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Daily Newsletter, Thursday, 04/17/2003

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The Option Investor Newsletter                 Sunday 04-20-2003
Copyright 2003, All rights reserved.                        1 of 5
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Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Priced to Perfection
Futures Market: Where's My Neck Brace?
Index Trader Wrap: SOX, glamour queen of tech-land
Editor's Plays: Last Time
Market Sentiment: An Easter Earnings Passover
Ask the Analyst: A SENTIMENTal Journey
Weekly Manager Microscope: Kevin Wenck: Polynous Growth Fund A
(PAGFX)


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 4-17         WE 4-11         WE 4-04         WE 3-28
DOW     8337.65 +134.24 8203.41 - 73.74 8277.15 +131.38 -375.85
Nasdaq  1425.50 + 66.65 1358.85 - 24.66 1383.51 + 13.99 - 51.65
S&P-100  453.71 + 12.74  440.97 -  5.72  446.69 +  8.75 - 18.43
S&P-500  893.58 + 25.28  868.30 - 10.55  878.85 + 15.37 - 32.41
W5000   8466.85 +239.31 8227.54 - 92.43 8319.97 +134.60 -277.93
RUT      383.70 + 12.40  371.30 -  1.98  373.28 +  4.58 -  7.53
TRAN    2326.19 +131.63 2194.56 +  6.28 2188.67 + 25.47 -100.29
VIX       24.59 -  3.68   28.27 -  4.53   32.80 +  0.62 -  1.44
VXN       35.88 -  3.74   39.62 -  2.83   42.85 -  0.24 -  2.69
TRIN       0.50            0.88            1.00            1.43
Put/Call   0.52            0.79            0.76            1.31
******************************************************************

Priced to Perfection
by Jim Brown

Traders were wearing their rose tinted glasses on Friday and
despite several bearish economic reports the markets closed
up for the week and right at strong resistance. 54% of the
companies already announced have warned about their 2Q outlook
but those that have announced are mostly beating their lowered
estimates. First Call has raised the overall earnings estimates
to +10.2% for the 1Q compared to 8.7% just a couple weeks ago.
Traders have quickly pushed up stocks to levels that assume the
positive earnings continue. Warnings? What warnings? Do you
want to borrow my glasses?

The economic reports continued to disappoint those looking for
a glimmer of recovery on the horizon. The Jobless Claims soared
to 442,000 and the second highest number for the year. Claims
for the prior week were revised up as well. This was the ninth
consecutive week over 400,000. The four-week average rose to
an eleven month high at 425,000. Continuing claims rose +76,000
to 3.574 million. The rising trend of higher unemployment is
likely to mean an increase in the unemployment number for April
to something in the 6.0% range. Also, this is the week that is
used to calculate the May Jobs Report numbers for April. The
very high jobless claims for the three April weeks so far, -443K,
-412K, -442K could indicate a seriously negative nonfarm payroll
number in the first week in May. This would be the third month
of massive job declines. One qualification, the shortened holiday
week could influence the numbers to some extent either way.

The Philly Fed Survey fell again for April to -8.8 and makes
the second declining month in a row. New orders fell to -11.2
from -4.3 and order backlog fell to -19.0 to -9.5. Employment
fell to -12.5 from -8.8 indicating more weakness in jobs. Even
shipments fell to -5.7 from 0.9 last month. This survey was
taken before April 10th and the completion of the war is
not yet priced in. The next month's numbers will be critical
to see if the conditions changed.

The lower employment discussed above is being felt in various
ways. United Health (UNH) warned that enrollment would be down
in future quarters. UNH dropped -$5 on Thursday before recovering
intraday. Multiply this type of unemployment impact across
multiple sectors and it adds up to continued weakness. If
unemployed consumers are giving up necessary healthcare you
know they are already curtailing things like cars, computers
and electronics. Gateway Computer reported a loss of -.62 cents
after the bell on Friday and said computer sales had fallen by
-30% from the 4Q levels. Gateway has shifted to a higher
performance product mix and is no longer trying to compete with
the cheap clones but is finding it difficult to find high dollar
buyers. This was the ninth quarterly loss in the last ten quarters.

SUNW was the latest in the big box makers to report earnings
this week and would not give any guidance going forward other
than they expect "some" revenue growth. The CFO said they saw
sales weaken from mid February and it continued into March.
SUNW hit their earnings estimates but fell short on revenue
due to the weakness in sales. The consensus is that SUNW will
survive but not thrive due to heavy competition and a variety
of high performance server choices.

The Semiconductor Book-to-Bill report was released on Thursday
and the number remained flat at .99 from the original February
number. However, the February number was revised down to .98.
These are not critical numbers. As long as the levels remain
close to 1.0, $1 of new orders for every $1 shipped, there
will not be any further declines in the sector. Semis are
treading water but not gaining any momentum. Considering some
of the warnings in the semi sector this week this number could
be seen as bullish except that it reflects March business instead
of April. That March business is already reflected in the current
earnings and warnings being reported. Confused? I think it
is just another confirmation that business is flat. We will
see some winners and some losers but no clear trend.

After the bell on Thursday there was a flurry of earnings
and earnings news. EDS announced it was delaying earnings
from April-23rd to May-7th to allow new management to get
comfortable with the numbers before releasing them to the
market. That could be exciting. LEXR Media, a chip company,
reported inline with estimates with inline guidance. ISSX
beat the street by a penny and raised guidance. XLNX beat
the street and said revenue would rise by +1% to 5% and a
little more than analysts estimates. Fairchild Semi (FCS)
also beat by a penny but said revenues would be flat for
the next quarter. IOM announced a drop in revenue of -40%
and said even allowing for a difficult economic environment
they were disappointed in the decline of their core products.
ATML missed by two cents and warned for Q2. PMCS beat by
two cents and did not give any guidance. BRCM soared +18%
after saying revenue could rise +12% to +14% in Q2.

This mixed bag proves that the technology recovery is random
and probably depends on having the right product and the
right cost cutting strategies. It is not a broad-brush move
and specifically related to companies with niche products.

Honeywell missed estimates by two cents and warned that
full year revenues would be at the bottom of previous estimates.
They said it was a very difficult market and they were being
hampered by the freeze in the airline sector. UTX beat the
street by two cents despite giving positive guidance just
last week at the lower number. They then warned that they
expect the business environment to remain difficult through
all of 2003 but especially the 2Q. They affirmed their full
year estimates but declined from giving any specific estimates
for the 2Q due to lack of visibility. UTX dropped -2.27.
NOK set the tone for Thursday with better than expected results
overnight but the tone was very muted in early going.

The bottom line has been "no disaster". The warnings lowered
the bar so far due to the impending war that almost everyone
should beat estimates. Those that are missing were generally
already expected to miss. With the outlook for the future
now mixed compared to a previously bad outlook across all
sectors we saw investors buying individual stocks on Thursday.
Still there is a high degree of disconnect between the strong
results and the economic climate. Cutting your estimates
from 50 cents to 30 cents in March and then beating the
30 cent estimate by two cents in April is not a strong
performance. It just means you over warned. This is what we
are seeing and investors in general have a short memory. The
"beat" becomes the focus instead of the prior warning that
allowed them to beat.

It is all in the perception of reality. If many investors
feel bullish based on the earnings for the week then the
market will go up until those feeling bullish run out of
money. Next week will give investors the chance to take
another look at the economy and another barrage of earnings.
30% of the S&P have already reported and next week we will
see another 30% report. Eight Dow components will announce.
The economic calendar starts slow with only Leading Indicators
on Monday and Chain Stores on Tuesday. Things pick up on
Wednesday with the Beige Book and then Jobless Claims, Durable
Goods, Help Wanted on Thursday. Friday has Home Sales, GDP
and Michigan Sentiment.

Thursday's close contained several critical elements. First
the Thursday before Easter has now closed bullish 8 of the
last 10 years. That is a pretty strong historical trend.
April has also been the best month for the Dow since 1950.
The positive ramp into earnings has provided some interesting
numbers. The VIX closed at 24.59 and a low not seen since
June-3rd 2002. The TRIN closed at .50, bearish for a contrarian
because it signifies larger ratio of up volume over down
volume. The Put/Call ratio closed at .52, a level not seen
on a weekend close for months. Remember, this was also an
options expiration week. Volume was nearly 6:1 to the upside
across all markets and 4:1 on the Nasdaq. This is very positive
but this is also a normally positive Friday. The market is
priced to perfection by any yardstick. Earnings are "better"
than expected and the war is over. "Party on bulls!" appears
to be the sentiment.

The challenges to the bullish scenario continuing to play out
are many. They are not insurmountable and actually overcoming
these challenges would put an even stronger bullish spin on
the market. The Dow closed over its 200 SMA at 8332. This was
heralded by some traders as a monumental event. The margin at
the close was only 5 points. Technically a break but by a very
thin margin. I would point to the chart below and suggest the
EMA average at 8484 was more relevant. It has held all four
times since last May.

Dow Chart - Daily




More importantly we have been going sideways in a narrow range
between 8100 and 8400 since the March rally. The gains this
week have put us closer to the top of the range but no closer
to a major breakout.

Dow Chart - 90 min




While the Dow may be trending to the top of its range the
Nasdaq closed exactly on it at 1425. This has been very
strong resistance for the last two months. If we have a
hope of breaking out of our range bound trading it will
be with the Nasdaq. This 1425 level is critical but by no
means the signal a new bull market has begun. Breaking this
level will be one more step in the effort to break the
current down trend. The next resistance is 1460 followed by
1500. That is liable to be a tough +75 point gain.

Nasdaq Chart - Daily




We continue to talk about the eventual danger of the VIX
and the closing at a ten month low on Thursday should not
be disregarded. It also does not mean a rogue comet will
hit Wall Street on Monday. It simply means the risk of an
eventual bout of selling is getting ever closer. The VIX
could continue to drop to historical levels under 20 before
the event but it would require several more days of very
strong buying. What it is telling us is that there is little
fear in the markets. Everyone thinks the markets are going up,
or at least they don't think they will drop soon. The put/call
ratio is another measure of lack of fear. At .52 it means
the risks are balanced or neutral. The contrarian viewpoint
would like to see more puts than calls as a measure of more
fear. Something in the 1.0 or higher generally precedes
decent rallies. Below .50 generally precedes a spurt of
selling.

In the final analysis everyone was bullish on Thursday at
the close. Whether it was the historical holiday bounce or
irrational exuberance over the earnings surprises is not
known. The markets rose almost casually despite the lopsided
volume. We closed right at critical resistance on the Nasdaq
and nearing critical resistance on the Dow. There are another
350 companies (guesstimate) announcing next week and historically
the farther we get into the cycle the less impressive the results
become. Also, the farther into the cycle the less interested
investors become. We are a cynical bunch and bore easily. Oh,
XYZ beat lowered estimates by a penny, yawn. Last week's earnings
was a welcome respite from the depressing war news and the SARS
epidemic. Will it prove the same next week?

With many companies already trading at significant gains over
where they were a couple weeks ago I would caution against
rushing into a buying frenzy. If you like BRCM at $16 when
it was $12 a couple weeks ago then be my guest. Numerous
blue chips have risen to resistance and getting enough
momentum to clear that resistance could be tough. IBM at $85?
INTC at $19? Citigroup at $39? CSCO at $14? MSFT $25.50?
Without a breakout by these companies and others like them
it will be hard to maintain a rally.

I would simply remind everyone that we are entering the
historical worst six months of the year. Beginning in May many
traders hang up their keyboards and turn to the task of family
vacations, yard work and barbeques and don't return to trading
until the kids return to school in September. The Hirsch
Corporation, editors of the Stock Traders Almanac, issued a
sell signal last Thursday based on market internals, technical
indicators and historical trends. While I and most others I
know scoff at the idea of taking a multi-month break there is
a historical precedent that many do. While most of the readers
of this article probably think this is the height of stupidity
we all have to take that trend into account. To do this we
should continue to profit from the bounces but be wary of
rallies to strong resistance. Think of it as sprints for a
runner. Run the race from every dip (8150) but when you reach
the finish line (8500) be ready to take a break. No single race
lasts forever. The start and finish lines can change at any time
so be flexible and pace yourself.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


**************
FUTURES MARKET
**************

Where's My Neck Brace?
By Vlada Raicevic

Daily Settlement Numbers 4:15pm ET

> DOW
Last: 8337.65
Net: +80.04
High: 8347.45
Low:  8235.41

> YM 03M
Last: 8302
Net: +74
High: 8325
Low:  8212

> S&P 500
Last: 893.58
Net: +13.67
High: 893.83
Low:  879.20

> ES 03M
Last: 891.25
Net: +12.50
High: 893.50
Low:  877.75

> Nas 100
Last: 1083.56
Net: +28.67
High: 1084.81
Low:  1051.36

> NQ 03M
Last: 1083
Net: +26.50
High: 1087.50
Low:  1054

DAILY PIVOTS

> YM 03M
R2: 8400
R1: 8361
Pivot: 8287
S1: 8248
S2: 8174

> ES 03M
R2: 904
R1: 899
Pivot: 888
S1: 883
S2: 873

> NQ 03M
R2: 1110
R1: 1100
Pivot: 1077
S1: 1066
S2: 1043

It is a good thing that the markets are closed tomorrow, because
my head hurts from the repeated banging of my forehead against the
desk top.  No, I didn't slip and fall.  I just continue to lean
over and bang it repeatedly, hoping to knock something loose
inside, perhaps some repressed memories which can come to the
foreground and allow me to understand what, exactly, this market
is doing.

Short recap: we exploded up on Tuesday, continued to melt up
overnight, and then sold off all of those gains on Wednesday.  In
fact, yesterday you couldn't find a buyer anywhere, and any moves
up were tiny 2 point burps.  Today, we went straight up again, and
you couldn't find a seller anywhere, and any selling barely moved
the price more than a couple points down.

After opening, the futures tried to move up, were sold, and it
looked like yesterday would have some follow through to the
downside.  Buyers came in before we tested yesterday's late day
lows, and from there the buying never stopped.  The strongest
selling came after ES hit the high of day at 892.50, but the
selling stopped at 888, and the futures found another round of
buying which exceeded the high by .25 to print 892.75.  We then
had more selling and what looked like another rollover, but buyers
stepped up again and pushed up to yet another high at 893.50.

The gnashing teeth and heads bouncing off desks created an
interesting rhythm across the trading communities.  Everywhere I
turned to had both bears and bulls shaking their heads in wonder,
and like a chorus to the head-banging rhythm, chanting "What in
the name of Wally is going on?".

Truly, this market action is not a complete surprise for options
expiry week, as they are known for their volatile ways.
Unfortunately, we've had more than a month of price swings that
make every week seem like options expiry.

Let's take a look at the charts and see what conclusions we may
come to.  Perhaps if we wear our Captain Nembot secret decoder
rings while we draw trendlines, we'll be able to figure something
out.

I know of two camps of thought when it comes to volume.  One says
that it is necessary to support whatever the market is doing,
meaning, if the market is going up, it is only sustainable if
there is strong volume to support it.  The other camp says, "who
cares?", if the market is going up, then it's going up, when it's
going down, it's going down.  I'm completely neutral on this,
since I've seen both sides proven right numerous times.  For those
who believe that volume needs to support price, then the green
weekly stick we just painted gives us yet another puzzler:
Yesterday during the selling, the total daily volume was higher
than the previous 4 days, but today's volume on the buying was
greater yet than yesterday's.  If you look at the following chart,
you can see how volume has been slowly falling off all week. The
bottom panel shows the 13MA of the volume data.  Today's total
volume is bigger because we didn't have the usual lunchtime
doldrums.

ES 15 Minute Volume Chart:




The ES daily chart shows Stochastics looking perky and moving up,
with the fast stochastic breaking above the downtrend line.  RSI
and Macd are at a dead stop, still in positive territory, but just
barely, and I would read them as neutral.  ADX shows that D+ is
just crossing below its uptrend line, but that sellers are no
where to be found, as D- continues to move lower.  We did not test
either of the two drawn uptrend lines today on the selling, but
then we didn't close above yesterday's open or the previous day's
close.  We are not at resistance or support on this chart.  All
that can be said is that price is in a mild uptrend, and
indicators are still generally positive, but nothing that would
cause a person to go out and actually buy the ES for a swing
trade.  On the other hand, there is nothing bearish about the
chart, so if one is long, there is no reason to sell, and there is
no reason to sell-short either.

ES Daily Chart With Indicators:




The following chart contains possibly useful trendlines.  As
trendlines are broken, new ones are drawn.  I used to erase the
ones that I thought weren't useful anymore, but have found that
they can often come back into play if a breakout/breakdown does
not hold, or just plain reverses.  Today, price stopped at the
original blue downtrend line.  The previous two highs have created
two additional downtrend lines, but they were not tested today.

ES Daily Chart with Trendlines:




The ES weekly chart shows that we yet again attempted to pierce
and hold above the downtrend line that repelled last week's
attempt.  That pierce did not work again (and I need to add a new
downtrend line to include last week's high).  However, price
attempted to pierce and close below the uptrend line, but that
failed as well, and the close was yet again inside the putative
triangle.  We did close well above last week's open and close, and
produced a strong looking green candle---which could neither break
out nor break down.  Macd is about to try and break above the
centerline, but note that the last two tries managed that, only to
fail almost immediately; Caveat 1: this time we are coming up from
a much higher low, which could bring more strength with it.
Caveat 2: the rise is very flat, carrying almost no momentum with
it, which shows a lack of conviction.  Net, again, is neutral.
Stochastics are on a nice uptrend, but the fast stochastic is
starting to run out of juice, and ADX is just showing an ever
larger disinterest as both buying and selling continue to drop.

ES Weekly Chart:




NQ daily chart is looking quite good, with Macd, RSI, and all
stochastics curling up and moving above their respective
resistance.  ADX actually shows a drop in buying, but price
continues up because there just are no sellers, with D- continuing
its steep descent. Price is against trendline and horizontal
resistance, but indicators are saying that there seems to be
enough momentum to get through.  It has been a very strong return
from the abyss, since just a few days ago it looked like the NQ's
were about to break and sell off hard.

NQ Daily Chart With Indicators:




In drawing trendlines on the NQs, you can see how they have been
much more predictable than the ES.  The NQs have been politely
stopping on cue at the downtrend line from the December highs, and
'false' pierces of existing trendlines have been few.  Here, like
the ES, price is coiling inside a narrowing set of trendlines, and
looks like it needs to decide which way to break  within the next
week.

NQ Daily Chart With Trendlines:




The NQ weekly chart shows that for five weeks, price has done very
little. This week has nearly reversed 3 weeks of price movement,
but the charts are barely bullish.  Macd continues to crawl up a
trendline, and crossed the centerline, and RSI is looking fairly
positive, turning up and away from the trendline and moving
average.  Multi-stochastic is looking positive as well.  Fast
stochastic is turned over, and is not reacting at all to this
week's rise, which is a warning signal, since this indicator
should react more quickly to fast price swings.   ADX shows that
sellers and buyers are both on a decline, and that this weeks
large green candle may be unsustainable.  Price also stopped at
the weekly downtrend line, although it did close near the high of
the week.  Mixed signals from both sides.

NQ Weekly Chart:




In conclusion, our secret decoder rings did nothing to clear up
the fog swirling among us.  Many charts are close to neutral, but
a positive week has pushed things into a more bullish tilt. This
bullish feeling that the charts give us must be tempered by the
fact that indices are nosing around resistance, and the ADX tells
us that it not necessarily a high degree of buying that is
producing all these green candles, rather, it is a lack of
selling, allowing what buyers there are to do as they please.
Next week, we hope against hope, that there is some resolution to
this standoff.  Will the sellers return and overwhelm the lower
volume bulls?  Will the bulls look charts over this weekend and
decide that things are starting to look good and return with
sufficient vigor to overcome overhead resistance?  Tune in next
week.


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

SOX, glamour queen of tech-land
By Leigh Stevens
lstevens@OptionInvestor.com

This past week brought earnings back into the forefront now that
Iraq as a military foe and danger has receded - of course, we
still have to win the "peace" and this may be the toughest
challenge. The market rally was lead by the tech heavy Nasdaq
which was in turn led by the key Semiconductor Index (SOX) - see
chart below. Earnings figures released by key tech leaders Intel
(INTC) and Microsoft (MSFT), among others, were well received.

The Nasdaq (Composite - COMPX) was up nearly 5 percent for the
week to 1425 - a substantial gain and even more so when you look
at it versus the S&P 500 (SPX) advance of 3% and the Dow's 1.7%.

THE BOTTOM LINE –
While the Nasdaq Composite (echoed by the Nasdaq 100, NDX) has
made a new closing 3-month high, my focus is on COMPX's ability
to pierce resistance in the 1450-1460 area, around the mid-
January top. The current rally is being led by what was a very
oversold Semiconductor index - more on that shortly - which is
one very volatile index that that can turn on a dime.

The S&P 500 (SPX) is now trading above its 200-day moving
average, a bullish plus, but there should continue to be two-
sided trading swings. As I've said before, the market appears to
be in an overall bottoming process but it can take some months to
create a strong recovery "base" in many key stocks.

Short-covering in the tech stocks by large hedge funds is a
dynamic here and the whole rally looks "technical" rather than
led by any big shift in the fundamental outlook for the economy
and stock earnings.

Moreover, bullish sentiment among traders jumped to an extreme
last week and calls into question the staying power of this rally
in the short-term. I continue to suggest trading the range and
the next best new entry should be into index puts, so take call
profits on rallies.

THURSDAY'S TRADING ACTIVITY –
Led by the spark provided by an upbeat sales forecast from Nokia
(NOK) and to general hopes for an economic rebound, traders and
investors pulled up the Nasdaq Composite by another 2.2 percent
or by  30.78 points, to 1425.50, producing a gain of 4.9% during
a holiday-shortened week (nearly 7% for the year).

The Dow rose 80 points on the week to 8337.65, which is now
virtually unchanged for the year.  There is shift in money coming
into the greater glamour of tech stocks and out of the
conservative Dow-300 type companies.  In the "bang for the buck"
department, I noticed the Journal quoting these startling gains
for the year - Yahoo up 53%, Amazon 32% and eBay by 33%.  Gold
anyone?  I don't think so, when more adventuresome investors see
these stats!

Both stock and bond markets close Friday for the Good Friday
church holiday. Without the U.S. market, don't expect much
European and Asian action.

Stocks took off in the afternoon after a Federal Reserve survey
of manufacturing activity in the Philadelphia region showed only
a mild decline, less than feared. Businessmen interviewed for the
survey indicated their expectations that the business climate is
improving.

In spite of the holiday shortened week, trading volume on the
NYSE was not much off its daily average of late, as options
expiration related activity took up the slack from traders
heading out early for a long weekend.

Tech stocks were strong from the opening - as mentioned, Nokia,
the big cell phone maker, put out a forecast on improving sales,
as did chip maker Broadcom (BRCM) - the company said that sales
were up during Q1.

With 101 million shares exchanged, Sun Microsystems (SUNW) ended
the day as the most-active Nasdaq stock, losing 8 cents (2.4
percent) to close at $3.24. SUNW performance disappointed
analysts as well as investors - A Merrill Lynch analyst said
"Sun's report highlighted the continuing depressed state of the
high-end hardware market. The company said IT spending might not
be worsening, but that it's sure not getting better". Amen
brother!

The Dow average lagged after Honeywell announced Q1 earnings that
were lower than consensus estimates. However, 27 of 30 stocks in
the Dow were higher on Thursday. The S&P 500 managed to tack on
1.5 percent for the day, or 13+ points to wind up the week at
893.58 - a possible test of the psychologically important 900
level is now only a few points away.

Weekly unemployment claims for the past week came in higher than
expected, remaining above the 400,000 level which seems to be a
benchmark figure for what is trouble for the economy or not.

OTHER MARKETS -
Oil prices rallied on fears that OPEC will cut back on supply
with the Iraq war winding down - nearby crude oil futures rose
$1.37 to $30.55. Gold prices also rose a bit, reflecting
continued nervousness about war and terrorism.  However, T-bonds
were little changed - the 10-year note was off 5/32, to wind up
yielding just under 4 percent.

The dollar up higher as the greenback closed FOREX trade in New
York at 119.66 Yen, up from 119.47 and the euro slide against the
U.S. dollar to $1.0876 from $1.0914.

MY INDEX OUTLOOKS –
The Semiconductor Index (SOX) daily chart leads my chart parade -

This one could also be entitled: "more than a dead cat bounce?"
Probably yes.  SOX has made a series of higher (down) swing lows as it
has climbed up from its bottom way down in the 210 area.

Now that the Index has exceeded a 62% retracement of its Oct. -
Nov. advance, it seems likely that SOX can continue to work its
way back to a test of the prior high at its mid-Jan. peak at 348
although there is also still the matter of a more recent high
at 338 to be overcome first.





What I will be watching for technically with the Semiconductor
Index is whether a new high will be "confirmed" by a similar
higher high in the RSI indicator.  If a bearish divergence sets
up it suggests to me that this sector index, and probably the
Nasdaq as well, is a candidate for profit taking on any long
calls and a switch to a put play as the next trading opportunity.

S&P 500 Index (SPX) – Daily & Hourly charts:

SPX is now trading above the important 200-day moving average
which is a technical plus as I've been saying before - you can
see how this line acted as resistance in recent trading.  So, 880
now is looking like the area that the bulls have to defend.

Interesting that the see-saw price action has created a situation
where the S&P 500 is not yet in any kind of overbought extreme.
As with the SOX however, it will be a test of sorts if the Index
gets to a new high without a confirming new high in the 14-day
RSI or the 21-period hourly stochastic, as per the indicator
graphs below -





The 10-day TRIN is not at any kind of extreme.  The rally can be
seen in one way however, as a "continuation" of the rebound
predicted by the two prior high readings showing very high
selling volume, relative to buying, over the prior 30 days.

Last but not least, as I suggested last week, if Monday brought a
further rebound from the hourly trendline, such bullish action
would suggest further upside, which is exactly what happened.
Who would have thunk it!  If you have a choice between thinking
and believing a trendline like this, believe what you see on the
chart.

900-905 looms as the key resistance.  I suggest shorting and put
buying strategies on signs of a faltering rally in this area.  It
seems unlikely that SPX is going to sale through there - but,
stay tuned!  875, at the trendline - the intersection of which
moves higher over the week, is an important technical support
line to watch over the week to come.  865 is a must-hold support
to keep a bullish chart going for this Index.


S&P 100 Index (OEX) – Daily & Hourly charts:

445 and 455 are the near support/resistance levels to watch in
the early part of the week. 460 is the key prior top that must be
overcome to get this rally kicked into 3rd. gear.  A break of
445-440 would suggest downside follow through.

The S&P 100 chart looks like a carbon copy of the S&P 500 (SPX)
chart - EXCEPT that I do have one indicator showing here that
provides my most bearish short-term key indicator, which is
related to market or trader "sentiment".

Traders got pretty bullish by week's end. Although there was
option unwinding due to expiration, my equities call to put daily
volume ratio is usually not that thrown off and the extreme is
marked with a red arrow on the left daily chart side below -





I figure that a downside reversal is coming in the next few
sessions.  The question in my mind is more on whether 440 gets
pierced and prior support at 430 gets tested or not.

A couple of hourly closes above 460 - my 450 suggestion last week
seems to not be enough leeway - AND the ability to hold this
level on subsequent pullbacks, is the only development that would
make me wonder if holding puts was getting too risky.

I'll bank on the 1-day extreme seen so far in my
Call to Put options "sentiment" indicator. Another day or two of
CBOE equity call volume running around double daily equities put
volume, would make this a surer bet and pull up the 5-day moving
average.

I use a 5-day average as a sometimes confirming indicator, but a
1-day extreme like the one shown above is usually enough to
signal that a countertrend move is coming. After years of
watching this, I still find it uncanny that when the majority of
option traders gang up on one side so heavily, it so often
signals that an unexpected opposite is coming.

Nasdaq Composite Index (COMPX) – Daily & Hourly:

The back and forth two-sided trading swings had nudged the daily
stochastic model into a neutral to slightly oversold area, so no
extremes are suggested in terms of this market being overbought
EXCEPT on an hourly chart basis.

But if the COMPX takes out that prior double top and get up to
the 1450-1460, it will be - overbought enough to suggest that the
Composite won't go to high for the year, or not for long. 1350
continues to be the area of the expected low end of a 1350-1450
trading range.





The Nasdaq has been a good market to trade given the number of
back and forth price swings.  Remember the "island" bottom
(yellow circle on the hourly chart)? - a good chart pattern
"signal" then.  Now what?  Look for a top again such as seen in
January and another trading swing to ride down. More is seen on
the QQQ chart lag to suggest that this rally probably doesn't
have big strong "legs" as they say.

QQQ charts - Daily & Hourly:

Near support 25.3 and resistance at 27.4 - the Q's are lagging
the Composite and the volume is in a downward trend.  Someone
forgot to tell the Nasdaq 100 followers that there is anything
here to get excited about.

To suggest a breakout of the triangular consolidation showing on
the daily chart will require a close that clears 28-28.25 AND -
do I sound like a broken record - the ability to hold above
27.75-28 on subsequent pullbacks.  The idea being that resistance
once exceeded in a solid rally, should "become" future support on
pullbacks.

I think we got a weak rally to the top end of a range rather than
a change of heart among the legions of investors and money
managers who would rather NOT get enticed back into tech stocks.
We're seeing an overbought reading on our hourly stochastic
models here also.





25.30 is the key trendline support.  A break of this area would
suggest that QQQ can get back to the 23.5-24 area again.  Short
the rallies, buy puts and stay tuned.

The principle bullish note is provided by that fact of the
possibility that the triangle is the stock "coiling" or
compressing for another up leg and the fact that the 14-day
stochastic is showing upside momentum from the lower end of its
range.

So let them prove themselves - the key technically for any
bullish outlook is an ability for the Q's to penetrate the
cluster of prior price peaks - hey, "ppp" may be a catchy new
acronym.


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**************
Editor's Plays
**************

Last Time

This may be the last time I play the QQQ in this column. (grin)
I can't seem to get a break. Last Sunday was the third time I
listed a potential QQQ play in the last two months. We started
off great on Monday but the rest of the week did not play
exactly as I expected.

If you entered the suggested play on Monday morning you would
have bought the April $26 call for about 20-25 cents where it
traded for the first 90 minutes. The May $25 put traded in the
75-80 cent range during that same period.

The game plan was to buy the put for an eventual Apr/May sell
off from QQQ support at $25.50 where it closed on that Friday.
We were buying the call for insurance against a bounce from
the IBM/MSFT/INTC earnings. Well, we got the bounce!

The plan was to sell the call on Thursday to defray our total
cost and then hold on to the put for the next couple weeks.
The call traded as high as $1.00 on Thursday but spent the
majority of the afternoon in the 90 cent range. If you entered
the trade as suggested you should have not paid more than
25/80 cents for a total of $1.05. If you sold the insurance
call as planned for 90 cents then you have May $25 puts with
a cost basis of 15 cents. Not bad for a busted play.

What do we do now? Nothing! We are actually even better
positioned tonight than we were last week and we have a very
cheap option. The QQQ came to a dead stop at the down trend
line from December. Also, unlike the Nasdaq which stopped at
1425 and at the same spot it stopped on each upward attempt
the QQQ has made a lower high each time. Nobody can guarantee
it will fail here but I would bet 15 cents on this scenario
any day of the week.

QQQ Chart - Daily




This may not have worked out exactly like we planned but
we should not have any complaints. If you are not in the
current play then the May $25 option would be the vehicle
of choice. It closed at 35 cents on Thursday.

Good luck!

Here is the link to last weeks play explanation:
http://members.OptionInvestor.com/editorplays/edply_041303_1.asp


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

Play updates:

I am only listing the current recommendations with a
link to the initial write up and unless the play changed
substantially.

ORCL - Put - $12.00
4/6/03 ($11.37 when recommended)

Somebody stop this software euphoria. With nearly every
software stock warning including Microsoft why is ORCL up?
Talk about a rising tide lifting all boats. I am going to
set a stop loss on this trade of $12.50. If we touch it
we are done. ORCL closed right at very strong resistance
on Thursday of $12.00. If it breaks over that level we
could see some serious short covering. Prepare to exit
gracefully.


CY - Cypress Semi Call - $8.49
3/2/03 ($6.41 when recommended)

http://members.OptionInvestor.com/editorplays/edply_030203_1.asp


EMC Call from Feb-2nd  $8.49
($7.70 when recommended)

http://members.OptionInvestor.com/editorplays/edply_020203_1.asp


Powerball - From 12/29/02

RFMD and TLAB are still holding this lottery ticket back but
we still have nine months until expiration.

It would have taken $1,255 to buy one contract of each on
January-2nd. Any bets on what this will be worth on 12/31/03





http://members.OptionInvestor.com/editorplays/edply_122902_1.asp

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

Remember, these are high risk plays and should only be made
with risk capital.

Good Luck

Jim Brown


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

An Easter Earnings Passover
by James Brown

Once again earnings news has taken center stage.  Traders took
the stream of reports in stride and drove the markets higher into
the close before the long holiday weekend.  Many of the reports
today and after the bell on Wednesday were better than expected
or at least not as bad as expected and these "surprises" caught
some traders off guard.  With so many of the not-so-bad or
positive earnings reports coming from tech companies it appears
that investors were able to maintain their positive bias and sort
of passed over the murky economic news.

Setting the stage for today's green candles in the U.S. markets
were positive sessions for Europe's major exchanges.  The London
FTSE 100 gained 34 points or +0.89%.  France's CAC 40 squeaked by
with a +3.84 points and the German DAX out-performed the
continent with a +2.66% gain.  In the Pacific, the two largest
markets were mixed.  The Japan NIKKEI 225 bounced +53 points off
fresh 20-year lows and the Chinese Hang Seng lost 96 points or -
1.11%.  The SARS illness is still first and foremost on the minds
of citizens and governments alike in the region and it's bringing
the economy to a standstill.  Have no doubt that this will
influence the American markets but to what degree remains
unknown.

After an up and down day, the U.S. Treasuries ended lower as
money appeared to shift back into stocks.  The U.S. dollar, which
took a nosedive on Wednesday was little changed against the euro
and the yen.  Investors with an energy focus are sure to note
that oil futures rose $1.01 to $28.54 on news that OPEC has
declared an emergency meeting for next week.  Faced with the
prospect of Iraqi oil hitting the markets faster than expected,
analysts believe OPEC will cut exports to prevent a glut on the
market and a crash in oil prices.

At the end of the day only three of the thirty Dow Jones
Industrial components failed to close in the green.  Market
internals were also positive.  Advancing issues beat decliners by
3-to-1 on the NYSE and by more than 2-to-1 on the NASDAQ.  52-
week highs completely overshadowed news lows 268 to 61.  Up
volume was huge with the NYSE posting 1.39B versus 237m in down
volume.  The bullishness was almost as strong on the NASDAQ with
up volume of 1.27B versus 307M in down volume.  Overall volume
was decent considering the Passover and Easter holiday.

Believe it or not, I looked at over 1000 charts today and
observed a lot more bullishness than I truly expected.  My
intermediate-term bearish market bias is struggling to find
evidence in the numbers.  Therein may be the secret.  The crowd
is normally wrong at the beginning and the end of a trend.  When
everyone (and everything) starts looking bullish, then it may be
time to worry.  On the other hand, maybe these languid economic
reports are the "wall of worry" that most bull markets need to
climb.  What concerns me the most are these lows in the
volatility indices (VXN & VIX).  Anytime investors are this
complacent they usually get jarred back to reality with a big
painful moves.  There is nothing that says the markets can't keep
climbing and that the VIX can't keep sliding but it would remain
a very dangerous place to trade if your only strategy is to go
long.

I'll leave you with a question... what are the markets going to
trade on after earnings season is over?


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

Market Averages

DJIA ($INDU)

52-week High: 10673
52-week Low :  7197
Current     :  8338

Moving Averages:
(Simple)

 10-dma: 8285
 50-dma: 8025
200-dma: 8329



S&P 500 ($SPX)

52-week High: 1176
52-week Low :  768
Current     :  894

Moving Averages:
(Simple)

 10-dma:  879
 50-dma:  851
200-dma:  880



Nasdaq-100 ($NDX)

52-week High: 1573
52-week Low :  795
Current     : 1084

Moving Averages:
(Simple)

 10-dma: 1047
 50-dma: 1020
200-dma:  990



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

These are EXTREMELY low reading on the VXN.  The markets only
have a couple of years of data on the VXN and this is a new all-
time low.  Meanwhile the VIX has slid past the previous two
relative lows and appears to be heading for its more traditional
lower boundary towards 20.  Keep in mind it has quite a ways to
go before it gets there.  Also keep in mind that according to
Mark Phillip's recent backtesting on the VIX, we should not see
it drop past the 24 mark before reversing.  The next few sessions
will be very interesting.

CBOE Market Volatility Index (VIX) = 24.59 -1.50
Nasdaq-100 Volatility Index  (VXN) = 35.88 -1.17

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.52      1,024,424       535,106
Equity Only    0.42        893,692       372,875
OEX            0.88         42,791        37,575
QQQ            0.78         91,525        71,252


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

Bullish Percent Data

           Current   Change   Status
NYSE          46.5    + 2     Bull Confirmed
NASDAQ-100    59.0    + 1     Bull Alert
Dow Indust.   43.3    + 0     Bull Alert
S&P 500       48.8    + 1     Bull Confirmed
S&P 100       47.0    + 3     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  0.91
10-Day Arms Index  1.10
21-Day Arms Index  1.31
55-Day Arms Index  1.34


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       2126            717
NASDAQ     2048            936

        New Highs      New Lows
NYSE       102               28
NASDAQ      87              16

        Volume (in millions)
NYSE       1,661
NASDAQ     1,596


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

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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***************
ASK THE ANALYST
***************

A SENTIMENTal Journey

I read so much bullish sentiment, and I just don't get it.  I
went to lunch the other day.  One of my favorite restaurants;
Always busy;  It was EMPTY and one of the waitresses had quit
because she wasn't making enough tips.  They didn't replace her.

Talked to a landscaper.  Said he'd made one sale out of 60
contacts.  Old customers aren't renewing.  Said every one told
him, "stocks are down."

I'm told these are lagging indicators, but if no one is buying,
what's being sold???  How does the bullish contingent say it'll
be better in 6 months?  Help, I just don't get it.

I hear you!  And I agree, all of the above are considered either
"lagging" or "current" indicators, but as we all know, the MARKET
is never wrong and its always looking forward.

Now, I received this e-mail on Wednesday, and I thought today's
comments from several economists that they were "ignoring"
today's release of the April Philadelphia Fed report was somewhat
surprising.

The basic comment was that, it doesn't matter because all that
weak data was largely due to "war with Iraq."

Now, I'm like, or share the same observations as the subscriber
above.

In fact... I haven't turned on a stove in over two-years, and I
eat out a lot.  I love it.  For the most part, I can walk into a
restaurant these days, not have to wait in line, and I can barely
read the first column of the newspaper article before the food is
on the table.

However, my brother-in-law and sister own a landscape design
company in northern Colorado and they are as busy as a bee and
usually have to turn down projects when people need them done
within the next couple of weeks.  Too much backlog!

Mind you, my brother-in-law is perfectionist and says it is so
tough to find "good help" and find someone that is willing to put
in a solid 8-hour day of work, so he does most of the work
himself and for bigger projects, and will only hire a temporary
worker when he really needs an extra set of hands.

It's amazing that with jobless claims so high, it is still tough
to find "good help."

How does the bullish contingent say things will be better in 6-
months?  I wonder too, but if I leave home just 10-minutes too
late, the traffic on the way to work is terrible!  Where are all
these supposedly unemployed people going?  They can't be going to
work can they?

In part, I think its general human nature to try and "think
positive," and always try to view the glass as being "half full."

Do we as traders have a problem with this?  We shouldn't.  At
least not as traders of stocks and options.

Perhaps my not having a problem with "thinking positive" is
because I offset that BULLISH thought process, with a BEARISH
thought process.  Then see which scenario the MARKET seems to be
agreeing with.

For instance, I don't currently own a home here in Denver, CO.
Why?  Because I think the economy stinks and housing prices will
come down.  About two years ago, a single family home would be on
the market for about 2-weeks and the seller would usually find
two or three buyers actually bid the price higher from the asking
price as there just weren't enough homes on the market.  I'm not
sure what the average selling time is today, but a friend of mine
finally took his house off the market, finished out the basement
for extra room, because they were going to have to bring the
price down below what they paid for it a couple of years ago.

But here's something interesting that a realtor friend of mine
was telling me.  Evidently, there have been a couple of builders
go "belly up" and there are actually investors that are buying
"shell houses" (partially finished, but the builder went bankrupt
and couldn't finish the job), and just letting them sit vacant
and unfinished until the housing market turns around.

Who the heck would buy a house that has no carpet, or cabinets in
it and pay $200,000+ to just let it sit there?  It makes no sense
to me.

BUT..... it makes sense to the person that bought it, and there's
NOTHING I can say or do about it.  You watch... It will probably
be one of "those guys" that I eventually buy a house from, and
I'll pay $300,000 for it.

While I may be missing out on a bottom, my SENTIMENT toward the
housing market here in Denver, CO may not be correct, but I guess
that's the RISK of OPPORTUNITY I'm willing to take.

I also understand where my BEARISH sentiment comes from.  It
comes from past experience.

Just as the subscriber that "can't figure it out" regarding why
the market continues to rebound from the March lows, I have
NEGATIVE sentiment on the housing market because of past
experience.  You see, I took a $20,000 bath in a town home I
bought in 1983.  I bought that town home just before the "oil
bust" took place in Denver.  About 7-years later, I sold the town
home to some "poor" girl that had just gotten a divorce.  Humph!
Two years ago, that town home sold for 4-times what I sold it
for.  Still, my SENTIMENT toward buying a house right now has me
looking for a pullback in prices as it just doesn't make sense to
buy a home right now.

I can't figure out why the Dow Jones Home Construction Index
(DJUSHB) 354.02 has surged some +21% in the last 6-weeks!  Can
you?  I sure haven't seen a 21% increase in home sales the last
90-days.  I'm also glad I'm not short/put this index either!  At
least not for April expiration.

Now, if I were "so smart" guess what?  I'd have been long the
DJUSHB or the PHLX Housing Index (HGX.X) 235 from 200.  But
again... my SENTIMENT is negative.

SENTIMENT is a wierd thing, and sometime, when it comes to
trading and investing, I fell it is HIGHLY overrated as a market
indicator.

SENTIMENT can be short-lived, and it can last one heck of a lot
longer than any of us can imagine.  I'm not just talking about
BEARISH sentiment either.

A couple of years ago, at an OptionInvestor.com seminar, we held
a seminar right across the street from a company called ICG
Communications.  They were either getting ready to go bankrupt or
had just gone bankrupt (Fall of 2000).  They were one of those
"fast growing" CLECs (Common Local Exchange Carriers) that was
building out these networks like crazy, putting in place tons of
fiber optic cable from Corning (NYSE:GLW) and routers and
switches from the likes of Cisco Systems (NASDAQ:CSCO) $13.95,
Ciena (NASDAQ:CIEN) $4.53, Nortel (NYSE:NT) $2.41 and Lucent
(NYSE:LU) $1.50.

While many of these networking equipment companies were trading
new 52-week highs and some had begun breaking some longer-term
bullish support trends, there was still quite a bit of BULLISH
SENTIMENT for these equipment makers, even though some of their
customers were going bankrupt.

The Spring seminar, there was still BULLISH SENTIMENT toward
these equipment makers.  It wasn't just investors either.  CEO's
were saying they just didn't see an "end" to the demand and
backlogs for orders were having them build out extra capacity to
meet the demand.

Can you believe it!  The MARKET was selling many of these
equipment stocks in late 2000 and early 2001, and many of the
CEOs, which were "closest" to the action, had no clue what was
coming?

I guess what I'm trying to say here, is that SENTIMENT isn't
always correct and it isn't always wrong.  How long does BULLISH
or BEARISH SENTIMENT last?

Does SENTIMENT last weeks, months, quarters or years?  It depends
doesn't it?  Yes, bullish and bearish sentiment can be short-
lived and it can be long-lived.

However the MARKET is NEVER wrong.  Oh... it may be wrong for a
little while, but as soon as it learns its mistake, it is quick
in correcting that mistake.

Do I think the economy is any better today (April 17, 2003) at
S&P 500 (SPX.X) 893 than it was on that it was on March 11, 2003
at S&P 500 (SPX.X) 800?  No, I don't think it is "that" much
better, but my SENTIMENT doesn't mean "squat" and perhaps the
MARKETS sentiment is just bullish.  I'd argue though that the SPX
started its rebound BEFORE any type of BULLISH sentiment was
present, just as many of the telecom stocks and telecom equipment
makers started receiving much BEARISH sentiment despite their
stocks breaking down and heading lower.

Sometimes, I don't like writing this column, especially when I
try and answer the final part of the subscriber's question.

..but if no one is buying, what's being sold???  How does the
bullish contingent say it'll be better in 6 months?  Help, I just
don't get it.

Buying what?  The stock that has doubled in the last 6-weeks that
you and I didn't buy because our SENTIMENT was not inline with
the MARKET's.  Or is the subscriber asking about the lack of
consumer buying of the PRODUCT that the company whose stock just
doubled in the last 6-weeks is manufacturing?

I'm not being critical of that question at all, but I came to the
simple conclusion a long time ago, that sometimes, what the
MARKET is doing at a particular time, didn't make a lot of sense
at the time.  However, I also learned that even though the MARKET
doesn't always make sense, it doesn't mean that the "nonsensical"
action can't be rewarding from the bullish side, even when the
BULLISH SENTIMENT seems too bullish.

About all that you and I can really do, is trade what we OBSERVE
from the market, using the tools that we have at our disposal.

Again... I'm like you.  There are some stocks or indexes/sectors
that I simply won't trade, when I just don't "believe" what I'm
seeing, because my SENTIMENT won't allow me to.  I've seen some
"missed opportunities" over the years despite the BULLISH chart
and my BEARISH SENTIMENT.  I've also learned to "call it quits"
when a trade goes against me and the technicals are confirming
that I'm out of line with what the MARKET is thinking and more
importantly DOING!

I've told the story about my bearish sentiment and several of my
clients bearish sentiment regarding Amazon.com (NASDAQ:AMZN)
$24.99 (split adjusted), a couple of years ago.  Hmmmm... at just
about this identical level.  You see, even though SENTIMENT was
TOO BULLISH and I/we shorted AMZN, the "bullish triangle" pattern
that unfolded had me and all but one client stopping out of the
trade as the stock's PRICE action had us doing so.  Finally, at
about $50.00, the other client took the loss.  Good thing too,
because despite the OVERLY BULLISH sentiment that we "knew"
couldn't last, lasted until the stock hit $100.00.  I never owned
a share of Amazon.com during that bull run, simply because MY
SENTIMENT wasn't as bullish.

I "know" and YOU "know" that SENTIMENT is a part of market
psychology, and it does impact price action of stocks and broader
market indices, which are comprised of stocks.

I'd also argue that SENTIMENT also shows up in fundamental
forecasts.

Here's an e-mail I got from James Brown.

On Dec. 16, 1998, CIBC Oppenheimer analyst Henry Blodget
predicted that the share price of Amazon.com, then $242.75
despite the company's losses of 90 cents per share in the most
recent quarter, would reach $400 within a year. The self-
fulfilling prophecy sparks a frenzy in which Amazon jumps $46.25
that day alone and to a split-adjusted price of nearly $600 12
months later.  Alas, Blodget, now with Merrill Lynch, maintains
his buy rating on Amazon until July 27, 2000, when the stock's
split-adjusted price has dwindled to about $180.

Apparently attempting to out-Blodget Blodget, on Dec. 29, 1999,
PaineWebber analyst Walter Piecyk places a 12-month target price
of $1,000 on cell-phone component maker Qualcomm, then trading at
$503.  The stock reaches an intraday high of $740 the next day.
Things, however, don't work out as well for Piecyk: Within 12
months the stock falls 35 percent; it now trades at a split-
adjusted $227.50.

Not to be outdone, Blodget writes the following in a column for
News.com in January 1999: "Unlike with other famous bubbles ...
the Internet bubble is riding on rock-solid fundamentals, perhaps
stronger than any the market has seen before.  Underlying the
crazy price increases are the foundations of what could become
the early 21st century's leading growth companies.... Just
because the Internet stock phenomenon looks like a bubble, it
isn't a given that the bubble will burst."

Ahhh... a SENTIMENTAL journey.  Not a pleasant for me.  Remember,
I thought SENTIMENT and the stock's price was WAY overdone and
was about to come to an end at AMZN $25.00.  Where did these
bulls and analysts really think the stock was going?  And why?

I just can't answer the "why" of anything.  I can come up with
scenarios as to why, and then check those scenarios against the
charts we follow to then try and "reason" the whys.

Right now, I'd have to say, that the MARKET has discounted, or
"thrown out" some things that the subscriber and I see on a daily
basis.  Why?  Probably because the MARKET thinks and has been
willing to back it up with money, that things are either changing
for the better, or have at least changed for the positive since
the March lows.

Now, I've also seen e-mail from subscribers wondering why the
SENTIMENT is so negative in OI commentary and other commentary
that they've read from other sources, and how can such commentary
be written when the MARKETs are going higher?

I could go into long oration about why the MARKET is going to
eventually be wrong.  Heck, I could have held my short in AMZN
from $25 to $100 and eventually proven I was "right."

However, I just try and trade the trend.  I don't ALWAYS get it
right and sometimes the MARKET disagrees with my trade and I
suffer a loss.  It's the trades I make that the MARKET agrees
with that keeps me trading.

Jeff Bailey


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

Kevin Wenck: Polynous Growth Fund A (PAGFX)

This small-cap equity fund is up over 24% on a year-to-date basis
through April 16, 2003, but should you invest?  We'll seek to add
some perspective to the fund's strong recent performance and tell
you what we think of the fund now as a potential long-term growth
investment.

Kevin Wenck established Polynous Capital Management, fund advisor
to the Polynous Growth Fund, in May 1996.  Before forming his own
asset management firm, Wenck was employed by G.T. Capital and ran
the G.T. America Growth Fund from July 1991 until April 1996.  He
also managed mid- and small-cap stock portfolios for G.T. Capital
Management's private clients.  G.T. Capital was renamed LGT Asset
Management in 1996.

Previously, Mr. Wenck spent three years managing small-cap growth
portfolios with Matuschka & Co.  Wenck received his undergraduate
degree from Marlboro College in 1981 and earned his M.B.A. degree
from Dartmouth College, Amos Tuck School of Business in 1985.  He
earned the right to be called a Chartered Financial Analyst (CFA)
in 1986.

Investment Style/Strategy

The Polynous Growth Fund seeks long-term capital appreciation by
investing in the equity securities of U.S. companies with market
capitalizations of between $50 million and $5 billion at time of
purchase, which are believed to have annual revenue growth rates
of between 15% and 30%.

Polynous Capital Management performs fundamental research as part
of its overall investment process, described as a "Dynamic Value"
process.  In other words, they invest only in companies that meet
their research criteria when they're selling at inexpensive price
valuations.  The firm's research conclusions are implemented into
the various investment portfolios managed by the firm, as well as
the Polynous Growth Fund.

Since the Polynous Growth Fund is registered as a non-diversified
open-end investment management company, Wenck is able to invest a
greater portion of the fund's net assets in individual securities
such as Optical Cable Corporation, which recently comprised 29.9%
of the value of fund net assets.  With just 29 stock holdings and
60% of assets held in the fund's top 10 holdings, Polynous Growth
Fund is fairly concentrated.

The Polynous Growth Fund, Class A (PAGFX) has a $2,500 minimum
initial investment for regular accounts; $1,000 to open an IRA
account.  The Class A shares of the fund have a 4.5% front-end
load charge and an annual operating expense ratio of 1.90% per
Morningstar.  The fund has just $6 million in total net assets.
For more information or to download a prospectus, logon to the
Polynous Capital Management website at www.polynous.com.

Investment Style/Strategy

The word "Polynous" in ancient Greek means "many thoughts", and
Wenck uses that moniker to describe their disciplined investment
process.  That means the firm analyzes the economic environment,
industry characteristics, and company strengths and weaknesses,
as well appropriate valuation assumptions.  The goal, to gain a
comprehensive understanding of each company under consideration,
and then to only invest in those companies meeting their equity
research criteria "when" they are selling at inexpensive prices.

Wenck's primary objective with the Polynous approach is to only
make investments when he can add significant value analytically.
However, he believes that his "dynamic value" process gives the
firm much more knowledge about their investments than generally
is the case (i.e. information advantage).  The process seeks to
combine the dynamic opportunities of growth stock investing with
the strong valuation disciplines of value investing.  By having
both growth and value screens, Wenck seeks to achieve an optimal
balance between risk and return.

Equity holdings are continuously monitored, with stocks sold when
they no longer satisfy the fund's buy/hold disciplines.  The firm
seeks to have the proper structure, risk control, and discipline,
but it acknowledges that such checks and balances don't guarantee
success.  At every step of the investment management process, the
primary focus is on risk management, their website states, not on
stock selection.

According to Morningstar's report, the Polynous Growth Fund had a
median market capitalization of $268 million as of January 31 for
a small-cap bias.  Compared to other small-cap funds, the fund's
average price valuations were high enough to land in the "growth"
style box so it's classified by Morningstar as a small-cap growth
fund.  Because it buys stocks when they are inexpensive, the fund
from time to time will find itself in the small-cap "blend" style
box.

Investment Performance

Earlier we mentioned that the Polynous Growth Fund is up 24.1% on
a year-to-date basis as of April 16, 2003.  However, that follows
a dismal 2002 when Wenck generated a 40.7% negative annual return
for investors.  So, we raise the question, is this fund right for
you?  The year before that (i.e. 2001), Wenck produced a positive
24.5% annual return.  So, suffice to say, Wenck's performance has
been hit or miss.




Below is a summary of the fund's annual period returns from 1997
to 2003 including the YTD 2003 period, along with its percentile
category ranking in the Morningstar small-cap growth category.

 Annual Total Returns/Category Rankings:
 +18.5% in 1997, 49th Percentile
 -12.3% in 1998, 96th Percentile
 -18.3% in 1999, 99th Percentile
 + 0.1% in 2000, 35th Percentile
 +24.5% in 2001, 2nd Percentile
 -40.7% in 2002, 91st Percentile
 +21.3% in 2003, 1st Percentile (YTD)

You can see that in the go-go growth years of the late 90s, Wenck
actually lost money for investors, not what you would expect from
a small-cap growth investment.  Quite to the contrary - one would
have expected a small-cap growth strategy to perform particularly
well in such a favorable market environment for small-cap, growth
stocks.

The fund's 40.7% calendar loss in 2002 was 12.5% greater than the
average small-cap growth fund per Morningstar.  So, entering 2003
the fund had ranked in the bottom decile of the small-growth fund
category three times in the last five calendar years, versus only
one year out of five ranking in the top decile.  So, to say Wenck
either hits a home run or strikes out may be a fair assessment of
his performance, at least over the past five years or so.

Wenck's trailing 5-year annualized loss of 10.8% through April 16
was 7.6% a year on average worse than the S&P 500 index, and poor
enough to rank the fund in only the 90th percentile of the small-
cap growth category, per Morningstar.  On the other hand, Wenck's
trailing 3-year annualized loss of 0.5% was 11.7% per year better
than the S&P 500 index, and strong enough to place it in the 11th
percentile of the category.

With near 30% of assets invested in one stock, Optical Cable, the
fund's investment results can be volatile.  Optical Cable's stock
is up 107.6% in 2003, contributing to the fund's 24.1 return this
year.  But as it goes so will the fund.  So, Wenck's concentrated
portfolio may not be for the faint of heart.

Conclusion

Over the long-term, Wenck has produced below average returns with
above average risk relative to other small-cap growth funds.  The
fund may be up 24% this year, but only investors with "cast-iron"
stomachs need consider it.  The fund's 40% loss in 2002 should be
enough to scare away most investors.

With only $6 million in assets, the fund's expense ratio of 1.90%
is more than the average small-cap growth fund (1.70%), lessening
its appeal even more.  Long-term investors may find better growth
managers and funds elsewhere.  It's a good story, but performance
is likely to continue to be too "hit or miss" for most investors'
tastes.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                 Sunday 04-20-2003
Sunday                                                      2 of 5


In Section Two:

Coming Events: Earnings, Splits, Economic Events
Market Watch: So Many To Choose From
Daily Results
Call Play of the Day: ERTS
Put Play of the Day: None
Dropped Calls: LXK, MMM
Dropped Puts: None


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*************
COMING EVENTS
*************

==========================================
Market Watch for the week of April 21st
==========================================

------------------------
Major Earnings This Week
------------------------

Symbol  Company               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

MMM    3M Company            Mon, Apr 21  During the Market   1.40
BSX    Bos Scientific Corp   Mon, Apr 21  After the Bell      0.29
COF    Capital One Financial Mon, Apr 21  After the Bell      1.03
CD     Cendant Corporation   Mon, Apr 21  After the Bell      0.29
CNF    CNF Inc.              Mon, Apr 21  After the Bell      0.20
CTSH   Cognizant Tech Sol    Mon, Apr 21  After the Bell      0.17
DNB    D&B                   Mon, Apr 21  After the Bell      0.51
RE     Everest Re Group      Mon, Apr 21  After the Bell      1.64
HAS    Hasbro, Inc.          Mon, Apr 21  Before the Bell    -0.06
HE     Hawaiian Electric     Mon, Apr 21  After the Bell      0.79
IDXX   Idexx Laboratories    Mon, Apr 21  Before the Bell     0.31
ICBC   Independence Com Bank Mon, Apr 21  After the Bell      0.60
LEE    Lee Enterprises       Mon, Apr 21  Before the Bell     0.33
LXK    Lexmark International Mon, Apr 21  Before the Bell     0.72
LRY    Liberty Prop Trust    Mon, Apr 21  After the Bell      0.81
LNCR   Lincare Holdings      Mon, Apr 21  After the Bell      0.48
MWV    MeadWestvaco          Mon, Apr 21  Before the Bell    -0.29
MRK    Merck & Co., Inc.     Mon, Apr 21  Before the Bell     0.76
MEOH   Methanex              Mon, Apr 21  -----N/A-----       0.60
NBP    No Border Partners    Mon, Apr 21  After the Bell      0.62
PKG    Pack Corp of America  Mon, Apr 21  Before the Bell     0.06
PRK    Park National         Mon, Apr 21  -----N/A-----       1.52
PCL    Plum Creek Timber     Mon, Apr 21  After the Bell      0.16
PX     Praxair Inc           Mon, Apr 21  Before the Bell     0.79
RTN    Raytheon              Mon, Apr 21  After the Bell      0.26
RSLN   Roslyn Bancorp, Inc.  Mon, Apr 21  Before the Bell     0.47
SANM   Sanmina-SCI Corp.     Mon, Apr 21  After the Bell     -0.01
SLAB   Silicon Laboratories  Mon, Apr 21  After the Bell      0.20
LUV    Southwest Airlines    Mon, Apr 21  Before the Bell     0.03
SWBT   So We Bank of Texas   Mon, Apr 21  After the Bell      0.44
PCS    Sprint Corp           Mon, Apr 21  After the Bell     -0.13
FON    Sprint FON Group      Mon, Apr 21  After the Bell      0.35
CAKE   The Cheesecake Fact   Mon, Apr 21  After the Bell      0.26
WHI    W Holding Company     Mon, Apr 21  -----N/A-----       0.31
WRE    Wash Rl Est Inv Trust Mon, Apr 21  After the Bell      0.49
WMO    Wausau-Mosinee Paper  Mon, Apr 21  After the Bell      0.07
WFSI   WFS Financial         Mon, Apr 21  -----N/A-----       0.55
WHR    Whirlpool Corp        Mon, Apr 21  Before the Bell     1.29


------------------------- TUESDAY ------------------------------

NDN    99 CENTS Only         Tue, Apr 22  Before the Bell     0.20
AFCI   Advanced Fibre Comm   Tue, Apr 22  After the Bell      0.06
ACS    Affiliated Comp Serv  Tue, Apr 22  Before the Bell     0.56
ATG    AGL Resources         Tue, Apr 22  -----N/A-----       0.90
ACL    Alcon Inc.            Tue, Apr 22  After the Bell      0.42
ALEX   Alexander & Baldwin   Tue, Apr 22  After the Bell      0.36
ALD    Allied Capital Corp   Tue, Apr 22  Before the Bell     0.56
AMTD   Ameritrade Holding    Tue, Apr 22  Before the Bell     0.02
AME    AMETEK Inc.           Tue, Apr 22  After the Bell      0.59
AMGN   Amgen                 Tue, Apr 22  After the Bell      0.39
AOT    Apogent Technologies  Tue, Apr 22  After the Bell      0.33
ARW    Arrow Electronics     Tue, Apr 22  -----N/A-----       0.06
ASH    Ashland               Tue, Apr 22  Before the Bell    -0.45
AVY    Avery Dennison Corp   Tue, Apr 22  During the Market   0.72
BHI    Baker Hughes Incorp   Tue, Apr 22  Before the Bell     0.14
BPC    Banco Com Portugues   Tue, Apr 22  After the Bell       N/A
BSG    BISYS GROUP INC       Tue, Apr 22  After the Bell      0.27
BBI    Blockbuster Inc.      Tue, Apr 22  Before the Bell     0.39
BCC    Boise Cascade         Tue, Apr 22  Before the Bell    -0.33
BWA    BorgWarner, Inc.      Tue, Apr 22  Before the Bell     1.59
BXP    Boston Properties     Tue, Apr 22  After the Bell      1.00
BNI    Brlngtn No Santa Fe   Tue, Apr 22  Before the Bell     0.39
CHRW   C.H. Rbnsn Worldwide  Tue, Apr 22  Before the Bell     0.28
CECO   Career Education      Tue, Apr 22  After the Bell      0.35
CTX    Centex Corporation    Tue, Apr 22  After the Bell      2.84
CKFR   CheckFree             Tue, Apr 22  After the Bell      0.20
CME    CHICAGO MERCANTILE    Tue, Apr 22  Before the Bell     0.64
CPS    ChoicePoint, Inc.     Tue, Apr 22  Before the Bell     0.36
COH    Coach, Inc.           Tue, Apr 22  Before the Bell     0.29
CPO    Corn Products Intl    Tue, Apr 22  Before the Bell     0.42
GLW    Corning               Tue, Apr 22  After the Bell     -0.03
XRAY   DENTSPLY Intl Inc.    Tue, Apr 22  After the Bell      0.45
DV     DeVry                 Tue, Apr 22  After the Bell      0.21
DBD    Diebold               Tue, Apr 22  Before the Bell     0.36
EBAY   eBay                  Tue, Apr 22  After the Bell      0.31
ECL    Ecolab Inc.           Tue, Apr 22  Before the Bell     0.41
EW     Edwards Lifesciences  Tue, Apr 22  After the Bell      0.37
ELUX   Electrolux Ab         Tue, Apr 22  -----N/A-----       0.79
LLY    Eli Lilly             Tue, Apr 22  Before the Bell     0.58
EQT    Equitable Resources   Tue, Apr 22  Before the Bell     1.00
ETH    Ethan Allen Interiors Tue, Apr 22  Before the Bell     0.52
FISV   Fiserv                Tue, Apr 22  After the Bell      0.38
FRX    Forest Laboratories   Tue, Apr 22  Before the Bell     0.49
HET    Harrah's Entertain    Tue, Apr 22  -----N/A-----       0.67
HCA    HCA - The Healthcare  Tue, Apr 22  -----N/A-----       0.86
HCP    Health Care Property  Tue, Apr 22  Before the Bell     0.81
HMA    Health Management Ass Tue, Apr 22  Before the Bell     0.31
HNI    HON INDUSTRIES, Inc.  Tue, Apr 22  Before the Bell     0.28
HUBb   Hubbell Incorporated  Tue, Apr 22  During the Market   0.42
IMN    Imation Corp.         Tue, Apr 22  Before the Bell     0.51
INET   Instinet Group Incorp Tue, Apr 22  Before the Bell      N/A
IGT    Intl Gaming Tech      Tue, Apr 22  Before the Bell     0.98
IPCR   IPC Holdings          Tue, Apr 22  After the Bell      1.15
KMB    Kimberly Clark        Tue, Apr 22  -----N/A-----       0.77
LLL    L-3 Comm Holdings     Tue, Apr 22  -----N/A-----       0.47
LMT    Lockheed Martin       Tue, Apr 22  -----N/A-----       0.42
MXO    Maxtor                Tue, Apr 22  After the Bell      0.16
MRX    Medicis               Tue, Apr 22  After the Bell      0.55
MCO    Moody's Corporation   Tue, Apr 22  After the Bell      0.50
ORLY   O'Reilly Automotive   Tue, Apr 22  After the Bell      0.37
OXY    Occidental Petroleum  Tue, Apr 22  Before the Bell     1.11
OSI    Outback Steakhouse    Tue, Apr 22  -----N/A-----       0.59
OI     Owens Illinois        Tue, Apr 22  After the Bell      0.24
PCAR   Paccar                Tue, Apr 22  -----N/A-----       0.65
PSFT   PeopleSoft            Tue, Apr 22  After the Bell      0.11
PBG    Pepsi Bottling Group  Tue, Apr 22  Before the Bell     0.13
PAS    PepsiAmericas         Tue, Apr 22  Before the Bell     0.05
PFE    Pfizer                Tue, Apr 22  -----N/A-----       0.44
PPP    Pogo Producing        Tue, Apr 22  -----N/A-----       1.13
DGX    Quest Diagnostics     Tue, Apr 22  Before the Bell     0.83
QTRN   Quintiles Transnatnl  Tue, Apr 22  -----N/A-----       0.14
RSH    RadioShack Corp       Tue, Apr 22  Before the Bell     0.32
RYN    Rayonier Inc.         Tue, Apr 22  Before the Bell     0.22
RGC    Regal Entertain Group Tue, Apr 22  Before the Bell     0.26
RGS    Regis Corporation     Tue, Apr 22  Before the Bell     0.45
RNR    RenaissanceRe Holding Tue, Apr 22  After the Bell      1.46
RMD    ResMed                Tue, Apr 22  After the Bell      0.33
ROK    Rockwell Automation   Tue, Apr 22  Before the Bell     0.25
ROL    Rollins, Inc.         Tue, Apr 22  After the Bell       N/A
SGP    Schering-Plough       Tue, Apr 22  Before the Bell     0.10
SHW    Sherwin-Williams      Tue, Apr 22  Before the Bell     0.21
SIAL   Sigma-Aldrich Corp    Tue, Apr 22  After the Bell      0.62
SLG    SL Green Realty       Tue, Apr 22  After the Bell      0.85
SNA    Snap-on Incorporated  Tue, Apr 22  Before the Bell     0.38
SPW    SPX                   Tue, Apr 22  Before the Bell     0.54
STK    Storage Technology    Tue, Apr 22  After the Bell      0.13
TE     TECO Energy Inc.      Tue, Apr 22  -----N/A-----       0.37
TMX    Telefonos de Mexico   Tue, Apr 22  After the Bell      0.75
TIN    Temple-Inland, Inc.   Tue, Apr 22  After the Bell     -0.25
JOE    The St. Joe Company   Tue, Apr 22  Before the Bell     0.09
WPO    The Washington Post   Tue, Apr 22  -----N/A-----       3.77
TMA    Thornburg Mortgage    Tue, Apr 22  After the Bell       N/A
TDW    Tidewater             Tue, Apr 22  Before the Bell     0.38
TMK    Torchmark             Tue, Apr 22  Before the Bell     0.93
TRI    Triad Hospitals, Inc  Tue, Apr 22  After the Bell      0.62
UPS    UNITED PARCEL SERVICE Tue, Apr 22  Before the Bell     0.51
UST    UST Inc.              Tue, Apr 22  Before the Bell     0.64
VLO    Valero Energy Corp.   Tue, Apr 22  Before the Bell     1.31
VRC    Varco International   Tue, Apr 22  Before the Bell     0.23
VZ     Verizon               Tue, Apr 22  Before the Bell     0.63
VFC    VF                    Tue, Apr 22  -----N/A-----       0.74
WCN    Waste Connections     Tue, Apr 22  After the Bell      0.48
WAT    Waters Corporation    Tue, Apr 22  Before the Bell     0.29
WSTC   West Corporation      Tue, Apr 22  After the Bell      0.26
WWY    Wm. Wrigley Jr. Co.   Tue, Apr 22  -----N/A-----       0.43
XTO    XTO Energy Inc.       Tue, Apr 22  Before the Bell     0.39


-----------------------  WEDNESDAY -----------------------------

ABY    Advanced Medical Opt  Wed, Apr 23  Before the Bell    -0.02
AET    Agnico-Eagle Mns Lmtd Wed, Apr 23  After the Bell      0.04
AG     Albemarle Corporation Wed, Apr 23  Before the Bell     0.39
APD    Altiris, Inc          Wed, Apr 23  After the Bell      0.09
ACV    American Medical Sys  Wed, Apr 23  After the Bell      0.15
AED    Anchor BanCorp Wisc   Wed, Apr 23  -----N/A-----       0.50
AT     AOL Time Warner       Wed, Apr 23  Before the Bell     0.11
AMZN   Applied Biosystems    Wed, Apr 23  Before the Bell     0.19
AXP    Apria Healthcare Grp  Wed, Apr 23  Before the Bell     0.49
AIG    ARC International     Wed, Apr 23  Before the Bell      N/A
ABC    Arena Pharmaceuticals Wed, Apr 23  After the Bell       N/A
APA    ArthroCare            Wed, Apr 23  After the Bell      0.04
AMCC   ArvinMeritor, Inc.    Wed, Apr 23  Before the Bell     0.34
ANZ    AXFOOD AB             Wed, Apr 23  -----N/A-----        N/A
ALV    Aztar                 Wed, Apr 23  After the Bell      0.38
AVT    BellSouth Corporation Wed, Apr 23  Before the Bell     0.45
BLL    Belo                  Wed, Apr 23  Before the Bell     0.13
BRL    Berkshire Hills Banc  Wed, Apr 23  After the Bell      0.25
BOL    BioCryst Pharm        Wed, Apr 23  Before the Bell      N/A
BDK    BJ SVCS CO            Wed, Apr 23  Before the Bell     0.25
BMC    Brinker International Wed, Apr 23  Before the Bell     0.47
BC     Buderus AG            Wed, Apr 23  Before the Bell      N/A
BPL    Canadian Natl Railway Wed, Apr 23  -----N/A-----       0.67
BR     Cardinal Health, Inc. Wed, Apr 23  Before the Bell     0.86
CAI    CDI Corp.             Wed, Apr 23  Before the Bell     0.28
CP     Cholestech            Wed, Apr 23  Before the Bell     0.08
CELG   Cleveland-Cliffs      Wed, Apr 23  After the Bell     -0.35
CNP    CNET Networks         Wed, Apr 23  After the Bell     -0.11
CEY    Coca-Cola Ent Inc.    Wed, Apr 23  Before the Bell     0.04
CSB    Cohu                  Wed, Apr 23  After the Bell     -0.09
CIN    Columbia Bancorp      Wed, Apr 23  Before the Bell     0.29
CIT    Columbia Banking Sys  Wed, Apr 23  Before the Bell     0.32
COLT   Convergys Corporation Wed, Apr 23  Before the Bell     0.26
COLM   Corillian Corporation Wed, Apr 23  After the Bell     -0.04
CFB    Corp Exe Board Co     Wed, Apr 23  After the Bell      0.21
CNX    Cytyc Corporation     Wed, Apr 23  After the Bell      0.15
CBE    Diagnostic Products   Wed, Apr 23  -----N/A-----       0.44
DCX    Dofasco, Inc          Wed, Apr 23  During the Market   0.64
DCN    Dreyer's Ice Cream    Wed, Apr 23  Before the Bell     0.08
DASTY  drugstore.com         Wed, Apr 23  -----N/A-----      -0.08
EMN    Exactech              Wed, Apr 23  After the Bell      0.13
ELX    First Indl Relty Trst Wed, Apr 23  After the Bell      0.87
EEP    First Merchants Corp. Wed, Apr 23  -----N/A-----       0.46
ENDP   First Midwest Bancorp Wed, Apr 23  Before the Bell     0.47
ELAB   Fl East Coast Ind     Wed, Apr 23  Before the Bell      N/A
EFX    Flowserve Corporation Wed, Apr 23  Before the Bell     0.24
ERIE   Foundry Networks      Wed, Apr 23  After the Bell      0.09
GYI    Getty Images          Wed, Apr 23  -----N/A-----       0.18
GILD   Gilead Sciences       Wed, Apr 23  -----N/A-----       0.15
GSF    GlobalSantaFe Corp.   Wed, Apr 23  Before the Bell     0.05
GG     Goldcorp              Wed, Apr 23  After the Bell      0.11
GXP    Great Plains Energy   Wed, Apr 23  After the Bell      0.12
HHS    Harte-Hanks           Wed, Apr 23  Before the Bell     0.18
HLT    Hilton Hotels Corp    Wed, Apr 23  Before the Bell     0.02
IMO    Imperial Oil Limited  Wed, Apr 23  -----N/A-----        N/A
INMRY  Instrumentarium       Wed, Apr 23  -----N/A-----        N/A
ISIL   Intersil Corporation  Wed, Apr 23  After the Bell      0.13
ITT    ITT Industries        Wed, Apr 23  Before the Bell     0.81
KLAC   KLA-Tencor            Wed, Apr 23  After the Bell      0.12
LF     LeapFrog Enterprises  Wed, Apr 23  After the Bell     -0.13
LOGI   Logitech Intl         Wed, Apr 23  Before the Bell     0.49
LSI    LSI Logic             Wed, Apr 23  After the Bell     -0.19
LU     Lucent Technologies   Wed, Apr 23  Before the Bell    -0.10
MRBK   Mercantile Bankshares Wed, Apr 23  Before the Bell     0.70
MCHP   Microchip Technology  Wed, Apr 23  After the Bell      0.16
NBG    National Bank Greece  Wed, Apr 23  Before the Bell     N/A
NBTY   NBTY Inc.             Wed, Apr 23  After the Bell      0.38
NSCN   NetScreen Tech        Wed, Apr 23  After the Bell      0.13
NXTL   Nextel Communications Wed, Apr 23  Before the Bell     0.16
NE     Noble Corporation     Wed, Apr 23  -----N/A-----       0.31
NRD    NORANDA INC           Wed, Apr 23  -----N/A-----        N/A
NSC    Norfolk Southern Corp Wed, Apr 23  Before the Bell     0.21
NCX    NOVA Chemicals        Wed, Apr 23  Before the Bell    -0.39
PFCB   P.F. Chang's China Bi Wed, Apr 23  Before the Bell     0.25
PTV    Pactiv                Wed, Apr 23  After the Bell      0.27
PRX    Pharmaceutical Res    Wed, Apr 23  -----N/A-----       0.60
PMI    PMI Group             Wed, Apr 23  Before the Bell     0.98
POT    Potash Corp of Saska  Wed, Apr 23  -----N/A-----       0.16
PGN    Progress Energy       Wed, Apr 23  Before the Bell     0.74
PLD    ProLogis Trust        Wed, Apr 23  After the Bell      0.55
PSD    Puget Energy          Wed, Apr 23  After the Bell      0.49
RCL    Royal Carib Cruises   Wed, Apr 23  Before the Bell     0.21
R      Ryder System, Inc.    Wed, Apr 23  Before the Bell     0.29
RYL    Ryland Group          Wed, Apr 23  After the Bell      1.25
SEE    Sealed Air            Wed, Apr 23  -----N/A-----       0.53
SEPR   Sepracor              Wed, Apr 23  Before the Bell    -0.66
SEBL   Siebel Systems        Wed, Apr 23  After the Bell      0.01
STM    STMicroelect N.V.     Wed, Apr 23  -----N/A-----       0.10
SDS    SunGard Data Systems  Wed, Apr 23  After the Bell      0.29
SYMC   Symantec              Wed, Apr 23  After the Bell      0.46
TLTOB  Tele2 AB              Wed, Apr 23  Before the Bell      N/A
TDS    Telephone Data        Wed, Apr 23  Before the Bell     0.46
BA     The Boeing Company    Wed, Apr 23  Before the Bell     0.33
FAF    The First Am Corp     Wed, Apr 23  Before the Bell     0.87
REY    Reynolds & Reynolds   Wed, Apr 23  -----N/A-----       0.41
TMO    Thermo Electron Corp  Wed, Apr 23  After the Bell      0.23
USM    U.S. Cellular         Wed, Apr 23  Before the Bell     0.31
UPM    UPM-Kymmene Group     Wed, Apr 23  Before the Bell     0.16
VAR    Varian Medical Sys    Wed, Apr 23  After the Bell      0.46
VSEA   Varian Semi Equip Ass Wed, Apr 23  After the Bell      0.15
VARI    Varian, Inc.         Wed, Apr 23  After the Bell      0.40
VVC    Vectren Corporation   Wed, Apr 23  After the Bell      0.70
VRTS   VERITAS Software Corp Wed, Apr 23  After the Bell      0.14
WLP    WellPoint Hlth Ntwrks Wed, Apr 23  After the Bell      1.20
WEN    Wendy's International Wed, Apr 23  -----N/A-----       0.38
WSH    Willis Grp Hold Lmtd  Wed, Apr 23  After the Bell      0.64
WIN    Winn-Dixie Stores     Wed, Apr 23  After the Bell      0.36
WYE    WYETH                 Wed, Apr 23  Before the Bell     0.52
XRX    Xerox Corporation     Wed, Apr 23  Before the Bell     0.08
YCC    Yankee Candle         Wed, Apr 23  Before the Bell     0.16
YUM    Yum! Brands, Inc.     Wed, Apr 23  After the Bell      0.38
ZMH    Zimmer Inc.           Wed, Apr 23  After the Bell      0.38


------------------------- THURSDAY -----------------------------

ABY    Abitibi-Consolidated  Thu, Apr 24  -----N/A-----      -0.10
AET    Aetna Inc.            Thu, Apr 24  Before the Bell     0.86
AG     AGCO                  Thu, Apr 24  Before the Bell     0.23
APD    Air Products & Chem   Thu, Apr 24  Before the Bell     0.53
ACV    Alberto-Culver Co.    Thu, Apr 24  During the Market   0.62
AED    Allied Domecq PLC     Thu, Apr 24  02:00 am ET          N/A
AT     ALLTEL Corp.          Thu, Apr 24  Before the Bell     0.79
AMZN   Amazon.com, Inc.      Thu, Apr 24  After the Bell      0.04
AXP    American Express Co   Thu, Apr 24  -----N/A-----       0.52
AIG    American Intl Grp     Thu, Apr 24  Before the Bell     0.89
ABC    AmeriSourceBergen     Thu, Apr 24  Before the Bell     1.04
APA    Apache Corporation    Thu, Apr 24  Before the Bell     2.03
AMCC   App Micro Circuits    Thu, Apr 24  After the Bell     -0.05
ANZ    Aus New Zlnd Banking  Thu, Apr 24  -----N/A-----        N/A
ALV    Autoliv               Thu, Apr 24  Before the Bell      N/A
AVT    Avnet                 Thu, Apr 24  After the Bell      0.07
BLL    Ball Corporation      Thu, Apr 24  Before the Bell     0.49
BRL    Barr Laboratories     Thu, Apr 24  Before the Bell     0.67
BOL    Bausch & Lomb         Thu, Apr 24  Before the Bell     0.29
BDK    Black & Decker Corp   Thu, Apr 24  -----N/A-----       0.43
BMC    BMC Software          Thu, Apr 24  Before the Bell     0.16
BC     Brunswick Corporation Thu, Apr 24  Before the Bell     0.21
BPL    Buckeye Partners      Thu, Apr 24  -----N/A-----       0.62
BR     Burlington Resources  Thu, Apr 24  Before the Bell     1.51
CAI    CACI International    Thu, Apr 24  Before the Bell     0.38
CP     Canadian Pac Railway  Thu, Apr 24  After the Bell      0.15
CELG   Celgene Corp.         Thu, Apr 24  Before the Bell    -0.02
CNP    CenterPoint Energy    Thu, Apr 24  Before the Bell     0.19
CEY    Certegy               Thu, Apr 24  Before the Bell     0.25
CSB    Ciba Spec Chem Hold   Thu, Apr 24  -----N/A-----       0.52
CIN    Cinergy Corp.         Thu, Apr 24  Before the Bell     0.68
CIT    CIT Group             Thu, Apr 24  Before the Bell     0.63
COLT   COLT Telecom Group    Thu, Apr 24  Before the Bell      N/A
COLM   Columbia Sportswear   Thu, Apr 24  -----N/A-----       0.26
CFB    Commercial Federal    Thu, Apr 24  Before the Bell     0.60
CNX    CONSOL Energy         Thu, Apr 24  Before the Bell     0.02
CBE    Cooper Industries Ltd Thu, Apr 24  Before the Bell     0.61
DCX    DaimlerChrysler       Thu, Apr 24  Before the Bell     0.88
DCN    Dana                  Thu, Apr 24  -----N/A-----       0.21
DASTY  Dassault Systemes SA  Thu, Apr 24  -----N/A-----       0.21
EMN    Eastman Chemical Co   Thu, Apr 24  After the Bell     -0.08
ELX    Emulex                Thu, Apr 24  -----N/A-----       0.21
EEP    Enbridge nrg Partners Thu, Apr 24  After the Bell      0.52
ENDP   Endo Pharmaceuticals  Thu, Apr 24  Before the Bell     0.23
ELAB   Eon Labs              Thu, Apr 24  Before the Bell     0.30
EFX    Equifax Inc.          Thu, Apr 24  Before the Bell     0.33
ERIE   Erie Indemnity        Thu, Apr 24  -----N/A-----       0.68
FLEX   Flextronics           Thu, Apr 24  After the Bell      0.06
FPL    FPL GROUP INC         Thu, Apr 24  -----N/A-----       0.83
BEN    Franklin Resources    Thu, Apr 24  -----N/A-----       0.44
FCN    FTI Consulting        Thu, Apr 24  -----N/A-----       0.57
GLK    Great Lakes Chemical  Thu, Apr 24  After the Bell      0.12
HSC    Harsco Corporation    Thu, Apr 24  Before the Bell     0.22
HR     Healthcare Rlty Trust Thu, Apr 24  After the Bell      0.68
HP     Helmerich & Payne     Thu, Apr 24  Before the Bell     0.05
HIW    Highwoods Properties  Thu, Apr 24  After the Bell      0.75
IKN    Ikon Office Solutions Thu, Apr 24  Before the Bell     0.24
IGL    IMC Global            Thu, Apr 24  Before the Bell    -0.17
ICST   Integrated Circ Sys   Thu, Apr 24  -----N/A-----       0.22
IP     International Paper   Thu, Apr 24  Before the Bell     0.12
IRF    Intl Rectifier        Thu, Apr 24  After the Bell      0.18
IVGN   Invitrogen Corp       Thu, Apr 24  After the Bell      0.48
SFI    iStar Financial       Thu, Apr 24  Before the Bell      N/A
JBLU   JetBlue Airways       Thu, Apr 24  Before the Bell     0.22
K      Kellogg Co.           Thu, Apr 24  Before the Bell     0.39
LVLT   Level 3 Comm          Thu, Apr 24  -----N/A-----      -0.67
LZ     Lubrizol              Thu, Apr 24  Before the Bell     0.58
LYO    Lyondell Petrochem    Thu, Apr 24  Before the Bell    -0.63
MFC    Manulife Financial Co Thu, Apr 24  -----N/A-----       0.49
MRO    Marathon Oil Corp     Thu, Apr 24  Before the Bell     0.89
MAR    Marriott Intl         Thu, Apr 24  Before the Bell     0.36
MEDI   MedImmune             Thu, Apr 24  Before the Bell     0.42
MGM    Metro-Goldwyn-Mayer   Thu, Apr 24  Before the Bell    -0.20
MTD    Mettler-Toledo Intl   Thu, Apr 24  After the Bell      0.37
NFG    National Fuel Gas Co  Thu, Apr 24  After the Bell      0.78
NCR    NCR Corporation       Thu, Apr 24  Before the Bell    -0.29
NFX    Newfield Exploration  Thu, Apr 24  Before the Bell     1.08
NT     Nortel Networks       Thu, Apr 24  Before the Bell    -0.03
NUE    Nucor                 Thu, Apr 24  -----N/A-----       0.24
ONB    Old National Bancorp  Thu, Apr 24  Before the Bell     0.41
ORI    Old Republic Intl     Thu, Apr 24  -----N/A-----       0.83
OLN    Olin                  Thu, Apr 24  After the Bell      0.12
OSK    Oshkosh Truck         Thu, Apr 24  Before the Bell     0.80
PKI    PerkinElmer           Thu, Apr 24  Before the Bell     0.09
PDE    Pride International   Thu, Apr 24  After the Bell      0.04
PVN    Providian Financial   Thu, Apr 24  After the Bell      0.02
PHM    Pulte Homes Inc.      Thu, Apr 24  Before the Bell     1.23
IQW    Quebecor World        Thu, Apr 24  -----N/A-----       0.14
RBK    Reebok                Thu, Apr 24  Before the Bell     0.63
RGA    Reinsurance Grp Am    Thu, Apr 24  After the Bell      0.73
RESP   Respironics, Inc.     Thu, Apr 24  Before the Bell     0.46
SNY    Sanofi Synthelabo     Thu, Apr 24  Before the Bell      N/A
SLE    Sara Lee              Thu, Apr 24  Before the Bell     0.34
SBC    SBC Communications    Thu, Apr 24  Before the Bell     0.34
SRA    Serono S.A.           Thu, Apr 24  Before the Bell     0.15
SCRI   SICOR                 Thu, Apr 24  -----N/A-----       0.21
SI     Siemens AG            Thu, Apr 24  Before the Bell      N/A
SSCC   Smurfit-Stone Cont    Thu, Apr 24  Before the Bell    -0.09
SNE    Sony Corporation      Thu, Apr 24  Before the Bell      N/A
SFG    StanCorp Finl Grp Inc Thu, Apr 24  Before the Bell     1.11
SBUX   Starbucks             Thu, Apr 24  After the Bell      0.13
STE    Steris                Thu, Apr 24  Before the Bell     0.37
SU     Suncor Energy         Thu, Apr 24  -----N/A-----       0.42
TGN    Texas Genco Holdings  Thu, Apr 24  Before the Bell      N/A
DOW    The Dow Chemical Co   Thu, Apr 24  Before the Bell    -0.09
SMG    The Scotts Company    Thu, Apr 24  Before the Bell     1.83
SVM    The ServiceMaster Co  Thu, Apr 24  Before the Bell     0.08
TAC    TRANSALTA CORP        Thu, Apr 24  -----N/A-----        N/A
TRH    Transatlantic Hldngs  Thu, Apr 24  -----N/A-----       1.24
UNP    Union Pacific         Thu, Apr 24  Before the Bell     0.60
UDI    United Defense Ind    Thu, Apr 24  Before the Bell     0.45
UCL    Unocal                Thu, Apr 24  Before the Bell     0.80
VRSN   VeriSign, Inc.        Thu, Apr 24  After the Bell      0.14
VVI    VIAD CORP             Thu, Apr 24  Before the Bell     0.33
WDR    Waddell & Reed Finl   Thu, Apr 24  Before the Bell     0.27
WC     WellChoice, Inc.      Thu, Apr 24  After the Bell      0.56
WDC    Western Digital Corp. Thu, Apr 24  After the Bell      0.21
WPS    WPS Resources         Thu, Apr 24  After the Bell      0.96


------------------------- FRIDAY -------------------------------

ALE    Allete                Fri, Apr 25  Before the Bell     0.49
APC    Anadarko Petroleum    Fri, Apr 25  Before the Bell     1.43
AVP    Avon Products Inc.    Fri, Apr 25  Before the Bell     0.41
BEC    Beckman Coulter       Fri, Apr 25  Before the Bell     0.43
BDX    Becton, Dickinson Co  Fri, Apr 25  Before the Bell     0.53
BPO    Brookfield Properties Fri, Apr 25  -----N/A-----       0.51
EAS    Energy East Corp      Fri, Apr 25  -----N/A-----       0.91
HCR    MANOR CARE INC NEW    Fri, Apr 25  Before the Bell     0.34
NOI    National Oilwell      Fri, Apr 25  Before the Bell     0.25
IX     Orix Corporation      Fri, Apr 25  Before the Bell      N/A
PGL    Peoples Energy Corp.  Fri, Apr 25  Before the Bell     1.54
PIO    Pioneer Corporation   Fri, Apr 25  -----N/A-----        N/A
PAA    Plains All Am Pipelne Fri, Apr 25  During the Market   0.35
RJR    R.J. Reynolds Tob     Fri, Apr 25  Before the Bell     0.78
RDA    READERS DIGEST ASSN   Fri, Apr 25  Before the Bell     0.03
SANYY  Sanyo Electric        Fri, Apr 25  Before the Bell      N/A
SCG    SCANA                 Fri, Apr 25  Before the Bell     0.77
SWMAY  Swedish Match         Fri, Apr 25  -----N/A-----        N/A
TROW   T. Rowe Price         Fri, Apr 25  Before the Bell     0.29
TP     TPG NV                Fri, Apr 25  -----N/A-----       0.32
TRP    TransCanada Pipelines Fri, Apr 25  -----N/A-----        N/A
WY     Weyerhaeuser Co.      Fri, Apr 25  Before the Bell     0.18
WPPGY  WPP Group PLC         Fri, Apr 25  -----N/A-----        N/A


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Company Name              Ratio    Payable     Executable

WSB     Washington Savings        3:2      Apr. 23rd   Apr. 24th
SFNCA   Simmons First Nat'l Corp  2:1      May   1st   May   2nd


--------------------------
Economic Reports This Week
--------------------------

Ah...another rapid-fire week of earnings announcements.  The
Q1 earnings flood is here and if last week is any indicator
it could be a positive week for the markets.  Look for the
Fed Beige book, Durable Orders, Sentiment and Home sales numbers
this week.

==============================================================
                       -For-

Monday, 04/21/02
----------------
Leading Indicators (DM) Mar  Forecast:  -0.1%  Previous:    -0.4%


Tuesday, 04/22/02
-----------------
None


Wednesday, 04/23/02
-------------------
Fed's Beige Book (DM)


Thursday, 04/24/02
------------------
Initial Claims (BB)   04/19  Forecast:    N/A  Previous:     442K
Durable Orders (BB)     Mar  Forecast:  -1.0%  Previous:    -1.6%
Help-Wanted Index (DM)  Mar  Forecast:     40  Previous:       40


Friday, 04/25/02
----------------
GDP-Adv. (BB)            Q1  Forecast:   1.9%  Previous:     1.4%
Chain Deflator-Adv. (BB) Q1  Forecast:   1.8%  Previous:     1.8%
Mich Sentiment-Rev. (DM)Apr  Forecast:   84.0  Previous:     83.2
Existing Home Sales (DM)Mar  Forecast:  5.70M  Previous:    5.84M
New Home Sales (DM)     Mar  Forecast:   900K  Previous:     854K


Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


************
MARKET WATCH
************

So Many To Choose From

EchoStar - DISH - close: 28.73 change: +0.53

We've had our eye on DISH for a while merely due to its relative
strength over the past five months.  Buying dips to the 50-dma
have been profitable for the bulls.  Currently the stock is
consolidating on its 50-dma and this smells like an entry point.
What concerns us is the $30 level, which is long-time resistance.
Fortunately, the technicals look bullish with the MACD slowing
down as it approaches the zero line and the Stochastics (5,3,3)
are curling higher from oversold.  Aggressive traders could go
long here with a tight stop.  Earnings are expected on May 1st.



---

Black Box - BBOX - close: 31.56 change: +0.89

Playing the gap can be profitable and BBOX has a very big gap to
fill.  Shares were hammered in mid-March on an earnings warning
and the stock has been consolidating sideways ever since.  A
breakout above $32 could be the beginning of an attempt to fill
the gap.  We would expect resistance at $35, but shorts on the
run could power the stock through this level.  Earnings are
expected on May 7th.



---

Cognos Inc. - COGN - close: 26.95 change: +0.80

The software sector is trying very hard to make a bullish break
for it (see today's market posture).  COGN is doing its part to
push the group higher.  Earnings were April 2nd and shares gapped
up on the news.  The new breakout above significant resistance at
$26.00 looks very attractive and the point-and-figure chart also
looks tempting.  We would target a move to the $30 level.



---

Iron Mountain - IRM - close: 39.08 change: +0.28

Here's one you may not have looked at in a while.  Shares of IRM
have almost doubled since their October 2002 lows.  Currently,
it's battling with overhead resistance at $39.50 (essentially
$40).  Shares tend to consolidate sideways and it's been doing so
again for the last four weeks.  Earnings are expected on April
30th.



---

Fair Isaac Inc - FIC - close: 51.50 change: +1.25

This business services company was recently added to the S&P 400
midcap index in late March.  You'll notice the spike in volume on
the announcement.  Despite this positive development, shares were
already in bullish form from their October lows at $30.  After
failing twice at the $50 level, shares broke through and are now
consolidating (still in bullish form) for another leg higher.
Aggressive players might target the $55 area.



---

eBay Inc - EBAY - close: 90.20 change: +1.79

For some, watching EBAY is sheer amazement.  For others it brings
back memories of the pre-bubble bursting tech rallies.  Shares of
EBAY have almost been unstoppable since its October 2002 lows.
You constantly hear talk about EBAY's excessive multiples then
the company follows up with incredible earnings growth.  The
consolidation under $90 has been interesting to watch but now
shares appear ready for an attack on $100.  Yet, traders beware,
earnings are expected on April 22nd (that's next Tuesday).  If
the results aren't anything but wonderful, this stock could see
some profit taking.




RADAR SCREEN
---------------------------------------------------------------
Stock's on the RADAR screen have piqued are curiosity and we
plan to watch them for further developments and/or entry points.
---------------------------------------------------------------

CTXS - $15.64 - This software stock looks pretty strong and we
like the breakout to new 52-week highs.  Earnings are April 23rd.

BOBJ - $20.75 - Another software stock, this one has broken out
above the $20 level but true resistance is $20.75.

AMGN - $60.13 - Finally, after all this time of waiting for a
breakout over $60 we get one...just in time for earnings on
Tuesday, April 22nd.

FRX - $53.30 - We like the bounce a few days ago.  It appears to
be ignoring the $55 mark and setting new relative highs.  Will it
make another run?  Earnings are April 22nd.

KSS - $59.92 - Shares of this retailer have been consolidating
under the $60 level of resistance for weeks.  Now it's fighting
with its simple 200-dma.  A breakout from here could have the
shorts on the run.

PGR - $65.20 - Sooner or later this rocket is going to run out of
fuel.  Its MACD looks ready to crack.  I'm sure this has been
painful for the shorts.

MSTR - $29.38 - This software stock might be worth watching for a
pull back.  Now that it's at $30 it could be soon.

PAYX - $30.19 - We've been waiting for a move over $30, but to
really convince us, let's see a move above $30.51.  That's a nice
bullish engulfing candlestick.


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

For Best Alignment view in Courier Ten Font
*******************************************

CALLS              Mon    Tue    Wed   Thu  Week

AZO      76.99    1.16   1.30  -2.69  1.89  Rebound
BBBY     39.52    1.15   0.58  -1.14  1.32  New Highs
ERTS     59.99                        1.05  New, trigger happy
LXK      69.19    0.71   0.77  -0.61  0.36  DROP
IMDC     35.00                        0.99  New, entry point
MEDI     33.42    0.33   0.74  -0.94  0.76  Longer-term no update
MMM     129.98    0.32   0.40  -4.64  0.98  DROP, broke $130
MXIM     39.62                        1.09  New, Aggressive Call
OMC      61.43    1.83   1.02  -0.40  1.31  Looking good
WFMI     57.94    1.33   0.87  -1.57  0.61  Higher lows


PUTS

NOC      83.80    0.92   0.39  -0.08  1.86  Need some "failing"


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********************
THE PLAYS OF THE DAY
********************

Call Play of the Day:
*********************

Electronic Arts - ERTS - close: 63.71 change: +4.61 stop: 57.00

See details in play list




Put Play of the Day:
********************

No PUT Play of the Day for this Weekend!


**************************
PICKS WE DROPPED THIS WEEK
**************************

Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS
^^^^^

Lexmark Intl. - LXK - close: 69.19 change: +0.36 stop: 66.00

While our LXK play performed about like we expected by dipping
back to support and rebounding higher, it took too long to do it
and the bounce lacked the necessary strength to generate any
gains.  Traders that entered on the rebound from $67 earlier in
the week managed a small gain by Thursday's close, but overall we
have to list this one as a disappointment.  LXK is set to
announce earnings on Monday morning and since we don't want to
assume the event risk of holding over the announcement, we're
dropping the play this weekend, as noted in the market monitor.

Picked on April 10th at  $69.02
Change since picked:      +0.17
Earnings Date          04/21/03 (confirmed)
Average Daily Volume = 1.50 mln

---

3M Company - MMM - close: 129.00 change: -4.64 stop: 129.75

After two weeks of chopping sideways with a floor near $131.50
and a ceiling at $135, we decided on Tuesday to tighten our stop
on the play to $131.50 to protect against a sudden, adverse move.
As it turns out, that was a prescient decision, as the stock
plunged sharply on Wednesday following a downgrade from JP
Morgan.  The initial drop took out our new higher stop right at
the open and then MMM proceeded down to take out our original
stop at $129.75.  By the time it all ended, MMM managed a feeble
rebound to close right at $129.  While the play came to an end
yesterday, we neglected to include the drop writeup in last
night's newsletter, but wanted to keep things current.    Note
that the prices listed are as of Wednesday's close.  In addition
to the busted stop, MMM is set to release its quarterly earnings
report on Monday, so even if not stopped out, we would have
closed this play this weekend.

Picked on March 27th at $131.66
Change since picked:      -2.66
Earnings Date          04/21/03 (confirmed)
Average Daily Volume = 2.44 mln

PUTS
^^^^

None


***********
DEFINITIONS
***********

SL  = Suggested stop loss. Sell if bid breaks this price.
OI  = Open Interest - the number of open contracts outstanding.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

Analysts ratings: 1-2-3-4-5
Analysts who follow each stock rate it and these rating are
accumulated and displayed as follows;

Position 1 = number of analysts recommending "strong buy"
Position 2 = number of analysts recommending "moderate buy"
Position 3 = number of analysts recommending "hold" or "neutral"
Position 4 = number of analysts recommending "moderate sell"
Position 5 = number of analysts recommending "strong sell"

Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys",
1 "hold" recommendation.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.


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Contact Support
The Option Investor Newsletter                 Sunday 04-20-2003
Sunday                                                      3 of 5

In Section Three:

New Calls: ERTS, IMDC, MXIM
Current Calls: AZO, BBBY, OMC, WFMI
New Puts: None


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

Electronic Arts - ERTS - close: 63.71 change: +4.61 stop: 57.00

Company Description:
ERTS creates, markets and distributes interactive entertainment
software for a variety of hardware platforms, including Sony's
PlayStation 2, the PC, Nintendo GameCube and the recently
launched Xbox.  The company's EA.com business segment is engaged
in the creation, marketing and distribution of entertainment
software which can be played or sold online, as well as the
ongoing management of subscriptions of online games and Website
advertising.

Why we like it:
Reports last year that the video gaming industry was in the early
stages of an 8-10 year boom cycle drove stocks like ERTS to new
all-time highs near $72.  But the spectre of a weak economy and a
consumer with less willingness to part with discretionary dollars
finally put the bite on the stock, driving it all the way back
down to major support near $48 by the middle of January.  After
basing in that area for the better part of 2 months, ERTS started
gradually climbing higher.  The bullish rebound really got moving
once the stock clawed its way back over the $55 level, but ran
into dual resistance at the descending trendline from the October
2002 highs as well as the 200-dma, both near $60 in mid-March.  A
big part of the stock's ability to hang tough has to do with the
fact that revenue and earnings continue to grow at a healthy
clip, as demonstrated by the blowout results announced at the end
of January.  The company produced its best quarter ever, both in
terms of revenue and earnings and while Q1 is always the
strongest quarter for the industry, investors are likely looking
forward to continued strong performance.

The breakout over $55 generated a powerful Buy signal on the PnF
chart, and that was good enough to lead ERTS up to the $60 level.
But that was the location of the bearish resistance line, and is
so often the case, the first test of bearish resistance proved
painful for the bears.  But rather than show any weakness, the
stock has consolidated its gains, finding consistent support near
the $57 level and appears to be showing bullish signs again,
riding an aggressive ascending trendline from the February lows.
Thursday's rally began above the broken descending trendline, and
then took ERTS back through the 200-dma, and right up to the $60
level again.  While it looks like the stock wants to break out,
we don't want to get sucked into the play right at the top of the
recent range, if the bulls can't show the conviction necessary
for a clean breakout.  So we're going to set a trigger of $61.25
on the play.  This is just slightly above the high on April 2nd,
and a rally through that level would likely be a precursor to a
run at the next serious level of resistance near $65.  That
initial breakout can be used for an aggressive entry into the
play, while more conservative traders will want to wait for a
subsequent pullback to confirm newfound support near $59.50-
60.00.  With daily Stochastics already looking a bit toppy, we
want to give the play some room to move, so our initial stop is
set at $57, just below the lowest closing level on the most
recent pullback.

Suggested Options:

Shorter Term: The May 60 Call will offer short-term traders the
best return on an immediate move, with manageable risk.  Traders
who desire a bit more insulation from time decay, while still
reaping the benefits of using an ITM option will want to use the
June 60 Call.

Longer Term: Traders looking to capitalize on a sustained
breakout move over the $61 level will want to look to the May 65
Call or even the June 65 Call.  These options are 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 MAY-60 EZQ-EL OI=2368 at $2.40 SL=1.25
BUY CALL MAY-65 EZQ-EM OI=3507 at $0.70 SL=0.35
BUY CALL JUN-60 EZQ-HH OI=4382 at $3.70 SL=2.00
BUY CALL JUN-65 EZQ-HH OI=7991 at $1.65 SL=0.75

Annotated Chart of ERTS:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/ERTS041703.gif


Picked on April 20th at  $60.04
Change since picked:      +0.00
Earnings Date          05/08/03 (unconfirmed)
Average Daily Volume = 3.36 mln

---

Inamed Corp - IMDC - close: 35.00 change: +0.99 stop: 32.86

Company Description:
Inamed is a global healthcare company with over 25 years of
experience developing, manufacturing, and marketing innovative,
high-quality, science-based products. Current products include
breast implants for aesthetic augmentation and for reconstructive
surgery; a range of dermal products to treat facial wrinkles; and
minimally invasive devices for obesity intervention, including
the LAP-BAND. System for morbid obesity. (source: company press
release)

Why We Like It:
"It doesn't seem to matter whether the economy's good or bad.
The vanity business just keeps chugging right along."  This quote
comes from an interesting article written in Investor's Business
Daily in mid-March about IMDC.  Considering the weak economic
environment, we agree with the article's tone that's just plain
surprising.  IMDC receives a large chunk of its revenues from
breast implants, which from the stock's rise, does not appear to
be bad business.  Actually, the company's latest Q4 results
showed double-digit growth in all three of its businesses
(source:IBD).  Total sales were up 21% for the quarter over the
prior year.

We really like the stock's rising trend and this appears to be a
decent entry point to catch the next leg up.  We're going to use
a stop at Tuesday's low of 32.86.  Stochastics look good as they
are still turning up from being oversold.  Our four-week target
is $40 but we do expect possible resistance at $37.50.

Suggested Options:
While the trend looks strong for IMDC we would not call this one
a "fast" mover.  We're going to post one short-term call (May), a
couple of July's (recommended) and one October for traders who
really want some time.

BUY CALL MAY 35 UZI-EG OI= 41 at $2.10 SL=0.90
BUY CALL JUL 35*UZI-GG OI=611 at $3.00 SL=1.50
BUY CALL JUL 40 UZI-GH OI= 11 at $1.10 SL=0.00
BUY CALL OCT 40 UZI-JH OI=103 at $1.75 SL=0.75

Annotated Chart of IMDC
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/IMDC041703.gif


Picked on April 17th at $35.00
Change since picked:     +0.00
Earnings Date         02/25/03 (confirmed)
Average Daily Volume = 215 K
Chart link:


---

Maxim Integrated - MXIM - close: 39.62 change: +1.09 stop: *see
note*

Company Description:
Maxim Integrated Products is a leading international supplier of
quality analog and mixed-signal products for applications that
require real world signal processing. (source: company press
release)

Why We Like It:
All right, all you chip-stock bears settle down.  We're
suggesting MXIM only as a very short-term, high-risk play on the
chances that the SOX can follow through on its recent rally and
actually breakout.  There's been plenty of analysis over the last
few months about chip stock valuations getting out of hand.  We
even saw one about MXIM's growth rate not worth investing in as
the reporter suggested that analysts would be lowering their
earnings forecast for MXIM lower as the next two years come and
go.  Yup, we're ignoring it all on the short-term basis that
investors are in a happy mood.  Traders are focusing more on
those companies that ARE beating estimates or offering positive
guidance than those companies that are not.

Here's the plan to play MXIM.  If and only if MXIM trades at or
above $40.51, we'll go long.  Our short-term goal is $45.00.
Real nimble traders willing to scalp a couple of points can aim
to exit at $44 and beat the crowd.  Should we get triggered we'll
start the play with a stop at $37.99.  We would prefer to stick
the stop under the ascending trendline but the risk-reward ratio
wouldn't make it worthwhile.  We are encouraged by the stock's
MACD, which just produced a bullish crossover and the stock's
stochastics are shooting higher.  Should the stock trade $41, it
will print a new double-top breakout on its point-and-figure
chart.  An alternative strategy to play MXIM would be on the pull
back.  This is assuming we don't get triggered on Monday above
40.51.  MXIM could pull back to its rising trendline and bulls
can jump in on a bounce near the $36 level (see chart).  This is
merely an alternative should the chip sector stall.  Keep an eye
on the SOX and watch it for a move over 340-350.  Just maybe,
MXIM will see a pre-earnings run up ahead of its announcement on
Tuesday, April 29th after the close.

Suggested Options:
This is a short-term play.  We don't expect to hold it more than
seven or eight session.  We're listing two short-term options
(May) and one longer-term option for those who just have to have
more time.

BUY CALL MAY 40*XIQ-EH OI=5506 at $2.35 SL=1.00
BUY CALL MAY 45 XIQ-EL OI=4335 at $0.65 SL=0.00*very risky*
BUY CALL AUG 40 XIQ-HH OI=2826 at $4.90 SL=2.25

Annotated Chart of MXIM:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/MXIM041703.gif


Picked on April XXth at $xx.xx
Change since picked:     +0.00
Earnings Date         04/29/03 (confirmed)
Average Daily Volume = 8.30 mil


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******************
CURRENT CALL PLAYS
******************

AutoZone, Inc. - AZO - close: 76.99 change: +1.89 stop: 74.00

Company Description:
AutoZone is a retailer of automotive parts and accessories,
primarily focusing on do-it-yourself customers.  Each of its more
than 2900 stores in 42 states and Mexico carries an extensive
product line for cars, vans and light trucks, including new and
re-manufactured automotive hard parts, maintenance items and
accessories.  Approximately half of its domestic stores also have
a commercial sales program, which provides commercial credit and
prompt delivery of parts and other products to local repair
garages, dealers and service stations.

Why we like it:
It doesn't take a rocket scientist to see that we're still in the
midst of a volatile and indecisive market.  Tuesday's impressive
breakout in our AZO play was followed by a dismal selloff on
Wednesday, most of which was regained on Thursday to round out
the week with a nice gain.  Did we forget to remind everyone to
pack their Dramamine?  Tuesday's breakout looked convincing
enough to us that we raised our stop to $74 (the site of the
prior week's closing low), and by late in the day on Wednesday,
it looked like that was a bad move.  But Thursday's session
dawned with renewed optimism, driving AZO higher to the tune of
2.5% and leaving us a bit more breathing room as we head into the
long weekend.  Looking at the daily chart, there is in fact a
nice pattern of higher lows building, with the latest dip finding
strong buying support at $74.50.  The big issue that is really
causing us concern is that there isn't very strong volume
supporting this recent move.  A nice 1.5 million share day on
rising price would go a long way towards convincing us that AZO
can not only achieve our initial target of $80, but also push
into the $80-85 zone of congestion from last fall.  Intraday dips
that find support above $74.50 can still be used for entries into
the play, but conservative traders will want to watch for more
conviction in the form of stronger buying volume.

Suggested Options:

Shorter Term: The May 75 Call will offer short-term traders the
best return on an immediate move, with manageable risk.

Longer Term: Traders looking to capitalize on a sustained
breakout move over the next few weeks will want to look to the
May 80 Call or even the June 80 Call.  These options are
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 MAY-75 AZO-EO OI=395 at $3.90 SL=2.50
BUY CALL MAY-80 AZO-EP OI=860 at $1.45 SL=0.75
BUY CALL JUN-80 AZO-FP OI=520 at $2.85 SL=1.50

Annotated Chart of AZO:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/AZO041703.gif


Picked on April 13th at  $75.24
Change since picked:     +1.75
Earnings Date          06/03/03 (unconfirmed)
Average Daily Volume = 1.32 mln

---

Bed Bath & Beyond - BBBY cls: 39.52 change: +1.32 stop:
37.00*new*

Company Description:
Bed Bath & Beyond is an operator of stores selling predominantly
better quality domestics merchandise and home furnishings
typically found in better department stores.  As of May, 2002,
the company had stores in 44 states.  Domestics merchandise
includes bed linens and related items, bath items and kitchen
textiles.  Home Furnishings include kitchen and tabletop items,
fine tabletop and giftware, basic housewares and general home
furnishings.

Why we like it:
It took a bit of patience to wait for the breakout over $38 in
our BBBY play, but it looks like the wait was worth it.  After
blasting through that level last Monday on increasing volume, the
stock actually managed to exceed $39 before pulling back.  Just
as we had hoped, that pullback came right down to the $38
breakout level before reversing strongly higher on Thursday,
ending the week just off its high of the day and at a new all-
time high.  As mentioned through the week, we're looking at a
trade at $40 as a good opportunity to harvest some partial gains
and then look for re-entry at a lower level.  There's nothing
magical about that level, except that it is likely to be
psychological resistance.  The Retail index (RLX.X) is just
testing the lower edge of the $295-305 resistance zone, and
unless the bulls can push through it with gusto, BBBY will likely
have a hard time clearing the $40 level.  This stock looks like
it could work its way substantially higher, so we still want to
give it some room to breathe.  Our stop moves up to $37 this
weekend, which is below both the ascending trendline and the 10-
dma ($37.64).  Another dip to the $38 level that finds willing
buyers can certainly be used for new entries, especially if the
RLX is able to hold above $290.

Suggested Options:

Shorter Term: The May 37 Call will offer short-term traders the
best return on an immediate move, with manageable risk.

Longer Term: Traders looking to capitalize on a sustained
breakout move over the next few weeks will want to look to the
May 40 Call or even the August 40 Call.  These options are
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 MAY-37 BHQ-EU OI=5297 at $3.00 SL=1.50
BUY CALL MAY-40 BHQ-EH OI=3894 at $1.40 SL=0.75
BUY CALL AUG-40 BHQ-HH OI=3501 at $3.00 SL=1.50
BUY CALL AUG-42 BHQ-HH OI= 470 at $1.90 SL=1.00

Annotated Chart of BBBY:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/BBBY041703a.gif


Picked on April 8th at  $37.18
Change since picked:     +2.34
Earnings Date          07/02/03 (unconfirmed)
Average Daily Volume = 3.22 mln

---

Omnicom Group - OMC - close: 61.43 change: +1.31 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:
We don't have a lot of new material to comment on for OMC.  We
picked this stock as a call play on Tuesday and Wednesday's
session provided a pull back to the $60 level for eager bulls to
buy the dip.  Shares rebounded another two percent by the close
on Thursday and put it squarely back above the $60 level, which
might act as new support.

Our original write up highlighted a few points that could be
driving the rise in advertising stocks.  First and foremost is
the end of the war in Iraq.  During the height of the conflict,
many TV channels reduced and or eliminated commercials to bring
their viewers full 24-hour coverage.  Now that the war is over,
advertising space and thus ad spending can return.  A secondary
but probably a stronger element is the consumer.  Prior to and
during the war in Iraq, analysts were very concerned that
consumer would hole up in their homes and not spend money over
concerns about the war, the "high" risk of terrorist attacks, and
the "CNN" effect (although some might start calling it the "FOX"
effect).  The most recent retail sales numbers put these concerns
to rest as the consumer is alive and well.

OMC's Point-and-Figure chart is showing a bullish ascending
triple-top breakout.  Meanwhile the daily chart looks attractive
as well.  There could be some resistance at $65 but our target is
the $68 to $69 level.  Our initial stop is at $56.99.  More
conservative traders might be able to get away with a stop just
under $58.  Currently, OMC's simple 200-dma is at 58.56.  We did
note that since Tuesday, the open interest in the May 60 calls
has more than doubled.

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=1787 at $3.70 SL=1.50
BUY CALL JUL 60 OMC-GL OI=1329 at $5.70 SL=3.00
BUY CALL JUL 65*OMC-GM OI= 854 at $3.20 SL=1.50
BUY CALL OCT 65 OMC-JM OI= 572 at $5.20 SL=2.75


Annotated Chart of OMC:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/OMC041703.gif


Picked on April 15th at $61.30
Change since picked:     +0.13
Earnings Date         02/25/03 (confirmed)
Average Daily Volume = 2.18 mil

---

Whole Foods - WFMI - close: 57.94 change: +0.61 stop: 56.00

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:
Believe it or not, we actually considered pulling the plug on our
WFMI play a week ago, when the stock ended the week on a down
note.  But we've been watching the way it keeps holding above the
20-dma and ascending trendline and decided to give it one more
chance to make good.  It's a good thing we did, because Tuesday's
rally saw the stock shooting to a new all-time high, finally
closing over $59.  Our patience was tested again on Wednesday, as
WFMI got caught in the market-wide downdraft, giving back all of
Tuesday's gains by the closing bell.  Despite such a sharp
pullback, support held once again and the stock rebounded on
Thursday to end the week with a respectable gain.  This is a
perfect example of a play that is best pursued by buying the dips
to support, rather than chasing it higher by buying the
breakouts.  Since that process has been working, we're going to
stick with it, targeting new entries on rebounds from support,
now at $57, just above both the trendline and the 20-dma.  The
PnF chart still looks strong with a bullish price target up in
the ozone at $85, but for now we'll target harvesting partial
gains at $60, with an eye towards re-entry on the next pullback
to support.  Maintain stops at $56.

Suggested Options:

Shorter Term: The May 55 Call will offer short-term traders the
best return on an immediate move, with manageable risk.

Longer Term: Traders looking to capitalize on a move towards the
$60 level may want to use the May 60 Call or even the AUG 60
Call.  These options are 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 MAY-55 FMQ-EK OI=3929 at $4.10 SL=2.50
BUY CALL MAY-60 FMQ-EL OI= 671 at $1.20 SL=0.75
BUY CALL AUG-60 FMQ-HL OI=1189 at $3.20 SL=1.50

Annotated Chart of WFMI:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/WFMI041703.gif


Picked on April 1st at $56.42
Change since picked:    +1.52
Earnings Date        05/08/03 (unconfirmed)
Average Daily Volume = 907 K


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

None


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


**********
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                 Sunday 04-20-2003
Sunday                                                      4 of 5


In Section Four:

Current Put Plays: NOC
Leaps: Round One Goes To The Bulls
Traders Corner: The Quickies – Were They Good For You?
Traders Corner: Putting it all together: OIN Mailbag(2)
Traders Corner: Do You Need An Attitude Adjustment?
Options 101: Foreign Currency Trading Basics


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Anything else is too slow!

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*****************
CURRENT PUT PLAYS
*****************

Northrop Grumman - NOC - close: 83.80 change: +1.86 stop: 85.26

Company Description:
Northrop Grumman Corporation is a $25 billion global defense
company, headquartered in Los Angeles, Calif. Northrop Grumman
provides technologically advanced, innovative products, services
and solutions in systems integration, defense electronics,
information technology, advanced aircraft, shipbuilding and space
technology. With approximately 120,000 employees and operations
in all 50 states and 25 countries, Northrop Grumman serves U.S.
and international military, government and commercial customers.
(source: company release)

Why We Like It:
Let's face it...it's tough to play puts in a rising market.  The
Industrials, the Nasdaq Composite and the S&P 500 all gained
ground on this shortened holiday week.  The defense sectors
followed suit and NOC was not left behind.  Still, the stock and
the industry remain relatively weak when compared to the market
as a whole.  In Tuesday's update we suggested that traders
looking for new entries may be better off to wait for a failed
rally at the $84.00 area.  That's exactly what we got today.  NOC
traded up to $84.38 at its high.  Now, all bears need to do is
look for a bit of "failing".  It may be prudent to look for
shares of NOC to trade below the 83.50 mark or even the 83.00
mark before initiating any new put positions.  Should shares open
up or quickly trade higher on Monday we would not want to go
short.  The stock could fail at its descending trendline (see
chart below) but it's a risky game and entry point is everything
when you're using options.

On Tuesday we elaborated a bit on why we were listing NOC as a
put play.  In addition to its relative weakness, one train of
thought is that now the Middle East region is more secure with
Saddam out of the picture.  A more secure Middle East means less
security forces and that means less security equipment.  Of
course the Iraq conflict was beneficial for companies like NOC as
they can receive orders to replace damaged or destroyed military
equipment in addition to selling upgrades and following through
on new products debuted in the war.  Part of the relative
weakness in the sector may be due to the quickness of the Iraq
war, which many had expected to last significantly longer.  At
any rate, traders need to be careful when choosing their entry
and we're going to be very strict with our stop at $85.26.

Suggested Options:
Stocks tend to go down faster than they go up.  Therefore we'd
probably suggest the short-term May options to play NOC.  Traders
who prefer more time might consider the August puts.

BUY PUT MAY 85 NOC-QQ OI=1667 at $3.20 SL=1.40
BUY PUT MAY 80 NOC-QP OI=1820 at $1.20 SL=0.50
BUY PUT AUG 80 NOC-TP OI= 351 at $4.00 SL=1.85

Annotated Chart of NOC:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-17/NOC041703.gif


Picked on April 6th at $83.26
Change since picked:    -0.54
Earnings Date        04/29/03 (unconfirmed)
Average Daily Volume = 1.57 mil


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*****
LEAPS
*****

Round One Goes To The Bulls
By Mark Phillips
mphillips@OptionInvestor.com

I don't care what your market view is, you've got to admit that
the first full week of the April earnings cycle went decidedly in
favor of the bulls.  Oh, there's no question it was a bumpy ride,
with lots of volatility.  But in the end, all the major indices
ended the week in the green, despite what I think were
questionable earnings results from the Trifecta of Technology --
IBM, MSFT and INTC.

Forget whether the earnings results were better or worse than
expectations, because that is really meaningless.  Which of those
companies forecast renewed growth that will fuel the second-half
recovery?  That's right, none!  From where I sit, we'll round out
the last of the "good six months" with the best spin the corporate
chieftains can put on fairly weak numbers.  What comes next?  The
"bad six months", summer doldrums, and an inability to blame the
weakness of the next earnings cycle on the uncertainty associated
with the Iraq war.

In perusing my weekly charts in preparation for writing tonight, I
found that in all cases the short-term (5,3,3) Stochastics are
already starting to roll bearish, while the longer-term (10,5,3)
oscillator is still rising, but nearing overbought.  With the
bullish percents still rising, I think we need to give greater
weight to the longer-term oscillators right now and that tells me
we may have another 2-3 weeks to go in this bullish move.
Hmmm...won't that take us just about through the end of the main
part of this earnings season?

Here's another way to look at it.  I extended the rate of ascent
of the SPX out into the future, and it looks to me like price
action will impact the upper boundary of the long-term descending
channel and the descending trendline from the August 2002 highs,
near the 915-925 area in early May.  That would certainly give the
bullish percents room to advance closer to overbought territory
and set up the next downward move.  That would be an amazing
parallel to what transpired a year ago, don't you think?

There's just one major fly in the ointment to my little bearish
party.  My thanks to Kathy for pointing it out in an email today,
as I think it very clearly frames the dilemma many very astute
traders must deal with right now.

"Mark, I've been following ALL of your articles concerning the
VIX, OEX, and the bullish percent  What I do not understand is the
increased long positions of the COT.  Supposedly, that is the
"smart money" and they are long this market.  Thanks for any
assistance in clarifying my confusion between the indicators and
the COT."

I've followed the action of the Commercials for many years, going
back to the mid-1990s when I used the data for position trading in
the commodity markets.  The one incontrovertible fact I came to
accept was that these big boys are almost never wrong, but they
also do a horrible job of timing.  The reason for the poor timing
has to do with scale.  The magnitude of the positions they take
are such that they can't just enter or exit in a day or even a
week.  They look to scale into positions over a period of weeks or
even months in agreement with their view of the direction of that
particular market for that particular time frame.  So they will
accumulate most of the way up and distribute most of the way down.
But spotting the point of inflection where the Commercials are at
their most bullish (or bearish) and the small speculators are at
an opposite extreme (measured over the preceding 12 months) is
about the best we can do.  It isn't an exact science (actually it
is more art) and over the years I've come to the conclusion that
the best we can do in using this data is nail down the timing
within about a 4-6 week window.  We just don't get enough data
frequently enough to nail it down any better than that.

So while on the surface, those elevated levels of bullishness as
demonstrated by the COT net positions seems to be in conflict with
the other indicators that are warning of a near term top in the
markets, I think what the COT data is telling us is to not be in a
rush to jump "whole hog" into the bearish camp.

After yesterday's article on the VIX, I'm not going to duplicate
that discussion here tonight.  The only point I'll make is that
the VIX drilled still deeper into that floor that I defined (the
lower edge now calculates to 24.32), even breaking down out of the
wedge on the relative strength chart from last night's article.
By all measures I use, fear is continuing to drain out of this
market at an alarming rate, without any appreciable improvement in
the actual levels of the market.  A day of reckoning is coming,
and I fear for the bulls that have bought into the mindless view
that the bear market is over, because I feel they are headed to
slaughter like on so many other occasions in the past 3 years.

There's nothing wrong with playing the upside as long as it lasts.
That's what we're trying to do with our current Portfolio plays.
Just don't fall for the siren song of a "New Bull Market", because
it is patently false.  As I said on Monday, be your own guru!  Now
off we go to examine those plays and I must say it was a pretty
decent week.

Portfolio:

ADBE - Well, it looks like our patience is being rewarded, with
ADBE finally tagging the $35 level again on Thursday.  Bullishness
in the Software sector (GSO.X) certainly isn't hurting, with a
3.4% advance on Thursday.  If the bulls continue to drive the GSO
higher, then it seems likely that ADBE (one of the strongest
stocks in the sector) will continue to surge higher.  We're
currently sitting on an 85% gain in the '04 LEAP, and I would
recommend that conservative traders look to at least harvest
partial gains if the 100% level is reached next week.  There
hasn't quite been enough upward movement to justify raising the
stop above the $31.50 level where it currently resides, but
hopefully we'll get that opportunity next week.

EMC - Wow!  Now that was a bullish week for our EMC play.  Not
only did it break and close above the $8.00 level in response to
the company's upbeat earnings report and upwardly revised Q2
forecast, but Thursday's bullish session had the stock closing
right on the next level of resistance at $8.50.  Weekly
Stochastics are stretching into overbought territory, but I really
think the stock has further to run on this cycle.  For now, we're
still keeping a pretty conservative stop set at $6.50, although we
have finally raised it above that $5.50 level we started with.
Conservative traders may want to raise their stops to breakeven on
the play, or take a targeted profit on a rally to the $9.00-9.50
area.  But I'm holding out for an eventual move into the $11-12
area.

Watch List:

NEM - Another missed entry, and here we sit watching NEM rise
without us.  Am I frustrated?  You bet I am, because we just
missed a decent entry a couple of times in the past few weeks and
the stock is rallying with the equity markets, even though the
price of gold is stagnating.  But positions in mining stocks are
not the sort of animal to chase.  It either comes to you and you
ride it up for a targeted gain or leave it alone.  I think a big
part of NEM's price strength lately has come from the company's
outstanding earnings report in late March.  Keep the entry target
fixed at $24.50-25.00 and we still ought to get a viable entry in
the weeks ahead.

QQQ - Despite the positive price action in the QQQ again last
week, I'm losing my enthusiasm for this play.  Taking a step back
from the day-to-day gyrations, the QQQ has bounced in quite
volatile fashion between $25-27 for over a month now, and quite
honestly, I'll be surprised to see a breakout to the upside that
can stick.  During the past month, while price has churned
sideways, the weekly Stochastics have topped out and started to
roll bearish.  At the same time, the NASDAQ-100 bullish percent
has risen from the low 30s to 59%.  That internal strengthening
hasn't been able to produce a breakout in price, which seems
bearish to me.  The other factor that causes me concern is the
NASDAQ-100 Volatility index (VXN.X), which at Friday's close
(35.88) is at an all-time (27-month) low.  Extreme low readings in
volatility tend to be followed by price declines, not price
advances.  I seriously considered pulling the plug on this play
this weekend, but due to the difficulty I'm having in reading the
market, I decided to monitor it for one more week first.  I would
recommend caution on bullish positions here, as I think there is
greater downside risk than potential reward at current levels.
Only a sharp decline and bounce from our current target range
looks viable to me at this time.

GD - Ok, now that just wasn't nice!  If you think I'm getting
tired of Watch List plays turning and going in our direction
without letting us in, you're right.  GD rebounded from $52.20 a
week ago, just fractionally above my entry zone of $50-52.  To say
last week was bullish would be an understatement, as the stock
vaulted higher to the tune of 10% in just four days, with the
bullish move further fueled by the company's impressive earnings
report on Wednesday morning.  GD reported $1.11 per share, beating
consensus by 9 cents on better than expected revenues.  Needless
to say, the stock shot higher on very strong volume on that news
and is rubbing up against $60 resistance.  Now the question is
whether we're going to get another pullback or if we missed our
opportunity?  I'm leaning towards the pullback and entry over the
next couple weeks, but we're not going to chase it.  I'm raising
the entry to $54-55, but that's as far as I'm prepared to go.
That makes position management difficult enough, and any higher
would make placing a reasonable stop all but impossible.

AMZN - Well, we were looking for weakness in AMZN when we added it
to the Watch List last week, and that's certainly what transpired.
The problem is, we never got a decent chance to get on board.  The
stock has now fallen from the top of its long-term ascending
channel right to the mid-line near $24 and found support.  Now we
just need to see a rebound up to our $27-28 target entry zone,
which ought to be followed by a drop down to the bottom of the
channel.  Since we don't yet have a live position in AMZN, we can
comfortably watch from the sidelines when the company releases and
then spins its quarterly earnings report next Thursday.  Nothing
would make me happier than to see a bullish response, which should
then see weakness drive the stock down to at least the bottom of
the channel.

I'm not going to harp on my bearish intermediate and long-term
view of the market again this week.  I've repeated it enough times
that most of you can probably repeat it from memory.  Basically,
the economy isn't showing anywhere near the strength to justify an
extended bullish move, and with volatility reaching very low
levels, I continue to think this bear market rally's days are
numbered.  Accordingly, we're adding another bearish Watch List
play this weekend.

As I mentioned at the end of Wednesday's article, I'll be taking
some time out for some R&R through next Wednesday.  Since I won't
be around to play in the markets with the rest of you, do your
best to keep it under control while I'm gone, alright?

In the meantime, manage your open positions aggressively!

Mark


LEAPS Portfolio

Current Open Plays

SYMBOL OPENED     LEAPS    SYMBOL  ENTRY   CURRENT  CHANGE  STOP

Calls:
ADBE   02/28/03  '04 $ 30  LAE-AF  $ 4.70  $ 8.70  +85.11%  $31.50
                 '05 $ 30  ZAE-AF  $ 7.50  $11.80  +57.33%  $31.50
EMC    03/12/03  '04 $  7  LUE-AU  $ 1.40  $ 2.10  +50.00%  $6.50
                 '05 $  7  ZUE-AU  $ 2.15  $ 3.10  +44.19%  $6.50


Puts:
None


LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
NEM    03/09/03  $24.50-25.00  JAN-2004 $ 25  LIE-AE
                            CC JAN-2004 $ 20  LIE-AD
                               JAN-2005 $ 25  ZIE-AE
                            CC JAN-2005 $ 20  ZIE-AD
QQQ    03/16/03  $24.50-25.00  JAN-2004 $ 26  KLF-AZ
                            CC JAN-2004 $ 22  LKF-AU
                               JAN-2005 $ 26  ZWQ-AZ
                            CC JAN-2005 $ 22  ZWQ-AU
GD     03/23/03  $54-55        JAN-2004 $ 60  KJD-AL
                            CC JAN-2004 $ 50  KJD-AJ
                               JAN-2005 $ 60  ZZJ-AL
                            CC JAN-2005 $ 50  ZZJ-AJ


PUTS:
AMZN   04/13/03  $27.50-28.00  JAN-2004 $ 25  LOH-ME
                               JAN-2005 $ 25  ZWE-ME
AIG    04/20/03  $56-57        JAN-2004 $ 55  LAJ-MK
                               JAN-2005 $ 55  ZAF-MK


New Portfolio Plays

None


New Watchlist Plays

AIG - American International Group $53.64  **Put Play**

AIG is no stranger to our LEAPS Watch List, as it has been here
before and will likely be here again.  There are few stocks that
have put together such an established downtrend in the past few
years, while still having room to fall.  Insurance stocks as a
group have not done well in the wake of first 9/11 and then the
admission that the bulk of their investments (what these companies
use to pay earn cash for paying out claims) have not performed up
to par.  This is no great surprise after 3 years of a bear market,
and we can view this phenomenon as an extension of the problems
that are plaguing most corporate pension funds.  Reality is not
living up to the pollyannish expectations.  Beginning in October
of 2001, AIG began riding down along the underside of a descending
trendline that began in late 2000.  Each test of this trendline
throughout 2002 met with bearish rollovers, at least up until late
October.  Then we saw AIG break through this trendline and really
try to break the trend of lower highs.  Alas, it wasn't to be,
with the 200-dma stepping in to really put a cap on the stock in
November and then again in January.  The January plunge took AIG
back under its descending trendline and all the way down to $43
before the mid-March rebound got underway.  Since then, the stock
has been working its way higher in a bearish ascending wedge,
which ought to produce a break down sometime in the next few
weeks.  I think the long-term descending trendline has become less
relevant and the real key that we need to watch is the 200-dma
(currently $58.27).  It currently lines up quite nicely with the
bearish resistance line on the PnF chart at $58.  That first test
of bearish resistance should prove painful for the bulls and I
expect will put an end to the series of higher lows.  AIG is set
to release its quarterly earnings next Thursday, and I see no
reason why we want to be in this play prior to that announcement.
If we're lucky, the initial response to the report could set us up
for a better entry into the play up near $58.  But I've gotten
caught flat-footed too often lately, waiting for an entry point
that never comes.  So I'm setting our initial entry target just a
bit lower at $56-57, with an initial stop set at $60.50, just
above the top of the late-January gap.  If you're wondering just
where I expect AIG to go on its next down-leg, you'll really need
to look to the weekly chart for the proper perspective.  For
starters, I'm looking for a retest of the March lows, and actually
a slight break below to test the $38-40 level.

BUY LEAP JAN-2004 $55 LAJ-MK
BUY LEAP JAN-2005 $55 ZAF-MK

Drops

None


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

The Quickies – Were They Good For You?
By Mike Parnos, Investing With Attitude

Too many traders go through life living out the words to the
Animals' "I Can't Get No Satisfaction."  Why?  It can usually be
blamed on poor techniques.  Enter the Couch Potato Trading
Institute (CPTI) -- an institution of higher learning.   That's
because our profits are high – and so are the students from time
to time.
_____________________________________________________________

The Quickies
In our Sunday column, I proposed some hypothetical expiration week
Quickie trades.  Let's see how they fared based on 10 contract
positions.

1.  RMBS Short Straddle.
We sold the $15 calls and $15 puts and took in $1.35.  The closer
it finishes to $15, the more we make.  RMBS finished at $14.60.
So we bought back the $15 put for $.45 -- resulting in a profit of
$900.  Not bad for four days.

2. MO Short Strangle.
On Monday, selling the MO April $30 puts and the April $32.50
calls would have yielded $1.20.  The objective was for MO to
finish at expiration between $30 and $32.50.  What a coincidence!!
MO closed at $32.19.   The options expire worthless and we just
made $1,200.

3.  ADRX Short.
This one is a little trickier.  If one was alert and shorted ADRX
on Monday morning at $14.65, he would have had an opportunity to
pick up $.50-$.55 as ADRX traded down to $14.05 shortly
thereafter.  But, if you weren't quick, you would have been
stopped out when the stock reversed and traded at $14.95 resulting
in a $250 loss.

If you can win two out of three and make a profit of $1850 in just
four days, I'd say we did pretty damn well.  I'd say you should
call all of the traders you know and tell them about
OptionInvestor and how you paid for your subscription for the next
five years – IN FOUR DAYS!!

These trades were so satisfying that, even if you don't smoke, you
wanted a cigarette after expiration.  CPTI students are finding
that trading is like eating Chinese food.  You enjoy the hell out
of it and the next month you want to do it again.  I suppose you
can say that about a lot of things – and I hope you can say it
often.   It's in the technique.
____________________________________________________________

Sunday Preview
If the "Quickies" didn't get you excited, wait until you read
about the results of our April positions – and the new CPTI
positions for the May option cycle.  This Sunday's column is going
to be fun to write.  BTW – Have a great holiday weekend!!
_____________________________________________________________

Where Did The QQQ Go?

Mike,
Why did you give up on the 2005 QQQ ITM strangle? It should earn
50% a year if held to expiration. Doesn't a strategy like this
take TIME to recoup the "risk" part of the position and then the
rest is 'gravy'? So, after several months, one has a free
position? I just put this trade on. Is it still a sound strategy?
What have we learned from doing it? Please give me your input.
Thanks.

Response:
It's still a good long-term trade (for experienced traders), but
the return may not be as high as you think.  If you put this trade
on today, with the QQQs trading at $26.03 using the $22 calls and
$29 puts, you would have an initial risk of about $6.10.  If you
sold the June $23 puts and $28 calls, you would have taken in
$1.15.  Your new risk would be $4.95.

Here are the reasons I closed the trade.
1.  Readers were writing that they had small trading accounts and
that this position was tying up too much of their trading capital.

2.  You're right about the "time" factor.  Most readers do not
have sufficient patience to stay in the trade to realize the
profits.

3.  In order to make it profitable, we would have to start selling
the near term options closer and closer to where the QQQs were
trading.  That would require readers to be nimble enough to close
out one end and roll out to other strike prices.  For some
readers, that's no problem.  For others, it's overwhelming.  Plus,
I'm only able to provide suggestions on Thursday and Sundays in my
column.  If the rollouts, or other adjustments, need to be dealt
with at other times of the week, hundreds of readers who put on
the trade will without guidance.  Granted, these trades are
supposedly just for study purposes, but many readers put them on.
Some have the knowledge to make the right moves, while others do
not.

4.  And last, but not least, I may have an excellent knowledge
base, but, if I was that good a trader, I'd be lying on a beach in
Hawaii, being fed grapes by half-clad native girls, sipping on
drinks with little umbrellas instead of sitting on my old couch in
my underwear in Detroit drinking Diet Pepsi and wearing out the
batteries on my remote control.

Let's take this opportunity to take a closer look at the profit
potential of the Long Term In The Money Strangle.

In the above example, we reduced the "risk" portion of this trade
to $4.95 after the sale of the June options.  At June expiration,
we will have 17 months remaining to the January 2005 expiration of
our long options.

In the similar CPTI position that we recently closed, we were able
to sell near term options twice.  We took in $.95 each time.  Each
time we had to sell near term strikes $1 closer than the strikes
of the long-term options.  We did this to generate more premium.
Both times we were lucky and the QQQs remained within the range of
the near term short options.

So, let's make a ridiculous assumption – that the QQQs will
forever remain in the trading range of $22 - $29.  That will
happen when pigs fly, when chickens have lips, and when Monica
Lewinsky's kneepads go on display at the Smithsonian.

We sell near term options two months out.  That translates to 8
1/2 opportunities to sell during the life of the 2005 long
options.  If we take in an average of $.95 on every two-month
sale, over the next 17 months we'll bring in about $8.00.  It will
take about 10 months to cover our risk ($4.95).  The next seven
months will generate only $3.00.  Now, a $3.00 return on a $4.95
risk is a 60% return.  The question you have to ask is if a 60%
return over 17 months is an acceptable return.

Another consideration is that the long 2005 LEAPS puts and calls
will tie up a lot of money for a long time.  This money is not
generating any income.

More money can be generated, but near term short options will have
to be sold closer to where the QQQs are trading.  That translates
into more premiums, but also more adjustment skills.  All these
things must be considered before entering the trade.
______________________________________________________________

CPTI Portfolio Update:
Position #1 – OEX Iron Condor – closed Thursday at $453.71.
We created an Iron Condor with a 70-point range of 420 to 490 for
April.  The objective is for the OEX, at April expiration, to
finish anywhere within the spread.   The total credit for the Iron
Condor position is $2.35.  Profit: $2,350.

Position #2 – BRCM Short Straddle – Closed at $16.00.
This month we sold 10 contracts of BRCM April $15 calls and sold
10 contracts of BRCM April $15 puts for a total credit of $2.60.
Our safety range is from $12.40 to $17.60.

A week ago Monday, we were presented with an opportunity.  The
market spiked up.  BRCM traded as high as $13.90.  To buy back the
$15 put would have cost $1.60.  There is heavy resistance at about
$14.  We decided that, if BRCM reversed, we would close out our
position.  When BRCM moved down to $13.80, we bought back the $15
put for $1.65.  We had taken in $2.60.  Our profit is $950.

Position #3 – MMM Iron Condor – $129.98.
We created an Iron Condor with a 15-point range $115 to $130 for
April.  We were able to take in $1,550 for our 10-contract
position.  The objective is for the underlying, to finish anywhere
within the spread.

The market has gone up too far and much to fast.  Did calmer heads
prevail and return MMM, to a more reasonable level?  Did Fibonacci
come through for us?

Ongoing Position #1 -- QQQ ITM Strangle – $26.82.
This is a long-term position we created four months ago.  We own
the January 2005 $21 LEAPS calls and the January 2005 $29 LEAPS
puts.  We sold 10 contracts of the QQQ April $28 the QQQ April
$22.  Our cost basis for the position was $5.30.  We closed this
four-month position with a $400 profit. (See discussion above)

Ongoing Position #2 – OIH - Diagonal Calendar Spread – $55.63.
We felt there was a great deal of uncertainty built into the price
of a barrel of oil.  When, and if, the war is resolved, the price
of oil should work its way down.

We bought 10 contracts of the July OIH $55 puts and sold 10
contracts of the March OIH $50 put at a debit of $3.85.  According
to plan, the March $50 put expired worthless.  We then sold the
April $50 put for $.70 to bring our cost basis down to $3.15.
What did we do?  You'll read about it on Sunday.

Happy trading! Remember the CPTI credo: May our remote batteries
and self-discipline last forever, but mierde happens. Be prepared!
In trading, as in life, it’s not the cards we’re dealt. It’s how
we play them.

Your questions and comments are always welcome.
Mike Parnos
CPTI Instructor


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

Putting it all together: OIN Mailbag(2)
By Leigh Stevens
lstevens@OptionInvestor.com

Still more viewer e-mail allows a look at further real-life
market examples that demonstrate technical analysis, at least by
the methods I favor. So, I pull out some questions of general
interest and answer them again in my weekly Trader's Corner -
that's here folks!

As with our other OIN contributors, I can't provide specific
stock, index, futures, etc. suggestions and comments to an
individual subscriber by e-mail, BUT - when the question is of
possible general interest, it allows me to analyze a specific
chart pattern, indicators, etc. in this column. (I also suggest
viewers make use of the OIN Market Monitor, where specific stock
and index ideas can be given to all in response to e-mail
queries.)

QUESTION/COMMENTS -
"As a follower of your articles, I would appreciate if you could
read the following charts:
Chart 1 - full month's chart
Chart 2 - chart for tail end of April 2003

CHART 1 - Singapore Stock Exchange Index (MSCI) futures - SYMEX




CHART 2 -




QUESTION 1 - Can I say there is a high probability that:
a: the price will go a bit higher to meet its upper trend line at
1623 level and from there continue to fall and when it breaks out
at 1582 (or 1558), it continues its downward trend?

b: The Index falls from here to break the lower trend line 1582
(1558) as in (a)? A down side target to about 1469 level, before
a reversal upwards.
QUESTION 2 - That the price will continue it up move from here to
break out the upper trendline at 1623 level and continue its
northward (upward) march?"

ANSWER/COMMENTS:
Well, all of the above is a lot of supposing.  What I can say
about this chart pattern is this -
The Index is consolidating most recently in a "symmetrical
triangle" after making 3 (up) swing highs that make up a well-
defined down trendline on the daily chart.  Highest volume spikes
are seen at these 3 peaks, confirming that the dominant trend is
down.

A triangle has no certain predictive value as to WHICH direction
a breakout move, if any, will be in. It does suggest that a price
move above the upper or lower trendline should travel a next
distance that is about equal to the left hand side of the
triangle (distance between low and high there) as measured from
the "breakout point" at the trendline.

For example, if there is a break below 1550, subtract 180 (1650
high minus 1470 low) for a downside target of 1370. OR, if there
is a breakout move above 1625, ADD 180 for a "minimum" upside
objective of 1805 - call it 1800, as there is often greater than
average selling (or buying) in the even 100 areas of an Index or
stock.

I think that the way you drew the trendline in Chart 1 above is
good and it does give somewhat more weight to expecting a
breakout move to the UPside. Triangles can form as reversal
patterns - they are not always (just usually) consolidations
before the dominant trend continues or has another "leg" in the
same direction as the trend that has gone before.

QUESTION/COMMENTS -
"1) If getting conflicting signals from your Call/Put and 10-day
TRIN, which do you favor?

2)Do you day trade at all? If so, what system would you recommend
for the S&P E-mini's for intraday? (my main focus)
I ask because I'm very confused over the many approaches I see
and would value your insights--is there a "KISS" approach to
intrday trading the E-mini's (as opposed to wave analysis, band
trading, pivot analysis, etc.)?"

ANSWER/COMMENTS:
1.) RE call/put versus 10day TRIN -
It's hard for me to say which indicator I "favor" as a general
rule - My Call/Put ratio is the most reliable as marking tradable
reversals. This is where of course, the daily call volume is
double or more the daily put volume suggesting a possible
downside reversal ahead; or, where daily put volume is equal to
(or more than) daily call volume suggesting an upside reversal
ahead.

The 10-day TRIN figure is a good indicator also, but only gives
"signals" rarely in a contrary sense; for example, when the 10-
day TRIN is 1.5 or above (heavy selling), suggesting an upcoming
bottom.

However, the lead-time before the market reverses can be up to 4
weeks with such a TRIN extreme.  An extreme in my Call/Put
equities daily volume ratio often precedes a reversal by 1-5 days
with 1-2 days being quite common.  Of course, these "signals" or
extremes don't come along but only every so often.

Moreover, as with all indicators, its what ELSE you see too - for
example, are prices also at resistance or support implied by an
up or down trendline, is there an overbought or oversold
oscillator extreme reading, etc.

2.) RE day trading & use of E-mini contract
I don't start out day trading, but if I get a sharp quick move
within the same day, I may take profits and close out my
contracts by the end of the day.  I would suggest the futures for
intraday or day-trading given the very big advantage they have in
NOT carrying an excess of time premium normally. Whenever, there
is a big move, the option market makers lay off risk by jacking
up the premiums.

This is why I pretty much only like to buy into support areas -
when nobody yet wants em - and sell into resistance.  This as
opposed to buying or selling "breakout" moves when the premiums
expand faster than you can think about getting an order in - hey
its not for nothing that those guys stay in business and make
money - they make it from YOU.  Anyway, some people might be able
to consistently profit by trading on breakouts, but I am not one
of them.

There is no "KISS" method that I can suggest.  However, my
version of KISS is to try to only trade when I see a clear chart
pattern(s) with predictive value, an oversold or overbought
condition and/or indicator divergences - these 3 things are
enough to trade off from; e.g., you see a double bottom low on
the 15 30 and/or 60-min charts, when the hourly oscillator is
oversold; or maybe such a bottom is made and the RSI or
Stochastic is already in an uptrend - pull the trigger!

The problem with many if not most short-term traders is that they
don't wait for the right set of predictors to line up.  My
masterful trading mentor was mostly a day trader but he almost
never had a losing trade if you can believe it - and, it was not
the case that he was in trades only once a week or infrequently.
But he was very skilled at waiting for the right moment during
the day or every couple of days if he had to.

Then, of course, there is the matter of how heavy or light you
trade.  A so-so setup for a trade suggests trading lightly,
versus a powerful set of circumstances shaping up which suggests
going in with a bigger position.

Like a good baseball player, this masterful option/futures index
trader had a great eye to only take "pitches" he could swing away
at.  Better to trade 2-3 times a week than every day if things
are not setting up right.

QUESTION/COMMENT -
"The 21 day moving average has a great support and resistance
look on the DOW, OEX, QQQ's."

1.) - Did you know that there has only been 14 x-overs in the
last 15 months on the DOW? Check it out.

2.) - Do you have any favorite stocks regarding the 21-day moving
average?

3.) In other words, stocks that stay one side or the other for a
period of days? Not flip-flopping back and forth."

ANSWER/COMMENTS:
Re your count (1.) on the infrequent number of crossovers in the
Dow in the prior 14-months, it's of course a good observation -
however, the there are some flip flops that occur; i.e., a close
below or above the average is a 1-day affair, such as seen in the
chart below where those conditions are outlined in the yellow
circle in the TradeStation "ShowMe" study I created -





So, the first thing I would note is just that this moving average
study can cause whipsaws if used as a "mechanical system".
However, your point is I believe about how infrequently these
crossovers occur - most traders are going to want to go in and
out of the market more often that that, even if the erosion of
option time premiums was not a consideration such as by being
long or short QQQ.

I use the 21-day moving average more in relation to the envelope
lines where I am looking at buying puts on moves to the lower
envelope line and calls on approaches to the upper line IF other
technical considerations also are favorable for that trade.  This
to guard against (again) simple mechanical use of this indicator
as you see plenty of instances where prices just continue to move
up or down, hugging the upper or lower bands.

Question # 2 and # 3- re trading stocks using the 21-day moving
average indicator:

When I discovered how often simple 21-day crossovers in the Dow,
S&P and Nasdaq indices signaled trend changes, I naturally looked
to see if individual stocks performed the same way.  On balance,
they don't.  Even the Dow (30) average is composed of 30 stocks,
but they are rarely all in a similar trend.  It seems that the
21-day average, with upper and lower envelope lines of 4-6-9
percent, is a moving average length that works well on a
"composite" - an index or average composed of many stocks.

Now, this is not to say that you couldn't find the particular
moving average that worked the best over time to suggest very
significant resistance or support on that stock.  But that is a
BIG undertaking - and, I always traded the indexes more.

With trading software like TradeStation you could set up a
hypothetical trading "system" that bought or sold on a 21-day
moving average crossover and START with a 21-day length.  It
would then be necessary to Optimize for the length moving average
that would produce the greatest or most consistent profits. This
might be a 15-day length on Intel (INTC) and a 23-day length on
IBM.  I don't know the "optimal" moving average length for these
stocks, but this is an example of the differences that exist.

And, if you wanted to work with stop-loss orders, both on entry
and trailing, you have to design for that too and test for what
type of stocks added the most to the overall profitability of
such a method.

The point is that this work would have to be done for each stock
- if you did only the biggest stocks of the OEX (S&P 100), this

would be a lengthily work and study.  And, there are limitations
in "optimization" as it works only with PAST results.

QUESTION/COMMENTS -
"What is the minimum number of bars (periods) that should build
before you consider divergence valid on the daily and 60-minute
charts (sometimes you see it with just a few bars between cycles
and I would assume this is less valid then say maybe 5-10?
periods?"

ANSWER/COMMENTS:
Good question - I don't have an exact rule of thumb on what is a
valid length in terms of the number of bars.

A divergence is usually considered valid within the time frame of
the "length" of the indicator, so the longer the indicator length
the more likely it is that a divergence will be seen.

If you are looking at an hourly stochastic, it is more likely
that you will see signs of a bullish or bearish divergence within
a longer length like 21 (21-hours here) rather than in a short
length like 5 or 10.  But this is not always the case as you'll
see from the chart below.

In the example below, the price/oscillator divergences show up on both
the 5 AND 21-period setting on the hourly stochastic but outside of the
5-hour setting of the 5-period Stochastic. The divergences here are
prices going to a new high, unconfirmed by a similar new high in the
oscillator type indicator like RSI, Stochastic or MACD.

I like to see divergences showing up on different length settings
and in different oscillators, although I consider an RSI
divergence ALONE to be a better "signal" of divergence than the
stochastic alone.  But it's also true that you see sometimes a
divergence showing up in just one or the other.  If other aspects
of the price pattern, volume and still other indicators (e.g.,
stop at a moving average) support a upcoming trend reversal by
the divergence, I take the trade.





In EXAMPLE 1 above -
A clear cut divergence was only seen in the RSI - the stochastic
just goes to an extreme multiple times, which is the tendency of
for the way its constructed.  This was a very good signal by the
way, although there was a long lead-time before the reversal
occurred.

I mean, at what point do you take the signal? - prices kept going
up and the RSI kept not "confirming" a new high.  One solution is
to wait for a break of the trendline or the first time a prior
(down)swing low was pierced, although there was one "false" break
like this.  It's not always so easy to use divergences to sell or
buy puts right at the top, but you can be ready such as when that
last top was made up the upper end of the (uptrend) channel.

In EXAMPLE 2 above -
The divergence was NOT seen on the RSI (see the yellow circle),
only on the 2 stochastic models, at the 5 and 21-period "length"
settings. What you do have in this example of a MAJOR help if the
double top that set up on the hourly chart.

Coupled with the divergence, example 2 provided a solid sell or
put buying indicator for an impending downside reversal - here
you KNOW the time frame to adopt a bearish strategy; i.e., at the
prior top, with stop protection just over it. Here it would be
warranted to trade with a bigger position - within the context of
not trading all your account or within what would be good risk
management.

Lastly, I would note that the RSI (in example 2) was at a major
extreme for the range it normally trades in and this was another
type of confirming technical reading on the probability of a
likely reversal.

In EXAMPLE 3 above -
Minor divergences were seen on both the RSI and stochastic models
and these were fairly apparent on the 5-hour stochastic (most)
and on the 13-period RSI.  Help in seeing at least a short-term
top here was the fact that the divergence occurred at overbought
readings on the oscillators.


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

Do You Need An Attitude Adjustment?

How many of you work hard at being the best trader you can
possibly be? How many of you study the markets for hours and know
more about technical indicators than you know about your spouse?
But how many of you just can’t seem to break through that glass
ceiling where the consistent profits seem to lay in wait.

Even the most astute, highly motivated, well grounded traders can
be crippled by emotional thinking which almost always leads to
poor decisions and trading errors. It doesn’t matter if you trade
with fundamentals, with technicals or a combination of both; your
biggest hurdle is what goes on between your ears.

Ninety five percent of trading errors will be caused by your
attitudes about being wrong, losing money, missing out or leaving
money on the table. These are the four primary trading fears. Is
there a trader reading this who has not felt any of these fears? I
doubt it.

As long as you make the errors from rationalizing, justifying,
hesitating, hoping, jumping the gun, you will fortify the mistrust
you have in your own judgment. Trying to do something as simple as
placing an order according to indicators becomes the most
exasperating thing you will ever do when it doesn’t turn out. The
irony is that with the “right” attitude trading is easy and simple
because you remain confident in the face of uncertainty. This is
called the trader’s mind-set.

Most traders instead of learning to think like a trader believe to
make it in this business you have to learn more about the markets.
It is almost impossible to not fall into this trap because of how
are brains are wired. We have a psychology that makes it easy to
assume that it’s what you don’t know about the markets that is
causing your losses, your lack of confidence, your pain.
Unfortunately this is just not the case. Trading consistency comes
from learning a trading psychology, not from studying the markets.

Let’s take an example. You have to choose between two traders to
trade your account. In this account is all the money you have in
the world. One trader has a simple, even a mediocre, system but
has a mind-set that never rationalizes, never second guesses,
never hopes, never jumps the gun. He (or this could be a she) just
takes the trades as they are presented to him. He knows before he
puts a on trade when he will get out, how much he will risk and
sticks to his plan. He does not second guess once the trade has
been executed because he has confidence in his simple system. He
is not fearful because he is emotionally detached from the trade.

The second trader is a phenomenal analyst. He knows everything
there is to know about technical indicators and charting analysis,
heck he may have even written a book on the subject but he
operates out of fear. He hesitates when putting on a trade, he
second-guesses each and every trade, and he closes trades well
before or, even worse, after he plans to. Which one would you
pick? The trader you pick is the trader you should be.

A trader attitude will always produce superior results over
analysis and technique. Of course to have both is the ultimate but
if you had to choose between one and the other, the attitude will
always win out.

Now you may be thinking how can I “learn” this trader psychology?
How can I think about trading in such a way that I’m no longer
afraid, no longer susceptible to the mental processes that causes
me consistent losses and not consistent profits? How can I become
emotionally detached? The answer is – drumroll please – learn to
accept risk.

There isn’t anything about trading that is more central to your
success and also more misunderstood than the concept of accepting
risk. What this means is accepting the consequences of your trades
without emotional discomfort or fear. Let me repeat this, what
this means is accepting the consequences of your trades without
emotional discomfort or fear. You must learn to think about
trading in such a way that the possibility of being wrong, losing,
missing out, or leaving money on the table doesn’t cause your
mental defenses to kick-in. Because once these defenses kick-in
all rational thought is kicked out and your fears will act on your
perception of information and your behavior in a way that will
cause you to create the very experience you fear the most, the one
you are trying to avoid. It isn’t fair but unfortunately very very
true.

Think about the last time you were in a losing trade and the
market was consistently going against you. You refuse to
acknowledge the loss but focus all your attention on the tics that
go in your favor. Each tic in your favor reinforces the thought
patterns that say the market has turned and in going in my
direction but in reality only one out of four tics are in your
favor. At some point the dollar value gets so large that you can’t
ignore it any longer and you get out.

The first reaction that traders universally have when looking back
at such a trade is, “Why didn’t I just take my loss and reverse?”
The opportunities to put on a trade in the opposite direction are
now easily recognized once there was nothing at stake. But we were
blinded to all these opportunities because the information
indicating it was an opportunity was defined as painful, so we
blocked it from our awareness. I know there is not a trader
reading this that has not gone through this scenario. It seems
that you must go through the pain and the anguish in order to
become a good trader. Unfortunately many never make it past the
pain and anguish and just leave the profession.

I wish I would have taken this lesson to heart when I first
started trading, I could have avoided so much pain, so many tears,
so much money lost. But I truly know this is the Holy Grail to
trading. Many say the money management is the Holy Grail but if
you don’t have the right trader attitude, I don’t care how good a
money management plan you have you will still lose.

If you are just starting out trading or have been trading for some
time but not making consistent profits, I beg you to please take a
look at how you “feel” when you put on a trade. Do you have a
plan, and if so do you stick to it? Do you get a knot in your
stomach if the trade goes against you? Do you get mad at the
market? Do you hear yourself saying things like “this is tough
market to trade”, “I am so frustrated with this market”? If so,
then take a look at your trader attitude.

Break the glass ceiling and become truly detached from your
trades, I cannot tell you how liberating it is. Have a plan, a
system and never, never deviate from it. If you lose, look at it
as a business expense, if you win then look at it as a business
profit. Nothing more, nothing less. Then you will no longer feel
that knot in my stomach, the sweat on the brow or the euphoria
that comes with trading. At that point then trading can become the
money tree in your backyard that you can pick from when you need
to.

And you can also once you develop the right trader psychology.

Jane Fox


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

Foreign Currency Trading Basics
Buzz Lynn
buzz@OptionInvestor.com

Two weeks ago, we did a column on how a preponderance of small
traders (most of us) could trade foreign currencies right here in
their own USA bank account.  Tonight we're going to add some
detail and dive deeper into the universal basics of foreign
exchange as it really happens in the entire world.

For those that missed that last article, "Currency Trading
Simplified, you can find it here.

http://members.OptionInvestor.com/options101/opt_040303_1.asp


Before you tune out thinking, "This can't apply to me.  I'm a
small-fry", realize this stuff is really simple, and is all about
profiting, or at least preserving the value of some hard-earned
dollars through currency swapping.

Think currency swapping is all about smoke, lights, mirrors,
derivatives, and other forms of higher math that obfuscate white-
collar criminal behavior?  Not so.  Think of it as going to a
grocery store and swapping dollars for coffee, bread, cotton
swabs, plant food. . .whatever.  Only instead of all those things,
you are going to swap dollars for another countries currency.
Pick what you like off the shelf and the rest happens at the
checkout counter!

First off, let me extend full credit and a huge amount of
gratitude for what I'm about to plagiarize, err, write.  The
following comes from OzForex, "a leading Australian foreign
exchange provider".

http://www.ozforex.com/

In short, I'm going to use their words (mostly), and very few of
mine.  However, by no means is this a recommendation or
endorsement of their services.  It's just that their information
was well-written and simple to understand.  So here goes!

As noted above, foreign exchange is essentially about exchanging
one currency for another.  The complexity arises from three
factors.  First, what is the foreign exchange exposure?  Second,
what will be the rate of exchange?  Third, when does the actual
exchange occur?

Identification of Foreign Exchange Exposures

Foreign exchange exposures arise from many different activities.
A traveler going to visit another country has the risk that if
that country's currency appreciates against their own their trip
will be more expensive.

An exporter who sells its product in foreign currency has the risk
that if the value of that foreign currency falls, then the
revenues in the exporter's home currency will be lower.

An importer who buys goods priced in foreign currency has the risk
that the foreign currency will appreciate thereby making the local
currency cost greater than expected.

Fund Managers and companies who own foreign assets are exposed to
falls in the currencies where they own the assets.  This is
because if they were to sell (repatriate) those assets their
exchange rate would have a negative effect on the home currency
value.

Other foreign exchange exposures are less obvious and relate to
the exporting and importing in one's local currency, but where
exchange rate movements are affecting the negotiated price.

Generally the aim of foreign exchange risk management is to
stabilize the cash flows and reduce uncertainty from financial
forecasts.  Fortunately there are hedging instruments that achieve
exactly that.

Spot and Forward Foreign Exchange Contracts

The most basics tools of FX risk management are 'spot' and
'forward' contracts. These are contracts between end users and
financial institutions that specify the terms of an exchange of
two currencies. In any FX contract there are a number of variables
that need to be agreed upon and they are:

1.  The currencies to be bought and sold - in every contract there
are two currencies, the one that is bought and the one that is
sold.

2.  The amount of currency to be bought or sold.

3.  The date at which the contract matures.

4.  The rate at which the exchange of currencies will occur.

It is point three that requires further explanation.  Whenever you
see exchange rates advertised either in the newspapers or on the
various information services, the rates of exchange assume a deal
with a maturity of two business days ahead.  A deal done on this
basis is called a spot deal.

In a spot transaction the currency that is bought will be
receivable in two days whilst the currency that is sold will be
payable in two days.  This applies to all major currencies with
the exception of the Canadian Dollar.

However most market participants want to exchange the currencies
at a time other than two days in advance but would like to know
the rate of exchange now.  For example if Australian firm, ABC
Ltd. had contracted to purchase a machine for the price of $1
million (USD 1 mil) payable in 6 months time, but wanted to be
sure that the USD would not become too strong in the interim, ABC
Ltd could agree now to buy the USD for delivery in 6 months time.
In other words ABC Ltd. could negotiate a rate at which it could
buy USD at some time in the future, setting the amount of USD
needed, the date needed etc. and hence be sure of the Australian
Dollar purchasing price now.

In determining the rate of exchange in six months time there are
two components:

1) The current spot rate

2) The forward rate adjustment

The spot rate is simply the current market rate as determined by
supply and demand.  The forward rate adjustment is a slightly more
complicated calculation that involves the interest rates of the
currencies involved.

Let us make a few assumptions about the markets:

AUD/USD spot rate: .6600
AUD 3-month interest rates is 6 %
USD 3-month interest rates 6.5 %

Now what is the forward adjustment that is made and why?

The forward rate can be calculated as follows: Forward rate =
(.6600+(.6600*.065*90/360)) / (1+(1*.06*90/365)) = .66095
This equation may look a little complex at first.  But in practice
your financial institution will calculate it for you.

If you defer the value date of a spot transaction, each party will
have the funds that they would have paid to invest.  The person
who sold Australian Dollars has those Dollars to invest for 90
days which assuming it was A$100 would equal A$ 101.4795.  The
person who sold US Dollars has those Dollars to invest for 90
days, which assuming it was USD 66 would equal USD 67.0725 at the
interest rates above.  The forward rate is calculated simply by
dividing 67.0725 by 101.4795 equaling .660947. If the forward rate
was not calculated as such, one party would be receiving an unfair
advantage by deferring the exchange of currencies.

Purchasing Foreign Currency

The actual purchase of foreign currency is a simple procedure.  If
ABC Ltd knows that it will need USD 1 million in three months time
and believes that the best time to buy the USD is now, all that is
required is that ABC Ltd telephone or fax their foreign exchange
service provider and a forward deal can be entered into.

There are two components to the price in forward transaction and
they are the spot price and the forward rate adjustment.

For example:

The current market rate is 0.6600.
The forward point adjustment for 3 months is +.00095.

Therefore the forward rate would be .6600+0.00095= 0.66095.

The deals are totally flexible as to the maturity date, the size
of the transaction and as to currency involved.

Also it just takes another phone call to change the payment date
if there is some delay in receiving the goods.

Once the deal is done, then the rate is fixed and ABC Ltd knows
the Australian Dollar cost of purchasing those materials.  When it
comes time for payment, the foreign exchange contract is
delivered.  This means that the foreign currency amount is sent to
the raw materials supplier.  At the same time ABC Ltd's bank sends
a debit note to ABC Ltd for an Australian Dollar amount, which
represents the cost of the raw materials.

That's the mechanics of the whole thing.  It's really pretty
simple.  But, what about the market risks and daily fluctuation of
various currencies?  How are exchange rates actually determined?

For that, Clearview Capital Management offers the answer.

"The potentials of Forex Market are phenomenal and best realized
when one understands what causes it to move.  The foreign exchange
market is dominated by economic conditions and political
situations; these conditions and situations often result in very
clear and sound fundamental economic policies.  The important
thing to realize is that these economic policies are not put in
place for a short term (a week or a month).  They are often put in
place for months on end, even years.  These fundamentals cause
clear and well-defined trends."

"These fundamentals are not a secret - they are known and
announced to the world.  Because of its size, the FX market is not
a subject to insider trading or manipulation.  Because of its size
and vast global participation, it has been called the fairest
market on earth, as well as the largest."

"The strength of currencies is affected by political situations
and economic factors of that country.  When governments make
decisions, markets react.  Exchange rates rise and fall as traders
around the world cast votes of confidence (or lack of it) in
currencies - and in effect - countries.  Foreign investments will
flow into countries with prolonged economic and political
stability and out of those that are rapid or uncertain."

"Indirectly, we are all passive currency investors.  Every asset
acquisition, product purchase or financial investment in equity,
credit or money markets, places a residual value in a selected
currency or group of currencies.  If it's a U.S. Dollar-
denominated asset, a conscious choice is made not to own assets
denominated in Euro, Japanese Yen, British Pounds or Swiss Francs.
Our investment choice automatically becomes dependent on the
global market value of the selected currency.  If we are invested
in a mutual fund that invests in foreign stocks, we are already in
the currency markets.  That's because to buy foreign stocks, we
have to use the underlined local currency.  The currency is then
exchanged back for Dollars when we take profits."

"There is a risk to keeping all of our assets in U.S. Dollars.  If
the Dollar depreciates with respect to other currencies, the value
of our investment portfolio, earning capacity and purchasing power
also becomes weaker."

As a point of reference, in two decades, the Dollar has lost about
75 percent of its value when compared against the Japanese YEN,
Swiss Frank, and the EURO, according to CCM, which is not very
reassuring.

However, we have noted in past articles on gold that competing
currency devaluations will likely prevent any one currency from
depreciating too far against other major currencies since there is
strong desire for products denominated under any specific currency
to remain competitive on the open market.  Meanwhile, gold remains
the only stable currency against which all others are measured.
Hence the strong case for gold under competitive devaluation
scenarios.  But that's a whole 'nother story.

But back to currency exchange. . . it is still very possible in a
micro-sense to trade one currency for another in a game of
arbitrage for profit.  In future columns we'll look at the
relationships between currencies on the charts to see what
opportunities might exist from time to time in which we might
garner some profit.

Questions are always welcome.  That's it for today.  Until next
time, make a great weekend for yourselves!

Buzz


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The Option Investor Newsletter                 Sunday 04-20-2003
Sunday                                                      5 of 5


In Section Five:

Covered Calls: Covered-Calls On Portfolio Stocks - Part II
Naked Puts: Some Guidelines For New Traders
Spreads/Straddles/Combos: Good Friday Provides A Much-Needed
Holiday!

Updated In The Site Tonight:
Market Posture: Bullish Developments


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*************
COVERED CALLS
*************

Trading Basics: Covered-Calls On Portfolio Stocks - Part II
By Mark Wnetrzak

Last week's article concerning covered-calls on long-term holdings
generated an interesting question from one of our new readers.


Attn: Questions@OptionInvestor.com
Subject: Monthly Covered-Calls on Portfolio Stocks

I am a new trial subscriber and am very impressed with the content.
Can you tell me if I have got this right -- or where have I gone
wrong!

In you covered calls section, an average return of 5-6% per month
is possible on various covered calls. It is possible to double
this with margin. If we ignore margin, a quick math exercise on a
$30 stock shows that after about 16 months at 6% your stock would
be free and every month your base cost would go down by 6% .  So,
the base cost in month 1 will be $28.20, month 2 $26.50, etc.  If
the stock price does fall a lot, you can still, after continuing
to write ATM calls, eventually have a base cost of NIL.  Then any
further premium income is all profit.  So after 16 months, it is
positive cash-flow no matter what the price of stock.

Have I got this right?

Regards,

AP


Hello,

The strategy we use in selecting newsletter candidates is based
on a conservative covered-write using the "total return" concept
that Lawrence McMillan adeptly describes in his original book,
"Options: As a Strategic Investment."  With this approach, an
investor considers the covered write as a single entity and is
not interested so much in stock ownership or bullish movement,
but in obtaining a consistent (monthly) return on investment.  In
other words, there is no intended stock ownership with the OIN
covered-call candidates - we would expect (and desire) the shares
to be called away each month.  Remember, we can't really forecast
what a stock will do in the future, we simply want candidates that
have a reasonable expectation for success in the short-term.  Yet,
it is good advice not to enter a position on an issue you wouldn't
mind owning, as there is always that possibility.  And that is why,
as with all recommendations, it remains your responsibility to
perform due diligence and thoroughly research any issue you are
interested in.  It is very rare that stocks will offer over-valued
premiums every month unless some sort of explosive move up or down
is expected (buy-out, clinical trial results, bankruptcy, etc.).
A large move either way could be quite annoying for a long-term
investor who sold covered-calls and doesn't want to lose the
underlying stock: the pain of lost profits on a large move up or
worse, the pain of excessive capital loss on a large decline in
the underlying.

Remember, the OIN candidates are ITM covered-writes; if the stock
doesn't move or even drops slightly, the stock will be called away.
It is a conservative trading approach that offers less risk than
outright stock ownership, but also a limited reward potential.  As
with any trading strategy, it still requires a disciplined approach
and sound money management techniques, as there is risk of loss in
all trading.  "McMillan On Options" is also an excellent resource,
covering all aspects of the "covered write" strategy, and it should
be available at your local library or in the OIN bookstore.  For
investors who prefer stock ownership, McMillan covers in detail the
strategy of selling calls on long-term portfolio holdings and all
the potential adjustment strategies.  Regardless of which approach
you favor, it is important to completely understand any strategy
you intend to use before you begin trading with hard-earned cash.

Trade Wisely,

Mark W.
OIN

Editors note: Margin is not used in our calculations, however the
use of margin could potentially double the listed yields.


SUMMARY OF PREVIOUS CANDIDATES
*****

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

Note:  Margin not used in calculations.

Stock   Price   Last    Option    Price   Gain  Potential
Symbol  Picked  Price   Series    Sold   /Loss  Mon. Yield

EP       5.20    7.17  APR  5.00  0.70    0.50*   9.7%
VRTS    17.93   19.66  APR 17.50  1.20    0.77*   6.7%
CPN      2.93    4.09  APR  2.50  0.60    0.17*   6.3%
ADLR    13.75   13.20  APR 12.50  1.60    0.35*   6.3%
MSCC    10.93   11.78  APR 10.00  1.30    0.37*   5.6%
MRVL    21.91   23.15  APR 20.00  2.65    0.74*   5.6%
DCLK     7.69    8.25  APR  7.50  0.55    0.36*   5.5%
OAKT     3.23    4.05  APR  2.50  0.90    0.17*   5.3%
IDCC    19.99   20.25  APR 17.50  3.30    0.81*   5.3%
FEIC    16.23   16.57  APR 15.00  1.75    0.52*   5.2%
WYNN    15.04   16.01  APR 15.00  0.55    0.51*   5.1%
VECO    15.91   15.70  APR 15.00  1.70    0.79*   4.8%
SOHU    11.73   14.04  APR 10.00  2.05    0.32*   4.8%
PEGS    10.90   11.90  APR 10.00  1.40    0.50*   4.6%
ILXO     8.40    9.60  APR  7.50  1.20    0.30*   4.5%
BCGI    16.14   18.90  APR 15.00  1.70    0.56*   4.2%
ELBO    18.21   17.44  APR 17.50  1.10    0.33    4.2%
TELK    13.37   12.69  APR 12.50  1.20    0.33*   3.9%
ALTR    13.84   15.78  APR 12.50  1.80    0.46*   3.3%

IMMU     2.95    3.35  MAY  2.50  0.65    0.20*   7.6%
CAL      5.68    7.49  MAY  5.00  1.00    0.32*   5.9%
SEAC     7.80    8.13  MAY  7.50  0.75    0.45*   5.5%
NEOL    13.50   12.51  MAY 12.50  1.80    0.80*   5.0%
CTLM     5.18    4.99  MAY  5.00  0.45    0.26    4.8%
UNTD    19.23   20.46  MAY 17.50  2.80    1.07*   4.7%
RINO    13.29   13.75  MAY 12.50  1.40    0.61*   4.5%
COMS     5.17    5.36  MAY  5.00  0.45    0.28*   4.3%
PLCE    13.34   14.36  MAY 12.50  1.40    0.56*   4.1%
UNTD    19.67   20.46  MAY 17.50  2.95    0.78*   4.1%
NEOL    13.60   12.51  MAY 12.50  1.65    0.55*   4.0%
MSCC    11.77   11.78  MAY 10.00  2.25    0.48*   3.7%

*   Stock price is above the sold striking price.

Comments:

Well, the major averages appear to be mounting a challenge of
the March high.  Is it the start of a new "Bull" market?  Time
will tell, but building a base seems more likely (and desired?).
In any case, the bullish week was an excellent tonic for the
covered-call portfolio as even several of the closed positions
(listed below) rebounded above the recommended sold strike.  As
for May, Neopharm (NASDAQ:NEOL) will be on the "early-exit"
watch list as the stock consolidates its recent run-up.  A test
towards support and the 150-dma around $12 is probable and the
issue should be monitored closely.  Hopefully we will get some
bullish follow through next week...but don't count on it!

Positions Previously Closed:  Manugistics (NASDAQ: MANU), RSA
Security (NASDAQ:RSAS), Sandisk (NASDAQ:SNDK), S1 (NASDAQ:SONE),
and Nautilus Group (NYSE:NLS).



NEW CANDIDATES
*********

Sequenced by Target Yield (monthly basis)
*****
Stock   Last   Option    Option  Last  Open   Cost  Days Target
Symbol Price   Series    Symbol  Bid   Int.   Basis Exp. Yield

XICO    5.09  MAY  5.00  UOB EA  0.45  27      4.64  28   8.4%
ASML    7.59  MAY  7.50  MFQ EU  0.55  118     7.04  28   7.1%
ALTR   15.78  MAY 15.00  LTQ EC  1.45  1314   14.33  28   5.1%
CCRD   11.05  MAY 10.00  UCD EB  1.50  45      9.55  28   5.1%
IFX     8.17  MAY  7.50  IFX EU  1.00  29      7.17  28   5.0%
AAII   11.43  MAY 10.00  IUQ EB  1.80  418     9.63  28   4.2%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

*****
XICO - Xicor  $5.09  *** Cheap Speculation! ***

Xicor (NASDAQ:XICO) designs, develops and markets high-performance
analog mixed-signal integrated circuits used in communications,
computing, networking and industrial applications.  The company
has two major product areas, core analog mixed-signal products
and legacy memory products.  The company's mixed-signal products
include data conversion products, power management integrated
circuits, application-specific standard products and interface
devices.  The company's memory products are electrically erasable
programmable read-only memories (EEPROMs).  EEPROM products are
divided into two categories, parallel EEPROMs and serial EEPROMs.
Xicor reported earnings this week and said revenues were $9.6
million, up slightly sequentially and mixed-signal sales were
up 5%.  The company also reported strong OEM bookings and an
increase in gross margins.  The stock appears to be on the mend
and this position offers investors a good method to speculate on
the company's future share value.

MAY-5.00 UOB EA LB=0.45 OI=27 CB=4.64 DE=28 TY=8.4%


*****
ASML - ASML Holding  $7.59  *** Waiting On The Recovery ***

ASML Holding (NASDAQ:ASML) provides advanced technology systems
for the semiconductor industry.  The company primarily designs,
manufactures, markets and services semiconductor processing
equipment used in the fabrication of ICs.  The company offers a
portfolio of lithography systems mainly for manufacturing complex
ICs.  ASML supplies systems to IC manufacturers throughout the
United States, Asia and Western Europe, as well as provides a full
range of support from advanced process and product applications
knowledge to complete round-the-clock service support.  ASML's
photolithography equipment includes Step & Scan systems, which
combine stepper technology with a photo-scanning method.  ASML
reported a first-quarter loss this week but also said that key
operations have returned to generating cash.  With the current
outlook still rather bleak, this position provides a method for
investors to profit from the current lateral trend as the stock
forges a Stage I base.

MAY-7.50 MFQ EU LB=0.55 OI=118 CB=7.04 DE=28 TY=7.1%


*****
ALTR - Altera  $15.78  *** Bracing For A Rally? ***

Altera (NASDAQ:ALTR) designs, manufactures and sells a range of
high-performance, high-density programmable logic devices; pre-
defined design building blocks, known as intellectual property
cores, and associated development tools.  Altera's PLDs, which
consist of field-programmable gate arrays (FPGAs) and complex
programmable logic devices (CPLDs) are semiconductor ICs that are
manufactured as standard chips that customers program to perform
desired logic functions within their electronic systems.  Altera's
customers can license IP cores for implementation of standard
functions in their PLD designs.  Altera has been consolidating
since October and recently moved higher on heavy volume, through
near-term resistance at $15, suggesting further upside potential.
With the current technical outlook improving, this play offers
excellent reward potential at the risk of owning this issue at
a favorable cost basis.  Earnings are due April 28.

MAY-15.00 LTQ EC LB=1.45 OI=1314 CB=14.33 DE=28 TY=5.1%


*****
CCRD - Concord  $11.05  *** Earnings Rally! ***

Concord Communications (NASDAQ:CCRD) develops, markets and supports
a scalable fault and performance management software solution, the
eHealth Suite family of products.  The company's products ensure
availability of the IT infrastructure by providing an end-to-end
view across the components of this infrastructure: the network,
the systems and the applications.  The eHealth Suite of products
enables its customers to reduce down time, optimize the usage of
current resources and limit the need for incremental IT personnel
as their business IT infrastructures expand.  Concord reported
earnings this week beating expectations while showing continued
revenue and profit growth.  Investors cheered the news and have
rallied the stock above $10 on heavy volume.  Traders who believe
the upside activity will continue can profit from that outcome with
this conservative position.

MAY-10.00 UCD EB LB=1.50 OI=45 CB=9.55 DE=28 TY=5.1%


*****
IFX - Infineon  $8.17  *** Stage I Speculation ***

Infineon Technologies (NYSE:IFX) designs, develops, manufactures
and markets a broad range of semiconductors and complete systems
solutions used in a wide variety of microelectronic applications,
including computer systems, telecommunications systems, consumer
goods, automotive products, industrial automation and control
systems, as well as chip card applications.  Infineon's products
include standard commodity components, full-custom devices, semi-
custom devices and application-specific components for memory,
analog, digital and mixed-signal applications.  Infineon is
organized into five business groups, four of which are application
focused, including Wireline Communications, Wireless Solutions,
Security and Chip Card ICs and Automotive and Industrial, and of
which is product focused, Memory Products.  With earnings due on
April 29, investors who wouldn't mind owning Infineon can use this
position to gain a relatively low-risk entry point in the issue.

MAY-7.50 IFX EU LB=1.00 OI=29 CB=7.17 DE=28 TY=5.0%


*****
AAII - AaiPharma  $11.43  *** What's Up? ***

AaiPharma (NASDAQ:AAII) is a science-based specialty pharmaceutical
company that focuses on targeted therapeutic areas, to which the
company markets a growing portfolio of established branded products
and applies its technologies to increase the commercial potential
of these products.  At the same time, AaiPharma's R&D organization
is developing a pipeline of products to position the company for
near-term and long-term growth in its targeted therapeutic areas.
In addition to developing and marketing its own line of proprietary
pharmaceutical products, AaiPharma continues to provide contract
pharmaceutical development services through its AAI International
division.  Did AaiPharma rally this week because the company said
on Wednesday it had acquired exclusive rights to a parenterally
administered methadone product, formerly branded as Dolophine
Hydrochloride Injection, from Roxane Laboratories?  Possibly,
but it could be anticipation of Monday's earning's report.  This
position simply offers investors who retain a bullish outlook on
AAII a method to establish a reasonable cost basis in the issue.

MAY-10.00 IUQ EB LB=1.80 OI=418 CB=9.63 DE=28 TY=4.2%


*****


*****************
SUPPLEMENTAL COVERED CALL CANDIDATES
*****************

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Target Yield (monthly basis)
*****
Stock   Last   Option    Option  Last  Open   Cost  Days Target
Symbol Price   Series    Symbol  Bid   Int.   Basis Exp. Yield

ACLS    5.28  MAY  5.00  ULS EA  0.55  92      4.73  28   6.2%
BOBJ   20.75  MAY 20.00  BBQ ED  1.80  194    18.95  28   6.0%
AMD     8.03  MAY  7.50  AMD ER  0.90  12834   7.13  28   5.6%
MVSN   13.33  MAY 12.50  MVU EV  1.40  16     11.93  28   5.2%
QLTI   10.65  MAY 10.00  QTL EB  1.10  106     9.55  28   5.1%
TSG    18.10  MAY 17.50  TSG EW  1.35  1047   16.75  28   4.9%
MYK     8.19  MAY  7.50  MYK EU  1.00  24      7.19  28   4.7%
LSS    22.90  MAY 22.50  LSS EX  1.30  7      21.60  28   4.5%
BCGI   18.90  MAY 17.50  QGB EW  2.10  82     16.80  28   4.5%
CTXS   15.64  MAY 15.00  XSQ EC  1.20  1158   14.44  28   4.2%
SMTC   16.29  MAY 15.00  QTU EC  1.80  618    14.49  28   3.8%
BRCM   16.60  MAY 15.00  RCQ EC  2.10  15765  14.50  28   3.7%



*****************
NAKED PUT SECTION
*****************

Options 101: Some Guidelines For New Traders
By Ray Cummins

A few simple rules, combined with a proven strategy and a system
for money management, can help any trader earn consistent profits.

The first rule is: Know the market, its condition and the future
economic outlook, then use that knowledge to identify appropriate
strategies and initiate trades that conform with the direction
reflected by the current fundamental and technical indications.
History suggests that the equity market anticipates the movement
of the economy and shows us in advance what we can expect with
regard to corporate health, unemployment, interest rates and other
financial trends.  Experienced traders understand that there is an
economic reality to which the market will inevitably converge and
it is far easier to profit from positions that are in harmony with
that trend.  With that idea in mind, it is also important to stay
in touch with the "tone" of the public and anticipate changes in
investor sentiment.  News and major events are primary catalysts
for market moves and they should evoke the proper response.  For
example, a strong market will shrug off bearish developments and
respond vigorously to favorable conditions.  When a specific group
of stocks (sector or industry) encounters adverse circumstances,
but does not decline in reaction to the occurrence, then it will
likely outperform the majority of issues in that segment of the
market.  In addition, when reviewing specific companies, remember
that fundamental analysis is the principle activity of brokerages
and public investors and that is the most common manner in which
the outlook for share values is reflected in financial reports and
future performance forecasts.

Another important axiom is: Trade the primary trend and concentrate
on issues or sectors that are the best performers in the current
environment.  There are many ways of expressing this idea but the
simplest approach is: "Buy rising markets and sell falling markets."
This theory seems paradoxical, because common sense would suggest
that the way to make money is to buy low and sell at higher prices.
Of course, this is true from an abstract viewpoint, however it has
nothing to do with "trend" or "momentum" trading.  In fact, buying
a market that is in a downtrend is often the quickest way to lose
money.  While the issue may appear to be a bargain at the reduced
levels, chances are it will become even cheaper in the future.  A
well known adage among floor traders is, "The best time to pick up
a falling knife is after it has hit the floor!"

For those who are new to technical analysis, one of the easiest
ways to determine the primary direction of the market is to use a
moving average or trend-line.  Trend-lines are self-explanatory:
you simply plot a line connecting any two lows or highs on a given
chart.  A significant trend occurs when the line is touched three
times or more.  A violation of this line generally signals a change
in the trend's near-term direction.  In addition, a move below an
advancing trend-line is negative, while a break above a declining
trend-line is bullish.  Moving averages are a bit more complex but
although there are numerous types of indicators in this category,
all of them are basically equivalent.  Traders who analyze moving
averages fall into two basic groups, those who monitor crossovers
and those who concentrate on the direction of the moving average,
or the slope of its ascent or descent.  After the major bias is
established, relative-strength can be used to identify the groups
or sectors that are leading the movement.  The relative-strength
comparison helps determine which individual issues or industries
are outperforming the broader market.  The basic premise of this
approach is that you should buy only the strongest stocks in the
top performing groups and liberate your portfolio of the laggards.

The most important guidance that new traders should adhere to is
the need to outline an entry-exit strategy, before initiating any
position, to eliminate emotional decisions.  Using predetermined
targets for profit and loss addresses a number of points.  First,
it eliminates the need for judgment under fire.  Second, it keeps
you from selling too soon, depriving yourself of potential upside
profits.  Also, an exit strategy will help you hold on to previous
gains rather than exposing a position to unnecessary losses.  Most
techniques for limiting losses (and taking profits) are based on
a prearranged goal, such as a percentage gain, or a trailing stop,
which is moved up as the issue advances.  For example, directional
option strategies work well with a percentage stop-order, such as
25% or 50%.  Traders that have the ability to place an order based
on the movement of the underlying issue can use a "trailing" stop.
In most cases, the trailing stop is placed a fixed distance below
the highest price attained by the underlying since the position was
initiated.  As the instrument moves higher, the stop (or stop-based
order) is adjusted upwards to "lock-in" profits.  Wise traders know
it is necessary to include a stop-loss system (mental or mechanical)
with any new position and those who comply with this principle are
certain to improve their success in this vicious game that is the
Stock Market.

Good Luck!


SUMMARY OF PREVIOUS CANDIDATES
*****

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

Stock   Price   Last    Option    Price   Gain   Simple  Max
Symbol  Picked  Price   Series    Sold   /Loss   Yield  Yield

NFLX    21.06   21.96  APR 17.50  0.40    0.40*   3.4%  11.0%
CREE    20.54   20.05  APR 17.50  0.50    0.50*   3.2%   9.6%
MOGN    10.96   12.98  APR 10.00  0.50    0.50*   3.8%   9.2%
XLNX    25.38   26.07  APR 22.50  0.75    0.75*   3.0%   8.1%
MVK     18.71   18.57  APR 17.50  0.35    0.35*   3.0%   7.7%
IDCC    22.69   20.25  APR 17.50  0.25    0.25*   2.1%   7.6%
AMZN    24.71   24.99  APR 22.50  0.65    0.65*   2.6%   6.8%
NVLS    30.87   28.46  APR 25.00  0.40    0.40*   1.8%   6.3%
ADTN    37.10   40.40  APR 30.00  0.35    0.35*   1.7%   6.3%
AMZN    27.93   24.99  APR 22.50  0.35    0.35*   1.7%   6.2%
MATK    25.32   31.69  APR 22.50  0.55    0.55*   2.2%   6.1%
CYBX    19.15   21.50  APR 17.50  0.45    0.45*   2.3%   6.1%
CVC     20.30   20.15  APR 17.50  0.30    0.30*   1.9%   5.8%
CYBX    21.26   21.50  APR 20.00  0.30    0.30*   2.2%   5.8%
OVTI    21.18   25.29  APR 15.00  0.30    0.30*   1.8%   5.7%
CMCSA   30.80   30.47  APR 27.50  0.50    0.50*   2.0%   5.7%
LLTC    32.58   34.73  APR 27.50  0.55    0.55*   1.8%   5.6%
YHOO    23.97   25.09  APR 20.00  0.30    0.30*   1.7%   5.5%
EXPE    37.14   55.43  APR 30.00  0.50    0.50*   1.5%   5.3%
JCOM    27.54   34.41  APR 22.50  0.30    0.30*   1.5%   5.2%
PSUN    19.73   22.08  APR 17.50  0.35    0.35*   1.8%   5.1%
JCOM    30.05   34.41  APR 25.00  0.25    0.25*   1.5%   5.0%
MEDI    30.68   33.42  APR 27.50  0.65    0.65*   1.8%   4.8%

RMBS    15.75   14.60  MAY 12.50  0.55    0.55*   3.3%  10.8%
NFLX    19.55   21.96  MAY 15.00  0.60    0.60*   3.0%   9.6%
FTS     10.06   10.02  MAY  7.50  0.25    0.25*   3.0%   9.6%
WYNN    16.22   16.01  MAY 12.50  0.40    0.40*   2.9%   9.5%
AVID    25.54   25.78  MAY 22.50  0.80    0.80*   3.2%   8.7%
EYE     11.96   12.40  MAY 10.00  0.35    0.35*   2.6%   8.0%
JCOM    32.12   34.41  MAY 25.00  0.75    0.75*   2.2%   7.6%
SEPR    15.77   16.78  MAY 12.50  0.30    0.30*   2.1%   7.5%
GTRC    21.10   22.45  MAY 20.00  0.65    0.65*   2.9%   7.1%
SEPR    16.35   16.78  MAY 12.50  0.35    0.35*   2.1%   7.0%
RIMM    14.88   14.74  MAY 12.50  0.35    0.35*   2.1%   6.5%
JCOM    31.96   34.41  MAY 22.50  0.50    0.50*   2.0%   6.3%
NFLX    20.77   21.96  MAY 15.00  0.30    0.30*   1.8%   5.9%
BOBJ    18.31   20.75  MAY 15.00  0.35    0.35*   1.7%   5.8%
ADRX    14.71   15.03  MAY 12.50  0.25    0.25*   1.8%   5.5%
CMCSK   28.44   29.01  MAY 25.00  0.60    0.60*   1.8%   5.1%

*  Stock price is above the sold striking price.

Comments:

The holiday-shortened week closed with an upside bias as traders
shunned a glut of murky economic data and chose instead to focus
on a minority of improved profit reports.  Indeed, the market is
often fickle but regardless of the reason, we are happy it chose
expiration Friday to make a bullish move.  All of the positions
in the portfolio ended profitably (another great month!) and
there are no issues on the "early exit" watch-list.

Previously Closed Positions: International Rectifier (NYSE:IRF)
and ImClone (NASDAQ:IMCLE), both of which finished the April
expiration period positive.



WARNING: THE RISK IN SELLING NAKED OPTIONS IS SUBSTANTIAL!
*****

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


MARGIN REQUIREMENTS

The Initial Margin is the amount of collateral you must have in
your account to initiate the position.  In specific terms, margin
refers to cash or securities required of an option writer by his
brokerage firm as collateral for the writer's obligation to buy
or sell the underlying interest if assigned through an exercise.
The Maintenance Margin is the amount of cash (or securities)
required to offset the changing collateral requirements of the
written options in your portfolio.  As the price of the option
and the underlying stock changes, so does the maintenance margin.
With (short) put options, the margin requirements can increase
when the underlying stock price declines and also when it rises
significantly.  The reason is the manner in which the collateral
amount is determined (with the formula listed above) and traders
should always consider not only the initial margin requirement,
but also the maximum margin needed for the life of the position.
Option writers occasionally have to meet calls for additional
margin during adverse market movements and even when there is
enough equity in the account to avoid a margin call, the need
for increased collateral will make that equity unavailable for
other purposes.  Please consider these facts carefully before
you initiate any "naked" option positions.

For more information on margin requirements, please refer to:

http://www.cboe.com/LearnCenter/pdf/MarginManual2000.pdf


MONTHLY YIELD: MAXIMUM & SIMPLE

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


NEW CANDIDATES
*********

Sequenced by Maximum Yield (monthly basis - margin)
*****
Stock  Last    Option    Option Last Open  Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int.  Basis Exp. Yield  Yield

LSCC    8.54  MAY  7.50  LQT QU 0.25 0      7.25  28   3.7%  10.3%
BOBJ   20.75  MAY 17.50  BBQ QW 0.40 797   17.10  28   2.5%   8.0%
OVTI   25.29  MAY 20.00  UCM QD 0.40 197   19.60  28   2.2%   8.0%
BCGI   18.90  MAY 15.00  QGB QC 0.25 1010  14.75  28   1.8%   6.7%
MRVL   23.15  MAY 20.00  UVM QD 0.35 1359  19.65  28   1.9%   5.9%
INTC   18.66  MAY 17.50   NQ QW 0.35 14862 17.15  28   2.2%   5.7%


Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, SY-Simple Yield (monthly basis - without
margin), MY-Maximum Yield (monthly basis - using margin).

*****
LSCC - Lattice Semiconductor  $8.54  *** Earnings Speculation! ***

Lattice Semiconductor (NASDAQ:LSCC) designs, develops and markets
high performance programmable logic devices and related software.
Programmable logic devices are semiconductor components that can
be configured by end customers as specific logic circuits, thus
enabling shorter design cycle times and reduced development costs.
The company's end customers are primarily OEMs (original equipment
manufacturers) in communications, computing, industrial, military
and consumer end markets.  Earnings are due for LSCC on April 22
and the bullish report from Xylinx (NASDAQ:XLNX) has investors
looking for favorable news from the firm.  Traders can speculate
on the outcome of the quarterly report with this position.

MAY-7.50 LQT QU LB=0.25 OI=0 CB=7.25 DE=28 TY=3.7% MY=10.3%


*****
BOBJ - Business Objects  $20.75  *** New 6-Month High! ***

Business Objects S.A. (NASDAQ:BOBJ) develops, sells and supports
business intelligence software for client/server environments,
intranets, extranets and the Internet.  The three main markets
for BI are enterprise, extranet and analytic applications.  For
enterprise, Business Objects products provide employees with
information to make better business decisions.  Deployments can
range from small workgroups to enterprise deployments exceeding
50,000 users.  For extranet, products allow organizations to
build stronger relationships by linking customers, partners and
suppliers via the world-wide web, and for analytic applications,
products offer packaged practice analytics, alerts driven by
business rules and workflow for specific business users, such as
sales managers or supply chain managers.  Business intelligence
stocks soared recently after an upbeat earnings report by Cognos
(NASDAQ:COGN) and an upgrade of Business Objects S.A., which was
raised to "outperform" by CS First Boston.  RBC Capital Markets
also upped its ratings on BOBJ and traders who agree with that
outlook can establish a conservative basis in the issue with this
position.

MAY-17.50 BBQ QW LB=0.40 OI=797 CB=17.10 DE=28 TY=2.5% MY=8.0%


*****
OVTI - OmniVision  $25.29  *** New 2-Year High! ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and sells
high performance, high quality and cost efficient semiconductor
imaging devices for computing, telecommunications, industrial,
automotive and consumer electronics applications.  The company's
main product, an image sensing device called a CameraChip, is used
to capture an image in cameras and camera-related products in a
range of imaging applications such as personal computer cameras,
digital still cameras, security and surveillance cameras, personal
digital assistant cameras, mobile phone cameras, and cameras for
automobiles and toys that incorporate both still picture and live
video applications.  Last Quarter, OmniVision exceeded consensus
quarterly earnings estimates and revenue projections, aided by
exceptionally strong demand from makers of digital still cameras
and cameras for cell phones.  Traders are optimistic about this
quarter and the stock has moved to a new 2-year high during the
recent NASDAQ rally.  Investors can use this position to speculate
conservatively on the company's future share value.

MAY-20.00 UCM QD LB=0.40 OI=197 CB=19.60 DE=28 TY=2.2% MY=8.0%


*****
BCGI - Boston Communications  $18.90  *** Premium Selling! ***

Boston Communications Group (NASDAQ:BCGI) provides real-time
subscriber management services to the wireless industry.  The
company's real-time subscriber management products include the
following: proprietary software applications, which include
extensive software suite to manage subscribers; hosting
environment, which is a real-time, large scale, micro-payment
transaction processing platform; Intelligent Voice Services
Network, which includes edge-of-network voice services and
Signaling System 7 call control; and Distribution Technology
Partnership Program, which is a national payment network for
cash collection.  Boston Communications shares rallied Friday
after the firm reported it earned a profit in the first quarter
as legal costs fell and its customers added new subscribers.
The stock has been volatile over the past few weeks, thus the
option prices are inflated.  Traders can attempt to profit from
the recent activity with this low-risk "premium-selling" play.

MAY-15.00 QGB QC LB=0.25 OI=1010 CB=14.75 DE=28 TY=1.8% MY=6.7%


*****
MRVL - Marvell Technology  $23.15  *** Rally Mode! ***

Marvell (NASDAQ:MRVL) designs, develops and markets integrated
circuits utilizing proprietary communications mixed-signal and
digital signal processing technology for communications-related
markets.  Marvell offers its customers a wide range of integrated
circuit solutions using proprietary communications mixed-signal
processing and digital signal processing technologies.  Marvell's
product groups include: storage products, consisting of a variety
of read channel, system-on-chip and preamplifier products; and
broadband communications products, consisting of a variety of
transceiver products, switching products, internetworking
products and wireless LAN products.  In February, Marvell posted
a sharply narrower 4th-quarter net loss and said revenue jumped
82%.  Investors were pleased with this news and they are hoping
for more of the same when the company reports again in May.  This
position offers a low risk entry point for traders who wouldn't
mind having MRVL shares in their technology portfolio.

MAY-20.00 UVM QD LB=0.35 OI=1359 CB=19.65 DE=28 TY=1.9% MY=5.9%


*****
INTC - Intel  $18.66  *** Blue-Chip Portfolio Position ***

Intel Corporation (NASDAQ:INTC) is a semiconductor manufacturer
supplying technology solutions for computing and communications.
The company's major products include microprocessors; chipsets;
boards; flash memory; application processors used in cellular
handsets and hand-held computing devices; cellular chipsets;
networking and communications, such as ethernet connectivity
products, optical components and network processing components,
and embedded control chips.  Intel's Architecture business offers
advanced technologies to support desktop, mobile and enterprise
systems.  The Wireless Communications and Computing Group focuses
on component-level products and solutions for wireless, hand-held
communications.  Intel Communications focuses solely on wired and
wireless connectivity products and provides key components for
networking and communications infrastructure devices.  This stock
is a good candidate for a long-term portfolio holding and traders
can use this position to establish a low-risk cost basis in the
issue.

MAY-17.50 NQ QW LB=0.35 OI=14862 CB=17.15 DE=28 TY=2.2% MY=5.7%


*****


*****************
SUPPLEMENTAL NAKED PUT CANDIDATES
*****************

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

Sequenced by Maximum Yield (monthly basis - margin)
*****
Stock  Last    Option    Option Last Open  Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int.  Basis Exp. Yield  Yield

SOHU   14.04  MAY 12.50  UZK QV 0.75 40    11.75  28   6.9%  16.9%
LRCX   13.41  MAY 12.50  LKR QV 0.50 629   12.00  28   4.5%  11.0%
IDCC   20.25  MAY 17.50  DAQ QW 0.55 474   16.95  28   3.5%  10.1%
MANH   22.76  MAY 20.00  MQR QD 0.55 494   19.45  28   3.1%   8.7%
MVL    15.80  MAY 15.00  MVL QC 0.45 49    14.55  28   3.4%   8.2%
NSM    18.92  MAY 17.50  NSM QW 0.50 479   17.00  28   3.2%   8.2%
ELX    23.04  MAY 20.00  ELX QD 0.50 1235  19.50  28   2.8%   8.1%
CKFR   23.78  MAY 20.00  FCQ QD 0.35 2658  19.65  28   1.9%   6.3%
XLNX   26.07  MAY 22.50  XLQ QX 0.40 2506  22.10  28   2.0%   6.0%


SEE DISCLAIMER IN SECTION ONE
*****************************


************************
SPREADS/STRADDLES/COMBOS
************************

Good Friday Provides A Much-Needed Holiday!
By Ray Cummins

The major equity averages moved higher Thursday as some optimistic
earnings reports and hopeful economic data spurred investors into
a "bargain-hunting" buying spree.

Technology companies led the rally with semiconductor and wireless
telecom shares boosting the NASDAQ 30 points higher to 1,425.  The
Dow Industrial Average added 80 points to close at 8,337 as retail,
homebuilding, transportation and beverage components enjoyed upside
activity.  The broader Standard & Poor's 500 Index gained 13 points
to 893 with healthcare, oil & gas, lodging, casino and paper stocks
among the best performers.  Breadth was overwhelmingly positive as
advancing issues beat declining shares by almost 3 to 1 on the NYSE
and by more than 2 to 1 on the NASDAQ.  Trading was average on the
Big Board, where 1.38 billion shares changed hands, while moderate
volume of 1.6 billion shares occurred on the technology exchange.
Bond traders took their cue from the rally in stocks, choosing to
sell treasuries ahead of the long holiday week-end.  The benchmark
10-year note fell 4/32 in price for a yield of 3.96%, up from 3.94%
the prior session.

*****************
PORTFOLIO SUMMARY
*****************

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


PUT CREDIT SPREADS
******************

Symbol  Pick   Last   Month LP  SP  Credit  CB     G/L   Status

AMGN    55.70  60.13   APR  47  50   0.25  49.75  $0.25  Closed
EXPE    35.19  55.43   APR  27  30   0.30  29.70  $0.30  Closed
APOL    47.44  53.75   APR  40  45   0.50  44.50  $0.50  Closed
MMM    125.55 129.98   APR 110 115   0.50 114.50  $0.50  Closed
FLR     32.11  35.60   APR  25  30   0.50  29.50  $0.50  Closed
OEX    424.07 453.71   APR 375 380   0.45 379.55  $0.45  Closed
CAT     52.55  51.98   APR  45  47   0.30  47.20  $0.30  Closed
GILD    41.53  44.04   APR  35  37   0.35  37.15  $0.35  Closed
BJS     35.08  35.55   APR  30  32   0.25  32.25  $0.25  Closed
IBM     80.85  84.26   APR  70  75   0.60  74.40  $0.60  Closed
AZO     76.38  76.99   MAY  65  70   0.55  69.45  $0.55   Open
BSTE    42.33  40.39   MAY  30  35   0.50  34.50  $0.50   Open
GILD    44.15  44.04   MAY  37  40   0.30  39.70  $0.30   Open
OIH     54.58  55.63   MAY  45  50   0.55  49.45  $0.55   Open
MDT     46.90  47.06   MAY  43  45   0.35  44.65  $0.35   Open
NBR     41.11  41.66   MAY  35  37   0.30  37.20  $0.30   Open

LP = Long Put  SP = Short Put  CB = Cost Basis  G/L = Gain/Loss

Previously closed positions in Expeditors Intl. (NASDAQ:EXPD)
and Advanced Neuromo Systems (NASDAQ:ANSI) ended the expiration
period profitably.


CALL CREDIT SPREADS
*******************

Symbol  Pick    Last   Month LC  SC  Credit  CB      G/L   Status

TOT     65.30   67.50   APR  75  70   0.60  70.60   $0.60  Closed
XAU     67.44   67.01   APR  80  75   0.50  75.50   $0.50  Closed
ACS     44.26   44.80   APR  55  50   0.55  50.55   $0.55  Closed
NOC     82.35   83.80   APR  95  90   0.60  90.60   $0.60  Closed
SII     34.10   37.19   APR  40  37   0.25  37.75   $0.25  Closed
FNM     66.70   72.67   APR  75  70   0.50  70.50  ($1.25) Closed *
QLGC    38.22   41.54   APR  45  42   0.25  42.75   $0.25  Closed
SYMC    40.25   41.96   APR  50  45   0.30  45.30   $0.30  Closed
CAM     49.39   47.46   MAY  60  55   0.45  55.45   $0.45   Open
DRYR    67.40   60.90   MAY  75  70   1.10  71.10   $1.10   Open
HCA     37.70   28.90   MAY  45  42   0.25  42.75   $0.25   Open
VAR     49.04   52.41   MAY  60  55   0.60  55.60   $0.60   Open
OIH     54.58   55.63   MAY  65  60   0.50  60.50   $0.50   Open
BAC     71.34   72.88   MAY  80  75   0.60  75.60   $0.60   Open
GSK     38.09   38.84   MAY  42  40   0.30  40.30   $0.30   Open
LLL     36.24   39.19   MAY  45  40   0.55  40.55   $0.55   Open
OEX    440.97  453.71   MAY 480 475   0.55 475.55   $0.55   Open
WLP     76.80   74.86   MAY  90  85   0.50  85.50   $0.50   Open

LC = Long Call  SC = Short Call  CB = Cost Basis  G/L = Gain/Loss

Previously closed positions include: International Paper (NYSE:IP)
and Chiron (NASDAQ:CHIR), both of which finished the expiration
period profitably, and United Health (NYSE:UNH), which lost $1.30
at Friday's close.  As noted last week, Federal National Mortgage
(NYSE:FNM) should have been exited when the issue moved through a
recent resistance area (and the sold strike at $70) during Monday's
session.  The summary reflect the loss as of the close of trading
on 4/14/03.  Issues currently on the watch-list are GlaxoSmithKline
(NYSE:GSK) and L-3 Communications (NYSE:LLL).


CALL DEBIT SPREADS
******************

Symbol  Pick   Last  Month  LC  SC   Debit   B/E   G/L   Status

STN     19.40  21.88  APR   17  20   1.60   19.10  0.90  Closed
EBAY    83.91  90.20  APR   70  75   4.50   74.50  0.50  Closed
PPD     18.16  19.50  APR   15  17   1.75   16.75  0.75  Closed
LXK     67.80  69.19  APR   60  65   4.40   64.40  0.60  Closed
BGEN    35.67  35.84  MAY   30  32   2.20   32.20  0.30   Open

LC = Long Call  SC = Short Call  B/E = Break-Even  G/L = Gain/Loss

The big winners in the month of April were Pre-Paid Legal Services
(NYSE:PPD) and Station Casinos (NYSE:STN).


PUT DEBIT SPREADS
*****************

Symbol  Pick   Last  Month  LP  SP   Debit   B/E   G/L   Status

QLGC    39.98  41.54  APR   47  45   2.30   45.20  0.20  Closed
WMT     52.98  55.41  MAY   60  55   4.30   55.70  0.29   Open

LP = Long Put  SP = Short Put  B/E = Break-Even  G/L = Gain/Loss

Wal-Mart (NYSE:WMT) rebounded this week in conjunction with the
broader markets, however the resistance area near $55 (and again
at $57) has the potential to end the rally.  We will monitor the
position closely in the coming sessions.  The bearish spread in
Federal Express (NYSE:FDX) has previously been closed to limit
losses.


SYNTHETIC (BULLISH)
*******************

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

MEDI    32.65  33.42   APR     35    30     0.10    0.70   Closed
ADTN    38.14  40.40   APR     45    30     0.10    0.60   Closed
OVRL    15.99  16.71   MAY     17    15     0.10    0.40    Open

Overland Storage (NASDAQ:OVRL) finally offered a reasonable entry
opportunity when the issue pulled-back during Tuesday's session.
Both Medimmune (NASDAQ:MEDI) and Adtran (NASDAQ:ADTN) achieved the
target exit profit.  The speculative position in Multimedia Games
(NASDAQ:MGAM), which is trading above the sold (put) strike at $20,
has been previously closed to limit potential losses.


SYNTHETIC (BEARISH)
*******************

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

QQQ     25.51  26.93   MAY    24     27     0.10    0.00    Open?

This was not a good week to bet against the technology group and
traders who initiated the bearish position in the NASDAQ-100 Trust
(AMEX:QQQ) should consider an early exit if the instrument closes
above recent resistance near $27 in the coming sessions.


CALENDAR & DIAGONAL SPREADS
***************************

Stock   Pick   Last     Long     Short    Current   Max     Play
Symbol  Price  Price   Option    Option    Debit   Value   Status

BMET    28.52  30.00   JUL-30C   APR-30C   0.80    1.40     Open
OTEX    29.29  31.23   MAY-25C   APR-30C   3.60    5.00    Closed
ESI     29.11  27.09   OCT-30C   APR-30C   2.40    2.60     Open
OCR     27.07  25.48   JUN-27C   APR-27C   0.90    0.80     Open
MO      32.13  32.19   JUN-27P   APR-27P   1.25    1.60     Open

Biomet (NASDAQ:BMET) finished the expiration period at maximum
profit; traders can now transition to May in the short option for
a credit near $1.00, making the position risk-free.  The position
in Open Text (NASDAQ:OTEX) ended at maximum profit.  Altria Group
(NYSE:MO) and Omnicare (NYSE:OCR) were not available at the target
entry prices, however we are tracking the positions at the higher
initial debits.  Integrated Circuit Systems (NASDAQ:ICST) has been
previously closed to limit losses.


DEBIT STRADDLES
***************

Stock   Pick   Last   Exp.   Long  Long  Initial   Max     Play
Symbol  Price  Price  Month  Call  Put    Debit   Value   Status

MYG     20.28  19.29   APR    20    20    1.75     0.00   No Play
LNC     29.88  30.43   MAY    30    30    3.00     2.80    Open

It's unfortunate we were unable to initiate the Maytag (NYSE:MYG)
straddle as the issue traded in a $3 range during the past week.
The stock encountered volatility after issuing mediocre earnings.


CREDIT STRANGLES
****************

No Open Positions

Questions & comments on spreads/combos to Contact Support


**************
READER'S WRITE
**************

Attn: Questions@OptionInvestor.com
Subject: Exchange Trading Systems

Greetings,

I had a chance to take the New York Stock Exchange tour and I
was surprised to see the number of people involved in trading
on the floor.  I expected there to be far less human involvement
with all the technology used in online trading and the Internet.
It was amazing to watch the number of people involved in buying
and selling stocks and after seeing the basic arrangement (my
first time at an exchange), I wondered how much different the
option exchanges are?  Do the trades take place electronically
or with a floor broker?  Also, the trade routing explanation was
a bit confusing (something like: brokerage booth, floor trader,
trading post, specialist?) and I never knew it was that complex.
Is it the same with options or better or worse?  What about the
floor traders - are they working for you or for the exchange?
Finally, does it help to have a personal broker (are they on the
floor?) or can you trade profitably with a discount online firm?

Thanks for any light you can shed on this subject as I am really
trying to learn the whole system before I commit serious money
to options.

TR


Regarding Options Exchanges and Trading Systems:

The open outcry process at many U.S.-based exchanges continues
to be a popular feature of the financial markets, providing the
public with the colorful image of traders competing for the best
price.  In the classic method, an order to buy or sell an option
contract is phoned from the broker's office to a representative
at the exchange.  A message is then delivered to the appropriate
area on the exchange floor where a trader, through the use of
hand signals, offers the position to other participants in the
pit.  When a transaction occurs, the details of the trade are
posted on an order slip and confirmed with the parties involved.
In addition, every trade is entered into the price/time database
by an official clerk, allowing the exchanges to supplement the
pit-outcry method with an electronic screen-based trading system.

The mechanics of the individual floor trading methods are slightly
different, depending on the specific rules of the institution to
which your trade is routed.  Options are traded on four exchanges:
the American Exchange (AMEX), Chicago Board of Options Exchange
(CBOE), Philadelphia Exchange (PHLX) and Pacific Exchange (PCX).
A new "off-floor" electronic trading facility, the International
Securities Exchange (ISE) has also begun to trade listed options
however for the purposes of comparison, most traders refer to the
oldest and largest exchange in America, the Chicago Board Option
Exchange, or CBOE.  Most option classes listed at the CBOE are
traded in an open outcry market.  Traders called "market-makers"
are the nucleus of the CBOE system, providing liquidity in option
trading by risking their own capital for personal accounts.  They
take the opposite side of public orders which are presented by
floor brokers, who act as agents for the various member accounts.
This differs from the trading environment on many other exchanges
where "specialists" are allowed to accept orders from the public,
to manage the public order book and to deal for their own accounts
in the same securities.  Competition is the essence of the system
that allows market-makers, floor brokers and order book officials
(CBOE employees who maintain the public customer limit order book
and have no personal financial interest in any trades that occur)
to facilitate the execution of customer orders.  The CBOE has also
recently introduced a modified trading system in all equity option
classes combining the strengths of the market-maker with those of
the specialist in one entity, the designated primary market-maker,
or DPM.  The DPM is an exchange appointed organization, obligated
to provide the highest degree of accountability to public traders
by functioning as both market-maker (liquidity provider) and floor
broker in these assignments while also operating the public limit
order book.

Despite the highly evolved systems used by option exchanges in the
United States, the efficient execution of orders continues to be a
problem for public traders.  Orders from retail participants are
often routed to a specific exchange that may not necessarily offer
the best price for a particular trade.  In addition, any brokerage
that is a principal in the issue being traded may choose to take
the opposing side in a position, effectively competing against the
public customer.  There are a number of reasons a brokerage would
execute a trade as a principal, rather than going into the open
market to "fill" it but on most occasions, it is because they are
carrying excess inventory in the issue or acting as a market-maker.
For most traders, it is best to use an independent agent; a broker
who doesn't carry inventory and can route orders to any exchange.
Unlike the discount broker, an independent agent is paid to search
for the best exchange prices and provide quality customer service
in all facets of the trading process.  In most cases, traders are
looking for simple and efficient order execution and with the many
advances in direct order-entry technology, there is no reason to
accept inferior services from brokerages who use a "middleman" to
complete their transactions.

Readers often ask which brokers are favored among OIN writers and
in my opinion, there are few firms who can compete with the price
and service combination offered by Preferred Capital Markets.  As
many of you know, the company's stock and equity-option segment;
Preferred Trade, is a self-clearing firm with ample experience in
electronic trading and a dedicated group of professionals that
offers education and assistance to traders at a reasonable price.
The company is a leader in automated options executions and they
have achieved remarkable advances in order-entry software through
their extensive experience with clearing for floor traders.  Using
the basic trading platform, option orders can be routed directly
to any exchange and the program can automatically search for the
best price.  In addition, Preferred offers trading stops based on
the stock or option price and also order-canceling and contingency
orders.  Experienced professionals, not clerks or assistants are
available before, during, and after market hours and the company's
proven electronic order software is supported by floor brokers to
guarantee the best executions.  (Novice traders mistakenly believe
they will save money with discount brokerages without knowledge of
the allowances they sacrifice on execution.)  Preferred's unique
software delivers accurate confirmations and their professional
staff helps you deal with the complexities of derivatives trading,
all at a cost comparable to the so-called "bargain" brokers.

For traders who want the exclusive service afforded by a personal
agent, the company offers Preferred Trade Plus; a program designed
by retail option specialists.  Based in Chicago, this combination
of a real-time trading execution platform and assistance rendered
by experienced option principals can provide both advanced and
novice market players with the tools needed to succeed.  Traders
can work one-on-one with licensed option principals to develop a
personal strategy, establish portfolio objectives, and identify
specific goals based on account size, market experience, and risk
tolerance.  These option experts use their knowledge to customize
a program of education and implementation of specific strategies
and they teach proper (stop and limit) order placement and money
management to help prevent expensive mistakes.  They also analyze
and interpret market news and information from the trading floor
to ensure the best possible guidance concerning a specific trade
or portfolio position.  The combination of a disciplined trading
plan, superior order-entry and execution technology, and experts
instruction can help anyone succeed in today's difficult markets
and with unequaled levels of service at very competitive prices,
Preferred Trade may be the consummate online brokerage.

Good Luck!

*************
NEW POSITIONS
*************

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your skill level, risk-reward tolerance and
portfolio outlook.  In addition, we recommend that you avoid any
strategy or technique in which you are not completely comfortable
with the potential loss, the necessary adjustments and the common
entry-exit strategies.

**************
CREDIT SPREADS
**************

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may be higher than other plays in the same strategy, due to
small disparities in option pricing.  Current news and market
sentiment will have an effect on these issues, so review each
play individually and make your own decision about its outcome.

*****
BBBY - Bed Bath & Beyond  $39.52  *** Bullish Retailer! ***

Bed Bath & Beyond (NASDAQ:BBBY) is an operator of stores selling
predominantly better quality domestics merchandise and other home
furnishings typically found in better department stores.  The
company operates over 400 Bed Bath & Beyond stores in 44 states
and one territory.  Domestics merchandise includes bed linens and
related items, bath items and kitchen textiles.  Home Furnishings
include kitchen and tabletop items, fine tabletop and giftware,
basic house-wares and general home furnishings.

BBBY - Bed Bath & Beyond  $39.52

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-35.00  BHQ-QG  OI=2557  A=$0.35
SELL PUT  MAY-37.50  BHQ-QU  OI=1670  B=$0.60
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$37.20


*****
PFCB - P.F. Chang's China Bistro  $42.47  *** All-Time High! ***

P.F. Chang's China Bistro (NASDAQ:PFCB) owns and operates various
full-service restaurants that feature a blend of traditional
Chinese cuisine and American hospitality in a contemporary bistro
setting.  The firm's restaurants offer distinct culinary creations
prepared from fresh ingredients, including a range of herbs and
spices imported directly from China.  The restaurants' menu is
focused on select dishes created to capture the distinct flavors
and styles of the five major culinary regions of China: Canton,
Hunan, Mongolia, Shanghai and Szechwan.  The company's quarterly
earnings report is due 4/23/03.

PFCB - P.F. Chang's China Bistro  $42.47

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-35.00  HUO-QG  OI=863  A=$0.35
SELL PUT  MAY-40.00  HUO-QH  OI=131  B=$0.90
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$39.45


*****
SYK - Stryker  $66.35  *** Premium-Selling Only! ***

Stryker Corporation (NYSE:SYK) and its subsidiaries develop,
manufacture and market specialty surgical and medical products,
including orthopaedic reconstructive implants.  The company
operates in two reportable segments: Orthopaedic Implants, which
sells orthopaedic reconstructive, trauma and spinal implants,
bone cement and the bone growth factor osteogenic protein-1,
and the MedSurg Equipment segment, which sells powered surgical
instruments, endoscopic systems, medical video imaging equipment,
craniomaxillofacial implants, image-guided surgical systems and
hospital beds and stretchers.  The firm's Other segment includes
Physical Therapy Services and corporate administration.

SYK - Stryker  $66.35

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-75.00  SYK-EO  OI=45   A=$0.15
SELL CALL  MAY-70.00  SYK-EN  OI=265  B=$0.70
INITIAL NET-CREDIT TARGET=$0.55-$0.70
POTENTIAL PROFIT(max)=12% B/E=$70.55


*****
IGT - International Game Technology  $79.55  *** Sector Slump! ***

International Game Technology (NYSE:IGT) is engaged in the
development and production of computerized gaming products.
The company operates in three lines of business: product sales,
proprietary gaming and lottery systems.  Product sales encompass
the development, manufacturing, marketing, distribution and sales
of computerized gaming products and systems.  Proprietary gaming
is comprised of IGT's wholly owned gaming operations, including
activities that the company performs on behalf of its strategic
marketing alliances, as well as its unconsolidated joint venture
activities.  The lottery systems segment consists of development,
manufacturing, operation and sale of equipment for online lottery
and pari-mutuel systems.  The company's quarterly earnings report
is due 4/22/03.

IGT - International Game Technology  $79.55

PLAY (conservative - bearish/credit spread):

BUY  CALL  MAY-90.00  IGT-ER  OI=752   A=$0.20
SELL CALL  MAY-85.00  IGT-EQ  OI=1192  B=$0.75
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$85.55


*************
DEBIT SPREADS
*************

These candidates offer a risk-reward outlook similar to credit
spreads, however there is no margin requirement as the initial
debit for the position is also the maximum loss.  Since these
positions are based primarily on technical indications, traders
should review the current news and market sentiment surrounding
each issue and make their own decision about the outcome of the
position.

*****
GILD - Gilead Sciences  $44.04  *** All-Time High! ***

Gilead Sciences (NASDAQ:GILD) is an independent biopharmaceutical
company that discovers, develops and commercializes therapeutics
to advance the care of patients suffering from life-threatening
diseases.  The company has five products that are marketed in the
United States and in other countries worldwide.  These are Viread,
a drug for treating HIV infection; AmBisome, a drug for treating
and preventing life-threatening fungal infections; Tamiflu, a drug
for treating and preventing influenza; Vistide, a drug for treating
cytomegalovirus (or CMV) retinitis in AIDS patients, and DaunoXome,
a drug for treating AIDS-related Kaposi's sarcoma.

GILD - Gilead Sciences  $44.04

PLAY (conservative - bullish/debit spread):

BUY  CALL  MAY-37.50  GDQ-EU  OI=296   A=$7.30
SELL CALL  MAY-40.00  GDQ-EH  OI=3492  B=$5.00
INITIAL NET-DEBIT TARGET=$2.20-$2.25
POTENTIAL PROFIT(max)=11% B/E=$39.75


*****
SLM - SLM Corporation  $115.05  *** Favorable Revenues! ***

SLM Corporation (NYSE:SLM), known as Sally Mae, is a private
source of funding, delivery and servicing support for higher
education loans for students and their parents in the United
States.  SLM provides a range of financial services, processing
capabilities and information technology to meet the needs of
educational institutions, lenders, students and guarantee
agencies.  The company's managed portfolio of student loans,
including loans owned and loans securitized, totals over $70
billion, of which the majority is federally insured.  The firm
also has commitments to buy billions of dollars of additional
student loans.  Primarily a provider of education credit, the
company serves a diverse range of clients, including over 6,000
educational and financial institutions and guarantee agencies.
The company serves in excess of seven million borrowers through
its ownership or management of student loans.

SLM - SLM Corporation  $115.05

PLAY (conservative - bullish/debit spread):

BUY  CALL  MAY-105.00  SLM-EA  OI=26   A=$10.70
SELL CALL  MAY-110.00  SLM-EB  OI=104  B=$6.20
INITIAL NET-DEBIT TARGET=$4.45-$4.50
POTENTIAL PROFIT(max)=11% B/E=$109.50


*****
BSX - Boston Scientific  $42.19  *** Consolidation In Progress! ***

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

BSX - Boston Scientific  $42.19

PLAY (less conservative - bearish/debit spread):

BUY  PUT  MAY-47.50  BSX-QW  OI=126  A=$5.70
SELL PUT  MAY-45.00  BSX-QI  OI=637  B=$3.60
INITIAL NET-DEBIT TARGET=$2.05-$2.10
POTENTIAL PROFIT(max)=19% B/E=$45.40


*******************
SYNTHETIC POSITIONS
*******************

These stocks have momentum-based trends and favorable option
premiums.  Traders with a directional outlook on the underlying
issues may find the risk-reward outlook in these plays attractive.

*****
DCTM - Documentum  $16.09  *** Excellent Earnings! ***

Documentum (NASDAQ:DCTM) provides enterprise content management
software solutions that bring intelligence and automation to the
creation, management, personalization and distribution of vast
quantities and types of content, including documents, Web pages,
XML files and rich media, in one common content platform and
repository.  Documentum's platform makes it possible for companies
to distribute content globally across all internal and external
systems, applications and user communities.  The firm's products
include site delivery services, content personalization services
and document control managers, among others.

DCTM - Documentum  $16.09

PLAY (speculative - bullish/synthetic position):

BUY  CALL  MAY-17.50  QDC-EW  OI=11  A=$0.75
SELL PUT   MAY-15.00  QDC-QC  OI=5   B=$0.70
INITIAL NET CREDIT TARGET=$0.05-$0.10
INITIAL TARGET PROFIT=$0.35-$0.70

Note:  Using options, the position is similar to being long the
stock.  The minimum initial margin/collateral requirement for the
sold option is approximately $600 per contract.  However, do not
open this position if you can not afford to purchase the stock at
the sold put strike price ($15).


*****
SMH - Semiconductor Holdrs Trust  $26.43  *** Strong Sector! ***

The Semiconductor Holdrs Trust (AMEX:SMH) is a unique instrument
that represents an investor’s ownership in the stock of specified
companies in the semiconductor sector.  HOLDRS allow investors to
own a diversified group of stocks in a single investment that is
highly transparent, liquid and efficient.  Each HOLDR is a fixed
basket of 20 stocks (except the Telebras HOLDR, which holds 12
companies).  They work operate much like ADRs; American Depositary
Receipts, which allow U.S. investors to purchase foreign-owned
companies on the U.S. exchanges in dollar denominated amounts.  In
just the same way, the investor actually owns the shares of each
underlying company, receives dividends, proxies, and annual reports
from each.  The HOLDRs are not managed, and once the companies and
amounts have been determined they are fixed, no companies will be
substituted.  In this way, the HOLDRs differ somewhat from Spiders
(SPDRs), or Standard & Poor Depositary Receipts and other exchange
traded funds, which will add and delete stocks on a regular basis,
usually in conjunction with an index that they are tracking.

A complete explanation of this issue, including the companies that
make up each HOLDRS' particular industry, sector or group can be
found here:

http://www.holdrs.com/holdrs/main/index.asp?Action=Definition

SMH - Semiconductor Holdrs Trust  $26.43

PLAY (speculative - bullish/synthetic position):

BUY  CALL  AUG-30.00  SMH-HF  OI=2507   A=$1.35
SELL PUT   AUG-22.50  SMH-TX  OI=15584  B=$1.05
INITIAL NET DEBIT TARGET=$0.10-$0.15
INITIAL TARGET PROFIT=$0.65-$0.90

Note:  Using options, the position is similar to being long the
stock.  The minimum initial margin/collateral requirement for the
sold option is approximately $780 per contract.  However, do not
open this position if you can not afford to purchase the tracking
stock (SMH) at the sold put strike price ($22.50).


*****


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



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MARKET POSTURE
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Bullish Developments


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