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Daily Newsletter, Tuesday, 11/21/2000

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The Option Investor Newsletter                  Tuesday 11-21-2000
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        11-21-2000        High      Low     Volume Advance/Decline
DJIA    10494.50 + 31.90 10569.00 10415.30 1.12 bln   1381/1464
NASDAQ   2871.45 -  4.19  2921.80  2845.17 1.75 bln   1431/2483
S&P 100   713.70 +  3.66   718.73   706.25   totals   2812/3947
S&P 500  1347.35 +  4.73  1355.87  1333.62           41.6%/58.4%
RUS 2000  466.79 -  3.45   472.41   465.49
DJ TRANS 2851.92 + 56.06  2851.92  2793.83
VIX        28.93 -  1.40    30.98    28.93
Put/Call Ratio      0.60
******************************************************************

Earnings, Economy, Election, Energy, Euro!

Factors beginning with an E are definitely in control of our
market. The election that never ends is still causing some
international investors to remain on the sidelines as well
as some U.S. traders. While this horse has been dead for some
time the analysts continue to beat it and claim a larger than
life impact on the daily numbers. The market movers today had
nothing to do with the election and will not be solved nearly
as quickly. Earnings, earnings and more earnings continue to
cause investors more indigestion than the election ever could.










While the Florida Supreme Court has not ruled on the various
issues relating to the election the news channels continue to
milk the news for all it is worth. Reminds me of the Iran
hostage crisis which launched Nightline as regular program.
Now over 20 years later Ted Koppel is still going strong.
The Desert Storm event over 10 years ago brought new life
back into the news only channels with icons like the "scud
stud" now history but the channels still exist. This begs
the question however over what will happen to MSNBC when
"Decision 2000" is regulated to the history books and the
army of reporters have to actually find new news to report.
Will viewers still tune in or have they already deleted MSNBC
from their favorite channel list?

The final election result is widely touted as the "be all, end
all" for the market. The broad based year end rally is only
waiting for the Florida certification to begin according to
many analysts. Actually those claiming that we will have a
rally at all are slowly dwindling. With each -50 point drop
on the Nasdaq a few more faithful are converted to the realization
that maybe there are more fundamental problems that the election
is masking. While everyone, almost, still expects a relief
rally upon the final announcement the possibility of it lasting
more than 2-3 days is now coming into question.

The economy is giving signals that has veteran economy watchers
worried. Without going into the boring details the prospect of
a recession is looming larger every day. Inflation is still a
problem as far as the Fed is concerned but the results of the
last six rate hikes are still being felt in the economy. The
U.S. Trade Balance for September came in at a record deficit
of -$34.26 billion. This is a huge deterioration over the August
revised deficit of -$29.81 billion. Economists had expected a
decline as the cooling U.S. economy motivated consumers and
producers to spend less. Imports surged by almost $4 billion
as consumers continued to spend their higher wages. If consumers
continue to spend like there is no tomorrow when the economy
is supposed to be slowing then the Fed will hold off cutting
rates until the opposing forces equalize. Already there is
concern that the Fed will not lower rates in December or even
change their bias. This would put off until next year any good
news from the Fed. This is weighing on the market more than the
election news. In another view the climbing trade deficit may
actually benefit the cause by knocking as much as 0.8% off the
GDP numbers to be reported on Nov-29th. Some analysts expect the
2.8% estimates to possibly drop under 2.0% as a result of this
deficit. Should the GDP drop that far the Fed would then face
more pressure to reduce rates. See what I mean? The economy is
showing enough conflicting signals that Greenspan could turn
gray. That is of course if he actually had hair.

The next E is energy and with oil still in the news and cold
weather shutting down the north east we are seeing more
upward pressure on oil prices. With prices hovering over $35
and world supplies still short there are those forecasting
$40 oil before winter is over. With the impact to inflation
by energy prices any further price hikes or shortages will
be yet another Fed inflection point at the December meeting.
Earnings for the manufacturing community will continue to
come under pressure until prices ease.

That brings up earnings as the next E and in reality the major
market mover. Heading our earnings parade today was Lucent,
capturing the prize for the most warnings in a calendar year
and the most investor depression. After trading near $85 in
Jan-2000 the stock, which closed today at $17.56, is now at
lows not seen since Apr-1997. Welcome to the world of "it can't
get any worse." Just when you think it can't and it is probably
a screaming buy, Lucent announced "revenue recognition" problems
with their accounting. OOPS! Yep, the second most feared words
behind "accounting irregularities." Just ask MicroStrategy
investors from last March or Cendant investors from 1998.
The amount in question, $125 million, is miniscule compared to
their $9 billion in total revenue but is causes investors to
wonder what else is hidden in the woodpile. Companies this
size pay millions of dollars to accountants and auditors to
prevent any "misstatement" of financial numbers and when
something like this occurs it calls into question then entire
integrity of their financials.

The positive news for this same sector came in the form of
NT earnings. They reaffirmed guidance that matched Wall Street
estimates and said positive things about strong growth through
2001. This eased investor fears that the telecom sector was
going to reduce spending for fiber optic supplies. It also
reduced fears that CIEN had stolen a large amount of NT sales
from Qwest. If NT is affirming estimates and growth then things
can't be all bad in the fiber sector. All the majors, JDSU,
GLW, CIEN and SDLI were up on average volume.

NEON had its market cap cut in half today after WIT SoundView
downgraded the firm to a hold. According to WS, NEON filed a
10Q that said $10 million of their $55 million total revenue
was taken in shares of stock in closely held companies.
Investors worried that if NEON software sales are so weak
that they have to take stock instead of cash then there is
a serious problem in that product. This type of event is a
prime example for stop losses. A great short term chart but
an event out of the blue cuts it in half.

CacheFlow, CFLO, announced earnings after the close and beat
the estimates by two cents but got hammered to the tune of
-$30 for the day on weaker than expected sequential revenue.
The severity of the drop is just another example of the worry
in the marketplace. ANY negative news is being met with very
severe selling. This is evidence to many that there is still no
bottom under the market and a preview of things to come.

The Internet sector suffered one of the worst blows in recent
memory with the double whammy of the EBAY downgrade yesterday
and the YHOO warnings today. Mary Meeker and Henry Blodget
both warned today that the possibility of Yahoo warning or
missing earnings estimates because of the slowdown in Internet
ad revenue was growing. Mary said there was a 30% chance that
YHOO would miss in the next three quarters. This rippled
through the sector with YHOO closing at $41.69 a two year
low and pushed CMGI perilously close to single digits at $11.
AMZN, EBAY, ICGE, DCLK and ENGA all suffered as well.

The earnings picture for the multinationals continues to
be pressured by the Euro as well as energy. There is no safe
haven in the current markets with all sectors getting whacked
routinely. The problems are only going to get worse according
to some. I hate to break the news but earnings warning season
starts again next week. It seems like we were just there and
if you have been in the markets this week you probably feel
like you were run over by warnings. We are not even there yet.
With the prime season starting five weeks before earnings we
are real close to finding out if the S&P earnings for the
fourth quarter can hang onto double digits estimates. Down to
14% already from 29% six weeks ago, just another handful of
warnings could push estimates below 10%. With the possibility
of a recession and the S&P close to single digits the election
result may produce only a trading rally. The market internals
are still terrible with declines beating advances daily. The
Nasdaq has only been positive two of the last twelve days and
closed at a 52 week low today. Volume was light again at only
1.7 billion shares while volume on the NYSE was strong at 1.1B.

While the day before Thanksgiving is normally an up day the
various market factors this year may keep volume very low.
With Friday only a half day traders may elect to clear the
tables early Wednesday and wait until Monday for a clearer
direction. For those aggressive traders who bought the dip
to 2850 yesterday and today things may not be looking very
bright on the surface. With the Nasdaq closing dead flat at
2875 for two days, even after being up +55 intraday, things
may look pretty gloomy. That may be a good thing. Traders
often make their best trades when things look worst and as
long as we don't break 2850 this could be the worst. Contrary
to everything I said above the Nasdaq is terribly oversold and
any positive news could cause a relief rally of several hundred
points. It just remains to be seem if we will get enough volume
from optimistic traders on Wednesday to produce that rally.

Good luck and don't buy too soon.

Jim Brown
Editor


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****************
MARKET SENTIMENT
****************

Copy & Paste
By Austin Passamonte

That seems like all we've done here for the past ten weeks and
counting. Bearish outlook overall with a few bullish outbursts as
rally attempts try to take hold. We've yet to enjoy a convincing
upward move with strength across the indexes since white shoes
went out of style for the year.

Nor will we be polishing them up anytime soon this week. Volume
will decrease and volatility increase as most traders leave for
the extended weekend leaving few in charge. Expect more swings
without conviction until at least next week and a president-elect
apparent for good.

Will that solve current market crisis? We wonder. Is a NASDAQ comp
aggregate P.E. ratio of 126 or so immune to further adjustment?
Can we get through December's confessional period to rally towards
better earnings next time? We wonder.

Might Greenspan & co. realize the wealth effect is dead and our
economy may soon follow suit unless a policy or at least outlook
change is announced? Don't count that out.

Can these markets sell straight down to the inevitable multi-year
bottom still below without a single correction to the upside? We
doubt it.

This is no longer a bull market in the short-term and hasn't been
for a long time. However, nothing moves in one direction without
pause. We are building a short-squeeze tinderbox that the next
piece of bullish news may ignite. Keep in mind that most rallies
appear by surprise without warning.

A falling VIX and near-term chart signals suggest we will see
further weakness this week. Any decision from Florida shall at
least clear one hurdle for now.

Market Sentiment remains neutral to bearish for this shortened
week and waits to see what Monday next has to offer. Enjoy the
holiday and savor your time with family & friends. You can be sure
market pros will do the same!

*****

VIX
Tuesday 11/21 close; 28.93


30-yr Bonds
Tuesday 11/21 close; 5.75%

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.

                                   Tuesday
                                 (11/21/2000)
  (Open Interest)       Calls        Puts          Ratio
S&P 100 Index (OEX)
Resistance:
750 - 735                9,009        3,259         2.76
730 - 715                5,878        6,608          .89

OEX close: 713.70

Support:
710 - 695                 1,982        5,722        2.89
690 - 675                    45        5,776      128.36***
Maximum calls: 750/4,138
Maximum puts : 720/3,589

Moving Averages
 10 DMA  725
 20 DMA  733
 50 DMA  746
200 DMA  775

===

NASDAQ 100 Index (NDX/QQQ)
Resistance:
 79 - 77                15,443         7,091         2.18
 76 - 74                27,483        42,577          .65
 73 - 71                 7,454        20,952          .36

QQQ(NDX)close: 69.75

Support:

 68 - 66                  1,136        13,586        11.96***
 65 - 63                  6,628        20,875         3.15
 62 - 60                    179         1,968        10.99

Maximum calls: 80/32,910
Maximum puts : 80/35,958
Moving Averages
 10 DMA 73
 20 DMA 76
 50 DMA 82
200 DMA 92

===

S&P 500 (SPX)
Resistance:
1425                   29,475        15,495          1.90
1400                   57,924        56,792          1.02
1375                   32,662        25,571          1.28

SPX close: 1347.35

Support:
1325                    4,560        19,273          4.23
1300                    6,732        20,164          3.00
1275                    1,798        16,504          9.18


Maximum calls: 1400/57,924
Maximum puts : 1400/56,792

Moving Averages
 10 DMA 1372
 20 DMA 1390
 50 DMA 1406
200 DMA 1439

*****

CBOT Commitment Of Traders Report: Friday 11/17
Weekly 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    (Current)  (Previous)      (Current)  (Previous)
Open Interest
Net Value        +100        -1105           -2436       -792
Total Open
Interest %      (+1.42%)    (-14.39%)       (-9.60)     (-3.33%)
                net-long    net-short       net-short   net-short

NASDAQ 100
Open Interest
Net Value         -733        -1999           -77        -293
Total Open
Interest %       (-3.58%)    (-11.37%)      (-.16%)     (-.60%)
                 net-short   net-short     net-short   net-short

S&P 500
Open Interest
Net Value        +61563       +58260        -72376       -67783
Total Open
Interest %       (32.17%)     (+30.75%)     (-10.91%)    (-10.52%)
                 net-long      net-long      net-short   net-short

What COT Data Tells Us: Commercial positions in S&P 500 remain at
their ten-year extreme short levels and have increased their net-
short DOW positions.

Small specs held their net-long S&P positions while changing from
net-short to net-long in DOW positions as compiled Tuesday 11/14 by
the CFTC.


**************
MARKET POSTURE
**************

Please visit this link for Market Posture:

http://members.OptionInvestor.com/marketposture/112100_1.asp


***********
OPTIONS 101
***********

Rudyard Was Right
By David Popper

"If you can keep your head when all about you are losing theirs
and blaming it on you.  If you can trust yourself when all men
doubt you, but make allowance for their doubting too..."  Rudyard
Killing wrote these first few lines of the poem If over 100 years
ago.  He must have been trading for family and friends in a bear
market.  A market like this can really get inside your head.  The
lessons of the last 3 years are just not applicable. The moves
are so violent and so sudden.

So here we sit, afraid to buy because these stocks can fall
further, and afraid to sell because these stocks can turn on a
dime and laugh as you sold on the bottom.  Many traders are frozen
like a deer in the headlights having lost all confidence in their
ability.  So many traders just hold.  The time to exit was 50
points ago right?  Surely these stocks will turn around like they
have before-won't they?  To further complicate the scenario, the
charts do not seem to provide any degree of predictability beyond
the next two hours.  The charts begin to look good and the rally
fails in 2 days.  Traders who try to trade themselves out of this
mess and recoup their losses quickly find themselves sinking
deeper into the quicksand.

Finally, during these times I think of the technical lessons that
I have learned through OIN, Investor's Business Daily and others
which strongly recommend short term or position trading which
requires regular monitoring of positions and cutting losses short.
On the other hand I am well aware of the rich rewards those brave
individuals earned holding CSCO, SUNW and others for 5 to 10 years
through thick and thin.

So how did I get in this mess?  By violating my sell rules.  How
did I justify violating these rules?  Simple.  When I entered
these positions, October was ending, the charts indicated a
bottom was in place, and Bush was leading.  Everyone expected
the market to rally once the election was over, regardless of
who won. Everyone expected a solid rally if Bush won.  The
probabilities of a rally were in place because the market was
in an oversold condition and because election closure was near.
Then the totally unexpected happened, no winner and no closure.
Even worse, the rhetoric from both sides and the prospect of
a weakened presidency has had a short term damaging effect on
the market. So front end call buyers and fully margined traders
poised to reap huge rewards were severely damaged.  The rest of
us find ourselves in an unusual position not of our choosing.

So how did I avoid severely damaging my account. First, I always
keep approximately 25% of my account in cash during a down or
trendless market, just in case.  Yes, it does cut into the
upside potential but with volatile stocks, a little bit can go
a long way. One hundred shares of JNPR, GLW, or PMCS can quickly
give you thousands in profits while not risking the integrity of
your account during uncertain times.  Second, I only trade stocks
that I would not mind owning over the long term.  If stock
selections are limited to potential core holdings, you are never
worse off than a buy and hold investor.  Any premium earned
through a covered call or through short term profit taking is just
gravy.

What will the market do now?  I don't know and neither does
anyone else. All of the market experts predicted a November
rally.  They were wrong.  Analysts upgraded the optical
sector 60 days ago when the stocks were high.  They apparently
did not do their homework because these same stocks are now
downgraded. Analysts and experts are no help.  So what makes
sense to do from this point forward?  As for me, I am cognizant
that many stocks are in a downtrend, but I realize that these
stocks are long term winners.  They will have their day, and when
they do, they will rocket up the chart quickly.  Technology is
not going away. It is normal for high PE stocks to experience
extreme highs and lows as analysts vacillate over the long term
prospects of the underlying businesses.  This is why it is wise
to maintain a small position in these issues.  You can not allow
short term aberrations to harm you.  I intend to maintain a heavy
cash position until the market sorts itself out.  I also intend
to hold my positions.  I am not going to try to make up any
losses overnight.  I am going to remember that people who did not
panic in 1987, 1990, 1994, or 1998 were amply rewarded.  Of course
I would rather not be sitting on losses.  I am not used to this,
but I will not become impatient. Instead, I will try to play the
cards that I am holding in as unemotional a manner as is possible.

In short, it may pay to avoid margin and front end calls because
the short term is unpredictable.  However, it is not the time to
lose confidence.  Many of you have significant gains over the
past few years and this too shall pass.


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

Deja Vu: Review of My November Plays
By Scott Martindale

Move aside; clear some room.  I have some more to get off my chest
today.  Throw out the daily charts.  Without a market that
includes both sellers and BUYERS (remember them?), most of the
momentum favorites will stay oversold.  It seems that the only
folks who buy on the uptick these days are the momentum
day traders, who then get out on the inevitable rollover.

Like a San Francisco BART train, or the Cat-Dog cartoon my kids
watch, this market looks like it could go either direction at any
time, with no compelling reason for either.  The trend certainly
has been down, but is it bottoming?  Is this Nasdaq train bracing
for a strong move back up to 4000 by January, or is it, "choo-
choo, next stop, 2200."  Right now, short-term technicals are
negative or ambiguous, so you have to either stand aside or go
with your gut.

Well, I haven't stood aside (although my activity is definitely
scaled back), and my gut has been failing me.  My strategy of
selling both ATM puts and deep ITM puts on my favorite stocks in
anticipation of oversold bounces has not worked well for the
second month in a row.  And my strategy of accumulating good
"stocks of the future" at relatively attractive prices in my long-
term account without setting stop losses has also not been
fruitful.  Over the past couple of decades, it paid for long-term
investors to follow the advice of those gurus who called stop
losses "stop gains," since good stocks usually recovered quite
quickly.  But this market has been a whole other animal-something
most of us haven't experienced before.

Like the last two months, I shied away from buying calls. Although
I concentrated primarily on calls during 1999, I began to feel
early this year that I was merely churning the account, so I now
focus primarily on selling naked puts, with some covered calls and
protective puts.  But these are bull market or trading range
strategies.  Without an election rally, fall rally, or Santa Claus
rally, I'm just throwing away money.  I got back into QQQ puts as
a hedge against further Nasdaq erosion, which has been a
profitable strategy, although it merely serves to offset my
aggressive losses.

I sold no covered calls for November expiration because I was
waiting for a nice rally to sell calls into.  I'm still waiting.

All told, I sold 10 different naked put positions on eight
different stocks: GE, TMWD, SCMR, JDSU, NT, AMAT, MSTR, and PRSF.
In all cases, these were dominant or high-growth stocks that were
apparently deeply oversold, and I was anticipating a post-election
rally.  I sold Nov 60 puts on GE based on the OIN alert when it
fell to $49, and bought them back on strength, which was
profitable.  I sold at the money Nov 80, 70, and 60 puts on SCMR
as it sold off, but only the 60's proved profitable.  I got out
early on the 70's for a small loss, but held the 80's because of
their high delta in anticipation of an oversold bounce, which came
but was not enough to prevent a significant loss.

I made money on at the money TMWD Nov 20 and MSTR Nov 25 naked
puts, buying them back early on stock strength.  I lost a little
on at the money JDSU Nov 80, NT Nov 45 and AMAT Nov 47.5's.  I
bought back JDSU and AMAT early on strength, but held NT too long,
and was actually assigned shares the day before expiration.  But
by far my biggest mistake was selling deep ITM puts on PRSF, a
major player in e-commerce software, in anticipation of a pre-
earnings rally after it had sold off substantially.  On Friday, I
rolled out to December since the earnings report was today, but
for some reason it is selling off even more in after-hours trading
despite beating earnings estimates.  It seems that they only met
revenue estimates, thus the sell off.  Go figure.  [Never hold over
earnings reports, they say.]

Like last month, my plan to exit early if things went against me
didn't play out as well as I planned because they gapped down too
fast.  It's hard to bring myself to close out for a big loss after
such huge negative moves on good stocks.  I decided to wait for
some inevitable recovery and time value erosion before closing
them.  This strategy worked for some but not all of the positions.
At least I sold after gap downs and when volatility and options
premiums were high, which helped prevent larger losses.

It seems to me that the excessive volatility and unfound bottom is
due to the easy access we all have to trading.  Almost all market
gurus today tell us we should place stop losses.  So when you
consider the retail and institutional stop losses kicking in along
with the short sellers and the dearth of buyers, the prices just
keep dropping.  It seems to me that if everyone would just stop
panic selling, we might see a bottom and the strong buyers might
return.  But as long as you can count on another down day
tomorrow, why buy today?  Every day, another group of investors
hits their pain threshold and sells.  And the sideline cash keeps
building.

And some market watchers are saying really gloomy things now.  For
example, Tom Costello just reported that floor traders apparently
are saying that margin calls are being covered by cash rather than
sales of shares, which indicates to them that we are not seeing
that long awaited capitulation.  More ominously, we are told that
today's Nasdaq P/E is around 124, but just three years ago (before
the big run up) it was at the longer-term prevailing level of
about 50.  To get back to that level, the index would have to drop
to near 1200.

Although I have little confidence at this point that the year-end
rally is imminent-certainly not before an end to this election
crisis-I still tend to feel in my gut that Joe Battipaglia has the
right general idea.  When buyers return, we should see an
explosive Nasdaq rally.  The "new economy" revolution has really
only kicked in gear over the past few years, justifying higher
P/E's, and so long as a recession is avoided, Americans believe in
their stock markets.  And younger investors in particular don't
really want to own Wrigley's and Caterpillar, even though the Dow
is near its historic P/E.  I don't mind holding stocks that are
underwater as long as I have faith in that vision.  The recent
past tells me that an explosive rally in the market-favorite
stocks may catapult some of them well beyond a price that I might
stop out at today.

But is the recent past still reliable?  Keep in mind the
catastrophic collapses of some of the high-flyers were completely
expected, since not everyone will survive the highly competitive
new-technology battlefield.  But the winners should win big, and
I think I'm holding some of them.


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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:
*****

NEON $9.00 -10.88 (-12.44) Our attempt to capitalize on NEON's
low cost options turned for the worst today after Wit Soundview
downgraded the stock on concerns over revenues recognized
during the third-quarter.  All we can say is thank
goodness for stops as NEON lost over half its value today and
finished well below our protective stop at $18.  Needless to
say, we're dropping NEON from our call list this evening.

CLS $58.63 -1.38 (-4.81) Continued technology weakness spelled
the end to our play on CLS, as the stock broke down through the
200-dma ($58.88) today.  Recall that our stop was resting at
$59, so we have no choice but to drop it from the call list.
Weakening volume seems to indicate that while there is not a
flood of selling, there is a shortage of buyers, meaning that
it is not a good candidate for the bulls.  There never was a
decent entry point since we added it last weekend, so we'll take
this opportunity to jettison CLS from the recommended list.


PUTS:
*****

No dropped puts today


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The Option Investor Newsletter                  Tuesday 11-21-2000
Copyright 2000, All rights reserved.                        2 of 2
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********************
PLAY UPDATES - CALLS
********************

TLAB $56.31 -0.75 (+0.44) Many of the telecommunications stocks
got pounded on the networker downgrade Monday as the NASDAQ
traced lower.  Concerns about growth prospects and softening
sales continued to plague the big equipment makers.  But there
was TLAB bucking the overall trend, trading higher throughout
the session!  The strong bounce off the 10-dma ($55.23),
bolstered by subsequent rebounds off the advancing 5-dma
($56.24) demonstrated TLAB's strength.  Today's action was a
mimic of yesterday's session; with the noteworthy exception of a
fractionally higher intraday peak.  To play this call, look for
bounces from $56, or lower at the 10-dma, if you're more
enterprising.  Resistance continues to be formidable in the
vicinity of $58 and specifically, at $58.31.  However, the
persistent challenges of the 200-dma ($57.41) are encouraging
and point to a potential breakout.

MSFT $67.75 +0.56 (-0.37) Microsoft appears to be stuck in a
tight trading range, with strong support at $66 and heavy
resistance at $71.  Swing traders can take advantage of these
predictable moves by entering on a bounce at the 50-dma of $65.67.
The markets are hanging in suspended animation, as the world
awaits a ruling from the Florida State Supreme Court on the issue
of ballot counting.  The markets really want closure in this
election, and it seems likely that the major indexes will rally
upon resolution of the uncertainty.  The justices said yesterday
that they wanted to adhere to the deadline of Dec 12th, which gave
the markets an indication that resolution is near.  Consider
taking new positions on a bounce off the converged 5 and 10-dmas
at $68.50 in an up market.  A breakout above the 200-dma of $72.88
would be a strong bullish indicator, and would very likely put
MSFT on the path to its previous highs of the year.  It would
be prudent to watch the market's reaction to the election ruling
before taking new positions, and set stops at $64.

QCOM $87.50 +2.88 (-1.31) Since late last week, traders have been
holding their breath, anxiously watching and waiting for QCOM to
break and close above the 200-dma, now sitting at $88.46.  This
resistance point is proving to be formidable indeed.   Morning
market nervousness led some traders to take some profits, as QCOM
pulled back $4.19 or 4.71 percent on 65% of ADV.  This was
despite a positive announcement that the company had expanded its
licensing agreement with NEC, leading to higher royalty fees.
Today however, the stock bounced back.  Gapping lower at the
open, the stock bounced strongly off support at $82, right above
our stop price of $81.  From there, the stock broke through the
200-dma but encountering resistance at $90 and some last hour
selling on the NASDAQ, pulled back but finished up 3.4 percent on
average volume.  Conservative traders are still waiting for QCOM
to break through the 200-dma definitively before taking a
position but for aggressive traders, a bounce off support at $85,
$82 and $80 are possible targets to shoot for.

CTXS $28.00 +0.00 (-2.88) A shaky day in the markets yesterday
led to some traders taking profits in CTXS, as the stock fell
$2.88 or 9.31 percent on 130% of ADV.  While the volume may seem
high, this is half the volume of its recent rally to the up-trend
that is still well intact.  As well, the stock bounced above
support at our stop price of $27.  Today, with a relatively flat
day for the NASDAQ, CTXS had as average a day as a stock could
have, closing unchanged on average volume.  While an attempt to
break through resistance at $30 was thwarted, the stock made a
higher low today and if not for light-volume selling into the
close, it could easily have been a profitable day.  At this
point, another bounce off $27 support could provide aggressive
traders with an entry but a more preferred entry point would be a
break through 5-dma resistance at $28.68 on volume.  From there,
a break through $30 with the buyers returning in mass would
confirm upward momentum and allow for a more conservative entry.

AMGN $64.63 +1.25 (-0.50) Tossed about by the continuing
election uncertainty, AMGN has had a hard time making any
headway over the past week.  The broad-based selloff in
yesterday's market came close to pushing our play onto the drop
list as it dipped briefly below our $62 stop level.  Buyers came
to the stock's rescue though, and turned the stock around,
bringing it back above the $64 level by the closing bell today.
This dip provided a nice aggressive entry point for the bulls,
but the stock is still in a precarious position.  The converged
200-dma ($65.31) and 50-dma ($65.44) are creating overhead
resistance, and we are going to need volume to pick up again to
clear this level.  The remainder of this holiday shortened week
is likely to see continuing light volume as investors wait for
a definitive result from the Florida election process.
Aggressive investors can continue to buy the dips to support,
but make sure you wait for the bounce.  Although unlikely, a
strong move through resistance would be a good entry trigger
for conservative entries.  Given the time decay that will occur
during the latter part of this week, conservative traders may
want to stand aside until next week, when we are likely to have
a resolution to the election mess.

JBL $45.56 -1.25 (-2.75) Nervousness is still ruling the
markets, and although JBL has not broken down, it is having a
hard time moving higher.  The past week has seen the stock
gradually move lower, and today's close saw the stock edge
closer to our stop at $44.  This morning the stock actually
hit solid support at $42, but there were buyers waiting to
buy the dip, which keeps our play alive for one more day.
Today's news that the company is strengthening its management
team by naming Ron Rapp to the newly created Chief Operating
Officer position may have had something to do with the
recovery, but the stock is still looking precarious.  The drop
in price over the past 2 days puts JBL back below its 200-dma
($47), and conservative investors will want to wait for a
recovery through this level before adding new positions.  Above
there, resistance is sitting first at $48.50, and then $50, so
the bulls definitely have their work cut out for them.


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

HAND $62.50 -2.35 (+0.06) HAND's previous support around $70
became the new upper resistance in yesterday's session.  A rally
ensued when HAND's share price flirted below the $60 level in
early trading and enticed some buyers.  Make no mistake, the
upward momentum was steadfast.  It took HAND up to $70.94 before
a sharp sell-off late day on increasing volume stopped the run
in its tracks.  The upside move provided a beautiful rollover
entry at the 50-dma ($70.30) for the aggressive and quick
fingered traders.  Today's action however, was rather subdued in
light of Lehman Brothers' new Buy recommendation and 12-month
target price of $90.  In contrast to its rival Palm (PALM), HAND
moved to the downside in spite of the positive comments.  An
early break of the $60 support, to $59.50, proved to be the
stock's low for the day.  But there was no question that the
upper resistance established a lower ceiling.  Traders couldn't
move the issue through $62 with any conviction; although the
volume continued to be respectable.  If you're more pragmatic
about taking an entry, then look for more downside confirmation
below the $60 level before adding put positions to your portfolio.

RATL $33.63 +1.75 (+2.13) After yesterday's market action, we
significantly lowered our Stop on RATL from $44 to $33.  RATL
took a one-two punch right at Monday's bell and tested $31.25 on
the swift decline.  It then found $34 almost impregnable on
attempted recoveries.  Today however, RATL continuously
rebounded off $32.50 on strong volume and made a bullish showing
at the close.  The trading behavior indicates RATL may be
stabilizing at this level of historical support ($30).  While it
appears we may have to find another lucrative downtrend to line
our pockets with cash, we're are keeping RATL on our put list
tonight.  If tomorrow's market sentiment takes the NASDAQ and
its techs lower, there's the potential for more downside
trading.  If you're taking entries on subsequent weakness,
consider playing it conservatively .  Look for RATL to
transgress $30 and challenge the $25 level.

SLR $34.06 -0.25 (-0.19)  After failing to hold at the key
support level of $35, SLR has found temporary support at $34.
However, it seems likely that this level will be broken also,
as the path of least resistance is down for SLR.  Volume is
very heavy on down days, and light on up days, indicating that
few buyers are interested in this stock at current levels.
The daily MACD and stochastic indicate an oversold condition,
but show no signs of moving upward at the present time.  SLR
is far below the 200-dma of $41.22, and the 50-dma of $42.17,
and it seems unlikely that either of these levels will be
reached at any point in the near term future.  Consider taking
positions on a roll off the 5-dma of $34.63, particularly on
heavy volume in the range of 9 million shares or higher.  The
next major support level is $32, and then the 52-week low of
$28.  However, remember that we are in an oversold market which
wants to rally, and that a strong rally can lift all stocks.
Keep stops set at $37, and exit positions if SLR settles above
that level.

ARBA $72.75 +4.88 (-3.81) ARBA picked up where it left off last
week, with continued selling on strong volume.  News surrounding
Oracle crushed ARBA and most of the B2B sector yesterday, as a
key CFO was leaving the company.  The news had little to do with
ARBA and managed to mitigate more positive announcements from the
company, though the press releases had little material effect on
the company's fundamentals.  For the day, ARBA lost $8.69 or
11.45% on well over twice the ADV.  After four straight days of
selling, a bounce from oversold was to be expected.  Bouncing off
support at $65, the stock gained 7.25 percent on 150% of ADV.
Despite this, the stock is still well under all of its moving
averages.  A failed rally above its 5-dma at $77 could provide
for an aggressive entry as well as at our stop price of $75.  For
the more conservative, a break below $70 could lead to another
quick retest of support at $65.

NEWP $71.69 +1.69 (+1.82) The 5-dma, now resting at $74.87,
continues to serve as formidable resistance for NEWP, as the
stock so far this week has failed to close above this point.  On
Monday, the stock tested last Friday's lows, gapping down at the
open and bouncing off support at $62.  From there, it spent the
day moving higher from its oversold conditions.  Encountering
resistance at $75 near the end of the day, the stock fell to
close up fractionally on 190% of ADV.  Today the stock managed to
inch 2.41 percent higher, on 120% of ADV but once again it
encountered overhead resistance just above $75, our current stop
price.  Another failed test of this resistance area could allow
aggressive traders to take a position but make sure the sellers
back the rollover before entering.  A more conservative trade
would be to wait for NEWP to break below $70 on volume before
making a play.

VRSN $94.06 -10.56 (-19.69) The bears have been having a field
day (week) with Internet stocks, and VRSN is definitely looking
the worse for wear.  After rolling over at the $123 resistance
level last week, the decline picked up speed the past two days,
and today saw the lowest close for the Internet Security firm
since last December.  With volume picking up to 50% over the ADV
in today's session, there was no question that the bears were
in control, as the stock traced yet another lower low.  With the
breakdown in price that has occurred we are moving our stop down
to $103.  Resistance has begun to form near this level, and
aggressive investors could get another attractive entry point on
any rally attempt that fails to penetrate that level.  Support
near $90-91 (the level of the spring lows) is looking precarious
and if it fails, it will open the door for a test of support
near $80.  Conservative players can consider new positions on a
drop through $90, especially if accompanied by strong volume.

FCEL $55.94 +4.06 (+2.19)  Day traders could have made a quick
profit from a put on FCEL on Monday, as the stock dropped
nearly 3 points.  In contrast, FCEL rallied today on news that
ABN AMRO initiated coverage with a Buy rating, and that FCEL
received approval to increase the number of authorized shares
from 20 million to 150 million.  The shares will be used for
future issuances for stock splits and as currency for future
acquisitions.  No impending stock split was announced.  While
this news was perceived as positive by the market, it looks
like a bull trap in a downward trending stock.  The 50-dma
is at $70.25, and the 5-dma of $57.33 is below the 10-dma of
$62.31.  Tuesday's move was actually bearish, as the stock
attempted to rally past $60 in the afternoon, but lacked the
strength and fell back to close just under $56.  Once the key
support level of $60 was broken, the next critical support
levels are $55, and $50.  This market is trashing stocks
which it perceives to be overvalued, and FCEL made a big move
up from May to October, and has a long way down.  A good
possible entry point would be a failed attempt to rally past
the 5-dma of $57.33, or a fall below support at $55.  However,
remember that a rising market can lift all stocks, and set
stops at $61.


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

AGGRESSIVE:

TQNT - TriQuint Semiconductor $43.19 +1.63 (+3.63 this week)

TriQuint's standard products include high-performance, low-cost
digital, analog and mixed signal GaAs RFICs which are used in a
wide variety of communications systems. The company also provides
applications-specific and custom circuit solutions for major
communications system original equipment manufacturers (OEMs).

With wireless giant Qualcomm moving higher as of late, TQNT seems
to be following in its footsteps, despite general weakness in the
Tech sector.  Strength in a soft and uncertain market is a good
sign, especially when backed by strong fundamentals.  As a
manufacturer of Gallium Arsenide-based chips, TQNT derives half
its revenues from the mobile phone sector.  Nokia's recent
better-than-expected earnings report has helped the stock push
higher.  Revenues from the broadband and optical networking
sectors make up the remainder of TQNT's business.  Reporting
earnings in late October, the company showed no sign of slowing
down, growing revenues by 90% year-over-year and net income by
191%, handily beating Street estimates by a nickel.
Quarter-over-quarter, gross margins improved by 4 percent to a
highly profitable 55.5%.  But what analysts were interested in
were the revenue growth numbers going forward, and TQNT did not
disappoint.  The company's conference call revealed that TQNT
could exceed expectations by as much as $6 million, with sales
continuing to be robust, as companies ramp up production for next
generation wireless devices.  That sentiment was confirmed last
week by coverage initiated by CS First Boston with a Buy rating.
According to analyst Michael Masdea, TQNT is well positioned to
capitalize on the next-generation wireless boom.  Since bouncing
off support at $25-26, the stock has been on a tear, rallying on
the back of the 5-dma, now at $40.60.  A bounce off this level as
well as support at $40 could allow for an aggressive entry point.
There is also strong support at $36.50 from the converged 10 and
50-dma but make sure TQNT closes above our stop price at $38.
For a more conservative entry, wait for strong buying to carry
TQNT over 200-dma at $45 threshold before making a play.  From
there, it could be a short trip to $50.

BUY CALL DEC-35 TQN-LG OI= 289 at $10.13 SL=7.00
BUY CALL DEC-40*TNN-LH OI=1320 at $ 6.88 SL=5.00
BUY CALL DEC-45 TNN-LI OI= 881 at $ 4.25 SL=2.50
BUY CALL JAN-40 TNN-AH OI=   2 at $ 9.38 SL=6.50
BUY CALL JAN-45 TNN-AI OI=  30 at $ 6.88 SL=5.00

http://www.premierinvestor.net/oi/profile.asp?ticker=TQNT


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

AGGRESSIVE:

YHOO - Yahoo Inc. $41.69 -7.19 (-9.56 this week)

Yahoo! is an industry leader in providing live audio and video
streaming media services for a wide range of customers, including
sports leagues, media and entertainment companies, television
and radio stations, corporations, advertisers and merchants.
Yahoo! delivers millions of hours of live and on demand
programming each month through a highly scalable streaming
distribution network designed to deliver high-quality audio
and video to large audiences accessing the Internet through
both dial-up and broadband connections.

From hero to villain, Yahoo is now the curse to any investor's
portfolio.  It didn't happen overnight, but the descent to
today's close at $41.69 was rapid.  It used to be that investors
couldn't find a weak link in the Yahoo business plan, now the
only thing investors can't find is support for their stock.
YHOO is at levels not seen since 1998 and the technical picture
is less than encouraging.  The reason for the decline this
week (and for months) is due to fears over fourth quarter
earnings.  These aren't just rumors anymore either.  Analysts
like Mary Meeker and Richard Bilotti of Morgan Stanley, Jordan
Rohan of Wit SoundView, and Henry Blodget of Merrill Lynch all
have similar fears for the stock.  The story is simple too.  The
concern is that revenue will be weaker due to lower advertising
dollars, something that has been evident in recent months.  The
bottom line is that Yahoo may be more at risk due to a high
concentration of revenue in Internet advertising.  The light
at the end of the tunnel is dim at best too.  Most analysts
project the problems to continue until mid-2001, but Henry
Blodget is still expecting a $200 stock by the end of next
year.  Too bad that won't bring the buyers back in the short-
term.  Therefore, we expect YHOO to continue to fail, maybe
even into the mid-$20s.  The trick here will be the entry
point.  We all know that YHOO options carry high volatility
and a $10 plunge in two days doesn't help.  So keep your eyes
open for any rebound in the stock (and Nasdaq) to enter a play,
especially on light volume.  But if investors want to keep
dumping at this level, on this high volume, then there should
be plenty of intraday plays available even at current levels.

BUY PUT DEC-45 YHQ-XI OI=1364 at $6.88 SL=4.25
BUY PUT DEC-40*YHQ-XH OI= 696 at $4.38 SL=2.50
BUY PUT DEC-35 YHQ-XG OI= 312 at $2.44 SL=1.25

http://www.premierinvestor.net/oi/profile.asp?ticker=YHOO


ARTG - Art Technology Group $35.88 -5.00 (-9.81 this week)

Art Technology Group offers an integrated suite of Internet
customer relationship management and e-commerce software
applications, as well as related application development,
integration and support services.  The Company's solution
enables businesses to understand, manage and build online
customer relationships and to market, sell and support products
and services over the Internet more effectively.  About 40% of
sales are derived from Web site design, consulting, and other
support services.  Global clientele include Forbes and General
Motors.

ARTG's golden hue from its lofty summer price of $126.88 quickly
took on a tarnished look as it fell on hard times recently.
The software company that customizes advertisements and other
content on Web sites, reported stellar earnings on October 26th.
They beat the consensus estimate by $0.03 and came in at $0.07
p/s versus -0.10, the same quarter last year.  The steep sell-
off that followed the strong numbers wasn't necessarily a case
of post-earnings decline, but rather, it plunged on the news it
planned to sell 4 mln shares in a public stock offering.  The
punishment was severe and ARTG saw $52.13 before tracing higher
with the NASDAQ on Halloween.  Moving forward, ARTG consolidated
higher at the $70 and $71, until the discordance emerged.  The
share price experienced significant damage on 11/7 and 11/8
after the company amended its 10-Q filing disclosing the sale of
$9.6 mln in accounts receivables.  Investors were incensed.
ARTG tumbled $23.25 to $45.75, losing 33.7% of its value in a
mere two sessions.  The poor performance of the stock and the
company's withdrawal of its public stock offering due to the low
price levels has led many investors wondering what's next.  The
analysts are mixed on the issue and the rating variances can
only be adding more instability to the stock's share price.
Yesterday, ARTG fell through its bottom supports at the closely
knit 5 and 10-dmas at $43.83 and $45.45, respectively.  The
technical infraction led to pure devastation today.  The stock
quickly violated the $40 level, which generated enough momentum
to take ARTG down to $35.50, for a bearish close at $35.88!  If
you take a look back over time, you'll see that after ARTG broke
through the $40 shackles in December of 1999, ARTG only saw a
transgression of this breadth during the April correction.  To
play this put, either enter on downward bounces off the $38 or
39 marks or buy into high-volume selling as ARTG tumbles under
$35.  We have a tight stop set at $38 to protect against a
buying binge.

BUY PUT DEC-50 AYQ-XJ OI=80 at $16.13 SL=11.50
BUY PUT DEC-45 AYQ-XI OI=10 at $11.50 SL= 8.75
BUY PUT DEC-40*AYQ-XH OI=65 at $ 7.38 SL= 5.25

http://www.premierinvestor.net/oi/profile.asp?ticker=ARTG


VRTS - Veritas Software $97.31 -9.94 (-12.81 this week)

As an independent supplier of storage management software,
VRTS develops and sells products that protect against data
loss and file corruption, allowing rapid recovery after disk
or computer system failure.  The company's products provide
continuous data availability in clustered computer systems with
shared resources. This enables IT managers to work efficiently
with large file systems, making it possible to manage data
distributed on large computer network systems without harming
productivity or interrupting users.

A clear example of how quickly things can change, VRTS has been
in a sharp downtrend recently.  It was only a month ago that
the stock was setting new highs above $165.  The combined effect
of persistent weakness in technology stocks and election
uncertainty has served to slash more than 40% off the stock's
value since October 20th.  The past week has been particularly
ugly, with a series of 4 increasing volume red candles
describing the stock's woes.  The tone really began to change as
the 200-dma (then at $123.35) was violated last Thursday.  This
just opened the floodgates and the sellers piled in driving VRTS
down through the $110 support level.  Volume today was
particularly heavy, coming in nearly 3 times the ADV.  The
late-day bounce today near the $93-94 support level looks like
nothing more than a pause before the decline continues, with
logical downside targets sitting at $85 and then $78.
Shareholders approved the merger with Seagate, and although the
deal should close within the week, it didn't seem to help the
stock in the least.  Intraday support near $100 gave way today
and it looks like this will now act as resistance, reinforced
by resistance at $105.  Use failed rallies to either of these
levels as aggressive entry points.  We are setting our stop at
$109, as a move through this level will indicate that the bears
are losing control.  More conservative traders will want to wait
for selling pressure to push VRTS down through today's lows; use
a drop through $93 as your trigger for new entries.

BUY PUT DEC-100 VUQ-XX OI=2075 at $12.00 SL=9.00
BUY PUT DEC- 95*VUQ-XW OI=1050 at $ 9.25 SL=6.50
BUY PUT DEC- 90 VUQ-XV OI= 175 at $ 7.13 SL=5.00

http://www.premierinvestor.net/oi/profile.asp?ticker=VRTS


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

QCOM - Qualcomm Inc. $87.50 +2.88 (-1.31 this week)

Qualcomm Incorporated is a leader in developing, delivering, and
enabling innovative digital wireless communications products and
services based on the Company's digital technologies.  As the
pioneer of Code Division Multiple Access (CDMA), the technology
of choice for next-generation wireless communications, Qualcomm
continues to lead the industry in the development of voice, data,
and wireless Internet products and solutions.  Qualcomm is also
transforming industries through its various satellite businesses
and technology partnerships.

Most Recent Write-Up

Since late last week, traders have been holding their breath,
anxiously watching and waiting for QCOM to break and close above
the 200-dma, now sitting at $88.46.  This resistance point is
proving to be formidable indeed.   Morning market nervousness led
some traders to take some profits, as QCOM pulled back $4.19 or
4.71 percent on 65% of ADV.  This was despite a positive
announcement that the company had expanded its licensing agreement
with NEC, leading to higher royalty fees.  Today however, the
stock bounced back.  Gapping lower at the open, the stock bounced
strongly off support at $82, right above our stop price of $81.
From there, the stock broke through the 200-dma but encountering
resistance at $90 and some last hour selling on the NASDAQ, pulled
back but finished up 3.4 percent on average volume.  Conservative
traders are still waiting for QCOM to break through the 200-dma
definitively before taking a position but for aggressive traders,
a bounce off support at $85, $82 and $80 are possible targets to
shoot for.

Comments

Today, QCOM traded in a wide range as it consolidated its recent
gains.  As low as $82.25 off the open and up to $90 in the
afternoon, QCOM would have been a great intraday trade.  Ideal
entry on this call play would come on a pullback to the $83 level,
along with a bounce.  But it may only take $85 to print for the
buyers to come in.  Tomorrow will be an illiquid day in both the
option and equity markets, so if you're trading, be prepared for
a whippy day.

BUY CALL DEC-85 AAF-LQ OI=5179 at $ 8.13 SL=6.25
BUY CALL DEC-90*AAF-LR OI=5731 at $ 5.75 SL=4.00
BUY CALL DEC-95 AAF-LS OI=4004 at $ 3.88 SL=2.25
BUY CALL JAN-90 AAF-AR OI=8605 at $ 9.88 SL=7.25
BUY CALL JAN-95 AAF-AS OI=5551 at $ 8.13 SL=6.25

SELL PUT DEC-80 AAF-XP OI=1770 at $ 2.88 SL=4.00
(See risk of selling put in play legend)

http://www.premierinvestor.net/oi/profile.asp?ticker=QCOM


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


************************
COMBOS/SPREADS/STRADDLES
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Blue-chips save the day!

Industrial stocks closed higher today as investors rotated to
defensive issues in the wake of the recent technology sell-off.

Monday, November 20

Technology stocks slumped to the lowest levels in two years after
a slew of analysts' downgrades weighed heavily on the group.  The
Nasdaq closed down 151 points at 2,875.  The Dow also plummeted
167 points to 10,462 on concerns about a slowdown in corporate
earnings.  The S&P 500 index finished 25 lower at 1,342.  Trading
volume on the Nasdaq was average at 1.7 billion shares exchanged,
with declines leading advances 3,001 to 976.  Volume on the NYSE
hit 953 million shares, with declines outpacing advances 1,851 to
981.  In the bond market, the U.S. 30-year Treasury rose 10/32,
pushing its yield down to 5.75%.


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

Intel        INTC   J0230C/JAN45C   $13.88   debit   LEAPS/CCs
Phillips     P      DEC70C/DEC65C   $1.00    credit  bear-call
US Airways   U      DEC30P/DEC35P   $1.00    credit  bull-put
Meridith     MDP    DEC25P/DEC30P   $0.88    credit  bull-put

The market volatility provided some favorable entry opportunities
in our new combination positions.  The Meridith spread was the
only position that did not meet our minimum (suggested) entry
price, but it was a reasonable credit for those of you who are
bullish on the issue.


Portfolio Plays:

Stocks closed lower Monday amid earnings concerns and continued
uncertainty over the outcome of the Presidential election.  The
Nasdaq led the downward move with Networking issues registering
the worst losses.  Morgan Stanley analysts caused most of the
grief, slashing ratings on a number of popular companies in the
group because of expected slower demand from service providers.
Cisco Systems (CSCO), Juniper Networks (JNPR) and Redback (RBAK)
were among the biggest losers.  Computer hardware and software
stocks also moved lower with Dell Computer (DELL) and Gateway
(GTW) falling on a downgrade by Wit Soundview, and Oracle (ORCL)
slumping on news that several analysts slashed their ratings on
the issue.  In the Internet sector, eBay (EBAY) dropped to $34
after Lehman Brothers reduced its rating on the stock and chip
companies also retreated, with Texas Instruments (TXN) leading
the way after Lehman lowered its 2001 earnings estimates due to
a slowdown in equipment orders.  On the Dow Industrial Average,
Coca-Cola (KO) was toppled by news that the company is in talks
to buy Quaker Oats for about $16 billion.  General Motors (GM),
J.P. Morgan (JPM) and American Express (AXP) also moved lower
while Merck (MRK), International Business Machines (IBM), and
Johnson & Johnson (JNJ) edged higher.  In the broader market,
Biotechnology issues were pummeled and financial stocks also
fell on concerns of potential credit problems.  Oil service
issues held up fairly well amid rising crude futures as the
Northeast U.S. began to experience winter weather, and the
recent violence in the Middle East continued.  Making matters
worse, the political battles moved to Florida's Supreme Court
as the justices convened to determine whether post-deadline
results from hand recounts should be added to the tally for
the U.S. presidential election.

Our new position in Quaker Oats received a boost as Coca-Cola
(KO) confirmed it was in talks with the company in what is now
expected to be a $16 billion deal to purchase the popular food
producer.  The boards of the two companies met over the weekend
to discuss a stock-swap deal valued at $116.70 per share.  Coke
is expected to offer 1.9 shares for every Quaker share and the
discussions come only two weeks after Quaker officials refused
a $13.7 billion offer from KO's soft-drink rival, PepsiCo (PEP).
That deal would have put the value of Quaker shares at $103.53.
Paris-based food concern Groupe Danone S.A. was also courting
Quaker but it appears that KO will be the winner by a knockout.
Our position is at maximum profit with the issue above $90, so
there is little chance of a negative outcome.  Another popular
stock in the Food and Beverage industry, Safeway Stores (SWY)
traded above yearly highs near $59 and the issue is poised for
further gains.  Major drug and healthcare stocks also performed
well, as investors rotated to safety issues during the technology
sell-off.  Our new plays in Johnson & Johnson (JNJ) and Cardinal
Health (CAH) benefited from the bullish activity in the group.
In smaller-cap issues, the synthetic position in MTI Technology
(MTIC) is now profitable and with today's $1.12 advance to $9.25,
MTIC may be approaching the upper limits of its current rally.
Traders who entered the position near $0.50 debit might consider
taking the excellent one-week profit, targeting a new entry if
the issue consolidates.  Landry's Seafood Restaurants (LNY) also
enjoyed upside activity, rising to a new 52-week high at $10.62.
Our bullish position in the issue, although not entered at the
target debit, is already yielding a favorable return.


Tuesday, November 21

Industrial stocks closed higher today as investors rotated to
a defensive stance in the wake of the recent technology sell-off.
The Dow closed up 31 points at 10,494 while the Nasdaq finished
down 4 points at 2,871.  The S&P 500 index ended up 4 points at
1,347.  Volume on the Nasdaq reached 1.74 billion shares, with
declines beating advances 2,488 to 1,433.  Trading volume on the
NYSE reached 1.1 billion shares, with declines beating advances
1,464 to 1,389.  In the bond market, the 30-year Treasury rose
11/32, pushing its yield down to 5.73%.


Portfolio Plays:

Industrial stocks managed a small recovery today, as investors
moved to defensive areas of the market, but technology issues
continued to struggle, on concerns of excessive valuations.
Safe-haven sectors received the majority of buying interest
with consumer products, gold, major drug and healthcare shares
among the best performers.  On the Dow, blue-chip frontrunners
included Boeing (BA), General Motors (GM), Intel (INTC), Exxon
Mobil (EXOM), and Microsoft (MSFT).  On the Nasdaq, networking
companies regained some of yesterday's losses with Cisco (CSCO)
and JDS Uniphase (JDSU) among the recovering issues.  Qualcomm
(QCOM), a recent OIN favorite, was also among the few bullish
stocks, rebounding $3 to a technical resistance area near $87.
Internet issues continued to suffer, declining for the fifth
straight session after Merrill Lynch's Henry Blodget commented
that "the worst is yet to come" for the online advertisers.  He
was only one of a number of analysts with bearish comments for
the industry.  In other technology groups, semiconductor stocks
remained subdued while biotech issues posted a modest recovery
following Monday's rout.  Among industrial stocks, retail and
utility shares retreated as buyers remained timid and unwilling
to commit new funds, even to sectors that have performed well
over the past few sessions.  One market expert suggested that
decelerating earnings growth and corporate revenues will likely
be the overall theme well into the first half of next year and
that doesn't bode well for the current market valuations.

Our portfolio actually performed quite well, considering the
number of catastrophic declines over the past two sessions.
The leaders in today's activity were spread across many groups
but the strongest moves came in defensive categories such as
major drug, food and beverage, and consumer products.  Safeway
Stores (SWY) has been one of the most productive issues among
grocery stocks and today the issue traded near an all-time high
at $60.  Our bullish synthetic position is now yielding a $1.00
credit and the long option does not expire until January.  In
the Food and Beverage group, Kellogg (K) continued to rally, up
$1 to close at $28.50 on speculation over recent consolidation
in the industry.  The potential buyout of Quaker Oats (OAT) is
the current catalyst for activity in the sector.  A well-known
consumer products issue, Johnson & Johnson (JNJ) climbed to a
recent high near $97 after a federal jury issued an unfavorable
verdict against Medtronic (MDT) in a case involving patents over
a type of heart device.  The jury has been ordered to determine
the damages to be awarded to JNJ, including potential payments
for previous stent sales and possible future royalties.  Our
Put-credit spread at $90 benefited from the news and the stock
appears to be bracing for a rally to a higher trading range.

Surprisingly, Intel (INTC) continues to perform well and the
issue rallied $1.50 to $42.62, even as investors were exiting
the technology industry.  Our new LEAPS/CCs position is off to
a good start and we expect the upside activity to continue, once
the outcome of the Presidential election is decided.  Microsoft
(MSFT) managed to close positive and the new trading range near
$70 is helping erode the sold time value in our diagonal spread.
If the issue begins to move above technical resistance near $72,
we will plan for an upside adjustment in the bullish position.
Invitrogen (IVGN) was another popular issue today, up almost $2
to $71.38 as investors continued to search for growth companies
in a market where technology stocks are being avoided like "the
plague."  Our bullish spread at $55 is intact, for the moment.
Carter Wallace (CAR) and Biochem Pharma (BCHE) were also among
the active drug issues and both of our time selling positions
in those issues are currently profitable.  Federal Express (FDX)
is another of our older diagonal plays and traders who rolled to
a JAN40C/DEC45C benefited from the stock's $3 rally to a 52-week
high.  The bullish position in FDX has yielded a profitable exit
every month since the play was initiated.

Questions & comments on spreads/combos to Contact Support
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                     - SPECULATION PLAYS -

The following positions are low cost speculation plays on active,
small-cap issues in various sectors.  Depending on your outlook
for the market and its many industries, you may find a position
that fits your strategic approach and trading style.

******************************************************************
PXD - Pioneer Natural Resources  $14.31  *** Energy Sector! ***

Pioneer Natural Resources Company is an independent oil and gas
exploration and development company.  The company has ownership
interests in oil and gas properties among the Mid Continent,
Southwestern and onshore and offshore Gulf Coast regions of the
United States and in Argentina, Canada, South Africa and Gabon.
The company's oil and gas producing properties includes the
Spraberry oil field located in West Texas, the Hugoton gas field
located in Southwest Kansas and the West Panhandle gas field
located in the Texas Panhandle.  Complementing these areas are
the exploration and development opportunities and oil and gas
production contributed by assets in the United States Gulf Coast
area, Argentina and Canada.  The company seeks to competitively
and profitably explore for, develop and produce proved oil, NGL
and natural gas reserves.  In so doing, Pioneer also markets
homogenous oil, NGL and natural gas units.

The energy sector is a great place to hedge against the bearish
moves in the broader market and with the onset of winter weather
in the Northeast, companies in the industry will receive more
attention in the coming weeks.  Analysts at Deutsche Banc Alex.
Brown recently started coverage on the company with a bullish
recommendation, saying the Exploration and Production group's
valuation is compelling and provides plenty of upside potential.
Traders who agree with that assessment can use this position to
speculate on the future movement of the underlying issue.


PLAY (speculative - bullish/debit spread):

BUY  CALL  DEC-12.50  PXD-LV  OI=775   A=$2.19
SELL CALL  DEC-15.00  PXD-LC  OI=1556  B=$0.56
INITIAL NET DEBIT TARGET=$1.38-$1.50  ROI(max)=66% B/E=$14.00


Traders who don't mind owning the stock might also try a collar;
Buy the underlying, sell a DEC-$15 Call and buy a DEC-$12.50 Put
for a cost basis near $14.00.  Maximum profit will be $1.00 and
maximum potential loss will be $1.50.


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MRVT - Miravant Medical  $15.94  *** On The Rebound? ***

Miravant Medical is engaged in the integrated development of
drugs and medical device products for use in PhotoPoint, the
company's proprietary technology for photodynamic therapy.
PhotoPoint is a medical procedure that integrates the use of
proprietary light-activated drugs, light producing devices and
light delivery devices to achieve selective photochemical
destruction of diseased cells.  PhotoPoint has the potential to
be a safe, cost-effective, minimally invasive treatment for
indications in a broad number of disease areas, including
ophthalmology, oncology, cardiovascular disease and dermatology.
Miravant is currently conducting trials in ophthalmology and
oncology testing its leading drug candidate, SnET2 (tin ethyl
etiopurpurin), and is developing products in collaboration with
its corporate partners, including subsidiaries of Pharmacia &
Upjohn.

Biotechnology stocks were among the few bright spots in the
market today and Miravant was one of the issues making solid
gains.  The recent recovery in MRVT's share value began last
week after an announcement at the American Heart Association
meeting in New Orleans.  The company announced that it has
achieved positive results in studies of its PhotoPoint therapy
for both the prevention of restenosis and the treatment of
lesions arising from common procedures such as angioplasty and
stenting.  Miravant presented the results of studies showing
broad potential applications for PhotoPoint therapy and the
results suggest that the procedure could be used as an adjunct
to angioplasty and could also be useful in re-opening arteries
by depleting cells in established restenotic lesions.  Miravant
has several other drug candidates that are showing potential in
advanced pre-clinical models for prevention and treatment of
unique problems such as vascular graft intimal hyperplasia and
atherosclerosis.  MRVT has also developed guidewire-compatible
endovascular light catheters to be used in combination with its
novel drugs.

Based on the recent bullish activity in the issue, investors
are speculating that the company is "back on track" and our
position offers an excellent reward potential at the risk
of owning this unique issue at a favorable cost basis.


PLAY (speculative - bullish/synthetic position):

BUY  CALL  DEC-20.00  SQD-LD  OI=644  A=$0.62
SELL PUT   DEC-12.50  SQD-XV  OI=650  B=$0.50
INITIAL NET CREDIT TARGET=$0.00-0.12  TARGET ROI=20%


******************************************************************
MEDQ - MedQuist  $15.31  *** Healthcare Sector ***

MedQuist is a leading provider of medical transcription services,
a key component in the provision of healthcare.  Transcription
is the process by which dictation is converted into an electronic
medical report.  The timely production of accurate reports is
necessary for patient care and healthcare providers to receive
reimbursement.  Using thousands of transcriptionists, proprietary
software, sophisticated digital dictation equipment and ability
to interface with healthcare providers' computer systems, the
company provides customized solutions to shorten its customers'
billing cycles and reduce their overhead and other administrative
costs.

The healthcare service industry has performed incredibly well in
recent months but although MedQuist is the largest electronic
medical transcription service company in the United States, the
company's share value has slumped to all-time lows.  Earnings are
not the cause; MedQuist generated solid results during the third
quarter of 2000, despite a tough marketplace.  MedQuist remains
an extremely strong company, with a blue-chip client base, high
recurring revenue, and strong earnings and cash flow, and their
management remains committed to the company's growth prospects.
Last week, a recovery began as MEDQ was raised to a near-term
"accumulate" rating by analyst David Risinger at Merrill Lynch,
and to short-term "outperform" by analyst Anthony V Vendetti at
Gruntal & Co.

Based on the recent trend, our outlook for the issue is bullish
and the current upward momentum should propel the share value to
a profitable range.  In the event of further consolidation, this
company would also be a candidate for any long-term portfolio.


PLAY (speculative - bullish/synthetic position):

BUY  CALL  DEC-17.50  QQU-LW  OI=0   A=$0.62
SELL PUT   DEC-12.50  QQU-XV  OI=50  B=$0.38
INITIAL NET CREDIT TARGET=$0.00-$0.06  TARGET ROI=20%




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