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Daily Newsletter, Sunday, 10/03/2004

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PremierInvestor.net Newsletter          Weekend Edition 10-03-2004
                                                    section 1 of 3
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: Bulls Stampede        
Market Sentiment: Investor Moods    
Watch List: Plenty of Technology to Watch         

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 10-01         WE 9-24         WE 9-17         WE 9-10 
DOW    10192.65 +145.41 10047.2 -237.22   10284 - 28.61 + 52.87 
Nasdaq  1942.20 + 62.72 1879.48 - 30.61 1910.09 + 15.78 + 49.83 
S&P-100  543.11 +  8.74  534.37 - 11.43  545.80 +  2.45 +  5.19 
S&P-500 1131.50 + 21.39 1110.11 - 18.47 1128.58 +  4.66 + 10.29 
W5000  11058.70 +220.40 10838.3 -155.02   10993 + 57.00 +115.44 
SOX      401.91 + 19.36  382.55 -  5.95  388.50 +  4.89 + 25.77 
RUT      585.03 + 19.06  565.97 -  7.20  573.17 +  3.26 + 13.67 
TRAN    3298.80 + 96.69 3202.11 - 55.28 3257.39 + 24.00 + 82.53 
VXO       12.55           14.14           13.55           13.49
VXN       18.91           21.10           20.13           19.56
=================================================================

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

Bulls Stampede
by Jim Brown

That will probably be the Saturday morning headline on the
stock pages across the country. The truth may be entirely
different but the results are the same. Funds poured cash
into the market despite fund flows turning negative for 
the last week of the quarter. Too soon for end of quarter
retirement deposits so where did the money come from? 

Dow Chart

 
Nasdaq Chart

 
SPX Chart

 

Drowsy bears anticipating a long nap beginning a couple
weeks from now were shaken violently awake by stampeding
bulls on Friday. The Dow gapped open +108 points and the
shock waves were felt across all indexes. The post debate
meltdown in the futures was met with a strong buy program
at the open of the cash market. Volume was again over 4B
shares across all markets but the internals were seriously
positive at 7:1 advancing volume to declining volume. The
Nasdaq ratio was slightly lower at 5:1 but nobody was
complaining. 

There was nothing in the economics to provide a reason 
for the blowout but nothing to hold it back either. The
University of Michigan Consumer Sentiment came in flat
at 94.2 on the final reading and no surprise there. This
was a drop from the 95.9 reading in August but inline
with the initial reading for September. 

Construction Spending increased +0.8% in August and the
July number was revised up to +1.0% from +0.4%. Low rates
are helping with construction funding but slow job growth
is keeping employers from the need to expand space. The
total value of current construction rose to $1.015 trillion
dollars. Considering the various constraints in various
sectors this is surprisingly strong. 

The ISM Index fell for the second consecutive month to 
58.5 from 62.0 in July. While this is still positive it
represents a continuation of the decline which began 
with the January high at 63.6. While it has not been
straight down the trend has been steady. New Orders fell
from 61.2 to 58.1 but employment rose to 58.1 from 55.7.
Overall the index produced a picture of a continued
expansion and one that should continue at least through
year end. While the report was not bullish it did not
give the bulls any additional cause for concern. 

Global semiconductor sales rose slightly at +1.1% for
August and the collective sigh of relief was heard around
the world. Analysts had feared sales had fallen and the
gain, although slight, was well received. Processor sales
increased +3.5% due to the back to school build. Intel
jumped +4% on the news to $20.85. Chip sales grew in all
regions where it had been focused to the Asia Pacific
region in prior quarters. We have heard from many chip
companies that orders to Asia had fallen off sharply
in recent months but it appears rising global demand
offset that drop. The SOX rocketed +18 to 402 for a 
+4.6% gain and came very close to the 405 highs from 
September. The strong semi rebound helped push the 
Nasdaq and the Russell to new relative highs. 

SOX Chart

 

The jump in techs ignored the CIO magazine survey 
released Friday that said tech spending was slowing and
would probably not exceed +7.4% over the next 12 months.
The Tech Future Growth Index, which projects growth over
the next 12 months, slipped to a six-month low of 3.0 
after reaching its high for the year of 4.0 in August.
Those officers planning on increasing spending dropped
to only 44% from 47% in August.

Automakers rose and helped provide lift for the markets
in general after GM sales rose by +25% over last years
levels. Daimler Chrysler sales rose +13% and Ford was
the laggard losing ground at -4.2%. GM rolled out the
0% interest rate for 60 months or your choice of a $6000
cash discount to unload its remaining 2004 inventory.
Evidently the program was a strong success. Considering
the low expectations for the automakers this was a very
strong report. Consumer sentiment may be falling but if
you sell things cheap enough there will always be buyers
waiting. Toyota announced they were increasing production
of their Prius hybrid and would double deliveries to 
the U.S. market. This amounts to about 100,000 new
hybrids and puts Toyota well ahead of the competition. 

Kerry won the debate and the market exploded. Surprise,
surprise. Were they related? Probably not. Remember
on Thursday night I told you that $16 billion in bonds
were sold at Thursday's open in 150,000 contracts. The
profit taking streak in the bond market has now stretched
to three days and the volume is heavy. It appears the
four month bond rally is over and funds are moving to
equities in anticipation of a post election rally. Just
looking at fund flows would not support the kind of
jump we saw today. According to TrimTabs.com stock funds
saw outflows for the week ending on Thursday compared
to multi billion inflows for the last several seeks. 
Funds in general lost money for investors in Q3 with 
the average diversified fund losing -2.8% for the 
quarter according to Investors Business Daily. 

So what happened on Friday? It appears that bond money
flipped to equities in an asset allocation play to 
capitalize on a post election rally. I also believe
we saw funds who sat on cash until the quarter ended
to not risk the normal September market decline also 
take the opportunity of the new quarter to make that 
same equity investment. It was clearly a fund day with
the majority of broad market buying over by 10:30. Those
issues most beaten down shared the spotlight with those
winners of late. There was broad divergence of those 
losers and winners moving higher while the "average"
performers failed to find a significant bid. You can
see the drastic differences with SYMC +2.22 and new
high, CME +4.43 and new high compared to INTC +4%, 
SLAB +8% and UTEK +12% all chip stocks rebounding 
off their lows. 
  
While the SOX roared for a +4.6% +18 point gain it 
still remains under downtrend resistance. The big 
winner for the day was the Russell which found buyers
for the fourth consecutive day and tacked on +12 points
to finish at a three month high and a clean break above
downtrend resistance. The race to the 585 close kept
the Nasdaq and Dow from crumbling under their own 
weight as the day wound down. It also moved the Russell
to within 15 points of a breakout over very strong
resistance at 600 and only -20 points away from the
all time high close of 606. On the surface it would
appear bullishness is breaking out all over. 

Russell Chart

 

That bullishness has pushed the VIX/VXO to new eight
year lows. I hate to keep preaching to the choir but
as a warning signal the klaxon has gone from muted
beep to a solid siren. The challenge with the VIX/VXO
is that there is no specific number that triggers a
sell off. Highs and lows are more critical than a 
single number. Whenever these indicators are setting
new highs/lows we should pay rapt attention. Needless
to say eight year lows are screaming to be heard. 
Checkout Keene's VIX article in the Traders Corner
this weekend. 

For next week we could see an acceleration of warnings
from the software sector. The ratio of warnings to 
positive guidance in the sector is currently 2:1 and
that number could rise sharply. Software makers 
typically cram as many last minute sales into the
quarter as possible and offer growing incentives as
the quarter ends. They really do not know if they made
their numbers until the smoke clears. This could 
pressure the sector and techs in general. This same
practice is used in other industries and we could
see a general spike in warnings next week. 

However, the pace of warnings for the current week 
did not pickup as analysts expected. They continued
but at a level pace with no increase in frenzy. This
could be a positive sign for the quarter after many
have predicted a potential drop to single digits for
overall earnings growth. We have also seen a lack of
warnings by major companies. Since Alcoa warned the
big caps have been mostly silent. IBM, MMM and the
other Dow components have been quiet and have now
passed the normal time for confessing. It is just
possible the asset allocation we saw on Friday was
due in part to the lack of big cap warnings. The 
little guys have been beaten badly but maybe the
multinationals have not been hurt as much as the
analysts previously thought. 

Even if that is true the trend may be changing. Oil
closed over $50 at $50.12 for the first time ever on
Friday. More and more pundits are talking $55-$60
and this will eventually squeeze profits for almost
everyone. GDP for most nations will fall as prices 
curtail expansion. Japan has been the hardest hit 
as it must import all of its oil. The Japan markets
have been in a nose dive on energy fears. It is 
entirely possible we will see an entire wave of 
cautious guidance over the next several weeks of
earnings as companies lose traction in the widening
oil slick. 

There is also a recent trend by invertors to ignore
warnings. Companies warning have been slapped on the
wrist instead of taken to the woodshed for a beating.
With disasters like MRK, CL and TZOO lurking around 
every corner a small drop in earnings from tech 
favorites is easily overlooked. 

Before we get overly bullish about the prospects we
need to remember what month we are in. October has
seen four of five major bubbles burst. The top three
single day Dow drops, -22%, -12% and -11% were all in 
October. There is some good news to tame the negative
outlook. Eight of the last nine election years October
broke out of the prior trading range to the upside. 
This is the carrot that lures timid investors to take
risks in advance of a normally highly volatile period. 

A major challenge confronting us is the known trend.
It is almost universally accepted that the market will
rally into and after the election with that rally 
ending in January. The abnormally low VIX shows that
despite a terrible quarter behind us there is little
or no fear heading into October. Everybody is counting
on the trend and the universal acceptance that it will
happen. Now we all know what happens when the entire
market accepts the existence of a trend and starts
counting on it. The market exists to confuse the
maximum amount of traders at any one time. This could
truly be one of those situations where all investors
could end up on the same side of the boat at the same
time with disastrous results. I am not predicting this
only suggesting we don't run head first into the trap
with our eyes closed to other possibilities. 

For next week there are no major economic reports
until Thursday with the Jobs report closing the
week on Friday. This gives stocks free reign to run
on Monday if Friday was not a one day fund wonder.
Keep your eye on oil over $50 and watch for the number
of warnings to increase and more importantly watch how
the market reacts to those warnings. We should see some
more short covering at Monday's open if nothing eventful
occurs over the weekend. Once any opening bounce fades
we will see if the rally has wings. Yes, wings not legs.
A move higher from this level would break the SPX down
trend and trigger even more short covering. If the
Russell clears 590 we could see investors racing to 
chase prices and a move over 600 could see an explosion
of activity. There is a lot of should and could in this
paragraph but there are also a lot of surprised traders
staring at charts this weekend. I suggest we do the same.

Enter Very Passively, Exit Very Aggressively!

Jim Brown

================================================
Market Sentiment
================================================

Investor Moods
- J. Brown

What is investor sentiment?  We hear about sentiment indicators.  
These are supposed to measure investors bullishness or 
bearishness.  Analysts then tend to use these as contrarian 
indicators.  If everyone's bullish then it's probably time to 
sell.  If everyone's bearish then it may be time to buy.  Wall 
Street has a number of colorful maxims explaining these concepts.  
Analysts like to evaluate investor sentiment because when it hits 
extremes it usually signals a reversal is just around the corner.  
As Jim put it this weekend - when everyone runs to one side of 
the boat odds are good the boat can tip over.  

The problem with sentiment indicators is that interpreting them 
is more art than science.  They offer clues not black and white 
buy and sell signals.  A clear example these days is the 
volatility indices the VIX/VXO.  For years if the VIX traded near 
or under the 20 level it was a clear signal that the market was 
near a top because investors were too confidence or too bullish.  
There was no fear in the markets, which is why the VIX is 
referred to as the "fear" index.  Now the VIX and VXO are both 
under 13 and hitting multi-year lows.  In the past few months 
when the VIX/VXO traded near 13-14 it was a sign that the market 
was near a short-term top.  Yet what did we learn over the past 
couple of years?  We learned that these sentiment indicators can 
always get more oversold (or overbought).  They still work but 
interpreting them becomes more challenging.  

Right now the VIX/VXO is screaming at us that the stock market is 
near a top.  Yet that top may not come for days or weeks and the 
VIX/VXO may end up hitting 12, 11 or 10, etc... before stocks 
reverse.  What's my point to this discussion?  This past week 
we've seen some end of quarter window dressing and Friday's start 
to the fourth quarter was extremely bullish.  There was a huge 
surge in new one-year highs and stocks were breaking out left and 
right.  I still believe the trend is your friend and as traders 
we should trade what we see but we don't have to do so on blind 
faith.  Short-term stocks may have more upside but this is 
dangerous territory.  

If you're a regular reader of this column you know I'm already 
bullish for stocks through the second half of October through the 
end of the year.  As Jim mentions in the wrap this weekend it's 
the historical post-election bounce.  Jim suspects that it is 
confidence in the coming bounce that is driving Friday's rally 
and funds are jumping in early ahead of the post-election bounce.  
It's a simple trade for money managers with President Bush still 
ahead in the polls despite his lackluster performance in Thursday 
night's debate.  However, I agree with Jim that usually when 
everyone's counting on the same pattern to show up it tends to be 
a no-show or it doesn't perform as well as in the past.  Right 
now everyone's counting on the post-election bounce so there's 
one big caution flag.  Second, the lack of any significant pull 
back from the August-September rally still leaves a number of 
stocks overbought and extended.  This is a tough spot to consider 
new long plays. I for one feel like a lot of investors are 
chasing stocks here because they don't want to be left behind.  
There's caution flag number two.

Crude oil continues to be a major issue and now that it's closing 
at record highs over $50 a barrel it's a lot easier for people to 
see oil at $55 or even $60.  You already know that oil at these 
levels is a huge drain on the global economy and impacts 
businesses and consumers alike.  We've already seen the economic 
growth in the U.S. slow down month after month.  If oil doesn't 
recede our growth is going to be in jeopardy and corporate 
earnings are going to suffer.  Wall Street isn't going to care so 
much about Q3's earnings as much as they care about guidance for 
the fourth quarter.  Keep waving caution flag number four.

I don't want you to think I'm a big bear.  I would much prefer to 
buy stocks or call options.  I merely find it more challenging 
when it feels like the market is near a top.  Yet I'm more than 
willing to consider that we're experiencing a potential trend 
change and the major indices could breakout from their multi-
month trading range and hit new relative highs.  

Looking ahead we have a very busy week.  Q3 earnings season 
begins with Alcoa (AA) reporting earnings on Thursday and General 
Electric (GE) reporting on Friday.  This week also has several 
appearances from multiple Federal Reserve governors including 
Greenspan himself.  In addition to the ISM services index, 
September's retail comparable sales numbers and other economic 
data the big event will be Friday's non-farm payrolls report.  
The latest jobs numbers are guaranteed to be more fodder for the 
Presidential campaigns. 

For more details on this week's events see the Market Watch page.  
For more on the volatility indices see Keene's article on the VIX 
this weekend.

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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9230
Current     : 10192

Moving Averages:
(Simple)

 10-dma: 10141
 50-dma: 10113 
200-dma: 10298



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  990
Current     : 1131

Moving Averages:
(Simple)

 10-dma: 1115
 50-dma: 1102
200-dma: 1118



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1452

Moving Averages:
(Simple)

 10-dma: 1412
 50-dma: 1381
200-dma: 1440



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

CBOE Market Volatility Index (VIX) = 12.75 -0.59
CBOE Mkt Volatility old VIX  (VXO) = 12.55 -0.89
Nasdaq Volatility Index (VXN)      = 18.91 -1.57


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.97        912,411       886,252
Equity Only    0.77        705,362       546,099
OEX            1.14         41,631        47,437
QQQ            2.97         59,482       176,876


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

Bullish Percent Data

           Current   Change   Status
NYSE          65.2    + 1.5   Bear Correction
NASDAQ-100    44.0    + 1     Bull Alert      
Dow Indust.   56.6    + 3.3   Bear Correction
S&P 500       62.6    + 1.4   Bear Correction
S&P 100       62.0    + 2     Bear Correction


Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


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

 5-dma: 0.94
10-dma: 1.07
21-dma: 1.01
55-dma: 1.15


Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning
points.


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers    2174      2139
Decliners     617       875

New Highs     274       123
New Lows       14        21

Up Volume   1642M     1516M
Down Vol.    268M      282M

Total Vol.  1921M     1807M
M = millions


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

Commitments Of Traders Report: 09/28/04

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being 
financial institutions. Commercials are historically on the 
correct side of future trend changes while small specs tend 
to be wrong.  

S&P 500

The most recent data doesn't show a lot of movement.  Commercial
traders upped their short positions a bit so they remain net
bearish.  Small traders didn't do much maneuvering and remain
net bullish.

Commercials   Long      Short      Net     % Of OI
09/07/04      415,952   426,342   (10,390)   (1.2%)
09/14/04      442,049   469,982   (27,933)   (3.0%)
09/21/04      404,746   425,560   (20,814)   (2.5%)
09/28/04      404,773   434,441   (29,668)   (3.5%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
09/07/04      157,732   130,817    26,915     9.3%
09/14/04      167,310   126,513    40,797    13.9%
09/21/04      134,943   108,036    26,907    11.1%
09/28/04      135,317   107,173    28,144    11.6%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

The e-minis always see a lot of action and this time we see
the commercial traders upping both their longs and shorts in
almost equal percentage moves so "smart" money remains bearish.
Small traders also upped their longs and shorts and remain
strongly net bullish.

Commercials   Long      Short      Net     % Of OI 
09/07/04      371,111   600,593   (229,482)  (23.6%)
09/14/04      377,643   586,139   (208,496)  (21.6%)
09/21/04      213,014   397,844   (184,830)  (30.2%)
09/28/04      226,020   420,714   (194,694)  (30.1%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
09/07/04      286,194     80,075   206,119    56.2%
09/14/04      289,155     81,314   207,841    56.1%
09/21/04      256,315     60,275   196,040    61.9%
09/28/04      262,501     68,255   194,246    58.7%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

The NDX futures aren't seeing much action from the commercials.
They did up their short positions a bit after the previous 
periods significant drop.  Yet professional traders remain
net bullish on the NDX.  In contrast the small trader remains
heavily net bearish but not to the extreme they were a week
ago.  

Commercials   Long      Short      Net     % of OI 
09/07/04       51,814     44,179     7,635    7.9%
09/14/04       64,282     59,808     4,474    3.6%
09/21/04       54,530     30,827    23,703   27.7%
09/28/04       55,045     32,319    22,726   26.0%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  25,160   - 06/01/04

Small Traders  Long     Short      Net     % of OI
09/07/04       16,817    12,561     4,256    14.5%
09/14/04       36,372    28,584     7,788    12.0%
09/21/04        7,417    25,821   (18,404)  (55.3%)
09/28/04       10,078    22,917   (12,839)  (38.9%)

Most bearish reading of the year: (20,270) - 06/01/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Interesting... commercial traders didn't make many adjustments
but small traders did.  We're seeing small traders hedge their
bets as their longs and shorts grow closer together.  This 
has significantly reduced their bearish outlook on the Dow.

Commercials   Long      Short      Net     % of OI
09/07/04       29,128    24,011    5,117       9.6%
09/14/04       41,951    34,486    7,465       9.7%
09/21/04       30,816    27,200    3,616       6.2%
09/28/04       29,714    26,877    2,837       5.0%
 
Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
09/07/04        5,041     8,656   (3,615)   (26.4%)
09/14/04        8,121    14,425   (6,304)   (27.9%)
09/21/04        4,467     6,748   (2,281)   (20.3%)
09/28/04        5,143     5,988   (  845)   ( 7.6%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03
 

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

Fairchild Semiconductor - FCS - close: 15.28 change: +1.11

WHAT TO WATCH: The semiconductor sector has surged higher on 
Friday as fund managers pour money into beaten down semis.  FCS 
was one such equity and the stock added 7.8 percent on Friday.  
The breakout to new two-month highs looks pretty tempting as is 
the close over its simple 100-dma.  The P&F chart has reversed 
from a sell signal to a buy signal, which is naturally pretty 
bullish.  Look for a dip back towards $14.50 and buy a bounce.  
Yet watch out for earnings.  FCS is expected to report in about 
two weeks.




---

Network Appliance - NTAP - close: 24.27 change: +1.22

WHAT TO WATCH: NTAP broke through the top of its seven-month 
descending channel back in early September.  Shares then spent 
the last three weeks churning sideways between $22.00 and $23.50.  
Friday's rally in the NASDAQ helped push NTAP through the top of 
its trading range to another new one-year high over the $24.00.  
We like the breakout and would watch for a dip back towards 
$23.75-23.50 and consider buying a bounce.




---

Omnicare Inc - OCR - close: 29.23 change: +0.87

WHAT TO WATCH: There was a lot of bargain shopping on Friday and 
investors decided to throw some money at OCR.  The stock added 
another 3 percent on above average volume to breakout over its 
simple 50-dma.  We would watch this one for a breakout over 
$30.00 and its September high at $30.21.  Then we can target a 
"fill the gap" type move toward $34-35.  




---

Bisys Group Inc - BSG - close: 14.89 change: +0.28

WHAT TO WATCH: Here's another "bargain" play for tech traders.  
If investors are going to look for beaten down tech stocks to 
make a rebound in the fourth quarter then BSG might be a trade.  
The stock has been consolidating under resistance at $15.00 and 
its simple 200-dma for weeks.  Watch for a breakout over $15.00.  
Such a move would also produce a new P&F buy signal.  





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

BOBJ $24.18 +0.88 - This software stock has broken out above its 
exponential 200-dma and has moved into the gap from April.  

HTCH $28.07 +1.34 - This hard drive maker has broken out above 
its simple 200-dma to new five-month highs.

RUS $20.91 +0.76 - Aggressive players only!  RUS trades on 
extremely low volume but it looks tempting because shares have 
broken into the massive gap from June and just broke above its 
simple 100-dma.

BVN $23.45 -0.30 - Watch this gold/silver stock for a breakout 
over $24.00.
 

=================================================================
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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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Do not duplicate or redistribute in any form.







PremierInvestor.net Newsletter          Weekend Edition 10-03-2004
                                                    section 2 of 3
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:

Tech Stocks
  New Bullish Plays:     MACR
  Closed Bearish Plays:  ARB, IMN, PHTN

Active Trader (Non-tech)
  New Bullish Plays:     AMH
  Bullish Play Updates:  SPN, UCL
  Bearish Play Updates:  ETM, LSCP, PSSI, 
  Closed Bearish Plays:  AMLN, FRX

High Risk/Reward
  New Bullish Plays:     IO

Stock Splits
  Announcements:         None


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

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------

Macromedia - MACR - close: 20.85 change: +0.77 stop: 18.99

Company Description:
Experience matters. Macromedia is motivated by the belief that 
great experiences build great businesses. Our software empowers 
millions of business users, developers, and designers to create and 
deliver effective, compelling, and memorable experiences -- on the 
Internet, on fixed media, on wireless, and on digital devices. 
(source: company press release)

Why We Like It:
A few weeks ago we tried playing MACR as a bullish play with a "buy 
the bounce" from long-term support strategy.  Unfortunately, MACR 
never managed to breakout over round-number, psychological 
resistance at the $20.00 mark.  However, the stock never broke down 
under support at $18.00 either.  The recent surge behind the NASDAQ 
has inspired MACR to breakout over the $20 mark and its simple and 
exponential 200-dma's.  The P&F chart remains bullish so we're 
going to use the breakout as an entry point.  Our target is $23.50-
24.00.  If MACR dips next week look for a bounce from $20.40-20.50 
and use it as an entry point.

Annotated Chart:

 
Picked on October 03 at $20.85 
Gain since picked:      + 0.00
Earnings Date         10/27/04 (unconfirmed)
Average Daily Volume:      867 thousand





============
CLOSED PLAYS
============

  --------------------
  Closed Bearish Plays
  --------------------

Arbitron Inc - ARB - close: 37.30 change: +0.69 stop: 38.51

Ouch!  The last three days have been painful for technology bears.  
ARB has rallied sharply and is now back above its simple 10, 40, 50 
and 100-dma's.  The rebound was fueled by stronger than average 
volume and its technical oscillators are turning bullish.  Our stop 
loss is currently at $38.51, which is above what should be 
resistance at $38.00.  However, we're going to close the play now 
to avoid seeing this play turn into a loser.

Picked on September 17 at $37.95
Gain since picked:        - 0.65
Earnings Date           07/22/04 (confirmed)
Average Daily Volume:        288 thousand



---


Imation - IMN - close: 37.09 change: +1.50 stop: 37.01

Ouch!  IMN also surprised us as it rallied more than 4 percent to 
breakout over its exponential 200-dma and its short-term trend of 
lower highs.  One would have thought that there would be volume 
powering the move but volume on Friday was actually below average.  
Currently IMN is challenging technical resistance at its simple 100 
and 200-dma's. However, for us, it doesn't matter any more we've 
been stopped out at $37.01. 

Picked on September 15 at $35.15 
Gain since picked:        + 1.94
Earnings Date           07/21/04 (confirmed)
Average Daily Volume:        352 thousand



---

Photon Dynamics - PHTN - close: 21.55 change: +1.25 stop: 22.05

Danger! Danger Will Robinson!  That's right... the SOX exploded on 
Friday for a 4.6 percent gain as funds piled in to buy the beaten 
down semiconductor stocks that Wall Street has been downgrading the 
past several weeks.  PHTN surged 6 percent to break back above the 
$21.00 mark.  This is bad news and we could easily see ourselves 
being stopped out on Monday.  We're going to jump the gun and just 
close the play now to minimize our losses. 

Picked on September 26 at $20.37
Gain since picked:        + 1.18
Earnings Date           07/21/04 (confirmed)
Average Daily Volume:        518 thousand




==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------

AmerUs Group - AMH - close: 42.55 change: +1.55 stop: 39.99

Company Description:
AmerUs Group Co. is an Iowa corporation located in Des Moines, 
Iowa, engaged through its subsidiaries in the business of marketing 
and distributing individual life insurance and annuity products in 
50 states, the District of Columbia and the U.S. Virgin Islands. 
Its major operating subsidiaries include AmerUs Life Insurance 
Company, American Investors Life Insurance Company, Inc., 
Indianapolis Life Insurance Company and Bankers Life Insurance 
Company of New York. As of June 30, 2004, AmerUs Group's total 
assets were $22.1 billion and shareholders' equity totaled $1.4 
billion, including accumulated other comprehensive income. (source: 
company press release)

Why We Like It:
The IUX insurance index is turning positive again and just broke 
out over its simple 200-dma.  The insurance sector looks tempting 
for bullish plays because it doesn't look as overbought and 
extended as the rest of the market.  We like AMH because the stock 
just broke out above resistance at $42.00 to hit new all-time 
highs. The rally on Friday produced a new triple-top breakout buy 
signal on its P&F chart that points to a $65 target.  We're willing 
to speculate that AMH can rally to the $46.00-47.50 region.  We'll 
start the play with a stop loss at $39.99.

Annotated Chart:

 

Picked on October 01 at $42.55 
Gain since picked:      + 0.00
Earnings Date         08/03/04 (confirmed)
Average Daily Volume:      222 thousand




============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

Superior Energy - SPN - close: 13.12 chg: +0.20 stop: 12.49*new*

Heads up!  SPN is up more than 11 percent from our picked price and 
shares are up about eight days in a row.  We're very encouraged by 
its relative strength and the breakout over $13.00 but SPN is 
looking pretty extended here.  The stock is overdue for some profit 
taking.  We suggest that our readers do some profit taking too.  
Yes, our target is actually $13.50-14.00 but there's no reason to 
be greedy.  Consider taking some money off the table.  It doesn't 
have to be all of it just some of it.  We're going to raise our 
stop loss to $12.49.  If SPN trades at $13.50 we'll close the play.

Annotated Chart:

 

Picked on September 01 at $11.74 
Gain since picked:        + 1.38
Earnings Date           08/03/04 (confirmed)
Average Daily Volume:        355 thousand



---

Unocal Corp - UCL - close: 43.34 change: +0.34 stop: 42.49*new*

The rise in crude oil and the strength in the energy sector has 
lead UCL to new multi-year highs.  The stock is very close to our 
profit target in the $44-45 range.  Now that UCL is up 7 out of the 
last 8 weeks the stock is looking pretty extended.  We're not going 
to close the play yet but traders can consider taking profits now.  
We're going to turn conservative and seriously raise our stop loss 
to $42.49.  If UCL breaks $44.00 we'll probably close the play that 
session.

Annotated Chart:

 

Picked on September 19 at $40.27 
Gain since picked:        + 3.07
Earnings Date           08/02/04 (confirmed)
Average Daily Volume:        1.3 million 




  --------------------
  Bearish Play Updates
  --------------------

Entercom Comm. - ETM - close: 32.80 change: +0.14 stop: 33.25     

Wow!  After two days of gains and a significantly tighter stop loss 
we're still not stopped out of ETM.  The stock has been sinking for 
weeks and is way overdue for an oversold bounce.  We're just 
waiting for ETM to trade at $32.00 and we'll exit. However, our 
stop loss is at $33.25 and we don't mind exiting there either. This 
close to our target we are not suggesting new bearish positions.  

Annotated Chart:

 

Picked on September 08 at $37.00 
Gain since picked:        - 4.20
Earnings Date           08/03/04 (confirmed)
Average Daily Volume:        463 thousand



---

LaserScope - LSCP - close: 20.50 change: +0.23 stop: 22.01

We are suggesting caution here.  LSCP has rallied the last few 
sessions from its bounce at $19.00.  The move back above $20.00 is 
a concern and now shares are back above their 10 and 20-dma's.  We 
do expect the bounce to continue.  The test will be at resistance 
near $21.75-22.00.  We are not suggesting new bearish positions 
until LSCP trades back under the $20.00 level and suggest caution 
until LSCP trades back under $19.50.

Annotated Chart:

 

Picked on September 22 at $19.85 
Gain since picked:        + 0.65
Earnings Date           07/28/04 (confirmed)
Average Daily Volume:        477 thousand



---

PSS World Medical - PSSI - cls: 10.06 chg: +0.02 stop: 10.75     

PSSI is still trading under resistance at $10.25 and its simple 50-
dma.  That's the good news.  Plus, the stock failed to rally with 
the market on Friday.  That's the really good news.  The bad news 
is that PSSI's technical oscillators are starting to turn bullish.  
Look for a move back under $10.00 maybe 9.90 before considering new 
bearish positions.

Annotated Chart:

_1
 

Picked on September 20 at $10.44
Gain since picked:        - 0.38
Earnings Date           07/28/04 (confirmed)
Average Daily Volume:        734 thousand




============
CLOSED PLAYS
============

  --------------------
  Closed Bearish Plays
  --------------------

Amylin Pharma - AMLN - close: 21.57 change: +1.05 stop: 21.26

We were already cautious given AMLN's bounce back above the $20.00 
mark.  Yet we certainly didn't expect the 5 percent rally on Friday 
on above average volume.  AMLN joined the broad-market rally and 
surged to resistance near its simple 200-dma.  Of course we've been 
stopped out at $21.26.  

Picked on September 22 at $20.30 
Gain since picked:        + 1.27
Earnings Date           11/02/04 (unconfirmed)
Average Daily Volume:        821 thousand



---

Forest Labs - FRX - close: 45.86 change: +0.90 stop: 45.33

Friday's rally was very broad-based and money was pouring into some 
of the third quarter's worst performers.  FRX was not left out and 
rallied two percent to breakout over resistance at the $45.00 mark.  
We were stopped out at $45.33.  The long-term trend still looks 
bleak and we'll keep it on our internal watch list.

Picked on September 22 at $43.49 
Gain since picked:        + 2.37
Earnings Date           10/19/04 (unconfirmed)
Average Daily Volume:        2.6 million 




==================================================================
HIGH RISK/HIGH REWARD (HR) section
==================================================================

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------

Input Output - IO - close: 10.60 change: +0.29 stop: 9.95

Company Description:
I/O is the world's leading, technology-only seismic services 
provider. The company provides cutting-edge seismic acquisition 
equipment, software, and planning and seismic processing services 
to the global oil and gas industry. The company's technologies are 
applied in both land and marine environments, in traditional 2D and 
3D surveys, and in rapidly growing areas like time-lapse (4D) 
reservoir monitoring and full-wave imaging. I/O has offices in the 
United States, Canada, Europe, China, Russia and the Middle East. 
(source: company press release)

Why We Like It:
Here's a question.  How would you like to play the surge in the 
energy sector and the rebound in the semiconductor sector at the 
same time?  IO happens to provide equipment and services for the 
oil and gas industry and with crude oil this high exploration 
becomes a hot topic.  IO's stock has been a relative strength 
winner and avoided most of the SOX's weakness during the third 
quarter.  Currently shares of IO are trading near the bottom of its 
rising channel.  This looks like an entry point to ride it back 
toward the stop of the channel near $12.00-12.50.  We'll use an 
initial stop loss at $9.95.

Annotated Chart:

 

Picked on October 01 at $10.60 
Gain since picked:      + 0.00
Earnings Date         10/28/04 (unconfirmed)
Average Daily Volume:      783 thousand




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

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

None


=================================================================
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) 2001-2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.





PremierInvestor.net Newsletter          Weekend Edition 10-03-2004
                                                    section 3 of 3
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 three:

Market Watch for Week of October 4th, 2004
   - Major Earnings
   - Stock Splits
   - Economic Reports

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)


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

==========================================
Market Watch for the week of August 23rd
==========================================

-----------------
Earnings Calendar
-----------------

Symbol  Co               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

RI   Ruby Tuesday         Mon, Oct 04  After the market     0.44


------------------------- TUESDAY ------------------------------

AYI  Acuity Brands Inc    Tue, Oct 05  ---- n/a ----        0.55
APOL Apollo Group         Tue, Oct 05  After the market     0.48
BCF  Burlington Coat Fc.  Tue, Oct 05  ---- n/a ----        n/a
YUM  Yum! Brands Inc      Tue, Oct 05  After the market     0.60

------------------------ WEDNESDAY -----------------------------

DNA  Genentech Inc        Wed, Oct 06  After the market     0.21
MON  Monsanto Co          Wed, Oct 06  Before the bell      0.03
SCHN Schnitzer Steel      Wed, Oct 06  Before the bell      0.90
WWW  Wolverine World Wide Wed, Oct 06  Before the bell      0.47

------------------------- THUSDAY -----------------------------

AA   Alcoa Inc            Thr, Oct 07  After the market     0.33
AMHC American Healthways  Thr, Oct 07  After the market     0.27
COST Costco Wholesale     Thr, Oct 07  Before the bell      0.58
ISCA Intl Speedway        Thr, Oct 07  Before the bell      0.59
MAR  Marriott Intl        Thr, Oct 07  Before the bell      0.55
RGS  Regis Corp           Thr, Oct 07  Before the bell      0.57

------------------------- FRIDAY -------------------------------

ARA  Aracruz Celulose     Fri, Oct 08  ---- n/a ----        0.59
GE   General Electric     Fri, Oct 08  Before the bell      0.38



----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Company Name              Ratio    Payable     Executable

ANSS    ANSYS Inc                 2:1      Oct   4th   Oct   5th
VLO     Valero Energy             2:1      Oct   7th   Oct   8th
MIK     Michaels Stores           2:1      Oct  12th   Oct  13th
NUE     Nucor Corp                2:1      Oct  15th   Oct  18th
PCBK    Pacific Continental Bank  5:4      Oct  15th   Oct  18th
RAVN    Raven Industries          2:1      Oct  15th   Oct  18th

--------------------------
Economic Reports This Week
--------------------------
We have a very busy week ahead of us.  The Q3 earnings season 
begins with Alcoa and General Electric reporting late in the week.
There is a number of economic reports and a parade of Fed Governors
speaking this week.  The biggest event will be Friday's jobs 
reort but the presidential and vice-presidential debates will
certainly get some air time.

==============================================================
                       -For-           
----------------
Monday, 10/04/04
----------------

Factory orders for August   Estimate: +0.1%  Last: +1.3%
Fed Governor Bies speaks in Philladelphia
Fed Governor Poole speaks in Missouri
Fed Governor Santomero speaks on Monetary Policy

-----------------
Tuesday, 10/05/04
-----------------
ISM Services index for September  Estimate: 59.0   Last: 58.2
Challenger's layoffs for September
Vice President Debate in Cleveland, OH.

-------------------
Wednesday, 10/06/04
-------------------
Fed Governor Poole speaks in Missouri
Fed Governor Hoenig speaks on Monetary Policy
Crude oil, gasoline inventories reported

------------------
Thursday, 10/07/04
------------------
Weekly Initial Jobless Claims   Estimate: 350K   Last: 369K
Fed Chairman Greenspan speaks in St. Louis
Fed Governor Guynn speaks
Fed Governor McTeer speaks
Chain Store Comparable Sales for September
Consumer Credit 
Natural gas inventories

----------------
Friday, 10/08/04
----------------
Non-farm Payrolls (Jobs) for September  Est: 140K  Last: 144K
Unemployment rate for September   Estimate: 5.4%   Last: 5.4%
Fed Governor Bernanke speaks in St. Louis
Fed Governor Ferguson speaks in St. Louis
Hourly Earnings
Average Workweek
Wholesale Inventories
Presidential Debate at 9:00 PM ET


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


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

HBC     HSBC Holdings              80.51     +0.71
FTE     France Telecom             25.91     +0.91
WFC     Wells Fargo & Co           60.19     +0.56
WB      Wachovia Corp              47.82     +0.87
COP     ConocoPhillips             84.07     +1.22
BCS     Barclays Plc (ADR)         39.70     +1.01

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

CTXS    Citrix Systems             19.07     +1.55
FCS     Fairchild Semiconductor    15.28     +1.11
ALO     Alpharma Inc               19.85     +1.56
SIMG    Silicon Image Inc          14.40     +1.76
MTLM    Metal Management           19.41     +1.23
IMOS    Chipmos Technologies        8.02     +1.03

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
SBUX    Starbucks Corp             47.22     +1.76
TRB     Tribune Co                 42.49     +1.34
PBI     Pitney Bowes Inc           45.30     +1.20
PSFT    PeopleSoft                 22.83     +2.98
LLL     L3 Communications          68.41     +1.41
CME     Chicago Mercantile Exchg  165.70     +4.40
CBE     Cooper Industries          61.64     +2.64

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

CYT     Cytec Industries           45.61     -3.34
MATK    Martek Biosciences         47.62     -1.02
PSYS    Psychiatric Solutions      24.13     -1.22

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

RIMM    Research In Motion         73.80     -2.54

=================================================================
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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
contact Contact Support.

*****************************************************************


Copyright (c) 2001-2004  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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