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Daily Newsletter, Wednesday, 03/26/2003

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The Option Investor Newsletter                Wednesday 03-26-2003
Copyright 2003, All rights reserved.                        1 of 2
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In Section One:

Wrap: It's Not the Economy... For Now
Futures Wrap: Positively Neutral
Index Trader Wrap: Rangebound
Weekly Fund Family Profile: BNY Hamilton Funds
Options 101: Consolidation

Updated on the site tonight:
Swing Trader Game Plan: Home in the Range

Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
03-26-2003                   High    Low     Volume Advance/Decl
DJIA     8229.88 -  50.35  8284.99  8187.73   1546 mln  521/999
NASDAQ   1387.45 -  3.56   1397.94  1383.35   1374 mln  806/545
S&P 100   442.07 -  2.70    445.43  440.46    totals   1327/1544
S&P 500   869.95 -  4.79    875.80  866.47
RUS 2000  368.18 -  3.61    371.79  367.65
DJ TRANS 2203.88 +  1.81   2214.48 2190.91
VIX        32.16 -  0.50    33.52   32.05
VIXN       43.94 -  1.06    45.56   43.43
Put/Call Ratio 0.86
*******************************************************************

It's Not the Economy... For Now
by Steven Price

The market seems to be betting on an economic recovery when the
conflict in Iraq is finally behind us.  Unfortunately this
morning's economic numbers let us know that the recovery is still
a ways off. The market took an undecided approach to the data,
while it continued to focus on the war in Iraq.

One of the biggest factors preventing an economic collapse in the
United States over the past year has been the strength of the
housing sector.  With consumers able to tap into their homes for
re-financing dollars and also sell their houses in a sellers'
market, there has been a reliable source of emergency dollars
since interest rates - and mortgage rates - began dropping to
multi-decade lows.  Apparently some of those dollars have finally
begun to slow.  After a year in which it seems everyone with the
ability to re-finance or buy a new house did so, we are starting
to see declines in the housing market that have become measurable
in numbers released over the past couple of days. February new
home sales fell 8.1% to an annual rate of 854,000.  This follows
a 12.6% decline in January and is the lowest level since August
2000.  The weather in the Northeast was partially to blame, as
that area saw a decline of 37% to its lowest level since 1996,
but with consecutive declines to multi-year lows, the trend seems
obvious.  The trend also seems to confirm comments that Alan
Greenspan made earlier this year that we could not expect to rely
on money from the housing market to the same extent we have over
the past year.  Further evidence that the market is cooling is
the 352,000 homes that stood for sale at the end of the month,
which is the highest number since June 1996. The 20 basis point
jump in the 30-year mortgage probably won't help the recent
declines, either.  Recent data did show a drop in mortgage
delinquencies, but the data does not include those mortgages in
any stage of foreclosure.  According to the Mortgage Bankers
Association, "The percentage of loans in the process of
foreclosure was 1.18 at the end of the 2002 fourth quarter, up
from 1.15 percent at the end of the third quarter. This most
likely indicates that loan foreclosures, which lag unemployment
and delinquencies, are peaking."

We also got data on durable goods that was not terribly
encouraging. Monthly orders for durables dropped 1.2% in February
and reflected drops in demand for computers (-12%), machinery (-
2.5%), automobiles, electronics (-1.9%) and metals (-2%).
Shipments of durables also fell, dropping 1.6%, accompanied b a
drop of 0.3% in unfilled orders and a 0.1% decrease in
inventories.  Just to clarify, these are not signs of growth.  If
we factor out defense, the non-defense capital goods number
showed a decline of 5.2% (although without the 26% drop in
commercial aircraft orders the decline was 2.8%). Orders
excluding defense dropped 2.7%, wiping out January's 2.2% gain
and more. These numbers show that while many economists are
hoping that businesses will increase spending with the war behind
us, it has yet to happen.

The University of Michigan Consumer Sentiment report that comes
out on Friday may give us an indication of just when we can
expect to see a turnaround in spending.  As long as consumer
spending remains questionable, companies will refrain from
placing orders for new capital equipment.  After the lowest
Consumer Confidence reading in ten years on Monday (which
reflected data only up to March 18), Friday's data, which is more
consumer heavy and reflects data tallied up through this week,
may give us an idea of just how consumers are reacting to the war
thus far.

One of the areas I've given a lot of attention lately is the oil
market.  It is a reflection of how the well the war is going from
an economic standpoint and reflects costs to businesses which
have played a role in many recent earnings releases.  Today's
example of that factor came from Temple-Inland (TIN), which
announced it would see a first-quarter loss, as opposed to the
$0.15 gain expected by analysts.  It blamed higher energy and
pension costs, with energy costs making up more than 2/3 of that
equation.  Today's intraday drop in the broader markets once
again accompanied a rise in oil prices, as reflected by the crude
oil futures.  May Crude Oil Futures rose 0.62 per barrel,
following several disappointing overseas developments. The first
was the fact that the Iraqi military has begun burning oil fields
in Rumalia, which produces slightly more oil per day than the
state of Texas. Add to that the advancement of Turkish troops
toward northern oil fields in Kirkuk and suddenly the control of
oil fields by the U.S. looks murky.  While it is unlikely that
anyone but the U.S. will eventually control those supplies,
assuming control may take longer than planned. Crude Oil Futures
reflected that activity and traded pretty much in tandem
(inversely) with the Dow for most of the day. While this
certainly is not a traditional measure of the equity market, such
as activity in the bond market, it seems to be serving that
purpose during the conflict with Iraq.  In fact, the failure to
break the $29 per barrel level mid-day timed closely with the
bounce in the Dow. The events in Iraq have even trumped the news
coming out of Venezuela, which announced that it intended to
start exporting gasoline by the end of the month.  Last year that
country exported 16.7 million barrels of gasoline, so it could
have a noticeable impact once those exports begin.  I imagine
things would be much different if the U.S. was invading France.
We may be tracking the price of wine stocks instead.

Chart of Crude Oil Futures




It seems that each day we get some additional news that tells us
the war will be a more drawn out affair than expected. Today we
heard that Iraqis have had success in destroying U.S. tanks and
are planning on blowing up bridges as the U.S. closes in on
Baghdad. That news continued to drive us today and the market
reacted intraday to rumors and developments yet again.  While we
traded in a very tight range for the most part, we did make a
couple of trips outside that range on war-related news/rumors. We
saw a quick intra-day drop on a rumor that the government was
raising the terror alert to red status, which is the highest
level of alert.  That rumor turned out to be false and we got a
sudden bounce.  That bounce was followed by news that the U.S.
had attacked an Iraqi convoy of 1,000 vehicles moving south to
engage U.S. troops and we rallied all the way back into the green
temporarily.

Intraday Chart of the Dow




We did get another look at a support level that has held up well
over the past week.  On the way up last week, we saw several
pullbacks to the OEX 437-440 level that has been pivotal over the
past several months.   Even on the code red rumor, the pullback
stopped at OEX 440.46.  The 50% retracement of the August highs
and October lows in the Dow and OEX have acted as both support on
the latest rally and also as resistance during a consolidation
period at the end of January and beginning of February.  That
retracement comes in at OEX 437 and has put a floor on the market
since the big breakout.  Traders looking for a pivot point in a
market that is hard to assess can use that level as the closest
indicator to where we now stand.

Chart of the OEX




The Nasdaq Composite also continues to find a ceiling at the 1400
level.  That level has acted as resistance (within a couple of
points) in six of the last seven sessions. The first bullish move
in the equities that sticks will likely have to involve a break
back above that level.  We did get through it on March 21, when
we ran into the 1426 level that has been even more pivotal.
However, since the pullback on Monday, we have been unable to
crack it again, although we have tried the past two sessions,
with highs of 1400 and 1397.

In business news, Sears said it is considering selling its
troubled credit card unit. The $30.8 billion dollar portfolio,
which garnered attention for its possible defaults in 2002 that
required the company to set aside millions of dollars, is
expected to fetch around $6 billion. While the money will help
clear up the company's balance sheet, critics are pointing to the
$1.5 billion in profits - 60% of the company's total - that Sears
will lose and saying that the  loss of revenue may make it more
difficult to turn around other sectors of its business. While
Sears is hoping that the portfolio sells at a premium, the poor
economy and increasing bankruptcies might weigh against the price
a big credit card issuer, such as Citibank or Bank One, might be
willing to pay. Investors loved the news, however, jumping into
the stock, which gained $2.69.

Another factor that continued to weigh on the market was
yesterday's vote by the Senate to cut the President's tax-cut
plan in half.  Those cuts could severely reduce his plan to
eliminate the double taxation on dividends.  The plan, when
announced, led to a big rally due to the sudden inflated value of
dividends to both corporations and the shareholders that receive
them. If those dividends don't receive the tax benefits President
Bush is pushing for, they can suddenly lose as much value as they
seemed to have gained, taking value out of the stocks that pay
them.

For the first time in a while, we traded in a tight range, with
only a couple of intraday swings that qualified as significant
moves.  And those moves were mostly news-based.  Volume was also
on the light side at 1.2 billion shares on the NYSE and 1.4
billion shares on the NASDAQ. The aimless drifting for most of
the day seemed to signal exhaustion and a waiting period for the
next big development in the war effort.  While the economic data
we saw suggests a worsening economy, all attention remains on the
war as it appears to be the last great hope for the economy. If
the theory that businesses will start spending once it is over
pans out, then we may make another run at last year's highs.
However, with no hard evidence yet that that is the case, the
market will continue to trade on hope, or the lack thereof.


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

Positively Neutral
By Vlada Raicevic

Daily Settlement Numbers 4:15pm ET

 DOW
Last: 8229.88
Net: -50.35
High: 8284.99
Low:  8187.73

 YM 03M
Last: 8200
Net: -42
High: 8277
Low:  8161

 S&P 500
Last: 869.95
Net: -4.79
High: 875.80
Low:  866.47

 ES 03M
Last: 868
Net: -4.25
High: 875.50
Low:  864.75

 Nas 100
Last: 1066.30
Net: -0.27
High: 1074.98
Low:  1060.05

 NQ 03M
Last: 1070.50
Net: +5
High: 1078.50
Low:  1063

DAILY PIVOTS

 YM 03M
R2: 8325
R1: 8258
Pivot: 8209
S1: 8142
S2: 8093

 ES 03M
R2: 880
R1: 873
Pivot: 869
S1: 863
S2: 858

 NQ 03M
R2: 1086
R1: 1078
Pivot: 1071
S1: 1063
S2: 1055

Futures traded in a small range in the overnight session and
opened basically unchanged today.  There was initially some
selling, but price quickly turned and moved up to find resistance
at the 875 spot.  Selling took over and we had a double bottom at
the 867 area which lead to another bounce to 875.  After some
sideways movement, a rumor that the terror alert had been moved to
Red led to the strongest selling of the day to 864.75, still well
above yesterday's low of 861.25 and Monday's low of 860.50.  At
this point a buy program kicked in and moved the ES up five points
in a single candle, some consolidation followed, then had another
run up to take out the triple top at 875 by .50 before retreating.
For ES, price movement was generally around the Pivot, barely
moving halfway to either R1 or S1.  The NQ is slightly more
bullish, having traded the last two days above the Pivot, cycling
above and below the halfway point between Pivot and R1.

Yesterday we discussed the possibility of having reached a point
where the market would tell us whether the bull run from last week
had ended, or if we were just consolidating before another push
upward. We did not get confirmation of either possibility today.
While there was more volatility today, the net result was
generally neutral.  This means that our daily charts have not
changed much, with indicators basically stagnant but still
bullish.

ES Pivot Chart:




Pivot charts shows how we continue to trade around the Pivot area
with only a brief visit to R1 yesterday.  The bias is slightly
down as shown by the green channel lines.

ES 270 Minute Chart:




A brief visit to recent lows still holds.  The move up from this
area brought Macd to back to the centerline, but it is now at
absolute neutral.  Stochastic is mixed with slow turning up and
fast turning down, ADX is completely chopping around with
sellers/buyers about even.  This chart is not telling us much,
which is not a surprise.

ES 60 Minute Chart:




Neutral is the word here as well.  Macd is about as flat as it can
be, and it is flat right on the centerline, with RSI doing the
same thing via smaller and smaller wiggles.  Indicators are not
telling us anything.  The 200 period regression channel is slowly
going horizontal, showing even 200 60-minute periods are slowly
going net neutral.  The faster regression channel, the 78 period,
is still pointing up and remains bullish.  In fact, price is
trending sideways towards the bottom of that channel which now
sits at 864.  We should test that area at some point tomorrow, and
it may be interesting to see if we bounce there, or on any
additional selling, if the center of the 200 period channel will
act as support, which now sits at the 857 area.

NQ 270 Minute Chart:




This is less neutral and slightly more bullish than the ES chart,
but it also has some cracks showing which point to a possible
eroding of that positive edge.  Macd is above its trendline, and
is peeking slightly above the centerline, but the last candlestick
has turned it over again.  ADX shows both buyers and sellers are
disappearing, with neither side willing to take a stand.  RSI
broke above its downtrend line like Macd, but has turned over and
is now threatening to break below it again.  A positive break
followed immediately by a negative break of a trendline is often
more bearish than a simple break below the trendline.  However,
that trendline on the RSI could also now become support if we move
up from here.

ES 60 Minute Chart:




Both of the regression channels still show a nice bullish upward
slant, and price is nowhere near the lower channel of the short
term (blue) regression.  Price seems to be using the center of the
longer term channel as support.  If compared to the ES, you can
see that the ES is further above the center of the longer term
regression.  Therefore, the ES is more bearish NQ on the 78 period
regression channel, but is more bullish than the NQ on the longer
term 200 period regression channel.

As much I look at these charts today, I really don't have all that
much to say.  We are in the middle of the bridge, neither closer
to the bull on one side, or the bear on the other.  Hang on to
your hats, because when we get a decisive direction, it may be a
very quick move.


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

Rangebound
Jonathan Levinson

Today's session was a study in rangebound trading, with little
excitement for bulls or bears.  Volume was lighter than we've
seen of late, with 1.55B NYSE shares and 1.4B COMPX shares
changing hands.  The markets opened flat and drifted higher,
never seriously challenging upper resistance before moving lower
without challenging support.  What followed was an extension of
the same, with little of interest along the way.

The fed added $4.75B via overnight repurchase agreements,
refunding the 1.5B expiring from yesterday's repos with a net
addition of 3.25B.  For all that, treasuries saw only light
buying, with the five year yield (FVX) closing down 3 basis
points, the ten year (TNX) down 1.7 basis points, and the thirty
(TYX) down .4 bps.

The lack of excitement was like a wet blanket thrown on the
volatility indices, with the VIX closing down .50 to 32.16, QQV
down 1.04 to 38.38 and the VXN down 1.06 to 43.94.  Particularly
for the COMPX and QQQ, moves of that magnitude would imply a nice
gain for the day, but the price failed to participate, with the
all of the major indices closing lightly in negative territory.
These moves lower in the volatility indices diverge from the
price, and are either giving us early warning of an impending
bullish jump in equity prices, or merely reflecting a very low
volatility day.  A glance at the charts shows these volatility
measures moving to their lower supports, and a bounce from here
would mean a move lower for equities.

Chart of the VIX




The VIX, while on "sell" signals (bullish for equities), is in a
bull wedge.  A failure to take out the lower support line would
be bearish for equities.

Chart of the QQV




We see that the QQV too is resting upon significant support while
printing sell signals on the oscillators and moving averages.

On to equities:

Chart of the INDU




The INDU put in another rangebound consolidation day on light
volume.  While there were no sell signals given, the stochastic
and its slower cousin, the MacD, seem to be headed in that
direction.  It is bad form to anticipate signals, and we will not
do that, so for now the only thing to do is note the pivot levels
and wait for the market to tell us what it wants to do.  With the
VIX resting on critical support in a potentially bullish chart
pattern and the oscillators closer to overbought than to
oversold, bulls need to be careful here.  Note that the 5 day
SMA, represented by the blue line at 8306.67, never got tested
today.

I'm posting the daily pivots based on today's session.  For the
weekly and monthly pivots, please see Jeff's index wrap here:
http://members.OptionInvestor.com/Itrader/marketwrap/iw_032503_1.ASP

INDU

R2 8331.46
R1 8280.67
P  8234.20
S1 8183.41
S2 8136.94


Chart of the SPX




The SPX printed an inside day on volume roughly equal to that
seen yesterday.  Again, no sell signals, and today showed us no
decent signals except for intraday scalps.  The 5 day SMA was
never touched.  Energy is clearly building for a strong move, and
whether it comes on a downside VIX breakdown and a blast higher
for the SPX or a fulfillment of the VIX bullflag and a breakdown
for the SPX, only time will tell.  In the meantime, here are the
daily pivot levels to watch.

SPX

R2 880.07
R1 875.01
P  870.74
S1 865.68
S2 861.41

I would add that 850 SPX is significant support below S2.


Chart of the OEX




The same comments apply to the OEX.  An inside day, slightly
lighter volume, no clear signals, no test of the 5 day SMA.
Clearly, the 439 support level is key, and tomorrow should
resolve our conundrum.

OEX

R2 447.62
R1 444.84
P  442.65
S1 439.87
S2 437.68


Chart of the COMPX




The indecision in the market is clearly reflected in today's
candle, with a top and bottom spike closing in the middle of the
day's range.  As with the other indices, the 5 dma provided
resistance, but unlike the other indices, it was not only tested
but actually exceeded for a brief moment.  Volume today was
lighter on the COMPX than for the other indices, and the
stochastic is closer to a sell signal than for the INDU, OEX and
SPX.  As we see below for the QQQ, which is actually on a
stochastic sell signal, the COMPX is either leading the decline
and implying a downside breakout for the other indices, or
setting us up for a headfake.  It would not be the first.

COMPX

R2 1404.14
R1 1395.81
P  1389.58
S1 1381.25
S2 1375.02

I agree with the above pivots, but would add that 1368 is the
level I'm waiting for to confirm a downside breakout.  1421 is
the rally high from last week, and 1425 would be the level
conservative bulls are watching for confirmation of a show of
strength.

Chart of the QQQ




QQQ posted a closing gain of 15 cents, but like the COMPX, looks
like the weakling of the bunch.  Note that the Qubes finish
trading at 4:15 EST, and those 15 extra minutes brought the QQQ
higher from its 4PM print.

A series of candle stars show indecision here, and the stochastic
is on a sell signal confirmed today.  According to the
stochastics, QQV should bounce off its lower trendline tomorrow
and add some premium to QQQ options.  The 5 day SMA was exceeded
but not on a closing basis.

QQQ

R2 26.97
R1 26.76
P  26.56
S1 26.35
S2 26.15


As we can see, tomorrow will be a critical day.  With the indices
building energy for their next move, traders will want to be
attentive and tight on their stops.  The markets have been
anything but simple this month, and capital preservation remains
a traders number one task.


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**************************
WEEKLY FUND FAMILY PROFILE
**************************

BNY Hamilton Funds

BNY Hamilton Funds is a family of no-load mutual funds advised by
The Bank of New York, one of the most experienced U.S. investment
managers with roots tracing back more than 150 years.  Currently,
BNY offers more than one dozen mutual funds along the risk-reward
spectrum, designed to meet a variety of investment objectives and
risk tolerances.  The Hamilton Funds are suitable for regular and
tax-advantaged accounts, such as IRAs.

The BNY Hamilton Funds have no loads or sales charges and require
a minimum initial investment of $2,000 to open a regular account.
The initial minimum is $500 for automatic investment programs and
just $250 to open an IRA account.  So, the BNY Hamilton Funds are
designed to be affordable and accessible.

Two funds, BNY Hamilton Multi-Cap Equity (BKMCX) and BNY Hamilton
(BNSVX), are currently offered on a no-load, NTF ("no-transaction
fee") basis through Schwab's Retail OneSource program.  The funds
are also available through Dreyfus LION (NTF), Scottrade, and TD
Waterhouse, per Morningstar's report.  For more information or to
get a prospectus, call 800-426-9363 or log on to the BNY Hamilton
Funds website at www.bnyhamiltonfunds.com.

Fund Overview

The BNY Hamilton Funds currently offer seven equity fund products
to choose from, including the recently merged BNY Hamilton Multi-
Cap Equity Fund (BKMCX) which Gannet Welsh & Kotler, Inc. ("GWK")
serves as investment sub-advisor.  Not all of the stock funds are
currently available to retail investors, however.  The funds that
offer Investment Class shares are:

 BNY Hamilton Funds: Equity Funds
 BNY Hamilton Large Cap Growth Fund (BLCGX)
 BNY Hamilton Small Cap Growth Fund (BNSVX)
 BNY Equity Income Fund (BNEIX)
 BNY Hamilton Multi-Cap Equity Fund (BKMCX)


BNY Hamilton's growth-oriented equity management style is based
on a discipline of relative earnings strength.  The approach is
described as "forward looking" and combines both "top down" and
"bottom up" approaches.  BNY's top-down framework assesses major
economic, political and social trends to identify the sectors of
the market with favorable growth prospects.  That work is merged
with bottom-up, fundamental research of individual companies.

The fund family's equity-income product, the BNY Hamilton Equity
Income Fund (BNEIX), pursues long-term capital appreciation with
a yield that is greater than the yield of the S&P 500 index.  It
invests in a diversified portfolio of high-quality common stock,
securities convertible into common stock, and REITs (real estate
investment trusts).  In stock selection, BNY Hamilton emphasizes
the securities of established U.S. and foreign companies.

The BNY Hamilton Multi-Cap Equity Fund (BKMCX) began investment
operations in December 1996 and was merged into the BNY Hamilton
Funds in October 2002.  This strategy provides broad exposure to
the U.S. stock market by investing in a diversified portfolio of
value and growth stocks of various market capitalizations.  Thus,
Lipper aptly categorizes the fund as a multi-cap core fund while
Morningstar (which does not have a multi-cap style box) puts the
fund in its large-blend category for comparison purposes.

Only two of the BNY Hamilton fixed income funds are available to
the retail marketplace.  The two BNY funds with Investment Class
shares are as follows:

 BNY Hamilton Funds: Fixed Income Funds
 BNY Hamilton Intermediate Government Fund (BNIGX)
 BNY Hamilton Intermediate New York Tax-Exempt (BNNYX)

BNY Hamilton Intermediate Government Fund (BNIGX) pursues a high
level current income, consistent with capital preservation.  Its
primary investments include high-grade U.S. government and agency
securities with a weighted-average maturity of 3-10 years.  Their
New York tax-exempt fund has a similar intermediate-term emphasis
as applied to high-quality New York municipal securities.

Both the BNY equity funds and fixed income funds have disciplined
investment strategies that are consistently applied and emphasize
risk management and continual portfolio oversight.  The different
investment strategies are based on analytical frameworks that aim
to "chart a steady course" as BNY puts it, regardless of economic
changes and current market conditions.

BNY Hamilton's portfolio managers are guided by the Bank of New
York's Investment Policy Committee, a senior team of investment
managers averaging 26 years of investment management experience.
This Committee follows and interprets economic and market data,
and recommends an asset allocation framework for the managers to
go by.  They also provide guidance relating to specific security
selections for each of the BNY Hamilton Funds.

The BNY Hamilton portfolio managers are supported by a Research
Team that works within these guidelines; combining fact-finding
with fundamental analysis in an effort to identify investments
that offer above average return potential.  In the next section,
we see how well the BNY Hamilton Funds have performed vs. index
and fund peer benchmarks.

Fund Performance

The highest-rated BNY Hamilton fund in Morningstar's system is
the recently merged BNY Hamilton Multi-Cap Equity Fund (BKMCX),
which receives a 5-star overall rating for risk-adjusted return
performance in the large-blend category.  According to the fund
tracker, the Multi-Cap Equity Fund sub-advised by Gannet Welsh &
Kotler has produced above average returns overall compared with
other large-blends, with a relatively low risk level.

For the trailing 5-year period through March 25, 2003, the fund
had a negative average annual return of 2.7%, beating the broad
S&P 500 index by an average of 0.5% a year over the time period.
That was good enough to rank the fund in the 29th percentile of
the large-blend category for 5-year performance.  Note, however,
that the fund's relative performance has trailed off since 2001,
so new investors may want to proceed with caution here.

The only other BNY Hamilton fund with a better than average star
rating is the BNY Hamilton Small Cap Growth Fund (BNSVX), which
sports a 4-star overall performance rating in the mid-cap growth
fund category.  So while the fund purchases small-growth stocks,
its average style over the past three years is closer to that of
mid-cap growth funds.  Compared with mid-growth style funds, the
fund has produced above average returns overall, with an average
relative risk level.

The BNY Hamilton Small Cap Growth Fund had a positive return of
6.0% on an annualized basis through March 25, 2003, beating the
S&P 500 index by an average of 9.2% a year over the same period.
That performance was strong enough to land in the top 5% of the
Morningstar mid-growth category for 5-year performance.  Return
performance here has been a little more consistent than the BNY
Multi Cap Equity Fund.  Long-term, risk-tolerant investors that
seek the higher return potential of mid/small-cap growth stocks
have a good choice here.

The BNY Equity Income Fund (BNEIX) has produced average returns
with below average risk relative to other large-value funds per
Morningstar, for a 3-star overall performance rating.  Over the
trailing 5-year period as of March 25, 2003, the fund generated
an annual average loss of 2.7%, beating the S&P 500 index by an
average 0.5%.  So, its performance over the past five years has
been similar to that of the BNY Multi Cap Equity Fund strategy.

Over the past year, its relative performance has improved, with
the fund ranking in the top quintile for 1-year performance and
ranking in the top 5% of the large-value group based on its YTD
2003 performance.  Investors desiring to invest in established,
large-cap companies such as Johnson & Johnson, Exxon Mobil, The
3M Company and MetLife may want to consider this conservatively
managed equity fund for a portion of their long-term portfolio.

BNY Hamilton's fixed income performance has been competitive in
relation to similar funds.  The Intermediate Government Fund is
rated 3 stars by Morningstar, but note that Morningstar has the
fund in its long-term government bond fund category rather than
in the intermediate-government group.  Compared with other long-
term government bond funds, the fund has produced average total
returns over time, with "low" risk.  It would be interesting to
see how the fund would rate versus intermediate-term government
funds.

Over the past five years, the Intermediate Government Fund had a
5.8% average annual total return, lagging the LB Aggregate index
by an average of 1.5% a year and the Lehman Long-Term Government
index by an average of 3.3%.  So, this fund could have done much
better over the long term.  Over the past year, with the wind of
declining interest rates propelling it, the fund produced a 10.8%
total return for investors.  Still, its long-term record deserves
caution.

Conclusion

Characteristic of all the BNY Hamilton funds are their focus on
risk management.  In all of the funds we looked at, risk levels
were comparable or better than similar funds, with the possible
exception of the BNY Hamilton Intermediate Government Fund that
over the past three years lands in the long-government category.
Its risk level may be higher than other intermediate-term funds,
which invest in government securities due to its long-term bond
maturity structure.

Long-term investors looking to add some octane to their equity
portfolios may want to consider the BNY Small Cap Growth Fund,
which invests in emerging growth companies with high risk-reward
potential.  Conservative stock investors may prefer BNY Hamilton
Equity Income Fund, which seeks growth of capital with a higher
yield than that of the S&P 500 index.

For more information or to download a prospectus, log on the BNY
Hamilton Funds website at www.bnyhamiltonfunds.com.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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

Consolidation
by Mark Phillips
mphillips@OptionInvestor.com

Following the explosive moves in the broad market over the past
couple weeks, a bit of consolidation was to be expected, and that
seems to be what we're seeing over the past couple days.  War
news is still the dominant driver in the market, but that should
start to fade a bit as we head into the April earnings cycle.  It
remains my view that investors looking for good news about
economic growth, increased business spending an improvement on
the corporate earnings front are being set up for another
disappointment.

As we've discussed recently, the market is in the process of
correcting its latest extreme oversold reading, and the clearest
picture of that shift can be seen in the bullish percent
readings, which have all improved dramatically in the past two
weeks.  The consolidation we're seeing over the past couple days
though, is just a part of a much larger consolidation pattern
that likely will still take some time to work through.  I
certainly don't have any special knowledge about how this
consolidation will resolve itself, but it will certainly be
exciting when the pattern breaks.

We've been talking at great length in recent months about the
interesting (and somewhat anomalous) behavior of the VIX.  We've
been watching that descending trendline connecting the highs from
last July and October, noting that the VIX just can't seem to
push through that trendline (except for a one-day wonder on March
12th), despite the persistent market volatility.  On a micro
scale, the most interesting feature of the VIX is displayed on
days like today, where the market falls, yet so does the VIX.
Put in layman's terms, this behavior seems to indicate that based
on action in the options market, fear of the downside is
continuing to wane.

While writing my LEAPS commentary over the weekend, I noted that
there appears to be another trendline in play on the VIX, which
started with the lows last March.  Taken together, these two
trendlines show a huge consolidation wedge in the VIX, which must
resolve itself before the end of May.

Weekly Chart of the CBOE Market Volatility Index (VIX.X)




See how this huge wedge comes to a point by the end of May?  One
way or the other, the VIX is going to need to break out of this
pattern by that time.  Will it just crawl past one of those
trendlines, or will it be an explosive move?  Obviously I don't
know the answer, but I'm expecting a big move.  The big unknown
is which way it will break.  As you might guess, my expectation
is for a break to the upside, based on my bearish outlook for the
broad markets through at least the middle of the year.

One other aspect of the VIX that Linda Piazza and I have been
noticing is the extremely high (relative to historical norms)
level of the 200-dma of the VIX, which is now at an all-time high
of 35.77.  Since I used a weekly chart above, I've approximated
the 200-dma by using a 40-week moving average, which currently
sits at 35.61.  A couple months ago, I looked back through the
long-term VIX chart and found that at no time have we seen the
VIX able to move more than 17% below its 200-dma.  Extrapolating
that out to the future, with the 200-dma hovering just below 36,
I recently postulated that the new "floor" for the VIX is near
29.50.  Using a value for the 200-dma of 35.77 and multiplying by
83% (a 17% drop below the 200-dma) gives a value of 29.69.  What
I find interesting here is that a quick look at that lower
trendline shows that the VIX should find support in the 29.00-
29.25 area.  Not exactly the same number, but if we push that
test out to the middle of April, that trendline will be right at
the 29.50 level.  If nothing else, it certainly bears watching
the pattern.

In my mind, the whole picture of consolidation became that much
clearer on Monday, when I read Linda's Index Wrap, "Making
Predictions".  In her response to a readers request for a
prediction of where the OEX was headed, Linda drew some
interesting trendlines that deviated just slightly from what I
had on my charts at the time.  You see, I had noticed that
Friday's rally had driven the OEX through its long-term
(connecting the highs from August 2001 and March 2002) descending
trendline and was a bit surprised that it had broken so easily.
But Linda pointed out that on long-term charts, it is sometimes
more effective to use a log chart.  When I changed my scale to
'log' I noticed that the upper trendline I had drawn popped up
significantly to about $473.  That combined with the trendline
from the July lows shows a similar consolidation wedge to what we
see on the VIX chart.

Daily Chart of the S&P 100 (OEX.X)




The way I see it, investors think the market has discounted the
worst possible scenario for the economy.  In fact, they've
demonstrated that belief on 3 separate occasions in the past year
- July, October and then again on March 12th.  This is just the
latest recovery from the bottom of what is now becoming a rather
mature consolidation pattern.  I don't think the worst has been
factored in yet, but the real verdict will come from the market,
not from my assertions.  If my expectations are to be met, then
sometime between now and early June, the OEX should break down
below its ascending trendline on a closing basis, while at the
same time, the VIX explodes through its descending trendline.  So
how will I know if I'm wrong?  I'll have my first indication of
that development with an OEX rally through its descending
trendline (currently just above $470), which will likely be
accompanied by the VIX falling below 29.  But for real
confirmation of a bullish resolution to this pattern, we'll need
to see the OEX rally through the $490 level, which would
represent a breakout over both the August and December highs of
last year.

There's still a fair amount of time left in this consolidation
pattern, but hopefully this analysis can provide another tool for
traders to use when trying to evaluate the longer-term direction
of the market, planning their trades accordingly.

Questions and comments are always welcome.

Mark


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

Home in the Range

We remained range bound for most of the day, with light volume and
a small floor to ceiling measurement in one of the more boring
sessions in recent weeks.

To read the rest of the Swing Trader Game Plan Click here:
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The Option Investor Newsletter                Wednesday 03-26-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

To view this email newsletter in HTML format with embedded
charts and graphs, click here:

In Section Two:

Stop Loss Updates: BRL
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - BVF
Big Cap Covered Calls & Naked Puts: Fear And Trepidation In The
Equity Markets

Updated on the site tonight:
Market Posture: Running in Place
Market Watch: Holding Recent Gains


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

BRL
Adjust up from $51.75 to $52.90


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

None


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

None


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

BVF – Biovail Corporation $40.30 (+1.24 last week)

Company Summary:
Biovail Corporation is a full-service pharmaceutical company that
applies its proprietary drug delivery technologies in developing
"oral controlled-release" products throughout North America.  The
company applies its proprietary drug delivery technologies to
successful drug compounds that are free of patent protection to
develop both branded and generic oral controlled-release
products.  BVF has applied its technologies to develop 18
products to date and currently has 16 others under development.

Why We Like It:
After a tenuous breakout over the $40 level early last week, our
BVF play needed to gather its strength for a sustained move
through that level by consolidating above the $39 support level
(prior resistance).  The bulls needed the help of a strongly
positive broad market to get the job done, but by midday on
Friday, BCR had climbed back over that $40 level and this time
it closed there.  Can it keep going?  It certainly looks that
way, with only mild resistance between here and the bottom of
the late April gap at $43.66.  We've been targeting new entries
near the bottom of the recent consolidation range and another
pullback into the $39.00-39.50 area may be the last chance to
get on board before this train leaves the station.  Should BVF
push higher out of the gate on Monday, momentum traders can
consider entries on a push above $40.75.  Friday's gains in the
broad market seem to have factored in the belief that the Iraq
war will end this weekend, and if it does, we could get a
powerful follow-through rally both in the broad market, as well
as our BVF play.  The 5-week ascending trendline has now risen
to $38.30, and that trendline should hold on any significant
pullback.  So let's raise the stop to $38 this weekend.

Why This Is Our Play of the Day:
BVF has been sitting on our list for a while, but it appears we
are finally seeing the strength we got a snapshot of when we
first added it. We had been looking for a move over $40 after the
bounce from support and not only did we get that move, but
today's action appears as though the stock may be there to stay.
After breaking to a new 10-month high, it bucked the broader
market trend today, adding to recent gains while the Biotech
Index (BTK) and Pharmaceutical Index (DRG) both finished in the
red.  Maybe more important was the pullback that followed the
broad market reaction to a rumor that the terror alert was being
raised to red.  That rumor proved untrue and the broad markets
recovered.  On the pullback, BVF found support above $40 for the
first time, reaching a low of $40.16, before heading higher and
challenging $41 again.  The high of the day was $41.00 and
although we like entries on the support at $40, more conservative
traders can wait for a trade of $41.25 to make sure that high of
the day doesn't act as resistance, since it came at a round
number.

BUY CALL APR-40*BVF-DH OI=6800 at $2.10 SL=1.00
BUY CALL APR-45 BVF-DI OI= 725 at $0.40 SL=0.00
BUY CALL JUL-40 BVF-GH OI=1696 at $4.30 SL=2.15
BUY CALL JUL-45 BVF-GI OI= 889 at $2.00 SL=1.00

Average Daily Volume = 1.05 mln



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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
*********************************************

Fear And Trepidation In The Equity Markets
By Ray Cummins

Stocks edged lower Wednesday on concerns of a prolonged conflict
in Iraq and worries about the weak outlook for the U.S. economy.

The Dow Jones Industrials Average sank 50 points to 8,229 amid
declines in industry bellwethers such as Honeywell (NYSE:HON),
Alcoa (NYSE:AA), and Boeing (NYSE:BA).  The NASDAQ fell 3 points
to 1,387 despite gains in Internet, chip-equipment and software
shares.  The S&P 500 Index slid 5 points to 869 as housing, drug,
consumer goods and paper-related stocks led the broader market
lower while retail, utility, oil service, oil, defense, biotech,
airline, and gold issues saw limited buying pressure.  Breadth
was negative as decliners paced advancers by a 9 to 7 ratio on
both the NYSE and the technology exchange.  Overall volume was
relatively light, with 1.39 billion shares changing hands on the
Big Board and 1.29 billion shares moving on the NASDAQ.  In the
government bond market, prices of benchmark 10-year Treasuries
rose 1/32, yielding 3.94%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 3/25/03

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

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of our subscribers, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The editor of this section does not take actual positions in any
published plays and the summary comments are simply a service to
help new traders understand when positions might be opened and
closed.  In most cases, actions taken based on the commentary
would be far too late to be effective, thus it is not intended
as a substitute for personal trade management nor does it in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

The Maximum Yield (listed in the summary and with "naked" option
selling plays) is the greatest possible profit available in the
position.  This amount, expressed as a percentage, is based on
the initial margin requirement as determined by the Board of
Governors of the Federal Reserve, the U.S. options markets and
other self-regulatory organizations.  Although increased margin
requirements may be imposed either generally or in individual
cases by various brokerage firms, our calculations use the widely
accepted margin formulas from the Chicago Board Options Exchange.
The "Simple Yield" is based on the cost of the underlying issue
(in the event of assignment), including the premium from the sold
option, thus it reflects the maximum potential loss in the trade.


Naked Puts
**********

Stock  Strike Strike  Cost Current   Gain    Max   Simple
Symbol  Month  Price Basis  Price   (Loss)  Yield  Yield

CELG     APR    23   21.25  26.25   $1.25   8.68%  5.88%
ERES     APR    20   19.20  25.76   $0.80   8.04%  4.17%
EXPE     APR    40   39.50  52.71   $0.50   4.15%  1.27%
GENZ     APR    30   29.60  35.84   $0.40   4.69%  1.35%
KLAC     APR    33   31.95  38.17   $0.55   5.84%  1.72%
MSFT     APR    24   23.35  25.49   $0.40   4.85%  1.71%


Naked Calls
***********

Stock  Strike Strike Cost  Current   Gain    Max   Simple
Symbol Month  Price  Basis  Price   (Loss)  Yield  Yield

COF      APR    33   33.05  30.33   $0.55   5.56%  1.66%
MERQ     APR    35   35.80  32.45   $0.80   7.15%  2.23%
PHM      APR    50   51.10  51.73  ($0.63)  0.00%  2.15% *
IGEN     APR    45   45.55  36.82   $0.55   7.71%  1.21%
MCHP     APR    25   25.40  22.50   $0.40   7.37%  1.57%

Capital One (NYSE:COF) and Mercury Interactive (NASDAQ:MERQ)
remain on the "early-exit" watch-list.  Conservative traders
should have closed the position in Pulte Homes (NYSE:PHM) to
limit potential losses.


Put-Credit Spreads
******************

Symbol  Pick   Last   Month L/P S/P Credit  C/B    G/L  Status

AMGN    55.33  58.46   APR   48  50  0.30  49.70  $0.30  Open
NKE     46.48  52.89   APR   40  43  0.30  42.20  $0.30  Open
ADBE    33.02  31.67   APR   25  30  0.50  29.50  $0.50  Open
CMCSA   29.91  29.31   APR   25  28  0.30  27.20  $0.30  Open
FRX     53.10  54.23   APR   45  50  0.60  49.40  $0.60  Open
LXK     65.89  64.63   APR   55  60  0.50  59.50  $0.50  Open
SLM     110.21 112.20  APR   95  100 0.45  99.55  $0.45  Open


Call-Credit Spreads
*******************

Symbol  Pick   Last  Month L/C S/C Credit  C/B    G/L   Status

CTX     50.03  55.28  APR  60  55   0.60  55.60  $0.32   Open
LEN     49.40  54.70  APR  60  55   0.55  55.55  $0.55   Open
LEH     53.42  59.35  APR  65  60   0.55  60.55  $0.55   Open
BHI     30.13  29.83  APR  35  32   0.25  32.75  $0.25   Open
INTU    50.44  38.89  APR  60  55   0.55  55.55  $0.55   Open
OMC     53.96  56.72  APR  65  60   0.50  60.50  $0.50   Open

Positions in Centex (NYSE:CTX), Lennar (NYSE:LEN), and Lehman
Brothers (NYSE:LEH) are on the "early-exit" watch-list.


Synthetic Positions
*******************

Stock   Pick   Last   Expir.  Long  Short  Initial  Max.    Play
Symbol  Price  Price  Month   Call   Put   Credit   Value  Status

GGP     54.02  54.62   APR     55    50     0.00    0.30    Open


Calendar Spreads
****************

No Open Positions


Credit Strangles
****************

No Open Positions


Questions & comments on spreads/combos to Contact Support
**************

NEW POSITIONS

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.  The positions with "*" will be
included in the weekly summary.  Those with "TS" (Target-Shoot)
are below our minimum monthly return, but may offer a favorable
entry price with a limit order, due to the daily volatility of
the underlying issue.

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

BULLISH PLAYS - NAKED PUTS

All of these issues have robust option premiums and relatively
favorable technical indications.  However, current news and market
sentiment will have an effect on these stocks, so review each play
thoroughly and make your own decision about its future outcome.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered puts entails considerable financial risk,
far more than the initial margin or collateral required to open
a position.  The maximum financial obligation for the sale of a
naked put is the strike price (of the underlying stock) that is
sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of puts should have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  In addition, there is one very important rule when using
this strategy: Don't sell puts on stocks that you don't want to
own!  Why?  Because stocks occasionally experience catastrophic
declines, exponentially increasing the margin maintenance and
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock's price falls.
Many professional traders suggest closing the position when the
underlying share value moves below the sold strike, or using a
"buy-to-close" stop order at a price that is no more than twice
the original premium received from the sold option.

***************
APPX - American Pharmaceutical  $23.19  *** Rally Mode! ***

American Pharmaceutical Partners (NASDAQ:APPX) is a specialty
pharmaceutical company that develops, manufactures and markets
injectable pharmaceutical products.  The company produces over
100 generic injectable pharmaceutical products in more than 300
dosages and formulations.  Its primary focus is in the oncology,
anti-infective and critical care markets.  The firm manufactures
products in all of the three basic forms in which injectable
products are sold: liquid, powder and lyophilized (freeze-dried).

APPX - American Pharmaceutical  $23.19

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 17.5  AQO PW      727   0.20  17.30   5.5%   1.2% TS
SELL PUT  APR 20    AQO PD    1,123   0.55  19.45  11.0%   2.8% *
SELL PUT  APR 22.5  AQO PX      580   1.40  21.10  18.5%   6.6%


**************
GENZ - Genzyme General  $36.00  *** Bullish Biotech! ***

Genzyme General Division (NASDAQ:GENZ) is a division of Genzyme
Corporation, a biotechnology and human healthcare company that
develops products and provides services for unmet medical needs.
Genzyme General develops and markets therapeutic products and
diagnostic products and services with an emphasis on genetic
disorders and other chronic debilitating diseases with defined
patient populations.  The company is organized into two segments,
Therapeutics, which focuses on developing and marketing products
for genetic diseases and other chronic debilitating diseases,
including a family of diseases known as lysosomal storage
disorders, and specialty therapeutics, and Diagnostic Products,
which develops, markets and distributes in vitro diagnostic
products.  The company also operates a wholly owned subsidiary,
GelTex Pharmaceuticals.

GENZ - Genzyme General  $36.00

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 30    GZQ PF    2,840   0.30  29.70   4.6%   1.0% *
SELL PUT  APR 32.5  GZQ PP      571   0.60  31.90   6.9%   1.9%
SELL PUT  APR 35    GZQ PG      836   1.25  33.75  11.3%   3.7%


**************
KLAC - KLA Tencor  $38.35  *** Chip-Equipment Leader! ***

KLA-Tencor (NASDAQ:KLAC) is a supplier of process control and
yield management solutions for the semiconductor and related
microelectronics industries.  The company's large portfolio
of products, software, analysis, services and expertise is
designed to help integrated circuit manufacturers manage yield
throughout the entire wafer fabrication process, from research
and development to final mass production yield analysis.  The
company offers a broad spectrum of products and services that
are used by every major semiconductor manufacturer in the world.
These customers turn to the company for in-line wafer defect
monitoring; reticle and photomask defect inspection; CD SEM
metrology; wafer overlay; film and surface measurement; and
overall yield and fab-wide data analysis.

KLAC - KLA Tencor  $38.35

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 32.5  KCQ PZ    4,269   0.40  32.10   5.3%   1.2% *
SELL PUT  APR 35    KCQ PG   10,691   0.85  34.15   8.8%   2.5%
SELL PUT  APR 37.5  KCQ PU    7,436   1.45  36.05  12.0%   4.0%


**************
NVLS - Novellus Systems  $30.12  *** Semiconductor Sector ***

Novellus Systems (NASDAQ:NVLS) manufactures, sells and services
semiconductor processing equipment.  The company's products are
comprised primarily of advanced systems used to deposit thin
conductive and insulating films on semiconductor devices, as well
as equipment for preparing the device surface prior to these
deposition processes.  Novellus is a supplier of high productivity
deposition and surface preparation systems used in the fabrication
of integrated circuits.  Chemical Vapor Deposition systems employ
a chemical plasma to deposit all of the dielectric (insulating)
layers and certain of the metal (conductive) layers on the surface
of a semiconductor wafer.  Physical Vapor Deposition systems are
used to deposit conductive metal layers by sputtering metallic
atoms from the surface of a target source via high DC power.
Electrofill systems are used for depositing copper conductive
layers in a dual damascene design architecture using an aqueous
solution.

NVLS - Novellus Systems  $30.12

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 25    NLQ PE   10,410   0.35  24.65   6.4%   1.4% *
SELL PUT  APR 27.5  NLQ PY    4,364   0.85  26.65  10.9%   3.2%
SELL PUT  APR 30    NLQ PF    2,825   1.80  28.20  17.3%   6.4%


**************
ROOM - Hotels.com  $60.74  *** Merger/Buy-Out Coming? ***

Hotels.com (NASDAQ:ROOM) is a provider of discount hotel rooms
and other lodging accommodations, allowing customers to select
and book hotel rooms in major cities through the firm's Websites
and its toll-free call centers.  The firm contracts with hotels
in advance for volume purchases and guaranteed availability of
hotel rooms and vacation rentals at wholesale prices and sells
these rooms to consumers, often at discounts to published rates.
In addition, its relationships often allow Hotels.com to offer
its customers hotel accommodation alternatives for otherwise
unavailable dates.  The company has room supply agreements with
over 4,500 lodging properties in 178 major markets in North
America, the Caribbean, Western Europe and Asia.

ROOM - Hotels.com  $60.74

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 50    URD PJ    1,746   0.90  49.10   8.2%   1.8% *
SELL PUT  APR 55    URD PK    1,961   1.85  53.15  12.0%   3.5%
SELL PUT  APR 60    URD PL      989   3.60  56.40  17.5%   6.4%


**************
YHOO - Yahoo!  $24.76  *** New 2-Year High! ***

Yahoo! (NASDAQ:YHOO) is a global Internet business and consumer
services company that offers a comprehensive branded network of
properties and services to more than 200 million individuals
worldwide.  The company offers an online navigational guide to the
Internet via its www.yahoo.com Website, which is a guide in terms
of traffic, advertising and household and business user reach.
Through Yahoo! Enterprise Solutions, the firm also provides many
business services designed to enhance the productivity and Web
presence of its clients.  Yahoo! has offices in the United States,
Europe, Asia, Latin America, Australia and Canada.

YHOO - Yahoo!  $24.76

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  APR 20    YHZ PD   23,151   0.20  19.80   4.9%   1.0% TS
SELL PUT  APR 22.5  YHQ PX    3,180   0.60  21.90   9.6%   2.7% *
SELL PUT  MAY 22.5  YHQ QX      487   1.05  21.45   7.2%   4.9%


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

BULLISH PLAYS - CREDIT SPREADS

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

***************
BSTE - Biosite  $38.47  *** A Big Day! ***

A leader in the drive to advance diagnosis, Biosite (NASDAQ:BSTE)
is a unique research-based company dedicated to the discovery and
development of novel protein-based diagnostic tests that improve
a doctor's ability to diagnose debilitating and life-threatening
diseases.  The firm combines integrated discovery and diagnostics
businesses to access proteomics research, identify proteins with
high diagnostic utility, develop and commercialize products and
educate the medical community on new diagnostic approaches that
improve health care outcomes.  Biosite's "Triage" rapid diagnostic
tests are used in approximately 50 percent of U.S. hospitals and
in approximately 40 international markets.

BSTE - Biosite  $38.47

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-30.00  BQS-PF  OI=2066  A=$0.35
SELL PUT  APR-35.00  BQS-PG  OI=684   B=$0.70
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$34.60


**************
CFC - Countrywide Financial  $58.00  *** All-Time High! ***

Countrywide Financial (NYSE:CFC), formerly Countrywide Credit
Industries, is a holding company that originates, purchases,
sells and services mortgage loans through its major subsidiary,
Countrywide Home Loans.  The company's mortgages are principally
prime credit first-lien mortgage loans secured by single one- to
four-family residences (prime credit first mortgages).  The firm
also offers home equity loans and sub-prime credit loans.  CFC,
through its other wholly owned subsidiaries, offers products and
services that are largely complementary to its mortgage banking
business, including lender-placed mortgage insurance, insurance
brokerage, mortgage-backed securities brokerage and underwriting,
brokerage of bulk servicing transactions, loan processing and
servicing in foreign countries, and retail banking.  The company
conducts its business through four segments: Insurance Segment,
Capital Markets Segment, Global Segment and Banking Segment.  The
company's quarterly earnings are due 4/29/03.

CFC - Countrywide Financial  $58.00

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-50.00  CFC-PJ  OI=3069  A=$0.25
SELL PUT  APR-55.00  CFC-PK  OI=1167  B=$0.60
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$54.60


**************
ERTS - Electronic Arts  $59.56  *** On The Rebound! ***

Electronic Arts (NASDAQ:ERTS), headquartered in Redwood City,
California, is the world's leading interactive entertainment
software company.  The firm develops, publishes and distributes
software worldwide for the Internet, personal computers and
video game systems.  Electronic Arts markets its products under
four brand names: EA SPORTS, EA GAMES, EA SPORTS BIG and EA.COM.

ERTS - Electronic Arts  $59.56

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-50.00  EZQ-PJ  OI=1439  A=$0.30
SELL PUT  APR-55.00  EZQ-PK  OI=3027  B=$0.75
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$54.50


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

BEARISH PLAYS - NAKED CALLS

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is no
more than twice the original premium received from the sold option.

***************
BSX - Boston Scientific  $43.25  *** Sell-Off In Progress! ***

Boston Scientific (NYSE:BSX) is a global developer, manufacturer
and marketer of less-invasive medical devices.  The firm's unique
products are offered by two major business groups, Cardiovascular
and Endosurgery.  The Cardiovascular segment focuses on products
and technologies for use in the firm's interventional cardiology,
interventional radiology, peripheral vascular and neurovascular
procedures.  The Endosurgery organization focuses on products and
technologies for use in oncology, vascular surgery, endoscopy,
urology and gynecology procedures.

BSX - Boston Scientific  $43.25

PLAY (sell naked call):

Action     Month &  Option    Open   Last  Cost    Max.   Simple
Req'd      Strike   Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  APR 47.5 BSX DW   1,955   0.40  47.90   3.9%    0.8% TS
SELL CALL  APR 45   BSX DI   2,106   1.15  46.15   9.1%    2.5%


**************
IGEN - IGEN International  $35.26  *** Premium-Selling Only! ***

IGEN International develops and markets products that incorporate
its proprietary electrochemiluminescence (ORIGEN) technology,
which permits the detection and measurement of various biological
substances.  ORIGEN provides a combination of speed, sensitivity,
flexibility and throughput in a single technology platform.  The
product is incorporated into instrument systems and other related
consumable reagents, and IGEN also offers assay development and
services used to perform analytical testing.  Products based on
ORIGEN technology address the Life Sciences, Clinical Testing and
Industrial Testing worldwide markets.

IGEN - IGEN International  $35.26

PLAY (sell naked call):

Action     Month &  Option    Open   Last  Cost    Max.   Simple
Req'd      Strike   Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  APR 45   GQ DI    2,841   0.45  45.45   7.9%    1.0% *
SELL CALL  APR 40   GQ DH    2,986   1.30  41.30  16.1%    3.1%
SELL CALL  APR 35   GQ DG    3,121   3.00  38.00  22.8%    7.9%


**************
NE - Noble Corporation  $32.40  *** New Downtrend? ***

Noble Corporation (NYSE:NE) is a provider of diversified services
to the oil and gas industry.  The firm performs contract drilling
services with a fleet of 49 offshore drilling units located in
key markets worldwide.  Its fleet of floating deepwater units
consists of nine semisubmersibles and three dynamically positioned
drillships, seven of which are designed to operate in water depths
greater than 5,000 feet.  Its premium fleet of 34 independent leg,
cantilever jack-up rigs includes 21 units that operate in depths
of 300 feet and greater, four of which operate in depths of 360
feet and greater, and 11 units that operate in depths up to 250
feet.  Its fleet also includes three submersible drilling units.
Over 60% of the fleet is deployed in global markets, principally
the North Sea, Brazil, West Africa, the Middle East, India and
Mexico.  The firm also provides labor contract drilling services,
site and project management services, and engineering services.

NE - Noble Corporation  $32.40

PLAY (sell naked call):

Action     Month &  Option    Open   Last  Cost    Max.   Simple
Req'd      Strike   Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  APR 35   NE DG    1,362   0.55  35.55   6.7%    1.5% *
SELL CALL  APR 32.5 NE DZ      184   1.40  33.90  13.0%    4.1%


**************
VIA'B - Viacom Class B  $38.51  *** Downgrade = Sell-Off! ***

Viacom (NYSE:VIA), together with its subsidiaries, is a widely
diversified worldwide entertainment company.  The company owns
and operates advertiser-supported basic cable television program
services through MTV Networks and BET: Black Entertainment TV and
and premium subscription television program services through the
Showtime Network in the United States and internationally.  The
Television segment consists of the CBS and UPN television networks.
Infinity's operations are focused on "out-of-home" media with
operations in radio broadcasting.  The Entertainment segment's
principal businesses are Paramount Pictures, which produces and
distributes motion pictures.  The company operates in the home
video retail business, which includes both rental and sale of
videocassette and DVD products.  The company also publishes and
distributes consumer hardcover books.

VIA'B - Viacom Class B  $38.51

PLAY (sell naked call):

Action     Month &  Option    Open   Last  Cost    Max.   Simple
Req'd      Strike   Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  APR 42.5 VMB DV   1,990   0.35  42.85   3.9%    0.8% TS
SELL CALL  APR 40   VMB DH   1,993   1.05  41.05   9.3%    2.6%


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

BEARISH PLAYS - CREDIT SPREADS

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

**************
CCMP - Cabot Microelectronics  $44.61  *** Failed Rally? ***

Cabot Microelectronics (NASDAQ:CCMP) is a global supplier of high
performance polishing slurries used in the manufacture of advanced
integrated circuit (IC) devices, within a process called chemical
mechanical planarization (CMP).  CMP is a polishing process used
by IC device manufacturers to planarize or flatten many of the
multiple layers of material that are built upon silicon wafers
and necessary in the production of advanced ICs.  Planarization is
a polishing process that levels, smoothes, and removes the excess
material from the surfaces of these layers.  CMP slurries are
liquid formulations that facilitate and enhance this polishing
process and generally contain engineered abrasives and proprietary
chemicals.  CMP enables IC device manufacturers to produce smaller,
faster and more complex IC devices with fewer defects.

CCMP - Cabot Microelectronics  $44.61

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-55.00  UKR-DK  OI=1385  A=$0.30
SELL CALL  APR-50.00  UKR-DJ  OI=1858  B=$0.80
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$50.50


**************
DVN - Devon Energy  $47.70  *** Trading Range? ***

Devon Energy Corporation (NYSE:DVN) is an independent energy
firm engaged primarily in oil and gas exploration, development
and production; the acquisition of producing properties; the
transportation of oil, gas and natural gas liquids, and the
processing of natural gas.  The company operates oil and gas
properties in the United States, Canada and internationally.
Its North American properties are concentrated within five
geographic areas.  Operations in the United States are focused
in the Permian Basin, the mid-continent, the Rocky Mountains
and onshore and offshore Gulf Coast.  Canadian operations are
focused in the Western Canadian Sedimentary Basin in Alberta
and British Columbia.  Operations outside North America include
Azerbaijan, Brazil, China and West Africa.  Devon also has a
large marketing and midstream business.

DVN - Devon Energy  $47.70

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-55.00  DVN-DK  OI=1243  A=$0.15
SELL CALL  APR-50.00  DVN-DJ  OI=6118  B=$0.60
INITIAL NET-CREDIT TARGET=$0.45-$0.55
POTENTIAL PROFIT(max)=9% B/E=$50.45


**************
IP - International Paper  $35.63  *** Sector Slump! ***

International Paper (NYSE:IP) is a global forest products,
paper and packaging firm that is complemented by an extensive
distribution system, with primary markets and manufacturing
operations in the United States, Canada, Europe, the Pacific
Rim and South America.  The firm's businesses are separated
into six segments: Printing Papers, Industrial and Consumer
Packaging, Distribution, Forest Products, Carter Holt Harvey
and Specialty Businesses and Other.  The firm owns or manages
approximately nine million acres of forestlands in the United
States, mostly in the South, approximately 1.5 million acres
in Brazil and has, through licenses and management agreements,
harvesting rights on government-owned timberlands in Canada
and Russia.  The company's quarterly earnings are due 4/24/03.

IP - International Paper  $35.63

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-40.00  IP-DH  OI=7468  A=$0.15
SELL CALL  APR-37.50  IP-DU  OI=7095  B=$0.40
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$37.75


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

SEE DISCLAIMER - SECTION 1

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


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

Running in Place

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

Holding Recent Gains

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