Option Investor
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Daily Newsletter, Thursday, 03/07/2002

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The Option Investor Newsletter                Thursday 03-07-2002
Copyright 2001, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************      
      03-07-2002           High     Low     Volume Advance/Decline
DJIA    10525.37 - 48.92 10606.88 10468.64 1.51 bln   1597/1564
NASDAQ   1881.63 -  8.77  1910.70  1865.06 1.86 bln   1875/1666
S&P 100   586.88 -  3.33   592.73   582.76   Totals   3472/3227
S&P 500  1157.54 -  5.23  1167.94  1150.69             
RUS 2000  494.92 +  0.12   497.29   493.64
DJ TRANS 3020.27 +  5.74  3042.46  3016.13
VIX        21.88 -  0.16    22.78    21.88
VXN        43.76 +  1.03    44.73    43.21 
TRIN        1.19 
PUT/CALL    0.65
************************************************************ 

Expansion Well Underway!

Greenspan took center stage again today and was actually bullish 
in his assessment of the current economic environment. He said 
the recession was over and the economic expansion was "well"
underway. However he stressed that since the recession was 
shallow and brief the recovery would not be as strong as most
had hoped. Investors were cheered by the positive comments but
reacted swiftly to the negative implications. The prospect of
rapidly rising interest rates hit the bond market like a
bunker buster and the ten year bond lost well over a full point.
Yields rocketed as money roared away from its prior safe haven.



 



 

The markets rallied slightly on the initial Greenspan comments
but profit taking in defensive issues and rotation out of sectors
seen as safe havens produced nearly a -100 point Dow drop at mid-day.
Investors expecting better times ahead bought the dip and while
they were not able to push the markets back into positive territory
it was a noble effort.

Had it not been for IBM and its -$2.60 loss and the -1.38 drop in
Boeing the results would have been much different. IBM broke 
below support at $105 on new rumors of accounting problems. IBM
will file its 10K with the SEC on Monday and it has promised to
disclose many of its questionable accounting practices in that
document. Investors not wanting to be surprised started bailing
in advance when the rumors resurfaced. Boeing was dropped for a
loss after South African Airways announced it was going to buy
41 Airbus planes instead of Boeing equipment. He who laughs last
however will be Boeing which announced after the bell a $5 billion
defense contract to develop a new defense system. Boeing said the
contract could be worth much more in the following years if the
system proved to be a success. Look for a nice pop in BA tomorrow.

Speaking of accounting problems, Arthur Anderson lost another big
name as Delta Airlines severed ties with the accounting firm after
53 years of associations. DAL joined MRK, Suntrust Banks, Freddie
Mac and about three dozen other public companies, which have fired
the company over the last several weeks. This is just a few of the
2311 public clients at AA but the big names and big money flight
is expected to accelerate. Several analysts are now speculating
that the trend will be fatal. Others claim it may be way too early
to jump to that conclusion since AA has over 100,000 clients
worldwide. Three other big clients, Georgia Pacific, FedEx and the 
Southern Baptist Convention have already solicited bids from other
firms in a move that could oust AA as well.

Leading the list of big losers on Thursday was Sepracor (SEPR) 
which dropped -27.63 to $19.60. The company said the FDA had
issued a "not approvable" letter after safety tests on its allergy
drug Soltara. SEPR issued a statement saying it had used the drug
as a significant part of its revenue projection for 2002 and would
have to restate their guidance. From the hit the stock took you
would have thought they filed bankruptcy. 

Would the last one out please turn off the lights. CURE, which
manages wound centers for hospitals, announced that the CEO had
resigned and two other executives would also resign. The CAO and
an EVP elected to walk with the CEO after a fight with the chairman
over his selling of the stock. The company said it was unfortunate
but that the executives would be replaced and they anticipated no
impact to operations or guidance. They expect earnings of $.80
for 2002 compared to a loss of -2.54 in 2001. The stock fell to
a low of $7.37 intraday from a high near $20 on Monday. Eric had
profiled CURE in the Wednesday watch list as a possible short play
if it broke $16 based on volume analysis. Had you taken that trade
when it broke at 9:40 this morning you would have been a happy camper!

The tech sector traded sideways on Thursday due to profit taking 
and worries over the INTC and SUNW mid-quarter updates due after
the bell. Intel narrowed its guidance with a slight bias to the
upside. Previously it had estimated $6.4-$7 billion in revenue and
they narrowed that to $6.6-$6.9 billion. Positively they expect the
gross margins to be slightly higher. They said the microprocessor
business continues to follow seasonal patterns but the communication
business remains weak. Andy Grove said there was no evidence of any
recovery in the that sector. They expect processor sales to be a 
little better than normal due to strong follow through in 4Q PC 
sales. After an initial drop on the announcement INTC rallied
to about where it closed the regular trading day. 

SUNW also announced that they were on track to meet estimates and
they were making good progress on returning to profitability. The 
CFO said orders were good but just slightly behind schedule. He
estimated that many would come in too late in the quarter to be
turned around and be recognized in revenue. SUNW jumped slightly 
in after hours trading. I like SUNW and I am thinking the time
may be right to grab a few lottery leaps on the next dip like the 
$10-Jan-2004 for $2.90. That gives them plenty of time to make a 
recovery. Just an opinion.

The retailers were mixed after huge differences were announced in
same store sales. Stores with huge increases included WMT +10.3%,
KSS +14.4%, TGT +8.5%, JCP +12.5%, PIR +17.2%. Losers included GPS 
-17%, FD -2.8%, MAY -2.7%, TLB -17.7%. The biggest loser in stock
price was Talbots with nearly a $4 drop. The biggest winner was
ANN which soared +2.05 after posting earnings which nearly doubled
the same period last year. 

We are firmly entrenched in the 2Q earnings warnings season and 
that is good news for the markets. It is good news because the
warnings have been fairly minimal. There has not been a rush to
say anything bad which leads traders to the conclusion that there
could be positive earnings surprises in our future. Many analysts
actually expect a wave of positive surprises as major corporations
file their 10Ks next week, as I mentioned about IBM above. If the
trend is to "over disclose" current accounting practices and there
are no nasty surprises then it could be construed as another positive
event for the markets. Conversely if the disclosure by these companies
paint a picture that includes things investors don't like then we
could see a negative wave develop. One thing for sure, investing 
is never dull. Just when you thought the markets were destined for 
stardom again there is another accounting cloud on the horizon. 

Retail investors began applauding the recent rally by throwing money 
last week. TrimTabs.com said equity funds received $3.2 billion in 
new cash for the week ended on Wednesday. Traders are buying the 
dips and bears are selling the rallies but volatility is basically
flat. There is a war underway and the battle lines are narrowing.
The Dow has tested 10600, four of the last four days and fallen back.
However each pullback has produced a higher low. The Nasdaq has
closed over 1875 for two days now and was looking good until the
INTC/SUNW announcements after the bell. Our fate rests on how investors
interpret those updates. Futures are down slightly at 7:PM but it is 
still too early to make a call on that basis. The bottom line is a need
to remain positive until the markets tell us otherwise. That would
be a drop below 1850 on the Nasdaq and 10425 on the Dow. The S&P
is looking very good as long as it stays above 1145. It is only
-18 points below a retest of its breakout level at 1175. Despite
a down day the advance/declines ratios were still positive on decent
volume and that is a good sign. The February Jobs Report is due tomorrow 
and a positive number could be very bullish. If we get a repeat of last 
Friday the bulls will be firmly in control come Monday so keep your 
fingers crossed!

Enter very passively, exit aggressively!

Jim Brown
Editor


********************
INDEX TRADER SUMMARY
********************

Topping Out?
Austin Passamonte

In last night's Market Wrap we depicted major indexes approaching 
or up against critical resistance, oscillators overbought and a 
VIX at bearish lows. Many traders wonder how markets can become 
overbought "so fast" when price levels languished for weeks and 
months in range-bound fashion.

Considering the Dow is up +500 points in five trading sessions and 
+800 points the past ten, conditions of overbought are not 
measured spatially by time. They are measured by raw distance 
covered straight up.

Lest we beat that tired topic ceaselessly, why not look at some 
examples of extended sectors and how the whole is exactly equal to 
the sum of its parts?

(Weekly/Daily Charts: HHH)


 

Each and every night I scan thru all of the indexes and sectors 
that list shares or options to trade. Much of the time it gives me 
a few issues on long or short signals with a majority mixed. 
Sometimes the majority is in agreement as we currently have 
right now.

Typical technology sector chart in the HHH Internet HOLDR. Looks 
just like all the rest in that daily charts are toppy but weekly 
charts exhibit room to run higher. Sector Share trade model listed 
long share plays from 28.00 to 32.50 the past several days for 
obvious reasons: price action broke to the upside out of little 
wedge with both W/D chart stochastic values oversold. Lay-up long 
trade if I ever saw one.

But the past three sessions have seen Fib retracement values come 
into play and reject price action at resistance. Stochastic values 
are bearish, prices broke down and will likely fill that gap to 
the $30 range (if not lower) soon. Toppy chart...

(Weekly/Daily Charts: OIH)


 

Oil Services HOLDR just went overbought in both time frame charts, 
banged its head in rejection at a key Fib level in the weekly 
chart (left) and posted a bearish reversal gravestone doji candle. 
Right now 62.50 area looks like a safe bet for the symbol to pull 
back towards and we listed this one short (or puts) in Sector 
Share model on any break lower Friday. If it does fall to 63 area 
or so, shorting right up here at resistance gives us a ceiling for 
protection and breathing room in our favor right now.

Toppy charts...

(Weekly/Daily Charts: IYG)


 

Dow Jones U.S. Financial Services iShares average around 500K 
shares in daily volume traded. Pretty liquid vehicle to play and 
Sector Share model went long at 87 and exited at 94 today. Another 
lead-pipe lock where a descending trendline was broken while 
weekly/daily chart stochastic values rolled up from oversold 
extreme. Entry points do not get much more crystal-clear than 
that.

And now where is this sector? Suspended in mid-air with 96.50 
looming overhead is what I see. The best chunk of this recent move 
is behind us; time to move on. Weekly charts suggest more upside 
is probable but to where? With bearish daily chart signals and 
support down at 92 area, that's the place to look for new longs on 
any pullback most likely right around the corner.

Summation
That's the essence of what I see across all tradable sectors 
tonight. Weekly/Daily charts topped out or working on it right 
now. Considering the moonshot move in the Dow and plummeting VIX 
I'm still amassing short positions to hold while trading around 
them to the upside intraday only. Nothing I see suggests any other 
approach for myself but as Dennis Miller closes his HBO show, 
"That's just my opinion; I may be wrong".

Time will surely tell as it always does!

Best Trading Wishes,
Austin P


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

Wave Your Arms
By Eric Utley

The major averages pulled back in Thursday's session.  Meanwhile,
bonds got whacked.  There was a major sell-off in the Treasury
market Thursday, sending the yield of the benchmark Ten-Year
18 basis points higher.  Selling was concentrated in the middle
of the yield curve, with the TNX.X rising the most.  All the
while, gold, both equities and the commodity, fell through the
session.  So much so, in fact, that the XAU.X earned the day's
worst performing sector spot.  Interesting divergence as it
relates to inflation expectations between bonds and gold which
warrants watching in the coming sessions.

Separately, the bullish percent levels continued rising through
Wednesday's session and to a much lesser extent Thursday.  The
bullish percent indicator is rising to recent multi year highs
in most of the markets we follow.  That means that downside
risk is growing with each additional uptick in the averages.
That's not to say the market can't rally just because it's
overbought by way of bullish percent.  Not at all.  But it does
beg caution in the way investors work in this work, requiring
a risk management system before taking bullish positions.

The internals of the two major markets -- NYSE and NASDAQ --
remained incredibly strong during Thursday's minor pullback.
New highs swamped new lows in both markets, while advancers
slightly out paced decliners.

Finally, the short-term ARMS Index reading is approaching an
extreme level to the downside.  The 5-day ARMS reading closed
at 0.88 Thursday, which is just off of what we consider
extreme at 0.85.  The overbought reading again reinforces the
downside risk that is in the market, similar to what the
bullish percent data is saying.  It may, however, only take a
day or two of weakness to work off the ARMS index extreme
reading.  

-----------------------------------------------------------------

Market Averages


DJIA ($INDU)

52-week High: 11350
52-week Low :  8062
Current     : 10525

Moving Averages:
(Simple)

 10-dma: 10295
 50-dma:  9985
200-dma: 10027



S&P 500 ($SPX)

52-week High: 1383
52-week Low :  945
Current     : 1157

Moving Averages:
(Simple)

 10-dma: 1128
 50-dma: 1127
200-dma: 1151



Nasdaq-100 ($NDX)

52-week High: 2771
52-week Low : 1089
Current     : 1507

Moving Averages:
(Simple)

 10-dma: 1436
 50-dma: 1522
200-dma: 1568



Natural Gas ($XNG)

The broader energy sector finished higher Thursday.  Within the
group, the XNG was the best performing with its 2.10 percent
gain.  That was enough for the best performing sector spot in
Thursday's session.

The group was led higher by Williams (NYSE:WMI), Kinder
Morgan (NYSE:KMI), Dynergy (NYSE:DYN), and Anadarko (NYSE:APC).

52-week High: 270
52-week Low : 157
Current     : 191

Moving Averages:
(Simple)

 10-dma: 178
 50-dma: 174
200-dma: 196


Gold and Silver ($XAU)

The XAU was the worst performing sector in Thursday's session.
The index shed 4.79 percent on the day, closing at a one month
low.

Leading to the downside included Anglogold (NYSE:AU), Harmony
Gold (NASDAQ:HGMCY), Gold Fields (NASDAQ:GOLD), and Newmont
(NYSE:NEM).

52-week High: 70
52-week Low : 46
Current     : 63 

Moving Averages:
(Simple)

 10-dma: 65
 50-dma: 61
200-dma: 57

-----------------------------------------------------------------

Market Volatility

The VIX bounced around the last two days without much real
direction.  The index finished only fractionally lower in
Thursday's session.

The VXN rebounded for the second consecutive day since falling
to relative lows earlier in the week.  Still, complacency
remains the theme.

CBOE Market Volatility Index (VIX) - 21.88 -0.15
Nasdaq-100 Volatility Index  (VXN) - 43.76 +1.03

-----------------------------------------------------------------

          Put/Call Ratio  Call Volume   Put Volume
Total          0.65        670,317       434,600
Equity Only    0.57        577,970       327,657
OEX            1.19         19,202        22,862
QQQ            1.12         28,171        31,455
 
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          61      + 1     Bull Alert
NASDAQ-100    70      + 0     Bull Confirmed
DOW           76      + 0     Bull Confirmed
S&P 500       74      + 1     Bull Confirmed
S&P 100       78      + 1     Bull Confirmed

Bullish percent measures the number of stocks in an index 
currently trading on a buy signal on their point and figure 
chart.  Readings above 70 are considered overbought, and readings 
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend

-----------------------------------------------------------------

 5-Day Arms Index  0.88
10-Day Arms Index  0.97
21-Day Arms Index  1.09
55-Day Arms Index  1.22

Extreme readings above 1.5 are bullish, and readings below .85 
are bearish.  These signals don't occur often and tend be early, 
but when the do, they can signal significant market turning 
points.

-----------------------------------------------------------------

Market Internals

        Advancers     Decliners
NYSE      1597           1564
NASDAQ    1875           1666

        New Highs      New Lows
NYSE      273             13
NASDAQ    160             27

        Volume (in millions)
NYSE     1,511
NASDAQ   1,868

-----------------------------------------------------------------

Commitments Of Traders Report: 02/26/02

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

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

S&P commercials were wrong in the most recent reporting
period.  The group increased its net position through February
26.  They may have scrambled to cover in last Friday's
session, helping the market higher.  Small traders got it
right by adding almost 10,000 contracts to their net bullish
position.  Interestingly, just the opposite occurred in the
Dow as you'll read below.

Commercials   Long      Short      Net     % Of OI 
02/12/02      355,276   412,868   (57,592)   (7.5%)
02/19/02      355,905   416,664   (60,759)   (7.9%)
02/26/02      366,258   432,258   (66,000)   (8.3%)

Most bearish reading of the year: (111,956) -   3/6/01
Most bullish reading of the year: ( 36,481) - 10/16/01

Small Traders Long      Short      Net     % of OI
02/12/02      126,730     59,902   66,828     35.8%
02/19/02      130,856     63,311   67,545     34.8%
02/26/02      139,183     62,087   77,096     38.3%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100

Nasdaq commercials grew increasingly neutral in the most
recent report period by shedding a few more shorts than
longs.  Small traders swung to decidedly bearish by
adding a large number of short positions.

Commercials   Long      Short      Net     % of OI 
02/12/02       32,712     34,841    (2,129)  (3.2%)
02/19/02       33,871     35,690    (1,819)  (2.6%)
02/26/02       33,589     34,091      (502)  (0.7%)

Most bearish reading of the year: (15,521) -  3/13/01
Most bullish reading of the year:   7,774  - 12/21/01

Small Traders  Long     Short      Net     % of OI
02/12/02        9,009     7,415     1,594      9.7% 
02/19/02        9,966     8,073     1,893     10.5%
02/26/02        9,517    11,416    (1,899)    (9.1%)

Most bearish reading of the year:  (9,877) - 12/21/01
Most bullish reading of the year:   8,460  -  3/13/01

DOW JONES INDUSTRIAL

Commercial traders grew more bullish in the most recent
reporting period.  Although the group added a number of
short positions, its additions of longs more than
compensated for an increase in the net bullish position.
Small traders were wrong by adding to their net short
position.

Commercials   Long      Short      Net     % of OI
02/12/02       26,811    16,488   10,323     23.8% 
02/19/02       29,606    17,953   11,653     24.5%
02/26/02       33,322    21,110   12,212     22.4%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
02/12/02        4,562    10,038    (5,476)   (37.5%) 
02/19/02        4,654    10,431    (5,777)   (38.3%)
02/26/02        6,333    12,547    (6,214)   (32.9%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   1,909  -  1/16/01

-----------------------------------------------------------------


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***********************
INDEX TRADER GAME PLANS
***********************

IS Swing Trade Model: Thursday 3/07/2002
Consolidations Again

News & Notes:
------------
A fair session for intraday scalps if one sold the failed pop 
short this morning. Otherwise, it might be the opposite direction 
ahead once again!


Featured Markets:
----------------
[60/30-Min Chart: OEX]


 

All indexes we track are flashing intraday bullish wedges and 
stochastic values are just beginning to turn up from oversold 
extremes. Witness the OEX which closed above and outside its 
bullish pattern Thursday.


[60/30-Min Chart: SPX]


 

The SPX was slightly contained and looks to break out on Friday.


[60/30-Min Chart: QQQ]


 

QQQs posted a bullish close as well.


Summation:
---------
But... there is always a "but". Both S&P indexes might stall right 
out at mid-channel resistance (black line) as daily chart signals 
are weak to bearish right now. If the indexes gap open higher on 
Friday it would be risky to play the upside right here. A break & 
hold above black lines of resistance would then become support, 
and we could measure the upper channel lines (red) as upside 
targets to exit bullish plays there.

Which leaves us with a plan for tonight. Call plays on a flat open 
with 100% risk capital or close stops would be fine, but a gap-
higher open negates this completely. Watch for a quick pop higher 
and possible failure at resistance for immediate downside 
correction from there. I can easily see where indexes go two 
different directions on Friday and slow decisions could wipe out 
traders each way.

The past several Fridays have been very bullish sessions except 
for February expiration, which was down. That trend may hold in 
place tomorrow but remains to be seen after such massive gains of 
late. Call plays from a flat open will be my move, but if price 
action fails quickly near resistance at lower recent highs that 
will be a clear sign to exit longs, get short and look the other 
way!


Trade Management:
----------------
Option traders may choose listed In-The-Money (ITM) or Out-The-
Money (OTM) contracts by personal preference. They are selected 
based on volume, open interest and "Delta" values in that order. 
Our preference is usually OTM contracts except for the last few 
days of expiration when ATM or ITM contracts are preferred.

Entry triggers are points where plays are tracked when price 
action breaks above for calls or below for puts. Stops are the 
exact opposite of that. Sell targets are points to exit based on 
index levels or %gain on option contract price as noted.

*No entry targets listed mean the models are idle at that time.


New Play Targets:
----------------
         QQQ                          DJX
Mar Calls: 37 (QQQ-CK)            Mar Calls: 102 (DJV-CX)  
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 
                                

Mar Puts: 36 (QQQ-OJ)             Mar Puts: 104 (DJV-OZ) 
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break above 


=====


         OEX                         SPX
Mar Calls: 570 (OEB-CN)           Mar Calls: 1125 (SPT-CE)
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 


Mar Puts: 580 (OEB-OP)            Mar Puts: 1125 (SPT-OE)
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break Above 



Open Plays:
----------
None


Sector Share Trade Model: Thursday 3/07/2002
Switching Bias Again

News & Notes:
------------
Markets are now just flip-flopping around trying to determine 
which way is next. That appears likely to be lower quite soon as a 
majority of sector plays are flashing bearish setups and more came 
due today.

Featured Plays:
--------------

(Daily Charts: IYG and HHH)


 

The IYG Financial Service shares and HHH Internet HOLDRs turned in 
the type of performance we seek in here. HHH was up +4.50 or 
+16.07% while the IYG gained +7.00 or +8.05% respectively. Both 
have met resistance, see chart signals turning bearish and will 
most likely revisit lines of support (pink) ahead from here. We'll 
post the gains on an exit today and see what happens if/when 
support is reached next week.

Summation:
---------
Most of our short-play triggers were hit and we're tracking those 
to the downside now. A few listings have been added and most of 
the longs are peeling away. This is an early signal that the 
markets are topping in the present area, but technology issues 
still have more upside room to run and may do so for several days 
ahead.


Trade Management:
----------------
Entry triggers are points where plays are tracked when price 
action breaks above for calls or below for puts. Stops are the 
exact opposite of that. Sell targets are points to exit based on 
index levels or %gain on share price as noted.

No entry targets listed mean the model is idle at that time.

** Asterisk means symbol has listed options as well


New Play Targets (Short):
------------------------
XLE **
Short: 28.00
Stop:  30.00

IXC
Short: 52.75
Stop:  55.00

IJJ
Short:  97.00
Stop:  101.00

OIH **
Short: 66.70
Stop:  70.00

IYE
Short:  49.70
Stop:   52.00


Open Long Plays:
---------------
HHH             XLE             
Long: 28.00     Long: 26.75     
Stop: 32.50     Stop: 28.00     
[hit]

           
IYZ             XLF         
Long: 26.60     Long: 25.25    
Stop: 27.60     Stop: 27.00    
[hit]           [hit]

IYG             
Long: 87.00     
Stop: 94.00     
[hit]

BDH             
Long: 12.75     
Stop: 14.50     
                

Open Short Plays
----------------
XLB **          XLP **          
Short: 23.75    Short: 26.00    
Stop:  25.00    Stop:  28.00    

XLV **          XLY **          
Short: 29.00    Short: 29.90    
Stop:  31.00    Stop:  32.00    

IYD             IYK             
Short: 45.25    Short: 45.90    
Stop:  48.00    Stop:  48.00    

IYR             UTH **          
Short: 84.75    Short: 93.25    
Stop:  88.00    Stop:  98.00    

RTH **          PPH **          
Short: 98.00    Short: 98.75    
Stop: 102.00    Stop: 102.25    

DIA **[DJX]     IYM
Short: 105.90   Short: 42.00 
Stop: 110.00    Stop:  44.50


IS Position Trade Model
Please Join Us In Sector Share!

News & Notes:
------------
For the month of March we will combine both Sector Share and 
Position Trade models for index and sector play listings. Most of 
the sector share listings are also optionable, and we consider 
these triggers viable for options and shares alike. Call options 
are suitable for long play triggers while put options are suitable 
for short play triggers. 

From here we combine the best of both worlds in one fell swoop 
until otherwise noted!


Featured Plays:
--------------
See Sector Share Trade Model



Trade Management:
----------------
Option traders may choose listed In-The-Money (ITM) or Out-The-
Money (OTM) contracts by personal preference. They are selected 
based on volume, open interest and "Delta" values in that order. 

Entry triggers are points in the underlying symbol where plays 
are demonstrated as price action breaks above long triggers for 
calls or below short triggers for puts. Stops are the other 
points listed as well. 

*No entry targets listed means the model is idle at this time.


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offers stop and stop loss online option orders
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option or stock
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offers fast option executions

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ADVERTISING INFORMATION

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or any Premier Investor Network newsletter please contact:

Contact Support
The Option Investor Newsletter                 Thursday 03-07-2002
Copyright 2001, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


****************
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:
*****

None


PUTS:
*****

LPNT $33.50 +0.10 (+0.54) While shares of LPNT have meandered
sideways to slightly higher over the past week, it has become
increasingly difficult to justify taking a position, either
bullish or bearish.  Since the $32 level held as support, and
the stock is trying to push higher, we think the best course of
action is to avoid the stock.  Our stop remains intact, but risk
reward no longer looks compelling and we are moving LPNT to the
drop list tonight.  Use any weakness on Friday to exit open
positions, in favor of better plays.


***********************************************************
DAILY RESULTS
***********************************************************

Please view this in COURIER 10 font for alignment
*************************************************

CALLS              Mon    Tue    Wed    Thu 

SII      66.78    2.81  -1.05   0.80  -0.57  Amazingly higher
TDW      41.64    1.53  -0.08   0.43   0.29  Gaining strength
UTX      74.69    3.05  -0.30   1.10  -0.31  Follows the INDU
HON      39.77   -0.20  -1.20   0.70   0.77  Strong Dow component
BA       48.48    1.29  -0.92   1.65  -1.38  A little giveback
MMM     121.13    2.69  -2.86   1.42  -0.44  Marking time at $120
ETN      84.28    2.99  -1.58   0.49   0.04  Another leg higher?
ACS      50.90    2.03  -0.87   0.64  -1.09  Profit taking
FLIR     55.94    3.98  -1.24  -0.04  -1.42  Back at entry point
CREE     18.16    1.01   0.72  -0.03   0.52  Leading among chips
BAC      66.98    1.60  -1.35   1.65   0.28  Steadily working up
CHIR     48.29    0.90  -1.14   1.99   1.04  New, biotech break
DYN      31.12    2.33   0.67   0.40   1.32  New, energy rebound


PUTS

ENZN     42.83    0.35  -1.92   3.76  -2.13  Big giveback Thursday
LPNT     33.50   -0.26   0.09   0.61   0.10  Dropped, not working
HGSI     22.12    0.92  -0.21   1.76  -0.91  Rolled at resistance


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

SII $66.78 -0.57 (+1.99) SII rebounded strongly in yesterday's
session after its pullback in Tuesday's session.  The stock
rebounded from its 10-dma in yesterday's session but failed to
take out its most recent relative highs.  That failure turned
into success in today's session when SII advanced past the $69
level.  The very short term fluctuations in this stock can be
traded by the more nimble traders, using support levels such as
the 10-dma as entry points and intraday breaks to new relative
highs as exit points into strength.  Given its overbought
nature, however, it may be more prudent for swing traders to
wait for a pullback over several days in order to work off the
overbought status of the stock.  For those traders a pullback
down into the $64.50 to $65 range followed by a few sessions of
basing may be the best approach.  From there, we'll be looking
for a resumption of the stock's run.  Traders who've held on to
positions since we initiated coverage on this play should be
thinking about exit points on further strength above current
levels or at least raising stops up to protect profits.  

TDW $41.64 +0.29 (+2.17) The Oil Service Sector Index (OSX.X)
penetrated the 100 level in today's session.  The move in the
OSX.X inspired the buyers in TDW who carried the stock to yet
another relative high above the $42 mark.  Traders who took
positions in the recent days could've used today's pop to exit
plays for a nice quick profit.  However, traders need to be
careful about chasing TDW higher given the overbought status
of both the stock and the OSX.X.  Today's trading was a good
example of the risks involved with chasing the stock higher.
After the morning pop, the stock pulled back along with its
group into the afternoon on what appeared to be routine profit
taking.  We'd like to see some more of that profit taking
transpire in the coming days, which should have TDW back down
near support levels where traders can look to enter positions
ahead of the next pop higher.  One level to watch for a bounce
from is the $40 mark, where the 10-dma just below there at
$39.70 should inspire a rebound.  Those with open positions
should seriously consider tightening stops to protect against
any downside risk and protect those profits we've captured so
far this week.

UTX $74.69 -0.31 (+0.49) UTX gave back some more ground in
today's trading.  The stock pretty much echoed the sentiment
in the Dow Jones Industrial Average (INDU), both finishing
fractionally lower on the day in terms of percentage points.
Volume continued to decline during UTX's slight pullback in
today's trading, which was a good thing as it showed the
sellers didn't have a lot of conviction to drive the stock
lower.  UTX rebounded from its 10-dma at $73.25, however,
revealing that the buyers were still interested in taking the
stock higher.  The recent period of rest was needed for this
stock, but we do need to see the INDU perk up if UTX is
going to continue higher along its recent trend.  A breakout
in the INDU should see UTX advance past its recently
established overhead short-term congestion above the $75.50
level.  From there, we'll look for the stock to revisit its
recent relative highs.  Further entry opportunities may come
on dips near the 10-dma following intraday weakness in the
INDU.

HON $39.77 +0.77 (-0.02) After its ramp above $40 earlier
this week, HON has spent the last three days consolidating its
recent gains.  The stock has gyrated between the lower end of
the $38 area and the $40 level to the upside.  The three days
of sideways trading could lead to a resumption of the stock's
upward trend in the coming days if the Dow gets moving higher
again.  Short-term traders who like entering into momentum
can look for HON to break above the $40 level in tomorrow's
session, just make sure that the Dow is supporting plays on
breakouts.  If HON needs to spend more time consolidating
before running higher, it may fall back down to the $38 level
where traders can look for entries on intraday weakness.
Ideally we'll see a decline in volume on the way back down
supporting the idea of consolidation and profit taking.

MMM $121.13 -0.44 (+0.81) MMM has been rebounding from the
$120 level in the past few sessions, but each rally attempt
has been met with overhead supply, stalling the move higher.
The stock's action has been indicative of the broader market's
price action, both lacking conviction.  The one positive from
MMM's recent sideways trading is that it's helped to work
off some of the stock's short-term overbought condition.
Daily oscillators have been buried in overbought for some time
now and have recently given some up to the downside all the
while MMM has essentially traded sideways.  The removal of
some of the downside risk in this play may finally allow MMM
to resume its climb higher.  We need the broader market to
get moving if the stock is going to take out its relative
highs just above current levels at $123.70.  A breakout from
there could have MMM finally testing its all-time highs that
we've been calling for.  Dip buyers can continue using intraday
weakness between the $119.50 and $120 levels for entry points
on weakness.

ETN $84.28 +0.04 (+1.96) ETN slipped into a consolidation in
Wednesday's session and the tight trading continued into
Thursday's trading.  The stock traded on light volume and
within a very tight range.  Its ability to hold up in light of
the weakness in the broader market was once again encouraging
to witness.  So long as the market remains weak, ETN is likely
to remain in its consolidation or be pressured lower.  That
said, we need the broader market to get going higher if ETN is
going to continue along its ascent.  Traders taking positions
at current levels can manage risk with a tight stop around the
$83 level.  If ETN does breakdown from its short-term
consolidation in such a fashion, dip buyers might start to
look for a bounce from the $82 to $82.50 area, which is the
site of the stock's 10-dma.  In an advancing market, traders
can look to take entries on an advance back above the $85
level.  Look for momentum to build on a breakout above the
$86 level.  The news flow from the company remained fairly
quiet through Thursday's session, which reinforces the stock's
ties to the action in the broader market.

CREE $18.16 +0.52 (+4.00) CREE continued to trade well versus its
sector and the broader technology market in Thursday's session.
The stock gapped higher yesterday morning and slid lower on profit
taking, putting the stock back down near its ascending support
line, which has been in place since Monday.  That support
line, which can be observed on a shorter timeframe bar chart,
has been the site to look for rebounds and entry points so far
this week.  Going into tomorrow's session, traders might look
for another rebound from the support line between the $17.50
and $17.75 levels.  The fact that CREE traced a new relative
high in today's session also helps to reveal the stocks
relative strength.  It should continue working higher as long
as the Semiconductor Sector (SOX.X) doesn't implode.  Even
though CREE is relatively strong, it still needs its sector
to participate if the stock is going to work higher.  Momentum
players can use the SOX.X as a gauge of whether or not to
enter breakout plays in CREE.  Otherwise, entering on intraday
weakness seems to be the better bet over the last few days.   

ACS $50.90 -0.87 (+0.71) Another day of consolidation in the
broad markets had shares of ACS giving up some ground again, but
the bulls were ready and waiting at the $50 level.  When price
dipped to just 10-cents above that level, the stock got a quick
rebound off the lows.  The problem is that ACS is starting to
show some weakness, and the daily Stochastics are threatening to
drop out of overbought territory.  It by no means says that ACS
can't go higher, but with the momentum slowing, it is a strong
sign to snug up those stops to lock in any profits currently in
the play.  If the broad market continues higher, shares of ACS
will likely go along for the ride.  But if the market continues
to weaken, it's a pretty safe bet that shares of ACS will weaken
further, putting our $49.50 stop in jeopardy.  Target new
positions on intraday dips near the $50 level, so long as the
broad market maintains its bullish bias.  Otherwise, wait for the
bulls to get moving forward again, demonstrated by ACS pushing
through the $52.75 level on solid volume.

BA $48.48 -1.38 (+0.64) It would have been hard to believe just
a few months ago, but BA actually tagged the $50 level on
Thursday.  That's a far cry from the sub-$30 area the stock
visited in September.  But with the economy on the mend, and
Transport stocks and the Airline sector clearly on the mend,
shares of BA have been performing very well in the past month.
As good as things have been lately, we could be in for a bout
of weakness as the recent gains are digested by market
participants.  The early stages of this weakness can be seen in
the stock's action over the past few days.  The highs are
getting higher, but the bounces off the $47.50 level (the
location of our stop) appear to be weakening.  We'll stick with
our guns on this one, but be sure to keep your stops in place in
the event of a selloff going into the weekend.  A renewed bounce
from the $47.50 level will likely make for another attractive
entry point, but we would caution against adding new positions
on a breakout over the $50 level.  Instead, we would use that
sort of strength to harvest profits and wait for another
attractive entry to the upside.

BAC $66.98 +0.28 (+2.18) Tuesday's dip in shares of BAC turned
out to be a great entry point, as the stock rocketed out of the
gate on Wednesday with the rest of the Banking sector (BIX.X) to
post another all time high.  BAC added to those gains this
morning with a pop up to the $68 level, but then predictably fell
back due to a lack of follow-through from either the BIX index or
the broad market.  But it is encouraging to see that the price
held above Wednesday's close, meaning that we got yet another
all-time high out of the play.  That is all well and good, but
bullish traders should be getting a bit nervous in the near-term.
Despite the recent positive price movement, the daily Stochastics
are showing some weakness, falling out of overbought territory on
Thursday.  This could mean a drop to and retest of the $65 level
that was the site of the breakout earlier this week.  Don't
attempt to chase the stock higher at this point.  Rather, look
for an intraday dip that finds solid buying support, possibly
near $66, but entirely possible to occur at the $65 level again
before continuing higher.  Keep stops set at $64.

FLIR $55.94 -1.42 (+1.58) After out-performing for months on end,
the bullish party in Defense stocks may be getting a little long
in the tooth over the near term.  Sure the Defense Industry index
(DFI.X) could continue significantly higher over the long term,
but we saw a potentially bearish development on the DFI daily
chart.  If not for the slight rebound in the final two hours on
Thursday, we would have an almost picture-perfect 'Tweezer-top'
formation, usually a very reliable bearish candle formation.
Fortunately we didn't get a matching formation in shares of FLIR,
but there are problems there as well.  The lows have been
drifting lower the past 3 days, and with the daily Stochastics
rolling down out of overbought territory, we could be looking at
some more weakness over the next few days.  But remember the
pattern we've seen over the past several weeks, where FLIR tends
to move sharply upward, and then consolidate for 3-5 days before
making another sharp move to the upside.  Well, Thursday was the
3rd day of consolidation.  Look for support to hold in the $54-55
area, and consider initiating new positions on a rebound from
this level, so long as it comes on renewed robust volume.  Keep
stops set at $53.


**************
NEW CALL PLAYS
**************

CHIR - Chiron $48.29 +1.04 (+3.79 this week)

Chiron Corporation is a biotechnology company that applies
leading scientific approaches to discover and develop innovative
healthcare products to prevent and treat cancer and infection.
The Company brings products to the global healthcare market
through collaborations with major healthcare companies and
through three growing businesses: biopharmaceuticals, vaccines,
and blood testing.

The AMEX Biotech Index (BTK.X) is approaching a critical
breakout point at the 520 level.  That site is the level of
the index's 50-dma.  A breakout in the BTK.X could have some
of the stronger stocks in the sector following suit.  In fact,
some of the stocks in the broader biotech space have already
taken out overhead resistance levels.  In this case, a breakout
in the BTK.X would only fuel their upside momentum.  CHIR
recently broke above its short term resistance level, in doing
so gained a significant amount of relative strength versus its
group.  Clearly CHIR is a leader in the biotech space currently.
Momentum traders can look to take entries into strength above
current levels on confirmation from the BTK.X as early as
tomorrow morning.  A breakout in the BTK.X above 520 would
give the green light to enter plays into strength in CHIR.
Those who would rather wait for additional confirmation can
watch for a breakout in CHIR past the $49 level on increasing
volume, which should induce the next round of short covering
and carry the stock above the $50 level.  If you're style is
more of entering call plays on pullbacks to support levels,
then you can wait for CHIR to come back down into the $46 area.
The stock recently broke above its 200-dma and has not yet
come back down to retest the all important moving average.  If
the BTK.X continues higher, then CHIR probably won't retest its
200-dma on this leg higher.  But if the BTK.X does weaken in
the coming sessions, and CHIR slips lower, then a rebound from
the 200-dma, currently at $46.48, would offer dip buyers an
excellent entry into this strong biotech stock on weakness.
Our stop is initially in place at $45. 

***March contracts expire next week***

BUY CALL MAR-45 CIQ-CI OI=2040 at $3.60 SL=2.50 
BUY CALL MAR-47*CIQ-CT OI=1490 at $1.55 SL=0.75 
BUY CALL APR-47 CIQ-DT OI= 909 at $2.90 SL=1.75 
BUY CALL APR-50 CIQ-DJ OI= 840 at $1.65 SL=1.00 

Average Daily Volume = 1.90 mln


DYN – Dynegy, Inc. $31.12 +1.32 (+4.72 this week)

Dynegy is a provider of energy and communications solutions to
customers in North America, the United Kingdom and Continental
Europe.  The company's expertise extends across the entire
convergence value chain, from broadband, power generation and
wholesale to direct commercial and industrial marketing and
trading of power, natural gas and coal.  Additionally, the
company is involved in the transmission and distribution of
electricity and natural gas and provides retail service to
electric and gas consumers.  In the more esoteric realm, DYN
is also involved in the trading of emission allowances and
weather derivatives.

While the epidemic is far from over, the recent affliction
dubbed 'Enronitis' is gradually fading from investors'
viewscreens as they focus on the prospects of economic recovery.
The Utility sector (UTY.X) has been improving over the past few
months, having now confirmed support near the $304 level 3 times
since the September lows.  Based on the recent price action (the
UTY index is currently on the cusp of a breakout over the $334
resistance level), it looks like the bulls are showing renewed
interest in this sector of the market.  Speaking of renewed
strength, our new play, DYN, has been making great strides over
the past couple weeks, most recently breaking out over double-top
resistance at the $27 level.  To improve the bullish picture,
buying volume has been on the rise as well.  The problem we need
to deal with is the fact that DYN has been up strongly over the
past four days and with daily Stochastics buried deep in
overbought territory and price just below heavy resistance at the
$33 level, the stock is ripe for some profit taking.  We want to
be in a position to strike when that profit taking arrives, as a
dip and bounce in the $27-28 area would make for a great bullish
entry for the next leg up the charts.  Taking a look at the PnF
chart, we can see we have a fresh triple-top buy signal, and the
eventual price target equates to $52.  Clearly the stock has a
lot of upside potential and all we have to do is pick an
attractive entry point.  Because we are expecting a pullback to
occur and allow entry, we are initiating the play with a rather
wide stop at $26.75, just below the $27 support level.

*** March contracts expire next week ***

BUY CALL MAR-30 DYN-CF OI=6705 at $1.80 SL=1.00
BUY CALL APR-30*DYN-DF OI=1983 at $3.10 SL=1.50
BUY CALL APR-35 DYN-DG OI=   5 at $1.10 SL=0.50
BUY CALL JUN-35 DYN-FG OI=1870 at $2.15 SL=1.00

Average Daily Volume = 4.29 mln



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


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

ENZN $42.83 -2.13 (+0.06) A bullish breakout in the Biotech
sector (BTK.X) helped to launch shares of ENZN back above the
$45 level on Wednesday, but that turned out to be just another
bearish trade setup.  Traders that entered on the rollover near
our $45.50 stop got a nice surprise today as the stock worked
lower throughout the day, finally settling with a 4.7% loss. 
Intraday support continues to materialize just above the $42
level and it isn't yet clear if the bears will be able to pull
off the breakdown below $41 or not.  Until that answer becomes
clear, we'll continue to initiate new positions each time the
stock fails to rally through the recent highs near $45.50.
Traders looking to enter new positions on renewed weakness will
want to see the $41 level give way before playing.

HGSI $22.12 -0.91 (+1.56) Ask, and it will be given.  We were
hoping for a bit of a rebound to let us into the HGSI play near
the 20-dma, and following Biotech rally on Wednesday, shares of
HGSI rallied to within 6 cents of the 20-dma on Thursday before
rolling over and shedding nearly 4% for the day.  It looks like
that $23-24 level is going to continue to provide formidable
resistance and any intraday pop near that level should make for
attractive entries going forward.  Today's weakness shows HGSI
losing more strength relative to the Biotechnology sector (BTK.X)
and another test of the $20 support level is likely just around
the corner.  Continue to sell the rallies, so long as they keep
failing below the $24 level, especially if the bulls lose
conviction in the overall sector.  If you'd rather wait for a
breakdown before playing, then you'll want to target the $19.50
level.


*************
NEW PUT PLAYS
*************

None


************************Advertisement*************************
If you trade options online, then you need an online broker 
that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the 
option or stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and 
more; call 1-888-889-9178 or click for more information.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


**********
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
The Option Investor Newsletter                 Thursday 03-07-2002
Copyright 2001, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


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

ETN - Eaton Corp. $84.28 +0.04 (+1.96 this week)

Eaton Corporation, incorporated in 1916, is a global diversified
industrial manufacturer. Eaton is in the business of fluid power
systems, electrical power quality and controls, automotive air
management and fuel economy, and intelligent truck components for
fuel economy and safety. The Company segments its business as
Automotive, Fluid Power, Industrial and Commercial, Controls,
and Truck.

Most Recent Update

ETN slipped into a consolidation in Wednesday's session and the
tight trading continued into Thursday's trading.  The stock
traded on light volume and within a very tight range.  Its
ability to hold up in light of the weakness in the broader
market was once again encouraging to witness.  So long as the
market remains weak, ETN is likely to remain in its
consolidation or be pressured lower.  That said, we need the
broader market to get going higher if ETN is going to continue
along its ascent.  Traders taking positions at current levels
can manage risk with a tight stop around the $83 level.  If ETN
does breakdown from its short-term consolidation in such a
fashion, dip buyers might start to look for a bounce from the
$82 to $82.50 area, which is the site of the stock's 10-dma.  In
an advancing market, traders can look to take entries on an
advance back above the $85 level.  Look for momentum to build on
a breakout above the $86 level.  The news flow from the company
remained fairly quiet through Thursday's session, which
reinforces the stock's ties to the action in the broader market.

Update

ETN continues to trade extremely well as it's one of the
purest of deep cyclicals.  Its attributes have kept a bid in
shares this week and may continue to do so into Friday's
session.  Positive employment news could have the buyers back
in force, chasing the cyclicals higher.  Watch for a rally in
the Dow and look for ETN to breakout above $85.

***March contracts expire next week***

BUY CALL MAR-80 ETN-CP OI=  29 at $4.50 SL=2.25 
BUY CALL MAR-85 ETN-CQ OI=  29 at $0.90 SL=0.00  High Risk!!
BUY CALL APR-80*ETN-DP OI=2275 at $5.90 SL=3.75 
BUY CALL APR-85 ETM-DQ OI=  35 at $2.80 SL=1.75 

Average Daily Volume = 375 K



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Anything else is too slow!

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


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

Milking Q-Charts, Part IX, An Owner's Manual
Buzz Lynn
buzz@OptionInvestor.com

Welcome back to what may prove to be the final edition of Milking 
Q-Charts.  Why is that?  Well, because I'm frankly running out of 
useful ideas, as the law of diminishing returns comes into play.  
Think of it in terms of the 80/20 rule.  80% of the usefulness of 
Q-Charts was contained in the first three articles and the 
remaining six articles have served to bridge, though not complete, 
the gap on the remaining 20%.  While there are still many odds and 
ends details to write about, they add little marginal value to 
what we already know.

Just in case you missed the previous articles, you can catch up on 
the following links:

http://www.OptionInvestor.com/traderscorner/011002_1.asp

http://www.OptionInvestor.com/traderscorner/011702_1.asp

http://www.OptionInvestor.com/traderscorner/012402_1.asp

http://www.OptionInvestor.com/itrader/archive/traderscorner/031801_2.asp

http://www.OptionInvestor.com/traderscorner/013102_1.asp

http://www.OptionInvestor.com/traderscorner/020702_1.asp

http://www.OptionInvestor.com/traderscorner/021402_1.asp

http://www.OptionInvestor.com/traderscorner/022602_1.asp

http://www.OptionInvestor.com/traderscorner/022802_1.asp

There, with that of the way, and little left to cover, there is 
one more useful tool I want to demonstrate before we end this 
series.  That is the "Alerts" heading on the main menu bar at the 
top of the Q-Charts screen.

How is this useful, you ask?  Imagine having another pair of eyes, 
or for that matter, infinite pairs of eyes watching price levels 
for you that would notify you when specific target prices are 
reached.  Then you could enter a traded based on the homework 
you've already done.  This makes watching exact price movements on 
multiple stocks or indexes a snap by taking all the symbol-
toggling out of your "gotta watch that stock" process.  Just set 
the Alerts and wait for them to trigger.

Let's say for the sake of argument that we want to buy calls on 
Philip Morris (MO) - heck make it LEAPS.  But at the current 
technical level where the price is roughly $53, it appears 
overpriced.  We want to wait for a better entry than that, but we 
don't want to watch MO's chart every day or even every week to see 
if we've hit our entry target, at say $45.  Here's how to automate 
the process and alleviate the work.

First click on the Alerts menu in the main menu bar. . .


 


. . .which will drop down a menu bar that looks like the above.


Next, select Add Alerts from the menu, which should pop up the 
following dialogue box for us to work with:



 


Notice the symbol, MO, is already filled in for us.  What ever 
symbol is in the Symbol space on the open workspace pops up here.  
Also notice that there is a "Target" price for us to fill in, as 
well as a "Direction".  In plain English, this asks us where we 
want our alert triggered - at or above our target price, or, at or 
below our target price.  So let's fill in the blanks to trigger an 
alert on MO if it touches $45 or below.  

Here's what to do starting with the dialogue box above.  First 
note that the header says un-triggered, meaning we have not used 
it yet.  Go to the Target space and fill it in with "45".  It 
automatically assumes you mean dollars so the $ symbol isn't 
necessary.  If you want to get specific and trigger at something 
like $44.98, you can do that too by typing in "44.98".  It does 
NOT assume a decimal, so we have to put that in where we want it.  
But it will assume round numbers if there is no decimal.  We can 
add a comment in the Comment field if we like, perhaps to remind 
us what we're supposed to do if triggered.  

At this point, we will be sure to have selected the desired 
direction.  We'll change it to "At or Below" since we want 
notification when it hits $45 or drops below it.  In practicality, 
our trigger will be hit at the exact value on any heavily traded 
stock without much volatility.  But in a fast market on a thinly 
traded stock, the price may be completely skipped with the price 
never trading at exactly $45, thus the need for "or Below".  It 
all looks like this:



 


Conversely, if you want to short at resistance, simply pick your 
target resistance point and repeat the above process, except be 
sure that the Direction remains "At or Above".

Then all we do is click on OK.  As long as Q-charts is open and 
operating properly, an alert once triggered we will pop-up on our 
screen accompanied by a canned noise.  Once triggered, it looks 
like this:



 


Sharp-eyed readers will note that the value above and the time at 
which it was triggered have nothing to do with market hours or our 
price target of $45.  The alert was not really triggered.  But I 
had to trick Q-charts into thinking it was triggered during this 
after-hours period for demonstration purposes.  Don't sweat it, it 
will do what it's supposed to do during regular market hours.  

There, wasn't that easy?  Set as many values on as many stocks or 
indexes as you like.  Each symbol can have many different alert 
levels.  So sit back and let the machine do the work for you!  All 
you do is act when you hear the noise or see the pop up box.

Speaking of which, here are more little tidbits that will be 
useful and will help you customize your alerts.

First the useful part - when an alert triggers and the box pops 
up, but you are not ready to enter a trade just because the symbol 
hit your point of support or resistance, you can re-arm the alert 
by simply hitting the "Rearm" button on the right of the box as 
shown above.  If you want to re-arm the alert but want to change 
the price at which the alert is triggered, you can do that too.  
Just be sure to change the price first before clicking the Rearm 
button.  It will then reset to trigger at the same price or the 
new price if it has been changed.

Now for the customization part - assuming you still have the 
triggered alert box open as last shown above, click on the >>More 
button and the box will expand to the following look:



 


Observe that the Show Dialog and Play Sound buttons are checked.  
That means you will get both a sound and a pop-up box when an 
alert triggers.  You can opt for one, the other, both (default) or 
neither (Though I recommend against that, otherwise, how would we 
know?  It defeats the purpose.).  But also observe the circled 
Browse button.  By clicking on that, we get a choice of sound 
effects for our triggered alerts!  The new box looks like this:



 


Select the sound that you like.  If you want to sample them first, 
simply right-click on the sound item, wait for an interface box to 
open, and play the sound with whatever your default playback 
program happens to be.  

WARNING!  Ladies, the male voice does not sound like Mel Gibson, 
Harrison Ford, Tom Cruise, or Warren Beatty.  Gentlemen, the 
female voice does not sound like Susan Sarandon, Sharon Stone, 
Marilyn Monroe, or Raquel Welch.  My personal preference is one of 
the mechanical noises.  If you are really tricky, you can grab one 
of your own sound files and drop it into the "Sounds" file under 
Q-Charts for selection as your preferred alert sound.  Otherwise, 
play them all - select what you like.

Once again, out of space and out of time.  Let's do this for next 
time.  If you have a Q-Charts question that has yet to be 
answered, send it in.  I'll do a "Readers Write. . ." column and 
answer all that I can in the space allotted.  If I'm inundated 
with questions, we'll do it again the following week.  

Honestly, I'm out of fodder and need your help!  Until next week, 
Happy Charting!


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************
MARKET WATCH
************

An index debut on the watch list. Plus a recovery in wireless?


To Read The Rest of The OptionInvestor.com Market Watch Click Here
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**************
MARKET POSTURE
**************

More movement in the major averages has support levels higher. 
Breakouts continued in defense and energy, among others.


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