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Daily Newsletter, Monday, 08/23/2004

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PremierInvestor.net Newsletter                   Monday 08-23-2004
                                                    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: Higher Dollar Sinks Most Boats 
Watch List: IGT, JCOM, BBOX, PERY  


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      08-23-2004           High     Low     Volume   Adv/Dcl
DJIA    10073.05 - 37.09 10131.08 10067.97 1.26 bln  982/1822
NASDAQ   1838.70 +  0.68  1849.12  1835.11 1.21 bln 1245/1797
S&P 100   534.89 -  1.15   537.72   534.33   Totals 2227/3619
S&P 500  1095.68 -  2.67  1101.40  1094.73
SOX       390.09 +  4.09   394.58   386.00
RUS 2000  543.47 -  4.45   549.97   543.44
DJ TRANS 3068.09 - 22.78  3117.03  3065.60
VIX        15.88 -  0.12    16.71    15.79
VXO (VIX-O)15.86 -  0.44    16.92    15.40
VXN        22.54 -  0.52    23.88    22.53
Total Volume 2,470M
Total UpVol  1,147M
Total DnVol  1,279M
Total Adv  2227
Total Dcl  3619
52wk Highs  112
52wk Lows    53
TRIN       0.72
PUT/CALL   0.80 
===============================================================

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

Higher Dollar Sinks Most Boats
Jonathan Levinson

The US Dollar Index rose throughout the session, trading above 89 
resistance as of this writing, and driving foreign currency 
pairs, US treasury bonds, gold, silver and oil lower.  Equities 
decline slightly, with the exception of the Nasdaq which held a 
fractional gain. 

It was a light volume session overall as the markets traded in 
the aftermath of last week's monthly options expiration.  Most of 
the price action was slow and listless, with the Nasdaq finishing 
higher by less than 1 point and the Dow losing 37 points compared 
more substantial declines in treasuries, metals and oil.  This 
was a bullish outcome for the Dow and Nasdaq following last 
week's strong gains and what had been deeply overbought intraday 
cycle oscillators as of this morning. 


Weekly Dow Chart


The strength that was beginning to appear a week ago from the 
prior weekly doji asserted itself for the remainder of last week 
and continued for much of today's session.  I noted that a move 
to the Dow's 10200-250 confluence range would threaten the weekly 
cycle downphase, and that continues to be the case following last 
week's gains.  While the weekly cycle downphase remains intact 
and the current bounce appears to be merely corrective, on the 
daily chart below it has a more impulsive feel, rising steeply 
from a bullish stochastic divergence and a week-long base (the 
weekly doji preceding last week's bullish engulfing candle).  A 
move above the 10250 zone would set up the Dow for a challenge of 
the declining channel resistance line atop the weekly bull flag, 
and suggest a retest of the year highs and beyond.  However, for 
such to occur, the gains from last week need to continue, and the 
daily cycle upphase will need to continue to strengthen above 
last week's lows at a bare minimum.  A break below the lower 
descending flag support line would abort this bullish scenario 
and suggest a test of 9600 support.


Daily Dow Chart


Today's 37 point decline retraced part of Friday's gains and 
respected the upper and lower trendlines on what appears to be a 
pennant between 10130 and 10050.  The lower rising support line 
coincides with the oscillator upphase, and a break below this 
lower line should cause that upphase to stall.  I believe that it 
would take a move below 9960 to start a new downphase, and were 
such to occur, it would be a very bearish development.  For the 
moment, however, it appears that today's action was merely 
corrective, and with the steeply rising pennant support line 
pressing toward an apex, we can look forward to a what will 
hopefully be a directional resolution as early as tomorrow.  For 
the time being, the daily cycle remains strongly up against the 
ongoing weekly cycle downphase.  


Weekly Nasdaq Chart


Last week's move resolved the accumulation/distribution doji 
dilemma from the prior week to the upside, and set up a possible 
bull wedge breakout targeting the 2075 level.  However, there's 
substantial resistance along the way, and each level will be 
reinforced by the downside weekly cycle bias while the downphase 
persists.  1920 continues to look like the key make-or-break 
level for the current weekly cycle downphase above which we 
should begin to see buy signals on the oscillators as the bull 
wedge or even cup and handle breakout scenario comes into play.  
The current move is so far just a correction within the weekly 
cycle downphase, and 1835-45, the range that prevailed for much 
of today's session, is first confluence to test the daily cycle 
upphase discussed below.  So long as 1760 support remains intact, 
weekly cycle bulls can hope that the doji candle of 2 weeks ago 
was the early bottom of the current downphase.  


Daily Nasdaq Chart


On Friday, the Nasdaq closed just below its high of the day, and 
today's fractional gains built on that to continue the steep 
uptrend.  While the intraday oscillators were again overbought at 
the close, there was only sideways selling on the intraday cycles 
today, with most dips quickly bought back up.  On this chart, it 
appears that no less than a close below 1800 would be required to 
stall the current daily cycle upphase, with support below that at 
1775 and 1745.  Above 1845, next resistance is at 1860-65, 
followed by 1890-95. 


Weekly TNX Chart


The most recent downphase in the weekly chart of the ten year 
treasury note yield (TNX) has seen yields descend from a high of 
4.9% to the 4.13% lows.  As discussed in the weekend Futures 
Wrap, a daily cycle downphase appeared to be basing as of Friday 
for a new upleg, and we saw a powerful move higher in the TNX 
today, lifting the TNX to its 50-week EMA and testing 4.29% 
resistance.  The weekly cycle downphase is not over and could 
project to a retest of a 4% support, while a move above 4.4% 
resistance could spell a new upleg from a higher low.  Because of 
the bottoming action in the daily cycle and today's strong bounce 
higher, I'm guessing that we've seen the lows for this weekly 
cycle upphase, but it will take a weekly close above 4.4% at 
minimum to prove it.  For the day, the TNX rose 4.8 bps or 1.13% 
to close at 4.279%.


Weekly chart of Crude oil


Crude oil finished positive last week, but substantially below 
its intraday spike high above 49.  Had the week finished 
negative, it would have been a textbook gravestone doji.  It 
appears that the bears were off by a day, as today's decline 
completed the picture, breaking back below 47 with a 1.55 point 
loss to close at 46.10 for a 3.25% decline.  This weekly chart is 
displaying this week's candle based on only one out of five days' 
data, and so the picture is almost certain to change.  But a 
break below 46 should see a downside reversal and could 
constitute a bearish ascending wedge breakdown with an implied 
target as low as 36.  Note the 10-week stochastic bearish 
divergence, which also suggests a strong downphase to follow on a 
sell-signal if printed from current levels.  I expect former 
resistance in the 40-41 area to provide firm support.  However, 
the recent steep weekly uptrend appears to be under attack this 
week, and 46 is shaping up to be the key battleground.

Part of today's weakness in oil prices were attributed to the 
resumption of exports from Iraq's northern and southern outlets 
after a 3-month halt for the northern and 2-week halt for the 
southern.  CNN reported that the northern Kirkuk pipeline was 
pumping a little more than half its normal capacity at 454,000 
bpd, while flows from the southern Gulf terminals was running at 
its normal level of approximately 2M bpd.  This news dominated 
Russian news to the effect that Yukos intends to cut its output 
by 4.5% and reduce capital expenditures by more than 1/3.  Yukos 
CEO Steven Theede said that "Despite numerous requests to allow 
legal access to our bank accounts in order for Yukos to continue 
normal operations, collection orders remain in place and no cash 
is available to the company from those accounts."  Yukos 
currently accounts for approximately 20% of Russia's production, 
generating roughly 1.7M bpd.

The oil and broader markets mostly ignored increased fighting 
between U.S. Marines and Shiite fighters around a shrine in 
Najaf, with Al Jazeera reporting damage to the gold-domed mosque 
caused by the fighting.

Dallas Fed President Robert McTeer told CNBC in an interview 
today that in his view, the economic recovery "is in a soft spot 
right now" but that, despite persistently high prices of oil, the 
economy is not "in jeopardy".  He added that, on an inflation-
adjusted basis, oil prices are not particularly high.  "Petroleum 
products are in many, many things, and it is very important and 
it is troublesome, both in adding to price pressures and in 
adding to weakness overall."  While the Fed considers it in 
determining monetary policy, McTeer said that it remains one 
factor among many.  Addressing recent developments in Fed policy, 
he said that "The Fed has not really tightened monetary policy in 
any strict sense. It's reduced its degree of accommodation. The 
target fed funds rate is still only 1.5 percent - extremely low.  
The target fed funds rate is still negative or close to zero in 
real terms."

Overall, it was a quiet day news-wise with no major economic 
reports released.  

FDX was strong throughout the session, closing higher by 2.11% at 
80.97 after raising both fiscal Q1 and full-year guidance this 
morning.  The company said that it expects its business to remain 
strong despite threats to the global economy such as an extension 
of the rally in oil prices.  The company raised guidance for Q1 
earnings from $.90-$1.00 per share to 1$-$1.10, and for the full 
year from $4.20-$4.40 to $4.40-$4.60.  Consensus expectations 
were for $.96/share for the quarter and $4.48 for the year.  The 
company attributed the change to strong demand for international 
express, ground and less-than-truckload services.

WMT warned to day, lowering its August forecast and citing weak 
back-to-school demand.  The company reduced expectations for 
August sales from a 2%-4% increase to a 0%-2% increase.  Some 
analysts blamed the decline on increased prices for gasoline 
affecting low-income consumers in particular.  WMT was sold on 
the announcement, finishing the session lower by 1.56% to close 
at 53.80.  The Retail Index, the RLX, closed lower by .4% at 
385.70.

For tomorrow, we're left intermarket questions that edged a 
little closer to resolution today.  As noted last week, the daily 
cycle downphases for the US Dollar Index and the Ten year 
treasury yield entered bottoming territory, and today those 
assets made strong moves to the upside.  Gold, which had been 
looking equally toppy, declined 1.16% today.  Equities remain the 
wildcard for the simple reason that their daily cycle oscillators 
bottomed a week earlier and spent last week strengthening to the 
upside as price made strong gains.  The general trend I've 
observed since 2003 has been the tendency of the USD Index to 
trade against the prices of equities as part of the binary dollar 
relationship.  For this reason, I'd expect to see equities move 
lower as the dollar rises.  However, that relationship has been 
far from iron-clad, and furthermore, the daily oscillators show 
no indication of weakness for the Dow or Nasdaq yet.  For this 
reason, I remain open-minded to the possibility of a downside 
whipsaw for the Dow and Nasdaq, but until the daily oscillators 
turn back down, traders following that daily timeframe can 
continue to expect higher prices from the current cycle upphase. 
While the intraday cycles suggest weakness at the open tomorrow, 
that weakness should be sideways-down, corrective within the 
ongoing daily cycle upphase.  
  


==================================================================
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
---------------------------------

Intl Game Technology - IGT - close: 29.67 change: -0.16

WHAT TO WATCH: The bearish consolidation in shares of IGT 
continues.  The stock is suffering under a trend of lower highs 
and the recent rally attempt back over $30.00 has failed.  
However, we would watch for a new relative low ($28.85) before 
considering new bearish positions.  The P&F chart is bearish with 
a $24 target.  




---

J2 Global Comm. - JCOM - close: 25.95 change: +0.65

WHAT TO WATCH: Shares of JCOM continue their rally from last week 
and add another 2.56% breaking out over its simple 40 and 50-
dma's. The stock was upgraded today and there was talk of a 
potential short-squeeze with short interest measuring more than 
24% of the float.  Aggressive bulls might consider positions but 
watch for tough resistance in the $28.50-29.00 range.




---

Black Box - BBOX - close: 36.24 change: +0.52

WHAT TO WATCH: Networking stocks were mostly higher today but 
BBOX's 1.45% rally pushed the stock above round-number resistance 
at $36.00.  BBOX also broke out over its simple 21-dma.  
Technicals are bullish and volume was decent during today's 
session.  The P&F chart is still very bearish but this might be 
an aggressive entry point for the bulls. 




---

Perry Ellis - PERY - close: 20.72 change: -1.23

WHAT TO WATCH: Investors were not happy with PERY's earnings 
report today and sent shares lower by 5.6%.  The stock has broken 
through support in the $21.00-21.50 range on more than double the 
average volume.  The P&F chart shows a double-bottom breakdown 
with a $12.00 target.  We believe that a trigger under $20.00 
might work for short-term traders targeting support near $18.  
One note of caution, volume on PERY is normally very light and 
this could create the opportunity for extreme volatility.





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

ZEUS $24.04 +0.89 - ZEUS has been a big winner for iron and steel 
investors.  Bulls may want to give it another look if it breaks 
out over $25.00.

FFIV $24.94 +0.04 - Networking stock FFIV is pushing higher 
towards the top of its descending channel.  A breakout over 
$26.00 and/or its exponential 200-dma could be seen as an early 
bullish entry point. 

BEL $5.89 +0.86 - BEL surged more than 17% on a legal win.  Bulls 
can watch to see if there is any follow through and the stock 
pushes through the $6.00 level.




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

HCA     HCA Inc                    37.86     +0.86
BEN     Franklin Resources         52.31     +0.60
PHM     Pulte Homes                61.05     +2.29
DHI     D.R.Horton                 30.95     +0.61
KIM     Kimco Realty               49.55     +0.59
FDO     Family Dollar Stores       27.40     +0.51

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

KKD     Krispy Kreme               14.80     +1.06
PMTI    Palomar Medical            18.00     +1.53
TACT    Transact Tech              18.92     +2.18
ESMC    Escalon Medical             9.32     +2.73

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
FDX     Fedex Corp                 80.95     +1.65
FLIR    FLIR Systems               65.91     +2.81
BSTE    Biosite Inc                48.44     +1.21
MOND    Rober Mondavi              40.69     +3.51
ARTI    Artisan Components         27.60     +3.72
MDCC    Molecular Devices          24.76     +1.03
STST    Sensytech                  26.35     +3.67

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

GGP     General Growth Propty      28.95     -1.05
KWD     Kellwood Co                37.18     -1.15
TSA     The Sports Authority       20.50     -1.65
GEF     Greif Brothers             35.32     -1.64
CWEI    Clayton Williams Energy    20.10     -2.11
PERY    Perry Ellis Intl           20.72     -1.23

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

YELL    Yellow Roadway             41.09     -2.01
ABFS    Arkansas Best              35.04     -1.64
ENB     Enbridge Inc               38.49     -1.05
JOSB    Jos A Bank Clothiers       26.43     -0.84
 


=================================================================
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                   Monday 08-23-2004
                                                    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:  None

Stock Splits
  Announcements:       SF


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

SF announces a 4-for-3 stock split 

Monday morning about 40 minutes after the opening bell the Stifel 
Financial Corp (NYSE:SF) announced that its Board of Directors had 
approved a 4-for-3 stock split in the form of a 33% stock 
dividend.

The dividend will be paid on September 15th, 2004 to shareholders 
on record as of September 1st.  Fractional shares resulting from 
the split will be paid in cash.  Post-split SF will have 
approximately 9.9 million shares outstanding.


About the company:
Stifel Financial Corp. is a financial services holding company 
whose subsidiaries are engaged in general securities brokerage, 
investment banking, and money management with 86 locations in 16 
states, primarily in the Midwest.
(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

HCA     HCA Inc                    37.86     +0.86
BEN     Franklin Resources         52.31     +0.60
PHM     Pulte Homes                61.05     +2.29
DHI     D.R.Horton                 30.95     +0.61
KIM     Kimco Realty               49.55     +0.59
FDO     Family Dollar Stores       27.40     +0.51

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

KKD     Krispy Kreme               14.80     +1.06
PMTI    Palomar Medical            18.00     +1.53
TACT    Transact Tech              18.92     +2.18
ESMC    Escalon Medical             9.32     +2.73

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
FDX     Fedex Corp                 80.95     +1.65
FLIR    FLIR Systems               65.91     +2.81
BSTE    Biosite Inc                48.44     +1.21
MOND    Rober Mondavi              40.69     +3.51
ARTI    Artisan Components         27.60     +3.72
MDCC    Molecular Devices          24.76     +1.03
STST    Sensytech                  26.35     +3.67

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

GGP     General Growth Propty      28.95     -1.05
KWD     Kellwood Co                37.18     -1.15
TSA     The Sports Authority       20.50     -1.65
GEF     Greif Brothers             35.32     -1.64
CWEI    Clayton Williams Energy    20.10     -2.11
PERY    Perry Ellis Intl           20.72     -1.23

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

YELL    Yellow Roadway             41.09     -2.01
ABFS    Arkansas Best              35.04     -1.64
ENB     Enbridge Inc               38.49     -1.05
JOSB    Jos A Bank Clothiers       26.43     -0.84


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




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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