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Daily Newsletter, Sunday, 01/16/2005

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PremierInvestor.net Newsletter          Weekend Edition 01-16-2005
                                                    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: Back From the Brink        
Market Sentiment: Look Out!  Earnings Ahead.    
Watch List: Anti-virus to Steel          

=================================================================
MARKET WRAP  (view in courier font for table alignment)
=================================================================
       WE 01-14        WE 01-07        WE 12-31        WE 12-24 
DOW    10558.00 - 45.96 10603.9 -179.34 10783.3 - 43.82 +177.20 
Nasdaq  2087.91 -  0.70 2088.61 - 86.16 2174.77 + 14.15 + 25.42 
S&P-100  564.44 -  1.94  566.38 -  8.64  575.02 -  1.04 +  8.67 
S&P-500 1184.52 -  1.67 1186.19 - 25.46 1211.65 +  1.52 + 15.93 
W5000  11652.74 +  3.85 11648.9 -323.90 11972.8 + 38.98 +150.45 
SOX      403.14 -  4.42  407.56 - 25.72  433.28 +  6.85 +  2.68 
RUT      617.48 +  4.27  613.21 - 37.87  651.08 -  1.71 +  7.29 
TRAN    3569.16 - 67.62 3636.78 -160.56 3797.34 +  9.56 + 36.71 
VXO       12.43           13.85           13.58           11.23 
VXN       18.57           19.15           18.37           16.80 
=================================================================

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

Back From the Brink
by Jim Brown

Friday's trading was erratic, lackluster and directionless
and on low volume BUT we did pull back from the brink of a
potential disaster. Traders should be breathing easier this
weekend with the decent gains but we are not out of the woods
yet. 

Dow Chart

 
Nasdaq Chart

 


If it were not for the economic reports on Friday we would
have had nothing to talk about. Stock news was nonexistent
and the bond and commodities markets closed early. Volume
was very light and choppy. The leading report on Friday
was the Producer Price Index which fell -0.7% and about
twice what was expected. On the surface it appears that
inflation is actually getting weaker but the energy was
the key component once again. The drop in oil prices in
December skewed the headline number substantially. Without
food and energy the core prices rose by +0.1%. Components
at the early stage of processing actually showed a rapid
increase in inflation. Core prices were also up for the
fifth consecutive month. We are beginning to see some pass
through of these rising prices to the consumer level and
that will pose a real risk of escalating consumer inflation
in the future. The Fed will not be blind to this and we are
only two weeks away from the next Fed meeting. 

Industrial Production rose more than expected in December
at +0.8% which was also twice the consensus estimate. This
helped push Capacity Utilization up by +60 basis points to
79.2. The headline number of 117.8 was the highest level 
since early 2004. This is a strong number and suggests that
the slack in production is slowly being reduced. However, 
that also means capacity utilization is approaching ranges
that could be consistent with increasing inflationary 
pressures.

Business Inventories spiked +1.0% in November and nearly
twice the consensus estimate. October levels were also
revised higher. The pace of sales eased and gave us a
slight uptick in the inventory to sales ratio to 1.31
but it is still nothing to brag about. It has been hugging
the lows at 1.30 for months. Business Inventories is a
lagging report and not really a market mover but it does
give us the long term trends. 

The net result of those three reports was more fear of the
Fed and comments from Fed President Poole helped to add to
that fear. The dollar shot higher after Poole said the Fed
would eventually remove its "measured pace" phrase in order
to be ready to fight inflation head on. While he did not
predict it would be at the February meeting or any specific
meeting the market always expects the worse. Bush also said
he was going to freeze funding for some programs and deny
funding to others to cut the budget deficit. The combination
of these comments sent the dollar soaring and it extended
its rally against the Euro to +3.2% for the year. The dollar
had fallen -34% over the last three years against the Euro.
By the way, in case you haven't heard, Bush restated his
support for a strong dollar. That has become the administration
catch phrase of the day. Every news report is not complete
without the phrase and everybody knows they don't mean it.
Elections in Iraq will be held on schedule and we support a
strong dollar. Meteor heading our way and we support the
strong dollar. I wonder if somebody at the White House is 
keeping track of how many times an administration official
repeats that phrase with a prize for the winner?

Oracle announced the Peoplesoft layoff numbers Friday and
they are cutting 5000 employees, -9%. They said they were
keeping 90% of the employees in development and support. 
Their goal is to cut 6000 but the remaining cuts will take
place over time. The first 5000 will be dumped next week.
The sense of foreboding created a somber atmosphere at 
PeopleSoft's Pleasanton headquarters as employees gathered
in small groups to say their final goodbyes. Hours before 
Oracle's Friday announcement, employees turned a PeopleSoft
sign into a makeshift shrine of flowers, candles and company
memorabilia. An inflatable doll dressed in black wore a 
button that read "Oracle" with a slash through it. Other 
PeopleSoft employees said they would rather be fired than 
work for Oracle. Obviously they have not noticed the current
job market.

Friday was the five-year anniversary of the Dow's all time
high at 11722. With Friday's close at 10558 we are -1164
points from that high. There are many analysts that still
think we will top that number in 2005 despite the slow start.
Those predictions are beginning to soften and maybe that is
what we really need. There was entirely too much optimism
at the end of 2004. Now we are starting to see the Fed hawks
circling with the increased prospects of inflation and they
found a nice thermal to keep them flying with the Poole
comments today. 

Another problem the bulls will have to overcome on our 2005
climb is the rising price of oil. You have heard the reasons
here many times and I will not repeat it now but there are
higher prices ahead. Those of you with the Oil Crisis report
already know why. It will not go straight up and we are 
likely to see a dip in the spring but I would use it as a 
buying opportunity for energy stocks. The rest of the market
will have to fight sticker shock again before the year is over.
Oil closed at a six week high again on Friday at $48.38 and
just one good day away from $50. 

Part of that price was due to the coming cold front and
the coming political events. The FBI reported that there
had already been some suspicious events noted around the
inauguration site and security was already at a stepped
up level. The event takes place on Thursday and it is
bound to cause some market worries. Also there has been
increased oil attacks in Iraq and the Nigerian strike
continues. 

Crude Oil Chart

 

In the markets we saw a surge of buying early in the day as
fund managers and traders cleared their desks before leaving
early. Reporters mentioned that less than 50% of traders
remained at their desks by noon and volume slowed to a 
trickle. The bounce was weak and appeared to be propelled
by two buy programs. Once past 10:30 the markets flat lined
and all traces of direction disappeared. There is simply
no conviction left in the market but it appears that goes
for both buyers and sellers. The plunge at the close on
Thursday that created some serious sentiment questions was
completely forgotten on Friday. 

Fund flows continued to be absent with the numbers through
Thursday reported to be only a +$495 million inflow for the
week. This massive shortfall in cash has fund managers 
scratching their heads in bewilderment but analysts remain
undaunted. Buy, buy, buy, good times are ahead is the cheer
but nobody is acting on the plan. That could change next
week as the earnings tsunami appears.

Monday is a market holiday but that just means we will cram
more earnings into a four day week. Leading off the list on
Tuesday morning will be C, PH, RF, ASO, BAC, ABT, ACO, FRX,
FCX, JCI, MMM, NCC, STT, USB, WFC, AMTD, FLWS, CRAI and FITB. 
The list is weighted heavily to the financial sector and we
will see what guidance they give in the face of higher rates
ahead. If the guidance is positive then traders might return
to the market after the inauguration. After the bell we will
see earnings from AMD, IBM, JNPR, CHKP, EAG, FSL, KMI, LLTC,
MOT, PHHM, PVSW, PLT, RMBS, RYL, SBSE, STX, TER, VSGN, YHOO.
Considering this is just one day you can see how we will be
trading on information overload all week. We had so few 
warnings the earnings are not the focus and this is not 
expected to be a disappointing cycle. The key is the outlook
for 2005. The economic calendar is steady next week with the
Fed Beige book on Wednesday and the Philly Fed Survey on 
Thursday as the highlights. 

The Dow needs a highlight or maybe a headlight to find its
way out of the cellar. It continues to hover just over 10500
despite the +50 gain on Friday. The close at 10558 was a
slight pull back from the brink of disaster I wrote about
on Thursday but you can still see the cliff edge from here.
We definitely need a goal line stand at 10500 and unless
earnings produce a negative surprise next week we may be 
in luck. 

The Nasdaq is showing even less life than the Dow with the
entire week spent with 2080 as the level defended by both the
buyers and sellers. We closed last week at 2088.61 and this
week at 2087.91. I would call that a dead heat or maybe just 
dead since there was not much heat. 

The Dow was the only major index to post a change for the
week greater than single digits with a -45 loss. The rest
were mixed around zero with a couple points either way.
Surprisingly the Russell and the Wilshire both finished
in the green with +4 point gains for the week. Considering
the beating the Russell took through Wednesday it is amazing
it pulled off that rebound. The Russell hit 604 on Wednesday,
down from 656 on Dec-31st, a -8% drop. By Friday's close
it had rebounded to 617 and erased 25% of the loss. If I
had to point to any single indicator that next week could
be the start of a general market rebound it would be the 
Russell rebound off the lows this week. As the index with
the worst profit taking it should lead the rebound as the
most undervalued. 

Russell Chart – Daily

 

The second indicator would be the SOX, which closed at a
four day high despite the -$9 drop in CREE and the negative
outlook. While the four day high was only +3 points over
400 it was a psychological victory. The SOX needs to stay
over its cycle low at 395 and preferably over 400 for next
week to have a chance. 

The move away from SPX 1175 has renewed my bullish bias 
and I would look to buy dips as long as we stay above that
level. Next week may not be highly directional with the
inauguration risk on the radar and it is an expiration week.
We could maintain a directional bias but it may not be very
strong. I would like to believe the bottom is in but we need
for that to be proven rather than be a guess. Right now the
focus is earnings guidance and that should provide direction
for the next six months. Let's just hope it is up. 

Jim Brown

"One of life's hardest jobs is to keep 
making the easy payments"


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

Look Out!  Earnings Ahead.
- J. Brown

The first two weeks of January are behind us and they have not 
been kind.  Stocks may have ended Friday on an up swing but the 
short-term trend is still a bearish one.  The question will be 
how will investors react to the first full week of corporate 
earnings news next week?  Thus far the earnings headlines we have 
received has been less than inspiring.  Sure, Intel and Apple 
managed to issue upside surprises but these failed to spark any 
meaningful market turnaround.  

In addition to corporate earnings the market will be digesting a 
handful of economic data with the NY Empire State index, the CPI, 
housing starts, building permits, the Fed's Beige book report, 
leading indicators and the preliminary Michigan sentiment 
numbers.  Yes, Tuesday begins a very full week.  Make sure you're 
ready for it.



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

Market Averages

DJIA ($INDU)

52-week High: 10868
52-week Low :  9708
Current     : 10558

Moving Averages:
(Simple)

 10-dma: 10604
 50-dma: 10585 
200-dma: 10279 



S&P 500 ($SPX)

52-week High: 1217
52-week Low : 1060
Current     : 1184

Moving Averages:
(Simple)

 10-dma: 1187
 50-dma: 1187
200-dma: 1132



Nasdaq-100 ($NDX)

52-week High: 1635
52-week Low : 1301
Current     : 1561

Moving Averages:
(Simple)

 10-dma: 1565
 50-dma: 1581
200-dma: 1467 



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

CBOE Market Volatility Index (VIX) = 12.43 -0.41	
CBOE Mkt Volatility old VIX  (VXO) = 12.85 -0.22
Nasdaq Volatility Index (VXN)      = 18.57 -0.52 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.72        843,562       611,182
Equity Only    0.58        648,600       378,385
OEX            0.72         41,464        30,109
QQQQ           1.15         46,451        53,455


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.3    + 0.2   Bear Correction
NASDAQ-100    73.0    + 0     Bull Correction***
Dow Indust.   73.3    + 0     Bull Confirmed
S&P 500       74.6    + 0.2   Bull Confirmed
S&P 100       76.0    + 0     Bull Confirmed


Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


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

 5-dma: 1.17
10-dma: 1.30 
21-dma: 1.10
55-dma: 1.02


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    1975      2017
Decliners     818       982

New Highs      94        67
New Lows       17        24

Up Volume   1147M     1310M
Down Vol.    431M      720M

Total Vol.  1631M     2057M
M = millions


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

Commitments Of Traders Report: 01/11/05


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

There was very little movement in the latest data leaving
commercials slightly bearish and small traders bullish on the
large S&P futures contracts.


Commercials   Long      Short      Net     % Of OI
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%)
01/11/05      457,383   509,892   (52,509)   (5.4%)

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
12/14/04      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%
01/11/05      157,131   110,174    46,957    17.5%

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 slightly increased their bullish positions
but everything else remained pretty much flat with the new data.

Commercials   Long      Short      Net     % Of OI 
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%)
01/11/05      322,800   622,509   (299,709)  (31.7%)

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
12/14/04      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%
01/11/05      277,808     73,288   204,520    58.2%

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


NASDAQ-100

Commercials upped both their longs and shorts for a minor 
decrease in bearishness.  Small traders upped their longs 
for a bump in bullishness.

Commercials   Long      Short      Net     % of OI 
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%)
01/11/05       31,984     49,244   (17,260) (21.2%)

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
12/14/04       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%
01/11/05       27,186     8,470    18,716    52.4%

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

There isn't much movement in the commercials' positions but
small traders significantly reduced their short positions.

Commercials   Long      Short      Net     % of OI
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%)
01/11/05       25,254    32,568   (7,314)    (12.6%)
 
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
12/14/04       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%)
01/11/05        5,141     5,389   (  248)   ( 2.3%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03
 

==================================================================
WATCH LIST
==================================================================

The PremierInvestor.net watch list is not designed to be read
as full fledged stock picks.  Rather we would prefer to offer
it as an extra tool in today's investor toolbox.  Think of it
as a radar screen with your own radar operator pointing out
interesting developments, technical patterns or potential plays
that you may or may not have seen on your own.  Due to time
constraints we do glance at the news but rarely do we have
time to fully read pertinent news stories, due background
research and other necessary screens that investors should do
before making a decision.  A common exercise is to read the
entry, glance at the sector and other stocks in that industry
and then compare what's happening in the stock to what's
happening in the broader market indices.  We hope you enjoy
the Watch List and that it proves to be a useful tool for your
own trading success.

STOCKS WORTH WATCHING
---------------------------------

Mcafee Inc - MFE - close: 25.40 change: +0.81

WHAT TO WATCH: MFE has been beat up pretty bad over the last 
month or so and bargain hunters may be coming in near the $25 
level and its 100-dma.  Technically the stock is still short-term 
oversold and we would see a bounce toward the $28 region but 
first MFE has to break overhead resistance at $26.00.  Keep in 
mind that there's a reason MFE has been sliding lower (new 
competition from MSFT is one reason) so concerned shareholders 
may start to use rallies to exit their positions.  The latest 
news we read suggested that analysts are expecting a strong 
quarter for MFE.  Earnings are expected near Jan. 28th.  

Chart=


---

Federated Dept. Stores - FD - close: 58.37 change: +1.00

WHAT TO WATCH: It looks like FD is showing some relative 
strength.  The consolidation of its October-November gains has 
narrowed from $54-58 to $56-58 and now shares are poised for a 
breakout.  Watch for a move over $59 or $60 as a potential entry 
point.  The bullish P&F chart points to a $62 target and this 
coincides with the median analyst price target so keep that in 
mind when planning your strategy.  

Chart=


---

Olympic Steel - ZEUS - close: 25.16 change: +1.00

WHAT TO WATCH: ZEUS has undergone some profit taking the last 
couple of weeks but the bounce from support near $22 has been a 
sharp one.  Technical oscillators are turning bullish and its 
MACD is hinting at a new buy signal soon.  We would watch the $26 
level and consider going long on a breakout.  

Chart=



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

OMM $17.10 +0.54 - OMM is another shipping stock that is 
rebounding from oversold levels.

PCSA $36.91 +2.14 - Breakout traders may want to check out PCSA.  
Shares broke out from its recent trading range on huge volume.

BWS $29.67 +0.87 - We would watch BWS for a breakout over 
resistance at $30.00 and its exponential 200-dma. 

SWIR $15.47 +0.62 - SWIR has sunk to significant support at the 
$15 level.  Will it bounce like it did in September and October? 

GLW $11.77 -0.10 - Nimble traders can watch for a breakout over 
resistance at $12.00 and target a run towards $13.00.

SHW $43.77 +0.65 - SHW has pulled back to the bottom of its long-
term rising channel.  This looks like a potential entry point but 
it will take patience to trade this stock.  We'd prefer to wait 
for a breakout over $45.00.
 

=================================================================
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DISCLAIMER
=================================================================

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

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

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Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 01-16-2005
                                                    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
  Closed Bearish Plays: VSEA 

Active Trader (Non-tech)
  New Bullish Plays:    OSG
  Bullish Play Updates: ACI, BMS, BA, EP, PDCO, RTN
  Closed Bullish Plays: MKC, USB

Stock Splits
  Announcements:        None


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

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

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

Varian Semi - VSEA - close: 33.10 chg: +1.68 stop: 33.53

Well that's frustrating.  The rebound in the SOX semiconductor 
index and a new upgrade for VSEA on Friday was enough to send 
shares soaring to $33.78 early Friday morning.  Shares failed at 
the 100-dma and 200-dma but it was enough to stop us out at $33.53 
or break even.  

Picked on January 04 at $33.53
Gain since picked:      - 0.43
Earnings Date         01/27/05 (confirmed)
Average Daily Volume:      700 thousand
Chart =




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

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

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

Overseas Shipholding - OSG - cls: 54.65 chg: +1.29 stop: 51.75

Company Description:
Overseas Shipholding Group, Inc. ("OSG") is widely recognized as 
one of the world's most customer focused marine transportation 
companies providing high quality tonnage and value-added services 
to major oil companies and other major charterers around the 
globe. The Company is focused on identifying and meeting the 
needs of our partners and customers in a rapidly changing market.
(source: company website)

Why We Like It:
We have listed multiple shipping/oil-tanker stocks in recent 
watch lists and we've decided it's time to play one.  The whole 
sector was a big winner through late summer early fall last year.  
Then profit taking hit and the group decline throughout the whole 
month of December.  Now shipping stocks are on the rise following 
a new rally in crude oil prices.  Boosting interest even more was 
the earthquake/tsunami in Asia.  The massive quake reshaped the 
shipping lanes and ships are taking longer to navigate the 
lucrative routes, which raises demand.  We think OSG has put in a 
new bottom near the $51-52 level and technicals have already 
turned positive with the recent bounce.  OSG does have a bearish 
P&F chart so we've decided to use a TRIGGER at $55.51 to capture 
a breakout over the $55 level and its 21-dma and 100-dma's.  Once 
triggered we'll target a run towards $59-60.  

Annotated chart:


Picked on January xx at $xx.xx <-- see TRIGGER
Gain since picked:      + 0.00
Earnings Date         02/10/05 (confirmed)
Average Daily Volume:      614 thousand
Chart =


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

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


Arch Coal - ACI - close: 34.90 change: +0.04 stop: 32.49     

Once again ACI is trying to rebound from long-term technical 
support at its 200-dma.  Technicals are turning positive and its 
MACD has produced a new buy signal but ACI still has tough overhead 
resistance at $36.00.  We would suggest readers wait for ACI to 
clear the $36 level before opening new bullish positions.  
Remember, we want to close this play before ACI's Jan. 29th 
earnings report.

Annotated Chart:


Picked on December 13 at $34.71 
Gain since picked:       + 0.19
Earnings Date          01/29/05 (unconfirmed)
Average Daily Volume:       951 thousand
Chart =

 

---

Bemis Co - BMS - close: 29.45 change: +0.20 stop: 27.99 *new*

BMS has spent the last few days consolidating sideways between 
$29.00 and $29.70.  Fortunately, the daily, weekly, and P&F chart 
all still look bullish.  The P&F chart points to a $45 target.  
We'd be happy with a run towards the $32-33 region but BMS needs to 
clear round-number resistance at the $30 mark first.  Readers can 
look for a bounce from $29 or a breakout over $30 as an entry 
point. Just remember that we want to exit this play before BMS' 
Jan. 26th earnings report.  We're raising our stop loss to $27.99.

Annotated Chart:


Picked on December 22 at $29.22
Gain since picked:       + 0.23
Earnings Date          01/26/05 (confirmed)
Average Daily Volume:       411 thousand
Chart =


---

Boeing - BA - close: 50.91 change: +0.28 stop: 49.95 

There has been a lot of news on BA recently with the U.S. and E.U. 
planning to back away from litigation over the BA and Airbus 
rivalry.  Plus, BA has decided to drop its 717 commercial jet 
program citing weak demand for the model.  Through all the 
headlines shares of BA continue to consolidate above support at the 
$50.00 mark and its 200-dma's.  The intraday bounce from $50.00 on 
Friday looks like a bullish entry point for those traders brave 
enough to take it.  We do not plan to hold over BA's February 
earnings report.

Annotated chart:


Picked on January 12 at $51.94
Gain since picked:      - 1.03
Earnings Date         02/02/05 (confirmed)
Average Daily Volume:      3.2 million 
Chart =


---

El Paso Corp - EP - close: 10.66 change: +0.02 stop: 9.99

EP broke out over resistance at the $10.60 mark on Thursday with a 
strong performance in oil and natural gas giving the stock a lift.  
Our trigger to go long was $10.61.  Shares dipped back toward the 
10.50 level on Friday morning but traders bought the dip and now EP 
looks poised to hit new relative highs next week.  Technicals are 
positive and its MACD just produced a new buy signal.  Remember 
that we want to be out of this play before EP's late January 
earnings report. 

Annotated Chart:


Picked on January 13 at $10.61
Gain since picked:      + 0.05
Earnings Date         01/27/05 (unconfirmed)
Average Daily Volume:      3.9 million 
Chart =



---

Patterson Companies - PDCO - cls: 45.24 chg: +0.89 stop: 41.85*new*

PDCO continues to show great relative strength with a strong up 
trend all week.  Technical traders will also note that volume has 
been above average almost all week, which suggests there is more 
upside ahead.  Our initial two-month target was the $50 level but 
now after six weeks we're going to adjust our target to the $46.00-
48.00 range.  If PDCO can trade in that range we'll close the play.  
Currently the stock looks a little overbought so we'd watch for a 
dip back toward $44, which should be support.  We're raising the 
stop loss to $41.85. 

Annotated chart:


Picked on December 01 at $42.06 
Gain since picked:       + 3.18
Earnings Date          11/24/04 (confirmed)
Average Daily Volume:       378 thousand
Chart =


---

Raytheon Co - RTN - close: 36.76 change: -0.04 stop: 36.25

Thursday headlines that RTN had won a new Navy contract to work on 
the F/A-18 jets was not enough to spark any breakouts in the stock 
price.  Shares continue to consolidate sideways and under its 100-
dma.  From the looks of it RTN is going to hit the bottom of its 
trading range.  We suggest readers be cautious and look for a move 
back over $37.25 before considering new positions. 

Annotated chart:


Picked on January 12 at $37.25
Gain since picked:      - 0.49
Earnings Date         02/03/05 (confirmed)
Average Daily Volume:      1.7 million 
Chart =

 

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


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

McCormick & Co - MKC - close: 38.03 chg: +0.00 stop: 35.99

We are choosing to exit MKC early.  The stock just isn't moving 
fast enough for us to play it and earnings are coming up around 
Jan. 26th.  


Picked on December 14 at $38.15 
Gain since picked:       - 0.12
Earnings Date          01/26/05 (unconfirmed)
Average Daily Volume:       328 thousand
Chart =


---

US Bancorp - USB - close: 30.19 change: +0.09 stop: 29.49     

USB has been following the banking sector indices lower.  The good 
news is that USB and the BIX and BKX indices look short-term 
oversold and due for a bounce.  Unfortunately, per our strategy, we 
had to close the play before USB's earnings report, which is 
expected on Tuesday.  

Picked on December 21 at $30.88 
Gain since picked:       - 0.69
Earnings Date          01/18/05 (unconfirmed)
Average Daily Volume:       4.2 million 
Chart =



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

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

None


=================================================================
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=================================================================
DISCLAIMER
=================================================================

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

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

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

PremierInvestor.net Newsletter          Weekend Edition 01-16-2005
                                                    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 16th, 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 16th
=========================================

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

FDEF First Defiance Fncl  Mon, Jan 17  After the market     0.50
MCBC Macatawa Bank        Mon, Jan 17  After the market     0.43


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

MMM   3M Company          Tue, Jan 18  Before the bell      0.91
ABT   Abbott Labs         Tue, Jan 18  Before the bell      0.67
AMD   Advd Micro Devices  Tue, Jan 18  After the market     0.09
AMTD  Ameritrade          Tue, Jan 18  Before the bell      0.19
BAC   Bank of America     Tue, Jan 18  ----- n/a -----      0.94
CHKP  Check Point Softw   Tue, Jan 18  After the market     0.29
FRX   Forest Labs         Tue, Jan 18  Before the bell      0.69
IBM   Intl Bus. Mach.     Tue, Jan 18  After the market     1.76
JCI   Johnson Controls    Tue, Jan 18  Before the bell      0.80
JNPR  Juniper Networks    Tue, Jan 18  After the market     0.14
LLTC  Linear Technology   Tue, Jan 18  After the market     0.32
MOT   Motorola            Tue, Jan 18  After the market     0.24
PCP   Precision Castparts Tue, Jan 18  Before the bell      0.88
RMBS  Rambus              Tue, Jan 18  ----- n/a -----      0.08
RYL   Ryland Group        Tue, Jan 18  After the market     2.08
STX   Seagate Technology  Tue, Jan 18  After the market     0.23
TER   Teradyne Inc.       Tue, Jan 18  After the market     0.02
WFC   Wells Fargo         Tue, Jan 18  Before the bell      1.06
YHOO  Yahoo, Inc.         Tue, Jan 18  After the market     0.11

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

DOX   Amdocs Ltd          Wed, Jan 19  After the market     0.3
AMR   AMR Corp            Wed, Jan 19  Before the bell     -3.10
ASML  ASML Holdings       Wed, Jan 19  During the market    0.26
COF   Capital One Fincl   Wed, Jan 19  After the market     0.67
EBAY  eBay Inc            Wed, Jan 19  After the market     0.34
FFIV  F5 Networks         Wed, Jan 19  After the market     0.21
FAST  Fastenal            Wed, Jan 19  Before the bell      0.40
GM    General Motors      Wed, Jan 19  Before the bell      0.91
JPM   J.P.Morgan          Wed, Jan 19  Before the bell      0.68
LU   Lucent               Wed, Jan 19  Before the bell      0.04
NWAC Northwest Airlines   Wed, Jan 19  Before the bell     -3.90
QLGC QLogic               Wed, Jan 19  After the market     0.45
QCOM Qualcomm Inc.        Wed, Jan 19  ----- n/a -----      0.27
SLM  SLM Corp             Wed, Jan 19  Before the bell      0.57
LUV  Southwest Airlines   Wed, Jan 19  Before the bell      0.08
SYMC Symantec             Wed, Jan 19  ----- n/a -----      0.22
WB   Wachovia             Wed, Jan 19  Before the bell      0.98
WM   Washington Mutual    Wed, Jan 19  After the market     0.75

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

ACS   Affiliated Cmptr    Thr, Jan 20  ----- n/a -----      0.73
BEBE  Bebe Stores         Thr, Jan 20  Before the bell      0.40
ELY   Callaway Golf       Thr, Jan 20  After the market    -0.31
CKFR  CheckFree           Thr, Jan 20  ----- n/a -----      0.31
C     Citigroup           Thr, Jan 20  Before the bell      1.02
DAL   Delta Airlines      Thr, Jan 20  ----- n/a -----     -5.38
ELX   Emulex              Thr, Jan 20  ----- n/a -----      0.19
GDW   Golden West Fncl    Thr, Jan 20  ----- n/a -----      1.06
HDI   Harley Davidson     Thr, Jan 20  Before the bell      0.69
IGT   Intl Game Tech.     Thr, Jan 20  Before the bell      0.33
KLAC  KLA-Tencor          Thr, Jan 20  After the market     0.59
LRCX  Lam Research        Thr, Jan 20  ----- n/a -----      0.53
KRB   MBNA                Thr, Jan 20  ----- n/a -----      0.58
PVN   Providian Financial Thr, Jan 20  ----- n/a -----      0.29
SAY   Saytam Computer     Thr, Jan 20  ----- n/a -----      0.23
SFA   Scientific Atlanta  Thr, Jan 20  After the market     0.37
STI   SunTrust            Thr, Jan 20  Before the bell      1.27
PGR   Progressive         Thr, Jan 20  Before the bell      1.67
UNH   United Health       Thr, Jan 20  Before the bell      1.08
XLNX  Xilinx              Thr, Jan 20  After the market     0.18

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

AT    ALLTEL Corp         Fri, Jan 21  Before the bell      0.83
ADP   Automatic Data Prc  Fri, Jan 21  Before the bell      0.42
BGG   Briggs Stratton     Fri, Jan 21  Before the bell      0.49
FO    Fortune Brands      Fri, Jan 21  Before the bell      1.21
KEY   KeyCorp             Fri, Jan 21  Before the bell      0.62
UTX   United Technologies Fri, Jan 21  Before the bell      1.27
WY    Weyerhaeuser Co     Fri, Jan 21  ----- n/a -----      1.14

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

Symbol  Company Name              Ratio    Payable     Executable

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
NCR   NCR Corp                    2:1      Jan 21st    Jan 24th
JOYG  Joy Global                  3:2      Jan 21st    Jan 24th
CPO   Corn Products               2:1      Jan 25th    Jan 26th
BRN   Barnwell Industries         2:1      Jan 28th    Jan 31st
CVCO  Cavco Industries            2:1      Jan 31st    Feb 01st

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

Earnings season hits full swing during this holiday-shortened 
trading week.  We'll also hear plenty from the various FOMC
governors.  The markets will also be digesting another round
of economic data.

==============================================================
                       -For-           
----------------
Monday, 01/17/05
----------------
... Markets closed ... Martin Luther King, Jr. Day


-----------------
Tuesday, 01/18/05
-----------------
NY Empire State Index for January
FOMC Governor Santomero speaks
FOMC Governor Stern speaks

-------------------
Wednesday, 01/19/05
-------------------
Federal Reserve's Beige Book Report
Consumer Price Index (CPI) for December
Housing Starts for December
Building Permits for December

------------------
Thursday, 01/20/05
------------------
Weekly Initial Jobless Claims
Leading Indicators for December
Philly Fed Index for January
Semi Book-to-Bill numbers
FOMC Governor Poole speaks
FOMC Governor Yellen speaks

----------------
Friday, 01/21/05
----------------
Michigan Sentiment numbers for January (preliminary reading)
FOMC Governor Stern speaks
FOMC Governor Bies 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

TM      Toyota Motor Corp          81.50     +1.29
MWD     Morgan Stanley             56.07     +0.57
MO      Altria Group               63.35     +1.05
XOM     ExxonMobil                 51.07     +0.52
DB      Deutsche Bank              87.42     +1.95
HMC     Hond Motor Co              26.65     +0.58

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

INTN    Intac Intl                 15.79     +1.48
AUGT    August Technology           9.13     +1.01
BOO     Collegiate Pacific         13.58     +1.27

---------------------------------------
Breakout to Upside (Stocks over $20)
---------------------------------------
  
KBH     KB Home                   109.41     +3.41
WTW     Weight Watchers            45.58     +1.08
FMD     First Marblehead           61.49     +1.24
IVGN    Invitrogen                 68.41     +1.69
SGMS    Scientific Games           25.87     +2.57
UTIW    UTI Worldwide              70.81     +1.99
ASKJ    Ask Jeeves                 30.04     +3.00

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

RDN     Radian Group               50.34     -1.47
CBH     Commerce Bancorp           59.51     -2.94
CREE    Cree Inc                   25.88     -9.19
ALB     Albemarle Corp             34.07     -1.23
CRDN    Ceradyne                   46.83     -1.87
NGPS    Novatel Inc                21.85     -1.95

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

JTX     Jackson Hewitt             22.95     -1.33
SSP     E.W.Scripps                48.26     -0.24

=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to remove@PremierInvestor.net
=================================================================
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

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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.

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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