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Daily Newsletter, Sunday, 01/09/2005

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PremierInvestor.net Newsletter          Weekend Edition 01-09-2005
                                                    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: Follow The Money        
Market Sentiment: Confused?    
Watch List: Transports and tech services           

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 01-07        WE 12-31        WE 12-24        WE 12-17 
DOW    10603.96 -179.34 10783.3 - 43.82 10827.1 +177.20 +106.70 
Nasdaq  2088.61 - 86.16 2174.77 + 14.15 2160.62 + 25.42 +  7.13 
S&P-100  566.38 -  8.64  575.02 -  1.04  576.06 +  8.67 +  1.89 
S&P-500 1186.19 - 25.46 1211.65 +  1.52 1210.13 + 15.93 +  6.20 
W5000  11648.89 -323.90 11972.8 + 38.98 11933.8 +150.45 + 91.38 
SOX      407.56 - 25.72  433.28 +  6.85  426.43 +  2.68 +  1.00 
RUT      613.21 - 37.87  651.08 -  1.71  649.37 +  7.29 +  9.84 
TRAN    3636.78 -160.56 3797.34 +  9.56 3787.78 + 36.71 + 65.04  
VXO       13.85           13.58           11.23           12.71 
VXN       19.15           18.37           16.80           18.21 
=================================================================

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

Follow The Money
by Jim Brown

It has been a long time since funds have seen cash outflows
in January. For the week ended on Wednesday $3.7 billion
flowed out of U.S. funds. $3.1 billion flowed into funds
that invest internationally. $1.3B also flowed into bond
funds. If we see this same ratio of fund flows next week
it could be a real change in direction for investors. If 
the majority of fund inflows continues to head for 
international funds the U.S. markets could experience 
further withdrawal symptoms. This resulted in a very 
rocky start to 2005 but the biggest damage was not done 
by withdrawals. The damage was simply profit taking. That
profit taking should be over and beginning next week it 
will be fund inflows that give us direction. 

Dow Chart

 
Nasdaq Chart

 
SOX Chart

 

The Jobs Data came in just right and exactly where traders
wanted it at +157,000 jobs. This was less than the consensus
but still a decent gain. This was market neutral and traders
hope Fed neutral as well. The November number was revised
upward to 137K from 112K and the October number was revised
up to 312K from 303K. This was a net gain for the day of
+191,000 jobs and gave us a total jobs gain for 2004 at
+2.2 million jobs. This was the biggest gain in five years.
The gains for the month were still less than the consensus 
and the bond groupies were able to relax slightly with the
Fed more than three weeks away. There is a positive trend
towards the creation of better paying jobs as professional
and technical categories continue to post better gains than
the retail and hotel businesses. With job gains for 2004
at 2.2M it puts us back at 1999 pre recession levels after
46 months. Normal recession recovery averages 22 months
but normal recessions don't come after Y2K Internet bubbles
with the largest terrorist attack in history in the middle.

This market neutral report should have given the bulls a
reason to celebrate but they may have been knocked off
balance by a serious case of sticker shock. When the news
initially hit the wires someone reported that the November
jobs had been revised to 312K. In reality it was October 
being revised to that level for a gain of +9K. On the 
surface it appeared initially that it was a November 
number which would have been a gain of +200,000 in 
November plus the +157K in December. The bond market went
crazy and there was a huge spike/dip in the equity futures
that blew out stops in both directions in a 10 point range
on the S&P. The range in bonds was a full two points and 
something that is nearly unheard of in only several seconds
of trading. Those bond traders that blew out positions when
it appeared jobs had exploded found themselves on the wrong
side of the market when the news was clarified. There were
huge amounts of money made and lost in just seconds as the
electronic markets reacted to the conflicting news and stops
were triggered in both directions.

This sticker shock may have cooled any real interest to
rush into the equity market. However, it does appear they
are willing to enter at the right price. After some strong
volatility at the open a strong sell program hit the 
markets at 10:00 and knocked the Dow back to 10571 and
the Nasdaq to 2076. Buyers immediately appeared and pushed
the indexes right back to their opening levels or higher.
Even the SOX rebounded +11 points from its 401 support 
low. The rebound had all the appearances of a V bottom 
liftoff but resistance held across the board. 

The Dow rebounded to 10650, the Nasdaq to just over
2100 but they lost traction once again. The highs of the
day were seen at 12:30 as a result of the rebound but 
there was a steady bleed the rest of the day. All the 
indexes except the SOX closed in negative territory once 
again with a strong flush cycle in the last 15 min. The
Russell was the hardest hit once again dropping back to
613 and an 8-week closing low. Both the Dow and the 
Nasdaq have held at their 25% retracement points for
the last two days. This is a logical place to pause
and could be a launch point if the funds quit selling. 

Where is this craziness going to stop? I have two possible
scenarios. If next week was going to be positive I would
have expected a little bullishness at the close in 
anticipation of a rebound. There was obviously no bullish
bias after 12:30 and there was almost no attempt to buy
the dip in the last 30 min. This suggests the selling 
may not be over. Even the shorts failed to cover and 
that leads me to believe they see more downside ahead. 

The second scenario revolves around the closing flush.
As a fund manager tasked with getting rid of a certain
amount of stock this week to capture profits and get
ready to rebalance the portfolio for 2005 the time was
expiring. With the sharp drops early in the week there
may have been some funds waiting on the bounces trying
to maximize their gains and hoping for a bounce on volume
to help them unload. With progressively lower highs all
week those sellers had to keep lowering their ask as the
price ran away from them. When it appeared the day was 
going to expire without a closing bounce they rushed to
clear the remaining orders so they could switch to the 
buy side for new positions next week. This may sound over
simplified but until you actually sell the winners and 
convert them into cash you really don't know how much 
cash you have to spend. That projected number has been
shrinking all week with the drop in the market. 

I favor the second scenario but I am concerned about the
lack of cash inflows. As I reported above Trimtabs said
U.S. funds had outflows for the week BUT they did report
inflows on Thursday. We will not know about Friday until
next week. If the tide has turned then next week should
begin the normal liquidity bounce. 

The talking heads on stock TV have been making a big
deal about the drop for the week. I believe that we 
have only done what is normally expected. The Nasdaq
normally corrects -5% in January. The -115 point drop
from the Monday high at 2191 to today's low at 2176
was -5.2%. If we are going to have a "normal" bout of
profit taking then we should stop here. I agree we did
not have a normal Q4 and gained much more than expected.
That could easily mean we should correct more as well. 
A -10% correction would take us to 1975 on the Nasdaq
and a reversion to seriously oversold. I do not expect
that but it is possible. That would undoubtedly take 
the Dow back to 10425 and very strong support as well. 

To assume we are going to take that dip you have to 
believe the market bias is changing. We are still in a
cyclical bull market and this is January. TrimTabs has
not changed their estimate for $31B to flow into the
market. That will float a lot of stocks from what could
be considered bargain levels at today's closing prices. 
The arguments for that change in bias are rising rates
and slowing earnings. After Friday's jobs numbers most
doubt the Fed will depart from its measured pace of
increases. No real harm there. Earnings are likely to 
slow but until we get past the next couple weeks we will
not know to what degree. I believe it is too soon to be
exiting the equity market and from the drop in treasuries
on Friday they are not rushing into bonds. 

I believe the SOX may be giving us a leading indicator
of market direction. After four days of strong selling
in the chips there was a strong buy program at 10:45
that pushed the SOX from 401 to 412. It would take a
lot of money to push the SOX that hard and the big
money is seldom wrong. There were several attempts to
sell it off but support held until the last 10 min. 
Chips normally lead the Nasdaq and this could be a sign
of coming times. Intel will announce earnings on Tuesday
and I doubt anybody wants to be short chips going into
their announcement. There are numerous reports that PC
sales gained speed going into late December and most
analysts are expecting Intel to report good results. 

That brings us to another point. The entire earnings
parade begins next week and will ramp up to full speed
the following week just as the fund flows are expected
to peak. Where we go after earnings is anybody's guess
but I am going to be real surprised if we don't move
higher over the next week. Of course an Intel miss
could erase this entire train of thought. 

The first week of January is history and when measured
by the various historical statistics the outlook is not
good. Since 1950 there have been 34 years where the first
week of January was positive. 85% of those years the 
markets finished with a gain for the year averaging +14%.
In the 20 years where the first week was negative only
50% of the time did the market finish higher for the
year. On the surface this would appear the odds were
stacked against the bulls. However, since 1890 there
has NEVER been a year that ended in five that finished
in the red. There is something about mid decade cycles
that favors the economy and the bulls. 

Just to show I try to present a fair and balanced view
the Nasdaq just finished its worst week since 1991. 
There have been fund outflows from tech funds for the
last seven consecutive weeks. Before that there was a
string of eight weeks of outflows despite the Q4 rally.
The bears would look at that as a glass half empty but
the bulls are thinking half full and it must be about
time to put money back into techs. Next week will prove
which view was correct. 

Oil briefly topped $46 again on Friday after it was
reported that three Chinese oil firms are trying to 
buy a stake in the Alberta oil sands in Canada. Let's
see if my geography is correct I don't think Canada
is anywhere near China. If you continue to connect the
dots of Yukos, China's CNOOC rumored $13 billion bid
for Unocal, joint Russian/China military exercises and
the attempt to lockup reserves in Canada I think you
will eventually get a picture of a coming oil shortage.
Just a hunch but the more you study the subject the 
more these moves seem to suggest long term consequences.

For next week any further drops should be confined to
Monday/Tuesday and any weakness after Tuesday negates
the entire bullish scenario. If we do dip again on
Monday I would still be a dip buyer as long as we 
stay above Dow 10425 and Nasdaq 2000. 

Jim Brown

"In the old days people quit spending when
they ran out of money"


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

Confused?
- J. Brown

Yuck!  The first week of 2005 was just painful to watch.  Where 
was the continuation of the Santa Claus rally?  Where was the 
January effect?  Where was all the new money that was supposed to 
be hitting stocks this month?  Some market pundits are suggesting 
that all the tax loss selling that was suppose to occur at the 
end of December is happening now.  

I'd like to think a 250-point pull back in the Industrials and a 
110-point drop in the NASDAQ is enough to satisfy this sell-off 
but from the looks of the intraday charts it may not be enough.  
No one feels very confident about next week.  Everyone seems to 
be in a wait and see mode and oh by the way I'll do some profit 
taking before my Q4 winnings evaporate.  The recent rise in oil 
and the prospect of higher rates as the Fed frets over inflation 
doesn't inspire anyone.  

You may remember me mentioning the early January barometer as 
veteran traders watch the first five days of the year as an early 
warning system for the month.  The pattern isn't fool proof but 
this past week does not bode well for the rest of January and the 
maxim says "so goes January so goes the year".   There is still 
an expectation for money to begin flowing back into stocks in the 
second half of January but that probably depends on how investors 
interpret the Q4 earnings reports.  Earnings season actually 
begins next week with Dow-component Alcoa (AA) reporting on 
Tuesday.  Yet it won't be until Tuesday, January 18th that the 
real flood of earnings reports will begin.  

Stocks look short-term oversold but I can't think of anything 
that will drive the rebound.  Be careful out there!


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

Market Averages

DJIA ($INDU)

52-week High: 10868
52-week Low :  9708
Current     : 10603

Moving Averages:
(Simple)

 10-dma: 10722
 50-dma: 10533 
200-dma: 10272 



S&P 500 ($SPX)

52-week High: 1217
52-week Low : 1060
Current     : 1186

Moving Averages:
(Simple)

 10-dma: 1200
 50-dma: 1182
200-dma: 1131



Nasdaq-100 ($NDX)

52-week High: 1635
52-week Low : 1301
Current     : 1564

Moving Averages:
(Simple)

 10-dma: 1596
 50-dma: 1575
200-dma: 1463 



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

CBOE Market Volatility Index (VIX) = 13.49 -0.09	
CBOE Mkt Volatility old VIX  (VXO) = 13.85 -0.32
Nasdaq Volatility Index (VXN)      = 19.15 -0.98 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.97        867,875       840,718
Equity Only    0.78        665,551       517,598
OEX            0.69         35,626        24,731
QQQQ           1.05         63,277        66,847


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

Bullish Percent Data

           Current   Change   Status
NYSE          74.0    - 0.3   Bear Correction
NASDAQ-100    75.0    - 0     Bull Confirmed
Dow Indust.   73.3    + 0     Bull Confirmed
S&P 500       75.0    - 0.6   Bull Confirmed
S&P 100       75.0    - 1     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: 1.42
10-dma: 1.21 
21-dma: 1.05
55-dma: 1.01


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    1074      1148
Decliners    1741      1842

New Highs      54        39
New Lows       15        22

Up Volume    662M     1098M
Down Vol.   1162M     1059M

Total Vol.  1843M     2183M
M = millions


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

Commitments Of Traders Report: 01/04/05


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

Not much change in the large S&P futures contracts.  
Professionals remain net bearish and small traders remain
net bullish.


Commercials   Long      Short      Net     % Of OI
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%)
01/04/05      456,255   505,042   (48,787)   (5.0%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   23,977  - 12/09/03

Small Traders Long      Short      Net     % of OI
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%
01/04/05      159,197   111,900    47,297    17.4%

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

Commercial traders have increased their bearish bias
just as small traders have increased their bullish bias.


Commercials   Long      Short      Net     % Of OI 
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%)
01/04/05      302,339   620,759   (318,420)  (34.5%)

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
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%
01/04/05      279,274     71,151   208,123    59.4%

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


NASDAQ-100

Commercial traders have turned significantly more bearish
on the NDX just as the small traders has turned sharply 
more bullish.

Commercials   Long      Short      Net     % of OI 
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%)
01/04/05       27,226     44,600   (17,374) (24.1%)

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
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%
01/04/05       22,227     8,293    13,934    45.6%

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 are increasing their bearish bias on
the Dow Industrials but small traders have jumped ahead
in their bearish attitude for the index.


Commercials   Long      Short      Net     % of OI
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%)
01/04/05       24,704    32,916   (8,212)    (14.2%)
 
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
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%)
01/04/05        5,166     7,596   (2,430)   (19.0%)

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

Canadian Natl Railway - CNI - close: 56.10 change: -1.49

WHAT TO WATCH: The Transportation sector is getting hit with 
heavy selling pressure and CNI is breaking down with it.  The 
next level of support should be $55.  A breakdown here could lead 
to a drop to the $50 level and its 200-ema.  




---

Yellow Roadway - YELL - close: 51.89 change: -1.83

WHAT TO WATCH: YELL is another transportation stock that is 
breaking long-term technical support at the 50-dma.  Yet be 
careful.  Shares faked out the bears back in September and the 
100-dma could still be a challenge.  Watch for a drop under 
$50.00 or consider going short now with a relatively tight stop. 
It might be worth noting that YELL has already achieved its 
bullish P&F target at $56. 




---

Unisys Corp - UIS - close: 9.42 change: -0.28 

WHAT TO WATCH: We normally do not like to short stocks under 
$10.00.  It can be more dangerous and tougher to place your 
stops.  Yet UIS looks tempting with the breakdown under support 
at the $9.50 level and its new MACD sell signal on big volume.  
We might speculate on a drop toward the $8.25-8.50 range. 





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

SNDK $23.96 +0.54 - SNDK is bouncing from what appears to be the 
bottom of a two-month rising channel.  A move over the 200-dma 
may be worth noting.

DCLK $8.00 +0.60 - DCLK has been consolidating sideways in a 
tight range for about two months.  A breakout over $8.25 could be 
worth a shot. 

Q $4.52 +0.09 - Momentum traders may want to give Qwest a look.  
The stock has been pretty strong since it broke out over the 
$3.50 level in November.  The next level of resistance looks like 
the $5.00 mark.  

TE $15.12 +0.18 - TE is trying to bounce from the rising 50-dma.  
We'd watch for a move over $15.50 as a potential entry point.
 

=================================================================
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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 01-09-2005
                                                    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
  Bearish Play Updates:  VSEA

Active Trader (Non-tech)
  New Bullish Plays:     EP
  New Bearish Plays:     SE
  Bullish Play Updates:  ACI, BMS, MKC, PDCO, USB, YUM 
  Closed Bullish Plays:  PNC, STJ

Stock Splits
  Announcements:         None


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

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

  --------------------
  Bearish Play Updates
  --------------------

Varian Semi - VSEA - close: 30.95 chg: -0.91 stop: 34.01*new*

Good news for VSEA bears.  The stock has gone from following the 
SOX weakness to becoming a leader to the downside.  Shares are 
picking up speed as they descending with very heavy volume about 
three times the normal on Friday's 2.85 percent drop.  VSEA is very 
close to our short-term target at $30.00.  Readers may want to 
strongly consider exiting as VSEA nears the $30 level, which could 
offer some round-number, psychological support.  Or one could 
closely monitor their stops and see how far VSEA will fall.  The 
P&F chart now points to a $20 target.  We are lowering our stop 
loss to $34.01. 

Annotated chart:


Picked on January 04 at $33.53
Gain since picked:      - 1.58
Earnings Date         01/27/05 (confirmed)
Average Daily Volume:      700 thousand




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

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

  -----------------
  New Bullish Plays
  -----------------

El Paso Corp - EP - close: 10.51 change: +0.06 stop: 9.99

Company Description:
El Paso Corporation provides natural gas and related energy 
products in a safe, efficient, dependable manner. The company 
owns North America's largest natural gas pipeline system and one 
of North America's largest independent natural gas producers.
(source: company press release)

Why We Like It:
We suspect that the consolidation in shares of EP could be ending 
soon.  The rebound bounce from the $10 level and its rising 40-
dma looks tempting but we're going to use a TRIGGER at $10.61 to 
catch the breakout.  Our target will be the recent highs near 
$11.85 but the P&F chart points to a $20 target.  We'll use an 
initial stop loss at $9.99.  Remember, we want to be out of this 
play before the late January earnings.

Annotated Chart:


Picked on January xx at $xx.xx <-- see TRIGGER
Gain since picked:      - 0.00
Earnings Date         01/27/05 (unconfirmed)
Average Daily Volume:      3.9 million 





  -----------------
  New Bearish Plays
  -----------------

7 Eleven - SE - close: 21.46 change: -1.17 stop: 22.26

Company Description:
7-Eleven, Inc. is the premier name and largest chain in the 
convenience retailing industry. Headquartered in Dallas, Texas, 
7-Eleven, Inc. operates or franchises approximately 5,800 7-
ElevenŽ stores in the United States and Canada and licenses 
approximately 20,500 7-Eleven stores in 17 other countries and 
U.S. territories throughout the world. During 2003, 7-Eleven 
stores worldwide generated total sales of more than $36 billion.
(source: company press release)

Why We Like It:
This is a little bit aggressive.  We normally don't like to chase 
a move more than five percent but SE's breakdown under support at 
the $22.00 level and its 100-dma on heavy volume looks like an 
opportunity for the bears.  Technical traders will notice that 
the daily chart appears to have a double-top pattern.  The MACD 
has rolled over into a new sell signal and this conflicts with 
the long-term buy signal on its P&F chart.  We're going to look 
for a quick drop to round-number, psychological support at the 
$20.00 mark.  We want to be out of this play before SE reports 
earnings. 

Annotated Chart:


Picked on January 09 at $21.46
Gain since picked:      - 0.00
Earnings Date         01/27/05 (confirmed)
Average Daily Volume:      124 thousand




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

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

Arch Coal - ACI - close: 33.65 change: -0.18 stop: 32.49     

It would be tempting to consider an exit here since ACI is clearly 
not performing for us.  However, shares are still holding support 
at the $33 level and its slowly rising 200-dma's.  We are not 
suggesting new bullish positions at this time.  Look for a bounce 
back above $35 before evaluating a new long.  

Annotated Chart:


Picked on December 13 at $34.71 
Gain since picked:       - 1.06
Earnings Date          01/29/05 (unconfirmed)
Average Daily Volume:       951 thousand



---

Bemis Co - BMS - close: 28.91 change: +0.42 stop: 27.49

BMS is showing some relative strength with a decent bounce from the 
$28 level and its rising 50-dma.  That bounce was more impressive 
on Friday when most of the market was headed south.  Maybe part of 
the bullishness is news related.  On Wednesday BMS announced that 
it has acquired a majority stake in Dixie Toga for $250 million 
cash, which was expected to boost BMS profits in 2005.  Dixie Toga 
is a Brazilian-based maker of containers and tubes.  We would 
probably wait for a move over $29.25 as a conservative entry point 
to break the short-term trend of lower highs. 

Annotated Chart:


Picked on December 22 at $29.22
Gain since picked:       - 0.31
Earnings Date          01/20/05 (unconfirmed)
Average Daily Volume:       411 thousand



---

McCormick & Co - MKC - close: 38.06 chg: +0.35 stop: 35.99

Slow-moving MKC is still cultivating an uptrend.  Shares are 
bouncing from their rising 40-dma near the $37.50 level.  This 
looks like a new bullish entry point but be sure you have the 
patience to let MKC run at its own pace.  Our target remains the 
$40-42 region.

Annotated Chart:


Picked on December 14 at $38.15 
Gain since picked:       - 0.09
Earnings Date          01/26/05 (unconfirmed)
Average Daily Volume:       328 thousand



---

Patterson Companies - PDCO - close: 42.81 chg: -0.01 stop: 
39.49*new*

Bulls really can't complain too much about PDCO.  This past week 
while the majority of the market was sliding lower PDCO held 
support at the $42 level.  The technical picture isn't very pretty 
so we'd probably look for a move over $43.00-43.50 before 
considering new bullish positions.  The P&F chart remains bullish 
with a $54 target.  Our target is $46.

Annotated chart:


Picked on December 01 at $42.06 
Gain since picked:       + 0.75
Earnings Date          11/24/04 (confirmed)
Average Daily Volume:       378 thousand



---

US Bancorp - USB - close: 30.45 change: -0.54 stop: 29.49     

Hmm... what should we do?  We were expecting USB to pull back with 
the market and the weakness in the banking indices.  USB really 
didn't show that much weakness until Friday's 1.7 percent decline. 
Unfortunately, we expected the $30.50 level to act as support and 
it did for about 30 minutes. Technicals are turning sour.  The 
banking indices look poised for more declines and USB was 
downgraded to a "neutral" on Friday by Bank of America.  We're 
going to hold on to USB for now.  Shareholders should have a 30-
cent dividend check coming and we would expect USB to bounce from 
support at the $30 level. The trick is getting out before USB's 
January 18th 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: 46.35 change: -0.26 stop: 45.65 *new*

We were encouraged by the Thursday bounce from the 40-dma but there 
was no follow through on Friday.  Instead YUM churned mostly 
sideways after LM started coverage on them with a "hold".  Plus 
news of another mad cow outbreak didn't do much to inspire the 
buyers.  We would wait for YUM to trade back over $47.00 before 
considering new bullish positions.  We are raising our stop loss to 
$45.65 just under the 50-dma.

Annotated Chart:


Picked on December 28 at $47.00 
Gain since picked:       - 0.65
Earnings Date          02/09/05 (unconfirmed)
Average Daily Volume:       1.2 million 




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


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

PNC Financial - PNC - close: 55.71 chg: -0.34 stop: 54.99

BAC reiterated their "buy" rating on PNC this Thursday and gave the 
stock an early lead but that strength faded.  The end result was a 
failed rally that continued to fall as the market slipped south 
into the weekend.  This drop back under the "neckline" of the 
inverse H&S pattern, which should be support, has us on the 
defensive and we're choosing to cut our losses to avoid further 
declines.  The next stop for PNC is probably round-number support 
at $55.00.

Picked on December 28 at $57.19
Gain since picked:       - 1.48
Earnings Date          01/21/05 (confirmed)
Average Daily Volume:      1000 thousand



---

St. Jude Medical - STJ - close: 39.02 chg: -0.68 stop: 38.95     

It's been a very tough week for STJ.  Shares reversed course and 
never looked back.  We issued a warning in Thursday's newsletter 
that the close under $40.00 was bad news.  Friday the declines 
continued with a minor failed rally at $40 Friday morning.  Then 
STJ proceeded to break old resistance and what should have been new 
support at the $39.50 level.  We're choosing to exit now to cut our 
losses as quickly as possible.  The next stop looks like the $38 
region. 

Picked on December 05 at $40.64 
Gain since picked:       - 1.62
Earnings Date          01/19/04 (unconfirmed)
Average Daily Volume:       854 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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For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
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*****************************************************************

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

PremierInvestor.net Newsletter          Weekend Edition 01-09-2005
                                                    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 10th, 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 10th
=========================================

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

AA   Alcoa Inc            Mon, Jan 10  After the market     0.41
DNA  Genentech            Mon, Jan 10  After the market     0.22
NT   Nortel Networks      Mon, Jan 10  ----- n/a -----      0.02
GBX  The Greenbrier Co    Mon, Jan 10  Before the bell      0.39

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

CAMP CalAmp Corp          Tue, Jan 11  After the market     0.08
CACB Cascade Bancorp      Tue, Jan 11  ----- n/a -----      0.26
MTB  M&T Bank             Tue, Jan 11  Before the bell      1.59
SVU  SuperValue Inc       Tue, Jan 11  Before the bell      0.58
WNI  Weider Nutrition     Tue, Jan 11  Before the bell      0.06

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

AAPL Apple Computer Inc   Wed, Jan 12  ----- n/a -----      0.48
CBSH Commerce Bancshares  Wed, Jan 12  Before the bell      0.79
INFY Infosys Technologies Wed, Jan 12  ----- n/a -----      0.38

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

CREE Cree Inc.            Thr, Jan 13  After the market     0.32
MTG  MGIC Investment      Thr, Jan 13  Before the bell      1.34
SRR  Stride Rite          Thr, Jan 13  Before the bell     -0.01
SUNW Sun Microsystems     Thr, Jan 13  After the market     0.01
VASO Vasomedical          Thr, Jan 13  After the market     n/a

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

AIT  Applied Ind. Tech    Fri, Jan 14  ----- n/a -----      0.32


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

Symbol  Company Name              Ratio    Payable     Executable

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
MDC   MDC Holdings               13:10     Jan 10th    Jan 11th
CMN   Cantel Medical              3:2      Jan 12th    Jan 13th
CVBF  CVB Financial               5:4      Jan 13th    Jan 14th
SHFL  Shuffle Master              3:2      Jan 14th    Jan 18th
EV    Eaton Vance                 2:1      Jan 14th    Jan 18th
AGP   Amerigroup                  2:1      Jan 18th    Jan 19th
CRDN  Ceradyne                    3:2      Jan 18th    Jan 19th
BCP   Balchem Corp                3:2      Jan 20th    Jan 21st

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

Believe it or not but earnings season is starting up again.
Alcoa starts it off on Monday but the real earnings season doesn't
begin until Tuesday, Jan. 18th.  As far as economic events go this
week look for the retail sales report and the PPI report. 

==============================================================
                       -For-           
----------------
Monday, 01/10/05
----------------
Wholesale Inventories for November
FOMC Governor Guynn speaks on U.S. Economy

-----------------
Tuesday, 01/11/05
-----------------
..none..

-------------------
Wednesday, 01/12/05
-------------------
Trade Balance for November
Treasury Budge for December


------------------
Thursday, 01/13/05
------------------
Weekly Initial Jobless Claims
Import and Export Prices for December
Retail Sales for December
FOMC Governor Poole speaks 

----------------
Friday, 01/14/05
----------------
Producer Price Index (PPI) for December
Industrial Production and Capacity Utilization


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

MO      Altria Group               61.40     +0.89
GIS     General Mills              50.94     +1.14
WY      Weyerhaeuser Co            67.56     +1.04
UCL     Unocal Corp                45.46     +1.12
PD      Phelps Dodge               97.65     +5.44
SNDK    SanDisk Corp               23.96     +0.54

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

RATE     Bankrate Inc              16.30     +1.77

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
AAPL    Apple Computer Inc         69.25     +4.70
AVP     Avon Products              39.59     +1.70
SHPGY   Shire Pharma               33.90     +1.75
STZ     Constellation Brands Inc   49.13     +2.64
USM     U.S. Cellular              49.40     +2.16
SRCL    Stericycle                 48.50     +3.05
BLUD    Immucor Inc                25.91     +1.70

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

AAPL    Apple Computer Inc         69.25     +4.70
AVP     Avon Products              39.59     +1.70
SHPGY   Shire Pharma               33.90     +1.75
STZ     Constellation Brands Inc   49.13     +2.64
USM     U.S. Cellular              49.40     +2.16
SRCL    Stericycle                 48.50     +3.05
BLUD    Immucor Inc                25.91     +1.70

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

BRO     Brown & Brown              43.88     -0.16
PTRY    Pantry Inc                 28.89     -1.04

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

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