The Option Investor Newsletter Thursday 01-30-2003 Copyright 2003, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Old Problems Produce New Lows Futures Markets: A deeper shade of Red Index Trader Wrap: Not looking good for the bulls Market Sentiment: What A Relief it Was Weekly Manager Microscope: Maurice & David Schoenwald: New Alternatives Fund (NALFX) Updated on the site tonight: Swing Trader Game Plan: All in the Timing Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 01-30-2003 High Low Volume Adv/Dcl DJIA 7945.13 -165.60 8141.09 7938.62 1.78 bln 1064/2162 NASDAQ 1322.36 - 35.70 1360.55 1322.36 1.40 bln 1060/2257 S&P 100 426.71 - 10.83 426.71 426.26 Totals 2124/4419 S&P 500 844.62 - 19.74 865.48 843.74 W5000 8021.22 -173.00 8204.16 8014.72 RUS 2000 367.62 - 7.22 375.80 367.59 DJ TRANS 2128.64 - 34.70 2175.19 2126.40 VIX 36.37 + 1.15 36.55 34.75 VXN 46.22 + 2.58 46.26 43.96 Total Volume 3,401B Total UpVol 647B Total DnVol 2,723M 52wk Highs 133 52wk Lows 171 TRIN 1.72 PUT/CALL .87 ************************************************************ Old Problems Produce New Lows The numbers came in slightly better than expected by most but the negative sentiment remained. The fourth quarter GDP did not dip into negative territory but it was still anemic. The Fed expressed worry about the economy and unemployment continues to rise. These factors and war worries pushed the Dow to a new low for the year. Dow Chart – Daily Nasdaq Chart – Daily Economically investors should have been relieved. The GDP came in at +0.7% for the fourth quarter when many analysts had been quoting whisper numbers in negative territory. We are far from out of the woods but that is one more quarter temporarily behind us with a plus sign in front of it. That is of course it is not revised downward when the real component numbers become available. The internals showed slower inventory buildup and weaker exports. Computer purchases continue to rise slowly along with business investment. There are two more revisions to this number over the next two months and there is still danger it could slip into negative territory. Jobless Claims rose again to 397,000 and very near the 400K threshold. This was an increase of +14,000 and +10,000 over the consensus estimates. Claims over 350,000 a week indicate a shrinking labor market. Increasing the evidence for a shrinking workforce was the drop in the Help Wanted Index to a new cyclical low of 39. It was 47 during the recession just a year ago. According to Economy.com the index peaked at 93 in the late 90s boom. There has been a -58% drop in job advertising volume in this down cycle. This compares to a drop of only -44% and -54% in the prior two economic cycles. Employers are not hiring and are continuing to trim their workforce. The weakness in the job markets pushed the Employment Cost Index to the slowest growth in five years at +0.7% for the fourth quarter. With a surplus of unemployed there is no need to offer premium wages with lots of costly benefits. The drop would have been much deeper had it not been for the +6% growth in benefit expenses for existing employees. The construction industry showed the biggest increases as they scramble for workers to complete houses before rates begin rising again. With falling real wages and continued competition for available jobs the consumer is going to be hard pressed to hold up the economy with future spending. For the fifth consecutive month the Chicago Fed National Activity Index came in below zero. The -0.5 number and the -0.6 3-month average shows the economy has stalled and there is no recovery in process. July was the only month in 2002 not negative but the drop in activity has been sharp and serious since. The normally robust December period was only fractionally better than November's -0.55. This report raises the very clear specter of a double dip recession already in progress. The minutes for the December FOMC meeting were released and showed that the Fed heads were encouraged by the lack of a further drop in the economy and the then current rebound in the stock market. They felt the market was confirmation that a recovery was underway despite the lack of economic confirmation. They were worried about the rising unemployment and lack of business investment. Their forecast for the near future showed minimal expectations for growth. They felt the rising geopolitical tensions as well as persisting concerns about consumer spending would continue to hold the economy back. Despite the -50 point cut in November the committee remained open to the potential need for future cuts. The number of negative factors "when measured against the stock market rebound" appeared to be balanced. They kept that public view at the January meeting despite the loss of the markets gains. Makes you wonder what was offsetting the risks this time? With Consumer Confidence at its lowest level since 1993 the Feds may be the only ones seeing balanced risks. AOL, you've got mail! Hate mail and lots of it. Don't look now but the monster may also have escaped from the lock box. With AOL posting a -$99 billion loss for 2002 there are many stockholders on the warpath. About to lead the attack is Ted Turner who is stepping down from his post as Vice Chairman in May. With over 100 million shares of AOL stock Turner is not going to be a friend to the company. At $12 that 100M shares is worth a whole lot less than it was at $95 in Dec-2000. As an unrelated party to AOL, Turner would be free to sell his shares OR more importantly lead a shareholder revolt to break up the company with Turner ending up with the prized pieces. Granted this is a broad leap of faith but Turner is reportedly extremely hostile about his -$8 billion drop in net worth. I can see where that could produce a vengeance motive. AOL stock dropped on the news from $14 to $12. The -$99 billion loss and negative guidance may have influenced investors as well. (grin) The oil strike in Venezuela may be almost over. Reports from the area claim strikers are going back to work and banks and retail stores are opening again. Employees need the wages to live and the riots were losing intensity. Oil production is back to about 1/3 of prior levels and growing. Fear of the war is still holding up the prices at $33.85 today but once the war begins it should fall. Oil is not the only commodity soaring with Platinum hitting a 17 year high at $647.80. The comments about hydrogen cars in the Fate of the Union speech has prompted a run on the metal and on fuel cell makers. Test vehicles have been the rage on news shows since Tuesday night. Too bad computer chips were not mentioned. AMAT announced tonight that they were laying off an additional 165 workers in response to the weakest industry conditions on record. The company is also planning on shutting down temporarily for a week or two to cut costs during this rough stretch. This is bound to add to weakness in semiconductors tomorrow after they had a rough Thursday finishing at 273.62 and a three month low. Disney announced earnings that beat the street but said they were not going to give guidance for the 2Q. They did say they expected to see +25% growth for all of 2003. ADBE also affirmed company estimates for the current quarter. There was some disagreement among analysts that the companies guidance was less than the consensus but they affirmed a broad range that did encompass the consensus estimate. Tomorrow is packed full of economic reports including Chicago PMI, NAPM-NY, Personal Income/Spending and the University of Michigan Consumer Sentiment. This is the second reading of the sentiment and it could have been impacted by the falling market over the last two weeks. The first take was Jan-17th and the current market drop began on the 15th. The war of words over Iraq has heated up since the 17th and tens of thousands of more troops have been called up. 83.9 is the consensus forecast for tomorrow. The NAPM-NY dropped from 56.2 to 41.4 in December due mainly to layoffs in the financial sector. With cuts continuing and waves of lowered guidance it could be worse tomorrow. This is a regional report but because it reflects the market conditions I listed it. The market is in trouble. After two days of gains it gave them all back and closed at a new low for the year. With one day left in January it is not likely we will finish with a gain for the year. This January barometer will predict another down year. Whether the year will be down or not the technicals for the market are terrible. The S&P failed to hold or reach yesterday's bear trap high of 868 and closed at a new low for the year. The bullish sentiment on the Nasdaq that helped hold up the other indexes earlier in the week has also disappeared. The Nasdaq also closed at a new low for the year. The Dow at 7944 is not far from my initial target of 7700 that I predicted two months ago. The date is set, February-14th. That is the new drop-dead date for Iraq to come clean with inspectors. It is the date that the inspectors will again report to the UN and it is the date that is making the rounds as the day before the start of the war. Over the last two months I have suggested Feb-15th as the earliest the war could start due to the Muslim holy days. It is amazing now that the US has suddenly picked that date as critical. Do they think we are all sheep? I think it will take another week for them to get all the troops in place but the window of opportunity is closing and they could go anytime after the 14th to prevent a continued increase in antiwar sentiment that could hinder their coalition. That window of opportunity means we could be looking at three more weeks like this week. There is going to be another UN meeting on Wednesday where Powell will spill the beans about some secret intelligence which is supposed to swing dissenters back to the US side. That should mean continued weakness in the short term but that weakness could be simply high volatility. I have been a bear for the last two months in predicting 7700 but I would be surprised if we went much lower than that. That is just an opinion and 7700 was my minimum target. The October lows of 7197 could still be retested if economic news does not improve quickly. Either way the next three weeks should be rocky and then we could see a nice bounce once the war begins. Anticipation of that historical bounce when the shooting starts should slow any serious declines as traders start bottom fishing in advance. Still three weeks is a lifetime in the markets and nothing should be considered certain. Enter Very Passively, Exit Very Aggressively! Jim Brown Editor *************** FUTURES MARKETS *************** A deeper shade of Red By John Seckinger jseckinger@OptionInvestor.com All three futures contracts came under pressure once more, and late-day selling began testing some important areas of support. Will they hold? If not, where could these markets end up? Thursday, January 30th at 4:15 P.M. Contract Last Net Change High Low Volume Dow Jones 7945.13 -165.58 8141.09 7938.62 YM03H 7900.00 -174.00 8126.00 7864.00 30,195 Nasdaq-100 985.51 -31.05 1022.21 985.16 NQ03H 987.00 -26.50 1027.00 986.00 226,374 S&P 500 844.61 -19.75 865.48 843.74 ES03H 840.00 -20.75 866.75 839.75 749,565 Contract S2 S1 Pivot R1 R2 Dow Jones 7805.81 7875.47 8008.28 8077.94 8210.75 YM03H 7701.00 7801.00 7963.00 8063.00 8225.00 Nasdaq-100 960.58 973.05 997.63 1010.10 1034.68 NQ03H 959.00 973.00 1000.00 1014.00 1041.00 S&P 500 829.54 837.08 851.28 858.82 873.02 ES03H 821.75 831.00 849.00 858.00 875.75 Weekly Levels Contract S2 S1 Pivot R1 R2 YM03H 7748.00 7933.00 8271.00 8456.00 8794.00 NQ03H 962.75 981.25 1011.25 1029.75 1059.75 ES03H 825.25 842.75 875.00 892.50 924.75 Monthly Levels (December's High, Low, and Close) Contract S2 S1 Pivot R1 R2 YM03H 7726.00 8028.00 8524.00 8826.00 9322.00 NQ03H 861.75 924.25 1041.75 1104.25 1221.75 ES03H 814.75 846.75 900.25 932.50 985.75 YM03H = E-mini Dow $5 futures NQ03H = E-mini NDX 100 futures ES03H = E-mini SP500 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. ================================================================= Before we begin, let us take a look at Jim Brown's day in the Futures Monitor. Signal recaps for the day: Short 861.50, exit 860.50, change +1.00 Long 861.50, exit 859.50, change -2.00 Short 857.50, exit 859.25, change -1.75 Short 858.25, exit 860.25, change -2.00 Short 854.75, exit 853.00, change +1.75 Short 851.50, exit 853.25, change -1.75 Total for the day = -4.75 Total for the week = -2.00 For more information on Jim's posts, please go to the following link and download the current market monitor. If you already have the most recent version, simply go to the Futures Monitor Post on the upper left hand portion of the applet. http://www.OptionInvestor.com/itrader/marketbuzz/download.asp The March E-mini S&P 500 Contract (ES03H) The ES contract fell underneath the profiled 842 area late in the session on Thursday, and this should portend more weakness to follow. Moreover, the daily chart below shows a "bearish engulfing" pattern as well as a close near the low-end of its Bollinger Bands. If weakness does take place on Friday, support is seen below from 827 to 832. A move underneath 827 should portend a move to S2, or 821.75. Note: The pivot is above at 849, and a bid above this area should take sentiment to more neutral levels. Resistance above 849 is seen at 855 and 865. Chart of ES03H, 720-minute Looking at a 120-minute chart of the ES contract, Thursday's settlement is below Friday's pivot and should attract aggressive shorts as the weekend approaches (as long as this holds true on the open). Ideally for bears, the MACD oscillator will cross lower and get traders following more technical analysis approaches to look for lower prices as well. Also on a bearish trader's side is the SPX, on a P&F chart, reversing back into a column of "O's" and still far away from oversold readings of 30% (currently at 47.50). If the 832 area does in fact hold, or if the ES contract clear 844.50 and then get above Friday's pivot, bulls might have a case. Chart of ES03H, 120-minute chart Bullish Percent of SPX: 47.50% and down 0.40% percent on Thursday. The column of O’s remains at nine (Recent High at 64%, Low of current column at 48). There is still a solid chance the bullish percent will move to the 40% level. Note: In order to really look for a bottom, I would like to see a move under 30%, followed by a row of "X's" that takes the indicator back above this 30 area. Looking at P&F analysis, the SPX contract reversed back into a column of O's today, and more weakness should be seen underneath the 840 area. The March E-mini Nasdaq 100 Contract (NQ03H) Weakness did take place on Thursday after the daily pivot of 1006.25 failed to hold selling pressure, and after-hours selling has taken the contract back underneath 980 and has started to do some technical damage. The 981 to 985 area will continue to be a strong technical area going forward; therefore, shorts can look for a move under 981 during the day as an indication of a move down towards 962. This 962 level is at the bottom of the daily Bollinger Bands, near the weekly S2 level, and also half of the range from the 50% retracement to the 941 area and 61.8% of the move from October to December. RSI is approaching oversold levels, so there could be a bounce soon that shorts will most likely sell into. The daily pivot comes in at 1000, which is very close to half the range from 1024 to 983; therefore, a move above Friday's pivot should send sentiment to more neutral levels and might be the catalyst for this possible short- covering. Chart of NQ03H, Daily Looking at a 60-minute chart of the NQ contract, Thursday's close places the NQ contract under Friday's pivot and should be viewed as bearish. It is also interesting that the daily S2 level is underneath the weekly S2 reading. Bearish as well. As the chart below does not show, weakness in after-hours has sent the NQ contract underneath the 50% area of 983 and added to the 'redness' of the chart. Ideally for longs, there is a move from above the daily pivot back to the 1024 area; however, that seems rather optimistic. I could instead envision a move to 1009-1012 instead, which is a compilation of a daily R1 level, weekly pivot, and retracement from R2 to S2. Chart of NQ03H, 60-minute Bullish Percent for NDX: This indicator fell 1% to 48% on Thursday, and continues to portend bears will be selling rallies going forward. There was an extra "O" added on Thursday, and this brings the count to nine. Note: The NDX will give a sell signal at 975, according to P&F charts. The March Mini-sized Dow Contract (YM03H) The YM contract on Thursday was unable to reach the 8152 area once again, proceeding to fall underneath its pivot and then to the 7933 area, or weekly S1. With the YM contract closing underneath the 7940-7963 area (support, now resistance), least resistance continues to be lower. The daily pivot is at the top of this range; therefore, a move above here will bring sentiment to more neutral readings. The downside objective is tiered: 7800, 7750, and 7700. I like the 7750 area, and weekly S2. It also corresponds with being half of the distance from the daily S1 to S2 area. For bulls, if the 7963 level is cleared to the upside, the objective would only be for a move to the 8025-8028 area. With risk of a fall then back to 7940, the risk/reward scenario is not great. Only a close above 8152 would severely change the bearish sentiment. Chart of YM03H, 120-minute Bullish Percent of Dow Jones: The bullish percent for the Dow was unchanged on Thursday at 36.67%, and the column of O’s is still 11 deep. The Bullish Percent indicator still has intermediate bearish implications. It does indicate that bears will look to sell rallies and be aggressive on weakness as well. Remember, a close underneath 30% should start to shift risk into the bears' camp. Stay tuned. Note: The DJIA, on a P&F chart, is currently in a row of "X's", and the bearish objective will now stay at 7000. Good Luck. Questions are welcomed, John Seckinger jseckinger@OptionInvestor.com ******************** INDEX TRADER SUMMARY ******************** Check the Site Later Tonight For Jeff’s Index Trader Article http://members.OptionInvestor.com/itrader/marketwrap/013003_1.asp ------------------------- Advertisement ------------------------- WINNER of Forbes Best of the Web Award optionsXpress voted Favorite Options Site by Forbes Easy screens for spreads, collars, or covered calls Free streaming quotes Real-time option chains, charts + calculators Go to http://www.optionsxpress.com/marketing.asp?source=oinvest21 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- **************** MARKET SENTIMENT **************** What A Relief it Was by Steve Price That relief rally we got Wednesday didn't last long. We got what seems to be a decisive sell-off, confirming that what we saw on Wednesday was an oversold bounce. That shouldn't be a surprise to anyone, since the recent trend has been decidedly down. We also began to see some signs that confirm the theory that we've got additional downside in the near future. The bond market saw some buying today, indicating a shift from equities back into bonds. The recent rebound in the equity markets has shown the opposite, with bonds falling for the last few days, however we saw decent bounces in the five, ten and thirty year treasuries. Those bounces weren't big, but if we are going to see another rollover in stocks, this indication is one of the supporting factors for that scenario. Gold futures also got a bounce today, as traders moved back into the defensive product after Wednesday's drop. The futures still haven't approached Monday's intraday rally up to 373.7, but they matched the recent closing high on Tuesday of 370.0 and also beat close of 369.4. One of the other factors figuring into today's equity pullback was the GDP report that showed the economy grew at a meager 0.7% in the fourth quarter. While that may not be a big surprise, it was slightly lower than expectations for growth of 0.9%. For the 2002 year, the economy grew a total of 2.4%, however, much of that growth was due to big gains in homebuilding and auto sales. Both of those factors are due to drop off in 2003, after setting an unsustainable pace due to record low mortgage rates and 0% financing deals offered by automakers. Other contributing factors were an increase in defense spending and government spending, which contributed 1.3% to the total, as well. Without those gains, we would have been in the red and those factors are hardly representative of underlying economic health. Business spending was the biggest drag, falling 5.8% for the biggest decline in 27 years. Investment in equipment and software dropped 1.8%, while investment in structures fell a whopping 16.4%. That 16.4% drop was the largest since the data stream began in 1929. The fourth quarter increase was also a big drop from the third quarter's rate of 4.0%, indicating a sharp downtrend. The weak GDP number also underscored the initial claims data that the government released this morning. For last week, unemployment claims rose by 14,000 to 397,000. However, the four-week moving average declined slightly to 384,000, which would indicate an improvement in the labor market. The threshold for the moving average between a worsening job market and one that is not worsening is 400,000, although many economists think a number below 350,000 is needed to suggest improvement. In any case, some of the data is skewed by the fact that employment offices were closed for one day last week for the Martin Luther King, Jr. holiday. One of the bigger factors we've been hearing from companies regarding costs of business in the fourth quarter, and also a reflection of geo-political concerns, is the cost of fuel. While some companies are much more sensitive on these fluctuations (i.e. airlines, trucking), those fuel costs apply to everything from transport to fueling manufacturing plants, to heating factories and offices. They are also passed along to less fuel dependent customers of the companies that do see the direct effects. These costs were also highlighted in yesterday's FOMC statement, which read, "Oil price premiums and other aspects of geopolitical risks have reportedly fostered continued restraint on spending and hiring by businesses." Crude oil futures once again rose today to new relative highs, suggesting there will be little relief until the Iraq situation is resolved on way or another. The head and shoulders pattern remains essentially in tact, with a failed rally below the neckline at Dow 8200, SPX 865 and OEX 438. The only fly in the ointment is the strong support in the Nasdaq Composite at 1319. That 1319 support in the COMP held on the pullback from what would be a left shoulder in November and has so far held, with a COMP close of 1322 today. If that level falls, there is little left to slow the decline. If we do breakdown below those levels, traders can continue to lean short, as there are few factors in the market that could lead to a big rebound. That doesn't mean we have moved into lower risk territory, however, as a resolution to the Iraq matter could still lead to a very big snap back rally. In essence, traders willing to take on that risk should lean to the short side, but traders with lower risk portfolios should still be on the sidelines until we get a war decision behind us. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10673 52-week Low : 7197 Current : 7945 Moving Averages: (Simple) 10-dma: 8268 50-dma: 8551 200-dma: 8813 S&P 500 ($SPX) 52-week High: 1176 52-week Low : 768 Current : 844 Moving Averages: (Simple) 10-dma: 874 50-dma: 902 200-dma: 935 Nasdaq-100 ($NDX) 52-week High: 1734 52-week Low : 795 Current : 985 Moving Averages: (Simple) 10-dma: 1011 50-dma: 1045 200-dma: 1039 ------------------------------------------------------------------ The Semiconductor Index (SOX.X): The SOX gave up its previous support in a big way today. After flirting with support at 280, closing just below before it bounced the last couple of days, it rolled over, leaving that support level in the rear view mirror. The SOX appears as though it has formed a classic head and shoulders pattern and has now decisively broken the neckline. What's more is that it fell below its November pullback low, unlike the Nasdaq Composite, which has held that level. There was some support at 274.50, as well, but it was minor and the index has broken below that level as well, although just barely. There is a definite void in support levels between where we currently stand and September/October lows in the low 200s (230 and then 211). There is some minor support at 260, but not nearly as strong as that at 230. The measuring objective of the H&S is much lower, down around 175, however that would be a very aggressive target for bears. 52-week High: 657 52-week Low : 214 Current : 273 Moving Averages: (Simple) 21-dma: 308 50-dma: 320 200-dma: 354 ----------------------------------------------------------------- The VIX actually failed to react in the same dramatic way it did on Monday's sell-off. While we actually traded lower than we did that day, the VIX barely jumped. It did add 1.15 on the day, after bouncing off previous resistance at 35, but the lack of panic should throw up a red flag to bears. If the institutions are either not buying premium - or even selling it on the bounces, they don't see as much downside in the current move as would seem to be evident. CBOE Market Volatility Index (VIX) = 36.23 +1.01 Nasdaq-100 Volatility Index (VXN) = 46.22 +2.58 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.87 476,129 414,207 Equity Only 0.70 353,102 246,414 OEX 0.84 22,248 18,814 QQQ 1.21 51,440 62,192 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 45.8 - 1 Bull Correction NASDAQ-100 48.0 - 2 Bear Confirmed Dow Indust. 36.7 - 0 Bear Confirmed S&P 500 47.8 - 2 Bull Correction S&P 100 45.0 - 1 Bear 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 1.52 10-Day Arms Index 1.54 21-Day Arms Index 1.24 55-Day Arms Index 1.29 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 they do, they can signal significant market turning points. ----------------------------------------------------------------- Market Internals Advancers Decliners NYSE 847 2006 NASDAQ 986 2175 New Highs New Lows NYSE 65 89 NASDAQ 71 84 Volume (in millions) NYSE 1,771 NASDAQ 1,412 ----------------------------------------------------------------- Commitments Of Traders Report: 01/21/02 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 Commercials added similar amounts to both sides, ending the period slightly less short, but not by a significant percentage. Small traders also added similar amounts to both sides, finishing the period with an additional 1,000 long contracts overall. Commercials Long Short Net % Of OI 12/31/02 410,968 462,782 (51,814) (5.9%) 01/07/03 411,542 455,538 (43,996) (5.1%) 01/14/03 411,052 453,164 (42,112) (4.9%) 01/21/03 415,028 456,885 (41,857) (4.8%) Most bearish reading of the year: (111,956) - 3/6/02 Most bullish reading of the year: ( 16,472) - 10/01/02 Small Traders Long Short Net % of OI 12/31/02 139,383 75,640 63,743 30.0% 01/07/03 143,169 83,895 59,274 26.1% 01/14/03 144,182 92,358 51,824 21.9% 01/23/03 148,227 95,356 52,871 21.7% Most bearish reading of the year: 36,513 - 5/01/01 Most bullish reading of the year: 114,510 - 3/26/02 NASDAQ-100 Commercials decreased long positions by 1,000 contracts, while adding almost 5,000 contracts to the short side. Small traders added 5,000 contracts to the long side, while reducing shorts by 1,500. Commercials Long Short Net % of OI 12/31/02 31,399 44,387 (12,988) (17.1%) 01/07/03 37,966 48,156 (10,190) (11.8%) 01/14/03 38,057 45,060 ( 7,003) ( 8.4%) 01/23/03 37,174 49,789 (12,615) (14.5%) Most bearish reading of the year: (15,521) - 3/13/02 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 12/31/02 19,841 5,009 14,832 60.1% 01/07/03 19,708 8,453 11,255 40.1% 01/14/03 20,757 8,320 12,437 42.8% 01/23/03 25,852 6,764 19,088 58.5% Most bearish reading of the year: (10,769) - 06/11/02 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Commercials added 1,000 contracts to the long side, while reducing shorts by 1,400. Small traders added approximately 600 contracts to both sides, leaving the net virtually unchanged. Commercials Long Short Net % of OI 12/31/02 15,940 11,253 4,687 17.2% 01/07/03 16,210 11,333 4,877 17.7% 01/14/03 17,804 12,427 5,377 17.8% 01/23/03 16,901 11,031 5,870 21.0% 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 12/31/02 4,997 6,553 (1,556) (13.5%) 01/07/03 4,963 8,334 (3,371) (25.4%) 01/14/03 4,552 7,697 (3,145) (25.7%) 01/23/03 5,120 8,282 (3,162) (23.6%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01 ----------------------------------------------------------------- ------------------------- Advertisement ------------------------- VOTED one of "Best Online Brokers" (4 stars)--Barron's optionsXpress's "order-entry screens...go far beyond... other online broker sites"--Barron's 8 different online tools for options pricing, strategy, and charting Access to options specialists via email, phone or live chat online Real-Time Buying Power, Account Balances or Cancels Go to http://www.optionsxpress.com/marketing.asp?source=oinvest22 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- ************************* WEEKLY MANAGER MICROSCOPE ************************* Maurice & David Schoenwald: New Alternatives Fund (NALFX) New Alternatives Fund, Inc. (NALFX), managed by Maurice and David Schoenwald, since its September 1982 inception date, is a mutual fund that seeks to provide long-term capital growth by investing in stocks of companies from various industries that are oriented to a clean environment. The first environmentally friendly fund maintains a special interest in Alternative Energy. Considering President Bush's $1.2 billion proposal to develop fuel cell and hydrogen technology for electric vehicles, we thought it would be appropriate to take a look at this particular fund. The portfolio managers of the New Alternatives Fund, Maurice and David Schoenwald, are former local, private practicing attorneys who took a personal interest in social and environmental matters, the prospectus reads. They received financial and consultative assistance in the founding of the mutual fund from neighbors and friends. Since they started the fund on September 3, 1982, they have continued to seek and receive advice from shareholders. As such, the Schoenwalds are both attentive and influenced by their shareholders' comments. The New Alternatives Fund, Inc. is located in Melville, New York, and shows a toll-free number of 800-423-8383. For more detail or to D/L the fund prospectus, go to the mutual fund website located at www.newalternativesfund.com. Investment Style/Strategy Like other stock funds, the New Alternatives Fund seeks long-term capital growth through investment in common stock of companies of different sizes across a wide range of industries. However, that is where the similarities end. This fund has investment policies that are materially different from other stock mutual funds. The major distinguishing characteristic is that New Alternatives Fund invests principally in companies, which provide contribution to a clean and sustainable environment. The fund also has a special interest in Alternative Energy, which is described in the prospectus as the production and conservation of energy by means that reduce pollution and environmental harm, particularly when compared with conventional coal, oil, or atomic energy. The New Alternatives Fund also emphasizes companies with non-discriminatory practices at all levels of work. The New Alternatives Fund attempts to invest at least 25 percent of assets in the securities of companies involved in Alternative Energy. Historically there have been a limited number of stocks in this area to choose from, so the percentage may not always be achieved, the prospectus reads. That would likely change if the U.S. Congress follows through on the President's energy proposal. The fund prospectus discusses the main risks of investing in the New Alternatives Fund. In addition to the common risks of stock investing, the fund may lag other stock funds if emerging energy technologies are feasible but not cost effective, if interest in having a clean environment wanes, or investments in alternative energy and companies become subject to political priorities and changing regulation. Some may argue that's happening right now, but I would prefer to look at the potential long-term benefit of the President's alternative energy proposal. According to Morningstar's report, the New Alternatives Fund has a small-cap blend style, with 90% of assets invested in the mid-, small-, and micro-cap sectors. Small company stocks are usually more risky (volatile) than large-cap stocks, but offer investors greater potential return over time. The Schoenwalds may invest up to 15% of assets in stocks of foreign companies, but recently had only a seven percent foreign equity stake. When suitable stocks cannot be identified, the New Alternatives Fund may let the fund's cash allocation rise. According to the Morningstar report, the fund recently had over 22 percent of its assets held in cash and equivalents. Investment Performance The chart above shows that the New Alternatives Fund's net asset value (NAV) can experience significant fluctuations, so you must have high-risk tolerance to invest in this mutual fund. Because there have been a limited number of stocks to choose from, total return performance doesn't compare well to other domestic equity funds as indicated by the 1-star (lowest) rating per Morningstar. Relative to its category peer group (i.e. small-cap blend funds), the New Alternatives Fund has produced below average returns and high risk overall. In the last three years, the fund's risk has been "high" compared to its small-blend category peers according to Morningstar, and performance has been "hit or miss." In 2000, the Schoenwalds banged a home run, returning 51.8% for investors that year. But, in 2001 and 2002 they whiffed, losing 12.4% and 29.5%, respectively. The result, a trailing average annual loss of 7.8 percent for the trailing 3-year period through January 29, 2003. It all depends on how you look at it. While this fund ranked in the bottom quintile of the Morningstar small-cap blend category, it has held up better over the past three years than the S&P 500 and Russell 2000 indices. Over the same trailing 3-year period, the S&P 500 large-cap index fell by an annual equivalent rate of 13 percent, while the Russell 2000 small-cap index declined 13.2 percent per annum on average. Still, the fund's long-term total returns leave something to be desired. For the trailing 10-year period through December 31, 2002, the fund has increased by only 3.1 percent a year on average. That's a high opportunity cost to pay for environmental responsibility. Conclusion Will the New Alternatives Fund ever kick into gear? That is hard to say. It would appear that this fund was maybe 20 years ahead of its time, with performance suffering because of a lack of good equity investments to choose from. Perhaps now would be a better time to think about "green" investing, but there is really no way of knowing with certainty today whether environmentally conscious funds will be able to outpace, or even keep pace with other stock funds in the future. President's Bush's proposal may not be approved by Congress, and traditional sources of energy may continue to dominate the scene. Whether alternative energy truly takes off remains to be seen and for that reason, the fund shouldn't represent a significant piece of an individual's long-term investment plan. It's probably best suited to investors who share the same ideals as the Schoenwalds. For more information, log on to www.newalternativesfund.com. Steve Wagner Editor, Mutual Investor email@example.com ------------------------- Advertisement ------------------------- We got trailing stops! Trade online with trailing stops at optionsXpress, at no extra cost Trailing stops based on the option price or the stock price Also place Contingent, Stop Loss, and "One Cancels Other" orders $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees! Go to http://www.optionsxpress.com/marketing.asp?source=oinvest23 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- *********************** SWING TRADER GAME PLANS *********************** All in the Timing Looks like that oversold bounce-relief rally theory was sound. Today, the selling resumed, although it wasn't a collapse like we saw on Wednesday morning. To read the rest of the Swing Trader Game Plan Click here: http://www.OptionInvestor.com/itrader/indexes/swing.asp FREE TRIAL READERS ****************** If you like the results you have been receiving we would welcome you as a permanent subscriber. The monthly subscription price is 39.95. The quarterly price is 99.95 which is $20 off the monthly rate. We would like to have you as a subscriber. You may subscribe at any time but your subscription will not start until your free trial is over. To subscribe you may go to our website at www.OptionInvestor.com and click on "subscribe" to use our secure credit card server or you may simply send an email to "Contact Support" with your credit card information,(number, exp date, name) or you may call us at 303-797-0200 and give us the information over the phone. 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The Option Investor Newsletter Thursday 01-30-2003 Copyright 2003, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: None Dropped Puts: APD, CTSH Daily Results Call Play Updates: FRX, COF, SYMC New Calls Plays: None Put Play Updates: KO, KSS, PNRA, TDS New Put Plays: CCMP, AT **************** PICKS WE DROPPED **************** When we drop a pick it doesn't mean we are recommending a sell on that play. Many dropped picks go on to be very profitable. We drop a pick because something happened to change its profile. News, price, direction, etc. We drop it because we don't want anyone else starting a new play at that time. We have hundreds of new readers with each issue who are unfamiliar with the previous history for that pick and we want them to look at any current pick as a valid play. CALLS: ***** None PUTS: ***** APD $40.51 +0.08 (-0.51 for the week) Under normal circumstances, we would not be dropping a play that has bounced only slightly after taking out a significant support level. APD finally broke down, trading as low as $39.32 on Wednesday, before bouncing hard and showing a gain on the day. It was the second in a row and Thursday marked its third gain in as many days. More importantly, APD seems to have once again found support at $40, in spite of a market that dropped hard today. We really don't have an answer for the contrarian nature of the recent behavior here and have decided to let this one go. If the stock does break down on Friday morning below its recent lows, then traders holding puts can reconsider the drop. However, as of the time of this publication, we'd rather not play a stock whose behavior has bewildered us. --- CTSH $58.75 +1.75 (+0.91) Somebody forgot to tell our CTSH play that the market was weak on Thursday, as the stock soared at the open, briefly trading over the $59 level. Traders following our $57.50 stop were likely stopped out of the play shortly after the open and we're following suit tonight, after the stock managed to avoid the selling pressure in the rest of the market. We got a nice ride down after CTSH broke the $60 support level, but the oversold rebound is underway and it has more strength than we'd like to see. Traders still holding open positions will want to take advantage of any intraday weakness on Friday to exit the play at more favorable levels. *********************************************************** DAILY RESULTS *********************************************************** Please view this in COURIER 10 font for alignment ************************************************* CALLS Mon Tue Wed Thu Week COF 31.08 -0.78 1.24 0.38 -0.76 Holding support FRX 50.94 -0.87 0.37 0.11 –0.47 Filled gap SYMC 46.38 0.21 1.90 1.07 –0.40 Holding gains PUTS APD 40.51 -1.06 0.17 0.05 0.08 Drop, questionable AT 46.21 -0.21 -0.40 0.10 –1.40 New, 200 dma break CCMP 44.83 -1.24 1.53 0.57 –2.67 New, Sector weak CTSH 58.75 -0.02 0.20 0.96 1.75 Drop, stopped KO 39.20 -0.56 -0.69 -0.55 –1.35 Underperformer KSS 52.02 -1.00 0.39 0.03 –0.16 Couldn't hold gain PNRA 29.06 -0.74 0.44 0.71 –2.70 CFO resigns TDS 41.35 -0.75 -0.08 0.54 –0.99 new closing low ------------------------- Advertisement ------------------------- Quit paying fees for limit orders or minimum equity No hidden fees for limit orders or balances $1.50 /contract (10+ contracts) or $14.95 minimum. Zero minimum deposit required to open an account Free streaming quotes Go to http://www.optionsxpress.com/marketing.asp?source=oinvest24 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- ******************** PLAY UPDATES - CALLS ******************** FRX $50.94 -0.47 (-1.07 for the week) On Thursday FRX put a halt to its recent trend of relative weakness versus the DRG.X pharmaceutical index. Shares finished with a loss of less than one percent, easily outpacing both the Dow Jones and DRG.X. The stock traded in positive territory early in the session and moved well above its 50-dma ($51.46), which had acted as resistance during the previous two session. These gains, however, were erased as the broader market moved lower throughout the day. Despite the intraday weakness, the daily chart shows that FRX was able to trace higher highs and higher lows for the second consecutive session. The recent reversal in the daily stochastics (5,3,3) suggests that the stock may have put in a short-term bottom. Unfortunately this technical strength might be rendered moot if the broader market extends today's decline. If the stock sees further selling on Friday we'll be watching for the $50.00 to once again act as support. We would not recommend taking new entries at this time. --- COF $31.08 -0.76 (-0.44) Despite a pretty solid rebound in the broad market on Wednesday, our COF play fell just shy of the $32.25 level needed to trigger it to active status, with an intraday high of $32.15. That lack of strength was also reflected in the action of the KBW Banking index (BKX.X), as it was unable to reclaim the $750 level, finding intraday resistance just below there and then setting up today's more than 2% slide. COF pulled back as well on Thursday, coming to rest near $31 and just above the ascending trendline, now at $30.50. Geopolitical concerns are still in the forefront of traders' minds, and without some upside conviction in the broad market and Banking sector, COF is likely to break under its trendline. We're still keeping our trigger in place, to prevent entering the play before the market confirms the wisdom in doing so. After entry, we'll set initial stops at $29.25. --- SYMC $46.38 -0.40 (+2.47) Despite the weakness in the broad market, our SYMC is holding up rather well. Following the rebound from the $43.50 level earlier in the week, the stock extended its gains on Wednesday, reaching an intraday high of $47. Unfortunately, the broad market couldn't hold it together on Thursday, and the stock slid fractionally in the afternoon, but did manage to stay above the $46 level. Recall that $46 was the top of the gap left behind last Friday, and we're looking for it to provide support for the next leg higher. Of course, that is going to be a tough feat to accomplish if the NASDAQ is unable to find support near its closing lows today. Traders looking for new entry points into the play will want to see how the stock behaves at that $46 level and more importantly near $45.40 (the bottom of last Friday's gap and now the site of the 20-dma). Another successful rebound from above $45 like we saw on Wednesday looks favorable for new entries. We're raising our stop to $44 tonight, which is just below the ascending trendline that has been providing support since early October. ************** NEW CALL PLAYS ************** None ------------------------- Advertisement ------------------------- VOTED one of "Best Online Brokers" (4 stars)--Barron's optionsXpress's "order-entry screens...go far beyond... other online broker sites"--Barron's 8 different online tools for options pricing, strategy, and charting Access to options specialists via email, phone or live chat online Real-Time Buying Power, Account Balances or Cancels Go to http://www.optionsxpress.com/marketing.asp?source=oinvest22 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- ******************* PLAY UPDATES - PUTS ******************* KO $39.20 -1.35 (-3.63 for the week) It seems we write the same update each day on KO. The stock under-performed the market, even on a day when the Dow lost 165 points. While the Dow dropped 2%, KO lost 3.3%, falling through the $40 support level that held it on Wednesday. Ever since breaking to a new six-year low, it has been a straight shot down for the beverage maker and so far shows no reason to expect that drop to stop. Of course, we'd be short sighted to think there will not be a bounce at some point. Now that the stock has lost ground nine straight days, losing 14% since January 16, traders can expect KO to at least make up some of that ground as investors looking for a deal come calling. We are going to tighten up the stop, rather than give back a gain and set our exit at $41.55. That would be just above Wednesday's high and lock in a small gain in case we do get an oversold bounce. More conservative traders can use a tighter stop above today's high of $40.77. However, with the stock closing on its low of the day, it does not appear that those bottom feeders have materialized just yet and a failed rally at $40 may be an entry point for aggressive traders. The stock can actually rebound all the way up to $43 before reversing the current PnF sell signal and the most aggressive put holders could even allow for a failed rally to that level to add to the position. However, we are not quite that aggressive and would rather lock in the move in our favor. --- KSS $52.02 -0.16 (-1.73) Yesterday's broad market rebound managed to drag the Retail index (RLX.X) back above the $255 level, but the lack of follow-through this morning had the sellers back in force. The index fell back to the $250 level by the close, and any hope for a quick rebound was significantly dampened by the close. Our KSS play has been following along with the sector, and after a failed move higher at the open, the stock weakened right up to the closing bell, ending at a new closing low for this move. While the $52.50 lows from early in January have decisively given way, it is somewhat puzzling that there hasn't been any follow-through to the downside. With the stock holding near recent lows, a breakdown is certainly a possibility, but so is a short-covering rally in this highly charged geopolitical environment. Failed rallies below resistance, such as was the case this morning are the best approach to gaming new entries, although more aggressive traders may want to target a breakdown under $51.50 for a quick run to the $49-50 level. As KSS continues to work lower, we'll continue to ratchet our stop downwards. Tonight, we're lowering it to $54, just above the intraday highs, and the site of the 10-dma (currently $54.05, but dropping below $54 by tomorrow). --- PNRA $29.06 -2.70 (-2.49) Now that's what we wanted to see. PNRA gapped sharply lower this morning following the company's announcement that the CFO would be leaving the company at the end of March. Immediately reversing yesterday's rally, the stock fell under $30 at the open, attempted a weak rebound, which failed near $30.40 (the site of Monday's intraday lows) and then proceeded lower throughout the day. With the broad market selloff picking up steam through the afternoon, PNRA proceeded to violate $29 support, adding another O on the PnF chart and extending the vertical count to $20. The next support of significance is found at $28, but with the heavy selling volume today, it appears the real target is the PnF bullish support line at $26. This is also important support from , and more conservative traders will want to harvest gains if that level is reached. A failed rebound below today's highs can be used for opening new positions, while more aggressive traders can consider adding to open positions as PNRA declines under today's intraday low of $28.75. We're lowering our stop to $30.55 tonight, just above the intraday highs. --- TDS $41.35 -0.99 (-1.40) Despite the weakness in the broad market on Thursday, shares of TDS held firm for most of the day, vacillating around the $42 level near where they came to rest following Wednesday's oversold bounce. But as the market continued to weaken, the bears were emboldened, driving the stock back down below the $41.50 level at the close to post another multi-year closing low. Highlighting just how weak TDS is, it hasn't even been able to challenge its declining 10-dma ($43.54) all week and appears destined to challenge the $40 level in the near term. The pattern of weakness continued in the XTC index as well, with the index finally closing below its declining 200-dma (currently $434.61). With nothing but weakness evident in the both TDS and the XTC index, the stock seems destined for lower levels, but in this highly charged political environment, we need to be on the lookout for an oversold bounce. If such a bounce occurs and fails below the 10-dma, that will make for our next high odds entry point. Entries on breakdowns are less favorable due to all the historical support in the $38-40 area from 1997-1998. Those willing to take the additional risk will still want to use a drop below $41.25 as their entry trigger. Lower stops to $43.75, just above the 10-dma and Tuesday's intraday high. ************* NEW PUT PLAYS ************* CCMP - Cabot Microelectronics - 44.83 -2.67 (-1.77 for the week) Company Description: Cabot Microelectronics, headquartered in Aurora, Illinois, USA, is the world leader in the development and supply of high- performance polishing slurries used for chemical mechanical planarization (CMP), a process that enables the manufacture of the most advanced integrated circuit (IC) devices and hard disk drive components. (source: company press release) Why We Like It: The entire chip equipment group was dealt a severe blow earlier this month when Intel announced that capex spending in 2003 would be much lower than analysts had expected. The implicit reduction in demand for companies engaged in the semiconductor manufacturing process did not sit well with investors. A sell- off within the sub-sector immediately took hold, leading to large losses in stock such as AMAT, KLAC, and NVLS. CCMP doesn't have the same high profile on Wall Street, but was nonetheless subjected to heavy selling pressure. Shares moved sharply lower from the $55.00 area before finally bottoming out near $44.75 less than a week later. Subsequent rally attempts were turned back at $48.00, which has emerged as reliable short-term resistance. While that's enough to frustrate the bulls, today's action was downright foreboding. CCMP trended lower for the entire session and plummeted to levels not seen since October. These losses stemmed from a steep sell- off in the semiconductor index, which posted a 5.8% decline. The SOX.X has fallen to multi-month lows and does not have any clear support until the 220-230 region. Minor support at 245 and 260 might be rendered obsolete if the overall market continues to decline at a rapid pace. Point-and-figure enthusiasts will also be interested to note that the index will give a double-bottom sell signal if it reaches 272. This sector weakness does not bode well for shareholders of CCMP. Much like the SOX.X, Cabot is sitting well above its next of solid support. How far could the stock fall? The daily chart shows a fast-move region all the way down to the October lows at $32.50. We're going to be a bit more conservative in targeting a decline to the $35.00 area. However, we won't hesitate to close the play if shares rebound from psychological support at $40.00. Our action point to enter this hypothetical trade is set at $44.69, two cents under today's low. If the play is activated our stop will be set at $48.01, above the aforementioned short-term resistance. Traders looking for less upside risk could use a stop slightly above the 200-dma at $45.84. BUY PUT FEB-50*UKR-NJ OI=1400 at $6.00 SL=3.00 BUY PUT MAR-45 UKR-OI OI= 186 at $4.20 SL=2.10 Average Daily Volume = 1.04 mil --- AT - Alltel Corporation $46.20 -1.40 (-1.46 this week) Company Summary: Alltel is a customer-focused technology company that provides communications and information services. The company's communications operations consist of its wireless, wireline and emerging business segments. AT also sells telecommunications products and publishes telephone directories. The company owns a majority interest in wireless operations in 69 Metropolitan Statistical Areas, and a majority interest in 132 Regional Service Areas. Long-distance services are provided on both a facilities-based and resale basis by the company's subsidiaries. Why We Like It: In an economic environment that continues to show a lack of business spending, as well as a consumer sector that is starting to fray around the edges, investors have reverted to a mode of selling first and asking questions later. Even posting solid earnings isn't enough to avoid the selling frenzy, as we have seen on numerous occasions over the past couple weeks. AT is a perfect example, as the company beat earnings estimates yesterday morning, which was met by a collective yawn from investors. On a day that the broad market managed to stage an impressive rebound, the stock posted a fractional loss, ending just above the 200-dma ($47.45). And it's not as though the stock had a bullish move heading into earnings, as it was already down from $56 in early January. Yesterday the company announced that it would be selling its finance unit for $1.1 billion in an effort to focus more directly on expanding its wireless business into other areas. One of those expansion areas became clear today, when the company announced that it will be offering a new prepaid wireless service, available at Wal-Mart stores nationwide. Investors were again unimpressed, or perhaps it was just the broad market weakness. But whatever the cause, AT had a bad day on Thursday, crashing through the 200-dma and losing nearly 3% on volume 50% above the ADV. The PnF chart was already on a Sell signal, and today's action just extended the current column of O's and dropping the bearish price target to $37. AT isn't like to move that low without a couple of bumps along the way, but it does appear that down is the direction of least resistance for now. After consolidating on the 200-dma for the first three days of the week and then breaking below it, that level is likely to provide solid resistance on any rebound attempt. A failed rally in the $47.50-48.00 area should provide for a solid entry into the play, as would a breakdown under $46. We do need to be careful about chasing the stock lower at this point though, with the PnF bullish support line at $45 and historical support near $44. That area is likely to produce at least a temporary bounce, which will give us that entry when it fails. Place stops initially at $48.60, just above this week's intraday highs. BUY PUT FEB-50*AT-NJ OI=1994 at $4.70 SL=2.75 BUY PUT FEB-45 AT-NI OI= 81 at $1.40 SL=0.75 Average Daily Volume = 1.25 mln ------------------------- Advertisement ------------------------- We got trailing stops! Trade online with trailing stops at optionsXpress, at no extra cost Trailing stops based on the option price or the stock price Also place Contingent, Stop Loss, and "One Cancels Other" orders $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees! Go to http://www.optionsxpress.com/marketing.asp?source=oinvest23 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Thursday 01-30-2003 Copyright 2003, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Play of the Day: PUT - CCMP Traders Corner: Who’s Been Spiking My Diet Pepsi? Futures Corner: Developing a Bias Options 101: Real Estate 2003 - Boon or Bubble? ********************* PLAY OF THE DAY - PUT ********************* CCMP - Cabot Microelectronics - 44.83 -2.67 (-1.77 for the week) Company Description: Cabot Microelectronics, headquartered in Aurora, Illinois, USA, is the world leader in the development and supply of high- performance polishing slurries used for chemical mechanical planarization (CMP), a process that enables the manufacture of the most advanced integrated circuit (IC) devices and hard disk drive components. (source: company press release) Why We Like It: The entire chip equipment group was dealt a severe blow earlier this month when Intel announced that capex spending in 2003 would be much lower than analysts had expected. The implicit reduction in demand for companies engaged in the semiconductor manufacturing process did not sit well with investors. A sell- off within the sub-sector immediately took hold, leading to large losses in stock such as AMAT, KLAC, and NVLS. CCMP doesn't have the same high profile on Wall Street, but was nonetheless subjected to heavy selling pressure. Shares moved sharply lower from the $55.00 area before finally bottoming out near $44.75 less than a week later. Subsequent rally attempts were turned back at $48.00, which has emerged as reliable short-term resistance. While that's enough to frustrate the bulls, today's action was downright foreboding. CCMP trended lower for the entire session and plummeted to levels not seen since October. These losses stemmed from a steep sell- off in the semiconductor index, which posted a 5.8% decline. The SOX.X has fallen to multi-month lows and does not have any clear support until the 220-230 region. Minor support at 245 and 260 might be rendered obsolete if the overall market continues to decline at a rapid pace. Point-and-figure enthusiasts will also be interested to note that the index will give a double-bottom sell signal if it reaches 272. This sector weakness does not bode well for shareholders of CCMP. Much like the SOX.X, Cabot is sitting well above its next of solid support. How far could the stock fall? The daily chart shows a fast-move region all the way down to the October lows at $32.50. We're going to be a bit more conservative in targeting a decline to the $35.00 area. However, we won't hesitate to close the play if shares rebound from psychological support at $40.00. Our action point to enter this hypothetical trade is set at $44.69, two cents under today's low. If the play is activated our stop will be set at $48.01, above the aforementioned short-term resistance. Traders looking for less upside risk could use a stop slightly above the 200-dma at $45.84. BUY PUT FEB-50*UKR-NJ OI=1400 at $6.00 SL=3.00 BUY PUT MAR-45 UKR-OI OI= 186 at $4.20 SL=2.10 Average Daily Volume = 1.04 mil ------------------------- Advertisement ------------------------- Quit paying fees for limit orders or minimum equity No hidden fees for limit orders or balances $1.50 /contract (10+ contracts) or $14.95 minimum. Zero minimum deposit required to open an account Free streaming quotes Go to http://www.optionsxpress.com/marketing.asp?source=oinvest24 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ----------------------------------------------------------------- ************** TRADERS CORNER ************** Who’s Been Spiking My Diet Pepsi? By Mike Parnos, Investing With Attitude I think all those years of playing football without a helmet are coming back to haunt me – or someone is making my pizzas with soy products. Well, it’s affecting my trading – or at least my writing. Another OOPS! Sorry about that. I’ve become a victim -- like a pod from the “Invasion of the Body Snatchers.” Except it’s not my body they’re after (a trophy though it would be). It’s my mind. It’s a conspiracy that’s being organized by alien beings – or market makers – who are threatened by our trading methods and strategies. In the new MMM Iron Condor trade posted last Sunday, it should have read: Sell 10 contracts of the MMM Feb. $120 puts (MMMND) @ $1.15 Buy 10 contracts of the MMM Feb. $115 puts (MMMNC) @ $.60 Sell 10 contracts of the MMM Feb. $130 calls (MMMBF) @ $1.45 Buy 10 contracts of the MMM Feb. $135 calls (MMMBG) @ $.40 As of last Friday, the credit for our bull put spread was $.55 and for the bear call spread was $1.05. Total credit (and potential profit) for the position was $1.60. Risk was $3.40 ($5.00 - $1.60). Total margin requirement was $10,000 ($5,000 for each credit spread). The maximum profit potential, for a 10- contract position was $1,600. _____________________________________________________________ Successful Entries Both BBH and MMM offered numerous opportunities to enter the respective condor positions at, or near, the projected credits. MMM even had numerous opportunities on Monday to get a credit of $1.70 instead of $1.60. ______________________________________________________________ CPTI PORTFOLIO POSITION UPDATE Position #1: BBB Iron Condor – Closed Thursday at $88.65. An Iron Condor is a credit position consisting of both a bull put spread and a bear call spread. The collected premium will come into your account the very next business day. The objective is for the underlying, at expiration, to finish anywhere within the $85-$95 range. Position #2: MMM Iron Condor – Closed Thursday at $123.91. The support at $120 once again seems strong, as does the resistance at $130. Enough. That should give MMM enough room (10 points) to bounce around for the next four weeks. Position #3: SMH Straddle – Closed Thursday at $21.72. We bought the SMH May $22.50 puts and calls and spent $5,850 on 10 contracts. But, since we’re going to stay in this position only for the February option cycle (5 weeks), we’ll only be risking about $.85 ($850). We’re looking for a big move for the semiconductors and we don’t care which way. Position #4: QQQ ITM Strangle – Closed Thursday at $24.54. This is a long-term position to generate a monthly cash flow. We own the January 2005 $21 LEAPS call and the January 2005 $29 LEAPS puts. We’ve sold the February $29 calls and February $21 puts. ____________________________________________________________ Interesting Alternative Trades For CPTI Students who missed the above trades and new readers to this column, here are a few ideas that look enticing. These are for traders who are a bit more conservative -- and patient. XAU Condor – Closed Thursday at $78.28 Sell March XAU $70 put & Buy March XAU $65 put for a credit of $.95. Sell March XAU $90 call & Buy March XAU $95 call for a credit of $.45. The total credit is $1.40. To get this credit will require you placing the orders as “spread” orders – taking advantage of the fact that XAU trades only on the PHLX (Philadelphia Exchange). If you come within $.20 of the $1.40, it’s still a good trade with a huge 20-point range for seven weeks. MMM Condor – closed Thursday at $123.91 Sell March MMM $115 put & Buy March MMM $110 put for a credit of $.70. Sell March MMM $135 call & Buy March MMM $140 call for a credit of $.50. The total credit is $1.20. Since MMM is traded on multiple exchanges, you may be better off legging into the spread if you have online directional trading capabilities. If you come within $.10 of the $1.20, it’s still a good trade with a huge 20-point range for seven weeks. QQQ 2 Month Baby ITM Strangle – closed Thursday at $24.54 Buy March QQQ $26 puts & Buy March QQQ $24 calls for total debit of $4.20. There is $2 of intrinsic value and only $2.20 of risk. We’re looking for a 3-4 point move in the QQQs. After the move, we want the successful long option to pay for both options. Then we’re left with a “free” long option and waiting for the market to reverse. (see question below). ______________________________________________________________ ITM Baby Strangle Question We don’t have our patented ITM two-month Strangle Position in place this month. However, many CPTI students, who have done exceptionally well with the strategy in the past, have established positions on their own. Below is a question that all CPTI students can learn from: Hi Mike, I have followed your column for many months and have learned a lot about different option strategies that I am slowly using in my portfolio of trades. Last week I put on a QQQ ITM Strangle because I like that results from past months even though it was not a featured CPTI play for the month. QQQ closed at 25.27 on 1/17. On 1/22 I bought 10 March 24 Calls for 2.50 and 10 March 27 Puts for 2.55. Total cost 5,005 with risk of $2,005. I used the March 27 Puts instead of the March 26 Puts because the time value was less, the delta was higher and the total risk was less ($2005 vs. $2400). My questions are: Even though it has only been a week, I am thinking of selling the Mar 27 Puts near $3.00 since there has been a retracement of 80% since the recent high on 1/13 and the daily stochastics are showing oversold and have turned up and given a possible buy signal. Does this make sense? If I sell the put side, should I buy another put in case the QQQ's continue down and would it be the March $26 or April $26 or $27? I am not sure if I should be without a put or should I establish new puts and calls. If I sell the put at $3.00 I make $.45 on the put but it does not come close to making the calls free. I am thinking of almost continuous playing of the QQQ's to create a stream of income, but don't know about the time frames and rolling just one side or always buying both. Response, By establishing the position with a 3-point spread, it makes the QQQs have to go that much further (a larger move) to end up with the opposite long option be “free.” And then, it's also further for the QQQs to reverse to give value to the "free" long position that you have left. You could sell the March 27 put at $2.80 and buy the Mar. $26 put at $2.20. That way you take some money off the table ($.60) and you've established the 2-point spread for which the strategy was intended. If the QQQs reverse and move up a few points, you could then sell the $24 calls, take some more money off the table, and buy the $26 calls. That would mean you have a straddle of the March $26 puts and calls. You would no longer have any intrinsic value in the position and it would be all time value – and it would all be at risk. If you go without owning a put, you're essentially picking a direction -- which, as you know, is precarious at best. For my purposes, this is much too much wheeling and dealing. We’ve spent months trying to establish strategies that take a minimum of adjustments. This kind of trading is contrary to CPTI objectives. ______________________________________________________________ Happy trading! Remember the CPTI credo: May our remote batteries and self-discipline last forever, but mierde happens. Be prepared! In trading, as in life, it's not the cards we're dealt. It's how we play them. Your questions and comments are always welcome. Mike Parnos CPTI Instructor ************** FUTURES CORNER ************** Developing a Bias By John Seckinger jseckinger@OptionInvestor.com When trading levels, removing an intermediate-term bias is sometimes the result. However, it should not happen, and there are certainly ways to keep a long-term perspective intact. With so many uncertainties in the marketplace (Geopolitical, economic, etc.), the "buy-and-hold" or "sell-and-hold" strategies is put on the backburner when volatilities runs rampant and market pundits seem to change their minds on a daily basis. More importantly, the equity markets rise and fall dramatically and seem to be trading outside the basis "noise range". So, how can a trader get a bias and know when it makes sense to sell support and buy resistance? Using Q-charts, I went as far back as possible and was actually able to grab a significant low from October 1990. By anchoring the retracement at this 294.51 area, it is very interesting how a 50% retracement comes in at 923.69. More amazing is the fact that the 61.8% level was recently tested and did seem to be still psychologically significant (775). With that said, since the SPX is UNDER the 50% area, my bias is BEARISH until proved wrong. Even without using retracement analysis, the recent channel certainly looks bearish, so I think this is a good start. Let us now try to find some more practical levels that will CONFIRM this bearish bias. Chart of the SPX, Monthly The next timeframe is a weekly chart of the SPX, and the contract is currently just underneath the mid-point of the bearish regression channel. The 50% area of the recent move lower is 1160, so risk is still lower; moreover, look how the 19.1% retracement area of 918.42 matches up well with the just- mentioned 923.69 level. Support is seen below at 768.63 to 775.20. Since this is a large range, a trader can take 50% of the range (923.69 to 768.63), getting a level of 846.16. The SPX closed on Thursday at 844.61. Therefore, this further confirms our BEARISH bias and should have a trader ONLY thinking of selling (remember, this does not include scalpers). Now let us take things to one more level and how these "zones" can be applied. Chart of SPX, Weekly Looking at a daily chart below, I have decided to do a retracement within the two recent 'waves'. I could have used only the last one, but I wanted to use both in order to get some "small zones" that can be especially helpful to traders. From the above discussion, we want to see if we can add the 846.16 level to one of these small zones below. Yes, it can be added (see "zone" from 839.55 to 848). Ok, here are the zones to be written down: 861 to 871; 839 to 848; 804 to 812; 769 to 776. Remember, a trader is ONLY thinking how to profit on LOWER PRICES. Since the close was within one of these ranges, a trader can do one of two things. Either (a) sell within the zone and put a stop ABOVE the top of the band (above 848), or (b) sell as the LOWER band (Example: 839) is broken and then put a stop ABOVE the top of the band (above 848). The objective should be the TOP of the band below (example would be just above 812). A trader could then SELL UNDER 804 and look for a move to the 776 level. If the market moves higher, say to the zone of 861 to 871, a trader (who is ONLY BEARISH, since that is our bias) can either wait until 871 is hit and then SELL UNDER 861, or sell somewhere from 861 to 871 and then put a stop ABOVE 871. Chart of SPX, Daily Now let us compare the above charts to monthly and weekly pivot analysis, in order to see if something else lines up. Monthly Levels (December's High, Low, and Close) Contract S2 S1 Pivot R1 R2 SPX 816.35 848.08 901.18 932.91 986.01 Weekly Levels Contract S2 S1 Pivot R1 R2 SPX 829.41 845.40 875.70 891.69 921.99 When comparing the above areas to the charts before, how can that help an intermediate bearish trader? The weekly R2 is at 921.99 and close to the 50% monthly retracement area of 923.69. The weekly chart showed a resistance "zone" from 918.42 to 923.69, and this weekly R2 level falls in this area. The lowest level achieved from the pivot analysis is 816.35. This area should be watched, but doesn't fall in the zone from 804 to 811 as listed in the daily chart. Remember, this level will be changed when January is finished. Using January levels as if the month was over (using a close of 849.52 - seen during trading on Thursday), we would see the following: Monthly Levels (January's HLC - as of 1 p.m. Thursday) Contract S2 S1 Pivot R1 R2 SPX 785.47 817.49 876.27 908.29 967.07 With the SPX well underneath the potential February 876.27 pivot, it only adds to our bearishness. Unfortunately, neither S1 nor S2 falls inside the daily "zones"; however, we can use February's potential S1 of 817.49 and January's S2 of 816.35 and call this a "potential zone." A more aggressive trader can add this zone to the ones above; however, it is aggressive and I don't want to micro-manage this article too much. Here is the BIG question. When do we turn Bullish? Neutral to slightly bullish will happen if we CLOSE above 923.69. It did happen before, and was a trap; however, bulls didn't take much heat AND got bearish as 923.69 failed to act as support. Speaking of a Bullish point-of-view, a trader could conceivably BUY the contract as the TOP of one of the aforementioned zones and look for a test of the zone above (with a stop below the bottom of the zone); however, that is trading against least resistance and is much more short-term in nature. Good Luck. Questions are welcomed, John Seckinger jseckinger@OptionInvestor.com *********** OPTIONS 101 *********** Real Estate 2003 - Boon or Bubble? Buzz Lynn buzz@OptionInvestor.com I am all jacked up today because I get to talk about a subject near and dear to Fundamentals Guy's heart - real estate! Candidly, I don't know how real estate is going to do this year. And I'm not even sure that a calendar year is an appropriate measure of time when talking about real estate due to its general lack of liquidity (except for REITS, which trade like stocks on an exchange). But let me lay out some of the critical factors that are going to determine the bigger picture for this sector going forward. Veteran readers already know this, but for those subscribers recently joining the OIN community, Fundamentals Guy (me) was a commercial real estate broker for 17 years in a former life. As a commercial broker, life centered on discovering - perhaps uncovering - the fundamental profit-earning abilities of nearly any kind of business under the sun. The reason for the fundamental research was that in order for a tenant to pay rent, there had to be profits to pay the rent after the cost of goods was subtracted from revenues. Can't make a profit? Can't pay rent. I discovered then that selling custom made sandwiches in volume was likely a better business proposition, and thus a better rent risk for the property owner than, say, a Cabbage Patch Doll adoption agency. (No joke - somebody actually thought that was a great idea for a sustainable business.) Of course, there are not-so-subtle nuances that can get the rent paid but still not afford the business a profit. This works because real estate, at least commercial real estate, is for the most part required to produce income. Manufacturers need a place to build; sales people need a place to office; travel agents generally need an office in order to serve the public; neighborhoods need grocery stores (as a matter of extreme convenience) lest we go hungry. The point is that in order to operate a business, real estate rents or mortgage loans need to be paid to keep the doors open. Uncomfortable as it is, reality dictates that companies are most likely to lay off staff and default on other obligations before they default on the leases or loans. When the going gets tough, I'd rather be the landlord than the creditor office supply salesman or vending machine attendee. The latter are extras. Real estate is generally not. From that, we can conclude that real estate loans and lease payments are more likely to be paid back first, which makes them more akin in pecking order to bond payments than equity dividends. Dividends are paid from the profits; rent and mortgage are paid from revenues - much higher up the food chain in terms of security of payback. That’s why dividends from a REIT are so much more appealing than dividends from widget manufacturers. Payback is more certain. While business struggle harder for profits every day, I'm not as worried for the landlords as I am for shareholders. While corporate defaults may rise in coming months or years, there is an added measure of insulation to the real estate investor. Of course, I've only mentioned commercial property here, which is a bit more insulated, though not immune, from severe economic difficulty. For instance, if deflation turns out, in fact, to be a major menace - and that is a real and likely possibility (see Options 101, January 16th, 2003 http://members.OptionInvestor.com/options101/opt_011603_1.asp ), rents could begin to fall too. That would spell bad news. However, while I see business struggling for profits, the mistakes made by builders and developers in the 1980's and early-1990's seem well remembered by anybody who can spell F-S-L-I-C, or R-T-C. And thus, despite the seemingly "free money from God" available for commercial real estate loans, lenders have remained fairly prudent in their underwriting criteria for commercial property. To my way of thinking, there is not an overbuilt supply of space, but rather the likelihood of predictably declining demand. In short, I do not believe there is a commercial real estate bubble, thus no ability to "pop". But that does not mean that the market can't see some serious setbacks if business remains in decline, as I expect it will. However, I would suggest any decline will not be sudden, unforeseen, unpredictable, or without plenty of warning. In any case, "severity" will likely be gradual, measured, and plainly visible, especially to "incubator space" primarily used by mom and pop, or otherwise small business. It's dicey on the multi-tenant small spaces and less risky on the larger commercial spaces leased or owned by larger corporate tenants who rely on Dunn and Bradstreet not to trash their debt ratings. But that's the way it's always been. Residential real estate is a whole 'nother matter. That's where the bubble is big and still expanding. What makes it different? A not-so-coincidental coziness between publicly-traded national home builders and Wall street money men that encourage the speculative building, plus the easy-money credit policies enabled and encouraged by a Federal Reserve determined to inflate the economy with home mortgage money intended to be spent by the ever increasingly debt-ridden U.S. consumer. Remember the case for inflation? http://members.OptionInvestor.com/options101/opt_012303_1.asp The consumer is the last, great hope to save the U.S. economy from deflation through spending home equity money as fast as it can be inflated and borrowed against. The Fed is enabling Americans to borrow themselves rich with the hope that they will spend that equity created from nowhere on trinkets, doo-dads, material possessions, along with other goods and services in order to keep the rest of us and our neighbors employed and spending our brains out. The downside is that debt has to be paid back, which becomes increasingly more difficult as jobs are lost to a slowing economy. I'll say it again, "We cannot borrow ourselves rich". Just like a game of musical chairs, one day the music will stop. It always does. The consequence is that as borrowing slows to a trickle, spending slows to a trickle. As spending slows to a trickle, goods and services remain "on the shelf", which reduce sales, which further reduce profits, which enable a new round of layoffs. And the process repeats itself. Unfortunately, Americans have exhibited increasingly worse saving habits over the last 40 years to the point that the U.S. savings rate is a mere 2% +/-. Should deflation take an even bigger grip on the economy, which would spell bad news, as a greater percentage of an already deflating take-home pay would be required to service the constant debt. Just imagine our income shrinking 3% per year. Eventually our income would approach zero. Meanwhile, say our mortgage debt has remained flat at $300,000 because we are struggling to make "interest-only" payments. Connecting the dots (and taking this to a literally logical, though improbable conclusion), we are gradually going to reduce our income to a point where it exactly equals our interest payments, then decreases more next year. Voila' - debt we can no longer pay off because our income shrunk. Dire and wacky? Consider the following as relayed by The Daily Reckoning: "Since the '60s, the consumer has added to his debts...first, cautiously in the '70s...and then recklessly in the in '90s. While GDP rose 283% during this period, consumer debt shot up much faster - by 473%." Here's more fresh meat from a recent Barron's article. "If the U.S. debt bomb ever explodes, the detonator probably will be the residential mortgage market," asserts Barron's Jonathan R. Laing. "Home prices have nearly double the impact on consumer spending than does the 'wealth effect' from rising or falling stock prices. And home prices have been on a tear, rising nearly 50% nationwide over the past six years. Consumers have tapped this surging equity value through wave after wave of cash-out mortgage refinancings, transforming homes into ATMs." "If the housing bubble bursts, instead of gently deflating, the nation's economy could be in for a major meltdown," Laing concludes. "In essence, then, the American home is a bulwark for the economy. As long as housing values stay high, the nation is sheltered from a detonation of the debt bomb." That is the one thing the Fed is counting on to happen (with it's breath held and fingers crossed). Also note, "Gary Shilling [money manger and well-noted Forbes Magazine Columnist] calculates that 39% of U.S. homes are owned free and clear," writes Laing, "and that the remaining homeowners have debt burdens exceeding 80% of the value of their homes. In other words, many Americans have little margin of safety should home prices level off or should they fall as much as 20%, as they did in many overheated areas in the late Eighties." But wait, there's more from Doug Noland, a financial strategist for the Prudent Bear Fund. He notes in a Daily Reckoning Column today of a recent Dallas Morning News headline: "Home Foreclosures are Casualties of Economy". Writer Steve Brown comments: "A bleak economy hit home in North Texas last year, putting thousands in danger of losing their homes. The number of homeowners threatened with foreclosure in Dallas County jumped 32%. And in Collin County - which has been ravaged by layoffs in the high-tech and telecom sectors - home foreclosure postings soared by 73% in 2002...January foreclosure postings for Dallas County were up 43% from January 2002. And in Collin County, foreclosure postings for the month were up a staggering 94%." My take isn't so much that there is a real estate bubble. It's that there's a mortgage bubble, which is still attracting the U.S. "borrow and spend" consumer. When will that end? Hard to say whether it is 2003 or later. I just don't know. But I do know this. It WILL end. It always does. But by then, maybe we'll have a new bubble to jump on that will keep us afloat for another few-year period until it pops too. We can dream irresponsibly, can't we? Just like an aircraft whose engines have slowed the otherwise capable bird to nearly a stall - with stall warning horns a- blazing - she'll still fly. But once stalled, recovery is difficult at best, and sometimes not possible. Planes don't function well without a smooth flow of air over the wings to produce lift. Neither do economies without a reliable source of REAL money and a stone-carved reliable monetary policy. The affect is the same. Walking away unscathed is seldom possible. Now, lest you think I'm predicting a mighty crash, I'm not. In fact, there are some signs that a major mortgage bubble catastrophe could be largely averted. The biggest indicator is that the inflation-adjusted bond market is telling us that inflation is picking up ever-so-slightly. The bond market never lies and can smell inflation light years ahead on the horizon. In 2002, the TIP rate was telling us that inflation had been reduced to just 1.47 percent. But recently, that spread has jumped to reflect anticipation of 1.83 percent - a slight increase, but the bond market doesn't lie, and it sees some inflation on the horizon. If inflation is to re-assert itself, even ever-so-slightly, it may have the effect of holding home prices steady if not increasing slightly rather than declining in popped-bubble style. That's not to say that the Fed will win the "Inflate of Die", inflation/deflation war. But there are signs that the electronic printing press so favored by Federal Bankers may be marginally inflating the U.S. economy out of deflation. While I do not profess to know what will ultimately come to pass for the real estate market. I am well aware that deflation will hurt the real estate/mortgage spending market badly, and thus the economy. So will inflation hurt the economy, but housing may be spared the deflationary death sentence. But there is, in my opinion, a safer way to insure our financial futures and protect ourselves against either inflationary or deflationary scenarios. It's an insurance policy, which, in a bear market is a good thing since nobody makes money consistently in a bear market. In most laymen's' instances, bear markets are not about what you make, but how much you don't lose. Hmmm - ugly thought. Mr. Rogers asks, "Can you say 'gold', boys and girls? Sure, I knew you could." We'll visit Mr. Rogers' neighborhood next week! Until then, make a great weekend for yourselves! Buzz ------------------------- Advertisement ------------------------- optionsXpress has "...a lot of bang for the buck."--Barron's $1.50 /contract (10+ contracts) or $14.95 Min. No hidden fees Easy screens for spreads, collars, or covered calls! Contingent, Stop Loss, Trailing stop, or OCO 8 different online tools for options pricing, strategy, and charting Go to http://www.optionsxpress.com/marketing.asp?source=oinvest25 Note: Options involve risk. 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