Option Investor
Newsletter

Daily Newsletter, Monday, 01/05/2004

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                   Monday 01-05-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Greenspan Says No New Bubble
Futures Wrap: Dollar Devastation, Rally Breaks Out
Index Trader Wrap: Volume returns!


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     01-05-2004            High     Low     Volume Advance/Decline
DJIA    10544.07 +134.22 10544.07 10411.85 2.01 bln   1941/ 931
NASDAQ   2047.36 + 40.68  2047.36  2020.78 2.34 bln   2082/1025
S&P 100   557.31 +  7.32   557.31   549.99   Totals   4023/1956
S&P 500  1122.22 + 13.74  1122.22  1108.48
RUS 2000  568.92 +  8.07   569.48   560.85
DJ TRANS 3028.63 + 20.47  3031.56  3007.76
VIX        17.49 -  1.16    18.49    17.44
VXO        16.71 -  1.88    17.85    16.69
VXN        23.89 -  0.94    25.29    23.76
Total Volume 4,750M
Total UpVol  3,514M
Total DnVol  1,116M
52wk Highs    1135
52wk Lows       12
TRIN          0.65
PUT/CALL      0.68
*******************************************************************

Greenspan Says No New Bubble
by James Brown

The first real day of trading for 2004 started with a bang as
U.S. markets launched to an early start as investors breathed a
sigh of relief that there were no terror events over the weekend.
Today's rally was very broad based and fueled by almost forty
fresh broker upgrades, many of them targeting tech stocks.  Some
positive news from the semiconductor industry and encouraging
comments from Bernanke and Greenspan over the weekend helped set
the stage.  Last week the S&P 500 ended its sixth consecutive
weekly gain, the longest streak in nearly six years, and if
Monday's performance is any indication we may see a seventh week.

The U.S. markets weren't the only ones making headway.  The first
Monday in 2004 witnessed global markets also ending with gains.
The Asian exchanges were very strong with the Japanese NIKKEI
adding 148 points to close at 10,825, despite a new three-year
low for the dollar against the yen.  The Hong Kong Hang Seng
index soared 203 points to break above the 13,000 mark.  European
exchanges turned in more muted gains with the English FTSE up 3
to 4513 and the German DAX up 17 to 4035.

Market internals here at home were very bullish.  28 out of the
30 Dow components closed higher.  Altria (MO) and Wal-Mart (WMT)
were the only losers.  Money managers put their funds to work in
technology stocks with strong gains across the board for
semiconductors, software, internets, hardware and networking.
Wall Street firm SG Cowen helped set the mood with a number of
upgrades.  Cowen raised chip stock KLAC, PC maker DELL and
software giant MSFT to "strong buy".  The advance-decline figures
closed with 19 winners for every 9 losers on the NYSE and 20
advancers for every 10 decliners on the NASDAQ.  We also saw a
return of volume with more than 2 billion shares trading on both
exchanges (4.3 billion total).  More importantly up volume was
better than 3 times down volume on the NYSE and more than 2.6
times down volume on the NASDAQ.  Joining the advance was crude
oil; up $1.26 to $33.78 a barrel and February gold futures added
$8.70 to close at $424.80 an ounce.

Chart of the DJIA:



Chart of the NASDAQ:



Wall Street did have some economic numbers to absorb today with
the December auto and truck sales figures and the November
construction spending data but all three reports were
overshadowed by this weekend's comments from Fed governor Ben
Bernanke and Fed chairman Alan Greenspan.  In a speech on Sunday,
Bernanke essentially reassured investors that the FOMC would do
whatever it takes to leave interest rates low and keep the
domestic economic recovery on track.  He also reiterated that the
government was not concerned over the U.S. dollar's decline and
suggested that the greenback's open market slide has been
"orderly".  Furthermore there was little reason to worry about a
"crisis" for the dollar.

His words helped grease the dollar for yet another decline on
Monday and currency traders were happy to oblige.  The U.S.
dollar hit a new all-time low against the euro trading near
$1.2679 after hitting $1.2697 midday.  The greenback fell to an
11-year low against the British pound and a new three-year low
against the Japanese yen despite the Bank of Japan's attempt to
slow the drop by selling yen.  By the end of the day the dollar
had dropped against all 16 major currencies.

Yet stock investors continued to turn a blind eye to the dollar's
woes.  Any why not?  Greenspan essentially gave them a free pass
with his comments over the weekend.  He said that we were NOT in
a new bubble (emphasis mine).  In fact he congratulated the Fed's
approach to dealing with the bubble's "consequences" and not the
bubble itself as having been successful.

There were plenty of stocks making headlines today.  Leading the
pack was Siebel Systems (SEBL).  The software vendor, known for
its "eBusiness" applications that help companies run call centers
and track customers, raised its fourth quarter estimates.  SEBL
now expects sales to jump six percent above its October
projections with earnings-per-share numbers to rise by five
percent.  This equals about 8 cents a share on revenue of $365
million.  Investors greeted the news enthusiastically as new
evidence that a turnaround in IT spending was indeed underway.
Shares of SEBL added 10 percent to close at $15.39 while the
software sector (GSO.X) added 3.49%.

The semiconductor sector turned in a strong session as well with
the SOX adding 3.6%, surging strongly off the 500 level.
Powering the move was a new report from the Semiconductor
Industry Association (SIA) who reported that worldwide chip sales
in November rose 26% from a year ago to $16.1 billion.  This was
the fourth monthly gain in a row with strong growth in flash
memory, up 11.2%.  As mentioned earlier, chip equipment maker
KLA-Tencor (KLAC) enjoyed a fresh "strong buy" rating from SG
Cowen.  The analyst at the Boston firm actually raised both KLAC
and AMAT to "strong buy" ratings on his belief that semiconductor
manufacturers will raise capex spending by 40 percent this year.

Serving up its own "blue-light special" today were shares of
Kmart (KMRT).  The company reported that its November and
December sales numbers had been very strong and that strict
inventory management had resulted in "significant profit".  The
company reemerged from bankruptcy last May and shares began
trading under the new symbol last June.  The "profit" will be
close to $200 million, before a $50 million one-time profit from
real estate.  This is encouraging news but sales have continued
to slump with same-store sales dropping 13.5% and total sales
falling 26% to just $5.1 billion.  Yet investors were too
enamored with the idea of a profit and got a little excited as
the stock soared 26.6% (more than $6) to $29.12.  Its larger
rival Wal-Mart (WMT) also made some after-market news by
announcing a $7 billion stock buyback program to replace an
earlier $5 billion plan.

Tomorrow should be interesting.  We might get some more news from
the 2004 Detroit car show that opened today.  The field is
growing crowded with a number of new product launches but
investors rewarded shares of GM, F and DCX with gains today.
Meanwhile Wall Street will be looking for the ISM services index
to come in at 60.8 for December, above its 60.1 reading for
November.  We'll also hear from the November factory orders
report, which is expected to slip after last month's 2.2% gain.
We could end up seeing a "sell the news" reaction no matter what
the ISM Services index comes out to be but historical trends
suggest the first several days of January are normally bullish
ones.  Right now there is a lot of excitement that the upcoming
fourth quarter earnings season will unwrap a number of positive
surprises but odds are very good that we will see some strong
sell the news reactions in response no matter what those earnings
results turn out to be.  Look for Dow component Alcoa (AA) to
open earnings season with its own report on Thursday after the
close.


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

Dollar Devastation, Rally Breaks Out
Jonathan Levinson

Everything strengthened in US Dollar terms as the USD Index broke
86 for the first time since its precipitous plunge from its highs
at 120 at the beginning of 2002.  Gold, silver and the CRB broke
to new highs, with silver ripping 4.53% higher, natural gas
10.31%, and gold 1.99%.  Bonds fell fractionally, and equities
surged to new rally closing highs.

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 gapped down following comments over the
weekend from Greenspan and Bernanke, and drifted lower throughout
the session, breaking 86 to a new low of 85.98 before bouncing in
the afternoon.  Foreign currencies rallied, with the euro setting
a record high, the CRB jumped 5.55 to close at 263.31, treasuries
retreated and equities rallied strongly.  As difficult as it is
to reconcile, it appears that equities are trading like
commodities, with a decline in the value of each dollar
increasing the number of those dollars required to purchase
alternative assets, in this case shares.  I find that analysis
strange, but it certainly fits the observable phenomena from
2003, with dollar destruction equating to rallies in everything
else, including US equities.  The wildcard is treasuries, which
have been selling off-  either on asset reallocation in favor
higher risk, or for some darker, more bearish reason.  I continue
to be unable to see how an equities rally can survive a rally in
yields, oil and other commodities, but this rally has had a knack
for doing just that.


Daily chart of February gold


Gold blasted out of the top of the rising bear wedge in another
perfect failure of technical patterns, a move similar to that
seen in equities in December.  Resistance from the mid-1980's and
mid-1990's was smoked in a move that would have attracted much
more attention but for the vertical meltup in silver, which added
over 28 cents.  The session low was 417.80 for February gold, and
420 held for most of the session with the closing print 424.40.
The HUI added 4.56% to close at 256.20, XAU +3.11% to close at
112.88.  While the rally across different markets continues to
dazzle observers, the rally in "things" or hard assets, being
commodities and precious metals in particular, still makes the
most sense to me as a currency hedge, inflation hedge and
uncertainty hedge.  Upper Bollinger band resistance is at 420,
and its violation should portend a pullback immediately, but so
did the close below the upper rising trendline on maxxed out
stochastics last week.  In other words, it's a very risky place
to go long, but if you're already in, trail your stops higher and
enjoy the ride.


Daily chart of the ten year note yield


Visible as a small green twitch above the upper descending
pennant trendline, which represents the 1.4 basis point rise in
the ten year note yield today.  The TNX closed at 4.387%, just
below upper Bollinger band resistance of 4.39%.  The daily cycle
upphase remains strong, and until it reverses, there is no reason
to expect that the trend of weeks past, with the dollar lower and
everything including treasury yields higher, won't continue in
the short term.


Daily NQ candles


The NQ added nearly 2% today, gaining 29 points to close at
1495.50 and leading its peers, with the YM up 1.13% and the ES
99%  The move surged to a new closing high, violating the key
outside reversal day printed on Friday.  There were no meaningful
dips following the breakaway gap up at the open, and the NQ
continues to trade inversely to the dollar.

The upper Bollinger band at 1492 was violated on a closing basis,
and though the daily cycle oscillators are not yet maxxed out,
the NQ is behaving in all other respects as a market that is
trending.


30 minute 20 day chart of the NQ


The 30 minute NQ broke back above the violated rising wedge
trendline.  I have added a secondary rising upper wedge trendline
at today's high to line up with the topping oscillators on this
timeframe, but insofar as it is based on very few data points,
it's not relevant with respect to price patterns.  As can be seen
from looking over the past 3 weeks, the 300 minute stochastics on
this timeframe rare trend in either oversold or overbought
territory, and so there's some argument to be made for the end of
the current move to be very close.  Daily Bollinger resistance
has been violated at 1490, and resistance on this timeframe is at
1503.  With the daily cycle oscillators still running higher but
nearing the top of their range, the NQ could roll over at any
time.  Like with the chart of daily gold, however, top-picking is
a potentially lethal game, as is buying the top.  Longs should
trail their stops, and shorts need to wait for the rollover to
commence.  My indicators are very stretched, but sentiment and
euphoria have their parts to play as well.  I would expect a
climactic blowoff to end the simultaneous 30 minute and daily
cycle upphases, and that would be the place at which patient
bears and bulls would look to sell.

Support is at 1490, followed by 1486 and 1477.


Daily ES candles


The ES added 11 points to close at 1120, gapping never violating
previous rising trendline resistance and closing just below
Bollinger band resistance at 1122.75.  The 10-day stochastics is
trending in overbought and begging for a rollover, but given the
persistence of 1112 support, even the most aggressive trend
following shorts should be waiting for a break of that level.
The Macd is still running higher and the 30 minute cycle below
turned back up on the ramp up in the last hour, suggesting
upside followthrough tomorrow morning.


20 day 30 minute chart of the ES


The rising wedge resistance line is a better fit on the ES, which
underperformed the NQ today.  1120-22 looks like stiff resistance
on the intraday charts, but the 30 minute oscillators have
twitched back higher.  If the ES can hold its gains overnight, I
would be surprised not to see a continuation of the buying
tomorrow morning.  With the oscillators this stretched, one would
expect that upside to be limited, but we often see explosive
moves to terminate a cycle downphase or upphase and with the 30
minute and daily cycles both lined up, that's my best guess from
here.


100-tick ES


The daily view shows the price action from the gap up open.  The
short cycle oscillators were rolling over at the close, but spent
most of the afternoon trending in overbought, and should pose
much impediment to an opening blast higher.


Daily YM candles


Nothing to add on the YM, which finished up 117 to close at
10517.


20 day 30 minute chart of the YM


Today's action is a blast down memory lane, evoking shades of
1999 and 2000.  On the one hand, prudent risk management is
prohibitive of leveraged long plays with indicators so toppy, but
then, triple digit gains in a day are not to be ignored.  I
personally expect to see a meaningful pullback on after a deck-
clearing blowoff top, and given the force of today's various buy
programs, that terminal spike could be ferocious.  Until then,
however, we must follow the price higher.  A 30 minute cycle
downphase is due, and the settings I follow do not tend to trend
in that timeframe.  If the bottom of the next 30 minute cycle
downphase on the indices follows a sideways/ corrective
downphase, then we'll know to expect yet another march to new
highs from there.


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

Volume returns!

Investors looked to have returned from their holiday breaks as
volume levels at both the NYSE and NASDAQ rose to their best
levels since December 19, 2003; the Friday before the week of
Christmas.

For the past two weeks, bears kindly reminded bulls that the
light volume gains for the major indices were less meaningful on
light volume.

While today's volume on the NYSE was nearly identical to that
found on December 19, 2003, its today's 2.3 billion shares on the
NASDAQ Composite (COMPX) 2,047.36 +2.02% and heaviest volume
since June 6, 2002 (2.79 billion) that gets a trader/investor's
attention as renewed interest for 4 and 5-lettered stock symbols
returned.

Market Snapshot / Internals - 01/05/04



Advancers outnumbered decliners for a 2:1 margin at both the NYSE
and NASDAQ.  For the NYSE, it was the ninth-consecutive session
of positive A/D breadth.  Bullish leadership at the NH/NL
indicators looks health, where today's 336 new highs at the
NASDAQ is the best seen since 411 stocks achieved new 52-week
high on December 2, 2003.

On Friday, our NASDAQ NH/NL 10-day ratio reversed back up to
"bear correction" status, which hints that some bullish
leadership is returning to the broader NASDAQ Composite, and is
strikingly similar to Friday's trade, which had the narrow
NASDAQ-100 Bullish % ($BPNDX) reversing back up to "bear
correction"

As a bullish % follower, I (Jeff Bailey) can only scratch my head
in wonderment, yet realization, of just how resilient and strong
the various equity indices have been.

NASDAQ Composite Index (COMPX) - Weekly Intervals



2.33 billion shares based on NOVEMBER construction spending?
That's "old news" when considering the month of January has
begun.  While November's 1.2% jump was much stronger than
economists' forecast for a gain of 0.5%, I think there's a lot of
complacent bears paying the piper on this type of volume.

Pivot Analysis Matrix -



The recently lagging (in the pivot matrix) NASDAQ-100 Index
(NDX.X) 1,496.58 +2.25% traded strong into today's close and is
the first major index in our WEEKLY Pivot matrix to trade its
WEEKLY R2.

I'll note here that there is correlative resistance in the matrix
showing up tomorrow at MONTHLY R1 1,503.82 and DAILY R1 of
1,504.04, which may tie into a nice round 1,500.00 of
psychological resistance.

Near-term, I think those traders that took my NASDAQ-100 Tracking
Stock (AMEX:QQQ) $37.09 +2% bullish trade from last week, begin
to make a tie at NASDAQ Composite 2,050.00 (round number) and
NASDAQ-100 Index (NDX.X) 1,500.00, as the QQQ approaches my
revised higher bullish target of $37.25.

Please note that today's QQQ high was $37.15, which is just under
our newly calculated WEEKLY R2 of $37.16.

What I would want to do tomorrow, when still targeting QQQ
$37.25, is raise a protective stop up under the DAILY Pivot of
$36.93.

I do think there is a HIGH POTENTIAL for a large short-squeeze to
take place in the QQQ, where I'd be monitoring tomorrow's Nikkei-
225 ($NIKK) 10,825 trade.

Nikkei-225 ($NIKK) - 50-point box



The $NIKK was a major global index that was showing a major
technical breakdown at 10,100, but now looks to be recovering
after testing its bullish support trend.  The renewed strength in
the $NIKK comes as the tech-heavy NASDAQ-100 Index (NDX.X) breaks
above its November relative highs, where some U.S. technology
analysts warned that technology stocks in the U.S. could be tied
to Japan's Nikkei-225 weakness.

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



I'd look to take profits on the QQQ with a trade at my bullish
target of $37.25 if achieved tomorrow, but also look to protect
some near-term gains and work off losses in a previously profiled
February $36 put, from a couple of weeks ago.  BEARS should be
jittery with short interest at 12-month highs, and QQQ price also
at new highs.

The upward trending "red" line is what some technicians might see
as "bullish resistance" for a bullish wedge.  I think fellow
analysts Jonathan Levinson has shown such a trend on various
charts in his Friday Index Trader Wraps.

I continue to see traders trying to pick tops in the indices and
short them, but what seems to be happening is these shorts get
stopped out, and no bullish trade can be taken, as the top is so
near.  It is so tempting to short what looks like a bubble, but
if the bubble turns out to be a humongous helium balloon, its the
bear that keeps getting burned.

Dow Industrials (INDU) Chart - Daily Intervals



On Friday, I made note in the Market Monitor that the INDU, at
its session highs, was testing the upper end of its bullish
regression channel we had just added to the above chart.  The
INDU did see selling from that level to a session low of 10,384.
With the INDU back to test this bullish resistance again today, I
would simply snug a protective stop under bullish trades just
below 10,370.  A break much above 10,560 would be deemed bullish
in my book, where WEEKLY R2 of 10,625 is in play.

Jeff Bailey


************************Advertisement*************************

Stock Option and Futures Brokerage

OneStopOption teams the best trading technology with varying
levels of professional assistance at very competitive prices.
Commission costs are comparable to discount brokerage and
tailored to individual customer needs.

The power of one brokerage group with experience and expertise
in the Securities* and Futures Markets offers unprecedented
convenience for traders.

Access To All Futures Markets            Toll Free 888-281-9569
Stock Option Principals

www.OneStopOption.com

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


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

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

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

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


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

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


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

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

Contact Support
The Option Investor Newsletter                   Monday 01-05-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: YHOO
Dropped Calls: None
Dropped Puts: None
Play of the Day: Call - YHOO
Watch List: Four Four-Lettered Stocks to Watch
Market Posture: Bears Still Singing the Blues


************************Advertisement*************************

Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade Market Monitor Signals
Personal Service and Education


**Services available for Foreign Traders including Canada**

http://www.OneStopOption.com

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


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

YHOO - call
Adjust from $42.00 up to $43.50


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

None


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

None


************************Advertisement*************************

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

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


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

Yahoo! - YHOO - close: 46.90 change: +1.50 stop: 43.50*new*

Company Description:
Yahoo! Inc. is a leading provider of comprehensive online products
and services to consumers and businesses worldwide. Yahoo! is the
No. 1 Internet brand globally and the most trafficked Internet
destination worldwide. Headquartered in Sunnyvale, Calif.,
Yahoo!'s global network includes 25 world properties and is
available in 13 languages. (source: company press release)

Why we like it:
Do you remember a few months ago about the big expectations for a
resurgence in online advertising in 2004? Well the talk is back
and YHOO is a lead contender to benefit from just such a comeback
for the online ad industry. We aren't the only ones bullish on
YHOO. Goldman Sachs just upped their revenue and earnings
projections for YHOO's fourth quarter of 2003 and their full year
2004 estimates. Many had expected the online shopping season to be
blockbuster this year and so far the numbers look good, which
should help YHOO's Q4.

The stock performed reasonably well last week and has been slowly
inching higher but we'd like to see more of a follow through on
the reverse head-and-shoulder pattern that YHOO has created. If
shares dip, then look for a bounce from the $44 level. Meanwhile,
keep your ears open for any news on Monday, January 5th when
YHOO's management is due for an appearance at the Smith Barney
Citigroup Entertainment, Media and Telecom conference in Arizona.

Why This is our Play of the Day
After creeping gently through the $45 resistance level late last
week, shares of YHOO blasted off with a vengeance this morning,
ending the day just below the intraday high of $47.11 and at their
best level in over 3 years.  The strength in the overall NASDAQ
was certainly a factor, but the real catalyst was more likely the
volley of positive analyst comments surrounding the Smith Barney
Media Conference.  Rising 3.3% on Monday on solid volume puts YHOO
in position to challenge the $50 level ahead of its earnings
report next Wednesday.  Depending on how much follow-through is
seen this week, YHOO could be destined for a test of strong
resistance from late 2000 near $52.50.  At this point, a pullback
near $45 would be a gift of an entry point, with a rebound off the
10-dma ($44.47) being highly likely.  We're raising our stop to
$43.50 tonight, which is just below last Monday's intraday low
($43.81) and will also have the support of the 20-dma (currently
$43.22) by mid-week.

Suggested Options:
Since we'll be dropping coverage of YHOO ahead of its earnings
report, aggressive traders can focus on the January options, which
expire after the January 14th earnings date.  More conservative
traders will want to use the February strikes, as they will be
less susceptible to the effects of time decay.  Our preferred
option is the February $47 strike, which is just slightly out of
the money.

! Alert - January options expire in less than two weeks!

BUY CALL JAN-45 YHQ-AI OI=18191 at $5.20 SL=3.25
BUY CALL JAN-47 YHQ-AW OI=12593 at $1.60 SL=0.75
BUY CALL FEB-45 YHQ-BK OI= 3540 at $2.90 SL=1.50
BUY CALL FEB-47*YHQ-BL OI=  389 at $1.15 SL=0.60

Annotated Chart of YHOO:



Picked on December 23rd at   $43.68
Change since picked:          +3.22
Earnings Date               1/14/04 (confirmed)
Average Daily Volume =     11.6 mln




************************Advertisement*************************

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

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


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

Four Four-Lettered Stocks to Watch

Maxim Integrated Products - MXIM - close: 50.28 change: +0.96

WHAT TO WATCH:  The SOX semiconductor index produced a very
strong 3.6% rally today after the Semiconductor Industry
Association reported that November's global chip sales soared 26%
to more than $16 billion.  This was the fourth month of
consecutive gains.  MXIM may be a way to play any bullish
enthusiasm for the group.  The stock has reclaimed the $50 mark
and appears to have broken its descending pattern of lower highs.
Plus its MACD indicators has produced a new buy signal.  Look out
for resistance at 52.50 but we'd probably target $55.

Chart=


---

Apollo Group - APOL - close: 70.55 change: +1.15

WHAT TO WATCH:  After three weeks of a very narrow consolidation
shares of APOL are on the move again.  We've seen a two-day rally
on decent volume push the stock up and over the $70 mark.  APOL's
MACD indicator has also produced a fresh buy signal.  Current
resistance is its all-time high just over 73 but APOL could make
a run for the $75 mark.

Chart=


---

KLA-Tencor - KLAC - close: 59.24 change: +2.80

WHAT TO WATCH:  Shares of KLAC enjoyed a 5% gain today after SG
Cowen upgraded it and fellow chip equipment maker AMAT to "strong
buy's".  The firm believes chip makers will raise their capex
spending by 40 percent this year.  Watch for a move over the $60
mark or its current highs near $61.00.

Chart=


---

Amazon.com - AMZN - close: 53.27 change: +1.37

WHAT TO WATCH:  Internet stocks turned in a decent session this
Monday.  Shares of AMZN added 2.63% and look ready to breakout of
a short-term bullish flag pattern.  The stock is now back above
all its moving averages but has resistance in the $54.75-55.00
range.  Aggressive traders may want to consider positions now but
the rest of us might do better waiting for a move above $55.
Earnings are expected at the end of January.

Chart=



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

Bears Still Singing the Blues
by - Nich Sheldon

Today's session saw bears getting bullied down Wall Street as
nearly every index closed higher.  The INDU, SPX & OEX all gained
more than one percentage point on the day, while the NDX Nasdaq-
100 rose by a margin of 2.25 percent.

The DDX Disk Drive Index drove in +3.94 percent gain, closing over
its 50-DMA for the first time in a month and a half.

The SOX Semiconductor Index came in second place on the bull's
scoreboard, adding on +3.60 percent and breaking a three-day
losing streak.

The GSO GSTI Software Index closed at a new 52-week high of
158.51, adding +3.49 percent by market close.  The GSO has not
seen the 158 level since its 11 point drop on April 2nd, 2002.

The XAU Gold and Silver Index was the last index to gain more than
+3 percent on the day (+3.10 percent).  Gold Bugs were happy with
the new 52-week high of 113.18 and the new 52-week closing high of
112.88.  The XAU index may look overbought on the weekly chart but
its daily MACD indicators suggest there is still more room for
appreciation.  Daily stochastics have reached overbought but have
not yet begun to weaken.

The INX CBOE Internet Index nearly closed at its intraday high,
adding on +2.89%.  After three months of churning sideways the INX
may be ready for another run higher.

The NWX Networking Index has gone up 9 out of the last 11
sessions.  Today's bullish session saw the NWX tacking on +2.71
percent and almost hitting new two-year highs.

The GHA GSTI Hardware Index rose +2.34 percent on Monday.  However
we suspect gains are going to get tougher in the next few sessions
as the index is reaching its three-month resistance level of the
255 range.

The OIX Oil Index struck gains today, adding on +2.18%.  The OIX
has been bullish for the past 23 out of 27 sessions, and today's
close at 328+ is a level that hasn't been reached since May 24th,
2002.  Traders should note that the 328 to 330 range was three
month resistance in 2002.

The worst losses were seen in the HMO Morgan Stanley Healthcare
Index, which fell -3.79 percent.  Today's more than 30-point drop
brought the index back to support around 820.

The only other index to drop more than one percent was the DJUSHB
DJ US Home Construction Index, which dropped -1.97 percent.


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

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

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

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


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

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


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

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

Contact Support

DISCLAIMER

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

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

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

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives