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Daily Newsletter, Monday, 12/27/2004

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PremierInvestor.net Newsletter                   Monday 12-27-2004
                                                    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: Holiday Trade   
Watch List: Tech, Steel and more.  


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      12-27-2004           High     Low     Volume   Adv/Dcl
DJIA    10776.13 - 50.99 10868.07 10776.13 1.13 bln 1055/1745
NASDAQ   2154.22 -  6.40  2171.94  2147.59 1.46 bln 1276/1752
S&P 100   573.86 -  2.20   578.13   573.86   Totals 2331/3497
S&P 500  1204.92 -  5.21  1214.17  1204.92
SOX       423.09 -  3.34   428.80   421.41
RUS 2000  644.34 -  5.03   651.72   642.84
DJ TRANS 3754.23 - 33.55  3799.43  3752.32
VIX        12.14 +  0.91    12.16    11.53
VXO (VIX-O)12.16 +  0.93    12.34    11.53
VXN        18.33 +  1.53    18.43    17.62
Total Volume 2,596M
Total UpVol  1,108M
Total DnVol  1,445M
Total Adv  2331
Total Dcl  3497
52wk Highs  249 
52wk Lows    21
TRIN       1.12
PUT/CALL   0.84 
===============================================================

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

Holiday Trade
Jonathan Levinson

The stock indices followed the dollar and treasury bonds lower in 
a very light volume session.  There was little news but plenty of 
volatility, with the NYSE unable to break 1B shares and the 
Nasdaq 1.5B.

Daily Dow Chart


The Dow traded a high of 10868 before declining to a low of 10776 
to close at 10828, -51 for the day.  The year high at 10895 from 
last Thursday was not touched, and today's heavier volume decline 
combined with the weak intraday bounce suggest a downside bias 
within the ongoing daily cycle upphase.  10780 is the apex of a 
steep bear wedge on the daily chart, projecting to an implied 
target as low as 10440.


Daily S&P 500 Chart


The SPX managed to tag Thursday's year high of 1214 at the day 
high without exceeding it, falling to settle at the low of the 
day at 1210.  The day closed on a perfect gravestone doji finish 
and had a bearish intraday feel resulting from the impulsive 
nature of the drop and the relatively corrective bounce off the 
lows.   It's worth stressing, however, that with volume as weak 
as it's been since Thursday, technical signals need to be taken 
with a grain of salt.


Daily Nasdaq Chart


The Nasdaq broke the December 15 year high of 2171 by 1 point 
before falling to a low of 2148, settling lower by 6.4 points for 
the day at 2154.  The Nasdaq failed to make new highs on Thursday 
and may have been catching up to its peers.  The bear wedge on 
the daily chart projects to 2100, below support at 2130.


Weekly TNX Chart


Bonds had a rough day today, declining strongly alongside the US 
Dollar, with foreign currencies rallying with the ten year 
treasury yield (TNX).  TNX rose to a high above 4.310% before 
settling back down to 4.291%, where it closed for a 7.3 bp or 
1.73% gain.  On the weekly chart, with this week's candle based 
entirely on today's performance, the candle has crossed above the 
22 and 50 week EMAs for the first time since April's yield rally.  
Next resistance is implied by the upper Bollinger band at 4.345%, 
while next confluence resistance is at 4.40%-4.44%.




Weekly chart of Crude oil


The financial press attributed today's 6.45% shellacking in the 
price of crude oil to "unseasonably warm weather" as crude 
futures dropped to a low of 41.25 on the Nymex.  The decline 
printed what continues to appear as the right shoulder of a 
symmetrical head and shoulders top above either 40.00 horizontal 
or 41 sloping support.  This pattern has an implied downside 
target as low as 25 which, while not unimaginable on a 
fundamental basis, appears nevertheless to be an extremely low 
price to contemplate from here.  In any event, that's the 
potential technical message of the chart pattern, while 40, 38 
and 35-36 remain strong confluence levels.  For the day, crude 
oil declined 2.85 to close at 41.325.

It was an otherwise quiet newsday, with little in the way of 
headlines other than the weekend disaster in Asia.  The death 
toll from the tsunami following the Sumatran earthquake continued 
its climb, as rescuers searched for bodies in and along the shore 
of the Indian Ocean.  The earthquake, which measured a Richter 
8.9, was the largest since the Alaskan quake of 1964.  To put 
this in further perspective, the LA Times reported that the quake  
moved the entire island of Sumatra 100 feet to the southwest.  It 
touched off a tsunami that lashed the coast of the Indian Ocean 
with a wall of water 10 meters high.  However, some eyewitness 
accounts put the wave height as many a 3x higher.  From TamilNet, 
December 26, 2004 21:29 GMT:
 
"'We went from the hospital to retrieve some bodies of people 
killed by the first wave near the Pandiruppu beach. We saw at a 
distance another massive wave, more than hundred feet high, 
speeding towards Kalmunaikudi. It was like a diagonal wall rising 
out of the sea. The sight was terrible. We ran for our lives. I 
do not believe that anything could have survived the force of 
that wave,' said a doctor at the Kalmunai base hospital Monday." 


The US military base at Diego Garcia was reported untouched due 
to its location at the top of the Chagos Trench, which is 
sufficiently steep and deep to preclude the buildup of tsunamis 
to threaten the installation.  OPEC's only member in the affected 
region, Indonesia, saw no disruption to its oil production.  Four 
Seasons hotels (FS), whose Asian Pacific hotels represent 12%-13% 
of its management fee revenue, managed a positive close today, 
adding .18% to close at 83.20, while earthquake protection firm 
Taylor Devices (TAYD) closed higher by 4.23 at 6.75 for a 
whopping 170.56% gain.

Because the coastline is the most densely populated region, the 
disaster was particularly dire, and the rush continues to recover 
as many bodies as possible to avert the risk of disease.  The UN 
stressed that the risk of epidemic is at least as serious as that 
posed by the initial impact and fallout of the tsunami.   
Assistance is being offered by a variety of governments and 
organizations.  European insurers said that it was too early to 
provide reliable estimates of the damage, while AIG announced in 
the afternoon that it doesn't expect to incur significant losses 
as a result of the destruction.  AIG lost .87% to close at 65.71.

In corporate news, Sharper Image (SHRP) announced "disappointing" 
holiday sales and lowers its Q4 and 2004 earnings outlooks 
because of it.  The company is looking for Q4 earnings of $.94-
$.99 and for the full year of $.90-$.95 vs. First Call estimates 
of $1.31 per share for Q4 and $1.27 for 2004.   The company said 
that sales to December 24 reflect a 4% increase so far, well 
below its expectations of 15%-18% growth for the quarter.  SHRP 
lost 18.06% to close at 18.96. 

This meshed with anecdotal reports I received from friends and 
traders of a relatively quiet boxing day this year.  The National 
Retail Federation is forecasting a 4.5% gain in total sales for 
the November-December period (excluding restaurant and auto 
sales), and estimates that roughly 8% of holiday sales ($17.24B) 
will be sold in gift cards this season.  This week's retail 
activity will be closely watched for the proportion of sales 
resulting from redemption of these gift cards vs. fresh money 
coming into stores.  Last year, the International Council of 
Shopping Centers reported that the seven-day period ended 
December 27 accounted for 20.6% of holiday sales, up from 19.6% 
in 2002. The seven-day period ended January 3, 2004 accounted for 
14.1%, up from 12.8% the previous year.

Amazon, however, reported a record holiday season, the busiest in 
its 10 years of operations, and a new record of 2.8M units 
ordered in a single day (which works out to an amazing 32 units 
per second worldwide).  It wasn't books, however, but rather 
consumer electronics that led the charge as AMZN's top sales 
category.  WMT announced that it is expecting same-store sales to 
rise between 1%-3% for December, with strength principally in 
food, gift cards and general merchandise during Christmas week.  
AMZN rose 8.53% to close at 42.25 while WMT rose .46% to close at 
52.79.  The RLX lost .23% to close at 453.41

Strong holiday sales were credited for XMSR's surpassing its 
year-end goal for 3.1M subscribers and for SIRI's 1M subscriber 
milestones, both announced this morning.  SIRI noted strong sales 
in its portable plug-and-play products, reinforcing the strong 
consumer electronics results noted by AMZN as well.  XMSR lost 
0.48% to close at 39.73 and SIRI gained 1.89% to close at 8.10.

Tomorrow's lone economic report is Consumer Confidence for 
December, expected to come in at 94 from a November reading of 
90.5.  Market volume and corporate news were very thin today, and 
should only become thinner as the holiday week progresses.  Just 
as traders are wary of the thin, less-predictable afterhours
sessions, I would urge traders to be skeptical of this week's 
intraday market moves.  In this thin volume, intraday chop has an 
even greater propensity to trick, whipsaw and stop-hunt. 

That said, the negative closes for the indices, particularly for 
the Dow and SPX despite the strong decline in crude oil, suggest 
that the tide may be turning in the wake of this autumn's strong 
rally.  However, it's early for daily cycle traders to switch 
gears, as the daily cycle trend, despite it's bearish divergences 
and bear wedges, remains bullish for the time being.  A couple of 
days' worth of downside would change that, but it hasn't happened 
yet.
 

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

Digital Insight Corp - DGIN - close: 18.50 change: +1.00

WHAT TO WATCH: DGIN has spent the last two weeks consolidating 
sideways after its breakout above $17 and its simple 200-dma.  
Now shares are moving higher again.  Today's rally was fueled by 
decent volume considering the holiday season.  The bullish P&F 
chart shows a similar breakout over resistance with a $25 target.  
Traders may want to use today's move as a new entry point. 




---

Olympic Steel - ZEUS - close: 28.67 change: +1.00

WHAT TO WATCH: ZEUS is on the move again.  Shares spent the last 
couple of sessions consolidating its breakout over the $27.50 
level.  Now ZEUS is hitting new highs with decent volume to boot.  
The P&F chart is very bullish with a buy signal pointing to $47.  
This could be a new entry point.




---

Knightsbridge Tankers - VLCCF - close: 34.32 change: -1.71

WHAT TO WATCH: Uh-oh!  This could be bad news for VLCCF.  The 
entire oil-shipping industry has seen its stock reverse into 
short-term bearish patterns the last week or so.  VLCCF has held 
up better than some of its peers but now it too is seeing some 
weakness.  Today's decline broke technical support at the rising 
50-dma and the $35 level with heavy volume. A move under $33.00 
would produce a new P&F sell signal.  Keep your eyes open for a 
possible drop towards $30.00.





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

BC $48.48 -1.07 - We're sill watching BC for a breakout over 
resistance at $50.00.

EVC $8.25 +0.12 - EVC is breaking out over its simple 200-dma and 
its two-month trend of lower highs.

SYNA $30.58 -0.66 - SYNA continues to look like a bearish 
candidate with the H&S pattern.  Look for another drop under the 
$30 level.

ULCM $16.09 -0.21 - The consolidation in ULCM has the stock 
looking vulnerable to more selling.  A drop under $15.00 would be 
very bad indeed.

EFJI $9.40 +0.51 - Today was a big day for EFJI and confirms 
Thursday's high-volume breakout.  
 

=================================================================
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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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For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
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Copyright 2004  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter                   Monday 12-27-2004
                                                    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: PDCO, KFY, CYT    

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

PDCO - non-tech long play -
  PDCO dipped to $42.00 on Monday but traders jumped in 
  to buy the dip.  This could be a new bullish entry point.
 
 
KFY - non-tech long play -
  KFY hit some profit taking on Monday.  Shares lost 71 cents
  and broke down under the $21.00 mark.  Look for a bounce
  from support at $20.00.
 
 
CYT - non-tech long play -
  CYT hit some profit taking as well but traders jumped in
  to buy the dip at $50.17 paring its losses.


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

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

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

SI      Siemens Aktien             84.34     +0.63
TM      Toyota Motor Corp          80.15     +1.06
TGT     Target Corp                51.31     +0.81
UN      Unilever N.V.              66.86     +0.64
TMX     Telefonos De Mexico        38.20     +0.52
BNN     Brascan Corp               35.75     +1.56

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

ZICA    Zi Corp                     7.55     +1.21
WGAT    Worldgate Communications    5.50     +1.07
METG    Meta Group Inc              9.82     +3.34
TAYD    Taylor Devices Inc          6.75     +4.27

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
BF      BASF Ag (ADS)              71.67     +1.29
AMZN    Amazon.com Inc             42.25     +3.32
DECK    Deckers Outdoor            48.02     +1.88
SNIC    Sonic Solutions            22.42     +1.49
CRYP    Cryptologic Inc            24.67     +1.40
NGPS    Novatel Inc                43.25     +5.75
ANGO    Angiodynamics              20.47     +2.44

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

LMT     Lockheed Martin            57.38     -1.56
TK      Teekay Shipping            41.14     -1.88
ALD     Allied Capital             25.61     -2.65
FRO     Frontline Ltd (ADR)        44.40     -3.11
GMR     General Maritime           39.15     -2.66
TNP     Tsakos Energy Navigation   34.59     -3.07
CTRP    Ctrip.com Intl             43.16     -2.44

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

VLCCF   Knightsbridge Tankers      34.32     -1.71
BZH     Beazer Homes              139.45     -4.10
BHS     Brookfield Homes           33.06     -0.53

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