Option Investor
Newsletter

Daily Newsletter, Thursday, 12/02/1999

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The Option Investor Newsletter         Thursday  12-2-99
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)
************************************************************
        12-2-99            High     Low    Volume Advances Decline
DOW    11039.10 +  40.70 11070.70 10998.60   900,700k 1,528  1,503
Nasdaq  3452.78 +  99.07  3452.78  3371.85 1,427,093k 2,227  1,842
S&P-100  752.53 +   3.96   753.23   748.21    Totals  3,755  3,345
S&P-500 1409.04 +  11.32  1409.04  1397.72            52.8%  47.2%
$RUT     460.44 +   6.77   460.45   453.67
$TRAN   2894.29 +  10.38  2899.34  2879.84
VIX       23.28 +   0.36    23.94    22.72
Put/Call Ratio       .52
*************************************************************
EMAIL FORMAT ALERT:

Please be advised that we are currently having problems with mail 
delivery to msn.com, and hotmail.com. (both Microsoft networks)
Our Technicians are working with the above companies to get this 
resolved, as the problem is on their end.  We have no ETA as to 
when these companies will resolve this issue. Many long time
readers may remember the bi-monthly problems we used to have
with AOL. Somebody changes something that breaks something else
and with billions of emails moving through their systems they 
either don't care or do not have enough staff to handle the 
problems in a timely manner.  

We apologize for any inconvenience, and hope to have this 
problem resolved as soon as possible.

OI Tech Support
*************************************************************

Did somebody leak the employment numbers in advance?

From the strength of the Nasdaq rally today you would think
the employment numbers were leaked a day in advance. The 
Nasdaq is back to setting records again with another record
high close at 3452. Was there ever any doubt? While I was
actually expecting a little less enthusiasm until after the
report tomorrow, I did not have any doubt of the eventual
direction. If you took action after my Tuesday entry point
article then you should be a happy camper. 


 


 

The Dow however is not as convincing. We did close back over
11,000 again but the strength was just not there. The reason
for this is the fear of the Employment Report. Most Dow stocks
are more interest sensitive than the tech stocks in the Nasdaq.
With Citigroup, JP Morgan and American Express holding back 
until after the report the Dow pulled back from the days highs
and traded in a very narrow range in late afternoon. 

I could write a book here tonight but the total focus is the
Employment Report tomorrow morning. I think every major analyst
is expecting a benign report but there are some rumors circulating
that unemployment could fall under 4%. The official estimate
is for an unchanged 4.1% Stock traders will be watching bond
traders after the announcement. If the unemployment comes in
too strong the bond market will sink with anticipation of the
next Fed meeting on 12/21 and a possible rate hike. Today 
nobody expects a rate hike in December but bond futures are
factoring in a hike at the February meeting. If unemployment
drops sharply and the markets are showing no signs of Y2K
concerns then the December meeting could take center stage. 
I personally think that unless the report is very bearish
stocks will simply ignore it and charge ahead. Still we wait
like kids around the tree on Christmas morning, waiting for
the approval of our parents to begin the opening orgy, or in
our case the buying frenzy.

As you can see from the Nasdaq record today the bubble did not
burst. Today was the fourth biggest point gain ever for the
Nasdaq and we could see another 10 records before Y2K. There
will be a huge pop eventually but traders are simply finding
ways to revalue already over valued tech stocks. Take PE
(price-to-earnings) for instance. This is a commonly used
method for valuing or ranking stocks. This is derived by
dividing the stock price by the last twelve months earnings.
Several years ago, a PE of 25 would be very high. The tech-
Internet revolution has made this number almost obsolete.
The PE for some Internet companies is either negative, (no
earnings) or astronomical (over 500). Companies that have 
earnings but do not lend themselves to the Internet hype 
model have been ignored by investors. Not any more! One 
analyst upped their price target on CSCO today and 
rationalized it by applying their current PE of 80 to the 
expected 2001 earnings. Not 2000 but 2001. So instead of
just upping their PE target to 90 or 100 and appear that
they were suffering from irrational exuberance, they simply 
kept the target and applied it to future earnings. To be 
fair this is not a new practice but I think we will continue 
to see more creative application as we go forward. Get it 
quick, YHOO only $6000 and a PE of 20 based on 2019 expected 
earnings! 

The NYSE caved in to progress today as they rescinded Rule 390
which prevented its members from trading some of the NYSE's
most popular stocks on alternative trading systems. This
move will allow the biggest trading firms on Wall Street to
trade the stocks of blue chip companies like GE, IBM and AT&T 
on electronic communications networks, or ECNs, which offer
cheaper and faster trading systems. It will also allow big
firms to trade the stocks on their own trading floors and
bypass the floor of the exchange. This was a major break for
the ECNs and gives them just another level of trading access.
ECNs have already taken away more than 33% of the trades
involving Nasdaq stocks. The more competition, the cheaper
the trade. Have to love it!

Market breadth is still not exciting. The Nasdaq of course is
picking up speed but the NYSE advancers only managed to beat
the decliners by a slim 25 issue margin. Some analysts feel
the NYSE stocks, mostly non-tech, may be more susceptible to
Y2K fears than the aggressive tech stocks that are actually
benefiting from the Y2K spending. The new home sales announced
today rose +16.3% from September despite rising mortgage rates.
This hurt bonds again and sent yields rising back to 6.31%.
The retail same store sales also failed to spur the sector
and the market as most only hit their estimates and many posted
lower than expected due to a lack of cold weather and associated
sales of winter clothes. Sears was the standout with a +5.9%
increase and shows they may actually have turned the corner in
their market recovery.

The battle of the Fed bears continues. Fed Gov Lindsey said
earlier in the week things that many took as a warning of
future rate hikes in the wings. St Louis Fed President, William
Poole said today that a rise in wages is not worrisome as long
as it is being offset by increased productivity. We need to
petition CNBC to interview Poole as a counterweight every time
another Fed head says something bearish.

It does not appear that anyone can say anything to really put
the brakes on this Teflon market. The bears and shorts tried
to mount a sell off for over a week now with no success and
the tech market just keeps making them run for cover. Put 
your party hats on if we get a great report tomorrow and
start celebrating Y2K early!

Good Luck, Sell Too Soon.

Jim Brown
Editor



**********
STOCK NEWS
**********

Are You a Trader or an Investor?
By  S.P. Brown

Quite a bit of e-mail has came in lately following my article 
"A Primer on Taxes and Options."  I didn't realize taxes were 
such a hot issue; therefore, it's probably not a bad idea to 
do a follow up article to further clarify the differences 
between a trader and an investor.  

/members/stocknews/120299_1.asp



******************
OPTION CLUB ALERT
******************

New club forming in Florida

The Central Florida OIN Group is going to have an inaugural 
meeting this Saturday, Dec. 4, at 9 AM at the Bob Evans 
restaurant right off of I-4 in Lakeland, halfway between 
Tampa and Orlando. 

Anyone who wants specifics, 
please e-mail me at jmassey2@compuserve.com. 

Thanks - Jim Massey



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

As of Market Close - Thursday, December 2, 1999 

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

DOW Industrials   10,750  11,320  11,039    Neutral  11.12
SPX S&P 500        1,340   1,425   1,409    Neutral  11.30
OEX S&P 100          700     755     753    Neutral  11.30
RUT Russell 2000     430     450     460    BULLISH  11.12
NDX NASD 100       2,650   3,150   3,108    Neutral  11.30
MSH High Tech      1,340   1,630   1,629    Neutral  11.30

XCI Hardware       1,075   1,160   1,213    BULLISH  11.11
CWX Software       1,000   1,160   1,214    BULLISH   9.03
SOX Semiconductor    560     660     649    Neutral  11.30
NWX Networking       650     800     788    Neutral  11.30
INX Internet         525     675     648    Neutral  11.30

BIX Banking          645     690     618    BEARISH  11.30
XBD Brokerage        395     450     429    Neutral  11.30
IUX Insurance        625     650     598    BEARISH  11.30

RLX Retail           875     920     925    BULLISH  11.23
DRG Drug             375     395     383    Neutral  11.30
HCX Healthcare       750     790     759    Neutral  11.09
XAL Airline          180     190     146    BEARISH   5.21
OIX Oil & Gas        285     315     298    Neutral  11.23
 

Posture Alert    
Technology stocks bounced back with a vengeance, as the Nasdaq 
broke a new 52-week high. The Dow was able to get back over the 
11k mark, however, many of the individual sectors failed to break 
above previous levels. As such, until we get confirmation on 
higher highs, many of the postures will remain Neutral. Winners 
Thursday included the Internet (+5.22%), Semiconductors (+4.57%), 
and Software (+4.20%) sectors. The downside list was limited to 
Oil & Gas (-1.52%), and Retail (-1.27%). 



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

Thursday December 2, 1999

Failed Rally, or Higher Highs!

The broad market blazed ahead Thursday, and was lead again by 
(surprise, surprise) the technology sector. The NASDAQ went ahead 
and broke a new record high, and the Dow got above the ever-
important 11K mark. However, many of the individual indexes 
failed to break new highs, even though many were very close. 
Tomorrow brings us the important employment data, which can add 
fuel-to-the-fire, or put the breaks on this latest rebound.

From a technical standpoint, we witnessed Shooting-Star patterns 
in most of the indexes before the break earlier this week. After 
Tuesday's drop, all of the major indexes (across the board) broke 
their 10-day moving average, which is the average that many 
short-term traders use. This break, combined with the negative 
chart on the long bond, gave us a more cautious and pessimistic 
stand. However, the Hammer pattern that is now evident may cause 
us to return to the bullish camp, but there are still issues at 
hand. 

The sentiment from this recent drop will not easily be forgotten. 
There are many investors who bought a stock or option, only to 
watch them drop significantly in 24 hours. Amazon.com was the hot 
stock Monday morning, as it gapped up to over $96, yet over the 
next 48 hours, many people witnessed a 15% drop in the stock as it 
hit a low of near $81. There are many other stocks that dropped 
worse than AMZN, but the point is that quick hits like these, 
tend to be remembered by traders and investors alike, and are not 
easily shaken off, at least until higher highs are set. 
  
Other issues that need to be addressed are the yield on the 30-
year Treasury, as well as Volatility Index breaking its 50-day 
moving average. These issues have not been put to rest by the 
bounce in the market. Like we mentioned above, many of the 
individual sectors failed to break new highs or at least recent 
highs (S&P 500, S&P 100, NASDAQ 100, Networking, Internet). The 
VIX is still close to its 50-day moving average and the 
employment data due tomorrow could put a tailspin on the bond 
market. What this market needs right now is a healthy dose of 
CONFIRMATION. To see a significant rally in the Treasury market 
would be very healthy for the continuation in this rally.  What 
this market needs is a rally in Treasuries, followed by higher 
highs in the leading technology sectors. If we don't get what we 
ask for, we are most likely to see a significant Failed Rally. 


BULLISH Signs: 

Cash Flow:
The amount of money being poured into this market continues to be 
staggering. 

Short Interest:
Short interest for the Nasdaq is at an all-time high, and increased 
another 1.4% from October. Short interest on the New York Stock 
Exchange rose 72,007,030 shares in the month ending Nov. 15 to a 
total of 4,061,057,060 shares.

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.


Mixed Signs:

Volatility Index (23.28):
The VIX broke through its 50-day moving average this week, but 
has recovered the last several days. If this average is violated 
again, this may indicate a near term top for the market. 


BEARISH Signs:

Moving Averages:
All of the major indexes have broken their 10-day moving averages 
and have yet to break higher highs. If new highs are not broken 
soon, this would suggest more short-term selling pressure.
 
Interest Rates:
The yield on the 30-yr Treasury broke support, and may soon hit 
52-week highs.

Advance/Decline Line:
The A/D line's continual break does not serve the best interests 
of the overall market.

Investor Intelligence:  
The rapid change from bearish to bullish sentiment has been too 
great, and may indicate a near term top in the market.

Energy Prices:
With the rapid rise in crude oil, everything from manufacturing to 
transportation will be affected by higher costs. These higher cost 
will be felt more 1-2 quarters out, and could put pressure on 
profit margins.


OTM Call Analysis

As we move closer to the December expiration cycle, Pinnacle is 
tracking the level of call buying (OTM) between 720-810 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%
Friday, November 12       94,610      +142.1%

December Expiration Cycle
OEX OTM Call Analysis (Open Interest December 720-810)
Date                 Open Interest     Change %    Alert

Friday, November 19       36,165          -
Friday, November 26       55,598       +53.7%

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                       (11/26)    (11/30)     (12/2)

Overhead Resistance (750-760)    1.50        1.15       1.38

OEX Close                       753.57     738.74     752.53

Underlying Support (730-745)     1.82        1.98       2.00


What the Pinnacle Index is telling us:
Based on 12/2, overhead resistance continues to be light, and 
underlying support is slowly increasing.



Put/Call Ratio                  Friday     Tues       Thurs
Strike/Contracts                (11/26)   (11/30)     (12/2)

CBOE Total P/C Ratio             .42        .53        .52
CBOE Equity P/C Ratio            .32        .46        .38
OEX P/C Ratio                   1.29       1.83       1.67


Peak Open Interest (OEX)
                     Friday           Tues            Thurs
Strike/Contracts     (11/26)          (11/30)         (12/2)

Puts                 750 / 6,887      750 / 9,394     750 / 8,972
Calls                750 / 6,533      750 / 7,185     750 / 8,477
Put/Call Ratio         1.05             1.31            1.06




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 19, 1999   Top?                19.63
 
December 2, 1999                        23.28


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 18, 1999                     52.1        29.9


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

Daily Results

Index      Last    Mon    Tue   Wed    Thu   Week
Dow     11039.06 -40.99 -70.11120.58  40.67  50.15
Nasdaq   3452.78 -26.44 -85.21 17.55  99.07   4.97
$OEX      752.53  -4.28 -10.55  9.83   3.96  -1.04
$SPX     1409.04  -8.79 -18.76  8.65  11.32  -7.58
$RUT      460.44  -1.99  -2.87 -0.41   6.77   1.50
$TRAN    2894.29  -8.97   9.53-25.81  10.38 -14.87
$VIX       23.28   0.74   1.26 -2.03   0.36   0.33

Calls              Mon    Tue   Wed    Thu   Week

YHOO      245.81  -0.75 -13.38 16.13  16.94  18.94  S&P 500!
HGSI      128.25  10.69 -14.19  8.88   7.38  12.75  Heats up!
CMGI      156.13   8.88  -8.19  2.19   6.63   9.50  Finds a friend
STM       126.06   2.31   2.69  0.38   0.63   6.00  Shares hold up
MSFT       94.81  -0.94   0.84  2.16   1.63   3.69  On the move!
EMC        93.38  -1.81  -4.81  3.50   5.88   3.06  New high!
TIF        78.88   0.50   0.88  0.38   1.00   2.75  New
IBI        42.50   2.25   2.69  0.75  -0.94   2.13  Holiday harvest
MACR       67.50   0.13  -3.63 -4.00   5.75  -1.75  Buyers step up
NOK       144.63   3.75 -12.50  1.75   2.88  -2.13  Fills gap
VVTV       45.50   1.19  -4.00 -4.44   4.94  -2.31  Classic bounce
AOL        80.00  -3.88  -6.69  3.69   3.88  -3.00  New
VRSN      194.81  -1.38 -10.81 -2.81  11.81  -3.19  Dropped
IMCL       37.81  -3.19  -1.63  0.88   0.56  -3.38  Looking better
NT         77.13  -1.69  -6.13  1.56   1.69  -4.56  Look for vol.
GMST      113.50  -0.69  -5.06 -2.63   3.38  -5.00  GMST climbs!
SNE       180.75   5.81  -7.56 -1.56  -1.88  -5.19  Entry point?
GTW        73.00   0.06  -2.75 -1.63  -1.75  -6.06  Dropped
BRCM      199.88  -4.19 -23.88 10.94   9.88  -7.25  What a ride!
QLGC      116.63  -4.63  -6.38 -0.44   3.94  -7.50  Sector bounce!
QCOM      374.00 -13.50  -8.94  1.81   9.88 -10.75  Consolidation!
SDLI      167.00 -22.31  -1.69  4.25   0.00 -19.75  Keeps head low
JDSU      239.94 -13.88 -23.38  0.81  10.38 -26.06  Great entries!

Puts

RMBS       71.31  -5.56  -0.75 -0.31   1.06  -5.56  Still weak
JCI        52.38  -0.19  -1.00 -1.31  -0.81  -3.31  New
EK         61.44  -1.69  -0.94  0.63  -1.06  -3.06  EK exposed?
GT         32.50  -0.88   0.50 -0.25  -1.00  -1.63  Goodyear?
WLP        59.56  -1.00  -0.50  1.56   0.44   0.50  Entry point?
BOW        48.81   0.09   2.03 -1.00   0.81   1.94  Light volume
CPTH       67.69  -1.38  -4.94  6.44   5.56   5.69  Dropped



************
WOMANS WORLD
************

A Winning Technique For Me

Last time, I told you about learning how to trade options, 
during an unstable interest rate environment. My first 6 months 
of trading, was pretty miserable. I became leery, to place more 
losing trades. Then news came, about a company I knew well. 
I had an insider's advantage, knowing the company and it's 
developing product, solely because of my professional background. 
This gave me confidence to place trades as "no brainer" bets. 
As I mentioned, they were very successful trades. The lesson 
I learned was to trade companies you are familiar with, with 
products you understand.

But there was another part of that trade, which later became 
a fairly consistent money maker for me. Through fine tuning 
that play over the next 9 months, I developed the Blow & Go 
Technique, which has been very rewarding to me. It is useful 
if you do not have a lot of money to invest, want to own stock 
& play options, without being glued to the screen intra day. 

This play has allowed me to exercise occasional calls, in order 
to hold long term, good quality stocks, that I basically got 
for free. I still use it, when the opportunity presents itself. 
Soon, I will get free shares of QCOM and YAHOO using this 
technique. These active plays of course, are not finished. But 
I already know the probable outcome. 

Each quarter, I post earnings announcement dates for the stocks 
I am following on a calendar. I note if they meet expectations, 
the whisper, or blow out the whisper number. I listen closely 
to the market sentiment. One blow out alone, does not convince 
me. I need to see sound reason for the pattern to continue, or 
a trend that is just starting to become noticed by the market. 
It is important that the market takes notice, as evidence by a 
nice run-up, in the stock. Then I just wait for the post earnings 
depression, to make my move. 

Basically, it is a 2-4 month play, depending on when you enter. 
I choose a stock that has had continued strong earnings, which 
still blows away estimates, even though the analysts continue to 
raise expectations. That tells me the company is still growing, 
competing and doing things right, at least for the short term. 
I note stocks on my calendar, which blew out the whisper number, 
along with those which had high expectations but only got a luke 
warm market reaction. I dismiss those. I research the stocks 
making sure I understand their products, basic financials (debt 
ratio & what they spend money on), their competitive advantage 
to their sector and analysts sentiment about the company & its' 
management. An important aspect of this research is looking at 
their split history, both the price they tend to split at, along 
with the run up history into the split. I want a stock that 
creates excitement.

I think about things. Based on all the information, can they do 
it one more time? If so, could the euphoria push them well into 
the stock split range this time. Actually, I mostly decide if it 
has enough potential, so I can get shares free and still have 
profit money left. 

I wait for a post earnings slump or sell off, then I buy calls 
for either the month of their next earnings report, or the month 
thereafter. I try to buy slightly ITM. This entry is usually well 
below the high from the run up, of their last earnings. Also, if 
anything unusual hits the market, like the Asian crises, I try to 
enter on this dip too. This can be risky since you are buying the 
down draft and don't know when the draft will end. But, it is also 
a time when premiums are not inflated and good quality options can 
be bought relatively cheaply. Remember, good entry points are like 
wearing thick armor. 

I buy the month after their next earnings report, in order to do 
a "no-no" and hold for the split announcement on earnings day. I 
do not recommend holding over earnings any other time, but 
sometimes it just feels like a "no brainer" and I have a good 
entry as a cushion. If no split is announced, I take my money and 
run, but that has only happened once. If your entry point is taken 
out, while approaching earnings, re-evaluate the play, re-do your 
sentiment research and decide if you take a loss & exit, or add to 
the position. 

This technique, gave me freedom. It is the way I played while 
working full time. I did not play the markets in and out. The 
luxury to me, was the fact that I did NOT have to watch it 
closely. If the company's dynamics held, the euphoria of another 
stellar earnings report would push the price back up, a split 
would be announced and I was already holding the next month's 
options, which then would take off into a split run. If I was 
really lucky, the split would occur before that expiration, 
splitting my contracts, and the strike price of the options. 
Usually, the profits from the run-up, paid for the shares I kept, 
with plenty of profit left over for other plays. I consider this, 
as "getting my shares for free."  My Blow & Go "free" holdings 
include IBM, DELL, AOL, PFE, CPQ and soon, QCOM, SUNW & YHOO. 

For example I bought QCOM Jan 220 @ 23 in October. I think QCOM 
was 180-190. I knew they owned the CDMA technology, had great 
earnings and cell phone technology was growing. I thought, they 
should be able to blow out again and be in split range. Well, 
you know the rest. A blow out and the 4:1 split. Those initial 
contracts have been as high as 190 each, a 726% gain. I have 
bought & sold several times since, but I still have 2 Jan 220 
contracts which I plan to exercise to get my "free" stock. By 
that time, 100 shares of the Jan 220 will cost only $5,500 with 
plenty of profits left over, when on the street, they will cost 
twice that. To me, this is an incredible way to get quality 
stocks for free, when you couldn't afford to buy them.

What a deal!!! Only in America, the land of the FREE!!!!!  

Renee
renee@OptionInvestor.com



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

Fire For Effect!

In the Marine Corps, Platoon Commanders write down their on-call 
mortar targets on laminated sheets of paper as they run through 
live fire exercises leading their Marines. In one such combined 
arms exercise, I remember vividly cresting a hill, turning to my 
radio operator, and calling for fire on my first pre-planned 
target. When the adjusting round landed smack dab on top of the 
bunker, I ordered, "Fire For Effect," dropping another 20 high 
explosive rounds on the target before my platoon moved forward....

... that's how I feel Tuesday night, having just gotten the word 
that YHOO will be added to the S&P 500 Index. Last week, I "stuffed 
the stocking" with YHOO Jan 220 Calls, and today, I backed up the 
truck on Dec 230 Calls at the newsletter's support level of 218. 
I thought I was in for it when YHOO continued lower, but now my 
Calls are looking just fine with YHOO up 22 after hours. Jim had 
outlined a pullback of 15 - 25% (of the November run) on the 
Nasdaq as probable support. When the NASDAQ passed the 15%
mark, I started calling in targets from my on call list:

SUNW @ 129 
MACR @ 64 
VRSN @ 183 
YHOO @ 218 
MSFT @ 89 
NOK  @ 135-40 
SNE  @ 180

In a volatile day like today, I recall swimming in the surf at 
Santa Cruz. Big waves break over you and you don't know which 
way is up, and you just hope you are swimming in the right 
direction. But making good trades and returning profits to your 
portfolio is like each individual stroke that a swimmer makes -- 
each stroke moves a little fluid (capital) to move you forward a 
little more, setting you up for the next stroke. I thought I was
going to take a loss on those YHOOs, but now that will be a 
positive stroke, which I will try to maximize with a trailing 
stop exit. My other buys for the day are Dec calls on MACR, VRSN, 
and NOK. 

But in the bigger picture, managing your portfolio is like 
climbing a mountain. At the 12,000 foot mark on the way up 
Everest, they make a camp so that climbers can acclimate to 
the thin atmosphere. They do the same thing every few thousand 
feet so that climbers don't make bonehead decisions and fall to 
their death. That's why I take at least a week off every month. 
In November, I made a 59% gain, and set up a base camp half way 
through the month. Now, fresh, rested, and ready for the next leg 
(Dec trading), I am on the trail, blazing a path, trying to take 
as many traders from the local club with me, free climbing (using 
naked calls) whereas others prefer to be roped in (using spreads, 
thus limiting risk). As Sun Tzu, the ancient military philospher 
wrote, the wise general does not commit to every attack. Or, as 
Jim wrote on Sunday, the wise trader does not commit to every trade.

But when you do muster the platoon (the capital in your portfolio) 
for an attack, and the conditions are right, CHARGE!

(Subtitles added for the testosterone impaired)

Next time: You're a trader on Nov 5, 1999. Using Black Scholes 
to analyze the implied volatilities, which January Call should 
you buy to take maximum advantage of AMZN's cyber-stocking run?

Janar Joseph Wasito
janar@OptionInvestor.com



*************
READERS WRITE 
*************

No Fool Like an Old Fool

Bald on top, gray on the sides, and considered wise by my wife, 
daughters, son-in-laws and granddaughters, I began believing my 
own press.  I subscribed to OIN and started trading options a 
year ago.  I'd been successful in business and met my retirement 
objectives so how difficult could making quick money in options 
trading be?  Read on.

Last January I opened a brokerage account with TD Waterhouse 
with $10K from some mutual funds that were showing less growth 
than passbook savings.  I selectively read OIN, picked out 2-3 
plays per week from OIN's picks and blindly plunged ahead.  I 
was lucky and doubled my money by April so I took Mamma on a 
Carribean cruise (while leaving a [relatively] large open 
position in Walmart just prior to earnings).  Great cruise, 
but when we got home and I fired up the computer, I got a very 
unpleasant wake-up call.  WMT tanked prior to earnings and stayed 
that way until the options expired.  My $20K shrunk to $5K.  
While it didn't break me or put me in a soup kitchen line, it 
did make me angry.  So I spent the next 6 months single-handedly 
butting heads with the market because "nobody can do that to me" 
and "I'm smarter than the market".  It didn't work, I broke every 
one of the 10 Rules (plus a few more, I think), but I have been 
'lucky' enough to hang on to the $5K.  No growth, but I'm still 
alive to fight another day.  You'd think with wisdom comes 
humility, but I am living proof that it is not always the case.

Now I read the whole OIN, use technical analysis, moved my 
brokerage account to Preferred Trade (because of the stop 
loss features that Waterhouse didn't have) and  paper-trade, 
paper-trade, paper-trade before I commit cash..  I now feel 
like I have a much stronger arsenal to attack the market and 
can do it without getting my ego in the way.  I look forward 
to a great 2000 trading year.  And the recent articles on entry 
and exit points were invaluable.  Kind of makes me fell a little 
dumb for not recognizing these things myself.  But can an 
'old dog' learn new tricks?  You can bet a wise one can!!  
Good trading and happy Holidays to all.

Grandpa George

PS:	I use words like 'attack' and 'arsenal' for Janar's benefit.  
I was an "Old Corps" Marine.  And having women contributors to OIN 
is an excellent idea because ladies are every bit as smart as men.  
Just ask my wife, 4 daughters, and 3 granddaughters; 
they'll tell you!!

****

Subject: Successful Options Trading.


I would like to thank OptionInvestor.com for the advice given 
to me over the past two years. I have enjoyed the service, and 
have made a substantial amount of money over the long-term from 
your information.

Recently, I have made some dream trades (you know, that trades 
that come once in a blue moon). On Oct. 29, I picked up 20 AOL 
Nov. 125 calls @ 8.5 and sold them @ 15, then on Nov. 4 I bought 
30 SUNW Dec. 105 calls @ 9.63 (it seems like I can read your 
minds because I got in and that evening you listed SUNW as a pick). 
I got out on Nov. 17 @ 24 for an astounding $43,000.00 profit on 
one play!! That'll do'er Al!

Another great play was when OptionInvestor.com sent out the alert 
about QCOM bottoming in the 330's (Nov. 17)...it grabbed my 
attention because optioninvestor doesn't always do that. I thought,
"This is unusual?" Sure enough, I took a look at the chart, and I 
saw the entry point. I jumped on board and before you know it, 
three days later...$10,000 in my pocket! That paid for 
optioninvestor for the next 30 years!!!

Anyway, I wish the employees at optioninvestor the best of 
success and to keep up the good work. Reading your information 
is just as important as watching CNBC!

Jason
OptionInvestor.com Customer

****

Subject: Welcome Renee

How nice to have a woman's viewpoint. Jim and his whole staff 
are wonderful: I couldn't do without them, and I enjoy and 
appreciate Janar. But you are icing on the cake. 

I am sixty-six and growing younger every day, at least mentally. 
The geriatric specialists say that continuing to learn new things 
and using our brains keeps us young. If true, getting into options 
is definately keeping me young. All I do anymore is study. There's 
nothing simple or easy about understanding options. Like you, I 
began trading options last August. I jumped in with both feet 
exactly at the top and rode the market all the way down into 
October. Surprisingly, I did very well. I thought, "Wow, this is 
pretty simple." I became over confident, had too many options open, 
most of my option money invested and lost it all. I started over 
again, did real well and lost it all again and had to crawl back 
up. Then, someone recommended Optioninvestor. Now, I cringe when 
I look back a year ago and see how dumb I was. I didn't even know 
I was in a bear market. I framed the charts from that period and 
hung them on the wall as a reminder of how far I have come. I read 
and study every section of the Optioninvestor--it's invaluable. 

My daughter Liza also became interested in option trading and at 
the present time we have a joint account, and we are pretty close 
to breaking even. I'm income-property poor and completely dependent 
on rents for income. I'm so tired of cleaning and fixing. I'm hoping 
I can eventually get good enough at options to create a steady 
income. Then, I will liquidate my properties and invest most of 
the proceeds in less risky areas. But, I think I'll always trade 
options just for the fun of it. 
Again Renee, I will be eagerly looking forward to your column. 
Thanks to Jim for recognizing the value of a woman's opinion and 
experience. 

Frances 

P.S. I really enjoyed reading the comments you received from 
readers, and especially your answer to the one who corrected your 
spelling. 

****

A while back, Jim Brown described about hearing some bad luck 
stories; well here is another. I'm not typing this to feel sorry 
for myself. I truly believe some people will NEVER become 
successful at this option/stock game!! I've been at this now 
for 30 months and gotten nowhere. Sure there are successes, but 
far outweighed but the failures. The key word in "stop losses" 
is "L O S S" Sure it allows you to play again another day. It 
only prolonged my agony. After $17,500 sent to an options account,
I pulled the remaining $5,000 out to fund our '99 IRA's. A 
completely boring index fund can certainly do better than I
have! Retirement now 10 yrs. away instead of 5 yrs. To those of 
you who find yourself in similar situations,look at yourself real 
hard and ask yourself how proud you are! Some of us were not 
destined to be winners at this "game". Half of me feels very 
envious of all the success stories printed in the newsletter, 
the other half of me wants to just puke! After spending more than 
$50,000 on books,tapes, seminars, numerous subscriptions to 
newsletters and fax recommendations,including and beginning with 
Wade Cook [you don't know how much I wish I never heard his radio 
ads!!!!!!] and losses to MR. MARKET, I am now ready to admit to
out and out failure! Something nobody wants to do! If it was not 
for my wife insisting on not touching our core 'T' and 'RBOC' 
holdings,I would have lost the proceeds to that too. Information 
overload, analysis paralysis,lack of study time, dual committment
to work and the market, ?????? who knows maybe a little of them 
all. I find I cannot concentrate on both without one of them 
getting neglected because they both take place at the same times 
of the day. Well enough of this spleen vent. THOSE OF YOU IN THE 
SAME BOAT HAD BETTER BUY A BIGGER BILGE PUMP OR DRY DOCK BEFORE 
YOU SINK!!!!!!!! As for me,I'm done. 
LEN 

(editor - Len, it takes a strong person to admit defeat. I 
sincerely wish you good luck in whatever you do. We get many of 
the success letters but very few of the failure letters. The human 
ego is fragile and sharing failures is not what causes most people 
to burst into print. George Fontanills and I will be the first to 
admit that we ran several accounts to zero when we were learning to 
trade. Option trading is not something you pick up casually. Many 
stock investors have tried and failed. Those that eventually learn 
become very successful but the battlefield is littered with 
casualties. Again, good luck in your future endeavors. - Jim)



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:
*****

GTW $73.00 -1.75 (-6.06) GTW just couldn't hang at its $76 
support level and continued in the downtrend started on Tuesday. 
The stock was already dangerously below the 10-dma (then at 
$78.78 and lower today at $77.50) and is now perched on the 30-
dma (72.72) - an indicator it hasn't seen the likes of since the 
rocky market of mid-October.  The only recent news specific to 
Gateway was the announcement on Tuesday that CEO and Chairman 
Ted Waitt may be stepping down from office by year's end.  And 
today it was reported that he filed with the SEC to sell 1.5 mln 
shares of common stock with an approximate value of $121.5 mln.  
Technically, we've lost sight of any rebound and are exiting 
the play this evening.

VRSN $194.81 +11.81 (-3.19) A $15 bounce off mild support and 
almost a break through overhead resistance at the 52-week high 
($202.50) today and I bet you want to know why we're dropping 
VRSN tonight.  It's really quite simple.  For starters tomorrow 
is the Jobs Report and this usually makes traders a bit jittery 
which isn't a good thing when playing VOLATILE Internets.  
Second and of utmost importance is the upcoming stock split.  
VRSN will split 2:1 after the bell on Monday and honestly you 
should be out of your positions by then.  Typically most stocks 
will suffer post-split depression and a particular a big risk 
in VRSN's case.  After last summer's 2:1 stock split VRSN's 
share price declined for a few weeks.  It's been a good play 
but it is time to start heading for the door.


PUTS:
*****

CPTH $67.69 +5.56 (+5.69) Quick play?  We never had a chance. 
Bullish investors didn't even wait until the share price sunk to 
support at $51.  Instead they jumped on the bandwagon and fired 
CPTH upward an incredible 21.5% over two trading sessions!  
Needless to say, this put play is a definite drop tonight. 



*************************************************************
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Stop Losses based on the option price or the stock price.
Move your trading into the next millineum with Preferred Capital

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**************************************************************



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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  12-2-99  
Copyright 1999, All rights reserved. 
Redistribution in any form strictly prohibited.


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

SNE $180.75 -1.88 (-5.19) The neighbors must have finally 
started complaining and asked SNE to turn it down, down, down.  
Sony has been gapping down at the open for the last three 
sessions.  Today, for the first time since the end of October, 
Sony violated it's 10-dma.  So why are we keeping it as a play?  
Entry points!  Sony does this to us, or rather, for us, all of 
the time.  Sony will drop down and offer some rather attractive 
points of entry before once again picking up the pace.  Sony 
made a nice come back at the end of today's session, closing 
above the $180 level, which has provided resistance for Sony in 
the past.  Sony's 10-dma is at $182 and once SNE breaks through 
and begins trading above this level, we should be set to 
continue on with the positive momentum run.  Look for $180 to 
hold as support.  But we want to see the bounce occur soon or 
we will turn Sony off for better plays.

BRCM $199.88 +9.88 (-7.25) You can't find a ride this good 
at any amusement park that I know of!  Broadcom did us a favor 
by providing us with some awesome points of entry at the 
beginning of the week.  Since then, BRCM has offered a gain of 
up to $26.50.  Not bad at all!  BRCM managed a breakthrough of 
it's 10-dma of $195, which could serve as support going forward.
Resistance looks to be at $200, which we are just pennies away 
from.  BRCM did trade above this level for a bit this morning 
but quickly pulled back to a more "comfortable" level, right 
around $197 and spent the day gradually working it's way back 
up to flirt with $200.  Once again, timing a new entry has become 
the challenge.  A breakthrough of $200 backed by strong volume 
will be good indications of continuing positive momentum.  At 
that point, waiting for pullbacks (which as we have definitely 
seen this week, and can be rather dramatic) will probably be 
your best bet for a new entry once we have confirmation.  Today, 
Morgan Stanley Dean Witter raised their price target on BRCM 
from $180 to $250 and up'd the earnings per share estimate from 
$1.25 per share to $1.35 per share. 

HGSI $128.25 +7.38 (+12.75) HGSI's shares have heated up once
again.  You may recall that the Biotechs suffered a rough day 
on Tuesday thanks to some negative comments about Amgen.  But 
it was a one-day event as we had suspected and HGSI bounced 
nicely on support at $110.  After a positive review of the 
company on CNBC on Thursday, HGSI rallied quite strongly and 
closed near the high of the day.  The rally was encouraging 
and a follow through above resistance at $130 could possibly 
indicate an assault on the old high.  A strong market on Friday 
could be just what the doctor ordered for a breakout to occur. 
There was some good news announced yesterday.  HGSI has entered
into a broad pact with Abgenix Inc. to identify drug candidates
based on human antibodies for development and commercialization.
The multi-year agreement will allow HGSI to use Abgenix's 
technology, a mouse which can generate fully human antibodies.
Using mice to generate human antibodies is the cutting edge of 
new drug research.  Support is at $125, $120 and $110.    

IMCL $37.81 +0.56 (-3.38) ImClone's stock performance this week
continues to be unimpressive.  By taking out yesterday's trading 
high of $38.13 today things may be looking better for the stock.
Unfortunately, IMCL was only able to hold on to a small gain 
today, despite the strength in other Biotechs.  IMCL did have 
a little good news today announcing that they have expanded their 
Phase III trials of their primary cancer fighting drug C225 into
Spain.  The trials are being conducted in conjunction with a Merck
subsidiary.  The companies also announced the triggering of a $6
million milestone payment to ImClone.  Although ImClone's stock
is looking a little stronger, be very careful if it should drop 
below $36.  If the trading range continues to narrow look for 
the stock to break out to one side or the other of the "wedge".  
The 10-dma at $37.25 is support and IMCL better hold or it 
will find its way off the call list.

STM $126.06 +0.63 (+6.00) Prompted by the announcement that 
STM would be added to the Morgan Stanley Capital International
indices France (MSCI), and the favorable report in the latest 
issue of "The Wall Street Transcript", the shares sky 
rocketed on Tuesday.  The shares have been trading in a range 
for the last two trading sessions, as traders try to digest 
the information about the stock.  It has been rumored that the 
stock's sharp rise was due to an error in a buy order, but 
there have been no reports to cancel any orders so we will 
assume this information is false.  We are pleased to see the
shares hold up during this consolidation stage, good support 
has held up in the $124-$125 range.  Late in the day, with the 
Semiconductor Index soaring to close up $28.36 points, STM 
closed at the high end of the range as well at $126.06 on
average volume.  The outlook going forward for the sector 
remains bullish and this recent consolidation should settle 
to the upside.  There is some resistance at the $127.50 level, 
and then again at $130.  Look to add to positions above 
current resistance levels or on dips to support levels 
previously mentioned.  In case of an unfavorable economic 
report tomorrow, and a sell-off, aggressive traders can look 
to jump back in on a bounce from the $120 level. 

MACR $67.50 +5.75 (-1.75) MACR announced today that the company
has entered into an agreement for $44 million in funding for
the company's online entertainment business-Shockwave.com.
This new funding should fuel growth in the shockwave.com 
content.  Along with building the next generation of this 
popular site that already claims over six million members.  
This endorsement of the Web's leading entertainment destination 
had the shares soaring as traders rushed into MACR, bidding it 
up to as high as $69.50, before settling in to close the day at 
$67.50.  This week the low end of the trading range has been 
$61.56 and the high end of the range has been $71.06 which is 
a 52-week high.  So depending on your entry points, you may 
have had a chance to profit on this play.  It is also a lesson 
in stops if you bought in at the high end.  The favorable or 
unfavorable digestion of tomorrow's economic report will dictate 
where MACR goes from here.  A breakout over $70 on strong 
volume would be a bullish sign.  Just make sure it is over $70 
and not at $70 where MACR will find some resistance. 

VVTV $45.50 +4.94 (-2.31) Whoa, what happened to VVTV during 
the closing minutes on Wednesday?  Ouch, is an understatement.  
But in today's afternoon surge in the Nasdaq, the shares of 
VVTV bounced back nicely off the intraday lows to close the 
day very strong, up almost 5 points.  Wednesday now looks 
like a capitulation event and the buyers have returned.  VVTV 
is now back above the 10-dma of $44.50.  This has convinced 
us to keep VVTV around as we could see higher prices from here.  
Traders who have not currently taken a position in the stock 
could enter at current levels if the market confirms it wants 
to go higher tomorrow.  The trading pattern is volatile, and 
during the day you should be able to find a favorable entry 
point on a pullback.  Resistance sits at $50.50, which would 
be major breakout territory. 

YHOO $245.81 +16.94 (+18.94) Yesterday, Yahoo's share price 
powered higher $16.13, or 7.6% on news of being added to the 
S&P 500 Index.  YHOO is the 2nd Internet stock to be selected 
for the Index joining American Online (AOL).  Those gains 
extended into today's trading session with buyers once again 
returning to the Internet sector, advancing the stock another 
$16.94, or 7.4%.  This two-day surge has placed YHOO well above 
the 5 and 10-dma at $228.09 and $225.21, respectively.  Near-
term support is at $225-$230, then at $220 for this split 
candidate.  At these higher trading levels, a return to the 
proximity of $225 could be a great entry for the very gutsy OR a 
reversal/flat-line signal.  Tomorrow is the Jobs Report and this 
data can easily shift the market sentiment so be careful of a 
sudden drop if you have open positions.  This is especially 
important considering the stock's recent gains - plus today 
marks a new 52-week high.  YHOO shot upwards during the last 
hour of trading peaking at $250 and closing strong at $245.81 to 
unequivocally squash last April's record of $244!  Today it hit 
the press that New World Development, one of the four hard-line 
telephone companies in Hong Kong, entered into a partnership 
with Yahoo! to deliver Internet related services to its wireless 
users when suitable handsets become available in the year 2000.  
In other news, Yahoo! launched its new automatic "spam" 
filtering system yesterday designed to stop unsolicited bulk 
e-mail from evading their user's mailboxes.

MSFT $94.81 +1.63 (+3.69) MSFT is on the move!  This powerhouse 
broke out yesterday and extended its decisive advance in today's 
trading session on moderate volume.  The real battle is now at 
hand.  MSFT faces strong resistance at $95 and $96.  For visual 
confirmation take a look at a six-month chart and find the peaks 
in this range.  Therefore it's reasonable to assume that earth-
shattering news will be required to power the upward momentum 
needed to overcome this opposition and make a run for the 52-
week high ($100.75 set in July).  Conservatively, it'd be wise 
to confirm a bounce and close above these levels before opening 
new plays.  The news surrounding Microsoft was mixed over the 
past two days.  On Wednesday, the company announced its Windows 
2000 operating system would be released by the end of the year 
and the official worldwide launch is scheduled for February 7th.  
Also, they are releasing a trial version of Internet Explorer 
5.5 creating more competition for Netscape's slower 5.0 browser.
Today it hit the press that another class-action suit was filed 
against Microsoft.  This time by Israeli lawyers on behalf of 
250K consumers for $125 mln alleging Y2K and monopoly issues. 

EMC $93.38 +5.88 (+3.06) Last July a federal judge filed a 
preliminary injunction against Hewlett-Packard, barring HP
from infringing on trademarks registered to storage maker
EMC.  Today that injunction was made permanent, and the 
price of EMC stock jumped over $5.  Yesterday EMC bounced
off the $83 support level we mentioned Tuesday gaining $3.81
for the session on decent volume of 4.6 mln. shares.  With
the announcement of the permanent injunction, traders gapped
the price of EMC up at the open and didn't look back.  EMC 
made a new high at $93.50 and closed near the high indicating
there may be more room to go.  The volume was about average
at 5.8 mln. shares.  If you re-entered a play yesterday and 
didn't take some money out of the trade today, we would
suggest keeping your stops close, with the jobs report due
out in the morning.  The Nasdaq and EMC have regained all of
the recent losses and then some, but a negative jobs report
could wreak havoc with our play.  As for entering a new play, 
we would suggest watching to see how traders react to the 
news in the morning, prior to placing a new order.

QLGC $116.63 +3.94 (-7.50) We mentioned Tuesday that QLGC could
find support near the $110 level and at this point it has.  The
low Tuesday and Wednesday was $110.88 before QLGC began to 
bounce back.  This could be a short-term low as the volume 
increased yesterday to just under 1.2 mln. shares.  Today saw
the Semiconductor sector bounce back by about 4.5% on the news 
that Hambrecht & Quist added KLA-Tencor to its focus list and
set a three-to-six month price target of $100 with a Buy rating.
The real question for our play in QLGC is rather it can sustain
the buying of the past two days.  The volume has been a bit light
and we will need to see it pick up for us to continue to have 
confidence in our play.  We will look at the $115 area for support.
Tomorrow traders will get the November jobs report at 8:30am ET
and the fate of the markets will be determined at that time.
A bad jobs report could knock the legs out from the Nasdaq and 
the Semiconductor sector.  If you entered a new play in QLCG 
yesterday or today on the bounce, keep your stops near.  

GMST $113.50 +3.38 (-5.00) On Wednesday shares of GMST continued 
to slide as investors took some money off the table.  Depending 
on one's trading style GMST gave us a good place to target shoot
late yesterday and early this morning.  Wednesday GMST bounce 
off $110 and began to climb again.  The one fly in the ointment
for our play is the light volume of the past two days, with each
day totaling just over 800K.  ADV for GMST is about 1.2 mln.
Yesterday afternoon's bounce came on the news that France's 
Thomson Multimedia had produced and shipped 1.3 mln television 
sets that incorporate the Gemstar interactive electronic program
guide.  They estimated a total of 1.5 mln sets will be shipped 
by the end of January 2000.  Again the key to our split run 
play in GMST is whether or not it can continue its momentum
to the upside after the recent pull back.  GMST splits 2:1 on 
December 13th, so if its going to kick back into gear, now 
is the time.  If you re-entered our play, keep your stops 
close with the jobs report due out in the morning.

CMGI $156.13 +6.63 (+9.50) CMGI found a friend today in analyst
Ryan B. Alexander of Wit Capital Corporation.  Alexander revised
operating estimates and raised his 12-18 month price target to
$225.  According to Alexander, "We are revising our projected 
enterprise value for CMGI from $20.7 billion to $30.6 billion".
The Wit Capital Internet analysts believes that CMGI is well
positioned to benefit from its vital and growing network of
public and private Internet companies.  At this point it would
appear as the $145 area has provided good support for our
play in CMGI.  CMGI began to bounce early in the session today
and continued strong into the close.  We see resistance at 
$160 and again at $170 (the all-time high).  

IBI $42.50 -0.94 (+2.13) This morning Intimate Brands reported
a 15% increase in same store sales for November and traders
rewarded them by hitting the sell button on their computers.
Several of the National chain stores, reported increases in
same store sales and traders took back recent gains from most 
of the sector.  At this point the selling doesn't appear to 
be anything serious as IBI and many its cohorts in the retailing
industry have enjoyed nice gains in the last couple of weeks.  
IBI picked up $0.56 yesterday and gave back $0.94 today.  The 
volume was not heavy on the day which leads us to believe the 
pullback is ordinary profit-taking.  The one other positive 
for today's session was the bounce IBI showed of the $42 area
late in the day.  IBI is not a fast mover but could be a 
profitable play, as the holiday season for retailers is their
harvest and most are expecting a solid holiday selling season.
As for entering a new play, we would keep our eye on the 
$42 level and look for continued strength.  Should we see a
negative jobs report in the morning, the major indices and the
retail sector could head lower so be careful.

NT $77.13 +1.69 (-4.56) The upgrades always help, but the fact 
is volume slacked off today from its ADV, indicating that the 
big buyers may be taking a break from this Canadian issue.  Yes, 
NT is a leader in the optical networking industry ahead of Lucent 
and looks to exceed the Street expectations in margins and 
revenue growth in 2000.  However, from the chart, technically it 
may be hitting a roadblock in trying to get back over its gap-
down price from Tuesday.  The 2-day recovery while nice, hasn't 
been that strong for NT.  We're not saying you can make money 
buying the dips here.  It's just that without volume, we won't 
see the same kinds of gains we've become accustomed to in the 
past with NT.  Support is at $75, but we'd sure like to see 
volume come back.  That is something to keep your eyes on if 
you enter a play.  With the tenuous chart, keep your stops set 
if you are already in the play - you don't want to give back 
the profits that have been hard to come by this week.  So who 
gave the upgrade mentioned above?  CSFB to a Strong Buy.

NOK $144.63 +2.88 (-2.13) Filling the gap again, Nokia has 
rebounded nicely from the Tuesday sell-off.  However, as we noted 
last week, slower trading volume in Europe could portend slower 
trading volume here, and that's just what happened over the last 
2 days.  Particularly, traders should note the lack of opening 
volume the last 2 days, which tells us that there likely have 
not been as many buyers at the open as there were in the past 
few weeks.  Are buyers going away?  We don't know for sure, but 
support remains intact at $140, a level tested two times 
yesterday with a confirming bounce.  Today, NOK tested $141 
before lunch, followed by a strong recovery with increasing 
volume all the way through the close where it finished near its 
high of the day.  It gained another $1 to $145.63 after hours.  
As long as volume doesn't die and take the price with it, NOK is 
back in split announcement territory, which could fuel further 
gains.  Also note from a briefing.com article, "Following 
positive presentation at CSFB's technology conference, CSFB 
raises price target to $160 and expects to revise estimates on 
Friday, seeing upside potential their forecasts, most notably for 
2000 and 2001; have $2.76 est for 2000."  Tomorrow could be good 
for NOK, but don't take eye off the ball.  Be ready to get out 
if the trade moves against you.

QCOM $374 +9.88 (-10.75)) Up almost $10 today on only half the 
ADV - talk about a great consolidation!  Yesterday we got a $355 
buying opportunity, and today another one at $363.  Support 
continues to move up, while resistance continues at $390.  As we 
noted, QCOM is forming a nice ascending triangle, which usually 
portends a breakout.  That it's happening on unusually low volume 
tells us that buyers are hesitant to jump in, but sellers are 
even more reluctant to sell.  QCOM has fallen off the active 
traders' radar screens keeping the price "reasonable" for us to 
make an entry.  What will put it back on traders' radar, drive 
the volume and increase the price?  How about that shareholders 
meeting on Dec 20th to vote an authorized share increase (the 
catalyst that makes the 4:1 split possible), or an announcement 
that QCOM has found a buyer for their handset business?  Those 
would do nicely, thank you.  Get ready.  Assuming the market 
doesn't roll over on us in the next 2 weeks, this is shaping up 
to be a great play.  Some words of caution though: DEC strike 
time premiums will eat us alive because they are still huge and 
they expire in 2 weeks.  Don't buy these and sit on em.  If you 
can stomach the price, look at and consider the JAN strikes so 
you don't get the stuffing knocked out of your account from the 
rapid time decay.  For the intestinally fortified, selling ATM 
puts could produce a turbo-charged return, but also carries 
nitroglycerin-like risk.

JDSU $239.94 +10.38 (-26.06) What great entry points we saw 
yesterday - $225 at the open with a $15 spike, all in the first 
hour of trade, followed by four re-tests of the $222-$225 range 
throughout the day.  Today, $233 provided support, as JDSU (like 
QCOM) consolidated in low end of the channel, exhibiting higher 
lows.  Though 40% of today's gain was a result of a gap up, Dain 
Rauscher Wessels issued a Strong Buy rating with a price target 
of $300, which helped a bunch.  That follows yesterday's 
reiteration by SoundView of their Buy rating.  JDSU too is a 
splitter (2:1) on Dec 30th, but it's a bit early for a serious 
split run to begin.  Even so, as the primary producer of passive 
and active optical components used in NT, CSCO, LU, and TLAB's 
optical components, it won't stay down for long.  Nonetheless, 
with any market correction, JDSU will likely move with it.  There 
is strong historical support at $225 (yesterday's 10 mln shares 
plus confirms that), whereas channeling support is more like 
$227-$230.  Target shoot to your own level of risk tolerance.  
With an almost $18 recovery since Tuesday, remember to protect 
your profits with stop loss orders, or at least be disciplined 
enough to get out and buy it back later if the trade heads south 
on you.  While a potentially great play, it still carries above 
average risk.  P.s. - don't be alarmed to read the Furukawa 
Electric of Japan sold 1.8 mln shares of JDSU (a big chunk of 
yesterday's volume); they did it to pare down some debt and still 
have 36.2 mln shares left.

SDLI $167.00 +0.00 (-19.75) Like its optical brethren, SDLI kept 
its head pretty low (volume wise) from Tuesday's sell-off, but 
has only managed to recover $4.25 since then - not an 
inspiration.  Two-week historical and channel support is at $160; 
near-term support is $165.  Target shooting is okay, but we'd 
like to see more volume before taking a position.  There have 
been no recent utterances of buyout rumors (either as acquirer 
or acquiree), though Dain Rauscher Wessels initiated coverage 
with a Strong Buy rating and price target of $200, while CSFB 
started coverage with a Buy rating and $210 target.  Other than 
that, news is pretty sparse, though they did win an achievement 
award from an industry trade group today for designing a better 
amplification process (Raman amplification vs. erbium-doped 
amplification - Raman is better.  We leave the scientific 
particulars to others).  Wait for volume and confirm market 
direction before playing.



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

WLP $59.56 +0.44 (+0.50) Could this be an area for entry?  WLP 
has been up in the last two sessions, gaining $2 and is up 
$0.50 for the week so far.  We are at a very critical point for 
our put play on WLP.  WLP did manage a breakthrough of it's 
50-dma at $58 and is inching toward it's 10-dma of $61.  Should 
WLP breakthrough this level, it may very well be time to turn 
this play loose.  $59 did hold WLP up for the majority of 
today's session and we will want to see WLP reverse and move 
below this level before we entertain the thought of entering a 
new play.  One thing in favor of our put play is the continuing 
lack of volume.  There just does not seem to be enough investor
interest to maintain the momentum needed to propel WLP through 
the next resistance level.  Time will tell.     

RMBS $71.31 +1.06 (-5.56) Rambus indulged in an up day thanks 
to the overall bullish mood of the sector with the SOX up 
over 28.  This was in spite of some rather bleak news from the 
ever-Rambus-plaguing Intel.  Intel announced that they have 
located a bug in a small number of their chips in the Pentium 
III family.  This has been a factor in the delay of the Pentium 
III family launch because of problems with the 820 chipset and
therefore, has caused problems with it's use of RMBS' memory 
enhancing technology.  RMBS did a nice job of offering some 
potential points of entry today, giving us a trading range of 
nearly $4.  We do not view this up day as a trend reversal being 
that RMBS still posted weak volume and has so much resistance yet 
to conquer.  RMBS continues to have resistance looming above, as 
it bumped its head several times at $72 in the afternoon session.  
RMBS also has further resistance at its 50-dma of $74.50 and its 
10-dma of $75.50.  We would still like to see a drop below $70 to 
confirm downward trend and at this point would recommend waiting 
for this drop to occur before entering a new play.

GT $32.50 -1.00 (-1.63) "It was your classic love story, boy 
meets girl...girl gets killed in horrible blimp accident."  
"Goodyear?"  "No, it was the worst." (from the movie Naked 
Gun)  That must be how GT is feeling lately as it moved down 
today to hit yet another new 52-week low.   There seems to be 
nothing that can stall GT's continuing negative momentum.  GT 
closed very close to the low of the day, positioning us well 
heading into tomorrow's session.  GT's 10-dma is now at $35, 
which is still providing resistance.  As the psychological 
levels continue to provide the only notable support, it will 
be important to tighten your stops and exercise caution as we 
approach $30.  We mentioned that the volume level that GT posted 
on Tuesday was a point of interest, being that it was so high.  
As expected, we have seen a drop off in the volume, indicating 
a continuing lack of investor interest. 

EK $61.44 -1.06 (-3.06) Has Eastman Kodak been exposed?  With 
the stock falling below support today it is very possible the 
shares could get weaker.  The downtrend is clearly visible and 
intact.  EK announced today that they will be expanding their 
presence in Times Square by updating their Kodarama display just 
in time for the Millennium celebration.  The increased exposure 
is helpful but it will probably have little impact on the price 
of the stock.  Besides, we hope to have made our profits long 
before the end of the year.  Any trading below today's low of 
$61 could indicate a continuation of the downtrend but we may 
need to wait for a move below $60 before initiating new plays.  
Resistance is at $62 and $64.

BOW $49.06 +1.06 (+1.94) Bowater has changed its pattern of 
trading contrary to the market.  Could value investors be 
entering the market?  Are there any value investors left?  It 
is time to watch this stock very closely.  It traded briefly 
above its resistance of $50 today.  A close above $50 tomorrow 
might indicate more to the upside.  Volume on this rally has 
been a little lighter than average so it is possible that BOW 
is just enjoying a little bounce and could resume a downtrend.  
A break below $48.50 could indicate a resumption of the 
downtrend and time to start new plays.



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

TIF - Tiffany & Co. $78.88 +1.00 (+2.75 this week)

Tiffany & Co. sells fine jewelry, timepieces, silver, china,
Crystal, stationery, and other luxury items through about
130 Tiffany & Co. stores and boutiques worldwide.  They 
also sell via catalog.  Tiffany also sells corporate gifts
directly to businesses.  

The shares of Tiffany & Co. hit a 52-week high today, trading
as high as $79.25, before settling in to close the day 
slightly off of the high at $78.88.  The robust thanksgiving
weekend sales helped some of the retailers to rebound, and 
other to continue to soar.  TIF has "Wall Street" in awe, 
because if you just focus on the fundamentals, and did not
look at the name of the company you would think you were 
looking at an Internet stock.  Although TIF is not an 
Internet company, the bottom line grew by 71% in the most
recent quarter, and they have re-launched tiffany.com just
in time for the very critical holiday shopping season.  The
third quarter that just recently ended saw profits 16% above
First Call estimates.  Going forward analyst are increasing
their quarterly and yearly estimates.  The price surges in 
the stock are not a big surprise with these type of numbers. 
We look for higher-highs with the technical picture looking
very bullish as we get closer to Christmas.  We will look to
enter positions at current levels $78.88, and on any pullbacks
to trading support at $74-$75 levels.  The chart pattern
is on a favorable climb and we are expecting a breakout to 
occur at any time.  Look for a move above $79.50 on strong 
volume to confirm the move.     

In the news recently, Amazon.com is in a deal with luxury 
retailer Ashford.com, so there customers will have a place to
buy diamonds and other luxury goods.  This recent focus on 
the luxury item space on the Web has shined a brighter light 
on the traditional retailers that have developed an online 
presence like Tiffany & Co., and Neiman Marcus Group Inc.  

BUY CALL DEC-75 TIF-LO OI= 320 at $5.63 SL=3.88
BUY CALL DEC-80*TIF-LP OI=  96 at $2.63 SL=1.38
BUY CALL JAN-75 TIF-AO OI=  84 at $8.75 SL=6.63
BUY CALL JAN-80 TIF-AP OI= 107 at $6.00 SL=4.25

SELL PUT DEC-75 TIF-XO OI=  65 at $1.63 SL=3.00
(See risks of selling puts in the play legend)

Picked on Dec 2nd at   $78.88     P/E = 49
Change since picked     +0.00     52-week high=$79.25
Analyst Ratings    1-13-5-0-0     52-week low =$19.06
Last earnings 11/99 est= 0.24     actual= 0.29
Next earnings 03-08 est= 0.87     versus= 0.74
Average daily volume =  556 K 
Chart= http://quote.yahoo.com/q?s=TIF&d=3m

****

AOL - America Online Inc $79.88 +3.75 (-3.88 for the week)

AOL is the world's #1 provider of online services with over 
21 mln subscribers.  It's acquisitions in 1998 and 1999 
have given the company a 60% market share and diversity.  
CompuServe, an online service geared more to professionals, 
added its 2 million users to the AOL portfolio in 1998.  
This year AOL brought the Web navigator, Netscape, to 
its organization and is also using DIRECTV to launch an 
interactive TV service.  

The decline was typical following AOL's 2:1 stock split on 
November 22nd.  Share prices dipped over $10, surfing levels 
near the 30-dma indicator before recovering the past two days.  
The strong rebound combined with a powerful show of volume 
signals a much anticipated momentum run in the midst of the 
e-holiday excitement.  This price level is an excellent entry 
point as it marks firm support.  However, if you're a more 
conservative player, you'll look for another bounce on volume 
before beginning a play.  Overhead opposition is just a stone's 
throw away at $85, just under the new 52-week high, but still 
be prepared for resistance.

Today, America Online announced a 4-year, $100 mln agreement 
with Monster.com, a career Web site, making the company the 
exclusive job search provider AOL sites.  Also in the news, 
AOL formed a 3-year pact with Net2Phone enabling user's Instant 
Messages to be placed and received via PCs, fax machines, or 
telephones.

BUY CALL DEC-75*AOO-LO OI=33319 at $7.38 SL=5.75
BUY CALL DEC-80 AOO-LP OI=33881 at $4.38 SL=2.75
BUY CALL DEC-85 AOO-LQ OI=23281 at $2.38 SL=1.25
BUY CALL JAN-80 AOO-AP OI=36102 at $8.38 SL=6.50
BUY CALL JAN-85 AOO-AQ OI=29257 at $6.38 SL=4.75

SELL PUT DEC-75 AOO-XO OI=16294 at $2.00 SL=3.75
(See risks of selling puts in the play legend)

Picked on Dec 2nd at     $79.88    P/E = 220
Change since picked       +0.00    52-week high=$87.75
Analysts Ratings    24-15-3-0-0    52-week low =$20.37
Last earnings 10/99   est= 0.13    actual= 0.15 surprise +15.4%
Next earnings 01-27   est= 0.14    versus= 0.08
Average Daily Volume = 17.1 mln
Chart = http://quote.yahoo.com/q?s=AOL&d=3m



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

JCI - Johnson Controls, Inc. $52.38 -0.81 (-3.31 this week)

Johnson Controls is a global market leader in automotive systems 
and facility management and control.  In the automotive market, 
it is a major supplier of seating and interior systems and 
services, and batteries.  For non-residential facilities, 
Johnson Controls provide building control systems and services, 
energy management and integrated facility management. 

What is wrong with Johnson Controls?  They have some solid
fundamentals, a solid dividend record and they sport a very low
P/E of 10.96.  Despite these positives, the stock has been in 
a steady decline ever since its August high of $73.88.  Surely,
the October comments that earnings momentum may slow in 2000,
have hurt the stock.  The explanation for JCI's decline is 
two-fold.  First of all, JCI is a manufacturing giant, making 
it a cyclical stock subject to a lot of pain in an environment 
of a rising Nasdaq market.  Secondly, Johnson Control's stock 
is a victim of that annual event, "window dressing".  At the end 
of the year money managers purge their under-performing stocks 
and gorge on the highest flying stocks.  This behavior confirms
trends in both directions.  Certainly value investors will
eventually step up to the plate and start buying downtrodden
cyclicals like JCI and CAT but until then, the trend is your
friend.  A good entry point for a put position on JCI would be 
below today's low of $52.38.  However, after four consecutive 
lower days, any intraday rally might be a good place to jump 
in.  A rally above $56.50 might indicate that JCI has made a 
short-term bottom.

BUY PUT DEC-55 JCI-XK OI= 2 at $3.50 SL=1.75 low OI
BUY PUT JAN-55*JCI-MK OI=38 at $4.25 SL=2.50

Average Daily Volume = 284 K
Chart = http://quote.yahoo.com/q?s=JCI&d=3m



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

TIF - Tiffany & Co. $78.88 +1.00 (+2.75 this week)

Tiffany & Co. sells fine jewelry, timepieces, silver, china,
Crystal, stationery, and other luxury items through about
130 Tiffany & Co. stores and boutiques worldwide.  They 
also sell via catalog.  Tiffany also sells corporate gifts
directly to businesses.  

The shares of Tiffany & Co. hit a 52-week high today, trading
as high as $79.25, before settling in to close the day 
slightly off of the high at $78.88.  The robust thanksgiving
weekend sales helped some of the retailers to rebound, and 
other to continue to soar.  TIF has "Wall Street" in awe, 
because if you just focus on the fundamentals, and did not
look at the name of the company you would think you were 
looking at an Internet stock.  Although TIF is not an 
Internet company, the bottom line grew by 71% in the most
recent quarter, and they have re-launched tiffany.com just
in time for the very critical holiday shopping season.  The
third quarter that just recently ended saw profits 16% above
First Call estimates.  Going forward analyst are increasing
their quarterly and yearly estimates.  The price surges in 
the stock are not a big surprise with these type of numbers. 
We look for higher-highs with the technical picture looking
very bullish as we get closer to Christmas.  We will look to
enter positions at current levels $78.88, and on any pullbacks
to trading support at $74-$75 levels.  The chart pattern
is on a favorable climb and we are expecting a breakout to 
occur at any time.  Look for a move above $79.50 on strong 
volume to confirm the move.     

In the news recently, Amazon.com is in a deal with luxury 
retailer Ashford.com, so there customers will have a place to
buy diamonds and other luxury goods.  This recent focus on 
the luxury item space on the Web has shined a brighter light 
on the traditional retailers that have developed an online 
presence like Tiffany & Co., and Neiman Marcus Group Inc.  

BUY CALL DEC-75 TIF-LO OI= 320 at $5.63 SL=3.88
BUY CALL DEC-80*TIF-LP OI=  96 at $2.63 SL=1.38
BUY CALL JAN-75 TIF-AO OI=  84 at $8.75 SL=6.63
BUY CALL JAN-80 TIF-AP OI= 107 at $6.00 SL=4.25

SELL PUT DEC-75 TIF-XO OI=  65 at $1.63 SL=3.00
(See risks of selling puts in the play legend)

Picked on Dec 2nd at   $78.88     P/E = 49
Change since picked     +0.00     52-week high=$79.25
Analyst Ratings    1-13-5-0-0     52-week low =$19.06
Last earnings 11/99 est= 0.24     actual= 0.29
Next earnings 03-08 est= 0.87     versus= 0.74
Average daily volume =  556 K 
Chart= http://quote.yahoo.com/q?s=TIF&d=3m



************************
COMBOS/SPREADS/STRADDLES
************************

Investors Show No Fear..

Wednesday, December 1

Blue-chip stocks led the markets higher Wednesday after positive
data from the NAPM offered relief from interest rate fears. The
Dow closed up 120 points at 10,998 and the Nasdaq composite rose
17 points to 3,353. The S&P 500 index was up 8 points at 1,397.
Declines outpaced advances by a 17 to 14 margin on heavy volume
of 868 million shares on the NYSE. Only 30 stocks achieved new
highs while 268 made new lows. The 30-year Treasury lost 4/32,
driving the yield up to 6.30%.

Tuesday's new plays (positions/opening prices/strategy):

Silicon Graphics  SGI  FEB10C/DEC10C  $0.93  debit  calendar 
Revlon            REV  JAN7C/JAN10C   $1.50  debit  bull-call

Both of our new spread candidates traded in a small range during
the morning session and then fell lower as the day moved on. SGI
was first to offer an entry opportunity with the calendar spread
debit moving to the target price near midday. The position traded
as low as $0.88 during the session. The REV play was unavailable
in early trading but was easily achieved in the afternoon, when
the stock dropped to the day's lows near $9.75.

Portfolio plays:

Market-leading stocks rallied today and the Nasdaq reclaimed some
of its losses from Tuesday's drubbing after a number of positive
news announcements. Mergers and earnings dominated the headlines
and the market drew support from bonds' recovery following a drop
in the NAPM prices index. Analysts said the manufacturing activity
index for November was 56.2% versus an expected 56.3%. The report 
temporarily allayed fears the economy was growing at an explosive
pace and investors exploited the news, moving quickly into bullish
issues. Large gains in chip equipment, personal computer and other 
consumer products issues helped spur a broad-market rebound from
recent declines.

Oil companies were in the news and one of our long-term positions
made the leader board. Share value in Exxon-Mobil (EXOM) rose $3
to $82.43 on the first day of trading after the industry giants
merged to become the world's largest publicly traded oil company.
Market bellwether Proctor & Gamble (PG) gained $4 to $112 as new
money poured back into the leading conglomerates. Large companies
received support from the trio of economic reports that suggested
the Federal Reserve's efforts to slow the economy may be working.
Solectron (SLR) bounded $4.25 to $86.75 after Merrill Lynch raised
its intermediate-term rating to "buy" with a new 12-month target
of $120. Analysts said SLR offers investors a diversified play on
technology at a discount to other industry companies with a higher
earnings growth projection. Leading Internet stocks made big gains
during the session and Lycos (LCOS) participated in the rally. The
stock rebounded $2.12 to $58, recovering some of the losses from
recent profit-taking. One of the stocks that has failed to rally
in any of the bullish market moves is Polaroid (PRD). The issue is
now approaching yearly lows and our gracious exit is long overdue.
The LEAPS/CC"S position was closed to preserve existing capital.

The majority of our portfolio stocks did not perform well during
the session but the pull-back offered some favorable opportunities.
Echelon (ELON) gave us another chance for exit today as the stock
price fell closer to the sold strike at $10. The neutral calendar
spread traded at $2.38 credit, a $1.12 profit after one month. A
$10 drop in Verity (VRTY) provided a new entry point in the short
term (bullish) credit spread. The DEC80P/DEC85P traded as high as
$1.25 credit. AT&T (T) was also in the news, falling $1.50 during
the session after the company said it would offer new residential
phone service in New York State. Our recent debit spreads traded
near the original (previously unachievable) price targets. There
were other issues that offered new entry opportunities including 
Excite@home (ATHM), E-tek Dynamics (ETEK), Peoplesoft (PSFT), TV
Guide (TVGIA), and Unisys (UIS).

Thursday, December 2

Equity markets continued higher Thursday and the Nasdaq resumed
its record-breaking rally as inflation fears subsided. The Dow
rose 40 points to 11,039 and the S&P 500 index climbed 11 points
to 1,409. The technology-heavy Nasdaq composite index rocketed 99
points to 3,452, a new all-time-high. Declining issues paced the
advances on active volume of more than 895 million shares on the
NYSE. There were 240 stocks at new lows and 51 at new highs. The
30-year Treasury bond sank 13/32, driving the yield up to 6.33%.

Portfolio plays:

The stock market blasted off again today, led by telecom stocks
and computer makers on new optimism that year 2000 problems will
be minimal. The Dow rebounded above 11,000 and the Nasdaq rose on
gains from a wide range of leading issues as investors once again 
embraced technology shares. With many companies posting excellent
sales and record growth, traders are finding few reasons to stay
away from the market. 

Our portfolio had its share of winners. The upcoming split for
Verity (VRTY) helped the issue recover $10 of recent losses to
close near $104, $20 above the sold strike price in our bullish
credit spread. Another of our bull-put positions, E-tek Dynamics
(ETEK) posted a $7 gain to finish near $84. Lycos (LCOS) bounced
over $6 with the Internet rally, trading at a recent high in the 
process. Both of the bullish debit positions are now comfortably
in-the-money. Excite@home (ATHM) managed a $3.75 move, climbing
into the previous trading range above $50. We have a number of
bullish positions on ATHM and they will all finish profitably if
the stock remains in this range. Intervu (ITVU) had the smallest
gain of the "new plays" group, moving up $1.43 to close at $64,
and $18 above the strike price of the sold (short) option.

Issues in our long-term group also moved higher. Sun Microsystems
(SUNW) led the way with a $5.75 gain to finish at $136. Solectron
(SLR) wasn't far behind, posting a $3 move to close at $90. Both
of these plays are diagonal positions and limited upside movement
is favorable. Medtronics (MDT) had great day, ascending $2 after
a recent consolidation near support at $38. This position is also
bullish with the sold strike at $40 and the outlook is starting to
pay rewards. Motorola (MOT) managed a decent rebound, climbing-up
to the $118 mark after a battle with profit-taking from the rally
over the past month. Even Adobe Systems (ADBE) joined the party,
recovering $2 of this weeks' losses to close at $68. Our neutral 
position is at the $80 strike thus we have little downside margin
remaining in this correction. Our expectation is the stock price
will begin to firm in the area near $65.

Many of the small-cap technology stocks came back to life today.
Nvidia (NVDA) was the best performer, adding $2.75 to close near
$39. 3Com (COMS), Kent Electronics (KENT), MessageMedia (MESG),
Net@Bank (NTBK), Peoplesoft (PSFT), Youth Networks (NETS), and
Unisys (UIS) also participated in the rally. One of our negative
issues was Able Telecom (ABTE). The stock price closed $3 lower
after announcing that the U.S. Securities & Exchange Commission
has concerns regarding the accounting of its acquisition of MFS
Network Technologies from MCI/WorldCom. The company claims that
it is working to resolve the SEC's concerns but a regional broker
posted a news item suggesting the alleged problems were much more
serious. The announcement from Asensio & Company claims this was
not the first time that their audited statements reflected false 
earnings and suggested the company is intentionally misleading
its shareholders. The neutral calendar position at $10 has very
little downside but a break-even exit was available in the play
during the morning session. Without more knowledge of the issue,
that's probably the safest way to go.

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

*********
NEW PLAYS
*********

Internet ticket and travel agencies have become second nature to
the vacation industry and this year's Holiday season is expected
to demonstrate the awesome potential of the industry. Here are
two candidates in this group of E-tailers that will benefit from
the growth of Online commerce.

****

PCLN - Priceline.com  $65.06     *** Name Your Price! ***

Priceline.com Inc. has pioneered a unique new type of e-commerce
known as a "demand collection system" that enables consumers to
use the Internet to save money on a wide range of products and
services while enabling sellers to generate incremental revenue.
Using the simple and compelling consumer proposition, "name your
price," the company collects consumer demand, in the form of
individual customer offers guaranteed by a credit card, for a
particular product or service at a price set by the customer.

Lehman Brothers recently released a list of companies that it
believes will deliver the success of the new online economy
while protecting investors from volatile Internet stocks. Lehman
says it chose the stocks after looking at potential market size, 
competitive factors and value creation. It also tracked a group
of trends it thinks will benefit the big-cap Internet stocks,
including a migration of advertising dollars to the Internet and
growth in online retail sales. PCLN was in that elite group with
a couple of the heavy hitters like American Online, Yahoo and
eBay. Today coverage of Priceline was initiated by Prudential
with a "buy" rating based on agreements with three new airlines.
Prudential is the most recent to join the long list of brokers
that have upgraded the stock in recent months.

From a technical viewpoint, Priceline.Com continues to show solid
improvement with positive divergences in several indicators. The
bounce today (Wednesday's close touched the bottom of a 14-day
regression channel) was supported by heavy volume and strengthens
the support above $60. The probability of a positive resolution
out of the current stage I base is increasing and we are going to
participate in the bullish trend with a deep ITM diagonal spread.
If the stock price closes above $65 in two weeks, the short call
will be assigned and the play will net a 16% return.

PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN-50 PUZ-AJ OI=762  A=$17.88
SELL CALL DEC-65 PUZ-LM OI=2241 B=$4.75
INITIAL NET DEBIT TARGET=$12.88 TARGET ROI=16%

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

****

CTIX - Cheap Tickets  $19.12     *** Discount Online Travel ***

Cheap Tickets is a leading retail seller of discount tickets for
domestic leisure air travel. The company sells airline tickets
through call centers, retail stores and their Internet site at
"www.cheaptickets.com." The company also offers a full complement
of regularly published fares, affording customers a breadth of 
choice in favorably priced leisure travel that is unmatched in
the industry.

Cheap Tickets reported incredible growth in the last quarter with
net earnings of $2.6 million and their third consecutive quarter
of record gross bookings in the company's history. Net revenues
increased 118% to $110 million, compared to $50 million in the
third quarter of 1998. The company believes that in this quarter, 
continued strong demand for leisure travel, a high sales mix of
non-published fares and the positive effects of higher levels of 
advertising, all helped contribute to the record gross bookings.
The company also reported that its board of directors authorized
a plan to buy-back $20 million of the company's common stock as
the financial outlook and market conditions, including the recent
prices of the shares, make this an attractive time to repurchase
a portion of the outstanding equity.

In the case of CTIX, a bullish character change is emerging from
the tape as the issue enters a stage I base. The period for IPO
selling is coming to a close and several oscillators are creating
a positive divergence with price which bodes well for the future.
The middle of November indicates an accumulation phase has begun
and the recent high should be taken out fairly soon. There are
two easy ways to participate in the future movement, depending on
your risk/reward tolerance. The bullish calendar spread has less
upside potential but also profits with the stock price relatively
unchanged while the diagonal position will perform better with a
significant positive move in the short-term. Both plays benefit
from the time-value erosion in the sold (short-term) call option.

PLAY (conservative - bullish/calendar spread):

BUY  CALL JAN-22.50 UEY-AX OI=88 A=$1.93
SELL CALL DEC-22.50 UEY-LX OI=64 B=$0.62
INITIAL NET DEBIT TARGET=$1.12 TARGET ROI=25%

- or -

PLAY (conservative - bullish/diagonal spread):

BUY  CALL JAN-20.00 UEY-AD OI=155 A=$2.88
SELL CALL DEC-22.50 UEY-LX OI=64  B=$0.62
INITIAL NET DEBIT TARGET=$2.00 TARGET ROI=25%

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



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