Option Investor

Daily Newsletter, Thursday, 06/07/2001

Printer friendly version
The Option Investor Newsletter                  Thursday 06-07-2001
Copyright 2001, All rights reserved.                         1 of 2
Redistribution in any form strictly prohibited.

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

Posted online for subscribers at http://www.OptionInvestor.com
MARKET WRAP  (view in courier font for table alignment)
        06-07-2001        High      Low     Volume Advance/Decline
DJIA    11090.74 + 20.50 11100.04 11008.95 1.09 bln   1585/1464	
NASDAQ   2264.00 + 46.27  2264.58  2205.85 1.63 bln   2093/1649
S&P 100   658.59 +  3.52   658.59   651.93   totals   3678/3113
S&P 500  1276.96 +  6.93  1277.08  1265.08           54.2%/45.8%
RUS 2000  514.77 +  2.19   514.95   511.52
DJ TRANS 2916.30 + 17.91  2921.12  2884.91
VIX        21.61 -  0.77    22.68    21.57
Put/Call Ratio      0.45

Caveat Venditor

The Nasdaq Composite (COMPX) is on the verge of testing its
relative highs and rejecting its pesky head-and-shoulders top.
And the driving force behind the Nasdaq's recent advance: The
Philadelphia Semiconductor Index (SOX.X).

In Wednesday's Market Wrap, we touched upon the earnings warning
delivered by Broadcom (NASDAQ:BRCM).  The company reported late
that night that its revenues would fall further than previously
expected for the current quarter.  More importantly, however, its
officials hinted towards stabilization in business during the
second-half of this year.  The market received that news rather
well Thursday morning as shares of Broadcom advanced sharply from
the opening bell.  The news from Broadcom inspired buyers to step
into the broader semiconductor sector early Wednesday, who
carried the SOX past the 665 resistance level we addressed in
Tuesday's Market Wrap.

Later Thursday, National Semiconductor (NYSE:NSM) reported its
quarterly earnings and added to the momentum in the SOX.  Although
National Semi warned of continued weakness in its next quarter,
the company echoed Broadcom's views of signs of recovery in the
near future.  National Semi's guidance further inspired the
bulls, who ran the SOX up to the critical 700 level (actually 697)
into the close of trading.

Thursday's close placed the SOX right at a key resistance level
that we've been focusing on this week.  To reiterate, the 700
level is a BIG area of congestion.  For one, it's a psychological
level that participants seem to gravitate to.  In addition, the
point & figure chart has a bit of supply around that level.  And
the SOX's 200-dma moving average currently resides at 695.81.  If
the SOX does clear 700 Friday (Judging by the news after hours,
it will) there's only a small amount of congestion in the 710
vicinity.  From there, we could see the SOX slowly migrate up to

The news I referred to in the above paragraph was obviously
Intel's (NASDAQ:INTC) mid-quarter guidance.  The event was much
awaited by market participants, who have been searching for signs
of a bottom in the tech business.  Intel officials gave guidance
for revenues within its previous range of $6.2 and $6.8
billion, which appeased investors in the after hours session.
Shares of Intel added $1.74 in the after hours session.  Keep in
mind that Intel is the largest component of the SOX.

The strength in the SOX Thursday finally boosted the COMPX back
above the 2250 resistance level, on a settlement basis.  By now,
we've addressed the head-and-shoulders (H&S) in the COMPX several
times.  And with Thursday's advance and Intel's news, the
pattern should be completely rejected Friday, allowing for the
COMPX to test its relative highs around the 2300 level.  That
level is a pretty significant resistance point, in and of
itself.  But, if the COMPX can decidedly clear 2300 Friday, we
should see it work up to 2400, where I think it makes sense to
take profits.  For one, 2400 marks the 61.8 percent retracement
level of the bracket we've been using.  Second, 2400 is the
site of the COMPX's descending trend line on the point & figure
chart.  So, although both the SOX and COMPX have staged quite
an advance over the past two weeks, I think there may be one
more trade left to the upside before the tech bulls take
profits and pull 'em back.  The catalyst in the very short-term
could be a combination of those longs afraid of missing the
move and any shorts remaining in tech scrambling to cover.

Over on the Dow Jones Industrial Average (INDU), dip buyers
stepped in at the 11,000 during midday trading to prop the
blue chip index higher into the close.  The 11,000 level
continues to act as a magnet, not allowing the Dow to work
higher.  Perhaps part of the Dow's inability to advance in
recent sessions stems from the weakness in the financial space,
particularly the bank sector.  The KBW Bank Sector Index
(BKX.X) bounced off the 900 support level Thursday, which was
the key breakout level in mid-May.  I have to admit that the
banks' collective inability to trade well is my only real
cause for concern.  Indeed, shares of large money centers such
as Citigroup (NYSE:C) and J.P. Morgan Chase (NYSE:JPM) continue
to trade miserably.  It is my belief that the bank sector is
an integral part of the broader market, and it must firm up
if the Dow, S&P, and to a lesser extent the Nasdaq, are ALL
going to work higher.

Nevertheless, it was encouraging to see buyers step into the
Dow at the 11,000 level.  In the short-term, as it turns out,
the 11,200 level is the site of resistance that the Dow needs
to clear if it's going to work towards relative highs.  And,
of course, 11,000 is the BIG support level to monitor.

There's not much in the way of scheduled news Friday morning.
And barring any major earnings warning, the broader markets
are poised to rally off of the Intel news.  Of course, there's
the possibility that profit taking could set in as early as
Friday morning.  But beyond those two possibilities, things
look good from where I sit.  So if there are any bears still
out there, you've been warned.

Questions are welcome: eutley@sungrp.com

Eric Utley

Advanced Chart Reading with Retracements
Online Interactive Seminar This Sunday

Eric Utley, Contributing Editor for OptionInvestor and
IntradayTrader, will be presenting a two hour interactive online
seminar at 8:00 PM EST, on Sunday June 10th.  Eric will teach
attendees how to use Fibonacci retracement brackets to better
manage risk and increase profits.  The seminar will benefit
both investors and traders and Eric will incorporate current
examples in his presentation, along with requests from

Click here for more information:

June Online Seminar Calendar

You can take the following seminars without leaving the comfort
of your home or office. They are interactive and allow you to
question the presenter during the presentation.

You do not need any special software to take the seminar but you
must have a 56K Internet connection or faster for best results
and a separate phone for the audio portion.

If you are interested in these seminars please click here for
more information.


Sun Jun-10 Advanced Chart Reading & Retracements - Eric Utley
Sun Jun-10 Basic Technical Analysis - Austin Passamonte
Tue Jun-12 Starting with Point & Figure Charts - Jeff Bailey
Wed Jun-13 Ask the Analyst - Eric Utley
Wed Jun-13 Basic Option Strategies - Jim Brown
Thr Jun-14 Using Volatility to Pick Stocks - John Seckinger
Thr Jun-14 Basic Candlesticks - Jon Farnlof
Sun Jun-17 7 Steps to Play Picking - Eric Utley
Mon Jun-18 Zero Cost Leaps - Mark Wnetrzak, Ray Cummins
Tue Jun-19 Profiting From Failed Technical Patterns - John Seckinger
Wed Jun-20 Chart Patterns, Flags, Pennants, Wedges - Derek Baltimore
Wed Jun-20 Entry Point, Exit Point - Jim Brown
Thr Jun-21 Day-Trading for People WIth Day Jobs - Jon Farnlof
Sun Jun-24 Determining Support and Resistance - Derek Baltimore
Sun Jun-24 Ask The Analyst - Eric Utley
Tue Jun-26 Assessing Risk with Point & Figure - Jeff Bailey
Tue Jun-26 Charting, Stage Analysis - Mark Wnetrzak, Ray Cummins
Wed Jun-27 Big Cap Strategies - Jim Brown
Wed Jun-27 Conservative CC/NP - Mark Wnetrzak, Ray Cummins

Click here for a detailed explanation of each:


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


Bull Victory
Russ Moore

Put one in the tech bulls column after today’s gritty performance.
Warnings by Broadcom and National Semiconductor did little to
dissuade investors from jumping on the tech bandwagon, giving the
NASDAQ a healthy 2.1 percent gain.

The big-cap techs were firing on all cylinders and that helped
power the NDX to tidy 3.1 percent rise. The DOW struggled for most
of the session thanks in large part to a court decision going
against Philip Morris. The company was ordered to pay punitive
damages in the amount of three billion dollars. Investors
inflicted their own punishment on big MO, sending the stock for a
three- percent slide. The blue chip index did manage to climb back
however, as Intel, Microsoft, Hewlett Packard and Wal-Mart all
finished on the upside.

Other sectors seeing green included drugs, retailers, chemicals
and transportation. Not so fortunate were banks, utilities,
biotechs, gold, natural gas and oil services.

The chip index (SOX.X) surged 7.67 percent in anticipation of
Intel’s after the bell mid-quarter report. Following the close
the company said second quarter sales would fall within the
projected ranges. Investors seemed to like that news as Intel’s
share along with several others in the group, were on the rise.

The news was not all rosy however, as Lattice Semiconductor,
TransSwitch, Handspring and 3Com all warned. All except 3Com
saw their shares fall in post-market action.

Initial jobless claims came in at +13,000 to 432,000, but once
again we saw little reaction by investors to the continued
weakness on the job front.

The major indices have been trapped in a narrow range over the
last few weeks and it is going to take something extraordinary to
bust out in either direction. With summer quickly approaching we
could be in for a continuation of this sideways journey for some
time to come.

Thursday 06/07 close: 21.61

Thursday 06/07 close: 52.70

30-yr Bonds
Thursday 06/07 close: 5.67%

Total Put/Call Ratio: .57

Equity Option Put/Call Ratio: .46

Index Option Put/Call Ratio:  1.54


NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   33.60
Current close: 48.70

Volume/Open Interest
Maximum calls: 50/83,752
Maximum puts : 46/80,953

Moving Averages
 10 DMA 47
 20 DMA 47
 50 DMA 44
200 DMA 63


S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   548.16
Current close: 658.59

Volume/Open Interest
Maximum calls: 660/5,592
Maximum puts : 530/9,719

Moving Averages
 10 DMA  654
 20 DMA  657
 50 DMA  634
200 DMA  693


S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:   1081.19
Current close: 1276.96

Volume / Open Interest
Maximum calls: 1250/42,174
Maximum puts : 1250/45,618

Moving Averages
 10 DMA 1270
 20 DMA 1273
 50 DMA 1229
200 DMA 1323


52-Week High:  11,518.83
52-Week Low:    9,047.56
Current close: 11,090.67

Volume / Open Interest
Maximum Calls: 100/51,291
Maximum Puts   100/73,247

Moving Averages:
 10 DMA 11,034
 20 DMA 11,064
 50 DMA 10,633
200 DMA 10,642


CBOT Commitment Of Traders Report: Friday 06/01
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        +70242     +63916        -68496     -70908

Total Open
Interest %       (+33.61%)  (+31.81%)    (-9.48%)   (-10.01%)
                 net-long   net-long      net-short  net-short

                     Small Specs             Commercials
DJIA futures
Open Interest
Net Value          -4226      -7101          +5812     +8925
Total Open
interest %      (-30.65%)    (-51.65%)      (+16.24%)  (+23.70%)
                 net-short   net-short     net-long    net-long

                     Small Spec              Commercials
Open Interest
Net Value         +2912      +444         -11508    -9946

Total Open
Interest %        (+14.80%)   (+2.24%)     (-18.82%) (-14.87%)
                 net-long   net-long      net-short net-short

What COT Data Tells Us
Indices: Commercials reduced their net-short positions on the S&P
500 by half a percent while Small Specs added two percent to their
net-longs. We are seeing increasing divergence on both the DJIA
and NASDAQ 100 with Commercials reducing long positions on the
DJIA and adding to their shorts on the NASDAQ 100. Small Specs cut
back dramatically on the DJIA net short positions while adding to
their net-longs on the tech index.

Gold: Commercials are now at a five-year net short extreme, while
small specs are opposed at a five-year net long extreme in full
speculation. Commercials are end users of gold and are hedging
current inventory purchased at lower prices. They seem to feel the
risk/reward clearly lies to the downside in prices right now and
made a dramatic move from accumulation to distribution in the past
four weeks:

5/08: 17,247 contracts net-long
5/15: 13,915 contracts net-short
5/22: 65,250 contracts net-short
5/29: 68,443 contracts net-short

Gold could rally considerably higher this year, but we expect at
least one pullback from current levels based on the action above.

Copper: Commercials have been building extreme net-long position
in this industrial metal, a bullish sign for economic health.

Eurodollars: Commercials are at a five-year extreme net-short on
an interest rate play in reflection of lowered rates currently and

Summation: Commercials are looking for lower interest rates, lower
gold and higher copper prices based on their positions here. Of
particular notice was the switch in gold from net short last week
to net short this week, a warning sign that large users are now
selling into the current retail rally.

Data compiled as of Tuesday 05/29 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!


When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


SGP $42.30 -0.68 (-0.40) SGP's getting the boot tonight.  The
overall weakness this leading drug maker demonstrated was quite a
disappointment.  While we expected some profit taking at these
higher levels, two days of consecutive losses poses a serious
threat.  Recent evidence leans toward SGP simply not having what
it takes to penetrate the formidable $44 resistance; especially
without the drug sector's support.  We're exiting in despite of
the fractional close above our $42 stop.

ITG $53.52 -0.22 (+1.27) Earlier speculation proved profitable!
Within days of adding the stock to our call list, ITG made a
great run from the $50 level to highs topping $55 - gains were
without a doubt achievable.  However at this point, we believe
ITG may have reached its upper limits.  Today's trading saw ITG
finding a comfy zone at the $53 level with topside action barely
peaking over $54.  Although ITG didn't technically breach our
closing stop, we're dropping coverage on a good note tonight.

CD $18.09 -0.39 (-0.89) After struggling and straining to push
CD up to the $19.50 level, the bulls seemed to lose their
resolve after the company announced yesterday that they would
be buying Galileo International for $2.6 billion.  Despite a
modestly positive day in the broader markets, CD continued to
decline this morning, spending the session oscillating about our
$18 stop.  Although the stock managed to close slightly above
that level, we are discontinuing coverage tonight due to the
heavy selling volume.  Buyers weren't very enthusiastic and it
appears unlikely that CD will be able to move significantly
higher in the near future.


A $35.84 +1.57 (+1.87) The relative stabilization in the
technology issues positively impacted Agilent's share price
today.  It catapulted from $33.50 in early trading and put
simply, just kept trucking.  The rise through the $35 level not
only violated our protective stop, but it also returned the
share price above its previous support.  It's disappointing we
couldn't get a foot in the door before the buyers came back on
the scene.

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

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                  Thursday 06-07-2001
Copyright 2001, All rights reserved.                         2 of 2
Redistribution in any form strictly prohibited.

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

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


CB $76.32 +0.02 (+1.97) Continuing to distance itself from the
200-dma (currently $75.25), CB is making a convincing show that
the recent move up is for real.  Daily closes are gradually
creeping higher, weakening the $76.50 resistance level, although
the volume continues to weaken.  The breakout (if and when it
comes) will likely come with an increase in volume, so
conservative traders will want to step into the play on a
volume-backed move through $77.  Ideally the Insurance index
(IUX.X) will be moving positively as well, especially given its
weak behavior in recent sessions.  An intraday dip in the $74-75
area will provide aggressive investors with attractive entries
for the anticipated breakout, but only if CB doesn't drop to
close below our $74 stop in the process.

IMCL $55.87 +1.03 (+2.78) Biotechnology investors have been
taking the last two days off, digesting their gains from the
past week.  While the Biotechnology index (BTK.X) fell back to
test its newfound $645 support level, IMCL once again ignored
the weakness, posting yet another yearly high.  Now the $55
level is just another conquered resistance level, and we will
be looking for it to act as support in the days ahead.  While we
are keeping our stop in place at the $52 level, keep an eye out
for profit taking.  Daily stochastics are once again deep in
oversold territory, and we are seeing buying volume drop off.
The best entries will now be had on pullbacks, first at $55,
then $54, and finally near our $52 stop.  While the bulls could
continue to drive prices higher without a pause, the more likely
scenario will call for some consolidation first.  Keep a sharp
eye on the BTK index as further weakness there will likely
deliver some weakness in IMCL, while a further advance will
likely buoy our play up towards the next major resistance near

PDLI $85.26 -3.54 (+7.01) Jubilant bulls have done the prudent
thing over the last two days, taking a little bit of profit off
the table after Tuesday's stellar rally in shares of PDLI.  In
textbook fashion, the stock has gradually fallen back to the $85
level on declining volume, and it appears to be setting us up
for an aggressive entry point for the next leg higher.  Of
course, we will need to see the broader Biotechnology index
(BTK.X) resume its advance for PDLI to challenge its recent
highs near $91.  If the stock is going to extend its rally, PDLI
will need to hold support near the $84 level, near the top of
Tuesday's gap open.  Aggressive entries will materialize on a
bounce near this level, but if it fails to provide support, all
bets are off.  This would open the door for further weakness,
forcing us to exit the play.  More conservative entries can be
taken as the stock pushes through intraday resistance at $87 and
$89, but only if volume is strengthening and the BTK index
regains its footing.

SEBL $51.83 +0.68 (+5.95) Leading Tech stocks like SEBL
continued their sedate advance again on Thursday.  Although the
gain was only fractional, it was encouraging to see our play
find support at $50 and recover from there.  With positive
reception of INTC's mid-quarter guidance this evening, it
appears there could be some significant technology buying
tomorrow.  While more attractive entries would occur on a dip
to the $48 level, it appears with daily Stochastics on the rise
that odds favor the upside in the near term.  Conservative
traders can consider new positions on a rally through the $54
resistance level, or even $55, the site of the mid-May highs.
The NASDAQ is once again north of the 2250 level, opening the
door for additional gains, and we would look for SEBL to
participate in such a move due to its solid fundamentals.  Keep
one eye focused on volume, as any serious rally will require
volume to ramp up closer to the ADV of 17 million shares.

VRSN $58.75 +4.66 (+2.51) Sellers dominated yesterday's
session, dragging VRSN down to test the $54 support level.  As
though injected with adrenaline, the bulls came charging back
today, posting a bullish outside day.  Gaining more than 8.5%
brought the supplier of Internet security solutions to its
highest close since Memorial day.  With daily Stochastics
emerging from oversold territory and the price now above the
converging 10-dma ($57.71) and 30-dma ($56.65), VRSN is looking
pretty healthy.  If only volume would pick up to the level of
the ADV, our play could really get moving.  The NASDAQ is back
over the 2250 level, pointing to tenuous strength in the days
ahead.  Continue to target intraday dips to $54 as aggressive
entry opportunities, although we may now see buyers start to
nibble in the $56-57 level after today's strong move.  The more
conservative approach will be to wait for buying volume to push
VRSN through the $60 resistance level before taking a position.
Keep stops in place at $53.

CEFT $52.33 +1.58 (+1.83) A dramatic spike in volume shot CEFT
from the underside of $51 to $52.70 in a matter of hours today.
 The subsequent double test of the $52 mark combined with the
bullish close emphasizes the underlying strength of the
breakout.  Moving forward, let's keep our protective stop at $49
to allow room for CEFT to operate tomorrow; although the optimum
conditions would send CEFT higher on strong bounces off $52.
Today's new 52-week record might portend a bit of profit taking,
so aggressive traders might opt for an entry on a pullback to
the former resistance at $51 in an advancing market environment.
Consider locking in gains as CEFT approaches the intermediate
$55 level.  You can always jump back into another momentum
cycle, whether it be intraday or across sessions.  News of a
long-term contract may have fueled today's upswing.  The company
announced today that Citizens Financial Group, a $30.9 bln
financial services company, signed a long-term contract for its
processing services.  In addition to driving Citizens' 820 ATMs,
Concord will also provide online debit card authorization,
signature debit card processing, and gateway access to debit

CELG $33.70 +0.39 (+2.96) The developing support at the $33 and
$34 levels offer assurance that CELG can resume its uptrend
with in a cooperating biotech market.  The BTK.X is finding
strength at the 650 level; however if the biotechs' progress is
to continue, a break of 660 is essential.  CELG's line of
resistance sits at Tuesday's rise of $36.48, so look for the
synergy of the sector and broad market to launch the share price
through this opposition.  Momentum traders might find an
enterprising entry as CELG moves through $34 and challenges $36,
just make sure there's enough intraday volume (+100 K) to make
it advantageous.  Keep a closing stop at $32.  Not only did
Celgene file an Investigational New Drug application with US
regulators to initiate a Phase I clinical trial of an
experimental treatment for breast cancer, but also the company
announced it expanded its portfolio of novel drug targets.
Through exclusive worldwide license agreements with three
leading research institutions -- New York University School of
Medicine, the Research Foundation of the State University of New
York and the Toronto Hospital for Sick Children, Celgene can now
claim 38 potential new drug targets.

NOVN $36.27 +0.17 (+4.21) A drop-off below the shorter-term
support at $36 raised concerns about NOVN's strength at these
new trading levels. But no worries, the $35 level acted as a
safety net and NOVN consummated a healthy recovery on
respectable volume.  You might consider buying into strength on
the big breakout through $37 and exiting as NOVN targets the
historical resistance at $42.  All in all, the stock's fate
currently seems hinged on the movements of the whole sector.
The Biotech Index is teetering on its higher support at the 650
level.  Intraday swings to the 670 resistance indicate the
song's not over yet, so be prepared to jump into a biotech play
on a breakout through 675.  NOVN's closing stop remains in
place at the $33.50 mark.

AMGN $68.82 +0.62 (+0.24) The leader amongst the biotech company
maintained its holding pattern as the BTK.X hovered at its
relative support.  We need the combination of an advancing
market and a rallying sector to give AMGN the shot of adrenaline
it needs to break the $70 barrier.  Some good company news
wouldn't hurt either! While the stock currently demonstrates a
bullish disposition and is poised to run, the conservative
approach is to be patient and wait for the visible breakout
before adding new positions.  Monitor other biotechs like HGSI,
CELG, and BGEN.  You should see these leaders also challenge
their respective resistance levels in conjunction with the BTK.X
rallying above 675.


AIG $81.10 +0.10 (+1.01) Although AIG's been trading on lower-
than-average volume in recent sessions, there's no denying the
ongoing battle between buyers and sellers.  The tight action
will ultimately lead to a breakout in one direction; and of
course, we're looking for the share price to go south.  A strong
indication that the insurance sector is falling victim to
selling is to see the Insurance Index (IUX.X) slide under the
760 support it's currently been flirting with of late.  A
violation of the historical support at the $80 level alerts
traders of an impending decline.  If you jump into the downward
momentum consider making $75 your first target.

NETE $39.61 +2.07 (+5.88) A healthy rise in today's session
brings closer to our $44 objective.  The strategy is to stay on
the sidelines until NETE reaches its respective resistance
levels and rolls over amid heavy profit taking.  A strong wave
of selling could see NETE return to the $32 level whether it
rolls from the upper spectrum at $44 or from its current
position.  Either way, there's the potential for significant
losses.  Take a look at a two-month chart for visual
corroboration.  A bearish environment coupled with a high-volume
decline invites traders to begin new plays.

ELNT $31.80 +0.76 (-1.20) So what's it going to be?  ELNT has
been trying really hard to recover from Tuesday's high-volume
selloff and actually managed to reach the $32 resistance level
today before giving back a bit at the close.  It looks like we
are getting a great entry setup as the stock continues to
gradually rise with the assistance of strong gains on the
Semiconductor index (SOX.X), which actually crested its 200-dma
for the first time since last September.  With no dire news from
INTC tonight, the Semis could very well continue their advance.
The big question is how it will affect ELNT.  It has been
hobbled this week by its own earnings warning, and the buying
volume has been anemic at best, coming in today at only 40% of
the ADV.  We are looking for weakness to develop near the $33
resistance level, also the level of our stop.  A failed rally
near this level will allow aggressive traders to enter the play,
although those with a more conservative bent will still want to
wait for a drop below $30 before taking a position.  Keep a
sharp eye on the SOX, as weakness there will likely yank the rug
out from under ELNT.

NEWP $34.00 +1.42 (+1.92) Those with a bearish slant on the
Networking sector have been holding their breath in recent days
as NEWP has advanced right up to the $34 resistance level.  The
lows are getting higher, and with the daily Stochastics on the
rise, we could very well be on the wrong side of this trade.
Depending on the market's reception on the INTC guidance
tonight, we will likely either get a great entry tomorrow or
bring our NEWP play to a close.  Buying volume is still anemic,
but a solid move through our $35 stop could be in the cards
tomorrow morning.  Use a failed rally below this level as an
opportunity to initiate new positions if your risk profile
allows it.  More cautious players will target a drop below the
$33 or even $32 intraday support levels.  The Networking index
(NWX.X) is in rally mode again, but if it can't hold the $430
intraday support level, the bears are likely to regain control.

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!



PSFT - PeopleSoft Inc $46.75 +3.67 (+4.83 this week)

PeopleSoft provides a family of enterprise application software
products for use throughout large and medium-sized
organizations. Its enterprise resource planning (ERP) software
addresses such tasks as accounting, manufacturing, and supply
chain management; but its services such as consulting and
maintenance accounts for more than 65% of sales.  PeopleSoft
currently ranks as the #3 seller of applications that tie
together customers' global back-office operations, following Sap
and Oracle, respectively.  As a result of its acquisition of
The Vantive Corporation, PeopleSoft claims a distant second spot
in the fast-growing customer relationship management (CRM)
software sector dominated by Siebel Systems (SEBL).

A brilliant presentation at the PeopleSoft Leadership Summit in
Las Vegas this week gave shares of PSFT star-studded status.
The list of distinguished keynote speakers was chaperoned by the
customers own powerful success stories about PeopleSoft's role
in enabling them to build a collaborative enterprise.  The
stellar gathering ushered in the company's unveiling of its
Internet sales and Web-based CRM software, which it expects to
ship to customers at the end of June.  As a result of the
customer service offering that directly competes with Siebal
Systems' products, JP Morgan raised its price target for
PSFT to $48 from $37.  In a research note, they commented that
"though Siebel Systems has a commanding lead (CRM market share)
that doesn't look threatened, PeopleSoft can now be much more
aggressive in its installed base and cross-sell more" (Read:
increased revenues).  Goldman Sachs indicated a bullish
predilection towards PSFT as well.  Earlier in the week, analyst
Steven Kaly reiterated the stock's position in its Recommend
List.  Take a look at a four-month chart for PSFT and it's easy
to recognize its uphill struggle from the depths of $18 last
March.  PSFT hit some strong resistance as it attempted to
crossover the $36 level in April.  But after the company "made
its numbers" and beat the Street's consensus estimates on the
25th, shares of PSFT surged on the news.  Currently $42 and $43
are support, with the former also marking our closing stop for
the play.  Today's fantastic 8.5% spike, or $3.67, launched it
through another resistance level.  Going forward, $44 and $45
should evolve as shorter-term support; withstanding a pullback
to firmer support.  A variety of entry points should present
themselves tomorrow, barring an outright reversal; with today's
bullish close at a mere $0.10 from the intraday high this
scenario is highly unlikely.  Your entry strategy will depend on
your personal risk portfolio and the market environment.  For
example, some aggressive plays might include entering on a deep
pullback and targeting today's upper resistance ($46.85); while
others may instead choose to buy into subsequent breakouts and
exit as PSFT approaches the psychological $50 mark.

***June contracts expire next week***

BUY CALL JUN-40 PQO-FH OI=2680 at $7.30 SL=5.25
BUY CALL JUN-45*PQO-FI OI=2259 at $3.00 SL=1.50
BUY CALL JUN-50 PQO-FJ OI=1618 at $0.85 SL=0.00
BUY CALL JUL-45 PQO-GI OI=1612 at $5.90 SL=4.00
BUY CALL JUL-50 PQO-GJ OI=2519 at $3.50 SL=1.75

Average Daily Volume = 7.20 mln

BRCD - Brocade Communications $46.80 +3.64 (+8.00 this week)

Brocade Communications is a provider of Fibre Channel switching
solutions for Storage Area Networks (SANs), which apply the
benefits of a networked approach to the connection of computer
storage systems and servers.  The company's family of SilkWorm
switches enables companies to cost-effectively manage growth in
their storage capacity requirements and improve the performance
between their servers and storage systems.  This provides the
ability of increasing the size and scope of a company's SAN,
while allowing them to operate data-intensive applications,
such as data backup and restore, and disaster recovery on the

Investors have been trying to make up their mind on Storage
stocks lately as analysts seem to change their ratings on stocks
in the sector almost on a daily basis.  BRCD is well off its
April lows near $17 and it is starting to look like there is a
payoff for buying the dips.  Last week's broad Technology
weakness, kicked off by negative news in storage leader EMC,
dragged our new play down to major support near $36 before
buying support appeared to provide some relief.  Since then,
BRCD has tacked on more than $10 to the share price and volume
is strengthening as well.  Today's gain puts the stock above
both the 10-dma (currently $42.38) and the 30-dma (currently
$43.62).  With daily Stochastics pointing towards the sky again
and well out of oversold territory, it looks like the bulls are
preparing themselves for another run at the $50 resistance
level.  Positive reception of INTC's mid-quarter update this
evening, might just allow the bulls to pull it off this time.
Overhead resistance sits at $48 and then $50, and rallies
through either of these levels on solid volume will provide
opportunities for more conservative investors to enter the play.
Since finding support at $36, a tenuous uptrend has been
forming, with the trendline currently resting at $42.
Aggressive traders will want to target intraday pullbacks to
$44 or even $42 as attractive entry points, so long as the dips
are met with renewed buying interest.  Initial stops are being
set at $42.

***June contracts expire next week***

BUY CALL JUN-45*UBF-FI OI= 5611 at $3.70 SL=2.25
BUY CALL JUN-50 UBF-FJ OI= 4858 at $1.25 SL=0.50
BUY CALL JUL-45 UBF-GI OI=10579 at $7.10 SL=5.00
BUY CALL JUL-50 UBF-GJ OI= 2571 at $4.70 SL=2.75
BUY CALL JUL-55 UBZ-GK OI= 4716 at $3.00 SL=1.50

SELL PUT JUL-40 UBF-SH OI= 1186 at $2.35 SL=4.00
(See risks of selling puts in play legend)

Average Daily Volume = 14.4 mln

QCOM - Qualcomm, Inc. $65.00 +2.52 (+3.41 this week)

Based on its proprietary CDMA technology, QCOM is engaged in
developing and delivering digital wireless communications
services.  The company's business areas include integrated
CDMA chipsets and system software and technology licensing.
QCOM owns patents that are essential to all of the CDMA
wireless telecommunications standards that have been adopted
or proposed for adoption by the worldwide standards-setting
bodies.  Currently, QCOM has licensed its CDMA patent portfolio
to more than 80 telecommunications equipment manufacturers
around the world.

Conditions in the Wireless sector have improved significantly
over the past two months and buyers have started creating a
decent uptrend in shares of QCOM since it traced its April lows
near $43.  Investors started becoming more positive on the
stock with the mid-April interest rate cut, but they really got
serious about 3 weeks ago when China announced that it had
issued several large CDMA contracts, opening the door to a major
new market for QCOM's technology.  After the initial euphoric
rise, it was expected that QCOM would come back to test the
$60-62 support level and it has now embarked on a more
sustainable rally.  After confirming the $60 support level, the
stock has gradually advanced over the past week and buyers seem
to be getting ready to take another run at the formidable $70
resistance level.  While volume has remained fairly light (on
the order of half the ADV) this week, with oscillators turning
up and emerging from oversold territory, QCOM looks like it will
be successful in extending its fledgling series of higher lows
and higher highs.  We are placing our stop at $60 and aggressive
players will want to target intraday dips near this level or
possibly intraday support at $62.  If you'd rather wait to enter
on strength, look for a volume-backed rally through $66.

***June contracts expire next week***

BUY CALL JUN-60 AAO-FL OI= 6671 at $6.20 SL=4.25
BUY CALL JUN-65*AAO-FM OI=11956 at $2.70 SL=1.25
BUY CALL JUN-70 AAO-FN OI=14914 at $0.85 SL=0.00
BUY CALL JUL-65 AAO-GM OI= 6643 at $6.50 SL=4.50
BUY CALL JUL-70 AAO-GN OI=12503 at $4.00 SL=2.50
BUY CALL JUL-75 AAF-GO OI=10301 at $2.45 SL=1.25

SELL PUT JUL-60 AAO-SL OI= 7464 at $3.70 SL=5.75
(See risks of selling puts in play legend)

Average Daily Volume = 16.2 mln


EPG - El Paso Natural Gas Co $56.19 -1.35 (-3.66 this week)

El Paso Natural Gas, formerly El Paso Energy Corp, is a global
energy company originally founded in 1928 in El Paso, Texas. For
many years, the Company served as a regional pipeline company
conducting business mainly in the western United States.  In the
past five years however, it now has operations that span the
wholesale energy value chain, from natural gas production and
extraction to power generation. The Company's growth during this
period was accomplished through a series of strategic
acquisitions, transactions, and internal growth initiatives.

It's expected that the rising gas prices will boost 2Q earnings
for major refiners, but if you take a look at the pullback in
share prices of EPG, CHV, TX and ENE in recent sessions you
can't ignore the writing on the wall - Over Bought Issues!  The
one difference you'll notice in the charts of the above-
mentioned is the magnified weakness surrounding EPG.  It began
to tumble through its respective support levels a few sessions
prior to its sector mates.  From a technical standpoint, EPG's
also been trading under the 10-DMA line since last week, without
challenge.  This week's violations of last January's $57 support
also portend a major breakdown.  The pattern of lower-lows and
lower-highs further suggests more downside action.  High-volume
selling (2+ mln intraday) through today's low of $55.82 give the
green light to jump into this put play.  The less risk-adverse
might consider a rollover strategy from the $57 and $58 range,
playing the spread in a volatile market.  Set CLOSING stops at
$59, in accordance with 10-DMA technical measurement.

***June contracts expire next week***

BUY PUT JUN-65 EPG-RM OI=1110 at $9.00 SL=6.25
BUY PUT JUN-60*EPG-RL OI=1726 at $4.10 SL=2.50
BUY PUT JUN-55 EPG-RK OI= 238 at $0.75 SL=0.00

Average Daily Volume = 2.75 mln


VRSN - VeriSign, Inc. $58.75 +4.66 (+2.51 this week)

VeriSign is the leading provider of Internet trust services
and digital certificate solutions needed by Web sites,
enterprises and individuals in order to conduct secure
electronic commerce and communications over IP networks.  VRSN
has used its secure online infrastructure to issue over 100,000
of its Website digital certificates and over 3.5 million of its
digital certificates for individuals.  The company also offers
the VeriSign Onsite service, which allows an organization to
leverage the company's trusted service infrastructure to develop
and deploy customized digital certificate services for use by an
organization's employees, customers and business partners.  To
date, over 300 enterprises have subscribed to the OnSite service
and VRSN has strategic relationships with industry leaders
including Cisco, Microsoft ,RSA, Security Dynamics, and VISA.

Most Recent Write-Up

Sellers dominated yesterday's session, dragging VRSN down to
test the $54 support level.  As though injected with adrenaline,
the bulls came charging back today, posting a bullish outside
day.  Gaining more than 8.5% brought the supplier of Internet
security solutions to its highest close since Memorial day.
With daily Stochastics emerging from oversold territory and the
price now above the converging 10-dma ($57.71) and 30-dma
($56.65), VRSN is looking pretty healthy.  If only volume would
pick up to the level of the ADV, our play could really get
moving.  The NASDAQ is back over the 2250 level, pointing to
tenuous strength in the days ahead.  Continue to target
intraday dips to $54 as aggressive entry opportunities,
although we may now see buyers start to nibble in the $56-57
level after today's strong move.  The more conservative
approach will be to wait for buying volume to push VRSN
through the $60 resistance level before taking a position.
Keep stops in place at $53.


VRSN is on the verge of breaking out above the $60
resistance level.  With help from Intel after the bell
Thursday, the Nasdaq is poised for advance Friday, which
should allow for VRSN to trade higher.  Look for a
high-volume move above $60 and target $65 on the upside
in the short-term.  Those with longer time horizons might
look to target $70.

***June contracts expire next week***

BUY CALL JUN-55*QVR-FK OI=1154 at $5.20 SL=3.00
BUY CALL JUN-60 QVR-FL OI=2699 at $2.30 SL=1.25
BUY CALL JUL-60 QVR-GL OI=1772 at $6.10 SL=4.00
BUY CALL JUL-65 QVR-GM OI= 248 at $4.20 SL=2.50
BUY CALL JUL-70 XVR-GN OI= 152 at $2.75 SL=1.25

Average Daily Volume = 8.94 mln

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!



Semiconductor Stocks Jumpstart The Market!

Technology stocks led today's advance with chip shares producing
the lion's share of the rally.

Wednesday, June 6

Industrial stocks retreated today after Hewlett-Packard and J.P.
Morgan issued cautious comments about future revenues.  The Dow
closed down 105 points at 11,070 on weakness in its financial and
energy components.  The NASDAQ managed a small gain, finishing 15
points higher at 2,217.  The S&P 500 index was down 13 points at
1,270.  Big Board volume reached 1.06 billion shares, with losers
beating winners by 3 to 2.  Activity on the NASDAQ was light with
only 1.75 billion shares exchanged.  Technology declines outpaced
advances 22 to 16.  In the U.S. bond market, the 30-year Treasury
ended flat, yielding 5.65%.

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

Hyseq      (NASDAQ:HYSQ)    JUL-15/CC    $13.90 debit   Cov-Call
Hyseq      (NASDAQ:HYSQ)	JUL12C/JUL15C  $1.95  debit   bull-call
South Fin. (NASDAQ:TSFG)	AUG17C/JUL20C  $1.60  debit   diagonal
Willamette (NYSE:WLL)     JUL55C/JUL50C  $1.05  credit  bear-call

Hyseq was a surprise mover, climbing $1.34 by midday as investors
continued to flock to the issue.  Traders who participated in the
covered-call enjoyed higher call premiums soon after the open and
a number of favorable entry opportunities were available.  However,
the best observed cost basis (on a simultaneous order basis) was
slightly higher than our target.  The bullish position in South
Financial was offered at the suggested debit.  The Willamette play
was hard to judge with the wide BID/ASK spreads (due to arbitrage
traders) but there were hundreds of contracts traded in the short
option at $1.70, and an acceptable credit should have been easily

Market Activity:

Blue-chip investors received another batch of bad news today as
Hewlett-Packard (NYSE:HWP) announced that it expects a continued
deterioration in the global economy and now has a "more cautious"
outlook on its third-quarter revenues.  The firm issued guidance
of flat to down 5% and said it is initiating cost reductions to
meet the consensus $0.23 per-share estimate.  On the upside, Sun
Microsystems (NASDAQ:SUNW) rose 3% to $17.61 after Goldman Sachs
said the company's server business is stabilizing, "with a slight
positive up-tick."  Goldman added that although the firm faces
additional problems, the "worst" might be over.  Internet stocks
moved lower even as shares of Priceline (NASDAQ:PCLN) jumped 29%
after Goldman raised its second-quarter earnings estimates on the
company.  On the Dow, shares of J.P. Morgan Chase (NYSE:JPM) and
Exxon Mobil (NYSE:XOM) led the industrial group lower.  JPM slid
to $46.84 after management told analysts that decreasing trading
revenues and the persistent investment banking slump will weigh
on the company's bottom line.  Several major analysts cut their
estimates on the stock in the wake of the news.  Procter & Gamble
(NYSE:PG) and Johnson & Johnson (NYSE:JNJ) led the safety issues
higher as traders hedged their portfolios.  Procter & Gamble was
the beneficiary of a Lehman Brothers upgrade ahead of the firm's
June 15 meeting.  In the broader market groups, biotechnology,
networking, and semiconductor stocks all slumped and oil issues
fell along with oil prices after data from the American Petroleum
Reserve showed a jump in crude, gasoline and distillate supplies
during the past week.

Portfolio Activity:

Despite the decline in broad market issues, the Spreads section
enjoyed a number of favorable moves.  A.G. Edwards (NYSE:AGE)
jumped almost $3 to $46.69, providing another opportunity to
exit the bullish calendar spread with a favorable profit.  The
time-selling position in Alexion (NASDAQ:ALXN) also offered an
excellent profit as the issue climbed to $28.  The credit for
the AUG-$30C/JUN-$30C calendar spread reached $2.70, a $0.75
gain on $1.95 invested in two weeks.  Sinclair Broadcasting
(NASDAQ:SBGI), John Hancock Financial (NYSE:JHF) and National
City (NYSE:NCC) are other issues in this group that performed
well during the downbeat session.  Among technology companies,
Freemarket (NASDAQ:FMKT) was a big winner, up over $2 to $14.55
on news that the B2B solutions provider and e-business software
maker Adexa agreed to terminate their planned merger because of
adverse market conditions and continued delays in regulatory
approval.  Instead they agreed to form a nonexclusive strategic
relationship and investors applauded the conservative decision.
Another issue that enjoyed an unexpected rally was Watchguard
(NASDAQ:WGRD).  The stock climbed 10% to $6.74 and that play
may yet finish profitable.  On the downside, bullish movement
in Microsoft (NASDAQ:MSFT) and Optimal Robotics (NASDAQ:OPMR)
continues to be a concern.  Both positions are very manageable
and since neither issue makes big moves, you should have ample
time to initiate any necessary adjustments.  Our only bullish
position in the oil group is the Reader's Request play in Stone
Energy (NYSE:SGY) and with today's $1.50 decline, the recent
technical bounce has officially come to an end.  Since there
are no lower strike prices in the July options, we have limited
flexibility with regard to adjustments and it may be best to
simply close the spread for a small loss ($0.50-$0.60), rather
than risk additional capital.

Thursday, June 7

Technology stocks led the advance with chip shares producing the
lion's share of the rally.  The NASDAQ closed 46 points higher at
2,264 and the Dow was up 20 points at 11,090.  The broader market
also ended higher, up 7 points to 1,276, but its gains were muted
due to weakness in tobacco and financial issues.  Activity on the
NASDAQ was light at 1.64 billion shares traded.  Hi-tech winners
beat losers 21 to 16.  NYSE trading volume reached 1.08 billion
shares, with winners beating losers 16 to 14.  In the bond market,
the 30-year Treasury fell 30/32, pushing its yield up to 5.72%.

Market Activity:

Technology stocks rallied today on renewed strength in the chip
sector after analysts offered positive forecasts for the group.
The Semiconductor Industry Association released a report that
projected an industry-wide recovery in the second half of 2001
with 20.5% in 2002 and 25% growth in 2003.  The SIA said that,
"Despite the sales decline brought on by the excess inventory
this year, the semiconductor market is still projected to grow
from $149 billion in 1999 to $283 billion by 2004, a compound
annual growth rate of almost 14 percent."  The announcement was
welcome news to technology investors and semiconductor shares
soared with substantial gains in a number of bellwether issues.
Other NASDAQ sectors edged higher amid the general optimism but
one analyst said he continues to be fairly cautious and would
remain "underweight" in the technology sector.  Merrill Lynch's
Steve Milunovich reported that "Inventories are highest in the
communications value chain and we think it will take three to
four quarters to work those down.  Among the technology groups
he favors are computer services, electronics manufacturing and
storage.  Using the NASDAQ for support, the Dow managed to close
positive even after a dismal performance in its financial and
tobacco components.  Driving the blue-chip average higher were
shares of Intel (NASDAQ:INTC), Hewlett-Packard (NYSE:HWP), Home
Depot (NYSE:HD), Microsoft (NASDAQ:MSFT), Walt Disney (NYSE:DIS)
and DuPont (NYSE:DD).  Among its financial components, American
Express (NYSE:AXP) and Citigroup (NYSE:C) were big losers after
Morgan Stanley lowered its earnings-per-share estimates on AXP
due to "ominous signs" of deteriorating economic conditions in
international markets.  Philip Morris (NYSE:MO) fell sharply on
news that a Los Angeles jury ordered the tobacco company to pay
$3 billion in punitive damages to one smoker.  In the broader
market groups, the retail sector squeaked out a gain as traders
digested monthly same-store sales data.  Overall, sales came in
weak due to inclement weather in May but most analysts believe
the industry will eventually profit from lower income taxes and
a recovering economy.  Among other groups, buyers were seen in
the drug, transportation and chemical groups while oil service,
utility, natural gas and biotechnology issues generally moved

Portfolio Activity:

Another day of bullish activity did wonders for the majority of
positions in the Spreads Portfolio.  Favorable gains occurred in
almost category with stocks in computer-related industries among
the best performers.  Issues in the networking group also moved
higher and there was select buying in the telecom segment.  The
most popular issues were Intel (NASDAQ:INTC), Cisco (NASDAQ:CSCO),
Novellus (NASDAQ:NVLS), Linear Technology (NASDAQ:LLTC), Hewlett
Packard (NYSE:HWP) and Microsoft (NASDAQ:MSFT).  In the retail
group, Costco (NASDAQ:COST) was a big mover, up $1.50 to $41 and
the rally offered a great early-exit opportunity in our synthetic
position.  The speculative position provided an $0.85 gain over a
period of one week with nominal downside risk.  Among Financial
issues, our new position in South Financial Group (NYSE:TSFG) is
off to a good start despite the overall retreat in the banking
sector.  In the small-cap category, Watchguard (NASDAQ:WGRD) was
up again today and it appears the recent recovery will continue.

Rather than focus on the positive events in today's session, and
there were many, I thought it might be more important to look at
the few issues which may need adjustments prior to next week's
option expiration.  We have very few bearish plays in the Combos
section but with the overall market beginning to rebound, there
are some positions that will require close attention, as well as
possible exits or modifications, in the coming sessions.  One of
the most active stocks in today's trading was Microsoft and even
though we have enjoyed the effects of the bullish movement on
our LEAPS, the recent upside trend is threatening our bearish
spread at $75.  With the potential for future gains limited by
current technical resistance near $74, a close above that price
on heavy volume will be our signal to roll out or out and up (or
cover the short call option) in the position.  Optimal Robotics
(NASDAQ:OPMR) has reversed its recent downtrend and the issue
will likely test a current resistance area near $35 in the next
few sessions.  Our sold (call) option at $35 will be at risk if
the rally continues but there are no higher strikes in the month
of July.  Our alternatives in this case are: close the position,
buy stock to cover, or buy an ITM call to create a debit spread.
Of course, there are many other complicated adjustment methods
but these are the most common techniques.  In the retail group,
Kohl's (NYSE:KSS) has shown some signs of a reversal but until
the stock closes near the current resistance area at $64, we
will continue to maintain a neutral-to-bearish outlook on the

Questions & comments on spreads/combos to Contact Support
                       - UPCOMING SEMINAR -
On June 18, I will be conducting an instructional seminar for new
traders who are interested in the fundamentals of "time-selling"

The general topics of discussion will be:

- Increasing portfolio returns with long-term options (LEAPS)
- Reducing the cost of these options with covered-calls
- Learning to sell time (and potential) for a profit

You can take the seminar without leaving the comfort of your home
or office.  It is interactive and you can ask questions after the
presentation.  You do not need any special software to attend
the presentation but you must have a 56K Internet connection or
faster for best results and a separate phone to listen to the
audio portion.

If you are interested in this seminar, please click here for more


                           - NEW PLAYS -
GM - General Motors  $59.05  *** Reader's Request! ***

General Motors (NYSE:GM) has two operating segments, Automotive,
Communications Services and Other Operations, which consists of
design, manufacturing, and marketing of cars, trucks, locomotives,
and heavy-duty transmissions and related parts and accessories,
as well as the operations of Hughes Electronics Corporation; and
Financing and Insurance Operations, consisting mainly of General
Motors Acceptance Corporation, which provides a broad range of
financial services, including consumer vehicle financing, fleet
leasing, dealer financing, extended service contracts, mortgage
services, vehicle and homeowners' insurance, and also asset-based

One of our faithful readers submitted this issue for a bullish
position and asked if we might offer our thoughts on the stock.
The belief that "As General Motors goes, so goes the Dow" may be
somewhat optimistic, considering the current condition of the
economy but if GM's recent trend is any indication of the Dow's
future performance, it's time to go long!  Technically, GM has
demonstrated remarkable strength over the past week, even as the
broader market endured a brief correction, and the fact that the
stock is holding up in the face of a recent downgrade by Goldman
Sachs bodes well for its future.  Yesterday, Gary Lapidus of GS
lowered 2001 earnings estimates for several national auto parts
makers due to a "continued assault" by import brands.  He noted
that, "With cash flow dwindling, we see the potential for lower
credit ratings with higher borrowing costs and reduced financing
flexibility."  That doesn't sound good but apparently GM traders
didn't read the article as the issue closed today's session near
a 6-month high.

Obviously, the issue is at a "key moment" with at least one more
test before the rally can be considered genuine.  Traders who
favor the upside potential in the stock can attempt to profit
from future bullish activity with this conservative position.

PLAY (very conservative - bullish/credit spread):

BUY  PUT  JUL-50  GM-SJ  OI=641  A=$0.25
SELL PUT  JUL-55  GM-SK  OI=748  B=$0.70

ACDO - Accredo Health  $38.06  *** Technicals Only! ***

Accredo Health (NASDAQ:ACDO) and its wholly-owned subsidiaries,
Hemophilia Health Services and Nova Factor, provide specialized
contract pharmacy and related services pursuant to agreements
with biotech drug manufacturers relating to the treatment of
patients with certain costly, chronic diseases.  The company's
many services include collection of timely drug utilization and
patient compliance information, patient education and monitoring
through the use of written materials and telephonic consultation,
reimbursement expertise and overnight drug delivery.

There is little recent news on this company except the report
concerning Accredo's acquisition of the outstanding stock of
privately-held Pharmacare Resources and its sister company, NCL
Management.  Pharmacare is a leading provider of pharmaceutical
care for chronic, long-term patient populations, including those
requiring intravenous immunoglobulin.  Pharmacare serves patients
in New York, New Jersey and Connecticut and the acquisition will
enhance ACDO's penetration in the national IVIG market.  Beyond
that announcement, there have been no major events concerning
the company in the past month other than "bullish" coverage by
analysts at Solomon Smith Barney.

During the big move earlier in the week, the stock climbed above
a recent resistance area near $35 and the top of that previous
range now becomes support for any future consolidation.  Traders
who agree with a neutral-to-bullish outlook for the issue can
profit from that outcome with this position.  Target a higher
premium initially, to allow for a brief consolidation in the
share value.

PLAY (very conservative - bullish/credit spread):

BUY  PUT  JUL-25  DZU-SE  OI=0  A=$0.30
SELL PUT  JUL-30  DZU-SF  OI=0  B=$0.70

                   - STRADDLES AND STRANGLES -
EBAY - eBay Inc.  $64.99  *** Premium Selling! ***

eBay (NASDAQ:EBAY) is a dynamic pricing online trading platform
located at www.ebay.com.  eBay developed a Web-based community in
which buyers and sellers are brought together in an efficient
format to buy and sell items, such as collectibles, automobiles,
high-end or premium art items, jewelry, consumer electronics and
a host of practical and miscellaneous items.  The eBay dynamic
pricing (auction-style) format permits sellers to list items for
sale, buyers to bid on items of interest and all eBay users to
browse through listed items.  eBay's service is fully automated,
topically arranged and easy to use.  Through its wholly owned and
partially owned subsidiaries and affiliates, the company operates
auction trading platforms in the United States, Germany, the U.K.,
Australia, Japan, Canada, France, Austria, Italy and South Korea.
In the second quarter of 2001, eBay expects to expand its online
trading to include Spain, the Netherlands, Belgium, Portugal,
Sweden and Brazil.

We continue to receive requests for conservative "premium-selling"
plays but with the recent decline in overall option volatility,
the number of theoretically favorable candidates is lower than
normal.  However, EBAY appears to be a great prospect for this
strategy as it robust option premiums and at the same time, may
be due for a period of consolidation.  In addition, we like the
issue for our stock portfolio thus we are going to sell premium
for credit and use the earned income to offset any losses on the
downside, in the event we accept assignment of the issue.  If the
price of the stock moves through the resistance area near $75 on
a heavy-volume rally, we will consider closing or adjusting the

PLAY (very conservative - neutral/credit strangle):

SELL CALL   JUL-85  QXB-GQ  OI=828   B=$0.65
SELL PUT    JUL-45  QXB-SI  OI=2092  B=$0.80
UPSIDE B/E=$86.50 DOWNSIDE B/E=$43.50


PLAY (conservative - neutral/credit strangle):

SELL CALL   JUL-80  QXB-GP  OI=1400  B=$1.25
SELL PUT    JUL-50  QXB-SJ  OI=3952  B=$1.40
UPSIDE B/E=$82.75 DOWNSIDE B/E=$47.25


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


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