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Begin part 2 of 2

FRIDAY

The unemployment report has been moved to next week, so Friday is without any scheduled economic data. As it is a Friday after a holiday, even though it is the first trading session of the new year, we don't expect much in the way of volume. That does not mean no action, just not much volume. With fund managers on holiday still that means there may not be any change in portfolios of note until the following week. At that point we will get a better view as to what fund managers favor near term.

Thus while Friday may be more of a sleeper session, the following week could be very interesting so to speak as more money is put to work and moved around in the market. The recent trends, despite a few sessions of NASDAQ and small cap leadership, still favors the large caps. That is why we are going to be looking at those names mentioned above as well as others to see if money moves into them. It is not a one-session blitz that is then over. We are looking at another year here, and want to keep our investing in somewhat of a longer perspective than the day-to-day noise we are pelted with. For now one of the current strong trends is large cap movement, and we are going to be looking at those in the coming week. At the same time we are going to watch NASDAQ continue to consolidate and provide buying opportunities when those bases are ripe for the breakout.

Getting back to what to expect for the year, we are looking for continued solid economic growth. There is virtually no one talking about this recovery in terms of a long lasting economic expansion. It has mostly been discussed as a flash in the pan due to stimulus that has run out and deficits that are supposedly going to jack up interest rates, choke off recovery, and leave us all with deficits that will hound us to the end of recorded time. Something like that, at least. To those around or listening in the 1980's, that was the prognostication as well. Everyone doubted the power of Art Laffer's supply side theories of lower tax rates and reduced government regulation leading to economic boom. While the Clinton administration can be lauded for not overspending, that is all it took to turn the economic powerhouse created in the 1980's into surplus city. Clinton did nothing proactively, just knew enough to stay out of the way. That in itself was quite sage given the temptations to meddle. Recall that the 1980's Congress spent $1.30 of every $1 brought in. Tax revenues skyrocketed but so did spending. When Clinton and the 1990's Congress controlled their outlays, money was everywhere. They, of course, after beholding their bounty, started new programs that busted the budget when the Fed pooped on the party.

Now we have true tax reform underway. It should be no surprise to anyone that there is more coming in the form of social security reform and in other areas. The big entitlements are just not working and have to be steered toward more market based methods of funding. Government regulation is a mixed bag; some areas are getting better, others worse. If they continue to relax and allow business to do business, the foundation for an extended economic expansion is in place for 2004 and beyond. We still think we are going to see an explosion of job creation in the new year, but not in manufacturing. We still view the rest of this decade with excitement that from the ashes of the collapse another solid expansion rises as it did in the 1980's and again in the 1990's. No one thinks it can happen again, but the same foundations are being put in place.

The market will rally and consolidate in such a situation. No 80% runs straight up; that is good because that just sets up crashes. This past year was great in how the market consolidated its gains and continued to move up in a more orderly manner. The start of 2004 may be rocky after an early surge as the market continues its run but then hits headwinds at those former tops and consolidation levels.

Support and Resistance

NASDAQ: Closed at 2003.37
Resistance: The March/August up trendline (2008) is some potential resistance. The January 2002 double top (2044 to 2099).
Support: December high (2000), November high (1992). The 10 day MVA and the 18 day MVA (1978, 1965). The 50 day MVA (1936). 1875 to 1880 is the bottom of the November range.

S&P 500: Closed at 1111.92
Resistance: Minor resistance at 1115. 1150 to 1175, the early 2002 double top.
Support: 1100 represents some early 2001 lows and 1106 from a May 2002 top. The 10 day MVA and the 18 day MVA (1097, 1087). 1080 from February 2002 lows. November high (1061.40-1064).

Dow: Closed at 10,453.92
Resistance: 10,600 (March 2002 peak).
Support: 10,353 from May 2002 high. The 10 and 18 day MVA (10,321 and 10,211). 10,259 (January 2002 high). The exponential 50 day MVA (9962). The November high (9903).

Economic Calendar

12-30-03
Chicago PMI, December (10:00): 59.2 actual, 62.0 expected, 64.1 November.
Consumer confidence, December (10:00): 91.3 actual, 91.8 expected, 92.5 November (revised from 91.7).
Existing home sales, November (10:00): 6.06M actual (-4.6%), 6.33M expected, 6.35M October.

12-31-03
Initial jobless claims (8:30): 339K actual, 350K expected, 354K prior (revised from 353K).

THE PLAYS

In each report we prepare full write-ups for those that look ready to move. If the move has been made already we discuss the play in the summary table. The purpose is to focus on the next good movers. New pre-announcement plays are found in that section.

No new plays for Friday. Several current plays look ready to make moves.

Current ready to move: There are plenty. ALTI; AMZN; AXYX; CLEC; CYBX; EASI; GGG; KBH; LXK; MMSI; MBG; OSTK; SOV; TMWD; TUTS; WMS

WATCHLIST/ CONTINUING

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LEGEND

DATE: date play first appeared on report.

PLAY: Denotes the type of pattern or play.
Upside play types: A Wedge=Ascending triangle/wedge; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; PreAnn=Pre-Announcement split; PreSplt=Pre-split; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; DWedge=Descending triangle/wedge; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);

PIVOT=Buy point

Tgt=Target stock price for the play. Applies to stock and options.

Vol=Volume for the most recent session.

TgtV=Target volume to enter the play.

Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.

Upside Plays

Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop

AAP 12/18 Test 50 81.4 +0.38 80.12 88.25 387K 550K 78.32
Buy Not Issued.

ALTI 12/01 Dbl btm 2.63 +0.11 2.05 2.74 2M 1.2M 2.35
Current.

AMZN 12/24 Dbl btm 52.62 -0.21 53.82 64 5.3M 15M 50.65
Current.

APA 12/16 Test BO 81.1 -1.11 78.18 86 1.3M 1.2M 79.98
Current.

APOL 12/01 DB hdl 67.81 -0.19 70.72 82 1.8M 2.9M 66.05
Current.

APOL 11/22 DB hdl 67.81 -0.19 66.54 82 1.8M 2.9M 66.05
Current.

APPB 10/13 BO 39.34 -0.11 37.55 44.95 193K 750K 37.94
Current.

AXYX 12/30 Rv H&S 4.87 +0.08 5.04 6.32 190K 703K 4.62
Buy Not Hit.

BCR 12/17 Rv H&S 81.25 +0.33 80.93 92.95 168K 500K 78.72
Current.

BSX 12/17 Test 50 36.76 +0.22 36.62 42.12 2.7M 8.2M 34.74
Buy Not Hit.

CFC 12/04 Test BO 75.85 +0.42 81.41 87.75 1.3M 2.5M 79.22
Current.

CKSW 12/30 Test 50 4.08 -0.42 4.49 5.51 298K 450K 4.14
Current.

CLEC 10/30 Cup hdl 7.88 -0.23 5.54 6.94 103K 96K 7.48

CYBX 12/22 DB hdl 32 -0.15 32.88 39.48 269K 429K 31.22
Buy Not Hit.

DCOM 12/06 Test 18 30.76 -1.02 30.65 36.78 73K 184K 29.98
Buy Not Issued.

DE 12/16 A Wedge 65.05 +0.39 64.78 77.55 1M 2.2M 64.13
Current.

DTAS 12/09 Flat 9.32 +0.12 9.49 11.88 178K 517K 8.98
Current.

EASI 12/30 Test 18 55.06 -0.19 55.65 61 243K 400K 54.88
Buy Not Hit.

EBAY 08/02 PreSplt 64.61 +0.33 53.78 60 5.4M 9M 61.22
Current.

EBAY 03/08 BO 64.61 +0.33 40.04 46 5.4M 8M 61.22
Current.

EMBT 10/06 Flat 15.95 -0.03 11.24 13.38 184K 350K 15.24
Current.

EMBT 07/26 Cup hdl 15.95 -0.03 9.33 11.12 184K 400K 15.24
Current.

FALC 12/18 Flat 8.74 -0.17 8.58 10.35 362K 300K 8.24
Current.

GGG 12/20 FlyPlat 40.1 -0.16 40.55 48.75 79K 200K 39.42
Buy Not Hit.

GPRO 11/12 Cup hdl 36.47 +0.47 30.85 36.95 1.1M 1.1M 33.88
Current.

GRMN 11/24 Cup hdl 54.48 -0.27 54.38 62 318K 690K 53.58
Current.

GRMN 11/09 Cup hdl 54.48 -0.27 53.82 62 318K 690K 53.58
Current.

HAR 12/29 A Wedge 73.98 -0.24 73.25 80 285K 400K 70.39
Current.

HBIO 12/22 Cup 8.9 -0.27 9.75 11.78 158K 235K 8.98
Current.

HOLX 12/06 Cup 17.25 -0.25 16.32 19.65 166K 200K 16.57
Current.

HOV 12/16 Test 50 87.06 -1.14 89.21 97.55 702K 1.2M 87.22
Current.

IGT 09/16 Rv H&S 35.7 +0.02 29.05 34.55 1.5M 4.7M 35.05
Current.

JCI 12/13 A Wedge 116.12 +0.87 112.82 118.45 374K 550K 112.98
Current.

KBH 12/20 Cup hdl 72.52 -0.48 71.38 81.94 688K 1.5M 71.44
Current.

KSWS 12/09 Test 18 24.1 -0.56 23.65 27.06 253K 200K 23.74
Current.

KSWS 11/19 Test BO 24.1 -0.56 22.36 25.5 253K 225K 23.74
Current.

LEN 12/20 Test 18 96 -1.2 97.39 106 1.3M 1.7M 97.18
Current.

LXK 12/30 Rv H&S 78.64 +0.18 79.12 89 506K 2M 77.12
Buy Not Hit.

MALL 12/29 Test BO 16.23 -0.55 16.68 20 110K 170K 15.11
Current.

MBG 11/18 Cup hdl 44.72 -0.23 44.3 53 497K 1.8M 44.54
Current.

MMSI 12/29 Test 50 22.26 -0.2 22.11 26.55 195K 260K 20.68
Current.

NTST 12/06 Test BO 15.35 +0.12 14.42 17.28 96K 215K 14.68
Current.

OSI 12/09 Test 18 44.21 -0.42 45.25 54.32 325K 891K 44.02
Buy Not Hit.

OSIS 12/01 DB hdl 19.21 -0.35 19.69 23.62 68K 365K 18.88
Current.

OSTK 12/11 Test BO 19.87 -0.09 20.35 24.45 297K 658K 18.93
Current.

PCAR 12/02 Dbl btm 85.12 -0.51 82.88 95 613K 1.4M 79.47
Buy Not Issued.

PMTI 12/16 Dbl btm 10.52 -0.32 9.42 11.25 77K 180K 9.98
Current.

PSSI 11/19 Cup hdl 12.06 -0.4 10.26 12.95 445K 779K 11.12
Current.

PX 12/11 A Wedge 38.2 +0.18 37.47 40 906K 1M 36.57
Current.

QCOM 12/11 Cup hdl 53.93 -0.45 50.61 58.25 5M 12M 51.96
Current.

QLTI 12/20 Test BO 18.85 -0.35 19.32 23.22 304K 1.2M 18.04
Buy Not Issued.

ROST 12/06 Test 50 26.46 -0.23 26.96 31.19 1.2M 1M 26.12
Current.

ROST 11/20 Test 50 26.46 -0.23 27.29 31 1.2M 1M 26.12
Current.

SBUX 07/30 Cup 33.16 +0.45 30.35 36.75 2.9M 6M 31.32
Current.

SBUX 07/01 Cup 33.16 +0.45 26.3 30.94 2.9M 6M 31.32
Current.

SFY 12/08 Cup 16.85 -1.15 15.38 18.55 180K 200K 16.78

SHFL 11/22 Cup hdl 34.52 -0.67 31.47 37.55 241K 425K 34.44
Current.

SLXP 12/02 Flat 22.68 +0.14 20.29 24.55 160K 316K 21.72
Current.

SOV 12/13 Test BO 23.75 +0.08 24.12 28.95 1.1M 2.7M 22.38
Buy Not Issued.

STEL 12/18 Cup hdl 9.92 -0.07 10.87 13.12 63K 178K 10.11
Buy Not Hit.

SYK 12/29 A Wedge 85.01 +0.21 84.55 97.35 648K 745K 81.94
Buy Not Issued.

TKTX 12/02 Flat 15.61 -0.04 14.36 17 459K 410K 14.14
Current.

TMWD 12/30 Test 50 8.38 +0.18 8.42 10.15 538K 880K 7.69
Buy Not Hit.

TOL 12/30 Test 18 39.76 -0.39 41.44 49.75 811K 1.2M 40.22
Buy Not Hit.

TRPH 12/11 Test BO 6.99 -0.03 6.49 7.68 306K 1.7M 6.48
Current.

TRPH 12/01 Test 50 6.99 -0.03 5.58 6.94 306K 1.7M 6.48
Current.

TSCO 07/29 Test BO 38.99 -0.55 28.06 31.44 343K 494K 37.94
Current.

TSCO 07/05 Test 50 38.99 -0.55 26.62 30 343K 500K 37.94
Current.

TSCO 06/03 Rv H&S 38.99 -0.55 23.42 27.62 343K 603K 37.94
Current.

TSCO 04/24 Cup hdl 38.99 -0.55 21.88 26 343K 603K 37.94
Current.

TSCO 04/03 Rv H&S 38.99 -0.55 19.3 22.19 343K 577K 37.94
Current.

TTI 12/13 A Wedge 24.24 -1.09 24.6 29.65 68K 165K 24.12
Current.

TUTS 12/29 Test 18 6.44 -0.04 6.78 8.48 61K 175K 6.28
Buy Not Hit.

UOPX 11/03 Test 50 68.93 -1.69 71.12 84 226K 315K 67.45
Current.

UOPX 10/25 Test 50 68.93 -1.69 68.95 82 226K 315K 67.45
Current.

UTSI 12/02 Cup 37.07 -0.24 39 44.55 929K 4M 35.98
Current.

UTSI 11/22 Test 50 37.07 -0.24 36.88 44 929K 6.4M 35.98
Current.

VAR 10/28 Cup hdl 69.1 -0.45 64.5 74.25 249K 1.1M 68.38
Current.

WFMI 12/18 Flat 67.13 +0.17 66.92 77 592K 1M 64.44
Current.

WMS 11/21 Dbl btm 26.2 -0.42 25.83 31.22 123K 650K 25.68
Current.

XTO 12/13 Test BO 28.3 -0.39 28.44 33.95 949K 1.4M 27.48
Current.

YELL 12/11 Rv H&S 36.17 -0.67 35.25 42.25 1.4M 1.3M 35.32
Current.

ZMH 08/09 Test BO 70.4 -0.5 51.12 59.55 1M 3M 68.65
Current.

Downside Plays

Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop

LOW 12/10 Put 55.39 +0.44 53.42 50.45 2.3M 4M 54.75
Current.

SMTC 12/13 Put 22.76 -0.2 21.25 18.54 747K 1.2M 22.18
Current.

TTC 12/15 Put 46.4 -0.55 45.15 42.51 126K 150K 47.05
Buy Not Hit.

Good Investing!
Jon L. Johnson and the Stock Split Report Staff.

All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.

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