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Daily Newsletter, Thursday, 11/30/2000

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The Option Investor Newsletter                 Thursday 11-30-2000
Copyright 2000, All rights reserved.                        1 of 2
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MARKET WRAP  (view in courier font for table alignment)
        11-30-2000        High      Low     Volume Advance/Decline
DJIA    10414.50 -214.60 10610.50 10292.40 1.51 bln   1002/1885
NASDAQ   2597.93 -109.00  2641.75  2523.04 2.74 bln   1312/2760
S&P 100   697.28 - 15.19   709.05   684.30   totals   2314/4645
S&P 500  1314.95 - 26.98  1334.55  1294.90           33.3%/66.7%
RUS 2000  445.94 -  8.66   454.60   440.76
DJ TRANS 2751.19 - 48.23  2797.33  2749.65
VIX        32.92 +  2.72    34.88    32.20
Put/Call Ratio      0.75

Please let this be capitulation!

Is it possible we could be thanking Gateway a week from now for
finally creating the environment we needed for a long awaited
capitulation event? Maybe so, but this morning Gateway shareholders
were not excited. After warning that sales over the holiday
weekend were much slower than in past years GTW lost over 1/3 of
its value and the news rippled through the markets like a title
wave. Altera also warned for the second time and the 1-2 punch sent
analysts racing to downgrade the entire PC sector, Chip sector,
Retail sector and almost any company that could spell PC. The
result was a massive drop with the Dow dropping over -320 points
and the Nasdaq -180 points at the low of the day. The Dow bottomed
at 10300 and the Nasdaq just above 2500 on heavy volume and the
bargain hunters finally arrived. The volume was very heavy with
both the Dow and Nasdaq posting the 2nd largest volume days ever.

The sentiment at the open was one rarely seen but also one which
has a good history of causing changes in market direction. The
multiple downgrades of everything PC had traders running for cover
before the open. The negative sentiment finally caused strong selling
on heavy volume. This is what is needed to create a market bottom.
The small traders and traders with limited capital finally had to
close positions or face being hit with even larger losses if the
drops continued. This final capitulation is what traders wanted to
see and it did not hurt a bit to have it occur exactly at -50% off
the highs for the year. Normally these big news events which occur
after long periods of directional market movement tend to reverse
the market trend even if only for a short time. If this was not
the capitulation day they were expecting then we have a really bad
day somewhere in our future. For it to qualify now it would need
to be below 2500 and involve a point drop of something close to
-200 points. Neither of those possibilities thrill me tonight.
The possibility still exists that someone bigger than Gateway will
warn and cause even a worse reaction. The most discouraging thought
I can give you tonight is we are just now approaching earnings warning
season. The next four weeks are the real problem for warnings. Not
a pretty picture but is there anybody left that does not understand
the economy is slowing and earnings are down? The news is out and
any future warnings will simply be more of the same. Yes they will
impact the market and make headlines but it will take a very big
warning to create a worse reaction than today.

The biggest losers from the Gateway warning included GTW -10.50,
INTC -4.63, IBM -6.31, HWP -2.19, DELL -2.63. Even non-PC makers
fell as MSFT lost -8 on the expectation of weaker software sales
following weaker PC sales. CSCO lost -4 and broke the low intraday
of 45.25 from October but recovered some at the close. With the
inventory channels and retailers shelves full the possibility of
a price war now looms large. Retailers posted big losses as
expectations of margin cutting and slower sales came closer to
reality. BBY and RSH both lost close to $4 on the news. The sales
forecast stretched across the Internet sector as well with prospects
of fewer logons, fewer subscribers, fewer DSL sales, etc. The AOL
rally which started yesterday was promptly hit with a -2.75 loss.
The PC/Chip sectors were the only warnings right? Not really but
the most visible. Ann Taylor warned of slowing sales and dropped
-$8.69 to $21 but was over shadowed by the PC bomb.

The market internals today were bad but not as bad as we have seen
on major down days in the past. The new lows on the Nasdaq was
near 900 compared to only 41 new highs. At the worst of the day
the declines were beating advances by 4:1 but at the close the
ratios were back to 2:1 in favor of declines. The 2.69 billion
shares traded on the Nasdaq and 1.51 billion on the NYSE was the
2nd largest on both exchanges. Today was painful but there are
signs that there may be a change in our future. The rebound from
2500/10300, while not back to even for the day, was encouraging.
There were signs if bottom fishing in many tech stocks. ARBA, BRCM,
with big gains. This is remarkable only because these are the stocks
that have been taking the brunt of recent selling. They are also
the stocks that appeared to have put in a bottom on Wednesday and
investor sentiment has shifted to buy from sell even when the market
is moving in the other direction. Another strong indicator was the
very strong "buy on close" orders on the NYSE for, are you ready?,
LU, Q, HWP, GTW and GE. Hundreds of thousands of shares in tech
stocks and the biggest Dow stock GE. GE had almost one million
shares to buy at the close or almost 5% of the days volume. Would
you bet $50 million on GE if you thought the Dow was going down
much farther? Goldman Sachs' chief strategist Abby Cohen told
clients today that because valuations have become more appealing,
her model portfolio is now overweighted at about 35% in tech and
telecom for the first time this year. Thank you Abby!

Other positives included the NVLS announcement after the close.
The CEO reaffirmed their estimates going forward and said sales
looked strong. The BRCM CEO and the VTSS CEO made the same statements
today. Hmmmmm. Three chip stocks with no problems. Also there were
some interesting developments in defensive stocks. Stocks like MRK,
BMY, CAT, WY, IP and MO which are pockets of safety in times of
market drops all fell today. When techs are down they are up and
most had been moving up steady in contradiction to the Nasdaq drop.
Today that trend changed. Nothing is cast in concrete and this can
change again tomorrow. The bounce today could have been caused by
short covering before the weekend. With the election likely to take
a serious turn one way or another before Monday, investors with big
short profits figured that covering today at support of 2500/10300
was a wise move. Also, as the last day of the month we could have
seen a last minute wave of portfolio window dressing by fund managers.
There are as many reasons for the end of day rally are there are
analysts. The -50 point fall in the Nasdaq at the close was in my
opinion simply fear of darkness. With the recent rash of bad news
after every close, even some of the hardiest investors, took their
profits from the bounce so they could sleep safer tonight.

The markets are looking for good news from the Fed soon. Fed funds
futures are now factoring in a 32% chance of a rate cut in December
and a +90% chance of a cut in January and February. Is the Fed head
listening? We will get a chance to see if he has anything to say on
next Tuesday when Greenspan speaks at 10:45AM on banking and the
economy. St. Louis Fed President William Pool made a comment today
that sounded like he would favor a rate cut if the market started
impacting the economy. Well don't look now but the wealth effect is
now the wealth defect will millions of investors significantly worse
off than they were this time last year. Many have tax liabilities
from selling shares for a profit earlier in the year but after
reinvesting the proceeds in every dip since they have no cash left
to pay the bill.

Christmas sale - all Nasdaq stocks -50% off!

At the low of the day today, 2523, the Nasdaq was EXACTLY -50% off
the March closing high of 5048. While that alone is amazing, it
was also a low not seen since August 8th, 1999. This means the
entire 100% gain from last fall has been completely wiped out
along with hundreds of thousands, if not millions, of new investors.
Experienced investors who understand stop losses and money management
are now faced with another opportunity to "buy low, sell high."
The markets are one of the true battle grounds where anyone, anywhere
with as little as $500 can do battle with the giants in the industry.
Unfortunately these novice investors do not have the same education,
discipline and money management skills as those who have been doing
it for a living for decades. Those refusing to spend the time to
learn these skills are doomed to go broke. Without learning and
practicing these skills on a limited basis before committing all
your funds you have about as much chance of success as being picked
out of the crowd to go ten rounds with Mike Tyson. New investors
are now feeling cheated, frustrated, beaten and broke. CNBC has
been running a series all week about trading as gambling. The
patterns are clear. Traders that could just buy the next dip or
the daily tech rocket last year and recover any profit from that
last busted trade, are finding out that that tactic does not work
in a bearish market. Traders who lose on 2 call contracts try to
double up on the next trade to 5 contracts to WIN it all back, then
10 contracts when that trade goes wrong. Instead of INVESTING with
a sensible game plan they are throwing money at every trade they
can find trying to make up for losses with volume. It does not work
that way as we all know. As an investor you need to have a trading
plan that has capital preservation as your number one goal. The
number two goal is to make money. Without capital the other goals
are impossible. If you have a losing track record you should be
investing less and less and be much more picky about each trade.

When your track record turns around then gradually make bigger trades.
If you go into a casino with $500 and the thought when I lose it
I will quit, you will lose it. Only on rare occasions will anyone
win with that concept. I have stood at tables for years and watched
players win hundreds of dollars over an hour or two only to give it
all back within minutes when they got too cocky from several big wins.
Those with some money left when they bore of the game are likely to
bet it all on the last roll and go home broke. If they win that roll,
suddenly it was not the last roll and the last hour repeats itself
until they do lose it. Since the odds in a casino are ALWAYS in the
favor of the house successful gamblers have to practice money
management. The same is true in the market only we can always wait
until the odds are in our favor. Many traders don't wait and that is
why money management is so critical. If you have not been successful
recently we strongly suggest you reconsider your trading plan. Sit
out and watch for several days. Pick several stocks that you want
to trade. Understand how they move intraday? What are the normal
trading ranges? Where is support/resistance? If you only had money
left for one play where would you want to place your buy? When would
you get out? (don't cheat) How does the market cycles impact your
stock? This is not a dart board game. It is real life, your life,
your future! When you sit down in front of your PC you are playing
with real money. Many traders lose sight of that fact. Consider this.
How much money is your family going to spend on Christmas? How much
could you lose on that next bad trade? Which is the better investment?

Do you feel I am picking on you? I am not. I get letters from time
to time when people blow up their accounts asking what they did
wrong and I got one today. This person ran their account up to
almost $500,000 and back down to $500.00 since April. I know of
multiple traders with over $1 million each in options expiring
worthless soon. Obviously the concept of entry points, stop losses
and money management was lost on them. Hopefully your case is far
better than those and I can shock you into rethinking your trading
plan while you still have capital to trade. These last three months
have been great months for option traders. Not call buyers but
option traders. Which are you?

Friday may be an exciting day. We could see a continuation of
today's bounce and the futures are pointing in that direction. The
Chicago Purchasing Managers Report today showed a huge drop from
48.7 in Oct to 41.7 in November. Below 50 is a contraction and 40
would be nearing recession status. Friday we get the National version
and should it mirror the one today it would provide more pressure
for the Fed to cut rates. The Personal Income/Spending Report
confirmed what we all know. Income dropped by -0.2% and spending
rose by +0.2%. The pressure is on to trade more and make up the
difference! Any morning bounce on Friday could be pressured by
the many court cases racing to conclusion in Florida. Gore only
needs to win one to change the outcome significantly. Will it impact
the markets? Who knows but the point is that many traders will want
to enter the weekend flat. This could cause trouble at the close.
Hopefully traders will be smelling a rally after a strong day and
be throwing money at the market. Either outcome is a possibility.
I am long. I bought BRCM, BRCD and JNPR on the dip. I would be
really excited to see a long play last for more than 24 hours but
I am ready to jump out if things turn ugly again. Are you? Expect
the best but prepare for the worst BEFORE it happens.

Good luck and don't buy too soon. Remember it is "buy low, sell
high", not "buy at the lowest, sell at the highest."

Jim Brown

Would you rather be lucky or good?

The Associated Press told the story today of a man in Boston
who thought he had sold his 3,000 shares of EMC in the early 90s,
when in fact he had unloaded only 2,000 shares. Since the shares
were purchased in 1989, they have split 6 times and appreciated
approximately 80,000%. The Forgetful One's windfall from his
1,000 rediscovered shares: $4 million. The lesson for stock
investors: Don't panic, time changes things a lot.


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Just Another Day
By Austin Passamonte

Thursday, November 30th 2000 was just another day in the markets.
For those who played the upside it was bad. For those who played
the downside it was good. For those who did neither it was
neutral. Simple as that. The market was indifferent. The approach
we chose to take created our own individual perception.

For some traders it was their last day in the market before going
bust. Margin calls exact a toll each day with significant drops.
Some choose to ignore the bear and continue bullish plays
regardless of market trend. What worked before will surely work
again but one can't expect the same approach to perform straight
through an entire career from start to end.

Market Sentiment is merely a market forecast tool. We do not
enter emotion our hindsight into our forecasting role. That
would compromise the very purpose served.

More than a few question how we remain market-neutral while
witnessing stocks in IRAs and 401Ks decimated. We're of the
thought that these are long-term holdings without plans of
liquidation near-term. Paper gain, paper loss is merely
perception instead of realization. Value appreciation makes us
feel good (wealth effect) and subsequent depreciation makes us
feel bad (loss effect) but it's only gain or loss when sold. We
offer the following example forwarded to us as perspective:

"...The Associated Press told the story today of a man in Boston
who thought he had sold his 3,000 shares of EMC in the early 90s,
when in fact he had unloaded only 2,000 shares. Since the shares
were purchased in 1989 they have split 6 times and appreciated
approximately 80,000%. The Forgetful One's windfall from his
1,000 rediscovered shares: $4 million.

The lesson: Don't panic, time changes things a lot..."

Wonder what he sold the first 2,000 shares for? That pretty much
sums up short-term emotion tied to long-term investments.

Back to short-term trading. Each session like today is followed
by questions of, "Is this the bottom?" Our answer is "depends."

For this session? Yes. For the week? Probably. For this year &
beyond? Not even close.

We could have easily begun our year-end rally today. This remains
to be seen. What we need to witness for a new multi-year bottom

Cessation of earning warnings and shortfalls. Pre-warn season
returns soon and further bad news will result in subsequent
market declines.

2. Economic stability - Fed easement. The first interest rate
reduction will be a step in this direction.

3. Lower oil prices. This could happen early next year but not
likely to be sooner.

4. More market pain. Margin debt is still too high. We've not
seen total washout of all weakness yet. Equity Armageddon will not
be pretty for those who refuse to prepare for it. We've had ample
fair-warning for months now, how we choose to handle these market
conditions are strictly up to us.

Traders ask how much lower many stocks can go. The truth is they
can fall further. INTC at $38... how much lower CNBC asks? They
said the same thing from $75 to $60. What happened since?

Are there any tech stocks still with p.e. ratio valuations above
200? Share price past & current is irrelevant on judgment day.

5. S&P 500 Commercials moving from all-time historical net-short
to neutral. This will happen after the previous four events and
likely not sooner. They have amassed unbelievable fortunes
since shorting futures from the 1400 level up to 1550 and back
down. The fact that they continue to short further is evidence
enough of big money conviction on our future.

Some say the SPX will reach 1650 within twelve months and we
believe that is very possible. More possible we will do so from
below 1250 first. Talk of 1575 by year's end has silently faded

Is the great bull dead? Nope, just chewing cud and biding time.
The markets will rally long & hard both directions from now until
far beyond our time in the sun.

Fortunes were made and lost in the markets today. The same
opportunity exists tomorrow and every session beyond. How we
choose to approach that shall dictate what our financial fate will
be. Trade the right direction (if any) and follow the trend if
even for that day. The trend is always your friend during rallies
both North and South.


Thursday 11/30 close; 32.92

30-yr Bonds
Thursday 11/30 close; 5.65%

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)
735 - 720               11,154        5,973         1.87
715 - 700                4,505        8,987          .50

OEX close: 697.28

695 - 680                   180       8,951        49.73
675 - 660                     3       7,616      2538.67***
Maximum calls: 750/5,458
Maximum puts : 640/10,133

Moving Averages
 10 DMA  711
 20 DMA  725
 50 DMA  736
200 DMA  774


NASDAQ 100 Index (NDX/QQQ)
 72 - 70                55,087        43,457         1.27
 69 - 67                27,492        15,999         1.72
 66 - 64                26,313        35,691          .74

QQQ(NDX)close: 62.98


 61 - 59                  6,052        8,186         1.35
 58 - 56                     30        4,595       153.17
 55 - 53                     37          743        20.08

Maximum calls: 70/42,587
Maximum puts : 75/33,846
Moving Averages
 10 DMA 68
 20 DMA 72
 50 DMA 79
200 DMA 91


S&P 500 (SPX)
1375                   32,452        27,429          1.18
1350                   15,561        33,936           .46
1325                    4,906        16,692           .14

SPX close: 1314.95

1300                    7,197        18,617          2.59
1275                    1,921        16,199          8.43
1250                    7,285        32,351          4.44

Maximum calls: 1400/64,370
Maximum puts : 1400/51,101

Moving Averages
 10 DMA 1343
 20 DMA 1372
 50 DMA 1390
200 DMA 1437


CBOT Commitment Of Traders Report: Monday 11/27
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         -138        +100           -2462       -2436
Total Open
Interest %       (-1.94%)    (+1.42%)       (-9.76%)     (-9.60%)
                 net-short   net-long       net-short   net-short

Open Interest
Net Value         -363        -733            -223        -77
Total Open
Interest %      (-1.76%)      (-3.58%)      (-0.42%)     (-.16%)
                net-short    net-short      net-short    net-short

S&P 500
Open Interest
Net Value         +68303       +61563        -79145      -72376
Total Open
Interest %       (+34.74%)    (+32.17%)      (-11.76%)   (-10.91%)
                 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 with the disparity between small
specs and Commercials increasing.

Small specs have now gone to a net-short position on the DOW.  Data
compiled as of Tuesday 11/21 by the CFTC.


Please visit this link for Market Posture:



The Nature Of The Beast
By Molly Evans

Is it my imagination or do my nights to write always fall on some
of these huge market days?  I try to write these up the day before
it comes out so that I can be trading during the day.  However,
it then seems we have huge moves or news that take place and the
article seems silly in light of current events.

What do you say about current events anyway?  It's sick!  I
agree!  I told them out at the Denver conference that the Nasdaq,
by my own admittedly amateur drawn trendlines, projected out to be
3150 by the end of the year.  Someone commented that just couldn't
be as that's what the Nasdaq was at right now.  I told him that
3150 might look really good coming up from the depths of where it
would find itself prior to year-end.  We'll see.

The problem is that there has been so much incessant pain
inflicted that people have become stubborn.  Let me give an
example: one doctor I know commented that his portfolio was now
down 40% on the year.  Furthermore, he was now maxed out on margin
because his broker had persuaded him to buy in big the day before
the election to catch that "post election rally" that "everyone"
knew was going to happen.  I told him that this was no longer a
bull market and that we'd see lower lows and some heart stopping
days in the days and weeks ahead but he shook that off saying,
"Well I'm not going to sell now!  Maybe if it got to where I was
looking at needing to just preserve a little capital to be able to
stay in I would but I'd have to be down 70% to do that!"  Suit
yourself doc.  Multiply him by millions of investors who won't
cut their losses until they just can't stand it one moment longer.
That cut off point is a little different for everyone and this
drip, drip, drip of selling is the manifestation of investors
reaching their uncle point.  They've been redeeming their shares
of mutual funds and those big guys are now trapped.  They're
having to sell to pay out the money.  Each big down day like
today results in more margin calls and selling and the cycle is

If you've ever studied bear markets, you would find that this is
what happens.  No long term buy and hold creature ever emerged on
the other side of a real bear market.  People are a little caught
in the headlights by this one because the last eighteen years have
been so good to them.  That's why this could drag on for a while
yet too.  I still hear, "Yeah, well, I made good money last year
and have so throughout my whole investing career, so I don't mind
having to give a little back this year.  That's just the price you
have to pay when you're in it for the long term."  You don't mind?
Oh! Ok.  At what point do you mind then, sir?

The good news is that the VIX is finally starting to move off
its duff.  My data showed a high of 34.73 for the day, a move of
more than 4 points.  It did finish down from that but it didn’t
finish red on the day at least.  It's a bad thing for the VIX to
drop on a down day in a bear market.  The nine-month cycle lows
that Carl Swenlin of DecisionPoint tracks are due December 1.  If
today was an intermediate low, my hat is off to Carl for his finesse
in timing.  There's no buzzer that goes off saying that such and
such a day is the start of the nine-month cycle -- that's determined
by crunching the numbers and understanding market cycles.  When I
started studying the nature of bear markets, I actually started to
feel better.  Why?  Because they too go away.  Just as the public
gets in a happy drunkenness with a run away bull market; that
"this time it's different" and it'll never end; a bear market is
the mirror image of that.  When the doom and gloom is so
oppressive and everyone thinks, "Well, this time it's different."
so too, does it end.  In my humble opinion, we're not there yet,
not for the bigger picture.  So, we're reduced to what we love to
do best.  Trade it.  Up, down, and things in between.   That's
ok.  It's still easy to get caught on the wrong side as the
whipsaws are a plenty but that's why we have to hone our skills
as traders.  I try to get in my own way on a daily basis.  There's
no greater challenge than being in the business of trading for
yourself if you ask me.

Now, no article of mine would be complete without at least a
little bit of economic drivel to enlighten the mind.  We didn't
have a newsletter go out last Thursday in respect to Thanksgiving
so I got relegated to the backseat in terms of getting my chance
to talk to all of you.  I had much to tell you as I had just been
to Chicago for my yearly pre-holiday shopping escapade.  Now that
I'm fully immersed in the market, I can never again look at
shopping in the same way as I had previously.  When I go into a
store these days, I'm looking around wondering how this store
might make me some money instead of me leaving bits of my net
worth with them.  As we go just before the standard holiday
season, it's more difficult to gauge the quality and amount of
Christmas spirit by the populace of shoppers and bags they're
carrying.  Yet, I can't help but to put out my feelers and
people watch.

Shopping on Michigan Avenue in Chicago is in itself a skewed
study.  There are no Wal Marts (WMT) on Michigan.  This is where
the Saks (SKS), Bally's, Nieman-Marcus', and Tiffany's (TIF)
reside.  People frequenting these stores typically are in the
higher income brackets of the nation but just the same, it's a
great place to walk, look and play.  I can't say as I saw throngs
of people rushing in to buy anything though.  Crate and Barrel,
which I believe is a private company, seemed to be selling a lot
of candles but the $75 Turkey platters were in full stock.
They're going to have to sell a lot of candles to pay for all
the Christmas help they had too.  C & B has beautiful merchandise
and two floors of chic furniture but it appears to me, the
furniture is going to lay in inventory for some time.

My husband likes to visit a friend he has worked with through the
years when he shops at Mark Shale.  When Dan asked him how
business was in their new sprawling and opulent store, "Jack" told
him that business "couldn't be better" . . . but there was no one
in the store on a Saturday afternoon.  As Dan said his goodbyes
and turned to leave, Jack asked him in a more hushed voice if he
was coming back as "We need your business."  Down the street, at
Abercrombie and Fitch I couldn't find a worker to corner to ask
how business was going so I found a shirt for my son on the sale
rack.  During the sales transaction I then got to the real business
of inquiry.  He said sales had been steady but if you follow the
retail sector at all, it would interest you that ANF just a few
days ago was challenging its 52 week highs but reported last night
that same store sales had dropped 8% for November.  Well,
shareholders showed them what they thought of that!  ANF was down
40% on its lows today.

Nike (NKE) looked busy; Sony (SNE)usually looks busy but people
like to play with the toys in there and the Sony Playstation 2 is
sold out.  Walgreens (WAG) is always crowded and cash registers
sing there.  Consequently, the stock is hitting new highs this
week.  Sharper Image (SHRP) was packed with people and the clerks
were busy but the guy helping me was too kind to tell me that "oh
no doubt about it, this store brings in the bucks!"  When I asked
him if he could compare it to last year, he waved his hand saying,
"Oh no!  No I was a stockbroker out in California this time last
year."  Oh really?  How interesting.  SHRP recently beat the
street for the second consecutive quarter and sports a PE of only
13.4.	The guy didn't lie when he said the folks had been keeping
them hopping.  Sharper Image reported a 24% increase in November
sales over the same period last year.  When pressed for other same
time last year comparisons, the ladies working Gap (GPS), Limited
(LTD) and Marshall Fields all told me that business didn't seem
as brisk as they had remembered but they too were steady.  The
Warner Studios guy was emphatic that this was shaping up to be a
great year for them with all the Harry Potter memorabilia, Scooby
Doo and Power Puff Girls toys.

As to the retail stores, I can't say as I found anything to short
or go long.  My own observations do jive with what is being
reported on the newswires.  Managers of shopping centers coast to
coast reported to Reuters that they drew a steady flow of crowds
but that shoppers seemed to be scouring the stores for the
advertised bargain sale items.  With the consumer confidence level
dropping yet again this month to a 13-month low, all eyes are on
the retail customer this year to read a significant aspect of the
American economy.  Will shoppers plunk down their credit cards and
cash once again or should we be bullish on coal futures?  They're
plunking it down at American Eagle Outfitters (AEOS).  That
company reported that November same store sales were up 13.4%
over 1999 numbers.  In keeping with a slowing economy, discount
retailer Wall Mart (WMT)is apparently seeing more traffic too.
The stock has enjoyed nice gains thus far this week based on their
reporting of $1.1 billion in sales on the Friday after
Thanksgiving.  That was up slightly from the $1 billion reported
last year for the same period.  K-Mart and Target are not quite
as robust but are still enjoying winning months in their stores.

Internet retailers see the next week or so as critical. Online
buying got off to a one-week late start, picking up the week of
Nov. 12, according to Nielsen/Net Ratings Holiday E-Commerce Index.
Although traffic from online home users jumped 27 percent on Friday
compared to the rest of the week, the momentum needs to continue.
"Traffic started out slow, and we need to make up for lost time,"
said Sean Kaldor, vice president of e-commerce for Nielsen/Net.
"Online companies can't be stuck with all the last-minute
shipments."  The Yahoo! (YHOO) shopping site, home to over 10,000
web-based retailers, saw their order volume double on last Friday
over the year ago day.

I always enjoy watching Wall Street Week with Louis Rukeyser on
public television on Friday nights.  Last week they discussed the
hot items of the year as well as the hot stores.  Hands down,
Barnes and Noble (BKS)is the store to succeed as they're selling
not only books and music but also video games.  Ahh yes, if only
we could get that Playstation 2.  Here too is a stock hitting
intermediate term highs this week but in the last few days has
pulled back on declining volume.

So what's it all mean?  It means that the retail sector and the
American shopper is still a piece of the economy pie and must be
watched for clues.  Shoppers credit habits are being scrutinized
to make judgments on how they're handling finances.  The consumer
credit reports lag two months for what they track.  The last one
covered September which showed that credit growth had moderated a
bit.  It was half of what it had been in August showing consumers
as a being a little prudent with their willingness to charge.  The
next report is due November 7th.  We'll see just how generous on
purchases shoppers were in the terrible market month of October.
Until then, you cut losses short and stay here in the game with

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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.


WIN $21.63 -0.38 (+0.00) WIN appears to be settling in a trading
range between the $21.50 and $22 levels.  Try as it might, the
stock just cannot settle above $22.  The news of WIN filing to
sell $1 billion worth of debt last week may have something to do
with the stock's lackluster trading this week.  In light of
WIN's consolidation, we're dropping the low volatility play
from the recommended list.  We'll take our small profits and
search out more enterprising plays.

GADZ $18.06 -2.34 (-2.06) The retail sector was a mixed picture
during Thursday's trading as November sales reports hit the
wires.  For its part, GADZ reported a 23% increase in sales over
the same time last year.  Despite the bullish numbers, the stock
sold-off on very light volume.  It appeared to be a case of
buyers stepping out of the way and letting the sellers take
control.  Given the light trading on which GADZ fell, the stock
could easily bounce back in the coming trading sessions if the
buyers return.  However, since GADZ closed below our $19.50
protective stop we are not longer covering the play.  Look to
exit positions on a rally back to the $20 level in the coming
trading days.


VRTS $97.56 +9.56 (-3.31) It's often been said that bearish
moves are quicker than rallies, and our play on VRTS certainly
bears that out.  In the past 3 weeks, the stock has given back
all its gains from the prior 3 months, and we are quite happy
to have taken some profit out of the move.  As the NASDAQ
continued to trace new lows today however, VRTS spent the
whole day moving higher, gaining more than $9 on more than
triple the average daily volume.  Vigilant traders got an
inkling of this as VRTS began to see strong buying interest
going into the close yesterday, prompting us to move our stop
down to $91.  This has all the earmarks of a bottom being put
in place, and since it took out our stop, it seems an
appropriate time to leave the software stock to its own devices.

FCEL $55.75 -0.31 (-6.36) FCEL provided several good opportunities
for day traders to make a profit in the last few days.  For
example, on Wednesday, the stock reached a high of $56.63, and
a low of $48.63.  However, FCEL showed uncharacteristic strength
in today's bloodbath.  After dipping briefly below the 200-dma
of $49, the stock recovered and began an ascending move through
out the rest of the day.  The stock closed just above the
converged 5 and 10-dmas of $55.50, which is impressive, as the
Nasdaq and Dow both closed near the lows, after rebounding only
slightly.  If the stock were truly on a downward trend, it would
probably have rolled off the 5 and 10-dmas  to close down much
lower than $55.75.  Therefore, we are dropping this put tonight
and moving on to other put opportunities which are plentiful
in this market.

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The Option Investor Newsletter                 Thursday 11-30-2000
Copyright 2000, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

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CELG $57.06 -0.69 (-3.31) The profit-taking we saw on Tuesday
continued into Wednesday as the stock, unable to stay above the
$60 level, pulled back $2 on low volume.  As well, CELG managed
to bounce off support from the 10-dma, now at $56.78.  Today, the
stock found support at the $55 level and from there, attempted to
stage a comeback.  Encountering resistance just below $60, the
stock closed down fractionally on low volume.  With today's close,
CELG has formed two-thirds of a reversal pattern, which if
confirmed by a strong up day tomorrow, could be a bullish sign.
For aggressive traders, a bounce off the 10-dma could allow for
an entry but confirm with volume.  There is also support at $55
and at our stop price at $52 but make sure the stock closes above
this level.  A break through resistance at $60 on strong volume
would allow conservative traders to take a position.  With the
American Society of Hematology (ASH) Meeting commencing tomorrow,
Positive announcements from the company could be a driving force
for the stock price going forward.

AMGN $63.63 -4.50 (-2.44) Proof that nothing moves in a straight
line, Drug stocks succumbed to the bears today as the major
indices sold off sharply.  For its part AMGN's defensive stock
status wasn't enough to keep the buyers happy as it bounced
south again from the descending trendline near $68.  After the
decline began, it seemed that nothing could stand in the way of
the bears, with the stock giving up $4.50 to end the session
solidly below the 200-dma ($65.35) again.  Today's decline has
brought AMGN back down within spitting distance of support at
$62, also the site of our $62 stop, and we need to be alert for
further declines.  If you follow Stochastics, you will notice
that they are rolling over on the daily chart, and further
weakness in the Drug sector will be a tough obstacle for our
play to overcome.  This could be just another opportunity for
aggressive players to get in to the play at a discount though.
If that fits your profile, look to initiate new positions on a
volume-backed bounce from support.  More conservative players
will wait for the stock to move solidly above the 200-dma again
before playing.

SGP $56.06 -0.38 (+2.56) Even defensive areas like Drug stocks
suffered today as the major indices sold off on renewed fears of
a hard landing for the economy.  SGP actually fared better than
some of its defensive brethren, with a fractional loss that only
materialized in the final hour of trading.  Early in the day,
the stock actually moved above $57.50 due to yesterday's
positive comments from Goldman Sachs followed by CSFB today.
The firms initiated coverage of the stock with Market Outperform
and Buy ratings respectively, and although buyers initially
responded positively, the conviction of volume just wasn't
there.  Although daily volume came in 50% above the ADV, most
of it came on the sell side as the day wore on.  After the
strong run over the past 2 weeks, a little profit taking seems
natural and the technicals are still pointing to further upside
in the play.  The first level of support is resting at $54, and
this would be a good level for aggressive traders to target new
entries on further weakness.  Solid support at $52 is where we
have set our stop, and while a bounce there would provide an
even better entry, don't try to catch a falling knife.  Wait
for buying volume to pick up again before adding new positions.
As always, conservative players will want to wait for a strong
move to the upside before opening new positions, and a rally
through $57 would fit the bill quite nicely.

A $52.19 -1.69 (+1.25) Today in New York City, Agilent
Technologies hosted an analyst meeting in which it'll focus
on recent contributions it's made to the communications
revolution.  While this, and yesterday's news of Agilent's
wireless manufacturers solutions unit gaining more market share
(a hefty 25% more) within the next 18 months bodes well, the
share price's finding a tough line of resistance at $54.
Although the marketplace itself is amid chaos, it's very
encouraging to see A's pattern of higher lows and highs continue
to emerge in these trying times.  Currently $51 is supporting
the share price intraday, which is no doubt a bullish
indication.  However, we're keeping our stop lower at $44 to
provide room for a pullback to the vicinity of the 30-dma.  If
you'd rather execute the play with a bit more prudence, then
consider setting stops higher and only taking positions after A
exhibits a convincing breakout above the $54 level.

LLY $93.69 -0.81 (+8.88) LLY's strong momentum powered it
through the $97 level this morning.  The share price toggled at
this higher range between $96 and $97 for the better part of the
session.  And another analyst gave LLY a boost today, too.  CSFB
issued a $98 price target per share and started the stock with a
Hold rating.  This new rating follows Goldman Sach's, Robertson
Stephens', and ING Barings' positive coverage of the stock
earlier in the week.  The broader sentiment of the markets
however, eventually took its toll on LLY by late afternoon.  The
advancing issue ultimately suffered a mild bout of profit taking
and closed a mere fraction from its intraday low.   Despite the
bearish close, LLY's current position is still bullish.  The
stock is almost 4 points above our stop at $90 and the converged
5-dma ($90.69) and 10-dma ($89.39).  Conservative players might
think of taking entry into the momentum if LLY bounces back
through the $95 level and shows strength above $97.  Look for
robust volume levels at over 100 K shares intraday to signal
another break to the upside.  Buying on intraday pullbacks is
always an option, but keep stops in place to protect capital.
And remember, take profits quickly.


YHOO $39.63 +0.56 (-1.25) There isn't much holiday cheer going
around down on the Street this week.  The Nasdaq continues to
suffer and Internet shares are bearing the brunt of the selling.
Yahoo is no exception and the stock continues to suffer.
While this is good news for our play, it is time to step back
and look more closely at the recent action, especially after
Yahoo's fractional gain today.  YHOO's decline has been somewhat
muted in recent sessions relative to other stocks and the volume
has begun to dry up.  With the VIX sitting at 33, this may be
the time to start locking in those healthy gains.  So we are
dropping our stop loss down once again to $40.00.  But remember,
there is still no reason YHOO can't trade lower if more
negative news hits the wire.  We have explained before how the
Net sector, and content providers in general, are suffering
from this slowdown in spending.  Company specific news can
still knock this stock down even further.  Yahoo still hasn't
even touched the 10-dma (currently at $42.50) in three weeks,
but did close over the 5-dma today.  We will continue to ride
the trend lower, but will exit the play on the next up move.

SLR $28.50 -4.31 (-7.00)  The weak market environment worked out
beautifully for our put play in Solectron.  An earnings warning
from Altera knocked down nearly every stock in the chip sector,
as well as many in the electronics components and original
equipment manufacturer sector.  Today's selling volume was more
than double the average daily volume, and the stock hit its
52-week low of $28 near the end of the day.  If the trend
persists, and there is no reason to believe it won't, SLR will
likely make a new 52-week low below $28.  With further earnings
warnings possible in the near future we could be in for more
selling.  SLR's pattern has resembled a downward staircase, as it
makes futile attempts to rally and falls down.  Consider taking a
new position on a failed attempt to rally past the 5-dma of $32.68.
We have lowered our protective stop to $32, and would exit
positions if SLR settled above that level.

MVSN $41.50 +2.27 (-7.63) Continuing its decent on Wednesday in
sympathy with a falling NASDAQ, MVSN made yet another lower high
and lower low.  The stock has found resistance intra-day at our
stop price at $43.  Failure to rally above this level allowed
aggressive traders an entry into this put play for a profit by
the end of the day, when MVSN closed down $3.27 or 7.68 percent
on 140% of ADV.  Today, after a gap down at the open, MVSN found
willing bargain hunters, who bid up the stock but once again
resistance at $43 held strong, while MVSN closed up 5.77 percent
on average volume.  A failed rally above our stop price as well
as the 5-dma at $44 would be aggressive targets to shoot for. For
the risk adverse, a break below $40, with the return of selling
volume could the signal to enter this play.  As news has been
light for this stock, confirm direction and sentiment with the
NASDAQ when initiating a play.

NEWP $57.00 -8.00 (-14.25) Finding support at the $60 level and
deeply oversold, NEWP bounced on Wednesday in anticipation of
news that the company would be presenting at Credit Suisse First
Boston Technology Group's annual conference.  With that, the
stock was able to buck a weak NASDAQ for the day to close up
$3.06 or 4.94 percent.  Closing right at $65, volume was light,
less than 85% of ADV, suggesting that there was little conviction
to the rebound.  This was confirmed today as a failed rally above
the 10-dma in the morning brought in the bears, who sold the
stock down, breaking through key support at $60 to close down
over 12 percent, backed by strong volume, 155% of ADV.  Depending
how the market reacts to NEWP's presentation tomorrow, a failed
rally above the 5 and 10-dma (at $63.65 and 67.07 respectively)
as well as $60 could be an aggressive target to shoot for.  Just
make sure NEWP closes below our stop price of $71.  If the market
does not like what NEWP's CEO and CFO had to say, look for a
break below $55 on strong selling for a safer entry.

ITWO $96.38 +5.94 (-16.63) On Wednesday, ITWO announced that its
global logistics marketplace subsidiary, FreightMatrix, formed an
alliance with privately held B2B company NTE.  While immaterial
news such as this in a bull market could help a stock to rally,
negative sentiment in the NASDAQ as well as the B2B sector was
the overriding factor.  Breaking through $100 in the early going
on heavy volume gave traders the signal to sell, which is exactly
what they did, as the stock closed down $11.25 on twice the ADV.
Today, the stock bounced, helped by a relief rally in B2B stocks.
While ITWO closed up 6.57 percent on twice the ADV, there is
strong resistance at our stop price of $100.  Another failed test
of this level could provide for an aggressive entry while a break
below $95 on high volume could provide for a conservative entry.

SEBL $69.88 -1.88 (-16.56) While the gap down at the open made
SEBL tough to play today, the late day rally (likely short
covering) brought the stock right up to a probable entry point
by the close.  With the NASDAQ gapping down over a hundred
points, it was a foregone conclusion that our play would follow
suit.  After finding support near $60, the stock spent the
balance of the trading day moving higher, actually closing the
gap by the closing bell.  The bulls ran out of steam near $74,
and it looks like the stock could roll over again tomorrow on
any bearish follow-though in the Technology sector.  Nothing has
really changed, with earnings warnings and economic concerns
continuing to heap pressure on high-valuation stocks.  With
resistance at $78 and then $80, also the site of the 200-dma
and our stop, SEBL will have a hard time breaking out of its
bearish trend without support from the broader markets, and
that doesn't look likely prior to some resolution in the
election or come conciliatory comments from the Fed concerning
interest rates.  Wait for the buying volume to abate before
initiating new positions, and then jump in when the bears
reassert their control.  Aggressive traders can open new
positions on a rollover from resistance, while more
conservative players will want to see a drop back through the
$65 level before playing.

VRSN $86.69 +5.94 (-6.56) If you were wondering when VRSN was
ever going to bounce, you got your answer today.  Although the
NASDAQ spent the entire day under water due to heavy selling in
the PC and Semiconductor sectors, VRSN spent the entire day
recovering from its gap-down open.  Prompting buyers to come
out of hiding were positive comments from CSFB in the wake of
Toshiba and 3Com selecting the company's cable modem
authentication services.  Analyst Todd Raker said that he
believes more customer wins will lead to better than expected
fourth-quarter results.   Gaining nearly $6 on volume 50% above
the ADV was an encouraging sign for the bulls, but we have seen
this before.  Granted, this was the strongest day the Internet
Security firm's stock has seen in the past month, but the
downtrend is still solidly in place.  Even the rampaging bulls,
believing a bottom may be in place, couldn't penetrate our $91
stop, and the stock fell back sharply at the close.  Resistance
at the descending trendline acted like in impenetrable barrier,
and if the recent pattern repeats, look for more selling to
appear tomorrow.  As buying volume dries up, our play should
roll over again, heading back towards today's low of $75.88.
As selling picks up again, aggressive traders can consider the
rollover from the $91 resistance level to be a good entry
trigger for new positions.

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BRCM - Broadcom Corporation $97.50 +2.50 (-19.63 this week)

Broadcom Corporation is a provider of highly integrated silicon
solutions that enable broadband digital transmission of voice,
video and data to and throughout the home and within the business
enterprise.  These integrated circuits permit the cost-effective
delivery of high-speed, high-bandwidth networking using existing
communications infrastructures that were not originally designed
for the transmission of broadband digital content.  Using unique
proprietary technologies and advanced design methodologies, the
company designs, develops and supplies integrated circuits for a
number of the most significant broadband communications markets.

Once a high-flyer and darling of Wall Street, Broadcom has not
been immune to the Tech bear.  But with positive guidance from
the CEO and analysts coming in defense of the stock, could this
be the turning point?  November has been an especially difficult
month for BRCM, as a break through its 200-dma lead to continued
selling.  Aside from Tech and Semiconductor weakness, BRCM has
had to deal with dilution concerns.  BRCM has been on a shopping
spree this year, acquiring companies with its once high-priced
stock.  This week, the company bought video compression chipmaker
VisionTech.  Analysts applauded the move, seeing it as a good
strategic fit.  With that, it appears that the stock may have
also found technical support at the $85 level this week, as
bounces off that level have been backed by strong buying volume.
A number of analysts have come out with positive comments on
BRCM.  Morgan Stanley upgraded the stock to a Strong Buy from
An Outperform, citing attractive valuation as well as strong
business conditions.  WR Hambrecht reiterated its Buy rating,
anticipating that the stock would outperform its peer group over
the next 12 months.  Today, BRCM closed up 2.64 percent on almost
three times the ADV thanks to CEO Henry Nicholas' upbeat
presentation at CS First Boston's technology conference.  During
his speech, Dr. Nicholas reiterated the company's growth
expectations and confidence in the business.  That being said,
this is a high-risk play, and we would only enter if the NASDAQ
is strong.  With the Tech index in oversold territory, BRCM would
be a likely leader in a relief rally.  For those willing to take
the risk, a bounce off support at $95, $90 and $85 are possible
targets to shoot for but be aware of our stop price at $84.  A
safer way to enter this play would be to wait for a break through
$100, confirmed by strong buying volume and strength on the NASDAQ.

BUY CALL DEC- 95 RDZ-LS OI= 244 at $13.38 SL=10.00
BUY CALL DEC-100*RDZ-LT OI=1025 at $10.50 SL= 7.25
BUY CALL DEC-105 RDW-LA OI= 694 at $ 8.50 SL= 6.00
BUY CALL JAN-100 RDZ-AT OI= 683 at $17.00 SL=12.25
BUY CALL JAN-105 RDW-AA OI=2521 at $16.00 SL=11.50


JNPR - Juniper Networks $124.63 +8.88 (-7.75 this week)

As a provider of Internet infrastructure solutions, JNPR serves
Internet service providers and other telecommunications service
providers, helping them to meet the demands resulting from the
rapid growth of the Internet.  The company delivers next
generation Internet backbone routers that are specifically
designed for service provider networks.  JNPR's flagship product
is the M40 Internet backbone router, which complements the
recently-introduced M20, which is a router built specifically
for emerging service providers.

Before you start thinking that we've taken leave of our senses
by adding a call play on a high-flying Networking stock, take a
look at the late-day action in the Networking sector (NWX.X).
JNPR spent the whole day in positive territory, and by the end
of the day, its gains had begun to have a positive effect on the
entire sector.  The gains were likely due in large part to the
stellar earnings report from BRCD after the close yesterday,
which gave the bulls new hope.  We've been wondering when the
bleeding would end, and after basing for the past week in the
$105-110 area, JNPR looks like it could be ready to reclaim some
of its decimated valuation.  Buying volume has been nearly
double the ADV of 12 million shares over the past two days, and
for their efforts the bulls have managed to drag our new play
17% higher in the face of new lows on the NASDAQ.  This is
obviously an aggressive play and not for the faint of heart.
We are placing our stop at the top of the recent consolidation,
($109), as this should provide solid support in the event of
more Technology weakness.  We would caution against target
shooting new entries on the dips however.  We have seen one
support level after another get blown away, and don't want to
try to catch a falling knife in this market environment.  We
only want to play if the bulls can remain in control, and
continue to push the stock back from the brink of double-digit
status.  The first upside target will be the 200-dma ($148.38),
which just happens to coincide with the top of the gap from
November 17th.  If buyers can't push through the $131-132
resistance level, it will likely be a sign that the stock will
need more time to lick its wounds before venturing higher.
Strong buying volume that can clear this resistance level will
be a good indication that JNPR wants to run higher, and a good
trigger for aggressive entries.

BUY CALL DEC-120 JUY-LD OI= 761 at $16.00 SL=11.50
BUY CALL DEC-125*JUY-LE OI=3217 at $13.88 SL=10.25
BUY CALL DEC-130 JUY-LF OI= 933 at $11.38 SL= 8.50
BUY CALL JAN-125 JUY-AE OI= 377 at $24.38 SL=18.25
BUY CALL JAN-130 JUY-AF OI= 605 at $22.38 SL=16.75
BUY CALL JAN-135 JUY-AG OI= 637 at $19.50 SL=14.25

SELL PUT DEC-105 JUY-XA OI= 788 at $ 5.25 SL= 7.50
(See risks of selling puts in play legend)


BRCD - Brocade Communications $167.94 +14.19 (-21.50 this week)

Brocade Communications Systems is a supplier of open Fibre
Channel Fabric solutions that provide the intelligent backbone
for Storage Area Networks (SANs).  Brocade's family of SilkWorm
switches enables a company to manage growth of its data storage
requirements, improve the data transfer performance, and
increase the size of its SAN.  Brocade's products are primarily
sold in the US with 70% of sales derived from Compaq, Data
General, Dell, McDATA, and Sequent.

We're initiating coverage on BRCD on the heels of its earnings
report and a stock split announcement.  Yesterday after the
market, BRCD charmed the Street with numbers exceeding analysts
4Q estimates by two cents and predicted sales growth in excess
of 150% for the 2001 fiscal year.  Brocade reported $27.2 mln
net profit, or $0.22 per share, on sales of $132.1 mln and set a
2:1 stock dividend effective December 22nd.  There's plenty of
shares available with 400 mln authorized and approximately 110
mln outstanding.  Today, the stock's performance was nothing
less than stellar amid the troublesome marketplace.  BRCD gained
$14.19, or 9.2% on the day and shot up to $173 at one point in
trading.  Volume was 3.75 time the ADV on the climb.  While one
day certainly doesn't make a trend, we're anticipating BRCD to
lead any relief rally on the NASDAQ in the coming days.  Of
course, we would look to enter new positions only after
confirming strength and direction in the NASDAQ.  It's true,
there was literally a slew of positive comments coming from
every end of the Street today, but we don't want to add anymore
risk to this already hot play.  Our stop is set rather high at
$159.  Today, $160 served as intraday support with promise of
higher levels developing higher near $165.  A high-volume move
through the 5-dma ($172.12) coupled with a break through the
200-dma ($177.34) would provide more bullish confirmation.  Look
investor excitement to create additional momentum as BRCD
approaches its split date on December 22nd.  In the meantime, a
relief rally on the NASDAQ would bode well for this call play.

BUY CALL DEC-165 GUF-LM OI=  99 at $14.63 SL=10.75
BUY CALL DEC-170*GUF-LN OI=1755 at $12.00 SL= 9.00
BUY CALL DEC-175 GUF-LO OI= 683 at $ 9.88 SL= 7.00
BUY CALL JAN-170 GUF-AN OI=  50 at $21.50 SL=16.75
BUY CALL JAN-175 GUF-AO OI=  53 at $19.13 SL=13.75
BUY CALL JAN-180 GUF-AP OI= 333 at $17.00 SL=12.25



QQQ - NASDAQ 100 Index Trust $63.00 +0.06 (-7.44 this week)

The NASDAQ 100 Index reflects NASDAQ's largest companies across
major industry groups, including computer hardware and software,
telecommunications, retail/wholesale and biotechnology.  Launched
in January 1985, the NASDAQ 100 represents the largest and most
active non-financial domestic and international issues listed on
The NASDAQ Stock Market based on market capitalization.

The possibility that the NASDAQ has finally reached bottom has
landed the QQQs on the play list.  After falling to the $60 level
during the climax of the NASDAQ's sell-off this afternoon, the
buyers stepped into the QQQs in a big way and carried them higher
near the close.  In fact, the QQQs continued their rally into the
evening session of trading where they gained another $0.50.  If
the NASDAQ follows through on its rebound early tomorrow, new
entries might be taken if the QQQs break above resistance at
the $64 level.  Conversely, a pullback to support at $62 and
subsequent bounce could provide for an additional entry
opportunity.  The fact that the NASDAQ is in deeply oversold
territory could lead to a rebound or a relief rally into year's
end.  We've placed the QQQs on the long-term call list this
evening in an attempt to profit from a potential rebound.
We've also established a protective stop at the $60 level,
which many technicians believe to be a strong support area for
the QQQs.

BUY CALL DEC-63 QUE-LK OI= 1237 at $3.88 SL=2.50
BUY CALL DEC-64 QUE-LL OI=10481 at $3.38 SL=1.75
BUY CALL JAN-64*QUE-AL OI=  613 at $6.00 SL=4.00
BUY CALL JAN-65 QUE-AM OI= 3030 at $5.38 SL=3.50
BUY CALL MAR-66 QUE-CN OI=  475 at $7.13 SL=5.25


ORCL - Oracle $26.59 +3.69 (+2.44 this week)

Oracle is the world's leading supplier of software for
information management, and the world's second largest
independent software company.  With annual revenues of more than
$10 billion, the company offers its database, tools and
application products, along with related consulting, education,
and support services, in more than 145 countries around the

Amidst the ruins across the tech sector Thursday, ORCL provided
investors with solace and profits.  ORCL's bear bucking rally
stemmed from positive comments and upbeat guidance from the
company at the CSFB Technology Conference.  At the conference,
ORCL officials reiterated guidance for the company's upcoming
quarter and provided bullish prospects for the firm in the
coming year.  The positive presentation prompted CSFB
analysts to reiterate their Strong Buy rating on ORCL and
lift their price target to $48.  Today's trading on the heels
of bullish news could very well signal a reversal for ORCL,
which has fallen nearly 50% off its highs traced in early
September.  We're looking for the potential turnaround in
the stock and attempting to profit from ORCL's low priced
options.  Given today's big run-up, a pullback may be in
order, in which event look to enter on bounces off support
levels.  First look for a bounce at $26, lower near $25.50,
or beneath near the $25 level.  Conversely, if ORCL continues
to climb, look to enter new positions on an advance above
the $27 level.  Since we are attempting to play ORCL for
a longer time period, we're setting a liberal stop at the
$21 level and would close the play should the stock settle
beneath its near-term lows.

BUY CALL DEC-25 ORQ-LE OI=17338 at $3.88 SL=2.50
BUY CALL DEC-30 ORY-LF OI=16400 at $1.38 SL=0.75
BUY CALL JAN-25 ORQ-AE OI=27032 at $5.38 SL=3.50
BUY CALL JAN-30*ORQ-AF OI=12879 at $3.00 SL=1.50
BUY CALL JAN-35 ORY-AG OI=33405 at $1.63 SL=0.75
BUY CALL MAR-35 ORY-GC OI= 8117 at $3.00 SL=1.50



No new puts today


A - Agilent Technologies Inc $52.19 -1.69 (+1.25 last week)

Agilent is a diversified technology company that provides
solutions to high growth markets within the communications,
electronics, healthcare and life sciences industries.  They're a
leading maker of analysis equipment with 51% of sales deriving
from its Test and Measurement Unit.  Recently Philips
Electronics agreed to buy Agilent's Healthcare Solutions for
$1.7 bln.  Customers include AT&T, Cisco, and Pharmacia.

Most Recent Write-Up

Today in New York City, Agilent Technologies hosted an analyst
meeting in which it focused on recent contributions it's made to
the communications revolution.  While this, and yesterday's news
of Agilent's wireless manufacturers solutions unit gaining more
market share (a hefty 25% more) within the next 18 months bodes
well, the share price's finding a tough line of resistance at $54.
Although the marketplace itself is amid chaos, it's very
encouraging to see A's pattern of higher lows and highs continue
to emerge in these trying times.  Currently $51 is supporting
the share price intraday, which is no doubt a bullish
indication.  However, we're keeping our stop lower at $44 to
provide room for a pullback to the vicinity of the 30-dma.  If
you'd rather execute the play with a bit more prudence, then
consider setting stops higher and only taking positions after A
exhibits a convincing breakout above the $54 level.


Agilent has been a recent bright spot in the gloomy tech sector.
The stock pulled back early this morning in sympathy with the
NASDAQ, but buyers stepped in near support at the $51 level and
carried the stock higher into the close of trading.  With the
potential of a rebound in the tech sector tomorrow combined with
the possibility of favorable analyst comments stemming from the
above mentioned meeting, A presents a favorable trade.  Along
with the aforementioned entry strategies, aggressive traders
might look to open positions early tomorrow at current levels
if the tech sector displays strength.  Otherwise, wait for a
breakout above resistance at $54 and confirm such a move with
healthy volume.

BUY CALL DEC-45 A-LI OI=1788 at $7.75 SL=5.25
BUY CALL DEC-50*A-LJ OI=2931 at $4.00 SL=2.50
BUY CALL DEC-55 A-LK OI=3916 at $1.44 SL=0.75
BUY CALL JAN-50 A-AJ OI=5935 at $6.88 SL=5.00
BUY CALL JAN-55 A-AK OI=2058 at $4.88 SL=3.00


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The sell-off continues in the equity markets...

Stocks fell precipitously today amid a number of downgrades and
a slew of profit warnings.

Wednesday, November 29

Technology stocks fell again Wednesday amid new concerns over a
slowdown in earnings growth.  At the same time, the Dow posted
triple-digit gains as investors rotated into defensive issues.
The Nasdaq closed down 27 points at 2,707 while the Dow ended up
121 points at 10,629.  The S&P 500 index finished 5 points higher
at 1,341.  Activity on the Nasdaq was moderate at 2.04 billion
shares, with declines beating advances 2,553 to 1,394.  Volume
on the NYSE reached 1.10 billion shares, with declines beating
advances 1,479 to 1,389.  In the bond market, the U.S. 30-year
Treasury rose 17/32, pushing its yield down to 5.64%.

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

Baxter         BAX   DEC75P/DEC80P   $0.56   credit   bull-put
Forest         FRX   DEC115P/D120P   $0.38   credit   bull-put
UnitedHealth   UNH   DEC110P/D105P   $0.50   credit   bull-put

All of our new spread candidates moved higher during the session
but in doing so, there was little opportunity to achieve the
target credits in each position.

Portfolio Plays:

Technology issues slumped today while industrial stocks rallied
as the flight-to-quality continued.  Worries about the slowing
economy and lagging earnings weighed heavily on investors and the
result was another sell-off among new economy issues.  On the
Nasdaq, Internet, software and computer hardware stocks all led
the index on the downside.  In after-hours activity, the news of
poor quarterly earnings by Gateway (GTW) and Altera (ALTR) just
made the situation worse and tomorrow's outlook for the group is
grim.  On the bright side, blue-chips enjoyed substantial gains
as investors opted for the relative stability of consumer product,
financial and drug shares.  Boeing (BA), Wal-Mart (WMT) and Merck
(MRK) boosted the industrial group while weakness in Exxon-Mobil
(XOM), Microsoft (MSFT) and Disney (DIS) limited the rally.  In
the broader market, biotechnology shares continued a recent rally
but transportation stocks slid lower after Merrill Lynch reduced
earnings estimates for seven major air carriers due to continued
revenue pressures from higher fuel prices.  In economic news, a
government revision of the gross domestic product showed that the
broadest measure of U.S. economic activity grew at its slowest
pace in four years during the third quarter.  The data renewed
hopes the Federal Reserve's recent history of interest-rate hikes
is over, but worsened fears that corporate profits will suffer in
a slower economy.

Our portfolio enjoyed a number of favorable moves in industrial
issues with pharmaceutical, consumer products and retail shares
leading the way.  A number of old economy stocks performed well
with Home Depot (HD), Quaker Oats (OAT), Ralston Purina (RAL),
and Hershey (HSY) among the strongest issues.  In the technology
group, Juniper Networks (JNPR) was surprisingly among the upside
movers, closing $10 higher at $115.  The bullish move provided a
great opportunity to roll forward and down to January options,
further reducing our cost basis in the issue.  Another position
that has quickly gone astray, Micron Technology (MU) has yet to
recover from the recent chip-sector downgrades and the technical
indications suggest that the downtrend has been renewed.  Those
of you participating in the bullish debit spread might consider
selling the long position for a profit with the idea to buy the
stock (covering the short option) if the issue moves back through
the current resistance level near $35.  Our bearish position in
Pfizer (PFE) has also provided some exciting activity, with the
impending Bush Presidency renewing optimism in the drug group.
The issue has moved back to the top of a recent trading range and
is now bracing for a rally to a three-month high.  The typical
roll-out transaction may not be as effective in this case, since
there is little time for further upside movement in the event of
a break-out, so here is another possible strategy.  An alternative
would be to buy stock to cover the sold option (a covered-call)
and sell the long option while there is still premium available.
Based on today's close, the credit for the sold option (DEC-47C)
would be near $0.75, bringing your total profit to $1.25.  At the
same time, the stock could be purchased near $45.50, incurring a
debit of $0.50 if the issue is called away at expiration.  The
overall outlook for the position would be bullish with a new cost
basis near $44.25.  Of course the issue has yet to demonstrate a
breakout character, but this strategy may help you avoid loss in
the event that occurs.

Thursday, November 30

Stocks fell precipitously today amid a number of downgrades and
a slew of profit warnings.  The decline in blue-chip technology
issues weighed heavily on the broader market, driving the Dow
214 points lower to 10,414.  The Nasdaq fell 109 points to 2,597
while the S&P 500 index finished down 26 points at 1,314.  The
trading activity on the Nasdaq was extreme with 2.72 billion
shares exchanged.  Technology declines beat advances 2,764 to
1,311.  Volume on the NYSE was the second heaviest on record at
1.51 billion shares traded, with declines beating advances by
1,886 to 1,009.  In the bond market, the 30-year Treasury rose
15/32, pushing its yield down to 5.61%.

Portfolio Plays:

The stock market fell sharply today amid new data suggesting the
economy is slowing further than expected and profit warnings from
key technology issues.  The Dow dropped over 300 points during
the session and the tech-heavy Nasdaq plunged to an intraday low
near 2500, its bottommost level in 18 months.  Technology stocks
have been steadily falling since September on worries of slumping
profit growth and analysts have continued to slash their ratings
on bellwether issues.  Today's activity was no different and the
earnings woes that fueled the flight from technology stocks also
affected old economy issues.  Computer hardware, semiconductors,
networking and Internet shares all moved lower.  Meanwhile, the
industrial average was fighting its own battle with a number of
technology stalwarts including Microsoft (MSFT), Intel (INTC),
Hewlett Packard (HWP) and International Business Machines (IBM)
falling to recent lows.  On the bright side, a few health-care
and drug issues were attracting buyers as investors selectively
searched for bargains.  In economic news, personal income fell in
October for the first time in nearly two years, but the decline
didn't keep consumers from spending ahead of the holiday season.
At the same time, the number of people filing first-time claims
for unemployment benefits rose to the highest level in more than
two years.  Fortunately, evidence of a major slowdown in the U.S.
economy may encourage the Federal Reserve to ease its cautionary
stance on inflation when policy makers meet later this month and
that could eventually lead them to lower interest rates next year.

Our portfolio performed much the same as the broader market with
technology stocks moving to recent lows while many of the popular
pharmaceutical and healthcare issues performed well.  Although
there were few rallies in the big-cap group, we noticed a number
of favorable moves in lower priced issues.  Bullish activity was
seen in medical transcriptions provider Medquist (MEDQ), drug
developer Miravant (MRVT), environmental technology management
company EngleHard (EC), and telecom giant AT&T (T).  US Air (U),
Safeway (SWY) and Pharmacyclics (PCYC) were the leading mid-cap
companies and Juniper Networks (JNPR) was again the leader in
the higher-priced category.  One positive aspect of the recent
volatility has been the performance of our debit straddles and
almost every position in that category has yielded profitable
results.  On the downside, many of the blue-chip issues in the
technology industry were punished today and one that garnered
our attention was Microsoft (MSFT).  MSFT's shares plunged $8 to
a recent low as traders shunned the personal computer group.  Our
LEAPS/CCs position will need to be adjusted downward if the slump
continues and the resistance area at $70 is likely to provide a
solid upside boundary for the next few months.  Keep that in mind
as you decide which option strike to sell in the bullish diagonal
spread.  Our recent play in Pfizer (PFE) is once again profitable
and it appears (for now anyway) that the trading range is intact.
Wednesday's close at $45.62 was not sufficient for technicians to
label this week's rally a "break-out" and apparently, investors
did not feel the move could be sustained.  In any case, we will
monitor the issue closely over the next few sessions.

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

I was one of the lucky ones that missed most of today's bearish
session due to other commitments.  In addition, I did not have
any time to research for plays this afternoon but fortunately,
I received requests for potential positions in these stocks from
our subscribers.  As always, please review each issue thoroughly
and make your own decision about the outcome of the position.

SKYW - Skywest  $59.50  *** Reader's Request! ***

SkyWest, through its wholly owned subsidiary, SkyWest Airlines,
operates regional airlines in the United States.  SkyWest offers
scheduled passenger and air freight service with approximately
1,000 daily departures to 63 cities in 13 western states and
Canada.  In a joint marketing and code sharing agreement with
Delta Airlines (DAL), SkyWest operates as a Delta Connection in
certain SkyWest markets.  SkyWest has also recently entered into
a new code-sharing agreement with United Airlines, and began
operating as United Express in certain California locations.

Skywest has been on the move in November after breaking-out of
a recent trading range earlier in the month.  Analysts say the
reason for the bullish activity is a combination of rumors of
a potential merger or buyout with the ongoing consolidation in
the industry and also the upcoming stock split.  The Board of
Directors of SkyWest recently declared a dividend distribution
of one share of stock for each outstanding share of stock.  The
dividend will be distributed on December 15, to shareholders of
record as of November 30, 2000.  Regardless of the reason for
the movement, the upward momentum is very strong and with the
small disparities in the front-month premiums, this position
offers an excellent speculation play for those who are bullish
on the issue.

PLAY (aggressive - bullish/debit spread):

BUY  CALL  DEC-55  UWQ-LK  OI=11  A=$5.38
SELL CALL  DEC-60  UWQ-LL  OI=70  B=$2.31
INITIAL NET DEBIT TARGET=$2.81-$2.88  ROI(max)=73% B/E=$57.88

FISV - Fiserv  $55.88  *** Reader's Request! ***

Fiserv provides information management technology and related
services to banks, broker-dealers, credit unions, financial
planners and investment advisers, insurance companies, leasing
companies, mortgage lenders and savings institutions.  Fiserv
operates centers nationwide for full-service financial data
processing, software system development, item processing and
check imaging, technology support and related businesses.  In
addition, the company has business support centers in Australia,
Canada, Indonesia, Philippines, Poland, Singapore and the United

In late October, Fiserv disappointed Wall Street with earnings
that were more than 20% above those reported a year earlier, but
lower than analysts' expectations.  The report raised concerns
that Fiserv's earnings growth might be slowing and the company's
share value took a beating, falling 20% to a 3-month low near $46.
A new trading range near $50 was established and over the past
few weeks, Fiserv's consistent, long-term track record has begun
to attract new investors.  Analysts say the company's ability to
build on its existing business, service the new economy, and
leverage existing relationships are just some of its fundamental
strong points.  In addition, the company is well positioned to
deliver favorable results in the coming quarters and the activity
over the past two sessions suggests that investors agree with the
bullish outlook.

Note: We will target a higher premium initially, to allow for
some consolidation after the recent gains.

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-45  FQV-XI  OI=320  A=$0.43
SELL PUT  DEC-50  FQV-XJ  OI=267  B=$0.75
INITIAL NET CREDIT TARGET=$0.43-$0.50  ROI(max)=9%

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Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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