Option Investor
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Daily Newsletter, Tuesday, 03/07/2000

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The Option Investor Newsletter         Tuesday 3-7-2000
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)
************************************************************
       3-07-2000           High     Low     Volume Advance Decline
DOW     9796.00 - 374.50 10229.10  9752.70 1,309,358k   968  2,075
Nasdaq  4847.84 -  57.01  5006.78  4829.88 2,143,828k 1,765  2,567
S&P-100  732.25 -  20.71   758.48   729.02    Totals  2,733  4,642
S&P-500 1355.62 -  35.66  1399.21  1349.99            37.1%  62.9%
$RUT     595.47 -   6.17   606.86   595.15
$TRAN   2263.59 - 112.50  2376.09  2260.78
VIX       26.63 +   3.48    27.46    22.80
Put/Call Ratio       .43
*************************************************************

Super "entry point" Tuesday!

Proctor & Gamble washed out the Dow with an earnings warning
but the rust stains still linger. Just when things were looking
so lemon fresh with the fastest productivity growth in seven 
years the mother of all earnings warnings knocked the Dow 
back to April 1999. After PG painted a word picture that could
have been scripted by Alan Greenspan the old economy met the
new economy head on for a serious bout of mud slinging and the
old economy may have won the battle but the new economy won the
war. Enough word pictures? The warning by PG was everything Alan
and company have been worried about. Decreasing sales, higher
labor costs, higher materials costs, decreasing margins, etc.
The mantra of the whining loser. It was not our fault. It was
the economy. It was competition, it was inflation. Sorry, been
there, heard that and the real answer always boils down to 
management not keeping up with the competition and not giving
the customer what they want. Nobody will ever make me believe
that the worldwide consumer is taking less baths, washing
fewer clothes and suffering from fewer colds. With the 
population exploding worldwide and many emerging countries 
just coming into the global consumer age, it is not the 
economy stupid. It is the company.

Now that we have the facts straight lets look at the damage.
If you are a public company with factories rusting away it was
a very bad day. If you were a tech company with eight days of
just in time inventory that you cannot keep in stock because
of consumer demand, it was a great day. The Dow opened up at
10229 on the positive productivity report but sellers flooded
in as everybody tried to get out of the market before PG
opened for trading 30 min later. Everybody knew what was coming
and there was a rush for the exits. When PG finally opened at
-$30 the impact on the Dow was striking. -$30 equates to -150
Dow points and we were already heading down at full speed. The
first bounce came at 9850, a full -379 points off the high and
then the bargain hunters stepped in to battle. After a valiant
effort by the bulls the sellers pushed the Dow back to 9850 
again for yet another bounce around 1:00. After failing to 
rally the Dow on three attempts the buyers simply stood aside 
for the final capitulation run just before the close. The
damage, 9752, believe it or not. After giving the sellers one
last unrestrained dive the buyers started easing back into 
position for the next relief rally. 


 


 


 


 


The bright spot for the day has got to be the Nasdaq. After
breaking 5000 at the open, even in the face of sure Dow
destruction, the Nasdaq fought for every inch of ground all
day long. Think about it. -418 points on the Dow at the low,
the fourth worst Dow point loss on record and the Nasdaq was 
positive until the very end. Many Nasdaq stocks and I am
talking about stocks that have huge double digit profits
ripe for the taking, held and even finished positive in
many cases. BRCD +8 , JNPR +8, MSTR +21, CLRN +13, ARBA +7,
EMC +7, MSFT +2 (-5.00 off the high but still positive),
TERN +23, RMBS +38. Everybody knew there would be a sell off
at 5000 from program trading but the Nasdaq roared back to 
+75 immediately after that drop.

Part of the Nasdaq strength came from the news that VRSN
was going to play the name game and buy Network Solutions 
for $14 billion. Simply incredible but it validated the 
direction of the Internet and proved again that companies 
who succeed will be rewarded. The transaction, 2.15 shares 
of VRSN for each NSOL share sent NSOL up to $437 from $360 
on the news but the kill the buyer syndrome punished VRSN 
to the tune of -47 and NSOL fell back in reaction. 

Adding to the Dow problems today was the rocketing price
of oil. Trading as high as $34.23 today the ripple through
the transports was obvious and dramatic. Oil service companies
soared on the news that OPEC may not increase production
since they expect demand to drop by the end of March and
the warm weather up north. Any increase in production now
would take 90 days to be felt in the retail sector. If you
have been putting off getting a fill up on that big tank
SUV, you had better not wait any longer or you will have
to sell options to pay for it.  

Where to from here? The almost two month decline in the
Dow is looking for a place to rest. We are coming into
some serious support from 9700 to 9200 and unless we are
entering a bear market there should be technical buying
soon. A -17% drop in the Dow has got to make Warren Buffett
type investors happy. 9836 was the recent low back on Feb
28th and many analysts think we could have put in a double
bottom here with the PG washout of that number. If it is
not a double bottom then we are in deep trouble because I
view it as a possible lower low confirmation of the
current Dow down trend. I want to look at it as simply
a news event to cap off the current selling with a needed
capitulation event. The Dow stocks are so low you have to
go back years on some for comparison. JNJ currently at a
2yr low, MRK 2yr low, KO 4yr low, EK 2yr, CAT 3yr, IP 5yr,
MCD 1yr. 50% of the Dow transports are at a 52wk low.
26% of the S&P-500 are at their 52wk lows. Only 1% of the
S&P is at or near new highs. Consider where the Dow would
be without the few tech stocks it has? There is serious
talk that the S&P is faltering because it does not have
enough tech stocks to match the current move into the
Internet economy and yet techs make up 34.3% of the S&P.

Ordinarily I would be pounding the table to tell you to
buy this dip. How many huge drops have you seen in your
investing lifetime? If this is the fourth largest at -374
and the largest was -508 in Oct then my guess is not many
of this magnitude. Unfortunately (or fortunately) the 
stocks you want to buy did not drop -374 points. The
Nasdaq stocks are up +600 points from their recent lows.
If the Dow continues to dive we could see more profit 
taking on the Nasdaq. Reluctantly, but still profit taking.
The stocks that dropped may still drop farther. If eggs
are $2 a dozen, how much are 30 worth if 24 are rotten?
Don't bother, it is just an analogy to show that things
are worth only what somebody will pay for them and right
now it seems that nobody wants to buy the Dow at any price
because of all the rotten eggs.

This is the second steepest Dow decline in a decade and
we now have had four bear trap rallies in two months.
With the very steep drop today there is a very good chance
that we will see another relief bounce. Consider that 
the Nasdaq is only 67 points from a new record high.
This is the largest record of divergence between the
Dow and Nasdaq and there appears to be no end in sight.
If the Dow wants to join the party it will have to find 
its own ride because the Nasdaq express has already left. 

Another reason I feel like we just saw the Super "entry
point" Tuesday is the bond market. Normally bonds would
be up on a very bad day as money leaves the stock market
to the "safety" of the bond market. Guess what? The bond
was flat today at 6.14% yield due to lack of interest.
The money that would normally "flee" to the bonds is
now "fleeing" to the safety and "returns" of the Nasdaq.
Who wants 6.14% when the Nasdaq is up +20% YTD and it is
only March? Check out the volume today 1.3 bln NYSE and
2.14 bln Nasdaq. The money is flowing and it did not
go to bonds.

I am just as human as the next guy and that makes me
fallible but I put my money on the line today and was
very happy to do so. I beat my way to the bargain table
at the close and my brokerage account is still smoking.
If there is no bounce I will be singing the blues tomorrow
but tonight I am very comfortable with my bargains. 
The VIX was not lying on Sunday at 21 and I don't think
it is lying tonight at 27. When the VIX is low it is
time to go and when the VIX is high it is time to buy.
One more big drop at the open should do the trick and 
push it over my 28 threshold. Of course I would "vote"
to skip that step and go directly to rally mode!

We had over 1300 entries in the one day Nasdaq-5000 
contest from Sunday and now all we need is a close 
over 5000 to identify the winner. Stay tuned!

Trade smart and sell too soon.

Jim Brown
Editor

Disclosure notice: 

Current long positions include; 

AFFX, ALLR, AMD, ARBA, BLDP, BRCD, BVSN, CIEN, CLRN, 
DSTM, ELON, GLW, MRVC, MSFT, MSTR, PEB, PHCC, RBAK, 
RMBS, SDLI, TXCC, WCG 


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

Deutsche Telekom Seeks Its Qwest
By  S.P. Brown

Qwest Communications (Q) ended a week of speculation Sunday by 
acknowledging that it is indeed engaged in merger talks with a 
"large telecommunications company."  Few  investors were 
surprised by the confession.  Fewer, still, were surprised to 
learn the "large telecom" Qwest was referring to was Germany's 
Deutsche Telekom (DT), Europe's largest phone company.

Investors were tipped to the possibility of a Qwest-Deutsche 
Telekom union last Thursday when USA Today reported that the 
German telecom giant had offered $80 billion for both Qwest and 
US West (USW) - two Denver-based companies who happen to be in 
the midst of their own $45 billion merger.  In November, both 
companies' shareholders agreed to combine operations in a 
transaction that would give Qwest a 14-state local phone 
network with 25 million customers.  

The Deutsche Telekom offer has some analysts scratching their 
heads.  It's no secret that Qwest has its hands full with US 
West (USW).  What was purported to be a merger of "equals" has 
morphed to a straight purchased of US West by Qwest, with Qwest 
management running the show.  In fact, just last last Monday, 
US West chairman Sol Trujillo announced he would be leaving 
once the merger was completed.  

Despite US West's subservience, there is discontent in the 
Qwest camp.  Chairman Joseph Nacchio has expressed concerns 
over US West's conflicts with regulators in some of its 14-
state territory, where it was ordered to refund $12.77 million 
to phone customers for service-quality violations. 

What's more, people close to the Qwest-US West situation are 
reporting that Qwest officials had been exploring options to 
strike a trans-Atlantic deal without US West.  Supporting that 
notion is Philip Anschutz, Qwest's principal shareholder, who 
recently stated that he would support a transaction with a 
"major telecommunications company."

Qwest's interest in exploring avenues sans US West is a sharp  
contrast from its position last summer, when the company 
literally pursued the Baby Bell like a lovestruck teenager, and  
wooed it out of the arms of Bermuda-based telecom Global 
Crossing (GBLX).

After being belle-of-the-ball, it should come as no surprise 
that US West isn't taking kindly to the prospect of becoming a 
lonely old maid.  The company has threatened to sue if Qwest 
backs out of the planned merger.  A $800 million break-up fee 
is already due US West if the merger doesn't go through.  But 
if US were to sue and win, Qwest could wind up owing the 
company billions of dollars.  

In response, Qwest stated that it won't agree to terms with  
another company unless US West also reaches an agreement with 
that company, too.  Still, US West is concerned that Deutsche 
Telekom isn't as interested in it as it is in Qwest.  

Reputations are also at stake.  If the Qwest deal falls 
through, US West would have two strikes against it and no 
merger partner, something the company desperately needs to 
pursue its aggressive Internet strategy and expand the its 
market presence.  

But US West and Qwest aren't the only ones under pressure.  
Deutsche Telekom is beginning to feel some heat.  The 
company is fast developing a reputation for being gun-shy.  
Last summer Deutsche Telekom CEO Ron Sommer stumbled badly in a 
failed attempt to acquire Italia Telecom.  To make amends 
Sommer has stated publicly that his company needs to make 
acquisitions quickly and has named several targets, including 
Global Crossing and Cable & Wireless (CWP). 

A Deutsche Telekom-Qwest merger would make sense for the German 
telecom.  The company wants desperately to enter the US market.   
Qwest would enable it to do so with it's fiber-optic lines and 
its interest in KPNQwest, an Internet joint venture with Dutch 
phone company royal KPN.  

It's obvious investors like a Deutsche Telekom-Qwest 
combination more than they do a Deutsche Telekom-Qwest-US West 
amalgamation.  Last week, shares of Deutsche Telekom and Qwest 
soared 12 and 39 percent, respectively, while US West inched 
ahead only 2 percent.   

Nevertheless, many analysts believe that US West must be part 
of the equation.  Qwest simply can't afford to get out at this 
point.  Tom Friedberg, telecommunications analyst with Janco 
Partners, predicts that a Deutsche Telekom offer for Qwest will 
include a share price for US West somewhere between its $50 to 
$60 price last July when the merger was announced and the $135 
or more it would command under the 1.72 exchange ratio 
originally agreed upon.  "If US West is offered $90 to $105, 
they have a fiduciary duty to look at that," Friedberg said. 

Some investors looking at this complicated triumvirate might be 
wondering if there's still a risk-arbitrage play lurking in 
there somewhere.  The usually way to play these things is to 
short the acquirer and go long the acquired.  At this point, 
it's difficult to say because there is more risk to Deutsche 
Telekom stock if it doesn't go through with the purchase than 
if it does.  If Deutsche Telekom doesn't follow through, all 
three stocks could come falling down.  If it does follow, 
through, there's a chance all three could rise higher.

With that said, the significant movement in all three stocks 
probably took place last week.  Given Deutsche Telekom's 
penchant for bailing at the last minute, there just doesn't 
seem to be enough reward for the risk investors would be 
undertaking to play this potential deal.



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

As of Market Close - Tuesday, March 7, 2000 

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

DOW Industrials   10,700  11,250   9,796    BEARISH   2.17
SPX S&P 500        1,400   1,450   1,356    BEARISH   3.07  *
OEX S&P 100          740     780     732    BEARISH   3.07  *
RUT Russell 2000     500     520     595    BULLISH   2.24
NDX NASD 100       3,800   4,000   4,391    BULLISH   2.24
MSH High Tech      1,850   2,000   2,122    BULLISH   2.24

XCI Hardware       1,300   1,460   1,551    BULLISH   2.24
CWX Software       1,200   1,470   1,568    BULLISH   2.24
SOX Semiconductor    800     900   1,264    BULLISH   2.24
NWX Networking       940   1,000   1,129    BULLISH   2.24
INX Internet         700     800     791    Neutral   1.06

BIX Banking          500     550     468    BEARISH  11.30
XBD Brokerage        400     450     479    BULLISH   2.31
IUX Insurance        500     550     445    BEARISH  11.30

RLX Retail           950   1,000     780    BEARISH   1.28
DRG Drug             340     380     293    BEARISH   2.18
HCX Healthcare       700     750     608    BEARISH   2.18
XAL Airline          120     140     111    BEARISH   3.07  *
OIX Oil & Gas        280     315     273    BEARISH   1.27

 
***Posture Alert***
Proctor & Gamble helped lead a near 400-point drop in the Dow, as 
all blue chips were affected by the negative earnings release. 
With oil topping $34/barrel, the woes only got worse as the day 
wore on.  The only bright spot today was in the Oil & Gas and 
Semiconductor sectors. The OIX rose 7.19% while the SOX rose 1.61%. 
Losers were plentiful, and with this most recent action, we have 
lowered Airlines, S&P 100, and S&P 500 to Bearish from Neutral.



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

Tuesday, March 7, 2000

It's Super Tuesday!

Who is going to feel worse on Wednesday, Senator Bill Bradley or P&G 
shareholders? Sorry, couldn't resist that one. Anyway, as you already 
know, Proctor & Gamble helped lead an assault on the Dow, as the 
bellwether index got clobbered for -375 points, it 4th biggest drop in 
history. Volume was strong on the NYSE with 1.3 billion, and the NASDAQ 
cracked the 2-billion threshold once again. The selling pressure 
witnessed on the Dow this morning soon started to spread, which led to 
selling pressure in the S&P 500, the S&P 100, and then finally the 
NASDAQ. To make things worse for the big name conglomerates, the price 
of oil hit $34/barrel. This one-two punch was too much for the blue 
chips. Technology stocks on the other hand, held up for most of the 
day, but during the final hour, it gave way to some eager profit 
takers. 

In major pullbacks in the past, one would witness a flight-to-quality, 
where investors would flee technology issues and purchase consumer 
stocks, pharmaceuticals, and other major multi-national companies. This 
trend is definitely changing! Today, as well as the recent past, it has 
been a role reversal. In today's action, P&G led the consumer issues 
down; pharmaceuticals were down about -5.00%, and the rest of the large 
global companies were singing the blues! Technology has continued to 
hold up extremely well! Two sectors that were even up today were 
Semiconductors and Software, which two years ago would have been 
unheard of. So the trendy adage of "New Economy" vs. "Old Economy" is 
really becoming a role-reversal when flight-to-quality is concerned. So 
the big question remains, will this flight-to-quality in the "new 
economy" stocks continue? 

So far, technology stocks have been a safe haven (as I bite my tongue). 
However, this sentiment can change dramatically. We have witnessed 
recent corrections on the NASDAQ to occur in days, where stocks free-
fall as everyone rushes to lock-in profits at the same time. In an age 
where investors can place trades anywhere in the world, on their pager, 
cell-phone, or laptop, the speed at which sentiment changes can be 
overwhelming. This can happen, and happen very quickly, so be careful, 
be diligent, and set your stops. On Sunday, Pinnacle highlighted how 
the Volatility Index and the Pinnacle Index were indicating an 
overbought market, and that locking in some profits was the most 
prudent thing to do. Hopefully, some of you took advantage of this 
quality advice. As it stands now, the VIX is in the middle of its 
trading range, and where it goes from here in the short term will help 
define the markets ever changing sentiment. The Pinnacle Index for the 
OEX now seems to be indicating that we are nearing support, so any 
continuation in a major sell-off is highly unlikely. More than likely, 
we will once again see some sort of bounce as the bulls' rush in and 
the quick-trigger shorts run to cover. Super Tuesday 2000 will 
definitely go down as a memorable one, however, the next several 
trading days will be extremely important to the sentiment of this 
marketplace, so if the new economy stocks continue to hold, stay with 
the trend, but place your stops! 

  

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. 
With the NASDAQ surpassing volume of 2 billion shares again, this money 
is obviously flowing into technology.

Short Interest:
Short interest continues to climb as quickly as the market. The short 
interest on the NASDAQ increased another +8.51%, for a 5th consecutive 
record.

Interest Rates (6.148):
The current yield is now safely off of 52-week highs and is temporarily 
out of the danger zone.


Mixed Signs: 

Volatility Index (25.14):
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. At current levels, the VIX is in neutral territory.


BEARISH Signs:

Pre-Release Season: 
With April just around the corner, we have the beginning of pre-release 
season. Over the next 3 to 4 weeks, companies will let Wall Street know 
that their profit/sales goals are not being met, and their stocks will 
get brutally punished. The first major corporation to do just this is 
Proctor & Gamble, with it's 27 point decline.

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. With crude over $34/barrel, the effects will be ever 
increasing.

Investor Expectations:
More and more investors are now expecting high double-digit growth if 
not triple-digit expansion in their portfolios. This extreme positive 
sentiment could help fuel a future selloff in technology shares.


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 
Benchmark                        (3/3)       (3/7)

Overhead Resistance (790-820)    16.85       16.53
Overhead Resistance (765-785)     6.23        5.26
Overhead Resistance (740-760)     0.69        1.01

OEX Close                       765.95      732.25

Underlying Support  (700-735)     2.71        4.68

What the Pinnacle Index is telling us:
On Sunday, we stated that the OEX was due for a breather, and boy did 
it get one. The index got hit hard thanks to P&G, but at current 
levels, we would look for the index to start building support. 
Overhead resistance (740-760) is light, so a solid bounce is possible. 


Put/Call Ratio                  Friday     Tues
Strike/Contracts                (3/3)     (3/7)


CBOE Total P/C Ratio             .40       .43
CBOE Equity P/C Ratio            .32       .35
OEX P/C Ratio                   1.36      2.04


Peak Open Interest (OEX)
                     Friday           Tues 
Strike/Contracts     (3/3)            (3/7)

Puts               680 / 9,154     705 / 10,844
Calls              750 / 7,497     750 /  7,277
Put/Call Ratio         1.22           1.49


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

March 7, 2000                           25.14



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

Daily Results

Index       Last      Mon      Tue    Week
Dow       9796.03  -196.70  -374.47 -571.17
Nasdaq    4847.84    -9.94   -57.01  -66.95
$OEX       732.25   -12.99   -20.71  -33.70
$SPX      1355.62   -17.89   -35.66  -53.55
$RUT       595.47     3.76    -6.17   -2.41
$TRAN     2263.59   -58.36  -112.50 -170.86
$VIX        26.63     1.86     3.48    5.34

Calls                 Mon      Tue    Week

QLGC       189.25    19.50    14.31   33.81  Tech conference news
CHKP       253.06     6.75    16.56   23.31  Continues to fly
CLRN       159.75     8.50    13.25   21.75  Great 2-week trend
EMLX       206.69    13.75     2.69   16.44  "clear market leader"
NTAP       212.63    12.13     0.56   12.69  Entry for a splitter
AMD         53.25     5.63     5.75   11.38  New, hot Semi play
JDSU       287.38    13.06    -5.69    7.38  Dropped, run ending??
SEBL       161.00    -3.28     9.56    6.28  Bucked the trend today
CMGI       140.00    12.94    -7.00    5.94  Dropped, earnings 
RRRR        72.44     0.50     3.94    4.44  New, picking up 
ATML        56.56     1.19     2.94    4.13  What market sell-off?
NSM         81.38     7.56    -3.63    3.94  Dropped, earnings 
WCG         58.00     3.00     0.75    3.75  New, broadband play
AFCI        69.00    10.25    -6.75    3.50  Volatile, but going 
ADIC        97.44     2.06    -1.56    0.50  Calm before the storm
ANDW        29.75     2.13     0.13    0.13  Monday trading alert
CCBL        49.75     1.91    -1.88    0.03  Consolidating 
INSP       259.50    -6.31     6.00   -0.31  More split run time 
MDT         49.50    -1.88     0.00   -1.88  Held its own today
ERICY      102.44    -0.75    -1.63   -2.38  Looking for entry
MER        104.44    -0.19    -2.38   -2.56  3 bounces off $104 
INKT       158.25    13.53   -16.25   -2.72  Dropped, more selling
CSCO       132.06    -1.31    -4.06   -5.38  Split run ahead
GLW        197.00     4.38   -12.63   -8.25  Sell-off, but entry??
LHSP       107.50    -3.81    -6.94  -10.75  Dropped, out of gas
VERT       237.50    -6.59    -7.63  -14.22  Upgraded to a Buy
DNA        211.50   -19.00    -4.00  -23.00  Entry for a Biotech

Puts

DD          46.31    -1.00    -3.44   -4.44  Old economy stock
MRK         53.94    -1.00    -2.56   -3.56  P&G domes sector
CTS         49.50    -5.81     3.00   -2.81  No reversal in trend
PPG         46.50    -1.06    -1.50   -2.56  Acting like a turkey
RNWK        70.13     2.56    -2.63   -0.06  Back to support??



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

Breaking Rules, Profitably
By Renee White

I broke a cardinal-trading rule recently, "Never Leave Town With 
Open Positions". Let me share my thinking, along with the value 
of good entry points because this time it proved to be incredibly 
rewarding. Pull out your charts and look at this with me. 

I'm a better trader than I was last year, or the year before that, 
or the year before that. That's what's exiting about this game. 
We are continuously learning, improving and practicing. Buying 
and selling is more planned now and I've learned to stack more 
odds in my favor. I had learned to not leave town with large 
open positions due a really stupid move in the past, which cost 
me more than just a bundle. 

At the end of January, I left for 10 days, returning to a market 
that had been selling off. I sat on my hands in cash, 
uncomfortable with the new bond yield inversion and yet conscious 
of the historical February sell-off. I was hoping to enter at the 
sell-off bottom, for some good April earning's plays. Returning to 
a bizarre bond market made me feel out-of-the-trading-rhythm 
causing me to miss good opportunities by being overly cautious 
while the Nasdaq continued it's rise. I had another 10 day trip 
scheduled at the end February, but I was getting anxious to play 
with my cash pile.  

Then, it happened and it happened fast! On February 18th  on 
option expiration Friday, the Dow which had been selling off, 
began a nose dive. Helped by the expiration day, it grabbed The 
Nasdaq pulling it under with it, to the bottom of the deep blue 
sea. Poor Nasdaq didn't have time to catch its breath, also not 
helped by some electrical problem preventing The Nasdaq quote 
from being able to be posted leaving traders in the dark for 
several hours. The sell off was nasty that Friday and Monday was 
a holiday, which makes any Friday sell-off always worse. Computer 
problems kept me out that Friday and all weekend. I was frustrated 
thinking everyone else was planning their entry points and I 
couldn't get online to research mine. 

Tuesday, after the holiday, both markets initially continued 
their slide down. Whenever I have been away from the markets and 
don't have time to do research on each stock I follow, I look at 
the broader market to ground me. Since I am mostly a tech bull 
player, that means Nasdaq daily, 15, 5, 1 min charts of the last 
day's trading activity and of course, always the VIX. From there 
I go to the sectors, then to the stocks on my stock lists that 
are strongly up or down on that day, then to the smaller movers 
on my list. When things are happening quickly, like that Tuesday 
morning, decisions have to be made quickly if you are going to 
catch an opportunity that falls in your lap. It doesn't happen 
very often and naturally, usually when you are least prepared.

In my quick Nasdaq review that morning, Nasdaq opened around 4430 
and I saw the sharp Friday sell-off continuing on both markets. I 
looked back through the Nasdaq charts and found a dip & bounce on 
February 15th to 4300, that I would use as a possible support 
level, thinking maybe it would occur in a day or two. I entered 
alerts at 4350, 4325 and 4300 on my Qcharts right then and moved 
on to the VIX. (Yes, I enter multiple alerts around the main 
number. This is just my obsessive insurance system, in case I am 
on the phone or doing something else. It gives me time to get my 
trigger finger ready and focus on all parameters.) The VIX had 
climbed sharply that Friday and now was continuing its climb to 
the key 30 level, on this Tuesday morning. I entered my alerts at 
29, 29  and 30. For me, 30 and over is a time I go shopping and 
load up with plays I've been prospecting. The key this time would 
be if Nasdaq bounced or continued through the support level. 

I was in a quandary since I was leaving town at the end of the 
week. I don't tend to repeat old mistakes, so why was I thinking 
about buying when I was soon to leave town? The answer was in the 
sell-off. I have not lost money YET, if I time my entries with 
the VIX and a major market correction. Although I was not 
expecting things to occur that morning, in the first couple of 
hours of trading, both of my targets were hit. Since I had not 
completed my review of charts on my watch list, I immediately 
prepared to load-up on QQQ March 186 options, a little in-the-
money, for whatever that would be worth as soon as a bounce off 
that level occurred. I paid 15 3/4. I invested a lot in this play 
but felt the risk was in my favor with the broader Nasdaq, due to 
the overly extended sell-off and fear factor in the air. 

I watched the market the rest of the day, I did not want to be 
caught with my pants down, on a sell-off into the close. The 
bounce was strong at 4300, but I was ready to exit at the close 
if needed. But, the worst appeared to be over with Nasdaq closing 
around 4377 and the VIX having come back down from roughly 30 1/2 
to 27 1/2. The next morning I went shopping for more buys. 
Actually, this was the more dangerous day because Nasdaq gapped-up 
on the open. This is when bear traps fake buyers back prematurely, 
only to swallow them up in pain. But I loaded with March & April 
plays during a quiet market listening to Mr. Greenspan. I don't 
remember what he said now, but something he said made me feel the 
market would rally after he was finished. A lot of my plays were 
consolidating after selling off with the market, which is another 
signal for me. I entered MOT, MLMN, VIGN and BVSN all nicely up 
by the end of day rally. Over the next two days, weakness did 
resurface with the VIX moving higher. I saw Nasdaq bouncing off 
the 4500 level, bouncing 3 times on a 5 min chart. I entered 
VRSN (an ouch for today), NSOL (jubilation today), CREE, AMAT, 
INSP, ARBA and VERT. I tried to enter each play at what I thought 
would be good entries. There was so much activity, I was late 
preparing to leave town. By the close of Friday I finally 
breathed and thought, "Girl!! What in the world did you do!?" 
I had completely loaded up. "Don't try this at home", is the 
disclaimer I should add for all new traders. This load could have 
been the kiss of death if I was wrong. 

Naturally, the cable service at the hotel went out and my 
connection speed was a mere 28,000 bps, but I checked my 
positions a couple of times a day, not much different than a full 
time employee could trade. Actually, all entries made rapid 
advances, only exiting my MLNM. Last week, holding during periods 
of profit taking due to wide stops, caused my biggest mistake to 
be my inability to churn these good plays. I had set stops 
instead of profit limits. It felt great to see 250% gains while 
gone 10 days, but I could have doubled that by churning. On the 
other hand, churning that many plays is probably unrealistic...it's 
just too much to watch. I usually don't play that many different 
plays at one time.

Since returning yesterday, I have been selling anticipating 
profit-taking as we get close to 5,000. I've sold 3/4th of my 
QQQ for 40 and 2/3 of BVSN bought at 20 6/8 for 76, ARBA bought 
at 45 1/8 for 90 and INSP bought at 28 7/8 hitting 109 today. At 
mid-day today as I write this, I still have many plays over 
250% gain. I'll exit these on any major Nasdaq pullback or as we 
get closer to closing over 5000......which my bet, will be on 
Thursday. At this point, it is past the time to churn because of 
the 5000 level. I will not be buying more, until the 5000 profit 
taking comes and goes.(Except for the JDSU I bought at the close).

In general the rule is sound. Don't leave town with open 
positions when you can't watch your plays. But, if you do break 
a trading rule, know why. Play when the odds are in your favor 
and be careful how you stack your deck. 

Renee White
Contact Support


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

First Trades Back for the Pretender
By Janar Wasito

After taking a vacation, veteran trader Marty Schwartz cautions 
that the first trades back should be small. So, today, I basically 
focused on writing calls against my LEAP holdings. Only two made 
sense -- BRCM and SEBL, which were both up big over the last few 
days, and looked technically over extended. I wish that I waited, 
but I jumped in a bit too soon during amateur hour, writing the 
BRCM Mar 250 and the SEBL Mar 160. I bought them back when the 
stock went up to that price. No free lunch -- there are good 
premiums on these calls because they are stocks that can move 
10 points in a half hour.

I used my checklist to evaluate the market after I rolled out 
of bed and grabbed my DSL line equipped computer. (Yeah, in a 
former life, I was a Marine, but I don't mind making money in 
bed!) I ran through the check list and the market, sectors, and 
stocks were still saying overbought, but some were up big. In 
fact, almost all of my plays were still up. That, itself, is a 
big warning sign. I was a bit disgusted with myself for playing 
the amateur hour two step against my experience and judgment. 
Oh well. I found myself watching the market a little more 
closely than I would like to. I was already beginning to feel 
like I need another vacation, and I just came back from one. 
That is some thing to resist: the temptation to watch the market, 
as if a tick by tick monitoring will make up for mistakes.

My road bike was stolen, and that bummed me out. Great bike, 5 
year old Trek with a carbon frame. Had to file another police 
report as my other bike, a mountain bike, was stolen a few 
weeks ago. I was having a good morning in the market, and could 
probably buy about ten of the bikes some kid took last night, 
but it was still getting to me.

I received wiring instructions for my favorite, fast broker. 
I went downtown, and did wire transfers from three different 
brokers into my single broker. Now that I am not selling naked 
options, I am comfortable putting all my cash in one place. 
When I was selling naked options, I felt like I was sitting on 
top of a Russian rocket with a motor that could blow up at any 
time for the sake of slightly better performance. Now that I am 
a spread trader, I can control my risk more precisely. I can do 
my two-stage, space shuttle trades in which credit spreads give 
the lift off that allows me to do longer term debit and credit 
spreads. My two JDSU plays are turning into textbook examples 
of this. Remember this formula: earnings or splits near expiry 
+ credit spreads = $$$$. I shut down one of my accounts with 
another broker that specializes in options. I can leg into any 
spread I need to without special entry screens. I moved money 
out of my two nationally recognized, high profile brokers. I am 
a gold customer at one of them. They must be using gold leaf to 
write my orders because the commissions are astronomical! I feel 
a little nostalgic about taking cash out of my other broker 
because I have been with the Beantown based firm since being a 
young officer in the Marines. I couldn't bring myself to 
liquidate all the stock positions I have held since 1998. I am 
vaguely thinking about using the margin there to do buy-writes 
on VRSN as I am doing in my IRA. Not a bad return for a no 
brainer strategy -- huge premiums, great stock. Coming home, 
I listen to another Jackson Browne tune, and ponder whether 
cash really will make anyone happy.

I'm going to be a happy idiot and struggle for the legal tender
Where the ads take aim, and lay their claim to the heart and soul 
of the spender
And believe in whatever may lie, in those things that money can 
buy For true love, could have been a contender...

Are you there, say a prayer for the Pretender
Who started out so young and strong, only to surrender

The last time I threw some JB lyrics into a column, I got mostly 
positive responses, one negative response ("stop rambling"), and 
a question from a classmate ("What are you smoking up in San 
Fran?") But, I think the question is worth asking in a column 
devoted to making money: What will make you happy? Just as you 
shouldn't look for excitement in the market, you shouldn't look 
for happiness in money alone either. End of sermon, back to 
making money

Back to my apartment for the last quarter hour of the market. 
I hit the checklist again. Sure enough, the market is rolling 
over. I can here George Jefferson now: This is the big one! 
(Not really.) I do think that the DOW will have a really hard 
time holding up. It would be fine to get some killer buying 
opportunities in the next few weeks. When I ran my checks on 
the market, the sectors, and the stocks, I came up with no 
reason to close any of my spreads. The two credit spreads (JDSU 
& IMNX) have max reward points (ie, where I sold the higher 
priced put) that are 50+ points in the dust -- actually my limit 
order to buy the higher priced JDSU put (Mar 230) back at a 
limit of 1/2 filled, so that play is closed for a ROI of about 
105%. Not bad for two weeks. The other longer term spreads are 
actually holding up quite well in the down draft. We'll see how 
they do in the next few days.

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:
*****

CMGI $140.00 -7.00 (+5.94) Profits! Profits! That's what this 
earnings' run reaped for many traders.  From initial entry 
points in the $115 and $120 range, the share price steadily 
climbed to an intraday high of $151.50 in this morning's 
session.  We couldn't have asked for a better play!  But the 
time has come for us to exit CMGI.  The company is reporting 
earnings this Thursday and is presenting its 4Q results during 
a Webcast which begins at 5pm EST.  Please consider closing 
any open positions.  OIN never holds over an announcement due 
to the risk of a post-earnings' decline. 

INKT $158.25 -16.25 (-2.72) We decided to make our exit from 
this momentum play tonight.  Today we saw INKT power up to 
$190.88 reaching (for the fourth consecutive time) yet another 
new all-time high.  Unfortunately, the subsequent downward 
spiral that followed knocked INKT down more than just a few 
notches.  Today's sell-off put the stock in a very precarious 
position just above the 5-dma (now at $156.06).  This mark on 
one hand could serve as a nice springboard in a rally, but on 
the other it may very well be a tell-all signal of impending 
gloom and doom.  In consideration that the swift decline was 
on more than double the ADV and the DOW may invariably drag 
down the Nasdaq, we're putting more weight on the latter 
speculation.  We could be adding INKT back to our call list 
later in the month for an earnings' run.  The company is 
expected to report around April 20th.

NSM $81.38 -3.63 (+3.94) The countdown to earnings has began.
On Monday, NSM gained $7.00 on strong volume of 2.7 mln shares.
As we mentioned this weekend it appeared as though investors
may have waited until the last minute to jump into NSM for its
earnings run.  Today was a whole different story as NSM could 
never really get out of the starting blocks.  NSM gave back
better than half of Monday's gains, but did manage to bounce
off support at the $80 level in the last hour of the day.
Volume today was fairly heavy as well with over 2.3 million
shares changing hands.  NSM is scheduled to report earnings
after the close on Thursday.  If you still have a position in
NSM we would use the $80 level as a guide for support, however
the SOX did manage to hang onto small gains today, while NSM
lost over 4.0%.  If NSM can regroup tomorrow and move higher
we may see a last minute spurt.  If not keep your stops close.
For now we will let NSM go, and concentrate our efforts 
elsewhere.

LHSP $107.50 -6.94 (-10.75) Maybe investors are going tone-deaf,
or maybe they just don't like what they hear, but they seem to
have a lack of conviction when it comes to LHSP.  They have
driven the price up into the $120 range twice now and both
times, the sellers have emerged to push the price all the way
down to support at $105.  There doesn't seem to be any reason
for the emerging trading range except that neither the bears
or the bulls feel strongly enough to push the price outside
the range.  As option traders, this kind of action can eat our
lunch, and rather than give it to the playground bully (time
decay), we'll go find some other playmates while LHSP takes
its nap.

JDSU $287.38 -5.69 (+7.38) While we consider the long tail on 
today's candle stick chart to most likely represent a good entry, 
we're dropping JDSU tonight.  It fell below support of $290 in 
the final hour reaching as low as $271 before staging an 
incredible recovery in the last 15 minutes of trading.  It's 
since regained its composure to $292 in after hours trading.  
Talk about a scare!  It's been an outstanding split play.  
However, on Friday, March 10, JDSU will split its shares 2:1 and 
there is little time left to execute another play.  Look for your 
exit between now and then.  The skilled trader might be able to 
squeeze a bit more $$$ from it.  But for now, we'll re-deploy our 
capital into a longer-term play.  Look for JDSU to return to our 
list as earnings approach on April 26.


PUTS:
*****

No dropped put plays tonight.



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

ATML $56.63 +3.00 (+4.13) What sell-off?  There wasn't one in 
the shares of ATML today, although the market did probably hold 
it back from further gains.  The SOX index was up nearly 20 
points today, but that is small relative to ATML's 5.5% gain 
on the session.  The gains have been purely momentum driven for 
this stock in a hot sector.  No fresh news to propel it.  The 
volume continues to be strong with today's doubling the 3-month 
average daily for ATML.  The one nice part to the market sell-
off was for entry points.  Atmel pulled back to $55 twice this 
afternoon before rocketing into the close.  $60 looks like a 
walk in the park from here, but watch out for more market-wide 
selling to possibly hinder the play.

ANDW $29.75 +0.13 (+2.25) Nothing like an OptionInvestor trading 
alert to put the life back into a stock.  We were watching ANDW 
all morning Monday, waiting for our entry point.  When the stock 
began to round up from $26.50, we knew it was time.  The influx 
of new buyers quickly sent ANDW to a new 52-week high at $30 
where it ran into resistance.  It has generally moved sideways 
near this mark for the past day, but upward trend is still in 
tact.  In the news today, California Amplifier refuted some 
allegations from Andrew of patent infringement for the design 
of certain products.  This will have little impact on ANDW's 
stock as it will be a long and drawn out process and ANDW is 
on the right side of this lawsuit.  In the news yesterday, was 
an article on Rueters after the close about the increase of 
option volume.  These are my favorite as they interview traders 
and call the company trying to figure out what is going on.  
Maybe we should send them a free subscription to OI.  We still 
like ANDW going forward. Those of you that were able to grab 
the April 30s around $2 got a great bargain.  Look for more 
bargains on the dips or a strong breakout on good volume over 
the $30 level.  A positive market may be what Andrew needs to 
get the breakout we want. 

ERICY $102.44 -1.63 (-2.38) Here is another momentum play
that made an intraday high of $105.25, yet succumbed to the 
negative sentiment that plagued the markets today.  That 
resistance point will remain our target point to break through 
the next few trading sessions.  Last week we spoke about the 
importance of breaking through the resistance level of 100 as 
a bullish indicator.  ERICY delivered on that as the bulls ran
the stock upward to new highs on Friday and Monday.  Today's 
slight pull back appears to be natural as the bears had the 
upper hand on the market as a whole.  With its 5-dma at $101, 
watch for this support as a good entry point.  During this run,
ERICY has consistently been bouncing off its 10-dma and today's
small pullback could provide attractive entry points.  Tomorrow
let's keep our eyes open to see whether ERICY tests its $101 
support and if so, watch for the bounce as confirmation for 
a conservative entry point.  

MER $104.44 -2.38 (-2.56) MER had some selling today in 
conjunction with the Dow sell off, yet nothing of which to be too 
terribly afraid.  Even with extraordinary selling today, there
was solid support at $104 where it bounced 3 times.  With all 
this in mind, watch for moves off this level to confirm.  We are 
still bullish on this play, feeling that this simply was the 
market weighing down on some of the blue chips.  MER actually 
made a run to a 52-week high of $111.75 on Monday where it 
ran our of gas and pulled back.  Today's trading range represents 
a good basing for another attempt to close at a new 52-week 
high and MER does appear to be poised for more upside potential.
Let's hang in there.  With the earnings season kicking off again
and a pending relief rally after today's bloodbath, MER could 
get to that next range.  Don't forget support at $104 as a 
good entry point and a bounce from there confirms an up move.  


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



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DISCLAIMER
**********
This newsletter is a publication dedicated to the education 
of options traders. The newsletter is an information service 
only. The information provided herein is not to be construed 
as an offer to buy or sell securities of any kind. The 
newsletter picks are not to be considered a recommendation 
of any stock or option but an information resource to aid the
investor in making an informed decision regarding trading in 
options. It is possible at this or some subsequent date, the 
editor and staff of The Option Investor Newsletter may own, 
buy or sell securities presented. All investors should consult 
a qualified professional before trading in any security. The 
information provided has been obtained from sources deemed 
reliable but is not guaranteed as to accuracy or completeness.
The newsletter staff makes every effort to provide timely 
information to its subscribers but cannot guarantee specific 
delivery times due to factors beyond our control.

The Option Investor Newsletter         Tuesday 3-7-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.


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

DNA $211.50 -4.00 (-23.00) Our prediction that consolidation was 
imminent was right on the money, so to speak.  DNA methodically 
slithered from a 52-record high at $245 to its first level of 
support at $210 and $215.  The current level shows promise with 
upward bounces off $208 and $209.  Volume was very active, but 
not overbearing indicating DNA is poised to hold its current 
position.  If all does take a turn for the worst and there is a 
further correction, then buckle up because old resistance is way 
down there at $195.  Consider waiting for upside confirmation.  
For the moment DNA is a pure momentum play, but we're hoping 
this powerhouse will carry us through into an earnings' run.  
The anticipated earnings' date is still about five weeks away on 
April 20th.  Although if all the stars are properly aligned, 
perhaps there'll be a split announcement to boot (more info on 
this aspect in Sunday's write-up).  In the news, Genentech and 
Novartis announced two new Phase III studies show their drug 
anti-IgE can almost cut in half the number of asthma attacks 
suffered by adults and children alike.  The drug could be on the 
market as soon as next year.

AFCI $69.00 -6.75 (+3.50) Volatility is the name of game for 
this momentum play.  AFCI set new record highs in the past two 
days.  The stock pinnacled at $77 and $77.19, respectably, while 
still offering solid bounces off intraday lows between $70 and 
$73 for entries.  Near-term support is firm at $69 and $70 (just 
a notch above the 5-dma at $67.18) has so far proved strong, but 
let's keep stops in place.  AFCI is strictly a momentum run and 
since there hasn't been any earth-shattering news, we want to 
see if there's adrenaline left to pump up the share price again.  
There was however a small bone thrown to AFCI by a recent 
Robertson Stephens' report.  AFCI was listed along with CIENA 
(CIEN) and Carrier Access (CACS) as smaller companies in the 
communications industry that have "the advantage of focus".  
Senior Analyst Paul Silverstein, also noted "Advanced Fibre, has 
a product that not only is extremely technologically capable but 
also has been out in the field for several years now" and "has 
the benefit of an impressive base of reference accounts".

INSP $259.50 +6.00 (-0.31) Looks like we've got more time to 
play our split run than previously anticipated.  Initially the 
stock was expected to split 2:1 on March 15th, but on Friday the 
company announced it would go ex-div on April 7th.  This is good 
news at a time when INSP is currently at a premium entry level.  
The proximity of $250 has proved to be firm near-term support 
over the past four trading sessions.  Entries off the rapidly 
rising 5-dma (currently at $254.38) are now also proving to be 
solid.  Even with a momentary slip today to $245, INSP quickly 
regained composure.  For those that prefer to play these HIGH-
RISK Internets a bit more on the cautious side, wait for INSP to 
make a move through $270.  On the news front, US West Wireless 
announced it chose InfoSpace's wireless Internet platform to 
handle its suite of wireless Internet services.  Other good 
tidings came today from SG Cowen.  The firm started INSP with 
a Strong Buy recommendation.

EMLX $206.69 +2.69 (+16.44) "The clear market leaders in end
nodes are Emulex and QLogic.  They have the lions share of the
OEM wins in my view."  That's a quote from Dane Lewis, Senior
Research Analyst on data storage and peripheral companies, with
Robertson Stephens.  The "clear market leader", that's quite a
strong endorsement for a company who just happens to be one
of our top plays as well.  EMLX took off Monday and didn't stop
until hitting a new high early this morning at $218.44.  Traders
began to take some profit at that time, which isn't all that
unusual considering the recent run we seen in EMLX.  It was
very encouraging to see an orderly decline, as EMLX really traded
in more of a sideways pattern for most of the day.  EMLX almost
drifted lower, rather than the sharp volatile corrections seen
many times when investors begin to take some money off the table.
EMLX finished the day $2.69 to the good but was heading lower 
as the session ended.  With the move the last two days, EMLX 
now has support at $203 and $200.  If the Nasdaq can regain its 
footing tomorrow we would look for shares of EMLX to get back 
on track as well.

CHKP $253.06 +16.56 (+23.31) A famous sportscaster by the name
of Dick Enberg coined the phrase, "Oh My", when broadcasting
events on national television.  As we watched CHKP trade the
past two days, that same phrase kept coming to mind.  As a
trader or researcher, sometimes we have are own pre-conceived
ideas as to the strength or weakness of companies we follow.
CHKP began the week making a new high and ending the day with
a gain of +6.75.  We thought maybe CHKP might see some profit-
taking set in Tuesday.  As trading began today, all we could say
was "Oh My".  CHKP opened almost $6 higher and didn't stop until
making another new high at $259.  On a day the wheels were coming
off the Dow, and the Nasdaq held on as long as it could, CHKP
gained 7.00%.  How do we play this one?  CHKP has broke out of
its channel so a pullback would not be out of line.  Support is
found at $250, $243 and $236.  If you have a position, move your
stops to where you are comfortable.  If you are considering a
new play, a bounce off a support area would be a great place to
enter a new play.  This morning analysts at Prudential upgraded
CHKP from an Accumulate to a Strong Buy, which may account for
part of the strength seen today. 

CLRN $159.75 +13.25 (+21.75) A gain of $13.25 or 9.0%.  That's
what you would see if you looked at just the closing price for
CLRN.  But that doesn't begin to tell the whole story.  CLRN's
closing price was $16.25 below its all-time high, set earlier
in the session.  That's right CLRN pulled back after gaining
$29.50.  This on a day when the DOW was headed towards its 4th
largest point drop ever, and the Nasdaq was clinging to gains
after crossing 5000.  Now we realize CLRN has nothing to do
with the DOW or the stocks getting clobbered at the NYSE.  But
investor sentiment or psychology in the overall markets does
play a part in the big picture.  If CLRN can gain 20% on day
when investor sentiment is lousy, where can it go if traders
aren't so skittish.  Actually CLRN did sign a deal with a 
company named Insors, a Chicago based business to business
integrated communications solution provider.  Insors plans to
package Clarent's gateways and the Clarent Command Center with
routers, hubs and other products.  Isors is targeting Fortune
1000 sized companies.  The strength may have also come from
traders anticipating a split announcement from CLRN, as the 
board did ask for shareholder approval to increase the number
of authorized shares.  Support for CLRN is found at $156 and 
$146 so adjust your stops according to your own risk profile.  

NTAP $212.63 +0.56 (+12.69) Did you sell too soon?  Our split
run got off to a great start Monday and provided us with 
several good entry points in the last two days.  With the 
Dow and Nasdaq under pressure today shares of NTAP fell from
a new high at $230 set late this morning.  NTAP gave back
most of the gains seen earlier today finishing up just $0.56.
The retracement may be providing us with another entry point
for our split run play, however it may be prudent to check
out the mood of traders tomorrow before entering a new play.
NTAP closed right on support at $212.  Additional support for
our new play is found at $202, with a bit of resistance seen 
at $220.  If the major indices can regain their footing, we
believe NTAP can move to new highs.  We have plenty of time
for this one to develop, as NTAP doesn't split until Mar 23rd.
Actually with the sentiment in the DOW so negative we are
very pleased, if not surprised, NTAP and many of the stocks in
the Nasdaq held up as well as they did.  If you entered this
play and took a quick profit, good for you.  If you are waiting
to take a position, be patient, as any further declines could 
provide a great entry point for a split run that we feel 
should continue to develop.

ADIC $97.44 -1.56 (+0.50) Looks like the calm before the storm.
While many stocks are moving up or down strongly, ADIC has
settled into a nice tight trading range between $96 and $100.
Volume, slightly below the ADV confirms that investors are
taking a break before deciding which way they want to drive
this boat.  Remember, we are in this play for the split run,
which should get moving any time now.  The company is splitting
its shares 2-for-1 on March 13th, so there isn't a lot of time
left for the run.  In light of the strong run that the stock has
already seen since early February (doubling from $50 to $100),
there may not be enough wind left to fill ADIC's sails for a
split run.  Support is strong at $90, and seems to be solidifying
near $96, with resistance sitting firmly at $100.  We need to
see volume come back into the picture to support the run; any
move higher in its absence should be viewed with suspicion.
If volume picks back up, look to enter new positions on a bounce
at support, (the $90 level would be a nice gift), or a
breakthrough of resistance at $100.  Just remember, with the
split occurring next Monday, we will be dropping ADIC on
Thursday to allow time to exit any open positions.

MDT $49.50 +0.00 (-1.88) Given the carnage on the NYSE, MDT
has held up pretty well this week.  Tagging a new 52-week high
of $52.94 early yesterday, shares sold off for the remainder of
the day as investors took profits, pulling MDT all the way down
to support at $49.  The trading today was more sedate
(encouraging in light of the action at the Big Board), as shares
traded in a narrow range on light volume (25% below the ADV),
and confirmed support at $49.  The direction of the broader
markets will likely determine MDT's direction for the rest of
the week.  Tiered resistance appears to be at $51, $52, and then
$53 (just above yesterday's high of $52.94) and increasing
buying interest will be necessary to push MDT through these
levels.  Support looks good at $49, but today's close near that
level leaves us with an unsettled feeling.  Further weakness
could drop MDT through to lower support, found at $47.50.
Remember we are playing MDT on the momentum that carried it to
new 52-week highs last week.  Entries can be considered on a
solid bounce of either of these support levels, but pay
attention to volume.  If there aren't buyers to drive the price
up, MDT could turn into a falling knife - don't try to catch it
until it finds a bottom.

QLGC $189.25 +14.31 (+33.81) Did somebody say there was a
correction over at the NYSE?  Nobody told QLGC investors, as
they continued to bid the shares higher on very strong volume.
After spending a week consolidating between $140 and $150,
investors seem to have gotten the picture from the company
that growth is rampant.  With frequent announcements about
industry alliances and new products, QLGC is becoming difficult
to ignore.  As an indicator of the company's dominant role in
the industry, QLGC's director of planning and technology, Skip
Jones, has been elected president of the Fibre Channel Industry
Association (FCIA).  Of course, the primary mover in QLGC's
price the last 2 days seems to have come from the Robbie
Stephens Tech 2000 conference last week.  Dane Lewis of
Robertson Stephens, in an interview with The Wall Street
Transcript called QLGC and EMLX the leaders in the emerging new
wave of storage solutions, namely Storage Area Networks (SANs)
and Network Attached Storage (NAS).  Shooting out of the gate
first thing Monday morning, investors grabbed shares with a
vengeance, starting the day out above resistance at $159.50
and moving up from there on almost double the ADV.  Without
losing a beat today, QLGC gapped up and moved up strongly,
tagging a new 52-week high of $203.25 before succumbing to
profit-taking.  Bouncing in the final half hour at $180, gives
us the notion that QLGC may find support there tomorrow.  If
not, we could see $174 or $166, all intraday support levels that
are new in just the past 2 days.  Mild resistance looks to be
found near $190 and then up at today's high.  Use QLGC's volume
and the health of the NASDAQ as indicators of the longevity of
this move.  A deterioration of either could be your first sign
of a shift in direction.  Target shoot new entries on intraday
dips to your risk tolerance and watch out for profit-taking.

CSCO $132.06 -4.06 (-5.38) New readers, CSCO is an upcoming 2:1 
splitter.  The stock goes ex-div in a little over two weeks on 
March 23rd.  This gives us ample time to make our trades and 
position ourselves for lots of potential profits.  If you take 
a look at a chart you may be thinking...why is OIN adding CSCO 
now?  Granted it hasn't broke out yet, but we're anticipating 
split excitement to accelerate in the coming days.  Therefore, 
following along those lines, it makes absolute sense to get in 
now while CSCO is at a strong support level.  Currently the 
stock is just a snippet under the intersecting 5-dma ($134.04) 
and 10-dma ($134.16), which in this case is a relatively safe 
place to linger.  Let's however watch CSCO.  The markets are 
likely to be very volatile over the next couple of days so keep 
a close eye on CSCO.  It'd be a shame if the DOW perpetually 
pulled the Nasdaq into its spiral and you bought too soon. 
Here's a few of the highlights swirling around Cisco this week.  
Cisco won a $280 mln equipment bid from Cogent Communications,  
a specialized Internet Service Provider (ISP).  This fiber optic 
gear order is the largest optical networking sale to date.  
Notably it will provide Cogent with the first end-to-end all 
optical network to deliver Internet access service with speeds 
100 times faster than a T-1 connection.  Yesterday Cisco Systems 
Capital Corporation (CSC), a wholly owned subsidiary of Cisco, 
and Diyixian.com, a leading corporate ISP in Greater China, 
announced a joint equipment financing agreement to build-up a 
next generation IP broadband network in Greater China over the 
next 3 years.

GLW $196.81 -12.81 (-8.44) Yesterday was fine; today, NOT!  
Apparently, today's 19th annual GLW media briefing did nothing 
to support the stock by the market's close.  In case you missed 
it, GLW took a $12 nosedive with a half-hour left to go in the 
trading day.  While that never looks good, it still managed a 
$1.50 rebound from the low - enough to get it back over the 10-
dma of $195.50.  If it turns out to be safe to get back in the 
water tomorrow, then this would make a good entry.  If you'd 
rather enter off historical support, then wait for a move back 
over $200, followed by $203.  One bright spot was Warburg Dillon 
Read announcing they had upped their target price from $175 to 
$260 - late to the party, but that's OK.  Anyway, GLW is a split 
candidate at this level.  With earnings on April 17, that would 
be the likely announce date, followed by a special shareholder 
meeting on April 27 (from DEF 14A) to increase the authorized 
shares in order to effect the split.  Confirm market direction 
before playing.  Today's action confirms that the OFC 2000 
Conference isn't enough to support this sector in a downdraft.

SEBL $161.00 +9.56 (+6.29) At least somebody bucked the trend 
today.  Volume made a comeback over the last two days and never 
let us get that entry in the $130's, so we had to be happy with 
$147 yesterday and $150 today.  SEBL looked technically strong by 
managing a bounce and a close well above its 5-dma of $147.69.  
As long as technology remains out in front, SEBL should continue 
to move up.  Unfortunately, other than an article noting that 
Home Shopping network is standardizing on SEBL systems software, 
there is no news to explain today's gains.  But if SEBL can do 
this while even the NASDAQ goes in the tank, it will be one of 
the strongest when the market turns around for earnings season.  
SEBL is also a split candidate at these levels, but will need 
shareholder approval to authorize more shares should management 
opt for anything greater than 3:2.  Earnings are not until April 
25.  You may consider target shooting at $150 again, or if you 
don't mind a bit more risk, $160 (near its current level) could 
also make a good entry.  Just make sure the market is moving in 
your favor.

VERT $237.50 -7.63 (-14.22) Nothing goes up in a straight line 
forever.  Accordingly, after a 25% gain in price over the last 
two weeks, VERT was due for some correction, especially after 
reaching nearly $265 yesterday.  We hope you followed our 
suggestion to keep your stops in place.  However, we expected 
that $245 might hold as support.  B2B is still a hot sector, and 
as suggested, we consider this pullback a gift, and even more so 
that it occurred on diminished volume - nobody lining up at the 
exits.  Remember VERT is on a run into its 2:1 split date of 
March 31.  VERT typically finds support at its 5-dma (currently 
$239.62), but is now below that figure.  We'd like to see a move 
back over that figure to confirm an entry point.  Of if you are 
more risk averse, you can wait for $229.57 (current 10-dma), but 
the chances of a fill diminish if NASDAQ resumes its trek to 
5000.  Confirm market direction before playing.

CCBL $49.75 -1.88 (+0.03) While the market may not think we've 
collectively been buying enough soap (PG -26.44), it can't accuse 
business of buying too little optical equipment.  That CCBL has 
help up well, as the market does its best submarine imitation, 
conveys that it will be one of the first to rise on any reversal, 
especially in light of the OFC 2000 conference (optical fiber 
conference) this week.  While we can find no specific news on 
CCBL to justify its durability, it's probably just in the right 
sector - optical equipment.  We don't put much credence in 
Emerald Research's announced Buy rating today, however, every 
little bit helps.  Technically, $48.50 is holding up well as 
intraday support.  Given the tapering off of volume in the last 
two days, there appears to be no mad rush for the exits.  That's 
a plus.  For technical traders, note that the 5-dma of $48.48 
provided excellent support today too (same as intraday), while 
the 10-dma is $43.67.  Pick your favorite target.  However, if 
the NASDAQ market turns around and moves smartly up to 5000 as 
earnings approach, we may not get that low of an entry.  Breakout 
occurs over $54.50.



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

RNWK $70.13 -2.63 (-0.06) Today we saw small gains throughout 
the day, yet RNWK made its low of the day in the final moments 
of trading on lighter than normal volume, about 1.7 mln shares.
$64 appears to be the next support level.  That point represents 
a slight support level with a stronger support at $60.  We feel 
a retest of these levels is eminent.  The past two sessions have 
brought closes near the intraday lows and this downtrend should 
continue.  Tomorrow's session should be mixed one so watch 
closely as to RNWK's direction in the early going.  Entry points 
into these puts may be attractive.  Keep in mind the support 
levels when RNWK drops and set your limits accordingly.

DD $46.32 -3.44 (-4.44) Well, the downtrend continues, and 
with great vigor.  The old economy seems to be weakening 
rather quickly, and with today's Dow sell-off, many of these 
"old economy" stocks don't show much hope.  DD was not an 
exception today.  On heavier volume than its ADV (4.1 mln vs.
3.3 mln shares), DD truly asserted its dramatic downtrend.  
As we stated in our original play, the 10-dma has provided 
consistent resistance and continues to depress the stock price.
The strong volume coupled with a new 52-week low, makes for a 
free fall.  DD is now at a price level that has not been seen 
since early 1997.  Along with the continued divergence between 
"old economy" and "new economy" stocks, the lack of money flow 
into these value plays (and value funds for that matter), does 
not bode well for DD.  We still believe we will see lower 
prices in the short run.  Keep riding the trend until we see 
a clear sign of a reversal. 

MRK $53.94 -2.56 (-3.56) Thanks to the Proctor & Gamble earnings
warning this morning, not to mention downgrades of many other
DOW components, stocks like MRK took a bath.  Yesterday's
"trickle" of sellers (at 30% over the ADV) became a regular
flood at the open this morning, dropping MRK as low as $52,
before the bottom-fishers started to appear.  Today's more than
12.9 million share volume, more than doubled MRK's ADV and
confirms the strength of the move.  Apparently there are still
investors out there looking for value, and they helped the
beleaguered drug-maker to recover some of its losses, closing
down $2.56 at $53.94.  Today's plunge takes MRK down to yet
another 52-week low, and today's range (after the initial drop)
is reminiscent of MRK's trading range between $51 and $54, 
last seen in December 1997/January 1998.  More time will be
necessary to see if either the $54 resistance or the $51-52
support will hold, but given the continued weakness in anything
non-tech, there could yet be more downside.  If support at $51
fails to hold, the next help for MRK should be seen at $48 and
then $46.  Look to enter new positions as MRK tests the $54
resistance level and rolls over.

PPG $46.50 -1.50 (-2.56) As the saying goes, "It's hard to soar
like an eagle, when you are surrounded by a bunch of turkeys".
Such was the case for PPG today, announcing the creation of an
e-commerce unit (remember when this type of announcement was
guaranteed to juice a stock's price?), and being recognized for
two innovations in automotive coatings.  How did investors
respond?  What started as indifference in the morning, turned
to capitulation in the afternoon as pressure from the DOW
selloff spooked investors and PPG dropped through the $47
support level (Yep, that's right...another 52-week low).  We
have to go all the way back to July of 1996 to find support
($45) below today's low of $46.  Also adding to the bearish
tone today is the volume picture; although the day saw about
20% less volume than average, as the price dropped in the final
hour, the volume picked up.  Then when the recovery began to
emerge in the last 10 minutes, volume dropped off.  PPG still
looks like it could have trouble mounting a recovery, but with
the degree to which it has already sold off, use caution.
Consider opening new positions as PPG bounces south from
resistance, now found at $48 (right between the 5-dma and
10-dma).  If the trend continues, consider moving your stops
down also, to protect your profits when PPG finally recovers.

CTS $49.50 +3.00 (-2.81) CTS bucked the market trend today with 
a 6.5% rise in its stock price, shrugging off the rest of the 
market debacle.  But don't be misled because this certainly 
is not a reversal in the downtrend for CTS, which began in early
February.  What today's price move does indicate is a very nice 
entry point to buy puts just a little bit cheaper.  This rise
does not overshadow the fact that on Thursday and Friday, CTS 
blew right through its 200-dma around $55.50, which now poses 
resistance.  Technically, CTS is poised to continue its 
downfall and as we mention in our play, the next support level 
is around $44.  Tomorrow may be a good chance to take advantage
of this slight price rise and bargain shop for some puts.  Be 
patient and pick your put once you see the direction of CTS.  
Remember CTS's support level when placing limits and watch 
closely to see if it holds.



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

AMD - Advance Micro Devices $53.25 +5.75 (+11.38 this week)

AMD is a global supplier of integrated circuits for the personal
and networked computer and communications markets.  They produce
processors, flash memories, programmable logic devices, and 
products for communications and networking applications.  the
company ranks #2 in the microprocessor market behind Intel,
however it has captured about a 60% share of the sub-$1000 PC
market.  AMD also makes embedded chips and nonvolatile memories.
They have manufacturing operations in Europe, China and Japan,
with about 55% of its sales outside the U.S.  AMD gets about
12% of its revenues from Compaq Computers.

They may be #2 in the microprocessor market, but Monday they
beat Intel to the punch.  Investors rewarded one of our latest
additions to our play list with a 27% increase in the price of
their stock in the past two days.  On Monday, AMD released their
new Athlon processor for PC's.  The new processor runs at
1-gigahertz, which makes it the fastest PC processor on the 
market.  AMD has overcome production problems and delays, which
have accounted for losses for seven of the last 10 quarters.
In making the announcement, AMD said that Compaq computers and 
Gateway already started selling computers with the 1GHZ Athlon
chips.  What attracted us to AMD as well, was a report from 
Reuters which said personal computer unit shipments are 
expected to grow by 20% in the first quarter of 2000, compared
to the same period in 1999.  Shipments made during the 1st
quarter are traditionally a slow period.  With Y2K fears over
for the most part, and the introduction of Microsoft's Windows
2000, demand should pick up for new PC's and those wanting to
upgrade.  If that's the case, then AMD will be well positioned
to capture more than its share of business.  On Monday, analysts
at Gruntal, reiterated their short-term Outperform rating of
AMD.  Need further proof of the new-found popularity of AMD?  
In the past two sessions AMD has seen over 24.1 million shares 
of their stock traded.  AMD made a new high today at $59 before
seeing some profit taking set in.  Due to the gaps up the past
two days, we would look for $49 or $46 to provide support for AMD,
should we see any further profit taking.  AMD did bounce off the
area at $50 late today, so a bounce back to higher levels may
have already began. 

The news of the new 1GHZ processor has captured the headlines
in the last day or so, however AMD also recently announced a
flash memory agreement with Cisco Systems.  Under the terms of
the agreement AMD will supply CSCO with the majority of their
flash memory devices requirements over the next three years.

BUY CALL APR-45 AMD-DI OI=3469 at $10.88 SL=8.75
BUY CALL APR-50 AMD-DJ OI=4016 at $ 8.00 SL=6.25
BUY CALL APR-55*AMD-DK OI=2112 at $ 5.88 SL=4.25
BUY CALL APR-60 AMD-DL OI=5309 at $ 4.13 SL=2.50

SELL PUT MAR-50 AMD-OJ OI= 208 at $ 2.06 SL=4.00
(See risks of selling puts in play legend)

Picked on Mar 07th at    $53.25    PE = N/A
Change since picked       +0.00    52-week high=$59.00
Analysts Ratings      8-6-8-0-0    52-week low =$14.56
Last earnings 01/00   est=-0.06    actual= 0.43 
Next earnings 04-19   est= 0.35    versus=-0.81
Average daily volume = 3.74 mln
/charts/charts.asp?symbol=AMD

****

WCG - Williams Communications $59.00 +1.75 (+4.75 this week)

WCG is 85% owned by Williams Company (WMB), a gas utility 
transmission company whose rights of way have been filled 
with ubiquitous strands of fiber optic cable.  In 1985, WMB 
became the first energy company to harness its core competency 
as a builder of networks to enable competition in the 
communications industry Williams Communications is North 
America's only exclusively carrier- focused fiber-optic 
network and the largest independent source of end-to-end 
integrated business communications solutions-data, voice or 
video.  Based in Tulsa, Okla., Williams Communications 
operates primarily in North America, with offices in Europe 
and Asia and investments in South America and Australia.  

Can't you just taste the broadbandy goodness?  Over the past 
week, pure optical transmission networks have found their way 
to the dinner plate, as Deutsche Telekom was rumored to have 
an appetite for Qwest Communications, then Global Crossing, 
both as acquisition targets.  While the market was preparing 
DT's meal, it also cooked up some nice gains in QWST and GBLX 
competitors, namely WCG.  All have core competency in leasing 
out access in their fiber backbones to other carriers.  
Recently, WMB announced deals to purchase 2200 miles of fiber 
in Michigan, Ohio, Indiana, Illinois and Wisconsin from SBC's
Ameritech division.  Similarly, they recently swapped network 
capacity with Sweden's Telia in a deal valued at $440 mln.  
Technically, WCG experienced a breakout five days ago at $46 
and has moved up to current levels, unabated by turbulent 
markets.  If you squint at the chart, support can be seen 
intraday at $50, $53 and its current level of $58.  But it's 
tough to see since the gains have been steady with little 
interruption.  Take solace in knowing that even the tip of the 
long candlestick tail in today's action couldn't get down to 
the 5-dma of $54.31.  Target shoot to your comfort level - it's 
looking really strong.  Though we don't list them, you can 
consider playing WMB strikes too since the street values their 
energy business at about $3 per share, net of their 85% interest 
in WCG.  It's a lot like BCE's interest in Nortel 

You want analyst recommendations?  We got'em right here: Lehman 
Bros. raised their price target to $62 from $52, while Solomon 
Bros. reiterated their Buy rating and raised their target to $70 
from $46.  CSFB was the first to notice two weeks ago when they 
raised their target from $38 to $65 and reiterated their Buy 
rating.

***March strikes expire in less than 2 weeks***

BUY CALL MAR-50 WCG-CJ OI=144 at $8.63 SL=6.50
BUY CALL APR-55*WCJ-DK OI=117 at $7.63 SL=6.00
BUY CALL APR-60 WCJ-DL OI=101 at $5.13 SL=3.25

Picked on Mar 07th at   $59.00     P/E = N/A
Change since picked      +0.00     52-week high=$58.38
Analysts Ratings     2-3-1-0-0     52-week low =$23.25
Last earnings 02/00  est=-0.23     actual=-0.16
Next earnings 05-13  est=-0.42     versus= N/A
Average Daily Volume =   956 K
/charts/charts.asp?symbol=WCG

****

RRRR - Rare Medium Group $72.44 +3.94 (+4.44 this week)

Originally known as ICC Technologies, the company divested
itself of its old business (air-conditioning operations) in
favor of newer technology after purchasing Web-site developer,
Rare Medium in 1998. RRRR provides planning, consulting,
technology, marketing and Web-hosting services to large and
mid-sized corporations looking to develop their e-commerce
businesses.  The company employs a service delivery methodology
that ensures rapid speed to market of business solutions,
iterative refinement of the solution, and a solution that is
linked to business benefit.  The company runs six offices in
the U.S., one in Canada, and another in Australia and has the
ability to conduct projects on either fixed price, fixed time,
or a time and materials basis.

No, the company's name does not refer to an elusive psychic or
an answer to the question of how you want your steak cooked.
This dynamic company is positioned in the middle (medium?) of
the red-hot e-business sector.  This is a purely technical play,
based on momentum and a strong chart.  Along with the NASDAQ,
RRRR has been marching higher since early February, during which
time its share price has more than doubled.  Volume seems to be
a particularly accurate indication of Re's strength on any
given day, as down and consolidation days have produced volumes
significantly below the daily average, while up days commonly
see double or triple the ADV.  Marching up the chart, RRRR
provides a beautiful stairstep picture as it moves up $5 at a
time before consolidating for the next move up.  Resistance
now sits at $75, near today's 52-week high, and the stock may
need to consolidate near $70 before moving higher.  Support is
found below at roughly $5 increments, and a bounce at either
$65 or $60 is buyable.  Frequently bouncing near the 5-dma
($66) on its move up, RRRR provides investors with their best
entry points on the occasional bounce at the 10-dma ($60.44).
Target shoot entries according to your risk tolerance, but
remember to watch the volume.  Strong volume on an up-day is
a good indication the move is for real.

The latest news for RRRR occurred on February 24th.  Sylvan
Learning Systems, Inc. announced that it plans to launch a
venture subsidiary that will invest in and incubate emerging
internet technology companies in the education and training
marketplace.  RRRR is one of several companies that will invest
in and support the venture.

***March contracts expire in less than 2 weeks***

BUY CALL MAR-70 RRU-CN OI=368 at $ 7.75 SL=6.00
BUY CALL MAR-75*RRU-CO OI=590 at $ 5.25 SL=3.50
BUY CALL MAR-80 RRU-CP OI=104 at $ 2.63 SL=1.25
BUY CALL APR-75 RRU-DO OI= 70 at $10.13 SL=7.50
BUY CALL APR-80 RRU-DP OI= 65 at $ 7.13 SL=5.25

Picked on Mar 7th at     $72.44     P/E = N/A
Change since picked       +0.00     52-week high=$75.75
Analysts Ratings      0-1-1-0-0     52-week low =$ 4.44
Last earnings 02/00   est=-0.21     actual=-0.24
Next earnings 05-15   est=  N/A     versus=-0.22
Average Daily Volume = 1.53 mln
/charts/charts.asp?symbol=RRRR



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

No new puts today.



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

SEBL - Siebel Systems $161.00 +9.56 (+6.28 this week)

Siebel Systems, Inc. is the world's leading provider of eBusiness 
applications software.  Siebel Systems provides an integrated 
family of eBusiness application software enabling multi-channel 
sales, marketing and customer service systems to be deployed over 
the web, call centers, field, reseller channels, retail and 
dealer networks.  Siebel Systems' sales and service facilities 
are deployed locally in more than 28 countries. 

Most Recent Write-Up

At least somebody bucked the trend today.  Volume made a comeback 
over the last two days and never let us get that entry in the 
$130's, so we had to be happy with $147 yesterday and $150 
today.  SEBL looked technically strong by managing a bounce and 
a close well above its 5-dma of $147.69.  As long as technology 
remains out in front, SEBL should continue to move up.  
Unfortunately, other than an article noting that Home Shopping 
network is standardizing on SEBL systems software, there is no 
news to explain today's gains.  But if SEBL can do this while 
even the NASDAQ goes in the tank, it will be one of the strongest 
when the market turns around for earnings season.  SEBL is also 
a split candidate at these levels, but will need shareholder 
approval to authorize more shares should management opt for 
anything greater than 3:2.  Earnings are not until April 25.  
You may consider target shooting at $150 again, or if you don't 
mind a bit more risk, $160 (near its current level) could also 
make a good entry.  Just make sure the market is moving in your 
favor.

Comments

Siebel had a great today before finally succumbing to market 
weakness.  Support looks solid at $160 and that justifies an 
entry here despite a $9 plus gain today.  Make sure you confirm 
the market direction as it could be volatile in the morning, 
but SEBL's trend should continue higher once the spotlight 
turns back to the Nasdaq 5000 run.  Resistance is at $170 and 
then it is smooth sailing.

***March contracts expire in 2 weeks***

BUY CALL MAR-150 SGW-CJ OI= 412 at $15.25 SL=10.50
BUY CALL MAR-155 SGW-CK OI=  88 at $12.00 SL= 9.50
BUY CALL MAR-160*SGW-CL OI=1361 at $ 9.25 SL= 7.00
BUY CALL APR-155 SGW-DK OI= 124 at $20.88 SL=14.00 
BUY CALL APR-160 SGW-DL OI= 208 at $18.50 SL=12.50

Picked on Feb 22nd at  $121.88     P/E = 298
Change since picked     +39.13     52-week high=$171.00
Analysts Ratings     9-5-0-0-1     52-week low =$ 15.75
Last earnings 01/00  est= 0.15     actual= 0.19
Next earnings 04-25  est= 0.14     versus= 0.10
Average Daily Volume = 3.4 mln
/charts/charts.asp?symbol=SEBL



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

A Weakening Dow Plagues The Market..

Tuesday, March 7

The blue-chip average plummeted 374 points to close at 9,796 as
Proctor & Gamble (PG), the consumer products giant, plunged $27
to $60.  The technology-driven Nasdaq Composite slid 57 points
to end at 4,847, after spiking above 5,000 near the open.  The
S&P 500 Index lost 35 points to 1,355.  More than 1.3 billion
shares traded on the New York Stock Exchange and breadth was
negative with declining stocks beating advances by more than
2-to-1.  The 30-year U.S. Treasury bond fell 1/32 with its yield
closing at 6.15%.


Portfolio plays:

Blue-chip stocks began a new slide this week after comments from
Federal Reserve Chairman Alan Greenspan renewed concerns that
interest rates are heading higher.  The Dow Industrial average
was also affected by profit-taking Tuesday as investors sold for
gains from the recent rally.  The majority of stocks ended on a
high note last Friday after a benign employment report suppressed
fears of rising inflation.  Now the selling pressure has returned
after Greenspan insinuated that higher stock prices are fueling
capital spending and that growth cannot continue to exceed supply
growth.  He also noted that the rise in productivity is causing
demand growth to eclipse supply and that labor market imbalances
may harbor a potential for inflation.  The end result; there is
a much stronger belief that interest rates will be raised higher
in the near-term.
 
There have been a number of big announcements regarding portfolio
issues over the last few days and fortunately, all of them were 
positive.  One of Monday's reports affected our new position on
Mirage Resorts (MIR).  The MGM Grand (MGG), a hotel and gaming
company controlled by billionaire investor Kirk Kerkorian, has
agreed to buy Las Vegas rival Mirage Resorts for $6.4 billion in
cash and assumed debt.  The merger/buyout virtually guarantees
maximum profit in our recent diagonal spread.  U.S. Foodservice
jumped $6 today after the company announced it would be acquired
by Royal Ahold for $3.6 billion in cash and stock.  Royal Ahold
will exchange $26 in cash per share for USF's 101 million shares
outstanding.  The deal gives Royal additional reach in the U.S.
and will turn them into a $30 billion multi-channel food provider.
Our bullish combination position is profitable above $12.50.  Web
security firm VeriSign (VRSN) said it would buy leading Internet
domain name registrar Network Solutions (NSOL) in a $17 billion
stock deal creating a one-stop shop for the basic ingredients of
electronic commerce.  The surprise pact combines one of the top
names in security services for Internet commerce with the company
that until recently held a monopoly on assigning and recording
names for the millions of dot-coms, dot-orgs and dot-nets that
populate the Internet.  The combined company will have the scale
and range of services to take e-commerce to the next level and
NSOL's 8 million customers will create huge opportunities for
expansion of its Internet security services.  Our position is at
maximum profit above $220.

The majority of portfolio positions have fared very well since my
departure and there is little to be said about the positive plays.
As always, if there is an opportunity to close a position early
for a favorable profit it should be exploited.  If the underlying
issue changes character and the play is in danger of significant
loss, it should also be closed.  While I won't attempt to uncover
all of the potential exits over the past few days, it is safe to
say that a number of spreads should have been exited to protect
gains.  In addition, there were numerous upside adjustments that
could have been made in the longer-term positions.  In our case,
these moves will be recorded as they become available or at the
March expiration.

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


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

Even as I traveled abroad, requests for credit spreads continued
to dominate my incoming Email.  While I remain confused over the
insatiable appetite for this specific approach, there are a number
of excellent candidates for the strategy.  The following plays
are based on well-known companies in favorable industries.  Each
position is evaluated for probability of profit using the current
price and trading range of the stock and the recent technical
history or trend.  News and market sentiment will have an effect
on these issues.  Review each play individually and make your own
decision about the future outcome of the position.

****

LVLT - Level 3 Communications  $124.93   *** On The Move! ***

Level 3 Communications engages in the information services,
communications and coal mining businesses through ownership of
operating subsidiaries and substantial equity positions in public
companies.  Level 3 also offers, through its subsidiary PKSIS,
computer operations outsourcing and systems integration services
to customers located throughout the U.S. and abroad.  LVLT's
systems integration services help customers define, develop and
implement cost-effective information services.  They offer a
number of reengineering services that allow companies to convert
older legacy software systems to modern networked computing
systems.  Ownership interests include: Commonwealth Telephone, a
public utility providing local telephone service to a 19-county
service territory in Pennsylvania.  RCN, a full service provider
of local, long distance, Internet and cable television services
primarily in the northeast and KCP, a company engaged in coal
mining.

Level 3 has been on the move recently and their option volume
and volatility has also remained firm as the stock reached a new
52-week high.  With the technicals suggesting a potential breakout,
this issue is one to watch in the coming sessions.  Traders who
favor the credit spread strategy can participate now with this
bullish, OTM position.
 

PLAY (aggressive - bullish/credit spread):

BUY  PUT MAR-110 QHN-OB OI=603 A=$1.12
SELL PUT MAR-115 QHN-OC OI=738 B=$1.88
INITIAL NET CREDIT TARGET=$0.75-$0.88 ROI(max)=20%

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

****

KLAC - KLA-Tencor  $84.00   *** Hot Sector! ***

KLA-Tencor supplies process control and yields management
solutions for the semiconductor and related microelectronics
industries.  KLA-Tencor's Wafer Inspection Group offers unique
products including Intelligent Line Monitor and Stationary Beam
Technology, IMPACT/Online and CRS/Offline.  The Yield Management
Solutions group provides products such as the Quest Defect Data
Management System, Klarity and YieldLink Systems Software.  The
company's Reticle Inspection and Data Management systems include
the 353UV Ultraviolet and the 301 Pattern systems.  The company
also offers metrology tools and analysis software, which include
E-beam and Optical products for Windows, and the Prometrix and
OmniMap systems and film stress measurement products, as well as
the HRP-220 and P-22 profiling products.

KLAC is another issue that recently achieved a new 52-week high
and with the bullish analyst's outlook, there is little to oppose
the trend.  On Monday, Lehman Brothers raised its 12-month price
target for KLA-Tencor to $110, along with increasing its earnings
per share estimates.  The brokerage based its change on the fact
that KLAC's orders are accelerating across virtually all product
lines and geographic areas.  Third quarter 2000 orders could be as
high as $525 million, a 17% sequential increase and a new record.
That's great news for investors and the report should provide
plenty of interest to support the upward movement in the issue
until next week's expiration.


PLAY (aggressive - bullish/credit spread):

BUY  PUT MAR-70 CKV-ON OI=132 A=$0.75
SELL PUT MAR-75 CKV-OO OI=260 B=$1.50
INITIAL NET CREDIT TARGET=$0.88 ROI(max)=20%

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

****

CMGI - CMG Incorporated  $140.00   *** An Old Favorite! ***

CMGI develops and operates Internet and direct marketing companies
as well as venture funds focused on the Internet.  CMGI Internet
Group includes majority owned subsidiaries ADSmart Corporation,
Engage Technologies, Accipiter, InfoMation Publishing Corporation,
NaviSite Internet Services Corporation, Planet Direct Corporation
and Password Internet Publishing Corporation, as well as minority
investments in Magnitude Network and Open Market.  CMGI's first
Internet venture fund is CMG@Ventures I, which has investments in
Blaxxun Interactive, Lycos, Parable LLC and Vicinity Corporation.
The company's second Internet venture fund is CMG@Ventures II,
which holds equity investments in companies such as Chemdex,
Critical Path, KOZ, Parable, Reel.com, Sage Enterprises, Silknet
Software, Softway Systems, Speech Machines, Universal Learning
Technology and Visto Corporation.

Today CMGI outlined their plans for financing the next stages of
the Internet revolution, including wireless Web access and other
Web-enabling businesses, moving well beyond its earlier focus on
consumer Internet investments.  The company also plans to make a
number of new acquisitions in hopes of capturing the hyper-growth 
markets.  CMGI's leading corporate strategist said the company
will focus on the areas that provide high-speed Internet access
over cable and phone lines and links to consumer devices such as
cell-phones.  He also suggested they would devote attention and
investments toward online services that connect businesses to
their suppliers and customers, an area expected to become much
larger than most current consumer-focused Internet industries.

A conference call scheduled later this week should provide some
new interest in the company and with technical support near our
break-even point, this position offers favorable, short-term
speculation on the volatile Internet sector.


PLAY (aggressive - bullish/credit spread):

BUY  PUT MAR-115 GCD-OC OI=1825 A=$2.31
SELL PUT MAR-120 GCD-OD OI=2531 B=$3.00
INITIAL NET CREDIT TARGET=$0.75-0.81 ROI(max)=17%

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



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