Larry's Swing Idea For Wednesday Dec. 01/04:

CIGNA Corp. (NYSE:CI) has been selected as one of my top (long) swing ideas for this week.

After performing extensive technical and fundamental (valuation) analysis on CIGNA Corp. I believe its shares are currently undervalued, presenting traders with an excellent swing trading opportunity.

As a result, I am rating the Company's shares "CI" a "Near-Term Buy" with a 15-day swing target at $74.00; based on a 3.4% (max.) return on investment.

As an option to buying "CI" long, consider buying this Company's call options (Sym:CILN); which trade on the Amex Exchange. 

Buying equity options allows a trader to: lower risk exposure (by reducing capital outlay); increase leverage (by reducing unit price); and can maximize short-term profitability.  Please read on for more details… 
 
CIGNA Corp.  (NYSE : CI)
Last Close: $70.02 on 1.1 million shares

After-Hours Close: $71.50  +1.48 on 44,500 shares

Index Membership/s: S&P 500  

Sector: Financial   Industry: Insurance  

Employees: 32,700   Market Cap: 9.4 Billion
Insider Ownership: 2.0%

Institutional Ownership: 88.8%
Shares Issued & Out: 134.2 Million
Company Information: www.cigna.com

Swing Strategy #1 > Buy "CI" (Long)

Swing Consensus: 100% Bullish / Near-Term
Target Return: 3.4%            Swing Target: $74.00
Trade Duration: 1 to 15 days

Buy:  CI  Above $71.50 (After Hrs. Close)     
Sell:   CI At Or Above $74.00

Protective Stop: 3% (Mental Stop: Below Entry Price)

Swing Strategy #2 > Buy Call Options "CILN"

Best Option Data: www.optionsxpress.com
Target Return: 100%+                     Strike Price: 70.00  

Option Type: Call                        Last Offer:  $1.50                
Position: At-The-Money                   Exchange:   Amex
Strike Month/Year: Dec. 2004         Duration: 1 to 15 Days

Buy: CILN "If" CI Trades Above $71.50

Sell:  CILN "If" CI Trades To $74.00
Protective Stop: 3% (Mental Stop: Based On Common)

Entry Tip/s:  "If" CI starts rising right after the opening bell, simply buy options CILN when CI trades above $71.50. Alternatively, "If" CI starts falling right after the opening bell on Wed. Dec. 01, 2004 wait about 10-15 minutes before buying the assigned options. Why? Because traders "may" take after-hours profits in the first 15-20 minutes of the regular trading session. "After" the first 20 minutes, CI "may" reverse direction and hit new intra-day highs.

Stop Tip: "Protective Stops" should always be written down and modified (raised/call or lowered/put) during the trading session, if necessary. This will ensure you maximize intra-day profit and minimize potential loss. This rule is very important and is one of the keys to long-term trading success.

Potential Risk Factors: bearish market conditions (sector price weakness), unexpected analyst downgrade/s, insider or institutional profit taking, bearish economic news 

For Best Results: When trading common (long), traders should initiate their positions during the pre-market, after-hours trading session; providing the common is trading above its assigned entry price. Hence, traders should take advantage of after-hours trading accounts.

Note: The swing trading strategy I use is based solely on the pricing of the underlying common stock for a reason. Novice traders find it difficult to follow volatile, intra-day option prices. This strategy has proven to be easier to follow and more profitable. Feel free to modify it, to suit your own needs. Thank-you!

Company Snapshot: CIGNA Corporation (NYSE:CI) is an investor-owned employee benefits organization in the United States. Through its subsidiaries, the Company is a provider of employee benefits offered through the workplace, including health care products and services, group life, accident and disability insurance, retirement products and services and investment management. CIGNA's principal subsidiary is Connecticut General Life Insurance Company. The Company operated in six business segments: Health Care, Disability and Life, Retirement, International, Run-off Reinsurance and Other Operations. In November 2003, CIGNA entered into an agreement to sell its retirement business, excluding its corporate life insurance unit, to Prudential Financial, Inc. The sale was completed in 2004. Also, the Company was incorporated in 1981 and is headquartered in Philadelphia, Pennsylvania USA.

Swing Catalyst: CIGNA Raises Outlook

After-hours Tuesday Nov. 30/04, Cigna Corp., one of the nation's largest providers of health insurance, raised its earnings guidance for 2004 and 2005, citing better management of runaway health costs and stronger-than-expected performance at its health care business. As a result, the Company's stock rose $1.48 or 2.1% to close at $71.50 on 44,500 shares traded in the extended session. Shares closed down 5 cents to $70.02 on 1.1 million shares traded during Tuesday's regular session on the New York Stock Exchange.

The Philadelphia-based health plan said it expects full year 2004 operating income before special items of $950 million to $975 million and full year 2005 operating income before items of $750 million to $825 million.  Cigna had earlier said it expects $925 million to $950 million for 2004, and $745 million to $810 million for 2005.

The Company spooked some investors in November when it gave a 2005 forecast below the consensus view. It then said it expected to earn $5.50 to $6.00 per share before special items. The Company didn't give an earnings-per-share prediction late Tuesday. However, Analysts polled by Thomson First Call forecasted earnings of $6.72 per share for fiscal 2004 and $6.13 per share for 2005.

CIGNA Corporation and its subsidiaries constitute one of the largest publicly owned providers of health care, disability, life and accident insurance benefits. Web site: http://www.cigna.com/.

Most importantly, I expect "CI's" relative strength and momentum to rise during the pre-market after-hours session on Wed. Dec.01/04.  I encourage traders to take advantage of lower pricing on common during the pre-market, after-hours session. Due to increased or unusual trading volume, CI "may" reach its swing target before noon E.S.T on Wednesday.

Larry's Tips:

In Consolidating Market: A simple money management system to use in a consolidating or range bound market, is to sell all of your options (at the market) once the underlying common stock reaches its assigned target price. Because stock prices tend to rise and fall in narrower ranges in consolidating market conditions, traders should take their profits as soon as possible. Traders should be disciplined and take small profits often, rather than risking capital over the short-term hoping to reap a big reward.

In Trending Markets: A simple money management system in trending markets is simply to sell 33% or 50% of your original option or common stock position as soon as your entry price doubles (incl. comm.). This way you're taking your profits off the table, reducing your risk exposure to zero, and enabling yourself to participate in future potential profits. Then sell the same percentage from options remaining for every unit price double thereafter. 

5 Percent Rule: Never risk more than 5% of your risk capital in one trade. If you stick to this rule like glue you will be successful. Swing trading is a numbers game and losing trades will "always" come. But, a wise trader will maximize profits from his winners, minimize loses on the bad trades, and always learns from his mistakes.