PremierInvestor.net Newsletter Monday 12-06-2004 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: Sleeper Watch List: Drugs to the Lottery and more! =============================================================== MARKET WRAP (view in courier font for table alignment) =============================================================== 12-06-2004 High Low Volume Adv/Dcl DJIA 10547.06 - 45.15 10591.99 10526.82 1.72 bln 1153/1673 NASDAQ 2151.25 + 3.29 2157.43 2138.21 2.13 bln 1346/1713 S&P 100 566.59 - 0.49 567.79 564.57 Totals 2499/3386 S&P 500 1190.25 - 0.92 1192.41 1185.18 SOX 446.88 + 1.60 449.05 440.36 RUS 2000 639.03 - 3.18 642.21 636.56 DJ TRANS 3707.25 - 19.49 3727.85 3701.47 VIX 13.19 + 0.23 13.40 12.93 VXO (VIX-O)13.57 - 0.04 14.29 13.37 VXN 19.53 + 1.27 19.60 18.68 Total Volume 3,859M Total UpVol 2,149M Total DnVol 1,590M Total Adv 2499 Total Dcl 3386 52wk Highs 149 52wk Lows 23 TRIN 0.99 PUT/CALL 0.75 =============================================================== =========== Market Wrap =========== Sleeper Jonathan Levinson Traders perturbed by the whippy price action were comforted by the extremely light volume today, with QQQQ barely managing to trade half of Friday's volume. Despite the relatively tight price range and light volume, however, volatility rose sharply (QQV +10.09%)for the QQQQ while declining slightly (VXO -.7%) for the OEX. Daily Dow Chart Dow bulls must have missed the memo this morning, as the Industrials hung stubbornly in the red as the Nasdaq and SPX spent much of the session in the green. The bounce in oil might have been a contributing factor, but as the one year daily chart above indicates, Dow bears have about 130 points left to go before the current bullish daily cycle picture can be invalidated. The October-November flagpole rally has resolved itself into the "flag" portion of the pattern, and the current 200 point range will either prove to be consolidation or distribution. The direction of the break above 10650 or below 10430 should be determinative. Above 10640, the daily cycle uptick will confirm itself into a genuine upphase from a much higher price and oscillator low, while below 10430, bears will have a chance at retracing at least part of last month's rally. For the day, the Dow lost 45.15 to close at 10547.06. Daily S&P 500 Chart The SPX traded both sides of unchanged today as the Dow held lightly negative. As with the Dow, the SPX is tracing a pullback from last week's highs within the flag atop the October-November rally. The range here has risen to 1174-1200, with next support below at 1160 and 1140-45. The light volume and doji prints today suggest that traders aren't willing to take a stand as to which way this deadlock will resolve. A bounce from here will need to take out 1200 in order for the rally to reignite, while anything less suggest a renewed test of rising support at 1174. In my view, the bulls have a greater challenger than the bears, but that view is mitigated by the fact that price has been rising for the past 2 months and the trend is, as they say, your friend. Aside from aggressive traders and gunslingers, following a high volume range break should be the safer approach. The SPX closed lower by .92 at 1190.25. Daily Nasdaq Chart The less oil-sensitive Nasdaq eked out a 3.3 point gain to close at 2151.3. The daily cycle upturn apparent on the charts of its peers is also apparent here, but the angle of incline is so sharp that the consolidation looks more like a rising wedge than a rising flag. In any case, 10125-30 is support, 2180-85 resistance. Below the 2050 wedge implied target, next support is at 2035, but the daily cycle oscillators should reverse on a break of 2100, if it occurs. Weekly TNX Chart Bonds rose today, with the ten year note yield (TNX) managing to break slightly below 4.26% support, losing 3 bps to close at 4.24%. The headlines this morning attributed the move to the shootout at the US embassy in Saudi Arabia (discussed below), but I suspect that that particular event was a tempest in a teapot for the bond market today. The weekly cycle upphase continues higher, and last week's strong whipsaw saw a test of 4.44% resistance followed by a strong decline in the TNX following Friday's disappointing employment report. A move below current levels should target 4.14%-4.16% support, but until the weekly cycle turns down, these pullbacks should remain corrective for the upphasing TNX. The Chicago Fed's senior economist, William Strauss, told Reuters that he expects slower growth in 2005 of 3.3% (Real GDP), down from the 4.4% projected this year. The estimate, derived from the Fed's experts as well as attendees of the Chicago Fed's economic symposium, is based on the anticipated slowdown caused by higher interest rates and high crude oil prices. The only component of GDP expected to grow was exports, based on the decline in the US Dollar's rendering exports more attractive to holders of rallying foreign currencies. Participants expect the unemployment rate to decline in 2005, and for inflation to decline from its current 2.9% level this quarter to an average estimate of 2.4% in 2005. Weekly chart of Crude oil Iran's oil minister Bijan Zanganeh indicated that the OPEC ministers will be focusing more on quota compliance than on the removal of production ceilings at the upcoming meeting in Cairo later this week. Zanganeh noted that price is very unstable currently, but suggested that current oversupply be dealt with not by raising the production ceiling but rather by compliance with existing production quotas. Zanganeh had nothing to say about the suggestion from other OPEC members that the oil price band target be raised from $22-$28 per barrel to a minimum of $30 per barrel. When pressed on what he felt to be a fair price, Zanganeh replied that the market price is, by definition, fair. That price came down significantly last week, the largest move in either direction in over 3 years. Support came at 42, and 40-42 remains strong confluence support. The weekly cycle downphase, so far very strong, suggests that selling might not be over, and unless we see a clear move back above the 50 level, that selling might in fact be just getting started. While the long term fundamentals for oil remain very bullish, the shape of the weekly oscillators suggest that the correction may well have further to go. For the day, crude oil closed higher by 1.08% at 43 on the Nymex. The morning opened on a bleak note as Associated Press reported that a number of Americans were injured in an attack on the US consulate in Jiddah, Saudi Arabia. The attackers apparently used grenades to make it past the Saudi security personnel to the interior of the compound where a gunbattle ensued. The initial reports stated that 7 people were killed in the 3 hour crisis, among which 3 attackers, but later reports stated that "several Americans were slightly injured" and none were killed. 2 attackers were captured, and an American spokesperson said that the attackers were suspected al Qaeda militants. Later reports upped the body count to 7 and then 14, but security sources reported that all were Arabs and Asians, many of whom staff who were alleged used as human shields by the attackers during the battle. Spain was rocked by at least 7 explosions following a series of telephone warnings from callers claiming to represent the Basque separatist group ETA. The explosions occurred in Leon, Santillana del Mar, Avila, Valladolid and Ciudad Real, Alicante, and Malaga. Initial reports indicated that only minor injuries were caused, with subsequent reports quantifying the inured at 18. In corporate news, Circuit City (CC) reported a 4.3% decline in same-store sales for fiscal Q3 from 2003's Q3 levels. Total sales were higher by 3.8% to 2.5B, missing estimates of 2.6B for the quarter. The company blamed the shortfall on its decision to reduce its promotions of music, movies and software, and a change in its DSS and wireless phone business models. The stock was downgraded as well by SunTrust Robinson Humphrey to "neutral," and the combination saw the stock get hit for a 7.46% decline to close at 15. Canadian miner GG reported that it intends to purchase WHT for 2.09B in stock in a friendly offer following its failed hostile bid to take over CDE. The Sunday announcement claimed that this latest consolidation in the mining industry will render GG the eighth largest gold producer worldwide with proven reserves of 10.5M ounces and an expected production of 1.1M ounces in 2005. GG closed lower by .56% at 14.26, while CDE got clipped for 4.73% to close at 14.03 and WHT rose 7.84% to close at 3.44. Kimberly-Clark (KMB) announced its plan to increase its quarterly dividend by 12.5% to 45 cents per share and to buy back "at least" 1B of its own stock in 2005. KMB expects Q4 earnings in the 89-91 cent range. KMB rose .56% to close at 64.34. Navistar (NAV) announced that it expects Q4 earnings to be no less than $1.88 per share compared with $1 for Q4 2003 and 8 cents above current consensus estimates. The company attributes the rise in guidance to strong engine shipments and improved cost structure. NAV lost 5.88% to close at 38.73. 3Com Corp. (COMS) warned that it expects to lose 12-14 cents per share on revenue of 149M-153M for Q2, solidly below consensus estimates of 7 cents per share on revenue of 174M. COMS lost 3.94% to close at 4.39. CMGI announced a loss of $600,000 for fiscal Q1, breaking even on a per-share basis after earning 6 cents per share on income of 29.9M in Q1 2003. Net revenue rose 171% to 257.1M, while total operating income rose 134% to 2.4M. CMGI blasted higher, adding 32.45% as of this writing to 2.49. The White House gave a lift to the price of gold in the afternoon, when spokesman Scott McClellan stated that the federal government would be required to borrow in order to support the "upfront transition" costs associated with the reform of what he characterized as the currently "unsustainable" Social Security system. Part of this transition includes the addition of personal retirement accounts to Social Security. While there were no economic reports today, tomorrow will see the release of revised Q3 productivity, estimated at 2%, and later in the day, consumer credit for October, estimated at +6.0B. While today's lack of decline certainly suggests bullishness, that bullishness was severely tempered in my view by the lack of volume that came in for the rise, particularly on QQQQ. As noted in the Market Monitor, the cycle setup this morning suggested a stronger decline than we got, but the intraday rise came in on dramatically lighter volume overall. Perhaps the big boys hadn't closed out enough longs or gotten sufficiently short to permit a deep downside move this morning. If so, the intraday gains should prove to be merely distribution, and should get no further than the afternoon highs tomorrow. If so, the sellers who were so notably absent today should push back tomorrow. If they don't, we can expect yet another powerful display of strength from the bulls when volume returns. ================================================================== 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 --------------------------------- ICOS Corp - ICOS - close: 27.44 change: +1.58 WHAT TO WATCH: The rally continues for shares of ICOS. Last week ICOS broke through round-number, psychological resistance at $25.00. Today's 6.1 percent gain on strong volume has pushed ICOS to a new four-month high. Bulls can thank UBS for an upgrade this morning from "neutral" to "buy". Currently shares are challenging resistance at $27.50 and its exponential 200-dma. It will take a move over $28.00 to reverse the P&F chart from a sell signal to a buy signal. If this occurs we would target $35 even though there looks like heavy resistance at $30. An alternative entry would be to look for another dip towards $25. We would not expect this to be a quick trade. --- Gtech Holdings - GTK - close: 26.56 change: +1.17 WHAT TO WATCH: Investors responded positively to news of another acquisition for GTK. The stock added 4.6 percent on above average volume to breakout over resistance at its simple 200-dma and the $26.00 level. Currently the P&F chart is bearish but the stock has gone a long way towards reversing back into a buy signal. Bulls can target a move to $30 from here. --- TRM Corp - TRMM - close: 20.72 change: +1.72 WHAT TO WATCH: Heads up! TRMM added more than 9 percent on above average volume to break through round-number resistance at $20.00 on Monday. We can't find any news or catalyst for the rally. This could be a bullish entry point but we'd prefer to watch for a move over $21.00. If TRMM can breakout over $21.00 it would produce a new spread-triple-top breakout buy pattern on its P&F chart, which already points to a $24.50 target. --- Fossil Inc - FOSL - close: 25.16 change: -1.06 WHAT TO WATCH: Uh-oh! The double-top near $32 has now grown into a more distinguished breakdown in FOSL. Shares lost more than four percent on heavy volume on Monday. FOSL has now broken support at the $26 level and its simple and exponential 200- dma's. The P&F chart has turned bearish with a $17 target. We would watch the $25 mark, which is bolstered by the 50-week moving average. A breakdown there could be an entry point. The next level of support would be $22. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- G $44.80 +0.07 - G still looks like a bullish candidate for the more patient investor. UGI $40.59 +0.62 - The relative strength is holding up for UGI. Watch for a move over $41.00. BP $59.90 +0.51 - BP is bouncing from its simple 50-dma. Watch for a move over $61 to fill the gap. SNDK $24.66 +0.61 - SNDK is making good progress on its own move to "fill the gap". Shares just broke out over its simple and exponential 200-dma's. UNTD $11.60 +0.60 - Today's gap higher looks like an attempt to breakout from its from its four-month consolidation. ================================================================= 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 12-06-2004 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: QLGC, ACH Stock Splits Announcements: BRN 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 ================================================================== QLGC - tech stock long - Recently added QLGC climbed 4.88 percent on Monday as it out performed the market and its peers in the SOX. ACH - non-tech short - ACH continues to sink towards support at $62 and its simple 50-dma. We remain cautious as ACH looks weak. ================================================================== Stock Splits ================================================================== BRN declares 2-for-1 stock split Monday morning before the market's opening bell Barnwell Industries, Inc. (AMEX:BRN) announced that its Board of Directors had approved a 2-for-1 stock split in the form of a stock dividend. This dividend will be payable on January 28th, 2005 to shareholders on record as of January 11th. This is the company's first stock split. About the company: Barnwell Industries, Inc. and its subsidiaries are principally engaged in the business of exploring for, developing, producing, and selling natural gas and oil in Canada, investing in leasehold land in Hawaii, and drilling wells and maintaining water systems in the State of Hawaii. (source: company website) ================== 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 C Citigroup 46.17 +0.52 AMX America Movil 48.53 +1.17 LEH Lehman Brothers 85.69 +0.69 PBI Pitney Bowes Inc 45.35 +0.52 FD Federated Dept Stores 55.74 +0.65 ABK Ambac Financial 82.33 +0.72 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- IDBE ID Biomedical 18.36 +1.55 GISC GSI Commerce 16.04 +1.09 KOMG Komag Inc 19.00 +1.27 ADSX Applied Digital 7.16 +1.31 RSYS Radisys Corp 16.01 +1.08 CYTO Cytogen 10.55 +1.10 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- NTAP Network Appliance 33.77 +1.56 CSC Computer Sciences 57.70 +1.64 AMD Advanced Micro Devices 24.85 +1.63 ABV Ambev 27.60 +1.19 MFE Network Associates 31.46 +1.54 GYI Getty Images 61.74 +2.05 DVA Davita Inc 36.82 +3.32 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- NAV Navistar Intl Corp 38.73 -2.42 FOSL Fossil Inc 25.16 -1.06 CATY Cathay General 37.67 -1.54 KCP Kenneth Cole 29.04 -1.71 JOSB Jos A Bank Clothiers 24.06 -2.17 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- CMI Cummins Inc 77.70 -2.18 WIT Wipro Ltd 24.24 -0.60 KMT Kennametal Inc 50.26 -1.24 CGI Commerce Group Inc 58.38 -0.43 TGI Triumph Group Inc 39.04 -0.96 OPY Oppenheimer Holdings 26.02 -0.41 ================================================================= 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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