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Daily Newsletter, Monday, 07/09/2001

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The Option Investor Newsletter                   Monday 07-09-2001
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******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        07-09-2001        High      Low     Volume Advance/Decline
DJIA    10299.40 + 46.72 10323.11 10222.24 1.04 bln   1589/1476 
NASDAQ   2026.71 + 22.55  2038.17  2000.08 1.39 bln   2027/1717
S&P 100   618.29 +  5.34   620.19   612.86   totals   3616/3193
S&P 500  1198.78 +  8.19  1201.76  1189.75           53.1%/46.9%
RUS 2000  485.98 +  2.72   487.24   480.98
DJ TRANS 2774.71 + 25.79  2775.35  2740.20
VIX        24.55 -  0.42    25.84    24.42
Put/Call Ratio      0.63
******************************************************************

Bulls Beguiled By Bonds

Does the answer to the conundrum lie in the bond market?  Perhaps
it lies within the hallowed halls of corporate America, which
continue to crumble.  Either way, the broader market averages
appear to be approaching a pivotal action point.

The yield of the 30-year Treasury Bond (TYX.X) has spent the last
two weeks creeping higher, which means bond market participants
have been selling bonds.  The same yield action has been observed
across the gamut of treasuries, including the 5- and 10-year
Notes.  Perhaps the rise in yield over the last two weeks can
be attributed to weak economic data, such as the horrid payrolls
report last Friday.  Or, perhaps that capital in the bond market
is ready to work its way into equities in a big way.  I have the
feeling we'll find out, either way, in the next two weeks.

Bond market participants are often smarter than those in equities,
and their actions often lead the broader market averages.  For
example, the buying of bonds (Read: Falling Yields) abated on March
22, about nine days prior to the Nasdaq Composite (COMPX) hitting
bottom on April 4 and subsequently advancing sharply, following
the lead of yields.  Conversely, the yield of the 30-year Bond
peaked (Read: Falling Prices) on May 15, about six days prior to
the COMPX tracing its relative high at 2328 on May 22 and
subsequently following yields lower.  Let me make it clear, that in
the short-term, rising yields are good for stocks and falling
yields are bad for stocks.  Supply and demand, baby, it's that
simple.

Back to the 30-year yield...The TYX advanced last week while the
broader markets sold-off rather sharply.  Yields reached as high
as 57.71 (5.77%), falling just short of a very pivotal resistance
point at 58.00.  This level is significant for several reasons,
including its positioning on the point & figure chart, as well as
the retracement levels that the ever-astute Jeff Bailey has
pointed out.  Without getting too complicated, however, let me
make this simple and actionable.  Bullish traders will want to
see the TYX break above the 58.00 level, which could unleash
stocks.  Bearish traders, on the other hand, will look for the
TYX to continue weakening from current levels, which could lead
to a lack of bids for stocks.




The TYX is not the only major market average that is hovering
near a pivotal point.  The COMPX continues to toy with the 2000
psychological support level with reckless regularity.  Its day
low Monday: 2000.08.  If the COMPX breaks below 2000 in the
coming sessions, however, keep in mind that our significant
support level at 1975 lies just below.  Therefore, bearish traders
can use 1975 as confirmation when shorting stocks.

In terms of resistance, our all-too-familiar 2060 level is about
30 points above the COMPX's current levels.  (By the way, and not
by coincidence, the COMPX opened last Friday at the 2060 level
and subsequently sank.)  Therefore, bullish traders at current
levels might keep a close watch on 2060 as confirmation.




The Nasdaq-100 (NDX.X) confirmed twice Monday that the 1710
retracement level would serve as near-term resistance.  It bumped
against that level twice Monday, before fading into the close.
Here again with the NDX and 1710, bullish traders and bearish
traders alike can monitor this level to assess short-term market
risk and conviction.  (It's worth while to mention that
Microsoft (NASDAQ:MSFT) currently sits on a very critical support
level around $65.25 and accounts for roughly 11 percent of the
Nasdaq-100.)




Like the COMPX and NDX, the S&P 500 (SPX.X) is hovering around
a most critical level at 1200.  Recall last week that we were
monitoring support around 1210, which had propped the S&P up
prior to last Friday's steep sell-off that dragged the broad
market index below its 50 percent retracement level at 1200.  The
1200 level, once support, now serves as resistance, which was
clearly evident Monday noting the SPX's intraday high of 1201.
Below the S&P's relative low at 1190, I don't see much support
on the daily chart until the 1170 - 1180 range.  (Worth mentioning
concerning the S&P is that its largest component in General
Electric (NYSE:GE) recently broke down in bearish fashion and
traded heavily Monday.)




Meanwhile, the Dow Jones Industrial Average (INDU) is working off
its previously overbought condition and is now approaching
historically oversold conditions.  Furthermore, the Dow bounced
from its 50 percent retracement level last Friday and again
Monday, which lies around the 10235 are.  (Random Observation:
It's uncanny how these retracement brackets work!)

Should we witness a breakdown in the Dow below its retracement
level, the index should eventually work its way down to the
psychologically significant 10,000 level, which by coincidence
is reinforced by the 61.8 percent retracement level.  That site
would mark a solid exit point for those traders short Dow stocks,
such as OI's current Boeing (NYSE:BA) put play.

On the upside, the Dow had some trouble settling above the
10,300 level Monday but could work its way up to 10,400 this
week provided the right catalyst.  Thereafter, it's 10,500 in
terms of resistance




With our technical levels set forth, we should revisit the
idea laid out in my introduction.  It feels as if the broader
market averages are setting up for a big move in one direction
or another, based upon the behavior of the 30-year yield and
that fact that the major indices are trading near pivotal
levels.  The obvious variable we're missing is the direction in
which the broader market averages will break.

I believe much of that variable is predicated upon second-quarter
earnings, which begin in earnest this week.  But judging by the
oversold conditions in the Dow and Nasdaq, the spike higher in
the CBOE Market Volatility Index (VIX.X) and bond yields on the
verge of breaking higher, I would suggest that the probability
favors an advance over a decline.  The difficulty, however, is
the timing and execution of any trade to the upside.  We can be
correct about the direction, but a poor entry at the wrong time
can run any trade a foul.

The only major flaw that I can find in my bullish thesis is that
the S&P 500 is sitting at mid-field in terms of risk versus
reward.  Or, in other words, overbought versus oversold.  And,
after all, IT is the broad market index so this flaw is worth
mentioning.  Furthermore, it's certainly acceptable that both
the Dow and Nasdaq can grow more oversold and pullback from
current levels.

But I believe that if we keep a close watch on bond yields and
levels across the broader market averages, we can therefore find
profits in this market.  Although my bias is slanted to the
bullish side, bond yields could start falling and support levels
can start giving away.  Therefore, traders need to remain
flexible in this market and willing to trade both sides.  On a
final strategy-related note, the current risk versus reward
dynamic may lend to entering long plays near support levels (i.e.
COMPX at 2000), while entering short plays on breakdowns below
support levels (i.e. Dow below 10235).

In earnings news, Corning (NYSE:GLW) - the optical cable maker -
warned after the bell that it would fall short of estimates,
cut jobs and close plants - the usual mantra.  The stock shed
about 50 cents in after hours.  This warning was not
unexpected and fits nicely into the trouble in the tech/telecom
related complex.  Its impact is likely to be minimal, but keep
in mind the market's reception of that Marconi (NASDAQ:MONI)
blow-up last week.

This week kicks off second-quarter earnings season, and on deck
Tuesday include DoubleClick (NASDAQ:DCLK) and Rational Software
(NASDAQ:RATL), followed by Motorola (NYSE:MOT) and Yahoo
(NASDAQ:YHOO) Wednesday, and Juniper Networks (NASDAQ:JNPR)
Thursday.

Questions are welcome: eutley@OptionInvestor.com

Eric Utley
Editor
www.OptionInvestor.com


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

A Good Sector Is Hard To Find
By Jeffrey Canavan

I've always been told that if you can't say anything nice don't
say anything at all, but it's hard to find anything nice to say
when 99% of all sectors are below their 25, 50, and 200-day
moving averages.  Perusing the percentage change data for the
past 5, 10, and 30 days also makes it hard to find any sectors to
be bullish on.

If your looking for relative strength, drugs, banks, and Russell
2000 stocks are the only groups performing better than an S&P 500
Index fund on a relative strength basis.

If buying oversold sectors at support is your cup of tea, the
Nasdaq-100, software, networking, and healthcare sectors might be
the place to look.

Semiconductors and biotechnology lost key support levels and are
not quite oversold yet, making them a 50/50 proposition.

Bargain basement stocks can be found in the oil services sector.
On a seasonal basis these stocks do tend to bottom in July, but
let the buyer beware, these stocks are cheap for a reason.

Of the three major indices, the Nasdaq looks like the strongest,
as long as 2,000 continues to hold.

While technically the Dow and Nasdaq are in neutral territory
in terms of Bullish Percent, they are, however, approaching and
leaning towards oversold.

*************************Sector Watch****************************

            Weekly   Daily      Overbought   Support  Resistance
            Trend    Trend      Oversold

DJIA        Bearish  Bearish    Neutral       10,200   10,500
NASD        Bearish  Bearish    Neutral        2,000    2,200
S&P 500     Bearish  Bearish    Neutral        1,180    1,200
Rus 2000    Neutral  Bearish    Oversold         480      520

Semis       Bearish  Bearish    Neutral          545      650
Biotech     Neutral  Bearish    Neutral          550      615
Internet    Neutral  Bearish    Oversold         160      186
Networking  Bearish  Bearish    Oversold          314     365
Software    Neutral  Bearish    Neutral          200      233
Banking     Bullish  Neutral    Overbought       640      670
Retail      Bearish  Bearish    Neutral          815      860
Drugs       Bearish  Neutral    Oversold         375      400


                 Percent Change
            Last      Last       Last     Relative Strength
           5 Days    10 Days    30 Days      vs S&P 500
DJIA        (3.0%)    (4.3%)     (7.7%)       Negative
NASD        (6.3%)    (0.4%)    (11.2%)       Neutral
S&P 500     (2.1%)    (2.2%)     (7.3%)          N/A
Rus 2000    (5.2%)    (0.5%)     (4.8%)       Positive

Semis       (9.7%)    (3.8%)    (14.4%)       Negative
Biotech     (7.7%)    (6.0%)     (9.7%)       Negative
Internet    (6.3%)     2.6%     (26.1%)       Negative
Networking  (7.8%)    (3.6%)    (32.1%)       Negative
Software    (8.9%)    (3.5%)    (15.0%)       Neutral
Banking     (1.1%)    (2.0%)     (2.0%)       Positive
Retail      (2.7%)    (6.5%)     (9.1%)       Negative
Drugs        2.0%     (2.6%)     (3.4%)       Positive

*****************************************************************


**************
TRADERS CORNER
**************

Anatomy Of A Winning Trade
By Mark Phillips

While we sometimes lose sight of the fact here in the office,
the variety of readers we have runs the gamut from novice
traders, desperate to learn this exciting game, to experienced
and accomplished short-term traders that recognize the need for
a continuing source of education to keep them fresh and
challenged.

The wealth of educational material in the archives here at OIN
is truly staggering; more than enough to take the newest trader
from complete ignorance to mastery of our chosen profession if
only they will take the time to learn and then apply that
knowledge.  Does that sound like a bold statement?  It is, but
I know it to be true because I remember when I first entered
this game.  I knew nothing, but had a voracious appetite for
reading and learning.  Although much of my education predates
my discovery of OIN, there is nothing I have learned about the
financial markets, options strategies, the psychology of trading
and the mechanics of successful entry and exit points that
isn't contained in the innumerable pages here at OIN.

Despite the wealth of critical educational information that
exists here, I know the vast majority of subscribers go right
for the plays, because that's where the money is, right?  Well
we know that is a fallacy, as the plays are only useful to those
traders that have learned HOW to play them successfully.  At any
one time there are 15-20 plays listed in the newsletter, and our
first task must be to winnow that list down to the handful we
will watch and play during the next market day.  Then there is
the complex process that we must all go through to get us into
and out of the play in a profitable manner.

Although there are many plays listed where we are dead wrong,
the majority of these never give prudent traders the slightest
hint of an entry point.  On the other hand, most of the balance
of the listed newsletter plays provides several opportunities
for profit.  With that as our backdrop, I thought it might be
useful to profile an OIN Put play that I recently traded
prudently and profitably.

On June 13th, we added Qlogic Corp. (NASDAQ:QLGC) to the put
list for a long list of technical reasons.  With solid
resistance near $60, a bearish formation on the Point and
Figure chart, and oscillators rolling south without even
reaching overbought territory, it sounds like a sure winner,
doesn't it.  Well, it was for me, but that doesn't mean it
was for everyone.  Just over a week later, QLGC had found
bottom and the recovery found it moving to the drop list in
fairly short order.  Having just traded it profitably, I wrote
the Drop with a positive slant, referring to the fact that we
were bringing another successful play to a close.  Needless to
say I was a bit surprised when I was taken to task by a reader
asking how I could claim it was a winning play when the stock
price had changed very little (down $1.28) and the listed
option, the JUL-50 Put was trading at the same point where it
was when we began coverage.

It didn't stop there though, as the email went on to question
our integrity in reporting marginal plays as successful, and
that really bothered me.  Not so much that someone was
questioning my ethics (I'm quite comfortable with the honesty
of everything I write), but in the realization that here was
someone paying for the service we provide that simply had
missed the boat.  I don't write this to pick on one individual,
but to point out that this game cannot be won through casual
interest.  It requires discipline and dedication to arm
ourselves each day so that we can profit when conditions are
such that the odds are in our favor.  Hopefully by looking at
the trades I took over a couple of days, you can see what is
contained in taking a listed play and turning it into a
profitable trade.

I'm a classic dip-buyer by nature and when playing the downside,
that means I want a bounce that I can sell into (actually buy
puts, but you get the idea).  And in this volatile and
schizophrenic market, I've found the most prudent course of
action is to be VERY cautious about leaving positions open
overnight.  Unfortunately, that means I'm making short
day-trades most of the time.  But small consistent profits are
much better than watching a solid gain turn into a loss at the
open on the following day.  When trading short-term like this,
the 5/10 minute charts are my primary tools for entry/exit,
although I keep half an eye on the 60/30 charts to make sure
I'm not fighting the larger trend.

My background research showed me QLGC was in the early stages
of a downward move, with its sector just beginning to weaken.
The Point and Figure chart showed me heavy resistance near $60
and the $47 level as a likely point at which to take profits
(near-term support).

So let's take a look, shall we?  June 14th saw the price
continue to decline without giving me that attractive bounce,
but the next day delivered what I wanted in spades.  After an
opening dip, price rebounded for most of the morning, propelling
QLGC up to the $54 area before buyers ran out of steam.  Looking
at the 30-min chart, I could see Stochastics topped out in
overbought territory and just starting to roll over.  Sure
enough, the rollover I wanted was just getting started.  Check
out the chart montage below, and I think you'll see what I mean.




So I targeted the JUL-50 Puts, placed my order and was almost
immediately filled at $4.50.  Because of the solid resistance at
$54, I opted to set my stop on the stock price rather than the
option price, and picked the $55.25 level (Ideally I would use
$55, but don't like to use round numbers).

Unfortunately, the drop was not as precipitous as I had hoped,
and by the close of trading, price had only dropped into the
$51-52 area, leaving me with the need to hold not just
overnight, but over the weekend if I wanted to make a decent
profit.  So relying on my stop, I held the position, and as you
can see by the following chart, I had a couple of Maalox moments
during amateur hour on Monday, the 19th.




But with the 30-minute Stochastics still heading south, and my
$55 stop intact, I held on until the close on Monday, getting
out near the low of the day as Stochastics bottomed, volume
began to rise and QLGC appeared to be finding support in the
$48-49 level.  Sure there might have been more downside in
store, but since I was able to close my position for $6.20, I
was more than happy to book a 37% gain.

As an unexpected bonus, the market conspired to let me play
virtually the same game the next morning, although some of the
details had changed.  With a positive gap on the NASDAQ on the
morning of the 19th, it quickly became clear to me that it was
going to be a classic "Gap-and-Crap" day.  Take a look at this
10-minute chart, and I think you can see the gift I received.
All I did was wait for confirmation that the bulls couldn't
penetrate resistance (this time they couldn't even reach $53
before letting the bears take over), and then picked out the
same contracts for another day trade.




This second helping looked so attractive, I didn't even wait
until the end of amateur hour, going against the opening gap
and picking up a fistful of the JUL-50 Puts for an even $5.00
each.  Then all I had to do was watch the price roll lower
throughout the day.  By 3pm ET, it looked like I might be able
to eke out a 50% gain, so I placed my exit order for $7.50.
And believe it or not, I got filled at 3:30 exactly at the high
of the day.  Two short swing trades, spanning a total of 3
market days for an 87% gain.  No matter how you slice it, that
is the kind of trading performance that puts a smile on my face.

Although QLGC remained on the put list for a couple more days
before violating its stop and being dropped, that trade on June
19th marked my last entry into the play.  Take a look at an
intraday chart starting on June 20th, and you can see that
conditions were changing, with buyers beginning to dominate
and the stock once again tracing higher highs and lows.

Disciplined entry/exit gave us a fat profit after a total of 3
days in the trade.  Contrast that with a trader that bought
puts the morning after we initiated coverage and then exited
when the stop was hit.  That second trader would have likely
closed out the position for a loss, scratching their head and
wondering how we could claim winning results on the trade.
We're all in this game to win, and I think Entry/Exit skills
are just about the most important factor to short-term trading
success.  Learn what it has to teach, and your account balance
will thank you!

Have a Profitable Week!

Mark


*************
NEW CALL PLAY
*************

LLY - Eli Lilly $76.40 +1.29 (+1.29 this week)

LLY discovers, develops, manufactures and sells Pharmaceutical
products targeted at the diagnosis, prevention and treatment of
human diseases.  The company's best known commercial product is
the anti-depressant Prozac, although there are numerous other
lesser-known drugs that treat conditions such as Parkinson's
disease, diabetes, osteoporosis along with a broad range of
antibiotics.  The company also conducts research to find
products to treat diseases in animals and to increase the
efficiency of animal food production.

After the abuse heaped on Drug stocks in the past 3 weeks, it
was encouraging to see the selling come to an apparent end
this morning.  The market seems to have digested the bad news
coming from the likes of MRK and AMGN and appears ready to let
the bulls have a little fun in the sun.  As one of the more
solid performers over the past couple weeks, LLY looks like a
good call candidate, especially with earnings set to be released
the morning of July 19th.  The $73 level has provided consistent
support since mid-February and did so again just over a week
ago, giving us a logical level for placing our stop.  LLY began
to recover last week, moving ahead of the Pharmaceutical index
(DRG.X), which found a solid bottom in the $377-378 area and
posted a solid 2% rebound today.  Risk seems fairly easy to
manage in LLY right now, as both a rebound from the $74-75 area
or a rally through $77 would provide solid entry points into the
play as the stock rallies ahead of its earnings announcement.
Resistance is likely to appear near $78.50 and then $80.  A
close below our $73 stop would be a clear sign of weakness and
have us closing the play in a New York minute.

***July contracts expire in less than two weeks***

BUY CALL JUL-75*LLY-GO OI=1184 at $2.50 SL=1.25
BUY CALL AUG-75 LLY-HO OI=  95 at $3.70 SL=2.00
BUY CALL AUG-80 LLY-HP OI= 320 at $1.50 SL=0.75
BUY CALL AUG-85 LLY-HQ OI= 382 at $0.50 SL=2.50

SELL PUT JUL-75 LLY-SO OI=3299 at $0.80 SL=1.50
(See risks of selling puts in play legend)

Average Daily Volume = 2.77 mln



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

ANF - Abercrombie & Fitch $40.56 -0.30 (-0.30 this week)

A specialty retailer, ANF is principally engaged in the
purchase, distribution and sale of men's, women's and children's
casual apparel.  The company's retail activities are conducted
through retail stores, a catalogue, a magazine and a website,
all bearing some form of the company name.  Merchandise is
targeted to appeal to customers in specialty markets, who have
distinctive consumer characteristics.

The almighty consumer appears to be weakening, and that should
come as no surprise.  With the economy in a recession (no matter
what positive spin the CNBC talking heads try to put on it),
layoffs mounting, and the Fed unable to solve the problem with
interest rate cuts, it should come as no surprise that consumer
spending is slowing.  And the first area that should feel the
pinch is discretionary spending.  Don't you think that Joe and
Jane consumer will look at the trendy offerings from the likes
of ANF and take a pass in the near-term?  I do, and the Bullish
Percent reading for the S&P Consumer Discretionary Index is
flashing a big warning signal too.  Reversing from a recent high
of 74%, it is now down to 65% and flashing a Bear Confirmed
reading on the Point and Figure chart.  As the broader sector
weakens, we are looking for ANF to get dragged lower.  Already
resting just above the critical $40 support level, the stock got
another black mark today as it fell below the 50-dma ($40.69).
Below that, there is very little support until the $35 level.
The Point and Figure chart shows us that ANF posted a Bearish
Triangle Breakdown today and trading $39 will give us a nice
confirmation with a Double-Bottom Breakdown.  There seems to be
some decent resistance at $43, so we will set our stop there to
protect against any surprises.  Use a failed rally in the $42-43
area or a drop below $39 as possible entry strategies.

***July contracts expire in less than two weeks***

BUY PUT JUL-40*ANF-SH OI=265 at $1.40 SL=0.75
BUY PUT AUG-40 ANF-TH OI=108 at $2.65 SL=1.25

Average Daily Volume = 1.31 mln



*****************
STOP-LOSS UPDATES
*****************

ORCL - call
Adjust from $17.50 up to $18

QCOM - call
Adjust from $55 up to $58

TGH  - call
Adjust from $63 up to $64

ANN  - put
Adjust from $35 down to $34

BA   - put
Adjust from $57 down to $55


*************
DROPPED CALLS
*************

FMKT $18.75 -1.00 (-1.00) Having the weekend to think things
over didn't improve investors' mood any, at least not where FMKT
was concerned.  While the selling volume seemed to wane a bit,
the price continued to fall, hitting a low of $17.89 before any
buyers surfaced to prop up the stock.  Alas, that was so far
below our $19 stop, that we had lost all interest by that time.
And rightly so, since the recovery couldn't even get the stock
boosted over the $19 level before the close.  And it looks like
there could be more downside in store with Stochastics pointed
down and plenty of white space down below.  Needless to say,
FMKT is a drop tonight and all positions should have been closed
out on today's weakness.

WB $68.82 -0.20 (-0.20) With weakness rearing its ugly head, we
are going to make an early exit from the WB play.  Even though
the broader markets staged a tepid recovery and the Banking
index (BKX.X) eked out a small gain, WB fell for the 4th
consecutive day, albeit on light volume.  WB is still holding
above the $68 support level (also the location of our stop), but
we think there are better opportunities elsewhere.  We're
dropping it tonight to make room on the playlist for those
better opportunities.


***********
DROPPED PUT
***********

No dropped puts tonight


**********************
PLAY OF THE DAY - CALL
**********************

QCOM - Qualcomm, Inc. $61.72 +3.54 (+3.54 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.

Most Recent Write-Up

Bouncing from call list to put list on an almost weekly basis,
QCOM looks like it is ready for an upward move again.  After
shooting up to the $64 level on Tuesday, following an expanded
CDMA licensing deal with Nokia, QCOM succumbed to the general
holiday-week market malaise, dropping particularly sharply on
Friday.  Make no mistake, this is an aggressive play, where we
are looking for the NASDAQ to hold the 2000 level and recover
next week, taking QCOM along for the ride.  Note that the stock
halted its slide on Friday near $58, right at the 38%
retracement of the recent rally.  Look for a bounce near this
level, support near $57 or $56 (the 50% retracement level) to
provide attractive entry points, but keep a tight stop set at
$55.  Earnings are set for July 26th, but that is likely too far
away to have a significant effect this week.  Watch the NASDAQ
Composite for a clue to QCOM's direction.  If it falls through
the 2000 level and can't mount a recovery, QCOM will likely have
a hard time making upward progress and we'll want to stand
aside.  The more conservative approach will be to see the
Composite bounce from the lower end of its range (near 2000)
and QCOM clear the $60 level before initiating new positions.

Comments

QCOM led the Nasdaq higher Monday, and has the potential to
continue advancing.  The stock benefited from an upgrade and
that momentum may be enough to keep working into Tuesday's
session.  Watch for a breakout above the $63 level if the
Nasdaq is advancing.  Otherwise, a light volume pullback to
support at $60 may offer enterprising entry points.

***July contracts expire in less than two weeks***

BUY CALL JUL-55 AAO-GK OI= 7633 at $ 7.80 SL=5.50
BUY CALL JUL-60*AAO-GL OI=15951 at $ 4.00 SL=2.50
BUY CALL AUG-55 AAO-HK OI= 3279 at $10.10 SL=7.00
BUY CALL AUG-60 AAO-HL OI= 2584 at $ 6.90 SL=5.00
BUY CALL AUG-65 AAO-HM OI= 5132 at $ 4.40 SL=2.75

Average Daily Volume = 12.5 mln



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