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Daily Newsletter, Wednesday, 12/15/2004

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PremierInvestor.net Newsletter               Wednesday 12-15-2004
                                                   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: Vantage Points
Watch List:  More Bullish Breakouts


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      12-15-2004           High     Low     Volume   Adv/Dcl
DJIA    10691.45 + 15.00 10706.16 10636.47 2.14 bln 1942/ 912
NASDAQ   2162.55 +  2.71  2171.27  2151.31 2.36 bln 1776/1285
S&P 100   573.45 +  1.03   574.00   570.19   Totals 3718/2197
S&P 500  1205.72 +  2.34  1206.61  1199.44
SOX       434.04 +  1.02   436.46   429.78
RUS 2000  648.61 +  5.07   648.61   642.68
DJ TRANS 3759.61 +  2.58  3770.55  3739.34
VIX        12.35 -  0.38    12.88    12.23
VXO (VIX-O)13.16 -  0.29    14.14    13.00
VXN        18.77 +  0.19    19.14    18.28
Total Volume 4,508M
Total UpVol  2,591M
Total DnVol  1,818M
Total Adv  3718
Total Dcl  2197
52wk Highs  454 
52wk Lows    22
TRIN       1.02
PUT/CALL   0.63
===============================================================

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

Vantage Points
Linda Piazza

Wednesday offered a view of the U.S. economy from several vantage
points, including the White House's.  One of the first of those
vantage points occurred when Treasury Secretary John Snow
appeared on CNBC Wednesday morning ahead of the open of the White
House's economic forum.  A CNBC commentator expressed skepticism
that the predicted reduction in the budget deficit would occur. 
Snow's "wait and see" answer epitomized the tone of the entire
interview.  Several times, he repeated his confidence that "the
numbers are going to play out," adding that rising government
receipts coupled with fiscal discipline would produce those
better numbers.  

On a morning that had seen the dollar drop precipitously against
some currencies, a guest commentator quizzed him about his
expressed strong dollar policy, saying that she hadn't seen any
actions to back up that policy. Snow answered that he never
talked about dollar levels.  Saying that the administration's
policy was well known, he stated that a strong American economy
was key.  Whether he meant that economic growth was key to
buoying the dollar or that he would sacrifice dollar strength to
help American multinational companies proved unclear, at least to
this listener, and the guest commentator did not ask further
questions that might have clarified the matter.

Later, President Bush spoke, saying that his administration's
policy was a strong dollar one, and Greenspan took the dollar's
value into account when deciding on rate hikes.  Harvard's
Feldstein was to echo Snow's optimism later in the day, saying
that the economy was in good shape. Disputing some assertions
that no evidence of inflation exists, Feldstein noted evidence of
upward pressure on prices.  After dropping precipitously against
the yen and euro overnight, the dollar steadied throughout the
day, with dollar investors perhaps awaiting other developments
out of the forum.  

Snow also addressed the issue of Social Security reform,
affirming that he had approached the bond market for help
financing the transition into personal accounts.  He expressed
confidence that if a "real fix" could be found, financing could
be found for that transition.  When questioned about whether 30-
year bonds would be issued, as had been rumored, or whether a
figure up to $1.5 trillion in bonds was accurate, Snow was cagey
with answers, essentially giving the same "wait and see" reply.    

For much of the day, indices displayed that same caginess.  An
end-of-day move higher pushed some above important resistance.

Annotated Daily Chart of the SPX:

 

Annotated Daily Chart of the Nasdaq:

 

Helped by Merck (MRK) after Raymond James upped the stock to a
strong buy rating, the Dow broke out of a broadening formation.

Annotated Chart for the Dow:

 

Annotated Daily Chart for the Russell 2000:

 

Beginning with the 7:30 release of the Mortgage Bankers
Association's (MBA) information on mortgage activity and ending
with the Dec NAHB Housing Market Index at 1:00, another vantage
point into the health of the economy was the performance of the
housing industry.  According to the MBA, mortgage activity
declined 1.00 percent on a seasonally adjusted basis in the week
ending December 10.  Refinancing applications also fell on a
seasonally adjusted basis, by 2.00.  The purchase index declined
0.4 percent.  Both the mortgage activity and purchase index
numbers had produced strong gains the week before, but the
decline in refinancing activity built on weakness from the
previous week.  

The U.S. December Homebuilder' Index was unchanged at 71.  The
DJUSHB still rose 5.44 percent, one of the strongest gaining
indices, perhaps cheered by Lennar Corp (LEN)'s earnings report. 
That report included 34 percent growth in earnings.  The company
beat forecasts and raised guidance for the year above
expectations.  A rally in the bond market also helped encourage
the homebuilders, with yields remaining low.

The 8:30 release of the December's Empire Manufacturing offered
another vantage point into the health of the U.S. economy, at
least as it's developing in New York.  Manufacturing activity in
that area unexpectedly increased to 29.9 in December from a
revised 18.9 for November.  Economists had expected a decline. 
New orders, shipments and unfilled orders all rose while the
number of manufacturers reporting deteriorating conditions
declined.  Despite those assertions about no sign of inflation,
those New York area manufacturers apparently experienced some,
with December's prices-paid component rising.  Manufacturers were
not able to pass prices on to consumers, apparently, since the
prices-received component dropped.  Maybe New York area residents
will soon be able to absorb some of those rising costs to
manufacturers, however, as the employment index also rose, to
21.9 from November's 10.6.

October's Net Capital Inflows, announced at 9:00, offered another
vantage point, showing capital inflows at $48.1 billion, down
from September's $67.5 billion. Foreign purchases of net domestic
securities fell while foreign purchases of U.S. Treasury notes
climbed.  Private purchases of U.S. financial assets declined. 
The news hit the weak dollar, weakening it further, before it
began a long period of consolidation for the day.  

At 10:30, the usual release of crude, gasoline, and distillate
inventories offered yet-another vantage point, one with a less
cheerful view.  Some concern had already arisen with Yukos'
Wednesday morning bankruptcy filing in a Houston court.  Yukos
felt forced into the move by the Russian government's intention
to sell off the valuable Yuganskneftegaz unit.  The government
intends the sale as one step in collecting the $28 billion in
taxes the government has billed the company.  Yukos asked the
U.S. judge for an injunction against that sale, along with other
protections.

Iran had also announced that it would adhere to OPEC's decision
to trim production, on the same morning that ChevronTexaco made
public its intention to raise its planning price for oil from the
previous $15-25 a barrel to $20-30 a barrel.  The Chairman and
CEO's conclusion that higher oil prices constituted an enduring
structural change probably caused more harm than the raising of
planning prices.  Most analysts had concluded that major
companies had already raised planning prices, especially after
Royal Dutch/Shell noted in September that while $20 a barrel
would remain its official planning price, the company would
factor in a price of $25.00 a barrel or above when making
investment decisions.

In that climate, crude had been rising pre-market, a climb it
continued into the release of crude inventories.  The Department
of Energy's figures proved disappointing to those who had hoped
to see a further build in inventories.  Instead, the DOE reported
steady inventories in distillates, the focus of interest during
winter months.  The American Petroleum Institute (API) reported a
drop of 2.2 million barrels.  The DOE said crude inventories
dropped 100,000 barrels and gasoline rose 1.5 million barrels. 
API disputed those numbers, citing a gain of 2.5 million barrels
in crude inventories and a drop of 1.3 million barrels in
gasoline. The government reported that imports dropped 498,000
barrels a day, arguing against OPEC's assertion that full tankers
have been churning their way through the seas to the U.S. with
inventories increasing.  The government's data on imports offers
a different view from a different vantage point.

After stabilizing for a few moments as the news was digested,
crude futures rose again.  

Annotated Daily Chart for Crude Futures for January Delivery:

 

While equities bucked the usual crude-up/equities-down reaction,
many may be discounting the rise in crude, feeling as if it were
an overreaction to the Yukos news.  Some might be focusing on the
technical potential for another rollover soon, perhaps after that
neckline is retested.  

Perhaps the various vantage points offered up a more encouraging
view of the economy than many expected to see.  Many had worried
about the influx of new shares into the market with the heavy IPO
schedule this week, but today's big IPO, Las Vegas Sands (LVS)
performed strongly, closing at $46.52, well above the
$29.00/share pricing.  

Increased merger and acquisition activity provides an optimistic
vantage point for the markets, and markets are seeing more M&A
activity.  Today's featured the Sprint Corporation purchase of
Nextel (NXTL) with the cash-plus-share price at a premium to
Tuesday's closing price.  Both boards have apparently already
approved the deal that will make the combined company, to be
known as Sprint Nextel, the country's third-largest cell phone
company.  The deal is expected to be completed by the second half
of 2005, if the regulatory approvals and usual closing conditions
can be met by then.  Sprint will spin off local telephone
operations.

Gary Forsee will head up the new company, with titles of 
resident and CEO.  He's currently Sprint Chairman and Chief
Executive.  Current Nextel president and CEO Timothy Donahue will
serve as chairman of the combined company.  Forsee enthused about
the efficiencies that will be generated and UBS analysts agreed.
UBS noted that Sprint should realize at least $19 million for the
spin-off of local telephone operations and speculated that 2005's
pre-tax cash flow should see double-digit increases.
    
Keep your eyes on the view, however, as tomorrow offers numerous
new vantage points, including FedEx (FDX) and Goldman Sachs (GS)
earnings before the bell and Adobe Systems (ADBE), Darden
Restaurants (DRI), KB Home (KBH) and Nike (NKE) after the bell.  

Thursday's economic releases begin with the 8:30 release of
jobless claims and include the 10:30 release of natural gas
inventories, but will feature many more economic releases. 
November Housing Starts, Building Permits, and Q3 Current Account
Balance will all be released concurrently with the jobless
numbers.  At noon, markets watchers will see December's
Philadelphia Fed.  The minutes of the November 10 FOMC meeting
will be released at 2:00, and at 4:30, the Money Supply figure
follows up.  Also after the close, the Semi Book-to-Bill number
will be released.  

With many indices offering tentative new upside breakouts, there
better not be any thick, ground-hugging roots to trip bulls
wandering among those gorgeous views.


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

Bristol Myers Squibb - BMY - close: 25.03 change: +0.71

WHAT TO WATCH: A 2.9 percent rally on big volume helped push drug 
maker BMY up through both its simple and exponential 200-dma's.  
Plus, the rally helped BMY breakout over its trend of lower 
highs.  Unfortunately, the rally seemed to stop at the stock's 
50-week moving average.  Even so this looks like a tempting 
reversal.  Watch for a dip back toward $24.50 and consider a 
bounce.




---

Masco Corp - MAS - close: 36.51 change: +0.51 

WHAT TO WATCH: MAS has been a steady climber for months.  Traders 
have been buying dips to its simple 50-dma since late July.  Now 
after the recent dip the stock is inching higher again as its 
MACD produces a new buy signal.  We would use a move over $36.75 
as an entry point for a run towards $38-39. 




---

UTStarcom Inc - UTSI - close: 22.35 change: +0.70

WHAT TO WATCH: UTSI is ready to try again.  Two weeks ago the 
stock broke out over major resistance at $20.0 0and charged 
toward the $23 level and its exponential 200-dma.  The rally 
failed but traders bought the dip again at $20.  Now UTSI is back 
to try and breakout again in its attempt to fill the gap from 
July.  The P&F chart shows a triple-top breakout buy signal with 
a $33 target.




---

Central Garden & Pet - CENT - close: 40.60 change: +1.68

WHAT TO WATCH: After four weeks of consolidating sideways in a 
trading range between $38 and $40 shares of CENT are breaking out 
to new highs.  Today's move was fueled by comments from Bank of 
America who started coverage with a "buy" rating.  Technicals are 
positive and its MACD is nearing a new buy signal.  Consider this 
a potential entry point. 




---


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

ORBK $19.89 +1.04 - ORBK added 5.5 percent and broke through its 
simple 200-dma.  Watch for a move over $20.00 as a possible entry 
point.

BWNG $8.48 +1.48 - BWNG added 21 percent on very strong volume to 
breakout over the $8.00 level.  While we wouldn't chase it here 
the stock looks poised for more gains. 

JMDT $20.31 -1.99 - JMDT is breaking down below support at $22.00 
and below its opening IPO price near $21.00. 
 

==========================================================
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               Wednesday 12-15-2004
                                                   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:  MNST

Stock Splits
  Announcements:        None

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)


==================================================================
Stop Loss Adjustments
==================================================================

MNST - tech stock long -
  Hang on tight!  MNST is up another 6.2 percent on huge volume
  that was almost six times the average volume.  The move follows
  yesterday's breakout over major resistance at $30.00.  Our initial
  target remains the $34-36 level but we are going to raise our stop 
  loss to $29.45.


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

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

None

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

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

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

PTR     PetroChina Ltd             54.31     +1.48
MRK     Merck & Co                 30.48     +0.86
COP     ConocoPhillips             87.54     +0.89
FRE     Freddie Mac                69.76     +1.00
KRB     MBNA Corp                  27.70     +0.75
ALL     Allstate Corp              51.35     +0.82

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

OPWV    Openwave Systems           16.11     +1.89
AXCA    Axcan Pharma               19.13     +1.30
OS      Oregon Steel Mills         19.59     +1.39
ORBK    Orbotech Ltd               19.89     +1.04
GTOP    Genitope Corp              16.39     +1.38
MMSI    Merit Medical Systems      14.97     +1.20

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
STT     State Street Corp          48.19     +1.12
NTAP    Network Appliance          34.64     +1.53
PHM     Pulte Homes                64.99     +5.01
LEN     Lennar Corp                56.35     +5.52
TOL     Toll Brothers              66.02     +2.55
PNR     Pentair Inc                43.27     +1.09
EMN     Eastman Chemical Co        56.80     +1.20

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

ITW     Illinois Tool Works        92.18     -1.22
GCI     Gannett Co Inc             79.60     -1.68
RIMM    Research In Motion         82.60     -2.84
MBT     Mobile Telesys            119.01     -5.24
BMET    Biomet Inc                 44.35     -3.95
CRL     Charles River Labs         44.31     -2.44
CUNO    Cuno Inc                   57.80     -5.39
JMDT    Jamdat Mobile              20.31     -1.99

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

ZMH     Zimmer Holdings            81.50     -2.79
DGX     Quest Diagnostic           94.33     -1.39
JLL     Jones Lang Lasalle         36.12     -1.81


=================================================================
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.

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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