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Daily Newsletter, Monday, 12/29/2003

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The Option Investor Newsletter                   Monday 12-29-2003
Copyright 2003, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Has Anyone Got a Nose Bleed Yet?
Futures Wrap: Upside Crash
Index Trader Wrap: Raging Bull rocks Wall Street


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     12-29-2003            High     Low     Volume Advance/Decline
DJIA    10450.00 +125.33 10450.00 10321.35 1.30 bln   2236/ 620
NASDAQ   2006.48 + 33.34  2006.48  1976.93 1.38 bln   2202/ 922
S&P 100   549.23 +  6.45   549.24   542.78   Totals   4438/1542
S&P 500  1109.48 + 13.59  1109.48  1095.89
RUS 2000  563.88 +  8.98   563.88   554.90
DJ TRANS 3038.15 + 39.82  3038.15  2998.60
VIX        17.09 -  0.36    17.86    17.07
VXO        16.04 -  0.43    16.99    15.95
VXN        23.73 -  0.28    25.11    23.52
Total Volume 3,062M
Total UpVol  2,533M
Total DnVol    482M
52wk Highs    1118
52wk Lows       17
TRIN          0.36
PUT/CALL      0.53
*******************************************************************

Has Anyone Got a Nose Bleed Yet?

It was an extremely bullish day on Wall Street today. The bulls
ere well rested after their Christmas break and came back with
sugar plumb fairies dancing in their heads and pushed all the
major indexes to new 52-week highs. Nasdaq composite jumped
33.34, or 1.7%, to 2006.48 and closed above 2000 for the first
time since January 2002. The Dow Jones Industrial Average climbed
125.33, or 1.2%, to 10450.00, while the S&P 500-stock index rose
13.59, or 1.2%, to 1109.48.

Helping the bullishness was the Help Wanted Index, which rose in
November, breaking the stagnation of recent months and posting
the first demonstrable increase in the index since midsummer.
This along with the recent pattern in jobless claims clearly
suggests that the job market has turned. The monthly change in
jobs is likely to accelerate to over 200k per month in the coming
months and in 2004, the job market should be helped by a powerful
combination of cyclical factors and the forthcoming $100 billion
in realized tax cuts that will be dealt in the first half of the
year.

Continuing on with the economy, economic reports out tomorrow
include the weekly chain store sales, which isn't a market mover
but many traders will be dissecting this number to see how well
retailers are doing with the Christmas season coming to an end.

Then tomorrow at 10:00AM ET we have the release of the December
Chicago PMI. The November Chicago PMI came in well above
expectations rising to 64.1, a level not seen since February
1995, but December consensus is for a decrease to 62. If this
number comes in above 64.1 the market will react very favorably.
One way or the other I would not be in a daytrade when this
number comes out.

Also at 10:00AM ET is the release of Existing Home Sales for
November where the consensus is for it to resume its upward climb
to 6.5M after the September retracement to 6.35M.

Finally at 10:00AM ET is the release of The Conference Board
Consumer Confidence number with a consensus of 91.8, which to me
is asking a lot for last month it took a 10-point surge, the
highest reading since September 2002. Once again if this number
beats the consensus number it could put a very bullish tone on
the day.

Leaving the economic front and moving closer to home, federal
investigators have concluded the Holstein infected with mad-cow
disease from Washington State was imported into the U.S. from
Canada about two years ago. The Canadian Agriculture Department
have provided records that indicate the animal was one of a herd
of 74 cattle that were shipped from Alberta, Canada, where a case
of mad-cow was found in May, into the US in August 2001. As a
result, the U.S. has lost approximately 90% of its beef exports
as more than a dozen countries stopped buying American beef as
insurance against potential infection.  Although the US only
exports 10% of its beef, there are many Americans who may take a
hiatus from beef consumption until this is all cleared up, which
could take months.

Although officials earlier said most of the meat went to
Washington and Oregon, investigators have now determined that
some of the meat from the cow went to Hawaii, Idaho, Montana,
Alaska and Guam.

In other Mad-Cow news, Japan has rejected a U.S. request to
discuss lifting a ban on American beef. Japan bought more than $1
billion of U.S. beef last year.

Moving on to more global concerns, two U.S. planes were among the
first of 45 foreign aircraft carrying aid and workers to assist
the stricken people of Bam, Iran where the estimated death toll
is more than 25,000 from Friday's 6.6-magnitude earthquake that
shook the city and surrounding region in southeast Iran. Some
officials have expressed fears that the death toll could rise as
high as 40,000. At least 10,000 are believed wounded.

And From the Beat Goes on Column, the scandal surrounding
Parmalat, Italy's eighth-largest company, has widened, with
prosecutors saying the company's founder, Calisto Tanzi, is under
investigation for misappropriating half a billion euros of the
company's money over the years. Prosecutors also allege, as the
probe was getting under way, Parmalat employees destroyed
documents. It is uncanny as to how closely this is starting to
play out like the Enron scandal for Parmalat's auditor Grant
Thornton has been thrust to center stage as two of its employees
are under scrutiny in connection with fraudulent documents
related to their audits of a Cayman Islands-based Parmalat unit.
And the Beat Goes On - all over the world.

Before we move on to the charts there was one bit of noteworthy
news. The NYSE suspended trading of shares in Footstar (FTS),
which owns the Just for Feet and Footaction chains, and has moved
to delist the stock because of uncertainty over the shoe
retailer's financial records. The delisting is pending the
completion of various procedures, including any appeal by the
company. After all the accounting fiascos we have endured over the
last few years what could FTS have done to be delisted so
unceremoniously. Seems odd doesn't it?

On to the charts. First we will take a look at the mighty DOW. At
one point today all the 30 DOW stocks were green, a site one does
not see too often.

DOW DAILY



The last time RSI was above the overbought line the DOW took a
19.1% retracement (1st blue circles). Not a big retracement but
was good for 480-point move. A 19.1% retracement from current
levels (10450) would bring the DOW back to 9860 for a 600-point
move. That's tradable and may be all we get. Another thing I have
noticed is how well the retracement levels line up. If we get any
kind of retracement in the next few months (said with tongue in
check) these may be levels to monitor.

SPX DAILY



I have been bothered by a negative MACD divergence dating back to
September but that divergence resolved itself when MACD made a
higher high along with price.

According to RSI, SPX is not as overbought at the DOW but more so
than the NAZ.

You could also build a case for a bearish wedge but I think it
would be a weak case.

NASDAQ DAILY



I have also been bothered by a negative COMPX MACD divergence
since last September when each new high the NAZ would make was
met with a lower MACD high. But that may have resolved itself
today also when both the MACD and price made equal highs.

The NAZ is not as overbought as the other indexes so it is
looking to be the index with the most upside potential.

                   NYSE        AMEX        NASDAQ
Total Volume      1055M        243M         1414M
Total UpVol        947M        191M         1095M
Total DnVol        103M         28M          274M
52wk Highs         642         144           312
52wk Lows           13           3             4
Advancing Issues  2533         591          2267
Declining Issues   773         286           969

TRIN                    0.32
Total CBOE PUT/CALL     0.53
Equity only PUT/CALL    0.38
OEX PUT/CALL            0.90


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

Upside Crash
Jonathan Levinson

The Fed added a net 3.5B in 4-day and overnight repurchase
agreements, and yet treasuries dropped.  That very large sum of
money found a home in equities, and we got substantial breakouts
across the indices, with the NQ, ES and YM breaking to new 52
week highs.  The VXO dropped to 15.60, the put to call ratio
closed at .52, the NYSE TRIN closed at .36, the US Dollar Index
dropped to new multiyear lows, gold and silver closed at new
multiyear highs, and the euro set a new record high.

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


The US Dollar Index traded weakly throughout the session but
managed to pull up to 87.39 at the close.  Throughout the day, we
saw dollar weakness accompanied by equity strength, the signature
of the March rally.  Bonds did not follow, however, which was
odd, and I speculated in the Futures Monitor that we were seeing
a "terror" premium coming out of treasuries.  Despite this, the
CRB dropped .78 to close at 255.59, with live cattle futures
closing limit down for the third consecutive session, and FCOJ
and natural gas bringing up the rear.  Cotton, silver and copper
were the leaders for the day.


Daily chart of February gold


In my picks for 2004, I discussed the inflation/deflation issue,
the central issue for investors in all markets, in my view.
Today made a very good case for inflation, but I frankly have
difficulty believing it, so extended have the charts become.
Other than cash, treasuries were the only losers today, and
metals had a stellar day, with Feb gold up 3.30 to close at
416.10, a .8% gain, with HUI gaining 3.88% to close at 246.19,
XAU +3.2% to 110.19, and March silver up 2.54% to close at 5.94.
February gold pushed higher within its bear wedge, with the upper
and lower day range touching both wedge trendlines.  The break,
either to the upside or downside, is due now.  Watch 412 support
and 416.50 resistance.

Daily chart of the ten year note yield


Ten year notes sold off today, adding 8.2 bps or 1.98% to the ten
year yield, which closed at 4.23%.  This is the mystery of the
day, but it lines up with the cycle oscillators, which gave buy
signals today from oversold territory.  The lower pennant
trendline is being tested here at 4.23%, and any further upside
in the yield should confirm the new upphase in the yield /
downphase in the bond.


Daily NQ candles


I will preface my review of the equity charts by saying simply
that the rise in equities today was as unfathomable as any I have
seen this year.  I am convinced that the Fed's 12B in repos,
which left 3.5B in new money on the table against today's
expiries, was gunned straight into equities.  Intraday, every
sell signal prefaced the next wave of bids.  Most buyers try to
buy low, but the bids today were trying to buy high for nearly
the whole day.  In such an environment, technical analysis is of
limited use.  When I say that the markets look toppy, as I will
be doing shortly, please note that they looked awfully toppy on
Friday as well.  If we are witness to a runaway inflation, then
no price will be too high.  It won't add any real value, but
prices will go higher.  For this reason, short positions are as
high risk as long positions, which are very risky in this
environment.  Please do not try to force your positions, and use
active stops consistently.

With that out of the way, the NQ broke to a new high today,
adding 25 points or 1.73%.  ES added 14.25 or 1.30%, and YM added
138 points for a 1.34% gain.  Nasdaq volume was 1.435B and NYSE
volume 1.06B shares.  My Prophet chart has left only a small
green smudge for today's daily candle on the ES and NQ, but all
the other charts, including the YM daily, have printed normally.

Looking at some longer term views, the NQ, ES and YM are back to
levels not seen since the 2002 highs between January and March.
This is clearly a resistance zone based on a retracement of less
than 50% of the decline from the March 2000 highs.  On that
basis, it remains a bear market rally, but it's all a matter of
perspective-  the decline from March 2000 was a correction within
a 60+ year bull market.  So long as the Fed continues to juice
the markets with liquidity, we can expect further increases to
come.  However, the word "expect" is loaded, as it is precisely
that expectation that will bring about the fall.  In March 2000,
when Maria was nightly shrieking about new record highs, all
expected the market to run higher forever.  Just as now, the
money supply had been growing steadily, debt levels rising, no
reason not to expect the run to continue.

But it's at precisely those times that everyone is committed
long, and when the buyers are done, the shorts eradicated, and
bullishness universal, markets fall.  They tend to fall faster
than they rise.  And with the VXO having seen the underside of 15
in the past few weeks, touching 15.60 today, we're seeing very
little bearishness left.

The NQ is in a daily cycle upphase here, but the move today was
sufficiently divergent to close above the upper Bollinger band at
1466.  An immediate reversal can be expected, unless we're
witnessing a trending move.  Support is now at the breakout level
between 14568 and 1460.


30 minute 20 day chart of the NQ


The upside meltup here has maxxed out the 30 minute cycle
oscillators, and looking back over the past 3 weeks, this is a
pretty good indication of a near term top.  Bulls and bears alike
should be expecting some kind of pullback, and the day highs
should not be exceeded by much or for long before that pullback
commences.  However, a meltup is a meltup, and if there are
enough shorts left still holding and susceptible to panic, then
we could see a spike higher.  Again, on the basis of cycles and
sentiment, I'd expect it to be a blowoff.


Daily ES candles


The daily ES chart is also broken, with only the daily closing
value displayed up at 1107.  The candle should be drawn from 1093
to 1107.  The 1100-02 level is now support at the upper rising
wedge trendline.  This is a pattern failure that is increasingly
common this year, but often followed by an immediate reversal.
If this was a stop-running exercise, it certainly worked.  That
said, the cycles are as overbought as they get on my current
settings, ready to either reverse down or begin trending.  If
1100 support holds, then we can expect more upside.  However,
with the daily, 30 minute and short cycle oscillators all trying
to roll here, along with Bollinger band resistance violated at
1104, I expect downside first.


20 day 30 minute chart of the ES


Zooming in on the rising wedge, I've placed the upper trendline
higher at 1104 to highlight a more bullish interpretation.  I
would not be thinking of a short stance above 1100 in any event
other than on a tight-stop aggressive basis.  The 30 minute cycle
is close to trending here, but recall that the gains of the past
week have been on very light volume.  These gains are currently
fragile, and bulls need to be careful as well.


150-tick ES


Nothing to add on the overbought short cycle 150-tick view of the
ES.


Daily YM candles


The daily YM is trending in overbought and flirting with the
upper channel trendline, having closed above it but trading back
at 10422 as of this writing.  The greater likelihood is obviously
of a downmove from here, and I suspect that most of the buy
orders this afternoon were closing, and not opening positions.


20 day 30 minute chart of the YM


Here's the more bullish view of the YM, projecting to the 10500
area for next trendline resistance.  The pinned 30 minute and
daily cycle oscillators don't support that interpretation, and
call for a reversal and retest of support in the 10350 area
before any further significant gains.

The trader's dilemma here is how to play it.  I've been carefully
trying to short relative tops on a scalp basis and finding very
little downside from which to profit.  If you must get long, then
use stops, and I'd suggest looking at gold and silver instead.
Silver outperformed equities today, and should hold up better in
a correction.  As discussed in my end of year article, the gold
and silver bulls have been bigger winners than the NQ this year.
The trouble is, however, that everything looks toppy here.  Cash
is a position, of course, but it's difficult to watch rallies get
away.

Hopefully, the market will give us a pullback from which to
reevaluate.  If today was the fed gunning the indices ahead of
the holiday break in anticipation of possible external negative
news, then the relief rally just occurred.  If, on the other
hand, this is just another chapter in the Bernanke reflation
crusade, then bears can expect a solid bounce from first support.
The market will tell us.  But whatever it does, don't let it take
your money.  Set your stops at levels beyond which you're not
willing to go, and respect them.  There are powerful forces at
work here, preserving your capital is the first order of business
at times like these.  If you can't accomplish that while staying
in the market, then get out and wait until you can.  There are
always easier environments and setups ahead.


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

Raging Bull rocks Wall Street

On Wednesday of last week, it was mad-cow disease that may have
had the Dow Industrials (INDU) 10,450 +1.21% suffering its first
losing session in 7 days, but a strong case of raging bull and
few sellers with just 2 days remaining in 2004 found the major
indices closing at new 52-week high, with the Dow Industrials
closing at its highest level since in 21 months.

The very NASDAQ Composite (COMPX) 2,006.48 +1.68%, and larger-cap
NASDAQ-100 Index (NDX.X) 1,470.37 +1.83% broke to new 52-week
highs as though a recent quarantine of resistance from late
November was lifted.

U.S. Market Watch - 12/29/03 Close



The AMEX Gold Bugs Index ($HUI.X) 246.19 +3.88% was today's
sector winner, as the dollar continued its torrid decline against
the euro, with the euro breaking above 1.25 against the dollar
for the first time ever.  I view today's strong move back above
the $HUI.X's 21-day SMA of 240 as bullish, after a successful
test of its rising 50-day SMA of 225 early last week.  Support
should be firm at the 220 level with bullish targets at 257.50
(early December highs) and 274.25 (from fitted retracement).

Treasuries were under pressure in today's session, with some bond
traders quipping that prices were "falling like a dollar."
Declines in Treasuries came after a $31 billion auction of 3 and
6-month bills brought new supply to the market, which fetched
rates of 0.885% and 0.995% with bid-to-cover ratios of 1.95 and
2.31, respectively.

Equity traders thought there might have been some continued 2004
asset allocations being implemented in stocks, specifically in
the S&P 500 (SPX.X) 1,109.48 +1.24%.  The Wall Street Journal's
"Heard on the Street" column suggested dividend stocks could
become favorites for 2004.  Since President Bush signed the bill
in May that slashed dividend-tax rates by more than 50% for many
investors, companies have hopped on the dividend payout
bandwagon.  Companies in the S&P 500-stock index are expected to
pay a record $160.6 billion in dividends to shareholders in 2003,
which is up from $147.8 billion last year, a previous record.
According to the Wall Street Journal article, 21 companies, with
Microsoft (NASDAQ:MSFT) $27.46 +0.91% and Best Buy (NYSE:BBY)
$52.19 +3.22% as examples, have started paying dividends for the
first time.

In the above U.S. Market Watch screen capture from my QCharts
charting software, I've shown not only today's percentage gains
for the major indices, but also the 5-day and 20-day percentage
changes, where perhaps the percentage out performance for the
last 20-days for the Dow Industrials (INDU), S&P 500 (SPX.X) and
S&P 100 Index (OEX.X) over the NASDAQ-100 Index (NDX.X) and
smaller-cap Russell-2000 Index (RUT.X) may be attributed to some
institutional favor showing up for a 2004 dividend strategy.

Market Snapshot / Internals - 12/29/2003 Close



Today's economic calendar had only the Conference Board's Help
Wanted Index for November being released at 10:00 AM EST, where
its 39 reading, which was above economists' forecast of 38 did
have the SPX trading a morning high of 1,102.65, which didn't
seem to be a market moving economic release as the SPX then
pulled back below the 1,100.00 level soon after.  However, that
brief dip back below 1,100.00, which lasted all of 10-minutes was
quickly bid back higher as the major indices built gains to their
close.  Today's 614 new 52-week highs on the NYSE comes close to
its 619 new highs set on December 1.  NASDAQ's 300 new highs
shows some resumption of bullish leadership present among 4 and
5-lettered stocks listed on the NASDAQ, but still shy of the 453
new highs found on December 1, 2003.

Current 10-day NH/NL ratio averages has the NYSE at 97.7% (bull
confirmed) and closing in on a recent high reading of 98.5% found
on December 9th.  The NASDAQ 10-day NH/NL ratio average is 93.2%
(bear confirmed) and nearing a recent relative high reading of
95.2%.  It would currently take a reversing upward 10-day average
ratio of 96% for the NASDAQ NH/NL ratio to achieve "bear
correction" status for this indicator of bullish leadership.

Volumes at both the NYSE and NASDAQ were light, depicting holiday
trade.

Pivot Analysis Matrix -



The NDX and QQQ took their time, but with just two days left in
the month, the NDX/QQQ saw trade at their MONTHLY R1s, as the
other major indices continued their torrid pace higher.  With all
the major indices at new 52-week highs, and traders looking
rather unwilling to sell and padding gains into year's end, I'd
have to view the WEEKLY Pivots as solid support after seeing
trade at the WEEKLY R2s.

I thought swing trade bulls in the QQQ might have "sold a top"
and took some short-term profits off the table when the Q's
traded $38.26 in the first 50-minutes of trade as the Q's pulled
back to $36.07 at the 11:00 AM EST mark, but when a new session
high was traded the WEEKLY R1 quickly became support.

The trade I would look for tomorrow, from the bullish side for
another short-term bullish trade would be in a QQQ pullback near
its DAILY S1 ($36.13), place a stop under DAILY S2 of $35.82, and
target a December 31 close of $37.00.  A shorter-term bull might
like this trade based on the Stock Trader's Almanac notes that
the last day of the year (Wednesday) has seen bullish trade 29 of
last 32 years.  I will note the Stock Trader's Almanac notes the
Dow Industrials (INDU) traded down 5 of last 7 on the last day of
the year.

With the other major indices (INDU/SPX/OEX) now further above
their MONTHLY R2s, I would have to view their WEEKLY Pivots as
firm support levels until we get new MONTHLY levels at the
conclusion of Wednesday's trade.

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



The Semiconductor Index (SOX.X) 510.48 +2.36% and positive
morning comments within the sector by Smith Barney helped the QQQ
gap back above our upward trend from the March lows, where a
quick check of an intra-day chart shows this upward trend now
residing at $36.03.  I'm still rather uncertain what to expect in
January as it relates to any "tax-gain selling," but with the QQQ
breaking above its November 7th high of $36.18, I think a
disciplined bull could look to play another QQQ long on a
pullback near tomorrow's DAILY S1.  The QQQ was stronger than my
bullish swing trade target of $36.25 and if bulls are looking to
send the major indices out on a high note by year's end, then the
QQQ would be the index closest to break-out support.

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



The SPX is breaking above all resistance that I could possibly
come up with.  Further gains above today's highs would find some
technical resistance appearing near 1,130.  I would have thought
1,105 from WEEKLY R2 and perhaps a relative high of 1,106.59 from
May 17, 2002 might find some sellers, but that wasn't the case in
today's trade.

Dow Industrials (INDU) Chart - Daily Intervals



A bear's worst nightmare is represented in the INDU, if not the
SPX at this point.  First sign of any real weakness would be a
decline back below 10,300 in my opinion.  I refuse to try and
pick a top in the INDU and I think some bears have given up too.

Jeff Bailey


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The Option Investor Newsletter                   Monday 12-29-2003
Copyright 2003, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: GD, HOV, QCOM, YHOO
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - QCOM
Market Posture: Bulls Sweep Wall Street


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STOP-LOSS UPDATES
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GD - call
Adjust from $83.49 up to $85.50

HOV - call
Adjust from $83.50 up to $86.50

QCOM - call
Adjust from $50.75 up to $52.00

YHOO - call
Adjust from $41.49 up to $42.00


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

None


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

None


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

Qualcomm, Inc. - QCOM - cls: 54.82 chng: +1.79 stop: 52.00*new*

Company Description:
Based on its proprietary CDMA technology, QCOM is engaged in
developing and delivering digital wireless communications
services.  The company's business areas include integrated CDMA
chipsets and system software and technology licensing.  QCOM owns
patents that are essential to all of the CDMA wireless
telecommunications standards that have been adopted or proposed
for adoption by the worldwide standards-setting bodies.
Currently, QCOM has licensed its CDMA patent portfolio to more
than 80 telecommunications equipment manufacturers around the
world.

Why we like it:
As expected, yesterday's breakout above the top of the rising
channel was technically significant for our QCOM play, as the
stock built on those gains today to end near $53.50, its best
close in over 2 years.  That breakout solidifies the bullish view
and has bulls eyeing the $55 level (our initial target), quite
possibly by the end of the week.  While volume is likely to be
light the rest of the week, it is certainly clear that QCOM is in
favor with the bulls.  Price is too close to that initial target
to recommend new entries on strength, but a pullback to confirm
support near $51.50-52.00 can certainly be considered.  If QCOM
does manage to rally up near the $55-56 area before the end of the
week, conservative traders should definitely lock in some gains
and then possibly look for a new lower entry point.  Note that
we've raised our stop to $50.75 tonight, just below Monday's
intraday low and the 10-dma ($50.83).

Why This is our Play of the Day
After consolidating near the top of its apparently broken channel
on both sides of the holiday last week, QCOM investors made their
bullish intentions clear on Monday, sending the stock higher by
another 3.37% and solidifying last week's breakout over the top of
the channel.  Not only did today's move represent a breakout over
the 200-week moving average, but it has the stock moving close to
our initial target of $55.  Conservative traders should take
advantage of the current strength to harvest some gains.  More
aggressive traders on the other hand can look for a continuation
of this rally up to next strong resistance near $60.  With the
stock up strongly over the past week and oscillators now
overbought, this does not appear to be a good setup for fresh
entries on further strength.  But a pullback into the $52.50-53.00
area can be used for new aggressive entry into the play, with that
$60 level as the goal.  Raise stops to $52 tonight, which is just
below both the 10-dma ($52.13) and last Tuesday's $52.12 intraday
low.

Suggested Options:
Shorter Term: The January 55 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 February 60 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 February 55 Call  Our
preferred option for new positions is the February $55 strike.

BUY CALL JAN-50 AAO-AJ OI=18191 at $5.20 SL=3.25
BUY CALL JAN-55 AAO-AK OI=12593 at $1.60 SL=0.75
BUY CALL FEB-55*AAO-BK OI= 3540 at $2.90 SL=1.50
BUY CALL FEB-60 AAO-BL OI=  389 at $1.15 SL=0.60

Annotated Chart of QCOM:



Picked on December 11th at   $50.14
Change since picked:          +4.68
Earnings Date               1/20/04 (unconfirmed)
Average Daily Volume =     8.84 mln


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Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
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.

Live Broker and Online Trading Available     888-281-9569

http://www.OneStopOption.com

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


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

Bulls Sweep Wall Street
by - Nich Sheldon

Christmas Holidays may be over by the rally sure isn't! Or, is it?
Or, rather, when will it stop?

The answers to these questions are hard to come by, especially
when every index closed in the green on Monday.  Not to mention
the five big dogs (in relation to the indexes we follow) all
posted a more than one percent gain on the day, as well as closed
at 2003 highs.

The INDU Dow Jones Industrial Average achieved a +1.21 percent
gain, closing at the top of its March 2003 regression channel.

The SPX S&P 500 tacked on +1.24 percent and closed over 1100 for
the first time since May 17th, 2002.

The OEX S&P 100 broke out of its recent consolidation of 542 and
closed at 549.23, adding +1.18 percent on Monday.  This is the
first time that OEX has see 549 since May 20th, 2002.

The NDX Nasdaq-100 Index also remained in overbought territory
nearly adding +2 percent on the day, and closing at a new 52-week
high.

The TRAN Dow Jones Transportation Index rose +1.32 percent on
Monday, closing over round figure resistance of 3000 for the first
time since March 11th, 2002.  Today's gains helped encourage the
index to remain as a buy signal on the MACD indicator.

While these major market indices claimed decent gains on Monday,
the highest percentage gain was seen in the XAU Gold and Silver
Index, which added +3.20 percent on the day.

The SOX Semiconductor Index rose +2.36 percent, which was possibly
sparked by the recent buy signal given off by the MACD.

After two trading days of lower than normal volume, it was back to
business as usual for the XBD Securities Broker Dealer Index,
which smacked on +2.22 percent by market close.

Today's bullish sweep of the indexes saw every index adding on
more than one percent, except for three.  The UTY Utility Index
added on +0.83 percent.  The XAL Airline index continued to fly
sideways adding on +0.78 percent.  The lowest gains were taken by
the OSX Oil Service Sector Index, which rose +0.70 percent.


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