The Option Investor Newsletter Monday 06-25-2001 Copyright 2001, All rights reserved. 1 of 1 Redistribution in any form strictly prohibited. To view this email newsletter in HTML format with embedded charts and graphs, click here: http://www.OptionInvestor.com/htmlemail/4981_1.asp Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** 06-25-2001 High Low Volume Advance/Decline DJIA 10504.22 -100.37 10644.24 10468.12 1.03 bln 1302/1780 NASDAQ 2050.87 + 16.03 2060.06 2026.40 1.48 bln 1893/1882 S&P 100 632.03 - 4.12 640.05 629.24 totals 3195/3662 S&P 500 1218.60 - 6.75 1231.50 1213.60 46.6%/53.4% RUS 2000 484.19 - 4.46 490.20 483.75 DJ TRANS 2646.31 - 30.18 2685.98 2644.03 VIX 23.25 + 0.75 23.82 22.26 Put/Call Ratio 0.63 ****************************************************************** Tedium is the Worst Pain It was John Gardner's monstrous character who uttered the preceding pontification in his book titled Grendel. I think the monster's opinion aptly applies to the current psychology among market participants. We need look no further than Monday's tepid volume across the major market averages to discover the lack of commitment among participants. Trading on the New York Stock Exchange (NYSE) barely topped 1 billion shares. And a mere 1.5 billion shares exchanged on the Nasdaq. Not only was trading volume light, but the Nasdaq Composite (COMPX) bounced within an extremely narrow range of 34 points. In a word: tedious. The Dow Jones Industrial Average (INDU), on the other hand, saw a bit more volatility, but more on that later. The narrow range in the Nasdaq Composite Monday was a product of several factors. For starters, our all-too-familiar 2060 resistance level capped the COMPX's early morning rally attempt. Further, sellers did not possess the conviction to take the COMPX any lower than its intraday low last Friday around the 2025 level. And finally, there's the Fed factor. Over the last three trading days, the COMPX has been capped by the 2060 level, while finding support around 2025. Its tight trading range has made it very difficult to discern an edge on the COMPX, let alone a trend to trade. Perhaps the best strategy to cope with the recent narrowness of the COMPX is to buy near strong support levels and sell near strong resistance levels. But that strategy does require quite a bit of nimbleness and will lose its efficacy if the COMPX breaks one way or the other this week. For momentum or trend traders who prefer breakouts, I'm once again going to turn to the 2060 resistance level as the area to key off. If the COMPX can trade and subsequently CLOSE above the 2060 level, I think it will have a good shot at working its way up to at least 2100, possibly between 2120 to 2150. (2120 is significant because that is the site where the COMPX broke down below the neckline of its head-and-shoulders and 2150 is the current site of that neckline.) For traders leaning bearish, in the very short-term, I think the 2025 support area in the COMPX, which has held for the last three days of trading, is worth monitoring. But, keep in mind, just below that general area lies the psychological support level of 2000, reinforced by the technical support of 1975. As I alluded to earlier, until the COMPX definitively breaks in one direction, the recent price action lends to patience, however painful. While the COMPX spent Monday meandering between technical levels, the sellers ran rampant in the Dow. The INDU broke below the 10,560 area - an area that had attracted buyers in recent sessions - early Monday morning and subsequently traded below the critical 10,500 level, before rebounding into the close. (On a side note, the breakdown in the Dow below the 10,560 area Monday illustrates how to gauge key technical levels in the current market environment and trade off of those levels. That is, have your action points in place and trade what the market gives you.) Coming away from Monday's trading, there are two observations I'd like to lay forth concerning the Dow. The first is that its break below 10,500 is most disconcerting and may pressure the broader markets. But the second, and perhaps more encouraging, point is that the Dow was able to claw its way back above 10,500 into the close of trading Monday. That was definitely a psychological victory for the bulls, despite the Dow shedding 100 points. As the Daily Chart of the Dow clearly depicts below, there's not much support below the 10,500 level, except for two lows around the 10,440 level traced in late April. Hence the significance of 10,500, including the fact that it is the site of the Dow's 38.2% retracement level. Below 10,500, however, the next meaningful support that I can find is around 10,230 - its 50% retracement level. The Dow could very well bounce from the 10,500 level this week and, in fact, may trace a relative low at that site. So how you trade the Dow and its 30 components right now is a matter of style and risk tolerance. Dip buyers can scale into relatively strong Dow stocks at the 10,500 level with tight mental stops just below, or the shorts can look to sell relatively weak Dow stocks on any further decline below 10,500. And to get a better feel for which direction the Dow might trade, we can turn to the price action in the S&P 500 (SPX.X). The S&P's advance above the 1225 resistance level late last week proved to be a bull trap, or head fake. The S&P settled right on the 1225 level Friday, but Monday's weakness across the Bank, Retail, Cyclical and Drug sectors dragged the broad market index below 1225. We're now left with minor support around the 1210 area, and major support at 1200. But again, monitoring the direction in the S&P should help to better gauge the Dow. To segue from the broader market, the CBOE Internet Index (INX.X) rebounded Monday after its recent two-week pullback. In a research report, U.S. Bancorp Piper Jaffray Net analyst, Safa Raschtchy, opined that Yahoo (NASDAQ:YHOO) would beat the high-end of estimates for its current quarter. The high-end, by the way, is pegged at 1 cent per share in earnings and $184 million in revenues. Nonetheless, shares of Yahoo did boost the INX and carried several Web shares higher. The INX finished 6 percent higher, led by the nearly 14 percent gain in shares of Yahoo and substantial gains in shares of eBay (NASDAQ:EBAY), HomeStore.com (NASDAQ:HOMS) and DoubleClick (NASDAQ:DCLK), among others. The INX has been extremely volatile over the past two months relative to the COMPX and may offer trading opportunities for both bulls and bears in the short-term. My sense is that much of Monday's advance in the INX stemmed from frantic short covering, especially noting the closes in Yahoo, eBay and DoubleClick - parabolic, baby! Each of the four aforementioned stocks have fairly high short interest, and Safa Raschtchy's positive comments on Yahoo induced fear into the bears. The move in the INX Monday could very well be perpetuated this week if the shorts remain on edge, so it may be worth while to monitor the Internet complex this week. The Biotech Sector (BTK.X) fared far worse than its Nasdaq cohort in the Internet sector. That's because Biogen (NASDAQ:BGEN) was the recipient of several downgrades, following its detailing of disappointing results last Friday for one its drugs under development for the treatment of psoriasis. Those results released last Friday prompted a slew of downgrades Monday morning which continued to pressure shares of Biogen. The stock finished $5.46, or 9 percent, lower - shares have lost over $12 in just the last two trading days! The Biogen-related selling across the biotech sector has weighed heavily on the BTK, which had recently been a bright spot within the tech sector. For those who monitor the BTK closely, keep a very close eye on that 575 level! The warnings season rolled on after the bell, with Applied Micro Circuits (NASDAQ:AMCC) reporting that it would post a net loss of between 4 to 6 cents for its current quarter, while its previously lowered guidance had set forth expectations for 2 cents per share in profits. The Applied Micro warning is not at all surprising. Its biggest customers are: Alcatel (NYSE:ALA), Cisco (NASDAQ:CSCO), JDS Uniphase (NASDAQ:JDSU), Juniper (NASDAQ:JNPR), Nortel (NYSE:NT) and Tellabs (NASDAQ:TLAB). The vast majority of the aforementioned have already warned so the impact of Applied Micro's news may be minimal. Nevertheless, keep in mind that Applied Micro competes with the likes of PMC-Sierra (NASDAQ:PMCS), Triquint Semiconductor (NASDAQ:TQNT), Vitesse (NASDAQ:VTSS) and Maxim Integrated Products (NASDAQ:MXIM). Applied Micro shed $1 in the after hours session. To revisit my ranting, the tedium we've been enduring recently is, in large part, a product of the Federal Reserve's meeting this week, which begins tomorrow (Tuesday). It's a two day meeting that culminates with the Fed announcing its decision on short-term interest rates Wednesday afternoon around 2:15 p.m. EST. Currently, the Fed Funds target rate is set at 4.00 percent. And the market, along with those dismal scientists (economists), are divided between whether or not the Fed will cut by 25 or another 50 basis points. This event Wednesday, in my very humble opinion, could break the Nasdaq out of its trading range. My sense is that a 25 basis point cut would cause a sell-off while a 50 basis point cut would rally the Nasdaq. But, I'm sure that opinion is shared by many market participants so I don't know how much credence it garners. In addition to the actual announcement on the cut, the market will be listening for guidance on whether or not any further cuts lie ahead. There are innumerable scenarios that we could set forth concerning the Fed announcement Monday and the market's reaction. What it boils down to is knowing your risk tolerance and time frame and, more importantly, having a strategy in place for multiple scenarios. Finally, recall the last rate cut. Remember how the Nasdaq and Dow faded following the cut on May 15th? And remember the following day and the massive advance across the broader markets...Innumerable! For those unfamiliar with the ways of point & figure charting, especially the intricacies of the awe-inspiring Bullish Percent, I highly recommend checking out Jeff Bailey's Online Seminar on these very topics Tuesday night. You can sign up through the following link: http://www.premierinvestorseminars.com/onlineseminars/jeff062601.asp Eric Utley Editor www.OptionInvestor.com ************************************ New Online Seminar Schedule for July ************************************ Many different seminars from the comfort of home! Imagine being able to learn the tips and tricks of investing without leaving your home. You can do that with our new online seminar product. Taught by the professional traders you read every day and now those traders are available to answer your questions. The seminars average 2 hours and are interactive. You will be able to ask questions and the presenter will answer your questions in real time with charts and diagrams. Click here for the complete list! http://www.premierinvestorseminars.com/seminarcalendar.asp **************** MARKET SENTIMENT **************** The Market is a Paine By Jeffrey Canavan According to Paine Weber, their Index of Investor Optimism fell to a four-year low. The reading came in at 104, which was well below May's reading of 113. Basically, only 44% of the sample population is optimistic, compared to a reading of 51% last month. The decline was mostly attributed to rising concerns over energy prices. The Mickey Indicator, which measures the attendance at Walt Disney World as a gauge consumer sentiment, is currently down 7% for the current quarter. On the positive side, sales of previously owned home increased by 2.9%, while analysts were only expecting the number to come in flat. The real estate market continues to hold up tremendously well in the face of a slowing economy. Overall the market sentiment remains pensive ahead of the Fed's announcement on Wednesday. Perhaps it's just me, but it seems that there is a lot less hoopla ahead of this Fed meeting. Could it be that we've become numb to the Fed's rate cuts? === Commitments Of Traders Report: 06/19/01 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange. 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 tend to be wrong. === S&P 500 Commercials Long Short Net %Change Open Interest 6/05/01 323,109 400,509 (77,490) 13.1% 510,122 6/12/01 353,074 423,257 (70,183) (9.4%) 562,025 6/19/01 301,376 371,121 (69,745) (0.6%) 457,618 Most bearish reading of the year: (111,956) - 3/6/01 Most bullish reading of the year: (41,144) - 5/1/01 Small Traders Long Short Net %Change 6/05/01 154,233 76,632 77,601 10.5% 6/12/01 167,720 100,610 67,110 (13.5%) 6/19/01 128,296 56,038 77,258 (7.7%) Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 91,122 - 3/06/01 Comments: We've changed the way we present this data to give readers more information, but if the shock is too much, please let us know. We've left in the previous two weeks data to give traders a better feel for how the data is trending. For example, Commercial are still net bearish by 69,745 contracts, but if we look at the past two weeks we can see that is a 10% improvement from the net bearish reading of 77,490 on 6/05/01. The next piece of data we've added is the number of contracts long, and the number of contracts short. This helps to give readers an idea of how the change in net position came to be. This week the number of commercial short positions dropped from 423,257 to 371,121. Things are looking good on the surface, since the institutions are shorting less. But if we look at the number of commercial long positions we can see that number also dropped from 353,074 to 301,376. So the reduction of both long and short positions is more of a reflection of market indecision. That brings us to our next new column, Open Interest. Open interest is the total number of positions outstanding (keeping in mind that one long contract and one short contract equals one position). The general theory behind this data is that a rising market should be supported by rising open interest (new positions being added). The other new column is just the percentage change in net position. Changes of 5% or greater in commercial net position are generally regarded as significant. Lastly, we've added the most bullish and bearish readings of the year to give readers an idea of where we stand from a historical perspective. === Nasdaq-100 Commercials Long Short Net %Change Open Interest 6/05/01 25,098 36,433 (11,335) (1.5%) 51,660 6/12/01 33,586 44,234 (10,648) (6.1%) 68,245 6/19/01 23,480 34,097 (10,617) (0.3%) 47,202 Most bearish reading of the year: (15,521) - 3/13/01 Most bullish reading of the year: (1,825) - 1/02/01 Small Traders Long Short Net %Change 6/05/01 11,217 10,062 1,155 (60.3%) 6/12/01 18,374 16,264 2,110 82.7% 6/19/01 14,284 8,403 5,881 178.7% Most bearish reading of the year: (1,028) - 1/02/01 Most bullish reading of the year: 8,460 - 3/13/01 Comments: We can see that commercial traders have been slowly reducing their net bearish position, but the reduction in both long and short positions tells us that there is a general lack of conviction in either direction. Small traders, ever optimistic about technology, and have increased their net bullish stance by 178%. Hmmm, if they tend to be on the wrong side? === Dow Jones Industrials Commercials Long Short Net %Change Open Interest 6/05/01 22,717 16,888 5,829 0.3% 35,257 6/12/01 37,886 22,611 6,239 6.6% 37,886 6/19/01 22,611 12,346 1,876 (232.6%) 22,611 Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 8,925 - 5/22/01 Small Traders Long Short Net %Change 6/05/01 3,881 8,132 (4,251) (0.6%) 6/12/01 5,332 9,637 (4,305) 1.3% 6/19/01 3,884 7,555 (3,711) (13.8%) Most bearish reading of the year: (7,572) - 5/08/01 Most bullish reading of the year: 1,909 - 1/16/01 Comments: Ahhhhhhhhhh!!!!! A 232.6% drop in the net bullish position of commercial traders! Actually the percentage change can be a bit deceiving since these contracts are thinly trade when compared to the S&P 500, but nevertheless the trend is disturbing. Notice how institutions started dumping their long positions in the Dow just before the likes of Merck and Alcoa started to warn about earnings. ************* NEW CALL PLAY ************* MVSN - Macrovision Corp. $60.20 +1.65 (+1.65 this week) Helping to keep intellectual property rights intact, MVSN designs, develops and licenses copy protection and rights management technologies. Integral to the entertainment industry, the company provides copy protection for major Hollywood studios, independent video producers, PC games, digital set-top box manufacturers and digital pay-per-view (PPV) network operators. In addition to helping content owners protect content such as videocassette, DVD and PPV movies, and PC games, MVSN also provides the ability to electronically market that content in a secure manner. Readers that follow the intraday updates got a leg up on our MVSN play an hour before the market closed, as my colleague Jeff Canavan highlighted the compelling technical developments on the daily chart. In case you missed it, here are the salient details. The top of the bullish wedge is resting at $61 and MVSN is just on the verge of cresting that level. The bulls have been running into resistance between $61-62 since the middle of April, owing to the fact that it is the 38% retracement of the stock's decline that began around Labor Day last year. A quick glance at the Point and Figure chart reveals a triple top at that level. A breakout above the $62 level will finalize the triple-top breakout and open the door for the bulls to drive MVSN towards the $70 resistance level, also the site of the 50% retracement. The Point and Figure chart demonstrates the breakout of the bullish triangle very effectively, showing the recent breakout that occurred as the stock cleared $58. This most recent breakout gives us a convenient location for our stop ($55), just above the converged 10-dma, 30-dma and 50-dma near $56. This will be a good level for dip buyers to initiate new positions. While a solid bounce at $56 or even $58 would be a bargain of an entry point, the highest odds for success will come from waiting for the bulls to push through the $62 level before initiating new positions. BUY CALL JUL-60*MVU-GL OI=1081 at $4.70 SL=2.75 BUY CALL JUL-65 MVU-GM OI= 190 at $2.70 SL=1.25 BUY CALL JUL-70 MVU-GN OI= 650 at $1.45 SL=0.75 BUY CALL AUG-65 MVU-HM OI= 51 at $4.70 SL=2.75 BUY CALL AUG-70 MVU-HN OI= 1 at $2.15 SL=1.00 SELL PUT JUL-55 MVU-SK OI= 352 at $1.75 SL=3.50 (See risks of selling puts in play legend) Average Daily Volume = 738 K http://www.OptionInvestor.com/charts/chart.asp?symbol=MVSN ************ NEW PUT PLAY ************ MERQ - Mercury Interactive $52.37 -2.10 (-2.10 this week) As a provider of integrated performance management solutions that enable businesses to test and monitor their Internet applications, MERQ is looking for growing e-commerce demand to continue to fuel its business. The company's products perform such tasks as analyzing and eliminating Web site performance bottlenecks and automating quality assurance testing. MERQ's client base spans a wide range of industries including Internet companies such as Amazon.com and America Online, infrastructure companies Ariba and Oracle, as well as Apple Computer, Cisco Systems and Ford Motor Company. Despite last week's strength in the Software sector and stellar gains today by Internet stocks such as YHOO and EBAY, MERQ just can't seem to attract any buying interest. A quick look at the daily chart reveals a deteriorating technical picture with decreasing highs and lows in price. The oscillators mirror that weakness, having been nowhere near overbought territory in over a month. With clearly defined support and resistance levels, MERQ gives us a trade setup that allows us to control our risk - a windfall in this type of market. After falling through the $58 support level, we can see that this level has become resistance again. Target shooters can look to initiate new positions on a bounce from this level or below with the understanding that a close above $58 will trigger our stop and have us exiting the play. Trend-followers will want to wait for MERQ to fall through the $50 support level, as that will complete the descending triple-bottom breakdown on the Point and Figure chart. That breakdown will open the door for a test of the $44-45 support level, providing a quick profit for vigilant traders. Due to its relative weakness with respect to the broader Technology market, poor reception of the Fed's decision on interest rates tomorrow could have the stock trading at or even below those levels before the week is out. BUY PUT JUL-55 RQB-SK OI=2976 at $6.60 SL=4.50 BUY PUT JUL-50*RQB-SJ OI=2633 at $4.00 SL=2.50 BUY PUT JUL-45 RQB-SI OI= 710 at $2.25 SL=1.25 Average Daily Volume = 4.55 mln http://www.OptionInvestor.com/charts/chart.asp?symbol=MERQ ***************** STOP-LOSS UPDATES ***************** OPWV - call Adjust from $24 up to $25 RATL - call Adjust from $23 up to $24 HGSI - put Adjust from $66 down to $64 NETE - put Adjust from $34 down to $32 ************* DROPPED CALLS ************* No dropped calls tonight *********** DROPPED PUT *********** No dropped puts tonight ************** TRADERS CORNER ************** Simplify Technical Analysis By Using Divergence By Mark Phillips When I first began to study the Financial markets, I immediately fell into the familiar pattern that I learned while studying Engineering so many years ago. If there is a problem, there must be a solution, and not only that, we should be able to describe that solution with one or more closed-form equations. It should be entirely mathematical and predictable, right? Naiveti is not restricted to youth, it seems. So off I went, purchasing the tools I would need for my endeavor, a computer, several charting programs that promised to hold the key perpetual winning trades, a data service, innumerable books on Technical Analysis from the likes of Jack Schwager, John Murphy and Martin Pring. Surely all the wisdom of the ages and the secret to plucking money out of the market would be contained within my new acquisitions. All I had to do was find the nuggets and meld them together into a trading strategy. I started first with the computer programs, as it seemed the logical point to begin. Afterall, I was an engineer who worked constantly with computers, and hadn't found the computer program I couldn't lick, WITHOUT reading the manual. How's that for foolish arrogance! It didn't take long to figure out that I had dived into a world with its own language, and I needed a dictionary in a big way. Each program had numerous ways of displaying price charts, each with its own unique advantages, and literally hundreds of technical indicators, all of which could be reprogrammed, modified and combined into the "perfect trading system". So I did what any self-respecting engineer would do, I diligently read and reread all my new books, and actually read the manuals for the computer programs. Gradually I came to understand what I had my hands on, and how to use it. Terms like Stochastics, RSI, MACD, Bollinger Bands, and On Balance Volume began to make sense to me, and what I discovered was that while there were literally hundreds of indicators available, I could only use a few at a time. I might be able to put 35 technical studies on a chart, but there is no way to make sense of the resulting jumble of criss-crossing squiggles on the page, much less use them to determine a logical and well considered plan of action for trading. Besides that, it is often possible to put enough indicators on a chart that you get strong signals both to the long and short side -- at the same time!! Now that can really leave you scratching the old noodle! So now I needed a way to boil all my newfound knowledge down to the 2 or 3 magic indicators that would make successful trading as easy as rolling off a log. I really liked the patterns I saw from oscillators like Stochastics, Momentum, MACD and RSI, but there were dozens of these oscillators. They all painted a similar picture; some were more responsive, while others were more consistently accurate. I needed to choose 2 or 3 and learn how to use them. I finally settled on Stochastics and RSI, but the long list of losing trades told me there was still something missing. I went back to my Technical Analysis books and began searching for some nugget of wisdom that I had somehow overlooked. Periodically the term 'Divergence' would pop up with an accompanying chart or two, but it seemed rather subjective to me. Then I stumbled across a book by William Blau titled "Momentum, Direction and Divergence." Inside the dust jacket, I noted that Mr. Blau was an electrical engineer -- hmmm, birds of a feather. So I figured, if divergence is important enough to be listed in the title of a technical analysis book written by a fellow engineer, there must be something to it, right? Well, after reading the book, I have to report that I didn't find the holy grail, BUT it did convince me that I needed to learn more about the concept, believing that it was one of the final obstacles standing between me and trading success. After considerable study, and endless hours of staring at and manipulating charts and technical studies, the fog began to clear and I could see the fruits of my labors. Divergence is a subjective tool, requiring some interpretation, which is probably why it took so long to sink into my thick skull. Once the light went on, the pieces began to fall into place almost by themselves. I finally settled on two oscillators, Stochastics and RSI, and determined to only place trades based on these indicators when they both gave me a strong divergence signal. Now that you've learned more about my journey than you probably cared to know, would you like to see what I learned? Well, I'm going to show you anyways. Let's start with a basic description of what Divergence is. Divergence consists of higher highs (or lower lows) on the price chart that are not matched by higher highs (or lower lows) on the oscillator. It can be viewed the other direction as well. Divergence also consists of higher highs (or lower lows) on the oscillator that are not matched by higher highs (or lower lows) on the price chart. What this Divergence tells us is best described with annotated charts, so for clarity, let's look at a couple of examples. To keep the charts as uncluttered as possible, I will only use the Stochastics oscillator in these examples. But bear in mind that divergence can be used with any oscillator that bounces between overbought and oversold extremes. It sure looks like some serious weakness is brewing in the NASDAQ back around late January. How valuable would that little observation have been back then? Even though oscillator inflection points that occur in either the overbought or oversold regions are stronger than those in between these levels, both can provide excellent signals. With Stochastics, I use the Slow Stochastics line (shown in red) due to the fact that it is smoothed and provides more consistent results. Let's see if maybe we can find a slightly more positive example. Let's take a peek at the daily chart for AOL Time Warner (NYSE:AOL), and see what it tells us. With a lower low in price and a higher low on the Stochastics oscillator, we have a strong case for bullish divergence here in early April. And true to form, it paid off in spades, as AOL launched itself up the charts with the rest of the Technology sector, gaining better than 40% in 2 short weeks. While Divergence is not the magic indicator that I have searched long and hard for (like all the rest, it is sometimes early, late or simply wrong), but it does something very valuable for us. It allows us to more accurately interpret the signals on our charts without having to add a plethora of technical studies that simply clutter the charts and make them harder to read. While Divergence doesn't always pan out the way we expect, when it is right, the moves it forecasts can be significant. Through the use of a couple oscillators and drawing some simple trend lines, we can uncover some truly amazing trading opportunities. So now that you know the basics, grab your favorite charting program and start drawing some trend lines on your favorite oscillators. There's no telling what little gems you may uncover. ********************** PLAY OF THE DAY - CALL ********************** OPWV - Openwave Systems $29.87 +1.20 (+1.20 this week) Openwave Systems is a provider of Internet-based communication infrastructure software and applications, serving over 150 communications service providers with over 500 million subscribers. Among OPWV's customers are wireless network operators, wireline carriers, Internet Service Providers (ISPs), portals, and broadband network providers. OPWV has a broad portfolio of products, including wireless Internet infrastructure and browsers, unified messaging, mobile email, directory services, voice processing and instant messaging. Most Recent Write-Up Reflecting the recent trend in the broad Technology market, OPWV is managing to lead a recovery in the Wireless sector due to their strong position in wireless-enabling software. Recall that one of the leading sectors in the NASDAQ last week was Software, due to the better than expected earnings report from ORCL, coming on the heels of ADBE's better than expected results. With the bad news already out from many of the players in the Wireless market (such as NOK, PALM and RFMD), investors seem to be taking the attitude that the bad news is out and they are ready to rally. While we are early in the move, we can see that the $25 level once again provided support, and an opportunity for the daily Stochastics oscillator to stabilize and begin to emerge from oversold territory. Look for an intraday dip to the $27-28 level, or even solid support near $25 to provide entry, if you like to buy the dips. Otherwise, hold on and wait for OPWV to clear the $32 resistance level before playing. Keep in mind, there is a gap between $34-38, which will need to be filled by the bulls. But the bears will be lying in wait to sell into that rally, so keep a tight reign on your position until you see the $38 level in your rear-view mirror. Above that, resistance will be waiting near $40, confirmed by the bearish resistance line on the Point and Figure chart. Comments Shares of OPWV pleasantly surprised us with their relative strength Monday. After pulling back from its May highs, the stock appears poised to advance. With a two-day base built around the $29 level, traders can look for entries on any pullback to that area. Conversely, those who prefer to enter on strength might look for a breakout above $31, backed by volume, to gain entry into this play. Its relative high sits near $32.50, but beyond that, OPWV has little resistance until $35. BUY CALL JUL-25 UGE-GE OI= 933 at $6.70 SL=4.50 BUY CALL JUL-30*UGE-GF OI=1728 at $3.90 SL=2.50 BUY CALL JUL-35 UGE-GG OI=4644 at $2.15 SL=1.00 BUY CALL AUG-30 UGE-HF OI= 123 at $5.20 SL=3.25 BUY CALL AUG-35 UGE-HG OI= 52 at $3.50 SL=1.75 SELL PUT JUL-25 UGE-SE OI=1860 at $1.50 SL=3.00 (See risks of selling puts in play legend) Average Daily Volume = 6.41 mln http://www.OptionInvestor.com/charts/chart.asp?symbol=OPWV ******************* FREE TRIAL READERS ******************* 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 www.OptionInvestor.com 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 ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION 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 "email@example.com"
Option Investor Inc