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Daily Newsletter, Thursday, 03/14/2002

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The Option Investor Newsletter                Thursday 03-14-2002
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  
************************************************************
        3-14-2002           High     Low     Volume Advance/Decline
DJIA    10517.14 + 15.29 10551.11 10474.72  1.2 bln   1742/1384
NASDAQ   1854.14 -  7.89  1873.01  1851.38  1.4 bln   1986/1580
S&P 100   584.33 -  0.37   587.15   583.26   Totals   3728/2964
S&P 500  1153.04 -  1.05  1157.83  1151.08
RUS 2000  497.76 +  2.31   499.48   494.90
DJ TRANS 2950.91 +  1.07  2956.36  2926.72
VIX        22.02 +  0.05    22.27    21.38
VXN        42.33 -  0.93    44.15    42.13
TRIN        1.72
Put/Call Ratio       .84
*************************************************************
MIXED SIGNALS

Bond yields rose today as prices on bonds fell.  This is well
illustrated by the chart of the 10-year Note Index below. On 
balance, the economic data of today, several important releases 
Tomorrow (Friday), the continued strength in the cyclical stocks 
that point to a revival of the economy, as well as a growing 
feeling that rates are as low as they can go and must begin to 
rise, are contributing to the mixed outlook and low stock volumes.
The resulting drop in the broad averages today had as much to do
with potential buyers stepping aside as to concerted selling.



 


Today’s economic data showed jobless claims for the latest week 
fell by 3,000 to 377,000, somewhat better than expected. The 
prior week's reading of 376,000 was revised higher to 380,000. 
Continuous jobless claims rose 96,000 according to the U.S. Labor 
Department. That number more than offset an 83,000 decline in
recipients reported for a week earlier, leaving the level near 
where it was for much of February. 
Business Inventories rose 
The Commerce Department reported inventories rose a seasonally 
adjusted 0.2% in January after falling 0.5% in December, versus 
expectations of a decline of -0.3%. Total business sales rose 
1.1% in January, marking the first increase in business 
inventories in 12 months. 

With sales rising faster than inventories, the inventory-to-sales 
ration fell from 1.39 to 1.38, the lowest level in nearly two 
years.  Inventories are now 6% below January 2001 levels. 
The Commerce Department also said the current account deficit – 
the broadest measure of the nation's financial standing with the 
rest of the world - rose slightly in the 4th quarter of 2001 to 
$98.7 billion from $98.5 billion in the 3rd quarter. The 4th 
quarter's $98.7 billion was slightly lower (better than expected) 
than the $101.3 billion consensus.

All in all, what the market saw today pointed to an improving 
economy.  The Dow Industrial average posted a small gain due to 
strength in Eastman Kodak (EK), Minnesota Mining (MMM) and 
International Paper (IP).  The other indexes fell slightly.
Friday’s events can easily impact the market and determine 
whether buyers will continue to stay on the sidelines and book 
some profits. Besides fluctuations that may occur from the 
expiration of options and futures, there are significant reports 
that relate to the economy and inflation:  

Friday, 03/15/02 – Figures due
PPI                      Feb  Forecast:   0.1%  Previous:    0.1%
Core PPI                 Feb  Forecast:   0.1%  Previous:   -0.1%
Industrial Production    Feb  Forecast:   0.2%  Previous:   -0.1%
Capacity Utilization     Feb  Forecast:  74.4%  Previous:   74.2%
Michigan Sentiment Index Mar  Forecast:   93.0  Previous:    90.7

After the close

Oracle Corp. (ORCL) reported third-quarter profit fell 13 
percent, meeting lowered expectations, as revenue dropped 20 
percent on a decline in sales in Asia. Shares of the stock rose a 
few pennies in after hours trading.  The stock has been under 
pressure, falling recently from the $16 area, to 13.45 at today’s 
close. On a conference call, the company said that "technology 
spending will continue to lag the overall economy even while 
economic data shows an improving economy".  If true, the tech 
heavy Nasdaq should continue to lag the blue chip, "old-economy" 
tocks.     

Adobe Systems' (ADBE) shares also rose in after-market 
dealings after the maker of publishing software exceeded first-
quarter profit estimates and posted revenue in line with 
expectations.  The company earned 22 cents a share, versus 
expectations of 20.  Some tech bright spots are found, but they 
are still few and far between.  A further example of technology’s 
continued woes was seen when a Lehman analyst cut his estimates 
for 

Micron Technology (MU), indicating that his expectation is 
that the company’s production & shipments during the recent 
quarter were less than anticipated.

Technical picture, near-term:

The near-term technical outlook suggests, as do the uncertain and 
mixed fundamental picture related to earnings and the spike up in 
bond yields, support the idea that the recent rally has run about 
as far as it can without some consolidation.  The low volume also 
points to the current lack of conviction on the near-term market 
outlook.  

The further expected consolidation I anticipate can take the form 
of a sideways move that "throws off" the overbought reading in 
the 14-day stochastic registering in the S&P 500 (SPX) 
as seen below.  Or, the consolidation can take the form of a 
deeper pullback.  Based on the recent highs moving up to the top 
envelope "band" (4.5% above), relative to its 21-day moving 
average, there is an historical tendency for the index to pull 
back, at least once, to the "mean", as represented by the 
central, 21-day moving average per the chart below.  

The other important moving average and one more widely followed, 
is the 200-day, just below today’s close.  A break of this level, 
should lead test of the 1130 area.  



 
Trading strategy – 

Look to the buy side for stocks that are in current uptrends, but 
on a further good-sized market pullback, such as into the 1120-
1130 zone, basis the SPX, or wait for the market to "prove" 
itself and for SPX to achieve a decisive upside penetration of 
well-defined overhead resistance in the 1170-1175 zone. The tech 
sector is not the most favorable place to look for current buy-
side candidates, especially in the options arena, as the Nasdaq 
Composite should continue to lag the S&P.         

Leigh Stevens


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

Coiled Markets = Entry Points!

Today's session was atypical of expiration Thursdays, especially 
during Triple-Witch events. Even though many (if not most) big 
players unwind/rollout March positions to forward months last week 
and earlier this week, some gyrations can be expected. That may 
arrive tomorrow.

As depicted in tonight's Swing Trade gameplan section, major 
indexes are coiled for action from here. Which way? Why you'll 
just have to tune in over there and find out!

Meanwhile we'll have a peek at some of the various sectors that 
may be poised to move soon themselves:

(Weekly/Daily Charts: OIX)


 

We tried shorting the Oil Services HOLDR in Sector Share model and 
barely got nicked out on our stop-loss before it turned tail & 
dropped. Has that ever happened to you, or am I alone?

Anyway, I'd short this one again if it hit resistance near $66 and 
fails from there with stop set up at $69.50 (blue). A break below 
$62.75 likewise smashes thru daily and weekly chart levels of 
support and confirms weakness. Entries near $62.75 w/stops at 
$66.25 could easily see that $56 level below... a 7 point reward 
with 3.5 points risked on the stop for green play. This HOLDR is 
of course optionable and May put contracts are reasonably priced!

(Weekly/Daily Charts: DTX)


 

Parties over for the Dow Transport index, or so it seems. Both 
stochastic values are bearish or about to become so, and price 
action seems destined to revisit the 270 or 265 area. This zone 
has been a long-term price magnet of congestion, and the top of 
that clear wedge coiled there should offer support. DTX options 
are low cost, low extrinsic value and looking good for a modest 
gain ahead.

(Weekly/Daily Charts: SWH)


 

Software HOLDR charts show the quandary faced in trying to gauge 
most tech sectors right now: mixed charts looking weak but not a 
classic rollover setup. This one short on the failure below $44 
made sense and scalpers might pick up $2 or so on the break below 
$42 on a short there, but I'd pass on this one as too ripe and 
past prime for me. Very liquid options and nice to trade, but no 
high-odds setup here

Summation
Could get active on Friday, especially the final half-hour of 
trading. Next week clears the air and prepares us for actual 
market movement devoid of expiration noise as we head into prewarn 
and earnings season straight ahead. Intraday traders can follow 
charts in Swing Trade gameplan for guidance tomorrow, but take 
profits when offered and expect a swift move into the close for 
one last trade this option's cycle!

Best Trading Wishes,
Austin P


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

Five of Five
By Eric Utley

We've been watching the Bullish Percent reading of the NYSE
Composite ($BPNYA) closely in the last few weeks.  Of the five
major market averages we track, only the NYSE remained out of
bull confirmed mode.  That changed during Wednesday's session
when the $BPNYA printed the necessary 62 box to move into a
bull confirmed state.  That move brought the five markets we
follow into bull confirmed status.  At least as far as our
Bullish Percent data is concerned, the market as a whole is
very bullish.

But the Bullish Percent data doesn't reveal the complete
picture of this market.  Digging a little deeper into
Thursday's sector performance, I find the day's top and bottom
performing groups interesting.  The day's best performing
sector was the Forest and Paper Products (FPP.X) group, a
classic deep cyclical.  On the other side, the Internet
(INX.X) space was the poorest performing group.  If nothing
else, the INX.X epitomizes the New Economy, or what's left of
it.  The divergence that we wrote off a few days ago was
even more apparent between these two sectors.

Separately, I continue to receive loads of e-mail from
bears concerning the low levels of fear as measured by the
CBOE Volatility Index (VIX.X) and Nasdaq-100 Volatility
Index (VXN.X).  We've been writing about the low level of
fear for some time, yet haven't seen a pullback in stocks.
That should prove the point that stocks can rally along
with complacency.  They won't do so indefinitely, which brings
into question timing.  Detecting the ultimate shift in
sentiment is where the money is made.

The one thing we have seen shift in the last few days is the
ARMS Index.  It had been revealing a short-term overbought
market, but that condition has been worked off in the last
few days.  The shorter term readings of the ARMS are now
back near the mean and are a non-issue at current levels.

Going into Friday's session, I'll be waiting for the latest
COT report.  Last week we saw a dramatic divergence in the
S&P 500, with commercials growing bearish and small traders
going the other way.  It'll be interesting to learn of
which direction the commercials went this week.

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

Market Averages


DJIA ($INDU)

52-week High: 11350
52-week Low :  8062
Current     : 10517

Moving Averages:
(Simple)

 10-dma: 10532
 50-dma: 10033
200-dma: 10009



S&P 500 ($SPX)

52-week High: 1383
52-week Low :  945
Current     : 1153

Moving Averages:
(Simple)

 10-dma: 1156
 50-dma: 1128
200-dma: 1148



Nasdaq-100 ($NDX)

52-week High: 2771
52-week Low : 1089
Current     : 1477

Moving Averages:
(Simple)

 10-dma: 1508
 50-dma: 1514
200-dma: 1557



Paper ($FPP)

Merrill Lynch's positive outlook on paper stocks helped the
FPP to the day's best performing sector spot.  The FPP finished
2.41 percent higher in Thursday's session.

Leaders within the sector included Weyerhauser (NYSE:WY),
Louisiana Pacific (NYSE:LPX), Georgia Pacific (NYSE:GP), Smurfit
Stone Container (NASDAQ:SSCC), and Boise Cascade (NYSE:BCC).

52-week High: 374
52-week Low : 270
Current     : 373 

Moving Averages:
(Simple)

 10-dma: 368
 50-dma: 343
200-dma: 329


Internet ($INX)

The Internet group was the worst performing sector in
Thursday's session with its 2.07 percent slide.  The recent
reshuffling of the INX components included several networks
and software components.  For instance, Cisco (NASDAQ:CSCO),
Juniper (NASDAQ:JNPR), and Check Point (NASDAQ:CHKP) are
current components.

Juniper was the worst performing component, followed by
Amazon (NASDAQ:AMZN), Earthlink (NASDAQ:ELNK), and CMGI
(NASDAQ:CMGI).

52-week High: 243
52-week Low :  76
Current     : 121

Moving Averages:
(Simple)

 10-dma: 123
 50-dma: 124
200-dma: 136

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

Market Volatility

The VIX finished fractionally higher in Thursday's session.
Triple witching could have an artificial impact on the VIX in
tomorrow's session.

The VXN continues to trade around its 10-dma.  It closed lower
in Thursday's session despite the weakness in the Nasdaq-100
(NDX.X).

CBOE Market Volatility Index (VIX) - 22.02 +0.05
Nasdaq-100 Volatility Index  (VXN) - 42.33 -0.93

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

          Put/Call Ratio  Call Volume   Put Volume
Total          0.84        569,597       480,982
Equity Only    0.78        437,892       340,167
OEX            1.13         27,908        31,407
QQQ            1.43         22,031        31,503
 
-----------------------------------------------------------------

Bullish Percent Data

           Current   Change   Status
NYSE          62      + 0     Bull Confirmed
NASDAQ-100    68      + 0     Bull Confirmed
DOW           77      + 0     Bull Confirmed
S&P 500       76      + 0     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  1.15
10-Day Arms Index  1.02
21-Day Arms Index  1.15
55-Day Arms Index  1.24

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      1742           1384
NASDAQ    1986           1580

        New Highs      New Lows
NYSE      138             20
NASDAQ    130             31

        Volume (in millions)
NYSE     1,208
NASDAQ   1,472

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

Commitments Of Traders Report: 03/05/02

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

Commercial interests added a significant number of short
positions for a marked increase in the group's net short
position.  The group added more than 13,000 shorts while
reducing longs by more than 5,000 contracts.  Not by surprise,
small traders went the opposite direction in a big way.  The
group reached its most bullish position in the last year.

Commercials   Long      Short      Net     % Of OI 
02/19/02      355,905   416,664   (60,759)   (7.9%)
02/26/02      366,258   432,258   (66,000)   (8.3%)
03/05/02      361,254   445,989   (84,735)  (10.5%)

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
02/19/02      130,856     63,311   67,545     34.8%
02/26/02      139,183     62,087   77,096     38.3%
03/05/02      161,711     60,941  100,770     45.3%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year: 100,770 - 3/05/02
 
NASDAQ-100

Nasdaq commercial remained relatively inactive in the most
recent reporting period.  The group's net short position grew
by a modest amount.  Meanwhile, small traders continued their
back and forth ways, now holding a net long position.

Commercials   Long      Short      Net     % of OI 
02/19/02       33,871     35,690    (1,819)  (2.6%)
02/26/02       33,589     34,091      (502)  (0.7%)
03/05/02       33,549     35,419    (1,870)  (2.7%)

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
02/19/02        9,966     8,073     1,893     10.5%
02/26/02        9,517    11,416    (1,899)    (9.1%)
03/05/02       11,961    11,214       747      3.2% 

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

Dow commercials reduced their net long position in the most
recent reporting period by adding more shorts than longs.
The group added 4,444 shorts and 3,714 longs.  Small traders
meanwhile weren't as convinced with their actions.  We see only
a slight increase in the group's net bearish position.

Commercials   Long      Short      Net     % of OI
02/19/02       29,606    17,953   11,653     24.5%
02/26/02       33,322    21,110   12,212     22.4%
03/05/02       37,036    25,554   11,482     18.3% 

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
02/19/02        4,654    10,431    (5,777)   (38.3%)
02/26/02        6,333    12,547    (6,214)   (32.9%)
03/05/02        6,589    13,057    (6,468)   (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
***********************

Index Trader Swing-Trade Game Plan: Thursday 3/14/2002 
Coiled Markets = Entry Points!

News & Notes: 
------------
Thursday's session was a yawner, but small range days lead to 
large range days. Was this a setup for something substantial on 
Friday? Hmmm...


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


 

Thursday's (in)action helped complete some very clear bearish 
descending triangles in the major indexes. I will be looking to 
play the downside on break below 582.50 in the OEX with stops (if 
any) set at 584.50 just outside this upper triangle resistance 
line (green). I expect price action to break below 582 and 
possibly trace just beneath that level for awhile. If it hovers 
near there but below the red line into Friday's close I'd then 
play April 570 puts at 4:05 - 4:10pm entry and hold them thru the 
weekend into next week.

[60/30-Min Chart: SPX]  


 

Actually, I'd be more apt to personally play SPX April 1125 puts 
on a Friday close below (but near) 1150 area on entry between 4:05 
4:10pm. Keep in mind that all index and sector options including 
QQQs trade until 4:15pm EST every session except last trading day 
of each calendar month, when they cease trading at 4:00pm EST.

Should these bearish triangles break to the upside in what would 
then be bullish fashion, call plays can be attempted but beware 
quick failure in bull-trap fashion set by the bears. Daily charts 
(not shown) are totally bearish right now and call plays would 
buck the "trend".

[60-Min Chart: QQQ]  


 

QQQs are in a similar triangle (not drawn) and actually closed 
below what would be bottom line support. A two-day channel below 
Wednesday morning's gap can be played, and any pop to 38 area 
might immediately fail right there as well.

Summation: 
----------
Friday is a day trader's session only using March options for 
obvious reasons. But I would not be scared to play April puts and 
hold them over the weekend myself and actually expect to do so if 
it's another sideways session. A big down move would have me 
rethink risk/reward while a sudden Friday rally might just make 
the downside twice as attractive after the 4:00pm equity bell. 
Stay tuned to MM updates!

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: 38 (QQQ-CL)            Apr Calls: 106 (DJV-DB)  
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 
                                

Mar Puts: 37 (QQQ-OK)             Apr Puts: 105 (DJV-PA) 
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break above 

----------

OEX                               SPX
Mar Calls: 600 (OEY-CT)           Apr Calls: 1175 (SPT-DO)
Long: BREAK ABOVE none            Long: BREAK ABOVE none
Stop: Break Below                 Stop: Break Below 


Mar Puts: 590 (OEB-OR)            Apr Puts: 1150 (SPT-PJ)
Long: BREAK BELOW none            Long: BREAK BELOW none
Stop: Break Above                 Stop: Break Above 


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


Index Trader Sector-Trade Game Plan: Thursday 03/14/2002 
--------------------------------------------
Treading Water


News & Notes: 
------------
Indexes & sectors merely marked time on Thursday, and Triple-Witch 
expiration on Friday will create artificial gyrations at the open and/or 
close. We'll remain in management mode only until the weekend gameplan 
arrives. 

Featured Plays: 
--------------
None 


Summation: 
----------
No new entries listed for tonight.


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):
------------------------
None


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

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

IYE
Short:  49.70
Stop:   52.00

IJJ
Short:  97.00
Stop:  101.00

XLE             
Long: 26.75     
Stop: 28.50     


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The Option Investor Newsletter                 Thursday 03-14-2002
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:
*****

TDW $40.29 -1.09 (-0.51) The Oil Service Sector Index (OSX.X)
pulled back by about 1.5% in today's session on further
negative analyst comments.  That pressured TDW for the
second consecutive session as the stock traded down below
its 10-dma to the $40 level.  Given the recent pullback,
we're on alert for an end to the trend in the oil service
group.  We're looking to book gains in TDW and wait for the
stock to pullback for a better entry.  Exit open positions
on any strength early tomorrow.

UTX $74.65 +0.76 (-0.67) UTX looks like it's losing some
of its recent relative strength.  The stock appears to be
rolling over with the sideways trading in the Dow Jones
Industrial Average ($INDU).  The recent pullback may reveal
an end to this stock's recent run.  Traders still holding
open positions can look to book gains on any strength
early tomorrow.

BA $47.61 -1.61 (-1.79) It was a fun ride while it lasted, but
it's time to lock in our gains on BA and move on.  The first
sign of real weakness came yesterday as the daily Stochastics
finally dropped down out of overbought territory and the price
came to rest just above our $49 stop.  That support level was
broken early this morning after the company announced the
potential impact to its balance sheet of pending changes to
acceptable accounting practices.  In the end BA fell to its
lowest closing level in the past 2 weeks and all positions
should have been stopped out on the early plunge this morning.
Clearly we are dropping the play tonight, as the momentum has
run out.


PUTS:
*****

ENZN $45.28 +0.27 (+2.40) Failure of our ENZN play to perform
certainly isn't because we didn't give it enough time.  But time
wasn't enough as the Biotech sector (BTK.X) has continued to
improve.  The real turning point came earlier this week, as the
stock posted 3-consecutive doji candlesticks before really
catching a bit of a rally yesterday.  On Thursday, ENZN rallied
through the $46 level before backing off a bit.  But we still
ended up with a gain, on a day where the BTK actually posted a
fractional loss.  The spectre of a major breakdown has dimmed
considerably this week, especially with the move through the
20-dma over the past 2 days.  While we haven't been stopped out
on a closing basis, we're still going to move ENZN to the drop
list tonight.  There are better bearish trades out there.


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

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

CALLS              Mon    Tue    Wed    Thu

TDW      40.29    0.69   0.67  -0.78  -1.09  Dropped, downgrade
UTX      74.65    0.37  -0.69  -1.11   0.76  Dropped, sideways
HON      40.37    0.26   0.06   0.06   0.53  Coiling around $40
BA       47.61    1.48  -0.60  -1.06  -1.61  Dropped, stopped
ETN      83.92    1.00  -1.14  -0.21   0.80  Waiting on the INDU
ACS      52.58    0.46  -0.52   0.39   0.01  Broke, pulled back
BAC      67.00   -0.08   0.25  -0.45  -0.55  Consolidating gains
CHIR     46.99    0.01  -0.64   0.15  -0.02  Biotech perking up
DCN      21.75    0.51   0.47  -1.07   1.05  Pullback, rebound
SYMC     40.95   -0.15  -0.07   0.51  -1.29  Resistance at $43
IDPH     68.22   -1.33   0.22   2.93  -1.09  Popped on upgrade
CEPH     66.31    1.68  -1.01   0.29   1.41  New, bye-bye 50-dma


PUTS

ENZN     45.28    0.17   0.07   1.89   0.27  Dropped, upside risk
CTX      58.20    0.86   0.99  -1.24  -1.68  Rolling over on cue
EMLX     29.25   -2.80  -0.36  -0.47  -1.83  Broke below 200-dma
NVDA     50.63   -0.68  -3.02  -0.99  -2.97  Trading poorly
RYL      90.56    1.42  -0.37  -2.12  -1.82  New, housing rollover
CCMP     63.30   -0.25  -8.37  -0.77  -1.66  New, compressing


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

IDPH $68.22 -1.09 (+0.63) IDPH gapped higher Wednesday morning
on favorable news from one of its competitors.  Actually, the
news was bad for IDPH's competitor, so naturally it was good
for IDPH.  The company, Corixa, suffered a setback in its
development of its cancer treatment which is expected to
compete with IDPH's Zevalin.  Several analysts upgraded IDPH
based on the news, which caused the stock to trade sharply
higher yesterday morning.  Although the trade higher was nice
to see, it was very difficult to gain a favorable entry after
the gap.  At this point, we're now looking for IDPH to back
and fill over the next several sessions, and looking for an
entry on an intraday dip.  One level to consider is the stock's
10-dma, currently at the $67.26 level.  IDPH bounced from that
area in today's session.  Reference the 10-dma going forward
for a possible entry on weakness.  Below the 10-dma, traders
might watch for IDPH to fill its gap in the coming days.  In
order for the gap to be filled, IDPH needs to trade down to the
$66.38 level.  A pullback and subsequent bounce from that
level would offer traders a favorable entry point.  Just make
sure that volume is relatively lower on the way back down as
it would reveal profit taking.

HON $40.37 +0.53 (+0.52) It's been an amazing week for HON as
the stock continues to trade around the $40 level with
regularity.  The narrow trading of the stock this week has
been a pain to option traders, though, as we've watched time
premium decay in open positions.  We think that HON's strange
price action is attributable to March options expiration.  If
that's the reason, we should see those March positions taken off
in tomorrow's session, which could allow HON to trade on its own
merits from here.  What we'll be looking for is the stock to
trade above the $40 price magnet.  Traders can look for an
advance up to the $41 level as confirmation that HON is free
from the grips of the $40 level.  It will probably take strength
in the Dow Jones Industrial Average ($INDU) in order for HON
to trade past the $41 level, so make sure to confirm direction
in the broader market before pursuing an entry above $41.  If
the stock does dip in tomorrow's session, look for a bounce from
the 10-dma, which currently sits below at the $39.67 level.

ETN $83.92 +0.80 (+0.45) ETN is trading in a sideways, to
slightly lower fashion.  The stock has spent this week
consolidating its recent rally, which is a normal part of the
process.  However, we need to see the stock start to resume its
upward climb if this play is going to remain on the list in the
foreseeable future.  ETN needs the broader market to pick up the
pace if it's going to move higher.  Traders need to keep a close
watch on the Dow Jones Industrial Average ($INDU) as well as the
S&P 500 (SPX.X) as they both will reveal the sentiment in ETN.
We still haven't seen the stock breakout above its short term
resistance at the $85 level.  In a positive market environment,
we should see ETN take out that level on a retest of its
relative highs.  A strong rally on healthy volume above the
$85 level could be used as an entry point into new positions.
If the dip buyers continue to emerge around the $82.50 level,
then look for bounces from that area for possible entries on
weakness.

CHIR $46.99 -0.02 (-0.50) In the last two days, we've seen
CHIR attempt to breakout from its recent coiling trading
range.  Prior to yesterday's session, CHIR had traced a
narrowing range in price, which revealed the consolidation that
was taking place in the stock.  We saw an inside day earlier
this week, which helped to reveal that trend further.  In
yesterday's session, the stock tried to get moving to the
upside, but rolled over at the $48 level.  Today's trading saw
CHIR once again try to take out its resistance at $48, but
again the stock failed.  It traded as low as its 200-dma before
rebounding.  The volatile trading in the last two days should
give way to a move in one direction or another.  With the
Amex Biotechnology Sector Index (BTK.X) trading well versus the
broader market, we're looking for the BTK.X to breakout to the
upside and for CHIR to follow it higher.  Turn to the BTK.X
early tomorrow for insight into the sector sentiment in the
biotech group.  If the BTK.X continues advancing, look for
CHIR to rally above the $48 level, which could be used as an
action point.

SYMC $40.95 -1.29 (-1.00) The bulls and bears have been
duking it out in SYMC in the last two days.  In yesterday's
session, the stock traded very well versus the Software Sector
Index (GSO.X) and the broader Nasdaq.  The stock looked like
it could breakout from its recent consolidation.  But the
breakout wasn't to be.  SYMC gave back its gains in today's
sessions as it caught up with the weakness in the GSO.X and
the broader Nasdaq.  The stock continues to face selling
pressure just below the $43 level.  Today's high was set at
the $42.70 level, while yesterday's intraday high was set
at $42.72.  At the same time, the buyers beneath the market
continue to emerge above the $40 level.  They bought the
stock today as it approached the 10-dma at $40.87.  What
we're looking for is SYMC to breakout above the $43 level
in a favorable market environment.  Such a move should
produce a short term short covering rally, which could be
good for a couple of quick points to the upside.  Otherwise,
look for a rebound above the $40 area for entry points on
intraday pullbacks.

DCN $21.75 +1.05 (+0.96) DCN pulled back quite a bit in
yesterday's session on the broader market weakness.  Volume
remained relatively active during the routine pullback as it
appeared some of those bulls who got in down in the mid teens
decided to take profits.  The stock did however rebound back in
today's session, nearly erasing all of its losses from
yesterday's session.  Volume again remained active on the way
back up in today's session.  The slight strength in the Dow
Jones Industrial Average ($INDU) most likely contributed to DCN's
rebound in today's session.  We'll continue to look to the
INDU for insight into the future price action of DCN over the
coming sessions.  Dip buyers can continue to turn to the 10-dma
for possible entry points on weakness.  The stock nearly
traded down to its 10-dma in yesterday's session, possibly
revealing that the buyers are interested in that level.  The
10-dma currently resides around the $20.61 level.  For those
who prefer entering new plays into strength on a momentum
type trade, look for strength in the broader markets,
including the INDU and the S&P 500, and look for DCN to advance
past the $22 level on active intraday volume.

ACS $52.58 +0.01 (+0.34) After finding resistance near the $53
level for the better part of 2 weeks, shares of ACS finally poked
through to hit an intraday high of $54.50 this morning before the
bears dragged the stock back to end the day up a mere penny.
What does this tell us?  Buying the dips is still the way to
pursue bullish trades right now.  For now, support appears to be
firm in the $51.50 area, and catching a bounce from that level
would make for a good entry as we wait for the next run at the
$55 resistance level.  There is one note of caution here though.
The large pullback from the highs on Thursday managed to push the
daily Stochastics into decline and out of overbought territory
to boot.  This is a bearish sign, and we'll want to see solid
buying volume support any bounce before we take on new positions.

BAC $67.00 -0.55 (-0.83) After running to new 2-year highs, it
is no surprise that we have seen a bit of profit taking in the
Banking index (BIX.X) over the past couple sessions.
Fortunately, the selling has been rather light, and our BAC play
has followed suit, consolidating between $67-68 on light volume
over the last 2 days.  The lows on Thursday came right at the
10-dma ($66.80), and now we're looking for the next bounce to
give us an entry for the stock's next run at new highs.  While
intraday oscillators are bottoming out in oversold territory, we
do need to be careful, as the daily Stochastic has now tipped
over out of overbought territory and could be hinting that the
run is about over for the time being.  We'll continue to target
bounces from support between $66-67, but we're keeping our stop
in place at $65.75.  Don't try to catch a falling knife if that
level is penetrated.


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

CEPH - Cephalon $66.31 +1.41 (+2.37 this week)

Cephalon, Inc. is an international biopharmaceutical company
focused on the discovery, development and marketing of products
to treat sleep disorders, neurological disorders, cancer and
pain. In the United States, the Company markets three products,
Provigil (modafinil) Tablets [C-IV] for treating excessive
daytime sleepiness associated with narcolepsy, Actiq (oral
transmucosal fentanyl citrate) [C-II] for the management of
cancer pain in opioid tolerant patients, and Gabitril
(tiagabine hydrochloride) for the treatment of partial
seizures associated with epilepsy.

As the biotech industry matures, the leaders are emerging.
Several companies are bursting into profitability, which is
appeasing investors.  Cephalon reported its most recent
quarter about three weeks ago.  The company reported that
it had turned a profit from operations for the first time
in its history.  The company cruised past its estimates by
reporting a profit of 17 cents per share.  Estimates had
called for the company to report a profit of 14 cents.  The
surprise earnings came on higher sales of the company's
main drug for anti-sleepiness.  The company also saw an
increase in revenues from its cancer pain killer and from
its anti seizure medication.  The company went on to raise
guidance for its next quarter by one penny per share in
profits.  That favorable fundamental news has been
propelling bullish technicals in this stock.  In today's
session, CEPH broke out above its 50-dma, which is a level
that has capped the stock's rally in the last three trading
days.  With the breakout and close above the 50-dma, CEPH
should be able to continue higher over the short term as
long as the AMEX Biotechnology Sector Index (BTK.X)
continues to trade positive.  Look for strength in the BTK.X
early tomorrow to gain new entry points into CEPH plays.
Watch for an advance past today's high as a possible action
point and target the $70 to $71 level to the upside in the
next several trading days.  To the downside, the 50-dma
should now serve as support from below.  That 50-dma currently
sits at the $65.17 and could attract dip buyers in the coming
sessions.  If the stock falls beneath its 50-dma, turn to the
converged 10-dma and 200-dma at the $63 level for a favorable
entry point on protracted weakness in the biotech sector.  Our
stop is initially in place at that $63 level. 

BUY CALL APR-65 CQE-DM OI=1815 at $6.00 SL=4.50 
BUY CALL APR-70*CQE-DN OI= 511 at $3.30 SL=1.75 
BUY CALL MAY-65 CQE-EM OI= 672 at $7.80 SL=6.00 
BUY CALL MAY-70 CQE-EN OI=2216 at $5.10 SL=3.75 

Average Daily Volume = 2.43 mln



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

CTX $58.20 -1.68 (-1.27) While our CTX play was skating on thin
ice on Tuesday, having rallied close to our stop, that rally
turned out to be an excellent opportunity to initiate new
positions.  Yesterday we saw the stock weaken near the $61.50
level and roll over and the selling party really picked up steam
going into the closing bell today.  CTX gave up 2.8% and selling
volume was on the rise at the end of the day as intraday support
at $58.50 gave way.  CTX is now sitting on support at the $58
level (reinforced by the 20-dma) and we need to see this level
give way if the bears are going to really press their advantage.
We would really like to see one more failed rally near $60 to
allow for late entries into the play, but we may just have to
settle for entering on a breakdown below the $58 level.  We're
lowering our stop to $61.50 tonight.

EMLX $29.25 -1.83 (-5.56) The fledgling breakdown in shares of
EMLX that we highlighted earlier this week is really becoming
well-established, with the breakdown under the 200-dma ($30.21)
on Thursday.  That doesn't mean that we can buy puts blindly,
but the bears are definitely gaining momentum.  The next level
of significant support is found in the $27-28 area (an area of
consolidation from last November), which is also the site of the
50% retracement of the fall rally.  Prior support near $31.50
has now become resistance and a failed rally near that level
would make for a solid entry point.  This is a distinct
possibility now that the daily and intraday Stochastics
oscillators are all buried in oversold territory.  An oversold
bounce would make sense, especially following Thursday's nearly
6% slide on above-average volume.  Lower stops to $32.50 tonight.

NVDA $50.63 -2.97 (-7.66) There's nothing like catching a
breakdown in progress to put a smile on a bearish trader's face.
As the Semiconductor index (SOX.X) has pulled back from last
week's rally, shares of NVDA have taken a tumble, giving up $7
in just the past 3 days.  While volume has been just about
average, we need to keep in mind that this decline is taking
place in the midst of light expiration week volume.  NVDA is
nearing the $49-50 support level, where it bounced on its most
recent decline in late February.  Reinforcing this support level
is the 200-dma at $49.15 and the 50% retracement at $48.21.  The
current column of O's on the PnF chart is now giving us a bearish
target of $42, and that target will continue to drop as this
column of O's continues to grow.  That being said, a bounce from
the $49-50 level is likely and would make for a good opportunity
to lock in some profits and wait for a fresh entry point.  And
that entry is likely to come from a failed rally at either the
$52.50 or $54 intraday resistance levels.  We're lowering our
stop to $54.50 tonight.


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

CCMP - Cabot Microelectronics $63.30 -1.66 (-11.05 this week)

Cabot Microelectronics is a supplier of high performance
polishing slurries used in the manufacture of advanced
integrated circuit (IC) devices, within a process called
chemical mechanical planarization (CMP).  CMP is a polishing
process used by IC device manufacturers to flatten many of the
multiple layers of material that are built upon silicon wafers
and necessary in the production of advanced ICs.  CMP enables
IC device manufacturers to produce smaller, faster and more
complex IC devices with fewer defects.

What goes up, must come down and the taller they are, the harder
they fall.  That has certainly been the case with the
Semiconductor index (SOX.X) this week.  After the nearly vertical
ascent last week, the SOX has reversed course and has rapidly
given back half of last week's gains.  Shares of CCMP rose
swiftly last week on hopes of a strong economic rebound, but
clearly investors are having second thoughts as evidenced by the
stock's nearly 15% decline in the past 3 days.  As if that
weren't bad enough, CCMP has now penetrated both its 200-dma
($65.82) and the 50% retracement level ($65.18) of the fall
rally.  Both of these levels are likely to act as resistance
going forward and a failed rally in the $65-66 area looks like a
good place to initiate new positions.  The PnF buy signal that
was generated just last week has now been negated and replaced
with a fresh sell signal with today's double-bottom breakdown,
creating a fresh price target of $52.  We don't know whether it
will get that far, but a decline to the $55-57 support level
certainly looks achievable.  We're initiating coverage with our
stop set at $67.50, just above recent intraday resistance.

BUY PUT APR-65 UKR-PM OI=556 at $6.40 SL=4.50
BUY PUT APR-60*UKR-PL OI=829 at $4.00 SL=2.50
BUY PUT APR-55 UKR-PK OI=642 at $2.45 SL=1.25

Average Daily Volume = 1.19 mln



RYL - The Ryland Group $90.56 -1.82 (-2.89 this week)

The Ryland Group is a homebuilder and mortgage-finance company
that has built more than 175,000 homes.  Additionally, the
Ryland Mortgage Company (RMC) has provided mortgage financing
and related services for more than 155,000 homebuyers.
Currently, Ryland homes are available in more than 260
communities in 21 markets across the United States.

While Housing stocks have been virtually untouchable by the
bears for the past 6 months, it looks like that invincibility
is starting to wear off.  Perhaps all the good news (record
housing numbers) is already factored into stocks in the sector,
but the sellers are starting to gain traction.  After charging
to new highs last week, the DJ US Housing index ($DJUSHB) is
showing signs of weakness and is in danger of breaking below the
$560 support level.  We've been on the right side of this trend
change with our CTX play this week, so this is our chance to pick
on another home-builder that is ripe for a fall.  RYL had a
stellar run over the past 6 months, more than doubling in price
from its September lows near $40.  But recent support near $91.50
gave way on Thursday, allowing the stock to trade below $91 and
give a sell signal on the PnF chart, with a bearish target of
$85.  But we really don't see strong support on the candle chart
until the $80 level.  A failed rally in the $92-93 area would make
for a great entry, although we wouldn't mind trading the breakdown
under $90 if it came on continued strong volume.  Note that the
print of $90 would produce another double-bottom breakdown on the
PnF chart, reinforcing the bearish picture.  We are starting the
play with our stop set at $94.

BUY PUT APR-90*RYL-PR OI= 54 at $5.00 SL=3.00
BUY PUT APR-85 RYL-PQ OI=165 at $3.10 SL=1.50

Average Daily Volume = 454 K



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The Option Investor Newsletter                 Thursday 03-14-2002
Copyright 2001, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


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

CTX – Centex Corporation $58.20 -1.68 (-1.27 this week)

The top home builder in the U.S., CTX operates in 20 states and
Washington DC, as well as in Latin America and the UK.  The
company builds almost 19,000 homes a hear with an average price
tag of $190,000 for both first-time and move-up buyers.  The
company has subsidiaries that offer home security systems and
pest-control services, as well as construction contracting for
hospital, school, office building and hotel projects.  Rounding
out the picture, CTX has interests in land development, mortgage
banking, commercial real estate, and construction supply
manufacturing.

Most Recent Update

While our CTX play was skating on thin ice on Tuesday, having
rallied close to our stop, that rally turned out to be an
excellent opportunity to initiate new positions.  Yesterday we
saw the stock weaken near the $61.50 level and roll over and the
selling party really picked up steam going into the closing bell
today.  CTX gave up 2.8% and selling volume was on the rise at
the end of the day as intraday support at $58.50 gave way.  CTX
is now sitting on support at the $58 level (reinforced by the
20-dma) and we need to see this level give way if the bears are
going to really press their advantage.  We would really like to
see one more failed rally near $60 to allow for late entries
into the play, but we may just have to settle for entering on a
breakdown below the $58 level.  We're lowering our stop to
$61.50 tonight.

Comments

The recent rise in long term rates could spell trouble for
the mortgage business.  That in turn would adversely impact
the housing stocks.  These stocks remain very close to their
all-time highs, but have shown weakness in the last two days.
We're looking for CTX to breakdown below the $58 level in
tomorrow's session, especially if the inflation report comes
in higher than expected, which should send rates higher.

BUY PUT APR-60 CTX-PL OI= 179 at $4.50 SL=2.75
BUY PUT APR-55*CTX-PK OI=1520 at $2.10 SL=1.00

Average Daily Volume = 952 K



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

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

Unbelievable!  Never could a movie series have hoped to make it to 
part X, except for maybe "Mr. Rambo goes to Washington", or "Star 
Wars - Return of the Geriatrics".  If this were a box office 
production, I'd be rich!  On the other hand, it could have been a 
string of box-office failures that got produced anyway.  
Fortunately, there is value in education, especially if it helps 
us to make money in a professional pursuit!  

To that end, and thanks to all readers who sent in questions, we 
could easily proceed with part XI next week, or more, as we 
continue the series on Milking Q-Charts for all they are worth.

Again, 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

http://www.OptionInvestor.com/traderscorner/030702_1.asp

We left off last week with what I thought was little left to 
cover.  And thus I asked readers to send in their questions in 
hopes that we would find a subject not yet well-covered.  Lo and 
behold, faithful readers came through with some good ones.  So 
without wasting any more time, let's get to them.

Readers write:  Hi Buzz!  I've really enjoyed your series on 
setting up the q charts.  I was wondering if you've included in 
your series how to setup and manage the retracement brackets.  If 
you've done this already, could you provide me the link to the 
article?  Thanks.  JS 

Actually, over the course of the last few weeks, I've had similar 
requests from a few readers.  While I touched on the subject in 
the second half of Part V, there appears a need to cover this in 
more detail - at least on drawing part.  We'll stick to that issue 
rather than covering the science, meaning and nuances of their use 
in trading.  For that, follow Jeff Bailey in the Market Monitor. 

We start by opening Q-charts and going to our favorite chart, then 
selecting the timeframe in which we want to run the retracement 
brackets.  I'll use the daily SPX in this example.  The basic 
chart, void of any indicators looks like this:



 


Once here, select the retracement bracket tool from the menu icon 
bar, which looks like this:



 


A pencil with this icon on it should appear as your cursor.  That 
is what we will use to start, draw, and stop the lines.  So where 
we start a line becomes the next big question.  The answer is we 
start the line always at the beginning of move from which we want 
to retrace.  If we want to see the retracement levels from last 
May's highs to last September's lows, we would start in May and 
move to September.  Conversely, if we want retracement levels 
downward from last September's low to January's high, we start in 
September and move to January.  In our SPX example, we'll use the 
May to September fall to see where the SPX might bounce back.



 


Start by placing the retracement icon cursor at the May high, then 
left click.  That tells the cursor where to start the yellow line.  
You can either hold the mouse button down in a "drag and drop" 
fashion while you search for the end point.  Or the mouse in this 
case will do the work for you.  Either way, the line will follow 
where the mouse leads.  Once you have reached your end point in 
September, release the mouse button if you "drag and dropped".  Or 
simply click again at the ending point if you did a simple left-
click to begin with.  You will now see the levels of retracement 
lines drawn on your chart that correspond to the yellow line.  

If you don't like where they ended up and want to start over, you 
can right-click anywhere on the yellow line or on the retracement 
level lines.  The following menu box pops up.



 


Simply select Remove Line from the menu, left-click, and it's 
gone.  You are free to start over.  You might consider this if 
trying to perform a "fitted" retracement wherein you want the 
retracement lines to match up with, or "fit", an existing candle 
pattern.  I do this sometimes to work backwards to see if I picked 
the correct starting or stopping point.  Fitting sometimes help to 
determine whether a wick in candle-price action is important or 
not.  That is a purely personal and subjective matter with which 
you will get comfortable as you use the function over time.

OK, great.  But I can't see the 50% retracement line on my bracket 
that I just drew.  While you can set your preferences for one 
particular chart space by using the Preferences selection in the 
menu above, it won't remember that setting on any other chart, 
which forces us to set each chart by hand.

There is a simpler way to get the settings to hold throughout the 
whole workspace and in fact, the whole Q-charts program without 
having to set each chart by hand.  Go to the top main menu bar and 
select Draw, then Preferences like this:



 


Once you click on Preferences, a new dialogue box pops up that 
allows you to set your own 50% if you like.



 


It also allows you to set everything else while you are at it.  
You can set the color of the regression line and its thickness.  
You can permanently set the percentages you want displayed.  You 
will likely have to hand set the 50% retracement, but once you do, 
it will remain to your setting until you change it again.  You can 
also choose the thickness of the retracement level lines as well 
as their color.  Don't want some of the levels to show?  Simply 
uncheck the "Display" box.  As a data junkie, I personally set all 
the Label buttons too.  You can do as you please.  The 
possibilities are infinite.  When you have what you want, click on 
OK, and start regressing, err. . .I mean using the regression tool 
to your heart's content!

The next question comes from a reader who wants to know how to 
find a stock in a specific sector:  Hello Buzz, Within Qcharts how 
do you go about finding what sector a particular stock belongs to?  
If I missed this in the "Milking Qcharts" series I apologize.  
Thanks, T.

Can this actually be done in Q-Charts?  Not directly.  But through 
some sleuthing and a bit of "hunt and peck" work, we might be able 
to find out if it is classified within any Q-Charts defined 
sectors.  Let's say we want to look for GE to see what sector it 
might be in.  That's a tall order because GE is into just about 
every business from manufacturing to finance to medical equipment.  
Where to look for starters?

We have to get an active quote sheet open for this one.  I won't 
rehash the mechanics of it here since we can find that in Part III
http://www.OptionInvestor.com/traderscorner/012402_1.asp.  So open 
a fresh quote sheet by clicking on the double-quote icon.  Once we 
have that, notice that we now have a new set of menu icons that 
looks like this:



 


Click on the Import Sectors List button and the following menu 
pops up:



 


This is where the sleuthing part comes in.  We now have to ask 
ourselves a good question like, "Where will I most likely find 
XYZ?", or GE in this case.  "Conglomerates" seems a good place to 
start.  Lo and behold, when we click on it, a sub-category drops 
down labeled (not surprisingly) "Conglomerates".  By clicking on 
the sub-category, our quote sheet will fill in with all of those 
stocks that Q-Charts has chosen to categorize under 
"Conglomerates".  No surprise then that GE will show up on that 
list, and we thus know by working backwards under which sector the 
stock falls.  

Now suppose the search is for an obscure mid-western bank or some 
other stock that flies under the radar.  The search becomes more 
like that of a rat searching for cheese in a maze.  Plus there is 
a good chance there will be no cheese unless the rat is lucky.  
Even so, we might start by looking under "Financial".  We can 
click on the word or click on the "+" sign to find the sub-
categories.  It would then look like this:



 


From here, the hunt for cheese begins.  If we have no clue where 
to look based on these categories, we systematically start opening 
them from the top.  Once we click on the sub-category, we watch 
the quote sheet fill in and see if our stock appears there.  Not 
there?  Go to the next one and repeat until found.  Still not 
there after searching all sub-categories?  Bummer.  Q-charts 
probably doesn't contain it on one of its category lists, thus 
we'll never unearth what sector the stock hales from - at least 
not from Q-Charts.

That was the long "working backwards" answer to our fellow 
reader's question.  The short answer is that there is no way to 
plug in a stock and have Q-charts spit back the sector.  It simply 
can't perform that function.  I personally don't know of a way to 
do it on any commercially available stock list from any of the 
exchanges, ratings companies (Moody's, S&P), or myriad of 
informational sites out there, other than perhaps an industrial 
SIC code database published on CD or online at a cost thousands of 
dollars per year.  My solution to this has always been to go to 
Hoover's or even Yahoo! Finance to get a company description, both 
outside the confines of Q-Charts.

Well, I hope that helps!  Questions are always welcome, and will 
be published in Part XI so long as we have material that serves 
the OIN community public interest!  Until next time, happy 
charting!


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

Breakdowns are out pacing breakouts on the watch list. Two more of 
the former make their way onto the list today.


To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://members.OptionInvestor.com/watchlist/031402.asp


**************
MARKET POSTURE
**************

Inaction remains the theme for market posture.  The recent 
sideways trading has resulted in little movement across the 
sectors.


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http://www.OptionInvestor.com/marketposture/031402_1.asp


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