Option Investor

Daily Newsletter, Tuesday, 04/13/1999

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The Option Investor Newsletter         Tuesday  4-13-99
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)
        4-13-99          High     Low     Volume   Advances Decline
DOW    10395.01 + 55.50 10418.87 10316.47  814,043k  1,545   1,463
Nasdaq  2583.50 - 15.31  2630.52  2575.05 1347,400k  2,156   1,918 
S&P-100  681.45 -  4.00   687.95   677.71   Totals   3,701   3,381
S&P-500 1349.82 -  8.82  1362.38  1344.03            52.3%   47.7%
$RUT     417.24 +  4.92   420.52   412.32
$TRAN   3296.44 - 39.45  3348.86  3290.73
VIX       24.42 +   .76    25.48    23.36
Put/Call Ratio      .50    
Motorola, Merrill, Paine Webber beat estimates, Intel cheats.

Brokers were hot again today. Merrill Lynch soared over estimates
with a reported $1.44 vs estimates of $1.22 but finished down for
the day at -2.56.  Paine Webber on the other hand beat estimates
by $.25 and finished up +$1.75 for the day. The difference is in
expectation and float. Merrill Lynch has significantly more shares
outstanding, is highly visible and had a great pre-earnings run.
MER had run from $65 in Feb to over $100 this week. PWJ had been
range bound since trading at $34 in Feb to a high of $49 today.
This is a pretty good example of expectation fizzle. MER had
a great run, we dropped it before the announcement, it beat 
estimates by +$.22 and then the stock dropped on a day the Dow
was setting records. 

The big news of course was Intel which announced after the close
today. Intel beat estimates of $.55 with $.57 but then warned that
the next quarter would be flat to down. This is a standard warning
for Intel but after posting revenues this quarter that analysts
thought were light, they may take Intel serious for the next cycle.
Did Intel cheat on earnings? They reported lower sales and did
not have the strong volume in high margin chips but still beat
estimates. They again claimed "cost cutting benefits" and other
factors. Looks fishy on the surface and analysts want to see
profits from increased sales not increased cost cutting. 
Intel shares were off -2.50 in after hours trading and the S&P

futures also dropped -5 points on the news. Intel CEO Andy Grove
tried to say all the right stuff on CNBC later but the "spin was
not in". You can smile and joke all you want but any way you say
weak sales it comes out the same. Andy did not actually say weak
sales but there were many clues. Terms like price cuts, product 
mix, seasonal factors all say weak sales. He did say the Pentium
III was on track to be the fastest selling processor ever and he 
did say good things about holding the line or even increasing 
profit margins over the next quarter. The drop in stock price in 
after hours trading may indicate that investors were not filled 
with confidence during the conference call. Time will tell and 
tomorrow will be the key.

The web-brokers and bankers were hot hot hot today. Is there no
end to the daily double digit gains? Those of us who sold some
time ago and are waiting patiently for a pullback appear to be
waiting in vain. EGRP +29.50, SCH +15.50, AMTD +$31 ! If a stock
is up +65 in two weeks, how much does it have to pull back to be 
a buy again? I wish I knew !! My thoughts are 35% to 50% of the 
gain but I do not see that happening any time soon. We have been 
wanting to play NTBK (NetB@nk) since 3/26 but the +$8 spike
to $69 made us wait for pullback. It is now $235! Yes, +$166
in two weeks. Up +$76 today alone. They announced a 3:1 split
today. This rampant euphoria doubtless had many people shorting
this stock in the last week and the split announcement today
caused the mother of all short covering rallies. Now, it really
looks like a short but I would not short it, or any other net
stock, on a bet. Rational thinking investors are scratching
their heads. Stocks don't go up +75 a day and stay there. At
least they never have before. The tulip mania references were
out in force today!

The Dow set another new record and the RUT was up strongly again.
However the Nasdaq and the S&P took a break from the daily new
high routine. The advance/decline line was positive again in
spite of the two declining indexes. Much ado was made about the
Russell-2000 small cap index adding +5% in the last three days.
Is the small cap rally showing confirmation of the Dow rally?
Don't hold your breath. Astute index watchers trying to find
out why the RUT suddenly turned around were surprised to learn
that some previously small cap stocks are now the leaders and
are no longer small caps. A small cap stock is usually considered
to have a market cap of under $1 bln. Don't look now but the
largest stocks in the RUT are now CMGI @ $15bln, XCIT @$9bln,
EGRP @14bln, MFNX @9bln, AMTD @ $10bln, RNWK @ $8bln. Surprised?
The RUT is a market cap weighted index which means the larger
the market cap the more influence a company has on the actual
index. With these previous "small cap" stocks doubling in value
every week it is no wonder the RUT is exploding We do not view 
the recent RUT advance as a legitimate small cap rally and 
anybody that looks under the hood will probably agree. Most
however will take the index at face value and start proclaiming
"small cap rally" at every turn. This would help the overall
market even if it is wrong.

That brings us back to the declining indexes, S&P and Nasdaq. 
We looked at many Nasdaq stocks as possible plays today and
almost all of them were showing signs of weakness. It could be
only temporary or just profit taking but the signs were there.
The Nasdaq had an intraday high of 2630 but closed at 2583 or
-47 points from the high. Not a good sign in our book, but 
the advances still beat the decliners?? Some analysts thought
it was pre-Intel jitters. Again, we will see tomorrow. We have
tried several times now to break through the 2600 barrier to
no avail.

Remember the Compaq inspired market drop on Monday? We dropped
-77 at the open and then recovered to close +234 points off the
bottom. We could see the market drop on the Intel news again
on Wednesday and possibly move forward again. We urge your
to be careful on Nasdaq stocks until a direction is determined.
With all the PC sales worry in the market the tech stocks may
continue to be under pressure. Remember the Nasdaq was down
today on very heavy volume, 1.35bln shares. High volume on a
down day is not a good sign. We are also up over +500 points
on the Dow without a serious bout of profit taking. The
watchword is "caution" for the rest of the week.

Good Luck, Sell too soon.

Jim Brown

Market Posture
As of Market Close - Tuesday, April 13, 1999 

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

DOW Industrials    9,750  10,000  10,395    BULLISH   4.7                 
SPX S&P 500        1,250   1,325   1,350    BULLISH   4.7      
OEX S&P 100          630     660     681    BULLISH   4.6        
RUT Russell 2000     390     400     417    BULLISH   4.9       

NDX NASD 100       2,075   2,250   2,175    Neutral   4.12 *       
MSH High Tech        975   1,115   1,052    Neutral   4.12 *              

                   Key Benchmarks
Technology         Bearish/Bullish  Last    Posture/Since  Alert
XCI Hardware         875     900     892    Neutral   4.12 *               
CWX Software         600     650     626    Neutral   4.6                  
SOX Semiconductor    375     400     380    Neutral   4.12 *          
NWX Networking       420     490     475    Neutral   4.12 *               
INX Internet         550     580     699    BULLISH   3.29        

                   Key Benchmarks
Financial          Bearish/Bullish  Last    Posture/Since  Alert
BIX Banking          675     710     714    BULLISH   4.12 *                      
XBD Brokerage        400     415     530    BULLISH   4.6            
IUX Insurance        625     655     640    Neutral   3.19                

                   Key Benchmarks
Other              Bearish/Bullish  Last    Posture/Since  Alert
RLX Retail           900     940     953    BULLISH   4.8          
DRG Drug             390     410     422    BULLISH   4.9           
HCX Healthcare       775     835     845    BULLISH   4.9                    
XAL Airline          170     185     174    Neutral   3.30      
OIX Oil & Gas        250     260     273    BULLISH   3.30                        

Posture Alert

After advancing to new heights and selling off amid 
earnings concerns, we have turned Neutral across select
technology sectors including Nasdaq 100, Hardware, and
semiconductors.  We have also turned Bullish on the
Banking sectors after its index reached a new 52-week high.

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


Market Sentiment - By Pinnacle Capital Advisors

Hold On

The broad market rally could very well be tested by the 
after-the-bell earnings warning by Intel.  As Pinnacle alerted 
subscribers on Sunday, the small cap (Russell 2000) finally 
emerged above its 100/200-day moving average and has helped fuel 
the recent rally.  Although the action within the small cap and
transportation index are encouraging, the Market volatility
index (VIX) jumped 6% from 23.44 to 24.94 and is quickly
challenging its 50-day moving average (26.00).  Pinnacle Capital
Advisors wants to alert subscribers to keep an eye on this
trusted indicator.  Over the near-term, The VIX has presaged key
turning points.  


Russell 2000              Trading above key 400 level.  Troops
                          beginning to follow Generals.

Interest Rates            Trading BELOW 200dma and 5.50%
                          Benchmark. (5.494%)

Peak Open Interest        April's peak open interest (1.32)
                          climbed higher indicating that Put open
                          is building.


Market Volatility (VIX)   Jumped nearing 1% to 24.94 and 
                          challenging 50-day moving average
Pinnacle Index            Reaching extreme levels at overhead 
                          strikes (OEX 680-695).

Advance/Decline Line      Enormous gap between INDU and A/D line. 


OTM Call Analysis

As we move through April's expiration cycle, Pinnacle is tracking 
the level of call buying (OTM) between 650-700 among option
speculators. As we have been documenting, out-of-the-money
(OTM) call buying has been climbing and may serve as overhead 

March Expiration Cycle
OEX OTM Call Analysis (Open Interest MAR 650-700)
Date                 Open Interest     Change %    Alert
Friday, March 5             58,085         -
Friday, March 12            68,675      +18.2%
Thursday, March 18          85,124      +47.6%     *    

April Expiration Cycle
OEX OTM Call Analysis (Open Interest Apr 650-700)
Date                 Open Interest     Change %    Alert
Friday, March 19            35,626         -
Friday, March 26            60,266      +69.2%     
Friday, April 2             70,952      +99.2%     
Friday, April 9             74,028     +107.8%     
Tuesday, April 13           79,656     +123.6%     *

Market Sentiment at a Glance
                                Friday     Tues      Thurs  
Indicator                       (4/9)     (4/13)     (4/15) Alert

Pinnacle Index (OEX):          
Overhead Resistance (680-695)     8.7        2.3             *   
Underlying Support  (645-660)     1.9        2.5

Put/Call Ratios:
CBOE Total P/C Ratio               .5         .5
CBOE Equity P/C Ratio              .4         .4                      
OEX P/C Ratio                     1.7        1.5                                  

Peak Open Interest (OEX):
Puts                              520        520
Calls                             700        700
P/C Ratio                        1.56       1.32                     

Market Volatility Index (VIX):	
CBOE VIX                        23.44       24.94                      

Investors Intelligence:
Bullish                         56.4%       56.4%            *  
Bearish                         31.6%       31.6%            *

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                             Friday      Tues      Thurs
Benchmark                       (4/9)       (4/13)    (4/15)
                    (690-695)     20.0        6.2
                    (680-685)      4.9        1.1
Overhead Resistance (660-675)      8.7        2.3

OEX Close                       679.49     681.45

Underlying Support  (645-660)      1.9        2.5
                    (655-660)      1.6        1.9
                    (645-650)      2.3        3.5
Average ratings: 
Resistance levels 2.0 / Support .5

What the Pinnacle Index is telling us:
Overhead sentiment resistance is moderate at the OEX 680/695 
level while the underlying support is building at the
OEX 645/660 level.

Put/Call Ratio 
                                Friday      Tues       Thurs
Strike/Contracts                 (4/9)      (4/13)     (4/15)
CBOE Total P/C Ratio               .50        .51
CBOE Equity P/C Ratio              .38        .35
OEX P/C Ratio                     1.68       1.50

Peak Open Interest (OEX)
                     Friday         Tues         Thurs
Strike/Contracts     (4/9)         (4/13)        (4/15)
Puts                 520 / 16,370  520 / 16,370
Calls                700 / 10,818  700 / 12,363
Put/Call Ratio       1.51          1.32

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   

April 9, 1999                           22.91
April 13, 1999                          24.94 *

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   
March 17, 1999                        52.6        17.6     
March 24, 1999                        55.9        29.7     
March 31, 1999                        55.6        31.6     

April 7, 1999                         56.4        31.6  *   

Please view this in COURIER 10 font for alignment

Index     Last    Mon    Tue  Week
Dow    10395.01 165.67  55.50 221.17
Nasdaq  2583.50   5.76 -15.31  -9.55
$OEX     681.45   4.11  -4.00   0.11
$SPX    1349.82  10.28  -8.82   1.46
$RUT     417.24   6.46   4.92  11.38
$TRAN   3296.44 -34.51 -39.45 -73.96
$VIX      24.42   0.75   0.76   1.51

Stock             Mon    Tue   Week

EGRP     125.50   5.88  29.50 35.38 Makes you sorry you sold yesterday
CMGI     297.81  37.63  -4.19 33.44 The Internet Incarnated
SCH      150.50   9.00  15.50 24.50 Dropped, earnings-before the bell 4/15
QCOM     169.75  15.31   8.88 24.19 Earnings are April 20th
RNWK     229.00  39.50 -18.00 21.50 Thrill seekers entry point!
MFNX      77.94   0.63   9.94 10.57 Announced a 2:1 split
COF      168.56   2.06   7.63  9.69 Earnings are April 15th
LVLT      93.06   5.25   3.06  8.31 Fiber Optics are hot!
QWST      96.13   1.88   5.25  7.13 Wheeling and dealing
AEOSD     85.13   7.75  -2.63  5.12 Entry point!
DCX       98.63   2.69   1.38  4.07 New, strong fundamentals
MWD      114.19   0.50   2.19  2.69 Brokers are still climbing
WMT      104.56   2.13  -0.31  1.82 Splits 2:1 on April 19th
VOD      196.81   0.38   0.31  0.69 Near its highs
JNJ       98.63   1.63  -1.00  0.63 Earnings changed to April 20th!!!!
JPM      129.31   0.75  -0.19  0.56 Dropped, not moving
TLAB     112.88  -2.88   3.38  0.50 Dropped, earnings-April 14th (split cand)
AOL      159.31  -2.06   1.44 -0.62 Consolidating
PVN      118.00   0.44  -1.44 -1.00 Earnings are April 26th
CMVT      93.75   1.69  -2.81 -1.12 Splits is Thursday (3:2)
BRCM      72.06  -0.56  -1.38 -1.94 Earnings are April 20th
VISX     134.84  -6.41   4.09 -2.32 Dropped, earnings April 14th (split cand)
JBL       46.75  -0.13  -2.25 -2.38 Be wary of any Intel fallout
SLR       52.19  -1.88  -1.81 -3.69 Dropped, Intel will pull it down
EMC      131.13  -4.31   0.56 -3.75 Earnings are April 20th
MSFT      90.13  -1.25  -2.88 -4.13 Dropped, not moving. Earnings 4/20
AMZN     178.38   1.56  -6.06 -4.50 Still have time before earnings
UNPH     125.00  -2.63  -2.13 -4.76 Wait for confirmation

RMBS      67.88  -3.06  -1.00 -4.06 Earnings should be no help
BGEN     113.38   1.06  -2.13 -1.07 Post earnings fatigue
LTR       70.81   0.31   0.25  0.56 Still weak
HWP       70.81  -1.25   2.44  1.19 We don't believe the hype
LHSG      29.06   0.38   0.94  1.32 Dropped, found a bottom
PPG       50.81   1.31   1.44  2.75 Nothing moves in a straight line
GM        90.44   2.50   2.31  4.81 Dropped, Upgraded

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.


SCH $150.50 +15.50 (+24.50)  SCH is hot, hot, hot!!!  When we 
added it way back on Feb 21st, it was trading at a mere $69.06.  
On Tuesday it closed at $150.50!!  The online brokerage sector 
is simply on fire and SCH is leading the way.  It will announce 
its earnings before the market opens on Thursday April 15th.  
This means you should consider closing your positions on 
Wednesday since we never recommend holding over the actual 
announcement.  Even though SCH could very well crush estimates, 
why risk losing on your profits?  We have to say goodbye to 
SCH for the time being.  We will definitely re-add it if it 
can sustain its incredible upward journey!!  Keep in mind 
that it is a split candidate even though it would need the 
authorization of more shares and a shareholder approval at 
its meeting in May (at this level, a split looks imminent).

MSFT $90.13 -2.88 (-4.13) Uh-oh.  Sure doesn't look like an 
earnings run today or yesterday.  The "old techs" like MSFT 
or INTC are experiencing some weakness as profits are taken 
and rotated into new performers like broadband development 
(QWST, LVLT, QCOM) and on-line brokers/bankers.  
Unfortunately, MSFT's losses come with increasing volume - 
not good.  Intel earnings didn't help and will likely take 
the whole sector down tomorrow.  Microsoft's announcement 
of developing real-time on-line music won't temporarily 
save it right now.  We're not waiting around, and are 
dropping MSFT tonight despite its reporting in 5 trading 
days (April 20th).

SLR 52.19 -1.81 (-3.61) Here's a short story.  We are 
dropping SLR in the wake of Intel's earnings report, which 
stated flat to lower revenues going forward into Q2.  SLR 
is likely to ride its coattails.  The end.

JPM $129.31 -0.19 (+0.56)  Bear Stearns, Merrill Lynch, & 
Paine Webber all beat estimates. And yet the financial 
powerhouse, JP Morgan, doesn't respond?  This lack of 
enthusiasm quickly changed our view on the stock and we're 
dropping it.  JPM will report earnings April 19th.

VISX $134.84 +4.09 (-2.32)  We practice what we preach. 
We're dropping VISX because earnings are due tomorrow after 
the bell. It's too risky to hold over an earnings report 
no matter how good the forecasts look.  And consider this. 
$40 in premium profit over the past two weeks is more than, 
shall we say - adequate?  Even though they recently split
at the $120 level, VISX is at split level again and they
have plenty of shares for another one.  Don't be surprised
if they announce one with earnings tomorrow.

TLAB $112.88 +3.38 (+0.50)  TLAB made up its loses from 
Monday today and reached an intra-day high of $115.25.  We
are dropping TLAB from the list today because earnings are
tomorrow.  We don't advise holding over earnings, but if
you are willing to accept the risk, TLAB could announce a
stock split.  We will look at TLAB after earnings to see
if they have post earnings depression.  TLAB has a share-
holder meeting in 1 1/2 weeks (a perfect chance to vote
on a split).


GM $90.44 +2.31 (+4.81)  We added GM as a put when they 
reported disappointing March auto sales while the rest of 
sector set monthly and quarterly records.  GM's truck sales 
dropped 2.2% and their light vehicle sales dropped 5.8%.  With 
earnings due on Thursday April 15th, we were expecting a 
pullback.  However, Lehman Brothers began coverage of GM with 
an outperform rating, set a new price target of $95, and 
projected a strong earnings outlook.  GM amazingly popped above 
its 50, 30,and 15 dma as investors drove the stock price higher 
and out of danger territory.  We are dropping GM as a put play 
for the time being.  

LHSG $29.06 +0.94 (+1.31) LHSG is not looking very put-
like.  Earnings are expected April 21 and volume is 
increasing along with the price.  In short, we think we've 
found a bottom, at least for now.  Thus we are dropping 
LHSG tonight.


COF $168.56 +7.63 (+9.68)  COF is definitely on an earnings 
run.  On Tuesday it flew +$7.63 and even reached a new all 
time high of $170.00 in intraday trading.  The company will 
release its numbers to the world on Thursday April 15th 
sometime during the day.  Even though we feel that COF could 
have some great numbers, remember that we never recommend 
holding over the actual announcement.  That means that 
Wednesday might be the perfect time to cash in your profits.  

QCOM $169.75 +8.88 (+24.19)  QCOM is a stampeding bull!!  On 
Tuesday, it trampled over its old all time high only to notch 
a new one at the level of $175.25.  Earnings for the company 
are scheduled for April 20th after the market closes.  We are 
hoping for a split announcement with their earnings reports.  
They have more than enough shares for a 2:1 (or 3:1) and 
previously split back in '95 at the $60 level.  Watch for QCOM 
to keep charging higher.  

QWST $96.13 +5.25 (+7.13)  OK- who spilled the lighter fluid 
on QWST?  This fiber optic company is ON FIRE!!  It added 
+$14.50 in last week's trading and seems to be getting even 
hotter this week.  It is already up +$7.13 in Monday and 
Tuesday trading alone.  Some of the excitement may have 
stemmed from Morgan Stanley Dean Witter's comments.  They 
raised QWST's price target to $110 (up from $85) and 
reiterated their strong buy rating on the company.  Additional
enthusiasm may be from QWST's new business deals.  In one of 
their most recent moves, QWST will team up with KPN Telecom 
to provide Europe with over 9100 miles of network which will 
provide broadband and Internet-based communication services 
in over 40 major European cities.  QWST is expected to announce 
several other deals in the next few months and we see QWST 
moving much higher.  Their earnings will be released on April 
28th.  They are one of our split candidates.  

***** 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  4-13-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

PICK NEWS - CALLS (continued)

PVN $118.00 -1.44 (-1.00)  After breaking to a new all time 
high in intraday trading of $122.44 on Tuesday, PVN dipped 
-$1.44 from what seems like simple profit taking.  With 
earnings scheduled for April 26th, this slight pull back could 
be your chance to buy at a discount.  PVN is in a hot financial 
sector and could recover quickly.  Also note that PVN is on our 
split candidate list.  It has plenty of authorized shares for a 
2:1.  Make sure to confirm the upward direction just in case 
the profit taking isn't over.  (In other news, "PVN announced 
the launch of a state of the art Internet retail deposit site.  
The company is the only major financial institution in the 
country offering online money transfer for customer retail 
deposits." (-PRNewswire)

WMT $104.56 -0.31 (+1.81)  WMT had been up for seven consecutive 
trading days in a row as investor excitement grew over the fact 
that the company splits 2:1 on Monday April 19th.  Even though 
WMT set a new all time high in intraday trading at $106.81 on 
Tuesday, profit takers stepped in and set the stock back thirty- 
one cents by the market close.  This could be your chance to 
buy on the dip for a short term play.  However, make sure to 
confirm upward movement again before jumping into any new 
positions.  Usually when a stock jumps for 7 days, it could 
drop for 3 days based on the cycling pattern.  Also remember 
that we never recommend holding over the actual split.   

AOL $159.25 +1.38 (-0.69) Only a small beneficiary of this 
weeks Internet feeding frenzy and despite rising to $164.25 
in early trading this morning, AOL has traded flat this 
week on average volume.  They don't report earnings until 
April 27 where they may also announce a split.  The bigger 
factor is that investors are turning their attention and 
their $$$ off the big cap tech stocks toward bandwidth and 
the Internet.  Technically, MACD is headed down.  We may 
have a few days to wait and a round of profit taking yet 
before we see a new run begin.  Wait for AOL to come to 
you; don't play because you have to.  Your #1 job is to 
earn money, not to risk capital.  Better to save it until 
it's profitable to trade.  Be patient.  It will happen.  
Confirm market direction first.

EMC $131.13 +0.56 (-3.75) Volume has been lackluster during 
the first 2 days of the week.  Of more concern, the 
spotlight is off the large tech stocks as they exit the 
stage temporarily in favor of a new rendition of "Those 
Amazing Internets"!  Honestly, EMC needs a breather 
following a strong run.  Technicals are showing a bit of 
weakness too.  Nonetheless, EMC reports earnings April 20 
before the open and should resume its upward march. 
Confirm market direction before taking a new position.

VOD $196.81 +0.31 (+0.69) Not much action here either.  
Technicals are still nicely positive.  AirTouch Cellular, 
VOD's betrothed in a second half wedding, will report 
earnings April 22.  VOD will benefit from any earnings run 
experienced by ATI, and its use of CDMA (read that 
"bandwidth") technology.  Resistance of $197.75 is proving 
tough to penetrate.  If profit taking sets in, make sure 
you have a stop set.  Wait until profit taking is over or 
VOD breaks through and holds over $197.75, and of course, 
confirm market direction before starting the play.

EGRP $125.50 +29.50 (+35.37) Surprise earnings from the 
full service houses buoyed the on-line brokers today as 
they expect even bigger surprises given the firestorm-like 
spread of on-line trading volume and new accounts.  It 
isn't over yet, but don't be greedy.  Ameritrade reports 
earnings on Thursday and will likely see some profit 
taking, which could easily rub off on competitors like 
Schwab and E*trade.  Keep your stops set.  Technical charts 
need re-calibration to handle these "pegged" indicators.  
You thought "old Internets" like Amazon and Yahoo! were 
hot?  They pale in comparison to the meteoric rise of on-
line brokers.  Gravity will prevail.  For risk takers only. 
Confirm market direction before playing.  Earnings are 
April 20.

UNPH $125.00 -2.13 (-4.75) We noted in an update last week 
that UNPH would trade in 1-2 week cycles.  Looks like we 
get another buying opportunity.  We don't look at this 
week's action as a reason to drop the play, as it came on 
lower to average volume.  UNPH supplies its equipment to 
Lucent, among others; LU announced after the close that 
revenues are unusually strong (up $4 after hours).  Upward 
surprise anyone?  Technically though, UNPH is rolling over 
and may soon cross the line to negative territory.  Beware 
of overall market profit taking too in the wake of Intel's 
forward looking flat to lower revenues.  Long term, this is 
a benefit to UNPH as it represents the new bandwidth 
paradigm, however, investors may not immediately recognize 
this, and toss this baby out with the "old tech" bath 
water.  No news on the company.  With earnings on April 26, 
we could get a nice reversal to the upside.  Play only 
after confirming market direction. 

MFNX $77.94 +9.94 (+10.56) Can you say 2:1 stock split?  
Sure, we knew you could.  Actually this announcement came 
early.  We expected the announcement along with earnings on 
May 18.  No matter, we'll take it now.  Congrats to those 
who played the bandwidth explosion this week.  The actual 
split takes place on May 19, which when you think about it 
is pretty smart.  It minimizes the reason to sell prior to 
or after earnings.  Anyhow, today it closed at a new high.  
As long as this sector remains hot, MFNX should continue 
this run.  Don't be afraid to get out though on any profit 
taking.  Keep the stops set and confirm market direction 
before playing.

AEOSD $85.13 -2.63 (+5.13)  Pre-split excitement and strong 
volume propelled this stock up +7.75 points on Monday. This 
9.5% gain set the stage and AEOSD hit $88.13 during intraday 
trading to set another 52 week record high. Today the stock 
suffered some profit-taking and gave back just a little. The 
2:1 stock split is set for May 3rd. Take note of the symbol 
change that occurred last Thursday and be sure to double 
check the option symbols with your broker.

AMZN $178.38 -6.06 (-4.05)  AMZN made a small gain yesterday 
adding +1.56 by the close, but today the stock was a victim 
of the Nasdaq profit-takers.  Profits were still attainable 
this morning as the stock reached $192, but then it finally 
succumbed to the daily trend and took its losses. GK Baum 
initiated coverage on AMZN today. They only rated it a 
"neutral" based on valuation criteria, yet in the same breath 
cited the company is clearly emerging as the dominant on-line 
specialist.  Monday evening, Amazon announced they will buy 
LiveBid.com for an undisclosed amount to enhance their presence 
in Web Auction services.  The real-time software technology 
used by LiveBid.com was a major factor in the deal.  Internet 
stock can be volatile so please remember to protect your profits 
and use stops. 

CMVT $93.75 -2.81 (-1.13)  CMVT splits Thursday 3:2 and 
momentum is still building. The stock climbed to new highs 
both yesterday and today. As did many other stocks on the 
Nasdaq, this one too closed down for the day, but not before 
reaching $99.63! This is a continuation of its split run.  
Remember, 7 out of 10 stocks fall into post-split depression 
and we never recommend holding over a split date.  

LVLT $93.06 +3.06 (+8.31)  Investors are listening to the 
"buzz" on the Street and buying up fiber-optic network 
builders. High-speed internet connections are the wave of 
the future and analysts see the profit potential for these 
companies. Britain's Cable & Wireless announced today it 
will invest $670 mln to build a vast internet network in 
the US using 15,000 route miles of fiber-optic cable 
purchased from Level3 Communications.  LVLT shot up +5.25 
points on Monday and today it turned its back on market 
sentiment and kept a +3.06 gain. LVLT has been on a long 
uptrend, but again, the recent surge may be driven by 
earnings due on April 23rd (before the bell) as well as the 
industry's overall growth.  Please consider the earnings 
factor as part of your strategic planning.

JBL $46.75 -2.25 (-2.38)  Conservative players here's your 
pullback. Yet, the stock didn't duck below its old resistance 
and is still positioned above its 10 dma at around $43-44.  
And it even reached a new pinnacle today and set yet another 
52 week high at $49.63.  This may simply be the expected 
consolidation before JBL bounces again, but before 
initiating a new play, look for that upward confirmation.

MWD $114.19 +2.19 (+2.69) MWD continues to trend higher with
a slight gain on Monday and a strong gain on Tuesday.  On 
Tuesday, Paine Webber and Merrill Lynch announced great 
earnings and this helped to convince the street that the 
brokers are really having a great year.  MWD reached a new
52-week high of $116.94 intra-day today.  The financials 
have been the hot sector and we see this continuing for the
time being.  MWD could announce a stock split at any time,
but we imagine the board will wait until the stock needs a

RNWK $229.00 -18.00 (+21.50)  In the words of Buzz Lightyear,
"To infinity and beyond!".  RNWK reached a high of $263.75
before fading.  We listed RNWK's earnings date as 4/27, but
we called investor relations and they gave us the 20th of 
April.  RNWK is up just $159 since we picked on the 27th of
February.  This would lead one to think that gravity has to
take place, but with earnings coming up and the likelihood
of a stock split, we see RNWK continuing higher.  Target 
shoot to get best price, but then again, today may have been
your entry point for the remainder of its earnings run.

CMGI $297.81 -4.19 (+33.43) CMGI has been on a gravity
defying run which took it as high as $330 on Tuesday.  The
stock faded as the day went on and closed slightly down.
Chairman and Chief Executive Officer David Wetherell opened 
the Company's third annual Investor Summit today with an 
address on the state of the CMGI "union."  The Summit will 
showcase a diverse portfolio of Internet businesses linked 
by CMGI's increasingly powerful vision of web commerce and 
investment being validated daily by the extraordinary growth 
of the online economy.  We apologize for the misinformation
in the weekend edition when we stated CMGI should announce
a stock split.  They already have announced a split and it
is payable May 27th.

JNJ $98.63 -1.00 (+.63) JNJ is still up for the week though
we saw the stock trade down today.  The stock gapped down on
the open and then traded in a very narrow range from $98.06
to $99.  Warburg Dillion raised its price target on JNJ to
$120 from $100 and reiterated its buy rating.  JNJ also 
announced that Ortho-McNeil Pharmaceutical Inc., a division 
of JNJ, said Tuesday that the European Commission has 
authorized marketing for Regranex for diabetic foot ulcers.
We called JNJ investor relations and found out that earnings
will be before market on the 20th of April.  

BRCM $72.06 -1.38 (-1.94)  BRCM has had a couple down days
in a row this week.  We can't quite put a finger on the 
reason, especially considering that BRCM was started at 
outperform at Salomon Smith Barney.  We have found out that
BRCM's earnings will be after market on the 20th of April.
This was confirmed with investor relations.  BRCM has a
shareholder meeting scheduled for May 6th.  


RMBS $67.88 -1.00 (-4.06)  RMBS is likely to sink further 
into the quicksand.  All eyes were on Intel to report stellar 
earnings.  Even though the company beat their estimates by two 
cents, investors were selling in after hours trading.  This 
could drag the entire sector down tomorrow and RMBS could 
continue to fall in sympathy.  We still haven't been able to 
pin down the exact date for the RMBS earnings announcement.  
It could be tomorrow (Wednesday).  Regardless, we feel that 
if INTC couldn't make investors happy, then RMBS will also 
likely disappoint.  

PPG $50.81 +1.44 (+2.76)  All year this stock has been in a 
downtrend. The advances by PPG the past two days can only 
be attributed to the strong market. There is no new event 
to report. Even with the recent gains, PPG is still 
positioned well below the bearish 200 dma at $56-57. PPG 
will announce earnings Thursday, April 15th and the news 
has been that 1Q EPS may fall short by as much as 25%. It is 
aggressive to play so close to earnings; so please, confirm 
the stock's direction before beginning a new play and keep 
your stops in place. 

HWP $70.81 +2.44 (+1.19)  The tech sector was shook up by 
Compaq's earnings warning and most of the stocks took a dive 
on Monday morning.  HWP was no exception and dropped $4.50 
by noontime. The debate continued throughout the day about 
whether CPQ's problems are isolated or broad-based for the 
industry.  HWP closed down -1.25 for the day.  Analysts are 
fearful that HWP may be the next to pre-warn, but today, 
Hewlett Packard's CEO went on the SquawkBox and gave his 
company some positive press stating HWP is "on track". This 
eased some analysts' apprehension and HWP gained +2.44. Also, 
after the bell today, Intel reported better than expected 
earnings. But just yesterday, BB Robertson Stephens downgraded 
HWP from "buy" to "LT attractive" citing expected lower 
revenue growth for the company.  Earnings are expected 
May 17th.  

LTR $70.81 +.25 (+.56) LTR hasn't done much this week.  This
isn't all bad.  With the gains the market has had, LTR has
gained very little.  LTR is hovering near its 52-week low
and with the slightest hint of further law-suits, we could
see LTR drop even further.

BGEN $113.38 -2.13 (-1.06)  BGEN had a small bounce on Monday,
but continued its downward ways on Tuesday.  After a run up
into earnings, BGEN met estimates last Thursday, and the 
street wasn't impressed.  We see BGEN falling to at least
the $110 level.  BGEN closed near its low of the day, another
bearish sign for Wednesday.  


DCX - DaimlerChrysler AG $98.63 +1.38 (+4.07 this wk)(+7.00)

Even though this automobile manufacturer was created only a 
year ago with the $37 billion acquisition of Chrysler by 
Germany's Daimler-Benz, DCX is already ranked #3 in sales 
and #5 in number of cars sold.  The company even has a 
freightliner unit that is the #1 maker of heavy trucks in 
the United States.   Mercedes-Benz, Plymouth, Jeep, and Dodge 
are all part of DaimlerChrysler's line of products.  

The automotive sector has been performing extremely well as of 
late.  Record monthly and quarterly profits were announced last 
week for the sector.  It is obvious that DCX is a leader when 
looking at the company's graph.  It exhibits a steady uphill 
climb throughout the past several weeks.  We feel DCX has plenty 
of potential.  Merrill Lynch seems to agree.  It upgraded the 
company to an intermediate term buy and went on to keep the 
company's long-term accumulate rating.  Watch for DCX to really 
step on the gas!

News:  Because DCX is based mainly overseas, we were unable to 
get their exact earnings date. 

BUY CALL MAY- 95 DCX-ES OI= 162 at $6.63 SL=4.75
BUY CALL MAY-100*DCX-ET OI=1537 at $3.50 SL=1.75
BUY CALL JUL- 95 DCX-GS OI= 556 at $8.25 SL=6.50
BUY CALL JUL-100 DCX-GT OI= 756 at $5.88 SL=4.25

Picked on April 13th at $98.63      PE = 12
Change since picked    +$ 0.00      52 week low =$ 74.50
Analysts Ratings     0-4-6-0-0      52 week high=$108.63
Last earnings N/A est 0.00   actual 0.00 
Next earnings N/A est 0.00   versus 0.00
Average Daily Volume = 980.5 K
Chart = http://quote.yahoo.com/q?s=DCX&d=3m



The Blue-chip Rally Continues...

Monday April, 12

The Dow closed at a new high as investors shopped the bargains
after a technology sell-off sparked by Compaq's warning of weak
earnings. The blue-chip index was up 165 points at 10,339 passing
the record set last Thursday. It was the fourth time in the past
six sessions that the DJIA has set a new record. The Nasdaq index
eventually rebounded, closing slightly higher at 2,598, and well
above the lows early in the day. In the broader market, advancing
issues led declines 16 to 13 on active volume of 810 mil shares
on the NYSE.

Sunday's new plays (positions/prices):

UK   JUL50C/APR50C  $2.75 debit (bullish play - but below target)
INTU MAY85C/MAY95C  $7.75 debit (easy entry at the target price)
CDO  MAY17C/MAY20C  $1.50 debit (played near the open)
CNCX MAY65C/MAY70C  $3.87 debit (down at the open-up at the close)
MI   MAY15C/MAY17C  $0.62 debit (great entry - speculators only!)
MOT  LJAN85/APR85C  $9.50 debit (down $2 by noon - price adjusted)

Portfolio plays:

As expected, DELL dropped with many of the tech issues after the
CPQ earnings warning but most of the other plays held on through
the morning collapse. One of our smaller issues that we spoke of
last Friday continues to fail. That stock is COOL, and the long
option, APR17C was sold for $1.50, to keep the play profitable.
We expect the stock price to remain below $20 until this Friday's

Tuesday, April 13

Blue-chip stocks continued their rally as the DOW set its 13th
record high this year on reports that the economy continues to
enjoy slow and steady growth. The DJIA closed 55 points higher
at 10,395. The Nasdaq index fell slightly, losing 15 points to
2583. In the broader market, advancing issues led declines by a
small margin on active volume of 812 million shares on the NYSE.

Portfolio plays:

Dell continued to drop today, but rather than close our two plays
(we are still bullish on DELL), we decided to just double-up on
the positions, increasing the probability of success if DELL does
recover. We are now basing our plays on 20 contracts each. NXTL is
also down big, two days in a row, so watch this one carefully for
news of the WCOM merger (or lack of it!). The two credit positions
that we opted out of earlier in the week (to limit our downside),
are now both safely inside the sold strikes. I am referring to the
LU put-credit spread and the TXN credit-straddle. Murphy's Law is
alive and well!
                           - NEW PLAYS -
FLT - Fleet Financial  $43.06     * Volatility Play ***

Fleet Financial Group provides business, retail, trust and asset
management, leasing, insurance, mortgage banking, real estate,
and investment services to individual and commercial customers
through some 1,200 branches. The #1 bank in New England, it also
offers checking, savings, loans , credit cards and money market
deposit accounts. Fleet has significant consumer, student, and
mortgage loan operations as well as strong consumer and business
banking operations. Other businesses include retail brokerage,
mutual funds, and mortgage servicing. Fleet's Quick & Reilly
Group is one of the top discount brokerages in the US.

Financial stocks are HOT and everyone is using the opportunity to
get back into a steady sector. Brokerage and banking stocks are
expected to achieve double digit earnings-per-share growth based
on new interest in investment banking, and signs of recovery in
the emerging markets.

Fleet is expected to report quarterly earnings next week (on April
22) just after the strike date but call option buyers have already
boosted the implied volatility on the April positions. We expect
FLT to finish somewhere near the sold strike price on Friday and
if that occurs, we should have a favorable edge in this neutral
calendar spread.

PLAY (conservative/time spread):

BUY  CALL JUL-45 FLT-GI OI=940  A=$2.81
SELL CALL APR-45 FLT-DI OI=2595 B=$0.50

Note: Plan to sell the May position after the April position
expires (or is bought-back) this Friday.

Chart = http://quote.yahoo.com/q?s=FLT&d=3m
PTEK - Premier Technologies  $17.25    *** Cheap Speculation ***

Premiere Technologies offers a variety of messaging and telecom
services including voice mail, fax/e-mail delivery, conference
calling, calling cards, personal 800 numbers, and interactive
voice response for businesses. The company delivers its services
through its network management system, which is accessible from
virtually any telephone and can communicate with PCs, pagers and
fax machines. Premiere also offers Web access to its system.

Among the other recent market alliances, Sun Microsystems and
PTEK just announced a strategic relationship to promote their
unified messaging services and Web-based communications. PTEK's
Orchestrate.comŽ unified messaging services will now be powered
by software from the Sun-Netscape alliance. The product support
from SUNW is expected to transform PTEK, (and Orchestrate.com)
into one of the top Web-based communications companies.

Rumors are also flying that Warren Buffet has acquired a minor
stake in PTEK. Some traders are saying that Buffet was present
during negotiations of SUNW alliance and sees some long-term
potential in the small communications company. We just like the
extra media attention that good rumors always provide!

PLAY (speculative/debit spread):

BUY  CALL MAY-15.00 TQO-EC OI=2446 A=$4.00
SELL CALL MAY-17.50 TQO-EW OI=151  B=$2.75
INITIAL NET DEBIT TARGET=$1.12 ROI(max)=125% B/E=$16.12

Chart = http://quote.yahoo.com/q?s=PTEK&d=3m
WCII - Winstar Communications  $50.81    *** Hot Sector ***

WinStar Communications is building a national network of local
and long-distance telephone, Internet access, and information
services. They transmit these services through high-frequency
radio waves that are as reliable as underground fiber cable and
much less expensive. Its local services are available in more
than 20 US metropolitan markets; Winstar has wireless licenses
for about 110 US markets and recently announced today that it
has been granted a nationwide grant of spectrum in the 38 GHz
band in the United Kingdom and plans to launch service in London
later this year. WinStar now has spectrum in major international
markets and can now provide high-speed data/information services
to large multinational business customers. WinStar New Media also
distributes business information services and entertainment such
as sports radio talk shows, TV programs, and films.

The telecom sector is booming and a recent analysts report says
that by almost any comparable measure, WinStar appears to NOT be
participating fully in the current telecom industry rally. The
analyst is reiterating his "strong buy" rating with a $62 target.
WinStar appears to be the most undervalued of the wireless CLEC
names, and that is where brokerages are focusing their investing
attention at present, looking for undervalued, emerging sectors
that can give them the next winner!

PLAY (conservative/debit spread):

BUY  CALL MAY-40 WQS-EH OI=657 A=$11.62
SELL CALL MAY-45 WQS-EI OI=365 B=$7.50
INITIAL NET DEBIT TARGET=$3.87 ROI(max)=28% B/E=$43.87

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

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