Monday, February 9, 2004
Issue Contents:
| 05:47 | U.S. Economic Calendar Key releases and earnings highlights. |
| 06:20 | Good Morning The week ahead. |
| 07:20 | Current Events Abdul Qadeer Khan. |
| 08:36 | Daily Swing Trade Today's stock setups. |
| 09:06 | Daily Swing Trade: FLEX Stock setup. |
| 09:11 | Daily Swing Trade: GM Stock setup. |
| 09:13 | Daily Swing Trade: JDSU Stock setup. |
| 09:17 | Daily Swing Trade: JNJ Stock setup. |
| 09:20 | Daily Swing Trade: LTD Stock setup. |
| 09:42 | Daily Swing Trade: NXTL Stock setup. |
| 10:22 | Big Picture: LNCR Earnings this week. |
| 10:25 | Big Picture: SIAL Earnings this week. |
| 10:38 | Big Picture: EXPD Earnings this week. |
| 11:06 | Big Picture: AIG Earnings this week. |
| 11:08 | Economic Data Summary of key releases. |
| 16:16 | Active Trader Transcript Real time forum log. |
Monday, February 9
Treasury Secretary John Snow to address a Cuban American audience in Miami about the economic embargo against Cuba. President Bush to speak about the U.S. economy, in Springfield, Missouri.
Earnings highlights include LNCR and conference calls with CSCO and XLNX.
- 10:00AM Wholesale Trade
- 11:00AM 4-Week Treasury Bill Announcement
- 12:30PM Chicago Federal Reserve Bank President Michael Moskow to speak about the bank's new Detroit branch at a groundbreaking event in Detroit.
- 1:00PM 3-Month Treasury Bill Auction
- 1:00PM 6-Month Treasury Bill Auction
Tuesday, February 10
Treasury Secretary John Snow to meet with local business leaders in Tampa and Jacksonville, Florida.
Earnings highlights include SIAL, EXPD, VIA.B and conference calls with VIA.B.
- 7:45AM ICSC-UBS Store Sales
- 8:55AM Redbook
- 11:30AM 4-Week Treasury Bill Auction
- 1:00PM 3-Year Note Auction
- 2:30PM Council of Economic Advisers Chairman Greg Mankiw to testify at Joint Economic Committee of Congress hearing on the Economic Report of the President, in Washington.
Wednesday, February 11
Earnings highlights include AIG, WFMI, MDT, KO, GRMN, DIS, CSC, CMCSA and conference calls with CMCSA, AIG, KO, SIAL, GRMN, MDT, CSC, and WFMI.
- 7:00AM MBA Purchase Applications
- 11:00AM Federal Reserve Chairman Alan Greenspan to give semiannual monetary policy testimony before the House Financial Services Committee, in Washington.
- 1:00PM 5-Year Treasury Note Auction
Thursday, February 12
Earnings highlights include BHI, NVDA, MAY, DELL, CEPH and conference calls with BHI, CEPH, NVDA and DELL.
- 8:30AM Jobless Claims
- 8:30AM Retail Sales
- 10:00AM Federal Reserve Chairman Greenspan to repeat monetary policy testimony before the Senate Banking Committee, in Washington.
- 10:00AM Business Inventories
- 11:00AM 3-Month Treasury Bill Announcement
- 11:00AM 6-Month Treasury Bill Announcement
- 1:00PM 10-Year Note Auction
- 2:00PM Treasury Budget
- 4:30PM Money Supply
Friday, February 13
Friday the 13th! Early close for the bond market due to President's Day holiday on the 16th.
Earnings highlights are N/A with a conference call with EK.
- 8:30AM International Trade
- 9:45AM Consumer Sentiment
So far in February, we survived Groundhog Day and full moon, but this week presents yet more challenges as we have a blockbuster Thursday in terms of earnings and the U.S. Economic Calendar, before Friday the 13th comes to pass.
On Monday, I will trade the first hour, and will be out of town in Seattle for the balance of the day.
On Wednesday, I am a featured speaker at a ScotiaMcLeod Direct Investing Investment Seminar. The topic is "Timing the Market with Exchange Traded Funds". If you happen to live in Vancouver and you're interested in iUnits, call 604.233.6633 to R.S.V.P. Grahame Lyons of Barclays Global Investors Canada and I will be speaking between 7:00PM to 8:00PM, with refreshments at 6:30PM.
This week's Thursday Night Report will chronicle a trip to Granville Island and some of Vancouver's wine shops as I meet my fate as a guest chef. I have been tipped off that the entree is going to be smoked Alaskan Black Cod. Hmm...there is disaster potential here, as I am not an expert on anything belonging to the family Gadidae or genus Gadus. Wine pairing suggestions are most welcome.
Well, at least we have President's Day off next Monday to recover.
Today's article appeared in the Economist Global Agenda, dated February 5.
(Economist.com) - Pakistan’s Proliferator-in-Chief
Abdul Qadeer Khan, Pakistan’s top nuclear scientist and the father of the “Islamic bomb”, has confessed to selling nuclear materials to Iran, North Korea and Libya. As proliferation scandals go, this one is hard to beat
AFTER years of bare-faced denials, the shocking truth, or at least as much of it as Pakistan’s government will admit to in public, has now come out. On Wednesday February 4th, after days of questioning, the country’s top nuclear scientist, Abdul Qadeer Khan, confessed to the president, General Pervez Musharraf, and then publicly, that he was guilty of trafficking nuclear materials to Iran, North Korea and Libya. He also submitted a plea for clemency, and the cabinet recommended a pardon, which duly came on Thursday. For in spite of the damage done to Pakistan’s reputation by the deliberate spreading of bomb-related technology, any attempt to hold Mr Khan accountable for what are claimed to be his private proliferation activities would be fraught with great risk for General Musharraf.
Mr Khan is still considered by many Pakistanis a national hero for fathering the “Islamic bomb”. He has also let it be known that he would have plenty of dirt to throw back at senior government and military figures if they tried to wash their hands of him completely and put him on trial. As it is, Mr Khan’s admissions so far are hair-raising enough.
It all started, he claims, in 1989 with Iran, before the two countries fell out over which side to back in the civil war in Afghanistan. Indeed, the trail of evidence that led Pakistan’s Inter-Services Intelligence agency to Mr Khan’s door, and has had one of his close colleagues, Mohammed Farooq, in detention since November, begins with names of suppliers given under diplomatic duress to the International Atomic Energy Agency (IAEA), the UN’s nuclear watchdog, by Iran last October.
Caught cheating itself last year, Iran blamed its suppliers for traces of bomb-usable highly enriched uranium found by IAEA inspectors on its secretly imported centrifuge machines. Names were handed on to Pakistan, which is still investigating financial links, some through the failed Bank of Credit and Commerce International, that could reveal more of what its nuclear freelancers (about a dozen scientists and military folk have been questioned so far) were up to.
Though suspicions had attached to Mr Khan for years, Pakistan’s government had always denied any wrongdoing. But the evidence from the IAEA is now unignorable. More of it came out after a shipment of centrifuge parts for uranium enrichment was intercepted on its way to Libya, hastening the surprise decision last December by that country’s leader, Colonel Muammar Qaddafi, to confess to a hidden nuclear programme of his own.
The IAEA’s chief, Mohamed ElBaradei, was taken aback at how much equipment and technology Libya had amassed; and all of it from what he has called a veritable Wal-Mart of black-market proliferation. Libya not only had names of contacts to find answers to after-sales scientific questions, but also the blueprint for a nuclear warhead. The most sensitive materials, parts and documents have now been flown to America for safekeeping. Some, including the bomb design, are thought to have come directly from Pakistan. The IAEA's inspectors would doubtless like to take a closer look at the country's nuclear programme, but on Thursday the government in Islamabad said it would not hand over any documents.
Though the network of middlemen and companies involved spans Europe, the Middle East, Asia and South Africa, Pakistan’s nuclear suspects are thought to have been at the centre of it. The nuclear programme was supposed to be under close military control. General Musharraf insists there was no official involvement, either now or in the past, in any of these transactions, which, he claims, were motivated by personal greed (official tales of Mr Khan’s national heroism have now given way to tales of his great personal wealth and many villas). The covert nature of Pakistan’s own bomb project, the general claims, left the scientists with too much autonomy, which they abused. But were they really just in it by themselves, for themselves?
Saudi Arabia and Libya were long thought to have financed Pakistan’s nuclear programme. Did that not qualify Libya for a bit of assistance in the other direction? Meanwhile North Korea appears to have got help with its enrichment efforts (which it now denies), and possibly also with warhead design, in return for supplying Pakistan with missile technology: working together on weaponisation would make sense, given that Pakistan’s Ghauri missile is a barely disguised version of North Korea’s Nodong rocket. All this smacks of official involvement at the highest levels.
For his part, Mr Khan may also not be telling the whole truth. He has reportedly contended in private that his proliferation activities had the support of two former army chiefs, General Aslam Beg and General Jehangir Karamat, though that has yet to appear in any official account. He also claims all such proliferation activities ended in the 1990s, conveniently before General Musharraf set up a National Command Authority over the nuclear programme in 2002 and promised that all proliferation concerns had now been addressed. Yet how then to account for centrifuge deliveries intercepted on their way to North Korea and Libya last year?
General Musharraf’s problems do not end there. Many Pakistanis do not want to see Mr Khan disgraced or else want to see the investigation extended to any senior military figures involved too. Mr Khan has said he acted to deflect western attention from Pakistan’s own nuclear programme (in 1990 America had cut off all military aid to Pakistan because of its then covert bomb-building) and, in the case of Libya and Iran, as a gesture of support for two fellow Muslim countries. The Islamist opposition in Pakistan has since called for a national strike to protest at Mr Khan’s humiliation. Many accuse the general of merely caving in to American pressure. Late last year General Musharraf survived two assassination attempts that were blamed on religious extremists, possibly in collusion with military or intelligence insiders. Punishing Mr Khan would not help with would-be assailants.
First, let's update Friday's picks.
BIIB/Biogen - Buy stop was elected and we would like to see it reach the first overhead target, the February 12 swing high at 45.00 within two days. Meanwhile, move the stop loss up to just above last Friday's low.
CPWR/Compuware - First upside target is hit. Either take your money, or move the stop loss up to just above last Friday's low. Target 2 is the January swing high at around 8.50.
BRCM/Broadcom - Did not break down below 38ish and holds support so far. Traders may want to monitor this in case there are intraday buy setups off the 10-minute charts, up to around the 42.00 area. On a swing trade basis, I think I can find easier buy setups...
GENZ/Genzyme - Is taking too long to reach the downside target. Pass.
IBM/International Business Machines - Would have liked to see downward thrust on some volume here, and in the absence of that today, it's time to move the stop loss down to around last Friday's high, and maybe exit if there is no downside continuation.
ETR/Entergy - Forms Bar 3 of the bull flag above the January 26 swing high. Traders who want to buy this higher risk trade should lower their buy alarm to last Friday's high and use a number just above last Friday's low if the buy stop is elected.. Since the pullback has been only three bars, using the 50% rule of thumb, it should only take 1.5 days to reach the upside target of last week's high IF the trend is still going strong.
FAST/Fastenal Co. - Sell stop was not elected and it did a strong reversal day. Pass on this for now.
HAL/Haliburton - First the downside target was hit, and now, it's stalled a little bit at the 20-day EMA where a group of Holy Grail buyers might show up. Traders who want to play this higher risk buy setup should have their alerts set a last Friday's high and the initial stop loss should be no lower than last Friday's low. The upside target is the January 30 swing high.
INTC/Intel - No downisde continuation for now as it bounces off the lower end of a big trading range in place on the weekly chart below.
I'll be uploading a few new picks over the next 10-15 minutes, so don't forget to hit the re-load button...
FLEX/Flextronics - Again, the cheapies, even though the setups aren't perfect, the masses are rushing in to scoop them up on a pullback to the 20-day EMA. Since this one already triggered on a swing basis last Friday, the intraday goal would be to scalp off the 10-minute chart in case it reaches the February 2 swing high, the upside target of this bull flag.
GM/General Motors - This one is hitting the 20-WEEK EMA right now in the bigger picture, but it's under the 20-day and 50-day MA. The little bounce last week forms a three-bar bear flag. Traders who want to short GM should have the sell alert placed at last Friday's low. The first downside target is the February 3 swing low. It's a small target, so reduce size to less than half. The 50% rule of thumb says that since the bounce has only been three bars, it should take no more than 1.5 bars to reach the downside target, IF the downtrend is intact.
JDSU/JDS Uniphase - This is another cheapie that the masses can come in and buy. It's the ugliest looking triangle but it's trying to hold the 20-day EMA below. Traders looking for a high risk buy can use last Friday's high as the buy alert, and use last Friday's low as the initial stop loss. The first upside target is the February 2 swing high.
JNJ/Johnson & Johnson - This is not the most exciting or glamourous stock, but this is a high-risk one day pullback in an uptrend. Traders who want to buy JNJ should set the alarm at last Friday's high, with the initial stop loss placed just above last Friday's low. IF the buy stop is elected, I think it would be good to see it close ABOVE 54.85 before taking it home overnight.
LTD/Limited Brands - This is the first pullback since the breakout. Traders who want to pursue this higher risk buy setup should have alarms at last Friday's high. The initial stop loss should be last Friday's low, and just like JNJ, we need to see this close well, above 19.45, in order to take it home, if the trade is elected.
This is our last idea for today.
NXTL/Nextel Communications - This is the type of chart that a lot of investors will find, draw the line and then go for the "breakout", after the 50-day MA "holds". My suggestion is to try to take pieces out of it on an intraday basis instead of placing too much faith in it's ability to go the distance. While it might, the odds of a fake breakout is not low.
LNCR/Lincare Holdings - Earnings out today. Longer term, you can see on this monthly chart that it spike and reversed, and is now holding onto the lower edge of a potential rising wedge.
On the daily chart, I have outlined a zone of resistance overhead with the two horizontal dotted lines. Seems like it's been sideways since the big crash down from the last quarter and is waiting for more news.
SIAL/Sigma-Aldrich - An important test of top on the weekly chart. Would like to see it hold above the 58 level for upside prospects to continue.
If we view this test of top in the context of the monthly chart, and we can see why it's important that it can hold here. Maybe a lot of investors have bought what they would characterize as a "breakout" above 58, and if they are disappointed, they turn into -- that's right -- sellers.
EXPD/Expeditors Intl. - This monthly chart shows a slow and griding uptrend. Note how the bars overlap by a significant amount? Talk about slow, but hey, at least it's still going up. And now, a pending test of top just as earnings are due out.
Here's the weekly chart, with support and resistance marked out with the blue horizontal dotted lines.
Daily chart shows that this is not a high volume trader, but investors are going for the "breakout" and then a test of the old swing high in the 41 area.
AIG/Amer Intl Group - Weekly chart held support on a tiny pullback.
Daily chart formed a classic bull flag into the 20EMA a week ago that hit target.
Wholesale Trade Inventories +0.6%
(Econoday.com) - Wholesale trade inventories rose 0.6 percent in December after rising 0.5 percent in the previous month and now stand 2 percent higher than a year ago. Inventories for durable goods were up 0.9 percent in December, but only 1.3 percent higher than a year ago. In contrast, nondurable goods inventories rose 0.1 percent in December, but were 3.1 percent higher than last year. At the same time, wholesale trade sales rose 1 percent in December and are 8 percent higher than a year ago. Thus, despite the steady gains in inventories, the inventory-to-sales ratio decreased to 1.17 in December 2003 from 1.24 in December 2002. The strength in sales suggests that inventories could pick up pace and this would bode well for production in coming months.
3-Month Bill Treasury Rate 0.920%
(Econoday.com) - The 3-month bill rate was unchanged in Monday's auction at 0.920 percent, reflecting steady expectations for short-term interest rates. Following Friday's weak employment report, there appears to be no risk that the Federal Reserve will begin raising rates over the next three months. The bid-to-cover was strong at 2.27 vs. 2.30 last week.
6-Month Bill Treasury Rate 0.990%
(Econoday.com) - The 6-month bill rate inched 1 basis point lower in the latest week, at 0.990 percent. The bid-to-cover was extremely strong at 2.47 vs. 2.12 last week. The results reflect steady expectations for short-term interest rates. In fact, the 1 basis point decline in the week is consistent with a reduced risk of Federal Reserve tightening over the next six months.
Real time forum log.
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