Option Investor
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Daily Newsletter, Wednesday, 04/12/2000

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The Option Investor Newsletter                Wednesday  4-12-2000
Copyright 2000, All rights reserved.
Redistribution in any form strictly prohibited.

Posted online for subscribers at http://www.OptionInvestor.com

Also provided as a service to The Online Investor Advantage
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
       4-12-2000           High     Low     Volume Advance Decline
DOW    11125.10 - 162.00 11425.40 11116.80 1,154,738k 1,495  1,453
Nasdaq 3,769.63 - 286.27  4077.92  3769.17 1,920,444k 1,003  3,337
S&P-100  792.90 -   0.38   821.42   792.27    Totals  2,498  4,790
S&P-500 1467.17 -   3.87  1509.10  1466.15            34.3%  65.7%
$RUT     493.44 -  16.69   513.02   493.44
$TRAN   2952.63 +  30.82  2979.25  2905.58
VIX       31.88 +   2.93    32.44    29.06
Put/Call Ratio       .51
******************************************************************

It's getting worse

The NASDAQ continued its losing ways for the third day in a row.
After Wednesday's meltdown, the NASDAQ is officially in bear
market territory, 20% off its high set just a month ago.
The action was pretty ugly from the get-go Wednesday morning as
the index fell to 3850, shedding 200 points in the first two
hours of trading.  Traders stepped in mid-day to carry the NASDAQ
back above 3900, only to see those gains erased as the index 
plunged through support of 3800 in the last hour of trading.  
Today was the second largest point drop for the NASDAQ, placing 
the index below 3800 for the first time since January 6th.

The DOW managed to extend its gains from earlier in the week as
the divergence between blue chips and the tech sector continued
through Wednesday morning.  The industrials managed to climb
higher throughout the day, reaching an intra-day high of 11,143.
The divergence we've come to know ended sharply in the last hour
of trading as the DOW sank to 11,125, losing 275 points from its
day high.  It was a case of traders selling the blue chips to
cover any possible margin calls tomorrow induced from the losses
in the tech stocks.  The DOW was carried lower by four stocks,
HWP, IBM, INTC, and MSFT.  The four tech components in the DOW
accounted for -160 points.

Yesterday it was the Motorola meltdown and today it was the
Microsoft debacle.  Just what the tech sector didn't need was a
negative outlook for the personal computer market.  The
influential Goldman Sachs analyst, Rick Sherlund, warned clients
Wednesday of sluggish growth in PC sales from November through
February.  He cut his revenue estimates for MSFT for the third
quarter ending March from $5.9 bln to $5.7 bln which would
translate into 2-cents per share in earnings.  However, the 2
cent loss in operations may be offset by gains in MSFT's
investment gains.  Sherlund's comments caused MSFT to gap down by
$2 this morning, positioning it just above its 52-week low of
$75.50.

The negative news for MSFT rippled through the tech sector,
sending hardware and software makers running.  ORCL lost $4.25
and ADBE shed $7.44 as the CBOE Computer Software Index ($CWX)
was lower by 7.9%.  The hardware makers also suffered from the
Microsoft meltdown, INTC, DELL, IBM, HWP, and SUNW all ended the
day the sharply lower.  SUNW was especially hard hit Wednesday as
some analysts were cautious ahead of their earnings announcement
on Thursday.  Prudential analyst Steve Milanovich warned clients
Wednesday of a shortfall in some of SUNW's products.   Last month
SUNW and IBM engaged in a server price war in hopes to lure 
e-commerce companies.  In light of the cost cutting plans and the
apparent weakness in the PC sector, some analysts feel that SUNW
may fall short Thursday.  While others feel that SUNW will meet
or possibly exceed estimates.  The uncertainty surrounding SUNW
is not isolated, as many of the leading tech names are hovering
around key technical levels.  SUNW finished the day lower by 9%,
closing at $80.

In addition to the Microsoft sell-off, Compuware (CPWR) added to
the market's problems with an earnings warning.  The company said
it expects a profit from operations of 13 to 15 cents per share
in the fourth quarter.  The revised estimates are well below the
First Call estimate of 35 cents per share.  CPWR cited revenue
weakness from its professional services and products division.
Banc of America, Robertson Stephens and J.P. Morgan downgraded
CPWR to a market perform from a buy rating.  CPWR lost a whopping
40% Wednesday, closing at $11.94.

Jim mentioned Tuesday night that he expected selling pressure to
continue in part of the upcoming tax deadline.  Rumors circulated
trading desks again Wednesday that traders were cashing in
positions to pay taxes on last year's gains.  So many traders
made a ton of money in 1999 and are now selling positions to pay
their taxes.  This presents a problem for any rally as traders
try to squeeze out the last dollar before paying the tax man.  

So where do we go from here?  NASDAQ closed today just above its
next critical support level of 3750, should the index fall below
that level we could see 3650, the bottom hit last week during
Terrible Tuesday.  What is worrying investors today is the lack
of fear in the market.  While the VIX continues its ascent
towards its 52-week high of 35 (currently 31.88), the CBOE put/
call ratio remains modestly low at 0.49.  The low put open
interest reflects a lack of fear in the market, possibly pointing
to further downside.  Unlike the recent debacles in the NASDAQ,
today the big name tech stocks were hammered.  In the past week
we saw the high-flying dot coms stumble, but today we saw the
likes of MSFT, CSCO, INTC, and DELL have serious problems.

There were a few signs of life today in the broader market.  The
bank stocks saw heavy buying interest thanks to a positive
earnings report from J.P. Morgan.  Oil service, utility, and
paper stocks were also higher on Wednesday.  Remarkably, the
market internals for the NYSE remain intact.  Advancing issues
squeaked past declining issues 1,495 to 1,453.  And new highs of
43 far outpaced the new lows of 28 on the Big Board.  The
internals on the NASDAQ are a mess.  Traders continue to find
some solace in the old blue chips and avoid the tech sector like
the plague.

So what's going to turn this market around?  The blowout earnings
we have been looking for in the semi's came to light Wednesday
evening as AMD and ALTR announced stellar earnings.  AMD blew
away estimates of 0.58 cents, earning a massive $1.15 per share.
ALTR posted 0.36 cents per share vs a 0.34 cent estimate.  Also
of note, ALTR will be added to the S&P 500, replacing Atlantic
Richfield.  Both AMD and ALTR were higher in after hours trading.
The mecca of economic indicators will be released in the coming
days.  The PPI will be released Thursday morning, Wall Street's
consensus estimate is 0.5%, and the CPI will follow on Friday,
also expected to be a 0.5% increase.  Combined with the blowout
numbers from AMD tonight and any positive surprise in either the
PPI or CPI the market could rebound substantially.  We also have
a host of earnings reports tomorrow coming from CREE, FTU, GTW,
GM, KLAC, PMCS, and SUNW among others.  We'll be watching
closely to see if the earnings selling Jim mentioned yesterday
will transpire, or if AMD is a sign of things to come, we could
see the tech stocks rebound.

Eventually the NASDAQ is going to make a stand and rally.  If
the rebound has any clout, we'll see volume substantially
increase along with a significant percentage increase.  The
leading stocks like CSCO, INTC, and SUNW have lost substantial
ground.  We'll watch for that group of stocks to bottom and
emerge before the rest of the NASDAQ follows.  Traders should
also keep an eye on the put/call ratio as a sign that bearishness
has peaked.  The market is going to face several hurdles before
finding a bottom and moving higher.  The IPO list continues to
bring more supply to a market with little demand to meet the new
issues.  Institutions will eventually stop selling and start
accumulating the market leaders.  There is also a lot of cash
sitting on the sidelines, noting the balance of money markets
surpassed $1 trln this month.  The bottom line, it's impossible
to pick the exact bottom in any market, be patient and let the
NASDAQ form a base and look for opportunities in the broader
market.

I know last night Jim said he was going to buy today's dip, and
he did.  Fortunately, he was stopped out on the afternoon roll
over before any real pain was inflicted.  He told me it was
painful today, but it was his own fault for not waiting for
support on the NASDAQ at 3800.  Jim said he is back in cash and
ready to take another shot tomorrow morning on the heels of a
positive PPI.  Jim also said we will probably complete the retest
of the recent lows in the morning which could provide a great
entry point.  But he warned to watch for those falling knives!

Trade smart, and sell too soon!

Eric K. Utley



*****************
STOCK NEWS 1 of 2
*****************

Harley-Davidson Goes Hog Wild
By S.P. Brown

Due to the recent surge in the Dow Jones Industrial Average 
(INDU), investor interest in old-economy stocks has grown 
noticeably over the past month.  However, many of these old-
economy converts are noticing a definite dearth of growth among 
these dinosaur issues.  

If that weren't bad enough, they're also noticing most of these 
stocks make for poor water-cooler fodder - no one brags about 
owning Procter & Gamble (PG), DuPont (DD) and General Motors 
(GM).

But not all old-economy stocks are saddled with a fuddy-duddy 
Grampa Simpson image.  In fact, one of the "coolest" companies 
in the world is an old-economy stock, and that's Harley-
Davidson (HDI).  

For that rare person who has never heard of the company, 
Harley-Davidson manufactures and sells a broad-line of 
heavyweight touring and custom motorcycles, ranging in price 
from $5,350 to $18,500.  In addition to motorcycles, the 
company also sells related products, such as motorcycle parts, 
accessories, riding apparel and collectibles.   

Contrary to popular belief, the typical Harley-Davidson buyer 
isn't some beer-bellied, menacing Hell's Angel-type.  Studies 
by the company indicate that the typical U.S. Harley-Davidson 
owner is a married male in his mid-forties, with household 
income of about $73,000, which means there is plenty of money 
in the kitty for upgrades and extras.

Arguably, Harley-Davidson is one of the most recognizable 
brands in the world.  Unarguably, Harley-Davidson commands a 
mystique that no other company can match.  After all, how many 
companies can boast of a clientele that regularly tattoos 
itself with the corporate logo?  I defy anyone to find one 
person with the word "Cisco" tattooed across his forearm.  

More importantly, though, Harley-Davidson has been able to 
parlay this near slavish customer devotion to outstanding 
financial performance.  Late Tuesday, the company reported 
first-quarter earnings that easily beat the consensus estimate.  
For the quarter, net income climbed to $80.2 million, or $0.26 
a share, from $59.04 million, or $0.19 a share, in the year-ago 
period.  The First Call consensus estimate was for $0.24.  

Revenue was also strong for the quarter, rising 21.9 percent to 
$681.1 million.  Of total revenue, $535.3 was attributable 
directly to motorcycles, which was a 22.6 percent increase from 
the same quarter in 1999.  Furthermore, overall shipments of 
motorcycles rose 19.1 percent to 49,057, while parts and 
accessories rose 26.4 percent and general merchandise sales 
rose 13.7 percent. 

Such strong growth prompted Jeffrey Bleustein, company chairman 
and chief executive, to boast in a statement released with the 
earnings, "During the first quarter, we achieved double-digit 
growth in each of our product lines and business segments."

Also in the release, Bluestein stated the company raised its 
2000 production target for motorcycles to 198,500 units, up 
from its previous target of 196,000, which should help the 
company's capacity utilization ratio.  Last year, Harley-
Davidson had to increase production capacity in response to 
robust demand for its motorcycles.   

Still, despite the increase in capacity, U.S. consumers often 
have to wait months to take delivery of their motorcycle.   
Needless to say, discounting isn't a problem for Harley-
Davidson - there isn't any.

Looking ahead, analysts expect year 2000 sales to increase at 
least another 14 percent over 1999 levels.  Furthermore, 
operating margins are expected to widen as sales grow to 
utilize the new capacity, which should lower the fixed cost 
portion of cost-of-goods-sold (COGS).  

The consensus projection is for net income to grow 19 percent 
to $318 million, or $1.03 a split-adjusted share.    

However, these figures aren't cut in stone.  While Harley-
Davidson has its hands full satisfying customer demand, 
analysts have their hands full trying to estimate the maximum 
capacity the company's plants can produce each quarter.  They 
usually fall short, as the Harley-Davidson invariably finds 
ways to outpace its own projections, which is one reason the 
company often has positive earning surprises.  

Year-to-date, many high-tech stocks have fallen 50 to 75 
percent in value, while Harley-Davidson has risen more than 50 
percent in value.  Admittedly, part of the pop in the company's 
stock price was due to it being added to the S&P 500 Index 
(SPX) in January.  

Nevertheless, the appreciation is backed by the numbers, which 
declare Harley-Davidson to be a blue-chip company that 
regularly generates analyst-beating earnings and double-digit 
returns on equity.



*****************
STOCK NEWS 2 of 2
*****************

Credit Suisse Updates Focus List
By Cindy Christ

Credit Suisse First Boston released an update of its U.S. Focus 
list Tuesday, which comprises the investment bank's top stock 
picks for the next 12 months.

Here are the issues that made the cut:

Company			Ticker		Target Price

AXA Financial		AXF			$45
Baker Hughes		BHI			$40
Best Buy			BBY			$110
Broadcom Corp.		BRCM			NA
Cisco Systems		CSCO			$80
Cox Communications	COX			$60
General Electric		GE			$180
Home Depot			HD			$70
Intel				INTC			$150
Intuit			INTU			$82
Kansas City Southern	KSU			$105
Lucent Technologies	LU			$90
Merck & Co.			MRK			$90
Microsoft			MSFT			NA
Nokia				NOK			$225
Nortel Networks		NT			$150
Progressive 		PGR			$94
RF Micro Devices		RFMD			$160
Tyco International	TYC			$65
Union Pacific		UNP			$55
Viacom 			VIA.B			$70



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

WLA - Warner-Lambert Co. $108.13 +0.63 (+4.19) 

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.

After a tough start, through no fault of its own, WLA began the 
week making a new high in each of the past two sessions.  The moves 
this week have at least given us some breathing room.  Whether WLA 
can continue the momentum seen so far this week remains to be seen.  
WLA shot up to its high right out of the gate this morning, and 
traded in a narrow range for the balance of the day.  A look at 
intraday charts shows that WLA continued to make higher lows on 
each pullback during the session today, which is a definite plus.  
ABN AMRO said Tuesday it was maintaining its hold rating on merger 
partner and Viagra manufacturer, Pfizer, after U.S regulators 
yesterday recommended marketing approval of Uprima, a rival 
impotence treatment.  They believe the competition may continue to 
heat up in key therapeutical areas in the industry.  If profit 
taking sets in, we would look for the $106 or $104 to bring fresh 
buyers to the market.  WLA is also scheduled to report 
first-quarter results on April 19th, so we could still have time 
for a run into earnings.  Indications are for a nice increase 
over last year, with estimates of $0.56 per share.

It was a wild day in the market and predicting the next move has 
become more and more difficult.  WLA was up slightly today and
represents a safehaven of sorts in a volatile market.  Target
shoot based on personal risk profiles and look for WLA to move 
toward its 52-week high which it set today at $109.88.

***April contracts expire in two weeks***

BUY CALL APR-100 WLA-DV OI=4760 at $ 8.75 SL=6.75
BUY CALL APR-105 WLA-DA OI=1041 at $ 4.38 SL=2.75
BUY CALL MAY-105*WLA-EA OI= 470 at $ 7.38 SL=5.75
BUY CALL MAY-110 WLA-EB OI= 480 at $ 4.38 SL=2.75

Picked on Apr 04th at   $105.50    PE = 53
Change since picked       +2.63    52 week high=$109.88
Analysts Ratings     12-4-8-0-0    52 week low =$ 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 = 3.73 mln
/charts/charts.asp?symbol=WLA



*****************************************
BIG CAP COVERED CALLS & NAKED PUT SECTION
*****************************************

After two weeks of fighting the trend, we have decided to change
the name of this section. (Next Week... BIG CAP NAKED CALLS & 
COVERED PUT SECTION)

Just kidding...but you have to admit, it is difficult to promote
a bullish strategy with all of the negative indications.  In any
case, our past attempts at bearish techniques have always met
with little enthusiasm so for now, we will continue to focus on
those few conservative positions that have a better-than-average
potential for success.  In addition, we will also begin to list
mid-cap issues and bearish plays when they become available (as
the market dictates).  Please feel free to submit suggestions on
the future direction of this section as our goal is simply to
please you, the readers.

Summary of Previous Picks:

Covered Calls: (Margin would double the listed Monthly Return)

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

SUNW    APR    80    77.00   80.00   $3.00   7.4%
PCLE    APR    25    23.47   27.63   $1.54   6.7% Split 2 -1
AMAT    APR    95    91.94   97.56   $3.06   6.3%
ASYT    APR    40    37.18   51.38   $2.82   6.2%
CY      APR    45    42.93   48.00   $2.07   4.9%
PHTN    APR    70    66.50   62.50  -$4.00   0.0%
AFCI    APR    55    49.75   45.25  -$4.50   0.0%

AMD     MAY    60    55.25   76.00   $4.75   5.9%
IMNX    MAY    50    46.56   54.94   $3.44   5.1%
CSCO    MAY    68    62.88   65.00   $2.12   2.3%

Positions Closed:

SPYG, ISSX, NXTV, PUMA, PHCM, MANU, ZIXI, DITC, YHOO,
NEON, TGNT.   

Naked Puts:

Stock  Strike Strike Cost   Current Profit  Monthly
Symbol Month  Price  Basis  Price   (Loss)  Return

AMAT    APR     85   83.44   97.56  $1.56  12.3%
ASYT    APR     35   33.38   51.38  $1.63  11.5%
SUNW    APR     70   68.94   80.00  $1.06  10.7%
AFCI    APR     45   42.63   45.25  $2.38  10.1%
MU      APR     85   82.25  110.88  $2.75   8.9%
CY      APR     40   39.00   48.00  $1.00   8.7%
IMNX    APR     45   44.44   54.94  $0.56   8.1%
IBM     APR    110  108.44  113.75  $1.56   8.1%
PCLE    APR     22   22.03   27.63  $0.47   7.6% Split 2 -1
IMNX    APR     51   49.83   54.94  $1.83   7.4% Split 3 - 1
CSCO    APR     60   59.44   65.00  $0.56   6.2%
AMD     APR     50   49.56   76.00  $0.44   5.9%
AFCI    APR     45   43.81   45.25  $1.19   5.9% 
MNMD    APR    100   99.25  115.13  $0.75   5.2%
MANU    APR     35   34.44   34.00 -$0.44   0.0% 
PHTN    APR     65   63.94   62.50 -$1.44   0.0% 
QCOM    APR    130  128.37  125.13 -$3.24   0.0%
KSU     APR     75   73.87   68.38 -$5.49   0.0%
ISSX    APR     90   86.38   79.50 -$6.87   0.0%
NT      APR    115  112.62  104.31 -$8.31   0.0% 
INKT    APR    140  136.00  123.00 -$13.00  0.0% Closing
YHOO    APR    155  150.75  136.19 -$14.56  0.0% Closing
NXTV    APR    115  110.63   91.00 -$19.62  0.0% Closing


Positions Closed:

PHCM, SPYG, SFE, ZIXI, MFNX, IBIS, PUMA, TGNT, NEON.   


NEW PICKS 

The positions that we find favorable (and will track every week) 
will be marked by asterisks. Do not enter these trades unless you
fully understand the strategy and various methods of manipulating
the position should the stock price drop, or rise, and in the 
event you decide you want to keep the issue.

****

AAPL - Apple Computer  $109.25  *** The Sky is Falling! ***

Apple designs, manufactures and markets personal computers and
related personal computing and communicating solutions for sale
primarily to education, creative, consumer and business customers.
The majority of the company's net sales are derived from the sale
of personal computers from its Apple Macintosh line of computers
and related software and peripherals.  Their subsidiary FileMaker
makes database software.  The company manages its business on a
geographic basis.  Geographic segments include the Americas,
Europe, Japan and Asia Pacific.  Each operating segment provides
similar hardware and software products and similar services.

Apple Computer has enjoyed a great run since last summer but the
end has finally arrived.  We had previously expected AAPL to put
in one more earnings rally but Monday's technical failure signaled
a potential change of character.  In today's trading, computer
companies dropped after Goldman Sachs cut its earnings estimates
for Microsoft, citing slower-than-expected personal computer sales.
Apple's quarterly report is due on April 19 and with lower numbers
expected for the group, it's unlikely there will be a substantial
rally in the issue.

Note:  Naked Call Recommendation!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 140  QAA DH  1888     0.94     140.94   13.0% ***
Sell Call APR 135  QAA DG  2445     1.19     136.19   17.4%
Sell Call APR 130  QAA DF  3356     1.81     131.81   25.8%

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

****

AMAT - Applied Materials  $97.56  *** Calling The Bottom! ***

Applied Materials is the world's largest semiconductor equipment
company.  AMAT develops, manufactures, markets and services
semiconductor wafer fabrication equipment and related spare parts
for the worldwide semiconductor industry.  Customers for these
products include semiconductor wafer manufacturers and
semiconductor integrated circuit (IC or chip) manufacturers that
either use the ICs they manufacture in their own products or sell
them to other companies.  These ICs are the key components in most
advanced electronic products such as computers, telecommunications
devices, automotive engine management systems and electronic games.

Applied Materials moved to an all-time high last week as analysts
at Adams, Harkness & Hill raised their rating on the manufacturer
of computer chip-making equipment to "accumulate" from "market
perform."  Unfortunately, the issue is in the Nasdaq and it has
fallen along with almost every other technology stock.  Now the
issue is testing support at the current price and with today's
solid earnings from Advanced Micro Devices (AMD), the outcome may
yet be favorable.  Technically this issue has performed very well
given the technology markets' weakness in recent weeks and a new
upgrade from Solomon Smith Barney should help the bullish momentum
return.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Put  APR 85   ANC PQ  3245      1.50    83.50    18.1%
Sell Put  APR 82.5 ANC PX  1530      1.13    81.38    15.2%
Sell Put  APR 80   ANC PP  5747      0.63    79.38     9.6% ***

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

****

CGNX - Cognex  $60.59  *** Bullish Outlook! ***

Cognex Corporation designs, develops and markets machine vision
systems that are used to replace human vision in manufacturing
processes.  Cognex machine vision systems consist of a computer,
which serves as a machine vision engine, and software that
processes and analyzes images.  When connected to a video camera,
the machine vision system captures images and extracts
information, which determines appropriate action for other
equipment in the manufacturing process.  Machine vision systems
are used in a variety of industries including semiconductor,
electronics, automotive, consumer products, packaging,
pharmaceutical, metals, plastics and paper.

Cognex announced Monday it has successfully completed the
acquisition of Komatsu's machine vision business, right on
schedule.  With this acquisition, Cognex has become the leading
supplier of machine vision systems to semiconductor manufacturers
in Japan, and Cognex has strengthened its existing position as
a supplier to the worldwide semiconductor market.

Cognex recently announced it expects revenue and net income for
the first quarter of 2000 to set new quarterly records, and that
both revenue and net income will significantly exceed most
current estimates.  Revenue for the first quarter of 2000 is
estimated to be greater than $53 million, and estimated earnings
for the quarter will exceed, by approximately 15%, First Call
consensus estimates of $0.29 per share.  Lets hope the estimates
are correct!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 55   QCG EK  104       9.25    51.34     5.9% ***

Sell Put  MAY 50   QCG QJ  4         1.75    48.25     9.3%
Sell Put  MAY 45   QCG QI  0         0.75    44.25     4.8% ***

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

****

INSUA - Insituform Technologies  $36.81  *** Technicals Only! ***

Insituform Technologies is a worldwide provider of technologies
and services for rehabilitating municipal sewers, water mains and
industrial pipes without digging and disruption.  Since 1971,
Insituform has rehabilitated more than 7,500 miles of underground
piping systems for cities and industrial plants throughout the
world.  Insituform's methods allow them to repair and rehabilitate
pipelines from inside the pipe, allowing for the repair of pipeline
in difficult-to-access areas, as well as saving the expense of 
excavation.

INSUA has enjoyed record operating income for seven consecutive
quarters and investors have begun to take notice.  Technically,
the stock has been climbing in a classic stage II pattern since
early 1999 and the chart shows no indications of stopping soon.
This play offers a reasonable entry point on a bullish issue for
those with a long-term portfolio outlook.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 35   ISQ EG  17       4.62     32.19     7.2% ***

Sell Put  MAY 30   ISQ QF  0        0.94     29.06     8.7% ***

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

****

MERQ - Mercury Interactive  $67.25  *** Going Down! ***

Mercury Interactive is a provider of integrated performance
management solutions that enable businesses to test and monitor
their Internet applications.  Their software products and hosted
services help e-businesses enhance the user experience by
improving the performance, availability, reliability and
scalability of their Web sites.  By using Mercury Interactive's
solutions to identify and assess performance problems,
e-businesses can increase their ability to attract and retain
customers, and improve their competitive advantage.  Customers
represent a wide range of industries including companies such as
Amazon.com, America Online, Ameritrade, E*Trade, Healtheon/WebMD,
Cisco Systems, Ford Motor Co. and Walmart.

Mercury Interactive recently announced the release of a new set
of Web performance monitors.  These additions to its Loadrunner
load testing product allows for performance monitoring and
optimization of Web sites, and they are designed specifically
to test and monitor a wide range of servers such as; BroadVision,
Microsoft IIS, Netscape, Apache, and others.  Last week Mercury
started a joint effort with IBM to deliver an new solution for
ensuring performance and reliability of applications developed
using key technologies of IBM's unique Application Framework for
e-Business: WebSphere Application Server and VisualAge for Java.
Mercury Interactive is also working with IBM to enable the smooth
integration of these development environments with their Web
application performance management products.

Unfortunately, the recent technical pattern is common to a number
of technology stocks and with the current outlook for the group,
this position offers an excellent risk/reward ratio for those who
are bearish on the issue.

Note:  Naked Call Recommendation!

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call APR 110  RBF DB  284      0.94     110.94   22.07% ***
Sell Call APR 105  RBF DA  383      1.25     106.25   28.73%
Sell Call APR 100  RBF DT  487      1.69     101.69   37.72%

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

****

PVN - Providian Financial  $92.25  *** On The Move! ***

Providian Financial provides consumer lending products such as
unsecured credit cards, revolving lines of credit, home loans,
secured credit cards and fee-based products.  They also offer
various deposit products.  Lending activities are conducted
primarily through Providian's subsidiaries, Providian National
Bank, Providian Bank and Providian Credit Corporation.  Providian
Financial originates, maintains and services unsecured consumer
loans generated primarily through Visa and MasterCard credit
cards.

Providian is a solid company in a recently slumping group that
is now expected to outperform much of the market in the coming
months.  Last year Providian's total interest income rose 93% to
$1.62 billion, nearly tripling the previous years annual revenue
of $582 million.  Net interest income after loan loss provisions
also rose 54% to $76.1 million and basic net income rose 86% to
$550.3 million.  That's a very profitable company and today's
break-out to a yearly high suggests the issue is ready to resume
trading in the $90 range.  With any support, the stock may even
continue to last summer's highs near $100.

Action    Month &  Option  Open     Closing  Cost     Monthly
Req'd     Strike   Symbol  Interest Price    Basis    Return

Sell Call MAY 85   PVN EQ  178      11.88    80.38     4.7% ***

Sell Put  MAY 80   PVN QP  380       2.31    77.69     7.1%
Sell Put  MAY 70   PVN QO  75        1.25    68.75     5.2% ***

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



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