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Daily Newsletter, Monday, 07/14/2003

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The Option Investor Newsletter                   Monday 07-14-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Stock Fever
Futures Wrap: Stock Fever
Index Trader Wrap: See Note
Weekly Fund Wrap: Mid-Year 2003 Review


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     07-14-2003         High     Low     Volume Advance/Decline
DJIA     9117.15 + 57.56  9278.41  9126.45 1.81 bln   1159/ 637
NASDAQ   1754.82 + 20.89  288+.10  1748.88 2.01 bln   1525/ 460
S&P 100   505.19 +  2.71   511.34   502.48   Totals   2684/1097
S&P 500  1003.86 +  5.72  1015.41   998.14
RUS 2000  479.03 +  5.26   481.37   473.77
DJ TRANS 2572.89 + 27.31  2583.16  2545.28
VIX        21.41 +  0.69    21.80    20.60
VXN        33.89 +  1.09    34.23    32.08
Total Volume 4,067M
Total UpVol  2,893M
Total DnVol  1,120M
52wk Highs     938
52wk Lows       16
TRIN          0.82
PUT/CALL      0.62
*******************************************************************

Stock Fever

By 9:30 this morning, twenty percent of Dow stocks had reached 52-
week highs.  Those six Dow stocks had been joined by 515 other
stocks making new 52-week highs.  Zero new 52-week lows had been
produced on either the NYSE or the Nasdaq.  By the end of the day,
796 NYSE and Nasdaq stocks had hit 52-week highs, while only 7 had
slumped to 52-week lows.  Advancing/declining and up/down volume
ratios showed strong numbers but had eased somewhat from their
feverish levels earlier in the day, when the Nasdaq saw up volume
that measured 16 times down volume.

The reasons behind the strong open proved so numerous that I'll
probably miss one or two.  Stock fever began rising as the Asian
markets opened.  After the Nikkei's biggest one-day loss ever on
Friday, the Nikkei rebounded 120.28 points.  A study of the
Nikkei's daily chart showed that Friday's decline had stopped at
9600.96, just above the key 9600 support level.  Tech stocks
gained in Asia and in Europe.  Perhaps stock fever, or tech fever
at least, had begun even before Asian markets opened, when
Barron's spoke positively of Sony's prospects this weekend.  Smith
Barney upgraded European semiconductors to marketweight from
underweight, adding its improved outlook on semiconductors to
Merrill Lynch's upgrade of INTC.  The CA World 2003 Semicon West
conference began today, and CNBC mentioned positive buzz about
increasing demand from the customers of the semiconductor
equipment group.

Bank of America (BAC) and Citigroup (C) reported earnings that
cheered investors, and C followed by saying that the company would
increase its quarterly dividend to $0.35/share.  CIBC upgraded
Merck (MRK) to sector perform from sector underperform, pepping up
another sector.  Bear Stearns added to the fever pitch by
upgrading Johnson & Johnson (JNJ) to outperform from peer perform.

Numerous companies also added to the excitement by announcing M&A
activity.  Boise Cascade (BCC) announced a surprising decision to
buy OfficeMax (OMX), the third-largest retail office supply chain
store in the U.S., for a 25 percent premium over Friday's closing
price.  BCC said the acquisition would add $0.15-.30 before costs
to 2004 earnings, but with costs factored in, the impact on
earnings would be neutral for 2004.  Market pundits weren't
surprised by the news that Yahoo (YHOO) would buy Overture (OVER),
however, as rumors of YHOO's purchase of OVER had been circulating
for months.  YHOO's stock-and-cash deal offered a 13 percent
premium over OVER's Friday close.

As the day progressed, the fever pitch of news continued.  On
Friday, Cigna (CI) had attempted to dose the stock fever with a
little sobering reality, warning that it would miss profit
expectations for 2003 and for the current quarter.  Today a
spokesperson blamed medical inflation.  Later in the afternoon,
Bob Pisani of CNBC posted a chart of CI put activity over last
week, pointing out the unusual put-buying activity as last week
progressed and raising the specter of insider trading.

If the markets paid attention to negative news, they punished only
the stocks in question.  YHOO lagged and so did CI.  Boeing (BA)
and Continental Airlines (CAL) sank after CAL announced that it
would be postponing delivery of 36 Boeing 737's.  While these
individual stocks sank, the indices held support.  Stocks had
zoomed up in the morning, but the tight ranges above support put
traders to sleep until 3:00 ET.

At 3:00 ET, markets dived so quickly that traders awaiting bearish
entries missed their opportunities unless they had orders waiting.
Reportedly in yet another snafu related to electronic trading at
the Chicago Mercantile, an erroneous e-mini sell order was
entered, resulting in the quick drop.  Just as happened with the
erroneous electronic order with the YM contract on July 3, markets
attempted a recovery but were unable to recover prior levels and
closed near the lows of the day.

SPX Five-Minute Chart:




The quick drop obviously dampened bullish sentiment.  That's
evidenced on this five minute chart by the bear-flag formation
that set up after the first five-minute drop and then the fall out
of that bear flag.  A quick pop pushed the SPX higher into the
close, but that pop could be setting up another potential bear
flag.

SPX 60-minute chart:




A study of this chart shows that the SPX dropped to the steepest
of its ascending trendlines and bounced.  A further study shows
that stochastics and RSI turned down, while hourly ADX shows a
near bearish cross of the -DI by the +DI.  Near crosses don't
count, however, and we must wait for confirmation.  Still, the
oscillators and ADX hint at further testing of that steepest
trendline if not a fall through that level.  A fall through 1000
predicts a try for 990, the site of the lower of the two ascending
trendlines.

The SPX daily chart shows a market that's still range-bound, as
predicted by the modest 17.91 ADX level and the flat MACD.

Daily Chart of the SPX:




Although today's 1015.41 high matched the June 17 1015.33 high,
presenting the possibility that the SPX will form a double top,
double top formations require a confirming fall through the trough
between the two tops.  That's a long way away for the SPX.  In the
meantime, however, today's long upper shadow pierced the
descending trendline, but the candle's body fell below the
trendline.  The candle's small real body rests at the bottom of
the day's range.  That's a bearish candle formation when it comes
after an ascent, but it can be argued that the SPX is not
ascending, but instead is consolidating.  Because that candle's
implications are not as bearish when it occurs during
consolidation, it perhaps predicts only a continuation of the
range-bound trading or consolidation.

Consolidation could mean further testing of the upper trendline or
a return to next support.  RSI currently challenges the top of its
ascending trendline, and watching RSI behavior around its own
trendline can confirm or perhaps predict the SPX behavior.  An RSI
push up through that trendline could mean further testing of
upside resistance, while a rollover could mean a test of support.

If the descending trendline holds as resistance, the SPX could be
setting up a bearish right triangle with a flat bottom near 972-
975.  I mentioned this possibility this weekend and today's equal
high doesn't negate the possibility since the candle's body formed
back under the trendline.  In addition to the 1000 and 990 support
shown on the hourly chart, 984 might be considered support.
Historical support can also be found at that 972-975 zone.  The
959-962 level represents the 25 percent retracement of the rally,
but also now represents the confirmation level for the potential
double-top formation.

To sum up the varied evidence, the retreat from resistance, the
descending hourly oscillators, the low daily ADX, and the flat
daily MACD point to consolidation, perhaps in the form of a
retreat down to next support or in a rise to test today's
resistance.  They do not as yet predict either a steep climb or a
steep descent, although that could change as a result of economic
numbers and earnings releases that continue to impact the market
this week.  This weekend's wrap detailed multiple layers of
overhead resistance, including 1010 and 1015, near the June 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 further resistance near
1045-1050.

As is often true, the OEX daily chart shows many of the same
formations.

Daily Chart of the OEX:




MACD remains flat on the OEX daily chart as it does on the SPX
chart.  CCI remains green on this chart, but squiggles around the
flatline, not giving a clear signal.  RSI squiggles around 50,
also not giving a clear signal, and there's no clear-cut
descending trendline on this RSI that we can watch for further
information.  The prediction remains the same for the OEX,
however:  consolidation for now within a top described by the
descending trendline and either 500, 498, 491, or 485 support.
Beyond that and the economic reports due over the next several
days, it's difficult to predict further action.

The DJI played catch-up with the other indices today.  Last week,
it closed beneath its 21-dma, unlike the S&P's and the tech-
related indices.  Today the DJI gapped above its 21-dma and closed
above it, although the daily DJI candle showed the same bearish
configuration and the same retreat from the descending trendline.
Unlike the S&P's, though, the DJI did not approach its previous
high, and so has not yet set up the possibility of a double-top
formation.  The potential of a bearish right triangle remains,
however.

Daily Chart of the DJX, as a proxy for DJI:




The DJI shows one difference from that of the two S&P's.  I've
included 5(3)3 stochastics on this DJX chart to show how near they
are to making a bullish kiss in mid-fall.  Although the OEX 5(3)3
stochastics also show a slight upturn, the DJI is nearer than the
two S&P's to displaying a bullish kiss.  This evidence is
tentative as yet as stochastics often redraw themselves in a
maddening manner, but it offers a first hint that the DJI could
attempt another test of its descending trendline.  The upturned
RSI does the same and is more trustworthy, so watch for an upside
break of the RSI descending trendline or a rollover beneath it.

I included possible support and resistance levels for the DJI this
weekend.  A recap should mention new possible support at the 21-
dma at 91.36, backing up historical support at 91.50.  As I
mentioned this weekend, 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.

In this weekend's wrap, I mentioned that an upside break of 9200
would see next resistance at last week's 9260 level, but today's
high was 9278, overshooting that 9260 level.  Next levels of
resistance might be found at 9300, 9350, and 9400.

Unlike the DJX and the two S&P's, the ADX level on the NDX remains
above 30, indicating a trending market.  The buying pressure line
(orange) has turned down, possibly indicating an imminent change.
That change has not arrived, however, and it's dangerous to
anticipate signals.  In late June, +DI also declined, bringing ADX
down with it, but there was never a bearish cross of the lines and
ADX flattened.  It has not, however, risen again as the NDX broke
out of its bull flag to the upside, so this does bear watching.

Daily chart of the NDX:




The NDX could not maintain 1300.  I haven't included the 60-minute
chart, but it shows the NDX falling at the end of the day to plumb
its opening gap but then pushing above that gap at the close.
Hourly ADX has declined below 30, with +DI and -DI approaching a
bearish cross but not yet having completed that cross.

As was true this weekend, NDX direction proves difficult to
predict.  Daily RSI and MACD point to the possibility that the NDX
still has more upside, or at least more time to spend testing the
current highs.  Tech fever has been strong.  With INTC reporting
tomorrow, that fever may be tempered or else reach malarial
levels.

INTC reports tomorrow after the close, and it will be joined by
MOT, PHTN, RFMD, and TER along with a myriad of other stocks
reporting before the open and after the close.  The SEMICON West
conference continues.  Before the bell, the July NY Empire
Manufacturing Index will be released at 8:00 and June retail sales
will be released at 8:30.  As I mentioned this weekend, the
biggest impact on the markets may be the Greenspan testimony on
monetary policy before the House.  That testimony begins at 10:00
ET.  Nothing I see on the charts can predict how markets might
react if Greenspan says something that either cools that stock
fever or sends it to malarial levels.  Be careful.

Linda Piazza


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

Freddie Fat Fingers Sells Again
Jonathan Levinson

In what is becoming a surprisingly commonplace occurrence, sudden
extreme selling was attributed to operator error, with an alleged
fat-fingered sell order causing a wave of selling, followed by a
bounce, but then, surprisingly, a renewal of selling.  No worries
as of this writing, with all of the equity futures still trading
comfortably in the green for the day.  Interactive Brokers was
unaware of the problem on the two occasions that I called them,
despite my quote feed going down over it.  I have yet to see an
explanation for the second wave of selling, but will be scanning
the news tonight.

The following was reported on Interactive Brokers' bulletin
board:

"Mon Jul 14 16:05:08 2003 EST

Globex's compliance department has stated that all executed
trades in the ES Spet futures contract at the executed price of
995.75 and below during the time beginning 14:08 EST have been
ruled as erroneous and have been busted.  You will see the
execution removed from your account today.

We have been contacted by Globex regarding a spike in the IB
Customer Service Emini September futures contract.

Globex's complaince department has stated that all executed
trades in the ES Sept futures contract at the executed."

There was nothing on the news services I usually follow, but
here's how it looked on my choppy feed:

150-tick chart of ES





I have computed the daily pivots, but please be aware that I'm
currently showing ES 990.50, NQ 1287.50 and YM 9102 as the lows
of the day and even the closing prints are off.  Rather than post
what I know to be erroneous data, I'm leaving the pivot matrix
blank for tonight.

Daily chart of the US Dollar Index




The US Dollar Index climbed throughout the day, despite strength
in both the CRB, which closed higher by a penny, and August gold,
which touched a high of 348.30 just before the Globex ES selloff
began, closing at 347.50.


Daily chart of August gold




Today's move in gold approached trend resistance at 350 and
turned the cycle oscillators higher.  The positioning of the
oscillators implies that we're either headed for a bullflag
breakout to the upside, or that I've drawn the trendline
incorrectly.  Time will have to tell, but for the moment, a test
of 350 resistance appears to be in the cards.


Daily chart of the ten year note yield




Bonds sold off today at an accelerating rate, leaving us with a
bullish hammer on the daily candleview of the ten year note
yield.  Given the failure of equity futures to follow the yield
higher when the latter began their mid-afternoon run to the
upside, I'm thinking that we were witnessing either short
covering in equities, or a Federal Reserve-sponsored buy-a-thon,
with the net 4.25B liquidity infusion via overnight repurchase
agreements announced at 10AM EST.  It's of little consequence
either way, as price is the final arbiter.  The five year note
yield ended higher by 7.7 basis points, the ten by 7.4 and the
thirty by 7.7.

It goes without saying that with bad or null data reflected on
the charts, our analysis is bound to suffer.  I'll say it once
and with that in mind, turn to the equity futures.  After the
confusion cleared, equities seemed to stabilize at round-number
support of 1000 ES, 1300 NQ and 9150 YM.

Daily NQ candles




We had a gravestone doji on the daily NQ.  The cycles clearly
wanted more upside, and it appears clear to me that the bearish,
albeit positive candle printed today would not have been so but
for the selling at the end of the day.  That's obvious, except
that the selling is being called into question by at least one of
the exchanges.  Nevertheless, we had a new intraday high for the
year printed, and the lows of the day never came close to the
ascending trendline.

30 minute 20 day chart of the NQ




I've drawn a bear wedge on the chart as it seems to fit best with
the cycle positioning of the MacD and stochastics oscillators.  I
generally like to see a cycle roll over at my upper trendline,
which is what occurred,  There's the potential for a bear flag
interpretation instead, but it doesn't fit the cycles as well,
which would have rolled over half way to the upper trendline of a
flag.  As on the daily chart, the lower trendline was never
tested.  1180 is the lower target implied by a continuation of
selling below the trendline of a bearish ascending wedge.

Daily ES candles




The ES displays data which will be busted, but note that the
selling spiked to the lower trendline before it reversed back up.
As on the NQ, the oscillators wanted to go higher before they
were cut short.

20 day 30 minute chart of the ES




I'm unable to derive a pattern from the 30 minute candles on the
ES that fits nearly as well as the bear wedge on the NQ chart.
The rollover occurred well-below the upper trendline, a poor fit.
More elegant would be that the horizontal resistance line is the
neckline of a reverse head and shoulders pattern, as a reader
commented by email today.  If so, a break above 1015 ES targets a
high of 1070 if it fulfills completely.

Daily YM candles




The same picture as ES applies to the Dow futures.

20 day 30 minute chart of the YM




Despite the spectre of busted trades, equities finished the day
on sell signals.  More interesting is the prevalence of errors,
revisions and outages from our world-class exchanges during the
past months.  I won't speculate as to what, if any, underlying
conditions this suggests, but today should have made obvious the
need for live stops at all times.  My quote feed went dead twice,
and the brokerage claimed at the time, by telephone, that
everything looked fine at his end.  Without hard stops in place,
an event such as today can leave traders completely unprotected
and in the dark as trades goes against them due to market or
exchange anomalies.

See you at the bell!


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

Check the Site Later Tonight For Jeff's Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_071403_1.asp


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****************
WEEKLY FUND WRAP
****************

Mid-Year 2003 Review

This week in lieu of the regular weekly fund wrap we take a look
at trailing 10-year annualized total returns as of June 30, 2003,
per Morningstar.  Stock funds had their best quarter in years in
the second quarter of 2003, raising optimism for the second half
of 2003.  A quick end to the Iraq war, Bush's tax reduction plan,
lower interest rates, and bargain hunting all contributed to the
quarter's improved return performance.

Vanguard 500 Index Fund (VFINX), which tracks the S&P 500 large-
cap index, rose 15.4% in the second quarter and is now up around
10.0% a year on average over the past 10 years using Morningstar
data through June 30, 2003.  Vanguard Extended Market Index Fund
(VEXMX), which tracks the Wilshire 4500 index of mid-cap, small-
cap and micro-cap stocks, posted a quarterly return of 21.3% and
now sports a 10-year average annual total return of 8.8% through
June 30.

Vanguard Developed Markets Index Fund (VDMIX), which seeks total
returns corresponding to the MSCI EAFE index, increased in value
by 19.4% in the second quarter of 2003.  Vanguard European Stock
Index Fund (VEURX) rose 22.3% in Q2 2003, and is now up 8.4% per
year on average over the past 10 years, according to Morningstar.
Vanguard Pacific Stock Index Fund (VPACX) produced a 12.4% total
return in the second quarter, but still sports a negative annual
equivalent return of 4.0% for the trailing 10-year period.

Second quarter gains weren't confined to equity funds.  Vanguard
Total Bond Market Fund (VBMFX), which replicates the price/yield
performance of the Lehman Brothers Aggregate Bond index, climbed
2.6% in the second quarter and is now up around 7.0% a year over
the past decade, per Morningstar.  Vanguard High Yield Corporate
(VWEHX) has a trailing 10-year annualized return of 6.6% through
June 30, including a 6.0% quarterly return in the second quarter.

So, all in all, one of the best quarters in quite some time, one
that should bring smiles to the faces of millions of 401(k) plan
investors when they receive their second quarter 2003 statements.
In the next two sections, we look at trailing 10-year returns as
of June 30, 2003 for selected Morningstar fund groups.

Equity Fund Group

 10-Year Annualized Total Returns (Through June 30, 2003)
 +7.6%   Morningstar All Hybrid Fund Average
 +8.4%   Morningstar All U.S. Stock Fund Average
 +3.8%   Morningstar All International Stock Fund Average


According to Morningstar, the average U.S. stock fund produced a
trailing 10-year annualized return of 8.4% through June 30, 2003.
That is 1.6% less per year on average than the low-cost Vanguard
500 Index Fund, which simply seeks to be the market, rather than
try to outperform it.  Vanguard 500's simple, effective strategy
ranks in the first quintile (17th percentile) of the Morningstar
large-cap blend category for trailing 10-year returns.  Personal
investors seeking a low-cost equity index portfolio need look no
further than the Vanguard 500 Index Fund.

Among hybrid funds, the highest returning funds over the past 10
years have been convertible securities funds.  At the top of the
list are two funds from the Calamos Funds Group.  Calamos Growth
& Income Fund A (CVTRX) has a 10-year annualized return of 14.4%
through June 30, while Calamos Convertible Fund A (CCVIX) sports
a trailing 10-year return of 11.6% (annualized).  In third place
is Fidelity Convertible Securities (FCVSX), up 11.5% a year over
the past 10 years.

The highest performing U.S. equity fund over the past decade has
been Vanguard Health Care (VGHCX), which has risen an average of
20.4% per year over the past 10 years.  Calamos Growth A (CVGRX)
is next with an 18.9% annualized total return, followed by Eaton
Vance Worldwide Health Sciences A (ETHSX), up 17.9% on average a
year over the trailing 10-year period through June 30.  Fidelity
New Millennium (FMILX) produced a 17.1% annualized return in the
past decade.  Below are the 15 diversified U.S. stock funds that
sport trailing 10-year annualized total returns of 15.0% or more
through June 30, 2003.

  Calamos Growth A (CVGRX) +18.9%
  Fidelity New Millennium (FMILX) +17.2%
  FPA Capital (FPPTX) +16.5%
  Legg Mason Value Prim (LMVTX) +16.5%
  Wasatch Core Growth (WGROX) +16.3%
  Janus Small Cap Value I (JSIVX) +16.2%
  Mairs & Powers Growth (MPGFX) +16.1%
  Smith Barney Aggressive Growth A (SHRAX) +15.8%
  Thompson Plumb Growth (THPGX) +15.5%
  Weitz Partners Value (WPVLX) +15.4%
  Excelsior Value & Restructuring (UMBIX) +15.4%
  Clipper (CFIMX) +15.3%
  PIMCO PEA Renaissance A (PQNAX) +15.3%
  Weitz Value (WVALX) +15.0%
  Fidelity Low-Priced Stock (FLPSX)

Among international stock funds, the highest 10-year annualized
total return through June 30 belongs to Mutual Discovery Fund Z
(MDISX) an international small-cap fund.  It's up an average of
13.2% a year over the past 10 years, per Morningstar.  American
Funds' Capital World Growth & Income A (CWGIX) is second with a
10-year annualized total return of 12.0%.  Oppenheimer Global A
(OPPAX) sports a 10-year average return of 11.6%, while sibling
Oppenheimer Global Growth & Income A (OPGIX) is up 11.5% a year
over the past 10 years.

Fixed Income Fund Group

 10-Year Annualized Total Returns (Through June 30, 2003)
 +6.0%   Morningstar All Government Bond Fund Average
 +6.1%   Morningstar All General Bond Fund Average
 +5.6%   Morningstar All Specialty Bond Fund Average


Here you can see that trailing 10-year annualized total returns
through June 30 are near 6.0%, unless of course you're Fidelity
New Markets Income Fund (FNMIX).  The high-yield fund's average
annual return of 13.1% over the past decade is more than double
the Morningstar bond fund indices.  Loomis Sayles Bond I (LSBDX)
sports a 10-year annualized return of 10.3% as of June 30, 2003.
Both fund families have good fixed income research capabilities.

Three of American Century's target maturity bond funds are among
the highest performing bond funds over the trailing 10-year time
period.  The 2020 Portfolio (BTTTX) has a 10-year average annual
return of 11.7% through June 30, while the 2015 Portfolio (BTFTX)
has averaged 11.1% a year over the past 10 years.  The 2010 Fund
(BTTNX) has an annualized return of 9.8%.  Such zero-coupon bond
funds are capable of significant fluctuations in net asset value
and are sensitive to interest rate movements.

Money Market Fund Group

The $56 billion Fidelity Cash Reserves Fund currently offers a 7-
day simple yield of 0.88%, better than most money market funds on
the market today.   The $47.2 billion Vanguard Prime Money Market
Fund sports a 0.85% current 7-day yield, up there with Fidelity's
money market fund.

Among "prime retail" money market funds, only PayPal Money Market
Fund currently offers a 7-day yield of 1.00% or above.  It sports
a current 7-day simple yield of 1.10%, per iMoneyNet.com.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                   Monday 07-14-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: None
Dropped Calls: None
Dropped Puts: WFMI
Play of the Day: Put - BLL
Watch List: Plenty to watch.

Updated on the site tonight:
Market Posture: Earnings Season Underway



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

None

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

None


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

Whole Foods - WFMI - close: 48.95 change: +1.07 stop: 48.26

It appears that bears got spooked early this morning with the
positive earnings reports from C & BAC shooting pre-market
futures higher.  The broader market indices certainly made
sizeable gains early in the session before falling back towards
the close.  The early morning jump in WFMI at $48.40 was quickly
followed by a ramp up to $49.48.  OptionInvestor.com had set its
stop on WFMI at $48.26, this means we would have been stopped out
on the opening trade of $48.40.  While this looks like a failed
rally in the making the technical damage done to the stock's
recent trend is not worth a follow up for bearish trades.
Traders have until the 30th of July before WFMI announces
earnings.

Picked on June 13 at $49.44
Change since picked:  -0.49
Earnings Date      07/30/03 (unconfirmed)
Average Daily Volume: 1.6 million
Chart =



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*********************
PLAY OF THE DAY - PUT
*********************

Ball Corporation - BLL - close: 43.27 change: -0.73 stop: 46.50

- 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.

- Most Recent Update (Sunday, July 13, 2003)-
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.

- Play of the Day Comments -
With little fanfare, shares of BLL completed faded the market's
early morning rally.  All the bullish sentiment this morning
would have been a perfect excuse to take some profits and cover
positions by the bears.  Instead the stock actually fell lower
and broke through the recent support we've seen the past couple
of days near $43.40.  The relative weakness makes this one a
prime candidate if the markets sees more selling tomorrow.

Suggested Options:
August puts are the strikes of choice but November strikes are
available for the long-term minded.

BUY PUT AUG-45 BLL-TI OI=461 at $2.80 SL=1.45
BUY PUT AUG-40 BLL-TH OI=494 at $0.75 SL=0.35
BUY PUT NOV-40 BLL-WH OI=  5 at $2.05 SL=1.00

Annotated chart:




Picked on July 8th at $45.14
Change since picked:   -1.87
Earnings Date       07/24/03 (confirmed)
Average Daily Volume =   586 K

Chart =



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**********
Watch List
**********

Plenty to watch.

KLA-Tencor - KLAC - close: 50.35 change: +2.45

WHAT TO WATCH: Positive comments about Intel, who reports
tomorrow after the close, have lifted the SOX back above the 400
level.  KLAC has followed suit with its own rise above resistance
at $50.00.  Be careful considering plays on this one as the
headline risk from Intel's report could be substantial.  KLAC
issues its own earnings report on July 24th.

Chart=


---


Mercury Interactive - MERQ - close: 44.45 change: +2.15

WHAT TO WATCH: There seems to be a lot of activity in MERQ just
two days ahead of its July 16th earnings announcement.  One
broker came out with negative comments on the company today but
traders ignored it and bid the stock up five percent on the
session.  A move above $45.00 would produce a new triple-top buy
signal on its P&F chart.

Chart=


---

Gart Sports Co - GRTS - close: 30.76 change: +1.05

WHAT TO WATCH: After two weeks of consolidating under resistance
at $30.00 shares of GRTS broke through powered by the bullish
market sentiment this morning. This is a new 52-week high for the
stock and shorts could be set to cover.  We would expect some
resistance near $32.50 but the next real resistance level is $35-
36.00.  Earnings are in August.

Chart=


---

Genzyme Corp - GENZ - close: 45.93 change: +1.91

WHAT TO WATCH: A positive earnings pre-warning about beating
estimates for its Q2 by GILD has lifted the biotech sector.
Enjoying the move was GENZ who added 4.3% and broke back above
the $45 level of resistance.  MACD is now positive and it looks
like a bullish candidate for a move to $49-50.  However, GENZ
reports earnings on July 16th.  Could be one to watch.

Chart=


---

Express Scripts - ESRX - close: 73.26 change: -0.27

WHAT TO WATCH: Shares of this pharmacy benefit management company
have been in a very steady up trend ever since it plummeted from
yearly highs in mid-June.  Now that it has reclaimed the recent
highs, we suspect it maybe due for some profit taking.  Everyone
who bought it near $75 could be selling just because they're
happy to get their money back.  We're premature in suggesting it
but there are probably bears betting on this being a double-top
and using today's high as a guide to place stops.  Less
aggressive bears could use a trigger under 72.50 to leg them into
the play.  Bulls may want to see a new high before considering
positions.  Whatever the case, use a good stop as we're only
speculating on the move.  Earnings should be on or around July
23rd.

Chart=



===================================
RADAR SCREEN - more stocks to watch:
===================================


SEAC $11.03 - It's a bit low dollar to play options on but the
breakout today was on strong volume. Currently $12 is price
resistance and $12.50 is P&F chart resistance.

BDY $19.90 - Another low dollar stock, maybe too low to play
options on, but the 16% gain today was a major breakout on the
daily and the P&F chart.  BDY is now showing a triple-top buy
signal.

FLEX $12.36 - Another stock trading idea, as this one also
appears rather cheap to play straight options on, shares of FLEX
have rallied strongly above long-time resistance at $12.  This is
a new double-top P&F breakout buy signal.  Earnings are expected
near the 24th of July.


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

Earnings Season Underway

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_071403.asp


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