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Daily Newsletter, Wednesday, 07/23/2003

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The Option Investor Newsletter                   Monday 07-23-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Bernanke Does it Again
Futures Wrap: Anti-Disinflationary Trading
Index Trader Wrap: See Note
Weekly Fund Family Profile: Navellier Funds
Traders Corner: The End of An Era


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     07-23-2003         High     Low     Volume Advance/Decline
DJIA     9194.24 + 35.79  9203.48  9102.28 1.59 bln    738/ 815
NASDAQ   1719.18 + 13.08  1720.04  1695.20 1.91 bln   1117/ 483
S&P 100   497.79 +  0.15   498.61   493.36   Totals   1855/1298
S&P 500   988.61 +  0.50   989.86   979.79
RUS 2000  466.14 +  2.14   466.15   460.52
DJ TRANS 2572.16 -  4.21  2578.82  2561.51
VIX        20.44 -  0.54    21.82    20.37
VXN        30.78 -  1.67    33.51    30.52
Total Volume 3,767M
Total UpVol  2,071M
Total DnVol  1,625M
52wk Highs     340
52wk Lows       37
TRIN          1.17
PUT/CALL      0.85
*******************************************************************

Bernanke Does it Again
Jonathan Levinson

Today's session spent a great deal of energy determining what
traders believed the Fed will seek to do next, and closed on a
question mark.  That indecision caused a ferocious rally in
precious metal, with stocks and bonds adding tentative gains.

One year daily candle chart of the INDU




I've zoomed out to the yearly view of the indices to seek
perspective.  The Dow has clearly stalled out within its up-phase,
the oscillators on sell signals from lower highs, while the Nasdaq
appears to be completing a healthy pullback within its bullish
uptrend.  The Stochastic and Macd oscillators are in mid-
downphases, however, and seem to imply that the 22 day EMA (green
line), which has supported each pullback, may not hold on the
current test.

For a more detailed view of the daily and thirty minute charts of
the index futures, see tonight's Futures Wrap.


One year daily candle chart of the COMPX





The Energy Department announced today that crude inventories
dropped by 2.3 million barrels for the week ended July 18. Total
inventories are down year-over-year to 276.3 million barrels, an
11 percent decline. Gasoline inventories fell by 1.6 million
barrels to 207.8 million barrels in the latest week.
Surprisingly, analysts got it right for a change, with many
calling for the decline based on Hurricane Claudette's disruption
to oil production in the Gulf of Mexico.  The American Petroleum
Institute reported a drop of 700,000 barrels in crude stocks for
the week, considerably lower than the Energy Department's 2.3
million barrel decline.  The API reported a 1.1 million barrel
drop in gasoline supplies to 208.4 million barrels.  Crude
futures finished above their lows but under $30 per barrel.

The Mortgage Bankers Association (MBA) announced that seasonally-
adjusted demand for mortgage refinancings, the MBA refinancing
index, dropped 7.2% for the week ended July 17 following a 1.6%
drop the previous week.  Demand for loans with which to buy
homes, the Purchase index, dropped 1.1%. The average interest
rate for a 30-year fixed rate mortgage rose to 5.72% from 5.33%.
Given the sharp jump in treasury yields over the past week, it
was expected that refinancings would drop, but I find it
surprising that there wasn't more activity from late-comers who
might have been procrasting and jumped to get in when rates
began to climb.  This implies that the market for home loans may
be maxxed out.

I've updated the macro charts we've been following during the
past weeks.  The changes are minute for this past week, with the
MBA mortgage and refi indices giving the first and, I believe,
leading indication of a possible pullback in the money supply as
the origination of loans begins to recede.  As treasury bonds
continue to get sold, this trend should strengthen.  Mr.
Bernanke's speech, discussed below, asserts that the Fed will
fight this contractionary trend, much as it has been doing for
the past several years.

MZM chart




The zero-maturity money supply and the Fed's open market activity
maintained their steeply rising trends as the Fed continued to
add bank reserves, freeing up capital with which to purchase
securities in the open market.  Note that an increase in the
supply of anything lowers its per unit value, and so the
expansion of the money supply is at the expense of the value of
each dollar.  In this light, inflation may be seen as a "hidden"
tax.

Chart of overnight and term repurchase agreements (repos)



Bank prime loan rate




The effect of the inflation of the money supply and the purchase
by the Fed's member banks of treasury bonds has helped lower the
time-value of money, with the prime rate at a multidecade low,
although this 13 year time series doesn't fully capture it.


Chart of Total Consumer Credit



Consumer credit outstanding appears to have ticked up this week,
and it too remains at multi-decade highs, fueled by the record
low rates. I find it disconcerting that consumers have been
encouraged to take advantage of these low rates by taking on more
debt instead of refinancing and paying down their existing debt.
This legacy of the President and Mr. Greenspan may well come back
to haunt them.

The overall effectiveness of Mr. Greenspan's war against the
Kondratieff Winter and inflationary stimulation policies is
measured by the following charts, those which constitute the
bottom line for the broad citizenry subject to the Federal
Reserve's policies:

Chart of Unemployment Rate




Chart of US Bankruptcy Filings, unchanged from last week




Chart of State and Local Surplus or Deficit





Against this backdrop, Federal Reserve governor Ben Bernanke
addressed a speech at UCSD this morning.  True to form, Bernanke
broadcast what appear to me to be panic-type comments on the
Fed's part, and a wanton disregard for the US currency and all
those who save and invest prudently with it.  As mentioned in
last week's Wednesday market wrap, the effective rate of return
on short term treasuries is more than 1 percent below the CPI,
forcing our elderly and savers to put their capital at risk just
break even with cost of living increases.  Bernanke took it a
step further, saying that "We should be willing to cut the funds
rate to zero, should that prove necessary to provide the required
support to the economy."  Once again, the "pushing on a string"
analogy comes to mind.

A highlight:

"In any case, I hope we can agree that a substantial fall in
inflation at this stage has the potential to interfere with the
ongoing U.S. recovery, and that in conceivable--though remote
circumstances, a serious deflation could do significant economic
harm. Thus, avoiding a further substantial fall in inflation
should be a priority of monetary policy. To my mind, the central
import of the May 6 statement is that the Fed stands ready and
able to resist further declines in inflation; and--if inflation
does fall further--to ensure that the decline does not impede the
recovery in output and employment."

The full text of the speech is available at 


The Fed added a larger-than-usual 7B overnight repo, and for the
second time this week failed to announce it through its website
until several hours later than usual.  The number announced in
this morning's Market Monitor was obtained by calling the New
York Fed and asking for it.  This large open market operation,
with no expiries today, indicates a certain trepidation on the
part of the Fed. However, the inflationary words of Bernanke's
speech are ultimately bullish for paper assets, as he's implying
an increase in the supply of money with which to chase those
assets, and both bonds and stocks remained firm following his
speech.  Gold rallied explosively on the comments, as investors
fled to commodities which are not subject to arbitrary inflation
or proliferation, unlike dollars, treasuries, stocks and other
paper.

There was a plethora of corporate data released today.  AOL Time
Warner (AOL) reported $0.12 per share, beating expectations by 2
cents. Boeing (BA) lost $0.24 per share vs. expectations of a
0.43 per share loss.  Bell South (BLS) earned $0.52 per share,
beating by 2 cents.  Lucent (LU) met expectations, losing 7 cents
per share.  Eastman Kodak (EK) earned 60 cents, clobbering
expectations of 27 cents per share.  Kimberly Clark (KMB) beat by
a penny, earning $.82 per share.

After the bell, Qualcomm (QCOM) beat by 3 cents at 33 cents per
share.  AFLAC (AFL) earned 48 cents per share, beating by 3 cents.
Overture (OVER) beat by 6 cents, coming in at 12 cents per share,
and Veritas (VTAS) beat by 5 cents per share, reporting revenues
of 19 cents per share.  Electronic Arts (ERTS) blew out estimates
of 2 cents per share, earning 13 cents and increasing y-o-y
profits by 148%.  Symantec (SYMC) earned $0.45 per share, beating
estimates by 6 cents.


We have the following economic data due tomorrow:

               Report                   Briefing  Market  Prior
                                        Expects   Expects
Jul 24 8:30 AM Initial Claims 07/19 -   415K      415K    412K


For tomorrow, with a very light slate of economic data due, the
question mark on which today's equity session closed will
continue.  The comments made by Bernanke are obviously not
bullish for companies or the broader economy.  However, the
spring rallies in bonds and stocks were the result of a surge in
liquidity.  The big moves up in gold and silver were obvious, as
was the move down in the dollar.  The big unanswered question is
whether stocks have it in them to rally again from current
levels, and whether the Fed will do as much as Mr. Bernanke
implied today.  The mixed trading throughout the day will likely
carry over to tomorrow as the markets struggle to choose a
direction.

See you at the bell!


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

Anti-Disinflationary Trading
Jonathan Levinson

Federal Reserve governor Ben Bernanke delivered some new "anti-
disinflationary" material today in a prepared speech, with the
expected effects on the dollar, gold and treasuries.  Equities
remained the wildcard.  For a more detailed discussion about Mr.
Bernanke's speech and its implications, see tonight's Market
Wrap.

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

Figures rounded to the nearest point:

           R2     R1    Pivot   S1     S2
ES03U      998    993    985    980    972
YM03U     9255   9216   9143   9104   9031
NQ03U     1294   1283   1265   1255   1237


10 minute chart of the US Dollar Index





The US Dollar Index got clocked all day until just before noon,
at which point it began a timid bounce.  The 96 support failed
with barely a fight as the Fed governor's comments about lowering
the Fed Funds rate further still, to zero if need be, gave
investors and traders second thoughts about holding dollars.  The
action was very bullish for precious metals, their indices, and
to a lesser extent, commodities, with the CRB adding 83 cents led
by silver, wheat and gold.


Daily chart of August gold




August gold gapped up and ran higher, closing at the high of the
day for an 8.1 point gain.  The bull wedge target was exceeded,
bringing the bull flag into play, and its projections above the
current highs for the year.  The upper Bollinger band was
exceeded, which implies a pullback, but there was certainly no
sign of weakness during the day.  The metals indices blew the
roof off, with HUI adding 9.65 to 159.29 and XAU up 4.15 to
81.47.

Daily chart of September silver




Silver made a huge move- so huge that you have to squint at the
chart to see the price bar.  As of this writing, September silver
was trading higher by 5.82%.


Daily chart of the ten year note yield





The Bernanke Put carries with it the implication of
"extraordinary measures", which has referred to the outright
purchase of t-bills by the Fed.  The Governor reiterated all his
old concerns today, and speculators rushed into the treasury
market to frontrun the Fed and each other, driving yields down
over 10 basis points on the TNX intraday.  Treasuries closed
modestly higher, with the five year note yield down 5.5 basis
points, the ten down 4.8 and the thirty down 1.7.  The rising
trendline under the TNX depicted above was not even close to
being tested.


Daily NQ candles




The NQ, ES and YM all printed higher lows and higher highs,
closing positive on the session.  Despite the oscillator
downphases in progress, the NQ had a very bullish session,
closing on a bullish hammer well above the trendline.

30 minute 20 day chart of the NQ



The 30 minute chart depicts at least a bullish descending wedge
breakout, and very possibly a reverse head and shoulders breakout
as well above the 61.8% retracement line at 1268.  Both
formations project above the 1300 level, and the oscillators are
back on buy signals, aborting their downphases in their very
early stages.


Daily ES candles




Despite the bullish news from EK this morning, the S&P futures
could not approach the rising trendline, printing what remains
the more bearish of the 3 equity futures daily charts.  ES also
went out on a bullish note, but further off its high than the NQ.


20 day 30 minute chart of the ES




The bullish reverse head and shoulders breakout is absent from
the ES chart, but the oscillators flipped to buy signals on the
bounce off the intraday lows just same.  The broken descending
trendline on the bull wedge served as support for a bullish
retest, and the ES looks like it wants to run higher.  The bull
wedge, if it fulfills, projects to the 1015 highs.

Daily YM candles



The YM chart is more troublesome, with today's action bringing
the daily oscillators close to buy signals, and price bouncing
either to or from the rising trendline.  The data set for the YM
contract is sketchier than that for its higher volume peers, and
my confusion is reflected in the alternate rising trendlines
above.

20 day 30 minute chart of the YM




Once again, the downphase was truncated, and YM looks ready to
test its high if it can break the current resistance below 9200.

Today's session opened a number of cans of worms:  Will the
breakout in gold and silver hold?  Has the US Dollar commenced a
new downleg from a lower high?  Will treasuries get bought back
to their year highs, breaking out of the steep downtrend (uptrend
in yield)?  And, will equities launch for a fresh rally?

It's difficult to tell because much of today's trade was based on
Bernanke and speculation about what the Fed will do next.  As
we've learned with Japan's example, central bankers prefer to
talk and let speculators do their work for them.  I believe that
this very thought was behind the hesitation we saw in treasuries
and equities today.  In the meantime, we'll have to follow the
oscillators.


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

Check the Site Later Tonight For Jeff's Index Trader Article
http://members.OptionInvestor.com/itrader/marketwrap/iw_072303_1.asp


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

Navellier Funds

This week's profile looks at Navellier Management, Inc., and the
Navellier Funds, a series of equity mutual funds known for their
aggressive investment style.  Accordingly, these stock funds are
suitable only for investors that are willing to accept more risk
in pursuit of greater returns, and who can hold stocks long-term.

Navellier Management Inc., founded by Louis G. Navellier in 1994,
is the investment adviser to both the Navellier Millennium Funds
(load) and the Navellier Performance Funds (no-load).  Our focus
will be on the Performance Funds, the firm's no-load fund series.
If you use a financial advisor, you can inquire about Navellier's
Millennium Funds series.  Class A shares have a 4.95% front load.

Navellier specializes in quantitative analysis and MPT ("Modern
Portfolio Theory").  All of the firm's quantitative, fundamental
and allocation screens are based on a database of 9,000 equities.
Stock holdings are selected for their earnings growth, expanding
profit margins and surprise earnings estimates.  The strategy is
momentum-based and quick hitting.  Navellier moves in and out of
securities quickly, resulting in high turnover.

The Navellier Performance Funds have no loads and have a minimum
initial investment of $2,000 ($500 for IRA accounts).  Funds are
available on a no-load, no-transaction fee (NTF) basis through a
number of leading online broker networks including Charles Schwab
OneSource and Fidelity Retail FundsNetwork.  Expense ratios look
like they are capped at the 1.50%/year.  For more information or
to download a fund prospectus, go to the www.navellier.com site.

Fund Overview

Navellier Aggressive Growth Fund (NPFGX) is the adviser's first
mutual fund, dating back to December 1995.  Alan Alpers, CFA is
the fund's current portfolio manager.  He also coordinates much
of the quantitative analysis and portfolio allocation procedures
for portfolio management at Navellier Management.

The Aggressive Growth Fund seeks long-term capital appreciation
by investing in stocks of "micro-to-small" sized companies that
also have the potential to rise in price.  Like other Navellier
portfolios, the investment process focuses on "growth" variables
including (but not limited to) earnings growth, operating margin
expansion and reinvestment rate.  Morningstar places the fund in
the small-cap growth category.  Over 85% of assets were recently
invested in the small- and micro-cap ranges, using Morningstar's
report.

Mr. Navellier has managed or co-managed Navellier Mid-Cap Growth
Fund (NPMDX) since November 1996.  Mr. Alpers has co-managed the
fund's portfolio since May 1998.  The fund seeks long-term growth
of capital by investing primarily in stocks of mid-size companies
that have potential to increase in price.  Its investment process
also focuses on growth and momentum variables.  Morningstar rates
the fund against other mid-cap growth funds, with over 75% of net
assets recently invested in the mid-cap range.

While each of the funds focus on "growth and momentum" variables
in the equity selection process, they vary in the capitalization
ranges they invest in.   Below is a summary of the "Performance"
Funds series based on their average market capitalization, using
Morningstar's report.

  Fund Name, Average Market Capitalization:
  Navellier Aggressive Growth (NPFGX), $801 Million
  Navellier Aggressive Small-Cap (NASCX), $720 Million
  Navellier Aggressive Micro-Cap (NPMCX), $520 Million
  Navellier Large-Cap Growth (NPLGX),  $32.4 Billion
  Navellier Mid-Cap Growth (NPMDX), $5.1 Billion

As you can see, the three Navellier Aggressive portfolios have a
similar average market capitalization of below $1 billion, so it
is possible that there is some overlap in those stock portfolios.
Collapsing all three aggressive portfolios into one small-growth
fund makes sense to us, considering the similarities in strategy
and style.

Each of the Navellier stock funds have a higher average P/E ratio
than the market, as measured by the S&P 500 index.  The large-cap
and mid-cap growth funds have average P/E's in the 34x-36x range,
an indication of their "growth" style bias.  Two aggressive funds
have current average P/E ratios in 33x-34x range per Morningstar.

While high turnover leads to higher fund expense and transaction
cost, current expense ratios don't exceed 1.50%, per Morningstar.
Read the prospectus carefully to understand the costs (and risks)
of investing in the Navellier Performance Funds.

Fund Ratings/Performance

Currently, Navellier Mid-Cap Growth Fund and Navellier Large-Cap
Growth Fund are rated four stars overall by Morningstar based on
risk-adjusted returns relative to category peers.  5-year return
ratings on both funds are "high" relative to fund category peers.
Navellier Aggressive Growth Fund and Navellier Aggressive Micro-
Cap Growth Fund are both rated three stars (average) overall per
Morningstar.  Navellier Aggressive Small-Cap Equity Fund holds a
1-star overall rating, reflecting poor investment results versus
category peers on a risk-adjusted basis.

In 1998 and 1999, Navellier Large-Cap Growth Fund's returns were
ranked in the first quintile of the large-growth category, which
is where the fund's YTD total return of 17.6% through July 22 is
ranked (20th percentile) within the Morningstar large-cap growth
fund category.







As a result of its strong showings in 1998, 1999 and (YTD) 2003,
Navellier Large-Cap Growth Fund sports a trailing 5-year average
annual return of 2.5%, ranking in the top 5% of the large-growth
category, per Morningstar.  For the same period, the S&P 500 had
a negative annualized return of 1.9%.

In 1999, sibling Navellier Mid-Cap Growth Fund generated a 127.0%
return for investors, ranking in the top 6% of the mid-cap growth
category.  This year, the mid-cap growth fund is up 16.6% through
July 22, 3.2% better than the S&P 500 large-cap index but ranking
only in the 61st percentile of the mid-growth peer group.  In the
last five years, the fund has increased in value by an annualized
rate of 8.6%, ranking in the category's top 6%.

So, when you look at these two funds through a market cycle, fund
performance is relatively strong on an annualized return basis in
relation to similar growth-style funds.

Navellier Aggressive Growth Fund is up 17.5% this year, while its
micro-cap sibling, Navellier Micro-Cap Growth Fund, has generated
a YTD return of 20.7% through July 22.  Those returns are greater
than the average large-cap equity fund, but only average compared
to other small-cap growth funds.  Anyone that sports a 20% return
this year is probably not complaining at this juncture, given the
higher volatility the market has experienced.

Conclusion

Navellier Performance Funds employ an aggressive investment style
that is not for the faint of heart.  Fund performance in 2003 has
not been quite as robust relatively as it was in the go-go growth
years of 1998 and 1999, but returns have generally beaten the S&P
500 index by decent margins, providing value over the U.S. market
benchmark.  For some the higher risk may be worth the potentially
greater return over time, but many are likely to find Navellier's
aggressive growth style to be too risky.

If you are comfortable with the risks of "growth" investing, then
you may want to consider one of Navellier's pro-growth portfolios
such as the Navellier Large-Cap Growth Fund and Navellier Mid-Cap
Growth Fund.  The trailing 5-year annualized total return of each
fund ranks in the first decile of their respective categories per
Morningstar.  If your horizon is over five years, the higher risk
may be worth taking, but be prepared for a bumpy ride.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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

The End of An Era
by Mark Phillips
mphillips@OptionInvestor.com

My earliest experience in the investing world was in sixth grade.
The year was 1976 and my father introduced me to the concept of
supply and demand and long-term investing through the purchase of
gold and silver coins through a local dealer.  I used the lion's
share of my accumulated savings and followed his lead.  That
turned out to be quite the adventure, as I managed to exit near
the high of that mania and parlayed the gains into my first car.

It is rather interesting to look back in retrospect and see that
up until 2001, gold had been in a 20+ year bear market.  The
blowoff top above $800 could be viewed as the end of an era.
Unless you have been living under a rock, you're well aware that
gold is well into the early stages of its next major bull phase.
Does lighting strike twice?  I think it can and you can rest
assured I've been in the process of accumulating gold and gold
stocks in anticipation of prices that will make the early 1980
high look tame by comparison.  One way to view my bias is that I
believe we are witnessing the end of the dollar-dominant era.  For
that matter, I think it is possible that we're exiting the fiat
money era that has been in force in the United States ever since
Nixon closed the gold window.

But I'm already starting to diverge from the topic that I want to
discuss tonight.  The reason for that preamble is to remind
everyone that the only constant in the market is change.  Asset
classes surge and wane in their popularity and correspondingly in
price.  The issue that has grabbed my attention is the state of
the Mutual Fund industry.  It has had an unabated 20 years of
growth via the growing popularity of 401ks, IRAs and other
personal retirement vehicles throughout the past 2 decades.  I
know I'm going to surprise some of you, but I believe we are
witnessing the waning days of the mutual funds' supremacy in the
marketplace.

Throughout the growth phase of the 1980s and 1990s, mutual funds
have proliferated faster than rabbits, to the point that there are
actually more funds (which are just a mix of different equities)
than there are individual stocks.  There's a product for just
about everyone, from managed funds, sector funds, index funds,
commodity-related funds, etc.  Indexing became more popular as the
broad market soared at the end of the last decade, but their fatal
flaw has been exposed over the past 3 years -- if the broad market
declines, you lose money.  While there are some notable exceptions
of managed funds that have managed to perform well over the past
few years, for the most part mutual funds are only advantageous in
a bull market.

The class of investment that has really seen amazing growth in the
past 3 years is the hedge fund industry.  The great selling point
for this asset class is that they can hold both Long AND Short
positions.  In other words, it is possible for a well-managed
hedge fund to prosper (grow assets) in a down market.
Unfortunately for most investors, this is an asset class that has
been deemed too risky for individual investors unless they have a
large (greater than $100,000) amount of capital they are willing
to commit.  The reasoning goes that hedge funds are inherently
much riskier than mutual funds and investors aren't capable of
understanding those risks.  Right.  I'm sure investors in NASDAQ
index funds since March 2000 are really thankful that they were
protected from the 'excessive' risk of hedge funds as they watched
their investment dollars melt away.

I'm not talking about people like us that are well qualified to
manage our own investments.  I'm talking about the vast public
that has a firm managing their retirement assets, telling them
year after year that it is just a normal dip due to the business
cycle, encouraging them to invest more all the way down.  How long
will it take for them to get back to break even?  After falling
from its peak north of 5000, the NASDAQ Composite bottomed just
above 1100 last October for a loss of 78%.  We've seen a pretty
impressive rally over the past several months and the COMPX is now
56% above its October lows.  So where are we in the grand scheme?
After that strong recovery, the COMPX has trimmed its loss from
the highs to "only" 65%.  There, don't you feel better now?

One of the products of the CNBC-ification of the American public
is that investors (even those that are only vaguely aware of the
daily market action) are more aware, more informed and more
interested in the condition of their investments.  I may be overly
optimistic, but I think they're going to be asking some hard
questions in the months and years ahead, wondering why in the
investment world their choices are so limited.  6000 varieties of
a losing choice is not choice, it is the illusion of choice and
the illusion of control.

In fact, if the fabled second-half economic recovery fails to
materialize (as I expect), I would not be at all surprised to see
the issue surface during the next election cycle.  Investors are
not going to be very happy about seeing the next wave down to new
lows while they are locked into a long-only equities approach to
preparing for their looming retirements, while those with
sufficient qualifications (more money) prosper through more agile
and productive investment vehicles.  I'm not sure it will happen,
but I won't be surprised to see politicians confronted with the
spectre of investors wanting access to other options such as hedge
funds.

There's another key difference between mutual funds and hedge
funds and that is the way the manager of the fund is compensated.
In mutual fund parlance, it is referred to as the load.  We pay
this load or management fee REGARDLESS of performance.  If your
managed fund has a load of 2%, you pay that fee whether the fund
makes 20% for the year or loses 30%!  On the other hand, hedge
fund managers only receive a paycheck if they make money.  Sure
they take a piece of the pie when they make money for you next
year, but there's nothing like incentive to keep them doing the
best job possible.  I don't know about you, but I would gladly
fork over 20% of the gains accrued in a hedge fund in which I have
an interest when it makes money.  That's the way the system is
supposed to work.

Why do you think we go through the window-dressing nonsense each
quarter?  It is the mutual fund managers trying to make their
portfolio look better than it really is.  I view this as blatantly
dishonest, and I think it needs to be eliminated.  But I don't
have any interest in the government getting involved in trying to
impose another level of meaningless regulation on the industry.
Are all those additional pieces of government-mandated paper from
your respective mutual funds doing anything to either help your
fund's performance or your understanding of what investments it
holds and how the fund is performing?  No?  Neither are mine.

No, I prefer a more market-oriented approach.  Give investors the
knowledge and choice they deserve and they can choose whether they
want to continue to give their money to one of a few thousand
mutual funds or if they prefer a more proactive and productive
approach.  If I'm right, mutual funds will start to see a
significant drop in new money coming in, as a portion of it is
directed to the "new kid on the block".  Then it will come down to
an issue of performance.  I recognize that there will be good
hedge funds and bad ones, just like we have in the mutual fund
industry.  Regulators currently make the assumption that investors
can choose among the good and bad mutual funds, so why not give
them that ability in the hedge fund world?

It is called a free market economy, and in that arena the strong
should survive and the weak should perish.  That happens now in
the mutual fund industry and a lot of funds that existed 3 years
ago are no more than an unpleasant memory.  I say let performance
be the over-riding consideration and I predict two positive
outcomes.  Investors will be better served with a broader range of
choices than just a selection of long-only equity funds, and I
suspect will pay greater attention to what is actually happening
with their managed investments.  You see, most investors know that
the monthly/quarterly/annual statements are useless for
determining absolute performance except for looking at the bottom
line balance.

The other major benefit I would expect if hedge funds were
competing head to head for 401k money is that it would force
mutual fund managers to do a better job.  If hedge funds as a
group are showing an average annual gain of 8%, investors are
going to be a lot less tolerant of their mutual fund losing 8% and
claiming it did well by beating the 11% loss in the S&P500.

It may take awhile to actually come to fruition, but I believe
this is the direction things will move over the next several
years.  The almighty bear is going to be with us for awhile and
when it becomes clear that this rally is just one more bear market
rally, I expect investors to be less willing to play the "be
patient and trust me" song and dance from Wall Street.  That will
be the beginning of the process that produce what I believe will
be a more open, honest and performance-driven industry.  Things
are getting ready to change and that will be good for everyone!

Have a great week!

Mark


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The Option Investor Newsletter                   Monday 07-23-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: FDX, GENZ, XL
Dropped Calls: None
Dropped Puts: None
New Put: PGR
Play of the Day: Put - PGR
Spreads, Combinations & Premium-Selling Plays: Stocks End Higher
After Volatile Session
Watch List: A Full Watch List for Wednesday

Updated on the site tonight:
Market Posture: Better-than-Expected Earnings Just aren't Enough
Anymore!



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

Fedex Corp - FDX - close: 64.96 change: -0.03 stop: 61.99

We're not actually changing our stop loss on FDX just yet
but the bounce at $64.00 today (suggested as an entry yesterday)
looks tempting.  More conservative traders could up their
stop towards the $63 level.

Picked on July 20 at $65.32
Change since picked:  -0.36
Earnings Date      09/23/03 (unconfirmed)
Average Daily Volume:  1.70 million
Chart =


---

Genzyme Corp - GENZ - cls: 50.75 chg: +0.99 stop: 46.49*new*

The rally continues for GENZ.  The stock moved up through our
trigger point of $50.05 so the play is now open.  We're raising
our stop loss from $44.99 to $46.49.

Picked on July 22 at $50.05
Change since picked:  +0.70
Earnings Date      07/16/03 (confirmed)
Average Daily Volume:  3.52 million
Chart =


---

XL Capital Ltd. - XL - cls: 77.09 chg: -3.61 stop: 81.75*new*

Something is happening with XL.  Shares dropped 4.4% on very big
volume of 2.1 million shares on Wednesday and we can't find any
news to explain it.  We're not complaining but it's nice to know
why a stock is moving.  The drop today put XL through its 100 &
200-dma as well as support at $80.00.  Given how shares closed at
their low for the day a follow through tomorrow towards the $75
level is a good bet.  Short-term traders can already begin to
plan their exit strategy and/or take profits on part of their
position.  We are lowering our stop loss to $81.75, just above
yesterday's high but more conservative traders can look at the
$80 level or even above $78.00 where XL failed at on an intraday
bounce today.

Picked on July 17th at   $79.64
Change since picked:      -2.55
Earnings Date          07/31/03 (confirmed)
Average Daily Volume =    773 K
Chart =



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

None


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

None


*******
NEW PUT
*******

Progressive Corp - PGR - close: 65.22 chg: -1.47 stop: 67.51

Company Description:
The Progressive group of insurance companies ranks third in the
nation for auto insurance based on premiums written, offering its
products by phone at 1- 800-PROGRESSIVE, online at
progressive.com and through more than 30,000 independent
insurance agencies. (source: company press release)

Why We Like It:
Bears unite!  For anyone who thought the never-ending rally in
shares of PGR from its lows under $50 to its highs above $75 was
way overdone but was too afraid to hold over earnings on the
chance that the company might actually say something to warrant
such a climb, well this play is for you.  It's also for anyone
who can recognize the complete lack of a bounce from its big drop
a few days ago.  The company announced its Q2 earnings report on
July 16th (after the close).  Earnings were indeed very strong.
Net income jumped from $160.4 million last year (Q2) to $286.3
million, up 78%.  Analysts had been looking for $1.22 a share,
PGR turned in $1.29.  So why the big drop?  Good question.  Media
and analyst appear to be a little tight lipped on the subject.
We suspect it may have been that expectations for PGR's net
premiums were a little too high and the company failed to hit
their target.  We know... they beat by 7 cents and almost doubled
their profits.  Sounds like a good quarter to us.

Despite what bullish shareholders might think (no, we're not one
of them) the stock got hammered the next day (July 17) for a big
loss.  There was absolutely no bounce on Friday (18th) as AG
Edwards cut the stock from a "buy" to a "hold".  Since then
shares have consolidated sideways until today.  PGR lost another
2.2 percent and the afternoon bounce today was very meager.
We're going to be a little aggressive and suggest bearish entries
at current levels or on failed rallies under $67.00.  The most
logical choice for an entry would be on a move under $65.00, just
22 cents away.  Our target is the $60.00 mark or the 200-dma
whichever comes first.  We're going to try and use a relatively
tight stop at $67.51.

Suggested Options:
PGR has plenty of options to choose from.  Currently there are
August, September, November and Februarys to choose from. Our
preference will be for the August-September strikes with an
emphasis on August 65's.

BUY PUT AUG 70.00 PGR-TN OI=443 at $5.20 SL=3.25
BUY PUT AUG 65.00 PGR-TM OI=471 at $1.95 SL=1.00
BUY PUT AUG 60.00 PGR-TL OI=885 at $0.50 SL= --
BUY PUT SEP 65.00 PGR-UM OI= 30 at $2.90 SL=1.50
BUY PUT SEP 60.00 PGR-UL OI= 41 at $1.15 SL= --

Annotated Chart for PGR:



Picked on July 23 at $65.22
Change since picked:  -0.00
Earnings Date      07/16/03 (confirmed)
Average Daily Volume:  941  thousand
Chart =



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

Progressive Corp - PGR - close: 65.22 chg: -1.47 stop: 67.51

Company Description:
The Progressive group of insurance companies ranks third in the
nation for auto insurance based on premiums written, offering its
products by phone at 1- 800-PROGRESSIVE, online at
progressive.com and through more than 30,000 independent
insurance agencies. (source: company press release)

Why We Like It:
Bears unite!  For anyone who thought the never-ending rally in
shares of PGR from its lows under $50 to its highs above $75 was
way overdone but was too afraid to hold over earnings on the
chance that the company might actually say something to warrant
such a climb, well this play is for you.  It's also for anyone
who can recognize the complete lack of a bounce from its big drop
a few days ago.  The company announced its Q2 earnings report on
July 16th (after the close).  Earnings were indeed very strong.
Net income jumped from $160.4 million last year (Q2) to $286.3
million, up 78%.  Analysts had been looking for $1.22 a share,
PGR turned in $1.29.  So why the big drop?  Good question.  Media
and analyst appear to be a little tight lipped on the subject.
We suspect it may have been that expectations for PGR's net
premiums were a little too high and the company failed to hit
their target.  We know... they beat by 7 cents and almost doubled
their profits.  Sounds like a good quarter to us.

Despite what bullish shareholders might think (no, we're not one
of them) the stock got hammered the next day (July 17) for a big
loss.  There was absolutely no bounce on Friday (18th) as AG
Edwards cut the stock from a "buy" to a "hold".  Since then
shares have consolidated sideways until today.  PGR lost another
2.2 percent and the afternoon bounce today was very meager.
We're going to be a little aggressive and suggest bearish entries
at current levels or on failed rallies under $67.00.  The most
logical choice for an entry would be on a move under $65.00, just
22 cents away.  Our target is the $60.00 mark or the 200-dma
whichever comes first.  We're going to try and use a relatively
tight stop at $67.51.

Suggested Options:
PGR has plenty of options to choose from.  Currently there are
August, September, November and Februarys to choose from. Our
preference will be for the August-September strikes with an
emphasis on August 65's.

BUY PUT AUG 70.00 PGR-TN OI=443 at $5.20 SL=3.25
BUY PUT AUG 65.00 PGR-TM OI=471 at $1.95 SL=1.00
BUY PUT AUG 60.00 PGR-TL OI=885 at $0.50 SL= --
BUY PUT SEP 65.00 PGR-UM OI= 30 at $2.90 SL=1.50
BUY PUT SEP 60.00 PGR-UL OI= 41 at $1.15 SL= --

Annotated Chart for PGR:



Picked on July 23 at $65.22
Change since picked:  -0.00
Earnings Date      07/16/03 (confirmed)
Average Daily Volume:  941  thousand
Chart =



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options," claims author Larry Spears in his new compact guide book:

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and clicking on the link to the book on its home page.

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


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

Stocks End Higher After Volatile Session
By Ray Cummins

The major equity averages closed on a bullish note Wednesday,
despite disappointing quarterly data from some of America's
largest corporations.

A slew of bellwether companies posted financial reports during
the session including Boeing (NYSE:BA), Lucent (NYSE:LU), Kodak
(NYSE:EK), Bell South (NYSE:BLS), GlaxoSmithKline (NYSE:GSK) and
Schering-Plough (NYSE:SGP).  Stocks fell early and then recovered
in the afternoon session, led mostly by technology shares.  The
NASDAQ Composite added 13 points to close at 1,719 on strength in
Internet shares.  The blue-chip Dow average gained 35 points to
end at 9,194 with Kodak (NYSE:EK), Alcoa (NYSE:AA) and Home Depot
(NYSE:HD) among the best performers.  The broader S&P 500-stock
index ended unchanged at 988 with major drug, gold and healthcare
shares enjoying select buying activity.  Volume was moderate with
1.34 billion shares changing hands on the New York Stock Exchange
and 1.82 billion shares traded on the NASDAQ.  On the Big Board,
advancers edged past decliners by a 17 to 15 ratio, while on the
technology exchange, advancers outnumbered decliners 17 to 14.
In bond trading, Treasurys gained for a second straight session,
fueled by comments from Fed Governor Ben Bernanke, who said the
Fed could still cut its overnight rate if disinflation becomes a
problem in the future.  The benchmark 10-year note gained 5/32 to
96-4/32, sending its yield down to 4.11%.

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

SUMMARY OF CURRENT POSITIONS - AS OF 7/22/03

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

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


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

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


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

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

AMLN     AUG    20    19.30  23.35   $0.70   8.47%   3.63%
ELBO     AUG    22    22.10  23.87   $0.40   4.23%   1.81%
IVGN     AUG    40    39.40  50.70   $0.60   3.97%   1.52%
JCOM     AUG    40    39.30  49.46   $0.70   5.19%   1.78%
NFLX     AUG    20    19.65  24.70   $0.35   4.91%   1.78%
POWI     AUG    22    22.20  24.90   $0.30   4.15%   1.35%
ELBO     AUG    22    22.20  23.87   $0.30   3.99%   1.35%
FWHT     AUG    17    17.00  21.11   $0.50   9.85%   2.94%
GENZ     AUG    42    41.85  49.76   $0.65   5.42%   1.55%
IDCC     AUG    20    19.70  17.71  ($1.99)  0.00%   1.52%
MATK     AUG    40    39.45  43.99   $0.55   4.50%   1.39%
MEDI     AUG    35    34.45  40.14   $0.55   4.76%   1.60%
MOGN     AUG    22    21.90  26.00   $0.60   9.51%   2.74%
NFLX     AUG    20    19.55  24.70   $0.45   8.23%   2.30%
OVTI     AUG    30    29.50  37.31   $0.50   6.01%   1.69%
POWI     AUG    22    22.15  24.90   $0.35   5.32%   1.58%
SNDK     AUG    40    39.45  52.95   $0.55   4.92%   1.39%
UTSI     AUG    30    29.50  41.87   $0.50   5.97%   1.69%

Interdigital Comm. (NASDAQ:IDCC) slumped late Tuesday after
announcing that Nokia (NYSE:NOK) has requested arbitration
regarding royalty payment obligations for sales of certain
products under their existing patent license agreement.  The
sharp decline offered little opportunity for a timely exit
however a buy-to-close stop would have initiated a closing
trade at a price far lower than the published debit.


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

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

PPD      AUG    27   28.10  22.85    $0.60   6.82%   2.14%
INTU     AUG    45   46.05  40.81    $1.05   6.80%   2.28%
PHTN     AUG    32   32.85  24.70    $0.35   6.22%   1.07%
PPD      AUG    27   27.85  22.85    $0.35   5.69%   1.26%


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

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

AGN     80.83  77.76   AUG   70  75  0.60  74.40  $0.60   Open
CDWC    50.04  48.58   AUG   40  45  0.60  44.40  $0.60   Open
ICST    34.20  30.24   AUG   25  30  0.55  29.45  $0.55   Open
IACI    41.28  38.46   AUG   35  37  0.35  37.15  $0.35   Open
IVGN    49.48  50.70   AUG   40  45  0.65  44.35  $0.65   Open
MSTR    42.05  41.00   AUG   30  35  0.60  34.40  $0.60   Open

Integrated Circuit Systems (NASDAQ:ICST) is on the early-exit
"watch" list.


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

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

ATK     51.37  54.86   AUG  60  55   0.50  55.50  $0.50   Open?
LMT     47.89  53.40   AUG  55  50   0.60  50.60 ($2.80) Closed *
AVE     52.20  51.98   AUG  60  55   0.65  55.65  $0.65   Open
ATH     75.35  77.98   AUG  85  80   0.60  80.60  $0.60   Open?
JNJ     52.60  51.76   AUG  60  55   0.40  55.40  $0.40   Open

Lockheed Martin (NYSE:LMT) moved above the sold strike last Friday
and as noted in the Market Monitor, the position should have been
closed at that time for a much smaller loss than reflected in the
summary.  Conservative traders should also consider exiting the
position in Alliant Techsystems (NYSE:ATK) as defense issues have
reversed their recent bearish trend, and Anthem (NYSE:ATH) as the
issue is rising into its quarterly earnings report, due next week.


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

No Open Positions


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

No Open Positions

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

NEW POSITIONS

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

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

BULLISH PLAYS - NAKED PUTS

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

**************
ACDO - Accredo Health  $25.00  *** Recovery In Progress! ***

Accredo Health (NASDAQ:ACDO) provides specialized contract
pharmacy services on behalf of biopharmaceutical manufacturers
to patients with chronic diseases.  The company's services help
simplify the difficult and often challenging medication process
for patients with a chronic disease and help ensure that patients
receive and take their medication as prescribed.  The company's
services benefit biopharmaceutical manufacturers by accelerating
patient acceptance of new drugs, facilitating patient compliance
with the prescribed treatment and capturing valuable clinical
information about a new drug's effectiveness.  The company's
services include contract pharmacy services, clinical services,
reimbursement services and delivery services.

ACDO - Accredo Health  $25.00

PLAY (sell naked put):

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

SELL PUT  AUG 22.5  DZU TX     59    0.50  21.50   8.8%   2.3% *
SELL PUT  AUG 25    DZU TE    139    1.45  23.55  16.7%   6.2%


**************
CECO - Career Education  $82.11  *** Soaring Scholastic! ***

Career Education Corporation (NASDAQ:CECO)) is the world's largest
on-campus provider of private, for-profit postsecondary education
and has a rapidly growing presence in online education.  CEC's
Colleges, Schools and Universities Group operates 51 campuses in
the U.S., Canada, France, the United Kingdom and the United Arab
Emirates and offers master's degree, bachelor's degree, associate
degree and diploma programs in the career-oriented disciplines of
visual communication & design technologies, information technology,
business studies, culinary arts and health education.  The Online
Education Group's AIU Online Division offers master's degree,
bachelor's degree and associate degree programs in information
technology, business administration, visual communication and
education.

CECO - Career Education  $82.11

PLAY (sell naked put):

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

SELL PUT  AUG 75    CUY TO     125   0.60  74.40   3.0%   0.8% TS
SELL PUT  AUG 80    CUY TP      49   1.90  78.10   7.7%   2.4%


**************
CYMI - Cymer  $40.27  *** Chip-Equipment Leader! ***

Cymer (NASADQ:CYMI) is a supplier of excimer light sources, the
essential light source for deep ultraviolet photolithography
systems. DUV lithography is a key technology that has allowed
the semiconductor industry to meet the exact specifications and
manufacturing requirements for volume production of advanced
semiconductor chips. The firm's light sources are incorporated
into step-and-repeat (steppers) and step-and-scan (scanners)
photolithography systems for use in the manufacture of various
semiconductors with critical feature sizes below 0.35 microns.
Cymer's products consist of photolithography light sources,
replacement parts and service. The firm maintains a worldwide
service organization that supports its installed base of light
sources.

CYMI - Cymer  $40.27

PLAY (sell naked put):

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

SELL PUT  AUG 35    CQG TG   1,132   0.45  34.55   5.3%   1.3% *
SELL PUT  AUG 40    CQG TH     264   1.80  38.20  13.5%   4.7%


**************
ICOS - ICOS Corporation  $40.24  *** Consolidation Complete? ***

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

ICOS - ICOS Corporation  $40.24

PLAY (sell naked put):

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

SELL PUT  AUG 35    IIQ TG     685   0.45  34.55   5.3%   1.3% *
SELL PUT  AUG 40    IIQ TH   1,472   1.85  38.15  13.8%   4.8%


**************
MEDI - MedImmune  $40.01  *** New 2003 High! ***

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  $40.01

PLAY (sell naked put):

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

SELL PUT  AUG 35    MEQ TG   1,144   0.25  34.75   3.0%   0.7% TS
SELL PUT  AUG 37.5  MEQ TU   1,159   0.70  36.80   6.5%   1.9% *
SELL PUT  AUG 40    MEQ TH     182   1.55  38.45  11.7%   4.0%


**************
MOGN - MGI Pharma  $26.70  *** Up-Trend Intact! ***

MGI Pharma (NASDAQ:MOGN) is an oncology-focused pharmaceutical firm
that buys, develops and commercializes proprietary pharmaceutical
products that meet patient needs.  MGI's current product candidates
are at various stages of development with an emphasis on advanced
stages of development, and are intended to have diverse roles in
treating cancer patients.  Of the company's product candidates, two
are in Phase III, one in Phase II and two in preclinical development
programs.  Of these programs, one is with a supportive care product
candidate, two are with cytotoxic product candidates, and two are
with cytostatic product candidates.

MOGN - MGI Pharma  $26.70

PLAY (sell naked put):

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

SELL PUT  AUG 22.5  QOG TX     615   0.75  21.75  13.7%   3.4% *
SELL PUT  AUG 25    QOG TE     245   1.50  23.50  18.9%   6.4%


**************
MNST - Monster Worldwide  $23.07  *** New 52-Week High! ***

Monster Worldwide (NASDAQ:MNST), formerly known as TMP Worldwide,
is a global provider of career solutions.  The company, through
its flagship Interactive product, Monster (www.monster.com), is
engaged in online career management.  Monster Worldwide is also a
worldwide recruitment advertising agency through its Advertising
and Communications division and a yellow pages advertising agency
through its Directional Marketing division.  On March 31, 2003,
the company completed the distribution of the common stock of
Hudson Highland Group, previously reported as the eResourcing and
Executive Search divisions of Monster Worldwide.

MNST - Monster Worldwide  $23.07

PLAY (sell naked put):

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

SELL PUT  AUG 20    BSQ TD     83    0.35  19.65   7.1%   1.8% *
SELL PUT  AUG 22.5  BSQ TX     30    1.10  21.40  14.9%   5.1%


**************
OSIP - OSI Pharmaceuticals  $32.67  *** Entry Point? ***

OSI Pharmaceuticals (NASDAQ:OSIP) is a biotechnology firm focused
on the discovery, development and commercialization of oncology
products that both extend life and improve the quality of life
for cancer patients worldwide.  The company has established a
balanced pipeline of oncology drug candidates that includes both
next-generation cytotoxic chemotherapy agents and novel mechanism
based, gene-targeted therapies.  The company's most advanced drug
candidate, Tarceva (erlotinib HC1), is a small-molecule inhibitor
of the epidermal growth factor receptor (HER1/EGFR).  The protein
product of the HER1/EGFR gene is a receptor tyrosine kinase that
is over-expressed or mutated in many major solid tumors.

OSIP - OSI Pharmaceuticals  $32.67

PLAY (sell naked put):

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

SELL PUT  AUG 25    GHU TE     638   0.40  24.60   7.6%   1.6% *
SELL PUT  AUG 30    GHU TF     909   1.40  28.60  15.7%   4.9%


**************
UNTD - United Online  $29.16  *** Internet Sector Rally! ***

United Online (NASDAQ:UNTD) is an Internet service provider
offering consumers free and value-priced Internet access and
e-mail.  Its Internet access services are offered through its
NetZero and Juno subsidiaries under their brands, and are
available in more than 5,000 cities across the United States
and Canada.  In addition, the company offers marketers numerous
online advertising products, as well as online market research
and measurement services.  As of June 30, 2002, the company had
approximately 1.7 million subscribers to its pay Internet access
services and approximately 4.8 million active users, including
pay users.  Active users include all pay users and those free
users that have logged onto its services during the preceding
31-day period.

UNTD - United Online  $29.16

PLAY (sell naked put):

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

SELL PUT  AUG 25    QAB TE     194   0.60  24.40   9.8%   2.5% *
SELL PUT  AUG 30    QAB TF      66   2.30  27.70  20.5%   8.3%


**************
UTSI - UTStarcom  $43.14  *** China Internet/Telecom Boom! ***

UTStarcom (NASDAQ:UTSI) is a global provider of wireless and
wireline access and Internet protocol switching solutions.  The
company designs, manufactures, sells and installs an integrated
suite of future-ready access network and next-generation switching
solutions.  It enables wireless and wireline operators in growth
markets worldwide to offer voice, data and Internet access services
rapidly and effectively by utilizing their existing infrastructure.
UTStarcom's products provide a seamless migration from wireline to
wireless, from narrowband to broadband and from circuit to packet
based networks by employing next-generation network technology.

UTSI - UTStarcom  $43.14

PLAY (sell naked put):

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

SELL PUT  AUG 35    UON TG   1,831   0.35  34.65   4.9%   1.0% *
SELL PUT  AUG 40    UON TH     915   1.35  38.65  11.5%   3.5%


**************
ZRAN - Zoran  $23.88  *** Earnings Speculation! ***

Zoran Corporation (NASDAQ:ZRAN) develops and markets integrated
circuits, integrated circuit cores and embedded software used by
original equipment manufacturers (OEMs) of digital video and
audio products for commercial and consumer markets.  The firm's
multimedia product line consists of four major product families:
DVD, comprised of video and audio decompression products based on
MPEG, Dolby Digital and DTS; filmless digital cameras, comprised
of video compression/decompression products; PC Video, comprised
of video compression/decompression products for JPEG technology
and universal serial bus multimedia controllers, and Digital Audio,
comprised of audio decompression products.  Quarterly earnings are
due on 7/24/03.

ZRAN - Zoran  $23.88

PLAY (sell naked put):

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

SELL PUT  AUG 20    ZUO TD     112   0.40  19.60   8.7%   2.0% *
SELL PUT  AUG 22.5  ZUO TX     309   1.00  21.50  14.4%   4.7%


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

BULLISH PLAYS - CREDIT SPREADS

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

***************
EBAY - eBay Inc.  $114.14  *** 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 other
miscellaneous items.  The eBay trading platform is an 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.  Through
its wholly owned and partially owned subsidiaries and affiliates,
the Company operated online trading platforms directed towards
the United States, Australia, Austria, Belgium, Canada, France,
Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Singapore, South Korea, Spain, Sweden, Switzerland and also the
United Kingdom.

EBAY - eBay Inc.  $114.14

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-100  QXB-TT  OI=7004  ASK=$0.60
SELL PUT  AUG-105  QXB-TA  OI=5233  BID=$1.15
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$104.40


**************
EXPE - Expedia  $77.18  *** Internet Travel-Sales Leader! ***

Expedia (NASDAQ:EXPE) is a provider of travel-planning services.
The company's travel marketplace includes direct-to-consumer
Websites offering travel-planning services located at Expedia.com,
Expedia.co.uk, Expedia.de, Expedia.ca, Expedia.nl and Expedia.it.
Expedia also provides travel-planning services through Voyages
sncf.com, as part of a joint venture with the state-owned railway
group in France.  In addition, the company offers travel-planning
services through its telephone call centers and through private
label travel Websites through its WWTE business.  WWTE is now a
division of Travelscape, one of Expedia's primary subsidiaries.

EXPE - Expedia  $77.18

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-65.00  UED-TM  OI=1193  ASK=$0.45
SELL PUT  AUG-70.00  UED-TN  OI=787   BID=$0.95
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$69.45


**************
GENZ - Genzyme General  $50.71  *** New 16-Month High! ***

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  $50.71

PLAY (less conservative - bullish/credit spread):

BUY  PUT  AUG-45.00  GZQ-TI  OI=912  ASK=$0.45
SELL PUT  AUG-47.50  GZQ-TS  OI=626  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$47.20


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

BEARISH PLAYS - NAKED CALLS

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

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

***************
BRCM - Broadcom  $23.53  *** Disappointing Earnings! ***

Broadcom (NASDAQ:BRCM) is a provider of highly integrated silicon
solutions that enable broadband communications and networking of
voice, video and data services.  Broadcom designs, develops and
supplies complete system-on-a-chip solutions and related hardware
and software applications for every major broadband communications
market.  Broadcom's diverse product portfolio includes solutions
for digital cable set-top boxes and cable modems; high-speed local,
metropolitan and wide area and optical networks; home networking;
Voice over Internet Protocol; carrier access; residential broadband
gateways; direct satellite and terrestrial digital broadcast; DSL;
wireless communications; SystemI/OTM server solutions, and for
broadband network processors.

BRCM - Broadcom  $23.53

PLAY (sell naked call):

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

SELL CALL  AUG 27.5  RCQ HY   15,631  0.30  27.80   6.9%   1.1% *
SELL CALL  AUG 25    RCQ HE   14,196  0.80  25.80  12.1%   3.1%


**************
QCOM - Qualcomm  $36.25  *** Wireless Sector Slump! ***

Qualcomm (NASDAQ:QCOM) is a developer and supplier of code division
multiple access (CDMA)-based integrated circuits and system software
for wireless voice and data communications and global positioning
system (GPS) products.  Qualcomm offers complete system solutions,
including software and integrated circuits for wireless handsets and
infrastructure equipment.  This complete system solution approach
provides customers with advanced wireless technology and enhanced
component integration and interoperability, as well as reduced time
to market.

QCOM - Qualcomm  $36.25

PLAY (sell naked call):

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

SELL CALL  AUG 40    AAW HH   15,255  0.40  40.40   4.7%   1.0% *
SELL CALL  AUG 37.5  AAW HU   10,042  1.05  38.55   9.7%   2.7%


**************
QLGC - QLogic  $45.68  *** Profit-Taking Underway! ***

QLogic Corporation (NASDAQ:QLGC) designs and supplies storage
network infrastructure components and software for server and
storage subsystem manufacturers.  The company's products are
based on SCSI, iSCSI, Fibre Channel and Infiniband standards.
The company is the only end-to-end supplier of Fibre Channel
network infrastructure components that aid in the transfer and
acquisition of data within the SAN.  Their products include its
SANblade HBAs, SANbox Fibre Channel Switches and SANsurfer Tool
Kit management software.  QLogic is the only HBA vendor that
supports SCSI, Internet Protocol, Virtual Interface and FICON
protocols with the same Fibre Channel HBA.  In addition, the
company designs and supplies controller chips used in a variety
of hard drives and tape drives as well as enclosure management
and baseboard management chip solutions that monitor the health
of the physical environment within a server or storage enclosure.

QLGC - QLogic  $45.68

PLAY (sell naked call):

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

SELL CALL  AUG 50    QLC HJ    4,597  0.70  50.70   6.3%   1.4% *
SELL CALL  AUG 47.5  QLC HW    1,975  1.40  48.90  10.4%   2.9%
SELL CALL  AUG 45    QLC HI    1,836  2.50  47.50  15.4%   5.3%


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

BEARISH PLAYS - CREDIT SPREADS

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

**************
CTX - Centex  $74.29  *** Premium-Selling Only! ***

Centex Corporation (NYSE:CTX) is a multi-industry company with
operates in six principal business segments.  Conventional Homes
operations involve the construction and sale of single-family
homes, town homes and low-rise condominiums, and the purchase and
development of land.  Investment Real Estate operations involve
the acquisition, development and sale of land, and the development
of industrial, office, retail and mixed-use projects.  Financial
Services operations involve the financing of homes, home equity
and sub-prime lending, and the marketing of insurance coverage.
Construction Products involves cement production and distribution,
and the production, distribution and sale of gypsum wallboard,
concrete, aggregates and recycled paperboard.  Contracting and
Construction Services involves the construction of buildings.
Centex HomeTeam Services is involved in pest and termite control,
lawn and landscape care, electronic security, alarm monitoring
and homewiring services.

CTX - Centex Corporation  $74.29

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-85.00  CTX-HQ  OI=224  ASK=$0.30
SELL CALL  AUG-80.00  CTX-HP  OI=684  BID=$0.80
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$80.55


**************
IGEN - IGEN International  $37.78  *** Roche/IGEN Merger? ***

IGEN International develops and markets products that incorporate
its proprietary electrochemiluminescence (ORIGEN) technology,
which permits the detection and measurement of various biological
substances.  ORIGEN provides a combination of speed, sensitivity,
flexibility and throughput in a single technology platform.  The
product is incorporated into instrument systems and other related
consumable reagents, and IGEN also offers assay development and
services used to perform analytical testing.  Products based on
ORIGEN technology address the Life Sciences, Clinical Testing and
Industrial Testing worldwide markets.

IGEN - IGEN International  $37.78

PLAY (speculative - bearish/credit spread):

BUY  CALL  AUG-47.50  GQ-HW  OI=361   ASK=$0.70
SELL CALL  AUG-45.00  GQ-HI  OI=2203  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.35-$0.40
POTENTIAL PROFIT(max)=16% B/E=$45.35


**************
OEX - S&P 100 Index  $497.54  *** For Market "Bears" Only! ***

Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the
share price times the number of shares outstanding.  Traders who
participate in OTM credit-spreads often utilize S&P 100 options
because they generally contain robust premiums and also provide
an underlying instrument less prone to "gapping" moves.  Review
the OIN's Market Sentiment section for more specific technical
information on the current trends in equities.

OEX - S&P 100 Index  $497.54

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-520.00  OEB-HD  OI=5916  ASK=$1.60
SELL CALL  AUG-515.00  OEB-HC  OI=2561  BID=$2.25
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$515.65


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

SEE DISCLAIMER - SECTION 1

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


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

A Full Watch List for Wednesday

Applied Materials - AMAT - close: 19.30 change: +0.53

WHAT TO WATCH: The largest chip equipment maker in the world is
now making something else - new relative highs.  Lehman Brothers
upgraded their view of the chip equipment stocks just a couple of
days ago and we're seeing an effect in AMAT.  Furthermore, the
recent rally, which has rebounded off the $18 level, shouldn't
have much overhead resistance between here and $24.00 save for
the psychological level of $20.00.  Earnings are in mid-August.

Chart=


---

Maxim Integrated - MXIM - close: 37.57 change: +1.04

WHAT TO WATCH: Just as we're seeing a rebound in the SOX off its
50-dma there is a similar bounce in MXIM off its 200-dma.
Traders might want to keep this one on their radar screen.  There
is plenty of congestion between $39 and $41 but aggressive bulls
might speculate on a move towards the $45 level.  Earnings are in
mid-August.

Chart=


---

Cooper Industries - CBE - close: 42.89 change: +0.77

WHAT TO WATCH: December 2002 through most of May of this year
shares of CBE consolidated sideways between $34 and $39.  Now the
stock is two months into a steady rising channel.  It appears to
have new support at $41 and the next overhead resistance, as seen
on the weekly chart, looks like $45.00.  Keep an eye for movement
tomorrow as the company is expected to announce earnings on
Thursday (July 24th).

Chart=


---

Anglogold Ltd - AU - close: 33.74 change: +1.66

WHAT TO WATCH: Gold futures rallied more than $9 today, closing
at $360.00 an ounce.  This sent the XAU gold & silver index
soaring more than five percent.  Also rising strongly were shares
of AU, which were rebounding from a retest of support at $31.00.
The $33.50 level has been overhead resistance for weeks so this
looks like a fresh breakout.  However, bulls might want to look
for a little confirmation before opening any new plays.

Chart=


---

Eaton Corp - ETN - close: 85.90 change: +3.10

WHAT TO WATCH: Shares of ETN took advantage of the positive day
in the markets to power a breakout above resistance at $85.00.
Volume was pretty strong on the move clocking in at 1.3 million
shares and lending credence to the bullish buy signal.  However,
a glance at the weekly chart shows that ETN has struggled with
resistance in the $86-87 level for years.  If you're going to
consider bullish plays on this one also strong consider a tight
stop loss.

Chart=



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

PNR $40.98 - Earnings were the 17th and there was little reaction
to the news.  Bulls might like the bounce today off the 50-dma.
The rising channel is rather slow so consider that when
considering an option.

NSCN $26.00 - The rebound off the $24.00 level was a great retest
of old resistance.  Earnings were today and the company beat by
two cents.  We could see some follow through tomorrow.

TSCO $55.65 - This retailer has been unstoppable this week.
Shares added another 5.74% today and marking a new all-time high.
A pull back and bounce near $52 or $53 might be a decent entry
point.

IART $27.20 - Shares are rebounding from a recent consolidation
after reaching the $30.00 level a few weeks ago.  With earnings
on July 31st we could see a ramp up back to $30.00 (and beyond if
the earnings news is good).

CCU $39.49 - The rollover in CCU is picking up steam.  Shares
just broke down through its 50-dma a few days ago and they are
approaching its 200-dma.

TEVA $53.05 - This drug company's stock price is undergoing
profit taking after its incredible rally from the March lows.
The breakdown under $54 looks bad as does the close under the 50-
dma.  Could a retest of the $48.50-50.00 area be far behind?


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

Better-than-Expected Earnings Just aren't Enough Anymore!

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_072303.asp


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