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PremierInvestor.net Newsletter                   Monday 09-27-2004
                                                    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:  Lower Highs, Lower Lows
Watch List:  Tech, Biotech and more!


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      09-27-2004           High     Low     Volume   Adv/Dcl
DJIA     9988.54 - 58.70 10046.65  9985.37 1.54 bln  902/1918
NASDAQ   1859.88 - 19.60  1871.94  1858.88 1.31 bln  833/2177
S&P 100   531.02 -  3.35   534.37   530.84   Totals 1735/4095
S&P 500  1103.52 -  6.59  1110.11  1103.24
SOX       376.96 -  5.59   383.47   375.67
RUS 2000  558.36 -  7.61   565.97   558.36
DJ TRANS 3177.35 - 24.76  3201.29  3166.94
VIX        14.62 +  0.34    15.06    14.55
VXO (VIX-O)14.30 +  0.16    14.76    14.07
VXN        21.92 +  0.82    22.34    21.73
Total Volume 2,864M
Total UpVol    637M
Total DnVol  2,203M
Total Adv  1735
Total Dcl  4095
52wk Highs  107 
52wk Lows    95
TRIN       1.68
PUT/CALL   0.99 
===============================================================

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

Lower Highs, Lower Lows
Jonathan Levinson

The indices gapped lower today and failed at or just below 
Friday's lows.  A narrow range emerged following the gap open, 
but an afternoon breakdown drove the indices below the intraday 
range to finish at the lows.

Breadth was negative and volume was light, with declining volume 
exceeding advancing volume 2.98:1 on the NYSE and 3.92:1 on the 
Nasdaq.  Volatility rose, with the OEX Volatility Index (VXO) 
adding 6.72% to close at 14.30 and the QQQ Volatility Index (QQV) 
+6.16% to close at 19.99.


Daily Dow Chart


The daily chart of the Dow shows today's break below 10000 
completing Friday's bearish consolidation at the lows.  Price is 
walking down the lower daily Bollinger band in what is so far a 
strong daily cycle downphase.  9950-60 is next support, below 
which bears will be targeting the August lows. 


Daily S&P 500 Chart


The SPX is in the earlier stages of its daily cycle downphase, 
still working on support from 1096-1102.  Below this level, the 
downphase will strengthen, with next support in the low 1080s.  
1112-1115 is new resistance.


Daily Nasdaq Chart


The Nasdaq is showing a bearish unfilled breakaway gap this 
morning, with the daily cycle downphase just getting started.  
Support below is at 1850-55, below which 1825-30 comes into view.  
Note the pattern of lower highs and lower lows from the daily 
cycle over the past 6 months.


It was a light day for economic news, with New Home Sales as the 
only major release.  The Commerce Department reported that new 
home sales in the US rose 9.4% to an annual rate of 1.184M homes 
(seasonally adjusted).  This was the largest jump in 4 years, 
with 404,000 new homes up for sale, which represents an inventory 
of 4.4 months at August's sales rate and the highest level in 25 
years.  The median price of a new home fell from $214,400 to 
$208,900, still a 9.7% year-on-year increase but the lowest 
median price in 8 months.

Standard & Poor's announced its estimate for Q3 SPX operating 
earnings at $16.42, which represents a 13.9% increase from Q3 
2003.  It's estimate for Q4 is for a 15.5% rise over 2004's 
levels.



Weekly TNX Chart


Ten year treasury bonds pulled back briefly on the New Home Sales 
news, but the decline proved to be a mere pause in the morning's 
gains.  Ten year note yields (TNX) continued lower through 4% and 
failed on a bounce attempt back to that level to close lower by 
3.4 bps at 3.997%.  The weekly chart of TNX shows descending 
trendline support in play at current levels, while the rising 
support line connecting the lows of the past 18 months is just 
below in the 3.85% area.  A break below that lower line would 
suggest a bear wedge breakout targeting 3.55% on the way to a 
downside objective of 3.05%.


Weekly chart of Crude oil


Investor awoke to crude oil trading north of $49 per barrel 
today, with crude futures reaching a new record high of 49.75 on 
the Nymex this morning.  This time it was concerns over Nigeria, 
the number five OPEC producer, where rebels pushing for political 
reforms said that they would seek to extend the current uprising 
to the countries entire southern delta oil region.  Royal 
Dutch/Shell closed down their 30,000 bpd output as a precaution.  
Nigeria had already been forced to cut back from its peak 
capacity of 2.55 mbpd due to aging facilities, and the current 
disruptions compound existing factors in Nigeria in a climate of 
global supply concerns and strong demand.

The weekly chart of Nymex crude, whose most recent green candle 
is comprised only of today's data, points an unequivocally 
bullish picture.  Current support is at 48, followed by 46.50.  
For the day, Nymex crude close higher by 80 cents or 1.64% at 
49.675, a new record close.

Nigeria wasn't the only fly in the ointment.  Insurgent forces in 
Iraq attacked the oil ministry building Saturday, causing no 
injuries and minor damage.  Iraq's export levels remain at 
relative highs for the year despite the various attacks on 
production facilities.  OPEC continues to produce oil at 25 year 
high levels, but traders and analysts cite an absence of excess 
capacity with which to cushion external shocks such as the recent 
Nigerian developments.  Again referring to the weekly chart, this 
year's rally has merely steepened an already bullish trend, and 
I'm personally not persuaded by arguments attributing the rally 
in oil to terrorism or other such purely external factors. 

In a report to its private clients released today, Morgan Stanley 
stated that it believes "crude oil could reach $61 before a 
meaningful sell-off occurs.  The Amex Airline Index ($XAL) fell 
4.01% or 1.72 to close at 41.18, with AMR losing 6.69% to close 
at 6.97, a new 52-week low.


Weekly chart of Amex Airline Index ($XAL)




In other news, UBS reported that its Index of Investor Optimism, 
maintained in collaboration with Gallup, declined to a 4-month 
low of 74 in September from 77 in August.  56% of investors 
polled believe that now is a good time to invest in the financial 
markets, down from 60% in August, though expected average rates 
of return rose from 9.3% in August to 10.1% in the current 
report.

In corporate news, FNM was announced its agreement with its 
regulator, the Office of Federal Housing Enterprise Oversight, to 
create a 30% capital surplus within 270 days and review its 
internal accounting controls.  FNM's minimum capital requirement 
is 2.5% of assets plus 0.45% of off-balance-sheet/derivative 
obligations, which Reuters reported to be equal to approximately 
$31B based on most recent data.  The company agreed to submit to 
the OFHEO with 45 days details of strategies to meet these new 
commitments and their impact on the company.

This comes in the wake of Wednesday's OFHEO charges that FNM has 
been employing improper "cookie jar" accounting methods to smooth 
earnings and, on at least one occasion, deferred its reporting of 
expenses, possibly to reach bonus compensation targets for 
management.  The SEC announced that it is conducting an inquiry 
into these findings.  Morgan Stanley had downgraded FNM earlier 
in the morning to equal weight from overweight, citing 
uncertainty from the ongoing OFHEO examination and "a wide range 
of possible outcomes", and Prudential followed with its own 
downgrade to "neutral" following the announcement.  Later in the 
day, it was announced that a subcommittee of the House Committee 
on Financial Services will hold a hearing titled "The OFHEO 
Report: Allegations of Accounting and Management Failure at 
Fannie Mae" will be convened on Oct. 6 at 10AM EST. 
Notwithstanding all of the foregoing, FNM's ticker showed some 
much needed green following last week's washout, closing higher 
by 1.51% at 66.50.

Hurricane Jeanne moved out of Florida today, leaving at least 4 
people in the State and approximately 5.2M people without power.  
Reuters reported that the storm dropped up to 10 inches of rain, 
and a close friend of mine in Florida told me that crews had yet 
to clean up much of the debris left by Ivan.  Sewage and drainage 
systems were waterlogged before Jeanne swept through, and 
flooding remains a serious concern.  Current damage estimates are 
between $4B and $8B.  The President declared a major disaster for 
the state, rendering it eligible for federal aid.  

While the Orlando/Orange County Convention and Visitors Bureau 
said that its tourism areas were unaffected, operational and open 
for business, investors sold shares in DIS, which closed 1.19% 
lower for the day at 23.18.  EMRG announced that it is 
redirecting customer service operations from its Sebastian FL 
location to its Fort Worth, TX branch.  Tampa Electric, a 
division of TE, announced that its infrastructure has sustained 
extensive damage in eastern FL, and that 228,000 of its customers 
are without power.  Insurer ANAT announced that the combination 
of Charley, Frances and Ivan will cost its subsidiaries $22M in 
pre-tax earnings, with total gross losses estimated at $37.2M, 
part of which will be recovered from the Florida Hurricane 
Catastrophe Fund and part from its reinsurance agreements.  
Insurer EMCI estimated its losses at $6.9M, which will translate 
to an earnings hit of $4.5M.  Both EMCI and ANAT had not yet 
tallied the damage resulting from Hurricane Jeanne.  BLS reported 
that 30,000 of its customers in Georgia have experienced service 
interruptions due to Hurricane Jeanne.

In other news, TOM got smoked for 21.79% or 2.87 to close at 
10.30 on news of a federal grand jury subpoena from the US 
Attorney, examining the commission rates paid by its US 
subsidiary  to its non-US subsidiary since 1990.  Pharmaceutical 
company NSTK rose 69.90% or 5.41 to close at 13.15 on news of a 
contract with Merck to develop a nasal spray treatment for 
obesity.

Tomorrow's lone economic report is Consumer Confidence for 
September to be released at 10AM, estimated at 99.5 and down from 
August's 98.2.  With oil mere pennies away from the $50 mark and 
getting a lot of attention, with the volatility indices beginning 
to rise but still in the range of multiyear lows, with S&P 
announcing optimistic expectations for Q3 earnings, my current 
bias is aligned with the daily cycle oscillators on the indices.  
With the previous daily cycle upphase failing from its third 
lower high in the past 6 months, the trend on this timeframe 
remains to the downside.  The current daily cycle downphase
suggests a strategy of shorting overbought bounces on the 30 
minute or 60 minute cycles with stops just above resistance.  
Until it reverses, this cycle should continue to deliver a 
pattern of lower highs and lower lows on these intraday 
timeframes.


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

Hyperion Solutions - HYSL - close: 33.08 change: -1.92

WHAT TO WATCH: We've mentioned HYSL before and now the stock has 
broken its long-term trendline of support in addition to breaking 
support at the $34.00 level.  Aggressive traders can chase it 
here but patient types can wait to see if HYSL bounces back 
toward $34.00 and then consider a short entry on the bounce.  The 
latest drop has produced a double-bottom breakdown on its P&F 
chart with a $28.00 target.  We may add HYSL to the play list 
tomorrow if conditions look favorable.




---

Digene Corp - DIGE - close: 25.37 change: -0.84

WHAT TO WATCH: The oversold bounce from the August gap down 
failed under the $28 level.  Now DIGE has been consolidating 
sideways between $25 and $28 for over a month.  Yet the most 
recent rally is now suffering under the simple 40-dma and DIGE is 
suggesting it could breakdown under support at $25.00-24.70.  
Watch for a breakdown and target $21-20.




---

Escalon Medical - ESMC - close: 11.95 change: -1.28

WHAT TO WATCH: The August to September rally in ESMC has failed 
near the $15.00 level.  Now the stock is rolling over and has 
broken support at its simple 200-dma.  Technical oscillators are 
bearish and its MACD indicator is extremely close to a new sell 
signal.  We would look for ESMC to retest support at the $10.00 
mark (maybe lower).  




---

Redback Networks - RBAK - close: 5.11 change: -0.59

WHAT TO WATCH: After three weeks of trying RBAK could not 
breakout over resistance near $6.50.  Now the stock has broken 
support near $5.50 and its simple 40, 50, 100 and 200-dma's.  
Aggressive traders could target a drop back toward $4.25-4.00.  
The P&F chart is bearish and points to a $2.00 target but we 
would expect the $4.00 level to act as tough support.





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

CIG $20.76 +1.03 - This electric utility is breaking out to new 
highs over resistance at $20.00.

CHINA $4.60 -0.40 - China.com has fallen 8 percent on Monday on 
strong volume.  The next stop could be the $4.00 region.

CALM $10.93 -1.12 - CALM has been stuck in a trading range 
between $10 and $13 for a couple of months now.  Watch for a 
possible breakdown under $10.00. 


=================================================================
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 09-27-2004
                                                    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, PHTN, ETM, AMLN, LSCP  

Stock Splits
  Announcements: DVN       


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 -
  Heads up!  IMN finally broke down and its MACD is 
  really showing the new sell signal now. 
 
PHTN - tech stock short -
  Good news!  PHTN dropped 2.74 percent and 
  broke down under round-number, psychological
  support at the $20.00 mark.
 
 
ETM - non-tech short -
  ETM came very close to our exit at $32.00 with
  today's low at $32.63.  Prepare to exit.
 
 
AMLN - non-tech short -
  Good news!  AMLN dropped more than 2 percent
  on Monday and broke down under the $20.00 mark.  
  We are lowering our stop loss from $22.01 to $21.26
 
 
LSCP - non-tech short - 
  More good news!  LSCP declined 3.8 percent on Monday
  to hit new three-week lows near $19.00.


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

DVN energizes 2:1 split

Shortly after this evening's closing bell Devon Energy Corp. 
(AMEX:DVN) announced that its Board of Directors had approved a 2-
for-1 stock split of its common shares. 

The stock split will take the form of a stock dividend payable on 
November 15th, 2004 to shareholders on record as of October 29th. 
Post-split DVN will have approximately 485 million shares 
outstanding.

The company also reported plans to move its listing from the 
American exchange to the New York Stock Exchange.  Plus, DVN plans 
to begin a stock buy back program.  

About the company:
Devon Energy Corporation is an Oklahoma City-based independent 
energy company engaged in oil and gas exploration, production and 
property acquisitions. Devon is the largest U.S.-based independent 
oil and gas producer and is included in the S&P 500 Index.
(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

FNM     Fannie Mae                 66.50     +0.99
STI     Suntrust Banks Inc         69.25     +0.63
SU      Suncor Energy              31.06     +0.67
AET     Aetna Inc                  95.96     +0.88
BSC     Bear Stearns Cos           91.99     +1.88
MDC     M.D.C.Holdings             74.68     +1.30

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

SCS     Steelcase Inc              14.50     +1.17
IMA     Inverness Medical Tech     19.27     +1.40
SYPR    Sypris Solutions           14.23     +1.14
NSTK    Nastech Pharma             13.15     +5.41
PARL    Parlux Fragrances          12.11     +1.49

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
WYNN    Wynn Resorts Ltd           50.08     +2.29
KBH     KB Home                    85.54     +2.02
UPL     Ultra Petroleum Corp       49.61     +3.31
THX     Houston Exploration        58.35     +1.17
TXI     Texas Industries           51.40     +3.72
ATW     Atwood Oceanics            48.14     +1.62
DWSN    Dawson Geophysical         21.28     +1.72

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

STA     The St. Paul Travelers Co  32.73     -1.59
DST     DST Systems                43.51     -1.49
JBLU    JetBlue Airways            20.56     -1.31
TBL     Timberland Co              55.87     -2.25
LEE     Lee Enterprises            44.89     -1.29
THO     Thor Industries            25.90     -1.27
HYSL    Hyperion Solutions         33.08     -1.92
ISRG    Intuitive Surgical         24.97     -1.10

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

BAK     Braksem Sa                 31.30     -1.02
WGO     Winnebago Industries       33.72     -2.10
GLDN    Golden Telecom             28.62     -1.18
ALL     Allstate Corp              47.41     -0.84
DOX     Amdocs Ltd                 21.54     -0.62
CMP     Compass Minerals Intl      21.71     -0.46
SEB     Seabord Corp              609.99    -25.00


=================================================================
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 (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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