PremierInvestor.net Newsletter Thursday 10-07-2004 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: Drug Interaction Warning Watch List: Appliance makers to Airlines Market Sentiment: Is this the beginning? ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-07-2004 High Low Volume Adv/Dcl DJIA 10125.40 -114.50 10240.95 10124.52 1.84 bln 869/2325 NASDAQ 1948.52 - 22.50 1970.26 1948.03 1.74 bln 961/2133 S&P 100 542.28 - 5.61 547.89 542.19 Totals 1830/4458 S&P 500 1130.65 - 11.40 1142.05 1130.46 W5000 11047.92 - 41.88 11164.15 11045.44 SOX 403.36 - 2.80 410.53 402.78 RUS 2000 582.60 - 10.06 592.66 582.37 DJ TRANS 3341.87 - 46.90 3389.20 3340.94 VIX 14.50 + 1.22 14.66 13.32 VXO (VIX-O)14.56 + 1.56 14.59 13.37 VXN 20.59 + 0.82 20.75 19.65 Total Volume 3,863M Total UpVol 1,182M Total DnVol 2,643M Total Adv 2145 Total Dcl 5012 52wk Highs 398 52wk Lows 97 TRIN 1.14 NAZTRIN 0.61 PUT/CALL 0.86 ================================================================= =========== Market Wrap =========== Drug Interaction Warning by Jim Brown Warning, certain drug stocks may not be tolerated well by bulls. Serious negative reactions may occur. Limit consumption to only those drug stocks that have reached well know support levels. This could have been the label for today's market as the drug induced stupor kept buyers in bed for the day. Dow Chart Nasdaq Chart SPX Chart The excuse gaining maximum credibility today for the drop in the markets was an attack on drug stocks. An article in the New England Journal of Medicine called into question the entire COX-2 class of arthritis drugs. The article suggested that despite any negative evidence to the contrary all drugs in that class are bad. The article came under fire from multiple directions for the generic conclusions and disregard for the facts. Still the three drug stocks in the Dow, PFE, MRK and JNJ all dropped substantially and were responsible for more than half the morning drop in the Dow. Accounting for the other half was disappointing economics, simple profit taking from the last weeks gains and fear of GE earnings tomorrow morning. The economics started with the Monster Employment Index at 151. This was +6 points over the August level at 145 and appeared to be normal seasonal hiring and not specifically a continued increase in the trend. In August we saw a +11 point spike and this month's seasonal gain was only half of that spike. Despite the slowing rate of growth the +6 points was significant. When coupled with the strong employment components in several other reports recently this suggests tomorrow's Jobs report could be strong. Jobless Claims fell back into the range we had seen prior to the hurricanes at 335,000. The prior weeks claims were adjusted higher to 372,000 and were seen to be a direct result of the hurricanes. Continuing claims have continued to decline but the pace is slowing and could suggest we have reached a level where hiring and turnover have reached a point of equilibrium. The Manufacturers Alliance survey dropped to 75 for the third quarter after three quarters of record highs. Nothing moves higher forever and a drop or pause in production was expected eventually. Even at 75 this is a strong indication of current growth. Shipments remained high at 93 and New Orders only backed off -1 point to 92. The weakness came from a drop in Back Orders to 86 from 93 indicating manufacturers are closing the gap. The Inventory component also shot upward to 69 from 61 and the investment index fell to 69 from 75. Companies running at greater than 85% capacity fell to 28% from 45%. Overall this report showed continued expansion but a reduction in the speed of that expansion. Oil continues exert pressure on consumers and that pressure came in the form of a drop in Consumer Credit by -$2.4 billion when an increase of +$5.9 billion was expected. This was the largest drop in Consumer Credit since Q4-1990 and is a clear indication consumers are being hurt by high energy prices and are concerned about the future. We have been seeing a drop in sales at various retail stores and numbers out today confirmed the drop in credit may continue. The headline Retail Sales number rose only +2.4% for September and it was the second weakest gain for the year. While weather and high gas prices combined to knock about -1.0% from the total the calendar impact of Labor Day added +0.5%. Thompson First Call said that taking Wal-Mart out of the equation dropped the headline number to only +1.9% growth. This compares to +6.1% for 2003 and illustrates how the tax rebate helped inflate the economy. In September discounters saw +3.0% growth but department stores lost -0.8%, apparel -0.4% and specialty stores lost -0.4%. Drug stores gained +4.1% due to the rising cost of drugs and the high floor traffic resulting in impulse sales. Tight job markets, falling wages, higher benefit costs, employers pushing more benefit expenses onto employees and rising energy prices are all depressing retail sales. None of these factors are expected to improve in the near future. Tomorrow we will get the September Jobs Report and the outlook is rosy, maybe too rosy. Expectations are calling for a +160,000 increase in jobs but that is not the real attention getter. October is when the Jobs numbers for the year are revised based on the corrections to the monthly estimates as more info becomes available. Based on a leaked internal memo now making the rounds, source unknown, the street is expecting another +288,000 jobs in the form of an upward revision to prior numbers. Obviously if this revision occurs and the September numbers are strong the Democrats will lose a few more debate points for Friday night. They can't complain that the revision was moved to October for political purposes because that date change happened in 2001 to better reflect current conditions. The revisions prior to 2001 had been made in February since 1991. This expected jump in jobs by nearly 500,000 jobs has been raising eyebrows and stock prices on the street for the last week. This suggests that the market may have gotten ahead of itself on the rumor and a sell the news event could be in our future should the expectations not come to pass. This could have been a factor in our afternoon sell off on Thursday. The morning sell off was initiated by the attack on Pfizer in the New England Journal of Medicine. The investment community is fresh off the massive Merck drop from last week and funds were trying to decide what to do with their MRK money now burning a hole in their pocket. Pfizer had been looking like a beneficiary from the VIOXX disaster and had seen a six day gain on the news. Because the article took a swipe at the COX-2 drugs in general there was a knee jerk reaction to drug stocks in general. There is no basis in the attack but investors dumped -84 million shares of Pfizer anyway. Personally I think this is a superb buying opportunity on Pfizer. After the initial morning dip it rebounded right back to its multiyear support level at $30. Pfizer was on TV on nearly every news channel claiming numerous studies, one as large as 1.4 million patients had not shown any indications of cardiac events. In one specific blind study the subjects taking Celebrex long term actually had fewer cardiac incidents than those taking the placebo. Celebrex is the oldest COX-2 drug and as such has had many more studies done and according to the FDA there is no incidence of cardiac events. Several studies currently underway using Celebrex have been running longer than the 18 month threshold where VIOXX failed and at dosages 2-4 times the recommended dose with no indications of complications. Over 31 million patients have taken Celebrex since it was introduced in 1998. Celebrex was on track to do nearly $3 billion in sales in 2004. This is a big drug but only a drop in the bucket to the $53 billion in revenue Pfizer will see this year. VIOXX was on track to hit $2.5 billion in sales before being removed from the market. According to surveys done this week 58% of those VIOXX patients are switching to Celebrex. 38% to some other form of treatment including Bextra, another Pfizer drug, and the rest going back to Ibuprofen or a similar over the counter drug. The survey found that pharmacies were scrambling to find enough Celebrex to fill the demand and pharmacy suppliers were paying premium prices to acquire large stocks of the drug. Rumors have customers trying to stockpile large quantities of the drug just to make sure they have it on hand if a shortage develops. With the jump in demand from 58% of VIOXX users converting prescriptions, Celebrex is on track to hit $5 billion in sales at little or no extra cost to Pfizer. If their drug trials currently underway prove to prevent Alzheimer's and colorectal cancer then $10 billion would be an easy target. I believe this is a buying opportunity for Pfizer but do your own research. I am an occasional Celebrex user and for me it is a wonder drug and based on the consumer hoarding reports I am not alone in that belief. The real reason we sold off today was not COX-2 drugs $53 oil or weak economics. We sold off because we were due and in those occasions the headline reasons are just sound bites for reporters looking for an excuse. If they wanted a reason there were plenty. Chipmakers are still warning and earnings estimates for the quarter are still falling. Taiwan Semiconductor, the worlds largest chipmaker, said sales fell for the first time in seven months and they warned they could continue to drop as demand falters. They expect oil prices to filter through the global economy and depress demand and earnings in 2005. The current S&P Q3 earnings are projected to be +12.5-13.5% with 4Q estimates now below +15%. This alone is plenty of reason to take cautious profits from the very strong rally. Oil hit $53 today and closed at an all time high of $52.67 on continued supply concerns. Production from the Gulf of Mexico is still down -1.4 billion barrels per day from Ivan damage and will not be back online for weeks. Nigeria is still a concern after a strike put some production on hold. Home heating oil supplies fell yesterday and demand is increasing as homeowners try to beat the rush to fill tanks ahead of any coming shortage. When given the choice of paying high prices for gas and heating oil or not being able to buy it at all, the high price option is quickly chosen with some other retail purchase taking a back seat. Investors are no longer pouring funds into the markets according to TrimTabs.com. In the week ended Wednesday stock funds saw outflows of -$170 million compared to inflows of +$600 million in the prior week. These numbers pale in comparison to the multi billion inflows from early in September. Fear of October may be impacting investor sentiment and seeing the markets back at multi month highs may seem like a good place to be cautious. Another reason for the market weakness may be the growing election risk. Kerry has pulled ahead in some polls and this produces even more risk for drug companies. The CIA report today that Saddam had not produced weapons of mass destruction for more than a decade was a serious blow to the Bush campaign and Kerry wasted no time in turning the news into a media event. Tomorrow night's debate will turn into another Bush bashing event in hopes of trying to leverage Kerry's current lead into a winning margin. With only 26 days left in the campaign the mud slinging will intensify for both sides. With the broader surveys showing a dead heat we could see more caution appear in the markets. Given the heights we have seen this week it was only natural for some profits be taken off the table before the Jobs report and the debate. The Dow took a serious hit for -114 points but 40+ points were due to the three drug stocks in the Dow. Also dragging the Dow lower was a substantial drop in MMM, UTX, HON, CAT and BA in front of the GE earnings before the open tomorrow. Fears that the conglomerate could express weakness in any of their individual areas drove investors to take profits. Each of those stocks represent a subset of some GE business and risk is high. GE never misses earnings numbers but they do talk down future projections. Jeffery Immelt said recently that growth in 2005 could be in the high single digits. Previously he had projected double digit growth in various divisions so it will be very interesting to see what appears as official guidance tomorrow. GE earnings are a proxy for the overall economy and while no negative guidance is expected caution was warranted. The Dow dropped from its opening level of 10240 to close at the low of the day at 10125. Nearly 50 of those points lost came in the last 30 min of trading when investors bailed from those five Dow stocks mentioned above. Even with the -114 point drop today we are still trading above last Friday's support level of 10050 and resting on the 50dma. While today's drop was dramatic it was not material and only classifies as simple cautionary profit taking along with a drug induced headache. The Nasdaq held at support most of the day and it was not until that closing sell cycle that 1955 broke and it accelerated deeper into negative territory. However, even at the 1948 close it only pulled back to yesterday's lows. The Wednesday end of day buy program was erased and we are right back in the range for the week. Again, it was simply cautionary profit taking. The SOX barely even budged after a couple of chip warnings and the comments out of Taiwan Semi. For the week the SOX has been trading between 400-410 and it closed in range at 403 with only a -2.84 drop for the day. If the Nasdaq selling was more widespread or on more substantial fears the SOX would have confirmed. Instead the SOX appears to be confirming a lack of selling pressure in techs. When determining real market performance it sometimes helps to look at the Wilshire-5000. As the broadest measure of the market it is not impacted by weighting of several high profile stocks and as such gives a clearer picture of overall market sentiment. The Wilshire dipped only a tame -41 points today and suggests the negativity was due to Dow imbalances only. Wilshire Chart The worst performer today was the Russell with a -10 point drop. The Russell had been on fire since Sept 28th and rallied more than +30 points as end of quarter contributions pushed it to within 7 points of resistance at 600. October is small cap month and funds typically pour the majority of their cash into the small caps in hope they will turn into big caps in the coming year. It is also the time when those funds that specialize in small caps tend to take profits in those winners who no longer fit the small cap growth model. Essentially those that became big caps are kicked out in favor of the little guys with big prospects. This pruning process tends to make the Russell volatile as the higher cap stocks which are more heavily weighted are sold. We saw some of that volatility today with the -10 point drop breaking initial support and taking back one third of the recent gains. For Friday I have mixed emotions. I know, you should not trade on emotions but you know what I mean. The SPX has pulled back to 1130 and strong support and a likely place for a relief rally to occur should Jobs be strongly positive and GE not spoil the party. I personally have a bullish bias for tomorrow but it all depends on the morning events. I believe the pullback today simply gave us some breathing room for both sides and took the pressure off the bulls. Wednesday's close was just too close to very strong and very critical resistance. Trying to get a running uphill start while on the side of a steep hill is a challenge. The pullback provided a resting point in neutral territory to wait for events to clear. I am not worried about Friday regardless of which direction prevails. Next week's direction is more critical with October one third over and the election only three weeks away. The Friday debate will be cussed and discussed in mini-debates by hundreds of on air reporters and countless surveys will be tabulated. Institutional investors will have to wade through the political morass and decide if the prevailing candidate can be elected and how it will impact their portfolio. With October known as portfolio restructuring month we could see this activity suddenly reach a fevered pitch. Let's just hope it is positive for the markets. Enter Passively, Exit Aggressively. Jim Brown Editor ================================================================== 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 --------------------------------- Maytag Corp - MYG - close: 17.57 change: -0.53 WHAT TO WATCH: Investors are worried that the rising cost of steel and raw materials are going to impact profits at the appliance makers like MYG. That's why shares are at new multi- year lows. The recent failed rally under $19.00 looks like a new entry point for shorts. The P&F chart is very bearish and points to a $5.00 target. We would probably target a drop to $15-14. --- Mylan Labs - MYL - close: 17.39 change: -0.49 WHAT TO WATCH: The DRG drug index and the sector is getting hammered recently with bad news from MRK, PFE and CHIR. MYL finally broke down under recent support and looks ready to test the $16.00 region as support. The P&F chart is very bearish and points to a long-term $2.00 target. Consider a drop under $17.25 or a failed rally near $18.00 as a new entry point. --- RyanAir Holdings - RYAAY - close: 27.02 change: -0.04 WHAT TO WATCH: Once again we feel like this is a bearish entry point in RYAAY. The stock tried to bounce earlier this morning but quickly failed and closed at a new low. The rising cost of oil is going to severely punish the airline industry and the XAL is already rolling over again. --- Visteon Corp - VC - close: 7.67 change: -0.42 WHAT TO WATCH: We normally hesitate to suggest shorts on single- digit stocks but VC is looking pretty weak here. After gapping down in September the stock has churned sideways between $7.70 and $8.50. Now shares are dropping fast and closed right at the bottom of its range. A breakdown here and VC could retest support in the $6.50-6.30 range. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- HCA $37.65 -0.28 - The recent action in HCA looks like a failed rally/bearish reversal. The P&F chart points to a $29 target. MRO $41.25 -0.88 - The relative strength in MRO, an oil stock, is amazing but today's session turned in a bearish engulfing candlestick, which is typically a reversal pattern. AVP $42.14 -0.36 - AVP looks ready to break support at $42 and test the $40 level and its simple 200-dma. =============================== Market Sentiment =============================== Is this the beginning? - J. Brown Could this be the beginning of a new leg lower in the market's current trading pattern? Bulls had hoped the pattern was broken earlier this week when the S&P 500 index broke above its descending trendline of lower highs. Yet since Monday's rally the SPX has churned mostly sideways between 1130 and 1140. The NASDAQ's strength and new two and half month highs were also encouraging but again the index has spent the week churning sideways mostly under its simple 200-dma. The Industrials fared even worse with an early high on Monday and another lower top Wednesday-Thursday. Given the sentiment and fear indicators like the ARMS index and the VIX/VXO it's not a surprise to see stocks turning lower. The VIX/VXO has been screaming that the markets are at a short-term top for days and the ARMS index or TRIN has seen its short-term moving averages hit bearish reversal levels in the last couple of sessions. Of course if you're an episodic or news-driven trader then today's weakness has more to do with drugs, oil and jobs than technical indicators. Experienced traders try and take a balanced approach and absorb it all. The drug sector has surely been a drag on stocks. Merck's dramatic news last week to pull their Vioxx drug off the shelves hit the group hard. Earlier this week news that Chiron would not deliver any flu vaccines was another surprise. Now new reports are out today suggesting that Pfizer's Celebrex, the rival to Vioxx, may also raise the risks for heart attacks. While PFE should have the studies to prove their product is safe the stock sank anyway on the initial news and pulled the drug sector lower again. Rising oil prices certainly don't help investor confidence. Crude oil has hit its third record high in a row over $50 a barrel. Today oil futures crossed $53 before settling at $52.67. The oil story has been beat to death even though it's still a factor so I won't go into detail on why it's bad for our economic health. Investors are also focused on tomorrow's jobs report. Wall Street estimates for the non-farm payrolls number is 140K to 150K. The problem is that September's number could be skewed downward by the recent rash of hurricanes. Four hurricanes in six weeks can take its toll on the economy. Therefore there will be a lot of eyes watching to see if the July and August numbers are revised upward to support a rising trend of job growth. If the job number is above 150K then the Bush camp is going to use it as fuel. If the number is under 140K then it will be gun powder for the Kerry camp. Meanwhile the Q3 earnings season has begun. Dow-component Alcoa (AA) has already announced and Dow-component General Electric (GE) reports tomorrow. Wall Street is looking for 38 cents a share from GE and analysts are eager to hear positive comments about GE's forecast for 2005. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9230 Current : 10125 Moving Averages: (Simple) 10-dma: 10128 50-dma: 10124 200-dma: 10298 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 990 Current : 1130 Moving Averages: (Simple) 10-dma: 1122 50-dma: 1106 200-dma: 1119 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1301 Current : 1455 Moving Averages: (Simple) 10-dma: 1430 50-dma: 1388 200-dma: 1441 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 14.50 +1.22 CBOE Mkt Volatility old VIX (VXO) = 14.56 +1.56 Nasdaq Volatility Index (VXN) = 20.59 +0.82 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.86 804,871 694,062 Equity Only 0.75 624,556 467,848 OEX 0.77 48,226 37,137 QQQ 1.70 54,479 92,781 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 66.3 + 0 Bear Correction NASDAQ-100 47.0 + 0 Bull Alert Dow Indust. 56.6 - 3.3 Bear Correction S&P 500 65.2 + 0.8 Bear Correction S&P 100 62.0 - 1 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: 0.69 10-dma: 0.93 21-dma: 0.95 55-dma: 1.11 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 680 895 Decliners 2112 2101 New Highs 100 52 New Lows 22 33 Up Volume 470M 697M Down Vol. 1367M 1023M Total Vol. 1849M 1733M 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 ================================================================= 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. 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PremierInvestor.net Newsletter Thursday 10-07-2004 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 Stock Splits Announcements: None Active Trader (Non-tech) Closed Bullish Plays: SPN, UCL 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 - Heads up! Expect some profit taking tomorrow as investors look ahead to the weekend following this week's strong rally. ================================================================== Stock Splits ================================================================== None ================================================================== Stock Bottom / Active Trader (AT) section ================================================================== ============ CLOSED PLAYS ============ ------------------- Closd Bullish Plays ------------------- Superior Energy - SPN - close: 12.77 chg: -0.57 stop: 12.49 Ouch! SPN gapped lower this morning after the company issued an earnings warning last night. Wall Street estimates were for 16 cents a share. SPN now expects Q3 numbers to fall between 12 and 15 cents. The stock dipped to $12.55 before filling the morning gap and then turning lower again. We've not been stopped out yet but with the warning and the close under $13.00 this looks like a short-term reversal. Picked on September 01 at $11.74 Gain since picked: + 1.03 Earnings Date 08/03/04 (confirmed) Average Daily Volume: 355 thousand --- Unocal Corp - UCL - close: 43.54 change: -0.10 stop: 42.49 We've been waiting for UCL to breakout over the $44.00 level for the last few sessions and we got our wish this morning. Shares of this oil stock traded to $44.17, hitting our profit target before the stock succumbed to the market wide profit taking. UCL is actually holding up pretty well considering the downturn in today's indices but we're going to hold true to our suggestion to exit at $44.00. Be careful here. UCL is very overbought and extended. Picked on September 19 at $40.27 Gain since picked: + 3.27 Earnings Date 08/02/04 (confirmed) Average Daily Volume: 1.3 million ================== 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 --------------------------------- Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change FNM Fannie Mae 69.00 +1.55 MTB M&T Bank 99.25 +0.59 CMA Comerica Inc 61.91 +0.79 KMI Kinder Morgan Inc 65.59 +1.22 JWN Nordstrom Inc 40.48 +1.43 RGS Regis Corp 41.50 +0.54 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- CRM Salesforce.com 18.50 +1.25 MHR Magnum Hunter Resources 13.46 +1.46 HOTT Hot Topic Inc 19.98 +2.57 PXLW PixelWorks Inc 12.05 +1.25 PARL Parlux Fragrances 15.33 +1.36 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- LLY Eli Lilly & Co 59.56 -1.91 DNA Genentech Inc 47.55 -2.70 JNJ Johnson & Johnson 55.92 -1.83 GSK GlaxoSmithKline 41.90 -1.15 NVS Novartis 45.49 -1.19 AGN Allergan Inc 69.65 -2.26 PHM Pulte Homes 50.55 -2.93 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- ANN Ann Taylor Stores 21.80 -1.84 EXM Excel Maritime 30.86 -2.64 DW Drew Industries 33.31 -1.49 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- NCX Nova Chemicals 38.00 -1.03 MRX Medicis Pharma 38.48 -1.02 ELBO Electronics Boutique 32.90 -1.59 MBT Mobile Telesys 143.50 -5.65 PII Polaris Industries 55.15 -1.40 ================================================================= 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. 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