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Daily Newsletter, Sunday, 12/12/2004

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PremierInvestor.net Newsletter          Weekend Edition 12-12-2004
                                                    section 1 of 3
Copyright (c) 2004, All rights reserved.
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The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section one:

Market Wrap: Fourteen Days and Counting        
Market Sentiment: Rested & Ready     
Watch List: Internets to Fashion and more           

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 12-10        WE 12-03        WE 11-26        WE 11-19 
DOW    10543.22 - 48.99 10592.2 + 69.98 10522.2 + 65.32 - 82.10 
Nasdaq  2128.07 - 19.89 2147.96 + 45.99 2101.97 + 31.34 - 14.71 
S&P-100  565.50 -  1.58  567.08 +  4.43  562.65 +  2.96 -  6.53 
S&P-500 1188.00 -  3.17 1191.17 +  8.52 1182.65 + 12.31 - 13.83 
W5000  11691.98 - 43.29 11735.3 + 99.63 11635.6 +155.01 -129.04 
SOX      422.75 - 22.53  445.28 + 14.30  430.98 -  0.90 +  8.07 
RUT      632.24 -  9.97  642.21 + 11.05  631.16 + 17.71 -  8.54 
TRAN    3686.03 - 40.71 3726.74 + 78.75 3647.99 + 80.34 - 60.55 
VXO       13.20           13.61           13.35           14.60 
VXN       19.57           18.26           17.85           19.72 
=================================================================

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

Fourteen Days and Counting
by Jim Brown

While the -49 Dow points for the week, -20 Nasdaq, may not
look impressive on the surface we finished the week in much
better position than many expected. With fourteen trading
days left in 2004 the Dow covered nearly its entire range
from 10600 to 10400 this week and then regained 75% of 
that drop by Friday's close. The bulls escaped disaster 
and gained needed breathing room as we head into the year
end period where stocks typically move higher. A lot can 
happen in the next fourteen days and the outcome is far 
from certain. 

Dow Chart

 
Nasdaq Chart

 
SPX Chart

 


Economic data surprised everyone on Friday with the PPI 
jumping +0.5% and well over the consensus of +0.1%. The
component that had the most impact was of course energy
prices with the gain ex-energy at only +0.2%. Inflation
is rising rapidly at the producer level and eventually
this will be passed on to the consumer. Finished energy
goods rose +1.8% in November but was tame compared to the
+6.2% jump in October. The price of energy has moderated
significantly since this survey period and we can expect
a downtick in gains for December. Finished goods prices
have posted gains for the last four months so it appears
limited pricing power is returning to manufacturers and
that means higher prices ahead for consumers. 

Consumer Sentiment jumped to 95.7 from 92.8 in November
and this was a real surprise given the weakness in the 
various sentiment/confidence reports we have seen recently.
The expectations component jumped to 88.8 from 85.2 and 
present conditions rose to 106.8 to 104.7. Given the 
massive drop in oil prices over the last couple weeks
it should not be a surprise that consumers are breathing
easier. Fears of $60 oil have been temporarily replaced
by oil prices at $41 today. While this is only going to
be a brief pause in the long term uptrend the average
consumer is oblivious to the coming problems ahead. They
live by the price at the pump and the sound bites on the
10:00 news. 

Next week the main event is the FOMC meeting on Tuesday
and there is unanimous agreement that they will raise
rates by another 25 basis points. There is only a 10%
chance as indicated by the Fed Funds Futures that the
Fed would jump 50 basis points in reaction to the strong
PPI. The Fed knows the gains have been energy related
and will more than likely retain their measured pace
scenario. There is a 91% chance that the Fed will again
raise by 25 points in February and bring the rate back
to 2.50%. There is a growing consensus that the Fed will
pause after February and look for more signs the recovery
is still in progress before starting the next hike cycle.
Raising rates will create a stronger dollar and while
everybody claims they want a strong dollar the truth is
they are happy with the current slow decent. This helps
U.S. companies compete better globally and slows imports.
The only scenario where a falling dollar would be a
disaster is one where it falls rapidly and disrupts the 
global currency balance. Greenspan warned several weeks
ago that foreign banks would eventually discontinue
buying U.S. debt and the comments rippled through the
currency market with predictions of dire consequences
for several weeks. This weeks five year treasury auction
had a record 65% of the bids from foreigners. How quickly
people forget once last weeks newspaper is lining the 
bird cage. Yields had soared last week to four month
highs but the spike was very short lived. 

The Fed cannot afford to raise rates much higher and risk
knocking the stumbling economy off its path. Delphi reported
on Friday that they were cutting 8500 jobs in a cost saving
measure. The auto sector has cut -32,000 jobs this year in an
effort to remain profitable on slowing sales. The Challenger
layoff report last week was the third consecutive month
with more than 100,000 announced layoffs. The economy is
growing but it closely resembles the Wal-Mart economy. 
Manufacturers are putting heavy pressure on suppliers
to cut costs to enable them to produce goods even cheaper
and sell them cheaper just to remain competitive. Those 
that can't make the cuts are left on the roadside as the
cheaper supplier signs up for their 15 min of fame. 
Employees are still the number one way to cut big dollars
out of the equation and the signs are everywhere that 
employment is lagging. 

There were several news stories this week about the 
global economy and the slow down in various countries.
Some are nearing recession levels. That is far from true
in China despite an attempt to slow their explosive growth.
We need to be careful in what we wish for in hoping for
a cooling off period for China. They have been the largest
buyer of commodities for several years and supplying those
commodities keeps numerous sectors in the black. Over the
last year China consumed 1/2 the global supply of cement,
1/3 the worlds steel, 1/2 copper and 1/5th of the aluminum.
Auto sales are doubling annually in China. Given the pre
recession levels in some other countries a serious cutback
in China could lead to even further challenges in the 
global economy. I understand the reasons for wanting 
slower growth but until other countries pick up the 
slack any growth is beneficial. 

In stock news GE said they were so confident of returning
to double digit earnings growth in 2005 they were raising
their dividend +10% and announcing a $15 billion stock
buyback over the next three years. Very strong news from
the company which is a proxy for the U.S. economy. With
the dividend jump to 22 cents a quarter GE is now paying
55% of earnings in the form of a dividend based on 2004
earnings of $1.60 per share. For comparison HON pays out
45% and UTX 25%. GE has bought back $75 billion in stock
over the last ten years. 

Next week Merck is going to host its annual analyst 
meeting on Tuesday and it is expected to provide some 
guidance about the financial impact of the Vioxx recall.
Most brokers continue to rate MRK a hold because of its
strong dividend but eventually Merck has to start building
some reserves for payout to patients. There are several
estimates making the rounds with the high end numbers
between $38 billion and $55 billion for the potential
liability. This is a huge number and to date Merck has
not taken any charges for the expected resolution of the
claims. Granted we are years from any payout but those
numbers are so big it will take years to store up the
cash. With an annual dividend of $1.50 and 2.2 billion
shareholders that $3.3 billion annual payout will be on
the chopping block eventually. 

Fund flows for the week slowed to a trickle of only $500
million compared to a $2.5B weekly average for November.
I doubt fund managers are worried because the next seven
weeks should average over $4 billion a week in year end
retirement deposits. This is the power behind the typical
year end rally and we will be watching closely next week
to see if the expected cash surge begins. The 15th is
typically when the end of year cash begins to flow and
it continues through January. 

In anticipation of the year end surge or maybe in hopes
of guaranteeing it the week was full of bullish analyst
predictions. Ralph Acampora led the list with his Dow
13,264, Nasdaq 2796 prediction but he was not alone. 
Abby Joseph Cohen played cleanup hitter on Friday with
a strong economy speech. She said that in spite of rising
inflation and rising interest rates the economy should
continue to grow through 2006. Her buzzwords for the day
was "durability of profits" and she felt investors would
see continued profit growth ahead. Profit growth even at
a slower pace would still continue to provide attractive
returns for investors according to Abby. The profits for
the 4Q have yet to be determined but the deceleration
trend is firmly in place. However, we should not jump 
to negative conclusions based solely on the headline
numbers. Profits soared in Q1 at 37.38% and eased in Q2
to 27.88%. Q3 finally posted a quarter end bounce to 
finish at 18.95% and better than the 14% early reporters
had averaged. 

According to Thomson First Call the current estimates 
for Q4 are for growth of +15%. While this may seem weak
compared to the prior quarters there is potential for a
rare event. According to Thomson the current growth rate
for the all of FY-2004 is projected to be +19.1% for the
S&P-500. With only a small amount of upside surprises 
this could creep over 20% and it would be only the 8th 
time it will have happened since 1950. The last time was
in 1993. Also according to Thomson the growth rate for 
the S&P for Q4-2003 was 28.3% and the highest growth 
rate in ten years. If we do achieve a +15% improvement
over that rate in Q4-04 given the myriad of problems 
the economy has overcome it would be nothing short of 
spectacular. When you put everything in perspective 
the deceleration of earnings may not be as bad as most
analysts would have us think. It will take another 12 
months to see if Ralph and Abby are right but the stage
is set for a bullish close for 2004 and positive earnings
in January could go a long ways toward improving the 2005
outlook. 

Next week the markets not only have to move higher on
existing issues but there are 17 IPOs coming to market. 
This will suck a large quantity of investment cash out
of funds and blunt the year end activity. One of the
biggest will be the Sands Casino. Bankers have to get
those deals priced and trading to earn those big bonus
checks for 2004. 

In the truth is stranger than fiction department OPEC
met on Friday and decided to cut production on Jan-1st 
by one million barrels per day in order to push prices
higher. Crude oil immediately dropped -$1.82 to close at
$40.70 and a four-month low. No, that is not a misprint
but a stunning event in light of the news. OPEC pumped 
29.4 million bbls per day (mbpd) in November and the 
highest level in 25 years. 2.22 mbpd of that production
came from Iraq. The current production ceiling is 27mbpd
and the excess production came mostly from Iraq and Saudi
Arabia and not from all OPEC member states. In fact 
several of the OPEC members cannot even reach the output
levels assigned to them due to declining production. 

The one-mbpd production cut was planned to remove excess
oil from the pipeline before the heavy use winter period
passed causing a rapid buildup in supplies among user
nations. The International Energy Association (IEA) said
a fall in 14 mb of distillate (heating oil and other
products) had lowered the days in inventory to 52, the
same level as September. This is trending below last
years levels and at the bottom of their five year range.
Officials worried that several weeks of cold weather
could accelerate usage and create another shortage before
the winter is over. 

Crude Oil Chart

 

The bottom line is more speculation ahead and a guarantee
that oil prices will go higher either by shortage, cutbacks
in production or both. The OPEC officials clearly have
abandoned their prior $22-$28 price range and the current
intent is to hold oil at $40 or higher. If you had dreamed
this scenario a year ago it would have been a nightmare. 
Now $40 oil is the baseline and after a brief taste at 
$55 OPEC is already addicted. Given their declining 
production capability it is only a matter of time before
we see $75 and $100. Shock value? Definitely not! Just 
several months or research and I can't believe I am 
watching this play out so soon. The expectations for the
price escalation on declining production was thought to
be at least a year away. The problem is increasing world
demand and it is not going away. The IEA said Q4 demand 
for oil had gone up +8% in China alone. I know the majority
of everyone reading this article does not believe me but 
we are on the verge of a major problem. I explain exactly
what is happening and what every investor needs to do 
about it in my "Coming Oil Crisis" report in the end of
year special. You need to get it and make some serious 
investment decisions very soon. The link below is for 
the oil depletion chart I included in the market wrap on 
Thursday night for those who did not read that commentary.
The numbers next to the country are the year production 
peaked and began declining in that country. 


   
On Friday the markets traded sideways with only a very
slight upward bias for the entire day. With oil falling
to a four month low the best they could do was breakeven.
While that sounds negative I was actually encouraged. The
Dow managed to cling to 10550, the Nasdaq at 2127 and the
SPX just below 1190. Remember this was on negative economic
data and the worry that oil prices were going higher not
that they were higher on Friday. Also there is the fear
of the Fed coming back into the market with the Fed meeting
next Tuesday. So why am I so positive?

If you remember my commentary from earlier this week the
index leading us down was the Russell. The Russell had
fallen nearly -4% over a five day period beginning on
Monday. The Russell is the leading indicator for mutual
fund activity and while a lot of the weakness was due 
to the SOX there was definite fund selling. On Friday 
afternoon that selling disappeared and the Russell 
rallied back over 630 and continued its rebound that 
began at 622 on Thursday. The Russell was the only 
index to close in positive territory and gained +.5% 
for the day. This may not sound like much but as a 
leading indicator for the broader market it was very 
positive. It suggests funds are already beginning to
move back into small caps for the year end. There is
plenty of incentive for the funds to prefer the Russell
with profit growth for 2005 currently estimated at +27.5%
compared to only +8% for the S&P. 

Russell Chart

 
SOX Chart

 


I am not expecting any large gains on Monday with the Fed
meeting looming but from my perspective the markets closed
with a bullish outlook on Friday. All we have to do it
hold our current levels until after the Fed meeting and
wait for the end of year money to begin flowing. The
Russell is my leading indicator but the SPX is the real
yardstick. We rallied back to 1191 intraday and just
below strong resistance at 1195. My outlook is still 
positive and I am still recommending buying any dip 
above SPX 1175. Add to those positions above 1195. 

Only 13 shopping days until Christmas

Jim Brown


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

Rested & Ready
- J. Brown

The upward momentum in the markets may have paused the last 
couple of weeks but that's exactly what they needed.  Now after 
some consolidation (or rest) they look ready for the traditional 
year-end push higher.  I agree with Jim in his wrap this weekend.  
With the FOMC meeting on Tuesday the market may just meander 
sideways until after the interest rate decision is announced.  Of 
course almost everyone believes that the Fed will raise rates by 
another 25 basis points.   

I would also keep an eye on oil next week.  While I don't expect 
crude prices to affect stocks over the next few days a breakdown 
under the 200-dma and the $40.00 a barrel mark would be bullish 
for equities.  

Historically next week begins the traditional Santa Claus rally, 
which is actually being fueled by an early January effect.  For 
those not familiar with the January effect it is an historical 
trend that was noticed year after year as the small caps out 
performed the market starting in January and through most of the 
first quarter.  In recent years that effect began to occur 
earlier and earlier so now it tends to begin around December 15th 
thus boosting the seasonal Santa Claus rally.  Obviously there is 
never a guarantee that such seasonal trends will show up but the 
odds seem to be in our favor this year.  

Many on Wall Street are expecting a big influx of money fueled by 
year-end retirement contributions and Christmas bonuses.  This 
should put another $12 billion or so in the hands of fund 
managers to be put to use in the markets.  Unfortunately, as Jim 
pointed out in the wrap, there are up to 17 IPOs just waiting to 
come to market in the next two weeks to take advantage of this 
tide of cash.  

According to the Stock Trader's Almanac this coming Monday and 
this coming option expiration Friday both tend to have strong 
historical trends for trading higher.  

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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9708
Current     : 10543

Moving Averages:
(Simple)

 10-dma: 10524
 50-dma: 10260 
200-dma: 10236 



S&P 500 ($SPX)

52-week High: 1197
52-week Low : 1053
Current     : 1188

Moving Averages:
(Simple)

 10-dma: 1185
 50-dma: 1150
200-dma: 1124



Nasdaq-100 ($NDX)

52-week High: 1631
52-week Low : 1301
Current     : 1605

Moving Averages:
(Simple)

 10-dma: 1601
 50-dma: 1516
200-dma: 1447



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

CBOE Market Volatility Index (VIX) = 12.76 -0.12
CBOE Mkt Volatility old VIX  (VXO) = 13.20 -0.03
Nasdaq Volatility Index (VXN)      = 19.57 -0.27 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.63        742,599       464,246
Equity Only    0.47        611,554       288,555
OEX            1.33         22,854        30,507
QQQQ           6.45         10,279        66,383


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

Bullish Percent Data

           Current   Change   Status
NYSE          75.2    + 0.5   Bear Correction
NASDAQ-100    78.0    - 2     Bull Confirmed
Dow Indust.   70.0    + 3.4   Bull Confirmed
S&P 500       74.8    + 1.6   Bull Confirmed
S&P 100       76.0    + 1     Bull Confirmed


Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


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

 5-dma: 1.19
10-dma: 1.08 
21-dma: 1.02
55-dma: 1.07


Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning
points.


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1527      1627
Decliners    1260      1388

New Highs     164        81
New Lows       12         9

Up Volume    804M      835M
Down Vol.    943M      935M

Total Vol.  1779M     1796M
M = millions


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

Commitments Of Traders Report: 12/07/04


Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being 
financial institutions. Commercials are historically on the 
correct side of future trend changes while small specs tend 
to be wrong.  

S&P 500

Commercial traders are growing a tad more bearish while small
traders have pushed to new bullish levels not seen in many weeks.

Commercials   Long      Short      Net     % Of OI
11/16/04      452,149   468,048   (15,899)   (1.7%)
11/23/04      462,408   491,384   (28,976)   (3.0%)
11/30/04      462,394   491,813   (29,419)   (3.0%)
12/07/04      450,072   498,057   (47,985)   (5.0%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
11/16/04      166,862   156,751    10,111     3.1%
11/23/04      171,192   150,606    20,586     6.4%
11/30/04      176,031   148,876    27,155     8.3%
12/07/07      187,707   135,776    51,931    16.0%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

There has been an interesting switch in the latest data.  
Commercial traders' bearish sentiment, while still strong, has
dropped significantly.  Meanwhile, small traders' bullish bias,
while still extreme, has fallen significantly.

Commercials   Long      Short      Net     % Of OI 
11/16/04      371,282   796,279   (424,997)  (36.4%)
11/23/04      412,724   849,091   (436,367)  (34.6%)
11/30/04      439,074   855,440   (416,366)  (32.2%)
12/07/04      470,553   805,234   (334,681)  (26.2%)

Most bearish reading of the year: (436,367)  - 11/23/04
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
11/16/04      445,737     70,169   375,568    72.8%
11/23/04      400,995     62,080   338,915    73.1%
11/30/04      386,665     67,926   318,739    70.1%
12/07/04      311,838     66,496   245,342    64.8%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

We a similar move in the NDX futures.  Commercials remain
bullish but their enthusiasm has waned a bit.  Small traders
remain very bearish but their sentiment has faded a bit too.

Commercials   Long      Short      Net     % of OI 
11/16/04       55,737     33,683    22,054   24.6%
11/23/04       58,159     34,104    24,055   26.0%
11/30/04       56,629     30,571    26,058   29.8%
12/07/04       57,621     34,313    23,308   25.4%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  26,058   - 11/30/04

Small Traders  Long     Short      Net     % of OI
11/16/04       10,533    37,660   (27,127)  (56.2%)
11/23/04       11,153    39,712   (28,559)  (56.1%)
11/30/04        9,902    44,779   (34,877)  (63.7%)
12/07/04       15,489    49,064   (33,575)  (52.0%)

Most bearish reading of the year: (34,877) - 11/30/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Commercials traders pared back their bearish sentiment 
while small traders became more bearish on the Industrials.

Commercials   Long      Short      Net     % of OI
11/16/04       22,004    23,744   (1,740)     (3.8%)
11/23/04       22,527    25,537   (3,010)     (6.2%)
11/30/04       22,622    25,411   (2,789)     (5.8%)
12/07/04       25,523    27,351   (1,828)     (3.4%)
 
Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
11/16/04        5,937     6,533    ( 596)   ( 4.7%)
11/23/04        5,833     8,299   (2,466)   (17.4%)
11/30/04        5,739     8,536   (2,797)   (19.6%)
12/07/04        5,274     9,507   (4,233)   (28.6%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03
 

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

InterActiveCorp - IACI - close: 26.50 change: +1.08

WHAT TO WATCH: Internet empire IACI is showing strength again.  
The stock has been churning sideways in a range between $23.30 
and $26 the last five weeks but shares broke out on Friday with 
above average volume.  Unfortunately, while Friday's rally broke 
through its exponential 200-dma it did not break through its 
simple 200-dma.  Look for the move over $27 as a potential 
momentum entry point. 




---

Tommy Hilfiger - TOM - close: 10.60 change: +0.42

WHAT TO WATCH: TOM soared over four percent on Friday with volume 
well above the norm.  We can't see any news for the rally but the 
breakout over $10.50 is positive.  Watch for TOM to breakout over 
resistance at the bottom of its gap down near $11.00.  Be careful 
of the 100-dma, which could act as overhead resistance too.  Once 
TOM trades over $11.00 it will have a chance to fill the gap. 




---

BEA Systems - BEAS - close: 8.70 change: +0.09

WHAT TO WATCH: Software stock BEAS has been channeling higher 
since its low in August.  The bulls are now battling resistance 
at the $8.90-9.00 region bolstered by its simple and exponential 
200-dma.  We would watch for a move over $8.90 or $9.00 as a new 
bullish entry point and a target of $9.50. 




---

Scientific Games - SGMS - close: 23.81 change: +0.43

WHAT TO WATCH: SGMS has been stair-stepping/channeling higher the 
past few months and now it looks ready to leap again.  Watch for 
a move over $24.20 as a new entry point.  The P&F chart is very 
bullish with a $40 target.  





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

NYB $20.01 +0.09 - NYB has cracked round-number resistance at $20 
again.  Consider a potential move to $21.50.

G $45.50 +0.12 - If you're a patient trader consider G a 
potential bullish candidate.  The breakout over resistance at $44 
is bullish and shares are hitting new highs not seen since 1999.

BRL $43.21 +0.25 - BRL continues to out perform its peers in the 
drug group.  The breakout over $42 could be a bullish entry 
point.

SWK $47.11 +0.53 - Brokers haven't been kind to SWK recently but 
shares are bouncing from support near $46. 

WON $25.38 -0.18 - WON still looks bullish over its 200-dma's and 
the bounce from $25 on Friday.
 

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DISCLAIMER
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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

*****************************************************************
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Do not duplicate or redistribute in any form.







PremierInvestor.net Newsletter          Weekend Edition 12-12-2004
                                                    section 2 of 3
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:

Tech Stocks
  Bullish Play Updates:  QGLC 
  
Active Trader (Non-tech)
  New Bullish Plays:     KFY, UHS
  Bullish Play Updates:  ONXX, PDCO, PNC, STJ, TARO
  Bearish Play Updates:  ED

Stock Splits
  Announcements:         BZH


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

============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

QLogic Corp - QLGC - close: 35.86 change: -0.48 stop: 33.99

It's decision time for bullish traders in QLGC.  This play has 
grown more dangerous given the weakness in the semiconductor sector 
this past week.  While QLGC has a knack for ignoring the action in 
its peers the last few months but a sell-off in the SOX wouldn't 
help us.  Shares of QGLC produced a two-day bearish reversal 
pattern on Monday-Tuesday this past week.  The fact that shares 
held support at the $35 level is encouraging but we are feeling 
cautious.  We would not suggest new bullish plays unless QLGC 
traded back above the $36.50 level.  Conservative traders may want 
to seriously consider raising their stop loss towards the $35 
level.  

Annotated Chart:

 

Picked on December 05 at $36.21 
Gain since picked:       - 0.35
Earnings Date          01/12/04 (unconfirmed)
Average Daily Volume:       3.1 million 




==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

=========
NEW PLAYS
=========

  -----------------
  New Bullish Plays
  -----------------

Korn/Ferry Intl - KFY - close: 21.30 change: +1.12 stop: 19.49

Company Description:
Korn/Ferry International, with 70 offices in 35 countries, is a 
leading provider of executive search and leadership development 
solutions. Based in Los Angeles, the firm partners with clients 
worldwide to deliver unparalleled senior-level search, management 
assessment, coaching and development and middle management 
recruitment services through its Futurestep subsidiary.
(source: company press release)

Why We Like It:
We like KFY for its bullish breakout over major resistance at the 
$20.00 mark.  The move came following a positive earnings report 
and was fueled by incredibly strong volume.  Friday's five 
percent rally is a strong follow through to the move and that was 
fueled by volume almost three times the norm.  The company beat 
Wall Street estimates by 2 cents with fee revenues rising 42 
percent for the quarter to $108.2 million.  Operating income 
tripled to $15.5. million.  Management was very positive.  Here's 
an excerpt from their press release: "Not only is overall demand 
for recruitment services up, but we are seeing an increase of 
activity in every product offering and in every region we serve," 
said Paul C. Reilly, Chairman and CEO of Korn/Ferry nternational. 
"It appears that many companies are moving into growth mode and 
recruitment and development activity is on the rise."   The P&F 
chart has produced a new double-top breakout with a $28 target.  
While we are willing to buy KFY at current levels we would prefer 
to see shares pull back in the next couple of sessions and give 
us a better entry point near the $20.50 region.  Our short-term 
target is a move into the $24-25 range.

Annotated Chart:

 

Picked on December 12 at $21.30 
Gain since picked:       + 0.00
Earnings Date          12/08/04 (confirmed)
Average Daily Volume:       345 million 



---

Universal Health - UHS - close: 48.51 change: +0.72 stop: 44.99

Company Description:
Universal Health Services, Inc. is one of the nation's largest 
hospital companies, operating acute care and behavioral health 
hospitals, ambulatory and radiation centers nationwide, in Puerto 
Rico and in France. It acts as the advisor to Universal Health 
Realty Income Trust, a real estate investment trust.
(source: company press release)

Why We Like It:
We put UHS on the watch list this past week with a note to watch 
for a breakout over resistance at $47.00 and $48.00.  In the last 
two days UHS has done just that.  The stock has been in rally 
mode with volume above average save for Friday's gain.  The 
breakout has also produced a new quadruple-top breakout buy 
signal on its P&F chart with a $65 target.  Technical traders 
will also note that the move over $48.00 broke resistance at the 
bottom of its gap down dating back to March.  We can now target 
the $54 region as UHS attempts to "fill the gap".  If UHS does 
see some profit taking next week we'll look for a bounce from $47 
as the first level of support.

Annotated Chart:

 

Picked on December 12 at $48.51 
Gain since picked:       + 0.00
Earnings Date          10/21/04 (confirmed)
Average Daily Volume:       500 thousand




============
PLAY UPDATES
============

  --------------------
  Bullish Play Updates
  --------------------

ONYX Pharma - ONXX - close: 31.54 change: +0.11 stop: 29.95

We strongly considered closing ONXX this weekend.  There has been 
no follow through on its recent breakout over $32 and the momentum 
from its oversold bounce is beginning to wane.  The MACD indicator 
looks overbought and ready to roll over into a new sell signal.  
Meanwhile the DRG drug index, while building on a bullish pattern 
of higher lows, is still stuck under resistance.  If it wasn't for 
the fact that we're moving into the most bullish three weeks of 
December we would drop ONXX.  Watch for a rally through the $32 
level before considering new bullish positions. 

Annotated Chart:

 

Picked on November 18 at $31.26
Gain since picked:       + 0.28
Earnings Date          11/04/04 (confirmed)
Average Daily Volume:       1.0 million 



---

Patterson Companies - PDCO - close: 41.89 chg: -0.30 stop: 37.99

We can't complain about the action in PDCO.  The market 
consolidated sideways this past week and shares of PDCO did some 
consolidating of its own.  Shares of PDCO slipped backward but 
found new support near $41.00.  What we need to see now is a new 
relative high above its short-term trend of lower highs.  However, 
we would not hesitate to buy PDCO here above $40.  Traders looking 
for new positions can wait for a move over $42.50 again or another 
dip to $41.  More conservative traders can use a tighter stop.  The 
P&F chart looks good with a triple-top breakout buy signal with a 
$54 target.  In the news on Thursday analyst firm Jefferies started 
coverage on PDCO with a "buy" rating.  

Annotated chart:

 


Picked on December 01 at $42.06 
Gain since picked:       - 0.17
Earnings Date          11/24/04 (confirmed)
Average Daily Volume:       378 thousand



---

P N C Financial Services - PNC - cls: 55.13 chg: -0.07 stop: 53.99

We can't see it on the intraday chart but according to the Time & 
Sales for Friday the opening trade for PNC was 100 shares at 
$56.56.  The rest of the day never saw PNC trade above $55.50.  
Unfortunately, the opening trade means we would have been triggered 
on the open since our entry price was supposed to be $56.15.  If 
you missed it that's okay.  We'd rather see a real rally up and 
through resistance at the $56 level than a fluke trade like this 
one.  However, we have to honor the move and adjust our entry 
point.  You, the reader, have more flexibility and can choose your 
entry point carefully.  We are NOT suggesting new bullish positions 
until PNC trades back above the $56.25 level.  Remember, our plan 
is to capitalize on the inverse (bullish) H&S pattern on PNC's 
daily chart pointing to a $63 target.

Annotated Chart:

 

Picked on December 10 at $56.56
Gain since picked:       - 1.40
Earnings Date          01/12/04 (unconfirmed)
Average Daily Volume:       997 thousand



---

St. Jude Medical - STJ - close: 40.90 chg: +0.02 stop: 37.49

There is big news happening in the stent industry.  Dow-component 
JNJ is in talks to buy Guidant (GDT).  Fortunately, the news has 
not affected STJ in a negative way.  Instead shares of STJ are 
inching higher and look ready to breakout over the $41 level.  We 
remain bullish and traders can choose their entry point.  Another 
dip above $40.00 or a new push high over $41.25 works for us.  Our 
short-term target remains the $45 region. 

Annotated Chart:

 


Picked on December 05 at $40.64 
Gain since picked:       + 0.26
Earnings Date          01/19/04 (unconfirmed)
Average Daily Volume:       854 thousand



---

Taro Pharmaceuticals - TARO - cls: 31.68 chg: +0.05 stop: 29.90

Even though TARO has consolidated sideways the past few days the 
stock is still out performing its peers in the drug index.  Given 
the late afternoon rebound on Friday we suspect the consolidation 
is over.  Thus this could be another bullish entry point.  If TARO 
surprises us and trades lower we could still buy a bounce from the 
$30.00 level of support, bolstered by its simple 21-dma. Our short-
term target remains the $35 level and its exponential 200-dma.

Annotated chart:

 

Picked on December 01 at $30.90 
Gain since picked:       + 0.78
Earnings Date          10/28/04 (confirmed)
Average Daily Volume:       629 thousand


 

  --------------------
  Bearish Play Updates
  --------------------

Consolidated Edison - ED - close: 43.45 chg: +0.09 stop: 44.51*new*

Whoa!  Where did Friday's opening surge come from?  ED opened at $44.14 but immediately fell lower back under the $43.50 level.  It looks like someone got a bad fill on that order!  The move helps establish the current trading range for ED and resistance just over the $44 mark.  However, that was a little too close for comfort and we're raising our stop just a tad to $44.51.  The breakdown pattern is still in place but traders looking for new positions can choose another failed rally under $44.00 or a new relative low under $43.  Please see the original play description on Wednesday for the weekly chart and ED's long-term trading range.

Annotated Chart: 
 

Picked on December 08 at $43.49 
Gain since picked:       - 0.05
Earnings Date          10/21/04 (confirmed)
Average Daily Volume:       817 thousand




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

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

BZH builds up a 3-for-1 stock split

Friday morning before the market's opening bell Beazer Homes USA, 
Inc. (NYSE:BZH) announced that its Board of Directors had approved 
a 3-for-1 stock split of its common shares.

This split will take the form of a stock dividend and is subject 
to shareholder approval at the company's February 3rd annual 
meeting.  If shareholders approve to raise the number of 
authorized shares then the Board will set the payable date.

The company has also approved the 40-cent annual cash dividend 
payable on a post-split basis. 

About the company:
Beazer Homes USA, Inc., headquartered in Atlanta is one of the 
country's ten largest single-family homebuilders with operations 
in Arizona, California, Colorado, Delaware, Florida, Georgia, 
Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, 
North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, 
Texas, Virginia and West Virginia. Beazer Homes also provides 
mortgage origination and title services to its homebuyers.
(source: company website)


=================================================================
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) 2001-2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.





PremierInvestor.net Newsletter          Weekend Edition 12-12-2004
                                                    section 3 of 3
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 three:

Market Watch for Week of December 13th, 2004
   - Major Earnings
   - Stock Splits
   - Economic Reports

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)


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

==========================================
Market Watch for the week of December 13th
==========================================

-----------------
Earnings Calendar
-----------------

*This is not a complete list.  We only try and highlight the 
more significant earnings reports.


Symbol  Co               Date           Comment          EPS Est

------------------------- MONDAY -------------------------------

PCSA  AirGate PCS Inc.    Mon, Dec 13  After the market     n/a
CKR   CKE Restaurants     Mon, Dec 13  After the market     0.17
FCEL  FuelCell Energy     Mon, Dec 13  After the market    -0.44
LAKE  Lakeland Industries Mon, Dec 13  After the market     0.29
ORCL  Oracle              Mon, Dec 13  Before the bell      0.13
PRSF  Portal Software     Mon, Dec 13  After the market    -0.38
COO   The Cooper Cos.     Mon, Dec 13  After the market     0.72

------------------------- TUESDAY ------------------------------

ABM   ABM Industries      Tue, Dec 14  After the market     0.29
STST  Argon St            Tue, Dec 14  Before the bell      0.26
EASI  Engineered Support  Tue, Dec 14  Before the bell      0.71
GLAD  Gladstone Capital   Tue, Dec 14  ----- n/a -----      0.35
PIR   Pier 1 Imports      Tue, Dec 14  ----- n/a -----      0.22

------------------------ WEDNESDAY -----------------------------

APOG  Apogee Enterprises  Wed, Dec 15  After the market     0.21
BBBY  Bed Bath & Beyond   Wed, Dec 15  After the market     0.39
BBY   Best Buy            Wed, Dec 15  Before the bell      0.44
BMET  Biomet              Wed, Dec 15  Before the bell      0.38
LEH   Lehman Brothers     Wed, Dec 15  Before the bell      1.70
LEN   Lennar Corp.        Wed, Dec 15  Before the bell      2.21
SCHL  Scholastic          Wed, Dec 15  After the market     1.77
VSNT  Versant             Wed, Dec 15  After the market     n/a
WGO   Winnebago           Wed, Dec 15  Before the bell      0.57

------------------------- THURSDAY -----------------------------

COMS  3Com Corp           Thr, Dec 16  After the market    -0.11
ADBE  Adobe Systems       Thr, Dec 16  After the market     0.42
APOL  Apollo Group        Thr, Dec 16  ----- n/a -----      0.57
CCL   Carnival Corp       Thr, Dec 16  During the market    0.31
CTAS  Cintas Corp         Thr, Dec 16  After the market     0.44
DRI   Darden Restaurants  Thr, Dec 16  After the market     0.23
ENTG  Entegris Inc.       Thr, Dec 16  Before the bell      0.07
FDX   Fedex               Thr, Dec 16  ----- n/a -----      1.26
GS    Goldman Sachs       Thr, Dec 16  Before the bell      2.32
KBH   KB Home             Thr, Dec 16  After the market     4.14
MEAD  Meade Instruments   Thr, Dec 16  Before the bell      0.04
NKE   Nike                Thr, Dec 16  After the market     0.86
PLMO  PalmOne             Thr, Dec 16  ----- n/a -----      0.53
ZQK   Quiksilver          Thr, Dec 16  After the market     0.40
RAD   Rite Aid Corp       Thr, Dec 16  ----- n/a -----      0.01
TTWO  Take-Two Inter.     Thr, Dec 16  After the market     1.55
TXI   Texas Industries    Thr, Dec 16  Before the bell      1.14
WOR   Worthington Ind.    Thr, Dec 16  Before the bell      0.48

------------------------- FRIDAY -------------------------------

KMX   CarMax Inc.         Fri, Dec 17  Before the bell      0.17
CC    Circuit City        Fri, Dec 17  Before the bell     -0.08
FDO   Family Dollar       Fri, Dec 17  Before the bell      0.33
SCS   Steelcase Inc.      Fri, Dec 17  Before the bell      0.04


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Company Name              Ratio    Payable     Executable

BLUD    Immucor Inc               3:2      Dec 13th    Dec 13th
WIBC    Wilshire Bancorp          2:1      Dec 14th    Dec 15th
LCAV    LCA-Vision Inc            3:2      Dec 15th    Dec 16th
NBAN    North Bay Bancorp         3:2      Dec 16th    Dec 16th
CNC     Centene Corp              2:1      Dec 17th    Dec 20th
AIT     Applied Industrial Tech   3:2      Dec 17th    Dec 20th
SAVB    Savannah Bancorp          5:4      Dec 17th    Dec 17th
ADSK    Autodesk                  2:1      Dec 20th    Dec 21st
SKT   Tanger Factory Outlet       2:1      Dec 28th    Dec 29th
BEBE  bebe stores                 3:2      Dec 29th    Dec 30th
SVBI  Severn Bancorp              2:1      Dec 30th    Dec 31st
CLF   Cleveland Cliffs            2:1      Dec 31st    Jan  3rd
O     Realty Income               2:1      Dec 31st    Jan  3rd
BRC   Brady Corp                  2:1      Dec 31st    Jan  3rd
NX    Quanex Corp                 3:2      Dec 31st    Jan  3rd

-----------------------------------
Economic Reports & Events This Week
-----------------------------------

The economic calender begins to pick up with Retail sales on
Monday, the FOMC meeting on Tuesday, the NY Empire index on
Wednesday, the Philly Fed and SEMI book-to-bill on Thursday
and the CPI on Friday.


==============================================================
                       -For-           
----------------
Monday, 12/13/04
----------------
Retail Sales for November     Last: +0.2%   Est: 0.0%
Business Inventories for October

-----------------
Tuesday, 12/14/04
-----------------
FOMC meeting on interest rates - est: 25 bps rise.
Trade Balance for October
Industrial Production for November
Capacity Utilizaton for November

-------------------
Wednesday, 12/15/04
-------------------
NY Empire state index for December

------------------
Thursday, 12/16/04
------------------
FOMC minutes from previous meeting.
SEMI Book-to-Bill report
Philly Fed for December
Weekly Initial Jobless Claims
Housing starts for November
Building Permits for November

----------------
Friday, 12/17/04
----------------
Consumer Price Index (CPI) for November   Last: +0.6% Est: +0.2%
Core CPI


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

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

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

GS      Goldman Sachs             109.40     +1.91
UTX     United Technology         101.03     +1.58
MER     Merrill Lynch              58.95     +0.58
MWD     Morgan Stanley             53.70     +1.19
PRU     Prudential Financial       51.89     +0.75
STI     Suntrust Banks             72.91     +0.75

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

NXTP    Nextel Partners            19.71     +1.11
ATVI    Activision Inc             17.75     +1.09
ELON    Echelon Corp                9.48     +1.29
VIVO    Meridian Bioscience        18.15     +1.26
SNDS    The Sands Regent           13.78     +1.45
MDKI    Medicore Inc                8.70     +1.10

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
COF     Capital One Financial      81.12     +1.93
IACI    InterActiveCorp            26.40     +1.08
ERTS    Electronic Arts            54.19     +1.73
CTX     Centex Corp                57.42     +2.82
LEN     Lennar Corp                50.11     +2.96
RYL     Ryland Group               54.50     +1.95
MDC     M.D.C.Holdings             81.01     +4.15

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

AZN     AstraZeneca                39.98     -1.13
AVE     Aventis                    86.99     -2.19
LFC     China Life Insurance       28.50     -1.60
KB      Kookmin Bank               35.65     -2.00
FRO     Frontline Ltd              50.31     -2.54
OSG     Overseas Shipholding       56.51     -2.22
TRN     Trinity Industries         31.66     -1.14
ESL     Esterline Technology       32.94     -1.36

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

GMR     General Maritime           43.80     -2.00
DT      Deutsche Telekom           21.45     -0.27
SHR     Schering Ag                70.78     -1.17


=================================================================
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) 2001-2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

DISCLAIMER

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

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

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