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Daily Newsletter, Monday, 09/20/2004

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PremierInvestor.net Newsletter                   Monday 09-20-2004
                                                    section 1 of 2
Copyright (c) 2004, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section one:

Market Wrap: Naz Pulled up by the SOX 
Watch List: Chips to Diamonds and more 


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      09-20-2004           High     Low     Volume   Adv/Dcl
DJIA    10204.89 - 79.57 10283.87 10187.19 1.46 bln 1078/1705
NASDAQ   1908.07 -  2.02  1921.50  1900.24 1.55 bln 1239/1765
S&P 100   541.93 -  3.87   545.80   541.08   Totals 2317/3470
S&P 500  1122.20 -  6.35  1128.55  1120.34
SOX       399.90 + 11.40   404.55   384.80
RUS 2000  570.74 -  2.43   573.97   569.86
DJ TRANS 3242.33 - 15.06  3259.17  3239.23
VIX        14.43 +  0.40    15.29    13.98
VXO (VIX-O)13.78 +  0.23    14.69    13.78
VXN        20.56 +  0.43    21.49    20.02
Total Volume 3,016M
Total UpVol  1,326M
Total DnVol  1,582M
Total Adv  2317
Total Dcl  3470
52wk Highs  203 
52wk Lows    54
TRIN       0.78
PUT/CALL   0.92 
===============================================================

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

Naz Pulled up by the SOX
Jonathan Levinson

The Nasdaq tested last week's highs, following the SOX which 
closed higher by 2.93% and broke week's high on a closing basis.  
The Nasdaq failed to hold its gains, closing fractionally 
negative at 1908, while the Dow and SPX remained in negative 
territory for the duration and closed lower by .77% and .56% 
respectively.  The Dow's loss was notable alongside the Nasdaq 
and SOX strength, with the Dow breaking and closing below last 
week's lows.


Weekly Dow Chart


The weekly charts provide the most bullish view of the markets at 
current levels, with the bullish divergent buy signals still in 
place on both the Dow and Nasdaq despite their inability to break 
the descending weekly resistance lines.  The Dow's loss today 
kicked off this week's weekly candle below 10300 trendline 
resistance, with an intraday high of 10284.  The weekly cycle 
oscillators remained on buy signals, but the indicators undrew 
part of the uptick that was showing as of last Friday.

The 10300-10350 level is shaping up as the key battleground 
between bulls and bears.  The current descending channel has been 
confounding bulls and bears all year- it's either a complex top 
at a low high, or the bull flag off the rim of a bullish cup and 
handle formation.  A break above 10300-10350 on a weekly closing 
basis would rule strongly in the latter's favor, while a failure 
from here will set up a tense retest of 9900 and ultimately 9700 
support.  The weekly cycle oscillator upturns are quite bullish 
here, but even the 10-week stochastics lag the action 
considerably and are only reflecting the recent gains.  Bulls 
need to break the 10300-10350 line in order to confirm the new 
weekly upphase, while a rollover from and a move below 10150 
support should be enough to whipsaw the upphase back down.


Daily Dow Chart


The Dow daily is the most bearish of the bunch today, with 
today's decline leading its peers to the downside and breaking 
below last week's lows on a closing basis.  Bulls are eyeing the 
support to 10180, being the lower descending trendline support 
level under what appears to be a bull flag.  While the daily 
cycle oscillators are in a clear downphase, that downphase will 
require that the 10180 level break this week.  A bounce from here 
would target the 10300 on the way to a test of 10350 and 
descending resistance at 10380 on this chart.  A move above 10300 
on a daily closing basis would most likely stall or abort the 
daily cycle downphase currently in progress.


Weekly Nasdaq Chart


The Nasdaq was a tower of power for much of today's session, 
benefiting from sector upgrades from Sanford Bernstein and RBC 
Capital Markets for the SOX which led the charge to the upside.  
The Nasdaq ran to the upper weekly descending resistance line and 
Fibonacci resistance at its session high of 1922 before falling 
back to the 1900-1910 range.

The weekly Nasdaq chart looks more bullish than that of the Dow 
in some respects, with clearer buy signals from more oversold 
levels on the oscillators.  The run up from the lower channel 
support line was steeper and the price action on this week's one-
day-old candle is more insistent, with price pushing today at the 
upper descending resistance line.  On the other hand, the bullish 
stochastic divergence on the Dow is absent here, and the selling 
in the early summer was more violent on the Nasdaq than on the 
Dow.  In any event, 1920-25 resistance is the bull flag 
resistance level to break, analogous to the 10300-10350 Dow level 
discussed above.  Below 1890, next support is at the 1845 level.  
Below 1820, the weekly cycle buy signals should whipsaw.


Daily Nasdaq Chart


As on the Dow, the daily COMPQ chart is less bullish than that of 
the weekly. Today's failure at 1922 left a tall upper doji 
shadow, and the negative close near the opening lows left us with 
a bearish gravestone doji.  A failure to regain the highs 
tomorrow will result in further weakness in the daily cycle 
oscillators, but bears need to see the 1890-1900 level taken out 
in order to damage the still-intact rising channel off the summer 
lows.  Last week's sideways range continues to look like 
consolidation above 1900, but below 1890, there's little support 
to the 1870-75 level.


Daily Nasdaq Price/Volatility ratio chart


The Nasdaq volatility index (VXN) rose .43 today to close at 
20.56, rising alongside price at various points throughout the 
session.  Over the years, many analysts, myself included, have 
noted the inverse correlation between volatility and price.  
"When the VIX is high, it's time to buy- when it's low, it's time 
to go."  The VXN is the Nasdaq's VIX, and we've been noting 
extremely low relative readings in recent months.  The trouble is 
in knowing how low is "low", and for this purpose, I prefer to 
watch ratio charts between the Nasdaq's underlying price and its 
volatility index.  The COMPQ:VXN chart above follows this 
relationship, and the oscillators follow the turns.  The ratio 
fell today, losing 2.08- that level is insignificant, except that 
the oscillators are oversold and verging on a turn lower.  A 
downleg in the ratio suggests that the Nasdaq's price will 
decline relative to the VXN.  I'll be following this tomorrow in 
the Market Monitor, but another up day for the VXN / down day for 
the Nasdaq should kick off a new downleg for this ratio- a 
bearish outcome for the Naz.


Weekly TNX Chart


Bonds rose strongly today, ahead of the FOMC announcement 
scheduled for 2:15PM tomorrow.  Ten year note yields (TNX) fell 
6.9 bps to close at 4.058% in a 1.67% decline for the day.  The 
move reversed all of Friday's gain in the TNX / decline in ten 
year bond and retested last week's TNX lows, the current lows for 
the move that commenced in June.  A break below current levels 
sets up a retest of lower channel support and old confluence 
close below at 4%.  

Treasury Secretary John Snow spoke in front of the National Press 
Club today, reiterating his optimistic view of the economic 
recovery in the US.  He cited the creation of 1.7M jobs in the 
past 12 months as evidence of better times to come.  He added 
that the President remains committed to cutting the federal 
deficit in half by the end of a second term should he be 
reelected.  The IMF's managing director Rodrigo Rato touched on 
these themes as well, saying that the US should seize the moment 
to begin reducing both its fiscal and balance of trades deficits.  
Addressing the Council of Foreign Relations in New York, Rato 
said, "This relatively benign global outlook provides an 
important window of opportunity for further progress in 
addressing global imbalances and reinforcing the basis for more 
balanced and sustainable global growth."  

In other news, the National Association of Home Builders 
announced that its housing index fell from 71 in August to 68 in 
September to July's levels.  The Wall Street Journal reported 
news of a report due to be released by the Office of Federal 
Housing Enterprise Oversight that will allegedly reveal evidence 
of FNM's executives decisions to manipulate earnings.  FNM closed 
lower by 1.59% at 75.98.


Weekly chart of Crude oil



Crude oil marched higher today on news of Russian YUKOS' 
suspension of 100,000 bpd worth of oil exports to China, closing 
higher by 70 cents or 1.54% at 46.30.  The financial press also 
noted that Hurricane Ivan has disrupted an estimated 1.2M bpd's 
worth of production in the Gulf of Mexico.  However, the YUKOS 
story received the most attention, as the suspension of rail 
deliveries to China constitutes the first supply disruptions 
arising from its ongoing financial woes.  The company has been 
warning of such risks in the wake of bank account seizures 
pursuant to the Russian government's efforts to recover more than 
7B in taxes from the company.  Analyst David Thurtell noted that 
"The YUKOS volume isn't much in the scheme of things but in 
today's market, which is as tight as a drum, it's crucial."

The move broke last week's high, closing above the 46 level and 
confirming the doji reversals from the lower rising channel on 
the past 3 tests over the past month.  While the bearish 
stochastic divergence continues, it will whipsaw to the upside on 
a return to the prior highs.  45.50-.75 is now support, and above 
the session high of 46.475 there's resistance at 46.75-47, 
following which the year highs will come into view above 48.


It was a quiet newsday, with no major economic reports released.  
In corporate news, CL was out with an earnings warning this AM, 
saying that Q3 and Q4 earnings will be light.  The company cited 
higher marketing costs that exceeded better-than-expected growth 
in unit volume and market share.  While consensus estimates were 
for earnings of .67 per share for Q3 and .68 for Q4, the company 
expects earnings from .57-.59.   CL got smoked for 11.23% to 
close at 48.23, -6.10, and the warning from the consumer products 
company helped keep the Dow and SPX in the red for the duration 
of the session.

PMCS also warned in the morning, reducing its Q3 revenue 
expectations from 86M to 71M-73M.  The company cited reduced 
demand for DSL equipment from Asian ISPs in Q2 2004.  Consensus 
estimates were for earnings of 89.2M.  PMCS, like the Nasdaq, 
managed to rise on the news, adding 39 cents or 4.12% to close at 
9.86 for the session.

After the bell, ADBE announced earnings for Q3 of 42 cents per 
share, beating estimates by 3 cents on sales of 403.7M. ADBE was 
up 3.86% at 50 as of this writing.  RHAT announced Q2 net income 
of 11.8M or 6 cents per share, beating estimates by 5 cents.   
RHAT was higher by 1.51% at 15.46 as of this writing.

For tomorrow, all eyes will be on the Fed's 2:15 rate 
announcement and it accompanying bias statement.  The bond market 
is poised for a breakout using last week's price high/yield low 
as the reference.  Strength in bonds today suggests that the Fed 
will emphasize the "disinflationary" risks facing the economy, 
which in the recent past has see declines in the dollar and 
rallies in all other asset classes.  As the intermarket 
relationships have been cloudier than usual, however, it's safer 
to follow the individual charts you're trading than to guess at 
an intermarket reaction to moves in the dollar.

The daily cycle in the Dow has rolled decisively to the downside, 
while the Nasdaq continues its bullish trending move.  Today's 
bearish gravestone doji suggests possible trouble tomorrow for 
Nasdaq bulls, but it will take a move below 1890-1900 to get the 
ball rolling.  The bullish cycle picture would have a corrective 
daily cycle downphase bottom at a higher low before resuming a 
renewed charge against descending bull flag resistance on the 
weekly charts.  Nasdaq bulls today were hoping to dispense with 
the downside altogether and get to the good part, which they 
nearly accomplished.  With the pending announcement at 2:15PM, 
there's the possibility that the market will try to bore us for 
the first part of the session and then make up for lost time in 
the final 2 hours. 


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

National Semiconductor - NSM - close: 15.74 change: +0.71

WHAT TO WATCH: The SOX semiconductor index was the strongest 
sector on Monday with a 2.9 percent gain.  NSM out performed its 
peers with a 4.7 percent rally to breakout to new five-week highs 
and above its simple 50-dma.  NSM has filled the gap from mid-
August and looks ready to breakout over the $16.00 level.  We 
would watch for the breakout or a possible dip back toward $15.00 
and consider a bounce. 




---

Overseas Shipping - OSG - close: 49.54 change: +1.48

WHAT TO WATCH: Oil stocks were strong today and OSG, an oil 
tanker company, joined the rush higher with a 3 percent rally.  
Shares of OSG have been trading sideways between $48 and $50 for 
the last several days but the stock looks ready to breakout over 
round-number resistance at $50.00.  The P&F chart shows a triple-
top breakout buy signal and a bullish target to $66.




---

Apple Computer - AAPL - close: 37.71 change: +0.57

WHAT TO WATCH: AAPL just keeps on climbing.  The stock is up 
strongly the last three sessions and up six out of the last seven 
weeks.  Shares have almost doubled from their late December lows 
near $19.25.  We suspect AAPL can make it to the $40 level before 
its next serious bout of profit taking.  Watch for a dip back to 
$36.00-36.25 and consider buying a bounce.  The bullish triangle 
breakout on its P&F chart is a very successful pattern to play 
but its bullish price target was achieved before the pattern was 
formed.  




---

Tiffany & Co - TIF - close: 31.43 change: -0.21

WHAT TO WATCH: Is TIF getting ready to roll over again?  TIF has 
been trading lower for months with a dramatic trend of peaks and 
valleys creating a nice pattern of lower highs and lower lows.  
The most recent oversold rebound is beginning to fade under its 
simple 50-dma.  The oscillators look bearish and its MACD is 
nearing a new "sell" signal.  We would watch for a drop under 
$30.00 as a potential entry point.  





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

SNDK $27.20 +0.90 - SNDK rallied 3.4 percent to breakout over the 
$27 mark and confirm its breakout over the simple 200-dma.

AIRT $19.01 +3.91 - We can't find any news behind AIRT's 25 
percent gain today.  The stock only has 1 million shares in its 
float and 2.8 million shares traded today.  The most recent data 
doesn't show a lot of short interest.

SNE $34.45 -0.22 - Noticing that SNE is seeing some follow 
through on the recent failed rally near $36.  The MACD has just 
painted a new "sell" signal. 


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

*****************************************************************
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Newsletter, or any Premier Investor Network newsletter please
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*****************************************************************


Copyright 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.







PremierInvestor.net Newsletter                   Monday 09-20-2004
                                                    section 2 of 2
Copyright (c) 2004, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section two:

Stop Loss Adjustments: IMN, ETM, DPH, SMRT, PSSI, PCLN  

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

IMN - tech stock short -
  IMN continues to consolidate but the action on the
  intraday chart and the momentum oscillators certainly
  seem to point to a breakdown soon.
 
 
ETM - non-tech short - 
  ETM continues to sink and has now broken the $35.00 
  level.  Shares dropped 2.8 percent on Monday.  We are
  going to lower our stop from $37.01 to $36.01.  Readers
  can prepare to exit as ETM nears our target at $32.00.
 
 
DPH - non-tech short  -
  DEPH is back under the $9.00 level again.  Traders may
  want to reconsider new entries on a drop below 8.90 or
  8.80.
 
SMRT - non-tech short -
  Be careful here.  SMRT dipped toward its exponential 200-dma
  before bouncing on Monday.
 
 
PSSI - non-tech short -
  ENTRY ALERT - We have been triggered in PSSI.  Our entry
  point to open shorts was $10.44 and PSSI dropped 2.74 percent
  on Monday breaking support at its exponential 200-dma.
 
 
PCLN - high risk/reward short -
  PCLN looks increasingly weak.  The stock dropped 2.5 percent
  breaking support at $20.00 and hitting new four-week lows.
 



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

ECA     Encana Corp                44.08     +1.16
DVN     Devon Energy               71.09     +1.09
CNQ     Canadian Natural Res.      36.20     +0.73
PCAR    Paccar Inc                 66.23     +1.28
OMC     Omnicom Group              70.93     +0.74
TLM     Talisman Energy            24.54     +0.56

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

RMBS    Rambus Inc                 16.98     +1.48
SIRF    Sirf Tech Holdings         13.47     +1.31
MEDX    Medarex Inc                 7.84     +1.01
SMSC    Standard Microsystems      17.69     +1.16
AIRT    Airt T Inc                 19.03     +3.93

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
DNA     Genentech Inc              53.91     +1.91
SLM     SLM Corp                   43.61     +1.36
XLNX    Xilinx Inc                 29.65     +1.11
CCJ     Cameco Corp                73.41     +2.54
NVLS    Novellus Systems           27.04     +1.16
HRS     Harris Corp                53.61     +1.91
PDS     Precision Drilling         54.86     +1.95

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

C       Citigroup                  45.40     -1.55
PG      Procter & Gamble Co        54.38     -1.88
MO      Altria Group               47.08     -1.40
UN      Unilever                   58.16     -2.78
CL      Colgate-Palmolive          48.23     -6.10
SSP     E.W.Scripps Co             49.08     -1.08
RAI     Reynolds American          69.89     -2.49
ACV     Alberto-Culver             44.87     -1.43
IFF     Intl Flavors & Fragrances  37.33     -1.37

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

LEN     Lennar Corp                45.95     -1.61
DNB     Dun & Bradstreet           56.28     -1.97
UHAL    Amerco                     31.00     -1.23
AVD     American Vanguard Corp     32.32     -2.23
LM      Legg Mason                 80.63     -1.38
IST     Ispat Intl                 27.30     -1.05
SKYF    Sky Financial Group        25.06     -0.26
RYL     Ryland Group               89.72     -2.01

 


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