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PremierInvestor.net Newsletter                   Monday 01-10-2005
                                                    section 1 of 2
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: Bulls Push Back  
Watch List: A few bullish candidates  


===============================================================
MARKET WRAP  (view in courier font for table alignment)
===============================================================
      01-10-2005           High     Low     Volume   Adv/Dcl
DJIA    10621.03 + 17.07 10663.74 10582.38 1.83 bln 1779/1059
NASDAQ   2097.04 +  8.43  2111.43  2086.66 2.09 bln 1658/1362
S&P 100   568.27 +  1.89   570.22   565.57   Totals 3437/2421
S&P 500  1190.25 +  4.06  1194.78  1184.80
SOX       406.25 -  1.31   411.55   404.80
RUS 2000  617.74 +  4.53   623.30   613.21
DJ TRANS 3663.23 + 26.45  3683.05  3628.28 
VIX        13.23 -  0.26    13.93    12.94
VXO (VIX-O)13.17 -  0.68    14.22    12.99
VXN        19.61 +  0.46    19.84    19.23
Total Volume 3,935M
Total UpVol  2,013M
Total DnVol  1,801M
Total Adv  3437
Total Dcl  2421
52wk Highs  142 
52wk Lows    42
TRIN       0.95
PUT/CALL   0.82 
===============================================================

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

Bulls Push Back
Jonathan Levinson

Bulls picked up the ball from faltering bears and ran the indices 
higher. The intraday bounce broke the upper end of the sideways 
range from last week on the SPX, while for the Dow and Nasdaq the 
range highs held.  The SPX gave back the bulk of its gains by 
session's end, closing back within its range. Volume was lighter 
than we saw last week and aside from a small number of buy and 
sell programs, there was very little about which to get excited.


Daily Dow Chart


The Dow advanced 17 points to close at 10621, failing from a high 
of 10664 and bouncing from a low of 10582 on relatively light 
volume.  The move printed a slightly higher high and higher low, 
but the 100 point range between 10570 and 10670 continues to 
contain the action, as it has since mid-last week.  A strong 
break above the range high will target next light resistance at 
10720, on the way to the stronger line at 10800.



Daily S&P 500 Chart


The SPX managed to break the high of the past 3 sessions on its 
spike to 1195, but it closed back within the range at 1190, +4.06 
for the day.  The low was 1185, at the 78.6% Fibonacci line off 
the August low.  Above 1195, next light resistance is at 1200, 
followed by 1205.  A close above 1205 should be enough to begin 
generating buy signals on the daily cycle oscillators, while a 
break below 1180 should get the ball rolling for a test of 1170 
support. 



Daily Nasdaq Chart


Today's 2111 high tested Wednesday's high after Friday's spike 
low to the 2075 level.  This defines the high and low end of the 
range, with key overhead resistance above at 2125-30.  A close 
above that level will spell trouble for the daily cycle 
downphase, as will a failure to break the 2070-75 level this 
week.  For the day, the Nasdaq closed higher by 8.4 at 2097.


Weekly TNX Chart


The treasury auctioned 16B worth of 6 month bills generating a 
2.48 bid-to-cover ratio, and 9B worth of 3 month bills generating 
a bid-to-cover of 2.15.  Ten year treasury notes were steady 
within a very narrow range, closing in lightly positive territory 
with the yield (TNX) down .7 bps to close at 4.278%.  The move 
respected a narrow range that had emerged last week between 4.26% 
and 4.295%.  Like the daily cycle oscillators discussed in the 
Futures Wraps, the weekly cycle upphase has been faltering on the 
so far weak/corrective upphase that emerged off the October lows 
beneath 4%.  A break below 4.14% support should be sufficient to 
begin generating sell signals for the TNX, while a move above 
4.295% will target key 4.4%-4.44% resistance.

Weekly chart of Crude oil


Oil was catching a bid this morning, breaking 47 as Iraqi 
officials announced that sabotage ahead of the January 30 
elections had halted oil operations in the North and brought 
exports to a standstill.  Oil flows through Iraq's northern 
pipeline have been on hold since an attack on December 18, and 
repair operations have been continually impeded by ongoing acts 
of sabotage.  In addition to these stories, the financial press 
began discussing a "cold snap" in the U.S. Northeast, after 
several consecutive weeks' discussion of the mild winter to 
justify the downward correction in oil prices.  As well, there 
was mention of the storm in the North Sea disrupting Norwegian 
production.  Nevertheless, a selloff in the afternoon reversed 
the morning gains, with crude oil closing fractionally lower for 
the day.

On the daily chart of front-month crude oil futures, the head and 
shoulders neckline support held in the 41 area, and the bounce 
since the new year has turned the daily cycle oscillators to a 
new upphase.  46-47 is a significant confluence level, and the 
break above 47 this morning represents a break of the previous 
high.  Today's 6-week high weakened, but has not yet invalidated, 
the head and shoulders formation.  Above 48, the next 
significant resistance is back at the 50.50 level.  For the day, 
crude oil closed lower by 12.5 cents at $45.30.

In corporate news, GM announced that it intends to reduce its US 
workforce by approximately 7%, eliminating 8000 positions over 
the coming 12 months.  This marks the fourth consecutive year of 
workforce reductions at the world's largest auto manufacturer- in 
each year since 2002, GM has fired between 2% and 3% of its 
salaried employees, 5%-6% of its hourly workers and approximately 
10% of its contractors.  GM closed lower by 1.31% at $38.49.

Executives of the Big Three automakers made comments over the 
weekend to the effect that inflation in US health costs, 
particularly for retirees, is severely impacting their ability to 
compete with foreign automakers. Ford revealed that it has paid 
3.2B in healthcare expenses for American employees, of which 2.2B 
went to retirees.  GM spent 4.8B in 2003 to cover 1.1M people, 
more than it spent on steel for its vehicles and adding an 
amazing $1,400 to the cost of every vehicle it manufactures in 
the US.  They stressed that this is an issue besetting all 
domestic manufacturers and not just their industry. 

Big news today was News Corp.'s (NWS) agreement to purchase the 
remaining 18% of Fox Entertainment (FOX) in a stock swap valued 
at approximately 6B.  This acquisition would complete NWS' 
ownership of FOX.  Under the deal, FOX Class A shareholders will 
receive 1.9 shares of NWS Class A shares, which represented a 
premium of over 7% above Friday's closing price of $31.22 for 
FOX.  NWS lost 2.08% to close at $17.85, while FOX gained 9.8% to 
close at $34.28.

Rural wireless provider Alltel Corp. (AT) announced that it will 
purchase Western Wireless Corp. (WWCA) for 4.4B in a cash and 
stock deal that values WWCA at $39.27 per share, a 7.5% premium 
over Friday's closing price.  AT will also assume 1.5B of WWCA's 
debt.  WWCA shareholders will receive $9.25 in cash and .53 AT 
shares for each WWCA share they hold.  Word of the deal prompted 
Standard & Poor's to place AT's long term "A" and short term "A-
1" ratings under review, as S&P believes that the acquisition 
could pressure AT's creditworthiness.  S&P placed WWCA's "B-1" 
credit rating under review as well, but with positive 
implications.  AT closed lower by 2.44% at $54.75, while WWCA 
gained 2.33% to close at $37.37.

After the bell, Alcoa announced Q4 earnings of 345M or 39 cents 
per share (flat against Q4 2003's 342M or 39 cents EPS), missing 
consensus estimates for 41 cents.  Sales rose to 6.04B from 5.42B 
in Q4 2003.  AA finished the day -.72% at 30.47.


In economic news, the lone report for the day was Wholesale 
Inventories released at 10AM.  The Commerce Department announced 
that inventories at US wholesalers rose 1.1% in November on 
increases in a wide array of categories, exceeding analyst 
expectations for a .7% rise.  Inventories had risen 1.1% in 
October.  Despite the larger than expected gain in November, 
however, the inventory-to-sales ratio remained at 1.15- 
indicating that it would take 1.15 months to deplete current 
inventories.  

Just after noon, Secretary of Labor Elaine Chao announced the 
administration's proposal for pension plan reform.  In 
particular, the plan seeks new rules for the funding of the 
Pension Benefit Guarantee Corporation and a likely increase in 
employer premiums.  Also included would be rules requiring more 
information to be provided to workers and greater flexibility for 
employers seeking to contribute to pension plans.  Those 
companies with fully funded plans would likely see their current 
premiums indexed to growth in employees' wages.  Those companies 
whose plans are in the red would see premiums increase.

There are no major economic reports scheduled for release 
tomorrow, and on Wednesday we'll get the November Trade Balance 
and the December Treasury Budget.  The big question that has 
dominated equities since last Tuesday's close has been whether 
this sideways range is a corrective distribution to consolidate 
Monday's and Tuesday's impulsive drop, or whether it's an 
accumulative base.  While the daily cycle oscillators suggest 
more downside to come, the surge in bearishness and the now 4-day 
extension on that sideways range mitigates on the bullish side of 
the ledger.  Based on the daily cycle oscillators, my 
interpretation is a bearish bias below the nearby resistance 
levels detailed above.  Above those levels, however, the 
oscillators will likely whipsaw back up, and the indices will be 
set for a retest of the rally highs.
 

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

Boeing Co - BA - close: 50.98 change: +0.67

WHAT TO WATCH: Dow-component and airline/defense giant BA 
starting to look like it might bounce from the $50 level and its 
rising 200-dma's.  Short-term technicals are hinting at a bullish 
turnaround and the P&F chart is still in a buy signal.  Traders 
might want to consider going long over $52 with a target in the 
$55.00-55.50 range. 




---

Humana Inc - HUM - close: 30.65 change: +1.23 

WHAT TO WATCH: This one might feel more aggressive because HUM 
looks so extended from its November-December rally.  Yet in 
reality the stock has been consolidating sideways for four weeks 
straight.  Today's four-percent gain was fueled by strong volume 
and shares are very close to another new multi-year high.  The 
breakout over $30.00 could be an entry point for more aggressive 
types.  We would watch for the move over $31.  




---

Amylin Pharma - AMLN - close: 24.40 change: +1.30

WHAT TO WATCH: AMLN came out with some good news about its new 
diabetes drug at the JPM healthcare conference today.  Traders 
responded with huge volume and a 5.6 percent gain.  The move 
pushed AMLN above resistance at the $24 level for a new eight-
month high.  The P&F chart shows a triple-top breakout buy signal 
with a $34 target.  We might be more conservative since AMLN 
appears to have resistance at the $26.75 level. 





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

CVH $54.10 +0.57 - Momentum traders can keep an eye on CVH for a 
breakout over the $55.00 level as a new entry point and new high.

IPS $44.33 +1.55 - Very aggressive players may want to check out 
IPS.  The volatile stock is bouncing from old resistance now 
support at the $40 level following its recent sell-off once it 
neared $50 at the first of the year. 
 

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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
contact Contact Support.

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

PremierInvestor.net Newsletter                   Monday 01-10-2005
                                                    section 2 of 2
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:

Stop Loss Adjustments: VSEA, PDCO, MKC, BMS    

Stock Splits
  Announcements:  None      

Active Trader (Non-tech Stocks)
  Closed Bearish Plays: SE

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)
  Breakout to Downside (Stocks over $20)
  Recently Overbought With Bearish Signals (Stocks over $20)

==================================================================
Stop Loss Adjustments
==================================================================

VSEA - tech stock short -
  VSEA continues to drop.  We are ready to exit at or near $30.00.
  Consider tightening your stop.
 
 
PDCO - non-tech long -
  PDCO continues to bounce on decent volume today.
 
 
MKC - non-tech long -
  MKC turned in a decent gain with rising volume behind it.
 
 
BMS - non-tech long -
 BMS hit a new relative high over the $29.50 level with big   
volume supporting it.
 

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

None


==================================================================
Active Trader (AT) Non-Tech Stock section
==================================================================

============
Closed Plays
============

  Closed Bearish Plays
  --------------------

7 Eleven - SE - close: 22.30 change: +0.84 stop: 22.26

Ouch!  We have been clearly whipsawed out of this play before it 
ever got a chance to really begin.  SE did open lower on Monday 
morning but immediately rebounded higher following a stronger 
than expected December same-store sales number of +5.6 percent.  
SE tagged technical resistance at its 50-dma near $22.85 before 
short-term traders did any profit taking.  We are stopped out at 
$22.26.

Picked on January 09 at $21.46
Gain since picked:      + 0.84
Earnings Date         01/27/05 (confirmed)
Average Daily Volume:      124 thousand



==================
  Trading Ideas
==================

This section contains stocks that meet criteria which may make
them of interest to long and short side traders.  These are not
recommendations, nor have they been reviewed by PremierInvestor
editors for investment potential.  However, each of them has
technical and fundamental characteristics that make them worthy
of further review by traders and investors looking for fresh ideas.
New stocks will appear daily following the market close.

Value Plays With Bullish Signals
---------------------------------

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

TM      Toyota Motor Corp          79.96     +0.52
BCS     Barclays Plc               45.42     +0.77
MO      Altria Group               62.20     +0.80
COP     ConocoPhillips             85.63     +0.77
BA      Boeing Co                  50.98     +0.67
ECA     Encana Corp                54.52     +1.15

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

CYCL    Centennial Comm             9.04     +1.01
HLEX    Healthextras               17.46     +1.22
FXEN    FX Energy                  14.99     +1.19
VIVO    Meridian Biosciences       18.99     +1.17
ALNY    Alnylam Pharma             10.23     +1.23
CPTV    Captiva Software           11.37     +1.57

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
PEP     Pepsico Inc                53.76     +1.31
FOX     Fox Entertainment          34.28     +3.06
AVP     Avon Products              40.80     +1.21
PHS     Pacificare Health          57.90     +1.71
HUM     Humana Inc                 30.65     +1.23
DVA     Davita Inc                 41.70     +1.83
BEC     Beckman Coulter            68.10     +2.10

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

SBUX    Starbucks                  57.83     -1.84
AT      Alltel Corp                54.75     -1.37
XMSR    XM Satellite Radio         32.94     -1.15
ESS     Essex Property Trust       75.80     -1.39
ELBO    Electronis Boutique        37.47     -1.36
DECK    Deckers Outdoor            39.56     -2.80
NGPS    Novatel Inc                24.65     -3.54

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

PRVD    Provide Commerce           33.27     -3.14

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

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Copyright (c) 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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