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Daily Newsletter, Monday, 11/01/2004

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PremierInvestor.net Newsletter                   Monday 11-01-2004
                                                    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: Low Range, High Anxiety  
Watch List: Plenty of Breakouts to watch   


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      11-01-2004           High     Low     Volume   Adv/Dcl
DJIA    10054.39 + 26.92 10076.59 10010.15 1.72 bln 1633/1164
NASDAQ   1979.87 +  4.88  1983.91  1969.32 1.53 bln 1574/1492
S&P 100   540.50 -  0.15   542.24   539.21   Totals 3207/2656
S&P 500  1130.51 +  0.31  1133.43  1127.53
SOX       413.71 +  1.46   415.00   409.39
RUS 2000  587.00 +  3.21   587.42   581.11
DJ TRANS 3504.07 +  6.65  3521.82  3485.70
VIX        16.27 -  0.00    16.76    16.18
VXO (VIX-O)16.31 -  0.26    17.07    16.27
VXN        22.61 +  0.71    22.85    22.43
Total Volume 3,256M
Total UpVol  1,843M
Total DnVol  1,347M
Total Adv  3207
Total Dcl  2656
52wk Highs  284 
52wk Lows    57
TRIN       0.86
PUT/CALL   0.92 
===============================================================

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

Low Range, High Anxiety
Jonathan Levinson


It was a relatively quiet day, punctuated by small number of 
sharp, narrow range moves.  Volume was light overall, not 
surprising as we approach the elect with its attendant direct and 
indirect uncertainties.  Option volatility increased despite the 
tight range for the day, perhaps caused by option purchases by 
market participants seeking to hedge open positions. 


One year daily Dow Chart


I've squeezed one year's worth of daily candles into a single 
chart to provide some perspective on today's action, or lack 
thereof.  The Dow rose 26.92 points to close at 10054, just above 
The Number but below 10080 confluence and trendline resistance.  
The daily cycle upphase currently in progress is so far 
delivering excellent price traction, and while the market feels 
to me like it wants to correct, the small wedge/flag atop last 
week's sharp rally should act as a continuation pattern with the 
upphase.  A close above 10080 will suggest that the breakout is 
in progress, targeting 10130 and 10175-200 next.


Daily SPX Chart


The SPX rose less than a point to close at 1130.51, one of those 
rare days when every fraction counts.  The daily cycle upphase 
has been very strong since last week as well, but the climb has 
outpaced the oscillators, leaving a potential bearish divergence 
here if the price reverses back below the 1115 support level on a 
closing basis.  Until then, this is merely a potential 
divergence, and only a daily cycle signal will change it.  Above 
1136, 1142-44 looms large on the way to a possible test of the 
year highs.



Daily Nasdaq Chart


The Nasdaq is the closest to a test of this year's declining 
resistance line, looking for a close above the 1985 level 
(today's close was 1979.9) to target 1995-2000, 2025 and 2060.  
The pattern of stochastic highs suggests that the 1980-2000 level 
will be a key battle between bulls and bears, and conveniently we 
have major market moving news due tomorrow.  Below 1950, next 
support is at 1920 and 1900.


Weekly TNX Chart


Bonds were weak today, gapping slightly and spending the day 
above the bulk of last week's range.  On this weekly chart (see 
tonight's Futures Wrap for a discussion of the daily chart), the 
most recent weekly candle is based solely on today's data.  
Despite the strong move higher in the ten year note yield (TNX), 
which added 1.51% in a 6.1 basis point move to close at 4.09%, 
the downtrend off the springtime highs has yet to be violated.  A 
move above the 4.14% level will be the first sign of trouble for 
bond bulls/TNX bears, followed by EMA resistance in the 4.2% 
area.  A break below the 3.85%-.88% level would suggest that the 
current decline is in fact a bear wedge breakout targeting the 
low 3.0% level below 3.59% support.


Weekly Crude Oil Chart


Last week's pullback was being lightly retraced this morning, 
with December crude futures reaching a high of 52.475 as the 
financial press discussed production concerns amid reports of 
wildcat strikes in Nigeria.  The spin abruptly reversed course as 
crude oil took a plunge, with reporters attributing the fall in 
prices to the workers not formally having agreed to strike and 
Iraqi production reaching its highest level since the first 
attacks on that country.  Reuters attributed the action to 
speculation of a Kerry win, citing analysts who expect a more 
interventionist petroleum policy, a less aggressive expansion of 
the Strategic Petroleum Reserves and a more conventional 
diplomatic policy in the Middle East under Kerry.

Whatever the reason, oil was back below the 50 level for the 
first time in a month, lending some credence to the bearish 
divergence in the 10-week stochastic that has been steadfastly 
holding its ground.  Wildcat strikes, kidnappings and fighting in 
the Middle East, and news of the sabotage of a pipeline in 
northern Iraq were ignored.  There's support at 49, with stronger 
confluence at 45-46.  Obviously, the election results will have 
their own impact on this chart, always assuming that the more 
than 10% price drop in the recent days approaching the election 
were merely technically driven.  For the day, crude oil for 
December delivery closed at 50.20 on the Nymex, a 3% decline.


Following Friday's news of the 70+ year low in the personal 
savings rate, the Bureau of Economic Analysis announced US 
September consumer spending and personal income before the bell.  
Personal income rose 0.2% for the month, while consumer spending 
rose 0.6%.  Expectations were a .3% increase and a .6% increase, 
respectively.  The Personal Consumption Expenditure Index (PCE), 
an index that the Fed prefers over the CPI, is now up an 
annualized 2% over the past year, with the core PCE up an 
annualized 1.5%.  There was little reaction to this data upon its 
release, with bonds drifting slowly lower while equities declined 
slightly and then rose.  

The news was notable in that personal spending continued to 
advance faster than personal income, as appears from the attached 
chart from the BEA's report:


BEA chart of Real Disposable Income and Real consumer spending





This month's income figure included an increase of 20B in 
transfer receipts representing net insurance settlements for 
hurricane damage.  Wages and salaries increased by another 20B, 
but according to the report were "partly offset" by a reduction 
in rental income due to uninsured losses resulting from the 
hurricanes.

At 10AM, the Institute for Supply Management reported that the US 
manufacturing sector expanded for its 18th consecutive month in 
October, holding over the 50% baseline but declining to 56.8% 
from an unrevised 58.5% in September.  Expectations were for 
58.5%, and equities dipped immediately on the news.  Also at 
10AM, the Commerce Department reported a US Construction Spending 
for September.  The number was flat for the month, missing 
expectations for a .5% increase.  The August reading was revised 
to a .9% gain from the .8% increase previously reported.  The 
September reading broke a 7 month trend of increases in 
construction spending.

At 3PM, the Treasury Department announced that it intends to 
borrow another $100B in the last quarter of 2004 to fund the 
budget deficit, to be followed by an additional 147B in the first 
quarter of 2005.  The markets greeted this news with a yawn, with 
the US Dollar Index holding steady as well.

Earning season is finally slowing down, and it was a relatively 
quiet day for corporate news.  DCLK was up strongly on news that 
it has retained Lazard Freres to advise the company on increasing 
shareholder value, including potential stock buybacks, dividends, 
the sale of all or part of the company and such.  DCLK rose a
whopping 11.95% to close at 7.12.

TYC reported fiscal Q4 earnings of 22 cents or 454M, which, 
excluding non-recurring items amounted to 45 cents per share, 
beating estimates by 2 cents.  Q4 2003 had seen a loss of 297M or 
15 cents per share.  Led by strong growth in its healthcare, 
electronics and engineered products divisions, revenues rose 13% 
to 10.44B, meeting expectations.  TYC expects to earn 40-42 cents 
in the next quarter, below current analyst estimates of 44 cents.  
TYC rose 1.77% to close at 31.70.

A Wall Street Journal story made the rounds this morning, 
suggesting that internal emails and other documents reveal a an 
effort on the part of MRK to bury the facts showing elevated 
heart risks associated with Vioxx.  The article cited an email 
dated March 9, 2000 acknowledging such risk.  In the afternoon, 
it was announced that Standard & Poor's had placed MRK's triple-A 
credit rating on review for a potential downgrade due the risks 
of additional litigation against the company.  The stock got 
shanked for 9.68% to close at 28.28.

Petrochemical and coal mining company CVX was downgraded by
 Robert W. Baird from "outperform" to "neutral" following last 
week's Q3 results, citing an expected negative impact from 
lingering interruptions in the wake of this years hurricanes, as 
well their anticipation of a "consolidation" in oil prices.  CVX
closed lower by .21% at 52.95.

After the bell, chipmaker NSM lowered its fiscal Q2 targets, with
the company now expecting sales to decline almost 20% to 445M-
450M from its previous forecasted drop of 8%-10%.  NSM was down 
8.03% to 15.35 afterhours as of this writing.  MXIM was also
getting sold afterhours, down 2.51% to 43.10 after meeting 
analyst expectations of 42 cents per share.  Sales were light, 
however, coming in at 435M for the quarter vs. expectations of 
454M.  The company also announced an increase in its quarterly 
dividend from 8 cents per share to 10 cents.

For tomorrow, we have a light menu of economic reports, with the 
ICSC-UBS Store Sales report and the retail Redbook, followed at 
10AM by the Challenger Job report.  That, and the elections.  I 
believe that today's lighter volume, higher option-volatility, 
narrow range action was the prelude to tomorrow's news.  I won't 
bother adding my voice to the deafening chorus of guesses as to 
what will, will not or might happen.  From a trader's 
perspective, we can either try for an educated guess, or wait for 
the market to tell us by moving through or failing to move 
through key levels.  While the temptation is obviously to attempt 
to anticipate a move with a prior (directional) position, that's 
the higher risk alternative.  With the Nasdaq near the top of an 
impressive rally off the August lows while the Dow and SPX 
continue to retrace last month's losses, there's something for 
everyone.  While I am personally expecting some kind of selling 
on the Nasdaq, at least on a corrective basis, that opinion will 
change if  bulls can break the declining resistance lines on the
way to a test of the June highs.  The only certainty is that the 
market will be making a strong move in either direction following 
the light volume, high anxiety action we had today.  If you find 
yourself worrying about the outcome of the election, at least as 
far as your open directional positions go, consider either 
hedging them or lightening up.  Alternatively, a straddle 
properly applied can help you capture the move without committing 
more than necessary to either direction.
 

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

Masco Corp - MAS - close: 35.41 change: +1.15

WHAT TO WATCH: Investors were in a buying mood the day before MAS 
reports earnings.  The stock added 3.3 percent on above average 
volume to breakout over resistance at $35.00 hitting new all-time 
highs.  Technicals are positive and its MACD is in a buy signal.  
The P&F chart is very bullish with a $60 price target.  Wall 
Street is looking for MAS to report earnings of 62 cents a share 
tomorrow morning.  Watch for a reaction to the news. 




---

Unocal Corp - UCL - close: 42.32 change: +0.57

WHAT TO WATCH: Oil and oil service stocks have been consolidating 
some of their late summer gains.  Yet while both the OIX and OSX 
indices traded lower today shares of UCL continued Friday's 
bounce on above average volume.  The RSI and stochastic 
indicators are reversing upward again and its MACD indicator is 
nearing a new buy signal.  Readers may want to consider bullish 
positions on a move over $42.75-43.00.




---

Martin Marietta - MLM - close: 47.75 change: +2.22

WHAT TO WATCH: MLM added 4.8 percent on strong volume after 
reporting earnings that bested analysts' estimates by 7 cents.  
The breakout has pushed MLM to new six-month highs and a new P&F 
buy signal. Considering the double-bottom near $41 and the 
consolidation over the past couple of months MLM could be poised 
to move higher.  Its MACD is in a buy signal and the P&F chart 
points to $58.  We see current resistance in the $51 region.




---

Novastar Financial - NFI - close: 44.25 change: +0.97

WHAT TO WATCH: This could be a bullish entry point in NFI.  
Several days ago the stock put in a quick double-bottom at the 
$40 level.  Now shares have broken out over resistance at $44.00 
and its simple 200-dma.  NFI has also broken its six-week trend 
of lower highs.  Plus, its MACD is in a new buy signal.  
Aggressive traders may want to consider long positions now.  
Conservative traders can watch for a move over $45.  We would 
target $50.






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

RSH $30.87 +0.94 - RSH added more than 3 percent on Monday with 
volume way above average.  Today's breakout pushes through 
resistance at $30.00 and its simple 200-dma.

PWR $6.94 +0.22 - PWR has rallied another 3.2 percent to breakout 
over resistance t $6.75 following Friday's move over the simple 
200-dma.

STZ $40.04 +0.81 - STZ looks poised for a breakout over 
resistance in the $40.00-40.10 region.

YCC $28.50 +0.80 - YCC has been consolidating in a large pennant 
pattern of lower highs and higher lows.  Currently YCC has broken 
out over all its major moving averages and looks ready to break 
the trend of lower highs.
 

=================================================================
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                   Monday 11-01-2004
                                                    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: AFG    

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

AFG - non-tech short -
  Ouch!  AFG is not cooperating and this is turning into
  a painful loss for us (-8.7 percent so far).  Over the weekend
  we suggested that conservative traders may want to exit if
  AFG breaks out over the $30.00 mark.  AFG did just that today,
  out performing the IUX insurance index on big volume again.
  All of our indicators and analysis on AFG is now bullish but the
  stock is nearing major resistance at $31.00 - a level that has
  not cracked in years!  We're going to stick it out for another 80 cents.


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

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

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

SI      Siemens Aktien             75.44     +0.70
UBS     UBS Ag                     73.06     +0.57
UN      Unilever N.V.              58.85     +0.56
MWD     Morgan Stanley             52.19     +1.10
CAT     Caterpillar                81.84     +1.30
AT      Alltel Corp                55.78     +0.85

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

MVL     Marvel Enterprises         16.98     +1.58
CHUX    O'Charley's Inc            17.30     +1.78
ABMD    Abiomed Inc                12.83     +1.52
MALL    PC Mall Inc                16.53     +1.10
ECST    Ecost.com Inc              10.10     +1.17
TRGL    Toreador Resources         12.40     +1.96

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
PSFT    Peoplesoft Inc             22.93     +2.16
PH      Parker Hannifin            72.56     +1.93
HUM     Humana Inc                 20.35     +1.20
KCI     Kinetic Concepts           55.65     +5.82
MLM     Martin Marietta            47.75     +2.22
CRM     Salesforce.com             21.70     +1.38
MMP     Magellan Midstreams        56.75     +1.35

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

MRK     Merck & Co                 28.28     -3.03
AVP     Avon Products              38.00     -1.55
APOL    Apollo Group               64.38     -1.62
EL      Estee Lauder               41.65     -1.30
KWK     Quicksilver Resources      30.42     -1.21
EAC     Encore Acquisition         31.62     -1.03
GIVN    Given Imaging Ltd          29.75     -2.49
ATRS    Altiris Inc                25.49     -1.71

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

GDT     Guidant                    62.98     -3.64
DADE    Dade Behring               52.47     -3.82
SRX     SRA Intl Inc               52.25     -1.51
CETV    Central European Media     33.70     -1.69
CAC     Camden Ntl Corp            35.84     -1.01

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