Option Investor
Newsletter

Daily Newsletter, Tuesday, 04/04/2000

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The Option Investor Newsletter         Tuesday  4-4-2000
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)
************************************************************
       4-04-2000           High     Low     Volume Advance Decline
DOW    11104.70 - 117.20 11418.20 10717.80 1,515,466k   803  2,215
Nasdaq 4,148.89 -  74.79  4283.45  3649.11 2,888,308k   664  3,676
S&P-100  811.29 -   9.33   830.25   770.38    Totals  1,467  5,891
S&P-500 1494.73 -  11.24  1526.45  1416.41            19.9%  80.1%
$RUT     506.12 -   9.92   520.13   464.08
$TRAN   2724.95 +  18.85  2750.98  2653.45
VIX       27.90 +   2.24    35.44    25.09
Put/Call Ratio       .43
*************************************************************

Maximum Volatility Produces Stop Loss Tuesday

If you were able to watch the market today you are probably still
glazed over from the event. This was a historic day and not one
you are probably going to see again anytime soon, I hope. Fed?
What Fed? Interest rates? Who cares? After todays market event
the volatility surrounding the non-farm payrolls this week will
not even be noticed. If you worked all day and did not get to
see the "dip" and you were fully invested then you probably 
saved a prescription refill on your blood pressure medicine.

The straight facts are almost unbelievable. The Dow soared to 
11418 or +196 points after the open and the Nasdaq was tame at
+60 and 4283. That was the end of the common market. The Nasdaq
started dropping like an Iridium satellite instead of a falling
knife and the soaring Dow got caught in the vacuum as it fell.
The Nasdaq dropped through 4200, 4100, 4000, 3900, 3800, 3700,
dizzy yet?, before finally stopping at 3649 and -575 points. 
The Dow, racing to catch up, went to full afterburner and knocked
off 11400, 11300, 11200, 11100, 11000, 10900, 10800 before S&P
circuit breakers stopped it at 10717 for a -504 loss. Had we 
stopped there the record books would have logged back to back 
first place losses for the Nasdaq and a second place for the Dow.

The real exciting part is next.... The dip buyers, who had been on
a diet all last week, went on a feeding frenzy with the mother of
all buying opportunities. The Dow and the Nasdaq went vertical 
again and with only a couple of pauses to catch their breath they
erased almost all of the huge deficit. The Dow actually went 
positive again but cautious traders pulled back at the close and
the Dow dropped to an insignificant -57. The Nasdaq rebounded to 
only -60 and then eased to close at -75. A miraculous recovery if 
there ever was one. A very emotional day for traders depending on 
which side of the market you were on.


 




 

Today ranked as the most volatile day ever for both the Dow and 
the Nasdaq. The Dow traded in a 700 point range on record volume
of 1.5 bln shares. The Nasdaq traded in a 634 point range on 
almost 3 bln shares (2.88B). This range for the Nasdaq was greater
then any entire year prior to 1998 and within 200 points of 
equaling all of 1998. At one point today the Nasdaq had given up
all of the +20% gain for the year. The Nasdaq started the year at
4069 and traded as high as 5132 in March. The almost -1500 point
drop to today's low was the equivalent of -28.9% off its highs 
and more than qualified as a bear market. The Nasdaq was down 
-13% today alone at the worst point.

Mary Meeker was quoted this morning as saying that "the serious
excesses in the market needed to be ripped out before the market
could move higher." Looks like she got her wish. The extremes
were not just in the market numbers. Individual stocks exceeded
known limits of support and yet bounced back to post strong gains
in many cases. For instance:

Stock Low/High
VIGN 102/161 - WAS $238 LAST WEEK
TERN 122/198 - WAS $237 LAST WEEK
INKT 112/168 - WAS $227 LAST WEEK
YHOO 132/168 - WAS $203 LAST WEEK
INTC 119/134 - WAS $144 LAST WEEK
JDSU  82/115 - WAS $137 LAST WEEK
QCOM 124/147 - WAS $162 LAST WEEK
EXDS  92/136 - WAS $179 LAST WEEK
CMGI  70/102 - WAS $129 LAST WEEK
BRCM 152/221 - WAS $253 LAST WEEK

Target shooting anyone?

On a day when trading volume set records you would expect brokers
to be making large gains on the prospects of big earnings. Two 
things held them back, margin calls and venture capital concerns.
Since many large brokers take stock in start ups as compensation
for assistance and their venture capital arms invest in some as
well, the implications were negative as many Internet stocks took
-50% hits from just last week. Lehman lost -10, MER -8, MWD -7, 
GS -7, EGRP -3.

The second problem of margin calls was responsible for much of the
sell off today. With the Nasdaq already strongly negative last week
the -360 point drop on Monday pushed many investors into margin
shock. When things are going good many investors with limited 
capital will margin 100% and then every time their stocks soar they
again take the additional buying power and buy more. This pyramid
buying results in huge exposure in the case of a negative market
event. An investor with $20,000 could actually be margined to $60K
after a good run for the stocks they own. Once those stocks drop
-30% to -50% their account has to be liquidated to cover the margin
calls. Sometimes, in worst case situations, their original capital
is lost and they are wiped out by the forced liquidation. Market
events like Tuesday take stock away from weak investors and put it
back into the hands of stronger investors. The net result, many
people who were investors last week are not investors this week 
and will not be again any time soon. Investors with funds left
after the margin calls may not be as aggressive as in the past
and more careful about where they put their money. Some investors 
interviewed today on TV claimed to have lost more in the past 
week than they made in the last year due to margin losses.

Today was a classic capitulation day. Massive selling, no bids, 
market orders going unfilled for long periods of time. Investors
accustomed to instant trades were met by long periods of no fills
or fills far below what they thought the price should be. Not only
was the lack of fills on the downside but also on the upside. I
had market orders for blocks of QQQ calls go unfilled for 20 min 
and I finally cancelled them. You should never be able to cancel
a market order. Of course those are traded on the AMEX which is
always behind even on slow days. Some AMEX bid/ask prices today
were as much as $10 behind the other option exchanges CBOE, PHLX,
PCX. Personally I would rather not trade an option that is only
on the AMEX but that is another story.

With capitulation before earnings and before tax day traders were
obviously running for cover. With the Nasdaq up +80% last year and
many stocks up more than that, many investors have large tax bills.
These tax bills are put off until the last minute so investors can
use the money for the April earnings run. With the market tanking
many investors have been selling to cover the bill. I took a poll
at the recent seminar and many attendees were still trading with
their tax money. With this money leaving in the next two weeks AND 
tax refunds already assumed to be in the market, AND, the deductible 
contributions drying up daily, the market liquidity is evaporating.
The mid-April sell off we were expecting may be accelerating into
a serious problem. 


 

Where I would normally be screaming "buy, buy" I am more subdued
tonight. This was the mother of all capitulation and rebound days
but there may still be some more selling from margin calls and 
tax payment preparation tomorrow. Even with the massive rebound
the advances were pounded by declines by 4:1. Normally another
positive would be the VIX which soared to 35.43, the highest
since January 14, 1999 when the Dow hit a low of 9087. Normally
a number this high would be a screaming buy signal, and it might
be, but the clouds still hanging over the market are clouding the
picture. Don't get me wrong. I bought the dip with everything I
had and will be watching my email for a REG-T myself in the 
morning. Still, with a trillion dollars lost this morning in 
the market and almost a $832 billion recovered on the rebound
there are a lot of new holders and a lot of long term buyers who
added to their positions from the bargain basement today. These
investors will not be sellers on Wednesday. They wait all year
for a buying opportunity like we had today. Even with the Nasdaq
rebound it is still very oversold. Closing today down -900 points 
since the 5078 high on Mar-24th we are still due for a relief rally.
The trick is to get past lunch. With margin selling normally by
11:00 if we can get past lunch we might be okay. Still we are 
going to face weakness as traders still in the market and playing
with Uncle Sam's money just try to get even before they have to
withdraw the funds. The severity of the drop has traumatized
many investors and the shock may take days or weeks to wear off.

Just to keep us on our toes Clinton is hosting a conference on
the new economy tomorrow. Alan Greenspan, Bill Gates and Abbey 
Joseph Cohen will be in attendance. Greenspan will speak at 1:30ET
with a speech titled "Technology and its Impact on the Economy."

Before you rush back in to the market you should be aware of the
new market conditions. First, the sell off today is only a warning
of what may come. Where we have gone years in the past without 
this type of volatility we may only go days or weeks before we
see it again. Just because it never happened before or just because
it has always come back, DOES NOT MEAN IT WILL ALWAYS DO IT AGAIN.
It can drop and close down -500 points just as easy. If I were
going to name today I would call it "Stop Loss Tuesday." If you
did not have stops then you would have been tempted to sell for 
an even greater loss when the market was down substantially. 
Developing a stop loss strategy will keep you from severe losses
when these disaster days occur. Had you been stopped out early
today, as I was, you would have been able to buy the dip instead
of trying to "hope" your stocks back to even. Even though I lost
six figures this morning from buying too early yesterday, if the
rebound holds, the purchases I made at the bottom today may turn 
into my most successful trading day ever. I was able to apply
capital at the right time in generous amounts to stocks that
were clearly bargains. Did you do the same? Not if you were 
married to previous plays. Remember this trading axiom: Traders
who will not take small losses early will end up taking big 
losses later. Both S&P and Nasdaq futures are down tonight.
What is YOUR stop loss strategy for tomorrow?

Trade smart and sell too soon.

Jim Brown
Editor

Current long positions include:

EBAY, AMAT, AMCC, EMC, QCOM, DISH, SUNW, TERN, ARBA, EXDS

(Naked put session seminar attendees...intrinsic, intrinsic, 
intrinsic, I got a bunch today!)


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


Tech Rout Offers Internet Buying Opportunities
By Cindy Christ

Monday's sell-off in technology indexes after the Microsoft
(MSFT) ruling was overdone, Goldman Sachs analysts said in a
research alert Tuesday.

On Monday, the Goldman Sachs Internet (GIN) index was
down 19.3 percent since January compared to the Nasdaq, which
was off about 7.4 percent year-to-date half way through
Tuesday's session.

"With general financial growth prospects intact for leading
Internet companies both in the current quarterly reporting
season and beyond, the volatility provides opportunities to
buy or add to positions in key names," analysts wrote.

Top Internet names Goldman likes are America Online,
Yahoo!, eBay , Real Networks and Inktomi.

Among leading sectors with strong near- and long-term
growth prospects, Goldman recommends portals America Online
(AOL), Yahoo (YHOO), Lycos (LCOS) and NBC Internet (NBCI);
Internet content providers CNet (CNET), ZDNet (ZDZ) and
LookSmart (LOOK); business-to-consumer plays eBay (EBAY),
Priceline.com (PCLN) and Amazon.com (AMZN); infrastructure
companies Inktomi (INKT), Exodus Communications (EXDS),
Digital Island (ISLD) and Double Click (DCLK); and broadband
and wireless access providers RealNetworks (RNWK), NetZero
(NZRO), Phone.com (PHCM) and InfoSpace (INSP).

Analysts concede more volatility is likely in the near term
but warned investors not to try and time a bottom on the
beleaguered Nasdaq.

"Market timing is a fool's game. There's very little
scientific evidence that you can successfully time the
market," Goldman research analyst Jamie Friedman told
OptionInvestor.com.

"You can't own stocks going up if you don't own them going
down," Friedman added.

No. 1 Web portal Yahoo is set to kick off the reporting season
for the Internet group after the close Wednesday. Goldman
projects first-quarter revenues of $205 million and per-share
earnings of 8 cents for Yahoo.

Friedman said Goldman recommends investors buy the leading
Internet issues mentioned at Tuesday's levels.

"In general, we view profit taking with the strong gains over
the past few months, and again reiterate our emphasis on a
long-term approach to investing in the 'best-of-breed'
Internet companies," analysts said.

At the close Tuesday, shares in America Online (AOL) traded
down $3.25, or 4.9 percent, at $63.25. Yahoo (YHOO) jumped
$7.25, or 4.5 percent, to $167.38.

eBay (EBAY) surged $23.75, 16.6 percent, to $167. RealNetworks
(RNWK) slid $1.31, or 2.6 percent, to $50.13. Inktomi (INKT)
dropped $9.44, or 5.6 percent, to $158.


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

As of Market Close - Tuesday, April 4, 2000 

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

DOW Industrials   10,850  11,250  11,165    Neutral   3.16
SPX S&P 500        1,410   1,475   1,495    BULLISH   3.21
OEX S&P 100          780     800     813    BULLISH   3.21    
RUT Russell 2000     470     580     506    Neutral   4.04  **
NDX NASD 100       3,800   4,700   4,034    Neutral   4.04  **
MSH High Tech        900   1,150   1,000    Neutral   4.04  **
     
XCI Hardware       1,480   1,510   1,589    BULLISH   2.24
CWX Software       1,450   1,670   1,275    BEARISH   4.04  **
SOX Semiconductor  1,210   1,360   1,069    BEARISH   4.04  **
NWX Networking     1,050   1,190     955    BEARISH   4.04  **
INX Internet         800     940     742    BEARISH   4.04  **
               
BIX Banking          520     615     593    Neutral   3.16
XBD Brokerage        450     580     486    Neutral   4.04  **
IUX Insurance        520     620     605    Neutral   3.16

                   
RLX Retail           900   1,000     985    Neutral   3.16
DRG Drug             330     380     377    Neutral   3.30
HCX Healthcare       680     760     753    Neutral   3.30
XAL Airline          130     150     145    Neutral   3.10
OIX Oil & Gas        265     300     295    Neutral   3.16


 
Posture Alert    
The NASDAQ broke a new trading record Tuesday, as the technology 
index traded 2.88-billion shares. Today's action may have been the 
capitulation that many were looking for, as the index was down -13% 
midday before staging a comeback. The weakness in technology finally
gave way to the Dow, as the blue chip barometer got hit for -500 
points before closing down only -57. As such, several sectors were 
downgraded due to the technical damage that occurred on Monday's 
sell-off. 



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

Tuesday, April 4, 2000

Capitulation, or bubble bursting?

The NASDAQ was flirting with disaster Tuesday, as the technology index 
was down over -13%, before rebounding on record-breaking volume of 
2.88-billion shares. Granted, the index still closed down -1.77%, but 
the late day relief rally gave many bulls hope of the worst being over. 

During the trading day, CNBC and every other news medium were talking 
how the technology bubble had burst, and valuations were coming into 
play. The reporters were blaming this selloff on anything and 
everything, from the technicians who stated that support was broken, to 
Abby Joseph, to the Department of Justice vs. Microsoft, or to margin 
calls rising by 40% at Ameritrade. Whatever the reason, many traders 
saw opportunity today, as many issues were down by -25% or -30%, yet 
closed relatively unscathed. Today was definitely an opportunity, and 
hopefully emotions did not rule your trading activity today.

Many professionals view this week's market action on the NASDAQ as the 
bubble bursting. However, today may have been the mother of all 
reversals, with many people tossing in the towel and letting the 
emotions take over just as the market was at the lows. This is the 
capitulation than many professionals look for, however, the next few 
trading days will be key in determining this outcome. What needs to be 
seen tomorrow morning is the market opening up higher than today's 
closing price. The NASDAQ needs to follow through from this afternoon's 
rally, and should this happen; you will see many bears quaking in their 
boots and running for cover. This is the scenario that Pinnacle is 
looking for, as fundamentally, this market didn't deserve to be taken 
down this quick this fast. But the pendulum swings both ways, and so 
far this week, it has swung in the negative direction.  

Before making any buy decisions today, some of the traders at Pinnacle 
wanted to look at some of the sentiment indicators for guidance. The 
first, which every one of you should always have on your quote screen, 
is the Volatility Index. The VIX continues to prove that the low 30's 
are an excellent buying opportunity, while the low 20's are a great 
selling opportunity. Tuesday, the VIX hit 35.44 before retracing, which 
also happened to be the lows of the day! If you traded just based on 
the VIX, you would have been a happy camper. You could have even been 
early to the party and bought many stocks or options when the VIX was 
trading at 30 (which was well off the high of 35), and still made out 
very well! Regardless, the VIX was flashing a major buy signal, so the 
next thing we looked for was the put/call ratio on the OEX. With the 
OEX trading down significantly, we looked for the option activity 
between 770-800, because this was where most of the action was. Put 
volume outnumbered call volume by almost 7.5 to 1 in this region. 
Pretty bearish implications! Now between the VIX being in buy 
territory, as well as bearish put/call ratio's, combined with the 30-yr 
treasury trading in the safety zone, we through it was prudent to step 
in and buy. The returns that some of our clients made was pretty 
phenomenal! Hopefully, all of our readers took advantage of this 
opportunity as well! Now, it is just a waiting game to see if the 
biggest reversal in NASDAQ history turns out to be the capitulation 
that we think it is, or if the air is being slowly let out of the 
tires! With Yahoo's numbers due out tomorrow, we still lean to the 
former.


BULLISH Signs: 

Corporate Earnings:
Major corporate earnings continue to come out strong and ahead of 
analyst expectations. General Electric is the latest bellwether to 
give positive comments regarding earnings.

Short Interest NYSE:
Short interest continues to climb as quickly as the market. The short 
interest on the NYSE increased +5.7% to 4,110,510,698 shares on March 
15. This bearish level would suggest further upside potential.

Short Interest NASDAQ:
Short interest jumped +3.49% to 2,710,141,156 shares on March 15. This 
bearish barometer would indicate further upside potential.

Interest Rates (5.737):
The current yield is in bullish territory.

Volatility Index (27.90):
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. Tuesday, the VIX hit 35.44 before retracing, which also 
happened to be the lows of the day!


Mixed Signs: None

BEARISH Signs:

IPO Dilution:
With so many IPO's hitting the market, there seems to be dilution 
occurring where shares of finally freed up to sell by insiders. $58.6 
billion of stock was freed up for trading in March, $67.3 billion this 
month, and $118.3 billion in May. This is too much stock for the system 
to handle. 


Pre-Release Season: 
With April just around the corner, we have the beginning of pre-release 
season. Over the next several 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, followed by 
MicroStrategy and its 140-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. 

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                        (3/31)      (4/04)

Overhead Resistance (830-860)     4.20        9.27   

OEX Close                       815.06      813.29

Underlying Support  (800-825)     1.01        1.22
Underlying Support  (770-795)     1.52        1.90

What the Pinnacle Index is telling us:
Based on Tuesday's figures, overhead resistance is heavy and increased 
dramatically from Friday. Underlying support is still light, but we did 
witness heavy volume on the put side at support levels today, so we 
would expect these figures to increase by Thursday's readings.  



Put/Call Ratio                  Friday     Tues 
Strike/Contracts                (3/31)    (4/04)

CBOE Total P/C Ratio             .48        .55
CBOE Equity P/C Ratio            .35        .45
OEX P/C Ratio                    .79       1.66


Peak Open Interest (OEX)
                     Friday           Tues
Strike/Contracts     (3/31)          (4/04)

Puts                700 / 7,509    700 /  7,821
Calls               830 / 6,037    845 / 18,137
Put/Call Ratio         1.24           0.43


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

April 4, 2000                           27.90



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

Daily Results

Index     Last     Mon     Tue    Week
DOW    11164.84  300.01  -57.09  242.92
NASDAQ  4148.89 -349.15  -74.79 -423.94
$OEX     811.29    5.56   -9.33   -3.77
$SPX    1494.73    7.39  -11.24   -3.85
$RUT     506.12  -23.05   -9.92  -32.97
$TRAN   2724.95  -57.14   18.85  -38.29
$VIX      27.90   -1.55    2.24    0.69

Calls              Mon     Tue    Week

WLA      105.50    4.19    3.63    7.81  New, hot drug sector
HWP      138.13    0.00    5.56    5.25  A real trooper today!
CL        60.69    4.12    0.19    4.31  New, strong at $60 today
AMAT      98.13   -5.00    8.88    3.88  New, buyers stepping in
IBM      121.19    3.63   -0.81    3.19  Wide range, small change
PCAR      52.75   -0.12    2.88    2.76  New, wasn't phased today
BAC       54.19    3.06   -1.31    1.75  Resistance @ 200-dma
INTC     132.75   -1.31    2.13    0.81  Still strong but volatile
T         56.50    1.69   -1.50    0.19  Dropped, broke down
QCOM     146.63   -8.56    5.88   -2.69  Bullish finish
KSS       99.63    1.63   -4.50   -2.88  Shop for entries
EXDS     136.94  -17.69   14.13   -3.56  Strong volume, big pop
SUNW      90.00   -3.88    0.19   -3.69  New, ready to breakout
YHOO     167.38  -11.25    7.25   -4.00  Dropped, earnings 04/05
AOL       63.13   -1.50   -3.50   -4.31  Dropped, retest of lows
BBY       77.50   -3.06   -5.44   -8.50  Dropped, selloff casualty
PCS       57.00   -3.50   -5.00   -8.50  Dropped, submarined
DISH      68.38   -4.81   -5.81  -10.62  New, great late recovery
CHKP     160.34  -36.19   25.47  -10.72  Surges on strong volume
SEG       51.19   -9.00   -1.81  -10.81  Dropped, too uncertain
NOK      207.00  -15.63    1.25  -15.00  Splits 4-1 on Friday 4/7
GMST      70.38  -11.31   -4.31  -15.63  Dropped, it's a coin flip
MFNX      71.56  -12.94  -12.25  -25.19  Dropped, not tough enough
LGTO      17.44  -24.75   -2.44  -27.19  Dropped, bad bookkeeping
INKT     158.00  -27.56   -9.44  -37.00  Weak hands shaken out

Puts

ICGE      67.88  -12.15  -10.28  -22.43  New, trending down
IIJI      55.50   -8.63   -5.63  -14.25  Yes indeed! Getting ugly
ITXC      35.06   -2.43   -9.56  -11.99  New, looking at $30 next
PSIX      31.63   -3.53    1.13   -2.41  Dropped, hit intraday low
AT        63.56    0.69   -0.19    0.50  Dropped, held up too well
CPQ       27.25    0.75   -0.25    0.50  Dropped, found buyers
GTW       54.06    0.50   -1.44    1.03  Dropped, it's time to go



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

Market Humility
By Renee White

Are we humble yet?  Hmmm.  To buy or to sit out.  That is the 
question.  Are those really bargains I see or just a teasing 
temptress with bear trap candy bars?  Is this market wild or 
what?  

I can't believe I just heard that the trading range for Nasdaq 
today was 634 points, which equaled the trading range for all of 
1998!  Can you believe that? 2.88 billion shares!  An intra day 
13% dip and 28% dip from the recent highs.  Welcome home Renee! 

The Denver OIN seminar was superb.  Those who missed it, really 
did missed a quality program.  Of all the seminars on option 
investing that I have attended in the past, this one stood out 
in a league of its own.  I'm proud that I am associated with the 
team.  This seminar truly emphasized the factors that help an 
option trader stack the odds in their favor.  From basic 
strategies, to technical analysis, entry points, hedging, spreads 
and advanced strategies, this seminar had it all whether you 
liked being naked or spreading with leaps. 

And unlike other seminars, this team also fed you while you 
learned.  Jim Brown was right when he told the attendees at the 
opening reception, "For the next three days, we own your mind." 
Serving breakfast, lunch and dinner, your mind was kept focused 
on trading issues until late into each evening.  And for those 
who think our Sunday newsletter is long, just imagine having 
those writers captive for a week in a seminar environment! 

Our Keynote Address speakers were excellent.  They included: Mark 
Leibovit, well known market timer and author of the Volume 
Reversal method of market timing; Harry Browne, a well known 
investment advisor and author of eleven books with over 2 million 
copies sold (New York Times Best Selling Financial Advisor); John 
Dessauer, editor of John Dessauer's Investor's World and a 
regular panelist (and winner of their investment competition) on 
Wall $treet Week with Louis Rukeyser; and Howard Ruff, who began 
The Ruff Times, a financial advisory newsletter.  We were 
fortunate to have these excellent speakers share their views of 
this bull market, at each of our luncheons. 

After the carnage in the market lately, it seems appropriate to 
include a little about Harry Browne's talk.  Mr. Browne is also 
the 2000 Libertarian candidate for President and was the 
Libertarian candidate in 1996 also.  He was a very interesting 
man, with a wealth of information to share.  In his latest book, 
Fail-Safe Investing, Harry combines his 30+ years of investment 
experience and delivers it to us in 17 key rules for financial 
investment safety.  Unfortunately, he was unable to review all 
17 at the luncheon.  So like you, I will have to buy the book to 
completely appreciate the depth of his knowledge.  Below are 13 
rules I captured in his talk. 

1.	Your career is your wealth.  What we do best is what we 
will make money in.

2.	Never assume you can replace your wealth.  What was 
possible at one time, may not be possible again at a different 
time.  Treat what you have respectfully.  

3.	Recognize the difference between speculating and 
investing.  Don't assume you are smarter than other people.  
Never speculate with money you can't afford to lose.  Build on 
things through investing. 

4.	No one can predict the future.  Don't look for a 
fortune teller with a perfect record.  He will lose his touch the 
minute you start following his advise.  Past performance is no 
indication of future performance.  There is an endless amount 
of data that affects tomorrow's markets; world events, economics 
here and around the world, oil, gold, wars, corporate news, etc. 

5.	Never borrow to invest.  Limit your loss by 
incorporating. 

6.	Never let anyone make decisions for you, with money you 
can't afford to lose. 

7.	Never give signature authority to anyone on money you 
can't afford to lose. Or if you do, limit the amount of money at 
risk. 

8.	Don't do anything you don't understand.  

9.	Never put all your eggs into one basket; one investment, 
one institution, one account, one country, one piece of property, 
with one person, one industry, one sector, or one anything. 

10.	Money that is precious to you (your investing money, 
not your speculating money), this is the money you can't afford 
to lose so diversify and balance that portfolio.  Adjust this 
"fixed" portfolio when it is out of balance due to splits, 
mergers, sell-offs, or other market conditions.

11.	With money you can afford to lose, set up a separate 
account with money you can afford to speculate with.  (This is 
where his option trading money is... secondary money he can 
afford to lose.)

12.	Have a budget for pleasure set aside for you to enjoy 
life with. Life is short.  Use it freely for rewards and knowing 
it is not interfering with other account.  Don't put off enjoying 
life. 

13.	Whenever you are in doubt about investment decision, 
if the answer is not obvious, and two people have different 
opinions, err on the side of safety.  Don't do it.  Remember 
Rule #2, "Never assume you can replace your wealth".  That is 
also true for any important decision in your life.  Always err on 
the side of safety. 

Mr. Browne sounds like a very wise man, doesn't he?  Check out 
his book, at the OI bookstore, Fail-Safe Investing for a through 
discussion of all of his points. Actually, all the speakers were 
excellent but Mr. Browne's rules just hit home.  For tomorrow, 
read number 13 a few more times.  If we must err, let us all hope 
it is on the side of safety.  

Renee White
Contact Support



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

An Osmotic Technical Point of View of Your $10,000 loss
Harrison Frolick

Thanks Guys and Gal?  But, I really can't see how getting my web
browser for free 3 years ago versus my paying $39 for one that 
still to this day I consider a piece of junk, hurt me as a 
consumer.  Just so that everyone knows where I stand on this 
subject, I almost became physically ill as I watched the debacle 
as non-elected representatives of our government were telling me 
how they were protecting me from the evil Microsoft concerning 
my choice of browsers and that they had my best interests at 
heart.  I am not picking on this administration per say.  First 
off, I dislike all politicians, period.  I have worked for several 
from both parties.  Some are just worse than others with very 
few exceptions.  I especially do not tolerate fools nor liars 
and I witnessed both on TV during the press conference.

Anyway,  the soapbox has almost collapsed once again but, for 
those of you that caught my Sunday article, this is exactly what 
I feared when speaking about the Feds, Moore's Law and not 
understanding the big picture.  You can do all the charting and 
research that you want but, when you have a Federal Government 
and in this case 19 States that either do not understand or care 
about the impact of their policies, you can watch your portfolio 
go up in a puff of smoke in a few days as has happened.  And 
some of you thought I was Chicken Little.  

While they said that they were out to punish Microsoft, the idiots 
(and I am being nice here) did not realize that because of the Net, 
Microsoft's competition also saw their market cap drop by billions 
of dollars as well.  Punishing Microsoft has the same effect as 
shooting yourself in the foot to cure an ingrown toe nail.  You 
may get rid of the toe nail but, you create a far bigger problem.  
Except they shot the foot of every investor and retiree in America 
and there investment accounts and IRAs dropped by hundreds of 
billions of dollars. Or as near I can figure about $10,000 for 
every man, women and child in America.  Way to go!!!  You guys 
created the largest loss of wealth in the History of Man!  
(someone check my math but, I think I am right)

For those of you that have never read "Atlas Shrugged" by Ayn 
Rand., I cannot recommend a more applicable book for what has 
happened to he market in the last few weeks.  For those of you 
that pick it up and read it for the first time and those that 
already have, it would be great to hear your opinions.  I 
believe that I was pretty bent after reading it for about three 
weeks.  In fact, I think that I will read it again starting 
this evening. 

This melt down started when the President and Tony Blair of 
Great Britain suggested the biotech companies give away billions 
of dollars of research a few weeks back.  It was further helped 
by the Federal Reserve Boards rhetoric and the icing on the cake 
was the Microsoft case.

I hope that all of you that got margin calls were able to cover 
them.  This too shall pass believe it or not.  However, I can 
assure you that I will have 100% cash before the next Fed meeting 
as I am convinced that if the price of admission to the Super 
Bowl were 3 neurons that worked, that you would not see anyone 
there with a US Government ID.

I will give an update  in my next article on the 150% challenge.  
We are actually not doing too bad considering!

Happy Trading!    Mumble mumble grumble grumble..

(Editor's note: The following represents the views of the 
writer not necessarily the views of OIN.  Please send your 
comments to him not to OIN. Thanks.)

Contact SupportHarrison



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:
*****

AOL $63.13 -3.50 (-4.31) Investors continued to roll out of
Internet issues on Monday, dropping AOL back to the $64 area.
Not exactly the way we wanted to see this one start the week,
but still a potentially profitable situation.  Today's bloodbath
dropped AOL to $59.06 before buyers stepped in, attempting to 
save the day.  AOL did bounce back $3.94 to end to the session 
at $63, but well below support levels that would keep it on our 
list of plays.  This morning's announcement that they had 
launched AOL Plus, which delivers multimedia content and features 
could not help prop up the company's stock.  We believe over 
the long-term AOL may move higher, but a retest of today's lows 
may be in order, before AOL can gather the momentum necessary 
to get back on track. 

GMST $70.38 -4.31 (-15.63) This is one of those plays that even
after we've decided to drop we want to say "I still think it may
be a potentially profitable play."  That's what happens when you
form too strong of an opinion about a company and its future.  
Could GMST bounce from here and go higher?  Absolutely, but if 
the past two days are any indication of the near term direction
for the GMST, the outlook is not bright.  Regardless of our 
opinion of the company, and the optimism for the interactive
programming guide, traders choose to sell the past two days
dropping GMST to $62 at its worst level.  Again, was the selling
overdone?  Perhaps, but this one may need to cook a while longer
before finding its way back on our list of favorites.  Simply 
put, the potential reward at this time is not worth the risk.   

LGTO $17.44 -2.44 (-27.19) LGTO's share price was halved and 
then some yesterday after they told the Street that they would 
have to restate sales and earnings.  Fourth-quarter revenues 
involving about $7 mln may be effected because auditors 
uncovered evidence that sales representatives of the company 
negotiated deals outside their authority.  The shock wave sent 
LGTO down $24.75, or 55.5% with trading volume reaching more 
than 7 times the ADV.  Investors then dodged the legion of 
analysts who hurled their dissenting remarks on the situation.  
On Monday Bear Stearns cut LGTO from Buy to Neutral, Merrill 
Lynch from a NT Accumulate to NT Neutral, and Tuesday wasn't 
much different.  SunTrust Equitable Securities downgraded the 
stock from Strong Buy to Attractive and Robertson Stephens from 
Buy to LT Attractive.  Fortunately there wasn't any time to get 
into this new call play on Monday morning.  LGTO is written 
as a drop tonight, but honestly, why would anyone have ever 
gotten in?

YHOO $167.38 +7.88 (-4.00) YHOO's given us a wild ride right up 
to the eve of its earnings' release.  The official numbers are 
due tomorrow after the bell and they better be good!  Estimates 
range from 8 cents to 9 cents a share, but the so-called whisper 
number is much higher at 12 cents.  If YHOO disappoints then 
look out below!  Any hint of bad news from this powerhouse could 
easily spark more butchery amongst the whole Internet sector. 
Many traders profited during the first couple weeks of this 
earnings play and enjoyed the lucrative gains in this volatile 
market.  Not too long ago, YHOO powered above $205 from the 
depths below $160!  But now is not the time to try and squeeze 
out a few more dollars, especially in this chaotic environment. 
And remember historically YHOO dives after the report!  So 
please, if you haven't already, consider closing any open call 
positions before the announcement.  

BBY $77.50 -5.44 (-8.50) Another casualty of the selloff, BBY 
beating their earnings estimate by $0.04 held no sway over 
frightened investors during the last two days.  This play was 
really over yesterday when BBY gapped up at the open, then pulled 
back all day long into the close, never giving us a really good 
entry.  Adding insult to injury, BBY fell through its 10-dma and 
never recovered.  While it managed to spare us from big losses as 
it fell to just $73.50, a level of support reached on March 27 
too, the rebound was not strong enough for our liking, especially 
given the volume of 50% in excess of the ADV.  It should have 
performed better.  But since it didn't, it's good bye to Best 
Buy.

PCS $57.00 -4.31 (-8.50) Despite what we think is good future for 
wireless stocks, PCS went along for the technology-sponsored 
under water submarine ride.  The problem in the end is that its 
boat didn't float with the rising tide once it hit the bottom.  
While both the NASDAQ and Dow staged a nice recovery, PCS did not 
participate, reclaiming only $2 from the low of the day.  The 
ascending wedge pattern did not hold right from the start of 
yesterday's trading and just got worse today even though PCS 
should have been making a run into its earnings date of Apr 18th.  
That and the eagerness of the street for the AT&T wireless spin-
off were the reason for the play.  With investors no longer taken 
in by those original premises, this play has taken on too much 
water.  Time to bail.

T $56.50 -1.50 (+0.19) Valiantly trying to get moving, T broke 
out of its recent range today.  Unfortunately, the break was 
down, not up.  On a little more than average volume, T followed 
the DJIA lower to tag $54 before recovering into the close.  
Although still technically at support, the wild gyrations of the 
past 2 days have really taken the wind out of T's sails.  The 
Telecom giant may have a hard time gathering momentum going 
forward, so we are cutting it loose tonight.

SEG $51.19 -1.81 (-10.81) Our play in SEG hinged upon the
performance of VRTS.  VERITAS has proved to be a weak link as the
stock has been hammered in the last two days.  VERITAS' chief
competitor Legato Systems (LGTO) announced a profit warning
yesterday.  The bad news from LGTO only added to the weakness in
VRTS shares Monday.  As VRTS moves lower, so goes SEG.  The stock
lost $9 Monday, breaking through a key support level at $60.  SEG
found support today at $50, after dropping down to $42.  After
thoroughly reviewing the proposed buyout of SEG, many investors
are beginning to question management's motives.  Shareholders of
SEG feel that they are not getting the maximum value for their
shares.  They feel that the investment bankers and the management
of Seagate are capturing most of the value from the deal while
the shareholders are left empty-handed.  Due to the recent
developments in the SEG transaction, we are stepping aside.
We'll watch the deal closely, as a re-negotiation is possible,
especially in light of the recent market conditions.  For now,
there exists too much risk to continue to hold SEG as VRTS
continues to look weak, and uncertainty surrounds the buyout.

MFNX $71.56 -12.25 (-25.19) The momentum from last week reversed
Monday as MFNX drifted lower throughout the day.  Today, we
reached a capitulation in selling.  Liquidity dried up in MFNX as
traders evacuated, causing the bid to drop with each 100 share
trade.  The culprit in today's massive sell-off was the M-word.
The financial media spoke of margin today as if it were a four
letter word.  The record margin levels that the FED has been
mulling over for the last several months came to light today.  
It appears that MFNX fell victim to the revered margin clerk.
Traders sold with conviction today as volume was more than
robust, over three times ADV for MFNX.  We mentioned that MFNX
might bounce off support at $90 and provide a good entry point.
The stock never found support due to the NASDAQ meltdown.  MFNX
plunged through key technical levels Monday, and again today,
before stopping all the way down at $59.  Although we have a
split coming soon, we don't want to stay around to answer any
calls from the margin clerk.



PUTS:
*****

GTW $54.06 -1.44 (+1.03) It's time to go.  We aren't exactly sure
what analysts at Morgan Stanley saw, but on Monday they initiated
coverage of GTW, with a Strong Buy.  An order imbalance at the
open was the result and GTW finally opened about $3.72 higher at
$56.75, which was near the high of the day.  Today the buying
continued as traders bid the price of GTW to $57.38 before 
selling set in.  Coupled with the Strong Buy rating, they set 
a price target of $80.  GTW is scheduled to report earnings 
April 13th so we may have seen the bottom for now.  Fundamentally 
things really haven't changed but sentiment seems to no longer 
be in our favor so we will let the hardware maker go for now.  

PSIX $31.63 +1.13 (-2.41) Today's steep intraday decline was 
rough for the call holders today but the put plays really paid 
off.  PSIX fell steadily to $24, its intraday low, and then 
recovered along with the rest of the market.  As the selling 
seemed to capitulate today, we saw most issues finding extreme 
bottoms and bouncing off them.  For PSIX, we feel that $24 is 
about as low as it can go for the time being.  It's time to 
look for a rebound in the markets and leave this put play.

AT $63.56 -0.19 (+0.50) ALLTEL and Bell Atlantic announced Monday
that they have completed the first phase of a transaction to swap
wireless interests in 13 states.  The new properties are expected
to strengthen AT interests in the southwest region of the US.
The agreement will allow AT to bundle communications services at
a good value to customers.  Today, AT announced an agreement with
InteliData Technologies to develop a suite of electronic bill
payment services to connect and support financial institutions.
AT held up relatively well in today's harsh trading.  The stock
has settled into a trading range, between $60 and $65.  In what
was a record day for trading volumes, traders left AT untouched.
In light of the recent announcements and the stable trading
pattern, we're dropping our play in AT.  We'll continue to
monitor the story from AT, and the fate of the information
services division.  However, we don't want to stand in the way 
of a broad market relief rally which may carry AT higher.

CPQ $27.25 -0.25 (-0.50) Headline reads, "Perennial Put Play 
Defies Market Odds".  What else can you say about a tech stock 
that goes up while carnage overtakes both the Dow and the NASDAQ?  
Actually for those able to catch it this morning, CPQ rolled over 
with the rest of the market following a gap up to $28.13, then 
fell to the cellar before finding support at $24.75.  That could 
have been a very profitable trade.  But did it stay there?  Nope, 
CPQ had the audacity to recover 10% from the low of the day - not 
a very good sign for a put play.  While we still expect an 
earnings warning, it won't have much effect if CPQ's potentially 
worst day (today) can't sink it like a stone.  One thing is for 
sure.  CPQ has lots of buoyancy right now, so we're dropping it 
from our put list.



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

BAC $54.19 -1.31 (+1.75) Our play in BAC started the week off
in great shape.  The action today didn't do much to help, but
frankly it could have been much worse.  We were encouraged to 
see buyers enter when BAC fell to $53.31 early this afternoon.  
With the Nasdaq dragging most everything in sight lower today, 
BAC faired pretty well losing only 3.9% at its worst levels 
of the session.  This morning BAC and Ariba said they are 
forming a broad based strategic alliance to provide an 
e-commerce platform for business-to-business customers.  
Although the financial terms were not disclosed, a press 
release said the two will develop a "comprehensive suite of 
Internet-centric, B2B financial services and a new B2B 
marketplace for BAC's more than 2 million customers."  So where 
do we stand on this one?  Well, BAC is exactly where we added 
it on March 23rd.  We would look to the $53 area to provide 
support and then again at $52.  Volume has been starting to 
pick up, which is a positive considering how BAC hasn't really 
been hit by major sellers.

INTC $132.75 +2.13 (+0.81) Wow!  The NASDAQ traded in a 634 point
range today and INTC had a $15 range.  Although it may have been 
scary for a while, the market's continued resilience was calming.
These dips represent prime buying opportunities.  And with this
much needed correction, INTC looks even stronger.  These kind 
of days that provide remarkable opportunities for trading.
Volatility is the name of the game.  INTC found buying support
today at $119, which was originally established in mid-March.  
That is above its 50-dma at $116.63.  Fortunately, INTC did 
have to go that low to find buyers.  Given the volatility in our
market, there is a distinct possibility that we will retest the
lows on the NASDAQ.  INTC will take cue from the NASDAQ and will
present plenty of entry and exit opportunities.  Be on your toes
and don't be afraid to trade in and out for the fast profit in 
a market environment like this.  Use stop losses and trade 
based on individual risk levels.   

QCOM $146.63 +5.88 (-2.69) Except for a swift and frightening 
slide to $124 in mid-afternoon trading today, QCOM bucked the 
trend.  For the most part, it held its own above $140.  It's a 
good sign that QCOM managed so well amidst the turbulence on the 
Nasdaq.  Of course it'd be better to see the stock rise above 
$145 and demonstrate it has the intensity to stay clear of the 
tight trading range of the previous three-months ($125 to $145).  
Recollect this play is based on that strong breakout and 
upcoming earnings.  Qualcomm is confirmed to report in two weeks 
on April 18th, after the bell.  Therefore we have time to pick 
our entries and this is certainly crucial to maximize profit 
potential!  If QCOM were to lose its momentum, there's a long 
way to fall (as you've seen from the intraday dips!) so be 
careful.  It'd be prudent to watch for volume levels to back 
a definite move above $145, or even $150, before you jump into 
this HIGH-RISK play.  

NOK $207.00 +0.25 (-15.00) Nothing like a nice market crash to 
derail a 4:1 split run, darn it!  If you are just joining this 
play, NOK splits 4:1 this Friday, Apr 7th, after the close.  You 
may have noticed we dropped lots of play tonight, but NOK stays 
on our list due to the split and the nice recovery.  Check this 
out.  Technically, while falling into the well with the rest of 
the market and testing $182 in the process, NOK pulled itself 
all the way back up to close positive for the day, and formed a 
positive doji (a right side up "T" with an extremely long tail) 
on volume nearly three times the ADV of 3.7 mln shares.  The 
close over the 50-dma of $203.48, and at the lower line of the 
ascending channel ($206) is a strong positive in our book, and 
particularly impressive given the pain in today's market.  
Assuming the worst is over, we still think any pullbacks are 
buyable for the split run.  Just make sure you see a bounce from 
the bottom.  Today's selloff is a good reason not to try to 
catch a falling knife.  


***********************************************
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 
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buy or sell securities presented. All investors should consult 
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information provided has been obtained from sources deemed 
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The newsletter staff makes every effort to provide timely 
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delivery times due to factors beyond our control.

The Option Investor Newsletter         Tuesday  4-4-2000
Copyright 2000, All rights reserved. 
Redistribution in any form strictly prohibited.


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

CHKP $160.34 +25.47 (-10.72) The illness that began a little
over a week ago, got worse before it got better.  Dragged down
by the ailing NASDAQ, CHKP fell below $116 before buyers could
come to its rescue.  As quick as the decline was, the recovery
was even quicker, as CHKP had two one-hour surges of almost $20
this afternoon.  Volume was very strong at 4 times the ADV, 
and it was encouraging to see CHKP move up to close strongly
positive, especially in light of the carnage seen in many of
the Internet stocks.  The strong move this afternoon puts CHKP
back above the $155-157 support level.  Tomorrow will tell
whether this level will hold, as CHKP investors try to decide
if they want to hang around and wait for earnings on April 12th
(notice the date has changed, but is now confirmed).  If things
get ugly in the markets again, we could see a return to intra-
day support between $134-136.  With the volatility that is
possible in this issue, make sure the market is moving in your
direction before you play.  Intraday dips to support will make
for the best entries, but depending on your risk tolerance, 
you may want to wait for a confirming move through the $170
resistance level before playing.

INKT $158.00 -9.44 (-37.00) A $37 loss in two days and we're
keeping INKT?  You bet we are.  For the explanation, all you
have to do is look at an intraday chart.  Up until about
1:15pm EST, things were looking ugly.  But then the last of
the weak hands were shaken out near $112, and the recovery
began.  Moving up nicely for the balance of the day, buyers
really stepped up to the plate as INKT recovered $45.50 from
its low of the day.  Many stocks saw record intraday moves
today and INKT was no exception.  Posting volume more than
triple the daily average and losing almost $10 would normally
be grounds for a drop.  Of course we are concerned and need
to see INKT stay positive as we go through the remainder of
the week.  The motivation for our play remains unchanged
though; Earnings are scheduled for April 18th, and with the
depression in the share price recently, there is plenty of
room to run.  Oh, and don't forget, INKT is a split candidate
over $150, so we could get a little bonus with the earnings
announcement.  Look for a bounce near support at $150 or a 
break through resistance at $162 to trigger new entries.

HWP $138.13 +5.56 (+5.25) What a trooper HWP was for us today.
While the rest of the market was going through a nuclear
meltdown, HWP held rock-solid at the $130 support level.
Although there was a brief dip to $129 as the NASDAQ hit its
lows for the day, the rebound was quick and strong.  Recovering
on strong volume, HWP managed to tack on almost $6 by the end
of the day.  That's pretty impressive when you consider that
all the major indices finished the day in the red.  Moving along
the top of the 50-dma ($129.75), HWP is likely still being
supported by the fact that earnings are expected to be strong
when they are reported in mid-May.  Of course, it doesn't hurt
that they just steam-rolled Compaq in February retail PC sales,
grabbing over 42% of the market.  So where do we go from here?
Today's strong bounce is quite encouraging, with support
confirmed at $130 and resistance confirmed at $140.  There is
still a fair amount of uncertainty in the markets, so exercise
caution in the days ahead.  A fear-driven return to the $130
level is buyable, but a more cautious approach would be to wait
for the breakout above $140.  Remember that over $140, HWP
becomes a split candidate.  If the NASDAQ can get healthy 
again, look for HWP to reap the benefits.

KSS $99.63 -4.50 (-2.88) All things considered we really are 
pleased with the first few days of this play.  With the action 
going on in the Dow and Nasdaq today, two very good things 
happened to one of latest retail plays.  KSS made a new high
this morning at $104.94.  Profit-taking set in but was 
fairly orderly, although selling in the broad markets hit panic
levels.  The next plus for KSS came late in the day.  Kohl's 
bounced off the $98 area as buyers entered to begin to prop up
the stock.  The volume wasn't great, but with the sentiment in
the markets today, we consider the bounce an opportunity to re-
enter this play.  Traders will be keeping an eye on KSS and
retailers, when they report same store sales on Thursday.
Analysts say the numbers for retailers could be flat for March,
due to the Easter holiday being late this year.  Easter has 
come to symbolize the start of the Spring shopping season.
Pre-holiday sales which normally fall into March, won't hit
until April, which may spell trouble for the sector as a hole
later this week.  We believe traders will take into account 
the late holiday and continue to buy shares of KSS.  Support 
for KSS is found at $98 from the 10-dma which hasn't been 
pierced in a month, despite the market woes.

IBM $121.19 -0.81 (+3.19) Once again there's only good things 
to say about IBM.  Near-term support is clearly established at 
$120.  On one hand this is a solid level to perch, which is at 
the converged 5-dma ($120.66) and 10-dma ($120.28) techinicals.  
Although looking back over the past five trading sessions 
there's concern that IBM could be range bound between $118 and 
$122.  This morning's performance however provided us with 
optimism that this may not be the case.  IBM immediately shot 
up to challenge $125.  It cleared that formidable mark of 
resistance and made a charge for $130.  Unfortunately the 700-
point swing in the DOW stopped IBM out at $126.94.  Our play is 
for IBM to power higher in the short-term on more good news 
and anticipation of a solid earnings report.  The company is 
expected to report on April 18th.  This week IBM announced it 
developed a process to make microchips up to 30 percent faster, 
which ultimately will make for faster Internet access and more 
powerful wireless devices.  According to Bijan Davari, VP of IBM 
Microelectronics' Semiconductor Research & Development Center, 
this new process "is an absolutely essential process without 
which you couldn't continue making both the Internet and its 
devices more powerful and capable".  On the global front, IBM 
and KPNQwest (KQIP) announced a 10-year deal to deliver next 
generation e-business services and applications throughout 
Europe.  The alliance is expected to generate more than $4 bln 
in revenues for the two companies. 

EXDS $136.94 14.13 (-3.56) We found an exodus (pun intended)
today in a less than friendly environment.  What a day for EXDS.
After hitting a bottom at 1:00, EXDS managed to gain 45 points
and close higher by 11%.  We mentioned last Sunday that $136 was
a major support level for EXDS.  We view a close back above that
level as a very positive sign.  From here, EXDS has light
resistance just above at $140 and major resistance at $150.
Aggressive traders will again look for a bounce off support at
$136 while conservative traders could wait for a move above $150.
Watch the wide intra-day swings for an entry point, but wait for
momentum to pick-up before entering new positions.  In the coming
days, several events could act as a catalyst to propel EXDS
higher.  Yahoo will report earnings after the close Wednesday.
Investors are expecting a good report from Yahoo as it could help
move Net stocks higher.  We'll watch EXDS closely in the next few
days as traders re-focus on the upcoming earnings season.  Also
of note, EXDS filed a proxy statement with the SEC Tuesday to
increase the total number of authorized shares to 1.5 bln from
300 mln.  The additional shares are needed for the proposed
2-for-1 stock split, announced on March 3rd.  Shareholders are
expected to vote on the proposed stock split on June 6th.



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

IIJI $55.50 -5.63 (-14.25) Yes indeed!  Things got even uglier 
for IIJI the past two days.  IIJI ran through the first line of 
defense at $67.13 (Friday's daily low) and then tackled support 
at $65 with ease by mid-afternoon in Monday's session.  The 
momentum kept on rolling and IIJI dived to $50.  This big upset 
in the share price was much quicker than anticipated, but 
certainly welcome!  The upward bounce off this bottom support 
level is not too unusual, especially when you consider investors 
haven't seen the stock dip to these levels for many moons.  So 
while the downward trend is intact and the momentum quite 
forceful, be alert for further signs of a rebound.  Some 
investors may see the 32.3%, or $26.50 drop of late just too 
good of a deal to pass up!  Although from a technical perspective 
the MACD, Momentum, and Stochastic indicators are still pointing 
south suggesting further declines.  



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

SUNW - Sun Microsystems $90.00 +0.19 (-3.69)

Since its inception in 1982, a singular vision -- "The Network 
Is The Computer(TM)" -- has propelled Sun Microsystems to its 
position as a leading provider of industrial-strength hardware, 
software and services that power the Internet and allow 
companies worldwide to "dot.com" their businesses.  OK, they 
make servers, but the above is what branding is all about.  
With $13 billion in annual revenues, Sun can be found in more 
than 170 countries 

This one will be short and could be sweet too.  For the more 
conservative tech player, we offer the big cap, SUNW that holds 
less volatility than many of its smaller tech peers.  SUNW 
reports earnings on April 13 (confirmed but subject to change), 
which could propel the play from here.  Technically, SUNW has 
formed a nice base of support at $87.50.  Even today as it was 
whacked to $71.75 in the tech selloff, the almost $20 recovery 
was spectacular.  That it closed fractionally positive on volume 
of more than 2.5 times the ADV of 17.1 mln shares is even better 
on a day like this.  We think this is a less risky "buy the dip" 
issue.  If there is additional margin call selling tomorrow that 
takes the price under $88, that may be the buying opportunity we 
need to take a position.  First though, confirm that a reversal 
is at hand following the dip.  If you want to play this 
conservatively, wait for a break back above the 50-dma of $91.67 
or (for the more conservative) today's high of $93.13, and be 
sure that any move up is backed with volume.

Some bad sentiment reflecting on the opposing team: What's bad 
for Microsoft is good for Sun, and the shot in the gut to MSFT by 
Judge Jackson yesterday in the landmark anti-trust case should 
help SUNW a bit.  

BUY CALL APR-85*SUX-DQ OI=3214 at $10.38 SL=7.50
BUY CALL APR-90 SUX-DR OI=7561 at $ 7.63 SL=5.25
BUY CALL APR-95 SUX-DS OI=6939 at $ 5.50 SL=3.50
BUY CALL MAY-90 SUX-ER OI=1031 at $11.88 SL=9.00
BUY CALL MAY-95 SUX-ES OI=1220 at $ 9.38 SL=6.50

Picked on Apr 04th at     $90.00     P/E = 117
Change since picked        +0.00     52-week high=$106.75
Analysts Ratings      9-11-1-0-0     52-week low =$ 24.88
Last earnings 01/00    est= 0.20     actual= 0.21 surprise=5%
Next earnings 04-13    est= 0.22     versus= 0.18
Average Daily Volume = 16.55 mln
/charts/charts.asp?symbol=SUNW

****

CL - Colgate-Palmolive Co $60.69 +0.19 (+4.31 for the week)

Colgate-Palmolive manufactures and markets a wide variety of 
products for the consumer.  They have two distinct business 
segments: oral and personal care products and pet nutrition.  
CL is the #1 seller of toothpaste - everyone brushes!  And 
their Hill's Science Diet brand is a leading premium pet food 
worldwide.  Almost 70% of their total sales revenue come from 
foreign accounts.

Investors are rotating equity holdings out of the high-flying 
tech sector and moving back into "old economy" stand-by stocks 
like CL.  The world's largest toothpaste maker has seen a steady 
increase in its share price since mid-March.  Although CL jumped 
up significantly in the last two trading sessions.  CL left its 
comfortable zone near the 10-dma ($55.93) and moved through 
resistance at the 5-dma ($58.04) yesterday.  Today amid the 
torrent of the 700-point swing on the DOQ, it firmed at $59 and 
$60 demonstrating it can hold the higher share price.  The 
ultimate challenge is for CL to power beyond its 52-week high 
at $66.75 (set in January).  The near-term does look promising 
for this consumer stock.  The tech traders are now pondering 
"portfolio diversification" and CL offers a low P/E for the 
value investor.  Earnings are also quickly approaching.  The 
company is expected to report positive results on April 19th 
(not yet confirmed).  A definitive bounce off $57 and $58 on 
an intraday pullback is a solid entry into this sector play 
assuming the uptrend remains intact.  Be patient and make sure 
there's volume to back the climb.

In recent company news, Colgate-Palmolive filed with the SEC to 
sell as much as $800 mln of Debt Securities.  The proceeds will 
be used for general corporate purposes.  And on Friday the S&P 
raised the company's Senior Unsecured Rating to an A-plus from 
a Single-A.

BUY CALL APR-50 CL-DJ OI=2058 at $11.25 SL=8.25
BUY CALL APR-55*CL-DK OI= 806 at $ 6.50 SL=4.50
BUY CALL APR-60 CL-DL OI= 414 at $ 3.13 SL=1.50
BUY CALL MAY-60 CL-EL OI= 588 at $ 4.75 SL=2.75
BUY CALL MAY-65 CL-EM OI= 519 at $ 2.75 SL=1.25

Picked on April 4th at  $60.69    P/E = 41
Change since picked      +0.00    52-week high=$66.75
Analysts Ratings    3-10-5-0-0    52-week low =$40.50
Last earnings 12/99  est= 0.40    actual= 0.41
Next earnings 04-19  est= 0.37    versus= 0.32
Average Daily Volume = 2.2 mln
/charts/charts.asp?symbol=CL

****

DISH - Echostar Communications $68.38 -5.81 (-10.63 this week)

Serving up multimedia to the masses, DISH and its subsidiaries
deliver direct-to-home satellite television products and
services.  With four satellites, its DISH Network has the
capacity to provide over 300 channels of digital video, audio,
and data services.  The company offers direct broadcast
satellite (DBS) TV dishes and integrated receivers that
receive programming for about 3 million DISH Network
subscribers.  Echostar also provides satellite delivery of
local network stations in a few large markets and has partnered
with Microsoft to provide WebTV access through its DBS system.

Serving up every viewing choice a couch potato could ask for,
DISH seems to be adding to its programming repertoire on a 
daily basis. (see news below)  After breaking out of its broad
consolidation between $40 and $50 in late February, DISH surged
and dipped its way to the high side of $80 in advance of the
company's 2-for-1 split, which occurred March 22nd.  The first
stage of the post-split depression was over and DISH was moving
higher when, out of nowhere comes the NASDAQ disaster of the
last two days.  If nothing else, the action today forced every
tech stock to demonstrate where the serious support existed.
For DISH, this level is $52.75, and along with the bulk of the
NASDAQ, bounced strongly from this level.  It was a long trip
to the low of the day, as DISH started out above $75, and even
after a recovery of almost $16, the stock was still -$5.81. 
The good news though, is all buried in the chart.  Trading over
8 million shares (4 times the ADV), the volume really confirmed
the move up today.  As the price stair-stepped its way to
recovery, we saw volume pick up on the uptrends and drop off
during the consolidations.  The road to recovery established
intraday support at $65, and then $61.  By the close of the day,
DISH had moved up to where it was trading last Friday ($68.75),
and only time will tell if it has the strength to move through
this resistance.  With the broader markets still unsettled, let
DISH show you whether it is going to challenge support or
resistance first, then pull the trigger accordingly.

Today the company announced the delivery of local channels in
Charlotte, North Carolina, bringing to 27 the number of cities
where DISH provides local programming.  Yesterday, DISH
announced that it now offers over 20 Spanish-language channels,
making the move to serve the fast-growing U.S. Spanish-speaking
audience.  On March 27th, DISH struck a deal to acquire 12% of
privately held Isky in an attempt to develop its broadband
Internet business.

BUY CALL APR-65 HSW-DM OI=1631 at $8.38 SL=6.00
BUY CALL APR-70*HSW-DN OI=1705 at $5.75 SL=4.00
BUY CALL APR-75 HSW-DO OI=2288 at $4.00 SL=2.25
BUY CALL MAY-70 HSW-EN OI= 140 at $8.63 SL=6.25
BUY CALL MAY-75 HSW-EO OI=1333 at $6.75 SL=5.00

Picked on Apr 4th at     $68.38     P/E = N/A
Change since picked       +0.00     52-week high=$81.25
Analysts Ratings      9-6-1-0-0     52-week low =$ 9.72
Last earnings 03/00   est=-0.55     actual=-0.97
Next earnings 05-15   est=-0.35     versus=-0.29
Average Daily Volume = 2.03 mln
/charts/charts.asp?symbol=DISH

****

AMAT - Applied Materials $98.13 +8.88 (+2.06 this week)

Applied Materials is the world's #1 maker of complex
manufacturing equipment used in semiconductor factories.  Its
machines have a big share in most industry segments, including
deposition (layering film on wafers), etching (removing excess
material during patterning), and ion implantation (altering
electrical characteristics of certain areas of wafer coating).
Applied Materials also makes metrology systems and inspection
equipment.  Their customers include Advanced Micro Devices,
Intel, Lucent, and Motorola.  

If this bull market is going to keep rolling, the chip stocks
could lead the way.  The Philadelphia Semiconductor Index (SOX)
has had a major pullback and could stabilize as many of the
individual stocks that make up the index are showing strength.
After losing a massive 7.4% Monday, the SOX closed 1.6% lower
on Tuesday.  The recent correction in the semi's has led many
analysts to believe that there exists attractive valuations in
the sector, and see the recent events as a buying opportunity.
AMAT is one of the stocks in the SOX that is showing strength.
The stock benefited today from an announcement that the company
will partner with Ericsson Microelectronics to develop a
multi-system technology that will be used to fabricate
telecommunication chips using Ericsson's 0.25 and 0.18 micron
advanced RF (radio frequency) devices.  The effort will combine
AMAT's product line and experience with Ericsson's expertise in
RF applications.  Technically, the chart on AMAT looks pretty
good considering the recent debacle in tech stocks.  The stock
briefly dipped below major support at $89 today, then charged
back to take out overhead resistance at $97.  AMAT looks as if 
it wants to move higher from here.  Volume was impressive Tuesday,
as traders moved 23 mln shares vs. 8 mln ADV.  If we can get above
$100 with momentum, the stock could retest its high of $110.  
The intraday chart reveals that the AMAT has found support along 
its 5-dma where an aggressive trader might look for a bounce off
support at $97.  A convincing move above $100 might provide a
better entry-point for those of you looking to minimize risk.

The entire semiconductor sector has benefited in recent months
and expectations are that earnings will exceed estimates, and
help maintain momentum in the sector.  Watch for AMAT's
competitors such as KLAC and TER ahead of earnings and use 
any move as confirmation before entering a new play.

BUY CALL APR- 95*ANC-DS OI=3536 at $10.25 SL=7.25
BUY CALL APR-100 ANC-DT OI=3315 at $ 7.88 SL=5.25
BUY CALL APR-105 ANC-DA OI=5985 at $ 5.75 SL=3.50
BUY CALL MAY-100 ANC-ET OI=1431 at $12.00 SL=9.00

Picked on Apr 4th at     $98.13    P/E = 70
Change since picked        0.00    52-week high=$110.00
Analysts Ratings    14-15-2-0-0    52-week low =$ 24.19
Last earnings 01/00    est=0.38    actual=0.40
Next earnings 05-10    est=0.54    versus=0.18
Average Daily Volume = 8.13 mln
/charts/charts.asp?symbol=AMAT

****

WLA - Warner-Lambert Co. $105.50 +3.63 (+7.81 this week)

Warner-Lambert has undergone a dramatic business transformation
during the last decade, a transformation marked by dynamic sales
and profit growth.  The introduction of breakthrough health care
and consumer products has helped lead the company's rise in
prominence.  To foster future growth WLA is expanding its role
in medical care by developing innovative pharmaceuticals.  They
also are striving to further bolster their position as a leader
in over-the-counter health care products.  WLA finds its top
competition coming from Bristol-Myers Squibb, Gillette and Merck.

The new week and quarter has been very good to one of our latest
additions to our play list.  Did you hear there was a huge sell-
off in the major indices today?  Well, if you owned stock in 
Warner-Lambert since late last week, you would never have known
the blue chips and Nasdaq were getting clobbered today.  Actually
WLA began the week, shooting out of the starting blocks to a new
high today and hasn't looked back.  What's the story?  We will 
call the latest beneficiary of sector rotation for now.  Investors
began to dabble in shares of WLA and several other Drug stocks on
March 8th.   While some of the others have fallen prey to profit
taking, WLA has continued to gain momentum.  Again it's a real
company, with real earnings, which seems to have garnered investor
attention as the Nasdaq and tech stocks have struggled for the
last few weeks.  Today news hit the streets that research is
showing a drug being developed by Pharmacia Corp, appears to
shrink or stop tumor growth in mice by blocking the formation of
cancer-feeding blood vessels.  The drug appears to be potent 
against a range of cancers and helped shrink tumors in mice with
lung, colon, skin, brain and ovarian cancer.  WLA, Pharmacia and
several others are working on treatments that target blood vessels 
feeding a tumor, rather than the tumor itself.  WLA has gained 
about 8.0% so far this week.  After making its new high WLA did
see a pullback to $102.63, but had buyers waiting with open arms.
Volume the first two days of the week has been heavy with just
over 12.5 million shares changing hands.  Closing in the upper
end of today's range suggests WLA should move higher.  If we see
a retracement, support should come in near $103 and $100 and
would be acceptable levels to target shoot an entry.

Late last week, WLA said it expects one-time costs of about $100 
million to cover the withdrawal of its Rezulin diabetes drug.  
The cost cover product returns and inventory write-off for the 
drug, which has been linked to 63 deaths since 1997.  WLA pulled 
the drug in late March at the demand of the FDA, ending almost 
two years of debate over the drug's link to cases of fatal liver 
damage.

BUY CALL APR- 95 WLA-DS OI=6703 at $10.38 SL=7.25
BUY CALL APR-100*WLA-DV OI=5027 at $ 6.25 SL=4.25
BUY CALL APR-105 WLA-DA OI= 908 at $ 3.25 SL=1.50
BUY CALL JUL-100 WLA-GV OI=1618 at $11.88 SL=9.00
BUY CALL JUL-105 WLA-GA OI=4023 at $ 9.25 SL=6.50

SELL PUT APR-100 WLA-PV OI= 348 at $ 1.31 SL=2.50
(See risks of selling puts in play legend)

Picked on Apr 04th at   $105.50    PE = 54
Change since picked       +0.00    52-week high=$106.75
Analysts Ratings     12-4-7-0-0    52-week low =$ 60.81
Last earnings 01/00   est= 0.52    actual= 0.55 
Next earnings 04-19   est= 0.56    versus= 0.45
Average daily volume = 3.63 mln
/charts/charts.asp?symbol=WLA

****

PCAR - Paccar Inc $52.75 +2.88 (+2.63 this week)

Paccar may not sound familiar, buy you've seen its trucks in your
rearview mirror.  Paccar is a diversified, mult-national company
that manufactures heavy duty, on and off road trucks sold around
the world.  Trucks manufactured by Paccar are marketed under the
Peterbilt, Kenworth, DAF, and Foden nameplates in the United
States.  The company also provides replacement truck parts.  
Through Paccar Leasing Corp, the company franchises Paccar truck
dealers, providing inventory financing for independent dealers
and lease financing for new and used trucks.  The company has
plants in Australia, Belgium, Canada, Mexico, the UK and the US.

PCAR keeps trucking its way to higher-highs in the face of broad
market weakness.  You've gotta love a stock that opens higher and
actually trends higher on a day like Tuesday, especially a four-
letter stock.  Our play in PCAR is pure and simple momentum.
Investors have been seeking solace in any form recently, even
value stocks.  PCAR provides plenty of value, sporting a single
digit P/E.  Looking at the chart for the past three months, it
shows that the stock tends to build a base after rallying, then
break out of that base to move higher.  PCAR broke out of its
recent trading range Tuesday, and now looks positioned to move
higher.  The stock had been bumping up against resistance of $50
recently, but managed to clear that obstacle with ease today.
The next level that PCAR will encounter resistance is at $55, a
level not seen since last August.  The stock has been using its
10-dma in its effort to move higher.  Look for a bounce off that
level, currently at $53.  We have strong support below at $52 and
again at $51 should any profit taking ensue.  We're looking for
momentum to continue in PCAR as investors continue looking for
companies with earnings.  Watch the volume carefully on PCAR, it
tends to increase as the stock moves higher, use it as
confirmation before entering a new position.

In the news last week, PCAR announced its ePaccar division formed
a business-to-business ecommerce company called Truckxchange.com.
The new company will create the first global electronic
marketplace for the commercial vehicle industry.  The best of
both worlds, old economy value with a B-2-B twist.

BUY CALL APR-50 PAQ-DJ OI=222 at $4.13 SL=2.50
BUY CALL MAY-50*PAQ-EJ OI=120 at $5.63 SL=3.50
BUY CALL MAY-55 PAQ-EK OI=103 at $3.13 SL=1.50

Picked on Apr 4th at   $52.75    P/E = 7
Change since picked     +0.00    52-week high=$63.00
Analysts Ratings    3-1-6-0-0    52-week low =$39.75
Last earnings 12/99  est=1.89    actual=2.06
Next earnings 04-25  est=1.81    versus=1.52
Average Daily Volume =  477 K
/charts/charts.asp?symbol=PCAR



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

ICGE - Internet Capital Group $67.88 -10.27 (-22.42 this week)

Like a little CMGI, Internet Capital Group is an Internet 
company actively engaged in business-to-business e-commerce 
through a network of partner companies.  It provides operational 
assistance, capital support, industry expertise, and a strategic 
network of business relationships intended to maximize the 
long-term market potential of more than 60 business-to-business 
e-commerce partner companies.  Headquartered in Wayne, Pa., 
Internet Capital Group also has offices in San Francisco, 
Boston, Seattle and London. 

Wow!  Check out the chart on this Internet incubator.  While 
fundamentally, its business is just like CMGI's, the chart has 
more of an ugly factor to it.  Though ICGE has violated every 
moving average it possesses (5, 10, 50, 200-dma), there was solid 
support at $80.  Sadly for ICGE, even that was violated today as 
the issue sank to $55.69 before staging a weak recovery to just 
$67.88 where it closed - still substantially under $80 support, 
and on volume of more than twice the ADV of 3.9 mln shares.  Mild 
support may take hold at $60, however, if the market keeps its 
wobbly legs for the next few days, ICGE could easily tag $55 
again, and may find $45 on a dip where it encounters strong 
support.  Simply stated, ICGE did not recover well with the rest 
of the sector and looks like it will continue the weakness 
exhibited today.  Also, earnings are not scheduled until late 
in May tentatively, and thus, won't interfere with the play, 
allowing ICGE free access down the stairway to the basement.  
More good news is that if you are looking for a sympathy company 
that might derail the descent, CMGI won't report earnings either 
until early June - similar chart pattern as well.

BUY PUT APR-70*EUG-PN OI= 72 at $9.00 SL=6.25
BUY PUT APR-65 EUG-PM OI=153 at $6.38 SL=4.25

Average Daily Volume = 3.87 mln.
/charts/charts.asp?symbol=ICGE

****

ITXC - ITXC Corporation $35.06 -9.56 (-12.00 this week)

ITXC Corp is the service providers' service provider for voice 
on the Internet.  ITXC WWeXchange Service provides phone-to-
phone wholesale call completion for carriers and resellers 
and has been chosen by ten of the top twelve U.S. facilities-
based carriers, leading European competitive carriers and 
PTTs worldwide to complete their customers' calls. 

From love to hate, Internets are currently taking a beating 
from investors.  ITXC is lumped into this sector too, as 
they bridge the gap between telephone and Internet with their 
networks that allow for phone calls to be passed inexpensively 
via the Net.  One look at the chart will tell you why we like 
this as a put play as the sellers are dominating the action.  
Even a recent upgrade by CIBC couldn't help curb the slide.  
The question here is where to enter.  Rational thinking 
would tell us that it is not after today's massive move.  But 
a bounce back up to resistance by the 5-dma at $44.88 or the 
10-dma near $50 would be prime.  With the recent volatility, 
moves of that magnitude could happen by tomorrow afternoon.  
Nevertheless, entry points are key.  Stocks like this that 
have stretched valuations and extremely low revenues are the 
ones really getting left behind.  Any rallies will bring 
back the sellers in full force.  Like the investors that 
bought 4 million shares on Feb 10th at $85.  How would you 
have liked to been stuck holding the bag on that secondary 
offering?  The lack of any signs of a rally will likely bring 
out those sellers at the first possible chance.  So watch 
for a Nasdaq and Internet rebound for the next entry point.  
Aggressive investors can jump in on the continuing downtrend 
though.  Next support looks like $30.  Look for new contracts 
with at-the-money strikes to be created tomorrow.

BUY PUT APR-50*UXI-PJ OI=107 at $15.63 SL=11.00
BUY PUT APR-45 UXI-PI OI=  0 at $11.13 SL= 8.50 Today's vol=55

Average daily volume = 293 K
/charts/charts.asp?symbol=ITXC



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

INKT - Inktomi $158.00 -9.44 (-37.00 this week)

Hidden behind the scenes of many of the world's largest portal
sites is INKT, providing scalable software applications designed
to enhance the performance and intelligence of large-scale
networks.  Its applications fall into two broad categories,
network products and portal services.  Traffic Server is a
large-scale network caching application licensed to Internet
Service Providers (America Online) and corporations to
mitigate capacity constraints in high-traffic network routes.
Current portal service applications include search, shopping
and directory services, which are offered to Web site customers
and Internet portals such as Yahoo!.
  
Most Recent Write-Up

A $37 loss in two days and we're keeping INKT?  You bet we are.  
For the explanation, all you have to do is look at an intraday 
chart.  Up until about 1:15pm EST, things were looking ugly.  But 
then, the last of the weak hands were shaken out near $112, and 
the recovery began.  Moving up nicely for the balance of the day, 
buyers really stepped up to the plate as INKT recovered $45.50 
from its low of the day.  Many stocks saw record intraday moves
today and INKT was no exception.  Posting volume more than triple 
the daily average and losing almost $10 would normally be grounds 
for a drop.  Of course, we are concerned and need to see INKT 
stay positive as we go through the remainder of the week.  The 
motivation for our play remains unchanged though;  earnings are 
scheduled for April 18th, and with the depression in the share 
price recently, there is plenty of room to run.  Oh, and don't 
forget, INKT is a split candidate over $150, so we could get a 
little bonus with the earnings announcement.  Look for a bounce 
near support at $150 or a break through resistance at $162 to 
trigger new entries.

Comments

No news to report for INKT.  No economic data.  Tomorrow's market
direction will be the dominant catalyst for equities.  There's no
doubt that it will be a volatile session so watch carefully and
choose your entry points wisely.  Target shoot based on personal
risk levels and keep in mind that INKT traded in a $56 range 
today.

BUY CALL APR-150 KYQ-DJ OI= 607 at $21.88 SL=17.00
BUY CALL APR-160*KAY-DL OI= 129 at $16.88 SL=13.00
BUY CALL APR-170 KAY-DN OI= 259 at $12.38 SL= 9.50
BUY CALL MAY-170 KAY-EN OI= 124 at $20.75 SL=16.00
BUY CALL MAY-180 KAY-EP OI=1127 at $17.38 SL=13.50

SELL PUT APR-130 KYQ-PF OI= 766 at $ 4.25 SL= 6.50
(See risks of selling puts in play legend)

Picked on Apr 2nd at    $195.00     P/E = N/A
Change since picked      -37.00     52-week high=$241.50
Analysts Ratings     8-10-1-0-0     52-week low =$ 42.75
Last earnings 01/00   est=-0.04     actual=-0.02
Next earnings 04-18   est=-0.02     versus=-0.05
Average Daily Volume = 2.59 mln
/charts/charts.asp?symbol=INKT



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

Volatility Rules The Market!

Monday, April 3

The Nasdaq suffered record losses Monday as investors unloaded
technology issues in the wake of the failing Microsoft antitrust
settlement discussions.  In contrast, the Dow industrials posted
big gains with old economy stocks leading the flight to quality.
The Dow closed up 300 points at 11,221 while the Nasdaq fell 349
points to 4223.  The S&P 500 was up 7 points to 1505.  Volume on
the NYSE hit 1.02 billion shares, with advances beating declines
1,578 to 1,486.  Nasdaq volume was heavy at 1.6 billion shares
with declines beating advances 3-to-1.  In the bond market, the
long bond rose 10/32, bid at 106 3/32, where it yielded 5.81%.


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

California Amp.   CAMP  APR45C/APR40C  $1.00  credit  bear-call
Intl.  Rectifier  IRF   APR50C/APR45C  $1.12  credit  bear-call
Triquint          TQNT  APR115C/110C   $0.00  credit  bear-call
Sun Micro         SUNW  APR75P/APR80P  $0.50  credit  bull-put
Sun Micro         SUNW  APR115C/110C   $0.75  credit  bear-call

There was little time to take advantage of the premiums in the
suggested positions as the technology market quickly began its
record fall.  Although Triquint moved as expected, the target
credit was unavailable.  Sun Microsystems had much larger
premiums in the bearish credit spread later in the session.
 

Portfolio plays:

The weakness in technology issues became very apparent today as
the Nasdaq endured its biggest point drop in history.  Microsoft
shares led the way, falling to $90 after the company's attempt to
settle their antitrust lawsuit failed over the weekend.  The loss
in capital was significant, shaving $80 billion off the firm's
market value, and the effects on the industry were widespread.
The Nasdaq index closed below a crucial technical support level
near 4400, signaling another potential downward move in what has
become a full scale correction.  Computer Hardware and Software,
Internet, Semiconductor and Telecommunications stocks all moved
lower.  Analysts said that as stocks plunged, brokers demanded
payment from investors with margin calls.  Faced with these cash
outlays, investors liquidated more shares, which exacerbated the
decline.  Our portfolio was significantly affected by the selling
in technology stocks and a number of positions were closed or
rolled forward (and down) to limit losses and protect profits.

Despite a steep decline in the Nasdaq, industrial stocks managed
to post impressive gains amid safe-haven buying.  The start of a
new quarter and bargain-hunting in the classic issues helped the
blue-chip average move higher.  The rotation back to traditional
stocks, such as banks and major drug companies, pushed the Dow to
its highest close since January.  The winners in the broad market
included retail, building materials and tobacco stocks, and our
standout in that group was Phillip Morris (MO).  The stock moved
up $2 during the session, providing a number of opportunities to
close both of our bullish calendar spreads for a favorable profit.
Another big mover was Kroger (KR), which rose $1.68 to close at
$19.25.  The move provided some great premiums for our expected
move to the $20 strike.  Our debit for the transition to MAY-$20
options (on the short side) was $0.50.  The new diagonal spread
is JUL17C/MAY20C at a cost basis of $1.43.  Navistar (NAV) has
once again moved above $40 and both of our bullish spread plays
are trading at favorable profits.  The calendar spread position
can be closed for a $1.12 return (on $2.00 invested) and the
diagonal spread offers a $10.12 credit against the original cost
basis of $9.00.
 
Banking issues also participated in the blue-chip rally and our
new positions in Bank One (ONE) and Summit Bancorp (SUB) were
among the group leaders.  The bullish LEAP/CC'S position in ONE
is at maximum profit above $30 and has no upside risk.  Summit
is also trading above the sold strike and remains positive above
$26.25.  Northern Trust Bank (NTRS) traded up $4 near $72 before
consolidating to a recent high near $70.  Our new bullish credit
spread profits above $59.18.  The surprise of the session was
Legato Systems (LGTO) which fell $20 to $19.88 after the firm
filed to delay its 10-K filing and said it expects to revise
downward the $251.1 million in revenue it previously reported.
The maker of storage management software said much of the problem
was the result of unauthorized transactions by certain sales
representatives.  In addition, Legato said it expects quarterly
revenues to be lower.  Our calendar-spread position was easily
closed last week for a profit but unfortunately, Monday's move
was before the open and the diagonal spread suffered significant
losses.


Wednesday, April 4

A record-setting fall in technology stocks pulled the Dow into a
powerful decline during a wild, panic-stricken session.  The Dow
Industrial Average recovered to lose 46 points, closing at 11,175
while the Nasdaq Composite rebounded to a 74 point loss, ending at
4,148.  The S&P 500 was relatively unchanged at 1,493.  Declining
issues outnumbered advancers by a nearly 2-to-1 margin on the New
York Stock Exchange with total volume at 1.5 billion shares traded.
Volume on the Nasdaq hit 2.88 billion, beating a former record of
2.23 billion shares.  Losing issues outpaced winning issues on
both exchanges.  The 30-year U.S. Treasury bond rose 18/32, with
the yield moving down to 5.77%.


Portfolio plays:

In the most active day ever for U.S. stocks, the Nasdaq Composite
and the Dow Jones Industrial Average each plunged more than 500
points before recovering late in the day.  Bargain-hunting buyers
flooded the market in the last hour of trading, lifting stocks
from session lows.  Widespread pessimism among investors started
the technology slide just after the open, sending the index to a
midday bottom near 3650 before the recovery began.  The downward
move spurred a steep sell-off in the broader market, pulling the
blue-chip index down 503 points at one time.  The 700-point swing
from high to low was the biggest on record for the Dow.  Traders
said the Nasdaq was long overdue to drop from its recent heights
and a well known analyst said today's pressures came from three
M's: Microsoft, margin calls and mounting anxiety.  With stocks
falling to correction levels, investors who bought securities on
margin, or on credit, have had to sell their shares to repay their
loans to brokerages.  Now the question is who will be left to buy
the recovering issues when the selling pressure finally abates.

Those investors who were unaware of the movement in today's market
will probably never understand what its like to witness such a
shocking financial event.  Traders with open (bullish) positions
on margin must have seen their whole lives pass before them in a
matter of minutes.  I for one, was absent during the most of the
carnage and was amazed to learn that both indexes had fallen 500
points during the session.  I don't know how I would have reacted
if I had personally watched the sell-off and today's activity
brings to light a unique difficulty associated with producing
this section.  That is, how to determine when to exit a position
(or when one should have been closed) without the added mental
baggage that comes with the potential for financial failure.  It's
easy to trade successfully based on simple, unemotional technical
analysis, when your actions are not affected by the possibility of
monetary loss.  Without actually trading the positions, the best I
can do is follow the basic rules (Jim's "Top-Ten" on the web-site
are ageless!) and try to manage the position just as I would if it
were in my portfolio.  I mention this because each week I receive
numerous requests for advice or assistance with various positions
and unfortunately, the answer I must give is simple: "Deciding
when to enter and exit a play is a matter of personal preference."
Fortunately, that's one secret to winning in this game.  You must
trade based on your own terms and knowledge!  You must not let the
effects of outside opinion or extraneous information influence
your judgment!  You are the only one who should decide how YOU
will trade.  While most professional traders strive for consistent
monthly returns of 10% to 15%, your specific style or risk/reward
attitude may require a less aggressive approach.  If you can not
afford the potential loss associated with a position, then don't
make the trade.  It's hard to believe (after today) but success
will come when you create a favorable balance of strategies and
sound money management techniques.  Of course that requires lots
of hard work and patience, and the fact is too many traders give
up after a few losing plays, long before they have time to learn
and absorb the various methods required for profitable trading.

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


******************************************************************
				- READER'S REQUEST -

One of our subscribers was kind enough to point out the increased
bullish activity in the Food and Beverage Group and in Consumer
Non-durables.  He also requested that we identify some favorable
spread positions in those issues.  Here are three candidates for
your review and based on the new technical outlook and increased
option interest, the easiest way to profit from any future upside
movement may involve the most common forms of debit spreads.

These plays are based on the current price or trading range of
the underlying issue and the recent technical history or trend.
Current 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.

****

PG - Proctor & Gamble  $63.44  *** On The Rebound? ***

The Procter & Gamble Company manufactures and markets a broad
range of consumer products in many countries throughout the
world.  Their products fall into a number of business segments:
Laundry and Cleaning, Paper, Beauty Care, Food and Beverage, and
Health Care.  Laundry and Cleaning products include dish care,
fabric conditioners, hard surface cleaners and laundry.  Paper
products include diapers, feminine protection, tissue and towel,
and wipes.  Beauty Care products include cosmetics, deodorants,
fragrances, hair care, personal cleansing, and skin care.  Food
and Beverage products include all of your favorites: coffee,
juice, peanut butter, shortening and oil, snacks, and other
commercial services.  Health Care products include general
health, oral care, pharmaceuticals and respiratory care.

Companies such as consumer products giant Procter & Gamble have
enjoyed solid gains recently as investors rotate to historically
consistent performers.  Today the stock moved up almost $4 after
a Donaldson, Lufkin & Jenrette analyst raised her rating on the
issue to "buy" from "market performer."  The bullish opinion for
the downtrodden stock is based on its oversold condition and the
potential for significant gains.  Technically, that outlook has
merit.


PLAY (conservative - bullish/debit spread):

BUY  CALL  MAY-50  PG-EJ  OI=206   A=$13.38
SELL CALL  MAY-60  PG-EL  OI=2278  B=$4.75
INITIAL NET DEBIT TARGET=$8.50 ROI(max)=17%

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

****

K - Kellogg Company  $26.25  *** Here's Your Special K! ***

Kellogg manufactures and markets ready-to-eat cereal and other
grain-based convenience food products.  The company's principal
products are ready-to-eat cereals and other convenience foods,
which are manufactured around the world and distributed in more
than 160 countries.  These products are generally marketed under
the Kellogg's name and are sold principally to the grocery trade
through direct sales forces for resale to consumers.  They also
use broker and distribution arrangements for certain products in
less developed market areas.  In addition to ready-to-eat cereals,
the company produces and distributes toaster pastries, bagels,
frozen waffles, crispy marshmallow squares and cereal bars in the
United States and Canada.  Kellogg also markets these and other
convenience food products in various locations throughout the
world.

This position is based solely on the recent technical change in
character in the issue and the short-term bullish outlook for the
Food and Beverage industry.  During the past few trading sessions,
the issue has posted significant gains and today it closed near
the top of its recent range.  The stock has also demonstrated new
bullish momentum with a break above its 50-day moving average.
The daily chart also reflects a small positive divergence from a
short-term MA and the trend in the sector may help it move higher
in the coming weeks.


PLAY (aggressive - bullish/debit spread):

BUY  CALL  MAY-22.50  K-EX  OI=438  A=$4.38
SELL CALL  MAY-25.00  K-EE  OI=231  B=$2.31
INITIAL NET DEBIT TARGET=$1.88-$1.93 ROI(max)=29%

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

****

HNZ - H.J. Heinz  $36.68  *** Cheap Speculation! ***

H. J. Heinz manufactures and markets an extensive line of
processed food products throughout the world.  Their products
include ketchup and sauces/condiments, pet food, tuna and other
seafood products, baby food, frozen potato products, soup,
lower-calorie products (frozen entrees, frozen desserts, frozen
breakfasts and other products), beans, pasta, full calorie frozen
dinners and entrees, chicken, vegetables and fruits, coated
products, meats, edible oils, pickles, vinegar, nutritional and
performance drinks, margarine/shortening, juices and other
processed food products. They also operate and franchises weight
control classes and operates other related programs. The company
intends to continue to engage principally in the business of
manufacturing and marketing processed food products and the
ingredients for food products.

This giant in consumer staples has garnered some attention in
recent weeks as its trading activity has begun to show new life.
Option trading has increased and with a favorable disparity in
premiums, this position offers a conservative, low-cost method
to speculate on the future trend in the Food and Beverage group.
 
 
PLAY (conservative - bullish/calendar spread):

BUY  CALL  JUN-40  HNZ-FH  OI=663  A=$1.38
SELL CALL  APR-40  HNZ-DH  OI=537  B=$0.31
INITIAL NET CREDIT TARGET=$0.93 TARGET ROI=25%

The basic premise in a calendar spread is simple; time erodes
the value of the near-term option at a faster rate than it will
the far-term option.  The bullish calendar spread is used when
the underlying issue is some distance below the strike price of
the options.  This position is speculative with low initial cost
and large potential profits.  Two favorable outcomes can occur:
the stock rallies in the short-term and the position is closed
for a profit as time value erosion in the short option produces
a net gain or; the underlying stock consolidates, allowing the
sold option to expire and then eventually rallies above the long
option strike price.

It is generally best to establish this type of spread at least
2 - 3 months before the long option expires, capitalizing on the
ability to sell another option against the longer-term position.
That is the basic idea in this spread play; selling time value
in the options when they are overpriced (high implied volatility)
and buying it back (if necessary) when they return to intrinsic
value.

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


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

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