Wednesday, November 5, 2003
Issue Contents:
| 08:39 | Paul's Watch List Stock picks for intraday and swing trades. |
| 08:43 | Good Morning Waiting to exhale. |
| 09:00 | Daily Swing Trade This is our swing trade setup for today. |
| 09:24 | [TYZ3, USZ3, Daily] T Bonds and Notes A look at the 10 and 30 Year Treasuries. |
| 12:22 | Economic Data Roundup A summary of today's key releases. |
| 13:24 | Bond Market The big picture. |
| 13:36 | China and Jobs Shades of Ross Perot. |
| 16:16 | Active Trader Transcript Real time forum log |
| 16:17 | Earnings: CSCO Cisco Systems reports first quarter earnings. |
This is Paul's intraday and swing trade watch list for Wednesday. He will review the setups for the Real-Time Trading Group at around 11AM Eastern.
BUY SCALPS:
- PAYX @ 39.02
- AWE @ 7.22
SHORT SCALPS:
- WB Intrday Entry
Prices above are used as ALERTS to look for intraday entries. If you need additional ideas, don't forget that we have automated Stock Scan Lists as well.
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This is the busiest week we've seen on the U.S. Economic Calendar in a long time, with plenty still to come before Friday's Employment Situation.
Market participants will be waiting earnings from CSCO and QCOM after the market, while five Federal Reserve officials will be giving speeches, including FOMC Chairman Greenspan, who will testify before the Senate Banking Committee on the condition of the banking industry at 10:00AM.
We are carrying over yesterday's picks.
CSCO Daily: We know that earnings come out after the bell, so if there is a failure on the test of top, aggressive traders will need to be positioned before the close today. I always hate trading around events, but it's a personal preference, because if you play them as a policy, you will get both the ups and downs, perhaps making it worthwhile as a long-term strategy.
To get a head start off a potential catalyst in case the test of top fails on the weekly chart, the plan here would be to get wait a few minutes if yesterday's low is broken, and then BUY NOVEMBER 22.50 PUTS, CYQWX with an initial stop loss of $22.50.
The negative here on CSCO is that the ADX on the daily and weekly charts do NOT have extreme ADX readings for the symbol and timeframes, and there is room for upward movement.
MEDI Daily: Buy alert is moved down to $25.75. If this price is hit, we will wait a few minutes for the smoke to clear and BUY NOVEMBER 25 CALLS MEQKE with an initial stop loss at $25.00.
SINA Daily: NO CHANGE IN SETUP except we would be looking to enter intraday off a 15-minute chart after a break of yesterday's low of $40.67. If it closes in our favor, we will swap it for NOVEMBER 45 PUTS NOQWI about 20 minutes before the close.
We will leave NTAP and SNDK alone for today.
[TYZ3, USZ3, Daily] T Bonds and Notes
Let's update the daily charts from last week.
TYZ3 Daily: No change. Triangular congestion area continues while trading range decreases.
USZ3 Daily: Same as TY. The bottom line is that we are waiting for resolution of this congestion area relative to the weekly and monthly charts. As the trading range narrows, we are careful not to overtrade intraday.
All quotes are from Econoday.com:
The U.S. Treasury announced a smaller-than-expected $57 billion refunding program for the fourth-quarter, consisting of $24 billion in 3-year notes, $16 billion in 5-year notes, and $17 billion in 10-year notes. There were no changes to the current calendar. Expectations had centered on a $60 billion total. The smaller total could reflect higher projections for tax receipts given the stronger economy or perhaps reluctance at the Treasury to over burden the market with supply. The Treasury noted that changes in the mix of issues put in place in April are giving it adequate capacity to accommodate the anticipated increase in issuance. The 3-year note will be auctioned on November 10, the 5-year on November 12 and the 10-year on November 13. The issues will settle on November 17. The Treasury estimates it will borrow $117 billion in the fourth quarter and $160 billion in first-quarter 2004. -- Mark Pender
The Reserve Bank of Australia surprised analysts and raised its key interest rate by 25 basis points to 5 percent. In its statement, the Bank said that it was doing so in part because of rebounding world economic growth but also to cool a home lending boom. The Australian dollar rose to a six year high while equities slumped on the news. -- Anne Picker.
Note that interest rates are rising around the world, as it has been in Canada, and that's one reason for the weakness in the Dollar, because higher interest rates attract money flows. Tomorrow, the Bank of England and the European Central Bank will be making announcements on interest rates as well.
MBA Purchase Applications 404.3
The Mortgage Bankers purchase index bounced up sharply, rising 11.1 percent to 404.3 in the week ended October 31. The rise indicates improved demand to buy homes. The refinancing index edged 0.3 percent higher in the week to 2,319.4, reflecting steady rates for 30-year mortgages.
ISM Non-Manufacturing Index 64.7
The ISM non-manufacturing survey for October showed strong activity in the U.S. economy -- and turned out higher than expected by market players. The business activity index increased to 64.7 in October from an already high level of 63.3 in September. This index is akin to the production index in the ISM manufacturing index. Other components were also very healthy. The new orders index jumped almost five percentage points to 64.4 percent and even the employment index rose nearly four points to reach 52.9 -- a level over the 50 percent mark which means that employment grew during the month.
Factory Orders +0.5%
Factory orders were up 0.5 percent, about what had been expected by analysts. Durable goods orders jumped 1.1 percent, up from the original estimate of an 0.8 percent increase.
What's of note from both the Factory Orders and the ISM reports was the fact the only area that is not growing is inventories, telling us that good sitting on the shelves are going out the door now.
In case you missed it, this is our long-term bond analysis. Nothing has changed since we last updated.
Just got an email from Michael Friesen:
On the market/economic psychological front, check out Jon Markman's (MSNBC's) archive of e-mail he received on an article he wrote:"Letters to SuperModels about China and U.S. jobs - Nov 5, 2003"
From many of the writers' tones, it gives further evidence that the psychology of the US could turn quite protectionist in the next few years. Remember Ross Perot and "That giant sucking sound?"
You know, I don't care if I get hate mail for writing the following but I'm personally just so sick of hearing how a country that has more than a billion culturally non-homogenous people is going to somehow suddenly get rich, take over the world and do us all in. The only thing the Chinese have "conquered" in the last 100 years is ... TIBET! Crikey!
Besides, there are philosophical questions to be asked:
- Is it OK to have more than one really rich country in the world?
- Is it OK to have a large non-White rich country in the world?
- Is it OK to have a large non-Democratic rich country in the world?
- There must be room for us all, right?
- Isn't a predominantly Buddhist nation where people are working 24/7 too tired to wage jihad like the poor Muslim nations?
- Wouldn't it be good if there are a billion people who we can sell our goods and services to?
- Who will buy all the QCOM cell phone services?
- Maybe we can try to support our own manufacturing base by buying goods made in North America, but dammit, we would have to pay 10 times as much, stop going to Walmart and those dollar stores!
I could go on all day, since I might have some insight into the cultural issues, since I'm Chinese, but I'm too busy working...
Real time forum log
Click on the title above to expand this document.
Visit the Cisco Newsroom for the full report:
SAN JOSE, Calif., November 5, 2003 - Cisco Systems, Inc., the worldwide leader in networking for the Internet, today reported its first quarter results for the period ended October 25, 2003.
Net sales for the first quarter of fiscal 2004 were $5.1 billion, compared with $4.8 billion for the first quarter of fiscal 2003, an increase of 5.3 percent, and compared with $4.7 billion for the fourth quarter of fiscal 2003, an increase of 8.5 percent.
Net income for the first quarter of fiscal 2004, on a generally accepted accounting principles (GAAP) basis, was $1.1 billion or $0.15 per share, compared with $618 million or $0.08 per share for the first quarter of fiscal 2003, and compared with $982 million or $0.14 per share for the fourth quarter of fiscal 2003. Pro forma net income for the first quarter of fiscal 2004 was $1.2 billion or $0.17 per share, compared with pro forma net income of $1.0 billion or $0.14 per share for the first quarter of fiscal 2003, and compared with $1.1 billion or $0.15 per share for the fourth quarter of fiscal 2003. A reconciliation between net income on a GAAP basis and pro forma net income is provided in a table immediately following the Pro Forma Consolidated Statements of Operations.
"We've begun our fiscal year with a solid quarter of continued operational excellence and year-over-year growth," said John Chambers, president and CEO, Cisco Systems. "We saw strength across our core switching and routing businesses, as well as traction in our advanced technologies. The service provider and public sector segments in particular, continue to be solid markets for our products."
Chambers continued, "The business and technology strategies we put in place 18 to 36 months ago are showing tangible momentum. I am confident our strategies and strong execution throughout the downturn have positioned us well for future growth."