Option Investor
Newsletter

Daily Newsletter, Tuesday, 04/01/2003

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                 Tuesday 04-01-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: April Fools Spotlight
Futures Markets: A Brake on the Break
Index Trader Wrap: (See Note)
Market Sentiment: Hide and Seek
Weekly Manager Microscope: Lipper Leaders in All Categories


Updated on the site tonight:
Swing Trader Game Plan: Reversal Signs


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-01-2003           High     Low     Volume Advance/Decline
DJIA     8069.86 + 77.73  8100.53  7979.69 1.73 bln   2193/1014
NASDAQ   1348.30 +  7.13  1356.37  1338.23 1.37 bln   1827/1321
S&P 100   435.00 +  5.87   436.88   429.54   Totals   4020/2335
S&P 500   858.48 + 10.30   861.28   847.85
W5000    8142.38 + 90.52  8163.77  8044.90
RUS 2000  368.69 +  4.15   368.69   363.73
DJ TRANS 2150.02 + 18.81  2154.31  2116.65
VIX        32.10 -  1.27    34.02    31.45
VXN        41.97 -  1.08    44.02    41.79
Total Volume 3,351M
Total UpVol  2,108M
Total DnVol  1,170M
52wk Highs  197
52wk Lows   153
TRIN       0.90
PUT/CALL   0.81
************************************************************

April Fools Spotlight

The spotlight is shifting from Iraq to Asia with the SARS virus
taking center stage. Saddam pulled a disappearing act on the
world again after Iraq said he would appear to speak to the
people and somebody else showed up instead. The economy increased
downward speed with very bad news from the ISM report. Despite
all this bad news the market rallied on all fronts. Welcome to
contrarian investing.

Dow Chart - daily



Dow Chart - 30 min



Nasdaq Chart - 30 min




One reader said it clearly in an email today. "Thursday will
have higher jobless claims followed by a terrible nonfarm
payroll report on Friday. Look for a +500 point rally on the
wonderfully bad news." That is how I feel today, battered and
bruised from fighting the trend. Obviously bad news continues
to be greeted with buyers with every possible excuse for the
market action. When Saddam was thought killed the market rallied
last week. When he was thought alive the market crashed again.
This week the potential for him to speak on live TV caused a
market bounce. When he did not show and the rumors started
again the market bounced again. Go figure.

The economic day started off terrible with Chain Store Sales
falling -1.4% to levels not seen since December. This was also
the largest weekly decline since Dec-7th. Sales were below plan
and traffic flow was weak. Not only are consumers cutting back
on durable goods and high ticket items it now appears they have
started cutting back on entertainment and restaurant spending.
Movies and restaurants reported up to 7% drops in sales due to
consumers staying home to watch the war and the SARS fears, as
well as the prior reasons of unemployment and high gas. BBY,
PIR, FD and others started the month guiding analysts lower
due to war worries and fear of crowds. The National Retail
Federation lowered their sales growth numbers to +3.8% for
the entire 2003 calendar year. This was a -2.0% drop from their
prior +5.8% estimate.

On a positive note the mass layoff numbers dropped to -85,000
for March from -138,000 in February. The drop in mass layoffs
was attributed to reservists leaving for Iraq and uncertainty
about the potential for a quick war from two weeks ago. With
the press setting everyone up to think we were going to walk
in and have everyone throw down their weapons, manufacturers
were cautious about letting trained personnel go. It will be
interesting to see how April layoffs fare if the war continues
through April. The lower layoffs is not an improvement in the
economy but just a news related lull.

Construction Spending fell -0.2% in February but this was
actually much better than expected at -0.7%. It was still the
first monthly decline in six months. Since construction lags
recovery this number could be weak for months to come. Private
construction rose +0.7% to rescue the headline number from
a serious fall. Without the private sector, buoyed by
multifamily units, it would have been a much different story.

The worst report for the day was the ISM report which showed a
drop to 46.2 compared to last months 50.5. This is the first
month of decline since October's 49.7. It is the largest monthly
decline since November 2001. A number below 50 shows a decline
in manufacturing and all three production related sub components
new orders, back orders and production are solidly in contraction.
Contrary to the Challenger Layoff report the ISM employment
number at 42.1 is indicating the pace of layoffs to be
accelerating. Nothing in the ISM cold be taken as a good sign
other than the very low inventory levels.

In the better than expected but still bad news column was Auto
Sales. Ford dropped -7.9%, GM -3.0% and DCX -3.0%. However, the
annualized numbers came in at 16.2 million units and much better
than the 15.7-15.9 million units expected. Sales were off but
not as bad as expected due to the war. GM took the offensive
today and went with a zero interest option for up to 60 months
on everything but Hummers. Even Corvettes, generally exempt
from sales incentives, were included. This is bad news for
Ford because they do not have the financial position to match
GM heads up for the remaining buyers. The pace for February
was 15.4 million units and the 16.2 for March was a significant
improvement. Analysts were reporting it was cheaper for car
makers to make the cars and sell them at cost than cut production
and layoff workers thereby hindering production in the future
if sales picked up. The problem will continue to be who is
going to buy them at higher prices in the future if everybody
buys them for cost or less now? They are killing their future
profits to keep the doors open now.

Jumping in front of the war worries is the fear of SARS, which
is spreading through Asian countries. The news was full of
pictures of an American Airlines plane quarantined at the San
Jose airport. The flight was from Hong Kong and according to
the pilots five people on board were experiencing symptoms of
the disease. Only three people were removed and taken by
ambulance to emergency rooms but the damage to the public
sentiment was already done. There are serious fears this disease
could spread globally faster without adequate controls. There
are numerous flight cancellations into Asian countries and
many companies are canceling travel to that area.

I am hearing from readers that all flights out of the afflicted
areas in Asia are full and flights in are being cancelled in
large numbers due to lack of passengers. Hong Kong is in almost
a panic state. Schools and apartments are being decontaminated
and shift workers are being told to stay home in some instances.
Motorola night shift was told to stay home today on fears that
some workers could already be infected. With many tech fabricators
in the Hong Kong, Taiwan area it is feared that the disease or
just the fear of the disease could impact delivery of components.

The SARS problem is a serious problem but not the end of the
world. According to the CDC only about 4% of patients die but
when talking about potential tens or hundreds of thousands of
patients it is very serious. Analysts are talking about huge
drops in GDP for Asian countries as meetings, shopping and
travel is cancelled. It is reported to be the type of virus
that can be passed or contracted from infected surfaces for
3-4 hours after those surfaces were touched. With it
passed by air or touch the potential is serious. Hopefully
the countries got control of the problem soon enough to
prevent a widespread outbreak but Asian markets are already
sick.

At 7:PM the Central Command announced the recovery of a
single US POW in Iraq and the futures rallied +11 points
before the actual news was even known. Just a rally on the
rumor of news after CentCom said they were going to make
a positive announcement at 4:AM in the morning. This shows
the volatile nature of the market. The immediate sell off
once the news leaked told us everyone was disappointed
it was not a Saddam obituary instead.

The market is very news oriented and is not trading on
traditional fundamentals. We get terrible economic news and
the market rises on war news. We have positive stock news
and some casualty report knocks us back -100 points. This
is not an investors market. It is not even a traders market.
The uncertainty is frustrating everyone. Next week we will
see earnings begin to flow in volume and there were many
warnings and general downgrades this morning as fears of
the current economic environment increase. Make no mistake,
despite the bad news the bulls are waiting on the sidelines
and ready to pounce on good news. The bears are scared and
are not applying as much force as in the past. It is clearly
a volatile market that may bleed points while waiting for
something important to happen but has explosive potential
if it does. The bounce today was nice for the bulls but it
was due after a four day losing streak.

The current down trend is still in place and the rally failed
right below the down trend line. The Dow resistance level is
at 8100 and the Nasdaq is at 1355. Neither of these levels
provides much room to run. Unexpected good news could of
course make this resistance history in a heartbeat but that
is where it exists tonight. I suggest traders maintain a
careful posture with an eye to the downside unless something
changes quickly. Of course that is about every 30 min lately!

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

A Brake on the Break
By Vlada Raicevic

Daily Settlement Numbers 4:15pm ET

> DOW
Last: 8069.86
Net: +77.73
High: 8100.53
Low:  7979.69

> YM 03M
Last: 8030
Net: +90
High: 8074
Low:  7949

> S&P 500
Last: 858.47
Net: +10.29
High: 861.28
Low:  847.85

> ES 03M
Last: 856.50
Net: +9.50
High: 860.50
Low:  843

> Nas 100
Last: 1022.63
Net: +3.97
High: 1031.51
Low:  1015.46

> NQ 03M
Last: 1019
Net: -32.50
High: 1048.50
Low:  1015

DAILY PIVOTS

> YM 03M
R2: 8146
R1: 8092
Pivot: 8021
S1: 7967
S2: 7896

> ES 03M
R2: 871.50
R1: 865
Pivot: 854
S1: 847.50
S2: 836.50

> NQ 03M
R2: 1060
R1: 1038
Pivot: 1027
S1: 1005
S2: 993

Futures gapped up this morning and sold off briefly, but not
enough to fill the gap.  At first it looked like traders were
cautious about the ISM numbers that were to be released, and
rightly so, as the numbers came in poor.  Yet, after some
volatility and indecision, strong buying came in and pushed the ES
to just under yesterdays highs, then rolled over and sold off to
pre-ISM lows.  Both the move up and the move down were like the
melt-up and meltdown yesterday: no pauses in buying then no pauses
in selling. This is just not how price acts normally, but that was
the undercurrent of the day: nothing happened like it should.
News came out that Saddam was going to speak on TV, and at first
futures were bought, then briefly sold off, then, when Saddam
didn't show, futures were bought again, breaking above yesterday's
high in a frenzy of optimism, then spent an hour and half selling
off very reluctantly in small increments, and a few larger bursts
down.  Just as stocks and indices started breaking support, huge
buying of contracts exploded the futures upward through descending
trendlines, but again sold off after 4 pm.

In looking at today's chart, I cannot, for the life of me,
understand any of it.  There was high optimism and hard selling.
There was low optimism, and slow-bleed selling.  There were
periods of high volume, and there were periods of incredibly low
volume.  It was not a day where you can put your finger on the
price action and come to any conclusions whatsoever.  What was the
mood of the market?  What prevailed?  What are we to think of
this?  Was the lack of bad news in the war a good thing?  Was
Saddam's no show a good thing?  How about yet another airline
going bankrupt (Canada Air), or an airplane from Tokyo being held
on the tarmac in San Jose, CA due to SARS fears.  According to the
World Health Organization, 182 new cases of SARS were reported
today.  This is much scarier than a wagonload of real or fake
Saddams.  No matter what your opinions on all these events may be,
the simple fact is that there are entities out there that can
press a button and purchase thousands of ES contracts before you
can yell "eek!", so it behooves us to either jump on these choppy,
sharp price swings, or stand aside and wait for a better trading
atmosphere.

The ES daily chart shows us nearly having an inside day, but the
highs exceeded yesterday's even though we closed below those
highs.  While we probed above the recent consolidation support
levels of 857+ we closed below that area, so the bearish tilt to
the market is still intact from a price point of view.  Indicators
are still bearish on the daily chart, but indicators show a pause
in their decline.

The ES 270 minute chart has paused its bearish slide by breaking
above the recent downtrend line on price, bringing Macd close to
crossing back to the upside, and has RSI breaking above its
downtrend line.  However, D- on ADX is still in an uptrend, and D+
did not move up, showing that although selling may have slowed,
not many buyers have stepped in.  Also, MACD and RSI are still
below the centerline, slow and fast Stochastic are below the
centerline and looking weak, and CCI is below its moving average,
and is not pointing up even though it is a very reactive
indicator.  Also note that even though price moved above the
downtrend line, it still was held back by the center of the short
term regression channel (blue line).

ES 270 Minute Chart:




The 270 minute all sessions chart shows how price broke above the
downtrend line but closed just below it.  The break above hit that
horizontal resistance area of 860 and pulled back.  By staying
inside that downtrend line, price could pull back and head for the
lower channel line.

ES 270 All Sessions Chart:




ES 60 minute chart is much less bearish than it has been lately.
You can see how price moved above the downtrend line and then used
it as support for the next 3 bars.  D- has fallen below the
uptrend of selling, but again, D+ shows that there was very little
buying interest as it points down.  Slow stochastic is pointing up
as is Macd, which broke the recent trendline line but is still
below the centerline.  This chart shows how the buying today
managed to get price and indicators away from the purely oversold
level it had reached.  At this point, a few more hours of buying
could change this chart bullish, or the buying today was enough to
offset the oversold conditions to a point where ES can now
continue selling for a new leg down.

ES 60 Minute Chart:




NQ daily chart is much more bearish than either the ES or YM.
Yesterday the price probed below the lower descending trendline
and today price action was very weak.  Slow Stochastic broke its
uptrend line, and Macd is ready to break double support: both its
ascending trendline and the centerline. Currently price is being
supported by the centerline of the short term regression channel
(blue line).

NQ Daily Chart:




NQ 270 minute chart shows how price is caught between resistance
at 1035 and support at the 1020 area.  The red line shows the
broken trendline, and the lower blue line shows the new trendline
drawn along yesterday's low point.

NQ 270 Minute Chart 1:




The same NQ chart with indicators shows slow stochastic continuing
to break lower below the centerline line, but fast stochastic is
getting to a point where it may need to bounce to offset the short
term oversold level, echoed by RSI attempting to break above the
downtrend line.  ADX shows both selling and buying tapering off,
but nothing really shows a turn is in the works just yet.

NQ 270 Minute Chart 2:




Fibonacci levels show that ES has reached the .500 retrace level
from the recent lows, and that if selling resumes, the next
retrace level is 829 for .618 retrace.

ES Fibonacci Retrace Chart:




NQ retrace chart shows the higher level of bearishness, as NQ went
deeper below the .500 retrace level, and has not really bounced
from that level, but has been flipping back and forth across it.
Next level for the retrace on NQ is 1006 area, which happens to
correlate with the lower regression channels shown on charts
above.

ES Fibonacci Retrace Chart:





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

Check the Site Later Tonight For Jeff’s Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_040103_1.asp


------------------------------------------------------------
VOTED one of "Best Online Brokers" (4 stars)--Barron's
  optionsXpress's "order-entry screens...go far beyond...
   other online broker sites"--Barron's
  8 different online tools for options pricing, strategy, and charting
  Access to options specialists via email, phone or live chat online
  Real-Time Buying Power, Account Balances or Cancels

Go to http://www.optionsxpress.com/marketing.asp?source=oetics22

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


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

Hide and Seek
by Steve Price

Where's Saddam?  That's what many traders were wondering when he
didn't show up for a television address scheduled this morning.
Speculation has run rampant that he was killed or severely
injured in the U.S.'s first attack on Baghdad and this morning's
no-show only heightened that speculation.   After one of Iraq's
government officials read a prepared statement in which he said
"Let's go do Jihad," the market ran higher, with the Dow taking
out February intraday rebound attempt highs at 8075, reaching a
high water mark of 8100.   We eventually pulled back, but still
ended the day 77 points higher.

We got the rally despite disappointing economic data on several
fronts. Most disappointing was the Institute for Supply
Management index that came in at a disappointing 46.2.  Anything
below 50 suggests contraction in the manufacturing sector, as it
represents that a manufacturing firms surveyed said conditions
were worsening or getting no better.  Expectations were for a
reading of 49.0, which already suggested a worsening economy, but
the actual reading showed us that things are even worse than
expected.  The ISM blamed the war for slowdowns in a number of
sectors, including industrial equipment, chemicals and
electronics. The new orders index fell to 46.2 from February's
reading of 52.3 and the production index sank to 46.3 from 55.4.
Both numbers were the lowest since October 2001, following the
9/11 attacks.

Construction spending also fell in March, dropping 0.2%.  That
was actually a little better than expectations for a 0.8% drop,
but still not a good sign. Spending on multi-unit dwellings held
up the residential sector, while single-family homes saw their
first decline since August 2002. Commercial building projects saw
the second straight monthly increase, but spending on offices and
industrial sites was weaker. One interesting portion of the
report showed that public construction outlays dropped 2.9% as
states and local governments had fewer tax revenues to spend. it
was the largest drop in a year.

Retailers are also feeling the pinch of an uncertain economic
outlook.  On Monday several retailers said sales were trending
below expectations and today The National Retail Federation cut
its retail sales growth forecast by 32% for the year to 3.8%
growth. That is the slowest growth rate in ten years.  The group
blamed the decrease on higher oil prices and the war in Iraq
cutting into disposable income and business spending.  Retailers
have blamed the slow sales at this time of the year, as compared
to last year, on Easter falling later in 2003.  Traders can watch
next month's figures to see if the drop is made up by more
positive comparisons to last April.

The run in equities tested some key levels on the point and
figure charts.  The Dow and SPX both reversed up into columns of
"X" with their trades of 8100 and 860.  The OEX also reversed up
on its 2.5-point chart at 435. One other key indicator that
helped "fuel" the rally was the drop in oil prices.  The May
Crude Oil contract (CL03K) dropped below $30 per barrel, where it
found support the past couple of sessions.

The point and figure reversals look promising for bulls, but we
are definitely still in a news-driven market. If Saddam Hussein
does show up in a live broadcast, we could give back today's
gains just as quickly as we rallied.


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

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8070

Moving Averages:
(Simple)

 10-dma: 8221
 50-dma: 7989
200-dma: 8391



S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  858

Moving Averages:
(Simple)

 10-dma:  869
 50-dma:  847
200-dma:  887



Nasdaq-100 ($NDX)

52-week High: 1573
52-week Low :  795
Current     : 1023

Moving Averages:
(Simple)

 10-dma: 1058
 50-dma: 1007
200-dma:  991



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

The Semiconductor Index (SOX):  The SOX rallied back slightly
from yesterday's drop, but was unable to crack the pivotal 300
level.  It made it over intraday, but sellers came back and drove
it to 299.17 by the close. if the rally in the broader markets is
going to reach higher, the SOX will need to make another run at
its 200-dma (309) to avoid acting as an anchor.  The SIA data
from Monday showed a decrease in sales of 3.3% for the sector in
February and lead to yesterday's plunge. The 50-dma of 291 will
be the next downside test if the market rally does not hold.

52-week High: 393
52-week Low : 214
Current:      299

Moving Averages:
(Simple)

 21-dma: 306
 50-dma: 291
 200-dma: 309

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


The VIX remains under 34% and over 30%.  Until we get a breakdown
or breakout, we are likely to remain in this range.  A breakdown
below OEX 425/Dow 7900 is likely to put us back into the 35-40%
range.  A move back above recent highs may send us toward a test
of 26%.

CBOE Market Volatility Index (VIX) = 32.10 -1.27
Nasdaq-100 Volatility Index  (VXN) = 41.97 -1.08

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.81        436,428       354,964
Equity Only    0.72        316,421       229,297
OEX            1.22         17,927        21,800
QQQ            1.67         20,524        34,255


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

Bullish Percent Data

           Current   Change   Status
NYSE          41.1    + 1     Bull Correction
NASDAQ-100    49.0    + 0     Bull Alert
Dow Indust.   40.0    + 0     Bull Alert
S&P 500       42.0    + 1     Bull Confirmed
S&P 100       43.0    + 0     Bear Alert

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  1.55
10-Day Arms Index  1.54
21-Day Arms Index  1.55
55-Day Arms Index  1.41


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       1942            886
NASDAQ     1775           1227

        New Highs      New Lows
NYSE        71               45
NASDAQ      81               49

        Volume (in millions)
NYSE       1,722
NASDAQ     1,376


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

Commitments Of Traders Report: 03/25/02

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 both sides of the position, but continued to
reduce the short side far enough to shift the net position from
short to long. Small traders also reduced both positions, but
reduced the net long position overall by 11,000 contracts.

Commercials   Long      Short      Net     % Of OI
03/04/03      426,053   472,492   (46,439)   (5.2%)
03/11/03      440,688   485,938   (45,250)   (4.9%)
03/18/03      483,224   490,582   ( 7,358)   (0.1%)
03/25/03      424,781   415,258     9,523     0.1%

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year:    9,523  -  3/25/03

Small Traders Long      Short      Net     % of OI
Small Traders Long      Short      Net     % of OI
03/04/03      164,759    98,636    66,123     25.1%
03/11/03      169,450   102,631    66,819     24.6%
03/18/03      184,907   153,400    31,507      9.3%
03/25/03      143,402   123,178    20,224      7.6%

Most bearish reading of the year:  20,224 - 3/25/03
Most bullish reading of the year: 114,510 - 3/26/02

NASDAQ-100

Commercials in the NDX also mirrored their S&P counterparts,
reducing overall positions and turning a net short to a net long.
Small traders took the opposite approach, changing their net
position from long to short, reducing the long side by nearly 4
times as much as the short side.

Commercials   Long      Short      Net     % of OI
03/04/03       39,934     52,978   (13,044) (14.0%)
03/11/03       43,641     56,020   (12,379) (12.4%)
03/18/03       58,877     64,302   ( 5,425) ( 4.4%)
03/25/03       44,403     36,436     7,967    9.9%

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
03/04/03       24,240     8,038    16,202    50.2%
03/11/03       27,196     9,674    17,522    47.5%
03/18/03       37,097    26,951    10,146    15.8%
03/25/03       10,313    20,080   ( 9,767)  (32.1%)

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 reduced long and short positions, leaning slightly to
the long side. Small traders also reduced but ended up with a
larger net short position.

Commercials   Long      Short      Net     % of OI
03/04/03       21,326    12,724    8,602      25.3%
03/11/03       21,726    14,370    7,356      20.4%
03/18/03       26,880    18,853    8,027      17.6%
03/25/03       19,752    10,212    9,540      31.8%

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
03/04/03        5,233     8,075    (2,842)   (21.4%)
03/11/03        5,549     7,727    (2,178)   (16.4%)
03/18/03        6,589     8,343    (1,754)   (11.7%)
03/25/03        5,076     7,721    (2,645)   (20.7%)

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


------------------------------------------------------------
WINNER of Forbes Best of the Web Award
  optionsXpress voted Favorite Options Site by Forbes
  Easy screens for spreads, collars, or covered calls
  Free streaming quotes
  Real-time option chains, charts + calculators

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

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


******************
WEEKLY FUND SCREEN
******************

Lipper Leaders in All Categories

These four mutual funds are Lipper Leaders in all five areas that
Lipper grades mutual funds on relative to similar funds: 1) total
return, 2) consistent return, 3) preservation of capital, 4) tax-
efficiency and 5) expense.  This week, we put these highly graded
funds to the test to see how well they have performed relative to
similar funds using updated fund information from Morningstar and
other sources.

Accordingly, this week's screen is more of a validation process,
if you will, than a start-from-scratch screen process.  And, if
we don't like what we see in one of these funds, we will suggest
one of its peers that we feel offers greater risk-adjusted total
return potential over the long term.  As always, we'll try to be
"fair and balanced" in our analysis and writing.

The fact that all four of these funds received Lipper's highest
grade in each of five target goal areas speaks for itself.  But,
since you can't judge a book by its cover, some due diligence is
required.  In our case, we simply loaded the four ticker symbols
into Morningstar's Fund Compare tool online (www.morningstar.com)
and viewed the screen results in different ways as we'll explore
further in the next section.

Screening/Evaluation Process

Since we haven't divulged the four funds yet, below are the four
mutual funds that receive Lipper's highest "1" score in all five
areas measured: total return, consistent return, preservation of
capital, tax-efficiency, and expense.


 Lipper Leaders: All Categories
 Dupree NC Tax-Free Short-Intermediate (NTSMX)
 USAA Tax-Exempt Short-Term (USSTX)
 EquiTrust Value Growth (FABUX)
 Old Westbury Capital Opportunity (OWCOX)


The Dupree and USAA funds are municipal-debt securities funds and
are included in the fixed income fund group.  Lipper puts taxable
and tax-exempt (municipal) bond funds together, while Morningstar
separates taxable bond funds and tax-exempt funds for star-rating
purposes.  The Dupree fund is also state specific, so it won't be
suitable for people outside North Carolina.  Accordingly, we will
not pursue the Dupree fund any further.  If you're a conservative
income investor, and seek income exempt from Federal tax, you may
want to look at the USAA Tax-Exempt Short-Term Fund.

The other two funds on the list - the EquiTrust and Old Westbury
funds - are both equity funds with "multi-cap" investment styles.
We tend to like funds that maintain large-cap biases overall, or
have multi-cap or all-cap structures to provide broader exposure
to the U.S. stock market.  Unless they really emphasize small or
mid capitalization stocks, most "multi-cap" equity funds land in
the Morningstar large-cap style box.  Some fall into the mid-cap
style box, however.

Taking a further look at the EquiTrust Value Growth Fund, we see
that Lipper classifies it as a multi-cap value fund, while it is
categorized as a mid-cap value fund in Morningstar's system.  As
of January 31, this fund had an average market capitalization of
$5.9 billion per Morningstar.  About a third of assets were held
in mid-cap stocks, with another fourth of assets invested in the
small-cap sector.

In addition to investing across all "capital" sectors, EquiTrust
invests at least 65% of assets in equity securities of companies,
which have potential to earn a high return on capital and/or are
undervalued by the market.  Note that as of January 31, the fund
had nearly 20% of assets invested in cash, bonds and other types
of securities, so at times it may be not be fully invested.  The
cash and fixed income holdings add income and stability but they
could cause the fund to lag other stock funds in a rising market.

The Old Westbury Capital Opportunity Fund shows up in the Lipper
classification system as a multi-cap core equity fund.  But, the
ticker symbol OWCOX doesn't yield a report in Morningstar's fund
database.  Instead, you have to plug in the ticker symbol "OWGOX"
in Morningstar's system to get a fund report for the Old Westbury
Capital Opportunities Fund.  The OWGOX symbol is for the fund's A
shares, which impose a front-end load charge of 4.50%.  You might
find that another share class works better for you, but we'll use
the OWGOX symbol for our purposes herein.

Bessemer Investment Management is the investment advisor for the
Old Westbury Capital Opportunities Fund.  They pursue long-term
capital appreciation by investing in a diversified portfolio of
large, mid and small-sized domestic companies.  In the security
selection process, the advisor uses a growth style of investing,
emphasizing stocks with high earnings growth potential.  Per the
latest Morningstar report, this fund migrated into the large-cap
growth style box in 2002.  However, it is still categorized as a
large-cap blend fund for rating purposes in Morningstar's system.

As of January 31, the Old Westbury Capital Opportunities Fund had
an average market capitalization of $15.1 billion, with about 70%
of stock assets invested in giant- and large-sized companies and
the remainder invested in mid-cap stocks.  So, if you favor value
stocks and the mid-cap sector, you may lean towards the EquiTrust
Value Growth Fund.  If you favor a growth style of investing with
emphasis on established, large- and mid-sized companies, then you
may want to pursue the Old Westbury Capital Opportunities.  Since
their styles are different, they are complementary to each other.

Return and Risk

Since the portfolio managers on both stock funds started in 2000,
we turn our attention to relative return and risk performance for
the trailing 3-year period through March 31, 2003 using data from
Morningstar.  Below are the two stock funds' returns and rankings
within their respective Morningstar category:


 3-Year Average Annual Returns/Rankings:
 +1.4%  EquiTrust Value Growth (FABUX) 37th Percentile
 -3.9%  Old Westbury Capital Opport (CWGOX) 3rd Percentile

 1-Year Annual Returns/Rankings:
 -18.5%  EquiTrust Value Growth (FABUX) 32nd Percentile
 -20.8%  Old Westbury Capital Opport (CWGOX) 13th Percentile


You can see from the numbers above that EquiTrust's Value Growth
Fund has performed well relative to its mid-value peers, ranking
in the top one-third of the category over the past year and close
to the 33% for trailing 3-year returns.  Combine the fund's above
average return performance with a below average level of risk and
you get a 3-star overall rating from Morningstar that maybe could
be a borderline 4-star rated fund in our opinion.  The fund's low
beta of 0.39 suggests it can serve a supporting role in someone's
long-term financial plan, providing exposure beyond large-company
stocks.





The Old Westbury Capital Opportunities Fund has done an excellent
job of preserving capital versus its "pro-growth" fund peers over
the past three years.  This fund is down just 20.8% over the past
year compared with 26.7% for the average large-growth fund in the
Morningstar system.  For the trailing 3-year period, Old Westbury
has held its annualized loss to just 3.9%, ranking in the highest
decile (actually 3rd percentile) of the large-cap growth category
per Morningstar.  The average large and mid-cap growth funds lost
more than 23 percent a year on an annualized basis over this same
3-year period.

Relative to its large-cap growth peers, the Old Westbury strategy
had produced top investment results with a low level of risk, for
a Morningstar 5-year risk-adjusted performance rating (its 3-year
rating).  A 20% bond stake has provided income and stability that
has helped in recent years.  The fund also appears to eschew tech
stocks, which could help explain why it has been less volatile in
the last three years compared to its large-cap growth fund peers.

Conclusion

While the Lipper Leaders information is useful, we have found the
Lipper rankings to be very general.  Accordingly, it is important
to follow up your Lipper Leader screen findings by seeing how the
other fund trackers, such as Morningstar, rate the fund.  We used
updated performance information on the two equity funds evaluated
to see if they are worthy of further consideration.  Both of them
have held up well in the market downturn since 2000 when compared
to their category peers, and may be worth a look.

We didn't look beyond 3-year performance because in each case the
fund received a new portfolio manager in 2000.  So, we viewed and
evaluated the performance that we could actually attribute to the
fund's current manager.  Chuck Happel, a registered principal and
portfolio manager with EquiTrust, has managed the EquiTrust Value
Growth Fund since March 1, 2000.  Happel has worked for EquiTrust
for 15 years.  Yun Jae Chung is a VP and portfolio manager with
Bessemer Trust, her employer since 1995.  Previously, she was a
research analyst with NatWest Securities USA (from 1991 to 1995).

Those investors who favor a value style and desire broader equity
exposure may wish to consider the EquiTrust Value Growth Fund for
their long-term investment goals.  Long-term investors that favor
a more growth-oriented investment style and stocks of established
growth companies may be prefer Old Westbury Capital Opportunities
Fund.  For more information or to download a fund prospectus, log
on to the respective fund family websites.  The EquiTrust website
is www.equitrust.com, while more information on Bessemer Trust is
available at the www.bessemertrust.com website.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


------------------------------------------------------------
 optionsXpress has "...a lot of bang for the buck."--Barron's

  $1.50 /contract (10+ contracts) or $14.95 Min. No hidden fees
  Easy screens for spreads, collars, or covered calls!
  Contingent, Stop Loss, Trailing stop, or OCO
  8 different online tools for options pricing, strategy, and charting

Go to http://www.optionsxpress.com/marketing.asp?source=oetics25

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


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

Reversal Signs

Today's rally gave us the first technical signs of a significant
rebound from the pullback of the past two weeks. The major
indices, which have been ratcheting lower to former levels of
support/resistance, finally bounced hard enough from the bottom of
the late January-early February consolidation pattern to give
point and figure reversals higher.


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


FREE TRIAL READERS
******************
If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is 39.95. The quarterly
price is 99.95 which is $20 off the monthly rate.


We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at

www.OptionInvestor.com

and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support
The Option Investor Newsletter                  Tuesday 04-01-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None
Dropped Puts: OTEX
Daily Results
Call Play Updates: BCR, BLL, BRL, BVF, MMM, STN, UNH
New Calls Plays: WFMI
Put Play Updates: CB, ROOM, WHR
New Put Plays: CDWC


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

Open Text - OTEX - close: 28.00 change: +0.17 stop: 30.55

This put play has been consolidating as the Software Index (GSO)
has continued to bounce at support at the 99-100 level.  While
OTEX hasn't gotten much of a bounce, it also has not broken down.
The stock has bounced several times from its 50-dma and now from
its converging 21-dma and 50-dma, which are sitting just below
$27.50 and rising.  While we think it still has potential for a
bigger drop down to $25 if the GSO can get below 98, we are going
to end coverage on the play, as it is moving sideways and taking
down time premium with it. Traders who'd like to give it some
more time can keep their eye on the GSO, as well as OTEX's 50-
dma.  A breakdown in either place may get it to our original
target.


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

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

CALLS              Mon    Tue

BCR      63.50    0.16   0.44  Building gains
BLL      56.91   -0.40   1.21  New high
BRL      58.78    0.68   1.78  Approaching Target
BVF      41.06    0.07   1.19  Over $41
MMM     130.84   -0.48   0.81  Holding $130
STN      20.64   -0.27  -0.47  Over $20
UNH      91.28    0.17  -0.39  Recovered
WFMI     56.42    0.14   0.78  New, Pullback entry


PUTS

CB       44.81    0.42   0.85  Under $45
CDWC     40.00    0.33  -0.80  New, Trigger below
OTEX     28.00   -0.59   0.17  Drop, sideways
ROOM     55.67   -0.08  -2.00  Good start
WHR      49.69   -0.30   0.66  Failed 50-dma


------------------------------------------------------------
VOTED one of "Best Online Brokers" (4 stars)--Barron's
  optionsXpress's "order-entry screens...go far beyond...
   other online broker sites"--Barron's
  8 different online tools for options pricing, strategy, and charting
  Access to options specialists via email, phone or live chat online
  Real-Time Buying Power, Account Balances or Cancels

Go to http://www.optionsxpress.com/marketing.asp?source=oetics22

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



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

C. R. Bard, Inc. - BCR close: 63.50 change: +0.44 stop: 61.40

That $64 resistance level is turning out to be a tough nut for
the bulls to crack, as BCR has been turned back just below that
level on each of the past 2 days.  But in the overall picture,
the play is still looking quite bullish with its ability to avoid
the intraday weakness that has been seen in the broader market.
The real key to a continuation of the rally would seem to be
volume, which has been lacking so far this week, still coming in
at only about 80% of the ADV.  Buying the dip last week certainly
worked to a trader's advantage, as buyers did successfully defend
the $61 support level.  At this point, a pullback shouldn't
extend much below the $62 level, so a dip and rebound from that
level is the most likely entry point for new bulls.  BCR looks
like it wants to break out though, and a volume-backed move over
the $64 level will be the trigger for entering on strength.
Until that breakout occurs, we're maintaining our stop at $61.40.

Picked on March 18th at $61.05
Gain since picked:       +2.45
Earnings Date         04/16/03 (unconfirmed)
Average Daily Volume = 304 K

---

Ball Corporation - BLL - close: 56.91 change: +1.21 stop: 55.00

Finally a break out!  Well almost.  We were looking for BLL to
push through the $57 level to initiate new momentum entries, and
it is rather curious that the bulls couldn't quite clear that
level on Tuesday, with a high trade of exactly $57.00.  Despite
the failure to actually break out, today's trade looks bullish
with a better than 2% advance and a close just slightly above
last Tuesday's intraday high ($56.85).  BLL has been finding
support near the $55 level for more than a week now, and it
appears that one more test of that level this morning was all the
confirmation the bulls needed to buy the stock with both hands
throughout the afternoon.  Volume came in at 718 K shares, more
than 60% above the ADV, hinting at follow through tomorrow.
Should we get so fortunate as to see another dip to support, the
$55.50-55.75 level looks like a good entry on the rebound, as
that support is backed up once again by the rising 10-dma
($55.78).  We'll adjust our momentum entry trigger to $57.10, as
a trade above that level looks good for a bullish follow-through
session.  Based on the stock's refusal to trade below $55 for the
past week, we're inching our stop up to $55 tonight.

Picked on March 21st at $55.87
Gain since picked:       +1.04
Earnings Date         04/24/03 (confirmed)
Average Daily Volume = 428 K

---

Barr Labs - BRL- close: 58.78 change: +1.78 stop: 56.98

BRL $58.78  Barr Labs, entered long at $53.81, jumped to yet
another relative high today, trading up to 58.90, before closing
at $58.78.  BRL confirmed on Monday that it filed an Abbreviated
New Drug Application (ANDA) with the U.S. Food & Drug
Administration (FDA) for generic versions of Cephalon's (CEPH)
Provigil on December 24, the first day it was legally entitled to
do so.  CEPH is putting up a fight in court over several ANDAs
filed by other companies challenging the Provigil patent that
CEPH has until 2014. While two other companies are claiming the
patent is invalid, Barr is claiming its generic would not be an
infringement and has not yet received a response from CEPH.
After breaking through the $55 barrier on 3/21, BRL climbed
slowly higher before the broader market drop on Monday.  It
pulled back, as well, but found support above $55, (which would
have been a point and figure reversal down) and then rallied.  We
like the bounce from the higher level of support and the move to
new relative highs intraday. The stock is approaching our $60
target, so we do not recommend new entries at this time.  Traders
can set an exit target between $59 and $60, as we will likely
close the play as our profit target for traders is reached.  We
have raised our stop to just below today's low in order to lock
in a gain for traders.

---

Biovail Corp - BVF - close: 41.06 change: +1.19 stop: 39.50

You almost need a microscope to see the progress, but our BVF
play achieved an important goal on Tuesday by pushing through and
closing above the $41 level, something it had been struggling to
do for over a week.  After another rebound from just above the
$39.50 level, buyers appeared with cash to spend, driving the
stock up throughout the day on Tuesday, ending just shy of a 3%
gain on solid volume.  Recall from our prior commentary, that
clearing the $41 level should now have BVF in that fast-move area
up to the $43.50 level and then possibly as high as $46.40.  The
10-dma ($40.10) has been consistently providing support for the
stock, as each small violation of that level leads to a
resurgence of buying interest.  We're now looking for the $40
level to hold on any subsequent pullback, so our stop now rises
to $39.50.  Traders still looking for an entry into the play can
either use a dip and rebound near the $40 level or a breakout
above $41.20 (just above today's intraday high).

Picked on March 14th at $39.06
Gain since picked:       +2.00
Earnings Date         04/25/03 (unconfirmed)
Average Daily Volume = 1.09 mln

---

3M Company - MMM - close: 130.84 change: +0.81 stop: 128.00

Traders wondering if MMM is going to deliver on its bullish
promises of just over a week ago are still in limbo.  Monday's
early drop certainly didn't look good, but there were buyers
willing to eagerly buy the dip.  Their actions were sufficient to
push MMM back over the $130 level by the close, but the
enthusiasm was lacking on Tuesday, with the $131.60 level keeping
a lid on the early rally attempt.  After that disappointment, the
bulls had to content themselves with a holding action for the
remainder of the day, protecting the $130 support level, but
unable to stage a meaningful advance.  The technicals are
becoming more encouraging though, with the daily Stochastics
turning a bullish reversal prior to entering oversold territory.
Traders that took advantage of the dip to establish positions
look to be in good shape, but need to keep their stops firmly in
place at $128.  Another dip and rebound from the $130 level still
looks good for new entries, although those looking for
confirmation will want to wait for a trade over $132.75, which
would represent a successful move through the past 5 days'
intraday resistance.

Picked on March 27th at $131.66
Gain since picked:       -0.82
Earnings Date         04/21/03 (confirmed)
Average Daily Volume = 2.25 mln

---

Station Casinos - STN - close: 20.64 change: -0.47 stop: 19.75

STN pulled back on Tuesday along with other stocks in the gaming
sector. The main impetus, however, appears to be a charge that
the company elected to take by restating fourth-quarter earnings.
STN had made a $4.5 million investment in an on-line gaming
operation that was discontinued. The drop in the stock took it
down to  $20.62, which is still above the $20 breakout level.
However, we are somewhat concerned about a possible double-top
formation on the last two rally tops that fell short of $22. We
have raised our stop to $19.75 to close out if the stock gives up
that support level.  Aggressive traders can still enter on the
hold above $20, but we don't recommend new entries for
conservative traders until recent highs are broken.

---

Unitedhealth - UNH - close: 91.28 change: -0.39 stop: 87.48

Many of the HMO stocks felt pressure today after prescription
drug benefit plan manager ESRX revised revenue figures for the
past three years in accordance with a new accounting rule.  Big
names in the healthcare sector such as Wellpoint (WLP), Universal
Health (UHS) and UNH all followed the HMO index lower.  The HMO.X
was one of th edays few losers, dropping just less than 1%.  UNH
dropped to $89.50 in early trading, but made up almost the entire
loss and slightly outperformed the sector by the end of the day.
We are not particularly worried about today's pullback, as it was
news related and the stock recovered impressively. In a sector
note, T. Rowe Price fund manager Kris Jenner spoke about the
outperforming health care sector funds that hold stocks such as
UNH, which are less subject to economic downturns than
traditional stocks. Jenner said, "Many health-care stocks that
were beaten-up in 2002 are now seeing a rebound as investors look
for companies that are relatively insensitive to a slowing
economy. There's been plenty of sub-sectors within health care
that have outpaced the market, at least on a short-term basis.
"It's quite reasonable to believe that many of these trends
continue for a good part of the year."  We have left our stop
just below the 200-dma, which is now converging with the 21-dma.
As that 21-dma rises, conservative traders can tighten stops for
a move below it.


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

Whole Foods Mkt - WFMI - close: 56.42 change: +0.78 stop: 53.50

Company Description:
Whole Foods Market, Inc. owns and operates a chain of natural and
organic foods supermarkets in the United States.  As of September
2002, the company operated 135 stores in 25 states plus the
District of Columbia and Canada.  The company offers a broad
product selection with a heavy emphasis on perishable foods
designed to appeal to both natural foods and gourmet shoppers.
Its product categories include produce, seafood, grocery, meat
and poultry, bakery, prepared foods and catering, specialty
(beer, wine and cheese), whole body (nutritional supplements,
vitamins and body care), pet products and household products.

Why we like it:
Just as the broad market was getting started on its strong
oversold rebound in mid-March, shares of WFMI got a boost from a
downgrade by McDonald Investments.  It may seem counter-
intuitive, but then what doesn't in this topsy-turvy market.  The
market completely ignored that downgrade, as investors continued
to pile into the stock following its successful rebound from the
converged 20-dma and 50-dma near $50.50.  That was a couple weeks
ago, and not only did the stock continue to climb, but it
successfully blasted through long-term resistance near $54
enroute to setting a new all-time high of $58.11 a week ago.
That ramp job needed to relax a bit and that appears to be just
what has been occurring over the past week, helped along by a
Salomon downgrade last Wednesday.  Rather than falling apart
though, the stock has found support at the $55 level over the
past 2 days and looks like it is ready to take another run at
those all-time highs.  It is no coincidence that the $55 level
has been acting as support this week, as that was the site of
intraday support on the way up last week.

Given the weakness in the rest of the market of late, it is
rather curious that WFMI has held up so well, and we can't help
but think that it has a lot to do with the company's continued
impressive financial performance.  The company continues to grow
revenues and earnings (beating estimates each of the past 8
quarters) and that is the sort of behavior that investors seem
willing to reward with their investment dollars.  Another factor
that benefits the stock is that it provides products that
consumers need, whether the economy stalls or not.  Hey, we've
all got to eat!  It is that economic insensitivity that should
keep WFMI working higher along its ascending trend.

After the strong rally from the $50 level broke through the
bearish resistance line at $52, we were looking for a pullback to
provide a lower risk entry, and the recent pullback has done just
that, giving us a 3-box reversal into a column of O on the PnF
chart.  Bulls now want to see a reversal back into a column of X
(which will occur with another trade at $58) to confirm the
bullishness currently found in the chart.  Should broad market
weakness pressure WFI down near the $55 level again, a rebound
from that level looks to be the perfect entry point into the
play.  More aggressive traders could even target shoot a dip
closer to the $54 level, as this support should be reinforced
both by the ascending trendline and the rising 20-dma (currently
$54.43).  Given the current market environment, and we're not
enthusiastic about chasing the stock higher with momentum
entries.  But for those that prefer that style of trade, we would
recommend waiting for a volume-backed move through the $58.25
level (just above last week's intraday highs).  Our initial
target for the play will be a trade at $60, and conservative
traders may want to consider harvesting partial gains if WFMI
begins to weaken near that level.  Initial stops will be placed
at $53.50, as that would be an indication that we are not going
to get the bullish 3-box reversal we're looking for.

Suggested Options:

Shorter Term: The April 55 Call will offer short-term traders the
best return on an immediate move, with manageable risk.  Due to
the relatively slow-moving nature of WFMI, the April 60 Call
should only be used by very aggressive traders.

Longer Term: Traders looking to capitalize on a move towards the
$60 level may want to look to the May 60 Call.  This option is
currently out of the money, but should provide sufficient time
for the stock to move higher without time decay becoming a
dominant factor over the short run.

BUY CALL APR-55 FMQ-DF OI= 571 at $2.55 SL=1.25
BUY CALL APR-60 FMQ-DG OI= 204 at $0.45 SL=0.25
BUY CALL MAY-55 FMQ-EF OI=3922 at $3.40 SL=1.75
BUY CALL MAY-60 FMQ-EG OI= 578 at $1.10 SL=0.50

Annotated Chart of WFMI:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-01/WFMI040103.gif



Picked on April 1st at $56.42
Gain since picked:       +0.00
Earnings Date         05/08/03 (unconfirmed)
Average Daily Volume = 929 K


------------------------------------------------------------
We got trailing stops!
  Trade online with trailing stops at optionsXpress, at no extra cost
  Trailing stops based on the option price or the stock price
  Also place Contingent, Stop Loss, and "One Cancels Other" orders
  $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees!

Go to http://www.optionsxpress.com/marketing.asp?source=oetics23

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


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

Chubb Corporation - CB - close 44.81 change: +0.85 stop: 46.50

Given the 2% advance in the Insurance index (IUX.X), it is no
great surprise that CB managed a positive day as well.  But there
certainly wasn't much conviction to the move, as evidenced by the
stock's inability to reach the $45 level, even on an intraday
basis.  It probably isn't a coincidence that Tuesday's intraday
high ($44.84) and closing price ($44.81) are so close to the top
of Monday's gap at $44.82.  Prior support is looking more like
resistance and a rollover from the $45 level on Wednesday could
be the next high-odds bearish entry point.  Should that level
fail to contain any bullish action, then our next line of defense
will be at $45.75, the site of the 20-dma.  We do need to be a
bit more careful with this play though, as the possibility exists
that it could recover from here.  The first hint of that
possibility is seen on the daily Stochastics, which are
attempting a bullish reversal from oversold territory.  To
protect ourselves against a sharp bullish move, we're going to
more aggressive with our stop, lowering it to $46.50 tonight.
Recall that our target on the downside is the $42 level, and
should a decline ensue over the next couple days, that looks like
a good point to harvest some gains.

Picked on March 25th at $45.73
Gain since picked:       +0.92
Earnings Date         04/30/03 (unconfirmed)
Average Daily Volume = 1.42 mln

---

Hotels.com - ROOM - close 55.67 change: -2.00 stop: 60.00

Good things come to those that wait, and our ROOM play is setting
up to give us a solid momentum entry tomorrow.  The continuous
pressure from the Iraq war on travel-related stocks is
intensifying with the SARS outbreak now catching more headlines.
That has turned the environment for stocks such as ROOM more
negative this week, and following yesterday's close below the 10-
dma ($58.22), the stock gave up nearly 3.5% on Tuesday to end
just above the important $55 level.  Encouraging to bears is the
fact that there was virtually no buying interest in ROOM after
the initial plunge, and the $56.25 level acted as resistance to
the two feeble rebound attempts.  The $58 level now looks like
very strong resistance and should we see an oversold rebound over
the next couple days, a failure at that level would be the best
setup for entering new trades.  Based on the price action on
Tuesday though, momentum traders are likely to get the next solid
entry with a breakdown below the $55 level.  Regardless of the
choice of entry point, the key will be a breakdown under $55, as
it will then open the door for a slide to our initial target of
$53 and then on to our ideal exit point of $50, which is the site
of the 200-dma.  We're lowering our stop tonight to $60, as a
close above that level would break the fledgling trend of lower
highs and clearly indicate a change of sentiment.

Picked on March 30th at $58.58
Gain since picked:       +2.91
Earnings Date         04/24/03 (unconfirmed)
Average Daily Volume = 1.33 mln

---

Whirlpool - WHR - close: 49.69 change: +0.66 stop: 52.76

After breaking down below support at $50, WHR reached the next
support level just above $48 and got a bounce. That bounce,
however, failed at $50, which now appears to be acting as
resistance.  There is also the 50-dma sitting just above it at
$50.07 which should provide additional resistance on further
rally attempts.  The National Retail Federation cut its retail
sales growth forecast by 32% for the year to 3.8% growth. That is
the slowest growth rate in ten years and while Whirlpool might be
considered more in the durable goods category (that report was
disappointing, as well), it still suggests that consumers are
staying out of stores and that isn't good news for Whirlpool's
smaller items. Traders can look to enter short positions on a
rollover from that 50-dma, but note the bounce this morning from
the $48 support level increases the risk on the play.  More
conservative traders may want to wait for a break below $48 for a
momentum entry.


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

CDW Computer Centers - close: 40.00 change: -0.80 stop: 43.25

Company Description:
CDW ranked No. 414 on the Fortune 500, is a leading provider of
technology solutions for businesses, government agencies and
educational institutions nationwide. CDW is a principal source of
technology products and services including top name brands such
as Cisco, Compaq, Computer Associates, Hewlett-Packard, IBM,
Intel, Microsoft, and Toshiba. CDW distributes contracts to end
users for customized and standardized on-site services supplied
directly by providers such as H-P Services and Unisys and for
training programs provided by firms such as KnowledgeNet and
Productivity Point International. (source: company release)

Why we like it:
CDW's business model of direct marketing to businesses,
government agencies and educational institutions seems solid
enough.  Except for when the economy goes into the tank and takes
business spending and tax dollars with it. The drop in IT
spending over the past couple of years has been well documented
and it is reflected in the downsizing of businesses, as well as
the many tech-based companies that no longer exist. The fact that
a significant portion of CDW's income is derived from business IT
spending has worked against it in recent months and the series of
lower highs on its chart is reflective of that fact. In fact,
Morgan Stanley even downgraded IBM this morning, citing industry-
wide deterioration of enterprise demand and said Big Blue may not
meet earnings estimates. CDWC is likely to suffer from that same
deterioration.

However, CDWC also has another problem brewing.  It's reliance on
business from government and educational institutions exposes it
to a another result of a poor economy - a shrinking tax base.
When more consumers are out of work and in general spend less,
that leads to less income and sales tax.  Fewer tax dollars lead
to less government spending and upgrading technology systems
tends to take a back seat to more pressing government needs, such
as healthcare and defense. Morgan Stanley recently cited this
exact problem when it downgraded the stock last week, saying it
was concerned that decelerating public sector growth will
pressure the top line.  The firm cited growing state and local
budget deficits and thinks expectations of 6% revenue growth in
the second quarter are too high.  It cut its earnings estimates
for both 2003 and 2004.

CDWC is once again testing a long-time support level that has
given it several big bounces.  The $40 level was tested
repeatedly throughout 2002, when it held up; and again in 2003,
when it failed. That failure in early March led the stock quickly
to $36.30 after a failed bounce attempt and the stock only
rallied again as the broader market caught fire on the heels of
early victories in Iraq. The stock once again broke $40 intraday,
before rallying back to a close right on that mark.  A
continuation lower would amount to a failed rebound at $40 and
could have it testing the recent low at $36 quickly.  Today's
relative weakness only underscores the bearish sentiment
investors have for this stock ahead of its earnings on April 15.
Since we won't be playing over earnings, this is a short-term
play from our perspective. the stock has made several rebound
attempts, but has been turned back from its descending bearish
resistance line on the point and figure chart. That line now sits
at $46, but would come in at $45 on a reversal higher. We are
looking to jump on a breakdown below today's low of $39.75, using
a trigger of $39.70.  However, longer-term traders may want to
hold out for a bounce to that bearish resistance line for entry.
If we do get the breakdown trigger on the play, that bounce is
unlikely, but if we don't and the stock bounces instead, then
traders can keep this one on the radar for the failure there.  If
triggered by a trade of $39.70, we will set our stop at $43.25,
just above the 50-dma.

BUY PUT APR-40  DWQ-PH OI=8317 at $1.95 SL=1.00
BUY PUT MAY-40  DWQ-QH OI=184 at $3.10 SL=1.55

Average Daily Volume = 2.15 MIL

Chart of CDWC
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-01/CDWC040103.gif




------------------------------------------------------------
Quit paying fees for limit orders or minimum equity
   No hidden fees for limit orders or balances
   $1.50 /contract (10+ contracts) or $14.95 minimum.
   Zero minimum deposit required to open an account
   Free streaming quotes

Go to http://www.optionsxpress.com/marketing.asp?source=oetics24

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support
The Option Investor Newsletter                  Tuesday 04-01-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: WFMI - CALL

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

Whole Foods Mkt - WFMI - close: 56.42 change: +0.78 stop: 53.50

Company Description:
Whole Foods Market, Inc. owns and operates a chain of natural and
organic foods supermarkets in the United States.  As of September
2002, the company operated 135 stores in 25 states plus the
District of Columbia and Canada.  The company offers a broad
product selection with a heavy emphasis on perishable foods
designed to appeal to both natural foods and gourmet shoppers.
Its product categories include produce, seafood, grocery, meat
and poultry, bakery, prepared foods and catering, specialty
(beer, wine and cheese), whole body (nutritional supplements,
vitamins and body care), pet products and household products.

Why we like it:
Just as the broad market was getting started on its strong
oversold rebound in mid-March, shares of WFMI got a boost from a
downgrade by McDonald Investments.  It may seem counter-
intuitive, but then what doesn't in this topsy-turvy market.  The
market completely ignored that downgrade, as investors continued
to pile into the stock following its successful rebound from the
converged 20-dma and 50-dma near $50.50.  That was a couple weeks
ago, and not only did the stock continue to climb, but it
successfully blasted through long-term resistance near $54
enroute to setting a new all-time high of $58.11 a week ago.
That ramp job needed to relax a bit and that appears to be just
what has been occurring over the past week, helped along by a
Salomon downgrade last Wednesday.  Rather than falling apart
though, the stock has found support at the $55 level over the
past 2 days and looks like it is ready to take another run at
those all-time highs.  It is no coincidence that the $55 level
has been acting as support this week, as that was the site of
intraday support on the way up last week.

Given the weakness in the rest of the market of late, it is
rather curious that WFMI has held up so well, and we can't help
but think that it has a lot to do with the company's continued
impressive financial performance.  The company continues to grow
revenues and earnings (beating estimates each of the past 8
quarters) and that is the sort of behavior that investors seem
willing to reward with their investment dollars.  Another factor
that benefits the stock is that it provides products that
consumers need, whether the economy stalls or not.  Hey, we've
all got to eat!  It is that economic insensitivity that should
keep WFMI working higher along its ascending trend.

After the strong rally from the $50 level broke through the
bearish resistance line at $52, we were looking for a pullback to
provide a lower risk entry, and the recent pullback has done just
that, giving us a 3-box reversal into a column of O on the PnF
chart.  Bulls now want to see a reversal back into a column of X
(which will occur with another trade at $58) to confirm the
bullishness currently found in the chart.  Should broad market
weakness pressure WFI down near the $55 level again, a rebound
from that level looks to be the perfect entry point into the
play.  More aggressive traders could even target shoot a dip
closer to the $54 level, as this support should be reinforced
both by the ascending trendline and the rising 20-dma (currently
$54.43).  Given the current market environment, and we're not
enthusiastic about chasing the stock higher with momentum
entries.  But for those that prefer that style of trade, we would
recommend waiting for a volume-backed move through the $58.25
level (just above last week's intraday highs).  Our initial
target for the play will be a trade at $60, and conservative
traders may want to consider harvesting partial gains if WFMI
begins to weaken near that level.  Initial stops will be placed
at $53.50, as that would be an indication that we are not going
to get the bullish 3-box reversal we're looking for.

Suggested Options:

Shorter Term: The April 55 Call will offer short-term traders the
best return on an immediate move, with manageable risk.  Due to
the relatively slow-moving nature of WFMI, the April 60 Call
should only be used by very aggressive traders.

Longer Term: Traders looking to capitalize on a move towards the
$60 level may want to look to the May 60 Call.  This option is
currently out of the money, but should provide sufficient time
for the stock to move higher without time decay becoming a
dominant factor over the short run.

BUY CALL APR-55 FMQ-DF OI= 571 at $2.55 SL=1.25
BUY CALL APR-60 FMQ-DG OI= 204 at $0.45 SL=0.25
BUY CALL MAY-55 FMQ-EF OI=3922 at $3.40 SL=1.75
BUY CALL MAY-60 FMQ-EG OI= 578 at $1.10 SL=0.50

Annotated Chart of WFMI:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-01/WFMI040103.gif



Picked on April 1st at $56.42
Gain since picked:       +0.00
Earnings Date         05/08/03 (unconfirmed)
Average Daily Volume = 929 K


------------------------------------------------------------
WINNER of Forbes Best of the Web Award
  optionsXpress voted Favorite Options Site by Forbes
  Easy screens for spreads, collars, or covered calls
  Free streaming quotes
  Real-time option chains, charts + calculators

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

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support

DISCLAIMER

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

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives