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Daily Newsletter, Thursday, 11/11/1999

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The Option Investor Newsletter         Thursday  11-11-99
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.

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

Published three times weekly, Sunday, Tuesday, Thursday evenings.
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
       11-11-99           High     Low      Volume Advances Decline
DOW    10595.30 -   2.40 10643.90 10543.90   891,350k 1,259  1,715
Nasdaq  3197.29 +  41.33  3201.38  3169.04 1,379,835k 2,012  1,983
S&P-100  725.11 +   4.24   726.27   720.30    Totals  3,271  3,698
S&P-500 1381.46 +   8.00  1382.12  1372.20            46.9%  53.1%
$RUT     447.49 -   1.23   450.76   447.09
$TRAN   3011.99 +   5.75  3017.04  2988.84
VIX       22.54 -   0.96    23.76    22.26
Put/Call Ratio       .55
*************************************************************

Hello Ripley? Believe it or not, 9 records in 10 days.

After only a -19 loss on profit taking on Tuesday the Nasdaq has
charged off again on another streak of new record highs. The gains
are on strong volume making Thursday the fourth heaviest day on
record with 1.38 bln shares traded. The Nasdaq continues to soar
without the help of the Dow. Since spiking to 10840 at the open
on Friday of last week, the Dow has continued to be weak and has
closed exactly at lower support (10600+ for the last three days. 
The advance/decline line has been negative all week and new lows
continue to beat new highs.


  

 

You can see by the Dow chart above, that except for the 
spike last Friday the trend has been flat to down for over
a week. However in contrast to the Dow the Nasdaq chart
below is perfection in real life. The Nasdaq has been
charging forward as if there was no worries in sight.


 

I applaud the rally in the face of the coming Fed meeting 
and hope it continues. The reason for the rally is historical.
Normally techs go down first and rally first. After the tech
prices appear to top the rally will broaden out into the
other sectors if the internals and economic fundamentals
remain favorable. The Nasdaq rally is being fueled by
massive amounts of cash coming in from the sidelines by
institutional buyers. Comments like "just get me filled
at any price" is powering some of these stocks to nosebleed
levels. The fear by the tech funds is that the train is leaving 
the station and by waiting for a pull back that never comes
they will be cursed with lesser returns than their fund 
brethren. This is causing a speculative bubble in techs that
could be dangerous if the market fundamentals turn negative.

The Fed meets next Tuesday to decide if they are going to 
raise rates, one of the major bull market fundamentals, and
the Nasdaq market is ignoring this event. The on again, off
again rate hike is still undecided. We seem to be vacillating
between rate hike and no rate hike every other day. If the
Fed does not raise rates then their warning words over the
last few months will fall on deaf ears next time. This is the
last chance to raise before Y2K. They meet again in December
but nobody expects a raise one week before Y2K. The next
meeting is in February. The Nasdaq appears to have factored
in a rate hike several weeks ago during its strong correction.
It is hard to believe the low for the Nasdaq on Oct-18th was
2632, almost 600 points or 23% later. Even if the rate hike
does not happen the odds of a significant Nasdaq correction
soon are growing every day we have another strong back to 
back gain. The Nasdaq is now up +45% for the year. 45% !!!!!

Like I said on Tuesday, the Dow appears more concerned about
possible Fed action. In reality the Dow was tech weak until 
just recently but is heavily impacted by financial concerns 
with Citigroup, JP Morgan and American Express. The recent 
addition of MSFT and INTC to the Dow has increased the tech 
ratio but those stocks have not set the Dow on fire yet. The 
tech stocks holding up/down the Dow now include HWP, IBM, UTX,
IBM, MSFT, none of which have participated in the tech rally.

The PPI report on Wednesday only served to slow the Nasdaq
advance slightly. You know the old saying, "don't confuse
me with the facts". It appears the Nasdaq is bulldozing all
the fact roadblocks in its path. The new roadblocks to be faced
tomorrow are the Retail Sales and the Productivity report.
The Productivity Report is sure to show some strong gains
which would be good for the market. The Retail Sales however
may show some strong gains also and that will not be good for
the market. The productivity gains are more important since
it is the trade off for higher unemployment and labor costs.
The Fed will be looking at both of these to factor into their
decision process. The wildcard here is the market itself. If
they feel the Nasdaq rally is the beginning of a speculative
bubble then they will be more likely than not to pull the pin
and deflate it. 

There was some interesting news driving some of the market
leaders today. Microsoft announced a deal with Tandy (Radio
Shack) where MSFT products will be sold in kiosks in Radio
Shack stores. TAN was up strongly on the news. This prompted
Best Buy and Circuit City to jump on the expectation that
AOL would do a similar deal with them. (What no AMZN book
kiosk?)

The major credit card lenders took a nose dive when Bank
One (ONE) issued a profit warning today. They expect to miss
estimates by -.20 next quarter. Customers paying off their
balances early are impacting their results. This is another
example of the wealth effect from a constantly rising bull
market. Wealth is being made and spent from rising stock
prices instead of labor, materials and products. The end 
result will be inflation. PVN, COF and MNBA (KRB) were all 
down early but COF issued a statement that "business could
not be better" and they finished slightly positive. 

Dell announced earnings after the close and met analysts
estimates of $.18 vs $.14 last year. The more important 
number was the revenue at $6.78 bln. Analysts were afraid
that the recent earthquake warning by Dell could have cost
them millions in lost sales. Apparently Dell had enough in 
the pipeline to offset any recent problems. After the 
announcement CEO Michael Dell was very upbeat in a phone
interview, saying Y2K was not a problem and 40% growth in
the fourth qtr was probable. Dell traded up +1.00 in after
hours.

Friday Forecast: It is all in the numbers, again. The 
Retail Sales and Productivity numbers out before the open
will dictate our direction. With the Fed meeting only two
days away the numbers will be microscopically examined
for any of the dreaded inflation signs. A bad report on
either could cause some profit taking to settle in again.
Also traders may want to go into the weekend and Monday
flat and see what direction we go after the FOMC. The
last several Fed meetings have been preceded by rallies
even though there was no justification for the move. Market
logic (oxymoron) would call for a step backwards before
Tuesday. Don't tell the Nasdaq, its not listening to logic.

I had several requests for stocks on which to sell naked
puts on Friday with only a week to go before November
expirations. This is dangerous because of the possibility
of an abrupt change in market direction in the next three
days. If you protect yourself with stop losses then these
candidates would be good choices. (They are not the normal
low dollar stocks that Ray does so well in the Sunday Naked
Put Section. They are my high dollar, high risk favorites.)
UBID $37, Nov-35P, DELL $44.25 Nov-42.50P, KIDE $76.50 at
support Nov-75P (good premium), SFE $118.75 Nov-115, EMLX
$179 support 175, Nov-175P (good premium), BVSN 81.56
Nov-80P, MSFT 89.56 Nov-90.  Remember, the best way to play 
these is to wait for a market dip on one of the news events 
the next three days. This will inflate the premium and 
give you some feeling for where the support might be.
As long as you use stop losses you can enter them anytime
the market is moving up and then protect yourself. 

Pick your entry points carefully at this altitude and sell
too soon. The Fed is still ahead!

Jim Brown
Editor



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for free. What else could you ask for?



**********
Stock News
**********

Microsoft and Tandy Shack Up to Promote Internet Use
By Cindy Christ

Microsoft is going offline to get more consumers hooked on 
the Web.

The Redmond, Wash.-based software company announced Thursday 
it would set up as many as 7,000 "stores within a store" as 
part of new, five-year strategic alliance with Tandy Corp.'s 
(TAN) electronics retailer RadioShack.

/members/stocknews/111199_1.asp

****

Chip Stocks Take A Cue from Merrill
By Cindy Christ

Shares in semiconductor issues hovered near all-time highs 
Thursday, after Merrill Lynch said the upswing in computer 
chip spending is far from over.

Citing strong pricing power, analyst Joe Osha raised his 
2000 price target for chip industry revenue growth to 21.5 
percent from 18.6 percent. 

/members/stocknews/111199_2.asp

****

David Beats Goliath, At Least for a Day
By S.P. Brown

Intel's (INTC) favorite whipping boy Advanced Micro Devices 
(AMD) has been taking a pummeling for so long from its Santa 
Clara-based rival that any talk of a comeback is usually 
brushed aside like so much dandruff off a black sweater.  But 
finally, after suffering years of ignominy at INTC's hands, 
the world's second largest supplier of microprocessors 
announced today that it may be ready to land a solid counter-
punch.   

/members/stocknews/111199_3.asp



***************
Market Posture
***************

As of Market Close - Thursday, November 11, 1999 

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

DOW Industrials   10,750  11,320  10,595    BEARISH   9.23
SPX S&P 500        1,315   1,385   1,381    Neutral  10.29
OEX S&P 100          675     725     725    Neutral  10.28
RUT Russell 2000     425     450     447    Neutral  11.09
NDX NASD 100       2,320   2,520   2,850    BULLISH  10.28
MSH High Tech      1,120   1,250   1,468    BULLISH  10.28

XCI Hardware       1,000   1,095   1,121    BULLISH  11.11  *
CWX Software         770     800   1,054    BULLISH   9.03
SOX Semiconductor    475     525     660    BULLISH  10.29
NWX Networking       550     615     736    BULLISH  10.28
INX Internet         495     525     537    BULLISH  11.05

BIX Banking          645     690     649    Neutral  10.28
XBD Brokerage        395     450     423    Neutral  10.28
IUX Insurance        610     650     621    Neutral  11.09

RLX Retail           875     910     897    Neutral  11.09
DRG Drug             375     390     397    BULLISH  11.04
HCX Healthcare       750     790     781    Neutral  11.09
XAL Airline          180     190     148    BEARISH   5.21
OIX Oil & Gas        285     305     303    Neutral  11.09


Posture Alert    

The Nasdaq made it 9 out of 10 record days, which is a pretty good 
batting average for any player let alone and index. Investors and 
fund managers continue to feed their appetite for anything tech 
related, while the Dow continues to languish. With this recent 
market action, we have raised Computer Hardware to Bullish from 
Neutral.Other sectors to watch include Oil & Gas, the S&P 100, 
Russell 2000, and the S&P 500, which are all getting close to 
bullish territory. 


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

/members/marketposture



****************
Market Sentiment 
****************

Thursday, November 11, 1999

The Gold Rush of 1999!

The race continues, as investors and fund managers try to grab 
anything and everything technology related before the turn-of-the-
century. The money that is pouring into this market has been 
phenomenal, as evidenced by the volume on the Nasdaq these last 
couple of weeks, and the new initial public offerings. 

The latest blockbuster IPO, United Postal Service, can best justify
this large inflow of new money that is gushing into the market. 
UPS was originally supposed to be priced at $36-$42, and with a 
whopping 109 million shares, would have yielded the company $3.9-
$4.6 billion. 

Well, the greed frenzy continued from start to finish on this deal. 
Not only was the IPO bumped up to $50 dollars, but the stock 
gapped up $16 at the opening. UPS closed today at 74, up another 
+5 3/4, which represents new money inflows of $8.1 billion, and now 
puts their market cap at $81 billion. 

Now add the UPS IPO to the 170 million share Charter 
Communications deal, and your talking over $10 billion in news 
issues just this week. That is a lot of new money being thrown 
around. We haven't even talked about Expedia, as well as the 
others new issues, but we think you get our point! This money 
inflow is incredible, and can very easily capitulate this market 
(especially the Nasdaq) into more record-breaking territory. The 
49-Niners had it pretty good with the gold rush, but we prefer our 
Nasdaq.  


BULLISH Signs: 

Short Interest:
Short interest for the Nasdaq is at an all-time high, and increased 
over 5% from the preceding month.

Bears have quick triggers:
After being beaten up for many years, bears are quick to 
run & hide, and will cover short positions in a flash.

Earnings: 
The results are in, with exception from a few stragglers, and the 
quarter ended up very solid.

Investor Intelligence:  
As a contrarian indicator, we may have witnessed the bottom in 
pessimism, and should this prove right, this market has a lot more 
upside in the months ahead.

Interest Rates:
The yield on the 30-yr Treasury is now safely off the 52-wk high, 
and is getting close to being under the 6% benchmark, which is a 
key psychological number.


Mixed Signs: 

Volatility Index:
The VIX continues to prove that 32-33 is a great buying 
opportunity, and also shows that the low 20's have been a good 
exit point. 


Advance/Decline Line:
The A/D line is showing signs of basing out.


BEARISH Signs: NONE


OTM Call Analysis

As we move closer to the November expiration cycle, Pinnacle is 
tracking the level of call buying (OTM) between 680-780 among 
option speculators. As we have been documenting, excessive out-of-
the-money (OTM) call may serve as overhead resistance.


November Expiration Cycle
OEX OTM Call Analysis (Open Interest November 680-780)
Date                 Open Interest     Change %    Alert

Friday, October 15        39,072          -
Friday, October 22        61,250       +56.8%
Friday, October 29        75,022       +92.0%
Friday, November 05       89,143      +128.1%


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.

 
OEX Pinnacle Index              Friday      Tues       Thurs
Benchmark                       (11/5)     (11/9)     (11/11)

Overhead Resistance (720-740)     7.42       4.53       3.92 

OEX Close                       718.80     718.32     725.11

Underlying Support (700-715)      0.87       1.15       1.31


What the Pinnacle Index is telling us:

Based on 11/11, support is still light, and overhead resistance was 
heavy, and is on the decrease. Should the PI drop even further, this 
would suggest the OEX may be breaking out to the upside.



Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (11/5)    (11/9)     (11/11)

CBOE Total P/C Ratio             .69        .68        .68
CBOE Equity P/C Ratio            .40        .38        .40
OEX P/C Ratio                   1.36       1.43       1.47


Peak Open Interest (OEX) Friday           Tues            Thurs
Strike/Contracts         (11/5)          (11/9)          (11/11)

Puts                   670 / 10,889	   660 / 11,142   660 / 11,977
Calls                  740 / 8,772     740 /  9,798   740 / 10,607
Put/Call Ratio           1.24            1.14            1.13


Volatility Index    Major
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   
May 14, 1999        Top                 25.01 

July 16, 1999       Top                 18.13 
August  5, 1999     Bottom              32.12 

October 15, 1999    Bottom?             32.06

November 11, 1999                       22.54 


Investors Intelligence  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
March 4, 1999           Bottom            49.1        32.5

Oct. 13, 1999           Bottom?           39.2        37.5

November 4, 1999                          42.1        38.6



Please view this in COURIER 10 font for alignment
*****************************************************
CHANGES THIS WEEK

DAILY RESULTS

Index      Last    Mon     Tue    Wed    Thu    Week
Dow     10595.30  14.37 -101.53 -19.58  -2.44 -109.18
Nasdaq   3197.29  41.68  -18.93  30.92  41.33   95.00
$OEX      725.11   5.83   -6.83   3.07   4.24    6.31
$SPX     1381.46   6.78  -11.73   8.18   8.00   11.23
$RUT      447.49   2.66    1.21   2.44  -1.23    5.08
$TRAN    3011.99  27.22  -41.80  16.83   5.75    8.00
$VIX       22.54  -0.54    1.55   0.43  -0.96    0.48

Calls              Mon     Tue    Wed    Thu    Week

SFE       118.75  13.13   -5.13   5.00   2.25   15.25  New
QLGC      130.06   3.34    2.09   2.25   4.06   11.75  New
SNE       174.81   0.06    5.25   6.19  -1.38   10.13  Good news
CMVT      123.06   7.25   -2.31  10.56  -6.19    9.31  Soaring
LSCC       46.00   2.66    1.69   2.38   0.88    7.59  Steadfast
SLR        88.94   3.63   -2.63   4.25   2.19    7.44  New
VRTS      113.69   2.44    4.38   1.00  -2.19    5.63  Split 11/22
NT         74.25   0.69   -1.69   2.13   4.31    5.44  Still going
SUNW      114.75   2.31    0.44   0.88   1.56    5.06  More news
DISH       74.88   7.94   -4.50   3.88  -2.50    4.81  Consolidates
AAPL       92.25   8.06   -6.75   1.81   0.81    3.94  Higher-lows
CNCX       32.00   0.88    2.25   0.75  -0.88    3.00  Takeover?
MXIM       87.06  -0.63   -0.88   2.06   1.19    1.75  On track
HD         78.81   1.13   -1.00  -2.81   1.63    0.81  Earnings
ADPT       50.63   1.38   -1.19   0.56  -0.44    0.31  Steady
VSTR       96.94  -0.94   -2.19   1.94   1.13   -0.06  Momentum
LVLT       71.00   1.44    0.88  -3.81   1.38   -0.13  Uptrend
KMB        65.06  -0.44   -0.81  -0.13   0.94   -0.44  Rallied
ASPT       30.44  -0.19    1.38   2.13  -4.13   -0.81  Dropped
SFA        60.94  -0.56   -2.25   1.44   0.06   -1.31  Dropped
BVSN       81.56   7.50   -1.75  -3.31  -4.38   -1.94  Hiccups
SYMC       47.75  -0.19   -0.19  -1.38  -0.38   -2.13  Dropped
INTC       79.44  -0.25   -2.06  -1.06   0.44   -2.94  Entry range
AOL       143.16   4.38   -4.38  -0.25  -2.88   -3.50  Split 11/22
EMLX      178.50   1.13    2.69  -4.19  -3.75   -4.13  Time to buy?


Puts

NDB        30.75  -2.50   -0.56  -1.38  -0.88   -4.50  Works lower
TXT        69.38   0.19   -2.75  -1.38   0.94   -3.00  Entry point?
GT         36.88   0.69   -0.31   0.13  -0.31    0.19  Stalls
BBY        54.25  -1.63   -0.50   0.00   5.75    3.63  Dropped
AMZN       73.00  13.06   -7.19   1.19   1.00    8.06  Dropped



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**********
DISCLAIMER
**********

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


**************
TRADERS CORNER
**************

Trading Places

Trading can be a lonely endeavor -- just you and the market. 
One of the successful trader's in our local option club noted 
the importance of getting support from your spouse or mate. Of 
course, she made a million dollars trading, so it is easy to 
see why her husband would support her. I received several 
interesting emails this week on the topic. Here are a few of 
the main themes, both from the emails I received, and from my 
own experience. 

1. Make Money. It's that simple. My girlfriend asks, "Did you 
make money?" When I can say, yeah, that's that. When I start 
talking about good entry points, interest rates, etc, well, 
it's a harder conversation. The newsletter has good advice on 
entry points, both in Jim's 10-part series, and in each 
individual play, which usually lists support levels as probable
entry points. 

2. Date a Trader. As one email put it, "If your mate does not 
give you the space to use your emotions and energy on trading--
TRADE HER IN FOR A TRADER!!! Emotional compatibility is priceless.
AND think of the FUN you both would have doing the SAME thing. 
DUMP THE NAGGER!!" Couldn't put it better myself. Even the most 
successful option traders will have bad days, but will, in the 
aggregate, make gains because of the overall portfolio over a 
long period of time.  (editor: This was a real email from a female
and it does not reflect the opinion of the staff. Please no hate 
mail!) 

3. Wait until the end of the month to tally gains & losses with 
your mate. Another reader put it this way, "Our philosphy is 
(at her request), 'Don't tell me anything until the end of the 
month, and then let me know how we came out.' This seems to work 
pretty well for us." To this, I would add that most successful 
traders plan their time out of the market in order to gather 
strength & judgment for the next go around. I am in the November 
& December cycles deeply now, but I plan to take the week after 
November expiration off completely. I make a point of taking this 
1 to 2 weeks a month, and try to spend some time with my 
girlfriend taking trips to Napa or something like that. After 
all, those are real dollars being won an lost out there, and 
spending some of them keeps it in perspective. 

4. Educate your mate. Your close friends can be good sounding 
boards, even if they aren't in the market. The other day I told
my girlfriend, "I have to get up because I have to trade." She 
said, "I don't want you to ever feel like you HAVE to trade." 
Good point. Another common dialogue is: "I made xxx dollars! 
I'm so psyched." To which, she responds, "Did you sell?"
Jim couldn't have put it better, eh?  (editor: AMEN !!, he must
have been talking to my wife - Jim)

Anyway, its been a pretty good week, except for a bad move 
yesterday. Seeing weakness at the end of the day, I opened a 
OEX put position, which continued down in value today, so I 
sold it. I was setting up a hedge (kind of a straddle) for my 
5 call plays on several of the newsletter picks. My rationale 
was that the market would generally trade sideways until the 
FOMC decision next week. Too complicated for my emotions -- I
find it hard to cheer for the market to go up and down at the 
same time -- though on an intellectual level, I know that a 
range bound market could very well trigger profitable sells in 
both put and call plays. In the "perfect play ledger," is my 
exit from a LSCC Nov 35 Call on a limit sell at 13, the high
of the day at the open, after purchasing the position for 8.625
on Tuesday. You have to have one of those every now and then -- 
made it look easy. After the close, I check my broker, and I 
got another fill on a limit order today -- sold half of my HD 
Nov 75 Call at 4, having purchased the contracts at 3 on Tuesday.
33% gain. Those aren't the ones that you brag about at the Money 
Show, but they are the ones that pay the bills -- Cash Flow is 
King. I would do that trade a thousand times and be very happy
(someone do the math on the compounding, please).

Right now, I have about 30% of my Short Term Option Trading 
Capital in open call plays. I am getting fatigued and my 
trading has not been too sharp, so I am holding off on 
entering more positions today. Tomorrow and Monday, I will 
probably target shoot more positions until I have about 50% 
of my Short Term Trading Capital in open positions ahead of 
the Fed. Aggressive, I know, but I expect the decision to be 
market positive either way. I should also note that I have 5 
positions in my Long Term Brokerage -- SCH Mar & AMZN Jan 
Calls bought due to SP Brown's columns a few weeks ago; MSFT
2002 LEAPs bought due to the newsletter's LEAP section on 
Monday's opening dip; MSFT & CSCO Jan Calls. The SCH and CSCO
contracts are up sharply; the AMZN's have died; and the two 
MSFT positions are mixed. I took half of the CSCO contracts 
off the table today because the position was up 100%. That
CSCO position is "paid for" and I have taken my emotion out
of the play. I expect CSCO to be considerably higher by 
January on general accumulation of NASDAQ leaders. On the 
whole, I am looking forward to my Thanksgiving Holiday 
planned week off. By that point, I may have a few open Dec 
positions in plays like SNE, SUNW, and AAPL, but I will not 
be trading that week. 

Good Luck

Janar Wasito
janar@OptionInvestor.com



****************
PICKS WE DROPPED
****************

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


CALLS:
*****

SFA $60.94 +0.06 (-1.31) SFA did give us a bounce off of support
levels we mentioned Tuesday.  However, after the bounce, the 
ball went flat.  SFA penetrated the $62 area right out of the 
gate Wednesday and then fell back into a narrow range for the 
balance of yesterday and today.  At this time there have been 
no major announcements come out of the shareholders meeting held 
yesterday.  The major trend for SFA is still up, and SFA may 
continue higher as they certainly had a good last quarter and 
projections for the current period look bright.  With SFA 
entering a consolidation we are going to say good-bye to SFA.
If you have a position in SFA and are not choosing to drop
this play keep your eye on the $59 area as that could prove
to be support or a point you may want to make an adjustment. 

SYMC $47.75 -0.75 (-2.13) The tight trading range at the 
beginning of the week followed by SYMC's dips below its 10-dma 
($48.61) without any strong reclamation during the past two 
sessions are not good signs.  It appears this momentum run is 
coming to a timely close.  We're not going to ignore the writing 
on the wall and are exiting the play this evening.  This is 
certainly not to say that SYMC could surge to newer highs once 
again following a positive FOMC meeting on Tuesday, but for now 
the play is over.

ASPT $30.44 -4.13 (-0.81) Actually this play was looking pretty 
good, reaching as high as $34.56 yesterday, and hanging at $34 
this morning.  Leave it to today's "after lunch crowd" to begin 
selling this stuff en masse, causing ASPT to fall as low as 
$28.25 before rebounding $2 in the final 5 minutes.  Sorry 
Charlie - too little, too late and not enough volume to convince 
us that it has any ability to dig out of a hole on Friday in 
front of the FOMC meeting next week.  We're hanging up on this 
call center software firm as quickly as we answered the call.  
Bye bye.
 

PUTS:
*****

BBY $54.25 +5.75 (+3.63) After Microsoft announced that they
will invest $100 million in Tandy Corp.'s online store as
a part of an alliance in which it will market Internet service
and products through RadioShack's electronics chain, this 
sparked an unexpected rally in rivals of RadioShack.  In 
particular Circuit City and BBY.  They rose on speculation
that America Online will now start to shop for a similar
partnership.  Circuit City Group rose $7.88 on the day and
BBY rose $5.75.  This is one reason we continue to push trailing
stops to protect profits, you never know when some unexpected
news will hit the street to completely disrupt the current
trend.  So was the case in BBY, we will choose to close this
position out until the speculation is over.

AMZN $73.00 +1.00 (+8.06) It's rare but it happens - some days, 
we just can't pick 'em (even with 10 fingers).  The market 
still seems impressed with the addition of 4 new stores to 
the AMZN site announced on Tuesday, following the teaser pre-
announcement on Monday.  Still that doesn't address why Goldman 
Sachs issued an uninspiring Market-perform rating today.  The 
reasons for this issue to drop are numerous, but the rest of 
the market doesn't seem to agree right now.  That said, we'll 
order that hand replacement surgery to fix the piranha wounds 
inflicted while swimming in this AMZN.  Even sharks are more 
fun than this, so we're dropping the play tonight.



*****************
PICK NEWS - CALLS
*****************

VSTR $96.94 +1.13 (-0.06) Hopefully, if you are playing VSTR 
you noticed Jim's chart analysis in Sunday's newsletter 
(Options 101).  It clearly defines the channeling pattern that 
we have been referring to since we have begun playing VSTR.  
You will see the quick run up that VSTR made at the end of 
October due to the rumors of a possible takeover.  When the 
rumors died down so did VSTR's upward momentum as VSTR needed 
time to come back down to earth.  VSTR spent the majority of 
Wednesday hugging $94 before finally making a late day break 
and trading up to a high of $96.13.  VSTR closed just short of 
the high and opened today with continuing positive momentum.  
VSTR had spent so much time "cooped" up in a tight trading 
range, that once it found it's legs, it just wanted to run.  
It made it all the way up to $99 before rolling over.  VSTR 
tired out a bit, danced along $98 and then began to decline, 
finding some support at $96.  VSTR moved up slowly in afternoon 
trading and closed just shy of $97.  This is just a stone's 
throw from $100 which we should hit soon.  Once we move past 
this obstacle, we believe this will rejuvenate investor 
confidence for higher prices.  The sector remains hot and 
rumors of acquisitions continue, although we haven't heard 
any specifics relating to VSTR lately.
 
LSCC $46.00 +0.88 (+7.59) LSCC traded in a steadfast manner 
on Wednesday and managed to squeeze in another new 52-week 
high by a quarter.  Thursday, LSCC gapped up at the open to 
hit a new 52-week high of $48.  LSCC then fell back a bit, 
making a bounce at $45.50 and finally closing right at $46.  
It is going to be important to confirm direction before 
attempting a new play.  Today Merrill Lynch semiconductor 
analyst Joe Osha helped the sector, saying that he is expecting 
a three to five year upturn for the overall sector and noting 
that the semiconductor prices still have a lot of upside 
potential.  BancBoston Robertson Stephens initiated coverage 
of Lattice today with a Buy rating and a price target of 
$70.  Did you catch Jim's analysis of Lattice's trading pattern 
in Sunday's newsletter?  If not, you may want to take a look.  
It pointed out the fact that LSCC has been reaching higher 
lows and narrowing intraday trading ranges.  Jim also went 
into detail regarding recent plateaus, indicative of at least 
one large buyer that has to keep upping their limit order 
because no one is willing to come down to meet their price.
You can find all of this information in Sunday's Options 101 
section of the newsletter. 

KMB $65.06 +0.94 (-0.44) KMB wasn't sure what direction it wanted 
to head today as it spent a good portion of the morning flirting 
with yesterday's close, right around $64.  KMB lost its footing 
mid-day and traded as low as $63.31 before rallying in afternoon
trading.  KMB has additional support at it's 10-dma of $63.50.  
But in reality, before entering a new play, we want to see this 
afternoon's momentum continue.  We want to see a breakthrough of
today's new high, and we want to see it continue to trade above 
that level to make sure that this afternoon's rally is legitimate.  
If support does not hold and KMB has another iffy day in the 
market, it may be time to exit this play.

HD $78.81 +1.63 (+0.81) Out from under the Amazonian shadow at 
long last.  Alright, so it wasn't that bad, but it does look as 
though investors are realizing that there is really nothing to 
worry about in regards to competition from Amazon's new on-line 
home improvement store.  This realization along with the current
earnings run, worked to propel HD towards its 52-week high, 
which is just $1.25 away.  Home Depot traded in a fairly tight 
range on Wednesday, finding support at $77 and resistance at $78.  
Today, HD again found support at $77 but had no trouble breaking 
through and trading above $78.  HD closed right at the high for 
the day, a good indication heading into Friday's session.  The 
NOV-80 contracts had volume over 1700 today, so obviously 
interest is not yet waning.  We are looking for this momentum 
to continue on Friday and into next week as HD has earnings next 
Tuesday.  As we have mentioned, we also see a possible split 
announcement.  It is going to be important to close out your 
positions Monday afternoon, as HD is set to announce before 
the bell on Tuesday.  
 
CMVT $123.06 -6.19 (+9.31) Once again the major brokers are 
really sticking their neck out on price targets.  On Monday, 
Lehman raised their price target on CMVT to $130.  CMVT hit 
that price on Wednesday.  Granted, we had two big up days in 
Comverse but why do keep those targets so close?  OK, enough 
of the soap box about conservative brokers, let's get to the 
play.  CMVT has been soaring.  We were getting used to the 
slow channel north that CMVT was in for the past couple weeks 
but we don't mind the change.  Obviously, investors are taking 
a position ahead of earnings on the 30th and a possible split 
announcement.  The volume is also picking up.  From here we 
see support at $120 if we can get a pullback.  The resistance 
is at Wednesday's high of $130.  And we still have plenty of 
time before earnings to be patient for a good entry point.  
So look for an intraday dip to initiate new positions. 

MXIM $87.06 +1.19 (+1.75) With the shareholders meeting coming
up next Thursday, shares of MXIM seem to be back on track.
We are anticipating a split announcement next week, as the
board of directors has requested a vote to increase the 
authorized shares from 240M to 480M.  The semiconductor
industry received numerous upgrades this morning from analysts
at Merrill Lynch and Prudential, which help our play as well.
We saw the pullback in MXIM's stock the first two days of 
the week.  Actually it wasn't really much of a retracement 
as the low of the week so far has been $83, early Tuesday
morning.  This morning MXIM gapped up at the opening hitting
$87.88 and promptly turned around falling back to $85.13 in 
the next 30 minutes.  For the balance of the day MXIM drifted 
higher on holiday volume of 1.2 mln.  MXIM gave us another 
chance to jump on board yesterday morning.  If you are in a 
play on MXIM, keep your stops close as several analysts are 
beginning to comment that the semiconductor industry as well 
as the Nasdaq is getting more and more over-extended and could 
be prime for some profit-taking.  

DISH $74.88 -2.50 (+4.25) Well, Tuesday DISH received word from 
Capital Hill that lawmakers had agreed on legislation to allow 
satellite firms to carry programming from local TV stations, 
which should level the playing field between satellite companies 
and cable firms.  Today EchoStar announced they had added 
approximately 141K new customers in the month of October, which 
is the largest monthly increase in DISH Network history.  This 
brings the total customer base to over 3.1 mln. subscribers.  
Tuesday Goldman Sachs reiterated their Buy rating on DISH and 
Salomon Smith Barney reiterated an Outperform rating indicating 
the legislation would "provide operational adrenaline."  Since 
being added to our call list DISH has began to consolidate
primarily between the $74 and $78 area.  DISH did make a new
high at $80 on Tuesday, so a pullback and or consolidation is
not out of line.  Ideally we would like to see DISH continue
higher after bouncing off the $71 area Wednesday.  If DISH
continues higher from here then we would view that as an 
opportunity to buy calls.  Again the $70-$72 level should
provide support.  If DISH continues to consolidate we would 
look to hold off until after the FOMC meeting on Tuesday. 

AOL $143.13 -2.88 (-3.50) As we warned on Tuesday more profit-
taking was in order.  AOL's descent over the past two days has 
brought it to just above near-term support in the $141-$142.  
Therefore look for a bounce off this mark on strong volume for 
upward confirmation.  Continue to be careful ahead of the FOMC 
meeting next week.  AOL is rate sensitive could react negatively 
even in light of the upcoming 2:1 split on November 22nd.  The 
media research firm, Myers Group, announced today that consumers 
ranked America Online ahead of ABC, NBC, and CBS based on 26 
attributes including frequency, relevancy, and value.  According 
to the firm's CEO Jack Myers, AOL is strong that it could" 
successfully extend its brand into any number of offline 
ventures".  If AOL breaks the 10-dma currently at $141, we 
may need to cut it loose regardless of the split.

INTC $79.44 +0.44 (-2.94) INTC continued to quietly consolidate 
safely near its 10-dma ($79.50).  The retracement puts the stock 
into an entry range.  You'll want to look for a solid bounce off 
$80 to jump into this momentum/technical play.  Volume has been 
moderate this week so a show of stronger trading activity would 
certainly be a plus.  More good news hit the press today.  Intel 
reported the waiting period for the US anti-trust review 
regarding its acquisition of DSP Communications has passed and 
no additional regulatory clearances are required.  Recall Intel 
has a tender offer for DSPC shares at $36, which is scheduled 
to expire on November 17th.  Also the company announced its has 
purchased a 6% stake in Opticom's data storage subsidiary Thin 
Film Electronics (TFE), a Norwegian technology company.  Under 
the terms, Intel has subscription rights to acquire up to 13% 
interest and under certain conditions may convert its holding 
into common shares of Opticom.

AAPL $92.25 +0.81 (+3.94) CSCO's solid earnings followed by a 
decent PPI report did eventually send the techs rocking.  AAPL 
powered higher breaking through resistance at $91 reaching 
upward for that $100 brass ring.  Today the stock inched 
forward, but the lackluster performance was a simple reflection 
of the light volume at 2.41 mln versus its ADV of 5.86 mln.  
Support is at $88 just above the 10-dma ($86.11) which would be 
an optimum entry point, but the present trading level is more 
realistic.  Especially when you consider that AAPL has 
consistently been establishing a pattern of higher-lows.  
Tomorrow AAPL could get a boost from DELL's positive earnings' 
report.  Dell reported after hours in-line with analysts' 
expectations coming in at $0.18 p/s and $6.78 bln in quarterly 
revenues!  This is good news for the box-makers.  In company 
specific news, Judge Jeremy Fogel granted Apple Computer a 
preliminary injunction against not only Future Power, but also 
against Daewoo Group and any others from distributing a iMac 
look-alike during the holiday season.

EMLX $178.50 -3.75 (-4.13) EMLX has seen better days.  The 
last two trading sessions have taken the stock to lower levels, 
which is unfamiliar territory for EMLX investors.  We feel this 
is just a slight setback and actually a buying opportunity for 
out split run.  Remember that the split date will be announced 
on November 18.  We're hoping for a surge ahead of the ex-date 
announcement and expect volatile conditions to persist.  With 
Tuesday's FOMC meeting adding tension, don't expect price 
fluctuations to let up soon.  I know it's hard to believe, but 
at one point during today's trading EMLX traded at low as 
$171.50.  At this level the stock bounced but if you were on 
your toes, it made for a great entry point.  Support remains 
at $170-$171 and resistance resides at $190.  Hopefully today's 
closing momentum will carry us to the weekend.  We really don't 
want to see EMLX close below the 10-dma.  This would be a 
signal to end your play.       

VRTS $113.69 -2.19 (+5.63) It was a mixed two days of trading 
for VRTS, which followed the roller coaster-like actions of the 
broader markets.  Yesterday, the stock fluctuated between $112 
and $116 several times throughout the day before closing on 
the upside.  Thank the mixed PPI figures for the volatile 
trading session, which has become a popular theme lately.  So
expect volatile conditions to continue in the short-term.  VRTS 
will be no exception, there will be bumps as the split date of 
November 22 draws closer however, the overall outlook remains 
positive.  Investors will be anxious to ride the tail end of 
the split, so watch for additional buyers to step forward.  
For those placing new trades, watch for entry points at $112.50, 
VRTS bounced three times at this level yesterday.  The 
resistance level was established today at $116.38, a new 
52-week intraday high.  

SNE $174.81 -1.38 (+10.13) Considering SNE's impressive run 
yesterday, it's expected that some profit-taking would follow.  
That's what happened today as some investors decided to take 
the money and run, resulting in the only down day since Nov 1st.  
What stated Wednesday's buying spree was SNE and Sun Micro's 
announced plans to further collaborate to provide digital 
consumer electronic appliances with direct access to Internet-
based content and services.  Combining the technologies of 
these two companies would create a seamless connections between 
network servers and digital consumer electronic appliances in 
the home.  Not only would such a connection simplify the secure 
electronic distribution of digital content, but it could also 
allow innovative solutions for customer service and other types 
of post-sales support.  Good things happen to great companies, 
which is why we continue to play SNE as one of our call plays.  
Despite today's slight setback, expect the stock to reach higher 
territory in the near future.  When placing trades, watch for 
slight pullbacks in the stock.  The nearest psychological support 
level is $170, but hopefully won't be a factor in the near-term.  
Resistance for SNE is the 52-week high at $177. 

CNCX $32.00 -0.88 (+3.00) The rumors of a takeover continued 
to be the major focus concerning CNCX and yesterday after the 
board of directors adopted a shareholders rights plan, the 
rumors were confirmed that the company is indeed in play on 
some level.  A shareholders rights plan merely gives 
stockholders the opportunity to boost their holdings in the 
event that a third party acquires a sizeable stake in the
company.  This would stop a hostile takeover of the company
without the okay of the company's management and board of 
directors.  The shares of CNCX continued the uptrend trading
as high as $33.50, before pulling back to close at the lower
end of the range at $32 on lower than average volume.  It is 
not surprising that the rally stalled somewhat, the market
normally does not like to see shareholders rights plans.  In
this case we believe that after this is digested and traders
remember that CNCX has had revenues that were up more than 
75% this year and have posted four straight quarters of gross
profits, the uptrend should resume.  Possible pullbacks that 
might fill the short-term trading gap should firm up at the 
$29.75 level.  This would be a possible entry point.  A break
through current resistance is at $33.50 level.   

LVLT $71.00 +1.38 (-0.13) The volatility remained in the shares
of LVLT the last two days, as momentum players continued to keep
the stock in a trading range.  Buying and selling very quickly.
The telecommunications processing and products sector remains 
on fire, with the likes of Nortel, Lucent, and others continuing 
to power forward on the back of favorable sentiment from analysts.  
LVLT's uptrend remains in place and we believe the pullback to 
the $68.38 level today was a good trading entry point for an 
aggressive trader that had LVLT on the radar screen.  We continue 
to look for LVLT to break out of the recent trading range for 
additional entry points above the $73.88 level.  Going forward
with only three more trading days before the FOMC decision on 
interest rates, we expect the volatility to remain in place, but
there should be opportunities to trade the shares on pullbacks.

ADPT $50.63 -0.44 (+0.31) The networking equipment companies
remained steady in the last few trading sessions, with some
traders lightening up on some positions on a day that saw
volatility, but also saw the Nasdaq hitting record highs once 
again.  On the back of Cisco System's good earnings report on 
Tuesday, the other stocks in the group have also remained in 
an uptrend.  ADPT has consolidated somewhat the last few days, 
as it tries to break above the $52.50 level.  The current 
pattern has been, up in the morning and sell-off in the 
afternoon, as the shares remain in a trading range.  This 
should possibly provide trading opportunities.  The volume 
remains below average, so there is no major sell-off taking 
place at this time, just profit-takers, and momentum traders 
getting in and out of positions.  Look for an opportunity 
for a bounce back around the $49.00 level if there is a 
continuation to the downside.  A breakout of the trading 
range would be above $52.50 backed by strong volume.

SUNW $114.75 +1.56 (+5.06) SUNW seems to have great news to 
report each and everyday.  They did not disappoint us today 
as well.  At the BaanWorld 99 today they announced that the 
Solaris-Powered SUNW Servers are the preferred Unix platform
for high-end adopters of Baan ERP applications.  This is news 
that investors find significant, seeing that many companies have
chosen this server to help to run their businesses.  Also as 
the Nasdaq powered higher on the back of high tech companies 
like SUNW, analysts continue to see technology outshining other 
sectors of the market with very strong top-line growth, with 
SUNW as a favorite stock that is leading the way.  The shares 
continued to be volatile, but no surprises.  Closing today at 
the high end of the trading range.  Trading opportunities have 
been in abundance for SUNW, and the daily pattern remains 
consistent for aggressive traders and conservative traders to 
pick there spots depending upon your risk tolerance.  Today 
11/11 is the record date for the upcoming stock split on 12/09, 
and there will possibly be some selling pressure for the near 
future.  After a record date has passed, it is good to be 
cautious for a few days.  Keep stops tight at this point if 
you have trading profits to protect.  There is support around 
the $111 level, and then major support around $106.

BVSN $81.56 -4.38 (-1.94) Volume in this issue remains huge at 
more than twice the ADV - too bad it went in the negative 
direction today, although that wasn't totally unexpected given 
the big moves earlier in the week.  Nonetheless, BVSN broke 
support at $87 and stair stepped it's way to $84 before falling 
off a cliff to $80 on a panic induced, profit-taking spike of 
volume.  It was there that BVSN found its character and recovered 
nicely back over $82 as volume increased into the close.  That 
looked like a buyable dip to us.  There is no news here - just 
good old-fashioned profit taking.  Strong volume still signals 
that buyers have interest and should move the price back up, 
market willing.  Be careful though.  The market may not be 
willing.  With a rarely achieved 10 days of gains (less a 1-day 
hiccup where the NASDAQ finished down 14 points), profit-taking 
can occur without notice.  A break south of $80 sets BVSN up to 
retest $76, the next support level.  Keep your stops set in case 
the market decides to take profits before you do.

NT $74.25 +4.31 (+5.44) Tuesday's news of price slashing to 
outgun Cisco, and licensing agreements with INTC and MSFT carried 
into NT's analyst meeting yesterday, which went great.  Over 400 
analysts in attendance yesterday got the news that NT expects 21% 
growth in fiscal 2000, largely fueled by high demand for fiber 
optic networking gear, which could bring in $10 bln of revenue 
next year.  Though they also announced they would be laying off 
1000 people next year (Wall Street likes this stuff despite the 
personal misfortune of some), the analysts put their money where 
their mouth was and pumped up the volume today to almost 2 times 
the ADV of 3.5 mln shares.  Yes, the funds are buying and helped 
NT set a new high today.  Strong support occurs at $68, then $71, 
and today at $73, where the bounce came on increasing volume into 
the close.  $4.31 is a big move for these guys, but not likely to 
be given back even if the market gets shaky prior to the FOMC 
meeting.  However, on a full profit-taking sell-off, all bets are 
off.  We think intraday dips are buyable even at this new level.  
Just keep those stops set so you don't give back any profits. 



****************
PICK NEWS - PUTS
****************

TXT $69.38 +0.94 (-3.00) Apparently TXT's decline was getting 
to bad for the company to stomach.  They came out this afternoon 
to reiterate that there is no major developments to cause the
stock to be dropping.  The problem is, that is why we are 
playing the stock.  There are no developments at Textron.  The 
company said they are in line to meet analysts expectations.  
So despite confirming what we already know, TXT bounced on the 
news.  That is ok though.  This is either the perfect entry 
point or time to ditch the play and we will know for sure 
tomorrow morning.  We want to see resistance at $70 hold TXT 
down.  If so, we should continue right back to our selling 
pattern.  Today's late bounce was probably due to the fact 
that CNBC covered the story.  Any buyers of the stock will 
likely be disappointed tomorrow if TXT doesn't go up through 
$70 and dump the stock.  So we will let TXT show us which way 
to go tomorrow.

NDB $30.75 -0.88 (-4.50) NDB has lost some steam lately but 
still manages to work its way lower.  We feel this negative 
trend will continue in the near-term, ultimately resulting 
at price levels under $30.  However, before doing so NDB must 
breakthrough its nearest support level and 10-dma at $29.50.  
Entry points are tough at this stage in the play.  We would 
caution new plays as we are getting close to taking profits 
and leaving the play.  Hopefully, with the Federal Reserve 
meeting on Tuesday, inflation feared investors might be the 
help we need to finish NDB.  The nearest resistance point is 
at $32.50.  There was no additional news at this time that 
would alter the price of our play.     

GT $36.88 -0.31 (+0.19) While retreating ever so slightly since 
Tuesday, volume has started to fall off, telling us that the 
fund selling may be coming to an end and so might this play.  
The overall market has been strong, and even GT (recently 
delisted from the DJIA) has begun to find support at the current 
level.  With that said, you might want to tighten up your stop 
tomorrow should GT begin to move up again.  On the other hand, 
we're going to wait and see if some Friday profit-taking can 
get GT down a bit more.  If GT can get under $35, the next stop 
would be $32.  Wait for the market to give you a direction 
before starting a play.  No news either.  But this could become 
a value play rather quickly.        



*****************************
SEE DISCLAIMER IN SECTION ONE
*****************************









The Option Investor Newsletter         Thursday  11-11-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.


**************
NEW CALL PLAYS 
**************

SLR - Solectron Corp $88.94 +2.19 (+7.44 this week)

Solectron is a premier global provider of customized 
manufacturing services rendering electronic solutions for 
original equipment manufacturers (OEM's).  They have won the 
Malcolm Baldrige Award twice for their manufacturing excellence.  
Solectron has a wide range of clients including Cisco, Hewlett-
Packard, and Mitsubishi. 

SLR caught our eye on November 2nd when news was swirling around 
regarding its acquisition of two manufacturing from Ericsson AB 
bought specifically to boost its manufacturing capacity.  There 
were no official financial terms released, however analysts 
speculated a deal in the $100 to $200 mln range based purely on 
company size and manufacturing output.  Also Solectron reported 
the same day it had completed its acquisition of NULOGIX 
Technical Services (a wholly owned subsidiary of IBM Canada), a 
a world leader in repair, re-manufacturing, and renovation.  
Herve Francois, analyst at CSFB came forward and reiterated his 
Buy rating in support of the recent deals.   The share price 
slowly began to rise and by Thursday SLR "officially" broke out 
above $75 and has since set 5 consecutive new 52-week highs.  If 
SLR doesn't pullback in front of the FOMC meeting on Tuesday, 
you'll have look for an intraday bottom if your risk profile 
allows it.  Technically the stock is poised to go higher as it 
establishes higher-lows on the climb and has left the short-term 
10-dma ($79.76) in the dust.  We'd like to see this momentum 
remain intact leading the stock into earnings next month 
expected on December 14th.  

Today CSFB once again reiterated their Buy rating and just on 
Monday, Eugene Peroni, equity research director from money 
management firm, John Nuveen, believes shares of SLR "could 
rise as earnings increase and technology advances". 

***November calls expire next week***

BUY CALL NOV-80*SLR-KP OI=501 at $ 9.63 SL=7.25
BUY CALL NOV-85 SLR-KQ OI=224 at $ 5.25 SL=3.50
BUY CALL DEC-80 SLR-LP OI=247 at $11.63 SL=9.25
BUY CALL DEC-85 SLR-LQ OI=256 at $ 8.50 SL=6.50
BUY CALL JAN-85 SLR-AQ OI=549 at $10.13 SL=7.75

Picked on Nov 11th at    $88.94    P/E = 73
Change since picked       +0.00    52-week high=$90.00
Analysts Ratings      9-8-3-0-0    52-week low =$29.12
Last earnings 08/99   est= 0.32    actual= 0.33 surprise +3.1%
Next earnings 12-14   est= 0.35    versus= 0.26
Average daily volume = 1.34 mln
Chart = http://quote.yahoo.com/q?s=SLR&d=3m

****

QLGC - QLogic Corporation $130.06 +4.06 (+12.75 this week)  

The competition in their industry is very stiff, yet they lead
the market in Fibre Channel host bus adapters.  Located in 
Costa Mesa, California, QLogic Corporation makes integrated 
circuits and adapter boards that connect peripheral devices 
to computers.  Their input/output subsystems handle data flow
between computers and peripheral devices such as hard disk,
tape, and CD-ROM drives.  QLogic has expanded its product line
to include the higher-performance fibre channel standard.  They 
also make chips for the mass storage and server markets. 
Sun Microsystems is one of QLGC's better known customers, 
although about 40% of their sales are outside the U.S.  Their
top competition comes from Adaptec, Cirrus Logic and Emulex.

Take one look at their chart and you can see why we have 
added QLGC to our call list.  Since the 3rd week of October
when their stock was trading for around $80 per share, QLogic
has jumped to over $135 per share.  The momentum behind the
stock has been absolutely incredible.  Technically MACD turned
positive late in October and is still climbing, showing no
signs of slowing, at least for now.  One other item that peaked 
our interest in QLGC is the recent vote by stockholders to 
increase the number of authorized shares from 50 mln. to 150 mln.
QLGC has already split twice this year in late February and early
August.  QLGC is approaching the level where we could see a 
split announcement come at any time.  Over a dozen stocks in 
the semiconductor industry received stronger reiterations and 
price projections this morning from analysts at Merrill Lynch 
and Prudential, which if nothing else makes QLGC attractive by
association and being in the right industry at the right time.
QLGC can be a volatile stock as evidenced by the option premiums.
If you are considering a play in QLGC, you'll find intraday 
support near $122 and $116.  Should we see a dip and bounce off
those levels we would look to initiate a new position in QLGC.
You may want to wait until after the FOMC meeting next Tuesday
to enter a new play in QLGC or any other stock.  As always
consider the risks and potential rewards prior to entering a 
new play.

This morning QLogic was named the number one company in the 
independent Fibre Channel host bus adapter market.  It was 
also named the vendor of choice to seven of the top-ten server
manufacturers.  Wednesday QLGC introduced their Zircon family 
of management processors, which is a fully integrated baseboard 
management controller.

BUY CALL DEC-125*QLC-LE OI=251 at $16.38 SL=12.75
BUY CALL DEC-130 QLC-LF OI=  3 at $14.00 SL=11.25 low OI
BUY CALL DEC-135 QLC-LG OI=  6 at $11.75 SL= 9.75 low OI

Picked on Nov 11th at $130.06    P/E = 122
Change since picked     +0.00    52-week high=$135.44
Analysts Ratings    3-4-1-0-0    52-week low =$ 23.25
Last earnings 10/99 est= 0.31    actual= 0.35 surprise +12.9%
Next earnings 01-20 est= 0.36    versus= 0.19
Average daily volume =  772 K
Chart = http://quote.yahoo.com/q?s=QLGC&d=3m

****

SFE - Safeguard Scientifics $118.75 +2.25 (+15.25 this wk)

Safeguard is an Internet-centric holding company that finds, 
acquires, operates and manages business-to-business companies 
engaged in e-commerce, e-communications, and e-business software 
and services and has interests in several private equity funds.  
Safeguard generally acquires ownership interests in companies 
that allow it to have a significant influence over their 
direction and management over the long-term.  Safeguard assigns 
a dedicated team to each partner company and actively assists 
its partner companies in their management, operations and 
finances.  Safeguard seeks to maximize shareholder value by 
actively providing operational assistance and expertise to 
help its partner companies grow and develop and by giving its 
shareholders the opportunity to participate in the initial 
public offerings of its partner companies while retaining a 
significant ownership interest after the initial public 
offering.   

SFE has been on a tear lately, moving up 48% since the end of 
October from $80.  We know what you're thinking - it's come a 
long way really fast; isn't it time for substantial profit-
taking on a Friday before an FOMC meeting?  We don't think so.  
Here's why.  SFE closed at a new recent high on tapering volume 
(still higher than the ADV), but seems to be stuck in this 
upper range over the past few days.  That is until you notice 
that the lows have been getting higher, forming a nice upward 
trending pennant, portending what we think will be a strong 
breakout to the upside, so long as weekly volume continues to 
rise as it has over the past 2 weeks.  The bottoms today at $116 
and $117 looked really strong, holding up even as the rest of 
the market experienced mid-day jitters.  In short, we think it 
may blow through $120 really soon and we expect volume to pile 
on when it does.  Target shooting according to your own risk 
profile at $117, $116, or $114 should get you the best entry, 
or you can wait for the breakout over $120 with volume backing 
up our cause.  Just don't buy on a spike in amateur hour.

News?  On September 4, CS First Boston issued a Buy rating.  
While we can't get into great detail, there have been many 
articles lately about B2B Internet growth in which SFE is 
nicely positioned.  Much like CMGI, SFE has numerous companies 
in the pipeline, which they plan to take public in 2000.  Only 
SFE has a reasonable p/e ratio of 47.  By definition, it's 
profitable.

BUY CALL NOV-115*SFE-KC OI=409 at $ 7.00 SL= 5.25
BUY CALL DEC-115 SFE-LC OI=495 at $12.50 SL=10.00
BUY CALL DEC-120 SFE-LD OI= 34 at $10.00 SL= 7.50 low OI

Picked on Nov 11th at  $118.75     P/E = 47
Change since picked      +0.00     52-week high=$121.00
Analysts Ratings     8-3-1-0-0     52-week low =$ 24.50
Last earnings 10/99  est= 0.14     actual= 0.26  surprise = 85.7%
Next earnings 02-17  est= 0.16     versus=-0.23
Average Daily Volume =   440 K
Chart = http://quote.yahoo.com/q?s=SFE&d=3m



*************
NEW PUT PLAYS 
*************

No new puts today.        



**********************
PLAY OF THE DAY - CALL
**********************

SFE - Safeguard Scientifics $118.75 +2.25 (+15.25 this wk)

Safeguard is an Internet-centric holding company that finds, 
acquires, operates and manages business-to-business companies 
engaged in e-commerce, e-communications, and e-business software 
and services and has interests in several private equity funds.  
Safeguard generally acquires ownership interests in companies 
that allow it to have a significant influence over their 
direction and management over the long-term.  Safeguard assigns 
a dedicated team to each partner company and actively assists 
its partner companies in their management, operations and 
finances.  Safeguard seeks to maximize shareholder value by 
actively providing operational assistance and expertise to 
help its partner companies grow and develop and by giving its 
shareholders the opportunity to participate in the initial 
public offerings of its partner companies while retaining a 
significant ownership interest after the initial public 
offering.   

SFE has been on a tear lately, moving up 48% since the end of 
October from $80.  We know what you're thinking - it's come a 
long way really fast; isn't it time for substantial profit-
taking on a Friday before an FOMC meeting?  We don't think so.  
Here's why.  SFE closed at a new recent high on tapering volume 
(still higher than the ADV), but seems to be stuck in this 
upper range over the past few days.  That is until you notice 
that the lows have been getting higher, forming a nice upward 
trending pennant, portending what we think will be a strong 
breakout to the upside, so long as weekly volume continues to 
rise as it has over the past 2 weeks.  The bottoms today at $116 
and $117 looked really strong, holding up even as the rest of 
the market experienced mid-day jitters.  In short, we think it 
may blow through $120 really soon and we expect volume to pile 
on when it does.  Target shooting according to your own risk 
profile at $117, $116, or $114 should get you the best entry, 
or you can wait for the breakout over $120 with volume backing 
up our cause.  Just don't buy on a spike in amateur hour.

News?  On September 4, CS First Boston issued a Buy rating.  
While we can't get into great detail, there have been many 
articles lately about B2B Internet growth in which SFE is 
nicely positioned.  Much like CMGI, SFE has numerous companies 
in the pipeline, which they plan to take public in 2000.  Only 
SFE has a reasonable p/e ratio of 47.  By definition, it's 
profitable.

BUY CALL NOV-115*SFE-KC OI=409 at $ 7.00 SL= 5.25
BUY CALL DEC-115 SFE-LC OI=495 at $12.50 SL=10.00
BUY CALL DEC-120 SFE-LD OI= 34 at $10.00 SL= 7.50 low OI

Picked on Nov 11th at  $118.75     P/E = 47
Change since picked      +0.00     52-week high=$121.00
Analysts Ratings     8-3-1-0-0     52-week low =$ 24.50
Last earnings 10/99  est= 0.14     actual= 0.26  surprise = 85.7%
Next earnings 02-17  est= 0.16     versus=-0.23
Average Daily Volume =   440 K
Chart = http://quote.yahoo.com/q?s=SFE&d=3m



************************
SPREADS\STRADDLES\COMBOS
************************

Veterans Day Trading Just Like A Holiday..

Wednesday, November 10

Equity markets were mixed Wednesday as inflation fears plagued
blue-chip issues while the Nasdaq climbed to a new record high.
The Dow closed down 19 points at 10,597 as financial services
stocks fell on rate worries but the Nasdaq composite ignored the
issue, moving 30 points higher to 3,156. The S&P 500 index was
up 8 points at 1,373. In the broader market, declining stocks
led advances by 16 to 14 on heavy volume of 986 million shares
on the NYSE. The 30-year U.S. Treasury bond was down 6/32 with
the yield rising to 6.09 percent.
 
Tuesday's new plays (positions/opening prices/strategy):

Champion    CHA    NOV50P/NOV55P   $0.38   credit   bull-put 
Multex.com  MLTX   MAY17C/NOV17C   $3.50   debit    calendar
Monsanto    MTC    JAN50C/NOV50C   $1.93   debit    calendar 
3Com Corp.  COMS   JAN30C/JAN32C   $1.31   debit    bull-call

Champion (CHA) was our first new play and it remained in a small
range for the first thirty minutes of trading. Near 10:00 AM, the
stock price started to drift lower and it went downhill (all day)
from there. Our opening credit was $0.38, well below the high of
$0.75. If the stock continues at this rate, we may indeed own it
at $55; if it rebounds, we may double-up our position to reduce
the current cost basis. Multex.com (MLTX) fared about as well,
dropping $1.06 by 9:45 AM. We adjusted our target lower but that
didn't help much as the stock closed down $1.62 for the session.
We expected the issue to consolidate but this may be more than we
bargained for in the initial assessment.

Monsanto (MTC) was one of our favorable plays, allowing an entry
near the target debit and moving higher during the session. 3Com
Corp. (COMS) was the best pick of the group, but the period of
opportunity to participate was limited. A debit of $1.25 was the
lowest entry price observed and that lasted only a few minutes. 
Individual orders would have produced a much better position as
the stock price rose steadily during the day.

Portfolio plays:

Financial stocks led the Dow Industrials lower after the October
Producer Price Index showed a stronger-than-expected rise of 0.3%
in the core rate, which excludes food and energy items. Analysts
said the increase may affect the Federal Reserve's decision when
it meets to discuss interest rate policy next week. Investors may
be uncertain whether the FOMC will opt for an inflation-fighting
rate hike but that didn't prevent them from driving the Nasdaq to
a new high. 

One of our recent picks led the group of technology stocks. Cisco
Systems (CSCO) reported fiscal first-quarter profits that topped 
analysts' consensus estimates by a penny. Revenue for the period
totaled $3.88 billion, up from $2.6 billion a year-ago, as Cisco
continued to advance its Internet technology for each of its key 
markets. SG Cowen and Banc of America raised their target prices
for the stock and the issue closed up $5 at $79.50. Our bullish
diagonal spread was easily closed near maximum profit. Another
stock that refuses to consolidate is Qualcomm (QCOM). The issue
rose $19 to close at $320 after analysts increased earnings and
revenue estimates for next year. JDS Uniphase (JDSU) has been a
big mover in recent weeks and the stock establishing a new range
near $180-$190.

Some of our lower-priced positions moved higher as profit-taking
pummeled the Dow. Talk.com (TALK) climbed $1.06 to $16.50 after
Tuesday's news that Metris Companies (MXT), one of the nation's
fastest-growing direct marketing companies, signed a marketing
agreement to provide TALK's long distance services to members of
Direct Merchants Credit Card Bank. The new deal leverages TALK's
ability to bill, service and market telecom services through the
Internet. Our current neutral position has traded profitably in
the past few weeks and we decided to adjust our calendar spread
to a bullish outlook for December. The move cost an additional
$0.43 but now we have better upside potential. The $15-call (in
December) also offers a favorable credit for those who want to
remain conservative (and neutral). Anesta (NSTA) rocketed to a
midday high above $15 and closed up $1.75 as large block orders
and institutional buying raised the session volume. A favorable
exit opportunity was again available in that position.

In our long-term portfolio, two of the issues appear destined
for another galaxy and regretfully, we can no longer offer any
accurate analysis as to where they will stop. In the case of Sun
Micro (SUNW), our current spread was still in the double digits
so we decided to move up closer to the new trading range of the
stock. We chose $105 as the short position and now our debit is
$28.25, gaining some upside potential and a reasonable downside
margin. Solectron (SLR) has also been on the move and with the
breakout above previous resistance near $75, it's probably best
to adjust higher on the sold (short) option. The transition to
DEC-$80 calls offered the best balance between bullish potential
and protection against a short-term reversal. Motorola (MOT) is
also moving like a freight train with no overhead resistance; it
may not stop any time soon. The original (static) position has
been far more profitable than our (personal) spread but we will
try to stay close to the stock price to protect current profits.
For now, the sold strike at $105 is within the profit envelope
but if the underlying rises above $118-$120, we will be forced
to move higher. Computer Associates (CA) is starting to solidify
at $60 and we plan to make an early  move to December if the
chart shows further signs of bullish activity.

Our bearish (call-credit) spread on QLT PhotoTherapeutics (QLTI)
offered a new entry point after Warburg Dillon Reed raised its
rating on the biotech company to "strong buy". The analysts said
that QLT's Visudyne drug should be approved by the FDA advisory
panel and the recent weakness in share value offers an excellent
opportunity to own the position. Based on the technical outlook
for the issue, the upgrade appears a bit optimistic. Sector news
hammered one of our long-term speculation plays as the nation's
largest trash hauler, Waste Management (WMI) failed to meet the
analysts' earnings estimates. This industry continues to spiral
downward and our position in Allied Waste (AW) has suffered long
enough. The (bullish) calendar spread has ample time to recover
but in this case, it may be better to take the remaining capital
and invest it in another successful play. Our closing credit for
the March-$12.50 call was $0.75.

Thursday, November 11

Thursday's session offered little direction for equity markets
as the Nasdaq closed at another new high while blue-chips fell
on interest-rate woes. The Dow Jones Industrial Average slipped
to 10,595 but the Nasdaq index continued higher, closing up 41
points at 3197. The S&P 500 index gained 8 points to 1,381. In
the broader market, declining stocks outpaced advances 17 to 12
with 885 million shares traded and 81 stocks at new highs along
with 145 at new lows on the NYSE. The U.S. Treasury market was
closed for the Veterans Day holiday.

Portfolio plays:

Gemstar (GMST) was the portfolio leader today, up over $6 to a
new 52-week high of $96 during the session. The rally comes on
the heels of their favorable earnings report Tuesday night. The
company announced higher-than-expected revenues from its guide
and the VCR Plus recording device. GMST earned over $22 million
or $0.19 a share and one analyst said the program-guide business
will be worth $40-$50 billion in a few years. Another stock that
is moving higher on future earnings expectations is Pixar (PIXR).
The stock is finally showing that technical strength that we saw
earlier in the month and today it moved up almost $2 to a midday
high near $45. The company reported great third-quarter earnings
last month and also said they expect to beat Street expectations
for the year. MessageMedia (MESG) gained $0.75 to $14 on extreme
volume, a nice recovery from the recent slump. Trading in after
hours was also brisk as investors speculated on upcoming news.

Nvidia (NVDA), a new diagonal spread, jumped to a recent high of
$32 and ended up $2 on new bullish activity as the earnings date 
approaches. The rumored "short squeeze" appears to be having an
effect on the stock price and now the issue is trading above the
old resistance area. Another of our new bullish plays; Champion
(CHA) made a solid recovery today, up $2 as rumors of a possible
merger continued. One trader suggested the potential partner may
be European because a foreign entity would more likely allow the
current management to continue to run the business. This type of
speculation should continue to support the stock price for a few
days, hopefully until next week's expiration. There were ample
opportunities for a second entry today (at credits near $0.75).

Questions & comments on spreads/combos to ray@OptionInvestor.com


****************************************************************
				- NEW PLAYS -

Jim's positive comments on the Covered-Calls with LEAPS strategy
resulted in an overwhelming response with numerous requests for
long-term (bullish) candidates. Today we have some new, low-cost
calendar spreads for those who favor the concept of selling time.
****************************************************************

ELON - Echelon Corporation  $9.00   *** A Technology Standard ***  

Echelon Corporation develops, markets and supports a family of
hardware and software products that enables original equipment 
manufacturers and systems integrators to design and implement
open, interoperable, distributed control networks. They intend
to extend their technological expertise by targeting leading OEM
customers, developing a systems integrator distribution channel,
integrating LonWorks control networks with other enterprise data
networks and leveraging international market opportunities.

Echelon recently completed a strong quarter in line with company
targets and the expectations of analysts. Revenues were almost
$10 million, an increase of 37% over the same period last year.
Net loss for the quarter was $743,000, or $0.02 per share, less
than most analysts expected.

Echelon's core product is the LonWorks® control network. With
millions of devices already installed worldwide and thousands of
application developers, LonWorks technology is the leading cross
industry standard for the networking of devices in average homes,
buildings, factories, and transportation systems. The technology
enables the myriad of everyday devices around us to communicate
with one another. The system has been approved as an industry
standard by the American National Standards Institute (ANSI).

The most recent news concerns the introduction of another ELON
product designed to connect everyday devices in the LonWorks
networks to the Internet. The i.LON 1000 IP Server will enable
thousands of devices to be monitored simultaneously over the
Internet, enabling up-to-the-minute information to be sent from
devices to enterprise management systems. These products will
also provide the technology base needed to develop optimized
solutions for the emerging home networking market.

A very unique company with an interesting product and a bullish
technical outlook.

PLAY (conservative - bullish/calendar spread):

BUY  CALL MAY-10 EUL-EB OI=180  A=$2.62
SELL CALL NOV-10 EUL-KB OI=1175 B=$0.25
INITIAL NET DEBIT TARGET=$2.19 TARGET ROI=%50

Note: If the premium for the November option is not available,
you may have to move to the December position (EUL-LB B=$0.75).

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

****

LOR- Loral Space And Communication  $18.00  ** On The Rebound? **
 
Loral Space is a technology company concentrated on satellite 
manufacturing and satellite based communication services. They
produce broadcast transponder leasing and value-added services,
domestic/international corporate data networks, global wireless 
telephony, broadband data transmission and formatting, Internet 
connectivity, digital audio radio services, and international
direct-to-home satellite services.

Today the stock price of Loral rocketed 25% amid rumors of a new
deal involving Microsoft (MSFT). Traders and analysts speculated
that Microsoft would acquire the 14% stake that Lockheed Martin
holds in Loral. Microsoft's news that it would make a strategic
announcement today fueled the rumors and the stock rose almost $2
to close at $18. Unfortunately, the announcement was about a deal
with Tandy's RadioShack unit.

The good news is that LOR appears to be back on track technically
and the recent buying pressure indicates a renewed interest in
the stock for institutional investors. Fundamentally, the company
has reported better-than-expected third quarter results and plans
to meet analysts' numbers for the year. The company says that the
leasing of transponder capacity on newly expanded fixed satellite 
services fleet and the initiation of Globalstar service will be
the major drivers of new revenue and shareholder value. In 1999,
five new satellites were added to their fixed satellite services
fleet, doubling the capacity of current transponders. These new
additions will expand revenue potential and provide a solid
foundation for growth.

The stock has been in a slump recently but the Microsoft rumors
have provided some much-needed attention for this favorable long
term issue.

PLAY (conservative - bullish/calendar spread):

BUY  CALL APR-20 LOR-DD OI=784 A=$2.88
SELL CALL DEC-20 LOR-LD OI=64  B=$0.88
INITIAL NET DEBIT TARGET=$1.81 TARGET ROI=50%

This position also be opened with 2001/2002 LEAPS.

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



*****************************
SEE DISCLAIMER IN SECTION ONE
*****************************


DISCLAIMER

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