The Option Investor Newsletter Sunday 03-07-2004 Copyright 2004, All rights reserved. 1 of 5 Redistribution in any form strictly prohibited. In Section One: Wrap: Bad News Bulls Are Back Futures Market: See Note Index Trader Wrap: WON'T GO UP, WON'T GO DOWN Editor's Plays: Time to Split Market Sentiment: Another tough week Ask the Analyst: Sector bell curve revisited Coming Events: Earnings, Splits, Economic Events Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** WE 03-05 WE 02-27 WE 02-20 WE 02-13 DOW 10595.55 + 11.63 10583.9 - 35.11 10619.0 - 8.82 + 34.82 Nasdaq 2047.63 + 17.81 2029.82 - 8.11 2037.93 - 15.63 - 10.45 S&P-100 568.45 + 3.91 564.54 - 0.33 564.87 - 1.05 - 0.14 S&P-500 1156.86 + 11.91 1144.95 + 0.84 1144.11 - 1.70 + 3.05 W5000 11314.42 +141.50 11172.9 + 29.34 11143.6 - 30.42 + 44.60 SOX 504.25 + 1.99 502.26 - 7.99 510.25 - 0.80 - 8.30 RUT 599.54 + 13.98 585.56 + 5.67 579.89 - 5.25 + 1.07 TRAN 2893.07 - 9.12 2902.19 + 10.01 2892.18 - 24.38 + 22.20 VIX 14.48 - 0.09 14.57 - 1.47 16.04 + 0.46 - 0.41 VXO 14.80 + 0.04 14.76 - 1.49 16.25 + 0.62 - 0.35 VXN 22.08 - 0.79 22.87 - 1.25 24.12 - 0.02 - 0.49 TRIN 1.40 1.26 1.29 1.19 Put/Call 0.79 0.73 0.86 0.76 ****************************************************************** Bad News Bulls Are Back by Jim Brown Jobs were drastically lower than expected. Markets gaped down at the open and bonds soared on the weak economic news. Suddenly the bad news bulls stampeded into the picture and not only pulled the markets back from the brink but pushed them to new highs in many cases. Bad news equals strong markets or so it appears. Dow Chart - Daily Nasdaq Chart - Daily The bad news came in the form of the February Employment Report and a huge miss in the headline number. Only 21,000 jobs were created in February when official estimates were for +125,000 and whisper numbers exceeded +250,000 in several instances. Not only was the headline number bad but the numbers for the prior two months were revised down as well. January dropped from +112,000 to +97,000 and December fell from +16,000 to only +8,000. This was not good news for those looking for signs of a rapidly expanding economy. It was good news for the bond market where bonds soared to eight month highs as fear of a coming rate hike evaporated. Yields on the ten-year note fell to 3.83% and well off the 4.10% highs for the week. That may not seem like much on the surface but in bond terms it is huge. It was the biggest one day change in rates since last July. In one fell swoop the Fed fund futures erased the chance of a quarter point increase in August where it had been indicated and moved it all the way to March 2005. Obviously this can change should the recovery suddenly catch fire but as of today there are no rates hikes expected this year. Ten-year Yield Chart - Daily With the Fed on hold and interest rates falling to eight month lows the business environment suddenly improved significantly. Fears of rising rates from a stronger dollar and the panic Greenspan created this week were suddenly forgotten. No strong dollar here or in the near future. All outward signs show the recovery still in progress but moving at a snails pace. This means the deficit will continue to grow from lack of tax receipts from surging earnings but earnings gains are still on track. The lack of job creation is actually good for earnings. It means productivity will continue to increase and costs will continue to be low. U.S. employees are expensive with up to 40% of their cost going to benefits. Using existing employees until they are forced to hire due to rising demand will keep earnings strong and companies healthy. The problem we are left with is the unemployed consumer and those that fear they could become unemployed. Workers in those categories hoard money not spend it. Every dollar takes on a higher value when future income is in doubt. What we are likely to see is further drops in consumer confidence and sentiment numbers. Those numbers will be even further depressed because of the political rhetoric which intensified immediately after the jobs announcement. The candidates wasted no time in blasting Bush about the lack of new jobs, the rising deficit and weakness in the economy. This will continue to be fed to the masses and confidence in the current and future economic conditions will decline. Overlooked in the greater scheme of things was the six consecutive months of positive job creation. Not a record pace but compared to the -300K to -450K per month of job losses in late 2001 this is a huge improvement. We have been steadily improving albeit at a slow pace since the 9/11 disaster. Also, when evaluating the current economy you always have to compare conditions now to those pre 9/11. Economic conditions, business and travel patterns all changed drastically on that day and it had nothing to do with the administration. We have worked our way out of that black hole and America businesses are stronger for it. Business is improving. Many companies are posting record profits again once they restructured to the new reality. Lessons were also learned from the bursting of the Internet bubble and the collapse of the Y2K buying cycle. There are a lot of things to be positive about and many traders saw through the jobs fog on Friday morning and went on a shopping spree. Business conditions had suddenly improved with the removal of the rate hike cloud that had tanked stocks earlier in the week. Stocks were on sale and smart investors recognizing a bull market opportunity loaded up. Interest rate sensitive stocks like banks and homebuilders soared with many hitting new highs. Consumer stocks like Maytag, TJX and HSY also rose on the prospect of continued low rates. Bull market? Absolutely! I have been telling you for weeks that the Russell and the Wilshire, the broadest market indicators, were still in rally mode despite the Dow's lagging performance. We saw the proof again today. The Russell broke prior resistance at 600 and traded to a high of 603.16 and a level not seen since March of 2000. That was only .65 below the March-10th, 2000 closing price of 603.81. This is a new four-year high and a very strong performance in the face of the jobs news. The Wilshire traded up to 11370 and a new post 9/11 high. It closed at 11314 also a post 9/11 closing high. The Wilshire-5000 ended up gaining +141 points for the week despite several external events like the Greenspan speech. In fact, all the major indexes were up for the week except for the transportation index which lost -9 points on the rising price of oil. Considering all the negative events I think this was a bullish week mainly due to the new high closes on the Russell and the Wilshire. The Dow struggled all week, actually for the last two weeks and remains locked into a narrow range. The spike to 10650 today was very short lived although it put up a valiant attempt to move higher again in the afternoon. In the end like a swimmer sinking beneath the waves the Dow slid back below 10600 once again. This is very tough resistance for the Dow and it has been the price magnet for two weeks. The Dow did get some good news as the 50dma finally rose to a level where it met the horizontal support at 10550. The morning dip hit that 50dma for the first time since November 24th. Now the real decision process will begin. The Dow MUST hold that 50dma and based on the recent highs it will continue to rise to something in the 10600 range. It must hold this average! This has been support since March 2003 and traders have come to rely on it. It is not an electric fence and it can be penetrated. On three of the last four tests it traded across the average for up to five days before breaking free and streaking to new highs. It never traded below it for the entire day. Eventually this avg will fail. I have been projecting an April failure since November. We are now at the crossroads for this market. If the average fails now we could easily see a drop to the 100dma currently at 10219. We have seen the Dow trade sideways since Jan-2nd and the time has run out. It must move higher next week or risk a serious technical drop. The Nasdaq closed down for the day due to a sell program at the close but it was still a bullish day. How can I say that with a -7 loss? Remember Thursday, the Nasdaq sprinted ahead of the other indexes in front of the Intel news and closed at nearly a two week high at 2054. The index had been trending up since its most recent low on Feb-24th and had soared to 2064 on the day of the Greenspan speech before getting killed on the interest rate worries. Those worries dropped it back to 2020 and it recovered to trade most of Friday over 2050 resistance again until the closing sell program. Look at a short term chart and you will see the bullish uptrend. The closing program knocked nearly -10 points off the gains but was not material to overall market sentiment. Much of the weakness the Nasdaq struggled to overcome was due to another drop in the SOX prompted by the weak Intel guidance. Everybody forgot about Intel in the Jobs hoopla. Hopefully TQNT and TXN on Monday will erase that memory. The challenge for the Nasdaq is the 50dma, which is at 2060 and above the current price not below it. If you have seen my Nasdaq chart over the last week you have seen the triple threat resistance at 2060 and it is not going away. We traded over it on Friday on the opening bounce but it quickly reasserted itself. Like the Dow and the critical 50dma support test the Nasdaq is currently at a pivotal resistance area. It MUST break this 2060 resistance next week or risk a retest of 2000. The most positive market event on Friday was the new highs on the Russell and Wilshire. The Dow is languishing but it is only 30 stocks. The Wilshire is the top 5000. If you were going to pick one for the health of the overall market I would pick the Wilshire. I know the Dow is the most recognized and most quoted index but it is not reflecting a correct picture of market strength. The Russell closed only -2 points from a new closing high. The Wilshire did close at a new high. These indexes are only a heartbeat away from breakout mode and represent a truer picture of the market. Wilshire-5000 Chart - Weekly Wilshire 5000 Chart - Daily The calendar is working in our favor with no material economic reports next week. There are plenty of reports but none that are earth shaking. The PPI for February, previously scheduled for next Friday, has been cancelled just like the PPI for January. There are no new dates for either report. The mid quarter update process is continuing and chip makers TQNT and TXN will give us their guidance on Monday after the close. There are also more than a dozen tech conferences next week that will stimulate tech interest. We are only three weeks away from quarter end and funds will use the next couple of weeks to dress up their portfolios for the quarterly statements. We are only five weeks away from the start of the Q1 earnings reporting cycle beginning the week of April-12th. Next week is the week before March option expiration and should have a bullish bias. This is the time where any April earnings run should begin. The keyword was "should". We all know there is no starting bell and no hard and fast rule that says we will even have an earnings run. BUT, if it is going to happen it should start soon. Despite the apparent neutral finish for the Friday on the major indexes, Dow +7, Nasdaq -7, the internals were strongly positive. We had the highest volume of the last two weeks and advancers beat decliners 4410 to 2882. All on bad (good) economic news. Were it not for the insane Martha Stewart activity that took over the NYSE Friday afternoon we could have seen a stronger finish. Trading activity in all but MSO came to a total stop once the verdict news hit the airwaves. Hopefully the broadcasters will wear themselves out before Monday and we can go on with business as usual. I could be all wet about my current market view and it certainly would not be the first time. Bears keep finding more excuses to short the market and to their dismay bulls keep buying the dips. So far the bulls have been winning with a whopping 813 new highs on Friday as proof. Until these conditions change I am going to keep buying the dips and suggest you do the same. Just remember the two key points for next week. The Nasdaq MUST break 2060 and hold it and the Dow MUST NOT break the 50dma at 10550 by any large amount. As long as those conditions are met the bulls are still in control. Enter Very Passively, Exit Very Aggressively! Jim Brown ************** FUTURES MARKET ************** Futures wrap is not emailed due to the excessive number of charts. It may be read on the website at this address. http://www.OptionInvestor.com/indexes/futureswrap.asp ******************** INDEX TRADER SUMMARY ******************** WON'T GO UP, WON'T GO DOWN By Leigh Stevens lstevens@OptionInvestor.com THE BOTTOM LINE – When the market can't make much further headway but also bounces back after "bad" news, it's usually a sign that it wants to go up but maybe needs to mark time for awhile. Of course we also have to speak about two different markets here: The Nasdaq has already retraced in February a fibonacci 62 percent of its Dec-Jan advance. The Nasdaq Composite (COMPX) fell right to its 2000 key technical support in Feb. then rebounded, which may be it for the Composite - the most I see is back to 1900, then up again. The S&P 500 (SPX) is having more of a sideways correction - a "time" correction. The next significant move looks to be up. If they can't take em down, eventually they should have another run as the trend remains up. I am holding some index calls in the Nasdaq 100 (NDX) and will buy QQQ on dips under 36 - the risk to reward ratio from here looks better to me in tech. FRIDAY'S TRADING ACTIVITY – Friday was a roller coaster day and more choppy intraday than the week before. The Market was down early based on the weaker than expected jobs report. Nevertheless, the S&P 500 (SPX) closed up 2 points to end at 1156 - this after being down as much as 6 points - and, up as much as 8. The Dow (INDU) ended higher by 7 points to 10,595. The Nasdaq Composite (COMPX) finished down 7 at 2047, but had been higher the day before bucking the trend of the S&P. The key Nasdaq influence was weakness in bellwether Intel (INTC), off almost 2.5 percent on a lowered Q1 sales forecast. The Dow eked out a gain on the week of 0.1%, while the Nasdaq was up 0.8% - noteworthy as the Index has reversed six weeks of declines. The Labor Department reported on Friday that its estimate of nonfarm payrolls was that jobs increased by only 21,000 in February, versus an expectation of 130,000. The unemployment rate was unchanged at 5.6%. While new job creation as risen for six months, the monthly average is around 60,000 and is only half of what is needed merely to stay abreast of population growth - to accommodate newly minted graduates looking for that first big job. The Administration had put out an estimate in early-Feb that job growth would grow by 3% in 2004, or about 300,000 a month. "Wait until you see the effects of our tax cuts" is a battle cry that is wearing thin. No doubt this all is making the Administration nervous. It's not likely that we will see ads touting job creation anytime soon. In fact, the Democratic nominee John Kerry was quick to seize on the issue and say that President Bush as "under-delivered". Treasury Secretary John Snow was just as adamant to state that the "The President's tax cuts are working". To add insult to injury, January's payroll report was revised lower by 15,000 (to just under 100,000) and December's gain was cut from 16,000 to 8,000. However, what is not so great for equities was fuel for the bond market as the 10-year T-note ran up well over a full point (+1 12/32), cutting its yield to 3.8%, the lowest since last summer. Bond market participants took the report as an indication that the Fed would be constrained from raising rates for some time to come. A bit of breakdown might be of interest here: manufacturing lost 3,000 jobs, making it 43 months of decline - however this was the lowest (loss) in 3 years. The service sector added 46,000 jobs, temporary help services were up by 32,000. Construction jobs fell by 24,000, likely due to severe winter weather. The average workweek held steady at 33.8 hours. Those working are not getting fat however - average hourly wages are up only 1.6% in the past 12 months, the slowest growth in 8 years. Intel (INTC), as mentioned, lowered its quarterly sales forecast due to ample inventory on hand by its Asian customers. The company now reports expected sales of a range of 8 to 8.2 billion dollars versus a range of 7.9 to 8.5 billion. INTC is of course a major tech influence and also in the Dow 30. However other Dow stocks took up the slack. McDonald's (MCD) ran up nearly 4% and a new high after reporting a jump in same-store sales. Guess those Big Macs are still big and with very big with Akins diet fans - and bigger waistlines are all around. JP Morgan Chase (JPM) also hit a new 52-week high and the financial sector is getting fat also. Low interest rates are not impacting what they charge on credit cards and the like, but it sure increases their profit margins or the spreads between what it costs them to borrow and what they can squeeze out of customers. The chip sector (SOX) was weak on the Intel news, as was Computer tech (XCI) and computer services (GSV). Gold, banking, oil services (also natural gas), and computer hardware were among sectors that gained. Oh and last but not least, but my least favorite story, Martha Stewart was the focus of a lot of media attention and trading in her company was halted. Interestingly, but I suppose tragically for her, the charges were not insider trading at all, conspiracy, obstruction of justice and lying to the feds - so, the moral of the story is if you get caught with your hands in the cookie jar fess up - you wanted the cookie, but maybe it wasn't the best idea. MY INDEX OUTLOOKS – S&P 100 Index (OEX) – Daily chart: The S&P of course is still stuck in the trading range defined on its daily chart below. There needs to be an advance above 572- 573 on a closing basis to create a breakout. If so, I figure upside potential to be to 590. The first level of support can be assumed to be at 561-562, at the prior downswing low and in the 558 area, where the OEX bottomed in late-January/early-February. Support in the former area is also implied by the 50-day average. I suggested last week that I would hold puts unless there is a close above 572 as an exit or stop point. Given my "bottom line" assessment of the way the market is holding up here, I would let my stop take me out. I am not assuming necessarily that there will be a breakout and new up leg. We could still be at the top end of a trading range here - further market action is needed to determine. OEX – Hourly: On the hourly chart its apparent that OEX is locked in a tight range between 572-573. The intersection of the hourly up trendline is at 566. Is the market coiling for a move through upper resistance? Stay tuned. The trend is remains up until and unless there lower downswing lows are seen on sell offs. Most significant technical support comes in at 558. If 566 was penetrated, I would exit any puts and look at calls at that point, especially if the two stochastic model pairs on the hourly chart, both get to their lower extremes. Dow Industrials (INDU) Daily: Charles Dow called this kind of sideways pattern a "line" formation - also called a "rectangle" these days, a pattern that is usually assumed to be a price consolidation pattern. Most often, consolidations after such a good-sized run up will resolve themselves by another up leg at some point. It was noteworthy that the 50-day moving average was not broken given the weakness seen Friday. Key resistance has to be assumed at the prior highs just above the 10,700 area. If this upper resistance area is penetrated, upside potential could be to the 11000 area. Support in the 10400-10435 area is the lower end of the rectangle. A decisive downside penetration below 10400 gives me a downside objective to around 10200 to 10100. The other thing about rectangular formations is that the longer they go on, the stronger and longer is the next price swing, up or down. Stay tuned. Dow Index - Hourly (DJX): When we look at the hourly chart, there is more of downtrend apparent unless there is move to above 106.5 basis the Dow Index or DJX. There is a downtrend channel that can be drawn also that projects a lower end of it to around 104.60. However, the trend that exists is still that lows are climbing, or crawling?, up an up trendline still, a pattern which is not broken unless there is an hourly close below 105.50. Summing up, DJX needs to get, and stay, above 106.50-107 to suggest a renewed upswing. Below 105.50, the up trend is faltering and I would look for 104.60 as potential lower support. A tough market to trade as the trend stays muddy! Nasdaq Composite (COMP) Index – Daily & Hourly: The Composite has not managed yet to break out technically and the same pattern of lower rally highs is still the pattern. A close over 2060 would suggest the trend might get back into gear on the upside. 2100 would then loom as the next key upside resistance. Key support is at 1990-2015. A close below 2000 would suggest downside potential to around 1900, but that is the lowest projection I have currently. A pretty mixed picture still. Where are those jobs? The next key economic influence will likely be Thursday's retail sales report in the week ahead. Nasdaq Composite (COMP) Index – Daily: We did see the Composite climb back above the center moving average and maybe the last touch to the lower envelope line will proved to have been a high potential buy point for Nasdaq index calls such as in the Nas 100 (NDX) options. Another close above 2050 in the Composite would convince me better. 2150 is my maximum upside potential if a rally does get going. I can't see fundamentally what is going to keep a rally like this going with IT spending so sluggish in the U.S. Another rally on expectation only could happen, but my best guess is that the market continues to trade in a relatively narrow range - and the trend stays more sideways than not. NOTE: Use of the Moving Average Envelope Indicator was discussed in my Trader's Corner article - http://www.OptionInvestor.com/traderscorner/tc_022604_2.asp Nasdaq 100 tracking Stock (QQQ)– Daily: QQQ has not managed to get back above the lower boundary of its uptrend channel and this prior support line is still acting as resistance. As long as this continues, the possibility of another downswing exists for sure. A close over 37.50-38 would put prices back into its uptrend channel and would be bullish technically. I could say the same as last week - with the Q's under 37, downside potential is to 35-35.50. Nasdaq 100 tracking Stock (AMEX:QQQ)– Hourly: The hourly chart below presents what could be a bearish downtrend channel if QQQ can't get above the upper boundary line around 37. The lower end of this hypothetical channel intersects currently in the 35 area. A move to below 36.25 would suggest downside potential to the lower end of the channel, at 35-34.75. If short QQQ stock I suggest bumping buy liquidating stops down to 37.30 from 37.70. I would exit shorts and take profits on a move to the 35.25 as I figure good buying interest at 35 and the Q's might not get there. Good Trading Success! ************************Advertisement********************************** Option traders, check what PreferredTrade offers: - true direct access to each option exchange - stop and stop loss online option orders - contingent option orders based on the price of the option or stock - online spread order entry for net debit or credit - fast option executions - rates as low as $1.50 per contract ($14.95 min) PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC *********************************************************************** ************** Editor's Plays ************** Time to Split The plan from last week was working so well. The puts on DNA profiled last week at $108 were working great. By the afternoon on Wednesday DNA had traded down to $104 and several readers had emailed me with congratulations. A couple had already exited shorts with a profit. That was before lightning struck. About 12:15 on Wednesday Forbes posted an article on its website suggesting Genentech had another cancer product in the pipeline that could be announced as early as April. Boom! Traders who had jumped on the prior weeks spike with shorts were suddenly getting squeezed by the extremely low float and the price exploded back to $109. Ok, new entry point and April is still weeks away. We only need -$5. When it rains it pours. After the close on Wednesday DNA announces a 2:1 stock split. Boom! The stock sprints back to $110 and near a new high. Friday several articles about promising new drugs from various companies boosts the entire sector and traders bought drugs on the dip. DNA closed at a new 4-year high. Traders using the stop loss plan I outlined in the play description of 50% on the $2.40 option should have lost about $1.25 depending on when you entered/exited. Due to decreasing volatility and the slow rate of drop the first of the week the March-$105 put never exceeded $2.70 and only those that shorted the stock made any real money. The second caution was to exit at $110 if reached again and the option was trading at $1.40 at that time. Either way it was a $1.00-$1.25 loss. This play was unfortunate but nobody can ever predict the future 100%. Nobody knew Forbes was going to post a bullish article on cancer drugs. Nobody knew they were going to announce a stock split. Needless to say I got a lot of hate mail from readers who lost money on the trade. I had mixed emotions about airing dirty laundry here but I decided it was best for the sake of other traders. I can only pick trades based on the information at hand. I explicitly outline all the factors I think are relevant including the risk factors. I have no crystal ball and there will always be unexpected events. Some in our favor and some against us. Trading involves risk and every reader has to evaluate the risk of each play and decide if they agree with the position. When the reader clicks the mouse button to initiate the position they are committing to that risk personally and they are taking responsibility for whatever happens. It is YOUR money and YOU are responsible. I try to find opportunities that offer the best risk reward ratios at the time they are profiled. If all the trades I profiled all produced profits the subscription price for the newsletter would be $1000 per month and you would be glad to pay it. As long as humans are involved in the process there will always be unexpected events and there will be periodic losses as well as gains. I am sorry the play did not work. Do you think I enjoy doing all the research, preparation and analysis just so I can have several thousand people curse me if it goes wrong? I always seem to get lots of hate mail on busted plays but very few emails on those that are profitable. Lastly, any play I recommend or any of the plays in the newsletter for that matter contain risk. The risk in the DNA play was $1.25. If you can't afford to risk $125 per contract then don't play. Nobody is forcing you to enter the trade. One reader said he lost thousands of dollars in the trade. I assume he must have bought a lot of contracts or failed to use stop losses. Either way it was his choice to risk thousands of dollars not mine. I sure would not have done it and I have a pretty high risk profile. If I offended somebody with this commentary I apologize. I simply felt I needed to remind everyone that YOU are the final decision maker. When I am playing craps in Vegas and I lose a bet I don't get mad at the shooter. I placed the bet, not him. "Jim – I took a small DNA short at your suggestion early last week at 109 and made a nice profit covering in the 105's. Thanks for the play. Tried for the "twice is nice" play and reloaded on Thursday short 109. Split news came out and I felt the pain. Again feel it may be overdone at 113. Risk is probably very high, but I'm still short 110.50 average (-2.65). Will see how Monday goes and maybe bite the bullet. Thanks again - Jeff, Honolulu" ************************** I am not going to provide a detailed play profile today but a couple of random thoughts for you to choose from. With the insane activity around Martha Stewart there may be an opportunity in MSO. The stock was intensely traded on Friday and ended around $11.00. The sentencing is scheduled for June 17th. As a convicted felon the analysts are expecting all the advertising for her products to be pulled from many of the magazines and TV spots. There will be a continued media frenzy for some time and her post trial statement that she will fight the verdict and she was unjustly convicted could go against her when the sentence is passed. ABC was reporting Friday night that count one had a minimum sentence of three years under Federal sentencing guidelines. This has not been picked up by the other networks yet. (if it is true) With MSO at $11.00 the June $7.50 put is $.55 cents and it may be less once the volatility eases on Monday. MSO has traded as low as $5.25 before she was convicted. 25% of the float is currently short and you can bet there will be a dog pile on Monday with others getting into the act. This might be worth a lottery play. Just realize June 17th is the day before option expiration. This is a 100% risk trade. Do not invest any more money than you can afford to lose. MSO Chart - Weekly ********************* QQQ Lottery play The QQQ closed at 36.63 on Friday. The 100dma is 36.13. If we are to believe the strength in the Russell and the breadth of the Wilshire then the QQQ should move up from here. With very strong support only 50 cents below the risk should be minimal. The odds of an April earnings runs for Tech stocks is very good. The odds of a post April crash are even better as the campaign mud slinging increases. I would look at buying a May-$38 call, currently 95 cents and sell it on May 1st. Once the first two weeks of earnings is over the "sell in May and go away" crowd will appear, especially in an election year. Risk on this should be about 50 cents, less if you wait for an entry closer to the 100dma. QQQ Chart - Daily **************** MARKET SENTIMENT **************** Another tough week - J. Brown Wow! We just finished another eventful week. While the markets didn't move much in front of Intel's mid-quarter update on Thursday and the disappointing non-farm payrolls report on Friday the Dow and the NASDAQ's minor gains did manage to break a six- week long losing streak. Last Monday's rally on a decent ISM report with an encouraging employment component quickly withered. Intel's mid-quarter update was disappointing and lead the tech sector lower on Friday. Jobs failed to appear for yet another month with just 21,000 added in February, more than 100,000 short from most estimates. Given the events above I'd say investor sentiment should be tired, frustrated and ready to give up. Yet that's not the case. The markets rallied on the jobs report because it guarantees that the Fed is on hold. With the current low interest rate environment and corporations still not hiring that means they're getting more work done with their current staff, based on the incredible productivity gains, and that goes straight to their bottom line to boost earnings. At least that's the train of thought and big investors seem more excited to see low interest rates than job gains. On top of it all investor psychology might be positively affected by the string of events for high-profile CEO's. Earlier this week Michael Eisner was stripped of his position as Disney Chairman while maintaining his CEO title in reaction to the unprecedented vote of no confidence by shareholders. On Thursday Bernie Ebbers, the former head of telecom titan WorldCom, was indicted on fraud charges for his role in one of the world's largest corporate bankruptcies. On Friday Martha Stewart, former head of Martha Stewart Omni Living, was convicted on all counts of conspiracy, false statements and obstruction of justice which will probably send her to jail. To see all of these headlines in one week could have a positive influence on the collective investor mindset demonstrating the power of the little guy (with the Disney vote) and that justice is being served to corporate management who felt they were above the law. Meanwhile the economy does seem to be heating up. Commodities are soaring even though the Fed continues to suggest that inflation is not an issue at the moment. The rising cost of oil with crude breaking above the $37 a barrel is a major issue that needs to be addressed or its going to affect both businesses and consumers. They're already talking about gasoline prices potentially hitting $3.00 a gallon this summer. The XAL airlines index has been coiling into a tighter and tighter range suggesting a breakout is on the way and given the rising oil prices I would gamble that the breakout is likely to be lower if we don't see a correction in crude prices soon. Scanning the various sector indices I'm seeing a lot of positive developments. The broadest measure of the market, the Wilshire 5000 total market index, just hit a fresh 2 1/2 year high on Friday. Plus the Russell 2000 small cap index is attempting to breakout above resistance in the 600 level and its technicals look positive. We also see both the KBW and the S&P banking indices hitting new all-time highs. Following the banks are the broker-dealers, which are ready to mount another attempt to break through resistance at 750 to hit more all-time highs. The BTK biotech index has put together a small string of gains to hit new two-year highs. While the DRG drug index may have just produced a short-term bottom. The drug sector looks like tempting ground for bullish traders to find candidates that aren't so overbought. Naturally the energy sectors are rising with oil so high. The OIX oil index has put together a string of four winning weeks. The UTY utility index is at a new one-year high and the XNG natural gas index is approaching new three-year highs. With the economy heating up we see the RLX retail index breaking out to new all-time highs and rising 7 out of the last 8 weeks. Wal-Mart's strong performance this year has been a major factor and the company just announced strong same-store sales above their usual mantra of 3%-5% growth. The Homebuilders have been the real standout winners with a huge surge in the last two weeks to new all-time highs. Honestly, while I'm very bullish on the group they look short-term overbought and due for a pull back. Be careful chasing stocks in this sector. Also noteworthy are the IUX insurance index and the HMO healthcare index, which are at or near new highs. Through my research this weekend I viewed several hundred charts and overall the picture looks pretty encouraging. Unfortunately, we've just seen the bullish percent data on the Dow Industrials turn into a bull correction and the NASDAQ-100 turn into a "bear confirmed" status. Be careful. With the volatility indices this low we'll never know when the market's going to turn. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 7416 Current : 10595 Moving Averages: (Simple) 10-dma: 10598 50-dma: 10551 200-dma: 9719 S&P 500 ($SPX) 52-week High: 1158 52-week Low : 788 Current : 1156 Moving Averages: (Simple) 10-dma: 1148 50-dma: 1135 200-dma: 1045 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 946 Current : 1472 Moving Averages: (Simple) 10-dma: 1472 50-dma: 1495 200-dma: 1365 ----------------------------------------------------------------- Volatility indices (VIX and VXO) traded toward their multi-year lows early in the session but edged higher by the close. All three remain at extremely low levels with no change to the trend in sight. It's surprising that given the build up ahead of the jobs report this morning that there wasn't a stronger reaction here. CBOE Market Volatility Index (VIX) = 14.48 +0.08 CBOE Mkt Volatility old VIX (VXO) = 14.80 +0.09 Nasdaq Volatility Index (VXN) = 22.08 -0.42 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.79 696,919 549,202 Equity Only 0.61 556,020 338,207 OEX 1.54 31,537 48,069 QQQ 3.46 22,578 78,185 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 75.8 + 0 Bull Confirmed NASDAQ-100 60.0 + 0 Bear Confirmed Dow Indust. 83.3 - 3 Bull Correction S&P 500 85.6 + 0 Bull Confirmed S&P 100 86.0 - 1 Bull Confirmed 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: 1.05 10-dma: 1.09 21-dma: 1.04 55-dma: 0.99 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 1849 1523 Decliners 986 1542 New Highs 309 149 New Lows 6 2 Up Volume 1011M 806M Down Vol. 652M 1104M Total Vol. 1678M 2025M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 03/02/04 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 In spite of a decrease in long positions by Commercial traders they still remain relatively neutral on the large S&P contracts. Small traders remain steadfastly bullish. Commercials Long Short Net % Of OI 02/10/04 412,217 414,044 (1,827) (0.2%) 02/17/04 416,148 415,278 870 0.0% 02/24/04 417,490 416,502 988 0.0% 03/02/04 411,932 418,936 (7,004) (0.1%) Most bearish reading of the year: (111,956) - 3/06/02 Most bullish reading of the year: 23,977 - 12/09/03 Small Traders Long Short Net % of OI 02/10/04 143,496 80,362 63,134 28.2% 02/17/04 141,533 84,227 57,306 25.3% 02/24/04 141,559 85,171 56,388 24.9% 03/02/04 148,383 84,135 64,248 27.6% 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 Commercials did put some money to use this last week and we see an increase in long positions but they remain net bearish. In contrast small traders reduced their longs and upped their shorts but remain net bullish. Commercials Long Short Net % Of OI 02/10/04 297,601 356,630 (59,029) ( 9.0%) 02/17/04 296,313 371,703 (75,390) (11.3%) 02/24/04 320,425 387,255 (66,830) ( 9.4%) 03/02/04 344,805 395,112 (50,307) ( 6.8%) 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 02/10/04 110,480 58,428 52,052 30.8% 02/17/04 144,014 64,391 79,623 38.2% 02/24/04 129,894 63,524 66,370 34.3% 03/02/04 119,382 67,453 51,929 27.8% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Not much change here in Commercial traders' positions. and the same can be said for the small traders. Commercials Long Short Net % of OI 02/10/04 44,406 40,439 3,967 4.7% 02/17/04 46,104 40,385 5,719 6.6% 02/24/04 47,266 40,452 6,814 7.8% 03/02/04 49,959 41,059 8,900 9.8% 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 02/10/04 9,906 13,018 (3,112) (13.6%) 02/17/04 9,630 12,338 (2,708) (12.3%) 02/24/04 12,388 7,310 5,078 25.8% 03/02/04 11,605 7,128 4,477 23.9% 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 Commercial traders remain asleep in the Dow futures with almost zero change and small traders are following suit. Commercials Long Short Net % of OI 02/10/04 21,764 11,974 9,790 29.0% 02/17/04 24,451 12,907 11,544 30.9% 02/24/04 27,176 13,918 13,258 32.3% 03/02/04 27,594 14,166 13,428 32.2% 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 02/10/04 6,267 14,220 (7,953) (38.8%) 02/17/04 6,768 15,623 (8,855) (39.5%) 02/24/04 6,509 14,919 (8,410) (39.2%) 03/02/04 6,898 15,874 (8,976) (39.4%) Most bearish reading of the year: (10,136) - 12/16/03 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ************************Advertisement********************************* Option Traders: Pay Attention Use the online options trading system built by option traders for options traders. Featuring direct access to each option exchange, stop and stop loss option orders, contingent option orders, online spreads, fast executions, and rates as low as $1.50 per contract ($14.95 min.). PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC ******************************************************************** *************** ASK THE ANALYST *************** Sector bell curve revisited It has been quite some time since we looked at the various sector bullish percent charts, and I've had some questions in recent weeks regarding the status of various sectors. As such, I thought this weekend would be a good time to take a look at what's taking place in the various sectors, but also try and tackle a trader's question regarding precious metals stocks, where the sector recently reversed up to "bear correction" from "bear confirmed" after having been "bull confirmed" at a much more overbought level of 92% in December and January of. Here is a comparison that spans three-weeks of trade. Sector Bullish % Bell Curve - 02/13/04 & 03/15/04 Comparison For those that have either visited Dorsey/Wright and Associates' web site, or subscriber to their point and figure service, you've undoubtedly become familiar with their various sector bullish % database. I'm showing just two points in time, roughly 3-weeks apart, where we've seen some sectors begin to shift left, or down the scale, and various stocks within sectors have generated some point and figure sell signals, while at the same time, we are seeing sectors shift right, or up the scale as though money coming out of one sector, rotates to others. Today's question has the trader noticing that the Precious Metals sector has started to show some signs of recovery in the bullish percent (BPPREC), where after reaching a rather high level of 92% bullish, and falling to a low reading of 56% and "bear confirmed" status, it has started to work its way back to the right and now reads "bear correction" status. A "gold bug" looking to play this sector from the bullish side would most likely have the mindset at this point that they would be looking for a "bounce" right now, and not necessarily taking on large positions as they look to leg back into the sector, but be ready to exit any new positions should recent lows, or an additional sell signal be found in the stock they are looking to trade, or invest in. Trading ANY stock from the bullish side in a "bear phase" sector should be done so with caution, and DISCIPLINED stops should be used. Let's take a look at Newmont Mining (NYSE:NEM) $43.95, which has fallen from a January 5, 2004 high of $50.20 (-12.45% from its high) where traders and investors might be best able to associate the sector's bullish % reading of 92% in January, with the taking of profits, when sector bulls had a rather high level of risk, where now, we have the mindset that some of that bullish risk has been taken out of the sector, where some sign of internal repair is being found. Newmont Mining (NEM) - $1 box Newmont Mining (NEM) $43.95 is a stock I consider to be a sector bellwether for precious metals, and this stock tends to be a leader in an advance, and when the sector begins to weaken, is often the "last" stock to show weakness. I've marked a point back in April of last year, when the precious metals sector bullish % was "bear confirmed" and had just started to reverse up to "bear correction." The RED 5 on the chart would be early May. It would have been a very nice trade for a bull in NEM to trade the "bear correction" reversal from the sector bullish %, when NEM was trading around the $26.00 level, where at stop could have been placed at $24.00, or lower at $22. We can clearly see that NEM later traded $31.00, and triggered a triple-top buy signal in early June RED 6. I then point to August (RED 8) when the sector bullish % then reached "bull confirmed" status. As such, a "gold bug" looking for renewed bullishness could use past history to set up a trade in NEM, with understanding that a trailing stop at $40.00 should be used, on any bullish positions. A gold bug's tail begins to glow, should NEM show a trade at $46, which would negate the current bearish vertical count of $31.00, and have a new bullish vertical count building, with an initial longer-term bullish target of $55 being established. Maytag Corp. (NYSE:MYG) - $0.50 & $1 box I received an upside alert in quite a few stocks and indices today, and upon review found one of them to be Maytag (NYSE:MYG) when the stock traded $30.00 and now looks to be breaking out of a nice 7-month base of consolidation. I wanted the stock to "prove itself" with a trade at $30, to try and avoid a bull trap, which point and figure chartists would be alert that a triple-top buy signal that only went one box above (at $29) might be a trap, when the associated sector bullish % was at a high level of bullish risk. Armed with a bullish vertical count of $44.00, MYG shares look compelling and quite bullish coming out of a 7-month base as if the stock is starting to get a second leg of bullish favor, and demand (X) eats away at supply (O). Jeff Bailey ************* COMING EVENTS ************* Symbol Co Date Comment EPS Est ------------------------- MONDAY ------------------------------- CMGI CMGI Mon, Mar 08 After the Bell N/A KIND Kindred Healthcare IncMon, Mar 08 After the Bell N/A LYG Lloyds TSB Group Mon, Mar 08 Before the Bell N/A LQU Quilmes Industrial Mon, Mar 08 After the Bell 0.62 SSL Sasol Ltd ADR Mon, Mar 08 Before the Bell N/A SGY Stone Energy Mon, Mar 08 After the Bell 0.93 VE Veolia Environnement Mon, Mar 08 -----N/A----- N/A ------------------------- TUESDAY ------------------------------ ABS Albertson's Tue, Mar 09 Before the Bell 0.20 ANN AnnTaylor Stores Tue, Mar 09 After the Bell 0.65 CHC CharterMac Tue, Mar 09 Before the Bell 0.45 HUG Hughes Supply Tue, Mar 09 After the Bell 0.33 TEO Telecom Argentina Tue, Mar 09 After the Bell N/A IPG Interpublic Grp Co Tue, Mar 09 Before the Bell 0.12 KR The Kroger Co. Tue, Mar 09 Before the Bell 0.22 ------------------------ WEDNESDAY ----------------------------- CMS CMS Energy Corp. Wed, Mar 10 Before the Bell 0.24 CMVT Comverse Technology Wed, Mar 10 After the Bell 0.01 DT Deutsche Telekom Wed, Mar 10 Before the Bell N/A EON E.ON AG Wed, Mar 10 Before the Bell N/A IDCC InterDigital Comm CorpWed, Mar 10 Before the Bell 0.07 KKD Krispy Kreme Doughnut Wed, Mar 10 Before the Bell 0.26 MATK Martek Biosci Corp Wed, Mar 10 After the Bell 0.12 MIM MI DEVS INC Wed, Mar 10 Before the Bell N/A ZQK Quiksilver Wed, Mar 10 After the Bell 0.15 TLB Talbots Wed, Mar 10 -----N/A----- 0.40 TECD Tech Data Corporation Wed, Mar 10 -----N/A----- 0.54 ------------------------- THUSDAY ----------------------------- TRMD A/S Dmpskbsslskbt TormThu, Mar 11 -----N/A----- 0.90 ARO Aeropostale, Inc. Thu, Mar 11 After the Bell 0.69 AIZ Assurant, Inc. Thu, Mar 11 Before the Bell N/A BGP Borders Group Inc. Thu, Mar 11 After the Bell 1.51 CLE Claire's Stores, Inc. Thu, Mar 11 06:00 am ET 0.57 CM Coles Myer Thu, Mar 11 -----N/A----- N/A CNO CONSECO INC Thu, Mar 11 Before the Bell 0.50 DEG Delhaize Group Thu, Mar 11 -----N/A----- N/A DKS Dick's Sporting Goods Thu, Mar 11 Before the Bell 0.99 DISH EchoStar Comm Corp. Thu, Mar 11 Before the Bell 0.10 EP El Paso Corp. Thu, Mar 11 Before the Bell -0.05 FCEa Forest City Ent Inc. Thu, Mar 11 -----N/A----- N/A FRED Fred's Thu, Mar 11 Before the Bell 0.34 NSM National SemiconductorThu, Mar 11 -----N/A----- 0.41 ORCL Oracle Thu, Mar 11 After the Bell 0.12 PETC PETCO ANIMAL SUPPLIES Thu, Mar 11 After the Bell 0.44 SHPGY Shire Pharm Group Thu, Mar 11 07:00 am ET 0.49 URBN Urban Outfitters Thu, Mar 11 11:00 am ET 0.42 ------------------------- FRIDAY ------------------------------- ABER Aber Diamond Corp Fri, Mar 12 -----N/A----- 0.24 AEG AEGON N.V. Fri, Mar 12 -----N/A----- N/A VNO Vornado Realty Trust Fri, Mar 12 -----N/A----- 1.08 ---------------------------------------------- Upcoming Stock Splits In The Next Two Weeks... ---------------------------------------------- Symbol Co Name Ratio Payable Executable CLFC Center Financial Corp 2:1 Mar 5th Mar 8th WGO Winnebago 2:1 Mar 5th Mar 8th SSNC SS&C Technologies, Inc 3:2 Mar 5th Mar 8th VAPH Vaso Active Pharma, Inc 3:1 Mar 5th Mar 8th PII Polaris Industries Inc 2:1 Mar 8th Mar 9th LWAY Lifeway Foods, Inc 2:1 Mar 8th Mar 9th MPX Marine Products Corp 3:2 Mar 10th Mar 11th FIC Fair Isaac Corp 3:2 Mar 10th Mar 11th EXC Exelon Corp 2:1 Mar 10th Mar 11th HWFG Harrington West Finl Grp 6:5 Mar 11th Mar 12th CTX Centex Corporation 2:1 Mar 12th Mar 15th BRL Barr Pharmaceuticals 3:2 Mar 15th Mar 16th ATVI Activision, Inc 3:2 Mar 15th Mar 16th CEC CEC Entertainment Inc 3:2 Mar 15th Mar 16th CLZR Candela Corp 2:1 Mar 16th Mar 17th DCOM Dime 3:2 Mar 16th Mar 17th GWR Genesee & Wyoming Inc 3:2 Mar 18th Mar 19th XTO XTO Energy Inc 5:4 Mar 18th Mar 19th HBHC Hancock 2:1 Mar 18th Mar 19th DCI Donaldson Company, Inc 2:1 Mar 19th Mar 22nd -------------------------- Economic Reports This Week -------------------------- The economic reports are weighted toward the end of the week with the biggest economic news coming from the Import/Export numbers, Retail sales, PPI and the preliminary Michigan Sentiment numbers all this week. ============================================================== -For- ---------------- Monday, 03/08/04 ---------------- TQNT & TXN mid-quarter updates Kansas City Fed Manufacturing Index ----------------- Tuesday, 03/09/04 ----------------- Chain Store Sales Redbook Retail Sales Richmond Fed Manufacturing Index ------------------- Wednesday, 03/10/04 ------------------- Trade Balance (BB) Jan Forecast: -$41.6B Previous: -$42.5B Wholesale Inventories (DM) Jan Forecast: 0.4% Previous: 0.5% Crude Oil & Gasoline Inventory numbers ------------------ Thursday, 03/11/04 ------------------ Initial Claims (BB) 03/06 Forecast: N/A Previous: 345K Export Prices ex-ag. (BB) Feb Forecast: N/A Previous: 0.6% Import Prices ex-oil (BB) Feb Forecast: N/A Previous: 0.7% Retail Sales (BB) Feb Forecast: 0.5% Previous: -0.3% Retail Sales ex-auto (BB) Feb Forecast: 0.5% Previous: 0.9% Treasury Budget (DM) Feb Forecast:-$100.0B Previous: -$96.7B Greenspan speaks on Education in Washington DC Natural Gas Inventories Money Supply numbers ---------------- Friday, 03/12/04 ---------------- Business Inventories (BB) Jan Forecast: 0.3% Previous: 0.3% Current Account (BB) Q4 Forecast: $136.2B Previous: -$135.0B PPI (BB) Feb Forecast: N/A Previous: N/A Core PPI (BB) Feb Forecast: N/A Previous: N/A Mich Sentiment-Prel. (DM) Mar Forecast: 95.2 Previous: 94.4 Greenspan speaks at Boston College Definitions: DM= During the Market BB= Before the Bell AB= After the Bell NA= Not Available ************************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. 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The Option Investor Newsletter Sunday 03-07-2004 Sunday 2 of 5 In Section Two: Watch List: Medical, Techs and Drugs... Dropped Calls: DHI, RJR, RYL Dropped Puts: None ************************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 ************************************************************** ********** Watch List ********** Medical, Techs and Drugs... ___________________________________________________________________ How to use this watch list: Readers can use the candidates below as a springboard for their own research. Many are in the process of breaking support or resistance or in the process of starting new trends or extending old ones. With your own due diligence these could be strong potential plays. ___________________________________________________________________ Zimmer Holdings - ZMH - close: 79.08 change: +1.50 WHAT TO WATCH: We think ZMH looks pretty bullish here. The recent bounce from its test of support at $75.00 and its rising 40-dma looks pretty good. Its MACD is about to produce a new bullish buy signal. Traders can use a trigger over $80.00. We'd target a quick move to $85 even though the stock can probably run higher. Chart= --- Sina Corp - SINA - close: 45.47 change: +0.67 WHAT TO WATCH: SINA is one of the Chinese Internets that were so hot last year. Shares peaked just under $50.00 in January 2004 but fortunately for shareholders the profit taking stalled at the $40 level. Now SINA is climbing its rising 50-dma and its technicals look positive. SINA's P&F chart looks tempting as well and points to a $53 price target, although that is likely to rise. Short-term traders can probably target a move to resistance at $50.00. Chart= --- MicroStrategy - MSTR - close: 64.17 change: +0.67 WHAT TO WATCH: MSTR has been out performing many of its peers in the software sector and its technical picture is turning bullish again. Traders might want to watch it for a breakout over resistance at $65.00-65.50 and target a quick move to $70.00. Chart= --- Johnson Controls Inc - JCI - close: 59.72 change: +1.50 WHAT TO WATCH: The breakout over its simple 50-dma on Friday was pretty impressive, especially considering the better than average volume. We also note the MACD has produced a fresh buy signal from being oversold. JCI has a habit of bouncing from its 21- week moving average. Okay, a "habit" may be too strong of a word but this is the second time and last time JCI experience a very strong follow through. Look for a move over $60.00 and watch out for resistance at $62.00. Our early target would be $65.00. Chart= --- Barr Pharmaceuticals - BRL - close: 78.46 change: +0.96 WHAT TO WATCH: Previously known as Barr Labs, BRL has found support at the $75.00 region and its simple 50-dma. Its MACD is about to signal a new buy signal but the stock does have short- term resistance at 80.50. We think BRL might be a play if the bullish reversal in the DRG drug index continues to play out. Aggressive players can speculate on positions here with a stop under $75.00. More conservative players should probably wait for a move over $80.50. Early target would be $85.00. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- AGN $89.41 +0.52 - The bounce from previous resistance at $88.00 looks very tempting but AGN still looks a little overbought here. Momentum traders might watch for a move over $90.00. NAV $48.72 +0.59 - NAV is another stock that has consolidated the last several weeks and looks ready for another run higher. We'd look for a breakout over its 50-dma and the $50.00 level before initiating positions. Initial target would be $55.00. INFY $81.53 -3.73 - We mentioned INFY in the MarketMonitor on Friday. The roll over under resistance at $86.00 looks pretty bearish and a breakdown at support of $80.00 looks imminent. However, traders should keep an eye on INFY's point-and-figure chart where the stock is currently struggling with support. We would target the 200-dma near $70.00. ************************Advertisement************************* No time to follow the Market Monitor? Tired of missing good Trades because you stepped away from your computer? OneStopOption Group can follow the Market Monitor for you. You choose the number of contracts, we take care of the rest!! Trade Stock Options, Stocks and ALL Futures with the same Group. Call us 888 281-9569 to see if you qualify to have us rebate your subscription cost. http://www.OneStopOption.com ************************************************************** ************************** PICKS WE DROPPED THIS WEEK ************************** Remember that historically, when we drop a pick it will go up 10 to 15% the very next week. It is part of Murphy's Law. Just because we drop a stock as a pick does not mean we are advocating a "sell" on any position you have. We are simply dropping our recommendation as a new play. Existing plays can and do continue on and are usually profitable. CALLS ^^^^^ D.R.Horton - DHI - close: 35.18 chg: +0.91 stop: 32.00 Homebuilder and mortgage lenders soared on Friday after the disappointing jobs report sent bonds higher, yields lower and mortgage rates back toward the 2003 lows. Shares of DHI helped lead the DJUSHB home construction index to a new all-time high and the stock (DHI) surpassed our planned exit point of $34.75 to hit $35.75. We're going to take the money and run even though DHI's intraday chart still looks strong. Its weekly and daily charts are looking very overbought and we'd prefer to sit back and wait for new entries on a appropriate pull back. Picked on February 08 at $30.00 Change since picked: + 5.18 Earnings Date 01/21/04 (confirmed) Average Daily Volume: 2.4 million Chart = --- RJ Reynolds Tobacco - RJR - cls: 61.08 chg: -0.50 stop: 59.00 We're going to pull the plug on RJR. We don't like the recent weakness and RJR is under performing its larger rival MO. Even though the drop on Friday held support near $61.00 volume was pretty strong at more than twice the average. In RJR's 10K the company reported an increase in its legal expenses by $8 million, which may have unsettled some investors. While we still feel that a bounce from $60.00 will probably work for bullish positions there are more attractive opportunities available. Picked on February 20 at $60.51 Change since picked: + 0.57 Earnings Date 01/27/04 (confirmed) Average Daily Volume: 699 thousand Chart = --- Ryland Group - RYL - close: 92.60 chg: +2.00 stop: 84.99 Our call play in RYL has performed perfectly. The stock has exceeded our short-term target of $90.00 and surpassed our official exit point of $92.00 with Friday's rally to $93.17. If you read the DHI play update homebuilders and mortgage lenders soared on the jobs report because it put the Fed on hold, sent interest rates and mortgage rates lower. We're still bullish on RYL but we're going to exit here and look for another entry point. Picked on February 24 at $83.96 Change since picked: + 8.64 Earnings Date 01/21/04 (confirmed) Average Daily Volume: 746 thousand Chart = PUTS ^^^^ None *********** DEFINITIONS *********** SL = Suggested stop loss. Sell if bid breaks this price. OI = Open Interest - the number of open contracts outstanding. ITM = In the money ATM = At the money OTM = Out of the money ADV = Average Daily Volume The options with a "*" by the strike price are our choices from the group. If the stock moves as expected we feel they have the best chance to substantially increase or double in price with the best risk/reward ratio compared to the other options for the same stock. You must determine if they fit your risk profile for time and price. RISKS of SELLING PUTS: The risk of selling naked puts is always the possibility of a catastrophic event that drops the stock below the strike price and could result in the stock being PUT to you. Always protect yourself with a "buy to cover" limit order to take you out before this can happen. ************************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 ************************************************************** ********** 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 Sunday 03-07-2004 Sunday 3 of 5 In Section Three: Current Calls: AET, AHC, ATH, CDWC, CFC, GS, MHK, QCOM, RNR, SLB, UNH New Calls: EBAY Current Put Plays: CHIR, CTSH, MMM New Puts: None ************************Advertisement************************* OneStopOption.com Trade: Securities, Stock Options, Futures Contracts Service: Experienced Brokers Personal Assistance Convenience of One Brokerage Online and Live Broker Trading Experience... The Difference OneStopOption.com 888-281-9569 *************************************************************** ****************** CURRENT CALL PLAYS ****************** Aetna Inc. - AET - close: 81.58 change: +0.32 stop: 77.50 Company Description: Aetna is one of the nation's leading providers of health care, dental, pharmacy, group life, disability and long-term care benefits, serving approximately 13.0 million medical members, 10.9 million dental members, 7.4 million pharmacy members and 12.3 million group insurance customers, as of December 31, 2003. The company has expansive nationwide networks of more than 600,000 health care services providers, including over 362,000 primary care and specialist physicians and 3,626 hospitals. (source: company press release) Why We Like It: We still like the strength in the IUX insurance index and shares of AET continue to be a leader in the group. As a matter of fact AET has been marching to the beat of its own drummer lately and that tune spells out a slow drift higher, despite the recent market volatility. We didn't hear or see anything noteworthy coming from AET's appearance at the Lehman Brothers healthcare conference this last week but there is another chance for AET to issue stock-moving news at the upcoming SG Cowen conference on March 10th. AET's P&F chart still looks super strong and points to an $89 price target. However, our first target is the $85 region. If the opportunity presents itself dips to $80.00 can be entry points for new positions. Suggested Options: Short-term traders can use the March or April calls. We like the April 80's. ! Alert - only two weeks left for March options! BUY CALL MAR 75 AET-CO OI=3599 at $6.90 SL=4.40 BUY CALL MAR 80 AET-CP OI=2229 at $2.55 SL=1.20 BUY CALL MAR 85 AET-CQ OI= 199 at $0.35 SL= -- BUY CALL APR 80*AET-DP OI= 613 at $3.90 SL=1.85 BUY CALL APR 85 AET-DQ OI=3539 at $1.45 SL=0.75 Annotated Chart: Picked on February 29 at $80.79 Change since picked: + 0.79 Earnings Date 02/12/04 (confirmed) Average Daily Volume: 1.2 million Chart = --- Amerada Hess Corp. - AHC - cls: 66.98 chng: +1.89 stop: 64.00*new* Company Description: Amerada Hess Corporation explores for, produces, purchases, transports and sells crude oil and natural gas. These exploration and production activities take place in the United States, United Kingdom, Norway, Denmark, Equatorial Guinea, Gabon, Indonesia, Thailand, Azerbaijan, Algeria, Malaysia, Colombia and other countries. The company also manufactures, purchases, transports, trades and markets refined petroleum and other energy products. It owns 50% of a refinery joint venture in the United States Virgin Islands, as well as another refining facility, terminals and retail gasoline stations located on the east coast of the United States. Why we like it: Flexing its muscles again on Friday, AHC ignored the broad market weakness and surged sharply higher, tagging the $67 level and holding it into the close. Once again, strength in the price of crude oil seems to be the dominant factor, as the front month contract broke out to new highs yet again. AHC's consolidation for much of last week strongly resembled the consolidation in crude oil, confirming once again that the stock should continue to trade in sympathy with the price of black gold. With the stock up well over 10% from our picked place and resistance looming near $68, obviously we're not interested in new momentum positions on further strength. But aggressive traders may be able to fine a solid entry on a dip and rebound now above the 10- dma ($64.33), but with solid gains under our belt, we're more interested in harvesting gains from the play near the top of this move, not in trying to find new entries. Note that we've raised our stop to $64 this weekend, which is just under the 10-dma. Conservative traders should use an initial move near $68 to harvest gains, while those aggressive traders can still target the $72-73 area. Suggested Options: Shorter Term: The March $65 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the April $70 Call, while traders looking for more immediate movement will want to use the April $65 strike. Our preferred option is the April $65 strike, which is in the money and should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-65 AHC-CM OI= 439 at $2.40 SL=1.25 BUY CALL APR-65*AHC-DM OI= 336 at $3.30 SL=1.75 BUY CALL APR-70 AHC-DN OI= 55 at $0.95 SL=0.50 Annotated Chart of AHC: Picked on February 10th at $59.53 Change since picked: +7.45 Earnings Date 1/28/04 (confirmed) Average Daily Volume = 938 K Chart = --- Anthem, Inc. - ATH - close: 89.81 change: +1.50 stop: 85.70*new* Company Description: Anthem is a health benefits company serving over 7 million members, primarily in Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Colorado and Nevada. The company owns the exclusive right to market its products and services using the Blue Cross Blue Shield (BCBS) names in these states under license agreements with the Blue Cross Blue Shield Association. ATH's product portfolio includes a diversified mix of managed care products, including health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans, as well as traditional indemnity products. The company's managed care plans and products are designed to encourage providers and members to select cost-effective healthcare by utilizing the full range of its medical management services. Why we like it: It sure is nice to see ATH vindicating itself after so many failed breakout attempts near the $85 level. Clearly this one is for real, as the stock continues driving higher, hitting an intraday high of $92.15 in early trade before falling back to end the week just a fraction under the $90 level. That was our first target at $90 and given the stock's strength, we're betting on further strength from here. That certainly seems to be the picture we're getting from the HMO index, which once again broke to new all-time highs on Friday near $924. We'll continue to ride this rocketship higher as long as it lasts and based on Friday's move, it looks like our initial target of $90 was far too conservative. After the strong move of the past two days, it is only prudent to tighten our stop significantly and we're raising ours to $85.70, which is just under Wednesday's intraday low. Aggressive traders can look for a dip to and rebound from the 10-dma ($86.56) as the only likely entry point. Make sure to monitor the HMO index for signs of weakness, as that may provide a clue that the sector is starting to lose strength. Suggested Options: Shorter Term: The March $90 Call will offer short-term traders the best return on an immediate move, as it is currently at the money. Longer Term: Aggressive longer-term traders can use the April $95 Call, while more conservative traders will want to use the April $90 strike. Our preferred option is the April $90 strike, which is at the money and should provide sufficient time for the play to move further in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-85 ATH-CQ OI=6372 at $5.30 SL=3.25 BUY CALL MAR-90 ATH-CR OI=1601 at $1.55 SL=0.75 BUY CALL APR-90*ATH-DR OI= 571 at $2.95 SL=1.50 BUY CALL APR-95 ATH-DS OI= 320 at $1.10 SL=0.50 Annotated Chart of ATH: Picked on February 26th at $85.37 Change since picked: +4.44 Earnings Date 4/28/04 (unconfirmed) Average Daily Volume = 1.43 mln Chart = --- CDW Corp. - CDWC - close: 71.63 change: +0.00 stop: 66.00 Company Description: CDW Corporation is a direct marketer of multi-brand computers and related technology products and services in the United States. The company offers multi-brand computers and related technology products, including hardware and peripherals, software, networking and communication products and accessories, for use with microcomputers based on a variety of operating platforms, including Microsoft, Apple, Linux, Novel, Oracle and others. CDWC offers more than 80,000 products that include a range of product types from manufacturers including Cisco, Hewlett- Packard, IBM, Intel, Microsoft, Sony and Toshiba. With this selection of products, the company can provide its customers with fully integrated, multi-branded technology solutions and the convenience of one-stop shopping. Why we like it: It was really a snoozer of a week for CDWC after blasting higher on Monday to post a new 3-year high over the $74 level. After such a strong move, some profit taking is to be expected, and the shallow decline in the middle of the week was just what we were looking for ahead of today's dip and rebound from the 10-dma ($70.68). As we noted earlier in the week, the best entries into the play would come on a retest of support in the $70-71 area and it certainly seems like we may have seen that today with the rebound off the 10-dma. With oscillators still looking mildly bearish, buying the dips is the only prudent course of action, as CDWC would have to break out over the $74.50 level to signal a breakout entry. Stick with the plan and maintain a wide stop down at $66 until we see how much strength is in the next bullish move. Suggested Options: Shorter Term: The March $70 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the April $75 Call, while the more conservative approach will be to use the April $70 strike. Our preferred option is the April $70 strike, which is in the money and should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-70 DWQ-CN OI=780 at $2.80 SL=1.40 BUY CALL MAR-75 DWQ-CO OI=773 at $0.60 SL=0.30 BUY CALL APR-70*DWQ-DN OI=789 at $4.10 SL=2.50 BUY CALL APR-75 DWQ-DO OI=291 at $1.70 SL=0.75 Annotated Chart of CDWC: Picked on March 2nd at $72.43 Change since picked: -0.80 Earnings Date 1/21/04 (confirmed) Average Daily Volume = 1.27 mln Chart = --- Countrywide Financial - CFC - cls: 96.55 chg: +3.91 stop: 90.00*new* Company Description: Founded in 1969, Countrywide Financial Corporation is a member of the S&P 500, Forbes 500 and Fortune 500. Through its family of companies, Countrywide provides mortgage banking and diversified financial services in domestic and international markets. (source: company press release) Why We Like It: Mortgage lenders like CFC were soaring on Friday after the abysmal jobs report. The lack of jobs put the Fed on hold for what many investors feel is the rest of the year. With a lack of any interest rate hikes in our near future the bond markets spiked higher sending the yield on 10-year note to its biggest one-day loss since October 2001. With bond yields dropping so were mortgage rates and investors were quick to capitalize on the expectation that homebuilders and lenders will do big business with the up coming spring-summer home buying season. The pop to $96.55 puts us half way to our target at $100.00 for CFC. The big move is giving us room to raise our stop loss to $90.00 but more conservative traders might be able to get away with a tighter stop in the $91-92 region. It's tough to gauge new entries with Friday's pop but bulls may want to consider a pull back to $93.50-94.00 as an entry point. Suggested Options: Short-term traders can choose from March and April calls. Our favorites are the April 90's. Be careful. There are some odd option symbols floating around due to CFC's recent stock split. Be sure you check the correct symbols with your broker. ! Alert - only two weeks left for March options! BUY CALL MAR 90 CFC-CR OI= 6052 at $7.10 SL=4.85 BUY CALL MAR 95 CFC-CS OI=13569 at $3.20 SL=1.65 BUY CALL APR 90*CFC-DR OI= 595 at $8.70 SL=5.25 BUY CALL APR 95 CFC-DS OI= 689 at $5.50 SL=3.25 Annotated Chart: Picked on February 24 at $91.63 Change since picked: + 4.92 Earnings Date 01/27/04 (confirmed) Average Daily Volume: 2.3 million Chart = --- Goldman Sachs - GS - close: 109.05 chg: +0.53 stop: 104.00 Company Description: Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.(source: company press release) Why We Like It: (Thursday's original write up) Wow! Can you believe it? It seems like earnings season just ended and now we're already looking forward to the next batch of earnings from the broker-dealers. Granted they do announce earlier than the rest of the market but that doesn't mean we can't ride them for a good old-fashioned earnings run. GS is expected to announce in about two weeks but to be honest we can't confirm that date just yet. In the mean time we have a sector that is near all-time highs and looks ready to mount another attempt at a breakout over the 750 level. GS should lead the way with today's breakout over short-term resistance at $108.00. We do not plan to hold over earnings so if a two-week time period is too brief for you be sure to know your limitations and sit out. We're going to suggest longs on today's move over $108.00 with stops at $104.00 - that's where GS bounced about a week ago. The P&F chart suggests a price target of $120.00, which doesn't seem too unreasonable but we'll re-evaluate as GS approaches the $115 range. Weekend Update: Right on track! Our recently added GS call continued to move higher after Thursday's breakout above the $108 level. Boosting the stock was a comment from Prudential who reiterated their "over weight" outlook and $115 price target. Meanwhile GS confirmed that they would announce earnings on the morning of March 23rd, which gives us even more time for an earnings run. Suggested Options: Aggressive traders can speculate on March options. Even though we're not holding over the March 18th earnings date (estimated) we're going to suggest the April 105 calls. ! Alert - only two weeks left for March options! BUY CALL MAR 105 GS-CA OI=11839 at $5.00 SL=2.75 BUY CALL MAR 110 GS-CB OI= 5815 at $1.60 SL=0.80 BUY CALL APR 105*GS-DA OI= 8133 at $6.20 SL=3.50 BUY CALL APR 110 GS-DB OI= 8508 at $3.10 SL=1.65 Annotated Chart: Picked on March 04 at $108.52 Change since picked: + 0.53 Earnings Date 03/23/04 (confirmed) Average Daily Volume: 3.2 million Chart = --- Mohawk Industries - MHK - cls: 85.27 chng: +0.74 stop: 79.50 Company Description: Mohawk Industries and its subsidiaries, are producers of floorcovering products for residential and commercial applications in the United States. The company is the second largest carpet and rug manufacturer, and a manufacturer, marketer and distributor of ceramic tile and natural stone. Through its carpet and rug business, MHK designs, manufactures and markets carpet and rugs in a broad range of colors, textures and patterns and is a producer of woven and tufted broadloom carpet and rugs, principally for residential applications. Why we like it: Bond yields plunged on Friday in response to the pathetic Employment Report and that certainly bodes well for the Housing sector. Apparently there's consensus on the topic as well, as investors handed the Dow Jones Home Construction index ($DJUSHB) another 3% gain and a fresh all-time high. MHK is benefiting from that trend as well and Friday's price action pushed the stock to a new all-time high of its own above $85. Volume was strong too, and this breakout looks like it could have some room to run. We're still close enough to the breakout that momentum entries look favorable above Friday's $85.79 high. Traders looking for a pullback to confirm old resistance as new support can target a dip back to the $83-84 area, with the lower end of that range now reinforced by the 10-dma ($83.05). MHK really shouldn't be able to pull back below the 20-dma ($82.03) if this rally has legs, but we're going to maintain our stop down at $79.50 until we see a bit more upside. Suggested Options: Shorter Term: The March $85 Call will offer short-term traders the best return on an immediate move, as it is currently at the money. Longer Term: Aggressive longer-term traders can use the April $90 Call, while the more conservative approach will be to use the April $85 strike. Our preferred option is the April $85 strike, which is at the money and should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-85 MHK-CQ OI=215 at $1.80 SL=0.90 BUY CALL APR-85*MHK-DQ OI= 46 at $3.20 SL=1.50 BUY CALL APR-90 MHK-DR OI= 32 at $1.15 SL=0.60 Annotated Chart of MHK: Picked on March 4th at $84.53 Change since picked: +0.74 Earnings Date 2/05/04 (confirmed) Average Daily Volume = 337 K Chart = --- Qualcomm, Inc. - QCOM - cls: 63.88 chng: +1.31 stop: 61.25*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: Playing right along with our script, QCOM pulled back almost exactly to the 10-dma ($62.15) last week before staging an impressive rebound on Friday. We can thank Deutsche Securities for Friday's bullish move, as the firm upgraded QCOM from Hold to Buy before the open. While the stock did manage to post a fresh intraday high, a bit of late-day profit taking dropped the stock to just below the $64 resistance level at the close. With bullish price action confirmed by the strong volume picture, QCOM seems destined to break out and more than likely reach our $67-68 bullish price target. As suggested here last week, the pullback to the 10-dma was the preferable continuation entry and kudos to those that took it. Aggressive traders can make a quick play on a breakout over Friday's high, targeting $67-68, but that is not our preferred strategy. Let's raise our stop slightly to $61.25, which is just under last week's low. Suggested Options: Shorter Term: The March $65 Call will offer short-term traders the best return on an immediate move, as it is just slightly out of the money. Longer Term: Aggressive longer-term traders can use the April $70 Call, while the more conservative approach will be to use the April $65 strike. Our preferred option is the April $65 strike, as it should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-60 AAO-CL OI=11307 at $4.30 SL=2.75 BUY CALL MAR-65 AAO-CM OI=14098 at $1.00 SL=0.50 BUY CALL APR-65*AAO-DM OI=12892 at $2.10 SL=1.00 BUY CALL APR-70 AAO-DN OI= 3260 at $0.70 SL=0.35 Annotated Chart of QCOM: Picked on February 17th at $59.55 Change since picked: +4.33 Earnings Date 1/21/04 (confirmed) Average Daily Volume = 8.83 mln Chart = --- Renaissancere Ltd - RNR - close: 54.63 chg: -0.03 stop: 52.00 Company Description: RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business primarily consists of four business units: (1) Catastrophe Reinsurance; (2) Specialty Reinsurance; (3) Individual Risk business, which includes primary insurance and quota share reinsurance, and (4) Renaissance Underwriting Managers, which manages the Company's Property Catastrophe Joint Ventures, its Business Development Joint Ventures, and its Structured Reinsurance Products. (source: company press release) Why We Like It: Our relative strength insurance play in RNR has been performing very well. This last week really confirmed the breakout above resistance at $52.00 in late February. RNR has come very close (2 cents) to our original profit target of $55-56. On Thursday we set an official exit price of $55.95 and if the IUX insurance index can burst past its recent highs we stand a good chance of getting there. Readers should take note that the stock does look short-term overbought and while it is overdue for a small correction the strength in the sector may support the stock price. Despite our enthusiasm we are not suggesting new positions with RNR so close to our target. More aggressive traders might want to keep an eye on it for a pull back to its simple 10-dma (near $53) and look for a bounce. Suggested Options: RNR is pretty close to our planned exit point so we're not suggesting new entries at this time. ! Alert - only two weeks left for March options! Annotated chart: Picked on February 15 at $50.83 Change since picked: + 3.80 Earnings Date 02/03/04 (confirmed) Average Daily Volume: 238 thousand Chart = --- Schlumberger Ltd - SLB - close: 64.99 change: -0.38 stop: 62.75 Company Description: Schlumberger Limited is an oilfield services company that supplies technology, project management and information solutions that aim to optimize performance for customers working in the international oil and gas industry. The company is comprised of two primary business units. Schlumberger Oilfield Services supplies a wide range of products and services that support core industrial operational processes. WesternGeco, jointly owned with Baker Hughes, is a large seismic company that provides advanced acquisition and data processing surveys. Why we like it: With crude oil continuing to surge to new highs last week, SLB is notable due to its price weakness on Friday. But rather than real weakness, this looks like more consolidation before the expected breakout to new highs. That is the pattern the stock has been following for the past several weeks - push to a new high, consolidate above the 10-dma ($64.99) and then break out again. Ending right on the 10-dma on Friday keeps that pattern intact, with backup support provided by the 20-dma at $64.12. After hitting a new multi-year high of $66.50 on Monday, SLB spent the week consolidating and it looks like one or two more days of sideways action should produce the next breakout to new highs. This current action is the best opportunity for entering the play on dips as low as the $64 support level, the site of old resistance and the location of its most recent breakout. Maintain stops at $62.75. Suggested Options: Shorter Term: The March $65 Call will offer short-term traders the best return on an immediate move, as it is currently at the money. Longer Term: Aggressive longer-term traders can use the April $70 Call, while the more conservative approach will be to use the April $65 strike. Our preferred option is the April $65 strike, which is at the money and should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-65 SLB-CM OI=4745 at $1.35 SL=0.60 BUY CALL APR-65*SLB-DM OI=1394 at $2.20 SL=1.00 BUY CALL APR-70 SLB-DN OI= 805 at $0.55 SL=0.25 Annotated Chart of SLB: Picked on February 24th at $64.47 Change since picked: +0.52 Earnings Date 1/23/04 (confirmed) Average Daily Volume = 3.58 mln Chart = --- UnitedHealth Group - UNH - cls: 63.17 chng: +0.67 stop: 60.50*new* Company Description: UnitedHealth Group Inc. provides health and well-being products serving more than 48 million Americans. The company's revenues are derived from premium revenues on risk-based products, fees from management, administrative and consulting services and investment and other income. UNH conducts its business primarily through operating divisions in four business segments: Uniprise; Health Care Services, which includes UnitedHealthcare, Ovations and AmeriChoice businesses; Specialized Care Services, and Ingenix. Why we like it: Giving a hint of what was to come, UNH edged slightly above the $62 resistance level on Thursday and then confirmed that bullishness on Friday with a solid breakout above $63. As noted here on more than one occasion, UNH won't be a fast moving play, but with the ascending channel working in its favor, it should be a consistent performer. Last week's slow motion rebound off the bottom of its rising channel near $61 provided a great entry point into the play, and Friday's breakout over $62.50 gave the momentum set an opportunity to play. Look for a break over the top of the rising channel ($63.90) to confirm strength and lay the groundwork for a move to the top of the channel at $66 in the near term. Because of the way UNH has been trading the past few months, we would recommend harvesting gains on a touch of the upper channel boundary and looking for re-entry on the next pullback. Raise stops to $60.50, which is under the bottom of the channel, and both the 20-dma ($61.01) and the 30-dma ($60.66). Suggested Options: Shorter Term: The March $60 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the April $65 Call, while the more conservative approach will be to use the April $60 strike. Our preferred option is the April $60 strike, which is in the money and should provide sufficient time for the play to move in our favor. ! Alert - March options expire in 2 weeks! BUY CALL MAR-60 UHB-CL OI=3576 at $3.50 SL=1.75 BUY CALL APR-60*UHB-DL OI= 300 at $4.20 SL=2.50 BUY CALL APR-65 UHB-DM OI= 738 at $1.25 SL=0.60 Annotated Chart of UNH: Picked on February 24th at $61.92 Change since picked: +1.25 Earnings Date 1/22/04 (confirmed) Average Daily Volume = 2.57 mln Chart = ************** NEW CALL PLAYS ************** eBay Inc - EBAY - close: 69.31 chg: +1.44 stop: 66.50 Company Description: eBay is The World's Online Marketplace.. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Through an array of services, such as its payment solution provider PayPal, eBay is enabling global e- commerce for an ever growing online community. (source: company press release) Why We Like It: Odds are you're familiar with EBAY and odds are growing that you or someone you know is one of their 95 million registered users. EBAY continues to broaden its product line and business models and investors have rewarded it as the premier Internet darling to survive the post-90's bubble. Even Standard & Poor's stock analysts give EBAY 5 stars (their form of a "buy") and suggest that EBAY's intrinsic value should be closer to $83 per share. EBAY topped out just under resistance at $70.00 just as the NASDAQ Composite peaked near 2150. Now that the NASDAQ appears to be finishing its consolidation so does EBAY with a strong bounce from its simple 50-dma toward the $70.00 level. We're going to use a TRIGGER at $70.05 to open the play for us. That way we can comfortably wait and watch for the breakout just in case EBAY decides to tighten the wedge-like pattern under $70. If we are triggered at $70.05 we'll start the play with a stop loss at $66.50, just under the 50-dma. We're going to target a move to $77.50. Suggested Options: Short-term traders should probably choose from the April or July strikes but July seems a ways off yet. We're going to select the April 70's although the April 65's look pretty tempting too! BUY CALL APR 65.00 XBA-DM OI=17408 at $5.60 SL=3.25 BUY CALL APR 67.50 XBA-DU OI= 7557 at $4.00 SL=2.20 BUY CALL APR 70.00 XBA-DN OI=11269 at $2.60 SL=1.30 BUY CALL APR 72.50 XBA-DV OI= 4995 at $1.55 SL=0.75 Annotated Chart: Picked on March 07 at $ xx.xx <-- see trigger Change since picked: + 0.00 Earnings Date 04/20/04 (unconfirmed) Average Daily Volume: 7.0 million Chart = ************************Advertisement********************************* Option Traders: Pay Attention Use the online options trading system built by option traders for options traders. Featuring direct access to each option exchange, stop and stop loss option orders, contingent option orders, online spreads, fast executions, and rates as low as $1.50 per contract ($14.95 min.). PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC ******************************************************************** ***************** CURRENT PUT PLAYS ***************** Chiron Corp - CHIR - close: 49.35 chg: +0.33 stop: 50.51 Company Description: Chiron Corporation, headquartered in Emeryville, California, is a global pharmaceutical company that leverages a diverse business model to develop and commercialize high-value products that make a difference in people's lives. The company has a strategic focus on cancer and infectious disease. Chiron applies its advanced understanding of the biology of cancer and infectious disease to develop products from its platforms in proteins, small molecules and vaccines. The company commercializes its products through three business units: BioPharmaceuticals, Vaccines and Blood Testing. (source: company press release) Why We Like It: CHIR gave us a scare on Friday with its early morning rally to $50.34. That put it above resistance at $50.00 and within 17 cents of our stop loss. Fortunately, shares rolled over under 21-dma (and its 200-dma). The bad news is the pop higher makes CHIR technicals looks bullish. Technicals aside we're encouraged that it produced another failed rally and closed under the $50 mark, especially with the BTK biotech index still hitting new two-year highs on a regular basis. Readers should still remain cautious opening bearish positions in this environment. A move under the recent low near $48.50 would be a good mental trigger to initiate positions. Suggested Options: Short-term traders can choose from the March or April strikes but we're going to select the April 50 puts as our favorite. ! Alert - only two weeks left for March options! BUY PUT MAR 50.00 CIQ-OJ OI=5596 at $1.50 SL=0.75 BUY PUT MAR 47.50 CIQ-OT OI=1236 at $0.50 SL= -- BUY PUT APR 50.00*CIQ-PJ OI=2511 at $2.40 SL=1.20 BUY PUT APR 47.50 CIQ-PT OI=2475 at $1.20 SL=0.60 BUY PUT APR 45.00 CIQ-PI OI= 265 at $0.55 SL= -- Annotated Chart: Picked on February 24 at $49.11 Change since picked: + 0.24 Earnings Date 01/28/04 (confirmed) Average Daily Volume: 1.7 million Chart = --- Cognizant Tech. - CTSH - cls: 46.36 chng: +0.59 stop: 47.50*new* Company Description: Cognizant Technology Solutions Corporation delivers full lifecycle solutions to complex software development and maintenance problems that companies face as they transition to e- business. These information technology (IT) services are delivered through the use of a seamless on-site and offshore consulting project team. The company's solutions include application development and integration, application management and re-engineering services. Among CTSH's prominent clients are ACNielsen Corporation, ADP, Inc., Brinker Int'l, Computer Sciences, The Dun & Bradstreet Corporation, First Data Corporation and Nielsen Media Research. Why we like it: While still adhering to its dominant downtrend, CTSH is sending some disturbing signals. Everything was looking rosy though the early action on Friday, as the stock fell to a fresh low for the move at $44.38. But the bulls got active after the initial market-related selloff, driving price nearly $2 higher from that intraday low by the close. We've seen this sort of bounce before, and each time it resulted in another rollover from the 10-dma ($46.98). If that pattern holds true, then we ought to see another rollover from the $47 area, with former support acting as new resistance. We're still looking for an eventual decline to the $41 area, so there's plenty of room for new entries on that rollover to work. That is if price action works in our favor. Should CTSH break from its bearish trend, we'll know for sure when it breaks above the 10-dma on a closing basis. So let's get a bit more aggressive with our stop, lowering it to $47.50, which is also just over the 100-dma ($47.48). Suggested Options: Aggressive short-term traders can use the March 45 Put, while those with a more conservative approach will want to use the March 50 put. Aggressive traders looking for more insulation against time decay will want to utilize the April strike. Our preferred option is the April 45 strike, as it provides more time until expiration. ! Alert - March options expire in 2 weeks! BUY PUT MAR-50 UPU-OJ OI= 352 at $4.30 SL=2.75 BUY PUT MAR-45 UPU-OI OI=1699 at $1.10 SL=0.50 BUY PUT APR-45*UPU-PI OI=1016 at $2.50 SL=1.25 Annotated Chart of CTSH: Picked on February 19th at $47.49 Change since picked: -1.13 Earnings Date 2/10/04 (confirmed) Average Daily Volume = 1.31 mln Chart = --- 3M Company - MMM - close: 78.66 change: -0.23 stop: 80.75 Company Description: Commonly known as the maker of the ubiquitous, adhesive-backed Post-It Notes, MMM is also a leading manufacturer of a variety of industrial, consumer, and medical products. Reflective sheeting on highway signs, respirators, spill-control sorbents, and Thinsulate brand insulations are just some of the company's industrial products. MMM also makes microbiology products, making it easier for food processors to test for the microbiological quality of food. Why we like it: Giving new meaning to directionless and boring, MMM really didn't go anywhere last week, trading in a very narrow range between $78 and $79.50. Whether this is consolidation before a move up or down, it is hard to say, but the oscillators are beginning to show a bearish short-cycle reversal and that suggests a breakdown. The action points remain the same while we wait for clarity. Rollover entries below $80 look favorable, while momentum traders need to wait for the drop under $77, which will give us that long-awaited PnF Sell signal. If MMM is going to break down like we expect, then it shouldn't be able to move above the short-term descending trendline ($79.75). So let's tighten our stop to $80.75, just over the 2/24 intraday high. Suggested Options: Aggressive short-term traders can use the March 80 Put, while those with a more conservative approach will want to use the April 80 put. Our preferred option is the April 80 strike, as it is currently in the money. Aggressive traders looking for more insulation against time decay will want to use the April strike. ! Alert - March options expire in 2 weeks! BUY PUT MAR-80*MMM-OP OI=4392 at $1.85 SL=0.90 BUY PUT APR-80 MMM-PP OI=5200 at $2.70 SL=1.25 BUY PUT APR-75 MMM-PO OI=3460 at $0.75 SL=0.35 Annotated Chart of MMM: Picked on February 15th at $79.68 Change since picked: -1.02 Earnings Date 1/20/04 (confirmed) Average Daily Volume = 2.76 mln Chart = ************* NEW PUT PLAYS ************* None ************************Advertisement********************************** Option traders, check what PreferredTrade offers: - true direct access to each option exchange - stop and stop loss online option orders - contingent option orders based on the price of the option or stock - online spread order entry for net debit or credit - fast option executions - rates as low as $1.50 per contract ($14.95 min) PreferredTrade, Inc. 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The Option Investor Newsletter Sunday 03-07-2004 Sunday 4 of 5 In Section Four: Leaps: Interest In The Dollar Traders Corner: I Like Mine “Horizontal” – How About You? ************************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 ************************************************************** ***** LEAPS ***** Interest In The Dollar By Mark Phillips mphillips@OptionInvestor.com That title could just as easily have been "Interest Rates And The Dollar" as those two issues are at the very heart of what is driving virtually every market with which we concern ourselves. Recently the dollar has rebounded on thoughts that the U.S. economy is heating up and that the Federal Reserve will need to start raising short-term interest rates sooner, rather than later. But the continued insistence that the Fed will remain patient until there is strong growth in employment seems to be telling us a different story. Especially in light of Friday's employment report, which showed dismal job growth of only 21,000 new jobs last month. Who are these brain donors that are coming up with estimates ahead of the report every month in the 200-300K range? A blind dog can do better than that and I certainly can't see where the upside is in such ridiculous predictions unless they are hoping for their quick 15 minutes of fame if the Fed finally makes good on their promises that December's "missing" jobs are still going to show up. New Flash! They are showing up -- just not in the U.S. The employment news seemed to have been what everyone was waiting for last week and when the news hit, the reaction was immediate. The dollar sold off as foreign currencies were bought, the thought being that with our interest rates expected to be low for the foreseeable future, other currencies still look much more attractive. At the same time, bonds were bought furiously, driving yields to lows not seen since July. The 10-year yield actually touched 3.8% and the 30-year yield hit 4.7%. In both cases, this was a breakdown from bearish triangles that have been forming for the past several months and it appears the long end of the yield curve is heading south again. Equities sold off on the news, but as we have come to suspect of late, the dip was aggressively bought, with all the major indices ending close enough to unchanged for both the day and week as to call it insignificant. Since January 5th, the DOW has risen 51 points, the SPX hasn't move at all since January 26th and the NASDAQ ended at 2047 on Friday, right where it ended the session on January 5th. Of the three, the SPX looks the most bullish and the NASDAQ looks the most bearish. But the point is that we are stuck in the middle of a sideways continuation coil with little incentive to drive the pile either higher or lower. For the remainder of the year, we can expect the strength of the dollar and the expectation for interest rates to be at the core of what drives equities either higher or lower. Stocks are priced for the perfection of rates staying low into 2005 and any perturbation of that belief will have significant effects on the intraday action, if not the overall trend. Everyone knows that inflation is rampant at the raw goods level, a topic we've discussed frequently here. It's the dirty little secret that everyone knows about, but never talks about because we want it to stay low so prices can continue upwards. I had an interesting conversation with a good friend (non trader) last week. She was asking what is going on with gas prices being high and I relayed to her our conversation from last week that gas prices are NOT high...it's just that the value of the dollar is quite low. When I explained the dynamics of the situation, it was quite interesting to see the light bulb go on, as she instantly understood the longer-term ramifications. Regardless of whether government reports show it, inflation does exist and it is consistently whittling away our purchasing power. At the same time, all tangible goods (even equities, although they ceased being a tangible good long ago) are rising. Not in actual value, but in relation to the ever deteriorating dollar. You see there are two types of inflation to deal with. The first and most common is demand-driven inflation, where the cost of goods is driven higher due to demand outstripping supply. This is the type of overheating that the Fed has traditionally addressed by tightening the money supply. The other type of inflation is monetary inflation, which is caused by excessive money growth. In this second variety, the price of everything rises, not because of strong demand, but because the value of the money used to purchase things is falling. The key difference is that in the first case, prices rise because the products being purchased are deemed to actually have greater value. In the latter case, there is no increase in value -- it only seems that way, as it takes more money to buy the same things. The important point for us to realize, is that in either case, we're confronted by an environment where our dollars buy less and less, while at the same time, our income fails (miserably) to keep pace with inflation. As long as our government refuses to exercise the self-control of even a crack addict when it comes to spending money, we can expect to see the dollar continue to weaken, money creation to continue at historical levels and monetary inflation continue to increase. Speaking of inflation, 2 weeks ago we looked at the inflationary signs that are creeping into the CPI report and wondered where in the world is the PPI report. Well, guess what? The PPI is still missing in action! Every week we get a fresh lie, er, I mean estimate, about when the report will actually come out and each week it fails to materialize. The credibility of the BLS has now declined to the subatomic scale if they can't manage to get the report issued, now 3 weeks beyond its normal release. If we can't believe the estimates on the release dates, how are we supposed to have any faith in the actual numbers contained therein? Last week I received an email from my brother that contained a very interesting quote that I think is worth sharing. It is from Alexander Tyler in 1787, who at the time was a Scottish history professor at The University of Edinburgh. "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy." Regardless of which side of the political aisle you sit on, I hope you can see that this is at the core, both of our current political process, as well as the current economic morass in which we find ourselves. Many readers would prefer that I leave my political commentary out of our weekly discussions, but I am reticent to do so simply because our political landscape is inextricably linked with the reality that we see unfolding in the markets on a daily and weekly basis. Bringing the focus back around to the markets, I see no reason to expect any of the major trends to change in the next week or three. That means bullish trends in foreign currencies, all commodities, bond prices and real estate prices and a sustained bearish trend in the dollar. This inter-market relationship will eventually come to an end and the manner in which it unravels will be quite interesting indeed. But in the near-term, the winning strategy will continue to be to play the prevailing trends until they end. In the equity world, that means buying the dips in bullish trends as long as important support levels are not broken. It is virtually impossible to gain any real clues from the action in the major indices or from any of the primary bullish percent readings, as everything there looks bullish, but stale -- just like it has for the past several months. Staleness of trend has obviously had no bearish on the longevity of that trend, now has it? As I've stated several times, we aren't likely to see a material change in the equity landscape until the VIX finds some life and gets back over 20. With two forays under the 14 level in the past 2 weeks, I don't see a change on that front anytime soon. With that, let's go take a look at our current list of plays and see what excitement cropped up last week. Portfolio: SMH - For all the volatility and gyrations in price, the SMH hasn't really gone anywhere for the past 2 weeks. For that matter, it's still within 50-cents of where we initiated the play back at the end of December. The bearish divergence that developed on the weekly Stochastics hasn't materialized into any significant price weakness. Despite a lack of strength, there's also a notable lack of selling pressure, with the bulls staunchly defending support near $500 on the SOX. Rather than delivering a downside break, it is entirely possible that the SMH will simply work off its overbought condition by trading sideways for a bit longer. That said, the trend does seem to be weakening significantly, with SMH now finding resistance below its 50-dma. We're still looking for a break under $40 to provide some confirmation of pending weakness down towards the mid-$30s, but with the 200-dma now rising over the $37 level, we may simply run the clock out in sideways fashion. We'll stick with the play for now, but conservative traders wary of an upside break may just want to exit the play on another bounce from the $40 level and re- deploy that cash into another play that looks more promising. NEM - Pundits were all in a lather over the past week in an attempt to be the first to proclaim the end of the bear market in the dollar. Here's a newsflash for those misguided souls -- the end of the decline in the dollar is still a long ways off. That reality was driven home over the past two days, with the DX00Y resuming its downtrend (reversing from the 100-dma) and gold stocks putting in a nice bounce, with the XAU index gaining nearly 3%, just on Friday. This leaves in place the potential for a H&S bottom on the XAU, with a sloping neckline that crosses at the $107 level. A break above that point will give us a near-term measuring objective of $121, well above the $113 highs from early January. NEM has a similar pattern in place (although not quite as clean) following last week's rebound from $41. A breakout over $47 will confirm the pattern and give us a bullish price objective of $53.50. I still like new entries in the $40-42 area (although with the weekly Stochastics now turning up from just above oversold, that ship may have sailed) and for late comers, a breakout over the 50-dma looks attractive as well. HD - Well, how doe you like that? HD is finally finding some buying interest and broke above its range of the past few months last week, testing the $37.50 resistance level and coming to rest right at the upper channel line. That doesn't look good for our play and the continued rise in the weekly Stochastics looks bullish too. This is precisely where the use of our insurance options will do wonders in keeping us emotionally balanced on our plays in the near-term. The LEAPS may be losing value, but they will do so more slowly than the protective position is gaining value. HD is benefiting from the continued strength in the Housing sector, which is being caused by the expectation of continued low interest rates and maybe another wave of refinancing activity. Fundamentally, HD still looks like a good short, but technically the jury is still out. The next important resistance measure to watch is the 200-week moving average at $39.50. MLNM - Well, so far it looks like we did the right thing by raising our entry point on MLNM, as the stock found support near $17.50 and put in a solid rally last week, getting back over the $19 level at the close on Friday. A breakout over $20 will confirm the bullishness in the stock and most likely have the weekly Stochastics turning a short-cycle bullish reversal. Should we see another dip near $18 prior to that breakout, it will provide another viable entry point along the path to a rally into the mid-$20s later on this year. We'll maintain a wide stop for now, but once over $20, it should be safe to trail that stop to $16, which will be below the 200-dma at that time. CHK - Cheating a bit on the entry point on CHK was certainly the right course of action, as the stock is responding favorably to the renewed rise in Natural Gas prices, and last week's breakout over $13 certainly looks constructive. The weekly Stochastics are turning a bullish reversal right now and it is reasonable to expect a breakout to new highs in the weeks ahead. It seems unlikely that we'll see the February lows retested, so let's raise our stop to $11, which is solidly below the 200-dma. Watch List: SNDK - Over the past few weeks, SNDK has been trying to put in a bottom and the rally off the recent lows near $24 certainly looks convincing so far. Price is currently stalled near the site of the 50-dma and 200-dma and it is reasonable to expect one more pullback before a real rally can get underway. But price action is looking constructive and I like the fact that weekly Stochastics are trying to turn bullish from within oversold. Let's take the play off hold and use an entry target at $25-26. If filled, we'll use an initial stop at $21.50, just under the 62% retracement of last year's rally from $8 to $43. The initial target for the play will be for a retest of the January highs near $36, and as we near that level, we can evaluate whether a rally to challenge the 2003 highs is reasonable. LUV - Was that the end of the decline? LUV certainly appears to be putting in an impressive upside move over the past few days, rising right to the top of the descending channel of the past couple months. But with price sill well below the 50-dma, I'm in no hurry to chase the stock higher. That said, the weekly Stochastics are really trying to turn up from oversold after being buried there for the past few months and this could be a bottom forming. So let's be a little more reasonable with our entry target and raise it to $14 this weekend. Initial stops will be set at $11, with near-term protection provided by the protective put. TYC - As promised last week, TYC makes the transition to the Watch List this weekend, as the stock continues to make steady upward progress in its year-long rising channel. Radar Screen: WMB - Natural Gas prices are once again moving strongly higher and that bullish price action caused a premature reversal in shares of WMB over the past 2 weeks and it now looks as though the foray under the 200-dma ($9.09) may have been the entry point to target. One thing is certain -- the price increase over the past couple days certainly looks convincing, as it is coming on strongly increasing volume. Weekly Stochastics are attempting a short- cycle bullish reversal as well and combined with the higher low in price, we could have bullish divergence setting up. That is in direct opposition to the bearish divergence we noted a few weeks ago and that leaves us in a position of indecision. I still really like the Natural Gas sector and WMB specifically, but I'd prefer to see greater clarity before turning this one into a Watch List play. APA - It looks like this train may have left the station without us, as APA held support at its 100-dma and then vaulted substantially higher, actually eclipsing its all-time highs on Tuesday. With the stock holding just below resistance and weekly Stochastics posting a short-cycle bullish reversal, it looks like we missed our chance. I like the bullish trend in APA, but the stock is too extended here for us to consider it a viable play. Let's keep our eye on it and look for another pullback near the 100dma as the most likely setup to consider it a viable long-term play. GM - The more I look at the descending multi-year channel on GM, the more I like it in terms of setting up a great long-term bearish play. But at the same time, I see the potential for a breakout from that pattern, and that keeps me cautious for now. Note that the weekly Stochastics have fallen near oversold, while at the same time, price is holding near the top of that channel ($50). If price fails to drop significantly lower before the oscillator turns back up, we'll have bullish divergence on our hands and that will obviously force me to rethink my position. For now, let's just keep our eye on the stock and postpone making any decisions. Closing Thoughts: "Steady as she goes" remains our action plan. Buy the dips when offered and hold for higher levels throughout much of the year as the dollar continues to deteriorate against foreign currencies. With the diminished expectations for an increase in interest rates this year, we could very well see this trend continue right into 2005. U.S. stocks will continue to appreciate relative to the dollar and that will work quite nicely for investors that can enter into steady trends. Let's hope that's us! Have a great week! Mark LEAPS Portfolio Current Open Plays LEAPS Watchlist Current Possibles SYMBOL SINCE TARGET PRICE TARGETED LEAP SYMBOL CALLS: SNDK 12/21/03 $25-26 JAN-2005 $ 27 XWS-AY CC JAN-2005 $ 25 XWS-AE JAN-2006 $ 27 YSD-AY CC JAN-2006 $ 25 YSD-AE PP JUL-2004 $ 22 SWQ-SX LUV 02/29/04 $14 JAN-2005 $ 15 ZUV-AC CC JAN-2005 $ 12 ZUV-AV JAN-2006 $ 15 WUV-AC CC JAN-2006 $ 12 WUV-AV PP JUN-2004 $ 12 LUV-RV TYC 03/07/04 $26-27 JAN-2005 $ 30 ZPA-AF CC JAN-2005 $ 25 ZPA-AE JAN-2006 $ 30 WPA-AF CC JAN-2006 $ 25 WPA-AE PP JUL-2004 $ 25 TYC-SE PUTS: None New Portfolio Plays None New Watchlist Plays TYC - Tyco International $29.96 **Call Play** It was a rough road for TYC bulls throughout 2002, but after building a solid bottom just above the $10 level, the stock has shaken off the effects of controversy from its ex-CEO and has been rising in a slow and steady manner for the past year. Price action has been rising in a steady upward channel and based on the consistency of that price action and a very bullish PnF chart, it looks like that trend could continue throughout much of this year. After rebounding from the middle of its rising channel at the end of February, the stock has once again moved up to test the top of the channel, currently at $30. This trend has the feel of the strong bullish trend we saw in SBUX before riding that stock significantly higher in recent months and with the PnF chart giving a bullish price target of $63, there's definitely plenty of upside potential to work with. The way the stock has been oscillating between the boundaries of the rising channel tells us that we don't have to chase it higher, but just wait for a pullback to the lower boundary of that pattern to take our entry. Reinforcing support at the bottom of the channel (just below $26) is the 100-dma ($25.27) and it would be very surprising to see that average broken. It may seem that we're late to the party and that risk is higher due to the weekly Stochastics still holding in overbought territory, but one thing we've learned is that this strong uptrends can continue much further than anyone expects and that oscillator readings are often unreliable for picking entry points. So we'll defer to price action and play the dominant pattern in play, that rising channel as long as it lasts. That means we want to look for a pullback near the bottom of the channel near $26 to set up a solid entry point. Even with the long time horizon of LEAPS plays, the $63 level seems a bit too aggressive in terms of expectations, but the weekly chart shows a very real possibility of continued upside to at least $35, and quite possibly strong resistance at $42. Achieving either of those goals will represent a handsome gain on the play, provided we can get the entry point we're looking for. More aggressive traders may even want to enter at a slightly higher level near $27, which held as support on the most recent pullback. We'll set our official entry at $26-27, looking to split the difference on any dip into the lower part of the channel, entering on the first rebound from that support. We'll use a fairly wide stop initially, placing it at $22, just under the 200-dma. BUY LEAP JAN-2005 $30 ZPA-AF BUY LEAP JAN-2005 $25 ZPA-AE **Covered Call** BUY LEAP JAN-2006 $30 WPA-AF BUY LEAP JAN-2006 $25 WPA-AE **Covered Call** BUY Put JUL-2004 $25 TYC-SE **Insurance Put** Drops None ************************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 ************************************************************** ************** TRADERS CORNER ************** I Like Mine “Horizontal” – How About You? By Mike Parnos, Investing With Attitude Martha Stewart is in the headlines – no big surprise. So she’s guilty. No big surprise. Apparently, what moral fiber Martha has, comes in a box of breakfast cereal. So she lied and she got caught. Who hasn’t done either or both? Speaking of headlines . . . Good headlines are difficult to write. These are just a few I came across: "New Study of Obesity Seeks Larger Test Group" "Typhoon Rips Through Cemetery; Hundreds Dead" "Include Your Children When Baking Cookies" Let’s hope that CPTI students pay more attention to their trades than the editors of those headlines. Meanwhile, let’s revisit the Calendar Spread strategies. They come in handy. After you read the article, see if you can identify how, and where, we use Calendar Spreads in our CPTI portfolio. ___________________________________________________________ The “Horizontal” Calendar Spread The “horizontal” calendar spread consists of the purchase of a long-term option and the simultaneous sale of a short-term option at different strike prices. For our example we will use GILD – on which we have a neutral to mildly bullish outlook. GILD (Gilead Sciences) closed Friday at $57.33. We will: 1. Buy the GILD August $60 calls @ $4.90 2. Sell the GILD April $60 calls @ $1.65 Total debit is $3.35. Regardless of where the GILD moves, our total risk is defined at $3.35. How Do We Make Money? If we’re right about the direction of GILD, it will move up slowly. The delta of the August $60 call is 48. The delta of the April $60 call is 38. That means that for every $1.00 GILD goes up, the value of the August call will increase $.48 and the April call will go up only $.38. We have a positive delta differential of 10. (Delta is the percentage that an option will move in relation to a $1 move in the underlying). Deltas are important because they’ll tell us if, and when, to make adjustments to the position later on. In a perfect world (and who’s kidding who?) GILD would move up to $59.90 by April expiration and the April $60 call would then expire worthless. At that point we would have two choices. A) Close out the spread and take our profits, or; B) Sell an option out for the next cycle. A) How much profit do we have? We can approximate the numbers by using our Greek friends – delta and theta. (Theta is the change of an option’s value given a one day change in time). Gather our fingers, take off our shoes and socks because it’s time to calculate. These results will be approximate – but close enough to enable us to make an educated decision. The delta of the August GILD $60 call is 48. GILD is currently trading at $57.33. We are projecting a slow increase in stock price to finish at $59.90. That’s a price increase of $2.57. If we multiply that by 48% (delta), we get $1.23. We then add the $1.23 to the original August $60 call price ($4.90) and get $6.13. We have to remember that there are still 41 days left to April expiration. The August call will experience time erosion – not a lot, but enough that we should include it in our calculations. The “theta” is .017 per day. 41 x .017 = .697. We’ll round it off to $.70. We now subtract this $.70 of time erosion from the $6.13 and we have an approximate value of the August $60 call of $5.43 at April expiration. It originally cost us $3.35 to put on the calendar spread. If we close the position by selling the August $60 call for $5.43, we will show a profit of $2.08. That’s pretty impressive on a $3.35 initial risk. Taking your profit would be the prudent thing to do. B) If we still have a bullish outlook on GILD, we could then sell a $65 call for about $1.00 a go through the process again. Our cost basis will have been reduced to about $1.27 ($3.35 - $2.08). GILD will have five more points of room to move up with a much higher delta working for you. How often will that happen? It’s about as likely as you marrying a girl named Trixie and living happily ever after. Let’s Get Back To Reality What happens if . . . a) What if the GILD is at $57 at April expiration? The April $60 call would expire worthless. The August $60 call would have increased in value and we’re now free to sell the March $60 call and take in about another $1.25. That would further reduce the cost basis of the August $60 call to $2.10. Even if we take in an about a buck a month, we will have paid for the August call in three months and everything above and beyond is P-R-O-F-I-T. That’s music to our ears and more spendable green stuff our bank accounts. b) What if the GILD is at $51 at April expiration? The April $60 call would obviously expire worthless, but you should have had a predetermined stop loss and closed the position– hopefully. If you have no self-discipline, and you’re still hoping for a rebound, you can sell the May $60 call for about $.25 while you patiently wait for a bounce back up. c) What if the GILD is at $64 at February expiration? It’s moved up a little too quickly. Well, that’s one scenario you want to head off at the pass. Why? Because the delta of the April $60 call will likely have surpassed the delta of the August $60 call. That will cost you money if you don’t make an adjustment before that plays out. It means the April $60 call will be increasing in value faster than the August $60 call. That’s a no-no. You have to monitor the deltas of both options. You will have to close the spread when the delta of the August $60 call is no longer higher than the delta of the April $60 call. You will likely have made a very respectable profit. If you’re still bullish, you can put on another (new) calendar spread using higher strikes. The “Diagonal” Calendar Spread A “diagonal calendar spread” is basically the same as the “horizontal” calendar spread except the strike prices are different. Using the example above, a “diagonal” spread might consist of: Buying the August $55 call @ $7.30 Sell the April $60 call @ $1.65 Total debit of $5.65. The main benefit is that you are basically buying more delta. The August $55 call has a delta of 63 vs. the 48 delta of the August $60 call. With a "diagonal calendar spread," it's also the months of time you buy in the long option that gives you flexibility. You can buy more or less time, depending on how long you think it will take for the underlying to go in your direction. Remember that, in both the “horizontal” or “diagonal” calendar spreads, you have many choices. You can take profits (if they exist) by unwinding the position at any time during the life of the long option. Taking profits is often a good idea. Why risk a nice profit on the “come.” You don’t want to risk what you have (profits) for something that hasn’t “come.” ______________________________________________________________ MARCH CPTI POSITIONS Position #1 – OEX (S&P 100 Index) Iron Condor – 568.45 We sold 12 OEX March 595 calls and bought 12 OEX March 605 calls (Bear Call Spread). Then we sold 12 OEX March 540 puts and bought 12 OEX March 530 puts (Bull Put Spread). The total net credit was $1.20 ($1,440). Maximum profit range: 540 – 595. Maintenance: $12,000. Position #2 – RUT (Small Cap Index) Iron Condor – 599.54 We sold 8 RUT March 610 calls and bought 8 RUT March 620 calls (Bear Call Spread). Then we sold 8 RUT March 550 puts and buy 8 RUT March 540 puts (Bull Put Spread). The total net credit was $2.75 ($2,200). Maximum profit range: 550 - 610. Maintenance: $8,000. Position $3 – MNX (Mini-NDX Index) Iron Condor - $147.30 We sold 20 MNX March $157.50 calls and bought 20 MNX March $160 calls (Bear Call Spread). Then we sold 20 MNX March $142.50 puts and bought 20 MNX March $140.00 puts (Bull Put Spread). The total net credit was $.90 ($1,800). Maximum profit range: $142.50 - $157.50. Maintenance: $5,000 less $1,800 = $3,200. Position #4 – BBH (Biotech Index) - Siamese Condor - $150.35 We sold 10 BBH March $145 calls and sell 10 BBH March $145 puts for a credit of about $6.95. Then we bought 10 BBH March $160 calls and buy 10 BBH March $130 puts for a debit of about $.70. The total net credit was $6.25 ($6,250). Our profit (safety) range was $138.75 to $151.25. These were also our bailout points. The closer BBH finishes to $145, the more money we will make. On Friday, BBH blasted through our topside parameter. We bought back the March $145 call at $7.40. We had taken in $6.25. Result: Loss of $1.15 ($1,150). ______________________________________________________________ ONGOING POSITIONS QQQ ITM Strangle – Ongoing Long Term -- $36.63 We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts of the 2005 QQQ $29 calls for a total debit of $14,300. We make money by selling near term puts and calls every month. Here's what we've done so far: October: Oct. $33 puts and Oct. $34 calls – credit of $1,900. November: Nov. $34 puts and calls – credit of $1,150. December: Dec. $34 puts and calls – credit of $1,500. January: Jan. $34 puts and calls – credit of $850. February: Feb. $34 calls and $36 puts – credit of $750. March: Mar. $34 calls and $37 puts – credit of $1,150. Total credit: $7,300. Note: We haven't included the proceeds from this long term QQQ ITM Strangle in our profit calculations. It's a bonus! And it's a great cash flow generating strategy. ZERO-PLUS Strategy. OEX – 568.45 In my Feb. 8th column, I outlined a strategy based on an initial investment of $100,000. $74,000 was spent on zero coupon bonds that will mature in seven years at a value of $100,000. In essence, that guarantees the principal $100,000 investment. We are trading the remaining $26,000 to generate a “risk free” return on the original investment. We bought 3 OEX Jan. 2006 540 calls at a cost of $24,300. Then we sold 3 OEX March 2004 585 calls for a credit of $930. We also put on a bull put spread, selling three OEX March 535 puts an buying three OEX March 525 puts for a credit of $330. Our total credit is $1,260. Our current cash position is $2,960 ($1,260 plus the unused $1,700). This one is going to drag on for seven years, so get comfortable. We’re going to make some money. _____________________________________________________________ New To The CPTI? Are you a new Couch Potato Trading Institute student? Do you have questions about our educational plays or our strategies? To find past CPTI (Mike Parnos) articles, look under "Education" on the OI home page and click on "Traders Corner." They're waiting for you 24/7. ____________________________________________________________ Happy Trading! Remember the CPTI credo: May our remote batteries and self- discipline last forever, but mierde happens. Be prepared! In trading, as in life, it’s not the cards we’re dealt. It’s how we play them. Your questions and comments are always welcome. Mike Parnos CPTI Master Strategist and HCP _____________________________________________________________ Couch Potato Trading Institute Disclaimer All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices or participated in these recommendations. The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable investor might receive utilizing these strategies. ************************Advertisement************************* No time to follow the Market Monitor? Tired of missing good Trades because you stepped away from your computer? 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The Option Investor Newsletter Sunday 03-07-2004 Sunday 5 of 5 In Section Five: Spreads/Combinations/Premium-Selling Plays: The Range-Bound Trend Continues... ************************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 ************************************************************** ****************************************** Spreads/Combinations/Premium-Selling Plays ****************************************** The Range-Bound Trend Continues... By Ray Cummins The broader equity averages ended little changed Friday with concerns over the health of the labor market neutralizing the effects of a positive interest-rate outlook. The blue-chip Dow closed up 7 points at 10,595 with McDonald's (NYSE:MCD), Coca-Cola (NYSE:KO) and Exxon-Mobil (NYSE:XOM) among the best performers. The technology-laden NASDAQ slid 7 points to 2,047 amid weakness in semiconductor stocks. The Standard & Poor's 500 index added 2 points to 1,156 as homebuilding, gold, restaurant, auto parts, oil & gas equipment, apparel, insurance and tobacco shares moved higher. Volume on the NYSE was 1.37 billion shares with advancers outpacing decliners by more than 2 to 1. On the technology exchange, over 2 billion shares traded with winners and losers roughly even at the close. Treasuries saw a huge buying effort following the unimpressive employment report, forcing yields on the 10-year note down to 3.78%. The high bond prices were sustained by the Bank of Japan, which was buying dollars to offset its early decline. The 10-year note closed up 1 14/32, with its yield falling to 3.84%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ UPCOMING EVENTS - CHANGES TO NEWSLETTER CONTENT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ They say "nothing lasts forever" and that statement was never more accurate than with regard to finance and publishing. But, despite the psychological comfort of a repetitious cycle, sometimes change is a "good" thing. I truly hope that is the case with the current situation at the OIN, where we have decided to make some major adjustments to the content in this portion of the newsletter. Obviously, the primary catalyst for the changes is the readership, whose desires were made very clear after our recent request for "favorite" strategies. In addition, the editors of each section have identified areas they think need improvement or modification, and there are also some personnel issues to contend with such as time limitations due to "life events" among members of the staff. With that in mind, we will no longer be offering covered-calls on a weekly basis, but rather once-a-month, which is really the best timeframe for our (in-the-money) approach to the strategy. The Spreads & Combos editor will now focus on vertical spreads and "premium-selling" positions in both the Wednesday and Saturday editions, however neutral-outlook debit straddles will also be added to the bi-weekly content as market conditions permit. The summaries for the core strategies will slowly be combined (credit spreads this week) thus providing more-timely observations with regard to position exits and adjustments. In the future, we hope to publish "supplemental play" data to replace some of the omitted strategies, such as calendar spreads and synthetic positions, and further augment the current number of candidates for combination plays. Among the new (and recurring) additions will be monthly credit spreads on the OEX and SPX, and some longer-term plays in all categories. One final adjustment will occur in April, when the "Premium-Selling" section moves to Tuesday afternoon, thus providing candidates for Wednesday's market session. Your thoughts are always valued as they guide our policy decisions and determine our subject matter. Please don't hesitate to send your comments and suggestions to: questions@OptionInvestor.com ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 03/05/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The following summary is a reasonable account of the positions previously offered in this section. However, no representation is being made as to the actual performance of a position and in fact, there are frequently large differences between the summary results and those of our subscribers, due to the variety of ways in which each play can be opened, closed, and/or adjusted. In addition, the summary might not be completely representative of the manner in which the average trader would react to changing conditions in a position and to the options market in general. The editor of this section does not take actual positions in any published plays and the summary comments are simply a service to help new traders understand when positions might be opened and closed. In most cases, actions taken based on the commentary would be far too late to be effective, thus it is not intended as a substitute for personal trade management nor does it in any way replace your duty to diligently monitor and manage the positions in your portfolio. MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE The Maximum Yield (listed in the summary and with "naked" option selling plays) is the greatest possible profit available in the position. This amount, expressed as a percentage, is based on the initial margin requirement as determined by the Board of Governors of the Federal Reserve, the U.S. options markets and other self-regulatory organizations. Although increased margin requirements may be imposed either generally or in individual cases by various brokerage firms, our calculations use the widely accepted margin formulas from the Chicago Board Options Exchange. The "Simple Yield" is based on the cost of the underlying issue (in the event of assignment), including the premium from the sold option, thus it reflects the maximum potential loss in the trade. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NAKED PUTS Stock Strike Strike Cost Current Gain Max Simple Symbol Month Price Basis Price (Loss) Yield Yield IDCC MAR 20 19.55 27.26 0.45 6.66% 2.30% LSCP MAR 17 17.10 24.42 0.40 6.20% 2.34% PCLN MAR 22 21.70 24.19 0.80 7.85% 3.69% * AMLN MAR 20 19.55 25.38 0.45 6.42% 2.30% ATRX MAR 22 22.05 26.28 0.45 6.79% 2.04% BRCM MAR 37 36.95 41.25 0.55 4.29% 1.49% IDCC MAR 22 22.10 27.26 0.40 5.88% 1.81% OSTK MAR 20 19.35 33.19 0.65 10.25% 3.36% NEOL MAR 17 16.95 22.12 0.55 10.48% 3.24% RMBS MAR 30 28.90 31.30 1.10 10.64% 3.81% SMTC MAR 22 22.15 23.14 0.35 4.58% 1.58% ADEX MAR 20 19.55 23.31 0.45 8.22% 2.30% ALXN MAR 20 19.70 25.42 0.30 6.05% 1.52% APPX MAR 30 29.70 38.04 0.30 4.59% 1.01% ATRX MAR 22 22.20 26.28 0.30 6.03% 1.35% MRVL MAR 37 37.10 43.85 0.40 4.40% 1.08% NEOL MAR 17 17.30 22.12 0.20 5.25% 1.16% OSTK MAR 20 19.70 33.19 0.30 6.70% 1.52% SEPR MAR 17 17.25 48.13 0.25 5.37% 1.45% ADEX APR 20 19.45 23.31 0.55 5.64% 2.83% ALXN MAR 22 22.05 25.42 0.45 10.40% 2.04% KMRT MAR 30 29.65 32.51 0.35 6.19% 1.18% NEOL APR 15 14.55 22.12 0.45 6.79% 3.09% OSTK MAR 25 24.65 33.19 0.35 9.74% 1.42% PBY MAR 22 22.15 25.80 0.00 0.00% 0.00% PKZ MAR 25 24.60 29.90 0.40 8.63% 1.63% Priceline.com (NASDAQ:PCLN) was a candidate for "early exit" during the recent slump. The position in Pep Boys (NYSE:PBY) was not available due to the "gap-up" in the issue on the day after our play was published. Semtech (NASDAQ) is on the early-exit "watch" list. NAKED CALLS Stock Strike Strike Cost Current Gain Max Simple Symbol Month Price Basis Price (Loss) Yield Yield AAII MAR 25 25.40 10.15 0.40 7.47% 1.57% CMTL MAR 35 35.45 27.82 0.45 7.46% 1.27% FLML MAR 35 35.35 26.24 0.35 6.02% 0.99% MHS MAR 35 35.45 32.80 0.45 4.40% 1.27% CECO MAR 55 55.50 52.17 0.50 4.96% 0.90% ECLG MAR 23 22.85 20.48 0.35 10.15% 1.53% ESI MAR 50 50.30 34.90 0.30 4.96% 0.60% ISSI MAR 18 17.85 17.22 0.35 11.45% 1.96% SEAC APR 20 20.40 15.56 0.40 7.86% 1.96% Integrated Silicon Solutions (NASDAQ:ISSI) is on the early-exit "watch" list. PUT-CREDIT SPREADS Symbol Pick Last Month L/P S/P Credit C/B G/L Status CERN 46.09 47.63 MAR 35 40 0.60 39.40 0.60 Open DNA 98.25 113.27 MAR 85 90 0.70 89.30 0.70 Open ESRX 70.58 75.16 MAR 60 65 0.65 64.35 0.65 Open NBR 46.97 47.15 MAR 40 42 0.25 42.25 0.25 Open BSX 41.94 43.53 MAR 35 37 0.25 37.25 0.25 Open CEC 51.62 56.92 MAR 45 50 0.55 49.45 0.55 Open ONXX 36.80 37.64 MAR 30 35 0.55 34.45 0.55 Open OSTK 29.27 33.19 MAR 22 25 0.30 24.70 0.30 Open RYL 85.72 92.60 MAR 75 80 0.50 79.50 0.50 Open GS 107.09 109.05 MAR 95 100 0.65 99.35 0.65 Open MSTR 64.78 64.17 MAR 50 55 0.55 54.45 0.55 Open MICC 22.06 22.35 MAR 17 19 0.12 18.63 0.12 Open VIP 83.25 90.57 MAR 70 75 0.65 74.35 0.65 Open GDT 69.79 71.50 MAR 60 65 0.65 64.35 0.65 Open MTH 71.09 78.35 MAR 60 65 0.70 64.30 0.70 Open APOL 77.82 80.54 APR 65 70 0.60 69.40 0.60 Open S 48.35 47.46 APR 42 45 0.35 44.65 0.35 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss Synopsys (NASDAQ:SNPS) has previously been closed to limit losses. CALL-CREDIT SPREADS Symbol Pick Last Month L/C S/C Credit C/B G/L Status CYBX 27.04 23.74 MAR 35 30 0.65 30.65 0.65 Open SOHU 29.05 28.49 MAR 40 35 0.60 35.60 0.60 Open KLAC 54.24 53.25 MAR 65 60 0.60 60.60 0.60 Open IACI 31.92 32.36 MAR 37 35 0.30 35.30 0.30 Open NVLS 33.26 31.16 MAR 40 37 0.30 37.80 0.30 Open BBBY 40.62 41.54 MAR 45 42 0.30 42.80 0.30 Open LLTC 40.03 39.10 MAR 45 42 0.25 42.75 0.25 Open PIXR 65.76 66.62 MAR 75 70 0.55 70.55 0.55 Open SFNT 37.96 38.62 MAR 45 40 0.60 40.60 0.60 Open UTEK 26.28 24.95 MAR 35 30 0.60 30.60 0.60 Open AMZN 44.87 44.09 MAR 55 50 0.50 50.50 0.50 Open CTAS 42.77 42.92 MAR 50 45 0.60 45.60 0.60 Open CCU 43.44 44.44 MAR 50 45 0.60 45.60 0.60 Open ICOS 37.53 41.90 MAR 45 40 0.50 40.50 (1.40) Closed DISH 35.50 34.55 APR 42 40 0.30 40.30 0.30 Open NVLS 31.15 31.16 APR 37 35 0.35 35.35 0.35 Open L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss As noted earlier in the week, Icos (NASDAQ:ICOS) should have been closed, for a smaller than published loss, when the issue moved above the sold (call) strike at $45. Neurocrine Bisosciences (NASDAQ:NBIX), OSI Pharma (NASDAQ:OSIP), and Multimedia Gaming (NASDAQ:MGAM) and have previously been closed to limit losses. DEBIT STRADDLES Stock Pick Last Exp. Long Long Initial Max Play Symbol Price Price Month Call Put Debit Value Status HOV 74.99 90.00 MAR 75 75 7.00 15.00 Closed TTWO 32.03 34.07 MAR 32 32 3.20 3.00 Open SNP 40.74 42.80 APR 40 40 5.70 5.70 Open AMX 35.66 37.82 MAY 35 35 3.65 4.30 Open CCMP 44.55 44.40 APR 45 45 5.90 5.75 Open Hovnanian (NYSE:HOV) was the "play of the month," offering up to a $8.00 gain on $7.00 invested. Take-Two Interactive (NASDAQ:TTWO) may yet yield a profit, and America Movil (NYSE:AMX) is off to a good start. Straddles in Martek Biosciences (NASDAQ:MATK), Bear Stearns (NYSE:BSC) and Forest Labs (NYSE:FRX) have previously been closed to preserve capital. Editor's Note: Due to mandated changes in the newsletter content, positions in any other strategies are no longer being tracked on a weekly basis. For more information on exit and/or adjustment techniques, please send an E-mail to: questions@OptionInvestor.com ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NEW POSITIONS ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ This following group of plays is simply a list of candidates to supplement your search for profitable trading positions. As with any new investment, you must decide if the selections meet your criteria for potential plays. Only you can know what strategies are suitable for your personal skill level, risk-reward tolerance and portfolio outlook. In addition, we recommend that you avoid any trading techniques in which you are not completely comfortable with the potential capital loss, the necessary adjustments, and the common entry-exit strategies. The positions with "*" will be included in the weekly summary. Those with "TS" (Target-Shoot) are below our minimum monthly return, but may offer a favorable entry price with a limit order, due to the daily volatility of the underlying issue. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BULLISH PLAYS - NAKED PUTS All of these issues have robust option premiums and relatively favorable technical indications. However, current news and market sentiment will have an effect on these stocks, so review each play thoroughly and make your own decision about its future outcome. WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL! The sale of uncovered puts entails considerable financial risk, far more than the initial margin or collateral required to open a position. The maximum financial obligation for the sale of a naked put is the strike price (of the underlying stock) that is sold. Although this obligation is reduced by the premium from the sale of the option, a writer of puts should have the cash or collateral equivalent of the sold strike price in reserve at all times. In addition, there is one very important rule when using this strategy: Don't sell puts on stocks that you don't want to own! Why? Because stocks occasionally experience catastrophic declines, exponentially increasing the margin maintenance and possibly causing a devastating shortfall in your portfolio. It is also important that you consider using trading stops on naked option positions to help limit losses when a stock's price falls. Many professional traders suggest closing the position when the underlying share value moves below the sold strike, or using a "buy-to-close" stop order at a price that is no more than twice the original premium received from the sold option. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ AAPL - Apple Computer $26.74 *** A Big Day! *** Apple Computer (NASDAQ:AAPL) designs, manufactures and markets personal computers and related personal-computing solutions for sale primarily to education, creative, consumer and business customers. The company's personal-computing products include desktop and notebook PCs, related devices and peripherals, networking and connectivity products, as well as third-party hardware products. Apple's software products and computer technologies include operating systems; professional application software; consumer-, education- and business-oriented application software; Internet products and technologies, and also wireless connectivity and networking products. AAPL - Apple Computer $26.74 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 25 AAQ OE 1397 0.35 24.65 9.5% 1.4% * SELL PUT APR 22.5 AAQ PT 7360 0.25 22.25 2.8% 1.1% TS SELL PUT APR 25 AAQ PE 1354 0.75 24.25 5.9% 3.1% __________________________________________________________________ AMLN - Amylin Pharmaceuticals $25.38 *** On The Rebound! *** Amylin Pharmaceuticals (NASDAQ:AMLN) is committed to improving the lives of people with diabetes and other metabolic diseases through the discovery, development and commercialization of innovative, cost-effective medicines. Amylin has two primary drug candidates in late-stage development for the treatment of diabetes; SYMLIN (pramlintide acetate) and exenatide, formerly referred to as AC2993 (synthetic exendin-4). AMLN - Amylin Pharmaceuticals $25.38 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 25 AQM OE 73 0.65 24.35 15.8% 2.7% SELL PUT APR 20 AQM PD 457 0.25 19.75 3.6% 1.3% TS SELL PUT APR 22.5 AQM PX 2230 0.70 21.80 6.7% 3.2% * __________________________________________________________________ APPX - American Pharma Partners $38.04 *** Uptrend Resumes? *** American Pharmaceutical Partners (NASDAQ:APPX) is a specialty drug company that develops, manufactures and markets injectable pharmaceutical products, focusing on the oncology, anti-infective and critical care markets. The company is one of the largest producers of injectables, with more than 130 generic products in more than 350 dosages and formulations. APPX - American Pharma Partners $38.04 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 35 AQO OG 3357 0.40 34.60 8.1% 1.2% SELL PUT APR 30 AQO PF 3589 0.40 29.60 3.8% 1.4% TS SELL PUT APR 33.3 AXD PV 448 0.90 32.48 6.0% 2.8% * __________________________________________________________________ ASKJ - Ask Jeeves $29.60 *** Rally Mode! *** Ask Jeeves (NASDAQ:ASKJ) is a provider of Internet-wide search, providing consumers with authoritative and fast ways to find relevant information to their everyday searches. Ask Jeeves deploys its search technologies on Ask Jeeves (Ask.com and Ask.co.uk), Teoma.com, and Ask Jeeves for Kids (AJKids.com). In addition, to its internet sites, Ask Jeeves syndicates its monetized search technology and advertising units to a network of affiliate partners. The company is based in Emeryville, California, with offices in New York, Boston, New Jersey, Los Angeles, London and Dublin. ASKJ - Ask Jeeves $29.60 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 25 AUK OE 2927 0.30 24.70 10.1% 1.2% * SELL PUT APR 22.5 AUK PX 190 0.35 22.15 4.2% 1.6% TS SELL PUT APR 25 AUK PE 921 0.80 24.20 7.6% 3.3% __________________________________________________________________ NEOL - NeoPharm $22.12 *** Pure Premium-Selling! *** NeoPharm (NASDAQ:NEOL) is a biopharmaceutical company engaged in the research, development and commercialization of drugs for the treatment of various cancers. The firm has built its drug portfolio based on its novel proprietary technology platforms, the proprietary NeoLipid liposomal drug delivery system and a tumor-targeting toxin platform. NeoPharm has several promising compounds in various stages of development. The company's lead compound is IL13-PE38, a tumor-targeting toxin being developed as a treatment for glioblastoma multiforme, a deadly form of brain cancer. NEOL - NeoPharm $22.12 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 20 UOE OD 65 0.35 19.65 12.5% 1.8% SELL PUT APR 15 UOE PC 2710 0.35 14.65 5.6% 2.4% * SELL PUT APR 17.5 UOE PW 438 0.90 16.60 12.9% 5.4% __________________________________________________________________ NKTR - Nektar Therapeutics $23.24 *** New High! *** Nektar Therapeutics (NASDAQ:NKTR) makes drug delivery products based on its portfolio of technologies and expertise designed to improve drug performance throughout the drug development process. The company has developed three distinct technology platforms: Nektar Molecule Engineering, which uses advanced PEG (polyethylene glycol)ylation and PEG-based delivery systems to enable drug performance, Nektar Particle Engineering, which uses the company's expertise in pulmonary particle technology and supercritical fluids technology to design and manufacture optimal drug particles and Nektar Delivery Solutions, which uses advanced systems for pulmonary drug administration to improve therapeutic outcomes. NKTR - Nektar Therapeutics $23.24 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 22.5 QNX OX 420 0.65 21.85 17.9% 3.0% SELL PUT APR 17.5 QNX PW 130 0.25 17.25 3.9% 1.4% TS SELL PUT APR 20 QNX PD 131 0.80 19.20 8.9% 4.2% * __________________________________________________________________ OSTK - Overstock.com $33.19 *** Another New High! *** Overstock.com (NASDAQ:OSTK) is an online "closeout" retailer offering discount, brand-name merchandise for sale primarily over the Internet. The company's merchandise offerings include bed-and-bath goods, kitchenware, watches, jewelry, electronics, sporting goods and designer accessories. Overstock offers its customers an opportunity to shop for bargains conveniently, while offering an alternative inventory liquidation distribution channel to its suppliers. The company typically offers around 5,000 non-media products and over 100,000 media products (books, CDs, DVDs, video cassettes and video games) in seven departments on its Websites, www.overstock.com, www.overstockb2b.com and www.worldstock.com. OSTK - Overstock.com $33.19 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAR 30 QKT OF 963 0.80 29.20 18.6% 2.7% SELL PUT APR 22.5 QKT PX 297 0.35 22.15 3.8% 1.6% TS SELL PUT APR 25 QKT PE 356 0.70 24.30 7.3% 2.9% * ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BULLISH PLAYS - CREDIT SPREADS These candidates are based on the underlying issue's technical history or trend. The probability of profit in these positions may also be higher than other plays in the same strategy, due to small disparities in option pricing however, each play should be evaluated for portfolio suitability and reviewed with regard to your strategic approach and trading style. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BZH - Beazer Homes $111.90 *** Homebuilders Rally! *** Beazer Homes USA (NYSE:BZH) designs, builds and markets single family homes in the following locations within the United States: Florida, Georgia, North Carolina, South Carolina, Tennessee, Arizona, California, Colorado, Nevada, Texas, Maryland, Virginia, New Jersey, and Pennsylvania. The company designs its homes to appeal primarily to entry-level and first time move-up homebuyers. The firm's objective is to provide its customers with homes that incorporate quality and value while trying to maximize its return on invested capital. Beazer's homebuilding and sales activities are conducted under the name of Beazer Homes except in Colorado (Sanford Homes) and Tennessee (Phillips Builders). BZH - Beazer Homes $111.90 PLAY (conservative - bullish/credit spread): BUY PUT APR-95.00 BZH-PS OI=349 ASK=$0.65 SELL PUT APR-100.00 BZH-PT OI=611 BID=$1.20 INITIAL NET-CREDIT TARGET=$0.60-$0.70 POTENTIAL PROFIT(max)=14% B/E=$99.40 __________________________________________________________________ KBH - KB Home $78.71 *** Strong Sector! *** KB Home (NYSE:KBH) is a homebuilder that has domestic operations in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas, and, through a majority owned subsidiary, international operations in France. KB Home builds homes that cater primarily to first-time and first move-up homebuyers, generally in medium-sized developments close to major metropolitan areas. Kaufman & Broad S.A., KB Home's majority-owned subsidiary, builds single-family homes, high-density residential properties such as condominium complexes and commercial projects in France. KB Home also provides mortgage-banking services to domestic homebuyers through its wholly owned subsidiary, KB Home Mortgage Company. KBH - KB Home $78.71 PLAY (conservative - bullish/credit spread): BUY PUT APR-65.00 KBH-PM OI=1228 ASK=$0.40 SELL PUT APR-70.00 KBH-PN OI=555 BID=$0.90 INITIAL NET-CREDIT TARGET=$0.55-$0.60 POTENTIAL PROFIT(max)=12% B/E=$69.45 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BEARISH PLAYS - NAKED CALLS Based on analysis of option pricing and the underlying stock's technical background, these positions meet our fundamental criteria for bearish "premium-selling" strategies. Each issue has robust option premiums, a well-defined resistance area and a high probability of remaining below the target strike prices. As with any recommendations, these positions should be carefully evaluated for portfolio suitability and reviewed with regard to your strategic approach and personal trading style. WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL! The sale of uncovered calls entails considerable financial risk, far more than the initial margin or collateral required to open the position. The maximum financial obligation for the sale of a naked option is the strike price (of the underlying stock) that is sold. Although this obligation is reduced by the premium from the sale of the option, a writer of options must have the cash or collateral equivalent of the sold strike price in reserve at all times. The simple fact is: stocks often experience large price swings, exponentially increasing the margin maintenance and very possibly causing a devastating shortfall in your portfolio. It is also important that you consider using trading stops on naked option positions to help limit losses when a stock price moves in a volatile manner. Many professional traders suggest closing the position when the underlying share value moves beyond the sold strike, or using a "buy-to-close" stop order at a price that is no more than twice the original premium received from the sold option. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NTE - Nam Tai Electronics $27.07 *** Next Leg Down? *** Nam Tai Electronics (NYSE:NTE) is a electronics manufacturing and design services provider to original equipment manufacturers of telecommunication and consumer electronic products. Through its electronics manufacturing services operations, the company makes electronic components and subassemblies, including liquid crystal display panels, transformers, LCD modules, and radio frequency modules. The firm also manufactures finished products, including cordless phones, palm-sized personal computers, personal digital assistants, electronic dictionaries, calculators and digital camera accessories for use with cellular phones. In addition, the company assists its OEM customers in the design and development of their products and furnishes full turnkey manufacturing services. NTE - Nam Tai Electronics $27.07 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL MAR 30 NTE CF 3365 0.20 30.20 6.3% 0.7% TS SELL CALL APR 30 NTE DF 922 0.80 30.80 7.0% 2.6% __________________________________________________________________ NTLI - NTL Incorporated $64.05 *** Consolidation Underway? *** NTL Incorporated (NASDAQ:NTLI) provides communications services to residential, business and wholesale customers. The company offers residential telephony, cable television and Internet access services. NTL also provides national and international carrier telecommunications, satellite and radio communications, as well as digital and analog television and radio broadcast transmission services. NTLI - NTL Incorporated $64.05 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL MAR 70 NUD CN 3616 0.50 70.50 6.3% 0.7% * SELL CALL APR 65 NUD DM 2857 3.80 68.80 10.1% 5.5% SELL CALL APR 70 NUD DN 3436 1.90 71.90 6.7% 2.6% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BEARISH PLAYS - CREDIT SPREADS All of these positions are favorable candidates for "bear-call" credit spreads, based on the current price or trading range of the underlying issue and its recent technical history or trend. The probability of profit from these positions may be higher than other plays in the same strategy, due to disparities in option pricing. However, current news and market sentiment will have an effect on these issues, so review each play individually and make your own decision about its future outcome. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ADBE - Adobe Systems $36.46 *** Nothing Bullish Here! *** Adobe Systems (NASDAQ:ADBE), the leader in network publishing, offers a comprehensive line of software for enterprise and creative professional customers. Its products enable customers to create, manage and deliver visually rich, compelling and reliable content. Adobe Systems helped launch the desktop publishing revolution in 1982 and is at the heart of the next publishing revolution, network publishing. Network publishing is about making reliable, visually rich information available to anyone, anywhere, on any device. Today, Adobe offers a comprehensive line of software for enterprise and creative professional customers. ADBE - Adobe Systems $36.46 PLAY (conservative - bearish/credit spread): BUY CALL APR-45.00 AEQ-DI OI=1813 ASK=$0.15 SELL CALL APR-40.00 AEQ-DH OI=3803 BID=$0.65 INITIAL NET-CREDIT TARGET=$0.55-$0.60 POTENTIAL PROFIT(max)=12% B/E=$40.55 __________________________________________________________________ VSEA - Varian Semiconductor $40.85 *** Chip Sector Slump! *** Varian Semiconductor Equipment Associates (NAASDAQ:VSEA) designs, manufactures, markets and services semiconductor processing equipment used in the fabrication of integrated circuits. The company's product line includes EHP-200 and EHP-500 products, EHPi-220 and EHPi-500 products, VIISion 80 LE and VIISion 200 products, and VIISta products. Varian also provides customer support and services such as The Varian Introduction Support Teams and Varian Productivity Transfer Teams, FAB Care Plus, VEDoc and Remote Assist. VSEA - Varian Semiconductor $40.85 PLAY (conservative - bearish/credit spread): BUY CALL APR-50.00 UES-DJ OI=80 ASK=$0.45 SELL CALL APR-45.00 UES-DI OI=61 BID=$1.00 INITIAL NET-CREDIT TARGET=$0.60-$0.70 POTENTIAL PROFIT(max)=14% B/E=$45.60 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ STRADDLES AND STRANGLES ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Based on analysis of the historical option pricing and technical background, these positions meet the fundamental criteria for favorable volatility-based plays. __________________________________________________________________ AIG - American Intl. Group $74.28 *** Probability Play *** American International Group (NYSE:AIG) is a holding company that, through its subsidiaries, is engaged in a wide range of insurance and insurance-related activities in the United States and abroad. AIG's activities include general and life insurance operations as well as financial services, retirement savings and financial asset management. AIG's general insurance subsidiaries are multiple line companies writing substantially all lines of property and casualty insurance. One or more of these companies is licensed to write substantially all of these lines in all states of the United States and in approximately 70 foreign countries. AIG - American Intl. Group $74.28 PLAY (speculative - neutral/debit straddle): BUY CALL MAY-75.00 AIG-EO OI=17191 ASK=$2.55 BUY PUT MAY-75.00 AIG-QO OI=1147 ASK=$3.20 INITIAL NET-DEBIT TARGET=5.50-$5.60 INITIAL TARGET PROFIT=$2.85-$4.10 __________________________________________________________________ SLB - Schlumberger $74.28 *** Volatile Sector! *** Schlumberger Limited (NYSE:SLB) is an oilfield services company that supplies technology, project management and information solutions that aim to optimize performance for customers working in the international oil and gas industry. The firm is comprised of two primary business units. Schlumberger Oilfield Services supplies a wide range of products and services that support core industrial operational processes. WesternGeco, jointly owned with Baker Hughes, is a large seismic company that provides advanced acquisition and data processing surveys. SLB - Schlumberger $74.28 PLAY (speculative - neutral/debit straddle): BUY CALL MAY-65.00 SLB-EM OI=2941 ASK=$3.00 BUY PUT MAY-65.00 SLB-QM OI=646 ASK=$3.90 INITIAL NET-DEBIT TARGET=6.60-$6.75 INITIAL TARGET PROFIT=$3.45-$5.15 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* OneStopOption.com Trade: Securities, Stock Options, Futures Contracts Service: Experienced Brokers Personal Assistance Convenience of One Brokerage Online and Live Broker Trading Experience... 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