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Daily Newsletter, Monday, 01/06/2003

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The Option Investor Newsletter                   Monday 01-06-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: Dividend Play
Futures Wrap: Early January
Index Trader Wrap: Way too bullish
Weekly Fund Wrap: New Year Starts on Good Footing
Traders Corner: 'Tis The Season

Updated on the site tonight:
Swing Trader Game Plan: Thank You, Mr. President

Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
01-06-2003                   High    Low     Volume Advance/Decl
DJIA     8773.57 +  171.88  8800.59 8602.10   1698 mln  1369/316
NASDAQ   1421.32 +  34.24  1428.65  1390.09   1528 mln  1262/249
S&P 100   469.74 +  10.54   471.41  459.20    totals    2631/565
S&P 500   929.01 +  20.42   931.77  903.07
RUS 2000  397.00 +   6.69   397.77  390.31
DJ TRANS 2421.71 +  56.77   2425.83 2365.02
VIX        27.41 -   0.57    27.76   26.45
VIXN       43.45 -   2.26    46.91   43.45
Put/Call Ratio 0.67
*******************************************************************

Dividend Play
by Steven Price

The January effect still remains in tact, with the markets 
exploding for another leg up today.  The big market mover was the 
release of the President's economic stimulus plan, which turned 
out to be twice as much as previously expected.  The plan now 
calls for elimination of tax on all dividends, instead of the 
previously planned 50% reduction. This translates into $600 
billion of relief over 10 years, instead of $300 billion and had 
investors scooping stocks that pay significant dividends. The 
President's plan, along with a new beginning of the year in-flow 
to mutual funds appeared to get the ball rolling and on a day 
without significant volume, there was little to stop it. 

That action was enough to lift the markets, in spite of a worse 
than expected ISM services report that came in almost two points 
below predictions (54.7 versus 56.6).  An ISM reading over 50 
still shows an expansion in the services sector.  The growth rate 
slowed in December, but backlog was up 1.1%, so expansion should 
continue into the near future.   After the ISM manufacturing 
index expanded more than expected in the last reading on 
Thursday, investors shrugged off this report, instead focusing on 
the Bush plan.  

The other economic news came from the Challenger report that 
showed a drop in layoffs from November to December. Companies 
said they would cut 92,900 jobs and while that number is still 
high, with an annual rate of 1.46 million, it is nevertheless a 
41% improvement from November when the number was 157,508.  

We have now rallied 531 Dow points off the December low of 8242 
and traders are undoubtedly wondering whether this is simply a 
blow-off rally before another leg down to lower lows, or whether 
we are really headed toward a breakout to new highs.  We did see 
a number of technical resistance levels fall today, as the SPX 
headed high enough to take out the September and November highs 
at 925.  That is significant in that shorts at those levels would 
have been overcome on an intraday basis.  However, the Dow and 
OEX have yet to break those highs in the 8800 and 472 range.  If 
traders looking to enter short are picking a top, failure in all 
three averages would have been more reassuring.  From a bull's 
perspective, there is still resistance to overcome, with a big 
resistance level looming above at the August/December highs.  
Those December highs sit at Dow 9077/SPX 954/OEX 487.94.  

Today's high in the Dow came at 8800 and bears will point out the 
possible formation of a bearish head and shoulders formation. If 
that is the case, we could be seeing a very big drop in the near 
future.  However, before we start piling on short, it would be 
nice to see some evidence of a rally failure.  While we saw 
failures at resistance today, we also saw resistance failures on 
Friday and wound up 2% higher on the day today.  The fact that 
the SPX took out the resistance that would have coincided with a 
right shoulder in the Dow at 8800 is also a red flag for bears, 
as noted above. Right now we are seeing a series of higher highs 
and higher lows, but the rally is extreme and looks 
unsustainable.  While some type of pullback is due, we have to 
ask what it will mean if it comes above Dow 8600.  In that case 
we may simply be seeing a higher low after Friday's late day 
bounce from 8550.  That doesn't mean that we shouldn't go short 
on a breakdown from this level, waiting for a neckline all the 
way down at Dow 8200, but tight trailing stops are prudent to 
avoid a bounce from a higher low. Most after-hours announcements 
were positive and we could see another gap open in the morning.

Chart of the Dow


 

Chart of the SPX


 


The Tech indices also saw a big rally today blowing through 
previous resistance levels and running into others.  The Nasdaq 
Composite (COMP) took out resistance at 1400 like it didn't exist 
and the Semiconductor Index (SOX.X) ran through its 50-dma of 318 
and horizontal resistance at 330.   After reaching an intraday 
high of 335, it fell back to close above that resistance at 331, 
indicating we may now see support at that level. Chip equipment 
stocks jumped after Deutsche Bank upgraded the sector to BUY, 
saying that multiple delivery and order pull-ins would lead to 
quarterly growth of 15% to 20% versus than expectations of flat 
to 10 percent growth. The next level of resistance in the NASDAQ 
is 1426, which it broke on an intraday basis and put a cap on the 
index back in August.  The COMP reached a high of 1428 intraday, 
before falling into the close to finish at 1421.33. The last time 
we broke through that 1426 level on the way up, the COMP didn't 
stop until it hit the December high of 1521.  Of course the 
previous time it hit that level and failed to hold, we saw a 
sell-off of 100 points in the COMP. We are likely to see a 
continued rally in the COMP again tomorrow, following comments 
from storage giant EMC. The company pre-announced better than 
expected earnings for the fourth quarter, saying it expects a 
profit of $0.01-$0.02 per share, versus previous expectations of 
a loss of $0.02.  It said customer spending was better than 
expected and revenues would come in above $1.47 billion, versus 
previous expectations of $1.27 billion. 

Chart of the NASDAQ Composite


 

Chart of the SOX


 


The rally that follows a big news event, such as today's change 
in the dividend tax-cut plan, certainly would seem to indicate a 
short opportunity.  However, this news event was one with direct 
stock market implications.  Dividends suddenly got potentially 
much larger, as they could become tax-free vehicles, making stock 
investments more profitable and most likely bringing more 401(k) 
dollars back into the equity market. The other benefit to 
shareholders is that if companies are not taxed on dollars put 
into dividends, there will be a bigger incentive for cash-rich 
companies such as Cisco (with $21 billion in cash) to begin 
paying a dividend. That kind of potential could actually give a 
rally some legs. However, the Democrats have a plan of their own 
and it calls for tax incentives of far less than the $600 billion 
proposed by Bush. This is far different than an announcement 
regarding Iraq, which has shorter-term implications and the 
market may continue to react to developments in the negotiations 
between the two sides. One thing was clear from today's action, 
however, and that is that the stakes just went in stockholder's 
favor.  If the President is going to start bargaining from a 
lower tax level, then the middle ground is likely to end up 
closer to a financial boon for bulls. 

The Democrats outlined their plan this afternoon, which was a far 
more conservative economic stimulus plan at a cost of $136 
billion and focused on a one-year economic boost.  The democratic 
plan said nothing about dividend tax relief and instead focused 
on tax-rebates to individuals, extension of unemployment benefits 
and investment depreciation acceleration for businesses.  
Representative John Spratt said it was about helping the economy, 
not the stock market. The depreciation acceleration is also a 
part of the Bush plan.  After the democratic statement, the 
markets hardly budged, apparently on the assumption that a 
President controlling both houses of Congress was the one dealing 
from a position of strength.  The GOP was listening however, and 
said it would offer an extension of jobless benefits on Tuesday.

Another factor figuring into today's rally is the price of oil.  
After OPEC President Abdullah al-Attiyah said Sunday that the 
group would use its production power to keep the price of oil 
within its targeted range of $22-$28 per barrel, in response to 
the supply shortfall resulting from the Venezuelan strike. 
Venezuela is world's fifth largest oil exporter and the six week 
general strike has reduced exports from that country to 500,000 
barrels per day, from an average of 2.7 barrels. The drop in 
Venezuelan oil has caused a 9 million barrel drop in U.S. crude 
oil inventories, reducing domestic supplies to near 26-year lows. 
"An increase could be anywhere between 500,000 barrels per day 
(bpd) to one million. It will depend on consultations," Attiyah 
said Crude Oil futures dropped  almost a dollar  per barrel and 
fueled stocks as the news signaled lower costs for almost all 
businesses. A look at the chart of Crude Oil futures has shown an 
inverse relationship to equities, as it reflected both operating 
costs and world events.  If we get a continued sell-off in oil 
prices at the same time stocks can break out above 
August/December highs, then there may be hope that this bounce is 
the start of something bigger. 

We have now reached yet another crucial level in the broader 
indices.  If the Dow and COMP both break above the resistance 
levels highlighted above, then we may see a re-test of the 
December highs.  There is more room for the techs to go before 
hitting those levels, so tech longs may have more room to run on 
a breakout in the Dow.   Traders can watch to see if we get 
another leg up on the open through resistance tomorrow.  If that 
is the case, then traders can either hop on the speeding train 
for a short ride to those December highs, or get out of the way 
if they are looking to enter short.


************
FUTURES WRAP
************

Early January
By John Seckinger
jseckinger@OptionInvestor.com

Dating back to the beginning of 1998, traders have been 
profitable selling rallies early in January.  Some descents last 
longer than others.  What should traders be looking for?

Monday, January 6th at 3:15 P.M. 

Contract      Last    Net Change     High        Low       Volume    

Dow Jones..  8773.69  +171.88      8800.59     8602.10
YM03H        8737.00  +133.00      8789.00     8570.00     18,989

Nasdaq-100   1061.48   +33.62      1068.49     1034.02     
NQ03H        1061.00   +25.00      1072.00     1032.00    201,126

S&P 500       929.01   +20.42       931.77      903.07
ES03H         926.50   +16.50       931.50      903.75    541,675

ES03H  = E-mini SP500 futures    
YM03H  = E-mini Dow $5 futures   
NQ03H  = E-mini NDX 100 futures  

Note:  The 03H suffix stands for 2003, March, and will change 
as the exchanges shift the contract month.  The contract months 
are March, June, September, and December.  The volume stats are 
from Q-charts.  

Notes:  Support, Resistance, and Pivotal level for Dow, SPX, and 
NDX will be posted in the Market Monitor every morning at 
approximately 9:30 a.m.  

Notes:  President Bush is expected to give his fiscal stimulus 
plan on Tuesday in Chicago; most likely unveiling a $600 billion 
stimulus package that includes eliminating the dividend tax as 
well as a $400 rebate check for middle-class parents.  In other 
news, crude oil fell after Saudi Arabia and Russia agreed to 
raise output.  Additionally, JP Morgan upgraded U.S. equities 
from neutral to overweight; expecting gains of 21% for the S&P 
500, 23% for the Dow, and 30% for the Nasdaq. 

The dollar weakened, bond prices fell, and both the Utility Index 
and Semiconductor Sector showed strong gains.  The XAU Index 
softened.  The Greenback fell to 102.16 and lost value against 
the Yen 8 out of the last 9 days.  Bonds fell, but the 110’01 
settlement is well above strong support at 108’24 and the intra-
day low of 109’11.  Both of these developments are slightly 
bearish for stocks going forward.  However, the XAU failed under 
80 to 78.15 (bullish for equities), and the UTY index is now well 
above the 260 pivot at 276 (bullish).  Resistance is above at 
290.  The Sox added 5.58% on Monday and closed at 331.69, well 
above the 320 profiled level.  Resistance above is seen at 340 
and 350.  

=================================================================

The March Mini-sized Dow Contract (YM03H)

One thing I found interesting in the Dow was that each relative 
high in January dating back to early 1998 took place ABOVE all 
three moving averages I follow (22, 50, and 200 (all 
exponential).  The Dow is currently at 8773 and its 200 DMA is 
above at 8859.  This should place the YM contract near the 8826 
level.  If weakness takes place before the 8826 level in the YM 
is achieved, shorts should at least wait until the pivot is taken 
out to the downside.  Also, S1 has proven worthy support in the 
last week; therefore, make sure to evaluate market conditions if 
this level is reached.  Moreover, the index has had a habit of 
clearing R2 early on; representative of a market with a 
significant underpinning bid.  If that happens, look for buyers 
to come in during dips.  If the 200 DMA is cleared, look to sell 
on weakness below it with a tight stop.  Should be a nice 
risk/reward trade.  

Chart of Mini-sized Dow Contract, Daily


 

Since the pivot never was tested on Monday, shorts had to try to 
pick a top.  Very hard to do, especially when the contract gets 
into triple-digit gains and doesn’t even really pause at Monday’s 
R2 area.  It did pause at the R2 level profiled on Friday.  On 
Tuesday, the pivot is below at 8699 and shorts should wait until 
this level is cleared (10-point cushion).  The first support 
comes in at 8609.  With a bearish divergence taking place in the 
RSI (only 60-minute, not daily), make sure stops are tight if 
looking to play a move long from R1 to R2, pivot to R1, or S1 to 
pivot.  That is the objective when using pivotal levels and 
retracement areas.  Play the contract from one level to the next, 
and if the next levels is cleared, tighten stops.  

Chart of YM03H, 60-minute


 

Bullish Percent of Dow Jones:  53% (Recent High at 72%, last 
Significant Low at 10%).  The recent column of O’s is still at 11 
and still in “Bear Alert” Status.  Despite the recent gains, 
there has not been a new column of X’s built (would take place at 
56%)

YM03H

Support               Resistance                Pivot    

8608.00               8827.00                   8699.00
8480.00               8918.00

Bold signifies levels based on Pivot Analysis (All Sessions).  

The March E-mini Nasdaq 100 Contract (NQ03H)

Rising above the top of the regression channel for the NQ 
contract was in fact a catalyst for bulls, and prices rose just 
threw the top of the Bollinger Band during trading on Monday.  
Resistance finally was seen at this area.  It took roughly 20 
days to go from the top of the band to the bottom; however, only 
three to reach the second deviation to the upside.  Will there be 
a trend line from the high above 1150 bisecting Monday’s high 
(green line)?  If not, there should be horizontal resistance at 
1078 and the red line drawn in the chart below.  The same trading 
theory applies for the YM contract:  Shorts should at least wait 
until the pivot is cleared if looking to sell weakness.  If a 
bounce develops, look for a test of 1078 during a recovery.  The 
key is of course to trade levels and understand risk.  

Chart of NQ03H, Daily


 

Speaking of levels and risk, solid support appears to be 
significantly lower at the 19.1% retracement area (1028).  It 
seems as though it is this level that was when shorts began to 
get squeezed and longs began to accumulate positions.  If the
1078 area is cleared, the next area to look for is 1094.  
Remember, if 1078 is cleared and 1094 is not hit with the contact 
falling back below 1078, begin to think about a failure.  The 
same theory applies on the downside.  Clearly there is a break in 
trend, and it looks like only a move under 1028 would put the 
contract back into the bearish pattern.  

Chart of NQ03H, 60-minute


 

Bullish Percent for NDX:  62% (Recent High at 82%, last 
Significant Low at 14%)  The recent column of O’s still stands at 
11, despite a 2% rise on Monday.  This indicator still points 
towards more risk in buying than selling; therefore, use tight 
stops on positions.   

NQ03H

Support              Resistance                 Pivot 

1038.00              1078.00                    1055.00
1015.00              1095.00

Bold signifies levels based on Pivot Analysis (All Sessions).  

1061.00   +25.00      1072.00     1032.00    

The March E-mini S&P 500 Contract (ES03H)

The 910 level did in fact become the top of a wedge, acting as 
a catalyst for the breakout higher.  However, the ES contract did 
not exactly get “tired” at the 916.25 area.  Instead, the ES 
found R2 as profiled from Thursday’s levels at 927.  Impressive 
move indeed.  Going forward, look for resistance above at 937 and 
948, with more emphasis placed on the 937 area.  The pivot is 
below at 920.  Note how the 910 area was 50% of the move in 
December, while Tuesday’s pivot comes in at the 61.8% retracement 
level.  

Chart of ES03H, 120-minute


 

Taking things to a more micro level, the contract looks to be in 
the middle of the range from the high in December to the 910 
area.  This level actually comes in at 931, and was very close to 
the session high.  Extremely aggressive traders can use 931 as a 
pivot.  Looking at the chart below, only a close below 910 would 
get to think least resistance is lower.  If 910 is penetrated at 
all, shorts will most likely look to sell rallies back towards 
Monday’s high (or Tuesday’s, if greater).  

Chart of ES03H, 60-minute


 

Bullish Percent of SPX:  60% (Recent High at 66%, Last 
Significant Low at 20%).  There is still risk in buying the 
contract, and note that the number has not risen and gone into a 
column of X’s after Thursday’s and Monday’s rally.  

ES03H

Support              Resistance                 Pivot    

909.75               937.25                     920.50
892.75               948.25

Bold signifies levels based on Pivot Analysis (All Sessions).  

Good Luck.

Questions are welcomed,

John Seckinger
jseckinger@OptionInvestor.com 


**********************  
Annual Renewal Special
**********************  

The annual special this year is far too large to put into an
email. The highlights include two option expiration mousepads
to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

https://secure.sungrp.com/03renewal/#m


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

Way too bullish

Wow!  What took bears roughly 20-sessions to build for gains in a 
downward move from Dow 9,000 to Dow 8,250 from early December to 
the end of December has all but been erased in the past three 
session as investors appeared to cheer more aggressive tax cut 
talk by President Bush.

While the bulk of dividends paid by corporations to their 
shareholders have been "double-taxed," that is, taxes have been 
paid on earnings before the distribution of dividends by the 
publicly traded company and then investors have been paying taxes 
(in non-tax deferred accounts) on those dividends, today's news 
of a more aggressive tax cut that considers not taxing dividends 
at the individual investor level seemed to ignite a fire under 
stocks.

While tonight's wrap is titled "way too bullish," its not because 
I don't think that the rally can't continue.  No.  The title of 
tonight's wrap depicts some major indexes that traded at levels 
that most technicians, including myself, didn't envision being 
traded so soon after what had been a slow trend lower in the 
latter part of last year.

Every bearish resistance trend on the point and figure charts 
have been challenged.  The major indexes have also done a 
complete reversal in three sessions from their lower Bollinger 
bands to upper bands, if not exceeded them.

All of this outwardly bullish looking market action has come, 
when the more narrow bullish % charts of the Dow, NASDAQ-100 and 
S&P 100 had continued to show internal damage being done.  Even 
the broader S&P 500 Bullish % had recently reversed lower as 
buyers seemed to be abandoning stocks late in 2002.

While volume wasn't heavy today, volume has certainly picked up 
compared to pre New Years Day levels.

Bears that say the rally lack volume have obviously forgotten 
declining days that came on less than 800 million shares.  
Today's 1.4 million share NYSE volume and NASDAQ 1.56 million 
share volume at least shows some interest has been renewed in the 
new year.

Dow Industrials Chart - Daily Interval


 

In just 3-session's, the Dow has moved from lower Bollinger to 
upper Bollinger band, and actually exceeding the upper Bollinger 
band of 8,747 into the close.  There hasn't appeared to be too 
many sellers willing to step in front of the recent rally and 
perhaps with good reason.  Nobody likes to step in front of what 
suddenly looks to be a freight train catching some steam and on a 
near-term basis, the move back above 8,500 and continuation today 
has that mid-point of the Bollinger band looking to serve 
resistance, while the current trading range can be defines as 
8,800-8,250.

One observation I've made in the market monitor in recent 
sessions as it relates to our daily "pivot analysis" is that the 
major indexes have NOT broken below their daily pivots in the 
past three sessions.  Tomorrow's "pivot" for the Dow Industrials 
based on today's high/low/close is calculated at 8,725.

Today's action saw the very narrow Dow Industrials Bullish % 
($BPINDU) see a net gain of 1 stock to a point and figure buy 
signal as the bullish % edged up 3.33% (1 stock out of 30 is 
3.33%).  International Business Machines (NYSE:IBM) 83.59 +2.37% 
traded $83.00 and that was enough to have this stock back on a 
p/f buy signal.  This was/is my "key" stock for the Dow and in 
recent commentary I thought a trade at $83 in IBM might have the 
Dow trading near 8,700.  In my opinion, this action becomes 
somewhat bullish and not to be taken lightly by index or IBM 
bearish traders.  Do NOT let full position short/put trades get 
away from you.  If full position short/put and feeling a little 
over leveraged (especially January expiration) look to raise some 
cash on breaks much higher than today's highs or follow any 
weakness lower by ratcheting down some stops.  

S&P 500 Index Chart - Daily Interval


 

I would have thought bears that had some conviction could have 
kept the SPX under the 925 level by the close, but this is not 
the case.  Tomorrow's first 1.5 hours of trading before the 10:00 
release of the November Factory orders, which are expected to 
show a decline of -0.6% will be closely monitored by traders and 
may be the only data that would have the SPX seeing some type of 
weakness.

Based on today's trading and high/low/close, tomorrow's "pivot" 
for the SPX is 923.28 and the pivot has held as support in recent 
sessions.  

Today's action saw the S&P 500 Bullish % ($BPSPX) see a net gain 
of 10 stocks to point and figure buy signals as the bullish % 
creeps higher to 60.6%, which is 2% above Friday's closing 
reading of 60.6%.  Still "bull correction" status and a reading 
of 64% is needed for a reversal back into "bull confirmed" 
status.

S&P 100 Index Chart - Daily Interval


 

While the SPX has gotten back above its "right shoulder," which 
would be the November 6th highs, the Dow Industrials above wasn't 
able to hold that level, nor was the larger cap S&P 100 Index 
(OEX.X) able to get above its November 6th high of 472.47, which 
I've marked as 475 on the above chart.

While I've discussed tonight's indexes more from the "bearish" 
point of view and what a bearish trader needs to see happen, the 
recent sharp rise in the indexes over the last three sessions is 
has the bearish camp a little dizzy and needing some attention.

The ability of the S&P 500 to break above and hold its November 
6th level may indeed be due to the benefit of breadth, which has 
obviously been seen on a daily basis in the past couple of 
sessions, but also partially noted in the SPX versus OEX bullish 
% levels.

It is my thought that a bearish trader currently short/put a full 
position in the major indexes needs to have some type of "level" 
or plan in place to cut back their bearish positions at this 
point as we see not only some "outward" technical bullishness 
suddenly developing in the past three sessions, but some gains 
found from the internals and the bullish %.  The bullish % 
readings we will not have until the END of a trading session.

I personally do NOT hold a call or put in the indexes at this 
point, but find my account rather "50/50" with equally weighted 
dollar amounts in calls/puts in individual stock options and 
Treasury YIELD calls.  However, I'd view the indexes as wanting 
to not be more than 50% put should the OEX break above 475 after 
tomorrow's Factory Order's release at 10:00 AM EST.

In our 12/31/02 Index Wrap
http://members.OptionInvestor.com/itrader/marketwrap/iw_123102_1.asp
I had shown the OEX $5-box p/f chart with "?" of a potential 
reversal.  For traders, that reversal took place and had extended 
up to 470 at this point, with resistance marked on that chart 
below 490.  However, I think it may be too much heat for a 
bearish trader holding full position puts to wait and now see if 
490 holds resistance, if the market responds bullish to 
tomorrow's economic data, and therefore would chose the 475 level 
as a level to assess further risk from.  Every trader has their 
own risk tolerance, but the rather sharp rally in the past three 
sessions is concerning to a bear.

Today's action saw the S&P 100 Bullish % ($BPOEX) see a net gain 
of 4 stocks to point and figure buy signals.  This still is not 
enough to have the bullish % reversing up to the needed 60% to 
have the sector bullish % reversing back into "bull confirmed" 
status, but today's 4% gain has the S&P 100 Bullish % getting 
close to reversing higher and bearish traders should not be full 
position short should a "bull confirmed" status be achieved.

For bullish traders looking to go long an upside surprise in 
tomorrow's economic data on an OEX break above 475, I would 
STRONGLY suggest 1/4 positions ONLY at this time.  The play here 
in my opinion is to try and catch a wave of short-covering with 
an upside target of the recent highs of 490 and always monitoring 
the OEX bullish % as higher risk back above the 70% level.  A 
time horizon for a bullish trade on a break above 475 would be 
the end of January, so February strikes would most likely be 
preferred.

NASDAQ-100 Index Tracking Stock (QQQ) - Daily Interval


 

Today's close above the $26.18 level in the QQQ has me now 
believing that there's a little more "buy side" order flow taking 
place in NASDAQ stocks that I would have thought before today's 
action.  Other rallies in early December were met with selling 
once the QQQ $26.18 level was broken to the downside, and the 
brief dip below "market maker" support of $25 and now violation 
of $26.18 to the upside looks bullish with a bear's risk now at 
$27 and $28.09.

With the NASDAQ-100 Bullish % ($BPNDX) still "bear alert" but 
seeing a net gain of 3-stocks to point and figure buy signals, 
the index is still "bear alert" at 62% and shy of the 66% level 
needed for a reversal back into "bull confirmed" status.  On a 
technical basis, this index sure looks short/put with a stop just 
above the $27 level, but here too, today's trade and close above 
$26.18 was just "way too bullish" to be overly aggressive with 
short/put trades into the close.  

Jeff Bailey


**************************************************************
Annual Renewal Special
**************************************************************

The annual special this year is far too large to put into an
email. The highlights include two option expiration mousepads
to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

https://secure.sungrp.com/03renewal/#m
**************************************************************


****************
WEEKLY FUND WRAP
****************

New Year Starts on Good Footing

A surprisingly strong manufacturing report and President Bush's 
economic stimulus package were the tonics for a good opening on 
Wall Street in 2003.  Vanguard 500 Index Fund, which tracks the 
S&P 500 large-cap index, was up 3.8 percent for the week, while 
Vanguard Total Stock Market Index Fund, which tracks the entire 
U.S. stock market (Wilshire 5000 Index), produced a 3.5 percent 
weekly total return.  As you can see from the chart below, most 
of the week's gains came on Thursday, with stocks posting their 
best gains in nearly three weeks.  




 

 

All of Lipper's equity fund indices produced gains for the week, 
with most general equity funds generating weekly returns similar 
to the index benchmarks.  Large-cap funds led the way with total 
returns in the 3.5%-4.0% range, similar to the S&P 500's advance, 
with both value and growth styles sporting solid returns.  Small-
cap funds averaged two percent for the week, per Lipper, lagging 
their large-cap peers.  Science and technology funds rose by 3.7 
percent on average last week so all in all, the New Year got off 
to a good start for U.S. equity investors.

The Vanguard Developed Markets Index Fund, which tracks the MSCI 
EAFE (Europe, Australia and Far East) index, ended the week with 
a 4.8% return in dollar terms, providing a tough index benchmark 
for international stock funds.  According to Lipper the average 
international equity fund had a 3.7 percent weekly total return, 
lagging the EAFE benchmark.  Emerging-markets equity funds rose 
by only 1.4 percent on average.

Bond fund returns were generally negative to start the New Year, 
except for certain muni debt funds and high current yield funds.  
According to Lipper, U.S. government and corporate A-rated funds 
declined by 0.8 percent and 0.7 percent on average, respectively.  
Those losses were comparable to Vanguard Total Bond Market Index 
Fund, which tracks the return performance of the Lehman Brothers 
Aggregate Bond Index.  High yield funds were up 0.5 percent over 
the week, getting off to a solid start in 2003.

Equity Fund Group

Below are selected Vanguard index funds and Lipper fund indices 
that can serve as equity fund benchmarks.  Weekly total returns 
are through Friday, January 3, 2003. 

Selected Vanguard Index Funds:
+1.9% Balanced Index Fund (VBALX) YTD +1.5%
+3.8% 500 Index Fund (VFINX) YTD +1.3%
+2.4% Extended Market Index Fund (VEXMX) YTD +2.0%
+3.5% Total Stock Market Index Fund (VTSMX) YTD +3.0%
+4.8% Developed Markets Index Fund (VDMIX) YTD +2.0%

Selected Lipper Equity Fund Indices:
+2.2% Balanced Funds (YTD +1.7%)
+3.5% Equity-Income Funds (YTD +2.8%)
+3.8% Large-Cap Value Funds (YTD +3.0%)
+3.6% Large-Cap Core Funds (YTD +3.0%)
+3.7% Large-Cap Growth Funds (YTD +3.4%)
+3.7% Science & Technology Funds (YTD +4.8%)
+3.7% International Funds (YTD +2.3%)

Large-cap funds averaged gains of 3.6%-3.8% for the week, using 
Lipper's indices, compared to a 3.8% weekly return for Vanguard 
500 Index Fund, which tracks the S&P 500 large-cap index return.  
Science & technology funds also averaged 3.7% for the week, per 
Lipper.  Mid-cap funds had weekly total returns in the 2.9%-3.1% 
range, while small-cap funds lagged a little bit, gaining around 
1.9%-2.1% on average.  International stock funds had a hard time 
keeping pace with the 4.8% weekly return from Vanguard Developed 
Markets Index Fund, which tracks the MSCI EAFE index return.

Among equity funds with over $500 million in assets, the week's 
highest performer was Legg Mason Value Trust, a multi-cap value 
fund managed by star manager William Miller III that produced a 
1-week return of 6.1 percent.  The Vanguard European Stock Index 
Fund was next with a 5.4% weekly return followed by the Thompson 
Plumb Growth Fund and Neuberger Berman Focus Fund, each up 5.3% 
for the week.  Several funds, in fact, sported weekly returns of 
more than five percent, so a good start to the New Year for U.S. 
and international stock funds.

Fixed Income Fund Group

Below are selected Vanguard index funds and Lipper fund indices 
that can serve as income fund benchmarks.  Weekly total returns 
are through Friday, January 3, 2003.

Selected Vanguard Index Funds:
-0.4% Short-Term Bond Index Fund (VBISX) YTD -0.5%
-1.1% Intermediate-Term Bond Index Fund (VBIIX) YTD -1.3%
-1.8% Long-Term Bond Index Fund (VBLTX) YTD -1.9%
-0.7% Total Bond Market Index Fund (VBMFX) YTD -0.7%

Selected Lipper Fixed Income Fund Indices:
-0.8% U.S. Government Funds (YTD -0.8%)
-0.2% Short Investment-Grade Funds (YTD -0.2%) 
-0.5% Intermediate Investment-Grade Funds (YTD -0.6%)
-0.7% Corporate A-Rated Debt Funds (YTD -0.7%)
+0.5% High-Yield Funds (YTD +0.5%)
-0.2% International Income Funds (YTD -0.8%)

A surprisingly strong manufacturing report was among the forces 
driving down bond prices last week as investors moved to stocks.
For the week, Vanguard Total Bond Market Index Fund declined by 
0.7 percent, indicative of the total U.S. investment-grade bond 
market.  Weekly losses increased as you went out further on the 
yield curve, though most bond funds were able to hold losses to 
below one percent on the week.  High-yield funds had a positive 
0.5% weekly average return, moving higher along with the equity 
market.

Among income funds with over $500 million in assets, the week's 
biggest gains were produced by the Fidelity Advisor High Income 
Advantage Fund and the Fidelity Capital & Income Fund.  Both of 
them produced 1-week returns of 1.6 percent for their investors, 
outperforming their category peers by a wide margin.  Pioneer's 
high yield fund was next with a 0.9% weekly return (for Class A 
and B shares).      

Money Market Fund Group

The average taxable money market fund has a 7-day simple yield of
just 0.88 percent according to iMoneyNet.com's latest MMF survey.
That is less believe it or not than the 0.91% all tax-free "muni"
money market fund average today.

PayPal Money Market Fund (402-935-7733) offers the highest yield 
currently among prime retail funds, at 1.44 percent.  Touchstone 
Money Market Fund (800-543-8721) is second at 1.37 percent, with 
McMorgan Principal Preservation Fund (800-788-9485) in third, at 
1.35% percent.

The $50.0 billion Vanguard Prime Money Market Fund (800-662-7447)
currently has a 7-day yield of 1.25 percent, among the highest 7-
day yields available today among prime retail money market funds.
Its 1.7 percent total return for the full year 2002 was small in 
absolute terms, but relative to stock funds, it looked fantastic, 
providing income, consistent with principal safety and liquidity.

Largest Mutual Funds

Below are performance results through Friday, January 3, 2003 for 
the nation's largest stock and bond funds, using Morningstar data 
for asset ranking purposes.  Funds with minimum initial purchases 
of over $25,000 are excluded.  For load funds with multiple share 
classes, class A share performance is shown.

 Largest Mutual Funds:
 +3.8% Vanguard 500 Index (VFINX) YTD +3.3%
 -0.4% PIMCO Total Return (PTTAX) YTD -0.4%
 +3.6% Fidelity Magellan (FMAGX) YTD +3.0%
 +3.0% Investment Company of America A (AIVSX) YTD +2.5%
 +4.2% Washington Mutual Investors A (AWSHX) YTD +3.3%
 +3.4% Growth Fund of America A (AGTHX) YTD +3.0%
 +2.7% Fidelity Contrafund (FCNTX) YTD +2.1%
 +3.2% Fidelity Growth & Income (FGRIX) YTD +2.7%
 -0.3% Vanguard GNMA (VFIIX) YTD -0.3%
 -0.7% Vanguard Total Bond Market (VBMFX) YTD -0.7%
 +3.5% Vanguard Total Stock Market (VTSMX) YTD +3.0%
 +3.0% EuroPacific Growth A (AEPGX) YTD +1.9%
 +3.5% New Perspective A (ANWPX) YTD +2.7%

It's easy to spot which of these bellwethers are bond funds, the 
ones with the negative weekly returns.  It amazes me how PIMCO's 
flagship Total Return Fund always seems to outperform the market 
regardless of the market conditions.  When bond prices rise, the 
PIMCO fund is often among the highest performing funds, while in 
last week's case when bond prices decline, it does a good job of 
limiting losses.  There are other good bond funds, but the PIMCO 
flagship fund serves as a tough bond fund benchmark.

Only one of the stock fund bellwethers topped the 3.8% return by 
the Vanguard 500 Index Fund, setting the bar in the equity funds 
group.  Washington Mutual Investors Fund returned 4.2% last week 
to beat the large-cap index fund.  Contrarian funds, such as the 
Fidelity Contrafund, generally lagged other equity funds in last 
week's market advance.

Mutual Fund News

Morningstar last week announced the winners of its "Manager of 
the Year" awards for 2002.  Joel Tillinghast received domestic 
stock manager of the year honors for his ability to manage the 
$15 billion Fidelity Low-Priced Stock Fund in both good and bad 
times.  Tillinghast lost just 6.2 percent in 2002 to rank in the 
top decile of the Morningstar small-cap blend category.  Co-fund 
managers Richard Pell and Rudolph-Riad Younes were picked as the 
international stock managers of the year for their strong effort 
in managing the Julius Baer International Equity Fund.  In 2002, 
the co-managed fund lost just 3.6 percent, ranking in the top 4% 
of the foreign stock fund group, per Morningstar.  

In the fixed income group, the honors went to the bond management 
team at Dodge & Cox for their adept management of the Dodge & Cox 
Income Fund.  Loan defaults and corporate bankruptcies tripped up 
a number of bond mutual funds in 2002, but Dodge & Cox's team was 
able to circumvent the credit landmines.  By avoiding the losses, 
this venerable bond fund earned a nifty 10.7% annual total return 
for shareholders last year, ranking in the top 7% of the category 
peer group (intermediate-term bond funds).

This week, Morningstar announced who their 2002 runner-ups were, 
and asked readers to answer the question "Who's the best manager 
or managers never to win Domestic Stock Manager of the Year" and 
listed five possibilities, as follows:

 1. Hawkins, Cates & Buford (Longleaf Partners Small Cap Fund)
 2. Schow, Kolokotrones & Fried (Vanguard PRIMECAP Fund)
 3. Bob Stansky (Fidelity Magellan Fund)
 4. Sam Stewart (Wasatch Core Growth Fund)
 5. Brian Rogers (T. Rowe Price Equity-Income Fund)

Hawkins, Cates & Buford are Morningstar's 2002 runner-ups within 
the domestic equity fund group.  Morningstar also recognized the 
manager of William Blair International Growth Fund, George Greig, 
for his ability to preserve capital better than similar funds in 
2002, 2001 and 2000.  The Fidelity municipal bond team was voted 
runner-ups in the fixed income peer group.


Steve Wagner
Editor, Mutual Investor 
steve@mutualinvestor.com


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

'Tis The Season
by Mark Phillips
mphillips@OptionInvestor.com

I'm not talking about the holiday season, as that is fortunately
behind us.  Don't get me wrong, I love the holidays, primarily
for the time they afford to visit with family and friends.  But
the trader side of my personality loathes the last 2 weeks of
December, due to the withering of volume that makes for rather
difficult trading.  It's now the season for gazing into our
crystal balls and trying to forecast what the markets will give
us in the year ahead.  Now that we've begun a new year, it seems
everyone is venturing forward with their bold (and often
foolish) predictions about the market for the new year.  I've
never claimed to not be foolish (often to my detriment), so I
thought I might as well take the time to throw my hat in the
ring.

As I mentioned in my LEAPS commentary over the weekend, with
very few exceptions, Wall Street's strategists and economists
are bullish for 2003, expecting strong growth throughout the
market, just like they have for the past 3 years.  My assertion
was that they aren't so much analyzing the markets and the
economy, as they are hoping that their same, stale forecast
will at last be correct this year.  A big part of their rationale
seems to be based on their belief that it isn't possible for the
market to have a fourth consecutive down year, something that
hasn't happened since 1929-1932.  I don't want to rehash my
commentary from the weekend, so if you need to catch up, take a
look at the following link:

New Year Cheer

As promised, I'm going to unveil (drum roll, please), my bold
prediction for the new year, and actually support it with
fundamental reasons and the charts that I'm using to develop
my long-term view.  The important thing to understand is that I
don't claim to have any crystal ball that tells me where the
market is going.  As you know, I have a bearish long-term view
of the market, based in large part on the fact that the
fundamentals in the market and the economy stink, and my belief
that we still have a long way to go before the excesses of the
late '90s bull market are worked off.

Contrary to popular belief, I think the posturing over the
Iraq situation is a non-issue.  There is a lot of risk over
this conflict that has already been factored into the market.
Any drop that occurs with as the situation heats up will
quickly be reversed when it becomes clear that it won't be a
protracted and messy affair.  That leaves the fate of the market
in the hands of the economy and whether or not the fabled 2002,
er, ah 2003 recovery arrives.

Let's assume that we actually do get a second half recovery
in the economy and by year's end the economy is ticking along
at 4% GDP growth.  I would consider that to be extremely
optimistic, but let's run with it.  What should happen to stock
prices?  Sadly, I think the upside is severely limited due to
the fact that so many stocks are already richly valued compared
to what is normally seen at the end of a bear market.  Based
on trailing earnings, the P/E ratio of the S&P 500 is currently
about 45, and even if we use the optimistic forward earnings,
the P/E ratio only drops to 25.  But I'm willing to be generous,
so let's work with the 25 figure.  Typically at the end of
bear markets, good stocks should sell at a P/E ratio in the
8-10 range.  That still leaves a lot of downside risk in this
market.

Without robust growth in earnings, I have a really hard time
seeing a strong rally from current levels.  The market just
isn't willing to pay the premium for stocks that it did a few
short years ago.  Any significant and sustained gains will
either come from a lower level, or in response to solid
earnings gains that come from business growth, not cost
cutting.  I certainly don't see evidence of that happening,
do you?

Unemployment is high, and likely to go higher.  The consumer
has been the backbone of the economy over the past 2 years,
following the collapse of the stock market.  Despite the
rise in unemployment, Joe and Jane consumer have continued
to spend profligately.  We all know that a large chunk of
the funds that have enabled this behavior have come from
cash-out refinancing, but that gravy train is coming to an
end.  I caught a report on CNBC just today that pointed to
the fact that cash-our refinancings have started to fall
dramatically.  Why?  Because most people that wanted to and
were able to take cash out of their houses have already done
so with the historically low mortgage interest rates.  So
if the consumer is going to continue to hold up the economy,
where is he/she going to get the money to spend.  Personal
bankruptcies are soaring and the number of delinquent
mortgages is at 30-year highs.

Is there a way out?  Certainly!  It will require that
businesses take up the slack, hiring more workers to satisfy
the increasing demand for the products and services they
provide.  That will reduce the number of people on
unemployment and provide the funds necessary to keep the
great consumption machine rolling.  The problem is that I
don't see the engine for that growth.  Until it arrives, the
economy remains weak and the markets will remain in the grip
of the mighty bear.  We'll eventually reach bottom in the
market, but I fear we have a lot more work to do to the
downside before we can reasonably say the bottom is in.
That concludes the fundamental side of the argument.  Now
let's turn to the charts to see what they have to say.

I'm going to focus on the S&P 500 (SPX.X) and the NASDAQ
Composite (COMPX) for our discussion here today.  Let's start
off with a weekly chart of the SPX, which I've shown in prior
columns.  I think it is interesting that I really haven't had
to change anything on the chart for months now, due to the
fact that the primary downward trend is still very much in
place.

S&P 500 (SPX) Weekly Chart


 

I know we tend to get a bit focused on the daily (and intraday)
action in the market, and sometimes lose sight of the big
picture.  I do it too, and that's why I keep coming back to
this chart.  That broad descending channel continues to
contain the price movement in the SPX and it is worth noting
that it has been almost a year since the upper channel line was
tested.  Don't you think it's about time we took another run at
it?  I do, and based on the price action so far this year,
there are obviously a fair number of other traders that are
thinking the same thing.

But it is going to be a difficult battle, with the descending
trendline at roughly 995 and the 50-week moving average
(red-line) just below at 985.  Whether what we have seen so
far is just new year's euphoria, or an actual trend change
remains to be seen, but the battle up near the 980-990 area is
going to be a fiercely pitched battle by the bears intent on
keeping the trend intact.  I wouldn't be a bit surprised to
see a breakout over the recent highs near 965 that finally sucks
in the bulls waiting for confirmation, only for a sharp reversal
to set their heads spinning when that overhead resistance comes
into play.  Now let's turn to the COMPX and see what nuggets of
wisdom we can find on that chart.

NASDAQ Composite (COMPX) Weekly Chart


 

The picture is somewhat different here, as we don't have a
channel, but a very-well defined descending trend.  That trend
is going to present some a formidable obstacle to the bulls IF
they can manage to test it in the weeks ahead.  Throw in the
historical resistance near 1600 and I think we have a pretty
firm cap on the technology market unless we are presented
with a miracle of an earnings season straight ahead.

Chartus Interruptus

Clearly, I bit off more than I could chew today, as I'm already
well into the fifth page and only about half-way through what
I want to say.  More importantly, I'm banging right up against
my deadline to get this into the newsletter tonight.  So with
apologies to all, we'll have to cut it off right here.  But fear
not, I'll pick up right where we left off on Wednesday, where
I'll get into the meat of what I expect to transpire throughout
the year.

See you then!


Mark


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last year for all the new subscribers who have been asking 
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***********************
SWING TRADER GAME PLANS
***********************

Thank You, Mr. President

Whoosh! Up and away we went following release of details of the 
Bush tax-cut plan. The 50% break in dividend taxes turned into a 
complete elimination of that tax and investors came running for 
equities.

To read the rest of the Swing Trader Game Plan Click here:
http://www.OptionInvestor.com/itrader/indexes/swing.asp


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

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to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

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


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The Option Investor Newsletter                   Monday 01-06-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: ACS, BEAS
Dropped Calls: None
Dropped Puts: BSC, IBM
Play of the Day: Call - ACS

Updated on the site tonight:
Market Posture: Breaking Through
Market Watch: Can It Hold


**************************************************************
Annual Renewal Special
**************************************************************

The annual special this year is far too large to put into an
email. The highlights include two option expiration mousepads
to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

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


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

ACS - call
Adjust from $51.75 up to $53

BEAS - call
Adjust from $10.50 up to $11.25


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

None


************
DROPPED PUTS
************

BSC $63.43 +1.71 (+1.71) The bulls charged out of the gate this
morning and never looked back.  With the Brokerage index (XBD.X)
up a very solid 3% at the close, it should come as no surprise
that our BSC Put play came to an end today.  The solid resistance
at the $62.50 level gave way in the first hour of the day, and it
wasn't long before our $63 stop was violated as well.  Clearly,
any open positions should have been stopped out today.  Traders
still holding open positions will want to look for a drop back
into the $62.00-62.50 area to exit at a more favorable level.

IBM $83.59 +1.94 (+1.94) Continuing the bullish move from last
Thursday, the broad market vaulted higher on Monday, and our IBM
play was favored by the bulls to the tune of almost a $2 gain.
It didn't take long after the opening bell to see that our $83
stop had been violated, and there wasn't the slightest hint of
any weakness in the stock throughout the day.  Despite the
late-day dip, IBM has clearly broken its recent bearish trend
and we're getting out of the way tonight.  If still holding
open positions, look to exit on a dip near the $82.50-83.00
area, which will likely provide support.


**************************************************************
Annual Renewal Special
**************************************************************

The annual special this year is far too large to put into an
email. The highlights include two option expiration mousepads
to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

https://secure.sungrp.com/03renewal/#m
**************************************************************


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

ACS – Affiliated Computer Services $56.17 +1.36 (+1.36 this week)

Company Summary:
ACS is a global Fortune 1000 company that delivers comprehensive
business process outsourcing and information technology
outsourcing solutions, as well as system integration services,
to both commercial and federal government clients.  

Why We Like It:
After huffing and puffing for over a week, our ACS play broke out
decisively on Friday, once again showing its relative strength
over the broad market.  The bullish victory wasn't readily
apparent at the open, as the stock spent most of the morning
vacillating around the $54 level.  But with a surge just before
lunchtime, the bulls pushed through $54.50 and never looked back.
In addition to the strong price action, ACS looks good based on
the action of the oscillators, all of which are in positive
territory and pointed north.  Particularly encouraging is the On
Balance Volume indicator, which is moving up out of a 6-week
base.  While volume over the past few days has been increasing
(an encouraging sign), it is still well below the ADV, likely
due to the continued effect of the holidays.  Next week will
tell the true story, as volume returns.  ACS is quickly
eliminating levels of overhead resistance, with the $56-57
resistance zone (all time highs from March through June of last
year) now looming as the most likely obstacle.  If the PnF chart
is any indication, with its long column of X's and price target
of $88, ACS has some significant room yet to run.  We don't
really want to chase the stock higher due to the looming
resistance, but the behavior on the next pullback will be key.
If ACS drops back to the $54 level and finds support, that would
be a real sign of strength.  But even a drop and rebound from
the vicinity of $52.00-52.50 would make for a very nice entry.
This is the site of both the 10-dma ($52.39) and the ascending
trendline that has been in place since the July lows.  We're
ratcheting our stop up again this weekend, this time to $51.75.

Why This is our Play of the Day
Throughout the two holiday weeks, ACS continued to impress
investors with continued higher highs and higher lows.
Underscoring the stock's strength was the breakout through
the $54 resistance level on Friday, while the broad market stood
still.  The broad-based rally on Monday once again had ACS
working higher and today's trade above $56 has the stock within
$1 of its all-time high of $57.05.  Traders that entered at lower
levels should now have stops tightened to ensure a profit on the
trade, and we would recommend harvesting gains on a rally failure
below the $57 level.  That said, it is entirely possible that ACS
could charge to new highs, given the strong buying volume on
Monday.  Momentum traders can use a volume-backed breakout over
$57.25 to add to their position.  Those looking for entry on a
pullback will want to keep an eye on the $54 level, as this
broken resistance should now serve as support.  We're raising
our stop tonight to $53, just below the 10-dma.

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

BUY CALL JAN-55 ACS-AK OI=2063 at $2.70 SL=1.25
BUY CALL FEB-55*ACS-BK OI= 297 at $4.50 SL=2.75
BUY CALL FEB-60 ACS-BL OI=1039 at $2.05 SL=1.00

Average Daily Volume = 1.64 mln



**************************************************************
Annual Renewal Special
**************************************************************

The annual special this year is far too large to put into an
email. The highlights include two option expiration mousepads
to which we have added the FOMC meeting dates this year. There
are also two videos with Jim, Jeff and Buzz and seven books 
by leading market professionals like John Murphy and and Jim 
Rodgers. We even brought back the Trading Strategies CD from 
last year for all the new subscribers who have been asking 
for it. 

Click here for the full details:  

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


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

Breaking Through

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_010603.asp


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

Can It Hold


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Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

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