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Daily Newsletter, Thursday, 02/13/2003

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The Option Investor Newsletter                Thursday 02-13-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.

In Section One:

Wrap: A Miracle Recovery
Futures Markets: Bears get their Objective
Index Trader Wrap: (See Note)
Market Sentiment: What the Blix Was That?
Weekly Manager Microscope: Vita Nelson: MP63 Fund (DRIPX)


Updated on the site tonight:
Swing Trader Game Plan: Was That a Repeat?


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      02-13-2003           High     Low     Volume   Adv/Dcl
DJIA     7749.87 -  8.30  7781.89  7628.99 1.76 bln 1309/1925
NASDAQ   1277.44 -  1.50  1281.32  1261.79 1.31 bln 1325/1951
S&P 100   414.04 +  0.43   416.13   407.79   Totals 2634/3876
S&P 500   817.37 -  1.31   821.25   806.29
W5000    7752.06 - 20.30  7780.44  7657.63
RUS 2000  354.77 -  0.61   355.40   351.78
DJ TRANS 2073.48 - 27.20  2106.08  2054.59
VIX        38.45 -  0.65    40.68    37.73
VXN        50.97 +  3.54    52.23    49.94
Total Volume 3,287B
Total UpVol  1,197B
Total DnVol  1,936M
52wk Highs   91
52wk Lows   457
TRIN       1.34
PUT/CALL   1.18
************************************************************

A Miracle Recovery

What may have seemed a miracle to some was actually a freak
combination of circumstances. The Dow pulled back from a -130
drop to 7628 on a combination of rumors, reporting errors and
a repeat of old news. The sparks from the news found explosive
tender from extreme oversold conditions.

Dow Chart - 240 min



Nasdaq Chart - 120 min




The most watched economic report for today, Jobless Claims,
showed a slight decrease for the current week to 377,000 but
last week was revised up to 395,000. The four-week moving
average which is supposed to smooth these bumps rose to
389,000. The continuing claims fell to 3.31 million. This
is due to the expiration of benefits for people out of work
for an extended period. Over one million people have dropped
off the roles because their benefits have expired.

The Retail Sales report for all of January posted a -0.9%
drop and much deeper than expected. The culprit was the
bottom falling out of auto sales. The Auto component fell
-7.5% as incentives and low interest are no longer attracting
buyers. Without autos consumer sales actually rose +1.1% and
was very bullish. Traders saw the numbers and ran for cover
regardless of the bullish internals. If the period covered
was last week I would say it was duct tape, plastic, batteries
and bottled water but instead it was January. With all the
stocking up on food supplies and hardware for a potential
terrorist attack the odds are good the next weekly numbers
will be much higher than expected. Most attribute the surge in
January buying by consumers to a record number of gift cards
sold in December. Consumers normally spend more than the
amount of the gift card once in the store and that could
account for the bounce.

Friday we will get the Michigan Consumer Sentiment again
and estimates are for 82.4. Business Inventories are expected
to be flat at +0.2% and Industrial Production up slightly at
+0.3%. These are not the biggest problems for Friday. The
showdown at the UN corral is going to be on the top of the
list of potential market movers. It appears the UN inspectors
will bring a mixed message to the UN with the IAEA head
saying that inspections should continue for months and there
is no reason to rush into war. Hans Blix is reportedly going
to say that IRAQ cooperation has improved very slightly but
not enough to justify a continued effort. The Blix scavenger
hunt turned up some missile that had greater the range than
allowed by the UN mandate but I think everyone is splitting
hairs over it. The difference between 150 and 180 kilometers
is not material since the main reason for the rule was to
prevent him from hitting major cities of his neighbors. Kuwait
is the only country at risk from the current missile and it
would be at risk from a 150K model as well. Later today it
was reported that the "unconditional" approval to allow U2
spy planes to fly over Iraq was not unconditional after all
and Blix is going to tell the UN that Iraq has backed out
of the agreement.

After the bell today Dell Computer announced record earnings
and did not lower guidance as many had expected. Dell is
firing on all cylinders and is stealing market share from
everybody. Corporate sales up +20%, consumer sales up +38%
and overseas server sales up +47%. They said earnings would
be flat for the 1Q but for Dell that represents a victory
in the beleaguered PC sector. While everyone else is losing
ground Dell is seizing it. The only problem with the report
was the analysis that Dell still sees no expansion in capital
spending and its record profits came from stringent cost
controls and taking market share from others. Dell was up
in after hours but Nasdaq futures were down on the lack of
overall improvement in the tech sector. I have not seen a
Gateway commercial in weeks and I saw three within two hours
of the Dell announcement. Clever marketing on the part of
Gateway but it remains to be seen if it will help.

INTU also announced strong earnings on better than expected
sales of its tax software and lower than expected acquisition
expenses. They beat the street by +4 cents and raised estimates
going forward. Unfortunately this is a company specific event
as well and does not reflect on the software sector as a
whole.

AMZN finally broke support at $21 and dropped -5% on problems
in Internet retailing. The current move underway to collect
sales taxes on all Internet sales will remove one more reason
for shopping at Amazon. States are mobilizing to force everyone
to collect based on a simplified taxing plan and all the big
retailers are falling in line. They are agreeing to begin
collecting sales tax in the future in return for forgiveness
of taxes not collected in the past. States are using the club
of retroactive liability to enforce future collection. AMZN
had almost $4 billion in sales in 2002, $12 billion over the
last five years. Depending on the average tax rate across the
states they could have as much as a $1 billion tax liability.
The future is clear. Agree to collect and remit taxes peacefully
or go to court and end up paying $1 billion plus court costs
and penalties and still end up having to collect taxes in the
future. Not much of a decision process in my opinion. Now, add
an average of 7% to every product sold and suddenly AMZN has
a much harder path to continued profitability. Many of the
other major retailers have already agreed to the tentative
plan and the Internet coalition has already begun to fracture.

Okay, so what happened this afternoon? We were slowly bleeding
points and about to break 7600 when an explosion occurred. Not
a bomb but the force of impact was the same. The Dow gained
+152 points in about 55 minutes. It appears there was a freak
combination of unrelated events that shocked shorts into frantic
covering. First Medicare chief Thomas Scully told a congressional
panel that JNJ's Cypher stent is likely to win FDA approval
within the month. Dow component JNJ suddenly spiked almost +3
points in just minutes even though the potential approval had
been widely reported over the last 30 days.

Secondly and about the same time, reporters misread a press
release by UPS about electing HD CFO Carol Tome to the UPS
Board. The release said UPS was raising its dividend to 21
cents from 19 cents. Instead it was reported that HD was
increasing its dividend to 21 cents a quarter. Dow component
HD's stock at $20 rocketed on the news. The report was later
retracted.

Third there was a rumor that a very high up Iraqi military
officer with complete knowledge of where the weapons were
hidden, had defected and the UN was racing to get him out
of the area. Also, bogus but it had about the same impact
as a Saddam retirement announcement. Shorts caught off guard
by the sudden spike were scrambling to cover without knowing
why. The initial thought process is "no news, must be a buy
program, it will pass." When it does not pass they end up
behind the curve and chasing prices upward. Look at an
intraday chart and you will see the perfect picture of a
short squeeze. Futures have sold off after the close now
that these news items have filtered out to the public.

After the bell it was announced that the FBI was aware of
as many as 300 Al Qeada operatives/sympathizers currently in
the US and they had specific and credible evidence that 12
of these were planning the current attacks. The FBI is
supposed to be pulling out all the stops to find these
people before they can pull off the attack but despite
eyewitness reports they have been unable to do so. There
is evidently strong evidence that they have multiple targets
and they are dispersed across the country. The report said
new operatives had been infiltrated into the country for
this operation. While I believe some of this is true I have
to believe that this could be a strong over reaction by the
press to limited "hearsay" information. You would think if
the FBI had names they would be broadcasting these names
and any pictures every 15 min.

Tomorrow is likely to resemble a fast game of pin the tale
on the donkey. Up, down or sideways and probably all in
a hurry once the 10:AM update is over. It is the smoking
gun question all over again. Traders will probably end up
feeling like they have been blindfolded and spun in a circle.
Trying to predict the market reaction to the UN inspector
update is tougher than nailing Jell-O to the ceiling.

We tried to come up with a scenario given the information
at hand and then extrapolate it onto the market. It is
impossible. The US is going to war whether they have a
new resolution or a UN mandate or even a coalition of the
willing. I think that means it wants a very negative report
by inspectors and that is not what is reported to be coming.
A soft report that leaves the door open to a couple more
months of inspections will force a confrontation between
the US, the UN and several past allies. It will mean more
uncertainty for the markets and more anti American feelings
worldwide. That means more money withdrawn from the market
and more pressure on the dollar. It MAY also mean a delay
in the start of the war and a delay in getting over this
market hump.

We reached my two month target of 7700 on the Dow and the
next material support is the 78% retracement level at 7592.
We came within 36 points of hitting that level today. The
Nasdaq bounced off support at 1266 but after cracking the
1295-1300 level it is in trouble. I don't think the UN
meeting on Friday is the end of this process and that leaves
more uncertainty ahead. Keep those fears under control. You
have a 1 in 500 chance of dying by cancer and a 1 in 56
million chance of dying in a biological attack. I am more
afraid of another short squeeze while I am in the bathroom
and not at my PC than I am being killed by a terrorist. Of
course while I am writing this two police helicopters have
been circling over the mall in the next block for about the
last 45 min. Must be jaywalkers. (grin)

My problem is this. Will traders remain short over the 3-day
weekend in anticipation of an event or will they cover for
safety. Will longs go flat for safety or take out insurance
in the form of puts or short futures? The weekend has risk
for both sides. Longs fear an attack. Shorts fear no attack
and a limit up gap open on Tuesday. Personally I think the
longs have the most to fear. A devastating attack could knock
hundreds of points off the indexes at the open. No attack
would be bullish but the overall conditions of war, terrorists
and earnings still remain. We could get a small bounce but
should not get a monster. That analysis is worthless if a
presidential vacancy in Iraq appears. Using this analysis
I would assume longs, if there are any left, would exit
before lunch tomorrow depending on the UN report and reaction.
Exiting would produce selling. Buying insurance by shorting
futures would produce selling. Buying insurance with puts
would raise the VIX and Put/Call Ratio and show additional
fear and promote selling. Traders expecting the worst over
the weekend would short or buy puts and that should produce
selling. The wild card is no attack by noon, a report that
puts the war off 3-4 months and longs would buy the dip. How
you approach this is up to you. I am going into the weekend
flat and face Tuesday with no bias.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


***************
FUTURES MARKETS
***************

Bears get their Objective
By John Seckinger
jseckinger@OptionInvestor.com

The ES traded 805, NQ 938, and the YM contract hit the 7654
level.  For the ES and NQ, these were intermediate term
objectives.  Will bears now take a day off?

Thursday, February 12th at 4:15 P.M.

Contract       Last    Net Change    High        Low       Volume

Dow Jones     7749.87     -8.30    7781.89     7628.99
YM03H         7760.00    +25.00    7781.00     7617.00     31,448
Nasdaq-100     951.90     -4.87     959.73      938.52
NQ03H          961.50     +3.00     964.50      938.50    261,274
S&P 500        817.37     -1.31     821.25      806.29
ES03H          819.00     +2.25     822.50      805.25    738,058

Contract         S2         S1       Pivot        R1         R2

Dow Jones      7567.35    7658.61   7720.25    7811.51    7873.15
YM03H          7555.00    7658.00   7719.00    7822.00    7883.00
Nasdaq-100      928.84     940.37    950.05     961.58     971.26
NQ03H*          928.75     945.25    954.75     971.25     980.75
S&P 500         800.01     808.69    814.97     823.65     829.93
ES03H           798.25     808.75    815.50     826.00     832.75

*The listed high of 983.50 has not been corrected, and the
highest price I found traded was 964.50.

Weekly Levels

Contract         S2         S1        Pivot        R1         R2

YM03H         7608.00    7730.00    7932.00    8054.00    8256.00
NQ03H          921.50     940.50     970.50     989.50    1019.50
ES03H          801.25     815.75     840.00     854.50     878.75

Monthly Levels (January's High, Low, and Close)

Contract        S2         S1        Pivot       R1         R2

YM03H         7237.00    7642.00    8253.00    8658.00    9269.00
NQ03H          875.75     930.25    1019.25    1073.75    1162.75
ES03H          775.00     814.75     876.00     915.75     977.00

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. Recapping his signals:

Short 817.75/818.00, exit 810.25, change +7.50
Short 807.75, exit 808.75, change -1.00
Short 810.50/811.00, exit 812.25, change -1.50
Short 814.25/814.50, exit 816.00, change -1.50

Total for the day: +3.50
Total for the week: +14.67

For information on the Futures Monitor and Jim Brown'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)

Technicians using daily retracement levels from the move
beginning in October and ending in December should be excited to
see the ES contract bounce almost exactly at the 80.4% level of
805.16 (round up to get 805.25, since ES only trades in
quarters), and then failing just under the half-way mark back to
the 61.8% retracement of 839.50 (half-way comes in at 822.25).
There still remains a likelihood that we will see a short-
covering rally once above 822.25, possibly to 826 and the daily
R1 level.  Since the ES contract is in-between the 805 to 822.25
level, bears do have a good risk/reward situation here.  Also
interesting was the fact that prices were rejected as they fell
to the bottom part of the drawn regression channel (read: area to
cover).  This channel comes in on Friday very close to the daily
S1 level of 808.75.

Chart of ES03H, Daily




A 5-minute chart of the ES contract shows prices breaking out of
the recent bearish regression channel and trading in a new
channel that is trending higher.  It is very interesting that
Friday's pivot of 815.50 lines up very well with both the ES's
weekly and monthly S1.  Therefore, I would expect selling
pressure to intensify if 815 (actually 814.75) is taken out.  I
would then expect a move first to the daily S1 area and then back
to 805.  With the SPX contract bouncing from its "support zone"
of 804 to 812 and closing above 812, there is a good chance we do
initially see higher prices.

Chart of ES03H, 5-minute




Bullish Percent of SPX: This indicator now stands at 35.80, after
falling 4% on Thursday and adding to the most recent column of
O's (now at 14).  I still expect a move in the bullish percent to
the 30% level.  This indicator is currently in "Bull Correction"
status.  The last column of "O's" ended at 20.  Looking at P&F
analysis, the SPX added to the recent column of O's on Thursday,
but the bearish price objective remains at 750.  If the SPX index
comes back and tests the quadruple bottom at 845, a buy signal
will be given.  The support seen from 805 to 810 was in fact
tested on Thursday, and the SPX closed above 810 at 817.37.
Therefore, we might see a move to 825 and put in a new column of
X's.

The March E-mini Nasdaq 100 Contract (NQ03H)

The NQ contract fell to both its daily retracement area at 941
(based on October to December move), as well as trading near 938
and the Head & Shoulders objective that was profiled on Wednesday
in the 15-minute chart.  Heading into Friday, I still think there
will be a short-covering move if 965 is cleared (used 962 in the
chart, so look for a small resistance zone from 962 to 965).  The
objective, unfortunately for bulls, is only for a move back to
the weekly pivot of 970.50.  With that said, I would tighten
stops if 970.50 is hit, and then look for a move to the area of
980 to 983.  This could happen if we get a sizable short-covering
rally heading into the weekend.  Not shown, the MACD oscillator
is still in bearish mode, so the majority of bulls remain on
the sidelines.  If the daily pivot of 954.75 is taken out, I
would once again look for a move down towards 941.  A close under
941 would be bearish, while a close above 983 would be bullish.
A close in-between these levels would be an indicator to be flat.

Chart of NQ03H, 120-minute




Bullish Percent for NDX:  This indicator fell four percent on
Thursday to 34, and added to the column of "O's" (now at 16).  .
This indicator is still in  "Bear Confirmed Status".  The last
column of O's ended at a reading of 14%.  Remember, once under
30%, risk should start to shift towards bearish positions.
The NDX, according to P&F charts, still shows resistance at 1000
and support below at 925.  The bearish objective has been
adjusted lower on Thursday to 775, since another "O" has been
added.

The March Mini-sized Dow Contract (YM03H)

The YM contract has not traded nearly as predictable as the Dow,
since the weekly S2 of the Dow was only 2-points from today's
low.  That was my daily objective, noted in the Market Monitor.
Unfortunately, the YM didn't come as close to its weekly S2 and
was slightly harder to read.  I have drawn in a new bearish
regression channel in the 60-minute chart below, and this might
help with predicting direction going forward.  Like the other
contracts, if the daily pivot is cleared, I expect more selling
and a move to its daily S1 at 7658.  Odds do favor a rally on
Friday, but Thursday's high of 7781 should be cleared first.
This will take out the mid-part of the regression channel.  7822,
or daily R1, would be the first objective; however, if this level
is breached, we might be in the midst of a sizable short-covering
rally that would take the YM contract back to the weekly pivot of
7932.  The bullish percent in the Dow is still falling, but
traders hand-charting this index could get very aggressive with
longs if we do see a "Bull Alert" indicator in the bullish
percent during trading.

Chart of YM03H, 60-minute




Bullish Percent of Dow Jones: A P&F chart of the Dow added
an impressive three "O's" on Thursday, lowering the bearish price
objective to 7100.  As noted earlier, the quadruple bottom
remains higher at 7950, and should be defended by bearish traders
protecting profits.  Support is still seen at 7600.  As far as
the bullish percent is concerned, it fell 3.33% to 13.33%.  The
column of O's is now at twenty-three. Note: The last column of
O's ended at 10%.  Moreover, the next column of X's will put this
indicator in "Bull Alert" status.  It is impressive that the
bullish percent has not shown a reversal of "X's" since January,
while the SPX bullish percent hasn't seen a move higher since
November.

Good Luck.

Questions are welcomed,

John Seckinger


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

Check the Site Later Tonight For Jeff’s Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_021303_1.asp


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

What the Blix Was That?
by Steven Price

The slide continued today, as it appears war fears only escalated
ahead of Hans Blix weapons report on Friday. At least for 75% of
the trading session.  With almost no bounce after the sell-off of
the last couple days, the major indices headed on another leg
down for most of the day, taking out support levels once again
and trading down to fresh four-month lows. Several non-equity
markets also confirmed bearishness for stocks, with the bond
market seeing buying and the market Volatility Index (VIX)
trading again back over 40%. Oil crept higher and gold got a
bounce.  It does seem that we are oversold and while I've been
looking for a big bounce at some point, so far that bounce has
not materialized.  However, we did get a powerful afternoon rally
that smacks of short covering ahead of the Hans Blix report to
the U.N. on Friday morning.  That has been the pattern in the
past, as we got similar big rallies ahead of the last Blix report
on January 27 (in the a.m.) and the Colin Powell presentation on
February 5.  The rally turned the Dow around 160 points from its
high to its low, before settling in with a loss of 8 points.

We have now sold off over 1100 Dow points since the New Year
rally that took us all the way up to 8869 and it seems ages ago
that we were looking at bullish signals in most major indices.
At that time we were looking at the 200-day moving averages, both
simple and exponential and using those pivotal levels to decide
whether we were looking at a rally that had legs.  The
President's plan to eliminate taxes on corporate dividends seemed
to give us reason to believe we may have seen a change in
fundamentals that supported a continued rally.  Since then, that
sentiment dissipated into an extreme bearish sentiment, following
a host of earnings reports.  It wasn't that companies were
missing earnings forecasts; in fact many actually beat those
fourth quarter estimates.  It has been the repeated downward
guidance for the upcoming year that seems to have triggered
concerns.  Of course, that seems to be just a small piece of the
puzzle, as geo-political concerns regarding an Iraqi invasion,
nuclear weapons in North Korea, and new terrorist threats from
Osama Bin Laden have dominated the news landscape.
Interestingly enough, we have seen several short-covering rallies
ahead of and during international developments, such as Hans Blix
last report on Iraqi weapons inspections and Colin Powell's
presentation to the U.N.  Like this afternoon, those rallies
seemed like powerful reversals, but were short-lived.  They have
led to many shorts (myself included) getting out of positions,
either by planned stop orders or by emotion that would have been
very profitable if they had just hung on.

Does this mean we should be hanging on through each event, or
allowing stops to lock in profits, then getting back in on the
bounces?  It is a question with different answers depending on
risk profiles.  Each trade we make, as option traders, involves
transaction costs, as well as losing out on the bid-ask spread
when we are forced to buy and sell those options with market
makers. In reality, if the trade moves far enough in our favor,
the bid-ask will be minimal in comparison to our profit.
However, in the current environment, when we are seeing so much
schizophrenic action, traders should take some time to add up all
of those costs and determine just how much getting in and out is
costing them in what seems like a clearly downtrending.
Certainly, it helps a trader sleep better at night not to get
whipped around and take the intermediate pain, but in the end, an
account may look much better if the position had simply been left
on, or at least allowed for a wider stop, until the trend
reversed. That is not to say there isn't plenty of value in
sleeping better at night.

The chances of a bounce are growing with each tick lower toward
our July levels. The July intraday lows in the Dow, SPX, OEX and
COMP are 7532, 775, 387 and 1192.  The closing lows were 7702,
797, 396 and 1229, each taking place the day before we bounced on
July 24 after setting new relative lows in the morning.  Today,
the Dow crossed that closing low, heading down to within 100
points of the July 24 intraday low, before bouncing today.  The
SPX came within 9 points of the July closing low and the OEX
within 11 points of the July closing low. The COMP traded as low
as 1261.   Does all of this mean that we've hit the bottom?
Anyone who saw the market drop in October knows there is still
some downside potential.  The Dow dropped as far as 7197 before
bouncing on October 10.  The OEX, however, did not hit the July
intraday lows before bouncing, although in October closed
slightly below the closing low.  The SPX broke below the July
lows on a closing and intraday basis, but not by a lot.  The COMP
made it all the way down to 1108.  If we get our third lower low
on this sell-off, then shorts will feel their oats in the near
future. However, we are definitely entering territory where the
drop is becoming extended and reaching one of two important
support levels.

In both July and October, it also felt like we were on a non-stop
train into a long dark tunnel, but the light appeared brightly
and surprisingly and painfully for the bears. It feels equally as
negative right now, but the difference is that we have an unknown
factor in war fears.  Theory holds that we will bounce when the
missiles start flying and what should be a short war gets
underway.  Many companies have blamed geo-political uncertainty
for a lack of business spending and Alan Greenspan has said we'll
have a better idea of what our economy truly looks like when we
get that uncertainty behind us. The only problem is, what if it
looks pretty much the same? In that event, Dow 7000 will look a
lot closer. For now the trend remains down, but most continued
rallies have begun with a big intraday bounce, as we got today.
While I'm still leaning heavily in the direction of calling it
short-covering ahead of the Blix report, history does tend to
repeat to some extent and traders need to keep that in mind if we
start to post some gains.


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

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  7749

Moving Averages:
(Simple)

 10-dma: 7921
 50-dma: 8385
200-dma: 8704



S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  817

Moving Averages:
(Simple)

 10-dma:  837
 50-dma:  885
200-dma:  921



Nasdaq-100 ($NDX)

52-week High: 1734
52-week Low :  795
Current     :  951

Moving Averages:
(Simple)

 10-dma:  968
 50-dma: 1020
200-dma: 1021




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


The Semiconductor Index (SOX.X):  The SOX has managed to hang in
above support at 260.  News from Intel that it was coming out
with a new chip, called the Manitoba, that could combine the work
of three chips and make up for the head start TXN and QCOM had in
the wireless sector, got mixed results.  INTC finished higher,
while TXN finished down slightly on the day.  QCOM got hammered,
losing $2.65 and breaking recent support at $36 to close at
$33.91.  The SOX finished slightly higher and after hours results
from Dell should set the tome tomorrow.  Dell matched estimates
and guided in line for the first quarter.  The stock finished up
over $1 in intraday trading, so signs are that traders were
looking for a muted forecast and were pleasantly surprised.

52-week High: 641
52-week Low : 209
Current:      264

Moving Averages:
(Simple)

 21-dma: 281
 50-dma: 302
200-dma: 339



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


The VIX has recently been an awfully good indicator, forecasting
temporary market bounces each time it trades in the 40% range.
 It repeated that pattern today, trading up to 40.68 and
 remaining just above 40 for most of the day, but going no
 higher.  That was one of the likely signs that the equities were
 in for yet another intraday bounce and once again the Dow
 followed through on that signal. We bounced 160 Dow points at
 one point and finished the day just barely in the red after
 seeing an early triple-digit loss. Each bounce has eventually
 headed lower, but the signals have been reliable on an intraday
 basis.


CBOE Market Volatility Index (VIX) = 38.45 -0.65
Nasdaq-100 Volatility Index  (VXN) = 50.97 +3.54

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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.18        549,337       648,332
Equity Only    1.05        350,336       369,269
OEX            1.09         40,817        44,565
QQQ            2.77         45,082       125,091


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

Bullish Percent Data

           Current   Change   Status
NYSE          40.6    - 2     Bull Correction
NASDAQ-100    32.0    - 5     Bear Confirmed
Dow Indust.   13.0    - 7     Bear Confirmed
S&P 500       35.6    - 6     Bull Correction
S&P 100       29.0    - 8     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  1.37
10-Day Arms Index  1.42
21-Day Arms Index  1.49
55-Day Arms Index  1.36


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       1241          1605
NASDAQ     1287          1843

        New Highs      New Lows
NYSE        46              182
NASDAQ      49              146

        Volume (in millions)
NYSE       1,725
NASDAQ     1,301


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

Commitments Of Traders Report: 02/04/02

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 reduced long positions by 8,000 contracts and shorts
by 3,000, for a net increase of 5,000 shorts.  Small traders
increased long and short positions by about 8,000 contracts,
keeping the net relatively unchanged.

Commercials   Long      Short      Net     % Of OI
01/14/03      411,052   453,164   (42,112)   (4.9%)
01/21/03      415,028   456,885   (41,857)   (4.8%)
01/28/03      422,232   468,586   (46,354)   (5.2%)
02/04/03      414,543   465,678   (51,135)   (5.8%)

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
01/14/03      144,182    92,358    51,824     21.9%
01/23/03      148,227    95,356    52,871     21.7%
01/28/03      142,734    85,567    57,167     25.0%
02/04/03      151,174    93,439    57,735     23.5%

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 increased long positions by approximately 2,000
contracts and shorts by 1,600.  Small traders increased short
positions by 1,000 contracts, leaving the long side close to
unchanged.


Commercials   Long      Short      Net     % of OI
01/14/03       38,057     45,060   ( 7,003) ( 8.4%)
01/23/03       37,174     49,789   (12,615) (14.5%)
01/28/03       37,955     49,321   (11,366) (13.0%)
02/04/03       40,934     50,992   (10,058) (10.9%)

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
01/14/03       20,757     8,320    12,437    42.8%
01/23/03       25,852     6,764    19,088    58.5%
01/28/03       25,814     7,576    18,238    54.6%
02/04/03       25,573     8,648    16,925    49.5)

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 increased long positions by 1,500 contracts, while
reducing shorts slightly.  Small traders increased shorts by
1,600, while seeing a slight reduction to the long side.

Commercials   Long      Short      Net     % of OI
01/14/03       17,804    12,427    5,377      17.8%
01/23/03       16,901    11,031    5,870      21.0%
01/28/03       16,013    11,574    4,439      16.1%
02/04/03       17,596    11,232    6,364      22.1%

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
01/14/03        4,552     7,697    (3,145)   (25.7%)
01/23/03        5,120     8,282    (3,162)   (23.6%)
01/28/03        4,838     7,836    (2,998)   (23.7%)
02/04/03        4,583     9,424    (4,841)   (34.6%)

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

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


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*************************
WEEKLY MANAGER MICROSCOPE
*************************

Vita Nelson: MP63 Fund (DRIPX)

Vita Nelson is editor of a DRIP newsletter called The Moneypaper
and is portfolio manager of the MP63 Fund (DRIPX), a mutual fund
seeking long-term growth by investing in a diversified portfolio
of common stocks of companies comprising the Moneypaper 63 Stock
Index.  The MP63 Fund is based on the Index of DRIP stocks that
Vita Nelson launched in 1994, and consists primarily of larger,
established companies with an emphasis on quality and diversity.
Cable TV viewers know Vita for her commercials on DRIP (direct
investment plan) investing.  Her website is www.moneypaper.com.

By investing in equity securities in the MP63 index, the fund's
portfolio is diversified across many industries and consists of
primarily large-size companies offering direct investment plans.
The Moneypaper website indicates that each company is allocated
an equal amount of the total assets to be invested.  While this
fund's large-cap blend style isn't unique, the MP63 Fund is the
only fund that I'm aware of specializing in the common stock of
DRIP companies; hence, the ticker symbol "DRIPX."

Moneypaper Advisor, the firm's investment arm, has served as the
fund advisor for the MP63 Fund since its March 1, 1999 inception.
Vita Nelson started the fund and serves as its portfolio manager.
She isn't of the stature of a Gus Sauter (Vanguard 500 Index) or
Bob Stansky (Fidelity Magellan) but she has guided the MP63 Fund
to a Morningstar highest 5-star rating in the fund's short life.
Five-star ratings are reserved for funds that rank in the top 10
percent within a category based on risk-adjusted returns for the
trailing 3-year (or longer) period.

The MP63 Fund has no initial or deferred load charges, and costs
only $1,000 to open an account ($0 for IRA accounts).  Investors
incur a 2.0% redemption fee on shares sold within a certain time
period.  The fund has an expense ratio of 1.25%, nearly the same
as the Morningstar large-cap blend average (1.26%).  For further
information on costs and expenses or to download a prospectus go
to the www.moneypaper.com website.

Investment Style/Strategy

The philosophy behind DRIPs is that they provide direct investors
the opportunity to avoid brokerage fees and commissions.  There's
roughly 1,300 companies to choose from that do not charge service
fees for investing or reinvesting dividends - providing investors
diversification across sectors and individual securities.  Direct
investors can therefore avoid transaction charges by investing in
DRIPs.  The MP63 Fund is suited to investors who like the notion
of DRIP investing, but want to leave the security selection to a
professional money manager.

The Moneypaper.com website shows the MP63 Fund's top 10 holdings
as of January 14, 2003.  At that time, Paychex (4.9%), Medtronix
(4.4%), Harley-Davidson (4.0%), and AFLAC (3.6%) were the fund's
four largest holdings.  No other stock holdings represented more
than 3 percent of assets.  Morningstar's most recent fund report
indicates the MP63 Fund actually had 64 stock holdings at year's
end, with 31.1% of assets invested in the fund's top 10 holdings.

As of December 31, 2002, Vita Nelson's MP63 Fund possessed a $14
billion average market capitalization, according to Morningstar,
with 25.1% of assets in ultra-cap stocks, 41.8% in the large-cap
sector, and 32.5% in mid-cap stocks.  I like that capital-sector
mix since it's large-cap based yet provides significant exposure
to mega-cap stocks and mid-cap stocks, which offer greater long-
term growth potential.

A look at the fund's investment style history shows that it has
maintained a consistent "blend" style that emphasizes dividends.
Per Morningstar's report, the MP63 Fund had an average yield of
2.2% recently, compared to around 1.7% for the S&P 500 index of
U.S. large-cap stocks.  Average price valuations are similar to
the S&P 500 and average large-cap fund, representing a blend of
value and growth characteristics.  The fund's inclusion of mega-
cap, large-cap and mid-cap stocks, its blend style and emphasis
on dividends makes it well suited to serve a core role in one's
long-term financial plan.

Vita Nelson's conservative equity management style has produced
below average risk relative to the average large-cap blend fund,
per Morningstar.  At 15%, the fund's average standard deviation
over the last 3 years has been lower than the average large-cap
blend fund (17%) and lower than the average domestic stock fund
(20%).  So, Nelson has done a nice job here of minimizing share
price fluctuations relative to other large-cap equity managers.

Fund Performance

The MP63 Fund hasn't done relatively well so far in 2003 versus
the large-cap blend universe, but other than that, the fund has
preformed admirably on a relative basis.  Some of the top stock
holdings have been hit this year, causing the value of the MP63
Fund to decline by 7.7% on a YTD 2003 basis through February 12.
That compares with a 6.8% YTD decline for the S&P 500 benchmark.

Below is a performance history and total return information per
the Morningstar.com website for the MP63 Fund as of February 12,
2003.

 Year-To-Year Returns (DRIPX):
 2000: + 5.8% (11th Percentile)
 2001: - 1.1% (4th Percentile)
 2002: -15.0% (5th Percentile)
 2003 (YTD): -7.7% (92 Percentile)

 1-Year Total Return (February 12, 2003):
 -20.2% MP63 Fund (DRIPX) 13th Percentile
 + 4.6% MP63 Fund Vs. S&P 500 Index
 + 4.0% MP63 Fund Vs. Russell 1000 Index

 3-Year Annualized Return (February 12, 2003):
 - 3.8% MP63 Fund (DRIPX) 4th Percentile
 +11.2% MP63 Fund Vs. S&P 500 Index
 + 9.6% MP63 Fund Vs. Russell 1000 Index

The annualized performance results over the past three years show
that Vita Nelson has done a superior job of preserving capital in
relation to the broad market indices and her large-blend category
peers.  The MP63 Fund's average annual loss of 3.8% over the past
three years is pale in comparison with the 15% annualized loss by
the popular 500 index.  Even though the fund has slipped up a bit
in 2003, its trailing 3-year performance has been "upper echelon"
within the large-blend category (4th percentile) per Morningstar.

Morningstar's highest 5-star rating is based on "high" return and
"below average" risk relative to other large-cap blend funds.  At
1.25%, the MP63 Fund's expense ratio is average versus peers, but
perhaps a little greater than it needs to be considering the fund
invests mostly in large company stocks that tend to be liquid and
widely traded.  Hopefully the fund's expense ratio will come down
as assets grow.  Right now, the MP63 Fund has just $18 million in
total net assets.

Conclusion

The MP63 Fund managed by Vita Nelson, editor of the Moneypaper
newsletter, offers investors a unique opportunity to invest in
the stocks of companies with DRIP plans.  Nelson's emphasis on
quality and diversity of portfolio holdings have helped to cut
losses relative to other large-cap blend funds through the U.S.
market downturn.  Long-term investors seeking a large-cap core
equity fund have a fine choice here, although the fund's total
return history is predominantly "down-market."  Time will tell
how well the MP63 Fund can/will perform in up markets.

For more information on Vita Nelson, the Moneypaper newsletter,
DRIP investing, or the MP63 Fund, go to the www.moneypaper.com
website.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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***********************
SWING TRADER GAME PLANS
***********************

Was That a Repeat?

What the heck was that ?!?  No doubt that's the question most
traders are asking after the big rally to end the day.  The rally
followed continued selling that trashed the major indices
throughout most of the day.


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The Option Investor Newsletter                 Thursday 02-13-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None
Dropped Puts: TSCO
Daily Results
Call Play Updates: AMGN, TRMS
New Calls Plays: None
Put Play Updates: AT, AZO, CB, CCMP, GWW, PII
New Put Plays: WHR


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

TSCO +1.16  (-0.93 for the week) This morning's release of the
latest Retail Sales data gave sector bulls something to cheer
about.  Ex-auto sales showed a 1.3% increase, 0.8% better than
expectations.  The December numbers were also revised higher.
This data indicates that consumer spending is on the rise.
However, any hopes for a morning rally in the retail index were
quickly dashed by the overarching bearishness in the broader
market.  The RLX.X proceeded to tag a 52-week low of 243.82
before retracing some of its losses in late-afternoon trading.
Investors might be expecting a downtick in retail sales (with the
notable exception of the duct tape business) as war with Iraq
becomes increasingly likely.  In any case, this sector weakness
provided the ideal climate for a continued decline in TSCO.  The
day started off on a promising note as shares approached
yesterday's low ($30.44) and psychological support at $30.00.
However, the bears decided to throw in the towel after the stock
failed to set a new low.  Shares then experienced a powerful
rebound, in spite of the broader market weakness.  There was no
news to explain this rally.  Looking at the daily chart, we see a
possible double-bottom formation created by the Wednesday and
Thursday lows.  This is an indication that TSCO may have put in a
short-term bottom.  Furthermore, it looks like the stock could
add to its gains if the major indexes continue higher tomorrow.
With this in mind, we've taken the conservative approach of
bailing out of this play at current levels.  We'd rather close
our hypothetical trade for a small gain rather than set a tight
stop that could be quickly violated on Friday.  Traders who are
willing to give TSCO more breathing room could use a stop
slightly above either $33.00 or $33.50.  We'll keep an eye on
TSCO, watching for a failed rally near the 200-dma ($34.91).  A
rollover from this moving average might yield another action
point.


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

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

CALLS              Mon    Tue    Wed   Thu  Week

AMGN     51.78    0.85   0.47  -0.83 -0.67 uptrend in tact
TRMS     40.41   -0.28   0.78  -1.46 -0.79 bounce from $40


PUTS

AT       43.09   -0.35  -0.28  -0.80 -0.51 Lower low
AZO      63.80   -1.11   1.31   0.43 -0.43 Rolling over
CB       48.56    0.80  -1.25  -0.43  0.14 AIG news
CCMP     41.93    0.28  -0.78   0.77 -0.17 SOX holding
GWW      44.70   -0.10   1.22  -0.81  0.03 mild bounce
PII      48.17    0.95  -0.03  -1.77  0.36 below $50
TSCO     32.49   -1.26  -0.16  -0.57  1.16  Drop, bounce
WHR      49.33    0.53  -0.45  -0.04 -0.63  New, weakness


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

AMGN $51.78 -0.54 (-0.31) It looked like another normal day in
the markets on Thursday, as things started out weak and ground
lower from there.  AMGN continued its retreat from the $54
resistance level, falling to just above the $51 level by the end
of the first hour, and then began a slow consolidation around
the $51.50 level.  The early going looked rather ominous for
shares of AMGN, but after failing to break down throughout the
afternoon a funny thing happened.  About 90 minutes before the
close, a strong buy program hit the markets and AMGN pushed
briefly above the $52 level before weakening at the close,
coming to rest right on the ascending trendline that has been
supporting the stock since late September.  The rebound off the
lows looks encouraging, but we sure would have liked to see the
stock avoid that final drop.  Aggressive traders could certainly
have entered the play on the rebound from the $51 level, but
those entries are certainly on the high risk end of the spectrum.
Should the bears come out swinging again on Friday, AMGN's last
line of defense is the 50-dma ($50.60).  A breakdown under that
level on a closing basis will almost certainly prompt us to
drop the play, with our stop resting at $50.50.  More
conservative traders will need to wait for a renewed rally
through the $52.75 level before entering the play.

---

TRMS $40.41 -0.79 (-1.22) TRMS completed its 5-day round trip
back to the $40 level on Thursday, before finally catching a bid
just above that level near the middle of the day.  The
short-covering spurt in the broader market helped to push TRMS
back over the $41 level, but there just weren't enough buyers to
keep it up there through the closing bell.  Part of the weight on
shares of TRMS could be related to the weakness in shares of GILD.
Recall that one of our principal catalysts for our TRMS play is
that the company is likely to gain FDA approval within the next
month for its HIV drug Fuzeon.  TRMS may have gotten caught in a
bit of guilt-by-association selling, as GILD got caught in a
pretty steep selloff on Thursday, possibly due to comments from
a Boston HIV conference pointing to possible kidney damage from
GILD's HIV drug Viread.  Whether related to that news or not,
TRMS is now back at strong support at $40 and this could make
for a solid entry point.  Risk is easy to manage at these levels,
with our stop set tight at the $39.50 level.  Traders looking
for some bullish confirmation before entering will want to see
TRMS rally through the 10-dma ($41.30) first.


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

None


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

AT $43.09 -0.51 (-1.41) Consistency is a wonderful thing and AT
has been delivering it in spades for over 2 weeks now, as it
continues to pound out lower highs and lower lows.  The gap up
on Wednesday provided the latest entry point for hungry bears.
UBS upgraded the stock from Neutral to Buy before the open,
producing a gap up to the $44.50 level (solid resistance)
before the rollover commenced.  The clue that this was a solid
entry came from watching the action in the North American
Telecom index (XTC.X), which just continued to distance itself
(on the downside) from its 200-dma.  That slide continued right
through this afternoon, when AT finally broke below the $43
level.  If not for a bit of late-day short-covering, the stock
would have finished right at its lows.  As long as the pattern
of lower highs and lower lows continues, each successive failed
rally should continue to provide attractive entry points until
price reaches firm support near $40.  Yesterday's failed rally
gives us the ability to once again tighten our stop, this time
lowering it to $44.60.

---

AZO $63.80 -0.43 (-0.35) While the past couple days have seen
a fair amount of volatility in our AZO play, there's no denying
the fact that the downward trend remains intact.  After a failed
rally just below the $65 level and the descending trendline (now
at $64.70) on Wednesday, we got a break to the downside this
morning with the stock briefly dropping below the $63 level
again.  Just as it looked like that support would give way again,
a bout of short-covering hit the broad market, lifting the stock
back up to test the $64 level from below.  Lots of back and
forth action when we drill down to the subatomic charts, but
trend of lower highs remains in force.  Entering new positions
on rally failures below that descending trendline (which lines
up nicely with the 21-day ema), continues to be a winning
strategy, as we wait for the stock to fall through the $63
support level again and finally fill its gap down to $61.20.
Stops should continue to be trailed just above the descending
trendline, and tonight ours moves down to $65.

---

CB $48.56 +0.14 (-0.88) Intraday traders got plenty of excitement
from our CB play on Thursday, even if it was confined to the
sub-atomic scale.  Positive earnings results from Insurance giant
AIG was enough to deliver a small upward gap to the $49.50 level,
before the anchor known as the broad markets dragged CB back down
to just below the $48 level by midday.  While that was certainly
a welcome sight, when the bears couldn't break the broad market
any further down the charts, the shorts covered and took our CB
along with them.  By the closing bell, the stock had managed to
eke out a tiny 14-cent gain, and we're left to wonder what's
next.  Was it a bottom or just an oversold bounce?  Since CB is
still on the Put list, you can correctly surmise that we think
the downward trend is very much intact.  Today's action is a
perfect example of why we aren't interested in chasing CB lower
on breakdowns.  With both the stock and the broad market so
deeply oversold, short-covering rebounds are likely to become
more frequent.  So the preferred strategy is still to short the
failed rallies as long as the trend remains down.  One solid
measure of the trend is provided by the descending trendline
connecting the two most recent failed rally attempts (1/23
and 2/3), which yields a trendline that currently rests at
$51.50.  A failed rally below that level (ideally in the $50-51
area, possibly near the 10-dma at $50.65) would make for a
solid entry for the next leg down.  Keep stops set at $51.75.

---

PII $49.17 +0.36 (+0.40) To think we almost pulled the plug on
our PII play on Tuesday.  Fortunately, the stock collapsed at
the end of the day and that was enough to tell us that the bears
were still in charge.  Over the past couple days the sellers
have really pressed their advantage, driving the stock to a new
52-week low of $47.11.  But then came the oversold bounce,
helped along by an end-of-day short-covering rally.  While PII
did manage to get back over the $48 level by the close, it didn't
get anywhere near breaking the persistent downtrend.  The stock
was turned back at the descending trendline (currently right at
$50), and as long as price remains below that line, the stock
should continue lower.  While the rollover just below $51 on
Tuesday looked like a high-risk entry, those who took advantage
of it are in good shape tonight, especially with PII finding
resistance at the end of the day near $48.50, a level that had
previously acted as support.  Another rollover below $50
(possibly near the 10-dma, which has now fallen to $49.52) can
still be used for new entries, and we'll continue to avoid
entering on breakdowns, as each new low is shortly followed by
an oversold bounce.  Lower stops to $50.10.

---

GWW  $ 44.70 +0.03  (-0.20 for the week) Tuesday's brokerage-
induced rally wasn't enough to take GWW above its descending
regression channel.  With the broader market heading lower on
Wednesday, the bulls never really had a chance to extend those
gains.  Today's trading saw GWW continue to trade in tandem with
the Dow Jones.  That was good news for the bears during most of
the session.  The stock hit a morning low of $44.00 and
repeatedly found resistance at the 50-period moving average on
the 5-minute chart.  Shares finally found a bid during the final
90 minutes of trading, thanks to a powerful end-of-day rally in
the Dow.  Although GWW finished in positive territory, those
intraday gains will probably be evaporated if the market reacts
negatively to Friday morning's developments at the U.N.  With
Grainger showing no ability to move out of its descending
channel, the bears still appear to have the upper hand.  Risk-
averse traders may want to use a break-even stop at $45.59, just
above the top of the channel.  For the time being we'll maintain
our stop-loss at $47.56.  This will give us the added protection
of the descending 21-dma at $47.01.  New entries could be
evaluated on a move under the relative low of $43.76.

---

CCMP $ 41.93 -0.17  (-1.21 for the week) Intel surprised Wall
Street today with its announcement of a new wireless internet
chip that is designed to compete with industry leaders QCOM and
TXN.  INTC traded higher on this news, while the latter two
stocks headed lower on fears of increased competition.  The
semiconductor index took the news in stride, drifting lower in an
orderly fashion before moving quickly higher with the broader
market towards the end of the day.  The daily chart reveals a lot
of indecision in the SOX.X - It's spent most of the past six
sessions trading in the 260-270 range.  CCMP has experienced
similar consolidation above $41.00.  Interestingly, this somewhat
directionless trading has also been characterized by a series of
lower highs.  That's a positive sign for the bears.  On Friday
we'll be looking for shares to break through yesterday's low of
$41.31 and move towards psychological support at $40.00.  While a
move to new lows might present a shorting opportunity, traders
may first want to strongly consider waiting for the SOX.X to
provide sector confirmation by breaking below its own relative
low of 258.56.  Also note that our stop has been moved down to
$44.06, slightly above break-even.

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

Whirlpool Corp. - WHR - $49.33 -0.63 (-1.26 for the week)

Company Description:
Whirlpool Corporation is the world's leading manufacturer and
marketer of major home appliances. Headquartered in Benton
Harbor, Michigan, the company manufactures in 13 countries and
markets products under 11 major brand names in more than 170
countries. (source: company press release)

Why We Like It:
What a difference an hour makes!  On Thursday afternoon there
were a plethora of attractive short candidates - stocks across a
wide variety of sectors falling to new relative lows, with no
clear underlying support.  But by the closing bell, the sudden
equity rally had created green candles (and possible reversal
signals) on many of those charts.  Such was not the case with
WHR.  The stock hit a fresh multi-month low today after the bears
clawed through $50.00.  This level, which acted as support over
the past two weeks, was bolstered by the 100-dma.  The technical
breakdown did not sit well with shareholders.  WHR moved steadily
lower throughout the session and set a low of $48.68.  The
subsequent late-day rebound was not convincing, as shares only
recouped a small portion of the intraday losses.

If the fresh double-bottom p-n-f sell signal, rising volume, and
downtrending daily stochastics (5,3,3) are any indication, WHR
could soon be trading below the point-and-figure chart's bullish
support trend at $47.00.  The daily chart shows no significant
support until $45.00.  Our profit-target for this play will be
set just above that level at $45.06.  We've set an entry trigger
at $48.67 in order to confirm downside momentum.  This is
particularly important, given the large amount of uncertainty
surrounding tomorrow's presentation by U.N. Weapons Inspector
Hans Blix.  What does Hans have to do with washing machines and
refrigerators?  Absolutely nothing.  But what he says tomorrow
morning could have a major impact on the major indexes.  For all
its technical weakness, WHR could easily bounce back if the
broader market zooms higher on eased concerns of an imminent war
with Iraq.  But if this doesn't occur, the bulls will have a very
tough time extending the late-afternoon gains.  Our expectation
is that Whirlpool could move sharply lower once it falls to new
relative lows.  Former support at $50.00 should now act as
resistance.  If the play is triggered, our stop will be set at
$50.56.  Long-term traders could give WHR additional room to move
with a stop above the 50-dma ($52.60), using the October lows
near $40.00 as a downside target.

BUY PUT MAR-50*WHR-OJ OI=282 at $3.00 SL=1.50
BUY PUT MAR-45 WHR-OI OI=1368 at $1.10 SL=0.55

Average Daily Volume = 488 k



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The Option Investor Newsletter                 Thursday 02-13-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: PUT - WHR
Traders Corner: Hey, Big Spenders – A Nickel For Your Peace Of Mind
Futures Corner: Before my first trade
Options 101: Gold Vehicles (Not the Chariot Type)

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

Whirlpool Corp. - WHR - $49.33 -0.63 (-1.26 for the week)

Company Description:
Whirlpool Corporation is the world's leading manufacturer and
marketer of major home appliances. Headquartered in Benton
Harbor, Michigan, the company manufactures in 13 countries and
markets products under 11 major brand names in more than 170
countries. (source: company press release)

Why We Like It:
What a difference an hour makes!  On Thursday afternoon there
were a plethora of attractive short candidates - stocks across a
wide variety of sectors falling to new relative lows, with no
clear underlying support.  But by the closing bell, the sudden
equity rally had created green candles (and possible reversal
signals) on many of those charts.  Such was not the case with
WHR.  The stock hit a fresh multi-month low today after the bears
clawed through $50.00.  This level, which acted as support over
the past two weeks, was bolstered by the 100-dma.  The technical
breakdown did not sit well with shareholders.  WHR moved steadily
lower throughout the session and set a low of $48.68.  The
subsequent late-day rebound was not convincing, as shares only
recouped a small portion of the intraday losses.

If the fresh double-bottom p-n-f sell signal, rising volume, and
downtrending daily stochastics (5,3,3) are any indication, WHR
could soon be trading below the point-and-figure chart's bullish
support trend at $47.00.  The daily chart shows no significant
support until $45.00.  Our profit-target for this play will be
set just above that level at $45.06.  We've set an entry trigger
at $48.67 in order to confirm downside momentum.  This is
particularly important, given the large amount of uncertainty
surrounding tomorrow's presentation by U.N. Weapons Inspector
Hans Blix.  What does Hans have to do with washing machines and
refrigerators?  Absolutely nothing.  But what he says tomorrow
morning could have a major impact on the major indexes.  For all
its technical weakness, WHR could easily bounce back if the
broader market zooms higher on eased concerns of an imminent war
with Iraq.  But if this doesn't occur, the bulls will have a very
tough time extending the late-afternoon gains.  Our expectation
is that Whirlpool could move sharply lower once it falls to new
relative lows.  Former support at $50.00 should now act as
resistance.  If the play is triggered, our stop will be set at
$50.56.  Long-term traders could give WHR additional room to move
with a stop above the 50-dma ($52.60), using the October lows
near $40.00 as a downside target.

BUY PUT MAR-50*WHR-OJ OI=282 at $3.00 SL=1.50
BUY PUT MAR-45 WHR-OI OI=1368 at $1.10 SL=0.55

Average Daily Volume = 488 k



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Go to http://www.optionsxpress.com/marketing.asp?source=oetics21

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
------------------------------------------------------------


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

Hey, Big Spenders – A Nickel For Your Peace Of Mind
By Mike Parnos, Investing With Attitude

What’s this world coming to?  I’m on my way out to buy a gas mask
and bottled water?  No, I’m not concerned about the war.  I had
beans and barbeque for lunch.

While a large portion of the American public would like to turn
Iraq into a giant litter box, I suspect calmer heads will
prevail.  (my two cats really had their hopes up). Besides, I
doubt Iraqi sand has the all-important clumping feature – which
would make the job of US troops cleaning the litter box after the
fact a real mess.

There’s also been a huge run on duct tape – the babysitter’s best
friend.  With a threat of chemical and/or biological warfare,
people are stockpiling duct tape to seal their homes.  Soon duct
tape will be available in designer colors.

The important question is:  If there’s a war or terrorist attack,
will Dominos still deliver?
_____________________________________________________________

Are We Lucky or Are We Good?
At the CPTI we’re right more often than we’re wrong.  Are we
lucky?  Hell No!  We’re GOOD!  We structure our trades using
options – those marvelous tools that enable us to be creative, to
be safe, to be conservative and to create a potentially
profitable scenarios for any market environment.

Not only are we right most of the time, but, as we learn more, we
can discover how to take advantage of stock movement during the
life of the trade.

Let’s Get Mental
For this example, we’ll use a trade a few Couch Potato Trading
Institute (CPTI) students put on in mid January.  It was an Iron
Condor using our old friend -- BBH (Amex Biotech Holders).

With BBH trading at about $86 at the time, they bought 10
contracts of BBH February $70 puts and sold 10 contracts of BBH
February $75 puts for a credit of $.65.  Then they sold 10
contracts of BBH February $95 calls and bought 10 contracts of
the BBH February $100 calls for a credit of $75.  The total
credit was $1.40 or $1,400 for the 10-contract position.

The reason they like this position is the 20-point range.  They
recognize that BBH has the potential to make good-sized moves in
either direction.  As per plan, BBH has stayed within a rather
narrow range, and the short options were eroding -- just like in
the playbook.

With almost two weeks remaining before option expiration, BBH was
still comfortably in the mid $80s.  Would all the options in the
Iron Condor expire worthless?  Probably, yes.  Is it possible
that, in two weeks, the market could explode in one direction or
the other?  Of course it’s possible.

They took a look at the BBH option chain and noticed that BBH
fluctuates a few dollars during the trading day.  On Tuesday, BBH
popped up over $90 for a while.  They bought back their short $75
puts for a nickel.  Then, later in the day, BBH came down and, on
Tuesday morning, they were able to buy back their short $95 calls
for another nickel.

What’s left?
Once the CPTI students bought back the short options, what
remained in their accounts?  10 BBH February $70 puts and 10 BBH
February $100 calls.  They have no value at the moment, but that
could change.

If we go to war, there will be a market reaction – how severe, or
in what direction, remains to be seen.  Let’s speculate.  If BBH
reacted with a spike down to $65 in the next week, how would that
affect the long $70 put?  It would have a minimum value of $5.
Wouldn’t that be nice?

Even if BBH only tanked to $72, the volatility would go through
the roof and the $70 put could be worth $1.00.  That wouldn’t be
hard to take either.

What Does This Accomplish?
1. When you sell a short option (put or call), you’re taking on
an obligation to perform.  When you buy back that short option,
you are no longer obligated.
2. You have locked in almost all your profits.  You originally
took in $1,400 and it cost you only $100 to insure your safety.
What a deal!!
3. You have put yourself in a position to profit tremendously if
there was a dramatic market move in the final two weeks before
expiration.

There are other ways to take advantage of stock movement within a
range that we’ll explore in a future column.  Just being aware of
what you can do will open up trading opportunities for you to
make the most of your position.

CPTI Rules!!  Now, since we’re not at war tonight, let’s order a
Dominos with everything and have the delivery boy pick up a
couple of rolls of duct tape.  The pizza is for me.  The duct
tape is to make sure I’m not interrupted during tonight’s game.
_____________________________________________________________

CPTI PORTFOLIO POSITION UPDATE
Position #1: BBB Iron Condor – Closed Thursday at $85.70.
An Iron Condor is a credit position consisting of both a bull put
spread and a bear call spread. The objective is for the BBH to
finish anywhere within the $85-$95 range.  BBH has traded down
and will hopefully continue to bounce off support.

Position #2: MMM Iron Condor – Closed Thursday at $122.41.
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 $20.85.
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.  The market has been
trading in a range and some volatility has come out of the
premiums.  We have only five trading days left.

Position #4: QQQ ITM Strangle – Closed Thursday at $23.94.
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.  In this position, we’re glad the QQQs have stayed in a
range.  It will make life easier when the short options expire
and we prepare to sell a new set of short options.

Position #5A: XAU Condor – Closed Thursday at $74.52.
This is a longer term trade expiring in March.  There is a $20-
point range and we took in a credit of $1.40.  We want XAU to
finish anywhere between $70 and $90.  Patience, patience and
patience.  XAU has been moving lower, but today’s bounce is
encouraging.  Time is working in our favor.

Position #6A:  MMM Condor – closed Thursday at $122.41.
This is a longer term more conservative trade expiring in March.
There is a $20-point range and we took in a credit of $1.20.  We
want MMM to finish anywhere between $115 and $135.

Position $7A:  QQQ 2-Month Baby ITM Strangle – closed Thursday at
$23.94.
Bought 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.  As time goes by . . . we’re ready for action.
______________________________________________________________

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

Before my first trade
By John Seckinger
jseckinger@OptionInvestor.com

If you haven't yet dived into the world of futures trading, there
are a few things worth learning about both this type of trading
and the E-mini S&P 500 contract.

Years ago, when I first found out that an initial margin of
between 3 and 4 thousand dollars could allow me to take a
position in a futures contract; my heart beat a little faster.
I started trading bond futures in the early 90's, and every tick
would immediately either increase or contract my trading account
by 31.25 per tick (1/32nd), times the number of contracts.  The
30-year, at the time, had the liquidity and leverage unlike any
futures contract at either the grain or financial exchange at the
Chicago Board of Trade.  If you are interested in equities,
trading the S&P 500 futures index is the '30-year' of the stock
market.

The S&P 500 Index represents roughly 70% of total domestic U.S.
equity market capitalization.  Standard and Poor's identifies
important industry sectors within the U.S. equity market,
approximates their relative importance in terms of market
capitalization, and then allocates a representative sample of
stocks within each sector of the S&P 500.  The Index is
capitalization weighted (shares outstanding times stock price);
each company's influence on Index performance is directly
proportional to its market value. The daily IS exclusive of
dividend income, i.e., they reflect only price action of the
underlying component stocks.  In conclusion, this is broad market
exposure.

As far as the E-mini S&P 500 Index is concerned, it is one-fifth
the size and cost of the standard S&P 500 futures contract, and
is the most liquid stock index futures contract in the world.
The capital required to trade such a contract is relatively
small; only 3,563 dollars needed in initial margin.  Because of
this fact, many traders of the S&P 500 prefer the liquidity and
ease of electronic execution of the E-mini.  Therefore, broad
market exposure at a relatively low cost.

The E-mini S&P 500 contract was introduced Chicago Mercantile
Exchange (CME) in 1997, trading in increments of 0.25 points,
with each tick equaling $12.50.  Commissions are roughly $8 to
$15 for round turns (entry and exit), but don't hold me to that
figure.

The CME had to standardize the contract, as well as making these
futures a legally binding agreements to buy or sell the cash
value of the S&P 500 Index at a specific future date.  The
contracts are valued at $50 x the futures price. For example, if
the Mini S&P 500 futures price is at 900.00, the value of the
contract is $45,000 ($50 x 900.00).  As an important note:  All
positions are marked-to-the-market daily.  With that said, a
trader can take profits from a position out of his/her account
WITHOUT liquidating the position.  Very nice feature.

These ES contracts are cash settled, just like the Standard S&P
500; so there is no delivery of the individual stocks following
expiration - which takes place quarterly (March, June, September,
and December). Remember, Mini S&P 500 daily settlements and
quarterly expirations will use the exact same price as the S&P
500.

Also a nice feature of futures trading is that there is no
up tick rule to go short, it is 100% electronic - no trading pits
and brokers, a short-term tax advantage, and can be a perfect
hedge for one's portfolio.  Why sell 10,000 shares of MSFT if you
don't want to alter your stock portfolio that much.  Just use the
ES contract.  The correlation will not be perfect, but it is
definitely a viable solution in the near term.

Ok, let us conclude that a trader only wants to "speculate" in
trading the ES contract.  Is it right for them?

It really does make a ton of sense to consider your financial
experience (very key), trading goals, and financial resources
(since trading the ES contract should only be used with RISK
CAPITAL).  As about everyone will tell you, trading futures can
result in losses that may substantially exceed an investor's
original deposit.  That is why stops in the futures market is so
critical.

Moreover, risking retirement savings, medical and other emergency
funds, and normal day-to-day funds should not be used to trade
futures.  Additionally, if you are a trader that doesn't like the
volatility of the markets, futures are probably not right for
you.  I can't tell you what your comfort level is, but trading
futures really is a different animal than say buying/selling
stocks (at least most of the time).

The margins that I talked about (3,563) is only a "good faith and
credit deposits", and there is a chance that a trader might have
to make additional margin deposits.  Note:  Sellers have the same
margin requirement as buyers.  The absolute minimum margin
requirement is set by law at 20% of a contract's value,
calculated daily, and exchanges and brokerage firms can
definitely increase this percentage. The 3,563 number was
gathered by the exchange, and could easily have moved since.
What if you don't meet a margin call?  Usually the broker will
liquidate a customer's open futures position, and is not required
to consult with a customer prior to liquidation open positions.

Please do not think that buying a futures contract is like owning
a share of stock.  Regulatory agencies (NFA, CFTC) even use the
phrases "pay attention" financial instruments, since futures
contracts are relatively short-term trading vehicles that need to
be monitored in case a margin call is issued.

I have gotten a number of emails wanting to explain the basics of
futures trading and the ES contract (since that is the contract
in the Futures Monitor).  If you are new to futures and just
finished this article, it is then important to begin paper
trading the ES contract (see
http://www.OptionInvestor.com/futurescorner/fc_011403_1.asp).
I also recommend looking at the pivot analysis formula, as well
as starting to get comfortable with MACD and regression channels
on a five-minute chart.  Then look at retracements from S2 to R2
on a daily, weekly, and monthly timeframe.  After that is done,
start to look for weakness or strength in the NQ and YM versus
the ES, since that can help with execution.  Moreover, become
comfortable going to www.stockcharts.com and pulling up a bullish
percent chart of the SPX and how that will gauge risk for the
market ($BPSPX).  To top it off, learn when NOT to trade.  This
is an entirely new article, altogether.

Going forward, every Tuesday I plan on doing an article from a
Trader's point-of-view.  I did, however, want to take a step back
tonight before things start to heat up.  On Thursday, the one
thing I learned was that WEEKLY retracements work fantastic, and
that selling underneath the bottom of the low via "fitted
retracements" really increases risk.  Ok, the rambling will stop
here (grin).

Ask away,

John Seckinger


***********
OPTIONS 101
***********

Gold Vehicles (Not the Chariot Type)
Buzz Lynn
buzz@OptionInvestor.com

As promised last week, if enough faithful readers sent in e-mails
requesting such, we'd do an article on the different vehicles
available for precious metals trading and investing.  Enough
readers responded - more than I'd imagined, actually - so we're
going to spend some time today on gold vehicles, none of which are
available at any of the Big 3 automakers' showrooms!

Before we get started, I encourage those just joining us for the
first time on the subject to go back to last week's article on the
case for gold.

http://members.OptionInvestor.com/options101/opt_020603_1.asp

I'd also encourage everyone, even the trading pros, to read
Jonathan Levinson's excellent article from last night.

http://www.OptionInvestor.com/traderscorner/tc_021203_1.asp

It dovetails very nicely with what we'll jump into right now.
Where Jonathan Levinson does a great job with the principles for
choosing certain vehicles, we'll focus on the vehicles,
themselves.

For starters, HUI.X, commonly known as the un-hedged gold index,
is not tradable to the best of my knowledge.  No options are
available, nor is there any volume of shares to indicate an
exchange traded fund (EFT).  However, we can use HUI as a
barometer or marker with some correlation to the price of gold.
The following companies in the index are considered un-hedged,
though "un-hedged" is a bit of a misnomer given that up to one and
a half years of forward sales (hedging or shorting) is still
permissible under the definition:

CDE   - Coeur D'Alene Mines
FCX   - Freeport McMoran Copper Gold
GLG   - Glamis Gold
GG    - Goldcorp
HGMCY - Harmony Gold
HL    - Hecla Mining
MDG   - Meridian Gold
NEM   - Newmont Mining

The next index is probably the most commonly known - XAU.X,
referred to as the Gold and Silver Index, and is also not
tradable.  However, options are tradable on this index on the
Philadelphia exchange.  Just because HUI is referred to as the
"un-hedged" index does not necessarily mean that XAU represents
only "hedged" companies.  In fact there are a bunch that overlap.
The following are the stocks that make up the XAU:

AEM   - Agnico Eagle Mines
AU    - Anglogold
SIL   - Apex Silver Mines
ABX   - Barrick Gold
FCX   - Freeport McMoran Copper Gold
GG    - Goldcorp
HGMCY - Harmony Gold
MDG   - Meridian Gold
NEM   - Newmont Mining
PDG   - Placer Dome

If our plan is to trade options in the gold market, XAU is pretty
much the only vehicle providing any connection with the price of
gold.

If that's too lightweight, we can always play with the big boys in
the futures market.  The contracts expire in different months of
the year and in future years too.  The current month contract is
GC03g (GC for Gold Contract; 03 for 2003; g for February).
However, volume has dropped to a trickle on these in favor of most
front month trades done under the symbol GC03j (again, GC for Gold
Contract; 03 for 2003; j for April).  GC03m is the June contract.

Each contract controls 100 troy ounces of gold.  Thus at current
levels, one contract will set us back roughly $35,750 at today's
closing price of $357.50 per ounce.  The good news is that futures
provide us tremendous leverage.  As Jonathan correctly pointed out
yesterday, although the initial margin requirement was just
increased to $2025 per contract from the previous $1500 per
contract, it's still a bargain.  Of course, that works in reverse
too in that a move to $337.25 per ounce of the metal wipes out the
$2025 we plunked down and begins costing us dearly if the price
declines further.

In the realm of trading, only the latter two are suitable trading
vehicles.  These are not the instruments of those who want
protection from either financial meltdown, or merely financial
erosion.  They are strictly trading vehicles in my opinion, and
not designed for a long-term investor.  Whether we use them or not
depends on our time horizon and our reasons for involving
ourselves in gold plays.  Trader's horizon, good.  Investor's
horizon, bad.

Traders can also avail themselves of gold and/or silver stocks,
most of which are optionable.  However, we're beginning to cross
over into investor territory here too.  As investors, we'll be
interested in instruments that never expire (though they can go
bankrupt or otherwise be wiped out), and that includes stocks of
individual mining companies, some of which even pay dividends(!),
meager as they are.

I don't have a favorite mining or exploration stock, except maybe
Newmont (NEM), which I'll get to in a minute.  I'm not really fond
of them for a number of reasons, the biggest of which is that they
are still stocks!

So what's the problem with that?  Keep in mind the reason that I
am personally invested in gold - an insurance policy that never
expires against financial catastrophe.  Now if there is a
financial catastrophe, metal stocks are going to suffer too for
the same primary reason as any other stock.  While metal stocks
may be slightly insulated by virtue of their inventory or reserves
of metal, as a reader astutely commented, their profits are still
derived in fiat currency.  For that reason, I'm on the fence about
purchasing individual mining companies.  If things ever get that
tough internationally, I'm not going to be able to spend a stock
certificate as a last resort, even if it is a mining company.
Maybe there won't even be a liquid exchange in which to sell it.

The secondary reasons are that shares are overpriced as a multiple
of earnings.  Or worse, they have no earnings even after the sharp
rise in the price of gold.  Criminy, what's it take to make a
profit if it can't be done at $350 per ounce?

Another piece of treachery in the individual companies is that
they can't just start producing at the tip of a hat.  There is
some ramp-up time.  For you real estate developers, if you thought
building a shopping center, warehouse, or office building was a
tough sell to the local zoning board, try developing a gold mine!
It's no surprise that 10 years is a reasonable development time,
at least in the U.S., and that foreign countries might be a bit
more lenient in the development process.

Therein lies another risk in mining in foreign countries.  What is
it?  In a word, nationalization - confiscation, re-possession, co-
opting, pilfering - call it what you want, but it's stealing.  So
you have event risk in any given mine.

Those are all reason why I tend to shy away from the shares under
my "ark-building" program.  None of this matters to the trader
though.  As traders, we only care about action.  Investments are
the furthest thing from our minds.  For that reason, I keep my
eyes on a bunch of individual mining stock symbols.  By no means
am I recommending any of them.  You've already observed some of
them above, but I've listed them here in alphabetical order:

ABX, AEM, ASA, ASL, AU, BGO, CBJ, CDE, DROOY, ECO, GFI, GG, GLG,
GSS, HL, HMY, KGC, MDG, NEM, PDG, RGLD, SIL, and SSRI.

Some of these are priced under $5 and have the possibility of
running up 10-fold or more.  I just don't know which ones, and I'm
not gambler enough to buy 10 at random with a throwing of the
proverbial dart, and hope I've nailed a home run.  I'm just not
well-versed enough in the industry to know the winners from the
losers.  Yes, there will definitely be both!

I mentioned NEM a minute ago for good reason.  It is, I believe
the closest thing to investment grade in terms of safety for a
couple of reasons.

First, it's the biggest capitalized mining stock out there, and it
pays a dividend.  To boot, it has operations in more countries
than any other mining company I can think of.  Thus it is not as
vulnerable to event risk in any one location as those with less
far-flung operations.

Second, if run of the mill mutual funds are eventually to gain
some exposure to gold, and they can pick only one stock, I think
they are going to first buy NEM for the reasons I noted above.
That doesn't make it a buy, but it's the highest on my radar
screen.  So I keep an eye on it.

Now if none of this sounds like fun investigating 20+/- individual
stocks, most not based here in the U.S., we are birds of a
feather.  For that reason, I'm inclined to give my money to a
metals mutual fund manager and let him/her do the picking for me.
 There are many funds out there to pick, as well.  By no means is
this a complete list; there are many more.  But here are a few I
swerved into over the last year.

GOLDX - Gabelli Gold
MNTGX - Monterrey Gold
RYPMX - Rydex Precious Metals
SGGDX - First Eagle Gold
TGLDX - Tocqueville Gold Fund
USAGX - USAA Precious Metals
EKWAX - Evergreen Precious Metals
INIVX - Van Eck Intl.
SCGDX - Scudder Gold

Disclosure:  I own some Tocqueville shares.

Dang!  Just when I was getting to the good stuff, I hit the wall
of time and space - not quite the Twilight Zone, but deadline and
allotted space dictate here.

Next time, we'll tackle the purchase of coins, bullion, and the
closest thing to gold certificates we'll ever see, CEF shares,
which can be owned in your IRA!

Until next time, make a great weekend for yourselves!

Buzz


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