PremierInvestor.net Newsletter Thursday 10-21-2004 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: Adrenaline Rush Watch List: Pasta to Semis and more! Market Sentiment: Friday Could Be Quiet ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 10-21-2004 High Low Volume Adv/Dcl DJIA 9865.76 - 21.20 9903.15 9800.87 2.04 bln 2164/1050 NASDAQ 1953.62 + 20.70 1957.48 1933.00 2.02 bln 1863/2052 S&P 100 531.26 + 0.54 532.53 527.28 Totals 4027/3102 S&P 500 1106.49 + 2.83 1108.96 1098.47 W5000 10851.86 + 55.06 10870.68 10775.31 SOX 408.98 + 15.60 411.21 393.36 RUS 2000 576.66 + 6.53 576.70 568.38 DJ TRANS 3431.69 + 45.00 3435.52 3381.86 VIX 14.54 - 0.31 15.19 14.28 VXO (VIX-O)14.99 - 0.11 15.97 14.86 VXN 20.36 - 0.29 20.92 20.21 Total Volume 4,397M Total UpVol 3,098M Total DnVol 1,254M Total Adv 4545 Total Dcl 2548 52wk Highs 233 52wk Lows 140 TRIN 1.10 NAZTRIN 0.60 PUT/CALL 0.83 ================================================================= =========== Market Wrap =========== Adrenaline Rush by Jim Brown Nearly 400 companies reported earnings on Thursday and the results were all over the board. Good news was mixed with bad news and delivered so quickly investors were left dizzy and confused. Strong market moves were made in both directions and outlooks changed faster than traffic lights during rush hour. Welcome to the busiest day in the October earnings schedule. Wilshire-5000 Chart Dow Chart Nasdaq Chart What a day! I hardly know where to start with mixed economics and even more violently mixed earnings. The Jobless Claims fell -25,000 to pre hurricane levels but analysts suggested it might be too early to get excited. The Columbus Day holiday may have impacted number collection and the low number may be in error. Seems to me there is some qualification on every number we get recently. The headline number was 329,000 for the week and heading for levels that translate to job gains on a consistent basis. The Chicago Fed National Activity Index fell -0.01 for September and back into negative territory after posting a high of 0.83 back in March. The decline has been very erratic with a spike from -0.08 in June to +.55 in July only to completely retrace that spike in August. Only 37 of the 85 indicators that make up the CFNAI rose during the month. Employment moved to -.09 from -.02 in August and was the biggest contributor to the decline in the headline number. High oil prices were also a factor in the decline. The Conference Board Leading Indicators fell for the fourth consecutive month with a -0.1% headline number. The Coincident Index also fell -0.2% for the month. These numbers may seem insignificant but the key is the trend and it is clearly down. Declining shipments and narrower yield spreads were two major reasons for the decline along with the pressure from energy prices. This is the only the third time since Jan-2002 that the index has declined more than three months in a row. The outlook is negative for future releases based on the internal trends. The index typically predicts economic trends for the next six months. Not all economics were negative with the Monthly Mass Layoffs falling slightly to 708 events impacting only 68,792 workers. This was only 51 workers less than the August report but both months were significantly below the recent trends. For instance July had 253,939 layoffs and when compared to Aug/Sept there is a significant improvement. Temporary services accounted for 10% of the Sept number and hit the highest level since 2001. This could be a negative sign that the fringe workers are being trimmed in advance of cutting into the long term workers. The best news came from the Philly Fed, which exploded to 28.5 compared to estimates for 19.3 and the September number at 13.4. This was clearly a blowout and renewed faith in manufacturing in general despite being only a regional index. Shipments surged to 28.2 from 22.4 and New orders remained strong at 24.6. On the negative side back orders fell into negative territory at -5.4 from last months already weak +3.1. Employment also fell strongly to 14.1 from 21.5. The six-month outlook dropped significantly from 44.9 to 27.6. The report was bullish on the surface definitely showed some cracks in the foundation. These are not insurmountable and as long new orders remain firm the minor weaknesses will be ignored. That brings us to earnings and this was a monster day with nearly +400 companies reporting. Five Dow components reported with CAT the standout with the best results and the biggest share price loss. CAT earnings more than doubled on strong demand for its products but concerns about high costs knocked -$3.35 of the share price. The basic worry was that continued high oil prices would pressure sales and growth in other countries. Steel prices have doubled and for CAT that is a major expense. Estimates for 2005 saw revenue up +10% compared to +30% gains in 2004. Dow component Merck reported earnings that fell to 60 cents compared to 82 cents for the same period last year. The Q3 earnings contained a 25 cents charge for the VIOXX recall. However, MRK guided analysts to a higher number for Q4 but many analysts were expecting the charge in the current quarter and not on the Q3 earnings so the real continued earnings should not appear until 2005. Merck said it already had over 300 personal injury lawsuits in progress from the VIOXX claims. MRK was flat for the day at $31.28. AIG fell another -1.15 on news a grand jury was looking at products that might have been used to make earnings look better. The probe centers on a contract with CELL claiming the company fraudulently concealed losses on the policy. AIG announced earnings that matched analyst estimates and that was the good news. A JPM analyst said he expected Spitzer to extract more than $2 billion in penalties from the current insurance scandal. Pfizer reported earnings of $3.34 billion for the quarter compared to $2.22 billion for Q3-2003. They beat the street slightly but warned that there would be increased generic competition next year for $5 billion of their products. Considering they will have more than $50B in total revenue next year the minor amount they may lose on generics should more than be made up on Celebrex. The stock appears to have found support at $28.50 and the VIOXX news is slowing. UPS missed estimates by two cents but used the politically correct hurricane excuse and escaped investor wrath. The company said business was strong and 2005 earnings should grow +13% to +17%. They said the holiday shipping season was shaping up to be a strong season. After the bell Microsoft beat estimates by +2 cents and said Q4 could be weaker than expected but raised estimates for all of 2005. The company said it was seeing more business decisions on software purchases being postponed by companies from Q4 and into 2005. Unearned income fell unexpectedly and suggests Linux is cutting into their subscription revenue base. MSFT fell -14 cents at the close and about -70 cents in after hours before the call produced some minor buying. MSFT has that monster $32B dividend that will be paid next month and $9 billion of that is expected to be received by retail investors. The rest will be collected by funds and insiders like Bill Gates. The $9 billion is expected to provide a retail bounce for the holiday season and some analysts suggest it could add 25-30 points to the GDP. I assume that was before the nearly $100 billion haircut in the insurance industry. AMZN dropped -3.46 in after hours after missing estimates by a penny and giving disappointing guidance. The +17 cent earnings were significantly over the +4 cents from Q3-2003 but the bar is pretty high for the online firm. AMZN did say they were well positioned to go into the DVD rental space. The problem came from revenue growth that was less than analysts had hoped. Competition is growing and growth is slowing as the business matures. I bought my first online book from Barnes and Nobel last week because Amazon did not have it. In the past Amazon always had everything and this could be a symptom of the future of their retail model. Skinny the inventory and ignore the slow sellers. With their reputation built as the worlds greatest marketplace it will be interesting to see how this plays out. I might also note I bought 12 other books from Amazon last week so the defection to BN.com for the one they did not have was only a minor detail. The big news after the bell was Google, which brought back the Internet volatility of yesteryear. When GOOG announced earnings of only 45 cents when analysts were expecting 56 cents the crowd went wild. The stock dropped from $149 to $140 as traders dumped the stock but then rallied back to $162 after they disclosed in the call that there was in fact some hidden charges in the number. The clean number was reported to be 70 cents and a beat. The volatility was huge and analysts could not say enough good things about the stock. However, nobody seemed to want to buy it at the current range. GOOG was touted as having a better growth rate than YHOO, EBAY and AMZN and while that may be true based on today's numbers the field is about to become very crowded. The Google model is not yet fully understood and once understood it will be widely copied. Microsoft is expected to make an announcement soon and Yahoo and Amazon already have products in place and growing. GOOG has a whopping 250 million shares coming eight times the current shares available for trading. With GOOG adding to the share price each day whether on valid assumptions or not the market cap continues to grow. Eventually this stock will be included in the various major indexes and at the current nearly $50 billion market cap will mean index funds will need to buy large quantities when that happens. This could be months away and after the last lockup release on Feb-15th of 176 million shares. Currently there are slightly more than 30 million shares in circulation and another 40 mil will be released on Nov-16th a little more than three weeks from now. Additional releases of 25M each will occur on Dec-15th and Jan-15th. The bad news came from numerous chip stock earnings. There were several today including BRCM, HLIT, IDTI, KLAC, MCHP, TQNT and XLNX to name a few. Led by BRCM several warned about Q4 and the amount of orders being pushed into 2005. BRCM warned that sales could drop as much as -18% in Q4 on delayed customer orders. They blamed excessive chip inventories still held by their customers due to weak Q3 demand. They said weaker sales of networking and satellite equipment had rippled back to them through the supply chain. XLNX warned that revenue would be down for the quarter based on increasing inventory levels at customers. The average inventory level at quarter end was 156 days, up from 131 days in the prior quarter. KLAC also said they saw a decline in Q3 and another decline is expected for Q4. They said sales to foundries had slowed significantly. TQNT warned that they would have a bigger loss than they previously expected for Q4, sales were slowing and their book to bill had dropped to only 0.81. MCHP warned that despite record sales in Q3 their expectations for Q4 had fallen. IDTI repeated the claims that Q4 would also be a challenge as customers wade through excess inventory. Sounds like they have the excuse committed to memory. That pretty well makes it unanimous that chip inventory has not improved and is not expected to improve for Q4. Based on dozens of company forecasts this situation is expected to pass by Q1-2005. The warnings tonight were nothing new and exactly like the warnings we have seen from chip companies for the last two months. Despite those warnings the SOX rose to a three week high today and the SMH did not lose any ground in after hours trading. The bad news appears to be fully priced in and traders are buying chips six months ahead of when they believe the next demand bounce will occur. Those buying today are looking at the April earnings as an exit point if the current tech scenario completes as expected. SOX chart Today was the largest earnings schedule for the Q3 cycle with nearly 400 companies reporting. As of yesterday's close 223 S&P companies had reported with an average increase in revenue of +9.2% and an average earnings increase of +10.8%. Analysts expect the final total to show earnings growth of +14.8% but as you can see by the current total there is a big gap. The breakdown of the results so far is shown in the following table and it is still not that bad. 2004-Q4 Comparisons Partial list of companies reporting after the close: KO earnings est +0.47, actual = +0.50 ACF earnings est +0.39, actual = +0.43 ACS earnings est +0.71, actual = +0.72 CLS earnings est +0.08, actual = +0.11 ELX earnings est +0.10, actual = +0.11 GNW earnings est +0.54, actual = +0.55 MCK earnings est +0.24, actual = +0.29 RHI earnings est +0.21, actual = +0.24 SFA earnings est +0.36, actual = +0.36 AMZN earnings est +0.18, actual = +0.17 BRCM earnings est +0.34, actual = +0.36 CAMD earnings est +0.09, actual = +0.10 CPKI earnings est +0.25, actual = +0.27 EPNY earnings est -0.07, actual = -0.06 FDRY earnings est +0.12, actual = +0.11 GILD earnings est +0.21, actual = +0.25 GOOG earnings est +0.56, actual = +0.70 HLIT earnings est -0.03, actual = -0.03 NSIT earnings est +0.29, actual = +0.30 IDTI earnings est +0.07, actual = +0.09 KLAC earnings est +0.57, actual = +0.58 MENT earnings est +0.07, actual = +0.05 MCRL earnings est +0.07, actual = +0.08 MCHP earnings est +0.29, actual = +0.29 MSFT earnings est +0.30, actual = +0.32 OSTK earnings est -0.20, actual = -0.16 PSFT earnings est +0.14, actual = +0.17 PLCM earnings est +0.19, actual = +0.19 RSAS earnings est +0.14, actual = +0.15 SIAL earnings est +0.81, actual = +0.81 TQNT earnings est -0.04, actual = -0.03 WEBX earnings est +0.24, actual = +0.26 XLNX earnings est +0.24, actual = +0.24 YELL earnings est +1.34, actual = +1.38 The obvious question is where do we go from here. The overall earnings are not that bad although expectations from techs for the next quarter are falling. The SOX is telling us the bad news is priced in despite the pummeling the Dow has taken over the last several sessions. However, was it really that bad? The Dow is only composed of 30 stocks and there have been some monumental blowups over the last several weeks. Drugs and insurance aside the weakness we have seen has been due mostly to the huge impact of individual stocks on the Dow. Using the broader indexes of the Wilshire-5000 and the Russell the markets are not in that bad of shape. The Wilshire is comfortably holding the high ground above 10800 support and only -300 points from a new high for the year. The Russell is also holding the high ground over 560 support and only 25 points from the breakout 600 level. This is not bad news despite what the Dow appears to be showing. The Dow has tested 9800 for two consecutive days and saw nearly a +100 point rebound on both days. Neither stuck due to individual stock issues. Today it was CAT and its -3.35 drop taking nearly -30 points off the Dow along with the continued AIG weakness. They were the only two Dow components losing more than $1 for the day. Dow 9800 is the conversational low of the year from August with the actual low 9783 but close enough for most. This 9800 retest is exactly where an October bottom should occur if it is in the cards. A break of the 9800 level would change all the rules but I will wait to cover that if it happens. Bulls really want to see the Dow rebound from this level and tomorrow would be nice. There are no economic reports to confuse the issue. The Nasdaq has actually been rising since the Oct-15th lows at 1900. The close today at 1952 is just one good day away from a potential breakout over 1975. It appears the October low was already made and the bad news bulls are back. This will of course be tested again tomorrow after the multiple chip warnings tonight. The futures are well off their lows and nearly positive as I type this and they appear to be indicating another bounce at the open. With the election only seven trading days away and October almost over there is a rising bid beginning to appear. Unfortunately every bounce is sold so there is still major resistance to be overcome. Any fund portfolio shuffling for their October year end should be over and if anything they should have cash to spend. TrimTabs reported tonight that fund flows for the week were positive to the tune of +$1.5B on top of +$1.4B last week. The tide may be turning and hopefully the worst is behind us. For Friday I think traders will be watching oil and chips and nothing else. Oil closed at $54.50 again and is higher overnight. Like the chip warnings I think investors have decided to ignore oil and consider it a "transitory event" using the Greenspan terminology. That sets up Friday as a possibly bullish day assuming chips don't suddenly implode. Watch the Wilshire, Russell and SOX for the real market direction. 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 --------------------------------- American Italian Pasta - PLB - close: 27.64 change: +0.69 WHAT TO WATCH: PLB is trying to put in a bottom. The stock has been withering for months but we're starting to see signs of a bottom between $25-26. PLB has actually be stuck in a trading range between $25 and $28 for the last three months. If PLB can breakout over the $28 level and its simple 100-dma it could be a bullish entry point. Watch for earnings on November 10th. We would target $30-31. FYI: the P&F chart is currently bearish making this a more aggressive play. --- Ryder Systems - R - close: 48.85 change: +0.53 WHAT TO WATCH: Transports stocks are on a roll. The Dow Transports index is hitting new five-year highs. The entire sector is completely ignoring record high oil prices and higher fuel costs. Meanwhile shares of Ryder are hitting new all-time highs. This looks like a relative strength play but watch for a dip after earnings on Oct. 25th. --- Lam Research - LRCX - close: 24.17 change: +0.87 WHAT TO WATCH: The SOX semiconductor index turned in a very bullish 3.9 percent rally on Thursday and this helped lift LRCX over its exponential 200-dma and round-number resistance at $24. If the SOX can power through the 410-412 region then LRCX might be able to breakout over its simple 200-dma near $24.33. A breakout over the 200-dma could be used as a bullish entry point. A move over $25 would produce a new P&F buy signal. --- Universal Health Services - UHS - close: 39.87 change: -1.02 WHAT TO WATCH: We've mentioned UHS before. The stock has broken through the bottom of a multi-month trading range a few days ago but we didn't play it because of its earnings report. Earnings came out tonight after the closing bell. UHS missed Wall Street estimates by 5 cents. We didn't see a lot of after hours trading but we expect UHS to trade lower tomorrow. Given the breakdown from its eight-month trading range this could be a bearish entry point. The P&F chart shows a quadruple-bottom breakdown sell signal with a $33 target. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- VRTS $21.97 +1.43 - The 3 percent rally in the GSO software index helped support a 6 percent rally in VRTS. Shares of the software company broke through resistance at $21.50 and its simple 100- dma. Earnings are expected on Oct. 26th. EXM $36.92 +3.51 - Cargo ship operator EXM has seen a very volatile August through October trading period. The stock appears to have found new support near $30 and looks ready to rebound again. This would be an EXTREMELY high-risk play either direction. PMCS $9.92 +0.92 - Here's another semiconductor stock that is trading higher despite a lackluster earnings report. This is a breakout over the trend of lower highs and the simple 50-dma. BEAS $8.00 +0.20 - We mentioned BEAS a few days ago when it was bouncing from the bottom of its rising channel near the $7.00 level. Shares have already hit the top of the channel. Looks like a good place to do a little profit taking in the $8.00-8.20 range. =============================== Market Sentiment =============================== Friday Could Be Quiet - J. Brown You wouldn't know it from looking at the major indices but the markets were generally positive today. The Dow Industrials ended the session lower under weakness from drug stocks, insurance, and a negative reaction to Caterpillar's earnings. The tech-heavy NASDAQ moved the opposite direction as investors bid up shares of EBAY for a 9 percent gain to $99.50. EBAY reported earnings last night with a 77 percent jump in profits. After the bell Internet stocks continued to command the spotlight. Shares of Google (GOOG) took traders on a wild ride as everyone struggled to discern whether or not the earnings miss was more or less important than the upside revenue surprise. GOOG closed at $149.38 in the regular session and initially dipped to $140 before soaring to $161 in the after-hours market. GOOG may grab the headlines tonight and tomorrow but it will be lackluster earnings numbers and comments from the likes of Amazon.com (AMZN), Broadcom (BRCM) and Microsoft (MSFT) that are likely to lead the NASDAQ and most of the tech sector lower on Friday. This will likely be a drag on the already weak Dow and S&P. Not helping matters today were comments from Federal Reserve governor Ben Bernanke who said that the days of cheap oil were likely behind us. He did say that the U.S. economy would be able to manage but the initial reaction to his words were not positive. Whether you believe the market is going to head up or down it's worth noting that the Dow Transports have broken out to another new five-year high over the 3400 level. I know some investors find this unbelievable given the high cost of fuel but it's happening anyway. Plus, the RLX retail index just hit a new all- time closing high. The strength in retailers could have been boosted by a CNN article that said consumers were not going to let higher interest rates and higher gasoline prices impact their holiday spending. The latest poll suggested that the average American consumer plans to spend about $702 in holiday shopping. That's a 4.5 percent increase over last year. The big story on everyone's mind is the election. Some market pundits feel that the stock market is likely to trade sideways for the next twelve days until after the November 2nd election. Tomorrow's schedule is light. There aren't any major economic reports due out and the Q3 earnings parade is relatively quiet after this week's deluge of numbers. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9497 Current : 9865 Moving Averages: (Simple) 10-dma: 9965 50-dma: 10114 200-dma: 10275 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 1018 Current : 1106 Moving Averages: (Simple) 10-dma: 1118 50-dma: 1109 200-dma: 1119 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1301 Current : 1474 Moving Averages: (Simple) 10-dma: 1442 50-dma: 1404 200-dma: 1440 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 14.54 -0.31 CBOE Mkt Volatility old VIX (VXO) = 14.99 -0.11 Nasdaq Volatility Index (VXN) = 20.36 -0.29 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.95 856,237 810,611 Equity Only 0.87 728,489 633,400 OEX 1.39 15,123 21,170 QQQ 5.38 30,026 161,746 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 62.7 - 0.4 Bear Correction NASDAQ-100 49.0 + 2 Bull Alert Dow Indust. 50.0 - 3 Bear Confirmed S&P 500 60.0 - 1.4 Bear Correction S&P 100 59.0 - 2 Bear Correction Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-dma: 0.93 10-dma: 1.19 21-dma: 1.07 55-dma: 1.12 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 1947 1824 Decliners 862 1105 New Highs 104 88 New Lows 49 50 Up Volume 1326M 1490M Down Vol. 701M 485M Total Vol. 2034M 2001M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 10/12/04 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 Commercial traders continue to hedge their bets on the large S&P contracts as longs and shorts move closer to parity. Small traders didn't move much money either but remain net bullish. Commercials Long Short Net % Of OI 09/21/04 404,746 425,560 (20,814) (2.5%) 09/28/04 404,773 434,441 (29,668) (3.5%) 10/05/04 421,217 435,736 (14,519) (1.7%) 10/12/04 423,472 436,780 (13,308) (1.5%) 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 09/21/04 134,943 108,036 26,907 11.1% 09/28/04 135,317 107,173 28,144 11.6% 10/05/04 137,210 114,489 22,721 9.0% 10/12/04 139,175 113,903 25,272 9.9% 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 Uh-oh! This could spell trouble for stocks. Commecials, who are normally on the "right" side of the trade are upping their short positions. Meanwhile, small traders decreased their short positions leaving them strongly net bullish. This alone is a contrarian indicator for a market top. Just remember that these readings were taken before the Wednesday-Thursday sell-off this past week. Commercials Long Short Net % Of OI 09/21/04 213,014 397,844 (184,830) (30.2%) 09/28/04 226,020 420,714 (194,694) (30.1%) 10/05/04 248,190 476,608 (228,418) (31.5%) 10/12/04 258,457 517,805 (259,348) (33.4%) 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 09/21/04 256,315 60,275 196,040 61.9% 09/28/04 262,501 68,255 194,246 58.7% 10/05/04 308,021 80,373 227,648 58.6% 10/12/04 309,720 62,502 247,218 66.4% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Commercial traders aren't changing their bets. They remain net bullish on the NDX. Small trades have significantly reduced positions in both longs and shorts but remain strongly net bearish, which of course is bullish for the NDX if you're a contrarian. Commercials Long Short Net % of OI 09/21/04 54,530 30,827 23,703 27.7% 09/28/04 55,045 32,319 22,726 26.0% 10/05/04 55,640 32,872 22,768 25.7% 10/12/04 52,572 32,775 19,797 23.2% 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 09/21/04 7,417 25,821 (18,404) (55.3%) 09/28/04 10,078 22,917 (12,839) (38.9%) 10/05/04 12,254 30,693 (18,439) (42.9%) 10/12/04 8,756 24,400 (15,644) (47.2%) 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 Commercial traders reduced both long and short positions but remained net bullish. In contrast small traders significantly increased both their longs and their shorts on the Dow Industrials but in essence remain rather neutral. Commercials Long Short Net % of OI 09/21/04 30,816 27,200 3,616 6.2% 09/28/04 29,714 26,877 2,837 5.0% 10/05/04 27,498 25,772 1,726 3.2% 10/12/04 24,150 22,849 1,301 2.7% 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 09/21/04 4,467 6,748 (2,281) (20.3%) 09/28/04 5,143 5,988 ( 845) ( 7.6%) 10/05/04 5,531 5,539 ( 8) ( 0.0%) 10/12/04 8,814 9,167 ( 353) ( 1.9%) 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. 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PremierInvestor.net Newsletter Thursday 10-21-2004 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: NVLS, SWIR, BC, LSCP Stock Splits Announcements: FINL, GDW, RYL, SYMC Active Trader (Non-tech Stocks) Closed Bearish Plays: PSSI 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 ================================================================== NVLS - tech stock short - Be careful here. The SOX is bouncing pretty strong and challenging resistance. If the SOX breaks out then NVLS is likely to breakout over its resistance near $25.75-26.00. We are not suggesting new positions here. SWIR - tech stock short - Be careful here too. SWIR is bouncing from the $15.00 level and is now trading back over the $16 mark. We would not suggest new positions. BC - non-tech long - So far so good. BC is challenging resistance at $47 and looks ready to breakout. LSCP - non-tech short - We would be cautious here. LSCP is nearing the $20 mark again. If LSCP trades over $20.51 again we may decide to exit early. ================================================================== Stock Splits ================================================================== FINL steps higher with a 2-for-1 stock split Thursday afternoon with about an hour to go before the close The Finish Line, Inc. (NASDAQ:FINL) announced that its Board of Directors had approved a 2-for-1 stock split. The split will be payable on November 17th, 2004 to shareholders on record as of November 5th. The Board also approved a cash dividend of 5 cents per share payable on December 15th, 2004. About the company: The Finish Line, Inc. is one of the nation's leading athletic specialty retailers offering the best selection of athletic footwear, apparel and accessories for men, women and kids. Finish Line is publicly traded on the NASDAQ National Market under the symbol FINL and currently operates 580 stores in 46 states and online. (source: company press release) -- GDW declares a 2-for-1 stock split This morning before the opening bell Golden West Financial Corp. (NYSE:GDW) reported Q3 earnings and announced that its Board of Directors had approved a 2-for-1 stock split. The split will take effect as a stock dividend payable on December 10th, 2004 to shareholders on record as of November 15th. About the company: Headquartered in Oakland, California, Golden West is one of the nation's largest financial institutions with assets over $100 billion as of September 30, 2004. The Company has one of the most extensive thrift branch systems in the country, with 276 savings branches in 10 states and lending operations in 38 states. (source: company press release) -- RYL builds a 2-for-1 stock split After the closing bell on Wednesday Ryland Group Inc. (NYSE:RYL) announced its Q3 earnings report. With that report the company also announced that its Board of Directors had approved a 2-for-1 stock split. The split will take the form of a stock dividend to be payable on November 30th, 2004 to shareholders on record as of November 15th. About the company: With headquarters in Southern California, Ryland is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company currently operates in 27 markets across the country and has built more than 225,000 homes and financed more than 195,000 mortgages since its founding in 1967. (source: company press release) -- SYMC programs a 2-for-1 stock split Wednesday afternoon after the closing bell Symantec Corp (NASDAQ:SYMC) announced with its earnings report that the company's Board of Directors had approved a 2-for-1 stock split. The split will take the form of a stock dividend. This dividend will be payable on or about November 30th, 2004 to shareholders on record as of November 11th. Post-split SYMC will have approximately 632 million shares outstanding. About the company: Symantec is the global leader in information security providing a broad range of software, appliances and services designed to help individuals, small and mid-sized businesses, and large enterprises secure and manage their IT infrastructure. Symantec's Norton brand of products is the worldwide leader in consumer security and problem-solving solutions. Headquartered in Cupertino, Calif., Symantec has operations in more than 35 countries. (source: company press release) ================================================================== Active Trader (AT) Non-Tech Stock section ================================================================= ============ Closed Plays ============ Closed Bearish Plays -------------------- PSS World Medical - PSSI - cls: 9.13 chg: -0.17 stop: 10.11 Per our previous suggestion we are closing PSSI at $9.15. The stock is seeing some great follow through on Tuesday's failed rally near $9.81. The stock has surpassed its early October low and looks ready to hit the $9.00 mark. Shares could easily keep falling but we're going to exit here to "trade our plan". If you choose to keep the play open and see how far PSSI falls we suggest a tighter stop than $10.11. Picked on September 20 at $10.44 Gain since picked: - 1.29 Earnings Date 07/27/04 (confirmed) Average Daily Volume: 734 thousand ================== 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 MER Merrill Lynch 52.50 +0.59 SO The Southern Co 31.58 +0.96 OXY Occidental Petroleum 57.87 +0.70 APA Apache Corp 53.16 +0.65 DVN Devon Energy 75.25 +1.01 PGR Progressive Corp 88.54 +1.12 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- ALA Alcatel 14.24 +1.44 TER Teradyne Inc 16.09 +1.06 SY Sybase Inc 16.10 +1.92 WAB Wabtec 19.97 +1.37 ASCL Ascential Software 14.89 +1.08 KTO K2 Inc 15.93 +1.64 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- EBAY eBay Inc 99.59 +8.23 SAP SAP Ag (ADS) 42.54 +1.28 FDX Fedex Corp 89.45 +1.58 SYMC Symantec 60.19 +5.76 NKE Nike Corp 80.79 +1.14 KSS Kohl's Corp 52.08 +1.13 CNI Canadian Natl Railway 51.62 +1.48 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- LLY Eli Lilly & Co 52.64 -2.46 AIG American Intl Group 56.45 -1.15 CAT Caterpillar 77.03 -3.76 D Dominion Resources 64.00 -1.08 PCAR PACCAR Inc 65.98 -2.96 AGN Allergan Inc 68.00 -1.37 S Sears Roebuck 33.74 -3.18 TDS Telephone Data Sys 75.85 -3.90 CMI Cummins Inc 67.76 -4.98 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- CELG Celgene Corp 58.22 -4.16 CVD Covance Inc 38.08 -1.27 ================================================================= To stop receiving this PremierInvestor.net Newsletter, send email to Contact Support ================================================================= DISCLAIMER ================================================================= This newsletter is a publication dedicated to the education of stock traders. The newsletter is an information service only. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. The newsletter picks are not to be considered a recommendation of any stock but an information resource to aid the investor in making an informed decision regarding trading in stocks. It is possible at this or some subsequent date, the editors and staff of PremierInvestor.net may own, buy or sell securities presented. All investors should consult a qualified professional before trading in any security. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. PremierInvestor.net staff makes every effort to provide timely information to its subscribers but cannot guarantee specific delivery times due to factors beyond our control. Please read our disclaimer at: http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html ***************************************************************** ADVERTISING INFORMATION For more information on advertising in PremierInvestor.net Newsletter, or any Premier Investor Network newsletter please contact Contact Support. ***************************************************************** Copyright (c) 2004 PremierInvestor.net. and The Premier Investor Network. Do not duplicate or redistribute in any form.
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