Option Investor

Daily Newsletter, Monday, 07/21/2003

Printer friendly version
The Option Investor Newsletter                   Monday 07-21-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.

In Section One:

Wrap: MMM Soars, LXK Crashes
Futures Wrap: Post Opex Wipeout
Index Trader Wrap: See Note
Weekly Fund Wrap: Stock Funds Post Weekly Losses

Posted online for subscribers at http://www.OptionInvestor.com
MARKET WRAP  (view in courier font for table alignment)
     07-21-2003         High     Low     Volume Advance/Decline
DJIA     9096.69 - 91.46  9187.80  9075.19 1.51 bln    328/1164
NASDAQ   1681.41 - 27.09  1706.29  1675.18 1.47 bln    367/1096
S&P 100   492.80 -  8.70   501.50   497.16   Totals   1326/2718
S&P 500   978.80 - 14.52   993.32   945.63
RUS 2000  457.17 -  7.59   464.76   456.54
DJ TRANS 2572.55 -  3.74  2571.87  2559.75
VIX        22.12 +  0.76    22.78    21.76
VXN        33.07 -  0.34    34.62    33.04
Total Volume 3,233M
Total UpVol    728M
Total DnVol  2,471M
52wk Highs     259
52wk Lows       37
TRIN          1.29
PUT/CALL      0.81

MMM Soars, LXK Crashes
by James Brown

Monday turned out to be another day of consolidation with
individual stocks making headlines instead of economic reports.
The market bounce on Friday was too tempting a target and bears
pounced after some disappointing earnings guidance from the likes
of Lexmark Intl (LXK) and Merck & Co (MRK).  However, offsetting
those losses were shares of 3M Company (MMM) who single-handedly
kept the Industrials above the 9000 mark.

Market internals were negative with declining issues out
numbering advancing stocks 20 to 7 on the NYSE and 2 to 1 on the
NASDAQ.  Down volume was more than three times stronger than up
volume across both exchanges.

Chart of the Dow Jones Industrials:

Chart of the NASDAQ Composite:

Monday's declines swept across market sectors leaving all of them
in the red save the XAU gold & silver index and the XAL, which
managed to squeak out a 0.02-point gain.  Those sectors hardest
hit were the GHA hardware index (-2.99%), the GSO software index
(-2.58%), the SOX semiconductor index (-2.0%), the DDX disk drive
index (-2.13%) and the DRG drug index (-2.14%).

The hardware group took the worst beating because of the violent
reaction in shares of Lexmark Intl (LXK).  The problem with LXK
wasn't their Q2 results.  Yes, they did miss consensus estimates
of 78 cents a share by a penny but the real culprit was their
forecast for the third quarter.  First Call lists LXK's Q3
estimates near 80 cents a share.  However, LXK now expects its Q3
numbers to come in between 63 cents and 73 cents a share.
Management said revenue growth would be in the low to middle
single digits.  The company blamed weakness in both corporate and
consumer spending as well as tougher competition.  Shares of LXK
plummeted from $73.50 to close at $59.40, down 19 percent.  Their
negative Q3 forecast put the brakes on printer-rival and Dow
component Hewlett Packard (HPQ) who's shares dropped more than
three percent on the session.

Breaking down through support today was the DRG drug index, which
lost more than two percent to close below support at 320.
Fueling the move was this morning's earnings announcement from
Merck & Co (MRK).  The headline number was 83 cents a share, a
penny below estimates.  Revenues were up four percent to $13.28
billion but below general estimates for $13.69 billion.  The
company said many of its biggest drugs only saw modest sales
growth and it is lowering projections for sales of Zocor, which
will soon be losing patent protection in some European countries.
The company also claimed that overall sales were impacted by
wholesalers stocking up on inventory in previous quarters.  MRK
also told investors that its on-again/off-again spin-off of its
Medco unit was now "on".  However, instead of issuing an IPO it
will issue shares to current MRK shareholders.  The stock lost
more than three percent and was a drag on fellow Dow component
Johnson & Johnson (JNJ), which lost more than 2.5 percent on the

Not everyone knows that the Dow Jones Industrial average is a
dollar-weighted index.  The higher dollar the stock the more
weight it carries in moving the average. The single-most powerful
stock in the index is MMM, which was trading near $130 before
investors pushed it to a new all-time closing high of $136.35
(+4.73%).  Vaulting the stock higher was its pre-market earnings
report where the company blew past analysts' estimates by 5
cents.  The $1.56 a share equaled a net profit of $619 million,
which according to the company's chairman was the highest second
quarter earnings in the company's 100-year history.  Revenues
jumped from $4.16 billion in the second quarter last year to
$4.58 billion this year.  3M admits that the weak dollar boosted
its net income and helped the company post 17 percent sales
growth overseas (compared to just 2 percent growth here in the
U.S.).  More importantly MMM raised its full-year forecasts to
$5.90 to $6.05 a share, which is significantly stronger than
current estimates of just $5.91 a share.  Not that there was a
large amount of shares shorted on this stock but the close above
$136 could have bears scrambling to cover.  Yet at the same time
a quick glance at the chart shows that a stock like this tends to
consolidate its big gains and that could spell bad news for the
Dow (remember, it's the highest weighted stock in the index).

The stream of earnings will continue to take center stage with
another one third of the S&P 500 expected to report this week.
Last week's announcement saw plenty of mixed results with the
general consensus being that earnings are up over six percent
overall.  However, corporate America still seems way too cautious
about the third and fourth quarters to justify current valuation
levels.  With investors starting to question the reality of a 2H
recovery they're going to be looking at any and all indicators to
help shape market direction.  The following are charts of the
dollar and the price of oil; which can be influences on market
direction and strength.

The U.S. dollar has risen strongly off its June lows but the
daily oscillators all suggest the rally is fading and we could
see a retracement of its recent gains.  The chart below is
actually a weekly chart of the dollar illustrating how it appears
to be rolling over near the top of its descending channel.

Chart of the U.S. dollar:

Next is the price of crude oil, which has moved strongly off its
April-May lows near $25.00 a barrel.  Currently, the August
light, sweet crude futures are trading under $32 a barrel almost
at its highs prior to the start of the Iraqi war.  As Jim
mentioned in his Sunday commentary this is an unspoken tax on the
economy to the tune of billions of dollars.  Higher oil prices
are felt throughout our economy from transportation to

Chart of August crude oil:

Fortunately, short-term traders may have some hope.  Texas
Instruments (TXN) announced earnings after the bell this evening
and the results were positive.  TXN said its Q2 profits rose 27
percent.  Earnings were 7-cents a share beating consensus
estimates by a penny.  Sales rose by more than 8 percent to $2.34
billion.  Chip analysts realize that TXN beat vastly reduced
expectations but Wall Street can have a short memory and the
stock is trading up in after hours.  This could have a positive
affect on the SOX, which has been pulled back to its rising 50-
dma (support).

Tomorrow it's another full day of earnings announcements and two
previous tech high fliers, Amazom.com (AMZN) and Sun Microsystems
(SUNW), will be announcing after the bell tomorrow.


Post Opex Wipeout
Jonathan Levinson

Our free markets got sold aggressively on this post options-
expiration Monday, with treasuries being drilled to year lows and
equities sold through several support levels.  The action in the
US Dollar Index implied that there was an exodus of funds from US
assets, while the swiss franc, euro, CDN loonie, silver and gold
in particular rallied.

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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U     1000    898    981    971    963
YM03U     9212   9146   9097   9031   8982
NQ03U     1277   1260   1246   1229   1215

10 minute chart of the US Dollar Index

The US Dollar Index got clocked today, and it took US equities
and bonds with it.  As of this writing, 96.10 appears to be the
line in the sand, but the action was so bearish for bonds and so
bullish for gold that I fear it will not hold.

Daily chart of August gold

Gold gave us the upside break we've been waiting for.  Resistance
at 350 was taken out and the price held above 351 for most of the
session, touching an intraday high of 352.50.  The bull wedge
breakout projects to first resistance at 354, but the bull flag
projects above the highs of the year, if it plays out completely.
HUI and XAU were both up strongly on the day, XAU +2.18 to 77.06
and HUI +5.28 to 149.55.

Daily chart of the ten year note yield

I've zoomed out to a one year view to put today's move in
perspective.  The size and ferocity of the ten year note yield's
20.7 basis point jump today was more dramatic than the longer
term chart implies.  Nevertheless, the trend is worrisome, with
yields closing at their year high today.  We see that most
resistance has been vaporized by the TNX through this move, and
the selling in treasuries has done nothing so far to stem the
selling in equities.  The question in my mind is how tight the
lease that Chairman Greenspan is keeping on Ben Bernanke can get
before it snaps and the fed begins buying bonds.  So far, it has
yet to occur.  In the meantime, I expect to see significant
contraction in the Mortgage Bankers Association refi index when
it gets updated on Wednesday as effective rates rise.

Daily NQ candles

The NQ walked right up to the ledge, peered over, slipped, and
then scrambled back.  The oscillators are on confirmed sell
signals, with today's session giving us lower lows and lower

30 minute 20 day chart of the NQ

I've left the 30 minute charts unmarked, because the Fibonacci
lines appear to be calling it quite well.  The upphase on the
oscillators aborted early, with both the stoch and the macd
putting in lower highs as the NQ slid right from the open.  We
were left on buy signals again, coincident with the Fibonacci
support that held at today's lows.  On a closing basis, the
fractured daily trendline above held, and it's not unreasonable
to expect a bounce from here on a short term basis.  With the
daily oscillators on sell signals, I do not expect it to get far,
however, and expect to see resistance in the 1250 area.

Daily ES candles

The ES was particularly weak, not challenging the broken
trendline and the daily oscillators reasserting their downphases
today with a lower low and lower high.

20 day 30 minute chart of the ES

We got the same Fibonacci bounce on the ES and the same
preliminary buy signals on the 30 minute oscillators.  982
resistance should prove a formidable resistanec level, although
the tape felt very tired even with the closing bounce (see
below).  If the oscillator upphase aborts early, I'll be
expecting lower lows following that bounce.

150-tick ES

On the 150-tick intraday chart, we see that the ES went out on
oscillator buy signals.  The aggressive selling in bonds today
implies that the market has bigger fish to fry than the equity
indices, however, and so I'd recommend extreme caution for any
bulls trying to play a bounce.

Daily YM candles

MMM gave the Dow futures a lift today, but it didn't help
particularly much.  I've had difficutly lining up the trendline
on YM because of the numerous breaks, but the above
interpretation seems to coincide well with the oscillator peaks
and troughs. Today's 89 point decline caused a lower high on the
stochastic, and the macd remains on a sell.  9000 remains a
significant line in the sand, with fib support just below it.

20 day 30 minute chart of the YM

On a 30 minute basis, YM resembles ES most closely, and went out on a buy signal.

Today's session vaporized a number of support levels for the
equity futures and for treasuries.  The weakness from the open
caused the short cycle oscillators on the equity futures to trend
in oversold for just over two hours, and I'd be surprised to see
today's opening high again for some time.  The simultaneous
selling of treasuries and equities bodes ill for the markets, and
bulls in particular need to be careful to not get trapped on the
wrong side of rapid declines such as we saw at several points today.

See you at the bell!


Check the Site Later Tonight For Jeff's Index Trader Article

Tired of waiting on trades to execute?
Does your broker offer Stop Losses on Options?

Trade instantly with Stop Losses at PreferredTrade Inc.
Stop Losses based on the option price or the stock price.
Move your trading into the next millennium with PreferredTrade.
Anything else is too slow!



Stock Funds Post Weekly Losses

Stocks were higher Friday, curbing some of the week's losses, but
that wasn't enough to put stock mutual funds in the black for the
week ended July 18, 2003.  Vanguard Total Stock Market Index Fund
(VTSMX), which tracks the return of the Wilshire 5000 Index, slid
0.6% on the week, with the large-cap range holding up better than
mid- and small-cap stocks in general.  The popular S&P 500 large-
cap index posted a 0.5% weekly decline.

Foreign markets and funds also produced weekly losses.  Vanguard
Total International Stock Index Fund (VGTSX), which reflects the
performance of both developed and emerging markets, lost 1.3% on
the week.  European stocks lost around 1.4%, twice that of their
U.S. counterparts.

According to Lipper, the worst performing equity fund objectives
last week were: gold funds (-3.5%); science and technology funds
(-2.5%); and small-cap growth funds (-2.2%).  Conservative stock
fund groups, such as balanced funds and equity-income funds, had
smaller weekly losses (-0.5% give or take).  Value-driven funds
held up better than pro-growth oriented funds, with tech stocks
leading the market lower.

Things weren't better on the fixed income side.  For the weekly
period, Vanguard's Total Bond Market Index Fund (VTBMX), which
mirrors the return of the Lehman Brothers Aggregate Bond Index,
lost 1.2%.  While the investment-grade market was lower overall,
a number of high-yield and emerging-markets bond funds produced
weekly gains of up to 1.00%.  High-yield funds rose 0.1% on the
week overall, the only Lipper fixed income fund group to finish
the week higher.

Equity Fund Group

 Week    YTD    Selected Lipper Equity Indices (Jul-18)
-0.7%   +9.8%   Balanced Fund Average
-0.4%  +10.8%   Equity Income Fund Average
-0.7%  +10.6%   International Fund Average
-0.5%  +12.2%   U.S. Large-Cap (Core) Fund Average
-0.9%  +16.8%   U.S. Mid-Cap (Core) Fund Average
-1.3%  +17.9%   U.S. Small-Cap (Core) Fund Average
-0.7%  +15.4%   U.S. Multi-Cap (Core) Fund Average
-2.5%  +27.5%   Science & Technology Fund Average

Among U.S. equity funds, weekly losses were generally higher for
smaller capitalization funds and growth-driven management styles.
Among billion-dollar funds, some of the week's biggest declines
were produced by Janus Mercury (-2.0%); Calamos Growth (-2.1%);
Fidelity New Millennium (-2.8%), and Robertson Stephens Emerging
Growth (-3.2%).  The flagship Janus Fund did well, breaking even
on the week (-0.05%).

Fidelity Select Biotechnology Fund produced a 1.1% weekly return
while its health category peers lost ground overall.  Its select
sibling, Fidelity Select Energy Service Portfolio, rose 2.1% for
the 5-day period July 18 to lead the natural resources category.
Financial services sector funds also performed well on the week,
including John Hancock Regional Bank Fund, up 1.4%, and Fidelity
Select Banking Portfolio, +1.5%.  So, there were some pockets of
strength last week.

International fund losses were generally 0.7% or less last week,
according to Lipper.  Foreign stock funds with pro-growth styles
such Vanguard International Growth Fund lost twice as much, with
the fund down 1.6% for the week.  Other laggards included Putnam
International Equity (-1.6%) and Putnam Global Equity (-1.4%) on
the week.

Fixed Income Fund Group

 Week    YTD    Selected Lipper Fixed Income Indices (Jul-18)
-1.1%   +3.3%   Corporate A-Rated Debt Fund Average
-0.5%   +0.7%   GNMA Fund Average
-1.2%   +6.4%   Global Fixed Income Fund Average
+0.1%  +16.6%   High Yield Fund Average
-1.1%   +6.7%   International Fixed Income Fund Average
-1.0%   +3.6%   Intermediate Investment-Grade Fund Average
-0.3%   +1.8%   Short Investment-Grade Fund Average
-1.2%   +1.0%   U.S. Government Bond Fund Average

You can see from the numbers above that it was a rough week for
bonds and bond funds, with weekly losses generally higher among
investment-grade bond funds, especially those most sensitive to
rising rates, long-term bond funds.  High-yield bond funds were
0.1% higher on average, however, many funds in the group posted
weekly losses.  Vanguard High-Yield Corporate Bond, the group's
largest fund, lost 0.4% over the 5-day period.

Short-term bond funds minimized their weekly losses relative to
funds with long term durations/maturities.  Vanguard Short-Term
Corporate Bond Fund for example lost just 0.4% last week, while
its sibling, Vanguard Long-Term Corporate Bond Fund declined by
2.5%.  Vanguard Long-Term Treasury Fund was 2.7% lower over the
5-day period through July 18.

Want to bet on rising rates?  Now you can with funds such as the
ProFunds Rising Rates Opportunity Fund, up 4.3% last week.  This
bond fund offering seeks investment results equal to 125% of the
"inverse" of the daily price movement of the most recently issued
30-year U.S. Treasury Bond.  If you fear interest rates will move
higher from today's lows, you may want to consider such a product

Money Market Fund Group

Yield   Selected iMoneyNet Money Market Indices
0.54%   All Taxable MMF Average
0.31%   All Tax-Free MMF Average

The iMoneyNet.com All Taxable MMF Average stands at 1.54%, having
leveled off following the Fed's last rate cut around a month ago.
PayPal Money Market Fund currently sports a 7-day simple yield of
1.07%, highest among prime-retail money market funds.  It remains
to only retail money market to have a yield of 1.00% or more now.

Two of the group's largest funds, Fidelity Cash Reserves Fund and
Vanguard Prime Money Market Fund have current 7-day simple yields
of 0.83%, well above the iMoneyNet.com taxable MMF average.  They
have a cost advantage (hence, yield advantage as well) over other
retail money market funds.

Fund News, Etc.

The big news last week was the announcement by Fidelity that star
manager David Glancy is leaving to pursue other opportunities (to
start a hedge fund).  Glancy ran Fidelity Leveraged Company Stock
Fund, Fidelity Advisor Leveraged Company Stock Fund, and Fidelity
Capital & Income Fund.  According to The Boston Globe, Glancy is
the fourth manager to leave the mutual fund giant so far in 2003.

For those of you who have inquired, I don't know how to invest in
Glancy's new hedge fund (I'm sorry).

Replacing Glancy at Leverage Company Stock and Advisor Leverage
Company Stock is Thomas Soviero, previous manager of Fidelity's
High Income Fund (SPHIX).  Soviero will continue to manage high
yield fund sibling, Fidelity Advisor High Income Advantage Fund
(FAHYX).  Morningstar says expect a similar management strategy
and style considering Glancy's previous success.  Up-and-comer,
Mark Notkin succeeds Glancy at Fidelity Capital and Income Fund.
He has managed variable annuity products for Fidelity since Oct.
2001, Morningstar said.

Schwab has launched a new quantitative-based stock fund, called
Schwab Dividend Equity Fund.  It will rely on the Schwab Equity
Ratings system to identify equities that pay dividends that are
"eligible" for the recently reduced tax rate.  Schwab's ratings
system grades over 3,000 stocks on valuation, growth and analyst
earnings estimates.  According to Morningstar, the Schwab equity
ratings system is also used to build the portfolio of the Schwab
Core Equity Fund (SWANX) and Schwab Hedged Equity Fund (SWHEX).

Safeco Funds announced it will carry out a major overall of its
mutual fund family, renaming seven funds and establishing a new,
co-managed system of portfolio management for all funds.  Safeco
also announced certain planned mergers and liquidations, per the
Morningstar report.  If you're a Safeco fund shareholder, you'll
want to go to their website or speak with a representative about
the fund changes (they are significant).

There's currently a small window of opportunity to invest in the
Brazos Micro-Cap Fund (BJMIX).  This righteous rocket-style fund
reopened to new investors on July 15, but will close when assets
reach $300 million.  Current fund assets are around $200 million.
In the fund's first four full years of operation - 1998 to 2001 -
total returns ranked in the top quartile of the small-cap growth
category, per Morningstar.  After a poor 2002 performance, it is
back on the right track, rising 30% since December 31 to rank in
the top 7% of all small-growth funds.

Steve Wagner
Editor, Mutual Investor



Trade: Securities, Stock Options, Futures Contracts

Service: Experienced Brokers
         Personal Assistance
         Convenience of One Brokerage
         Online and Live Broker Trading

Experience...  The Difference

OneStopOption.com   888-281-9569



If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at


and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support
The Option Investor Newsletter                   Monday 07-21-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.

In Section Two:

Stop Loss Updates: LEN
Dropped Calls: GS
Dropped Puts: None
Play of the Day: Put - HD
Watch List: Watch Out For Earnings

Updated on the site tonight:
Market Posture: Can Major Companies Beat or At Least Meet Q2


Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for

Live Broker and Online Trading Available     888-281-9569




LEN - put
Adjust from $73.25 down to $71.50


Goldman Sachs Grp. - GS - close: 85.70 change: -1.99 stop: 85.50

Despite several convincing attempts at a rally over the past
couple weeks, GS finally succumbed to the broad market weakness on
Monday, trading below $85.50 (the site of our stop late in the
afternoon before a slight bounce into the close.  While the stock
did manage to close above our stop, we're taking the conservative
approach and closing the play tonight, with the Broker/Dealer
index (XBD.X) closing just above the critical $550 support level.
Rather than hope for a rebound, we're opting to close the play
near break-even and look for a better setup.  Now that support has
been broken, GS looks like it could fairly quickly trade down to
the site of the 50-dma just under $84, and that's more risk then
we're prepared to take.  Traders still holding open positions
should use any rebound back to the $87-88 area as an opportunity
for a more favorable exit, not as an invitation for entry.

Picked on July 1st at      $85.85
Change since picked:        -0.15
Earnings Date             09/24/03 (unconfirmed)
Average Daily Volume =    4.38 mln



If you trade options online, then you need an online broker that:
offers true direct access to each option exchange
offers stop and stop loss online option orders
offers contingent option orders based on the price of the option or
offers online spread order entry for net debit or credit
offers fast option executions

PreferredTrade offers these online option trading features and more;
call 1-888-889-9178 or click for more information.



The Home Depot - HD - close: 33.08 change: -0.02 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 contractors.

Why we like it:
The other half of the Home Improvement Retailer duo, HD has been
rather stingy about delivering us the breakdown in price we've
been expecting.  Critical resistance has been found in the $34
area and failed intraday rallies there have made for solid entry
opportunities.  But at the same time, there hasn't been much
downward pressure below the $33 level either.  Friday's session
did see an intraday dip to $32.66, but the stock came bouncing
back into the range by the closing bell.  The past several
sessions have had the stock tracing out a neutral wedge and a
solid downside break of this wedge will be our first clue that the
bears are gaining some traction.  Aggressive entries can still be
had on failed intraday rallies below the $34 level, and slightly
more conservative traders can enter on a break below the bottom of
the wedge near $32.75.  Traders looking for more confirmation
before playing, will need to see the 50-dma ($32.18) violated,
preferably on rising volume.  Recall that our initial target will
be $30, with our final exit point sitting at $28.  Until this
wedge breaks one way or the other, maintain stops at $34.75, just
above the recent double-top.

Why This is our Play of the Day
Ever since its double top near $34.70 a couple weeks ago, we've
been looking for a breakdown in shares of HD, and the recent
breakdown in Treasuries and the Housing sector seems to be helping
the bearish move get underway.  On Monday, Treasuries again saw
heavy selling, the $DJUSHB index got hit for another 2% decline,
and HD lost more than 2.8%, breaking below the 50-dma ($32.24) for
the first time since the second week of March.  Price action
certainly looks bearish, daily oscillators are in full bearish
roll and the violation of the 50-dma is a technical confirmation
we've been waiting for with bated breath.  Of course, the bears
aren't home free just yet, as there is still the possibility for
support to be found near $32 and then again near $31.58 (the 6/23
intraday low).  But once below $31.50, it looks like a high-odds
bet for HD to reach our first target of $30, quite possibly this
week if bonds continue to drop, dragging the $DJUSHB down further
as well.  Failed rebound attempts in the $33.00-33.50 area are
still looking good for new entries, and more aggressive traders
can target that breakdown below $31.50 as a momentum entry as
well.  Remember, our eventual target for the play is $28, which is
at the bottom of the 5/20 gap.  Maintain stops at $34.75 until the
stock closes below $32 and then we can tighten them to $34.00.

Suggested Options:
Aggressive short-term traders will want to focus on the August 32
Put, as it will provide the best return for a short-term play.
More conservative traders will want to utilize the August 35
contract, as it is now solidly in the money.  Aggressive traders
with a longer-term focus may want to use the November contract,
which although it is currently out of the money should provide
enough time for profitability before time decay becomes a factor.
Note that September contracts are currently available, but so far
do not have any open interest.

BUY PUT AUG-35 HD-TG OI=2179 at $3.00 SL=1.50
BUY PUT AUG-32 HD-TZ OI=7849 at $1.20 SL=0.60
BUY PUT NOV-30 HD-WF OI=2604 at $1.45 SL=0.75

Annotated Chart of HD:

Picked on July 10th at   $32.43
Change since picked:      -0.28
Earnings Date          08/19/03 (unconfirmed)
Average Daily Volume =  9.52 mln


Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade Market Monitor Signals
Personal Service and Education

**Services available for Foreign Traders including Canada**



Watch List

Watch Out For Earnings

Amazon.com - AMZN - close: 35.30 change: +0.35

WHAT TO WATCH: The Internet retail giant announces earnings
tomorrow after the close and we could see some action in the
share price tomorrow.  Bears are probably a little surprised as
the stock closed under the $35.00 level and its 50-dma on Friday
so the expectation was for additional weakness on Monday.  An
upgrade of YHOO lifted shares of AMZN as well and the stock
rallied to the $36 mark before falling back.



Broadcom Corp - BRCM - close: 25.17 change: -0.39

WHAT TO WATCH: Another stock holding at support is BRCM.  Shares
had fallen from the $30 level back towards support and its 50-dma
near $25.00.  The positive earnings news from TXN after the bell
on Monday could push shares of BRCM higher ahead of its own
earnings report after the bell on Tuesday.



eBay Inc - EBAY - close: 111.06 change: +0.95

WHAT TO WATCH: The Internet sector was the strongest "tech"
sector on Monday probably owing to strength in shares of EBAY and
YHOO.  EBAY is set to announce its earnings on Thursday and we
suspect the stock could bounce from the $111 in anticipation of
strong numbers.  The stock is up so much this year that a "sell
the news" event could be painful.



Can Major Companies Beat or At Least Meet Q2 Expectations?

To Read The Rest of The OptionInvestor.com Market Watch Click Here


If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at


and click on "subscribe" to use our secure credit
card server or you may simply send an email to

 "Contact Support"

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


Please read our disclaimer at:


For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


Option Investor Inc is neither a registered Investment Advisor nor a Broker/Dealer. Readers are advised that all information is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All opinions, analyses and information included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we do not necessarily update such opinions, analysis or information. Owners, employees and writers may have long or short positions in the securities that are discussed.

Readers are urged to consult with their own independent financial advisors with respect to any investment. All information contained in this report and website should be independently verified.

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives