Option Investor

Daily Newsletter, Tuesday, 03/09/1999

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The Option Investor Newsletter         Tuesday  3-09-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com

Also provided as a service to The Online Investor Advantage

Published three times weekly, Sunday, Tuesday, Thursday evenings.
MARKET WRAP  (view in courier font for table alignment)

        3-09-99         High      Low      Volume   Advances Decline
DOW     9693.76 - 33.85 9798.93  9669.89   798,584k  1,344   1,664
Nasdaq  2392.94 -  4.68 2433.37  2385.52 1,032,400k  1,721   2,244 
S&P-100  640.93 -  2.14  648.89   639.22    Totals   2,985   3,833
S&P-500 1279.84 -  2.89 1293.74  1275.11             43.8%   56.2%
$RUT     399.20 -   .86  402.55   398.13
$TRAN   3300.85 + 12.45 3319.28  3270.49
VIX       25.26 +   .28   26.08    24.27
Put/Call Ratio      .58

Dow 9800 - Missed it by that much!

Slipping at the open, the market headed south as bears licked 
their chops hoping it was a sign of things to come.  Yet victory 
was snatched from their paws as the market rallied midday.
Continued enthusiasm over Intel dodging the DOJ trial helped 
them climb early in the day as well as news that MSFT might do 
the same.  A article in the Seattle Times stated that MSFT might 
settle and is discussing it with the Justice Dept.  Traders
were quick to assume the best and piled into MSFT sending it
to an intraday high of +5.75.

The techs combined with a strong performance by IBM and AXP
drove the markets higher and we came so very close to 9800.
At 9798.93 traders could almost taste.  Yet, next century
mark to fall to the bulls was spared as rumors re-surfaced
that Intel might pre-warn about this quarters earnings.  A
popular version circling the ranks had Intel forcing their
sales staff to cram orders into this quarter to meet the

AMD's warning, the second in the last month, did little to
help the situation.  After new chip designs resulted in 
lower productions, AMD stated that they would miss latest
shipment goal by 500,000 units.  A "significant loss" would
result for this quarter.  Combine a new worry that DRAM 
chips might be under pricing pressures as analysts estimate
a possible glut and you get a one-two punch that knocked
INTC for a loop.  As the chip maker fell, it pulled the
entire industry with it, and some say the Nasdaq.  Not to be 
left alone, the Dow quickly followed suit and followed the 
Nasdaq lower throughout the rest of the day.

Market analysts say this is to be expected as we digest 
last week's gains.  Many had predicted a stronger sell-off
and some felt a return to the 9400 - 9200 trading range.
If nothing else a bounce off of 9400 as new support.
But while the bulls are disappointed we haven't started 
the next charge to 10,000 yet, the bears shouldn't 
expect too much either.  You will notice that since last 
Thursday's and early Friday morning's surge we have formed 
a new bottom at 9660.  It is still to early to tell and 
this may be just wishful thinking, but new support in the 
mid 9600s is one more step forward to the elusive 10K mark.

Of course no major market move could occur without the 
obligatory appearance by everyone's favorite Prudential
analyst, Ralph Acampora.  Ralph boldly stepped forward
to tell us that the 5% to 10% correction he had forecast
for the Dow and S&P had occurred.  Plus the blue-chips
index components look "spectacular" -(Reuters).  Ralph 
said that their interim target for the Dow was 9800
(gee, thanks) and their long-term 1999 target was 11,500.

Whether you believe him or not, short term indicators 
are pointing that direction.  Even Greenspan in a speech
today confirmed that the economy is on track and despite
the fact that unemployment was at a 30 year low that there
was no obvious signs of inflation.  These are words that 
investors enjoy hearing over and over.  We remain concerned
over the continue trend in the advance/decline line.  It
seems like we mention it everyday, but long term, the 
market can not sustain this massive divergence.  

This week earnings watchers will be focused on CMGI and
ORCL as they report after the bell on Thursday.  

We continue to be cautious without a clear direction.
The market wants to go up and we will 10,000; but whether
it is this week or next month we don't know.  We have
entered the minefield of earnings warnings season and 
everyday is another opportunity for some company to drop
a bomb.

Remember, you don't have to be in the market everyday.
Sitting in cash gives you time to wait.
Pick your entry point and confirm both market and
stock direction.
Sell too soon.

Good luck, 


asst. editor.   

Market Posture 
As of Market Close - Tuesday, March 9, 1999 

                   Key Benchmarks 
Broad Market       Bearish/Bullish Last Posture/Since Alert 
DOW Industrials   9,200   9,500   9,694   BULLISH   3.5 
SPX S&P 500       1,225   1,280   1,280   Neutral   3.4 
OEX S&P 100         615     640     641   Neutral   3.4 
RUT Russell 2000    400     435     399   BEARISH   2.4 
NDX NASD 100      1,900   2,050   2,029   Neutral   3.4 
MSH High Tech       900   1,000     968   Neutral   3.5 

                   Key Benchmarks
Technology         Bearish/Bullish Last Posture/Since Alert 
XCI Hardware        800     900     867   Neutral   3.5 
CWX Software        600     650     644   Neutral   3.5 
SOX Semiconductor   350     420     372   Neutral   3.5  
NWX Networking      400     450     432   Neutral   3.4 
INX Internet        450     570     531   Neutral   2.19 

                  Key Benchmarks
Financial         Bearish/Bullish Last Posture/Since Alert 
BIX Banking         650     675     692   BULLISH   3.5  
XBD Brokerage       650     700     739   BULLISH   3.4 
IUX Insurance       600     625     638   BULLISH   3.5 
                  Key Benchmarks
Other             Bearish/Bullish Last Posture/Since Alert 
RLX Retail          850     880     921   BULLISH   3.4 
DRG Drug            775     795     812   BULLISH   3.5  
HCX Healthcare      775     795     808   BULLISH   3.5 
XAL Airline         320     330     339   BULLISH   3.2 
OIX Oil & Gas       230     250     237   Neutral   3.4 

Posture Alert

Market holding its gains after last week's breakout.  S&P 
100 and 500 both at key breakout levels and will serve as 
confirmation of the DOW's breakout.

A detailed description of our Market Posture and its 
applications can be found at:


Market Sentiment - By Pinnacle Capital Advisors

Is unavailable due to the Seminar in Denver today.
Thursday's newsletter will be the next update.

Please view this in COURIER 10 font for alignment

Index    Last    Mon      Tue  Week
Dow    9693.76  -8.47   -33.85 -42.32
Nasdaq 2392.94  60.51    -4.68  55.83
$OEX    640.93   4.08    -2.14   1.94
$SPX   1279.84   7.26    -2.89   4.37
$RUT    399.20   2.05    -0.86   1.19
$TRAN  3300.85 -24.39    12.45 -11.94
$VIX     25.26  -0.14     0.28   0.14

Stock   Price    Mon      Tue Week

CMGI    194.44  47.50    -5.25 42.25 Earnings are Thursday
PVN     117.00   2.38     7.50  9.88 New high
EMC     114.06   6.44     3.06  9.50 New super stock!
MSFT    161.81   4.06     2.81  6.87 Possible settlement
LGTO     56.00   3.94     1.50  5.44 Now we are moving
QCOM     79.75   1.19     2.00  3.19 New play
RNWK     92.13   4.50    -1.88  2.62 Profit taking
GE      106.00   1.12     1.19  2.31 Breakout!
LOW      63.69   0.75     0.94  1.69 Strong and steady
SBUX     59.81   2.13    -1.06  1.07 Consolidating
C        62.50   0.25     0.50  0.75 Financials were strong
TJX      34.31  -0.31     1.06  0.75 Retail is strong
WMT      94.00   0.19     0.56  0.75 Still climbing
MER      86.63  -1.13     1.81  0.68 Brokers are strong
MEDI     59.75   0.94    -0.69  0.25 New high
ANF      87.19   1.50    -1.31  0.19 Profit taking
CL       92.56  -0.50     0.50   .00 Holding recent gains
MWD      98.56  -1.06     0.69 -0.37 Brokers are strong
COF     134.56  -2.50     1.25 -1.25 Financials were strong
CMA      68.31  -1.25    -0.19 -1.44 Consolidating
HRB      49.94  -1.44     0.00 -1.44 Holding recent gains
PG       92.38  -1.00    -0.62 -1.62 Wait for entry point
BCST     90.00   1.69    -3.38 -1.69 Profit taking
SONE     67.25  -2.75     0.63 -2.12 Wait for upward move
SCH      78.31  -1.13    -1.56 -2.69 Consolidating
UTX     126.25  -2.06    -0.75 -2.81 Dow reaction

MCK      58.56  -2.25    -0.44 -2.69 Looking bad
CB       59.25  -1.00    -1.31 -2.31 Still falling
LHSG     38.94  -0.22    -1.53 -1.75
SNC      30.00  -0.38    -0.69 -1.07
CDWC     64.00  -1.50     1.00 -0.50 bounce
SMS      48.94  -0.50     0.00 -0.50
INTC    115.31   5.00    -4.31  0.69 Earnings rumors
RAD      39.25  -0.88     1.63  0.75 Should bounce off 10 dma
BMCS     41.13   2.63     0.31  2.94 Up fractionally
VISX     88.13   1.25     2.25  3.50 Dropped
TBH      71.63   4.00    -0.38  3.62 Volatile
WLA      72.25   1.88     1.75  3.63 Dropped
CSCO    105.31   3.75     0.75  4.50 Dropped
ELNK     65.25   4.19     1.00  5.19 Dropped
BBY      98.88   6.56     0.31  6.87 Dropped

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time. 
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.




VISX $88.13 +2.25 (+3.50)  After spiking up +19.25 last Tuesday 
on good news and an extremely high trade volume, we felt the 
stock would soon after return some of its spike.  By last 
Friday, VISX's trade volume returned to normal and we proceeded 
to add it as a put play on Sunday.  However, VISX has taken 
advantage of the rally in the markets that provided the backing 
it needed to hold on to its gains.  VISX hasn't given us a 
buy signal or an entry point.  So, we are dropping it as a 
put play.  

BBY $98.88  +.25  (+6.80)  Stock rallied strongly off of near 
term support at $90 and did not break down as we expected.  
Therefore, we are dropping the Retail play until the stock 
breaks below $90.

ELNK $65.25  +1.00  (+5.19)  Stock rallied strongly off of 
near term support at $60 and did not break down as we expected.  
Therefore, we are dropping the Internet play until the stock 
breaks below $60.
CSCO $105.25  +.75  (+4.44) Stock rallied strong above key 
support at $100 during Monday's big tech rally and therefore we 
are dropping it as a Put play until the networking company 
breaks below $100. 

WLA $72.25  +1.75 (+3.62) Stock closed above important 
resistance price of $70 and therefore we are dropping the Drug 
stock as a put play.


MSFT $161.81 +2.81 (+6.87)  From Sunday's newsletter, 
"Now's a good time to scale in" -- fat chance!  Microsoft 
left the gate yesterday in full gear, and didn't let up the 
pace today.  Volume was 22 million shares.  MSFT will split 
2:1 on March 26.  MSFT has not only started to run into its 
split, but was rumored to be in settlement talks with the 
DOJ to avoid prolonging the trial.  That helped MSFT with 
its gains today.  Wrong! Say other sources.  It may be 
dicey tomorrow if untrue, especially with today's mid-day 
market reversal.  Wait for upward market movement before 
starting a new play

EMC $114.06 +3.06 (+9.50) Upside breakout!  EMC traded through
its old high on Monday and got as high as $118.38 today.  In
fact, EMC bounced off of its old high at the open today.  One
article we read today attributed the surge to the raft of
positive comments by analysts after the new products meeting
last week.  The article thought that this was also a short
squeeze which only adds to the momentum.  EMC is on the cover
of this week's Business Week magazine, and coverage was
initiated on EMC by a Tokyo brokerage with an outperform
rating. Be prepared for profit taking.

C $62.50 +0.50 (+0.75)  Fear of the semiconductor industry 
spurred action today in the financials, with C as a 
beneficiary.  Volume was 9.8 million shares, slightly above 
average.  Though the market was slightly down, C held up 
well in today's action.  Sandy Weill, co-chairman of C, 
exercised stock options worth about $160 million last year.  
This won't affect the price.  Because of the instability of 
the broader market to hold its gains today, trading could 
be choppy, but good for C overall since its technical chart 
is still positive in all areas.  Confirm market direction 
before playing.
BCST $90.00 -3.38 (-1.69)  First, a slight correction from 
Sunday's newsletter:  Dr. Laura is already carried on BCST.  
That said, volume over the last 2 days has been a little 
off.  We aren't noticeably alarmed, but keep your eye on 
support of $87, the chart still technically positive.  
There is no news driving the price, only the gyrations of
the Internet group.  This is a good place to target shoot 
if your risk profile fits, or use stop limits to protect 
profits.  Otherwise, confirm market, sector and stock
direction, backed with volume before starting a new play.  
With only 5 million shares in float and 2 million shares 
traded daily, any inkling of volume really moves this one.

SONE $67.25 +0.63 (-2.13)  A momentum play only with thinly 
traded options, this has the potential for big volatility.  
Yesterday was a bit scary as volume spiked and SONE 
suffered a loss.  The good news:  SONE bounced off 
resistance of $66 and moved back up today.  MACD turned 
slightly negative which indicates a basing to us.  It may 
trade in this $66-70 range before moving up again.  HP is 
talking up their e-commerce strategy, which includes an 
alliance with SONE.  9.2 million shares are outstanding.  
Wait for volume to come into the stock, and confirm upward 
trend before making the play. 

***** Play updates continued in section two *****

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This newsletter is a publication dedicated to the education 
of options 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 or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter 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.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.

The Option Investor Newsletter         Tuesday  3-09-99  
Copyright 1998, All rights reserved. 
Redistribution in any form strictly prohibited.

PICK NEWS - CALLS (continued)

CMGI $194.44 -5.25 (+42.25)  Two weeks ago CMGI added +13.63.  
Last week, CMGI shot up +$29.56.  So far this week, CMGI has 
dwarfed those numbers.  It is up an additional +$42.25.  After 
exploding to a $47 gain on Monday, CMGI continued the trend 
by reaching an all time high of $226 in intraday trading on 
Tuesday.  But the markets turned mid-day and CMGI actually 
finished down -$5.25.  Not to worry though.  The company is on 
a rampage and maintains its popularity with investors.  It will 
announce earnings on Thursday March 11th.  First Call is 
predicting a loss of 22 cents versus a 15 cent loss a year ago.  
We are also awaiting a split announcement for the company.  It is 
at all time highs and has enough authorized shares for another 
2:1 even though the company split back in January.  As Thursday 
rolls around, be extremely careful!  We never suggest holding 
options over an earnings announcement.  Set your stop losses 
tight!  In other news, CMGI's Chairman and COE David Wetherell 
gave up his seat on Lycos' board of directors.  He felt that the 
$18 billion merger deal between Lycos and USA Networks was 
inadequate for Lycos shareholders.  He will now be free to work 
on a better deal for the company.  CMGI owns a 20% stake in Lycos.   

CL $92.56 +0.50 (+0.00) The market may 
have been down today, but CL retained its small gains on 
very strong volume. The stock never traded below 92 and is 
keeping well above its old resistance of $87.  Noontime 
brought good news for CL when James Dormer, analyst for 
MSDW, initiated coverage and gave it an "outperform" rating 
along with 3 other consumer stocks.  Colgate-Palmolive is 
being played as a split run candidate and a correction is 
in order.  CL does have 1 bln shares authorized and 292.8 
shares outstanding; certainly enough for another 2 for 1 
stock split! However, the last split occurred in May 1997 
at around $120, not in June 1998 at $65 (as previously 
reported).  Confirm market direction before entering a new

WMT $94.00 +.56 (.+75) WMT continues to tack on small gains 
this week, adding to last week's impressive jump. Yesterday 
it dipped a couple of dollars in late morning, allowing a 
nice option entry point. If you missed it, rest assured, 
there will be another chance. WMT is a steady but slow moving 
stock. A $7.12 weekly gain is a lot for such a stock and it 
may consolidate its gains a bit. Also the split is over a 
month away, on April 19, although there may be a small 
positive move toward the March 19 record date. In the news, 
the U.S. government filed a lawsuit against WMT for using a 
hiring questionnaire that asked applicants if they would need 
any accommodation to perform the required duties. The suit 
does not seem to be adversely affecting the stock. The trend 
is still up on strong volume.

PVN $117.00 +7.50 (+9.87) After PVN managed to close above 
resistance yesterday, investors jumped aboard in droves 
today and the stock blasted up another $7.50. Volume was more 
than twice the average. Yesterday's close above resistance 
was in spite of a downgrade by Paine Webber from buy to 
attractive. This stock is incredibly strong. Nevertheless, 
be sure to use stop loss protection if you can't watch it. 
The analysts are beginning to raise the dreaded "valuation" 

SCH $78.31 -1.56 (-2.69) By Friday's close, Schwab had gained 
over $7.00 in just 2 days, so some profit taking is not 
unwarranted. This may provide an opportunity to buy options, 
but please WAIT until the stock starts up again. It has a 
very high PE, and valuation downgrades or a general market 
pullback could accelerate the profit taking. On the other 
hand, this leading online broker's price is based on growth 
in online trading rather than previous earnings, so that is 
what to watch. Currently, growth is tremendous. 

MER $86.63 +2.19 (+1.07) After a pause for profit taking on 
Monday, MER resumed its climb today. It traded as high as 
$88.50, before closing at $86.63. A class action lawsuit 
filed on behalf of 1994 shareholders of MER stock was ammended 
to include new information. The stock plunged back then 
in response to risky investments MER had allowed Orange County 
to make against MER's own policy. News of this lawsuit was 
released after today's market close, so it remains to be seen 
what effect it will have on the current stock price.

MEDI $59.75 -.69 (.25) MEDI gapped up strongly at the open 
Monday to $61.44, a new high. It demonstrated its ability 
to top 59.50, the high it had tried 3 times to pass. (Topping 
an old high after 3 tries is usually a positive sign,) 
Although it has sold off in the last 2 days, it still managed 
to close ABOVE $59.50 today, and bounced off 58.50. It now 
shows support from $57.50 to $58.50.  Confirm market 
direction before playing.

TJX $34.31 +1.06 (+.75) TJX dipped a little twice yesterday 
on some profit taking--just enough to allow us a decent entry 
point. Today it set a new intra-day high of $34.63 and a 
closing high of $34.31. Based on its great earnings report, 
the continuation of good sales in February, and the positive 
comments from analysts, look for this one to move up further. 
Retail is strong.

CMA $68.31 (-1.44) CMA has started the week with two 
straight down days.  Not a real positive sign, but the stock
has held at support.  CMA gapped open last Friday and is very
close to filling that gap.  We could see a bullish bounce off
of the $67.50 range.  During these down days the volume has
been well below average, which tells us that CMA is 
consolidating gains, not selling off.  CMA's resistance is 
just above $70.  A break through this level on strong volume
would be very bullish.  

HRB $49.94 +0.00 (-1.70) When we added HRB as a call this
last weekend, we warned of profit taking.  Hopefully no one
has added positions to HRB as of yet.  We see the last two
trading days as positive for the short term prospects of HRB.
HRB traded in a very narrow range on Tuesday and seems to be
building some support in the $50 range.  The key breakout
would be above HRB's 52-week high of $51.63.

MWD $98.56 +.69 (-.38) MWD traded up on Tuesday after 
trading down on Monday.  After all is said and done, MWD
is pretty flat for the week.  Not too much of a surprise
considering the consolidation of the market these last two
days.  MWD did reach a 52-week intra-day high at just above
$100.  This is a key level technically and mentally for the
stock.  When we see a break above $100 on strong volume, we
could see a nice run.  MWD has support at the $92 level, the
site of its 25-dma.

RNWK $92.13 -1.87 (+2.63) RNWK had a wild ride today, along
with many of the Internet stocks today.  RNWK traded as high
as $97, but fell near the closing to $90, only to bounce a 
few dollars before its close of just above $92.  A bit of 
profit taking can only be expected after a move of over $22
in just seven trading days.  We still like RNWK and also
like that the $90 level has caused a bounce the last two
days.  RNWK is a good target shooting stock because of its
large intra-day moves.

UTX $126.25 -.75 (-2.81) UTX ran smack into $130 at the open on
Monday and promptly reversed course.  UTX is still above its 10
dma which is currently at $125.03.  In the absence of any news,
UTX will follow the Dow.  We also want to remind you of UTX's
trading pattern of the last several weeks.  UTX has been up one
week, and down the next, and last week was a down week.  We
haven't had any news on UTX.

LOW $63.69 +.94 (+1.69) LOW has traded to new highs on both
Monday and Tuesday.  It got as high as $65.06 before trading
down today.  On Sunday, we discussed the sector rotation into
retail, and that still appears to be happening.  We haven't had
any news on LOW, but then again slow and steady is the word.

LGTO $56.00 +1.50 (+5.44) LGTO appears to be riding the
momentum of the deal it announced last week with Yahoo!  LGTO
broke through its 50 dma today, and came close to it towards
the end of the day, but held.  It would not be a good sign if
it broke below its 50 dma which is currently at $54.92.  There
appears to be minor resistance on LGTO at around $60, but they
have already cleared the tough hurdles.

PG $92.38 -.63 (-1.63) PG could not hold above resistance.  It
made an attempt today, and got as high as $93.94, but could not
follow through.  PG is still above its 10 dma which is at $91. 
Morgan Stanley started coverage on PG today with a outperform
rating.  As we discussed on Sunday, we would look for PG to
trade through its old high of $94.81, before initiating any new

ANF $87.19 -1.31 (-0.19)  After posting gains every day last 
week and also on Monday, ANF finally decided to take a break.  
It gave back a mere -$1.31 in trading on Tuesday.  This could 
be your chance to buy on the dip.  We feel that ANF is a prime 
split candidate since it is trading in blue sky territory.  It 
also has plenty of authorized shares to do so.  We are just 
waiting for the announcement.  But until it comes, there are 
no reasons why ANF can't continue heading higher.  Use stop 
losses to protect your profits along the way.

COF $134.56 +1.25 (-1.25)  Last week, COF added +$8.18 in 
trading.  That may have been "too far, too fast" in some of 
the brokerages' eyes.  On Monday, PaineWebber downgraded the 
stock to attractive from buy.  Capital One proceeded to fall 
-$2.50 on the day.  However, COF showed its resiliency to the 
negative news by heading right back up on Tuesday.  The stock 
continues to move closer to its all time high of $140 set 
back in January.  Since it seems as if Greenspan will 
not raise interest rates anytime soon, look for COF to keep 
moving higher.    

SBUX $59.81 -1.06 (+1.06)  The green markets have greatly 
helped SBUX reach new heights.  On Monday, it soared as high 
as $61.00 to break its previous all time high of 59.95 set 
way back in July.  On Tuesday, it dipped only -$1.06 after 
adding +$8.00 in the previous six days of trading.  We expect 
SBUX to quickly resume its jaunt higher.  It will split 2:1 on 
March 19th and should pick up its momentum.  Wait for the stock 
to edge back over the $61 level before heading back into a 
new play.  


RAD $39.25 +1.63 (+0.75)  On a short-term scale, Rite Aid 
has had a habit of bouncing up into its 13 DMA, then 
heading south again.  It collided today, so we expect a 
bounce south tomorrow or Thursday.  There is no news moving 
the price, but a block trade of 100,000 shares crossed at 
$38 today.  The overall trend is still down, with a very 
ugly chart.  Confirm downward direction before playing.

LHSG $38.94 -1.53 (-1.75)  There is no news, but we still 
have fallout from insiders desiring to sell 3.3 million of 
their shares.  When insiders want to unload this much, it's 
never good news.  The technical chart is substantially 
negative (excepting slightly positive momentum).  The 
downward trend is in tact and will continue barring a 
market blast to the upside or good news from the company; 
not a likely prospect in light of rumors they will lose a 
major customer in 2000.  Confirm stock and market direction 
before playing.

SMS $48.94 -0.00 (-0.50)  The recent bearish sentiment 
on the healthcare information industry is keeping SMS 
below its 30dma.  The stock has lost 5+ points in the 
last week falling below its old support of $51. Good news 
for the bear players came from Everen Securities as they 
downgraded SMS from "perform" to "underperform" after trading 
hours on Monday.  On heavy trading, SMS dropped below $48 
both yesterday and today. Target shooting may be a good 
choice for this play. 

INTC $115.31 -4.31 (+0.68)  Rumors are still flying 
on the Street and that's making the traders nervous!! It's 
going to be a rocky road ahead for Intel and perhaps for the 
whole semi-conductor industry.  Yesterday's poor earnings warning 
from Intel's rival, AMD, and soft PC sales in general is 
certainly setting up a bearish climate. And bad press on the 
Pentium III continues to plague Intel.  Newsbytes reported 
today that even though Intel persists in their claim of a 
super-performing new chip, they are keeping quiet on the 
comparative performance of AMD's K6-III. But Beware!  Recall 
from Sunday's write-up, Intel may be best played as a quick 
in-and-out. Consider what's happened over the past two days:  
Initially Intel got a hefty 5+ point boost Monday when they 
announced a reached agreement with the FTC regarding their 
antitrust case. Now that was not enough to keep the stock 
rolling (luckily for the bears!) and INTC did give back those 
gains today on heavy volume.  But one news flash and up it went. 
Now there are most certainly attainable profits within that 
swing, however you'll need to be very cautious with this type 
of play and know your risk tolerance. Protect your profits and 
sell too soon!

CB $59.25 -1.31 (-2.26) CB has broke down this week and is
now trading below its 50-dma again.  We continue to feel that
CB has plenty of room to drop.  The $55 level appears to be
the next support level.  As always, a strong market can cause
a stock to trade contrary to its trend.  

TBH $71.63 -.38 (+3.63) TBH traded down on Tuesday, but
is still showing some internal strength.  We still feel TBH
could break down strong on any negative news from Brazil.  
This is definitely a more risky play.  Watch for a break below
$68, the site of the 15 and 30-dma.    

CDWC $64.00 +1.00 (-.50) CDWC is hanging out right around its
200 dma which is currently at $64.58.  As we discussed on
Sunday, its 200 dma could provide some support for CDWC.  If
CDWC can break below this level, in a significant way, we think
it will be a good put play.  In the meantime, we would wait and
watch for some downward movement.  

SNC $30.00 -0.69 (-1.06)  SNC continues to edge lower.  Even 
when the markets rallied in the past few days of trading, SNC 
couldn't turn it around.  The is a great sign for those of us 
playing this company with put options.  If the markets continue 
to roll over like they did towards the end of trading on Tuesday, 
look for the negativity to help SNC to dip even lower. 

BMCS - $41.13  +.25  (+2.93) Stock up fractionally despite 
big Tech rally.  Stock still trading under declining 
moving averages and under continued pressure. 


QCOM - QUALCOMM Inc. $79.75 +2.00 (+3.19 for this wk)(+3.56)

Wireless digital communications are QCOM's specialty.  They 
have developed "CDMA" technologies used in cellular, personal 
communication, and wireless local loop systems.  The trucking 
industry uses QCOM's OmniTRACS two-way satellite messaging and 
position tracking systems.  Qualcomm has currently teamed up 
with Loral space to develop the Globalstar satellite system to 
offer telecommunication services worldwide.  Eudora, a type of 
e-mail software, is also a QCOM production.

Since the beginning of March, QCOM has been on a significant 
run.  The ascent seemed to be triggered by an announcement from 
QCOM and Ericsson.  Investors were relieved to hear that the 
two companies who had been at odds over a long running patent 
dispute had postponed the trial scheduled for April until June.
Ericsson initially filed the suit way back in 1996 saying that 
QCOM's CDMA technology breached Ericsson patents.  However, last 
month the two companies said they were close to reaching an 
agreement that will benefit both companies.  QCOM also set a new 
all time high at the price of $80.25 on Tuesday.  At these levels, 
QCOM is a split candidate.  It has plenty of authorized shares 
and had split 2:1 back in '94 at approximately $60.  Look for 
QCOM to fly higher through blue skies.  

News:  Qualcomm signed a deal with Transit Group, Inc. on 
Tuesday.  QCOM will provide 13 of Transit Group's trucking 
fleets with OmniTRACS mobile satellite communication terminals.  
In other news, back on March 3d, Qualcomm reported that its 
second quarter business was flourishing.  (Normally their sales 
slow after the holiday season.)   

March options expire on the 19th!
BUY CALL MAR-75 QAQ-CO OI=2143 at $5.88 SL=4.25
BUY CALL MAR-80 QAQ-CP OI=1811 at $2.75 SL=1.50
BUY CALL APR-75 QAQ-DO OI= 932 at $8.38 SL=6.50
BUY CALL APR-80 QAQ-DP OI= 889 at $5.38 SL=3.75
Picked on March 9th at $79.75      PE= 48
Change since picked   +$ 0.00      52 week low =$37.75
Analysts Ratings    5-5-6-0-0      52 week high=$80.25
Last earnings 01/99 est 0.58   actual 0.65 surprise=+12% 
Next earnings 04-21 est 0.25   versus 0.58
Average Daily Volume = 1.65 mil
Chart = http://quote.yahoo.com/q?s=qcom&d=3m


GE - General Electric $106.00 +1.19 (+2.31this week)(+5.69)

GE might not call itself a conglomerate, but it is. Its 14 
divisions make airplane engines, appliances, lighting, 
medical systems, plastics, power systems, and also include 
NBC, financial services, and electrical distribution and 
control. It is one of the largest and most diversified 
industrial corporations in the world.

Since the beginning of January, GE has tried 3 times to break 
through resistance at $105.00. Each time it hit that magic 
number, it pulled back, forming a triple top. Today it finally 
broke out and hit $107.19 before making a new closing high of 
$106.00. Volume was nearly 50% higher than normal. This is a 
very bullish sign for the stock, and we expect it to make new 
highs from here. Support is in the $97 to $98 range.

In the news, GE is buying a 20% stake in ValueVision Intern-
ational through its GE Equity and NBC divisions. NBC's expertise 
will help ValueVision's cable network, and NBC will gain 
Internet and e-commerce opportunities.

March options expire on March 19th!
BUY CALL MAR-105 GE-CA OI=7288 at $2.75 SL=1.25
BUY CALL APR-100 GE-DT OI=1405 at $8.38 SL=6.50
BUY CALL APR-105 GE-DA OI=2024 at $5.00 SL=3.25
BUY CALL APR-110 GE-DB OI=2014 at $2.50 SL=1.25 
BUY CALL JUN-110 GE-FB OI=4020 at $5.50 SL=3.75

Picked on March 9 at   $106.00      PE=35
Change since picked    $  0.00      52 week low=  69.00
Analysts' ratings    8-8-2-0-0      52 week high=105.00
Last earnings 12-98   est=$.80   actual=.80 surprise 0%
Next earnings on 4-08 est=$.65   versus=.57 
Average daily volume = 4.36 mln
Chart = http://quote.yahoo.com/q?s=ge=3m


MCK - McKesson HBOC, Inc $58.56 -0.44 (-2.69)

McKesson is a combination of businesses.  Foremost, they are a 
leader in healthcare information systems and North America's 
top distributor of pharmaceuticals and supplies. And if you need 
water to take those pills, Mckesson will deliver that too.  They 
are the #3 distributor of bottled water in the US.

MCK has been showing signs of decline since mid-February and on 
Friday drastically broke down confirming its downward trend.  
This is in contrast to a record-setting day on the Street. 
MCK drove through its old resistance of $64-65 and is now perched 
near its 52 week low of $53. The micro charts clearly show that 
this stock is going down, down, down.  Today, MCK closed at its 
intraday low of $58.56. 

In the news, the poor earnings forecast of IDX, a leader in 
the healthcare industry, hit the health information systems 
sector hard on Friday; and prompting analysts to wonder if 
sales would be hurt by the effects of Y2K computer problems. 
The stock itself was also downgraded on Friday from a "strong 
buy" to "out perform" by MSDW and they lowered their 12 month 
target price on MCK to $85 from $95.

BUY PUT MAR-60 MCK-OL OI=340 at $2.75 SL=1.25
BUY PUT MAR-65 MCK-OM OI=761 at $6.88 SL=5.25

Chart = http://quote.yahoo.comq?s=MCK&D=3m

A Bump in the Road?

Monday, March 8

Stocks were mixed Monday as investors cashed in some profits after
driving the Dow to within reach of the 10,000 milestone. The DJIA
ended down just slightly at 9727 following last week's 429 leap
and record close on Friday. The technology-laced Nasdaq composite
index jumped 60 points to 2397 in a rally fueled by Intel Corp.

Sunday's new plays:

AAMB  MAR15C/MAR12C    $0.18 Credit (Good play but worth it?)
AAS   MAR85C/MAR80C    $0.87 Credit (Easy entry...)
ACAI  MAR40C/MAR35C    $0.56 Credit ($0.50 at a minimum)
CAH   MAR85C/MAR80C    $0.62 Credit (Better in the afternoon)
EMC   APR100/105/110C  $0.00 Debit  (up $5 but well above target)

Portfolio plays:

Our big winner of the day was the Browning Ferris speculation
spread. Allied Waste made an announcement of the merger and BFI
gapped up allowing us to close the debit position at $4.75 for a
profit of $2.00. ONSL gapped-up $13, leaving our bullish credit
spread at $0.12 to close, but we will let it expire to gain the
maximum profit. CNXT spiked up almost $3 on news of a revised
financial outlook. The stock broke well above the previous range
forcing us to close the short position at $4.75 debit as the price
firmed in "blue-sky" territory. Our initial debit was only $0.56
but with a calendar spread, you can lose money when the stock
moves far enough away from the initial strike price. We expect to
sell the long position (APR17C) for a small profit, our initial
goal will be $6.00. PMS is starting to move in our debit straddle
position. We expect to sell whole play at $5.00 or exit the put
option when the stock price firms.

Tuesday, March 9

U.S. stocks fell today as the morning rally fizzled as investors
showed some jitters in the Dow's run to the 10,000 mark. The DJIA
closed off 33 points at 9693, falling for the second day in-a-row
after Friday's record-setting run. The Nasdaq Index of technology
stocks fell just slightly to 2392. The S&P 500 Index was basically
unchanged at 1279, pulling back only slightly from its record high
on Monday. Declining stocks outpaced gains on both the NYSE and
the Nasdaq

Portfolio plays:

We are attending the OIN "Options Bootcamp" in Denver today!

There was very little time to watch the market and will not be any
spread plays today but we still encourage you to send in any trades
that you have participated in while we are at the seminar. We will
update the portfolio plays on Thursday.

Send your comments to ray@OptionInvestor.com

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