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Daily Newsletter, Thursday, 06/26/2003

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The Option Investor Newsletter                 Tuesday 06-26-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Right On Schedule
Futures Markets: Treasuries tank, equities drift
Index Trader Wrap: See Note
Market Sentiment: Short term bullishness in the options market
Weekly Manager Microscope: Jackson W. Robinson: Winslow Green Growth Fund (WGGFX)


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************ 
      06-26-2003           High     Low     Volume Advance/Decline
DJIA     9079.04 + 67.50  9092.21  8987.16 1.68 bln   2059/1187
NASDAQ   1634.01 + 31.40  1636.15  1606.47 1.54 bln   1992/1217
S&P 100   497.06 +  5.46   497.76   490.85   Totals   4051/2404
S&P 500   985.82 + 10.50   986.53   973.80 
W5000    9434.91 +101.70  9438.89  9322.27
RUS 2000  449.90 +  6.69   450.30   443.21 
DJ TRANS 2410.16 + 54.00  2412.99  2355.23   
VIX        21.80 -  1.39    23.07    21.64   
VXN        30.91 -  0.84    32.28    30.62 
Total Volume 3,470M
Total UpVol  2,498M
Total DnVol    914M
52wk Highs  327
52wk Lows    22
TRIN       0.78
PUT/CALL   0.78
************************************************************

Right On Schedule

Two days left in June and the markets continue to rise as expected.
The gains today bucked the normal trend for the day after a Fed
meeting to be down. The Dow was the laggard and gave indications
of weakness numerous times but closed with decent gains in the end. 
The Nasdaq tacked on +31 points after coming close to 1600 once
again. Right on schedule, so far.

Dow Chart - daily

 
Nasdaq Chart - Daily

 

The day was packed with economic reports although none really
rocked the markets. The Jobless Claims came very close to breaking
the consecutive streak of 21 weeks over 400,000 claims with only
404,000 for the week ending June 21st. Claims for last week were
revised upward by +5,000 to 426,000. The four-week moving average
fell to 428,000 and a four week low. Unfortunately continuing
claims rose to 3.741 million and only slightly below the recent
high of 3.78 million in May. Fewer people filed for claims but
fewer jobless are finding work. 

Unfortunately the Monthly Mass Layoff report showed 173,784 worker
layoffs were announced in May. This is a lagging number but it is
also an announcement of future layoffs so the impact could have
been felt in June or could still occur in July. This was up from
the 161,095 announced in April. Manufacturing is continuing to be
the biggest loser. There were 1,699 mass layoffs announced in May.

The Chicago Fed National Activity Index improved significantly to
-0.39 from -1.04 in April. This was also a lagging number from May
and the market ignored it. This was the ninth consecutive week of
declines with April being the worst. This could be seen as an
improvement that the rate of decline was slowing. With all other
components improving it was the labor component that held it in
negative territory. If the labor market is improving, which could
be seen in the drop in Jobless Claims to near 400K this week then
this index should be in positive territory for June. 

Despite the near sub 400K Jobless number there is no real evidence 
that the job environment is improving. The May Help Wanted Index 
today was unchanged at 36 which is a cycle low. In reality it was 
an improvement as the April number, the previous low of 35, was 
revised up to 36. Is that an improvement or not? It is still the
low either way you count it. On the bright side the number of
markets reporting an improvement in advertising jumped to 37% from
only 20% in April. Using your optimism microscope you could decide
that the trend had changed and look forward to next months report
for confirmation. Countering this view was new lows in the Midwest,
West South Central and the Mid Atlantic regions. Also, the bounce
in the Mountain and New England regions is failing. 

The final GDP for the first quarter fell unexpectedly to only +1.4%
growth from +1.9% growth in the last revision. Weak investment was
the critical component that failed. The inventory component fell
when the numbers came in weaker than expected. Computer equipment
and software fell -4.8% and the first decline in four quarters. 
Good news came from corporate profits that rose more than double
the prior estimate to +$20.4 billion. Analysts reviewing this report
claim it is clear the economy was contracting in February and most
of March. The question now is what happened in April and May as the
war ended?

The minutes of the May FOMC meeting were released and it was clear
the committee was strongly divided about the need for a rate cut
and the chances for deflation. The war confused them and they were
unwilling as a group to make the cut but there were several members
suggesting the war was NOT a reason to delay a needed cut. The most
revealing comments were on how to word the release to mention
deflation without causing a deflation panic. They decided to wage
a verbal war on bond rates rather than actually cutting rates in
May. You should remember the flurry of Fed heads all commenting 
on the "other methods available" and the Fed's commitment to "do
whatever was necessary" to pump up the economy. Evidently the 
strategy worked as bonds soared to a 45 year high with no May 
rate cut. 

Stock news was fairly thin today with a ruling in the MSFT/SUNW
Java case the major news. The judges reversed a lower court ruling
that forced Microsoft to carry Java in its products because of its
anticompetitive actions. That is the MSFT version of the story. 
The SUNW side is that the judges left intact a ruling that said
MSFT must abide with the previous agreements with SUNW if it did 
distribute Java. While the announcement sounded positive for MSFT
and negative for SUNW on the surface it really did not change the
climate or the deal. SUNW claims there are currently three million
Java programmers and they are attempting to boost the number to 
ten million. It does not seem likely that MSFT will be able to 
delete Java support from its products or it will risk pushing those
applications to other operating systems. Support is different than
offering Java as a product so the battle is far from over. 

Speaking of battles RIMM was the focus of a broker war. Before the
open today Needham downgraded RIMM to sell from hold on news that
Dell was going to release a competitive product with superior
technology. They expect it to significantly impact RIMM's market
share and future growth. They have a price target of $8.43 on the
stock which is trading at $22.50. On the other side of the table
an institutional investment firm called ThinkEquity raised its
rating on RIMM to overweight from equal weight due to strong sales
of its current products. CIBC also praised the companies 
performance and raised its price target to $27. RIMM lost -34 
cents on the day. They look very top heavy at this level. 

The real news today came from the bond market where selling was
heavy. The concept that the Fed "might" lower rates again or 
"might" buy long term bonds to keep the interest rate low was
evidently ignored. The FOMC notes suggesting a verbal war on 
long term interest rates did not carry much weight with current
bond holders. The yield on the ten-year rose to 3.53% from
yesterday's close of 3.36 and well above the Wednesday low of 
3.20%. The 30-year yield rose to 4.56% from yesterday's low of
4.29%. This is a huge jump in yields and it suggests the rate
cut already priced into the bond market was 50 points not 25. 
Both treasuries broke out of prior resistance and closed near 
the highs of the day. 

While the buying in the stock market was concentrated in techs
instead of the Dow there was not a flood of cash hitting the 
markets. There was subtle upward pressure on the Nasdaq but the 
Dow actually struggled to gain ground most of the day. This is 
not the picture of a major asset shift out of the bond market. 
The volume during the day was very light and it did not pickup 
until the last 30 min of the day. It looked like a standoff with 
nobody wanting to be the first to step up to the plate. Friday 
could be a different story if the pattern remains the same. 

The Dow closed just below next resistance at 9100 and stronger 
resistance at 9150. If Europe/Asia trades up overnight on our
markets then we could open strongly positive tomorrow. Futures
are up in after hours and approaching the highs of the day. It
appears the historical first week of July rally is about to take
place. The S&P has very strong resistance at 988-990 but then a 
free pass to 1000. The Nasdaq already broke its corresponding 
resistance at 1630 today. 

What is powering this is the end of quarter and end of half cash
from retirement contributions and the cash moving out of the bond
market. This inflow into stocks should last another week and peak
around July 7th-10th. If you read my Tuesday market wrap then you
know what I am expecting. I suggest you do so because it is 
critical you understand the historical trends in our near future. 

The game plan for the next week should be to go long the market 
over SPX 990 and stay long until the 10th. This assumes the July
historical trends I discussed on Tuesday remain in place. The
S&P bounced off its lower uptrend support today and could actually
move up to 1050 before July 10th. It will not be an easy road but
if the July trend remains in place it is not impossible. 1010-1015
is going to be monster resistance but if the bond bulls turn into 
bond bears that cash has got to go somewhere. 

SPX Chart - Daily

 
SPX Chart - 30 min

 

Before you think I have lost my mind I suggest you read my Tuesday
wrap. The historical trends are clear and the bond market is 
poised to release a lot of cash if the selling continues. The 
drop in bonds today pushed them to a seven week low. There is 
probably a lot of number crunching underway tonight in bond rooms
around the country. IF and I repeat IF in capital letters, the
bonds continue bearish and that cash adds to the retirement flood 
over the next week we COULD have a very strong market. Did I
qualify that enough? We are poised to repeat the normal July
trend. That does not mean highly profitable funds will not sell 
into the trend to capture profits since the trend is so well 
defined. Either way the second trend beginning after the 10th 
is probably alive and well so be prepared. 

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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

Treasuries tank, equities drift
Jonathan Levinson

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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U      995    989    980    974    965
YM03U     9140   9093   9029   8983   8918
NQ03U     1239   1228   1209   1198   1179

Other than on the Nasdaq futures, equities held yesterday's low 
and put in slightly lower highs, while the US Dollar Index 
cruised to a new relative high and treasuries got croaked.


10 minute chart of the US Dollar Index



The US Dollar Index headed straight north today, trading just 
above resistance at 95.00 as of this writing.  The action was, 
naturally, bearish for gold and other hard assets.

Daily chart of August gold

 

August gold printed such a narrow range that it looks like a
smudge right on the 38.2% support line and lower Bollinger band,
closing at 344.10.  Despite the 5.50 point selloff today, XAU 
closed positive by .02 and HUI dropped .91 to close at 146.26.   
The CRB closed down 3.08 to 231.46.


Daily chart of the ten year note yield

 

Another huge move today as "Bond.com" took another nosedive, 
launching yields deep into the green, with the five year note 
yield gaining 17.5 basis points to close at 2.449%, the ten year 
gaining 17.3 bps to close at 3.534% and the thirty up 12.4 bps to 
close at 4.562%.  TNX is approaching first resistance just below 
the 50% retracement line, but the oscillators are unanimous to 
the upside.  The fed drained 5.5B today with its 7.5B overnight 
repo, and so the selling was to be expected.  When we see the Fed 
beginning to add again with its 10AM repo announcements, we'll 
know to look for nearby resistance as a likely top to the move.


Daily NQ candles

 

This is the most bullish chart of all the equity futures today, 
with NQ sporting a bullish engulfing off the ascending trendline, 
with the stochastic oscillator ending its downphase early.  It's 
the only contract that broke yesterday's high.


30 minute 20 day chart of the NQ

 

The 30 minute NQ candles show the head and shoulders pattern 
about which bears have been buzzing, but it's growing sloppier as 
the NQ rises from the lower 1190 neckline.  The stochastics are 
getting toppy here and hinting at a resumption of the downtrend 
that's in the process of aborting on the daily candles above.

Daily ES candles

 

Today's green day gave bulls plenty about which to cheer on the 
ES daily candles, given the successful test of the ascending 
trendline.  While the oscillators are still in their downphases, 
another positive day could change that, but it's going to take 
more than just a sideways drift, and today gave us a lower high.

20 day 30 minute chart of the ES

 

The head and shoulders is tidier on the ES, which underperformed 
the NQ today.  Bulls will note that the Naz indices tend to lead 
the others, and if this is the case, then we're looking for 
higher prices on the ES tomorrow.  The oscillators on the 30 
minute candles show no sign of a turn just yet.


Daily YM candles

 

We have the same bullish picture on the Dow futures.  Will the 
oscillators win out or was today's green candle the start of a 
turn?  With end of quarter window dressing lending possible
bidding pressure to the tape and the shorter cycle oscillators 
pointed north (as in the chart below), higher prices tomorrow 
would not surprise me in the least. 

20 day 30 minute chart of the YM

 


The head and shoulders top is again clear on the 30 minute candle 
chart.  You can take your pick of necklines, which conveniently 
coincide with the Fibonacci retracement levels.  

For tomorrow, we have a possible reversal of the recent down 
moves grown toppy in the shorter timeframes, but respecting 
trendline support.  A failure to hold today's lows tomorrow will 
show us that the longer cycle downtrends off the rally high are 
still governing, but with traders eyeing the ascending daily 
trendlines, I don't expect that to happen without a fight.

The massive selling in treasuries today coincided with higher 
equity prices, but not nearly to the degree that the bond sales 
would have implied if the "asset reallocation" theory was in 
effect.  I continue to believe that bonds and treasuries will 
continue to trade together, barring short term divergences such 
as we saw today.


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

Check the Site Later Tonight For Jeff's Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_062603_1.asp


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

Short term bullishness in the options market
 
The put to call ratio opened today at .47 today, showing very 
high relative call volume, and reached the mid .80s by the end of 
the session, which closed near its highs.  If the market's "job" 
is to humiliate the greatest number of participants at any one 
time, then the upwardly-trending put to call ratio was one 
indication of higher prices to come, and it would have been 
correct.
 
At the same time, the volatility indices all cratered today, with 
the QQV dropping 1.58, the VIX 1.39 and the VXN .75.  These 
readings are generated by the willingness of option sellers to 
accept lower prices for their contracts.  As the intrinsic value 
of an option is a "constant", it is only the premium which 
declines in such a case, driving down the volatility indices.
 
If the there's a predominance of calls being traded, as reflected 
in  a low put to call ratio, then we can infer that calls are 
being dumped when we see declining volatility indices.  If the 
put to call ratio is relatively high, then it's puts being sold 
aggressively.  Today's escalating put to call ratio and declining 
volatility indices implies that it was puts being sold as the 
session progressed.
 
As discussed in the Market Monitor, the put to call ratio is best 
treated as a "secondary" indicator, because of the great 
versatility with which options can be used.  Puts can be used 
bullishly or bearishly, and it's impossible to "steer" one's 
market view reliably based on options activity for this reason.  
Nevertheless, when other indicators are ambiguous, the options 
market can be a helpful guide.  Based on the oscillator setups 
discussed in the futures wrap, the put to call / volatility 
relationship is confirming the possibility for more upside at the 
open tomorrow.  We'll see how it plays out.


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

Market Averages

DJIA ($INDU)

52-week High:  9379
52-week Low :  7197
Current     :  9079

Moving Averages:
(Simple)

 10-dma: 9171
 50-dma: 8766
200-dma: 8372

S&P 500 ($SPX)

52-week High: 1012
52-week Low :  768
Current     :  986

Moving Averages:
(Simple)

 10-dma:  994
 50-dma:  950
200-dma:  892

Nasdaq-100 ($NDX)

52-week High: 1266
52-week Low :  795
Current     : 1215

Moving Averages:
(Simple)

 10-dma: 1217
 50-dma: 1162
200-dma: 1039


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


Approaching their recent lows, these volatility indices are 
communicating that there is very little fear in the markets right
now.

CBOE Market Volatility Index (VIX) = 21.80 -1.39
Nasdaq-100 Volatility Index  (VXN) = 30.91 -0.84

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.89        478,433       424,258
Equity Only    0.77        401,260       307,305
OEX            1.18         15,599        18,344
QQQ            5.80         15,899        92,141


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

Bullish Percent Data

           Current   Change   Status
NYSE          71.2    + 0     Bull Confirmed
NASDAQ-100    76.0    + 0     Bull Confirmed
Dow Indust.   83.3    + 0     Bull Confirmed
S&P 500       78.8    + 0     Bull Confirmed
S&P 100       81.0    + 0     Bull Confirmed


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

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

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

 5-Day Arms Index  1.46
10-Day Arms Index  1.23
21-Day Arms Index  1.19
55-Day Arms Index  1.13


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    1878      1915
Decliners     999      1119

New Highs      65        95
New Lows        6         5

Up Volume   1196M     1135M
Down Vol.    460M      381M

Total Vol.  1677M     1532M

M = millions


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


Commitments Of Traders Report: 06/17/03

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 contracts continue to see more buying as Commercials'
long positions have hit highs not seen in a while.  Short positions
took a significant jump higher as well but big money is 
expecting strength.

Commercials   Long      Short      Net     % Of OI
05/27/03      435,195   423,474    11,721     1.4%
06/03/03      438,228   422,722    15,506     1.8%
06/10/03      456,967   455,024     1,943     0.2%
06/17/03      519,887   501,401    18,486     1.8%

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   18,486  -  6/17/03
 
Small Traders Long      Short      Net     % of OI
05/27/03      147,687   149,344    (1,657)   (0.6%)
06/03/03      169,650   167,172     2,478     0.7%
06/10/03      199,356   185,403    13,953     3.6%
06/17/03      202,040   184,028    18,012     4.6%

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

In contrast to the full S&P contract data above, the S&P e-mini
contracts are showing the most bearish reading in a long time,
at least from the Commercial traders.  We saw significant jumps
in both long and short positions but Commercials or "smart money"
are exceptionally bearish on the e-minis.

Commercials   Long      Short      Net     % Of OI 
05/27/03      252,655   485,962   (233,307)  (31.6%)
06/03/03      267,680   512,648   (244,968)  (31.4%)
06/10/03      270,359   543,221   (272,862)  (33.5%)
06/17/03      306,279   661,114   (354,835)  (36.6%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year: (222,875)  - 04/01/03

Small Traders Long      Short      Net     % of OI
05/27/03      427,412    66,031   361,381    73.3%
06/03/03      470,655    58,420   412,235    77.9%
06/10/03      498,999    49,689   449,310    81.9%
06/17/03      466,837    70,609   396,228    73.7%

Most bearish reading of the year: 283,831   - 04/08/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Again, we're seeing large increases in the number of contracts
outstanding for both commercials and small trades but there is
no discernable change in investor sentiment here.

Commercials   Long      Short      Net     % of OI 
05/27/03       40,999     41,491      (492)  (0.6%)
06/03/03       42,232     43,217      (985)  (1.2%)
06/10/03       42,877     45,793    (2,916)  (3.3%)
06/17/03       60,964     65,561    (4,597)  (3.6%)

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
05/27/03       12,194    13,339   ( 1,145)  ( 4.5%)
06/03/03       11,407     9,092     2,315    11.3%
06/10/03       14,759     7,761     6,998    31.1%
06/17/03       29,400    23,232     6,168    11.7%

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

No change in investor sentiment here either, despite increases
in the number of contracts outstanding.

Commercials   Long      Short      Net     % of OI
05/27/03       18,660    15,537    3,123       9.1%
06/03/03       19,480    15,282    4,198      12.1%
06/10/03       17,368    15,263    2,105       6.5%
06/17/03       20,625    18,593    2,032       5.1%

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
05/27/03        8,225     9,316    (1,091)   ( 6.2%)
06/03/03        7,948     9,353    (1,405)   ( 8.1%)
06/10/03        7,968     8,316    (  348)   ( 2.1%)
06/17/03        9,092     9,398    (  306)   ( 1.6%)

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


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

Jackson W. Robinson: Winslow Green Growth Fund (WGGFX)

Jack Robinson is President of Winslow Management Company and the 
portfolio manager of Winslow Green Growth Fund (WGGFX), a unique 
growth fund that seeks to produce superior returns for investors 
over the long term by investing in "green" and "clean" companies.  
Winslow is owned by Adams, Harkness & Hill, a firm that shares a 
common interest in environmentally effective investing.  Healthy 
living and alternative/renewable energy areas are two main areas 
of common interest.

Before founding Winslow Management Company in 1984, Jackson was a 
director and officer of two gardening businesses in Vermont, both 
of which were financially successful.  Both enterprises qualified 
as environmentally and socially responsible as well.  Hence, Jack 
Robinson's fondness for healthy living companies.  He has focused 
on environmental effective investing since 1991 and has more than 
a quarter century of investment experience.

Assisting Robinson is Harry E. (Skip) Wells, another veteran with 
over 20 years of money management experience (and 33 years equity 
research experience).  He joined Winslow Management as a research 
analyst and is a Chartered Financial Analyst (CFA).

The Winslow Green Growth Fund's administration and distribution, 
fund accounting, shareholder services, transfer agency, custody, 
etc. are handled by Forum Financial Group, a firm servicing the 
needs of 500 portfolios and 677 share classes, with $130 billion 
in client assets, per company sources.  The fund requires $5,000 
to open a regular account ($2,000 for IRA's), and has an expense 
ratio of 1.45% (capped).  The average small-cap growth fund, per 
Morningstar, has an expense ratio of 1.72%.   

For questions about the Winslow Green Growth Fund, you can speak 
to a shareholder representative by calling toll free at 888-314-
9049.  You can also obtain fund information at the Winslow Green 
website at www.winslowgreen.com or the Winslow Green Growth Fund 
website at www.winslowgreengrowthfund.com.  


Investment Style/Strategy


Winslow Green Growth Fund is described as an "aggressive growth" 
equity portfolio seeking above-average performance and long-term 
capital appreciation through environmentally effective investing.

In pursuit of the fund's appreciation objective, Robinson invests 
primarily in domestic securities of small- and mid-capitalization 
companies that the firm believes exhibit potential for superior 
growth and are reasonably priced as well at time of investment.  
Robinson uses a disciplined screening process that incorporates 
both environmental and financial analysis to create a portfolio 
of 30-40 stocks.  The companies that rank the highest in "green" 
and "clean" effectiveness comprise the portfolio.

According to Morningstar, Robinson's fund was fully invested at 
May 31, 2003, with 99.5% of assets invested in stocks.  At $339 
million, the fund's average market capitalization is "small-cap" 
biased overall.  Nearly all holdings are micro-cap or small-cap 
in market size.  

Since fund inception in 2001, Robinson has maintained the fund's 
growth bias, showing he's willing to pay up some for prospective 
earnings, sales and cash flows.  Accordingly, Morningstar places 
Winslow Green Growth Fund in the "small-cap growth" category for 
comparison (ratings) purposes.  With only 28 portfolio holdings 
at May 31 and a small-cap growth bias, you can expect this fund 
to be more volatile than the average diversified US equity fund.
  

Investment Performance


Although Morningstar's report reflects a fund inception date of 
March 2001, its roots date back to May 1994.  For six years, it 
was associated with Eaton Vance Management.  Therefore, we will 
use fund performance information provided by Winslow Management.

First off, in terms of the long-term picture, Robinson has done 
very well on an inception-to-date basis through May 31, putting 
up an average annual total return of 16.8%.  That was 3.6%/year 
better than the Russell 2000 Growth index and 10.2%/year better 
than the Russell 2500 Growth index over the same period.  So if 
you have a long-term perspective and can handle the higher risk, 
Robinson has shown over a long time period "green begets green."



 

As you can see from the chart above, this fund's net asset value 
has risen significantly since March.  Over the last three months, 
Winslow Green Growth has produced a 41.8% return, ranking in the 
top 1% of the Morningstar small-cap growth category.  The fund's 
25.9% return over the past 12 months also ranks in the top 1% of 
the small-growth category.

On a year-to-date basis through June 25, Robinson has produced a 
50.1% return for investors (1st percentile).  So, when this fund 
gets hot, it can lead the pack.  Aggressive growth funds such as 
Winslow Green Growth Fund have potential to outperform in market 
upswings, but are more vulnerable in market downdrafts.  In 2002, 
Robinson lost 37.5% for investors, reflecting the fund's greater 
downside risk potential.


Conclusion


Investors seeking a stock fund that reflects their environmental 
commitment have a strong choice in the Winslow Green Growth Fund 
managed by Jack Robinson.  As last year indicates, this fund can 
take a nosedive if the market tanks and investors shun small-cap 
growth stocks.  As this year indicates, however, the portfolio's 
capable of producing superior returns in market advances.  

If you believe that the economy expands more than it contracts 
over time, and stocks increase in value more than they decrease, 
then investing in an aggressive growth fund like this makes some 
sense as part of one's long-term financial plan.  Environmental 
effective investing also makes sense because it seeks to enhance 
shareholder returns while promoting a sustainable world.  You'll 
get the best of both worlds with this fund, but be sure that you 
have a long-term horizon and are comfortable with the higher risk 
profile.

Steve Wagner
Editor, Mutual Investor


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The Option Investor Newsletter                  Tuesday 06-26-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: AZO
Dropped Puts: BRCM
Call Play Updates: AMGN, IGT, LH, LXK, MRK, PGR, STJ
New Calls Plays: ABC, AGN, EBAY
Put Play Updates: COF, KSS, RYL, SIVB, WFMI
New Put Plays: None


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

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


CALLS:
*****

AutoZone, Inc. - AZO - close: 75.45 change: -0.14 stop: 74.95

I guess you could say that we've simply lost faith in AZO's 
ability to bounce.  After a week of trying, about all the stock 
has been able to accomplish is to drift under the 200-dma.  That 
isn't an encouraging sign for a call play, now is it.  Lower 
intraday highs and lower intraday lows are adding to our lack of 
interest and rather than wait and hope, we're simply going to 
pull the plug tonight to make room for stronger candidates.  
There never was a solid entry point into the play, but traders 
that are in the play should look at a bounce as a better exit 
point, not an invitation for entry.

Picked on June 22nd at     $76.65
Change since picked:        -1.20
Earnings Date             08/26/03 (unconfirmed)
Average Daily Volume =   1.34 mln




PUTS:
*****

Broadcom Corp - BRCM - close: 25.32 chg: +0.91 stop: 26.05

Hmmmm... BRCM and the chip sector can't seem to make up its 
mind(s).  The breakdown for BRCM on Tuesday looked pretty 
convincing with strong volume backing up the action.  The SOX 
looked ready to break its own 50-dma and the 350 mark.  Now both 
are bouncing.  Shares of BRCM have found support at its rising 
30-dma while the SOX added 2.75 percent today.  How quickly 
investors forget the bad news. It was just two days ago AMD had 
slashed its earnings forecast.  We're not suggesting that BRCM is 
now a worthwhile long play as there is still plenty of overhead 
resistance but the bounce in the SOX and the lack of follow 
through in BRCM's decline has us on the defensive.  We had a 
TRIGGER to go short or buy puts on BRCM if and only if it traded 
at $23.84 or lower.  That has not occurred so we're closing the 
play unopened.

Picked on June xx at $xx.xx
Change since picked:  -0.00
Earnings Date      07/16/03 (unconfirmed)
Average Daily Volume: 14.0 million
Chart =



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

Amgen, Inc. - AMGN - close: 66.32 change: +1.73 stop: 62.40

It sure is hard to argue with consistency, and AMGN has it in 
spades.  After a bit of weakness on Wednesday, the Biotechnology 
stock got the bulls' attention again today and they propelled it 
back over $66 for a 2.67% advance.  That's pretty impressive when 
you stack it next to the Biotechnology index (BTK.X), which 
checked in with a 1.82% gain.  With daily Stochastics and MACD 
now solidly turning bullish, AMGN looks like it is ready to take 
another run at the recent high of $67.50.  A breakout above that 
level will have us eyeing a near-term move towards the $70 level, 
where we'll likely look to harvest some gains ahead of the next 
expected profit taking dip.  Remember the way AMGN tends to move.  
It pushes to a new high, pulls back to a higher low and then 
repeats the process.  So entries are best considered as AMGN is 
rebounding from support, not when the stock is breaking to new 
highs.  Another dip into the $64.50-65.00 area looks favorable 
for new entries on this cycle, with stops set at $62.40.  While 
the near-term profit target is $70, note that our eventual goal 
is $72, which correlates nicely with the PnF chart's bullish 
price target.

Picked on June 24th at     $65.05
Change since picked:        +1.27
Earnings Date             07/22/03 (unconfirmed)
Average Daily Volume =   10.4 mln


----

Intl Game Technology - IGT - cls: 101.23 chg: +1.39 stop: 99.00*new*

The momentum continues for shares of IGT.  The stock cleared the 
$100 mark rather easily Thursday morning.  After the early 
morning buying rush the stock traded sideways between $100.85 and 
$101.50.  The trend has been pretty strong the last four days so 
IGT is due for some more short-term profit taking.  We continue 
to suggest traders take some profits off the table but consider 
leaving a small speculative position as IGT approaches the July 
2nd ex-date for its 4-for-1 split.  On Wednesday we raised our 
stop loss from $94.99 to $97.00.  Today we're going to bump it 
higher again and place our stop at $99.00.

Picked on June 10th at $91.87
Change since picked:    +9.36
Earnings Date        07/17/03 (confirmed)
Average Daily Volume =   1.22 million 
Chart link:


---

Laboratory Corp - LH - close: 30.23 change: +0.36 stop: 28.00

We're growing a little impatient with our bullish play on LH.  
The stock has traded sideways in a narrow range since we added it 
on June 17th.  Thankfully the simple 50-dma has held up as 
support but the stock cannot seem to break out above the $31 
level.  Depending on your style of trading it may be more prudent 
to wait for that upside breakout.  More conservative traders can 
shave off another dollar of risk by placing their stop loss near 
$29.00.  Shares haven't traded below $29.50 since the 17th.  
We're going to leave ours at $28.00 for tonight and re-evaluate 
tomorrow.

Picked on June 17th at $30.10
Change since picked:    +0.13
Earnings Date        07/28/03 (unconfirmed)
Average Daily Volume =   1.49 million 
Chart link:


---

Lexmark Intl - LXK - close: 72.65 change: -0.59 stop: 71.00

LXK is offering bullish traders one of two signals.  This is a 
great new entry point to go long at its rising 50-dma, which has 
been support for weeks.  Or it's a warning signal that buying 
pressure is running out of steam and we're about to see more 
weakness.  We were expecting a bounce today after the stock hit 
its simple 50-dma yesterday.  Unfortunately, LXK lost 59 cents 
while the GHA hardware index rose more than two percent on 
Thursday!  Under performance has not been a problem for LXK but 
if the stock trades under $72, we'd be very cautious about new 
entries.  Currently we have our stop loss set at $71.00 because a 
trade at $71.00 would invalidate the current buy signal with a 
new sell signal on LXK's P&F chart.  There is the strong 
possibility that LXK merely trades down to the $70 area, builds a 
new base and then starts the next leg higher but we would 
hesitant to open new long positions under its 50-dma.

Picked on June 16th at $74.51
Change since picked:    -1.86
Earnings Date        07/21/03 (unconfirmed)
Average Daily Volume =   1.78 million 
Chart link:


---

Merck & Company - MRK - close: 62.00 change: +0.82 stop: 59.50

After breaking out last week and pushing just above $63, MRK has 
been drifting slightly lower in what appears to be a nice bullish 
flag setup.  Price dipped below the bottom of the month-long 
ascending channel this morning on news of positive trial results 
from a competing cholesterol drug candidate being developed by 
Esperion Therapeutics.  But the dip turned out to be just another 
entry point, as the news was quickly discounted as insignificant 
to MRK's revenue stream, at least in the near term.  After the 
initial dip, the stock consistently marched higher throughout the 
day, ending just off its intraday high and right back at the 
pivotal $62.  That bull flag pattern is still perfectly intact 
and MRK ended the day right at the top of the flag.  That means a 
push through $62.25 tomorrow should give the bullish resolution 
to the pattern and set MRK on the path to another run at $64 
resistance.  Just to be on the safe side, traders looking to 
enter on strength should wait for MRK to get back over $62.55 
before playing.  Until this $61-64 range breaks, we're 
maintaining our stop at $59.50.

Picked on June 17th at    $62.37
Change since picked:       -0.37
Earnings Date           07/21/03 (unconfirmed)
Average Daily Volume =  6.25 mln


---

Progressive Corp. - PGR - close: 74.26 change: +0.26 stop: 71.00

While Thursday's action wasn't what one would call bullish for 
our PGR play, it is hard to find fault with the play given such a 
mild pullback this week.  On the hourly chart, this week's price 
action certainly looks like a bull flag, with price drifting down 
towards the bottom of the ascending channel (now at $72.65).  A 
rebound from the channel bottom should be the next high-odds 
entry point, as it should be followed by a renewed bullish move 
towards the top of the channel, which is currently at $79.  PGR 
is still significantly stronger than the Insurance index (IUX.X) 
and as long as it holds within that channel and retains its 
relative strength, buying the dips is still the prudent entry 
strategy.  In addition to the support at the bottom of the 
channel, the 20-dma ($72.98) should help the bullish case.  
Maintain stops at $71 until we can get a read on the strength of 
the next rebound.

Picked on June 15th a  $73.27
Change since picked:    +0.99
Earnings Date        07/16/03 (unconfirmed)
Average Daily Volume =  953 K


---

St. Jude Medical - STJ - close: 58.65 change: +1.16 stop: 54.95

The bounce from rising support continues for STJ. Traders appear 
to be enthusiastic about STJ's medical showcases and the reports 
to be shared at the upcoming Society of Heart Valve Disease 
(SHVD) international meeting that begins June 28 and runs through 
July 1st in Paris.  Some of the reports STJ will be showing off 
are the 17-year study on its Biocor tissue valve, its new Epic 
stented tissue valve (which is not yet available in the U.S.), 
and its Toronto Root stentless valve among others.  The positive 
press can't hurt.  The stock is quickly approaching possible 
overhead resistance near $60.00, which is something to keep in 
mind as you time your entry point.  Our current target is the old 
highs near $64 but we suspect it could tag the $65 level.

Picked on June 24th at $57.62
Change since picked:    +1.03
Earnings Date        07/16/03 (unconfirmed)
Average Daily Volume =   1.56 million 
Chart link:



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

AmerisourceBergen - ABC - close: 70.00 change: +1.31 stop: 66.00

Company Description:
AmerisourceBergen is a pharmaceutical services company dedicated 
solely to the pharmaceutical supply chain.  The company markets 
its products and services to hospital systems (hospitals and 
acute care facilities), alternate care customers (mail order 
facilities, physicians' offices, long-term care institutions and 
clinics), independent community pharmacies, and regional 
drugstore and food merchandising chains.  ABC also provides 
outsourced pharmacies to long-term care and workers' compensation 
programs.  ABC perates in two segments: Pharmaceutical 
Distribution and PharMerica.  The Pharmaceutical Distribution 
division is primarily the company's wholesale and specialty drug 
distribution business, and PharMerica is the company's 
institutional pharmacy business.

Why we like it:
While ABC is listed as a Biotechnology stock, it is really 
involved in the more mundane business of distributing 
pharmaceutical products and related healthcare services.  
Apparently the company is doing a good job, at least based on the 
recent price action.  After bottoming near the $45 level in 
March, the stock has risen an impressive $25 or 55%, and from the 
looks of the daily chart, it is ready to break out again.  The 
last round of earnings in April certainly seemed to have goosed 
the stock, as the company beat estimates by a penny on better 
than expected revenues.  The next day, Raymond James upgraded the 
stock to Strong Buy and ABC was off to the races, not really 
stopping for breath until earlier this month when it ran into 
resistance just over $70.  ABC has been consolidating in a rather 
narrow range ($67.50-70.50) for the past 2 weeks and with today's 
move back to the $70 level at the close, a breakout seems to be 
brewing.

The PnF chart certainly agrees, as it is on a Buy signal, in a 
column of X, and has a bullish price target of $84.  While we're 
not going to target a move that high, it is nice to know that the 
stock has potential room to run.  With strong historical 
resistance near $75, that will be our initial target.  Note the 
ascending channel on the chart below -- a break above $70 would 
push ABC back into the upper half of the channel and could be 
used for aggressive entries enroute to another touch of the top 
of the channel.  Those with a more conservative style will want 
to look for a dip before taking the plunge.  With the recent 
strength of support near $67.50, any rebound from above $68 looks 
like a good conservative entry.  We'll initially set our stop at 
$66, which is just below the early June closing lows, as well as 
the 20-dma ($67.13).  One additional item to note is that volume 
has been rather light the past couple days, so traders looking to 
enter on strength will want to confirm that strength with 
increasing volume.

Suggested Options:
Shorter Term: The July 70 Call will offer short-term traders the 
best return on an immediate move, as it is currently at the 
money.

Longer Term: Aggressive traders looking to capitalize on an 
extended rally will want to look to the August 75 Call.  This 
option is currently out of the money, but should provide 
sufficient time for the stock to move higher without time decay 
becoming a dominant factor over the short run.  More conservative 
long-term traders should utilize the August 70 call.

BUY CALL JUL-65 ABC-GM OI=2349 at $5.90 SL=4.00
BUY CALL JUL-70 ABC-GN OI=2603 at $2.05 SL=1.00
BUY CALL AUG-70 ABC-HN OI= 332 at $3.30 SL=1.75
BUY CALL AUG-75 ABC-HO OI= 177 at $1.30 SL=0.75

Annotated Chart of ABC:

 

Picked on June 26th at     $70.00
Change since picked:        +0.00
Earnings Date             07/24/03 (unconfirmed)
Average Daily Volume =    1.50 mln


---

Allergan, Inc. - AGN - close: 66.20 change: +2.30 stop: 75.25

Company Description:
Allergan is a technology-driven, global healthcare company that 
develops and commercializes specialty pharmaceutical products for 
the ophthalmic neurological, dermatological and other specialty 
markets, as well as ophthalmic surgical devices and contact lens 
care solutions.  Its revenues are principally generated by 
prescription and non-prescription pharmaceutical products in the 
areas of ophthalmology and skin care, neurotoxins, intra-ocular 
lenses and contact lens care products.  The company's are sold to 
drug wholesalers, independent and chain drug stores, pharmacies, 
commercial optical chains, commercial optical chains, food 
stores, hospitals and individual medical practitioners.

Why we like it:
Never mind the triple-digit P/E ratio.  At least that seems to be 
the attitude of investors in shares of AGN, a company perhaps 
best known for popularizing Bo-tox injections to eliminate 
wrinkles.  After rebounding from the $50 level last fall, the 
stock has continued to work its way higher, leaving many a 
frustrated bear in its wake.  The rally in early June took AGN 
through the key $75 resistance and then shortly thereafter 
through $80.  After a $10 move in such a short period of time, 
some consolidation was necessary and we've been watching for an 
opportunity to play with the bulls.  That opportunity appears to 
be at hand, as the $76 level has held as support, with Thursday's 
very bullish candle looking like the bullish reversal needed for 
the next leg up the chart.  Note on the chart below how both the 
$76 level (site of the early June reaction low) and the 20-dma 
($77.11) teamed up to provide support following this morning's 
brief dip.  The PnF chart shows the strength of the stock so far 
this year, with one Buy signal after another leading the stock to 
its current altitude.

With daily Stochastics and MACD starting to turn bullish again, 
this looks like a good spot to stake our claim on a new bullish 
entry.  There is significant resistance in the $81-82 area, but 
AGN has been pushing through "significant resistance" on a 
regular basis since March.  As long as those levels continue to 
be broken, buying the dips looks like a winning strategy.  Right 
now, any dip back near the $77.00-77.50 area looks like about the 
best we can do for new entries, as the rebound seems to already 
be in progress.  Looking at targets, the first objective will be 
for a return to the $81-82 area, where the bulls ran into trouble 
a couple weeks ago.  If they're able to scale that mountain on 
the next attempt, then we'll look for an eventual target of $84.  
While a bit wider than we'd prefer to use, a stop at $75.25 
should keep us from being prematurely stopped out, as that is 
well below recent support, as well as the intraday lows from 
early June.

Suggested Options:
Shorter Term: The July 75 Call will offer short-term traders the 
best return on an immediate move, as it is currently in the 
money.

Longer Term: Aggressive traders looking to capitalize on an 
extended rally will want to look to the August 80 Call or even 
the July 80 Call.  This option is currently out of the money, but 
should provide sufficient time for the stock to move higher 
without time decay becoming a dominant factor over the short run.  
More conservative long-term traders should utilize the August 75 
call.  Note that open interest is still very thin in the August 
contracts.

BUY CALL JUL-75 AGN-GO OI=1747 at $5.00 SL=3.00
BUY CALL JUL-80 AGN-GP OI=1233 at $1.85 SL=1.00
BUY CALL AUG-75 AGN-HO OI=   0 at $6.10 SL=4.00
BUY CALL AUG-80 AGN-HP OI=   3 at $3.10 SL=1.50

Annotated Chart of AGN:

 

Picked on June 26th at     $78.74
Change since picked:        +0.00
Earnings Date             07/28/03 (unconfirmed)
Average Daily Volume =    1.21 mln


---

eBay Inc - EBAY - close: 103.12 change: +2.31 stop: 99.99

Company Description:
eBay is the world's online marketplace(TM). Founded in 1995, eBay 
created a powerful platform for the sale of goods and services by 
a passionate community of individuals and businesses. On any 
given day, there are millions of items across thousands of 
categories for sale on eBay. eBay enables trade on a local, 
national and international basis with customized sites in markets 
around the world. (source: company press release)

Why We Like It:
Investors have been hopping on the EBAY train for months now.  
Shares of this Internet auction giant have more than doubled from 
its October 2002 low of $50.00 and there appears to be no end in 
sight.  Today heralded the company's annual shareholder's 
meeting.  While nothing too exciting or surprising came as a 
result of the meeting, investor did not seem to mind that 
shareholders approved the bigger employee stock options plan.  
Shares have been consolidating under overhead resistance at $104 
for nearly a month.  We think EBAY is getting ready to break out 
above this level and begin its next leg higher.  The company is 
expected to announce earnings on July 18th and J.P.Morgan just 
raised their earnings estimates for the company two days ago.  
Plus, there are rumors that EBAY might announce a stock split 
with their earnings report.  However, let us repeat that's just a 
rumor and a weak one at that.

Our strategy will be to use a TRIGGER at $104.05 to go long (or 
buy calls).  If we are triggered our initial stop loss will be at 
$99.99.  More aggressive traders can attempt to target shoot 
bullish entries on dips to the $101 level.  Our short-term target 
is $110 but EBAY may be capable of reaching old highs near $120.

Suggested Options:
Given that there could be a pre-earnings run, our suggestion 
would be to play the July options but the August strikes are not 
a bad play either.

BUY CALL JUL-100 QXB-GT OI= 8508 at $5.00 SL=3.00
BUY CALL JUL-105 QXB-GA OI=14077 at $2.10 SL=1.00
BUY CALL JUL-110 QXB-GB OI= 7538 at $0.70 SL=0.00
BUY CALL AUG-105 QXB-HA OI=  792 at $4.10 SL=2.00
BUY CALL AUG-110 QXB-HB OI=  227 at $2.15 SL=1.00

Annotated Chart:

 

Picked on June xxth at $xxx.xx
Change since picked:     +0.00
Earnings Date         07/18/03 (unconfirmed)
Average Daily Volume =    6.76 million 
Chart link:



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

Capital One Financial - COF - close: 49.95 chg: +1.30 stop: 52.51

Thus far it's been a week of churning sideways for shares of COF.  
The credit card lender has consolidated between $48.00 and $50.00 
the last four days.  We're a bit surprised though.  The bearish 
breakdown Friday-Monday looked pretty good but there's been no 
follow through.  We suspect it could have been from traders 
waiting to see what the Fed would do.  Now that the Fed has cut 
its interest rates by 25 bps, this is actually a good thing for 
COF.  Yet surprisingly, shares have failed to react to it - at 
least very strongly.  The lower rate should increase the spread 
between what they charge consumers and what COF pays on the money 
they lend out, thus giving them a little extra cushion.  The 
major financial indices (BIX, BKX, XBD) all bounced today, but 
like COF the reaction was a little muted.  More conservative 
traders can reduce their risk in COF by lowering their stop to 
$52.00, $51.00 or even $50.11.  We would grow concerned should 
COF actually close above $50 again.

Picked on June 22 at $49.64
Change since picked:  +0.31
Earnings Date      07/16/03 (unconfirmed)
Average Daily Volume: 4.3 million
Chart =


----

Kohl's Corp. - KSS - close: 50.42 change: +0.74 stop: 51.75

For all its bouncing around, our KSS play has certainly been 
annoying with its inability to either move higher or lower.  The 
last 12 days have closed within a $2.00 range and there really 
hasn't been anything approaching a trend that we can hang our hat 
on during that time.  Support has been holding up well near the 
$48 level, while the 20-dma (now $51.25) continues to cap each 
rally attempt.  That means if we're going to game new entries, 
we've got to fade the failed rally attempts near the $51 level in 
anticipation of the eventual breakdown below support.  Daily 
Stochastics are working their way towards overbought while price 
essentially trades flat and that is bearish.  It is just a 
question of whether price will in fact break south under the 
weight of relative weakness, or if the recent stabilization in 
the Retail index (RLX.X) will be enough to drag KSS off the mat.  
Because of the bouncy behavior of the RLX, we should confirm 
weakness in that index before opening new bearish plays on KSS.

Picked on June 15th at   $49.45
Change since picked:      +0.97
Earnings Date          08/14/03 (unconfirmed)
Average Daily Volume = 4.45 mln


---

The Ryland Group - RYL - close: 71.95 change: +2.46 stop: 74.50

Is anyone else sick of the yo-yo action in the Housing stocks?  
Every time RYL looks like it is ready to have a decent drop, it 
squirts higher like a balloon that has been held under water and 
then released.  We got more of the same from our RYL play this 
week, as the stock has twice closed under $70, looking like a 
breakdown was at hand.  Then the buyers emerged the next day, 
undoing all of the bearish action of the prior day.  While still 
holding below the $72.50 resistance and the 10-dma ($72.86), the 
stock is looking like it really wants to move higher, much to our 
chagrin.  Aggressive traders may want to enter on another 
rejection below the 10-dma, but otherwise, we're looking for a 
failure at a higher level (perhaps near $74) as a better 
risk/reward proposition.  More conservative players will still 
want to wait for RYL to crack under $68.50 before initiating new 
positions.  Look for renewed weakness in the $DJUSHB index before 
playing.

Picked on June 22nd at   $69.95
Change since picked:      +2.00
Earnings Date           07/23/03 (unconfirmed)
Average Daily Volume =    900 K


---

Silicon Valley Bancshares - SIVB - close: 23.27 change: +0.68 
stop: 25.25

A bounce was what we wanted and a bounce was what we got on 
Thursday, as shares of SIVB gained a solid 3% by the closing 
bell.  But the way the stock ended the day is far more 
interesting to us than the fact the candle was green.  After 
bouncing as high as $23.73, the stock found willing sellers just 
below the top of the gap from Tuesday.  Hey, that's just what we 
were looking for and traders that were quick on  the trigger 
should have gotten a solid entry when the rollover began about 2 
hours before the close.  Recall that we're looking for still-
falling interest rates to adversely affect the stock and with the 
end of the quarter looming, perhaps others are thinking the same 
thing.  As we mentioned on Tuesday, failed rally attempts below 
$24.50 look like the best setup for new entries, although a sharp 
drop under $22 would certainly work for momentum entries now that 
we've seen a bit of an oversold bounce.  Maintain stops at $25.25 
and look for a breakdown under $22 to have SIVB quickly seeking 
out $20 support near the 200-dma.

Picked on June 24th at   $22.82
Change since picked:      +0.45
Earnings Date               N/A
Average Daily Volume =    668 K


---

Whole Foods Market - WFMI - cls: 48.06 chg: -0.07 stop: 50.00     

So far so good.  We were a little bit apprehensive with what 
appeared to be WFMI's attempt to bounce back to the $50 level but 
shares have essentially failed at the 10-dma yet again.  The 
$49.00 level has been a top on the stock price for three days 
straight.  More conservative investors might want to consider 
lowering their stop but OptionInvestor is going to leave ours at 
$50 for tonight.  The weakness in WFMI the last two sessions 
might be taken as a possible new entry point for new bearish 
positions.  Our short-term target remains at $45.00.

Picked on June 13 at $49.44
Change since picked:  -1.38
Earnings Date      07/30/03 (unconfirmed)
Average Daily Volume: 1.6 million
Chart =



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

None


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The Option Investor Newsletter                  Tuesday 06-26-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three: 

Play of the Day: AGN
Traders Corner: Inquiring Minds Want To Know – So Here It Is

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

Allergan, Inc. - AGN - close: 66.20 change: +2.30 stop: 75.25

Company Description:
Allergan is a technology-driven, global healthcare company that 
develops and commercializes specialty pharmaceutical products for 
the ophthalmic neurological, dermatological and other specialty 
markets, as well as ophthalmic surgical devices and contact lens 
care solutions.  Its revenues are principally generated by 
prescription and non-prescription pharmaceutical products in the 
areas of ophthalmology and skin care, neurotoxins, intra-ocular 
lenses and contact lens care products.  The company's are sold to 
drug wholesalers, independent and chain drug stores, pharmacies, 
commercial optical chains, commercial optical chains, food 
stores, hospitals and individual medical practitioners.

Why we like it:
Never mind the triple-digit P/E ratio.  At least that seems to be 
the attitude of investors in shares of AGN, a company perhaps 
best known for popularizing Bo-tox injections to eliminate 
wrinkles.  After rebounding from the $50 level last fall, the 
stock has continued to work its way higher, leaving many a 
frustrated bear in its wake.  The rally in early June took AGN 
through the key $75 resistance and then shortly thereafter 
through $80.  After a $10 move in such a short period of time, 
some consolidation was necessary and we've been watching for an 
opportunity to play with the bulls.  That opportunity appears to 
be at hand, as the $76 level has held as support, with Thursday's 
very bullish candle looking like the bullish reversal needed for 
the next leg up the chart.  Note on the chart below how both the 
$76 level (site of the early June reaction low) and the 20-dma 
($77.11) teamed up to provide support following this morning's 
brief dip.  The PnF chart shows the strength of the stock so far 
this year, with one Buy signal after another leading the stock to 
its current altitude.

With daily Stochastics and MACD starting to turn bullish again, 
this looks like a good spot to stake our claim on a new bullish 
entry.  There is significant resistance in the $81-82 area, but 
AGN has been pushing through "significant resistance" on a 
regular basis since March.  As long as those levels continue to 
be broken, buying the dips looks like a winning strategy.  Right 
now, any dip back near the $77.00-77.50 area looks like about the 
best we can do for new entries, as the rebound seems to already 
be in progress.  Looking at targets, the first objective will be 
for a return to the $81-82 area, where the bulls ran into trouble 
a couple weeks ago.  If they're able to scale that mountain on 
the next attempt, then we'll look for an eventual target of $84.  
While a bit wider than we'd prefer to use, a stop at $75.25 
should keep us from being prematurely stopped out, as that is 
well below recent support, as well as the intraday lows from 
early June.

Suggested Options:
Shorter Term: The July 75 Call will offer short-term traders the 
best return on an immediate move, as it is currently in the 
money.

Longer Term: Aggressive traders looking to capitalize on an 
extended rally will want to look to the August 80 Call or even 
the July 80 Call.  This option is currently out of the money, but 
should provide sufficient time for the stock to move higher 
without time decay becoming a dominant factor over the short run.  
More conservative long-term traders should utilize the August 75 
call.  Note that open interest is still very thin in the August 
contracts.

BUY CALL JUL-75 AGN-GO OI=1747 at $5.00 SL=3.00
BUY CALL JUL-80 AGN-GP OI=1233 at $1.85 SL=1.00
BUY CALL AUG-75 AGN-HO OI=   0 at $6.10 SL=4.00
BUY CALL AUG-80 AGN-HP OI=   3 at $3.10 SL=1.50

Annotated Chart of AGN:

 

Picked on June 26th at     $78.74
Change since picked:        +0.00
Earnings Date             07/28/03 (unconfirmed)
Average Daily Volume =    1.21 mln



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

Inquiring Minds Want To Know – So Here It Is

By Mike Parnos, Investing With Attitude

Confusion is a wonderful thing.  It forces us to clarify that 
which is confusing us.  For those who prefer to remain confused, 
the line for food stamps forms on the right.  

June's option expiration provided us with a situation that, 
obviously, requires some additional explanation.  We had an iron 
condor position on the SPX.  For the bear call spread we sold the 
June 995 calls and bought the June 1015 calls.  We got lucky and 
the SPX closed Thursday, the last day of trading, at 994.70.  

Life Is Full Of Surprises
The proper play, at that point -- if this were a stock -- would be 
to close out the short position for a nickel or dime at the close.  
This is something we've discussed numerous times in previous 
columns.  Why is it wise to close out this position?  Because, 
even though a stock is at, or near, the short strike, sometimes 
there are unexpected assignments or exercising of the short 
options.

Mike,
I don't understand how they come up with the 1001.56.  If that is 
what they used, the SPX didn't even get near 1001.56 until around 
11 a.m. according to my Q-charts program.  Obviously, now that I 
know, I will exit any position prior to the expiration. However, 
it does concern me that there is this hazy area.  Understanding 
how they account for the closing value is an important thing for 
anyone trading these options to understand.  I wish we could get 
more data on how they derived the 1001.56.  Thanks.

Response:
First, I went to the CBOE site and pulled up the following.  This 
should answer part of your question.

"Settlement of Option Exercise:
The exercise-settlement value, SET, is calculated using the 
opening (first) reported sales price in the primary market of each 
component stock on the last business day (usually a Friday) before 
the expiration date. If a stock in the index does not open on the 
day on which the exercise & settlement value is determined, the 
last reported sales price in the primary market will be used in 
calculating the exercise-settlement value. The exercise-settlement 
amount is equal to the difference between the exercise-settlement 
value, SET, and the exercise price of the option, multiplied by 
$100. Exercise will result in delivery of cash on the business day 
following expiration."

I have learned that, to establish an "official" opening price, 
they have to wait until all 500 stocks in the SPX are open.  
Perhaps one of the stocks had a delayed opening.  As each stock 
opens, that price is recorded – until all 500 stocks are open.  
Then the official opening price is calculated.

Indexes Are Different
To get a better understanding of the process, I called the magic 
number (1-888-OPTIONS) and learned a little something.  As we 
know, when the SPX closed below our sold strike of 995 on 
Thursday, our exposure wasn't over.  The SPX "official" close (and 
don't ask me why) is based on where the SPX opens on Friday 
morning.

According to the "official" numbers, the SPX opened Friday morning 
at 1001.56.  Those who did not close out their position were 
surprised when their account was settled – based on the Friday 
morning number.  A very nice profit had turned into a bit of a 
loss.

Jeff, at 888-OPTIONS looked it up and discovered that, to close 
out the short June 995 call, it would have cost about $2.65.  In 
other words, apparently, when trading European index options, the 
time premium doesn't erode to zero.  

Another Decision To Make – It's a Crapshoot
So, now we have yet another decision to make.  Here's a review of 
the scenario.  The June SPX 995 call is below 995 near the close 
of trading on Thursday.  To close out the short call would cost 
$2.65.  We can:
a) Spend the $2.65 to close out the position, or
b) Wait for the settlement on Friday morning – taking the chance, 
and hoping, that the SPX would open below 995.  You're also taking 
the chance that the SPX will open above 995.

It's a rare occurrence, but it happens.  It did to us.  I will 
make the adjustments on the calculations of our CPTI portfolio to 
reflect a loss of $1,800.
____________________________________________________________

NEW JULY POSITIONS

July Position #1 – LLTC Baby Condor – Closed at $32.85
Sell 10 contracts of LLTC July $35 calls @ $1.05
Buy 10 contracts of LLTC July $37.50 calls @ $.45
Net credit is $.60
Sell 10 contracts of LLTC July $30 puts @ $.75
Buy 10 contracts of LLTC July $27.50 puts @ $.40
Net credit is $.35
Total credit of $.95.  Risk is $1.55 ($2.50 - $.95)
Linear Technology (LLTC) was one of our profitable quickies.  We 
now want to try to establish a slightly longer relationship.  
We've created a maximum profit range of $30 to $35 and a safety 
range of  $29.05 to $35.95.  Maximum profit is $950.  So far, so 
good.
_____________________________________________________________

July Position #2 – SPX Iron Condor – Closed at $985.82
Sell 4 contracts of SPX July 940 puts
Buy 4 contracts of SPX July 925 puts
Net credit: $1.50
Sell 4 contracts of SPX July 1025 calls
Buy 4 contracts of SPX July 1040 calls
Net credit: $2.55
Total credit: $4.05.  Risk is $10.95 ($15 - $4.05)
Here we go again.  The range is 940 to 1025.  I'm still 
anticipating (what do I know?) that pullback we never really got 
in June.  I've reduced the number of contracts to four to reduce 
our exposure.  This still may be a bit aggressive for some of you.  
Be careful and stay within your risk tolerance.
Maximum profit is $1,620.  Also, so far, so good.
______________________________________________________________

July Position #3 – RUT Iron Condor – Closed at $449.56
We were going to put on an Iron Condor with a 420/480 range.  
Either I was drunk when I came up with the numbers, or the 
premiums changed dramatically on Monday morning.  Regardless, with 
premium gone, the proposed position was aborted.
_____________________________________________________________

Position #4 – Ongoing QQQ ITM Baby Strangle – Currently at $30.34
In May we bought 10 contracts of the July QQQ $30 puts @ $2.05 and 
bought 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 off 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.
______________________________________________________________

New Position for July – DJX – Bear Call Spread – Plus - $90.79
We're due to experience the summer doldrums – and why shouldn't 
the DOW participate?  We're going to establish a bear call spread 
and use that money to buy some puts.  Here we go.
Sell 15 contracts of DJX July $90 calls @ $1.90
Buy 15 contracts of DJX July $92 calls @ $1.00
Net credit of $.90 X 15 contracts = $1,350

Now, you can just leave that position alone and, if the DOW 
finishes below 9000 at July expiration, you keep the $1,350.   
Your exposure would be $1.20 (9200 – 9000) X $1,800.  Your maximum 
profit would be $1,350.

How Bearish Are We?
Another alternative is to use the $1,350 to buy some puts.  It all 
depends on how bearish you are.  You could buy 10 contracts of the 
September $84 puts for about $1,300 or 8 contracts of the 
September $86s.  That would give the DOW three months to move 
down.

For the time being, we're going to put on only the bear call 
spread and watch the DOW to see if it begins its descent.
______________________________________________________________

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
______________________________________________________________

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


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