PremierInvestor.net Newsletter Thursday 12-16-2004 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: Merger Mania Watch List: A handful of bullish candidates Market Sentiment: Maybe Next Week. ================================================================= MARKET WRAP (view in courier font for table alignment) ================================================================= 12-16-2004 High Low Volume Adv/Dcl DJIA 10705.64 + 14.20 10726.85 10661.67 2.20 bln 1121/2103 NASDAQ 2146.15 - 16.40 2164.80 2138.81 2.39 bln 1222/1952 S&P 100 573.46 + 0.01 575.26 575.04 Totals 2343/4055 S&P 500 1203.20 - 2.52 1207.97 1198.41 SOX 427.09 - 7.00 435.56 423.84 RUS 2000 642.23 - 6.38 648.61 640.53 DJ TRANS 3733.23 - 26.40 3760.24 3716.77 VIX 12.27 - 0.08 12.59 11.96 VXO (VIX-O)13.01 - 0.15 13.72 12.57 VXN 18.60 - 0.17 19.07 18.19 Total Volume 4,872M Total UpVol 1,812M Total DnVol 2,855M Total Adv 2716 Total Dcl 4615 52wk Highs 452 52wk Lows 47 TRIN 0.66 NAZTRIN 1.00 PUT/CALL 0.68 ================================================================= =========== Market Wrap =========== Merger Mania by Jim Brown Companies are in a shopping mood this season and today was a banner day for deals. Symantec and Veritas, JNJ and Guidant, Nobel Energy and Patina were all caught up in the holiday shopping excitement. Unfortunately traders said bah-humbug and dumped stocks for several reasons. Some days even the best news falls on deaf ears. Dow Chart Nasdaq Chart SOX Chart Bad news was more important to investors today and there was plenty of it. Suddenly new home construction hit a wall and starts fell to an annualized rate of 1.77 million. This was a -13% drop over October's 2.04 million rate and the largest drop in eleven years. The drop suggests builders are becoming concerned about an overabundance of future supply. We don't know if that was based on slowing sales or just an anticipation of slowing sales given the potential for interest rate hikes into 2005. Builders are continuing to exceed earnings estimates for every quarter and sales have also been strong. By lowering inventory levels they can keep prices high and not get into a price war. Housing permits also fell to 1.988 mil from 2.018 mil and that was far less than the actual drop in starts. This suggests the November lull in starts could have been related to external factors or just a timing pause calculated to delay inventory coming to market until spring. Confused? Until earnings begin to slip I would still buy the homebuilders on any dip. Population density is growing, the equity markets are healthy and employees are seeing larger bonuses again. All this adds up to continued demand. The soft starts did not impact my favorite builder today. NVR announced they were going to buy back $400 million in stock to continue adding to shareholder value. The stock closed at $754 per share. That is slightly higher than the $405 per share from just six months ago. Sorry, no options yet. Offsetting the bad news from Housing Starts the Jobless Claims fell -43,000 to 317,000. This was the biggest drop in three years and the lowest level since July-9th. The last two weeks were inordinately high at 350K and 360K respectively. Analysts suggested that these levels were due to an incorrect seasonal adjustment and now it looks like that could have been the case. I would also expect this abnormally low level could also be a factor of seasonal adjustments. Jobless numbers between Thanksgiving and year end should normally be ignored due to the scheduling of holidays and the clumsy attempt to adjust for them based on prior years. The economic picture brightened again when the Philly Fed Survey came in at 29.6 and blew away estimates of 18.7. This was a huge jump and the highest level since July. This report completely erased fears from the disappointing Richmond Fed survey out last Tuesday. It is also in line with the NY Empire Survey out on Wednesday at 29.9 that also blew away estimates of 20.5. These are very strong numbers and they could be the leading indicators for a new economic surge. The Current Account Deficit declined only slightly in Q3 from -$164.4 to $164.7. This insignificant drop is a function of several things but it was a real upside surprise given the ramp in oil over the quarter. Nobody thinks the downward spiral is over but this could be an indication of a slowing of that descent. The bad news that rocked the markets was the announcement by FASB that stock options must be accounted in earnings statements by June-15th of 2005. This has been a hotly debated topic and one that could really change the earnings landscape next year. Merrill Lynch analyst Richard Farmer said expensing options would have taken more than 10% off S&P earnings over the last year. That is not the real problem. Tech stocks are where options are really used heavily and the impact to tech earnings is going to be huge. Merrill feels the impact to tech earnings could be as much as a -20% to -30% drop. This makes those already high PE stocks even higher and it put a really dark cloud over techs for early 2005. The opponents to this change vow to fight it in Congress and possibly the courts but that could be a long fight and it will not take away the cloud over Q2 earnings next year. This was one of the major factors for the sell off intraday today and one that will not go away. The second reason for the drop was a sharp sell off in the Russell due to a monster reweighting scheduled for the close on Friday. The Russell indexes are adding 40 of the recent IPOs with three large ones going straight into the Russell-1000. This bumps three large stocks back down into the Russell-2000 in addition to the 37 remaining IPOs going into that index. Because some of these IPOs have been very large it means they will go into the R2K at a much larger weighting than hundreds of the other smaller stocks. In order for the mutual funds to adjust for the new index they have to sell a portion of each of the other Russell stocks they currently own to adjust everyone's overall ratio. With nearly $1 trillion indexed to the Russell indexes the amount of shuffling on any index change is huge. The Russell company itself advises holders of nearly $2 trillion in equities and directly manages $180 billion for clients. Just a little Russell trivia I thought you would be surprised to know. The Russell fell -1% today and retraced from its historic 648 high this morning to 640 on the afternoon dip. There was a buy program at 3:PM that produced a +3 point bounce or it would have been much worse. The volume on the exchanges today was close to five billion shares and tomorrow it should be even higher. The Russell shuffle and the quadruple witching option expiration could push it over five billion. The added uncertainty of the option expensing could also add to selling pressure. Symantec announced it was buying Veritas for $13.5B in stock but before the day was over the deal had fallen to only $10.6B based on the monster selling on Symantec. The stock has fallen from its $34 high last week to close at $25 today. This -26% drop in SYMC has created a major buying opportunity in my opinion. The combination of virus protection, data integrity, backup, recovery and storage seems to many like a match made in heaven. SYMC had experienced a monster run from $10.75 in just over a year. That number is even more amazing when you realize they split their stock 2:1 twice in the last 12 months. Split adjusted that is the equivalent of $43 to $136 in 15 months. Needless to say there was a lot of stored up profit and investors ran for the doors on the news rather than calmly wait to see what analysts said. The LEAPs section is going to go LONG the SYMC 2007 $25 LEAP Calls OBL-AE currently $6.00, Buy JAN-2005 $22.50 PUT SYQ-MX currently $0.55 as insurance against a further drop. I view $25 as strong support and the drop very overdone. See the weekend LEAPS section for further details. JNJ announced it was buying Guidant for $24.5B and traded higher on the news. Guidant was seen as adding another opportunity for JNJ and the company said it did not foresee any antitrust roadblocks to the deal. Noble Energy announced a $2.76B acquisition of Patina Oil and Gas and NBL dropped -$2.16 on the news and POG gained +4.69. POG was not a big operator with the majority of its fields in Colorado, Texas, Oklahoma and New Mexico. Oppenheimer agreed NBL needed to make some more acquisitions given the rapid depletion rate of the current Noble fields. Oppenheimer did think the deal was too expensive unless oil remained over $40. It is amazing to me how many oil analysts can't see the forest for the trees when predicting oil prices. There are going to be a lot of shocked people in a couple years when oil is well north of $60. In my Profiting from the Coming Oil Crisis Report I detail the public smoke screen that is being used to keep civilians in the dark. You would think that analysts would have a little more on the ball and not be sucked into it so easily. Just last week the ExxonMobil CEO said energy demands were going to double over the next 20 years and we need to begin adding new sources of energy to keep up with demand. Some of the new sources he suggested were to burn garbage, wood and animal dung. Seriously! I don't know how far your SUV will get on that fuel or how many planes will be stopping at feed lots for a fill up. The $45B in mergers today brought to $90 billion the total for December. That is the strongest period since 2000. Analysts have been predicting more activity because S&P companies have over $600B in cash on their balance sheets which is also a record. The IPO schedule is also running at a record pace with 21 IPOs this week alone. The huge sucking sound you hear is cash being pulled out of other stocks to fund the IPO frenzy. But, not to fear there was $3.2 billion in new cash deposited into fund accounts in the week ended on Wednesday. This was up from the $642 million trickle the week before. The end of year deposits have begun to flow and were it not for the FASB ruling on options I would be thinking SPX 1250 was just ahead. Now I am not so sure. There are plenty of fund managers that are paid bonuses based on the years performance so they really need to keep those stocks pinned against the highs for at least two more weeks. Once the year-end passes into the record books, ledger books in this case, they can run for the hills if they are worried. I suspect a lot of them will be worried simply because of the uncertainty of what earnings will look like. Nothing has really changed at the companies only the way earnings are reported. Does that matter in the long run? I believe it does. Managers are judged by the companies they keep and the almighty PE ratios. If a company has an already high ratio, say 50 and earnings are $1 then the stock price is $50. If those earnings drop by -25% because of expensing options then earnings are 75 cents. A PE of 50 then equals a stock price of $37.50. OR, it could just mean a new PE of 67. I do not believe we will see either extreme but a blending of both. That means slightly higher PE ratios but slightly lower stock prices. This uncertainty cloud will start to weigh heavy on the markets after the first of the year when Q4 earnings are released. Many companies will begin to give guidance on what their earnings will be after options expensing and the street will have to decide how to deal with it. Just a heads up for everyone, the outlook has changed for 2005 but few have picked up on it yet. Today the Dow notched a new eight-month high at 10726 and seems hell bent on a new multiyear high over 10753. For a change the Dow was one of the stronger indexes on the strength of the JNJ gains. That also boosted MRK +1.31 and PFE +0.66. There was a strong bid under the Dow that was not felt in techs. The Nasdaq dipped back to 2140 intraday and closed just over 2146. The FASB news hit it hard as well as the Russell shuffle. After the bell CRUS and EFII warned and traders took $4 from Take-Two Interactive after they badly missed estimates. Later the semiconductor Book-to-Bill number was announced at 1.00, which was an improvement over last month at 0.96 but the news was not good. Orders fell -2.1% in November but billing feel even sharper at -6.1%. This forced an improvement in the BTB ratio but in reality the news was worse. This is not good news for Friday given all the other challenges from option expiration, Russell and FASB. Based on today's events my outlook has changed. While we could continue to struggle higher in the face of the FASB ruling and the semi slump it would only be a jam job by funds trying to hold the market up for the next ten trading days. It is still entirely possible that the bulls will just ignore everything but I am much more cautious tonight. I would no longer buy the dips blindly as we have been doing over the last several weeks. We need to be much more selective in what we are buying and how long we are planning on keeping it. Those stocks with the highest PE ratios are usually the highest flyers and the ones with the most options exposure. This should shift the focus back to more of a value perspective and away from the hysterical PEs some techs now command. The rotation may not occur immediately and it could be a slow painful process. Once January earnings begin to appear I believe it will accelerate. Consider this a caution warning that an investor shift may be ahead. We need to see how the market digests this news and be more cautious until the outcome appears. Jim Brown Editor ================================================================== 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 --------------------------------- Possis Medical - POSS - close: 13.38 change: +0.82 WHAT TO WATCH: POSS continues to build on its recent breakout over $12.00 and its 50-dma. Today's 6.5 percent gain was fueled by volume almost double the norm. The P&F chart looks bullish with a new buy signal from very oversold levels. The P&F target is currently $19.50. Watch for a potential resistance at $15.00 near the top of the October gap down. --- ViaSat Inc - VSAT - close: 23.00 change: +1.95 WHAT TO WATCH: VSAT added 9.2 percent on big volume today to breakout over resistance at $22.00 and its 200-dma. The move bucked the overall market's weakness and produced a new MACD buy signal. Unfortunately, we could not find any news to account for today's breakout but its P&F chart shows a new ascending triple- top buy signal with a $30 target. This could be an aggressive players entry point although we'd prefer to see a pull back. --- Concurrent Computer - CCUR - close: 2.64 change: +0.30 WHAT TO WATCH: CCUR soared for a 12.8 percent gain on volume that was 15 times the average. We don't see any news to account for the move but the breakout over resistance near $2.55 could be buyable. The stock has been suffering under resistance at the bottom of its April gap down for months. CCUR couldn't hold its early morning gains but a bounce from $2.60 might be a speculative bullish entry point. Look for resistance near $3.00. ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- ORBK $20.52 +0.63 - Ding! ORBK added another 3 percent and produced the breakout over $20.00 we were looking for. We would use this as an aggressive players bullish entry point. LU $3.74 +0.14 - We normally don't follow LU but the stock appears to be producing a three-day bullish reversal signal. We would look for some confirmation. Look for resistance at $4.15. =============================== Market Sentiment =============================== Maybe Next Week. - J. Brown It looks like I was a little early calling for the year-end, Santa Claus, early January effect rally to begin on Dec. 15th. I should know better than picking a single day like that. I suspect that the next push higher will begin on Monday but it's only a guess. This week and the next few weeks are expected to see a big increase in inflows into stock funds and money managers will need to put that cash to work. Fortunately, the mood on Wall Street suggests that investors are happy for any dip as it provides another entry point for the widely expected push higher. Aside from another Osama tape out today trading seemed mild. Yes there was lots of volume and market internals were negative but the market has been and remains overbought. The pull back was focused in tech stocks and gold issues. Tech is likely to bounce back while gold will depend on strength of lack thereof in the U.S. dollar. Today brought some positive economic news with the weekly initial jobless claims hitting lows not seen since July. Plus, the Philly Fed index surprised economists with a 29.6 reading compared to 20.7 in November and expectations for a drop to 20.0. Tomorrow is a light day for economic reports with just the Consumer Price Index. Don't forget that tomorrow is also quadruple witching Friday when index options, equity options, and stock futures expire. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 9708 Current : 10705 Moving Averages: (Simple) 10-dma: 10588 50-dma: 10298 200-dma: 10238 S&P 500 ($SPX) 52-week High: 1197 52-week Low : 1053 Current : 1203 Moving Averages: (Simple) 10-dma: 1192 50-dma: 1155 200-dma: 1125 Nasdaq-100 ($NDX) 52-week High: 1631 52-week Low : 1301 Current : 1607 Moving Averages: (Simple) 10-dma: 1612 50-dma: 1528 200-dma: 1450 ----------------------------------------------------------------- CBOE Market Volatility Index (VIX) = 12.27 -0.08 CBOE Mkt Volatility old VIX (VXO) = 13.01 -0.15 Nasdaq Volatility Index (VXN) = 18.60 -0.17 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.68 1,200,757 814,736 Equity Only 0.44 934,116 410,355 OEX 1.93 44,832 86,646 QQQQ 0.45 122,501 55,839 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 76.3 + 0.7 Bear Correction NASDAQ-100 77.0 - 1 Bull Confirmed Dow Indust. 70.0 + 0 Bull Confirmed S&P 500 76.8 + 0.8 Bull Confirmed S&P 100 77.0 + 0 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: 0.93 10-dma: 1.06 21-dma: 0.96 55-dma: 1.05 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 972 1164 Decliners 1857 1875 New Highs 271 97 New Lows 11 14 Up Volume 1034M 760M Down Vol. 1206M 1453M Total Vol. 2261M 2384M 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 ================================================================= 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. 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PremierInvestor.net Newsletter Thursday 12-16-2004 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: None Stock Splits Announcements: CMN, FLIR, JOYG, MTH, BCP Active Trader (Non-tech Stocks) Closed Bullish Plays: TARO 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 ================================================================== None ================================================================== Stock Splits ================================================================== CMN announces a 3-for-2 stock split Thursday afternoon the Cantel Medical Corp. (NYSE:CMN) announced that its Board of Directors had approved a 3-for-2 stock split of its common shares. The stock split will take effect as a stock dividend payable on January 12th, 2005 to shareholders on record as of January 5th. Fractional shares resulting from the split will be paid in cash. About the company: Cantel Medical Corp., a healthcare company, is a leading provider of infection prevention and control products, specialized medical device reprocessing systems for renal dialysis and endoscopy, water treatment systems, sterilants, diagnostic imaging and therapeutic medical equipment primarily focused on endoscopy, hollow fiber membrane filtration and separation technologies for medical and non-medical applications, specialized packaging for infectious and biological specimens, and scientific instrumentation. The Company also provides technical maintenance services for its products. (source: company website) -- FLIR declares a 2-for-1 stock split Thursday morning before the opening bell FLIR Systems, Inc. (NASDAQ:FLIR) announced its FY05 earnings and revenue outlook. The company's guidance was slightly under analysts' estimates so management tried to soften the news with a 2-for-1 stock split. The payable date for the split will be February 2nd, 2005 for shareholders on record as of January 12th. Post-split FLIR should have approximately 78.5 million shares outstanding. About the company: FLIR Systems, Inc. is a world leader in the design, manufacture and marketing of thermal imaging and stabilized camera systems for a wide variety of Thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security. (source: company website) -- JOYG mines a 3-for-2 stock split Thursday morning before the market's opening bell the Joy Global Inc. (NASDAQ:JOYG) announced that its Board of Directors had approved a 3-for-2 stock split of its common shares. The split will payable on January 21st, 2005 to shareholders on record as of January 6th. Fractional shares resulting from the split will be paid in cash. JOYG will begin trading on a split- adjusted basis on January 24th. About the company: Joy Global Inc. is a worldwide leader in manufacturing, servicing and distributing equipment for surface mining through its P&H Mining Equipment division and underground mining through its Joy Mining Machinery division. (source: company website) -- MTH builds a 2-for-1 stock split Thursday morning before the opening bell the Meritage Homes Corp. (NYSE:MTH) announced a 2-for-1 stock split of its common stock in the form of a stock dividend. The split is payable on January 7th, 2005 to shareholders on record as of December 28th. About the company: Meritage Homes Corp. is one of the nation's largest single-family homebuilders, and is traded on the NYSE, symbol: MTH. Fortune Magazine recently named Meritage to its "Fortune 1000" list of America's largest corporations and included the company as a "top pick from 50 great investors" in its Investor's Guide 2004. Additionally, Meritage is ranked as one of Fortune's Fastest Growing Companies in America, its fourth appearance on this list in six years. The company is included in the S&P SmallCap 600 Index and appears on Forbes' "Platinum 400" list as part of an elite group of only five companies on the list that have exceeded 50% in five-year annualized total return. In its 18-year history the company has built approximately 34,000 homes, ranging from entry-level to semi-custom luxury. Meritage operates in fast- growing states of the southern and western United States, including six of the top 10 single-family housing markets in the country. (source: company website) -- BCP grows a 3-for-2 stock split Thursday morning before the market's opening bell the Balchem Corporation (AMEX:BCP) announced that its Board of Directors had approved a 3-for-2 stock split of its common shares. the split will take the form of a stock dividend payable on January 20th, 2005 to shareholders on record as of December 30th. If we're reading the press release correctly the company also announced a cash dividend of 9 cents per share payable on the same dates payable on a post-split basis. About the company: Balchem Corporation consists primarily of three business segments: ARC Specialty Products, Encapsulated/Nutritional Products and BCP Ingredients. Through ARC Specialty Products, Balchem provides specialty-packaged chemicals for use in health care and other industries. The Encapsulated/Nutritional Products segment provides proprietary microencapsulation solutions to an expanding variety of applications. BCP Ingredients, our unencapsulated feed supplements segment, manufactures and supplies choline chloride and derivatives used primarily in the poultry and swine industries. (source: company website) ================================================================== Active Trader (AT) Non-Tech Stock section ================================================================== ============ Closed Plays ============ Closed Bullish Plays -------------------- Taro Pharmaceuticals - TARO - cls: 34.99 chg: +1.14 stop: 29.90 A strong day for drug stocks in general and positive news for TARO gave the stock a 3.3 percent gain on Thursday. TARO actually hit an intraday high of $35.43, surpassing our target at $35.00. The news out this afternoon stated that the FDA had given approval to TARO for its new drug application for its Halobetasol Propionate Ointment. The company also received tentative approval from the FDA for its Gabapentin Oral Solution. When this news hit shares of TARO immediately spiked higher on strong volume. We are closing the play at $35.00 per our game plan. The $35 level is expected to be round-number resistance made tougher by the presence of its exponential 200-dma. Picked on December 01 at $30.90 Gain since picked: + 4.09 Earnings Date 10/28/04 (confirmed) Average Daily Volume: 629 thousand ================== 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 GSK GlaxoSmithKline 46.76 +0.96 MRK Merck & Co 31.79 +1.31 JNJ Johnson & Johnson 63.45 +2.55 FRE Freddie Mac 70.75 +0.99 BMY Bristol Myers Squibb 25.56 +0.53 WYE Wyeth 41.69 +1.09 --------------------------------------- Breakout to Upside (Stocks $5 to $20) --------------------------------------- CALM Cal-Maine Foods Inc 14.29 +1.78 NEOL Neopharm Inc 13.24 +1.16 CNVX Cancervax 11.34 +1.43 BCSI Blue Coat Systems 19.18 +1.62 MFRI MFRI Inc 9.08 +1.97 --------------------------------------- Breakout to Upside (Stocks over $20) --------------------------------------- ABT Abbott Labs 46.19 +1.84 PEG Public Service Enterprises 45.61 +1.03 UST UST Inc 47.24 +2.21 BCR C.R.Bard Inc 63.99 +3.79 SEPR Sepracor Inc 55.30 +4.85 GWW Grainger W.W. 64.52 +1.18 POG Patina Oil & Gas 36.61 +4.69 ------------------------------------------- Breakout to Downside (Stocks over $20) ------------------------------------------- GS Goldman Sachs Inc 105.40 -3.85 SYMC Symantec 25.13 -2.25 APOL Apollo Group Inc 79.63 -5.70 BMET Biomet Inc 43.26 -1.09 MFE Networks Associates 29.23 -3.48 CUNO Cuno Inc 56.35 -1.45 MANH Manhattan Associates 23.72 -1.51 MIDD Middleby Corp 47.70 -2.64 ASGR America Service Group 22.02 -1.87 ----------------------------------------- Recently Overbought With Bearish Signals (Stocks over $20) ----------------------------------------- FDX Fedex Corp 97.71 -1.04 WCN Waste Connections 34.14 -1.59 WMI Waste Managements 30.23 -0.58 HCA HCA Inc 40.62 -0.25 LNCR Lincare Holdings 38.41 -0.77 TFX Teleflex Inc 51.38 -0.72 VCI Valassis Comm. 34.80 -0.50 ================================================================= 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. 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