Option Investor
Newsletter

Daily Newsletter, Monday, 11/03/2003

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                   Monday 11-03-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: November Opens Strong
Futures Wrap: Uncle Buck's Revival
Index Trader Wrap: Manufacturing puts its best hoof forward


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     11-03-2003            High     Low     Volume Advance/Decline
DJIA     9858.46 + 57.34  9896.16  9802.38 1.66 bln   1979/ 854
NASDAQ   1967.70 + 35.49  1969.26  1941.31 2.06 bln   2107/1035
S&P 100   524.01 +  4.03   525.42   519.98   Totals   4086/1889
S&P 500  1059.02 +  8.31  1061.42  1050.71
RUS 2000  537.84 +  9.62   537.84   528.22
DJ TRANS 2940.73 + 27.62  2947.79  2913.81
VIX        16.55 +  0.45    16.70    16.22
VXO        17.01 -  0.14    17.43    16.72
VXN        25.38 +  0.49    25.95    25.15
Total Volume 4,163M
Total UpVol  3,129M
Total DnVol    991M
52wk Highs    1167
52wk Lows       19
TRIN          0.71
PUT/CALL      0.63
*******************************************************************

November Opens Strong
by James Brown

It was another busy Monday with the bulls once again in control.
As the mutual fund scandal claimed another victim, this time at
Putnam Investments, Wall Street chose to ignore the news and
focus on positive economic data.  The ISM report beat economists'
estimates and turned in its best pace since January 2000.
Cementing the positive mood was a strong showing for business
construction that also turned in its best numbers in a year.  The
icing on the cake was Sunday's chip sales numbers, which were the
strongest in 13 years.  At the end of the day the tech-heavy
NASDAQ closed at 21-month highs.  The S&P 500 and the DJIA closed
at 17-month highs.

U.S. markets got a big boost from their overseas counterparts.
The Japanese NIKKEI may have stumbled 135 points to 10,559 but
its Hong Kong neighbor the Hang Seng index added 196 points to
close at 12,386.  Across the Atlantic were gains in the British
FTSE, up 1.05% to 4332.  Meanwhile the Germans lead the charge
with a 2.42% gain in the DAX.  The Dow Jones Industrials Average
closed up 57 points at 9858, almost breaking 9900 intraday.  The
NASDAQ Composite added 35.49 points or 1.83% to close at 1967.
The S&P 500 added more than 8 points to follow through on
Friday's close above technical resistance at 1050.  The SPX
closed at 1059.

Today's biggest gainers were in technology lead by the
Semiconductor index (SOX) and followed by stocks in Networking,
Internet and Hardware sectors.  Non-technology winners were heavy
in homebuilders and the broker-dealer sectors.  Selling was
concentrated in gold stocks, oil services and the healthcare
sector.  Market internals were very bullish.  Advancing issues
whipped decliners almost 20 to 8 on the NYSE and 21 to 10 on the
NASDAQ.  New Highs soared to 817 versus new lows of just 16.  Up
volume was very bullish coming in at three times down volume on
both exchanges.

Chart of the DJIA:




Chart of the NASDAQ COMPX:




The big economic event for the day was the ISM index.  Released
at 10:00 AM ET the ISM manufacturing index rose to 57 percent,
beating estimates of 55.4 percent and jumping 3.3 percent from
September's reading.  October was the fourth consecutive month of
gains.  Readings above the 50 mark indicate that business was
improving or holding steady.  October's reading at 57 is the best
pace since January 2000.  Manufacturers have seen business
improving due to the need to refill low customer inventories.
October's reading put customer inventories falling to 39 percent,
a record low only matched by May 2002.  Investors cheered the new
orders component, which rose to 64.3 percent in October from 60.4
percent in September.  This is the best pace since June 1994.
Optimists also noted the strong jump and nine-year high in the
export component, which rose to 59.6 up from 52.9 in September.
Overall it was a very strong report and yet another stepping
stone the markets needed to hear to keep the momentum alive.
With inventories so low the manufacturing sector should be
humming throughout the rest of 2003 as they race to replenish the
country's inventories.

Bulls also cheered the positive construction spending numbers
that came out today.  Construction spending rolled out at +1.3
percent versus estimates for a gain of just +0.4%.  Economists
noted that private non-residential building construction rose
2.5%, which is the biggest gain in a year.

Today's biggest winners were in the chip sector as the SOX index
rose 3.87% and closed at levels not seen since May 2002.  The
rally was fueled by a 6.5% jump in global chip sales for
September, according to the Semiconductor Industry Association
(SIA).  The rise in sales was the biggest monthly improvement
since 1990.  The SIA also said quarterly revenues soared more
than 17 percent to $43.3 billion compared to a year ago.
Technology bulls will be looking for more good news from the SIA
when the industry group releases its long-term outlook for 2003
through 2006.

Nowadays we can't have a Monday without some merger news and
today was no different.  Chips stocks also got a boost from news
that Conexant Systems (CNXT), a broadband chip producer, would
buy GlobespanVirata (GSPN).  GSPN shareholders will get almost
1.2 shares of CNXT for each share of Globespan, which at Friday's
prices valued GSPN at a 14% premium.  There was also merger news
in the energy sector.  Exelon (EXC), a Chicago-based energy
company, announced it would buy Illinois Power from Dynegy (DYN)
for $425 million.  Both EXC and DYN rose higher on the news.

Bulls were definitely in control on this first trading day for
November but not everything closed in the green.  The strong
economic numbers in the ISM boosted the dollar and suddenly
traders felt less inclined to buy gold as a safety hedge.  The
U.S. dollar surged to one-month highs against the euro and the
yen.  Meanwhile December gold futures dropped $7.50 to close at
$377.10 an ounce.  The XAU gold & silver index fell 2.13%.  All
together these influences sent bonds lower and the yield on the
10-year note jumped to 4.36%.

Oddly enough the markets seemed to ignore the growing mutual fund
fiasco.  The growing firestorm over fraud charges for illegal
trading forced Putnam Investments to fire CEO Lawrence Lasser,
who lead the company for 18 years.  Lasser was one of the highest
paid industry professionals earning more than $160 million over
the past six years.  NY State Attorney General Elliot Spitzer
said the bloodletting isn't over.  At a Senate subcommittee on
financial management the high-profile prosecutor called the
mutual fund industry a "cesspool" and suggests that funds should
surrender all fees that were collected while these illegal
trading abuses were being practiced.

Normally the first three to five days of the month are bullish as
mutual funds put new money to work and this can be exceptionally
true in November as they begin a new fiscal year.  The breakout
to new highs on the $INDU, NASDAQ and the technical breakout over
1050 on the S&P 500 should have bears running scared again.  It
wouldn't surprise us to see sellers just step back and wait for
the Dow to hit 10,000 and the NASDAQ to hit 2,000 before
attempting to short these round-number psychological resistance
levels.  The impulse to short these levels may be compounded by
the new lows we are witnessing in the VXO.  The combination will
likely be too much for bears to resist, even in their current
state of pain.  The next couple of days could prove interesting.


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

Uncle Buck's Revival
Jonathan Levinson

The US Dollar Index sprang to life, jumping more than 1% in less
than 1 hour.  Gold and treasuries were sold, and equities
rallied.

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




Note 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.

10 minute chart of the US Dollar Index


Weekend news of setbacks in Iraq and new official allegations of
widespread wrongdoing in the mutual fund industry was washed away
on bullish US manufacturing data, and I'll let the chart speak
for itself with respect thereto.  Gold, silver and the CRB all
sold off in US Dollars, as did the euro, swiss franc, yen and CDN
dollar futures.

Daily chart of December gold


The extent of the US Dollar rally is well-reflected in the chart
of December gold.  The pullback was not unexpected, but as usual,
the speed and extent of it was.  Dec gold printed a low at
376.70, and was trading –7.10 or –1.85% at 377.50 as of this
writing.  We have sell signals on the oscillators with a bearish
divergence thrown in for good measure.  December silver was
pummeled for 2.39% as of this writing at 4.994, with an intraday
low of 4.911.


Daily chart of the ten year note yield


Bonds sold off, with the TNX adding 6.7 bps to close at 4.368%.
While the small gap above Fibonacci resistance was  interesting,
the action in treasuries continues to build suspense within the
narrowing pennant, and direction will be a tossup until either
the lower or upper trendline is broken.  The oscillators are
reflecting this narrowing range, flipping from bearish to bullish
kisses just as they did last week for gold.


Daily NQ candles


In the weekend Futures Wrap, we observed that the (then) 52 week
highs presented a convenient level against which shorts could
base their positions, and that a move above them could ignite a
short covering frenzy, cause the intraday oscillators to begin
trending and turn the daily chart oscillators up onto bullish buy
signals from an aborted downphase.  This is exactly what
occurred.  The VXO hit and maintained ludicrously low levels
below 17, and shorts panicked as expected.  The only surprise was
that shorts couldn't panic more, and that more bulls didn't pile
on to the breakout to new 52 week highs.  The Nasdaq broke 2B
shares' volume and outperformed the S&P/Dow indices, both
price-wise and volume-wise.

Notwithstanding the breakout and the new buy signal on the daily,
the bearish interpretation somehow survived, with the move not
surpassing the upper trendline on the old bear wedge we've been
following since the 1300 low in October.  While nominal new price
highs were made today, the resistance area appears to be intact.


30 minute 20 day chart of the NQ


The NQ 30 minute chart gave us our truncated downphase and the
break above the previous double top 52 week highs, with an
intraday high of 1448.  The surge to the high appears to have
marked the top of the oscillator upphase on this timeframe, and
sets up a bearish divergence on the Macd.  The higher price high
against the lower Macd tends to precede price corrections, and
combined with oscillator rollovers on this timeframe, I'm
favoring downside tomorrow. 1435 is first support, followed by
1420, 1415, 1410 and 1392.

Daily ES candles


The ES had a good day as well, but also failed at the top of that
daily bear wedge resistance.  The oscillators flipped up on buy
signals, still no sign of weakness in 7 sessions.  The wedge
projects down to 987, but could be broken at any time to the
upside.  1038-40 is key support, and resistance is now at 1061 ES
with an intraday  high of 1060.50.  Volume on the NYSE was a mere
1.36B shares despite the breakout price action, and it looks more
like short covering occurred today than any real bullish buying-
with the VXO below 17 for much of the session, I'm not surprised,
but a breakout remains distinctly possible so long as 1040 isn't
violated to the downside.

20 day 30 minute chart of the ES


The ES also peaked in the afternoon, making a marginal new high
at 1060.50 above the morning high of 1059.75.  The afternoon
failure sealed a bearish Macd divergence and kicked off an
oscillator downphase within what appears to be a bearish rising
wedge projecting to 1016.  The support line at 1056 was violated
after the cash close, with the 4:15PM print at 1054.  If the
downphase on this chart gains any price traction, we should see
1052 support taken out, setting up a test of 1044, followed by
the critical 1038-40 support level.  Needless to say, a bounce
from 1052 would be very bullish, but it's becoming increasingly
difficult to contemplate realistic bullish scenarios with the VXO
so vastly oversold.

150-tick ES


The end of day selloff is the most interesting feature of the
intraday chart, as it refutes all of the buying that occurred
since 10AM.  Everyone who bought and held since 10AM was
underwater at 4:15PM, which is classic distribution action. Yet
another golfclap for the specialists is in order.

Daily YM candles


Same picture on the YM.  Note that the YM, which has led to the
upside during the past week, lagged the NQ today, with the NQ up
1.52%, YM up .48% and ES up .43%.


20 day 30 minute chart of the YM


Numbers don’t lie, and I just had to adjust the column width on
my pivot template to allow for YM R3 at 10040.  While there are
good technical and fundamental reasons to expect a decline from
here, how many are gunning for the big round number targets of
Dow 10,000 and Nasdaq 2,000?  Logic and reason are but two of the
plethora of things that equity markets ignore in the short term.


For tomorrow, we will watch to see if the continued strength in
the dollar lifts or hinders equities and bonds.  I expect
commodities to continue to get sold on dollar strength, as it’s a
direct relationship.  Between bonds and equities and the dollar,
however, we need to see how the trend continues to develop.  I
don’t expect bonds to diverge from stocks for long, because,
again, I believe this to be a bear market rally.  If the spring
rally was liquidity driven, with a weak dollar buoying stocks and
bonds, then a strong dollar should reverse it.  "Should" is not a
good word for the markets, and so we look to tomorrow for further
clues.


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

Manufacturing puts its best hoof forward

The major equity indices finished today's session with gains,
while the U.S. dollar jumped against major foreign currencies
with the U.S. Dollar Index (dx00y) 93.68 +1.02% gaining 0.95
points after the Institute for Supply Management (ISM) said its
manufacturing diffusion index rose 3.3 points in October to 57.0,
the strongest monthly gain since December 1999.

The news out of the manufacturing sector had the S&P 500 Index
(SPX.X) 1,059.02 +0.79% breaking to new highs, as October's gains
in the ISM helped increase bullish optimism that the recently
reported Q3 Gross Domestic Product annual growth of 7.2% may have
the manufacturing sector carrying further momentum into the
fourth quarter.

While October's 57.0 reading was well above economists' forecast
of 55.9 and September's 53.7, the new orders component gained to
64.3, while production rose to a 62.6 reading; both signaling
further expansion.  With new orders still ramping, a low
inventories reading of 44.5 showed demand pulling inventories off
the shelf and had backlogs continuing to rise to 53.5.

Employment continues to struggle, but did show modest improvement
in October with a 47.7 reading.  The ISM says payroll is
considered neutral at 47.5.

The prices paid component continued to bounce either side of 55.0
as pricing power for output remained weak.  The weaker dollar,
which hit multi-year lows in October versus the yen and euro
helped boost new export orders to 59.6, as did stronger global
growth.

It didn't take bulls long to get some early tests of WEEKLY R1s
in the pivot matrix, helped in part by a bullish report this
morning out of the Semiconductor Industry Association (SIA)
showing year-over-year growth up from 14% to 17%.

ThinkEquity felt the data was surprisingly bullish as the robust
September replaced the month of June, where the data suggests the
strength appears to have held up in October.  ThinkEquity also
felt the lunar new year coming much earlier than normal (late
January) may also have been responsible for the stronger results.
The SIA data also hinted that high-performance analog demand was
strong, which reinforced ThinkEquity's belief that during the
second half of the chip recovery underway, company's like Texas
Instruments (NYSE:TXN) $29.93 +3.49% and STMicroelectronics
(NYSE:STM) $27.22 +2.17% were large cap names that might benefit
most ahead of quarterly earnings out of Dell Computer
(NASDAQ:DELL) $36.52 +1.44% and Cisco Systems (NASDAQ:CSCO)
$21.71 +3.72%, where ThinkEquity looks for both companies to
upwardly revise guidance.

The Semiconductor Index (SOX.X) 515.77 +3.87% was today's sector
winner, while a rebound in the dollar found the AMEX Gold Bugs
Index ($HUI.X) 208.86 -3.37% today's sector loser.

Pivot Analysis Matrix -





While nothing is certain, today's close above the 1,051.20 level
for the December S&P futures contract (sp03z) marks the first
close above this key level of resistance and looks to have a
bullish bias now building to 1,073.30.

This would be pretty close to the cash SPX MONTHLY R1 of
1,071.01, where we also see some overlapping support forming at
the MONTHLY Pivot of 1,033.49 and WEEKLY S1 of 1,035.57.

Lets keep WEEKLY S1 and MONTHLY Pivot in our minds as we enter a
new week and new month, where new 52-week highs most likely has
sellers few with the major indices showing strength above what
had been deemed a cement ceiling the last couple of weeks.

Still, bulls should not be complacent, but once again will have
confidence to buy a pullback, with the thought the bears will
also be looking to limit exposure as a new 52-week high has been
witnessed.

December S&P futures (sp03z) - Daily Interval




Ability of S&P futures (sp03z) to settle above 1,051.20 builds
bullish bias to 1,073.30.  It would appear that recent pullback
in sp03z seemed to find settlement very close to 1,029.10 as if
traders were trying to square up positions at that level, and
today's ability to settle above 1,051.20 gives upside to
1,073.30.  Note the 4-point disparity between future and cash, as
this ties to important support for October at the MONTHLY Pivot
in the SPX (cash) at 1,033.49.

S&P 500 Index (SPX.X) - Daily Interval




SPX traded WEEKLY R1 today, and while bullish, also shows
similarity to original scenario that SPX might duplicate its mid-
September trade and new 52-week high.  MACD above signal gives
confirmation to upward trend, but Stochastics now "overbought"
should have swing-trade bull looking to guard profits, raise some
cash, and look for new bull entries on pullback, where
Stochastics at "oversold" have been good entries.  I've found it
difficult to precisely forecast "trough" pullback points as
Stochastics oscillator can move quickly to oversold, where 1,044
becomes near-term support, while 1,033-1,035 a much nicer bullish
entry point, both with targets back higher to 1,068-1,069.

In a past Index Trader Wrap, I did think an AGGRESSIVE BEAR could
look for a partial bearish position if/when the SPX made a new
high similar to that found in mid-September, like we saw today,
but I'd prefer to let tomorrow's trade develop and try to get a
good action point for weakness for a trade entry on Wednesday.
An AGGRESSIVE BEAR might look for an entry tomorrow, but higher
at 1,068-1,069, where from that point, I would think high
likelihood of SPX pullback to at least 1,044-1,047.

Today's trade saw a net gain of 2 stocks to reversing point and
figure buy signals in the broad S&P 500 Bullish % ($BPSPX).
Still "bull confirmed" status at 80.4%.

S&P 100 Index (OEX.X) Chart - Daily Interval




MSFT getting nice bounce from its 200-day SMA, but GE finds
resistance at trending lower 21-day SMA ($29.08) and looks like
it wants to trade its 200-day SMA of $27.91.  This gives mixed
look to OEX's two largest-weighted stock and has me thinking OEX
MAX WEEKLY gain of 527, so not excited about any new bullish
positions here.  Look for pullback entry once again near 513,
where WKLY S1 now marks this summer's (June) relative highs.

Today's trade saw no net change in the narrower S&P 100 Bullish %
($BPOEX).  Still "bull correction" status at 79%.

Dow Industrials Chart (INDU) - Daily Intervals




The price-weighted Dow Industrials traded overlapping resistance
of 9,896.3, and didn't get some needed help today from its
heavyweight PG, which traded a 52-week high yesterday, but fell
back today.  INDU as well as PG may need to reload, but I think
destiny calls for PG to trade $100.00, when INDU trades 10,000.

On Friday, AT&T (NYSE:T) $18.87 +1.50 traded $18.50 and that was
a double-bottom sell signal.  That had the very narrower Dow
Industrials Bullish % ($BPINDU) slipping 3.33% to 80.00%.  There
was no change on the bullish % chart (2% box scale), but still
"bull correction" status at 80.00%.

NASDAQ-100 Tracking Stock (QQQ) Chart - Daily Intervals




QQQ edged up to a 52-week high, but not euphoria I would have
thought on semiconductors.  Ideal pullback entry would be $34.49-
$34.60 ahead of CSCO's earnings.  CSCO did break to new 52-week
high today, and on bullish guidance going forward, could get the
more "euphoric" QQQ pop to $36.61-$36.85 level.

QQQ targetto $36.61-$36.85 also a potential should MSFT fill to
the upside its recent gap lower.  Hey!  With Sun Microsystems
(NASDAQ:SUNW) $4.38 +11.1% getting a bounce in recent session,
MSFT looks "cheap" on fundamental comparison.

Today's trade saw a net loss of 1 stock to a point and figure
sell signal as the NASDAQ-100 Bullish % ($BPNDX) slipped lower by
1% to 76.00%.  Still "bear correction" status and would take a
further bullish reading of 82% to achieve "bull confirmed," while
a lower reading of 72% is needed to reverse back lower to "bear
confirmed."

Jeff Bailey


------------------------------------------------------------
 optionsXpress has "...a lot of bang for the buck."--Barron's

  $1.50 /contract (10+ contracts) or $14.95 Min. No hidden fees
  Easy screens for spreads, collars, or covered calls!
  Contingent, Stop Loss, Trailing stop, or OCO
  8 different online tools for options pricing, strategy, and charting

Go to http://www.optionsxpress.com/marketing.asp?source=oetics25

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
------------------------------------------------------------


*******************
FREE TRIAL READERS
*******************

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

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

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

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

Contact Support
The Option Investor Newsletter                   Monday 11-03-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: LOW, QLGC, JBLU
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - LOW
Watch List: A few high dollar NDX components

Updated on the site tonight:
Market Posture: One Small Step for Man, One Giant Leap for Wall Street


------------------------------------------------------------
We got trailing stops!
  Trade online with trailing stops at optionsXpress, at no extra cost
  Trailing stops based on the option price or the stock price
  Also place Contingent, Stop Loss, and "One Cancels Other" orders
  $1.50 /contract (10+ contracts) or $14.95 Minimum--NO Hidden Fees!

Go to http://www.optionsxpress.com/marketing.asp?source=oetics23

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
------------------------------------------------------------


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

LOW - call
Adjust from $57 up to $58

QLGC - call
Adjust from $52.99 up to $55.50

JBLU - call
Adjust from $60.51 down to $59.50


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

None


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

None


------------------------------------------------------------
VOTED one of "Best Online Brokers" (4 stars)--Barron's
  optionsXpress's "order-entry screens...go far beyond...
   other online broker sites"--Barron's
  8 different online tools for options pricing, strategy, and charting
  Access to options specialists via email, phone or live chat online
  Real-Time Buying Power, Account Balances or Cancels

Go to http://www.optionsxpress.com/marketing.asp?source=oetics22

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
------------------------------------------------------------


**********************
PLAY OF THE DAY - CALL
**********************

Lowe's Companies - LOW - close: 58.93 change: -0.52 stop: 57.00

Company Description:
As a retailer of home improvement products, Lowe's has a specific
emphasis on retail do-it-yourself and commercial business
customers.  The company specializes in offering products and
services for home improvement, home decor, home maintenance, home
repair and remodeling and maintenance of commercial buildings.

Why we like it:
As we expected, LOW gave us that breakout over $59 last week, with
price stretching all the way up to $59.95 before the bulls lost
their nerve.  Since achieving that peak on Tuesday, the stock has
been gradually drifting back down, and it looks like old
resistance in the $58.00-58.50 area is being tested to see if it
can now hold as new support.  Traders that didn't take the initial
breakout over $59 are now getting a second chance to enter the
play.  Rebounds from above $58 look viable as new entry points, so
long as our $57 stop is not violated.  With just over 2 weeks to
go until the company reports earnings on November 17th, there's
still plenty of time for the stock to achieve our upside target of
$65.  More cautious traders may want to wait for a break above $60
before jumping aboard with new positions.  Watch for continued
strength in the Dow Jones Housing index ($DJUSHB) and the Retail
index (RLX.X) to confirm continued bullishness in shares of LOW.

Why This is our Play of the Day
Positive economic data this morning had the bulls feeling frisky
and that was enough to poke both the Dow Jones Home Construction
index ($DJUSHB) and the Retail index (RLX.X) to fresh highs.  The
$DJUSHB is at all time highs and the RLX (currently $389) is
within spitting distance of its $394.50 all-time high.  So it
would have been a real surprise to have NOT seen LOW break out to
new all-time highs of its own.  Fortunately, we weren't surprised,
as the stock tacked on 1.9% and closed above $60 for the first
time ever.  The top of the rising channel (now at $61.75) and the
upper Bollinger band ($60.07) are still presenting some
resistance, but we're looking for LOW to continue marching higher
right into its November 17th earnings announcement.  It appears
there is now strong support at $58.50, the site of former
resistance, so intraday dips and rebounds from above that level
look attractive for new entries.  While we're targeting $65 for
the play, keep in mind that reaching that level ahead of earnings
will require a breakout from the rising channel.  With the top of
the channel likely in the $62.50-63.00 area at the time of the
company's earnings report, more conservative traders may want to
harvest gains on any push up into that area ahead of the earnings
announcement.  Raise stops to $58 tonight, which is below both
last Friday's intraday low and the supportive 20-dma at $58.32.

Suggested Options:
Shorter Term: The November 60 Call will offer short-term traders
the best return on an immediate move, as it is currently at the
money.

Longer Term: Aggressive traders looking to capitalize on an
extended rally will want to look to the December 65 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 December 60 Call.

BUY CALL NOV-55 LOW-KK OI= 2323 at $5.60 SL=2.75
BUY CALL NOV-60 LOW-KL OI=11100 at $1.70 SL=0.60
BUY CALL DEC-60 LOW-LL OI= 1078 at $2.65 SL=1.25
BUY CALL DEC-65 LOW-LM OI=  469 at $0.80 SL=0.40

Annotated Chart of LOW:



Picked on October 23rd at    $58.65
Change since picked:          +1.40
Earnings Date              11/17/04 (unconfirmed)
Average Daily Volume =     3.89 mln



------------------------------------------------------------
WINNER of Forbes Best of the Web Award
  optionsXpress voted Favorite Options Site by Forbes
  Easy screens for spreads, collars, or covered calls
  Free streaming quotes
  Real-time option chains, charts + calculators

Go to http://www.optionsxpress.com/marketing.asp?source=oetics21

Note: Options involve risk. Risk disclosure:
http://www.optionsxpress.com/welcome_risk_index.htm
------------------------------------------------------------


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

A few high dollar NDX components

Electronic Arts - ERTS - close: 98.73 change: -0.21

WHAT TO WATCH: We continue to keep our eyes on ERTS.  The stock
failed to hold on to its rally over the $100 mark last week but
today produced a nice bounce from the 96 level and its 50-dma.
There was some negative news from a video game retailer today,
which probably weighed on ERTS's gains.  Look for a move back
above the $100 level.

Chart=


---

Paccar - PCAR - close: 79.40 change: +0.32

WHAT TO WATCH: Once again PCAR is fighting with its simple 50-dma
just overhead.  This time its technical resistance coincides with
the $80 round-number level.  A breakout could be worth playing
but look for additional resistance just under $82.  Bears could
seek aggressive entries on a move below $78 but watch out for
PCAR's trend of higher lows.

Chart=


---

Amgen Inc - AMGN - close: 61.15 change: -0.61

WHAT TO WATCH: We are posting AMGN back on the watch list because
shares have failed to break above its 200-dma again.  The stock
is oversold and does have a short-term trend of higher lows but
there doesn't seem to be much conviction from the buyers.  Bulls
can look for a move over $63.00.  Bears may want to wait for a
drop back under $60 before evaluating plays.

Chart=



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

One Small Step for Man, One Giant Leap for Wall Street

To Read The Rest of The OptionInvestor.com Market Posture Click Here
http://www.OptionInvestor.com/marketposture/mp_110303.asp


*******************
FREE TRIAL READERS
*******************

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

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

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

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

Contact Support

DISCLAIMER

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

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

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

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives