The Option Investor Newsletter Thursday 06-05-2003 Copyright 2003, All rights reserved. 1 of 3 Redistribution in any form strictly prohibited. In Section One: Wrap: Ding Dong the Bear is Dead Futures Markets: Higher highs Index Trader Wrap: Hit me with your best shot.... Market Sentiment: Getting More Extreme Weekly Manager Microscope: Geraldine Hom: Schwab 1000 Fund (SNXFX) Posted online for subscribers at http://www.OptionInvestor.com ************************************************************ MARKET WRAP (view in courier font for table alignment) ************************************************************ 06-05-2003 High Low Volume Adv/Dcl DJIA 9041.30 + 2.30 9045.15 8969.24 2.12 bln 2026/1220 NASDAQ 1646.01 + 11.40 1646.01 1613.99 2.43 bln 2041/1296 S&P 100 496.14 + 1.11 496.14 491.07 Totals 4067/2516 S&P 500 990.14 + 3.90 990.14 978.13 W5000 9480.80 + 49.30 9480.81 9356.67 RUS 2000 456.69 + 5.46 456.69 447.87 DJ TRANS 2511.35 - 45.10 2556.96 2480.43 VIX 23.12 + 0.64 23.65 22.82 VXN 34.53 + 1.52 34.68 33.76 Total Volume 4,873B Total UpVol 3,170B Total DnVol 1,662M 52wk Highs 1125 52wk Lows 19 TRIN 0.78 PUT/CALL 0.64 ************************************************************ Ding Dong the Bear is Dead If you are a trader you have probably been hearing this a lot lately. The end of the bear market is at hand, the bear is dead, long live the bull! While I would not rush to proclaim this from the house tops the internals are clearly proclaiming a change in the trend for the last three years. With even the lagging Dow up over +25% from the October lows it is hard to disagree. Dow Chart - Daily Nasdaq Chart - Daily The euphoria in the stock market even appears to be wearing off on the retail sector with May Retail Sales up +2.0% and higher than expectations. This makes two consecutive months of strong gains with April gaining +3.1%. These numbers are significantly above the trend of only +0.5% since the +3.2% gain in October. After a five month dry spell there appears to be a retail bounce. However, according to individual reports the buying was very spotty. Best Buy reported sales up +2.2% while Circuit City reported sales dropped -10%. Wal-Mart reported gains of +2.1% while ABS saw sales dip -1.2%. It is obviously a case of shopper selectivity based on prices and advertising. It was still enough to power the entire sector to the gains despite a -7.6% drop in footwear and -2.0% drop in furniture sales. Wal-Mart posted a cause for concern that sales were following the paycheck cycle and suggested consumers were suffering from a cash crunch as unemployment continued to grow. That growing unemployment was seen in soaring Jobless Claims to 442,000 for last week. Expectations were for a drop to 422,000. The four-week moving average jumped to 430,500 and this is pointing out the potential for a severely negative Nonfarm Payroll report on Friday. The jump in claims this week reversed a minor three week decline. Currently 43% of unemployment recipients are running out of benefits before finding a job. This means an average of 175,000 workers are dropping off the roles each week with no job and no benefits. The worst report of the day was the Factory Orders for April. The report showed orders fell -2.9% and a full point more than consensus estimates of -1.9%. This was the worst decline since November 2001 and the aftermath of the 9/11 attack. Nondurable goods fell -3.5%. New orders for non-defense capital goods fell -2.73%, communications equipment -2.68% and industrial machinery a whopping -28.51%. Computer equipment was the highlight and rose +19.17%. Shipments fell -2.2% and back orders were flat. There was nothing to be excited about in this report other than the computer component and this was April data. The spin doctors continued to claim it was impacted by the war and not relative. The bulls bought the excuse and the dips. Tomorrow we are going to get the Nonfarm Payrolls for May. This report is expected to show a fourth consecutive month of declines in real jobs. The consensus ranges from a loss of between -27,000 to -39,000 jobs depending on which consensus you believe. The whisper number is significantly higher in the -75,000 range. The Fed has a history of cutting rates after only three consecutive months of declines but they didn't cut last month due to the expected post war rebound. There is a strong belief that should the job loss be over 100,000 on Friday the Fed will cut rates as soon as tomorrow. That number also ranges from 100K to 200K depending on who is doing the analysis. If they do not cut tomorrow or Monday then it is almost a 100% chance they will cut by a quarter at the June 25th meeting. The futures are now showing a 29% the Fed will cut by another 25 points in August and a 64% chance of the same second cut by the September meeting. This morning the ECB cut rates by a full 50 basis points and that is setting the stage for a full 50 point cut by the Fed to ward off the deflation monster and maintain parity with the ECB. If they are really contemplating a rate cut in June and another in August or September then they would be better served to do it all at once in June. Slow injections may build up an immunity to the vaccinations when a big jolt of stimulus could spark a faster rebound. The market outlook is clear. There is an assumption that the ECB cut has put the onus on the Fed to match it and traders bought that rumor today despite the horrible Jobless Claims and Factory Orders. After the bell Intel gave it's mid quarter update and NOBODY was scared of the result. Prices rose right into the bell with the new 52-week highs setting another new high at 1125 compared to new lows of only 19. Intel did not disappoint. They narrowed guidance to $6.6-$6.8 billion from $6.4-$7.0 billion. Bottom line $6.7 average on both estimates so the result was an inline guidance with processor trends at the high end of seasonal normal. This encouraged the bulls yet again and after a brief dip in after hours the Nasdaq futures took off and jumped +10.00 to 1244 as I write this. Considering the mixed messages from other chip companies over the last couple days this affirmation of Intel's outlook could be the tech blessing the markets were looking for. Considering news from the other 800 pound gorilla the Intel news was a breath of fresh air. CEO Steve Ballmer said in a memo to MSFT employees that Linux represented a serious challenge to Microsoft. Many analysts thought the mention by name of Linux in addition to open source software in general meant the threat was real. Linux has a long way to go to be any material threat to Microsoft but in today's economy every dollar counts. It is not that Linux is replacing the NT/2000 operating system that hurts but it also takes out the SQL, Exchange, Office, etc components that run on the Microsoft system. These are high dollar revenue sources for Microsoft. For every server running a Microsoft operating system there can be hundreds of users accessing it and the licensed software it runs. Changing one computer with Microsoft 2000 server running Microsoft Exchange as an email host and SQL as a database program could cost MSFT as much as $25,000 a year for a moderate size company. Every user that connects to that computer for email or data must have a license for that program. It is an intricate web of interleaving license requirements that produces huge revenue from each MSFT equipped server. BAC cut MSFT from its fresh money list on the news. MSFT dropped back to $24 support and then rallied after the close on the Intel affirmation. The bullish turn of events this week has some confusing internals. While the new highs/lows is off the scale there are some signs of weakness. Insider selling is at a two-year high with $3.3 billion in sales for May. This was a +150% increase from already high April levels and sales were running nearly 4:1 to insider buys. If the economy and earnings, the prime mover of stock prices, are about to explode then why are so many insiders dumping stock? The VIX, an indicator of premium prices paid for puts and calls on the OEX has been rising with the market. This is completely contrary to historical trends. The VIX falls when markets rise and rises when sellers appear. The VIX hit a high of 23.65 today, up from 20.97 on June-2nd. This would indicate a growing concern for the strength of the rally. Don't get me wrong, this is good because it shows the fear factor is alive and well and the market is actually growing more balanced than in the recent past. The point I am making is that there is a growing contingent of doubters. Much of that doubt is stemming from the lack of a recovery. DCX reported today that incentives had risen to $4,500 per car and average selling prices were down -3% due to slowing sales and increased competition. This is a major hit to the profitability of automakers which already signaled cuts in production earlier this week. Retail sales are spotty and are cycling with paychecks and unemployment could rise above 6% for May. No recovery here. The offset to those concerns is that cash is trash and getting cheaper daily. If the Fed does cut rates tomorrow on a worse than expected Jobs Report then money markets could be between a rock and a hard place. Bonds, which could not go any higher, rocketed to a new 45 year high today with yields on the ten-year dipping below 3.25% intraday. With a half point rate cut on the horizon they could actually go below 3%. This is keeping bondholders from cashing out and switching into stocks but the equity markets are soaring anyway. Even the most bullish of pundits are now scratching their heads at the extreme overbought conditions. Add to the rally the very strong internals on strong volume and there appears to be no end in sight. The war is over according to the press and the SARS epidemic has peaked and is under control. If Intel is not going to warn despite the dent in demand due to SARS then there must be demand seeping in from other areas. At least that is the consensus tonight. What can crash this train? Assume the Jobs Report comes in lower than expected. The Feds will likely cut rates and that would take the upward pressure off bonds. If they cut tomorrow then they would not likely cut again at the June 25th meeting. The next meeting is not until August so the July doldrums could easily settle in for the bond market. That would be good for stocks as money would flow out of bonds at the highs and into equities. Assume the Jobs Report came in better than expected at flat or even slightly positive. This is highly doubtful but a possibility. The Fed would not cut tomorrow but the pressure would still be on to cut on the 25th to match the ECB drop. Bonds might dip on on the news Friday but could resume their upward climb until the decision on the 25th. Stocks should climb based on the better than expected number. The recovery is in progress or so they would claim if the jobs surprise to the upside. The most damaging event to the market could be a simple inline Jobs number in the -35,000-50,000 range. Not enough to scare the Fed into action and not strong enough to convince traders still waiting for recovery confirmation to come off the sidelines. At some point the current owners should be thinking about taking profits. The only question now is when. Before the Fed meeting or a sell the news event after the meeting. There is little doubt in anyone's mind that a serious bout of selling is in our future. We are at the extreme high end of the trading range for nearly the last year on the Dow. The closing high for last August was 9053. The high today was 9045 and the close at 9037. Assuming the overnight futures do not blast us over that level before morning it could be tough to break. The Jobs Report is due out at 8:30 and the cash open will be totally dependent on that. The Nasdaq is already in the green when it comes to resistance. The longer term down trend was broken yesterday at 1612 and there is but little resistance at 1650 before reaching the 61% retrace at 1720 from the Jan-2002 high of 2099 to the October low of 1108. With today's close at 1646 it has already gained an incredible +48.5% from the October lows and +31% from the March lows. That would be classified as a good year and maybe a good couple years of gains in a regular market. There are two things perfectly clear and in perfect divergence. The markets are extremely overbought using any yardstick you desire. The NDX bullish percent is at 84%, the SPX 74% and the INDU 70%. This leaves very few stocks to add to the numbers when you consider all the indexes have perpetual dogs that will never be a contributor to the bullish numbers at any given time. 70% is considered overbought by Dorsey. The second thing is that nobody seems to care about the first. The land rush is on and until the cash stops flowing we are just going to get more and more overbought. This is dangerous, very dangerous. We have gone from a bubble market to what some are calling a bubble echo. The current justifications for the rally are purely hope although that could turn to reality with the July earnings. It could also implode with a nasty string of earnings warnings which may have already started, FDX, ROAD, ABS, TQNT to name a few. To be fair there have been quite a few affirmations and even a few raised guidance. While there is a strong need for a pause there is no guarantee we will see one. Extremely overbought markets tend to get more overbought. It is not logical but it happens. As a trader I would be extremely cautious about entering longs at this level. Simply the number of new 52-week highs, which proves how bullish traders are, should also warn you that there is a strong potential for a dip. Tomorrow, next week, June-26th? nobody knows but there needs to be a multiday pause in order to build a new base for higher highs. With all the external forces coming together at a peak in the markets that pause could be more than a couple days. Enter Very Passively, Exit Very Aggressively! Jim Brown Editor Tomorrow is the last day to get in on the $1000 in free options in the stock of your choice. I must receive the suggestions by 8:PM on Friday 6/6 to qualify. See here for details: http://members.OptionInvestor.com/editorplays/edply_060103_1.asp *************** FUTURES MARKETS *************** Higher highs Jonathan Levinson Daily Pivots (generated with a pivot algorithm and unverified): Figures rounded to the nearest point: R2 R1 Pivot S1 S2 ES03M 1000 996 987 982 973 YM03M 9107 9076 9019 8988 8931 NQ03M 1254 1244 1225 1216 1197 The indices gapped lower on the poor initial claims data and then rallied on the poor factory orders data at 10AM, advancing and retracing until a burst of frenzied buying closed the session on the equities' highs of the day. 10 minute chart of the US Dollar Index The US Dollar Index struggled with resistance at 94 through most of the night and treaded water until the Bank of England announced that it would leave rates unchanged, and the European Central Bank cut its benchmark rate by 50 bps. The upside surprise in US initial claims and the downside surprise in factor orders iced the cake, and the US Dollar Index took a nosedive to its bear market support level at 92.00. This move was puzzling on the heels of the ECB rate cut, as one would expect US Dollars to appreciate on a devaluation of a competing currency. The counterintuitive move was attributed to the consensus prior expectation among traders of a 50 bp cut. Daily chart of June gold The action in the US Dollar was, of course, bullish for gold, which rallied to the 370.00 level. The stochastic downphase will get cut short if the strength in gold continues. In the market monitor, I suggested that the shallowness of the price pullback during this downphase is encouraging for bullish gold traders, and that a successful test of the 358 support area would be a good place for new long positions. The jump this morning was surprising, as the recent rally top at 371 appears to be the next significant resistance area. The CRB was up 1.01 to 236.16. Daily chart of the ten year note yield Treasuries found some sellers midway through the session after rising to new multidecade highs, and yields closed in the green for a change, with the five year yield up 5.5 basis points to 2.234%, TNX up 4 bps to 3.31% and the thirty year yield up 4.3 bps to 4.394%. Daily NQ3M candles The NQ printed a higher closing high and a higher low on the daily candles, once again following its upphase higher. The stochastics and MacD are both at high levels, and ordinarily this would be the place to warn that the greater risk is to the downside. That remains the case, but it's been the case for the past two months, with the exception of the brief corrections in the rally. NQ closed at 1234.50, just below its intraday high of 1235. 30 minute 20 day chart of the NQ3M The downphase was cut short yet again, and the MacD issued a fresh buy signal well above the zero line on the 30 minute candles. The oscillator setup tells us that, for the moment, both the longer and shorter cycles are in gear to the upside. Daily ES3M candles The ES contract closed just below its high of 991.25, and as with the NQ, shows us nothing about which to be bearish. The intraday low of 977.50 did not last for long, and if the past week is any indication with its pattern of higher lows, 977.50 should not be seen tomorrow. With price adhering to the upper Bollinger band and the oscillators running out of wiggle room near the top, any further upside will be considered a trending move and will require strong additional buying for fuel. Until the trend reverses, it's unhealthy to try to pick the top, but fresh bullish positions from here will require both tight stops and strong courage. 20 day 30 minute chart of the ES3M On the ES 30 minute candles, we see the same setup as with NQ. There is additional room projected to the upside by the oscillators, but they are not far from the tops of their channels. Daily YM3M candles Nothing to add on the Dow futures, which closed just below their new year high of 9050. 20 day 30 minute chart of the YM Today's session showed treasuries posting a possible reversal from their rally highs (and yields from their rally lows), and a dramatic selloff in the US Dollar Index. The fed had added a modest amount of intervention money via overnight repos, an insignificant amount in the face of the USD selloff. With equities constituting a very small market by comparison, the intermarket relationships here are key. During this rally, equities and treasuries have rallied together against the tanking US Dollar, and I've speculated that the moves were caused by the fed's aggressive addition of dollars. With the US Dollar falling and treasuries failing to push higher, I'm led to believe that something might have changed today. If yields continue to rise tomorrow and the US Dollar does not, it could be foreign selling, which would negatively impact US equities. I'd guess, further, that if such occurs, the YM will suffer the most, followed by ES and finally NQ. We'll see how it plays out tomorrow. ******************** INDEX TRADER SUMMARY ******************** Hit me with your best shot.... Pat Benatar scored her first Top 10 hit with the song "Hit Me With Your Best Shot" from the Crimes of Passion album, and while the album itself was certified platinum, the song was certified GOLD! Other hits from Ms. Benatar's Crimes of Passion album were "You Better Run" and "Hell is for Children." You know where I'm going with this. Don't you? Bulls look to have survived a one-two punch from this morning's economic data, which had weekly jobless claims coming in weaker than economists forecast (421k) at 442,000, while April factor orders were also weaker than forecast (-1.8%) with a 2.9% decline. "Well you're a real tough cookie with a long history Of breaking little hearts, like the one in me...." Overnight European Central Bank interest rate cuts sparked buying in gold stocks as the equal weighted AMEX Gold Bugs Index ($HUI) $147.14 +4.05% surged. Meanwhile the stock weighted Gold/Silver Index (XAU.X) 77.70 +3.46% may have "broken the hearts" if not the potential head and shoulders top formation with today's move above the 76.69 level. Is the move higher in gold stocks a "bad sign?" I'm not sure, but I don't think so. Some economists as well as the Fed are on the alert for "deflation," but when one considers what the stock market is doing, I tend to lean more toward the "inflation" camp at this point. I would certainly think that if "deflation" were in play, then stocks wouldn't be hitting multi-month highs. Now, this isn't to say that at some point the market won't have change in thought (gets more information), but for those torn between thoughts of "deflation" or "inflation," it may be gold stocks that benefit most. "That's O.K., lets see how you do it Put up your dukes, lets get down to it...." What's "in play" is trader/investors seeing a falling Producer Price Index and Consumer Price Index, that's sign of "deflation." But what about the aggressive Fed and now ECB policy of lowering key interest rates? Now... the Fed hasn't made an interest rate move since cutting the fed funds rate by 50-basis points on November 6, 2002, but as noted in yesterday's 01:00 PM EST Update, the MARKET is looking for at least a 25 basis point cut by its August meeting, as depicted by the August Fed Funds Futures contract (ff03q) 99.04. In fact... as of today's close, the MARKET is looking at a 15% chance of a 50 basis point cut by the Fed between now and the August meeting. August Fed Funds Futures - Daily Interval Something's "out of whack" isn't it? The August fed funds futures are climbing and getting close to their March 10 contract high. Where was the S&P 500 Index (SPX.X) 990.14 +0.39% on March 10? How about 807.48. Deflation? Mmmmmm.... no. I don't think so. Inflation? Mmmmmm... perhaps. Why does the Fed or ECB lower interest rates? To pump liquidity into the system to stimulate growth. If growth comes, what does one expect? Inflation or deflation? Some inflation right? If the growth is to robust? I'll say it now... "hyperinflation." Ahhhh! But what if growth doesn't come and product prices continue to fall in order to still try and spur some demand for those goods? "Deflation," Right? What's a commodity that tends to perform well/bullish under "inflation" or "deflationary" environments? The WORST-case scenario for gold is ECONOMIC GROWTH, with NO inflation. Gold/Silver Index (XAU.X) - Daily chart I now look for or am further alert to "short-squeeze" trade to develop in many gold stocks based on today's break of the "left shoulder." As a trader, I think it is good to try and build scenarios for "why" an index may be trading the way it is, as it relates to some type of "economic meaning." Now... lets put the "short-squeeze" trade aside for a moment and look at periods where the XAU.X and major equity indexes that some of us may be trading showed some DIVERGENCE (what we're really interest in) and times where the XAU.X and major indexes moved in unison. Like they have been in recent months. From the far left of the chart shown above, the XAU.X made a very big move higher, while during the same time frame (January 2002 - May 2002) the SPX fell from 1,160 to 1,050) and from May, BOTH the SPX and XAU.X got back in unison. Some economists interpreted the price action in the XAU.X simply as a massive short squeeze in gold. "Gold bugs" confirmed that notion, but also said that gold prices were going back to $700 an ounce as the economy was headed into a recession. Hmmm.... were both wrong? What I've "liked" and still "like" about a trade in gold, is that there's enough UNCERTAINTY between the various scenarios of "deflation" and potential "inflation" brought on my easy money and lower interest rates, that the "kicker" is the potential for another short-squeeze to take place. Now... I point to the downward trend. I RESPECT trend and like to monitor and try and understand its implications. I still say that at the EARLY part of a potential economic recover, INFLATION IS GOOD! Its after a prolonged period of economic growth that INFLATION IS BAD! Remember a couple of years ago when the markets would rally on any type of "weak" jobs data? Wage inflation was the big concern. As I see it, I've basically got three different economic scenarios in play. One is deflation (the rate at which the general level of prices for goods and services is falling). The second is inflation (the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling). The third is economic growth with no inflation. Gold has the opportunity to benefit from the first two (is your U.S. dollar buying you more today than it was a year ago?) The US Dollar Index (dx00y) 92.52 -1.29% closed at a new low today. Forget my previous question about "a year." The US Dollar Index (dx00y) has fallen 7.5% from the 100.00 level since April 13. Now... the decline in the dollar impacts you and I more significantly if we like to buy foreign goods or services. Right now, I don't see the "inflation" from the CPI or PPI and if the MARKET is playing inflation, its because of the thought of "easy money" now coming back to haunt us in some way. Where our downward trend may come into some importance from a technical and ECONOMIC scenario standpoint is this. And that's the DEFLATION standpoint. I'm going to suggest that if the XAU.X breaks above that trend and we were to see the major equity indexes break back lower, then the MARKET may then be putting greater emphasis on DEFLATION. "Hit me with your best shot! Why don't you hit me with your best shot! Hit me with your best shot! Fire away!" Now... if I start hearing.... "oh, its just a short squeeze in gold," then a bull with a partial position could care less what's in play. And that's the "kicker." "Knock me down, it's all in vain, I'll get right back on my feet again!" S&P 500 Index (SPX.X) - Daily Interval The SPX got "knocked down" early, but not enough to even come close to yesterday's low. I received some questions from traders that were trying to better understand the "inside day" technique of finding a an action point, but also simply using this technique that really instills discipline into a trader of once you've initiated a trade, then following it systematically with a stop. I've tried to show some of the "inside days" that the SPX has had in recent sessions. The "inside day" in itself is a "neutral" day as the day's range was "inside" the previous day's trade. This has the shorter-term and even swing trader entering the next day with a NEUTRAL bias as it relates to that day's trade. All he/she does is say, "if the SPX breaks below the inside day, then short/put and follow with a stop just above the "inside day's" high. (#2 was an inside day the broke lower the next day, then stopped out for small loss the day after that as SPX moved above the previous bar's high). Right now, a trader that traded bullish on Wednesday (#4) now moves his/her stop up just under today's low. For "inside day" (#3) I marked with a red arrow the bar that would have exceeded the prior bar's low and had a trader stopping out. Now... with the major indexes, you may want to give a little "fudge room" to a stop of this sort. Back test the "inside day" technique with the index or stock that you look to trade and see if it works consistently (say 70% of the time). Even if you don't use the inside day, it may be helpful to "pretend" you are trading it. Then, count the duration and perhaps the price move that you would have been in the trade. What you find right now, is that the BEARISH breaks of "inside days" tend to be short-lived, and stopped out rather quickly, while the BULLISH breaks either result in small losses or last a little longer than would the BEARISH breaks. As time passes, an "inside day" trader can begin to sense changes. I've also incorporated the use of LEVELS from the DAILY/WEEKLY/MONTHLY pivot analysis data. Today's not a real good example, but imagine (for the future) that you traded an "inside day" to the upside 5 days ago, and now sitting on a 40-point move, with 10 of those points coming in today's trade. Do YOU really want to give back 10 of those points to today's low? If not, then you might simply look to the pivot analysis matrix, look for a level that fits your downside RISK comfort level for the gain you've got, and then it is OK to "hope" that there are some "buy side" computers at that level that keep the SPX from hitting your stop. I've said before that I don't use "hope" as a way to trade. I do use "hope" in this instance when I'm trying to protect a PROFIT! Today's trade saw a net gain of 11 stocks to new point and figure buy signals as the S&P 500 Bullish % ($BPSPX) rose 2.2% to 80.4%. A subscriber posed a very good question today as it relates to "bellwether" leadership. His point was... "where is it?" Microsoft (NASDAQ:MSFT) $24.09 -3.13% and International Business Machines (NYSE:IBM) $24.09 -3.13%. He also asked about Intel (NASDAQ:INTC) $21.85 +2.19%, which jumps to $22.34 after mid- quarter update, and Oracle (NASDAQ:ORCL) $13.36 -1.62%. His observation I think is very meaningful toward technology at this point, but not a bank, a homebuilder, healthcare stock or even a resurgent airline stock mentioned. With the SPX bullish % at 80.4% this rally has been building broad (it has to be to get the bullish % this high). When the "leaders" lag thought, its a very good observation to be alert! S&P 100 Index (OEX) Chart - Daily Interval I have a pretty good sense of humor about things, and I think a subscriber was "jabbing" me a little regarding a potential head/shoulder top after my long oration about intra-day head/shoulder tops that had been failing at the right shoulder. However, I've shown the POTENTIAL (heavens sake, the head hasn't even formed yet) but when I've looked back at head and shoulder patterns that HAVE developed and unfolded, the HEAD often came a a high level of bullish % (especially in sectors) and the BEST place to have SHORTED/PUT was when the right shoulder developed, when the BULLISH % was in a COLUMN OF "O" and internals didn't confirm the rebound that formed the RIGHT SHOULDER. Today's trade saw a net gain of 1 stock to a new point and figure buy signal in the S&P 100 Bullish % ($BPOEX) and has this bullish % indicator growing to 76%. "You come on with a come on, you don't fight fair..." I had a friend back during the Pat Benatar era, and he was a pretty tough guy and liked to go around picking fights. He thought there was no such thing as fighting "fair." With what looks to be a positive response from Intel's mid-quarter update in after-hours trade, bulls aren't going to pull any punches in the NASDAQ-100 Index (NDX.X) 1,231.72 +0.56% and Tracking Stock (AMEX:QQQ) $30.64 +0.72% with after-hours trade at $30.83. NASDAQ-100 Index Tracking Stock (QQQ) - Daily Interval The Q's look to have a shot at $31.16 early tomorrow morning and that's not a "stretch" with after-hours trade at $30.83. This morning's "first hour" of trade turned 25.8 million shares, with support coming just above DAILY S1 of $29.90, but most likely the extension of the upper end of our "bullish wedge." It was laaate Tuesday that we thought a trade at $29.85 was the "trigger" for a bull to try and inflict some "pain" on bears that may have been shorting that trend, which broken, did look to be resistance intra-day on Tuesday. This morning's "gap lower" good spot for short-covering and as the session grew long, so did a bear's FEAR. Tomorrow's GREED point for bulls is the MONTHLY R2 of $31.63. I wouldn't be GREEDY and $31.48, just below $31.50 would be an early exit. Day traders that don't like to chase gaps, but willing to take a shot at $31.48, WATCH the 5-minute bar chart and try and MAKE SURE you get a 5-minute close ABOVE $31.16. Today's trade saw a net gain of 3 stocks to point and figure buy signals in the NASDAQ-100. This has the NASDAQ-100 Bullish % ($BPNDX) rising to 87%. Dow Diamonds (AMEX:DIA) - Daily Intervals When the bullish % are as high as they are, I become more like "Sherlock Homes" than anything and I think a bull wants to see a break and close above that "tweezer top" dating back to August of last year. The Dow Industrials (INDU) 9,041.30 +0.02% is perhaps the most-often quoted index in the world and looks determined to close the 9,000 level. Bulls don't want to keep market psychology positive and a close above 9,100 then brings thought of 9,250 and 9,500. Bulls do NOT like the way IBM and MSFT are trading and if tonight's "good news" out if INTC finds selling, then a tight stop under today's lows provides the protection I think bullish traders need at these higher levels of risk. Today's trade saw no net change in the very narrow Dow Industrials Bullish % ($BPINDU). Still 76.67%. Pivot Analysis Matrix Treasuries found selling as the session progressed and with the U.S. Dollar weakness noted above, its my thought that some money was repatriated by foreign investors after the ECB cut rates 50 basis points. The gloves have come off in this battle between bulls and bears and its has gotten UGLY for the bears. But, as I agree with the floor trader's comments discussed in last nights Index Trader Wrap, when the reversal comes, it isn't going to be pretty for the bulls, so like a wise street fighter, bullish traders should be ready to cut and run if things aren't going as planned. One observation I'll repeat from a subscriber today is that he was looking at a list of stocks from a stock screen of BULLISH technicals, oscillators, etc. The comment was that EVERYTHING looks bullish. Jeff Bailey ------------------------------------------------------------ WINNER of Forbes Best of the Web Award optionsXpress voted Favorite Options Site by Forbes Easy screens for spreads, collars, or covered calls Free streaming quotes Real-time option chains, charts + calculators Go to http://www.optionsxpress.com/marketing.asp?source=oetics21 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ **************** MARKET SENTIMENT **************** Getting More Extreme by James Brown Investor sentiment. One need only look at the charts to figure out what investors are thinking and feeling. They're too afraid to miss the move so they buy every dip. This can't go on forever folks. The market needs its up's and down's to allow for rotation of money between sectors and between securities. Normally you don't buy both bonds and stocks at the same time. Early today investors were buying bonds before a midday turnaround brought them back. This didn't stop traders from buying stocks. New highs hit 661 while new lows rang in at 15. Advancing issues outpaced decliners almost 18 to 11 on the NYSE and 19 to 12 on the NASDAQ. Up volume beat down volume 14 to 6 on the NYSE and 14 to 9 on the NASDAQ. Total volume was still very strong at more than 2 billion on both exchanges. The DJIA managed its second close in a row over the 9000 mark but will the bulls eventually tire of holding it up there? The Russell 2000 pushed out its 12th gain in a row. The small cap index is up more than 32 percent from its March 2003 lows. The breadth of the market advance is great news but it needs a rest! The ARMS index 5 & 10-dma are both getting to dangerously low levels at 0.89 and 0.95 respectively. The bullish percents just keep climbing. Eventually there will be nowhere else to go but down. The bullish percent for the S&P 100 hit 76 today. It has only been this high three times in the last four years. The NASDAQ-100 jumped to 87. This is the 3rd time since the beginning of 1999 that its bullish percent has been this high (or higher). The biggest reading of extreme bullishness is the S&P 500 bullish percent. It reached 80.4 today. This is the MOST bullish reading EVER in the last four years. Needless to say while we're very encouraged that the markets are celebrating the death of the bear market we're VERY skeptical that it can keep this pace up for much longer. If I had a sense of humor I'd find it funny that at the time of this writing shares of Intel are up after its meeting today and the S&P futures, while off its highs, are trading up in after hours. Viva la bull. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 9801 52-week Low : 7197 Current : 9041 Moving Averages: (Simple) 10-dma: 8823 50-dma: 8491 200-dma: 8336 S&P 500 ($SPX) 52-week High: 1050 52-week Low : 768 Current : 990 Moving Averages: (Simple) 10-dma: 960 50-dma: 914 200-dma: 886 Nasdaq-100 ($NDX) 52-week High: 1163 52-week Low : 795 Current : 1232 Moving Averages: (Simple) 10-dma: 1183 50-dma: 1110 200-dma: 1020 ----------------------------------------------------------------- The slight rise in the volatility indices in spite of the market strength is interesting. Could it be traders, who remain skeptical of the market's advance, buying puts to speculate on a pull back? CBOE Market Volatility Index (VIX) = 23.12 +0.64 Nasdaq-100 Volatility Index (VXN) = 34.53 +1.52 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.64 732,352 467,441 Equity Only 0.59 598,165 353,665 OEX 1.33 19,402 25,868 QQQ 1.43 38,212 54,694 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 67.7 + 2 Bull Confirmed NASDAQ-100 87.0 + 4 Bull Confirmed Dow Indust. 76.7 + 3 Bull Confirmed S&P 500 80.4 + 4 Bull Confirmed S&P 100 76.0 + 5 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 0.89 10-Day Arms Index 0.95 21-Day Arms Index 1.12 55-Day Arms Index 1.15 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 1775 1908 Decliners 1119 1207 New Highs 399 262 New Lows 13 2 Up Volume 1443M 1435M Down Vol. 650M 959M Total Vol. 2109M 2424M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 05/27/03 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 The large S&P futures contract is not showing much change this week. Commercials remain slightly bullish while small traders just flipped from slightly bullish to slightly bearish. Commercials Long Short Net % Of OI 05/06/03 429,519 419,545 9,974 1.2% 05/16/03 429,028 419,553 9,475 1.1% 05/20/03 438,238 426,569 11,669 1.3% 05/27/03 435,195 423,474 11,721 1.4% 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 05/06/03 150,345 148,681 1,664 0.6% 05/16/03 151,883 148,479 3,404 1.1% 05/20/03 157,034 154,980 2,054 0.7% 05/27/03 147,687 149,344 (1,657) 0.6% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 We are seeing an increase in both long and short positions for both the small trader and the commercial trader but the overall sentiment remains unchanged. Commercials are net short and small traders are net long. Commercials Long Short Net % Of OI 05/06/03 169,388 447,330 (277,942) (45.1%) 05/16/03 178,679 452,727 (274,048) (43.4%) 05/20/03 232,184 468,006 (235,822) (33.7%) 05/27/03 252,655 485,962 (233,307) (31.6%) Most bearish reading of the year: (337,496) - 04/29/03 Most bullish reading of the year: (222,875) - 04/01/03 Small Traders Long Short Net % of OI 05/06/03 423,918 55,932 367,986 76.7% 05/16/03 421,540 57,483 364,057 75.9% 05/20/03 422,555 62,580 359,975 74.2% 05/27/03 427,412 66,031 361,381 73.3% Most bearish reading of the year: 283,831 - 04/08/03 Most bullish reading of the year: 409,657 - 04/29/03 NASDAQ-100 The dead heat between long and shorts in the commercial positions is narrowing. Small traders have turned a bit more bearish with a big increase in shorts compared to last week's abnormally low reading. Commercials Long Short Net % of OI 05/06/03 46,327 38,216 8,111 9.6% 05/16/03 43,539 39,046 4,493 5.4% 05/20/03 42,864 42,040 824 1.0% 05/27/03 40,999 41,491 492 0.6% 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 05/06/03 13,482 21,010 ( 7,528) (21.8%) 05/16/03 11,706 16,104 ( 4,398) (33.0%) 05/20/03 11,024 9,965 ( 1,059) ( 5.0%) 05/27/03 12,194 13,339 ( 1,145) ( 4.5%) 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 DJIA futures traders still seem gripped by indecision. The commercials inched up their short positions by more than 1000 but remain net long. The small trader effectively maintains a net short position but not a very convincing one. Commercials Long Short Net % of OI 05/06/03 16,772 13,568 3,204 10.6% 05/16/03 18,265 14,396 3,869 11.8% 05/20/03 18,028 14,108 3,920 12.2% 05/27/03 18,660 15,537 3,123 9.1% 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 05/06/03 7,829 8,642 ( 813) ( 4.9%) 05/16/03 7,873 9,058 (1,185) ( 6.9%) 05/20/03 8,378 9,922 (1,544) ( 8.4%) 05/27/03 8,225 9,316 (1,091) ( 6.2%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01 ----------------------------------------------------------------- ------------------------------------------------------------ VOTED one of "Best Online Brokers" (4 stars)--Barron's optionsXpress's "order-entry screens...go far beyond... other online broker sites"--Barron's 8 different online tools for options pricing, strategy, and charting Access to options specialists via email, phone or live chat online Real-Time Buying Power, Account Balances or Cancels Go to http://www.optionsxpress.com/marketing.asp?source=oetics22 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ************************* WEEKLY MANAGER MICROSCOPE ************************* Geraldine Hom: Schwab 1000 Fund (SNXFX) This fund's annualized total return over the past decade ranks in the top third of the Morningstar large-blend category on a pretax basis, but places in the category's top 8% on an after-tax return basis. Geri Hom, a vice president with Charles Schwab Investment Management ("CSIM"), has overall responsibility for management of the tax-efficient equity fund, valued today at over $5 billion in total assets. Hom joined CSIM in March 1995 and today is the firm's director of equities. In addition to serving as the lead manager of Schwab's 1000 Fund, she is manager or co-manager of other CSIM equity fund products. Prior to joining CSIM, Hom was a portfolio manager and manager of portfolio management for equity-index funds with Wells Fargo Nikko Investment Advisers for 10 years. While at Wells Fargo, Hom was also responsible for "transactions- management" services. Previously, she was also a systems analyst with Bank of America. So, Hom's investment management experience includes portfolio management, security analysis and transactions management (i.e. trading), making her well qualified to be Schwab 1000 Fund's lead portfolio manager. The Schwab 1000 Fund is designed to be a tax-efficient and lower expense equity investment option for personal investors who seek long-term capital growth and can accept significant fluctuations in share price in pursuit of that objective. Investor shares of the fund require a minimum initial purchase of $1,000 to open an IRA ($2,500 for regular accounts). At 0.46%, the fund's current expense ratio is relatively low adding to its appeal and helping to keep the fund competitive over time. For further information or to download a fund prospectus, log on to www.schwab.com. Investment Style/Strategy The Schwab 1000 Fund seeks to provide a total return that equals the return of the Schwab 1000 Index, a proprietary index made up of common stocks of the 1,000 largest, publicly traded companies in the United States. In pursuit of this objective, Hom usually invests at least 80% of total assets in Schwab 1000 index stocks, in proportion to their weighting in the index. Hom may invest the remaining 20% of fund assets in equities that aren't part of the Schwab 1000 Index, consistent with the fund's long-term growth objective. She does not automatically buy/sell securities to reflect changes in the Schwab 1000 Index. Russell 1000 Index would also be an appropriate index benchmark for this core equity portfolio. At the end of March 2003, the fund was fully invested with 99.8% of total assets invested in stocks. At quarter-end, this fund's trailing 12-month yield was 1.17% per Morningstar, offering some income for investors. At March 2003, the Schwab 1000 Fund had an average market cap of nearly $39 billion, well into the large-cap style box on average. Giant-cap stocks represented 47.8% of stock assets at March 2003; large-caps comprised 30.6% of stock assets; and mid-caps made up 20.1% of stock assets, per Morningstar. So, this fund gives you primarily large-cap exposure, along with some "mid-cap" exposure. The fund's average price valuations reflect a blend of value and growth characteristics, consistently landing in the "core" style box per Lipper and in the "blend" style box per Morningstar. It has all the makings of fine core equity investment, one with low expense and low turnover to boot. At just 8%, the fund's annual turnover ratio is very low in relation to the average U.S. stock fund, increasing its relative tax efficiency. In the next section, we see how Hom has performed in relation to other large-cap blend funds and compared with appropriate equity index benchmarks. Investment Performance Let me start by talking about the fund's long-term returns when compared to other large-cap blend funds. Over the trailing 10- year period through May 31, 2003, the Schwab 1000 Fund produced an annual average total return of 9.5% for investors, basically matching the annualized total returns of both the S&P 500 index and Russell 1000 index, before deduction of expenses. That was strong enough to rank in the 31st percentile (top third) of the large-blend category on a pre-tax return basis, per Morningstar. However, trailing 10-year after-tax returns are even better and reflect the fund's superior tax efficiency. The fund's 10-year "tax-adjusted" annualized return of 9.0% ranks it in the top 8% (top decile) of the Morningstar large-cap blend category. Fund manager Geri Hom has been the fund's lead manager since '95, so she deserves most of the credit for the fund's strong after-tax results over the long run. As you can see from the chart above, Hom has participated in the market rally that started in March. Through June 4, the fund is up 12.95% on a year-to-date return basis, ranking in the top 24% (top quartile) of the large-blend category. The fund's "mid-cap" exposure had helped relative performance, with mid-cap stocks in general doing better than large-caps in this year's market rally. Hom doesn't take too many risks away from the broad indices with this portfolio. Hence, its performance tends to be "average" at worse, with the potential to do better than the average domestic stock fund over time. If someone told you that you could invest in a fund that has beaten two out of three large-cap blend funds over time with the potential to continue doing so, that would be an attractive proposition. Like Vanguard's index products, this Schwab equity index product benefits from its relatively low turnover and low expense, which allows it to remain competitive compared to the average domestic equity fund. Its strategy is simple, efficient and effective in the long run, especially from a tax-adjusted return perspective. Conclusion The Schwab.com website states that indexing can be one of the most economical and rewarding ways to participate in the long- term growth potential of the U.S. equity market (since they are designed to keep pace with the market). The Schwab 1000 Fund's long-term performance has essentially matched that of the broad U.S. indices (S&P 500, Russell 1000, Schwab 1000). In doing so, it has produced above average returns relative to similar large- blend funds with average relative risk for an attractive return to risk tradeoff. The Schwab 1000 Fund is suitable for beginning investors as well as seasoned veterans, and is particularly well suited to regular (taxable) investors. It makes for fine core U.S. equity holding. Steve Wagner Editor, Mutual Investor email@example.com ------------------------------------------------------------ We got trailing stops! Trade online with trailing stops at optionsXpress, at no extra cost Trailing stops based on the option price or the stock price Also place Contingent, Stop Loss, and "One Cancels Other" orders $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees! Go to http://www.optionsxpress.com/marketing.asp?source=oetics23 Note: Options involve risk. 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The Option Investor Newsletter Thursday 06-05-2003 Copyright 2003, All rights reserved. 2 of 3 Redistribution in any form strictly prohibited. In Section Two: Dropped Calls: MEDI, VRTS Dropped Puts: None Daily Results Call Play Updates: AMGN, BBY, DISH, OHP, RJR, SPW New Calls Plays: None Put Play Updates: ATH, IBM, LLL New Put Plays: HCA, NOC **************** 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: ***** MedImmune - MEDI - close: 39.95 change: +2.56 stop: 32.50 Whoa! All the strength in the biotech sector finally rubbed off on shares of MEDI and the stock broke out above the $36.50 level on Wednesday. That breakout appears to have either inspired the bulls or scared the shorts as MEDI vaulted another 6.84 percent today. We opened MEDI as a longer-term call play on April 3rd with a target of $40.00. That target was reached intraday today when MEDI hit $40.24. Part of the motivation to go long MEDI was the up coming June FDA approval of its FluMist product. Here it is June and we have yet to see an approval. Of course the FDA might reject or delay the approval, which could be disastrous for MEDI's stock price. More aggressive traders can hang on and wait for more news or just to see if the bulls can keep MEDI moving higher. Since the stock is up more than 20 percent in the last two weeks and we've hit our target we're going to close this as a successful play. Picked on April 3rd at $34.31 Change since picked: +5.64 Earnings Date 04/23/03 (confirmed) Average Daily Volume = 3.9 million Chart link: --- Veritas Software -VRTS - close: 28.67 change: +0.21 stop: 24.50 There doesn't appear to be anything wrong with VRTS except for the fact that it hasn't obliged to give us a viable entry point. After its breakout last week, we were looking for a pullback to test that breakout level as support, but it just hasn't happened. VRTS appears too extended to chase, so rather than continue to update the play stating that it hasn't been triggered, we're dropping coverage this weekend. We'll keep it on the radar screen and look to reinitiate the play once that pullback does occur. Picked on May 29th at $27.24 Change since picked: +1.43 Earnings Date 07/23/03 (unconfirmed) Average Daily Volume = 9.05 mln Chart link: PUTS: ***** None *********************************************************** DAILY RESULTS *********************************************************** Please view this in COURIER 10 font for alignment ************************************************* CALLS LAST Mon Tue Wed Thu AMGN 65.44 -1.49 0.51 0.43 0.95 Closing High! BBY 42.80 1.19 -0.77 1.27 2.33 Breaking Out DISH 34.40 -0.03 0.18 0.94 0.41 Nearing Target MEDI 39.95 -0.35 0.73 1.31 2.56 Closed at $40 OHP 38.14 -0.08 -0.10 0.40 0.12 Still Cautious RJR 37.63 0.86 1.09 0.36 0.78 Keeps Going SPW 43.92 0.35 -0.15 3.14 1.78 Taking Off VRTS 28.67 -0.63 0.36 0.65 0.21 Closed, no trigger PUTS ATH 74.06 -1.01 -0.09 0.41 1.27 Uh-oh, trouble. HCA 31.45 0.00 0.25 0.25 -1.30 New, breakdown IBM 81.90 -1.58 -3.51 0.43 -2.35 Getting worse LLL 43.50 -0.44 -0.76 0.00 1.10 Bouncing NOC 85.99 -0.39 -0.74 -0.70 -0.31 New, divegence ------------------------------------------------------------ WINNER of Forbes Best of the Web Award optionsXpress voted Favorite Options Site by Forbes Easy screens for spreads, collars, or covered calls Free streaming quotes Real-time option chains, charts + calculators Go to http://www.optionsxpress.com/marketing.asp?source=oetics21 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ******************** PLAY UPDATES - CALLS ******************** Amgen, Inc. - AMGN - close: 65.44 change: +0.95 stop: 63.00*new* Another impressive day of gains in the Biotechnology sector (BTK.X) helped to lift our AMGN play to another 52-week high. It looks like the bulls are intent on challenging that next level of resistance near $66, and if the action in the rest of the market is any indication, they probably won't stop there. Traders that have been taking advantage of the dips following each breakout move are likely starting to get the hang of this game. Buy the dip to support, harvest some gains after the next breakout and then look to do it all over again. We'll continue to apply this strategy until it stops working or until our upper target of $72 is achieved, whichever comes first. The most recent pullback found consistent support just above the $63 level, and since the 10-dma ($63.68) is well above that level now, we're raising our stop to $63 tonight. Picked on May 11th at $61.24 Change since picked: +4.20 Earnings Date 07/22/03 (unconfirmed) Average Daily Volume = 10.8 mln Chart link: --- Best Buy Co. - BBY - close: 42.80 change: +2.33 stop: 42.00*new* Holy Cow! Our target for BBY was $44 and the stock came really close to achieving that on Thursday, printing a high of $43.95. You can thank Gerard Klauer, as the firm upgraded BBY to Outperform this morning, setting off a buying frenzy. After that moonshot, there was some profit taking back to $42.05 and then a rebound into the close, ending just below $43. Just to be perfectly clear, we are not advocating any new entries into the play at this point. BBY is up more than $4.00 from where we picked it and nearing some stiff resistance. It's time to start watching for an attractive exit from the play, so that we can chalk this one up as a winner and start looking for the next one. If you didn't do so today, we're recommending using another push up near $44 as a viable exit. Note that we're getting aggressive with our stop tonight, raising it to $42. While we want to give BBY the opportunity to run still higher, if this rally falls apart, we don't want to give back much of the currently unrealized gains. Picked on June 1st at $38.70 Change since picked: +4.10 Earnings Date 06/18/03 (unconfirmed) Average Daily Volume = 4.10 mln Chart link: --- EchoStar Comm. - DISH - cls: 34.40 chg: +0.41 stop: 32.00*new* The broader market's inability to pull back is not hurting our play in DISH. The stock's slow climb is picking up a little speed and shares are closing at one-year highs. In the news, EchoStar and Allbritton Communications solved their transmission dispute but not much was said about the negotiations. DISH is approaching potential resistance at $35.00. With the stock up more than 10 percent from our entry price conservative traders should be taking some profits and or closing out altogether. We suspect that DISH will be able to trade to the $36.00 level, which would coincide with its rising trendline across its tops (Jan'03 - May '03). We're going to raise our stop loss to $32.00 but anyone wishing to protect a 5 percent gain should consider a stop loss near 32.65. We would not recommend new entries at this level but aggressive traders could target a dip to $33.00. Picked on May 21st at $31.10 Change since picked: +3.30 Earnings Date 05/06/03 (confirmed) Average Daily Volume = 3.3 million Chart link: --- Oxford Health - OHP - cls: 38.14 chg: +0.12 stop: 37.25 *new* OHP seems to be in a lazy drift higher. Intraday ranges have been very narrow and volume has been low the last few days. We remain very cautious on OHP and do not recommend new plays at current levels (look at WLP or UNH). The big news in this sector recently was the Wellpoint (WLP) buyout news of Cobalt (CBZ). What really surprises us is how shares of WLP, the buyer, did not see much of a dip on the news at all. Wall Street must really approve of the deal. Putting action to our cautious words we're raising our stop loss to $37.25, which is just under the simple 10-dma. If you like the sector instead of playing OHP consider a play on WLP, which is rebounding from a small dip and just closed over $85. A run to $90 looks doable. Shares of UNH also look stronger but short-term upside is probably limited to $100. UNH does have a stock split coming up. Don't forget that OHP's management will be speaking at the June 10th Goldman Sachs 24th Annual Global Healthcare Conference. Picked on May 20th at $36.51 Change since picked: +1.63 Earnings Date 05/05/03 (confirmed) Average Daily Volume = 857 thousand Chart link: --- RJ Reynolds Tobacco - RJR - cls: 37.63 chg: +0.78 stop: 34.95*new* The strong steady climb for tobacco maker RJR continues. Investors' thirst for high dividend stocks could remain unsatisfied for weeks and months to come. Shares are quickly approaching potential resistance at $39.00 and new entries are probably better made on pull backs to the $36.00 area. We do note that the 10-dma looks like decent short-term support and conservative traders could use it as a guide to place their stops. We're following our own advice tonight and raising our stop to $34.95. Remember, our profit target is $40.00. Picked on June 3rd at $36.49 Change since picked: +1.14 Earnings Date 07/25/03 (unconfirmed) Average Daily Volume = 1.6 million Chart link: --- SPX Corp. - SPW - close: 43.92 change: +1.78 stop: 42.00*new* Score another victory for the bulls! First we were concerned about the $40 resistance and then the 200-dma. SPW just blasted through both of those levels in the past two days and ended the day just off its high with a more than 4% gain on Thursday. Solid volume has been backing this rally, so we don't want to cut it off just yet. But at the same time, there are some solid gains accrued and we don't want to give them back. After moving up nearly $5 in the past 2 sessions, it should be clear that the time for entries has passed. From here forward, this play is all about managing open positions to maximize gains. To that end, we're aggressively raising our stop to $42 tonight and setting our sights on that bearish resistance line ($46). A charge higher into the $45-46 area should be used to exit open positions and book those gains, as that first test of bearish resistance could result in a sharp reversal. Picked on May 27th at $36.86 Change since picked: +7.06 Earnings Date 07/22/03 (unconfirmed) Average Daily Volume = 1.11 mln Chart link: ************** NEW CALL PLAYS ************** None ------------------------------------------------------------ optionsXpress has "...a lot of bang for the buck."--Barron's $1.50 /contract (10+ contracts) or $14.95 Min. No hidden fees Easy screens for spreads, collars, or covered calls! Contingent, Stop Loss, Trailing stop, or OCO 8 different online tools for options pricing, strategy, and charting Go to http://www.optionsxpress.com/marketing.asp?source=oetics25 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ******************* PLAY UPDATES - PUTS ******************* Anthem, Inc. - ATH - close: 74.06 change: +1.27 stop: 75.50 Sometimes the market delivers precisely what you ask for and you're left asking if that was what you really wanted. That's certainly the case with our ATH play. The breakdown below the bottom of the stock's ascending channel looked good enough on Tuesday and a rebound to the $74 level looked like an ideal entry point on the rollover. Well, today's action delivered the rebound to the $74 level, complete with a midday rollover. The problem is that the dip was bought and ATH ended right back at the $74 level. So, is this a viable entry point or not? Normally, we'd give a qualified yes, but the strength of today's rebound has us thinking the breakdown was a bear trap. Adding credence to that thought process is the daily Stochastics, which are launching a nice bullish reversal over the past two days, and it appears likely to continue tomorrow. Aggressive traders can certainly consider new positions on a rollover in the $74-75 area, with the understanding that a rollover could be reversed just as quickly as today's was. The best approach for those looking to enter the play at this elevated level would be to look for confirming weakness from the HMO index. That weakness was nowhere to be found on Thursday, as the index charged to a fresh all-time high. While it won't provide quite as good an entry point, the more conservative entry strategy would now be to wait for a break below the $71.70 level (just below this week's intraday lows) before initiating new positions. Picked on June 3rd at $72.38 Change since picked: +1.68 Earnings Date 07/30/03 (unconfirmed) Average Daily Volume = 1.19 mln Chart link: --- Intl Business Machine - IBM - cls: 81.90 chg: -2.35 stop: 85.01*new* Hmm... it seems we have more interesting price action in shares of IBM today. The stock dropped another 2.78 percent on volume more than twice the normal. The headlines were generally positive for Big Blue. IBM is once again back on top as the #1 seller of servers worldwide. Plus, Standard & Poor's said the current investigation will not affect IBM's credit ratings, at least not yet. Still, the good news was not enough to soothe what appears to be concerned investors over the SEC probe into IBM's revenue recognition. Shares closed just 15 cents off their low for the day, which is not a good sign for Friday's session. Conservative traders should be preparing to exit as IBM approaches the $80 level. Actually, tomorrow is not a bad time to start taking at least some profits off the table as Mondays have been pretty bullish lately (not that IBM has been participating). The question more aggressive traders are probably asking is this: "will IBM find support at its 200-dma, which also coincides with support on its PnF chart near $78? or will the SEC news achieve enough momentum to have Big Blue retest stronger support near $75.00?" If you're willing to be vigilant in moving stops down then one can leave the play open and see how far it goes. We're going to lower our stop to $85.01 but the $84 level doesn't look bad either. Picked on May 29th at $87.36 Change since picked: -5.46 Earnings Date 04/14/03 (confirmed) Average Daily Volume = 8.2 Million Chart link: --- L-3 Comms -LLL - close: 43.50 change: +1.10 stop: 44.10 Here we go again! Just when it seemed LLL was headed south, those pesky bulls came out for another romp. The 50-dma (currently $42.02) looks like it spoiled our party again, providing support on Wednesday and the launch point for today's sharp rebound. As noted on Tuesday, if LLL is able to move back over the $44 level, that would be a clear sign that the bulls are in charge. Attempting new entries on a rollover near current levels should only be considered by aggressive traders, given the stock's recent resilience. Before it becomes clear that there is any decent downside potential for the play, LLL will need to close below that 50-dma, preferably on strong volume. The other hint that this play may be doomed to triggering its stop comes from the Defense index (DFI.X), which rallied through its mid-May highs and closed above the 200-dma for the first time since last Summer. Picked on May 20th at $41.94 Change since picked: +1.56 Earnings Date 07/22/03 (unconfirmed) Average Daily Volume = 1.38 mln Chart link: ************* NEW PUT PLAYS ************* HCA, Inc. - HCA - close: 31.45 change: -1.30 stop: 34.00 Company Description: HCA Inc. is a healthcare services company that, as of the end of 2002, operated 179 hospitals, comprised of 166 general, acute care hospitals, six psychiatric hospitals, one rehabilitation hospital and six hospitals included in joint ventures. In addition, the company operated 78 free-standing surgery centers. The company's facilities are located in 22 states, England and Switzerland. The general, acute care hospitals provide a full range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. Why we like it: After just the briefest of consolidations earlier this week the Health Care Payor's index (HMO.X) surged to a fresh all-time high on Thursday, ending right at its high of the day with a 1.2% gain. While that may not seem too impressive, it needs to be taken in the context of more than 28% since the middle of April. In marked contrast to this unmitigated strength, shares of HCA are a clear picture of weakness. The stock suffered a major selloff in mid-April following its Q1 earnings warning, falling as low as the $28 level before gradually clawing its way back to the $33 area on the back of the broad market rally. But rather than continue to advance, HCA has found a firm lid on its price in the $33.50 area for the past month, building a compelling picture of relative weakness. That weakness really began to appear on Thursday, as the stock broke sharply lower on volume that more than doubled the ADV. Should this fledgling selloff continue, a retest of the April lows seems quite likely. The daily Stochastics are rolling lower in bearish fashion and have now recorded a series of 3 lower highs in the past month. In addition, the MACD is just giving a bearish crossover, and it is occurring right at the zero line. All technical signs point to further price weakness, and the PnF chart confirms this weakness as the stock has been unable to get anywhere close to giving a new Buy signal. Price action over the past month has demonstrated that the $33.50 level is a firm ceiling for the stock, allowing us to confidently place our stop at $34. The ideal entry setup would come from a failed rebound near the 20- dma (currently $32.74), but we may have to settle for a weaker rebound entry. Note that the top of today's gap was near $32.50, and that should provide solid resistance as well. Traders willing to chase the stock lower will want to look for a drop under $30.75 (below today's intraday low and support from late April) to trigger an entry. Look for continued weakness relative to the HMO index before playing. Suggested Options: Short-term traders will want to focus on the June 32 Put, as it will provide the best return for a short-term play. Those looking for a larger move down below the $30 level will want to utilize the July 30 Put, which provides greater insulation from the spectre of time decay. BUY PUT JUN-32 HCA-RO OI=1854 at $1.45 SL=0.75 BUY PUT JUN-30 HCA-RN OI=1145 at $0.35 SL=0.20 BUY PUT JUL-30 HCA-SN OI= 650 at $0.95 SL=0.50 Annotated Chart of HCA: Picked on June 3rd at $31.45 Change since picked: +0.00 Earnings Date 07/22/03 (unconfirmed) Average Daily Volume = 5.22 mln Chart link: --- Northrop Gruman - NOC - close: 85.99 change: -0.31 stop: 88.75 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 press release) Why We Like It: We think the market is trying to tell us something. The DFI defense index has just closed over its simple 200-dma since its inception. After weeks of consolidating in the 500-505 range it closed at 508 today. Yet at the same time shares of NOC, the country's second biggest defense contractor, has been slowly sliding. Today is the second day in a row that NOC has closed under its simple 50-dma. NOC has been a complete laggard compared to the overall strength in the markets. What makes this perplexing is that NOC has confirmed it would turn in double- digit revenue and earnings growth for the next two years as defense budgets rise. What does Wall Street see that we don't? The long-term down trend, which has been reversed in so many sectors and stocks across the markets, is still very much intact for NOC. We suspect that NOC could retest support at the $80.00 mark and recent action offers us an entry point for a put play. However, because the broader markets have been so strong, we are going to use a TRIGGER at 85.74 to leg us into this NOC play. The last couple of weeks have shown a trend of lower highs for NOC but we'd feel more comfortable opening a position as the stock takes out today's low. One word of CAUTION, NOC's point-and-figure chart does show the stock currently testing bullish support at $84.00-85.00. PnF aficionados may want to wait for that support to break. Suggested Options: We're going to list June, July and August puts for NOC but with two weeks left before June expiration our preference would be for July strikes. BUY PUT JUN 85 NOC-RQ OI=3083 at $1.85 SL=0.90 BUY PUT JUN 80 NOC-RP OI=2172 at $0.50 SL=0.00 *more risky* BUY PUT JUL 85 NOC-SQ OI= 655 at $3.20 SL=1.60 BUY PUT JUL 80 NOC-SP OI= 305 at $1.45 SL=.0.75 BUY PUT AUG 80 NOC-TP OI= 492 at $2.15 SL=1.00 Annotated Chart of NOC Picked on June 5th at $xx.xx Change since picked: -0.00 Earnings Date 07/29/03 (unconfirmed) Average Daily Volume = 1.6 million Chart link: ------------------------------------------------------------ Quit paying fees for limit orders or minimum equity No hidden fees for limit orders or balances $1.50 /contract (10+ contracts) or $14.95 minimum. Zero minimum deposit required to open an account Free streaming quotes Go to http://www.optionsxpress.com/marketing.asp?source=oetics24 Note: Options involve risk. 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The Option Investor Newsletter Thursday 06-05-2003 Copyright 2003, All rights reserved. 3 of 3 Redistribution in any form strictly prohibited. In Section Three: Play of the Day: PUT - HCA Traders Corner: What Is Progress? Learning From The Mistakes Of Others! ********************* PLAY OF THE DAY - PUT ********************* HCA, Inc. - HCA - close: 31.45 change: -1.30 stop: 34.00 Company Description: HCA Inc. is a healthcare services company that, as of the end of 2002, operated 179 hospitals, comprised of 166 general, acute care hospitals, six psychiatric hospitals, one rehabilitation hospital and six hospitals included in joint ventures. In addition, the company operated 78 free-standing surgery centers. The company's facilities are located in 22 states, England and Switzerland. The general, acute care hospitals provide a full range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. Why we like it: After just the briefest of consolidations earlier this week the Health Care Payor's index (HMO.X) surged to a fresh all-time high on Thursday, ending right at its high of the day with a 1.2% gain. While that may not seem too impressive, it needs to be taken in the context of more than 28% since the middle of April. In marked contrast to this unmitigated strength, shares of HCA are a clear picture of weakness. The stock suffered a major selloff in mid-April following its Q1 earnings warning, falling as low as the $28 level before gradually clawing its way back to the $33 area on the back of the broad market rally. But rather than continue to advance, HCA has found a firm lid on its price in the $33.50 area for the past month, building a compelling picture of relative weakness. That weakness really began to appear on Thursday, as the stock broke sharply lower on volume that more than doubled the ADV. Should this fledgling selloff continue, a retest of the April lows seems quite likely. The daily Stochastics are rolling lower in bearish fashion and have now recorded a series of 3 lower highs in the past month. In addition, the MACD is just giving a bearish crossover, and it is occurring right at the zero line. All technical signs point to further price weakness, and the PnF chart confirms this weakness as the stock has been unable to get anywhere close to giving a new Buy signal. Price action over the past month has demonstrated that the $33.50 level is a firm ceiling for the stock, allowing us to confidently place our stop at $34. The ideal entry setup would come from a failed rebound near the 20- dma (currently $32.74), but we may have to settle for a weaker rebound entry. Note that the top of today's gap was near $32.50, and that should provide solid resistance as well. Traders willing to chase the stock lower will want to look for a drop under $30.75 (below today's intraday low and support from late April) to trigger an entry. Look for continued weakness relative to the HMO index before playing. Suggested Options: Short-term traders will want to focus on the June 32 Put, as it will provide the best return for a short-term play. Those looking for a larger move down below the $30 level will want to utilize the July 30 Put, which provides greater insulation from the spectre of time decay. BUY PUT JUN-32 HCA-RO OI=1854 at $1.45 SL=0.75 BUY PUT JUN-30 HCA-RN OI=1145 at $0.35 SL=0.20 BUY PUT JUL-30 HCA-SN OI= 650 at $0.95 SL=0.50 Annotated Chart of HCA: Picked on June 3rd at $31.45 Change since picked: +0.00 Earnings Date 07/22/03 (unconfirmed) Average Daily Volume = 5.22 mln Chart link: ------------------------------------------------------------ VOTED one of "Best Online Brokers" (4 stars)--Barron's optionsXpress's "order-entry screens...go far beyond... other online broker sites"--Barron's 8 different online tools for options pricing, strategy, and charting Access to options specialists via email, phone or live chat online Real-Time Buying Power, Account Balances or Cancels Go to http://www.optionsxpress.com/marketing.asp?source=oetics22 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ************** TRADERS CORNER ************** What Is Progress? Learning From The Mistakes Of Others! By Mike Parnos, Investing With Attitude Life isn't all peaches and cream. As you know, when you go hunting, sometime you get the bear and sometimes the bear gets you. After teaching the world how to make placemats out of banana peels, Martha Stewart, will likely be making her caramel apples for her fellow inmates in the foreseeable future. You can expect sales of striped sheets to go through the roof at Kmart. As some of our positions approach or violate our range (and you haven't lived until you've had your range violated!), I receive a steady stream of email questions. Since all trades are not going to cooperate and provide us with profit, it's nice to have choices. Today, we're going to address a few of these questions. The idea here is to get you used to thinking and exploring the alternatives. If we can learn from other people's mistakes instead of our own, it's progress – real progress. ______________________________________________________________ Hi Mike, It looks like SPX is threatening the upper limits of this play. What are some of my choices for adjustments? Is it better to roll or just simply exit the play? Just trying to get prepared. What about the bottom (bull put) part of the Iron Condor? Response: (At this writing, SPX was at 986.24) You have the right attitude. You probably should have asked this question before you put on the trade, but at least you didn't wait until you were in way over your cajones. Your adjustment will depend on what you think the market will do. Here are a few possible scenarios. Keep in mind that a lot can happen in 2 1/2 weeks -- good and bad. 1. You can simply close out the SPX 995/1010 for about $5.70. We took in $2.90. The loss would be about $2.80 2. You can ride it out and wait for the pullback that has to happen eventually (hopefully while we're still young). 3. You can close out the June SPX 995/1010 for about $5.70. Then . . a) If you are still bearish, you can roll the spread out to a June or July SPX bear call spread. We want to try to make back the additional $2.80 it cost us, over and above our $2.90 credit, to unwind our June 995/1010 spread. For instance, the June 1010/1025 bear call spread currently could be sold for appx. $2.80. That would give you an additional 15-point cushion to the upside. b) If you are bullish, we could put on a bull put spread below with the expectation that the SPX will continue up. For instance, the June 965/950 bull put spread would provide a credit of about $2.65 -- that would just about cover the $2.80 cost. Regarding the bottom part of the condor. Check out the prices. With the underlying trading near the upper limits of it's range, it may be worth your while to close out the bottom (bull put) spread – or at least buy back the short option if it's not too expensive. When you buy back your short put, you no longer have an obligation to perform (except with your wife, of course). It's no longer a spread, thereby freeing up the maintenance held against the bull put spread. That money may be useful if you have to make adjustments that result in additional contracts. ______________________________________________________________ Hi Mike, When would be the time a rollover is use? I'm in the following bear call spread on GM which is going against me and don't want to be called. Sold GM June $32.50 call @ $1.70 Bought BM June $35 call @ $.50 Net credit: $1.20 I still think GM will go down considerably. How do I protect myself without buying back the June $32.50 back? A rollover??? Thank you. Response: Your choices are: a) Let it ride and cross your fingers it reverses in the next three weeks. b) Close out the June $32.5/$35 bear call spread and take a $1.10 loss. c) Close out the June spread and roll to a July $35/$37.50 spread for a credit of $1.80. If GM finished below $35 in July, you'd still have a small profit of $.60. d) To roll out to the July $35/$37.50 spread, but increase the number of contracts that would allow the credit to replenish the $2.30 it takes to close out the June position. For example, if you did 10 contracts in the June position, you'd need to do 13 contracts. If you really have strong feelings about GM, fine. If not, keep in mind that, if you lose money in a stock, you don't have to make it back in that same stock. ______________________________________________________________ CPTI JUNE POSITION UPDATE June Position #1 – SPX Iron Condor – Currently at 990.14 We sold 5 contracts of SPX June 995 calls and 5 contracts of SPX June 895 puts. For protection we bought 5 contracts of SPX June 1010 calls and 5 contracts of SPX June 880 puts. Total net credit of $2.90. We're giving the S&P 500 a 100-point range. We'll get our maximum profit of $1,450 if SPX closes within a huge 895 to 995 range. Our exposure is $12.10 ($15 points less the $2.90 credit). If it works, it's about a 24% return on risk. _____________________________________________________________ June Position #2 – BBH Iron Condor – Aborted _____________________________________________________________ June Position #3 – TOL – Bear Call Spread Plus – Currently at $31.01 Sell 10 contracts of June TOL $25 calls @ $1.40 Buy 20 contracts of June TOL $30 calls @ $.15 Net credit of $1.10 We're slightly bearish on the housing market and believe TOL will finish below $25. But, just in case we're wrong, we're buying 10 additional contracts of the $30 calls to protect ourselves. The market has gone against us. We have two weeks for TOL to move back down to $25 or up to $35. Maximum potential profit is $1,100. ______________________________________________________________ June Position #4 – COF Iron Condor – Currently at $53.16 Sell 10 contracts of June COF $47.50 calls @ $1.55 Buy 10 contracts of June COF $50 calls @ $.95 Net credit of $.60 Sell 10 contracts of June COF $40 puts @ $1.05 Buy 10 contracts of June COF $37.50 puts @ $.65 Net credit of $.40 Total credit of $1.00. We're giving COF a $7.50 range. This is a credit card stock that appears to have topped out and there's support around $40. We'll get our maximum profit of $1,000 if COF closes between $40 and $47.50. The nice part is that our exposure is only $1.50 ($2.50 less our $1.00 credit). If it works, it's an 80% return on risk. ______________________________________________________________ June Position #5 – QQQ ITM Baby Strangle – Currently at $30.42 Buy 10 contracts of the July QQQ $30 puts @ $2.05 Buy 10 contracts of the July QQQ $28 calls @ $1.80 Total debit of $3.85. The QQQs have made a big move up. It's either going to break through resistance or bounce of and head back down. Our objective is for a $3-4 move in the next month. One of our long options will hopefully pay for almost the entire position. That will leave our other long option, which is now practically free, poised for the bounce back as the QQQs reverse. Our exposure is only $1.85 because we have $2.00 of intrinsic value. This worked quite well in the past for us. It will take some time to play out so be a little patient. With the move up, we find ourselves in a profitable position. ____________________________________________________________ Unofficial CPTI Replacement PositionQQQ Strangle - $30.42 We bought 10 contracts of the QQQ June $31 calls @ $.10 and 10 contracts of the QQQ June $25 calls @ $.10. Total debit is only $200. Pretty cheap, huh? We're playing for a big move in the QQQs. If the QQQs move $3-4 in the next few weeks, our long put or call could easily be worth $.75 - $1.25. That would be a nice return – IF it happens. If not, que sera, sera – whatever will be will be. We're only risking a total of $.20. Greater risk takers (speculators) can buy closer strikes. The $26 put and the $30 call would cost $.20 each or a total of $.40 ($400 for 10 contracts. The benefit is that the delta is slightly higher and a smaller move would be necessary to get into the profit zone. Good News! With the continued move up, our $200 bet is now worth $550. If you bet $400, it's now worth $1,150. _____________________________________________________________ New To The CPTI? Are you a new Couch Potato Trading Institute student? Do you have questions about our plays or our strategies? Feel free to email me your questions. An excellent source for new students is the OptionInvestor archives where we've been discussing strategies and answering questions since last July. To find past CPTI (Mike Parnos) articles, look under "Education" and click on "Traders Corner." They're waiting for you 24/7 ______________________________________________________________ Parting Thought . . . One of the top 25 Country/Western songs of all time: "I'm Still Missin' You Baby, But My Aim's Gettin' Better" An actual classified ad: For sale: Antique desk suitable for lady with thick legs and large drawers. ______________________________________________________________ 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 Master Strategist and HCP ------------------------------------------------------------ We got trailing stops! Trade online with trailing stops at optionsXpress, at no extra cost Trailing stops based on the option price or the stock price Also place Contingent, Stop Loss, and "One Cancels Other" orders $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees! Go to http://www.optionsxpress.com/marketing.asp?source=oetics23 Note: Options involve risk. Risk disclosure: http://www.optionsxpress.com/welcome_risk_index.htm ------------------------------------------------------------ ********** 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
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