Option Investor

Daily Newsletter, Thursday, 03/22/2001

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The Option Investor Newsletter                 Thursday 03-22-2001
Copyright 2001, All rights reserved.                        1 of 2
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MARKET WRAP  (view in courier font for table alignment)
        03-22-2001        High      Low     Volume Advance/Decline
DJIA     9389.50 - 97.50  9497.80  9106.50 1.74 bln    776/2335	
NASDAQ   1897.70 + 67.50  2004.09  1922.78 2.51 bln   1510/2284
S&P 100   567.66 -  2.31   571.03   548.16   totals   2286/4619
S&P 500  1117.58 -  4.60  1124.27  1081.19           24.9%/75.1%
RUS 2000  432.80 -  2.94   435.74   419.70
DJ TRANS 2632.52 - 46.31  2680.09  2578.87
VIX        39.71 +  3.31    41.99    37.59
Put/Call Ratio      0.74

Impressive but is it real?

I have to admit the Dow rebound at the close was impressive.
If only it was really a rally. The charts show strong gains on
several of the leaders but many of them show only short covering
spikes. Nothing goes up or down in a straight line, although the
Dow has been trying of late, and after a big move there is a
normal squaring of positions. Shorts, highly profitable from a
-1600 point Dow move, were eager to take profits with a growing
rumor that the Fed could cut rates again any day. This is not
likely on Friday but closing positions for a big profit and
avoiding the risk appealed to many bears.

Short covering examples - not investors buying on excitement!

The Dow was positive for only a few seconds at the open before
falling off a cliff to an intraday low of -381 points. Then the
miracle recovery appeared. About 2:PM the minutes of the Jan-31st
FOMC meeting were released showing that the Fed saw "favorable
prospects for an appreciable recovery" and the rebound began.
It did not hurt that Joe Batipaglia, Abbey Cohen and several
other analysts and brokers were pounding the table about the
severely oversold conditions and raising their weightings on
tech stocks. Once the rebound began the shorts began seeing
the windfall profits from the last week and the almost -400
point drop from today, begin to shrink. Trailing stops began
to be hit and up volume spiked significantly as buy orders
quickly outpaced sell orders. A classic short squeeze!

The magnitude of the recovery was amazing. After seeing market
internals as bad as 7:1 decliners over advancers on heavy
volume of 1.734 billion shares on the NYSE, the ratios quickly
dropped to a bad but much more realistic 3:1 declines over
advances. At the close there were 54 new highs and 270 new
52-week lows. Still the +280 point rebound off the lows was
met with excitement by traders. The Nasdaq was never in much
danger and held onto gains or minor losses even as the Dow
fell into bear territory. The internals on the Nasdaq were
still not much better with decliners beating advancers 3:2.
New lows blew away new highs 506 to 17. This shows the generals
were leading but the troops were still getting slaughtered.

The Nasdaq had several factors in its favor today. Micron said
that they were seeing a rise in corporate orders and were now
building chips to fill orders again instead of just producing
inventory. DRAM prices were climbing and components were seeing
increased demand. The semiconductor sector rallied on the news
with the SOX gaining +68 points. Big gainers were INTC +3.13,
PMCS +6, RMBS +5.66, AMCC +4.44 and BRCM +6.38. Helping the
Nasdaq also was the pause in the biotech sell off. After dropping
almost -20% in the last several days the biotech index BTK.X
stopped at 382 and rallied into the close. It is too early to
call it a biotech rally but at least a pause in the drop.

The Dow saw several major components set new 52-week or longer
lows. GE set a new 52-week low at $36.42 before closing at 37.61.
MCD set a three year low at 24.88 and only gained a quarter into
the close. AXP set a two year low at 34.25 after a two month
slide. Only eight Dow stocks were positive with MSFT +3.94 and
INTC +3.13 leading the list with MRK and HWP the only others
to gain more than a dollar. The Dow broke into bear territory
about ten minutes after the open and provided an imitation of
the MIR space station which will plunge in flames into the
ocean this week. The Dow appeared to be attempting a true
capitulation event. High volume, increasing every day this week,
with severe advance/decline disparity. Traders were almost
joyful as the watched the crash and burn event. "Finally, we
are getting some fear." Yes, there was some fear. The VIX hit
41.99 for the highest point this year. The 42 level has only
been hit three other times in the last four years. You will
remember the previous events as Oct-1997, Oct-1998 and Apr-00.
The put call ratio however drifted back down to only .74 and
less of a buy signal than yesterday. The Dow finished only
about 14 points above bear territory which was only a small

The Nasdaq performed better on the strength of the semi stocks
and some software stocks. MSFT which was downgraded today rose
+3.94 instead of falling. INTC rallied on the Micron news and
stocks like AMAT, VTSS and NVLS followed suit. As I said yesterday
I was encouraged that the Nasdaq held its ground with the Dow
in the tank by triple digits. Today the Nasdaq did not just
hold its ground but rallied in the face of a monster Dow drop.
Could this be the end of the tech selling? Looking at the money
rotation for a clue, investors were selling cyclicals like AA,
GE, BA, HD and WMT. Raising cash to put into the bloody techs?
Could be...

TrimTabs.com said that Monday investors took -$4.4 billion out
of stock funds but ironically Tuesday showed an inflow of $7.4
billion. The full month of March is estimated to see outflows
of -$10.6 billion but compared to the +53.7 billion that came
into the markets in March of 2000 the numbers do not appear to
be as important according to trimtabs.com. Speak for your own
money! The $10 billion outflow may be all that is left of the
$53 billion invested last March!

Analysts are mixed as to market direction with several noted
predictors calling for Dow 8000 soon and others looking for a
rebound to 10000 next week. Personally I think the huge rebound
today guarantees a bounce at the open on Friday. The key driver
of course is the shorts who did not cover today. They are looking
at the market action and the positive futures tonight and thinking
about what another +300 point bounce will do to their profits and
they will be trying to cover at the open. The closer we get to
lunch time we will see if there is any real buying interest.
With the global weakness growing traders will probably not want
to hold over the weekend. Traders have been selling into the
close on Friday for some time and tomorrow may not be any

The game plan for Friday should be extreme caution. Traders will
want to jump on any morning bounce as the long awaited bounce
off the bottom. That may be premature. I suggest waiting for next
week to see if this is yet another classic bear trap rally. In
this market shorts AND longs have much to fear. A market that
can move 400 points in both direction on any day is very
dangerous for traders that are not quick on the trigger. If it
is the bottom then we have a long way to go and can afford to
wait. If it is not a bottom then we do not want to be long.
Cash is king today and patience is a highly desirable virtue!

Enter passively, exit aggressively!

Jim Brown

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There's The Bottom (?)
By Austin Passamonte

Today's session had most of the classic capitulation signs
traders have been waiting for. Tilted advance/declines. Heavy
up/down volume and then down/up volume as the Dow recovered 300+
points from intra-session lows to relative highs in one hour's
time. Nasdaq markets that refused to break down led by the Sox
and its chip-sector strength through it all.

A VIX reading above 41.00. Bullish reversal "Hammer" candlesticks
on daily index charts pierced lower Bollinger band extremes to
post long tails in the process look favorable. Short-term chart
stochastic signals all reversing up from deep oversold indicate
higher price action ahead. We have all the makings of a sustained
relief rally in the works tonight. No reason to be bearish from
here? Ultimate bottom in place? One question at a time, please.

Today's late-day action was very bullish indeed. Call it short
covering or bottom fishing, prices did bounce strong off broad
index support. It will take considerably bad news to drive prices
below these lows going forward, but rest assured the shorts will
try. Downside action has netted obscene fortunes over the past
few months and professionals will not up & abandon their tactics
just yet. While we easily could and probably should tack on a few
hundred Dow points to the upside from here, nothing has changed
in the fundamental picture.

Traders who caught tail's end of the great bull run first quarter
of year 2000 may have given much, most or all of those gains back
since then, but that's not how our beloved IRS tallies the score.
There will be tax implications for many in the next month that
has been ignored until now, but the painful recognition of this
reality has just begun.

Earnings will go from bad to worse and we haven't seen the end of
pre-warnings quite yet. One or two big caps or sector leaders can
still put a damper on things.

On the other hand, rumors of the Fed standing ready to whack
interest rates another .50-basis points at any time from next
week forward are circulating and will serve to prop up markets as
they have for endless weeks now. The reason for Dow's 2+ session
collapse came when this threat was eliminated Tuesday afternoon.
It will soon resume and keep shorts looking over their shoulder
every day, especially towards the close.

The Nasdaq 100 and SOX have held fast the past two sessions while
broad market indexes plunged, which is fundamental strength on
its face indeed. We see a reluctance for sellers to push tech
leaders down even while stock symbols with less than three
letters got thrown to the wolves. It will be a long, long time
before tech darlings fall out of favor with today's investor. If
old economy stocks are the girl next door who can cook, clean &
sew they will still be forsaken in favor of the sleek sirens at
every market turn.

Oil sector stocks have been smoking lately (as has MO ) but
all anyone ask analysts about on CNBC is CSCO, JDSU, ORCL... even
dead carcasses like PCLN and INKT garner more interest than all
OSX components combined. Basic human nature will never change,
and the powerful allure of "technology" shall act as money
magnets far into the future.

What next? Beats us. All signs point to further strength tomorrow
but seeing is believing. With the Dow shedding a staggering 1,700
index points the past ten sessions and -900 of those the past
two, we'd say it's high time for some type of correction indeed.
Friday will be a true battle of wills as the weekend draws nigh.
We haven't had more than one positive Friday close on the broad
indexes all year and solid fundamental reasons exist for that.

1. Few want to hold long positions over the weekend in a
downtrend market.

2. Absence or withdrawal of foreign money from the S&P 500
futures. We've been told from professional traders in the SP01H
pits that large sums of foreign money get pulled from action each
Thursday due to religious reasons. Friday's are sacred days where
work is frowned upon, including trade management and stop-loss

Rather than risk holding longs in the volatile CME pits, large
foreign traders go flat for the long weekend and resume the
prevailing trend following Mondays. That would leave Friday's
volume in the futures pit thin and subject to manipulation.
Mondays are down and injected volume at that time pushes the
direction further. We can't vouch for this being 100% accurate
but it could explain the strong pattern in place at this time.

We stand ready to play the daily trend when possible and suggest
you consider the same. Long-term buy & holds are not possible
right now. If we cannot monitor market action a full 6.5 hours
with stop-losses in place, expect to miss solid profits when they
materialize. Such is the nature of current volatility that cannot
last forever but promises to linger for awhile.

Trade the daily trend and buy chart signals in that direction
without question. Set stops and watch those plays like a hawk!


Thursday 03/22 close: 39.70

Thursday 03/22 close: 71.54

30-yr Bonds
Thursday 03/22 close: 5.27%

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)
605 - 590                6,326        3,624         1.75
585 - 570                1,542        5,894          .26

OEX close: 567.66

565 - 550                   31        5,757       185.71
545 - 530                    0        6,829      6829.00

Maximum calls: 650/ 3,553
Maximum puts : 520/ 6,917

Moving Averages
 10 DMA  595
 20 DMA  620
 50 DMA  665
200 DMA  737

NASDAQ 100 Index (NDX/QQQ)
 52 - 50               107,190        14,204         7.55
 49 - 47               139,546        58,348         3.44
 46 - 44               160,310        53,054         3.02

QQQ(NDX)close: 42.80

 41 - 39                64,244        89,044          1.39
 38 - 36                 3,604        24,152          6.70
 35 - 33                 8,545        35,381          4.14

Maximum calls: 53/116,829
Maximum puts : 43/76,337

Moving Averages
 10 DMA 42
 20 DMA 45
 50 DMA 55
200 DMA 76

S&P 500 (SPX)
1175                    4,862         7,210          0.67
1150                    9,473        22,017          0.43
1125                      989         8,836          0.11

SPX close: 1117.58

1100                      268        15,882         59.26
1075                       54        15,707        290.87
1050                       39         9,476        242.97

Maximum calls: 1275/18,870
Maximum puts : 1150/22,017

Moving Averages
 10 DMA 1165
 20 DMA 1208
 50 DMA 1283
200 DMA 1386


CBOT Commitment Of Traders Report: Friday 03/13
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
S&P 500          (Current) (Previous)     (Current) (Previous)
Open Interest
Net Value         +78245     +91122        -94842     -111638
Total Open
Interest %       (+29.35%)  (+37.69%)    (-11.74%)   (-14.93%)
                 net-long   net-long     net-short   net-short

DJIA futures
Open Interest
Net Value          -1981      -2012        -1491     -2960
Total Open
interest %      (-15.88%)   (-19.12%)     (-4.35%)  (-10.32%)
                net-short   net-short     net-short net-short

Nasdaq 100 data will resume this weekend, but keep in mind it is
of very little significance in comparison to the S&P. The ND01H
is a small, illiquid market that may be of some value & interest
but the S&P 500 drives all market action.

What COT Data Tells Us
Indices: This week saw the Commercials start to pullback a little
on their hedged positions. Commercials show a decline of 3
percent on the S&P 500 net-shorts while they reduced their DJIA
net-short positions by 6 percent..

COT/CRB: This commodity index measures the entire spectrum of
commodities in overall bullish or bearish outlook. It is now at a
one-year high for commercial bullishness, meaning the outlook for
commodities is long-term positive while equities as a mirror are
considered long-term negative.

Data compiled as of Tuesday 03/13 by the CFTC.



Please visit this link for Market Posture:



Covered Calls and Collars

In a volatile or declining market, there are still stocks that go
up or at least don't drop as much.  One strategy in turbulent
market conditions is selling as close to the money as possible.
Selling in the money calls (usually less than 5 points in the
money) sometimes increases the probability of being assigned.
Although you may lose money on the stock, you should make it up
on the call due to intrinsic value and the additional premium.
Selling one month at a time may allow for more flexibility.
There is an argument to both schools of thought.  If you sell four
months out, for instance, you have received a larger premium in
the short term.  But you may be locked into that stock for a long
time.  By selling one month at a time, assuming that the stock
remains relatively stable and the stock isn't assigned, you may be
able to sell the options four times.  If the market conditions
improve and the stock isn't assigned, you may have the opportunity
to sell a call slightly out of the money the next month.  Therefore,
if the stock advances above the strike price by the second (third,
fourth, fifth, etc.) month's expiration, you may not have to take a
loss on the stock. One of the risks associated with covered calls
is that a security's upside potential is capped by writing the
covered call contract. Another risk is the call premium doesn't
negate the fact that the security's price can decline and result
in a loss.

Although the cost basis is reduced, it is very important to have
an exit point established before the trade is even initiated. If
an investment is made due to technical reasons, it should also be
exited for technical reasons. That way you aren't tied to a
sinking ship if it is pulled down by the market's undertow. By
selling the call, your cost basis is immediately reduced.  One
method is to set your exit point at your desired threshold of
risk/loss in relation to your cost basis and not your purchase
price.  This in effect allows for a larger variance in price to
occur before exiting the losing position.

Another strategy is to buy the stock as close to the strike price
as possible (below, at, or slightly above) and simultaneously sell
the covered call for the next month.  This is different to the
above in one way.  You aren't selling the call in the money.  The
next part is the downside protection.  You also buy a put with the
money you just received.  Due to tax consequences, you want to buy
the put at the same time as you buy the stock.  This is called a
married put.  Note: Buying a put will break up the holding period
of you stock. Unfortunately, there isn't a concrete formula to
determine the best price to simultaneously buy the stock, sell the
call, and buy the put. The main idea is to create a net credit and
lock in a profit whether the stock advances or declines.  However,
as with covered calls, the risk of selling the calls locks in the
upside potential of the stock. This strategy isn't known for its
tremendous returns.

Sometimes you can sell the call two months out and buy some short
term downside protection with a put at either the same strike price
as the call's or at a strike price below that of the call's.  If
you buy the put at the same strike price, this will give you the
right but not the obligation to sell the stock at the specific
strike price on or before expiration of the contract.   The reason
you may sell the call a couple months out is to have a higher net
credit between the call and put.  There should be a larger credit
if the stock is purchased at the money in relation to the covered
call while the put is purchased out of the money.  Even with the
put out of the money, this still locks in a max downside.  Because
market conditions change from one day to the next, one may what to
buy one month at a time.  For instance, buying closer to the money
if the market is very turbulent and slightly out of the money if
the market is a little volatile. Because this strategy is flexible,
if the stock declines, the put may also be sold if a profit is
achieved before expiration. This strategy may have a number of
variables to be tweaked in order to maximize one's return.  Due to
each individual's risk tolerance and return expectation, there is
no one right way of creating this position.  I realize my intentions
are to give strategies that make money and all I have done is
discuss how to take losses or make little returns.  However, I am
more concerned with the return OF your money rather than the return
ON your money. If you have any additional questions regarding this
article or any market related topics, please feel free to contact
me at 877-925-0880.

Robert John Ogilvie

Neither Cutter & Company, Inc. nor Robert J. Ogilvie makes any
representation as to the accuracy, reliability or completeness
of any charts, formulas, and /or research opinions presented
herein. This article is intended solely for educational purposes.
Nothing herein should be construed as an offer or solicitation
to buy or sell any securities. Cutter and Company is a Member
of the NASD, MSRB, and SIPC. Please read the OptionInvestor.com's:


Mark Leibovit, the #1 market timer in the nation.

Mark is Chief Market Strategist for VRTrader.com, a Premier
Investor Network website, a technical consultant and former
'Elf' on Louis Rukeyser's Wall Street Week for 7 years.
His Annual Forecast Model has been subscribed to by Wall
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Model for your own viewing, click here:

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.


No dropped calls tonight


RATL $23.00 +2.31 (+2.69) Multiple tests of the $20 level
presented unquestionable evidence that RATL was forming a strong
bottom; although the tangible resistance at the trailing 10-dma
($23.56) continued to thwart major advances.  In today's session
however, RATL gained 11.2% as traders took started nibbling at
many of the technology stock.  In despite of the fact that
RATL's climb was on lower-than-average volume, it nonetheless
closed smack on our protective stop.  Furthermore, we're
anticipating that as the NASDAQ sorts itself out in the next few
sessions, there's a good probability that RATL could break to
the upside.  If you have open positions in your portfolio, look
for exit opportunities on dips, if there's a negative sentiment;
else, simply pack it up and move on to other plays.

CLS $32.30 +4.10 (-1.95) A stunning comeback on the NASDAQ today
positively effected shares of this technology manufacturer.  The
steadfast buying that occurred earlier in the session brought
CLS to $30, a crucial turning point.  Instead of a rollover
scenario that would have offered aggressive entries, the
building enthusiasm amongst the bulls created a burst of
momentum that swung CLS upward to the 5-dma technical.  This
sharp rise to $32 was an absolute breaking point for us.  On one
hand, we're disappointed that we didn't get a chance to profit
from a play on CLS, but we also know that a missed trade is
better than a bad one!

BRCM $37.88 +6.25 (+4.50) After failing to make new 52-week lows
in the past three sessions, strength in the Chip sector today
allowed BRCM to move strongly higher, ending the day up almost 20
percent on over 1.3 times the ADV.  While the parade of lawsuits
have not ceased, and a number of Semiconductor companies were
downgraded today, the close above the 5 and 10-dma (at $33.53 and
$34.41 respectively) for the first time in almost two months as
well as our stop price of $34 suggests that the downtrend may be
waning.  With that, we are taking our profits on what has turned
out to be a highly profitable play.

VTSS $40.25 +6.13 (+1.19) A rally in Semiconductor issues across
the board today resulted in a gain of almost 18 percent for
shares of VTSS on over 1.45 times the ADV.  This move came
despite a downgrade by Robertson Stephens from Strong Buy to a
Long Term Attractive rating, citing weak demand, as measured by
net bookings, and excess inventory cutting into profit margins.
Fans of candlestick charting will note that trading in the last
three sessions have culminated in the formation of a morning doji
star pattern, a bullish sign.  With the stock moving in the face
of bad news, as well as the close above our stop price of $36, we
are dropping coverage of this play.

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The Option Investor Newsletter                 Thursday 03-22-2001
Copyright 2001, All rights reserved.                        2 of 2
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SMTC $30.31 +2.31 (+2.91) A rally in the semiconductor sector
provided the stimulus for SMTC to break out above heavy
resistance at $30 with strong volume.  At this point, if SOX.X
keeps its strength, SMTC might be positioned to make a run for
the next major resistance at the 200 dma of $34.42, which has
been eluding the stock since last October.  Pay particular
attention to the analog device sector when playing this stock,
as others in the sector have demonstrated excellent strength
this week, including MXIM, LLTC, and ADI.  Some analysts feel
that the worst may be over for the semiconductors, as the market
is looking ahead two quarters, at which point demand may start
to pick up for chips.  After clearing the 600 level, SOX.X might
be able to clear the 50 dma of 641.45, which would be a very
bullish indicator for chip stocks.  Traders can take positions
in SMTC at current levels, ideally if SOX.X stays above 610.
We are moving stops to $29 to protect profits, and we will
exit positions if SMTC closes below this level.

PMI $59.05 -0.70 (+2.20) PMI demonstrated extraordinary
resilience in Thursday's sell off, as it rebounded from
strong support at $57.57 during the height of the selloff on
the Dow.  Volume has been significantly higher during the
rallies in PMI over the last several weeks.  After breaking
above the first level of resistance at $58.50 this week,
PMI is experiencing difficulty clearing the 200 dma at $60.70.
Aggressive traders could consider taking positions at
strong support at $57.57, which held even during the free fall
which occurred on the Dow on Thursday.  Alternatively,
positions could be taken at the current level, as a rally in
the major market indexes could push PMI over $60.  We are
keeping stops at $56, so close positions if PMI closes below
this level, as this could signify destruction of the upward

ADBE $36.00 +3.44 (+7.38) Consolidation over the past couple of
sessions has proven to be healthy for ADBE, as this has allowed
some time for it's moving averages to catch up with the stock
price.  Trading between support below at $31.50 and resistance
overhead at $35, ADBE broke out of that range today, with a
strong day for the NASDAQ providing enough incentive for the
bulls to charge ahead.  By the end of the day, the stock gained
over 10 percent on higher than average volume.  Now a nicely
profitable play, we are moving our closing stop price up from $31
to $34 to protect some of our gains.  Higher risk players may
look for intra-day pullbacks to support at $34 and $35 for
entries, but confirm bounces with volume.  If the buying
continues tomorrow, a move above today's intra-day high of $36.06
may allow for an entry on strength, after which ADBE may be
poised to challenge its 50-dma at $39.34.


ABGX $16.94 -0.25 (-2.25) While the biotech index managed to
rally almost 4% with the Nasdaq toward the close on Thursday,
ABGX exhibited only a lackluster move from its new 52-week
low of $15.19.  Analysts and investors are trying to find
companies which could benefit from a potential rebound in demand
for their products in the second half of this year, and most
investors are in no mood for additional risk.  While most of
the analysts covering ABGX feel that it has tremendous long
term potential, the company has a very high cash burn rate, and
it could be years before ABGX reaches profitability.  In the
meantime, both ABGX and the biotech sector have a long way to
go before they can stage the beginning of a true upward trend.
Nonetheless, we are moving stops to $17 to protect profits, as
the markets appear to be staging an oversold rally.  Traders
could take put positions on a break below $16.50 on strong
volume, if accompanied by weakness in the BTK.X and others like
MEDX.  We will close positions if ABGX closes above $17.

AETH $16.19 +1.50 (+0.25) It appears that the stock has found
some support at the $15 level.  Upon reaching this point both
yesterday and today, shares of the wireless software maker were
able to find some willing buyers.  Today's bounce off support, in
conjunction with a rallying NASDAQ, resulted in a gain of almost
10 percent for AETH.  Trading volume was below average however,
and while the stock managed to close above its 5-dma (at $16.76),
its downtrend remains intact.  A failed test of 10-dma resistance
near $18 may provide aggressive traders with a potential entry,
but AETH would have to close back below our stop price of $17.
Otherwise, we would drop coverage of this play.  If selling
pressure returns, taking AETH back below the $16 mark on volume,
this would allow more cautious traders to enter on weakness.
Correlate entries with direction in rivals CMVT and OPWV.

BMC $19.40 -0.95 (+0.23) Even today's Tech rally could not help
shares of B2B software maker BMC to end the day on the upside.
Despite a strong close for software stocks on the NASDAQ, BMC did
not participate, choosing instead to move in sympathy with the
NYSE.  With that, the stock lost another 4.67 percent of its
value.  While trading volume was light, less than 75% of ADV, BMC
continues to struggle with its 5-dma, now near psychological
support at $20.  Look for a failed rally above this level as well
as the 10-dma near $21 to provide aggressive entry points,
confirming with selling volume before making a play.  But make
sure BMC continues to close below our stop price, which we have
moved down from $22 to $21.  The more risk averse may want to
wait for the stock to move back below $19 with conviction before
jumping in.  Track sector sentiment using Goldman Sachs' Software
Index (GSO).

OPWV $24.47 +3.00 (-1.27) While OPWV rallied with the Nasdaq
toward the close on Thursday, the consistent pattern of higher
lows it has been forming since January is still intact.  OPWV has
demonstrated an unusually high level of volatility over the
last few days, so traders should be cautious going forward.
Depending on market conditions, aggressive traders might want to
take position on a roll over from $26, the next major resistance
level.  Alternatively, a drop below the $23 level on heavy
volume could present a more conservative entry point.  Monitor
others in the communications software sector, as well as the
Nasdaq, and keep stops set at $27.  We will exit positions if
OPWV closes above this level.

FLEX $19.75 +2.38 (-1.06) After the barrage of bad news in
shares of the contract manufacturers, FLEX was due for a bounce.
Poor earnings forecasts from JBL and SLR earlier this week
pulled the rug out from under the group, helped by First
Union's downgrade yesterday.  Just when it is the darkest, that
is when conditions are due for an improvement, and today we got
a sharp upturn.  Giving us an early indication that today would
be the day was the persistent strength in Semiconductor stocks.
Spending the entire day in positive territory, the Semiconductor
index (SOX.X) tacked on an amazing 12% today.  FLEX did even
better, gaining 13.7% to close just below the $20 resistance
level.  Our stop is still resting at $21, and a close above that
level will spell an end to our play this weekend.  On the other
hand, FLEX could be setting up to give aggressive traders an
attractive entry point as selling resumes ahead of the weekend.
Target new positions as FLEX rolls over, confirmed by weakness
in other contract manufacturers such as SLR, JBL, and CLS.
More conservative traders will want to wait for the bears to
push prices back below the $18 intraday support level before
jumping into the play.

LH $111.82 -0.87 (-12.66) Yesterday's late-day selloff
continued unabated at the open this morning, driving LH down to
the critical $100 mark in the first hour of trading.  That was
too quick to give us a conservative entry, but the buying frenzy
that took place in the final hour today could be setting us up
for an attractive entry point tomorrow.  While it was amazing to
see the recovery this afternoon, note that the stock was unable
to trade above yesterday's closing price.  We need to be very
careful here, but an entry could be lurking right around the
corner.  Watch the overall market strength tomorrow, and if it
is unable to move higher, LH looks poised to roll over as we
head into the weekend.  Look for conservative entries to appear
as LH falls back through the $108 intraday support level, but
make sure it is coming on strong volume.  The bulls have been
beaten up pretty severely over the past couple weeks and they
are eager to recoup some of their losses.  If buying volume
comes in strongly, pushing LH above our $116 stop level, stand
aside from the play as we will be dropping it over the weekend.
Aggressive traders may want to look for a rollover for
initiating new positions, but keep in mind that the first level
of resistance is near $120, above our stop.

RIMM $24.39 -0.30 (-1.80) Tuesday's weakness continued unabated
yesterday and for most of today's session, before RIMM finally
found support near $23.  The overdue, but unexpected bounce
occurred in the final hour, as all the major indices rallied
sharply off their lows.  The first hint of strength in
Technology came from the Semiconductor sector, but also spilled
over into most other sectors in the final hour.  Even the
Wireless HOLDR (AMEX:WMH) put on a late-day burst to move above
the $60 resistance level, closing just below the next level of
resistance, near $62.  Volume was strong today, with buying
volume really picking up in the final hour.  This puts our play
on shaky ground - either it is just about to give us another
aggressive entry, or break out, ending the recent bearish trend.
Aggressive traders will want to target a rollover from below
our stop, now at $26.  Keep an eye on the WMH, as movement in
the broader sector should give us a preview of what to expect
from RIMM as the week draws to a close.  Conservative traders
will want to sit on the sidelines until our play falls through
the $23 support level.  If we get a repeat of the today's
volatility tomorrow, such an entry opportunity is not out of
the question.

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DELL - Dell Computer Corp $26.25 +1.56 (+1.44 this week)

Dell Computer is the world's #1 direct-sale computer vendor and
one of the world's top PC makers.  Therefore it's understandable
that the company designs, develops, manufactures, markets,
services, and supports a variety of computer systems including
desktops, notebooks, workstations, network servers, and storage
products.  Dell's clients include the government, corporations,
the medical and education industries, as well as the individual
consumer.  Founder Michael Dell is still the CEO and maintains a
14% stake in the company.

It was a day for the NASDAQ bellwethers to shine!  DELL, MSFT,
INTC, ORCL, and even JDSU all saw fantastic gains, helping the
technology market rise in despite of the devastating weakness in
the DOW.  The Goldman Sach's Computer Hardware Index (GHA.X)
also eeked out a gain, positioning it the 310 level.  On
Tuesday, DELL's volume topped 37 mln shares exchanging on the
heels of Michael Dell's announcement that his company was "on
track" for the 1Q.  He reported at the Las Vegas Wireless Show
that the company would easily meet the consensus earnings
estimate of $0.17 and sales would be in the $8 bln range.  The
comments came as rival computer makers, Compaq Computer (Nasdaq:
CPQ) and Gateway (Nasdaq: GTW) are issuing profit warnings and
dismal outlooks for sales growth.  Volume continued to remain
robust on Wednesday on news of a $16 bln, four-year supply pact
with Korea's Samsung; although it was today's exceptional
trading activity and the crucial break to the topside of $26
that prompted immediate coverage.  Shares of DELL traded on
volume of 59.8 mln, or 1.8 times the ADV.  For this play to be
successful, we need to see an encore of today's dazzling
performance in the NASDAQ!  We're looking (praying?) for DELL to
trade confidently above $26 and make a valiant charge through
the staunch upper resistance at the $30 level.  Take a look at a
six-month chart of DELL and you can visually confirm the
imposing ceiling.  In light of the market uncertainty, it would
be very aggressive and risky to take entries off the converged
DMAs, near $23 and $24; although some might argue that taking
positions on deep dips in an ADVANCING (repeat: ADVANCING)
market portends greater profits.  Use your personal discretion.
A more conservative approach might be to buy into DELL's
strength on a big breakout in the NASDAQ.  Keep in mind there's
heavy-duty opposition near $30, so traders should consider
locking in gains early and then jumping back into the play amid
a subsequent momentum cycle.  If we don't see the bullish action
we're anticipating and DELL closes below the $24 mark, which is
currently bolstered by the 10-dma, then we'll exit without

BUY CALL APR-20 DLY-DD OI= 3090 at $5.50 SL=3.50
BUY CALL APR-25*DLQ-DE OI=38536 at $2.06 SL=1.00
BUY CALL MAY-20 DLY-ED OI= 4722 at $6.12 SL=4.00
BUY CALL MAY-25 DLQ-EE OI=15879 at $2.88 SL=1.50
BUY CALL MAY-30 DLQ-EF OI=22112 at $1.00 SL=0.50


SEBL - Siebel Systems $31.78 +4.84 (+6.16 this week)

Providing sales automation and customer service software through
its main product, Siebel Sales Enterprise, SEBL offers its
customers the ability to access client information and decision-
making support across a corporation's global computer network.
The company's e-commerce applications deliver the first entirely
Web-based, enterprise class family of sales, marketing and
customer service applications.  Among the company's heavyweight
clientele are Lucent Technologies, Glaxo Wellcome, and
Prudential Insurance.

Having suffered a severe retreat in February followed by a period
of consolidation for most of this month, it now appears that
shares of e-Business software maker SEBL may be ready to move
higher.  It's no secret that a weak economy has resulted in cuts
to capital expenditures, so much so that even high growth areas
of the Tech sector were materially affected.  With rival Oracle
recently warning and lowering guidance going forward, lack of
visibility in earnings have wrecked havoc on the Software sector,
as it was the weak sector throughout the NASDAQ's recent decline.
 However, it appears that SEBL has found firm support at the $25
level.  While it has struggled with resistance at $31.75, today's
gain of over 18 percent on almost 1.4 times the average daily
volume put the stock just above this point.  The 5 and 10-dma
(currently at $27.73 and $27.56 respectively) acted as formidable
resistance during SEBL's decline and now, it appears that these
moving averages may act as support.  Bounces off these levels may
provide higher risk traders with potential entry points as would
horizontal support at $31, $30 and $29.  Just be aware that we
have placed our closing stop price at the $29 level, so a close
below this point would mean that we would drop coverage of this
play.  Continued buying pressure leading to a bullish charge
through resistance at $32 may allow more cautious traders to take
a position, but make sure that sector sympathy is on your side,
using Goldman Sachs' Software Index (GSO) and Merrill Lynch's
Software HOLDR (SWH).

BUY CALL APR-25 SGQ-DE OI= 4143 at $8.00 SL=5.75
BUY CALL APR-30*SGQ-DF OI= 5976 at $5.00 SL=3.00
BUY CALL APR-35 SGQ-DG OI=18351 at $2.50 SL=1.25
BUY CALL MAY-30 SGQ-EF OI= 4715 at $6.13 SL=4.00
BUY CALL MAY-35 SGQ-EG OI= 1683 at $4.13 SL=2.50



No new puts tonight.


SMTC - Semtech Corp. $30.31 +2.31 (+2.91 this week)

Semtech is a leading supplier of power management, transient
protection, system management, high performance, and advanced
communications semiconductor products for portable and high
speed communications applications.  Semtech designs, manufactures,
and markets a range of products, the majority of which are sold
to the communications, industrial and computer markets.

Most Recent Write-Up

A rally in the semiconductor sector provided the stimulus for
SMTC to break out above heavy resistance at $30 with strong
volume.  At this point, if SOX.X keeps its strength, SMTC might
be positioned to make a run for the next major resistance at the
200 dma of $34.42, which has been eluding the stock since last
October.  Pay particular attention to the analog device sector
when playing this stock, as others in the sector have demonstrated
excellent strength this week, including MXIM, LLTC, and ADI.
Some analysts feel that the worst may be over for the
semiconductors, as the market is looking ahead two quarters, at
which point demand may start to pick up for chips.  After clearing
the 600 level, SOX.X might be able to clear the 50 dma of 641.45,
which would be a very bullish indicator for chip stocks.  Traders
can take positions in SMTC at current levels, ideally if SOX.X
stays above 610.  We are moving stops to $29 to protect profits,
and we will exit positions if SMTC closes below this level.


After a strong close in the broader markets and the SOX.X, we are
making SMTC our call Play of the Day.  The stock broke above the
$30 level today on very good volume.  We want to be extra cautious
on the entry of this play, especially if we gap up in the morning.
Look to gain entry on pullbacks to intraday support at $29.50, the
the level from which SMTC broke to $30 today.  A break above $31
on strong volume could also provide entry, but confirm strength
in the NASDAQ and SOX.X.  Remember that tomorrow is Friday.

BUY CALL APR-25*QTU-DE OI= 43 at $5.63 SL=3.75
BUY CALL APR-30 QTU-DF OI=203 at $2.88 SL=1.50
BUY CALL JUN-25 QTU-FE OI=363 at $8.88 SL=6.75
BUY CALL JUN-30 QTU-FF OI=198 at $5.88 SL=4.25


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A Glimmer Of Hope?

A flurry of unexpected buying in technology shares near the end
of the session helped the market recover from significant early

Wednesday, March 21

Stocks slumped again today amid concerns over falling corporate
earnings and continued disappointment over the Fed's half-point
interest rate cut.  The Dow Jones industrial average tumbled 233
points to 9,487 and the NASDAQ composite fell 27 points to 1,830.
The S&P 500 index slid 20 points to 1,122.  Trading volume on the
Big Board reached 1.3 billion shares, with losers ousting winners
2,206 to 863.  Activity on the NASDAQ was heavy with 2.1 billion
shares exchanged.  Technology declines outpaced advances 2,485 to
1,240.  In the bond market, the U.S. 30-year Treasury fell 5/32
to 101 14/32, pushing its yield up to 5.27%.

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

Elan      (NYSE:ELN)     APR60C/APR55C  $0.60  credit  bear-call
Lennar    (NYSE:LEN)     APR30P/APR35P  $0.75  credit  bull-put
Lennar    (NYSE:LEN)     AUG40C/APR40C  $2.65  debit   calendar
PF Chang  (NASDAQ:PFCB)  APR45C/APR40C  $0.43  credit  bear-call

The new combination positions were available at acceptable entry
prices during the volatile session.  There were two plays offered
in Lennar and we chose the time-selling position based on the low
risk, conservative outlook.

Portfolio Activity:

Investor ran for the exits today, pushing the blue-chip average
to its lowest close since March 1999, after an unexpected rise
in inflation dampened hopes for another near-term interest-rate
reduction.  The closing level in the Dow Jones industrial average
represented a decline of almost 20% from its all-time high last
year and the NASDAQ, already in bear territory, slipped to its
lowest closing level since November, 1998.  Only four industrial
components survived the selling pressure with Intel (NASDAQ:INTC)
leading the technology issues.  The chip giant has begun shipping
its 900 MHz large cache Pentium III Xeon processors for high-end
servers and a number of computer manufacturers, including Compaq,
Dell, Fujitsu-Siemens, Hewlett-Packard, IBM, NEC and Unisys are
expected to start shipping platforms based on the new processor
in the first half of 2001.  Other bullish stocks included Disney
(NYSE:DIS), International Business Machines (NYSE:IBM) and retail
giant Wal-Mart (NYSE:WMT).  American Express (NYSE:AXP) was the
big loser among finance stocks, falling to $35 after UBS Warburg
PaineWebber cut its price target for the stock, citing a slowdown
in corporate travel revenues and potential weakness in brokerage
services due to poor equity markets and high yield debt exposure.
J.P. Morgan Chase (NYSE:JPM) and Citigroup (NYSE:C) also slumped
and the selling pressure spread to lower-priced brokerage issues.
Procter & Gamble (NYSE:PG) led the decline in defensive shares
after the Wall Street Journal's online edition reported that the
giant consumer-products company is considering a 10% to 20% drop
in its global work force.  In the technology segment, networking
equipment maker 3Com (NASDAQ:COMS) reported a worse-than-expected
loss, blaming a downturn in the telecom sector and falling profit
margins.  The one bright spot was Jabil Circuit (NYSE:JBIL), the
leading contract electronics manufacturer, which rallied to $20
after posting quarterly earnings that beat Street estimates.  In
broader market issues, most sectors were lower with oil service,
finance and consumer products among the worst performers.

There was little positive activity in the Spreads portfolio but
the downward movement in the industrial group boosted a number
of our bearish positions.  Amgen (NASDAQ:AMGN), International
Business Machines (NYSE:IBM) and PolyMedica (NASDAQ:PLMD) slid
lower on broad-market selling pressure and our roll-out candidate
from last month, Johnson & Johnson (NYSE:JNJ) also slumped during
the session.  On the downside, Impath (NASDAQ:IMPH) dropped amid
the steep sell-off in the pharmaceutical group and with the issue
moving below the most recent trading-range bottom (NOV-2000), it
will require closer attention.  Our bullish Put position can be
covered with short stock and based on the increasingly oversold
conditions, that may be the easiest way to protect many of the
failing spread positions.  Another candidate for that technique
would be Liz Claiborne (NYSE:LIZ) as it has little support below
the current price and the method allows for an easy exit (simply
repurchasing the stock at the strike price) in the event of a
reversal in the market.  Of course, an alternate strategy is to
roll down and forward to a future option series and with stocks
that have a well-defined trading range, we prefer that method.
Positions in Cummins Engine (NYSE:CUM), Kerr McGee (NYSE:KMG) and
Amerada Hess (NYSE:AHC) are candidates for a "roll-out" strategy.

Thursday, March 22

A flurry of unexpected buying in technology shares near the end
of the session helped the market recover from significant early
losses.  The NASDAQ bounced back 67 points to 1,897 and the Dow
recovered from a 330 point loss to close down only 97 points at
9,389.  The S&P 500 index fell 4 points to 1,117.  Trading volume
on the NYSE reached 1.73 billion shares, the third heaviest day
in its history.  Broad market declines outpaced winners 2,338 to
778.  Activity on the NASDAQ was also extreme with 2.49 billion
shares exchanged.  Technology declines surpassed advances 2,287
to 1,509.  In the bond market, the 30-year Treasury rose 5/32 to
101 19/32, pushing its yield down to 5.26%.

Portfolio Activity:

Stocks tumbled early in the session today, driving the Dow down
as much as 330 points into official bear market territory amid
concerns of an impending slowdown in global economic growth.  At
midday, all of the major indices were in the red but a valiant
effort by the technology group led to a market-wide recovery at
the end of the session.  Semiconductor and chip equipment stocks
were very strong with positive news from Micron (NYSE:MU) adding
to the optimism after analysts suggested that its DRAM business
has bottomed.  In addition to the advances in big-cap technology
stocks, bullish activity was seen in personal computer, telecom
equipment and electronic manufacturing.  On the Dow, Procter &
Gamble (NYSE:PG) moved lower after confirming reports it will
slash 9,600 jobs as it tries to restore long-term growth, and
General Motors (NYSE:GM) slumped after announcing plans to idle
more North American assembly plants in the next three months as
it reduces inventories.  Minnesota Mining (NYSE:MMM) was another
big loser, down almost $5 at one point as investors unloaded the
conglomerates.  Retail giants Home Depot (NYSE:HD) and Wal-Mart
Stores (NYSE:WMT) also dragged on the blue-chip average, sagging
amid worries the slowing economy will reduce consumer spending.
The impact of slowing demand has hurt a number of industries and
in the broader market groups, financials, pharmaceuticals, paper
and forestry companies and consumer products were the worst

The Straddles section was the big winner in today's session with
almost every position moving into the "profitable" category.  The
recent play in Telecom Brazil (NYSE:TBH) topped the group with an
overall credit of $16.70 on $7.60 originally invested.  That's a
potential gain of over 100% in just two weeks.  Imperial Chemical
(NYSE:ICI), Icos (NASDAQ:ICOS) and British Telecom (NYSE:BTY) were
also active issues with each position achieving a credit in their
respective straddles.  Omnicom Group (OMC) was a surprise, falling
to a 3-month low near $77 and providing a small profit during the
bearish activity.  Telefonos De Mexico (NYSE:TMX) is the only play
in the section that has yet to provide a gain and it is currently
trading near the break-even point.  The bullish activity in the
Spreads portfolio was limited, but excellent moves were seen in
many of the blue-chip technology issues including Hewlett-Packard
(NYSE:HWP), Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT).  In
small-cap positions, Earthlink (NASDAQ:ELNK) was a popular issue
and our recent time-selling spread is approaching profitability
after just one week in play.

Questions & comments on spreads/combos to Contact Support
                           - NEW PLAYS -
CRUS - Cirrus Logic  $22.94  *** Cheap Speculation! ***

Cirrus Logic (NASDAQ:CRUS) designs and manufactures integrated
circuits that employ high-performance analog and digital signal
processing technologies.  The company's products, sold under its
own name and the Crystal, Maverick and 3Ci product brands, enable
system-level applications in many Analog (audio, communications
and data acquisition), Internet (embedded processors and optical
storage) and Magnetic Storage (disk drive electronics integration
and read channels) markets.  The Analog Products segment conducts
operations in the Computer Audio, Consumer Audio and Precision
Data Conversion divisions.  The Internet Products group conducts
operations through the Embedded Processor division.

Corporate earnings in the technology industry have been terrible
over the past two quarters and the outlook for the near-term is
grim.  However, Cirrus is optimistic about the future, saying in
January that it expects to meet the previously announced annual
revenue goal of $775 million and earnings-per-share of $0.90 in
fiscal 2001.  The company also said it expects revenue in the
fourth quarter to be up in a year-over-year comparison and the
outlook for 2002 is favorable, based on buying trends that show
growth in retail sales of the devices in which their chips are
used.  The company also believes that its large patent portfolio
and the diversity of the markets it participates in will shield
it from the current downward cycle of the semiconductor industry.

That's a very positive perspective considering the recent trends
and traders who agree with a bullish outlook for the issue can
speculate on its future movement with this speculative position.

PLAY (speculative - bullish/calendar spread):

BUY  CALL  SEP-30  CUQ-IF  OI=8384  A=$3.00
SELL CALL  APR-30  CUQ-DF  OI=60    B=$0.56

LSI - LSI Logic  $20.00  *** Rally Potential! ***

LSI Logic (NYSE:LSI) is a designer, developer, manufacturer, and
marketer of complex, high-performance integrated circuits and
storage systems.  The company's integrated circuits are used in
a wide range of communication devices, including for wireless,
broadband, data networking, and set-top-box applications.  The
company operates in two segments; the Semiconductor segment and
the Storage Area Network Systems segment.  LSI Logic is focused
on the three markets of communications, network computing, and
storage area network systems.  An acquisition, DataPath Systems
is a communications chip company with a comprehensive pipeline
of product offerings in the broadband communications market.

Computer chip shares rallied today as investors speculated the
worst may soon be over for the beaten-down sector.  Traders were
searching for any excuse to invest money in technology stocks,
particularly the semiconductor group and bullish comments from
Micron (NYSE:MU) and Intel (NASDAQ:INTC) helped pave the way for
a flurry of optimistic analysts' statements.  Industry watchers
said Micron is undergoing a recovery, having solved its inventory
problems and is experiencing an increase in demand for PC memory
chips.  Intel's CEO added to the positive attitude, saying he was
hopeful of a complete industry recovery in the coming year with
advances bringing the consumer more memory, more capability, and
more capacity in computing and communications products.  LSI is
one of the companies that will contribute to that outcome and the
depth and breadth of their communication centric technology and
intellectual property is one of its major attributes.

Traders who favor a bullish outlook for the issue should consider
one of these positions.

PLAY (very speculative - bullish/debit spread):

BUY  CALL  APR-22.50  LSI-DQ  OI=3046  A=$0.80
SELL CALL  APR-25.00  LDI-DE  OI=3480  B=$0.30

- or -

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JUL-25.00  LDI-GE  OI=2952  A=$2.00
SELL CALL  APR-25.00  LDI-DE  OI=3480  B=$0.30

CY - Cypress Semiconductor  $19.92  *** Bottom Fishing! ***

Cypress Semiconductor (NYSE:CY) designs, develops, manufactures
and markets high-performance digital and mixed-signal integrated
circuits for a range of markets, including data communications,
telecommunications, computers and instrumentation systems.  The
company currently offers approximately 500 products from its two
business segments, memory products and non-memory products.  The
company's products are marketed worldwide through a network of 25
North American sales offices, seven European sales offices, two
Japanese sales offices, two Chinese sales offices, an office in
Singapore, an office in Korea, an office in Taiwan, and other
international sales representative firms.  The company sells its
products to a wide range of customers, including Lucent, Motorola,
Nortel Networks, Seagate Technology, Compaq Computer, 3Com, IBM,
Cisco Systems and Sony Corporation.

CY was one of the many semiconductor stocks that rallied today,
defying the overall weakness in the financial markets as traders
speculated that the sector is nearing a fundamental bottom.  The
consensus among analysts is that even if the industry-wide slump
continues, the chip-makers are due for a technical bounce from
oversold conditions.  Cypress shares are poised to benefit from
that effect with the company's earnings due in mid-April, the
potential for continued upside activity is excellent.

We will attempt to enter the position on a pullback and traders
should target an opening credit initially, to benefit from any
near-term consolidation in the issue.

PLAY (conservative - bullish/synthetic position):

BUY  CALL  APR-22.50  CY-DX  OI=2989  A=$0.95
SELL PUT   APR-17.50  CY-PW  OI=333   B=$0.75

Note:  Using options, the position is similar to being long the
stock.  The collateral requirement for the sold (short) put is
approximately $650 per contract.


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