Option Investor

Daily Newsletter, Sunday, 07/13/2003

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The Option Investor Newsletter                   Sunday 07-13-2003
Copyright 2003, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Conflicting Evidence
Futures Market: Week in flux
Index Trader Wrap: WHIPPY
Editor's Plays: Still On Target
Market Sentiment: Trend change?
Ask the Analyst: Weighting your account bullish and bearish
Coming Events: Earnings, Splits, Economic Events

Posted online for subscribers at http://www.OptionInvestor.com
MARKET WRAP  (view in courier font for table alignment)
        WE 7-11          WE 7-04         WE 6-27          WE 6-13
DOW     9119.59 + 49.38  9070.21 + 81.16 8989.05 -211.70  + 83.63
Nasdaq  1733.93 + 70.48  1663.45 + 38.19 1625.26 - 19.46  + 18.23
S&P-100  502.48 +  6.40   496.08 +  4.47  491.61 - 10.78  +  4.57
S&P-500  998.14 + 12.44   985.70 +  9.48  976.22 - 19.47  +  7.08
W5000   9610.89 +148.38  9462.51 +104.02 9358.49 -153.14  + 57.47
RUT      473.77 + 17.42   456.35 +  7.60  448.75 -  0.81  -  0.15
TRAN    2545.58 +130.27  2415.31 -  1.72 2417.03 - 25.25  - 13.28
VIX       20.72 -  0.89    21.61 -  0.10   21.71 +  0.62  -  1.79
VXN       32.80 +  0.33    32.47 +  1.54   30.93 -  1.41  -  2.12
TRIN       0.94             1.98            1.93             1.00
Put/Call   0.98             1.07            0.99             0.51

Conflicting Evidence

Conflict brews over President Bush's apparently unsupported
allegation that Iraq had sought uranium from Niger, with that
statement made during his January State of the Union address.
Friday afternoon, CIA Director George Tenet took the blame.  CNBC
reported on the issue all afternoon, noting that questions about
the issue dogged President Bush in his trip in Africa, a trip he
intended to focus attention on other issues.

Conflicting evidence presents itself in a study of the markets,
too.  Economic numbers released this week muddied the economic
picture, with this week's much worse-than-expected initial claims
numbers conflicting with last week's much better-than-expected ISM
services number.  Today saw the release of May trade deficit and
June PPI numbers, with the trade gap widening to $41.8 billion, in
line with expectations that ranged from $41.5 billion to $42
billion.  Exports rose 0.9 percent while imports rose 0.7 percent.
Increased sales of autos, capital goods, and industrial materials
added to export figures, while the imports figure rose in part due
to the declines in the U.S. dollar.  Are we really importing more
goods?  The same volume of imports now costs more U.S. dollars,
and those figures are recorded in U.S. dollars, but some do
believe the higher figure resulted from increasing demand for
capital goods and industrial materials.

June core PPI, which excludes energy and food, fell 0.1 percent
rather than rising 0.3 percent as had been expected.  PPI climbed
0.5 percent.  The falling core PPI gave rise to debates whether
deflation worries might be legitimate, but the number certainly
reflects a continued inability to raise prices among the

Dow biggie General Electric reported Q2 earnings that met
expectations, but the bellwether stock narrowed its 2003
expectations to $1.55 to $1.61 per share from its earlier estimate
of $1.55 to $1.70 per share.  While some also characterized this
guidance as being in line since many analysts had pegged the
expectations at $1.60 per share, others reacted more negatively
and the stock lost 0.25 percent.  Whether this number was expected
or not, it did not suggest an economic rebound underway.  GE
traded as high as 28.85 and as low as 27.99 on higher-than-average
volume on a light-volume day on the indices, but closed at 28.12.
GE blamed higher plastics and oil costs for the narrowed
expectations.  While the quarterly earnings of 38 cents per share
met expectations, they were below the year-ago earnings of 44
cents per share.  Revenue, although above expectations, was also
slightly below year-ago levels.

Coca-Cola will also be battling conflicting evidence, as a former
employee filed a wrongful termination suit against the company in
which he charged that the company pumped up revenues and
manipulated product test studies.  The Justice Department now
investigates, adding its heft to the SEC, which began an inquiry
into the charges a month ago.  During that month, KO has traded
down from its June high of $48.34 to today's closing price of
$43.91.  Although down $0.10 today, KO bounced from its low of
43.35 to close at 43.91.

Foreign markets presented conflicting evidence of global economic
strength or weakness.  The Nikkei fell 320.27 points or 3.22
percent in Friday's trading, but other global bourses took little
notice.  The FTSE 100 closed up 0.73 percent, the CAC 40 traded up
1.29 percent, and the DAX added 1.73 percent.  Our markets behaved
similarly, with the Dow adding 0.92 percent, the SPX 0.95 percent,
the OEX 1.08 percent, and the COMPX 1.05 percent.

I ended last weekend's Market Wrap with the prediction that the
indices seemed primed to move higher, perhaps only over the next
week or so, with maybe a down day or two along the way.  We got
the move higher from last weekend's levels and the couple of down
days.  Do I still believe that the move higher will end in within
that period I predicted?  The charts present conflicting evidence.

Daily Chart of the SPX:

After breaking out of its bull flag week before last, the SPX this
week maintained 986 support. Friday, the SPX dipped below its
ascending trendline and its 21-dma, but closed above both. That's
the evidence on the bullish side of the case.

The bearish side can present evidence, too.  The SPX's rise did
not even test the midline resistance of the ascending channel, nor
did it test the June high.  While the SPX made a lower high, the
5(3)3 stochastics were perhaps setting up bearish divergence, with
the stochs making equal highs while the price made a lower high.
RSI turns over again from a lower low, not signaling divergence,
but not signaling strength, either.

MACD remains inconclusive and the modest ADX level currently shows
a trend-less or range-bound market.  I haven't shown the hourly
chart here, but it depicts similar conflicting evidence:  RSI
turning up again while the stochastics turn down out of overbought
territory, the -DI ADX line making a bearish cross of the +DI
line, and a flattening MACD.

Bearish and bullish evidence appears evenly matched, but next
week's evidence of continued economic weakness or economic
recovery may make one case stronger than the other.  Market
pundits will have much evidence to weigh, with such heavyweights
or former heavyweights as C, INTC, MOT, PHTN, FRMD, TER, YUM, JPM,
SFA, SNWL, UTSI, WEBX, XLYX, and ERCY reporting.  C reports Monday
before the open, and INTC, MOT, PHTN, RFMD, TER, and YUM report

While many point to the easy comparisons to be made and the
possibility that many companies can surprise to the upside, GE's
experience Friday showed that participants will look beyond the
easy comparisons.  In addition, markets seemed priced to
perfection.  Take a look at only one of these stocks due to report
next week.

Daily Chart of SFA:

This is a good-looking price chart complete with ascending moving
averages, a stair-stepping climb higher, and an ADX still above
30, but that steep rise cannot persist forever.  SFA must
consolidate or pull back at some time.  Evidence shows warning
signs in the form of bearish divergences on the indicators.  Even
ADX has begun to slope down.  These kinds of divergences have
shown up previously in the chart--check out the stochastics highs
in mid-May and mid-June and compare them to price highs--while
prices continued to move higher, but they will someday signal what
bearish divergences usually do signal.

SFA has more than doubled in price since February. The company's
prospects had better have increased, too.  Dramatically.  I have
no foreknowledge of SFA's likely results, and it's possible that
they will surprise to the upside and the stock will continue to
gain.  This is just meant to be a representative chart.  I can
reproduce dozens of charts that look like this one.  So far, few
have stumbled, with most continuing to climb, consolidate, and
then resume their climbs.  Perhaps they can do that all the way
into next year, but that seems doubtful.

In addition, next week's economic calendar is full, with the
Kansas City Fed Manufacturing Index due Monday; NY Empire
Manufacturing Index due Tuesday along with retail sales; June CPI,
Capacity Utilization, and Industrial Production due Wednesday;
Initial Claims, Building Permits, Housing Starts, and the July
Philadelphia Fed due Thursday, and July preliminary Michigan
Sentiment due Friday.  Several of those numbers will have the
capacity to move the markets, but perhaps none will be as
important as the Greenspan testimony at the House on monetary
policy.  That testimony takes place at 10:00 ET Tuesday and it
wouldn't be unlikely for market participants to decide to take
profit ahead of that testimony.

Jeff Bailey sometimes poses the thought that perhaps markets
aren't hit or buoyed by a specific piece of news as much as they
were already primed to move a certain direction and the news
provided the impetus.  Right now, markets are priced as if the
economic recovery had already begun, and that's where the danger
lies.  With conflicting technical developments, confirmation must
come from price action, however.

One type of price action would be consolidation, with the SPX
holding current 986 support while daily oscillators relieve
overbought pressure.  The modest level of the ADX hints at that
possibility.  If that's to happen, look for MACD to remain flat
while price holds above 984-96 and RSI and the stochs travel down
toward oversold levels.  If consolidation occurs, it might do so
in the form of a bearish right triangle, with a flat bottom either
near 984-986 or slightly lower at 972-975, with a descending top
formed from the two recent highs.  This formation appears to be
setting up on the chart and would indicate likely lower prices
sometime within the next two weeks, but bearish formations can
break to the upside, too.

This range would be difficult to trade as traders could not be
sure how many touches of the upper trendline would occur before a
fall through the lower trendline, with the best policy perhaps
being a decision to wait for either an upside or downside break of
the triangle.

A fall through 984 might therefore find next support at 972-975
historical support, but a break of 972 might drive the OEX down to
the 959-962 level that represents the 25 percent rally
retracement.  SPX 929 represents the 38.2 percent rally
retracement and also is the area of the 200-ema, but there's also
light support at 935.

If the SPX instead bounces from the 984-986 level, it perhaps will
see next resistance at 1000, of course, and then at 1010 and 1015,
near the June 1015.33 high.  Above that is the resistance implied
by the midline of the rising regression channel, somewhere between
1023 and 1027 depending on how quickly the SPX should rise, and
then again near 1045-1050.  Evidence does not currently suggest a
move above the June high, but instead would favor either range-
bound trading or a move lower, perhaps to test the 25 percent
retracement near 960 again.  Ahead of the initial reactions to
Greenspan's address and the earnings and economic numbers due next
week, it's not possible to project how deep a retracement would
take the SPX, but a retracement between 25 percent (960) and 38.2
percent (929-930) seems most likely.  That depends on earnings
that reasonably approximate expectations and outlooks that leave
room for hope of economic recovery.  There's no guarantee that
either will happen.

The OEX daily chart also displays conflicting evidence.  The OEX
also tested its descending trendline and its 21-dma, and closed
above both.  It also formed a lower high, but held 494-496
support.  Bearish divergence shows up on the chart.

Daily Chart of the OEX:

Here I've included both the 21(3)3 and 5(3)3 stochastics.  The
5(3)3 stochastics reveal bearish divergence (equal stochastics
highs while price makes a lower high), but the 21(3)3's do not,
although their downturn in midrise signals weakness, too.  Unlike
the SPX's RSI, OEX RSI kicked back up again on Friday, perhaps
indicating that market strength was concentrated in the big caps
that might be represented in the OEX.  That conclusion is belied
by the RUT, however, which also gained and showed an RSI that
kicked back up.

OEX MACD flattens.  I have not shown ADX here, but it dives even
more strongly than the ADX for the SPX, indicating a continued
loss of strength in the previous rally.  -DI made a bearish cross
of +DI, but they're still close and can recross in the other

Although the low ADX shows that oscillator evidence can be trusted
since the market is not strongly trending, the oscillator evidence
proves inconclusive and may be pointing to a choppy market.  Price
must guide decisions and hopefully will realign the oscillators so
that evidence can be found of future direction.  CCI, shown here,
is also inconclusive as it oscillates around the signal line.  The
same possible bearish right triangle sets up on this chart, with
the preferred tactic possibly being to await either a downside or
upside break of the triangle to initiate plays.

Support is layered underneath the current position, perhaps
strongest at 500.80-501, 497.60-498, 494-496, and then 489-491, at
which point it would be testing the bull flag's support.  Other
support might be found at the 25 percent rally retracement just
below 485, at 478.50-480, and at the 38.2 percent rally
retracement and 200-ema at 469-470.

OEX resistance is also layered closely overhead, in two-point
increments.  OEX 504 and 506 have proved to be resistance in the
past week.  The descending trendline off the recent price tops
crosses near 507.75, just below last week's 508.28 high.  The OEX
would find a zone of resistance between 510-513, and a close above
that level would hint at a move toward the top of the regression
channel, currently near 530. If the OEX moves that far, it might
then see light resistance near the June high, near 417.50, near
the top of the regression channel, and again at 533 and 542.  If
the OEX did manage a move to the top of the regression channel,
the currently low ADX hints that it might also establish a trading
range throughout the summer doldrums.

If each of these charts presents conflicting evidence, a
comparison of the DJI and NDX offers even more conflicting
evidence.  Unlike the other indices, the DJI did not close above
its 21-dma.  In fact, it challenged that average and fell back
from it, displaying more weakness than the two S&P's.

Daily Chart of the DJX, as proxy for DJI:

Because the DJI could not close above its 21-dma, it perhaps might
be expected to show more price or oscillator weakness, too, but
prices this week also maintained 9050 support on a closing basis
and oscillators show similar mixed evidence.

The comparative weakness might lend more evidence to the theory
that the DJI will again test its 25 percent retracement level near
8880, but the holding of 9050 support challenges that evidence.
The DJI appears to be setting up a bearish right triangle, too,
with the likely outcome being a downside break of that triangle.
The break might not be catastrophic, however, perhaps portending a
drop only to a 25 percent or 38.2 percent retracement of the
rally.  Support might be found in 50-point increments down to
8950.  The 25 percent rally retracement lies at 8880, some support
exists between 8710-8740, and the 38.2 percent retracement and
200-ema lie between 86.20 and 86.60.

An upside break of the potentially bearish right triangle would
occur at a move over 9200, with last week's 9260 level providing
next resistance, and with 9300, 9350, and 9400 also providing
possible resistance.  DJI 9400 would be the location of the
midline resistance.  Although oscillator evidence does not now
point to a move above the midline resistance, a break above that
level might send the DJI to test the top of the channel, currently
near 9770.  Interim resistance would be found at 95-95.50 and

One caution exists:  Unlike the DJI, the TRAN did make a higher
high this week, and at 2538.45, it closed far above its 21-dma at
2461.61.  The TRAN often leads its sister index, the DJI, but Dow
theory says that the DJI now must confirm that higher high on the
TRAN.  If not, we have seen divergence between the sister indices,
and that predicts a fall in both.

The NDX also shows far more strength than the DJI, offering
another piece of conflicting evidence.  The NDX broke out of its
bear flag formation and traded at a new relative high this week.
Not only did it trade at a new relative high, but during this
week's pullbacks, it also found support at the level of its June
high.  Oscillator evidence proved much less bullish than the price
action, however.

Daily chart of the NDX:

Bearish divergences have been setting up, but just as with the SFA
chart shown earlier, we've seen those NDX bearish divergences set
up at other points throughout the rally without any significant
damage to the rally.  At some point, they will result in the
pullback they're predicting, but it's not yet clear that time is
upon us.  ADX remains strong, above 30, but it has flattened.  The
buying pressure line has turned down, but there has as yet been no
bearish cross of the two lines.

It's also possible to draw alternative lines to the ones I've
drawn on the formation, what Jonathan Levinson calls a bulloney
bullhorn: a widening formation of ever higher highs and lower lows
that indicates emotional and unstable trading.  Because these are
widening formations, it's difficult to pinpoint a breakout or
breakdown, but traders looking for a sign of a breakdown might
first watch for a move below 1250.  It's difficult to suggest a
short/put play at such a breakdown, though, because that brings
the NDX into a congestion zone in which support might be found at
any one of several different points, including the 21-dma near
1235, 1200, and the July 1 low of 1180.  NDX 1162-1166 might offer
next support, with 1140 the site of historical resistance.

NDX proves the most difficult index for which to predict action
because the emotional trading displayed by the bullhorn or
megaphone formation produces unclear indicator evidence.  This
adds confusion to the conflicting evidence presented by all the
indices:  a strong TRAN coupled with a weaker sister DJI index;
S&P charts with bearish right triangles holding support and the
21-dma; individual stock charts showing bearish divergence while
charts continue to stair-step higher.

Markets behaved pretty much this week as I predicted last week.
My best guess for immediate market direction is one I dread to
make:  markets that stutter one direction and then another,
chopping around in a trading range in a manner that defies easy
trading decisions.  I do believe that markets will retrace again
within the next two weeks and possibly next week, although perhaps
not as deeply as many expect.  Next week will give me and all of
us a better look, though, and it's my sincere hope that my best
guess for immediate market direction proves less trustworthy than
last week's best guess turned out to be.  We'll have more evidence
before us this time next week, and perhaps our guesses will be
less guesswork and more analysis of less conflicting technical and
fundamental evidence.

Linda Piazza


Week in flux
Jonathan Levinson

Friday was a long, confusing and for awhile, boring session, with
both equities and treasuries closing higher and gold finishing
fractionally lower.

150-tick chart of ES3U

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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U     1009   1004    994    989    979
YM03U     9213   9156   9068   9011   8923
NQ03U     1301   1292   1279   1269   1256

10 minute chart of the US Dollar Index

The US Dollar Index went nowhere today but finished higher, with
a brief spike north of 96.00.  The action was bullish for gold
for most of the session, with an end of day pullback closing the
August gold contract 20 cents in the red at 344.40.

Daily chart of August gold

The metals indices closed positive, with the Gold Bugs Index
(HUI) closing higher by one cent to 152, and the Precious Metals
Index (XAU) up .55 to 78.09.  Led by wheat, sugar and crude oil,
the CRB added .05 to 234.78.

Daily chart of the ten year note yield

Like the rest of the markets, treasuries traded choppily today,
but ended the day higher.  The strength in treasuries and
equities together broke the recent trend of equities trading
inversely to treasuries, and so that particular intermarket
relationship remains unclear for the moment.  As the above chart
shows, the ten year note yield seems to be lazily trying to put
in a relative top.  However, with the recent uptrend still
intact, it's anyone's guess as to whether this downphase will
bring the TNX back down to its lows or not.  The TNX closed the
day lower by 3.7 basis points at 3.64%.  The thirty was down 2.5
bps to 4.684%.

Daily NQ candles

Friday was just one of those days.  Long, counterintuitive, and
tricky.  We had inside days printed on all 3 major equity
contracts, with lower highs and higher lows on the Nasdaq, S&P
and Dow futures.  Nothing was accomplished, technically, other
than to run the clock and the oscillators.  Yesterday's low was
never tested, though a higher low was printed in the afternoon
after the failure off the highs.

30 minute 20 day chart of the NQ

The day gave us a rounded top, a very messy head and shoulder-
esque formation which broke down to its approximate target before
bouncing into the close.  The high coincided perfectly with the
top on the stochastic and Macd histogram on the 30 minute charts
as noted in the intraday Market Monitor.  The end-of-session ramp
job did not reverse the ongoing downphases, but a continuation on
Monday morning could have that effect.

Daily ES candles

Friday brought us no closer to knowing whether the ascending
daily trendline will hold or not, as it was never tested.  The
daily oscillators on the S&P futures moved further along their
tenuous upphase, and the lower high provided bears some
encouragement, on the basis that if this is the upphase, the
downphase should be a doozy.

20 day 30 minute chart of the ES

The MacD is the only indicator supporting further upside on the
end-of-day bounce for Monday morning, and even there, the
histogram is in a downphase.  Given the toppy short cycle
oscillators on the 150-tick ES chart above, as well as the longer
cycle oscillators on the 30 minute chart, I'm expecting at least
a pullback on Monday morning, barring any unforeseen bullish
developments.  The Fibonacci grid continues to work well for
support and resistance, with 1004 to 988 delimiting the current
range within which Friday's session traded.

Daily YM candles

Nothing to add on YM.  Once again, it traded very similarly to
the ES contract.

20 day 30 minute chart of the YM

The main question after Friday is whether equities are reversing
their uptrends or merely consolidating for more upside.  It's
currently a difficult question, the obvious answer to which being
that one the daily chart, there's an uptrend which is strongest
on the Nasdaq futures and weakest on the Dow and S&P.  The 30
minute charts gave us a lower high following a sharp correction
yesterday, and on the ES and YM, this followed a failure to print
a higher year high as did the NQ.

On the weekly candles, we had positive closes for the equity
futures and a negative close for the ten year note yield, with a
harami printed for YM, doji's for NQ and ES, and a gravestone
doji for the TNX.  These are all bearish candle formations,
indicating overall uncertainty and potentially lower levels for
equities and treasury yields.  The trouble is that on the NQ and
ES, the candle prints also imperfectly resemble a low-reliability
bullish pattern called "3 separating lines".  I'll personally go
with the uptrends on the daily charts for guidance, above which
the outlook looks bullish and below which we'll know that a
reversal is under way.

Most significantly, this week showed treasuries trading mostly
against equities, despite Friday's break in the week-long trend.
The Fed was draining reserves via open market operations, despite
which buyers of treasuries managed to close yields negative for
the week.  Hopefully, next week will show us whether a renewed
bid for treasuries will prove bullish or bearish for equities.


By Leigh Stevens

Whip-saw markets are ones where there is roller coaster ride
during the week and very short-term traders can make money with
masterful timing, but the patient longer-term holder of index
calls or puts will mostly only see erosion of the option (time)
premium as, by week's end, there is not much of a price change.
Call me "whippy".

However, the bulls can take heart as the past 6 weeks action
looks like a bull flag consolidation before another up leg.  This
would be "confirmed" by a decisive upside penetration of 1013-
1015 in the S&P 500 (SPX) or 505 in the 100 (OEX), in which case
OEX projects to 550 as a possible target based on the measuring
implication of the aforementioned flag pattern.

The (Nasdaq) Composite or COMPX has a different pattern and this
past week has already broken out above the top end of the same
type of "flag" pattern by piercing 1690. However, the
aforementioned bull flag formation doesn't project to more than
1750 as a next objective, which is also near resistance impli9ed
by the top end of its weekly uptrend channel.  However, other
technical considerations suggest that COMPX could eventually get
back to the 2100 area or its early 2002 peak. This would also
suggest that the Nasdaq 100 could reach the 1700 area by year's
end or early next, from its current level of 1280. 40-42 is a
possible target for QQQ. Stay tuned!

What could "support" such a bullish technical potential is the
question that my bottom line commentary raises; i.e., what are
the fundamental influences.  Now, I sometimes have been known to
call these the "funny-mentals", but I declare it's only in jest.
Actually, there are some well-reasoned arguments for a bullish
unfolding scenario for our economy.

The U.S. unemployment rate climbed to 6.4% recently, which was
the highest in nearly 10 years.  Not exactly a picture to gladden
the hearts of consumers and get them to open those wallets even
more than they've been doing to reach for the plastic.  However,
a close look at some other economic signs point to a possible end
of a "jobless" recovery:

1. A set of surveys of corporate chief executives taken over the
past few weeks indicate that more a third of these CEO's say they
are planning to hire in the Q3 and very few are planning to lay
off workers or any MORE workers. (Surveys were conducted by the
Center for State and Local Policy at the University of
Massachusetts and polled 400 chief executives in Boston, Chicago,
Dallas and San Francisco.)

The key question was: "In the next three months, Q3 of 2003, will
the number of employees at your company increase, stay the same
or decrease?" 36% said the number would increase, 54% said stay
the same, and 10% said decrease. This is quite bullish for hiring
hints relative to what was the case in the year before this

2. In May and June, the Labor Department reported a rise in the
number of temporary workers  often a first hint of a rebound.
Temporary workers are generally the first to be fired as times
get bad and the first to be hired as times become good. In April,
1.6% of all workers were temporary employees, but this rose to
1.7% in June. The increase may be small, but its a significant
trend and suggests some hope for laid off and unemployed workers.

3. The number of wage and salary workers in the non-farm sector
has actually risen some 266,000 since Jan. 1 - the total is as of
early-July and is according to the Labor Department's household
survey. This rise can be compared to the huge loss (1.4 million)
of workers in 2001 and 2002.

Note: Reservations about these stats in the household survey -
the numbers for the total civilian population used in the survey
sample were not adjusted for the call-up of reservists for the
war in Iraq, which might account for about half of the increase.

4. The survey of employers also done by the Labor Department
shows a modest decline of 30,000 jobs from May to June. This
represents a big improvement in the rate of job decline over 2001
and 2002, a period when employers reported whopping losses of 2.2
million jobs  an average of 90,000 jobs per month!

When the Fed talked in late June about "labor and product markets
that are stabilizing," it was making a key point. The rates of
change in recent Labor Department surveys, reinforced by the
optimism in the recent set of chief executive surveys, suggests
that the job market may be about to turn the corner. And, pent up
demand by recently hired workers offers a potent boost to the
economy typically.

Stocks closed higher after General Electric (GE), a Dow component
met the Street's earnings expectations.  Because of it there were
some analysts' upgrades of some other blue-chip stocks.

The Dow was up 83.5 points, closing above 9100 at 9119.6, while
the Nasdaq Composite Index ran up a substantial 1% or 18 points
to close at 1734. The S&P 500 index rallied 9.4 points to close
at 998, still under the key 1000 mark.

Money managers and investors appeared to be paying up for up
stocks in anticipation of Q2 earnings that will be at least in
line, if not better than, expectations.

S&P bellwether GE's earnings led to a collective sigh of relief
by not missing its revenue and profit targets, even though its Q2
net income was off by 14%. Overall revenues did rise a bit to to
$33.37 billion from $33.33 billion, although this figure was just
a bit shy of estimates.

GE also shaved its full-year earnings estimate to a range of
$1.55 to $1.61, from a range of $1.55 to $1.70. This performance
by GE led to some upbeat talk about other key stocks, like Home
Depot and rival Lowe's.

Intel (INTC) which figures prominently in both the Dow and the
Nasdaq was up nearly 2% after an analyst upgrade. IBM ran up a
percentage point after some upgrading by Street analysts.

In economic news, a report on U.S. wholesale prices indicated a
RISE in prices for the first time in three months in June, as
food and energy prices were up. With the market more worried
about falling prices taking corporate profits down also, this was
actually "good" news.

The Producer Price Index or PPI rose by a greater than expected
half percent, ending some months of declining prices that had
raised this specter of deflation - think Japan.

The widely followed "core" index, which excludes food and energy
prices, fell by 0.1%, versus an expectation of a 0.1% increase in
the core index.

Meanwhile, the U.S. trade deficit of goods and services widened
to $41.8 billion in May from a revised $41.6 billion in April,
according to the Commerce Department. No surprises there - and, I
defy you to buy something these days NOT made in China -
excepting autos and high-end electronics.

Earnings (its the money honey) are the primary focus for
investors as they await 100's of company reports expected over
the next 3 weeks.

The 10-year Treasury note gained an 1/8 point, to yield 3.636%.
The dollar firmed also and traded at 117.65 yen, up from 117.58
yen late Thursday, while the euro fell against the dollar to
$1.1298 from $1.1389 in the previous session.


S&P 500 (SPX) - Weekly chart:

The S&P 500 Index (SPX) is the key to the old economy stock
sectors, and the most widely watched market measure by big money
institutional (fund) money managers. This week I provide a little
bit extra focus on the SPX in that I start the way I often start
when I survey price history each week - from the big picture
weekly chart showing 3 or more years, to the daily chart with the
multi-month record of trading and finally to the hourly chart.
The hourly chart should ideally be able to display a 100 days of
the hourly OHLC (Open, High, Low, Close), but this is not
achieved by many chart packages, so I tend to show a lot of the
longer hourly history, which you may not see elsewhere.

The weekly chart above with the "flag" or consolidation
(sideways) pattern outlined that I described in my "bottom line"
comments at top.  Now, the upside potential (emphasis on
"potential") implied by price consolidation, a period of a narrow
price range after a sizable run up, is not suggested unless there
is a move above the upper line.  Conversely, a move down below
the bottom line is a negation of the bullish potential, so we
would look out below if there was a drop to below 970.

The range bound pattern is why the trading suggestion has been to
buy calls or select stocks on moves toward the lower end of the
consolidation and buy put options on moves to the areas of
selling interest or resistance - which has been in the 1010 area.
It takes earnings momentum trends to get the S&P moving higher as
individual traders and investors don't achieve as much influence
in the large capitalization main-stream stocks in the main S&P

Whereas, it takes only a wing and a prayer to move some of the
tech stocks ever higher - hey, I think I've seen this before!
Anyway, I would note that Charles Schwab got some favorable
ratings increases last week cause their trading volumes have
jumped over recent weeks. The big guns aren't trading 10-50,000
share blocks at Charles the Schwab.

I would still say that it will take the ability for the S&P 500
to hold above 1000 to be seeing renewed upside momentum in the
S&P stock groups.

S&P 500 (SPX) - Daily chart:

Trading in the middle range, as represented by the 21-day moving
average, which is mostly bullish - because, after a big run up,
the ability to then find support on the pullbacks and on price
dips is the sign of a technically strong market.

Trading "sentiment" among option traders is closer to the bearish
view shown in increased or substantial put option volume activity
and is keeping me leaning toward the idea that the next breakout
will be to the upside.  Summer is not when big sustained advances
occur, but all money managers don't go on vacation - heck, this
isn't France where everyone goes away for August. (Or, where all
eyes are on the Tour in July - if you don't know this reference
you don't "know" the incredible ironman from Austin, Lance

Anyway, given that the market discounts or looks ahead to the
earnings picture expected out 6 months ahead, you will see the
expectations implied by buying stocks NOW.

S&P 500 (SPX) - Hourly chart:

1010-1015 is the area to watch for its potential to signal a
further upside move on a move above this area.

Conversely, A dip much below 990 or a close under the prior
hourly lows at 983 would be a bearish omen suggesting that would
be some further selling pressure or downside potential.

S&P 100 Index (OEX) – Hourly chart:

The sideways move is either a consolidation pattern -
consolidation or minor "give-back" of the prior up swing - or is
suggesting flagging upside momentum in stocks or the willingness
to continue to bid the leader stocks higher.

As long as the OEX stays above the recent low in the 495 area and
especially the low before that at 485 only the normal
consolidation pattern is being suggested.  If there is a move
above the "line" of recent hourly highs at 506-508, this would
suggest renewed upside momentum.

I'm anticipating wanting to buy calls in the 495 area, exiting at
492 if OEX slips to there, and perhaps add to positions on an
advance through 506-508. I'll likely want to trade out of the
same if 512, the prior top is again the reversal point for a
rally.  A decisive upside penetration of 512, suggests a next
objective to around 530 however.

On the bearish side, a break of 485 suggests downside back to the
470 area in the OEX, which would be the low end of a downtrend

I think we need some more positive earnings announcements to kick
the S&P 100 through overhead supply or stock for sale when OEX
hits the top end of its recent range around 510-512.  The way
bellwether S&P stock General Electric (GE) has failed to maintain
upside follow through after its move to new high for the year, it
seems that there is amble stock for sale on rallies from here.

Dow Industrials Hourly (DJX.X) chart:

The Dow has held above 89-90 which maintains its hourly price
pattern within its uptrend channel.  96 is the high end of this
channel currently as noted on the chart below.

92.50, then 93.50 is the area of likely selling interest for the
Dow 30 and these points are the key technical resistance levels
to watch.  It could be just more sideways from here.  So far
however, the Average is maintaining price levels that are keeping
it the well-defined uptrend channel outlined below.  Until the
Dow breaks below the low end of this channel, I have to assume a
bullish trading bias.

I mentioned GE and its a good example, as the stock should find
good support in the 26 to 28 price zone and it seems unlikely
that there is a lot of downside to the stock (and to the Dow
itself) unless the earnings start to show up as under or well
under expectations.

Nasdaq Composite Index (COMPX) – Weekly:

What looked like it might be a "triple top" when viewed from the
perspective of the hourly charts just turned out to the top end
of a temporary price ceiling as seen from the perspective of the
weekly chart below.  Remember the point about looking first at
the weekly chart even if you're a very short-term trader -
otherwise you could miss the forest for the trees.

The Composite (COMPX)looks to be near at least temporary
resistance at last week's high, which is also the top end of a
weekly uptrend channel. Prices tend to swing up and down even
within an uptrend and this recent zig (rally), may have a zag to
follow.  There is another little channel that suggests that the
Nasdaq, even though nearly at an "overbought" extreme, could zip
on up to 1900 before coming down. Stay tuned - hardly ever a dull
moment with tech stocks.

Nasdaq 100 (NDX) MONTHLY chart:

To keep a broad BROAD view, we can look at the Nasdaq 100 on a
monthly chart basis.  From this way of viewing the semi-
logarithmic chart scale (equal PERCENTage moves being the equal
in distance) in a multiyear time frame, its not surprising to see
a rebound from the lows of last fall as the Index came down to
long-term support.  I think of it as falling back to its long-
term rate of change or upward price "progression" - like falling
back to the mean so to speak. Hey, when you get too far ahead of
the traffic flow, there's a speeding ticket in the wings.

Nasdaq 100 Tracking Stock (QQQ) - Hourly:

I thought there was a chance of QQQ falling to major support
around 27.50-28 - WRONG!  But, as I said also, a sign of renewed
bullish trend was the hourly close above 31-31.25 and that fact
that it there was the same close on daily basis.

If you were short the stock and I was, I exited on my suggested
ay with it, with exiting stops at 31.30 stop for only a slight
loss.  The very reason I like to take out short stock positions
in a price area where there appears to be substantial stock for
sale.  If the stock then churns through there, more buyers are
going to be behind the pack.

The 33.50 area is where I peg technical resistance currently, at
the top of an implied uptrend channel. What was resistance around
31.25 should now be support if last week's rally has got "legs".

The price channel lines have been pretty reliable over recent
week (true almost anytime the market is "trending"), except for
the occasional "overshooting" of them which tends to drive
traders crazy for a while, me included.  That is at least for
those who rely on technical patterns - but, you have to allow for
the occasional tendency for price swings to carry further than

Extreme temporary price swings might today be a gut reaction to
stories that suddenly appear on the news wires and seems to, or
actually does, relate to terrorism or a new epidemic or the like.
Or, like the week before last, a mistake in a sell order for
index futures as 10,000 instead of 100 - opps!

Good Trading Success!


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Editor's Plays

Still On Target

"I love it when a plan comes together" - Hannibal, from the A-Team

Thus far the plan for our laddered DJX put/call play has worked pretty
well.  Monday, July 7th saw a lot of action as the markets rallied
quickly in the first hour.  The DJX ran from under 91 to 92.61,
triggering two more fills.

To recap when our play began, click here:

Following the plan we bought more August 88 DJX puts when the DJX
traded at 92.00 (Dow 9200) early Monday morning.  Our cost was $1.00.

As the markets continued to rally, we got the opportunity to buy even
more August 88 DJX puts when the DJX crossed the 92.50 mark.  Our cost
was $0.90.

Using a 2, 4, 6, 8, 10 contract increment starting at Dow 9050 (DJX
90.50) we bought puts at every 50 Dow points.  By late Monday morning
we had accumulated 30 August 88 DJX puts for $3,280.  However, we also
had 10 contracts of the July DJX 91 calls as insurance that we bought
for 75 cents at Dow 8950 the previous week.  These were protection
should the Dow keep climbing.  As of mid-day Monday, these calls were
worth $2.10.

As the markets started to fade on Monday I choose to raise my stop on
the calls to Dow 9225 (DJX 92.25).  Later that day we excited the DJX
calls for $1.85 when the Dow fell through our stop.  Additionally, we
cancelled the order to buy more puts at Dow 9300.

This left us with 30 Aug-DJX 88 puts with a total cost of $2130.

Chart of the DJX:

The only thing left to do is to wait and let the Dow (DJX) continue to
do its part and follow the script.

Our expectation is that the Dow will eventually trade to 8500 (DJX
85.00) but our plan is to exit the play at our profit target of Dow
8600 (DJX 86.00).  When the DJX hits 86 we will sell all 30 puts.

However, should the markets rally, then we'll use two stops to exit the
play.  Our first stop will be Dow 9300 (DJX 93.00) where we will sell
half our puts.  Our second stop will be Dow 9350 (DJX 93.50) where we
will sell our remaining puts.

Jim will be back on the Market Monitor this Monday covering any changes 
or progress in this play.


Trend change?
Jonathan Levinson

On Thursday, we discussed the possibility of a change of trend
based on the many extreme readings we've been following here and
the "feel" of the tape on Thursday's downside reversal.

Friday gave us positive closes on the Dow, Nasdaq and S&P, but
without violating the highs from Thursday.  We saw a number of
surprising developments in the options market, with the put to
call ratio printing extreme readings above 1.0, and the equity
put to call ratio exceeding the index put to call ratio for
several consecutive half hour segments.  This is a rare event, as
the index put to call ratio is almost always higher than the
equity put to call ratio, and usually by a wide margin.

As a sentiment indicator, the put to call ratio is imperfect due
to the plethora of bullish and bearish strategies that can be
applied using either puts or calls.  Nevertheless, the
predominance of put volume over call volume is generally seen as
indicating bearish option speculation, and on a contrarian basis,
it's generally taken as a bullish indicator.  The price action
obliged, proving resilient to anything more than corrective price
drops, and the averages finished positive.   The volatility
indices were all negative, and combined with the high put to call
readings, it gave the appearance of net selling of puts by option
writers.  Next week is option expiration week, which should help
to muddle the issue further still.

The indices failed to exceed Thursday's highs, and to that
extent, our downside reversal thesis is still intact.  However,
as I note in the Futures Monitor, the uptrend on the daily candle
charts is still very much intact.  We watch market breadth,
commitments of traders, and the bullish percents to try to gain a
lead major market turns before price confirms it.  Were the high
put to call readings net bullish or bearish?   We'll find out
next week.


Market Averages


52-week High:  9353
52-week Low :  7197
Current     :  9119

Moving Averages:

 10-dma: 9098
 50-dma: 8903
200-dma: 8419

S&P 500 ($SPX)

52-week High: 1015
52-week Low :  768
Current     :  998

Moving Averages:

 10-dma:  991
 50-dma:  965
200-dma:  897

Nasdaq-100 ($NDX)

52-week High: 1307
52-week Low :  795
Current     : 1280

Moving Averages:

 10-dma: 1252
 50-dma: 1193
200-dma: 1057


If we remember correctly the old market maxim says "when the VIX
is high it's time to buy and when the VIX is low it's time to go."
The problem is the VIX has been "low" for more than two months as
it churns between 21 and 25.  Traditionally, the "sell" signal was
when the VIX neared or traded under the 20 level.  Well, we're
seeing the range on the VIX narrow substantially this week and
Friday's candle ended at its lows and approaching a new 52-week
low.  If this were a stock, one might be thinking it's about to
breakdown through support of 20 and initiate a new bearish leg down.
That's not good from a contrarian standpoint but probably means we
still have another leg (however brief) higher in the markets.

CBOE Market Volatility Index (VIX) = 20.72 -0.81
Nasdaq-100 Volatility Index  (VXN) = 32.80 -0.86


          Put/Call Ratio  Call Volume   Put Volume

Total          0.98        533,391       521,795
Equity Only    0.88        425,661       378,041
OEX            0.99         26,885        26,851
QQQ            3.98         36,628       145,783


Bullish Percent Data

           Current   Change   Status
NYSE          72.8    + 0     Bull Confirmed
NASDAQ-100    80.0    + 0     Bull Confirmed
Dow Indust.   86.6    + 0     Bull Confirmed
S&P 500       79.4    + 0     Bull Confirmed
S&P 100       82.0    - 1     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  1.02
10-Day Arms Index  1.21
21-Day Arms Index  1.20
55-Day Arms Index  1.15

Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning


Market Internals

            -NYSE-   -NASDAQ-
Advancers    1947      1939
Decliners     882      1102

New Highs     201       340
New Lows        8         7

Up Volume    967M      989M
Down Vol.    479M      457M

Total Vol.  1479M     1494M

M = millions


Commitments Of Traders Report: 07/08/03

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

There was little change last week in the large S&P contracts.
It appears both big and small traders are waiting to see how the
initial burst of Q2 earnings come in and how investors react to

Commercials   Long      Short      Net     % Of OI
06/17/03      519,887   501,401    18,486     1.8%
06/24/03      405,382   447,526   (42,144)   (4.9%)
07/01/03      415,976   453,005   (37,029)   (4.3%)
07/08/03      415,053   453,720   (38,667)   (4.5%)

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
06/17/03      202,040   184,028    18,012     4.6%
06/24/03      159,405    85,182    74,223    30.3%
07/01/03      150,232    75,937    74,295    32.8%
07/08/03      152,239    74,749    77,490    34.2%

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

The same holds true for the commercials here in the e-minis,
as they appear to be waiting before making any big commitments.
However, we've seen a drastic turnaround in the small traders
sentiment going from extremely bullish to know the most bearish
in months.

Commercials   Long      Short      Net     % Of OI
06/17/03      306,279   661,114   (354,835)  (36.6%)
06/24/03      150,208   201,724    (51,516)  (14.6%)
07/01/03      175,893   216,993    (41,100)  (10.5%)
07/08/03      192,815   224,124    (31,309)  ( 7.5%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  (41,100)  - 07/01/03

Small Traders Long      Short      Net     % of OI
06/17/03      466,837    70,609   396,228    73.7%
06/24/03       84,081    44,347    39,734    30.9%
07/01/03       57,639    67,449    (9,810)   (7.8%)
07/08/03       56,394    72,090   (15,696)  (12.2%)

Most bearish reading of the year: (15,696)  - 07/08/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ futures remain in a holding pattern.  Commercials
remain net short and small traders remain net long.

Commercials   Long      Short      Net     % of OI
06/17/03       60,964     65,561    (4,597)  (3.6%)
06/24/03       28,780     47,425   (18,645) (24.4%)
07/01/03       28,662     48,265   (19,603) (25.5%)
07/08/03       30,489     48,311   (17,822) (22.6%)

Most bearish reading of the year: (19,603)  - 07/01/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
06/17/03       29,400    23,232     6,168    11.7%
06/24/03       24,519     7,064    17,455    55.3%
07/01/03       26,777     8,498    18,279    51.8%
07/08/03       26,136     9,035    17,101    48.6%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02


Ditto here too.  There's almost no change in the commercials'
net long position in the Industrial futures and there is
a small bump in the small traders net short position.

Commercials   Long      Short      Net     % of OI
06/17/03       20,625    18,593    2,032       5.1%
06/24/03       19,373    11,565    7,808      25.2%
07/01/03       20,504    11,871    8,633      26.7%
07/08/03       20,752    11,860    8,892      27.3%

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
06/17/03        9,092     9,398    (  306)   ( 1.6%)
06/24/03        5,950     7,442    (1,492)   (11.1%)
07/01/03        5,799     6,822    (1,023)   ( 8.1%)
07/08/03        5,005     8,093    (3,088)   (23.6%)

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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Weighting your account bullish and bearish

Jeff: A few questions regarding your business plan.  What is your
target monthly return?  What is the maximum percentage of your
account you will place on 1 trade?  Using the bullish % data, is
there some kind of formula you use as to the percentage of
puts/calls you use? IE, when the bullish % reaches 70% 8 puts/2
calls, when it is 20% 3 puts/7 calls...am I clear here?

Wow!  I'm going to have to consult my attorney about full
disclosure and perhaps financial net worth before I can answer
all the above, and what I (Jeff Bailey) do with my trading
account isn't, nor should it be a blueprint for everyone as we
all have different tolerances for risk and financial objectives.

But I'm going to take a shot at all of the trader's questions
posed and I'm hoping that a "real life" example, using my current
trading account status, will perhaps give a tie in with a prior
column "Your account is your business."

First, I'm single, 40-years old, no debt, don't own a house at
this point, own a 2002 Dodge Ram Turbo-Deisel 1/2-ton pickup
truck, and have 1 dependent named "Drake" that will turn 7-months
old on Saturday, July 12th!

I have a career with Sunset Investment group, which I feel pays
me a fair wage for a solid 40+ hourly workweek.  Under difficult
economic conditions, if I were to lose my job tomorrow, I would
probably fuel up my pickup truck, move all my belongings into
storage with the exception of Drake, fishing/hunting gear and
laptop computer and head for Alaska.  I would visit a friend I
haven't seen in several years for the summer and do some fishing.
Then around August, head east toward central Canada and hunt the
waterfowl migration south to Arkansas over the span of 5-months,
or until I couldn't stand being away from Colorado.  This should
give you the reader an idea of my "risk profile" and I have no
dependence on my trading account at this point.  I do not
consider myself "independently wealthy" and upon return from a
lifelong dream of following a waterfowl migration the length of
the continent, would probably have to look for a job.  The caveat
to having to look for a job upon return from an extended vacation
is that Frontier Airlines (NASDAQ:FRNT) $12.74 were trading $100
in February of next year.

What is my target monthly return?  What is the maximum percentage
of your account you will place on 1 trade?

My target monthly return is lofty 6% return on total account
capital, which I find difficult to keep fully invested at any
point in time.  I follow a very similar business plan as outlined
in "Your account is your business."

For the purposes of meeting the "pattern day trader" (I've been
known to make 4 or more round-trip day trades within any rolling
5 business day period) requirement, I will at times have the
minimum capital required to maintain the $25,000 in my trading

I follow the discipline of not exposing more than 10% of my total
account capital into any one underlying STOCK.  For example,
based on a $25,000 account, I would not buy/short more than
$2,500 worth of stock and hold it overnight.  For options, I
consider 1 contract to be equivalent to 100 shares and will on
rare occasion exceed a stock equivalent $2,500 risk exposure.  I
usually find that based on a $25,000 account, I will rarely place
more than $1,000 (4% of total account) at risk in an option.  It
is also very rare to see my account "totally" weighted toward
bullish or bearish trade scenarios.  I personally have never had
a margin call.

Here is what my trading account looks like at Friday's close and
I would think most subscribers, especially those at
OptionInvestor.com will be familiar with some of the positions
held.  I would like to think that each trade has a "purpose" and
will discuss some of them in brief.

Trading account using q-charts' portfolio tracker

I like to keep my portfolio divided into two sections with
bullish trades at the top and bearish trades at the bottom.

I'm not going to discuss each holding in detail but since I this
trading account is very rarely "fully invested" (it can be on
intra-day basis with short-term trades and use of intra-day
margin), with money market rates where they are, I decided back
in May to try and get some YIELD "kick" in the Pacholder High Yld
Fund (NYSE:PHF), which is a closed-end "junk bond" fund.

The Geron (NASDAQ:GERN) position is now what's left of a 5-lot
options trade.  It was SPECULATIVE and ended up paying off pretty
good with gains taken on 3 other contracts, what's left may be
exericised at $5.00 on expiration, but I'm not sure at this

The Oxford Health (OHP) Nov. 45 calls need some explaining.  I
had previously bought 1 August $35 call (OHPHG) on May 21 for
$3.60 and I sold that call on June 17th for $9.50 after a nice
move higher.  However, I needed to adjust the position as its
gain represented a little more than my trading discipline allows
and rebalancing was required.  With bullish prospects still
intact, I wanted continued exposure to the stock and extended
duration with the November $45 call that very same day.

I was also bullish on Merck (NYSE:MRK) on June 17th as the stock
extended gains from a spread-triple top buy signal the session
prior with strong volume.  With the various market bullish % at
"overbought" and HIGH risk levels for bulls, I was looking for
some "boring" stocks like OHP and MRK that looked to be breaking
away from some larger bases where a longer-term bullish move
might present opportunity.

Frontier Airlines (NASDAQ:FRNT) is good story and perhaps a
lesson to "just pay the stinking offer!"  On June 16th, I had the
stock on my "watch list" for a triple-top buy signal at $8.50 as
the Airline Index (XAL.X) had been catching fire.  I made note in
Market Monitor as FRNT traded $8.53.  On June 17th, the stock was
gaining again at $8.96 and I again made note in Market Monitor
(10:16:32) that I wasn't going to "chase it" and tried working a
bid in between bid/offer at $1.90 for November $7.50 calls.  No
go and market maker immediately matched by bid and raised offer.
I finally gave in on June 26th after stock was consolidating, but
finding "suspicious" support above $8.50 as if shorts were
nervous about something.  Similar to GERN, 5 lot was taken, some
profits locked in, and will let the rest rip until February of
next year.

Autozone (AZO) and Micron (MU) are new bullish positions.  AZO is
kind of a pullback into trend trade that I think represents the
kind of technicals that institutions are willing to buy if they
feel the bulk of stocks in the market are more overextended.
Micron (MU) allows some technology exposure my account may have
needed at the time, with stock triggering a triple-top buy signal
and breaking above longer-term downward trend.  Maybe a stock a
semiconductor bulls rolls toward if he/she takes profits from a
bigger winner?

My QQQ trade is from an Index Trader Wrap this past week.  It is
"partial" position, but after being a little too quick on an SPY
short from July 1 and not having gotten some bullish % reversals
lower like I thought might take place, the QQQ serves a near-term
hedge for my SPY trade and was initiated just as the SPY came
back to original bearish entry point.

Ryland (RYL) and Centex (CTX) are both homebuilders.  I bought
puts on both one day when Treasury YIELDS were moving higher and
we had noted that the building sector bullish % from
Dorsey/Wright and Associates had reversed into "bear alert"
status.  I've placed an "*" by RYL as I've now determined that
for whatever reason, its relative strength remains too strong,
but continue to like CTX as a relative strength loser in the
sector.  I don't really need two homebuilder stocks at this
point, and may look to exit RYL on pullback to $70, but will base
that on the condition of the sector bullish % if a pullback does
occur.  Plenty of time in both for October expiration to gather
further observations.

Altria (NYSE:MO) is a stock I've liked, but recent developments
gives some uncertainty toward the stock.  Took a bearish trade
today, which I profiled in the Option Investor.com Market
Monitor, and also discussed action in today's 01:00 PM EST

I don't really own a position in the 13-week Treasury YIELD
($IRX.X), but this would represent an approximation of cash
balance.  It should be noted that this balance contains the
current credit for a short position in the SPY, which at some
point I must return to the owner.  I would currently plan on
doing this if the SPY itself trades $102.50.

When the bullish % reaches 70% 8 puts/2 calls, when it is 20% 3
puts/7 calls...am I clear here?

Yes, something like that, but not all at once, and if anything,
that's the mindset I try and get in.  However, I always like to
nip away first, see some success before legging in further.

It been my observation and current thinking based on this
observation that bears are going to need to see more than just
the NASDAQ-100 Bullish % ($BPNDX) reversing into "bull
correction" status, even at these higher levels of bullish risk
to really get the thinking that internal weakening is taking

Perhaps this is reflecting in my account?  I'm not seeing too
many "+" signs in the bear section right now.  I have taken some
gains off the table in the bullish side and there's some "-"
signs on that side of the ledger too.

But with some gains locked in for June, it has given me a little
room in July, and I'm on target per my monthly objective of a
"lofty" 6% gain.  We shall see as I'm only two-weeks into the
month and still have some hard work and disciplined trading

You don't need a "portfolio" tracker to necessarily keep track of
how "balance" your account is or how things are going as it
relates to your annual, quarterly and monthly objectives.  A
simple spreadsheet that is updated once a week is more than
sufficient (for traders).  A swing-trade or longer-term investor
need only update every two weeks or once a month respectively.

Again, I should stress, that my account is not a blueprint for
YOU!  We all have different objectives and tolerance for risk and
no position listed above is to be construed as bullish or bearish
recommendation on my part, or that of Sunset Investment Group.

Well, I hope a real life example is helpful, and hopefully helps
a trader/investor discover that they can track their account, and
see how a disciplined business plan can work to their favor, if
not help mitigate risk on capital invested.

Jeff Bailey


Market Watch for the week of July 14th

Major Earnings This Week

Symbol  Company               Date           Comment      EPS Est

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

BAC    Bank of America Corp  Mon, Jul 14  Before the Bell     1.57
BBT    BB&T Corporation      Mon, Jul 14  Before the Bell     0.71
C      Citigroup Inc.        Mon, Jul 14  -----N/A-----       0.80
FNFG   First Niagara Finl    Mon, Jul 14  Before the Bell     0.13
MTB    M&T Bank Corporation  Mon, Jul 14  During the Market   1.24
MI     Marshall & Ilsley     Mon, Jul 14  During the Market   0.58
MTG    MGIC Investment Corp. Mon, Jul 14  Before the Bell     1.38
PKG    Packaging Corp Am     Mon, Jul 14  After the Bell      0.09
PRK    Park National         Mon, Jul 14  -----N/A-----       1.65
PKX    POSCO                 Mon, Jul 14  -----N/A-----        N/A
RMBS   Rambus Inc.           Mon, Jul 14  After the Bell      0.04
RFMD   RF Micro Devices      Mon, Jul 14  After the Bell     -0.06
SSP    The E.W. Scripps Co   Mon, Jul 14  Before the Bell     0.83

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

ACN    Accenture             Tue, Jul 15  Before the Bell     0.25
ADTN   ADTRAN, Inc.          Tue, Jul 15  Before the Bell     0.27
ASO    AmSouth Bancorp       Tue, Jul 15  Before the Bell     0.44
AMCC   Applied Micro Crcuts  Tue, Jul 15  After the Bell     -0.04
BLK    BlackRock, Inc.       Tue, Jul 15  Before the Bell     0.57
BRE    BRE PROPERTIES INC    Tue, Jul 15  After the Bell      0.60
CDN    Cadence Design Sys    Tue, Jul 15  After the Bell      0.09
CSL    Carlisle Companies    Tue, Jul 15  After the Bell      0.86
CEC    CEC Entertainment     Tue, Jul 15  After the Bell      0.54
CTAS   Cintas Corporation    Tue, Jul 15  Before the Bell     0.38
CYN    City National Corp    Tue, Jul 15  After the Bell      0.91
CBSH   Commerce Bancshares   Tue, Jul 15  Before the Bell     0.71
DJ     Dow Jones & Company   Tue, Jul 15  During the Market   0.25
ETN    Eaton                 Tue, Jul 15  -----N/A-----       1.34
FBAN   F.N.B. Corporation    Tue, Jul 15  After the Bell      0.52
FNM    Fannie Mae            Tue, Jul 15  Before the Bell     1.87
FITB   Fifth Third Bancorp   Tue, Jul 15  Before the Bell     0.74
FBF    FleetBoston Financial Tue, Jul 15  Before the Bell     0.58
FRX    Forest Laboratories   Tue, Jul 15  Before the Bell     0.48
FULT   Fulton Financial      Tue, Jul 15  -----N/A-----       0.33
GCI    Gannett               Tue, Jul 15  Before the Bell     1.20
GPT    GreenPoint Financial  Tue, Jul 15  Before the Bell     1.55
HLYW   Hollywood Enter       Tue, Jul 15  -----N/A-----       0.29
HCBK   Hudson City Bancorp   Tue, Jul 15  After the Bell      0.28
INTC   Intel Corporation     Tue, Jul 15  -----N/A-----       0.13
JEF    Jefferies Group       Tue, Jul 15  Before the Bell     0.60
JNJ    Johnson & Johnson     Tue, Jul 15  Before the Bell     0.69
MDC    M.D.C Holdings        Tue, Jul 15  Before the Bell     1.20
MYG    Maytag                Tue, Jul 15  Before the Bell     0.56
MEG    Media General         Tue, Jul 15  Before the Bell     0.72
MEL    Mellon Financial Corp Tue, Jul 15  -----N/A-----       0.39
MER    Merrill Lynch         Tue, Jul 15  Before the Bell     0.71
MOT    Motorola Inc.         Tue, Jul 15  After the Bell      0.00
MSM    MSC Industrial Direct Tue, Jul 15  Before the Bell     0.19
JNC    Nuveen Investments    Tue, Jul 15  Before the Bell     0.34
SPOT   PanAmSat              Tue, Jul 15  Before the Bell     0.17
PPP    Pogo Producing        Tue, Jul 15  -----N/A-----       0.94
PII    Polaris Industries    Tue, Jul 15  Before the Bell     0.91
PCP    Precision Castparts   Tue, Jul 15  Before the Bell     0.62
RJF    Raymond James         Tue, Jul 15  After the Bell      0.37
RDC    Rowan Companies, Inc  Tue, Jul 15  Before the Bell    -0.03
PHG    Royal Philips Elect   Tue, Jul 15  Before the Bell      N/A
SCHL   Scholastic            Tue, Jul 15  After the Bell      0.87
STX    Seagate Technology    Tue, Jul 15  After the Bell      0.31
SOV    Sovereign Bancorp     Tue, Jul 15  After the Bell      0.35
STT    State Street Corp     Tue, Jul 15  Before the Bell     0.47
SYK    Stryker               Tue, Jul 15  After the Bell      0.52
TER    Teradyne Inc.         Tue, Jul 15  After the Bell     -0.21
NYT    The New York Times Co Tue, Jul 15  Before the Bell     0.46
TSFG   The South Financial   Tue, Jul 15  Before the Bell     0.42
TRMK   Trustmark Corporation Tue, Jul 15  -----N/A-----       0.50
TSS    TSYS                  Tue, Jul 15  -----N/A-----       0.17
USB    U.S. Bancorp          Tue, Jul 15  -----N/A-----       0.49
WM     Washington Mutual     Tue, Jul 15  After the Bell      1.09
WFC    Wells Fargo & Company Tue, Jul 15  Before the Bell     0.91
WABC   Westamerica Bancorp   Tue, Jul 15  -----N/A-----       0.70
YUM    Yum! Brands, Inc.     Tue, Jul 15  After the Bell      0.46

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

AMD    Advanced Micro Dev    Wed, Jul 16  After the Bell     -0.54
ADS    Alliance Data Systems Wed, Jul 16  -----N/A-----       0.18
ASD    American Standard     Wed, Jul 16  During the Market   1.82
APH    Amphenol              Wed, Jul 16  Before the Bell     0.55
AMR    AMR Corporation       Wed, Jul 16  -----N/A-----      -2.67
AAPL   Apple Computer, Inc.  Wed, Jul 16  -----N/A-----       0.03
ASML   ASML Holdings NV      Wed, Jul 16  -----N/A-----      -0.08
BXS    BancorpSouth, Inc.    Wed, Jul 16  After the Bell      0.39
ONE    Bank One              Wed, Jul 16  Before the Bell     0.73
BOKF   BOK Financial         Wed, Jul 16  -----N/A-----       0.62
BCR    C.R. Bard, Inc.       Wed, Jul 16  After the Bell      0.94
COF    Capital One Financial Wed, Jul 16  After the Bell      1.10
CNT    CENTERPOINT PPTYS TR  Wed, Jul 16  After the Bell      1.04
CHZ    Chittenden            Wed, Jul 16  After the Bell      0.49
CCE    Coca-Cola Enterprises Wed, Jul 16  Before the Bell     0.54
CNB    Colonial BancGroup    Wed, Jul 16  -----N/A-----       0.29
CMA    Comerica Incorporated Wed, Jul 16  Before the Bell     0.96
CBSS   Compass Bancshares    Wed, Jul 16  -----N/A-----       0.65
DHI    D.R. Horton           Wed, Jul 16  After the Bell      0.95
ET     E*TRADE Group, Inc.   Wed, Jul 16  -----N/A-----       0.14
EMC    EMC Corporation       Wed, Jul 16  Before the Bell     0.03
F      Ford Motor Company    Wed, Jul 16  Before the Bell     0.18
GD     General Dynamics      Wed, Jul 16  Before the Bell     1.17
GNTX   Gentex                Wed, Jul 16  Before the Bell     0.33
GENZ   Genzyme Corporation   Wed, Jul 16  Before the Bell     0.32
TV     Grupo Televisa, S.A.  Wed, Jul 16  After the Bell      0.35
HDI    Harley-Davidson       Wed, Jul 16  Before the Bell     0.58
HCN    Health Care REIT      Wed, Jul 16  -----N/A-----       0.70
HU     Hudson United Bancorp Wed, Jul 16  After the Bell      0.64
GMH    Hughes Electronics    Wed, Jul 16  Before the Bell    -0.03
IBM    Intl Business Mach    Wed, Jul 16  After the Bell      0.98
IFIN   Investors Finl Serv   Wed, Jul 16  Before the Bell     0.32
JPM    J.P. Morgan Chase Co  Wed, Jul 16  Before the Bell     0.62
JCI    Johnson Controls      Wed, Jul 16  Before the Bell     1.88
KMI    Kinder Morgan         Wed, Jul 16  -----N/A-----       0.73
KRI    Knight Ridder         Wed, Jul 16  Before the Bell     0.93
NITE   Knight Trading Group  Wed, Jul 16  Before the Bell     0.13
KFT    Kraft Foods           Wed, Jul 16  After the Bell      0.58
LEG    Leggett & Platt       Wed, Jul 16  -----N/A-----       0.24
MERQ   Mercury Interactive   Wed, Jul 16  Before the Bell     0.20
MIL    Millipore Corp.       Wed, Jul 16  After the Bell      0.46
MHK    Mohawk Industries     Wed, Jul 16  After the Bell      1.08
NCC    National City         Wed, Jul 16  Before the Bell     0.77
NET    Network Associates    Wed, Jul 16  Before the Bell     0.11
NYB    New York Comm Bancorp Wed, Jul 16  Before the Bell     0.50
NFB    North Fork Bancorp    Wed, Jul 16  Before the Bell     0.61
NTRS   Northern Trust        Wed, Jul 16  -----N/A-----       0.44
BTU    Peabody Energy Corp.  Wed, Jul 16  Before the Bell     0.25
PPDI   Pharm Product Develop Wed, Jul 16  After the Bell      0.39
PP     Prentiss Properties   Wed, Jul 16  After the Bell      0.78
PFGI   Provident Finl Grp    Wed, Jul 16  Before the Bell     0.54
QLGC   QLogic                Wed, Jul 16  After the Bell      0.33
RDN    Radian Group          Wed, Jul 16  After the Bell      1.14
SNDK   SanDisk Corp.         Wed, Jul 16  After the Bell      0.31
SXT    Sensient Tech Corp    Wed, Jul 16  Before the Bell     0.49
SON    Sonoco Products       Wed, Jul 16  -----N/A-----       0.34
SOTR   SouthTrust            Wed, Jul 16  Before the Bell     0.50
STJ    St. Jude Medical      Wed, Jul 16  Before the Bell     0.43
STU    Student Loan          Wed, Jul 16  After the Bell       N/A
SNV    Synovus Financial     Wed, Jul 16  After the Bell      0.31
TFX    Teleflex, Incorp      Wed, Jul 16  After the Bell      0.83
ALL    The Allstate Corp     Wed, Jul 16  After the Bell      0.74
PGR    The Progressive Corp  Wed, Jul 16  After the Bell      1.22
UB     UnionBanCal           Wed, Jul 16  After the Bell      0.90
WFSL   Washington Federal    Wed, Jul 16  Before the Bell     0.52
WBS    Webster Financial     Wed, Jul 16  Before the Bell     0.87
WERN   Werner Enterprises    Wed, Jul 16  After the Bell      0.29

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

MO     Altria Group, Inc.    Thu, Jul 17  -----N/A-----       1.19
ABK    Ambac Financial Group Thu, Jul 17  Before the Bell     1.29
ATR    AptarGroup            Thu, Jul 17  After the Bell      0.54
ARB    Arbitron Inc.         Thu, Jul 17  Before the Bell     0.26
ASBC   Associated Banc-Corp  Thu, Jul 17  -----N/A-----       0.75
AF     Astoria Finl Corp     Thu, Jul 17  Before the Bell     0.66
ATML   Atmel Corporation     Thu, Jul 17  After the Bell     -0.08
ALV    Autoliv               Thu, Jul 17  Before the Bell      N/A
AVB    Avalonbay Communities Thu, Jul 17  After the Bell      0.80
AVID   Avid Technology, Inc. Thu, Jul 17  After the Bell      0.17
AVCT   Avocent Corporation   Thu, Jul 17  Before the Bell     0.29
BAX    BAXTER INTL INC       Thu, Jul 17  -----N/A-----       0.41
BCC    Boise Cascade         Thu, Jul 17  Before the Bell    -0.25
CWG    CanWest Global Comm   Thu, Jul 17  -----N/A-----        N/A
CAT    Caterpillar Inc.      Thu, Jul 17  Before the Bell     0.65
CEN    Ceridian              Thu, Jul 17  Before the Bell     0.17
CF     Charter One Financial Thu, Jul 17  After the Bell      0.66
CHRT   Charterd Semicon Manu Thu, Jul 17  After the Bell     -0.38
CFBX   Comm First Bankshares Thu, Jul 17  Before the Bell     0.50
ED     Consolidated Edison   Thu, Jul 17  -----N/A-----       0.38
CTB    Cooper Tire & Rubber  Thu, Jul 17  Before the Bell     0.18
COT    Cott Corporation      Thu, Jul 17  Before the Bell     0.32
CCK    CROWN HOLDINGS INC    Thu, Jul 17  Before the Bell     0.25
CVTX   CV Therapeutics       Thu, Jul 17  After the Bell     -0.95
CY     Cypress Semiconductor Thu, Jul 17  Before the Bell     0.03
CYT    Cytec Industries Inc. Thu, Jul 17  After the Bell      0.54
DHR    Danaher               Thu, Jul 17  Before the Bell     0.78
DPH    Delphi                Thu, Jul 17  -----N/A-----       0.16
DAL    DELTA AIR LINES DEL   Thu, Jul 17  -----N/A-----      -2.08
DLX    Deluxe Corporation    Thu, Jul 17  Before the Bell     0.85
DO     Diamond Ofshre Drlng  Thu, Jul 17  Before the Bell    -0.07
D      Dominion Resources    Thu, Jul 17  Before the Bell     0.83
DOV    Dover Corporation     Thu, Jul 17  After the Bell      0.33
DSL    Downey Financial Corp Thu, Jul 17  Before the Bell     1.02
ELUX   Electrolux Ab         Thu, Jul 17  -----N/A-----       1.26
ESV    ENSCO International   Thu, Jul 17  Before the Bell     0.17
EFX    Equifax Inc.          Thu, Jul 17  Before the Bell     0.36
FCS    Fairchild SemiconIntl Thu, Jul 17  After the Bell      0.03
FDC    First Data            Thu, Jul 17  Before the Bell     0.47
FTN    First Tennessee Natl  Thu, Jul 17  Before the Bell     0.88
FMER   FirstMerit            Thu, Jul 17  Before the Bell     0.45
FBC    Flagstar Bancorp      Thu, Jul 17  After the Bell      1.09
FO     Fortune Brands        Thu, Jul 17  -----N/A-----       0.99
FCX    Frprt-McMoRn Cop Gld  Thu, Jul 17  Before the Bell     0.34
GM     General Motors Corp.  Thu, Jul 17  Before the Bell     1.19
GPC    Genuine Parts         Thu, Jul 17  Before the Bell     0.56
GP     Georgia-Pacific       Thu, Jul 17  Before the Bell     0.14
GPN    Global Payments Inc.  Thu, Jul 17  After the Bell      0.35
GGG    Graco                 Thu, Jul 17  After the Bell      0.49
GDT    Guidant               Thu, Jul 17  -----N/A-----       0.55
HSY    Hershey Foods Corp    Thu, Jul 17  Before the Bell     0.52
HIB    Hibernia Corp.        Thu, Jul 17  Before the Bell     0.41
HON    Honeywell             Thu, Jul 17  Before the Bell     0.37
HBAN   Huntington Bancshares Thu, Jul 17  Before the Bell     0.36
IDPH   IDEC Pharmaceuticals  Thu, Jul 17  After the Bell      0.25
IEX    Idex                  Thu, Jul 17  Before the Bell     0.49
IR     Ingersoll-Rand Co.    Thu, Jul 17  Before the Bell     0.72
IDTI   Integrated Dvice Tech Thu, Jul 17  -----N/A-----      -0.06
IGT    Intl Gaming Tech      Thu, Jul 17  -----N/A-----       0.27
IVC    Invacare              Thu, Jul 17  -----N/A-----       0.48
ESI    ITT Educational Serv  Thu, Jul 17  Before the Bell     0.19
JEC    Jacobs Eng Grp        Thu, Jul 17  Before the Bell     0.58
LSTR   Landstar System       Thu, Jul 17  -----N/A-----       0.84
LEA    Lear Corp.            Thu, Jul 17  -----N/A-----       1.26
LM     Legg Mason            Thu, Jul 17  Before the Bell     0.76
MAN    Manpower              Thu, Jul 17  Before the Bell     0.34
MAR    Marriott Intl         Thu, Jul 17  Before the Bell     0.47
MGG    MGM MIRAGE            Thu, Jul 17  Before the Bell     0.35
MCHP   Microchip Technology  Thu, Jul 17  After the Bell      0.15
MSFT   Microsoft             Thu, Jul 17  -----N/A-----       0.24
NCF    Natl Commerce Finl    Thu, Jul 17  -----N/A-----       0.39
NXY    Nexen                 Thu, Jul 17  Before the Bell     0.77
NXTL   Nextel Communications Thu, Jul 17  Before the Bell     0.24
NOK    Nokia                 Thu, Jul 17  Before the Bell     0.16
PCBC   Pac Capital Bancorp   Thu, Jul 17  Before the Bell     0.42
PNR    Pentair, Inc.         Thu, Jul 17  Before the Bell     0.88
PBCT   People's Bank         Thu, Jul 17  -----N/A-----       0.24
PSFT   PeopleSoft            Thu, Jul 17  After the Bell      0.13
PMCS   PMC-Sierra, Inc.      Thu, Jul 17  After the Bell     -0.03
PLCM   Polycom Incorporated  Thu, Jul 17  After the Bell      0.03
PFS    Provident Finl Serv   Thu, Jul 17  Before the Bell     0.17
RF     Regions Financial     Thu, Jul 17  Before the Bell     0.71
RHI    Robert Half Intl      Thu, Jul 17  -----N/A-----      -0.01
COL    Rockwell Collins      Thu, Jul 17  Before the Bell     0.36
RG     Rogers Communications Thu, Jul 17  Before the Bell      N/A
RCN    Rogers Wireless Comm  Thu, Jul 17  -----N/A-----        N/A
TSG    Sabre Holdings Corp.  Thu, Jul 17  Before the Bell     0.20
SAP    SAP AG                Thu, Jul 17  Before the Bell     0.19
SFA    Scientific-Atlanta    Thu, Jul 17  After the Bell      0.19
S      Sears, Roebuck and Co Thu, Jul 17  Before the Bell     0.95
SEIC   SEI Investments       Thu, Jul 17  Before the Bell     0.32
SIB    SI Bank & Trust       Thu, Jul 17  After the Bell      0.45
SKYF   Sky Financial Group   Thu, Jul 17  Before the Bell     0.42
SLM    SLM Corporation       Thu, Jul 17  Before the Bell     0.44
SUP    Superior Industries   Thu, Jul 17  Before the Bell     0.66
TXT    Textron Inc.          Thu, Jul 17  Before the Bell     0.65
BK     The Bank of New York  Thu, Jul 17  Before the Bell     0.41
KO     The Coca-Cola Company Thu, Jul 17  Before the Bell     0.54
MNI    The McClatchy Company Thu, Jul 17  Before the Bell     0.80
TRB    Tribune               Thu, Jul 17  -----N/A-----       0.57
UCBH   UCBH Holdings, Inc.   Thu, Jul 17  -----N/A-----       0.33
UPC    Union Planters Corp   Thu, Jul 17  Before the Bell     0.67
UIS    Unisys                Thu, Jul 17  Before the Bell     0.16
UTX    United Technologies   Thu, Jul 17  Before the Bell     1.23
UNH    UnitedHealth Group    Thu, Jul 17  Before the Bell     0.66
UPM    UPM-Kymmene Group     Thu, Jul 17  Before the Bell     0.15
UTSI   UTStarcom             Thu, Jul 17  After the Bell      0.30
VLY    Valley Natl Bancorp   Thu, Jul 17  During the Market   0.39
GWW    W.W. Grainger         Thu, Jul 17  Before the Bell     0.61
WB     WACHOVIA CORP 2ND NEW Thu, Jul 17  Before the Bell     0.77
WTNY   Whitney Holding Corp  Thu, Jul 17  Before the Bell     0.59
XLNX   Xilinx, Inc.          Thu, Jul 17  After the Bell      0.15
ZION   Zions Bancorp         Thu, Jul 17  After the Bell      0.98

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

GE     General Electric      Fri, Jul 11  Before the Bell     0.38
AKZOY  Akzo Nobel N.V.       Fri, Jul 18  -----N/A-----        N/A
ACI    ARCH COAL INC         Fri, Jul 18  -----N/A-----      -0.06
CX     CEMEX S.A.            Fri, Jul 18  Before the Bell     0.83
EQT    Equitable Resources   Fri, Jul 18  Before the Bell     0.52
ERICY  Ericsson LM Telephone Fri, Jul 18  Before the Bell    -0.27
KEY    KeyCorp               Fri, Jul 18  Before the Bell     0.52
LAB    LaBranche & Co Inc.   Fri, Jul 18  Before the Bell     0.18
MAT    Mattel                Fri, Jul 18  Before the Bell     0.07
TBL    The Timberland Co     Fri, Jul 18  Before the Bell     0.16
UBSI   United Bankshares     Fri, Jul 18  Before the Bell     0.54
UST    UST Inc.              Fri, Jul 18  Before the Bell     0.77
WL     Wilmington Trust      Fri, Jul 18  Before the Bell     0.47
WIT    Wipro Limited         Fri, Jul 18  -----N/A-----       0.18

Upcoming Stock Splits In The Next Two Weeks...

Symbol  Company Name              Ratio    Payable     Executable

NCEN    New Century Financial     3:2      Jul  11th   Jul  14th
CNTE    Centene Corp              3:2      Jul  11th   Jul  14th
ANSI    Advanced Neuromodulation  3:2      Jul  11th   Jul  14th
CMTL    Comtech Telecom Corp.     3:2      Jul  14th   Jul  15th
EXJF    Exchange Natl Bancshares  3:2      Jul  15th   Jul  16th
FAB     FirstFed America          2:1      Jul  17th   Jul  18th
PULB    Pilaski Financial Corp.   2:1      Jul  21st   Jul  22nd

Economic Reports This Week

It's a busy week on Wall Street.  Q2 earnings hit their stride and
investors will be inundated with announcements.  Plus we have a full
roster of economic reports with the Retail sales, CPI, Production
& Utilization, jobless claims and Michigan Sentiment.


Monday, 07/14/03

Tuesday, 07/15/03
NY Empire St Index (BB) Jul  Forecast:    19.4  Previous:     26.8
Retail Sales (BB)       Jun  Forecast:    0.4%  Previous:     0.1%
Retail Sales ex-auto(BB)Jun  Forecast:    0.3%  Previous:     0.1%

Wednesday, 07/16/03
CPI (BB)                Jun  Forecast:    0.2%  Previous:     0.0%
Core CPI (BB)           Jun  Forecast:    0.1%  Previous:     0.3%
Business Invntories(BB) May  Forecast:    0.0%  Previous:     0.1%
Indl Production(DM)     Jun  Forecast:    0.1%  Previous:     0.1%
Capacity Utilization(BB)Jun  Forecast:   74.4%  Previous:    74.3%

Thursday, 07/17/03
Initial Claims (BB)   07/12  Forecast:    425K  Previous:     439K
Housing Starts (BB)     Jun  Forecast:  1.750M  Previous:   1.732M
Building Permits (BB)   Jun  Forecast:  1.790M  Previous:   1.803M
Philadelphia Fed (DM)   Jul  Forecast:     7.5  Previous:      4.0

Friday, 07/18/03
Mich Sentiment-Prel.(DM)Jul  Forecast:    91.0  Previous:     89.7

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


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The Option Investor Newsletter                   Sunday 07-13-2003
Sunday                                                      2 of 5

In Section Two:

Watch List: Watch Out for Earnings
Call Play of the Day: LOW
Dropped Calls: None
Dropped Puts: BVF, SIVB

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Watch List

Watch Out for Earnings

Lexmark Intl Inc - LXK - close: 75.98 change: +0.92

WHAT TO WATCH: Shares of LXK have been consolidating between $70
and $77 for two months.  Nimble swing and day traders can trade
the range but bulls looking for a breakout can watch the $77.50-
$78.00 level.  A trade at $78 would be a fresh triple-top buy
signal on its P&F chart.  Earnings are July 21st.



Wellpoint Health Network - WLP - close: 84.25 change: +0.10

WHAT TO WATCH: Shares of WLP appear to be building a head-and-
shoulder pattern.  If the stock breaks the $82.50 level, that
should form a breakdown of its neck.  From there, bears can
target a move to the $75.00 level which just happens to coincide
with the simple 200-dma.  However, expect some support near $79
and $80.  Earnings are expected on July 22nd.



Timberland Co - TBL - close: 58.63 change: +1.70

WHAT TO WATCH: Up, up and away!  Shares of TBL have been very
strong the month of July and they have almost doubled from its
February lows near $30.  Earnings are expected on July 18th and
we might see a "sell the news" affect once the numbers are out.



Avid Technology - AVID - close: 41.14 change: +1.55

WHAT TO WATCH: AVID is another stock that has enjoyed a very
strong July that many suspect has been bolstered by plenty of
short-covering.  The recent breakout above $38.00 was also a
bullish triangle breakout on its P&F chart.  The stock has been a
massive winner for investors having broken the $40 level after
closing near $9.00 last October.  Earnings are near the 17th of



Centex Corp - CTX - close: 77.23 change: -0.77

WHAT TO WATCH: The homebuilders are seeing continued profit
taking, albeit slowly.  A break under CTX's 50-dma could portend
a move to $70.00 but shares did bounce from $75 just a week ago.
Aggressive traders only.  Earnings should be on July 21st.


RADAR SCREEN - more stocks to watch:

IR $49.14 - A move above $50 would be a breakout over tough
resistance and could spark more short covering.  But watch out
for earnings near the 17th this week.

COF $51.75 - Shares have regained the $50 level and just retested
it again as support.  Short-term traders could aim for $55 but
earnings are July 16th.

QCOM $38.64 - Can QCOM break resistance at $40.00?  It's already
tried once but the stock's stair-step climb higher is still in
affect.  Earnings should be the 23rd of July.


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Call Play of the Day:

Lowe's Companies - LOW - close: 46.31 change: +1.66 stop: 43.75

See details in play list


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




Biovail Corp - BVF - close: 44.55 change: +0.54 stop: 46.01

Well that was fast!  We added BVF on Thursday night when it
closed at $44.01.  Our short-term target was the $40.00 level but
we didn't expect it to reach it in just one day.  Actually,
shares of BVF only traded down to 40.50 on Friday's session
before violently rebounding back above the $44 mark.  Some
speculate the move was a knee jerk reaction to insider selling
news on transactions that happened a couple of years ago.
Whatever the case, this produced a very big hammer-style
candlestick that usually says "reversal".  We're going to cut our
losses immediately!

Picked on July 10 at $44.01
Change since picked:  +0.54
Earnings Date      07/29/03 (unconfirmed)
Average Daily Volume:  1.95 million
Chart =


Silicon Valley Bancshares - SIVB - close: 23.80 change: +0.19 stop: 24.90

Enough is enough!  We've been tortured by SIVB's incessant tight
range action between support and resistance for nearly 3 weeks now
without any conclusive evidence of either a breakout or a
breakdown.  While it has been encouraging to see the 20-dma
consistently provide resistance, it has been disappointing to see
the bears unable to even effect a drop under the $23.50 support
that has been building for the past couple weeks.  While a
breakdown is still possible, with the 20-dma continuing to exert
downward pressure, the way volume has dried up over the past
couple weeks indicates that it just isn't worth waiting around any
longer.  Traders with open positions may want to hold out for the
breakdown, but should tighten stops to $24.40, just above the 20-
dma.  With earnings set to be released next Thursday, our energy
is better expended on more promising plays.

Picked on June 24th at   $22.82
Change since picked:      +0.98
Earnings Date          07/17/03 (unconfirmed)
Average Daily Volume =    720 K
Chart =


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

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

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

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

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

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

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The Option Investor Newsletter                   Sunday 07-13-2003
Sunday                                                      3 of 5

In Section Three:

New Calls: LOW, OMC
Current Put Plays: BLL, HD, INTU, WFMI
New Puts: None


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Allergan, Inc. - AGN - close: 80.73 change: +0.97 stop: 78.50

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:
Friday was the second day in a row that our AGN play dipped to
the 20-dma (currently $79.11) and caught a solid bounce.  The
follow through on Friday was better though, as it propelled the
stock back to close near Thursday's opening level.  The action in
the broad market has been rather whippy over the past few days,
and the same can certainly be said about AGN.  The stock seems to
be trying to consolidate its recent rebound and the bounce from
higher support certainly looks positive.  Another rebound from
the $79-80 area looks favorable for new entries, although more
conservative traders may want to wait for confirmation of
strength with a breakout above last week's $81.60 high before
committing fresh cash to the play.  There's only a week and a
half until the company releases its earnings report, so if the
breakout is going to happen, it will need to do so soon.  On a
breakout, we're still looking to harvest gains on a move up to
the $84-85 area.  Maintain stops at $78.50

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.  Just beware of the fact that July options expire next

Longer Term: Aggressive traders looking to capitalize on a
breakout above the recent highs will want to look to the August
85 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 80 call.

BUY CALL JUL-80 AGN-GP OI=1423 at $1.90 SL=1.00
BUY CALL AUG-80 AGN-HP OI= 224 at $3.90 SL=2.50
BUY CALL AUG-85 AGN-HQ OI=  35 at $1.65 SL=0.75

Annotated Chart of AGN:

Picked on June 26th at     $78.74
Change since picked:        +1.99
Earnings Date             07/23/03 (confirmed)
Average Daily Volume =    1.08 mln
Chart =


Amgen, Inc. - AMGN - close: 69.80 change: +0.29 stop: 68.50*new*

Company Description:
The biggest of the Biotech big guns, AMGN makes and markets
therapeutic products for hematology, oncology, bone and
inflammatory disorders, as well as neuroendocrine and
neurodegenerative diseases.  Anti-anemia drug Epogen and immune
system stimulator Neupogen account for about 95% of sales.  Its
Infergen has been commercialized as a treatment for hepatitis C,
and Stemgen is approved for stem cell therapy in Australia,
Canada, and New Zealand.  The company has a strong pipeline of
new drugs in various stages of development as well as research
and marketing alliances with Hoffman-La-Roche and Johnson &

Why we like it:
Almost as though it has the ability to defy gravity, AMGN
continued to impress, with Friday's session seeing yet another
foray over the $70 level.  That makes four days in a row that the
stock has traded at or above that level, but in each case it has
been unable to hold it on a closing basis.  Can the bulls manage
one more strong push to get the job done?  We think so, but
they're running out of time if they're going to do it on our
timetable.  There are only 6 more trading sessions before AMGN
announces its Q2 earnings, and one way or the other, we're
looking to be out of the play before that event.  With the stock
so close to our eventual target of $72, it is hard to advocate
new entries up here.  Aggressive traders may be able to parlay an
entry off a bounce from the $69 area into a $3 gain if our target
is achieved, but must do so with the understanding that there's a
lot of air down to the $67.50 level if something were to spook
the bulls.  As we've been discussing for most of the past week,
there just isn't enough potential reward in the play to be
chasing the stock higher, and our attention should be focused on
milking that last little bit of profit from the play, while not
giving too much back if the stock reverses.  Accordingly, we've
raised our stop to $68.50, which is just below Tuesday's intraday

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.  This option carries greater risk though due to July
contracts expiring next week.

Longer Term: Since our target for this play is only $72, even
longer term traders should limit their focus to the August 70

BUY CALL JUL-70 YAA-GN OI=17638 at $0.95 SL=0.50
BUY CALL AUG-70 YAA-HN OI=14483 at $2.45 SL=1.25

Annotated Chart of AMGN:

Picked on June 24th at     $65.05
Change since picked:        +4.75
Earnings Date             07/22/03 (confirmed)
Average Daily Volume =   9.95 mln
Chart =


Quest Diagnostics - DGX - close: 67.02 change: -0.63 stop: 64.75

Company Description:
Quest Diagnostics was the result of a 1996 Corning spinoff, and
currently holds the title of the world's #1 clinical laboratory.
DGX performs more than 100 million routine tests annually,
including cholesterol, HIV, pregnancy, alcohol, and pap smear
tests.  Operating laboratories throughout the US and in Brazil,
Mexico, and the UK, DGX also performs esoteric testing (complex,
low-volume tests) and clinical trials.  The company serves
doctors, hospitals, HMOs, and other labs as well as corporations,
government agencies, and prisons.

Why we like it:
We were wondering if DGX was going to give us a normal
retracement back to confirm support at the recent breakout level
and we got that answer in a big way on Friday.  CIBC downgraded
the stock to Sector Underperform before the open, delivering a
sharp gap down to $66, and after weakening just a bit from there,
we saw the strength of buying interest, as the stock was quickly
propelled back over $67.  After that initial excitement, DGX
traded in a fairly sedate range between $66.50-67.00, but managed
to eke out a close just over $67 at the end of the day.  That
certainly seems to be the confirmation that support is firm at
the site of last Monday's breakout and traders that were quick on
the trigger got a great entry this morning.  Successive rebounds
from above Friday's intraday low look like solid entry points,
ahead of the expected rally to take out the recent high near $69
and eventually reach our initial target of $72.  Take note of the
way the 10-dma acted as support on Friday, as this moving average
should continue to provide support in the week ahead.  If DGX is
going to break out to new highs ahead of earnings, next week will
have to be it, as the company is set to report the following
Tuesday morning.  Given the strong volume on Friday's dip and
rebound, our $64.75 stop should be safe.

Suggested Options:
Shorter Term: The July 65 Call will offer short-term traders the
best return on an immediate move, as it is currently in the
money.  At this point though, only aggressive traders should
choose this option with July contracts expiring next week.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the August 70 Call.  This
option is currently out of the money, but should provide
sufficient time for the stock to move higher ahead of earnings
without time decay becoming a dominant factor over the short run.
More conservative long-term traders should utilize the August 65

BUY CALL JUL-65 DGX-GM OI=1873 at $2.70 SL=1.25
BUY CALL JUL-70 DGX-GN OI=1158 at $0.35 SL=0.00
BUY CALL AUG-65 DGX-HM OI=1973 at $4.10 SL=2.50
BUY CALL AUG-70 DGX-HN OI=1221 at $1.45 SL=0.75

Annotated Chart of DGX:

Picked on July 1st at     $65.78
Change since picked:       +1.24
Earnings Date           07/22/03 (unconfirmed)
Average Daily Volume =     899 K
Chart =


eBay Inc - EBAY - close: 113.07 change: +0.99 stop: 110.99 *new*

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:
The strength displayed in shares of Internet auction giant EBAY
is enormous.  It's almost as strong as EBAY's triple-digit P/E
ratio.  As a matter of fact, EBAY's share price and current P/E
are almost the same.  Happily (for EBAY shareholders) the
valuation question that has weighed heavily on YHOO after its
recent earnings announcement has been unable to take a hold of
EBAY.  Of course most Internet investors see EBAY's business
model and future growth as significantly stronger than YHOO's.

We continue to hold onto EBAY as a call play with the expectation
that momentum traders may try for one last push higher ahead of
the company's July 22nd earnings announcement (a week from this
coming Tuesday).  The stock's ability to hold above the $111
level is a possible entry point for aggressive short-term
players.  However, because we are not planning on holding over
the earnings report, initiating new positions now would be very
speculative and involve a greater degree of risk.  Thankfully we
plan to reduce some of that risk by raising our stop loss to

Something else to keep in mind is that EBAY is a potential split
candidate.  The stock was split 2-for-1 on May 25th, 2000 when it
was trading near $120.  It's certainly in announcement range now,
especially since our current target is $120.  Unfortunately, we
couldn't pin down how many shares EBAY's management is authorized
to issue.  The 10-Q forms look like they have a typo and state
only 900,000 shares are authorized.  Yet the company already has
some 315 million shares outstanding so maybe that is really 900
million shares authorized.

One last time I want to remind readers that initiating new plays
now, while tempting, is becoming increasingly risky.

Suggested Options:
We only have six trading days left before EBAY's earnings.  Choose
options carefully.


BUY CALL AUG-110 QXB-HB OI= 2475 at $ 7.20 SL=4.00
BUY CALL AUG-115 QXB-HC OI= 7025 at $ 4.60 SL=2.50

Annotated Chart:

Picked on June 27th at $104.05
Change since picked:     +9.02
Earnings Date         07/22/03 (unconfirmed)
Average Daily Volume =    6.76 million
Chart link:


Goldman Sachs Grp. - GS - close: 87.32 change: +0.77 stop: 84.50

Company Description:
The Goldman Sachs Group is a global investment banking and
securities firm that provides a wide range of services worldwide
to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net-
worth individuals. The company provides investment banking, which
includes financial advisory and underwriting, and trading and
principal investments, which includes fixed income, currency and
commodities, equities and principal investments.  GS recently
completed the acquisition of Spear, Leeds & Kellog, which is
engaged in securities clearing, execution and market making, both
floor-based and off-floor.

Why we like it:
It would be difficult to call last week's trading in GS a trend,
but if anything, it would appear to have been a bullish week.
Beginning with a sharp gap and run session on Monday, the stock
topped out near $88, plunged back under $87 on Thursday and then
traded a nice, tight inside day on Friday.  After Thursday's
sharp slide, we were expecting a test of Monday's gap as support,
but perhaps the intraday low of $86.00 was close enough.  At any
rate, the inside day setup gives us some levels to watch on
Monday.  A break below $86 would confirm that the gap IS going to
be tested and we would then want to watch for new entries near
$85.60 (top of the gap) or $84.70 (bottom of the gap).  On the
other hand, bullish continuation above Thursday's intraday high
($88.23) could set up a momentum entry enroute to a test of the
June highs near $92.  The more conservative momentum entry
approach would be to wait for a trade above Wednesday's intraday
high ($88.65) before entering.  If trading the inside day setup,
look for confirmation of strength/weakness from the Broker/Dealer
index (XBD.X), which traded an inside day of its own.  Weakness
would be signaled on a drop under $550, and strength demonstrated
by a push above $568.  Until we get resolution of the current
range, maintain stops at $84.50.

Suggested Options:
Shorter Term: The July 85 Call will offer short-term traders the
best return on an immediate move, as it is currently in the
money.  This is an aggressive choice though, with July contracts
expiring next week.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the August 90 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 85 call.

BUY CALL JUL-85 GS-GQ OI=15254 at $2.70 SL=1.25
BUY CALL AUG-85 GS-HQ OI= 2289 at $4.30 SL=2.75
BUY CALL AUG-90 GS-HR OI= 2107 at $1.75 SL=0.85

Annotated Chart of GS:

Picked on July 1st at      $85.85
Change since picked:        +1.47
Earnings Date             09/24/03 (unconfirmed)
Average Daily Volume =    4.38 mln
Chart =


Harman Intl - HAR - close: 82.18 change: +1.58 stop: 78.75 *new*

Company Description:
Harman International Industries, Incorporated (www.harman.com) is
a leading manufacturer of high-quality, high fidelity audio
products and electronic systems for the consumer and professional
markets. (source: company press release)

Why We Like It:
So far so good.  HAR is following the play script pretty well.
After the initial pop early this week the stock has maintained
its relative strength and held support at $80.00, which was
previously resistance.  Dip buyers moved in and bid the stock
higher on Friday.  News has been rather light for HAR but the
company did purchase Wavemakers Inc. and shares barely faltered
on the news.  More conservative traders can raise their stop loss
to just under $80.00 but we're going to keep our stop just below
the rising 21-dma, which has been support for months.  This makes
our new stop at $78.75.

In today's momentum market investors are putting more money into
growth companies like HAR and with a PEG ratio of 0.4 this stock
still has plenty of price appreciation left to go despite its
currently overbought condition.  Last month HAR increased its
share buyback program by 1 million shares authorizing management
to buy back up to 1.54 million shares.  The company has 28.7
million shares in the "float" or on the open market.
Furthermore, the company is set to buy back up to $100 million in
outstanding debt.

Something else that could be driving shares of HAR are dreams of
a split announcement.  The company last split 2-for-1 on
September 20th, 2000 near $80.00.  We suspect they actually
announced in the $60-65 dollar range.  It is more traditional to
have the company announce any split with its earnings, which
appear to be August 19th, but they don't have to wait to announce

Suggested Options:
Given that HAR's earnings are expected in August, we'd prefer to
play the August options.  Unfortunately, after the recent
quadruple witching in June and the new issuance of the August
options, there haven't been many takers.  Even though there is
little open interest, small traders who use market orders of 10
contracts or less should have them executed automatically at the
current bid or ask (market).  We're going to list Augusts and an


BUY CALL AUG 80 HAR-HP OI=   1 at $4.40 SL=2.20
BUY CALL AUG 85 HAR-HQ OI=  26 at $1.45 SL=0.70
BUY CALL OCT 80 HAR-JP OI=  16 at $6.10 SL=3.25
BUY CALL OCT 85 HAR-JQ OI  100 at $3.30 SL=1.65

Annotated Chart:

Picked on July  6th at $80.26
Change since picked:    +1.92
Earnings Date        08/19/03 (unconfirmed)
Average Daily Volume =    321 thousand
Chart link:


PACCAR Inc. - PCAR - close: 72.45 change: +1.11 stop: 69.00

Company Description:
PACCAR is a global technology leader in the design, manufacture
and customer support of high-quality, light-, medium- and heavy-
duty trucks under the Kenworth, Peterbilt, DAF and Foden
nameplates. It also provides financial services and distributes
truck parts related to its principal business. In addition, the
Bellevue, Washington-based company manufactures winches under the
Braden, Gearmatic and Carco nameplates.  (source: company press

Why We Like It:
Auto-related stocks are en vogue this week, bolstered by the Dana
Corp - ArvinMeritor news on Monday.  We're not suggesting PCAR is
any sort of takeover candidate or acquirer but it's one stock
we've been wanting to play.   The relative strength in this
equity has been nothing short of phenomenal.  The breakout over
$50.00 in March this year was the beginning of a very powerful
new up trend.  After peaking just above $72 around June 12th,
shares of PCAR slowly consolidated back to its rising 30-dma
before rebounding strongly back over the $70 mark last Thursday.
The recent strength above the previous high should have shorts
running scared.

Dividend paying stocks are also drawing investors and PCAR
announced another quarterly dividend this week.  The shareholder
record date is August 18 with a payable date of September 5th.
The only challenge here is the dividend is just 22 cents a share,
which doesn't equate to much of a yield on a $73 stock.  However,
we also suspect that momentum traders may be hoping for a stock
split announcement with PCAR's July 24th earnings report.  The
stock last split 3-for-2 on May 29th, 2002 in the $70 range.
Currently, PCAR has 116.2 million shares outstanding and
management is authorized to issue 200 million.  That's more than
enough for another 3-for-2 split.

This week has been one of consolidation between $71 and $74.
Traders can still choose to gauge an entry on a bounce above
$70.00 or wait for a new high above $74.  Our short-term target
remains $80.00.  Keep in mind there are less than 10 trading days
left before PCAR's earnings announcement and we currently don't
plan to hold over the report.

Suggested Options:
Given our short-term time frame our choice of options would be
August strikes.  Those wishing for more time should look to the
November calls.  The 70 and 75 strikes are probably the easiest
to play.  The $80 strikes are new and should have bid/ask prices


BUY CALL AUG 70 PAQ-HN OI= 303 at $4.80 SL=2.50
BUY CALL AUG 75 PAQ-HO OI= 351 at $2.20 SL=1.10
BUY CALL AUG 80 PAQ-HP OI=  28 at $0.90 SL= --
BUY CALL NOV 70 PAQ-KN OI=3046 at $7.30 SL=5.00
BUY CALL NOV 75 PAQ-KO OI=  97 at $4.80 SL=2.65
BUY CALL NOV 80 PAQ-KP OI=   0 at $3.00 SL=1.50

Annotated Chart:

Picked on July 08 at $73.49
Change since picked:  -1.04
Earnings Date      07/24/03 (confirmed)
Average Daily Volume:  1.24 million
Chart =


Pulte Homes - PHM - close: 61.80 change: -0.46 stop: 60.50

Company Description:
Pulte Homes, Inc., (www.pulte.com) based in Bloomfield Hills,
Michigan, has operations in 44 markets across the United States.
Under its Del Webb brand, the Company is also the nation's
leading builder of active adult communities for people age 55 and
older. Over its history, the Company has constructed more than
330,000 homes and has been named Builder of the Year for 2002 by
Professional Builder magazine. Pulte Mortgage LLC is a nationwide
lender committed to meeting the financing needs of Pulte Homes'
customers by offering a wide variety of loan products and
superior customer service. (source: company press release)

Why We Like It:
Initially we added PHM to the call list as a hedge against our
RYL put play and as a speculation on another rebound in the
homebuilders from their recent profit taking.  Shares of PHM
rebounded nicely from the $60.50 level on July 1st and then
slowly climbed higher hugging its 50-dma.  As of Thursday this
week the DJUSHB homebuilders index began to grow weaker and PHM
along with it.  The specter of investors selling their winners
ahead of any uncertainty in earnings is beginning to weigh on the
homebuilders who have been big winners this year.

The recent breakdown in PHM has us on the defensive.  We would
not recommend new positions unless we see a decisive bounce from
the $60.00 level (or a move back above $65).  Unfortunately, our
stop is currently at 60.50 and we're loathe to move a stop
backwards once set.  The $61.50 level appears to be holding as
support as the 38.2% retracement of its March-June rally.  We'll
see if this level holds.  We're currently not suggesting new

Suggested Options:
We are not suggesting new entries at this time.

Annotated Chart:

Picked on July 01 at $63.52
Change since picked:  -1.72
Earnings Date      07/24/03 (confirmed)
Average Daily Volume:   767 thousand
Chart =


Lowe's Companies - LOW - close: 46.31 change: +1.66 stop: 43.75

Company Description:
As a retailer of home improvement products, Lowe's has a specific
emphasis on retail do-it-yourself and commercial business
customers.  The company specializes in offering products and
services for home improvement, home decor, home maintenance, home
repair and remodeling and maintenance of commercial buildings.

Why we like it:
Regardless of what the outcome is of the recent housing boom and
whether rising interest rates put the kibosh on another round of
refinancing activity, shares of LOW made a very bullish move on
Friday, indicating further upside is in store.  After rebounding
from the $42 level just one short week ago, the stock rallied
sharply last week, pausing briefly near $45 resistance and then
blasting off again on Friday, closing over $46.50 for the first
time in over a year.  If there was any doubt as to the strength
of Friday's rally, a look at the buying volume (40% over the ADV)
should put those doubts to rest.  A quick look at the PnF chart
shows the significance of that breakout, as it generated a new
Buy signal with a tentative bullish price target of $58!  Before
considering that as a viable target, the stock will need to work
through resistance on the weekly chart between $47.50-50.00, but
all signs look bullish right now.  Pulling up a relative strength
chart of LOW vs. its main competitor HD shows why we're bullish
on LOW and bearish on HD.  That chart has been consolidating near
support for nearly 2 months and broke out to the upside with
conviction last week.

As strong as Friday's breakout appeared (both in terms of price
and volume), we would feel a lot better about new positions on a
pullback to confirm old resistance as new-found support.  That
would require a pullback and rebound from the $45.00-45.50 area,
which has been acting as resistance since the middle of April.
With earnings not set to be released until the middle of August,
we've got plenty of time to let this bullish trend unfold in our
favor.  One reason we're not advocating momentum entries without
at least a mild pullback has to do with Friday's close above the
upper Bollinger band.  Stocks can continue to push their bands
either higher or lower, but it is usually an uphill battle.
Waiting for the pullback before entry just presents a more
favorable risk-reward dynamic.  Our first target will be for a
test of the 2002 high at $50 and then we'll see how much gas the
bulls still have in their tank.  Place stops initially at $43.75,
which is just below Thursday's intraday low, as well as the
converged 10-dma ($43.91) and 20-dma ($44.08).

Suggested Options:
Shorter Term: The July 45 Call will offer short-term traders the
best return on an immediate move, as it is currently at the
money.  But with July expiration looming next week, the more
conservative approach would be to use the August 45 Call.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the August 47 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 could utilize the October 47 call.

BUY CALL JUL-45 LOW-GI OI=11321 at $2.10 SL=1.00
BUY CALL AUG-45 LOW-HI OI= 3263 at $2.90 SL=1.50
BUY CALL AUG-47 LOW-HT OI=  744 at $1.40 SL=0.75
BUY CALL OCT-47 LOW-JT OI= 1553 at $2.70 SL=1.25

Annotated Chart of LOW:

Picked on July 13th at    $46.87
Change since picked:       +0.00
Earnings Date           08/18/03 (unconfirmed)
Average Daily Volume =  4.83 mln
Chart =


Omnicom - OMC - close: 73.97 change: +1.80 stop: 69.99

Company Description:
Omnicom is a leading global marketing and corporate
communications company. Omnicom's branded networks and numerous
specialty firms provide advertising, strategic media planning and
buying, direct and promotional marketing, public relations and
other specialty communications services to over 5,000 clients in
more than 100 countries. (source: company press release)

Why We Like It:
If the economy is improving then that means companies are going
to be recommitting money back towards their advertising budgets.
Of course that means more business for the likes of OMC.
Besides, the stock has been a stellar performer from its March
lows.  Bulls have been buying the dips near its rising 30-dma and
that's exactly where shares are riding right now.

Earnings are expected at the end of July and that gives us three
weeks to ride any momentum into their announcement.  The stock
has some resistance in the $75-76 area but we projecting a move
up to the $80 level.  We'll start the play with a stop loss at
$69.99 but more conservative traders could use Thursday's low of

Suggested Options:
As we don't plan on holding over OMC's end of July earnings, our
preference will be for the August strikes but Octobers will be
listed as well.

BUY CALL AUG 70 OMC-HN OI=  57 at $5.70 SL=3.00
BUY CALL AUG 75 OMC-HO OI=2173 at $2.45 SL=1.25
BUY CALL AUG 80 OMC-HP OI=1333 at $0.70 SL= -- much riskier
BUY CALL OCT 70 OMC-JN OI= 733 at $7.40 SL=5.00
BUY CALL OCT 75 OMC-JO OI=1161 at $4.40 SL=2.20
BUY CALL OCT 80 OMC-JP OI= 284 at $2.45 SL=1.25

Annotated Chart:

Picked on July 13 at $73.97
Change since picked:  +0.00
Earnings Date      07/29/03 (unconfirmed)
Average Daily Volume:  1.66 million
Chart =

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Ball Corp. - BLL - close: 44.00 change: -0.10 stop: 46.50*new*

Company Description:
Ball Corp. is a manufacturer of metal and plastic packaging,
primarily for beverages and foods, and a supplier of aerospace
and other technologies and services to commercial and
governmental customers.  Ball's principal business is the
manufacture and sale of rigid packaging products, primarily for
beverages and foods.  Polyethylene terephthalate packaging is the
company's newest product line.  The aerospace and technologies
segment includes civil space systems, defense operations and
commercial space operations.  The defense operations business
unit includes defense systems, systems engineering services and
advanced antenna and video systems, as well as electro-optics and
cryogenic systems and components.

Why we like it:
Persistent bearish trends are hard to come by in the current
market, but it is hard to argue with BLL's bearish trend of the
past 3 months, as one support level after another has given way.
We initiated coverage just in time for entries ahead of a break
of the $45 support level and it has been encouraging to see the
past two days' tests of the $43.50 level, which is next support.
The fact that both of those dips were bought though, brings up
the possibility of a more pronounced oversold rebound before the
bearish trend continues.  We would actually welcome such a move,
as it would set up the next high-odds entry point, preferably on
a rollover from the $45.00-45.50 area.  There should now be very
strong resistance near $46, and that will be reinforced by the
declining 20-dma at $46.17, as it has been providing consistent
resistance since early May.  Chasing the stock lower without a
bounce first does not seem to be a winning strategy with the
lower Bollinger band currently just above $43.  The stock needs
to have some pressure relieved first and then we can hammer it on
the next failed bounce.

Suggested Options:
Short-term traders will want to focus on the July 45 Put, as it
will provide the best return for a short-term play.  Conservative
traders looking for a larger move down towards the $40 level or
below will want to utilize the August 45 contract, which provides
greater insulation from the spectre of time decay.  Note that
July contracts expire next week.

BUY PUT JUL-45 BLL-SI OI=327 at $1.40 SL=0.75
BUY PUT AUG-45 BLL-TI OI=404 at $2.45 SL=1.25
BUY PUT AUG-40 BLL-TH OI=494 at $0.65 SL=0.30

Annotated Chart of BLL:

Picked on July 8th at    $45.14
Change since picked:      -1.14
Earnings Date          07/24/03 (confirmed)
Average Daily Volume =    620 K
Chart =


The Home Depot - HD - close: 33.17 change: +0.74 stop: 34.75

Company Description:
A home improvement retailer, The Home Depot operates more than
1500 stores throughout the United States.  The do-it-yourself
warehouse retail stores offer building materials, home
improvement products and related furnishings.  Additionally, the
company provides lawn and garden products and an assortment of
services to both individual home-owners and independent

Why we like it:
Almost as though waiting for us to begin bearish coverage of the
stock, BofA came out before the open on Friday, upgrading HD to a
Buy.  That gave the stock an early pop that extended up to the
$33.50 level and that may have been the oversold rebound we were
hoping for.  After the initial excitement wore off though, the
stock gradually drifted lower throughout the afternoon, ending
just above $33.  Stepping back, we're once again confronted by
the technicals that originally attracted us to the play and we
can't shake the feeling that the sharp selloff earlier in the
week is the primary story.  A rollover below the $34 level looks
like a high-odds entry point for aggressive traders.  A quick
comparison between HD and its primary competitor LOW, shows how
the stock is quickly losing strength relative to its peer, with
the relative strength chart breaking below its 50-dma over the
past 2 days.  Traders looking for more weakness before playing
will want to see HD take out the $32 support level and then break
the 50-dma ($31.75) before playing.  That breakdown will confirm
the recent double-top at $34.70 and have us looking for a quick
drop to $30 and then our final target of $28.  Maintain stops at
$34.75, as a close over that level would be a significant bullish

Suggested Options:
Aggressive short-term traders will want to focus on the July 32
Put, as it will provide the best return for a short-term play.
With July contracts expiring next week though, conservative
traders will want to utilize the August 32 contract, which
provides greater insulation from the spectre of time decay.

BUY PUT JUL-32 HD-SZ OI=4729 at $0.30 SL=0.00
BUY PUT AUG-32 HD-TZ OI=5094 at $1.05 SL=0.50
BUY PUT AUG-30 HD-TF OI=4506 at $0.35 SL=0.00

Annotated Chart of HD:

Picked on July 10th at   $32.43
Change since picked:      +0.74
Earnings Date          08/19/03 (unconfirmed)
Average Daily Volume =  9.59 mln
Chart =


Intuit Inc - INTU - close: 43.30 change: +0.14 stop: 45.55

Company Description:
Intuit Inc. is a leading provider of business and financial
management solutions for small businesses, consumers and
accounting professionals. Its flagship products and services,
including QuickBooks., Quicken. and TurboTax. software, simplify
small business management and payroll processing, personal
finance, and tax preparation and filing. ProSeries. and Lacerte.
are Intuit's leading tax preparation software suites for
professional accountants. (source: company press release)

Why We Like It:
Whether you call it a seasonal play or technical weakness it just
looks like a bearish candidate.  Last earnings season the stock
was hammered on INTU's earnings and revenue warning for the
second half of this year.  The company blamed a sluggish economy
and lower consumer spending across all the product lines.  Since
that announcement and corresponding $12 drop Prudential cut the
stock from a "buy" to a "hold".  Shares eventually traded below
the $35 level before rebounding with the broader markets.  INTU
almost "filled the gap" with its mid-June high near $49.00 but
soon thereafter traders started taking profits.  The breakdown
under its 200-dma and the $45.00 level are rather negative.  Not
helping the share price were negative comments just recently from
Prudential.  The research firm is concerned about INTU's 2004
earnings and competition from Microsoft into the small business
accounting market.

Shares of INTU appear reluctant to give up much ground. While the
stock is certainly under performing the markets and the GSO
software index it isn't moving very fast.  We do see a strong
series of lower highs as selling pressure slowly wears down the
bulls.  Plus, we're encouraged by the two consecutive closes
under the simple 50-dma.  New positions can be taken at current
levels but momentum traders may want to wait for a move back
under $43.  Meanwhile, target shooting types can look for another
failed rally, this time under $44.50.

Suggested Options:
Stocks tend to move lower much faster than they climb.  Thus, our
preference is for short-term options like July's but these expire
in five days and are NOT recommended.  We're going to suggest the
August contracts. However, we're going to list August and October
options.  FYI.. INTU does have 42.50 strikes but we're not
listing any.


BUY PUT AUG 45 IQU-TI OI= 246 at $3.20 SL=1.65
BUY PUT AUG 40 IQU-TH OI= 523 at $1.10 SL=0.60
BUY PUT OCT 45 IQU-VI OI=1914 at $4.90 SL=2.50
BUY PUT OCT 40 IQU-VH OI=1647 at $2.55 SL=1.30

Annotated Chart:

Picked on July 8th at $43.35
Change since picked:   +0.05
Earnings Date       08/13/03 (unconfirmed)
Average Daily Volume =   4.1 million
Chart link:


Whole Foods - WFMI - cls: 47.88 chg: +0.81 stop: 48.26

Company Description:
Founded in 1980 in Austin, Texas, Whole Foods Market is the
world's largest natural and organic foods supermarket with $2.7
billion in sales in fiscal year 2002. The company currently has
143 stores and employs more than 27,000 Team Members in the
United States and Canada. The motto, "Whole Foods, Whole People,
Whole Planet"(TM) captures the company's mission to find success
in customer satisfaction and wellness, Team Member excellence and
happiness, enhanced shareholder value, community support, and
environmental improvement. For six consecutive years, Whole Foods
Market has ranked on Fortune's annual list as one of the "100
Best Companies to Work For." Whole Foods Market, Bread & Circus.
and Harry's Farmers Market. are all registered trademarks owned
by Whole Foods Market IP, LP. (Source: company press release)

Why We Like It:
WFMI is getting swanky, with a planned new address in a center to
be built on Columbus Circle at the southwest corner of Central
Park.  It's also making progress on its new landmark store and
world headquarters in downtown Austin.  Perhaps all the news
excited the WFMI investors.  They sent WFMI climbing 1.72 percent
on Friday.

A study of the $RLX and competitors Wild Oats (OATS), Kroger
(KR), Albertson's (ABS), and Safeway (SWY) shows the retail index
gaining 1.97 percent, KR gaining 1.98 percent, and closest
competitor OATS gaining 1.43 percent.  Perhaps it wasn't the
glitzy new location after all that sent WFMI climbing, but we
liked that story better.

Although WFMI could not maintain 48.00 and today's anemic volume
did not confirm the move, the day's strong trading created
technical damage to the chart outlook on our short play.
Stochastics, RSI, and MACD all turned up, although MACD remains
below signal.  WFMI climbed above its 10-dma and closed there.
Based on these technical considerations, we expect another test
of 48.20 early next week and possibly a test of our stop, too.
With a couple of weeks to go before earnings are released, we
hope to see WFMI roll over again beneath that stop, but we would
not suggest new entries at this time.

Suggested Options:
We're not suggesting new positions in WFMI at this time.


Annotated Chart for WFMI:

Picked on June 13 at $49.44
Change since picked:  -1.56
Earnings Date      07/30/03 (unconfirmed)
Average Daily Volume: 1.6 million
Chart =





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The Option Investor Newsletter                   Sunday 07-13-2003
Sunday                                                      4 of 5

In Section Four:

Leaps: Let The Earnings Parade Begin
Traders Corner: Quickie Time Again – Keep Em" Short & Sweet &
Traders Corner: Elliott Wave Play Updates
Traders Corner: Where is the Dow Going?

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Let The Earnings Parade Begin
By Mark Phillips

The more things change, the more they remain the same.  That
phrase certainly applies to the stock market lately, as investors
continue to believe that surging liquidity will result in economic
recovery.  That's really the story behind the recent rally and
with July earnings upon us, we'll soon get to see whether there is
any kernel of truth to it or if it is the same recycled fairy
story of a second-half recovery that we've been fed for the past 3

Based on the trend of increasing money supply and the way it has
flowed into consumer debt creation, without so much as a hint of
growth in business loan activity, I can't shake the feeling that
this chapter of the story is going to end badly, just like the
prior 3 chapters.  Jonathan has been doing a great job of
reflecting on the macro picture in this arena in his Wednesday
Market Wraps, so I won't rehash any of it here.  The Fed may be
sending lots of money out there (through whatever extraordinary
means they may choose) to stimulate business development, but I
believe they have left out two huge components of the equation.
The first is a huge excess of production capacity.  As long as
that exists, companies have no need to invest in expansion
projects.  Making matters worse is the excess production capacity
means that companies have no pricing power and that translates to
more fierce price competition and falling prices -- with the end
result being falling prices.

The other factor I believe the Fed is ignoring is that with
interest rates bottoming, the incentive for homeowners to
refinance is going to dry up.  Unemployment is on the rise - still
- and really with no signs of it improving anytime soon.  With
consumers having propped up the economy in the past couple years,
how are they going to continue to do so if they've already
refinanced all they can and more and more of them are losing their
jobs.  You see the conundrum the Fed is faced with don't you?
Unfortunately, the remedy they have chosen appears to be the
financial equivalent to pushing on a string.  You can move the
near end (money creation) all you want, but it is unlikely to have
even a remote impact on the other end of the string that you're
really interested in (economic growth).

We are in the early stages of what is likely to be one of the
strongest bear markets in history (including the 1930s and the
experience of the Nikkei over the past decade plus) and this
little bull run will turn out to be just one of a long series of
bear market rallies that I expect to continue for some time to
come.  But for now, the bulls are still in charge, so let's take a
look at some of our usual factors and see what grabs our
attention.  Unfortunately, I'm already way behind schedule today
and have more of a deadline than usual, as I'm leaving town for
the weekend and already have reservations at the other end of my
journey.  So I'm going to keep my commentary rather brief (at
least compared to my usual novel) this week.

In short, all of the major indices are still trading very near
their recent highs and while I continue to add bearish plays to
the Watch List and Portfolio, I think we need to be cognizant of
the big picture that shows very little indication of internal
weakening.  The key to that view for me comes from the Bullish
Percent readings, and as usual, we see very little there to
provide encouragement for the bears just yet.  Here are the
updated readings as of Friday's close.

NASDAQ-100 - 80% Back in Bull Confirmed, down from the 91% high
NASDAQ Composite - 72.64% (another new all-time high)
DOW - 86.67% (Highest reading since 1/99 -- highs in 1998 = 92%)
S&P 500 - 79.40% (Cycle high of 82.80% - Still Bull Confirmed)
S&P 100 - 82% (Just below cycle high, 11/98 all-time high = 84%)

Other than the NDX, I see very little sign of internal weakening
in the broad market, and even that index popped back up into Bull
Confirmed with a fresh column of X last week.  In fact, we have
the DOW and COMPX registering fresh cycle highs last week.
Haven't we read somewhere that overbought can become more
overbought?  The action in the broad markets and the internals is
providing living proof of that maxim.

We've been talking in recent weeks about the bullish percent
SharpCharts for the major indices and I think it is worth
mentioning again here.  In the interest of getting this turned in
at a decent time tonight, I won't duplicate the charts here, but
you should have gotten adept at pulling them up yourselves by now.
Here is the link and BP symbols for easy reference.


Here are the pertinent Bullish Percent symbols.


Both the NDX and the SPX saw enough internal weakening to have the
bullish percent lines cross under their respective 10-dmas, with
the CCI oscillators falling below the -100 lines.  By my
reckoning, that is the bearish signal that we want to see to give
us some conviction to the downside.  But look at how we're
starting to see a rebound in these bullish percent lines, which
have now crossed back above the 10-dmas.  We're also starting to
see the CCI oscillator creep back over the zero line.  What does
that mean?

Recall this snippet from last week's column?

"I think we are likely watching a variant of the pattern of last
December and January play out.  We got the primary bearish cross
in mid-June (early December) and then after a brief rebound
following the initial dip, we ought to get a second bearish cross
at a lower level of bullish percent sometime in July, leading to a
similar pattern to that seen in January."

Take a quick look at the Sharp Charts of the NDX and SPX Bullish
Percents and I think you can see the potential for this scenario
to play out.  The big unknown for me is the still very strong
picture presented by the Bullish Percent on the DOW, COMPX and
OEX.  For now, there is still a lot of internal strength and the
bears need to be careful.

But as we head into July earnings in earnest next week, I have a
strong conviction that the irrational bullish enthusiasm of the
past couple months is going to run headlong into economic reality.
One way or the other, I think we're going to see some fireworks,
even if it is a couple weeks late.  I think the actual earnings
are really irrelevant and what investors are going to focus on is
the future guidance.  That's what they've been buying stocks on,
is the EXPECTATION of future improvement.  If their hopes are
dashed by bearish comments in the coming weeks, it could be a
painful few months for the bulls.  On the other hand, if their
hopes are found to be justified, we could be looking at new highs
for year just around the corner.

The picture presented by the VIX is finally starting to look more
encouraging, with Friday's close under 21 for the first time since
last May.  I'm hoping we have lower levels in store over the next
week or so, and a close under 20 will make the bearish case that
much stronger, as more and more traders shift to the bullish side
of the boat, making it that much more lop-sided and unstable.  The
March 2002 low on the VIX was 19.03 and if we get anywhere near
that level, I would consider it a high odds entry point for long-
term bearish positions on either the DOW or the S&Ps.  We'll just
have to wait and see how it all plays out, now won't we?

And now let's move on to the growing list of plays.  It was an
active week, and there's a lot of ground to cover.


AIG - Is that pesky support ever going to fail?  Each time AIG
comes down to challenge the $54-55 support area, buyers emerge to
prop it right back up.  I still feel a significant breakdown is in
the future, but there are good odds it won't materialize until
after the company reports earnings on July 24th.  Resistance seems
to be firming up just over $58 and the long-term descending
trendline has now fallen below $60.  But until AIG prints $54 and
creates a new PnF Sell signal, the stock remains rangebound,
torturing us on a weekly basis.  Aggressive traders can still use
failed rallies below $58.50 to enter the play.  We'll want to see
the 50-dma crossing back under the 200-dma to give us an
indication that strength is waning.  I think the biggest thing
that concerns me about this play is the lack of a price decline to
accompany the drop in weekly Stochastics over the past month.
That is normally a sign of strength, which is not what we want to
see in this bearish play.

AMGN - I don't know how many ways I can say how astounded I am
with the performance of our AMGN play.  Last week was another
stellar performance, with 4 out of 5 days providing a test of the
$70 resistance level and each one being a potential profit-taking
opportunity.  I certainly wouldn't fault anyone for harvesting
gains at current levels, with even the '05 LEAP showing better
than a 50% gain from where we logged our entry.  From here on out,
it is all about maximizing gains on the play.  Our final target is
$72, which is the bullish price target from the PnF chart.  If
that level is traded next week, then we'll close the play then and
there.  Note that we've raised our stop to $68.50, as that is just
below last Tuesday's intraday low.  Yes, that's an aggressive stop
for a LEAPS play, but I think it is warranted given the proximity
of our eventual target.

QQQ - Bringing the misery to an end, QQQ surged through the $32
level early last week and stopped us out by a mere 3 cents.  To be
honest, I'm glad to have it behind us.  It is a perfect example of
the hazards of being too eager to enter a play contrary to the
dominant market trend.

HD - It was an aggressive way to play, but I think it is going go
pan out nicely.  Needless to say, the double top last week
triggered our HD play to move to the Portfolio.

SMH - Despite showing more strength than I was expecting, I took
the plunge on SMH early last week and we have another new bearish
play in the Portfolio.

Watch List:

DJX - As recently as Thursday, I was thinking that the jig was up
and we had missed the ideal entry point on our DJX play.  But then
the bulls delivered another robust rebound on Friday, and the
possibility of another assault on those highs is still in play.
One of the most encouraging signs I saw on Friday was the VIX
finally cracking below 21 on a closing basis -- for the first time
since May of 2002.  I'm going to stick with the entry target of
$83.50-94.00 on the play and if we get a VIX plunging under 20
next week, then so much the better.

Radar Screen:

GS - The bullishness in the Brokerage sector (XBD.X) last week
certainly gave GS a lift.  Now the question is whether the stock
can test its June highs near $92.  Based on the action in the XBD
index, I really think it can.  We have a lower high in GS to work
with, but until there is a lower low to go along with it, we'd
just be trying to game a top in a relatively strong stock in a
strong sector.

LEH - For traders looking to play the downside in the Brokerage
sector, LEH certainly seems to have more appeal than GS, primarily
due to its lack of upside traction last week.  Hovering between
$65-70 for the past 3 weeks now, the stock could be primed for a
breakdown, but I just can't bring myself to put it on the Watch
List until we see which way this range is going to break.  My
biggest concern is the price action in the Broker/Dealer index
(XBD.X), which tagged a new 2-year high last week on expectations
that profits are improving with increased trading activity.

WMT - Now that's more like it!  We got a taste of renewed
bullishness from the Retail index (RLX.X) last week, as it tagged
a new 52-week high at $344.  I'm looking for another thrust higher
before the top is in, perhaps near the $360 area.  WMT is finally
showing a bit of traction as well, currently challenging the $57
level.  The manner in which the stock is lagging the RLX is
encouraging, but I want to see how the stock behaves near the $58
resistance level, which has turned back every decent rally since
May of last year.  Earnings aren't scheduled to be released until
the middle of August, so there is plenty of time for a solid entry
to set up.  At this point, I want to wait to see whether year-long
resistance is going to hold or fail.  Until we have that piece of
data, gaming a top in WMT just doesn't have the appeal needed to
get me off the fence.

LEN - While it was encouraging to see the Housing index ($DJUSHB)
and LEN put in a lower high last week, I'm not convinced we've
seen the end of bullishness in the sector just yet.  Instead of an
imminent breakdown, I'm expecting one more thrust towards the
highs before all is said and done.  I may be dead wrong on that
account, with bond yields holding the bulk of their recent gains,
but I just can't justify a new position here just yet.  Before
getting aggressive to the bearish side, I think we will also need
to see a lower low to go along with last week's lower high.  The
next couple weeks should prove to be quite interesting and I
wouldn't rule out a new Watch List play as early as next week,
depending on favorable price action.

BBH - As strong as the temptation is to short into the recent
rally in the Biotech sector, I can't justify it, especially when
we're already leaning bullish with our AMGN play.  I'm going to
keep BBH here though, because if the uptrend in AMGN fails, then I
think that will be a strong indication that it is time to shift
BBH to the Watch List.  Eager and aggressive traders might
consider an early play on another failure below the $135 level,
looking for a return back to the $100-110 area.  Note that we're
right back into the area of the recent highs and this is where
aggressive traders might look to place their bets.  But not me!
If anything, BBH looks like it wants to break out over recent
resistance and we could be looking at a move up towards $140
before this train runs out of steam.

RIMM - With the strength in the Wireless and Internet space, RIMM
has had quite a run off of its March lows, consistently working
higher in a neat little ascending channel.  But that channel is
fast approaching some formidable resistance near $24.  I don't yet
see any signs of weakness on the chart, but the first indication
of such will be a break below the bottom of the channel.  The
strategy will be to wait for the breakdown and then look to enter
bearish positions on a failure to then get back into the channel.
This will still take a few weeks (I expect) to set up, but once it
does, RIMM could give us a very nice ride back to the $16-17 area,
which the most recent breakout took place.  Note that the past few
weeks have got RIMM moving close to the bottom of its channel, but
no breakdown yet.  Patience is the key for now.

GM - Doesn't GM's trading pattern over the past few weeks look an
awful lot like it did in late April and the first part of May
before the stock broke down to the $33 level?  I just can't shake
the feeling that there isn't enough bang for the buck in this one
unless we can get an entry on the next spike move.  With earnings
coming out next week, that sort of move seems unlikely unless the
company really pulls a rabbit out of their hat.  I'm starting to
cool my jets on GM as a solid bearish play, primarily because of
the erratic price action we've witnessed in recent months.  Long
term, I think it is headed much lower, but the only way to play it
is to get the really attractive entry point.

SNDK - That's just downright cruel!  While I was looking for a
pullback last week, SNDK just rocketed out of the gates on Monday
and never looked back, tacking on nearly 12% by Friday's close.  I
know the stock looks really strong and has a bullish price target
well above $70, but I just can't stomach the risk necessary to
chase the stock here.  We've got to wait for the pullback first
and hopefully we'll get a nice little "sell the news" event after
next week's earnings report.  I continue to think we need to see
at least a 25% pullback to consolidate this rally before
continuing higher, and right now that equates to SNDK pulling back
into the $40-41 area.

Closing Thoughts:

I had a fair amount of charting problems this morning in trying to
get this column put together before heading out of town for
another long weekend.  As a result of all the activity with the
play lists, I had to keep my commentary rather short.  As I think
you can read between the lines though, I see the market as having
changed very little in the past month.  We've seen very little
internal weakening and the major indices are all trading very
close to their recent highs.  I'm still leaning into the bearish
camp, as demonstrated by two more bearish Portfolio plays and a
bearish Watch List play this week.  But I still feel we're
fighting a bullish trend that just refuses to accept the reality
of economic weakness.  Remember that the market can stay
irrational much longer than we can stay solvent.  Keep that in
mind before uttering any phrase that begins with "XYZ stock just
can't..."  Of course it can!  We just need to balance risk and
reward in our pursuit of profits.

July earnings are upon us and corporate officers will either have
to put up or shut up.  Investors have been persistently bidding
stocks higher in anticipation of the second half recovery and if
there's no evidence of that happening, then it could be a painful
rest of the summer for the bulls.  Of course there's always the
possibility that this year will be different, so we'll have to
stay on our toes.  Either way, the next few weeks are likely to be
very interesting.

Have a great weekend!


LEAPS Portfolio

Current Open Plays


AMGN   05/21/03  '04 $ 60  YAA-AL  $ 7.00  $12.50  +78.57%  $68.50
                 '05 $ 60  ZAM-AL  $10.90  $16.70  +53.21%  $68.50

AIG    04/24/03  '04 $ 55  AIG-MK  $ 5.60  $ 3.80  -32.14%  $61.00
                 '05 $ 55  ZAF-MK  $ 8.50  $ 7.00  -17.65%  $61.00
HD     07/09/03  '04 $ 32  HD -MZ  $ 2.45  $ 2.70  +10.20%  $36.50
                 '05 $ 30  ZHD-MF  $ 3.20  $ 3.60  +12.50%  $36.50
SMH    07/09/03  '04 $ 30  SMH-MF  $ 2.70  $ 3.00  +11.11%  $33.00
                 '05 $ 30  ZTO-MF  $ 5.00  $ 5.20  + 4.00%  $33.00

LEAPS Watchlist

Current Possibles



DJX    05/04/03  $93.50-94.00  DEC-2003 $ 92  DJV-XN
                               DEC-2004 $ 92  YDK-XN
ADBE   07/13/03  $36           JAN-2004 $ 35  AEQ-MG
                               JAN-2005 $ 35  ZAE-MG
                               JAN-2006 $ 35  WAE-MG

New Portfolio Plays

HD - The Home Depot $34.55  **Put Play**

To be entirely honest, I really didn't expect HD to be able to
test its June highs so thoroughly, so when Tuesday's euphoric ramp
left the stock up above $34.50, after an intraday high just 2
cents below June's intraday high, I just couldn't stand the
temptation and took advantage of the higher-risk entry point.  As
luck would have it, the sharp decline of the next two days had me
feeling a bit smug in having captured THE cycle high, but I
remained cognizant of the risk of a bounce until the $32 support
gave way.  Well that's precisely what transpired on Friday, as
BofA upgraded the stock to Buy, resulting in a pop back to the
$33.50 level.  The afternoon session produced a very slight bleed
into the close, but it was encouraging to see a lack of bullish
follow-through.  As I mentioned last week, this play is all about
trying to game a top in HD, in some respects a less volatile way
to play the expectations of weakness in the overall Housing
sector.  One other factor in our favor is the was HD is
underperforming its primary competitor (LOW) and that relative
underperformance really stood out on Friday, with LOW moving to a
new high and HD failing to follow suit.  I actually have rather
modest expectations for HD for the duration of the play, as I
think the best we could hope for would be a drop to the 200-dma
(currently $26.67).  There are several support levels to deal with
on the way to that optimistic target though, starting with the 50-
dma ($31.75), the bottom of the June dip ($31.58), more support at
$30 and then the bottom of the 5/20 gap at $28.07.  Realistically,
I think we should target the $28 level and if achieved, we should
be gladly harvesting our gains.  The bullishness in the rest of
the market (including the Housing sector) really hasn't faded yet,
so I want to err on the side of caution and give HD some room to
move before commencing the decline in earnest.  Initial stops are
set at $36.50, just above the 50% retracement ($36.35) of the
decline from 2/02-1/03 slide.  Traders that missed last week's
entry point can use any subsequent bounce near the $34 level as a
viable entry.  We'll know it is safe to tighten our liberal stop
once the stock closes below $31.50.

BUY LEAP JAN-2004 $32 HD -MZ $2.45
BUY LEAP JAN-2005 $30 ZHD-MF $3.20

SMH - Semiconductor HOLDR $31.80  **Put Play**

Let me be perfectly clear about this bearish play on SMH.  It is
VERY aggressive and we are once again trying to game a top in one
of the stronger sectors of the market.  Remember what happened
with the QQQ play that was stopped out this week?  We're taking
the same sort of risk in trying to pick a top in the Chip sector
right now.  The Semiconductor index (SOX.X) is trying valiantly to
accomplish a decisive breakout over year-long resistance in the
$400-407 area, and the SOX has yet to break down from its
ascending channel from the February lows.  With that said, I
believe the rise in this sector to be wholly unsustainable, due to
the complete lack of evidence of any recovery in Tech spending.
As we've discussed in recent commentaries, the rally in recent
months has been driven by surging liquidity and the belief
(read:hope) that it will translate to economic recovery later this
year and early in 2004.  If you believe that fairy tale, then this
play isn't for you.  SMH has tracked the SOX fairly well (as we
would expect) and has traded within its own ascending channel off
the February lows.  We'll need to see a break below the 50-dma
($28.86) and the bottom of the channel ($28.50) before we'll know
the play is working.  As noted in the Watch List writeup last
weekend, I was looking for a rally failure in the $30.50-31.50
area, and we definitely got more than that, with Tuesday's
intraday surge above $32 and then sharp pullback into the close.
In fact, I probably would have left it alone if not for that
final-hour swoon.  While there was a bit of weakness to round out
the weak, there is nothing to point at saying the top is in and
we're headed straight down from here.  Successive rebound failures
below $32 look good for aggressive entries, while more
conservative traders may still want to wait for a break and close
below $30 before playing.  I'm not willing to give this play
nearly as much breathing room as we did on the QQQ play, so I'm
setting a very tight stop at $33, which is just above the June
intraday high of $32.47.  Things could get really exciting over
the next couple weeks with earnings season breaking into full
stride.  In my opinion, it will be time to "Show us the money", as
companies are forced to demonstrate improving business or suffer
the wrath of investors that have heard the same tired promises
once too often.

BUY LEAP JAN-2004 $32 SMH-MF $2.70
BUY LEAP JAN-2005 $30 ZTO-MF $5.00

New Watchlist Plays

ADBE - Adobe Systems $34.63  **Put Play**

After playing ADBE successfully to the upside earlier this year,
I've been watching for a favorable setup to play the downside in
the stock and I think that opportunity is near at hand.  After
topping out near $38 in early May (where we exited the bullish
play), we've seen the stock enter into a more bearish trend.  The
June earnings were certainly not well received and the stock
cratered down to the $32 level and it took nearly 3 weeks for any
sort of upward traction to take hold.  Over the past couple weeks,
ADBE has been working higher and is currently finding resistance
just below the top of its June gap.  Please note that this is
still an aggressive bearish play because the stock has not yet
broken it ascending trendline connecting the October and March
lows.  So the risk we run with this play is the possibility that
the recent weakness is no more than a long period of
consolidation.  With weekly oscillators not showing anything
approaching overbought territory, it may seem like we're just
throwing darts, but I invite you to take a look at that weekly
chart.  Draw a trendline connecting the 4/01 and 5/02 highs and
you can see how it has provided resistance over the past couple
months.  I'm expecting it to continue to do so, and with that
trendline currently just over $37, we appear to have a favorable
risk/reward dynamic in front of us.  We'll look to initiate
positions on a closure of the June gap, so our entry target is
$36.  We'll set our stop at $38.50 initially, which is just above
the early May highs.  The first downside objective will be for a
break below the ascending trendline (currently at $32) and then
we'll look for a break under $30 and a test of the 200-dma
($29.20).  ADBE isn't set to report earnings until September, so
we've got plenty of time for the trade to start working in our
favor before the waters get muddied by those sort of gyrations.
Note that we've started including the 2006 LEAPS here on the ADBE
play.  Over the next couple months, we'll gradually phase in the
2006 strikes and by September, we'll stop using the 2004 LEAPS as
they will be starting to show too much time decay for our



QQQ - $32.28 This bearish play is a perfect example of what
happens when we leap too soon.  I got way too aggressive on the
entry point back in May, with the result being we shorted into the
breakout over the $30 level and the QQQ has just continued to
climb.  Setting our stop more than $3 above entry should have
easily survived unless I was dead wrong on the play.  Well,
Tuesday's close above that $32.25 stop proved that I had indeed
under-estimated the bullish resolve in Tech-land.  I'd still like
to try gaming a bearish play in this arena, but until there's a
pattern of lower highs to work with, I feel it would be ill-
advised.  For now, we'll focus our bearish efforts elsewhere.


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Quickie Time Again – Keep Em" Short & Sweet & Profitable
By Mike Parnos, Investing With Attitude

This week marks my one-year anniversary as an option strategist
for OptionInvestor.  We seem to have survived each other pretty
well.  It appears that I've educated more readers than I've
confused or offended.  That's encouraging!

I've written close to 150,000 words (John Grisham eat your heart
out) about options  – with more than a few opinions and jokes
thrown in to make it all tolerable.  It's amazing what you can
accomplish during commercials.

There have been a few casualties. Many options have given their
life for our strategies.  There have been marriages – puts to
stocks.  We have lost our shorts and re-covered our shorts.  We've
violated a few trend lines, but have been forgiven.  We've
combined our longs with attractive naked options to produce baby
profits.  If you combine enough baby profits, they will grow into
adulthood and you will live happily ever after.  Don't you just
love happy endings?

And it all started here – at the Couch Potato Trading Institute.
Many CPTI  students now know a lot more about option trading than
their brokers.  My emails are filled with great questions, well
thought out alternatives, strategy suggestions, and stories of
accounts that are moving up nicely.  Nothing could make me

What do we have to look forward to in year #2?  Hopefully, more of
the same.   You never have too much wisdom, too many smiles, too
much money or too many cable channels.  I have my work cut out for

One Week Left
With only a week remaining before expiration, we'll see if we can
pick up a few extra dollars by putting on some short-term trades.
Here are a few ideas.  Be careful.  Remember, the money you trade
may be your own.

July Quickie Trade #1 – SPX Sell Strangle
I know we already have a SPX trade on in our CPTI portfolio, but
this looks pretty safe to me (for what that's worth).  We have a
nice wide range of 965 to 1025 and only four trading days (and an
open) to hold on.
Sell 5 contracts of July SPX 965 puts @ $1.10
Sell 5 contracts of July SPX 1025 calls @ $1.20
Total credit of $2.30.  Maximum profit potential  $1,150.
Consider exiting the trade if the SPX hits 970 or 1020.

July Quickie Trade #2 – QQQ Lottery Strangle
This is the trade that worked out very well for us in last month's
quickie.  It's cheap, the risk is low, and we're looking for a $2-
3 move in the QQQs.
Buy 10 contracts of July QQQ $31 put @ $.20
Buy 10 contracts of July QQQ $33 call @ $.10
Total debit of $3.00.  Profit potential is unlimited.  But, let's
be reasonable. A $.60 profit would give us $600.  That would be
nice.  We got more last month, but we can't expect to hit our
version of the "lottery" too often.

July Quickie Trade #3 – BBH Sell Strangle – Closed at $131.41
Sell 5 contracts of July BBH $135 calls @ $.70
Sell 5 contracts of July BBH $130 calls @ $1.35
Total credit, and maximum profit, of $1,025.  Maintenance of about
$13,000.  We've created a maximum profit range of $130-$135 and a
safety range of $127.95 and $137.05.  If BBH trades at $127.95 or
$137.05, you should exit the trade.


July Position #1 – LLTC Baby Condor – Closed at $34.76
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 last
month.  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.
LLTC is in the range and going in the right direction.

July Position #2 – SPX Iron Condor – Closed at $998.14
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.  So far, so good.

July Position #3 – DJX – Bear Call Spread – Plus - $91.20
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 $1.10 (9200 – 9000) X $1,900.  Your maximum
profit would be $1,350.  Seems to have reversed and is heading in
the right direction – at least for the moment.

Position #4 – Ongoing QQQ ITM Baby Strangle – Currently at $31.84
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 for a 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

Earlier this week, we sold the July $28 call for $3.80.  We now
own the July $30 put at a cost of $.05.  If the QQQs move down a
few points, we might just make a few bucks.

July Position #3 – RUT Iron Condor – Aborted.
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.

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.

Take Advantage Of . . .
OptionInvestor is a tremendous resource.  The OI writers really
know their stuff and it's all archived for you.  Take advantage of
this knowledge base.  Go to the archives and print out some of the
columns.  File them.  They're yours forever.  Know that, when you
renew your subscription, you're keeping the door open.  The
knowledge will continue to flow.  The possibilities are endless.
So are the potential profits.

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


Elliott Wave Play Updates
By Steve Gould


Chart: DJX update 7/11/2003

The net position of the Dow in relation to when we bought the
spread is essentially the same.  We are rapidly losing time value
though.  I still suspect that the play is going to move one way or
the other in July.  I think the best strategy at this point is to
wait until July expiration and if there is no significant
movement, roll this play over to December.


The original option values on 6/6/2003 were

DJX – 90.62

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy        DJVIN    SEP 92      Call  2.80  3.00    0.51   15
Buy        DJVUJ    SEP 88      Put   2.70  2.90   -0.33   23
                                      ----  ----   -----
                                      5.50  5.90    0.18

Current values on 7/11/2003 are

DJX – 91.20

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy        DJVIN    SEP 92      Call  2.25  2.50    0.48   16
Buy        DJVUJ    SEP 88      Put   1.70  1.90   -0.32   21
                                      ----  ----  ------
                                      3.95  4.40    0.16


Chart: QQQ update 7/11/2003

Expiration day is quickly approaching.  The July 37 put will still
have value and needs to be rolled over.  The August 37 put is the
same price and it will just cost you the spread difference plus
commissions.  I find that on the QQQs I can usually get the option
for the difference in the spread, i.e., buy back the July for 5.20
and sell the August for 5.20 in two separate orders.

Here is the strategy for really aggressive traders.  It looks like
the QQQs are at the top of the 3 wave and about to start the 4
wave retracement.  Buy back the July 31 puts and wait for the QQQs
to move to 28.  Sell them there to exit the play.


The original option values on 6/13/2003 were

QQQ – 29.96

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy   2    KLFME   Jan 04 31    Put   3.00  3.20   -0.44   32
Sell  1    QQQSK   Jul 03 37    Put   6.90  7.10    0.99   41

Credit: .50

Current values on 7/11/2003 are

QQQ – 31.84

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Buy   2    KLFME   Jan 04 31    Put   2.10  2.15   -0.40   29
Sell  1    QQQSK   Jul 03 37    Put   5.10  5.30    0.96   58

Liquidation 1:  -1.10 + .50 =  -0.60


Chart: BA update 7/11/2003

BA is continuing its wave 4 correction.  The minimum retracement
level of 25% has been reached, but the oscillator indicates more
of a correction is forthcoming. I think we got the anticipated
bounce and BA should continue down.  Because of the rule of
alternation, expect this retracement to be a flatter correction
than wave 2.

With option expiration this week, we will need to roll over the
July 30 call to August.


The original option values on 6/17/2003 were

BA – 36.15

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Sell  1     BAGF   Jul 03 30    Call  6.10  6.40   -99.5   29
Buy   2     BAAU   Jan 04 37.5  Call  2.70  2.85    52.6   25

Credit: 0.40

Current values on 7/11/2003 are

BA – 35.18

Pos   Qty   Sym     Strike      Type  Bid   Ask    Delta   IV
Sell  1     BAGF   Jul 03 30    Call  5.10  5.20   -99     35
Sell  1     BAHF   Aug 03 30    Call  5.20  5.30   -95     33
Buy   2     BAAU   Jan 04 37.5  Call  1.80  1.85    40     28

Liquidation value: -1.60 + .40 = -1.20


Chart: T update 7/11/2003

T retraced 38% and then headed down.  I expected it to retrace a
little bit more than it did but that is OK.  T appears to have
either finished or about to have finished the 1 wave of the 5 wave
and should retrace somewhere between 20.38 – 20.74 (wave 2) before
it continues heading back down.

I know that I get antsy to enter a play, but this is a good
example that sometimes it is best to wait for the optimal moment
before initiating a play.  Let’s stick to the original game plan
and wait until we get the price we want.


T: $19.39

Pos  Num  Sym  Strike   Type   Bid   Ask   Delta   Vol   OI
Sell  1   TGC  Aug 15   Call  4.40  4.60    92      0    70
Buy   2   TJX  Oct 22.5 Call  0.60  0.70    29      0 10317

Credit: $300


Where is the Dow Going?
By Steve Gould

It is said that there are three types of people in the world:
Those who can count and those who can’t.  Actually, if I am going
to divide people up into two categories, it would be those who
like to drive automatic transmissions and those who like to drive
stick shifts.

Those people who drive automatics are willing to sacrifice
efficiency for convenience.  For example, they will run their
computer with all the defaults even though it bogs it down a bit.
They still have all the advertising icons on their desktop from
software they installed. (Quicken is especially notorious for
this.)  They have all the default tones on their cell phones and
will use only two features, namely the answer key and the off key.
They will be satisfied with the default values on everything
because they would rather spend their time enjoying the device
rather than fiddling with it.

People who drive stick shifts on the other hand, like to take
control of the situation and handle things manually.  They will
build their own computer to get the best components for the best
price.  They know how to use every feature on their cell phone and
actually transmit pictures of the kids to their parents with that
new camera feature, even though their parents don’t know how to
view them.  They will tweak and optimize every control on every
piece of equipment they have to make it run faster and more

When it comes to Elliott Waves the Elliottician has two choices,
too.  He can either rely on a computer program to label waves or
he can label them himself.  The true Elliott Jedi Knight will
label the wave himself, but there are times when it is interesting
to see how a software program labels a wave and compare the two.

There are several programs on the market that label Elliott Waves.
I have tested several of them and each one has good points and bad
points.  The one I cut my teeth on and the one I happen to use is
Advanced Get.  (In the interest of full disclosure, I do not
receive any compensation from Advanced Get.)

In the future I am planning to discuss some of the proprietary
features of Advanced Get but for now I think it would be
interesting to see the way Advanced Get labels the Dow versus the
way I would label it.

Chart: Dow from Jan 2000 Using Purist Labeling

Here is a daily chart of the Dow from January 2000.  I moved the
final blue arrow a little bit to better visualize the price
movement over the last week.

According to this particular labeling, the Dow has completed the
A-B-C correction and is now progressing with the 3 wave of the (3)
wave of the 3 (circle) wave.  Three waves are rather intense so if
this labeling is correct, the next several weeks to months should
be a sharp decline.

Chart: Dow Purist Labeling From October 2002

Zooming in a bit shows in more detail that the Dow has completed
the (i) wave and is in the process of completing the (ii) wave if
it is not already complete.

Chart: Dow Hourly 7/13/2003

Zooming in even more to an hourly chart of the Dow shows that the
Dow has indeed finished the (i) wave (the 5 wave at 6/30/03) and
is currently working on the A-B-C correction of wave (ii).  I do
not believe that the way Advanced Get labeled the last 1-2-3-4
waves is correct.  It looks like it should be more of an A-B-C
correction that has only completed the A wave (currently wave 3)
and B wave (currently wave 4).  It looks like the Dow will make
one last surge up in the next few days to complete the C wave and
then start heading back down.  We could possibly see a Dow of 9300
before it reverses.  If the Dow pierces the 9352, then we will
have to reevaluate our wave count.

Now, let's take a look and see the way that Advanced Get would
label the Dow.

Chart: Dow from January 2000 Using Advanced Get Labeling

This is the same daily chart as the first one except I am letting
Advanced Get label the waves.  Because Advanced Get does not deal
with complex corrections very well, I have localized the starting
point at March 2002.

What this chart is saying is that after completing the five wave
basic pattern, the Dow is undergoing an A-B-C correction.
According to Advanced Get, the C wave is complete and the Dow
should start heading down.

This is the same way that I labeled the Dow from that point.  The
localization point was labeled (2) on my chart.  The only
difference is that Advanced Get is not able to come up with a
plausible wave count from the peak in January 2000 to the
localization point.  However, since this is a common reference
point, we can make our comparisons from there.

A close up view of this chart starting at the localized point
really yields no additional useful information.  However, the
weekly view does.

Chart: Dow Weekly Using Advanced Get Labeling 7/11/2003

This is a weekly chart of the Dow for the last 2 years.  Advanced
Get has labeled the wave starting from March of 2002 as the
beginning of a five wave basic pattern.  The March 2002 high is
the localization point on the daily chart.  Two interpretations of
this pattern are valid.  The first one, and this is the way the
wave is labeled, puts the Dow currently at the peak of a wave 4
corrective pattern.  This pattern is a classic Type I set up and
it satisfies the following criteria:

1. The oscillator has retraced about 140% and looks to be turning.
2. The 4 wave has traced out a nice A-B-C correction pattern.
3. The 2 wave and the 4 wave satisfy the rule of alternation.
4. The 4 wave is at the purple/aqua resistance bars

If this analysis holds, then the Dow is headed toward 6500 by the
end of the year.

Chart: Dow Weekly Alternative 7/11/2003

The alternative analysis labels the 5 wave as a truncated 5th wave
and the 4 wave is actually the A wave of the subsequent A-B-C
correction.  This alternative doesn't seem as feasible because the
4 wave would not have traced out a nice A-B-C correction pattern.
Otherwise, the oscillator did retrace a little more than 90%,
there is an oscillator divergence and the alternate 5 wave does
show a five wave basic subpattern.

The weekly pattern and the daily pattern to not coincide.  In the
daily pattern, the five wave basic pattern is complete by October
of 2002 with the subsequent A-B-C correction whereas the weekly
chart traces out a 1 through 4 wave instead.  The weekly pattern
may be a more valid interpretation as the oscillator on the weekly
does not support a 5 wave in October.

In any case all the analyses show the Dow headed down for a while.
Time will tell just how far down and which analysis is valid.

Bottom line it appears that despite which analysis you choose, the
Dow is headed down over the next several weeks.  Where it goes
from there is yet to be determined.  We will know more as the
pattern unfolds.

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The Option Investor Newsletter                   Sunday 07-13-2003
Sunday                                                      5 of 5

In Section Five:

Covered Calls: Trading Basics: Success With Covered-Calls
Naked Puts: Options 101: Trading Rules
Spreads/Straddles/Combos: Upgrades Spur Rally In Industrial Stocks!

Updated In The Site Tonight:
Market Posture: Uptrend! Downtrend! What Type of Market are We In?


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Trading Basics: Success With Covered-Calls
By Mark Wnetrzak

Even the best market conditions can create havoc for investors
who write covered-calls on long-term portfolio holdings.

The ideal environment for selling covered-calls is a neutral to
mildly bullish market.  In a perfect world, stocks climb steadily
up to the range of the sold (call) strike price and they remain
in that area until the option expires.  Of course, this kind of
activity will yield the maximum potential profit in the original
position and make for easy adjustments going forward, however the
market is rarely that cooperative.  Most problems with the covered
-call strategy are related to volatility -- when the stock (or
market in general) makes a big move one way or the other -- and
traders who use this technique must always be prepared to deal
with unexpected gyrations in the underlying issue.

The most frequently used method of position adjustment with the
covered-write strategy is "rolling;" a transaction that involves
buying back previously sold calls and then selling new (longer
term or different strike) calls to generate additional premium.
There are a variety of reasons for initiating a "roll-out" and
depending on the current market conditions, it may be necessary
for a trader to completely alter the original profit/loss outlook
in a particular position.  In most cases, the underlying stock has
simply changed character and the covered-call writer is attempting
to avoid a loss or improve his profit potential.

When making position adjustments or rolling-out to new options,
there are a few things to consider.  First and foremost, don't
hold on to declining issues unless there is a high probability of
a recovery in the near future.  One of the most common mistakes
new traders make is keeping a bearish stock until it is almost
worthless, hoping it will go up again.  They ignore the obvious
because they don't want to accept the fact that they have chosen
a "loser" and their pride prevents them from moving on to new and
more prosperous positions.  A trading plan can help prevent this
predicament as the profit and loss targets, as well as the time
need to achieve these goals, are pre-determined, leaving little
room for emotion-based judgments that erode the value of your

Another objective that should always be on the mind of a trader
is to "lock-in" profits whenever possible.  A poor adjustment
can turn a great covered-call into a disaster, so be careful
when adding new money into a position in anticipation of further
gains.  A good example of this idea can be seen in the current
market where the majority of stocks are trading at far higher
prices than anyone expected a few months ago.  Investors who
recently sold in- and at-the-money calls on long-term portfolio
stocks are scrambling to keep those plays from early assignment,
which would limit profits and possibly generate tax liabilities
in those issues.

One final concern is the time frame of the options sold.  Recall
that the underlying purpose of the strategy is the sale of time
value (or premium) for income, thus the key is to take in enough
cash to offset the disadvantages of limited profit potential and
and maintain a reasonable downside margin.  But herein lies the
problem; selling longer-term options actually reduces the amount
of premium you receive for the option, when compared to selling a
series of front-month options.  In addition, writing options with
distant expiration dates will greatly reduce a trader's ability to
make efficient adjustments in the future -- you simply can't roll
out forever.

Next week, we'll continue our discussion of position management
with a focus on the recent activity, where most stock prices have
risen above the strike price of the written calls.

Trade Wisely!


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

Note:  Margin not used in calculations.

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

SVNT     5.30    5.68  JUL  5.00  0.60    0.30*  13.9%
IBIS     7.95   10.22  JUL  7.50  0.85    0.40*   8.2%
SUPG     5.86    5.65  JUL  5.00  1.20    0.34*   7.9%
BEAV     2.69    3.45  JUL  2.50  0.35    0.16*   5.9%
CNET     5.71    6.96  JUL  5.00  0.90    0.19*   5.7%
AMR     11.32   10.95  JUL 10.00  1.70    0.38*   5.7%
WEBX    13.90   15.84  JUL 12.50  2.10    0.70*   5.2%
GP      18.96   19.25  JUL 17.50  2.05    0.59*   5.1%
RSYS    13.00   15.80  JUL 12.50  1.05    0.55*   5.0%
USG     19.57   16.83  JUL 15.00  4.90    0.33*   4.9%
BLUD    22.02   23.10  JUL 20.00  2.85    0.83*   4.7%
OVRL    20.68   21.01  JUL 20.00  1.50    0.82*   4.6%
MTON     5.60    5.49  JUL  5.00  0.90    0.30*   4.6%
ASIA     5.75   10.80  JUL  5.00  1.00    0.25*   4.6%
CYBX    24.04   23.72  JUL 22.50  2.00    0.46*   4.5%
WEBX    14.45   15.84  JUL 12.50  2.45    0.50*   4.5%
USG     19.95   16.83  JUL 15.00  5.40    0.45*   4.5%
LEXR    10.85   10.71  JUL 10.00  1.05    0.20*   4.4%
RHAT     8.27    7.69  JUL  7.50  1.20    0.43*   4.4%
MHR      8.11    7.65  JUL  7.50  0.95    0.34*   4.1%
BCGI    17.70   20.02  JUL 15.00  3.10    0.40*   4.0%
EDS     21.99   22.41  JUL 20.00  3.00    1.01*   3.9%
IMMU     6.91    6.80  JUL  5.00  2.15    0.24*   3.7%
ASIA     5.97   10.80  JUL  5.00  1.15    0.18*   2.7%
Q        5.23    4.75  JUL  5.00  0.50    0.02    0.5%
OI      13.91   12.11  JUL 12.50  1.75   -0.05    0.0%
MIR      2.78    1.75  JUL  2.50  0.65   -0.38    0.0%
SGR     12.62   10.75  JUL 12.50  0.90   -0.97    0.0%

RFMD     5.89    6.59  AUG  5.00  1.15    0.26*   4.0%

*   Stock price is above the sold striking price.


Speculation reigned supreme this week as the NASDAQ powered above
the June high while the DJ-30 and SP-500 sputtered.  A preview of
earnings week added a nice touch of volatility which suggests that
next week could be quite interesting.  The three positions listed
as closed (below) all rallied nicely this week to offer a second
chance exit, for those so inclined.  Next week, we will list two
more positions as closed since the horrid technical picture doesn't
bode well for the future: Mirant (NYSE:MIR) -- bankruptcy worries
increase; and Shaw Group (NYSE:SGR) -- earnings disappointment.
On Monday, Thoratec (NASDAQ:THOR) jumped higher at the open and a
reasonable entry point (as listed on Sunday) wasn't available
without an aggressive roll-in, so the position isn't listed above.
With one week left for the July expiration, re-evaluate any issues
that you do NOT want to own and act accordingly.

Positions Previously Closed:  Quest Software (NASDAQ:QSFT) and
Siebel Systems (NASDAQ:SEBL) which are both positive, and Dendreon


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

INET    5.08  AUG  5.00  UAU HA  0.45  979    4.63  35   6.9%
SSTI    5.47  AUG  5.00  SJV HA  0.75  596    4.72  35   5.2%
CHINA  13.48  AUG 10.00  UIH HB  4.00  1328   9.48  35   4.8%
CY     13.84  AUG 12.50   CY HV  1.95  2493  11.89  35   4.5%
STEL    8.25  AUG  7.50  URU HU  1.10  124    7.15  35   4.3%
BCGI   20.02  AUG 17.50  QGB HW  3.30  628   16.72  35   4.1%
INSP   15.52  AUG 15.00  IOU HC  1.20  36    14.32  35   4.1%

Company Descriptions

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

INET - Instinet  $5.08  *** Cheap Speculation! ***

Instinet Group (NASDAQ:INET) offers customers trade, execution,
order management and ancillary services, enabling them to trade
equity securities directly with each other through its platforms,
as well as with other investors in over 40 securities markets
around the world.  Instinet offers its customers smart order-
routing technology that directs their equity transactions among
the various markets to which the company is connected to obtain
better execution.  In 2002, Instinet's customers used its two
platforms to complete a total of 156 million transactions, which
represents an average of approximately 619,000 transactions each
trading day.  Through its electronic platforms, customers can also
access over 40 securities markets, including NASDAQ, the NYSE and
stock exchanges in Frankfurt, Hong Kong, London, Paris, Sydney,
Tokyo, Toronto and Zurich.  Instinet's transaction volume is on
the rise and so is the company's share price.  The stock appears
poised to move higher in the coming sessions and traders who
believe the issue is destined for a rally can profit from upside
movement with this position.  Earnings are due July 21.

AUG-5.00 UAU HA LB=0.45 OI=979 CB=4.63 DE=35 TY=6.9%

SSTI - Silicon Storage  $5.47  *** On The Rebound ***

Silicon Storage Technology (NASDAQ:SSTI) operates as a supplier
of flash memory semiconductor devices for the digital consumer,
networking, wireless communications and Internet computing markets.
SSTI offers over 90 products based on its proprietary SuperFlash
design and manufacturing process technology.  Its product offerings
include standard flash products, application specific memory
products, embedded controllers and mass data storage products.
Silicon's memory devices have densities ranging from 256 kilobits
to 32 megabits and are generally used for the storage of program
code.  The company's customers include 3Com, Apple, Cisco, Dell,
Hyundai, Intel, IBM, Nintendo, and etc.  Shares of Silicon Storage
continue to recover from the March bottom and now appear to be
starting a new leg higher.  We simply favor the recent technical
trend and this position offers a great way to speculate on the
future movement of the issue in a conservative manner.  Target
shooting a lower net-debit will increase the potential yield and
downside protection in the position.  Earnings are due on July 23.

AUG-5.00 SJV HA LB=0.75 OI=596 CB=4.72 DE=35 TY=5.2%

CHINA - Chinadotcom  $13.48  *** "Scorching Hot" Sector ***

Chinadotcom (NASDAQ:CHINA) is a pan-Asian integrated Internet
company that has a business model centered around its e-business
solutions, advertising (including e-marketing services, portal
services and other media assets) and the sale of IT products.
By integrating its e-business solutions services and Internet
advertising services with its media assets network, the company
offers a comprehensive suite of Internet products, services and
solutions to a diverse clientele of users, online advertisers
and Web-based enterprises.  The company has also invested in
Internet and related technology and software companies in the
pan-Asian region and the U.S. that it believes add value and
depth to its business.  The Asian internet group is one "hot"
sector and it shows no sign of cooling down.  This position
simply offers a way to speculate on the continued bullish
momentum with a cost basis closer to technical support.

AUG-10.00 UIH HB LB=4.00 OI=1328 CB=9.48 DE=35 TY=4.8%

CY - Cypress Semiconductor  $13.84  *** Rally Mode! ***

Cypress Semiconductor (NYSE:CY) designs, develops, manufactures
and markets a broad line of digital and mixed-signal ICs for a
range of markets, including data communications, telecommunications,
computing, consumer and instrumentation systems.  The company has
four product lines organized into two business segments, Memory and
Non-memory.  Cypress views its product offerings by market segment
in order to enhance its focus on serving end markets.  These market
segments include the wide area networks and storage area networks,
which focus on networking applications; wireless infrastructure
and wireless terminal, which focus on wireless connectivity, and
computation and consumer, which focuses on personal computers,
gaming and video applications.  Cypress has now rallied above
the June high (which should provide near-term support) on heavy
volume and is showing no signs of changing its current trend.
We simply favor the bullish technical indications and our
conservative position offers a method to participate in the
future movement of the issue with relatively low risk.  Earnings
are due July 17

AUG-12.50 CY HV LB=1.95 OI=2493 CB=11.89 DE=35 TY=4.5%

STEL - Stellent  $8.25  *** Rocketing Higher ***

Stellent (NASDAQ:STEL) develops, markets and services content
management software with the main focus of helping organizations
derive maximum value from their content that exists in the normal
course of business such as Microsoft Office documents, Web pages,
images, graphics, multimedia, CAD and other files.  Customers use
Stellent Content Management System to help them leverage this
enterprise content while streamlining the process of obtaining
or accessing content from content creators and delivering it to
content consumers employees, partners and customers, so that
timely decisions can be made.  Stellent Content Management System
can be deployed to satisfy immediate needs at a line of business
or departmental level as well as strategic needs at an enterprise
level.  On July 2, Stellent announced that based on a preliminary,
"unaudited" analysis of its results of operations, it expects to
report total revenues of approximately $17.3 million for the 1st-
quarter of its fiscal year 2004, ended June 30, 2003.  The stock
has climbed almost straight up as investors look forward to the
actual report on July 22.  The long-term chart suggests a bullish
future for Stellent and investors who agree with the bullish
potential of the company can use this position to speculate on
the future movement of its share value.

AUG-7.50 URU HU LB=1.10 OI=124 CB=7.15 DE=35 TY=4.3%

BCGI - Boston Communications  $20.02  *** Bracing For A Rally? ***

Boston Communications Group (NASDAQ:BCGI) provides real-time
subscriber management services to the wireless industry.  The
company's real-time subscriber management products include the
following: proprietary software applications, which include
extensive software suite to manage subscribers; hosting
environment, which is a real-time, large scale, micro-payment
transaction processing platform; Intelligent Voice Services
Network, which includes edge-of-network voice services and
Signaling System 7 call control; and Distribution Technology
Partnership Program, which is a national payment network for
cash collection.  Boston Communications shares rallied in April
after the firm reported it earned a profit in the first quarter
as legal costs fell and its customers added new subscribers.
The stock has been volatile recently as investors appear to be
moving into the stock and expecting "good" news when the company
reports earnings on July 16.  This position offers traders a
method to profit from the recent bullish activity and "inflated"
options with a cost basis closer to support.

AUG-17.50 QGB HW LB=3.30 OI=628 CB=16.72 DE=35 TY=4.1%

INSP - InfoSpace  $15.52  *** Climbing Higher ***

InfoSpace (NASDAQ:INSP) develops and delivers a wireless and
Internet platform of software and application services to a
range of customers that span each of its wireline, merchant
and wireless business units.  Many of the company's products
and application services are offered to its customers, which,
in turn, offer these products and application services to
their customers as their own solutions.  InfoSpace provides
its services across multiple platforms, including PCs and
non-PC devices.  In the wireline business, it delivers its
services throughout its own sites, as well as to Web portals
and to broadband service providers.  In the merchant business,
it offers its products and services to Verizon Information
Services, merchant aggregators, merchant banks, financial
institutions and independent sales organizations.  In the
wireless business, it delivers its products and application
services to wireless carriers and other consumer service
companies.  InfoSpace continues to stair-step higher from
the October low and its reverse split in September.  The
technicals remain bullish and traders who believe the rally
will continue can profit from that outcome with this position.
Earnings are due July 30.

AUG-15.00 IOU HC LB=1.20 OI=36 CB=14.32 DE=35 TY=4.1%



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

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

MOSY   12.55  AUG 12.50  QSY HV  1.65  3572  10.90  35  12.8%
OXGN   10.25  AUG 10.00  QYO HB  1.15  685    9.10  35   8.6%
FTUS    7.64  AUG  7.50  FEQ HU  0.70  22     6.94  35   7.0%
GERN    8.87  AUG  7.50  GQD HU  1.90  652    6.97  35   6.6%
XMSR   13.33  AUG 12.50  QSY HV  1.65  3572  11.68  35   6.1%
OVER   21.51  AUG 20.00  GUO HD  2.80  3761  18.71  35   6.0%
AMKR   15.69  AUG 15.00  QEL HC  1.65  108   14.04  35   5.9%
URI    15.06  AUG 15.00  URI HC  0.90  71    14.16  35   5.2%
THOR   16.25  AUG 15.00  TQU HC  2.05  68    14.20  35   4.9%
AQNT   11.10  AUG 10.00  QBT HB  1.60  3      9.50  35   4.6%
ALXN   19.43  AUG 17.50  XQN HW  2.80  194   16.63  35   4.5%
SINA   27.77  AUG 22.50  NOQ HX  6.30  237   21.47  35   4.2%
APHT    8.97  AUG  7.50  HQY HU  1.80  10     7.17  35   4.0%
IMPH   18.00  AUG 17.50  QPH HW  1.25  40    16.75  35   3.9%


Options 101: Trading Rules
By Ray Cummins

One of our new readers asked for some guidelines that a trader
might use to be successful in the options market.

This subject has been covered at length by numerous writers here
at the OIN, however one of the previous Broker's Corner narratives
stands out as an excellent instruction manual for novice traders.

This article is intended to offer a few helpful hints that will
hopefully benefit you in the future.  While the markets appear to
be in a perpetual trading range, it is becoming more and more
frustrating to trade in these conditions.  Many investors have
either given up as indicated by the anemic volume or are looking
at new trading strategies for an answer to why they haven’t been
making the gains they once were.  Before you start a new strategy,
develop and write down some sound trading rules that are easy to
follow.  You should begin by establishing your investment goals
and objectives.  Ask yourself, “why am I trading?” and/or “what
(realistic) short and long term rate of return do I want to
achieve?”  Are you investing for fun, to build wealth, to earn a
living, and/or to retire?  An example would be, “I want to make
50% per year. To do this, I have to average 4% per month.”  A lot
of people like the idea of 10% or 20% per month.  But it comes at
a cost.  Higher returns come with higher risk.  There is no way
getting around it.  In concert with your investment goals, you
need to determine your risk tolerance.  What amount can you afford
to lose?  Stocks are risky.  Options on stocks are even riskier.

After you have determined your goals and risk tolerance, you have
a choice of many investment strategies.  This article is a little
vague because I can’t cover every possible variable for every type
of investor.  Just because some person is successful shorting
stocks doesn’t mean it is the strategy for you.  You might be
eligible for something even riskier and more complex.  The amount
of time you have to monitor your investments also determines the
strategies you can use.  Some people can spend all day and night
at their computers analyzing charts and trading while others barely
have time to stop and eat.  Depending on your circumstances, choose
a strategy that not only fits your goals and risk tolerance, but
also your time frame and your experience.  Some people just don’t
comprehend the concept of various strategies.  It isn’t because
they are dumb.  It is similar to how some people are whizzes at
calculus while others have a hard time with algebra.  Another tip
is to use a variety of strategies for your overall portfolio.  Cash
allocation is important to diversification.  For instance, allocate
the majority of your investment capital in lower risk instruments,
while dedicating a smaller portion to more aggressive strategies.
Everyone’s cash allocation model is different.  You’re model should
represent your goals and risk tolerance.  Determining how much cash
to invest in various strategies is key to achieving those goals.
For instance, if you have an annual return goal of 20%, with 80% of
your capital in a money market account earning 4% annually and 20%
invested in options, the small amount in options will need to be
very successful to make about 100% annually.

Now that the boring tedious stuff is out of the way, we can get to
the hard part.  Choosing a research method can be very frustrating.
With so many indicators to choose from, which ones are the best?
The best indicators are the ones that work for you in all market
conditions.  I have read that statistically, only 1 out of 4 stocks
goes up in a bear market.  If you are buying or going long as an
investment strategy, then you will have to find the stocks going
up.  The same is true for the stocks going down.  The problem with
so many stocks going down is that you have to determine which will
continue to go down.  Some traders use only technical or fundamental
analysis.  I think both should be used.  I think the key to using
technical indicators is to find a few that work well for you.  If
you use too many, the signals may conflict.  KISS – Keep It Simple
Stupid is what I tell my clients.  Just as investment objectives
are different for each investor, so are the tools for each person.
Personally, I like using Stochastics, MACD, and Bollinger Bands as
a confirmation tool for the bar chart and the 10 and 40 DMA.

After you have found a few candidates for your strategy, develop
strict entry parameters.  This should reflect your research method.
If all of your criteria are met, then proceed with caution.  If
one of the criteria doesn’t meet your parameters, don’t enter the
position.  This is where having too many indicators can burn you.
We are emotional creatures that will find a reason to enter if we
find a conflicting indicator that matches our emotion.  There is
a reason the average investor is considered "the sheep" and the
institutional money is the “smart money” -- “Smart money” trades
without emotion.  Once you have committed to entering a position,
it is important to have a strict exit strategy.  Again, some
require tighter stop loss parameters than others.  It all depends
on your tolerance.  Because you have determined your goals, you
know how much you need to profit on the trade to help meet those
return goals.  Don’t let your emotions get the better of you.  If
you entered the trade because of technical and fundamental reasons,
then you should exit the trade if any of those reasons change.  Do
not get greedy.  That is the worst emotion of all.  After you have
determined your sell parameters and written them down, write “3
ways to lose money – hope, fear, and greed.”

Write down all of your trading rules and keep a copy of the list
on hand at all times.  Laminate it if necessary.  Keep a copy near
your computer and a copy in your wallet.  The reason to have the
rules is to be consistent.  If you are consistent, and your results
aren’t meeting your goals, it may be easier to pinpoint the problem.
This is a little vague for a reason, if you need help with your rule
book, I am happy to help you get through the steps.  As a financial
consultant, it is my job to help determine an investor’s needs and
develop a strategy to help them reach their goals.  Except for our
ego, there are no consolation prizes for succeeding on our own.

Robert John Ogilvie
Options Broker & ROP


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

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

GNTA    14.21   14.39  JUL 10.00  0.50    0.50*   4.6%  13.0%
CBST    12.95   11.70  JUL 10.00  0.40    0.40*   3.6%  11.6%
FWHT    20.33   22.99  JUL 17.50  0.45    0.45*   3.8%  11.3%
SINA    23.53   27.77  JUL 20.00  0.30    0.30*   3.3%  10.5%
CDWC    48.30   50.21  JUL 45.00  0.80    0.80*   3.9%  10.3%
FWHT    19.14   22.99  JUL 15.00  0.40    0.40*   3.0%  10.3%
ADVS    17.74   18.45  JUL 15.00  0.45    0.45*   3.4%  10.2%
KMRT    25.20   24.20  JUL 20.00  0.50    0.50*   2.8%   9.8%
AVCT    30.97   32.08  JUL 27.50  0.40    0.40*   3.2%   9.3%
MERQ    41.34   42.30  JUL 37.50  0.50    0.50*   2.9%   8.2%
AVID    38.99   41.14  JUL 35.00  0.45    0.45*   2.8%   8.1%
OIIM    16.49   18.00  JUL 15.00  0.30    0.30*   3.0%   8.0%
AVCT    31.21   32.08  JUL 27.50  0.70    0.70*   2.8%   8.0%
CHKP    19.94   20.70  JUL 17.50  0.40    0.40*   2.5%   7.3%
ISIL    26.48   27.72  JUL 22.50  0.35    0.35*   2.3%   7.3%
AMLN    25.45   23.00  JUL 20.00  0.45    0.45*   2.0%   7.1%
SNDK    41.20   48.18  JUL 32.50  0.40    0.40*   1.8%   6.7%
MEDI    37.71   39.01  JUL 30.00  0.60    0.60*   1.8%   6.4%
MCHP    24.86   26.41  JUL 22.50  0.35    0.35*   2.3%   6.4%
AAII    20.10   21.41  JUL 17.50  0.25    0.25*   2.1%   6.4%
NTE     14.00   18.45  JUL 11.63  0.10    0.10    1.9%   6.4% **
SOHU    32.45   40.82  JUL 22.50  0.50    0.50*   2.0%   6.2%
CTSH    24.25   28.44  JUL 20.00  0.40    0.40*   1.8%   5.9%
PLMD    42.59   38.60  JUL 35.00  0.50    0.50*   1.6%   5.5%
NTES    33.70   39.84  JUL 25.00  0.45    0.45*   1.6%   5.4%
CVTX    34.43   35.37  JUL 25.00  0.45    0.45*   1.6%   5.3%
YHOO    32.14   32.19  JUL 27.50  0.40    0.40*   1.6%   5.0%
JCOM    45.95   53.45  JUL 37.50  0.35    0.35*   1.4%   4.9%

*  Stock price is above the sold striking price.
** Adjusted for a 3-1 split


Buyers returned to the market Friday amid optimism of a recovery
in corporate earnings during the second half of 2003.  The upside
momentum was obvious in a number of key sectors including drug,
financial, paper, retail, computer hardware and most importantly
(for our portfolio) biotechnology.  It was surprising activity,
given the fact that during the first week of quarterly earnings,
there were few companies that achieved the sanguine predictions
for business activity and profits.  With that idea in mind, traders
should continue to be vigilant in their portfolio management and
exit or adjust any suspect positions.  Issues on the "watch" list
include: Cubist (NASDAQ:CBST) and Amylin (NASDAQ:AMLN)

Previously Closed Positions: None


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.


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

For more information on margin requirements, please refer to:



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


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

ALGN   13.38  AUG 10.00  CUA TB 0.35 485   9.65  35   3.2%  10.1%
BLUD   23.10  AUG 20.00  QMQ TD 0.65 37   19.35  35   2.9%   8.3%
CYBX   23.72  AUG 20.00  QAJ TD 0.60 71   19.40  35   2.7%   8.2%
MSTR   43.68  AUG 35.00  EOU TG 0.75 53   34.25  35   1.9%   6.8%
NFLX   26.49  AUG 20.00  QNQ TD 0.35 227  19.65  35   1.5%   5.4%
DRIV   23.05  AUG 17.50  DQI TW 0.30 130  17.20  35   1.5%   5.3%
SNDK   48.18  AUG 37.50  SWQ TT 0.60 824  36.90  35   1.4%   5.1%
MRVL   38.10  AUG 32.50  UVM TZ 0.60 409  31.90  35   1.6%   5.1%

Company Descriptions

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

ALGN - Align Technology  $13.38  *** Improving Your Smile! ***

Align Technology (NASDAQ:ALGN) is primarily engaged in the design,
manufacture and marketing of Invisalign, a proprietary system for
treating malocclusion, or the misalignment of teeth.  Invisalign
includes ClinCheck, an Internet-based application that allows
dental professionals to simulate treatment, in three dimensions,
by modeling two-week stages of tooth movement, and Aligners, which
are thin, clear plastic, removable dental appliances that are
manufactured in a series to correspond to each two-week stage of
the ClinCheck simulation.  The company says approximately 80,000
patients worldwide are being treated using the Invisalign system.
Investors started buying this unique company early in the year and
since that time, the issue has quadrupled in value.  Traders who
believe the company's earnings will be favorable can speculate on
that outcome with this position.

AUG-10.00 CUA TB LB=0.35 OI=485 CB=9.65 DE=35 TY=3.2% MY=10.1%

BLUD - Immucor  $23.10  *** You Can't Live Without BLUD! ***

Immucor (NASDAQ:BLUD) develops, manufactures and sells a complete
line of reagents and automated systems used primarily by hospitals,
clinical laboratories and blood banks in a number of tests performed
to detect and identify certain properties of the cell and serum
components of human blood prior to blood transfusion.  Immucor also
markets a complete family of automated instrumentation for all of
their market segments.  During the past year, the company resolved
the remaining performance issues relating to its ABS2000 instrument
and launched new software for the product.  The company has recently
signed an agreement with the University of Vermont to commercialize
an in-vitro diagnostic test to measure platelet markers useful in
anti-platelet pharmacological drug development and potentially to
improve real-time treatment of cardiovascular disease.  Traders who
like the outlook for the company can establish a relatively low risk
basis in the issue with this position.

AUG-20.00 QMQ TD LB=0.65 OI=37 CB=19.35 DE=35 TY=2.9% MY=8.3%

CYBX - Cyberonics  $23.72  *** Testing Multi-Year Highs! ***

Cyberonics (NASDAQ:CYBX) designs, develops, manufactures and
markets the NeuroCybernetic Prosthesis, an implantable medical
device that delivers a novel therapy, Vagus Nerve Stimulation,
for treating epilepsy and debilitating neurological, psychiatric
diseases and other disorders.  In July 1997, the NCP System was
approved by the United States Food and Drug Administration for
commercial distribution in the United States for the treatment
of epilepsy, which the firm sells using its own employee-based
direct marketing organization.  In addition, the NCP System is
marketed internationally for the treatment of epilepsy (mainly
in Europe) using a combination of Cyberonics' own direct sales
organization and independent distributors.  During fiscal 2001,
the firm obtained approval for commercial distribution of the
NCP System for the treatment of depression in Europe and Canada.
CYBX is in a bullish sector and the company has a product that
is proven and well known for treating epilepsy.  In addition,
the firm's fundamentals are improving with 6 straight quarters
of 20% or better revenue growth.  Investors can establish a cost
basis near $20 in the issue with this position.

AUG-20.00 QAJ TD LB=0.60 OI=71 CB=19.40 DE=35 TY=2.7% MY=8.2%

MSTR - MicroStrategy  $43.68  *** Premium Selling Only! ***

MicroStrategy (NASDAQ:MSTR) is a global leader in the increasingly
critical business intelligence software market.  Large and small
firms alike are harnessing MicroStrategy's business intelligence
software to gain vital insights from their data to help them
proactively enhance cost-efficiency, productivity and customer
relations and optimize revenue-generating strategies.  The firm's
business intelligence platform offers exceptional capabilities that
provide organizations, in virtually all facets of their operations,
with user-friendly solutions to their data query, reporting, and
advanced analytical needs, and distributes valuable insight on this
data to users via Web, wireless, and voice.  Shares of MSTR have
been in "rally mode" since its lows in mid-2002, up over 1000% in
just 12 months.  The issue is now at an all-time high near $44 and
with earnings due in a few weeks, there is lots of speculation in
the August put options.  Traders with a bullish outlook on the
issue can take advantage of the inflated option premiums with this

AUG-35.00 EOU TG LB=0.75 OI=53 CB=34.25 DE=35 TY=1.9% MY=6.8%

NFLX - Netflix  $26.49  *** Beating-Up On Blockbuster! ***

Netflix (NASDAQ:NFLX) is an online entertainment service in the
United States that provides more than 600,000 subscribers access
to a comprehensive library of more than 11,500 movie, television
and other filmed entertainment titles.  The company's standard
subscription plan allows subscribers to have three titles out at
the same time with no due dates, late fees or shipping charges.
Subscribers can view as many titles as they want in a month and
they select these titles at the firm's Website (www.netflix.com)
aided by its proprietary CineMatch technology.  They receive them
on DVD by first-class mail and return them to the company at their
convenience using prepaid mailers.  Once a title has been returned,
Netflix mails the next available title in a subscriber's queue.
NFLX is one of the hottest companies in years in the retail video
and music industry and the firm's fundamentals suggest the bullish
trend will continue in the near-term.

AUG-20.00 QNQ TD LB=0.35 OI=227 CB=19.65 DE=35 TY=1.5% MY=5.4%

DRIV - Digital River  $23.05  *** Rally Underway! ***

Digital River (NASDAQ:DRIV) is a provider of electronic commerce
outsourcing solutions.  As an application service provider, the
company enables its clients to access its proprietary electronic
commerce system over the Internet.  The company's technology plat-
form allows it to provide a suite of electronic commerce services,
including Web commerce development and hosting, transaction
processing, fraud screening, digital delivery, integration to
physical fulfillment and customer service.  Digital River also
provides analytical marketing and merchandising services to assist
clients in increasing Web page view traffic to, and sales through,
their Web commerce systems.  Digital River announced last week
that it will continue its agreement with TIBCO Software to provide
new software distribution and entitlement management capabilities.
In addition, the company has also signed an expanded e-commerce
agreement with Aladdin Systems, a pioneer of the global standard
in file compression.  The company's quarterly earnings are due on
July 23 and investors who believe the results will be favorable
can speculate conservatively on that outcome with this position.

AUG-17.50 DQI TW LB=0.30 OI=130 CB=17.20 DE=35 TY=1.5% MY=5.3%

SNDK - SanDisk  $48.18  *** The Rally Continues! ***

SanDisk (NASDAQ:SNDK) designs, manufactures, and markets flash
memory storage products that are used in a wide variety of
electronic systems.  The company has designed its flash memory
storage solutions for applications in the consumer electronics
and industrial/communications markets.  The company's products
are used in a number of rapidly growing consumer electronics
applications, such as digital cameras, PDAs, portable digital
music players, digital video recorders and smart phones, as well
as in industrial and communications applications.  The company's
products include removable CompactFlash cards, MultiMediaCards,
FlashDisk cards and Secure Digital Cards and embedded FlashDrives
and Flash ChipSets with storage capacities ranging from eight
megabytes to 1.2 gigabytes.  Shares of SNDK reached a new 2-year
last week and there are no signs of a retreat in the near future.

AUG-37.50 SWQ TT LB=0.60 OI=824 CB=36.90 DE=35 TY=1.4% MY=5.1%

MRVL - Marvell Technology  $38.10  *** Testing 2-Year Highs! ***

Marvell (NASDAQ:MRVL) designs, develops and markets integrated
circuits utilizing proprietary communications mixed-signal and
digital signal processing technology for communications-related
markets.  Marvell offers its customers a wide range of integrated
circuit solutions using proprietary communications mixed-signal
processing and digital signal processing technologies.  Marvell's
product groups include: storage products, consisting of a variety
of read channel, system-on-chip and preamplifier products; and
broadband communications products, consisting of a variety of
transceiver products, switching products, internetworking
products and wireless LAN products.  Marvell has moved near the
top of a historic resistance area near $40 after a recent Lehman
Brothers upgrade and the stock appears poised to climb higher in
the coming sessions.  Investors who believe the firm's shares are
destined for a future rally can profit from additional upside
movement in the issue with this position.

AUG-32.50 UVM TZ LB=0.60 OI=409 CB=31.90 DE=35 TY=1.6% MY=5.1%



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

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

PDII   17.67  AUG 15.00  PKU TC 0.80 38   14.20  35   4.9%  13.4%
SSTI    5.47  AUG  5.00  SJV TA 0.30 3     4.70  35   5.5%  12.9%
MOGN   28.00  AUG 22.50  QOG TX 0.70 100  21.80  35   2.8%   9.5%
JNPR   14.48  AUG 12.50  JUX TV 0.40 9435 12.10  35   2.9%   8.3%
JCOM   53.45  AUG 45.00  JQF TI 1.30 187  43.70  35   2.6%   7.9%
SINA   27.77  AUG 20.00  NOQ TD 0.50 453  19.50  35   2.2%   7.2%
AEIS   17.55  AUG 15.00  OEQ TC 0.40 120  14.60  35   2.4%   7.1%
TECD   31.03  AUG 30.00  TDQ TF 1.00 5    29.00  35   3.0%   7.0%
AVID   41.14  AUG 35.00  AQI TG 0.85 28   34.15  35   2.2%   6.6%
SOHU   40.82  AUG 30.00  UZK TF 0.60 598  29.40  35   1.8%   5.9%
NTES   39.84  AUG 30.00  NQG TF 0.55 191  29.45  35   1.6%   5.6%



Upgrades Spur Rally In Industrial Stocks!
By Ray Cummins

Computing giant Hewlett-Packard and retailer Home Depot led the
market higher Friday in the wake of bullish brokerage comments
on the blue-chip issues.

The Dow Jones industrial average ended up 83 points at 9,119 as
26 of the 30 components closed with gains.  The NASDAQ Composite
also advanced, up 18 points to 1,733 as semiconductors, wireless
services, and application software enjoyed buying activity.  In
the broader markets, retail stocks helped the S&P 500 index close
9 points higher at 988.  Trading volume was moderate with over
1.2 billion shares changing hands on the New York Stock Exchange
and about 1.5 billion shares traded on the NASDAQ.  Winners beat
losers by almost a 2 to 1 ratio on the Big Board and by 5 to 3 on
the technology exchange.  The bond market recovered slightly with
the 10-yr note up 4/32 while its yield ended at 3.64%.


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 or 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.


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

AGN     77.24   80.73  JUL   65  70   0.50  69.50  $0.50   Open
ERTS    72.35   76.70  JUL   60  65   0.55  64.45  $0.55   Open
UNH     48.93   51.20  JUL   42  45   0.60  44.40  $0.60   Open
PRX     49.16   50.00  JUL   40  45   0.60  44.40  $0.60   Open
WLP     86.87   84.25  JUL   75  80   0.60  79.40  $0.60   Open
GILD    53.75   59.28  JUL   45  47   0.30  47.20  $0.30   Open
JCOM    44.35   53.45  JUL   30  35   0.60  34.40  $0.60   Open
MRK     62.59   61.44  JUL   55  60   0.50  59.50  $0.50   Open
EBAY   102.36  113.07  JUL   90  95   0.35  94.65  $0.35   Open
UNH     50.22   51.20  JUL   45  47   0.30  47.20  $0.30   Open
IRF     28.00   28.74  AUG   22  25   0.25  24.75  $0.25   Open
MER     49.25   49.55  AUG   42  45   0.25  44.75  $0.25   Open
YHOO    34.85   32.19  AUG   27  30   0.25  29.75  $0.25   Open

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

The position in Biogen (NASDAQ:BGEN), although previously closed
to limit losses, is profitable.  Watch-list issues include Merck
(NYSE:MRK) and Yahoo! (NASDAQ:YHOO).


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

APC     44.46   44.81   JUL   50  47   0.40  47.90  $0.40   Open
FNM     68.55   70.35   JUL   80  75   0.60  75.60  $0.60   Open
GDT     39.95   45.57   JUL   50  45   0.60  45.60  $0.03   Open?
KSS     49.45   57.22   JUL   60  55   0.60  55.60 ($1.62) Closed
LOW     44.15   46.87   JUL   50  47   0.30  47.80  $0.30   Open?
BZH     87.00   83.85   JUL  100  95   0.75  95.75  $0.75   Open
HOV     62.12   58.38   JUL   75  70   0.65  70.65  $0.65   Open
IBM     84.92   84.89   JUL   95  90   0.45  90.45  $0.45   Open
IGEN    31.60   31.13   JUL   37  35   0.35  35.35  $0.35   Open
MHK     56.56   56.14   JUL   65  60   0.45  60.45  $0.45   Open
OEX    491.61  502.48   JUL  520 515   0.40 515.40  $0.40   Open
ACS     45.06   44.05   AUG   55  50   0.65  50.65  $0.65   Open
BBBY    38.59   39.75   AUG   45  42   0.35  42.85  $0.35   Open
MMM    128.28  129.24   AUG  140 135   0.70 135.70  $0.70   Open

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

The bearish spread in Kohl's (NYSE:KSS) became an exit candidate
Friday when Banc of America Securities raised its rating for the
company's shares to "buy" from "neutral," saying the retailer had
made a positive move by "biting the bullet on inventory."  Traders
should also consider closing positions in Guidant (NYSE:GDT) and
Lowe's (NYSE:LOW) to limit potential losses.


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

NBIX    56.84  55.11  JUL   45  50   4.25   49.25  0.75   Open
GILD    53.81  59.28  JUL   45  47   2.20   47.20  0.30   Open
BSTE    48.96  54.87  JUL   40  45   4.50   44.50  0.50   Open
EBAY   110.02 113.07  AUG   95 100   4.60   99.60  0.40   Open

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


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

INTU    46.13  43.30  JUL   55  50   4.50   50.50   0.50   Open

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


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

QCOM    33.55  38.64   JUL     37    30     0.10    1.25    Open
SGR     12.62  10.75   OCT     15    10    (0.10)   0.00   Closed
ESI     29.63  31.53   OCT     35    25     0.15    0.65    Open

Qualcomm (NASDAQ:QCOM) and ITT Educational Services (NYSE:ESI) have
already offered favorable profits for short-term traders.  The Shaw
Group (NYSE:SGR) position should probably be closed in the wake of
the company's announcement that fiscal quarterly earnings fell 88%
on lower revenue and write-offs related to an oil refinery where it
provided construction services in 1998.


No Open Positions


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

CHKP    18.05  20.07   OCT-20C   JUL-20C   0.10    1.50    Open
GDT     39.98  45.47   OCT-45C   JUL-45C   0.80    2.20    Open
BRCM    21.40  27.86   JAN-25C   JUL-25C   1.70    2.75   Closed
SRNA    19.71  21.40   AUG-22C   JUL-22C   0.45    0.90    Open
MCDT    13.47  12.12   OCT-15C   JUL-15C   0.70    1.00   Closed
BEAS    11.08  11.36   SEP-12C   JUL-12C   0.65    0.85    Open
IR      47.95  49.41   SEP-50C   JUL-50C   1.20    1.50    Open
OVER    18.24  21.51   NOV-20C   JUL-20C   1.90    2.10    Open?
ADTN    55.69  56.51   AUG-60C   JUL-60C   1.40    1.40    Open
ARTI    24.32  23.24   SEP-25C   JUL-25C   1.60    1.50    Open
NSCN    24.18  25.97   SEP-25C   JUL-25C   1.60    1.50    Open

Closed positions in Electronic Data (NYSE:EDS), National Semi
(NYSE:NSM), Verity (NASDAQ:VRTY), and Viacom (NYSE:VIA) have
previously achieved profitability.


No Open Positions


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

TYC     17.27  18.87   JUL   17.5  17.5   1.80     2.70    Open?
BAC     80.01  82.88   JUL   80    80     2.40     2.75    Open
RJR     36.19  36.32   AUG   37.5  35.0   3.15     3.70    Open?
DG      18.64  19.34   AUG   20    17.5   1.20     1.30    Open
BSX     60.00  60.65   AUG   60    60     7.00     7.30    Open
MBI     50.24  49.20   AUG   50    50     5.20     5.00    Open
AIG     55.69  57.16   AUG   55    55     4.90     5.00    Open
FRE     50.00  53.55   AUG   50    50     5.10     6.10    Open?

Tyco (NYSE:TYC), R.J. Reynolds (NYSE:RJR) and Freddie Mac (NYSE:FRE)
have achieved favorable "early-exit" profits.  The Bank of America
(NYSE:BAC) straddle reached the break-even point in less than one

Questions & comments on spreads/combos to Contact Support

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


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

EBAY - eBay Inc.  $113.07  *** New All-Time High! ***

eBay (NASDAQ:EBAY) is a web-based community in which buyers and
sellers are brought together to browse, buy and sell items such as
collectibles, automobiles, high-end or premium art items, jewelry,
consumer electronics and a host of practical and miscellaneous
items.  The eBay trading platform is a fully automated, topically
arranged service that supports an auction format in which sellers
list items for sale and buyers bid on items of interest, and a
fixed-price format in which sellers and buyers trade items at a
fixed price established by sellers.

EBAY - eBay Inc.  $113.07

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-95.00   QXB-TS  OI=1951  ASK=$0.80
SELL PUT  AUG-100.00  QXB-TT  OI=3049  BID=$1.30
POTENTIAL PROFIT(max)=12% B/E=$99.45

GENZ - Genzyme General  $44.02  *** New Disease Treatments! ***

Genzyme General Division (NASDAQ:GENZ) is a division of Genzyme
Corporation, a biotechnology and human healthcare company that
develops products and provides services for unmet medical needs.
Genzyme General develops and markets therapeutic products and
diagnostic products and services with an emphasis on genetic
disorders and other chronic debilitating diseases with defined
patient populations.  The company is organized into two segments,
Therapeutics, which focuses on developing and marketing products
for genetic diseases and other chronic debilitating diseases,
including a family of diseases known as lysosomal storage
disorders, and specialty therapeutics, and Diagnostic Products,
which develops, markets and distributes in vitro diagnostic
products.  The company also operates a wholly owned subsidiary,
GelTex Pharmaceuticals.

GENZ - Genzyme General  $44.02

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-35.00  GZQ-TG  OI=263  ASK=$0.35
SELL PUT  AUG-37.50  GZQ-TO  OI=212  BID=$0.60
POTENTIAL PROFIT(max)=11% B/E=$37.25

MEDI - MedImmune  $39.01  *** New 2003 High Coming? ***

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 MEDI's Chief Executive David Mott expects the FDA to
approve its inhaled influenza vaccine FluMist sometime this quarter.
MedImmune will co-market the vaccine with Wyeth and the companies
expect to provide the vaccine initially to healthy people between 5
and 49 years old, which will mean a potential market of 160 million
people a year in the United States.

MEDI - MedImmune  $39.01

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-32.50  MEQ-TZ  OI=347  ASK=$0.45
SELL PUT  AUG-35.00  MEQ-TG  OI=767  BID=$0.70
POTENTIAL PROFIT(max)=14% B/E=$34.70

SYMC - Symantec  $45.65  *** Consolidation Complete? ***

Symantec (NASDAQ:SYMC) provides a broad range of content and
network security solutions to individuals and enterprises.  The
company is a provider of virus protection, firewall, virtual
private network, vulnerability management, intrusion detection,
remote management technologies and security services to various
consumer groups and enterprises around the world.  The company
currently views its business in five primary operating segments:
Consumer Products, Enterprise Security, Administration, Services
and Other.

SYMC - Symantec  $45.65

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-35.00  SYQ-TG  OI=348  ASK=$0.30
SELL PUT  AUG-40.00  SYQ-TH  OI=640  BID=$0.80
POTENTIAL PROFIT(max)=12% B/E=$39.45

CI - Cigna Corporation  $44.49  *** Next Leg Down? ***

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

CI - Cigna Corporation  $44.49

PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-55.00  CI-HK  OI=74   ASK=$0.25
SELL CALL  AUG-50.00  CI-HJ  OI=443  BID=$0.85
POTENTIAL PROFIT(max)=15% B/E=$50.65

ICUI - ICU Medical  $27.90  *** Pre-Earnings Sell-Off? ***

ICU Medical (NASDAQ:ICUI) develops, manufactures and markets
proprietary, disposable medical connection systems for use in
intravenous therapy applications.  The company's devices are
designed to protect healthcare workers and their patients from
exposure to infectious diseases, such as Hepatitis B and C and
Human Immunodeficiency Virus, through accidental needle sticks.
The company also produces custom I.V. systems that incorporate
its proprietary products, low-cost generic I.V. systems and the
Punctur-Guard line of blood collection needles.

ICUI - ICU Medical  $27.90

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-35.00  QPD-HG  OI=32   ASK=$0.35
SELL CALL  AUG-30.00  QPD-HF  OI=105  BID=$0.90
POTENTIAL PROFIT(max)=14% B/E=$30.60

PG - Procter & Gamble  $88.56  *** Trading Range? ***

The Procter & Gamble Company (NYSE:PG) manufactures and markets
more than 250 products to more than five billion consumers in 130
countries throughout the world.  The firm categorizes its various
businesses as follows: Baby, Feminine and Family Care, Fabric and
Home Care, Beauty Care, Health Care, and Food & Beverage.  The
company acquired Clairol, a manufacturer of hair color and hair
care products from the Bristol-Myers Squibb Company in 2001.

PG - Procter & Gamble  $88.56

PLAY (aggressive - bearish/credit spread):

BUY  CALL  AUG-95  PG-HS  OI=1807  A=$0.25
SELL CALL  AUG-90  PG-HR  OI=2044  B=$1.50
POTENTIAL PROFIT(max)=35% B/E=$91.30


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

TECD - Tech Data  $31.03  *** Prudential Upgrade! ***

Tech Data (NASDAQ:TECD) is a distributor of information technology
products, logistics management and other value-added services
worldwide.  The company serves over 100,000 value-added resellers,
direct marketers, retailers, corporate resellers and Internet
resellers in more than 80 countries throughout the United States,
Europe, Canada, Latin America, the Caribbean and the Middle East.
It offers a variety of products from manufacturers and publishers
such as Adobe, Apple, Cisco, Computer Associates, Creative Labs,
Epson, Hewlett-Packard, IBM, Intel, Iomega, Lexmark, Microsoft,
Nortel Networks, NEC, Palm, Seagate, Sony, Symantec, 3Com, Toshiba,
Viewsonic and Western Digital.  Products are generally shipped the
same day the orders are received from regionally located logistics

TECD - Tech Data  $31.03

PLAY (less conservative - bullish/debit spread):

BUY  CALL  AUG-25.00  TDQ-HE  OI=200  A=$6.30
SELL CALL  AUG-30.00  TDQ-HF  OI=801  B=$2.00
POTENTIAL PROFIT(max)=18% B/E=$29.25


A calendar spread (or time spread) consists of the sale of one
option and the simultaneous purchase of an option of the same
type and strike price, but with a future expiration date.  The
premise in a calendar spread is simple: time erodes the value of
the near-term option at a faster rate than the far-term option.
The positions in this section are speculative (out-of-the-money)
spreads with low initial cost and large potential profit.

GP - Georgia-Pacific  $19.25  *** Trading Range? ***

Georgia-Pacific (NYSE:GP) is engaged in four principal business
operations: the manufacture of tissue products (including bath
tissue, paper towels and napkins) and disposable tabletop products
(including disposable cups, plates and cutlery); the manufacture
of containerboard and packaging (including linerboard, medium and
corrugated packaging); the manufacture of bleached pulp and paper
(including paper, market and fluff pulp, craft and bleached board),
and the manufacture and distribution of building products (including
plywood, oriented strand board, various industrial wood products and
softwood and hardwood lumber, as well as certain non-wood products,
including gypsum board, chemicals and other products).  GP's four
principal businesses are broken down into six operating segments:
North America consumer products, international consumer products,
packaging, bleached pulp and paper, building products manufacturing
and building products distribution.

GP - Georgia-Pacific  $19.25

PLAY (speculative - bullish/calendar spread):

BUY  CALL  OCT-20.00  GP-JD  OI=7072   ASK=$2.00
SELL CALL  JUL-20.00  GP-GD  OI=17313  BID=$0.35

MSFT - Microsoft  $27.31  *** Reader's Request! ***

Microsoft (NASDAQ:MSFT) develops, builds, licenses and supports
a range of software products for a multitude of computing devices.
The company's software products include scalable operating systems
for servers, personal computers and intelligent devices; server
applications for client/server environments; information worker
productivity applications; business solutions applications, and
software development tools.  During 2002, Microsoft launched Xbox,
its next-generation video game system.  The firm's online efforts
include the MSN network of Internet products and services and its
alliances with companies involved with broadband access and various
forms of digital interactivity.  Microsoft also licenses consumer
software programs, sells hardware devices, provides consulting
services and trains and certifies system integrators and developers.

MSFT - Microsoft  $27.31

PLAY (conservative - bullish/calendar spread):

BUY  CALL  JAN-27.50  MSQ-AY  OI=87152   ASK=$2.30
SELL CALL  JUL-27.50  MSQ-GY  OI=199990  BID=$0.40


Based on analysis of the historical option pricing and technical
background, these positions meet the fundamental criteria for
favorable volatility-based plays.

CVTX - CV Therapeutics  $35.37   *** Earnings Play! ***

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.  The company's quarterly earnings
report is due 7/17/03.

CVTX - CV Therapeutics  $35.37

PLAY (very speculative - neutral/debit straddle):

BUY CALL  JUL-35.00  UXC-GG  OI=632  ASK=$1.25
BUY PUT   JUL-35.00  UXC-SG  OI=233  ASK=$0.95


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