHAT TO WATCH: The recent action in ZNT has been very bearish. Shares broke through the bottom of its rising channel several days ago. It then proceeded to break through support at the $45 level and still later the 100-dma. Curiously the stock is stalling near the 38.2% Fibonacci retracement level of its October to July rally. Today's 3% rally produced a bullish engulfing candlestick and at the bottom of a downtrend this could be a bullish reversal pattern. It needs confirmation and it would be a risky trade to go long here while the P&F chart points to a $32 target. Yet it wouldn't surprise us to see ZNT trade up to the $46-47 level again, even it only proved to be another bearish entry point. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- AEOS $31.92 +0.60 - AEOS managed to hit new 2 1/2 year highs after yesterday's bullish breakout. ADSK $38.44 -0.26 - We're still watching for a breakout over the $40.00 mark. VRTS $18.48 -0.56 - We're still watching for a breakout over resistance at $20.00. KCS $14.27 +0.32 - Energy stocks are on the move again. KCS has pushed back above the $14 level and is nearing resistance in the $14.55-14.60 range. ================== 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 FNM Fannie Mae 71.19 +0.97 BP BP Plc 54.92 +1.02 BCS Barclays Plc (ADR) 34.07 +0.71 HMC Honda Motor Co Ltd (ADR) 23.67 +0.59 MMC Marsh & Mclennan Cos Inc 45.25 +1.65 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- AV Avaya Inc 14.35 +1.85 MFE Networks Associates Inc 17.48 +1.30 PKI Perkinelmer Incorporated 17.14 +1.38 FCN FTI Consulting Inc 18.60 +1.10 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AMGN Amgen Inc 57.00 +1.09 EXC Exelon Corporation 34.00 +1.11 BIIB Biogen Idec Inc 58.45 +1.94 CB Chubb Corp 68.39 +3.74 HSY Hershey Foods Corp 47.42 +1.67 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- UN Unilever N.V. 61.63 -2.59 CMCSA Comcast Corp CI A 27.56 -1.18 UL Unilever Plc 36.00 -1.34 CMCSK Comcast Corp CI A Spcl 27.10 -1.03 TEVA TEVA Pharm Ind 28.49 -1.13 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ------------------------------------------- None ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
PremierInvestor.net Newsletter Wednesday 07-28-2004 section 2 of 2 Copyright (c) 2004, All rights reserved. Redistribution in any form is strictly prohibited. The entire newsletter is best viewed in COURIER 10 for alignment ================================================================= In section two: Stop Loss Adjustments: ENDP Active Trader (Non-tech Stocks) New Bearish Plays: WWW High Risk/Reward Closed Bearish Plays: FLML Stock Splits Announcements: BLL, CVX, VLO ================================================================== Stop Loss Adjustments ================================================================== ENDP - high risk/reward short - Lower stop from $21.01 to $20.51 ================================================================== Active Trader (AT) Non-Tech Stock section ================================================================== --------- New Plays --------- New Bearish Plays ----------------- Wolverine Worldwide - WWW - close: 22.37 chg: -0.18 stop: 22.80 Company Description: With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world's leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform footwear and slippers. The Company's portfolio of highly recognized brands includes: Bates., Hush Puppies., HYTEST., Merrell., Sebago. and Wolverine.. The Company also markets footwear under popular licensed brands including CAT., Harley- Davidson. and Stanley.. The Company's products are carried by leading retailers in the U.S. and are distributed internationally in over 140 countries. (source: company press release) Why We Like It: Even a casual glance at WWW's daily chart and you'll notice the big drop on July 14th. That was investor reaction to its earnings report. WWW reported in-line but its revenues came in a bit light. In the conference call WWW reaffirmed its previous guidance for FY04 earnings to fall between $1.44 and $1.52 for the year but this was under Wall Street's estimates. The post- earnings drop stalled at the simple 200-dma and WWW consolidated above the 200-dma for several days before breaking down a week ago. Now shares are consolidating above the $22.00 level of support but even this level looks ready to breakdown. We are going to suggest readers go short with a TRIGGER at $21.99 and a target at $20.05. If we are triggered we'll start the play with a stop loss at the simple 10-dma (currently 22.80). There is potential support at the $21.00 mark but odds are the round- number, psychological level at $20 will be too much of a magnet. Annotated Chart: Picked on July xx at $xx.xx <-- see TRIGGER Gain since picked: - 0.00 Earnings Date 07/14/04 (confirmed) Average Daily Volume: xxx thousand ================================================================== High Risk/Reward (HR) Stock section ================================================================== ============ Closed Plays ============ Closed Bearish Plays -------------------- Flamel Technologies - FLML - cls: 18.06 chg: -0.25 stop: 20.06 Per our instructions on Monday night we are going to close this short play in FLML on Wednesday to avoid any surprises when FLML reports earnings tomorrow. We suspect they are after the close but can't confirm. We offer kudos to any traders who were willing to exit near the lows on Monday. That would have been worth a few extra percentage points. As it is now we are closing FLML with a 13 percent drop from our picked price. Estimates for earnings tomorrow are at 11 cents a share. Picked on July 11 at $20.83 Gain since picked: - 2.77 Earnings Date 07/29/04 (unconfirmed) Average Daily Volume: 536 thousand ================================================================== Stock Splits ================================================================== Announcements ------------- BLL bounces with a 2-for-1 split. This afternoon Ball Corp (NYSE:BLL) announced a stock split, an increase to its cash dividend, and a stock buy back program. The split will be a 2-for-1 and will be payable on August 23rd, 2004 to shareholders on record as of August 4th. This is BLL's fourth stock split. The Board of Directors also approved a 33 percent increase in the quarterly cash dividend to 10 cents per share on a post-split basis. The cash dividend is payable on September 15th to shareholders on record as of September 1st. The Board approved a 12 million share (post-split) stock buy back program. About the company: Ball Corporation is a supplier of high-quality metal and plastic packaging products and innovative packaging solutions to the beverage and food industries. The company also owns Ball Aerospace & Technologies Corp., which develops sensors, spacecraft, systems and components for government and commercial markets. Ball employs 12,600 people worldwide and reported 2003 sales of $4.9 billion. (Source: Company Press Release) --- CVX drills for a 2-for-1 stock split. Late this afternoon but before the closing bell oil giant ChevronTexaco (NYSE:CVX) announced that its Board of Directors had approved a 2-for-1 stock split and an increase to its cash dividend. The cash dividend will be upped to 80 cents per share, payable on September 10th, 2004 to shareholders on record as of August 19th. This will be paid on a pre-split basis. CVX has an unbroken record of annual dividend increases for the past 17 years. The Board also approved a 2-for-1 stock split of its common stock. The split will be paid as a 100% stock dividend to shareholders on record as of August 19th. The distribution date for the split will be September 10th. About the company: ChevronTexaco Corp. ranks among the world's largest and most competitive global energy companies. Headquartered in San Ramon and active in more than 180 countries, it is engaged in every aspect of the oil and gas industry, including exploration and production; refining, marketing and transportation; chemicals manufacturing and sales; and power generation. (Source: Company website) --- VLO update on 2-for-1 split. Valero Energy Corp (NYSE:VLO) issued an update on its 2-for-1 split announced on July 15th. The company will hold a special shareholder meeting on September 13th, 2004. At the meeting shareholders will vote to increase the number of authorized shares from 300 million to 600 million. Once approved the stock split will be payable on October 7th to shareholders on record as of September 23rd. About the company: Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenues of around $50 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,500 retail outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero and Beacon. For more information, please visit www.valero.com. (Source: Company Press Release) ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright (c) 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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 "email@example.com"
Option Investor Inc