Option Investor

Daily Newsletter, Thursday, 03/11/1999

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The Option Investor Newsletter         Thursday  3-11-99  
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)
        3-11-99           High     Low    Volume  Advances Decline
DOW     9897.44 +124.60 9935.46  9769.96  908,586k  1,738   1,257
Nasdaq  2412.25 +  6.25 2437.39  2391.55 1036,400k  1,968   2,025 
S&P-100  649.85 +  5.45  654.97   644.40   Totals   3,706   3,282
S&P-500 1297.68 + 10.84 1306.41  1286.84            53.0%   47.0%
$RUT     401.08 -  0.04  403.37   399.78
$TRAN   3257.65 - 32.30 3297.48  3239.09
VIX       25.52 +   .12   26.82    24.68
Put/Call Ratio      .54

I think I can, I think I can, I think I can...

The market that thought it could continues to defy gravity as
the assault on Dow 10,000 continues. Despite the drag on the
market by the techs today the Dow managed to hit 9935 intraday
and close only three points shy of 9900. Traders held their 
breath around 12:30 as the upward momentum faded and a strong
sell program started knocking points of the Dow leaders in 
rapid succession. The index fell to an afternoon low of 9860
before catching a second breath and adding back +37 points at
the close. Catching a second breath may get harder and harder
at this altitude as traders will be wanting to protect profits
for the eventual down cycle. Nothing goes up in a straight
line and we are bound to see another down cycle soon. The chance
of an emotional let down drop after we break the physiologically
important 10,000 barrier is very strong.

The forces behind the current rally are rapidly increasing
earnings, low inflation, strong consumer spending across all
sectors and low interest rates. The record consumer confidence
levels continue to be reflected in cash flow into the mutual
funds. The larger than expected tax refunds which came back 
sooner than expected this year continue to fuel the market
liquidity. The bullishness is starting to reach perilously
high levels again. 

The rally today in the Dow numbers was also fueled in most
part by the surge in oil stocks. The Prime Minister of Saudi
Arabia said that they were going to actively pursue strong
cuts in production output and these cuts could approach
2.3 million barrels. The OPEC meeting on March 23rd is
expected to produce a unique accord to enforce this cutback.
Previously announced cutbacks were met with cheating by
OPEC nations and non-OPEC nations alike. The damage to the
Arab states economies has reached the scale of magnitude not
seen in many years. The recent lows of $10 oil were stated
in terms of west Texas crude which always enjoys higher
prices than mid-east oil. At $10 U.S. crude the mid-east oil
sells for $7-8 per bbl. It is definitely in their interest
to force compliance with the cutbacks. The rise in current
oil prices is a result in cutbacks in capital expenditures
from major oil exploration companies and plugging of wells
that finally just became not worth the effort at such low
prices. The Oil Service Index has risen +30% since March 1st
on prospects of higher oil prices. Some analysts feel that
a serious agreement could send oil stocks soaring another

The tech sector has not participated in the recent Dow
rally and may have put in a new top here around 2400-2420.
The Nasdaq rallied with the Dow at midday but pulled back
to negative territory later in the afternoon and only 
barely finished positive. Tomorrow may be the turning point
for the Nasdaq. Oracle announced earnings after the close
and analysts were not excited. The database revenues were
not as strong as expected and the stock traded down -$6
in after hours trading. MSFT also made news with a the CFO
saying they were "comfortable" with the estimates for this
quarter. Comfortable is not the term analysts wanted to 
hear. The fear that slowing PC sales would start to be
reflected in the MSFT numbers was causing a rumor of a
possible earnings shortfall. MSFT was trying to calm this
rumor but may have put more lingering doubt in analysts
minds from the weak statements. They did say that "worldwide"
PC demand was expected to remain strong but did nothing to
convince analysts that U.S. demand was not sagging. MSFT
traded down slightly after hours. MSFT said they expected
to move $400 mln in earnings to the next quarter to offset
some Office97 - Office2000 conversion plans. This amounts 
to $.08 per share but they said they expected this to be
offset by increased "investment income" but they did not

CMGI announced blowout earnings after today's close with 
a +$.30 compared to an expected -$.22. A +$.52 blowout.
You know how we feel about holding over earnings....a
definite suicide mission normally. Do you think CMGI
soared in after hours?  NOT!! They traded down, only 
slightly, but down! After the big run they have had, $150
to $225 in only four days, the odds of profit taking are
very strong even if they had blown out with double the
earnings. In the terminology we used at the seminar, 
everybody is already standing on CMGI. There are no
voters left on the sidelines.  

The sector rotation out of techs and into blue chips is
likely to continue tomorrow. In spite of the rotation the
market breadth is still very weak. The advances only barely
beat decliners today 3,706 to 3,282. When you look at the
market momentum, and the strong volume today, this is not
a good sign. The market is going higher and higher on
fewer and fewer stocks. The decliners actually beat the 
advancers on the Nasdaq. We continue to urge caution on 
starting new positions at this market level. 

Fridays Producer Price Index will likely show strong 
productivity which continues to hold down inflation at
the wholesale level. This will be just another bullish
sign and could provide the spark to break the 10,000
barrier. The market has taken all the bad news you could
imagine lately and rallied. Short of a complete turnaround
in the PPI numbers, the market should like the news. The
strong retail sales today of +.9% in February and the
revised +1.0% for January was very strong and we expect
the PPI to reflect the same sentiment.

The three market fundamentals, earnings, interest rates
and liquidity have changed to speculation, euphoria and
liquidity. According to the Federal Reserve the market is
now overvalued by 18%. While some traders are throwing
caution to the wind there is still a huge amount of cash
on the sidelines. Cautious investors are scratching their
heads in disbelief over the current divergence between
the Dow and the rest of the market. Do you think it is
strange that the Dow is closing at new all time highs
and the Russell-200 closed negative today? Also, lest we
forget, the transports closed negative today as well. 
The rising price of oil may be good for Dow components 
CHV and XON but bad for transportation stocks in general.

I feel like a stick in the mud telling you to be cautious
and "please" look this gift horse in the mouth, but 
remember the previous three 1000 marks and the immediate
result of their passing. After 9000 we dropped -1500 points.
After 8000 we dropped -1000 after 7000 we dropped -700.
Whether or not we see the same reaction this time remains
to be seen. With earnings just around the corner again the
expectations may continue to hold the market at these
levels. Remember also what comes before April earnings,
March earnings warnings. A major warning could be a serious 

Good Luck
Sell too soon!

Jim Brown 

Market Posture
As of Market Close - Thursday, March 11, 1999 

                   Key Benchmarks
Broad Market       Bearish/Bullish  Last    Posture/Since  Alert

DOW Industrials    9,200   9,500   9,897    BULLISH   3.5              
SPX S&P 500        1,225   1,280   1,298    BULLISH   3.11 *   
OEX S&P 100          615     640     650    BULLISH   3.11 *   
RUT Russell 2000     400     435     401    Neutral   3.11 *   

NDX NASD 100       1,900   2,050   2,044    Neutral   3.4     
MSH High Tech        900   1,000     974    Neutral   3.5           

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
XCI Hardware         800     900     861    Neutral   3.5              
CWX Software         600     650     626    Neutral   3.5                
SOX Semiconductor    350     420     374    Neutral   3.5        
NWX Networking       400     450     438    Neutral   3.4              
INX Internet         450     570     547    Neutral   2.19       

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
BIX Banking          650     675     707    BULLISH   3.5                    
XBD Brokerage        650     700     756    BULLISH   3.4        
IUX Insurance        600     625     640    BULLISH   3.5              

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
RLX Retail           850     880     935    BULLISH   3.4      
DRG Drug             775     795     817    BULLISH   3.5       
HCX Healthcare       775     795     813    BULLISH   3.5                
XAL Airline          320     330     330    BULLISH   3.2   
OIX Oil & Gas        230     250     254    BULLISH   3.11 *                     

Posture Alert

Strong rallies in Financial and Oil & Gas lifted the broad 
market indices into record territory turning our market
posture Bullish across the S&P 100 and 500.  We have also 
turned Bullish across the Oil & Gas sector after the sector
closed above its declining 50/100 day moving averages. 
Notice make a note that the Russell 2000 closed above the key
400 level, turning us Neutral from Bearish.  We want to
caution investor, however, that the Technology sector closed 
up fractionally today.

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


Market Sentiment - By Pinnacle Capital Advisors
Thursday, March 11, 1999

Don't Bring out the DOW 10,000 Party Favors Yet

While CNBC is making plans for its DOW 10,000 party, take a 
look at what's happening to interest rates, market breadth and
our Pinnacle Index for the S&P 100.  At OIN's Seminar this week,
Pinnacle Capital Advisors talked about how technical and
sentiment analysis can give savvy investors a decided edge. 
Technically, long-term interest rates, one of the market
pillars, have broken their long-term trend and is now trading
above 5.50%.  Next, the advance-decline line has not improved
appreciably during the recent market rallies. 

Finally, with a week remaining until March's expiration, option 
speculators have been betting on a major breakout as evidenced
buy deep out-of-the (OTM) money call options -- at strikes as
high as OEX 700.  This extreme level of optimism, as reflected
in by our high Pinnacle Index, suggests that there is HEAVY
overhead market sentiment.  What this means is that the market
is vulnerable to a precipitous sell-off if expectations are NOT

Together, these technical and sentiment Bearish developments may 
preempt the 10,000 party.  As such, we want ant to encourage
investors if interest rates don't fall below 5.50%.  Separately,
the advance-decline line has not improved appreciably over the
past few days while the latest surge has occurred.


Separately, Pinnacle has been tracking the Market Volatility 
Index (VIX) closely as an early clue as to where the market is
likely to head. On Friday (3/5), the VIX broke below a key 
benchmark and closed at 25.12.  This is a bullish development
if the VIX can continue to stay BELOW its 50-day moving
average.  But all it takes is one major earnings warning and
the VIX will be above 30% in a New York second. 

Market Sentiment at a Glance
                                Friday     Thurs  
Indicator                       (3/5)      (3/11)            Alert

Pinnacle Index (OEX):          
Overhead Resistance (660-675)                9.8                *
Underlying Support  (615-640)                1.4

Put/Call Ratios:
CBOE Total P/C Ratio               .6         .6
CBOE Equity P/C Ratio              .4         .4                *   
OEX P/C Ratio                     1.1        1.5                *                

Peak Open Interest (OEX):
Puts                              560        610
Calls                             620        650
P/C Ratio                         1.2        1.1

Market Volatility Index (VIX):	
CBOE VIX                         25.12     25.52                *

Investors Intelligence:
Bullish                          50.9%       49.1               *  
Bearish                          32.1%       32.5               *

The Power of Sentiment Analysis

It has often been said that the crowd is right during the
market trends but wrong at both ends.  Measuring and
evaluating the sentiment of the crowd, therefore, can give
savvy option traders a decided edge.

Pinnacle Index
OEX                              Thurs
Benchmark                        (3/11)
                    (660-665)     49.2
                    (650-655)      5.5
Overhead Resistance (650-665)      9.8

OEX Close                       649.85   

Underlying Support  (625-640)      1.4
                    (635-640)      1.1
                    (625-630)      1.8

Average ratings: 
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is heavy at the OEX 650/665
level while the underlying support is firm at the
OEX 625/640 level.

Put/Call Ratio 
                                Friday     Thurs
Strike/Contracts                 (3/5)     (3/11) 
CBOE Total P/C Ratio               .66       .58
CBOE Equity P/C Ratio              .42       .39
OEX P/C Ratio                     1.18      1.47

Peak Open Interest (OEX)
                     Friday         Thurs
Strike/Contracts     (3/5)          (3/11)
Puts                 560 / 13,016   610 / 12,817
Calls                620 / 10,879   650 / 11,488
Put/Call Ratio       1.20           1.12



Market Volatility Index (VIX)
Date                Turning Point       VIX
October 97          Bottom              54.60      
July 20, 1998       Top                 16.88         
October 8, 1998     Bottom              60.63
January 11, 1998    Top                 26.38
March 4, 1999       Bottom              28.15   

March 11, 1999                          25.52   *


Investors Intelligence Survey
                    Major             Percent     Percent
Date                Turning Point     Bullish     Bearish
October 97          Bottom            22.0        48.3       
July 20, 1998       Top               52.0        24.0         
October 8, 1998     Bottom            38.5        42.7
January 11, 1999    Top               58.3        30.0

January   6, 1999                     58.3        30.0   
January  13, 1999                     60.0        30.0   
January  20, 1999                     61.7        25.9   
January  27, 1999                     60.7        28.2   

February  3, 1999                     60.0        26.7   
February 10, 1999                     61.7        25.9   
February 17, 1999                     55.7        28.7   
February 24, 1999                     54.1        31.5   

March 3, 1999                         50.9        32.1   
March 10, 1999                        49.1        32.5   

Please view this in COURIER 10 font for alignment

Index    Last    Mon    Tue    Wed   Thur  Week
Dow    9897.44  -8.47 -33.85  79.08 124.60 161.36
Nasdaq 2412.25  60.51  -4.68  13.06   6.25  75.14
$OEX    649.85   4.08  -2.14   3.47   5.45  10.86
$SPX   1297.68   7.26  -2.89   7.00  10.84  22.21
$RUT    401.08   2.05  -0.86   1.92  -0.04   3.07
$TRAN  3257.65 -24.39  12.45 -10.90 -32.30 -55.14
$VIX     25.52  -0.14   0.28   0.14   0.12   0.40

Stock   Price    Mon    Tue    Wed   Thur Week

CMGI    182.13  47.50  -5.25  -2.75  -9.56 29.94 Dropped
RNWK    102.13   4.50  -1.88   8.13   1.88 12.63 Rocketing forward
EMC     116.00   6.44   3.06  -1.50   3.44 11.44 Keeps climbing
PVN     115.75   2.38   7.50  -3.38   2.13  8.63 50% Growth
MSFT    161.44   4.06   2.81  -0.44   0.06  6.49 PC demand Okay!
LGTO     55.97   3.94   1.50  -2.25   2.22  5.41 Great Recovery
C        65.94   0.25   0.50   1.50   1.94  4.19 New Highs
QCOM     80.38   1.19   2.00  -0.12   0.75  3.82
MER      89.25  -1.13   2.19   0.13   2.50  3.69 Still Running
LOW      65.13   0.75   0.94   1.19   0.25  3.13 Slow & Steady
MWD     101.75  -1.06   0.69   0.50   2.69  2.82 Still Running
SBUX     61.25   2.13  -1.06   1.56  -0.13  2.50 Splits next week
WMT      95.31   0.19   0.56  -0.44   1.75  2.06 Slow & Steady
SCH      83.00  -1.13  -1.56   2.69   2.00  2.00 Still Running
MEDI     60.56   0.94  -0.69   0.38   0.44  1.07 Resting
GE      107.00   1.12   1.19  -0.25   1.25  1.00 New Highs
CL       93.50  -0.50   0.50  -0.06   1.00  0.94 Still climbing
TJX      33.38  -0.31   1.06   0.94  -1.88 -0.19 Entry point?
CMA      68.88  -1.25  -0.19   0.38   0.55 -0.51 Wait for reversal
BCST     90.63   1.69  -3.38   0.25   0.38 -1.06 Consolidating
HRB      49.94  -1.44   0.00  -0.13   0.13 -1.44 Consolidating
UTX     127.44  -2.06  -0.75  -0.25   1.44 -1.62 Bounce off 10dma
PG       92.13  -1.00  -0.62  -0.19  -0.06 -1.87 Dropped
COF     133.06  -2.50   1.25   1.31  -2.81 -2.75 Wait for $137
ANF      84.00   1.50  -1.31  -2.19  -1.00 -3.00 Timely profit taking
SONE     63.00  -2.75   0.63  -1.00  -3.25 -6.37 Dropped


DAL      60.50  -0.63   1.13  -0.94  -2.50 -2.94 Oil rising!
LHSG     38.25  -0.22  -1.53  -0.88   0.19 -2.44
CB       59.50  -1.00  -1.31   1.44  -1.19 -2.06
SNC      29.38  -0.38  -0.69  -0.25  -0.38 -1.70
RAD      37.00  -0.88   1.63  -1.25  -1.00 -1.50 Losing marketshare?
BMCS     37.94   2.63   0.31  -1.75  -1.44 -0.25 Still sinking
TBH      70.56   4.00  -0.38   1.44  -2.50  2.56 Brazilian worries?
INTC    118.13   5.00  -4.31   1.56   1.25  3.50 Possible warning
SMS      56.00  -0.50   0.00   0.25   6.81  6.56 Dropped
CDWC     72.50  -1.50   1.00   7.69   0.81  8.00 Dropped
MCK      56.75  -2.25  -0.44  -0.06  -1.75 -4.50 Free falling
CNET     95.81  20.07   7.13  -4.19 -11.19 11.82 Post Split depression

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.


PG $92.13 -.06 (-1.88) The Dow is up over 100 points today, and
PG goes down.  This isn't good.  When we added PG last weekend,
our thinking was that PG had made a good move last week, and we
were expecting the Dow to move up this week, so we thought it
would make a good play.  This isn't working out like we had
planned, so we are dropping them as a pick.

SONE $63.00 -3.25 (-6.38)  Up market, down stock, low 
volume -- bye bye!  Actually, First Union Capital 
reiterates their "buy" rating with a target price of $90, 
but upside potential will be limited in the short run 
citing near-term absence of positive catalysts.  In short, 
it's going the wrong way for our liking, but we'll keep it 
on the radar and let you know if it becomes a good option 
play again.  We are dropping it for now.  Earnings are May 

CMGI $182.13 -9.56 (+29.94)   We are dropping CMGI as a pick.  
Even though it has produced incredible profits since we added 
it as a play, we have to say goodbye until it shows it can 
continue this incredible upward surge.  It may take a bit of 
time though.  Most stocks suffer from post earnings announcement
depression.  Even though CMGI appears to have blown out the 
estimates of -0.22 when it reported +0.30 results, there seems 
to be some confusion as to exactly what those numbers mean.  It 
also remains to be seen if CMGI will announce another split.  It
previously split back in January but still has more than enough 
shares authorized for another 2:1.  We will definitely keep an 
eye on this big mover.  As soon as we feel it is safe to play 
again, you will be the first to know!! 


SMS $56.00 +6.81 (+6.56) We're dropping SMS as a put play.  
Word on the street is that SMS had a very positive conference 
call and analysts were assured of SMS's financial outlook.  
We were unable to confirm this meeting occurred but the tape
is all the truth we need.   

CDWC $72.50 +.81 (+8.00) Yesterday was a killer.  The move CDWC
made yesterday was on below average volume, and we couldn't
find any news that would cause it to move like that.  CDWC
closed right at its 30 dma.  We are not going to wait around
and watch CDWC blow through this moving average as well.  


EMC $116.00 +3.44 (+11.44) The upside breakout continues!  EMC
rested on Wednesday, but took off again today.  As we mentioned
on Tuesday, EMC was featured on the cover of Business Week this
week.  The article indicated that in the last decade the only
S&P 500 stock that has outperformed EMC was Dell.  The article
also pointed out that EMC's sales tend to be resilient, even in
a computer industry downturn, because storage demand continues
to grow as corporations generate more and more data on existing

CMA $68.88 +.19 (-.87) CMA finished up on the day, but faded
after hitting resistance in the $69 range.  If CMA can break
through this resistance on strong volume, we could see a 
new run.  CMA's 52-week high is at $73.  There isn't any
news to account for with CMA.  Wait for the breakthrough.

MWD $101.75 +2.69 (+2.81)  MWD continued its winning ways
today as it reached, yet again, another 52-week high.  The
high of the day was $102.31 and the close was just a bit
below.  In the news, CMGI has hired MWD to find better
suitors for Lycos.  It has been highly publicized that CMGI
is not pleased with USA's takeover offer.  There is only
resistance at MWD's intra-day high. 

RNWK $102.13 +1.88 (+12.63)  RNWK just keeps on going and
going.  It is up $22 in just over two weeks since we first
picked it.  RNWK went up over $8 on Wednesday and reached
an intra-day high of $109.13 on Thursday before tailing off
mid-day.  RNWK had a large trading range today from $97.75
to $109.13.  Once again, RNWK is a great stock to target

HRB $49.93 +.13 (-1.57)  HRB seems to be consolidating its
recent gains.  HRB traded in a narrow range today and has
been for the last few days.  HRB seems to be finding some
support around the $49 to $50 range.  This consolidation will
enable HRB to break higher when it is ready.  Watch for a nice
move upward on strong volume for a less risky play.  Another 
play would be to buy the bounce off the $49 level.

CL $93.50 +1.00 (+0.96) This stock is a steady mover and has 
been making consistent gains since its breakout March 1st. 
Traders liked the coverage initiated by MSDW on Tuesday that 
gave the stock an "outperform" and more good news came this 
afternoon.  CL announced (to the delight of its stockholders) 
a $0.275 cash dividend to be paid May 17th.  The stock is 
getting real close to its 52 week high of $98.87 and looks 
like it may reach it soon. Today, CL was as high as $95.19 
on moderate volume while the Dow broke 9900.  

UTX $127.44 +1.44 (-1.63) UTX bounced off of its 10 dma
yesterday and traded up today.  UTX is holding true to its
trading pattern over the last 6 weeks of one up week and one
down week.  In the news, UTX filed with the SEC to sell up to
$500 million in debt securities.  The funds will probably be
used, in part, to finance the acquisition of Sundstrand Corp.

LOW $65.06 +.19 (+3.06) LOW made a new high today at $66.44
before trading down a bit.  LOW has a very good looking short
term chart.  Very steady upward movement.  In the news, LOW was
upgraded from an accumulate to a buy.  The analyst had very
positive things to say about sales and margin growth.  They
also think that the acquisition of Eagle Hardware will help
accelerate earnings growth over the next several years.  

***** 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         Thursday  3-11-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

PICK NEWS - CALLS (continued)
LGTO $55.97 +2.22 (+5.41) LGTO has not been able to
consistently hold above its 50 dma which is at $54.59, but it
did manage to close above it today.  Both yesterday and today,
LGTO has bounced off of $53.25.  We are hoping that LGTO is
basing right here for its next leg up.  We haven't had any news
on LGTO.  

WMT $95.31 +1.75 (+2.06) WMT lost a little ground yesterday 
(buying opportunity), but came back today to set a new high 
of $96.38. This afternoon saw another entry point when the 
stock dipped below $94.00, before coming back to close at 
$95.31 on strong volume. WMT splits April 19 for shareholders 
of record March 19. Retail is still strong!  

TJX $33.38 -1.88 (-.18) TJX closed at a new high yesterday of 
$35.25. By mid-day today, it had topped that by $.13. However, 
a block sale of 200,000 shares sent the price tumbling until 
it found a bottom at $32.50 just 10 minutes before the close. 
It bounced up sharply and closed on an uptick. This may 
provide a good buying opportunity--we could find no negative 
news to cause the sell-off.

PVN $115.75 +2.13(+8.62) PVN paused on Wednesday to digest 
the stellar gains it had made through Tuesday. Today it 
tacked on another couple of dollars. On Wednesday, PVN had 
reached as high as $117.50 and today it hit $117.38 on 
slightly reduced volume, just shy of the $118.00 high it set 
on Tuesday. Slight resistance is building at this level, and 
you might want to wait until the stock breaks through it 
before taking new positions. However, PVN has tremendous 
momentum and seems to always bounce back from any dips, so 
if it does dip, it could make a great buying opportunity. 
Management has guided earnings growth estimates for this year 
to about 50%, but one fund manager said on CNBC today that he 
believes 65-70% is possible. Another thing to consider: 
although it just split Dec. 16, 1998, PVN is in split territory 

SCH $83.00 +2.00 (+4.69)SCH made up for its losses Monday and 
Tuesday as it gapped up Wednesday and went on to set a new 
high. Today it set another new high of $83.13 and closed very 
near that high. With the SEC increasing its oversight of 
online brokers, Schwab is wisely settling with traders who 
were unable last November to cancel market orders online 
which they had placed to buy the IPO Globe.com. (The traders 
should have placed limit orders.) Instead of the initial 
offering price of $9.00, the first trades were actually a 
surprising $90.00. Settling with the 300 customers involved 
could run as high as $1.2 million. The trend with SCH is 
still UP.

MER $89.25 +2.50 (+3.69) Yesterday, MER traded in a range and 
moved up only fractionally. Today, it reached as high as 
$89.63 before closing at $89.25 on good volume. Today's high 
was less than $10.00 away from its all-time high set in July, 
1998. The brokerages remain strong.

MEDI $60.56 +.44 (+1.06) MEDI continues to make small gains. 
Today it traded as high as $61.25 on light volume. MEDI has 
support around $58.50. No new news.

GE $107.00 +1.25 (+1.00) After setting a new high on Tuesday, 
GE traded mostly sideways Wednesday. Today, however, it hit 
$107.75 before closing at $107.00 on good volume. Technical 
analysts see GE's breakout to new highs following a triple 
top formation as very bullish. Look for this one to continue 
moving up. 

C $65.94 +1.94 (+4.19)  What a beautiful day for C.  They 
followed yesterdays gain of $1.50 with a $1.94 gain today 
on 50% greater volume.  Stein Roe & Farnham Growth Fund 
said they are reducing technology exposure from 36% to 28%, 
and adding steadier finance and consumer product issues 
like C, KO and G in its place.  Other funds are already 
following the same strategy.  Chart is nicely positive.  
Market willing, C will be a survivor in a downdraft, and a 
winner in the dash to Dow 10,000.  Follow the rules, sell 
too soon, make money.

BCST $90.63 +0.38 (-1.06)  Technicals are weakening a bit 
on this high-flyer, with MACD giving us the neutral sign.  
This is bound to happen on low volumes, even when the stock 
is up.  It indicates the buyers (demand) have wandered to 
other issues, although nobody is aching to sell either.  
Keep your eye on the volume.  Current support is $87.  
Target shoot at $87 if your risk profile allows it, or 
confirm upward movement with volume before making the play.  
Other than press releases announcing new content from 
E4L.com (like "Home Shopping Network" over the Internet) 
and Information Superhighway.com, no price-moving news.

MSFT $161.94 +0.06 (+6.50)  What an odd day for MSFT.  On 
average volume, it's closed pretty flat the last 2 days 
following Tuesdays rumor of settlement negotiations with 
the DOJ.  Under the surface though, MSFT traded up to $164 
today, then fell to $159.50, recovering minutes before the 
close.  MSFT is scheduled to split 2:1 on March 26 (company 
confirmed).  Intra-day support this week is about $160.  
Look out though:  Although MSFT announced after the close 
they are on target to meet analysts estimates, they expect 
a sequential slow-down in revenues.  This is about as close 
as you can get to "no earnings surprise" without saying it, 
which could be met with disappointment in tomorrow's 
trading.  Depending on your risk profile, you may want to 
use April strikes, since March's will expire before the 
split.  Watch out for ship-jumpers and profit taking, then 
confirm market direction before playing.

ANF $84.00 -1.00 (-3.00)  ANF broke out to a $10 gain in less 
than 10 trading days.  With movement like that, it is normal 
for profit taking to set in.  Add that to the fact that 
BancBoston Robertson Stephens downgraded the stock solely on 
valuation and you get -$4.50 of consolidation in the past 
three days of trading.  The curious thing is that after 
downgrading the stock, analysts still recommended purchasing 
ANF and kept their price target set at the $150 level.  We feel 
ANF will continue to head higher but recommend waiting for the 
buy signal with a move back up.  Remember, ANF remains a 
candidate for a split at its current prices.

COF $133.06 -2.81 (-2.75)  COF doesn't want to get off the 
kiddie roller coaster.  It has hit $136 several times in 
recent trading only to dip slightly back down each time.  We 
still feel COF has the ability to break its all time high of 
$140.  However, we don't suggest initiating any new plays 
until it holds above the $136 level.  No new news.

QCOM $80.38 +0.75 (+3.82)  QCOM reached another all time high 
in intraday trading on Thursday at $80.81.  It showed strength 
by closing just off its highs with a +$0.75 gain on the day.  
Qualcomm is one of our split candidates.  Back in 1994 it split 
2:1 at the $60 level.  It now could do the same with plenty of
authorized shares to do so.  QCOM is looking great.  Watch for 
it to continue climbing.   

SBUX $61.25 -0.13 (+2.50)  Starbucks shot up to $63.75 (a new 
all time high) in intraday trading on Thursday before 
succumbing to profit taking.  It finished the day down only 
thirteen cents.  Could that number be unlucky?  We think not.  
Starbucks should revisit its highs since it is splitting 2:1 
on March 19th.  Watch for SBUX to steam full ahead especially 
if investors pile in to push the markets to record levels.  (By 
the way, on Friday Starbucks will give a free piece of chocolate 
with your coffee just to say "thank-you" for your patronage.) 

RAD $37.00 -1.00 (-1.50)  Just as we anticipated in 
Tuesday's update, RAD bounced south of its 10 DMA.  Put-
wise, this is a beautiful sinking ship, dropping $1 per day 
on higher than average volume since Tuesday.  The chart is 
ugly-negative.  Since breaking support at $37.50, the next 
support is $34, set on October 1,1998 (do you remember the 
pain?).  E-tail drugstores, though small by comparison, are 
getting lots of press and are scaring investors out of the 
brick and mortar scrip-filler issues.  No salvation on the 
horizon, but confirm market direction anyway before 

SNC $29.38 -0.38 (-1.68)  SNC seems to be oblivious to the 
surging markets.  In a world of its own, it continues to sneak 
lower.  As it draws closer to its all time lows around the $25 
level, make sure to set your stop losses tighter!   

INTC $118.13 +1.25 (+3.50) It has been a rocky 1st quarter for 
this stock as analysts are concerned about the company's growth
projection. We're keeping INTC as a put play in anticipation of 
a possible poor earnings pre-announcement; perhaps we'll 
get a report tomorrow.  If we don't see an earnings warning 
tomorrow, we do not recommend a put play on INTC.  Earnings are 
due April 14.  Besides AMD's pre-warning on Tuesday, another 
computer sector company, Ingram Micro, announced today a caution 
for poor earnings and that it will cut 1400 jobs. This is bad 
news for the whole semi-conductor industry. Intel's trading 
range has been within 5 points over the last 2 days; barely 
pushing past 119.  Yet, volume has continued to be strong 
suggesting traders are still nervous about the future of Intel 
and the soft sales in the PC industry.  Consider target 
shooting this play.  Please be cautious and know your 
tolerance for risk.  

MCK $56.75 -1.75 (-4.50) The downward spiral confirmed last 
Friday by the stocks ultimate breakdown is still holding true. 
MCK closed on the downside the past two days moving it closer 
to its record low of $53. Evidently, the analyst's concern 
over possible Y2K compliance issues for the healthcare 
information industry and the recent downgrade by MSDW are 
still fresh in the minds of traders.  Technicals still
indicate MCK is a good consideration for a put play.

LHSG $38.25 +0.19 (-2.44) The chart is still negative, but 
it improved slightly today.  Today's gain, though small, 
showed up with 175% of average volume, and comes on the
heels of an announcement that the largest-market-share-
phone-company in Columbia, Comcel, will choose LHSG to
deliver customer care and billing solutions.  LHSG looks
great for the week and still looks like a put should, but 
be prepared to bail out if their press release department
goes berserk with more favorable news and the shorts run for
cover.  Otherwise, confirm market and company direction 
before starting a new play.

TBH $70.56 -2.50 (+2.56) TBH took a turn down today, finally.
Again, this is a very risky play and can be viewed more as a
play on the Brazilian market.  The safest play would be to 
wait for TBH to break below its 50-dma at the $68 range.  

CB $59.50 -1.19 (-2.06) CB has performed more like a put
play this week.  Even with the strong market on Thursday, 
CB traded as low as $58.81.  We are rapidly approaching CB's
52-week low of $54.00.  This is the next support level.  CB
does tend to gain early in the day and then fade.  Wait for
an intra-day gain for an ideal time to buy puts.

BMCS - $37.94  -1.44 (-2.31) Stock just broke key support and 
resistance at $40.  Now recent trading range ($40-45) serves 
as overhead.  If technology sector rolls over, the software 
company could be among the first causalties. 




DAL - Delta Air Lines $60.50 -2.50 (-2.94 this week)  

Delta is the US's 3rd largest airline providing service to 
about 150 cities domestically and to 48 cities in 31 other 
countries.  They supply scheduled air transportation for 
passengers, cargo and mail. DAL also has a 33% stake in 
WORLDSPAN, computer reservations service.

The oil excitement has driven the price of fuel up cutting 
the profit margin for the major airlines and Delta is not 
immune.  The stock suffered a loss of -$2.50 in today's 
trading driving it through its recent resistance of about $63. 
We expect DAL to continue in this trend in anticipation 
of the OPEC meeting scheduled for March 23rd.  The 
speculation is that OPEC may cut output and thereby oil prices 
will rise significantly.  This stock is already flying near its 
30dma of $58 and could easily push past this to meet its 200dma 
at around $56.  Also in the news, Aeroperu, whose major 
stockholder is Delta, is clipping its wings for 60 days in hopes 
of restructuring its $90 mln in debts with foreign investors. 

Understand that we are dealing with expectation that
the OPEC meeting will deliver some substantial cuts.
If word or rumor begins to spread that they will not
be successful the airlines are likely to rally as oil
falls back on the disappointment.  As of today, the oil
analysts are expecting the OPEC members to follow through
with all the positive press that has been generated 
rather than "lose face". 

March Options Expire on the 19th!
BUY PUT MAR-55 DAL-OK OI=1007 at $0.25 SL=0.00
BUY PUT MAR-60 DAL-OL OI= 717 at $1.06 SL=0.50
BUY PUT MAR-65 DAL-OM OI= 352 at $4.75 SL=3.00
BUY PUT APR-60 DAL-PL OI= 177 at $2.81 SL=1.50
BUY PUT APR-55 DAL-PK OI= 331 at $1.19 SL= .00

Chart = http://quote.yahoo.com/q?s=DAL&d=3m


CNET - CNET, Inc. $95.81 -11.19 (+11.82this week)(+53.37)
CNET supplies information about the Internet, computers, and
digital technologies by using the World Wide Web and
television.  The company operates several websites including
snap.com, cnet.com, shareware.com, search.com, and news.com.
It also produces "TV.COM" which is the first TV show about
the Internet.  However, 75% of CNET's sales come from its 
Internet operations and advertisements.  

CNET made an incredible split run.  It added +$53.37 in last 
week's trading.  It continued the run all the way through the 
day after it split.  Adding $40 points on Monday and another
7 points ($14 unadjusted on Tuesday). However, the stock has 
plummeted since Wednesday.  CNET is suffering from "post 
split depression"  and we are adding it as a put play.  We 
feel it has the potential to drop all the way to the $60 
level- where it was before it picked up its split momentum.  
Look for CNET to continue its free fall. 

No new news.

March Options Expire on the 19th!
BUY PUT MAR-100 QKZ-OT OI=238 at $10.50 SL= 7.50 
BUY PUT MAR- 95 QKZ-OS OI=101 at $ 7.88 SL= 6.00
BUY PUT MAR- 90 QKZ-OR OI= 61 at $ 5.88 SL= 4.00
BUY PUT APR- 95 QKZ-PS OI= 13 at $14.50 SL=11.00
BUY PUT APR- 90 QKZ-PR OI= 10 at $11.63 SL= 7.50

Chart = http://quote.yahoo.com/q?s=cnet&d=3m

Wednesday, March 10

The Dow climbed to another record close Wednesday, thanks to the
rallies in oil and banking stocks. The Blue-chip index ended up
almost 80 points at 9772; 230 points below the 10,000 milestone.
Technology stocks also finished higher elevating the Nasdaq index
13 points to 2406. In the broader market, advancing issues led
declines by a small margin on active volume of 836 million shares
on the NYSE.

Portfolio plays:

The bullish RHD position (MAR15C) was sold for $1.38 to retain a
small profit in the play. The short option (MAR17C) is trading at
$0.25 and is safely OTM with no news expected in the next week.

Thursday, March 11

The DJIA closed at a record high but investors will have to wait
another day for the attempt on the 10,000 level. The world's most
watched index finished at 9897 after an early rally stalled just
65 points away from the magic mark. The Nasdaq index ended only
slightly higher at 2412. In the broader market, advancing issues
led declines 17 to 12 on active volume of 908 million shares on
the NYSE.

Portfolio plays:

EGRP (Etrade) was quite a surprise this morning as it gapped to
almost $57 allowing us to exit the bullish side (MAR60C/65C) of
our debit spread/straddle for $1.12. The bearish position;
(MAR40P/35P) had already been closed for a small profit and we
needed a minimum of $0.87 to have a profit for the overall play.

Tuesday's trades (Seminar day):

CNXT continued higher today and allowed us an easy exit on the
(APR17C/MAR17C) calendar spread at $6.12 for a $0.68 profit. We
sold a call against the AZPN (MAR15C) position to create a credit
spread (to offset losses from the original debit spread). The new
short position; March $12.50 call (at $1.00) should be closed on
the last day of the strike period if it is ITM. Once again, this
is an aggressive attempt to recover lossses from a debit spread
that has performed poorly. The risk is that the stock finishes
above $13.50 and we lose more money than the initial debit play.
These types of recoveries are often possible with spread trading
and you should be aware of the various adjustments that can help
limit losses on failed plays. Good Luck!
				- NEW PLAYS -
PHB - Pioneer Hi-Bred Intl.  $24.43     *** Volatility Play ***

Pioneer Hi-Bred is the nation's largest seller of hybrid seeds.
PHB uses genetic research to develop seeds that produce higher
crop yields for farmers, who use the crops primarily as feed for
animals. Corn seed accounts for more than 75% of sales but the
company also makes seeds for alfalfa, canola, sorghum, sunflowers,
soybeans, and wheat. Pioneer also makes silage and hay inoculants.
Chemical giant DuPont owns nearly 21% of the company.

Implied volatility on Pioneer Hi-Bred options continued higher on
Thursday as speculators chased after the calls with expectations
that DuPont would raise its 20% stake in Pioneer. Call volume was
at extremes and that produced a small disparity which may allow us
to profit in a short-term play.

Plan to close the April position next Friday or the following
Monday after the March option expires (or is bought back).

PLAY (speculative/time spread):

BUY  CALL APR-25 PHB-DE OI=112 V= A=$2.43
SELL CALL MAR-25 PHB-CE OI=131 V= B=$1.18

Chart = http://quote.yahoo.com/q?s=PHB&d=3m
UAL - United Airlines  $65.00     *** Technicals Only ***

UAL is the holding company for United Airlines, the #1 air carrier
in the world. United flies nearly 500 jets to destinations in the
US and other countries; it has hubs in Chicago, Denver, London,
San Francisco, Tokyo, and Washington, DC. United Express connects
passengers from regional carriers to United's system. Shuttle by
United offers more than 460 daily short-haul flights to western US
cities. The carrier also leads a code-sharing partnership called
Star Alliance with several other airlines. Employees own over half
of UAL, making it one of the world's largest employee-controlled

Not much news other than a recent industry wide upgrade and the
pronounced effect of OPEC's decision to lower oil production to
help reduce the worldwide glut. Technically, just a nice rolling
trend and today the price finished at the mid-point of the recent
trading range. Historical support at $58 and rising fuel prices
should keep this stock happily caged for the next few weeks.

PLAY (aggressive/credit strangle):

SELL CALL APR-70 UAL-DN OI=344 B=$1.38
SELL PUT  APR-60 UAL-PL OI=20  B=$1.12
UPSIDE B/E=$72.62 DOWNSIDE B/E=$57.38

Chart = http://quote.yahoo.com/q?s=UAL&d=3m
ITVU - InterVU  $22.38     *** Big Move Today! ***

InterVU enables businesses, advertisers and Web developers to
present videos online. Its clients add videos to their Web sites
and banner ads without special equipment or personnel, since the
videos are deflected to InterVU's site. There its server network
and All Eyes and EyeQ software eliminate the problem of video
transmission, enabling multiple viewers to receive videos quickly
and efficiently. InterVU also creates banners; offers VUTOPIA,
which targets specific markets; and presents live broadcasts.

The future earnings outlook is favorable and revenues are strong.
CNN and other companies are expected to continue their current
relationships and ITVU partners are successfully consolidating
with other companies. A large institutional interest exists with
giants like General Electric purchasing stock and there is also
rumor that Broadcast.com and ITVU may be working together on some
new projects.

PLAY (conservative/long-term):

BUY  CALL JUN-22.50 QYU-FX OI=26  A=$4.75
SELL CALL MAR-22.50 QYU-CX OI=397 B=$1.25

Note: In the long-term calendar spread, we are reducing the net
cost of the long option by the amount of credit from the sale of
the nearer-term option. If the near-term call expires worthless,
we will sell the APR call to further reduce our debit. If the
short-term position is ITM on the last day of the strike, you
need to buy it back so that you DON'T have to exercise the long
term position. In that case, your long position is going up in
value also and on the last day of the strike period, the short
call will shrink down to intrinsic value so you should be ahead
in the play even after you buy it back.

Chart = http://quote.yahoo.com/q?s=ITVU&d=3m

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