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PremierInvestor.net Newsletter                   Monday 08-30-2004
                                                    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: Low volume, low prices 
Watch List: TXN, NCT, LF 


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      08-30-2004           High     Low     Volume   Adv/Dcl
DJIA    10122.52 - 72.49 10196.78 10122.52 1.02 bln  986/1810
NASDAQ   1836.49 - 25.60  1855.78  1836.49  993 mln  945/2059
S&P 100   536.55 -  4.33   540.88   536.55   Totals 1931/3869
S&P 500  1099.15 -  8.62  1107.77  1099.15
SOX       373.64 -  8.70   382.34   373.64
RUS 2000  544.56 -  7.11   551.67   544.46
DJ TRANS 3085.35 - 23.45  3108.17  3080.06
VIX        15.44 +  0.73    15.58    15.30
VXO (VIX-O)15.11 +  0.32    15.28    14.71
VXN        23.14 +  1.87    23.18    22.31
Total Volume 2,015M
Total UpVol    316M
Total DnVol  1,678M
Total Adv  1931
Total Dcl  3869
52wk Highs   75
52wk Lows    46
TRIN       2.95
PUT/CALL   0.85 
===============================================================

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

Low volume, low prices
Jonathan Levinson

Extremely light volume probably attributable to heightened 
security for the GOP convention in New York coincided with losses 
across the indices as bonds rallied throughout the session.  
Crude oil extended last week's losses, closing below 43 and 
dipping below 42 intraday on the Nymex.

RBC's technical analyst Bob Dickey was out this morning saying 
that overhead resistance for equities was considerable at current 
levels but that pullbacks should provide good entry points as 
market conditions improve for the remainder of the year.

If so, then today provided the first such pullback, with the 
Nasdaq declining 1.37% to close at 1836.5 and the Dow .7% to 
10123.  The decline was set up by a bearish oscillator divergence 
on the 30 minute charts discussed this morning before the open in 
the Market Monitor.  It occurred within the context of the 
broader daily cycle upphase, which itself has been fighting with 
the weekly cycle downphase.  If today's weakness does not reverse 
from current levels either tomorrow or by Wednesday at the 
latest, then the daily cycle upphase that has fueled the market 
strength of the past 3 weeks should reverse, bringing with it a 
still-deeper "pullback" for RBC's analyst to buy.


Weekly Dow Chart



The weekly declining channel is in play at current levels, and 
despite last week's confirmation of the strong advance in the 
prior week, the bulls weren't able to break resistance this 
morning.  The session high of 10196 was right on the line, and 
while the weekly cycle oscillators remain in a downphase, a 
positive week finishing above 10200 should be enough to begin 
generating buy signals.  On the other hand, these oscillators 
aren't oversold by any stretch, and a break below last week's 
lows will suggest a retest of 9900 and possibly of the lows for 
the year at the lower descending channel support line.  These are 
critical levels, insofar as that 10200 resistance level could be 
considered bull flag  resistance as noted for the past several 
months in this current channel, while a failure to advance here 
will open the door to a bearish finish for 2004.  


Daily Dow Chart



The issue for the Dow is pretty clear on the daily chart, and it 
looks bearish as of today's admittedly light volume close.  The 
steeply rising support line in place since the year low was 
broken today with a bearish engulfing candle.  This would set up 
Friday as a gravestone doji top to finish off the daily cycle 
upphase, but conditions that generally accompany such prints 
include high volume and long intraday range.  Neither of those 
conditions were present on Friday, with light volume and a narrow 
range/short upper candle shadow.  Of course, chart signals are 
rarely perfect, and the trendline break with today's long candle 
looks pretty convincing to me.  If it's valid, then we should see 
10200 go unchallenged on a daily closing basis, and better yet a 
move to 10080 confluence/trendline support.  The wildcard remains 
the light volume and ambiguous cycle setup in this timeframe, as 
the daily cycle appears to be ready to roll over but has yet to 
do so.  A failure to regain the 10160-10170 should be enough to 
see the rollover follow through, however, and a lower high from 
the next 30 minute cycle upphase will confirm the new daily cycle 
weakness.


Weekly Nasdaq Chart



The Nasdaq held the previous week's gains last week, confirming 
what appears to have been a bull wedge breakout with an implied 
target as high as 2075.  Today's decline reversed all of last 
week's advance, confirming the 1855-60 confluence resistance 
below the more significant 1890 and 1920 resistance levels.  The 
bounce from the lows 3 weeks ago has yet to reflect itself in the 
weekly cycle oscillators, which remain bearish, if somewhat less 
aggressively so.  1760 remains key downside support, while the 
descending-channel-that-might-be-a-bull-flag support declined to 
1750.


Daily Nasdaq Chart



The break on the daily chart is as rich with implications for the 
Nasdaq as it is for the Dow above.  The implied target on the bear 
wedge that broke today is at the year lows, with the 22 day EMA at 1839 
being tested by today's close at 1836.  A close below the 1825-30 
support level should be enough to generate sell signals on the daily 
cycle oscillators, setting up the Nasdaq for a test of support at the 
1810 and 1800 levels for starters.  Any lower high for the anticipated 
30 minute cycle upphase below the 1860 level will confirm the daily 
cycle weakness.


Weekly TNX Chart



At the beginning of last week I discussed the daily cycle upphase 
building within the ongoing weekly cycle downphase.  In the 
latter part of last week, we saw ten year note yields (TNX) fail 
at the 50 week EMA and give up the better part of their advance, 
closing the week in negative territory.  That decline in the TNX 
(advance in bonds) continued today, with the TNX falling 3.9 bps 
to close at 4.188%.  The most recent downphase in the weekly 
chart of the ten year.  If support between 4.1% and 4.15% fails, 
next support is at the 4.0%-4.02% level.  Overhead resistance 
above 4.3% is at 4.4%. 

It was reported that tomorrow U.S. Treasury auction of 4-week 
notes will be reduced from 24B to 22B.


Weekly chart of Crude oil



Oil extended last week's slide today, and on the weekly candle 
chart the most recent candle is based solely on today's move.  
The bearish ascending wedge noted for the past several weeks 
broke with authority last week, and the implied downside target 
is as low as 36.  However, there's significant support at 40-41 
and at 41.70, with today's spike low on the Nymex reaching 41.40.  
A break below 41 should kick off a much-welcome weekly cycle 
downphase.

The news associated with the decline, other than pure technicals, 
revolved around a number of items.  It was reported that Shiite 
cleric Muqtada al-Sadr told his followers in Iraq to cease their 
resistance against U.S. and Iraqi government forces following the 
end of the standoff in Najaf. 

As well, OPEC president Purnomo Yusgiantoro said that  plans for 
additional oil capacity expansions were on the horizon.  "...In 
response to expected demand growth in the near future, member 
countries have plans in place to further increase production 
capacity by around one million bpd toward the end of this year 
and into 2005.   In addition, plans for additional capacity 
expansions are available and could be enacted soon. However, this 
capacity would, typically, become available around 18 months 
after commencement of this process," Yusgiantoro said. 

Iraqi oil exports were running below last week's 2 million bpd 
1.4 million bpd today, thanks to pipeline damage caused by last 
week's acts of sabotage. The repair work is expected to take five 
days.  Fire fighters were working yesterday to put out a blaze in 
the South Rumaila oilfield caused by the pipeline breaks. 

Crude oil closed lower by .925 at 42.25 on the Nymex, a 2.14% 
decline, and, despite an upgrade from Lehman Brothers from 
neutral to positive today, both the OSX and OIH closed lower by 
1.3% at 107.68 and by 1.12% at 72.01 respectively.  Oil bulls 
pointed to the absence of a resolution in the YUKOS affair, 
continued strong global demand and, other than in Saudi Arabia, a 
relative dearth of excess supply capacity.  Airline stocks, 
lofted by the continued decline in crude oil prices, bucked the 
broader market today, with the Amex Airline Index (XAL) closing 
higher by .38% at 47.22.

It was a quiet news day.  The Commerce Department reported that 
US consumer spending climbed sharply in July, rising .8% and 
meeting expectations.  Personal Income, however, rose just .1% 
and missing estimates for a .2% increase.  The increase in 
personal income was the weakest reading since November 2002.  The 
personal savings rate declined from 1.3% to .6% as consumer 
spending rose faster than income.  The personal savings rate was 
the lowest since December 2002. After-tax income increased 0.1 
percent.   The closely-watched personal consumption expenditure 
price index, which the Fed prefers to the CPI, was unchanged, as 
was the core PCE index.   Some analysts were quoted as saying 
that this confirms that there is "no inflation", and that the 
robust increase in personal spending bodes well for Q3 growth.

Spending on durable goods increased 4.1%, and June's 5.9% decline 
in durable goods spending was revised upward to a 3.2% drop.  As 
the most disappointing component of today's reports was the 
personal income reading, all eyes will be focused on this 
week's employment report for August, scheduled for release on 
Friday.  

Forrester Research announced that it expects a 7% increase in 
information technology spending next year, based on a its Q3 CIO 
Confidence Poll survey of 195 information technology executives.  
will rise 7% next year, according to the firm's survey of 195 
executives. 

The markets were less concerned with the impact of Hurricane 
Hermine and the flight-path of Hurricane Frances than with the 
ongoing GOP convention in NYC.  Despite a limit-up day for cotton 
futures, volume was light overall not just for cotton futures but 
for the markets in general.  With security tight in New York for 
the Republican Convention, some analysts wisely connected the 
light volume with impediments for those trying to enter or even 
travel within Manhattan.   

For tomorrow, we are left with the uncertainty surrounding the 
fate of the intraday cycles and the ongoing but faltering daily 
cycle upphase.  A relatively orderly bounce attempt turned up the 
30 minute cycles, only to see the price collapse into the close.  
That dip got ahead of the 30 minute cycle oscillators, which 
stalled but did not reverse their upphase.  Any strength tomorrow 
will generate a bullish divergence on that key intraday cycle, 
and the short cycles are oversold as well.  This is a recipe for 
a strong intraday rebound, which will either close below today's 
highs or not.  A lower high will spell the end of the daily cycle 
upphase, while a higher high will re-confirm it.  If we see more 
selling tomorrow after today's very weak bounce attempt, then I 
will expect that selling to be quite strong and the daily cycle 
upphase should abort almost immediately.  I do not expect to see 
today's high broken on a closing basis given the trendline break 
today and the toppiness in the daily cycle oscillators.

Oil is a wildcard, as we saw lower oil prices coincide with lower 
equity prices.  While intermarket trends are anything but stable, 
the recent decline in the price of oil from its record highs has 
coincided with higher prices in equities.  With oil declining 
strongly today, it remains to be seen whether bullish pressure is 
building for equities or not.  Again, tomorrow's bounce (or the 
absence thereof) will tell us a great deal.  Given that the daily 
cycle is threatening to roll over from just below overbought 
territory, my expectation is for the next extended move to be to 
the downside, ideally following the intraday bounce discussed 
above.  Hopefully, volume will pick up and provide us more clues 
as to which way the ambiguity will be resolved.


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

Texas Instruments - TXN - close: 19.71 change: -0.63

WHAT TO WATCH: It looks like we may have been too cautious on 
last week's TXN short.  We originally added TXN as it 
consolidated under the top of its descending channel.  The SOX 
looked weak and TXN had produced a nice failed rally.  Then by 
last Friday the SOX turned in a decent bounce and TXN has climbed 
up and through the top of its channel and above the $20.00 mark 
but had not yet hit our stop.  Now shares are failing again.  The 
move under $20.00 looks like bad news.  We might consider new 
bearish plays if TXN drops under $19.35.  Just remember there is 
risk from Intel's mid-quarter update this Thursday night.




---

Newcastle - NCT - close: 30.41 change: +0.65

WHAT TO WATCH: NCT has gone nowhere the last couple of months.  
The stock has been consolidating sideways between $28.00 and 
$30.60.  Yet in the last two weeks we've seen a new trend of 
higher lows that is pushing NCT toward a bullish breakout over 
resistance.  Watch for a move over $30.65 and target the March 
highs near $34.00.  




---

LeapFrog Enterprises - LF - close: 20.13 change: +0.97

WHAT TO WATCH: Shares of beleaguered LF have made an impressive 
rebound in the last two weeks.  The stock has gone to hitting new 
lows near $16.00 to breaking out over round-number, psychological 
resistance at $20.00 and its simple 100-dma.  Today's bullish 
rally also produce a new relative high, which breaks the trend of 
lower highs dating back to April.  We are not suggesting bullish 
positions at this time but it may be one to watch!





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

ARA $34.80 +0.93 - We've played ARA as a successful long in the 
past and we're tempted to do it again.  We do not like the 
bearish P&F chart but we do like the bullish trend of higher 
lows.  In the last few sessions shares have bounced from their 
simple 200-dma. 

AACE $26.60 +1.12 - AACE was on our trading ideas this evening.  
the bullish breakout over $26.25 and its converging 100 and 200-
dma's looks impressive.  So was AACE's volume considering the 
abysmal volume in the markets today.

IPCC $26.45 -1.13 - IPCC was also on our trading ideas column 
today.  The stock's 4% decline and breakdown under $27.00 has 
produced a new triple-bottom sell signal on its P&F chart with a 
$19 target.

MTCT $25.13 -0.90 - MTCT appears to be headed back toward the 
bottom of its trading range near $23.00.
 

=================================================================
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 08-30-2004
                                                    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:  SWIR, CTMI

Net Bulls (Tech Stocks)
  Closed Bullish Plays: TKLC

Stock Splits
  Announcements: None        


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

SWIR - tech stock short -
  EXIT ALERT!  Shares of SWIR fell more than 13 percent on 
  Monday with almost double the normal volume.   The stock 
  is reacting, some might say overreacting, to a broker's downgrade
  to a "reduce" this morning.  Our TARGET was $21.25.  SWIR
  has exceeded our target and hit the $20.00 mark.  We are 
  suggesting that readers close this play for a profit.  The stock
  is down MORE than 20 percent from our entry point.  
 
  We are choosing to keep the play OPEN with a stop loss at $21.25,
  which was our initial target.  Our new target is $17.50.  Be careful
  here.  Shares are oversold and could bounce!
 
 
CTMI - high risk/reward short -
  Good news!  CTMI has fallen under the $9.50 level.  Looking at the
  intraday chart we see a late afternoon rally attempt failed at this
  level.  We are going to lower our stop from $11.01 to $10.51.
 


==================================================================
Net Bulls (NB) Tech Stock section
==================================================================

-----------
Closed Play
-----------


  Closed Bullish Play
  -------------------

Tekelec - TKLC - close: 17.87 change: -0.38 stop: 17.95

Our instincts were right.  TKLC looked poised for more weakness.  
In an effort to minimize our losses we lowered the stop to $17.95 
over the weekend.  It didn't take long today and TKLC hit our 
stop taking us out for a 53-cent loss.  Short-term technicals are 
looking worse and the stock's MACD indicator has turned over into 
a new "sell" signal.  We would anticipate some support near 
$17.00 but we didn't want to give it that much room. 

Picked on August 18 at $18.40 
Gain since picked:     - 0.53
Earnings Date        07/22/04 (confirmed)
Average Daily Volume:     722 thousand




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

None


==================
  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                 74.02     +0.55
SNY     Sanofi-Aventis             36.68     +1.34
XL      XL Capital                 70.75     +0.80
UST     UST Inc                    39.70     +0.51
KIM     Kimco Realty               50.00     +0.58
ARA     Aracruz Celulose           34.80     +0.93

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

PKOH    Park-Ohio Holdings         17.67     +1.92
ENWV    Endwave Corp               13.64     +1.14

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
BLK     BlackRock Inc              73.73     +2.41
LNR     LNR Property               62.81     +3.71
HDWR    Headwaters                 30.20     +1.27
AACE    Ace Cash Express           26.60     +1.12

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

NTT     Nippon Telephone           21.69     -1.38
ACDO    Accredo Health             22.05     -5.75
PFGC    Preformance Food           22.05     -1.89
KCP     Kenneth Cole               27.86     -1.34
IPCC    Infinity Property & Cslty  26.45     -1.13
SWIR    Sierra Wireless            20.05     -3.00

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

FLIR    FLIR Systems               60.32     +2.19
FRK     Florida Rock Industries    44.96     -1.41
ARO     Aeropostale                31.03     -2.72
POOL    SCP Pool Corp              42.30     -2.34
OXM     Oxford Industries          40.47     -1.87
UTHR    United Therapeutics        29.85     -2.14


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








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