PremierInvestor.net Newsletter Monday 11-22-2004 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: As the World Turns Watch List: Almost All About Energy =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 11-22-2004 High Low Volume Adv/Dcl DJIA 10489.42 + 32.51 10508.04 10432.01 1.73 bln 1991/ 840 NASDAQ 2085.19 + 14.56 2085.19 2052.80 1.90 bln 1799/1235 S&P 100 561.64 + 1.95 562.42 557.94 Totals 3790/2075 S&P 500 1177.24 + 6.90 1178.18 1167.89 SOX 432.88 + 1.00 434.59 426.09 RUS 2000 621.52 + 8.08 621.59 612.02 DJ TRANS 3609.24 + 41.59 3613.07 3559.77 VIX 12.97 - 0.53 13.71 12.94 VXO (VIX-O)13.58 - 1.02 14.28 13.48 VXN 18.77 - 0.95 20.07 18.72 Total Volume 3,637M Total UpVol 2,349M Total DnVol 1,231M Total Adv 3790 Total Dcl 2075 52wk Highs 331 52wk Lows 29 TRIN 0.99 PUT/CALL 0.73 =============================================================== =========== Market Wrap =========== As the World Turns Linda Piazza Thanksgiving week opened with a day light on U.S. economic releases, but heavy on global news that might impact our markets. The only scheduled U.S. economic release was the 6:00 EST release of the SEMI Book-to-Bill number, but the weekend had been heavy with meetings among the world's political and economic leaders. Added to that mix were various global and analyst reports. Those included an International Monetary Fund report that lowered the IMF's forecast for the globe's 2005 economic growth, a negative Merrill Lynch report on PC sales that initially hit tech stocks and a Piper Jaffray decision to raise earnings estimates for Apple Computer. Piper Jaffray also set a new, attention-getting price target of $100.00. By the end of the day, the dollar had temporarily stabilized and crude had retreated off its high of the day. Most indices had posted gains, with the BTK (Biotechnology Index), TRAN (Dow Jones Transportation Index), XNG (Natural Gas Index), UTY (Utility Index) and DJUSHB (Dow Jones Home Construction Index) being among the standouts, each posting more than 1 percent gains. Daily Chart of the SPX: Annotated 15-Minute Chart of the SPX: Annotated Daily Chart of the Nasdaq: Annotated 15-Minute Chart for the Nasdaq: Annotated Daily Chart of the Dow: The TRAN, the Dow's sister index, sometimes gives advance notice as to the direction the Dow and S&P's are most likely to take. The TRAN is sensitive to both crude and economic issues. Annotated Daily Chart of the TRAN: Annotated Daily Chart of the Russell 2000: What happens tomorrow will likely be influenced by the reaction to the SEMI book-to-bill number, with that number not yet released as this report was prepared, and crude prices. Annotated Daily Chart of Crude for January Delivery: The dollar's performance remains important, but the dollar consolidated much of Monday. With the Nikkei closed Tuesday for a one-day holiday, the dollar/yen pair may continue to consolidate or zoom around in a choppy fashion difficult to predict, and the euro/dollar pair may follow suit. Currency issues have been much featured in financial newsletters and television reports late last week and through today. This weekend, finance ministers and central bank members from twenty countries concluded a meeting without a statement addressing the dollar's decline against other currencies. According to one article, German officials had attempted to include language that criticized the volatility of recent currency moves, but the U.S. rejected the language. Going into the meeting, many had feared that no consensus could be reached, but that lack of consensus still remained a disappointment. Some interpreted the lack of a statement to mean that some participants wanted to see currencies fluctuate freely against the dollar. Some must have argued against the kind of intervention that has been practiced in the past by Japan and South Korea to weaken their currencies against the dollar. China, too, has been under pressure to allow its currency to fluctuate against the dollar, with China's President Hu Jintao reportedly telling President Bush separately, in their meeting in Chile, that China will consider allowing more flexibility, but only if economic conditions are stable. A stronger dollar benefits foreign exporters but hurts U.S. exporters. Some feel that a weaker dollar is needed to lower the U.S. deficit, but other countries fight to protect their more fragile economies. Currency experts felt that the lack of a statement and the presumed reasoning behind that lack suggested further declines in the dollar against other currencies. That decline against some currencies didn't take long to occur, as the dollar fell to multi-year lows against South Korea's won, but throughout most of the U.S. trading day, the dollar consolidated against most other currencies. Another meeting, the Asian Pacific Economic Cooperation Summit, occurred in Santiago, Chile. However, despite the "economic" thrust of those meetings, North Korea's nuclear threat issues was the subject of a bilateral meeting with President Bush and Japanese Prime Minister Koizumi. At that bilateral meeting, President Bush reaffirmed his intention that discussions with North Korea must be multi-party ones, including other Pacific Rim leaders. Iran's nuclear threat was also discussed, with President Bush also meeting with China, South Korea and Russia to discuss Iran's threat. In the wake of those meetings and at the eurozone countries' urging, Iran on Monday suspended enrichment processes that could be used to develop a bomb. Some consider the suspension a ploy to avoid the U.S.'s request that the U.N. sanction the country. The U.S. wants a statement added in the EU draft resolution to the U.N.'s International Atomic Energy Agency (IAEA) that sets forth measures to be taken if Iran restarts its enrichment program. Iran has already warned that it's not that country's intention to make the suspension permanent. Rather, Iran intends the suspension as an effort to restore confidence in its peaceful goals for the program. The IAEA has been in the process of confirming the suspension, with a report likely at a Thursday meeting. Discussions about a comprehensive global trade accord and free trade agreements were also scheduled for that Asian Pacific Economic Cooperation Summit. At the conclusion of his meeting with Prime Minister Koizumi, President Bush reiterated his commitment to a strong dollar and to lowering the U.S. budget deficit, both a concern of our trading partners, but his statement made little impact in convincing market watchers that the dollar would stem its slide on more than a temporary basis. That concern about the U.S. budget deficit and dollar performance was heightened by the International Monetary Fund's lowering of the globe's 2005 economic growth forecasts, to 4.0 percent from the IMF's former 4.3 percent estimate. The IMF cited the U.S.'s budget deficit and higher crude costs when lowering that forecast. Computer makers were the subject of conflicting reports Monday. Merrill Lynch proposed that PC sales growth had already peaked for 2004, at 12 percent. The firm expects sales growth for 2005 and 2006 to be lower, at 9 and 6 percent, respectively. Piper Jaffray had more encouraging things to say about computer maker Apple (AAPL), raising the company's full-year earnings estimate for 2005-2006. Piper Jaffray caught the attention of market watchers when the firm raised the price target to $100 from its current $52. The firm took this step after conducting a six-week survey of former PC users who bought iPods, determining that a healthy 13 percent of those intended to buy or had already bought Macs. In the interests of accounting for errors or bias among survey participants, Piper Jaffray's analyst trimmed those estimates back to a 6.5 percent capture rate for reeling in first-time Mac buyers. Fulcrum Global Partners also raised Apple's price target, but to $65.00. The firm's analyst cited strong sales of iPods and iMac G5 desktops, and increased his estimates of iPod sales and IMac shipments. He expects Mac shipments to grow faster than in the overall PC market. The GHA, the GSTI Hardware Index, includes AAPL as a component stock, as well as a number of PC makers. While many component stocks started the day under pressure, the GHA climbed, consolidated, and climbed again into the close, with the GHA's strong performance perhaps predicting early on that the Nasdaq would rise by the end of the day, too. Despite the disturbing news from Merrill Lynch, this strong performer's daily candle engulfed Friday's bearish one, touching 300 and closing just above it at 300.07. The GHA should be watched for rollover or breakout potential. Annotated Daily Chart of the GHA: Other developments Monday included a 2.53 percent loss in Google (GOOG) after Friday's report on insider selling and 2.16 and 4.93 percent gains, respectively, in Toys R Us (TOY) and Campbell Soup Company (CPB) after their better-than-expected earnings results. Oracle dropped 0.54 percent. PeopleSoft shareholders decided they would take ORCL's offer, but PeopleSoft's board still insisted that the offer undervalued the company. ORCL said it would seek a hearing this week in Delaware to resolve the issue. The calendar for economic releases remains light Tuesday. At 10:30, investors get a glimpse of October's Existing Home Sales. After the close, the ABC Consumer Confidence number will be released at 6:30 EST. The Nikkei won't trade tonight, but watch the futures' reaction to the SEMI book-to-bill number for some insight into the impact of that number. The tech-heavy Taiwan Weighted and South Korean Kospi can also be watched to gauge reaction to that number. Remember that markets are already seeing holiday-lightened volumes, and volumes may stagnate even more as Thanksgiving approaches. Be prepared for stagnate markets, too, or for markets that chop around in difficult-to- anticipate moves. Don't get married to any positions in a light- volume, holiday week. ================================================================== 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 --------------------------------- Occidential Petroleum - OXY - close: 59.45 change: +1.02 WHAT TO WATCH: We have highlighted OXY before. The stock is one of several in the oil sector that is leading the way higher. The oil patch looks poised for another leg higher and could be a great way to play it. Shares of OXY have broken through its short-term trend of lower highs. Technicals are bullish. The MACD has produced a new buy signal. Aggressive traders could go long now. Conservative traders can wait for the move over $60.00. The P&F chart is extremely bullish with a $96 target. We would target $65-66. --- N S Group Inc - NSS - close: 21.58 change: +0.66 WHAT TO WATCH: This could be a momentum trader's entry point. NSS has just broken out over resistance at $21.50 dating back to the summer of 2000. Today's 3 percent gain puts NSS at new 6 1/2 year highs. We think the stock looks a little extended here and due for a pull back but right now the trend is your friend. The P&F chart shows a new double-top breakout with a $29 target. --- Telecom Brasil - TBH - close: 29.90 change: +1.12 WHAT TO WATCH: TBH could definitely be a stock to watch. Shares have been consolidating sideways between $26 and $30 for almost four months. Now the stock has rallied through its 200-dma and is challenging resistance at the $30.00 level. We would consider a move over $31.00 as a bullish entry point. The P&F chart shows the same resistance in the $30-31 region but the chart is in a new bullish buy signal with a $39 target. --- Cons Energy - CNX - close: 40.89 change: +1.08 WHAT TO WATCH: We hear a lot about oil and oil stocks these days but natural gas and utilities have been very bullish too. CNX is an electric company that generates power through coal and gas. Shares recently broke out over resistance at the July high near $39.00 and round-number resistance at $40.00. Now the stock is edging nearer to its all-time highs dating back to 2000 at the $42.50 level. Watch for the breakout. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- VLO $46.23 +1.21 - Another oil-related stock breaking out over resistance. Technicals are bullish. PCO $42.83 +1.27 - We've highlighted PCO before. It's another oil-related stock breaking out. VPI $22.57 +1.02 - Another oil stock breaking out over resistance. SM $40.20 +1.25 - Another oil stock with bullish technicals and just now breaking out of its consolidation phase. ================================================================= 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 11-22-2004 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: CHK, ACH Active Trader (Non-tech Stocks) New Bullish plays: CVX, DNR High Risk/Reward New Bullish plays: VLCCF 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 ================================================================== CHK - non-tech long - CHK broke out over resistance with a 2.2 percent gain on Monday. This could be another bullish entry point. ACH - non-tech long - Chinese aluminum miner ACH is trying to rally out of its current trading range. This could be a bullish entry point, or wait for a move over $63.00 to confirm. ================================================================== Active Trader (AT) Non-Tech Stock section ================================================================== --------- New Plays --------- New Bullish Plays ----------------- ChevronTexaco - CVX - close: 54.80 change: +0.90 stop: 51.99 Company Description: Currently celebrating its 125th anniversary, ChevronTexaco is one of the world's leading energy companies. With more than 47,000 employees, ChevronTexaco conducts business in approximately 180 countries around the world, producing and transporting crude oil and natural gas, and marketing and distributing fuels and other energy products. ChevronTexaco is based in San Ramon, Calif. (source: company press release) Why We Like It: We believe there is another leg up about to happen in the energy sector. Bolstering our suspicions are new MACD buy signals in both the OIX oil index and the OSX oil services index. We like CVX because as one of the largest players in the field it trades with plenty of liquidity and will probably be a little less volatile than some of the other oil-related issues. Bank of America recently started coverage on CVX with a "buy". Currently CVX has spent the last six weeks consolidating its late summer gains. The stock has rallied toward resistance at $55 and looks ready to breakout. Technicals are bullish and its MACD just produced a new buy signal. The Point & Figure chart is extremely bullish with a $107 price (long-term) target. We are going to target a move to $60.00-62.50 but we're going to use a trigger to open the play. Our entry point will be $55.15. Annotated Chart: Picked on November xx at $xx.xx <-- see TRIGGER Gain since picked: + 0.00 Earnings Date 10/29/04 (confirmed) Average Daily Volume: 4.8 million --- Denbury Resources - DNR - close: 27.00 change: +0.72 stop: 24.49 Company Description: Denbury Resources Inc. (www.denbury.com) is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of carbon dioxide used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage in onshore Louisiana. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices, including secondary and tertiary recovery operations. (source: company press release) Why We Like It: DNR is another bullish candidate to play what we believe is the next leg up for oil stocks. Like the CVX play DNR has been consolidating for the past several weeks after the summer rally. Now the stock is on the move again with bullish technicals and a new MACD buy signal. Volume was well above average on Monday's 2.7 percent gain. The P&F chart is bullish as well. Aggressive traders can go long at current levels but we're going to use a TRIGGER over the current high. Our entry point will be $27.51. Our six to eight week target is the $32.50 region. Annotated Chart: Picked on November 22 at $xx.xx <-- see TRIGGER Gain since picked: + 0.00 Earnings Date 10/28/04 (confirmed) Average Daily Volume: 366 thousand ================================================================== High Risk/Reward (HR) Stock section ================================================================== --------- New Plays --------- New Bullish Plays ----------------- Knightsbridge Tankers - VLCCF - cls: 37.60 chg: +2.10 stop: 34.85 Company Description: Knightsbridge Tankers Limited is a tanker company with a fleet of five very large crude oil carriers or VLCCs. Three of the five are under contract while the other two trade in the spot market. (source: company press release) Why We Like It: This is a high risk/reward play. VLCCF has known to be volatile in the past few months with big swings both up and down. We like it as a bullish candidate for multiple reasons. First the entire "shipping" industry has seen a very strong up turn in buying interest. Several stocks in the group like VLCCF are trading at or near new one-year highs (some at all-time highs). We like VLCCF's relative strength. The stock held up very well during last Friday's sell-off. Shares of VLCCF have been digesting their gains with a two-week consolidation above the $35.00 level, which should now act as support. Volume was more than double the average on today's breakout, which is always a bullish reading. Plus its P&F chart shows a bullish triangle breakout pattern with a $59 target. P&F triangle patterns are one of the most successful patterns to play. They're not guaranteed wins but they normally produce very consistent historical trends. We're going to chase today's breakout (high-risk) and target a run toward $44-46. What makes VLCCF even more of a higher-risk play than usual is the upcoming November 29th dividend payout. VLCCF has a $1.00 payout that should impact the stock price by the same amount. Unfortunately, we've missed the shareholder record date. Even with the payout one week away we're bullish on the stock and the group and think shares can trend higher through the end of the year. Annotated Chart: Picked on November 22 at $37.60 Gain since picked: + 0.00 Earnings Date 00/00/00 (unconfirmed) Average Daily Volume: 307 thousand ================================================================== 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 PTR PetroChina 55.80 +0.85 COP ConocoPhillips 88.87 +1.44 CVX ChevronTexaco 54.80 +0.90 XOM ExxonMobil 50.91 +0.53 AIG American Intl Group 62.85 +1.05 ALL Allstate 51.11 +0.83 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- CREAF Creative Technology 14.31 +2.17 ASFI Asta Funding Inc 19.50 +1.21 NEOL Neopharm Inc 10.80 +2.99 VTALE Vital Images Inc 15.96 +1.49 LB La Barge Inc 11.08 +1.13 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AAPL Apple Computer 61.35 +6.18 BNN Brascan Corp 38.26 +1.22 CPB Campbell Soup 28.71 +1.35 AHC Amerada Hess 86.32 +3.53 BTU Peabody Energy 78.79 +4.23 CCJ Cameco Corp 96.97 +3.97 FRO Frontline Ltd (ADR) 62.80 +3.32 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- MDT Medtronic 47.01 -1.19 FRX Forest Labs 36.80 -3.49 OSIP OSI Pharmaceuticals 54.22 -3.94 AGIX Atherogenics Inc 26.50 -4.87 HRT Arrhythmia Research 24.88 -3.27 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- KMRT Kmart Holding 97.72 -7.27 HSC Harsco Corp 51.23 -1.92 CTXS Citrix Systems 23.69 -0.88 OSK Oshkosh Truck 62.06 -0.38 YCC Yankee Candle 30.74 -0.31 ================================================================= 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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