Option Investor
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Daily Newsletter, Thursday, 02/17/2000

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The Option Investor Newsletter         Thursday  2-17-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
       2-17-2000           High     Low     Volume Advance Decline
DOW    10514.60 -  46.80 10671.90 10454.60 1,037,945k 1,443  1,558
Nasdaq  4548.92 + 121.27  4553.14  4444.75 2,008,438k 2,335  1,880
S&P-100  752.19 -   2.01   761.19   747.13    Totals  3,778  3,438
S&P-500 1388.25 +   0.58  1399.88  1380.07            52.4%  47.6%
$RUT     558.42 +  10.66   559.08   547.76
$TRAN   2470.36 +  15.57  2485.79  2454.79
VIX       25.07 -   0.03    26.00    24.45
Put/Call Ratio       .49
*************************************************************

Strong Economy, High Productivity, Inflation Low. 
What's Wrong With This Picture?

Nothing if you live in the real world. Alan Greenspan however 
lives in constant fear of the monster under his bed. While the
Inflation Monster is about as hard to find as the Loch Ness
Monster, Alan is sure it exists. If this was a movie it would be
an X-File and he would be a very old Fox Mulder, always searching 
for the truth that is "out there." The truth started to raise its
head this morning with a PPI that was lower than expected. Actually
unchanged from last month. Falling tobacco prices offset higher
energy prices to shock the markets into a brief rally with the
Dow gaining over +100 points. The excitement was short lived
with the equivalent of an earthquake rattling the markets almost
immediately. The Greenspasm registered about a 5 on the Richer
scale. The higher on the Richer scale the poorer investors will
be from market drops. Greenspan said the Fed would have to be
ever vigilant and continue raising rates to slow the runaway
economy. Greenspan said the current economic factors were 
unprecedented in his 50 plus years of observing the markets.
After he voiced repeatedly that the Fed would continue to 
raise rates aggressively until the economy cried uncle the
Dow dropped from a +110 point gain to a -106 point loss. The
Nasdaq however gave up most of its +50 point gain but recovered
quickly to mount the charge to record territory again.


 


  

The Dow still cannot mount a successful rally and the down trend
that started on Jan 14th is still intact. In the last three weeks 
we have seen two oversold relief rallies of +300 points or more 
that turned into bear traps as the sellers over powered the buyers 
with strong volume. The materials stocks and the financial sector 
are still being singled out for selling as the threat of higher
interest rates and the lure of tech stocks becomes a powerful 
double whammy. The banking index, BKX, closed at a new 52 week 
low with the insurance index, IUX, not far behind. 

The Greenspeak had no impact on the NASDAQ, which managed to soar 
to a new all time high on the strongest volume ever, over 2.1 
bln shares. The tech stocks were joined by biotech's as important 
breakthroughs in medical technology pushed the major medical 
research stocks to strong double digit gains. The major biotech
winners included MLNM +54 (a current play), and HGSI +29, AFFX
+18. The more recognized names did well but finished off their 
highs. BGEN +8, JMED +9, CEPH +2.50. Are these stocks ever going
to cool off? It has been a decade since the biotech's were this 
hot and it does show that the dot.com craze can be topped.
The Nasdaq breakout today against the Dow trend needs to be
confirmed on Friday with another good strong day in order to put
to rest all the remaining bears. With the short interest so high
on the Nasdaq you can bet there is some real concern at many
trading desks tonight. With the money still pouring into the tech 
funds there appears to be no end in sight. Now don't you wish you
had bought that last dip under 4300! That was only three days and
250 points ago! Ironically this same Thursday last year was the
low point of the year for the Nasdaq ar 2260. We are up +100%
since then and Nasdaq 5000 looks like a sure bet for this year.

The bond managed to shake off the certainty of more rate hikes
ahead and finished higher today with the yield at 6.22% Not only
the Nasdaq and the bond but the S&P 500 also closed positive and
broke with the Dow trend. The Nasdaq was not the only new record
high today. The Russell-2000 soared another +10 points to another
record and finished strong showing no signs of weakness. The
small cap rally is a very bullish sign and as long as the Russell
is on a roll the Nasdaq is likely to follow suit.







Stock splits anyone? I can't remember a previous period where there
were more stock splits than we have had recently. Hardly a day goes
by without two or three. Today's high profile announcements included
IMNX 3:1, BRCD 2:1, ADVS 2:1, AGIL 2:1, MEDI 3:1, ADIC 2:1, ELNT 2:1,
NXLK 2:1, ADI 2:1. Four of these stocks saw their prices skyrocket 
on the announcement with IMNX +23, BRCD +28 after hours, AGIL +10, 
MEDI +12. No news? These companies made their own.  

It is official. Windows 2000 is now available for sale. With much
fanfare and celebrity promos Microsoft pounded the table for their
new operating system. They claim more than $250 million was spent
in testing under different conditions to make this the most bug
free software release ever. While Microsoft expects W2000 to be 
a strong contributor to their bottom line, they do not expect it
to be all at once. This is a totally new program that will require
a longer entry cycle. Still, you can expect a couple hundred 
million new users over the next few years. I wonder if they
fixed the "blue screen of death" so prevalent in Win98? 
Michael Dell must be breathing easier. The conflicting comments
on Win2000 are now history and they are firing out press releases
almost hourly about computers immediately available with the
new operating system. The selling on Dell stock also appears
over with Dell advancing to $40.69 from $35 last week. This was
enough to add almost $1 bln to Michael Dells net worth today. 
My Dell leaps are looking better every day.

The market internals going forward are mixed. The advance/decline 
line on the NYSE is almost even despite the negative Dow. We are 
in correction mode on the Dow again. Many analysts feel there will 
be a retest of 10,000 next week. I am not that pessimistic. If the 
CPI is as benign as the PPI was this morning then we have no
reason to stay on the sidelines. Next weeks economic reports are
not going to move the market. Existing home sales and Durable Goods
just don't measure up to the PPI/CPI impact. The Nasdaq has had 
2.5 corrections in the last six weeks and each has had a higher
low. As long as Greenspan does not pull a rate increase out of his
hat just to show us he can back up his tough stance then there
should be no potholes in our immediate future. Earnings are over
and there is not going to be a lot of market moving news but we
appear to be acting out a self fulfilling prophecy of double 
digit tech gains again this year. Money is flowing, techs are hot
and the rally is spreading into other sectors. What more could 
you ask for? I know, I know. When everything is too good to be
true, it probably is. There may be a stealth bomb out there 
somewhere but I don't see it today. Oil prices are falling and
transports are starting to recover. If the financials could only
shake off the coming rate hike on March 21st the Dow could at least
break even. If the CPI tomorrow is benign we should be in good 
shape but Fridays still hold the possibility for profit taking 
as traders get flat for the weekend. Keep your fingers crossed 
and if you find that inflation monster under your bead, call 
Greenspan, he is out there somewhere! 

If you are totally board and want to read the text of Greenspan's
speech, click here:

http://www.bog.frb.fed.us/BoardDocs/HH/2000/February/Testimony.htm

Trade smart, sell too soon.

Jim Brown
Editor


We have had several requests for disclosure of current positions
whenever I write articles mentioning specific stocks. I will 
list the stocks in which I have open positions from this
point forward. Nothing should be construed as an endorsement 
either positive or negative for the stocks in my position list
as I could be long short or spread at any time. 

My current positions include:

AFFX, ANAD, ARX, BEAS, BVSN, CMDX, DITC, EMLX, ENZ, HGSI, INSP,
ITWO, JMED, MSTR, PUMA, SILK, TIBX, TERN, LU, DELL, AMTD.


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

International Fibercom: This Thing Is On A Run
By Matt Paolucci

These days, the mere utterance of the words fiber-optic cable 
networking can grab the attention of just about anyone. The 
growth in this area is forecasted to increase by geometric 
amounts. 

http://members.OptionInvestor.com/stocknews/021700_1.asp



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

As of Market Close - Thursday, February 17, 2000 

                    Key Benchmarks
Broad Market        Bearish/Bullish     Last    Posture/Since  Alert 
**************************************************************** 
DOW Industrials     10,700   11,250   10,515    BEARISH  2.17  *
SPX S&P 500          1,350    1,450    1,388    Neutral  2.01 
OEX S&P 100            740      780      752    Neutral  2.01 
RUT Russell 2000       500      540      558    BULLISH  2.17  * 
NDX NASD 100         3,575    4,090    4,125    BULLISH  2.17  * 
MSH High Tech        1,800    2,000    1,993    Neutral  2.11 

XCI Hardware         1,300    1,525    1,504    Neutral  2.11 
CWX Software         1,200    1,470    1,496    BULLISH  2.17 
SOX Semiconductor      740      940      979    BULLISH  2.15  
NWX Networking         900    1,020    1,060    BULLISH  2.17  * 
INX Internet           700      800      739    Neutral  1.06 
BTK Biotech            420      500      658    BULLISH  2.15 NEW!!

BIX Banking            550      690      497    BEARISH 11.30 
XBD Brokerage          400      450      418    Neutral 11.30 
IUX Insurance          550      600      508    BEARISH 11.30 

RLX Retail             950    1,000      815    BEARISH  1.28 
DRG Drug               340      380      337    Neutral  2.15  
HCX Healthcare         700      750      705    Neutral  2.15  
XAL Airline            160      180      121    BEARISH  5.21 
OIX Oil & Gas          250      280      263    Neutral  2.15 

**Posture Alert**
Tale of two markets for the moment.  After Nasdaq's surge into new 
territory, we have turned Bullish across select sectors.  However, 
we remain Neutral/Bearish across several blue chip selectors 
including financials, Retail and Drugs.  We have also added a new 
industry sector - Biotech - to our Market Posture feature after 
following recent investor interest.  Take a special note of our 
key benchmarks for each index for they have been updated with the 
recent volatility. 



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

Biotechology -  Hot! Hot! Hot! 
By Pinnacle Capital Advisors 

With more and more money pouring into the hot Biotech, 
OptionInvestor.com will be adding the sector to our Market Posture 
and Sentiment coverage.

As highlighted by the chart below, interest in the Biotech sector 
has been expanding, but this week the sector has taken off as 
investors have been pouring money into the new market niche  News 
of an advance in the fight against AIDS helped trigger an explosive 
rally. Names like Protein Design Labs, Organogenesis, Human Genome 
Sciences and Millennium Pharmaceuticals have made precipitous 
moves this week.

The Biotechnology Index is designed to measure the performance of 
a cross section of companies in the biotechnology industry that 
are primarily involved in the use of biological processes to 
develop products or provide services. 

The Index is equal-dollar weighted, designed to ensure that each 
of its component securities is represented in approximate equal 
dollar value. Today, the Biotech Index (BKT) includes 15 stocks 
including:

Amgen Inc. (AMGN)
IDEC Pharmaceuticals Corporation (IDPH) 
Bio-Technology General Corp. (BTGC)
Immunex Corporation (IMNX) 
Biogen, Inc. (BGEN) 
Medimmune Inc. (MEDI) 
Cephalon, Inc. (CEPH) 
Millennium Pharmaceuticals, Inc. (MLNM)
Chiron Corporation (CHIR) 
Organogenesis Inc. (ORG) 
COR Therapeutics, Inc. (CORR) 
Protein Design Labs, Inc. (PDLI) 
Genzyme Corporation (GENZ) 
Vertex Pharmaceuticals Inc. (VRTX) 
Gilead Sciences Inc. (GILD)

Pinnacle Capital Advisors will be adding the hot index to our 
Market Posture tool together with our key benchmarks and current 
market posture.


 


 


BULLISH Signs: 
Corporate Earnings:
Major corporate earnings continue to come out strong and ahead of 
analyst expectations. 

Cash Flow:
The cash that has been sitting on the sidelines has been put to 
use as of late, as record volumes for the major indexes have been 
shattered. 

Short Interest:
From a contrarian stand, short interest on the NYSE is still very 
high, eclipsing 4 billion shares. The short interest on the Nasdaq 
is more than 2.4b shares. 

Mixed Signs: 
Interest Rates (6.247):
Although the recent bond market rally has helped bring the current 
yield down near 6.0 last week, the long bond remains above 6.24. 

Volatility Index (25.10):
A review of the VIX's daily chart suggests that the low 30's are 
an excellent buying opportunity, and the low 20's continue to be 
a great selling opportunity. The VIX peaked on an intraday basis 
Friday (2/11) at 28.4 before collapsing and closing at 24.52. This 
may serve as a potential reversal pattern and signal the end of 
the market's recent slide. 

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

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                       (2/11)      (2/15)     (2/17)

Overhead Resistance (760-830)     2.16        3.72        4.25

OEX Close                       752.04      763.06      752.19

Underlying Support  (700-750)     5.63        5.30        6.50


What the Pinnacle Index is telling us:
Overhead resistance is building and could stall a broad market 
advance. 


Peak Open Interest (OEX)
                     Friday           Tues           Thurs
Strike/Contracts     (2/11)           (2/15)         (2/17)

Puts               740 / 9,937     740 / 10,315      740 / 11,107
Calls              800 / 7,806     800 /  8,796      770 / 15,732
Put/Call Ratio         1.27           1.17              .70


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
January 18, 2000    Top                 21.09

February 11, 2000                       26.98
February 15, 2000                       24.98
February 17, 2000                       25.10



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

Daily Results

Index      Last    Mon    Tue     Wed    Thu   Week
Dow     10514.57  94.63 198.25 -156.68 -46.84  89.36
Nasdaq   4548.92  23.10   2.22    6.88 121.27 153.47
$OEX      752.19   4.76   6.26   -8.86  -2.01   0.15
$SPX     1388.25   2.82  12.11   12.11   0.58  27.62
$RUT      558.42   2.84   0.30    7.52  10.66  21.32
$TRAN    2470.36  31.15 -18.38    5.89  15.57  34.23
$VIX       25.07  -1.13  -1.18    0.49  -0.03  -1.85

Calls              Mon    Tue     Wed    Thu   Week

MLNM      314.56   3.59   1.66   42.75  54.06 102.06  Dropped
SEPR      171.25   1.75   7.13   11.63  10.50  31.00  Wait for me!
MUSE      236.50  -4.00   0.44    8.63  21.94  27.00  Split run
BEAS      134.50   8.38   4.38    1.25  12.50  26.50  MOMENTUM
GLW       191.06  14.25  -4.25    2.25  13.06  25.31  New
ANAD      144.13  12.50   4.19    0.94   2.50  20.13  Unflappable
IFCI       26.38  -0.38   4.50    0.44   5.56  10.13  Alert!
INSP      201.00   9.19   0.06   -1.44   1.88   9.69  Splitting
ISSX       97.38   2.13   0.88    3.06   2.44   8.50  New
EMLX      132.06  -4.75   9.94    0.56   2.44   8.19  Channels
TXN       143.00  -3.00   0.31    0.81   7.25   5.38  Finds feet
SNDK      154.25   3.38  -1.44   -1.50   4.75   5.19  Better
CLRN      111.00  15.00  -4.84  -13.47   8.06   4.75  Dances
BCE       122.50   0.91   0.38    3.81  -0.63   4.47  Still value
PCMS       22.28   0.78   2.72   -0.19   0.22   3.53  Options!
COVD       85.50   0.13   0.19   -0.06   0.63   0.88  Builds base
ISLD      115.00  -9.19   5.13   -4.94   9.75   0.75  On track!
AMCC      230.25 -10.91  18.38  -12.13   4.88   0.22  Head fake
LHSP       82.13  -2.06   4.06   -3.88   2.00   0.13  Solo driver
CUBE       87.13  -0.06   2.06   -0.81  -1.25  -0.06  Leadership
ASPT       65.91  -0.75  -0.03    0.88  -2.06  -1.97  Holds up
ERICY      87.75  -3.69  -0.13    0.63   0.75  -2.44  Volume
LLTC      102.25   2.63  -3.13   -3.25   0.50  -3.25  Dropped
HYSL       45.31  -1.69   0.75   -1.44  -1.19  -3.56  Dropped

Puts

RHAT       75.19  -5.19  -3.44   -4.75   5.19  -8.19  Boing!
VERT      208.25 -10.50  -5.50    9.00   2.25  -4.75  Dropped
MRK        63.25   0.81  -0.44   -0.13  -2.25  -2.00  New
KMG        47.81  -0.94   1.44    0.00  -0.81  -0.31  Slippery
KRB        21.00   0.13   1.25   -0.19  -1.00   0.19  Economy
GD         43.13   0.13  -0.25    0.25   1.56   1.69  Dropped
JNJ        79.19   0.19   2.06    0.13  -0.63   1.75  Channel
PGR        57.69  -1.88   3.81    1.00   0.75   3.69  Rally over?



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

There's A Time For Everything, Limit vs Market Orders
By Renee White

Today I am frustrated. I was frustrated yesterday too. I've been 
sitting on my hands, patiently waiting for a feeling of comfort, 
before entering any more plays. Until just recently, I have been 
50-60% cash, deciding to trade lightly during these uncertain 
times. This week, I was ready to play. I will be traveling again 
soon, so I wanted to get a feel for the action this week, before 
jumping in for anything short term.

Several things have been on my radar screen lately. I wanted to 
enter CSCO after their split announcement. I've wanted to add to 
my INSP position and I've been waiting to enter VERT once I felt 
the downhill slide was over. Last week, I decided on some biotech 
companies to enter in the downturn I anticipated this week, in 
addition to identifying some DOW companies for leaps, to help 
diversify my IRA. I was ready for another 10% Nasdaq correction 
and had my checkbook in hand. I've been watching the VIX, except 
for 1 1/2 hours I left on Friday which of course, is when it 
spiked! It has traded mid-range since then. Not only did I miss 
a good entry on the spike up in the VIX, that spike was also my 
exit on puts I had. All last week I had waited for that spike, 
then it occurs when I run an errand! Geee!!

My week started Monday morning trying to get out of the puts I 
didn't exit Friday after putting in a late day limit order, which 
did not fill by the close. I knew I was probably toast, when I 
noticed afterwards that there was buying occurring in the final 
few minutes. 

Things were looking gloomy Monday and most of Tuesday. The 
positive close on Tuesday made me cautious, not excited. I 
checked all the charts and it looked like Nasdaq was trying to 
form the right shoulder of a possible head and shoulder pattern 
formation on a line/daily chart, from the previous week. It made 
me more cautious. By Wednesday, the pattern had broken though, 
never completing the formation.

On the weakness Tuesday though, I was fortunate enough to enter 
CSCO on its dip and I added to my position in INSP. Initially, I 
did not know if these would hold, if Nasdaq did sell off, these 
would tank. But, so far so good. On to Vertical Net. Poor guy, 
he really fell off his bike after falling from the heights of 285 
in late January, to a 190's skinned knee on Tuesday. I've been 
watching VERT and felt the slide was over by Tuesday. There is 
plenty of time to enter this play. It's still a little risky now, 
as it struggles to turn back up and start its climb going back 
through resistance.  

The gap up Wednesday looked like some risk takers had a little 
interest, so after it sold off a little later in the day, I put 
in my limit order. I waited. And waited. And moved up my limit a 
tiny bit. And waited. And waited. Well, you get the point. It 
closed up into the close as the market maker decided I was either 
going to buy him a beer or he wouldn't take my limit order that 
day. VERT had come down during the day, but not the options. 

Same thing today, gap up, put limit order in, sold off a little 
but again, didn't take my limit. It was at that time that I 
notice these options had absolutely no volume. What is no volume? 
My chart read VOLUME: 8 but I swear I couldn't find more than 3 
trades! This time, those limit orders probably saved me. With the 
light market activity yesterday, I didn't think too much about 
it, but with 2 billion today, I knew something was wrong. Never 
chase an option, especially if it has no volume or low open 
interest. You will over pay just about every time. I'm glad I 
wasn't filled and will reevaluate my play before trying to 
re-enter. 

Yesterday, I had the impression everyone was asleep. The trading 
range was narrow and there was little buying activity positioning 
before the PPI and Greenspan's speech, like we have seen in the 
past. The volume left me concerned and the DOW still looked weak, 
so I decided to wait before entering more plays. 

Missed opportunity though, became my moaning pain due to the 
biotech sector. Last week, I identified several companies to 
watch, and hopefully get a good entry in the Nasdaq sell-off I 
was hoping for. Forget that!! These guys aren't resting at all. 
Waiting on the pullback caused me to miss an entry, during 
Nasdaq's Tuesday morning weakness, when they were marginally up. 
Since then, they have had 20-55 point gains every day. I felt 
like the little kid left on the shore, waving my arms, kicking 
and screaming watching all my friends on the party boat leave 
without me! MedImmune announced a 3:1 split earlier today and 
just now, I heard that Immunex announced a 3:1 split, up 21 
after hours after +23 during the day!! And did you see the 
action on Millenium Pharmaceuticals this week? It was trading 
around 217 early in the week and today a high of 316 with 
strong buying into the close, +54 just today. Talk about crying 
in the soup line!! I think I'll go back to knitting. Let's see, 
is it knit one, pearl two? That is one HOT sector right now! This 
is one time that a market order would have done me just fine 
during Tuesday's, afternoon rally. This was the most painful 
mistake this week, after doing the homework last week. Did Jim 
Brown call that right Sunday, or what?! Tuesday was definitely 
the right entry. Unreal! 

Yesterday we heard the dirty on Doubleclick, but I was not 
expecting Michigan's Attorney General to accelerate its slide, 
before I could enter my put orders. Again, limit orders and they 
were only 1/8th off the ask when I entered them. I waited. And 
waited. And moved it up a little. And waited. Again, you know 
the story. This was a major news breaking announcement that I 
knew would cause the stock to immediately sell off.  I should 
have entered a limit order at least at the ask. I never got 
filled. One thing I noticed though, even though Doubleclick came 
back a little bit after the shock had worn off, the put option 
premiums had inflated with the negative sentiment. 

When I first looked at the quotes, the February 87 1/2 puts 
were 1/8 X 3/8. If you had entered 50 contracts at 3/8 you 
would have been happy. Those puts closed at 1 3/8 giving you 
a profit of $5000 from an $1,875 investment and I bet you a 
nickel it will gap down tomorrow raising that one day profit 
much higher!! I think this was my dumbest mistake this week! 
This definitely should have been either a higher limit order 
or a market order. Normally, if I can catch the trade 
immediately on the really bad or good news, I don't challenge 
the price.

I've been very conservative the last several weeks. I've had 
other professional responsibilities to deal with and I did not 
want to be risky during February with its history of being weak. 
Unfortunately, when I put my brakes on and converted to 
conservatism, evidently I became a little too set in my ways! 
I feel like I've lost major money all week, by being too cheap 
on my entries. My picks were good, but without an entry it 
doesn't make you any money. Oh well, another day, another week, 
another play. I'll be traveling again soon, so maybe it just 
wasn't meant to be...but it still leaves me frustrated! 


Renee White
Contact Support



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

Running On Empty: The Highway 101 Portfolio
By Janar Wasito

Let me tell you about my day. One of the best things that 
happened is that I discovered a Jackson Brown CD in my Jeep's 
center compartment. Call him an existentialist. Call me crazy. 
So, I pull out from my San Francisco apartment about noon, 
headed downtown to run -- not walk -- away from my old broker, 
Fidelity, which calculates the margin requirements on spreads 
by regarding the short leg as naked. I hit my bank, into which 
I have wired all the liquid funds. After wrangling with the 
manager regarding the availability of funds, I cut two cashiers 
checks. One I walk into the Schwab (SCH) office. The other I 
walk into the Mr. Stock office. I picked those two because they 
rank high in options order capability in Fontanills's latest 
book, Trade Options Online. I sit and talk to the SCH rep about 
the stand alone software, and a charitable trust that I want to 
do. I am going to structure that trust myself. After all, I am 
a third year law student. I am going to fund it using some YHOO 
and CSCO that I bought in 98, and I am going to trade in it as 
the trustee, and I am going to use it to fund projects like 
putting that Mexican school online. I am going to use Mr. Stock 
to really learn the advanced spread strategies. Mr. Stock is 
in the same city block as Preferred Trade, and both firms are 
located in the same city block as the Pacific options exchange 
(PACX). No wonder these firms know the business -- their 
principals are former floor traders, and the genesis of the 
firms are in clearing stock for option traders putting on and 
taking off hedge positions. Then I am on the road, southbound 
on 101...

Looking out at the road rushing under my wheels
Looking back at the years gone by like so many summer fields
In '65, I was 17, running up 101
I don't know where I am running now, I'm just running on

Running on empty,
Running blind
Running into the sun
But I am running behind

I am thinking, as I drive south on 101, that you could make a 
pretty good portfolio out of the companies that I am driving 
past. Begin with SCH, lots of good stuff going on there with 
recent mergers. Then Seibel Systems (SEBL), a business database
information service gaining wide acceptance. Then Oracle (ORCL), 
which will get hot again sometime this year. Liberate (LBRT) 
has been moving. There's Insweb, don't know if it is public yet.
Crossroads over by the airport -- that's a company that some of 
the newsletter picks have interests in. Down by the airport, I 
grab my cell phone, and I reserve a flight to Paris. Fares are 
cheap, got some friends heading over. I am burnt.

Gotta do what you can just to keep your love alive...

In '69, I was 21, and I called the road my own
I don't know when that road turned out to be the road I'm on

Running on... running on empty

I am driving southbound still. There's @Home (ATHM), as I get 
closer to Stanford -- its been cold, so stay away from that 
one for now. I turn off at University Avenue, headed to class, 
which I will probably be late to. If I continued south on 101, 
the list would just get better. Nokia (NOK) recently set up a 
campus down by Great America. Off of that exit, you'll find 
Verisign (VRSN), where I went to a biz dev meeting last year, 
when, in my second year of law school, I was working with the 
25 year old, snowboarding CEO of a dot com start up. And you 
will find Healtheon (HLTH), Jim Clark's 3d billion dollar 
start up. Further south, near San Jose, Intel (INTC) buildings 
populate (polute?) the landscape, and Atmel (ATML) sits off 
to one side of the freeway in its own campus.

Everyone I know, everywhere I go
People need some reason to believe
I don't know about anyone but me
If it takes all night, that will be alright
If I can get through this mile before I leave

So, now I am in my Chinese Legal Institutions Class at Stanford. 
It is a perspectives requirement, but I am actually enjoying it 
because of the first hand stories of the scholarly professor 
who has spent half of his life prowling around China. In the 
class, I scribble notes for a start up idea that I am figuring 
out some way to hand in as a term paper because I have been 
booted out of The Art & The Law Class because there wasn't enough 
space. Oh well, too bad, so sad. After class, I go upstairs, shoot
the breeze with a corporations professor who was a White House 
scholar -- and he is asking ME about what I think about a start 
up idea. My advisor for another term paper (another thinly 
disquised start up idea) walks down the hall, two students in 
tow. I dash out to give the rough draft to the former SEC 
commissioner, and tell him he'll love the part about how Sand 
Hill Road is the new City on a Hill to an updated version of 
the Massachusetts Bay Colony, the original Internet start up. 
(The Mass Bay Colony was a joint stock company in the era of 
South Seas Madness, and other such popular delusions of crowds.)

After schmoozing a bit at the school, I am off to Fry's 
Electronics, where I pick up tech gear like other people pick 
up fruit and vegetables at a supermarket. Tonight, I am looking 
for a PC Card Ethernet adapter that won't break off, and I am 
psyched to find a Xircom adapter without that annoying, easily
breakable dongle. I rip the package open, and fool around with 
the gear like a manic shopper squeezing a cantaloupe. Out the 
door, I grab the latest Wired. Cool article about shopping bots, 
which are related to the start up I worked on. Then I hit the 
road, northbound this time on 280, which has adopted this 
horrible reverse rush hour where all the San Francisco 
residents commute to the Silicon Valley suburbs for their day 
jobs. I want to work from my house with a DSL line! To heck
with that drive. Give me a house in Napa. I drive past the Ski 
Chalets on Sand Hill Road, whose venture capital residents get 
stock at prices we public investors will never dream off. How 
about some YHOO at $.02, thanks. Over the golf course, down 
in the heart of 3000 Sand Hill is the start up venture finance 
company I worked for before starting law school. They are 
getting set to go public. Damn, and I had an offer to work 
there for a year with stock. Ah well, the education will serve 
me in better stead. I will try to get some of that one. Over 
there is the law firm I worked at for a summer -- they have a 
better portfolio of low priced stock in hot companies than you
can dream of. Over there is where I pitched that idea for our 
start up to a top tier VC -- which would you rather graduate 
with, a high GPA or a high net worth? The market is the 
greatest teacher, and in this microcosm, the key is getting 
in the middle of deals.

Looking out at the road rushing under my wheels
I don't know how to tell you all just how crazy this life feels
Look around for the friends that used to pull me through
Looking into their eyes, I see them running too

Jeff was our student body president in my San Francisco high 
school, which I graduated from in 1987. He went to Stanford 
and took wind surfing classes while I froze my butt off in 
my first winter at Harvard. Now, he is the CEO of a company 
that just got $85 million in venture funding -- a sure sign 
that they will be hitting the public markets soon. TJ, the 
smartest guy in the class, who wanted to study Physics and 
Theology because "the higher you go in each, the closer they 
get together," is working for Jeff. Now, the only universe 
that TJ is studying is filled with the five digit symbols for
mutual funds. DaveD got Broadcom stock options 50 plus points
ago (post split), which makes him an accredited investor under
Regulation D of the 1933 Securities Act. FredM has been 
clearing restricted stock transactions for an SF investment 
bank since the mid 1990s. He recently bought a $2 million 
dollar house overlooking the Golden Gate. Colin -- who was 
our high school quarterback and threw every pass like he was 
providing a target for a trap shooting range -- just got done 
clerking for the Supreme Court. He's back out here somewhere. 
DaveB, one of my best friends from high school, and maybe the 
best athlete in our class, is working on his MBA out in 
Michigan ("I needed a school with a real football team"), 
and we are plotting on a start up of our own. We chat for 
free using Microsoft Net Meeting. He'll be in the back of 
class with his lap top. I will be in the back of class. We'll 
be YHOO chatting back and forth -- hey, how about that 
China.com put at 7 7/8 bid on the PACX. Nah, take it for 
7 3/4 on the AMEX. Right click on qcharts, set up the shot 
in Preferred, pull the trigger. You get that one, Dave? Yeah,
I got it. Hold on, the professor is asking me a question. The 
professor says that the efficient market hypothesis says that
only monkeys and idiots can make money in the stock market. 
I wonder whether I should tell him I just made $1500? Those 
are my high school classmates.

Running into the sun
I'd love to stick around, but I am running behind
You know I don't even know what I am hoping to find

I get in the door a little after 8 pm. Roundtrip done. 
Grab my workout gear and head down to the Yuppie Boxing-
Spinning Gym in the Marina. Guys taking off their boxing 
wraps are talking about how MSFT always negotiates hard. 
A guy with a British Accent, MBA Challenge for Charity 
T-shirt, and a Goldman Sachs gym bag is putting his gear 
away as I warm up. My boxing coach would be outraged at 
the slackers trying to imitate a boxing workout. A workout 
partner from Hotjobs.com comes up to the boxing room, and 
after a few rounds on the heavy bag, we do a series of 
drills that Tommy taught us back in college. Slip a punch, 
weave, throw a left hook, then a straight right. My heart 
rate monitor is maxed out, and my heart rate level is too 
high, but it is a great work out. Between drills, I explain 
to him that the fact that earnings per share are becoming 
more negative year over year are not the only thing that 
Wall Street looks at. I promise him that I'll email him 
a list of stocks to watch. We do a few drills where we 
circle the same bag hitting the exact opposite punches. 
Hooks, then right hooks. In a mindless, mind freeing 
cadence, I think about what an unreal day it has been. 
And that is every day.

And at the end of the day, or at the end of the lifetime, 
a dying man will not regret what he did. He will regret 
what he didn't do. Hence, my own personal ethos -- Ivy 
League College followed by the US Marines. Teaching 
(the best thing I did in my life). Law School followed 
by Lord knows what. Lead the crowd a merry chase and see 
if they can follow. Go for it. You fail, so what? The 
Jesuits who taught me theology in college would call it 
existentialism. Soren Kirkegaard call your office.

By the way, I have come to a conclusion regarding trading 
strategies -- half calendar spreads using LEAPs and short 
term options which I sell against them every month; half 
bull spreads -- evenly split between debit (45 day+) and 
credit (30 day or less) spreads. Those strategies 
respectively replace my LT Stock holdings and straight 
call plays. The way to go is to use the OptionInvestor.com 
Call Picks but then construct your own bull spreads. Missed 
some trades this week, but now I have the right brokers to 
play the game the way that I want to.

Good Luck

Janar Wasito
Contact Support


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:
*****

HYSL $45.31 -1.19 (-3.56) It looks like this ship may be 
sinking.  We thought that HYSL might be offering us some 
potential entry points, but apparently, it had something else 
in mind.  HYSL has continued to head south and we have seen 
the volume increasing to back the descent.  Not a good sign 
for a call play.  HYSL did manage to make a weak bounce from 
$44 today however, HYSL has been tagging lower highs for the 
past three sessions.  Basically, HYSL is sending us all of the 
signals to abandon ship, and therefore, that is exactly what 
we are doing.  Too many other fish in the sea swimming in the 
right direction.

LLTC $102.25 +0.50 (-3.25) We are not dropping LLTC as a call
play because there is anything particularly wrong or negative 
about the stock.  It is just that we feel our capital could be 
better used elsewhere.  Technically, we lost a little interest 
in LLTC when it dropped below $100 intraday.  Despite the fact 
that the stock rallied back above this level it appears to us 
that since LLTC broke below the low end of its recent trading 
range the stock seems more likely to take a look at $95 before 
making a new high.  A pullback and consolidation in the mid $90's 
could provide a good entry point for long term investors.  It 
appears that for now there are some better immediate investment 
opportunities in the semiconductor industry.

MLNM $314.56 +54.06 (+102.06) We won't get into the goose and
gander theory again, but if you have a position in, or have been
following MLNM, you undoubtedly have heard that HGSI patented
a gene considered key to HIV infection Wednesday.  That sent
the Biotech index soaring to new highs, along with most of the
companies in the sector that have anything to do with genomics.
Oh, by the way if you do hold a position in MLNM, we would say
congratulations are in order as well.  Depending on your entry
point you are enjoying an unbelievable return in the past two
days.  MLNM soared $96.81 in the past two sessions.  We aren't
going to wear out our welcome in this play, so we are going to 
simply say thank you and walk away.


PUTS:
*****

VERT $208.25 +2.25 (-4.75) Did you tighten your stops as we 
suggested?  We mentioned on Tuesday that we were in bonus 
territory and from that point on anything below $200 was 
icing on your cake.  Hopefully, you had a small cake to ice.  
VERT gapped up nearly $2 on Wednesday and just kept going 
up from there to close the session at $206.  Today, VERT 
continued to climb until it found resistance at its 10-dma of 
$216.  There may still be some room to play VERT on the downside,
however, the risk/reward factor just is not appealing enough 
for us to continue to hold a spot open for it on our put play 
list.  It delivered the drop to $200 that we were looking for 
when we initiated this play and therefore we are content to 
step back from this one at this point.  Remember, the closer 
we get to the split in March, the more likely VERT will climb.

GD $43.13 +1.56 (+1.69) GD sure is a stubborn stock.  Day after 
day they bounced off that $41.50 level, but never fully broke 
it.  It looks like they have made up their minds that they 
won't break it either - at least not anytime soon - case in 
point, they closed points above resistance today.  The last
couple of days they have been hanging out, trying not to dip 
any lower.  That's ok.  We can find other stocks that will do 
more than stubbornly hang out at the same price.  So we are 
getting rid of our play on GD.  Dropping lower than they have 
for years was to much to ask of them and, like the industry 
they are in, they defend themselves well.    



********************
PLAY UPDATES - CALLS
********************

ERICY $87.75 +0.75 (-2.44) A good indication as to the strength 
of the momentum backing a stock's move is the volume level.  
If you take a look at the recent trading for ERICY, you will 
see big volume on the days that ERICY posted a gain.  This is 
something that we love to see.  You may have noticed that ERICY 
has been struggling a bit around the $88 level.  ERICY looks to 
be caught in a battle of the daily moving averages.  ERICY's 
5 and 10-dmas have nearly converged.  The 5-dma, which seems to 
be providing some support, is at $87.50 and the resistant 10-dma 
is at $88.  As you can see, ERICY is snuggly sandwiched between 
the two.  We are betting that ERICY has the momentum backing it 
to push it through $88 and will soon be relying on both of 
these levels for support.  ERICY has some additional support 
at $87 if needed. 

IFCI $26.38 +5.56 (+10.13) We introduced IFCI to our call play 
list earlier today with a Trading Alert at 12:30pm EST.  Since 
then, IFCI traded up to a new 52-week high of $27.69 and posted 
volume nearly six times the daily average.  Not to mention the 
option volume!  The March-20 contracts posted volume over 2,300.  
Will IFCI make it through $30 tomorrow?  IFCI tried to establish 
some support at $26, $25 and $22 on its way up.  Should IFCI 
pullback, watch for these levels to catch and take advantage 
for possible new points of entry.  And the story gets better 
still.  We didn't mention earlier the fact that IFCI will be 
announcing earnings on February 29th after the close, so we 
may benefit from a nice earnings run as well.  Congrats to all 
who got in early on this trading alert.  

MUSE $236.50 +21.94 (+27.00) It certainly seems like the split 
run has begun in earnest for the shares of MUSE.  The 2-for-1 
split will occur next Wednesday and with a new high  
convincingly made today, look for MUSE to continue its rally as 
long as the NASDAQ stays strong.  We had good volume today at 
close to two times the ADV.  There was plenty of news the past 
two days to help account for the strength in the stock.  
Yesterday, ICG Communications, one of the industry's fastest-
growing infrastructure service providers, announced that they  
are expanding their use of MUSE's Netcool suite of software to 
include their entire national network.  Today it was announced 
that MUSE will expand its presence in the New World Ecosystem 
program established by Cisco Systems.  The program is a 
community of technology partners working together to enable 
service providers to rapidly develop and deploy innovative 
telecommunications services.  Any press linking a company to  
the highly respected and influential CSCO is usually met with 
investor enthusiasm, and that was certainly the case today.  
Today's rally saw the shares of MUSE break out of a nice flag 
pattern.  Indications are that MUSE could be testing $250 very 
quickly, perhaps tomorrow as long as the CPI comes out benign.  
When trading a stock that has made a very nice move like MUSE, 
do not be afraid to utilize a trailing stop strategy to lock 
in profits.

CUBE $87.13 -1.25 (-0.06) It has been a little surprising that
C-Cube has not been able to go up the past two days with the 
NASDAQ staging a huge rally and a very strong earnings report 
from industry leader AMAT. (It should be noted that AMAT is a 
semiconductor tools company and C-Cube is a semiconductor 
manufacturer.  Amat is still a significant component of the SOX 
Index).  In fact, if you take out AMAT, the SOX has kind of 
cooled off the past two days with the bulk of momentum chasing 
cash going after the Human Genome Project stocks.  We are not 
yet concerned that the leadership position of semiconductor 
stocks in general is in jeopordy, it just seems like they are 
taking a break.  We still believe that a close above $90 on 
CUBE could give the stock enough of a boost to carry it to the 
significant price point resistance level of $100.



***********************************************
PLAY UPDATES - CALLS - CONTINUED IN SECTION TWO
***********************************************



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This newsletter is a publication dedicated to the education 
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newsletter picks are not to be considered a recommendation 
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********************************
PLAY UPDATES - CALLS - CONTINUED
********************************

ISLD $115.00 +9.75 (+0.75) The volume was back on track today 
and ISLD tacked on $9.75, or 9.3%!  Over 1.27 mln shares 
exchanged hands compared to the stock's ADV at 1.17 mln and the 
lower levels from the beginning of the week.  This is a great 
indication that the momentum will start to snowball and drive up 
the share price.  Yesterday, ISLD repeatedly bounced off $104 
and $105, but couldn't crack the short-term opposition at $112.  
No matter, this volatility offered a variety of entry points 
into this play whose overhead resistance is just points away at 
$118.13 (Monday's intraday high).  The clear breakout today 
powered ISLD even higher.  It established a higher level of 
near-term support at $110, which is also in-line with the 5-dma 
($109.95).  If you want to start a new position or add positions 
for that matter, the $110 level is a good entry on the climb 
while lower at $105 is more solid on a slight pullback.  Remember 
this is a pure momentum play so trading volume needs to stay 
intact on the ascent. 

INSP $201.00 +1.88 (+9.69) On Monday, INSP initially set another 
all-time high at $208 during early morning trading.  Following 
a natural course, it then became a victim of the profit-takers.  
INSP was cut down to a low of $188.63 on Tuesday before the 
bulls bid the share price back over $200.  However, the stock is 
still in consolidation mode as it trades primarily between $195 
and $200.  We're anticipating that INSP will regain its momentum 
as the split date draws closer.  INSP is splitting its stock 2:1 
on March 15th.  If this HIGH-RISK Internet play meets your risk 
portfolio, then consider this period of consolidation as a 
playing field of entries.  Watch for volume to return to levels 
upwards of the ADV (1.7 mln) for added confirmation.

ASPT $65.91 -2.06 (-1.97) Unfortunately there hasn't been an 
earth-shattering event to pop ASPT out of this dry period.  The 
momentum has tapered off a bit this week while the stock finds 
its footing at these higher share prices.  In consideration of 
the economic events of this week and some stocks experiencing 
major sell-offs, ASPT is holding up well.  Near-term support is 
sandwiched at $66 between the 10-dma ($65.20) and the 5-dma 
($67.19) which isn't a bad place to roost.  Honestly though, 
we need to see a move through $68 followed by a break above the 
$70 hurdle.  This would confirm that the powerful momentum that 
rocketed ASPT up from the $50 level just this month hasn't 
fizzled.    

COVD $85.50 +0.63 (+0.88) The good news for our play in COVD
is it hasn't headed south.  Unfortunately it hasn't moved much
higher.  Other than a brief move early this afternoon, COVD has
traded in a $2 range for most of the past two sessions.  At 
this point the lack of movement may not be all that bad, as 
COVD is building a good base with $84.38 providing support.
If you have a current position in COVD, keep that level in mind.
A move though that area, especially if it is accompanied by
solid volume may be a good point to place your stops.  Wednesday
Dan Ross, an analyst at Sanders Morris Munday initiated new 
coverage of COVD with a Strong Buy rating.  Ross is certainly
optimistic with his price target, coming in at $140.  While we
tend to agree with Mr. Ross the coverage did little to move the
price of COVD's stock, at least in the last two days.  Although
we believe COVD has a bight future in the near term, we will 
need to see new buyers enter for COVD to regain its momentum.

BEAS $134.50 +12.50 (+26.50) Momentum check anyone?  We mentioned
Tuesday that sometimes there is just no stopping momentum.  That
has proven to be the case in BEAS.  Our earnings run exploded 
again right out of the gate this morning.  By mid-afternoon BEAS
had hit a new high at $143.13.  Traders began to take some money
off the table, but the e-commerce company finished the day with 
a 10% gain.  Early this morning BEAS announced it had signed a 
multi-year, multi-million dollar contract with KPN Royal Dutch
Telecom.  Under the terms of the deal BEAS has agreed to deliver
its e-commerce transactions solutions to enable KPN to integrate
many of its heterogeneous internal systems.  Our suggestions for 
BEAS, are move your stops up.  BEAS formed support at $134 on 
an intraday basis, with the next level seen at $125.  Time is 
beginning run out on our play.  If the momentum continues, we 
would certainly enter a new position, but be prepared to close 
it by Tuesday, as BEAS is scheduled to report earnings after 
the close.    

EMLX $132.06 +2.44 (+8.19) If you look at the chart on EMLX, 
you'll see EMLX continues to form a nice channel higher.  EMLX
made another step Wednesday to the $140 target previously 
mentioned.  Our only concern was the volume was a bit light as 
traders began to put some money in their pocket, after hitting 
$135.  EMLX still finished the session with a small gain.  Today 
EMLX added another $2.44 but the volume was on the light side 
again.  Intraday charts show an ascending triangle formation 
beginning to appear, which could lead to a breakout to higher 
prices.  Again we are very satisfied with the moves seen so far
this week, but we would like to see more volume to support the 
current moves.  EMLX is forming a base near the $130 area and a
bounce off that level, accompanied by good volume would be a nice
entry point for a new play or additional positions.  Not much 
news in the past couple of days, so rely on support, resistance 
and volume to guide you in this play.

PCMS $22.28 +0.22 (+3.53) After hitting a high at $22.50 at the 
open Wednesday, PCMS has spent the past two days catching its 
breath. The volume has lightened up as well.  Well, let's just 
say its fallen back into its normal range.  One place the volume
and volatility hasn't lightened up is at the options exchanges.  
Options volume in PCMS jumped, especially in the March and May 20
calls.  A lead market maker at the Pacific Exchange said "It 
seems like a lot of call buying" going on in PCMS.  Apparently 
many traders saw the great potential in PCMS and jumped into 
a solid play.  Although PCMS spent most of the past two days 
consolidating, we expect the momentum to continue.  As far as 
support and resistance is concerned, $21.88 has provided a good 
base while a breakout over $22.50 would confirm another move 
to the upside.      

CLRN $111.00 +8.06 (+4.75) Dancing between the raindrops,
CLRN just barely avoided making it onto our drop list.  With
yesterday's large drop, the bears pushed the price down through
both the $110 and $105 support levels, producing a close near
the low of the day.  The bulls finally woke up today near the
$100 support level, and helped CLRN turn on a dime to punch
through the $105 and $110 levels which were violated yesterday.
Volume the last 2 days has been a little over average, but
nothing to write home about.  Particularly encouraging today
was CLRN's ability to close above $110, possibly re-establishing
that level as support.  We are still waiting on news of the
outcome of Tuesday's shareholder meeting where one issue
was whether to increase the authorized shares from 50 to 200
million.  At any rate, it seems clear that a split announcement
could be on the horizon and just the idea may continue to drive
shares higher.  Yesterday, Edward Jackson at Piper Jaffray
raised his price target from $115 to $140 and reiterated his
Strong Buy rating.  Going forward, look for a renewed bounce
near $110 to trigger your entry into new positions.  Mild
resistance exists at $113 and more conservative traders may
want to wait for a break above this level before committing.

LHSP $82.06 +2.00 (+0.13) Like a solo driver stuck in Friday
night traffic, LHSP is sitting near $82, watching with envy as
others zip by in the commuter lane.  Volume has been about 20%
above the daily average, but the struggle between buyers and
sellers is dead even.  The move up has been motivated by the
strong earnings announcement last week, accompanied by a 2-for-1
split.  Shareholder approval will be required and the date has
not been set, but the news underscores the company's positive
outlook for the future.  There is still plenty of positive press
about their new handheld device, which uses voice input to allow
users to send and receive email, browse the web and conduct
e-commerce transactions.  Basing the architecture on the hot
Linux operating system will likely elicit continued good will
from the investment community.  After such a strong move, it
makes sense that LHSP needs to pause to catch its breath.
Support at $80 is still intact, backed up by $75, and aggressive
investors can consider initiating new positions on a bounce near
these levels.  However, we would prefer to see a convincing
breakout above $85 before jumping onboard.

SNDK $154.25 +4.75 (+5.19) That's a little better.  SNDK finally
managed to break through to a new high today, touching $159.50
mid-day, before fading into the close.  At least we finally saw
a decent volume day with over 1.1 million shares trading hands.
With investors returning in force to the NASDAQ today, SNDK
reaped the rewards by closing at a new high of $154.25.  The
$152 level is shaping up as new support, with the 5-dma close
behind at $151.25.  With today's surge into new territory,
resistance has moved up to the neighborhood of $159.  Remember
the real motivation for a continued move upwards is the pending
split on February 22nd.  Based on today's increase in volume,
investors may be waking up and preparing for a final surge.
With the split occurring next Tuesday, we will be dropping SNDK
this weekend, consistent with our 'never hold over a split'
rule.  New positions can be considered on a bounce near $152
or a breakout above $160 - just remember time is running out,
and any run higher will have to be quick.

TXN $143.00 +7.25 (+5.38) After finding its feet near $130 on
Tuesday, TXN has recovered nicely, with an especially nice
performance today.  Gaining over $7 on the day, the real
excitement came in the final 30 minutes.  With a surge of buying
volume, TXN tacked on an additional $3.50 to close near the
high of the day.  Continuing to toot its own horn and crow
about the pivotal role in the broadband access markets being
played by the silicon providers, TXN kicked off the High Speed
Access Summit in Dallas today.  As the world leader in Digital
Signal Processors and Analog Circuits, TXN expects continued
strong business growth driven by the incessant demand for both
wireless and broadband communications solutions.  With a revival
of the $137-138 support level, TXN looks ready to run to new
highs.  The next target will be the 52-week high at $145, set
last Thursday.  Look for another bounce near $137 or a continued
move upwards to provide your entry.  More conservative players
may want to wait for a convincing move above $145 before jumping
on board.

SEPR $171.25 +10.50 (+31.00) Wait for me!  Just barely pausing
after amateur hour on Wednesday to allow new entries, SEPR has
been on a tear the past two days.  Driven by positive press
and impressive gains in the rest of the Biotech sector, SEPR
has added more than $10 on triple the ADV both yesterday and
today.  Don't forget, SEPR is also on a split run, with the
effective date, next Friday, the 25th, approaching rapidly.
The strong demand for anything that promises to extend our
lives and enhance our health continues to be amazing.  Today's
move represents a very convincing break to new highs and SEPR
is now in blue-sky territory.  Expect resistance to come in
round numbers like $180 and $190.  With the rapid move up, mild
support is now found at $169.50 and then $165.  To find strong
support, look all the way down to $155, but given the short fuse
on our play, a test of this level would give us concern over
its viability.  New positions can be considered on either a
bounce at the mild support levels listed above or a break to
new highs.  Just remember, after the last two days, there is a
lot of profit already built into this play.  Use caution, and
if you have open positions, keep your stops in place.

BCE $122.50 -0.63 (+4.47) Investors still value BCE at just 
$13 bln after netting out the value of BCE's 39% stake in Nortel 
(NT).  We are in this play to capture BCE's value once investors 
realize that the Canadian phone giant is worth more than 1.3 
times sales and 3.7 times earnings, again net of NT's value.  
At least it should still rise in parity with NT, as NT moves up 
the chart.  Helping in that department, NT just won a WDM system 
contract from Metromedia Fiber Network (MFNX), a previous 
customer of Lucent for the same product.  While reiterating a 
Strong Buy rating, CSFB also noted their belief that Qwest (Q) 
would deploy Qtera's (newly acquired division of NT's) long 
haul solution in 2000, thus benefiting NT as well.  Support 
remains at $117 and has since shown resilience at $122.50.  Yes, 
the price moved over $122 and held, though unfortunately not in 
the textbook breakout style that we had hoped.  Even so, what's 
good for NT is good for BCE.  Target shoot dips, watch for volume 
(more is better than less) and keep your eye on NT for direction.

AMCC $230.25 +4.88 (+0.22) Just when we thought it was safe to 
get back in the water, that volume we saw from Tuesday's intraday 
low turned out to be a head fake.  Still, $220 proves to be a 
strong point of support for this optical semiconductor 
manufacturer.  With volume falling back to slightly above the ADV 
today, the daily move was a bit directionless and did not follow 
the NASDAQ pattern over the last few days.  There has been no 
news either.  Resistance is at $24, then $235, then $230.  
Anybody see a small pattern emerging?  Like a small series of 
lower highs?  While it doesn't mean the play is over, it should 
cause us to exercise some caution before entering a new play.  
Lower highs with decreasing volume may mean that buyers are 
turning elsewhere after the recent runup.  Then again, maybe it's 
just a breather.  Those of you with profits may want to tighten 
up your stops so you can keep 'em.  Otherwise, we need to look 
for dips coupled with a volume increase after a bounce intraday 
for the best entry.

ANAD $144.13 +2.50 (+20.13) Talk about unflappable.  Aside from a 
one-hour dip yesterday morning to $137, ANAD has remained solidly 
above $140 support, yet bumps its head on $145.  Though it's 
only a three-day pattern, the lows are getting higher as the 
resistance remains constant at $145.  As long as volume doesn't 
fall below the ADV, ANAD could get a breakout.  However all bets 
are off if NASDAQ can't sustain today's rally.  Potentially, it 
could find $130 again if things get nasty.  Looking for something 
that might turn up the heat on ANAD going forward?  How about 
that 3:2 split coming up on February 29 (ex-date is March 1)?  
Until then, buying intraday dips (target shooting) to $141 might 
give the best entry.  We hesitate to aim much lower since dips 
generally aren't that much deeper than $3.  Other than a Strong 
buy rating from Cruttenden-Roth and a new price target of $200, 
there isn't much news - just plain old momentum in a hot sector.



*******************
PLAY UPDATES - PUTS
*******************

KMG $47.81 -0.81 (-0.31) Alright, we are going to try and keep 
this one a little shorter today.  KMG is a story play and the 
story behind it has been all over the news this week.  Oil 
crisis.  Need we say more?  Though the oil service stocks did 
manage somewhat of a rally this week, it looks as though 
investors are again feeling a little leery of taking on any 
new positions in this potentially slippery sector.  The news 
this week has really worked to make a near-term correction 
in oil prices seem not only likely, but inevitable.  KMG is 
looking up at a barrelful of resistance, the first of which 
is directly overhead at $48 (5-dma) and the next at $48.75 
(10-dma).  KMG has managed to dig up a bit of support right 
around $47.50 so watch for KMG to trade through this level to 
confirm the next move down.  

PGR $57.69 +0.75 (+3.69) Overall selling among the Big Board 
leaders seems to lead to a little buying in the beaten down 
stocks like PGR.  The mini-rally for PGR could end soon.  We 
noted in Tuesday's report that throughout the devastating 
downtrend in the shares of PGR the stock has managed a few small 
rallies that can last a couple of days.  Hopefully this little 
rally is almost over and the stock will soon resume its 
downtrend.  The small rally is probably still due to the CSFB 
upgrade to Strong Buy that came out on Tuesday.  It is our 
opinion that CSFB is trying to catch a falling knife.  Sure, 
there is probably some value in the shares of PGR down here, but 
stocks are driven by cash flow.  As long as it looks like rates 
are going to continue going up, and Greenspan gave us no 
indication today that they are not, it looks like financial 
stocks, in general, will continue to be under pressure.

RHAT $75.19 +5.19 (-8.19) Boing!  After a good start on this new 
put play we got a bit of a bounce today in RHAT.  Our guess is 
that some of the excitement that led to the rally today has to 
do with the release of Windows 2000 today.  Since Linux is one 
of the few competitors of Windows, any media coverage of Windows 
gets people thinking about the alternatives.  Some of the rally 
today may be attributed to the anticipation of what the CEO of 
Red Hat might say after the close during an interview on CNBC.  
Well, nothing new was really said.  The CEO mentioned his 
company's continuing attempts to increase Linux's presence in 
the server market and various other objectives that are already 
pretty well known.  One interesting part of the interview came 
at the end when the CEO gave a very curt response to a question 
about his personal selling of the stock and the huge amount of 
stock that will be becoming available for insider selling in the 
coming months.  Perhaps the most interesting thing to come out 
of the interview was the immediate downside action in after- 
hours trading in the stock right after the interview concluded. 
We will see if the selling continues tomorrow.  A break below 
today's low of $70 would indicate to us that RHAT could be back 
on its way to lower prices.

JNJ $79.19 -0.63 (+1.75) Since Tuesday the stock has been 
struggling to rise above the 10-dma ($80.06), which is a good 
sign that the technical indicator is acting as strong 
resistance.  Yet, at the same time, $79 is near-term support.  
This tight channel is frustrating.  There's good news in that 
yesterday's upgrade by CSFB didn't entice investors to rush out 
and buy JNJ.  Ann Barber raised JNJ to a Buy from a Hold citing 
"the stock is attractively valued at discounts to the market and 
its peer group".  CSFB also issued a $95 price target.  With the 
CPI data coming out tomorrow and in light of today's late 
afternoon slump, we're keeping JNJ on the list.  Be careful and 
use stops to protect your capital.  Our bets are that another 
day of negative sentiment may ignite a descending breakout.  We 
need to see JNJ slide back under the 5-dma ($78.75) and break 
the $77 mark once again.  

KRB $21.00 -1.00 (+0.19) Something's hanging over the heads of 
KRB traders.  The economy.  It has been doing too well, too 
long and we all know what that means.  In order to stop 
inflation interest rates must rise.  We also all know that 
those handy little cards we carry around in our wallets are 
tied to interest rates (especially when we get those monthly 
bills).  KRB, or if you have a credit card it is better known 
as MBNA, will feel the effects of a correction in the economy.  
We are still waiting for $21 support to break for new plays.  
Resistance is from the 10-dma at $22.



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

ISSX - ISS Group, Inc. $97.38 +2.44 (+8.50 this week)

ISS is a leading global provider of security management 
solutions for e-business.  Major products include SAFEsuite 
security software and ePatrol managed security services and 
strategic consulting and education services.  Through these 
products and services, ISS helps clients protect digital assets 
and helps to ensure the availability, confidentiality and 
integrity of computer systems and information critical to 
e-business.  ISS' lifecycle e-business security management 
solutions protect more than 5,000 customers including 21 of 
the 25 largest U.S. commercial banks, 9 of the 10 largest 
telecommunications companies and over 35 government agencies.

The recent attacks on Internet based companies such as E-Trade 
and Yahoo! have sent a collective chill through the industry.  
The concerns over this potentially devastating development have 
reached all the way to the FBI, the head of the Justice 
Department and it has even been commented upon by the President.  
In the past few days several of the executives of ISS have been 
invited to help brainstorm new protection ideas with some of our 
highest government officials.  All of this has to be good for 
business and, at the very least, it gives ISS a higher profile 
as a security leader.  If you are in the spotlight, investors 
sometimes take notice.  Not only have investors taken notice but 
they have also been bidding up shares ever since this latest 
crisis began.  The current rally has seen the stock rise over 
17 points.  ISSX shares are fast approaching the very important 
psychological price point of $100.  A close above that price and 
the stock could very easily stage a more substantial rally.  A 
trade above today's high of $98.25 could take the stock there 
very quickly.  If we are weak tomorrow due to profit-taking or a 
negative CPI number, it might be profitable to try and pick up 
the stock near support levels of $92, or if we get a big selloff 
maybe even as low as $80 although the second support level 
seems unlikely to be reached in the short-term.

It was announced today that ISS will be able to support the 
Windows 2000 computing platform and that it has made its main 
product, the SAFEsuite System Scanner 4.0, immediately available 
for Windows 2000 Professional and Windows 2000 Server software 
systems. 

BUY CALL MAR- 90*ISU-CR OI=119 at $15.50 SL=12.00
BUY CALL MAR- 95 ISU-CS OI=  8 at $12.50 SL= 9.75 low OI
BUY CALL MAR-100 ISU-CT OI= 24 at $10.25 SL= 7.50
BUY CALL APR- 95 ISU-DS OI=  5 at $17.38 SL=13.50 low OI
BUY CALL APR-100 ISU-DT OI= 48 at $15.25 SL=11.75 

Picked on Feb 17th at   $97.38    P/E = 558
Change since picked      +0.00    52-week high=$98.25
Analysts Ratings     4-6-0-0-0    52-week low =$20.00
Last earnings 01/00  est= 0.05    actual= 0.05
Next earnings 04-27  est= 0.06    versus= 0.04
Average Daily Volume =   829 K
/charts/charts.asp?symbol=ISSX

****

GLW - Corning Inc. $191.06 +13.06 (+25.31 this week)

Corning is a premier provider of optical fiber, cable, and 
photonic products for the telecommunications industry; high-
performance glass for computers, television screens, and other 
information display applications; advanced optical materials for 
the semiconductor industry and the scientific community; ceramic 
substrates for the automotive industry; specialized polymer 
products for biotechnology applications; and other advanced 
materials and technologies.  Pots and pans (housewares) have 
been a division of Borden since their sale in April 1998.

Corning (GLW) is taking aim at JDS Uniphase (JDSU) as a leader 
in the photonics revolution.  While their market cap isn't quite 
there yet by comparison, their revenue growth in the optical 
communications business is spurring the recent price surge, as 
investors learn that they are not a cookware company any longer, 
but in fact a producer of over half the world's supply of fiber 
optic cable.  With their recent purchases of Oak Industries, 
Siecor and Optix (OPTX), they have become a powerhouse of optical 
subsystem assemblies for the industry, with the capacity and 
financing to compete with JDSU (though JDSU will not suffer for 
this - there is enough business to go around) in the big tent.  
Earnings came in last quarter with a 6% surprise ($0.03 better 
than analyst estimates of $0.50).  Technically, support is hard 
to find when you are sprinting to new highs.  However, solid 
support appears at $175 (maybe a good target to shoot at?).  The 
10-dma, which provides good technical support is $172.  In 
today's trading though, $185 held up well.  Volume is on the rise 
too.  GLW hasn't split since 1992 and is due, however they will 
need shareholder approval to authorize more shares to pull off 
even a 2:1.  If history is any indication, they should be filing 
a proxy and notifying shareholders within the next 2 weeks of the 
shareholders meeting typically held in April.  We'll let you know 
when the news is out.  To summarize: Optical component maker with 
JDSU panache; strong momentum, split candidate.

Though maintaining their Outperform rating, Gruntal and Co. 
raised their near-term price target from $176 to $200 (none too 
soon) and from $203 to $235 on a long-term basis, which accounts 
for the Oak Industries and Siecor purchase.  GLW's purchase of 
Optix (OPTX) is unaccounted for in Gruntal's rating.

BUY CALL MAR-180 GRJ-CP OI=143 at $23.38 SL=18.25
BUY CALL MAR-190*GRJ-CR OI=532 at $18.50 SL=14.50
BUY CALL MAR-200 GRJ-CT OI=274 at $14.25 SL=11.25
BUY CALL MAY-190 GRJ-ER OI= 32 at $31.38 SL=24.50 low OI
BUY CALL MAY-200 GRJ-ET OI=198 at $26.88 SL=21.00

Picked on Feb 02nd at   $191.06     P/E = 91
Change since picked       +0.00     52-week high=$192.50
Analysts Ratings      7-6-0-0-0     52-week low =$ 47.69
Last earnings 01/00   est= 0.48     actual= 0.51
Next earnings 04-24   est= 0.47     versus= 0.36
Average Daily Volume = 3.46 mln
/charts/charts.asp?symbol=GLW



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

MRK - Merck & Co $$63.25 -2.25 (-2.81 for the week)

Merck is a research-driven pharmaceutical company that develops, 
manufactures, and markets a broad range of human and animal 
health products.  They are the #1 industry leader in the US and 
#2 worldwide.  Some of its more prominent drugs include Zocor 
and Meycaor (cholesterol drugs), Pepcid (an anti-ulcerant), 
top-selling hypertension drugs, Vasotec and Prinivil, and more 
recently the AIDS medication, Crixivan.  The drug maker also 
provides pharmaceutical benefit services through Merck-Medco 
Managed Care which it sells to corporations, labor unions, and 
insurance companies.  When it comes to e-commerce Merck won't 
be left behind either.  The company has formed an alliance with 
CVS to market drugs online.

A downturn in the broad markets last week coupled with its own 
looming patent expirations and it's no surprise why Merck is 
leading the pack of DOW Blue Chips towards new 52-week lows.  
In an influential article last Wednesday, WSJ put a big emphasis 
on the fact that five of Merck's leading drugs will soon lose 
their patents and this will ultimately make the drug maker very 
vulnerable to competition from generics.  The targeted drugs 
are cholesterol fighter Mevacor, hypertension treatments Vasotec 
and Prinivil, and ulcer drugs Prilosec and Pepcid.  Investors 
obviously take to heart what they read in the revered WSJ.  MRK 
fell $10.19, or 13.5% in just three days.  At that point, OIN 
needed to see if MRK could break that historical bottom support 
at $64 and $65 before adding it to our put list.  Patiently we 
waited for confirmation and we're rewarded in today's session.  
MRK made a definitive descent to $63.25!  The stock is now 
closing in on its 52-week low of $60.94, which was set way back 
on August 11th of 1999!  An intraday bounce off the 5-dma 
($65.14) is a solid entry into this "Blue-Chips Are Out & Techs 
Are In" put play.  Although remember that a negative market 
sentiment is an important factor to consider.  Essentially 
there is no support south of the current level so watch out 
for prudent buyers stepping up to the plate.  On the Analyst 
front, Sutro & Co is no longer recommending a Buy on MRK.  
Last Thursday they downgraded MRK a Hold rating.

BUY PUT MAR-70 MRK-ON OI= 866 at $7.38 SL=5.75
BUY PUT MAR-65*MRK-OM OI=1201 at $3.75 SL=2.25
BUY PUT MAR-60 MRK-OL OI= 141 at $1.50 SL=0.75

Average Daily Volume = 5.30 mln
/charts/charts.asp?symbol=MRK



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

ANAD - Anadigics $144.13 +2.50 (+20.13 this week)

Anadigics designs and manufactures radio frequency integrated 
circuit (RFIC) solutions for growing broadband and wireless 
communications markets (broadband, cable, fiber optic and PCS).  
The company's innovative high frequency RFICs enable 
manufacturers of communications equipment to enhance overall 
system performance, manufacturing cost, and time to market.  
By utilizing state-of-the-art manufacturing processes for 
its RFICs, ANAD achieves the high-volume, and cost-effective 
products required by leading companies in its targeted high-
growth communications markets.  ANAD was the first GaAs (Gallium 
Arsenide) IC manufacturer to receive ISO 9001 certification.

Sunday's Write Up

With wireless broadband, cable, fiber and the need for hardware 
to support it growing by leaps and bounds, the market continues 
to validate this sector as the next great frontier.  So how is 
this important to ANAD?  They make the high frequency radio 
circuitry that makes the transmission possible.  How's business?  
Glad you asked.  They announced a 38% earnings surprise on 
January 28 with the stock trading at about $77.  No post earnings 
depression here.  The issue has zoomed ahead its current price of 
$124 with not even a day of breathing time.  That came to an end 
on Friday and also gave us what may be an entry point.  Though it 
spiked up to $129 during the first five minutes of amateur hour, 
it immediately spiked back down to its low of the day of $116.75.  
From there, the rest of Friday's chart is a thing of beauty with 
a steady ascent all the way back to $124 - this while the rest 
of the market was headed the other way.  Talk about bucking a 
headwind!  With volume as strong as it was at the close, it 
looked like a continuation of Thursday's closing breakout.  ANAD 
has wobbly support at $122, pretty strong support at $117, and 
stronger support yet at $110.  Target shoot to your comfort 
level, or let volume fill the issue to carry it convincingly over 
$125.  Since earnings, pullbacks have been limited to only about 
$5, that may be all the break we get for a good entry.  But a 
correcting technology market (AKA NASDAQ) could make it worse.  
You'll have to make your own judgement call on this one.  Recent 
price gains and lack of OI make these inherently risky.

No we haven't forgotten about the split announced with earnings 
on January 28.  The ratio is 3:2 and is just over two weeks away 
on February 29, with March 1 as the execution date.  With maybe 
a breather or two, we are looking for the split run to continue 
through that date, though maybe not at as strong a pace as in 
the last two weeks.

Tuesday's Write Up

Yeah Baby!  Apparently having figured out a way to defy gravity, 
ANAD moved up smartly yesterday and dropped a measly $0.50 below
yesterday's stellar close during today's pre-lunch shellacking.  
With the exception of a $1 loss on Friday, ANAD has not seen a 
down day since January 28 when it traded at $75.  It doesn't 
have to fall back very far to reach support.  Gap ups at the 
open just provide a new technical benchmark, which ANAD seems 
all too willing to conquer.  Support levels have thus moved up
to $135 (nice bounce) and $140 (cruise control without selling
pressure).  With volume over twice the ADV yesterday and today, 
buyers (most probably growth fund money) are in control.  
Remember too that ANAD splits 3:2 on February 29, with an ex-
date of March 1.  That can only help.  We look for the price 
to keep moving up accordingly, even though ANAD is bumping its 
head on resistance at $144.  Of course that's expected when 
setting a new high every day.  A bit of news may be driving 
the price too: ANAD announced today that they received an order 
for 10 mln RF switches from "one of largest U.S. based wireless 
handset manufacturers" (duh, maybe Motorola) to be used in dual 
mode phones.

Thursday's Write Up

Talk about unflappable.  Aside from a one-hour dip yesterday
morning to $137, ANAD has remained solidly above $140 support, 
yet bumps its head on $145.  Though it's only a three-day pattern, 
the lows are getting higher as the resistance remains 
constant at $145.  As long as volume doesn't fall below the ADV, 
ANAD could get a breakout.  However all bets are off if NASDAQ 
can't sustain today's rally.  Potentially, it could find $130 
again if things get nasty.  Looking for something that might turn 
up the heat on ANAD going forward?  How about that 3:2 split 
coming up on February 29 (ex-date is March 1)?  Until then, 
buying intraday dips (target shooting) to $141 might give the 
best entry.  We hesitate to aim much lower since dips generally 
aren't that much deeper than $3.  Other than a Strong buy rating 
from Cruttenden-Roth and a new price target of $200, there isn't 
much news - just plain old momentum in a hot sector.

BUY CALL MAR-130 AUZ-CF OI= 29 at $25.38 SL=19.75
BUY CALL MAR-135*AUZ-CG OI= 95 at $22.50 SL=17.50
BUY CALL MAR-140 AUZ-CH OI= 55 at $19.88 SL=15.50
BUY CALL MAR-145 AUZ-CI OI= 52 at $17.50 SL=13.50
BUY CALL MAR-150 AUZ-CJ OI= 22 at $15.13 SL=11.75

Picked on Feb 13th at  $124.00     P/E = 478
Change since picked     +20.13     52-week high=$149.25
Analysts Ratings     3-2-1-0-0     52-week low =$ 13.00
Last earnings 01/00  est= 0.16     actual= 0.22 surprise=38%
Next earnings 04-28  est= 0.20     versus= 0.08
Average Daily Volume =   431 K
/charts/charts.asp?symbol=ANAD



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

Greenspan's Hawkish Comments Bury The Dow..

Wednesday, February 16

Blue-chip stocks sank Wednesday as traders moved to the sidelines
ahead of Fed Chairman Alan Greenspan's Humphrey-Hawkins testimony.
The Dow Industrials lost 156 points to end at 10,561 while the
Nasdaq Composite Index edged-up over 5 points to 4,427.  The S&P
500 Index slipped 14 points to 1,387.  Declining issues trounced
advances 17 to 12 with over 1 billion shares traded on the NYSE.
There were 56 stocks at new highs and 147 at new lows.  The long
bond was down 7/32, with the yield rising to 6.26%.


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

Voicestream   VSTR   MAR110C/M130C   $17.00   debit   bull-call
Iona (PLC)    IONA   MAR45P/MAR50P   $0.62    credit  bull-put
Compuware     CPWR   MAR20C/MAR22C   $0.00    debit   bull-call

Voicestream was quite active during the session and our new
position traded as low as $16.00 debit, a large discount from
the suggested price.  In contrast, the Compuware spread was
significantly more expensive than the target listed in Tuesday's
section and the speculative position was less attractive at the
inflated cost.  Although we did not open a position on the issue,
it will be monitored over the next few days for another favorable
entry point.


Portfolio plays:

Industrial issues slumped again today as reports regarding the
potential for inflation tempered the recent blue-chip recovery.
Investors were anticipating the upcoming data on wholesale and
retail prices which should provide clues to the Fed's monetary
policy.  Analysts say the rise in housing starts indicates the
economy may be growing at an unhealthy rate, further increasing
the likelihood of a future rate hike.  Although the Fed does not
meet until March, Greenspan's testimony on Thursday is expected
to offer clues on how aggressive the Fed will be about raising
rates.

The were only a few sectors that made favorable moves in today's
session.  Biotechnology, software, semiconductor and oil issues
rallied while retail, banking and other interest-rate-sensitive
stocks slipped lower.  The big winners in the spreads section
were Aspect Development (ASDV) with a $15 move to $115 and Adobe
Systems (ADBE), which jumped $10 to a new all-time high at $100.
BCE Inc. (BCE), Helix (HELX), Siebel Systems (SEBL), and Tekelec
(TKLC) also participated in the technology rally.

Our portfolio had little activity as the majority of February
positions have been closed to protect gains or prevent losses.
However, there were a number of longer-term issues that enjoyed
bullish activity.  Unisys (UIS) moved up $3.31 to $33.50 after
computing products company Compaq (CPQ) agreed to use their
Cellular Multi-Processing architecture for the new 32-processor
platforms.  The systems, which will be marketed under the Compaq
ProLiant server name are expected to generate about $400 million
in revenues over a two-year period for Unisys.  The rally offered
the perfect opportunity to transition to the March options in our
long-term diagonal spread; APR22C/FEB30C.  The new position is
APR22C/MAR30C at a cost of $2.50.  Marketing Services Group (MSGI)
rose $3 in the afternoon session, ending at a recent high near $28.
The rebound came after a brief post-earnings dip and provided
another chance to roll-out to next month's options. The current
position is MAY12C/MAR22C at a cost of $5.75.

There were some excellent rallies in the small-cap group.  Cirrus
(CRUS) moved up $1.00 to $18.68 on the heels of the semiconductor
rally.  Our new calendar spread is a candidate for early exit after
just one week and the position will have to be closed or adjusted
if the issue moves much higher.  e.spire rose $1 after the company
announced it has been awarded more than $16 million in a reciprocal
compensation collection actions against BellSouth and GTE Florida.
The move pushed our speculative, short-term calendar spread to a
profitable position and the new diagonal play is now trading near
the maximum profit price.  Any further upside movement will allow
both positions to be closed for favorable profits.  Other notable 
performers were ESC Medical (ESCM), up $1.31 to $12.25; Recoton
(RCOT), with a $1.38 rally to $13.38; and Onhealth Network (ONHN),
which spiked $1.50 to close at $11.50.  Boston Communications
(BCGI) and 3dfx (TDFX), two recently bullish issues also enjoyed
excellent sessions.


Thursday, February 17

Blue-chip stocks slid lower on speculation that interest rates
may have to rise to contain inflation. The Dow Jones Industrials
recovered from early losses to close 46 points lower at 10,514.
The Nasdaq composite index rose 121 points to 4,548 on record
volume of more than 2 billion shares.  It was the Nasdaq's first
close above the 4,500 mark, a new record high.  The S&P 500 Index
remained relatively unchanged at 1,388.  Declining issues topped
advances 15 to 14 on over 1 billion shares traded on the NYSE.
The 30-year bond price ended sharply higher, up 19/32 while its
yield fell to 6.22%.
 
Portfolio plays:

Technology stocks came roaring back Thursday after Fed Chairman
Greenspan's comments on higher interest rates drove Investors
away from blue-chip issues.  A number of market-leading stocks
in our portfolio moved higher with the rally.  The top performers
were Corning (GLW) with a $13 spike to $190, and Siebel Systems
(SEBL) which added another $9 to close at a new all-time high near
$116.  Small-cap telecom and semiconductors also participated in
the bullish session and a number of our new positions are trading
near maximum profit.  Cirrus (CRUS) climbed another $2 to end at
$22.75 and our bullish calendar spread provided $0.62 profit on
$0.88 invested for just two weeks.  Traders that want to stay in
the issue until the long option (JUN-$20) expires will have to
make an upside adjustment.  e.spire (ESPI) romped $1.56 to end at
$12.75 after announcing that its construction subsidiary, ACSI
Network Technologies, has won a contract to provide PSINet (PSIX)
with local area fiber-optic networks in Atlanta and Miami.  Under
the terms of the agreement, ACSI NT will provide PSINet with a
combination of long-term fiber leases and design, construction
and delivery of new fiber-optic networks in both cities.  The
move boosted our short-term calendar spread to a $1.12 credit on
$0.62 invested for just one week.  Now that's a great play!  The
long-term diagonal position is also trading near maximum profit
and will need to be adjusted to profit from further upside moves.
Other notable issues were ESC Medical (ESCM), up $1.18 to $13.43
in a second consecutive day of gains and Tera Computers (TERA),
which bounced nicely off the 50 dma, recovering to a recent high
near $8.

The two remaining speculative positions offered favorable exits
today.  BMC Software (BMCS) added $1.25 to finish at $43 and the
bullish diagonal spread; MAR40C/FEB45C, was easily closed at the
maximum credit of $5.00.  Advanced Fiber (AFCI) rallied back to
the $50 mark and the bullish position; MAR40C/FEB50C provided a
$3 return on $8.75 invested for just two weeks.  Only Chris-Craft
(CCN), Marshall and Isley (MI) and Pfizer (PFE), which were all
previously closed to limit losses, failed to yield a profit.  The
new position on Compuware (CPWR), which fell to $23.38 has yet to
offer a debit near the original target of $1.38-$1.50.  However,
we may get a new entry opportunity in tomorrow's volatile session.

Questions & comments on spreads/combos to Click here to email Ray Cummins


*********
NEW PLAYS
*********
The demand for bullish positions continues as a number of readers
have requested in-the-money debit and conservative credit spreads.

****

NTPA - Netopia  $76.50   *** A New Range? ***

Netopia develops, markets and supports products and services that
enable organizations to establish their presence on the Internet.
The company offers Website services and collaboration software
and plug-and-play, high-speed, multi-user Internet connectivity
solutions.  Their products are designed for users in personal
businesses, branch offices of multi-national corporations, home
offices, schools or other small organizations that may not have
access to sophisticated technical support.  The Netopia Virtual
Office software platform enables web users to create customized,
interactive Websites.  Netopia's Internet Connectivity Solutions
offer high-speed digital and analog Internet Routers that enable
cost-effective, simple Internet connectivity for individual users
and workgroups, and service programs to assist customers with
connecting to the Internet.  Timbuktu Pro Collaboration Software
is multi-platform remote control and file transfer software for
workgroups and remote workers.

We favor the technicals on this issue but Wednesday's fundamental
upgrade didn't hurt.  Hambrecht and Company, an online investment
bank, increased its 12-month price target for Netopia from $70 to
$100.  The move was based on Netopia's string of recent contract
wins in the DSL router market, their comparatively attractive
valuation and the projected growth of DSL.  The analyst reported
that NTPA offers strong upside investment potential and its new
agreements with Concentric Network and Fastpoint Communications
underscore a number of future growth opportunities.  Analysts at
Warburg Dillon Read back that opinion with a BUY rating, based on
the performance of the industry and NTPA's future upside potential.
We agree with the outlook and this position should provide a
relatively conservative method to participate in any future share
value growth.


PLAY (conservative - bullish/debit spread):

BUY  CALL MAR-50 NQD-CJ OI=107 A=$27.25
SELL CALL MAR-65 NQD-CM OI=84  B=$13.75
INITIAL NET DEBIT TARGET=$13.25-$13.50 ROI(max)=12%

Chart =
/charts/charts.asp?symbol=NTPA

****

ITVU - Intervu  $139.00   *** A Formidable Team! ***

InterVU provides Website owners and content publishers with
feature-rich, cost-effective services for the delivery of
streaming, live and on-demand video and audio content over the
Internet.  InterVU's streaming media services allow web users to
view news, sports and other events from around the world, listen
to live radio broadcasts, watch and listen to specialized content
not widely available on television or radio, hear live earnings
reports, accompanied by a graphical presentation, view a movie
trailer before purchasing a movie ticket, videotape or DVD and
watch music videos or listen to songs on demand.  InterVU has
also developed a suite of services that automate the publishing,
distribution and programming of video and audio content.

Early this month, Akamai Technologies (AKAM) announced plans to
merge with Intervu in a $2.8 billion stock deal.  AKAM's business
is building faster web sites with leading-edge technology.  With
the addition of ITVU's products, they will become a full service
provider in virtually every type of online content.  Together, the
combined company will have a leading market share with over 1,000
of the Web's most popular sites.  Of course the deal is subject to
approval by shareholders and regulators but most experts believe
it will eventually be approved.

Another big announcement occurred this week as Akamai reported it
has entered an alliance to connect its servers within the network
of Internet media company America Online (AOL).  AKAM is placing
its servers within the American Online network to boost the speed
and reliability of their services.  Under the agreement, Akamai,
whose customers include CNN, Yahoo, Martha Stewart Living and the
Motley Fool, will make payments to AOL based on its future revenue
stream.

The combination of the Internet's most advanced video presentation
specialist and the leading web-page enhancement company should
ultimately produce a winner.  ITVU's recent technical support near
$100 and the bullish upside potential provide the basis for a
favorable, low risk spread.  Traders who want a higher return may
consider selling the $105 option against the long ($90) position.


PLAY (conservative - bullish credit spread):

BUY  PUT MAR-90  QYU-OR OI=8  A=$1.25
SELL PUT MAR-100 QYU-OT OI=17 B=$2.38
INITIAL NET CREDIT TARGET=$1.25 ROI(max)=14%

Chart =
/charts/charts.asp?symbol=ITVU

****

ISSX - Iss Group  $97.38   *** Hot Sector! ***

ISSX, through Internet Security Systems, provides monitoring,
detection and response software that protects the security and
integrity of enterprise information systems.  Their SAFEsuite
family of products is designed to enforce information risk
management automatically in distributed computing environments.
ISS's products use an innovative Adaptive Network Security
approach that entails continuous security risk monitoring,
detection and response to develop and enforce an active network
security policy.  Products within the SAFEsuite family include
Internet Scanner, System Scanner, Database Scanner, RealSecure
and SafeSuite Decisions. In addition, ISS offers professional
services that deliver comprehensive network and web security
solutions to customers.  ISS has licensed its network security
solutions to over 3,000 organizations worldwide, including firms
in the Global 2000, government agencies and major universities.

The recent series of attacks against several popular web-sites
has brought the group of Internet Security Companies to the
the attention of most investors.  Now the sector speculation is
running rampant and leading issues in the industry are performing
very well.  Our outlook for this stock is bullish based on the
favorable fundamental and technical outlook.  The majority of
analysts tracking the company agree with our opinion.  This week,
Robinson Humphrey reiterated their BUY rating on ISSX with a
target price of $120, based on favorable quarterly earnings and
solid growth in revenues.  Goldman Sachs recently reiterated a
MARKET OUTPERFORM rating based on ISSX's quarterly revenues and
EPS.  Warburg Dillon Read also favors the company's improving
growth opportunities from the Netrex acquisition.


PLAY (conservative - bullish/credit spread):

BUY  PUT MAR-70 ISU-ON OI=20 A=$1.43
SELL PUT MAR-75 ISU-OO OI=29 B=$2.12
INITIAL NET CREDIT TARGET=$0.68-$0.75 ROI(max)=17%

Chart =
/charts/charts.asp?symbol=ISSX


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