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Daily Newsletter, Wednesday, 06/11/2003

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The Option Investor Newsletter                Wednesday 06-11-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Outside upside day
Futures Wrap: Push higher
Index Trader Wrap: A bull in bear's clothing?
Weekly Fund Family Profile: Sit Mutual Funds


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
      06-11-2003           High     Low     Volume Advance/Decline
DJIA     9183.22 +128.33  9183.22  9038.07 1.84 bln   2315/ 982
NASDAQ   1646.02 + 18.35  1647.57  1612.22 1.89 bln   1872/1299
S&P 100   501.95 +  5.86   502.05   494.59   Totals   4187/1381
S&P 500   997.48 + 12.64   997.48   981.61
RUS 2000  455.50 +  4.54   454.50   447.76
DJ TRANS 2483.17 + 24.74  2485.49  2444.56
VIX        22.12 -  0.01    22.97    21.79
VXN        33.74 -  0.26    34.97    33.58
TRIN       0.75
PUT/CALL   0.66
*******************************************************************

Outside upside day
Jonathan Levinson

The indices ate up bad news today, rallying off the Beige Book at
2PM.  They broke northward out of yesterday's inside day on
moderately higher volume after a mostly indecisive session, with
advancing volume nearly triple declining volume on the NYSE and
more than double on the Nasdaq.


Daily Chart of the INDU




The close at the session highs printed bullish hammers on the
daily candles for the Dow and the Nasdaq.  Note the stronger
showing from the Dow today.  The rally highs are the bulls' next
target.  The internals were strong today, though the oscillators
and bullish percent readings are toppy.

Daily Chart of the COMPX






Weekly chart of the Ten Year Treasury Yield




Not that we needed them to confirm it, but the Mortgage Bankers
Association of America announced that the average interest rate
on 30-year fixed-rate mortgages dropped to 5.06 percent in the
latest reporting week, erasing the previous week's alltime record
low rate of 5.13 percent.   Nevertheless, seasonally-adjusted
demand for mortgage requests fell to 1,684.6 for the week ended
June 6, down 9.3% from the record level set last week, the first
down week in 5 weeks.  The refi index, measuring demand for loans
to refinance was also down 9.3% over the previous week, though
it's still up 400% over its level from this time last year.
Demand for home loans fell by 9%.

MZM chart




MZM is a measure compiled by the St. Louis fed, and is commonly
used as measure of the money supply.  There are numerous other
charts which all tell the same story, but my goal is to briefly
touch on the implications of the multidecade drop in interest
rates.  Against the backdrop of the fed's continual worries about
"disinflation" and its eagerness to run its printing presses, in
Governor Bernanke's words, we see the surge in money supply.
This coincides well with the more than 20% drop in the US Dollar
Index since January 2002, and the corresponding rally in
commodities.

Chart of Commercial and Industrial Loans




So far, the surge in money supply has not found its way into
loans to industry, but rather in loans to homeowners.  Spurred by
lower rates than many of us have seen in our lifetimes, consumers
have bought and borrowed against their homes in record numbers.
This surge in consumer borrowing has helped to buoy the economy
on demand spurred by the historic availability of cheap money.
Whether this is sustainable, which I don't believe it to be, and
whether this is the better use of the new money added to the
financial system, which I don't believe either, will have to be
seen.  But with this week's nearly 10% drop in mortgage activity
over the previous week, we could be seeing the beginnings of a
reversal to the 400% surge over the past year.

This discussion is only intended to contextualize the action in
treasuries, the USD, and this week's mortgage data.  I realize
that I cannot do the subject justice in two or three paragraphs.
My own view is that economic expansion can be stimulated
temporarily with borrowed money, but at some point real demand
needs to take over.  The devaluation of the dollar via the
suppression of interest rates has resulted in a rapid jump in
home prices, acceleration in auto sales and other consumer-
related goods.  But unemployment remains persistent, and profits
remain elusive.  It is my hope that the fed will be successful in
its campaign and that employment, productivity and demand will
pick up soon.

The Federal Reserve's Beige Book was released at 2:00PM EST.  The
headline was that the fed sees the US economy as "sluggish" in
most US areas in April and May, and that while the end of the war
had provided some boost to US business and consumer sentiment, it
was not enough to materially assist the US economy.  The fed's
next meeting on interest rates is scheduled for June 24-25.  The
federal funds rate is currently at 1.25, a 41 year low.

In other debt-related news, the SEC upped the status of its
investigation into FRE, the U.S.'s second largest mortgage-debt
issuer, to "formal" from "informal," and can now issue subpoenas
for witnesses and documents. The US attorney's office also
announced an investigation.  Without mentioning FRE, Fed Governor
Susan Schmidt Bies, addressing the American Bankers Association's
annual regulatory compliance conference, said that the status quo
of corporate governance is "unacceptable and must change."  Ms.
Bies added that it is unclear whether it was personal or systemic
failure behind the alleged improprieties at FRE.

OPEC announced its decision to leave supply quotas unchanged at
25.4 million barrels per day, adding that it would push for
tighter compliance with existing production limits.  The cartel
also decided to revisit the supply and demand situation in a
special meeting on July 31 in Vienna. July crude was trading
above $32 a barrel, a 3 month high. This jump was aided by a
large decline in last week's U.S. inventories, with the Energy
Department reporting a drop in crude inventories of 4.6 million
barrels to 284.4 million barrels for the week ended June 6,
surprising analysts yet again. Gasoline inventories rose 2.6
million barrels to 209.9 million barrels during that week.

Biotechs were strong today on bullish comments about the sector
from Merrill Lynch.  As well, LLY said before the bell that it
expects second-quarter results to come in at the high end of the
range of 59 to 61 cents per share. The company also reaffirmed
its forecast before items for a profit of $2.50 to $2.60 per
share for the full year 2003. As well, LLY gave an update on FDA
reinspection of its dry products and injectable facilities in
Indianapolis.  The stock was strong throughout the session.

DELL and GTW were both higher, reaffirming guidance at the Bear
Stearns Technology Conference in New York.

After the bell, the Semiconductor Industry Association lowered
its industry-wide growth target for 2003 to 10.1 percent from a
recently reduced range of 10 to 15 percent. The Association
expects growth of 16.8 percent versus its previous projection of
22 percent.  The Qubes dropped all of a nickel on the news.

For tomorrow, we have a full slate of economic data due before the
bell:

               Report                     Briefing  Market  Prior
                                          Expects   Expects
Jun 12 8:30 AM Business Inventories Apr - 0.2%       0.2%   0.4%
Jun 12 8:30 AM Export Prices ex-ag. May - NA         NA    -0.1%
Jun 12 8:30 AM Import Prices ex-oil May - NA         NA    -0.9%
Jun 12 8:30 AM Initial Claims     06/07 - 430K       425K   442K
Jun 12 8:30 AM Retail Sales         May - 0.2%       0.0%  -0.1%
Jun 12 8:30 AM Retail Sales ex-auto May - 0.4%       0.2%  -0.9%


Last Friday gave us a high volume reversal at the rally's peak.
We had been observing that at then current levels, the risk-
reward had become unfavorable for bulls.  The pullback from
Friday appears to have been a routine "backing and filling" move,
but note that many indicators, such as the bullish percents,
never actually eased out of overbought territory.  So, for the
moment, this remains a trending move.  Any of the above data
could set off the bomb that gets the sellers motivated.  So far,
it remains my belief that the simultaneous strength in equities
and bonds is a function of the fed's manipulation of the money
supply through open market operations and other mechanisms.
Regardless of the cause, equities have shown a great
imperviousness to bad news, and a flagrant disregard for
resistance levels.  It may come rocketing back down, but so long
as these strong bad-news bounces persist, bearish plays remain
risky.  Given the extension of the rally, so do bullish plays.
The solution is solid account management and tight stops for
directional plays, and premium-based strategies such as those
profiled by Ray and Mike.  See you at the bell!


************
FUTURES WRAP
************

Push higher
Jonathan Levinson

The bad news bulls were back in town, jumping all over the
Federal Reserve Beige Book at 2PM.  The inside day printed
yesterday resolved itself to the upside, with the YM leading the
charge for a change and challenging its rally highs.  Bellwether
GE broke to new yearly highs during the session, with most of the
action across the indices only commencing after 2PM.


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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03M     1009   1003    992    986    976
YM03M     9281   9231   9136   9086   8991
NQ03M     1252   1241   1220   1208   1187


10 minute chart of the US Dollar Index




The US Dollar Index began selling off from a high just above
93.60 at midnight and bounced from a low in the 92.90 area.
We've been seeing increasingly violent swings in the US Dollar
Index- each day seems to bring another massive swing higher or
lower.

Daily chart of June gold




June gold performed well on the selloff, closing up 3.20 at
355.40 for an inside day.  The commodity futures index (CRB) was
up .37 to 237.99, led by cotton, corn, coffee, cocoa, copper,
precious metals, and oil.  July crude oil hit a 3 month high,
closing at 32.35.


Daily NQ candles




The ND contract closed just below resistance at 1230.  The
stochastic downphase still in progress gave a hiccup, and is in
danger of truncating prematurely if the bullrun that started at
2PM persist tomorrow on a closing basis.  Note that unlike its
previous visit to the 1230 level, there is no Bollinger band
resistance for this try, and so I expect that level to be weaker
than we've previously seen.  As one reader wrote me today, "We
don't need no stinkin resistance" [sic.] and that certainly
appears to be the case tonight.

30 minute 20 day chart of the NQ




Our loquacious reader was absolutely correct, as the NQ managed
to cause a bear flag failure on the 30 minute candle chart.  The
stochastics are trending higher, maxxed out in overbought
territory, and the MacD shows no sign of stopping here. 1230
again appears as resistance, after which, the rally high could be
tested.

Daily ES candles





The S&P futures outperformed the NQ contract, taking out the
equivalent of the NQ's 1230 level, closing at its high of the day
and aiming for the rally highs as next resistance.  There were no
buy signals on the daily oscillators, but another closing high or
two will change that.

20 day 30 minute chart of the ES




We got the same bear flag failure on the 30 minute candles, and
the stochastic is trending higher as well.  The Bollinger band
violation could provide some resistance at tomorrow's open, but
there's little else of bearish consequence on the 30 minute
chart, and bulls can sleep easy tonight.

Daily YM candles




The YM contract led the charge, and closed just below its spike
high of the year.  I expect 9050 to provide meaningful support if
the high fails to get taken out during tomorrow's session.


20 day 30 minute chart of the YM




The bear flag failure was most pronounced in the YM, and as the
30 minute chart shows, we are within gapping distance of a new
year high.  For tomorrow, there's a plethora of economic data due
at 8:30AM, and any bullish surprise, or, for that matter, even a
bearish surprise could provide the spark to send bulls over the
top and into the airball zone.  Arguably, the negative Beige Book
was expected, but there was little to incentivize bulls in it,
not even the promise of a rate cut, which is also expected.  As
Art Cashin reportedly said, not only have the markets priced in
the future, they've also priced in the hereafter.  Caution is
advised at current heights.


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

A bull in bear's clothing?

I have mixed emotions as I write this evening's Index Trader wrap
as I feel like a bull that was wearing bearish clothing into
yesterday's close.

I hate losing trades.  While I take a losing trade rather hard
and personal, I've learned to not dwell on it, and try and get
back on trend.

Just how the MARKETS were able to simply shrug off another
warning from the wireless handset sector in Texas Instruments
(NYSE:TXN) $18.86 -7.5%, when I would have thought market
participants might have been much more eager to sell profits at
these higher levels of market and sector risk, the major indexes
pushed back higher and once again look to challenge yet another
"top," or in this case, Friday's highs.

I thought for a moment I was developing arthritis in my right
index finger as the S&P 500 Index (SPX.X) 997.48 +1.28% made its
way above our WEEKLY pivot of 986.35, as it was difficult to pull
the trigger, or click the mouse and close a bearish trade.  But
when the SPX came back to test the 986 level and rebound from
there to then take out the morning highs of 990, the rush was on
as many bears turned bullish with Friday's highs back in play.

With failure, perhaps comes success for those that were willing
to take a shot at a bullish trade in the NASDAQ-100 Tracking
Stock (AMEX:QQQ) $30.55 +1.12% from today's profile of $30.12.  I
should have stuck with my original $30.04 profile, but the
ability for the QQQ to trade its WEEKLY Pivot early in the
morning, had me getting a little more aggressive.  Had I known
some guy in Israel was going to blow himself up along with others
on a bus, I might have left my entry point at $30.04.

Here's a snapshot of my "mindset" and observations from this
morning's market monitor.

Market Monitor - 10:23 to 10:50 AM EST




To save some room, I just clicked on my posts (Jeff Bailey) to
look back on my mindset and observations.  Here's the chart of
the SPX that I was drawing up just minutes before the 10:23:26
post.

S&P 500 Index Chart (SPX.X) - 5-minute bars




Computers may have been "smarter than me" after reading last
night's Index Trader Wrap, as the morning pull back stopped dead
in its tracks at today's DAILY Pivot of 981.87.  Hey!  That's
right where I had profiled the bearish trade on break below 982.
There was still a shot at downside as long as the WEEKLY pivot
held resistance.  Wasn't there?

Let's stay focused on the S&P 500 (SPX.X) a little bit longer
tonight.  Here I'm going to show a chart of the SPX on 30-minute
intervals.  This allows us to still focus on some of the intra-
day action, see what took place, but also incorporate what took
place on Friday, that we as traders might want to be alert to
tomorrow.

S&P 500 Index Chart - 30-minute intervals




I've placed tomorrow DAILY pivot retracement (gold/brown) on the
SPX 30-minute chart as there are two levels that I think traders
need to be cognizant of.

The first level is right at 1,002 (thinking psychological 1,000
also).  My thinking here is this.  Last week, we thought the SPX
might be set to see a "blow off move higher" and Friday's move to
1,006 might tie in with that analysis.  At some point, when I
don't know, we would expect, or look for a lower high for some
type of sign of more prolonged "profit taking."  If so, then I
still want to monitor and at least understand that such a
technical pattern could be found if the SPX trades the upper-end
of our regression channel, but finds resistance there and begins
to weaken.  This type of trade then may make sense as to the
"blow off" move we looked for earlier last week.

From there, the second level.  On Friday's reversal, there is
only ONE explanation I can come up with for the reversal Friday,
when the SPX surged from 990 to roughly 1,006 and quickly
reversed those gains.  Remember!  Program trading curbs were in
that day, but SOMEBODY had the 1,006 or even 1,005 level in mind
as a level they were going to sell "come heck or high water!"

Yes!  You are darned right I'm looking for resistance and areas
where a bull could get their head handed to them.

As I review the above chart, I'd put myself in the position of
being long going into Friday's open.  If I didn't sell strength
at MONTHLY R2, then HOW COULD I AS A BULL HAVE PROTECTED MYSELF?

How about a stop just under 992?  Which is tomorrow's DAILY
Pivot.

Now, do you see that little "break" below the 975 level?  Doesn't
that look like a little "trap?"  I still feel the SPX is closer
to a top than a bottom at these higher levels of bullish %, and
I'd be cognizant of a "trap" for bullish on a move above 1,008,
that quickly gets reversed back below 1,001.99.

Today's action saw a net gain of 0.2% for the S&P 500 Bullish %
($BPSPX), so a net gain of 1 stock to a reversing point and
figure buy signal.  This has the bullish % back at 82%.

Now... lets back off the intra-day stuff for a minute and use the
S&P 100 Index (OEX.X) 501.95 +1.18% daily interval chart to take
in a bigger picture of things.  One sign of trouble for my
bearish trade in the SPX presented itself last night when the OEX
closed above its WEEKLY pivot and was perhaps further present
this morning when the OEX pullback at the open found support
right near the WEEKLY pivot.  Once again... when the little
"intra-day" head/shoulder top pattern failed to hold at the
"right shoulder" the race was on for bears to cover.  Bulls will
keep making bears pay on this "false pattern" until bulls see a
losing trade.

S&P 100 Index Chart - Daily Interval




The OEX was the only index that did NOT have an "inside day"
associated with its bar chart, as yesterday's high exceeded
Monday's high.  Still, a bullish trader could "pretend" that it
was and at higher levels of bullish %, follow with a stop just
below today's low, which would tie in nicely with the WEEKLY
pivot.

One thing I want to discuss was a question sent to me from a
trader regarding my comments on the Stochastics oscillator from
last night in the SPX.  The question was.... "should we look for
a two day move higher, then consolidation for 5-days and a break
back lower?"

I've said before, that I'm not a big "Stochastics trader," and
will only use this oscillator as a partial weighting in my
analysis (about 10%).  I'm more of a supply/demand trader (60%
weighting).

Due to horizontal space limitations, I can show the January
relative highs, but when the OEX was trading sideways around the
475 level as Stochastics were turning back up from similar levels
as they are now, that 475 level was right at the January relative
highs and I would imagine, that just like you and I were
monitoring that as a key level of resistance on the strong
rebound from the lows, other technicians and traders were doing
the same thing.

Two things are "different now."  One is... overhead supply of
stock is VERY limited (one reason we see some impressive moves on
breaks higher) and this is the MAIN reason I think there's a shot
at WEEKLY R2 and Stochastics to return to "oversold."  However,
to advise caution of over exuberance, the "second thing," which
I'm concerned most about as a bullish traders is that RISK is
much higher now as depicted by the bullish %, than it was in mid-
May.

So, do I "expect" the OEX to trade sideways based on similar
Stochastics pointed to above?  No!  But should they reach
"overbought" and the OEX has either traded WEEKLY R2 or has been
trading sideways at MONTHLY R2 for several sessions, then I'll
weigh risk/reward at that point.  I think a bull is encouraged by
the Stochastics action, but its price action and profits that put
food on the table, not Stochastics!

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).  This has the
bullish % for this index rising to 79% and a new high reading for
this bull cycle.

Looking back at last night's wrap, I only used Stochastics as one
"reason" to really focus on the WEEKLY pivot as my stopping point
to manage risk and keep a loss minimal.

Dow Industrials Chart - 50-point box




Will the Dow ever give a PnF sell signal?  Today's trade at 9,100
now gives PnF traders a new level to snug a stop up under at
8,900.  With a bunch of economic data due out tomorrow, I see
correlative levels at the DAILY R1 of 9,231.6 and WEEKLY R1 of
9,235.  If the Dow were to break further higher and generate
another PnF buy signal at 9,250, then I can't rule out another
higher target of 9,400, which would tie in nicely with our
"bullish resistance trend" and WEEKLY R2 of 9,407.

Today's trade saw no net change in the very narrow Dow
Industrials Bullish % ($BPINDU).  Still "bull confirmed" at 80%.

I showed an intra-day chart of the NASDAQ-100 Tracking Stock
(QQQ) $30.52 +1.12% in today's 03:15 intra-day commentary and
discussed my interpretation of volume on the break at today's
highs.  It is that type of action, which really wants me to
COMPLETELY IGNORE tomorrow's economic data from a trading
standpoints.  The ONLY thing I impact I think that today's Beige
Book had on trading is that BULLS pulled their offers (didn't
sell as much) and made BEARS pay the price, which they were
willing to do on the break to an intra-day high.

Yes, volume picked up a little bit at the 02:00 PM EST release
(14) on the 10-minute chart, but by golly, that VOLUME SPIKE was
found on the break at the session high.

Now, I will admit, that my bullish profile in the QQQ from $30.12
was simply a trade to try and TAKE ADVANTAGE OF JITTERY BEARS,
when I saw the SPX trading bullish.  I also profiled the QQQ
trade to "get back a loss" in the SPX.

For those traders that TOOK my SPX loss, my/your MAIN GOAL right
now, is to set stops at a level in the QQQ, where the SPX and QQQ
trade then becomes a WASH!  Yes... we're here to MAKE money, not
just trade break-even.  However, when I see a loss taken, and get
an opportunity to now get back at "break-even" I don't want that
opportunity to slip by.

Since I have no way of knowing what put options everyone may have
traded, I'll use the SPY as an example.  Let's say I shorted
$9,850 of SPY (100 shares at $98.50) on Monday, and stopped out
today above WEEKLY Pivot of $99.11, say at $99.25.  I've suffered
a $75.00 loss (plus commissions).

Now, if a trader than took similar $9,850, amount and bought
equal dollar in the QQQ at $30.12, say 300 shares (300 x $30.12 =
$9,036) then my main GOAL is to exit the QQQ with a $75.00 gain
(plus commission for both SPY and QQQ trade).  Let's say my
break-even including commissions right now has me needing to make
back $120.  That $0.40 per QQQ right?  ($0.40 x 300 = $120).  If
so, then a trader with a MINIMUM break-even goal in mind would
place a stop at "gulp" $30.52.

Now... this is rather "extreme" account management, but one way
to view things.  As I type, the QQQ are ticking $30.59 at 07:58
PM EST).

Here's a 60-minute interval chart of the QQQ, which is more of a
"swing-trader's" time interval.  If I'm on the lookout of some
type of sharp reversal tomorrow morning after strength, then it
will be at the DAILY R1 of $30.84.

NASDAQ-100 Tracking Stock (QQQ) - Daily Interval




I didn't "know" that a bullish profile of $30.12, would be the
61.8% retracement in tomorrows DAILY pivot analysis retracement,
but gives me a good look at where some bulls might own some QQQ
from today.  I see "three levels" of early resistance from $30.84
to $30.80 and this would be the "first level" I'd watch for
resistance/selling on morning strength.  I've outlined two
different levels for stops, based on a trader's tolerance for
downside risk.  Both are at overlapping resistance.

With three earnings warnings from MOT, NOK and TXN, I won't
disagree that bulls may be "playing with fire" in the QQQ, so I'm
using tight stops to control risk on bullish trades, as trying to
use jittery BEAR'S short-covering to my advantage when the
opportunity looks to present itself.  That's it!

Today's trade saw a net loss of 1 stock to a new point and figure
sell signal.  This has the NASDAQ-100 Bullish % ($BPNDX) slipping
back 1% to 90% after three-days of bull cycle high readings of
91%.

I'm running late, but here's the pivot analysis matrix for
tomorrow.

Pivot Analysis Matrix




Jeff Bailey


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**************************
WEEKLY FUND FAMILY PROFILE
**************************

Sit Mutual Funds

This week, we look at another growth-driven investment manager,
Sit Investment Associates and the Sit Mutual Funds, a family of
12 no-load mutual funds.  The company's equity investment style
focuses on growth companies that have sustainable above-average
"earnings" growth.  One of the areas that Sit has traditionally
found good growth stock candidates is in the health care sector,
touts the Sit Funds website (www.sitfunds.com).

Eugene Sit founded Sit Investment Associates (SIA) in July 1981
and is currently chairman and chief investment officer, as well
as portfolio manager or co-portfolio manager of all seven stock
funds offered by the Sit Mutual Funds.  Before starting his own
firm, Gene Sit was CEO and chief investment officer at American
Express/IDS Advisory.  Today his firm is described as a diverse
financial asset management firm with both U.S. and international
investment capabilities.

Sit Investment Associates currently manages over $6.8 billion in
total financial assets for institutions, families and its mutual
fund clients, per company sources.  According to Morningstar, in
excess of $1.6 billion of total assets is represented by the Sit
Mutual Funds.  None of the Sit funds are currently closed to new
investors.  The Sit Mutual Funds are meant to be affordable, and
have a minimum initial investment of $2,000 for regular accounts
($5,000 for the Sit U.S. Government Securities Fund).  To obtain
complete fund information or to download a prospectus, go to the
Sit Mutual Funds website at www.sitfunds.com.

Fund Overview

The Sit Mutual Funds currently consists of twelve no-load mutual
funds across four broad investment classes, as follows:


  Domestic Growth Stock Funds:
  Sit Balanced (SIBAX)
  Sit Large Cap Growth (SNIGX)
  Sit Mid Cap Growth (NBNGX)
  Sit Small Cap Growth (SSMGX)
  Sit Science & Technology Growth (SISTX)

  International Growth Stock Funds:
  Sit International Growth (SNGRX)
  Sit Developing Markets Growth (SDMGX)

  Taxable Bond & Money Market Funds:
  Sit Money Market (SNIXX)
  Sit U.S. Government Securities (SNGVX)
  Sit Bond (SIBOX)

  Tax-Free Bond & Money Market Funds:
  Sit Tax-Free Income (SNTIX)
  Sit Minnesota Tax-Free Income (SMTFX)

Sit's U.S. and international stock funds seek long-term capital
appreciation.  Gene Sit has managed or co-managed Sit Large Cap
Growth Fund and Sit Mid Cap Growth Fund since their 1982 launch.
Peter Mitchelson has co-managed Sit Large Cap Growth Fund since
its 1982 inception, while Erik Anderson has served as co-manager
of Sit Mid Cap Growth Fund since 1993.  The SIT large-cap growth
product invests in common stocks of growth companies with market
caps of more than $5 billion, including "blue chip" stocks.  The
mid-growth strategy invests in common stocks of growth companies
with market caps between $2 billion and $15 billion.

Gene Sit has managed or co-managed Sit International Growth Fund
since its 1991 inception.  It invests in common stocks of large-
and mid-sized companies outside the United States.  Roger J. Sit
has co-managed the international growth portfolio since July '98.
The Sit Developing Markets Growth and Sit Small Cap Growth funds
started operations on July 1, 1994.  The developing markets fund
invests in common stocks of companies located in rapidly growing
emerging international markets.  The small growth strategy holds
common stocks of rapidly growing U.S. companies with market caps
of $2.5 billion or less.

Sit Science & Technology Growth Fund, also managed by Eugene Sit,
invests in common stocks of growth companies expected to benefit
from the development, improvement, advancement and use of science
and technology.  Holdings may include large-, mid- and small-cap
issuers.

Michael Brilley, another seasoned veteran at Sit, has managed or
co-managed the four Sit bond funds since their inception.  Sit's
U.S. Government Securities Fund dates back to 1987.  It seeks to
provide stable return and income, and invests in high-grade U.S.
government bonds.  Sit Bond Fund started about 10 years ago and
seeks to provide high total return through investments primarily
in investment-grade bonds.  Bryce Doty has co-managed both funds
since November 1995.

Sit Balanced Fund combines the firm's growth equity and general
bond fund strategies.  It invests in large and medium companies,
including blue chip stocks, for the equity portion, and invests
in principally investment-grade bonds for the income allocation.

Our Favorite Funds

If you have a long-term horizon and can tolerate the risks that
go along with growth equity investing, you may want to consider
Sit Science and Technology Growth Fund and Sit Small Cap Growth
Fund, for which Eugene Sit serves as the sole portfolio manager.

Sit Science & Technology Growth Fund (SISTX) has exhibited less
than average risk compared to its tech fund peers over the past
three to five years.  Though it got its fair share of bumps and
bruises during the tech-led market correction, Sit has shown in
the past and in this current year-to-date period that he'll put
up strong numbers in growth-led markets.







On a year-to-date basis through June 10, the Science & Technology
Growth Fund has a 22.5% total return, outperforming the broad S&P
500 index by 9.7%.  While its 58th percentile ranking in category
suggests mediocre performance, we don't mind giving up some total
return for the below average relative risk level.  Sit has put up
competitive returns this year by tech fund standards and in doing
so, this fund has outperformed most diversified U.S. equity funds
in 2003.

In 1998, Sit Science & Technology Fund returned 38.4% and in 1999
it produced an annual total return of 86.0%.  Sit's style may not
always rank highly in the category, but he's done a good job over
the years of capturing much of the return available in growth-led
(tech-led) markets.

So is the case for the Sit Small Cap Growth Fund (SSMGX).  There,
Eugene Sit sports a trailing 5-year average annual return of 6.8%
as of June 10, 2003, ranking in the 11th percentile of the small-
cap growth category per Morningstar.  That compares to an average
annual loss of 1.0% from the S&P 500 large-cap index.  The fund's
strong trailing 5-year return is partially due to the banner year
Eugene Sit had in 1999, when he put up a 108.6% annual return for
investors.





On a year-to-date basis through June 10, the Sit Small Cap Growth
Fund is up 16.5%, ranking in the top 40% of the Morningstar small
growth category.  That is 3.7% better than the S&P 500 index this
year.

Sit's large-cap growth and mid-cap growth products are also ahead
of the S&P 500 large-cap index in 2003.  Sit Large Cap Growth has
a 13.6% YTD total return, while Sit Mid Cap Growth has gone up by
19.2% this year.  The S&P 500 index has risen 12.8% so far this
year, using Morningstar's figures.

Sit Developing Markets Growth Fund has produced a YTD return of
11.95% through June 10, while Sit Balanced Fund sports a 10.33%
YTD total return.  So, all in all, six equity funds with double
digit percentage returns thus far in 2003, not bad.

Conclusion

Since there is no free lunch in investing, we know that greater
returns are generally associated with greater risks.  The "pro"
growth style/strategy used to manage the Sit equity funds makes
them more volatile than other stock styles/strategies, but also
gives them more long-term appreciation potential, especially in
periods like now (i.e. 2003) when growth/technology stocks lead
the market advance.

Like Alger, Janus and other pro-growth managers, Sit was beaten
up too in 2001 and 2002.  It's hard not to look at Sit's losses
those years, but the firm has done well in tech-led, growth-led
market advances.  If you believe we're in the early stages of a
bull market advance, Sit's stock fund lineup has several growth
offerings that can go capture return for you.  We profiled them
this week, not because of how much they may have lost from 2000
to 2002 but because of their potential strength in a growth-led
market advance.

For more information, go to the www.sitfunds.com website.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                Wednesday 06-11-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: DISH, IGT
Dropped Calls: OHP
Dropped Puts: ATH, NOC
Play of the Day: Call - GENZ
Spreads, Combinations & Premium-Selling Plays: New 2003 Highs!
Watch List: Four More: Health, Oil, Defense, Food

Updated on the site tonight:
Market Posture: Broad Market Rally



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*****************
STOP-LOSS UPDATES
*****************

EchoStar Comm. - DISH - cls: 35.34 chg: +2.04 stop: 35.00 *new*

Run! Runaway!  That's what our mind is telling us.  Shares of
DISH added more than six percent today and came within 6 cents of
our official exit price of $36.00.  6-cents!  Volume was very
strong at 8.5 million shares.  The move was powered by a court
ruling in Florida. While both DISH and its opposing broadcasters
claim victory in the case, Wall Street is clearly in favor of the
news.  We STRONGLY recommend taking profits if you have not done
so already.  Yet it may be worthwhile to keep a VERY small
speculative position as the stock closed over the $35.00 level
and with this bullish market environment, who knows how high it
could go.  So far it has not violated its upper trend line and we
could easily see more profit taking.  Therefore to at least
maintain the lion's share of this gain, we're raising our stop
loss to $35.00.  If DISH trades at or below $35.00 we're out!

Picked on May 21st at $31.10
Change since picked:   +4.24
Earnings Date       05/06/03 (confirmed)
Average Daily Volume = 3.3 million
Chart link:


---

Intl Game Tech, - IGT - cls: 94.37 chg: +2.50 stop: 90.00 *new*

Our play-of-the-day for Wednesday performed very well, adding
2.72 percent today.  We're raising our stop loss from $89.00 to
$90.00.  Shares closed near their high for the day and look ready
for another bullish session tomorrow.

Picked on June 10th at $91.87
Change since picked:    +2.50
Earnings Date        07/22/03 (unconfirmed)
Average Daily Volume =   1.22 million
Chart link:



*************
DROPPED CALLS
*************

Oxford Health - OHP - cls: 40.66 chg: +1.88 stop: 37.65

Wow!  We don't know what the occasion was, as there was no new
news for OHP, but the 4.8 percent gain on big volume of 1.5
million shares was welcomed by us.  We had an official exit price
of $39.75 and that's where we're closing the play.  If you're
still long, we highly recommend you consider taking profits and
upping your stop loss.

Picked on May 20th at $36.51
Change since picked:   +3.85
Earnings Date       05/05/03 (confirmed)
Average Daily Volume = 857 thousand
Chart link:



************
DROPPED PUTS
************

Anthem, Inc. - ATH - close: 76.92 change: +2.54 stop: 75.50

Try as we might the bulls are just too much for any bearish
positions these days.  We tried to short ATH when it was breaking
out of its rising channel but the strength of the market lifted
it right back into that channel and now it's at new relative
highs.  We've been cautious on it for days but alas, today's move
stopped us out at 75.50.

Picked on June 3rd at   $72.38
Change since picked:     +4.54
Earnings Date         07/30/03 (unconfirmed)
Average Daily Volume = 1.17 mln
Chart link:


---

Northrop Gruman - NOC - cls: 87.06 chg: +1.94 stop: 87.05

Wouldn't you know it...a 10-year, nearly $2 billion deal for one
of NOC's competitors (General Dynamic, NYSE:GD) launches the
entire defense sector back into a bullish move.  This has the DFI
and DFX making new relative highs and shares of NOC followed the
pack and gained 2.27 percent to close us out at $87.05.  NOC has
been a huge under performer relative to the markets in general
and the DFI defense index.  Traders should be careful.  Make sure
you don't get caught when it chooses to play catch up with the
pack.

Picked on June 6th at $85.74
Change since picked:   +1.32
Earnings Date       07/29/03 (unconfirmed)
Average Daily Volume = 1.6 million
Chart link:



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

Genzyme Corp. - GENZ - close: 48.00 change: +1.72 stop: 44.00*new*

-Company Description-
Genzyme General, a division of Genzyme Corporation, is focused on
developing innovative products and services to solve major unmet
medical needs.  GENZ has nearly 600 products and services on the
market and a strong pipeline of therapeutic products for the
treatment of rare genetic diseases.  The Diagnostics business
unit develops, markets and distributes in vitro diagnostic
products and genetic testing services. With a solid, profitable
revenue base, this research is intended to maintain the company_s
high rate of earnings growth.

- Most Recent Update (Tuesday, June 10, 2003)-
Just as expected, the confluence of those two ascending channels
near $45 provided solid support on Monday, and GENZ caught a
solid rebound from that level today.  In actuality, the rebound
got started midday on Monday, but the action didn't really turn
bullish until Tuesday's open when GENZ gapped higher at the open
and then spent the remainder of the day crawling through and then
consolidating above $46.  Yesterday's rebound from just below $45
produced a nice double-bottom formation along with the dip on
June 3rd and a rally and close above $48 will confirm the
validity of that formation.  For now, the best approach for
initiating new positions seems to be entering on rebounds from
support near $45.  Given the way Friday's early rally above $48
was summarily squashed, traders entering on another breakout
above that level need to understand the inherent risk that comes
with such an entry in an extended market.  If entering this play
on strength, look for the BTK index to confirm that strength with
a rally back over $470.

- Play of the Day Comments -
Shares of GENZ have rebounded strongly from the $44 level and are
trading at highs not seen in over a year.  The best part is many
analyst just released their opinions that the biotechs still have
more room to run.  With several key product announcements
expected in the next few weeks, the BTK and hopefully stocks like
GENZ will continue to see more new highs.

- Suggested Options -
Shorter Term: The July 45 and 50 call options look like our best
bet.  June options don't have much time left so we don't
recommend them for the average trader.  June's will expire one
week from Friday.

BUY CALL JUL-45 GZQ-GI OI=2137 at $4.80 SL=2.75
BUY CALL JUL-47 GZQ-GS OI= 868 at $3.10 SL=1.60
BUY CALL JUL-50 GZQ-GJ OI=3255 at $1.95 SL=1.00
BUY CALL OCT-50 GZQ-JJ OI=1738 at $4.00 SL=2.00

Annotated Chart of GENZ




Picked on June 8th at    $46.61
Change since picked:      +1.39
Earnings Date          07/16/03 (unconfirmed)
Average Daily Volume = 3.61 mln
Chart link:



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*********************************************
SPREADS, COMBINATIONS & PREMIUM-SELLING PLAYS
*********************************************

New 2003 Highs!
By Ray Cummins

The major equity averages soared today after the Federal Reserve
said the U.S. economy is showing some new "signs of life."

Bullish activity in the blue-chip group came from stalwarts AT&T
(NYSE:T) and International Business Machines (NYSE:IBM) with the
Dow Jones Industrial Average adding 128 points to finish at 9,183.
The NASDAQ Composite climbed 18 points to 1,646, despite a slump
in semiconductor issues.  The broader S&P 500-stock index rose 12
points to 997.  Almost 3 stocks climbed for each 1 that declined
on the New York Stock Exchange and the ratio was better than 3 to
2 in favor of gainers on the technology exchange.  Trade was very
active with 1.49 billion shares swapped on the Big Board and 1.92
billion shares changing hands on the NASDAQ.  Long-dated Treasury
issues saw limited buying, brought on by news that the Securities
and Exchange Commission launched an investigation into accounting
practices at Freddie Mac (NYSE:FRE).  However, prices of the long
bond shed 6/32 to 117-30/32, nudging its yield up to 4.27%, while
the benchmark 10-year note also slipped 6/32 to yield 3.21%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 6/10/03

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

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


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

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


Naked Puts
**********

Stock  Strike Strike  Cost Current   Gain    Max    Simple
Symbol  Month  Price Basis  Price   (Loss)  Yield   Yield

APPX     JUN    17   16.85  36.06   $0.65   8.35%   3.86%
AVID     JUN    22   22.10  33.96   $0.40   4.47%   1.81%
BBY      JUN    32   31.60  42.28   $0.90   5.14%   2.85%
COF      JUN    37   37.80  50.68   $0.70   4.58%   1.85%
IMCLE    JUN    15   14.65  36.30   $0.35   5.04%   2.39%
MRVL     JUN    20   19.50  31.55   $0.50   6.28%   2.56%
SFNT     JUN    20   19.65  28.20   $0.35   4.36%   1.78%
OVTI     JUN    20   19.45  33.89   $0.55   6.28%   2.83%
APPX     JUN    25   24.55  36.06   $0.45   6.54%   1.83%
ANPI     JUN    22   22.25  31.40   $0.25   4.20%   1.12%
JCOM     JUN    25   24.55  33.90   $0.45   6.55%   1.83%
MO       JUN    37   36.60  43.80   $0.90   5.92%   2.46%
MRVL     JUN    22   22.10  31.55   $0.40   6.03%   1.81%
OVTI     JUN    22   22.05  33.89   $0.45   7.31%   2.04%
SHFL     JUN    20   19.70  27.89   $0.30   4.90%   1.52%
SNDK     JUN    27   26.90  36.15   $0.60   6.56%   2.23%
ANPI     JUN    22   22.00  31.40   $0.50   10.25%  2.27%
CELG     JUN    25   24.45  33.62   $0.55   10.38%  2.25%
CREE     JUN    20   19.65  23.21   $0.35   7.05%   1.78%
IMCLE    JUN    17   17.15  36.30   $0.35   8.95%   2.04%
JCOM     JUN    30   29.25  33.90   $0.75   10.18%  2.56%
MERQ     JUN    35   34.60  42.53   $0.40   4.45%   1.16%
OVTI     JUN    25   24.65  33.89   $0.35   6.44%   1.42%
SEPR     JUN    20   19.40  23.83   $0.60   11.67%  3.09%
TTWO     JUN    22   22.15  27.37   $0.35   6.52%   1.58%
MIK      JUN    32   32.05  37.20   $0.45   5.31%   1.40%
ANPI     JUN    25   24.55  31.40   $0.45   12.55%  1.83%
BSX      JUN    42   42.15  54.99   $0.35   5.84%   0.83%
CELG     JUN    25   24.75  33.62   $0.25   7.13%   1.01%
COF      JUN    45   44.55  50.68   $0.45   6.00%   1.01%
CYMI     JUN    30   29.65  32.64   $0.35   7.20%   1.18%
JCOM     JUN    30   29.65  33.90   $0.35   7.35%   1.18%
KLAC     JUN    43   42.05  48.13   $0.45   6.34%   1.07%
MERQ     JUN    37   37.10  42.53   $0.40   5.87%   1.08%
NVLS     JUN    32   32.20  37.34   $0.30   5.56%   0.93%
SEPR     JUN    20   19.60  23.83   $0.40   12.65%  2.04%


Naked Calls
***********

Stock  Strike Strike Cost  Current   Gain     Max   Simple
Symbol Month  Price  Basis  Price   (Loss)   Yield  Yield

DPMI     JUN    22   22.85  21.10    $0.35   5.35%  1.53%
PPDI     JUN    30   30.60  27.85    $0.60   4.82%  1.96%
BSTE     JUN    50   50.60  42.74    $0.60   5.13%  1.19%
DCX      JUN    32   32.95  31.41    $0.45   4.46%  1.37% *
IGEN     JUN    42   43.25  34.68    $0.75   9.75%  1.73%
IGEN     JUN    42   43.25  34.68    $0.40   6.60%  0.92%
GM       JUN    37   37.80  36.30    $0.30   4.39%  0.79%
DCX      JUN    32   32.75  31.41    $0.25   4.40%  0.76% *
FCN      JUN    26   26.95  24.61    $0.29   9.00%  1.08%

Integrated Circuit Systems (NASDAQ:ICST) was closed for a
loss during last week's rally  DaimlerChrysler (NYSE:DCX)
is on the "watch" list and conservative traders should
consider closing the (bearish) position on any further
upside activity.



Put-Credit Spreads
******************

Symbol  Pick   Last   Month L/P S/P Credit  C/B    G/L  Status

BJS     38.63  39.72   JUN   32  35  0.25  34.75  $0.25  Open
LEH     65.32  72.66   JUN   55  60  0.55  59.45  $0.55  Open
DNA     56.09  70.60   JUN   50  55  0.50  54.50  $0.50  Open
BIO     56.70  59.30   JUN   50  55  0.45  54.55  $0.45  Open
BZH     76.70  89.05   JUN   65  70  0.45  69.55  $0.45  Open
PLMD    37.08  36.09   JUN   30  35  0.65  34.35  $0.65  Open
CHIR    44.12  46.01   JUN   40  42  0.30  42.10  $0.30  Open
UNH     95.46  98.83   JUN   85  90  0.55  89.45  $0.55  Open
BBY     40.47  42.28   JUN   40  37  0.30  37.20  $0.30  Open
BGEN    45.99  44.00   JUN   40  42  0.25  42.25  $0.25  Open
GILD    51.10  50.58   JUN   45  47  0.30  47.20  $0.30  Open

Polymedica (NASDAQ:PLMD) continues to be an active issue and
traders are encouraged to monitor the stock for indications
of downside activity.


Call-Credit Spreads
*******************

Symbol  Pick   Last   Month L/C S/C Credit  C/B    G/L   Status

FRX     51.18  54.98   JUN  60  55   0.50  55.50  $0.50   Open?
ATK     51.65  50.33   JUN  60  55   0.45  55.45  $0.45   Open
FNM     71.60  69.87   JUN  80  75   0.45  75.45  $0.45   Open
IP      36.13  38.19   JUN  40  37   0.30  37.80 ($0.39) Closed
AZO     83.74  81.04   JUN  95  90   0.45  90.45  $0.45   Open
ITW     62.61  64.75   JUN  70  65   0.50  65.50  $0.50   Open?
MMM    125.01 126.21   JUN 135 130   0.45 130.45  $0.45   Open
MXIM    39.15  36.63   JUN  45  40   0.60  40.60  $0.60   Open
NOC     86.30  85.12   JUN  95  90   0.55  90.55  $0.55   Open

Illinois Tool Works (NYSE:ITW) and Forest Labs (NYSE:FRX) remain
on the "early-exit" list.  Conservative traders should consider
closing the bearish position in International Paper (NYSE:IP).
Spreads on Anadarko Petroleum (NYSE:APC) and Krispy Kreme Donuts
(NYSE:KKD), which are positive, and Devon Energy (NYSE:DVN) have
previously been closed to limit losses.


Synthetic Positions
*******************

Symbol  Pick   Last   Month    L/C   S/P   Credit   M/V    Status

GYI     32.43  39.00   JUL     35    30    (0.10)   5.50    Open?

Getty Images (NYSE:GYI) has performed beyond all expectations,
achieving sizable profits well in advance of the July options
expiration.


Debit Straddles
***************

Symbol  Pick   Last   Month    L/C   L/P    Debit   M/V    Status

SNE     24.74  29.00   JUN     25    25     2.90    4.80   Closed

Although now profitable, the "Reader's Request" straddle in Sony
(NYSE:SNE) has previously been closed to limit losses.


Questions & comments on spreads/combos to Contact Support
**************

NEW POSITIONS

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.  The positions with "*" will be
included in the weekly summary.  Those with "TS" (Target-Shoot)
are below our minimum monthly return, but may offer a favorable
entry price with a limit order, due to the daily volatility of
the underlying issue.

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

BULLISH PLAYS - NAKED PUTS

All of these issues have robust option premiums and relatively
favorable technical indications.  However, current news and market
sentiment will have an effect on these stocks, so review each play
thoroughly and make your own decision about its future outcome.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

**************
BGEN - Biogen  $45.59  *** Biotech Binge! ***

Biogen (NASDAQ:BGEN) is a biopharmaceutical company principally
engaged in the business of developing, manufacturing and marketing
drugs for human healthcare.  The firm derives revenues from sales
of its Avonex (Interferon beta-1a) product for the treatment of
relapsing forms of multiple sclerosis (MS) and from royalties on
worldwide sales by its licensees of a number of products covered
under patents it controls.  In addition, Biogen has a number of
ongoing research programs and a pipeline of development-stage
products, the furthest along of which, Amevive (alefacept), is
being considered for approval by the United States Food and Drug
Administration and regulatory authorities in the European Union
and Canada for the treatment of moderate to severe psoriasis.

BGEN - Biogen  $45.59

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 42.5  BGQ RV   2,713    0.45  42.05   9.8%   1.1%
SELL PUT  JUL 37.5  BGQ SU   1,164    0.60  36.90   4.6%   1.6% *
SELL PUT  JUL 40    BGQ SH   1,018    1.05  38.95   6.3%   2.7%


**************
CELG - Celgene  $34.74  *** New High Coming? ***

Celgene (NASDAQ:CELG) is a commercial-stage biopharmaceutical
company.  The company is primarily engaged in the discovery,
development and commercialization of small molecule drugs that
are designed to treat cancer and immunological diseases through
gene and protein regulation. Small molecule drugs are man-made,
chemically synthesized drugs that, because of their relatively
small size, can typically be administered orally.  The firm's
drugs are designed to modulate multiple disease-related genes,
including cytokines (which are proteins) such as Tumor Necrosis
Factor alpha, or TNF(alpha), growth factor genes such as those
that control angiogenesis, blood vessel formation and apoptosis
genes.  Because the company's drugs can be administered orally,
they have the potential to advance the standard of care beyond
current injectible protein drugs that inhibit TNF (alpha) and
other disease-causing cytokines.

CELG - Celgene  $34.74

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 30    LQH RF   6,904    0.25  29.75   9.0%   0.8% *
SELL PUT  JUL 25    LQH SE   1,667    0.35  24.65   3.3%   1.4%
SELL PUT  JUL 30    LQH SF   3,768    1.30  28.70   8.6%   4.5%


**************
COF - Capital One  $53.18  *** The Rally Resumes! ***

Capital One Financial (NYSE:COF) is a holding company whose major
subsidiaries market a variety of financial products and services
to consumers using its proprietary information-based strategy.
The company's primary business is consumer lending, with a focus
on credit cards, but including other consumer lending activities
such as unsecured installment lending and automobile financing.
The company's principal subsidiary, Capital One Bank, a limited
purpose, state-chartered credit card bank, offers credit card
products.  Capital One, F.S.B., a federally chartered bank, offers
consumer lending and deposit products.  Capital One Services, the
other major subsidiary, provides various operating, administrative
and business services to the company and its subsidiaries.

COF - Capital One  $53.18

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 47.5  COF RW   2,551    0.35  47.15   7.4%   0.7% *
SELL PUT  JUL 42.5  COF SV   1,175    0.75  41.75   4.6%   1.8%
SELL PUT  JUL 45    COF SI   1,511    1.10  43.90   5.4%   2.5%


**************
CVTX - CV Therapeutics  $35.79  *** Rally Mode! ***

CV Therapeutics (NASDAQ:CVTX) is a biopharmaceutical firm focused
on the discovery, development and commercialization of new small
molecule drugs for the treatment of cardiovascular diseases.  The
company's New Drug Application (NDA) for Ranexa (ranolazine) for
the treatment of chronic angina has been filed at the U.S. FDA.
Tecadenoson (CVT-510), an A1-adenosine receptor agonist, is being
developed for the potential reduction of rapid heart rate during
atrial arrhythmias.  CVT-3146, an A2A-adenosine receptor agonist,
is being developed for the potential use as a pharmacologic agent
in cardiac perfusion imaging studies.  Adentri, an A1-adenosine
receptor antagonist, is being developed by the company's partner,
Biogen, for the potential treatment of acute and chronic congestive
heart failure.  CVTX also has several research and preclinical
development programs designed to bring additional drug candidates
into human clinical testing.

CVTX - CV Therapeutics  $35.79

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 32.5  UXC RZ     419    0.50  32.00  14.7%   1.6%
SELL PUT  JUL 25    UXC SE      74    0.45  24.55   4.1%   1.8% TS
SELL PUT  JUL 27.5  UXC SY     313    0.70  26.80   6.2%   2.6%


**************
GILD - Gilead Sciences  $52.25  *** AIDS Fighter! ***

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

GILD - Gilead Sciences  $52.25

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 47.5  GDQ RT   1,689    0.30  47.20   6.2%   0.6% *
SELL PUT  JUN 50    GDQ RJ   2,549    0.80  49.20  13.9%   1.6%
SELL PUT  JUL 45    GDQ SI   6,033    1.10  43.90   5.2%   2.5%


**************
ICOS - ICOS Corporation  $45.17  *** Volatile Stock! ***

ICOS Corporation (NASDAQ:ICOS) develops pharmaceutical products
with significant commercial potential by combining its unique
capabilities in molecular, cellular and structural biology,
high-throughput drug screening, medicinal chemistry and gene
expression profiling. The firm applies its integrated approach
to erectile dysfunction and other urologic disorders, sepsis,
pulmonary arterial hypertension and cardiovascular diseases, as
well as inflammatory diseases. The company has established
collaborations with pharmaceutical and biotechnology companies
to enhance its internal development capabilities and to offset
a substantial portion of the financial risk of developing its
product candidates.

ICOS - ICOS Corporation  $45.17

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 40    IIQ RH   1,630    0.50  39.50  12.6%   1.3% *
SELL PUT  JUL 30    IIQ SF   1,697    0.30  29.70   2.2%   1.0% TS
SELL PUT  JUL 35    IIQ SG   1,702    0.90  34.10   6.3%   2.6%


**************
MEDI - MedImmune  $39.39  *** FluMist Speculation! ***

MedImmune (NASDAQ:MEDI) is a biotechnology company with a range of
unique products on the market and a diverse product pipeline.  The
firm is focused on using advances in immunology and other biological
sciences to develop new products that address significantly unmet
medical needs in areas of infectious disease, immune regulation and
cancer.  MedImmune actively markets three products, Synagis, Ethyol
and CytoGam and seeks to launch a potential blockbuster product,
FluMist, later this year.

MEDI - MedImmune  $39.39

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 35    MEQ RG   2,348    0.25  34.75   7.3%   0.7% *
SELL PUT  JUL 32.5  MEQ SZ     319    0.65  31.85   4.7%   2.0%
SELL PUT  JUL 35    MEQ SG   2,267    1.10  33.90   6.1%   3.2%


**************
MERQ - Mercury Interactive  $43.50  *** New 8-Month High! ***

Mercury Interactive (NASDAQ:MERQ) is a provider of integrated
performance management solutions that enable businesses to test
and monitor their Web-based applications.  Its software products
and hosted services help Global 2000 companies enhance the user
experience by improving the performance, availability, reliability
and scalability of their Web-based applications.  Its many hosted
services provide its customers with a cost-effective solution that
quickly meets business needs without dedicating significant time
and internal resources.  Its integrated performance management
solutions enable customers to more quickly identify and correct
problems before users experience them.  The company also provides
outsourced load testing and Web performance monitoring services
that complement its software products.

MERQ - Mercury Interactive  $43.50

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 40    RQB RH   1,675    0.30  39.70   7.1%   0.8% *
SELL PUT  JUL 35    RQB SG   1,988    0.70  34.30   5.0%   2.0%
SELL PUT  JUL 40    RQB SH   2,951    1.70  38.30   7.5%   4.4%


**************
NVDA - Nvidia  $25.84  *** On The Rebound! ***

Nvidia (NASDAQ:NVDA) designs, develops and markets graphics and
media communication processors and related software for personal
computers (PCs), workstations and digital entertainment platforms.
The company provides an architecturally compatible top-to-bottom
family of unique, performance 3-D graphics processors and graphics
processing units that set the standard for performance, quality
and features for a broad range of desktop PCs.  Nvidia's graphics
processors are used for a wide variety of applications, including
games, digital image editing, business productivity, the Internet
and industrial design.  Its graphics processors are designed to be
architecturally compatible backward and forward between computer
generations, giving its original equipment manufacturers (OEMs),
customers and end users a low cost of ownership.

NVDA - Nvidia  $25.84

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 22.5  UVA RX   5,324    0.20  22.30   9.4%   0.9%
SELL PUT  JUL 20    UVA SD     859    0.40  19.60   5.0%   2.0% *
SELL PUT  JUL 22.5  UVA SX   1,976    0.90  21.60   7.9%   4.2%


**************
OVTI - OmniVision  $32.89  *** Entry Point? ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and sells
high performance, high quality and cost efficient semiconductor
imaging devices for computing, telecommunications, industrial,
automotive and consumer electronics applications.  The company's
main product, an image sensing device called a CameraChip, is used
to capture an image in cameras and camera-related products in a
range of imaging applications such as personal computer cameras,
digital still cameras, security and surveillance cameras, personal
digital assistant cameras, mobile phone cameras, and cameras for
automobiles and toys that incorporate both still picture and live
video applications.

OVTI - OmniVision  $32.89

PLAY (sell naked put):

Action    Month &   Option    Open    Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.    Price Basis  Yield  Yield

SELL PUT  JUN 25    UCM RE   1,267    0.25  24.75  12.4%   1.0% *
SELL PUT  JUL 30    UCM RF   1,416    0.95  29.05   5.9%   3.3%
SELL PUT  JUL 25    UCM SE     378    0.80  24.20   7.5%   3.3%


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

BULLISH PLAYS - CREDIT SPREADS

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

***************
CMCSA - Comcast  $32.85  *** New Trading Range? ***

Comcast (NASDAQ:CMCSA) is a cable operator involved in three
principal lines of business: cable, through the development,
management and operation of broadband communications networks;
commerce, through QVC, its electronic retailing subsidiary; and
content, through its consolidated subsidiaries Comcast Spectacor,
Comcast SportsNet, Comcast SportsNet Mid-Atlantic, Comcast Sports
Southeast, E! Entertainment Television, The Golf Channel, Outdoor
Life Network, G4 Media, and through other programming investments.
The company has deployed digital cable applications and high-speed
Internet service to most of its cable communications systems.

CMCSA - Comcast  $32.85

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-27.50  CCQ-SY  OI=3906  A=$0.25
SELL PUT  JUL-30.00  CCQ-SF  OI=4471  B=$0.45
INITIAL NET-CREDIT TARGET=$0.25-$0.30
POTENTIAL PROFIT(max)=11% B/E=$29.75


**************
IDPH - IDEC Pharmaceuticals  $40.29  *** Bottom-Fishing Biotech ***

IDEC Pharmaceuticals (NASDAQ:IDPH) is a biopharmaceutical company
engaged primarily in the research, development, manufacture and
commercialization of targeted therapies for the treatment of cancer
and autoimmune and inflammatory diseases.  The firm's two primary
products, Rituxan and Zevalin (ibritumomab tiuxetan), are for use
in the treatment of certain B-cell non-Hodgkin's lymphomas.  The
company is also developing products for the treatment of cancer and
various autoimmune diseases such as rheumatoid arthritis, psoriasis,
allergic asthma and allergic rhinitis.  Rituxan, the firm's first
product, and Zevalin, its second product approved for marketing in
the United States, as well as its other primary products under
development, address immune system disorders such as lymphomas,
autoimmune and inflammatory diseases.  In addition, the company has
discovered other product candidates through the application of its
technology platform.

IDPH - IDEC Pharmaceuticals  $40.29

PLAY (less conservative - bullish/credit spread):

BUY  PUT  JUL-30.00  IDK-SF  OI=6495  ASK=$0.40
SELL PUT  JUL-35.00  IDK-SG  OI=2049  BID=$1.05
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$34.35


**************
IGT - International Game Tech.  $94.37  *** 4:1 Split Coming! ***

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

IGT - International Game Technology  $94.37

PLAY (less conservative - bullish/credit spread):

BUY  PUT  JUL-80.00  IGT-SP  OI=1193  ASK=$0.65
SELL PUT  JUL-85.00  IGT-SQ  OI=2331  BID=$1.25
INITIAL NET-CREDIT TARGET=$0.60-$0.75
POTENTIAL PROFIT(max)=14% B/E=$84.40


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

BEARISH PLAYS - NAKED CALLS

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is no
more than twice the original premium received from the sold option.

***************
LLTC - Linear Technology  $34.07  *** Range-bound? ***

Linear Technology (NASDAQ:LLTC) designs, manufactures and sells
a broad line of standard high-performance linear integrated
circuits (ICs).  Applications for the company's products include
telecommunications, cellular telephones, networking products,
optical switches, notebook and desktop computers, computer
peripherals, video/multimedia, industrial instrumentation,
security monitoring devices, high-end consumer products, digital
cameras and MP3 players, complex medical devices, automotive
electronics, factory automation, process control and military and
space systems.

LLTC - Linear Technology  $34.07

PLAY (sell naked call):

Action     Month &   Option    Open   Last  Cost    Max.   Simple
Req'd      Strike    Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  JUN 35    LLQ FG   4,368   0.60  35.60  15.2%    1.7%
SELL CALL  JUL 37.5  LLQ GU   1,645   0.80  38.30   6.0%    2.1% *
SELL CALL  JUL 40    LLQ GH     301   0.30  40.30   3.1%    0.7% TS


**************
XLNX - Xilinx  $28.42  *** Consolidation In Progress? ***

Xilinx (NASDAQ:XLNX) designs, develops and markets complete
programmable logic solutions, including advanced integrated
circuits, software design tools, predefined system functions
delivered as intellectual property cores, design services,
customer training, field engineering and technical support.
The programmable logic devices include field programmable gate
arrays and complex programmable logic devices.  These devices
are standard products that its customers program to perform
desired logic functions.  Its products are designed to provide
high integration and quick time-to-market for electronic
equipment manufacturers primarily in the telecommunications,
networking, computing, industrial and consumer markets.

XLNX - Xilinx  $28.42

PLAY (sell naked call):

Action     Month &   Option    Open   Last  Cost    Max.   Simple
Req'd      Strike    Symbol    Int.   Price Basis  Yield   Yield

SELL CALL  JUN 30    XLQ FF   9,018   0.35  30.35  11.7%    1.2%
SELL CALL  JUL 30    XLQ GF   1,740   1.25  31.25   9.3%    4.0%
SELL CALL  JUL 32.5  XLQ GZ   1,929   0.55  33.05   5.8%    1.7% *


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

BEARISH PLAYS - CREDIT SPREADS

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

**************
CEPH - Cephalon  $45.33  *** No Biotech Rally Here! ***

Cephalon (NASDAQ:CEPH) is an international biopharmaceutical firm
dedicated to the discovery, development and marketing of products
to treat sleep disorders, neurological disorders, cancer and pain.
In addition to conducting a very active research and development
program, the company markets three products in the United States
and a number of products in various countries throughout Europe.
Cephalon's United States products are comprised of Provigil, for
the treatment of excessive daytime sleepiness associated with
narcolepsy, Actiq for cancer pain management, and Gabitril for
the treatment of partial seizures associated with epilepsy.

CEPH - Cephalon  $45.33

PLAY (less conservative - bearish/credit spread):

BUY  CALL  JUL-55.00  CQE-GK  OI=0    ASK=$0.25
SELL CALL  JUL-50.00  CQE-GJ  OI=998  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$50.60


**************
CI - Cigna Corporation  $49.61  *** Profit-Taking Underway! ***

Cigna Corporation (NYSE:CI) and its subsidiaries are investor-
owned employee benefits organizations in the United States.  Its
subsidiaries are major providers of employee benefits offered
through the workplace, including health care products and other
services, life, accident and disability insurance, retirement
products and services and investment management.  CIGNA's main
perating divisions include Employee Health Care, Disability and
Life Benefits, CIGNA Group Insurance, Employee Retirement, and
Investment Services, and International Life, Health and Employee
Benefits.

CI - Cigna Corporation  $49.61

PLAY (conservative - bearish/credit spread):

BUY  CALL  JUL-60.00  CI-GL  OI=498   ASK=$0.30
SELL CALL  JUL-55.00  CI-GK  OI=2737  BID=$0.80
INITIAL NET-CREDIT TARGET=$0.55-$0.70
POTENTIAL PROFIT(max)=12% B/E=$55.55


**************
MXIM - Maxim Integrated  $36.51  *** Post-Earnings Slump! ***

Maxim Integrated Products (NASDAQ:MXIM) designs, develops, makes
and markets a broad range of linear and mixed-signal integrated
circuits, commonly referred to as analog circuits.  The company
also provides a range of high-frequency design processes and
capabilities that can be used in custom design.  Maxim's products
include data converters, interface circuits, microprocessor
supervisors, operational amplifiers, power supplies, multiplexers,
delay lines, real-time clocks, microcontrollers, switches, battery
chargers, battery management circuits, radio frequency circuits,
fiber-optic transceivers, sensors and voltage references.  The
firm's unique products are sold to customers in various markets
including automotive, communications, consumer, industrial control,
instrumentation and data processing.

MXIM - Maxim Integrated Prod.  $36.51

PLAY (less conservative - bearish/credit spread):

BUY  CALL  JUL-45.00  XIQ-GI  OI=1193  ASK=$0.20
SELL CALL  JUL-40.00  XIQ-GH  OI=2946  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$40.65


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

SEE DISCLAIMER - SECTION 1

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


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

Four More: Health, Oil, Defense, Food

Wellpoint Health Network - WLP - close: 87.82 change: +2.40

WHAT TO WATCH:  The entire health insurance sector took off today
and shares of WLP added 2.8% while closing above recent
resistance of $87.50.  Volume was stronger than it had been
recently and we think WLP can break above longer-term resistance
just under $90.00.

Chart=



---

Apache Corp - APA - close: 68.15 change: +2.10

WHAT TO WATCH:  Oil & Gas stocks have been taking off and while
APA looks extended from its May run (what doesn't) the entire
group looks ready for another (fresh) leg higher. This is a new
all-time closing higher for APA.

Chart=



---

General Dynamic - GD - close: 72.02 change: +3.10

WHAT TO WATCH:  Not only did Wall Street approve of GD's news to
acquire VNX but now the company just announced a 10-year, $2
billion deal with the government.  Shares broke out above the
$70.00 level and its 200-dma while leading the defense sector to
new highs.  This looks like a sure winner to close the gap from
last January.

Chart=


---

Hershey Foods - HSY - close: 71.42 change: +0.95

WHAT TO WATCH:  Trying to find something that wasn't tech or
financially related, we stumbled across HSY again.  Shares have
been able to maintain support above $70.00 and are bouncing from
the bottom of its rising channel.  This looks like an entry point
with a stop under $70.00.

Chart=



**************
MARKET POSTURE
**************

Broad Market Rally


To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_061103.asp


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