Option Investor
Newsletter

Daily Newsletter, Tuesday, 04/29/2003

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                 Tuesday 04-29-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Confidence Soars
Futures Markets: Sound and Fury
Index Trader Wrap: See Note
Market Sentiment: Just A Couple of Days
Weekly Fund Screen: New, Unrated Funds


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-29-2003           High     Low     Volume Advance/Decline
DJIA     8502.99 + 31.40  8559.77  8442.34 1.86 bln   1822/1400
NASDAQ   1471.30 +  9.10  1482.49  1459.48 1.63 bln   1701/1475
S&P 100   465.93 +  1.15   469.89   462.75   Totals   3523/2875
S&P 500   917.84 +  3.00   924.24   911.10
W5000    8700.51 + 28.70  8759.10  8645.80
RUS 2000  395.78 +  0.58   398.40   395.20
DJ TRANS 2400.88 +  2.60  2415.27  2390.57
VIX        23.53 +  0.48    24.30    23.03
VXN        32.58 -  0.01    33.25    32.25
Total Volume 3,725M
Total UpVol  2,534M
Total DnVol  1,069M
52wk Highs  403
52wk Lows    70
TRIN       0.76
PUT/CALL   0.89
************************************************************

Confidence Soars

The Consumer Confidence soared in April as the war wound down
and the markets wound up. The Nasdaq closed at the high for
the year and is closing in on 1500 again. Everything appeared
rosy and investors were left wondering what they were
overlooking.

Dow Chart - Daily



Nasdaq Chart - Daily




Things were not all that rosy at the open with Chain Store
Sales falling again by -1.6% for the last week. The reason
given was the loss of a shopping day due to Easter. Come on
guys, you can't have it both ways. Last week they were cheering
the +1.6% gains for the prior two weeks due to the increased
Easter shopping. While I agree it was a short week it seems
there is always an excuse. Are you asking us to believe the
short week was not factored into professional estimates? Sales
were below plan for WMT, JCP and FD indicating that even the
discounters were having trouble attracting customers. The BTM
lowered growth estimates for April to only 2.0% to 3.0% and
the combined growth for March and April to only +1.0%.
Averaging the two months takes into account the Easter holiday
date shift. With employment still rising retail sales are
likely to remain under pressure.

Another problem for employers was the jump in the Employment
Cost Index by +1.3% in the first quarter. This was significantly
over expectations of only +0.8% increase. This is the fastest
growth spurt in employment costs since 1990. Costs are up +3.9%
over the same period last year. For employers trying to cut
costs to maintain earnings this is not good news. It means
they may have to cut more employees if the economy does not
pick up soon. The biggest increase in costs is health care.
This leads to employers hiring part time employees instead of
full time and working them 32-38 hours a week and not offering
health care as a benefit. Employees are then forced to buy
higher priced individual health care or worse go without.
Either way it produces less net income for the worker.

Despite the numbers above consumers were euphoric in April
according to the Consumer Confidence released today. The
number spiked to 81.0 from last months low of 61.4. This was
completely due to the quick finish to the war in Iraq. In 1991
the same survey of confidence jumped from 59.6 to 81 when the
last Iraq war was over. The jump today was the 3rd largest
jump in the history of the index. The majority of the gains
were in the expectations portion of the index which jumped
to 84.8 on hope that the end of the war would remove
uncertainty from the economy and bring back prosperity. The
present conditions component only rose to 75.3 indicating
consumers were counting on hoping more than actually seeing
many changes.

The market was enjoying a lot of good news today but other
than the closing bounce it was not acting like it. The SARS
virus is starting to be contained and the W.H.O. lifted the
travel ban to Toronto. Numerous countries have not reported
any new cases and measures to control the outbreak appear to
be working. China is the only major country where it is still
growing. Over 10,000 people are quarantined in China today.
They have restricted travel into areas that have not reported
any cases in an effort to prevent any new outbreaks. China
is 1/6th of the GDP of Asia and while the impact on China
will be substantial it appears a successful containment will
limit the further impact to the rest of the world. Airlines
reported overseas traffic dropped -40% in the week ended
April 20th. Overall the panic appears to be easing and that
is good news for the markets. There will be an impact to
earnings in the 2Q but how much remains to be seen.

Another positive for the market is the continued drop in oil.
The futures closed at $25.24 today and a 52-week low. This
is very good news for stocks because energy is such a big
component in the cost of doing business. Profits squeezed
over the last six months will see some relief from this change.
However, despite the high cost of exploration, drilling,
transportation and refining, oil still costs a fraction of
what we pay for bottled water. With bottled water averaging
about $2.00 for a 20oz bottle that makes it worth about $600
for a 50 gallon barrel. Not a bad margin for bottlers. Think
about it.

North Korea is making noises that could be construed as a
peaceful settlement in the making. NK and SK issued a joint
statement on Tuesday saying they were committed to resolve
the current crisis peacefully. This is far from a deal but
the pressure from its neighbors appears to be working. With
Iraq winding down, Afghanistan a footnote to the back pages
and troops coming home daily there is little left on the
global horizon to confront investors with war fears. Even
the constant mention of Syria and Iran has cooled as the
administration tries to move into the election cycle and
out of the global conflict arena. This is another plus for
the markets.

The markets need all the plusses they can get. Despite the
gains today they are far from out of trouble. We are no
longer close to March but the ICI reported today the official
numbers for fund flows for March. Better late than never I
guess. There was a net inflow of $243 million into equity
funds in March. No applause please. There was a net inflow
into bond funds of $10 billion. If you think backwards you
will remember March was the beginning of the big rebound as
the shooting started. From the March 12th low the Dow rebounded
more than +1000 points in seven days. You would have thought
that a rebound of that magnitude in the middle of the month
would have skewed the numbers a little stronger to the equity
side. Obviously April may show a different picture for the
full month but last weeks inflows were basically flat for
stock funds.

Markets are rebounding on the positive sentiment and the
improvement in global news. The earnings are over for all
practical purposes and the results are not exciting. 62%
beat the lowered expectations and only 15% missed estimates.
If the expectations had not been lowered so far by the war
these would be stellar numbers. To get a better picture of
the economic health we need to look at the guidance for the
current quarter, the post war quarter. So far 58% of the
companies that have reported earnings have warned that Q2
earnings will miss estimates. Only 23% have said they will
likely beat current estimates. 58%, more than half are still
seeing problems for multiple reasons. Bull markets are built
over walls of worry but not normally earnings worries this
steep.

The catch is expectations. Just like the sentiment, which
jumped today on expectations, not present conditions, the
markets are rising on expectations. Investors expect the
economy to do better with no war, no terrorists, no SARS,
no North Korea nukes and nothing to hold the economy back.
Whether they are right or wrong remains to be seen. The facts
are clear that somebody is buying stocks and we are right on
the edge of a breakout, or a breakdown.

We should get a clearer picture of the current state of the
economy before the week is out. Tomorrow we get testimony
before the House Financial Committee by Greenspan and you
can bet your bippee (ask your parents) he will be asked
some tough economic questions. He will of course duck
gracefully and try to answer in Greenspeak while reassuring
but not inflating economic hopes. Greenspan speaks at 10:00,
which is the same time we get the Chicago PMI. The biggest
events remaining this week come on Thursday and Friday.
The ISM, Productivity and Construction Spending will be
out on Thursday. Friday is the Nonfarm Payrolls and Factory
Orders. Before 10:30 Friday morning we will have a very
clear picture of the current post war economy and I would
be surprised if it has changed much. Investors typically
discount actual economic events by about six months. The
gains we are seeing this week are based on expectations that
six months from now things will be significantly better. That
is not yet being seen in the earnings guidance. After the
Payroll Report on Friday investors will have to decide if
their expectations are justified.

The Dow posted another milestone today with a close over 8500.
This is the second time in a week and the second close over
the 200 EMA at 8481. This is very bullish but until we can
clear the 8520 resistance and hold we are still in danger of
this rally ending. The bullish wedge on the chart above is
very strong and the odds are good it will be broken soon. We
have tested that 8520 level six times now and failed. Each
time we wear away at a little more of the resistance. The
reaction spike this morning to 8559 showed just how strong
that resistance was. The selling pressure was very intense
and pushed us back below 8450 before shocked bulls found
enough courage to buy the dip.

The Nasdaq is forging ahead and closed at a new high for the
year. It closed above resistance at 1465 and showed remarkable
strength considering the magnitude of the recent gains. CSCO
CEO John Chambers said today he is convinced companies will
buy computer hardware before adding new employees but nobody
knows when the recovery will come. CSCO guided flat to down
-3% for this quarter. QLGC beat the street after the close
but several others missed or came in flat so the net result
to the futures was flat. With the Nasdaq bullish percent
already at 70% there is a heightened risk for the bulls and
caution is advised about entering new longs without a dip.

IBM and Cisco both fired volleys at the potential change to
expense employee options. IBM shareholders voted no to expensing
stock options in a meeting filled with dissention. Cisco
CEO John Chambers called the plan to expense options the
"High Tech Job Export Act of 2003." He said forcing companies
to expense options would force employers to cut U.S. workers
in favor of cheaper labor overseas during the first decade
and companies would eventually follow. CSCO would have reported
on third less profit in the last quarter if options had been
expensed. Intel CEO Craig Barrett said earlier that CEOs may
refuse to certify financials that contain expensing as an
incorrect financial picture of the company.

The week is off to a good start but at a critical juncture.
We have come a long way very fast and the odds of a future
dip are growing every day. The next serious resistance for
the Nasdaq is just over 1500 but the Dow still has a battle
at 8520. The S&P has the same battle at 920 and then again
at 930. The bulls may be excited and everybody has their
hopes in high gear but the next three days are critical. Just
keep saying to yourself, PMI, ISM, Jobs. Once past those
hurdles the next week will be a breeze with nothing material
but an old fashioned FOMC meeting on Tuesday. Will no
challenges to overcome next week there is also the chance
for a sell the news event. Yes, nothing is ever as simple as
it looks and that goes for investing as well.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Sound and Fury
Jonathan Levinson

Daily Pivots (generated with a pivot algorithm and unverified):

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
DJIA      8619   8561   8501   8443   8383
COMPX     1494   1482   1470   1459   1447
ES03M      931    924    917    910    903
YQ03M     8601   8539   8476   8414   8350
NQ03M     1141   1128   1116   1103   1091

The bulls let it rip today, marching up the indices into the 10AM
con-con announcement and then blasting them new highs, with ES
printing 923.75, NQ 1129.50 and YM 8537.  A dramatic reversal
brought the indices back to unchanged, followed by a drift back
up to close just below the highs of the day.

It's been quite a week so far, and while bears see a sloppy head
and shoulders formation in the chart below, bulls see a general
drift higher with generally higher lows and a much higher high
this morning.  In fact neither scenario is obvious to me, and so
the market is doing an excellent job so far:

2-day chart of the QQQ




Volume was heavier today than yesterday, with COMPX volume 1.73B
and NYSE volume 1.86B shares.  There was an interesting
divergence in the VIX, which added .48 to close at 23.53, while
the VXN was down .10 to 32.58 and QQV down .56 to 27.99.  The put
to call ratio opened at .41 and then cruised up to the mid-.80s,
where it closed on a spike at .91.

For perspective, here are the daily candles:

QQQ daily candles




The bearish ascending wedge is more obvious on the SPX chart, but
we saw it last night.  The top of that spike was a moment that I
expect will be remembered by QQQ bears for a long time to come.
But, a higher high was implied by this formation, and today it
delivered.

On to the futures:

Chart of YM3M




The Dow futures gave us a beautiful headfake on that intraday
spike above the upper resistance line.  It looked like a reverse
head and shoulders breakout for a few minutes there, and then
price returned.  The potential for an upside breakout remains,
and support is still at 8300.  Despite all the action, very
little changed technically, and the trading range remains 200
points wide between 8300 and 8500.  We'll add a dose of caution
for good measure.  The pivot calculator has 8476 as a pivot point
within the range, and this looks like a good reading to me.


Chart of ES3M




The ES contract had a similar day, closing below key resistance
on this formation while finding support at last week's highs.
Both bulls and bears got frustrated by today's tape, but in my
view the benefit of the doubt goes to bulls here.  The tenacity
of support has been very impressive compared with resistance, as
reflected in the steadily advancing lower trendline.  The whole
question for me is whether sufficient energy remains to power the
chart into an ascending triangle breakout or not.  While the
10(5) stochastics appear to favor the downside, we see that
there's been more traction to the upside on the stochs than to
the downside.  The market has clearly wanted to go up this month-
whether still does is the main question from here.


Chart of ND3M




Is it an ascending wedge or is it a persistent climb up the
bottom of a bear flag?  It looks like both to me, and while
neither have bullish projections, and the 10(5) stochastics have
actually crossed bearishly this afternoon, I remain a nervous
bear.  Why?  Well, we have higher highs and mostly higher lows
here, and remember that chart patterns are not graven in stone.
Their projections are based on statistical probabilities only, as
are stochastic signals.  The lower high put in at the end of
today's session is encouraging.  Last night's closing stochastic
sell signal from overbought territory was encouraging too.

The plan remains the same.  We must watch the upper and lower
ends of the ranges and await confirmation of either breakouts or
failures.  Today's massive blowoff top was a good example of why
that's important.  Until the market resolves what is now becoming
a critical area for the coming weeks and months, a disciplined
strategy of scalp trading with tight stops seems to me to be the
way to play.  Kudos again to Alan who managed to short the top of
the high of the day on ES to within 75 cents.


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

Check the Site Later Tonight For Jeff’s Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_042903_1.asp


************************Advertisement*************************
Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.
Anything else is too slow!

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

Just A Couple of Days
- James Brown

It is absolutely amazing what a couple of days can do.  By
Friday's close we were staring at a potential breakdown of the
Dow Industrials from is bullish wedge.  Now the DJIA is back
towards the top of its pattern and threatening a break out to the
upside.  The NASDAQ Composite is near new highs for the year and
the S&P 500 keeps inching closer to the critical 920 level.

So far the markets on Wall Street seem to be looking for a reason
to go up.  Let's hope that the rash of economic reports still on
deck for this week don't derail that attitude.  The big story for
tomorrow will be the PMI number and Greenspan's appearance before
the Senate.  As Jim correctly stated in his wrap, the Senators on
the Finance committee will be looking to pry some sort of
guidance out of Alan, as they do every time, and he'll do his
best to eloquently dodge anything he's not comfortable answering.

The market wrap tonight also mentions that the NASDAQ-100 bullish
percent has risen to 70.  Thus, 70 percent of the stocks in the
NDX are on a buy signal.  That's technically overbought territory
and a market top cannot be far away.  I know we've been saying
the same thing about a market top coming due to the VIX and VXN
indicators and our cautious statements remain.  With the VIX and
VXN at lows and the major market indices at resistance (albeit
the Nasdaq and the SPX are in breakout mode) this is a crucial
decision point for the markets.  Given the economic reports
coming out this week, it only takes one of them to be the
catalyst and have Wall Street use it as an excuse to sell.

In the meantime the market internals continue to look very
encouraging for the bulls.  Up volume is out pacing down volume
and new highs are consistently smashing new lows.  The bullish
percent for the major indices are all bullish.  That in and of
itself is a yellow flag but they can all continue to push higher.
Some of the statements heard by professional traders this week
are starting to sound the same.  The general attitude seems to
be, "yes, we have more upside in front of us but probably not
much longer and the risk-reward doesn't make sense to go long
now."  Hence, new money isn't coming into the equity markets,
which may be why this advance is so slow.  It could be a lack of
sellers more than it is a new wave of buyers.

We'll continue to trade what we see but remain vigilant on our
stops.

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

Market Averages

DJIA ($INDU)

52-week High: 10106
52-week Low :  7197
Current     :  8503

Moving Averages:
(Simple)

 10-dma: 8405
 50-dma: 8107
200-dma: 8309



S&P 500 ($SPX)

52-week High: 1098
52-week Low :  768
Current     :  918

Moving Averages:
(Simple)

 10-dma:  902
 50-dma:  861
200-dma:  879



Nasdaq-100 ($NDX)

52-week High: 1230
52-week Low :  795
Current     : 1117

Moving Averages:
(Simple)

 10-dma: 1087
 50-dma: 1037
200-dma:  993



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



Once again, the VXN shows losses for another day while the descent
in the VIX actually slowed.  We're at a critical juncture here
with the major indices at resistance and the fear indices "oversold"
so to speak.

CBOE Market Volatility Index (VIX) = 23.53 +0.48
Nasdaq-100 Volatility Index  (VXN) = 32.58 -0.10

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.89        578,925       517,157
Equity Only    0.80        464,923       372,934
OEX            1.14         19,209        21,909
QQQ            3.59         36,879       132,259


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

Bullish Percent Data

           Current   Change   Status
NYSE          51.3    + 1     Bull Confirmed
NASDAQ-100    70.0    + 5     Bull Confirmed
Dow Indust.   50.0    + 0     Bull Alert
S&P 500       56.4    + 2     Bull Confirmed
S&P 100       57.0    + 4     Bull Confirmed

Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend

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

 5-Day Arms Index  1.09
10-Day Arms Index  1.00
21-Day Arms Index  1.15
55-Day Arms Index  1.29


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

            -NYSE-   -NASDAQ-
Advancers    1591      1611
Decliners    1261      1401

New Highs     118       144
New Lows       25        22

Up Volume   1201M     1155M
Down Vol.    616M      386M

Total Vol.  1853M     1619M

M = millions


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

Commitments Of Traders Report: 04/22/02

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

We see some shuffling here in the Commercials as both short and
long positions rise but new shorts increase by more than 13K
contracts.  Small traders remain net long but the tide of bears
is growing.

Commercials   Long      Short      Net     % Of OI
04/01/03      417,637   409,332     8,305     1.0%
04/08/03      420,084   407,452    12,632     1.5%
04/15/03      424,219   409,853    14,366     1.7%
04/22/03      430,758   423,295     7,463     0.9%

Most bearish reading of the year: (111,956) -   3/6/02
Most bullish reading of the year:   14,366  -  4/15/03

Small Traders Long      Short      Net     % of OI
04/01/03      143,580   126,594    16,986      6.3%
04/08/03      136,173   122,006    14,167      5.5%
04/15/03      148,434   137,680    10,754      3.8%
04/22/03      147,068   140,153     6,915      2.4%

Most bearish reading of the year:  10,754 - 4/15/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

Meanwhile, on the smaller e-mini contracts a wave of new
bearish activity has appeared in the Commercials.  This is
not good news for the markets as the "smart money" is usually
right and we just saw 47,000 new short positions.  Retail
traders remain excessively long with nearly 30K new long
positions and a drop of 3600 short positions.

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%)
04/15/03      119,316   390,555   (271,239)  (53.2%)
04/22/03      124,200   437,597   (313,397)  (55.7%)

Most bearish reading of the year: (313,397)  - 04/22/03
Most bullish reading of the year: (222,875)  - 04/01/03

Small Traders Long      Short      Net     % of OI
04/08/03      319,460    35,629   283,831    79.9%
04/15/03      365,876    44,137   321,739    78.5%
04/22/03      395,596    40,480   355,116    81.4%

Most bearish reading of the year: 283,831   - 04/08/03
Most bullish reading of the year: 355,116   - 04/22/03


NASDAQ-100

Interestingly enough, the Commercials remain net long on
the NDX with the Nasdaq breaking out to the upside this week
and the small traders remain next short (almost 2 to 1).


Commercials   Long      Short      Net     % of OI
04/01/03       40,493     36,893     3,600    4.7%
04/08/03       44,257     36,711     7,546    9.3%
04/15/03       44,976     37,929     7,047    8.5%
04/22/03       45,647     38,531     7,116    8.5%

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
04/01/03        9,771    13,306   ( 3,535)  (15.3%)
04/08/03       11,365    17,790   ( 6,425)  (22.0%)
04/15/03       11,182    17,438   ( 6,256)  (21.9%)
04/22/03       10,929    20,376   ( 9,447)  (30.2%)

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

There has not been much change in the futures positions
for either the commercials or the small traders.  The
retail trader is pretty much neutral and the big guy
is slightly bullish.

Commercials   Long      Short      Net     % of OI
04/01/03       19,068    12,672    6,396      20.2%
04/08/03       18,566    12,616    5,950      19.1%
04/15/03       17,881    13,124    4,757      15.3%
04/22/03       16,942    14,750    2,192       6.9%

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
04/03/01        5,142     7,459    (2,317)   (18.4%)
04/08/03        5,886     7,964    (2,078)   (15.0%)
04/15/03        7,748     8,704    (  956)   ( 5.8%)
04/22/03        8,081     8,275    (  194)   ( 1.2%)

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

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


************************Advertisement*************************
If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

New, Unrated Funds

These domestic stock funds have not yet been rated by Morningstar
and other fund trackers, but have performed well relative to fund
category peers over the past year and are off to good starts.  It
goes without saying that new mutual funds are riskier, since they
don't have an established record of performance but they may also
offer better performance.  New funds generally have smaller asset
bases to manage and can invest a larger percentage of fund assets
in their favorite stocks.

In the next section, we'll review our screen search criteria, but
our goal this week is to identify the most promising new funds in
the Morningstar domestic stock fund group based on returns, risks
and expenses, as well as other factors such as style and strategy
and fund manager.  Preference may be given to new funds that have
an established portfolio manager at the reins.  In such cases, we
may consider the manager's performance on other funds, especially
if the new fund's objective, style and strategy are comparable to
that of the other fund(s).

After we go through the screening and evaluation process, we will
pick one or two new funds we believe may offer better performance
potential.  We'll tell you why we think so.

Screening/Evaluation Process

Morningstar's screener is available online at www.morningstar.com
and is simple to use, allowing someone to quickly narrow down the
field of potential funds based on your own search criteria.  This
week, we began our screening process with the following criteria:


 Morningstar Basic Fund Screen Criteria:
 Fund Group = Domestic Stock Fund
 Manager Tenure > or = 1 Year
 Minimum Initial Purchase = $10,000
 Load Funds = No-Load Funds Only
 Expense Ratio < or = Category Average
 Star Rating = New/Unrated
 YTD Return > or = Universe Category
 1-Year Return > or = Category Average
 Net Assets < or = $1 Billion


As you can see, we limited our search to no-load stock funds with
minimum initial investments of $10,000 or less (initial purchases
may be lower for IRA accounts).  Since above-average expenses can
lead to sub-par performance, we included only new funds that have
below-average expense ratios relative to their fund category.  We
asked for manager tenure of one year or above to screen out funds
that have existed for under a year or have undergone a management
change within the past 12 months.

Further, we said give us those funds, which have outperformed the
category average on a YTD basis and over the past 12 months using
Morningstar data as of April 28, 2003.  Last, we asked for funds
with total assets of under $1 billion to make sure that the fund
hadn't lost its nimbleness due to faster-than-expected growth in
assets.

Our initial screen produced 39 results across several Morningstar
domestic stock fund categories, with the most results coming from
the domestic hybrid, large-blend, and large-growth categories.  A
number of mid-cap funds made the list, but only two small company
stock funds did.  Several specialty-sector funds made the results
also including a few health care funds, one real estate fund, and
two tech funds.

Next, we clicked the "Score These Results" button to move us from
the Morningstar Basic Fund Screener to the Morningstar Fund Score
Tool, which allows you to set criteria importance and score funds
based on your personal preferences.  Rather than use the defaults
given, we customized the "Fund Score" search criteria as follows:


 Morningstar Fund Score Criteria/Importance (10-Highest)
 High YTD Return = 10
 High YTD Return % Rank = 10
 High 1-Year Return = 10
 High 1-Year Return % Rank = 10
 Low P/E = 5
 High Earnings Growth Rate = 5
 High Yield = 5
 Low Expense Ratio = 10
 Long Manager Tenure = 10


Here, we gave highest importance to YTD and 1-year performance,
and to low expense ratio and long manager tenure.  Portfolio
characteristics such as low P/E, high earnings growth rate and
high yield were given average importance.  Based on our custom
screen criteria, MassMutual Institutional Focused Value Fund S
(MFVSX) received the highest overall score, a 69.  However, the
fund is distributed to institutional investors only.  Excluding
the MassMutual fund, the following funds had highest scores:


 Highest Fund Scores (Retail Class Funds):
 61  Alpine Dynamic Balance (ADBYX) Large Blend
 59  Schwab Financial Services Focus (SWFFX) Financial Sector
 58  Fidelity Leveraged Company Stock (FDLVX) Mid Blend
 56  Pitcairn Select Growth (PTSGX) Large Growth
 51  Fidelity Freedom 2040 (FFFFX) Large Blend
 50  Turner Disciplined Large Cap Growth I (TSGEX) Large Growth
 49  Bailard, Biehl & Kaiser Enhanced Growth (BBEGX) Tech Sector


Fidelity Leveraged Company Stock Fund (FDLVX), a mid-blend fund,
is up 21.3% on a YTD basis through April 28, 2003.  However, we
recently profiled the fund and its manager, David Glancy on this
website.  So even though we like the fund, we'll concentrate our
efforts from here on the other six fund candidates.  Having said
that, we returned to the Morningstar Basic Fund Screener to view
and compare performance, risk, expense, style, tenure, and other
factors.

First, we looked to see how well these six funds have performed
so far in 2003 and over the trailing 1-year period through April
28, 2003.  Bailard, Biehl & Kaiser Enhanced Growth Fund (BBEGX),
a specialty-technology fund, has generated a YTD return of 12.6%
to lead the way.  Pitcairn Select Growth Fund (PTSGX) and Turner
Disciplined Large-Cap Growth Fund I (TSGEX) are two and three on
the list with YTD total returns of 10.1% and 8.6%, respectively.

Each of the funds has an expense ratio that is below that of the
average mutual fund (1.41% per Morningstar).  At 0.08%, Fidelity
Freedom 2040 Fund (FFFFX) has the least annual operating expense.
Turner Disciplined Large-Cap Growth Fund has a low 0.65% expense
ratio, while Schwab Financial Services Focus Fund (SWFFX) has an
expense ratio of 0.89%.  Only the Fidelity Freedom 2040 Fund has
a Morningstar analysis report written on it.  It's the newest in
a series of Fidelity "funds of funds" that are geared to various
retirement dates in the future.  These funds invest aggressively
in earlier years, and become more conservative as they reach the
target retirement date.

Looking now at 1-year performance through April 28, 2003, we can
see that each of the funds ranked in the first quintile (top 20%)
of their relative Morningstar category.  Alpine Dynamic Balance
(ADBYX), Bailard, Biehl & Kaiser Enhanced Growth (BBEGX) and the
Pitcairn Select Growth Fund (PTSGX) each ranked within the top 5%
of their respective category for 1-year performance.  Each of the
funds preserved capital better than the market as measured by the
S&P 500 index (-13.5%).

In terms of portfolio characteristics, three of the funds landed
in Morningstar's large-cap growth style box: Bailard, Biehl and
Kaiser Enhanced Growth, Pitcairn Select Growth, and Turner Large-
Cap Growth.  Because of its heavy tech stake, Bailard, Biehl and
Kaiser Enhanced Growth Fund is categorized as a tech sector fund
by Morningstar.  The Alpine Dynamic Balanced Fund is categorized
as a "large-blend" fund, but currently has a "large-value" style.
Schwab Financial Services Focus Fund, a specialty-financial fund,
also falls into the large-cap value style box.

Since there was no risk data to analyze, we looked at each fund's
average PE ratio, average 3-year earnings growth rate and average
market capitalization to get a sense of how much price risk, etc.
that each fund is taking relative to the market (S&P 500).  There
we found that each of the three funds with large-growth styles of
management also had above-average P/E ratios of 31 or higher (S&P
500 is 24.7).  Pitcairn Select Growth Fund had the highest growth
rate by far of the six funds.  Its 3-year average earnings growth
rate of 18.9% was more than twice the next highest fund.

In terms of yield, Alpine Dynamic Balance Fund sports a 12-month
yield of 2.52%, the highest of the six funds.  Schwab's Financial
Services Focus Fund is next with a 12-month yield of 1.67%, while
Fidelity Freedom 2040 Fund produced a decent 1.22% yield.  In the
next section, we put all these factors together and tell you what
funds we like the most now (and why).

Our Favorite Funds

Long-term investors who don't want to put together their own fund
portfolio may want to consider Fidelity Freedom 2040 Fund (FFFFX)
for their long-term appreciation goals.  The fund seeks to match
the return of a customized index benchmark and uses between 15-17
actively managed Fidelity funds in pursuit of the fund objective.
It's the most aggressive of the Fidelity Freedom fund series, but
will likely be less volatile than the average large-blend fund as
a result of its modest fixed income stake.






Over the past year, the Fidelity Freedom 2040 Fund lost 12.7%.
Although a negative return, the fund lost less than the stock
market (S&P 500 -13.5%) and less than the average large-blend
fund (-15.0%), per Morningstar.  The fund's 12.7% loss ranked in
the top 15% of the large-blend category for 12-month performance.

Since December 31, 2002, the fund has matched the 4.5% return of
the S&P 500 index without being fully invested in the U.S. stock
market.

A decent yield, low expenses and top-notch management add to the
overall appeal of the Fidelity Freedom 2040 Fund.  For investors
in their 20's and 30's who want to save for retirement, the fund
makes a compelling case for the one-stop Fidelity Funds shopper.

It is hard to dispute what Alpine Dynamic Balance Fund, Bailard,
Biehl & Kaiser Enhanced Growth Fund, and Pitcairn Select Growth
Fund have done in their short histories.  Each fund is among the
YTD return and 1-year return leaders in their relative category.

Alpine Dynamic Balance Fund (ADBYX) has a balanced objective but
is categorized as a "large-blend" fund by Morningstar due to its
high equity stake.  It seeks capital appreciation as its primary
goal; reasonable income and preservation of capital are secondary
objectives.  Co-managers Samuel Lieber and Stephen Lieber invest
primarily in common stock with some assets invested in notes and
bonds for income and stability.  Stephen Lieber is well known in
the mutual fund industry.  He was a founding partner of Lieber &
Company and Evergreen Asset Management Corporation, and currently
serves as chair and co-chief executive officer.

Over the past year, the Alpine Dynamic Balance Fund has declined
just 5.0%, 8.5% better than the S&P 500 index and good enough to
rank in the top 2% of the large-blend category, per Morningstar.
On a YTD 2003 basis through April 28, the fund has a 5.9% return.
That's 1.4% better than the stock market (S&P 500) and 2.3% more
than the average large-cap blend fund.  Like the Fidelity Freedom
2040 Fund, the Alpine Dynamic Balance Fund is likely to have less
volatility than the average large-cap blend fund, but is showing
that it can perform relatively well in market upswings (with its
more conservative asset mix relative to other large-blend funds).

Conclusion

Long-term investors who can tolerate significant fluctuations in
share price in pursuit of potentially higher returns may want to
consider the three large-cap growth portfolios we covered herein:
Bailard, Biehl & Kaiser Enhanced Growth (BBEGX), Pitcairn Select
Growth (PTSGX), and the Turner Disciplined Large-Cap Growth Fund
(TSGEX).

Each fund has more price risk than the stock market (S&P 500) as
evidenced by their above-average P/E ratios of between 31 and 39.
However, growth-oriented funds may provide greater total returns
over time than other types of stock funds due to their generally
higher-than-average earnings growth rates (earnings drive growth
and stock prices).

Turner Disciplined Large-Cap Growth Fund is a recent addition to
the Turner Investment Partners' growth fund lineup.  It seeks to
provide long-term growth of capital by investing in common stock
of companies that have higher earnings expectations and positive
fundamentals.  Analysts and portfolio managers work together and
maintain a strong sector focus.  These guys can light it up when
the markets are rallying and "growth" is in favor with investors.

For more information, visit the respective fund family websites.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


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

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


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

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

Contact Support
The Option Investor Newsletter                  Tuesday 04-29-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: MXIM
Dropped Puts: None
Daily Results
Call Play Updates: AZO, ERTS, IMDC
New Calls Plays: ADTN, NXTL
Put Play Updates: None
New Put Plays: FITB, INTU, KSS


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

Maxim Integrated - MXIM - cls: 40.68 chg: +1.00 stop: 38.00

Per our plan on Sunday, OI drops MXIM as of Tuesday's close
today.  The company announced its Q3 earnings after the bell
tonight and the numbers look positive.  A rise in orders helped
fuel a 10% gain in revenues to $286.2 million.  This boosted net
profit for the quarter to 23 cents a share or $77.6 million.
This was inline with analyst forecasts.  There's been a lot of
speculation about chip producers and inventory build up.  MXIM
came out and said they saw "no sign" of build up at their
distributors or their end customers.  What might impact the stock
was management's stance against expensing stock options but we
doubt it.  Shares were down slightly in after hours trading but
remained above $40.00.  Overall the stock's chart still looks
healthy and brave (or foolish) traders who held over earnings
might do okay.  MXIM needs to trade above the 41.60 mark and the
SOX needs to breakout above the 350 level.

Picked on April 22nd at $40.51
Change since picked:     +0.17
Earnings Date         04/29/03 (confirmed)
Average Daily Volume = 8.30 mil


PUTS:
*****

None


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

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

CALLS    LAST      Mon    Tue    Wed   Thu  Week

ADTN     40.70           1.13  NEW, Strong Trend
AZO      80.34    1.27   1.02  Closed above $80
ERTS     59.53    1.33  -1.35  Turning Cautious
IMDC     37.05    0.95  -0.15  Very Strong
MEDI     35.92    0.81   0.15  long-term, no update
MXIM     40.68    0.88   1.00  DROP, earnings
NXTL     15.61           0.86  NEW, Major Breakout


PUTS

FITB     49.58    1.10  -0.16  Still Not Triggered
INTU     38.74   -2.17   3.95  Big Rebound, Under Resistance
KSS      57.28    1.67   0.59  Look for Weakness


************************Advertisement*************************
Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.
Anything else is too slow!

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

AutoZone, Inc. - AZO - close: 80.34 change: +1.02 stop: 76.75

Is this the breakout that will finally stick?  Our AZO play has
been a bit of a wild ride, but there is no denying the persistent
trend of higher lows and higher highs.  It looked like today
might result in a slightly lower high when the early rally failed
at $80.25.  But the bulls came back with enthusiasm this
afternoon, driving the stock as high as $80.49 before relaxing a
bit into the close.  The key here is that the stock closed above
(just barely) a level of resistance that has been holding it back
since it first crept above $80 nearly a week ago.  If AZO can get
over the $80.60 level, it will be free of the early-December
resistance and we can focus on targeting the $82-85 area as an
exit area.  Traders still looking to enter the play can consider
a breakout over that level, with the understanding that AZO is
starting to get a bit extended up here and that would be a pure
momentum play.  More conservative entries can certainly be taken
on a pullback and bounce, but only above the $78 level, the site
of the most recent low.  While we're leaving our stop at $76.75
tonight (just below the ascending trendline from the March lows),
more conservative traders may want to raise stops to $77.75, just
below Friday's intraday low.

Picked on April 13th at  $75.24
Change since picked:      +5.10
Earnings Date          06/03/03 (unconfirmed)
Average Daily Volume = 1.22 mln

---

Electronic Arts - ERTS - close: 59.53 change: -1.35 stop: 58.00

In light of the bullish action in the rest of the market, ERTS'
performance has been rather disappointing.  Rather than challenge
last week's highs, the stock reversed course on Tuesday, losing
more than 2% on above-average volume.  That certainly isn't the
behavior of a winning call play!  To be fair, Tuesday's weakness
can be attributed to bearish comments out of Lehman today,
recommending taking profits in ERTS (along with ATVI and THQI)
ahead of earnings.  ERTS and ATVI are set to release their
numbers on May 8th, while earnings for THQI come out on May 7th.
While today's action was less than we might have hoped for, it is
worth noting that after the midday dip below $59, the stock
rebounded right back into the $59.50 area that we've been
focusing on.  Recall this support is being created by the
confluence of the 20-dma ($59.40) and the 200-dma ($59.45).  So
long as the stock continues to hold above the $59 level, new
entries on the rebounds still make sense.  Traders looking for
some confirmation before playing will need to wait for a push
back over $61.10 (just above Friday's intraday high before adding
new positions.  Don't forget we'll be dropping the play ahead of
earnings in either case regardless of price action, so the fuse
is growing short for ERTS to make a convincing bullish move.

Picked on April 20th at  $60.04
Change since picked:      -0.46
Earnings Date          05/08/03 (unconfirmed)
Average Daily Volume = 3.10 mln

---

Inamed Corp - IMDC - close: 37.05 change: -0.15 stop: 34.50*new*

And the beat goes on for shares of IMDC.  Thankfully, that beat
is bullish.  The rally in the markets on Monday propelled shares
of IMDC to new 52-week highs.  The challenge now is that bulls
need to get enough momentum to break the $37.50 level, where IMDC
failed last April 2002.  Thus far, IMDC has been hugging the
centerline of its trading channel.  A move to the top of the
channel could put it near our initial target of $40.00.  A move
to the bottom of the channel could be a decent entry point near
$35.00.  Because the bottom of the channel is now $35.00 we're
going to raise the stop on IMDC to $34.50.  For traders who were
able to open a position at $35.00, our pick price, this limits
risk to just 50-cents.  Sometimes steady but sure wins the race.

Picked on April 17th at $35.00
Change since picked:     +2.05
Earnings Date         02/25/03 (confirmed)
Average Daily Volume = 215 K


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

ADTRAN, Inc. - ADTN - close: 40.70 change: +1.13 stop: 38.00

Company Description:
ADTRAN, Inc. develops products and services that simplify access to
telecommunications networks.  The company's high-speed, digital
transmission products improve the operation of, and reduce the costs
associated with, building and using communications networks.  Small and
large telephone companies, long-distance carriers and other network
service providers use the company's products to deliver high-speed
data, voice, video and Internet services to their customers.
Businesses, schools and government agencies use ADTN's products to
connect facilities, remote offices and mobile workers, enabling
corporate information services, Internet access, telecommuting and
videoconferencing within their organizations.

Why we like it:
Remember the high-flying Networking index (NWX.X)?  This sector,
along with the Semiconductors helped to propel the NASDAQ to its
nose-bleed heights in the heady days of yesteryear.  The
resultant stumble plunged the NWX as low as $80 last October, but
the index has more than doubled since then.  While the initial
breakout attempts were stymied in December and January, the price
action in the index has been looking quite constructive over the
past few months, with the 200-dma (currently $133.31) providing
consistent support until the bulls came back in to lift it higher
beginning about 6 weeks ago.  Now testing resistance from the
November/December highs, the NWX looks like it wants to break out
and given the healthy base that has been building for the past 3
months, that breakout could be powerful.  One of the strongest
stocks in the NWX is ADTN, which is itself on the cusp of
breaking to new recent highs.

ADTN looks significantly stronger than the overall NWX index,
having risen 170% from its early October low and the buying
interest is readily apparent when viewing the very healthy
increase in volume since October.  On Balance Volume is
confirming the health of the stock as it pushes up to levels not
seen since the fall of 2000!  Looking closer to the present time,
ADTN put in a solid bounce near $30 in early March and has been
steadily marching higher ever since.  A slight pullback a couple
weeks ago found buyers waiting at the $36 level, and those two
lows can be used to construct a solid ascending trendline.  That
trendline (currently $38.70) coincides nicely with the rising 20-
dma ($38.64) and should provide for very strong support on any
subsequent pullback.  The really interesting feature of the chart
comes in at resistance though, not support.  In early January,
ADTN surged to an intraday high of $41.28, a level that came very
close to being tested with today's intraday high of $41.21.  An
ascending trendline connecting the lows and horizontal resistance
makes a nice bullish triangle pattern and a breakout from that
pattern could be quite exciting for the bulls.

Daily Stochastics are just reversing upwards after the last bout
of profit taking and indicate that there is room to run through
resistance before becoming overbought again.  Also interesting is
the trend of decreasing volume over the past week (as price was
drifting lower) that was soundly smashed today with above average
volume and a 2.85% gain in price.  Until broken, resistance is
still an obstacle, so we're setting a trigger at $41.40 (just
above the recent highs) and we're going to require the stock to
push through that level before considering new entries.  Momentum
traders can enter on the initial breakout, while more
conservative types will want to wait for a subsequent pullback
and bounce from the $40-41 area, confirming old resistance as
new-found support.  Stops will initially be placed at $38, just
below gap support from 4/16.  We're initially targeting $45, with
a possible surge as high as $48.  This area was one of prior
resistance on the way down and will likely be important on the
way back up.

Suggested Options:

Shorter Term: The May 40 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 40 Call, but need to wait for some open interest.

Longer Term: Traders looking to capitalize on a sustained
breakout move over the $41.40 level will want to look to the June
45 Call or even the August 45 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-40 RQA-EH OI=1239 at $2.15 SL=1.00
BUY CALL JUN-40 RQA-FH OI=   0 at $3.30 SL=1.75
BUY CALL JUN-45 RQA-FI OI=  18 at $1.20 SL=0.50
BUY CALL AUG-45 RQA-HI OI= 361 at $2.45 SL=1.25

Annotated Chart of ADTN:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-29/ADTN042903.gif


Picked on April 29th at  $40.70
Change since picked:      +0.00
Earnings Date          07/15/03 (unconfirmed)
Average Daily Volume = 756 K

---

Nextel Communications - NXTL - cls: 15.61 chg: +0.86 stop:*note*

Company Description:
Nextel Communications, a Fortune 300 company based in Reston,
Va., is a leading provider of fully integrated wireless
communications services and has built the largest guaranteed all-
digital wireless network in the country covering thousands of
communities across the United States. Nextel and Nextel Partners,
Inc., currently serve 197 of the top 200 U.S. markets. Through
recent market launches, Nextel and Nextel Partners service is
available today in areas of the U.S. where approximately 240
million people live or work. (source: company press release)

Why We Like It:
It's nice to see some corporate profits again.  NXTL recently
announced their Q1 results and the numbers were pretty positive.
Not only that, it was their fourth consecutive quarterly profit.
Earnings came out on April 23rd and the Q1 numbers showed a 21%
jump in revenues.  Net income was 20 cents a share or $240
million, which is a huge improvement over the same quarter a year
ago with an 82-cent loss.  Analyst estimates for the latest
quarter were just 16 cents.

The company said the higher earnings were driven by much better
than expected subscriber growth.  New customers totaled 480,000
for the quarter.  This brought total subscribers to 11.1 million.
At an average monthly revenue per subscriber of $67, the new
additions really boosted revenues.  The company also shared that
customer churn, the rate at which customers leave their service,
was down to 1.9%.  This was the lowest level in four years.
Management also said they would meet or exceed their 2003 goals.
How's that for guidance?

As a matter of fact, the entire "wireless" industry is doing
pretty well despite previous slow downs from the go-go days of
the late 90's.  Verizon Wireless saw a big jump in revenues and
AT&T Wireless (AWE) isn't doing so bad either.  Some Wall Street
pundits are speculating that the bigger telecom companies in the
U.S. may actually have to buy NXTL or AWE to have an edge against
the competition.

HOW TO PLAY IT -- We put that in capital letters because it's
essential to plan for the right entry point given NXTL's low
stock price.  Only truly aggressive traders should try chasing
the stock right now.  The short-term trend is very strong but
shares look overbought from their recent lows at $12.  Keep in
mind the move today over multi-month resistance near $14.50 is
huge and probably has a number of shorts desperately trying to
cover.  Instead of chasing it, with the call option prices
already inflated, we want to catch an entry on a pull back.

We are going to USE a TRIGGER to go long NXTL if and when the
stock pulls back between $15.00 and $14.50.  Essentially, we're
target shooting an entry.  We provide a range because one never
knows when a stock might gap open.  If NXTL gaps open below
$14.50, then we don't want to play it.  The most probable
scenario is that NXTL pulls back to somewhere within that range
and officially we have to claim an entry price of $15.00.  As the
reader, you can wait and see how far the pull back goes.  Should
we get triggered we'll initiate the play with a stop loss at
$13.75.  Worse case scenario is that NXTL pulls back and just
keeps on going down.  Should you never see a bounce, then don't
go long.  Our initial target will be $20.  Keep tabs on NXTL's
progress in the MarketMonitor.  NXTL's next update will be on
Thursday unless we get triggered tomorrow.

Suggested Options:
Most of the volume is going to be in the short-term front month
options in May.  These will also be the least expensive to play.
However, if you believe the rebound in wireless and the growth
seen by NXTL can keep up, then consider August or Novembers.  You
don't have to hold them that long and can close the position at
any time.

BUY CALL MAY 15.00 FQC-EC OI=28249 at $1.15 SL=0.00
BUY CALL MAY 17.50 FQC-ES OI= 5681 at $0.20 SL=0.00*more risky*
BUY CALL AUG 15.00 FQC-HC OI= 9945 at $2.20 SL=1.00
BUY CALL NOV 17.50 FQC-KS OI= 1135 at $1.85 SL=0.90

Annotated Chart of NXTL:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-29/NXTL042903.gif


Picked on April xxth at $xx.xx
Change since picked:     +0.00
Earnings Date         04/23/03 (confirmed)
Average Daily Volume = 21.6 Million


************************Advertisement*************************
If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

Fifth Third Bancorp - FITB - cls: 49.58 change: -0.17 stop: 50.25

The first few days on the playlist have not been encouraging for
FITB bears.  Rather than break down below the $47 level as we had
expected, the stock surged higher, actually leading the latest
rebound in the Banking index (BKX.X).  While the stock is now
well away from our $47 trigger (which was never hit), the stock
has been unable to touch our stop at $50.25.  It came painfully
close on Tuesday with an early morning high of $50.23 before
falling all the way down to $48.70, finally settling in the
middle of those two extremes at the end of the day.  The action
in the BKX will likely determine the future of FITB.  If the BKX
breaks above $800, it will likely propel the stock through
resistance.  On the other hand, another rollover at resistance
could be just what it takes to drive FITB through our $47
trigger.  Until that level is breached, this play remains on
inactive status.

Picked on April 24th at $47.73
Gain since picked:       +1.85
Earnings Date         07/15/03 (unconfirmed)
Average Daily Volume = 2.66 mln

---

Intuit Inc. - INTU - close: 38.74 change: +3.95 stop: 40.00

Whoa!  INTU traders could be suffering from a serious case of
whiplash.  The stock was looking rather weak on Friday and we
added the stock as a new put play over the weekend.  Shares
opened lower on Monday morning and promptly fell from $37.00 to
$33.30.  Then shares began to bounce back but they closed under
the $35.00 mark.  All the excitement was over rumors that the
company would suffer from a weak tax season and maybe sales of
their multiple tax preparation products weren't so good.  Then
the INTU spin machine went to work and start pumping out news
that "no, the 2003 tax season was great" and how sales were good.
Shares did rally strongly on Tuesday but with the big gap open
we're wondering if it was a big bout of short covering.  The 11%
move today from Monday's big drop is frustrating but the stock
remains below significant resistance.  We're not convinced quite
yet that business is so strong for INTU and plan to keep the play
open with our original stop loss at $40.00.  However, we would
not advise any new positions unless you're feeling aggressive.  A
failed rally at $40.00 might be the answer.  Keep in mind that
INTU is expected to announce earnings on May 15th.

Picked on April 27th at $37.24
Change since picked:     -1.50
Earnings Date         05/15/03 (confirmed)
Average Daily Volume = 4.53 mil

---

Kohl's Corporation - KSS - close: 57.28 change: +0.59 stop: 58.00

That's not the way it was supposed to work!  Recognizing the
possibility for a rebound from support, we erred on the side of
caution, setting a trigger for our KSS play at $54.70 on the
notion that a break below that level should show some follow-
through.  Apparently not!  Yesterday's session began with an
encouraging breakdown, with KSS hitting an intraday low of $54.35
from which a powerful rebound was launched.  That drove the stock
well above $56 by the closing bell and the buying interest
continued this morning, with the stock tagging an intraday high
of $58.03.  Fortunately that high was short-lived and the stock
worked its way lower (albeit in volatile fashion) into the
closing bell.  Aggressive traders might have tried shorting into
the lower high near $57.75 during midday, but make no mistake, it
would have been an aggressive move.  The question now is whether
KSS is a failed play or if it is getting set to go our way.  The
combination of the 10-dma ($57.79) and 20-dma ($57.66) will
likely be the determining factor.  If they can hold as
resistance, KSS should roll over and once again visit yesterday's
intraday lows.  A push over those two moving averages that sticks
will likely trigger our stop and have us moving on.

Picked on April 27th at $55.02
Gain since picked:       +2.26
Earnings Date         05/15/03 (confirmed)
Average Daily Volume = 3.57 mln


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

None


************************Advertisement*************************
”If you haven’t traded options online – you haven’t really traded
options,” claims author Larry Spears in his new compact guide book:

“7 Steps to Success – Trading Options Online”.

Order today and save 25% (only $15) by clicking on PreferredTrade
and clicking on the link to the book on its home page.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

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


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

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

Contact Support
The Option Investor Newsletter                  Tuesday 04-29-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: CALL - ADTN

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

ADTRAN, Inc. - ADTN - close: 40.70 change: +1.13 stop: 38.00

Company Description:
ADTRAN, Inc. develops products and services that simplify access to
telecommunications networks.  The company's high-speed, digital
transmission products improve the operation of, and reduce the
costs associated with, building and using communications networks.
Small and large telephone companies, long-distance carriers and
other network service providers use the company's products to
deliver high-speed data, voice, video and Internet services to
their customers.  Businesses, schools and government agencies use
ADTN's products to connect facilities, remote offices and mobile
workers, enabling corporate information services, Internet access,
telecommuting and videoconferencing within their organizations.

Why we like it:
Remember the high-flying Networking index (NWX.X)?  This sector,
along with the Semiconductors helped to propel the NASDAQ to its
nose-bleed heights in the heady days of yesteryear.  The
resultant stumble plunged the NWX as low as $80 last October, but
the index has more than doubled since then.  While the initial
breakout attempts were stymied in December and January, the price
action in the index has been looking quite constructive over the
past few months, with the 200-dma (currently $133.31) providing
consistent support until the bulls came back in to lift it higher
beginning about 6 weeks ago.  Now testing resistance from the
November/December highs, the NWX looks like it wants to break out
and given the healthy base that has been building for the past 3
months, that breakout could be powerful.  One of the strongest
stocks in the NWX is ADTN, which is itself on the cusp of
breaking to new recent highs.

ADTN looks significantly stronger than the overall NWX index,
having risen 170% from its early October low and the buying
interest is readily apparent when viewing the very healthy
increase in volume since October.  On Balance Volume is
confirming the health of the stock as it pushes up to levels not
seen since the fall of 2000!  Looking closer to the present time,
ADTN put in a solid bounce near $30 in early March and has been
steadily marching higher ever since.  A slight pullback a couple
weeks ago found buyers waiting at the $36 level, and those two
lows can be used to construct a solid ascending trendline.  That
trendline (currently $38.70) coincides nicely with the rising 20-
dma ($38.64) and should provide for very strong support on any
subsequent pullback.  The really interesting feature of the chart
comes in at resistance though, not support.  In early January,
ADTN surged to an intraday high of $41.28, a level that came very
close to being tested with today's intraday high of $41.21.  An
ascending trendline connecting the lows and horizontal resistance
makes a nice bullish triangle pattern and a breakout from that
pattern could be quite exciting for the bulls.

Daily Stochastics are just reversing upwards after the last bout
of profit taking and indicate that there is room to run through
resistance before becoming overbought again.  Also interesting is
the trend of decreasing volume over the past week (as price was
drifting lower) that was soundly smashed today with above average
volume and a 2.85% gain in price.  Until broken, resistance is
still an obstacle, so we're setting a trigger at $41.40 (just
above the recent highs) and we're going to require the stock to
push through that level before considering new entries.  Momentum
traders can enter on the initial breakout, while more
conservative types will want to wait for a subsequent pullback
and bounce from the $40-41 area, confirming old resistance as
new-found support.  Stops will initially be placed at $38, just
below gap support from 4/16.  We're initially targeting $45, with
a possible surge as high as $48.  This area was one of prior
resistance on the way down and will likely be important on the
way back up.

Suggested Options:

Shorter Term: The May 40 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 40 Call, but need to wait for some open interest.

Longer Term: Traders looking to capitalize on a sustained
breakout move over the $41.40 level will want to look to the June
45 Call or even the August 45 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-40 RQA-EH OI=1239 at $2.15 SL=1.00
BUY CALL JUN-40 RQA-FH OI=   0 at $3.30 SL=1.75
BUY CALL JUN-45 RQA-FI OI=  18 at $1.20 SL=0.50
BUY CALL AUG-45 RQA-HI OI= 361 at $2.45 SL=1.25

Annotated Chart of ADTN:
http://www.OptionInvestor.com/oin/images/commentary/newsletter/2003-04-29/ADTN042903.gif


Picked on April 29th at  $40.70
Change since picked:      +0.00
Earnings Date          07/15/03 (unconfirmed)
Average Daily Volume = 756 K


************************Advertisement*************************
If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
stock
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.

http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
**************************************************************


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

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


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

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

Contact Support

DISCLAIMER

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

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

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

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives