Option Investor

Daily Newsletter, Thursday, 10/07/2004

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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

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

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


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.


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 

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 

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 

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 

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


52-week High: 10753
52-week Low :  9230
Current     : 10125

Moving Averages:

 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:

 10-dma: 1122
 50-dma: 1106
200-dma: 1119

Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1455

Moving Averages:

 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


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


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

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


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

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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:


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

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 


Stock Bottom / Active Trader (AT) section


  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 

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

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:


For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.


Copyright (c) 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.


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