Option Investor
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Daily Newsletter, Thursday, 06/21/2001

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The Option Investor Newsletter                  Thursday 06-21-2001
Copyright 2001, All rights reserved.                         1 of 2
Redistribution in any form strictly prohibited.

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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        06-14-2001        High      Low     Volume Advance/Decline
DJIA    10690.13 -181.49 10868.48 10659.47 1.22 bln    926/2152	
NASDAQ   2044.07 - 77.59  2101.05  2043.36 1.73 bln   1010/2713
S&P 100   629.42 - 10.50   639.92   628.99   totals   1936/4865
S&P 500  1219.87 - 21.73  1241.60  1218.90           28.5%/71.5%
RUS 2000  495.38 -  9.74   505.12   494.79
DJ TRANS 2710.56 - 64.40  2779.68  2707.64
VIX        26.20 +  1.81    26.43    24.81
Put/Call Ratio      0.72
******************************************************************

Symantec And Micron Drop Bombs On The Rally!

Just when traders were breathing a sigh of relief over a decent
string of three positive days on the Nasdaq, Symantec and MU
dropped earnings bombs on the rally. The software company dropped
estimates in after hours from $.65 to $.40 and got hammered
for a -$13 drop. Micron added to the mushroom cloud with an
earnings miss of sizeable proportions. Joining the club was
chip maker Transmeta. Anyone who had doubts about the severity
of any remaining warnings should be converted by today's action.







The rally on Thursday was also rumored to be fed by some fund
re-balancing as we near the end of the quarter. The volume on
the NYSE was very heavy with almost 1.5 billion shares and
many of those shares were in large block market on close orders.
The rumor mill attributed this volume on several funds shifting
from growth to value in advance of the slow trading week expected
before the holidays. There was simply no reason and not enough
conviction to assume the volume was retail traders and cash
inflows to funds have not been enough to cause a buying surge.
If you look at the trading pattern during the day you will see
a surge of buying until after lunch and then constant selling
in the afternoon. This could be attributed to a large fund
making purchases in the morning, knowing they would drive up
prices and then dumping different stocks in the afternoon to
take advantage of the morning bump.

Now the news that will move the markets tomorrow. Symantec
warned after the close that first quarter expectations would
fall drastically short due to weakening "global" spending and
negative currency effects. They are now forecasting 39-47 cents
compared to estimates of as much as 67 cents. They also said
revenue would be flat. They are still expecting annual revenue
to grow slightly but investors fled anyway. The stock closed
over $61 but was trading as low as $45 in after hours. The
software sector is sure to react negatively to this on Friday.

Micron announced earnings in after hours and they were not
even close. They had a loss of -.50 compared to estimates of
a -.15 loss. The challenge for Micron is the glut of chips.
Each 64MB chip costs over $2 to produce and the current spot
market is about $.85. It is just like using dollar bills as
wrapping paper for each chip sold. I guess they plan on
making it up on volume!! The chips have been falling as much
as a nickel per day. Revenues fell -24% and they had to take
a huge write down on existing inventory. They said they saw
no signs of any recovery on the horizon. Kiss the semiconductor
sector goodbye for Friday. Ironically the horrible environment
will drive smaller companies out of the market and the big
companies like MU should recover and be stronger when the PC
sector recovers.

Transmeta was the big loser of the day after saying revenues
could drop as much as -45% due to decreased demand. The stock
fell from $12.50 at the close on Wednesday to almost $5 at
the close on Thursday. A -57% drop in one day.

Manugistics met analysts estimates of three cents but fell
-3.50 in after hours trading. They said demand was still
strong for their products and the drop may be in response
to the Symantec news. The stock had risen several dollars in
advance of the earnings report. Some analysts believe the
management at MANU is responding to the economy better than
many of its bigger competitors.

RIMM also announced earnings and failed to drop in after hours!
The reason...they matched forecasts and were optimistic about
sales going forward. They are not that big but they are
a high profile device maker. The BlackBerry wireless email
device gained 44,000 customers in the quarter and they said
they had several new agreements ready to announce with major
new providers that would expand their reach and sales. They
are one of the few companies who are forecasting gains in
the next quarter. Competitor HAND just cut its forecast and
PALM said in May that the fourth quarter loss would be double
previous projections.

Good news - bad news joke? The good news is that Lucent may
have found a buyer for its fiber division. The bad news - it
is CIEN and the price could be as low as $3 billion, less than
half of what Lucent expected to get just a month ago. Ciena
stock fell about a dollar on the news. Is it a bargain for
CIEN or a headache from which they will not recover? Analysts
think that the current fiber glut may be providing a too good
too be true deal for CIEN since conditions will eventually
recover. Will $3 billion get LU out of debt? Will LU trade
under $5 on the news? Time will tell.

Not all things were bad today. Eastman Kodak reaffirmed their
guidance and gained +1.66. GM and Ford also gained ground
after a report said June would be a very strong month for
car sales. Retailers gained ground on expectations that the
Fed is not done cutting rates as well as brokers on expectations
that the markets may recover soon. Good earnings from Lehman
and Morgan Stanley have helped spur financials in addition
to the rate cut fuel.

Jobless claims fell more than expected to only 400,000 for last
week and significantly below the 434,000 level reached the prior
two weeks. This could simply be a blip in the reporting as we
move into the summer season and more people are interested in
vacationing than filing for immediate unemployment. A positive
Philadelphia Fed index showed that the economy may have bottomed
and the outlook is improving slightly. This provided some comfort
to the markets but the real key is still the Fed meeting next
week.

The markets will probably trade in a range between now and the
Fed meeting next week. The Fed has got to be concerned that
there has not been more reaction to the prior rate cuts and
Fed watchers are hoping they will continue to act aggressively
with another -50 point cut. The worry exists that the Fed will
not want to continue to pour gas on the smoldering economy in
the hopes of avoiding an explosion. If the Fed only cuts by
25 points the markets could react negatively. This indecision
is what should keep the markets in a trading range. I mentioned
on Tuesday night that we had not seen a pre-Fed bounce yet and
after the last two days the oversold conditions that fed that
bounce have eased. Now there is nothing to fuel any buying
until after the meeting. Volume will continue to slow next week
as traders head out for the mid-week July 4th holiday. Some
will take a long weekend prior and some a long weekend after
with the result being a lethargic week.

The bottom line here is a yawn. In spite of the major earnings
problems after the bell today the futures are basically flat.
Curiously flat. You would normally expect a major miss by MU
to be a serious problem but everybody knew it was bad already.
The book to bill ratio improved slightly to a .46 in May from
44 in April. Grasping at straws? Maybe. Also, the number of
earnings warnings has actually SLOWED from the pace set last
quarter. This same time last quarter we had 598 negative and
113 positive announcements and so far this quarter we have had
550 negative to 149 positive. As I said on Tuesday there is an
undercurrent of bullishness and things are not as bad as they
seem on the surface. Advancers beat decliners again today and
the Russell-2000, a real leading indicator, is making a strong
recovery. A week of basing here will provide comfort to those
who are worried about further drops. There are fireworks in
our future, both literally and figuratively!

Got a couple hours to spare tonight? Jon Farnlof is presenting
a seminar tonight on "Day-trading for People With Day Jobs" at
9:PM ET. Click the link below to attend:

http://www.premierinvestorseminars.com/onlineseminars/johnf062101.asp

Enter passively, exit aggressively!

Jim Brown
Editor

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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
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Thr Jun-21 Day-trading for people with day jobs - Jon Farnlof
Sun Jun-24 Determining Support and Resistance - Derek Baltimore
Tue Jun-26 Assessing Risk with Point and Figure - Jeff Bailey

Click here for a detailed explanation of each:

http://www.premierinvestorseminars.com/seminarcalendar.asp


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

Survey Says
By Jeffrey Canavan

If you believe in polls, one conducted by Pew Research Center
revealed that 43% of America is satisfied with the current
direction of the country, and 52% are dissatisfied. Perhaps
President Bush's tax cut will help to change that?  Nope.  60% of
those surveyed said they haven't thought about it, and only 30%
said they were looking forward to it.  I guess most of that money
won't be finding its way into the markets.  Most likely that
money will be used to payoff some debt, since 30% of the people
reported that they have more debt than they can afford.  Maybe
that's why those bank stocks are doing so well.

While polls are nice, where are investors putting their money?
According to Thursday's action, it looks like Treasury Bonds
yielding 5.6% are becoming more attractive than shares of Lucent.
But then again, $5 worth of lottery tickets is more attractive
than a share of Lucent.  Seriously, as money continues to flow
into the safety of government bonds, that's less money available
to push stocks through some upcoming resistance levels.

Perhaps the amount of earnings warnings that is starting pile up
is chasing money into bonds.  It is now estimated that over 1,000
companies will issue earnings warnings this quarter, which would
eclipse the record of 935 that was set in the first quarter.
Investors have stayed the course through the first wave of
warnings this quarter, but how long can their bullish optimism
hold up?  It certainly isn't doing much to pull in that money
sitting on the sidelines.

Bullish money that is finding its way into stocks is being very
selective.  Banks and biotechs are attracting the most interest,
with some dabbling in software and semiconductors.  I believe the
third knight in Indiana Jones and the Last Crusade gives the best
bullish advice - choose, but choose wisely.

===

VIX
Thursday 06/21 close: 21.91

VXN
Thursday 06/21 close: 52.06

30-yr Bonds
Thursday 06/21 close:  5.63

Total Put/Call Ratio: .67

Equity Option Put/Call Ratio: .65

Index Option Put/Call Ratio:  .87

===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   33.60
Current close: 43.35

Volume/Open Interest
Maximum calls: 50/95,210
Maximum puts : 40/69,082

Moving Averages
 10 DMA 43
 20 DMA 45
 50 DMA 45
200 DMA 60

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   548.16
Current close: 642.97

Volume/Open Interest
Maximum calls: 650/4,990
Maximum puts : 600/6,341

Moving Averages
 10 DMA  637
 20 DMA  645
 50 DMA  645
200 DMA  684

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:   1081.19
Current close: 1237.02

Volume / Open Interest
Maximum calls: 1250/13,061
Maximum puts : 1200/24,709

Moving Averages
 10 DMA 1233
 20 DMA 1251
 50 DMA 1245
200 DMA 1310

===

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    9,047.56
Current close: 10,715.43

Volume / Open Interest
Maximum Calls: 110/17,244
Maximum Puts   108/18,069

Moving Averages:
 10 DMA 10,763
 20 DMA 10,898
 50 DMA 10,827
200 DMA 10,621

*****

CBOT Commitment Of Traders Report: Friday 06/15
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        +67110     +77601        -70183     -77490
Total Open
Interest %       (+25.01%)  (+33.61%)    (-9.04%)   (-10.71%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures
Open Interest
Net Value          -4305      -4251          +6239     +5829
Total Open
interest %      (-28.76%)    (-35.39%)      (+14.44%)  (+14.71%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100
Open Interest
Net Value         +2110      +1155         -10648    -11335
Total Open
Interest %        (+6.09%)   (+5.43%)     (-13.68%) (-18.42%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices: Commercials did lighten their net-short positions on the
S&P but not by a notable amount.

Gold: Commercials continued to lessen their net-short positions
dropping 32,000 contracts since May 29. Inflation concerns may
usher in a new wave of buyers and it looks like the Commercials
are thinking along those lines.

5/15: 13,915 contracts net-short
5/22: 65,250 contracts net-short
5/29: 68,443 contracts net-short
6/05  42,314 contracts net-short
6/12  36,544 contracts net-short

Data compiled as of Tuesday 06/12 by the CFTC.


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


CALLS:
*****

IDPH $68.61 -2.23 (-4.39) IDPH broke below its aggressive,
ascending support line Thursday, which coincided with the
stock settling below our stop at the $69 mark.  The
repercussions of Biotech sector earnings warnings recently
pressured IDPH lower Thursday.  As such, we're dropping the
play.  In terms of exit points, use either a quick pop back
above $70 to bail or cut losses if the stock falls below $68
Friday.

ENE $44.05 -1.75 (-3.21) ENE was a huge disappointment!  We
were looking for a continuation of the rebound off the $42.50
level to provide a short-term move up to the $50 level.  After
running into a brick wall at $46, the stock followed the broader
Energy sector lower, ending just above the $44 level.  To make
matters worse, volume was 75% above the ADV on Thursday.  We can
admit when we are wrong, and that was clearly the case with ENE.
Although our $43 stop has not been violated, there is no reason
to keep the play alive when it is clearly going against us.


PUTS:
*****

QLGC $53.69 +1.81 (+1.58) While it has been a fun play, QLGC is
no longer dancing to the bears' tune.  After several days of
consistent gains for those that bought puts on every rally, QLGC
started getting healthy yesterday afternoon.  It rallied into
the close and continued its winning ways today, closing solidly
above our $53 stop.  All good things must come to an end, but we
are sad to see it go.  We are consoled by the fact that we have
brought another successful play to an end.

TMPW $56.31 +0.66 (+0.70) It doesn't take a rocket scientist to
see that TMPW has reversed course, with the series of higher
lows and higher highs that has begun to appear on the intraday
chart over the past 2 days.  The broad markets are also trying
to recover, helping to buoy shares of TMPW.  The final push
this afternoon brought the stock up to close above our $56 stop,
forcing us to drop coverage this evening.


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The Option Investor Newsletter                  Thursday 06-21-2001
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:
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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.

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IndexSkybox.com:
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************************************************************


********************
PLAY UPDATES - CALLS
********************

RATL $26.53 -0.42 (+2.54) We thought RATL had a chance to
breakout above its key resistance range between $28 and $29
Thursday, but as it turned out, the stock pulled back on
lighter volume.  Perhaps Thursday's price action portends
consolidation in RATL before the stock attempts to breakout
again.  If that's the case, traders might look for an entry
on any further pullback, especially near support around the
$23 to $24 area, which is a significant demand level on the
point & figure chart.  Those looking to enter on any pullback
down to $23 or $24 can set a relatively tight stop just below
that general area in order to minimize risk and game a
potential rebound with greater reward.  Conversely, those
who would rather trade breakouts and momentum can still
wait for RATL to advance above the $29 level on heavy
volume.  However, make sure to confirm direction in the
GSO.X and see that it's above the 225 level before attempting
to trade any breakout in RATL.

ADBE $45.31 +0.01 (+5.75) Weary from its rapid rise, ADBE spent
its first day on the call list treading water and feebly
attempting to move higher.  Although the bulls did manage to
briefly crest the $46 level, they couldn't hold the gains and
settled for a one penny advance at the close.  While it was too
bad to see our play fail to advance, it was encouraging to see
a lack of profit taking.  As the FOMC meeting on Tuesday
approaches, look for ADBE to take a serious run at the $48
level.  In the meantime, entries can still be harvested on a
bounce near the $43 support level, with significant support
below that at the converged 10-dma ($41.81), 30-dma ($41.92)
and 50-dma ($42.41).  Software stocks are still attracting
buyers, and now that the Software index (GSO.X) has popped
through it's own 50-dma ($222.74), look for the index to lead
ADBE higher.  Momentum players will want to initiate new
positions as the stock moves through the $46.25 level on
strong volume, or even through the formidable $48 level.  Keep
stops set at $40.

CB $77.98 +0.11 (-1.02) Just like clockwork, CB dropped to the
ascending trendline ($77) at the open, only to quickly rebound
and spend the rest of the day bumping its head on the $78
resistance level.  There just wasn't enough buying interest to
buoy CB higher, despite a solid rally in the Insurance index
(IUX.X).  This could be an early sign that our play is getting
tired, so cautious investors may want to tighten their stops up
even more than the $76 level at which our stop currently rests.
On a more upbeat note, CB, could just be gathering its strength
in order to make a concerted assault on the $80 level.  A
renewed bounce at the $77 level would make for an attractive
entry, but if we don't get that, the best alternative is to wait
for a breakout over the $80 level before initiating new
positions.  Keep a sharp eye on the IUX index.  Given the
breakout in today's session, it should help to drag CB along
for the ride.

FRX $72.74 -0.06 (+2.51) As Technology and Financial stocks
regained favor with investors, it was encouraging to see the
Pharmaceutical index (DRG.X) add to its recent gains.  Despite
the fact that FRX gave back a little ground, the stock managed
to hang onto the lion's share of Wednesday's gains.  With the
DRG index coiling for a break to higher ground, FRX will likely
be propelled higher as well.  Dips to the $72 intraday support
level are buyable, as are solid bounces at the long-term $70
support level, also the location of our stop.  A volume-backed
move through the $74 resistance level will provide a chance
for momentum players to get onboard, but be mindful of the
congestion zone between $74-76.  Once free of that obstacle,
FRX will be free to challenge its recent highs near $78.

GE $51.25 +0.48 (+2.44) The bulls finally chased the bears off
the playground yesterday, launching GE through the formidable
$50 resistance level, and they added to those gains today.  Now
that GE has gained the high ground above the 200-dma (currently
$49.60), buyers are setting their sights on the May highs near
$53.50.  Adding to the bullish outlook is volume which has been
on the rise the past few days, reaching 60% above the ADV in
today's session.  With the recent breakout, we are ratcheting
our stop up to the $49 level.  Consider intraday dips to the
vicinity of $50 as attractive entry opportunities.  If the
broader market continues to advance into the FOMC meeting next
week, momentum traders may get the next high odds entry point
as GE pushes through its next level of intraday resistance at
$52.

QCOM $52.50 +4.05 (+3.15) What a day the bulls had with QCOM
on Thursday.  After descending to just touch the $48 level on
Wednesday (recall that $48 was the bearish target generated on
the Point and Figure chart), buyers drove the stock sharply
higher today on strong volume.  This may have just been a
reaction to the news of QCOM's strategic alliance with HTC
Corp. of Taiwan, granting the latter Taiwan's first second and
third-generation CDMA license.  While investors took this as
news that wireless growth is moving forward, we don't want to
forget that our target in the play is only $55.  Due to the
strong move today, we are raising our stop to $49.  Target
intraday dips to support between $49-50 for initiating new
positions, or wait for a push through the $53 resistance level.
If QCOM reaches the $55 level tomorrow, we would recommend
taking profits, as that level corresponds to the 38% retracement
of the recent price decline.


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

NETE $33.79 +3.10 (+0.94) Although NETE traded above our stop
at $34 on an intraday basis Thursday, its settlement below
that level is the reason we're maintaining bearish coverage
on the stock.  In addition, the stock rolled over near a
significant resistance level around $35, which is the site of
a key retracement level.  This development suggests that
sellers are still very present in the stock, especially at
higher levels.  Going forward, any subsequent rollovers
near $35 would offer a potentially low risk/high reward entry
point.  For those who prefer trading in the direction of the
trend, look for entry points if NETE falls back below the $31.50
level.  From there, target $28 on the downside.  However, if
NETE does settle above the $34 level Friday, we will drop the
play so take that much into consideration going into Friday's
trading.

CMVT $53.79 +0.66 (-6.14) You would think with the NASDAQ
closing in the green for 2 days in a row that CMVT would stage
at least a minor recovery, and you would be right.  Although it
managed to reverse its recent losing ways, the damage was done
on Tuesday when the stock closed under the $55 level for the
first time since April 9th.  CMVT was held to a fractional gain
on Thursday, and it didn't even challenge the $55 level, now
resistance.  Volume has continued to increase throughout the
week and is now running 40% over the ADV.  With our stop still
resting at the $56 level, we would love to see an intraday rally
roll over in the $55-56 area, providing for attractive entry
points.  Of course, further weakness is playable as well, with
new entries materializing as CMVT falls through the $52 support
level, preferably with volume still on the rise.

EMLX $32.81 -1.50 (-0.07) Even a rally on the NASDAQ wasn't
enough to allow EMLX to post two positive days in a row.
Buyers continued to push the stock higher this morning, but
the declining volume was our first clue that it wouldn't have
much staying power.  Sure enough, the $35 level was a wise level
to place our stop, as it turned back the bulls.  Instead of a
gain, EMLX suffered a 5% loss today, and the way volume was
rising into the close, it looks like we could see a continuation
of this pattern in the morning.  Any rebounds into the $34-35
range still look attractive for new entries, but keep stops set
at $35.  A close above that level will have EMLX ejected from
the playlist.  With the stock weakening into the close, weakness
in the morning could deliver additional entries as selling
pressure pushes the price first below $32 and then $30, the site
of the recent lows.  Once this level is breached, $26.50 will be
the next target for which the bears will shoot.

SRNA $28.90 +1.63 (+1.15) The recent rally in Software stocks
finally reached traders of SRNA and the stock rallied sharply
on Thursday, adding more than 6% by the closing bell.  Despite
this solid advance, it came on only half the average daily
volume and the stock is still resting below our $30 stop level.
The bulls did make some progress though, as they pushed SRNA to
close just below $29, it's highest close in over a week.  The
rally in the Software index (GSO.X) is truly lifting all boats,
so if it continues, SRNA could find its way to the drop list
this weekend.  However, a weakening of the sector could give us
just what we're looking for - a rollover in the $29-30 range and
on increasing volume.  There is mild support at $27, followed by
a triple bottom at $25.50.  A move south of either of these
levels will open the door for new entries as well.


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NEW CALL PLAY
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MEDI - MedImmune $47.48 +2.71 (+5.24 this week)

MedImmune Incorporated is a fully integrated biotechnology
company focused on developing and marketing products that
address medical needs in areas such as infectious disease,
immune regulation and cancer.  Headquartered in Gaithersburg,
Maryland, MedImmune has manufacturing facilities in Maryland
and the Netherlands.

The biotech sector, despite recent warnings, continues to
attract capital.  That fact could stem from the biotech sector's
uncorrelated nature to the economy.  Or, it could be a function
of increased liquidity in the system, with biotech issues a
target of that capital.  Either way, the Biotechnology Sector
Index (BTK.X) continues to trade well relative to the Nasdaq.
And since its bottom in late March, MEDI has traded well relative
to the BTK.  The stock recently bounced from a key demand level
at $40, and has traded over $7 higher since then.  We appreciate
the fact that MEDI has had a nice run, and concede that a
pullback may occur in the short-term.  Nevertheless, the
demand for MEDI currently outweighs supply noting its price
action recently and the excessive volume on which the stock
advanced Thursday.  In gaining entry, momentum traders might
look for a continued advance Friday and target the $50 level
on the upside for a quick short-term trade.  But, make sure
to confirm direction in the BTK and look for that index to
advance above the 625 level.  If your style is more conducive
to entering on pullbacks, look for MEDI to retreat first to
the $44 level, or lower near $42 - our stop and its 10-dma.
Our approach leaves a lot of room between support and current
levels, so be patient and trade according to your style.

BUY CALL JUL-40 MEQ-GH OI=3262 at $8.50 SL=6.00
BUY CALL JUL-45*MEQ-GI OI=2107 at $4.70 SL=2.75
BUY CALL JUL-50 MEQ-GJ OI=1097 at $2.15 SL=1.00
BUY CALL AUG-45 MEQ-HI OI=  20 at $6.10 SL=4.00

SELL PUT JUL-45 MEQ-SI OI= 157 at $2.00 SL=3.75
(See risks of selling puts in play legend)

Average Daily Volume = 6.02 mln



************
NEW PUT PLAY
************

NVDA - NVIDIA Corporation $91.71 +1.70 (-3.34 this week)

NVIDIA Corporation designs, develops and markets 3D graphics
processors, graphics processing units and related software that
set the standard for performance, quality and features for
every type of desktop personal computer user.  Used in a wide
variety of application including games, the Internet and
industrial design, the company's products were the first to
incorporate a 128-bit multi-texturing graphics architecture.
This design approach delivers to users a highly immersive,
interactive 3D experience with compelling visual quality and
stunning effects at real-time frame rates.  NVDA sells its
products to major PC manufacturers such as Compaq, Dell,
Gateway, Hewlett-Packard and IBM.

Defying the weakness in the PC sector, shares of NVDA have been
on a nearly meteoric rise since the first of the year, more
than tripling in price.  Having built itself into the leading
name in PC-video cards, NVDA has been a gold mine for its
investors over recent months.  This falls into the subject of
"all good things must come to an end", at least for now.  The
real signal that the tide was turning against NVDA investors
was the double top at $100, completed two weeks ago.  This was
followed on Monday by the sharp violation of the 14-week
ascending trendline, which brought the stock down to challenge
the 50-dma (now at $86.39) before recovering with the broader
market.  A quick look at the daily candle chart reveals some
serious overhead resistance at the $95 level, making it an
easy decision to place our stop at $96.  We are looking for a
failed rally in the $94-95 level to provide a truly juicy entry
point before the next leg down.  Look for additional entry
points to materialize as NVDA falls below support, first at $88
and then $83, near Wednesday's lows.  Based on recent support
and the Point and Figure chart, our first price target will be
in the $82-83 area.

BUY PUT JUL-95 RVU-SS OI= 402 at $9.80 SL=7.00
BUY PUT JUL-90*RVU-SR OI=1107 at $7.10 SL=5.00
BUY PUT JUL-85 RVU-SQ OI=1170 at $5.20 SL=3.25

Average Daily Volume = 5.48 mln



*********************
PLAY OF THE DAY - PUT
*********************

CMVT - Comverse Technology $53.79 +0.66 (-6.14 this week)

Comverse is the world leader in multimedia telecommunications
applications.  Through its Comverse Network Systems division,
the company markets its Access NP and TRILOGUE INfinity Enhanced
Services Platforms, which enable wireless, wireline, and
internet companies to offer enhanced telecommunications services
to business and residential customers.  Among these services
are voice and fax messaging, call answering, and web
information services.  Comverse also offers Intelligent
Peripheral/Service Node, supporting next-generation personal
communication services such as pre-paid wireless, mobile
number portability, call screening, and mobile attendant
functions.

Most Recent Write-Up

You would think with the NASDAQ closing in the green for 2 days
in a row that CMVT would stage at least a minor recovery, and
you would be right.  Although it managed to reverse its recent
losing ways, the damage was done on Tuesday when the stock
closed under the $55 level for the first time since April 9th.
CMVT was held to a fractional gain on Thursday, and it didn't
even challenge the $55 level, now resistance.  Volume has
continued to increase throughout the week and is now running
40% over the ADV.  With our stop still resting at the $56
level, we would love to see an intraday rally roll over in the
$55-56 area, providing for attractive entry points.  Of course,
further weakness is playable as well, with new entries
materializing as CMVT falls through the $52 support level,
preferably with volume still on the rise.

Comments

Despite the ramp in networking related issues Thursday, CMVT
traded relatively flat.  Its underperformance may portend
continued weakness Friday if the Nasdaq pulls back from its
recent rally.  CMVT has found support at $51.95 and $51.93 in
the past two sessions.  Look for the stock to break below that
level Friday if the Nasdaq does pullback and target $50 on the
downside.

BUY PUT JUL-55 CQV-SK OI=4473 at $5.40 SL=3.50
BUY PUT JUL-50*CQV-SJ OI=1666 at $3.00 SL=1.50
BUY PUT JUL-45 CQV-SI OI= 718 at $1.65 SL=0.75

Average Daily Volume = 5.52 mln



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