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Daily Newsletter, Monday, 10/06/2003

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The Option Investor Newsletter                   Monday 10-06-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Earnings Eve
Futures Wrap: A Quiet Monday
Index Trader Wrap: All eyes on the highs


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     10-06-2003            High     Low     Volume Advance/Decline
DJIA     9594.98 + 22.67  9624.91  9562.53 1.21 bln   1811/ 984
NASDAQ   1893.46 + 12.89  1894.22  1876.00 1.36 bln   1949/1089
S&P 100   517.04 +  1.87   518.24   514.62   Totals   3760/2073
S&P 500  1034.35 +  4.50  1036.48  1029.15
RUS 2000  516.72 +  4.44   516.74   510.97
DJ TRANS 2796.67 + 11.82  2806.50  2781.45
VIX        19.51 +  0.01    20.69    19.45
VXN        29.42 +  0.22    30.21    29.32
Total Volume 2,818M
Total UpVol  1,983M
Total DnVol    776M
52wk Highs     707
52wk Lows       19
TRIN          0.89
PUT/CALL      0.66
*******************************************************************

Earnings Eve
by James Brown

It would have been a rather uneventful Monday but positive 
earnings news from the likes of PeopleSoft (PSFT) and Knight 
Trading Group (NITE) renewed investor enthusiasm for the Q3 
earnings season finally upon us.  Motorola and Rambus chipped in 
with some positive headlines of their own and Wall Street managed 
to stretch its winning streak to four in a row.  The Yom Kippur 
holiday was reflected in the very low volume, about 25 percent 
less than the market's three-month average, with just 1.3 billion 
shares trading on the big board and slightly more trading on the 
NASDAQ.  

Shallow gains were widespread with only the semiconductors, 
biotechs and healthcare stocks slipping into the red.  Most of 
the buying was concentrated in technology, brokers and airlines.  
Strong traffic numbers from JetBlue (JBLU) helped lift the XAL 
airline index to a new yearly high.  The DJIA added 22 points to 
close at 9594.  The NASDAQ added almost 13 points to close at 
1893 and the S&P 500 inched up 4.5 points to close 1034.  All 
three are very close to their 52-week highs.  Asian exchanges 
contributed to the positive mood with a strong gain in the Hang 
Seng index but European bourses were down slightly as the dollar 
continued to slip against the euro.

Domestically the advance-decline numbers were positive.  The NYSE 
recorded 18 winners for every 9 losers.  The NASDAQ turned out 19 
advancers for every 10 losers.  Up volume significantly out paced 
down volume on both the NYSE and the NASDAQ.  There was another 
surge in new yearly highs with 612 between the two exchanges.  
There were only 12 new yearly lows.  

Chart of the DJIA:


 

Chart of the NASDAQ:


 


Raising the Bar

Shares of PeopleSoft (PSFT) surged another 3.1 percent to 
breakout above the $20 level after raising their Q3 earnings 
guidance for the second time in two months.  Last month PSFT had 
raised their guidance to 10-to-11 cents a share and most analysts 
readjusted their estimates to match the 11-cent figure on 
estimated revenues of $589 million for the quarter.  Today the 
company said they will top their latest projections.  PSFT's CEO 
said the combination of PeopleSoft and recently acquired 
J.D.Edwards was "already exceeding our expectations".  The stock 
is now trading above the $19.50-a-share hostile takeover by 
software rival Oracle (ORCL).  PSFT is expected to announce its 
Q3 results in the next two-to-three weeks.   

Another stock breaking out to new highs on raised earnings 
guidance is Knight Trading Group (NITE).  The company is a market 
maker for a wide range of securities and the rebound in trading 
volumes has really boosted its business.  The company's press 
release also remarked on the progress they feel they're making 
with institutional clients.  Consensus estimates had been for 11 
to 12 cents a share.  NITE now sees Q3 earnings in the 16 to 21 
cent range.  The good news boosted shares of NITE by more than 
15% and the XBD broker dealer index gained 1.85%.  

Chipping In

Now that he's on the way out Motorola (MOT) CEO Chris Galvin 
seems to be a lot more agreeable to making improvements at his 
company.  Analysts and investors have been suggesting that MOT 
spin off its semiconductor business for a long time.  This 
morning, the company finally announced that it would.  The 
Semiconductor Products Sector (SPS) division of MOT currently 
represents about 18% of their overall sales but it also accounts 
for a large portion of their operating losses.  Details were not 
readily available but investors will probably have more to digest 
at MOT's October 14th earnings announcement.  The stock jumped 
almost 10 percent to a new 52-week high on today's news.

Rambus (RMBS) is another chip stock hitting new 52-week highs 
today.  Actually, the stock hit a 2 1/2 year high after rising 
almost 38 percent in today's session to close at $25.80.  Fueling 
the move was news that the U.S. Supreme court refused to hear an 
appeal by rival chip-maker Infineon Technologies (IFX) after the 
company lost its fraud case against RMBS.  The courts also 
reopened RMBS' counter-suit that IFX was involved in patent 
infringement.  

Bouncing Back

It was a bullish Monday around the board with oil, gold and bonds 
all bouncing back to join stocks in the green.  Crude oil futures 
were green again in what has been a sharp two-week climb from the 
$26.50 level to back above the $30 mark.  Concerns that Saudi 
Arabia might cut production to prepare for the eventual coming to 
market for Iraqi oil has combined with investor fears over 
trouble in Venezuela and new threats of strikes in Nigeria.  Add 
growing turmoil with Israel sending planes to bomb terrorists in 
Syria and gunfire on the Israel-Lebanon border and we have what 
could be a recipe for new highs in crude oil.  Meanwhile both 
gold and bonds bounced back after painful sessions last Friday.  
Gold close up $3.30 to $373.30 and the yield on the 10-year note 
dropped to 4.151%.  

Tomorrow will be the starting gun for Q3 earnings announcement.  
The major company to watch will be Dow component Alcoa (AA) who 
reports after the close on Tuesday.  Consensus estimates are for 
30 cents a share, which is 15 percent better than last year.  
We'll also hear from PepsiCo (PEP) who reports before the opening 
bell.  Estimates for PEP are 62 cents.  After the market will be 
fast-food giant Yum! Brands (YUM), who is better known for their 
Taco Bell, Pizza Hut, KFC and Long John Silver's fast food 
outlets.  Estimates for YUM are 52 cents a share.  

Despite the onset of Q3 earnings tomorrow's headlines will likely 
be dominated by one event.  You guessed it, the state of 
California's governor recall election.  Will the recall pass?  
Will Arnold get the vote?  Who will be the first to file a 
lawsuit contesting the results?  Oh the myriad of questions we'll 
be forced to listen to late into the evening tomorrow.  Sounds 
like a good reason to just turn off the T.V. 


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

A Quiet Monday
- Jane Fox

I am pinch hitting for Jonathan today for he is taking the day 
off for Yom Kippur. Since his format works I will try to stick 
with it as best as I can.



 

Regarding pivot matrix: The support, pivot and resistance levels 
above are derived from the high, low an regarding pivot matrix: 
The support, pivot and resistance levels above are derived from 
the high, low and closing price levels by a simple mathematical 
formula. They are not intended to be predictive of market turning 
points or to serve as targets, but rather represent the range 
retracement levels as generated by the pivot algorithm. Do not 
think of them as market "calls" or predictions. Like any 
technically-derived indicator or price level, the pivot matrix 
values should be regarded as decision points at which to evaluate 
current market conditions. Visit us in the Futures Monitor for 
our realtime views of the various markets covered here. d closing 
price levels by a simple mathematical formula. They are not 
intended to be predictive of market turning points or to serve as 
targets, but rather represent the range retracement levels as 
generated by the pivot algorithm. Do not think of them as market 
"calls" or predictions. Like any technically-derived indicator or 
price level, the pivot matrix values should be regarded as 
decision points at which to evaluate current market conditions. 
Visit us in the Futures Monitor for our realtime views of the 
various markets covered here.

5-minute ES chart:


 

The day started out real slow and by 7:30ET I was wondering if I 
should just go back to bed. But even with the low volume and ES's 
small range of only 8 points (from a low of 1027 to a high of 
1035), the day had a bullish tone to it. 

1028, as early support, made all sorts of trouble for bears, of 
which I was not surprised.

I keep a database of daily highs and lows to help determine where 
price could find support or resistance throughout the day and 
1028 has been tagged as a daily high on six separate occasions. 
No other single number has as many daily highs or lows attached 
to it. 

Overnight highs of 1031 (blue line) also came into play today 
serving up resistance until approximately 12:20ET when price 
broke through. And once broke, ES marched straight up and tagged 
1035 only to quickly return to 1031, just to make sure it was 
still there (support), then bounced back to 1034 where it closed. 

5-minute NQ chart:


 

From the database of daily highs and lows I mentioned earlier I 
determine areas or zones where dates cluster. I call these 
support and resistance zones. Some days price will confirm these 
zones and some days they don't. Today they did. 

The double top you see in the 1385-1387 zone would have been 
confirmed by a trade below the 1378-1380 zone and the projected 
price down to 1371 the top of the 1366-1371 zone. Unfortunately 
(or fortunately depending on if you were a bear or a bull today) 
the double top did not confirm and NQ made a double bottom in the 
1378-1380 zone. This one did confirm but too late in the day.

Daily ES chart:


 


The thing that bothers me the most about this chart is the MACD 
divergence. Each of the last two higher highs in price has been 
met with a lower high in MACD and I put a lot of sway to MACD 
divergences. An OI reader noted last week that if MACD were to 
cross down here again it would be in line with the MACD trendline 
(magenta line) and in line with another MACD lower high while 
price is making at least equal highs. If price blasts through to 
new yearly highs it needs to invite MACD to the party. I don't 
use stochastics a lot but the same story can be told with 
stochastics. 

Daily NQ chart:


 

The exact same story in NQ as in ES. Lower MACD highs in and 
higher price highs. Something has to give and if we get another 
MACD cross I will be turning in my bullish horns in for bear 
claws.

Ok on to other future's markets.

$US dollar index - daily chart:


 

US Dollar index's low on September 30th was 93.42 a level not 
seen since January 1997.  However, it does look like it is 
starting to stabilize. MACD is trying to cross back up but even 
if it does, it is so far below the 0 line I would not read too 
much into it, albeit will be the first time since August 14th it 
would have made a bullish cross. 

Yen vs. Dollar chart:


 

Last week Japanese authorities intervened to stop the yen 
appreciation against the US dollar and more intervention is 
expected, which may put the US economic recovery at risk. Much of 
our recent growth has been due to an unsustainable burst in 
capital spending by large companies, likely due to pent up 
demand. We need low prices on Japanese goods to help consumer-
spending pick up the slack when large company's capital spending 
starts to wane. 

Gold futures - daily chart:


 

On Friday afternoon I heard someone on CNBC say the daily range 
in Gold was the largest one-day range in 16 years. I have not 
been able to verify this statistic but I know Gold did take a 
huge drubbing on Friday. However, it did stabilize somewhat today 
and did not made new lows. The loss on Friday caused MACD to 
cross down, albeit above the 0 line. But if Gold can hold here, 
making a higher low and MACD crosses back up, we could have 
another run at September 25th highs of 393.

Crude Oil futures - daily chart:


 

Crude oil futures continued to rise, after Nigeria announced a 
strike to protest plans to reduce gasoline subsidies. This raises 
the possibility of renewed violence and disruptions to crude oil 
production. Higher prices were also supported by fears of an 
escalation in the Middle East after Israel attacked a training 
camp for Islamic terrorists located on Syrian territory; the 
Israeli retaliation followed a suicide attack claiming 19 lives 
in the northern city of Haifa. As a result, the Crude Oil 
contract hit a high of $30.80 in today's trading but retreated 
and ended up forming a bearish doji. Stochastics have crossed in 
very overbought territory but MACD is a long ways off from 
crossing. 

Wheat contracts - daily chart:


 

A selloff in the Hard Red Spring Wheat Contract began Friday 
after the U.S. International Trade Commission ruled imports of 
Canadian-subsidized hard red spring wheat, used for making flour 
and bread, are harming American farmers, which clears the way to 
begin imposing a tariff. The Canadian government said it will 
launch a North American Free Trade Agreement challenge of the 
ruling and is considering legal options.  

Well that is it for today. Jonathan will be back tomorrow.


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

All eyes on the highs

Compared to Friday's trade, today's Yom Kippur holiday found the 
major indices creeping higher on light volume, where gains for 
the major indices were really a recouping of Friday's last hour 
pullback.  

All eyes are on the highs and bears look jittery where economic 
news early this week is August related and it won't be until 
Thursday that weekly jobless claims and September import/export 
data give traders fresh economic data to trade on and after 
breaking above their MONTHLY Pivots last week, the major indices 
now sit on MONTHLY R1's as near-term support, with new 52-week 
highs in reach.

Pivot Matrix -


 

I would have to view the MONTHLY pivots as formidable support the 
remainder of the month.  The main reason for this thinking is the 
rather impressive move higher from the found from the major 
indices, where we first witness the Dow Industrials, SPX and OEX 
making the breaks higher, as well as last Thursday's jump higher 
from the MONTHLY Pivot in the QQQ after Friday morning's nonfarm 
payroll data.

Levels that I would deem more significant on a swing trade basis 
is that I feel the major indices as it relates to the SPX would 
have near-term upside to its WEEKLY R1, but with Stochastics now 
"overbought," it would not be unlikely to see some giveback of 
those types of gains to the WEEKLY Pivots, where I would 
currently look to protect gains with bullish stops just under 
tomorrow's correlative MONTHLY R1's and DAILY S1/S2 correlative 
levels.

S&P 500 Index Chart - Daily Interval


 

The SPX may be finding some near-term resistance at our cloned 
downward trend, but bulls that traded long above the MONTHLY 
Pivot at 1,010 should feel comfortable (no complacent) with a 
stop just under MONTHLY R1 of 1,025, which was quickly discussed 
as a bullish stop in Friday morning's 09:00 AM EDT intra-day 
update.  Late Thursday, in the final hour of trade, the SPX 
intra-day chart showed the SPX declining to 1,029.15.  I like the 
idea of a 1,025 stop, as that would most likely protect a bull's 
gains and a turn lower from "overbought."

Today's trade saw no net change in the broader S&P 500 Bullish % 
($BPSPX), where its status remains "bull confirmed" at 77.60%.

S&P 100 Index Chart - Daily Interval


 

American Express (NYSE:AXP) $46.45 -0.08% was the only financial 
component in the OEX to find a loss by session's end, with the 
Broker/Dealer Index (XBD.X) 627.52 +1.85% leading financial 
sector gains after electronic broker Knight Trading Group 
(NASDAQ:NITE) $13.95 +15.28 sparked gains after the company said 
it would see a stronger quarter due to increasing trade volumes 
for equities.  Last week, the S&P Banks Index (BIX.X) 315.29 
+0.84% showed strength in their WEEKLY and MONTHLY pivots and 
look to be closing in on their 52-week highs of 317.94, which 
would be right at the correlative levels noted in the matrix.  
This BIX.X has gained just over 5% in the past three-weeks, and 
for the OEX to clear its WEEKLY R1, I would think the BIX.X needs 
to make a bold break above its WEEKLY R1, where a strong round of 
short-covering could see a test of WEEKLY R2 at 323 in the BIX.X.  

I'm still keeping an eye on Washington Mutual (NYSE:WM) $39.85 
+1.78% for strength above $40.00 and I would think an OEX/SPX 
index trader should keep an eye on the stock to get a feel for 
potential short-covering and bullishness for the stock should it 
be able to clear the $40.00 level.

Today's trade saw not net change in the narrower S&P 100 Bullish 
% ($BPOEX), which remains "bull correction" status at 78%.

Dow Industrials (INDU) Chart - Daily Interval


 

Aluminum maker Alcoa (NYSE:AA) $28.27 +0.42% has risen $2.46 per 
share, or 9.5% since it last reported quarterly earnings on July 
8, when the company beat estimates by 2 cents a share, when it 
reported EPS of $0.27 (excluding one-time charges), and will be 
the first Dow component to kick off quarterly earnings after 
tomorrow's closing bell.  AA did slip to a post quarterly 
earnings low of $24.00 two-weeks after it last reported earnings, 
and such slippage might equate to a Dow pullback to its MONTHLY 
pivot of 9,400 should the company not exceed current estimates 
for $0.30 per share, where most analysts feel higher aluminum 
prices should help results.  

While AA carries the 23rd highest weighting in the Dow 30, its 
earning report and comments on the state of both the U.S. and 
global economic trend could set an early tone for some of this 
quarter's deeply rooted in the economy non-ferrous metals 
producers/manufacturers.  

In Thursday evening's Market Monitor, I discussed a bullish trade 
in copper producer (non-ferrous metals sector) Phelps Dodge 
(NYSE:PD) $51.85 +2.04% from the $49.31 level and the stock has 
set two consecutive session 52-week highs, so I would think the 
MARKET is looking for some upside surprises, or positive news 
from this group of stocks.

Today's trade saw no net change in the very narrow Dow 
Industrials Bullish % ($BPINDU).  Still "bull correction" status 
at 83.33%.

NASDAQ-100 Tracking Stock (AMEX:QQQ) - Daily Interval


 

The QQQ edged higher today and recouped Friday afternoon's 
pullback to now challenge Friday's highs.  Shorts may be in a fix 
on a break above the $34.50 level as there was little volume in 
today's session that an overly short bear could cover into.  
While I've marked our cloned downward trend as a potential 
bullish target for a "blow off" type move on short-covering, I do 
think the $35.00 level is a good target for a "get out early" 
type of trade on strength as we see some overlap in the WEEKLY R1 
and the WEEKLY retracement itself, but $35.00 is also a nice 
round psychological number.

I must admit that I was a bit surprised by PeopleSoft's 
(NASDAQ:PSFT) $20.43 +3.12% upside earnings warning as it is 
often very difficult to make a large acquisition like PSFT did of 
JD Edwards, begin integrating the two operations, and still give 
some hint of an upside earnings surprise.

PSFT did not say what the amount of the upside surprise was, and 
I can only guess, it is to help PSFT's less than friendly rival 
Oracle (NASDAQ:ORCL) $12.19 +1.75% and its CEO Larry Ellison lose 
a little sleep until PSFT reports earnings later this month.  
Current estimates are for PSFT to have earned $0.11 per share, 
where earnings for October 16th, after the market's close, has 
not yet been confirmed by PSFT.

Today's trade saw no net change in the NASDAQ-100 Bullish % 
($BPNDX) where status remains "bear confirmed" at 73%.

Jeff Bailey


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The Option Investor Newsletter                   Monday 10-06-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: AAMZN, RYL
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - RYL 
Watch List: A Few Four-Lettered Stocks

Updated on the site tonight:
Market Posture: Green with Envy


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

AMZN - call
Adjust from $49.50 up to $52.50

RYL - call
Adjust from $74.00 up to $76.00


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

None


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

None


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

The Ryland Group - RYL - cls: 81.00 chng: +2.75 stop: 76.00*new*

Company Description:
The Ryland Group is a homebuilder and mortgage-finance company 
that has built more than 175,000 homes.  Additionally, the Ryland 
Mortgage Company (RMC) has provided mortgage financing and related 
services for more than 155,000 homebuyers. Currently, Ryland homes 
are available in more than 260 communities in 21 markets across 
the United States.

Why we like it:
From the "Nick of Time" file, we clearly initiated coverage on RYL 
with perfect timing.  The stock absolutely exploded upwards on 
Wednesday, moving to new all-time closing highs.  Over the past 
two days, the bulls have been struggling with resistance at $79 
and it now remains to be seen whether there is more upside in 
store.  The strong selling in the bond market on Friday drove RYL 
down to an intraday low of $76.06, but the powerful bullish 
sentiment drove the stock right back up to resistance before a 
slight drop into the close.  Conservative traders should have 
taken advantage of the strength towards the end of the week to 
lock in some gains and that still remains our advice.  With price 
still above the upper Bollinger band, entering at this altitude is 
not advisable.  With the $DJUSHB index ending the week at another 
new high, RYL still looks like it could continue higher, so we're 
maintaining our stop at $74.  Traders unwilling to give the play 
that much room to the downside can use a tighter stop at $76, just 
under Friday's intraday low.  The PnF bullish price target is $91, 
so there is still substantial potential upside.  But the best 
approach for traders still looking for new entries would be on a 
rebound from the $75-76 area, which should now be solid support.

Why This is our Play of the Day
Those unstoppable Housing stocks just keep on churning higher, and 
Monday's strong breakout in the Dow Jones Home Construction index 
($DJUSHB) was no small feat.  The index vaulted higher by 2.83% to 
close at yet another all-time high of $515.  Our RYL play has been 
flirting with the $79 resistance level ever since reaching that 
zone of resistance last Wednesday.  Today's price action finally 
gave us the breakout we've been waiting for, with RYL ending the 
day at $81, a 3.5% gain for the day.  If the PnF chart is to be 
believed, there's still some more room to run as well.  The 
vertical count of $91 is looking more reasonable by the day.  That 
said, RYL is up sharply (15%) in the past 6 sessions and 
conservative traders should be looking to harvest some gains up 
here, and especially into further strength.  RYL does look like it 
has some more room to run, but a bout of profit taking may be 
necessary first.  We're raising our stop to $76 (just below last 
Friday's intraday low) but note that may be a bit too wide for 
some.  If that stop seems to wide to you, then you are one of 
those that should be harvesting some gains up here, with price 
extended well above the upper Bollinger band.  We want to look for 
new entries on a dip and rebound from the vicinity of $77.50-
78.50, not on further strength.

Suggested Options:
Shorter Term: The October 80 Call will offer short-term traders 
the best return on an immediate move, as it is slightly in the 
money.  Note that October strikes expire in less than two weeks.

Longer Term: Aggressive traders looking to capitalize on an 
extended rally will want to look to the November 85 Call.  This 
option is currently out of the money, but should provide 
sufficient time for the stock to move higher without time decay 
becoming a dominant factor over the short run.  More conservative 
long-term traders will want to use the November 80 Call.

BUY CALL OCT-80 RYL-JP OI= 833 at $3.10 SL=1.50
BUY CALL OCT-85 RYL-JQ OI= 288 at $1.05 SL=0.50
BUY CALL NOV-80 RYL-KP OI= 149 at $5.60 SL=3.50
BUY CALL NOV-85 RYL-KQ OI=  65 at $3.20 SL=1.50

Annotated Chart of RYL:


 

Picked on September 30th at  $72.18
Change since picked:          +7.89
Earnings Date              10/21/03 (unconfirmed)
Average Daily Volume =        832 K




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

A Few Four-Lettered Stocks

Electronic Arts - ERTS - close: 99.57 change: +1.29

WHAT TO WATCH: Hmm... interesting dilemma here for the bears.  
Not only are shares of ERTS butting up against the $100 mark, 
which is traditionally a strong psychological support/resistance 
level (in this case its resistance) but they're also near the top 
of its ascending channel (also resistance).  Smells like a 
perfect place to short this high-flying tech stock but ERTS' 
rally from its February lows is littered with carcasses from 
bears who tried to short this winner.  We're not buyers or bears 
here but if it pulls back to its simple 30-dma then we'll be 
tempted.  Actually, we'll be tempted if it just dips to the $95 
mark but don't tell anyone.  Earnings are about 2 1/2 weeks away.

Chart=


---

Synopsys Inc - SNPS - close: 27.60 change: -1.26

WHAT TO WATCH: Shares of SNPS are cascading lower after a recent 
2-for-1 stock split.  The stock has broken support at its 50-dma, 
at the $29 and $30 price levels, which had been support in the 
past, and it is about to break into the gap from last May.  
Shares look very oversold but are approaching the simple 200-dma 
and additional support/resistance at $26.00.  We'd keep an eye on 
this one for an oversold bounce.

Chart=


---

Genzyme Corp - GENZ - close: 49.31 change: +0.21

WHAT TO WATCH: Biotech traders in GENZ have about 10 days left 
before the company announces earnings before the bell on the 
15th.  Shares have been consolidating sideways between $45 and 
$50(51) for a few weeks now while the weekly chart suggests a 
pattern of higher lows and lower highs (as does the P&F chart).  
It is certainly possible that the stock could continue to 
oscillate sideways as investors wait for the Q3 earnings news but 
eventually we should see a move one way or the other.

Chart=


---

Veritas Software - VRTS - close: 34.29 change: +0.36

WHAT TO WATCH: PeopleSoft's positive news today should continue 
to cast a positive glow for the software sector and VRTS could 
use the help.  VRTS has been stuck in a bullish flag 
consolidation pattern for the last five weeks but looks ready to 
breakout to the upside.  Its MACD is just about ready to produce 
a new buy signal while stochastics and RSI are already bullish.  
More aggressive traders could use a move above $34.50 to go long 
while traders looking for a little more momentum might want to 
wait for a move over $35.00.  Earnings are still a couple of 
weeks away.

Chart=



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