The Option Investor Newsletter Tuesday 6-6-2000 Copyright 2000, All rights reserved. 1 of 2 Redistribution in any form strictly prohibited. Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 6-06-2000 High Low Volume Advance Decline DOW 10735.60 - 79.70 10822.60 10707.70 943,286k 1,520 1,392 Nasdaq 3756.37 - 65.39 3884.01 3749.18 1,595,176k 1,937 2,097 S&P-100 783.39 - 7.36 790.54 781.06 Totals 3,457 3,489 S&P-500 1457.84 - 9.79 1471.36 1454.74 49.8% 50.2% $RUT 511.65 - 1.65 523.05 511.49 $TRAN 2766.54 - 33.80 2800.04 2756.96 VIX 25.14 + 0.24 25.85 24.89 Put/Call Ratio .47 ****************************************************************** Not so fast there partner! The Fed is alive and well! Just when you thought it was safe to go back into the market the Fed heads, led by Parry and two others, took center stage with comments detrimental to the market. Parry said it was too soon to assume the Fed was done raising rates. This was a small comment but enough to punch a hole in the rally balloon and attempts by analysts to repair the verbal damage were not successful. Parry said one month's data or even one quarter's data would not be enough to show a lasting trend. With earnings warnings and signs of slipping sales on almost every front, the possibility of even more rate hikes and the resulting profit slow down sent investors heading for the exits. Picture this. A conference call between Greenspan and associates over the weekend. Greenspan talking, "as you can determine from the rapid escalation of speculative equity values over the last four days that the financial markets are expanding at rates that exceed the targets we established from years of empirical data and I am concerned that the rapid cessation of worry in the financial arena about future Fed policy will encourage a continued rise in equity values above our established norms." Say what? In English, "Wow, did you see that +800 point gain in the Nasdaq?, we need to hit the lecture circuit and talk this puppy back down." Kelly, you hit them on the jobs report. Figure out some way to down play that data! Right boss! Everybody else, fire (talk) at will! Today, Kelly said that the Jobs report data was encouraging but it is not a soft landing yet. There is still a lot of data we need to see before moderating the interest rate policy. While others are worried about a crash landing "I see no signs of the economy falling off a cliff." Interpretation = "no signs" means there is nothing yet that would tell us we have gone too far in rate hikes. If they don't see "any signs" of serious slow downs then they are not done yet! The number of analysts that were leaning toward no rate hike at the June-27th meeting just took a serious turn downward. The sentiment turned on a dime and now almost all the Fed watchers expect a +.25% hike in June. Fed sentiment can change faster than weather in Colorado when analysts decide they made a wrong turn at the last economic report. While the Feds have seen no major signs of a slow down the investing public saw a vivid display today. Circuit City announced today that May sales were flat and earnings would suffer. They said they were also seeing lower margins and a big slow down in large appliances. Appliances are one of the first signs of a slow down in consumer purchasing. Big ticket items are the first to get axed when money starts to tighten. CC lost -$12.50 or -24% of its value on the news. Immediately the rest of the retail sector reacted and prices slid across the board. Many analysts think the problem is simply Circuit City and they may be losing sales to Sears and others but all retailers took a hit. EFII also warned today and lost -10.81 or -31% of its value. National Semi (NSM) warned after the bell that it was experiencing slower growth and margin squeeze. This should impact the otherwise hot chip sector on Wednesday. The offset to this was an announcement by Microsoft today that they were seeing PC growth running at a +12% to +15% growth rate. This positive news as well as comments from the CEO that they expect to win the breakup case on appeal, added +2.75 to the stock price. MSFT filed what was expected to be their last brief in the breakup case before the Judge issues his ruling. The financial sector took a hit today as well after Merrill Lynch expressed concerns about future profits. Citing past times of multiple rate hikes, the banking sector suffered from fewer deals, fewer loans and fewer trades which all contribute to weaker profits. The sector had been in rally mode with anticipation that the Fed was done. Looks like the rally was premature. In spite of the way the markets turned out today we should be thankful that the damage was not worse. With an active Fed and huge profits from last week we could easily have lost a couple hundred points on both indexes. On the Dow we have back filled about half of the big gains made since the Jobs Report last Friday. The Nasdaq has only given back about -100 points of the +300 gained. As of the Tuesday close we are just profit taking and consolidating from those big gains, even if the analysts tell us it is Fed dread causing the problems. What happens on Wednesday will tell us if we have the guts and conviction to hold the line. Conviction is something we have been lacking, even when the rally was on fire. Traders are taking positions but running for cover whenever there is the slightest bit of negative news. Without conviction we have no chance of holding our gains. Until traders feel they can hold through the next dip we are doomed to maintain the extreme volatility. The volume was still decent today with 1.6 bln on the Nasdaq and 945 mln on the NYSE. But, decent volume on a down day is not a good sign. But were the markets really down? The advance decline line was exactly flat with equal advancers and decliners. After a record +19% gain last week you would expect a bigger drop if traders were very nervous. The cash is still on the sidelines and the next major economic report is Friday. The PPI report will give the Fed one more piece of important data on which to base their decision. Recently the PPI has been a leading indicator for the CPI which follows next week. Should the PPI come in lower than expected investors would expect the CPI to be lower also and this would set us up for another possible rally. Recent PPI reports have been preceded by rallies the day before as traders placed their bets on a benign number. We will see if traders are as convinced this time around by the market activity on Thursday. Wednesday is anybody's guess since we closed on the lows of the day. Futures are up slightly but there is a lot of dark before morning. If we have an uptrend over 3800 in the afternoon I would feel positive about a follow through rally on Thursday as well. In our seminars we have a saying, "trade what you know not what you don't know." This means you should not "gamble" money by holding over earnings announcements, economic reports or Fed speeches. You should only place your bets when you are in control or fully aware of as many pieces of the puzzle as possible. The things you do not have control over are the things that will bite you. Nobody will ever eliminate 100% of the risk of investing in the market but you can reduce it to a very small amount with the right attitude. Should you hold over the PPI report? Those that do will either win big or lose big depending on the numbers. Personally I think they will be market neutral but I am not willing to bet the farm on it. Are you? This is where the term risk capital comes into play. If the market is up on Wednesday afternoon and Thursday, take a smaller position than you would normally. If it works in your favor, add to it. If it goes down you will lose less. Good luck and sell too soon. Jim Brown Editor Current long positions include: NOK, VOD, VIGN, MSFT, YHOO *********************** Regional Seminar Series *********************** Technical Analysis, Stock and Option Seminar Three days of indepth education. The next seminar is a three day event in Los Angeles on June 22-24th. We guarantee you will not be disappointed. The class size is only 20 so you will get plenty of individual attention from Chris Verhaegh and the staff. At less than the cost of a bad trade you can learn how to analyze stocks and trade options like the pros. Don't wait, do it now. Future Seminars June 22-24 Los Angeles 3 day June 27-28 Washington DC 2 day July 3-6 London England 3 day July 13-15 New York 3 day July 21-23 Seattle 3 day July 27-29 Atlanta 3 Day Aug 11-12 Pittsburg PA 2 day Aug 17-19 Orlando 3 day Aug 24-26 Dallas 3 day Aug 28-29 Detroit 2 day http://www.OptionInvestor.com/seminar/seminar.asp ****************************Advertisement************************* Options Traders ! Mr. Stock's new online trading site has been designed for you. Trade spreads, straddles, covered calls, and stocks online. Get real-time market data throughout our site. Advanced options tools include volatility graphs, implied volatilities, and more. http://mojofarm.mediaplex.com/adserver/click_thru_request/565-58-1875-3 ****************************************************************** **************** MARKET SENTIMENT **************** Tuesday, June 6, 2000 Greenspan's Slowing Economy! The broad markets suffered some profit taking Tuesday, as traders and investors stayed on the sidelines, waiting for some real economic data to be reported. Some of today's selling pressure can be attributed to Circuit City (CC, -12 ½) and Electronics for Imaging (EFII, -10 13/16), which both got hit as they prereleased negative news. Greenspan's slowing economy was evidently felt by both of these companies named above, which in turn sent many sectors lower today. This double-edged sword is what we spoke about last week. That is, if the economy truly is slowing, that's great for the interest rate environment, but bad for corporate earnings. With the (major) negative-prerelease season soon upon us, we will be witnessing more debacles such as Circuit City and Electronics for Imaging very soon, so stay protected. In the Pinnacle Index section for the OEX, our indicators were indicating an overbought market heading into this week, at least for the OEX. The 800 benchmark seemed like a level that would cause some significant resistance to the S&P 100. Well, the put buyers came out in force the last couple of days, as the Pinnacle Index for the OEX (775-800) fell from 5.74 to 2.25. This is a pretty significant drop, and we will be monitoring this region closely over the next couple of days. If we witness more negative activity such as this over the next couple of days, and if we get a good Producer Price Index on Friday, we may have another strong rally in the works. Until then, stay cautious, as Greenspan's slowing economy may finally be effecting our country in the way they see fit. BULLISH Signs: Interest Rates (5.909): With the long bond breaking below the crucial 6% benchmark, fears of higher rates may finally be subsiding. NASDAQ Short Interest: As of May 15, the level of short sales not yet closed out, known as short interest, climbed 4.80% to 2,780,161,105 shares. With the tame inflation numbers posted this past week, it was quite evident that a major short squeeze was occurring. Volatility Index (25.14): The VIX has proved that the low 30's are an excellent buying opportunity, and the low 20's continue to be a great selling opportunity. It appears that the VIX is heading back to the trading range of old, after spending numerous weeks in uncharted waters. Mixed Signs: None BEARISH Signs: Slowing Economy: If the economy is truly slowing down, we will start feeling the effects once corporate earnings report over the next couple of quarters. This has just occurred as Circuit City and Electronics for Imaging both warned of slower growth. Liquidity Crunch: With the fear of inflation, and the most likely scenario of several more rate hikes, liquidity in the marketplace will become a more significant issue and put more pressure on equities. IPO Dilution: $58.6 billion of stock was freed up for trading in March, $67.3 billion April, and $118.3 billion in May. This is too much stock for the system to handle. Energy Prices: With the rapid rise in crude oil, everything from manufacturing to transportation will be affected by higher costs. These higher costs will be felt 1-2 quarters out, and could put pressure on profit margins. ***************************************************************** The Power of Sentiment Analysis It has often been said that the crowd is right during the market trends but wrong at both ends. Measuring and evaluating the sentiment of the crowd, therefore, can give savvy option traders a decided edge. Pinnacle Index ***************************************************************** OEX Friday Tues Thurs Benchmark (6/2) (6/6) (6/8) ***************************************************************** Overhead Resistance (805-825) 24.20 25.40 Overhead Resistance (775-800) 5.74 2.25 ** OEX Close 792.69 783.39 Underlying Support (745-770) 1.28 1.45 Underlying Support (715-740) 3.47 3.89 What the Pinnacle Index is telling us: Direct overhead did drop dramatically, indicating a better potential for the OEX to break through. However, OTM resistance is still extremely strong, so until option expiration next week, we would doubt that the OEX would significantly test this level. Put/Call Ratio ***************************************************************** Friday Tues Thurs Strike/Contracts (6/2) (6/6) (6/8) ***************************************************************** CBOE Total P/C Ratio .41 .47 CBOE Equity P/C Ratio .32 .41 OEX P/C Ratio 1.18 1.08 Peak Open Interest (OEX) ***************************************************************** Friday Tues Thurs Strike/Contracts (6/2) (6/6) (6/8) ***************************************************************** Puts 740 / 8,382 740 / 8,897 Calls 800 / 6,553 800 / 8,703 Put/Call Ratio 1.29 1.02 Market Volatility Index (VIX) ***************************************************************** 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 14, 2000 Bottom? 39.33 June 6, 2000 25.14 ************** MARKET POSTURE ************** As of Market Close - Tuesday, June 6, 2000 Key Benchmarks Broad Market Bearish/Bullish Last Posture/Since Alert **************************************************************** DOW Industrials 10,200 11,400 10,736 Neutral 5.05 SPX S&P 500 1,350 1,500 1,458 Neutral 5.30 OEX S&P 100 725 800 783 Neutral 5.30 RUT Russell 2000 450 550 512 Neutral 5.05 NDX NASD 100 3,000 4,000 3,646 Neutral 5.30 MSH High Tech 800 1,000 987 Neutral 6.06 ** XCI Hardware 1,250 1,600 1,468 Neutral 5.30 CWX Software 1,050 1,300 1,272 Neutral 6.06 ** SOX Semiconductor 850 1,200 1,112 Neutral 5.30 NWX Networking 900 1,100 1,106 BULLISH 6.02 INX Internet 500 800 602 Neutral 5.30 BIX Banking 530 600 606 BULLISH 6.01 XBD Brokerage 400 500 476 Neutral 5.05 IUX Insurance 540 620 636 BULLISH 5.16 RLX Retail 850 1,000 873 Neutral 6.02 DRG Drug 355 400 375 Neutral 4.28 HCX Healthcare 710 800 772 Neutral 4.28 XAL Airline 140 155 163 BULLISH 5.25 OIX Oil & Gas 265 300 312 BULLISH 5.11 Posture Alert Stocks suffered some profit taking Tuesday, as a slowing economy hurt Circuit City's profit outlook, which entail, helped send the Retail Index down with a -3.46% loss. This negative sentiment soon spread to other sectors, as many were down by 2 to 3%. With this most recent action, we have lowered both Software and the Morgan Stanley High Tech to Neutral from Bullish. ************** TRADERS CORNER ************** Analyzing A Profitable Call Trade By Mary Redmond In order to trade options successfully, you need to have an understanding of many different technical and fundamental analytical tools. You also have to watch the direction of the market, the stock's sector, and the individual stock's unique trading pattern. Then, make a judgement based on as many factors as possible. There are hundreds of different technical tools. None of them are 100% accurate all of the time. However, if you combine technical and fundamental analysis, you are in a stronger position. Fundamental analysis generally refers to an understanding of the company's business model and earnings projections. Technical analysis is usually used on a short term basis and generally refers to a stock's trading patterns. For example, the week prior to Memorial Day, I purchased two year LEAPs on two stocks I follow, CMGI and NT. I thought the market was going to rally last week and this week for a number of reasons. The economic indicators released had been pointing to a general slowing of the economy, which could lead to a market perception that the Fed's program of increasing rates would end soon. I thought the NASDAQ had bottomed at around 3100, as the volume was decreasing on the down days and increasing on the up days. In addition, I think that the cash inflows to the market and equity funds will likely be high for a few weeks, which could give a much needed liquidity boost to the NASDAQ. The CMGI trade was an example of a trade executed primarily on the basis of fundamentals. The company's technicals were weak. It had violated both the 50 and 200-dma many weeks ago. When I watched the live charts, I could see that many of the trades being executed were sell orders. The stock was down over 60% from it's high of the year. The market was almost valuing the stock as if they were just another dot-com start up doomed for failure. However, I had been watching CMGI and its holding companies for a long time, and reading the quarterly and annual reports as well as research reports published on the company. The management has consistently demonstrated their ability to make venture capital stage companies profitable. I bought the Jan '02 100 LEAPs at $13.50 when the stock dropped below $45 the week before Memorial Day. My risk? The employment report could have been a bomb, the company could have experienced further selling pressure, and the NASDAQ could have failed to rally. With two year LEAPs, I estimated that the risk could be equal to about half of my investment if the stock dropped to around $35. As it was, the position returned a 45% reward in less than two weeks time, a reward which occurred when the stock moved up 15 points, or 30%. The two year LEAPs were $19.75 yesterday. Whenever you have a large profit in an option, it is wise to sell the option and lock in on the profit. However, I think the stock could move further as earnings are due to be reported next week. So I sold half my position and held on to the rest. My NT trade was done on the basis of both fundamental and technical reasons. I have been watching the stock and it's trading pattern for a long time. I continue to be very impressed by the company's consistent pattern of predictable earnings increases in the high growth sector of optical networking equipment. I purchased a Jan '01 60 call at $8.75 when the stock was $48. On Thursday of last week, NT moved above its 50-dma on strong volume. In fact, the volume on this stock was one of the highest on the NYSE last week. By watching the live charts, I could ascertain that many of the trades going through were large buy orders. Last week, the stochastic indicators predicted a move up, as NT's %K bar moved above the %D bar after dipping below it. The blow out employment report pushed the stock up 8 points for the week. I sold the Jan '01 60 calls at a 50% profit. I don't like to miss another potential for profit when I think the stock could move further. So I took some of the profit and bought Jan '02 70 calls. I think the NASDAQ is going to move up this month, and although NT is an NYSE listed stock, it tends to trade with the NASDAQ movement, as most of the telecom equipment stocks are listed on the NASDAQ. I think we are going to have strong fund flows every week this month, and that may help to buoy the market. If I am wrong, NT may drift down, but probably not much more than 5 or 10 points. If it can clear $70, my Jan '02 70 LEAPs could increase by 75% in a relatively short period of time. If it drops by 50% I could break even, as I left part of the profits in cash. In summary, there are probably as many ways to trade options as there are option traders. If you use options properly, you can make more money in a shorter period of time than you can in almost any other investment strategy. If you use options to gamble blindly, it is likely that your losses could be severe. Generally speaking, LEAPs are safer to trade than short-term expiring options, and sometimes can give greater profits. Contact Support ****** Strangling The OEX By Austin Passamonte Believe me, there have been occasions when I would've loved to do that in the physical sense. Let's spare such tales of woe and explore what I feel is a great tactic to profit from volatile moves when market direction is uncertain. A strangle by definition is the act of buying a call and a put on the same underlying equity. True straddles would have the call and put purchased at the exact same strike price, i.e. the 790 call and 790 put on the OEX. To strangle a market is to buy calls and puts for different strike prices that "collar" or "fence" the underlying current price. If the OEX is at 790 today and we feel a big move in some direction is imminent, buying the 800 call and 780 put will allow us to capture that move and profit handsomely if we manage our position well. Therein lies the tricky part. Personally, I prefer entering strangles instead of straddles for a few reasons. I like my positions to be of equal cost or close to it on either leg. This allows me to plan entry & exit targets for profit or loss. Options one or two strikes OTM will give a greater return than ATM contracts due to gamma. If you buy a true straddle, it's tough to meet both criteria. Should that straddle be purchased on options ATM (790 call & 790 put when the OEX rests at 790 +/-), our return is limited for capital at risk. By the same token, if a straddle is away from the index price (780 call & 780 put when the index rests at 790) one leg is ITM, one leg is OTM and purchase prices for each are greatly skewed. Great if the expensive leg wins, but maybe not if the cheap leg can't offset the expensive leg's loss going the other direction. There are sound reasons and logic for placing these types of trades, but let's focus on true strangles today. Our objective is to profit from a large market move in either direction. We understand that one leg will win and the other will lose in the process, so our overall profit and odds of reaching it must be favorable. Ideal conditions form within the last two weeks of an option's life when markets coil before news events. Seen anything like that lately? We have two main choices: do we strangle with straight calls & puts or with spreads? There are good reasons for each, depending on circumstance. Again, it's my preference to use debit spreads to strangle a market in almost every case. The exception might be when playing options on the very day of expiration. OTM premiums are so cheap that I simply buy, sell or let expire at will under the same parameters outlined below. If premiums are rich, you must set tight stops on each in order to exit the losing leg for profit to occur in the winning one. I've seen volatile markets whipsaw both open legs through their respective stops within minutes. The May 19th Fed meeting market reaction was a prime example. An open contract spread with stops would have been blown out on either side in short order. Forgo using stops? Brief trading career ahead for you! Using debit spreads within two weeks of expiration to strangle a market allows one to buy close to the index mark using limited capital. This is vital for many traders. Some people might label these lottery plays, but I disagree. Your odds of winning a jackpot are some 13.7 million to 1. The odds of profit on these strangles are better than that, I promise! The parameters I look for are few but rigid. Each leg must be within reasonable reach for the index to trade completely through. This is an arbitrary figure arrived at in many ways, but I rely on the tools discussed in my section last week. Each strangles price MUST be less that 6 points total cost, hopefully with each leg balanced in price. An example of this setup would be entering this Friday's action. The PPI report will likely stir the markets in advance of next week's CPI. There is a definite bullish bias right now leading in but overhead resistance for the OEX is strong and growing. Clearly the index could make a strong move, but can we really tell which way from here? Not me! Perhaps the market will rally or sell off Thursday afternoon as traders jockey for position ahead of the reports. I'll be watching the action carefully, especially the final hour of trading. If technical analysis and charting indicates a clear direction for Friday's open, I might enter a linear play to catch an opening pop. More likely the outcome will be ambiguous as equal bets are hedged. Still a strong move either way to open the session on Friday is expected. In this case, I'll look to enter a debit spread strangle giving me the best chance to win. Suppose action is heated and the index closes at 790 on Thursday. Let's check the cost of a 780 long/770 short put spread and an 800 long/810 short call spread. Even though each spread is equidistant from the strike, one may have a slight price skew from the other. There are volatility, O/I imbalance and carry-charge factors at work that I don't fully understand, nor do I need to. All I want to know is can I buy the position balanced for a total of 6 points or less? Suppose it turns out the ASK price for the 780/770 put debit is 2.75 and the 800/810 call debit is 3.25. We can buy one pair of each for a total debit of 6 to complete our strangle. Now what? Well, the OEX must close at/above 806 or at/below 784 in order for us to break even before expenses. My first question is always what does it take to get my money back? Does the upcoming event and market conditions indicate this minimum move can be possible? You decide. If the index closes anywhere between 780 and 800 we lose the entire 6 points risked. How many 6 point plays does your budget allow you to risk total loss? Again, you decide. This is the base of our initial decision. If the answer to any question is none, we skip the trade. If the index expires at/beyond 770 or 810 or trades deeper before expiration, each winning leg has a potential value of 10 points. That means each strangle has a maximum profit potential of +4 points in one direction with what I feel are pretty good chances of occurring. Personally, if I enter any straddles before next Tuesday, I'll only buy them at six or less and set a close-sell limit price of 9, GTC. If a sharp move runs one leg over and this 3 points profit is hit, check please! I've seen market reversals too many times to leave this on the table. By the same token that other leg of the strangle is now virtually worthless but still has life. Who knows, stranger things have happened...a market turn is unlikely but possible, and we now have a free play protecting the other side of the market should it reverse engines and fly. There you have it. A spread strategy to collar any volatile market poised for a breakout in unknown direction. Our chance to buy close to the action is cheap. Potential for 50% profit or slightly better with favorable odds of performing. How does this seem to you? Next week, we'll clean up some odds & ends on spreads, strangles and various other solid questions I've fielded lately. With the big reports and triple-witch Friday looming ahead, my guess is we're in for some serious action. Hopefully, you now have an extra idea or two in mind for profiting from it. I'll also share my spread plays and why I entered them. Expect good, bad & ugly. See you Monday! Contact Support P.S. General answers to a volume of questions: The stochastic settings I rely on are the standard 14(1)3 in Qcharts, or 14 and 3 instead of 21 and 14 on the live chart applet under "Tools" in OIN features column. Everyone asking for candlestick book recommendations, OIN's bookstore lists the "bibles" on this topic..."Beyond Candlesticks" by Steve Nison and "Japanese Candlestick Techniques..." by Nison in title-search box. The latter title is the first edition covering all basics, and "Beyond Candlesticks" takes over from there. Comprehensive, easy to digest books that are a must read for understanding the subject. ************* DAILY RESULTS ************* Index Last Mon Tue Week Dow 10735.57 20.54 -79.73 -59.19 Nasdaq 3756.39 8.38 -65.37 -56.99 $OEX 783.39 -1.94 -7.36 -9.30 $SPX 1457.84 -9.63 -9.79 -19.42 $RUT 511.65 0.27 -1.65 -1.38 $TRAN 2766.54 -29.02 -33.80 -62.82 $VIX 25.14 0.79 0.24 1.03 Calls Mon Tue Week PDLI 137.88 8.38 4.38 12.75 The CEO talks of earnings GLW 217.25 2.13 6.25 8.38 New, looking for entry BRCD 138.88 3.50 1.38 4.88 New, short-term uptrend SEPR 110.63 8.06 -6.25 1.81 Moving with the sector YHOO 135.06 2.81 -2.25 0.56 Drifting with the markets CIEN 137.88 -4.69 4.25 -0.44 Looking for the bounce ITWO 127.00 5.69 -7.81 -2.13 The Street remains bullish MU 77.00 1.94 -4.19 -2.25 Upgraded today, target $100 ADI 84.88 -1.75 -2.38 -4.13 Watch for an entry on Wed. EXDS 82.06 -0.13 -4.94 -5.06 Another nearing support SDLI 255.00 -8.38 3.00 -5.38 Is there no stopping SDLI? TQNT 108.00 2.75 -9.13 -6.38 Pullback was overdue RBAK 106.00 1.00 -7.56 -6.56 Closing the gap to $100 MERQ 85.00 0.31 -7.75 -7.44 Right at support at $85 PGR 85.50 -5.31 -2.31 -7.63 Dropped, sector reversal SCMR 102.00 -7.06 -0.94 -8.00 More sector consolidation CPN 102.69 -13.31 4.69 -8.63 Dropped, time to split RMBS 202.00 -3.38 -12.00 -15.38 Splits in just over a week AMCC 106.81 -6.19 -15.81 -22.00 Dropped, acting funny CHKP 205.94 -17.69 -10.06 -27.75 Needs to hold above $200 Puts MMM 82.31 0.75 -2.75 -2.00 New, broke support CAH 62.94 -1.44 0.81 -0.63 Possible bullish reversal CL 54.56 -1.44 1.50 0.06 Dropped, flight to safety? MRK 69.59 0.25 0.41 0.66 Going nowhere fast BUD 74.50 1.69 -0.19 1.50 Bounce up to resistance 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: ***** AMCC $106.81 -15.81 (-22.00) Another reminder of the importance of stop losses, AMCC pulled back sharply today, giving up over $15 on volume 50% greater than the daily average. After the strong move last Friday (with a greater than $13 gap up), AMCC was due for a pullback this week. Yesterday's direction-less market gave investors an opportunity to lock in their profits ahead of today's carnage. Things were looking all right until the last hour today; then the selling volume increased, slicing more than $10 off the share price as AMCC violated support at $110. The decline halted at the 30-dma ($106), but today's negativity really put a damper on last week's momentum. Looking rather weak compared to other Semiconductor stocks, we are dropping AMCC tonight. PGR $85.50 -2.31 (-7.63) Another victim of the fickle finger of fate, the Insurance sector has fallen out of favor this week, and PGR is leading the decline. It looks like investors started paying more attention to the CS First Boston downgrade from last Friday and their appetite for the stock has diminished significantly. The $91 support level got smashed yesterday and the decline continued today, putting this insurance stock right on the $85 support level. While this level may hold and PGR could head higher, the momentum that attracted us to the play is gone. With enthusiasm returning to the NASDAQ, our play is suffering from neglect, and it is time to move on. There are way too many great plays out there to waste any more time on PGR. CPN $102.69 +4.69 (-8.63) Our split-run in CPN ran out of gas early this week. The relative weakness in the utilities sector finally caught up with CPN. DB Alex Brown attempted to boost CPN Monday by reiterating its Strong Buy rating and urging investors to buy the stock on the dip. Despite the help from analysts, CPN shed over $13 during Monday's trading. The stock received more help Tuesday from CS First Boston, who reiterated their Strong Buy rating as well. CPN did rally on the news Tuesday, but was unable to hold onto much of its early day gains, and weakened into the close. In light of the poor showing so far this week it's time for us to split. PUTS: ***** CL $54.56 +1.50 (+0.06) CL extended its losses Monday as capital flowed from the consumer staples sector. Wall Street then turned on a dime Tuesday, as Fed fears returned, and investors sought out shelter in the defensive sectors. Traders' concerns over a slowing economy led to money returning to defensive plays such as CL. With Tuesday's rally, CL managed to edge, ever-so-slightly, above its 10-dma, by tracing an intra-day high of $54.75. The 10-day has proved to be major resistance over the past two weeks, and Tuesday's move above that level is somewhat concerning for us on the short side. With the PPI number Friday, traders might continue their shift into defensive plays, so we'll step aside. ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at Preferred Capital Markets Stop Losses based on the option price or the stock price. Move your trading into the next millennium with Preferred Capital Anything else is too slow! http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN ************************************************************** FREE TRIAL READERS ****************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is 39.95. The quarterly price is 99.95 which is $20 off the monthly rate. 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The Option Investor Newsletter Tuesday 6-6-2000 Copyright 2000, All rights reserved. 2 of 2 Redistribution in any form strictly prohibited. ******************** PLAY UPDATES - CALLS ******************** TQNT $108.00 -9.13 (-6.38) Overdue and expected, the NASDAQ headed lower late in the day today, and was led by the Semiconductors. TQNT held up rather well in light of its gains last week, and bounced repeatedly from support at $105-106. Increasing volume accompanied the afternoon decline, and it was reassuring to see support hold. The close left TQNT resting on its 5-dma ($107.63) and if buyers return later in the week, this could be a nice level to open new positions. The Semis will likely lead the much hoped for Summer rally, and TQNT looks well positioned to lead the charge. We may need to see the stock fill the remainder of Friday's gap up, which would mean a bounce near $104. Aggressive traders may want to target shoot intraday dips to this level, although we could see a retest of support near $100, as investors wait and hold their breath ahead of Friday's PPI Report. Watch the NASDAQ and the Semiconductor sector for confirmation of investor sentiment and wait for support to firm before playing. ITWO $127.00 -7.81 (-2.13) The theme of Tuesday's trading in the B-2-B sector was profit taking. Broad selling swept through the group Tuesday as traders locked in their gains after Monday's extension of last week's rally, but the selling came on relatively light volume. Although ITWO lost ground Tuesday, Wall Street remains bullish over the company's long-term prospects. Analysts point to the fact that ITWO is one of the few B-2-B players that is actually profitable, and the company has a ton of cash, currently $638 mln on hand. Additionally, ITWO continues to line-up contracts at a break-neck pace. In fact, the company said Tuesday that it would provide e-commerce and supply chain technology for MetalSpectrum, the new online specialty metals marketplace. With the renewed investor interest in the leading B-2-B stocks, ITWO could move higher from here. If the profit taking persists Wednesday, watch for a bounce off support at $124 for a possible entry. Otherwise, wait for ITWO to turn north, and look for an entry point if the stock clears resistance at $135. CIEN $137.88 +4.24 (-0.44) Investors bid shares of CIEN higher Tuesday despite the broad market weakness. The fiber optic sector displayed strong relative strength in part from investors' anticipation of the SuperComm 2000 Conference. The communications mecca slipped into full-swing Tuesday as high-tech companies gathered in Atlanta to display their new products and services. Wall Street will be listening closely for bullish comments from CIEN executives and looking for signs that the company is continuing to expand through new product innovation. CIEN stumbled a bit Monday in what appeared to be profit taking, noting the light volume. After the massive rally last week, a little consolidation was expected. The sell-off Monday pushed CIEN back down to its 5-dma, currently at $132. The $140 level has proved to be a staunch resistance level for CIEN. Watch for an entry if CIEN clears resistance Wednesday on the heels of any positive news from SuperComm and confirm upward momentum. If the market weakness catches up with CIEN Wednesday, look for a bounce off support at the 5-dma for a possible entry. SEPR $110.63 -6.25 (+1.81) While SEPR stumbled a bit Tuesday, the Biotech sector extended its gains on the heels of several positive developments within the group. With no detrimental news Tuesday, SEPR's decline appears to be nothing more than a case of profit taking. And after last week's impressive showing, it comes with no surprise. Although SEPR fell over $6 Tuesday, its pattern of higher highs and higher lows remains intact. The stock is still trending upward, above its 5-dma. With the Biotech sector coming back into fashion on Wall Street, we're looking for SEPR to continue to march higher. The return of momentum in this group may carry the stock higher, but we'll also listen for news coming from the PaineWebber Life Sciences conference this week. Watch for a bounce from current levels as SEPR closed Tuesday at strong support. If you want confirmation that momentum has returned to SEPR, wait for the stock to clear congestion at $118 before entering the play. SCMR $102.00 -0.94 (-8.00) We "knew" it was too good to last. OK, we didn't "know" it for certain, but it was a reasonable expectation since SCMR came up so far so fast. If you were in the play, you should have been stopped out yesterday. Profit taking was bound to set in. Sure enough, SCMR found support at $100 yesterday and today, not counting today's amateur hour. In fact it popped up to just under $106 on today's news that it would acquire privately held Sirocco systems for $2.88 bln in stock. Why the excitement? Sirocco has the metro optical networking access technology that SCMR is currently missing. CNBC would have you believe that's too rich a price for a company without a finalized product line and no revenues. Frankly, we think that's short sighted given the demand for that type of equipment. Not only that, CSCO paid nearly $7 bln for Cerent with just $10 mln in cumulative sales to get into that business. In the 12 months since the purchase, Cerent will deliver over $1 bln in sales to CSCO - smart deal. But we digress. Technically, SCMR held on at $102 while the rest of the NASDAQ began to roll over on Fed rate hike fears. While that is a sign of strength for SCMR, it may not hold up if the market selling turns ugly before Friday's PPI release. On the other hand, if today was just an attempt to scare the bulls, $100 to $102 could make a good entry assuming the market turns back in call buyers' favor (not likely, but possible). With SuperComm 2000 this week and Sirocco in the sweet spot of optical networking, we would expect SCMR to have a strong recovery. That said, wait for your entry at support of $100, $97, or $94 depending on your risk profile. RBAK $106.00 -7.63 (-6.56) Here's another successful player in the metro optical networking equipment sweet spot. Unlike SCMR, most of RBAK's loss this week came today where it fell $7 in the last hour with half of that in the last five minutes on a big volume surge - over 100 K shares. This is a great example of how a sell stop order can save your trading account. Tomorrow's opening won't likely be pretty. Recall that $106 is the gap open price from last Friday that created a $6 "island" down to $100 where no trades occurred. That gap needs to be filled, and we could easily see RBAK dip to $100 on any market weakness. However, where there is ugliness, there is sometimes opportunity. The 5-dma (currently $103) could provide support. So too could there be stronger support at $100. That level looks buyable to us as long as we see a rebound and the rest of the market cooperates. The next level? Grab your parachute (and set your stops) - try $92. Helping matters greatly this week is the focus on all things optical at the SuperComm 2000 conference. RBAK is currently giving live demonstrations of its latest offering in the metro optical networking line (the new SmartEdge 800) at the conference, which should keep interest in the issue high. Perhaps there will be a big sales announcement to follow from one of their major carrier customers, including SBC, GTE, UUNET, and Q. No guaranties, of course. This is really all about buzz, momentum, and a reported first mover advantage. But we need the market's cooperation first, and that isn't likely until the PPI release. MERQ $85.00 -7.75 (-7.44) MERQ woke up bright and early on Monday smashing its top resistance at the $90 level like a bug on the sidewalk. It just missed shattering that ever elusive $100 mark by a mere fraction. Then ka-boom! A prime example of why you NEVER buy during amateur hour. MERQ saw a quick and merciless sell-off that extended into today's session. The free-fall however put MERQ at its near-term support of $84 and $85, which is an excellent level to start looking for entries. But hold up! There's perhaps some turmoil approaching in the next few days - a possible downdraft in the markets and a pullback ahead of the PPI data on Friday. So let's be picky and choosy. Definitive moves off the current level, or even better through the 5-dma (now at $87.91), are potential points of entry for the more risk-oriented. Otherwise wait for it to move back above $90 in a positive market. New readers be warned, this Internet momentum play is HIGH-RISK and not for the faint of heart. In the news CarsDirect.com, an automotive e-commerce retailer that puts consumers in control of the total car buying experience, announced it adopted the LoadRunner(R) ActiveTest(TM) for stress testing its consumer-focused automotive pricing and purchasing Web portal. PDLI $137.88 +4.38 (+12.75) PDLI was a big shot amongst the techs this week. Primarily the shift in sentiment towards biotechs is, without a doubt, the driving force behind the intense momentum. However the company's positive revenue outlook didn't go without notice from investors' today. CEO Laurence Korn reported that company revenues are expected to reach $35 mln in the first half of 2000, which matches revenues in all of 1999. He said in an interview that revenues were "bolstered by growing royalties from monoclonal antibodies it has licensed to other pharmaceutical firms, including Genentech (DNA) breast cancer treatment Herceptin and MedImmune (MEDI) Synagis for the prevention of a respiratory virus common in infants". PDLI peaked at $148.38 on nearly double the ADV before feeling some downward pressure as a result of broad market selling. The market saw fantastic gains last week and as a result, the next few days may be stormy. Stay on your toes if you have open positions. Take a look at a daily chart and you can visually confirm that near-term support is much lower at $125-$130 and even firmer at old resistance of $110-$115. In other words, hang on to your hat if PDLI suffers a big correction. It's more likely thought that after clearing the first line of opposition at $135 on Monday and plowing through $140 today, PDLI is poised for a strong breakout once the clouds clear. Nevertheless, strap on your life preservers and be prepared for to ride out a potential storm. ADI $84.88 -2.38 (-4.13) So far so good. Near-term support evolved at these higher levels of $83 and $85. Volume ebbed away to moderate, however this is a good sign in light of the mild downdraft from Friday's all-time high. And the good news surrounding ADI still abounds. At the Supercomm 2000 today, ADI announced that its ADSL sales for 2000 are growing at three times the rate of the industry. They also took it a step farther and reiterated expectations for xDSL silicon sales to grow by as much as 700% from 1999. The company also joined the CDMA Development Group (CDG), a consortium of more than 115 companies joined together to lead the global adoption and evolution of CDMA (Code Division Multiple Access) wireless technology. Getting back to our momentum play, let's keep an eye on the current level for strength over the next few days. Worst case is for ADI to trend down to old resistance at $80. The PPI data is coming out this Friday and it's not unthinkable that the markets could pullback in anticipation; especially when you overlay it with a normal correction period. So if you have itchy trigger fingers, please use prudence in adding new positions this week. MU $77.31 -3.88 (-1.94) Three times is a charm! For the third consecutive session, investor enthusiasm propelled MU into new territory. In a late day push on Monday, the share price climbed to $82.50 on moderate volume. Today MU opened lower, but intraday it further established a near-term support at $77 and $78. This level, above the 5-dma ($76.24), is relatively safe for the time being. But there's no guarantee that MU won't dip down to firmer support in the $71 to $74 range. We have to expect some consolidation in consideration of the stock's recent gains and overall market conditions - remember stocks and markets move in cycles. Dan Niles of Lehman Brothers did however soothe investor's fears of a sharp pullback with a reiteration of his Buy rating today. He also restated a six- month price target of $100 for MU. Be patient to ride the next rebound. As of today, Micron's Corporate Affairs doesn't have an earnings' date nailed down. The company is however targeting the week of June 19th and should have a confirmed release date by next week. EXDS $82.06 -4.94 (-5.06) This recovering stock is performing like clockwork after its dynamic momentum thrust it upwards 40.5%, or $25.13 last week. On Monday EXDS stabilized at its short-term support of $86 and $87, then blew off some steam as traders took some cash off the table. The volume was light to moderate, which is a good sign that the momentum will return. Even with today's mild profit taking, EXDS is hovering above firmer support at $78 and $80. It'd be nice to see EXDS make a move off the 5-dma (currently at $81.19) on a rebound. But don't get too giddy. Now is the time it ere on the side of caution. Be careful if you choose to begin new plays in front of the PPI data on Friday and have stops in mind. Honestly the ride may be too rocky for some traders over the next few days, so be aware of your personal risk profile. YHOO $135.69 -1.63 (+1.19) The first two days have provided little excitement and little direction for our play. Both yesterday and today YHOO tried to rally through $140 early in the day, only to get turned back by those seeking profits. On the bright side the profit taking expected to take place hasn't developed, yet. Late today the bears did step in, driving YHOO back to $135 at the close. Closing near its low of the day could indicate the serious profit taking is just around the corner. However with a pullback could come new opportunities. With two days of little or no conviction in the market, gunslingers could certainly try their hand at bounces off the $135 area. That said, we would make sure to keep your stops in place as investors that have been waiting for YHOO and the major indices to extend last week's gains could become restless, and pull some money off the table at any time. For those with more patience, a bounce off $130 or $127 accompanied by better than average volume may provide a more suitable entry for new plays. SDLI $255.00 +3.00 (-5.38) The new week hasn't really started out quite like we had expected. Today SDLI was able to make another new high at $272.63 before the profit taking set in. The late day selling in the broad markets dropped our play back to a support area formed the past two days at $255.00. The question for traders now becomes, is that all there is to the pullback, analysts were looking for? Honestly, we really aren't sure. At this point we would not ignore further moves higher, however we would definitely be prepared to take profits if a bounce turns out to be a head fake. On further profit taking we would look for $250 and $240 to provide support. On Monday SDLI said it had completed the closing of its acquisition of Photonic Integration Research, which had been announced in early May. The news was already in the market, however did seem to bring buyers back early today. RMBS $202.00 -12.00 (-15.38) Early on Monday, Rambus made one futile attempt to stick its head over the $220 mark. It did so with little conviction and began to pullback and consolidate just like we had hoped. This morning's gap down to $200 came on the news that Intel was delaying the launch of its Timna processor chip that had been scheduled for the second half of this year. This was not a total surprise as investors had speculated last month's recall of nearly 1 million motherboards by Intel, could disrupt production on the new processor. RMBS was able to shake off the news and began to recover until late day selling in the major indices drug our play back down near support at $200. Remember another reason for keeping RMBS near the top of our list is for it 4-for-1 split, which is scheduled for June 15th. With the major indices drifting for much of the past two sessions, we would take our cue from the broad markets as well, when considering new plays. Should we see more profit taking support comes into play near $200, $190 and $185. A move back through $215 accompanied by strong volume could clear the way for new positions as well. CHKP $205.94 -10.06 (-27.75) While the broad markets have been searching for direction, there has been little doubt as to the mood of investors holding CHKP stock so far this week. After last weeks explosion we really aren't concerned about the move as our play was due for profit taking. The overall negative mood in the markets does seem to be dwindling and we view the pullback in CHKP as healthy round of profit taking. Now with that said, if the selling picks it would definitely get our attention. CHKP close just below its 5-dma but still remains well above its 10-dma at $186.04. We previously the importance of CHKP staying above the $200 level of support but would also look to establish call positions on bounces off the $195 or $185 area as long as they are accompanied by solid volume. On Monday Certicom Corp. announced it would market a security system that will enable wireless devices to connect securely with corporate intranets. The company said it is working with a number of companies including Check Point to develop its "VPN handheld client, which will allow corporations to securely connect with sensitive private networks from handheld wireless devices. ******************* PLAY UPDATES - PUTS ******************* CAH $62.94 +0.81 (+0.63) After last Friday's large drop, CAH has spent the first 2 days this week in a holding pattern. Reflecting investor indecision, trading has been subdued. Less than 900 K shares traded hands today, which is only 75% of the ADV. A potential bullish reversal pattern has developed over the past 2 days. Yesterday's small loss was followed today with a larger gain, and the two candlesticks create a pattern known as a Bullish Outside Day. This occurs when the high and close on the second day are both greater than the high and close from the preceding day. Completing the picture, the open and low for today were both below the corresponding prices from yesterday. This pattern frequently precedes a bullish reversal, so tighten your stops accordingly. In order to initiate new positions, we need to see CAH roll over at resistance near $64 (on strong volume) or fall through support at $61. Confirm market direction before playing, as the stock may very well follow the broad markets ahead of Friday's PPI report. MRK $69.59 +0.41 (+0.66) Going nowhere fast is the best way to describe this one. Merck did begin the week in an oversold environment, so the bounce on Monday came as no surprise. The drug company made it up to near $71 before sellers stepped in. The real problem with this one is the overall lack of conviction in the markets so far this week. Not that its a bad thing, but days like we seen this week can test the patience of traders looking for or wanting something to happen. Our best advice is not to try to force anything. If you bought puts on Monday's bounce hang in there. If you are still waiting, another bounce to resistance at between $71 and $72 followed by more weakness could give you another chance to enter our play. The volume has been very light so far, with the area between $68.50 and $69.50 providing support. The point here is not many people wanted to put their money on the line at those levels, so it may not take much to break though the bottom of the recent range if with better participation. MRK announced today it has signed a deal with PETNet Pharmaceuticals, to open a radiopharmaceuticals manufacturing and distribution center near Merck's research and development division in West Point, Penn. BUD $74.50 -0.19 (+1.81) The bounce today up to its 5-dma may have provided traders with a good entry for our new play. So far for the week BUD has picked up about 2.5%. The one main problem for the bulls as we see it is the light volume behind the move. Granted the markets so far have been a bit boring in the first two session and could change at any moment. The widely expected pullback that many were looking for in the broad markets has yet to develop. We actually were hoping for a better bounce followed by weakness, for opportunities to enter this play. In industry news this morning, British brewing and leisure group Bass Plc, said it is close to selling its beer division to Belgium's Interbrew, for approximately $3.34 billion. Interbrew is already the world's fourth largest brewer behind BUD and others. As for our play, be patient, let the broad markets find a direction, and look for chances to participate on further weakness or failed rallies. ************** NEW CALL PLAYS ************** GLW - Corning Inc. $217.25 +6.25 (+8.75 this week) Corning provides communications technology at light speed. The materials pioneer is one of the world's top makers of fiber-optic cable, which it invented more than 20 years ago. Corning's Telecom unit (about 50% of sales) makes optical fiber and cable and photonic components. The company's Advanced Materials unit makes industrial and scientific products, including semiconductor materials. Its Information Display segment makes glass products for TVs, VCRs, and flat-panel displays. The company operates 40 plants in 10 countries. Despite the market meltdown beginning in early March, GLW has held its ground. The stock is trading near its all-time high of $226.44, revealing investors' insatiable appetite for companies operating in the fiber optic arena. With expanding profits, investors have been rewarded with GLW. And with the announcement Tuesday, GLW's bottom-line may grow even more. The company said Tuesday that Marconi Communications, a supplier to 80% of the world's telecom organizations, will use GLW's PurePath technology in Marconi's next generation systems. The announcement helped GLW to buck the tech weakness Tuesday. Also, the highly anticipated SuperComm 2000 conference commenced Tuesday. GLW is a headline presenter at the gathering of leading-edge telecom companies where investors await good news. With the resurgence of the tech sector last week, GLW broke out from a two month trading range between $160 - 200. After gapping above the $200 level last Friday, the stock hasn't looked back. Volume has steadily increased over the past five trading days as GLW has rallied. Despite the deteriorating conditions in the tech sector Tuesday, GLW managed to hold onto much of its early day gains. The stock did run into resistance at $220 as the day wore on. In the coming days, look for a bold move above $220 combined with healthy volume for an entry point, if GLW can clear that level we could see a retest of its 52-week high. If, however, the weakness in the broad market brings GLW down, the stock has minor support at $215 and major support at $210. These are the levels we will be watching tomorrow for a chance to jump aboard. With the rally above $200 last week, investors have been a-buzz with split talk. At GLW's annual meeting last April shareholders approved the proposal to increase the number of authorized shares to 1.2 bln from 500 mln. Amazingly, GLW has not split its stock since 1992, when it was trading around $60. Since the market has stabilized over the past week, we may get a split announcement which could help our cause. ***June contracts expire in less than two weeks*** BUY CALL JUN-210*GRJ-FB OI=834 at $13.00 SL= 9.75 BUY CALL JUN-220 GRJ-FD OI=616 at $ 7.50 SL= 5.25 BUY CALL JUN-230 GRJ-FF OI=253 at $ 4.00 SL= 2.50 BUY CALL JUL-220 GRJ-GD OI=586 at $19.63 SL=14.00 BUY CALL AUG-230 GRJ-HF OI=306 at $22.00 SL=15.50 Picked on June 6th at $217.25 P/E = 113 Change since picked +0.00 52-week high=$226.44 Analysts Ratings 8-5-0-0-0 52-week low =$ 54.56 Last earnings 04/00 est= 0.55 actual= 0.64 Next earnings 07-24 est= 0.67 versus= 0.49 Average Daily Volume = 2.97 mln /charts/charts.asp?symbol=GLW BRCD - Brocade Communications $138.88 +1.38 (+4.88 this week) Brocade Communications is a provider of Fibre Channel switching solutions for Storage Area Networks (SANs), which apply the benefits of a networked approach to the connection of computer storage systems and servers. The company's family of SilkWorm switches enables companies to cost-effectively manage growth in their storage capacity requirements and improve the performance between their servers and storage systems. This provides the ability of increasing the size and scope of a company's SAN, while allowing them to operate data-intensive applications, such as data backup and restore, and disaster recovery on the SAN. Helped along by the NASDAQ recovery last week, BRCD finally broke out of its pattern of lower highs that began in early April. After one final bounce at the 200-dma on May 25th, the stock has moved up nicely in the past two weeks. Friday's gap up on strong volume put the stock into breakout mode and the momentum continued Monday and right up through the middle of today's session. The late-day NASDAQ weakness today finally took its toll, dragging the stock down to close just $1.38 above the day's opening price. The gains over the past 2 weeks have been supported by the 5-dma (currently $129.38), and a pullback and consolidation is possible before the stock is ready to move higher. Looking at a daily chart, the shooting star candlestick pattern (normally a bearish reversal signal) raises a caution flag. Investors may be nervous ahead of the PPI Report coming out on Friday, and we would use any weakness as an opportunity to open new positions at a better price. Near-term support is found at $137, followed by $131. Longer term support can be found near $120, and vigilant investors could be rewarded with a very nice entry point if BRCD gets caught in a market-wide downdraft ahead of the PPI numbers. Aggressive traders can consider entries on a volume-backed bounce from support, while more cautious investors may want to wait for BRCD to push the $148 resistance level, near today's high. On Monday, BRCD announced the appointment of David de Simone to the newly-created position of vice president of Platform Development. With over 20 years of experience in managing hardware and software development, testing, and program management, de Simone will be responsible for the hardware strategy for BRCD's SilkWorm family of FibreChannel fabric switches. ***June contracts expire in less than two weeks*** BUY CALL JUN-135 UBZ-FG OI=390 at $11.25 SL= 8.25 BUY CALL JUN-140*UBZ-FH OI=471 at $ 8.75 SL= 6.00 BUY CALL JUN-145 UBZ-FI OI=230 at $ 7.00 SL= 5.00 BUY CALL JUL-140 UBZ-GH OI=878 at $19.00 SL=13.75 BUY CALL JUL-145 UBZ-GI OI=312 at $16.75 SL=12.00 SELL PUT JUN-130 UBZ-RF OI=241 at $ 4.75 SL= 6.75 (See risks of selling puts in play legend) Picked on June 6th at $138.88 P/E = 631 Change since picked +0.00 52-week high=$185.00 Analysts Ratings 7-5-2-0-0 52-week low =$ 12.91 Last earnings 05/00 est= 0.08 actual= 0.11 Next earnings 08-14 est= 0.12 versus= 0.01 Average Daily Volume = 2.99 mln /charts/charts.asp?symbol=BRCD ************* NEW PUT PLAYS ************* MMM - Minnesota MNG & MFG Inc $82.31 -2.75 (-2.00 this week) The Minnesota Mining and Manufacturing Company (3M) is a leading manufacturer of a variety of industrial, consumer and medical products. With operations in more than 60 countries, 3M is a major player in the global economy. The Company's technologies have spawned a seemingly endless flow of groundbreaking products with more than 50,000 products in its cache. From Scotch tape to industrial sandpaper, 3M has had an influence on the daily lives of consumers worldwide. The company was founded at the turn of the century in 1902 in Two Harbors, MN. Every major sector participated in last week's broad rally except for Oil, Drugs and defensive stocks. Now let's take it closer to home. A defensive stock like MMM may have been fashionable while the techs were taking their lashings, but that sentiment seems to be on the wayside. As the NASDAQ and DOW make valiant efforts to recoup, it's the blue chips and techs paving the road ahead. For MMM it's not looking so good. For months $84 always held as a firm bottom. Then today the negative pressure brought it down a consequential notch. MMM slipped under the governing 5-dma ($84.46) and 10-dma ($84.87). And to add insult to injury, the 52-week record low (set in mid- march) is a mere 4+ points away. Volume is currently only at average levels, however this could change in a heartbeat and invite a strong downtrend. Basically we're adding MMM in anticipation of further downdrafts in consideration of the perilous week ahead. Look for downward moves off the above mentioned technicals for entries. If today's overall negative sentiment extends into tomorrow, we should see some immediate profits. In company news, the 3M Foundation BoD approved over $7.5 mln for educational institutions and programs throughout the US and over $1.7 mln for the support of art organizations. ***June contracts expire in less than two weeks*** BUY PUT JUN-90 MMM-RR OI=151 at $8.13 SL=3.75 BUY PUT JUN-85*MMM-RQ OI=265 at $3.63 SL=2.00 Average Daily Volume = 1.62 mln /charts/charts.asp?symbol=MMM ********************** PLAY OF THE DAY - CALL ********************** MERQ - Mercury Interactive Corp $85.00 -7.75 (-7.44 this week) Mercury Interactive is the exterminator of the software industry. The company offers a comprehensive line of automated testing tools that address the full range of quality needs for testing complex applications throughout the business enterprise. Essentially the tools help companies build better applications, from Internet/e-business transaction systems to informational Web sites. All of its research and development is conducted in Israel, however the company is based in California. Most Recent Write-Up MERQ woke up bright and early on Monday smashing its top resistance at the $90 level like a bug on the sidewalk. It just missed shattering that ever elusive $100 mark by a mere fraction. Then ka-boom! A prime example of why you NEVER buy during amateur hour. MERQ saw a quick and merciless sell-off that extended into today's session. The freefall however put MERQ at its near-term support of $84 and $85, which is an excellent level to start looking for entries. But hold up! There's perhaps some turmoil approaching in the next few days - a possible downdraft in the markets and a pullback ahead of the PPI data on Friday. So let's be picky and choosy. Definitive moves off the current level, or even better through the 5-dma (now at $87.91), are potential points of entry for the more risk-oriented. Otherwise wait for it to move back above $90 in a positive market. New readers be warned, this Internet momentum play is HIGH-RISK and not for the faint of heart. In the news CarsDirect.com, an automotive e-commerce retailer that puts consumers in control of the total car buying experience, announced it adopted the LoadRunner(R) ActiveTest(TM) for stress testing its consumer-focused automotive pricing and purchasing Web portal. Comments The NASDAQ began slipping at the end of day and many tech stocks rolled over with it. After testing $100 on Monday, MERQ has slowly drifted down to its current level. If the NASDAQ continues its slide to retrace Friday's gap, look for MERQ to find support at $83 which it held last Thursday. Below that lies the 100-dma at $81.44 and the 50-dma at $78. A bounce from these levels would provide good entry opportunities. On the upside, $90 will have resistance and a move through that level along with a surging NASDAQ will be a good indication to enter the call play. The NASDAQ will be the key tomorrow as technicians and investors watch to see if it closes that very wide gap from 3600. ***June contracts expire in 2 weeks*** BUY CALL JUN-85 RQB-FQ OI=439 at $ 5.38 SL=3.75 BUY CALL JUN-90 RQB-FR OI=417 at $ 3.50 SL=1.75 BUY CALL JUN-95 RQB-FS OI=344 at $ 1.88 SL=1.00 BUY CALL JUL-90*RQB-GR OI=408 at $10.13 SL=7.50 BUY CALL JUL-95 RBF-GS OI=179 at $ 8.38 SL=6.25 Picked on June 4th at $92.44 P/E = 213 Change since picked -7.44 52-week high=$134.50 Analysts Ratings 9-2-1-0-0 52-week low =$ 16.50 Last earnings 03/00 est= 0.10 actual= 0.11 Next earnings 07-17 est= 0.12 versus= 0.09 Average Daily Volume = 1.60 mln /charts/charts.asp?symbol=MERQ ************************ COMBOS/SPREADS/STRADDLES ************************ Along With Any Sunshine, A Little Rain Must Fall... Monday, June 5 The market consolidated today as a lack of economic news left Wall Street searching for direction. The Dow closed up 20 points at 10,815 and the Nasdaq ended 8 points higher at 3821. The S&P 500 Index fell 9 points to 1467. Volume on the NYSE was a light 849 million shares, with declines beating advances 1,638 to 1,334. Trading volume on the Nasdaq reached 1.45 billion shares, with advances beating declines 2,237 to 1,832. Economic data provided further evidence the economy is slowing and boosted the 30-year Treasury 11/32, pushing its yield down to 5.92%. Sunday's new plays (positions/opening prices/strategy): CD-Now CDNW JUL5C/JUL7C $0.00 debit bull-call Globespan GSPN JUN80C/JUN90C $8.00 debit bull-call Paine Webber PWJ JUL40C/JUL45C $4.00 debit bull-call Novoste NOVT JUN50C/JUN45C $0.50 credit bear-call Wellpoint WLP JUN80C/JUN70P $2.12 credit strangle The consolidation in the market allowed favorable entries in the majority of our new positions. CD-Now was the most interesting issue, and we had to rethink our opinion after company officials made a public announcement near the opening bell. The comments tempered optimism about an upcoming deal concerning an investor or a merger partner. The report stated that CDNW discussed a possible merger transaction with five different groups but has not agreed on terms with any of these companies. CDNW has also requested final proposals from interested parties in order to be able to reach an agreement on a transaction by the end of June. Unfortunately, there can be no assurance that proposals will be submitted, or that a transaction will be consummated in June or at any time in the future. The stock slumped after the news and although our target entry was easily available, we opted to not enter the position, based on the new information. Of course, we will monitor the issue for renewed optimism and a new opportunity over the next week. Portfolio plays: After a range-bound session, stocks ended slightly higher Monday amid gains in technology and telecom issues. Trading was choppy but analysts were confident in the market's refusal to correct significantly after Friday's rally. Investors may be convinced that the tightening cycle is approaching an end, but a slowing economy could result in weaker corporate earnings going forward. A key barometer of the U.S. non-manufacturing economy declined slightly last month, indicating that growth in that sector may be moderating. After the report became public, Federal Reserve Bank President Robert McTeer said the economy may be able to grow at a faster rate than it could in previous expansions without risking higher inflation, partly because of increased productivity gains. Jack Guynn, Federal Reserve Bank of Atlanta president, was not so optimistic, suggesting that although recent data may point to a slowing economy, there is a very real risk of inflation. With a lean calendar of reports this week, the market will likely trade in a small range until a future direction is established. The Nasdaq was the source of today's bullish activity with chip and biotech companies leading the way on positive momentum from last week. In the broader market, gold mining, automobiles and computer stocks advanced while electronics, drug, healthcare and industrial power issues slumped. Industrial stocks were most affected as traders moved money into the technology group after the recent recovery rally. Rate-sensitive financials slipped despite the benign economic data and one of our bearish issues, J.P. Morgan (JPM) helped the downward trend in the Dow. For now it appears our new call-credit spread at $140 is safe but beware of a technical rebound in the group. A downgrade from Donaldson, Lufkin & Jenrette affected a number of issues in the small-cap banking sector and our remaining issue in the category, Keycorp (KEY) moved lower on the news. With the new concerns over future profitability in this industry, it may be prudent to look for an early exit opportunity. The board of U.S. food manufacturer Bestfoods (BFO) is expected to meet early this week to discuss a sweetened bid from Unilever (UL), which is willing to offer Bestfoods shareholders up to $72 per share. That makes our recent bullish positions in BFO much more attractive but now reports have surfaced that Bestfoods is close to acquiring long-ailing Campbell Soups (CPB). Wall Street analysts who follow the company say the match doesn't fit, and that suggests that BFO is probably using the speculation as a bargaining ploy to extract a higher offer from Unilever. After the news was announced, shares of Campbell Soups shot up to $33, providing an interesting trading opportunity of those of you in the bullish calendar spread. Our position is short at $32.50, a recent resistance area and it has yet to be threatened even with the new speculation. In the past, a BFO/CPB combination might have made sense but it is unlikely to be worth $72 a share, and that means the current CPB rally will probably fail. Keep that in mind when deciding whether to take profits (as we must) or hold the position until expiration. Our Straddles/Strangles section had a new winner today. Lennox International (LII) achieved a mid-session high near $14 and the credit for our (September) debit strangle reached $1.56. That's a $0.31 profit on $1.25 invested in just over one week. Another issue in this section has been on the move recently. Medimmune (MEDI) split 3-for-1 this week and the stock has continued to move higher even as the new shares were issued. Our call option position is short at (split adjusted) $63 and with the excellent potential for bullish movement, we are now going to cover the sold calls with purchased stock. As you recall from the initial narrative, we were optimistic about the future of the issue and it appears the momentum from the current trend will continue to a new trading range. Our profit in the position will actually increase if the stock finishes above the sold strike at $63.38. Tuesday, May 6 The market slumped today as investors sold for profits after a series of bullish sessions. The Dow closed down 79 points at 10,735 and the Nasdaq was closed 65 points lower at 3756. The S&P 500 Index fell 9 points to 1457. Volume on the NYSE ended at 951 million shares, with advances beating declines 1,522 to 1,402. On the Nasdaq, trading volume reached 1.59 billion shares, with advances beating declines 2,104 to 1,943. In the bond market, the 30-year Treasury rose 3/32 pushing its yield up to 5.91%. Portfolio plays: The market moved lower today as investors took profits after a string of bullish sessions. Both the Dow and the Nasdaq edged downward on speculation that a slowing economy may hurt certain business sectors. For almost a week, equities have rebounded on hopes that the economy has slowed enough to persuade the Federal Reserve to end its recent slew of interest rate hikes. Now the concerns have changed but for the most part, analysts believe investors are simply regrouping after the rally of the past few days. Trading volume also remained relatively low as market participants awaited information on the strength of the U.S. economy before resuming their buying spree. A crucial economic report is due out on Friday, when the Labor Department issues the results of the Producer Price Index. Our recent bearish issue, J.P. Morgan (JPM) again led the Dow retreat with a $4.12 drop to $133. Unfortunately, the negative bias affected a number of our bullish banking issues. A Merrill Lynch analyst told clients that periods of rising interest rates are bad for investment banking revenue and that will certainly affect the outlook for this group in the near-term. Shares of retailers also fell as analysts suggested that a slowing economy could mean a lack of consumer buying and a future drop in revenue and net profits. Crude Oil stocks and other sector-specific technology issues made up for most of the declining groups. Our positions in Texaco (TX), Apache (APA) and Falcon Drilling (FLC) benefited from today's bullish activity and Cienna (CIEN) led the the big-cap category with a rally to $137. The bullish players in Bestfoods (BFO) received some excellent news today. Bestfoods, the maker of Skippy peanut butter and Hellmann's mayonnaise, accepted a sweetened $20 billion bid from giant Anglo-Dutch group Unilever (ULVR.L), ending a month-long unsolicited takeover effort. The deal will be the latest in a series of acquisitions for Unilever, which pursued Bestfoods in order to capture more top-name brands and boost revenue. The company agreed to pay $73 a share for BFO, up from an initial offer of between $61 and $64, and shareholders expressed relief that Bestfoods finally gave in popular demand. The deal leaves a handful of other food companies (including our Campbell Soups) out in the cold because Bestfoods had been considered a buyer, not a seller. BFO had been exploring potential acquisitions in an effort to deflect Unilever's approach and now they will no longer be a potential suitor. In a related story, our position in Nabisco (NGH) rallied amid additional merger speculation in the Food and Beverage Sector. The French food company Danone declined to comment on a recent newspaper report it was teaming up with Cadbury-Schweppes to make a joint bid for U.S. snack-maker Nabisco. Sources close to the company say a Danone-Cadbury team would make sense since the French company is interested in Nabisco's biscuit business and the British firm in its sauces, cereals and snack divisions. Danone is not alone in eyeing Nabisco. Tobacco firms Reynolds (RJR) and Philip Morris (MO), currently the favorite, as well as U.S. financier Carl Icahn have expressed interest in the company. Icahn is the only one to have put a value on his offer, pricing Nabisco at $6.5 billion or about $22, and that bid has virtually guaranteed our success in the bullish, call-debit spread. Two of our credit positions made surprising moves today. Ditech (DITC) fell $7, breaking through a recent support area as the Nasdaq finally gave way to profit-taking. Our bullish position at $75 is in jeopardy and we will move to exit (roll-out of) the spread if the issue continues through the next level of technical support at $74. WellPoint (WLP) also slid $3 on weakness in the Health Services Sector and it will likely test a recent trading range bottom in the next few sessions. A move below support at $68 will be our initial early-exit signal. Questions & comments on spreads/combos to Contact Support ****************************************************************** - NEW PLAYS - Today's positions are based on recent increased activity in the stock and underlying options. All of these plays offer favorable risk/reward potential but they should be evaluated for portfolio suitability and reviewed with regard to your strategic approach and trading style. ****************************************************************** TX - Texaco $58.00 *** A Second Chance! *** Texaco is engaged in the worldwide exploration for and production, transportation, refining and marketing of crude oil, natural gas liquids, natural gas and petroleum products, power generation and gasification. The company's worldwide operations encompass three main businesses: Exploration and Production; Refining, Marketing and Distribution; and Global Gas and Power (marketing of natural gas and natural gas products). A number of leading energy companies rallied today after Merrill Lynch raised its earnings estimates for the major oil industry issues citing an increase in oil prices. The firm raised its 2000 and 2001 estimates after reports suggested crude oil prices will remain near $30 a barrel amid strong summer demand. The bullish outlook moved through the entire sector with all major energy indices posting significant gains. The rise in these groups comes after a long-awaited period in which soaring crude oil and natural gas prices have made for handsome earnings but have done little to bring the industry leaders back to their historical share values. Now it appears that a fundamental change is underway and energy stocks are again on an upswing in anticipation that business will flourish in the high-demand summer months. Texaco has been the focus of increased option trading interest and implied volatility moved higher as the share value rallied. There were both large institutional buyers and retail participants. The activity left us with some favorable positions and in this second opportunity, we are going to begin with a short-term bullish outlook and hope for a move to the $60 range prior to next week's expiration, when we will roll forward to July positions. Two positions are available, based on your outlook for the issue. PLAY (conservative - bullish/diagonal spread): BUY CALL JAN-45 TX-AI OI=1168 A=$15.38 SELL CALL JUN-60 TX-FL OI=13484 B=$1.25 INITIAL NET DEBIT TARGET=$13.88-$14.00 TARGET ROI=50% Or, if your opinion is less bullish and more neutral... PLAY (conservative - bullish/calendar spread): BUY CALL JAN-60 TX-AL OI=3181 A=$6.25 SELL CALL JUN-60 TX-FL OI=13484 B=$1.25 INITIAL NET DEBIT TARGET=$4.75-$4.88 TARGET ROI=25% Chart = /charts/charts.asp?symbol=TX ****************************************************************** IBC - Interstate Bakeries $15.25 *** Food Group Mergers! *** Interstate Bakeries Corporation is one of the largest bakers and distributors of fresh bakery products in the United States. The company produces, markets, distributes and sells a wide range of breads, rolls, snack cakes, donuts, sweet goods and related products. These products are sold under national brand names such as Wonder, Hostess and Home Pride, as well as regional brand names, including Butternut, Dolly Madison, Drake's and Merita. Interest in IBC options has increased markedly in the past few sessions. The current volatility is sharply higher than it was a year ago and the average volatility over the past three weeks has been near all-time highs. The recent merger of Bestfoods and Unilever and the expected takeover of Nabisco (NGH) are the most likely reasons for new activity. French food group Danone has been rumored to be interested in Nabisco. As part of its focus on core activities, Danone has made new international development a priority. The company's aim is to become the world's leading firm in each of its three businesses in every country. While Danone is #1 in the world in sweet biscuits, it is still absent from the U.S. market where it has major positions in water and dairy products. Of course, the speculation is that while Nabisco is the target, IBC should also be a takeover candidate in this industry and our conservative position offers a way to participate in the merger speculation with relatively low risk. PLAY (conservative - bullish/diagonal spread): BUY CALL OCT-12.50 IBC-JV OI=0 A=$4.38 SELL CALL JUN-17.50 IBC-FW OI=469 B=$0.50 INITIAL NET DEBIT TARGET=$3.75 INITIAL TARGET ROI(max)=35% Chart = /charts/charts.asp?symbol=IBC ****************************************************************** CEGE - Cell Genesys $25.00 *** Reader's Request *** Cell Genesys is engaged in the development and commercialization of gene therapies to treat major, life-threatening diseases, including cancer and AIDS. Cell Genesys currently has two gene therapy programs, the clinical programs and the pre-clinical programs. The clinical programs include GVAX(tm) cancer vaccines in Phase I/II studies to treat specific types of cancer, such as lung and prostate cancers, and T cell gene therapy for AIDS, which is undergoing Phase II testing. The pre-clinical programs include potential gene therapies for cancer, cardiovascular disorders, hemophilia and Parkinson's disease. Cell Genesys also develops and commercializes, through its partially owned subsidiary, Abgenix, Inc., human monoclonal antibodies for pharmaceutical applications, including inflammation, autoimmune disorders and cancer. The biotechnology group is on the move and one of our faithful subscribers pointed out the increased activity in front-month CEGE options. Traders have become interested in the issue amid reports the company's factor IX blood-clotting protein performed well in tests on primates, with no discernable ill effects. In particular, a potentially harmful immune response against the gene therapy did not emerge in the tests. The therapy, which was delivered to the liver using CEGE's proprietary adeno-associated viral gene delivery system, was shown to be safe and tolerated in a variety of clinical assays. The bullish technicals suggest a recovery from the recent sell-off is underway and in this case we simply favor a conservative entry into a momentum-based speculative position. PLAY (aggressive - bullish/debit spread): BUY CALL JUN-20.00 UCG-FD OI=1500 A=$5.62 SELL CALL JUN-22.50 UCG-FX OI=3406 B=$3.50 INITIAL NET DEBIT TARGET=$2.00 ROI(max)=25% B/E=$22.00 Chart = /charts/charts.asp?symbol=CEGE *********** IN THE NEWS *********** Computer Makers Poised to Cash-In on Booming Demand By Cindy Christ Global demand for personal computers is expected to expand more than 15 percent in the second quarter driven by booming sales to consumers in Japan, Asia and Latin America. According to market research firm IDC, unit volume will reach 30.3 million in the second quarter, up 15.2 percent from a year ago. In a report released Tuesday, IDC said Japan will lead the world in PC orders with demand up 41 percent on the strength of consumer sales, new low-cost desktop models, and business PC upgrades spurred in part by tax law changes. The Asia/Pacific region, which excludes Japan, is expected to expand by 25 percent amid price cuts and government- sponsored programs in countries like Korea that promote PC buying. After a sluggish first quarter, sales in Western Europe are projected to jump 16 percent as the commercial market shakes off the Y2K effect and consumer demand remains high, sparked by the Internet, employee purchase programs and aggressive retail pricing. Sequentially, IDC forecasts a slight decline in global PC volume pegged to a component shortage in the United States. "While the U.S. consumer market remains strong, we see a tighter supply of desktop PCs due to current CPU shortages," said Bruce Stephen, IDC group vice president of Worldwide Personal Systems Research. IDC said that business demand for desktop PCs should remain flat this quarter, but pick up in the second half of the year as the Windows 2000 upgrade cycle moves into high gear. Data show that computer makers most likely to capitalize on the uptrend are those strongly positioned in consumer, Asian and Latin American markets and those in the portable PC space. "Ranking global vendors who can benefit from these growth factors include Acer, Hewlett-Packard, Dell and Gateway," IDC said in the report. Headquartered in Taiwan, The Acer Group is the world's No. 3 computer maker. Based on units shipped in the United States during the second quarter, the top five computer makers are Dell with year-on- year unit growth of 36 percent, Compaq with 18 percent, Hewlett-Packard with 67 percent, Gateway with 13 percent and eMachines with 83 percent. In terms of worldwide unit sales, the leading vendors are Compaq with shipments up 11 percent over last year's second quarter, Dell up 30 percent, Hewlett-Packard up 57.6 percent, IBM down 13.7 percent, and Fujitsu Siemens up 11.8 percent. The study comes on the heels of a report from the Semiconductor Industry Association showing a similar pattern in global chip sales. Sales of semiconductors reached an all-time high in April, fueled by a global explosion in demand for mobile phones, healthy PC sales, and growth in the Internet and electronic commerce. In Tuesday trading action shares of Dell (DELL) helped lead computer hardware issues higher, closing up $1.94, or 4.5 percent, at $44.69. Dell June 40 calls on the Pacific Exchange (DLQFH-X) also were advancing, finishing up 1 5/8 at 4 3/4 on volume of 2,272 contracts and open interest of 6,792. Dell rival Gateway (GTW) jumped $0.94, or 1.8 percent, to $52.81 after trading up to $55.62 intraday. Compaq Computer (CPQ) climbed $1, or 3.7 percent, to $27.88. Hewlett-Packard (HWP) slid $2.31, or 1.9 percent, to $118. American Depositary Receipts in The Archer Group (ACEPPGDR) added $0.25, or 2.6 percent, to $9.75 on the Taiwan Stock Exchange. ************************Advertisement************************* Tired of waiting on trades to execute? Does your broker offer Stop Losses on Options? Trade instantly with Stop Losses at Preferred Capital Markets Stop Losses based on the option price or the stock price. Move your trading into the next millennium with Preferred Capital Anything else is too slow! http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN ************************************************************** ************ See Disclaimer in section one ************
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