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Daily Newsletter, Sunday, 01/02/2005

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PremierInvestor.net Newsletter          Weekend Edition 01-02-2005
                                                    section 1 of 3
Copyright (c) 2005, 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: Going Out With A Whimper         
Market Sentiment: Closing Near The Highs    
Watch List: Bullish Candidates from various sectors          

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
      12-30-2004           High     Low     Volume   Adv/Dcl
DJIA    10800.30 - 28.90 10850.18 10799.71 1.05 bln 1852/1311
NASDAQ   2178.34 +  1.30  2182.37  2176.40 1.42 bln 1725/1410
S&P 100   576.10 -  0.43   577.81   576.06   Totals 3577/2721
S&P 500  1213.55 +  0.10  1216.47  1213.41 
SOX       431.26 +  0.70   433.65   430.36
RUS 2000  653.06 -  0.28   654.45   652.99
DJ TRANS 3808.60 -  1.70  3823.96  3798.74
VIX        12.56 +  0.94    12.61    12.18
VXO (VIX-O)12.86 +  0.39    12.96    12.67
VXN        17.94 +  0.22    18.05    17.63  
Total Volume 2,635M
Total UpVol  1,490M
Total DnVol  1,007M
Total Adv  4140
Total Dcl  3079
52wk Highs  515
52wk Lows    13
TRIN       1.22
NAZTRIN    0.49
PUT/CALL   0.86
=================================================================

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

Going Out With A Whimper 
by Jim Brown

The markets were listless on Thursday on very low volume
and you would have almost thought the market was already
closed for the year. While Friday is a normal trading day
it will be anything but normal with volume expected to 
slow to a trickle. The lack of excitement going into year
end suggests there could be dip in our immediate future. 

Dow Chart

 
Nasdaq Chart

 
SPX Chart

 

The last economic reports for the year provided a mixed
bag once again as our recovery continues to provide
conflicting signals. The Jobless Claims fell slightly 
to 326,000 from a downwardly revised 331,000 in the 
prior week. There was no specific reason and analysts
suggested it could still be a seasonal adjustment bug.
The consensus was for claims to be flat at 333,000. 
Continuing claims have risen slightly and suggests the
employment picture is still cloudy. 

Confirming this was the Help Wanted Index for November
which was released today. The Index fell one point to
36 and the low for the year. This represents the low
for this employment cycle and a failure of the attempted
bounce in October. This indexes the quantity of help
wanted ads in print newspapers across the nation. The
growth of online job shops has reduced dependence on
print advertising but the trends should still be the
same although at a lower level. This is a confirming
report rather than a leading report on the state of
the labor market. 

Adding to the negativity was a drop in the PMI to 61.2
from 65.2 in November. The consensus was again 65 and
it was not even close. Most components were lower with
employment taking the biggest drop from 60.8 to 49.1
and suggesting the October high for the headline number
at 68.5 was simply pre-holiday production. Any headline
number over 50 represents expansion so this dip to 
61.2 is not a death knell but just a caution point to
ponder as we enter 2005. New orders declined -5.5 points
suggesting the internal production components will also
decline in the coming months. 

The key to all these business indexes will be the ISM
report next week. This is the national version of all
the regional reports and tells us where the economy
is going. That report is due out on Monday morning. 

The NY-NAPM report contradicted the Chicago PMI drop
with yet another gain to a new high. Like the Empire
Index they both show the business conditions in the
New York region to be strong. The Empire report is
beginning to show some cracks in the foundation but
the region has had a very strong run over the last
two years with the rebound from the post 9/11 lows
and is due for a rest. It appears the New York managers
feel the same way with a monster drop in the six month
outlook component from 64.3 to 37.5 in December. The
manufacturing conditions component fell from 54.4 to
41.2. Buying of materials fell from a lead-time of
96 days to only 15 days and material on hand fell
to 30 days from 80 days. It definitely appears there
is some fear of 2005 showing in the outlook for the
region. This is the first month that manufacturing 
has slowed in over two years. 

The markets were very weak on Thursday with the Dow
failing to post any gains and barely avoiding a drop
back below 10800 at the close. The Nasdaq managed to
post a gain but it was only a point and well off the
highs. The S&P was the only index with any strength
but it also ended back at the flat line before the
day was over. 

This market weakness in a period where we typically
would be seeing a Santa Claus rally is troubling for
me. I have been expecting a potential minor dip next
week but the weakness heading into the year end is
suggesting that dip may be more severe. We are facing
some potential profit taking from the 4Q rebound off
the October lows. Funds who want to sell the overbought
winners also want to wait for the calendar to roll
over before kicking the winners out of their portfolio.
This insures their year end statements remain rosy and
enticing for the coming year. 

There are a lot of profits waiting to be taken. The
gains for the year for the various indexes are very
strong. 

TRAN +27% - despite the airline failures.
UTIL +26% - on higher energy prices
$RUT +17% - Funds inflows from retirement accts.
NASD +9%  - Led by Internets and biotechs
$SPX +9% - Mostly on gains in energy
DOW +4% - Mostly on gains in CAT, MO, UTX, MCD, DD, XOM

Now contrast those gains for the year with the fact
that the lows for the year were in October. Much of 
these gains were made in the last two months and the 
actual gains from those lows are much stronger. Several
of the indexes did make earlier lows than the Dow with
even stronger gains.  

Index Low Today Gain
Dow 9708 10800 +11.2% from October low
Nasd 1899 2178 +14.6% from October low
$SPX 1090 1213 +11.2% from October low
Nasd 1750 2178 +24.4% from August low  
TRAN 2959 3807 +28.6% from August low
$RUT 516 653 +26% from August low
UTIL 260 336 +29.2% from May low

I do believe we will see higher highs in January but
the potential for a profit taking dip next week is
very strong given those numbers above. It appears
from the lack of a real Santa Rally this week that
others are thinking the same thing. 

Last Thursday we hit a nine year low on the VIX at 
11.14. The last time the VIX was this low was Dec-29th,
1995 at 10.36. This was prior to Internet trading and
investors had to call their brokers to make trades. 
There were less than half the brokerage accounts then
as we have now. This extreme lack of volatility now has
not been a real lack of volatility because the markets
have been erratic over the last few weeks. It actually 
represents a lack of bearishness in the market. Nobody
has been buying puts until this week when put buying
suddenly found favor again. Investors Intelligence 
reported yesterday that newsletter writers were 
currently the most bullish since 1987. That year 
should ring a bell for many as it was the last major
market crash with the Dow losing -23% in one day. 

VIX Chart

 
Wilshire 5000 Chart

 


The extreme bullishness comes from the election being
over, no terrorist attacks, low interest rates, low
inflation and an economy that appears to be recovering.
Money is flowing into the markets from individuals with
+$3.7 billion of inflows to funds for the week ended
yesterday. Definitely no fear there. 84% of the top 
1500 stocks are over their 200-day average and a very
overbought condition.  This is yet another reason why
funds may be looking to lighten the load next week. 

If there is a dip next week or anywhere in January it
is not the end of the world. Actually there is a trend
in place that has lasted 120 years that will be tested
in 2005. 

According to the Stock Traders Almanac the markets have
closed higher every year that ended in a five since 1880. 

Astoundingly not only did they close higher but since 1900
they have been significantly higher. There is no concrete
evidence on why this trend exists but any trend that is
unbroken over 120+ years deserves some credit. 

Since 1880 these were the Dow changes in those years.

1885 +20.1%
1895 + 2.3%
1905 +38.2%
1915 +81.7%
1925 +30.0%
1935 +38.5%
1945 +26.6%
1955 +20.8%
1965 +10.9%
1975 +38.3%
1985 +27.7%
1995 +33.5%
2005 ?????

That is an average of a +30.7% gain for years ending 
in five. Also amazing is that virtually every year
saw its lows for the year in January. Only three years,
1915, 1935, 1965 saw a later dip below the January lows
with that dip normally lasting less than two weeks and
occurring in February (1915), March (1935) and June (1965).
The only real year to break the support from the January
lows was 1925 with a lot of time spent lower but the Dow
still rallied to close up +30% for the year. For those
trying to mentally do the math an average +30% gain for
the Dow from Thursday's close would put it over 14,000. 

While it is far too early to guess if 2005 will continue
the 120 year trend for market gains it is not too early
to take advantage of the warning for January. The average
date for the January low was January-22nd. The massive 
influx of retirement cash in the first two weeks tends
to prevent any early month dips from sticking. There is
normally a calendar sale in the first week where funds
have waited to take profits until the year was over. 
That brings us right back to where I started this train
of thought and the potential for volatility next week. 

While we can expect an opening dip for 2005 I believe
it is a dip that should be bought in hopes of a quick
bounce. Once that liquidity bounce occurs we can watch
for a continued long opportunity or a roll over in 
late January. While I am skeptical about any major
gains in 2005 I am not willing to throw caution to 
the wind in either direction. We need to see what 
January brings and then plan our strategy. Regardless
of direction there are a lot of trades ahead and I am
looking forward to the challenge. 

The market is open on Friday but the odds are very 
strong that it will be the lightest volume day of the
year and directionless. However, at todays close there
was a bout of futures selling that sent the indexes to
their lows. For funds or just traders in general the
ideal way to hedge against a calendar sale on Monday
would be to short futures on Friday. What we saw today
could have been an early entry by those hedgers. If I
were going to bet on a position for Friday it would be
to short any bounce and hold it over the weekend. We
have not seen any terrorist events in the U.S. for a
long time and our attention is wandering to other 
things. The holiday weekend is a prime opportunity 
for attacks and not just in the U.S. but also against
targets abroad. If you have long positions tonight it
might be good risk management to hedge them with a
short or a put position over the weekend. 

While the markets are open on Friday, Option Investor
will be closed. This newsletter tonight is the full
Sunday edition and we will not publish again until
Monday. This allows our staff to spend time with 
their families over the holiday. The Market Monitor
will be open for business as usual. 

Happy New Year and I wish everyone a prosperous year.

Jim Brown
Editor


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

Closing Near The Highs
- J. Brown

Looking back at 2004 there are several issues that investors will 
remember.  The constant barrage of news covering the violence in 
Iraq; the potential terrorist targets with the 2004 Olympics in 
Athens, Greece; the Democratic National Convention, the 
Republican National Convention, and of course the results from 
the 2004 Presidential election.  Now sadly many across the world 
will remember the Christmas time tsunamis that have wiped out 
over 100,000 souls across Asia's various coastlines. 

Yet Wall Street will also remember another year of steady growth 
for home values, the return of the IPO, especially Google's, the 
falling U.S. dollar and how China became a huge factor in the 
commodities market.  In spite of all various headlines the one-
thing managers will be happy to remember is that we're closing 
the year at the highs.  The Dow Jones Industrials will be closing 
near 3 1/2 year highs.  The NASDAQ Composite and the S&P 500 will 
be closing at three-year highs.  Meanwhile the Russell 2000 small 
cap index (RUT), BIX banking index, BKX banking index, XBD 
broker-dealer index, XNG natural gas index, the DFI defense 
index, the CYC cyclical index, the RLX retail index, the HMO 
healthcare index, and the DJUSHB home construction index are all 
closing at or near new all-time highs.  Yes, 2004 was a pretty 
good year for stocks. 

The natural question to ask is how will stocks fare in 2005?  
There will be plenty of investors watching the first few days of 
January.  You may have heard the term "as January goes so goes 
the year".  This suggests that if January is net positive then we 
have a bullish year ahead of us and vice versa.  Yet some traders 
will be focused on just the first five trading days of January as 
sort of an early January barometer (thanks to the Stock Traders 
Almanac).  Fortunately, the first couple days of January tend to 
be bullish as a hangover affect from the Santa Claus rally.  
However, what might scare some traders is the fact that the major 
stocks indices do look a little overbought and the sentiment 
indicators like the volatility indices and the TRIN have been 
suggesting a top in the market for days (or months in the case of 
the VIX/VXO).  Stocks will eventually correct and odds are it 
could occur when the Q4 earnings season begins as investors "sell 
the news".  

However, far be it from me to leave you with a sour note as we 
head into the near year.  I present a bit of stock market trivia.  
Some of you have probably heard of the decennial cycle and how 
the fifth year in a decade tends to be one of the strongest years 
for stocks in the decade.  While I hesitate to put too much faith 
in any sort of pattern like this the cycle does have a very 
consistent track record with 12 up years or "wins" and zero 
losses for the fifth year over the last twelve decades.  Who am I 
to say it won't happen this year in 2005?  

Happy Holidays and may you have incredible trading success in 
2005.

-James Brown

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

Market Averages

DJIA ($INDU)

52-week High: 10868
52-week Low :  9708
Current     : 10800

Moving Averages:
(Simple)

 10-dma: 10767
 50-dma: 10437 
200-dma: 10257 



S&P 500 ($SPX)

52-week High: 1216
52-week Low : 1060
Current     : 1213

Moving Averages:
(Simple)

 10-dma: 1206
 50-dma: 1172
200-dma: 1128



Nasdaq-100 ($NDX)

52-week High: 1635
52-week Low : 1301
Current     : 1623

Moving Averages:
(Simple)

 10-dma: 1611
 50-dma: 1559
200-dma: 1458



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

CBOE Market Volatility Index (VIX) = 12.56 +0.94 
CBOE Mkt Volatility old VIX  (VXO) = 12.86 +0.39
Nasdaq Volatility Index (VXN)      = 17.94 +0.22 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.86        470,646       402,438
Equity Only    0.60        373,995       223,765
OEX            1.42          7,725        10,995
QQQQ           4.89          7,602        37,249


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

Bullish Percent Data

           Current   Change   Status
NYSE          77.2    + 0.4   Bear Correction
NASDAQ-100    80.0    + 0     Bull Confirmed
Dow Indust.   73.3    + 0     Bull Confirmed
S&P 500       78.2    + 0     Bull Confirmed
S&P 100       78.0    + 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: 0.76
10-dma: 0.88 
21-dma: 0.96
55-dma: 1.00


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    1545      1645
Decliners    1211      1341

New Highs     176       104
New Lows        6         5

Up Volume    523M      865M
Down Vol.    480M      426M

Total Vol.  1031M     1389M
M = millions


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

Commitments Of Traders Report: 12/21/04


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 more bearish while small traders
are naturally moving the other direction and growing more 
bullish.

Commercials   Long      Short      Net     % Of OI
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%)
12/21/04      455,238   502,538   (47,300)   (4.9%)

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
11/30/04      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%
12/21/04      157,015   106,205    50,810    19.2%

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

There has been a dramatic reduction in open positions for
both longs and shorts for both the commercial traders and
small traders.  The net result has produced an increase
in bearishness for professionals and an increase in bullishness
for small traders.

Commercials   Long      Short      Net     % Of OI 
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%)
12/21/04      279,694   554,818   (275,124)  (32.9%)

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
11/30/04      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%
12/21/04      227,047     66,140   160,907    54.8%

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


NASDAQ-100

Hmm... we are seeing a dramatic reversal for both commercial
and small traders.  Commercials have significantly cut their
long positions reversing their bullishness into bearishness
for the NDX.  Small traders have drastically reduced their
short positions to flip-flop them from net bearish to net
bullish. 

Commercials   Long      Short      Net     % of OI 
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%
12/21/04       30,614     45,158   (14,544) (19.1%)

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%)
12/21/04       20,840     9,109    11,731    39.1%

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 have suddenly become a lot more bearish 
on the Dow Industrials.  Meanwhile small traders have
significantly cut their positions on both sides of the trade.


Commercials   Long      Short      Net     % of OI
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%)
12/21/04       24,850    31,920   (7,070)    (12.4%)
 
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
11/30/04        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%)
12/21/04        5,637     6,961   (1,324)   (10.5%)

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

Siebel Systems - SEBL - close: 10.42 change: +0.48

WHAT TO WATCH: It might feel a little aggressive chasing SEBL's 
4.8 percent rally on Thursday but volume was pretty good, 
especially for a holiday week.  Plus shares burst through any 
daily moving averages and broke out over its 50-week moving 
average.  The technical picture looks good too with a rising RSI 
and a MACD nearing a new buy signal.  The $10.85-11.00 area will 
probably offer some resistance but nimble traders might try 
targeting a move into the $11.50-12.00 range.  Keep in mind this 
is somewhat higher risk as bulls are fighting a bearish P&F even 
with the low-pole reversal pattern.




---

Stryker Corp - SYK - close: 48.20 change: +0.34

WHAT TO WATCH: Bulls are getting ready to make a break for it in 
SYK.  The stock has fought its way back to early October levels 
and just broke through technical resistance at its 200-dma.  
Currently shares are trading under price resistance at $49.00.  
If SYK can push through the $49 level it would produce a new 
triple-top breakout buy signal on its P&F chart.  We would target 
a move toward $54 but watch for additional hazards at the bottom 
of the gap near $52.50.




---

Watson Pharmaceuticals - WPI - close: 33.24 change: +0.69

WHAT TO WATCH: The drug sector hasn't been the strongest this 
year but the DRG index could get a boost as investors consider 
MRK and PFE as "dogs of the Dow" candidates in 2005.  If this 
does happen then a rebounding DRG index will produce a favorable 
environment for WPI to keep its own rally alive.  WPI has already 
filled the gap from June and pushed through its simple and 
exponential 200-dma's.  Aggressive traders may want to look over 
WPI as a candidate.  The P&F chart points to a long-term target 
at $48.




---

La Z Boy - LZB - close: 15.53 change: +0.11

WHAT TO WATCH: LZB is long-term oversold but it looks like the 
bounce has begun with the bottom near $13 put in place back in 
October-November.  Technicals are improving and its MACD is 
nearing a new buy signal.  A trade over $15.80 might be a worthy 
bullish entry point as its P&F chart is already in a new buy 
signal with a $21 target.  Bulls do need to watch out for 
potential headaches with the 200-dma still overhead.






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

AMCC $4.14 +0.23 - AMCC got some positive press on CNBC Wednesday 
and shares responded with a 5.8 percent rally on Thursday 
breaking through round-number resistance at $4.00 and challenging 
overhead resistance at its 200-dma.  Readers can watch AMCC for a 
dip back to $4.00 or a breakout over $4.20.  If I remember 
correctly the CNBC guest picked AMCC to double in 2005. 

BRCM $32.54 +0.16 - BRCM is trying to put in a bottom above 
support at the $30.00 level.  We like the bounce this past week 
and its MACD is nearing a new buy signal but the stock has 
resistance in the $34 level plus its 200-dma.

EMC $14.82 +0.18 - EMC has spent the last month consolidating 
sideways after two months of steady gains.  Now shares look ready 
to run again but it needs to break out over resistance at $15.00.  
We see additional resistance at $16 on the weekly chart but the 
P&F chart points to $25.00.

WMAR $25.19 +0.51 - WMAR recently broke through both its 200-day 
moving average and its 50-week moving average.  A move over 
$25.50 may be a breakout worth playing. 

LSCP $33.59 +3.20 - We don't like to chase big 10 percent moves 
but if LSCP can trade over $34.20 it would break major resistance 
and hit new all-time highs.

HRL $30.65 +0.52 - The bounce from $29 and its 200-dma looks like 
a tempting entry point.  Watch for resistance near $32.

BMET $43.31 -0.03 - We're still watching BMET for the breakdown 
under $43.00.

JUPM $24.00 +0.75 - Wow!  JUPM is showing a lot of strength.  
We'd prefer to look or a dip and then buy the bounce.
 

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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) 2001-2005  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 01-02-2005
                                                    section 2 of 3
Copyright (c) 2005, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================

In section two:

Tech Stocks
  New Plays: See Note    

Active Trader (Non-tech)
  Bullish Play Updates: ACI, BMS, CYT, KFY, MKC, ONXX, PDCO, PNC, 
                        STJ, USB, YUM 

Stock Splits
  Announcements:        None


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

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

Editor's note: There are no new plays in tonight's newsletter.
Please see our nightly watch list for potential play ideas and
look for new picks next week.


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

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

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

Arch Coal - ACI - close: 34.80 change: -0.31 stop: 32.49     

It may seem like the rebound in ACI has failed but we still see a 
three-week trend of higher lows that bulls can find encouragement 
from.  Readers may actually want to use this dip toward its 50-dma 
and $34.50 as a possible entry point although we'd like to see 
signs of a bounce first.  More conservative traders may want to 
wait for ACI to breakthrough resistance at $36.00 first.  
Unfortunately, the recent story on steel and word that we may see 
an oversupply issue has investors selling steel and coal stocks 
since many coal companies provide coke for smelting ore.  Be 
careful.  Long-term ACI still has rising technical support at its 
200-dma but we'd be uncomfortable seeing it retracement back to 
$33.00.

Annotated Chart:

 

Picked on December 13 at $34.71 
Gain since picked:       + 0.09
Earnings Date          01/29/05 (unconfirmed)
Average Daily Volume:       951 thousand




---

Bemis Co - BMS - close: 29.31 change: +0.13 stop: 27.49

The last several days has been a phase of consolidation for BMS as 
the stock digests its recent breakout over major resistance at the 
$28.50-29.00 levels.  Now that traders have bought the recent dip 
to $28.66 BMS looks poised to move higher.  More conservative 
traders may want to wait for BMS to trade over $29.50 before 
initiating positions.  The P&F chart looks bullish with a double-
top breakout buy signal and a $45 target.  Our target remains in 
the $33-35 range.

Annotated Chart:

 

Picked on December 22 at $29.22
Gain since picked:       + 0.09
Earnings Date          01/20/05 (unconfirmed)
Average Daily Volume:       411 thousand



---


Cytec Industries - CYT - close: 51.60 change: +0.28 stop: 47.99

Slowly but surely shares of CYT continue to drift higher with 
traders buying the recent dip to support at the $50.00 level.  We 
remain bullish on the stock and would still consider new positions 
at current levels.  Our short-term target remains the $55 region 
even though the bullish P&F chart points to $66.

Annotated Chart:

 

Picked on December 21 at $51.10 
Gain since picked:       + 0.50
Earnings Date          01/20/04 (unconfirmed)
Average Daily Volume:       357 thousand



---

Korn/Ferry Intl - KFY - close: 20.94 change: +0.04 stop: 19.75     

Hmm.. we're getting a slightly mixed picture here.  We expected the 
dip back towards $20.00 and the bounce as traders bought the dip.  
Unfortunately, KFY is not seeing a lot of follow through on that 
bounce.  It could be the lack of volume and investors away for the 
holidays.  We are going to remain long but we're feeling cautious.  
If we don't see some strength in KFY next week we may exit early.  
Look for another dip to $20.00 and a bounce as a new entry point.  
We're still targeting a move into the $24-25 range.

Annotated Chart:

 

Picked on December 12 at $21.30 
Gain since picked:       - 0.36
Earnings Date          12/08/04 (confirmed)
Average Daily Volume:       345 million 



---

McCormick & Co - MKC - close: 38.54 chg: -0.02 stop: 35.99

The momentum for MKC has stalled while investors are away on 
holiday.  This is somewhat disappointing as the last week of the 
year tends to be a bullish one for stocks.  Previous resistance in 
the $37.75-38.00 region should become new support so readers can 
look for a dip in this area as a new entry point although we would 
still consider positions at current levels.  Our target remains the 
$40-42 region.

Annotated Chart:

 

Picked on December 14 at $38.15 
Gain since picked:       + 0.39
Earnings Date          01/26/05 (unconfirmed)
Average Daily Volume:       328 thousand



---

ONYX Pharma - ONXX - close: 32.51 change: -0.40 stop: 31.26

Danger! Danger!  ONXX has failed to breakout over resistance at the 
$34.00 level for several days straight.  Now the stock is sinking 
toward what should be support near $32.00.  If ONXX breaks this 
level we may exit early.  We are not suggesting new bullish 
positions at this time as ONXX could see some tax loss selling 
tomorrow. 

Annotated Chart:

 

Picked on November 18 at $31.26
Gain since picked:       + 1.25
Earnings Date          11/04/04 (confirmed)
Average Daily Volume:       1.0 million 




---

Patterson Companies - PDCO - close: 43.87 chg: -0.17 stop: 37.99

We don't have much new to report on for PDCO.  Morgan Stanley did 
reiterate their "over weight" rating on the stock yesterday and 
that helped push shares to a new all-time high near $44.  Thursday 
was pretty mild with the markets meandering sideways.  We remain 
bullish and readers can initiate positions at current levels or 
look for a dip towards the $42 level.  We are going to adjust our 
target to $46.00.  

Annotated chart:

 


Picked on December 01 at $42.06 
Gain since picked:       + 1.81
Earnings Date          11/24/04 (confirmed)
Average Daily Volume:       378 thousand



---

PNC Financial - PNC - close: 57.11 chg: +0.18 stop: 54.99

PNC is a recent addition to the PremierInvestor play list added on 
Tuesday, December 28th.  The stock recently broke out through 
resistance near $56.00, which happened to be the neckline to an 
inverse or bullish head and shoulders pattern with a $63 target.  
We would go long above $56.00 with a $62-63 target.  The plan is to 
exit before PNC announces earnings on January 21st.   We do expect 
some resistance at $60.00 so short-term players may want to exit 
there.

Annotated Chart:

 

Picked on December 28 at $57.19
Gain since picked:       - 0.08
Earnings Date          01/21/05 (confirmed)
Average Daily Volume:      1000 thousand




---

St. Jude Medical - STJ - close: 42.23 chg: +0.03 stop: 38.95     

Healthcare was one of the best performing sectors in 2004 and we 
don't expect it to slow down that much in 2005.  STJ happens to be 
one of those strong performers currently trading less than a dollar 
from all-time highs.  Unfortunately the traditionally bullish post-
Christmas week has turned into a dud for STJ.  Shares have 
consolidated sideways that last several sessions and the 
consolidation is narrowing suggesting a breakout soon.  Technical 
oscillators would suggest that STJ is overbought and due for a pull 
back.  We would watch for a possible dip into the $40-41 range and 
then consider buying the bounce.  

Annotated Chart:

 


Picked on December 05 at $40.64 
Gain since picked:       + 1.59
Earnings Date          01/19/04 (unconfirmed)
Average Daily Volume:       854 thousand




---

US Bancorp - USB - close: 31.15 change: -0.01 stop: 29.49     

Heads up!  If you plan on capturing USB's 30-cent cash dividend 
then you need to own your shares before Friday, December 31st's 
closing bell.  That is the record date for the January 17th payout.  
USB has spent the last few days consolidating its pre-Christmas 
gains and we wouldn't be surprised to see the stock dip back to the 
$30.50 level, which should be support.  Watch for the bounce from 
$31.00 or $30.50 as a potential entry point.  Our target remains 
the $33 level before its January earnings report.

Annotated Chart:

 

Picked on December 21 at $30.88 
Gain since picked:       + 0.27
Earnings Date          01/18/05 (unconfirmed)
Average Daily Volume:       4.2 million 



---

YUM Brands! - YUM - close: 47.17 change: +0.02 stop: 45.49

YUM is a new addition to the PremierInvestor play list we added on 
Tuesday, December 28th.  Shares have continued to climb albeit very 
slowly but we're seeing the $47.00 level act like support the last 
couple of sessions.  Readers may want to consider positions at 
current levels or a dip back towards $46.00.  Our immediate target 
is $50.00. 

Annotated Chart:

 

Picked on December 28 at $47.00 
Gain since picked:       + 0.17
Earnings Date          02/09/05 (unconfirmed)
Average Daily Volume:       1.2 million 



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

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

None


=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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

Copyright (c) 2001-2005  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 01-02-2005
                                                    section 3 of 3
Copyright (c) 2005, 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 January 3rd, 2005
   - 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 January 3rd
========================================

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

SONC  Sonic Corp          Mon, Jan 3rd  After the market     0.25
WAG   Walgreen            Mon, Jan 3rd  ----- n/a -----      0.29


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

AULT  Ault Inc            Tue, Jan 4th  After the market     n/a
BDAY  CelebrateExpress    Tue, Jan 4th  After the market     0.09
DLP   Delta & Pine Land   Tue, Jan 4th  Before the bell     -0.15
FINL  Finish Line         Tue, Jan 4th  After the market     0.06
LNDC  Landec Corp         Tue, Jan 4th  After the market    -0.06
OXM   Oxford Industries   Tue, Jan 4th  After the market     0.51

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

BSET  Bassett Furniture   Wed, Jan 5th  ----- n/a -----      0.25
LWSN  Lawson Software     Wed, Jan 5th  After the market     0.01
MON   Monsanto Co         Wed, Jan 5th  ----- n/a -----      0.13
RI    Ruby Tuesday        Wed, Jan 5th  After the market     0.30
UNF   UniFirst            Wed, Jan 5th  ----- n/a -----      0.52

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

ACN   Accenture           Thr, Jan 6th  After the market     0.31
AYI   Acuity Brands Inc.  Thr, Jan 6th  ----- n/a -----      0.32
BRLI  Bio-Reference Labs  Thr, Jan 6th  Before the bell      n/a
STZ   Constellation Brand Thr, Jan 6th  After the market     0.85
EMMS  Emmis Communication Thr, Jan 6th  ----- n/a -----      0.28
HELE  Helen of Troy       Thr, Jan 6th  Before the bell      0.93
TONS  Novamerican Steel   Thr, Jan 6th  ----- n/a -----      n/a
RPM   RPM Intl Inc        Thr, Jan 6th  Before the bell      0.33
SCHN  Schnitzer Steel     Thr, Jan 6th  Before the bell      1.30
TOPP  Topps               Thr, Jan 6th  ----- n/a -----      0.02
WDFC  WD-40 Company       Thr, Jan 6th  ----- n/a -----      0.30
XRTX  Xyratex Ltd         Thr, Jan 6th  Before the bell      0.18

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

CYCL  Centennial Comm.    Fri, Jan 7th  Before the bell      0.14
GAP   Great Atl/Pac Tea   Fri, Jan 7th  Before the bell     -1.19


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

Symbol  Company Name              Ratio    Payable     Executable

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
CCJ   Cameco                      3:1      Jan  6th    Jan  7th
MTH   Meritage Homes              2:1      Jan  7th    Jan 10th
LSTR  Landstar System             2:1      Jan  7th    Jan 10th
ACET  Aceto Corp                  3:2      Jan 10th    Jan 10th
CMC   Commercial Metals Co        2:1      Jan 10th    Jan 11th
WHI   W Holding Co                3:2      Jan 10th    Jan 11th

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

The fourth quarter earnings season begins soon but economic
reports like the ISM index will probably take the spotlight.
We'll also hear from multiple fed governors this week.  The
December Jobs report on Friday will be closely watched.


==============================================================
                       -For-           
----------------
Monday, 01/03/05
----------------
Construction spending for November
ISM Index for December
FOMC Governor Lacker speaks in N. Carolina

-----------------
Tuesday, 01/04/05
-----------------
Auto Sales for December
Truck Sales for December
Factory Orders for November

-------------------
Wednesday, 01/05/05
-------------------
ISM Services for December

------------------
Thursday, 01/06/05
------------------
Weekly Initial Jobless Claims
FOMC Governor Hoenig speaks in Missouri

----------------
Friday, 01/07/05
----------------
Non-farm Payrolls (Jobs) for December  Est: 175K  Last: 112K
Unemployment rate for December
Hourly Earnings for December
Average Workweek for December
Consumer Credit for November
FOMC Governor Santomero speaks..
FOMC Governor Ferguson speaks..


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

HMC     Honda Motor Co             25.84     +0.55
CAJ     Canon Inc                  53.87     +1.06
FRE     Freddie Mac                73.39     +0.70
KMB     Kimberly Clark             66.04     +0.89
CAH     Cardinal Health            58.55     +1.08
HCA     HCA Inc                    40.06     +0.71

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

SBL     Symbol Technologies        17.24     +1.37
GSIC    GSI Commerce Inc           18.35     +2.25
MDTL    Medis Technologies         18.35     +1.77
ATCO    American Technology        11.12     +1.07
DCAI    Dailysis Corp of America   19.21     +1.75
YAKC    Yak Communications          8.55     +2.45

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
FUJIY   Fuji Photo Film            36.80     +1.30
CCJ     Cameco Corp               104.00     +3.50
SBTV    SBS Broadcasting           39.91     +2.58
NICE    Nice-Systems Ltd           31.39     +1.34
NFLD    Northfield Labs            23.42     +2.45

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

LFC     China Life Insurance       26.26     -1.34

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

NUE     Nucor Corp                 51.38     -3.49
X       U.S. Steel Corp            50.04     -2.90
NSS     NS Group Inc               27.04     -1.19
TONS    Novamerican Steel          50.95     -7.75
GBX     Greenbrier Companies       33.35     -1.46
ZEUS     Olympic Steel             26.17     -2.90


=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

Please read our disclaimer at:
http://www.optioninvestor.com/page/oin/aboutus/disclaimer.html

*****************************************************************
ADVERTISING INFORMATION

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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


Copyright (c) 2001-2005  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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