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Daily Newsletter, Tuesday, 12/02/2003

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The Option Investor Newsletter                Tuesday 12-02-2003
Copyright 2003, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Like Moths to a Flame
Futures Markets: Dollar Devastation, Equity Obfuscation
Index Trader Wrap: Treading water
Market Sentiment: Treading Water


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      12-02-2003           High     Low     Volume Advance/Decline
DJIA     9853.64 - 45.40  9900.45  9837.27 1.77 bln   1582/1608
NASDAQ   1980.07 -  9.80  1996.08  1978.23 1.78 bln   1580/1696
S&P 100   524.71 -  1.89   527.02   523.85   Totals   3162/3304
S&P 500  1066.62 -  3.50  1071.22  1065.22
W5000   10441.68 - 29.40 10492.66 10432.96
RUS 2000  553.60 -  0.99   557.42   553.28
DJ TRANS 2936.36 - 25.20  2964.24  2935.45
VIX        16.27 -  0.50    16.89    16.17
VXO (VIX-O)16.42 +  0.45    16.90    15.99
VXN        26.72 +  0.43    26.94    25.81
Total Volume 3,824M
Total UpVol  1,496M
Total DnVol  2,270M
52wk Highs 1106
52wk Lows    23
TRIN       1.31
NAZTRIN    1.33
PUT/CALL   0.71
************************************************************

Like Moths to a Flame

The bulls gravitated to overhead resistance at 9900/2000 again
and like moths dodging a flame they were careful to stay just
out of touch. The Dow just nicked the 9000 level by .45 of a
point right at the open and then wandered lower but within
reach the rest of the day. The Nasdaq traded less than four
points from 2000 before getting its wings singed by a sell
program that could have been triggered by a proximity fuse.

Dow Chart


Nasdaq Chart



The day started out on a bad note after the weekly Retail
Sales dropped -0.1% despite two of the strongest sales days
of the year. Not a good sign in my opinion. There were all
kinds of excuses about weather, inventory shelving and
competition but the bottom line was weaker than expected
sales. All the smoke about the improved employment picture
suddenly cleared and analysts saw that the change of 200,000
jobs over the last couple months did little to give consumers
cash to buy gifts. Yes, the trend has changed but not strong
enough to produced a new wave of broad based employment.
Consumers are still hoarding cash. While the news reports
were full of early bird specials on Friday the rest of the
weekend was tame in comparison. 31% of consumers surveyed
said they were going to spend less this year. Only 22% said
they were going to spend more. 35% said they were going to
wait until the last two weeks of the holiday season. Wal-Mart
fell to a new five-month low of 53.02 on the disappointing
news.

That employment picture continued to improve with the November
Challenger Layoff report showing a drop of 40% in the numbers
from October. In November there were 99,452 job cuts announced
compared to 171,870 in October. This was encouraging but the
number was still well above the 60-70,000 levels from last
summer. The elevated levels still show that companies are
trying to cut costs rather than staff up for the recovery.
We will get another look at employment on Friday with the
November Jobs report. The estimate is for a gain of +140,000
jobs compared to +126,000 in October. This will be a critical
report. If the number falls but remains positive it may not
be disastrous but a negative number would be a disaster.
Also, we need to watch for a revision of the number from
last month. The November whisper number is nearing +200,000
and is way out of line in my opinion. This is setting us up
for a serious disappointment.

If we get a blowout number then the FOMC meeting on Tuesday
will be a major market event. A strong jump in jobs would
insure a removal of the "considerable period" statement and
possibly a change in the bias to tightening. A drop in the
number of jobs to +50K or so would keep the recovery on a
tentative basis and the Fed may feel more comfortable in
leaving things alone. This is a critical report and the
outcome will directly impact the Tuesday Fed meeting. This
puts the markets on notice that things could change quickly
and could stimulate some cautionary selling.

The Auto Sales data was mostly positive today with only
Ford posting negative numbers for the month. GM posted a
+22% gain in overall sales and +30% gain in trucks. DCX
showed a minor +3% gain with Nissan up +15%. Ford fell -2%
for the period. Cadillac was a strong GM performer with a
whopping 40% gain. GM raised production targets by 10,000
units for the quarter. Incentives are also creeping up
with the average expected to be +$4000 in December. The
automakers were mostly optimistic about coming quarters
and are looking forward to strong sales in the 1Q boosted
by the next $150 billion in tax stimulus to consumers.

Another fund was hit with charges today but unlike the
others vowed to fight the charges. Invesco Funds said they
had done nothing wrong despite the charges levied on them
for late trading and market timing. The war of words flew
both directions all day and Invesco posted a strongly
worded rebuttal on their website. They said they had done
nothing wrong and the charges will be "vigorously contested".
They claim they never participated in late trading and that
their market timing trades were permissible and not contrary
to the best interests of the shareholders.

The Dollar plunged again on the currency markets and with
the drop in the dollar came the rise in gold to a high of
$407 and a close at 404.80. All commodities continue to
rise on the recovery hopes and in some cases terror threats.
Oil rose over $30 a barrel once again after a three day dip
under that technical level. Cold weather also helped jack
up oil prices but new terror threats continue to put strain
on potential availability of future supplies.

The markets today were very cautious. The initial Dow tick
to 9900 triggered some light selling that pushed the index
back to support at 9850 and it spent the rest of the day
between 9850-9890. Well within striking distance of 9000
but maintaining a cautious distance away. The Nasdaq
struggled to within 4 points of 2000 around 2:PM and after
lingering in the area for about 15 min a very strong sell
program triggered that knocked it back to just above 1980.

What I believe we are seeing is fear of round numbers. That
is fear of round number targets. Nasdaq 2000 is obviously
a target that has been in trader sights since Jan-2002 when
we dipped below that level. After nearly two years the
Nasdaq is drawing back to that now strong resistance and
there are a lot of investors that will be very happy to
just get out alive when that number is reached again. They
have been holding for this event to get even for two years.
The last rebound over 2000 came on Dec-5th 2001 from the
post 9/11 Nasdaq low of 1387. Euphoria was high and techs
were soaring. They traded in the 2000 range for a little
over a month before slipping back below 2K on Jan-15th.
Traders were sure it was just a profit taking dip from the
+600 point bounce and many held their positions until it
was too late or too expensive to exit. Now two years later
and after a dip to 1100 they are almost back to where they
started. With memories of a +50% bounce failing at 2000
in 2002 they are probably plenty of fears of the current
+81% bounce to 2000 in 2003 failing as well.

Many funds have accumulated huge profits with this bounce
and they are probably very worried that somebody will
blink before Dec-31st and start a cascade of profit taking.
I have speculated that a touch of 2000 would trigger some
sell programs from profit takers. When the Nasdaq stalled
only 4 points away from 2000 for about 15 min this afternoon
I suspect the pressure was too much to bear for whomever
pulled the trigger on the big program. If you have been
waiting for months for that target to be hit and your bonus
is riding on your funds performance then cheating by four
points makes sense to me.

Did that relieve the performance anxiety for the next touch
of that level? I doubt it. The same thing has been happening
at Dow 9900 but not in the same volume. The big programs
are probably waiting for D10K and as long as we linger in
in the 9850-9900 range they may not decide to adjust the
triggers. The danger here is a perceived lack of progress.
We have been stopped dead at 9900 on every attempt since
November 3rd. 9900 is the down trend resistance since Jan
2000 and very strong resistance. However this is December
and typically the second strongest month of the year. The
economy is exploding according to most economic reports
and investors are throwing money at mutual funds despite
the scandals.

This scenario is setting the markets up for massive end
of year confusion. Retail investors are buying and
institutional investors, hedge funds and mutual funds are
trapped in high flying stocks with no easy way out. With
cash flowing into funds in near record amounts it is tough
to justify selling winners. It is tougher to find a place
to put the new money. Hedge funds may have large profits
but are paid on year end results. They do not want to sell
now unless they have to. What we have is a confluence of
major buying pressure and major selling pressure with the
calendar counting down to the year end deadline.

This has caused stagnation at the 52-week highs. There
is not enough buying pressure to push us over 9900/2000
top. They are happy to buy the dip but they do not want
to buy the top. The market is perceived as fully priced
despite the exploding numbers. It is fully priced because
the market expected the economy to recover. It expected
double digit earnings growth in the 3Q and 4Q because
all the analysts had been predicting it since January.
It was the 3rd year they predicted it but that is another
story. You could make a case for a stronger than expected
gain due to the GDP but very few traders believe that
number anyway.

This leaves us in serious confusion. Over the last 50
years the S&P has gained an average of +1% in December.
Last year the S&P lost -6%, -80 points in December. The
high for the month was set on 12/2. In Dec-2001 the high
was set on 12/5 and then the S&P dropped -60 points into
the middle of the month. In 2001 the high was set on the
11th and the S&P dropped -136 points by the holidays.

The bottom line here is that we have a recent historical
trend that suggests the high for the month could be set
early and then portfolio rebalancing, year end profit
taking, etc puts pressure on the market. We definitely
have profits to take. To be fair the prior three years
for comparison were all bear market years. Somehow when
traders look back to see prior seasonal patterns they
tend to overlook the bigger trend.

While that bigger trend would work in favor of the analysts
when just looking a the prior three Decembers there is a
bigger trend that works against us. That is the downtrend
from Jan-2000. It intersects at Dow 9900 and is serious
resistance.

Dow Weekly Chart



I would also note that three of the last four Januarys have
seen significant losses. 2003, nearly -900 points off its
highs, 2002, nearly -800, 2001, -550. 2000 had two separate
drops in January of -600 and -1050 points. A very volatile
month.

I have gone to great lengths to paint the picture for the
next six weeks. We have rebounded +80% on the Nasdaq and
+34% on the Dow. The rebound has stalled exactly at strong
downtrend resistance. There is very strong overhead supply
at D10K and N2K. Portfolio managers are looking at the
recent January trends and thinking "how much longer should
I hold" or "how much farther can we go?" In each case they
are risking a lot with very little upside left. I say very
little upside because any move over 9900 will draw the D10K
sellers that are getting out early.

In my previous commentaries I wrote that I expected a bounce
to 9900 this week and then a slight sell off for a week or
so, then a bounce into the holidays. That holiday bounce
rarely reaches the prior highs for the month. I suggested
that any breakout to 10,000 would be sold heavily. At
present I am not seeing any catalyst to produce that
breakout. We have ISM Services tomorrow but that is not a
big report. After ISM Manufacturing the services number is
assumed to be ok and traders look elsewhere. Friday is the
big one with the Jobs Report. With the whisper number
around +200K we could be disappointed. Add in the rate
anxiety for next Tuesday and traders have more to worry
about than they do to be excited about.

The prediction for the rest of the week is high risk. We
could move up but I think the bulls are starting to weaken.
They have over indulged on good news for weeks and the Jobs
Report is the desert. The harsh reality of the FOMC meeting
could be the heart attack that shocks them awake and begins
the slim down diet. I would love to see them get their second
wind and race off into the holidays and bust through 10,000
like a marathon runner through the tape but that only sets
up another "what now" scenario. I would suggest we don't
get our hopes too high and not be surprised if December is
disappointing. Keep the faith until the red candles begin
to appear but keep one eye on the exit.

Enter Very Passively, Exit Very Aggressively!

Jim Brown
Editor


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FUTURES MARKETS
***************

Dollar Devastation, Equity Obfuscation
Jonathan Levinson

The US Dollar Index broke to new multiyear lows below the widely
watched 90.00 level, and equities reacted by making marginal new
highs before selling off in the afternoon.  But the selloff was
short-lived.  Treasuries finished at their session highs, with
gold and silver advancing fractionally.

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


I'll let the chart speak for itself.  The US Dollar Index was
trading 89.65 as of this writing.  Gold and silver advanced, as
did the CRB, gaining 2.29 at 256.66.  As the Fed continues to
deny the existence of inflationary risks, the CRB and precious
metals markets continue to make multiyear highs.

Daily chart of February gold


Amidst reiterations of Barrick's intention of unwinding all its
hedges and the US Dollar Index getting smoked, gold printed a new
multiyear high at 407.  Maria Bartiromo, that limitless fount of
market insight and financial savvy, wondered aloud "how much
higher it could realistically go".  You couldn't ask for a bigger
anecdotal buy signal than that.  February gold closed at 404.70,
up .90 against a low of the day at 400.40.  The daily cycle
oscillators are trending, but the 10 day stochastic is at a lower
oscillator high against the higher price high.  We need to be
attentive to the possibility of a negative divergence here, with
399 key support in this current leg of the gold rally.


Daily chart of the ten year note yield


Ten year notes

Got whipped around but closed positive, with the ten year note
yield closing lower by 1.2 basis points at 4.38%.  I note this
with utter amazement, given the vertiginous drop in the US Dollar
Index as well as the hefty 7.75B repo drain from the Fed.  I
don't know from whence the money came, although Fukui-san at the
Bank of Japan comes quickly to mind.  Nevertheless, the move was
countertrend, and did nothing to impede the yield upphase
currently in progress.

Daily NQ candles


The NQ was the stronger index all day long in what appeared to be
a foreign liquidation of blue chips, but that changed with the
afternoon selloff following a large NDX put buy.  The NQ finished
lower by 8 or .55%, compared with 2.25 or .21% for ES and 33 or
33% on YM.

The current daily cycle upphase on the NQ has to be one of the
more troublesome signals with which we've had to contend.  It
came at a time when the index was most apt to collapse, and has
been fighting synchronous weekly and intraday sell signals every
step of the way.  As on the chart of the TNX, the daily NQ
suffered no technical damage from today's pullback, and the
uptrend is still well-established.  That said, the broken wedge
trendline remains unbroken so far, and the confluence of
resistance makes this a prime candidate for an early end to the
upphase.  For the time being, however, there is no indication
that such will occur.  A break back 1415 could change that, but
support at 1425 will have to fail first.


30 minute 20 day chart of the NQ


The 30 minute chart affords bears a brighter ray of hope, with
the afternoon selloff taking out the rising wedge trendline with
authority, and confirming several bearish oscillator divergences
in the process.  This wedge breakout projects all the way to
1358, but the whole area from 1415 to 1428 is strong support, and
with the 30 minute downphase already well-advanced, bears might
run out of time before the daily cycle upphase reasserts itself.


Daily ES candles


I haven't drawn the steeper wedge trendline on this daily ES
chart, but 1070 now has a number of trendlines intersecting to
form stiff resistance at that level.  Today's correction retraced
part of yesterday's strong move, and as with the NQ, did little
to alter the bullish tenor of this chart.  1056-58 is immediate
support, although 1062-64 has yet to be meaningfully tested.
Bears need to understand that, despite the abundance of factors
signaling a precipitous drop from current levels, bulls have
managed to build a strong uptrend with plenty of downside
support.  The bear wedge targets of 987 and 955 seem like a long
way down, and bears do not need to rush their entries above that
support.


20 day 30 minute chart of the ES

As with the NQ, the 30 minute ES broke wedge support, bringing in
a downside target of 1030.  1064 has held all week, and though I
expect it to fail, I've left the horizontal trendline setting up
a reverse head and shoulders of sorts.  Note that reverse h&s
patterns are bottom, and not top formation, but the rounded
bottom / cup and handle tone to the price pattern is sufficient
to keep bears on guard.  With the VXO this low, it's dangerous to
bet on 1070 getting broken, but the index flirted with that level
several times today and yesterday.

150-tick ES

Against the 30 minute cycle downphase, we have the ES in a short
cycle upphase.  This could result in an upside pop at the open.



Daily YM candles


Nothing to add on YM, which most closely matches the ES.


20 day 30 minute chart of the YM



The markets alternated between boring and treacherous again
today, with deep currents stirred up by the support break on the
US Dollar Index.  The buying in bonds and, initially, in equities
was surprising, as has been the lack of reaction from equities
overall.  The charts tell us to be patient, because the technical
conditions for a violent failure are all lined up.  But the
strong market forces in play lead me to wonder how long the
unidirectional equities market will remain intact.  The
consistently low volatility readings are not sustainable, and
bullish optimism remains very high.  While the break could come
at any time, the charts tell us not to begin holding our breath
just yet.


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

Treading water

The major indices spent the better part of the day treading water
after outplacement firm Challenger, Gray & Christmas said
announced layoffs in November fell to 99,452 in November after
reaching a 12-month high of 171,874 in October.

Economists' made special note that the Challenger survey only
captures a tiny fraction of all layoffs.  According to government
data, about 1.5 million workers lost their jobs in the first four
weeks of November and filed for state unemployment benefits.
John Challenger, CEO of the employment firm also noted that
November's figures are not seasonally adjusted to account for the
large number of job cuts typically announced at the beginning of
the fourth quarter, and that announced layoffs are just that,
announced, and may not necessarily be immediate, but take place
over weeks if not months.

Still, the Challenger survey, which isn't necessarily viewed as a
major economic report lacks any real discernable trend in
corporate downsizing, where Mr. Challenger said "is indicative of
uncertainty associated with the current economy."

The world's largest maker of automobiles had General Motors
(NYSE:GM) $43.28 +0.34% posting the strongest year-over-year
increases in U.S. auto sales for the month of November, as most
automakers uncovered improved sales results driven by incentives
and an improving economic outlook and consumer confidence.

GM said sales jumped 22% to 363,181 vehicles, number 2 automaker
Ford Motor (NYSE:F) $12.92 -1.52% said sales were off 4% from
last year to 255,533 vehicles, while DaimlerChrysler (NYSE:DCX)
$38.54 -0.43% said U.S. sales rose 3% from last year to 157,212
vehicles.

Meanwhile, Honda Motor (NYSE:HMC) $20.25 -1.02% said total sales
rose 0.7%, Volkswagen's sales rose 28% to 29,257, Audi's sales
slipped 0.4% to 7,107, Porsche's sales hit record levels and rose
58% to 2,654, while Subaru said monthly sales fell 5% to 13,088.

I can't say that any of the above economic-related data had much
impact on today's trade.  As I was reviewing a timeline on
today's late session fade lower, the only timeline I can put
together with any meaning would be the sell program premium alert
triggered just after 02:00 PM EST, which unbeknown to me at the
time came about 20-minutes after the S&P 500 Index (SPX.X)
1,066.62 -0.32%, which closed 3.5-points lower on the session,
had traded its MONTHLY R1 of 1,070.83, and marks the first equity
index to trade its MONTHLY R1 in October.

I would only suggest that this 1,071 level might be a near-term
level where some institutional profit taking would be found, and
wouldn't get too excited about this afternoon's late fade.

After barely meeting publisher deadline for last night's Index
Trader Wrap, I made some notes in the Market Monitor that the
NYSE Composite had recorded an annual high number of new 52-week
highs in yesterday's trading session at 619 and when looking at
tomorrow's pivot matrix and some stacking up of correlative
resistance in the DAILY/WEEKLY levels, being offset by stacked
correlations in the WEEKLY/MONTHLY levels, it gives me the
impression that the major indices may have gotten a little "too
bullish" near-term, but pullbacks will most likely be bought with
some vigor.

Pivot Matrix -



If there is one concern of mine, and perhaps a concern of other
market analysts, its the continued drubbing the U.S. dollar
continues to take, despite a more positive economic backdrop.

One very complex trade I continue to hear mentioned on the
weakening dollar versus euro is a three-way trade by European
market participants where euro-based participants that are not
intervening to weaken their currency against the dollar, are
using the strength of the euro to buy oil, using the leverage of
the stronger currency, to then sell the dollar.  I dare say this
complex trade, which I don't fully understand, nor portend to,
would at least make some sense on the directional play of the
dollar, whereas our friends in Asia seem more set on trying to
sell their stronger currency, and buy the weaker dollar and
Treasury bonds.

I must then chuckle to myself in regards to things being "too
bullish" as the weaker dollar most likely has to be associated
with the growing deficit, but one would think at some point that
the strengthening economy should be finding some offset to the
deficit with improving government tax receipts.  The inability of
the dollar to find any type of prolonged bid of stability (for
more than a week) still has the bullish side of me rather
cautious.

Heck, even Barton Biggs said tonight on CNBC that he hasn't a
clue at this point what to expect from the markets, with the
dollar being one of his greatest perplexities.

One chart we haven't looked at in awhile is the December S&P 500
Futures contract (sp03z) with my fitted retracement overlaid.
Last night I was also working on this chart after it settled at a
new contract high, where I felt the need to once again place a
new upside retracement on it, should the 1,073.30 level be
violated to the upside.

We were using the PINK retracement and levels within the
retracement to establish bullish or bearish biases based on where
this contract settled each closing night.  Using the EXACT
principles of anchoring at a relative low close, then "fitting"
the 38.2% retracement at a relative high close, that for whatever
reason seemed to be a significant level of resistance, I've added
a new BLUE retracement level, then colored in YELLOW what I would
deem zones of support and resistance.  The YELLOW zone from
1,001.80 to 1,007.80 was established months ago, and I would
currently associate the 1,046.20-1,051.20 zone as a similar zone,
where a backfill after a new contract high might have futures
traders looking to buy a pullback.

Remember, futures create GREAT leverage, and you can well bet
that there are some futures traders just as short the futures
market as there are traders short the S&P Depository Receipts
(AMEX:SPY) $107.33 -0.25%.

S&P 500 December Futures contract (sp03z) - Daily Intervals



While I captured this chart earlier this morning, it may tie in
rather well with the S&P 500 Index (SPX.X) 1,066.62 -0.32%, or
cash market, in our pivot matrix.  Today's trade did see the
above futures contract trade a session high of 1,071.00, where as
the cash (SPX.X) saw a session high trade of 1,071.22.  Note how
narrow the futures/cash spread becomes as we now near December
expiration, and how today's trade of a rather major MONTHLY R1
level may have had some institutional sell programs selling a
large basket of stocks at a level.

With the levels shown above, the bullish bias would remain above
1,058.50, but it is the YELLOW zone from 1,046.20-1,051.20 that
grabs my attention as it relates to the MONTHLY Pivot of 1,051.20
and WEEKLY Pivot of 1,051.37 in our pivot matrix, which may well
mark a bullish level of support for a pullback bullish entries.

Some may argue "But Jeff, all your doing is making the future
chart match your pivot matrix levels."  However, this is why I'm
using the EXACT SAME discipline of attaching to a relative low
settlement in the futures, then attaching, or fitting the 38.2%
retracement at a relative high settlement, that for some reason
was deemed SIGNIFICANT for resistance by the market.

S&P 500 Index Chart - Daily Intervals



The SPX has been the STRONGEST index of late, not only as it
relates to our observations in the pivot matrix, but also on its
pure technical merits of trading a new 52-week high in the manner
that its has.  Right now, this is the HEAD of our animal
(inchworm and snake analogy has been used) and we want to monitor
it for strength, but also for any near-term weakness.

A pullback to the 1,058 level would simply be a very normal
digesting of gains, where a pullback into the 1,051 level becomes
what I begin to observe a very good bullish entry point.

In the above chart I've noted a tie in with the YELLOW zone of
support, with the S&P futures chart and my latest fitted BLUE
retracement of 1,058.50.  This 1,058.50 level in the futures was
resistance for all of November, but broken solidly to the upside
on Monday.  As such, I still have to deem it a level where trade
above still keeps a BEARISH trader very defensive as overhead
supply is relatively nonexistent.

Dow Industrials (INDU) Chart - Daily Intervals



Some bears seemed more eager to short the INDU at 9,900 last
week, but from what I saw in today's market monitor, were very
tentative about such a trade.  I don't blame them.  The first
inkling of weakness would be back below 9,832 and I'd probably
have to add 10-point to that given the larger price scale of the
INDU.  Still, while bears were tentative to short the INDU at
9,900, bulls seemed just as tentative, but there was little in
the way of economic data to really build a conviction.

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



I just couldn't get behind a bullish QQQ trade, nor a bearish
trade in today's market monitor until after the sell programs
brought QQQ weakness down to a level I thought we might get a
little bounce to the close, which never really took place.  The
Q's felt a little heavy today, but I would look for a bullish
entry back near $35.14, but I'm a very short-term bear right now
with very modest downside intra-day targets.

Jeff Bailey


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****************
MARKET SENTIMENT
****************

Treading Water
- J. Brown

It was a relatively quiet day on Wall Street.  There were no
major economic reports.  No corporate earnings and very little on
the scandal front today.  Stocks and major averages merely
churned sideways as if digesting a portion of Monday's big gains.
This is in essence another victory for the bulls.  With such a
clear lack of sellers it could instill even more confidence for
investors.

Technical fans will note that the ARMS index's 5-dma has dropped
to a bearish reading of 0.81.  Traditionally readings under 0.85
are bearish and indicate a market top is close by.  Of course the
real question now is will anyone take notice?  Traders have been
ignoring the VIX, another technical indicator, for months.

Tomorrow brings the revised Q3 productivity numbers and the ISM
services index.  Both pale under the importance of Monday's ISM
factory number and investors are probably looking ahead to
Friday's employment report and next Tuesday's FOMC meeting.

Trade carefully and watch those stops.


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

Market Averages

DJIA ($INDU)

52-week High:  9903
52-week Low :  7197
Current     :  9853

Moving Averages:
(Simple)

 10-dma: 9665
 50-dma: 8882
200-dma: 9740



S&P 500 ($SPX)

52-week High: 1071
52-week Low :  768
Current     : 1066

Moving Averages:
(Simple)

 10-dma: 1050
 50-dma: 1040
200-dma:  968



Nasdaq-100 ($NDX)

52-week High: 1453
52-week Low :  795
Current     : 1431

Moving Averages:
(Simple)

 10-dma: 1403
 50-dma: 1396
200-dma: 1232



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

As the markets churned sideways so followed the volatility
indices.  There is little change and they all continue to
urge caution for bullish investors.

CBOE Market Volatility Index (VIX) = 16.27 -0.50
CBOE Mkt Volatility old VIX  (VXO) = 16.42 +0.45
Nasdaq Volatility Index (VXN)      = 26.72 +0.43


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.71        735,096       524,620
Equity Only    0.52        601,278       314,983
OEX            1.13         20,089        22,789
QQQ            1.11         21,419        46,036


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.8    + 1     Bull Confirmed
NASDAQ-100    75.0    + 2     Bear Correction
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       81.6    + 2     Bull Confirmed
S&P 100       79.0    + 1     Bull Correction


Bullish percent measures the number of stocks in an index
currently trading on a buy signal on their point and figure
chart.  Readings above 70 are considered overbought, and readings
below 30 are considered oversold.

Bull Confirmed  - Aggressively long
Bull Alert      - Cautiously long
Bull Correction - Pause or pullback in upward trend
Bear Alert      - Take defensive action if long
Bear Confirmed  - High risk if long, good conditions for shorting
Bear Correction - Pause or rebound in downtrend


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

 5-dma: 0.81
10-dma: 1.11
21-dma: 1.11
55-dma: 1.14


Extreme readings above 1.5 are bullish, and readings below .85
are bearish.  These signals don't occur often and tend be early,
but when they do, they can signal significant market turning
points.


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1378      1467
Decliners    1436      1652

New Highs     536       408
New Lows       13        10

Up Volume    709M      408M
Down Vol.    956M       10M

Total Vol.  1689M      1771M
M = millions


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

Commitments Of Traders Report: 11/18/03

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Will it never end?  The commercial traders refuse to move any
positions or make any more big bets in the full S&P futures
contracts.  They've been oscillating in the current range for
weeks.  Small traders have bumped up both their short and long
positions but they remain relatively equidistance from each other.


Commercials   Long      Short      Net     % Of OI
10/28/03      391,596   412,498   (20,902)   (2.6%)
11/04/03      391,079   415,136   (24,057)   (3.0%)
11/11/03      389,965   415,259   (25,294)   (3.1%)
11/18/03      393,893   414,442   (20,549)   (2.5%)

Most bearish reading of the year: (111,956) -  3/06/02
Most bullish reading of the year:   18,486  -  6/17/03

Small Traders Long      Short      Net     % of OI
10/28/03      137,791    76,791    61,000    28.4%
11/04/03      137,829    78,206    59,623    27.6%
11/11/03      136,072    74,249    61,823    29.4%
11/18/03      147,842    80,047    67,795    29.7%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

The e-minis are seeing some action.  Commercials upped their
short positions but not by too much.  Small traders also
raised their short positions by 10K contracts (almost 20% of
outstanding shorts).


Commercials   Long      Short      Net     % Of OI
10/28/03      220,171   260,644    (40,473)  ( 8.4%)
11/04/03      242,409   270,785    (28,376)  ( 5.5%)
11/11/03      249,864   258,503    ( 8,639)  ( 1.7%)
11/18/03      249,286   264,083    (14,797)  ( 2.9%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
10/28/03      123,569    59,742    63,827    34.8%
11/04/03      135,525    63,006    72,519    36.5%
11/11/03       94,649    51,815    42,834    29.2%
11/18/03       95,119    61,975    33,144    21.1%

Most bearish reading of the year: (77,385)  - 09/02/03
Most bullish reading of the year: 449,310   - 06/10/03


NASDAQ-100

Commercial traders are still stuck in limbo with outstanding
longs and shorts in NDX futures barely budging the last few
weeks.  Meanwhile small traders have turned more bullish with
a nice jump in outstanding long positions.


Commercials   Long      Short      Net     % of OI
10/28/03       36,168     46,272   (10,104) (12.3%)
11/04/03       34,159     48,293   (14,134) (17.1%)
11/11/03       35,889     49,201   (13,312) (15.6%)
11/18/03       35,608     49,689   (14,081) (16.5%)

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:   9,068   - 06/11/02

Small Traders  Long     Short      Net     % of OI
10/28/03       21,640     8,830    12,810    42.0%
11/04/03       24,132     9,703    14,429    42.6%
11/11/03       26,212    10,730    15,482    41.9%
11/18/03       32,034    10,356    21,678    51.3%

Most bearish reading of the year: (10,769) - 06/11/02
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Ditto here as well...commercials are not making any new big
bets and keeping the number of long and short contracts
relatively unchanged.  Small traders appeared to have scaled
back on longs and inched up their shorts.


Commercials   Long      Short      Net     % of OI
10/28/03       20,504    11,366    9,138      28.7%
11/04/03       21,756    11,903    9,853      29.3%
11/11/03       20,209    11,660    8,549      26.8%
11/18/03       20,746    11,080    9,666      30.4%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
10/28/03        5,295     8,864   (3,569)   (25.2%)
11/04/03        5,099     9,160   (4,061)   (28.5%)
11/11/03        6,105     8,201   (2,096)   (14.7%)
11/18/03        5,655     8,607   (2,952)   (20.7%)

Most bearish reading of the year:  (8,777) - 10/12/01
Most bullish reading of the year:   8,523  -  8/26/03

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


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The Option Investor Newsletter                  Tuesday 12-02-2003
Copyright 2003, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None
Dropped Puts: None
Call Play Updates: AMZN, BBY, DGX, DHR, HOV, PGR, ANDK, UTX, ZMH
New Calls Plays: BCR
Put Play Updates: KSS
New Put Plays: NUE


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

None


PUTS:
*****

None


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within the same firm. Licensed Option Principals Andrew Aronson
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option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

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********************
PLAY UPDATES - CALLS
********************

Amazon.com - AMZN - close: 53.93 chg: -0.72 stop: 48.99

We're scratching our heads in confusion.  The NASDAQ roars to a
new high on Monday and AMZN barely budges.  That's not the kind
of action we were expecting.  It does not appear that AMZN is
languishing alone.  The INX Internet index has not done much the
last two days either.  Probably not so odd is the similar
patterns between AMZN's chart and the INX's chart.  Considering
that just about everyone is expecting pretty strong online sales
this year (up 10% compared to just 5% for normal retail sales) we
would expect bulls to continue buying the dip throughout
December.  From the looks of AMZN's intraday chart odds are
building for a short-term pull back.  Traders can look for a
bounce from the $52.00 level.  We'll keep our stop loss at 48.99.

Picked on November 30 at $53.97
Change since picked:     - 0.04
Earnings Date          10/21/03 (confirmed)
Average Daily Volume:     10.7  million
Chart =


---

Best Buy Co - BBY - close: 58.52 chg: -2.35 stop: 57.95

Ouch!  The last two days of declines have really stung.  Traders
came back on Monday and decided to "sell the news" that retail
sales were doing pretty well.  Granted some analysts thought they
weren't doing THAT well the general mood is very positive.
Monday's big red candle almost looked like a Japanese bearish
engulfing pattern but ended with an equally bearish "dark cloud
cover".  What makes it worse is Tuesday's follow through on
Monday's failed rally.  BBY came within 5 cents of stopping us
out today but shares bounce from the $58 mark in the last half
hour.  Odds are VERY good that we'll be stopped out tomorrow at
$57.95 (assuming it doesn't gap down).  However, we're not going
to drop BBY just yet as shares could continue their afternoon
bounce from minor support at $58 (this is why we put our stop
below support).  The low today also happened to coincide with its
simple 30-dma. We would NOT suggest any new plays at this time
unless BBY bounced back over $60.00.

Picked on November 25 at $60.36
Change since picked:     - 1.84
Earnings Date          12/17/03 (unconfirmed)
Average Daily Volume:      3.6  million
Chart =


---

Quest Diagnostics - DGX - cls: 74.12 chng: +0.28 stop: 72.00*new*

Continuing to push higher on a daily basis, our DGX play has been
a bastion of strength, gaining ground steadily ever since breaking
out above the $72 level last week.  The early rally this morning
propelled the stock to $74.99, a penny below our $75 profit target
and as mentioned in the Market Monitor, that would have been a
good time to lock in some gains.  After that early bullish move,
DGX weakened throughout the day, ending just above $74.  There's a
distinct possibility of more profit taking before the next upward
push and conservative traders still may want to harvest gains on
any early strength tomorrow.  We're sticking with our initial
target, recommending exits be taken on a rally into the $75-76
area, and if that target is reached, we'll be looking to close the
play for a nice gain.  Since the current price is so close to that
eventual target, we're once again raising our stop, this time to
$72, which is just below the 10-dma ($72.05).  Note that we are
not recommending new entries at this time.

Picked on November 13th at   $69.46
Change since picked:          +4.66
Earnings Date               1/20/04 (unconfirmed)
Average Daily Volume =        876 K


---

Danaher Corp - DHR - close: 82.99 chg: -1.15 stop: 81.65 *new*

News continues to be scarce for DHR but the stock did enjoy a
nice jump higher on Monday with the markets in rally mode.
Shares did pull back today in profit taking but nothing serious.
Should the weakness in the markets and DHR continue then traders
may want to look for a bounce from the $82.00 level.  Meanwhile
we're going to raise our stop loss to 81.65, just 30 cents from
break even.

Picked on November 23 at $81.95
Change since picked:     + 1.04
Earnings Date          10/16/03 (confirmed)
Average Daily Volume:       829  thousand
Chart =


---

Hovnanian Enterprises - HOV - cls: 95.55 chg: -0.05 stop: 92.49*new*

This is it!  We originally added HOV with a profit range of $95
to $100.  Now shares are above the $95 level and traders should
be SERIOUSLY considering what their next move is.  We had a hard
time tonight deciding what to do.  Considering how shares are
right at the top of its ascending channel the easy decision is to
cut it loose, close the play and take our profits home.  The
stock is up 10 points from our trigger price at $85.51 and well
overdue for some profit taking.  But therein lies the conundrum.
The markets slipped back in profit taking today and the best
sellers could do to HOV was a 5 cent loss.  That's it!  Which is
an amazing display of relative strength, lack of willing sellers,
or whatever else it is you'd like to call it.  So here's our
plan...we suggest that traders strongly consider closing the
majority of their positions and only keeping a small position
open.  If that doesn't work or maybe you only have a small
position then we suggest the following.  We're going to raise our
stop loss to $92.49, which should protect a large gain.  If we
get stopped out, then great.  If we don't then we've given HOV
room to move and it can still make a run for the $100 level.
Keep in mind that HOV is due to announce earnings next Tuesday
and we'll probably close this play this weekend if we don't get
stopped out.

Picked on November 21 at $85.51
Change since picked:     +10.04
Earnings Date          12/09/03 (confirmed)
Average Daily Volume:      827  thousand
Chart =


---

Progressive - PGR - close: 80.11 chg: -0.69 stop: 77.75 *new*

Ah-hah!  We just needed to offer a veiled threat that if PGR
didn't perform soon we'd cut it.  If only it were that easy.
Actually, shares of the insurance stock jumped strongly on Monday
along with the rest of the market.  Fortunately, for PGR
investors the move on Monday broke resistance at $80 and closed
at a new all-time high.  The stock has actually reached our
initial profit target of $80.  Taking profits here is not a bad
idea.  We're going to raise our next target to $82. We wouldn't
be surprised to see PGR pull back and retest the $79 or even the
$78 level if the broader markets turned sour.  In the mean time
we're going to raise our stop loss to 77.75.

Picked on November 07 at $76.25
Change since picked:     + 3.86
Earnings Date          10/22/03 (confirmed)
Average Daily Volume:      654  thousand
Chart =


---

Sandisk Corp. - SNDK - close: 78.21 change: -0.85 stop: 75.50

In light of the strength in the rest of the market, our new play
on SNDK has definitely gotten off to a disappointing start.  Last
week's rebound back into the rising channel got reversed yesterday
and the stock continued to weaken today.  Yesterday's early surge
over the $81.50 level satisfied our entry trigger and it looks
like we may have gotten caught by setting that trigger a bit too
low.  The best approach for new entries now would be a rebound
from above the 50-dma ($76.21), although that is an aggressive
strategy.  More conservative traders will want to wait for
confirmed strength with SNDK moving over $82.  The advantage to
buying the rebound from above the 50-dma is that risk is more
easily controlled, with our stop set at $75.50, just under the
11/21 intraday low.

Picked on November 30th at   $80.82
Change since picked:          -2.61
Earnings Date               1/14/04 (unconfirmed)
Average Daily Volume =     3.63 mln


---

United Tech. - UTX - cls: 87.56 chng: +0.17 stop: 85.00*new*

Demonstrating the strength of resistance at $88, UTX has been
struggling to clear that level for two days now.  It looked like
the bulls might actually succeed this afternoon with price just
peeking above that level, but the late day sell program once again
kept the rally in check.  UTX still managed to close in the green
though and a breakout over resistance seems likely later this
week.  In addition to the historical resistance at this level, UTX
is also battling with the midline of its rising channel, along
with the upper Bollinger band at $88.29.  Buying the breakout over
resistance is clearly an aggressive choice and the more
conservative approach would be to enter the uptrend on a pullback
to support in the $85.50-86.00 area.  Once UTX breaks out over
$88, our focus will turn towards locking in gains as price nears
our target in the $90-91 area, with the top of the rising channel
now edging over $91.  Note that we're once again raising our stop,
this time to $85.00, which is just under the 10-dma.

Picked on November 23rd at   $83.90
Change since picked:          +3.66
Earnings Date               1/15/04 (unconfirmed)
Average Daily Volume =     1.84 mln


---

Zimmer Holdings - ZMH - close: 67.66 chg: -0.14 stop: 64.00

If you missed the move on Monday you may get another chance.
Shares of ZMH powered to yet another new all -time high yesterday
but could not build on that move as the general markets slipped
backwards.  The intraday chart has a rounding-pattern to it and a
pull back and retest of the $66 level may be the next bullish
entry point for traders.  As a side note, ZMH rival Stryker (SYK)
looks ready to break out over the $83.00 level.  A positive move
here could help lift ZMH too.

Picked on November 30 at $65.92
Change since picked:     + 1.74
Earnings Date          10/22/03 (confirmed)
Average Daily Volume:      1.8  million
Chart =



**************
NEW CALL PLAYS
**************

C R Bard - BCR - close: 77.35 change: +0.60 stop: 74.99

Company Description:
C.R. Bard, Inc., (www.crbard.com) headquartered in Murray Hill,
N.J., is a leading multinational developer, manufacturer, and
marketer of innovative, life-enhancing medical technologies in
the fields of vascular, urology, oncology, and surgical specialty
products. (source: company press release)

Why We Like It:
It's a strong market for medical device makers so we'd thought it
might be time to look at one that's been around the block a
couple of times.  BCR was founded about 96 years ago and it
continues to perform year after year.  The company has managed to
deliver seven consecutive quarters of double-digit earnings
growth and a full year of double-digit sales growth.  This is on
top of a management change this past August.

Now the stock has pulled back from new all time highs in late
October and investors are finally buying the dip again.  The
stock bounced off the $74.00 level in late November and has
broken back above its simple 50-dma and what should have been
resistance at $76.  The stock's technical oscillators look
bullish with stochastics, RSI and momentum shooting higher and
its MACD is about to produce a new buy signal.  However, there is
some resistance at $78 and we want to use a TRIGGER at $78.01 to
open the play.  Until shares trade through our trigger we're
content to watch.  Once initiated our first target will be $85
with a stop loss at $74.99.

Split fans will note that BCR has not split its stock since 1988.
Shares are well over there previous split price and the company
could announce one at any time.

Suggested Option:
There are only 2.5 weeks left for December options so our
preference will be the January strikes.  Our favorite is the
January 75 call.

BUY CALL DEC 75 BCR-LO OI= 78 at $3.10 SL=1.50
BUY CALL DEC 80 BCR-LP OI= 19 at $0.50 SL= --
BUY CALL JAN 75*BCR-AO OI= 68 at $3.90 SL=1.85
BUY CALL JAN 80 BCR-AP OI=678 at $1.25 SL=0.65

Annotated Chart:



Picked on December 02 at $xx.xx
Change since picked:     + 0.00
Earnings Date          10/15/03 (confirmed)
Average Daily Volume:      322  thousand
Chart =



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PLAY UPDATES - PUTS
*******************

Kohl's Corporation - KSS - cls: 46.67 chng: -1.87 stop: 50.25*new*

After a few days of the bulls defending the $48 support level, KSS
finally got hit with a serious round of selling on Tuesday,
plunging below that support level on strong volume (50% above the
ADV).  Aggressive traders could have entered on the rejection at
the 10-dma (currently $48.70) yesterday afternoon, while the more
conservative approach was to wait for the breakdown under support
this morning.  After the support break, there was only a token
bounce from the $47 level before the stock continued down to close
at the low of the day.  There wasn't any news to explain today's
sharp slide, but it is interesting that it coincided with the
Retail index (RLX.X) rolling over from strong resistance just
below $390, also the bottom of the ascending channel that
initially broke in late November.  KSS is likely to find some
support near $46.25 near the March lows, and then should continue
its slide towards the $44 October 2002 lows.  Failed rebounds
below $48 should be used for initiating new positions.  Note that
we've lowered our stop to $50.25, keeping it just above the 20-
dma, now at $50.23.

Picked on November 18th at   $48.75
Change since picked:          -2.08
Earnings Date                2/12/04 (unconfirmed)
Average Daily Volume =      3.97 mln



*************
NEW PUT PLAYS
*************

Nucor Corporation - NUE - close: 52.66 change: -4.01 stop: 56.00

Company Description:
Nucor Corporation manufactures and sells steel products, including
hot-rolled steel, cold-rolled steel, cold-finished steel, steel
joists and joist girders, steel deck and steel fasteners.  The
company produces its rolled sheet steel to satisfy customer
orders, while other products are manufactured in standard sizes
and inventories are maintained.  While the rolled steel products
are sold primarily to steel service centers, fabricators and
manufacturers throughout the United States, steel fasteners are
sold to distributors and manufacturers.  Steel joists , joist
girders and steel deck are primarily sold to general contractors
and fabricators in the United States.

Why we like it:
Shares of the steel stocks have been trading strongly in recent
months, helped in part by the tariffs imposed on foreign steel
manufacturers.  It appears that tailwind is about to be removed
though as the Bush administration is now looking at lifting those
tariffs this week, 16 months ahead of schedule.  While there was a
news report out yesterday indicating that the premature end to the
protective action is unlikely to hurt U.S. steelmakers, investors
apparently had a change of heart today, helped along by some
notable downgrades in the sector this morning.  Before the open,
McDonald Investments cut their rating on NUE (the largest domestic
steel producer) from Buy to Hold this morning, citing concerns
about the company being able to pass along higher scrap metal
costs to customers.  Whether the catalyst was the downgrade or
concerns over the end of the tariffs on foreign producers, the
stock got hit very hard on Tuesday, losing more than 7% on volume
that more than tripled the ADV.

NUE has been trading in an increasingly volatile manner for the
past several weeks, building an expanding wedge pattern that hints
of future price weakness.  Today's slide dropped the stock to the
lower bound of that pattern, also right at horizontal support near
$52.60.  Should that support fail, NUE should have downside
potential to the $47-48 area, which is right at the 200-dma
($47.06), as well as the top of the 10/03 gap.  We'll use a $52.50
trigger for the play and aggressive traders can enter on the
initial break below that level.  There's the potential for a near-
term bounce from the 50-dma ($51.49), which is right at historical
resistance-turned support.  So the more conservative entry
strategy would be to look for a rebound off that support level to
roll over from new resistance in the $53-54 area.  Due to the
recent volatility, we're starting coverage with a wide stop at
$56, just over today's opening high.  Our recommended profit
target will be for a drop into the $47-48 area.

Suggested Options:
Aggressive short-term traders can use the December 50 Put, while
those with a more conservative approach will want to use the
January 50 put.  Our preferred option is the January 50 strike,
which has ample time until expiration.

BUY PUT DEC-55*NUE-XK OI=134 at $3.30 SL=1.75
BUY PUT DEC-50 NUE-XJ OI=332 at $0.85 SL=0.40
BUY PUT JAN-50 NUE-MJ OI=568 at $1.70 SL=0.75

Annotated Chart of NUE:



Picked on December 2nd at    $52.66
Change since picked:          +0.00
Earnings Date                1/22/04 (unconfirmed)
Average Daily Volume =         655 K



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The Option Investor Newsletter                  Tuesday 12-02-2003
Copyright 2003, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Play of the Day: CALL - BCR

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

C R Bard - BCR - close: 77.35 change: +0.60 stop: 74.99

Company Description:
C.R. Bard, Inc., (www.crbard.com) headquartered in Murray Hill,
N.J., is a leading multinational developer, manufacturer, and
marketer of innovative, life-enhancing medical technologies in
the fields of vascular, urology, oncology, and surgical specialty
products. (source: company press release)

Why We Like It:
It's a strong market for medical device makers so we'd thought it
might be time to look at one that's been around the block a
couple of times.  BCR was founded about 96 years ago and it
continues to perform year after year.  The company has managed to
deliver seven consecutive quarters of double-digit earnings
growth and a full year of double-digit sales growth.  This is on
top of a management change this past August.

Now the stock has pulled back from new all time highs in late
October and investors are finally buying the dip again.  The
stock bounced off the $74.00 level in late November and has
broken back above its simple 50-dma and what should have been
resistance at $76.  The stock's technical oscillators look
bullish with stochastics, RSI and momentum shooting higher and
its MACD is about to produce a new buy signal.  However, there is
some resistance at $78 and we want to use a TRIGGER at $78.01 to
open the play.  Until shares trade through our trigger we're
content to watch.  Once initiated our first target will be $85
with a stop loss at $74.99.

Split fans will note that BCR has not split its stock since 1988.
Shares are well over there previous split price and the company
could announce one at any time.

Suggested Option:
There are only 2.5 weeks left for December options so our
preference will be the January strikes.  Our favorite is the
January 75 call.

BUY CALL DEC 75 BCR-LO OI= 78 at $3.10 SL=1.50
BUY CALL DEC 80 BCR-LP OI= 19 at $0.50 SL= --
BUY CALL JAN 75*BCR-AO OI= 68 at $3.90 SL=1.85
BUY CALL JAN 80 BCR-AP OI=678 at $1.25 SL=0.65

Annotated Chart:



Picked on December 02 at $xx.xx
Change since picked:     + 0.00
Earnings Date          10/15/03 (confirmed)
Average Daily Volume:      322  thousand
Chart =



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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.

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