PremierInvestor.net Newsletter Monday 11-29-2004 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: Volume Returns Watch List: Financials, Electronics, Biotechs and more =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 11-29-2004 High Low Volume Adv/Dcl DJIA 10475.90 - 46.33 10557.41 10417.08 1.71 bln 1294/1539 NASDAQ 2106.87 + 4.90 2117.89 2090.35 1.83 bln 1749/1293 S&P 100 560.15 - 2.50 564.60 557.73 Totals 3043/2832 S&P 500 1178.57 - 4.08 1186.94 1172.37 SOX 429.89 - 1.09 438.28 428.16 RUS 2000 634.46 + 3.30 636.00 626.84 DJ TRANS 3650.13 + 2.14 3665.65 3620.94 VIX 13.30 + 0.51 13.69 12.93 VXO (VIX-O)13.46 - 0.09 14.03 13.34 VXN 18.83 + 0.89 19.18 18.02 Total Volume 3,544M Total UpVol 1,829M Total DnVol 1,631M Total Adv 3043 Total Dcl 2832 52wk Highs 535 52wk Lows 16 TRIN 1.02 PUT/CALL 0.74 =============================================================== =========== Market Wrap =========== Volume Returns Jonathan Levinson Traders returned from the holiday with pockets full, gapping the indices higher at the open and driving the Nasdaq to a new rally high in the first 15 minutes of the session. Those gains were reversed in a drop that ended just before noon, and a sharp bounce brought the indices back to lower highs. Volume was a healthy after the anticipated holiday doldrums, with the Nasdaq beating its average of 1.68B shares on 1.84B shares for the day, while the NYSE traded a more moderate 1.37B. Declining volume led advancing by a factor of 1.45 on the NYSE, while advancing shares led declining volume 1.58:1 on the Nasdaq. Daily Dow Chart Dow traders were treated to a wide range today of 140 points between 10417 and 10557, with the Dow settling lower by 46 points at 10476. The move violated last week's high and low, finishing around midrange for an engulfing doji star. 10417 is fibonacci support at the failed bear flag from 3 weeks ago, and that confluence zone stretches to a low of 10360. Below that support, it should be an easier run to the 10270 level. The daily cycle downphase continues to suggest a bearish bias, but the potential for a bullish consolidation remains so long as price holds above 10360. Daily S&P 500 Chart The SPX also finished a wild session slightly below its opening level, losing 4.08 to close at 1178.57. As with the Dow, the day opened on a gap up, with the session highs printed within the first 15 minutes, followed by a clothesline drop to the lows and a slower rise to the midpoint for the day. For the SPX, support came at a low of 10172, which is the top of confluence support to 1168 as well as the upper rising channel support line. Below 1160, there's light support at 1160, followed by stronger support at 1143-44. Daily Nasdaq Chart The Nasdaq finished 4.9 points in the green at 2106.87, failing from a new rally high of 2117.78 and then bouncing from 2090. The closing print held at the top of last week's strong bounce, and the daily cycle downphase for the Nasdaq remains the least assertive of its peers. The Nasdaq's daily cycle downphase looks clearly corrective to me, and Nasdaq bears have little to talk about until price gets below 2070 at minimum, with the more important test at 2045-50 support. Weekly TNX Chart Treasury bonds kicked off the week on a sour note, with ten year note yields (TNX) rocketing past previous resistance at 4.26% in a strong move that closed higher by 9 bps at 4.33%. Today's gain represented a 2.12% rise for the TNX, and the first time the TNX has cleared the 22 and 50 week EMA's since the beginning of April. The weekly cycle upphase suggests an imminent test of 4.44%-4.45% below stronger resistance at the year high at 4.904%. 4.14%-4.16% and 4.26% should now act as support for any retest. There was a surprising lack of discussion about fundamental factors or events to explain the sudden and strong drop in bonds/rise in yields this morning. Reuters attributed the selling in bonds to "speculative traders" but mercifully dropped that one early in the day. It was later reported in an unrelated AP story that China has today signed a free trade accord with a number of Southeast Asian nations to create the world's largest free trade area by 2010. The announcement emanated from the 10 nation Association of Southeast Asian Nations at the group's annual summit in Laos, and will include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The agreements seeks to end all tariffs by 2010, which would pull the economies of these 10 countries, cited by Associated Press as being worth $1 trillion, closer to China's $1.4T economy. If the Chinese currency peg to the US dollar and the consequent massive buying in US treasuries with the proceeds of China's dollar purchases have been behind the notable resilience in the US treasury market in the past few yearrs, then any indication that China might no longer need a strong US dollar could spell severe dislocation for the USD and treasury markets. The idea is that Chinese suppliers to the US have been benefiting from China's peg to the USD, which keeps the price of Chinese goods to America stable despite the sinking US dollar. US businesses and consumers have also been benefiting, at least insofar as persistent low interest rates and easy borrowing are concerned. However, if China no longer needs to sell as much to the US, such as might occur under an Asian free-trade scenario, the currency peg and support of the treasury market would become less important. Today saw WMT decline as well, though the media attributed this to its soft Thanksgiving same-store sales (discussed below). However, I find the Asian free trade story, which explains today's weakness in the dollar, treasury bonds and WMT, to be more persuasive. Weekly chart of Crude oil Crude oil was firm again today, this time on news of that a gas leak requiring the evacuation of 180 workers from a North Sea platform halted production of approximately 130,000 bpd by Norway's Statoil ASA. The leak puts an additional 75,000 bpd potentially in peril as well. Norway's oil ministry said that it did not think that any oil had leaked into the water as a result of the accident. News stories also cited uncertainty ahead of the December 10 meeting of OPEC ministers in Cairo as contributing to the morning's strength in oil, which reached a high of 49.95 on the Nymex. For the day, January crude oil closed +.30 at 49.75, just off a 4-week high. Nymex crude continues its ongoing bounce off the sub-46 low earlier this month. The shape of the weekly cycle oscillators suggests that the bounce will be corrective and fail at a lower high. If such occurs, the 44-45 level will very likely be retested on the way to a test of stronger support in the 40-42 area. It was a quiet day for market news, with no major economic reports released. The Washington Post reported that treasury Secretary John Snow's tenure may be growing short, and that he might remain in the Cabinet for only a short time into the administration's second term. White House spokesman Scott McClellan said that the President "appreciates the job Secretary Snow is doing" to implement the President's economic agenda, but commented no further on the Washington Post's assertions. Later this morning, it was announced that the President has nominated former CEO of Kellogg (K) Carlos Gutierrez to replace outgoing Commerce secretary Don Evans. Gutierrez' nomination awaits confirmation by the Senate. Over the weekend, WMT announced that this year's Thanksgiving week fell short of expectations, causing it to lower its November sales forecast to a 0.7 year-on-year rise. The previous forecast had been for a 2%-4% rise. Walmart dropped over 2.5% in premarket trading on the news, with analysts saying that WMT's news suggests that the ongoing oil rally, poor job and wage growth would hurt holiday spending, especially among lower income consumers. The WMT slam saw WMT lose 3.94% to close the day at 53.14. The S&P Retail Index (RLX) finished lower by .95% at 457.06, not helped by KRMT which lost 5.01% to finish at 102.01. This morning also brought a dire warning from outgoing Ukrainian president Leonid Kuchma to the effect that Ukraine's financial system could collapse shortly "like a house of cards" due to the chaos that has been growing in the wake of the contested presidential election. Kuchma stated that he and his government cannot be held responsible, as the situation is beyond their ability to control. Later in the day, it was reported that Kuchma agreed to a new presidential election, yielding to pressure from domestic protesters and the international community. A brighter point on the consumer front was a report from MasterCard of a 9.3% year-over-year increase in overall transactions, while Visa USA reported a 14.3% increase for the week. Outback Steakhouse (OSI) reported a rise in its November same- store sales of .8% y-o-y. Sales at its Carrabba's Italian Grills rose 4%, Roys rose 7.7%, Bonefish Grills rose 1.5%, and Fleming's Prime Steakhouses saw a 15% y-o-y increase. OSI finished higher by 1.2% at 43.76, just off its high for the day at 43.86. Homebuilding material supplier RYG announced that its special committee of independent directors, which oversees all matters arising from the ongoing investigations into the executives' roles in some of the company's 1998 land transactions, terminated the company's CEO and Senior V.P./CFO "for cause." The committee also terminated chairman Vic de Zen and requested that the three directors resign from the board. The committee alleged that the roles played by these three directors demonstrated "a breach of their responsibilities to the company..." V. James Sardo was named as the company's interim president and CEO. RYG closed higher by 4% at 8.84. Biotech firm DNA got a lift from its joint announcement with Roche Group that the Phase III trial of its Avastin and Folfox4 chemotherapy treatment increased the survival rate for colorectal cancer patients, reducing their risk of death by 26%. The stock was halted ahead of the news and rose sharply after being released for trading, finishing the day higher by .99% at 49.20. AAPL had a good day as well, managing a 6.03% rise on an upgrade from Merrill Lynch citing strong anticipated holiday sales of its popular iPod product. AAPL closed higher by 3.89 at 68.44. After the bell, retailer HOTT lowered its Q4 target from the 49- 52 cent EPS range to 37-43 cents. The company attributed the adjustment to weak November same-store sales, down 8% from November 2003. Also after the bell was a statement from Treasury Department spokesman Tony Fratto to the effect that the administration still supports the "strong" dollar, but that the price of this strong dollar should be set in "open, competitive markets." Tomorrow kicks off what is a full slate of economic data for the week, with the preliminary Q3 GDP and Chain deflator at 8:30, followed by consumer confidence and the Chicago PMI at 10AM. The dollar and treasury story delivered a large, uncertain range today, and I see no reason for that to change until the forex markets stabilize. The Nasdaq continues to trade bullishly compared with its peers but for all 3 indices, all but the most aggressive bears should be waiting for the market to show them some convincing weakness, at least on a break of the support levels discussed above. ================================================================== 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 --------------------------------- New York Community Bank - NYB - close: 19.92 change: +0.57 WHAT TO WATCH: NYB turned in a very strong day with a 2.9 percent rally. This pushed NYB up through its recent trading range and above technical resistance at its 40 and 50-dma's. We would watch for the move over $20.00 as a potential bullish entry point with a $22.00 target. The P&F chart is pretty bullish with a long-term target at $30. --- Cabot Microelectronics - CCMP - close: 37.80 change: +1.04 WHAT TO WATCH: CCMP is bouncing from support near $36 after the pre-Thanksgiving week sell-off. Short-term technicals are already turning bullish. Watch for the move over $39.00 as a potential entry point. The next hurdle should be the $42 level. The P&F chart is very bullish with a long-term $62 target. --- Northfield Labs - NFLD - close: 18.70 change: +1.21 WHAT TO WATCH: NFLD is a biotech stock that is out performing its peers. Shares have not only broken out from its recent consolidation but are also breaking out past resistance at $18.00 dating back to April. Today's 6.9 percent gain was fueled by strong volume. Bulls can use it as an entry point but watch out for round-number resistance at $20.00. The P&F chart is bullish with a $27 target. --- ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- OCR $32.50 +0.55 - OCR is breaking out from its recent two-week trading range to hit new four-month highs. LANC $44.04 +0.84 - LANC is nearing major resistance in the $44.00-44.25 level. Watch for the breakout. EXM $31.17 +2.85 - Aggressive traders can use the breakout in EXM as an entry point. The short-term trend is up again. We would target $37.50 to $40.00. IPAR $17.12 +2.19 - IPAR soared more than 14 percent on big volume to hit new four-month highs and breakout over its exponential 200-dma. PARL $18.10 +2.15 - PARL is in the same industry as IPAR and is showing a similar breakout. PBY $16.12 +1.27 - PBY is breaking out over the $15.00 level and its simple 100-dma. A move over today's high would be bullish! TNC $39.75 -1.14 - This looks like a bearish entry point given today's breakdown under the 200-dma and the $40.00 mark. We would target $37.50-38.00. ================================================================= 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 11-29-2004 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: SEBL, CHK, ZEUS, DNR, VLCCF Stock Splits Announcements: SKT Active Trader (Non-tech) Closed Bullish Play: 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 ================================================================== SEBL - tech stock long - We're impressed. SEBL added 2.38 percent on decent volume to hit new five month highs. CHK - non-tech long - CHK is seeing some profit taking. We'd watch the $17.25-17.50 region for support. ZEUS - non-tech long - ZEUS experienced some very strong follow through on Friday's breakout. Shares soared 5.25 percent on Monday with extremely strong volume, which is very bullish. We are raising our stop loss from $18.99 to $20.65 - our entry point. Watch for a possible dip back toward $22.00. Our target remains the $24.50- $25.00 region. Prepare to exit. DNR - non-tech long - DNR is showing more relative strength today with a 1.99 percent rally. Shares are now up eight days in a row. We're expecting some resistance near the $30.00 mark. VLCCF - high risk/reward long - VLCCF is also showing some relative strength with a 1.75 percent gain today. ================================================================== Stock Splits ================================================================== SKT declares a 2-for-1 stock split This morning just before the lunch hour Tanger Factory Outlet Centers, Inc. (NYSE:SKT) 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 28th, 2004 to shareholders on record as of December 17th. About the company: Tanger Factory Outlet Centers, Inc. is a fully integrated, self- administered and self-managed publicly traded (REIT), that presently has ownership interests in or management responsibilities for 36 centers in 23 states coast to coast, totaling approximately 8.8 million square feet of gross leasable area. (source: company press release) ======================== Active Trader (Non-tech) ======================== Closed Bullish Play: OMI Corp - OMM - close: 20.98 change: +0.73 stop: 18.49 Exit alert! OMM had already hit our initial profit target in the $20-21 range but we decided to keep it given its relative strength. We set a new target for the $21.50-22.00 range this past week and OMM has already hit it. The strength this morning (with an intraday high of $22.05) was due to positive news from the company. Management issued bullish upside guidance of at least $1.10 a share for its Q4 earnings outlook. Compared to consensus analysts' estimates of just 98 cents we can see why the stock jumped. At least one broker firm reiterated their "buy" rating on the stock following the news. Looking at the intraday chart OMM still looks bullish but we're going to exit following out revised target for a 16 percent run (out at $21.50). Picked on November 10 at $18.45 Gain since picked: + 2.53 Earnings Date 10/18/04 (confirmed) Average Daily Volume: 1.1 million ================== Trading Ideas ================== This section contains stocks that meet criteria which may make them of interest to long and short side traders. These are not recommendations, nor have they been reviewed by PremierInvestor editors for investment potential. However, each of them has technical and fundamental characteristics that make them worthy of further review by traders and investors looking for fresh ideas. New stocks will appear daily following the market close. Value Plays With Bullish Signals --------------------------------- Value Plays With Bullish Signals --------------------------------- Ticker Company Name Close Change AMX America Movil 46.38 +1.58 GDW Golden West Financial 118.57 +1.39 HDI Harley-Davidson 58.28 +0.58 CIT CIT Group 41.99 +0.77 ITT ITT Industries 86.40 +0.60 ABK Ambac Financial 81.71 +0.66 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- PBY Pep Boys 16.12 +1.27 XXIA IXIA 15.05 +1.30 NFLD Northfield Labs 18.70 +1.21 KONG Kongzhong Corp 10.96 +1.55 VOXX AudioVox Corp 15.21 +1.01 IPAR Inter Parfums Inc 17.12 +2.19 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- AAPL Apple Computer 68.44 +3.89 INFY Infosys Technologies 70.30 +4.60 BEN Franklin Resources 65.47 +1.72 KCI Kinetic Concepts 64.22 +2.97 ICBC Independence Cmmty Bank 42.78 +2.21 ELAB Eon Labs 26.94 +1.57 RMBS Rambus Inc 23.57 +1.40 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- WMT Wal-Mart Stores 53.15 -2.17 K Kellogg Co 43.47 -1.54 BBY Best Buy Co 57.78 -1.14 OSIP OSI Pharmaceuticals 47.96 -2.53 MTW Manitowoc Co 37.01 -1.48 CNCT Connetics 20.30 -1.23 SALM Salem Communications 24.85 -1.39 TNC Tennant Co 39.75 -1.14 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- BNN Brascan Corp 36.99 -1.81 NMG.A Neiman Marcus 66.58 -2.62 AXP American Express 55.82 -0.29 COF Capital One Financial 78.51 -1.47 FPL FPL Group 71.71 -1.00 TOL Toll Brothers 51.26 -2.20 JOE St. Joe Co 54.80 -1.54 ================================================================= 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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