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Daily Newsletter, Wednesday, 08/13/2003

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The Option Investor Newsletter                   Wednesday 08-13-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Perspective
Futures Wrap: At the brink
Index Trader Wrap: See Note
Weekly Fund Family Profile: Cooke & Bieler (C&B) Funds


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     08-13-2003         High     Low     Volume Advance/Decline
DJIA     9271.76 – 38.30  9322.11  9233.94 1.48 bln    608/ 849
NASDAQ   1686.61 –  0.40  1695.83  1681.31 1.44 bln    738/ 677
S&P 100   495.29 -  4.45   500.95   493.55   Totals   1346/1526
S&P 500   984.03 -  6.32   992.50   980.85
RUS 2000  467.47 +  0.52   468.37   466.01
DJ TRANS 2598.88 -  8.59  2610.04  2592.52
VIX        20.62 +  0.41    21.69    20.17
VXN        30.27 +  0.06    31.24    29.79
Total Volume 3,144M
Total UpVol  1,490M
Total DnVol  1,598M
52wk Highs     367
52wk Lows       59
TRIN          0.12
PUT/CALL      0.78
*******************************************************************

Perspective
Jonathan Levinson


The indices flirted with significant upside and downside levels today,
finishing the day nearly unchanged, with the Nasdaq losing less than
one point and the Dow 38 points.


5 year weekly COMPX




Cyclically, the Dow and Nasdaq both appear to have just completed
up-phases from the March lows.  Note that on both indices, the
March bottom was a higher low on the 10 week stochastic, and the
top of the ensuing up-phase occurred at a higher high.  While
lower prices appear to be in the cards, the onus will be on the
bears for the down-phase just commencing.


5 year weekly INDU





6 month daily COMPX




The daily candles paint a picture of bifurcated markets with the
Dow vastly outperforming the Nasdaq on the correction off the
March rally's high.  The Dow is on buy signals, with the Nasdaq
on sells.

6 month daily INDU





20 day 30 minute COMPX




On the 30 minute candles, we see both indices in the early stages
of downphases within bear flag formations, projecting to lower
lows.

20 day 30 minute INDU




What does the foregoing tell us?  The bulk of the long-term
(weekly timeframe) energy of the Spring rally has been expended,
and the cycles are beginning a down-phase.  Countertrend to that
are the daily candles, which have paused in their ongoing
downphases.  The short term up-phase which caused that pause has
terminated on the 30 minute candles, with the oscillators in that
timeframe topped out and pointing south.

While the outlook appears weighted to the downside, note that
significant bounces can occur within downphases without
disturbing their course, such as we see on the daily candles.
For me, the best trades occur when the short cycles max-out
countertrend to their longer cycles before resuming their runs in
gear with the longer trend.

On the economic front, the Mortgage Bankers Association (MBA)
announced this morning that seasonally-adjusted demand for
mortgage refinancings, the MBA refi index, declined 16.1% for the
past week following the previous week's 2.4% drop.  Demand for
loans with which to buy homes, the Purchase index, fell 10%.  The
Application index fell 10.3% for the week.  The average interest
rate for a 30-year fixed rate mortgage fell to 6% from 6.37%.
The drop in mortgage and refi activity for the week is indicating
either the beginning of the end of the mortgage and credit
bubble, a very significant development, or merely a lag between
rates and mortgage/refi demand.  While it's entirely possible
that demand has been satisfied at and near current rates, I find
the latter case the more likely scenario, and we'll see next
Wednesday whether demand perks up for this current week.

The Philadelphia Housing Index (HGX) was lower today, while
treasuries got sold aggressively throughout the session sending
yields sharply higher, the thirty year yield (TYX) finishing
higher by 15.3 basis points at 5.441%.

One year daily chart of the HGX




The HGX sold off, dropping 5.44 to 286.14.  It seems obvious that
higher rates should slam the brakes on the homebuilders, but
strong yield rally (see TYX below) has yet to have any serious
impact on the index.  Nevertheless, today saw the TYX add 15.5
basis points to the HGX' 5.44 point loss.  If yields post new
year highs, one might expect to see a downward trend in the HGX
assert itself.

One year daily chart of the TYX





Equity futures took a jump at 8:30 when The Commerce Department
reported that U.S. retail sales increased by 1.4% in July,
exceeding estimates of 0.8%, led by purchases of gasoline, autos,
electronics and household goods. The June figure was revised up
to 0.9% from the 0.5% previously reported. Auto sales were up
3.2% in July. Excluding autos, retail sales were up 0.8% compared
with estimates for a 0.5% increase.  Retail sales were higher by
5.6% from July 2002, and this month's figures represent the
largest increase since March of this year.  It was reported that
sporting goods stores and non-store retailers were the only
retail categories to see a decline in sales for July.  The
financial press reported that this data is evidence of the sharp
economic recovery that some are seeing.  This may well be the
case, but I find the water excessively muddied by the recent sharp
moves in interest rates, the ongoing new highs in consumer
credit, and the aggressive inflation of money supply by the Fed.
The combination of increased sales with the recent declines in
initial claims paints a potentially bullish picture for the
economy, but ongoing price inflation, continuing unemployment
claims and duration of that unemployment remain worrisome.

On that point, President G.W. Bush, following a meeting with his
top economic advisors, told reporters that in his opinion, the
current round of tax cuts and incentives should be sufficiently
robust to create jobs, and that his administration is upbeat on
the employment outlook.  In a separate statement, U.S. Treasury
Secretary John Snow said that, "When an economy is recovering, it
is normal to see interest rates rise some. So I would point to
the rising interest rates as an indication that the economy is
coming back."

While Mr. Snow is not the only observer to share that opinion, I
do not.  Unless a significant uptick in employment and domestic
corporate spending occurs (ie spending at home, and not foreign
direct investment), the rise in yields looks purely negative to
me, particularly in light of the alltime record levels of
personal indebtedness and bankruptcies already occurring in this
year's "as good as it gets" credit environment.  The increase in
yields will only exacerbate these problems, putting additional
pressure on the straining consumer, as well as corporate and
government borrowers.  As a purely technical aside, a better than
130 basis point jump in yields within a 2 month period looks like
more than interest rates merely "rising some", as Secretary Snow
puts it, but the matter is open to interpretation.

The Labor Department reported that the price of imported goods
rose 0.5% in July following a rise of 0.7% in June, exceeding
estimates of a 0.3% increase.  Prices for exported goods fell
0.1%. Prices rose in nearly all major sectors, with petroleum
import prices rising 3.7% in the month while non-fuel import
prices rose 0.1%.

The Energy Department reported a 200,000 barrel increase in crude
oil supplies for the week ended August 8, while the American
Petroleum Institute reported a 3.2 million barrel increase to
281.3 million barrels. Gasoline supplies fell 1.85 million
barrels to 200 million barrels and distillate inventories lost
836,000 barrels to 117 million barrels according to the API.
Unsurprisingly, analysts were caught flatfooted again, expecting
a drop in crude oil supplies for the week.  Crude oil futures led
the Commodities Index to the downside, dropping 1.14 or 3.57% to
$30.78 per barrel. Notwithstanding today's drop, crude remains
above the widely-regarded 30 per barrel level and continues to
pressure the economy.

We have the following economic data due tomorrow:

               Report                   Briefing  Market    Prior
                                        Expects   Expects
Aug 14 8:30 AM Core PPI Jul -             0.1%     0.1%     -0.1%
Aug 14 8:30 AM Initial Claims 08/09 -     385K     393K      390K
Aug 14 8:30 AM PPI Jul -                  0.1%     0.1%      0.5%
Aug 14 8:30 AM Trade Balance Jun -      -$42.0B  -$42.0B  -$41.8B
Aug 14 2:00 PM FOMC Minutes

With bonds selling off aggressively today and gold rallying, the
markets should be particularly sensitive to the 8:30 news.  The
initial claims data is expected to be low, and any upside
surprise could be the straw that breaks the camel's back on the
bear flags we've been watching.  Nevertheless, it is options
expiration week, and price has a habit of misbehaving during this
period.  We'll trade what the markets give us and exercise
caution in either direction.


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

At the brink
Jonathan Levinson

The markets traded at the brink of breakouts and breakdowns
today, with equities finishing the day slightly within negative
territory, while treasuries and crude oil saw more serious
selloffs.  Gold finished higher.


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






10 minute chart of the US Dollar Index




The US Dollar Index was sold off throughout the session,
finding support at the 96 level at noon, from which it began a
weak bounce.  Gold and silver had been weak overnight but
jumped strongly on the dollar decline, with silver leading the
CRB higher, adding 3.46% to close at 5.03.


Daily chart of December gold




December gold printed a bullish engulfing candle, adding 4 to
364 and building on the buy signals that have been tentatively
printing for the past week.  The descending upper trendline on
the pennant commencing in February looms overhead at 368, and
365.40 held back the advance today.  HUI was higher by 3.07 to
180.53, reversing its morning losses, and XAU added 1.16 to
close at 87.37.


Daily chart of the ten year note yield




Treasury yields gapped higher and the ten year yield traded for
the entire session above the trendline, completing a whipsaw
commenced last week.  The TNX closed higher by 20.3 basis
points at 4.56%.  Note that everyone who bought the record 60B
treasury auction last week is now significantly under water.  I
do not share Secretary Snow's view that this rise in yield is
either healthy for or indicative of a healthy economy, as
discussed more fully in the Market Wrap.  On the ten year yield
chart, the sell signals are aborting very early in their
downphases, and given today's breakaway gap above the
trendline, the outlook for treasuries looks quite bearish.
Note, however, that the rally high in the ten year yield
remains untested so far, though the 4.6% level looms a mere 4
basis points away.


Daily NQ candles




The NQ closed lower by one point on the day, clearing the 22
day EMA and again finding support above the 50 day EMA.  The
flat close left the oscillators unchanged in their ambious
state, still within downphases but on the cusp of reversing to
buys.

30 minute 20 day chart of the NQ




The lower ascending trendline on our steep bear flag held
today, despite a near-breakdown from the ES near the end of the
day.  If not for a strong showing in the last 20 minutes from
the MOC orders, today's outcome might have been very different.
The oscillators on the 30 minute chart are on sell signals, and
given the listless bounces from the lower trendline within this
bear flag, I am not seeing much hope for an upside breakout on
the daily bull flag in the chart above.

Daily ES candles




ES was the weaker index today, failing at its upper descending
trendline and printing a pattern of lower highs throughout the
day.  Nevertheless, the tentative buy signals on the daily
oscillators remain, and the MOC rally at the end of the cash
session left the outlook entirely ambiguous, as appears more
fully from the 30 minute chart below.

20 day 30 minute chart of the ES




The afternoon break below 984 was on solid volume and felt
impulsive.  Lined up with the oscillators pointed south, it
felt like a bear flag breakout.  979.75 held as support,
however, and after a moment of indecision, a nearly-vertical
rally brought the ES back above the lower trendline, closing at
984.75.	Whether the end-of-session buying was a mere tape-
painting job or whether it signals another leg up is anybody's
guess- if you don't believe me, compare the stochastic with the
Macd on the 30 minute candles, with the "earlier" oscillator on
an early buy signal and the lagging Macd still on a sell.  I
would be inclined to be patient and wait for the trendline to
get broken before shorting at current levels.


Daily YM candles




YM traded both sides of the ascending trendline on the daily
candles, closing right on it.  Despite its 21 point loss on the
session, the buy signals on the daily did not reverse, but nor
did they gain any headway.  Near term direction for the YM
remains up for grabs at current levels.


20 day 30 minute chart of the YM




Like the ES, the YM broke below the trendline on its bear flag
but closed above it at 9267.  My analysis for the YM is the
same as for the ES, but note that the buy signal on the
stochastic has barely printed.  My bias is bearish, but it's
more of a bias than an objective conclusion at this point, and
I will try to exercise patience.

We have a number of economic reports due tomorrow morning, and
I expect them to give us our cue before the cash open.  The
failure at the morning highs erased the bearish fears/bullish
hopes of a retest of the rally highs, and so while prices did
not change dramatically today, the victory must go to the
bears.  Tomorrow will be an important day for equities, and
moreso for treasuries and gold, both of which are kissing
distance from major trendlines.  See you at the bell!


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http://members.OptionInvestor.com/itrader/marketwrap/iw_081303_1.asp


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

Cooke & Bieler (C&B) Funds

Long-term investors looking for a high quality, low risk approach
to equity investing will like what they see at Cooke & Bieler, an
investment firm based in Philadelphia that has been building (and
preserving) capital for more than half a century.  In 1949, Louis
Bieler, a former Philadelphia banker with considerable investment
experience, founded an investment firm to focus on the management
of accounts for wealthy individuals.  Two years later, Bieler was
joined by Jay Cooke, a prominent Philadelphian, forming Cooke and
Bieler.

The story goes that the two investment entrepreneurs proved to be
a successful combination.  By the time that Jay Cooke passed away
in 1963, the firm had its first pension fund account and over 100
million dollars in assets under management.  The firm grew during
the 60s and 70s, adding new professionals to serve a growing list
of institutional clients.  When Louis Bieler retired in 1973, six
partners bought the firm.  At that time, the firm's total managed
assets were approximately $350 million, over half of which was in
institutional accounts.

The firm's assets under management reached $2 billion by 1986 and
that year, Cooke & Bieler (C&B) became a subsidiary of the United
Asset Management Group (UAM).  By 1999, the firm's assets managed
were over $5.5 billion.  Then in 2001, eight partners completed a
successful buy-back of the firm from UAM/Old Mutual (successor to
UAM).  Cooke & Bieler (C&B) has been independently owned/operated
since 2001.

According to Cooke & Bieler's website at www.cookebieler.com, the
company's investment team has an "average industry experience" of
16 years, referring to them as seasoned decision makers who share
the firm's investment philosophy.  The firm's investment team is
also distinguished by its stability and continuity.  The average
tenure of the C&B investment team is 13 years, with a systematic
hiring process in place to ensure continuity and the firm's long-
term success.  The firm's website provides bio's for each of the
firm's key professionals.

Mutual Fund Overview

The Cooke & Bieler (C&B) mutual funds were first offered in 1990
with the launch of the C&B Equity Fund (CBEQX), now known as C&B
Large-Cap Value Fund.  The fund seeks long-term total return with
minimal risk to principal by investing primarily in common stocks
of companies with solid financial positions and strong management
capabilities.  It focuses on stocks of companies with consistency
and predictability in earnings and growth, and whose common stock
is "undervalued" at the time of investment.

In 1997, a tax-managed equity fund was launched, known as the C&B
Tax-Managed Value Portfolio (CBTAX).  It seeks maximum long-term
and "after-tax" total return, consistent with minimizing risk to
principal.  Morningstar classifies both CBEQX and CBTAX as large-
cap value funds; Lipper reflects them as "multi-cap" value funds
in their system.  So, they are large-cap bias overall, but invest
across all market capitalization ranges.

The firm's third mutual fund, C&B Mid-Cap Value Fund (CBMDX), got
its start in 1998.  It has a similar investment philosophy as its
two equity siblings, seeking long-term growth by investing mainly
in common stock of companies that have consistency/predictability
in their earning growth.  Both Morningstar and Lipper classify it
as a mid-cap value fund.

Although these are really institutional mutual funds as their "I"
designation indicates, the C&B mutual funds are available through
leading brokerage networks.  The Cooke & Bieler funds are offered
on a no-load, no-transaction fee basis through Schwab's OneSource
program, Fidelity's Funds Network, and TD Waterhouse's Retail NTF
network, to name a few of the bigger NTF programs.  The funds are
designed to be affordable and have minimum initial investments of
$2,500 ($2,000 for IRAs).  Expense ratios are reasonable, ranging
from 1.25% to 1.40% of assets per annum.

Each of the C&B fund portfolios are team managed.  All portfolios
seek to achieve a superior rate of return over the long run, with
minimal risk.  Each strategy is implemented primarily by internal
research, involving investing in high quality, low risk companies
with strong financial positions and management capabilities.  The
Investment Philosophy section of the firm's website details their
approach to equity investing.  Typically, portfolio holdings will
consist of undervalued or reasonably priced stocks with desirable
characteristics: above average yields, above average earnings,
above average dividend growth potential, and below average risk.

According to Morningstar's latest reports, the average P/E ratios
of the C&B funds range from 20.6x to 23.2x, below the 24.5x ratio
for the S&P 500 index.  Those values would suggest that the funds
are not deep-discount oriented.  Further, the annual turnover for
each portfolio is 44% or less, so it's possible that a fund could
temporarily drift up into the "core" style box from time to time,
but that doesn't mean the funds stray from their value investment
discipline.  They invest in companies when the value of the stock
is underpriced in the market and then hold them for a while until
they reach their fair market value (or no longer show the desired
characteristics).

C&B Large-Cap Value Fund and C&B Tax-Managed Large-Cap Value Fund
have average market capitalizations of roughly $12 billion.  That
is large enough to put the funds in Morningstar's large-cap style
box, but Lipper's "multi-cap" designation is a better description
of these two funds' styles in our opinion.  The C&B Mid-Cap Value
Fund recently sported an average market cap of roughly $2 billion
(i.e. mid-cap).  The large-cap portfolios invest primarily in the
large-cap and mid-cap ranges, while the mid-cap portfolio invests
primarily in the mid-cap and small-cap ranges.

In the next section, we see how the C&B funds have performed over
time relative to similar funds.

Mutual Fund Performance

C&B Equity Fund (CBEQX), now called C&B Large-Cap Value Fund, has
the longest history so we start there.  The flagship fund product
over the trailing 10-year period (through July 31, 2003) produced
an annualized total return of 12.3 percent for investors, beating
the S&P 500 index benchmark by an average of 2.0% a year.  It was
also good enough to rank the fund in the top quartile of the mid-
cap value category where Morningstar puts the fund for comparison
purposes (based on its average investment style of the past three
years).

Over the same trailing 10-year period, the average domestic stock
fund produced an average annual total return of 8.6 percent.  So,
over the long run, the firm has succeeded in producing a superior
rate of return for investors when compared to broad peer group of
U.S. stock funds.  Below is a summary of 10-year annualized total
returns through July 31, 2003 for the fund and various stock fund
categories, using Morningstar data.

  Average Annual Total Return (Jul-31-03):
  +12.3%  C&B Large-Cap Value (CBEQX)
  +10.3%  S&P 500 Large-Cap Index
  +8.6%  All U.S. Stock Funds Average
  +9.0%  Large-Cap Value Fund Average
  +10.8%  Mid-Cap Value Fund Average

As you can see, the C&B Large-Cap Value Fund has beaten its index
and fund-peer benchmarks by considerable margins over the past 10
years following a conservative equity style.  Though investing in
value stocks can cause it to trail other types of funds in rising
market environments, the C&B investment team excels at preserving
capital in market downswings.  Some investors feel it is not what
you make in up markets, but rather what you "don't lose" in stock
downturns that matters most.  C&B's style is best suited to long-
term investors who do not mind giving up some upside potential in
return for better downside protection over the long run.

Turning now to 5-year performance, below is an investment summary
through August 12, 2003 for the three Cooke & Bieler mutual funds
versus comparable benchmarks.

  5-Year Annualized Total Returns (Aug-12-03):
  +7.9% C&B Tax-Managed Large-Cap Value (CBTAX), 3rd percentile
  +7.9% C&B Large-Cap Value (CBEQX), 32nd percentile
  +15.1% C&B Mid-Cap Value (CBMDX), 5th percentile

Note that if C&B Large-Cap Value Fund was categorized as a large-
cap value fund by Morningstar (not as mid-cap value), it would be
ranked in the 3rd percentile of that category.  C&B's Tax-Managed
Large-Cap Value Fund, which also produced a 7.9% annualized total
return over the past five years, ranks in the top 3% of the large
value category.  So, we're talking really about top 5% returns in
the past five years.






On a year-to-date basis through August 12, the C&B funds continue
to be a source of strong investment results.  All three funds are
ahead of the S&P 500 index this year and all three funds continue
to rank highly within their respective category peer groups.  For
the YTD period, C&B Large-Cap Value Fund has returned 16.4%, C&B
Tax-Managed Large-Cap Value Fund has returned 12.7%, and C&B Mid-
Cap Value Fund is up 18.4%.  For comparison purposes, the S&P 500
index has gone up 12.5% since December 31, 2002.

The C&B funds are also continuing to perform well versus category
peers.  For the YTD period, the average large-cap value fund has
risen 12.6% while the average mid-cap value fund has increased by
14.5%.  So, with the market's ups and downs in 2003, C&B's equity
funds have remained competitive, maybe a little better than that.

Conclusion

A conservative equity approach, reasonable cost and expenses, and
low turnover characterize the Cooke & Bieler mutual funds.  Stock
funds are managed similarly to the way the firm has managed large
money for institutions and high net worth individuals for over 50
years.  Although the C&B funds lagged more aggressive fund styles
during the go-go growth years (1997-1999), they have come through
the market correction (2000-2002) in much better shape than other
fund types.

If you have a long-term investment horizon and seek a stock fund
that follows a high-quality low-risk path to capital growth, the
Cooke & Bieler funds are worth a closer look.  For further detail
or to download a prospectus, go to www.cookebieler.com.  You can
find more information on C&B as an investment firm there as well.

Steve Wagner
Editor, Mutual Investor
steve@mutualinvestor.com


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The Option Investor Newsletter                Wednesday 08-13-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: None
Dropped Calls: KSS
Dropped Puts: FITB, KLAC
Play of the Day: Call - PCAR
Spreads, Combinations & Premium-Selling Plays: Rally Fades Amid
Bond Market Woes!
Watch List: Bonds Get Slammed

Updated on the site tonight:
Market Posture: Traders Hit Snooze


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

None


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

Kohl's Corp. - KSS - close: 61.50 change: +0.01 stop: 59.75

Despite a mighty effort, the bulls just couldn't sustain the early
gains in KSS and while it was encouraging to see the stock still
hold onto positive territory (just barely) at the close, we're out
of time.  We've finally gotten the solid breakout we were looking
for, but it has been a bit disappointing that the stock couldn't
build on its breakout ahead of earnings.  KSS is set to report
earnings on Thursday after the closing bell, so we're closing it
out for a small gain tonight.  Use any bullish follow through in
the morning to exit at a more favorable price point.

Picked on July 31st at    $59.35
Change since picked:       +2.15
Earnings Date           08/14/03 (confirmed)
Average Daily Volume =  4.27 mln



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

Fifth Third Bancorp - FITB - cls: 55.00 chg: +0.61 stop: 55.01

While the Banking sectors were weak on Wednesday, sadly, the same
cannot be said about our FITB play, which continued its rebound
from the recent lows near $52.50.    Gapping higher at the open,
the stock pushed through our $55.01 stop on several occasions, but
in each case was unable to hold above $55.  But the strength of
the short-covering bounce at the close was too much for us, and
the close right at $55.00, a penny below our stop does not bode
well for the bears.  Rather than hope for a reversal tomorrow, the
prudent course is to cut it loose tonight just below our picked
price and let the chips fall where they may.  If still holding
open positions, look to exit on any early weakness tomorrow
morning.

Picked on July 17th at      $55.26
Change since picked:         -0.26
Earnings Date             07/15/03 (confirmed)
Average Daily Volume =    2.22 mln


---

KLA-Tencor - KLAC - close: 52.21 change: +2.61 stop: 50.05

So much for that breakdown in the Semiconductor sector!  The SOX
has come roaring back to life this week, breaking back inside its
broken ascending channel and looks to be threatening the $400
level again.  KLAC led that charge on Wednesday, vaulting higher
by more than 5% on huge volume.  In the process, the stock broke
above the 10-dma, the 20-dma and ended right back at strong
resistance near $52.50.  With our stop tripped in the first 30
minutes of trade, there is no question about dropping the play
tonight.  This is yet another reminder of the utility of live
stops.

Picked on August 10 at      $48.04
Change since picked:         +3.08
Earnings Date             07/24/03 (confirmed)
Average Daily Volume:     9.62 mln



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Note: Options involve risk. Risk disclosure:

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


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

PACCAR - PCAR - close: 79.73 change: +0.34 stop: 75.50*new*

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

Why we like it:
Our relative strength play in shares of truck and truck parts
manufacturer PCAR is working out well.  The stock appears to have
finished consolidating above old resistance of $75 and we're now
seeing a short series of higher lows.  PCAR is setting up for a
new breakout over current resistance of $80.00.  Momentum traders
might want to wait for the move over $80 before initiating new
positions.  Chart readers will also note that the 10-dma appears
to be offering some support.  It would be nice to see a little
more volume on the climb higher but given the late summer trading
sessions low volume is expected.  Stronger volume on any breakout
to the upside would certainly be confidence building for the
bulls.  We are going to raise our stop by $1.00 to $73.99.  More
conservative traders might want to consider upping their stop
towards the $76 mark, a level not seen for several sessions.

Why This is our Play of the Day
It may have been a mildly negative day in the broad market, but
somebody forgot to tell PCAR shareholders, as they once again bid
the stock to new all-time closing highs, just below $80.  The
stock has been methodically marching higher to the tune of higher
highs and higher lows for the past week, and it feels like a
breakout over the $80 level could be just around the corner.  Note
how the stock has consistently found support above the 10-dma over
the past couple weeks.  That indicates that intraday dips that
find support above this moving average are likely solid entry
points.  Momentum traders will want to wait for the elusive
breakout over $80.00 (today's intraday high) before playing.  Our
stop is moving up to $75.50 tonight, just below the 20-dma
($75.59).  Clearly a drop below that level would not be a good
sign and would indicate at least a temporary end to this bullish
run.

Suggested Options:
PCAR currently has August, September, November and January
options available.  We're going to list September and November
strikes with a preference for September 75s and 80s.

BUY CALL SEP 75 PAQ-IO OI=  66 at $5.40 SL=3.50
BUY CALL SEP 80 PAQ-IP OI= 159 at $3.30 SL=1.75
BUY CALL NOV 75 PAQ-KO OI= 354 at $8.40 SL=6.00
BUY CALL NOV 80 PAQ-KP OI=  76 at $5.30 SL=3.25

Annotated Chart of PCAR:



Picked on July 31 at     $77.24
Change since picked:      +2.49
Earnings Date          07/24/03 (confirmed)
Average Daily Volume:  1.16 mln



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Note: Options involve risk. Risk disclosure:

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


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

Rally Fades Amid Bond Market Woes!
By Ray Cummins

Concerns over the future direction of interest rates pushed the
major equity averages lower today, despite a surge in retail
sales and renewed strength in semiconductor shares.

The Dow Jones Industrial Average retreated 38 points to 9,271 as
losses in McDonald's (NYSE:MCD), Merck (NYSE:MRK), General Motors
(NYSE:GM) and SBC Communications (NYSE:SBC) kept the blue-chip
group in the red.  The NASDAQ Composite finished 3 points higher
at 1,690 after upbeat comments from Applied Materials (NASDAQ:AMAT)
spurred a buying spree in chip shares.  The Standard & Poor's 500
Index slid 6 points to 984 with gold issues among the few bullish
sectors.  Trading was active as 1.21 billion shares changed hands
on the New York Stock Exchange and about 1.45 billion were swapped
on the NASDAQ.  Decliners beat advancers 9 to 7 on the Big Board
while winners edged past losers by a slim margin on the technology
exchange.  Treasury issues moved lower, though shorter maturities
fared better relative to longer securities in response to the Fed's
pledge to keep monetary policy accommodative for the foreseeable
future.  The yield on the benchmark 10-year Treasury note rose to
4.57% as its price sank more than a full point.

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

SUMMARY OF CURRENT POSITIONS - AS OF 8/12/03

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

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  23.81   $0.70   8.47%   3.63%
ELBO     AUG    22    22.10  25.65   $0.40   4.23%   1.81%
IVGN     AUG    40    39.40  50.02   $0.60   3.97%   1.52%
JCOM     AUG    40    39.30  49.82   $0.70   5.19%   1.78%
NFLX     AUG    20    19.65  24.87   $0.35   4.91%   1.78%
POWI     AUG    22    22.20  28.91   $0.30   4.15%   1.35%
ELBO     AUG    22    22.20  25.65   $0.30   3.99%   1.35%
FWHT     AUG    17    17.00  19.70   $0.50   9.85%   2.94%
GENZ     AUG    42    41.85  46.65   $0.65   5.42%   1.55%
MATK     AUG    40    39.45  47.22   $0.55   4.50%   1.39%
MEDI     AUG    35    34.45  36.45   $0.55   4.76%   1.60%
MOGN     AUG    22    21.90  36.86   $0.60   9.51%   2.74%
NFLX     AUG    20    19.55  24.87   $0.45   8.23%   2.30%
OVTI     AUG    30    29.50  41.90   $0.50   6.01%   1.69%
POWI     AUG    22    22.15  28.91   $0.35   5.32%   1.58%
SNDK     AUG    40    39.45  50.28   $0.55   4.92%   1.39%
UTSI     AUG    30    29.50  40.24   $0.50   5.97%   1.69%
ACDO     AUG    22    21.50  23.50   $0.50   8.82%   2.33%
CECO     AUG    75    74.40  86.10   $0.60   3.01%   0.81%
CYMI     AUG    35    34.55  38.39   $0.45   5.27%   1.30%
MEDI     AUG    37    36.80  36.45  ($0.35)  0.00%   1.90%
MOGN     AUG    22    21.75  36.86   $0.75  13.72%   3.45%
MNST     AUG    20    19.65  24.03   $0.35   7.11%   1.78%
OSIP     AUG    25    24.60  32.90   $0.40   7.63%   1.63%
UNTD     AUG    25    24.40  32.40   $0.60   9.79%   2.46%
UTSI     AUG    35    34.65  40.24   $0.35   4.89%   1.01%
ZRAN     AUG    20    19.60  22.86   $0.40   8.71%   2.04%
CCMP     AUG    55    54.45  62.14   $0.55   5.54%   1.01%
CYMI     AUG    35    34.60  38.39   $0.40   6.58%   1.16%
IMCL     AUG    35    34.35  40.39   $0.65  12.05%   1.89%
IVGN     AUG    47    46.95  50.02   $0.55   6.16%   1.17%
MATK     AUG    45    44.50  47.22   $0.50   6.08%   1.12%
MNST     AUG    20    19.65  24.03   $0.35  10.64%   1.78%
MSTR     AUG    35    34.60  35.45   $0.40   7.54%   1.16%
OVTI     AUG    35    34.50  41.90   $0.50   8.91%   1.45%
SNDK     AUG    50    49.50  50.28   $0.50   5.78%   1.01%
UNTD     AUG    25    24.70  32.40   $0.30   7.94%   1.21%
ADI      AUG    35    34.75  36.48   $0.25   6.87%   0.72%
DIGE     AUG    30    29.75  31.38   $0.25   8.31%   0.84%
MRVL     AUG    32    32.25  35.98   $0.25   7.20%   0.78%
OSIP     AUG    25    24.60  32.90   $0.40  19.64%   1.63%
DRIV     SEP    17    17.15  21.41   $0.35   4.88%   2.04%
IMCL     SEP    30    28.85  40.39   $1.15   8.88%   3.99%
LLTC     SEP    32    31.75  36.56   $0.75   4.40%   2.36%
OVTI     SEP    30    29.15  41.90   $0.85   6.18%   2.92%
SINA     SEP    22    21.90  30.57   $0.60   5.80%   2.74%
ZRAN     SEP    20    19.60  22.86   $0.40   4.92%   2.04%

Conservative traders should have closed a number of issues
in the portfolio during last week's sell-off in technology
stocks.  Those positions, most of which are profitable now,
include: Sandisk (NASDAQ:SNDK), Microstrategy (NASDAQ:MSTR),
Invitrogen (NASDAQ:IVGN); $47.50 Put, MedImmune (NASDAQ:MEDI);
$37.50 Put, Monster Worldwide (NASDAQ:MNST), Accredo Health
(NASDAQ:ACDO), and Martek Biosciences (NASDAQ:MATK); $45 Put.
ICOS Corp. (NASDAQ:ICOS) and Interdigital (NASDAQ:IDCC) have
previously been closed to limit potential losses.


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

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

PPD      AUG    27   28.10  21.23   $0.60   6.82%    2.14%
INTU     AUG    45   46.05  43.42   $1.05   6.80%    2.28%
PHTN     AUG    32   32.85  26.25   $0.35   6.22%    1.07%
PPD      AUG    27   27.85  21.23   $0.35   5.69%    1.26%
BRCM     AUG    27   27.80  22.12   $0.30   6.91%    1.08%
QCOM     AUG    40   40.40  36.76   $0.40   4.74%    0.99%
QLGC     AUG    50   50.70  44.48   $0.70   6.32%    1.38%
FRX      AUG    52   52.95  43.70   $0.45   5.91%    0.85%
NVLS     AUG    37   37.85  34.18   $0.35   5.79%    0.92%
QLGC     AUG    47   47.85  44.48   $0.35   5.00%    0.73%
APC      AUG    45   45.25  42.65   $0.25   6.91%    0.55%
CVTX     AUG    27   27.25  23.40   $0.25  14.98%    0.92%
ELX      AUG    22   22.80  22.70   $0.10   5.26%    1.32%

The speculative position in Emulex (NYSE:ELX) did not perform
as expected after the company posted a quarterly profit versus
a year-ago loss on revenue that rose 16%.  Although currently
profitable, conservative traders should consider closing the
play to limit potential losses.  Anadarko Petroleum (NYSE:APC)
is on the "watch" list in the wake of rumor that the company
may be searching for a potential buyer.


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

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

AGN     80.83  77.19   AUG   70  75  0.60  74.40  $0.60   Open
CDWC    50.04  49.01   AUG   40  45  0.60  44.40  $0.60   Open
IVGN    49.48  50.02   AUG   40  45  0.65  44.35  $0.65   Open
MSTR    42.05  35.45   AUG   30  35  0.60  34.40  $0.60   Open?
CB      61.90  65.49   AUG   55  60  0.25  59.75  $0.25  No Play
KSS     60.64  61.49   SEP   50  55  0.60  54.40  $0.60   Open
WHR     66.05  68.28   SEP   55  60  0.60  59.40  $0.60   Open
XAU     82.67  86.21   SEP   70  75  0.55  74.45  $0.55   Open

This has been a difficult month for the put-credit portfolio with
previously closed (unprofitable) positions in Integrated Circuit
Systems (NASDAQ:ICST), eBay (NASDAQ:EBAY), Expedia (NASDAQ:EXPE),
InterActive (NASDAQ:IACI), Genzyme (NASDAQ:GENZ), and Cephalon
(NASDAQ:CEPH).


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

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

ATK     51.37  52.85   AUG  60  55   0.50  55.50  $0.50   Open
AVE     52.20  51.48   AUG  60  55   0.65  55.65  $0.65   Open
ATH     75.35  72.98   AUG  85  80   0.60  80.60  $0.60   Open
JNJ     52.60  51.26   AUG  60  55   0.40  55.40  $0.40   Open
CTX     74.29  76.22   AUG  85  80   0.55  80.55  $0.55   Open
OEX    497.54 499.74   AUG 520 515   0.60 515.60  $0.60   Open
APC     42.70  42.65   AUG  47  45   0.30  45.30  $0.30   Open
CHIR    45.50  44.79   AUG  50  47   0.25  47.75  $0.25   Open
PG      87.75  89.41   AUG  95  90   0.40  90.40  $0.40   Open
UNH     48.79  51.16   SEP  57  55   0.30  55.30  $0.30   Open
WLP     76.49  79.32   SEP  90  85   0.50  85.50  $0.50   Open

Anadarko Petroleum (NYSE:APC) is on the "watch" list in the wake
of rumor that the company may be searching for a potential buyer.
Positions in Igen (NASDAQ:IGEN) and Lockheed Martin (NYSE:LMT)
have previously been closed to limit potential losses.


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.

**************
AEIS - Advanced Energy  $20.89  *** Rally Underway! ***

Advanced Energy (NASDAQ:AEIS) is a leader in the development and
support of technologies for critical high-technology manufacturing
processes used in the production of semiconductors, flat panel
displays, data storage products, compact discs, digital video
discs, architectural glass, and other advanced product applications.
Leveraging a diverse product portfolio and technology leadership,
the firm creates solutions that maximize process impact, improve
productivity and lower cost of ownership for its customers.  This
portfolio includes a comprehensive line of technology solutions in
power, flow, thermal management, plasma and ion beam sources, and
integrated process monitoring and control for original equipment
manufacturers and end-users around the world.

AEIS - Advanced Energy  $20.89

PLAY (sell naked put):

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

SELL PUT  SEP 17.5  OEQ UW      0    0.40  17.10   6.0%   2.3% *
SELL PUT  SEP 20    OEQ UD     15    1.20  18.80  11.1%   6.4%


**************
CBK - Christopher & Banks  $41.35  *** New 52-Week High! ***

Christopher & Banks (NYSE:CBK) is a Minneapolis-based specialty
retailer of women's clothing providing exclusive fashions under
the Christopher & Banks and C.J. Banks labels.  Currently, the
company operates 482 stores in 41 states, located primarily in
the northern half of the United States.  CBK recently declared
a three-for-two split of its common stock.  New shares will be
distributed on August 27 to shareholders of record on August 13.
CBK will have approximately 38 million shares outstanding after
the stock split.

CBK - Christopher & Banks  $41.35

PLAY (sell naked put):

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

SELL PUT  SEP 35    CBK UG     140   0.45  34.55   3.4%   1.3% *
SELL PUT  SEP 40    CBK UH      20   1.65  38.35   7.8%   4.3%


**************
IMCL - ImClone  $39.77  *** Own This One! ***

ImClone Systems (NASDAQ:IMCL) is a biopharmaceutical company whose
mission is to advance oncology care by developing a portfolio of
targeted biologic treatments designed to address the medical needs
of patients with a variety of cancers. The company's lead product,
Erbitux, is a therapeutic antibody that inhibits stimulation of
epidermal growth factor receptor upon which certain solid tumors
depend in order to grow. In addition to the development of its
lead product candidates, the company conducts research in a number
of areas related to its core focus of growth factor blockers, as
well as cancer vaccines and angiogenesis inhibitors. IMCL has also
developed diagnostic products and vaccines for certain infectious
diseases.

IMCL - ImClone  $39.77

PLAY (sell naked put):

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

SELL PUT  SEP 30    QCI UF     840   0.55  29.45   5.2%   1.9% *
SELL PUT  SEP 35    QCI UG   1,003   1.75  33.25  10.9%   5.3%


**************
LLTC - Linear Technology  $36.67  *** Range-Bound? ***

Linear Technology (NASDAQ:LLTC) designs, manufactures and sells
a broad line of standard high-performance linear integrated
circuits (ICs).  Applications for the company's products include
telecommunications, cellular telephones, networking products,
optical switches, notebook and desktop computers, computer
peripherals, video/multimedia, industrial instrumentation,
security monitoring devices, high-end consumer products, digital
cameras and MP3 players, complex medical devices, automotive
electronics, factory automation, process control and military
and space systems.

LLTC - Linear Technology  $36.67

PLAY (sell naked put):

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

SELL PUT  SEP 32.5  LLQ UZ   1,158   0.50  32.00   3.6%   1.6% *
SELL PUT  SEP 35    LLQ UG   1,094   1.10  33.90   6.2%   3.2%


**************
NVLS - Novellus Systems  $35.43  *** Back In A Comfort Zone? ***

Novellus Systems (NASDAQ:NVLS) manufactures, sells and services
semiconductor processing equipment.  The company's products are
comprised primarily of advanced systems used to deposit thin
conductive and insulating films on semiconductor devices, as well
as equipment for preparing the device surface prior to these
deposition processes.  Novellus is a supplier of high productivity
deposition and surface preparation systems used in the fabrication
of integrated circuits.  Chemical Vapor Deposition systems employ
a chemical plasma to deposit all of the dielectric (insulating)
layers and certain of the metal (conductive) layers on the surface
of a semiconductor wafer.  Physical Vapor Deposition systems are
used to deposit conductive metal layers by sputtering metallic
atoms from the surface of a target source via high DC power.
Electrofill systems are used for depositing copper conductive
layers in a dual damascene design architecture using an aqueous
solution.

NVLS - Novellus Systems  $35.43

PLAY (sell naked put):

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

SELL PUT  SEP 30    NLQ UF   2,754   0.45  29.55   3.9%   1.5% *
SELL PUT  SEP 32.5  NLQ UZ   2,986   0.95  31.55   6.2%   3.0%
SELL PUT  SEP 35    NLQ UG   1,829   1.80  33.20   9.3%   5.4%


**************
OVTI - OmniVision  $41.39  *** Near All-Time Highs! ***

OmniVision Technologies (NASDAQ:OVTI) designs, develops and sells
high performance, high quality and cost efficient semiconductor
imaging devices for computing, telecommunications, industrial,
automotive and consumer electronics applications.  The company's
main product, an image sensing device called a CameraChip, is used
to capture an image in cameras and camera-related products in a
range of imaging applications such as personal computer cameras,
digital still cameras, security and surveillance cameras, personal
digital assistant cameras, mobile phone cameras, and cameras for
automobiles and toys that incorporate both still picture and live
video applications.

OVTI - OmniVision  $41.39

PLAY (sell naked put):

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

SELL PUT  SEP 30    UCM UF   2,670   0.65  29.35   5.8%   2.2% *
SELL PUT  SEP 35    UCM UG   1,216   1.60  33.40  10.9%   4.8%


**************
PCLN - Priceline.com  $33.00  *** Internet Travel Retailer! ***

Priceline.com (NASDAQ:PCLN) offers products for sale in two major
categories: a travel service that offers leisure airline tickets,
hotel rooms, rental cars, packaged vacations and cruises; and a
personal finance service that offers home mortgages, refinancing
and home equity loans through an independent licensee.  PCLN also
owns travel Web sites Lowestfare.com and Rentalcars.com.  The firm
is part-owner of Internet travel service Travelweb.  Priceline.com
licenses its business model to independent licensees, including
pricelinemortgage and certain international licensees.

PCLN - Priceline.com  $33.00

PLAY (sell naked put):

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

SELL PUT  SEP 25    PUZ UE      65   0.35  24.65   4.0%   1.4% *
SELL PUT  SEP 30    PUZ UF     187   1.60  28.40  10.9%   5.6%


**************
PHTN - Photon  $28.54  *** On The Rebound! ***

Photon Dynamics (NASDAQ:PHTN) is a provider of yield management
solutions to the flat panel display (FPD) industry.  The company
also offers yield management solutions for the printed circuit
board assembly and advanced semiconductor packaging industries
and the cathode ray tube display and CRT glass and auto glass
industries.  The firm's test, repair and inspection systems are
used by manufacturers to collect data, analyze product quality
and identify and repair product defects at critical steps in the
manufacturing.

PHTN - Photon  $28.54

PLAY (sell naked put):

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

SELL PUT  SEP 22.5  PDU UX      29   0.40  22.10   5.2%   1.8% *
SELL PUT  SEP 25    PDU UE      13   0.80  24.20   7.4%   3.3%
SELL PUT  SEP 27.5  PDU UY      38   1.65  25.85  11.0%   6.4%


**************
RIMM - Research In Motion  $25.71  *** Up-Trend Intact! ***

Research In Motion Limited (NASDAQ:RIMM) is a designer, builder,
and marketer of wireless solutions for the mobile communications
market.  Through development and integration of hardware, software
and services, the firm provides solutions for seamless access to
time-sensitive information and communications, including e-mail,
telephone, messaging and Internet- and intranet-based applications.
The company's technology also enables a broad array of third-party
developers and manufacturers around the world to enhance their own
products and services with wireless connectivity.  RIM's portfolio
of products includes a family of wireless handhelds, the BlackBerry
wireless e-mail solution, embedded radio modems and a suite of
software development tools.

RIMM - Research In Motion  $25.71

PLAY (sell naked put):

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

SELL PUT  SEP 20    RUL UD   3,576   0.40  19.60   5.8%   2.0% *
SELL PUT  SEP 22.5  RUL UX     843   0.95  21.55   9.5%   4.4%


**************
URBN - Urban Outfitters  $46.50  *** New All-Time High! ***

Urban Outfitters (NASDAQ:URBN) is a merchandising company that
operates specialty retail stores under two distinct brands,
Urban Outfitters and Anthropologie, as well as the Free People
wholesale division.  The company creates and manages retail
stores that offer highly differentiated collections of fashion
apparel, accessories and home goods in dynamic store settings.
In addition to its retail stores, the company offers its many
products and markets its many brands directly to the consumer
through the urbn.com and anthropologie.com Websites, as well
as the Anthropologie catalog.

URBN - Urban Outfitters  $46.50

PLAY (sell naked put):

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

SELL PUT  SEP 40    URQ UH     131   0.60  39.40   3.8%   1.5% *
SELL PUT  SEP 45    URQ UI      50   2.00  43.00   8.4%   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.

***************
APPX - American Pharmaceutical  $43.86  *** Premium Selling! ***

American Pharmaceutical Partners (NASDAQ:APPX) is a specialty
pharmaceutical company that develops, manufactures and markets
injectable pharmaceutical products.  The firm produces over 100
generic injectable pharmaceutical products in more than 300
dosages and formulations. Its primary focus is in the oncology,
anti-infective and critical care markets.  The company makes
products in all of the three basic forms in which injectable
drugs are sold: liquid, powder and lyophilized (freeze-dried).

APPX - American Pharmaceutical  $43.86

PLAY (speculative - bullish/credit spread):

BUY  PUT  SEP-30.00  AQO-UF  OI=397   ASK=$0.40
SELL PUT  SEP-35.00  AQO-UG  OI=1808  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.60-$0.70
POTENTIAL PROFIT(max)=14% B/E=$34.40


**************
CHIR - Chiron  $46.33  *** J.P. Morgan Upgrade! ***

Chiron Corporation (NASDAQ:CHIR) is a global pharmaceutical firm
that is focused on developing products for cancer and infectious
disease.  Chiron continues to build upon its cancer franchise,
which has three dimensions, including immune system modulators,
monoclonal antibodies and novel anti-cancer agents.  In the area
of infectious diseases, the company has a range of products.  The
company commercializes its products through three business units,
which include biopharmaceuticals, vaccines and blood testing.
Chiron Biopharmaceuticals discovers, develops, manufactures and
markets a range of therapeutic products.  The company's products
include Betaseron, TOBI, Proleukin, PDGF for Regranex products
and Procleix HIV-1/HCV Assay.

CHIR - Chiron  $46.33

PLAY (conservative - bullish/credit spread):

BUY  PUT  SEP-40.00  CIQ-UH  OI=87   ASK=$0.35
SELL PUT  SEP-42.50  CIQ-UV  OI=292  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.25-$0.35
POTENTIAL PROFIT(max)=11% B/E=$42.25


**************
TIF - Tiffany & Co.  $37.41  *** A Reader's Request! ***

Tiffany & Co. (NYSE:TIF) is the internationally renowned jeweler
and specialty retailer.  The company's sales are made primarily
through Tiffany stores and boutiques in the Americas, Asia-Pacific
and Europe.  Direct Marketing includes Tiffany's Business Sales
division, Internet and catalog sales.  Specialty Retail primarily
includes the retail sales made in Little Switzerland stores, and
also includes consolidated results from other ventures operated,
or to be operated, under non-TIFFANY & CO. trademarks or trade
names.

TIF - Tiffany & Co.  $37.41

PLAY (conservative - bullish/credit spread):

BUY  PUT  SEP-30.00  TIF-UF  OI=295  ASK=$0.15
SELL PUT  SEP-35.00  TIF-UG  OI=250  BID=$0.60
INITIAL NET-CREDIT TARGET=$0.50-$0.60
POTENTIAL PROFIT(max)=11% B/E=$34.50


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

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.

***************
CVTX - CV Therapeutics  $23.03   *** Still In A Slump! ***

CV Therapeutics (NASDAQ:CVTX) is a biopharmaceutical firm focused
on the discovery, development and commercialization of new small
molecule drugs for the treatment of cardiovascular diseases.  The
company's New Drug Application (NDA) for Ranexa (ranolazine) for
the treatment of chronic angina has been filed at the U.S. FDA.
Tecadenoson (CVT-510), an A1-adenosine receptor agonist, is being
developed for the potential reduction of rapid heart rate during
atrial arrhythmias.  CVT-3146, an A2A-adenosine receptor agonist,
is being developed for the potential use as a pharmacologic agent
in cardiac perfusion imaging studies.  Adentri, an A1-adenosine
receptor antagonist, is being developed by the company's partner,
Biogen, for the potential treatment of acute and chronic congestive
heart failure.  CVTX also has several research and preclinical
development programs designed to bring additional drug candidates
into human clinical testing.

CVTX - CV Therapeutics  $23.03

PLAY (sell naked call):

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

SELL CALL  SEP 32.5  UXC IZ   2,391   0.35  32.85   5.7%   1.1% *
SELL CALL  SEP 30    UXC IF   2,054   0.55  30.55   8.5%   1.8%
SELL CALL  SEP 27.5  UXC IY     933   0.85  28.35  12.2%   3.0%


**************
MEDI - MedImmune  $36.04  *** Revenge Play! ***

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  $36.04

PLAY (sell naked call):

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

SELL CALL  SEP 40    MEQ IH   9,278   0.65  40.65   4.7%   1.6% *
SELL CALL  SEP 37.5  MEQ IU   5,363   1.35  38.85   7.6%   3.5%


**************
RJR - R.J. Reynolds  $32.19  *** S&P Outlook = NEGATIVE! ***

R.J. Reynolds Tobacco Holdings (NYSE:RJR) is the parent company
of R.J. Reynolds Tobacco Company and Santa Fe Natural Tobacco
Company.  R.J. Reynolds Tobacco Company is the second-largest
tobacco company in the United States, manufacturing about one of
every four cigarettes sold in the United States.  Their product
line includes four of the nation's 10 best-selling cigarette
brands: Camel, Winston, Salem and Doral.  Santa Fe Natural Tobacco
Company manufactures Natural American Spirit cigarettes and other
tobacco products, and markets them both nationally and on an
international basis.

RJR - R.J. Reynolds  $32.19

PLAY (sell naked call):

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

SELL CALL  SEP 35    RJR IG   1,969   0.55  35.55   4.1%   1.5% *
SELL CALL  SEP 32.5  RJR IZ     646   1.35  33.85   7.8%   4.0%


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

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  $73.74  *** Homebuilding Sector Consolidation! ***

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  $73.74

PLAY (speculative - bearish/credit spread):

BUY  CALL  SEP-85.00  CTX-IQ  OI=289  ASK=$0.45
SELL CALL  SEP-80.00  CTX-IP  OI=346  BID=$1.10
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$80.65


**************
NBIX - Neurocrine Biosciences  $49.52  *** Next Leg Down? ***

Neurocrine Biosciences (NASDAQ:NBIX) is a unique, product-based
biopharmaceutical company focused on neurological and endocrine
diseases and disorders.  Their product candidates address some
of the largest pharmaceutical markets in the world including
insomnia, anxiety, depression, diabetes, multiple sclerosis,
irritable bowel syndrome, eating disorders, pain, autoimmunity
and certain female and male health disorders.  The company has
a large number of programs in various stages of research and
clinical development.  Its lead clinical development program is
indiplon, a drug for the treatment of insomnia that is being
evaluated in Phase III clinical trials.  The company's other
products under clinical development are altered peptide ligand,
gonadotropin-releasing hormone antagonist, interleukin 4 fusion
toxin and corticotropin-releasing factor.

NBIX - Neurocrine Biosciences  $49.52

PLAY (conservative - bearish/credit spread):

BUY  CALL  SEP-60.00  UOT-IL  OI=206  ASK=$0.45
SELL CALL  SEP-55.00  UOT-IK  OI=802  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$55.55


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

SEE DISCLAIMER - SECTION 1

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


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

Bonds Get Slammed

XL Capital - XL - close: 77.68 change: -1.54

WHAT TO WATCH: We had an all-too-brief fling with XL a couple
weeks ago and had to let it go ahead of earnings.  The post-
earnings bounce is history and the sharp rise in yields have the
sellers active again.  While there's some mild support near $75,
we've got our eye on a gap fill down to the $72.50 area.

Chart=


---

Lehman Brothers - LEH - close: 64.34 change: -1.06

WHAT TO WATCH: Despite relative strength in the Brokerage sector,
LEH is back to its old pattern of relative weakness and was turned
back on Wednesday from strong resistance in the $65.50-66.00 area.
This looks like the beginning of a reversal that should take LEH
down to at least the $60-61 area near the 200-dma.

Chart=


---

D R Horton - DHI - close: 28.06 change: -1.06

WHAT TO WATCH: All of the Housing stocks got hit hard on
Wednesday, but shares of DHI caught our attention because of the
way they reversed right at the descending trendline (just over
$29) from the June highs.  There's some mild support near $27, and
then the stock looks destined to visit stronger support near
$25.50 enroute to the $24 level.  Look for continued weakness in
bonds to fuel this bearish play.

Chart=


---

Varian Semiconductor Equip. - VSEA - close: 33.92 change: +1.08

WHAT TO WATCH: This week's abrupt turnaround in the Semiconductor
sector is finally catching some follow-through, and shares of VSEA
made an appearance by breaking out of its bull flag to the upside
on Wednesday.  Look for upside continuation to take the stock
first through the $36 resistance and then target a move to $38.

Chart=



===================
On the RADAR Screen
===================

MME $50.15 - Shares of MME finally found bottom near $45 and have
been rebounding over the past week.  But the bounce appears to be
losing momentum.  After 3 days of failing at resistance at the 10-
dma near $51, it looks like it is time for the bears to have their
way again.  Target a drop back to the $45-46 area and then
possibly $42.50.

CECO $88.45 - No end in sight!  After breaking out above the $80
level last month, shares of CECO have been consolidating in a very
healthy manner.  The bulls went on a rampage on Wednesday,
launching the stock to new all time highs again.  While certainly
aggressive, let's go with the flow and ride the wave higher.

DISH $34.27 - Apparently those earnings weren't what the bulls
were hoping to have dished up today, and then sold DISH hard on
nearly triple the daily average volume.  We need to watch for a
reflexive bounce, but with today's breakdown out of the ascending
channel from the October lows, it looks like a very tasty morsel
for the bears.  Target entries on a failed rebound near the 50-dma
and look for a fall back towards $30 support.


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

Traders Hit Snooze

To Read The Rest of The OptionInvestor.com Market Watch Click Here
http://www.OptionInvestor.com/marketposture/mp_081303.asp


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