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Daily Newsletter, Tuesday, 04/15/2003

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The Option Investor Newsletter                 Tuesday 04-15-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Three For Three
Futures Markets: Tomorrow Is The Day
Index Trader Wrap: (See Note)
Market Sentiment: Name of the Game
Weekly Fund Screen: Top YTD Performers in Fixed Income Class


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-15-2003           High     Low     Volume Advance/Decline
DJIA     8402.36 + 51.30  8402.43  8307.54 1.72 bln   2095/1111
NASDAQ   1391.01 +  6.01  1394.03  1376.03 1.27 bln   1741/1397
S&P 100   452.08 +  2.47   452.53   447.88   Totals   3836/2508
S&P 500   890.81 +  5.58   891.27   881.85
W5000    8432.14 + 50.90  8433.09  8351.61
RUS 2000  379.60 +  1.99   379.62   375.68
DJ TRANS 2316.62 + 84.90  2317.43  2232.69
VIX        26.04 -  0.43    27.43    25.79
VXN        36.50 -  3.01    39.48    35.98
Total Volume 3,174M
Total UpVol  2,048M
Total DnVol  1,085M
52wk Highs  297
52wk Lows    97
TRIN       1.00
PUT/CALL   0.87
************************************************************

Three For Three

The three biggest tech stocks have announced and all three
pleased investors with the results. MSFT and INTC beat estimates
by two cents each on Tuesday after the close. IBM missed by a
penny due to more shares outstanding than analysts had expected
but results were good despite the lagging economy. With this
trio of tech giants setting the earnings standard can the
rest of the sector match their marks or are we doomed to be
disappointed?

Dow Chart - Daily



Nasdaq Chart - Daily




Despite the strong earnings by the tech trio, economically
nothing changed. The Chain Store sales for the week were up
+1.3% and the second consecutive positive week. This is a
positive trend but not very encouraging. Pre-Easter is usually
a strong retail period and only a +1.3% gain is mediocre at best.
Retailers said the CNN effect was dwindling and shoppers were
coming back into the malls for Easter, but not in large numbers.

Industrial production fell by -0.5% in March and was a larger
decline than expected. All of the major market groups lost ground.
Capacity Utilization fell to 74.8% and very near the lows seen
in 2001. Companies do not need to buy new equipment and start
new lines if 25% of their capacity is currently unused. All the
factors are in place for an increase of profits without spending
additional money but the demand must appear first.

Manufacturing problems are still growing as represented by the
NY Empire Manufacturing Survey. The April number dropped to -20.4
from -2.8 in March. This is a drastic drop and there was weakness
in all areas. New orders fell to -15.9 from -4.7, back orders
fell to -26.3 from -15.5. Inventories fell to -16.6 from -3.3.
This is a very negative report and should it prove to be a proxy
for the next ISM we could be in deep trouble.

In earnings news GM beat estimates but then gave cautious guidance
according to early reports. The stock dropped on the news but if
you analyze it a bit closer maybe it shouldn't have. GM said it
was "less certain" of hitting its internal earnings target of the
$5.00 for the year. The consensus estimate for GM was $4.63 so
anything close to $5.00 would be a win even if it did not hit the
"internal" number exactly. Is that a warning? GM said higher
incentive costs and the wobbly U.S. economy could impact their
2Q earnings. The stock lost -.95 cents on the news.

JNJ was the only other major earnings cloud if you don't count
airlines. JNJ beat estimates by a penny but said that it was
seeing slower sales of some of its bigger drugs. JNJ lost -1.80
on the news.

IBM missed earnings by a penny last night because analysts were
expecting their aggressive stock buyback program to continue.
They had overestimated the number of shares to be bought over
the last quarter and calculated the estimates on the lower
number of shares outstanding. IBM surprised them by only buying
$65 million in shares because they bought Rational Software in
February and that $2.1 billion cash/share drain postponed any
buybacks. Other than the earnings per share number the earnings
were better than expected. They said they had the second best
1Q ever in services sales. They received over $12 billion in
new orders in the 1Q alone. IBM was up +2.83 on Tuesday.

After the bell Intel beat lowered estimates on all fronts and
affirmed estimates for the next quarter. Intel beat estimates by
two cents, revenue slightly and profit margins by 3 points. Intel
had warned that margins would be "below the midpoint 50% level"
during their mid-quarter update. Actually they also cautioned
that revenue would also be at the low end of the range. Today
they blew out all the ranges and surprised on all fronts. They
did warn that flash memory sales were still hurting their overall
profits. Since analysts were so kind to ratchet down their
estimates after the mid-quarter guidance Intel was able to come
in smelling like a rose. Their inline guidance for the 2Q will
likely lead to an increase of estimates requiring another round
of lower guidance from Intel at mid-quarter. Don't you love this
earnings game? This is normally the worst quarter for the chip
maker. INTC was trading up +.88 cents at $18 in after hours.

Microsoft threw its hat into the ring with earnings that also
beat the street by two cents on better than expected revenue.
There were some clouds in the MSFT report. CFO John Connors said
MSFT was only seeing PC growth in the low to mid single digits
through June 2004. He said growth in their subscription businesses
would also be slower. MSFT guided analysts lower for full year
earnings to $1.04 to $1.06 a share where the First Call consensus
was $1.08. They said they expected .23 to .24 cents for the current
quarter and analyst's estimates were for 24 cents. Not much but
it is the second quarter MSFT has guided analysts lower. With
their lower forecast for the next 12 months it could put a
damper on their stock and temper the outlook from Intel. MSFT
was trading up +1.05 at $25.82 in after hours.

TXN also beat the street by a penny at +.07 cents and reversed
a loss of -.02 cents in the prior year. TXN also guided analysts
to a gain of +7% in revenue for the second quarter. They are
planning on cutting -1250 jobs in a restructuring move to cut
costs and bring plants closer together.

Seagate Technology also beat the street by a whopping +10 cents
and said sales of disk drives rose by +1.6 million units in the
past quarter. They said by the end of June their 80GB drive would
comprise virtually all of their 16 million units sold. This is
an increase from 4.6 million of the 80 GB in the first quarter.
The standardization of components and higher volume is helping
profitability. They also declared a three-cent quarterly dividend.
STX closed at $11.39.

Corning also affirmed estimates of returning to profitability
by the third quarter. They said they were closing another
plant and getting out of another money losing venture of
making glass for televisions. They are cutting -1000 jobs and
taking a substantial charge but are making progress on their
recovery.

On the negative side NVLS predicted a drop of -26% in revenue
on Monday due to the SARS epidemic. NVLS was off -1.06 today
but analysts were trying to decide if NVLS bean counters were
being honest or searching for another excuse now that the Iraq
ate my earnings excuse was over.

Some good news from a non-tech sector came from MBNA, the credit
card issuer, which said credit losses were easing and the worst
appeared to be over in the consumer sector. This prompted gains
across the board in the credit card stocks but more importantly
appeared to point out that the worst may be behind us. This
conflicts with the NY Manufacturing survey and the weekly Jobless
Claims but any glimmer of hope is still hope.

With all the earnings news investors are glazing over to the
Iraq war. Been there, done that, next! Well next could be Syria.
The war of words is heating up and the U.S. said it was considering
various options including military action to prevent Syria from
exporting weapons of mass destruction and terrorists. They claim
they have documentation supporting their claim that Syria has
an advanced bio/chemical weapons program and they have been
intercepting potential terrorists from Syria heading into Iraq
with leaflets promising rewards for killing Americans. While this
may sound like another conflict shaping up I believe it is just
pressure to make Syria turn over all the Iraqi leaders who have
escaped into Syria. The U.S. turned off an illegal oil pipeline
that was sending 300,000 barrels of oil a day into Syria. This
was a windfall for Saddam Insane and Syria as profits from the
illegal oil sales went both to Saddam and Syria. That is about
$250 million in additional revenue a month. Syria's cut for
buying the illegal oil was a 50% discount on 200,000 barrels
per day. With Syria on the brink of financial disaster already,
cutting off this flow of cash and threatening sanctions is all
meant to lean on them hard to turn over Iraqis. (my opinion) Not
that all the other benefits would be nice as well but first things
first.

Where are we going next? With the futures up strongly already and
still rising(S&P +8.50 and NDX +24) there is little doubt we will
explode at the open on Friday. Short of some seriously negative
news event or a tech earnings disaster before the open the odds
are good we will test the 1425 level again on the Nasdaq and 8500
on the Dow. Anyone still short will be buying chip stocks with
both hands and enduring a large amount of pain. Most of the chip
stocks were up in after hours on the TXN/INTC news. The enthusiasm
for the tech trio's earnings will eventually wear off if the rest
of the sector fails to meet the high standards. With Thursday
before Easter normally bullish and this being a short options
expiration week the volatility is likely to be huge.

Earnings slated for tomorrow include MO, AMD, AAPL, ASML, BRCM,
CAT, F, GDT, HDI, JPM, NITE, LRCX, MERQ, MER, MGG, MIPS, RBAK,
SNDK, SUNW, TLAB, KO, PGR, VNWK, WB and BK. These are just a
small portion of the companies to report on Wednesday. 35% of
the S&P report this week plus hundreds of smaller companies.
We are not out of the woods yet. 54% of the companies already
reported have warned about the 2Q.

The markets have seen an upward bias already this week but the
volume has been very light. The volume on Wednesday will be the
key. The Nasdaq only traded 1.2 billion shares today and there
is a good bet it will do two billion on Wednesday. If it does
it could be a major turning point in the market. If it tops out
at something in the 1.5 billion range then the long term weakness
could still be with us.

Make no mistake. The 8522 level has been STRONG resistance since
the first rally in March. The same type of resistance equates to
1425 on the Nasdaq and it appears we will gap well over that at
the open. A strong move over these levels could generate some
serious short covering and some defensive buying. Everyone that
expected an earnings disaster and an opportunity to buy lower
could react to the rebound with knee jerk buying. If we do get
over 8520 the next real resistance is 8850 and would be a serious
change in market sentiment. Fasten your seatbelts.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Tomorrow Is The Day
By Vlada Raicevic

Daily Settlement Numbers 4:15pm ET

> DOW
Last: 8402.36
Net: +51.26
High: 8402.43
Low:  8307.54

> YM 03M
Last: 8403
Net: +61
High: 8410
Low:  8281

> S&P 500
Last: 890.81
Net: +5.58
High: 891.27
Low:  881.85

> ES 03M
Last: 894
Net: +8
High: 894
Low:  880

> Nas 100
Last: 1053.07
Net: +4.76
High: 1058.54
Low:  1039.99

> NQ 03M
Last: 1057.50
Net: +9
High: 1064
Low:  1041

DAILY PIVOTS

> YM 03M
R2: 8503
R1: 8467
Pivot: 8374
S1: 8338
S2: 8245

> ES 03M
R2: 905
R1: 902
Pivot: 891
S1: 888
S2: 877

> NQ 03M
R2: 1081
R1: 1075
Pivot: 1058
S1: 1052
S2: 1035

Futures gapped down slightly and then sold off, finding support at
880 at the 50ema5.  This was to be the low for the day.  The first
round of buying couldn't fill the gap before sellers showed up and
sold the ES to the rising 50ema5, making a higher low which was
again bought and took price up to fill the gap.  Sellers showed up
again but could not get the upper hand and buying then resumed for
the next hour and half, peaking at 890.75 before rolling over.  A
weak attempt was made to take price up again, but failed making a
lower top at 890.  At this point the strongest selling of the day
pushed the ES down to 883.25, which held three touches on the 5
minute chart but did not break.  This was the second higher-low,
and price slowly ground up on low volume which was hit by a sell
program but this too failed to grab any traction.  Finally, buyers
took over and pushed price beyond the previous high, and continued
up to finish just below the highs of the day at 893.75.

Until the end of day buying kicked in, just like it did yesterday,
it looked like nothing was really going to happen.  We had three
higher lows, and three lower highs, with each peak and bottom
creating more questions as to what the futures were trying to do.
The pattern of indecision or weakness for most of the day,
followed by strong end of day buying seems to have returned to the
market.  If you recall, this was how the market often traded
during the 'war rally' expectations over the past month or so.
With the war news slowly fading, it now seems that we have the
end-of-day earnings expectations rally.

The ES daily chart now is now bullish.  We have a positive
crossover of Macd and RSI, an uptrend on D+ and falling D- on the
ADX, and the stochastics are held the centerline and are turning
up.  The upper tine of the regression channel is around 903, which
is the same general area as the downtrend line which runs from the
1/13 high of 937 to the recent high of 905.  With good news from
INTC and MSFT after trading hours, the ES has already hit 900, and
if foreign markets rally on the earnings we could have a large gap
up that opens above this area of resistance.  The 200ema is at
908.76, and this, along with the recent high of 905 should be the
first areas of resistance if we move above the downtrend line.

ES Daily Chart:




I'm going to start using the 135 minute chart, which gives us 3
candles for the daily futures session and allows us to 'zoom' into
what is happening on the daily chart.  Here you can see that the
chart is quite positive, with the Macd above the centerline and
showing no sign of rolling over.  RSI is also above the moving
average and pointing strongly up.  Both of these indicators are
just under the downtrend line that started at the 3/21 peak, and
although this should be some resistance, the chart is looking like
it will push right through.  After crossing over, the 3-line
stochastic is pointing straight up, and only the fastest line has
moved into overbought territory.  ADX shows D+ on a strong uptrend
and D- showing that selling is almost nonexistent, although it is
reaching a point where it may go to single digits soon which is
often a good signal of an overbought market.

ES 135 Minute Chart:




The ES 60 minute chart may give us some insight into the low D-
reading above.  That last candle shows a bearish divergence with
the indicators.  RSI and Macd both made lower highs while price
made new highs.  Price is also pushing against upper channel
resistance.  Although the 60 minute chart looks to have topped out
and is in need of some pullback, it doesn't look very likely
considering the ES has broken above 900 in after hours trading.
The 60 minute chart can stay overbought for quite some time if
bullishness is extreme enough.

ES 60 Minute Chart:




The NQ daily chart still has not broken up conclusively, although
if the after hours trading is any indication it should do so
tomorrow, assuming it closes above today's closing levels.  That
daily chart is very choppy, and hard to interpret well.  Selling
has been strong, but so have the recent rallies.  This has created
a chart on the verge of a bullish turn.

The following chart shows the NQ daily chart which includes
tonight's after hours trading.  This Esignal chart will close out
the day at midnight, rather than at the 4:15 close.  I'm showing
it here to give an indication of what this after hours trading
will do to the daily chart if we hold these levels overnight.  You
can see that Macd is crossing over and moving above the
centerline, fast stochastics are crossing over, and RSI is about
to cross over positive.  ADX is in a strong uptrend, and even Movo
has crossed above the centerline and downtrend line.

NQ Daily Chart (including after hours trading):





The NQ 135 minute chart does not include the after hours surge,
and shows that price stopped in the 1060 area where two regression
channels converge.  Macd and RSI both moved above their respective
downtrend lines.  Stochastics are in a strong uptrend, and ADX
shows a complete lack of sellers.

NQ 135 Minute Chart:




I feel strange doing this market wrap based on the day's trading.
In looking at the 60 minute chart, I see NQ's as topped out for
the moment.  Price stopped at the upper regression channel,
stochastics are overbought and staring to roll over, and it looks
like we need to good correction.  So I included an all-hours chart
to show you just how things look with the NQ's up 20 points as I
write this.  On that second chart you can see how the buying has
completely changed the declining indicators, and punched through
the upper regression channel.

NQ 60 Minute Chart (day session):




NQ 60 Minute Chart (all-hours):





After hours, the euphoria is running very high.  NQ's are up 2%
and ES is up 0.9% as I type this.  How much of this will hold is
anybody's guess.  When the European markets open, they could use
the opportunity to do some profit taking, or they could add fuel
to the fire.  There is a high possibility of a very large gap up
tomorrow morning, past strong areas of resistance.  How we close
will be the real key, but if we are going to break up and out of
the recent month long range, tomorrow is the day to do it.


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

Check the Site Later Tonight For Jeff’s Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_041503_1.asp


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

Name of the Game
James Brown

Market sentiment is by its nature a tough item to nail down.
It's constantly changing, flowing, ebbing here, swelling there.
News, rumors, economic reports, you name it can all affect
investor sentiment.  However, through it all the one thing that
is constantly in focus for those judging sentiment (and market
direction for that matter) is corporate earnings.  It is
corporate earnings that drive stocks and it is the expectation
for futures earnings, or lack thereof that affects supply and
demand on a daily basis.

Here we are in the midst of 2003's Q1 earnings season with a few
surprises on our hands.  IBM's earnings report on Monday, while a
miss, has been read by Wall Street as positive.  Tonight's major
earnings reports by Microsoft and Intel were huge in that they
both beat by two cents each.  Sure, Intel had pre-warned six
weeks ago and now looks great after analysts had all lowered
their estimates.  And sure MSFT warned that futures quarters
would be tough, but don't they ALWAYS warn that futures quarters
may be tough?   These three giants of tech land have turned
investor sentiment from reluctantly bullish to strongly bullish.
The question now is will there be any stamina to this rally?

It's tough to put a lot of credence in market moves and stock
moves during a holiday week with light volume.  Yes, it's just as
painful, volume or no volume, if you're on the wrong side of the
trade, but when traders return to the markets next week will they
reverse any big moves?

Furthermore, the volatility indices are hitting major levels.
The VXN, or volatility index for the Nasdaq 100, produced a major
drop today of 7.6 percent.  It fell from apparent support of 40
to 36.50.  The VXN has not seen levels this low since it bottomed
in March of 2002.  The VIX, the volatility index based off the
OEX, has also dropped to crucial levels.  Last November and
January the VIX dropped to the mid-26 level and both were clear
signals for a top in the market.  In the last two days the VIX
has dropped back to the 26 area and is about to slide below it.
I speculate that the VIX will drop to the 25 or even 24 as the
markets spike higher on this positive earnings news.  Should the
rally fade, then this new trading range for the VIX remains
intact.  If the rally has endurance and the VIX continues to fall
then maybe we're back to the more traditional levels of VIX
trading signals with market tops being found when the VIX trades
near 20.

The future of this rally will depend on it being fed by a steady
stream of good, if not decent, earnings news.  We still have two
thirds of the S&P 500 to announce.  How much faith do you have
that this is a good place to go long?


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

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8402

Moving Averages:
(Simple)

 10-dma: 8278
 50-dma: 8014
200-dma: 8336



S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  891

Moving Averages:
(Simple)

 10-dma:  878
 50-dma:  849
200-dma:  881



Nasdaq-100 ($NDX)

52-week High: 1573
52-week Low :  795
Current     : 1053

Moving Averages:
(Simple)

 10-dma: 1046
 50-dma: 1016
200-dma:  989



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


Danger, Will Robinson!  The continued slide in the VIX and the VXN
are major warning flags for the bulls.  The VIX has slide past the
previous two relative lows, of which both had called tops in the
market.  Can a new top in the market be far behind?  Meanwhile the
VXN fell a massive 7.6% today and dropped to a low not seen since
March 2002.

CBOE Market Volatility Index (VIX) = 26.04 -0.43
Nasdaq-100 Volatility Index  (VXN) = 36.50 -3.01

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.87        757,714       655,727
Equity Only    0.70        529,034       369,418
OEX            0.97         43,931        42,825
QQQ            1.06         70,001        74,150


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

Bullish Percent Data

           Current   Change   Status
NYSE          45.0    + 1     Bull Confirmed
NASDAQ-100    58.0    + 2     Bull Alert
Dow Indust.   43.3    + 0     Bull Alert
S&P 500       48.0    + 1     Bull Confirmed
S&P 100       44.0    - 1     Bull 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  1.08
10-Day Arms Index  1.05
21-Day Arms Index  1.26
55-Day Arms Index  1.33


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       1872            952
NASDAQ     1678           1309

        New Highs      New Lows
NYSE        90               30
NASDAQ     112               29

        Volume (in millions)
NYSE       1,693
NASDAQ     1,273


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

Commitments Of Traders Report: 04/08/02

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Commercials added to the long side and reduced short positions
for a net long gain of 4,000 contracts.  Small traders reduced
both sides for a net reduction of 3,000 contracts from the long
side.

Commercials   Long      Short      Net     % Of OI
03/18/03      483,224   490,582   ( 7,358)   (0.1%)
03/25/03      424,781   415,258     9,523     1.1%
04/01/03      417,637   409,332     8,305     1.0%
04/08/03      420,084   407,452    12,632     1.5%

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year:   12,632  -   4/8/03

Small Traders Long      Short      Net     % of OI
03/18/03      184,907   153,400    31,507      9.3%
03/25/03      143,402   123,178    20,224      7.6%
04/01/03      143,580   126,594    16,986      6.3%
04/08/03      136,173   122,006    14,167      5.5%

Most bearish reading of the year:  14,167 - 4/08/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

The small trader change in data seems rather extreme from the
last report to this one and as a new addition to the newsletter,
we will wait to draw conclusions until we have a more reliable
data stream.

Commercials   Long      Short      Net     % Of OI
04/01/03       98,460   321,335    222,875  (53.1%)
04/08/03      114,210   344,961    230,751  (50.3%)

Most bearish reading of the year:  230,751  - 04/08/03
Most bullish reading of the year:  222,875  - 04/01/03

Small Traders Long      Short      Net     % of OI
04/01/03        2,296     1,146     1,150    33.4%
04/08/03      319,460    35,629   283,831    79.9%

Most bearish reading of the year:   1,150   - 04/01/03
Most bullish reading of the year:   1,150   - 04/01/03


NASDAQ-100

Commercials added 10% to the long contract position while leaving
shorts unchanged. Small traders added slightly more contracts to
the short position.

Commercials   Long      Short      Net     % of OI
03/18/03       58,877     64,302   ( 5,425) ( 4.4%)
03/25/03       44,403     36,436     7,967    9.9%
04/01/03       40,493     36,893     3,600    4.7%
04/08/03       44,257     36,711     7,546    9.3%


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
03/18/03       37,097    26,951    10,146    15.8%
03/25/03       10,313    20,080   ( 9,767)  (32.1%)
04/01/03        9,771    13,306   ( 3,535)  (15.3%)
04/08/03       11,365    17,790   ( 6,425)  (22.0%)

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 left positions relatively unchanged, while small
traders did the same.

Commercials   Long      Short      Net     % of OI
03/18/03       26,880    18,853    8,027      17.6%
03/25/03       19,752    10,212    9,540      31.8%
04/01/03       19,068    12,672    6,396      20.2%
04/08/03       18,566    12,616    5,950      19.1%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
03/18/03        6,589     8,343    (1,754)   (11.7%)
03/25/03        5,076     7,721    (2,645)   (20.7%)
04/03/01        5,142     7,459    (2,317)   (18.4%)
04/08/03        5,886     7,964    (2,078)   (15.0%)

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

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


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

Top YTD Performers in Fixed Income Class

These fixed income funds have produced the highest total returns
since December 31, 2002 and may be appropriate for risk-tolerant
income investors seeking a higher yield and greater total return
potential.  Our search will begin with identifying the top total
return performers in the fixed income fund group using data from
the NYTimes.com website.  Then, we'll load the ticker symbols in
the Morningstar's system to compare these highest YTD performers
on the basis on return, risk, expense, manager tenure, and other
factors.

As you will see in a minute, the top 24 fixed income funds this
year fall into one of three Morningstar income categories: high
yield bond, international bond, or emerging markets bond.  These
funds typically offer a higher yield and greater potential total
return than those investing primarily in high-quality government
and corporate debt instruments.  Since there is no free lunch in
investments, we know that potentially higher returns are usually
associated with greater risk.  In the end, we'll try to identify
a couple funds that we think offer the best return-risk tradeoff
for investors now.

Screening/Evaluation Process

The NYTimes.com's "Fund Finder" identified the 24 highest return
performers of 2003 in the fixed income bond fund class.  We then
took those ticker symbols and entered them in the "Fund Compare"
tool on the Morningstar.com website.

Our first stop was the "Nuts and Bolts" View which provides each
fund's load charges (if any), expense ratios and minimum initial
investment requirements, as well as other information.  We found
here that eight fund share classes had to be excluded because of
their higher minimum purchase requirement (minimum investment of
$100,000 or higher).  We removed those eight funds from the list.

The remaining 16 funds on the list have minimum initial purchase
requirements of $2,500 or less, making them affordable.  But the
list actually consists of six funds; four of them are load funds
with multiple share classes (in which case, we'll use the fund's
class A shares for comparison purposes).  Below is a performance
summary for the six fixed income funds as of April 14, 2003, per
Morningstar.

 Highest 2003 Performers: Fixed Income Funds
 +13.9%  AllianceBernstein Emerging Market Debt A (ADGAX)
 +13.9%  Fidelity Advisor High Income Advantage A (FAHDX)
 +14.2%  Fidelity Capital & Income (FAGIX)
 +13.2%  PIMCO Emerging Markets Bond D (PEMDX)
 +11.7%  Scudder Emerging Markets Income A (SZEAX)
 +12.1%  TCW Galileo Emerging Markets Income I (TGEIX)

Note the PIMCO Emerging Markets Bond Fund has both "load" share
classes and a no-load ("D") share class.  The D shares that are
shown above are offered on a no-load, NTF basis through Charles
Schwab and other fund marketplaces.  So, we are using it rather
than the fund's class A shares.  Fidelity Capital & Income Fund
is also offered on a no-load basis as well.  TCW Galileo's fund
reflects the "I" or institutional share class, but the fund can
be purchased for a minimum initial investment of $2,000 through
various brokerages (Schwab is not one of them).  So, in essence,
it's available on a no-load basis too.

Next, we reviewed Morningstar's star ratings and found that one
fund, PIMCO Emerging Markets Bond D (PEMDX), currently receives
Morningstar's highest "5-star" rating for risk-adjusted returns
relative to its category.  TCW Galileo Emerging Markets Income I
(TGEIX) sports an above average "4-star" overall rating.  Three
more funds have average "3-star" ratings, while the Scudder fund
is not rated.  Note the class "S" shares of the Scudder fund are
rated 3 stars but they are no longer open to new investors.  So,
in terms of "risk-adjusted" relative returns, the PIMCO and TCW
Galileo emerging markets debt funds have the best overall marks.

We next looked at manager tenure, and found that the manager of
Fidelity Capital and Income Fund (FAGIX), David Glancy, has the
longest manager tenure of these six funds at 7 years.  The fund
manager of the TCW Galileo Emerging Markets Income Fund, Nathan
Sandler, has run the portfolio for five years.  And, Mohamed El-
Erian has managed the PIMCO Emerging Markets Bond Fund since its
March 31, 2000 inception.

Looking at the expenses of these three funds, we found that the
Fidelity Capital and Income Fund has the lowest annual expenses
(0.81% expense ratio), below average within the high-yield bond
fund category.  PIMCO Emerging Markets Bond Fund has an expense
ratio of 1.25% for the class D shares, while TCW Galileo's fund
has a 1.10% expense ratio.  While we'd prefer these funds to be
under 1.00%, emerging markets bond funds generally cost more to
operate, so the higher expense ratios are not unreasonable, and
investors appear to be compensated for the greater fund expense.

Our Favorite Funds

In the high-yield bond fund category, we like Fidelity Capital &
Income Fund, and in the emerging markets bond fund category, our
favorite is the PIMCO Emerging Markets Bond Fund, Class D shares.

Fidelity Capital & Income Fund is one of the oldest and largest
domestic high-yield bond funds in the nation, with roots dating
back to 1977.  David Glancy, who joined Fidelity Investments in
1993, has managed the fund's portfolio since February 1, 1996,
producing above average returns versus other high-yield funds.
He seeks a combination income and capital growth by investing
primarily in high-yield debt securities, but he can invest in
equity and debt securities of any type according to the fund's
prospectus.




Since Glancy tends to incur more risk relative to his peers, the
fund tumbled harder than other high-yield funds during the years
2000 to 2002.  But with the high-yield market bouncing back this
year, Glancy's return performance is back at the top of the pack.
The fund's 13.7% YTD total return ranks in the top 1% of the high
yield category per Morningstar.  While the fund's trailing 3-year
returns ranked in only the 63rd percentile, its 5-year annualized
total return of 1.5% was still good enough to rank in the group's
27th percentile, just missing "top quartile" status.

With the fund's trailing 10-year performance ranking in the high-
yield category's top quintile (16th percentile), it's fairly safe
to assume that Glancy's annualized returns over his 7-year tenure
have also been top quintile, or near that.  So, if you can accept
the higher relative risk of this fund, it makes a compelling case
within in the high-yield category.  Glancy is supported by credit
research analysts at Fidelity Investments, who has built a strong
reputation through the years in terms of its fundamental research
capability, adding to its appeal.

The class D shares of PIMCO Emerging Markets Bond Fund were first
offered on March 31, 2000 but the institutional class shares have
been available since July 31, 1997.  In reality, Mohamed El-Erian
has managed the portfolio since August 1, 1999, when he took over
the day-to-day portfolio management duties.  The D shares carry a
different cost/expense structure than the institutional class but
it's the same portfolio.  So even though the D shares have just a
3-year track record and rating, you can look to the institutional
class shares to judge relative 5-year return performance as well.

Either way you look at it, El-Erian has produced superior returns
relative to other emerging markets debt funds.  He's achieved the
superior returns by investing in a diversified portfolio of fixed
income securities denominated in foreign currencies and US dollar
of issuers that are economically tied to countries with emerging-
securities markets.  Essentially, we're talking about investments
in US$ denominated foreign government bonds.





In 2001, El-Erian posted a 27.8% annual return for shareholders,
followed by a 12.4% return in 2002 and a 13.2% return since Dec.
31, 2002.  Put those all together and you have a trailing 3-year
average annual total return of 21.1% as of April 14, 2003.  That
ranked this fund in the top 5% of the emerging markets category,
per Morningstar.  While the class D shares don't have a trailing
5-year record, the fund's institutional class shares returned an
average of 14.5% a year over the past five years, ranking in the
top 1% of the category.

Accordingly, El-Erian's performance has been outstanding on both
an absolute and relative basis since taking the portfolio reins.
The best part is the fund's superior returns have come with just
average risk overall relative to category peers.  The fund's risk
level in the last 3-5 years has sometimes been above average, but
at other times it has been below average, so saying "average" is
probably a fair overall assessment.

El-Erian is a part of PIMCO's fixed income management team, which
has an excellent reputation in the fixed income investment world.
The fact that you can purchase this PIMCO fund on a no-load, NTF
basis through Schwab's OneSource funds network makes it even more
appealing.

Conclusion

Current income investors in search of a higher yield and greater
potential total return over time have two good candidates in the
Fidelity Capital and Income Fund and PIMCO Emerging Markets Bond
Fund.  Both funds are sponsored by industry giants with excellent
security research and portfolio management capabilities.

For more information, go to the www.fidelity.com website and the
www.pimcofunds.com website, respectively.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                  Tuesday 04-15-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: BLL, UNH
Dropped Puts: CDW, LLL
Daily Results
Call Play Updates: AZO, BBBY, LXK, MEDI, MMM, WFMI
New Calls Plays: OMC
Put Play Updates: NOC
New Put Plays: None


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

Ball Corporation - BLL - close: 57.53 change: +0.07 stop: 55.50

Despite consistent broad market strength in recent days, shares
of BLL continue to struggle in a very narrow range.  While we
haven't really seen any overt signs of weakness, it is notable
that the stock just can't seem to advance.  After rebounding from
the 20-dma late last week, BLL has posted 3 consecutive dojis,
reflecting the indecision.  The stock could be in the process of
putting in a lower high or it could be getting ready to once
again challenge those recent highs near $59.  We just can't see
that from here, and given the lack of clarity, we're going to err
on the side of caution and drop coverage tonight.  Traders that
opt to remain in the play should have stops set fairly tight at
$56.50, which is just below both Tuesday's intraday low and the
20-dma ($56.55).

Picked on March 21st at  $55.87
Change since picked:      +1.66
Earnings Date          04/24/03 (confirmed)
Average Daily Volume = 446 K

---

United Health - UNH - close: 93.76 change: -0.38 stop: 89.48

There will be a lot of folks waiting to hear from UNH tomorrow
morning when the company announces its Q1 results.  Health
insurance has been a rising cost for corporate America for
several years now.  For many companies it is the 2nd or 3rd
largest expense they have.  So far, 2003 is shaping up to be the
third year in a row that corporations are faced with another
double-digit rise in health care costs.  Stocks like UNH were
huge winners for investors last year based on these facts (just
look at the weekly chart for UNH).  We believe the stock could be
one we'll play over and over again this year but we still see too
much risk to hold over the earnings announcement, which comes out
before the bell.  Estimates are for net income of $1.24 a share.
Should there be any negativity in the report or the Q2 guidance
then the stock could easily see some profit taking.  As we stated
in the Sunday update and again in the MarketMonitor today, we're
closing the play ahead of their earnings.

Picked on March 25th at $90.66
Change since picked:     +3.10
Earnings Date         04/16/03 (confirmed)
Average Daily Volume = 2.12 mln


PUTS:
*****

CDW Computer Centers - close: 40.41 change: -0.31 stop: 43.25

Per our instructions on Sunday, it was suggested that traders
close any positions on Monday night due to CDWC's impending
earnings report after the bell on Tuesday.  The small bounce back
above the $40 level on Monday session should have been a tell-
tale warning sign that the bulls weren't ready to give up just
yet.  After IBM's earnings report on Monday evening the new
question on traders' minds was how would CDWC react?  IBM's
revenues were stronger than normal but their hardware sector was
not the strongest and actually saw slower sales.  CDWC did
announce its Q1 earnings tonight after the bell.  The estimates
were for $0.48 cents a share.  The company turned in 49 cents,
beating by a penny.  Net income was $42.4 million, up from $40.8
million a year ago.  CDWC said that a small decline in corporate
sales was offset by better consumer sales.  The current
environment for tech stocks "feels" bullish now that MSFT and
INTC both turned in decent numbers.  Shares of CDWC are joining
the crowd and trading higher in the after hours session.

Picked on April 1st at $40.00
Change since picked:    -0.41
Earnings Date        04/15/03 (confirmed)
Average Daily Volume =  2.18 mil

---

L-3 Communications - LLL - close 38.23 change: +1.42 stop: 38.50

Our LLL play delivered nearly everything we were looking for, but
left us wanting more.  Recall our aggressive target for the play
was $35.50.  We should have "taken the money and run" late last
week, as the $36 level provided a consistent floor for the stock.
Hopefully conservative traders took our advice to place stops at
$37, as they were out of open positions shortly after the open
this morning.  We don't expect any great bullish things from LLL,
but it is clearly in the midst of an oversold rebound.  Better to
exit now and look for another entry opportunity in the $39-40
area, which is just below the declining trendline.  We'll be
watching and if another setup presents itself, LLL could find
itself on the put list in the very near future.

Picked on April 3rd at $38.84
Change since picked:    -0.61
Earnings Date        04/23/03 (unconfirmed)
Average Daily Volume = 1.60 mln


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

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

CALLS              Mon    Tue

AZO      77.79    1.16   1.30  looking strong.
BBBY     39.13    1.15   0.58  breakout follow through
BLL      57.53    0.11   0.07  DROP, going no where fast.
LXK      68.69    0.71   0.77  Possible entry point
MEDI     33.65    0.33   0.74  Longer-term play, no update
MMM     133.64    0.32   0.40  Couple of days left
OMC      61.30    1.83   1.02  NEW, improving environment
UNH      93.76    1.21  -0.38  DROP, earnings tomorrow
WFMI     58.80    1.33   0.87  New high


PUTS

CDWC     40.41    0.51  -0.30  DROP, per Sunday, earings
LLL      38.23    0.81   1.42  DROP, Take $ and run
NOC      81.63    0.92   0.39  DROP, waiting for failed rally

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

AutoZone, Inc. - AZO - close: 77.79 change: +1.30 stop: 74.00*new*

Taking off like a shot this week, our AZO play barely gave us a
chance to get onboard.  A brief dip to the $75 level was all we
got on Monday, as the bulls proceeded to drive the stock steadily
higher throughout the day.  Another slight dip at the open this
morning and it was off to the races again.  AZO pushed through
the $77 level during the noon hour (satisfying our momentum entry
trigger) and continuing higher to close at the high of the day.
While not yet through the 3/21 intraday highs, today's close
marked the highest close for the stock since the post-earnings
selloff last December.  Note how the 10-dma (currently $75.46)
appears to be providing solid support on the pullbacks.  So we
can continue to target shoot new entries on dips into the $75-76
area, while at the same time raising our stop to $74, just below
last Wednesday's closing low.  Conservative traders may want to
harvest partial gains on any price weakness near $80, although
we're looking for a push into the $80-85 area before the play
runs out of steam.

Picked on April 13th at  $75.24
Change since picked:     +2.55
Earnings Date          06/03/03 (unconfirmed)
Average Daily Volume = 1.35 mln

---

Bed Bath & Beyond - BBBY close: 39.13 change: +0.58 stop: 36.00

Well now that was a fine performance we've gotten from our BBBY
play over the past couple days!  After triggering to live status
with the breakout over $38 on Monday, the stock just continued
working higher, hitting an intraday peak of $39.37 today.  The
stock relaxed a bit into the close, but still managed to hold
above $39.  With BBBY trading at new all-time highs, resistance
is hard to gauge.  Next up is psychological round number
resistance at $40, and that would make a logical spot for
conservative traders to harvest some gains.  This play still
looks to have some room to run though, so we aren't going to get
too aggressive with our stop just yet, leaving it at $36.  The
next attractive entry setup would be a dip and bounce from the
$37.50-38.00 area, with additional support just below at the 10-
dma ($37.05) and the ascending trendline ($36.55).  One
additional bullish confirmation is the action in the Retail index
(RLX.X), which finally managed to break above the $290 level.
While there is definitely more overhead resistance to deal with
in the $295-305 area, today's breakout bodes well for more upside
in both the RLX and our BBBY play.

Picked on April 8th at  $37.18
Change since picked:     +1.95
Earnings Date          07/02/03 (unconfirmed)
Average Daily Volume = 3.28 mln

---

Lexmark Intl. - LXK - close: 68.69 change: +0.77 stop: 66.00

Where's the love?  Judging by the positive reception of earnings
results from both INTC and MSFT, our LXK play could finally get
moving on Wednesday.  The play has been pretty quiet since we
began coverage last Thursday, although yesterday's dip to just
below $67, certainly gave a decent entry into the play.  The
nascent rebound continued on Tuesday, with LXK exiting the
regular session just above the $68.50 level, which put it in
positive territory for the week.  The problem with the play is
that we're running out of time for it to perform.  Earnings are
set to be released before the open on Monday, and with Friday
being a market holiday, LXK will be a drop one way or the other
by Thursday's closing bell.  Traders that took advantage of
Monday's dip to enter the play will want to look for an exit on a
surge near the $71.50 level, the site of last Monday's intraday
high.  Due to the short fuse on the play, we aren't advocating
new positions at this point.

Picked on April 10th at  $69.02
Change since picked:      -0.33
Earnings Date          04/21/03 (confirmed)
Average Daily Volume = 1.51 mln

---

3M Company - MMM - close: 133.64 change: +0.40 stop: 131.50*new*

After much struggling and straining, we can report that MMM is
still stuck right in the middle of the range that has kept it
captive for the past 2 weeks.  Dips are bought in the $131.50
area, but there are willing sellers in the $134-135 area.
Something's got to give soon, and perhaps the well-received
earnings reports after the bell tonight will be just the ticket.
MMM is slated to report earnings next Monday before the open, so
there's only a couple day's left to play.  For that reason, we
are not advocating new entries at this point in the play.  It's
all about selecting an advantageous exit ahead of earnings.  The
stock is holding above the 20-dma on a closing basis, so that's a
good sign.  But on the other hand, the trading range is
shrinking, as the intraday highs are getting lower.  Look to exit
open positions on a surge back to the $135 level, especially if
the bloom starts to fade early in the session.  Since the fuse is
getting short and tomorrow's session ought to start out with a
positive bias, we're raising our stop to $131.50, just below the
intraday lows of the past 2 weeks.

Picked on March 27th at $131.66
Change since picked:      +1.98
Earnings Date          04/21/03 (confirmed)
Average Daily Volume = 2.38 mln

---

Whole Foods - WFMI - close: 58.80 change: +0.87 stop: 56.00*new*

Now that's more like it!  Our WFMI play had been churning along
in an ever-tightening consolidation pattern for close to two
weeks, when things started to look a bit more bullish with
yesterday's close just below the $58 level.  We got the
confirmation this morning, as price charged through the $58.25
level (satisfying our condition for a momentum entry),
conveniently pulling back to test that breakout level and then
surging at the close to end just off the high of the day.  That
completes the consolidation pattern with another breakout to new
highs, and now all we need is for some volume to push right up to
the $60 level.  Another intraday dip into the $57.50-58.00 area
can be used for new entries, with backup support provided by the
ascending trendline ($56.65) and 20-dma ($56.83).  We're raising
our official stop to $56.00 tonight.

Picked on April 1st at $56.42
Change since picked:    +2.38
Earnings Date        05/08/03 (unconfirmed)
Average Daily Volume = 898 K


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

Omnicom Group - OMC - close: 61.30 change: +1.02 stop: 56.99

Company Description:
Omnicom Group Inc. (NYSE-OMC) is a leading global marketing and
corporate communications company. Omnicom's branded networks and
numerous specialty firms provide advertising, strategic media
planning and buying, direct and promotional marketing, public
relations and other specialty communications services to over
5,000 clients in more than 100 countries. (source: company press
release)

Why We Like It:
A few advertising stocks appear to be out-performing the market
and OMC is one of them.  Why would buyers be interested in OMC?
First, the company reported Q4 earnings for 2002 in February.
The results were very positive with a 23% rise in net income for
the quarter and decent results for the year despite the economic
malaise.  Not many companies can turn in that sort of net income
growth.  Ah... but what about the war and ad sales!  True enough;
analysts were concerned that the war in Iraq would significantly
hamper ad sales as all-important war coverage superceded any
advertising.  Fortunately for companies like OMC, the war is
essentially over and ads can once again become commonplace on
several TV channels.  A bigger effect of the war being "over" is
consumer spending.  Industry watchers were very concerned that
the conflict would keep people at home and keep their wallets
closed while the war raged on.  After seeing the strong retail
sales numbers last Friday, this fear is essentially gone.  The
rebound in shares of OMC looks pretty strong and the close over
the $60 level of resistance is very encouraging.  OMC's Point-
and-Figure chart is also bullish and displaying an ascending
triple-top breakout.  We do expect potential resistance at $65
but patient traders might be able to target a move to $68.00-
68.50.  We're going to start the play with a stop at $56.99 but
those who can handle a wider range might want to stick it under
the recent low near $56.

Suggested Options:
Short-term traders may want to consider the May 60 or 65 calls.
This would give OMC essentially four weeks to make a run at our
target.  Those traders would prefer more time can try the July
65s or the October 65 calls.

BUY CALL MAY 60 OMC-EL OI= 802 at $3.80 SL=1.50
BUY CALL JUL 60 OMC-GL OI=1270 at $5.70 SL=3.00
BUY CALL JUL 65*OMC-GM OI= 748 at $3.30 SL=1.50
BUY CALL OCT 65 OMC-JM OI= 582 at $5.40 SL=2.75

Annotated Chart of OMC:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-15/OMC041503.gif


Picked on April 15th at $61.30
Change since picked:     +0.00
Earnings Date         02/25/03 (confirmed)
Average Daily Volume = 2.18 mil


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

Northrop Grumman - NOC - close: 81.63 change: +0.39 stop: 85.26*new*

In spite of the some of the bears growling that a market is
preparing for an imminent roll over, decent put plays seem to be
hard to find.  The Defense sector remains relatively weak to the
broader markets and thus our play on NOC remains viable.  The DFI
defense index managed a small gain of 4.49 points to close at
449.  Obviously, it remains under resistance at 450 and it also
remains under its 50-dma.  The DFI's MACD has rolled over into a
bearish crossover under the zero line.  Unfortunately, the DFI's
stochastics are conflicting with potential bullish reversals.
Meanwhile the DFX defense index looks almost identical except it
is trading above its 50-dma.  Currently, the DFX is below the
145-resistance level.  Looking at NOC we see the stock has found
support at the $80 mark, which was not unexpected.  NOC's MACD is
in a bearish crossover but the stochastics are portraying an
oversold state that could reverse higher.  Should this occur, the
descending trend line that has been resistance for months (from
this January) should cross just below the $85 mark.  We're going
to lower our stop to $85.26 putting it just above this trendline
and the $85 mark.  Traders looking for new entries may be best
served by waiting for a failed rally near the $84 area.  Given
the sharp ramp up into the close today, that failed rally could
happen soon.  Some investors are wondering... isn't the war good
for defense stocks?  Without a doubt, it is good for them short-
term.  Munitions stockpiles need to be replenished.  Damaged
equipment needs to be replaced.  However, one suggested viewpoint
is that now that the U.S. has successfully defeated Saddam's
regime, the area will become inherently more stable.  More
stability means less conflict, which means less need for military
equipment, which means fewer sales for NOC.  If the U.S. decides
to turn its gun sights on Syria or N. Korea, then the situation
could rapidly change.  Hopefully, these "hotspots" can be solved
through diplomacy.  Checking the news, we find that NOC put out a
release on their Global Hawk product, which has been getting
strong positive reviews from the military's use of the Hawk in
Iraq.  NOC's Global Hawk can fly at altitudes of more than 60,000
feet and stay aloft for more than 24 hours.  Last December, the
Pentagon approved a purchase order for the Air Force to buy 51
Global Hawks by 2011 for $5.5 billion (Reuters).  That's more
than $107 million a piece.  Geez, one would think NOC would give
the Air Force a volume discount, say $99.95 million a piece.
Doesn't the Pentagon know how to shop around?  The article went
on to say that NOC believes Global Hawk sales could reach 250 to
300 units by 2020 with clients ranging from the U.S. to NATO
countries to Australia and Japan (Reuters).

Picked on April 6th at $83.26
Change since picked:    +1.63
Earnings Date        04/29/03 (unconfirmed)
Average Daily Volume = 1.57 mil


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The Option Investor Newsletter                  Tuesday 04-15-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: CALL - OMC


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

Omnicom Group - OMC - close: 61.30 change: +1.02 stop: 56.99

Company Description:
Omnicom Group Inc. (NYSE-OMC) is a leading global marketing and
corporate communications company. Omnicom's branded networks and
numerous specialty firms provide advertising, strategic media
planning and buying, direct and promotional marketing, public
relations and other specialty communications services to over
5,000 clients in more than 100 countries. (source: company press
release)

Why We Like It:
A few advertising stocks appear to be out-performing the market
and OMC is one of them.  Why would buyers be interested in OMC?
First, the company reported Q4 earnings for 2002 in February.
The results were very positive with a 23% rise in net income for
the quarter and decent results for the year despite the economic
malaise.  Not many companies can turn in that sort of net income
growth.  Ah... but what about the war and ad sales!  True enough;
analysts were concerned that the war in Iraq would significantly
hamper ad sales as all-important war coverage superceded any
advertising.  Fortunately for companies like OMC, the war is
essentially over and ads can once again become commonplace on
several TV channels.  A bigger effect of the war being "over" is
consumer spending.  Industry watchers were very concerned that
the conflict would keep people at home and keep their wallets
closed while the war raged on.  After seeing the strong retail
sales numbers last Friday, this fear is essentially gone.  The
rebound in shares of OMC looks pretty strong and the close over
the $60 level of resistance is very encouraging.  OMC's Point-
and-Figure chart is also bullish and displaying an ascending
triple-top breakout.  We do expect potential resistance at $65
but patient traders might be able to target a move to $68.00-
68.50.  We're going to start the play with a stop at $56.99 but
those who can handle a wider range might want to stick it under
the recent low near $56.

Suggested Options:
Short-term traders may want to consider the May 60 or 65 calls.
This would give OMC essentially four weeks to make a run at our
target.  Those traders would prefer more time can try the July
65s or the October 65 calls.

BUY CALL MAY 60 OMC-EL OI= 802 at $3.80 SL=1.50
BUY CALL JUL 60 OMC-GL OI=1270 at $5.70 SL=3.00
BUY CALL JUL 65*OMC-GM OI= 748 at $3.30 SL=1.50
BUY CALL OCT 65 OMC-JM OI= 582 at $5.40 SL=2.75

Annotated Chart of OMC:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-15/OMC041503.gif



Picked on April 15th at $61.30
Change since picked:     +0.00
Earnings Date         02/25/03 (confirmed)
Average Daily Volume = 2.18 mil

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