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Daily Newsletter, Wednesday, 10/06/2004

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PremierInvestor.net Newsletter               Wednesday 10-06-2004
                                                   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: Leaning into the Wind
Watch List:  Natural Gas to Games


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      10-06-2004           High     Low     Volume   Adv/Dcl
DJIA    10239.92 + 62.24 10240.14 10157.99 1.77 bln 1913/ 859
NASDAQ   1971.03 + 15.53  1971.04  1947.24 1.92 bln 1877/1116
S&P 100   547.89 +  3.41   547.89   543.38   Totals 3790/1975
S&P 500  1142.05 +  7.57  1142.05  1132.94
SOX       406.20 +  1.62   406.22   398.84
RUS 2000  592.66 +  5.32   592.66   586.55
DJ TRANS 3388.72 + 53.12  3388.72  3334.44
VIX        13.28 -  0.67    14.10    13.24
VXO (VIX-O)13.00 -  0.27    14.18    12.91
VXN        19.77 -  0.25    20.53    19.74
Total Volume 3,697M
Total UpVol  2,652M
Total DnVol    979M
Total Adv  3790
Total Dcl  1975
52wk Highs  487 
52wk Lows    51
TRIN       0.64
PUT/CALL   0.78
===============================================================

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

Leaning into the Wind
Linda Piazza

The market day didn't feel like one beset with heavy winds, but
that was because the indices' strength matched the strength of
those winds.  When the winds abated late in the day, indices
pitched forward. 

With hurricanes hitting the U.S. one after another during this
hurricane season, all have watched evening news programs showing
reporters leaning into wind-driven rain to deliver news about the
hurricanes' expected trajectories.  Wednesday morning, markets
appeared to be leaning into winds caused by record highs on crude
and warnings from AmerisourceBergen (ABC) and multiple tech
stocks.  Fannie Mae's Raines was scheduled to appear before a
U.S. House Panel Meeting to discuss the company's accounting
practices.

The stalwart TRAN, the Dow Jones Transportation Index, and the
weakened-but-attempting-to-recover DJUSHB, the Dow Jones US Home
Construction Index, leaned far into the wind Wednesday morning. 
They tried to buffer markets and tug the lagging techs and
healthcare stocks along with them.  Late in the day, Verizon (VZ)
and Computer Associates (CA) helped by giving positive capital
expenditure guidance (VZ) and raising expectations (CA).  Still,
it was the TRAN's performance that most buffered the effect of
those winds.  When the winds abated, the indices leaped forward.

Annotated Daily Chart of the TRAN:

 

With Herculean effort the TRAN's performance and that of other
indices finally managed to tug the SOX higher in the last hour of
trading, although the SOX remains below its next breakout zone.

Annotated Daily Chart of the SOX:

 

The SOX may not be playing the leadership role in tech gains that
it has in the past, however, and tech traders might look to the
GHA and GSO, two sectors performing more strongly of late, for
leadership either to the upside or downside.  They posted 1.35
and 1.25 percent gains, respectively, in Wednesday's trading. 
With their help and the reluctant help of the SOX, the Nasdaq
pushed above its 200-sma in late-day trading, although it remains
below 1975 potential resistance. 

Annotated Daily Chart of the Nasdaq:

 

Those currently in bullish positions should make plans to protect
profits near 1975 and again near 2000.  Those seeking new bullish
positions should watch for retests and bounces from the 200-sma
and that 19.1 percent retracement level or wait for a breakout
over 2000.  Those seeking new bearish positions should watch for
a rollover beneath this week's low or wait for a potential
rollover beneath 2000.

Despite the TRAN's best efforts, it could not produce much of a
breakout on its sister index, the Dow.  Although the Dow did
break out of a bull flag on the 30-minute chart, it couldn't
break above Monday's high.

Annotated Daily Chart of the Dow:

 

The SPX did break above Monday's high.
 
Annotated Daily Chart of the SPX:

 

The day's economic numbers began as usual with information
released by the Mortgage Bankers' Association at 7:00 EST.  Last
week's figures showed a 7.7 percent rise in refinancing activity,
with refinancing activity up a more modest 2.7 percent for this
reporting week.  New applications for home loans remained flat,
while the purchase index rose 2.2 percent.  The DJUSHB rose from
its 50-dma, closing 1.66 percent higher, but some consider that a
bounce was due after the recent drubbing this index received.
  
While the TRAN didn't wait around for the release of crude
inventories, the American Petroleum Institute was delayed in
releasing its figures, releasing them more than thirty minutes
later than the Department of Energy due to a glitch in the new
system the API has adopted to report those inventories.  The
API's figures differed as usual from the Department of Energy's. 
The API reported that crude stocks rose by 268,000 barrels, far
less than the DOE's report of a rise by 1.1 million barrels. 
Both came in well below the expectation for a rise of 2.75
million barrels.  Some thought that Hurricane Ivan's effect was
still being felt.  The hurricane damaged several oil rigs in the
Gulf of Mexico, and they may not be able to ramp up production to
meet the shortfall some anticipate.  

Crude hit the morning's $50.70 low as the release of the DOE's
figures approached, and then quickly soared to new record highs. 
Some also blamed worries about Nigeria and winter demand for the
higher prices.  Previous to the DOE's inventories announcement,
the Department of Energy had noted that U.S. petroleum demand was
expected to rise 1.9 percent this year.  The department
anticipated home heating oil prices would rise 29 percent this
winter.  The department also noted that an anticipated 1.5
percent increase in demand for natural gas would help drive
residential prices higher by an expected 11 percent, although
natural gas stocks were expected to reach a 14-year-high when
announced Thursday.  Electricity demand was expected to rise by
1.7 percent. 

The Dow Jones Transportation Index, the TRAN, often a fair
barometer of the market's reaction to rising crude costs, had
been driving higher before the release, but took a blow as the
inventories numbers were released.  That blow proved to be only
temporary, however, with the TRAN eventually closing 1.59 percent
higher, at levels not seen since the summer of 1999. 

The API reported distillate inventories falling by 286,000
barrels, with the DOE reporting a drop of 2.1 million barrels. 
API reported gasoline stocks declining 337,000 barrels with the
DOE reporting those inventories climbing by 600,000 barrels.
 
The U.S. House Panel Meeting on Fannie Mae's (FNM) accounting
issues opened today, adding to the ill winds as Armando Falcon
Jr., Director of the Office of Federal Housing Enterprise
Oversight, FNM's government regulator, testified that FNM chose
not to follow accounting rules.  FNM's CEO Raines denied that the
company managed earnings, and the CFO testified that generally
accepted accounting principles were met "at all times."

After the close, retailers began announcing September's same-
store sales reports, with those reports to continue Thursday
morning before the bell.  Hurricane winds impacted those reports,
at least according to MW, Men's Wearhouse.  Others avoided the
easy hurricane excuse.  Analysts in the sector commented that
retailers in regions impacted by the hurricanes showed the same
pattern as those elsewhere.  SBUX same-store sales disappointed. 
Big Lots Inc. (BLI) warned that Q3 losses would be much wider
than previously expected, with September's sales disappointing. 
Some retail analysts began trimming estimates of same-store sales
for the sector, with Thomson First call lowering estimates of
gains to 2.4 percent from its previous estimate of a 2.8 percent
gain.  

Property and casualty insurance company United National Group
(UNGL) was impacted by those hurricane winds, however, saying
that Frances' impact would hurt earnings by 4-5 cents per share. 
Companies warning included WMAR, SPN and LAVA, with SPN saying
that hurricanes caused ten days of downtime.  

Genentech (DNA) reported earnings after the bell and beat eps
estimates. In after-hours trading, DNA traded at $51.15, up from
the closing level of $50.25.  SBC was also to report earnings,
but no report had appeared at the time of this report.

Indices appear to be holding a hurricane party.  Watch futures'
developments overnight to make sure the party continues.  If it
does, gains might continue into tomorrow morning, but watch
carefully tomorrow afternoon for possible profit-taking ahead of
Friday's jobs numbers and second presidential debate.  Those
currently in bullish plays should protect profits as the SPX
approaches 1144-1146; the Dow, its 200-sma; the Nasdaq, 1975 and
then 2000; and the TRAN, the top of its ascending regression
channel.  The TRAN approaches that channel's resistance now.  

Crude continues to charge higher, but travels a greater distance
away from its 50-dma than it usually does.  Markets may already
be discounting an expected pullback or sideways consolidation to
retest the 50-dma's support.  So far, crude's upward trend
remains intact, with each pullback honoring the previous swing
high's support.  If crude continues its upward pattern without
violating the support of its 100-sma or previous swing highs,
those long equities should perhaps retain some skepticism of
gains.  Earnings season is upon the markets now, and some
companies might begin reporting the anticipated future effect of
crude's rise.  It's the outlook statements market participants
should watch. 

Thursday's economic releases begin with the usual 8:30 release of
jobless claims and continue with the 10:30 release of natural gas
inventories and the 3:00 release of August's Consumer Credit.  


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

Williams Co - WMB - close: 12.95 change: +0.25

WHAT TO WATCH: There's a lot of interest in energy stocks these 
days and natural gas stock WMB is surging to new highs.  The 
breakout over $12.50 looks positive and volume is rising on the 
rally, which is bullish.  Traders can watch for a breakout over 
$13.00 or a dip to $12.50.  The P&F chart is very bullish with a 
$22 target.




---

United States Steel - X - close: 41.70 change: +1.21

WHAT TO WATCH: If you missed the entry point two days ago now you 
can buy the rebound from $40.  X has broken out over major 
resistance at $40.00 and consolidated for a session but held new 
support/resistance at $40.  Steel and commodity stocks have been 
very strong recently and now X has produced a bullish catapult 
breakout on its P&F chart with a $49 target.




---

Scientific Games - SGMS - close: 19.88 change: +1.22

WHAT TO WATCH: The rally in SGMS surged to the $20.00 mark in 
mid-September and then shares began to consolidate.  The 
consolidation appears to be over and SGMS is trying to breakout 
over the $20.00 mark. Given the intraday action on Wednesday's 
session we could see a breakout soon.  Consider using a trigger 
over $20.09 and targeting a run to $22.  The P&F chart is bullish 
and points to a $28.50.





==========================================================
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 10-06-2004
                                                   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:  MACR, SPN, UCL, PSSI, LSCP

High Risk/Reward
  Closed Bearish Plays: -- ETM

Stock Splits
  Announcements:       None

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


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

 MACR - tech stock long -
  The breakout continues for MACR.  Shares added another
  5.2 percent on Wednesday with strong volume behind the
  move.  MACR is very close to our $23.50-24.00 target range.
  Short-term traders can prepared to exit for a profit.
  We are raising our stop loss from $18.99 to $20.99.
 
 
SPN - non-tech long -
  We are still suggesting that readers consider taking 
  profits now in SPN even though the stock has not yet
  hit our profit target. 
 
UCL - non-tech long - 
  Heads up!  UCL is very close to our profit target at $44.00.  
  We are ready to exit on an intraday spike higher.
 
 
PSSI - non-tech short -
  Uh-oh!  PSSI has almost completely reversed yesterday's
  losses.  That's bad news for the bears.    We are going
  to lower our stop loss to $10.51.
 
LSCP - non-tech short -
  Heads  up!  LSCP is showing strength again with a bounce
  from $20.00.  We are not suggesting new bearish positions
  and we would suggest traders exit the play if LSCP trades
  over $21.00 or its exponential 200-dma near $21.20.


==================================================================
Active Trader (AT) Non-Tech Stock section
==================================================================

============
Closed Plays
============

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

Entercom Comm. - ETM - close: 33.20 change: +0.29 stop: 33.25     

It finally happened.  Buyers managed enough momentum to push ETM past 
our stop loss at $33.25.  The recent bounce has been fed by relatively 
low volume so we don't put a lot of confidence behind it but we do 
acknowledge that ETM is way over due for a bounce.  Today's trade at 
$33.25 closes this play with a $3.75 drop.

Picked on September 08 at $37.00 
Gain since picked:        - 3.80
Earnings Date           08/03/04 (confirmed)
Average Daily Volume:        463 thousand




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

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

None


==================
  Trading Ideas
==================

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

Value Plays With Bullish Signals
---------------------------------
Ticker  Company Name               Close     Change

XOM     Exxon Mobil Corp           50.03     +0.71
NTT     Nippon Telephone           20.92     +0.58
BAC     Bank of America            45.25     +0.53
IBM     Intl Business Machines     88.04     +0.72
WB      Wachovia Corp              48.24     +0.54
MER     Merrill Lynch              51.61     +0.79

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

SGMS    Scientific Games           19.88     +1.22
GLNG    Golar LNG Ltd              17.60     +1.30
NTGR    Netgear                    13.51     +1.07
TOPT    Top Tankers Inc            18.45     +1.04
ATPG    ATP Oil & Gas              14.09     +1.24
EPEX    Edge Petroleum             17.49     +1.44

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
UNP     Union Pacific              61.54     +1.99
PCZ     Petro-Canada               55.03     +1.68
DHR     Danaher Corp               54.90     +2.90
AHC     Amerada Hess               92.91     +2.48
PH      Parker Hannifin            62.78     +1.79
CSX     CSX Corp                   35.42     +1.28
CELG    Celgene Corp               63.14     +1.18

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

MRK     Merck & Co                 31.67     -1.76
RYAAY   RyanAir Holdings           27.06     -1.01
RESP    Respironics Inc            47.74     -1.43
APPX    American Pharma            25.15     -1.96
ADTN    Adtran Inc                 20.79     -2.70
RMD     Resmed Inc                 44.20     -2.62
JAS     Jo-Ann Stores              26.10     -2.45
TGI     Triumph Group              31.88     -2.29

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

MIK     Michaels Stores            58.20     -1.87
BRL     Barr Labs                  40.47     -1.58
INSP    InfoSpace Inc              46.49     -3.76
UTHR    United Therapeutics        34.01     -0.78
BGFV    Big Five Sporting Goods    22.40     -0.35


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