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Daily Newsletter, Wednesday, 09/29/2004

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PremierInvestor.net Newsletter               Wednesday 09-29-2004
                                                   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: The Better to See You With, My Dear
Watch List:  Brokers to Semis and more


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      09-29-2004           High     Low     Volume   Adv/Dcl
DJIA    10136.24 + 58.84 10136.24 10050.56 1.72 bln 1590/1202
NASDAQ   1893.94 + 24.07  1894.06  1869.95 1.62 bln 1996/ 998
S&P 100   536.56 +  2.37   536.56   532.46   Totals 3586/2200
S&P 500  1114.80 +  4.74  1114.80  1107.36
SOX       380.62 +  6.93   383.26   373.69
RUS 2000  571.07 +  5.41   571.07   565.22
DJ TRANS 3239.59 + 31.01  3241.28  3204.36
VIX        13.21 -  0.62    14.14    13.20
VXO (VIX-O)12.81 -  0.42    13.81    12.55
VXN        20.67 -  0.69    21.51    20.57
Total Volume 3,357M
Total UpVol  2,268M
Total DnVol  1,042M
Total Adv  3586
Total Dcl  2200
52wk Highs  175 
52wk Lows    50
TRIN       0.66
PUT/CALL   0.85
===============================================================

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

The Better to See You With, My Dear
Linda Piazza

Although a Fed president painted a rosy picture for the economy
Tuesday night and the GDP was revised slightly upward Wednesday
morning, some consider the specter of higher crude costs the wolf
that lurks in "transitory" clothing.  

Pre-market, investors brushed aside views of the final GDP and
performances of global bourses with barely a glance, all the
better to focus on the crude inventories numbers released at mid-
morning.  In addition, unconfirmed rumors circulated that the IMF
might trim its estimates on economic growth for the economy due
to higher crude costs.  Inventories surprised to the upside, but
the IMF did lower its 2005 outlook for global economies based on
rising crude costs.  At the end of the morning's economic
releases, market participants had no better view of the size of
that wolf than they did at the start, but that was going to
change.  The wolf himself was going to change it.

Crude moved lower.  Oil services, natural gas and utilities
stocks declined, joined by the home builders and gold and silver
miners.  The Dow Jones Transportation Index climbed 0.96 percent
higher to close just underneath 3240 resistance.  Techs soared,
with the disk drive index and SOX gaining 2.91 and 1.85 percent,
respectively, ahead of Micron's (MU) after-hours earnings
announcement.  Advancers were always ahead of decliners on the
Nasdaq, and ended up so on the NYSE.

At day's end, however, some already expressed skepticism of the
climb's sustainability.  

The daily chart of crude futures shows no change in the uptrend
yet.

Annotated Daily Chart of Crude Futures for November Delivery:

   

The Russell 2000 might have been a likely recipient of end-of-
quarter buying, pushing it above its 200-sma.

Annotated Daily Chart of the Russell 2000:

 

Those leery of the sustainability of the gains will want to see
the Russell 2000's upside break confirmed by a break above the
September high.

Armed with an upgrade by Amtech, many chip and chip-equipment
stocks also felt no fear of the wolf, whatever its size or impact
on global demand, and charged higher ahead of MU's after-hours
report.  

Annotated Daily Chart of the SOX:

 

The SOX's behavior continues to conform to a potential inverse
H&S.  This suggests that some believe that the worst is baked
into expectations for the semi's.  Someone is buying, producing
this pattern.  However, the outcome of H&S's and inverse H&S no
longer proves predictable.  These formations should be used to
guide traders as to bullish or bearish intentions and whether
those intentions are realized rather than entice traders into
plays ahead of at least a minimal confirmation of the pattern by
a rounding down into a right shoulder.  They're now frequently
rejected.

The combined resistance of the 30- and 50-dma's and the 50
percent retracement of the rally off the October 2002 low proved
too strong for the SOX Wednesday.  MU reported earnings of $0.14
per share on earned operating income of $125 million, net income
of $93.5 million, and net sales of $1.19 billion.  Earnings per
share were up from last year's loss, but below the expected $0.21
on sales of $1.23 billion.  The company blamed lower selling
prices for memory chips for the disappointment.  

MU's result could help propel the SOX either direction, but which
direction?  Whisper numbers had been for results as low as $0.09
per share on revenue of $1.15 billion, so tomorrow could as
easily see a buy-the-fact reaction as a sell-the-fact one.  MU
traded $0.04 lower during after-hours trade, but other most-
actives in after-hours trades included semi-related stocks TXN
and INTC, with both relatively unchanged.  

The SOX's chart reveals that a break above the 50-dma would
indicate an upside breakout in progress.  Watch for a test of 394
and then 400, with semi bulls needing a profit-protecting plan as
each of those levels is approached. Investors sometimes reject
these formations at the neckline.  A push above September's high
sets an upside target near the 200-sma.  

However, the combined resistance near the 50-dma looks strong and
rollover entries might be more likely either from there or from
the 400 level.  New bears taking entries from those levels want
to see the SOX quickly press through the 30-dma and below
Tuesday's low.  Look for a decline beneath Tuesday's low as a
sign of a downside breakout entry.  That could see 360 tested,
but semi bears need profit-protecting plans in place as 360 and
then the September low are tested.  A break below September's low
suggests a test of the 342-343 level. 

The SOX and the Disk Drive Index helped push the Nasdaq higher,
and both could impact it Thursday.

Annotated Daily Chart of the Nasdaq:

 

Current Nasdaq bulls should have profit-protecting plans in place
as the Nasdaq approaches the 100-sma and 200-ema's, as well as
historical horizontal resistance.  A break through the converging
resistance suggests a test of resistance also converging just
above 1950.  Profit-protecting plans should be in place if that
level is tested.  

With a weekly downtrend still in effect, sell-the-rallies appears
to be remain the best tactic.  Look for rollovers beneath 1900,
1925, or 1950 as possible new bearish entries.  Any bear should
have a profit-protecting plan in place as the 50-dma is
approached.  A break below the 50-dma sets a downside target near
1790, but I'd also have profit-protecting plans in place as
August's gap was tested.   

Annotated Daily Chart of the Dow: 

 

With a weekly downtrend still in place on the Dow, sell-the-
rallies also appears to be the best policy until that weekly
downtrend is broken.  The breakout above the converging 50-sma
and 200-em's suggests a test of 10,160-10,200, but bulls should
have profit-protecting plans in place now and then as the lower
edge of that band is approached, if it is.  Look for a potential
rollover entry near the 100-sma or a breakdown entry on a break
below 9950.  A break below 9,950 suggests a tumble down toward
9,800, where profit-protecting plans should be in place.  If the
Dow instead breaks to the upside through the 30- and 100-sma's,
have profit-protecting plans in place as the 200-sma and the top
of the channel are approached.

Annotated Daily Chart of the SPX:
 
 

As with the other indices, a weekly downtrend remains in effect,
so a sell-the-rallies policy continues to be the best tactic
until a breakout above that descending regression channel.
Current SPX bulls should have profit-protecting plans as the 200-
sma is approached and then again as September's high and the top
of the descending regression channel are approached, if the SPX
makes it past the 200-sma.  Bears should look for rollover
entries below the 200-sma or the top of the channel, back down
through the 200-sma.  A rollover beneath the 200-sma suggests a
test of 1080-1085, where profit protection plans should be in
place and remain in place through a test of the bottom of the
regression channel. 

What were the forces driving the markets today?  Wednesday's
first economic release is always the Mortgage Banker's
Association numbers on the previous week's financing activities. 
The composite number increased 4.9 percent week over week, with
the purchase component increasing 2.7 percent and the refinance
component increasing 7.7 percent, to its highest level since the
middle of April.  The sharp climb in yields today hit the
homebuilders hard, however, driving the sector lower. 

Next arrived the 8:30 release of the Q2's final GDP, with a ho-
hum reaction to the upward revision to a 3.3 percent increase. 
The Bureau of Economic Analysis had previously estimated a 2.8
percent rise, with expectations being that the number would be
revised upward to 3.1 percent.  Some articles credited business
investment with the higher-than-expected revision.  Others also
mentioned a decrease in imports and increase in inventory
accumulation and exports.  Investments in residences increased
16.5 percent.  Personal consumption and the chain deflator, a
measure of pricing pressures, had last been at 1.6 and 3.2
percent, respectively.  Both remained unchanged.  Still, despite
the headline number, growth was termed the slowest in five
quarters.

Market watchers brushed aside those numbers, however, all the
better to focus on the crude inventories to be released near
10:30.  That number prompted a short-covering rally in equities
and a decline in crude futures.  The release showed a jump in
crude inventories by 3.4 million barrels according to the
Department of Energy and by 3.7 million according to the American
Petroleum Institute.  Although both the DOE and API showed drops
in distillate and gasoline inventories, those numbers remained
within expectations.  

Market watchers knew all they wanted to know about the wolf,
although they hesitated just long enough to hear one more piece
of information.  Indices hit resistance levels just ahead of the
International Monetary Fund's 11:00 EST update on its 2005 global
outlook.  Many had feared that the IMF would trim its forecast
due to rising crude prices, and that's exactly what happened. 
The IMF cited higher oil prices as the reason behind the lowered
forecast for global economic growth in 2005, with the new
forecast for a 4.3 percent growth.  That was lower than this
year's projected 5.0 percent increase.  

IMF Chief Economist Ragharam Rajan characterized those numbers as
healthy and agreed with our Fed's characterization of the soft
patch in the U.S. economy as transitory, reassuring investors. 
However, the IMF also noted that the global economic outlook
appeared less solid and risks to the forecast were to the
downside.  That wolf clothes himself well, but he may still be
threatening.  

At 10:30 the Fed's McTeer also addressed a banking conference in
Dallas, but little coverage was given to his address.  The
previous evening, Thomas Hoenig, the president of the Federal
Reserve Bank of Kansas City, addressed a business group, saying
encouraging things about the labor market, consumer spending,
inflation, and the limited effects of rising crude on the U.S.
economy.  He felt that any negative impacts were being offset by
accommodative monetary and fiscal policies.  As long oil prices
do not rise significantly, he believes that those negative
impacts would remain minimal.  When someone in the Q&A session
tried to pin down his forecast for oil prices, he declined to
give one. 

Nothing investors heard was strong enough to hold back gains
later variously attributed to short-covering, end-of-quarter
window-dressing, oversold bounces, and healthy gains.  The VIX
and VXO dropped again into levels not seen since September 17,
with the VXO, the old VIX, dropping below the September 21 level. 
The VXN, the Nasdaq 100 Volatility Index, did not decline to new
recent lows.  That lack of fear of the lurking wolf shown by the
VIX and VXN levels scares many market participants, including
this writer, but price action should remain the final arbiter.  

With volatility indices low, semi weakness being confirmed by
MU's report, numerous companies warning after hours, and an
intact weekly downtrend in place, sell-the-rallies remains the
preferred tactic, and that's the one this writer suggests.  Many
indices appear to be moving up into resistance that forms at
appropriate right-shoulder levels for H&S's on the daily charts,
with those right shoulders perhaps requiring another day or two
to begin flattening.  Remain skeptical of any upward moves in
equities while crude futures remain above the 50-dma and perhaps
even while above the 100-dma, also a frequent bounce point. 

Bearish entries near the top of descending regression channels,
near breakout levels, are scary.  Those chart characteristics
offer an easy way to determine if the thesis is wrong, however: a
move above the appropriate right-shoulder levels or above the
tops of the channels, as the case might be.  

While the Russell 2000's daily chart does not sport a H&S
formation at the top of the climb on the daily chart, 
it may still be important to study this week.  Watch the Russell
2000 and TRAN for first signs of breakouts or rollovers in the
making.  The Russell 2000 moved the closest to a breakout and the
TRAN tested new recent highs, so a Russell 2000 upside breakout,
should make bearish traders cautious, no matter what volatility
indices suggest.  They're not good market-timing tools. 

Any option position taken tomorrow may accrue special risk due to
the presidential debates to be held Thursday night, including the
risk of no movement while options prices leak lower.  Whether
indices are heading up for new breakouts or preparing for a
rollover, tomorrow could be a difficult-to-trade set-up day for a
later directional play.  Know the risk you accept when entering
ahead of the first debate, and be willing to be wrong and jump
out again if proven wrong.   

Thursday's economic releases begin with the usual 8:30 release of
jobless claims, with August's personal income and personal
spending also to be reported during that time period.  Trade
carefully in front of the 10:00 release of Chicago's PMI, last
reported at 57.3, and the August Help-Wanted Index.


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

Ameritrade - AMTD - close: 12.02 change: +0.73

WHAT TO WATCH: Was today's 6.4 percent rally and breakout over 
$12.00 and its exponential 200-dma a real buying spree or just 
window dressing before the quarter ends?  We like the trend of 
lower highs.  More aggressive traders may want to keep an eye on 
this one and target a move toward the recent high or its simple 
200-dma near $13.




---

JupiterMedia - JUPM - close: 17.44 change: +1.54

WHAT TO WATCH: Wow!  JUPM shot up 9.68 percent on more than three 
times its average daily volume.  The move pushed JUPM over 
resistance at $17.00 to new all-time highs.  Normally we don't 
like to chase a big move like that but this looks tempting.  Then 
again it could be window dressing before the end of the quarter 
on Thursday.  




---

Silicon Labs - SLAB - close: 33.31 change: -1.16

WHAT TO WATCH: The SOX semiconductor index added 1.85 percent and 
helped push the NASDAQ back towards the 1900 level.  In contrast 
SLAB fell 3.3 percent on heavy volume.  Its technical oscillators 
are turning bearish and its MACD is very close to a new sell 
signal.  More aggressive traders may want to consider this stock 
for a quick drop toward round-number support at $30.00.  




---

Qualcomm - QCOM - close: 38.95 change: +0.85

WHAT TO WATCH: We strongly considered adding QCOM to the play 
list tonight as a new long.  Traders have been buying dips to 
$37.75-37.50 and now the stock is rebounding from its simple 40-
dma. We also like how its short-term oscillators like the RSI and 
stochastics have turned more bullish.  This could be a bullish 
entry point but it feels a bit early to us.  Watch for a move 
over the $40.00 mark.  It's very possible that today's gains 
could be window dressing before the end of the month.




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

MET $38.17 +0.33 - This insurance stock looks pretty tempting as 
a bullish candidate for the more patient investor.  Traders are 
buying the dip to previous resistance.

PFG $36.54 +0.61 - Here's another insurance stock that looks like 
a decent candidate with a new six-month high. 

HYSL $33.54 +1.61 - We are keeping a watch on HYSL for a failed 
rally under $34.00 as a potential entry point for bearish plays.


==========================================================
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               Wednesday 09-29-2004
                                                   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, SPN, ETM, PSSI, AMLN, FRX

New Plays:              See note

Stock Splits
  Announcements:        PFSB

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 -
  Danger!  IMN is bouncing from its simple 40-dma.  Look for
  the exponential 200-dma to act as resistance.
 
 
SPN - non-tech long -
  SPN has added another 2.25 percent.  We are going to 
  move our stop to break even at $11.74.
 
 
ETM - non-tech short -
  ETM continues to melt.  Lower stop from $33.75 to $33.25.
 
PSSI - non-tech short - 
  Heads up!  PSSI is seeing a bounce and the stock is back
  above round-number support/resistance at $10.00.  
  Bears need to see 10.50 hold as resistance.
 
AMLN - non-tech short -
  Be careful here.  AMLN is back above the $20 mark.  That's
  a major warning sign for us.
 
 
FRX - non-tech short -
  Heads up!  FRX bounced sharply in the last 30 minutes of 
  trading and looks ready to test resistance at $45.00 again. 
  We are not suggesting new plays and readers should double
  check their stops.  


==================================================================
Stop Loss Adjustments
==================================================================

Editor's Note:
-------------
 
We evaluated plenty of candidates to add to PremierInvestor's
play list this evening but didn't find anything we felt confident
enough to add.  Please review tonight's watch list for potential
play candidates


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

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

PFSB declares 2-for-1 stock split

This morning before the market's opening bell PennFed Financial 
Services Inc. (NASDAQ:PSFB) announced a 2-for-1 stock split of its 
common shares.  

The split will take the form of a 100% stock dividend payable on 
October 29th, 2004 to shareholders on record as of October 15th. 

About the company:
PennFed Financial Services, Inc. is the holding company for Penn 
Federal Savings Bank, which maintains 24 New Jersey branch 
offices. (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

GSK     GlaxoSmithKline            43.84     +0.52
HD      Home Depot                 39.38     +0.55
CMCSA   Comcast Corp               28.19     +0.51
MFC     Manulife Financial         43.45     +0.54
KMB     Kimberly Clark             65.05     +0.71
DOW     Dow Chemical Co            44.79     +1.00

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

VRSN    Verisign Inc               19.82     +1.11
NXTP    Nextel Partners            16.56     +1.03
JUPM    JupiterMedia               17.44     +1.54
IDNX    Identix Inc                 7.02     +1.57
HEPH    Hollis-Eden Pharma         11.22     +1.11

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
YHOO    Yahoo! Inc                 34.00     +1.20
UPS     United Parcel Service      75.56     +1.03
CAT     Caterpillar Inc            80.50     +3.60
GDT     Guidant Corp               66.67     +3.02
STJ     St. Jude Medical           75.50     +2.80
IR      Ingersoll-Rand Ltd         67.08     +1.95
IGT     Intl Game Technology       35.40     +2.01

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

BA      Boeing Co                  51.01     -1.31
FLIR    FLIR Systems               59.35     -2.99
SLAB    Silicon Labs               33.31     -1.16
PDX     Pediatrix Medical          58.01     -11.27
TSCO    Tractor Supply Co          31.70     -2.82
NFI     Novastar Financial         42.92     -1.01

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

NKE     Nike Inc                   78.53     -1.17
DVN     Devon Energy               70.70     -1.46
GENZ    Genzyme Corp               55.01     -1.24
BJS     BJ Services                51.67     -1.23
MDC     M.D.C. Holdings            71.11     -2.39
NAT     Nordic Am Tanker Shipping  33.66     -1.47


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

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