The Option Investor Newsletter Thursday 09-14-2000 Copyright 2000, All rights reserved. 1 of 2 Redistribution in any form strictly prohibited. To view this email newsletter in HTML format with embedded charts and graphs, click here: http://www.OptionInvestor.com/htmlemail/091400_1.asp Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 09-14-2000 High Low Volume Advance/Decline DJIA 11087.50 - 94.70 11208.10 11069.30 1.01 bln 1442/1355 NASDAQ 3913.86 + 19.97 3984.33 3897.18 1.70 bln 2222/1725 S&P 100 799.34 - 3.68 806.68 796.74 totals 3664/3080 S&P 500 1480.87 - 4.04 1491.71 1476.73 54.3%/45.7% RUS 2000 539.21 + 5.21 540.01 534.00 DJ TRANS 2705.48 - 17.98 2727.73 2693.28 VIX 20.69 - 0.79 22.25 20.29 Put/Call Ratio .56 ****************************************************************** Ralph Block, Ralph Acompora, What is it with Ralph? Volatility is the result of unexpected bad news from a variety of sources. It is back! Remember the currency problems from the last couple of years? You woke up in the morning to news that some currency you could care less about had devalued and repealed the laws of market physics as we knew them. We are not there yet but the rumblings are clear. Foreign currencies are now going to cause us serious problems again. Add in several noted analysts calling for market highs for 2001 only +100 points from the September highs or calling for a retest of Nasdaq lows and you have a picture of today's trading. PPI? What PPI? The Dow and Nasdaq gapped open on the favorable PPI news but the euphoria was brief. The PPI headline number slipped -0.2% in August falling well short of analyst's estimates for a +0.2% gain. The core rate was only +0.1% and the markets should have reacted strongly but the good news was overshadowed by earnings warnings. Even positive jobs data showing that employment was slowing could not provide additional lift. The double whammy of McDonald’s earnings warning yesterday and then the downgrade of Colgate today gave the Dow a serious case of earnings jitters. The MCD and CL problems were pegged to the weakening Euro and the trickle down effect that followed hit all the large multinationals. The weakening Euro causes currency losses when those sales are converted back into dollars. Other companies which fell in anticipation of weak earnings were CLX, PG, JNJ, DD, WY, EL, F, KO and G. Also mentioned was the impact of gas prices on the cash available to the consumer worldwide. In Europe they are just glad to get gas and pump prices reflect the shortage. Macdonald’s said currency problems could take as much as -.07 off their results. After the close today Maytag warned that slowing sales would impact second half results and by doing so joined the swelling ranks of earnings lepers. The trend is accelerating as sectors like consumer products, building materials, chemicals and capital goods companies are faced with failing economic rallies overseas and slowing sales. The old economy stocks are also the stocks of rebuilding economies and when those countries stall the impact is broad. Tech stocks rallied +91 points on the PPI news and actually weathered the earnings problems most of the day on the hopes that Oracle and Adobe would beat estimates after the close. ORCL did just that with a blowout +.17 actual number which beat estimates of .13 easily. Unfortunately the increase in sales was less than many analysts expected. The year ago quarter was depressed by Y2K concerns and analysts were looking for stronger comparisons. ORCL also announced a 2:1 split. You would have expected ORCL to soar in after hours but as long time readers know, we don't advise holding over earnings reports for this very reason. Earnings are great, sales are great, future revenues are great, per Larry Elison in the conference call, but the street was not happy with the numbers. ORCL dropped over -$2 in after hours trading. Adobe also beat estimates by a whopping +.09% with a +26% increase in profits. They also announced a 2:1 split. Future growth was also expected to be better than +25% and the stock was up over +$5 in after hours trading. The difference was expectations. Oracle was expected to do better and analysts were disappointed. Another reason for the differences is volume. ORCL traded over 32 million shares today and ADBE only 1.5 million. It takes a huge amount of retail orders to push ORCL on news. Something in the tens of millions of shares. That is a huge number of retail buyers. ADBE however can be pushed around with orders for only several hundred thousand shares. Volume is something every option trader should consider when hoping for large, quick moves. Of course, either stock would crater on bad earnings news so we do not recommend this strategy. The Nasdaq was doing really well until traders came back from lunch. It was starting to bleed but an interview with Ralph Block from Raymond James on CNBC caused the bleeding to turn into a hemorrhage. Ralph said he could see the Nasdaq test the recent lows soon and investors already unsure ran to the sidelines. Before you assign guru status to Ralph, how much effort do you think it took to predict a retest of the recent lows on the Nasdaq with October only three weeks away? This reminds us of another Ralph, Ralph Acompora, who has been very quiet lately. Jumping in front of almost a sure direction change in the market was good for several sound bites and 30 minutes of fame and Acompora did it well. Block has tried before but has not been as lucky. I think we dodged a bullet yesterday when Abbey Joseph Cohen called for the 2001 high on the S&P to be only 1650. That is only about +100 points away from our September high. Calling the market fairly valued (again) she is pulling in her bullish horns. She called the market fairly valued several times in the past at much higher levels. This means her valuations are slipping. She repeated much of this on CNBC today. With Cohen turning from bullish to bearish and Ralph Block calling for new Nasdaq lows, which way do you think the market is going? It does not matter if they are right or wrong, it only matters that they are vocal and visible. Investors will move to protect themselves and the market will follow. The Nasdaq has now formed, according to some, a double top at 4250 and now must retest lows and start over with a new trend. This fear has caused persistent selling in the Nasdaq big caps as institutional investors read the writing on the wall. Intel closed under $60 to hit a four month low. Microsoft fell -2.38 to a four month low at $65.69. This is only $5 away from a 52 week low. Microsoft was hurt as well by a less than exciting release of the WindowsME product. Cisco, which had bounced from a low of $58.50 on Tuesday to $63.31 today, rolled over again and headed back down to possibly retest $60. Dell, another Nasdaq pillar, is at a six month low and only $1 from a 52wk low. WCOM is still holding at $30. JDSU is only a few dollars away from retesting the July low. If you are looking for poor technicals on the Nasdaq you don't have to look far. With the drop in ORCL after hours the Nasdaq is likely to open down on Friday unless we get a CPI bounce. The bright spot on the Nasdaq was the fiber optic sector. Yes, that was a bottom on Tuesday as I speculated in the commentary. No, I did not play it and I am cussing myself as I write this. CIEN +31 (2 days), GLW +15, SDLI +10. The biotechs continue to inject gains into the Nasdaq as well as some of the hot Internet high flyers. ARBA +10, RBAK +10, BRCD +6.75 and don't look now but EMLX is alive and well (+7.69) and about to break the post hoax high of $108. It appears the damage is over and investors are moving back in again. Friday could be a record breaking day. It is a triple witching option expiration Friday but that news is old hat and mostly already priced in to the market. We have the CPI report which will be announced before the open but is not expected to be a market mover after the low PPI today. Volume for the last two days has been heavy. The NYSE has traded over 1 billion two days in a row and the Nasdaq posted 1.7 billion today. Friday could be the heaviest day on recent record but not due to anything listed above. There is a major re-weighting of indexes scheduled for Friday. The major indexes re-weight periodically for different reasons but tomorrow is huge. The estimates from some analysts are for something in the range of $30 billion in stock to be traded in addition to the regular volume. Volatility anyone? Many traders will also be moving to the sidelines to avoid the rash of after hours warnings expected on Friday. You know the drill. Warn on Friday and hope investors will forget by Monday. Personally, it is easier for me to forget if I am in cash than stuck in a long position. Good luck and sell too soon. Jim Brown Editor ********************************************** Live in Boston - HAVE LUNCH WITH OIN SEPT-19th ********************************************** Busy in Boston? Have lunch with on us Tuesday September-19th. OptionInvestor.com, Preferred Trade and A-T Attitude will hold a FREE seminar on Tuesday complete with handouts, freebies, door prizes and over six hours of solid information which can improve your trading results. Lightning trades, real time quotes, the best option strategies and a FREE BREAKFAST and LUNCH! How can you go wrong? It is free but you have to register so we can order food. http://www.OptionInvestor.com/seminar/dtn ********************* FALL SEMINAR SCHEDULE ********************* The Austin, TX seminar is September 21/23rd. Options expiration will be over and earnings still several weeks away. Here is your chance to learn from the pros. The three day Technical Analysis Stock and Option Fall Seminar Series. Three days of in-depth education. Don't miss it! Some comments from recent attendees: I want to thank Chris, Steve and Scott for the excellent workshop held in Detroit last week. Having been to the Expo in Denver in March (which was fabulous), I was ready for a smaller, hands-on approach to hone my less-than-perfect skills. I was not disappointed. One can never get too much education in options investing, and Chris and Steve offer terrific, unique approaches. Laurie Chris & Steve, I would like to thank both of you for a great experience at the Atlanta Workshop. I learned more in the three days of the workshop about investing and trading than all of my undergraduate and graduate courses combined. It was a lot of information in a short time and I hope to put it to use very soon. Mike I attended the Atlanta seminar and wanted to forward my positive comments. The seminar "really lit my fire". I have been a trader for 20 years and often go to seminars and this was the first one that really taught me the most. Dr Lloyd Jim, I had the good fortune of attending the meeting in Orlando. Like your newsletter, it was a CLASS ACT. Chris and the others did a great job. Chris was by far the best performer but the gentlemen beside me was an option trader with several seminars under his belt and almost freaked out when Chris finished his Index Presentation. JC I am writing this note to compliment you and your staff on the great job they did in Atlanta. But more importantly I would like to single out Steve Rhoades as one of the finest speaker/teacher on technical analysis that I have ever had the pleasure of hearing. I am doing my best to persuade other members of the two investment clubs that I belong to, to attend the Detroit seminar. Sincerely, ML We guarantee you will not be disappointed. The class size is small so you will get plenty of individual attention from Chris Verhaegh, Steve Rhoads and 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. Date City Sep 21-23 Austin TX Sep 28-30 Boston Oct 12-14 Charlotte NC Oct 19-21 San Francisco Nov 02-04 Phoenix Nov 09-11 Miami FL Nov 20-22 Dubai, United Arab Emirates Dec 07-09 Philadelphia Dec 14-16 San Antonio Australia coming soon! Has the market been beating you up? Did you give back your gains from April? Would you like to understand all the technical indicators our writers use? Does the alphabet soup of technical terms like RSI, DMA, MACD, ROC, Stochastics, Bollinger bands, sound like Greek to you? You can learn from the experts how to interpret all these indicators, read charts, pick stocks and which option strategies to use on those stocks for less than the cost of one bad trade. Reserve your seat now for one of our regional seminars. Click here for more info: http://www.OptionInvestor.com/seminar/seminar.asp ************************Advertisement************************* Attention Online Traders: NobleTrading.com has become the first online trading firm to offer both Direct Access Trading, and web based trading to its customers. Trade Direct using any ECN, SOES, and SelectNet, or trade right through your browser using our web based trading application. FREE DSL service for active traders. Visit our website and sign up for a Free real-time demonstration! http://www.sungrp.com/tracking.asp?campaignid=484 ************************************************************** **************** MARKET SENTIMENT **************** Flip Your Coin By Austin Passamonte That's what Friday will come down to. We have triple-witch and the usual upward bias of expiration Friday. Coupled with sharp sell-offs that leave numerous investor favorites looking "cheap", it's the fixin's of a surprise rally. The bears are wondering if indeed the sell off has run it's course. Old-economy stalwarts are lining up at the confessional in rapid fashion and don't look now but a handful of techs have sidled in with them. This could be the final thrust of a major market bottom; the last stage is usually major capitulation as earning performance slumps. Next come interest rate reductions and we begin our bovine party once more. The Dow plunged almost 100 points and VIX closed lower yet? Not good. Candle formations are dismal and vital supports are being tested or broken frequently these days. What's a trader to think? Today's relatively tight range for the NASDAQ and it's steadfast resolve not to tank badly with the Dow is moral support for our bulls. A benign CPI could be the catalyst for an upside burst tomorrow. If that happens and fails to hold off strong selling pressure, we would look for buyers to throw in the weekend towel and walk away. It's possible to see dual 100-point moves in both indexes tomorrow in either direction. Our best guess is the selling hasn't finished although we could be close. Good news could pop the markets, bad news will likely kill it. Be prepared for a volatile day and make sure you trade the right direction! ***** VIX Thur 9/14 close; 20.69 CBOE Equity Put/Call Ratio The CBOE equity put/call ratio is a contrarian-sentiment indicator. Small traders are majority of equity-option players. Numbers above .75 are considered bullish, .75 to .40 neutral and bearish below .40 ************************************************************* Tues Thurs Sat Strike/Contracts (9/12) (9/14) (9/16) ************************************************************* CBOE Total P/C Ratio .60 .56 Equity P/C Ratio .52 .50 Peak Volume (Index & OEX) CBOE Index & OEX put/call ratio is now a "smart money" sentiment indicator, as majority of buying done by institutional traders. Numbers above 1.5 are considered bearish, 1.5 to .75 neutral and bullish below .75 ************************************************************** Tues Thurs Sat Strike/Contracts (9/12) (9/14) (9/16) ************************************************************** All index options 1.34 1.01 OEX Put/Call Ratio 1.07 .89 30-yr Bonds Fri 9/08 close; 5.82% Support/Resistance Indicator The Index Support/Resistance(S/R)Ratio is a formula used to gauge possible support or resistance based on open-interest disparity. Ratio listed is percentage of calls to puts or puts to calls respectively. Support is factored from dividing puts by calls at strike levels beneath index closing price. Resistance is factored from dividing calls by puts at strike levels above current closing price. (Open Interest) Calls Puts Ratio S&P 100 Index (OEX) Resistance: 840 - 820 22,829 6,342 3.60 815 - 800 21,973 18,676 1.18 *** OEX close: 799 Support: 795 - 780 2,441 15,931 6.53 775 - 760 72 16,276 226.05 Maximum calls: 810/6,633 *Expect the OEX index to close Maximum puts : 790/5,110 between these strikes* Moving Averages 10 DMA 818 20 DMA 818 50 DMA 807 200 DMA 782 NASDAQ 100 Index (NDX/QQQ) Resistance: 98 - 96 22,817 22,567 1.01 95 - 93 27,265 41,719 .65** QQQ(NDX)close: 93.25 Support: 92 - 90 22,274 51,072 1.87 89 - 87 2,397 17,485 8.13 85 - 83 4,198 25,424 6.06 Maximum calls: 90/25,426 Maximum puts : 90/14,705 Moving Averages 10 DMA 97 20 DMA 96 50 DMA 95 200 DMA 94 S&P 500 (SPX) Resistance: 1525 14,975 7,740 1.93 1500 52,639 52,161 1.01 SPX close: 1481.99 Support: 1475 20,207 18,787 .93** 1450 11,365 15,680 1.38 Maximum calls: 1500/52,639 Maximum puts : 1500/52,161 Moving Averages 10 DMA 1501 20 DMA 1500 50 DMA 1482 200 DMA 1444 ***** CBOT Commitment Of Traders Report: Friday 9/08 Biweekly COT report discloses positions held by small specs and commercial traders of index futures contracts on the Chicago Board Of Trade. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs are not. Extreme divergence between each signals a possible market turn in favor of the commercial trader’s direction. Small Specs Commercials DJIA futures Net contracts; +791 (long) - 2,700 (short) Total Open Interest % 11.5% net-long 12% net-short NASDAQ 100 Net contracts; -3,427 (short) -2033 (short) Total Open Interest % 21.74 net-short 4.84% net-short S&P 500 Net contracts; + 46,014 (long) -52,185 (short) Total Open Interest % 21.36% net-long 8.95% net-short What COT Data Tells Us: Commercial positions in S&P 500 and DJIA remain at or above five-year extreme short levels. NDX commercials continue to go shorter. Small specs continue to build net-long extremes in SP00S but have given ground in DJIA and switched over to heavily net- short in NDX. Weak hands are shaking out, only a matter of time in our opinion before they crumble. (Not Shown) Commercial positions in 10-Year Note and 30-Year Bond markets at or near five-year extreme net-short levels. Small specs build net-long. Summary: "Smart money" insiders expect stock market to decline and interest rates to rise. Small traders directly opposite, creating diverse set up favoring commercial sentiment for future market direction. Bullish: Fed's finished ? Benign government reports ? Oversold market levels soon ? Disparity in overhead call/put ratios Bearish: Oil Prices COT reports Recent pre-warnings, downgrades Broad market's break of critical M/A support Market leaders breakdown Low VIX Technical chart indicators ************** MARKET POSTURE ************** As of Market Close - Thursday, 09/14/2000 Key Benchmarks Broad Market Last Support/Resistance Alert **************************************************************** DOW Industrials 11,087 11,050 11,450 SPX S&P 500 1,480 1,475 1,535 COMPX NASD Composite 3,913 3,650 4,200 OEX S&P 100 799 796 832 RUT Russell 2000 539 520 550 NDX NASD 100 3,737 3,500 4,050 MSH High Tech 1,037 990 1,095 BTK Biotech 739 690 780 XCI Hardware 1,476 1,460 1,600 GSO.X Software 462 435 495 SOX Semiconductor 1,004 960 1,140 NWX Networking 1,257 1,150 1,305 INX Internet 567 525 605 BIX Banking 626 600 645 XBD Brokerage 695 685 710 IUX Insurance 749 705 800 RLX Retail 869 825 890 DRG Drug 383 365 410 HCX Healthcare 799 765 815 XAL Airline 152 144 162 OIX Oil & Gas 312 296 324 Zero alarms were triggered in the past two sessions and this indicates a lack of conviction by bulls and bears. The DOW, SPX and OEX are very close to support levels, giving market bulls the opportunity to buy stocks close to support and minimizing downside losses with stops close by. Market bears will be looking for a break of support, in hopes that more selling will occur. ************** TRADERS CORNER ************** Are 63% of You Bullish Too? By Molly Evans Tell me you don't feel like you're walking on a tightrope here. On the one hand, we've got a mountain of bearish press to scare the living daylights out of anyone who's paying attention. Let me count the ways that come to mind off the top of my head: "A Weary Bull" section in the Tuesday Sept 5th edition of The Wall Street Journal, countless other articles of same sentiment in other widely read missives, earnings warnings, analyst downgrades, very expensive oil, weak euro, downgrade of Japanese bonds, margin debt back to March 2000 levels, seasonal cycle for market lows, smart money net short and a VIX that seems to be pretty persistent in staying under 21. All this and yet the American Association of Individual Investors reports that 63% of those surveyed remain bullish and only 8% are bearish. What does that 63% know that we don't? I'm afraid they're the ones trudging off to their jobs everyday and don't read OIN or any other source of up-to-the-moment market-moving news. Can that possibly be right? 63% bullish? I haven't seen that many bulls hanging out in my favorite stocks. I see them trading them but they're not investing them to buy and hold. You don't need me to tell you it's been a nasty battle out here on the front lines. Today was mixed; yesterday was mixed, but the Dow is having trouble closing over the 11,400 mark that it reached intraday on Sept 6th, and is now off a little over 1% since the close of Sept 1st. The Nasdaq, despite having nice waves to trade today, is still down over 7% on the month. Lastly, the S&P is down just under 3% since the close prior to the Labor Day holiday. So what's the good news? The good news is that markets love to climb a wall of worry and we're looking at a mighty big wall. How's that for consolation? Now please don't go getting all whigged out on me here for talking about bear sightings. Let's comb a few of the issues here. We can't dispute that these oil prices are going to hurt both you and me as we pay for our higher energy bills out of our disposable income. I'm betting folks get a little less anxious to put their monthly deposits into those mutual funds as those bills mount, especially since the Dow is still down 3.5% and the Nasdaq down 4% on the year anyway. And won't it put the skids on corporate earning's prospects for a time? Sure it will. There's a double whammy assault to corporations to pay for higher energy costs plus factor in six interest rate hikes in the past 18 months. Earnings drive stock prices, no ifs, ands, or buts about it. Right now we're dodging bullets being long as companies are in the "preannounce their struggles" time. We all cuss the analysts when they downgrade our holdings or even our sector. They're out there trying to bring these problems to light before the fact, as that's how they make their names. It does no good to downgrade after the company has shown the crack in their mirror. It's got to be an unenviable position. What good is it if one only upgrades? Not all of these companies are going to make it, yet every stock went up last Fall and Winter. Gravity still works and analysts are a part of the deal. The hits are going to continue to come. My two cent advice: know what you own and don't be afraid to short (buy puts or other bearish plays) weakness. Margin? Who's on margin?!? Surely not you dear OIN reader! Don't be doing that! Always, always, always keep a stash of cash in the portfolio. The bare minimum is 25%. Don't look at me that way! Margin calls have ended the trading life of many a trader. Don't let it be you. It's bad enough to be on the wrong side of the trade but it's quite another to have a market turn and not let you out of its clutch. I don't want to read your tale of woe and how you got religion after the fact on some message board. Have discipline, please! It's that time of the season, too. Even the famous author Mark Twain who lived from 1835 - 1910 understood the cyclical nature of the markets during his era. I'm from Mark Twain country, right in America's Heartland on the Mississippi River. We take a lot of pride in his legacy here, so it is only fitting that I present you with his words of wisdom on the topic. This quote should be taken in context of the season: "October. This is one of the peculiarly dangerous month to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February." What a character. But as you know, we've discussed all of this at length in previous articles and commentary. The international problems, like our own, change day to day. That's beyond the scope of my capabilities to comment upon but just know that problems do continue overseas and our markets are very touchy to instability. Perhaps the indices will break out of their trading ranges and go higher. As I alluded earlier, they love to climb a wall of worry. We all rejoice when these economic numbers come in showing a slowdown because that reduces the likelihood of continued rate hikes. Yet, then our stocks are severely punished when the companies dare to mention that they're not invulnerable to that slowdown. Perhaps this week's pushdown is simply pre-triple witching antics. If so, we'll have a better grasp on that next week. Maybe we're destined to stay in trading range. In view of the scenario I shudder to think about, that sounds really good. The point is that this is a time to be extra alert to the pangs of the market. Dips that you want to buy, might just get deeper so wait for those bounces on volume. It's time for defensive posturing. It's been time for defensive posturing the whole year but put that on heightened alert. One more Mark Twain quote might be extra prescient here depending on how you look at the market or look at me for my cautious stance: "Let us be thankful for fools; but for them, the rest of us could not succeed." Consider that one closely. On another note, I'm here in Chicago at the OIN seminar. Chris is amazing. You really have to hear him to appreciate it. We've gone over technical indicators, hidden features of Q charts, risk management, fundamental factors of the stocks we trade, and a host of other interesting bits. Make your best efforts to get to one of these. The knowledge gained should pay for itself in spades. ************************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.sungrp.com/tracking.asp?campaignid=469 ************************************************************** ************* SECTOR TRADER ************* A Watched Pot Never Boils By Buzz Lynn sectortrader@OptionInvestor.com Seems like we've been waiting a long time for the current trend in the NASDAQ and the OEX to flatten and reverse to the upside. In fact, we figured once some of this week's economic news was released that it would alleviate investors' inflation/Fed fears, thus allowing stocks to move up. Just when we got technical indicators yesterday showing that we might be near entries on many issues, McDonald's asked investors for a break today citing "currency risk" and slowing sales in their international operations, which would put a damper on profits. If you guessed that other consumer stocks like Proctor and Gamble, Gillette, Coke, and worst of all Colgate Palmolive (down $8.69 today) would suffer, you win the prize! After the close, Maytag reported they would fall short of estimates too. It's already happened in the chemical business. Not only is there a currency risk, but the cost of production is getting steeper too as a result of increased petroleum costs. With the high margins Ford, GM and Daimler-Chrysler earn on their SUVs, just how long before they warn of the same thing? All of a sudden, despite good economic news here (lower than expected PPI and jobless claims), the attention has shifted to the oversees economies, which will undoubtedly affect American companies with international presence. Other companies will surely follow. In short, nothing is safe from increasing oil prices. Get used to it and look for more landmines as the warning season continues. That's a bigger trend than any technical chart move will yield no matter how much the chart says "anticipate a reverse, time to go up". Ralph Bloch, known technical pundit and Raymond James curmudgeon helped with a bucket of cold water around 3:20 this afternoon too when he advised to remain cautious on the NASDAQ. While the NASDAQ had a good start this morning on the positive economic news hitting 3984 at its high point, it began to drift downward in the late afternoon before Ralph kicked it into the basement. That it happened on over 1.7 bln shares doesn't look good for tomorrow or going forward. Lest we leave on a bearish note, take heart. The daily charts really have entered an oversold position on many issues, including the OEX and QQQ. Now that investors are hunkered down for more bad news, it may prove to be an over-reaction. Our economy is still good. If (that's a big if) the large cap tech companies can hold up under more earnings warnings pressure (this means you CSCO, INTC, IBM, HWP and MSFT), then the market may have found a bottom. As Jim notes, it is always darkest just before the dawn. If you are going to try to pick a bottom (not recommended), try to limit yourself to little nibbles in selected issues. This is not the time to bet the ranch. ************** QQQ ************** QQQ - NASDAQ 100 $92.88 -0.63 (-2.25 this week) Sure enough, we got that bounce yesterday at support of 3800. Today following a gap open and gradual selloff, 3900 held. Yes, both days have been positive on the surface as the moves have flattened out the stochastic and MACD on a daily technical chart. That looks good, but can we see a bullish entry yet? Not so fast. Keep an eye on CSCO and INTC, which both have strong support at $60. Big declines below $60 for either could spell bad news for the whole index. The fact is that the generals led the QQQ to a loss while the remaining 2900 or so issues led the NASDAQ it to a small gain today. Eventually, the market index will follow the generals. Technically, MACD and stochastic are flattening out, which is the good news. In fact, the fast stochastic has flattened out and looks like it will cross the slow line soon. MACD has flattened and may also start to show a crossing back to the "zero line". All we really want to see to get bullish on the index again is for the fast stochastic to cross back above 20%. MACD back over zero would confirm it. Set your stochastic to 10 (3), 5, and your MACD to 8, 18, and 6 to see the same thing we do. Ideally the 60-min chart would slightly lead the daily chart, so look for it too to break 20% on the stochastic and positive on MACD. With the market currently in a sour mood, we may have to wait until Monday for a signal. Don't try to catch a falling knife if earnings warnings or an ill-received CPI inspire further downward pressure. Calendar Spread: Yesterday as the daily MACD and stochastic flattened out on the 60 and 30-min charts in conjunction with the daily chart, QQQ confirmed an entry for the long leg. You would have had to be quick about it as the window of opportunity quickly disappeared by the end of the day. If you look at the charts, an entry could have been made with the QQQ at $92 just after amateur hour, and following a bounce from support at $91. Still, it lasted only through this morning when the QQQ hit about $95.50 (a great time to sell the short leg if you are fast) before selling off to close today at $92.88. While waiting for a longer-term trend to show itself, we had what we think is a good entry for the long leg of our spread. Unfortunately, given the fear of currency risk and crude prices, we may have to wait until next week to sell the short position for a nice premium. Still looking to initiate the spread? You may want to wait for a bounce again from $91 to go long (confirm the MACD and stochastic crossover on the daily chart) for the long leg and prepare to go short at resistance (possibly overbought MACD and stochastic on the 60-min chart). BUY CALL JAN- 90 QVQ-AL OI= 4976 at $12.13 SELL CALL OCT- 95 QVQ-JQ OI= 3159 at $ 4.38, ND = 7.75 or less SELL CALL OCT- 97 QVQ-JS OI= 3095 at $ 3.50, ND = 8.63 or less SELL CALL OCT-100 QVO-JV OI= 4071 at $ 2.44, ND = 9.69 or less Long Call: Same story here. Nice entry was available yesterday after an amateur hour bounce when the daily, 60 and 30-min charts lined up to show a MACD and stochastic reversal. Unfortunately, the daily is still flat, but still shows signs of a bottom. We may just need to wait another day or until negative sentiment related to crude and currency blows over. With the indicators in oversold territory, we still don't think the past week's downtrend will last long so long as support remains above the 3800-3900 level on the NASDAQ and 90-91 on the QQQ, both good levels of historical support. BUY CALL OCT- 90 QVQ-JL OI= 2437 at $7.50 SL=5.25 BUY CALL OCT- 95 QVQ-JQ OI= 3159 at $4.63 SL=2.75 BUY CALL OCT-100 QVO-JV OI= 4071 at $2.63 SL=1.25 Bullish Put Credit Spread: If you took this trade, you are undoubtedly gnawing your fingernails off waiting for the bomb to explode. On one hand the technical indicators are pointing toward a reversal. On the other, your SEP options expire tomorrow and you will likely be assigned or put the QQQ shares if the price falls under $90. Hopefully you played the suggested OCT strikes. We still think this level will hold barring any unforeseen bad news. Fortunately ORCL NKE, ADBE and RHAT all beat estimates, thus dodging another bullet. Anyway, the objective is to sell an OTM put and simultaneously buy a lower OTM put for a net credit to your account. It's a bit like a naked put, but safer. By taking in slightly less premium, you also limit the downside risk. Support is at $90. Don't attempt this play unless you understand the workings and how to exit if the trade moves against you. SELL PUT OCT-90 QVQ-VL OI=7439 at $3.38 BUY PUT OCT-85 YQQ-VG OI=1749 at $2.06 Net Credit = $1.33 or better Average Daily Volume = 18.4 mln ************** OEX ************** OEX - S&P 100 $799.34 -3.68 (-13.56 this week) Hanging on by its finger nails at support of $800 (close enough) OEX too is showing technical signs of a reversal on the daily chart. However, earnings warnings borne of currency risk and crude oil prices are keeping our largest market cap companies under pressure. It isn't a U.S. economy problem. It's more of an international economic slowdown that hasn't landed here yet. That has investors nervous about the next six months. As we noted in tonight's summary, that may be a stronger trend than the lines on a chart. If it turns out to be investors just injecting a bit of fear into the previous weeks' overbought market, we would term this healthy and stand by the indications given by a flattening MACD and stochastic on the daily chart. Like the NASDAQ yesterday, the OEX too gave us an entry yesterday morning taking us as high as $808 today before the backslide. Profitable, yes. But you had to be fast and acknowledge the 60 and 30-min charts decline from overbought just like you had to acknowledge oversold the day before. If the market decides not to advance again tomorrow, support is very near at $798 and again at $791. Watch for more earnings warnings as these will definitely affect the index. Long Call: Technical indicators MACD and stochastic on the daily chart have definitely entered and flattened in the oversold territory telling us that a bottom is near if not already here. Unfortunately, fundamental news like oil and currency may keep it here a bit longer. However, we believe it is only a matter of time until it reverses, perhaps as early as next week. Support is good at $800, though OEX is in a cliffhanger position right now at $799. Next stop is $798, then $791. Wait for the MACD to cross back positive and for the fast stochastic to cross back over the slow stochastic and the 20% on the daily chart and confirm it with the hourly chart, which should lead it out of its current oversold condition. BUY CALL OEZ-JR OCT-790 OI= 495 at 27.63 SL=19.50 BUY CALL OEX-JT OCT-800 OI=1550 at 20.50 SL=14.75 BUY CALL OEX-JB OCT-810 OI=3740 at 14.75 SL=10.75 Bullish Calendar Spread: With the technicals all lining up for a buy signal yesterday, congratulation to those who took the long leg entry. Unfortunately, thanks to McDonalds and other consumer goods companies citing currency risk and higher production costs, OEX backslid today. Still it found support at $798 and closed just a hair under the $800 support level we expected to hold. It's a tossup as to whether or not we see gains tomorrow, but the technicals tell us they are coming. MACD and stochastic are oversold now on the daily chart, with the 60-min rolling over. If those two can simultaneously break out of oversold territory, that would confirm our entry. That may not happen until next week, and we still need to be careful of earnings warnings as that will overpower any indicator. Remember to sell the short at resistance and to cover any SEP shorts that are ITM. You don't want to get called out of this spread unlike a covered call. BUY CALL DEC-840 OEX-LH OI= 615 at $17.38 SELL CALL OCT-840 OEX-JH OI= 908 at $ 4.13, ND=13.25 SELL CALL OCT-850 OEX-JJ OI=1972 at $ 2.25, ND=15.13 Bullish Put Credit Spread: Unless you are a skilled surgeon, don't let yourself get assigned on the SEP-800 put. OEX is barely hanging on to $800 support, which may not last long if more bad news spooks the index lower. This play is only profitable if both the long and the short close over $800. While the downside is limited to a $5 per share loss, you still stand to lose if you let the trade get away form you, especially if you took in less than that in the form of a credit. Because this play is based on SEP strikes, you need to close the play tomorrow or have your prayers for a close over $800 answered in the affirmative. A regulation T call on Monday can result, which requires you to bring in fresh cash if your account won't cover the amount required to settle when you are assigned. Don't let this happen to you unless you can afford to settle in cash. Now you know why we called this a risky play suitable for gunslingers only. The risk is no longer worth the reward for now. Perhaps we can bring back OCT strikes this weekend. Average Daily Volume = 1269 ************* DAILY RESULTS ************* Index Last Mon Tue Wed Thu Week Dow 11087.47 -25.16 37.74 -51.05 -94.71 -133.18 Nasdaq 3913.86 -82.06 -46.84 44.38 19.97 -64.55 $OEX 799.34 -4.78 -5.55 0.45 -3.68 -13.56 $SPX 1480.87 -6.65 -5.86 2.92 -4.04 -13.63 $RUT 539.21 -2.08 -1.19 1.57 5.21 3.51 $TRAN 2705.48 -41.56 -5.82 38.06 -17.98 -27.30 $VIX 20.69 0.27 0.22 0.30 -0.79 0.00 Calls ITWO 175.88 -2.38 3.00 10.88 3.88 15.38 B2B is back! ABGX 84.50 -2.28 1.31 6.75 7.19 12.97 New CHKP 153.94 -8.19 2.69 11.13 2.06 7.69 Another high CFLO 120.56 -3.63 -0.19 5.56 5.44 7.19 Breakout! PALM 51.31 0.00 2.13 1.38 2.81 6.31 Lookin' good! AGIL 77.06 -0.88 -0.75 1.75 6.06 6.19 Blast off! BEAS 66.81 -1.13 -0.81 4.44 1.25 3.75 Volatile! YHOO 106.94 2.19 0.69 -0.63 0.56 2.81 New uptrend? AFL 60.69 0.75 0.06 -0.75 0.38 0.44 AFL rests... NTRS 87.94 1.25 1.06 -1.56 -0.44 0.31 Consolidation CMRC 70.75 3.75 -6.00 -1.63 3.25 -0.63 Came back COF 64.38 0.53 0.06 0.25 -1.63 -0.78 Profit taking AZA 76.50 -1.75 -0.31 2.69 -2.13 -1.50 Pull back IDTI 90.75 -3.69 0.69 -2.75 3.38 -2.38 Rebounded Puts CMTN 43.13 -0.63 -3.00 -2.94 -0.81 -7.38 Keeps falling SCMR 110.25 4.88 -7.69 -0.75 -2.44 -6.00 Struggling MMM 85.00 -1.00 -0.88 -1.56 -1.50 -4.94 Beaten down CREE 118.50 -2.31 -4.44 0.00 2.00 -4.75 Chips stable LVLT 78.25 -1.56 -3.50 3.63 0.38 -1.06 Good entry? UK 37.94 0.13 -0.19 0.00 0.00 -0.06 Stable at $38 PCS 48.00 -0.34 1.50 -0.75 0.50 0.91 Hello entry! DIGL 76.06 1.88 -1.25 -2.00 3.69 2.31 Be careful TLGD 110.56 -5.69 -6.38 14.38 0.81 3.13 Dropped 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: ***** No dropped calls today PUTS: ***** TLGD $110.56 +0.81 (+3.38) It's simply amazing how quickly sentiment and psychology in a stock can shift, especially with help from good news. In the case of TLGD, an announcement yesterday of a new customer in Choice One Communications helped the stock move up an astounding $14.38 on 106% of ADV. Closing at $109.75, just below strong resistance at $110, there was still hope for our put play. A failure to break through $110 could have provided for an ideal entry but today's action in the stock convinced us otherwise. TLGD managed to gap up this morning and from there, was range-bound between $110 and $115 before some late- day selling brought the stock to close up fractionally. While the stock did have trouble with resistance at $115 today, yesterday's strong move should have prevented entry into the play and today's strength confirmed our decision to drop coverage on CREE. ************************Advertisement************************* Attention Online Traders: NobleTrading.com has become the first online trading firm to offer both Direct Access Trading, and web based trading to its customers. Trade Direct using any ECN, SOES, and SelectNet, or trade right through your browser using our web based trading application. FREE DSL service for active traders. Visit our website and sign up for a Free real-time demonstration! http://www.sungrp.com/tracking.asp?campaignid=476 ************************************************************** 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. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. 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The Option Investor Newsletter Thursday 09-14-2000 Copyright 2000, All rights reserved. 2 of 2 Redistribution in any form strictly prohibited. To view this email newsletter in HTML format with embedded charts and graphs, click here: http://www.OptionInvestor.com/htmlemail/091400_2.asp ************************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.sungrp.com/tracking.asp?campaignid=470 ************************************************************** ******************** PLAY UPDATES - CALLS ******************** IDTI $90.75 +3.38 (-2.38) IDTI continues to provide profitable entry points with amazing regularity. The stock dipped just below its 10-dma yesterday, but bounced back like a rubber ball today. The action in the Philly Semi Index ($SOX) has been somewhat bearish recently, which might explain IDTI's inability to move substantially higher. Granted, the stock has added over $20 since we first initiated coverage, so a little more consolidation might be in order before IDTI runs again. The $SOX has stabilized over the last two days, which might aid IDTI's cause. If the Chip sector decides to rally tomorrow, aggressive traders might look to enter IDTI on a bounce off its $90 support level. If the bears and bulls continue to battle for market direction, traders might continue trading IDTI's range between $90 and $95. If the stock falls below $90, watch for a bounce off the 10-dma near $88. The more conservative traders will wait for IDTI to gain momentum and look to enter the play on a rally above resistance at $95. Confirm sector direction, and watch for a return of strong volume, before entering IDTI on a rally. ITWO $175.88 +3.88 (+15.38) What a difference two days make. ITWO finally broke out of its trading range yesterday, spurred by the resurgence in the broader B-2-B sector. ITWO's trading range between $160 and $170 was nearly eight trading days long. The stock's breakout from its range bodes extremely well for the health of our play. What's more, ITWO retested its breakout point today, which is obviously the $170 level, and bounced higher to hold onto the majority of its gains, despite the late- day sell-off in the NASDAQ. The B-2-B sector enjoyed gains across the sector today, and might be ready to roll on to new highs. If the NASDAQ shows strength early tomorrow, aggressive traders might consider entering ITWO at its closing level, or on a bounce off support just below at $175. If the B-2-B sector pulls back on profit taking, watch for ITWO to find support at its pivot point at $170, and wait for the buyers to step in. A more conservative trader might wait for ITWO to rally above its intraday high at $178, or wait for another breakout above the $180 level. CHKP $154.25 +2.38 (+$8.00) CHKP looked weak at the open yesterday, down more than $4. As the NASDAQ bounced back and forth around the flat-line in early morning trading, the CHKP buyers lifted the stock to a mid-day level of $148.50 after the NASDAQ tentatively moved into positive territory. Yesterday morning, CHKP announced that eB Networks, a leading network infrastructure solutions company and wholly owned subsidiary of Computer Horizons, had expanded its partnership with CHKP. By the end of trading Wednesday, Tech buyers were out in force picking up their favorites. CHKP was the recipient of solid buying all afternoon and it closed up $11, to finish at $151.75 on 2.74 mln shares (1.73 times ADV). This morning, the market and CHKP kicked it into overdrive, fueled by benign economic data. CHKP was in positive territory from the get-go and had eclipsed its old yearly high of $158.50 within the first half-hour of trading. By mid-day, CHKP was up $5 at $156.88, after hitting a mid-morning high of $159, on heavy volume. From there, the NASDAQ spent the rest of the day backing and filling, and so did CHKP, although the stock remained in positive territory, even after pulling back to almost even just prior to the close. By days end, CHKP ended up $2.38, to close at $154.25 on heavier than normal volume. Aggressive traders might watch for a move above $159, the high for today, on strong volume as a reasonable entry point. From there, you will find no technical resistance. On the other hand, you might want to watch for a pullback to yesterday's close of $151.88 or back to the 10-dma at $146.90, followed by a bounce with supporting volume, as an ideal entry point. In any event, continue to monitor market sentiment and direction before entering any new trades. AFL $60.69 +0.19 (+0.44) On Wednesday, The Duck Rested! All quiet on the AFL home front, as the market attempted to find its way for the day. Volume was average for AFL by mid-morning as it was hanging close to the flat line, down -$0.25 at $60.81. Financials as a whole did not perform well Wednesday, as Techs took the lead. Stability was the name of the game for AFL as it was only down -$0.63 on the day to finish at $60.44. Volume was above normal on Wednesday logging in at 1.18 mln shares, however, two large block trades that totaled 442K shares. As the Tech sector continued to run on Thursday, AFL felt some further selling pressure, albeit calm and on light volume. AFL was down -$0.25 to $60.75 in the first half-hour of trading this morning. The Tech sector remained strong as the Financials continued their day of rest. AFL was down -$0.38, at $60.13, on average volume by mid- morning. By the end of the day, some fear leaked into the Tech sector and some buyers showed up on AFL's doorstep, who took the stock above the flat line to close at $60.69, up +$0.19 for the day on volume of 948K shares (2.1 times ADV). Traders should continue to watch for a pullback accompanied by light volume and followed by a bounce from the 5-dma or the 10-dma (currently $56 and $57.10), for an ideal entry point. CMRC $70.75 +3.25 (+0.00) The B2B's bounced higher today on the Tech recovery and general optimism ahead of company conferences. After yesterday's downdraft, CMRC opened strong, and quickly returned to trading near $72 and $73. For the more calculating traders, this level is considered a pivotal position. High-volume moves from there, coupled with a definitive break through immediate resistance at $75, would provide better confirmation that CMRC can stretch higher on momentum alone. Earnings are expected next month around October 17th so don't count on an earnings run just yet. Be aware of the task at hand. The real opposition is not at Monday's peak of $78.13, but rather at the staunch resistance of $80, which marks the gateway back to higher price levels seen in early Spring. In the news, CMRC got a pat on the back from Thomas Weisal Partners with a Buy reiteration and the company also announced it completed its stock-for-stock acquisition of AppNet (APNT), a leading provider of end-to-end Internet services. The addition of AppNet's comprehensive services is expected to dramatically accelerate CMRC's ability to bring marketplaces online and improve business functionality. The deal is valued at approximately $2 bln. NTRS $88.00 -0.38 (+0.37) The past two sessions of consolidation provided evidence that near-term support is firming at $88 and $89, right above the 5-dma ($88.56). This level should serve as a solid launching pad for entries on a breakout. Yesterday, NTRS flirted with its all-time high of $90.38 on volume that almost doubled the ADV. It will be important in the coming days to look for intraday activity in the range of 400-500 K to signal potential advances. If you would rather take a "wait- and-see" approach, then watch for NTRS to develop more strength above $90 and challenge the century mark. Northern Trust is confirmed to report earnings on October 16th, before the market opens. AGIL $77.06 +6.06 (+6.19) After consolidating for the past two weeks, AGIL has made a break through formidable resistance. We saw AGIL gap down yesterday at the open. Getting close to it's 200-dma at $66, the stock quickly bounced as buyers came in to offer support. From there, the stock traded sideways for the rest of the day to close up $1.75 or 2.53% on 122% of ADV. Today, conservative traders finally got their entry point into the play as it broke through formidable resistance at $75 on strong volume. Beginning the day with a quick visit to the 5- and 10-dma (at $71.63 and $72.18), the stock spent the rest of the day moving higher. On the last hour of trading, the stock shot up past the $75 mark on high volume to close the day up $6.06 or 8.54% on an astounding 541% of ADV. This move came with no news, just high volume buying. With $75 out of the way, the next resistance levels are at $80 and then $85. A successful test of new support at $75 would be an attractive entry point but make sure it bounces before entering. BEAS $66.81 +1.25 (+3.75) Despite the low volume, yesterday was a volatile but rewarding day for BEAS as the stock gapped down to open at $59.50. From there, the buyers stepped in and bid the stock up for the rest of the day to finish up $4.44 or 7.26% on 80% of ADV. The move put BEAS back above its 5- and 10-dma (now at $63.75 and $65.57). Today saw BEAS adding slightly to its gains. Gapping up to start the day, BEAS spent the rest of the day trading sideways in a narrow range to close up 1.91% on 72% of ADV. The stock has had some support at the $66 level. A bounce off that point or it's 5- and 10-dma could offer an aggressive entry point. Overhead, resistance can be found at $68 and then $70. Conservative traders may want to wait for BEAS to break through $68 with conviction before entering. CFLO $120.56 +5.44 (+7.19) Persistence pays off. After four straight days of attempting to break through formidable resistance at $115, CFLO managed to accomplish the task Wednesday. The stock came roaring out of the gates and rallied the entire day to close up $5.56 or 5.08% on 87% of ADV. The final close price for Wednesday was just 13 cents above the resistance at $115. This move put CFLO back on the right side of the 5-dma at $113.71. Today saw CFLO's new support level hold up strongly. The stock never got lower than $115.25 for the day. After a spike up during amateur hour, CFLO spent most of the day digesting its gains before ending the day with some buying to close up 4.72% on 150% of ADV. At this point, there is support at $117 as well as $115. Target-shoot these levels for aggressive entries but confirm bounces with volume. Overhead resistance can be found at $125 and then $130. AZA $76.50 -2.13 (-1.50) Consolidation has set in our AZA play as the bulls and the bears duke it out between the $76 support level and resistance at $80. Volume remains near the daily average, with no real pattern to the intraday trading activity. Investors just can't decide whether they want to buy or sell shares of this specialty pharmaceutical company. The 2-for-1 stock split, which was announced on Tuesday, is far enough in the future that it won't have any effect in the near- term, so we are left to play AZA on the current merits of the stock. After the strong run over the past month, some consolidation was necessary, and the big question now is, "How long it will last?". Today's closing price was fractionally below the 10-dma (currently $76.69), making it even more important for AZA to hold the $76 support level if the momentum run is going to survive. Any volume backed bounce from current levels looks buyable, although more conservative players will want to wait for strength to really return and push the price above the $80 resistance level. COF $64.38 -1.63 (-0.78) Nothing goes up in a straight line and COF proved it today. Succumbing to weakness in the broader Financial sector today, the stock fell back early in the day and closed lower for a loss. The Financials have been surging lately on continued merger speculation, but yesterday's deal between Chase Manhattan and JP Morgan seems to have burst the bubble a little, as the sector drifted lower again today. Although today's loss violated the 5-dma (currently $65.38), the stock looks like it may be finding some mild support near $64, fractionally above the 10-dma at $63.50. After that, we have to look to the $62 level for support. If COF can't find support and put in a bounce by that point, we would advise standing aside and letting the play go - a 10% decline is hard to absorb while keeping a momentum run alive. The highs this morning were just fractionally off of the stock's all-time high, keeping the $67 resistance level in place. The best conservative entry strategy right now is to wait for buying volume to return, propelling our play to new highs. More aggressive players can target shoot new entries on intraday dips as long as the bounce is confirmed by a resurgence in buying volume. PALM $51.31 +2.81 (+6.31) Dodging the weakness in the broader markets, PALM is continuing to surge on increasingly heavier volume. Trading well over 150% of its ADV today, and posting more than a 5% gain makes our play even more impressive in light of the lack of conviction seen in many sectors today. The technical indications are still pointing north, with the 10-dma (currently $45.19) providing consistent support on the brief pullbacks. Obviously, the company has tapped into a rich vein in the consumer market with its popular line of handheld computing devices, and investors seem to be catching the buying fever as well. Due to the sharp decline that took place after the PALM's IPO in March, there are not any nearby levels of formidable resistance. The closest one is $55, followed by $60. We have now had 6 up days in a row, and our play is likely due for a bit of consolidation, before continuing its run. Look for a pullback to the 10-dma, right at the $45 support level to provide an attractive entry point. Wait for the buying volume to pick up again and then jump in and enjoy the ride. YHOO $106.94 +0.56 (+2.81) After Wednesday's rounding out at $104.50, YHOO continued higher this morning. The stock traded to a high of $109.38 today where it rolled over in conjunction with the NASDAQ. It may be slow and rolling, yet certainly tradable. Since last Friday's dip to just above $100(an ideal entry point), YHOO has been making its climb slowly but surely. Although we typically don't use the MACD, it is worth mentioning today that the fast line is getting ready to cross over the signal line to the upside. This should occur very soon and may indicate a renewed uptrend. Ideally, this play offers good intraday trades between support and resistance. Entry can be obtained on bounces from $104.50-$105, as it has done throughout the week. Overhead, resistance will be encountered at $109.38, and then at the 10-dma of $110.25. A strong volume close above $110.25 could bring back the momentum needed for an earnings run. Earnings are confirmed for October 10th. In the news, YHOO and Medallion Financial rolled out New York City's first Internet-enabled taxicabs. Ten wired cabs offer riders the luxury to surf the Web for free from a PALM VII handheld computer. ******************* PLAY UPDATES - PUTS ******************* CMTN $43.13 -0.81 (-7.44) Dain Rauscher Wessels reiterated its Strong Buy rating and its $150 price target on CMTN yesterday. The result, CMTN fell. A lower-than-expected PPI report this morning set the Tech sector a light. The result, CMTN rolled over and slid lower. Despite the analyst attempt and the Tech sector rally this morning, CMTN can't catch a break. The big players continue to unload stock with fervor as CMTN continues to fall on increasingly heavier volume. With the roll over in the NASDAQ this afternoon and the heavy institutional selling increasing, we're looking for CMTN to continue sliding lower tomorrow. Look to enter the play if CMTN falls below its recently established $43 support level. Aggressive traders might consider entering the play after any intraday rally subsides. Watch for a bump against resistance at $45 and again near $46, and wait for the big sellers to return before shorting a rally. Another big down day on the NASDAQ might carry CMTN to its major support level at $40, which might provide a good exit point for our play. UK $37.94 +0.00 (-0.06) Yawn. It's been very, very quiet in UK over the past week. The stock has settled on the $38 level as its acquirer DOW has settled on a similar support level. UK is bouncing on a regular basis between $37.50 and $38.50. Aggressive traders might consider trading that small range in an attempt to scalp profits. Otherwise, we want to wait for UK to fall lower before entering new positions. The low level of the euro and the still-high prices of oil might start to pressure UK again, which could induce the failure of support we're waiting for. With that said, watch for the obvious breakdown below the $38 level, while more conservative traders will wait for UK to fall several ticks below $37.50 before entering the play. Confirm heavy volume with any support failure and watch the direction in DOW. PCS $46.69 -0.81 (-0.44) Not much to get excited about for PCS on Wednesday. The stock kept its head on straight, even as the Tech sector was looking scary in the early morning. PCS traded as low as $47.69 early Wednesday and remained in negative territory, down -$0.25, at $48, by mid-day, even as the Tech sector started to firm up. PCS did not join the afternoon buying party for the Tech stocks as was evidenced by the light volume on the day coming in at 1.8 mln shares, half of its average daily volume. PCS finished at $47.50, down -$0.75 for the day. Thursday morning, PCS moved fractionally into positive territory as the Tech sector remained strong, fueled by market friendly economic data. However, PCS continued to have trouble moving up past its current 10-dma at $48.20. This continues to bode well for our short position. PCS showed continued weakness as we approached the half-way point today, down -$0.88 to $46.63, just below its current 5-dma at $47.10. Not much new for PCS as it neared the end of its trading day on Thursday. Weakness continued to be its theme, as it closed down -$0.81 to finish at $46.69 on continuing light volume. Positively, PCS's close was held below the current 5-dma and 10-dma, currently at $47.10 and $48.20, respectively. Traders should look for continued weakness and ideally, increasing volume to the downside before entering new trades. DIGL $76.06 +3.69 (+2.31) If you took your entries earlier in the week, then yesterday you reaped a harvest! DIGL opened in a weakened state and tumbled down below the $70 on respectable volume. The intraday volatility continued to offer target shooters entries near $72 and exits as low as $68 before all was said and done. Today, however, was altogether a different story. The bulls bid DIGL up to its near-term resistance right from bell, but nevertheless couldn't bring it over the top. The 10-dma ($79.63) continued to hold firm as a ceiling. But, take heed. Even the most enterprising traders should go on full- alert if DIGL moves through $80 with any strength. Today's last-minute sell-off on increasing volume was also good news. But again, let's not throw caution to the wind. Instead, consider waiting for DIGL to slide back under $75 and the 200- dma ($75.68) before taking on new positions. SCMR $110.25 -2.44 (-6.00) SCMR's recent trading reflects the mixed attitude amongst Telecom investors. In the past two sessions, SCMR primarily bounced back and forth between $112 and $116 on robust volume. However, the share price broke down during the last hour of trading today. SCMR slid through the crucial 100-dma line ($113.09) and shattered the near-term bottom of $110. It may have taken three sessions to crack $110, but the bearish move to $109.94 and the weak close implies that perhaps SCMR might fall lower. Depending on your risk portfolio, consider taking entries on downward bounces off the 5-dma line ($114.74) if the volatility permits. Although, it may be wise to wait for SCMR to make additional moves under its current bottom before starting new plays. CREE $118.50 +2.00 (-4.75) The 5- and 10-dma, now at $119.22 and $124.21, respectively, continue to act as formidable resistance for CREE. With help from a positive NASDAQ yesterday, CREE took a respite from its downward ways to close unchanged for the day on 110% of ADV. Gapping down at the open, the stock found support at the $110 level before spending the rest of the day recovering. Today, CREE did the opposite. Gapping up at the open, the stock moved higher until mid day. Unable to break through its 10-dma, CREE rolled over. Despite the weakness, CREE closed up $2 or 1.72% on almost 90% of ADV. In doing so, the stock closed below its 5- and 10-dma as well as resistance at $120. A failure to rally above these levels could provide for an entry point. There is also strong resistance at $125 thanks to the convergence of the 50- and 200-dma. As CREE has had little news lately, it has been moving in step with the NASDAQ so make sure the index confirms direction before making a play. LVLT $78.25 +0.38 (-1.06) Still waiting for an entry point? The bounce that began Tuesday afternoon has continued over the past two days, but it is looking a little weak. While the bulls were able to exert their influence and effect a bounce at the $72 support level, they haven't been able to get any buying momentum going and LVLT looks like it could be ready to roll over from resistance at $78-79. Adding to the strength of this resistance level is the 100-dma, sitting at $78.83. The strength over the past two days (if we can call it that) is likely due to enthusiasm for its network services agreement with SAVVIS Communications, which was announced yesterday morning. In this unfriendly market environment, such run of the mill deals are unlikely to be sufficient to hold investors' attention, much less their money. Adding further downside pressure is the declining 10-dma (currently $80.06). Consider new positions as LVLT rolls over from current levels and heads back south. MMM $85.00 -1.50 (-4.94) The beatings will continue until morale improves. Although MMM is not a high momentum play, those that entered the play last Wednesday when it rolled over near $95 have enjoyed a nice ride. Earnings warnings and concerns about the effect of the weakening euro on stocks exposed to the European marketplace continue to pressure MMM. The stock has barely taken a pause to poke its head up above the 5-dma (currently $87.63) as it has nose-dived for the basement, and it is now trading very near a major support level ($84). After a 10% decline in a little over a week, an oversold bounce is not out of the question, and we may have seen the beginnings of this as MMM bounced from the $84 support level at the end of the day. The next level that is likely to provide significant support is $82, followed closely by $80, and then $78. If you have been riding this play down from the mid-90s, this would be a good time to tighten up those stops to make sure you don't give up your profits. The best approach for starting new positions will be to wait for an intraday rally to fail at either the 5-dma or even the $88 resistance level, just above the 10-dma (currently $87.69). Then feel free to jump in for the next round of beatings. ***********************ADVERTISEMENT************************ Get a NextCard Visa, in 30 seconds! 1. Fill in the brief application 2. Receive approval decision within 30 seconds 3. Get rates as low as 2.9% Intro or 9.9% Fixed APR http://www.sungrp.com/tracking.asp?campaignid=463 ************************************************************ ************** NEW CALL PLAYS ************** ABGX - Abgenix, Inc. $84.50 +7.19 ($12.95 this week) Abgenix is a biopharmaceutical company that develops and intends to commercialize antibody therapeutic products for the treatment of a variety of disease conditions, including transplant-related diseases, inflammatory and autoimmune disorders, cardiovascular disease, infectious diseases and cancer. XenoMouse is a proprietary technology ABGX has developed that produces antibodies with fully human protein sequences. There are four antibody candidates that are currently under development. In the last month, ABGX has entered into numerous agreements with companies such as ImmunoGen, CuraGen and SangStat. Most recently, they announced a collaboration with ImmunoGen, giving ABGX access to their Tumor-Activated Prodrug technology to use with Abgenix's fully human antibodies generated with XenoMouse technology. ABGX will pay ImmunoGen a $5 mln dollar technology access fee as well as potential milestone payments and royalties on net sales of any resulting products. Abgenix also agreed to purchase $15 mln of ImmunoGen's common stock at $19 a share. Technically, ABGX is looking fantastic. The stock has been in A beautiful up-trend since hitting its yearly low of $25.91 on April 4th. Since then, ABGX has spent equal amounts of time above and below its 50-dma, currently $63.70, however the stock has not closed below its 200-dma, currently $51.20, since April 17th. Today, ABGX broke above the double top it had formed beginning with an intraday high back on July 11th of $79.94 and then another high on September 5th at $80.25. This occurred today on convincing volume of 1.86 mln shares (2.7 times ADV). It is possible this run could continue at the beginning of trading tomorrow, as there is no technical resistance until the $90 and $92 range. Beyond that level, the old high of $103.25 will act as the last bit of resistance. However, conservative traders want to look for a pullback to the previous intraday high of $80.25 on light volume, followed by a bounce, as a way to gain entry into the play. Aggressive traders may find a pullback to intraday support of between $82-$83 as a good spot to get started. The current 5-dma and 10-dma are quite a bit lower at $72.50 and $73.30, respectively. In any event, watch market sentiment and direction for confirmation before entering new positions. It is interesting to note that back in March, Abgenix signed an agreement providing Millenium Pharmaceuticals, Inc., with extensive access to their XenoMouse technology for the creation of fully human antibodies. They received an undisclosed upfront payment and potential future payments that could reach $100 mln plus royalties on product sales. Last week Prudential reiterated coverage of ABGX with a Hold rating. BUY CALL OCT-75 AXY-JO OI=155 at $15.38 SL=11.50 BUY CALL OCT-80*AXY-JP OI= 94 at $12.38 SL= 9.00 BUY CALL OCT-85 AZU-JQ OI= 53 at $ 9.75 SL= 7.00 BUY CALL JAN-85 AZU-AQ OI=837 at $19.38 SL=13.75 SELL PUT OCT-75 AXY-VO OI= 7 at $ 4.63 SL=8.00 (see risks of selling puts in play legend) Picked on Sep 14th at $84.50 P/E = N/A Change since picked +0.00 52-week high=$103.25 Analysts Ratings 1-3-3-0-0 52-week low =$ 8.03 Last earnings 06/00 est= -0.03 actual= -0.01 Next earnings 11-01 est= 0.05 versus= -0.02 Average Daily Volume = 695K ************* NEW PUT PLAYS ************* No new puts today ********************** PLAY OF THE DAY - CALL ********************** ITWO - I2 Technologies $175.88 +3.88 (+15.38 this week) I2's RHYTHM supply chain management software helps manufacturers plan and schedule production and related operations such as raw materials procurement and product delivery. Companies that use RHYTHM include: 3M, Dell, Ford, and Motorola. Maintenance, training, and other services account for more than a third of sales. I2 is using acquisitions of complementary technologies and companies to position itself as a leader in the market for Internet-based production process applications. Most Recent Write-Up What a difference two days make. ITWO finally broke out of its trading range yesterday, spurred by the resurgence in the broader B-2-B sector. ITWO's trading range between $160 and $170 was nearly eight trading days long. The stock's breakout from its range bodes extremely well for the health of our play. What's more, ITWO retested its breakout point today, which is obviously the $170 level, and bounced higher to hold onto the majority of its gains, despite the late-day sell-off in the NASDAQ. The B-2-B sector enjoyed gains across the sector today, and might be ready to roll on to new highs. If the NASDAQ shows strength early tomorrow, aggressive traders might consider entering ITWO at its closing level, or on a bounce off support just below at $175. If the B-2-B sector pulls back on profit taking, watch for ITWO to find support at its pivot point at $170, and wait for the buyers to step in. A more conservative trader might wait for ITWO to rally above its intraday high at $178, or wait for another breakout above the $180 level. Comments Encouraged to see ITWO close above $175, we watched this stock closely as good volume backed today's advance. The other development that happened today was the test of the $170 area, near the 10-dma at $168.07. Look for bounces from the 10-dma with a positive NASDAQ trend to enter. BUY CALL OCT-170 QYI-JN OI=196 at $20.75 SL=16.00 BUY CALL OCT-175 QYI-JO OI=177 at $18.38 SL=14.25 BUY CALL OCT-180*QYI-JP OI=229 at $16.13 SL=12.50 BUY CALL NOV-180 QYI-KP OI=246 at $22.88 SL=17.75 BUY CALL NOV-185 QYI-KQ OI= 97 at $19.50 SL=15.00 Picked on August 27th at $166.50 P/E = 500 Change since picked +9.38 52-week high=$223.50 Analysts Ratings 11-19-3-0-0 52-week low =$ 15.19 Last earnings 06/00 est= 0.08 actual= 0.10 Next earnings 10-20 est= 0.10 versus= 0.06 Average Daily Volume = 3.57 mln ************************Advertisement************************* Attention Online Traders: NobleTrading.com has become the first online trading firm to offer both Direct Access Trading, and web based trading to its customers. Trade Direct using any ECN, SOES, and SelectNet, or trade right through your browser using our web based trading application. FREE DSL service for active traders. Visit our website and sign up for a Free real-time demonstration! http://www.sungrp.com/tracking.asp?campaignid=477 ************************************************************** ************************ COMBOS/SPREADS/STRADDLES ************************ Technology Stocks Edge Higher... The Nasdaq overcame late-session selling pressure to finish positive amid strength in computer software and Internet stocks. Wednesday, September 13 Technology stocks rebounded today, despite profit warnings and a number of downgrades on bellwether issues. The composite index closed 44 points higher at 3,893. Meanwhile, the Dow industrials retreated amid weakness in computer hardware and financial shares. The blue-chip average ended down 51 points at 11,182 and the S&P 500 index finished relatively unchanged at 1,484. Trading volume on the NYSE reached 1.06 billion shares, with advances outpacing declines 1,425 to 1,412. Activity on the Nasdaq was moderate at 1.65 billion shares traded, with advances beating declines 1,998 to 1,981. In the bond market, the 30-year Treasury rose 31/32, pushing its yield down to 5.73%. Tuesday’s new plays (positions/opening prices/strategy): Allstate ALL JAN40C/JAN25P $0.06 debit synthetic Plug Power PLUG OCT35P/OCT40P $0.50 credit bull-put Ballard Power BLDP OCT90P/OCT95P $1.00 credit bull-put The bullish movement in Plug Power prevented any entry at the target price in our new position. With luck, the issue will consolidate in the next few sessions and we will achieve the suggested credit. The premiums for ALL options were slightly different than those quoted at Tuesday’s close and the target price did not become available during the day’s trading. We will monitor the position for a better entry in the coming sessions. Our target is $0.06 - $0.12 credit. BLDP retreated from recent gains and the pullback provided a great opportunity to enter the bullish spread. Portfolio Plays: Industrial stocks came under pressure today due to declines in bellwether issues. J.P. Morgan (JPM) moved lower after Chase Manhattan (CMB) said it would acquire the company for $207 per share, to form a new firm J.P. Morgan, Chase, & Co. Technology giant Intel (INTC) slid to $61 after Banc of America downgraded the stock and Hewlett-Packard (HWP) was another big loser, down almost $8 after SCI Systems (SCI) issued a profit warning due to weak demand in the PC industry. BofA also slashed its rating on Advanced Micro Devices (AMD), causing a ripple of selling in the chip sector. In opposition to the trend, Rambus (RMBS) rose to $84 after forming a pact with NEC to develop RDRAM and Micron Technology (MU) rallied after a bullish comment from PaineWebber. Networking issues also edged higher with shares of Cisco Systems (CSCO), Lucent Technologies (LU), and Nortel Networks (NT), all joining the upside activity. Telecom equipment stocks recovered from a recent slump and in the broader market, airlines rallied despite the fact that Goldman Sachs lowered its future earnings estimates on Alaska Air Group (ALK), America West Holdings (AWA) and Midwest Express (MWH), and downgraded US Airways (U). The bullish move in transportation issues was probably related to a drop in crude oil futures. The per-barrel price of oil fell to $33.82 as politicians pressured the Clinton administration to release crude from the U.S. Strategic Petroleum Reserve. The big news in our portfolio came in the form of merger rumors for Knight Trading Group (NITE). Rampant speculation drove the issue to a mid-day high near $38 and our remaining position in the debit straddle almost doubled in value. Rumors continue to circulate in the investment community that Morgan Stanley Dean Witter (MWD) is interested in acquiring the market-maker and the issue is likely to move higher in the coming sessions. Our exit target has already been achieved but it will be interesting to see how high the stock can go on simple speculation. A number of other stocks in the group benefited from the activity including Ameritrade (AMTD), which was up over $2 at one point, providing yet another profitable exit in our bullish synthetic position. Technology issues were the leaders in today’s activity and we experienced a number of big winners. Protein Design Labs (PDLI) was the top performer, up $12 to close at $105 amid strength in the biotech sector. Our bullish, put-credit spread is over $40 in-the-money. Juniper Networks (JNPR) rebounded $9 to $98 after a series of down days and it appears our neutral credit strangle will finish at maximum profit. Other surprises in the section included Vitria (VITR), which jumped $5 to $46 with a peculiar one-day reversal and Echostar (DISH), which came roaring back after a week of losses. The issue gained $3.50 to end at $48. Notable activity was also seen in Altera (ALTR), Oracle (ORCL), Network Appliance (NTAP), Polycom (PLCM), and Qualcomm (QCOM). In addition, our large-cap industrial sector plays on Anheuser Busch (BUD) and Wellpoint Health (WLP) appear to be safely above the sold options and are expected to expire profitably on Friday. Thursday, September 14 The Nasdaq overcame late-session selling pressure to finish positive amid strength in computer software and Internet stocks. At the same time, concerns over slowing earnings growth in the consumer products sector sent the broad market lower. The Dow Industrial Average ended down 94 points at 11,087 and the S&P 500 Index closed 4 points lower at 1,480. The composite of technology stocks ended up 19 points at 3,913. Trading volume on the NYSE reached 1.0 billion shares, with advances beating declines 1,451 to 1,355. Activity on the Nasdaq was moderate at 1.69 billion shares traded, with advances beating declines 2,229 to 1,729. In the bond market, the 30-year Treasury fell 1 6/32, pushing its yield up to 5.81%. Portfolio Plays: Technology stocks rallied again today amid optimism over benign economic data. A favorable wholesale inflation report and soft retail sales data gave investors confidence the Federal Reserve will leave interest rates unchanged for the rest of the year. The economic outlook continues to support the idea that the U.S. economy is experiencing sustainable growth will little pressure from inflationary factors. One problem remains however, the price of oil, and it could eventually affect the core rate of inflation and force the Fed to increase interest rates in the future. In most categories, inflationary measures have remained relatively optimistic in the face of rising energy costs but with gasoline and heating oil prices moving higher, the outlook will eventually change. One of the primary effects on stocks can be seen in the recent Dow slump. The industrial group has come under pressure as earnings worries continue to plague its old-economy components, particularly consumer stocks. Higher energy prices and the weak euro are expected to adversely affect third-quarter earnings in a number of these issues. In contrast, the technology industry is expected to be less influenced by the changing economy and the increasing cost of doing business. Today, the group saw gains in networking and Internet issues, the future of communication and information distribution in our society, and a number of leading stocks made substantial recoveries. Inside the broader market, biotech stocks edged higher while retail, drug, airline and most transportation issues moved lower. Share values in utilities also consolidated after a recent, month-long rally. The Spreads/Combos portfolio was again dominated by technology issues. The leaders in today’s session included Virata (VRTA), Vitria (VITR), Phone.com (PHCM), Protein Design Labs (PDLI), and Voicestream (VSTR). Honorable mention went to Oracle (ORCL), Polycom (PLCM), Network Appliance (NTAP), International Rectifier (IRF), Infocus (INFS), Qlogic (QLGC), and Commerce One (CMRC). In the lower-priced issues, Covad Communications (COVD) and Red Hat (RHAT) both recovered from recent losses and Knight Trading Group (NITE) continued to rally, climbing to a mid-day high near $40 as speculation over a potential buyout of the company drove share values skyward. Two of our new positions, Allstate (ALL) and Plug Power (PLUG) slumped during the session and the target entry prices might have been achieved by aggressive traders. One of our under-performing categories, the consumer products group moved lower following a number of analyst downgrades. A slowing in household spending in August is seen as the possible beginning of a real economic slump and some of our long-term positions are suffering from that outlook. Maytag (MYG) is the issue we are most concerned with and if the share value falls below the recent support range near $34, we will consider an early exit in the bullish synthetic position. The other stock in the group is Mead Corporation (MEA) and this issue is also at a key moment. A move below $24 would suggest that a lower trading range is forthcoming and we would likely sell the long position, while leaving the (short) OCT-$30 call uncovered, in expectation that the issue will remain below the new resistance area. Questions & comments on spreads/combos to Contact Support ****************************************************************** - NEW PLAYS - Based on the requests I receive for specific strategies, the OIN could hire another researcher to simply look for credit spreads. There is always an amazing demand for this particular approach, and fortunately we have some excellent candidates for the bullish technique. The following positions are based on popular issues in favorable industries. Each play is evaluated for probability of profit using the current price or trading range of the stock and the recent technical history or trend. Market sentiment and current news will have an effect on these issues, so review each play individually and make your own decision about the future outcome of the position. In addition, a number of technology stocks have made significant gains in the past few sessions and a correction will likely occur in the near-term. Plan to target higher premiums in these spreads initially and adjust the entry prices, based on the future movement of the underlying issues. ****************************************************************** HNCS - HNC Software $61.25 *** A Unique Situation! *** HNC Software is a business-to-business software company that develops, markets, licenses and supports predictive software solutions for various service industries, including companies in the insurance, financial services, telecommunications, e-commerce, and retail industries. The company's predictive software solutions help service industry companies manage and optimize their customer relationships. By analyzing volumes of customer transactions in real-time, the company's predictive solutions help companies shift the decision-making process from a retrospective to prospective basis. The increasing conduct of e-business over the Internet increases the demand for analysis of large volumes of real-time information, which the company's products provide. Electronic customer interaction is necessary to manage and respond to customer activity and expectations in all markets. There are many excellent things to say about the company but apparently, a rather unique factor is affecting the price of this issue in the near-term. HNC holds about 40 million shares of Retek (RETK), a business-to-business software company that HNC spun-off in an initial public offering last November. HNC has declared a dividend on HNC common stock of all the shares of RETK common stock owned by the company. The Retek shares will now be distributed on or about September 29, 2000 to HNC shareholders of record after the close of trading on September 15, the record date for the dividend. HNC’s current holdings represent approximately 84% of Retek's outstanding common stock and the ratio of RETK shares to be distributed (for each HNCS share) will be determined by the number of HNCS shares outstanding as of September 15. The potential outcome of the distribution issue is relatively complex and a position in the stock prior to the record date involves potential ownership of Retek. Obviously, the situation is very difficult to explain thoroughly in this forum but we believe the position offers a favorable risk/reward outlook for speculative traders who wouldn’t mind owning shares in great B-2-B software issues. Note: This position warrants serious due-diligence! PLAY (speculative - bullish/credit spread): BUY PUT OCT-40 NSQ-VH OI=0 A=$0.56 SELL PUT OCT-45 NSQ-VI OI=156 B=$1.00 INITIAL NET CREDIT TARGET=$0.62-$0.75 ROI(max)=17% ****************************************************************** RIMM - Research In Motion $81.75 *** On The Move, Again! *** Research in Motion Limited is a designer, manufacturer and marketer of innovative wireless solutions for the mobile communications market. Through development and integration of hardware, software and services, they provide solutions for access to e-mail, messaging, Internet and intranet-based applications. Research in Motion's technology also enables a third party developers and manufacturers worldwide to improve their products and services with wireless access. According to International Data Corporation, 50 million handheld devices will be in the workforce by 2003, many of them wireless. Forrester Research predicts that over 50% of the workforce will have mobile connections to the workplace, and that number is expected to grow substantially as the devices become popular. Research in Motion is set to capitalize on the emerging wireless market, producing a hand-held wireless device, the 957, that allows wireless access to corporate e-mail, along with their Inter@ctive Pager product line and the BlackBerry wireless e-mail solution. RIMM recently announced a deal with private software firm Brience to expand enterprise applications to their devices. Brience specializes in adapting and delivering unique proprietary corporate information to any handheld in customized form, and the potential for applications for RIMM's devices is significant. In addition, MODCOMP, a subsidiary of CSP (CSPI) and a top developer of E-commerce and M-Business solutions, just announced that its integration software, ViewMax, now supports wireless access to mainframe, midrange, and UNIX applications via the BlackBerry wireless email solution. The ViewMax solution will seamlessly connect any enterprise system, or "green screen," application to the popular handheld, which recently won the 2000 PC World Class Award for best wireless communication device. Although the company is growing by leaps and bounds, Research In Motion is considered the opportunist in the hand-held computer sector, coming from relative obscurity to a top contender. Its stock, which has begun a new up-trend in recent sessions, may not be for conservative, "buy-and-hold" investors. However, if you want excitement and the potential for excellent growth, consider selling premium in this credit spread and get paid for trying to take a position in the issue. PLAY (conservative - bullish/credit spread): BUY PUT OCT-60 RUL-VL OI=125 A=$1.38 SELL PUT OCT-65 RUL-VM OI=58 B=$2.00 INITIAL NET CREDIT TARGET=$0.88-$1.00 ROI(max)=25% ****************************************************************** MANU - Manugistics $91.50 *** New, All-Time High! *** Manugistics Group is a global provider of intelligent supply chain optimization solutions for businesses and eBusiness trading networks. Its solutions include client assessment, software products, and consulting services, all of which can be customized for a clients specific requirements. Their newest generation of solutions help businesses to improve their logistics and trading with their partners by utilizing the Internet. Speculation that Manugistics may have won a new contract with Cisco Systems (CSCO) pushed the company’s shares to an all-time high last month. According to published reports, the company has secured a multimillion dollar contract for supply-chain software and the deal may grow larger as Cisco deploys the new products. In addition, Manugistics also recently landed a contract with John Deere, which will use the company's e-business software to improve its product flow to distribution centers and enhance communication with carriers. Manugistics' technology will help develop capacity utilization at fleet and distribution centers, improve service levels, and reduce costs. The rally today was driven by news that Manugistics has been chosen by the Naval Transportation Support Center (NAVTRANS) to help create an intelligent global transportation network designed to improve customer service and reduce costs. The transportation arm of the Naval Supply Systems Command plans to utilize MANU’s NetWORKS to improve item visibility and better manage complex, multi-modal freight movements from vendors to inventory control points and on to U.S. Navy forces worldwide. The software’s communication and automated capabilities will help ensure the dependable, reliable and cost-effective shipment of materials. Manugistics' unique transportation solution was recently rated "best-in-class" across all key vertical industries in the private sector and the company also helps power FreightWise, an Internet marketplace for buyers and sellers of transportation targeted at third-party logistics services. They have also been chosen to enhance connectivity for The National Transportation Exchange. Those of you who favor the outlook for the company’s products can speculate on the future movement of their share value with this relatively low risk position. PLAY (conservative - bullish/credit spread): BUY PUT OCT-60 ZUQ-VL OI=102 A=$1.12 SELL PUT OCT-65 ZUQ-VM OI=113 B=$1.50 INITIAL NET CREDIT TARGET=$0.56-$0.62 ROI(max)=14% ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html
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