The Option Investor Newsletter Thursday 2-24-2000 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) ****************************************************************** 2-24-2000 High Low Volume Advance Decline DOW 10092.60 - 133.10 10248.10 9942.80 1,176,183k 1,037 1,995 Nasdaq 4617.65 + 67.32 4620.03 4495.20 1,944,048k 1,849 2,307 S&P-100 731.16 - 5.14 737.79 718.67 Totals 2,886 4,302 S&P-500 1353.43 - 7.26 1364.80 1329.88 40.2% 59.8% $RUT 554.04 + 4.13 556.24 547.33 $TRAN 2380.30 - 39.98 2422.25 2367.89 VIX 27.32 + 1.06 29.30 26.33 Put/Call Ratio .37 ****************************************************************** Exam Time For the Dow, Will It Pass The 10K Test? We've been expecting the Dow to test 10,000 for the first time since October and we got it today. Despite a strong opening for the markets after yesterday's record close on the Nasdaq, the Dow Industrials appeared to have its heart set on touching the key 10,000 level. Didn't take long either as the first test occurred by 11:00am EST. After that initial bounce, it retested 10K two other times before giving way to the selling around 2:00pm. So did we get a big collapse under 10K? Nope, and it might not be likely despite the analysts that you hear on CNBC hitting the panic button. A closer look at the numbers (and the most recent history of a Dow drop over 15%) may have you drawing a different, and better, conclusion than any panic- stricken analyst on the Street. The last time we saw a major sell-off over 15% was in the summer of 98. We got a 10-12% dip last summer, but the last extended dip over 15% and longer than 5 weeks was two summers ago. Take a look at the chart below. Notice that 1998 dip did extend over 15%, but never more than 20%, and lasted 7 to 8 weeks. In the Dow's recent decline, we hit the 15% correction mark today around 9950 and are in the 6th week of the decline. The bottom from the 1998 dip was confirmed with four days where the Dow had major intraday dips only to bounce right back and create the tails on the candlestick charts. Any similarity to today's bounce back? The Dow broke 10,000 this afternoon and the bottom didn't fall out! It's because we may have already witnessed the bulk of the downside to this market. Again, it may take another week or so to build a base, but LEAPS, calendar spreads or selling puts should be the thinking here. Not "sell it all, the world is ending." Remember the words from yesterday's Wrap, "This is not real fear...missing an entry point is the only real fear on Wall Street right now." A close look at the weekly bars for these two sell-offs look amazingly similar. With that said, let's look at what is good on the Street and it is easy to find. First, the OEX held solid at support at 720 today. This made for some very playable bounces. The Nasdaq also showed incredible support and strength. Can life really be that bad if we are closing at a new all-time high? Just think what we might see when we get through this phase and head into earnings run-ups. I shudder to think of the possibilities. The closest possible support for the Nasdaq was at 4500 and we got two textbook bounces, one in the morning and one in the afternoon. I saw a lot of bargains on my screen in the Nasdaq today. It was a good day for entry points. The VIX is saying the same thing as it once again neared 30, topping at 29.23. Volume was good on both exchanges with the NYSE ringing up 1.17 billion while the Nasdaq turned in nearly 2 billion shares. The Nasdaq closed at 4617.59, up 67.24. The S&P ended at 1353.43, -7.26, the Dow at 10092.63, -133.10 and the Russell 2000 finished at 554.03, +4.12 and less than 5 points off a record close. The only major economic report of the day was a non-event to the markets. U.S. factory orders for manufactured goods fell in January by 1.3%. That was in line with estimates which ranged from 0.0% to -2.0%. This was the first decline since October for Durable goods, but it followed a sizzling 6.3% for the month of December. The report helped the 30-year to rally slightly. The yield was down to 6.06 before climbing to close at 6.12% Tomorrow will produce some more important numbers with January existing home sales and current quarter GDP numbers. Home sales are expected to rise by 5 million homes and GDP is expected to rise by 3.0% to 3.5%. In the news, QCOM dipped today on word that China will postpone indefinitely the deployment of a mobile communications network that will feature CDMA technology from Qualcomm. This story was reported by the WSJ and could just be a delay tactic by China to strengthen their position to enter the World Trade Organization (WTO). QCOM closed at $139.69, down $7.19. INTC helped support the Dow and moved the SOX to another all- time high on word that Robertson Stephens raised their price target to $150 from $125. They cited strong momentum that has carried over from January into February. INTC sees typically slow growth in Q1, but Robertson Stephen's Managing Director and Senior Computer Systems Analyst Daniel Niles said "We believe the first quarter is off to the best start seen in the last several years." INTC ended at $114.25, up $5.19, and the SOX index closed at 1063.70, up 56.21. The SOX was the hot sector of the day, up over 5.5%. Other winners include Internet, Computer Hardware and Brokers. The losers were easier to find with Banks, Retail, Cyclicals, Gold, Healthcare and Utilities all heading lower. You would think from watching the market that stocks losing ground were the name of the game today, but that is not the case. There were lots of strong stocks on the Nasdaq including INSP +27.81, KANA +28.63, HGSI +26.38, RBAK +25.25, JDSU +22.50, BVSN +21.44, NTAP +21.19, and CRA +68.00. Tomorrow should be more of the same. Depending on the economic numbers released before the open, I wouldn't be surprised to see the Nasdaq charge out of the gates again. Right now only 2% of Nasdaq stocks are at or near 52-week lows versus 30% of all S&P 500 stocks. This is a two-faced market right now and as long as you concentrate your positions on the Nasdaq or tech-related stocks, you should see movements and results similar to what you are used too. The Dow will come back, but until it shows a good base with signs of life, we will leave it alone. Let the support lines in the charts above guide you for the Nasdaq and OEX. A close below those lines will do a lot to reverse the sentiment in those markets. On the Dow, we are looking at 9950 to 10,000 continuing to hold. Worst case scenario may put the blue chips down near 9800. If we don't hold these levels, then traders may start getting knots in their stomachs. Just remember, there haven't been any major fundamental changes that would signal a long-term bear market. A good capitulation day is just what the doctor may prescribe to right this index and get us started on the journey back up. When in doubt, stay on the sidelines. This market is full of opportunities every day, pick the one that is right for you. Ryan Nelson Asst. Editor P.S. Jim is at a management conference for the rest of the week. He will be back at the helm on Tuesday. Look For Kimo's recap of this week's trading, plus a look ahead to next week in the Sunday Market Wrap. *************************Advertisement**************************** Options Traders ! Mr. Stock's new online trading site has been designed for you. Trade spreads, straddles, covered writes, and stocks online. Get real-time market data throughout our site. Advanced options tools include volatility graphs, implied volatilities, and more. http://mojofarm.mediaplex.com/adserver/click_thru_request/565-58-1875-3 ****************************************************************** ********** STOCK NEWS ********** Having an E.piphany By S.P. Brown It's hard to believe that the Internet is old enough to start undergoing some industry rotation, but it is. Not that long ago, investors were bidding the likes of front-end companies Yahoo! (YHOO), American Online (AOL), eToys (ETYS) and Amazon.com (AMZN) to the moon. Nowadays, the aforementioned quartet is lucky to warrant even a dismissive glance. It took awhile, but investors have come to realize that the competition is only a mouse-click away for those companies on the front-end of the Internet. What's more, the front-end is the easiest entry point into the e-commerce world, which means few business-to-consumer (B2C) companies lack for competition. Truth is, operating in this highly competitive, zero-switching cost environment can lay even the best business models to waste. So where has the money gone that was once earmarked for the B2C folks? It hasn't left the Internet; it's just moved a few steps off the firing-line to those companies that enable the front-end guys to go about their business. From a business perspective, moving to the back of the room makes sense. Numerous studies by well-respected market research firms such as Forrester Research (FORR) and International Data Corp. (IDC) forecast that business-to- business (B2B) e-commerce will generate anywhere from $1 to $3 trillion in revenue by 2003, roughly 10 times the total revenue expected to be generated from B2C e-commerce. One Internet B2B market that has been white hot of late are for those products and services that enable B2C business to monitor and track their customers buying habits. The company emerging as the leader in this industry is E.piphany (EPNY). The company provides analytical software that gives companies an insight into their customers' habits, enabling them to personalize transactions, products, and services in e-commerce and traditional sales channels. EPNY's software includes tools for reporting and analysis, distributed database marketing and e-commerce. EPNY provides its customer relationship management services via an Internet-based architecture. Specifically, end-users can track, analyze and profile customers based on data from their Web-browsing activity, phone-calls, e-mails and virtually any point of contact with a corporation. This ability to address all points of contact enables EPNY to address not only pure "dot.com" companies but also traditional brick-and-mortar companies that operate a Web site as an additional marketing conduit. Though public only since last September (Yes, EPNY was one last year's hot Internet IPOs), EPNY has managed to secure a blue- chip clientele. Initial clients included software developer Autodesk (ADSK), brokerage firm Charles Schwab (SCH) and computer maker Hewlett-Packard (HWP). Furthermore, over the past few months, EPNY has expanded it's client base considerably. Over the latest quarter ending December 31, the company announced it had snagged 18 new customers, including American Airlines (AMR), Xerox (XRX), Citigroup (C), GTE (GTE), Mitsubishi Motors and American Express (AXP). And just last week, EPNY announced it had added Expedia (EXPE), Promotions.com (PRMO) and E-Stamps (ESTM) to its corporate stable. This swelling client base has done wonders for EPNY's top-line, and, let's face it, the top-line is probably the most important variable in valuing any new Internet company. Here's how the numbers shape out: For the fourth-quarter ended December 31, EPNY reported revenues of $8.7 million, which represented a 521 percent increase over revenues of $1.4 million reported in the fourth quarter of 1998. On a sequential basis, revenue increased 63 percent from the third quarter of 1999. What's more, the average selling price for the EPNY's software and services rose from $480,000 in the third-quarter to $510,000 in the fourth. Now a look at the bottom-line. There's a reason nascent Internet companies aren't valued on earnings - there usually aren't any, and EPNY is no exception. Excluding the amortization of stock-based compensation, net loss for the fourth-quarter was $5.6 million, or $0.24 per share, compared to a net loss of $3.5 million, or $1.00 of stock-based compensation, net loss for the 1999 fourth quarter was $6.3 million, or $0.27 per share. However, the recent quarterly loss was better than the Street had expected. The consensus estimate was for a quarterly loss of $0.31 a share. For the near future, many analysts expect EPNY to continue with its high-octane growth. The recent purchase of fellow consumer tracker RightPoint will help see to that. The RightPoint purchase basically makes EPNY the only provider of tracking software that will allow companies to manage customer relations across all customer touch points. Now, companies that use EPNY's software and services will be able to continuously identify and differentiate customers, then customize and personalize products, services and interactions based on their customer's specific wants and needs. Based on recent and expected performance, and EPNY's unique niche in the B2B e-commerce sector, Robertson Stephens recently reiterated its buy rating on EPNY after the company beat the investment firm's revenue growth and EPS loss expectations. Based on revised estimates, Robertson Stephens is forecasting first-quarter 2000 revenues of $10.6 million, up from previous estimates of $7.1 million and for year 2000 revenues to come in at $55.2 million, up from an original estimate of $38.6 million. What's more, Robbie Stephens is revising its EPS estimates from a loss of $1.30 for the year to a loss of $0.76. One other investment bank sees nothing but blue skies ahead, too. Merrill Lynch (MER) recently raised its target price to $210 per share, a 35 percent premium from current levels, based on the positive quarterly surprise. It seems the analysts at MER had been calling for four-quarter revenues of $6.5 million and a loss of $0.31 per share. The investment bank is now raising its calendar year 2000 revenue estimates to $55.3 million, up from $38.5 million, and it's raising its 2001 revenue estimates from $62 million to 100 million. As long as EPNY retains its lead in the consumer information market and keeps adding clients at its recent torrid pace, this is one Internet B2B company that just may live up to its hype and already sky-high market valuation. ************** Market Posture ************** As of Market Close - Thursday, February 24, 2000 Key Benchmarks Broad Market Bearish/Bullish Last Posture/Since Alert DOW Industrials 10,700 11,250 10,093 BEARISH 2.17 SPX S&P 500 1,400 1,450 1,353 BEARISH 2.18 OEX S&P 100 740 780 731 BEARISH 2.18 RUT Russell 2000 500 520 554 BULLISH 2.24 * NDX NASD 100 3,800 4,000 4,253 BULLISH 2.24 * MSH High Tech 1,850 2,000 2,047 BULLISH 2.24 * XCI Hardware 1,300 1,460 1,527 BULLISH 2.24 * CWX Software 1,200 1,470 1,541 BULLISH 2.24 * SOX Semiconductor 800 900 1,064 BULLISH 2.24 * NWX Networking 940 1,000 1,060 BULLISH 2.24 * INX Internet 700 800 776 Neutral 1.06 BIX Banking 500 550 474 BEARISH 11.30 XBD Brokerage 400 450 426 Neutral 11.30 IUX Insurance 500 550 466 BEARISH 11.30 RLX Retail 950 1,000 772 BEARISH 1.28 DRG Drug 340 380 323 Neutral 1.28 HCX Healthcare 700 750 677 Neutral 1.28 XAL Airline 120 140 117 BEARISH 5.21 OIX Oil & Gas 280 315 241 BEARISH 1.27 Posture Alert As the Dow momentarily broke below the infamous 10,000 mark, investors flocked to the safe-haven NASDAQ to get relief from those ever sliding blue-chips. Who would have ever thought that technology stocks would be the safe place to park your assets (at least temporarily)! With this most recent action, we have upgraded numerous technology sectors to BULLISH from Neutral. Leaders sectors Thursday include Semiconductors (+5.58%), Software (+3.44%), and Networking (+2.78%). **************** Market Sentiment **************** Thursday, February 24, 2000 Going Below 10K! The big board flirted with the magic number today, as it momentarily broke below this infamous number, while the NASDAQ continues on its steady pace by closing up another +67 points. The technology index continues to defy all expectations, and the bears are just left standing still and scratching their heads. One indicator that has been extremely consistent during the last couple of years has been the put/call ratio on the NASDAQ 100. This contrarian indictor of market sentiment has been extremely useful. Currently, the put/call ratio on the NDX (NASDAQ 100) stands just below 2.00. This is a very bearish number. However, when looking at the QQQ which trades on the American Stock Exchange, put buyers have been lining up all month. The put/call ratio for the QQQ (between 190-210) is above 5.0 (extremely bearish). This is extreme negative sentiment, and from a contrarian stance, has only helped fuel strength in the NASDAQ 100. This negative sentiment continued today, as weakness in the Dow brought out the NASDAQ bears. Put buying continued to be aggressive at these highs, and as long as these bears continue to speculate rampantly in a market top (on the NASDAQ), we will most likely continue seeing higher highs! Now, does the Dow close below 10k shortly? Technically, it shouldn't matter at all, because the Dow is an "old school" method for measuring market performance just like P/E ratios, and plus, the NASDAQ is where the action is at! However, from a sentiment standpoint, maintaining the magic 10k mark is important. The way our media pushes insignificant milestones is amazing, and the Dow breaking below 10k should just be that, however, when it did today, every media outlet couldn't resist hyping the event. Now, we don't think we will see a close below this mark, however, you should maintain a bit of caution should this event happen. Should this mark be violated on a close, the media can easily cause the millions of online investors to set their stop losses just a little bit tighter, which in turn, could cause the psychology and sentiment of this market environment to turn to the bearish side. But then again, maybe the NASDAQ just rallies for a couple hundred more points on this event! Pinnacle Capital Advisors < 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 (JAN-14) on the NYSE is still very high, totaling 3,973,256,735 shares. The short interest on the Nasdaq rose another 2.11% in the latest figures, its fourth consecutive record, to 2,413,628,695 shares. Interest Rates (6.126): The current yield is now safely off of 52-week highs and is temporarily out of the danger zone. Mixed Signs: Volatility Index (27.32): The VIX continues to prove that the low 30's are an excellent buying opportunity, and the low 20's continue to be a great selling opportunity. 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 (2/18) (2/22) (2/24) Overhead Resistance (750-830) 2.16 3.15 3.32 OEX Close 728.04 730.16 731.16 Underlying Support (700-730) 5.63 7.10 2.80 What the Pinnacle Index is telling us: Based on the most recent sentiment, we would not be surprised to see the OEX rally slightly. However, we believe that the index is most likely trading range bound. Peak Open Interest (OEX) Friday Tues Thurs Strike/Contracts (2/18) (2/22) (2/24) Puts 700 / 5,522 700 / 6,241 700 / 6,964 Calls 800 / 4,863 800 / 5,300 750 / 6,289 Put/Call Ratio 1.14 1.20 1.11 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 28, 2000 Bottom 29.09 February 24, 2000 27 Please view this in COURIER 10 font for alignment ************************************************* CHANGES THIS WEEK Daily Results Index Last Tue Wed Thu Week Dow 10092.63 85.32 -79.11 -133.10 -126.89 Nasdaq 4617.65 -29.62 168.21 67.32 205.91 $OEX 731.16 3.06 4.72 -5.14 2.64 $SPX 1353.43 6.08 8.52 -7.26 7.34 $RUT 554.04 -4.73 8.96 4.13 8.36 $TRAN 2380.30 28.34 -38.86 -39.98 -50.50 $VIX 27.32 -0.90 -1.29 1.06 -1.13 Calls Tue Wed Thu Week QLGC 146.00 4.50 19.81 10.69 35.00 Defies gravity LHSP 115.97 9.38 22.50 -5.28 26.59 Not left behind SEBL 139.88 7.31 7.75 10.25 25.31 Breakout City VERT 221.00 -2.75 16.88 8.13 22.25 New, splitting INKT 144.31 9.44 4.63 7.69 21.75 More money in INSP 221.63 -4.00 -1.75 27.13 21.38 Gets fired up! SEPR 184.50 -7.19 15.31 9.25 17.38 Dropped EMLX 155.00 6.00 1.31 7.69 15.00 EMLX is popular COMS 83.00 1.19 6.75 5.38 13.31 Continues ascent CMGI 119.38 -3.63 15.44 -0.81 11.00 New, entry! NEON 84.38 2.38 12.75 -4.38 10.75 Burning brightly NSM 73.00 0.69 3.44 5.38 9.50 New, earnings ENMD 75.13 7.00 -2.13 2.75 7.63 More good news PHCM 144.25 -0.81 10.19 -2.75 6.63 Nice breakout! ERICY 93.00 2.56 0.63 1.13 4.31 Plenty of news IFCI 32.00 -1.13 -1.88 3.00 0.00 A fine finish? COVD 84.63 0.13 3.00 -3.50 -0.38 Dropped GLW 192.25 -3.31 -1.75 4.00 -1.06 On schedule PCMS 22.00 -0.91 0.09 -0.25 -1.06 A rule is a rule ESPI 12.31 -0.38 -0.69 -0.56 -1.63 Earnings date? Q 47.38 -0.94 -1.38 -0.56 -2.06 Patience pays ANAD 142.75 -9.88 1.75 4.63 -3.50 Offers entry ISLD 108.31 -7.63 -0.25 0.81 -7.06 Dropped Puts MCOM 84.00 -3.81 1.31 -3.25 -5.75 Hang up shares JNJ 72.16 1.19 -2.50 -3.97 -5.28 New all time low KMG 42.00 -1.00 -0.69 -1.75 -3.44 Slip Slidin' FD 32.44 1.19 -0.81 -1.75 -1.38 New, no interest RHAT 70.50 0.13 0.38 -1.50 -1.00 On probation PGR 55.50 1.00 0.06 -1.50 -0.44 Listen up! ************ WOMANS WORLD ************ Profiting From Consolidation By: Renee White Have you ever tried to consciously play consolidation? I have. I realize that when I see that pattern intra-day on a stock that is on my watch list, I get excited, hyper-focus and my mouth starts watering. I start evaluating the market and studying charts. Usually, for a stock to be on my radar screen, it is due to one of these reasons: 1. it has either bounced off of a hard sell-off caused by no fundamental reason that would affect the integrity of the company or maybe right before the bounce if I'm really feeling aggressive 2. it appears to be ready for a break-out from an ascending triangle formation 3. it has pulled back again, after attempting to take out its overhead resistance several times 4. if I am expecting a stock split announcement soon 5. it is running into the split 6. if I am beginning to see a lot of articles and news, by diverse sources, discussing the company 7. Or, it is running into the earnings announcement date It was early November of last year when I consciously caught myself reacting to stocks that were consolidating. I've noticed that I tend to pay more attention to these patterns, right before the answer is soon to be known, from a Fed-itis attack. This is the same period many of us have been playing aggressively, anticipating the results of a pertinent economic report, or interest rate announcement. With fear in the air, some traders have placed preliminary bets, anticipating a good report or acceptance of the interest rate increase we are likely to see. The thinking has been that once the news is known, buyers will emerge, so why wait if the bargain is now? These plays are very risky for sure, because if your instincts are wrong, your call premiums will turn to dust. It requires a good understanding of the overall market and sentiment, along with very close monitoring for signs of being wrong. Fear and uncertainty can be damaging times for "the markets" and any long positions. Fear causes profit-taking and sell-offs. However, after the pain frequently there are periods of consolidation where markets and the underlying, trade within a range during the extension of the uncertainty period. It is almost like all the buyers are lined up, not wanting to sell any more, but not quit sure it's time for an entry. Instead, they wait, they watch, they focus, carefully watching the next guy, making sure they are not left in the dust on the big move. Haven't you noticed those floor traders all seem about ready to have a heart attack belting out trades one minute and in a flash, they are all hushed in silence at the same time? These guys can act fast! Nevertheless, they trade for other people's accounts and I trade for my own. I choose my own risks without the fear of being fired or loosing my bonus. I can be very conservative one day and incredibly aggressive the next. I love that independence and freedom. No one owns my trades but me. I have had contemporaries ask me time and time again to trade for them, but I have never seen a good reason why I should do that again. People always love you when you make them money, but most don't like paying when you blow a trade and lose money. Research time, market watching and practicing paper-trades must be paid for somehow because these are the precursors to successful trading. In any event, if I blow a trade, it may irritate me, but other than kick a tire, I accept it as the cost of doing business. Losing is part of the business of option trading. The important thing is that you win more than you lose and you cut your losses quickly. There is plenty of research that is required to stack the odds in your favor. When you become confident enough to pick your own trades, you are on your way to becoming a successful long-term option trader, that is when the intricacies of fine tuning your plays, takes on a new dimension. For instance, I had noticed the channeling of QQQ lately. From February 3 rd when it broke through its last resistance, until the break out Wednesday, QQQ has traded between 192 ½ and roughly 206. It's interesting to note also, that the 192 ½ area, was the high on the first trading day of the year, January 3 rd, and we all remember what happened after that. Last Tuesday I noticed that when Nasdaq sold off sharply, QQQ slightly penetrated its support and then rebounded. Tuesday morning had carry-over weakness from Friday's sell-off. With the morning Nasdaq sell-off carry-over from Friday, the VIX penetrating 30, knowing there was fear in the markets and Greenspan speaking again on Wednesday, I thought about this consolidation pattern. Two weeks ago, I had played the puts expecting a sell-off, but my entry proved to be a bit early and the VIX did not hit 20. Yesterday, I saw the Nasdaq sell-off with the VIX at 30, a buy signal for me and a potential reversal pattern which might explode to the upside if a surge of buying occurred after his testimony as I expected. I entered ITM QQQ calls March 186 for a little added cushion, on the weakness of fear, filling at 15 ½ and 16. Fighting with my computer cost me a point, but I can't complain since the play worked beautifully with a QQQ breakout through the 206 resistance, closing Wednesday at an all time high of 208 ½ after trading as high as 210 in the afternoon once Mr. Greenspan's question and answer period was over. This particular consolidation play gave me roughly a 62% ROI in one day and 87% by today's close. Yep! Time for some more Cristal Champagne or a Jennifer Lopez dress! In addition, Wednesday during Mr. Greenspan's testimony, I noticed a lot of intra-day channeling in stocks on my watch list. Some seemed range bound for a couple of hours. Traders were conservatively waiting, watching and focusing. Since my market decision and game plan had already been determined the day before, I went shopping on these patterns and loaded up from my watch list. Like QQQ, these too proved to be nice plays with 5 hour trades showing ROI up to 40.47% yesterday, 92 1/2% today. Keep in mind these plays are very risky. Instead of entering with heavy volume confirmation, I am entering during a lull. If my market assumption is wrong, it could cost me a lot since I tend to load up at these times. That is why I like to enter these trades, toward the end of the fear period, right before reality is known, ITM or ATM depending on the play. I always try to have as much back-up support in my favor as possible such as a high VIX, a broad market sell-off over several days to a strong support level and a clear calendar of major economic reports for a few days. I look for good leap plays at this time also. Try this on paper and see if it works for you. You may get an opportunity again, right before the next FOMC meeting in later March. Well, I'm going to take my winnings, along with my 4 new boxes of Thin Mint Girl Scout Cookies and go sit in a medical conference for a week in beautiful North Carolina. Enjoy the markets and I'll see you back March 7th. ************** TRADERS CORNER ************** There is no Traders Corner article tonight. 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: ***** SEPR $184.50 +9.25 (+17.38) It is with a heavy heart and a fat wallet that we say goodbye to SEPR. This has been an ideal split play, taking off almost immediately after we picked it last Tuesday at $149. The weakness on Tuesday, gave us one last opportunity to jump onboard before adding more than $24 in just the last 2 days. Driven by strength in the Biotech sector, new highs on the NASDAQ, and a 2:1 split, SEPR allowed us to profit from the $30+ run in a little over a week. The split takes place tomorrow and in order to avoid the typical post-split depression, we bid SEPR a fond farewell. COVD $84.63 -3.50 (-0.38) Ok that's it. It's time to let this one go. COVD finally broke out of its recent trading range late yesterday morning, topping the $90 mark, making a high at $91.25. Apparently investors couldn't believe their eyes and stepped in placing sell orders like there was no tomorrow. The selling continued today, with COVD not only giving back all of the gains made yesterday, but another 4.0%. Depending on your entry point and whether or not you were fast on the draw, COVD did give us a chance for a good day trade yesterday. Although we must play the cards we're dealt, a day trade in COVD is not what we were looking for. Until the communications company can regain its footing, and gain some momentum, we will look elsewhere for our opportunities. ISLD $108.31 +0.81 (+7.06) Unfortunately ISLD has been trapped in a channel between $105 and $115 (at the uppermost levels) with only moderate volume to boot. However earlier today, Merrill Lynch started new coverage on ISLD with a Near-Term Accumulate. While Long-Term, analyst Thomas Watts recommended a Buy and issued a $125 price target. Still no breakout! Instead there was a fierce intraday battle between the buyers and sellers. Volume levels were astronomical at 4.92 mln shares exchanging hands representing a quadruple increase over the ADV of 1.19 mln. But ultimately ISLD settled just below the 10-dma ($109.83) and just couldn't regain its spark. There was even news that Digital Island was expected to reach a deal with Apple Computer regarding the deployment of Apple's QuickTime streaming media format on its servers. Nonetheless, the bottom-line is ISLD's momentum has faded and we must exit the play. PUTS: ***** No dropped puts this evening ******************** PLAY UPDATES - CALLS ******************** ENMD $75.13 +2.75 (+7.63) After the strong move in the past week, ENMD was due to take a break. To look at the chart, you wouldn't know that the NASDAQ has been breaking out to new highs. Volume has dropped off significantly, trading near the daily average. This looks like consolidation as investors wait for the moving averages to catch up and help propel shares higher. The good news continues to flow related to the company's anti-cancer drugs and treatments. On Wednesday, ENMD announced the issuance of a broad patent, covering all antiangiogenic fragments and methods of production for its potent angiogenesis inhibitor, angiostatin protein. ENMD now has patent protection covering all forms of the angiostatin molecule, whether used as a protein, peptide fragment, or gene for delivery to a patient. Support is solidifying near the $71 level, followed closely by the 5-dma at $70.38. The range has been fairly tight the past 2 days, as shares trade between $70 and $75 on moderate volume. A bounce near support is buyable if confirmed by increasing volume, but more conservative investors may want to wait for a convincing penetration of resistance at $75. LHSP $115.97 -5.28 (+26.59) Not wanting to be left behind, LHSP jumped aboard the NASDAQ freight train yesterday and posted a new 52-week high ($126.50) on more than triple the ADV. Profit- taking ensued this morning, before volume subsided and support began to solidify near $114.50. Action was light for the remainder of the day, as investors appeared to be trying to catch their breath. The stock is being fueled by a continuous stream of product announcements and industry alliances, not to mention anticipation of the upcoming 2-for 1 stock split. Continuing to expand its dominance in speech and linguistics technology, LHSP announced Wednesday that it is demonstrating a new hands free system for the automobile that employs voice activated dialing. Developed in conjunction with Cellport Systems, the new system is safer, more convenient and more intuitive for drivers. Then today SwiftTouch Corporation announced that it has licensed technologies from LHSP to enable voice access to secure, Web-based personal information. By integrating LHSP's multi-language technologies with the Web and advanced synchronization, SwiftTouch will be the first to offer mobile professionals a solution to access their contacts, schedules, and mission critical data whenever they need it. If this move is to continue upwards, there will need to be a pick in the volume level. If we see this, consider entries on a bounce near support and enjoy the ride. NEON $84.38 -4.38 (+10.75) Still burning brightly, NEON launched through the $90 level yesterday during the record NASDAQ move. After yesterday's upside move of more than $12 on more than double the ADV, it was natural to see some profit- taking today. Giving back $4.38 of yesterday's gain on less than average volume puts NEON stock in an attractive position. Still very strong technically, NEON is well above its 5-dma, which is clear down at $78.50. Intraday support is forming at $83, followed by the 5-dma. Continuing to be driven by frequent product announcements and alliances, NEON should continue to power higher. The company announced today that TheStreet.com has selected NEON technology to deliver highly personalized stock and news alerts to subscribers of its upcoming commentary site, RealMoney.com. NEON's e-business infrastructure platform will be used to provide extensive, highly customized information to subscribers based on nothing more than the information itself. Going forward, a bounce near $83 is buyable if the buying volume picks up again. Use caution though, as investors may need a little more time to digest yesterday's strong move. QLGC $146.00 +10.69 (+35.00) Investors in QLGC are challenging the law of gravity as they continue to throw cash at the top-tier technology stocks. Each day this week has yielded a new 52-week high. Today saw QLGC kissing the $150 level mid-day, before finally succumbing to a bit of profit- taking. This is turning into a serious momentum play with very strong volume. Yesterday volume hit 1.7 million and today ended just shy of 2 million shares, swamping the daily average of 843 K. Positive news continues to flow and is being reflected in the strong investor demand for shares of QLGC. On Wednesday, QLGC announced that its QLA2200 Series Fibre Channel adapters are the first and only Fibre Channel adapters to have achieved compliance with Microsoft's PC99 test, ensuring compatibility with Microsoft's new Windows 2000 operating system in both workstation and server environments. Support is building near $140, followed by $133. Intraday dips are buyable, as long as the bounce is supported by a return of buying volume. Given the strength this week though, you may have to be content with buying a breakout above the $150 level, where QLGC found resistance today. ERICY $93.00 +1.13 (+4.31) ERICY traded up to another new 52- week high of $93.50 today and managed a close just fifty cents shy of this level. ERICY has tested and held support right around $91 several times throughout the last week. In addition, ERICY's 5-dma ($90.50) and 10-dma ($89.50) are working to play back up when needed. There is not a lack of news out there for ERICY, some of which we will be going into more detail about in Sunday's write up (barring any unforeseen circumstances that may end our play). Yesterday, Robertson Stephens initiated coverage on ERICY with a Buy rating. In the news today, ERICY is unveiling several new products at the CeBit trade show, which began today and will continue through March 1. One of the featured items is called a Screen Phone, which is a wireless communications device for the home that allows users to surf the net, use the phone and catch up on e-mails, all from the comfort of their sofa. ERICY's close near the high looks to have positioned us well heading in to finish the week. For new entries, it is probably best to try and target shoot your way in on the intraday pullbacks. IFCI $32.00 +3.00 (+0.00) IFCI looks to be working toward a fine finish to this earnings run. IFCI gapped up $1.50 this morning, which was an impressive move because this moved IFCI right through the $30 level. Now that we are back on the right side of $30, look for this level to provide support to finish this run. At this point, if IFCI trades back through, it may be an indication to close out your positions. We were pleased to see IFCI close on $32, a level it flirted around with throughout the day. Going forward, IFCI may encounter resistance at $35 (all time high is $35.25). Not only is IFCI benefiting from an earnings run, there were a few pieces of news thrown in to fuel the fire. This morning, it was announced that International FiberCom's wireless solutions division, AeroComm, was awarded a contract, which is valued at over $5 million from Bell Atlantic Mobile. IFCI was also given a boost today by FS Van Kasper, who initiated coverage of IFCI with a Buy rating. As you may know, we will be dropping IFCI from our play list on Sunday because IFCI is set to announce earnings on Tuesday. INSP $221.63 +27.13 (+21.38) This Internet rocket finally got fired up again! And I bet the aggressive players are certainly wagging their tails in glee! Today INSP made stellar gains of $32.25, or 16.6% at its peak. Trading volume also backed the breakout at more than double the ADV, which is a very bullish indication that there is more upside to come. Currently there is no opposition except to move through today's new 52-week high of $226.75. This feat shouldn't be too hard to achieve as we're anticipating a powerful run ahead of the 2:1 stock split on March 15th. Firm support is still down near the converging 10- dma ($199.61) and the 5-dma ($202.63) technicals. However $210 and then later on $215, held up very well in today's session. In the news yesterday, INSP's Saraide.com, a US-based mobile Internet services group, inked a deal with Philips Electronics to provide them with new services for voice-operated wireless phones. INKT $144.31 +7.69 (+21.75) Well more money poured into INKT today and that's a good thing! Our infrastructure stock powered upward into new territory for the fourth consecutive session and set the latest in a string of all-time highs at $144.50, the intraday pinnacle. Bullishly it closed just mere cents from this mark and volume was strong on the incline. Typically you'd have expected near-term support to form at the old resistance of $130. However this hasn't held true for INKT. Looking at the past two days of trading, short-term support is at $138, then lower at $135 and $134 both far exceeding the lagging 10-dma ($122.70). But don't be fooled, the vicinity of the 5-dma ($131.73) still provides a more realistic support level in the event of a strong pullback. In other words, there's quite a bit of room to tumble so be prepared for the volatility in these markets. There was some news today. Inktomi announced an agreement with Apple Computer to extend the Inktomi Traffic Server content delivery platform to support Apple's QuickTime technology. The integration will provide enhanced streaming media over the Internet. *********************************************** PLAY UPDATES - CALLS - CONTINUED IN SECTION TWO *********************************************** **************************Advertisement************************* Have you got an idea for a financial website? Need help getting started? Technical support? Funding? We will help you turn your idea into a reality. Don't sit on your idea until somebody beats you to the punch. Do you have a website now that is not succeeding like you think it can? Let us help you achieve faster results with our proven techniques. 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The Option Investor Newsletter Thursday 2-24-2000 Copyright 2000, All rights reserved. Redistribution in any form strictly prohibited. ******************************** PLAY UPDATES - CALLS - CONTINUED ******************************** EMLX $155.00 +7.69 (+15.00) EMLX continued a recent pattern the past two days of jumping up at the open, declining until midday and then gaining strength into the close. Although the volume has been a bit light compared to what we've seen recently, we are very pleased with the moves so far this week. EMLX has added $15.00 for the week, and the chat rooms are still buzzing concerning a possible split announcement. EMLX did split back in late December, and its in the area where the last split was announced. We have seen or heard nothing from company regarding a potential split, and believe the current move in the stock is based simply on the basic strength of the company and its fibre channel technology. Remember EMLX is popular with the institutions and with the selling seen in the broader markets the money must go somewhere. EMLX did announce today that the Emulex LightPulse(TM) LP8000 host bus adapter has been approved by StorageTek for use with its 9840 fibre channel tape drive system. Although the trend for EMLX points higher, support is found at $155, $150 and $147. A bounce off any of those levels would provide a good point to either add to existing or enter new positions. PCMS $22.00 -0.25 (-1.06) A rule is a rule. For those of you that may have entered in the first fifteen minutes of trading today, you can see why we suggest staying away from the first hour of trading. PCMS spiked up to its high of the day at $23.38, and promptly fell out of bed as the major indices began to sell off. The $20 area of support we mentioned Tuesday provided a great point to enter a new play. It really looks as though PCMS is experiencing some profit taking and a bit of consolidation, although the $20 level should hold. The strength seen late in the day, in PCMS does boost our confidence as well. The volume for PCMS picked up somewhat today, with 1.5 million shares changing hands. A spike in volume at the low of $20.50 would indicate at least a temporary bottom. For PCMS to get back on track we will now look for new buyers to enter. As we mentioned Tuesday, PCMS has intraday levels of support and resistance about every $0.50, so set your stops and targets according to your own risk tolerance. COMS $83.00 +5.38 (+13.31) Investors jumped into COMS with both feet the past two days. During past two sessions, COMS has seen over 17% added to the price of its stock. Actually COMS has made a new high in each of the past two sessions. Today the only thing that stopped COMS from continuing its ascent was the closing bell. The interest seen in IPO's this month has been very encouraging. Again we point out that our play on COMS, is more a play on the upcoming IPO of its subsidiary, Palm. Speaking of interest in COMS, this could be just the beginning of a move to more new highs as over 31.7 million shares have changed hands in the past two sessions. Not even some related news concerning Alcatel's $7.1 billion deal with Newbridge Networks could dampen investors enthusiasm for jumping into COMS. In the past 3Com has relied heavily on Newbridge to fill holes in its high-end strategy for telecommunications carriers and Internet Services providers. The merger between Alcatel and Newbridge could eliminate that revenue stream for COMS, as Alcatel sells data networking equipment that competes with 3Com. Given that kind of news, the move the past two days is even more impressive. Support for COMS is seen at $80 and $77, and would provide a good entry point for our play if we see any pullback or profit taking Q $47.38 -0.56 (-2.06) Q has spent the first three days of the week drifting lower. The old saying that patience is a virtue, may apply to our play in Qwest. For those that waited patiently this week may have found a very nice entry point to our play. We mentioned Tuesday that Qwest had support at $47 and $46. Shortly after amateur hour, Q hit $46.25 when buyers stepped in. With the Dow and Nasdaq deteriorating investors were stepping up to the plate and putting money into Qwest stock. Qwest is not a high riding fast moving stock, but it did manage to pare down most of its losses by closing to just $0.56, which is very positive for our new play. The volume was a bit light, but again, the fact we saw buyers step in with the major indices falling supports this view. Another positive for our play came in the form of a company press release announcing the completion a German fiber optic ring, connecting 16 German cities in a 1678 mile route. Qwest and joint venture partner KPNQwest invested $219 million in the project and is the first data communications company to complete a German ring. ANAD $142.75 +4.63 (-3.50) As we noted on Tuesday night, we wanted to see $136 hold before taking new positions. It did not. But we did get a tremendous selloff, then bounce on Wednesday morning from $127. Hopefully, you were able to take advantage of the rebound for a good entry. Technically, the ascending pennant is still forming. However, the volume has been descending slightly all week, though it remains just over the ADV of 431 K shares. 10-dma support is at $137.50, which provided excellent support today, and should make an attractive target at which to shoot. $140 also provides some weaker support. As long as the DOW doesn't pull the NASDAQ down with it, ANAD should continue to move up with the index (NASDAQ, that is). It also never hurts when a major brokerage, Paine Webber in this case, initiates coverage by lumping you into its top 10 new picks (JDSU and BRCM among the noted). February 29 after the close, ANAD will execute a 2:1 split too. While there isn't enough volume to really make ANAD cook, the split could add more impetus. Volatility reigns, so keep your stop loss orders in place to protect your profits. GLW $192.25 +4.00 (-1.06) OK, right on schedule. GLW filed their proxy with the SEC notifying shareholders of the annual meeting to be held on April 27. Any guesses as to what's on the agenda? Right - an item to increase the authorized shares from 500 mln to 1.2 bln. Can you say official split candidate? Great! However, with over 60 days to go, that won't affect this play much right now. GLW appears to be giving us a small consolidation following Monday's spurt to $198. The good news is that $186 seems to be holding nicely through the last two days of turbulence. It doesn't hurt either that their competitor, JDSU, is on everyone's buy list, which makes GLW a great sympathy play. However, until the volume picks up again we may be range-bound between $186 and $195 - still plenty of room to make money intraday. If things get really ugly, the 10-dma, which has provided great support since mid-January stands at $182.38, and also make a strong low-end target for entry. If you get or already got a great fill, be sure to protect your profits with trailing stops so you don't have to give them back. PHCM $144.25 -2.75 (+6.63) WOW! Nice breakout yesterday - too bad it couldn't follow through with more today. Still, following a $10 move up yesterday, that PHCM held up this well today is testimony to its strength, especially since volume fell back substantially today from it's previous levels. The low volume is a good sign when the price is heading down. Typically, a stock will move down temporarily to test its breakout, which means we could have seen $140 today, but support held well at $143. However, if the market turns sour tomorrow, PHCM could yet see $140. With wireless broadband growing like a weed and PHCM setting the WAP standard, this would make an excellent entry point. Just make sure technology issues aren't joining the sour mood. If you are a bit more risk tolerant, feel free to nibble at a bounce off $143. With earnings way off in April and another split announcement likely anytime soon, PHCM is going to have to rely on contract wins (read that, good excuse for a press release) to keep the price moving upward if it's to break $149 resistance. It did just that by announcing yesterday that it's licensed its browser for use in mobile phones in Asia and Europe. SEBL $139.88 +10.25 (+25.31) History was wrong (see Tuesday's new call section). SEBL never even got close to $118 for what we thought would make a good entry on a pullback to the center of the ascending channel. SEBL was in Breakout City today on volume exceeding the ADV by 53%. While it touched $130 at its low point, support could be found at $132, and more prominently at $136 intraday. Of course, solid support is pretty hard to find when an issue is tacking on 18% in four days. Our caution from Tuesday still stands though. With such a strong break from the ascending channel, we can't help but think there will be some pullback tomorrow from profit takers doing their jobs well, and not wanting to carry a position through the weekend. The channel ranges from $108-$127. While it's possible that SEBL could pull back into that range, that's a lot for this high flyer to give up. Even the 10-dma (traditionally good support) is only at $115. Target shoot to your level of risk tolerance, and let volume (huge volume) be your guide. Also, be sure you protect with stops that which you have already earned. SEBL promises to volatile even if it is in an up trend. Can one broker upgrade get a stock to move that much? Not usually. But it sure didn't hurt when Prudential upgraded SEBL to Strong Buy from Buy today. SEBL is also a split candidate even though they will need shareholder approval to effect anything greater than a 3:2. ESPI $12.31 -0.56 (-1.63) ESPI has taken a reprieve and is perched between the 10-dma ($11.90) and the 5-dma ($13.10). This in of itself isn't too bad. On a brighter note, the volume correspondingly tapered off on the downdraft indicating the stock isn't suffering from panic selling just some mild consolidation. It also came to light today that we likely have more time to play this earnings run that we previously anticipated. Therefore, this downdraft may prove an excellent opportunity to open positions. Initially ESPI was expected to report on February 28th. However, Investor Relations is now planning to give a press release over the next few days to confirm a definite earnings date. Good news also came way after the bell today. ESPI announced it had signed a commitment letter with Honeywell International for $50 in Equity funding. This commitment coupled with previous commitments from Greenwich Street Capital Partners and the Huff Alternative Income Fund bring the total of new equity financing to $175 mln. e.Spire Communications' Chairman, William R. Huff, remarked, "This $175 million of financing and the associated additional financing available under the various credit facilities should dispel any doubts about e.spire's ability to raise the capital needed to complete its business plan". He further added that "we are excited about e.spire's prospects as it transitions from network construction to building profitability in its core and other businesses". ******************* PLAY UPDATES - PUTS ******************* PGR $55.50 -1.50 (-0.44) Alright listen up! We are keeping this play but it might not be for much longer. How PGR performs for us tomorrow will most likely determine PGR's fate. We would like to see PGR trade through and close below the $55 level to confirm continuing negative momentum. PGR has tested and held support at this level several times now, and we do not recommend initiating new positions until we see a breakthrough. Should PGR trade through $55, watch for strong volume to validate the move. PGR is sitting directly underneath its 10-dma, which is currently at $55.75. This will also be an important factor in determining the future of this play. Should PGR manage to breakthrough here and reclaim the 10-dma as support, it may be a good indication that PGR has found it's bottom. On Wednesday, Advest initiated coverage of PGR with a Market Perform on however, the news seemed to have little impact on the shares. With all of these factors in mind, it is important to exercise caution going forward. Be sure to tighten up your stops to protect profits against a possible trend reversal. RHAT $70.50 -1.50 (-1.00) Is RHAT trying to establish a base? Though we did see a nice drop today, RHAT still managed to test and hold support at $70 throughout the day. So why are still playing RHAT? First of all, RHAT did trade through the $70 level on Tuesday, and we think it is possible that RHAT may do so again. Secondly, RHAT has yet to find the momentum to help it breakthrough its 10-dma, which is all the way up at $75. Thirdly, though RHAT's volume was slightly under the daily average, it did not miss by much, which leads us to believe that there are still plenty of RHAT sellers out there. For these reasons, RHAT has managed to claim at least one more day on our play list. If RHAT doesn't make a definitive move through $70, we will probably be dropping it. KMG $42.00 -1.75 (-3.44) In the words of Paul Simon, KMG is "Slip Slidin' Away". In looking at the last week of intraday charts for KMG, we can't help but smile. KMG is posting a picture perfect downward trend. KMG opens at the high and steadily declines for the remainder of the session. Each day, the previous day's support level becomes a new level of resistance and the volume backing this decline remains strong. We can also add weak relative strength to our list of reasons that we are happy with KMG. The oil service stocks fared well in today's session, with the OSX up nearly 4 points for the day, and yet KMG was unable to participate and instead posted the biggest loss of its week so far. KMG found resistance at $42 throughout the day, and managed to close smack dab at this level, and though we don't expect this level to provide very solid support, we will want to see KMG drop below to confirm continuing momentum. Your best bet for new entries is to enter toward the earlier part of the session. Unlike the above referenced song, KMG may not be near it's destination, though it is doing a fine job of helping us to reach ours. MCOM $84.00 -3.25 (-5.75) Investors continued to hang up their shares of MCOM on a day that saw the Nasdaq up over 67 points and big gains for many of the telecoms. In other words, MCOM demonstrated some weak relative strength against today's market. MCOM spent the majority of the day trading between $82, which managed to provide solid support for the day, and $84. We are also approaching a solid looking level of pre-established support at $80, and it will be very important to exercise caution the closer we get. Use those stops! As you know, volume can be a valuable way to gauge the force of the momentum backing a move, and frankly, MCOM is lacking. One other important point to note in regards to volume, was the fact that once MCOM bounced from $82 near the close, we saw the volume level pick up, which is indicative of some interested buyers out there. We are keeping a close eye on this, and if you are playing MCOM, we recommend that you do so as well. If you are looking to enter a new put position on MCOM, you will want to watch for MCOM to trade under $84 backed by strong volume. JNJ $72.16 -3.97 (-5.28) The interest rate concerns are spreading like wild fire throughout the markets! The fear has pushed the DOW below 10,000 and JNJ can't help but to lose more ground! Yesterday and today the stock shed $6.47, or 8.2% clearly putting it below the formidable $77 mark. Now let's not get too giddy. Remember this is simply a sector play. There isn't anything news specific to drive JNJ down further. So let's keep stops in place to protect against a rash of value hunters moving in for a bargain. As of today JNJ set a new all- time low at $72! ************** NEW CALL PLAYS ************** VERT - VerticalNet, Inc. $221.00 +8.13 (+22.25 this week) VerticalNet owns and operates 55 industry-specific Web sites designed as online business-to-business communities, known as vertical trade communities. These vertical trade communities provide users with comprehensive sources of information, interaction and e-commerce. They are grouped into the following industry sectors: ADVANCED TECHNOLOGIES, COMMUNICATIONS, ENVIRONMENTAL, FOOD AND PACKAGING, FOODSERVICE AND HOSPITALITY, HEALTHCARE/SCIENCE, MANUFACTURING AND METALS, PROCESS, PUBLIC SECTOR, SERVICE, TEXTILES AND APPAREL. Additionally, VerticalNet provides auctions, catalogs, bookstores, career services and other e-commerce capabilities horizontally across its communities with sites like Industry Deals.com, IT CareerHub.com, LabX.com, Professional Store.com. VerticalNet's NECX Exchange provides an exchange for the electronic components industry. If the market were a smorgasbord (and it is), B2B issues would be dessert. For your dining pleasure, We have cake; we have icing. The cake is that VERT finally appears to have put in a technical bottom. Though VERT had found short term support around $195, the longer term trend was at $200, the figure from which VERT gapped open four weeks ago and has since been falling back - call it 100% retracement. For the last two days, volume has turned up to reflect a 30-45% increase over the ADV. That has helped to drive the price up $25 in the same period. Volume makes for a good compass, and it's pointing north. $209, $212, and to a lesser extent, $220 may provide some intraday support. VERT also popped above its 10-dma for the first time in over three weeks, a powerful technical indicator. We look for the gains to continue next week, however perhaps with brief pause. With such a strong rise, profit takers could pay a visit tomorrow. Target shoot to your own level of risk tolerance. What about the frosting? Aside from a 29% earnings surprise on February 1, VERT also announced a 2:1 split payable on March 31 after the close. That should help boost the shares eventually back over its all-time high of $289.56. There's plenty of room to run, and lots of time. For you risk takers whose life is uncertain, this is one case where it's OK to eat dessert first! In the news, VERT has been upgraded three times during the last week and a half. Today, Goldman Sachs initiated coverage with an uninspiring Market Outperform. The week previous to last, Sand Bros. upgraded from Neutral to Buy, and USB Piper Jaffrey initiated coverage with a Strong Buy rating. Even Better, Honeywell and Microsoft announced they would collaborate to accelerate the growth of Myplant.com, an e-commerce hub for manufacturing industries. Who provides the software to enable trading directly from the site? Microsoft alliance partner, VERT, or course. BUY CALL MAR-210 ERW-CB OI=194 at $29.38 SL=23.00 BUY CALL MAR-220 ERW-CD OI=274 at $24.63 SL=19.25 BUY CALL MAR-230*URE-CF OI=547 at $20.38 SL=16.00 BUY CALL APR-220 ERW-DD OI=223 at $38.25 SL=29.75 BUY CALL APR-230 ERW-DF OI=195 at $34.13 SL=26.75 Picked on Feb 24th at $221.00 P/E = N/A Change since picked +0.00 52-week high=$289.56 Analysts Ratings 4-6-3-0-0 52-week low =$ 17.50 Last earnings 02/00 est=-0.36 actual=-0.28 Next earnings 05-02 est=-0.45 versus=-0.19 Average Daily Volume = 1.4 mln /charts/charts.asp?symbol=VERT **** CMGI - CMG Information Services $119.06 -0.81 (+11.00 this week) CMGI invests in, develops, and integrates advanced Internet, interactive, and database management technologies. The company's venture capital arm is called @Ventures and boasts a portfolio of over 30 Internet companies such as Lycos and Raging Bull. One of the more prominent additions to its portfolio is a 83% acquisition of the search engine, Alta Vista. The majority of CMGI's revenues (80%) is derived from fulfillment and mailing list services. Entry points! Entry points! CMGI is a prime candidate for a stellar earnings run going into March. The company last reported its earnings on December 15th. Now take a look at a three-month chart and notice the strong uptrend prior to the release. We're anticipating a repeat performance and want to alert our readers. If you're interested in an early entry, the next few days may prove to be the time. Another player, The Internet Cap Group (ICGE), reported poor earnings after the bell today. In after-hours trading ICGE plummeted over $10. Inevitably this could drag the sector down in the short-term and thus, we'll be rewarded with entry points into a potentially profitable earnings play. CMGI has confirmed it will report on Thursday, March 9th so this will be a relatively quick play. Please make sure you're out of any positions before then. It is UNKNOWN at what time during the day they'll announce and you don't want to be caught in a post-earnings' sell-off! Currently near-term support is at $114 and $115, but firmer at $110. So an entry in this range is relatively solid. If you're more of a conservative, then wait for the first line of opposition at $120 to be shattered. Just yesterday US Bancorp Piper Jaffray reiterated a Strong Buy recommendation for CMGI, but offered no other comments. In other news, AltaVista, a media and commerce network company majority owned by CMGI, reported Internet traffic continues to climb with a record 54 million unique users worldwide visiting its network of sites. BUY CALL MAR-115 GCD-CC OI=3372 at $11.25 SL= 9.00 BUY CALL MAR-120*GCD-CD OI=5361 at $ 9.13 SL= 6.75 BUY CALL MAR-125 GCD-CE OI=3549 at $ 7.00 SL= 5.25 BUY CALL APR-120 GCD-DD OI= 225 at $15.50 SL=12.00 BUY CALL APR-125 GCD-DE OI= 150 at $13.38 SL=10.75 BUY CALL APR-135 GCD-DF OI= 333 at $11.75 SL= 9.25 Picked on Feb 24th at $119.06 P/E = 91 Change since picked +0.00 52-week high=$163.50 Analysts Ratings 4-7-0-0-0 52-week low =$ 26.94 Last earnings 12/99 est=-0.72 actual=-1.08 Next earnings 03-09 est=-1.32 versus= 0.07 Average Daily Volume = 6.73 mln http://www.optioinvestor.com/charts.charts.asp?symbol=CMGI **** NSM - National Semiconductor $73.00 +5.38 (+9.50 this week) National Semiconductor combines leading edge analog and digital technologies to create highly integrated solutions for the information age. They are developing the next generation microchip, called a system-on-a-chip, which will combine a microprocessor and logic and memory components in a single unit. These products will be used in Internet appliances and set-top boxes. No longer in the PC processor market, NSM has switched its focus to integrated circuits that are used in communications devices, networking equipment and automobiles. The majority of the NSM's revenues come from outside the U.S. with 60% of its sales in Asia and Europe. NSM does business with some big names including Lucent, Compaq, Samsung and Siemens. Until Wednesday, NSM spent most of February in a fairly narrow trading range. Well that's not the case any more. This morning NSM announced an alignment with Microsoft, to provide the hardware platform and enabling technology for the new MSN-based Web companions. Web companions are designed to offer consumers a simple and fun way to browse the Internet, communicate with others and shop online. The semiconductor industry was one of the few that seemed to ignore the nasty mood in the broader markets today, and NSM helped lead the way. NSM tacked on almost 8.0% today after adding breaking out of its recent trading range yesterday. NSM found its way to our list of plays as it appears to be setting up for a great earnings run. The company is scheduled to report earnings March 9th. The last few quarters NSM has beat analysts estimate quite handily, and it looks as though they may be on track for a repeat performance this quarter. Today's move was on strong volume, nearly three times the ADV which suggests there is more room to the upside ahead. NSM has received positive comments recently from analysts with a projected price target of $80. Technically NSM has support just under $72 and $68, although given the strength of today's move, we may not see $68 for a while. If we do see a pullback or some profit- taking, use those points as a guide. In a company press release yesterday, NSM announced that NEC Corporation is using the first generation National chipset solution for use in prototypes of the world's first Bluetooth interoperable notebook PC's with a built-in antenna, which NEC is displaying at the CeBit 2000. BUY CALL MAR-60 NSM-CL OI=3049 at $15.75 SL=12.25 BUY CALL MAR-65 NSM-CM OI=1570 at $11.63 SL= 9.00 BUY CALL MAR-70*NSM-CN OI=1897 at $ 8.00 SL= 6.25 BUY CALL MAR-75 NSM-CO OI=1579 at $ 5.88 SL= 4.25 BUY CALL APR-70 NSM-DN OI= 140 at $11.50 SL= 9.00 SELL PUT MAR-65 NSM-OM OI= 93 at $ 2.50 SL=4.00 (See risks of selling puts in play legend) Picked on Feb 24th at $73.00 PE = N/A Change since picked +0.00 52 week high=$74.00 Analysts Ratings 9-8-2-0-0 52 week low =$ 8.88 Last earnings 12/99 est= 0.26 actual= 0.37 Next earnings 03-09 est= 0.45 versus=-0.16 Average daily volume = 1.81 mln /charts/charts.asp?symbol=NSM ************* NEW PUT PLAYS ************* FD - Federated Department Stores $32.44 -1.75 (-1.38 this week) Better late than never, FD is trying to leave the comfort of its luxurious brick and mortar walls. The company is the largest upscale retailer in the U.S., with over 400 stores in 33 states. In addition to its flagship chains, Macy's and Bloomingdale's, the company runs six regional chains, Lazuras, The Bon Marche, Burdines, Stern's, Rich's, and Goldsmith's. Attempting to capitalize on consumer demand for online shopping, FD is increasing it's focus on catalog (Macy's by Mail and Bloomingdale's by Mail) and internet (Macys.com) sales. Plagued by the lack of interest for any stock symbol with less than four letters, FD has been in a continuous downtrend since the second week of January. Rising interest rates and investors' desire for double-digit growth numbers continues to pressure the stock. Joining the ever-growing list of NYSE stocks at new lows, FD hit a new 52-week low today of $31.63, its lowest level since January...of 1997. Even posting stronger than expected earnings yesterday didn't provide any support for FD. The stock has only posted one close above the 5-dma, (currently at $34) in the past 3 weeks and that was 6 days ago. Adding insult to injury was the earnings releases today from JC Penney and Gap Stores, neither of which was received particularly well. FD is likely being lumped in with the weaker retailers, so look for the weakness to continue. The 5-dma should provide upside resistance, so consider entries as the stock moves up to this level and then rolls over. If the price moves down from today's level, don't fight the tape - go ahead and jump on the bandwagon. BUY PUT MAR-40 FD-OH OI=20 at $6.25 SL=4.50 BUY PUT MAR-35*FD-OG OI=59 at $2.38 SL=1.25 Average Daily Volume = 1.21 mln /charts/charts.asp?symbol=FD ********************** PLAY OF THE DAY - CALL ********************** IFCI - International Fibercom $32.00 +3.00 (+0.00) International FiberCom is a leading provider of a wide range of engineering, development and maintenance services for fiber optic, broadband networks, public telephone networks, local and wide area networks and specialized wireless applications. With a number of recent strategic acquisitions that complement and enhance existing services and products, International FiberCom has positioned itself as a "one-stop shop" for the telecom and cable TV industries. Sunday's Write Up When we said "Welcome to the big leagues" to IFCI last Thursday, we weren't kidding. It turned out to be a fantastic finish to the week for IFCI. If you were playing IFCI, you probably couldn't help but keep a close eye on the action, but please allow us to indulge in a brief recap. As you may know, we welcomed IFCI to our call play list last Thursday with a morning Trading Alert. IFCI finished Thursday's session up $5.56 and posted some very impressive volume, not only for the stock, but in the options contracts as well. Friday, things just kept getting better as IFCI traded up to a new all time high of $34.50. Nearly 11 million shares traded hands on Friday, which is over 7 times the daily average. Alright, enough of our patting ourselves on the back, but we do hope you are enjoying the ride so far. IFCI looks to have established some rather solid looking support at $30, which it tested several times on Friday. This will be an important near-term level. We want to see this level to continue to hold to confirm the momentum that pushed IFCI through. We have one week left to be in this play, as earnings are scheduled to be announced on the 29th. Be sure to keep your stops tight on the way up. As we mentioned, earnings are on the 29th, which could prove to be a nice catalyst to keep up IFCI's positive momentum next week. The only other news out there was an article released on Thursday afternoon reporting the increased volume and value of the IFCI options, particularly the March 20 calls. But the article stated they weren't sure why. Doesn't it feel good to be ahead of the game? Tuesday's Write Up IFCI held up very well in today's down market and managed to tag yet another new high of $35.25. We saw a few profit-takers emerge on to the scene early today, dragging the stock down to $28.50. The buyers quickly came to the rescue and brought IFCI back up. IFCI tested the recently established support level at $30, which held nicely throughout today. Should IFCI reclaim its positive direction tomorrow, the current level may serve well for new entries if you are looking to play the remainder of this earnings run. As we have mentioned before, IFCI is set to announce earnings on February 29th and therefore, we have less then a week left of this play. Enjoy! Thursday's Write Up IFCI looks to be working toward a fine finish to this earnings run. IFCI gapped up $1.50 this morning, which was an impressive move because this moved IFCI right through the $30 level. Now that we are back on the right side of $30, look for this level to provide support to finish this run. At this point, if IFCI trades back through, it may be an indication to close out your positions. We were pleased to see IFCI close on $32, a level it flirted around with throughout the day. Going forward, IFCI may encounter resistance at $35 (all time high is $35.25). Not only is IFCI benefiting from an earnings run, there were a few pieces of news thrown in to fuel the fire. This morning, it was announced that International FiberCom's wireless solutions division, AeroComm, was awarded a contract, which is valued at over $5 million from Bell Atlantic Mobile. IFCI was also given a boost today by FS Van Kasper, who initiated coverage of IFCI with a Buy rating. As you may know, we will be dropping IFCI from our play list on Sunday because IFCI is set to announce earnings on Tuesday. BUY CALL MAR-25*IQD-CE OI=2590 at $8.38 SL=6.25 BUY CALL MAR-30 IQD-CF OI=1063 at $5.75 SL=4.00 BUY CALL MAR-35 IQD-CG OI=1753 at $3.38 SL=1.75 BUY CALL APR-30 IQD-DF OI= 53 at $7.75 SL=5.75 BUY CALL APR-35 IQD-DG OI= 131 at $6.00 SL=4.25 Picked on Feb 17th at $22.00 P/E = 100 Change since picked +10.00 52-week high=$34.50 Analysts Ratings 0-1-0-0-0 52-week low =$ 4.50 Last earnings 11/99 est= N/A actual= 0.02 Next earnings 02-29 est= 0.06 versus= 0.12 Average Daily Volume = 1.80 mln /charts/charts.asp?symbol=IFCI ***************************ADVERTISEMENT************************* Bring the Markets Home! ~ InvestIN.com http://www.investinoptions.com Is your broker limiting your options? Can you enter stop and stop loss orders on options? Options Trading with InvestIN.com is available for all accounts. Ranging from IRA's to Direct-Access accounts. Option Stop loss orders accepted. Streaming real time option quotes available with direct access accounts. InvestIN.com has your OPTIONS. Call Toll Free 1-800-327-1883. http://www.investinoptions.com ***************************************************************** ************************ COMBOS/SPREADS/STRADDLES ************************ Nasdaq Soars as Dow Tumbles.. Wednesday, February 23 Investors traded their classic stocks for new technology issues in today's session, driving the Nasdaq to a new, all-time high. The high-flying index recorded its best day ever, climbing 168 points to close at 4,550. The blue-chip industrial average dropped 79 points to end at 10,225. The S&P 500 Index finished up 8 points at 1,360. On the NYSE, 979 million traded with decliners leading advancers 1,756 to 1,235. There were 46 stocks at new highs and 219 issues at new lows. The 30-year Treasury bond slipped 15/32, pushing the yield to 6.12%. Tuesday's new plays (positions/opening prices/strategy): Theragenics TGX JUN10C/MAR15C $4.00 debit diagonal Echostar DISH MAR80C/MAR90C $9.00 debit bull-call IDT Corp. IDTC MAR22C/MAR30C $5.38 debit bull-call Wednesday's session provided a number of big winners and our top performer was Echostar. Unfortunately, the issue gapped open and never looked back. The best observed debit (available near the open) was above our target entry but with the reduced risk, the return was tolerable. The stock eventually closed $20 higher. IDTC also made a sharp move at the open, falling almost $2 in the first few minutes of trading. Our position was initiated at a slightly better than expected debit. Portfolio plays: Technology stocks ended at record levels today as money continued to flow into the leading momentum issues. Internet and biotech companies dominated the headlines while traditional stocks came under pressure from inflation concerns. Industrial, finance and retail issues burdened the market despite a late rally after Fed Chief Alan Greenspan said monetary policy is not aimed at keeping stock prices in check. Analysts expect the Fed to raise interest rates to brake the economy and but anxieties escalated last week after Greenspan said the stock market was the reason the economy has seen such strong demand. Needless to say, today's commentary from the Humphrey Hawkins testimony was interesting. Greenspan alluded to what he described as the "New Economy", and his views, like many young economists, is that the old standards for gauging the market no longer apply. He said that productivity is higher than in the past due to better technology and the key is whether the advances will eventually become profitable enough to justify the valuations being enjoyed by these companies. Our portfolio enjoyed a number of significant rallies and a few of this month's positions are already trading at maximum return. The BEAS play from Sunday was notable as it offered a minimum of $1.25 profit for just one day in the bullish credit spread. The biggest gainer of the session was Network Solutions (NSOL) which finished up $37 at $298, almost $90 above our sold strike. Other notable big-caps included InterVu (ITVU), climbing $8 to $143 and Netopia (NTPA) with a $5 rally to end at $82. The were also some new winners in the small-cap group. Integrated Silicon Solutions (ISSI) led the pack, gaining $2.50 to close at $23.94 and numerous other issues made favorable moves. The surprise of the session was LHS Group (LHSG) with a $2.50 move to $46. The overall credit for the April straddle is now $21.00, a 300% return for 2 months. Fortunately, the recent rally in technology stocks has benefited the majority of portfolio positions and with the current contempt for industrial stocks, there is little data to suggest any change is forthcoming. Thursday, February 24 The composite of technology stocks closed at a record high in today's session while industrial stocks fell to perilous levels. The Dow ended down 133 points at 10,092 and the S&P 500 was down 7 points at 1,353. Meanwhile the Nasdaq rose 67 points to 4617. Volume on the Big Board reached 1.1 billion shares, with declines outpacing advances 2-to-1. The benchmark 30-year Treasury fell 5/32, bid at 101 15/32, pushing its yield up to 6.13. Portfolio plays: Today's session was much like Wednesday's, a blue-chip rout with investors swapping their classic stocks for high-flying technology issues. Our portfolio was no different and the list of winners included a number of well-known companies. The most active stock in recent sessions has been Network Solutions (NSOL) and today the issue rallied $31 to end at a new all-time high near $330. Other big movers included: Ariba (ARBA), up $13 to $253; InterVu (ITVU), up $10 to $154; and MRV Communications (MRVC), which spiked $15 to $116. Cabletron (CS) was the biggest surprise, climbing $7 to a new 52-week high at $43 after the networking device maker said it secured $200 million in funding from technology investment firm Silver Lake Partners. The $200 million will be divided among CS and its four subsidiary companies; Riverstone, Enterasys, GNTS, and Aprisma. The money is intended to fuel the expansion of the new companies in their target markets including service provider, e-business enterprise, professional services and infrastructure management. Integrated Silicon Solutions (ISSI) again dominated the small-cap group with a $2.75 move to $26. Our new diagonal position is well above the maximum profit price in less than 1 week. Valence (VLNC) also made a favorable move, climbing $2.75 to end at $32. There has been some question as to how well that company would perform after earnings, since it has rallied almost 500% in just a few months. The other leaders in the low-priced issues were Boston Communications (BCGI) with a $1 gain to close at $11 and Duramed (DRMD), with a $1.12 rally to end at $12.75. Both of these positions are comfortably profitable. No adjustments were made during the session and with the incredible technology rally boosting the majority of portfolio plays, there has been little need for astute position management. Questions & comments on spreads/combos to Click here to email Ray Cummins ********* NEW PLAYS ********* Janar's articles must be well read as I have been overwhelmed by the number of requests for conservative spreads. Today we will examine a group of bullish issues that offer favorable credit positions. Each of these plays are based on the current price or trading range of the underlying stock and the recent technical history or trend. Current news and market sentiment will have an effect on these issues. Please review each play individually and make your own decision about the future outcome of the position. **** MACR - Macromedia $84.00 *** On The Rebound! *** Macromedia develops and distributes original technologies and innovative software tools, servers and services to a range of customers including developers, consumers and large corporate accounts. Their software products and technologies are focused on maximizing opportunities in three key areas: Web Publishing, Web Learning, and Shockwave.com. Macromedia's family of Web Publishing products works together as a complete solution to streamline Web workflow from concept to design, development to production. Macromedia's Attain Enterprise Learning System is an integrated enterprise-wide solution for managing the online learning process from planning, producing, administering, and delivering curricula, to tracking, storing, and reporting the learner's progress from any browser, anywhere in the world. Their new consumer business, shockwave.com, intends to release various new products and services in the coming months. Macromedia reported excellent earnings in January, benefiting from the strength of its core-software business and upside in the company's e-Business initiative. The momentum in their software business is expected to continue with additional product announcements throughout the coming year. The Shockwave.com spin-off will also add to the bullish speculation on the company. U.S. Bancorp Piper Jaffray Managing Director and Senior Internet Software Infrastructure Analyst Hany M. Nada recently raised his estimates and reiterated a STRONG BUY on Macromedia, and analysts at Bear Stearns reiterated their positive outlook, noting that the company will likely position Dreamweaver software as a full platform for E-commerce. We simply favor the strong, technical reversal and the recent support near the sold strike price. PLAY (conservative - bullish/credit spread): BUY PUT MAR-65 MRQ-OM OI=36 A=$1.12 SELL PUT MAR-70 MRQ-ON OI=68 B=$1.68 INITIAL NET CREDIT TARGET=$0.62-$0.68 ROI(max)=14% Chart = /charts/charts.asp?symbol=MACR **** EXDS - Exodus $136.31 *** Break-Out! *** Exodus Communications provides Internet system and network management solutions for enterprises with mission-critical Internet operations. Their solutions include Internet Data Centers, network services and managed services, which together provide the high performance, scalability and expertise that enterprises need to optimize their Internet operations. Exodus delivers its services from geographically distributed, Internet Data Centers with un-interruptible power supplies and back-up generators, fire suppression, raised floors, HVAC, separate cooling zones, seismically braced racks, and around-the-clock operations with high levels of physical security. The company offers a number of different applications to meet any customer's needs. Internet Infrastructure is a dominant market group and Exodus is one of the sector leaders. The fundamental outlook for the company is excellent and a number of brokerages have high ratings on the issue. Most recently, Paine Webber reiterated a BUY rating after Exodus announced plans to acquire the Professional Services Division of NETwork Security Solutions. Goldman Sachs has Exodus on their recommend list and Deutsche Banc Alex Brown offered a STRONG BUY rating in early February based on exceptional quarterly earnings and strong customer growth. Merrill Lynch also rates the company favorably, based on their outstanding growth potential. Once again, we simply favor the bullish chart pattern and the technical support above the sold strike price. PLAY (conservative - bullish/credit spread): BUY PUT MAR-105 DUB-OA OI=1411 A=$1.88 SELL PUT MAR-110 DUB-OB OI=1274 B=$2.43 INITIAL NET CREDIT TARGET=$0.62-$0.68 ROI(max)=14% Chart = /charts/charts.asp?symbol=EXDS **** PLCM - Polycom $89.25 *** On The Move! *** Polycom develops, manufactures and markets teleconferencing products. They market audio, video and data conferencing products to facilitate communication over long distances. Their flagship product SoundStation is an audio conferencing system that operates over ordinary telephone lines. It is designed to operate with telephone systems around the globe and Polycom has obtained regulatory approval for SoundStation's use in 32 countries. Marketed under the name ShowStation, Polycom's data conferencing products provide a cost-effective method for two or more users that are separated by a distance to view, discuss, edit and annotate paper or electronic documents and data. Their ViewStation provides a complete suite of video conferencing products. Polycom also sells the Lucent multipoint conferencing unit product (MCU) through its reseller channel, which provides connectability for large videoconference calls. This is simply another bullish issue in a hot sector. From a analyst's viewpoint, the company is performing well with solid quarterly and fiscal year-end results that exceeded the Street consensus. Wedbush Morgan recently reiterated a STRONG BUY on the issue and although the February rally made be overextended, there is little chance the trend will reverse significantly. PLAY (conservative - bullish/credit spread): BUY PUT MAR-70 QHD-ON OI=21 A=$0.68 SELL PUT MAR-75 QHD-OO OI=8 B=$1.25 INITIAL NET CREDIT TARGET=$0.62-$0.68 ROI(max)=14% Chart = /charts/charts.asp?symbol=PLCM **** MNMD - Minimed $91.00 *** Moving On Up? *** MiniMed designs, develops, manufactures and markets advanced microinfusion systems for delivery of a variety of drugs primarily focusing on diabetes management. They sell external insulin pumps and related disposables, which are designed to deliver small quantities of prescribed insulin in a controlled, programmable profile. The programmable external insulin pumps are thin and lightweight and designed to be worn under the patient's clothing, and not interfere with normal activities. The company also has developed an implantable pump, which has been utilized only for insulin delivery. MiniMed also plans to diversify its drug delivery programs, to expand the market for insulin pumps, and to diversify into disease management and the distribution of additional diabetes products. In addition, they expect to enhance their current products. The only recent news concerns the commercial European approval of MNMD's next generation implantable insulin pump. This pump, which is manufactured by an affiliated company, contains several technology improvements, such as increased memory and battery life, and it is lighter in weight than its predecessor. European sales will be limited until the specially formulated implantable pump insulin, manufactured by Aventis, is approved for commercial use. Neither the implantable pump nor the insulin are approved for marketing in the U.S. but Hambrecht & Quist believes Minimed is a BUY as all of their projects are on schedule. Ing Baring Furman Selz also rates MNMD a STRONG BUY, based on explosive quarterly earnings results. SG Cowen reports the massive sales infusion in the fourth quarter was far ahead of estimates and US Clearing recently reiterated a BUY rating with a target of $97. The move above a recent trading range is interesting and if all else fails, at least there will be a number of well-known brokerages trying to support the issue. PLAY (conservative - bullish/credit spread): BUY PUT MAR-70 MAQ-ON OI=24 A=$0.75 SELL PUT MAR-75 MAQ-OO OI=34 B=$1.31 INITIAL NET CREDIT TARGET=$0.62-$0.68 ROI(max)=14% Chart = /charts/charts.asp?symbol=MNMD **************************Advertisement************************* Have you got an idea for a financial website? Need help getting started? Technical support? Funding? We will help you turn your idea into a reality. Don't sit on your idea until somebody beats you to the punch. Do you have a website now that is not succeeding like you think it can? Let us help you achieve faster results with our proven techniques. 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