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Daily Newsletter, Sunday, 12/19/2004

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PremierInvestor.net Newsletter          Weekend Edition 12-19-2004
                                                    section 1 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 one:

Market Wrap: Drug Overdose        
Market Sentiment: Only 8 1/2 Trading Days Left    
Watch List: Retail, Banks & Software          

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 12-17        WE 12-10        WE 12-03        WE 11-26 
DOW    10649.92 +106.70 10543.2 - 48.99 10592.2 + 69.98 + 65.32 
Nasdaq  2135.20 +  7.13 2128.07 - 19.89 2147.96 + 45.99 + 31.34 
S&P-100  567.39 +  1.89  565.50 -  1.58  567.08 +  4.43 +  2.96 
S&P-500 1194.20 +  6.20 1188.00 -  3.17 1191.17 +  8.52 + 12.31 
W5000  11783.36 + 91.38 11692.0 - 43.29 11735.3 + 99.63 +155.01 
SOX      423.75 +  1.00  422.75 - 22.53  445.28 + 14.30 -  0.90 
RUT      642.08 +  9.84  632.24 -  9.97  642.21 + 11.05 + 17.71 
TRAN    3751.07 + 65.04 3686.03 - 40.71 3726.74 + 78.75 + 80.34 
VXO       12.71           13.20           13.61           13.35 
VXN       18.21           19.57           18.26           17.85 
=================================================================

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

Drug Overdose
by Jim Brown

What a way to end the week! There was a constant barrage
of drug news both positive and negative that helped remove
any remaining bullish bias. Add in the index re-weighting
on the NDX, RUT, S&P 500, Mid-cap and Small-cap and it had
investors wishing they were on drugs before the day was
over. 

Dow Chart

 
Nasdaq Chart

 
SPX Chart - Multiple Resistance Lines

 


The Consumer Price Index rose a higher than expected +0.2%
despite the drop in oil prices over the reporting period. 
Core inflation also rose +0.2% and pushed the annual rate
of inflation to +2.2% for the last 12 months. The headline
inflation rate increased to an annualized +3.5% and the 
highest since May 2001. With inflation rising the Fed 
has no reason to really let up on the rate hike scenario
despite the current wishful consensus that expects them 
to pause. Energy prices added to the number despite a 
drop in crude for the month. The higher energy levels 
are starting to filter through the system and it will
take a prolonged drop to remove the upward pressure. 
Don't count on it any time soon. 

The economic news took a back seat to the drug news and
there was plenty of it. The headliner for the day was
Pfizer and news that at very high levels there was an
increased risk of heart attack. The new study released
Friday showed at doses 2-8 times the recommended dose
there was twice the risk of heart attack. The study was
an anti cancer study where very high doses of Celebrex
were being tested to see if cancer complications from
high levels of inflammation could be improved by removing
the inflammation. PFE stock dropped to $22 from $29 on
the news but quickly rebounded to close at $26. You would
have thought they had found that there was a heart attack
in one of every 50 pills. Very few drugs when taken at
4-8 times the recommended dosage will not cause problems
and I think Pfizer will recover. However, as we have seen
over the last three months the MRK/VIOXX news has caused
serious investor flight from these drugs. It could be
months or even a year before the daily news stories
will fade away. This weekend CNBC is doing a special
called the "Death of a Wonder Drug" in relation to the
MRK/VIOXX event. This will pose additional questions in
the mind of users and investors. I believe PFE is a buy
at $25 but I would give it a few more days to settle 
down. PFE traded 289 million shares on Friday and I
suspect there are plenty of investors who did not bail
but will soon. 

Lilly warned that their Strattera drug for A.D.D. had 
produced liver problems in some patients. LLY fell -1.38
on the news. AstraZeneca fell -7.7%, -$3.11 after it said
it's cancer drug Itressa failed to prolong survival in 
cancer patients. OSIP soared on the news with a +$21 
jump to $68. OSIP and DNA just had their anti cancer 
drug Tarceva approved on Nov-19th. With Itressa out 
of the picture the OSIP drug which has shown positive
benefits should jump to the front of the pack. Deutsche
Bank said "Tarceva remains the only EGFR inhibitor to 
have demonstrated a survival benefit in patients" and 
maintained a buy on DNA/OSIP. CSFB said it was a clear
win for Tarceva. FBR said Tarceva could end up with 100%
of the market but Eributux from Imclone could still be
a factor in future trials. 

There were several lesser items of drug news but you 
get the picture. JNJ powered the Dow higher on Thursday
and gave Dow components MRK/PFE a boost as well. Today
PFE removed that positive bias and pushed the Dow back
to 10650 and a level that appears risky were it any 
other time of the year. 

Crude Oil Chart

 

Last Sunday I predicted that the 200-day average would 
be strong support on crude oil. That average at just
over $40 produced a very strong bounce. Oil prices 
rocketed back over $46 with a gain of +2.10 on Friday
and +5.60 for the week. This was a +14% jump in price
and the biggest jump in five years. Somebody must have
gotten an advance copy of my Oil Crisis Report. (grin) 

The jump was related to colder weather drawing
down supplies of heating oil, the breakup of Yukos,
the Osama tape and worries about Nigeria again. Yukos
production arm is going to be auctioned this weekend
to supposedly satisfy a tax debt. However, it is already
beginning to appear as though Russia is trying to regain
control of its oil assets. This is troubling for the oil
sector as Yukos was the most westernized of the Russian
entities. Yukos pumps about 1.5 mbpd and has reserves
of nearly 11 billion barrels. That sounds like a lot 
but it is less than a four month global supply at our
current rates. The bidder expected to win is Gazprom,
Russia's state controlled gas giant. I say expected 
to win because only four companies have entered the 
auction and the other three are previously unknown. 
Considering it took at $1.77 billion deposit to enter
the auction it did not take much research to determine
that at least two of the unknowns were actually linked
to Gazprom itself and put in the bidding to simulate a
real auction. Indications are that the third company 
may also be a phony. If the government gave an auction
with only one government controlled company bidding it
would be seen as a complete sham. By adding in three 
phony bidders it is only a 97% sham. Thus far no western
country has appeared to bid because they no longer feel
confident in doing business there. With the expected 
price to be in the $8 billion range and fair value in
the $18.5 billion range you would have expected some
of the U.S. companies to take a shot. They all fear 
the current environment and the potential for losing
all of their investment. 

Production is already falling at Yukos since the 
current battle began and fears are rising that should
another Russian company take control the production 
would slip even further. The problem in Russia is a 
desire to take all the cash from sales and use it 
elsewhere and not spend any on new exploration, 
repairs or even finishing out existing capacity. 
When the fields begin to decline there is no cash 
left to rebuild them. Secondly if this is a move by
Russia to take back the oil fields for whatever reason
then western oil companies are afraid to invest/explore
in the region. This also increases the global decline 
rate because the entire region is taken out of the 
picture earlier than expected. It normally takes 
about six years from discovering oil to being in full
production of the find. If the discovery phase is being
eliminated in Russia then we will always be at least 
eight years away from seeing any additional production.
Two years to restart the discovery process once the 
political climate changes and six years to drill and
start production. This is yet another reason why the
world is going to be very short on oil very soon. I 
explain this all in great detail in my Oil Crisis 
Report.  https://secure.sungrp.com/05renewal/

A new Osama tape that appeared on Thursday calls for
attacking oil in Iraq and the entire Middle East to 
prevent America from getting it. This is yet another
problem that will be facing the world in 2005. Osama
repeated the claim that the U.S. invasion of Iraq was
to take control of some of the largest oil fields in
the world. I discarded this accusation over the last
two years but after doing research on my oil report
I am no longer sure. I initially thought Bush went
after Iraq and Saddam for various reasons including 
Saddam's attempt to assassinate Bush senior. I did 
not give credence to the oil scenario. Since Bush and
Cheney are oilmen fully aware of the coming problem
I am finding there could easily have been an ulterior
motive that included putting in a new regime that 
was friendly to the U.S. just before the world oil 
production begins to decline. I am sure nobody will
ever admit to it. It also did not hurt to show some
force in the region in anticipation of the coming oil
crisis. Makes the other countries a little less vocal
about their anti American feelings and tendencies. I 
have rambled on here but you can see I am becoming 
passionate about the future of oil.    

EBAY caught the shopping fever this week and bought
Rent.com for $415 million. Rent.com lists home and
apartment rentals on the Internet. This is a great
deal for EBAY and helps get them another step closer
to building out their real estate segment. EBAY is
expected to be a major force in real estate sales
in coming years. Rent.com listings only generate a
fee if the property is rented. The fees are generally
much higher than an auction on a Tickle Me Elmo doll
so I am sure EBAY will get another shot in the revenue
arm once the deal closes in early 2005. 

There was huge volume across all the indexes Friday and
the Dow came close to a top-5 volume day. Volume across
all three major exchanges totaled 5.985 billion shares. 
This is almost a billion shares more than Thursday's
5.005B level. Nearly 700 million shares were in only
two companies. News Corp, NWS-a, traded 408 million
shares and PFE hit 289 million. News Corp was added
to the S&P-500 at the close. The Nasdaq leaders were
SIRI 130M, MSFT 129M and CSCO 106M. SIRI has been 2-3%
of the daily Nasdaq volume for over a month. According
to Ameritrade it is the most heavily traded stock by
a wide margin. 

Unfortunately the majority of this massive volume was
down despite the A/D line being nearly flat. For two
days now we have seen massive volume and it has been
weighted to the sell side. This is very troubling to
market analysts given the level of the indexes, the
length of the current rally and the season. It is 
still hard to attribute the losses to any material 
stock factors. This could just be related to the 
index events. With the 41 new IPO stocks going into
the Russell there was a need to sell a portion of 
existing positions in thousands of stocks, literally.
This would contribute to sell side volume but no real
drop in prices. Same with the S&P changes. With News
Corp's market cap at $55B this also meant index funds
had to buy a lot of NWS stock. Over $7.6 billion in 
NWS stock was bought on Friday. This literally meant
$7.6 billion in other S&P stocks had to be sold to 
maintain the balance in the index. 

I believe this index re-weighting has depressed the 
market over the last couple days and produced an 
artificial selling bias. Quadruple witching expiration
did not help either. Little was said about the FASB
option ruling on Friday but you can rest assured it
will reappear. A reader emailed me on Friday about the
American Jobs Creation Act asking how it would impact
the market in 2005. Given the potential downside
pressure from the FASB options ruling this is an
excellent time to discuss the Act. I had meant to do
it several times but there is just never enough space.

The American Jobs Creation Act was passed on Oct-22nd
and it basically gives American corporations a free
pass to the local candy store. Companies with operations
in other countries can repatriate up to $500 million per
year in cash at a 5.25% tax rate. The current tax rate
for bringing overseas profits back into the country is
35%. This nearly free opportunity takes dollars that
would have been spent in other countries and brings
them back to the U.S. The only catch is that the money
must be used for job creation, capital expenditures,
pay down debt, buy back stock, increase dividends or
fund pensions. All of these uses would be positive 
for the U.S. economy. According to TrimTabs and Morgan
Stanley there could be over $420 billion in profits
waiting to be put to work. Of that number TrimTabs
estimates $150 billion could be repatriated. Intel
has already announced they might bring back $6 billion.
Heinz said they were returning $1 billion. These are
just the tip of the iceberg given the Act has only
recently been signed. Of that $150 billion TrimTabs
thinks $50 billion could make its way directly into
the market and the rest would support the market by
the various other uses. Obviously the largest amount
will be in the first year of the program and it will
dwindle as the years pass. Is it enough to compensate
for the FASB ruling? I doubt it but it should soften
the blow. 
 
Russell Investment Services released the results of a
recent survey of investment managers on Friday. The
survey showed that 10.4% thought the market was over
valued, 69.8% thought it was fairly valued and only
19.8% thought it was under valued. In general the 
managers were expecting an 8-11% return in 2005 and
felt dividend stocks were the main focus with large
cap and growth stocks the next in favor. That is a
"return" not an increase. They are expecting a +5-7%
market gain and the rest in dividends. Another analyst
said dividends had represented 43% of market returns
from 1930-1980. Since 1981 dividends had only accounted
for 23% of the overall returns. Both analysts felt 2005
would be another year for increased dividends rather 
than any material increase in stock prices. In periods
where the market stagnates those dividends can provide
an income to offset the lack of appreciation. With the
current tax laws favoring dividends it only makes sense
managers would refocus their efforts. 

For next week we are facing a lot of mixed market 
indicators. Historically the Santa Claus rally occurs
on the last four days of the year and the first two days
of the next. The anticipation of this rally normally
sees buyers appear the two days before Christmas. For
2004 this gives us a window from Wednesday this week
until Tuesday Jan-4th as potentially bullish days. 
With expiration on Friday we should continue to see
settlement issues on Monday. Monday and Tuesday could
be a critical days for market sentiment. With the Dow
resting on 10650 and the SPX in danger of breaking 1195
we need to see confirmation of the prior underlying bid
or the Santa rally could fail. This makes Mon/Tue pivotal
for the rest of the year. There is an adage, "If Santa
Should Fail To Call, Bears May Come To Broad and Wall." 
When buyers are hesitant to enter the market during the 
holiday season it typically suggests trouble ahead. 
This makes next week a critical sentiment week for all.
Everyone will be watching and many will be waiting for
somebody else to take the first step.  

To make it as simple as possible I would continue to 
watch SPX 1195. We broke back below the 1200 level I was
using as an indicator to add to positions on Friday but
I am hoping it was due to index balancing. 1195 is still
support. Should we fall below that level I would not want
to be long. As long as we remain above I would chance 
small bullish positions until we get confirmation the 
underlying bid has returned. Mutual fund managers have
a lot riding on the next nine days. Many earn their 
bonuses based on performance through 12/31. They will 
want to keep painting the tape as much as possible to 
keep prices high. However, they do not have to remain 
locked into this program. If the outlook suddenly turns
grim they can and will take profits to salvage as much 
of their bonus as possible. Until a new upward trend 
appears next week traders and managers will be walking 
on eggshells in fear of an early breakdown. Let's hope
those eggs are petrified.  

Only 5 shopping days until Christmas

Jim Brown


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

Only 8 1/2 Trading Days Left
- J. Brown

Would you believe we only have eight and a half trading days left 
in 2004?  That means we're approaching one of the most bullish 
times of year for equities.  The traditional Santa Claus rally 
usually begins around Tuesday or Wednesday this week and runs 
into the first two trading days of January.  As is normally the 
case market pundits begin asking, "Will the year-end rally appear 
this year?"

We think so.  Granted the major stock indices are still 
overbought but stock funds are expected to see huge inflows and 
managers need to put that money to work.  Part of the year-end 
rally can probably be attributed to year-end and quarter-end 
window dressing so your mutual fund statements look good.  

If for some reason Santa fails to show up it could spell trouble.  
The old Wall Street maxim "If Santa Claus should fail to call 
bears may come to Broad and Wall" is true because the lack of a 
year-end rally in the past usually signaled the beginning of a 
new bear market or at least a serious correction.

Some technicians are worried too.  The huge volume recently 
without any stock market gains could spell a top.  The volume on 
the NYSE this Friday was 3.1 billion shares while the NASDAQ hit 
2.49 billion.  Jim's wrap suggested that most of this volume was 
due to the various index rebalancing.  Let's hope so!  

This coming week the U.S. markets are closed on Friday in 
observance of Christmas. That means all the economic data has 
been squeezed into Wednesday and Thursday with the final Q3 GDP 
numbers, chain deflator numbers, November Durable orders, 
personal income and spending, and the Michigan Sentiment figures 
for December.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9708
Current     : 10649

Moving Averages:
(Simple)

 10-dma: 10593
 50-dma: 10308 
200-dma: 10238 



S&P 500 ($SPX)

52-week High: 1207
52-week Low : 1060
Current     : 1194

Moving Averages:
(Simple)

 10-dma: 1193
 50-dma: 1157
200-dma: 1125



Nasdaq-100 ($NDX)

52-week High: 1635
52-week Low : 1301
Current     : 1596

Moving Averages:
(Simple)

 10-dma: 1610
 50-dma: 1531
200-dma: 1450



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

CBOE Market Volatility Index (VIX) = 11.95 -0.32
CBOE Mkt Volatility old VIX  (VXO) = 12.71 -0.30
Nasdaq Volatility Index (VXN)      = 18.21 -0.39 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.84      1,241,187     1,037,969
Equity Only    0.54      1,002,656       536,541
OEX            1.48         53,842        79,939
QQQQ           2.59         41,366       107,462


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

Bullish Percent Data

           Current   Change   Status
NYSE          76.3    + 0     Bear Correction
NASDAQ-100    77.0    + 0     Bull Confirmed
Dow Indust.   70.0    + 0     Bull Confirmed
S&P 500       76.6    - 0.2   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: 1.00
10-dma: 1.09 
21-dma: 1.01
55-dma: 1.06


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    1387      1482
Decliners    1428      1560

New Highs     203       106
New Lows       16         9

Up Volume   1336M      971M
Down Vol.   1768M     1471M

Total Vol.  3141M     2493M
M = millions


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

Commitments Of Traders Report: 12/14/04


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 upped their positions in both longs and 
shorts with the net result as a decrease in their bearish
bias.  Small traders did the same but with a net result in
a decrease in their bullish bias.

Commercials   Long      Short      Net     % Of OI
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%)
12/14/04      502,471   540,494   (38,023)   (3.6%)

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
11/23/04      171,192   150,606    20,586     6.4%
11/30/04      176,031   148,876    27,155     8.3%
12/07/04      187,707   135,776    51,931    16.0%
12/14/04      201,428   164,111    37,371    10.2%

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

Hmm.. we have some interesting movement here.  Commercials upped
both their longs and shorts but their bearish bias has been slowly
decreasing for weeks.  Meanwhile the small traders more than 
doubled their short positions putting a serious dent in the 
overall bullish bias.

Commercials   Long      Short      Net     % Of OI 
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%)
12/14/04      556,980   899,616   (342,636)  (23.5%)

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%
12/14/04      398,915    137,598   261,317    48.7%

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 are seeing some interesting movement here too.  Commercial
traders significantly raised their positions in both longs
and shorts with a serious drop in their bullish bias as 
the net effect.  Meanwhile small traders added a huge chunk 
of new longs compared to a significant jump in shorts with
the net effect being a sharp drop in their bearish bias.

Commercials   Long      Short      Net     % of OI 
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%
12/14/04       73,554     50,286    23,268   18.7%

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
11/23/04       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%)
12/14/04       26,781    58,159   (31,378)  (36.9%)

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

Commercial traders added significant amounts to both their long
and short positions with a net decrease in their bearish bias.
Small traders also poured a lot of new money into both their
long and short positions with the net effect as a decrease
in their bearishness.

Commercials   Long      Short      Net     % of OI
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%)
12/14/04       36,960    38,566   (1,606)     (2.1%)
 
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
11/23/04        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%)
12/14/04       13,445    19,089   (5,644)   (17.3%)

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

Bed Bath & Beyond - BBBY - close: 39.04 change: -0.60

WHAT TO WATCH: We came very close to adding BBBY to our play list 
as a short candidate.  The stock has been falling after its 
recent earnings report.  The company beat estimates by a penny 
but came in light on revenues.  Prudential followed up with a 
downgrade while CSFB tried to defend BBBY by reiterating its out 
perform rating.  BBBY's management may have tried to soften the 
news with a $350 million stock buy back program.  We would watch 
for a breakdown under $39.00 and target a move to long-term 
support at $35.00.




---

Fremont General - FMT - close: 24.99 change: +0.54

WHAT TO WATCH: The high-volume rebound from the $24.00 level 
might be a bullish entry point.  We can't find any news for the 
volume but the $24.00 level used to be resistance and old 
resistance tends to become new support.  Of course FMT still has 
some resistance at $25.00 dating back to October.  Conservative 
traders might wait for a move over $25.00 instead.




---

Unisys Corp - UIS - close: 9.55 change: -0.15 

WHAT TO WATCH: We normally don't like to short stock under the 
$10.00 mark but UIS looks like a bearish candidate.  The bounce 
on Friday failed at 9.84 and shares closed at a new 18-month low.  
Volume has been very strong on the recent decline in mid-December 
and the breakdown under the August low suggest there is more 
weakness ahead.  It is worth noting that the P&F chart bearish 
target has already been achieved ($11) but that doesn't make it a 
buy.  Shares dipped to $8.25 back on February 9th, 2003 and may 
be the target bears are looking for. 




---

Symantec - SYMC - close: 25.37 change: +0.24

WHAT TO WATCH: Ouch! SYMC was crushed for a loss from $34 to $25 
under the recent merger news and speculation.  This seems way 
over done and we're probably not the only ones thinking SYMC 
could bounce from here at its 200-dma.  Watch for a move over 
$26.00 as a potential entry point for a short-term bounce.  





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

CBSS $47.45 +0.37 - This banking stock is slowly marching higher 
and looks ready to breakout over the $48.00 level.  The huge 
volume on Friday was based on news that CBSS would be added to 
the S&P 500 index.

PETD $39.05 +1.05 - PETD is an oil and gas stock that has been 
inching higher the last few days.  A move over $40.00 might be an 
entry point.

C $46.62 -0.43 - We are watching Citigroup for a breakout over 
$48.00.

TXN $23.44 -0.59 - TXN looks vulnerable to more selling with 
Friday's breakdown.   Look for a move under $23.00.
 

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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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Do not duplicate or redistribute in any form.







PremierInvestor.net Newsletter          Weekend Edition 12-19-2004
                                                    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:

Editor comments:
There are no new PI plays this weekend.  Please look over
our nightly watch list for potential play ideas.  

Tech Stocks
  Bullish Play Updates: MNST, QLGC 

Active Trader (Non-tech)
  Bullish Play Updates: ACI, KFY, MKC, ONXX, PDCO, STJ, UHS 
  Closed Bullish Plays: PNC

Stock Splits
  Announcements:        None        


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

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

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

Monster Worldwide - MNST - close: 32.68 chg: +0.08 stop: 29.45     

Wow!  MNST is working out very well.  We added the stock with a 
trigger to go long on a breakout over major resistance at $30.00.  
The rally came the following session with a high-volume breakout to 
hit new all-time highs after over a year in a wide trading range.  
The stock charged higher again on Wednesday.  MNST displayed 
relative strength on Thursday with a minor loss after CSFB 
downgraded the stock to "neutral" based on valuation concerns.  We 
are encouraged that MNST is finding new short-term support near 
$32.00.  Plus, the bullish Point & Figure chart has extended its 
target from $51 to $63.  Our initial target was a move into the 
$34-36 trading range.  Right now our expectation is for shares to 
get there before year-end. 

Annotated Chart:

 

Picked on December 14 at $30.11
Gain since picked:       + 2.57
Earnings Date          02/08/05 (unconfirmed)
Average Daily Volume:       1.4 million 



---

QLogic Corp - QLGC - close: 35.81 change: -0.69 stop: 34.95*new*

After a strong start earlier in the week QLGC began to fade with 
the SOX and the tech sectors in general.  The recent weakness and 
the action visible on the intraday chart would suggest that we 
close this trade now for a minor loss.  However, QLGC has still not 
broke rising technical support at its 21-dma near $35.75.  
Meanwhile the SOX is still near technical support as well.  We 
would not suggest new bullish positions until QLGC traded back 
above the $36.50 level.  We are going to reduce our risk by raising 
our stop loss to $34.95.  More aggressive traders who believe in 
QLGC's rising trend may want to leave their stop under $34 support.

Annotated Chart:

 

Picked on December 05 at $36.21 
Gain since picked:       - 0.40
Earnings Date          01/12/04 (unconfirmed)
Average Daily Volume:       3.1 million 




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

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

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

Arch Coal - ACI - close: 34.27 change: +0.08 stop: 31.99

The sudden rise in oil prices may have captured energy traders 
focus again.  Fortunately any profit taking in coal stocks like ACI 
has been very minor.  The stock bounced from its lows near $34 on 
Friday and looks poised to run higher, especially given its longer-
term trend of higher lows and bouncing from technical support at 
its 200-dma.  Our target remains unchanged at $40.00 near the top 
of its slowly rising channel.  In the news ACI "announced its Black 
Thunder mine in Wyoming achieved a one- billion-ton shipment 
milestone on Friday, Dec. 17, 27 years after the mine's first coal 
shipment on Dec. 14, 1977. Today, Black Thunder produces nearly 10 
percent of the U.S. coal supply. That's enough coal to provide 
electricity to 5.8 million American households."  That quote is 
from ACI's press release on its Black Thunder mine, one of the 
largest and most efficient coal mines in the world.  

Annotated Chart:

 

Picked on December 13 at $34.71 
Gain since picked:       - 0.44
Earnings Date          01/29/05 (unconfirmed)
Average Daily Volume:       951 thousand




---

Korn/Ferry Intl - KFY - close: 21.36 change: +0.08 stop: 19.49

KFY continues to trade near three-year highs after breaking out 
over major resistance at $20.00 several days ago.  The lack of 
follow through has been hampered by weakness in the broader market.  
Watch for a dip back toward $20.00-20.50 as a potential entry point 
for new positions but we would confirm the bounce before committing 
new capital.  The bullish P&F chart points to a $28 target.  Our 
short-term target is a move into the $24-25 range.

Annotated Chart:

 

Picked on December 12 at $21.30 
Gain since picked:       + 0.06
Earnings Date          12/08/04 (confirmed)
Average Daily Volume:       345 million 



---

McCormick & Co - MKC - close: 38.61 chg: +0.51 stop: 35.99

We don't have much new to report on for MKC.  The stock 
consolidated sideways for a couple of days following its breakout 
on the 14th.  On Friday the stock out performed the broader markets 
with a 1.3 percent gain on above average volume.  That's exactly 
the kind of strength we want to see.  Our target remains the $40-42 
range.  

Annotated Chart:

 

Picked on December 14 at $38.15 
Gain since picked:       + 0.46
Earnings Date          01/26/05 (unconfirmed)
Average Daily Volume:       328 thousand





---

ONYX Pharma - ONXX - close: 33.59 change: +1.24 stop: 29.95

ONXX displayed some impressive relative strength on Friday.  
Several drug and biotech stocks were hit with selling after some 
negative news for Pfizer (PFE) and AstraZeneca (AZN).  The DRG drug 
index fell 2.95 percent.  Not so for ONXX, which soared 3.8 percent 
on decent volume following news that JPM had started coverage with 
an "over weight" rating.  ONXX bounced from minor support at $32 to 
challenge minor resistance at $34. Shares look ready to breakout 
over $34 and hit our target in the $35-36 range.  Given the recent 
action in the drug sector we're going to adjust our target so we 
can exit at $35.00, which could be tough resistance with its simple 
100-dma and exponential 200-dma just overhead.  We're also going to 
raise our stop loss to $30.75.

Annotated Chart:

 

Picked on November 18 at $31.26
Gain since picked:       + 2.33
Earnings Date          11/04/04 (confirmed)
Average Daily Volume:       1.0 million 




---

Patterson Companies - PDCO - close: 42.06 chg: +0.06 stop: 37.99

PDCO is positive on the week but shares aren't gaining much ground.  
The stock has been consolidating sideways and this has allowed time 
for the momentum oscillators to all roll over into bearish signals.  
Fortunately, the loner-term P&F chart remains bullish with its 
triple-top breakout buy signal and $54 target.  If PDCO does dip we 
would look for immediate support near $41.  Momentum traders may 
want to wait and see PDCO breakout to new highs over $43 before 
initiating positions. 

Annotated chart:

 


Picked on December 01 at $42.06 
Gain since picked:       + 0.00
Earnings Date          11/24/04 (confirmed)
Average Daily Volume:       378 thousand



---

St. Jude Medical - STJ - close: 40.98 chg: +0.23 stop: 37.99*new*

You wouldn't know it from the chart but STJ is up for the week.  
Shares performed well Monday and Tuesday but slipped backward in 
profit taking the remainder of the week.  Fortunately traders 
jumped in to buy the dip at $40.00 on Friday pushing STJ back into 
the green before the close.  We heard something on CNBC this Friday 
that said money managers were looking to invest more in medical 
device stocks next year.  Whether or not the JNJ acquisition of GDT 
this past week had any influence on this news is a good question.  
Whatever the case it should be good news for STJ.  This bounce from 
support at $40.00 looks like a new bullish entry point.  We are 
raising our stop loss to $37.99.

Annotated Chart:

 


Picked on December 05 at $40.64 
Gain since picked:       + 0.34
Earnings Date          01/19/04 (unconfirmed)
Average Daily Volume:       854 thousand




---

Universal Health - UHS - cls: 46.31 chg: -0.61 stop: 45.50*new*

This has been a tough week for UHS.  The previous week the stock 
soared through multiple levels of resistance to breakout through 
P&F chart resistance and produce a new quadruple-top breakout buy 
signal with a $65 target.  The last few days have seen much of 
those gains evaporate in profit taking.  Fortunately, shares 
managed to bounce from support at the $46.00 level on Friday 
afternoon.  This looks like a new bullish entry point but we would 
watch to see the bounce continue before committing any capital.  We 
are raising our stop loss to $45.50.

Annotated Chart:

 

Picked on December 12 at $48.51 
Gain since picked:       - 2.20
Earnings Date          10/21/04 (confirmed)
Average Daily Volume:       500 thousand




============
CLOSED PLAYS
============


  --------------------
  Closed Bullish Plays
  --------------------

P N C Financial Services - PNC - cls: 55.06 chg: -0.63 stop: 53.99

We don't like they way PNC is shaping up.  We were triggered on the 
fluke gap higher several days ago and shares have not traded over 
resistance at $56.00 ever since.  We're going to cut our losses now 
before PNC rolls over on us.  We will continue to watch it for a 
bullish breakout.

Picked on December 10 at $56.56
Gain since picked:       - 1.50
Earnings Date          01/12/04 (unconfirmed)
Average Daily Volume:       997 thousand




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

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

None


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

*****************************************************************
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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 12-19-2004
                                                    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 20th, 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 20th
==========================================

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

AMHC  American Healthways Mon, Dec 20  After the market     0.21
ANGO  AngioDynamics       Mon, Dec 20  After the market     0.05
ARRO  Arrow Intl          Mon, Dec 20  ----- n/a -----      0.35
CRDS  Crossroads          Mon, Dec 20  ----- n/a -----     -0.08
IMGC  Intermagnetics Gen. Mon, Dec 20  After the market     0.26
JBL   Jabil               Mon, Dec 20  After the market     0.31
SMSC  SMSC                Mon, Dec 20  Before the bell      0.12

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

APSG  Applied Signal Tech Tue, Dec 21  After the market     0.29
ATYT  ATI Technologies    Tue, Dec 21  ----- n/a -----      0.26
BSC   Bear Stearns        Tue, Dec 21  Before the bell      2.14
CBK   Christopher Banks   Tue, Dec 21  ----- n/a -----      0.22
COGN  Cognos              Tue, Dec 21  ----- n/a -----      0.33
ECHO  Elctrnc Clrg House  Tue, Dec 21  After the market     0.09
FDS   FactSet Research    Tue, Dec 21  ----- n/a -----      0.49
GIS   General Mills       Tue, Dec 21  ----- n/a -----      0.87
GTK   GTech Holdings      Tue, Dec 21  Before the bell      0.34
MANU  Manugistics, Inc.   Tue, Dec 21  After the market    -0.04
PAYX  Paychex             Tue, Dec 21  After the market     0.23
PRGS  Progress Software   Tue, Dec 21  Before the bell      0.29
RIMM  Research In Motion  Tue, Dec 21  After the market     0.55
SLR   Solectron           Tue, Dec 21  After the market     0.05
SCOX  The SCO Group       Tue, Dec 21  After the market    -0.18

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

AGE   A.G.Edwards         Wed, Dec 22  Before the bell      0.56
CAG   ConAgra Foods       Wed, Dec 22  Before the bell      0.46
GPN   Global Payments Inc Wed, Dec 22  After the market     0.53
MU    Micron Technology   Wed, Dec 22  ----- n/a -----      0.22
PSRC  PalmSource Inc      Wed, Dec 22  After the market     0.04
RHAT  Red Hat, Inc.       Wed, Dec 22  ----- n/a -----      0.06
TIBX  TIBCO Software      Wed, Dec 22  After the market     0.08


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

AM   American Greetings   Thr, Dec 23  ----- n/a -----      0.70
SUMX Summa Industries     Thr, Dec 23  ----- n/a -----      0.12

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

..none..


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

Symbol  Company Name              Ratio    Payable     Executable

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
LUK   Leucadia Ntl Corp           3:2      Dec 31st    Jan  3rd
NADX  National Dentex             3:2      Dec 31st    Jan  3rd
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
SBIT  Summit Bancshares           2:1      Dec 31st    Jan  3rd

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

There are a few earnings in the middle of the week and economic 
reports on Wednesday and Thursday but investors will probably be 
more focused on the upcoming Christmas holiday than corporate 
earnings and economic data. 

==============================================================
                       -For-           
----------------
Monday, 12/20/04
----------------
Leading Indicators for November

-----------------
Tuesday, 12/21/04
-----------------
..none..

-------------------
Wednesday, 12/22/04
-------------------
Final revision for Q3 GDP numbers
Chain deflator guage

------------------
Thursday, 12/23/04
------------------
Weekly initial jobless claims
U.S. bond market has a shortened session
Durable Orders for November
Personal Income & Spending for November
Revised Michigan Sentiment index for December
New Homes Sales figures for November

----------------
Friday, 12/24/04
----------------
Christmas Eve - 
U.S. markets are closed in observance of Christmas holiday


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

FNM     Fannie Mae                 70.31     +1.01
UTX     United Technologies       103.90     +1.90
PRU     Prudential Financial       54.12     +0.66
ECA     Encana Corp                55.21     +0.93
DE      Deere & Co                 73.02     +0.59
GDW     Golden West Financial      61.00     +0.60

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

MNKD    Mannkind Corp              19.28     +1.08
PGNX    Progenics Pharma           17.64     +1.19
WPTE    WPT Enterprises            14.70     +1.60
ZOLT    Zoltek Companies           12.40     +2.23
EVST    Everlast Worldwide          7.04     +2.94

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
NKE     Nike Inc                   91.70     +5.80
ADSK    Autodesk Inc               72.05     +2.60
XMSR    XM Satellite Radio         40.20     +1.41
KMI     Kinder Morgan              72.94     +1.14
SEPR    Sepracor                   56.97     +1.67
LNCR    Lincare Holdings           41.82     +3.41
OSIP    OSI Pharmaceuticals        68.38     +21.28

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

AZN     AstraZeneca                37.10     -3.11
PFE     Pfizer                     25.75     -3.23
GS      Goldman Sachs             103.75     -1.65
HCBK    Hudson City Bancorp        36.75     -3.66
LEG     Leggett & Platt Inc        27.30     -2.40
HRS     Harris Corp                61.80     -1.55
SPW     SPX Corp                   39.03     -1.47
GGC     Georgia Gulf Corp          48.80     -3.61

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

HSY     Hershey Foods Corp         54.85     -1.36
JP      Jefferson-Pilot Corp       51.44     -1.20
JBX     Jack In The Box            37.28     -1.22
RAH     Ralcorp Holdings           40.40     -1.19
ADBL    Audible Inc                26.02     -2.69
CMX     Caremark Rx Inc            37.89     -0.35
ESI     ITT Educational Services   48.25     -1.69


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

*****************************************************************
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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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