Option Investor
Newsletter

Daily Newsletter, Tuesday, 10/26/2004

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                  Tuesday 10-26-2004
                                                    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:       Better Late Than Never
Watch List:        Computer Services to Bath Towels and more!
Market Sentiment:  Is the rally here?

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      10-26-2004           High     Low     Volume   Adv/Dcl
DJIA     9888.48 +138.50  9888.48  9749.55 1.98 bln 2213/ 879
NASDAQ   1928.79 + 14.80  1928.80  1905.49 1.81 bln 1796/1275
S&P 100   531.69 +  7.69   531.60   524.00   Totals 4109/2154
S&P 500  1111.10 + 16.30  1111.10  1094.81 
SOX       396.77 -  1.10   400.27   393.38
RUS 2000  577.61 +  5.94   577.99   567.32
DJ TRANS 3435.61 + 55.40  3437.83  3366.07
VIX        16.40 -  0.18    16.87    15.97
VXO (VIX-O)16.48 -  0.39    17.28    16.12
VXN        22.40 -  0.03    23.14    22.36 
Total Volume 4,094M
Total UpVol  2,854M
Total DnVol  1,183M
Total Adv  4498
Total Dcl  2469
52wk Highs  270
52wk Lows   121
TRIN       0.55
NAZTRIN    1.14
PUT/CALL   0.68
=================================================================

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

Better Late Than Never
by Jim Brown

The historical end of October ramp finally appeared but
the reasons remain far from clear. The Dow has been the
laggard for weeks but today the blue chip index roared
higher with a +138 point jump to almost regain the 9900
level. It is amazing we had sunk so far that a +138 point
gain does not make it back to 9900 and a level that was
support then resistance over the last two weeks. 

Nasdaq Chart

 
SPX Chart

 
Wilshire Chart

 

The morning started off far different than it finished.
The indexes dove at the open in anticipation of the 
Consumer Confidence number with the Dow retesting 9750
before the numbers hit the wires. The Consumer Confidence
came in less than expected at 92.8 with a decline on
almost all internal components. The magnitude of the
declines were minimal on each internal component but 
the forward looking views were the most telling. Most
consumers are backing away from a potential home or 
major appliance purchase and feel business conditions
and employment will be worse six months from now. Only
autos showed an increase in purchase expectations and
that was due to the new model year and the very strong
incentives now being offered for year end inventory 
reductions. This was the third consecutive month of 
declines and this is the lowest level in seven months.
The high was 105.7 in July making today's number a 
-13 point drop in only three months. 

After the headline number was announced the markets
rebounded off the lows on decent volume despite the
worse than expected results. Traders claim the whisper
number was far worse based on the negative campaign
ads, mudslinging and the rise in energy prices. The
drop was not as severe as the recent Michigan Sentiment
and analysts expect the low interest rates will help
buoy confidence once the election is over. Retail 
prices are still experiencing some deflation from 
excess inventory and are expected to rise but the
elimination of apparel quotas should lower apparel
prices after the first of the year. Bottom line is
a continued decent environment for consumers as long
as the Fed does not get carried away in Nov/Dec. 

Weekly Chain Store sales posted their second week of
declines with a -0.6% loss which indicates the high
gas prices are continuing to drag on consumer budgets.
The index fell to the second lowest level since the
beginning of April and has nearly erased the early
October bounce. However the ICSC feels growth will
improve for the entire month to something in the +3.5%
range compared to only +2.4% in September. Somebody
better buy a lot of Halloween candy very soon because
October is about over.  

While the economics probably did not provide a large
boost to the market the Marsh Mclennan news did. The
extremely quick turnaround by MMC to the Spitzer claims
has cooled the Spitzer attack. Spitzer has removed the
criminal portion of the claims and said the problem
can be handle on a civil basis. This removes the 
potential death sentence for MMC and by association
several other companies. The board of MMC quickly
addressed the problem and came up with a huge bundle
of changes structured to make buyers, investors and
Spitzer happy once again. Investors have moved back
into the stock over the last three days based on 
changes being made and discussed and the calming of
the Spitzer attack. MMC gained +2.45 today to $28.81
and well above the $22.75 low from last week. 

AIG was a major winner with a +4.23 gain. As a Dow 
component this equates to about +35 points of the Dow
rebound. The AIG chairman is Hank Greenberg and the
father of Jeffery Greenberg the CEO who resigned from
MMC. The Dow also got help from GE after GE backed
4Q and full year estimates citing strength across all
divisions. GE rose +0.73. Also helping were CAT +1.07,
HD +1.00, BA +0.98, AA +0.98. IBM also rose slightly 
after authorizing a $4 billion stock buyback. 

Despite the gains by the major insurers, AET +4.49, 
ATH +3.84, CB +4.56, CI +3.69, WLP +4.67, there is
another lion prowling the woods. Connecticut Atty
General Richard Blumenthal confirmed he had issued
35 subpoenas to insurance companies and brokers who
operate in his state. Anthem was the headliner for
this effort but ATH downplayed the event saying it
was not material to their business. Bloomenthal said
he was working with his counterparts in other states
to sift through not only property and casualty but
also health, auto and employee benefits. The wide net
approach is sure to trip over some more practices they
feel are contrary to the public good. Hopefully the
fear has already been seen in the boardrooms and when
any problems are found there will be a swift response.
Given the cash cow that could be milked by aggressive
states currently in financial stress the odds are 
very good there will be some heated discovery and 
the insurance companies will eventually pay. 

The Dow rebound this morning may have pulled it out
of danger for making the history books. At the open
the Dow had lost -2.3% for the month, more than any
October since 1997. The +1.4% one-day jump erased more
than half of that drop for the month. The key question
is obviously how long will it last? With 9900 resistance
looming overhead and 9950 almost as strong there is
going to be some potholes in the road. However this
is October and this is the week that should see a
strong rally. At least in normal years we could expect
a rebound from the October lows to set us up for the
Nov/Dec year end run. 

The Dow actually pegged the pattern almost to the point
with Monday's drop to 9700. The downtrend since February
was looking for a lower low and 9700 was the earliest
potential rebound point once the August lows at the 9800
level was broken last week. 

Dow Chart

  


The Nasdaq was not as lucky. A couple of high profile 
warnings from FLEX and SLAB and the SOX was knocked for
a loss that almost took the Nasdaq down with it. FLEX
dropped -$1 after it said profits would be below prior
analysts estimates on weaker than expected sales. While
that warning hurt the market more than it hurt the FLEX
stock price the damage from SLAB was much more drastic. 
SLAB was slammed to a -6.56 point loss after warning 
that high inventory levels and cautious customers had 
turned the outlook "extremely murky" according to one
analyst. SLAB said they expected the current inventory
excess impacting the entire sector to take time to work
itself out. SLAB expects Q4 sales to fall to $95 million
from prior estimates of $125 million. That slash in 
outlook knocked three times that amount at -$370 million
off the market cap for SLAB. DBS and FB downgraded the 
company to inline levels making the last six ratings 
changes all downgrades on SLAB. It seems the analyst 
community has turned sour on SLAB. 

The challenge was not the downgrades to FLEX/SLAB but 
the impact to the markets. The SOX clung to support at
395 and tried several times to rally to no avail. The
SOX closed flat at -1.10 at 396. The lack of SOX support
for the Nasdaq kept the Nasdaq from joining the Dow party
and held it to only a +7 gain at 1920 until the closing
spike. The closing spike was due to a couple buy programs
on the S&P and the Russell which pushed the Russell to 
a three week high at 577.63 and over strong resistance.
The result was a Nasdaq that moved right back into the
middle of its recent range (1900-1950) at 1927 and a 
+15 point gain. 

Last week the chip stocks could do no wrong in the eyes
of investors. Of the 20 or so chip stocks reporting 
earnings one analyst said 19 either missed estimates 
or guided lower. Yet the SOX rallied off its 375 low 
to a high of 411 last Thursday. So what changed? The
reason for the SLAB warning was exactly the same as the
rest but the market timing was different. Last week you
could not give away insurance stocks and huge amounts
of money was flowing into sectors not related to insurance.
Once the get out of jail free card was played by Spitzer
that cash suddenly saw returning value in insurance and 
weakness in chips for Q4/Q1. As you can tell by the gains
in the insurance stocks I reported above the funds were
rushing back into the sector and away from techs they
loved last week. Why? Insurance stocks were suddenly 
undervalued repositories for excess cash ahead of the
fund year end on Friday. Those funds wondering what to
do with cash generated from the portfolio rebalancing
over the last three weeks suddenly decided Chubb, AIG,
AET, HIG and CI were better investments at their current
valuations than chip stocks where 19 of 20 had warned. 

Another factor sending the indexes higher was the AT&T
Wireless sale to Cingular. According to futures traders
the close of the deal produced a huge index disparity in
the S&P-500. S&P dropped AWE from the S&P-500 and added
CIT. AWE had a market cap of $41 billion and CIT only 
$8 billion. This meant index funds had to buy the index
equivalent $33 billion of other S&P stocks to make up 
for the reduction to the overall market cap loss in the
S&P. Rick Santelli said that about 12,000 S&P futures 
contracts would need to be bought to cover the changes.
Obviously the S&P got a much needed shot in the arm and
the rebound in insurance stocks definitely did not hurt. 

I am sure you are thinking the same thing I am. What
does that mean for tomorrow? Based on the procrastination
factor I would expect more S&P buying tomorrow. I really
doubt that every fund that needed to make the change did
it today. The Justice Dept did not make the announcement
until 3:26 pm on Monday and there were some qualifications. 
S&P did not announce until 5:46 PM on Monday what changes
would be made to the various indexes. This means funds 
could not make changes until today and just given the 
enormous amount of money to be shuffled and the number
of funds needing to make the change the odds are very
good we have not seen the last of it. 

After setting the stage I suggest we look at it from 
the bears point of view. Oil closed over $55 again and
is moving higher overnight. The S&P closed at 1110 which
is just below strong resistance at 1112 where the 50dma
and 100dma converge. That resistance won't matter if 
funds still need to buy billions in S&P stocks. The 
tech sector did not join the party despite the S&P 
being better than 25% weighted in tech stocks. That 
may change tomorrow once fund traders are shocked
but the big gains in some non tech stocks. Non-techs 
may look suddenly over valued and techs may be combed
over once again for bargains. 

The calendar is right for more buying as funds put the
finishing touches on their portfolios for year end. The
calendar is also wrong for a continued rally based on 
the current election surveys. With the election still
a dead heat according to the surveys there are some 
other sources predicting a Kerry victory with the 
University of Minnesota releasing its latest projection
on the election saying that Bush has less than a 30% 
chance of being reelected. The missing 350 tons of 
explosives made the news all afternoon and the blame 
is being placed on Bush despite him not even knowing 
it was there. Late news today suggests a setup by Dr. 
ElBaradei in an effort to discredit Bush ahead of the
election. The IAEA Director General Dr. Mohamed ElBaradei
is no friend of the Bush administration and releasing 
this news the week before the election could be payback.
For whatever reason it was released this week it is not
doing the Bush campaign any good. This causes even more
confusion for investors with only four trading days 
until the election. 

The combination of these events suggests more confusion
in the markets but a potential upward bias from the S&P
changes. The Nasdaq has room to run and the S&P could
break 1115 if the fund shuffling continues. The Dow has
the biggest challenge at 9900 and 9950 but a textbook
support low is in place at 9700. This could be all the
bulls need to justify continued buying. Were it not for
the election I would bet we close higher on Friday than
we did today. However, the election mudslinging on both
sides and the closeness of the race will continue to keep
the market outcome in doubt. Fortunately October and the
election will be history in five trading days and we will
be free to trade on fundamentals once again. That may 
have it's own set of problems but at least it will be 
different than the ones we are facing this week. 

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

MTS Systems - MTSC - close: 24.75 change: +1.22

WHAT TO WATCH: MTSC continues it rally and stretches the winning 
streak to five days in a row.  Volume has been above average for 
the stock for the last three days.  Yesterday the stock broke 
through its simple 200-dma.  Today MTSC broke through six-month 
old resistance at the $24 level.  This looks like a breakout 
worth watching.  One note of caution through, MTSC's normal 
volume is very, very low, which makes any play here a high-risk 
play. 




---

Electronic Data Systems - EDS - close: 20.99 change: +0.96

WHAT TO WATCH: EDS delayed its earnings report to November 3rd 
and announced that it plans to cut about 4,000 jobs to reduce 
expenses.  The news sent EDS soaring for a 4.7 percent gain on 
above average volume.  Furthermore the rally broke through eight-
month old resistance in the $20.50-20.65 range.  Technical 
traders will also note that the rally sparked a bullish triangle 
breakout on its P&F chart.  This is traditionally a very 
successful pattern to trade.  The current upside target is $29.




---

ExxonMobil - XOM - close: 49.39 change: +0.58

WHAT TO WATCH: As crude oil continues to flirt with all-time 
highs the rally in the oil sector continues.  There's no denying 
the up trend in shares of XOM and the recent pull back toward the 
$48 region looks like an entry point.  We like the bounce today 
and would consider bullish positions.  However, we want to wait 
and see how investors react to the half-dozen energy-related 
earnings reports tomorrow.  Plus, XOM is due to report earnings 
on Thursday.  We'll be watching to see how traders react to XOM's 
Q3 numbers and its guidance.




---

Bed Bath & Beyond - BBBY - close: 40.00 change: +1.51

WHAT TO WATCH: The RLX retail index is still trading relatively 
close to all-time highs.  In spite of all the economic data 
showing that growth is slowing investors still expect a strong 
fourth-quarter shopping season.  That's why today's rally in BBBY 
might be of interest.  The stock added 3.9 percent to close right 
at round-number resistance at the $40 mark.  A broker starting 
coverage with an "over weight" outlook was to blame for today's 
gain.  We suggest that patient traders watch for a breakout over 
the $40 level and then give BBBY time (several weeks) to climb 
toward the $44 level.  





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

LCAV $29.00 +5.41 - Whoa!  That's quite a reversal on Tuesday.  
The company beat estimates by 4 cents and guided higher.

UNP $62.22 +0.97 - UNP continues to look like a bullish candidate 
and today's breakout over minor resistance at $62 reaffirms our 
opinion.

CHRT $6.22 -0.04 - CHRT has been stuck in a trading range between 
$5.90 and $6.80 for the past three months.  Nimble traders can 
take advantage of that trend.

XLNX $29.48 +0.28 - XLNX is currently challenging its simple 100-
dma.  If shares can breakout over $30.00 or $30.40 again it could 
be a bullish entry point.

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

Is the rally here?
- J. Brown

There have been a lot of traders waiting and watching for the end 
of October rally in stocks.  You can bet that more than a few of 
them are hoping that today's 138-point gain in the Dow is the 
beginning.  There are probably a few more hoping or speculating 
that today could be the beginning of the widely-expected post-
election fourth quarter rebound higher.  It is certainly a 
possibility to consider. 

Most will point the finger at insurance stocks today if you're 
looking to blame someone for the bounce.  The entire insurance 
sector soared higher after news hit of NY Attorney General Eliott 
Spitzer's decision to not file criminal charges against Marsh and 
Mclennan (MMC).  The IUX insurance index added 5.3 percent and 
Dow-component AIG soared more than 7 percent and was the Dow's 
biggest gainer.  

The rally spread to the rest of the Big Board and soon almost the 
entire market was trading higher.  Only semiconductors, disk 
drives, and gold stocks closed lower as evidenced by their 
respective indices.  Bulls produced some big bounces in 
healthcare (HMO.X +5%), homebuilders (DJUSHB +3.4%), and airlines 
(XAL.X +4.3%).  Overall market internals were very bullish.  
Advancing stocks outnumbered decliners 20-to-7 on the NYSE and 3-
to-2 on the NASDAQ.  Up volume was about four times heavier than 
down volume on the NYSE and only about 25 percent heavier on the 
NASDAQ.  

I feel like I should mention crude oil again and its rebound back 
over the $55 a barrel level but does it really matter?  Oil 
didn't influence stocks today and it certainly didn't impact the 
transportation sector, which climbed right back toward five-year 
highs.  

On a different note there are probably some big-picture pundits 
out there pondering the implications, if any, of the SEC's vote 
on hedge funds today.  The hedge fund industry is rumored to 
control upwards of $1 trillion in assets.  The agency voted in 
approval of having hedge funds register as investment advisors.  
This would allow SEC examinations, force them to have and follow 
security compliance guidelines and provide more information in 
general.  

Tomorrow's economic reports are the durable goods orders and new 
home sales.  Plus, we'll get the latest oil and gas inventory 
supply data.  Wednesday is also another full day of Q3 earnings.  
Some of the oil/energy stocks reports are AHC, COP EOG, KMG, and 
POG.  A few of the tech stocks reporting are ASKJ, JDSU and SIRI.  
Plus, we have a handful of other big names like BUD, BDK, NEM, 
NOC, BA, PG and UL.  

Tuesday leaves us with just seven days and only five trading days 
before the Nov. 2nd election.  It wouldn't surprise me to see 
stocks rally into the election on the singular notion that the 
whole circus is almost behind us.  But then that's probably not 
true.  Such a razor-thin race probably guarantees the whole thing 
will be decided in court and we won't know the "winner" for days.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9497
Current     :  9888

Moving Averages:
(Simple)

 10-dma:  9883
 50-dma: 10110 
200-dma: 10264



S&P 500 ($SPX)

52-week High: 1163
52-week Low : 1018
Current     : 1111

Moving Averages:
(Simple)

 10-dma: 1105
 50-dma: 1112
200-dma: 1119



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1442

Moving Averages:
(Simple)

 10-dma: 1443
 50-dma: 1411
200-dma: 1439



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

CBOE Market Volatility Index (VIX) = 16.39 -0.19
CBOE Mkt Volatility old VIX  (VXO) = 16.48 -0.39
Nasdaq Volatility Index (VXN)      = 22.47 -0.23 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.67        841,443       566,655
Equity Only    0.58        705,920       406,927
OEX            0.84         22,756        19,085
QQQ            1.40         14,958        21,023


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

Bullish Percent Data

           Current   Change   Status
NYSE          62.9    + 0.2   Bear Correction
NASDAQ-100    49.0    + 2     Bull Alert      
Dow Indust.   50.0    - 0     Bear Confirmed
S&P 500       60.2    + 0.6   Bear Correction
S&P 100       59.0    + 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: 1.03
10-dma: 1.04
21-dma: 1.02
55-dma: 1.07


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    2063      1793
Decliners     745      1197

New Highs     135        91
New Lows       25        63

Up Volume   1672M     1047M
Down Vol.    397M      728M

Total Vol.  2089M     1803M
M = millions


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

Commitments Of Traders Report: 10/19/04

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 in the big
S&P contacts and are nearing a dead heat between longs and
shorts.  Small traders remain mostly net bullish but have
pared back their enthusiasm a bit.

Commercials   Long      Short      Net     % Of OI
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%)
10/19/04      432,945   441,041   ( 8,096)   (0.1%)

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
09/28/04      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%
10/19/04      147,148   124,827    22,321     8.2%

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

We see a similar picture in the e-minis.  Commercial traders
aren't making any changes.  They remain net bearish and we
have the same reading as last week.  Meanwhile small traders
have slowly grown more net bullish, which of course is a
bearish contrarian indicator.

Commercials   Long      Short      Net     % Of OI 
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%)
10/19/04      264,860   531,541   (266,681)  (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
09/28/04      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%
10/19/04      353,903     66,027   287,876    68.5%

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 trades have not moved much.  They remain net 
bullish on the NASDAQ 100.  Small traders upped both their
longs and shorts and reduced their bearish posture a tad but
remain strongly net bearish.

Commercials   Long      Short      Net     % of OI 
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%
10/19/04       52,630     31,940    20,690   24.4%

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
09/28/04       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%)
10/19/04       10,462    25,243   (14,781)  (41.3%)

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 seem content to sit on the sidelines with
out any big directional bets on the Industrials.  Longs and
shorts have remain pretty close to one another for a few weeks
now.  That's not so with the small traders.  The latest data
shows a big drop in short positions and the bias has turned
bullish for the first time in weeks.


Commercials   Long      Short      Net     % of OI
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%
10/19/04       25,385    24,213    1,172       2.3%
 
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
09/28/04        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%)
10/19/04        8,327     6,015    2,312     16.1% 

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.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

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

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


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







PremierInvestor.net Newsletter                  Tuesday 10-26-2004
                                                    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:  PLAB, BC, BG

Net Bulls (Tech Stocks)
  Closed Bearish Plays: -- SWIR

Stock Splits
  Announcements:       None

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


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

PLAB - tech stock long -
  The bounce from $17.00 looks like another
  bullish entry point. 
 
 
BC - non-tech long -
  BC added a strong 3.64 percent to breakout
  over resistance near $47.00 and close at new
  all-time highs.  Remember that we plan to exit
  this play on Wednesday afternoon to avoid the
  Thursday morning earnings report.
 
BG - non-tech long -
  BG turned in a strong performance with a 
  2.64 percent rally and close over the $44 level.
  Remember that we plan to exit on Wednesday's
  close to avoid the Thursday morning earnings.


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

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

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

Sierra Wireless - SWIR - close: 16.53 chg: +0.27 stop: 16.75     

Time is almost up and SWIR is not cooperating.  The stock continues 
to bounce and has now closed above the $16.50 level.   We are 
choosing to exit now, per our comments last Sunday, to avoid the 
company's Q3 earnings report after the closing bell on Wednesday 
evening.  

Picked on October 18 at $15.45
Gain since picked:      + 1.08
Earnings Date         10/27/04 (confirmed)
Average Daily Volume:      1.9 million 




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

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

None


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

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

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

WFC     Wells Fargo                58.70     +0.85
WB      Wachovia Corp              48.50     +1.11
AIG     American Intl Group        60.33     +4.23
COP     ConocoPhillips             86.43     +1.51
CVX     ChevronTexaco              53.95     +0.51
FNM     Fannie Mae                 69.13     +2.26

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

NVDA    NVIDIA Corp                14.49     +1.15
NUS     Nu Skin Enterprises        19.40     +1.40
CSGS    CSG Systems Intl Inc       17.37     +1.65
ABMD    Abiomed Inc                10.85     +1.40
MACE    Mace Security Intl          5.45     +2.48

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
AMX     America Movil              41.50     +2.65
PGR     Progressive Corp           92.73     +1.84
CCU     Clear Channel Comm.        32.61     +2.19
OMC     Omnicom Group              79.44     +6.72
MON     Monsanto Co                40.42     +1.20
CIT     CIT Group                  40.10     +2.00
TROW    T.Rowe Price               52.39     +1.91

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

DNA     Genentech Inc              42.87     -1.13
APOL    Apollo Group               66.75     -4.20
PIXR    Pixar                      76.96     -1.66
DVA     Davita Inc                 29.40     -2.86
TIN     Temple Inland              59.74     -1.49
RCI     Renal Care Group           30.00     -2.48
SLAB    Silicon Labs               27.88     -6.56
TRMB    Trimble Navigation         25.89     -2.51
ATRS    Altiris Inc                27.18     -1.89

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

QCOM    Qualcomm Inc               39.50     -1.64
CME     Chicago Mercantile Exchg  165.70     -3.65
CTSH    Cognizant Tech             30.79     -1.46


=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

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

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

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







DISCLAIMER

Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives