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Daily Newsletter, Tuesday, 08/10/2004

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PremierInvestor.net Newsletter                  Tuesday 08-10-2004
                                                    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:      Measured Pace Continues
Watch List:       --first four symbols here -- and more!
Market Sentiment: Short Covering

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      08-10-2004           High     Low     Volume   Adv/Dcl
DJIA     9944.67 +130.00  9944.67  9815.47 1.50 bln 2343/ 880
NASDAQ   1808.70 + 34.10  1808.70  1782.26 1.48 bln 2202/ 893
S&P 100   528.77 +  6.35   528.77   522.42   Totals 4545/1773
S&P 500  1079.04 + 13.82  1079.04  1065.22
SOX       392.96 +  5.30   393.08   387.44
RUS 2000  529.83 + 11.45   529.84   518.38
DJ TRANS 3044.87 + 74.80  3044.87  2971.10
VIX        17.47 -  1.42    18.86    17.25
VXO (VIX-O)16.90 -  1.56    18.50    16.90
VXN        26.52 -  0.93    27.59    25.90
Total Volume 3,263M
Total UpVol  2,600M
Total DnVol    616M
Total Adv  5048
Total Dcl  2119
52wk Highs   43
52wk Lows   292
TRIN       0.60
NAZTRIN    1.33
PUT/CALL   1.03
=================================================================

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

Measured Pace Continues
by Jim Brown

The markets waited on pins and needles for the Fed news
and once it came they realized there was no change. The
morning rebound faltered for a few minutes while everyone
waited to see who would blink first and then charged ahead.
Is it a real rally or just an oversold bounce?

Dow Chart


Nasdaq Chart


SPX Chart



The morning opened with second quarter Productivity and
Costs with productivity rising +2.9% and well over the
consensus estimates of +2%. Some analysts had suggested
we could even see a drop in productivity. The increase
came on a very weak +0.8% increase in hours worked. The
manufacturing sector saw a huge jump of +7.5% with the
primary gains in nondurable goods. This was a strong
report but suggests a weakness in future hiring. When
productivity rises there is less need to add new workers.

The Richmond Fed Manufacturing Survey came in at only
six compared to 14 in June. This was the second monthly
decline in the headline number from 22 in May. However,
several of the components showed a marked improvement
with New Orders rising from 1 to 13 and the six-month
outlook jumping to 33 from 10. That is the highest
six month number since the recent high of 44 in December.
The outlook had been declining all year with last months
10 the cycle low. A rebound to 33 is very strong and
would seem to suggest things are beginning to look up
again. The only negative component was order backlog
which at -3 was still better than the low for the year
last month at -12. Overall the headline number is the
lowest level of expansion for the year but internal
components suggest July could have been the bottom.
The qualification is that it only relates to the
Richmond area.

Of course the big news of the day was the Fed and it
turned out to be no news at all. The Fed went ahead
and raised the rate +25 points as expected. They also
failed to calm nerves by suggesting in their statement
that they were willing to back away from their pace
of measured increases for the rest of the year. The
Fed continued their position that rates are accommodative
and need to be brought back into line to prevent future
inflation. The Fed said that except for energy prices
inflation has been tame and the current spike is due
to those transitory energy prices. The only bone they
threw to investors was "The economy nevertheless appears
poised to resume a stronger pace of expansion going
forward." They acknowledged the slowing growth and
weak job market but kept their bullish stance.

The markets pulled back slightly just after the news
but a strong buy program helped push shorts to cover
just before the close and pushed the Dow to a +130
point gain. The Nasdaq added +34 and the SPX +13.
It appeared to be a bullish day but I believe it was
mostly due to short covering before Cisco earnings.
We had a strong tech decline and buyers were hoping
for the Fed to take a pass and for Cisco to beat the
street and raise guidance. In retrospect they only
got one out of their three wishes.

After the bell Cisco reported earnings that beat the
street by a penny. They always beat by a penny so this
was expected and not outstanding news. Cisco also said
inventory levels were rising just as Intel said with
their earnings. Cisco claimed it was not yet a problem
but it was the second quarter of rising inventory levels.
Cisco then said earnings would be flat to only slightly
higher for the current quarter. Chambers said CEOs were
only seeing modest growth ahead. Cash flow was tight
and the increase in inventory reminded investors of
the massive $2.5 billion write off of inventory during
the last business cycle. If inventories are rising and
sales are slowing it is not a good sign and CSCO fell
under $19 in after hours trading.

Also disappointing tech bulls after the close was an
earnings warning from National Semi (NSM) which said
revenue would fall on lower than expected demand. This
was disappointing since NSM had previously said revenue
would rise. The company said orders were expected to
decrease in August but the decrease had been much more
significant than originally expected. They blamed the
weakness on slower growth rates for flat panel display
products and lower than expected demand from wireless
handset manufacturers.

It was a tough night for tech company earnings with
Computer Sciences (CSC) beating the street by a penny
and affirming guidance. CSC was still knocked for a
loss to $42 from its $44.20 close.

Oil broke over $45 intraday but pulled back to close
at $44.50 as traders took profits. The outlook is
still bearish with higher prices ahead but stocks
appeared to be ignoring these new levels. Our
vaccination to high oil must be kicking in but I
bet the first touch of $50 will be a knockout. If
you remember my comments about Hubbert's Peak last
week those same comments were echoed by Boone
Pickens in an interview on Monday. I realize he is
a wildcat but his thoughts that production had
peaked forever at 83 million barrels per day did
agree with my comments last week. Evidently the
stock market has elected to ignore oil as old news
after only two weeks of running in panic with every
quarter jump in price.

The rest of the week has a barrage of economic reports
but only Friday has anything of importance with the
PPI. I believe it is not economics we need to fear
the rest of the week but instead the buildup to the
opening ceremony for the Olympics on Friday night.
This kicks off two weeks of event risk and the
markets really have no coming events to offset that
risk and draw investors back into the market.

The Dow rebound over 9900 today was exciting for the
bulls but the odds of it sticking are slim. The SPX
rallied to 1078 but stopped right at the 200 week
average. This should be strong resistance and with
the three major techs reporting earnings after the
close and taking sizeable hits the odds are good it
will open well below 1078 tomorrow.

I am not going to spend a lot of words rehashing
the risk for the next three weeks but it still exists.
Overhead resistance still exists and I believe today
was an oversold bounce, short covering and betting
on Cisco. I could be as wrong as the next guy but
I believe the markets will have a tough time moving
higher until after Labor Day. More likely we will
either move lower or trade in a range under Dow 10K
until the threat passes. Investors should take advantage
of any dips over the next three weeks to nibble at good
stocks being taken down with the rest of the market. I
said nibble, not back up the truck. Normally we see
strong dips in Sep/Oct but in election years September
can be bullish. Let's hope this is one of those years.

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

Definitely a mixed bag.

Eastman Kodak - EK - close: 28.24 change: +1.28

WHAT TO WATCH: EK, a previous Dow-component, has rallied strongly
today adding more than 4% to breakout over the $27.50 and $28.00
levels of resistance.  This move was fueled by very strong volume
and pushed the stock through the top of its five-month trading
range.  There wasn't any apparent catalyst for the move other
than a product launch for a new 3D computer monitor that's been
compared to IMAX for the desktop.  This could be a bullish entry
point for a run toward the $30.00 level.




---

Apple Computer - AAPL - close: 31.52 change: +1.22

WHAT TO WATCH: APPL turned in a strong day.  We like the 4% rally
because it represents a rebound from the $30.00 support level and
the rising trendline of support dating back to the December 2003
lows.  Short-term technicals are edging higher and this does look
like a bullish entry point but it feels a little aggressive here.
AAPL still has some resistance near $33.00-33.50.  Traders might
want to consider a trigger over $32.50, which should break the
trend of lower highs dating back to June.




---

Sina Corp - SINA - close: 21.64 change: -1.91

WHAT TO WATCH: Chinese Internet stock SINA bucked the up trend in
the technology and Internet sectors today to lose more than 8%.
The drop follows SINA's 10Q report where investors and analysts
discovered that SINA has temporarily lost its contract with China
Mobile and may not regain it.  The breakdown in shares of SINA
has hit new relative lows and its P&F chart points to a $3.00
target.  We would watch for a drop under $20.00 or look for a
failed rally as a potential entry point for shorts.





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

IST $27.65 +2.00 - Iron and steel producer IST continues to defy
gravity.  Remember, what goes up usually comes down.

NPO $19.05 +0.62 - The intraday rebound in NPO is very
impressive.  The stock gapped down and tagged its simple 200-dma
before climbing back above the $18.00 and $19.00 levels.  Look
for some follow through.


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

Short Covering
 - J. Brown

Depending on what direction you've been trading it's been pretty
easy to get whipsawed in this market.  Last week stocks were
breaking down through support left and right.  Given today's
massive and broad-based bounce a good number of stocks have
reversed their bearish breakdowns.  Some of the indices are
painting what could be three-day bullish reversal candlestick
patterns.

Is today a one-day fluke or is it a repeat of the late July
oversold bounce that will die out in a couple of more days?
Market internals were certainly bullish with advancing stocks
outnumbering decliners by more than 3-to-1 on the NYSE and 21 to
8 on the NASDAQ.  Up volume was about six times down volume on
the NYSE and about three times down volume on the NASDAQ.  Those
are some bullish readings although overall volume was somewhat
light.

It makes one wonder if today's gain was mostly fueled by short
covering.  A lot of traders could have been opening new shorts on
last week's breakdown and to have stocks back above their support
levels today could be unnerving.  Thursday and Friday will bring
a number of new economic data but it's the upcoming Olympics and
Republican convention that could be the market moving or stalling
events.  You may have already guessed that with volume this low a
number of investors have just moved to the sidelines until
September.  That may be a good idea.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9146
Current     :  9944

Moving Averages:
(Simple)

 10-dma: 10025
 50-dma: 10184
200-dma: 10227


S&P 500 ($SPX)

52-week High: 1163
52-week Low :  974
Current     : 1079

Moving Averages:
(Simple)

 10-dma: 1089
 50-dma: 1105
200-dma: 1108


Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1208
Current     : 1346

Moving Averages:
(Simple)

 10-dma: 1368
 50-dma: 1413
200-dma: 1445


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

CBOE Market Volatility Index (VIX) = 17.47 –1.42
CBOE Mkt Volatility old VIX  (VXO) = 16.90 –1.56
Nasdaq Volatility Index (VXN)      = 26.52 –0.93


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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.03        606,837       622,547
Equity Only    0.89        420,364       375,145
OEX            0.69         42,620        29,576
QQQ            3.80         20,778        78,877


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

Bullish Percent Data

           Current   Change   Status
NYSE          54.3    - 1     Bear Confirmed
NASDAQ-100    27.0    - 1     Bear Confirmed
Dow Indust.   53.3    + 0     Bear Confirmed
S&P 500       48.4    - 1     Bear Confirmed
S&P 100       49.0    - 1     Bear Confirmed


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: 1.60
10-dma: 1.37
21-dma: 1.33
55-dma: 1.20


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    2131      2189
Decliners     677       855

New Highs      30        19
New Lows       49       119

Up Volume   1254M     1074M
Down Vol.    216M      357M

Total Vol.  1482M     1455M
M = millions


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

Commitments Of Traders Report: 07/27/04

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

Commercial traders haven't made any big bets but the data
we're looking at doesn't reflect the big sell-off in the last
two days.  Small traders remain bullish as of this report.


Commercials   Long      Short      Net     % Of OI
07/13/04      407,166   416,869   ( 9,703)   (1.2%)
07/22/04      404,828   419,017   (14,189)   (1.7%)
07/27/04      397,354   422,914   (25,560)   (3.1%)
08/03/04      401,619   419,429   (17,810)   (2.2%)

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
07/13/04      133,935    95,787    38,148    16.6%
07/22/04      138,123    94,990    43,133    15.5%
07/27/04      135,136    90,433    44,703    19.8%
08/03/04      128,510    88,833    39,677    18.3%

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

Not much movement in the e-minis from commercial traders.  Small
traders have turned a bit more bullish, but again this is before
the big sell-off.


Commercials   Long      Short      Net     % Of OI
07/13/04      265,142   427,017   (161,875)  (23.4%)
07/22/04      309,972   428,240   (118,268)  (16.0%)
07/27/04      337,615   429,477   ( 91,862)  (12.0%)
08/03/04      340,053   428,736   ( 88,683)  (11.5%)

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
07/13/04      225,410     57,699   167,711    59.2%
07/22/04      212,078     62,416   149,662    54.5%
07/27/04      186,211     68,930   117,281    46.0%
08/03/04      195,105     68,717   126,388    47.9%

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 have reversed their previous gain by
paring their longs and adding to their shorts.  Meanwhile
small traders have turned bearish again.


Commercials   Long      Short      Net     % of OI
07/13/04       44,211     37,007     7,204    8.9%
07/22/04       45,069     37,975     7,094    8.5%
07/27/04       43,042     35,935     7,107    9.0%
08/03/04       42,771     36,863     5,908    7.4%

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
07/13/04        7,847    15,243    (7,396)  (32.0%)
07/22/04        9,398    11,776    (2,378)  (11.2%)
07/27/04       14,543    14,518        25     0.0%
08/03/04        8,995    13,901    (4,906)  (21.4%)

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

Commercials seem to be taking some money off the table as
their bullish stances seems to waver a bit here.  Small traders
pared back their longs and their shorts but remained net
bearish.


Commercials   Long      Short      Net     % of OI
07/13/04       27,773    20,573    7,200      14.9%
07/22/04       27,957    20,389    7,568      15.7%
07/27/04       27,577    21,427    6,150      12.5%
08/03/04       30,118    25,029    5,089       9.2%

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
07/13/04        5,292     9,068   (3,776)   (26.3%)
07/22/04        4,857     7,297   (2,440)   (20.1%)
07/27/04        5,310     6,099   (  789)   ( 6.9%)
08/03/04        4,325     5,212   (  887)   ( 9.3%)

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 08-10-2004
                                                    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: None
Stock Splits:     TRBS

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

None


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

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

TRBS deposits a 3-for-2 stock split

This afternoon before the market's closing bell Texas Regional
Bancshares, Inc. (NASDAQ:TRBS) announced that its Board of
Directors had approved a 3-for-2 stock split to be effected as a
50% stock dividend.

This dividend is payable on August 30th, 2004 to shareholders on
record as of August 23rd.

About the company:
Texas Regional is a McAllen-based bank holding company whose stock
trades on The Nasdaq Stock Market. under the symbol TRBS. Texas
State Bank, its wholly owned subsidiary, conducts a commercial
banking business through approximately 67 banking locations
primarily located in the metropolitan areas of Beaumont-Port
Arthur, Brownsville-Harlingen-San Benito, Corpus Christi, Houston,
McAllen-Edinburg-Mission and Tyler.
 (Source: Company Press Release)


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

USB     US Bancorp                 28.61     +0.51
BAC     Bank of America            85.00     +1.07
AXP     American Express           50.09     +0.79
UNH     United Health              63.07     +1.70
ALL     Allstate Corp              47.23     +0.72
MCD     McDonalds                  26.74     +0.58

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

MICC    Millicom                   15.87     +1.29
AGI     Alliance Gaming            13.69     +1.60
SOL     Sola Intl                  17.80     +1.83
SPSS    SPSS Inc                   15.85     +2.50

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

DISH    Echostar Comm.             29.55     +2.29
EK      Eastman Kodak              28.24     +1.28
SAFC    Safeco                     47.26     +1.39
POT     Potash                    102.17     +2.17
CME     Chicago Merc Exchg        137.50     +2.08
ACF     Americredit                20.97     +3.44
MTD     Mettler Toledo             43.70     +2.45

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

HNP     Huaneng Power              28.65     -1.99
RMK     Aramark Worldwide          24.24     -1.03
CEPH    Cephalon                   43.00     -4.86
MOGN    MGI Pharma                 22.10     -2.11
SINA    Sina Corp                  21.64     -1.91
PDII    PDI Inc                    21.60     -2.35
LCAV    LCA-Vision                 20.90     -2.01

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

FE      FirstEnergy                39.18     -0.28


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

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