Option Investor

Daily Newsletter, Sunday, 04/01/2001

Printer friendly version
The Option Investor Newsletter                   Sunday 04-01-2001
Copyright 2001, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

To view this email newsletter in HTML format with embedded
charts and graphs, click here:

Entire newsletter best viewed in COURIER 10 font for alignment

        WE 3-30          WE 3-23          WE 3-16           WE 3-9
DOW     9878.78 +374.00  9504.78 -318.63  9823.41 -207.87  -213.63
Nasdaq  1840.26 - 88.42  1928.68 + 37.77  1890.91 - 49.80  -115.95
S&P-100  605.58 + 24.87   580.71 -  7.28   587.99 - 12.72  - 18.06
S&P-500 1182.17 + 42.34  1139.83 - 10.70  1150.53 - 23.03  - 31.32
W5000  10645.85 +170.55 10475.30 - 84.07 10559.37 -223.31  -282.18
RUT      450.53 +  7.26   443.27 +  1.47   441.80 - 10.36  -  7.84
TRAN    2771.36 +126.02  2645.34 + 13.97  2631.37 - 71.64  - 75.12
VIX       33.82 -  1.09    34.91 -   .38    35.29 +  2.66  +  2.89
Put/Call    .76              .52             1.08              .83

Window Dressing Ends With a Whimper!
By Jim Brown

The close on Friday was anticlimactic with the Nasdaq closing
only slightly positive for the day but posting the worst quarter
on record. The Dow attracted some end of quarter money as we
expected and eased closer to 9900 again with a +79 point gain.

The main catalyst for the market on Friday was the Chicago PMI
and the University of Michigan Consumer Sentiment reports. The
Chicago PMI surprised investors with a reading of 35 and a drop
of -8 points. It is the lowest level since 1982. This signals
that the significant weakness in manufacturing in the Chicago
region is intensifying. There is no recovery underway in Chicago!
This report is a leading indicator for the NAPM report which will
be released on Monday and is strongly valued by Greenspan and the
Fed. A drop of this magnitude in the National Purchasing Managers
report (NAPM) report on Monday would be met with a call for more
aggressive rate cuts before the next Fed meeting. The Consumer
Sentiment report actually rose slightly for the first time in
three months to 91.5 but only slightly over the February 90.6.

The other major report Friday was the ECRI which lost -4.9% and
puts it at levels near the end of 2000. The ECRI continued its
weekly decline falling to 120.7. The six month rate is falling
to a level not seen since the end of 1990. It means that there
is a continued worsening of economic conditions. The Personal
Income and Spending reports showed that consumers were experiencing
income growth and they were spending this extra income at a rate
which would be consistent with the Fed's claims that the economy
is not as bad off as feared. If you weight these reports the
PMI carries more weight with the Fed while the increased income
and spending encouraged retail investors that there was light
at the end of the tunnel.

The week of April 2nd will be pivotal in market direction.
The economic calendar has several major releases which
could drive the market. Monday has Construction Spending
and the important NAPM Index. The next most important report
for the week is the Nonfarm Payrolls on Friday. A strong
employment report would mean a recovery is underway and a
weak report would provide another stimulant for the Fed to
cut rates. Either of these major reports could trigger an
inter-meeting rate cut but the Fed is more likely to wait
until the employment report as confirmation of any NAPM

Earnings warnings on Friday included PRI Automation, Nasdaq:PRIA,
Semtech, Nasdaq: SMTC, Cirrus Logic, Nasdaq:CRUS, C-Cor.net,
Nasdaq CCBL, Dendrite, Nasdaq:DRTE and several other companies
announced slowing sales and layoffs. Ameritrade, Nasdaq:AMTD,
cut 170 jobs due to lower trading volume. Gillette, Nyse:G,
said they saw zero growth going forward. This is just a sample
of the hundreds of warnings in our future over the next three
weeks. The market will have a significant wall of worry to
climb but that also builds strong bases.

Dell Computer, Nasdaq:Dell, has an analyst conference this
week and many analysts expect a positive report. Dell is
reinventing itself and I even heard one analyst say he
expected Dell to beat estimates. Now that would be a trick!
Dell stock has been slowly gaining ground since hitting
a low of 16.25 in December. It is not burning up the charts
but showing positive momentum. The buy the rumor, sell
the news syndrome may be showing since Dell faded the last
couple days of the week. Remember, they can also guide
analysts lower as well.

The challenge for Dell as well as the rest of the PC and Chip
sectors will be the continuing decrease in demand. The most
telling indicator is the semi book to bill ratio which was
77 in February. It is still falling and analysts say that
component inventory in all the channels was still very high
with as much as three quarters of excess. MU finally announced
a narrow than expected loss but inventory levels were much
higher than expected. The claim of decreasing inventory and
building for new orders was hard for analysts to believe.
These same analysts point to the pricing levels as still in
the second down phase of correction and until manufacturers
cut prices substantially to convert inventory back to cash,
the correction is not over. There is still too much bullish
sentiment for a quick rebound and until that sentiment is
gone and inventory flushed, semi stocks have farther to fall.

The SOX.X, which is viewed as the leading indicator of an
economic recovery, has fallen back to its last level of
support at 540. After a hopeful rally two weeks ago the
index is poised only 30 points above a new low. The semi-
conductor holders, AMEX:SMH, came within .06 of setting a
new intraday low on Friday. While checking for possible
plays on Friday there were more semi stocks heading for
new lows than holding their ground. For the first time in
16 years, many analysts are predicting that the number of
semiconductors sold worldwide in 2001 will drop. Bill McClean,
of IC Insights, said last week the industry is caught in
a perfect storm, too much inventory, too many factories
and a severe economic slowdown. He is predicting a -7%
drop in unit sales worldwide and he is an optimist. David
Wu, analyst for ABN Ambro, is looking for chip sales to
fall -20% this year from over $200 billion to $160 billion.
Wu said in late 2000 makers of networking, telecommunications
equipment and cell phones were ordering as much as four
times the number of chips that they needed in order to
prevent shortages in the supply line for 2001. When the
economy screeched to a halt in December these companies
had millions of chips on hand and nobody buying their
finished products. This excess chip inventory could last
18 months according to some analysts because there is
simply no product movement in these sectors.

The airwaves were awash in negative sentiment about the
worst quarter ever for the Nasdaq. The Nasdaq lost over
-630 points or -25.5% in the first quarter and finished
only +45 points from its 52-week low set last week. The
low point for Friday was only +.06 above that low of
1974.21 set on March-22nd.

The Dow managed to continue its rebound from last weeks
lows and posted a +363 point gain for the week. With tech
stocks still under pressure fund managers parked money in
blue chips like JPM, XOM, MRK, PG, SBC and IBM. The other
tech components of the Dow did not fare as well. MSFT -.69,
INTC -.25, UTX -1.25 and HWP +.63. The Dow also got a boost
from speculation that Citigroup wants to buy American Express.
This rumor has been around for years because the CEO used
to work for AXP and would like to structure a huge merger
before he retires. At least that is the rumor. AXP gained
+2.34 on the news.

We need some rumors to build a fire under this market. The
possibility that we will see literally hundreds of warnings
over the next three weeks was boosted by GE CEO Jack Welch
on CNBC. When asked if we were in a recession he responded
that his business "was ugly and getting worse." If the CEO
of the largest diversified company in America says his
business is ugly and getting worse, we should probably believe
him. When asked if we could expect a second half recovery as
many analysts are predicting, he said "he would not count on
it." He does not see the recovery that everyone wishes was
happening. He said he had called Greenspan for the first time
in two years last quarter and told him things were looking
grim. Before you start looking for a window to jump out of
we need to remember that Jack Welch may be past his prime.
His appearances have been less than inspiring and he may be
playing for dramatic impact. He could also be doing his John
Chambers imitation and using his public appearances to talk
down analyst expectations for GE. Of course that would mean
that he needed to reduce estimates due to weak earnings.

There were some improvements in money flow this week. After
seven consecutive weeks of outflows, tech funds managed to
post a positive week. Before you get too excited they were
only positive by $37 million. Considering the trillions of
dollars lost in the last year, $37 million is pocket change.
Equity funds in general posted a +$850 million gain compared
to over -$6 billion outflows from last week. Not much to
write home about. After seven weeks of cash outflows it is
no wonder Ameritrade is cutting jobs and heading to penny
stock status. Order flow and commissions have got to be
shrinking daily.

Besides the NAPM and Non-farm payroll reports next week we
have seven Fed officials making public speeches. Talk about
a mine field! Two years ago there was a flurry of value funds
that closed up because investors had abandoned that approach
to investing. We have now come full circle and value is now
a very much appreciated commodity. Unfortunately it is the
previous growth stocks like CSCO and LU that are being
singled out as value plays. There are compelling values in
the market and this is going to be the driving force in
powering the market this spring. Several asset allocation
analysts have gone on record as saying the risk/reward
ratio for equities is at a 20 year high. Repeat, A 20-YR
HIGH. To qualify that they are comparing the possible return
from equities with the return from bonds in the same period.
They are not saying that equities cannot go lower. These are
the same people who were saying the ratios were at a 10 year
extreme just a few weeks ago. Hopefully they will not be
claiming 30 year extremes anytime soon.

The coming quarter is historically a tough one. The first two
weeks in April are historically up. Don't take that as a buy
recommendation. They are up historically because earnings
are expected to flow in quantity by mid month and these two
weeks are the end of the pre-earnings run, historically! Reality
may be different. Historically earnings are expected to be up.
This year earnings are falling through the basement and expectations
of profits have given way to fear of increased losses. Instead
of holding over earnings and hoping for an upside surprise
there is a good chance that investors will be heading for the
sidelines instead. They will sit in cash and look for survivors
after the smoke clears. I have said this before but over the
last three years, good earnings years, the last two weeks of
April have produced a market sell off. Once a historical trend
is established the timing of that trend accelerates as more
investors try to beat the rush in and out of the trend.

Another challenge for next week will be the window undressing
period. This is when funds who were forced to invest cash to
show pretty statements now move back to cash to wait for
better targets. This really does happen and stocks that
attracted money this week can suffer next week. Some of this
is related to traders who anticipated the fund movement and
took positions ahead of them. Next week they will take profits.

What does all this mean to us? It means volatility is still
with us and we may see some huge swings as warnings and actual
earnings duel for press coverage. Many tech companies have
earnings cycles that are back end loaded. That means they
try to cram as many sales into the last two weeks as possible
and we will be hearing over the next two weeks if those
companies hit their targets. With all economic indicators still
pointing down it is doubtful that many were successful. This
warnings period has already gone down as the worst in history
since First Call started keeping records. That does not bode
well for the next three weeks.

Those readers who are following my benchmark trading plan should
still be flat. Currently I am only recommending that buy and
hold option investors ONLY open new positions with a Nasdaq close
over 2000. Last Sunday the Nasdaq was sitting at 1928 and most
retail investors were looking for a strong rebound to 2500 over
the next couple weeks. Don't look now but after struggling to
close the gap between 1928 and 2000 for two days, the Nasdaq
came within .06 of making another new low on Friday. If you
had tried to enter the market (as a buy and holder) on Monday
or Tuesday before waiting for that close over 2000 then you lost
money last week. Traders who can jump in and out quickly can
trade these huge swings but longer term investors should wait
patiently for confirmation of a rally before going long. If
you don't like this benchmark strategy then trade whatever plan
you like. It may be boring but it beats broke. It is your money!

If you have not yet reserved a seat at the April Trading Expo
in Denver this week then you are missing out on the opportunity
of a lifetime. This group of speakers will never be offered
again. Over a million investors have read their books and
newsletters and heard them speak individually. Next weekend
you can hear them all in one place with over 50 hours of
in-depth options and stock trading education. Take a couple
days off from the markets and learn how to win more and
lose less.

Trade smart, enter passively, exit aggressively!

Jim Brown

3rd Annual Trading Expo
April 5th-9th, Denver Colorado

If you have not reserved your seat at the Spring Trading
Expo here in Denver on April 5th-9th then you are missing
the best seminar we have ever held. This power packed
four-day event is structured to fully educate you not
only on advanced option strategies but stock analysis
as well. This will make you a better and more profitable


Jeff Bailey, Editor, PremierBriefing.com
Learn the basics of Point and Figure Charting while analyzing
how supply and demand on an institutional level affects the
markets and the stocks you want to trade.

Mark Skousen, Ph.D., Editor, FORECASTS & STRATEGIES
The Global Economy and its Impact on Us.
Learn from a professional economist who turns his understanding
of economics into highly valuable investing advice.

Harry Browne, Author of Fail-Safe Investing
Sixteen Golden Rules of Failsafe Investing.
A powerful session that translates the essence of the book
into guiding principles.

Jim Brown, Founder, OptionInvestor.com
Austin Passamonte, Editor, IndexSkybox.com
Jeff Bailey, Editor, PremierBriefing.com
Preparing for Battle.  This is a very popular session where
multiple speakers team together offering insights on: planning
your trades and the combination of research, market factors, and
choosing your hot list.

Tom DeMark, Author of three books on DayTrading Options
Day Trading Options.  An extremely popular subject taught by one
of the world's foremost authorities on chart analysis.  Tom wrote
the book on day trading options, literally.

Steve Nison, Author, Japanese Candlestick Charting Techniques
Candlestick Charting.  Is that a doji or an evening star formation?
How can this benefit your trading success?  Candlestick chart
analysis is another hot topic that traders are always eager to
learn.  Nison is internationally recognized as the "Father of
Candlesticks" and has written two books on the subject.

Austin Passamonte, Editor, IndexSkybox.com
Buzz Lynn, Contributing Editor, IndexSkybox.com
Beating the Market with Indexes.  This is another tag team event
where you'll hear from two of our staff from IndexSkybox.com as
they discuss topics like:  Don't Pick Stocks, Pick Markets; and
Market Timing Equals Sector Profits.

Rance Masheck, President, SpreadTrader.com
Calendar Spreads & Bull Call Spreads.  Some of the first strategies
a beginner will encounter in spread trading are these two spreads.
Both simple and effective they continue to draw experienced traders
over and over again.

Mark Skousen, Ph.D., Editor, FORECASTS & STRATEGIES
Scrooge Investing - The Best Bargains in Beaten Down Stocks for
2001.  This is a great topic and Mark's background as an economist
really offers some new insight into the challenge of choosing your

Jeff Bailey, Editor, PremierBriefing.com
Calculating the Bullish Percent.  Applying your new knowledge
in Point and Figure charting to decipher how many stocks in
a sector are showing buy signals.

Jim Brown, Founder, OptionInvestor.com
Austin Passamonte, Editor, IndexSkybox.com
Pre-Market Analysis.  A very popular session where multiple
speakers team together offering insights on: Pulling the Trigger,
Amateur Hour, and Market Hype.

Dick Arms, Inventor of the Arms Index, Founder, ArmsInsider.com
Increase your profit potential with Equivolume Charting, volume
adjusted moving averages and the TRIN

Derek Baltimore, Co-Editor, IntradayTrader.com
Risk Management in a declining Market

Buzz Lynn, Contributing Editor, IndexSkybox.com
Sector Trading with IShares.  You may know of DIAMONDS for the
Dow Jones, SPDRs for the S&P 500, and the QQQs for the NASDAQ but
there is a growing list of IShares and HOLDRS that offer great
trading potential.

Jon Najarian, Founder, Mercury Trading, Floor-Trader CBOE
Successful Option Trading. "Doctor J" is the name and options is
the game.  Jon has twenty years of experience as a professional
option trader.  His firm makes markets in over 90 high-tech and
biotech stocks and trades up to 40,000 options per day.

Matt Russ, Editor, OptionInvestor.com
How to Profit from Option Pricing, Market Making and Volatility

Rance Masheck, President, SpreadTrader.com
Straddles. An excellent strategy for today's markets.  Traders
should be very familiar with the proper execution of a straddle to
benefit from expected volatility.

Jeff Wright, Preferred Trade
Understanding Option Basics and the roll of an options floor trader.

Buzz Lynn, Contributing Editor, IndexSkybox.com
Slump Busting.  Are you on a losing streak?  Learn what you need
to do to BUST out and break the pattern.

Jim Brown, Founder, OptionInvestor.com
Big Cap Strategies, Naked Puts, Zero Risk Trading, Making Dollars
not Dimes.

Jim Crimmins, President, TraderAccounting.com
Tax Strategies for the Active Trader.  It's that time of year
again and Uncle Sam wants a cut of your trading profits.  Let Jim
offer some advice on how traders should handle such taxing issues.

Molly Evans, Writer/Trader, IndexSkybox & OptionInvestor.com
The Organized Trader.

Rance Masheck, President, SpreadTrader.com
Five Point Star Trader System.  Learn what you need to know
about a stock before making a decision to trade.

Austin Passamonte, Editor, IndexSkybox.com
Swing Trading & Day Trading Index Options.  Many consider Index
option trading to be the pinnacle of equity options.  Learn more
about the do's and don'ts for Index Option trading.

Eric Utley, OptionInvestor.com & IntradayTrader.com
Psychology of trading and the Importance of the top down
approach to trading.

Buzz Lynn, Contributing Editor, IndexSkybox.com
Trading with Qcharts.  Learn how to properly set up, use, and
deploy the best features and techniques.

Derek Baltimore, Co-Editor, IntradayTrader.com
Exit Strategies, knowing when to quit

Tim Taylor - Preferred Trade
Using Direct Access Trading Platforms

Each topic will be covered in 1-2 hr general sessions taught
by one or more OptionInvestor staff and presented on three
giant screens. In the evening we will offer five of our popular
chalk talk sessions for that personal question and answer

Unlike other seminars with only two or three instructors, you
will get in-depth knowledge from many different instructors
who are experts in their field.

The cost for the four-day workshop, April 6th to 9th is only
$2995 (spouse only $1495). This includes breakfast, lunch and
supper each day. All course materials, a CD of all the
presentations and a professional video package of the entire
seminar so you can review the material at home in the comfort
of your living room.  There is also a $500 discount if you
have attended a prior OIN seminar.

This is not a prepackaged presentation that gets repeated over
and over with stale information. This is a one-time production
and everything is fresh, live and as current as we can make it.
The videos will have your real time questions and answers and
not some from a prior class. Where else can you get intensive
yet personalized options education like this?

Do not delay as seating is very limited.
We guarantee you will not be disappointed!

You can pay for your education one bad trade at a time or you
can invest less money one time to learn how to do it right.

Click here for more info:

What will your strategy be for 2001?

The VRTrader.com Annual Forecast Model
Your road map to the 2001 market!

Forecast is prepared by 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

His Annual Forecast Model has been subscribed to by Wall
Street's most elite. Mark is presently ranked #1 timer in
the nation by TIMER DIGEST and #2 on AmericasBestTimers.com.
Order your today! click here:


Trading the Trend

Would you buy this stock today?

As traders we tend to trade stocks based on what we know about
them instead of trading their charts. We trade based on emotion
and not on fact. If you were forced to pick your stocks based
on a nameless chart most of us would do much better.

This bias we have for various stocks is based on past performance
and news hype from the media. Many analysts and reporters tell
us that XYZ stock has pulled back from being overvalued to over
sold or a bargain based on its price RELATIVE to its past

Remember all the analysts on TV and in the investing magazines
that said CSCO was the Microsoft of the Internet. With the
Internet doubling every 90 days CSCO would be immune to any
problems impacting other overpriced tech stocks. This was when
CSCO was trading between $60 and $80 and the "other" stocks
were starting to fall.

I can distinctly remember analysts on CNBC that said repeatedly
that $60 was the bottom for CSCO. I can still remember the
expert analysts saying CSCO would be a bargain at $50. A direct
quote repeated many times, "I will take all the CSCO at $50 that
anyone wants to sell me." Any takers today? That same quote was
made by different people at $40 and $30. With CSCO closing under
$16 on Friday there are millions of traders who would take any
of these offers today.

The number of analysts in the CSCO corner today is very slim.
Targets are now in the $6-$12 range based on current market

The point I am trying to make here is that everyone for the last
six months was valuing CSCO based on past performance not based
chart technicals. Chart technicals tell you where real investors
who are buy/selling the stock think the value really is. We may
buy stocks based on news, sentiment and technicals but we ALWAYS
hold stocks based on sentiment not technicals. Technicals tell
us direction and our bias tells us to ignore it.

Internet Analyst Mary Meeker was asked on Friday about her
strong buy recommendations from last March on YHOO, AMZN and
EBAY. Each have dropped more than -75% in value and she
recommended them all the way down. Billions were lost because
she was married to the stories behind those stocks. YHOO
fell from $210 to $15. It was the biggest story on the
Internet but the Internet bubble was bursting.

Retail investors, that is you and me, tend to do exactly the
same thing. We can look at a chart and recite all the reasons
why the company is going to rebound any day. Their reasoning
is based on bias not fact. Remember the QCOM spike from 1999?
$1000 price targets, cell phone royalty payments more than
the GDP of many countries.

The point I am trying to make here is that people have
expectations of stock and market performance based on prior
performance not reality. Many people who became investors
over the last four years do not even know why earnings are
important to stock price. My wife keeps trying to get me
to buy Krispy Kreme because the store that opened here
in Denver last week still has a line of over 150 cars
waiting to get into the parking lot at any time of the
day or night. I tried to explain to her that the PE was
over 80 and higher than most tech stocks. My PE discussion
fell on deaf ears since she has been influenced by the hype.

If you want to remain an investor for years to come then
you need to learn to read charts and not hype. I have an
exercise we do at the office sometimes. I ask people what
they think of a specific chart, one without a symbol. Almost
every time I get the opposite reaction once I tell them the
symbol. We are human and we are a product of the old "garbage
in, garbage out" syndrome. As investors we constantly process
information on the market and stocks. When the time comes
to make a decision we are influenced by that information,
good and bad. Successful investors will actually read the
chart, not just look at it.

Try this at home. Usually in every family there is one
spouse who is an "investor" and one spouse who is not.
If you are the investor print off about ten charts of
the stocks you like. (Daily charts please, no cheating
with 5 or 10 minute snapshots) Cut off any reference to
the name of the company. Now ask your spouse if they think
each company is going up or down without telling them who
it is. Now compare that with your expectations for those
companies. You may be very surprised. Save those charts
for 90 days and see who was right. (you don't have to
disclose this information to your spouse at the end of
the 90 days. It could be dangerous to your relationship.)

Would you buy those charts I showed you at the beginning
of this article? They have no symbols. Take another look
before I tell you the names.

What is your opinion of the direction of the Nasdaq for
the next three months? Is it based on fact of hope? Can
you trade the trend based on hope or fact? As option
traders we can easily trade in either direction. We only
need to know the direction and not let our play picking
be influenced by our market sentiment.

There is one sector that leads the Nasdaq more than any
other. It is the Semiconductor sector. Jeff Bailey called
it the head of the snake last week. Where ever that head
goes the snakes body must follow. Movements in this index
are magnified in the Nasdaq. That is because every tech
stock is in some way related to chips. Even software sales
are dependent on how many chips are sold for computers
to run that software. The very first ingredient for almost
every tech product today is a chip. By watching the sales
of chips you can forecast the direction of the Nasdaq. If
you read my market wrap today you know that many analysts
think chip sales will have their worst year in a decade due
to the economic slowdown. Personally, I think it is immaterial
what they think. I only need to watch the chip sector to
decide real Nasdaq market direction. There will of course
be dozens of bumps and dips that are related to oversold
and over bought conditions and current news events but
the charts over time do not lie.

In order here are the names to go with those charts.
SMH, JDSU, CIEN, COMPX (Nasdaq). The SMH is the
semiconductor holders. They function like the QQQ for
the semiconductor sector.

My play for the week is the SMH. The low on Friday was
40.51, only +.06 above the 52-week low. If that low is
broken next week I would buy puts on the SMH. I would
buy the April-45 puts SMH-PI if the 40.50 level is
broken. They closed Friday at $5.20 but should be about
$6.00 at 40.50.

Good Luck

Jim Brown

Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at


One Down, Three To Go In 2001
By Austin Passamonte

The first quarter of year 2001 has ended and no market bulls are
sad to see it pass. Hope leans heavily on better times ahead for
those who favor the upside. Market Sentiment would sure love to
see a sustained, extended rally last far into the future from
here for most as well, but unbiased outlook is our frequently
gloomy task.

So let's delve right in.

For any market bottom formed and strength to emerge we must have
a positive catalyst that pushes action forward. Several gazillion
dollars growing mold on the "sidelines" will continue to sit
right there until given cause to move. Interest-rate cuts will
reverse economic conditions over time, just like they caused part
of this circumstance in the first place. An interim cut or at
least the rumor of one could cause shorts to watch over their
shoulder and bulls to hang on the possibility of such salvation.

Will another .50-basis change things right now? Does the market
actually look six - nine months ahead like we so often hear? If
that were indeed the case, why did every big cap & blue chip
leader hold up until the very moment they warned before getting
crushed? Where was all that forward vision to the downside when
investors needed it most? Do markets only look forward with
blinders on for good news while overlooking bad? Food for

Market action is nothing more than human emotion at work. We try
to believe that "logic" is based upon unbiased reason when in
fact the reverse is actually true. Humans arrive at all
conclusions based on feelings and some semblance of this is
labeled logic and reason. Nice try.

Right now investors and traders are tired & weary of relentless
selling. Tired of watching their retirements evaporate painfully
deep and relentlessly slow day after agonizing day. Tired of
seeing those sexy little tech darlings battered and shredded to
mere shells of their former selves.

The bottom must be near. It has to be!

Such has been the mantra for the past twelve months and counting.
Ahead of us lay the rest of pre-warn season, "non" earnings
reports, muddy outlook vision going forward, eleventh hour tax-
loss sales, massive overhead supply weighing markets down and the
traditional summer lull dead ahead.

Is that really a bottom from which we can spring forth? Market
Sentiment is skeptical at best.

Here's one litmus test we objectively use to form our market
outlook. Right now the Dow rests near 9,900 level. Based upon all
we know via technical & fundamental info, does the old index
stand a better chance of reaching 10,900 or 8,900 first? That is
1,000 index points in equal direction: where does the path of
least resistance lie? What bullish or bearish fundamental
catalysts exist to move markets forward from here?

That is how professional investors and traders weigh their odds.
Retail traders, retail analysts and clueless media celebrities
have been calling bottoms and stating we can't possibly go lower
for the past twelve months and counting. Astute traders must
remain open & objective to what possibly lies ahead, regardless
how hard to believe it is.

Speaking of professional investors, S&P 500 commercial traders
remain constant in their level of shorts from last week until
now. We expect they will cover shorts on further declines and add
more during subsequent rallies going forward from here. The very
period they switch from net-short to flat or preferably net-long
is a solid signal the bottom is in place. And not until then.

Based on seasonal, historical patterns, April is a challenging
month for the markets. We might expect this to follow suit going
forward from here. A valid, lasting reason to push market action
upward must arise from yet to be seen direction before we can
safely play the upside for any length of time from here.

Trade the daily trend with caution!


Friday 03/30 close: 33.82

Friday 03/30 close: 72.13

30-yr Bonds
Friday 03/30 close: 5.44%

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. A reading above 10.00 is considered viable
resistance or support respectively within that general strike
price range.

  (Open Interest)       Calls        Puts          Ratio
S&P 100 Index (OEX)
630 - 615                9,608        2,793         3.44
610 - 595                9,540        5,216         1.83

OEX close: 591.63

590 - 575                6,748       10,428         1.55
570 - 555                1,977        9,850         4.98

Maximum calls: 600/ 5,388
Maximum puts : 520/ 9,018

Moving Averages
 10 DMA  585
 20 DMA  603
 50 DMA  652
200 DMA  731

NASDAQ 100 Index (NDX/QQQ)
 48 - 46               189,351        46,164         4.10
 45 - 43               221,744       136,998         1.62
 42 - 40               162,607       104,818         1.55

QQQ(NDX)close: 39.15


 38 - 36                 8,718        69,612          7.98
 35 - 33                 7,078        63,879          9.03
 32 - 30                   969        17,340         17.89

Maximum calls: 45/131,520
Maximum puts : 43/74,624

Moving Averages
 10 DMA 41
 20 DMA 43
 50 DMA 52
200 DMA 75

S&P 500 (SPX)
1225                    6,135         6,916           .89
1200                   12,197        14,555           .84
1175                    8,248         6,862          1.20

SPX close: 1160.33

1150                   14,073        17,982          1.28
1125                    1,662         8,597          5.17
1100                    1,364        18,034         13.22

Maximum calls: 1275/24,725
Maximum puts : 1100/18,034

Moving Averages
 10 DMA 1148
 20 DMA 1180
 50 DMA 1262
200 DMA 1377


CBOT Commitment Of Traders Report: Friday 03/30
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        +64946      +70479        -65571     -69490

Total Open
Interest %      (+30.79%)  (+38.13%)      (-9.15%)   (-9.63%)
                net-long   net-long       net-short  net-short

DJIA futures
Open Interest
Net Value         -3269       -2516         +3299     -2696

Total Open
Interest %      (-24.49%)  (-19.73%)      (+14.22%)  (-11.17%)
                net-short  net-short      net-long   net-short

Open Interest
Net Value          +431       +3555         -4461     -8928

Total Open
Interest %       (+2.03%)   (+21.46%)     (-5.89%)   (-12.57%)
                 net-long   net-long      net-short  net-short

What COT Data Tells Us
Indices: Commercials took a breath this week with net-short
positions on the S&P 500 remaining virtually unchanged.
Commercials did reverse their positions on the DJIA as they are
now net-long.

Currencies: Commercial traders continue to build net-long
positions in the Japanese Yen

Metals: Commercials in the silver and copper markets are near a
five-year net long extreme.

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 03/27 by the CFTC.


Please visit this link for Market Posture:


Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



By Eric Utley

The end of the first quarter is welcome, from where I sit.  It
not only marks the end of the worst ever quarter for the Nasdaq,
but it also marks the beginning of a pleasant distraction of

As I've written in the past, my passions in life are narrow in
scope, but deep in involvement and they include fly fishing.
I've drawn upon parallels between fly fishing and trading stocks
in the past, and will probably do so again in the near future
as I embark upon the trout filled streams here in Colorado in
search of enlightenment and inspiration.

So, instead of reviewing a trade from last week, I thought I'd
deliver a thought from a man whom I hold in high esteem,
Norman Maclean, author of A River Runs Through It - a fabulous
account of life and fly fishing.  As you read over the following
thought, consider the parallels between fishing and trading:

"Something within fishermen tries to make fishing into a world
perfect and apart - I don't know what it is or where, because
sometimes it is in my arms and sometimes in my throat and
sometimes nowhere in particular except somewhere deep. Many of us
probably would be better fishermen if we did not spend so much
time watching and waiting for the world to become perfect."

On a quick ancillary note, I very much anticipate conversing with
the readers of this column who are attending the seminar in Denver
next weekend.  Please make sure to speak with me, as I'm anxious
to gain insight and ideas on ways to improve my column.

One last note.  This weekend's column is rather lengthy, but I
feel I've touched upon several good trading and investing ideas
generated by my readers.  I apologize for the length, but I
attempted to put out some quality work!

Send your stock requests to Contact Support.
Please put the symbol of your requests in the subject line of the



Please give us your views on CIENA and what are the support and
resistance levels?  What are your views about any further
downside? - Thanks, Sunil

It's good to hear from you again, Sunil!

I like CIENA (NASDAQ:CIEN) very much, as a company.  The firm
sells a suite of high-end, leading edge products in the optical
networking space.  CIENA is a pioneer in dense wavelength
division multiplexing (DWDM) technology, which is a cost effective
technology used by carriers to increase bandwidth across networks.
The nature of CIENA's cost saving DWDM technology has enabled the
company to buck the macro weakness in the telecom equipment space.
Telecom carriers are less likely to cut CIENA's products from
their budgets because they save money and are at the leading edge
of optical networking technology.  Because of the aforementioned
attributes, CIENA has been able to exceed earnings estimates in
recent quarters, and actually raise expectations.  However,
CIENA's bullish guidance has not been well received by the
market, which is a perfect segue into why I don't like the stock
right now.  Remember, there is a HUGE difference between a company
and its stock!

By now, it's blatantly obvious that the telecom equipment sector
is facing a macro slowdown as measured by the myriad warnings
and blowups within the sector (read: Nortel).  Because of that
risk, there is an extreme tendency to avoid risk in the market
right now, which is lending to the multiple compression in
technology shares.  And, shares of CIENA trade with a trailing
price-to-earnings (PE) multiple of 98 and a forward looking
multiple of 56 times earnings - both multiples are rich in the
current market environment.  Of course, CIENA's forward looking
multiple is predicated upon the company meeting its expectations;
the market doesn't think CIENA will hit its targets as measured
by recent price action in its shares, hence the long liquidation
last week.

Furthermore, because CIENA's shares still trade with a relatively
high multiple and because the actual price of the stock is
relatively high compared to the teen handles in shares of Cisco
Systems (NASDAQ:CSCO), Nortel (NYSE:NT) and Lucent (NYSE:LU), I
think the stock could be a target of the shorts.  In fact, short
interest has been on a steady rise in shares of CIENA for the
last three months.

Having said all of that, Sunil, I do think there is more downside
in shares of CIENA.  In fact, I have traded puts on the stock over
the past few weeks and I'll think there will be additional
opportunities to profit from the short side in the coming weeks.
However, when the glut of inventory in telecom equipment is
cleared out and carriers start spending more aggressively, I think
shares of CIENA will lead the rebound within the networking
sector.  But, that could take several more months, if not years.

Now let us turn to the chart and find some support and resistance
levels in shares of CIENA, as you requested, Sunil.


Conseco - CNC

Eric, keep up the good work.  I was looking at CNC and was
wondering if that is a cup with a hand forming on the weekly
chart? - David

It's nice to hear from you again, David, and, as always, thank
you for the kind words of encouragement.  In addition, I'm
happy to receive a request outside of the technology arena.

For its part, Conseco (NYSE:CNC) operates in two principal
segments: insurance and finance operations.  Conseco's insurance
operations include the provision of supplemental health
insurance, life insurance and group medical insurance.  The
finance portion of Conseco's operations consist of originating,
purchasing, selling and servicing consumer and business loans.

Conseco's most recent earnings report in late February brought
about concerns over bad loans in its finance division.  The
company reported an increase in loan write-offs and a jump in
late payments from its mobile home loan portfolio.  Because of
the loan problems, earnings from Conseco's finance division
only accounted for roughly 19 percent of its net earnings from

Furthermore, Conseco and several of its former officials are
being sued by a couple of pension funds.  The funds allege that
the company and its directors in the finance segment doctored
bad loans.  Now, for a long time, Conseco was viewed by Wall
Street as a poorly managed company - the firm has had its
share of problems in the past.  That much can be viewed on the
long-term chart of the stock.  However, a new management team
was ushered in to revive the company and reestablish its

While concerns over Conseco's loan portfolio and the lawsuits
may continue to surface over the next three to six months, I
would argue the fact that the Federal Reserve has slashed
interest rates by 150 basis points thus far in 2001 and is
injecting liquidity into the system.  Furthermore, I expect the
Fed to continue cutting rates, which is why I'm bullish on
shares of Conseco at current levels.

But, if my readers like the idea of Conseco and the general
premise of investing with the Fed, and would rather circumvent
the individual issues with the company itself, I can offer
several alternative investment ideas that are similar to
Conseco.  Just a reminder, the following list is NOT an end, and
my readers should take into account time horizons, risk
tolerances and should perform due diligence before pursuing
any of the following for investment purposes.  Here's a list of
some of Conseco's direct and indirect competitors:

AXA (NYSE:AXA), AmerUs Group (NYSE:AMH), American General
(NYSE:AGC), American National Insurance (NASDAQ:ANAT), Lincoln
National (NYSE:LNC), Nationwide Financial Services (NYSE:NFS),
Stancorp Financial Group (NYSE:SFG)

Finally, let us address your question, David, concerning the
cup-with-handle formation on Conseco's weekly chart.  I apologize
for taking so long to get to the simple request concerning
Conseco's chart, but I feel that without providing some background
on the company, I would be doing a great disservice to my

Shares of Conseco traced a double-bottom over the course of
2000 around the $5 level.  Shares have since rallied has high
as $18.60, but have pulled back into a consolidation around the
$15 level.  Like you suggested, David, the stock is setting up
to form a picturesque cup-with-handle.  Shares of Conseco have
been in its consolidation phase (the handle) for about nine
weeks.  As such, a breakout above relative highs could take
place any time now and would mark a solid entry point into,
provided it comes on higher-than-average volume.


Amgen - AMGN

The stock was like a falling knife last week until recovering
somewhat on Friday.  Is this a signal to sell or should one hold
on? - Alex

Alex, I greatly appreciate the request, but I must remind you
that I cannot give specific investment adivce.

Having said that, OptionInvestor added Amgen (NASDAQ:AMGN) to its
put play list over the weekend and I'll tell you why.

The risk-to-reward in shorting shares of Amgen at current levels
far outweighs the risk-to-reward in owning the stock at current
levels.  In short, the path of least resistance for shares of
Amgen appears skewed to the downside.

The stock slid precipitously lower throughout the month of
March.  Earlier in the month, shares of Amgen were holding
steady between the $70 and $75 levels, but fell as low as
$45 before rebounding in the last seven trading sessions.  Amgen
did stage a massive rebound from its low at $45 on March 22nd, but
has since run into resistance around the $60 - $62 range and looks
poised to rollover.  I'll elaborate on my rollover thesis more on
the charts below.

The underlying fundamental reasons for the weakness in the biotech
sector and, indeed, shares of Amgen are bit more clouded.  I know
that there has been some bearish news concerning select companies
in the biotech sector.  In addition, I know that there were rumors
circulating about two weeks ago that a large biotech hedge fund
was near the brink of collapse.  Those rumors have not yet
been substantiated, but I think they did induce some fear within
the sector and may continue to do so if the group weakens early
next week.  Finally, I think that the majority of the selling in
the biotech sector stems from the weakness in the broader tech
sector.  The ramifications of the weakness in the tech sector
are far reaching and have been dragging down other sectors such as

Now, let me elaborate on why the risk-to-reward in shorting
Amgen at current levels is favorable.  But, let me make it clear
that the following concerns the SHORT-TERM and is pertinent to
only a TRADE.  As you can see on the daily chart below, shares of
Amgen rebounded from their relative lows up to the 68.6%
retracement level, which sits at roughly $61.  The stock
attempted to settle above the $61 level on four separate
occasions last week but failed each time.  That tells me that
there is a BIG seller of Amgen at the $61 level - either a fund
liquidating long positions or a short defending positions.  As
such, if Amgen is shorted at current levels, a trader can set
a relatively tight stop just above the $61 level to manage risk.
If the stock does settle above $61 or $62, any short position
can be quickly covered for a small loss.  However, if we're
correct in our bearish stance, shares of Amgen could trade down
to the $56.50 level (50% retracement) or lower to the $54 level
(38.2% retracement) - either way, the risk in shorting the
stock is mitigated while the potential reward is greater.

The presence of a big seller at the $61 level is even more
evident on a shorter time frame chart, such as the one
below.  You can see that each time shares of Amgen attempt
to settle above the $61 level, they are almost immediately
pressured back down.  However, the selling appears to be
subsiding as the stock approaches the $58 level.  As such,
$58 is the key support level and if it fails, I would
expect the stock to trade $55 or $56.


ViaSat - VSAT

Please review VSAT. - Thanks, Vishal

Thanks for the request, Vishal, I think you may have discovered
something special.

Prior to Vishal's request, I had not heard of ViaSat
(NASDAQ:VSAT).  After doing a little homework on ViaSat, I have
to admit that I'm VERY impressed with the company's fundamentals.

Let me provide a quick snapshot of ViaSat's financials.  The
company, according to the most recent filings, has a debt-free
balance sheet with about $24 million in cash.  ViaSat is
expected to grow its earnings by more than 30 percent annually
over the next several years, bolstered by 30 percent sales growth
expectations next year.  Moreover, its shares trade at a deep
discount relative to future, expected earnings.  Assuming ViaSat
does, in fact, grow earnings by more than 30 percent next year,
its shares currently trade with a price-to-earnings growth (PEG)
ratio of roughly 0.50 - that's cheap.  In short, ViaSat's
fundamentals are exceptional!

The company develops wireless communications products and,
judging by my limited reading, does the majority of its business
with the United States military.  The broader defense sector has
done relatively well this year as measured by price in shares
of Lockheed Martin (NYSE:LMT) and Alliant Tech (NYSE:ATK).  So,
I don't quite understand why shares of ViaSat have performed
poorly year-to-date as its sector has done quite well.  Perhaps
the underperformance stems from the fact that ViaSat does market
its wireless networking and communications products to
commercial customers in addition to its military customers.

But, the question remains: Why have shares of ViaSat performed
so poorly?  I don't have the answer to that question.  After all,
its sector has done well and the company has superior fundamentals.
The only negative I can think of concerning ViaSat is that the
company is somewhat tied to the commercial market in communications
related products.  So, the stock market may be discounting future
shortfalls in terms of earnings.

But, if the market is unjustly punishing shares of ViaSat and the
company does, in fact, continue to deliver superior earnings
performance, I think shares of the stock are greatly undervalued
at current levels.

ViaSat could represent a compelling opportunity for a long-term
investment once the market stabilizes and a new bull emerges.
Having said that, we (OI readers and I) may consider exploring
this company a bit more.  If there's any interest among my
readers in pursuing this investment idea further, let me know
via the e-mail address above.  Furthermore, if any of my readers
have any special insight into this company, please let me know.
Based upon my preliminary work, I think Visahl may have discovered
a small cap gem in ViaSat.


Foster Wheeler - FWC

Could you please give your opinion on FWC.  It has steadily
increased in value this year while the broader markets have
decline.  Do you anticipate this continuing or does it look a
little over extended here? - Many thanks, Tony

Many thanks for the request, Tony!

Foster Wheeler (NYSE:FWC) is another great request this weekend
outside of the technology sector.  The company is an energy
infrastructure play that, in my opinion, will continue to work
(read: trade higher).

Foster Wheeler is divided into two segments: engineering and
construction and energy equipment design.  The former group
designs and constructs energy facilities, such as power
production plants, water treatment facilities and refineries.
The energy equipment group designs products for power stations
and other industrial applications; examples include heaters,
steam condensers and boilers.

Those who live in the United States, particularly California,
are well aware of the increasing demand for energy.  As such, I
think the energy infrastructure companies such as Foster Wheeler
represent excellent long-term investments.  For its part,
Foster Wheeler is expected to grow its earnings by a modest
12 percent next year.  While that type of earnings growth isn't
exactly sexy, I would expect it to accelerate judging by the
strong performance in shares of Foster Wheeler recently.  In
conclusion, I think the long-term fundamentals are in place for
Foster Wheeler and its chart lends to that idea.


This column is an information service only.  The information
provided herein is not to be construed as an offer to buy or
sell securities of any kind.  The Ask the Analyst picks are not
to be considered a recommendation of any stock or option but an
information resource to aid the investor in making an informed
decision regarding trading in options.  It is possible at this
or some subsequent date, the editor and staff of The Option
Investor Newsletter may own, buy or sell securities presented.
All investors should consult a qualified professional before
trading in any security.  The information provided has been
obtained from sources deemed reliable, but is not guaranteed
as to its accuracy.


For the week of April 2, 2001

Auto Sales                Mar  Forecast:   6.6M  Previous:     7.0M
Truck Sales               Mar  Forecast:   7.2M  Previous:     7.5M
Construction Spending     Feb  Forecast:  0.40%  Previous:    1.50%
NAPM Index                Mar  Forecast: 42.50%  Previous:   41.90%

Factory Orders            Feb  Forecast:  0.20%  Previous:   -3.80%
Chicago Fed Activity Idx  Mar  Forecast:    NA   Previous:   -0.71%

NAPM Services             Mar  Forecast: 51.50%  Previous:   51.70%
Oil and Gas Invtenty   20-Mar  Forecast:    NA   Previous:   301.5MB
Semiconductor Billings    Feb  Forecast:    NA   Previous:    -5.7%
Vehicle Sales             Mar  Forecast:  14.0   Previous:    17.5M
Idx of Online Shopping    Mar  Forecast:    NA   Previous:   154.4

Initial Claims        31-Mar  Forecast:     NA   Previous:     362K

ECRI Wkly Leading Idx 30-Mar  Forecast:     NA   Previous:     -4.9%
Nonfarm Payrolls         Mar  Forecast:     70K  Previous:      135K
Unemployment Rate        Mar  Forecast:   4.30%  Previous:     4.20%
Hourly Earnings          Mar  Forecast:   0.30%  Previous:     0.50%
Average Workweek         Mar  Forecast:   34.1   Previous:     34.2
Wholesale Inventories    Feb  Forecast:   0.10%  Previous:    -0.30%
Consumer Credit          Feb  Forecast:   $9.5B  Previous:    $16.1B
ECRI Future Inflation    Mar  Forecast:     NA   Previous:    111.3

Week of April 9th
Apr 11  Export Prices ex-ag.
Apr 11  Import Prices ex-oil
Apr 12  Initial Claims
Apr 12  PPI
Apr 12  Core PPI
Apr 12  Retail Sales
Apr 12  Retail Sales ex-auto
Apr 13  Business Inventories

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is 39.95. The quarterly
price is 99.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at


and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

The Option Investor Newsletter                   Sunday 04-01-2001
Sunday                                                      2 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:


NASDAQ Stuck In Reverse?
By Renee White

What a disappointing week and horrible quarter! If market pundits
have it correct, the sharp 25% Nasdaq drop this quarter should set
us up for a nice spring-back rally within 6 months. Supposedly
history is on our side for a reactionary rally within two
quarters, but six months seems like a long way out of this pain.

In preparation, let's review the Relative Strength Index, an
analytical tool I use to confirm my chart interpretations. It's a
well-known oscillator using a formula which includes averages of
upward and downward price changes. One can use it in short time
frames such as 5 minute charts, or longer time periods such as
daily or weekly charts.

I really needed the rally to hold last week and when it failed,
my stomach lining went into auto digest mode again. This mighty
bear market is beginning to be one heck of a weight loss system.
As seasoned traders know, markets move in anticipation of the
economy. Once we start hearing hints that CEOs can see beyond the
fog, our markets will move towards the clearing. Business cycles
are normal and they follow the course of: expansion, peak,
contraction, trough. While some economic indicators are
considered "leading," others are considered "lagging" and they
may peak while the leading indicators are just starting to turn
back up off the bottom of the trough. The stock market is a
leading indicator. When it cycles into the trough phase, it
is literally in the gutter. The muddy, murky, bottom.

In my opinion, we are in the trough phase of the cycle, crawling
in the mud. We will crawl for a while, before slowly recovering.
I say slowly because the unfocused small trader may not even
notice the slow movement forward because rallies will be sold as
quickly as they are bought. It will feel like a seesaw until
time passes and one can look back on the Composite and realize
that we're sloping up, along with the moving averages. I believe
we have been in this phase for a while now, and along with that
comes cloudy, inconsistent, economic reports.

This muddy bottom is the riskiest area for short-term option
traders. It is impossible to know if you're going to be whipped
around intraday, or if the play can hold over night. With
progressive lower lows, and rallies lasting only a few hours
before they stall, option premiums have no room to inflate
regardless which side of the trade you are on.

Like Jim Brown mentioned in Thursday's Wrap, call premiums are
dirt cheap. I too think that 2003 Leaps are low risk here. I'm
personally struggling with the decision to buy now, or wait for
my planned entry after April when the market usually sells off.
If I wait too long, those cheap premiums will get re-priced and
I will have missed a golden opportunity if the market starts to
improve. If I buy too early and Nasdaq falls to 1500 as some
predict, then I'll be mad at myself.

For short-term equity trading, I use several analytical tools to
assist me in decision making when interpreting my main equity
chart. The Relative Strength Index, commonly referred to RSI,
was developed by Welles Wilder and is discussed more thoroughly
in his book, "New Concepts in Technical Trading Systems." The RSI
can be found packaged in many charting programs and quote feeds
that have standard analytical tools for your use.

The name is a bit misleading. As Steven Achelis points out in
"Technical Analysis from A to Z," it measures the "internal
strength" of an equity, not comparative strength between two
market indices. For those who follow the ratings in William
Oneil's Investors Business Daily, it is important to note that
their relative strength readings measure strength relative to
other equities, again, not the internal strength of one
particular equity. Using IBD's relative strength along with the
RSI is fine, but don't confuse one for the other.

Most programs come with RSI preset to 14-day, but many change to
9-day or 25-day. With choppy whippy markets that have no conviction,
I prefer using 9-day. The shorter the interval, the more volatile
the reading. Unfortunately, I don't think I would know how to act
if the markets weren't volatile anymore. I'd probably think I had
stale data.

There are several ways to use the RSI that can confirm or cause
you to question your initial equity chart interpretation. I use
several analytics this way. Some give earlier readings than
others. Basically, if all don't point in the same direction, then
my main chart pattern is highly suspect. That suspicion can lead
to good early profit taking decisions, before the chart reverses.
At a minimum, it puts me on alert for a potentially unstable chart

The RSI is to be used with your equity chart, and similar patterns
you watch for in the equity, should be confirmed in the pattern of
RSI also. In other words, support and resistance levels should
hold, trend lines should hold, and tops, bottoms, lower lows or
lower highs are significant. The RSI tops above 70 and bottoms
below 30, usually before the underlying price chart. Also,
breakouts and flag formations can be followed for early notice of
the break.

One of the best ways to use RSI is with divergence readings.
Divergence occurs when the equity price makes a new high (or low)
that is not confirmed by a new high (or low) in the RSI. Again,
prices usually correct and move in the direction of RSI. If your
underlying equity chart is showing higher highs with strength, yet
your RSI is showing lower highs, you might want to realize this
is a divergence reading and consider taking profits. Rolling
cycles that follow a trend line opposite from your equity's
trend line and cycle is a divergent pattern. If you become
sensitive to reading these patterns, you will salvage many more
previously lost profits due to holding on too long. Also,
learning this can help you make those critical decisions when
we fight with ourselves, not wanting to exit the trade when our
gut tells us to. It is one more piece of data, moving at a
little different speed than the main chart, that can be used to
hit us upside the head like a brick, when we fight with our
own (lack of) discipline.

Another thing I use is support & resistance levels with RSI. If
my position is moving as planned on my main chart but the RSI
rolled over before taking out its previous high/low, then a trader
should consider an exit and take profits, or limit losses. Usually
the equity pattern will follow in the direction of RSI, not vice

Next time I'll discuss another favorite indicator that I will be
using to help me judge buying interest based on volume momentum.
This will be important to monitor when picking which securities to
buy. I want those that will be early leaders. An indicator that
shows buying interest and momentum should help me choose stocks
that may move up in price sooner.  The last thing I want to do is
buy a previously good company, whose stock price just sits in the
mud for months to come, while other things are moving ahead and

Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at


Call Play of the Day:

INSP - InfoSpace.com $186.13 (+19.44)

See details in sector list

Put Play of the Day:

INSP - InfoSpace.com $186.13 (+19.44)

See details in sector list

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


No dropped calls this weekend


ENE $58.10 (-1.30) Short-lived, but profitable, ENE gave us a
quick $7 dip before bouncing at the $54 support level late on
Thursday.  The weak, late-day bounce wasn't quite convincing
though and we had to wait for the follow through on Friday to
convince us the bottom had been reached.  The bulls wasted no
time, propelling ENE through our $57 stop in the first hour, and
this level survived every bearish challenge all the way to the
closing bell.  Our stop took us out well below our entry price,
and it is now time to jettison the stock from our playlist,
pocketing tidy gains in the process.


SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5
Analysts who follow each stock rate it and these rating are
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell"

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.


BAC - Bank of America Corp. $54.75 (+1.97 last week)

Providing a diversified range of banking and certain
non-banking financial products and services, BAC's operations
consist of Consumer Banking, Commercial Banking, Global
Corporate and Investment Banking, and Principal Investing and
Asset Management.  Consumer Banking targets individuals and
small businesses, while Commercial Banking targets businesses
with annual revenues up to $500 million.  Global Corporate
and Investment Banking provides investment banking, trade
finance, treasury management, leasing and financial advisory
services.  Principal Investing includes direct equity
investments in businesses and general partnership funds, while
the Asset Management businesses are split into three branches;
Private Bank, Banc of America Capital Management and Banc of
America Investment Services.

Have you noticed the sharp recovery in Banking stocks in the
past week?  We have, and BAC is leading the charge, up 14%
since the lows on March 22nd.  Investors have taken notice of
the comparatively healthy economic reports recently and are
clearly expecting that the economic slowdown will be severe
enough to keep the Fed on its rate-cutting program, but not
severe enough to cause an appreciable increase in the number
of defaulted loans and accounts for major banks.  As the most
heavily weighted stock in the S&P Banks index (BIX.X), BAC has
a strong influence on the index, meaning that the index will
provide a good indication of the likely direction of BAC.  So
what do we see on the chart?  The stock is approaching the $55
resistance level, after which the bulls will take aim on the
$57.50 level.  After the strong recovery in the past 6 sessions,
BAC is looking a bit top heavy and may need to undergo some
profit taking before it is able to scale either of these
resistance levels.  First the daily stochastics is flattening
out in the overbought region, and the upper Bollinger band is
looming near $55.50.  Aggressive investors will want to target
a bounce above our $53 stop for new positions, while more
conservative traders will wait for further strength to push
the stock above $55 on solid volume.

BUY CALL APR-50 BAC-DJ OI= 5778 at $5.80 SL=3.75
BUY CALL APR-55*BAC-DK OI=13748 at $2.30 SL=1.25
BUY CALL MAY-55 BAC-EK OI=13024 at $3.80 SL=2.25
BUY CALL MAY-60 BAC-EL OI=18542 at $1.50 SL=0.75


COF - Capital One Financial $55.50 (+4.46 last week)

As one of the top 10 credit card issuers in the U.S., Capital
One's secret weapon is its vast databases.  The company uses
this data to match a potential Visa or MasterCard customer to
any one of its thousands of cards, varying in annual percentage
rates, credit limits, finance charges and fees.  Ranging from
platinum and gold cards for preferred customers to secured and
unsecured cards for customers with poor credit histories, the
company has a credit card for just about anyone.  The company
also sells wireless phone services, mortgage services, and
consumer lending products.

After recently successfully testing $46 support, shares of
consumer credit firm Capital One have bounced sharply, helped by
a stronger than expected consumer confidence number this week.
With consumer spending remaining firm, this bodes well for the
earnings outlook of credit card issuers.  Analysts have also been
positive on the stock, as Prudential Securities recently
initiated coverage on COF with a Strong Buy rating and a $62
price target, with Analyst Brad Ball citing strong growth and
praising the company's information-centric business model.  On
Thursday, COF was upgraded by AG Edwards, from an Accumulate to a
Buy rating.  While credit quality continues to be a concern in
the Financial sector, COF's business has been seen as being less
risky compared to credit lenders who deal with corporations.
Because COF is making many small loans as opposed to fewer but
much larger ones, there is a sense of risk diversification.  At
this point, a break above $56 on volume would allow conservative
traders to make a play.  Just make sure that rivals AXP and C
confirm upward movement.  While there is strong support for the
stock at $52, we would like to see COF continue to close above
$53, which is why we are placing a protective stop at this level.
Pullbacks to support from the 5 and 10-dma at $53.82 and $52.28,
as well as horizontal support at $53 and $52 may allow aggressive
traders to jump in.

BUY CALL APR-50 COF-DJ OI= 216 at $6.90 SL=5.00
BUY CALL APR-55*COF-DK OI= 419 at $3.50 SL=1.75
BUY CALL MAY-55 COF-EK OI= 576 at $4.90 SL=3.00
BUY CALL MAY-60 COF-EL OI= 196 at $2.85 SL=1.50


Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

The Option Investor Newsletter                   Sunday 04-01-2001
Sunday                                                      3 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



PMI - PMI Mortgage Insurance Company $64.98 (+5.8l last week)

PMI Mortgage Insurance company, with headquarter in San
Francisco, is one of the largest private mortgage insurers
in the United States.  In addition, PMI Mortgage Insurance
Company and its subsidiaries, provides private mortgage
insurance in Australia, New Zealand, and the European Union
as well as mortgage guarantee reinsurance in Hong Kong.
PMI, along with its parent company, The PMI Group Inc, and
its corporate affiliates, is a leader in risk management
technology and provides various products and services for
the home mortgage finance industry, as well as title

The insurance sector blew through resistance at 710 to 720
on Friday morning, and PMI caught the upward momentum to sail
past resistance at $65 all the way up to  a high of $66.50.
IUX.X is now on the verge of clearing its 50 dma of 729.59
and possibly its 200 dma of 736.58.  If this occurs, PMI has
light resistance between $65 and $70, and could possibly
make a run towards this level next week.  Several recent
mergers and acquisitions in the financial services and
insurance sector have helped to stimulate this sector over
the last several days.  On Thursday, the Wall Street Journal
ran an article regarding the previously announced bid for
American General Insurance Company by Prudential of the U.K.,
which will be the largest acquisition of an American company
announced this year.  In addition, on Friday, GE Capital
announced their plans to buy Franchise Financial, and an
unconfirmed rumor circulated on Friday regarding a possible
merger between Citigroup and American Express.  At this point,
PMI's moving averages are vertically aligned, with the 5 dma
of $62.96 strongly above the 10 dma of $60.75.  Traders might
want to wait for IUX.X to move above 730 before taking
positions.  A possible entry point would be at the current level,
or possibly at a pullback to $64.  A conservative entry point
could be taken on a strong move past $65.50 with heavy volume.
We are setting stops at $63 to protect gains, so exit the
position if PMI closes below this point.

BUY CALL APR-60 PMI-DL OI=130 at $6.00 SL=1.30
BUY CALL APR-65*PMI-DM OI=  2 at $2.55 SL=1.50
BUY CALL MAY-60 PMI-EL OI=  4 at $7.00 SL=5.00
BUY CALL MAY-65 PMI-EM OI=  0 at $3.90 SL=2.50  Wait for OI!!


FDC - First Data Corporation $59.71 (+1.16 last week)

Atlanta-based First Data Corp. helps move the world's money.
As the leader in electronic commerce and payment services,
First Data serves more than two million merchant locations,
1400 card issuers, and millions of customers, making it easier,
faster, and more secure for people and businesses to buy goods
and services using virtually any form of payment.  With more
than 27,000 employees worldwide, the company provides credit,
debit, and stored value card issuing and merchant transaction
processing services, internet commerce solutions, Western Union
money transfers and money orders, and check processing and
verification services throughout the United States, United
Kingdom, Spain, Australia, Mexico and Germany.  Its money agent
transfer network includes approximately 101,000 locations in
more than 185 countries and territories.

A clean upward line can be drawn from FDC's low of $38 on
October 9 to the support level of its current upward channel.
Traders who bought at the support level of the 50 dma of $59.50
on Thursday were rewarded nicely with a move upward to $61 on
Friday morning.  FDC is currently reaping the rewards of
investors who are attracted to stocks which offer safety and
growth.  FDC's subsidiary, Western Union, is one of the best
known brand names both in the United States and internationally.
Recent announcements regarding the expansion of Western Union
into the Asian markets has stimulated new attention in FDC,
and if the strong upward trend continues, we may make a run for
the 52-week high at $64.10.  At this point, FDC appears
poised to roll over from the current level to support at
$59.50, which could be a possible entry point.  Conservative
traders might want to wait for a break above $62 on heavy volume.
We are keeping stops at $58.50, so exit positions if FDC closes
below this level.  Continue to monitor others in the sector
like ADP and PAYX for an indication of sector strength.

BUY CALL APR-55 FDC-DK OI=  10 at $5.60 SL=3.50
BUY CALL APR-60*FDC-DL OI= 599 at $2.20 SL=1.00
BUY CALL MAY-55 FDC-EK OI=2385 at $6.80 SL=5.00
BUY CALL MAY-60 FDC-EL OI=2907 at $3.70 SL=2.50


ERTS - Electronic Arts Inc. $54.25 (+2.25 last week)

Electronic Arts is the leading independent interactive
entertainment software company that develops, publishes and
distributes products for personal computers and advanced
entertainment systems such as the PlayStation and Nintendo 64.
Since its inception, EA has garnered more than 700 awards for
outstanding software in the U.S. and Europe.  Combining such
diverse media as video, photographic images, computer graphics,
and stereo sound with the work of professional story writers and
Hollywood film directors, EA is breaking traditional boundaries
and evolving into a 21st century high-technology entertainment

The video game industry this year has attracted much interest
from analysts and traders alike.  While still considered a
backwater of the Software sector, with the upcoming introduction
of new and exciting products (such as Microsoft's X-box game
console) as well as the advent of online games, shares of ERTS
have been trending steadily upward.  Already the undisputed
champion of sports-related video games through its EA Sports
division, the company hopes to expand on its success by taking it
online.  For a fee between $4.99 to $10 a month, ERTS is also
aiming to build a subscription model to augment their revenues
from software sales, as in the case of its Ultima Online
product/service.  As well, the company has been broadening the
demographics of its customer base by creating games that appeal
to a larger audience.  It's most recent home run, titled The
Sims, has become a bestseller and in the process, attracting
people who are not as receptive to the standard shoot-the-bad-guy
theme.  US Bancorp Piper Jaffray recently re-iterated their Buy
rating and $60 price target, citing visibility and predictable
growth.  Aggressive traders may look for pullbacks to support at
$54, $53, the 10-dma at $52.46 and our closing stop price of $51
as potential entries.  In doing so, wait for buying volume to
return before jumping in.  The more risk averse may want to wait
until ERTS trades back above its 5-dma (now at $54.55) before
taking a position, but only if sector peers ATVI and THQI are
also showing strength.

BUY CALL APR-50 EZQ-DJ OI=2808 at $6.75 SL=5.00
BUY CALL APR-55*EZQ-DK OI=2539 at $3.88 SL=2.50
BUY CALL APR-60 EZQ-DL OI=1173 at $2.06 SL=1.00
BUY CALL MAY-55 EZQ-EK OI=  71 at $6.25 SL=4.00
BUY CALL MAY-60 EZQ-EL OI= 168 at $4.13 SL=2.50


UVN - Univision Communications $38.16 (+2.04 last week)

Based in Los Angeles, California, Univision Communications Inc.
is a Spanish-language television broadcaster in the United
States.  The company's network provides the Univision affiliates
with 24 hours per day of Spanish-language programming with
substantially all new programs.  Univision's Network, which is
the most watched television network (English- or
Spanish-language) among Hispanic households, provides the
Company's broadcast and cable affiliates with 24 hours per day of
Spanish-language programming with a prime time schedule of
substantially all first run programming (I.E., no reruns)
throughout the year.

It appears that the Street is still rewarding firms with strong
and steady earnings growth, which has helped the Cable sector to
rise in the month of March in the face of strongly declining
markets.  While drug stocks have been the traditional safe haven
in uncertain times, traders have now also taken an interest in
the broadcasting space.  One of the reasons for this is the
affordable luxury theory.  While conventional wisdom would
suggest that in tough economic times, people are likely to
tighten their spending, few would start by canceling their cable
television.  In fact, home entertainment would most likely
replace other activities such as going to the movie theatre.  Not
only does UVN have this in its favor, but the most recent census
data has given the company a unique strategic advantage.
According to the reports, the Latin population has become the
largest minority group in the United States.  This is to UVN's
advantage, since the company has a commanding share of this
lucrative market.  In short, it's like owning "Park Place" in the
board game Monopoly.  With that, the stock has been moving
steadily higher in an upward trending regression channel.  A
bullish spike through $39, which is just above where its 5 and
50-dma are converged, would allow conservative traders to make a
play, provided that sector peers COX and CVC are also moving up.
Aggressive players may target pullbacks to support at $38 and our
closing stop price of $37 for potential entry points.

BUY CALL APR-35*UVN-DG OI= 31 at $4.50 SL=2.75
BUY CALL APR-40 UVN-DH OI=172 at $1.70 SL=1.00
BUY CALL MAY-40 UVN-EH OI=  0 at $2.95 SL=1.50  Wait for OI!!
BUY CALL MAY-45 UVN-EI OI= 39 at $1.40 SL=0.75


M0 - Philip Morris Cos $47.45 (+4.05 last week)

Philip Morris Companies is the world's largest tobacco firm,
controlling about half of the US tobacco market.  The Marlboro
name is their most valuable brand; although Benson & Hedges,
Parliament, and Virginia Slims brands have made their mark
across the globe, too.  The company also derives a large
proportion of its profits from its Kraft food and Miller beer
subsidiaries.  Its Kraft Foods unit is the #1 food company in
the US and #2 throughout the world.  Some household brands that
you're likely familiar with include Jell-O, Oreo, Ritz, Kool-
Aid, Maxwell House, and Post cereal.

You can always count on the old economy types, particularly
tobacco stocks, to fare well in a fear-based economic
environment.  You've got to figure that their products will
always be a mainstay in despite of how worried consumers might
be about finances.  A bullish climb from its recent lows of
$41.47 recently took MO through key resistance levels, including
the elusive 30-dma.  Other publicly traded tobacco companies
like Universal Corp (UVV) and RJ Reynolds (RJR) are also running
strong alongside Phillip Morris.  If the DOW can break 10,000
and MO maintains its current upward trend, then the share price
could easily penetrate the strong opposition at $52.04, the 52-
week high.  High-volume bounces off the current level offer
viable entries into the momentum, but be prepared to exit
aggressively as MO approaches the upper resistance levels.  In
light of its lower volatility, we're not taking any chances on
pullbacks.  We'll exit the play if MO closes under the $45 mark.
This isn't to say that aggressive entries couldn't be found near
the 10-dma ($45.58) if MO is experiencing wider than usual
intraday swings and the markets are attune to such a strategy.
Otherwise, it's much safer to wait for a definitive breakout
through $48 before taking additional positions.

BUY CALL APR-40 MO-DH OI= 5000 at $7.80 SL=5.25
BUY CALL APR-45*MO-DI OI= 8278 at $3.50 SL=1.75
BUY CALL MAY-40 MO-EH OI=  257 at $8.50 SL=6.00
BUY CALL MAY-45 MO-EI OI=  458 at $4.70 SL=2.75
BUY CALL MAY-50 MO-EJ OI= 2597 at $2.00 SL=1.00


Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at


Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

The Option Investor Newsletter                   Sunday 04-01-2001
Sunday                                                      4 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:

Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at


AMGN - Amgen - $60.19 (+2.50 last week)

Amgen is a global biotechnology company that discovers, develops
manufactures, and markets human therapeutics based on advances
in cellular and molecular biology.  The company manufactures and
markets four human therapeutic products, Epogen, Neupogen,
Infergen, and Stemgen.  Amgen uses wholesale distributors of
pharmaceutical products as the principal means of distributing
the company's products to hospitals, pharmacies and clinics.

As one of the premier profitable biotechnology stocks, as well
as a key bellwether for the sector, Amgen demonstrated a high
level of technical strength during the beginning of the biotech
onslaught which occurred over the last several months.  However,
since falling below the converged 200 and 50 dmas of $67.50 on
March 12, Amgen's strength has fallen dramatically.  That drop
occurred simultaneously with a collapse in the BTK.X below a
critical support level of 500, which had held since May of 2000.
A weekly chart of Amgen now shows a major head and shoulders
pattern forming over the last year, with the left shoulder
forming at $76 on January of 2000, the head forming at $81 last
July, and the right shoulder forming at $74 during March.
Amgen actually fell to $45.44 when the Dow collapsed to 9100
on March 22, and since rebounded, but was unable to rally past
a lower high at $62 this week.  Unfortunate news regarding one
of their products as well as a downgrade may have killed the
last short term glimmer of hope for Amgen.  JP Morgan analyst
David Molowa cut first quarter estimates for Amgen, based on
a projection of slowing sales for one of their key cancer
products, Neupogen.  According to Molowa, Neupogen sales are
being hurt by competition from Immunex, as well as slowing
market penetration.  While Amgen rallied slightly with the
health care sector this week when the Johnson & Johnson Alza
deal was announced, it subsequently made a daily pattern of
lower highs at $62, $61, and $60.  Amgen is poised to roll over
from current levels, which could be a good entry point,
particularly if taken in conjunction with a roll over in the
BTK.X from current levels.  Below $60, there is light support
until $57.50.  A break below $57.50 on strong volume would be
a more conservative entry point, and could lead Amgen to the $53
level.  We are setting stops at $62, close positions if Amgen
closes above this level.  In addition to monitoring BTK.X, it
is helpful to watch others like HGSI and DNA.

BUY PUT APR-60*YAA-PL OI=7147 at $3.75 SL=2.50
BUY PUT APR-55 YAA-PK OI=5786 at $2.06 SL=1.00


XLNX - Xilinx Inc $35.13 (-10.87 last week)

Xilinx develops and markets complex programmable logic
solutions.  Their design software allows clients to customize
chips to meet specific needs.  The company's solutions include
advanced integrated circuits, software design tools, predefined
system functions delivered as cores of logic, and field
engineering support.  They primarily market to electronic makers
who use the chips in telecommunications and data processing
equipment, industrial controls, military and aerospace
applications, and networking equipment.  Blue chip clients
include Alcatel, Cisco, Fujitsu, IBM, Lockheed-Martin and Nokia.

Unnerved investors may have thought the worst was over, but
chipmaker XLNX led the semiconductors lower as the NASDAQ
continued its slide on concerns of eroding corporate profits.
After Palm and Nortel Networks lowered their sales forecasts,
XLNX fell off the cliff.  The historical support at $40 crumbled
under the broad selling pressure.  At the moment, XLNX is
teetering precariously at the $35 level.  Xilinx's counterparts
like MXIM, CRUS and MU have also taken severe lashings of late.
With the general sentiment of more earnings disappoints to come,
we're anticipating more weakness across the sector.  The
Philadelphia Semiconductor Index (SOX.X) provides traders with a
panoramic account of the semiconductors, so look for continued
action under the 550 level for bearish confirmation.  More
specifically, if traders take XLNX through $35 on respectable
volume, then get ready to jump on this put play.  The more
aggressive types might also find an entry if XLNX rolls over
near the trailing 5-dma, at $39.  Lows of this magnitude haven't
been seen since October 1999, which of course leads us to the
topic of using stops for protection.  We have a closing stop set
at $38; although if you're erring on the side of caution or
playing a sharp decline, set your intraday stops accordingly.

BUY PUT APR-40 XLQ-PH OI=3813 at $6.88 SL=5.00
BUY PUT APR-35*XLQ-PG OI=4925 at $3.63 SL=1.75
BUY PUT APR-30 XLQ-PF OI=3143 at $1.69 SL=0.75



ADBE - Adobe Systems $34.97 (-0.72 last week)

A long-time leader in desktop publishing software, ADBE
provides graphic design, publishing, and imaging software
for Web and print production.  Offering a line of application
software products for creating, distributing, and managing
information of all types, the company generates nearly 75% of
sales through publishing software products such as Photoshop,
Illustrator, and PageMaker.  Its Acrobat Reader, which uses
portable document format (PDF) is popping up all over the
Internet, as businesses shift from print to digital
communications.  In addition, ADBE licenses its industry
standard technologies to major hardware manufacturers,
software developers, and service providers, as well as
offering integrated software solutions to businesses of all

So will ADBE deliver profits for us again in the month of
April?  Recall our profitable play from early March, as we rode
ADBE down to its lows near $25.  After a brief rally, the
Computer Software index (GSO.X) is testing its lows again, and
if support near $170 on the index fails, the downside pressure
on stocks like ADBE could be significant.  After reaching a
recent peak at $38, the stock began to weaken, and despite a
vigorous rally attempt on Friday, the 5-month downtrend line
(currently $37) is still unbroken and likely to continue
pressuring the share price.  Stochastics have rolled over from
overbought on the daily chart, and with volume on the rise
again, ADBE looks like it could easily retest its lows as we
head into the heart of earnings disappointment season.
Technology investors continue to be unforgiving of
disappointments, and although it is hoped that most of the bad
news is already priced into the market, it is that type of
hoping that helped many investors to blow up their accounts last
year.  A couple of notable warnings or disappointments in the
Software sector is likely all that would be needed to drive ADBE
back to test its March lows.  After Thursday's sharp drop, we
ratcheted our stop down to $35, and Friday's close was just the
merest fraction below this level, keeping our play alive for
another day.  Aggressive traders can consider new positions if
the price weakens near current levels, but beware of continued
buying the pushes the stock through our stop.  The conservative
approach may be best at this juncture; look to initiate new
plays on a drop through either the $34 or $32 intraday support
levels, depending on your risk tolerance.

BUY PUT APR-40 AEQ-PH OI=3345 at $6.50 SL=4.50
BUY PUT APR-35*AEQ-PG OI=1885 at $3.00 SL=1.50
BUY PUT APR-30 AEQ-PF OI=1816 at $1.20 SL=0.50


VRTS - Veritas Software $46.24 (-7.64 last week)

As an independent supplier of storage management software,
VRTS develops and sells products that protect against data
loss and file corruption, allowing rapid recovery after disk
or computer system failure.  The company's products provide
continuous data availability in clustered computer systems with
shared resources. This enables IT managers to work efficiently
with large file systems, making it possible to manage data
distributed on large computer network systems without harming
productivity or interrupting users.  VRTS provides products for
most popular operating systems, including UNIX and Windows NT,
as well as a full range of services to assist its customers in
planning and implementing their storage management solutions.

Just when we thought our ride on VRTS might be just about played
out, the bears came back to abuse the Software stocks again,
driving the stock solidly below the $50 support (now resistance)
level.  In fact, the selling intensified on Thursday, driving
the NASDAQ to a new intraday low, as well as VRTS.  Tagging the
$42 level Thursday afternoon, the stock got a little help on
Friday as the bulls charged back, raising the price back over
the $45 level, but $47 remained as stubborn resistance.
Although the price fell back towards the end of the day, it is
looking like VRTS may be reaching the end of its bearish trend,
so we are protecting our position be keeping a tight stop at
$48, also the site of the 5-dma.  Another factor that will
likely be pivotal next week is any news in the Software sector.
The Software index (GSO.X) is resting right on major support
near $170, and any bearish developments could break the back of
this support.  The logical consequence of this development would
be to drag VRTS through its support, now sitting near the $42
low from last week.  Conservative traders will want to wait for
the bears to break the back of this support level before
initiating new positions, while those with a higher risk
tolerance can consider any failed rally near our $48 stop as an
attractive entry point.  Confirm weakness in the Software sector
by watching the GSO.X; if it bounces from last week's lows, it
will be an indication that the bears will have a hard time
breaking the back of VRTS' $42 support level.

BUY PUT APR-50 VIV-PJ OI=12904 at $7.70 SL=5.50
BUY PUT APR-45*VIV-PI OI= 6470 at $4.90 SL=3.00
BUY PUT APR-40 VIV-PH OI=15656 at $2.95 SL=1.50


DPMI - DuPont Photomasks Inc. $43.87 (-6.11 last week)

DuPont Photomasks leads the photomasks industry with one of the
most technically advanced manufacturing networks.  The company
supplies photomasks to the global semiconductor industry from
13 strategically located facilities in North America, Europe,
and Asia, and derives 25 percent of its current revenues from
leading edge photomasks with .18 micron or smaller design rules.
DuPont photomasks also produces and supplies photoblanks and
pellicles.  Headquartered in Round Rock, Texas, DuPont Photomasks
posted worldwide sales of approximately $328 million in fiscal

DPMI has been on a steady decline all week, as the stock
lacks a near term catalyst necessary to stimulate a rally.
Furthermore, the earnings which were released by Micron on
Thursday may provide the selling momentum necessary to push
DPMI below strong support at the $40 level, and possibly lower.
The semiconductor sector did not respond well to Micron's
earnings, which were reported on Thursday after the close.
Micron reported a pre-tax net loss of one cent per share,
down sharply from the year ago profit of thirty cents per
share.  Micron also stated that their inventories peaked
about five weeks ago, and have been on a steady decline,
which prompted Prudential and Lehman Brothers to upgrade
the stock.  However, the semiconductor sector seemed to
want to see solid proof that demand for chips is increasing
and investors were not satisfied with MU's forward outlook.
As a result, SOX.X lost over 4% on Friday, and dropped below
an important support level of 550.  DPMI has established a
pattern of lower highs at $50.80, $46.83, and $45.  At this
point, DPMI is starting to form a rounded roll over from
current levels, which could be a good entry point, and would
likely lead the stock to $42.50.  For conservative traders, a
break below $42.50 on strong volume could be a good entry point
which could lead DPMI to strong support at $40.  If DPMI
breaks the $40 level, it could possibly drop to the 52-week
low at $28.50.  Monitor the SOX.X for an indication of
sector strength, and move stops to $45.  We will close
positions if DPMI closes above this level.

BUY PUT APR-45*DUD-PI OI= 66 at $4.40 SL=2.75
BUY PUT APR-40 DUD-PH OI=168 at $2.10 SL=1.00


AETH - Aether Systems Inc. $13.00 (-3.44 last week)

Aether Systems Inc. is a leading provider of wireless and mobile
data products and services allowing real time communications and
transactions across a full range of devices and networks.  Using
its engineering expertise, the ScoutWare family of products
including the Aether Intelligent Messaging (AIM) software
platform, and its network operations and customer care center,
Aether seeks to provide comprehensive, technology independent
wireless and mobile computing solutions.  Aether develops and
delivers wireless and data mobile services across a variety of
industries and market segments both in the United States and

It just goes to show that in the long run, the fundamentals and
technicals go hand in hand.  While optimism over the staggering
potential of wireless helped drive AETH to breath-taking heights
last year, and the sex appeal of triple-digit revenue growth gave
the bulls much to be excited about, a number of realities have
come home to roost.  Behind the backdrop of a weakening economy,
slower than expected wireless handset sales along with delays in
the deployment of next generation networks have severely hampered
the growth of AETH's customer base.  What's more, analysts have
questioned the excessive costs incurred to generate what have
been called "low quality earnings".  Add to that a 35 percent
increase in float due to a share lockup which expired on February
25th and its no wonder that the AETH sits near its all-time low.
Having breached $15 support this week, the stock fell further on
strong volume.  Over the past three sessions, the stock has found
support above the $12 mark.  A break below this level could allow
conservative traders on weakness, but confirm with volume.
Failed rallies as the stock approaches resistance from the 5-dma
at $13.91 and our closing stop price (moved down from $15 to $14)
may allow higher risk players to take a position.  Look to
competitors CMVT and OPWV in gauging sector sympathy.

BUY PUT APR-15  *HIZ-PC OI=218 at $3.50 SL=1.75
BUY PUT APR-12.5 HIZ-PV OI=210 at $1.81 SL=1.00


ISSX - Internet Security Systems $27.36 (-5.14 last week)

Internet Security Systems is the leading provider of total
information security management for networks, servers,
applications and desktops.  Not only does ISS offer
market-leading, best of breed security management systems for
security assessment, policy enforcement and intrusion detection -
all built on the company's SAFEsuite security management platform
- it also provides superior customer service, consulting and
education offerings that significantly reduce the complexity and
expense inherent in protecting online assets.  ISS approaches
Internet security through a complete lifecycle approach, offering
a managed solution that covers the full continuum of Internet
security needs.

The bulls and bears have been arguing over the viability of
Internet security stocks for quite some time now.  Despite the
detonation of the dotbomb space, bulls have been arguing that
because security is such a vital part of any e-business strategy,
it should be considered a necessity and therefore, less immune to
the suppressive forces of a slowing economy.  The bears, upon
hearing this, would point out that this was the same argument
that was used for the Storage sector, which has fallen sharply on
the heels of warnings from leaders such as BRCD and EMC.  While
ISSX held up fairly well in March in the face of the NASDAQ's
decline, it appears now that the bears are winning.  With that,
we recently added ISSX as an aggressive put play.  Connecting the
highs and lows since mid-February reveals a downward trending
regression channel, one that to this day continues to hold.  The
5 and 10-dma, now converged at just above $30, have acted as
formidable resistance throughout ISSX's retreat.  Higher risk
players may look for failed attempts to surpass this level as a
signal to jump in, along with resistance at $28.50 and $27.75,
but confirm the rollover with volume.  Also be aware that we have
placed a closing stop at the $30 mark.  For conservative traders,
a break below $26 could allow for an entry, but the even more
cautious will want to wait for a bearish plunge below $25 support
before taking a position.  Correlate entries with direction in
sector sisters CHKP and VRSN.

BUY PUT APR-30*ISU-PF OI=226 at $4.88 SL=3.00
BUY PUT APR-25 ISU-PE OI=133 at $2.00 SL=1.00


OPWV - Openwave Systems Inc. $19.84 (-4.72 last week)

Openwave Systems Inc., the combination of Phone.com and
Software.com, is the worldwide leader of open Internet-based
communication infrastructure software and applications.
Openwave's customers are communication service providers
worldwide, including wireless network operators, wireline
carriers, internet service providers, portals, and broadband
network providers.  Openwave was formed in November of 2000
following the merger of Phone.com Inc. and Software.com Inc.

After OPWV fell below $20 on Wednesday, the selling intensified,
and took the stock all the way down to $15.96 on Thursday.
This occurred simultaneously with a drop in the software index,
GSO.X, below 185 to support at the 170 level on Thursday.
While GSO.X recuperated on Friday, the index only rallied to
181, a significantly lower level than the week's high at 195.
OPWV rallied on Friday with the Nasdaq, possibly due to an
analyst upgrade.  Dresdner Kleinwort Wasserstein inititated
coverage on OPWV with a buy rating, which followed an upgrade
by W.R. Hambrecht this week, which upgraded OPWV to a strong
buy.  Nevertheless, OPWV has a long way to go before the
stock can re establish a true upward trend, and, at this point
the odds seem stacked against this in the near term.  Since the
beginning of March, OPWV has rolled over from each lower
high at $32, $29, and $25, with strong volume, indicating heavy
selling.  Some of this selling may come from former holders of
Phone.com and Software.com, which merged to create OPWV.  If
this pattern continues, OPWV should roll over from the $20 level,
which could be a good entry point.  Alternatively, conservative
traders could wait for a move below $19.40, which could lead
OPWV back to its 52 week low at $15.96.  Monitor others in the
sector, like NTOP and CTRA, and set stops at $22.  Exit positions
if OPWV closes above this level.

BUY PUT APR-25 UGE-PE OI=880 at $6.60 SL=4.50
BUY PUT APR-20*UGE-PD OI=882 at $3.00 SL=1.50


NSM - National Semiconductor $26.75 (-2.90 last week)

National Semiconductor is a leading technology provider of
analog solutions and related semiconductor products.  The
company promotes its system-on-a-chip (SOC) components, which
combine microprocessors with logic, memory, and other functions
on a single chip.  Its Geode SOC products serve a variety of
markets; particularly wireless communications and power
management.  Customers include Compaq, Nortel Networks and

Investors can't even find relief in a sector that's been in a
downward spiral!  The chip stock made a nice recovery recently.
In looking to put some money to work, investors figured the
chips were the best choice to yield positive results.  But given
the tough business market ahead and the downturn in tech
spending, which translates to high inventories and low demand,
their short-term conjecture didn't reap the rewards.  Despite
the oversold conditions, NSM and rivals Analog Devices (ADI),
Linear Technology (LLTC), Maxim Integrated Products (MXIM) are
once again getting kicked to the curb.  Last week, Lehman
Brothers, Goldman Sachs, and Banc of America started NSM with a
Market Perform rating and citing the downside risk.  And to add
fuel to the fire, NSM experienced strong selling on news of Palm
and Nortel's Networks lowered forecasts.  On Wednesday, NSM was
cut down $2.90, or 10% on 2.4 times the ADV.  Thursday's upside
action through the $28 level and subsequent rollover offered
excellent, but aggressive, entry opportunities.  The more
cautious should avoid playing the current trading channel
between $28 and $26.  Instead, be patient and consider buying
into weakness as NSM slides under $26 and makes a high-volume
charge for the next level of support at the converged 30 & 50
DMAs, which currently trace $24 and $25.  Amid a major decline,
expect buyers to step in as NSM approaches the $20 level.  Keep
stops according to your risk portfolio and lock in gains early!
We'll exit the play if there's a CLOSE above the $28 mark.

BUY PUT APR-30*NSM-PF OI=600 at $4.10 SL=2.50
BUY PUT APR-25 NSM-PE OI=933 at $1.15 SL=0.00


SONS - Sonus Networks $19.94 (-8.06 last week)

Sonus Networks furnishes the voice infrastructure solutions that
let public network providers -- long distance carriers,
wholesale carriers, ISPs, and cable operators -- offer voice and
data networks.  Essentially, the company's hardware and software
facilitates the voice transmissions and provides efficient

When we started coverage on Thursday evening, SONS was on the
verge of its destruction - the beginning of its end, so to
speak.  The well-established bottom support at the $20 level was
at stake.  We anticipated that a cavalry of buyers weren't
frothing at the mouth to buy up shares of this networker;
especially with JNPR and CIEN investors singing the blues.  We
advised buying into high-volume declines and locking in gains
quickly.  The enterprising traders who espoused aggressive
reactionary skills saw profit opportunities in Friday's session,
but you had to be willing to jump in early and get out fast!
Intraday, SONS slide $3.53, or 17.8% on over twice the normal
trading volume.  At this point in the play, look for continued
volume on the decline and more weakness across the technology
markets to drive SONS below Friday's $16.25 intraday low.
Cracking the 52-week low, at $10.69, is the next objective.
We're maintaining our closing stop at $23 to provide some room
for the play to operate.  But beware that taking adventurous
entries on downward bounces from the upper 5 & 10 DMA ($23.76,
$25.11) lines poses additional risk and isn't for the more
cautious trader.

BUY PUT APR-25   UJS-PE OI=1001 at $6.25 SL=4.25
BUY PUT APR-22.5 UJS-PX OI=4358 at $4.50 SL=2.75
BUY PUT APR-20  *UJS-PD OI= 484 at $2.88 SL=1.50




USAI $23.94 (+1.44 last week)  What a week it was for USAI.  One
would have thought that after last Sunday's Oscar awards, in
which "Traffic," a USA Film production, won Best Screenplay, Best
Director, and Best Supporting Actor for Benecio del Toro, the
stock would have bidded on Monday.  Not so.  The pullback to the
50-dma at $22 was the technical move that got the buyers out on
Tuesday.  USAI continued to receive buying interest throughout
the week while retesting the 50-dma on Thursday.  Yet, it was
Friday's action that finally saw the stock move above resistance
at $23.50.  Look for a pullback to this previous resistance for
a supportive bounce to enter.  Below that lies intraday support
from Thursday at $23.  A break below and USAI may be heading back
to the 50-dma for another test, currently at $22.19.  A bounce
from that technical would be a viable entry, yet watch the volume
to the downside to determine the force of the liquidation.  If
USAI pushes higher, resistance stands at $24.50 and then $25.  Our
stop remains at $22 on a closing basis.

BUY CALL APR-20*  QTH-DD OI=678 at $4.25 SL=2.75
BUY CALL APR-22.5 QTH-DX OI=654 at $2.13 SL=1.00
BUY CALL MAY-25   QTH-EE OI=  7 at $1.38 SL=0.75

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



Just In Time!
By Mark Phillips
Contact Support

It took us several weeks to get it done, but I think the new
LEAPS section is coming along nicely.  With a far better method
of both communicating our entry strategy and tracking our
performance, it should provide you with a better tool for making
your LEAPS investment decisions.  Just in time too, as it looks
like the markets could be nearing the end of their long decline
in the next couple months; as long as the earnings picture isn't
too ugly!

The last remaining housekeeping task is that of gradually
working through the old playlist and either dropping those plays
or adding them to the new Portfolio.  Along those lines, we are
actually doing quite well.  With the rash of New Plays and Drops
over the past 2 weeks, the old playlist has been whittled down
to only 3 stocks, CPN, DELL, and MU.  JWN is still shown in the
list, but will be gone by next week due to the fact that we
added it to our actual Portfolio on Friday.

Each of these old plays are sitting on our Watch List awaiting
entries into the Portfolio, with that of CPN looking the least
likely at the current time.  On the back of the California
energy debacle, shares of CPN finally broke out to new highs
last week.  Due to the continuing uncertainty in the broad
equity markets, we are hesitant to chase the stock higher by
ratcheting our entry price higher.  If the breakout failed to
hold above $50, we would be faced with the an entry price near
the highs, watching the bears have their way.  We would rather
wait for confirmation that the stock wants to head higher before
increasing our entry target.  In fact, those of you that picked
up CPN near the $40 level may want to tighten up your stops to
protect your profits.

So how are our new Watch List and Portfolio doing, you ask?  Not
half bad, if I do say so myself.  With far better control over
when we actually take a position, and the utilization of rigid
stops I think the performance will be pretty impressive once we
get a few more months down the road.  Even now, the likes of WM,
GENZ, and WMT have certainly gotten things off to a good start;
especially when you consider that those entries all took place
just over a week ago!

All right, enough self-congratulatory rhetoric, what should we
expect going forward?  While we are deep in the middle of the
earnings warning season, soon to be followed by the earnings
disappointment season, there are definitely some positive signs
in the markets.  Sure, the NASDAQ tested its lows again last
week, but despite some notable earnings warnings, it is looking
like much of the Technology sector has grown tired of the
incessant selling.  We have reasonably healthy economic
reports keeping the field clear so that the Fed can continue to
reduce interest rates in the months ahead.  This helped
Financial stocks to stage a pretty impressive recovery last
week, and as we all know, we need the Financials to participate
if we are going to have a meaningful rally.

Then we have the Commercial Traders behaving themselves and not
shorting this market back into the dirt over the past week (see
Market Sentiment for details), and I have to admit I am
encouraged.  Throw in a VIX reading that spent the entire week
north of 30, ending the week at 33.82, and I am starting to
think the necessary amount of fear is getting factored into this
market.  Have we seen the ultimate market lows?  I don't think
so, but I also don't think they are very far below current
levels, meaning that I think our downside risk is limited.

At this juncture, I am willing to start nibbling at attractive
plays, but only if they come to me, hit my entry point, and
their overall sector is showing signs of strength.  Needless to
say, Semiconductor plays are suspect with the SOX.X testing its
lows again.  I would be hesitant to initiate new positions on
plays such as MU, NSM and TXN until we see that the overall
sector is capable of recovering without incurring any more
collateral damage.

One cautionary comment before I sign off for the week.  We are
now approaching the May-July time period, where we will start
to see the issuance of 2004 LEAPS.  If you are looking to
initiate new positions in a Buy-and-Hold manner, I would
strongly recommend avoiding the 2002 LEAPS in favor of the
2003s.  The 2002 LEAPS can still be used, but more in an active
trading manner, as they only have a bit more than 9 months of
time premium.  Time decay will start to have a more pronounced
effect, eroding the premium through the life of a position if
you intend to hold the LEAPS for 4-6 months.

Even more conservative investors may want to wait for the
issuance of the 2004 LEAPS which will begin to arrive at the end
of the May expiration cycle.  For details on this process,
please refer to the article I wrote last year around this time,
"The New 2003 LEAPS."  You can find it in the LEAPS archives
from May 31, 2000.  The process outlined in that article is
still accurate and should give you a roadmap of the LEAPS
rollover cycle for your planning in the months ahead.

Have a profitable week, and make those entry points come to you.

Mark Phillips
Contact Support

Current Playlist (Old Format)


MU     11/26/00  JAN-2002 $ 45  WGY-AI   $13.13   $10.50   -20.00%
                 JAN-2003 $ 45  VGY-AI   $17.25   $15.70   - 8.99%
DELL   01/07/01  JAN-2002 $ 20  WDQ-AD   $ 5.25   $ 8.75    66.67%
                 JAN-2003 $ 25  VDL-AE   $ 5.63   $ 8.88    57.64%
CPN    01/21/01  JAN-2002 $ 40  YLN-AH   $10.50   $20.50    95.24%
                 JAN-2003 $ 40  OLB-AH   $15.38   $25.40    65.20%
JWN    02/18/01  JAN-2002 $22.5 WNZ-AX   $ 3.30   $ 1.10   -66.67%
                 JAN-2003 $ 25  VNZ-AE   $ 4.10   $ 1.95   -52.44%

LEAPS Portfolio

Current Open Plays


CLX    03/13/01  '02 $ 35  WUT-AG  $ 3.50  $ 3.30   - 5.71%  $ 28
                 '03 $ 35  VUT-AG  $ 6.10  $ 5.60   - 8.20%  $ 28
AOL    03/23/01  '02 $ 40  WIU-AH  $ 8.00  $ 8.40     5.00%  $ 35
                 '03 $ 40  VAN-AH  $11.60  $12.10     4.31%  $ 35
GENZ   03/23/01  '02 $ 85  YGZ-AO  $24.50  $28.00    14.29%  $ 74
                 '03 $ 90  OZG-AR  $27.75  $30.90    11.35%  $ 74
SWS    03/22/01  '02 $ 18  YWF-AT  $ 4.10  $ 4.00   - 2.44%  $ 15
                 '03 $ 20  VWZ-AD  $ 5.00  $ 5.00     0.00%  $ 15
WM     03/22/01  '02 $ 50  WWI-AJ  $ 6.00  $10.50    75.00%  $ 43
                 '03 $ 50  VWI-AJ  $ 9.20  $13.80    50.00%  $ 43
WMT    03/23/01  '02 $ 50  WWT-AJ  $ 7.00  $ 9.00    28.57%  $ 41
                 '03 $ 50  VWT-AJ  $11.00  $13.60    23.64%  $ 41
JWN    03/30/01  '02 $ 20  WNZ-AD  $ 1.65  $ 1.65     0.00%  $ 14
                 '03 $ 20  VNZ-AD  $ 3.30  $ 3.30     0.00%  $ 14

LEAPS Watchlist

Current Possibles


MU     03/18/01  $38           JAN-2002 $ 40  WGY-AH
                               JAN-2003 $ 40  VGY-AH
DELL   03/18/01  $20-22        JAN-2002 $ 25  WDQ-AE
                               JAN-2003 $ 25  VDL-AE
CPN    03/18/01  $43-44        JAN-2002 $ 45  YLN-AI
                               JAN-2003 $ 50  OLB-AJ
GE     03/25/01  $37           JAN-2002 $ 40  WGE-AH
                               JAN-2003 $ 40  VGE-AH
NSM    03/25/01  $23-24        JAN-2002 $ 25  WUN-AE
                               JAN-2003 $ 30  VSN-AF
QQQ    03/25/01  $39-40        JAN-2002 $ 40  WD -AN
                               JAN-2003 $ 45  VZQ-AS
TXN    03/25/01  $32-33        JAN-2002 $ 35  WTN-AG
                               JAN-2003 $ 35  VXT-AG
GS     04/01/01  $82-83        JAN-2002 $ 90  WSD-AR
                               JAN-2003 $ 90  VSD-AR
NOK    04/01/01  $21-22        JAN-2002 $ 25  WIK-AE
                               JAN-2003 $ 25  VOK-AE

New Portfolio Plays

JWN - Nordstrom, Inc. $16.28

Patience was rewarded this past week, as JWN dropped right to
our entry price of $16.  After testing this level 4 out of 5
days, it looks like support is going to hold, as the health of
the Retail sector has been on the mend.  Finally on Friday, the
bears were unable to puncture support and it looks like there
could be a mild rally in the immediate future - just so long as
earnings warnings don't kill the sector.  Better than expected
Consumer Confidence numbers certainly didn't hurt, and leads one
to believe that we could actually be on the mend.  We have
placed our stop at $14, to protect against that which we
currently can't see.  That much of a drop would constitute
technical violation, as it would have JWN trading at a new
52-week low, not the kind of action we are looking for in
successful LEAPS plays.  As the markets sort out their
near-term direction, you can still use dips to the $16 support
level as an opportunity to add new positions.

BUY LEAP JAN-2002 $20.00 WNZ-AD $1.65
BUY LEAP JAN-2003 $20.00 VNZ-AD $3.30

New Watchlist Plays

GS - The Goldman Sachs Group $85.10

So you're looking for a lower-risk way to play the likely
recovery in the Financial markets in the months ahead?  How
about a global Financial stock to balance your portfolio.  GS
is a global investment banking and securities firm, providing
a wide range of services to a substantial and diversified client
base throughout the world.  The company is one of several that
has seen its rate of growth slow due to more sedate action in
the equity markets, but as the economy improves in the months
ahead with the help of the Fed's continuing reductions in
interest rates, GS is poised to stage a nice recovery.  Just
finishing with its latest downward move, the stock is looking
like it is just about to reverse directions and head north of
the century mark again.  Support appears to be rock solid at
$80, and we want to catch a bounce above this level, say between
$82-83.  The current corrective move on the daily chart should
bring the stock back to that level one more time to allow us
onboard before the weekly Stochastics emerges from oversold on
its northward journey.  Use the health of the overall Brokerage
index (XBD.X) to gauge the health of the sector, and verify that
the $80 support level doesn't fall victim to the bears.  If it
does, we will need to re-evaluate the suitability of the play
for our portfolio.

BUY LEAP JAN-2002 $90.00 WSD-AR
BUY LEAP JAN-2003 $90.00 VSD-AR

NOK - Nokia Corp. $24.00

Without question, the leading wireless handset manufacturer, NOK
has been taking market share from both MOT and ERICY, and this
fact can be seen in the stock charts.  While all three have
seen dramatic reductions in their stock prices over the past
year, of the three, only NOK is showing bullish signs of life.
Layoffs are hitting across the industry due to the economic
slowdown, but NOK's seem to be the least drastic.  Add in the
fact that the Finnish phone-maker announced last week that it
would be buying back 50 million shares of its own stock
beginning as early as Friday, and we definitely have the
beginnings of a bullish outlook.  While the company has reduced
its sales growth outlook for the first quarter, it left the
earnings per share forecast unchanged, perhaps indicating that
the fundamentals for the company are not nearly as bad as
originally thought.  After confirming support in early March
near the $21 level, NOK has been timidly moving higher, and this
looks like our opportunity to do some bottom fishing before the
recovery really gets underway.  We are looking for another dip
to the $21-22 level to provide us with an attractive entry
point, as we move through the April earnings cycle.  Earnings
are currently scheduled for April 20th, so keep that in mind
when contemplating new positions.  Be careful if the bears
manage to drive NOK to new lows.  A break below $20 will have us
re-evaluating the health of the stock and the suitability of the
play for the LEAPS portfolio.

BUY LEAP JAN-2002 $25.00 WIK-AE
BUY LEAP JAN-2003 $25.00 VOK-AE


CRUS $14.94 Only 3 weeks old, and the new Watch List has proven
its utility.  We were looking for the stock to drop to the $17
support level again to give us an attractive entry point.  Well,
it dropped to that level on Thursday, but unfortunately it kept
right on dropping due to the company's earnings warning for the
next 2 quarters on Friday.  A quick look at the precipitous
decline on Wednesday and Thursday is all we need to be convinced
that somebody knew about the warning ahead of time and took the
opportunity to unload their shares ahead of the warning.  By
Thursday, volume had swelled to more than triple the 2 million
share ADV.  While the action on Friday was definitely
encouraging, with strong buying volume pushing the stock
gradually higher throughout the day, the fact that it couldn't
clear $15 by the close leads us to believe that there may be
more pain ahead before CRUS is ready for sailing on the high
seas again.  We'll keep it on our radar screen watching for
conditions to improve.  When they do, look for the stock to once
again appear on the Watch List.

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

The Option Investor Newsletter                   Sunday 04-01-2001
Sunday                                                      5 of 5

To view this email newsletter in HTML format with embedded
charts and graphs, click here:


Candlestick Charting Basics: Reversal Patterns
By Mark Wnetrzak

The majority of technicians use historical price charts to reflect
the daily movement and volume action in a specific instrument.  A
chart is simply a representation of the conditions that exist in
the underlying instrument.  Technicians watch for price clues that
alert them to changes in the market psychology and primary trend.
Unfortunately, while they can be helpful in projecting potential
movement and character, chart patterns cannot predict the future.

A reversal signal implies that a prior trend or its character is
likely to change in the near future.  Common bar-chart reversal
indicators include "double top" (or bottom), "head-n-shoulder,"
and "island" formations.  Although the term "reversal pattern" is
commonly used to identify a relatively abrupt change in direction,
most trend reversals occur over a slightly longer period, often
days or even weeks.  Primary trends usually transition to sideways
price actions or consolidation patterns before continuing with a
definitive directional movement and for this reason, it is more
accurate to think of reversals as simply changes in the current

Recognizing the emergence of reversal patterns is a valuable tool
that will help increase profits in all of your trading positions.
With timely knowledge of a prospective change in character, you
can adjust your trading style to reflect the new outlook for the
issue.  There is one important fact to remember.  When a potential
change is underway, new positions should be opened only when the
reversal pattern signals a move towards the direction of the major

The majority of candlestick patterns are trend-change or reversal
indicators.  Two of the most common formations are the "hammer"
and "hanging-man."  These candlesticks have long lower shadows
and small real bodies that are near the top of the daily range.
The color of the body is not as important but it is slightly more
bullish if the body of the hammer is white, and in contrasts, more
bearish if the body of the hanging man is black.  The long lower
shadow should be twice the height of the real body and it ideally
it will have almost no upper shadow.  The longer the lower shadow
and the smaller the real body the more meaningful the indication.

These candlestick lines can be bullish or bearish depending on
when they appear in a trend.  When this candlestick emerges in a
downtrend, it is a signal that a bullish change in character may
soon occur.  If this line appears after a rally, the bullish move
may be at an end.  It may seem strange that the same candlestick
can identify both bullish and bearish reversals but the outlook is
based on results similar to those that follow "Island" formations
in standard bar charts.

In recent weeks, the hanging man has been an important tool for
timing profitable exits.  As with any technical indication, it is
important to confirm the bearish trend with this type of signal.
The difficulty is determining when the actual reversal will occur
as a hanging man generally appears while the market is inundated
with bullish optimism.  In most cases, the issue opens near the
daily highs, then declines sharply, and finally rallies to close
back at the high.  How do you know if the recovery will continue
or falter?  If the stock opens significantly lower the next day,
investors who purchased shares at the open (or close) will be in
a losing position and may decide to cut their losses quickly.  The
potential for a new downtrend is based on the distance between the
real body of the hanging-man and the opening price the next day.
The greater the distance, the higher the probability for a bearish
change in character.

This unique pattern is just one of the ways in which candlesticks
measure the emotional element of a specific issue.  The names are
simply a colorful mechanism used to describe the character of the
market at the time these patterns are formed.  After hearing the
phrase "hanging man", what trader wouldn't go running for cover?
Next week, we will review another group of technical indicators
and as we progress to more advanced formations, you will discover
which patterns work best for your style of trading and the market
in which you participate.

Good Luck!

Note:  Margin not used in calculations.

Stock  Price  Last   Call  Strike Price   Gain   Potential
Symbol Picked Price  Month Sold   Picked  /Loss  Mon. Yield

SGSF    8.75   7.88   APR   7.50  1.88  *$  0.63  10.0%
ELNK   10.38  12.13   APR  10.00  1.38  *$  1.00   9.7%
IGEN   13.31  18.94   APR  10.00  4.25  *$  0.94   9.0%
UTHR   16.94  17.44   APR  15.00  3.25  *$  1.31   8.3%
MTSN   14.00  15.13   APR  12.50  2.44  *$  0.94   7.1%
ADBE   28.63  34.97   APR  25.00  5.13  *$  1.50   5.5%
SHFL   21.25  25.19   APR  20.00  2.44  *$  1.19   5.5%
BRKS   43.47  39.75   APR  40.00  5.63   $  1.91   5.5%
NRG    30.84  36.40   APR  30.00  2.60  *$  1.76   5.4%
LTXX   19.00  18.69   APR  17.50  2.31  *$  0.81   5.3%
IGEN   15.19  18.94   APR  12.50  3.25  *$  0.56   5.1%
SHFL   20.94  25.19   APR  17.50  4.38  *$  0.94   4.1%
ATVI   24.63  24.31   APR  22.50  3.13  *$  1.00   3.4%
CPRT   21.81  20.49   APR  20.00  2.63  *$  0.82   3.1%
SMTC   34.75  29.44   APR  30.00  6.00   $  0.69   2.6%
GLC    23.73  21.90   APR  22.50  2.35   $  0.52   1.8%
CLPA    6.22   4.09   APR   5.00  2.06   $ -0.07   0.0%
ICST   20.13  16.00   APR  17.50  3.38   $ -0.75   0.0%
VECO   52.31  41.56   APR  45.00  9.88   $ -0.87   0.0%

*$ = Stock price is above the sold striking price.


An interesting week with Nortel (NYSE:NT) warning again and
the end-of-quarter maneuvering by fund managers.  We will
continue to monitor Activision (NASDAQ:ATVI) closely as it
moves into a lateral consolidation phase.  Copart (NASDAQ:
CPRT) managed to rally off its 150 dma and may actually
make a run to a new high.  Semtech (SMTC) has suffered with
the recent horrid action in the Semiconductors and is at a
key moment.  Cell Pathways (NASDAQ:CLPA) dropped a dollar this
week after being sued for securities fraud (which the company
denies).  The stock appears to have made a successful test
of the December low with Friday's "hammer" bottom candlestick.
We will look for confirmation next week.  Veeco Instruments
(NASDAQ:VECO) and Integrated Circuit System (NASDAQ:ICST) are
testing strong support areas.  Any further weakness should
signal an exit.

Positions Closed:

Seitel (NYSE:SEI), Bed Bath & Beyond (NASDAQ:BBBY)


Sequenced by Company
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

ACPW   20.31  APR 17.50   ACQ DW  3.75 33    16.56   21    8.2%
CTLM   24.44  APR 20.00   UUM DD  5.38 24    19.06   21    7.1%
EBAY   36.19  APR 30.00   QXB DF  7.38 880   28.81   21    6.0%
HPOW    8.00  APR  7.50   HQF DU  1.13 977    6.87   21   13.3%
LTBG   11.44  APR 10.00   LKQ DB  1.94 301    9.50   21    7.6%
METHA  17.94  APR 15.00   QME DC  3.50 2245  14.44   21    5.6%

Sequenced by Target Yield
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

HPOW    8.00  APR  7.50   HQF DU  1.13 977    6.87   21   13.3%
ACPW   20.31  APR 17.50   ACQ DW  3.75 33    16.56   21    8.2%
LTBG   11.44  APR 10.00   LKQ DB  1.94 301    9.50   21    7.6%
CTLM   24.44  APR 20.00   UUM DD  5.38 24    19.06   21    7.1%
EBAY   36.19  APR 30.00   QXB DF  7.38 880   28.81   21    6.0%
METHA  17.94  APR 15.00   QME DC  3.50 2245  14.44   21    5.6%

Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

ACPW - Active Power  $20.31   *** Unique Energy Storage! ***

Active Power (NASDAQ:ACPW) designs, manufactures and sells power
quality products that provide the consistent, reliable electric
power required by today's digital economy.  They are the first
company to commercialize a flywheel energy storage system that
provides a highly reliable, low-cost and non-toxic replacement
for lead-acid batteries used in conventional power quality
installations.  In January, Active Power reported that revenues
for the 4th-quarter totaled $2.7 million, up 468% from the same
period last year and 99% sequentially.  Active Power's CEO
stated that market demand for their battery-free power quality
solutions remains strong and is very optimistic about their near
and long term growth prospects.  In March, Lehman Brothers
started coverage on Active Power with a "strong buy" rating and
a price target of $31.  A favorable cost basis from which to
speculate on the future success of Active Power.

APR 17.50 ACQ DW LB=3.75 OI=33 CB=16.56 DE=21 TY=8.2%

CTLM - Centillium Communications $24.44  *** Bottom Fishing ***

Centillium Communications (NASDAQ:CTLM) designs and markets
communications chipset solutions for central office equipment,
digital loop carrier line cards, and customer premise equipment
for DSL, premise networking and Voice-Over-Packet.  Centillium
beat estimates in January on revenues of $24.3 million, due to
significant sequential growth in product shipments and design
wins.  The stock rallied strongly in January but has since
dropped to support as investors price-in the continued weak
demand environment in communications components companies.
Centillium continues to forge a Stage I base and actually
rallied after being downgraded by Robertson Stephens.  A
favorable cost basis from which to speculate on Centillium's

APR 20.00 UUM DD LB=5.38 OI=24 CB=19.06 DE=21 TY=7.1%

EBAY - eBay $36.19   *** Internet Speculation ***

eBay (NASDAQ:EBAY) has developed a Web-based community in which
buyers and sellers are brought together in an auction format to
buy and sell items such as antiques, coins, collectibles, stamps,
computers, memorabilia, and toys.  eBay enables trade on a local,
national and international basis with local sites in 60 markets
in the U.S. and country-specific sites in the United Kingdom,
Canada, Germany, Austria, France, Italy, Japan, Australia, and
Korea.  The company recently announced it will open trading Web
sites for Ireland, New Zealand and Switzerland.  eBay's revenue
nearly doubled last year and analysts expect above a 50% annual
growth rate for the next 4 years.  eBay appears to have made a
successful test of its December low, and over the last few weeks,
has outperformed the NASDAQ.  Favorable short-term speculation.

APR 30.00 QXB DF LB=7.38 OI=880 CB=28.81 DE=21 TY=6.0%

HPOW - H Power Corp $8.00   *** Fuel Cell Systems Part II  ***

H Power (NASDAQ:HPOW) is a leading fuel cell development company
and one of the first providers to complete a commercial sale of a
proton-exchange membrane (PEM) fuel cell system.  PEM fuel cells
generate electricity efficiently and cleanly from the electro-
chemical reaction of hydrogen and oxygen.  With rising fuel costs
and calls for stricter vehicle emission requirements, fuel cell
companies are drawing the attention of Wall Street.  This week,
a bill has been submitted before congress that will provide a
$1,000 per kilowatt tax credit for purchasers of stationary fuel
cell systems that supply home electricity.  H Power has been
targeting rural markets for its electric generators and passage
of the bill could spur sales.  With the stock in a Stage I
consolidation phase, H Power offers a reasonable entry point
for those investors who are bullish on the company's future.
Earnings are due on Thursday, April 5.

APR 7.50 HQF DU LB=1.13 OI=977 CB=6.87 DE=21 TY=13.3%

LTBG - Lightbridge  $11.44   *** Bottom Fishing Part II  ***

Lightbridge (NASDAQ:LTBG) provides customer relationship management
solutions that enable communications service providers to initiate
and maintain relationships with their subscribers.  Clients rely on
Lightbridge's Telesto. network of integrated customer acquisition
and risk management solutions to forge customer relationships.
The company's traditional and Web-based offerings are designed to
facilitate rapid application approval, minimize fraud and expand
the opportunity to retain high-value customers.  Lightbridge, which
recently completed its merger with Corsair Communications, expects
to see 20% total revenue growth over last year with total gross
margins in the mid fifty percent range.  The stock appears to have
made a successful test of its December low as it continues forging
a Stage I base.  We favor a cost basis close to technical support
and just above a logical stop-loss exit point.

APR 10.00 LKQ DB LB=1.94 OI=301 CB=9.50 DE=21 TY=7.6%

METHA - Methode Electronics $17.94 *** Bottom Fishing Part III ***

Methode Electronics (NASDAQ:METHA) manufactures component devices
for OEMs of information processing and networking equipment, voice
and data communications systems, consumer electronics, automobiles,
aerospace vehicles and industrial equipment.  Methode's Board of
Directors recently declared a dividend of all of Methode's shares
in Stratos Lightwave (NASDAQ:STLW).  The shares will be distributed
as of April 28, 2001 to holders of record of Methode's Class A
and Class B common stock as of the close of business on April 5,
2001.  Currently, the dividend equates to about 1.5 shares of STLW
for each share of METHA.  Methode has been forming a Stage I base
at a strong historical support area and has recently moved above
its 30 dma.  For speculators who favor taking advantage of the
current positive momentum provided by the STLW distribution.

APR 15.00 QME DC LB=3.50 OI=2245 CB=14.44 DE=21 TY=5.6%



The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

NXCD   10.31  APR 10.00   DQX DB  1.00 357    9.31   21   10.7%
UTHR   17.44  APR 15.00   FUH DC  3.13 121   14.31   21    7.0%
VANS   22.56  APR 22.50   VQG DX  0.94 68    21.62   21    5.9%
WON    23.02  APR 22.50   WON DX  1.35 58    21.67   21    5.5%
IDX     8.48  APR  7.50   IDX DU  1.25 252    7.23   21    5.4%
THQI   38.00  APR 35.00   QHI DG  4.13 139   33.87   21    4.8%

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.

Anything else is too slow!



Success Basics: The High Cost of Ego
By Ray Cummins

There is little room for pride or presumption in today's demanding
financial markets.  In fact, unbiased reflection and action has
never been more appropriate considering the recent decline in
equity values.  Unfortunately, human nature is just one of the
many obstacles that all traders must overcome before they can be
successful in the stock market.  Each and every position has the
potential to be affected by some emotion and the influence of
these feelings is the biggest single factor one must understand
if he expects to profit on a consistent basis.

The majority of traders have an opinion about the condition of
the stock market and the manner in which they can profit from
its future movement.  When asked about recent positions, most
will reply with confidence that the strategies they have used
resulted in a successful outcome.  Unfortunately, a high degree
of conviction can frequently lead to failure.  The trouble
begins soon after the initial trading decision has been made.
As the new position matures, the reasons for the trade, whether
accurate or timely, are often adjusted to support the original
outlook.  The facts just seem to fall into place.  The market
character, the earnings outlook, the potential for favorable
developments.  All of the available supporting evidence is
included in the rationalization, whether relevant or not, and a
plethora of reasons to remain in the position are marshaled in
defense of this decision.

Its no different with analysts and financial gurus; those that
attempt to forecast the market's future on a regular basis.
Each and every one has a long list of justifications for the
current trends or "why the market has declined" and "when the
market will recover."  Inflationary issues, economic conditions,
developments in technology, and changes in the political arena
are all given as common explanations for situations that have
yet to be proven "predictable."  The problems with attempting to
explain the events of the past or forecast the outcome of the
future are numerous, but the primary reason to avoid this trait
is simple.  Once you have entered a position with this attitude,
you will continue to assemble and connect information in a manner
which will support the original conclusion, rather than reflect
the actual conditions of the market.

The fact is, the majority of investors have trouble recognizing
that all situations change and there is no perfect and complete
method of knowing when, where, and how these developments will
occur.  In the early stages of learning and throughout most of
our adult lives, we are trained to make decisions in a positive
and absolute manner.  We are taught to endorse and defend our
ideas with resolve.  In essence, we strive to be correct!  It is
a conditioned response; simply a matter of existence in today's
society.  Based on the customs of our culture, changes in opinion
are sometimes seen as a failure to arrive at the proper solution
during the initial assessment.  That is why it is so difficult to
admit when we are wrong, to take the loss (even when it is small),
and to correct our original observations after reassessing a new
position.  Human nature is the culprit here and until one can
overcome the debilitating effects of pride and presumption, there
is little hope for prosperity in the stock market.

For most traders, profit comes from the timely participation in
proven strategies.  As with any investment or speculative venture,
the key is to remain alert for signs of a change in character or
directional trend, and respond promptly and decisively when and
if such events occur.  One manner in which that can be easily
accomplished is through the use of a structured trading system.
Next week, we will review this approach along with some of the
most common and successful methods that professionals use to
manage their positions.

Good Luck!

                      *** WARNING!!! ***
Occasionally a company will experience catastrophic news causing
a severe drop in the stock price. This may cause a devastatingly
large loss which may wipe out all of your smaller gains. There is
one very important rule; Don't sell naked puts on stocks that you
don't want to own! It is also important that you consider using
trading STOPS on naked option positions to help limit losses when
the stock price drops. Many professional traders suggest closing
the position when the stock price falls below the sold strike or
using a buy-to-close STOP at a price that is no more than twice
the original premium from the sold option.


Stock  Price  Last   Call  Strike Price   Gain   Potential
Symbol Picked Price  Month Sold   Picked  /Loss  Mon. Yield

OATS    9.25   9.03   APR   7.50  0.44  *$  0.44  13.3%
MCDTA  24.31  18.88   APR  17.50  0.56  *$  0.56  11.2%
AAPL   19.63  22.07   APR  15.00  0.50  *$  0.50   9.8%
BSX    18.45  20.18   APR  17.50  0.80  *$  0.80   9.6%
AAPL   23.00  22.07   APR  17.50  0.44  *$  0.44   9.5%
THQI   33.88  38.00   APR  30.00  1.38  *$  1.38   9.0%
SCIO   19.38  23.00   APR  15.00  0.44  *$  0.44   8.9%
TMAR   17.31  15.00   APR  15.00  0.56   $  0.56   7.8%
DDS    20.30  21.94   APR  17.50  0.40  *$  0.40   7.6%
GLC    23.44  21.90   APR  20.00  0.55  *$  0.55   7.4%
MTON   27.25  32.75   APR  20.00  0.50  *$  0.50   7.3%
ESCM   21.75  24.06   APR  17.50  0.38  *$  0.38   6.8%
AMD    29.44  26.54   APR  22.50  0.35  *$  0.35   6.1%
OLOG   25.00  24.81   APR  22.50  0.56  *$  0.56   6.0%
ANF    32.30  32.70   APR  25.00  0.55  *$  0.55   5.7%
LRCX   29.44  23.75   APR  22.50  0.31  *$  0.31   5.4%
VTS    36.98  31.95   APR  30.00  0.62  *$  0.62   5.3%
MTON   31.69  32.75   APR  22.50  0.31  *$  0.31   5.1%
ADVP   49.94  54.27   APR  40.00  0.75  *$  0.75   5.0%
CRUS   24.44  14.94   APR  17.50  0.31   $ -2.25   0.0%

*$ = Stock price is above the sold striking price.


A couple upgrades on Monday has helped Boston Scientific (NYSE:
BSX) rally this week and alleviate our worries.  However,  Trico
Marine (NASDAQ:TMAR) continues to test its 150 dma - consider an
early exit or rolling down to a May $12.50 strike.  The recent
volatility in Veritas (NYSE:VTS) has definitely been difficult to
bear - make sure you wish to add the stock to your portfolio.
Lam Research (NASDAQ:LRCX) may be a candidate for an early exit
as its recent move points to a failed rally.  Cirrus Logic
(NASDAQ:CRUS) has violated its December low after an earnings
warning and we will show the position closed next week.


Sequenced by Company
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

APHT   20.50  APR 15.00   HQY PC  0.56 37    14.44   21   17.4%
ASMI   17.69  APR 15.00   IQB PC  0.31 89    14.69   21    9.6%
HOTT   28.00  APR 22.50   UHO PX  0.38 112   22.12   21    9.1%
IGEN   18.94  APR 15.00    GQ PC  0.25 14    14.75   21    9.0%
SBYN   12.75  APR 10.00   QYS PB  0.50 31     9.50   21   23.7%
SCIO   23.00  APR 17.50   UIO PW  0.25 262   17.25   21    7.5%

Sequenced by Target Yield
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

SBYN   12.75  APR 10.00   QYS PB  0.50 31     9.50   21   23.7%
APHT   20.50  APR 15.00   HQY PC  0.56 37    14.44   21   17.4%
ASMI   17.69  APR 15.00   IQB PC  0.31 89    14.69   21    9.6%
HOTT   28.00  APR 22.50   UHO PX  0.38 112   22.12   21    9.1%
IGEN   18.94  APR 15.00    GQ PC  0.25 14    14.75   21    9.0%
SCIO   23.00  APR 17.50   UIO PW  0.25 262   17.25   21    7.5%

Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

APHT - Aphton Corp. $20.50     *** What's Up? ***

Aphton (NASDAQ:APHT) is a biopharmaceutical company developing
products using its innovative vaccine-like technology for
neutralizing hormones that participate in gastrointestinal
system and reproductive system cancer and non-cancer diseases;
and the prevention of pregnancy.  The Company's lead product,
an anti-gastrin immunogen, is in two separate Phase III clinical
trials for pancreatic cancer in the US and Europe; in a pivotal
trial for chemo-refractory colorectal cancer; and in a Phase II
study in gastric (stomach) cancer.  The SCO Group Covers APHT
with a Buy Rating and the stock rallies $7?  Ok, but we prefer
a conservative entry point with a more reasonable cost basis.

APR 15.00 HQY PC LB=0.56 OI=37 CB=14.44 DE=21 TY=17.4%

ASMI - ASM International  $17.69  *** Cheap At This Price? ***

ASM International, N.V. (NASDAQ:ASMI) designs, manufactures
and sells equipment and solutions used to produce semiconductor
devices, or integrated circuits.  The company's production
equipment and solutions are used by both the front- and back-end
segments of the semiconductor market.  ASM International's
products in the front-end market segment grow or deposit thin
films onto wafers primarily using a process called chemical
vapor deposition, or CVD.  CVD deposits films on the wafer's
surface through chemical reactions using gases at high
temperatures.  Its products in the back-end market assemble
and package individual dies into finished semiconductor devices
using stand alone and automated lines of equipment.  The company
also manufactures leadframes, copper carriers on which dies are
mounted as part of the back-end assembly process.  Shares of
ASMI surged last week even as the company issued a profit and
sales warning.  Analysts said the bullish activity was due to
new orders for the company's next generation 300 millimeter
tools and the current favorable valuation of ASMI's shares.

APR 15.00 IQB PC LB=0.31 OI=89 CB=14.69 DE=21 TY=9.6%

HOTT - Hot Topic  $28.00    *** Bracing for a Rally  ***

Hot Topic is a mall-based specialty retailer of music-licensed
and music-influenced apparel, accessories and gift items for
young men and women principally between the ages of 12 and 22.
Hot Topic recently reported record results for both the fourth
quarter and the 2000 fiscal year.  The company opened 62 new
stores last year and increased net sales by 52%.  Hot Topic
is continuing to post strong sales (up 10% in February) and
will open 65 new stores and six Torrid stores this year.  The
technicals remained bullish during the recent consolidation
phase and now the stock appears ready to resume its uptrend.

APR 22.50 UHO PX LB=0.38 OI=112 CB=22.12 DE=21 TY=9.1%

IGEN - IGEN International  $18.94  *** Rally Mode! ***

IGEN (NASDAQ:IGEN) develops and markets biological detection
systems based on its proprietary ORIGEN technology, which
provides a unique combination of sensitivity, reliability,
speed, and flexibility.  ORIGEN-based systems are used in a
wide variety of applications, including clinical diagnostics,
pharmaceutical R & D, life science research, and industrial
testing for food safety and quality control.  The company
recently announced a joint venture to develop a test for the
"mad cow disease" that would allow screening of infected cows
in slaughterhouses.  This week, a favorable court ruling
granted a summary judgment in IGEN's favor.  Technically,
the move above the January high confirms the new bullish
trend and creates an area of support above our cost basis.

APR 15.00 GQ PC LB=0.25 OI=14 CB=14.75 DE=21 TY=9.0%

SBYN - SeeBeyond  $12.75   *** Cheap Speculation ***

SeeBeyond (NASDAQ:SBYN) enables the seamless flow of information
within and among enterprises in real time.  The SeeBeyond eBI
Suite offers a rapidly deployable and infinitely scalable
infrastructure for application integration, B2B connectivity
and business processes optimization.  SeeBeyond continues to
expand its operations with several new partnerships and is
growing its customer base in the Asia Pacific region.  A recent
4-year deal with GM should bode well for future earnings and
has sparked trader interest.  The chart is painting a double
bottom formation and this position offers a reasonable entry
point for those wishing to add SeeBeyond to their portfolio.

APR 10.00 QYS PB LB=0.50 OI=31 CB=9.50 DE=21 TY=23.7%

SCIO - Scios  $23.00   *** New Drug Approval? ***

Scios (NASDAQ:SCIO) is a biopharmaceutical company engaged in
the discovery, development, and commercialization of novel
human therapeutics based upon its capabilities in both protein-
based and small-molecule drug discovery and development.  The
company focuses its proprietary research and development
efforts primarily in the areas of cardiorenal and inflammatory
disorders, and Alzheimer's disease.  The company has research
and development collaborations with Chiron Corporation, DuPont
Pharmaceuticals Company, Eli Lilly, GenVec, Kaken Pharmaceutical
and Novo Nordisk A/S.  Scios also operates a Psychiatric Sales
and Marketing Division, which provides operating cash that funds
the other activities of the company, principally research and
development efforts.  A recent report suggests Scios expects its
experimental drug Natrecor to become by mid-summer, the first
new treatment in more than a decade for acute congestive heart
failure.  Based on the recent bullish indications, traders are
also optimistic on this outcome.

APR 17.50 UIO PW LB=0.25 OI=262 CB=17.25 DE=21 TY=7.5%



The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield
Stock  Last  Call Strike  Option  Last Open  Cost   Days  Target
Symbol Price Mon. Price   Symbol  Bid  Int.  Basis  Exp.  Yield

TLGD   25.75  APR 20.00   THF PD  0.56 76    19.44   21   14.2%
SPOT   39.19  APR 35.00   OQO PG  0.88 450   34.12   21   10.3%
IBIS   27.50  APR 20.00   UIB PD  0.38 300   19.62   21    9.4%
MCCC   19.56  APR 17.50   MUD PW  0.38 0     17.12   21    9.0%
OLOG   24.81  APR 22.50   OOQ PX  0.44 0     22.06   21    7.9%
CIT    28.88  APR 25.00   CIT PE  0.40 228   24.60   21    7.2%

Why put all your risk into one stock when you can play the
index instead?

Learn how to invest in the OEX, QQQ, and SPX.  Get intraday
market updates, plays, education and daily commentaries by
those who know.

Sign up for a two week free trial and see for yourself at


One of the World's Most Unique Financial Markets!
By Ray Cummins

All of the great cities around the globe contain breathtaking
monuments: Paris with its Eiffel Tower, Rome its coliseums and
renaissance architecture and of course, the fabled skyline of
New York.  London is a member of that elite group and it has
emerged from each era in its 2000 years of history more varied
and magnificent, while becoming richly endowed with the vast
treasures of a proud civilization.  With its unique mixture of
cultures and customs, from the pomp and ceremony of the daily
changing of the guard at Buckingham Palace to the dazzling neon
theatre district that is Piccadilly Circus, London is a colorful
tapestry of living antiquity.

This happy marriage of old and new is most evident in the heart
of the City, another name for London's financial district and the
site of the original Roman town.  Gleaming office blocks surround
the 1000-year old Tower of London, striking an unusual contrast
in a region with a long tradition of innovation and excellence as
a center of trade in European markets.  As its nickname suggests,
the City is no more than a square mile and is approximately equal
to the local authority area of the Corporation of London.  Within
this narrow rectangular corridor, various markets and exchanges
cluster in sensible geographical divisions with banking, stocks
and commodities, and insurance all established in unique locales.
Much like the design of New York's infamous Wall Street, it is
possible to walk from one end the City to the other in only a few
minutes and the hub of the district at the Royal Exchange affords
a suitable junction for access to separate areas of the financial
community.  In the past, the Royal Exchange has been the home of
Lloyds of London, the Foreign Exchange Market and LIFFE Financial
Futures Market.  Its regal prominence is downplayed only by the
presence of the Bank of England, home of the British Government's
monetary arm and the place where foreign financial institutions
post their representatives.  Among the other noticeable buildings
are the Mansion House (the Lord Mayor's home), the Stock Exchange
tower and a number of global insurers and repositories including
Lloyd's, Barclays and National Westminster Bank.  Together, these
entities control the bulk of the region's monetary transactions
whether they relate to securities, foreign exchange, insurance,
underwriting or commerce.

The foundation of London's equity markets dates back to the late
seventeenth century, when the city was one of the largest trading
ports in Europe and a center for many types of economic activity.
As the exchange of commodities with the population of surrounding
regions increased, speculators began to participate in these new
ventures in return for a share of the potential profits.  But in
those days, ocean voyages were risky and most investors were not
prepared to finance a long, dangerous journey unless they could
convert their shares to currency at any time.  This demand for
liquidity led to public meetings at local pubs and coffee houses
where individual stock in a current endeavor could be sold or
exchanged, and future projects could be funded.  In 1802, the
London Stock Exchange was officially established with the idea
that a controlled and recognized procedure should be instituted
to enable investors to buy and sell common shares without undue
difficulty.  The benefits of this activity were interdependent
as reduced market risk made it easier for companies to collect
money to continue production or finance future expansion.  The
actual workings of the London Market were much the same as any
securities exchange in America until 1986, when major changes
were introduced to enable banks and investment houses to link
with broker/dealers, thus forming large financial conglomerates
capable of competing with other leading exchanges around the
globe.  The system has evolved into a unique electronic platform
much like the NASDAQ, where there is no physical trading floor;
simply a computerized network among participating member firms.

In recent years, London's capacity to keep pace with the overseas
trading community is as much about the ability to exploit the
benefits of new technology as it is to realize a potential market
opportunity.  To meet these challenges, Great Britain's financial
institutions have led the way with disciplined innovation in a
state of the art business environment.  With this type of global
commerce, necessity dictates change and the region has enjoyed
enormous growth in monetary activity following the launch of a
single currency; the euro.  London's major banks and brokerages
are now the world center of the European markets, with one-third
of all foreign exchange turnover and virtually all Euro-traded
derivatives business.  This increased demand has created a number
of new opportunities for the development of more exotic financial
products and LIFFE (London International Financial Futures and
Options Exchange) has responded quickly and effectively to the
unique needs of today's changing markets.  Established in 1982,
LIFFE is one of Europe's foremost financial exchanges, offering
the ability to transact in the world's broadest range of equity,
currency and commodities products.  Until recently, the exchange
functioned in a similar manner to its counterparts in the United
States, with an open "outcry" auction in a "pit" on the trading
floor.  Now, an electronic trading platform called LIFFE CONNECT
has been installed, offering one of the world's most advanced
and complete market environments with extremely efficient trade
execution in a truly global exchange.  With over $500 billion
transacted on the system every day, more business by value is
entrusted to LIFFE CONNECT than to any other electronic exchange.

The need for innovation is constant and LIFFE has undergone a
reinvention of its design structure and business potential by
embracing technology, partnerships and alliances.  In 1999, the
Chicago Mercantile Exchange and LIFFE announced an alliance to
provide customers in both regions with new and expanded product
opportunities and electronic access methods.  Earlier this year,
LIFFE furthered the development of futures on global stocks with
the successful launch of its Universal Stock Futures; contracts
on company shares worldwide.  The product is a market standard,
creating new opportunities in foreign equities and providing an
efficient alternative to trading company shares worldwide.  The
combined market capitalization of this global benchmark is over
$5 trillion and additional contracts will be introduced in the
future.  LIFFE recently affirmed its position as the world's
leading electronic derivatives exchange, announcing a unique
partnership with the NASDAQ to develop the global stock futures
market for customers in the United States and Europe.  Using a
powerful combination of strengths and skills to develop the
derivatives markets, LIFFE and NASDAQ will provide single stock
futures on a wholly electronic platform.  LIFFE already has an
an unrivalled distribution network, available in more countries
than any other electronic trading system and the new alliance
will link with other overseas clearing organizations to create
the most comprehensive exchange in the world.

Our technologically advanced society is moving rapidly toward
electronic trading across an array of financial instruments in
every geographic region and investors will benefit from future
access to these new markets.  LIFFE has assembled the necessary
ingredients for success in this environment and London's historic
foundation in the financial world has provided an opportunity for
the exchange to emerge as dominant player in the global market.
In our next discussion, we will examine the daily activities on
the trading floor and learn how this unique exchange has emerged
as the leader in electronic trading innovation.


Get 10 FREE Issues of Investor's Business Daily. No obligation.
Nothing to cancel.


Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


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.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives