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Daily Newsletter, Sunday, 03/21/2004

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The Option Investor Newsletter                   Sunday 03-21-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Don't Look Now!
Futures Market: See Note
Index Trader Wrap: DOWNWARD PULL
Editor's Plays: Second Chance
Market Sentiment: Strength Hard to Find
Ask the Analyst: No desire to take possession on Triple Witch
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 03-19        WE 03-12        WE 03-05        WE 02-27
DOW    10186.60 - 53.48 10240.1 -355.47 10595.5 + 11.63 - 35.11
Nasdaq  1940.47 - 44.26 1984.73 - 62.90 2047.63 + 17.81 -  8.11
S&P-100  543.68 -  6.24  549.92 - 18.53  568.45 +  3.91 -  0.33
S&P-500 1109.74 - 10.83 1120.57 - 36.29 1156.86 + 11.91 +  0.84
W5000  10852.98 -115.20 10968.2 -346.24 11314.4 +141.50 + 29.34
SOX      463.35 - 21.75  485.10 - 19.15  504.25 +  1.99 -  7.99
RUT      570.74 - 12.10  582.84 - 16.70  599.54 + 13.98 +  5.67
TRAN    2786.83 - 76.26 2863.09 - 29.98 2893.07 -  9.12 + 10.01
VIX       19.15 +  0.85   18.30 +  3.82   14.48 -  0.09 -  1.47
VXO       19.16 +  0.44   18.72 +  3.92   14.80 +  0.04 -  1.49
VXN       25.99 +  0.69   25.30 +  3.22   22.08 -  0.79 -  1.25
TRIN       1.93            0.44            1.40            1.26
Put/Call   1.03            1.05            0.79            0.73
******************************************************************

Don't Look Now!
by Jim Brown

While the talking heads were focused on the battle in Pakistan
and the market analysts were talking about option expiration
and S&P rebalancing the SOX quietly headed south. As if
escaping under the cover of al Qaeda news the semi stocks
ignored several upgrades and a strong book-to-bill report to
break support at 475 and break the back of the market as well.

There were no material economic reports on Friday but I doubt
it would have mattered. The market makers managed to pin the
S&P at resistance before the open and once the index options
were settled the ugly began. We traded flat on very low volume
until 2:30 with everyone wondering which forces would control
our fate. There was no material news out of Pakistan and the
news we did get seemed to point to a longer resolution than
everyone first thought. It could be days before the military
can overcome the resistance and sort through the rubble. They
were ordering up a couple more regiments to aid in the battle.

While we waited there was a battle underway in the markets
with the bulls and bears trading control several times during
the day. The battle fought to a draw about 1:PM and the
waiting for end of day option volatility began. At a little
after 2:30 Art Cashin reminded viewers on CNBC that the S&P
was being rebalanced at the close and within five minutes
the bottom fell out of the S&P.

The rebalancing was due to the +$3.8B in new stock being
issued by GE. This increase in market cap meant index fund
managers had to buy more GE and sell small amounts of the
499 other stocks in the S&P. Between Art's reminder at 2:30
and the close the S&P lost -10 points. The high/low range
before that had been five points for the entire day and
centered around 1120. We closed at 1110. Ironically GE fell
like a rock in the last hour despite the doubling of shares
traded for the day in the last hour. GE went from 19M to just
over 40M in the last hour. One analyst suggested the hedge
funds had accumulated shares to sell into the expected bounce
while other funds were hoping for the bounce to unload shares
of what has been an under performer. With funds seeing a net
-$1.5B outflow of cash for the week ended on Wednesday they
may have been targeting the expected rebalancing bounce to
raise cash. Unfortunately the joke was on everyone it appears
as far more sellers appeared than buyers. The net result was
net selling on the S&P without any compensating bounce in GE.

Obviously option expiration may have had some impact in the
end of day market direction but that did not prevent some
serious confusion at the close. With the potential for a
resolution in Pakistan over the weekend you would not have
expected anyone to hold shorts over the weekend. Since we
did go down and go down sharply it would suggest there was
some serious sell side action where traders were simply
getting out of the market. This is disturbing to the overall
sentiment picture.

I kept watching the Russell all day and it was the strongest
of all the indexes and held at the high end of its range. At
least it held until 3:PM. About 15 min after the S&P began
to implode the Russell followed suit. Whether it was the
copycat syndrome where strong selling in one index begets
selling in others OR small cap bears combined with options
expiration triggered stops. Small cap mutual funds saw
outflows of -$1B in the week ended Wednesday.

What we should have been watching more closely was the SOX.
The index gapped down on a strong book-to-bill number. That
should have been a clue. The 1.14 number was lower than the
prior number of 1.19 but only because shipments grew much
faster than orders. Orders grew +6.5% for the month and
shipments +11%. No weakness there and orders have been
accelerating since June-2003. In fact orders are at a three
year high. It did not seem to matter to the semi sellers.
The drop was blamed on weak comments from Taiwan Semi, the
worlds largest contract foundry. The chairman of TSM said
he expects spending on new plants and equipment to fall by
as much as 50% next year. He expects new plants being built
in China to lead to over-capacity. He also said he expected
global semi growth to slow to 10% in 2005 from 26% in 2004.
TSM just doubled its capex budget to $2 billion last October
and the announcement they were cutting it back to $1B was
a shock to analysts. It also did not help to have an
assassination attempt on the president and vice president
of Taiwan on Friday.

Obviously the news was a shock to traders as well. The SOX
tried to rise around lunch time as dip buyers bought support
at 473 once again but the rebound attempt was weak. A climax
spike to 479 at 11:40 was the peak and the downhill slide
began immediately and accelerated into the close. The SOX
ended up losing -17, -3.6% for the day. The worst of the
damage was the failure at support. For the last eight days
the SOX has held at the 473-475 level despite some serious
selling in techs. This was the line in the sand launch
point for any potential April earnings run. There will be
no earnings run if the SOX does not participate and after
Friday's action I now have serious doubts.

If we back up and look at the market from a broader
perspective we can watch the current weakness as it unfolds.
Using the Dow as a starting point we had a very nice run
that began last year. The spurt into January pushed the
index to 10705 on Jan-26th and we spent the next six weeks
trying to break that high. Once it became apparent the
rally was tired everyone started expecting a profit taking
correction. We have seen that over the last two weeks. The
bad news is the lack of the expected rebound. The difference
between a profit taking correction of -5% to -10% and the
beginning of a trend change is the lack of a rebound. We
are at the point where that rebound must occur or we are
going to retest the corrections lows and I am not optimistic
that retest will hold.

Where we would normally be seeing some bargain hunting in
various stocks after a week at the market lows there is
little buying interest. Intel for instance closed at $26.50
and a seven month low. MSFT closed at $24.63 and a ten-month
low. The damage is not limited to techs. PFE, the second
largest company by market cap, closed at 33.95 and a four
month low. Others at or near multi month lows include Dow
components HPQ, MRK, UTX, GM and JNJ. About the only stocks
holding the high ground are the materials stocks and the
home builders.

The dip that looked like a normal correction at first is
starting to look like just a consolidation pause before
another dip. Obviously we will not know that until we
actually break support at 10000/1900 but the outlook based
on the indexes is far from positive.

But what about the economy? Isn't it growing? Yes, from all
accounts it is actually picking up speed. Commodity prices
are continuing to spike with a price curve that looks like
the Nasdaq during the Internet bubble. All the manufacturers
are scrambling for raw materials with things like copper
and steel seeing shortages in many areas. This is due to
the global expansion not just the U.S. economy. Earnings
are continuing to climb with First Call quoting 15.9% as
of Friday for Q1 earnings. It was estimated at 13.4% at
the end of January. Warnings have been almost nonexistent.
Productivity is still climbing, interest rates are very low
and the goldilocks economy appears to be returning.

Unfortunately where you and I think this should be a good
reason for stocks to be moving up instead of down there is
ample evidence that economic prosperity does not necessarily
translate into a strong stock market. Normally, yes but as
I have explained many times in the past, the market is always
looking 6-9 months into the future. Over the last couple
weeks I have discussed the potential for weakness after the
April earnings cycle due to the election and the potential
for negative expectations. I have mentioned numerous times
that earnings comparisons after the April cycle will become
much more difficult given the slow economic growth. None of
this is news to anyone.

What I think helped change the picture was the Madrid bombing.
Those that were planning on selling in May and going away
have accelerated their timetable with the al Qaeda threat
returning. Also, changing the outlook was the sudden
emergence of John Kerry as a possible winner. Suddenly the
administrative and economic picture became more cloudy. Tax
cuts are no longer guaranteed and a more restrictive period
may be ahead. Oil prices are continuing to rise and closed
over $38 on Friday. The $40 level has been the top for 20
years. The last two times it touched that level were before
the 1991 Desert Storm and again just before the Iraq war
last spring. Already economists are starting to warn that
oil prices are going to impact profits as well as consumer
spending. A break over $40 could have a very serious impact.
Enough of this negativity. You and I may not want to consider
it but we do need to look at the worst case in the markets.

The best case would be a retest of the lows and a drop all
the way to 10000/1900 just to get it over with then a rebound
into April earnings. I do not see any potential for moving
back to the highs but we could see a significant rebound
from our present levels. This bullish case is built on and
depends on no material earnings warnings over the next couple
weeks, no new terrorist attacks and positive cash flow into
funds. It makes no difference what you and I think about
economic and market direction if funds continue to suffer
negative cash flow. That is the true voting booth for the
stock prices.

The bearish case assumes there is more wrong with the
market picture than what we see on the surface. The parade
of analysts on stock TV are pounding the table to buy the
dip and investors are taking money out of the market. Do
you see something wrong with this picture? I know from
experience that trying to out think the market is an
exercise in futility. Once you get a couple turns correctly
and start believing you know what is going to happen the
market does the opposite. That means we always have to
have an alternate plan and that plan is to trade the trend.
That trend may have changed on Friday with the collapse of
the SOX. I still want to hold on to my hope for one more
rebound into April but I am not going to bet money on it
until it happens.

I want you to do something for me. Don't think about
Donald Trump's hair.

I told you not to do it but I bet an image of the world
famous comb over just jumped into your consciousness. I
did that to prove a point. Now look at the charts below
without any bias. I have removed the names and prices to
help. The black line is the 100 dma. What do you see?
Which charts would you buy? Remember, no bias.

Chart 1


Chart 2



Chart 3



Chart 4


Chart 5


Chart 6



Chart 7




If all those charts represented the health of the market
would you give it a passing grade? Would your bias be
positive or negative? Obviously by shortening the time
frame I have taken away all the long term bias that most
charts would give the casual investor. I admit I am very
easily swayed by past events and past trends. We all are.
We tend to unconsciously subscribe to the theory that a
"body in motion tends to remain in motion" and looking at
the markets over the past year they have definitely been
in upward motion. Part of our bias comes from expecting
things to continue doing what they have been doing.

If you had to make an investment decision on Monday on
those charts above would it be to buy, sell or remain on
the sidelines?

The first chart is easy because it is a three-month chart
of the Nasdaq. Would you buy that chart? I would probably
pass. Most people if asked on the street would probably
say the Nasdaq has been in a bullish uptrend. Has it?
You might be surprised to know that the Nasdaq has only
had one up week out of the last nine and only three up
weeks this year. Uptrend? Yes, from March to January,
not from January through March.

The Nasdaq closed down -22 points at 1940 and seems a sure
bet to test 1900 next week. Fortunately for the Nasdaq the
200dma is rapidly approaching that same level and techs
are normally bought at that level. The NDX closed below
1400 on Friday and the QQQ traded three times its normal
volume in the last hour. I look for both to test their
200dma as well.

Nasdaq Chart - Daily


NDX Chart - Daily




The second chart is the SOX. The SOX peaked at 560 and
the high of the year on January-12th. There has been
literally dozens of semi upgrades since then and all to
no avail. I shortened the timeframe on the chart to
illustrate a point. If you expand the time frame you can
always find a critical point to support your trend in motion
stays in motion theory. But if you look at the shorter term
trend the outlook is much different. Using the longer term
chart below and the support break on Friday I would say
our risk is to a much lower level. KLAC is the largest
weighted stock in the SOX at 10% and it broke major support
and fell -2.50 on Friday. It is trading at a five month low
and well above its next support level. We could easily see
another -$5 drop in KLAC. AMAT also broke support and looks
very weak. The SOX closed exactly on the 200dma.

SOX Chart - Daily


KLAC Chart - Daily


AMAT Chart



Chart three was the Dow and by itself may not suggest a
strong negative bias but a definite change in trend. The
trend that changed was the consolidation trend. The Dow
peak was on Feb-11th with successive lower highs into the
middle of March. There was a climax high on Feb-19th
where a higher high was reached but it quickly retraced
to a lower low the next day. Everyone continued to pin
their hopes on a recovery to higher highs on the fact
that we were not making lower lows. We were simply trading
in a consolidation range with 10400 on the bottom and as
long as that range held we bought the dips and sold the
tops with the expectation that a higher move was coming
once all the excess was worked off. The justification for
that thought process was the uptrending support line from
December. Once that support broke the alarms went off and
support at 10400 became the critical level to watch. Now
that all pretenses of support including the 100dma have
been broken there is no real support below us until we
hit the 9600-9800 level. 10000 is round number psychological
support but there is no recent technical basis.




Chart four was Intel. If Intel is the proxy for the semi
sector and techs in general then what does the chart below
suggest will happen. The congestion support at $27-29 barely
slowed its decent and the next likely target is $24. Intel
has broken all reasonable support and is accelerating to the
downside. Do not expect the Nasdaq to recover until Intel
finds a bottom.

Intel Chart - Daily



Chart five was GE and as the proxy for manufacturing, the
economy and the market it is not painting a positive picture.
It is fighting to stay above $30 but after closing below the
200dma and the unexpected drop on the S&P rebalancing it does
not look promising. The next real support for GE is $28 and
I would be surprised if we saw any institution buying before
that level. Once a stock breaks the 200dma it loses a lot of
institutional support. That is normally a sell signal for
funds. This could have added to the volume at the close on
Friday.

GE Chart - Daily



Chart six was the S&P-500 and this is the only real chart
that suggests we may still have a chance at a rebound. The
uptrend support and the 100dma are just over 1100 and that
round number support is critical for this market. The S&P
is a much broader indicator of market health than the Dow
and tech stocks make up 27% of the index.

I have explained in recent articles that the market top
coincided exactly with the 50% retracement of the S&P from
the market top in 2000 to the market low in 2002. If the
uptrend support does break the next logical support level
is the 38% retracement at 1067 followed by much stronger
support at 1000. Extrapolating an S&P drop to 1000 projects
a much lower Dow and Nasdaq and I am not trying to make any
case for that today. I am only exploring the worst case
support levels.

S&P-500 Chart - Daily




Chart seven was the Russell. I have been a fan of the Russell
for some time and it has influenced my bullish bias considerably.
Unfortunately the Russell is struggling. The uptrend support
has been broken and it is barely above the 100dma. At this
point I think we are looking at a clear double top and that
average is about to break. The Russell has rebounded +85% in
the last year and came very close to matching its all time
closing high from 2000. It is the only index to come even
close to recovering all of its losses. The risk now is that
funds with huge gains from this rebound will see the break of
the 100dma as confirmation that the rally is over and begin
closing positions at a faster rate. You can see the battle
being waged between the average and the uptrend support where
we have seen seven days of long candles. If support eventually
fails then we could be faced with a standard retracement of
the gains. A -38% retracement would be almost exactly 500.
Obviously a -70 point drop in the Russell would be a major
hit and would be very ugly.

Russell Chart - Daily




I did not go through this exercise just to say that the
market is going lower. I only wanted to demonstrate that
the trend had changed and despite positive economics and
earnings we could easily go lower. We need to consider both
directions when we are researching a potential position.

The optimist view of the charts above would be looking for
a rebound from 10000/1900 with the S&P holding 1100. The
drop at the close left the S&P at 1109, the Dow at 10186
and the Nasdaq at 1940. Obviously the numbers do not match.
The S&P normally drops one point for every ten Dow points.
That is a rough average but close. The Nasdaq equivalent
is about three points. The S&P is the most widely used
index for measuring the market and is seen as the benchmark.
Using the SPX at 1109 this suggests a drop to 1100 would
put the Dow around 10100 and the Nasdaq at 1910. That would
be a new low for the Nasdaq by -17 points but would put the
Dow right on 10100 and its support lows from this week. The
term support for Dow 10000-10100 is used loosely. There is
no real technical support at those levels, only emotional.
A -25% retracement of the March bottom to Feb top would be
9919 and 9867 from the Oct 2002 bottom to top.

If I had to watch only one thing next week I would watch
these levels. SPX 1100, Dow 10100 and Nasdaq 1900. If there
is any chance for an earnings rebound into April those
levels must hold because a support break there would cause
too much technical damage. (As if we have not seen enough
already)

Nobody knows what really caused the market drop at Friday's
close. Expiration, rebalancing, profit taking or fear of
weekend news events. Nobody knows what will happen at the
open on Monday. Did they find Osama or his lieutenant? Did
we trip some magic buy level at the close? I personally
would like to believe the market will rebound at last ditch
support but we have had a lot of those levels broken day
after day recently. Keene and Keith, both Elliott Wave
followers in the Futures Monitor, are expecting one more
wave up to SPX 1138, Dow 10400. I would like to believe
that but the semiconductor implosion on Friday bothers me.
I have been telling you to watch for a break of 475 as the
confirmation for a trend change and Friday's 463 close sure
does qualify. However, if you are grabbing at straws today
that is also exactly the 200dma for the SOX. Tech stocks
have a strange way of rebounding at those levels but I
would not be placing bets on this one. All eyes will be on
the SOX on Monday and a break of the 200dma could seal our
fate.

I am sure I have totally confused everyone with my various
scenarios but the bottom line is we are at a crossroad. If
we break those support levels (1100/10100/1400) there will
be no bulls left in the corral. Actually there were no bids
on Friday so maybe they already left. Despite all the option
expiration and S&P rebalancing volume we only managed to
trade 3.6B shares across all markets. Very paltry. Down
volume was 3.5:1 over up volume. There are no economic
reports on Monday or Tuesday so nothing to stir up the
markets. Choose your direction carefully next week and
follow the trend. Sounds like a corny clichi but betting
against could be expensive.

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

DOWNWARD PULL
By Leigh Stevens
lstevens@OptionInvestor.com

THE BOTTOM LINE –
I thought we might have seen the lows for this current correction
in the week before last, but Friday's renewed downward pull makes
me wonder. Of course it came on a triple witching options
expiration and the selling came late without apparent "news"
connected to it.  There is also nervousness ahead of the next
round of full-blown earnings releases coming up next month.

The indices may hold at or above 1100 in the S&P 500 (SPX),
10,100 in the Dow, and the low-1900 area in the Nasdaq Composite
(COMPX). Of course major support is seen at Dow 10,000 and could
be the key test if 10,100 give way. The Nasdaq looks the most
vulnerable to breaking to new lows given the Semiconductor (SOX)
Index closing under its prior mid-December (down) swing low.

Money managers seem too complacent on the S&P being in a mild
correction only for the market to move into a strong renewed
uptrend, especially ahead of seeing Q1 earnings. The recent rally
failed just under the prior SPX lows in the 1125 area, which now
looms as significant resistance. It looks best to trade for
short-term objectives and let the market sort itself out as to
the next major move. Technically, longer-term weekly oscillators
need to fall further before the market is again really oversold.

FRIDAY'S TRADING ACTIVITY –

BULLS ARE WONDERING HOW LOW THEY CAN GO –
The S&P 500 (SPX) has now shed nearly 5% off its highs from
earlier this month. The Index closed at 1118.8, off about one
percent or 12.5 on Friday. The Nasdaq Composite has fallen double
the SPX corrective figure and the COMPX is now fully 10% off its
peak of late-Jan (at 2154) and closed on Friday, down 22 points,
to 1940.4.

Not much news, some rumors – short sellers were in short supply
most of the day – until about 3 pm Eastern – as there was the
still active talk about a possible capture of the #2 to Ben Laden
in Pakistan.  A wild fight was going on for sure.

Indexes spent the day not doing much until option expiration
activity seems to take over according to our man Jeff (Bailey).
UTX (United Technologies) put a bit extra selling pressure on the
Dow Industrials on a ratings cut and the stock lost nearly 3%.

There wasn't much news as I mentioned, as the market waits for
the main season for Q1 earnings reports coming up in April.
Decliners outdid advancing stocks by nearly 2 to 1 on the NYSE
and nearly that much on Nasdaq.

A triple witching day, so it remains to be seen if there is
Monday downside follow through.  A surprise capture?  There may
not be much buying interest otherwise and on such a surprise it
may be more short-covering in nature.

OTHER MARKETS –

Bond prices were off a bit on Friday (6/32nds). For the week, the
benchmark 10-year Treasury was off slightly after a 3-week rally.

Bonds have been trending higher since the weak jobs report early
in the month. The 10-year note was at 101 and 26/32nds to yield
3.78 – this versus 3.76 a week ago. Not much change for sure, but
prices were lower given the higher yield than the week before.

I still remember my Sociology Prof saying that an INVERSE
relationship is when two related factors move in the opposite
direction - when one is up, the other is down.  Never knew that
this would come in handy when I traded bonds many years later and
needed to remember that with prices up, yields are down and vice
versa.

The dollar staged a rebound on Friday trading in New York, based
on the possibility of the capture of al-Qaida's #2.  The rise I
should say was against the Euro - against the Yen there was
virtually no change.  The dollar gained nearly a full percent
again the Euro and closed in New York trading at 1.2272

The backdrop to the dollar/yen steady trade was that dollar
buying had been going most of this month by Japanese central
authorities – on Friday talk around the FOREX market was that the
Ministry involved would stop trying to keep a lid on the rise of
the Yen and might for now stop trying to keep the U.S. currency
from falling.

Japan usually wants to buck the trend to a rising yen, based on
not wanting to see the price (in dollar terms) of their exports
going up.

MY INDEX OUTLOOKS –

S&P 500 Index (SPX) – Daily chart:
SPX need to get, and hold, above 1125 to suggest a renewed
uptrend.  If the recent rally is the approximate mid point in a
corrective down leg – this is plausible given the wide double and
triple top formed over several weeks – if so, a measured move
objective (2nd down move is equal to the first) is to around 1060.
Given that this is the area of the 200-day moving average it
would not be too surprising either. The S&P 500, and the
component stocks will often pull back to the area of the 200-day
average after a prolonged uptrend.

The key is whether recent lows in the 1105 area are penetrated
especially on a close.  If so, an immediate next downside
objective is to 1080 with the next lower objective to 1060.




A move down to the area of the 200-day average would give me some
confidence that the correction was near an end as I think
institutional buy support will be found in this price zone. This
kind of a move would then suggest entry into Index calls.

SPX and OEX put purchases have a favorable risk to reward on
another rally, assuming "risk" is held to exiting puts on a close
over 1125 basis the S&P 500. Downside profit potential at that
point should well exceed risk, given the risk that 1100-1105
might get penetrated.  My assessment of market sentiment, as
mentioned, is that participants are complacent that the
correction won't be much deeper.  Maybe, maybe not.

THE BIGGER PICTURE –
S&P 500 Index (SPX) – Weekly chart:
Good to look at the bigger picture when at a juncture like this
and from the weekly chart it can be seen that:

- The major resistance hit at recent highs
- Recent lows were at an up trendline, more or less reflecting the
rate of change on the rally from the fall
- The RSI on an 8-week basis is falling, but is still at a
midpoint and is not yet reflecting an oversold reading.

The market will get oversold again if the market just goes
sideways or drops lower.  Either or.  Stay tuned.





S&P 100 Index (OEX) – Daily chart:
PATTERNS -
The S&P 100 (OEX) didn't quite complete a 50% retracement of its
last advance from its mid-November low to the first of several
tops it made.  Just on this basis, the correction could be deeper
still and be within what is a "normal" retracement.  Something I
keep in mind.  The other is that the strongest chart support is
still well under where the Index has gotten to so far on this
pullback.  The dashed green line suggests that this line of
support is around 527.  Heavy resistance is assumed to be at 557-
558, in the area of those late-Jan/early Feb relative lows.





INDICATORS –
Traders have been trading a lot of equities puts relative to
calls – enough so to pull my Equities Call/Put indicator down to
it lowest level, in terms of the 5-day average (magenta line),
since October, around the time of the start of a major rally.  I
don't rely on this indicator in isolation.  If the chart pattern
gets more bullish with a close above 550 – and ability to hold
this area on subsequent pullbacks – this Indicator will have
greater weight in terms of my trading.

The 14-day stochastic is indicating a first oversold reading.
This alone is not enough to get bullish, as it can stay in this
lower area for a while.  At a minimum however, it suggests that
one more shot down, say to 535, or worst case, a brief dip below
530, would set up a great Index call buy in my estimation.  Stay
tuned. As to put suggestions, the hourly chart is next -

S&P 100 Index (OEX) – Hourly chart:
Basis the hourly chart, would favor puts on signs of rally
failure in the 555-560 area. Those who held puts from the area of
the triple top at 565-570, profit taking is suggested on a move
to the lower end of the trend channel, especially to the 542-540
area.  At that point, the longer stochastic (21-hour) would
likely be fully oversold again also.




Dow Industrials (INDU) Daily:
Based on the appearance of this pattern and the Friday close, it
does look quite likely that the Dow has another dip to the lower
envelope line and to test key support at 10,000.  When buying
interest wanes, selling doesn't usually dry up and institutional
buy support come in until there is a retreat to a recognized
support point.  The other, more major support will likely kick in
if there was a decline to the area of the 200-day moving average
intersecting currently in the 9800 area.

The rounding top pattern formed in the Dow and outlined below is
of interest and not seen on the S&P indices.  Often after this
kind of arc pattern there is a sharp sell off once prices fall
off the midpoint (of the circular pattern) on the right side.




The Dow Index (DJX) has first resistance at 103-103.3, next at
104.25, then has a more significant resistance overhang at 105.3
– only a close above this area in fact, and the ability to hold
this point on subsequent pullbacks, would suggest that upside
momentum had been regained.

Nasdaq Composite (COMP) Index  – Daily:
Support, at the lower end of the hourly downtrend channel is at
1920, then 1900.  Momentum is down as measured by the longer
range (21-hour) stochastic and measuring the 3-day trend. No
doubt there could be some follow through weakness into Monday-
Tues before another rally attempt. Rallies have not been too
impressive so far and, as mentioned before, the SOX Index is
leading the way lower in that it fell to a new closing low.




I've been figuring to buy calls in NDX or QQQ (or, buying the
stock) based on the Nasdaq Composite getting to the low-1900
area.  I still favor this for a trade, but am somewhat less
convinced that this could be a "final" low.  Maybe best to look
at the Nasdaq 100 and QQQ next.

Nasdaq 100 (NDX) Index  – Daily & Hourly:
The new low close for this move ended the week on a definite
bearish note.  Below support in the 1400 area, next support is at
1380 at least as implied by the intersection of the lower trend
downtrend channel line.

First resistance is at 1430, then 1440, at the upper boundary of
the downtrend hourly price channel.  Basis the daily chart, the
key resistance is at 1455-1460, the area of the relative lows of
February.  Significant support, once broken, often "becomes"
resistance.




I lean to buying NDX calls, and exiting puts in the 1380 area,
looking for another rally attempt with a (at most) 40-point
objective.  My exit or stop point if this trade was realized
would be to 1370.

Nasdaq 100 tracking Stock (AMEX:QQQ)– Daily & Hourly:
As is often the case with QQQ, areas of buying (support) and
selling interest (resistance) are pretty well defined on the
hourly chart on the right.  Repeated recent highs in the 35.5
area show this as first resistance, then at 36 – the area of
prior lows.  Finally, taking a clue from the upper trend channel
boundary, next resistance is 36.5.

Support is implied around 34.5 based on the lower trend channel
line. A cluster of prior lows going back to December, show up on
the daily chart in the 33.80 area.  I think the stock is a buy on
dips under 34 if seen, with a relatively close stop-out point at
33.5, looking for a recovery rally to at least 35.5 or perhaps to
36-36.5 which I see as more significant technical resistance.




Those short the stock or holding puts – I would use the same
price points I outline above as potential support and take the
money (profits) and run.  You may disagree and figure that we are
in a new tech bear trend – but, the Nasdaq segment of the market
is now quite oversold relative to the S&P.

The 8-week RSI on QQQ is now at 32 (not shown) – it can dip under
30 for sure, but the odds increasingly favor a rebound at some –
some decent tech earnings and there will be another buy binge in
those stocks we just can't stop lovin as we dream of another tech
boom some day.

TRADER'S CORNER article –
My past week's musings (3/18/04) were on the principle methods
that I use to find support and resistance technically.  See -
http://www.OptionInvestor.com/traderscorner/tc_031804_2.asp

AND, keep those cards and letters (e-mails) coming, especially
that relate to trading/technical analysis tools I use and abuse.

Good Trading Success!


**************************
2004 Stock Traders Almanac
**************************

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special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

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**************
Editor's Plays
**************

Second Chance

In last weeks play suggestion on SYMC I mentioned trying to
buy it on a dip to the bottom of the channel. We did not
get much of a dip, only -$2, but we are moving closer to
the $42 level. With a week less time available I definitely
suggest the July option. If you can get a fill at the $42
level I would use the July-$45 call. Just be aware that
the Nasdaq is not in the best of health and calls could
be tough. Despite the Nasdaq weakness SYMC and EBAY have
failed to crumble. A helium balloon still goes lower in a
down elevator. Nothing is bullet proof forever.

Symantec Chart - Daily




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

DNA traded down to $102.41 this week from its $114 high.
A week too late for me. Several readers that stuck with
the play emailed me their successes. I think they just
wanted to rub it in. (grin)


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


Confused?

If you read my market wrap this weekend you should be
completely confused about market direction. The answer
I arrived at after several hours of research was a strong
likelihood that we were going lower, maybe much lower.
However, there are just enough straws to grasp to suggest
that we may see once more bounce from 1100/10000/1900.
If that bounce does occur I am looking for resistance at
10300.

I am undecided on how best to play this. Do we buy calls
at Dow 10100 when there is little to suggest a material
bounce will actually happen? Or do we try and buy puts
on any bounce back to the 10300 range? Whichever one we
don't choose will be the correct one.

Based on the Elliot Wave projections from Keith and Keene
they are looking for a return to 10400/1138. I would be
really surprised but then I have seen them hit the numbers
more than once.

I am thinking the best plan is to be safe not sorry. Buying
calls at 10100 has a greater risk in my opinion. Odds are
very good we will hit 10100 but once there the direction
may not be up.

I am more comfortable with trying to play the downside
from a higher level. We saw 10325 fail three days straight
last week and the odds are good it will fail next time
as well. If the Friday sell off was a combination of
random factors then it is possible we could see a rebound
on Monday. Finding a high profile al Qaeda person in the
rubble over the weekend could help.

I want to target 10300 as an entry point to buy the April
$102 DJX puts. I would estimate they would cost $1.50 with
the Dow at 10300.

The stop loss would be Dow 10400 and the profit target
will be Dow 10000.

We may never be filled on these if we fail to rebound or
any rebound fails to reach this level but no play is better
than a bad play.

Dow Chart - 30 min




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

Strength Hard to Find
- J. Brown

Ouch!  Friday was another rough day for the markets.  Investors
were being hit left and right with non-market events.  Early
Friday there were reports that police were rushing to Washington
D.C. schools due to a bomb threat.  The current Taiwan President
and his Vice President were both shot while campaigning ahead of
Saturday's general election all while China was performing
military maneuvers off their coast.  Thankfully both men were
okay.  Meanwhile violence in Baghdad continued to heat up as we
approached the 1-year anniversary for last year's Iraq war.  On
top of it all was news of a heated battle on the outskirts of
Pakistan between the Pakistan military and what some reports
described as hundreds of heavily armed men believed to be Al
Queda supporters defending Osama's right hand man.

Yes, it was a rough day and through it all traders had to deal
with a quadruple options and futures expiration and an S&P 500
rebalancing.  The only sector to close the session positive was
the XAU gold & silver index fueled by a small gain in gold to
$412.70 an ounce.  Seems like widespread market declines have
become rather popular lately.  Market internals were naturally
bearish with losers outnumbering advancers almost 18 to 10 on the
NYSE and 18 to 12 on the NASDAQ.  Down volume overpowered up
volume 3-to-1 on both exchanges.

The markets have certainly turned defensive but traditional safe
haven stocks aren't performing very well.  That may be
misleading.  Gold stocks are doing okay and healthcare stocks are
out performing by falling less than the rest of the market.
Unfortunately drug stocks, a traditional safe haven, are getting
punished.  Searching for pockets of strength was rather
disappointing.  Nearly ever sector index I looked at aside from
the XAU was breaking down toward new relative lows or rolling
over from this week's bounce.

Checking out the COT data below this report revealed that the
commercial traders (a.k.a. "smart money) had turned pretty
bearish on the S&P in the e-mini contracts.  Oddly enough they
also turned more bullish on the Nasdaq-100 (NDX).  Could they be
expecting a bounce?  Right now the real concern is the
semiconductor sector.  The SOX tends to lead the NASDAQ up or
down and Friday's 3.6% drop fell straight to its 200-dma.  I
suspect we may see an oversold bounce before it rolls over again
but if it doesn't the NASDAQ could follow it lower rather
quickly.

We might see a bounce on Monday if the Pakistan military prevails
and we do find some high-ranking terrorists but that may only be
a temporary reprieve.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  7929
Current     : 10186

Moving Averages:
(Simple)

 10-dma: 10272
 50-dma: 10519
200-dma:  9794



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  843
Current     : 1109

Moving Averages:
(Simple)

 10-dma: 1121
 50-dma: 1137
200-dma: 1053



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1014
Current     : 1398

Moving Averages:
(Simple)

 10-dma: 1418
 50-dma: 1484
200-dma: 1378



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

The volatility indices have pulled back from their recent highs
but they still appear to be in breakout mode and that's generally
bearish for the markets.

CBOE Market Volatility Index (VIX) = 19.15 +0.62
CBOE Mkt Volatility old VIX  (VXO) = 19.16 +0.54
Nasdaq Volatility Index (VXN)      = 25.99 +1.41

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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.03        853,502       881,695
Equity Only    0.89        677,758       599,883
OEX            1.03         59,746        61,299
QQQ            2.23         55,512       123,696


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

Bullish Percent Data

           Current   Change   Status
NYSE          71.8    + 0     Bull Correction
NASDAQ-100    44.0    + 1     Bear Confirmed
Dow Indust.   80.0    + 0     Bull Correction
S&P 500       77.2    + 0     Bull Correction
S&P 100       85.0    + 0     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: 1.46
10-dma: 1.70
21-dma: 1.40
55-dma: 1.14


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


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1018      1171
Decliners    1774      1853

New Highs     119        81
New Lows       11        15

Up Volume    386M      390M
Down Vol.   1280M     1195M

Total Vol.  1696M     1615M
M = millions


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

Commitments Of Traders Report: 03/16/04

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

Hmm... there's been a lot of action in the commercial traders'
positions the last few weeks.  It's almost like they can't decide
what direction to go.  The latest data shows them switching from
net bearish to net bullish again.   Small traders are more
consistent and remain net bullish although less so than recent
weeks.


Commercials   Long      Short      Net     % Of OI
02/24/04      417,490   416,502       988     0.0%
03/02/04      411,932   418,936    (7,004)   (0.1%)
03/09/04      418,394   433,237   (14,843)   (1.7%)
03/16/04      454,635   449,505     5,130     0.6%

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
02/24/04      141,559    85,171    56,388    24.9%
03/02/04      148,383    84,135    64,248    27.6%
03/09/04      155,947    88,317    67,630    27.7%
03/16/04      159,054   115,023    44,031    25.3%

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

Whoa!  Commercial traders have turned very bearish on the
S&P e-mini's.  Contract volume in both longs and shorts have
soared but they bought almost 90K new shorts pushing bearish
sentiment to new levels not seen in weeks.  Small traders
also increased their positions but remain bullish.

Commercials   Long      Short      Net     % Of OI
02/24/04      320,425   387,255    (66,830)  ( 9.4%)
03/02/04      344,805   395,112    (50,307)  ( 6.8%)
03/09/04      431,623   485,268    (53,645)  ( 5.9%)
03/16/04      472,809   574,241   (101,432)  ( 9.7%)

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
02/24/04     129,894     63,524    66,370    34.3%
03/02/04     119,382     67,453    51,929    27.8%
03/09/04     135,233     76,558    58,675    27.7%
03/16/04     192,136     96,691    95,445    33.0%

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


NASDAQ-100

Commercial traders are continuing this bullish trend and
hit another new high in bullish sentiment.  Is everyone
just buying the dip?  Small traders may have taken notice
as they nearly doubled their number of long contracts but
then the more than doubled their short contracts.  At least
the brokers are making some money on commissions.

Commercials   Long      Short      Net     % of OI
02/24/04       47,266     40,452     6,814    7.8%
03/02/04       49,959     41,059     8,900    9.8%
03/09/04       57,368     46,082    11,286   10.9%
03/16/04       68,285     54,899    13,386   10.9%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  13,386   - 03/16/04

Small Traders  Long     Short      Net     % of OI
02/24/04       12,388     7,310     5,078    25.8%
03/02/04       11,605     7,128     4,477    23.9%
03/09/04       15,533     8,070     7,463    31.6%
03/16/04       27,859    18,333     9,526    20.6%

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

Not too much change here for the commercial traders although
they've become significantly less bullish than recent weeks.
Small traders are moving the other direction and becoming
less bearish!


Commercials   Long      Short      Net     % of OI
02/24/04       27,176    13,918   13,258      32.3%
03/02/04       27,594    14,166   13,428      32.2%
03/09/04       26,867    12,845   14,022      35.3%
03/16/04       32,317    17,514   14,803      29.7%

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
02/24/04        6,509    14,919   (8,410)   (39.2%)
03/02/04        6,898    15,874   (8,976)   (39.4%)
03/09/04        7,053    19,159  (12,106)   (46.2%)
03/16/04       10,002    20,970  (10,968)   (35.4%)

Most bearish reading of the year: (12,106) -  3/09/04
Most bullish reading of the year:   8,523  -  8/26/03

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


**************************
2004 Stock Traders Almanac
**************************

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special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

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Intro to Options Trading Success Video - $84.95 value

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***************
ASK THE ANALYST
***************

No desire to take possession on Triple Witch

I received a plethora of questions this week regarding this
quarter's Triple Witch expiration, where questions surrounded
various observations and comments I made throughout the past
week-and-a-half.

Several questions surrounded "Max Pain," and while most everyone
understood the concept of how it is derived, I'm going to try and
show a graphical representation of how "Max Pain" levels can be
viewed in graphical form, which really looks like a bell curve.
This may also bring some clarity as to the sector bullish % bell
curves we've discussed in prior Ask the Analyst columns.

On Friday, March 19, 2004, the MARKET itself gave proof that an
option expiration, especially a Triple Witching expiration, can
see a high degree of volatility take place, where on March 19,
2004, the equity markets saw a sudden decline in the last hour of
trade, with the S&P 500 Index (SPX.X) 1,109.78 -1.11% sliding
7.15 points, or 0.64%, where at the time of the decline, there
were no major news announcements.

In this weekend's Market Wrap, Jim Brown will discuss some news
that was released earlier Friday morning regarding the
Semiconductor sector.  News I was not aware of, until after
Friday's close.

While the Semiconductor Index (SOX.X) 463.35 -3.6%, a sector we
covered in a February 29, 2004 Ask the Analyst column, lead
Friday's list of sector declines, where Jim's Market Wrap will
shed light as to the "why," I do believe there are some
observations made on Friday, in the OptionInvestor.com Market
Monitor (as it was happening), where Friday's Triple Witch
expiration may be telling to a more cautious stance being taken
from market participants.

First, let me confess my incorrect analysis as it relates to my
thoughts that we might see a more bullish session on Friday,
where at 12:00 PM EST, many of the option-related observations I
had been making as to options market makers wanting to see a
NASDAQ-100 Tracking Stock (AMEX:QQQ) $34.75 -1.66%, looked to be
unfolding just as planned when the QQQ was making a session high
of $35.45, and gravitating toward the QQQ's "Max Pain" $36.00
level.  But that was it for the highs, and the QQQ once again
headed back to the $35.00, which wasn't all that unusual, when
prior session's trade had found the QQQ edging into the $35 area,
but then regaining composure and rising back near $35.50.

However, this Friday Triple Witch, something strange happened,
where all of a sudden, it seemed as if all market participants
wanted to be seller, with few buyers to support the major
indices.  I made not prior to the close, that I had not received
a single sell program premium alert, but where market action
appeared to resemble a sudden thought of "I have no desire to
take possession of this stock."

Those not overly familiar with stock options should have a basic
concept of what the BUYER or OWNER of a call option will often
do, when they own a call option, which gives the buyer/owner of
that call option the RIGHT, but not the OBLIGATION to BUY the
underlying security at the stated price of security.

Put option BUYERS or OWNERS have the RIGHT, but not the
OBLIGATION to SELL the underlying security at the state price of
the security.

With this basic understanding of options, let's look at the just-
expired NASDAQ-100 Tracking Stock (AMEX:QQQ) $34.75 -1.65% March
Call option chain, which I've sorted in descending order.

March 19, 2004 quarterly expiration - March Calls



On the far right of the table, is this months open interest.
I've tried to show a graphical representation of a bell curve,
where a normal distribution of open interest could be observed.
When the QQQ opened for Friday's trade at $35.28, the March $35
calls (QQQCI) were IN the money, meaning that they were
profitable, and should the QQQ close above that level, the OWNER
of that call option could EXERCISE their RIGHT to buy the QQQ at
$35.00 if they wished to.  If the OWNER of that call did not want
to take possession (exercise their right to buy at $35) they
could simply SELL the option itself.  It is nearly impossible for
anyone, other than the option's market maker to truly have a good
sense of buyers versus sellers of an option, but we can see there
was a great amount of volume in the March $35 calls on Friday.
That volume could have come from speculative trading, based on a
trader's thoughts toward price direction in the QQQ itself.  The
volume could have come from OWNERS of those calls deciding that
now was not the time to be taking possession of the QQQ and
closing out their position by selling the calls.

One way a trader or investor can get a feel for what type of
volume was seen during a day, is to follow the open interest that
will be reported the following day, once all trading is
tabulated.  As a basic example, we know that at Thursday evening
close, there was 141,500 QQQ March $35 call (QQQCI) contracts
still open.  If all OWNERS of those contracts were SOLD in
Friday's trade (96,871 contracts), then open interest would fall
to 44,629.  In its most simplistic form, the SELLING of a CALL
option is considered somewhat BEARISH.  The reason for this is
that when a market participant sells a security that would only
profit from a rise in price (like a call option) the seller of
that call must be thinking that upside reward is becoming
minimal, compared to the downside risk.

In red arrows, I've pointed to three contracts, where a high
volume, relative to open interest was found in today's trade.

The March $35 call volume is not necessarily all that unusual,
considering the QQQ has been trading between $35 and $36 this
past week, and all day Friday, but one could conclude that
volumes at the $34 strike and $28 strike, representing 1.09
million and 185,200 shares of QQQ, were most likely option
contracts that were CLOSED OUT (not certain, but high likelihood)
where the OWNERS of those calls decided to NOT exercise their
right to buy the QQQ at the stated strikes.

Note the PINK "?" I placed in the above table by the March $41
Call (QQQCO) and volume of 2,000 contracts being traded.  I view
this has HIGHLY unusual, considering the QQQ trading between $35
and $36.  A time and sales check has that trade taking place at
10:50:17 AM EST, and upon intra-day investigation in how the QQQ
was trading, I can not figure out what this trade means.  But it
is HIGHLY suspicious and becomes even more suspicious in a
minute.

Now lets look at the QQQ March Put option chain, where the
OWNERS/buyers of these contract had the RIGHT, but NOT the
obligation, to sell the QQQ at the stated strike price of the
contract.

March 19, 2004 quarterly expiration - March Puts



Note the PINK "?" at the QQQ March $27 Put (QAVOA) volume of
2,000 shares.  What is going on?  A time and sales check has that
trade taking place at 10:50:28 AM EST, just seconds after the
March $41 call traded the same number of contracts.

I've never noticed this type of option trade, and I don't want to
sound like a conspiracy theorist, but should I find out that
these were errant trades, or offsetting buy/sell trades, ($10,000
per trade) I have to wonder if there was some type of direction
signal being given as to where the QQQ was going to settle on
this Triple Witch expiration.  Split the difference between $27
and $41, and I calculate $34, which might be a directional signal
for a settlement toward $34.  Again, no big deal here, but very
obscure options trade, where should I see this in the future,
might be a beneficial observation if trying to trade during
options expiration.

The QQQ puts were an integral part of my analysis for a higher
trade to be found on Friday, where I thought the market maker in
the QQQ options, would try and manipulate a higher trade in the
QQQ on Friday, in order to have the March $36 puts and the March
$37 puts (QQQOK), losing some of their profitability, as both had
high level of open interest.  While market participants (you and
me) will generally be BUYERS of call and puts, the market maker
is often the seller, and when expiration nears, we as
traders/investors will observe some wild intra-day swings, which
some believe is caused by the market makers using their clout to
buy/sell the underlying QQQ, in order to have the options
swinging wildly, to influence you and I into buying or selling
our options.  It was my thought, that a MARKET MAKER would
benefit, if he/she could get the QQQ to move higher, thus the
price of the put options falling, and therefore, increasing the
market makers profitability by today's close.

While that scenario may have been in play up until about 12:00 PM
EST, the closing price of the QQQ shows that scenario did not
work out.

And here are some things that might begin hinting of a market,
where demand for stocks (a willingness to buy being greater than
supply) is starting to be outstripped by supply (a willingness to
sell being greater than demand).

One thing I had been noting as we neared option expiration (as it
related to the QQQ) was that open interest in the March $36 and
$37 puts had been around 200,000 in each contract, where
certainly a market maker would either stand to profit, or not
lose as much money, if he/she could push the QQQ higher, if only
on Friday, to try and have the $36 and $37 put prices falling.

One note from the above table would show that open interest as of
Thursday's close, was still rather steady around the 200,000
contract level (200,000 contracts equates to 20 million QQQ
shares).  We might now think of this in regards to Friday's total
volume for the QQQ of 100.1 million shares traded, as the market
maker perhaps having to buy at least 40 million shares, should
the $36 and $37 put holders decide to exercise their RIGHT to
sell their underlying QQQ shares.

While some of Friday's first-half session gains may have
influenced some put sellers to CLOSE out their put options
contracts, the greater amount of open interest may also have been
simply too much supply for the market maker to handle.

And this is where I become somewhat suspicious to Friday's
expiration actually having an impact on trade.

Think about this.  If it is true that a market maker has a better
feel for the number of buyers and sellers in a market (if you buy
or sell an option, it goes to the market maker, where he/she
provides the liquidity for you and I to buy or sell a security)
and senses that sellers outnumber buyers, and is faced with
taking possession of roughly 40 million shares at the close of
business, what would YOU do to try and protect such a large
amount of capital?  40 million shares multiplied by $36.50?

I don't know about you, but I would buy some near-term insurance.

Here is a QQQ option chain, which is comprised of various QQQ
call and put options, which I've sorted by open interest in
descending order.

March 18, 2004 QQQ Open Interest - (Table date 03/19/04)



At 03:09:59 PM EST, I alerted traders in the OptionInvestor.com
Market Monitor, that volume in the April $35 puts was unusually
heavy.  This alert was about 15-minutes after the QQQ had dropped
quickly from $35.12 to $35.00.  Not a "big move," but somewhat
unusual given the day's trade.  At the same time, I noticed the
NASDAQ-100 Volatility Index (VIX.X) was up 2.07% and was rising
quickly (this can be created when a high number of calls are
being sold, or puts are being bought).   Something was going on,
and based on the April $35 put (QQQPI) jump in volume it may well
have been a rather large near-term hedge being placed by a QQQ
bull, that wanted to buy near-term insurance, to protect against
a decline below $35.00.  I checked an intra-day chart of the QQQ,
and at 03:10 PM EST, the QQQ was traded $35.00 to the penny.

Now, I had multiple questions and requests as to being able to
track future option open interest, for purposes of analysis.

I am not aware of a service (maybe one of the other analysts here
at OI, or maybe a subscriber knows) where you can get historical
data on option volumes and contract open interest fluctuations.

So, I have prepared the current June QQQ call and put option
chains, where we could track the changes in open interest with
the passing of time.

These two option chains can become a benchmark as to where we
stand at this quarterly expiration, and where there is current
open interest, which will change over time, for next quarter's
expiration.

As a current benchmark, June "Max Pain" is currently calculated
at $36 for the QQQ, the S&P 500 Index (SPX.X) 1,109.78 is
calculated at 1,050.00, and for the Dow Diamonds (DIA) $101.94 is
calculated at $96.00.

QQQ June Calls - Open Interest as of 03/18/04



One observation I make in the calls, is that there doesn't appear
to be any unusual volume in the June calls having taken place on
Friday.

QQQ June Puts - Open Interest as of 03/18/04



The PINK arrow shows a rather high 13,921 contracts traded in the
June 32 Puts on Friday, where we might think of this as some type
of rolling hedge, with the thought of QQQ $32 being in play
between now and June expiration.

Is their a directional bias being expressed in today's trade, as
it relates to the general direction of trade for the QQQ in
coming months?

It is impossible to say, with just one day's observation, but
sometimes, the noting of anomalies can be useful, where a trader
and investor and then benchmark from, and follow with time.

Jeff Bailey


*************
COMING EVENTS
*************

-----------------
Earnings Calendar
-----------------

Symbol  Co               Date           Comment      EPS Est

------------------------- MONDAY -------------------------------

CCL    Crnvl Corp & Crnvl    Mon, Mar 22  -----N/A-----       0.22
CBB    Cincinnati Bell Inc.  Mon, Mar 22  -----N/A-----       0.09
SKIL   SkillSoft Corporation Mon, Mar 22  After the Bell      0.04
WAG    Walgreen              Mon, Mar 22  -----N/A-----       0.42
WOS    Wolseley              Mon, Mar 22  -----N/A-----        N/A


------------------------- TUESDAY ------------------------------

ARRO   Arrow International   Tue, Mar 23  -----N/A-----       0.33
FDO    Family Dollar         Tue, Mar 23  -----N/A-----       0.46
GS     Goldman Sachs         Tue, Mar 23  Before the Bell     1.61
MKC    McCormick & Company   Tue, Mar 23  Before the Bell     0.27
RHAT   Red Hat, Inc.         Tue, Mar 23  After the Bell      0.03


------------------------ WEDNESDAY -----------------------------

RIO    Companhia Vale Rio    Wed, Mar 24  After the Bell      1.17
LNR    LNR Property          Wed, Mar 24  -----N/A-----       0.77
SIGY   Signet Group          Wed, Mar 24  Before the Bell      N/A
SONC   Sonic Corp.           Wed, Mar 24  After the Bell      0.23
SCM    Swisscom AG           Wed, Mar 24  Before the Bell      N/A
TKA    Telekom Austria AG    Wed, Mar 24  Before the Bell      N/A


------------------------- THUSDAY -----------------------------

BGO    Bema Gold             Thu, Mar 25  After the Bell     -0.01
COGN   Cognos                Thu, Mar 25  After the Bell      0.35
CAG    ConAgra Foods, Inc.   Thu, Mar 25  Before the Bell     0.38
VIP    Vimpel Communications Thu, Mar 25  -----N/A-----        N/A


------------------------- FRIDAY -------------------------------

DISH   EchoStar Comm Corp.   Fri, Mar 26  Before the Bell     0.09
IMI    SanPaolo IMI SpA      Fri, Mar 26  -----N/A-----        N/A


----------------------------------------------
Upcoming Stock Splits In The Next Two Weeks...
----------------------------------------------

Symbol  Co Name              Ratio    Payable     Executable

DCI     Donaldson Company, Inc    2:1      Mar  19th   Mar  22nd
NIHD    NII Holdings, Inc         3:1      Mar  22nd   Mar  23rd
ASFI    Asta Funding Inc          2:1      Mar  23rd   Mar  24th
COCO    Corinthian Colleges Inc   2:1      Mar  23rd   Mar  24th
RJF     Raymond James Financial   3:2      Mar  24th   Mar  25th
AMSG    AmSurg Corp               3:2      Mar  24th   Mar  25th
SCHN    Schnitzer Steel Ind, Inc  3:2      Mar  25th   Mar  26th
WGA     Wells-Gardner Elect Corp 21:20     Mar  26th   Mar  29th
HOV     Hovnanian Ent, Inc        2:1      Mar  26th   Mar  29th
MVL     Marvel Enterprises        3:2      Mar  26th   Mar  29th
APH     Amphenol Corp             2:1      Mar  29th   Mar  30th
XTEX    Crsstx nrg co, L.P.       3:2      Mar  29th   Mar  30th
GGG     Graco Inc                 3:2      Mar  30th   Mar  31st
IDSA    Industrial Services of    3:2      Mar  30th   Mar  31st
PHX     Panhandle Royalty Co      2:1      Apr   1st   Apr   2nd
TACT    TransAct Technologies Inc 3:2      Apr   2nd   Apr   5th


--------------------------
Economic Reports This Week
--------------------------

There are a lot of Fed heads speaking this week on the economy
should it could keep the market hopping.  We're still in the
middle of pre-announcement season and most of this week's
economic reports come out Weds-Thursday-Friday.


==============================================================
                       -For-

----------------
Monday, 03/22/04
----------------
Federal Reserve's Moskow speaks in Chicago

-----------------
Tuesday, 03/23/04
-----------------
Federal Reserve's Stern speaks in New Orleans


-------------------
Wednesday, 03/24/04
-------------------
Durable Orders (BB)        Feb  Forecast:    1.2%  Previous:    -2.3%
New Home Sales (DM)        Feb  Forecast:   1100K  Previous:    1106K
Federal Reserve's Guynn speaks in Tennessee
Federal Reserve's Parry speaks in Portland
Federal Reserve's Minehan speaks in New York

------------------
Thursday, 03/25/04
------------------
Initial Claims (BB)      03/20  Forecast:     N/A  Previous:     336K
GDP-Final (BB)              Q4  Forecast:    4.1%  Previous:     4.1%
Chain Deflator-Final (BB)   Q4  Forecast:    1.2%  Previous:     1.2%
Help-Wanted Index (DM)     Feb  Forecast:      39  Previous:       38
Existing Home Sales (DM)   Feb  Forecast:   6.20M  Previous:    6.04M


----------------
Friday, 03/26/04
----------------
Personal Income (BB)       Feb  Forecast:    0.3%  Previous:     0.2%
Personal Spending (BB)     Feb  Forecast:    0.5%  Previous:     0.4%
Mich Sentiment-Rev. (DM)   Mar  Forecast:    94.0  Previous:     94.1

-Amendment to the Economic Calendar-
The Feds released the January PPI data last week but have not
yet announced when the February PPI data will be released.

PPI (NA)         Date TBA  Feb  Forecast:     N/A  Previous:     0.6%
Core PPI (NA)    Date TBA  Feb  Forecast:     N/A  Previous:     0.3%



Definitions:
DM=  During the Market
BB=  Before the Bell
AB=  After the Bell
NA=  Not Available


**************************
2004 Stock Traders Almanac
**************************

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

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The Option Investor Newsletter                   Sunday 03-21-2004
Sunday                                                      2 of 5


In Section Two:

Watch List: Tech, Biotech & Gold
Dropped Calls: AET, CFC, TARO
Dropped Puts: None


**************************
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Almanac this is your chance.

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

Tech, Biotech & Gold
__________________________________________________________________

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.
___________________________________________________________________


MicroStrategy - MSTR - close: 50.76 change: -1.35

WHAT TO WATCH: Oversold or not shares of MSTR don't look healthy.
After failing at resistance several times near the $65 region
MSTR has fallen sharply in the last two weeks.  Concerns over the
company's tax rate sent the stock sinking last Tuesday but the
bounced from their 200-dma.  That bounce has failed and now
shares sit at support of $50.00 and its 200-dma.  A breakdown
here and the next stop is likely the $45 region.

Chart=


---

Newmont Mining - NEM - close: 44.38 change: +0.07

WHAT TO WATCH: Gold stocks are one of the few pockets of strength
in the markets.  NEM looks tempting given its recent high-volume
rebound above its 50-dma.  Bulls can keep an eye on it for a move
above resistance at $45.00 or the recent top near $45.75.  We'd
target a move to stronger resistance at $50.00.

Chart=


---

Celgene Corp - CELG - close: 47.26 change: -0.51

WHAT TO WATCH: This one is for the bulls and the bears.  CELG's
recent volume-powered rally to $48.50 looks pretty tempting but
bulls shouldn't consider a position until it breaks out above the
$49.00-to-50.00 level, which has been tough resistance since
September 2003.  Conversely bears might eye it as an aggressive
short.  The BTK looks pretty weak and we expect it to turn lower
next week.  This will be a drag on CELG and traders may decide to
do some profit taking.  Unfortunately for the bears CELG should
have some support at the $45 mark.

Chart=


---

Red Hat Inc - RHAT - close: 19.22 change: +0.35

WHAT TO WATCH: It's always impressive to see an expensive (P/E
409) stock like RHAT trade higher on a day when the NASDAQ and
ever tech index turned lower.  Technicals are bullish for RHAT
but the stock still has resistance at the $20.00 mark.  A
breakout over $22.00 could lead to a run toward its January highs
near $21.88.

Chart=




-----------------------------------
RADAR SCREEN - more stocks to watch
-----------------------------------

IMCL $48.07 -0.45 - Imclone has been relatively strong this past
week with new support at $45.00 holding up well.  We'd consider
bullish positions if it can breakout above the $50.00 mark.

PD $83.34 -0.95 - We're still watching PD.  Copper continues to
inch higher but PD is struggling with resistance at $85.00.  We
suspect we'll see PD retest the $80.00 level next week.

DE $66.19 +0.04 - DE was actually one of the big winners last
week but the equipment maker still has to break out over major
resistance in the $68.00 range.


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**************************
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
^^^^^

Aetna Inc. - AET - close: 87.43 change: -0.14 stop: 86.95

AET's performance has been very impressive this week and we came
within 2 cents of being stopped out on some early morning Friday
weakness.  Fortunately, traders continued to buy the dip.  Even
though AET remains strong we're going to exit. The stock looks
very overbought and volume has been fading the past several days.
Traders still looking to play AET might want to watch for a dip
to the 10 or 21-dma's.

Picked on February 29 at $80.79
Change since picked:     + 6.64
Earnings Date          02/12/04 (confirmed)
Average Daily Volume:       1.2 million
Chart =


---

Countrywide Financial - CFC - cls: 91.36 chg: -1.64 stop: 90.00

We've been cautious on CFC for days.  The stock just isn't acting
that strong for one that recently announced a 3-for-2 stock split
and should be drowning in business with mortgage rates so low.
We haven't been stopped out yet but we're going to close the
stock anyway with the drop under short-term support at $92.00.
We believe in the fundamentals here but shares just aren't
performing.  Maybe we'll get another chance to play it long in a
couple of weeks.

Picked on February 24 at $91.63
Change since picked:     - 0.27
Earnings Date          01/27/04 (confirmed)
Average Daily Volume:       2.3 million
Chart =


---


Taro Pharma. - TARO - close: 61.01 chg: -0.52 stop: 59.50

TARO just never got off the ground for us even though the double-
bottom looked so tempting.  Of course it's not all TARO's fault.
The DRG drug index's performance has been terrible.  Fortunately
for TARO it has continued to hold support at its slowly rising
200-dma.  The bad news is that it's still painting a trend of
lower highs.  Right now we suspect the next move in TARO may be
down not up.  Traders might want to consider shorting TARO if it
breaks the $59.00 mark.

Picked on March 14 at $ 61.85
Change since picked:   - 0.84
Earnings Date        02/17/04 (confirmed)
Average Daily Volume:     284 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.


**************************
2004 Stock Traders Almanac
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special and would still like to get a Stock Traders
Almanac this is your chance.

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The Option Investor Newsletter                   Sunday 03-21-2004
Sunday                                                      3 of 5


In Section Three:

Current Calls: ATH, DGX, EBAY, JNPR, LXK, RNR
New Calls: ONXX
Current Put Plays: CHIR, ETN, IVGN
New Puts: QLGC, SLAB


**************************
2004 Stock Traders Almanac
**************************

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Almanac this is your chance.

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******************
CURRENT CALL PLAYS
******************

Anthem, Inc. - ATH - close: 89.50 change: -0.56 stop: 86.50

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:
Despite being unable to sustain a move over the $90 resistance
level, ATH has been a stellar performer for us in the past week,
as it bounced strongly from the 10-dma (now $88.83) and continued
chipping away at that $90 resistance all week long.  Even on
Friday -- a weak day for the overall market -- ATH hit an
intraday high of $90.50, before pulling back to close exactly $1
below that mark.  It appears that we'll get another test of the
10-dma early next week, and aggressive traders can attempt new
entries at that level.  More conservative traders can hold out
for a dip back to test the 20-dma ($87.36) before attempting a
rebound entry.  With the difficulty the stock is having with
breaking out over $90, we aren't enthusiastic about new breakout
entries at this time.  Maintain stops at $86.50, which is just
below the bottom of the most recent profit-taking dip.

Suggested Options:
Shorter Term: The April $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 June $95
Call, while more conservative traders looking for more insulation
against time decay will want to use the June $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 in our
favor.

BUY CALL APR-85 ATH-DQ OI=2835 at $5.70 SL=3.75
BUY CALL APR-90*ATH-DR OI=1673 at $2.35 SL=1.25
BUY CALL JUN-90 ATH-FR OI=1257 at $4.40 SL=2.75
BUY CALL JUN-95 ATH-FS OI= 716 at $2.25 SL=1.10

Annotated Chart of ATH:



Picked on February 26th at   $85.37
Change since picked:          +4.13
Earnings Date               4/28/04 (unconfirmed)
Average Daily Volume =     1.47 mln
Chart =


---

Quest Diagnostics - DGX - close: 82.35 change: -0.62 stop: 79.00

Company Description:
Quest Diagnostics was the result of a 1996 Corning spinoff, and
currently holds the title of the world's #1 clinical laboratory.
DGX performs more than 100 million routine tests annually,
including cholesterol, HIV, pregnancy, alcohol, and pap smear
tests.  Operating laboratories throughout the US and in Brazil,
Mexico, and the UK, DGX also performs esoteric testing (complex,
low-volume tests) and clinical trials.  The company serves
doctors, hospitals, HMOs, and other labs as well as corporations,
government agencies, and prisons.

Why we like it:
It was a rather lackluster start for our DGX play, as the stock
traded in a very narrow range, just below resistance.  But we're
willing to be forgiving, as the stock held firm in its bullish
trend, while the broad market got hit with another painful round
of selling.  Any dip back near the short-term rising trendline
and the 50-dma (currently $80.99) look great for new entries into
the play, but remember our $83.50 trigger.  DGX needs to break
above that level before we consider buying either on a breakout
or on a pullback to support.  Options expiration certainly had an
effect on Friday, so we'll look for clarity to emerge on Monday.
Wait for the breakout before playing.  Aggressive traders can
enter on the initial breakout, while bargain hunters can wait for
a subsequent dip and bounce from support above $81.

Suggested Options:
Shorter Term: The April $80 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 $85
Call, while the more conservative approach will be to use the May
strikes.  Our preferred option is the May $85 strike, as it
should provide sufficient time for the play to move in our favor.

BUY CALL APR-80 DGX-DP OI= 142 at $4.00 SL=2.50
BUY CALL APR-85 DGX-DQ OI= 357 at $1.40 SL=0.75
BUY CALL MAY-85*DGX-EQ OI=1837 at $2.60 SL=1.25
BUY CALL MAY-90 DGX-ER OI=2810 at $1.05 SL=0.50

Annotated Chart of DGX:



Picked on March 18th at      $82.97
Change since picked:          -0.62
Earnings Date               4/22/04 (unconfirmed)
Average Daily Volume =        617 K
Chart =


---

eBay Inc - EBAY - close: 68.30 chg: -1.04 stop: 67.24 *new*

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:
Well it's been about two weeks and we haven't gotten very far
with our EBAY calls.  The NASDAQ has continued to drift lower
while the Dow's recent bounce is rolling over.  EBAY has been
stuck in a consolidation between its slowly rising 50-dma and the
$70.00 mark.  This consolidation is okay for those traders who
are still patiently waiting for another breakout over the $70.00
level as we have been suggesting the last few sessions.
Unfortunately, we were triggered on the spike above the $70.00
mark on March 8th.

This past week started out okay with some positive comments from
Goldman Sachs but they weren't enough to spark any fires under
EBAY's stock price.  YHOO tried to get things going mid-week with
two brokers upgrading its stock and EBAY followed with a rally
towards $70 but it never made it above $69.60.  We are still
cautiously suggesting that readers be patient and wait for EBAY
to trade back above the $70.00 mark before considering new
bullish positions.  We have suggested that more aggressive
players can use dips to the 50-dma as entry points but these dips
are growing more frequent and EBAY's technicals aren't looking
that healthy.  We're going to raise our stop loss to $67.24, just
under the recent lows.  More conservative types can raise their
stops to $67.50 just under the 50-dma.

Suggested Options:
Remember we're pretty cautious here and are only suggesting new
plays on a move above the $70.00 mark.  Short-term traders should
probably choose from the April or July strikes but July seems a
ways off yet.

BUY CALL APR 65.00 XBA-DM OI=18625 at $4.40 SL=2.20
BUY CALL APR 67.50 XBA-DU OI= 8124 at $2.75 SL=1.35
BUY CALL APR 70.00 XBA-DN OI=18123 at $1.60 SL=0.85

Annotated Chart:




Picked on March 09 at $ 70.05
Change since picked:   - 1.75
Earnings Date        04/20/04 (unconfirmed)
Average Daily Volume:     7.0 million
Chart =


---

Juniper Networks - JNPR - close: 24.86 chg: -0.49 stop: 23.64

Company Description:
Juniper Networks transforms the business of networking by
converting a commodity -- bandwidth -- into a dependable, secure
and highly valuable corporate asset. Founded in 1996 to meet the
stringent demands of service providers, Juniper Networks is now
relied upon by the world's leading network operators, government
agencies, research and education institutions, and information-
intensive enterprises as the foundation for uncompromising
networks. The Infranet Initiative uses Juniper Networks MINT
(Model for Infranet Transformation) as its underlying framework.
Juniper Networks is headquartered in Sunnyvale, California.
(source: company press release)

Why We Like It:
Last week we added JNPR to the call list due to its relative
strength and bullish breakout over multiple resistance levels.
Since that time we've seen the NASDAQ continue to slide lower and
the NWX networking index has followed suit.  With the major
indices sliding JNPR struggled to follow through on its breakout
and has consolidated sideways.  This should have bulls turning
cautious and preparing their exit plans if the stock and the
markets continue to head south.

Watch the NWX index.  It looks weak and is approaching the recent
low near 262, which might correlate with the recent low of $24.00
in JNPR's stock price.  If the NWX breaks 262 then the next stop
should be the 250-255 support level from November-December last
year.  This would be a major drag on JNPR.  Although we and
plenty of Wall Street analysts are bullish on the stock we would
still expect it to trade lower.  In essence the current short-
term picture isn't very bright and we strongly hesitate to
suggest new calls.  Look for JNPR to trade above its converging
40-dma and 50-dma near $26.25 to feel more confident that the
stock is going our direction.

Suggested Options:
Remember we're pretty cautious here with the NWX slipping lower.
Short-term traders can choose the April or July options.  We're
going to suggest the April 22.50s as our favorite but the 25's
look good too.

BUY CALL APR 22.50*JUX-DX OI= 7176 at $3.20 SL=1.65
BUY CALL APR 25.00 JUX-DE OI=43537 at $1.65 SL=0.85
BUY CALL JUL 25.00 JUX-GE OI=12311 at $3.10 SL=1.65

Annotated chart:



Picked on March 14 at $ 25.81
Change since picked:   - 0.95
Earnings Date        04/21/04 (unconfirmed)
Average Daily Volume:    15.7 million
Chart =


---

Lexmark Intl. - LXK - close: 88.70 change: -1.05 stop: 85.00

Company Description:
Wrapping its arms around the entire life-cycle of printers, LXK
develops and manufactures a broad range of laser, inkjet and dot
matrix printers for the office and home markets.  The company is
also the exclusive source for new print cartridges for the laser
and inkjet printers it manufactures.  Additionally, LXK provides
supplies for IBM printers and offers after-market laser
cartridges for the large installed base of a range of laser
printers sold by other manufacturers.

Why we like it:
It was starting to look like LXK wasn't going to give us another
entry point, the way it charged through resistance at $87 and
then just kept on running, all the way to $91 on Wednesday.
Fortunately, the stock finally looked back at the lagging broad
market and decided it better cool its heels for a bit.  When $90
held as intraday resistance on Thursday, LXK investors decided to
take a bit of money off the table on Friday, resulting in a
slight pullback to just under $89.  There's still a lot of space
between the current price and the first tangible support down at
the 10-dma (currently $86.52) and with daily oscillators
threatening to tip over from overbought territory, it appears the
prudent approach is to take a wait and see attitude.  Certainly
if the buyers come back in force, breakout entries can be
considered on a strong move through Wednesday's intraday high,
but the better entry now appears to be on a bounce from the 10-
dma.  LXK should not be able to significantly break the 10-dma if
there's still another leg to this upward trend, so our $85 stop
still appears to be in the right location.

Suggested Options:
Shorter Term: The April $90 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 July $95
Call, while the more conservative approach will be to use the
July $90 strike.  Our preferred option is the April $90 strike,
which is near the money and should provide sufficient time for
the play to move in our favor.

BUY CALL APR-85 LXK-DQ OI=1265 at $5.20 SL=3.25
BUY CALL APR-90*LXK-DR OI=1902 at $2.25 SL=1.00
BUY CALL JUL-90 LXK-GR OI=1179 at $5.70 SL=3.50
BUY CALL JUL-95 LXK-GS OI= 291 at $3.60 SL=1.75

Annotated Chart of LXK:



Picked on March 14th at      $85.77
Change since picked:          +2.93
Earnings Date               4/19/04 (unconfirmed)
Average Daily Volume =        963 K
Chart =


---

Renaissancere Ltd - RNR - close: 54.14 chg: +0.58 stop: 52.50*new*

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:
Surfers ready?  It looks like RNR is on its next wave higher.
The stock was boosted by the mid-week (Tues-Thursday) rally in
the IUX insurance sector but as it typical for RNR the stock
continues to march to its own beat.  We're very encouraged by its
Friday close over minor resistance at $54.00, which proved so
troublesome two weeks ago.  Short-term technicals like the RSI
and stochastics are bullish again and we hope to see RNR surf
past the $55 level soon.

If you missed the original entry near $51.00 or the suggested
entry on the dip towards $52.50 this past week picking new
positions could be tough.  RNR is less than $2.00 away from our
planned exit price at $55.95.  Thus we're not suggesting new
positions.  We are, however, raising our stop loss to $52.50.

Suggested Options:
RNR is pretty close to our planned exit point so we're not
suggesting new entries at this time.

Annotated chart:




Picked on February 15 at $50.83
Change since picked:     + 3.31
Earnings Date          02/03/04 (confirmed)
Average Daily Volume:       238 thousand
Chart =



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

Onyx Pharm. - ONXX - close: 36.07 change: +0.02 stop: 34.00

Company Description:
Onyx Pharmaceuticals, Inc. is engaged in the discovery and
development of novel cancer therapies utilizing two technology
platforms, small molecules that inhibit the proteins involved in
excess growth signaling, and therapeutic viruses that selectively
replicate in cells with cancer-causing genetic mutations.  The
company is developing a novel small molecule compound, BAY 43-
9006, in collaboration with Bayer Pharmaceuticals Corporation.
Utilizing its proprietary virus technology, the ONXX is
developing ONYX-411, a second-generation product that targets
cancers with abnormal function of the retinoblastoma tumor-
suppressor gene, and is developing Armed Therapeutic Virus
products.

Why we like it:
There's no question the December-February rally in the Biotech
index (BTK.X) helped ONXX to sustain its bullish trend, but
looking at the price action both before the BTK rally and since
the profit taking that began earlier this month and we can see
there's something else at work.  Whereas the BTK plunged all the
way through its 50-dma, ONXX once again found support just above
that support level, just as it has on numerous occasions
throughout its rally over the past year.  The stock has traded in
a very consistent manner throughout this period.  First breaking
out to new highs, then undergoing a mild consolidation, finding
support at a higher level and repeating the process.  The
pullback from the most recent rally found support near $34.50,
right at the site of the peak from late January and early
February.  Note that the bounce that began late last week
commenced from just above the 50-dma ($34.22) again.  The recent
break above $38 represented new all-time highs for the stock, so
this recent pullback to confirm support at prior resistance was
to be expected.

So consistent has the upward trend been, that it hasn't given a
single PnF Sell signal since issuing the first buy signal in this
series, all the way down at $5.00.  Obviously, the stock has long
since exceeded the bullish price target, so the PnF chart
provides no clarity on an upside objective.  Once ONXX breaks
above its $38.40 high from earlier this month, the $40 level
should be a cinch, so that will be our initial target.  A
pullback near the $35 level would be preferable for new entries,
although there's nothing wrong with entries on further strength
either.  So long as the 50-dma remains unbroken, we'll look to
buy the dips all the way up.  The key level of support will
continue to be the 50-dma, so we're initially placing our stop at
$34, just under that average.

Suggested Options:
Shorter Term: The April $35 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 $40
Call, while the more conservative approach will be to use the May
strikes.  Our preferred option is the May $35 strike, as it is
currently at the money and should provide sufficient time for the
play to move in our favor.

BUY CALL APR-35 OIQ-DG OI= 757 at $2.90 SL=1.50
BUY CALL APR-40 OIQ-DH OI=5988 at $0.85 SL=0.40
BUY CALL MAY-35*OIQ-EG OI=3107 at $3.90 SL=2.50
BUY CALL MAY-40 OIQ-EH OI=1452 at $1.60 SL=0.75

Annotated Chart of ONXX:



Picked on March 21st at      $36.07
Change since picked:          +0.00
Earnings Date                   N/A
Average Daily Volume =        569 K
Chart =



**************************
2004 Stock Traders Almanac
**************************

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*****************
CURRENT PUT PLAYS
*****************

Chiron Corp - CHIR - close: 45.90 chg: -0.95 stop: 48.30*new*

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:
The all-important drug pipeline is critical to biotechs and drug
companies alike and any time a company discontinues it research
means that is one less candidate to recoup their R&D costs.  On
Friday CHIR announced it would discontinue development of
tezacitabine.  Here's an excerpt from the company's press
release, "the company has decided to discontinue further
development of tezacitabine, a next-generation nucleoside analog,
based on an analysis of the data from a Phase II trial in
patients with gastroesophageal cancer. The compound did not
demonstrate sufficient antitumor activity in the trial to satisfy
Chiron's predetermined criteria to advance the program."

While that's sad news it's actually good news for our put play.
The stock's recent slide has picked up speed and volume is
ticking higher too.  CHIR is fast approaching our exit range of
$45-44 and its Point-and-figure chart vertical count at $44.00.
We're going to try and exit ahead of any crowd that might try and
cover their shorts as CHIR approaches $44.  We're going to set
our official exit point at $45.00, which is already round-number
psychological support.  If you think CHIR has farther to fall
feel free to keep the play open.   Readers should realize that
nothing tends to fall in a straight line for very long and CHIR
is getting rather oversold.  We will also lower our stop to
$48.30 following the simple 21-dma.

Suggested Options:
CHIR is less than $1.00 from our exit point at $45.00 so we are
not suggesting new entries.


Annotated Chart:



Picked on February 24 at $49.11
Change since picked:     - 3.21
Earnings Date          01/28/04 (confirmed)
Average Daily Volume:       1.7 million
Chart =


---

Eaton Corp. - ETN - close: 56.25 change: -1.00 stop: 58.50

Company Description:
Eaton Corporation is a global diversified industrial manufacturer
with businesses in fluid power systems, electrical power quality,
distribution and control, automotive engine air management and
fuel economy and intelligent truck systems for fuel economy and
safety.    The principal markets for the company's Fluid Power,
Automotive and Truck segments are original equipment
manufacturers and after market customers of heavy-, medium- and
light-duty trucks, passenger cars, off-highway vehicles,
industrial equipment, and aerospace products and systems.  The
principal markets for the company's Industrial and Commercial
Controls segment are industrial, construction, commercial,
automotive and government customers.

Why we like it:
To say last week was a volatile ride for ETN investors would be
an understatement, as the stock was rejected both at support and
resistance, keeping it confined between the $54.50 and $58.00
levels.  After a couple more failed attempts to decisively break
below $54.50, the buyers appeared and sent the stock sharply
higher on Wednesday in response to news of the company's
acquisition of the Electrum Group.  The stock gapped up above $57
and spent the next two days failing to advance significantly.
That had us eyeing a potential rollover entry and aggressive
traders got just that on Friday when ETN tipped over in response
to the broad market weakness.  We're not out of the woods yet
though, as we really need to see a break back under $56 to
confirm real downside potential.  And conservative traders may
still want to wait for the break under $54.50 before entering the
play.  Resistance at $58 still looks firm and it should get
stronger early next week, as the 20-dma ($58.13) drops below that
level.  Maintain stops at $58.75, just over the 50-dma.

Suggested Options:
Aggressive short-term traders can use the April 55 Put.
Aggressive traders looking for more insulation against time decay
will want to utilize the July 52 strike.  Our preferred option is
the April 55 strike, as it is currently near the money and should
provide ample time for the play to move in our favor.

BUY PUT APR-55*ETN-PK OI= 166 at $1.25 SL=0.75
BUY PUT APR-52 ETN-PX OI=  74 at $0.55 SL=0.40
BUY PUT JUL-52 ETN-SX OI= 110 at $1.80 SL=0.90

Annotated Chart of ETN:



Picked on March 11th at       $54.82
Change since picked:           +1.43
Earnings Date                1/21/04 (confirmed)
Average Daily Volume =      1.15 mln
Chart =


----

Invitrogen - IVGN - close: 68.11 chg: -0.20 stop: 70.01

Company Description:
Invitrogen Corp. provides products and services that support
academic and government research institutions and pharmaceutical
and biotech companies worldwide in their efforts to improve the
human condition. The company provides essential life science
technologies for disease research, drug discovery and commercial
bio-production. Invitrogen's own research and development efforts
are focused on breakthrough innovation in all major areas of
biological discovery including functional genomics, proteomics,
bio-informatics and cell biology -- placing Invitrogen's products
in nearly every major laboratory in the world. Founded in 1987,
Invitrogen has headquarters in Carlsbad, Calif., and conducts
business in more than 70 countries around the world. The company
globally employs approximately 3,000 scientists and other
professionals. (source: company press release)

Why We Like It:
IVGN tried to rally mid-week with the bounce in the BTK biotech
index but both the BTK and IVGN struggled with resistance.  The
resulting failed rally on Friday looks like a tempting entry
point for new bearish positions.  Obviously with the bounce some
of IVGN's technicals look a bit more bullish but we're still
seeing more volume on the declines than the rallies.  That
doesn't suggest a lot of enthusiasm from the bulls.  If you're
not willing to consider the failed rally at resistance of $70.00
and its simple 100-dma then look for a bit more confirmation with
a move below the $67.50 mark, which was support for the last day
and a half.

We're going to keep our stop loss at $70.01 and our short-term
target remains at $63.00 the same as its P&F price target.  More
aggressive traders can hope for a move to the simple 200-dma near
$60.00.  You might want to keep an eye on AMGN, the biggest
component in the BTK index, and the BTK index itself.  Both look
vulnerable to more selling next week and that's good news for us
but if they begin to strength reconsider your stops.

Suggested Options:
We would suggest the April of May puts.  Our favorite would be
the April 70's.

BUY PUT APR 70*IUV-PN OI= 206 at $4.00 SL=2.00
BUY PUT APR 65 IUV-PM OI= 461 at $1.80 SL=0.95
BUY PUT APR 60 IUV-PL OI= 217 at $0.70 SL= --
BUY PUT MAY 70 IUV-QN OI=1055 at $5.30 SL=3.25
BUY PUT MAY 65 IUV-QM OI= 752 at $3.00 SL=1.50

Annotated Charts:



Picked on March 11 at $ 67.26
Change since picked:   + 0.85
Earnings Date        02/12/04 (confirmed)
Average Daily Volume:     910 thousand
Chart =



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

QLogic Corp - QLGC - close: 40.53 change: -1.58 stop: 42.30

Company Description:
Since 1993, over 50 million QLogic products have shipped inside
servers, workstations, RAID subsystems, tape libraries, disk and
tape drives. These products were delivered to small, medium and
large enterprises around the world. Powering solutions from
leading companies like Cisco, Dell, EMC, Fujitsu, Hitachi, HP,
IBM, Network Appliance, Quantum, StorageTek and Sun Microsystems,
the broad line of QLogic controller chips, host bus adapters,
network switches and management software move data from storage
devices through the network fabric to servers. A member of the
S&P 500 and NASDAQ 100, QLogic was recently named to Fortune's
100 Fastest Growing Companies list for the fourth consecutive
year and to Forbes' Best 200 Small Companies for the fifth
consecutive year. In addition, QLogic was named to Business
Week's list of 100 Hot Growth Companies for 2003.
(source: company press release)

Why We Like It:
It was a rough week for investors in QLGC.  The stock traded
lower on Monday after rumors surfaced that a third player in the
HBA market may emerge.  Right now HBA's or host bus adapters,
that are needed for storage area networks is an industry
dominated by QLGC and EMLX.  A third competitor would immediately
squeeze margins in a fight for market share.  QLGC managed to
rally back toward resistance in its 10 & 21-dma's but that didn't
last very long.  Weakness in the semiconductor sector (SOX.X) was
very pronounced on Friday.  The SOX dropped 3.6% and closed on
its 200-dma.  QLGC followed suit with a 3.75% drop and closed
above round-number psychological support at $40.00.

If you look at the intraday chart of the SOX the drop looks
pretty ugly and leads one to believe that the selling will
continue on Monday.  However, it's easier to believe that we may
see a bounce, even just a small one, from the 200-dma.  Thus
we're expecting a small bounce in QLGC and plan to use a TRIGGER
at $39.99 to open the play for us. Until then we'll just be
spectators.  However, more aggressive traders might want to look
for another failed rally under the $42.00 level in QLGC to open
positions.  Once QLGC breaks support at $40.00 the next level of
true support appears to be the $32.50 range.  We do suspect some
support at the $35.00 level and plan to make that our initial
target.  If we are triggered our stop loss will be $42.31 but we
plan to ratchet it down quickly as QLGC falls.   P&F chart
readers will note that its bearish vertical count is only $40.00.
That could be a call for caution but sometimes a stock will
overshoot its P&F price target and this looks like a good
candidate for just such an event.

Suggested options:
We're going to suggest that short-term traders mull over the
April and July puts.  Our favorites are probably the July 40's
but the April 40's look good too.

BUY PUT APR 35.00 QLC-PG OI= 931 at $0.55 SL= --
BUY PUT APR 37.50 QLC-PU OI=1067 at $0.80 SL=0.40
BUY PUT APR 40.00 QLC-PH OI=2541 at $1.65 OI=0.85
BUY PUT APR 42.50 QLC-PV OI=1809 at $3.10 SL=1.65
BUY PUT JUL 37.50 QLC-SU OI= 326 at $2.40 SL=1.20
BUY PUT JUL 40.00 QLC-SH OI=3444 at $3.50 SL=1.75

Annotated Chart:



Picked on March xx at $ xx.xx <-- see trigger
Change since picked:   - 0.00
Earnings Date        04/27/04 (unconfirmed)
Average Daily Volume:     3.8 million
Chart =


---

Silicon Labs. - SLAB - close: 51.35 change: -2.53 stop: 55.75

Company Description:
Silicon Laboratories designs, manufactures and markets
proprietary high-performance mixed-signal integrated circuits
(ICs) for the wireless, wireline and optical communications
industries.  The company initially focused its efforts on
developing ICs for the personal computer modem market and is now
applying its mixed-signal and communications expertise to the
development of ICs for other high growth communications devices,
such as wireless telephones and optical network applications.

Why we like it:
As goes the Semiconductor sector (SOX.X), so goes the rest of the
NASDAQ, so the saying goes.  Well, if Friday's action is any
indication, the Tech bulls are in trouble.  The $470-475 level
has been rock solid support since the breakout through that level
in late October.  The SOX led the sector loser list on Friday,
with a 3.6% decline, resulting in a close right on the 200-dma at
$462.  The carnage in the SOX tipped the scales in SLAB, which up
until Friday had been trying to stage a rebound from just above
the 50-dma ($52.66).  Selling off with real conviction, the stock
smashed through its 50-dma in the process of delivering a 4.69%
loss.  It appears the only thing that stopped the slide was the
bottom of the early February gap near $51.  That and the fact
that the clock ran out.  Turning to the PnF chart, the picture
gets even gloomier for the bulls, as the stock produced its first
Sell signal since the first of the year.

That sell signal gives a tentative bearish price target of $45,
which lines up nicely with the 200-dma ($44.75), making it an
ideal target for the play.  But it won't likely make a straight
run towards that goal, with the PnF bullish support line at $49.
The first test of support is usually painful for the bears, so we
need to be careful here.  Aggressive traders can certainly enter
on a breakdown below Friday's low, but only if they're willing to
take the risk of a strong bounce from the $49 area, which is also
the site of the lows from early February.  The better entry
strategy will be to wait for that bounce to occur and look for
entries on a rollover from the $52.50-53.00 area, with the 50-dma
now likely to act as resistance.  Once SLAB trades the $50 level,
the PnF price target will drop to $42, near the site of strong
support from last December and that is certainly a viable target
for more aggressive traders.  Due to the sharp decline over the
past two days, we need to use a fairly wide stop to allow for a
near-term bounce..  Initial stops go at $55.75, just over
Thursday's intraday high.

Suggested Options:
Aggressive short-term traders will want to use the April 45 Put.
Those with a more conservative approach will want to use the
April 50 put.  Aggressive traders looking for more insulation
against time decay will want to utilize the July 45 strike.  Our
preferred option is the April 50 strike, as it is currently at
the money and should provide ample time for the play to move in
our favor.

BUY PUT APR-50*QFJ-PJ OI=1061 at $2.25 SL=1.00
BUY PUT APR-45 QFJ-PI OI=2681 at $0.75 SL=0.35
BUY PUT JUL-45 QFJ-SI OI= 328 at $3.20 SL=1.50

Annotated Chart of SLAB:



Picked on March 21st at       $51.35
Change since picked:           +0.00
Earnings Date                1/26/04 (confirmed)
Average Daily Volume =      1.40 mln
Chart =



**************************
2004 Stock Traders Almanac
**************************

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special and would still like to get a Stock Traders
Almanac this is your chance.

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The Option Investor Newsletter                   Sunday 03-21-2004
Sunday                                                      4 of 5


In Section Four:

Leaps: The Hibernation Is Over
Option Spreads: It’s Easy Being Green – With Profit


**************************
2004 Stock Traders Almanac
**************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

2004 Stock Traders Almanac - $34.95 value
2004 Option Expiration Mousepad - $14.95 value
Intro to Options Trading Success Video - $84.95 value

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*****
LEAPS
*****

The Hibernation Is Over
By Mark Phillips
mphillips@OptionInvestor.com

Fasten your seatbelts, boys and girls.  The ride is about to get
bumpy!  For the first time in a long time, we have a lot to talk
about in terms of what's going on in the market and I don't want
to waste any time.  So let's get to it.

The bear woke from his year-long hibernation and made his first
foray out to gnaw on some weak bulls 2 weeks ago.  The first hint
that perhaps this was more than some mild profit taking was the
break of the 50-dma on the DOW on March 8th and the drop through
the 50-dma on the SPX 2 days later.  There are a lot of factors at
play here, but I'm going to try to lay out some of the important
issues we need to pay attention to as we head into the April
earnings cycle and then the summer doldrums beyond that.

Last week, we talked about the recent changes to the PnF charts
for the major indices and their respective Bullish percent
readings.  For the most part, that picture is unchanged, but let's
revisit it just the same.  First up, let's talk about Bullish
Percent (BP).  The DOW is still in Bull Correction at 80%, the SPX
is still in Bull Correction, but gave up a bit of ground to 77.2%,
and the NDX actually managed to hold at 44% in Bear Confirmed
status.  As I said, very little change here.

But turning to the actual PnF charts of the major indices, we see
that the picture has worsened from a bullish standpoint.  The Sell
signal on the DOW lengthened, stretching the bearish price target
down to 9400, which is significantly below the bullish support
line at 9550.  In the PnF sense, a break below 10050 will issue
another Sell signal and give credence to the notion that the DOW
has significantly further to fall before finding strong support.

The SPX is still a long ways from issuing any sort of bearish PnF
signal, but as you'll see below, there are some serious problems
brewing for the bulls here.  But for now, the bulls don't have any
warning signs flashing in terms of either BP or PnF charts.  What
the bears will want to see is a rebound back to the 1140 level,
giving a 3-box reversal up and then a break down under the 1100
level.  That is the most likely scenario for a future PnF Sell
signal and you can bet we'll be watching that picture closely.

The PnF chart of the NDX looks downright ugly.  The current Sell
signal on the PnF chart has a target of 1390 and we got really
close to that on Friday, with the close at the low at 1398.  It is
the pattern on the PnF chart that causes the most concern though,
as the failed rally attempt was turned back right at the bullish
support line and a break to 1390 or below will give a reinforcing
Sell signal.  If you take the time to look, you'll notice that the
NDX is now drawing a bearish resistance line, which rests up at
1470.  And reinforcing that resistance, we can see the 50-dma
(1484) on the standard price chart starting to curl down for the
first time in a year.

Aside from the NASDAQ, I'd have to say that the big picture from
the PnF and BP world is indeterminate.  There are some signs of
weakness, but nothing conclusive yet.  It is the rest of the
picture I want to paint this afternoon that I think will have the
bulls sitting up and taking notice.  First up, let's revisit the
monthly chart of the SPX, something we haven't done for several
months and I think you'll agree it is due for another look.

Monthly Chart of the S&P 500



I'm the first to admit, I really didn't think the market would
make it this high, but they don't call it the Great Humiliator for
nothing.  But the POTENTIAL bearish divergence we were looking for
late last year appears to still be on course.  Note how price ran
into a veritable brick wall at the 50-month moving average and has
since tipped over pretty convincingly.  We do have a bearish cross
on the monthly Stochastics, but that won't really confirm until at
least the fast line (blue) crosses down out of overbought
territory.  Right now we have much higher oscillator highs and a
slightly lower price high.  That's textbook bearish divergence if
it confirms.

Next up, let's take a look at price action from the standpoint of
Dow Theory.  As I've detailed in the past, Dow Theory looks at the
inter-relationship of the different DOW indices -- Industrials,
Transports and Utilities.  I view the action between the
Industrials and the Transports as the most significant and if the
charts can be believed, we're at a very important inflection point
right now.

Daily Chart Montage -- Dow Industrials vs. Dow Transports



The Transports surged to a new high in late January, along with
the DOW pushing through the 10,600 barrier.  New highs on both
indices, confirmed by new highs on the Utilities (not shown) was a
Bull Confirmed signal, but there were a lot of internal factors
pointed to this being a weak confirmation.  The first hint of a
problem was the Industrials pushing to a new high in mid-February,
but with the Transports having broken down and posting a much
lower high.

The key event to watch after that lower high on the Transports was
whether or not the 2/03 low of 2815 would be violated.  Sure
enough, that low was taken out with the weakness in the past
couple weeks, and that is the first leg of a Dow Theory Bear
Confirmed signal.  Next we turn our attention to the Industrials.
As we've discussed, the DOW suffered a significant breakdown,
taking out the 50-dma and then smashing through horizontal support
near 10,400.  That plunge didn't stop until just under the 10,100
level and it appears that rebound is already losing steam.  If the
Industrials break below the 10,092 low of 3/15, then we'll have a
confirmed Dow Theory Bear signal.  The trifecta and final
confirmation will come from the Utilities breaking their own 50-
dma and taking out the 3/12 low of 272.

Take a look at the weekly charts of both the Transports and the
Industrials and you can see the Stochastics are in full-on power
dives towards oversold territory.  They might turn on a dime and
give short-cycle bullish reversals starting on Monday, but that
isn't the way I'd place my bets.  But let's not stop there when
there is so much other very interesting data to look at.  Next up
is our trusty friend the VIX.  Putting aside the issues of the
integrity of the data due to the recalculation that was put in
place last year, I think we can state that the VIX is coming back
to life.

Weekly Chart of the VIX



This is the third time since last April that the VIX has attempted
to move above the upper boundary of the descending channel.  Both
of the earlier attempts in August and September were short-lived,
but this time things look a bit different.  Not only did the VIX
close over the top of the channel a week ago, but this week it
spent the entire week ABOVE the top of the channel.  I may be the
eternal optimist, but it certainly looks like the VIX is finally
moving out of the doldrums that have kept it becalmed for the
better part of the past year.

We've talked a fair amount in the past about the fictional rally
in the DOW and the fact that when we pull out currency effects,
we're left with a market that has been flat-lined for much of the
past year.  With all the strength seen in the metals of late, I
thought it would make sense to take another look in that area.
First up is the DOW vs. Gold chart that we've looked at in the
past.

Weekly Chart of the DOW Industrials vs. Gold



With the break of the year-long rising trendline last week, the
picture looks pretty ominous from where I sit.  Gold really hasn't
moved up very far since its recent pullback, but this trend break
could be an early sign that mining stocks are going to be coming
back into favor.  I'm sure you've noticed that Silver has been on
the move as well, as it often moves in tandem with gold.  It has
been a bit of a laggard to the yellow metal until fairly recently
and then it really took off.  If we use it to measure the strength
of the equity market, we get a more exaggerated picture.

Weekly Chart of the DOW Industrials vs. Silver



The ascending trend vs. silver broke much earlier, as the price of
silver sky-rocketed through the $6.00 level and just kept right on
soaring.  If we view silver as a currency, we can see just how
much more valuable it has become in relation to the paper shares
of the DOW.  Now as we know, silver is both a precious metal and
an industrial metal.  Gold has been rather stagnant for the past
couple months as it endeavors to build a new higher base from
which it can launch the next leg of what I feel will be a history-
making bull market.  On the other hand, silver has been soaring.
Could it be the demand for industrial metals is rising?  What's
one of the key industrial metals that can be used as a metric for
whether an economy is heating up?  If you guessed copper, give
yourself a pat on the back!

Weekly Chart of the DOW Industrials vs. Copper



All right, I don't care how you slice it, that is an ominous
picture.  When the DOW vs. Copper ratio broke support just under
100, it just went into absolute free-fall.  You see all of these
metals represent something tangible that has intrinsic value.  The
DOW does not.  Oh sure there's the nebulous assumption of value as
when you buy shares of the DOW, you're getting a piece of 30
companies that provide a stream of earnings, some of which is
returned to share-holders in the form of dividends.  With the
exception of MO with a yield of 4.94%, the dividend yield from the
rest of the DOW is a joke and I don't see how anyone can justify
buying the DOW even at these levels and thinking that they're
buying anything with intrinsic value.  No, they're buying a piece
of paper solely on the hope that it will go up in price so they
can then sell it to someone else at a higher price.  With dividend
yields absurdly low and P/E ratios absurdly high by historical
measures, none of my readers should mistake buying the DOW at
current levels as anything close to purchasing a tangible asset.

That said, I wouldn't say that equities can't rise to even higher
levels.  It just won't happen on the basis of value.  Trading the
swings is one thing and a practice that we traders engage in on a
regular basis.  But 'buy and hold' investing at this level is
simply insane, in my "never to be" humble opinion.

Coming back to our DOW/Copper chart, that action is largely due to
the price action in copper, as up until the past 2 weeks, the DOW
had essentially been flatlined for weeks.  So let's take a look at
a chart just of copper and see what it has to say.

Weekly Chart of the DOW Industrials vs. Copper



In order to show all the pertinent details, I had to go to a
monthly timeframe, as we can see the futures price is now back to
testing the highs from 1995.  A very clear double bottom formation
formed between mid-1999 and late 2001, then price broke above the
multi-year descending trendline in early 2003 and then we got a
confirmation of the double-bottom pattern as price moved through
95 late last year.  That's when the price of the metal simply took
off.  Copper is up nearly 40% in less than 3 months.  What is
going on here??  Copper is NOT a precious metal at all -- it is
simply an industrial metal and its price tells us one of two
things.  Either demand is strongly rising or else we're getting a
very clear confirmation of rampant inflation.

On the one hand, we can clearly see the root cause for a demand-
driven rise in price.  China and much of the Far East are coming
on line and building up industrial economies of their own and they
are demanding vast quantities of everything from copper to crude
oil to steel.  Vast quantities of global production are moving
overseas due to the cost of labor, and that (along with
Greenspan's productivity miracle) are causing a nearly non-
existent rebound in domestic employment.  But the little talked
about reality is that at the same time, China and India are in the
process of building up strong industrial economies so that in the
future they can be self sufficient.

The other side of the coin is perhaps investors have peeked around
the curtain and seen the reality that Emperor Greenspan really
does have no clothes.  All the protestations that risks between
inflation and deflation are roughly balanced is a ruse.  Imports
from China and much of the far east are the equivalent of imported
deflation.  This is being countered by the unprecedented levels of
monetary inflation that the Fed has engaged in over the past 3
years.  Print enough dollars and their value will go down.  While
that works great for debtors -- like the U.S. government that is
seriously up to its eyeballs and getting deeper to the tune of
half a trillion dollars per year -- it has a long-term
inflationary effect.  Not by making products more expensive, but
by making our dollars worth less and rapidly on the way to
worthless.

I think what we're seeing in the Copper chart and to a lesser
extent on the Silver chart is the vote by the big money pros that
the Fed is going to win and that monetary inflation is going to
beat imported deflation, at least over the near term.  We've seen
that reality borne out in the recent CPI reports and with last
week's release (finally) of the PPI, we saw that even with an
extra six weeks of time to manipulate the data, the headline
number came in at 0.6%.  I don't care how the wonks at the BLS
want us to view the data on an annualized basis, I do my math the
old-fashioned way.  Multiply 0.6% by 12 months and I get 7.2% as
an inflation rate.  I wonder what we'll see when the February
numbers arrive.

I've gone on much longer than I originally intended to with this
discussion, but as noted at the top, I told you there was a lot to
cover.  And in reality, I've glossed over a lot of issues, simply
due to the lack of time and space.  In a nutshell, I think the
commodities markets are talking, no make that screaming at us that
inflation is here right now.  The Fed got their wish and will get
the privilege of doing battle with the inflation monster again.  I
expect we'll see inflation come on much more strongly in the
months ahead and even if the employment market does not improve,
the Fed will be forced to act by raising interest rates to cool
off the rampant price rises that are already incredible.  Just
remember, if you want to understand the absolute core of what is
happening in ALL financial markets, it is all about the dollar.

Greenspan and Bernanke have printed literally tons of them and
that additional supply has significantly lessened their value.  As
a result, everything that is denominated in dollars is rising.
Real estate, stocks, bonds, commodities, art, jewels, it's all the
same.  The value in dollars is rising, even though the TRUE value
hasn't changed.  All right, I could go on about this topic for
several more pages, but I must get to the individual plays before
I run into my deadline.  Fortunately, it was a pretty calm week
for our playlist, all except for our SMH play.  So let's take a
look, before it gets any later.

Portfolio:

SMH - If the Semiconductors are the key to the Technology market,
then the picture is turning downright ugly.  We've waited long
enough for this play to come to fruition and it looks like we're
finally going to be rewarded.  Support for the SOX in the $470-475
area finally broke on Friday and the index fell right to its 200-
dma.  The SMH broke down below the bottom of its descending
channel and closed beneath its 200-dma ($37.88).  More
importantly, the PnF chart finally issued that elusive Sell signal
with the trade under $38 and now we have a bearish price target of
$30 to work with.  I would expect a near-term bounce, but the
bearish trend got a lot stronger last week.  Continue to keep
stops at $42.50 and look for next support in the $36-37 area.  My
expectations are for a decline to at least the $32-33 level before
a solid bottom can be put in place.

NEM - We've had to wait longer than I initially expected, but gold
and gold stocks appear to be in the final stages of building their
higher base.  No significant support levels were violated in this
pullback from the recent highs, as gold, the XAU index and our NEM
play have all held up well above their respective 200-dmas.  The
dollar may be just about done with its oversold bounce and if that
is in fact the case, we can look for NEM to resume its upward
trend quite soon.  The first sign that the bullish trend is really
resuming will be for NEM to move back over $46 on a closing basis
and then we can feel comfortable raising our stop to $40.  For now
though, we're still in consolidation mode, so our stop remains
down at $37.  Near-term dips into the $42-43 area are still viable
for fresh entries.  Our insurance put served its function by
protecting our position throughout the past few months of
consolidation.  Since March options expired on Friday, we no
longer have any insurance on the position, but I'm thinking it may
no longer be necessary.

HD - As if to just cause us a little added consternation, HD
bounced back pretty strongly last week.  Rebounding back into the
middle of the bear flag pattern we've been watching, the stock
pushed right up to the top of the long-term descending channel
near $37 before rolling over on Friday.  The jury is still out on
whether the bulls or the bears are going to win this stalemate,
but my vote still goes with the bears.  Look first for a breakdown
under $35 and then the 200-dma to confirm the downtrend is getting
underway.  One note from the weekly chart that looks encouraging
is the fact that we have a confirmed bearish crossover on the
Stochastics oscillator.  I still like entries near the top of the
falling channel, with stops placed comfortably above strong
resistance and the 200-week moving average at $41.

MLNM - It looks like we could have indeed gotten a better entry
point by waiting for a dip to the $17 level or below, but MLNM
hasn't really given us any cause for concern yet.  Well actually,
there is one potential problem and that is the fresh PnF Sell
signal, that came complete with a bearish price target of $14.50.
Fortunately, that is above our $14 stop, so things still look all
right.  MLNM did dip below the bottom of its rising trendline, but
recovered back above it by the end of the week.  The stock remains
in the consolidation zone that it has inhabited for the past 3
months, with the bottom of that horizontal channel holding firm
near $16.75 last week.  I still like entries near current levels,
but more conservative traders may now want to wait until the stock
can get back over $19.50 and issue a new Buy signal before
playing.  One note about MLNM and its PnF chart -- it has given a
number of false Sell signals in the past year, none of which have
achieved their respective targets.  And throughout this process
over the past year, MLNM has yet to challenge its bullish support
line.

CHK - Without sounding blasi, I have to say not much of substance
happened with our CHK play last week.  It continues to be confined
within its lower rising channel that we pointed out last week.
Natural gas prices are still supporting a bullish position here
and we're now just waiting for the necessary consolidation to run
its course before the bullish trend reasserts itself. CHK is
holding up much better than the broad market, so that is one more
notch in favor of the play.  Look for a breakout over $13.50 to
confirm the bulls are once again gaining traction and maintain
stops at $11.

SNDK - Given the carnage in the Semiconductor sector last week
(especially on Friday) I'm actually pleased with the performance
of our new bullish play on SNDK.  The stock did fall back towards
support, but not with any great conviction.  This continues to
feel like some healthy consolidation before the stock can finally
get moving back up the charts.  The first milestone that will
confirm the stock's bullish prospects will be a breakout over the
$30 level.  On the other hand, a break below the February low near
$23.50 would be a serious concern.  Maintain stops at $21.50.

LUV - It really hasn't been a very encouraging start to our LUV
play, but given the weakness in the rest of the market and
particularly the Transports, it's hard to fault the stock.  It's
still holding within the descending channel and we won't have a
strong bullish indication until it can close above the top of that
channel (currently $14.25).  Further weakness just gets us closer
to what our initial entry point was supposed to be, and I favor
rounding out to full positions on dips near the $12.00-12.50 area.
This is an aggressive play, as we're attempting to pick a bottom
in a weak sector, but I think it is a warranted risk, given the
stock's performance over the past few years.

Watch List:

TYC - We've seen TYC struggling to hold above support for the past
couple weeks, after notching a new recent high above $30.  So the
question we have to ask is "Is the trend reversing?"  That's a
valid question, as we can see on the weekly chart that the
Stochastics have given a confirmed Sell signal, dropping out of
overbought again.  As noted previously, that has happened twice
before in the past year and both times presaged a bullish entry
point.  So I'm inclined to stick with the dominant pattern on the
daily chart, that of a continually rising channel that has
contained price for the past year.  Our entry target at $26 is
still near the bottom of the channel and just over the 100-dma, so
that strategy still makes sense.  Buy a bounce from the bottom of
the channel and set a liberal stop at $23, which should then be
under the 200-dma.

EBAY - After the technical damage that has been done to the
overall market in the past 2 weeks, I'm having some serious second
thoughts about our EBAY play.  Weekly Stochastics are threatening
to give a sell signal and support at the 50-dma is weakening.
EBAY is set to report earnings on April 21st, so if there's going
to be a run into the event, it will likely start in the next week
or two.  We'll stick with the action plan of buying a dip under
$67 and then rebound back above.  But I want to put the caveat in
that this is a very aggressive play, given its rich valuation,
extended nature on the daily, weekly and monthly charts and the
nascent weakness in the overall market.  The other side of the
coin is that EBAY is showing tremendous strength relative to all
the major indices.  I still like the play, but understand the
risks before venturing in.

Radar Screen:

WMB - I'm still on the fence about initiating a Portfolio play on
WMB.  Strength in the energy sectors has helped the stock
stabilize above the 200-dma, but we have the issue now of a Sell
signal on the PnF chart with a price target down at $5.50.  I
still favor a wait and see attitude here, especially with the
weakness we're seeing in the rest of the market.

APA - More and more, it looks like we missed our ride on APA.
Rather that weakening with the rest of the market, the stock is
flirting with a breakout to new highs.  I'm never wild about
initiating new bullish long-term plays at new all-time highs, so
clearly we just need to wait for a better entry.  If APA makes a
solid breakout, then I think we'll have to drop it and hope for a
better opportunity in the future.

GM - I really expected to see more of a bounce in GM thatn what we
saw last week, but then I really wasn't expecting to see the
overall market behave this badly either.  I like the downside in
the stock, but with weekly Stochastics already oversold, I just
can't see a viable entry at this time.  My hope is that we'll see
a strong bounce from the 200-dma and that bounce will run out of
gas below the top of the long-term descending channel.  When that
move rolls over up near the $50-52 areas, then we'll have a
technical setup that we can sink our teeth into.

DJX - I said I wouldn't consider another bearish DJX play until
the market gave us a compelling reason to do so.  Well, I think
from all the commentary above, you can see that the market has
obliged on that front.  I'll be listing a new Watch List play on
the DJX next weekend, and we'll be targeting entries in the $104-
105 area, with a downside objective near $96.  I would have added
it this weekend, but I simply ran out of time.

Closing Thoughts:
If it sounds like I'm getting a bit more conviction to the
downside, then I've amply conveyed my mindset.  There are a lot of
things beginning to work in the bears advantage, with PnF Sell
signals on the DOW and NDX, the SOX breaking down, the VIX coming
back to life, a lack of real employment growth and rampant
inflation (to the point that even the government bean counters
can't hide it).  We can't go whole hog bearish, but I think we can
start thinking about the downside for position trades.  I still
think it will be into 2005 before either the bottom of the equity
market falls out or we see rising interest rates from the Fed, but
that view is subject to change based on what we see from the
PPI/CPI reports in next month or two.  Regardless of what emerges
on that front, it looks like investors are starting to wake up to
the reality that perhaps the bear market of 2000-2002 was just on
holiday -- it didn't go away.

Have a great week!

Mark


LEAPS Portfolio

Current Open Plays



LEAPS Watchlist

Current Possibles

SYMBOL  SINCE    TARGET PRICE  TARGETED LEAP  SYMBOL

CALLS:
TYC    03/07/04   $26          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
EBAY   03/14/04   $67          JAN-2005 $ 70  ZQX-AN
                            CC JAN-2005 $ 65  ZQX-AM
                               JAN-2006 $ 70  YEU-AN
                            CC JAN-2006 $ 65  YEU-AM
                            PP JUL-2004 $ 60  XBA-SL



PUTS:
None


New Portfolio Plays

None


New Watchlist Plays

None


Drops

None


**************************
2004 Stock Traders Almanac
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************************
Option Spread Strategies
************************

It’s Easy Being Green – With Profit
By Mike Parnos, Investing With Attitude

The profits continued to flow.  This month we didn’t need to back
up the truck to carry them away.  A hatchback will do.  But the
CPTI now has an additional $1,950 in its coffers, compliments of
speculators everywhere.

The March option cycle was the fourth cycle in the second year of
tracking our Couch Potato Trading Institute portfolio.  With our
$1,950 profits, we’ve now accumulated a total of $11,430 in five
short months.
_________________________________________________________________

Summary Of March Positions
OEX Iron Condor – Profit: $1,440
RUT Iron Condor – Profit: $2,200
MNX Iron Condor – Loss: $500
BBH Siamese Condor – Loss: $1,150
Total Profit:  $1,950.00
_____________________________________________________________

REVIEW OF MARCH CPTI POSITIONS

OEX (S&P 100 Index) Iron Condor – 543.68
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).  Maintenance:  $12,000.  Profit: $1,440.

RUT (Small Cap Index) Iron Condor – 574.55
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.  Profit: $2,200

MNX (Mini-NDX Index) Iron Condor - $141.78
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).  Total net
credit was $.90 ($1,800).  Our range was violated and we closed
the position for $2,300.  We took in $1,800.  Result:  $500 loss.

BBH (Biotech Index) - Siamese Condor - $144.62
Sold 10 BBH March $145 calls and sold 10 BBH March $145 puts for
credit of $6.95.  Bought 10 BBH March $160 calls and 10 BBH March
$130 puts for debit of $.70.  Total net credit was $6.25 ($6,250).
Our profit (safety) range & bailout points were $138.75 to
$151.25.  We closed the position for a loss of $1.15 ($1,150).
______________________________________________________________

NEW APRIL CPTI POSITIONS (From Thursday’s Column)

April Position #1 – SPX Iron Condor – 1109.78
We sold 4 SPX April 1075 puts and bought 4 SPX April 1050 puts for
credit of: $2.50 (x 4 contracts = $1,000).  Then we sold 10 SPX
April 1170 calls
And bought 10 SPX April 1180 calls for a credit:  $1.40 (x 10
contracts = $1,400).  Total net credit and potential profit of
about $2,400.  Maximum profit range is 1075 to 1170.  Safety range
is about 1072.60 to 1177.40.  Maintenance: $10,000
_____________________________________________________________

April Position #2 – RUT Iron Condor – 570.74
We sold 10 RUT April 530 puts and bought 10 RUT April 520 puts for
a credit of  $1.10.  Then sold 10 RUT April 610 calls and bought
10 RUT April 620 Calls for a credit of $1.15.  Total net credit of
about $2.25.  Potential profit: $2,250.  Maximum profit range: 530
to 610.  Safety range: 527.75 to $612.25.  Maintenance: $10,000.
______________________________________________________________

April Position #3 – XAU Iron Condor
Sold 10 XAU April 95 puts and bought 10 XAU April 90 puts for a
credit of  $.85 (x 10 contracts = $950).  Sold 10 XAU April 110
puts and bought 10 XAU April 115 puts for a credit of $.55 (x 10
contracts = $550).  Total net credit: $1.40.  Potential profit:
$1,400.  Maximum profit range $95 to $110.  Safety range: $93.60
to $111.40.
_____________________________________________________________

April Position #4 – OSX Calendar Spread Plus – 105.56
OSX is the Oil Index.  This is a play on the common belief that
oil prices will continue to move up over the next month or two.
Bought 10 OSX June $115 calls (36 delta) and sold 10 OSX April
$115 calls (23 delta) at a cost of  $2.15 ($2,150).

We also put on an April $100/$90 bull put spread and took in an
extra $.70 ($700) to reduce the cost basis to $1.45 ($1,450).
______________________________________________________________

ONGOING POSITIONS
QQQ ITM Strangle – Ongoing Long Term -- $34.75
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.
April: Apr. $34 calls and $37 puts – credit of $750
Total credit: $8,050.

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 – 543.68
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
maturing in seven years at a value of $100,000.  The principal
$100,000 investment is guaranteed.  We’re trading the remaining
$26,000 to generate a “risk free” return on the original
investment.

Long Term: Bought 3 OEX Jan. 2006 540 calls @ $81 (x 300 =
$24,300)
March: Sold 3 OEX 585 calls @ $3.10 (x 300 = $930)
March: 535/525 Bull Put Spread for credit of $1.10 (x 300 = $330)
March: Bought back 3 OEX March 585 calls for $.10 & sold 3 of
March 560 calls for $1.35.  A credit of $1.25 x 300 = $375.00.
March: Bought back March 560 calls for $.15, locked in profit of
$120 x 3 = $360.
Current cash position is $3,320 ($1,620 plus the unused $1,700).

April: New Position
OEX Bull Put Spread - $543.68
Sell 5 OEX April 515 puts and buy 5 contracts of April 505 puts
for credit of  $.90 (x 5 contracts = $450).

Sell 5 OEX April 570 calls for $1.35 (x 5 contracts = $675).

_____________________________________________________________

MARCH QUICKIE RESULTS – Batting 100%
We were three for three this month.  March quickies yielded a
total of $3,700 of profit.  Combination of luck and skill.  That’s
a great combination.

Quickie #1: RUT – 570.74 – Iron Condor
Sold 10 RUT March 560 puts & bought 10 RUT March 550 puts for a
credit of  $.65 (x 10 contracts = $650).  Sold 10 RUT March 600
calls and bought 10 RUT March 610 calls for credit of $.80 (x 10
contracts = $800).  Total net credit of $1.45.  Potential profit:
$1,450.  Result:  $1,450 profit.

Quickie #2: BBH – 143.62 – Siamese Condor
Sold 10 BBH March $145 calls and sold 10 BBH March $145 puts.
Bought 10 BBH March $155 calls and 10 BBH March $135 calls.  Total
net credit of  $3.45 (x 10 contracts = $3,450).  The closer BBH
finished to $145, the more we’ll make.  BBH finished at $143.62.
We bought back the $145 put for $1.45.  Profit: $2,000.

Quickie #3:  QQQ - $34.75 – Straddle
Bought 10 QQQ March $36 puts and bought 10 QQQ March $36 calls for
a total debit of $1.00 ($1,000).  We risked a buck.  QQQs tanked
at end of the day Friday.  Sold the $36 put for $1.20.  Profit:
$200.
_____________________________________________________________

EOY Update
QQQ ITM Strangle - $34.75
Early last week we bought back our $38 call for a nickel and
rolled down to the $36 call for $.95.  Then, we rolled from the
March $37 put to the April $37 put for $.30.  Total of $1.20 x 10
contracts = $1,200.

We own the 2005 $33 calls and the $2005 $43 puts.  Thus far (in
three months) we have taken in $4,200.

March OEX Iron Condor – 543.68
We sold 15 March OEX 595 calls and bought 15 March OEX 605 calls
for a credit of $.55.  Then we sold 15 March OEX 545 puts and
bought 15 March OEX 535 puts for a credit of $.95.  Our total net
credit is $1.50 (x 15 contracts - $2,250).  Our maximum profit
range was 545 to 595.  We took in $2,250.  We were the victims of
a last hour downdraft and the OEX settled at 543.68.  That means
we give back $1.32 of the $1.50 we took in.  Our profit was a
whopping $270.00 ($.18 x 15 contracts).   Hey, it covered
commissions with enough left over for a massage and a . . . .

Some OI traders got out earlier and kept a larger portion of their
profits.  Good for you!

New EOY Position:
April OEX Iron Condor – 543.68
Sell 15 OEX April 510 puts and buy 15 OEX April 500 puts.  Then,
sell 15 OEX April 570 calls and buy 15 OEX 580 calls for a total
credit of about $1.55 (x 15 contracts = $2,325).   Maintenance:
$15,000.

Profit potential: $2,325.  Maximum profit range of 510 to 570.
_____________________________________________________________

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.


**************************
2004 Stock Traders Almanac
**************************

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The Option Investor Newsletter                   Sunday 03-21-2004
Sunday                                                      5 of 5


In Section Five:

Spreads/Straddles/Combos: A Vote Of "No Confidence!"


**************************
2004 Stock Traders Almanac
**************************

Those readers who did not sign up for the end of year
special and would still like to get a Stock Traders
Almanac this is your chance.

For only $44.95 you will get:

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************************
SPREADS/STRADDLES/COMBOS
************************

A Vote Of "No Confidence!"
By Ray Cummins

The major equity averages plunged Friday, giving back all of
their recent gains, as investors showed their concerns about
the sluggish economic recovery.

The Dow Jones industrial average finished 109 points lower at
10,186 with defense firm United Technologies (NYSE:UTX) leading
the dive in the blue-chip average.  The technology-laden NASDAQ
Composite Index slid 21 points to 1,940 as semiconductor shares
continued to slump.  The Standard & Poor's 500 Index dropped 12
points to close at 1,109, with steel stocks among the few groups
enjoying buying pressure.  The quadruple-witching expiration of
options led to choppy trading with moderate volume.  Roughly 1.4
billion shares changed hands on the New York Stock Exchange and
about 1.6 billion shares traded on the NASDAQ.  Declining issues
swept past advancing stocks by a 3 to 2 margin on both the NYSE
and the technology exchange.  The bond market drifted lower with
the price of the 10-year benchmark note falling 5/32 while it's
yield climbed to 3.78%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 03/19/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

LSCP     MAR    17    17.10   20.27    0.40   6.20%    2.34%
PCLN     MAR    22    21.70   24.61    0.80   7.85%    3.69%
AMLN     MAR    20    19.55   23.65    0.45   6.42%    2.30%
ATRX     MAR    22    22.05   24.41    0.45   6.79%    2.04%
BRCM     MAR    37    36.95   37.95    0.55   4.29%    1.49%
OSTK     MAR    20    19.35   30.01    0.65  10.25%    3.36%
NEOL     MAR    17    16.95   20.80    0.55  10.48%    3.24%
ADEX     MAR    20    19.55   20.00    0.45   8.22%    2.30%
ALXN     MAR    20    19.70   22.29    0.30   6.05%    1.52%
APPX     MAR    30    29.70   42.61    0.30   4.59%    1.01%
ATRX     MAR    22    22.20   24.41    0.30   6.03%    1.35%
MRVL     MAR    37    37.10   41.55    0.40   4.40%    1.08%
NEOL     MAR    17    17.30   20.80    0.20   5.25%    1.16%
OSTK     MAR    20    19.70   30.01    0.30   6.70%    1.52%
SEPR     MAR    17    17.25   46.47    0.25   5.37%    1.45%
ADEX     APR    20    19.45   20.00    0.55   5.64%    2.83%
ALXN     MAR    22    22.05   22.29    0.24   5.55%    2.04%
KMRT     MAR    30    29.65   38.13    0.35   6.19%    1.18%
NEOL     APR    15    14.55   20.80    0.45   6.79%    3.09%
OSTK     MAR    25    24.65   30.01    0.35   9.74%    1.42%
PKZ      MAR    25    24.60   28.66    0.40   8.63%    1.63%
AAPL     MAR    25    24.65   25.86    0.35   9.53%    1.42%
AMLN     APR    22    21.80   23.65    0.70   6.68%    3.21%
APPX     APR    32    32.48   42.61    0.90   5.98%    2.77%
ASKJ     MAR    25    24.70   30.73    0.30  10.09%    1.21%
NEOL     APR    15    14.65   20.80    0.35   5.57%    2.39%
NKTR     APR    20    19.20   20.22    0.80   8.87%    4.17%
OSTK     APR    25    24.30   30.01    0.70   7.25%    2.88%
APPX     APR    33    32.73   42.61    0.65   5.76%    1.99%
ASKJ     APR    25    24.15   30.73    0.85   9.04%    3.52%
CLZR     APR    11    11.07   13.90    0.17   4.72%    1.54%
JNPR     APR    22    21.85   24.86    0.65   7.82%    2.97%
NEOL     APR    15    14.65   20.80    0.35   6.74%    2.39%
PDII     APR    22    21.80   24.99    0.70   8.31%    3.21%
SWIR     APR    22    22.15   31.93    0.35   5.03%    1.58%
APPX     APR    33    33.03   42.61    0.35   4.71%    1.06%
BRCM     APR    35    34.55   37.95    0.45   4.64%    1.30%
ELN      APR    15    14.65   20.00    0.35   9.84%    2.39%
OSTK     APR    22    22.25   30.01    0.25   4.47%    1.12%
PCLN     APR    20    19.75   24.61    0.25   4.90%    1.27%
SYMC     APR    40    39.40   42.80    0.60   4.89%    1.52%
XMSR     APR    25    24.40   27.67    0.60   7.74%    2.46%
YHOO     APR    40    39.40   45.75    0.60   5.13%    1.52%

Positions in Rambus (NASDAQ:RMBS), Semtech (NASDAQ:SMTC), and
Interdigital (NASDAQ:IDCC) have previously been closed to limit
potential losses.  Ade Corp. (NASDAQ:ADEX), Amylin (NASDAQ:AMLN)
and Nektar (NASSDAQ:NKTR) are on the early-exit list.  New plays
in Pep Boys (NYSE:PBY) and Invision Technologies (NASDAQ:INVN)
were not available due to "gap-up" activity on the day after the
plays were published.


NAKED CALLS

Stock   Strike Strike Cost   Current   Gain    Max    Simple
Symbol  Month  Price  Basis   Price   (Loss)  Yield   Yield

AAII     MAR    25    25.40    7.87    0.40   7.47%    1.57%
CMTL     MAR    35    35.45   23.27    0.45   7.46%    1.27%
FLML     MAR    35    35.35   24.72    0.35   6.02%    0.99%
MHS      MAR    35    35.45   32.45    0.45   4.40%    1.27%
CECO     MAR    55    55.50   47.66    0.50   4.96%    0.90%
ECLG     MAR    22    22.85   20.32    0.35  10.15%    1.53%
ESI      MAR    50    50.30   28.99    0.30   4.96%    0.60%
ISSI     MAR    17    17.85   14.19    0.35  11.45%    1.96%
SEAC     APR    20    20.40   14.31    0.40   7.86%    1.96%
NTLI     MAR    70    70.50   58.60    0.50   6.27%    0.71%
CECO     APR    55    55.65   47.66    0.65   5.59%    1.17%
ERES     APR    35    35.30   27.32    0.30   4.73%    0.85%
FARO     APR    30    30.40   22.15    0.40   7.33%    1.32%
AFCI     APR    25    25.50   21.94    0.50   8.84%    1.96%
FLSH     APR    22    22.75   19.29    0.25   5.62%    1.10%

The new position in Nam Tai Electronics (NASDAQ:NTE) was not
available due to bearish activity on the day after the play
was published.


PUT-CREDIT SPREADS

Symbol  Pick   Last   Month L/P S/P Credit  C/B    G/L   Status

CERN    46.09  43.64   MAR  35  40   0.60  39.40   0.60  Closed
DNA     98.25 104.85   MAR  85  90   0.70  89.30   0.70  Closed
ESRX    70.58  73.91   MAR  60  65   0.65  64.35   0.65  Closed
NBR     46.97  45.30   MAR  40  42   0.25  42.25   0.25  Closed
BSX     41.94  39.98   MAR  35  37   0.25  37.25   0.25  Closed
CEC     34.06  35.95   MAR  30  32   0.36  32.64   0.36  Closed
ONXX    36.80  36.07   MAR  30  35   0.55  34.45   0.55  Closed
OSTK    29.27  30.01   MAR  22  25   0.30  24.70   0.30  Closed
RYL     85.72  87.33   MAR  75  80   0.50  79.50   0.50  Closed
GS     107.09 102.66   MAR  95 100   0.65  99.35   0.65  Closed
MICC    22.06  18.70   MAR  18  19   0.12  18.63   0.07  Closed
VIP     83.25  92.45   MAR  70  75   0.65  74.35   0.65  Closed
MTH     71.09  74.62   MAR  60  65   0.70  64.30   0.70  Closed
APOL    77.82  84.11   APR  65  70   0.60  69.40   0.60   Open
BZH    111.90 105.10   APR  95 100   0.70  99.30   0.70   Open
KBH     78.71  77.28   APR  65  70   0.55  69.45   0.55   Open
COF     73.50  72.40   APR  60  65   0.50  64.50   0.50   Open
HUG     52.95  51.22   APR  45  50   0.50  49.50   0.50   Open
SYMC    44.64  42.80   APR  37  40   0.35  39.65   0.35   Open
DNA    106.82 104.85   APR  90  95   0.60  94.40   0.60   Open
FDX     71.59  71.28   APR  65  70   0.85  69.15   0.85   Open

L/P = Long Put  S/P = Short Put  CB = Cost Basis  G/L = Gain/Loss

Spreads on Sears (NYSE:S), Synopsys (NASDAQ:SNPS), Microstrategy
(NASDAQ:MSTR) and Guidant (NYSE:GDT) have previously been closed
to limit losses.  Beazer (NYSE:BZH) is on the "watch" list.


CALL-CREDIT SPREADS

Symbol  Pick   Last   Month L/C S/C Credit  C/B    G/L   Status

CYBX    27.04  22.56   MAR  35  30   0.65  30.65   0.65  Closed
SOHU    29.05  24.40   MAR  40  35   0.60  35.60   0.60  Closed
KLAC    54.24  49.65   MAR  65  60   0.60  60.60   0.60  Closed
IACI    31.92  29.16   MAR  37  35   0.30  35.30   0.30  Closed
NVLS    33.26  29.92   MAR  40  37   0.30  37.80   0.30  Closed
BBBY    40.62  38.26   MAR  45  42   0.30  42.80   0.30  Closed
LLTC    40.03  35.88   MAR  45  42   0.25  42.75   0.25  Closed
PIXR    65.76  62.99   MAR  75  70   0.55  70.55   0.55  Closed
SFNT    37.96  37.87   MAR  45  40   0.60  40.60   0.60  Closed
UTEK    26.28  21.88   MAR  35  30   0.60  30.60   0.60  Closed
AMZN    44.87  42.80   MAR  55  50   0.50  50.50   0.50  Closed
CTAS    42.77  41.48   MAR  50  45   0.60  45.60   0.60  Closed
CCU     43.44  41.73   MAR  50  45   0.60  45.60   0.60  Closed
ADBE    36.46  39.85   APR  45  40   0.55  40.55   0.55  Closed
DISH    35.50  33.10   APR  42  40   0.30  40.30   0.30   Open
NVLS    31.15  29.92   APR  37  35   0.35  35.35   0.35   Open
VSEA    40.85  37.50   APR  50  45   0.60  45.60   0.60   Open
COGN    29.54  28.69   APR  35  32   0.35  32.85   0.35   Open
SFA     31.96  31.23   APR  40  35   0.55  35.55   0.55   Open
BBBY    39.04  38.26   APR  45  42   0.25  42.75   0.25   Open
MSTR    52.64  50.76   APR  65  60   0.60  60.60   0.60   Open

L/C = Long Call  S/C = Short Call  CB = Cost Basis  G/L = Gain/Loss

The bearish position in Icos (NASDAQ:ICOS), which is positive, as
well as the spreads in Neurocrine Bisosciences (NASDAQ:NBIX), OSI
Pharmaceuticals (NASDAQ:OSIP), and Multimedia Gaming (NASDAQ:MGAM)
have previously been closed to limit losses.  Adobe (NASDAQ:ADBE)
is a candidate for early exit after Friday's earnings-related rally.


DEBIT STRADDLES

Stock   Pick   Last   Exp.   Long  Long  Initial   Max     Play
Symbol  Price  Price  Month  Call  Put    Debit   Value   Status

LEN     55.58  55.20   MAR    55    55     2.40    2.75   Closed
TEK     29.59  31.05   MAR    30    30     1.45    1.60   Closed
TTWO    32.03  34.29   MAR    32    32     3.20    3.00   Closed
SNP     40.74  39.02   APR    40    40     5.70    5.70    Open
CCMP    44.55  41.40   APR    45    45     5.90    5.75    Open
AMX     35.66  37.81   MAY    35    35     3.65    4.30    Open
AIG     74.28  72.10   MAY    75    75     5.60    6.50    Open
SLB     65.13  63.66   MAY    65    65     6.75    6.50    Open

Hovnanian (NYSE:HOV) was the "play of the month," offering up to
a $8.00 gain on $7.00 invested.  Straddles in Martek Biosciences
(NASDAQ:MATK), Bear Stearns (NYSE:BSC) and Forest Labs (NYSE:FRX),
which is now profitable, have previously been closed to preserve
capital.  Prices for the new positions in American International
(NYSE:AIG) and Schlumberger (NYSE:SLB), as well as any potential
gains (max. value) for existing straddles, will not be accurate
this month as I did not monitor the portfolio during my recent
absence from the market.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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 - COVERED-CALLS

Our approach to this strategy, which does not focus on stock
ownership or bullish movement, considers the covered write as
a single entity with a primary goal of obtaining a continuous
(monthly) return on investment with reduced downside risk.

__________________________________________________________________

Indices Continue To Correct...
By Mark Wnetrzak

The correction that started a few weeks ago continues to hamper
the major averages and forces one to have a defensive near-term
outlook.  With the market's technical indications being rather
bearish and a defensive posture in place, it's a good time for
added vigilance.  Conservative traders should re-evaluate their
current portfolio positions and select only the most favorable
issues for new plays.  Even though covered-calls do hedge against
near-term weakness, they are not a panacea for protracted bearish
activity.

This is most likely my last week for the covered-call section as
it moves towards a monthly or semi-monthly schedule, with none
other than Ray Cummins at the helm.  It's been fun!

Trade Wisely!
__________________________________________________________________

NEW COVERED-CALL CANDIDATES
__________________________________________________________________

ROXI - Roxio  $5.19  *** On The Rebound! ***

Roxio (NASDAQ:ROXI) provides a comprehensive family of PC-based
software products that allow customers to create, manage,
customize and share digital content.  The company's software
is reliable, easy to use and compatible across a broad range
of operating systems.  Its Easy CD & DVD Creator, Toast and
WinOnCD products allow users to take digital music and burn
custom playlists to CD, archive digital photos and videos to
DVD or archive and share large data files, such as PowerPoint
presentations, by storing them on a CD.  Roxio's PhotoSuite
product enables users to capture, edit and share photographs
on a PC or over the Internet.  Its VideoWave product enables
users to capture and combine edited video clips, graphics,
photographs, music and narration to create a video that can
be shared on CDs, DVDs, videotape or over the Internet.
Roxio climbed higher this week after the company raised
revenue guidance, citing strength in its CD-software and
Napster online music segment.  Reasonable speculation with
a cost basis near long-term support.

APR-5.00 RXU DA LB=0.55 OI=962 CB=4.64 DE=28 TY=8.4%


__________________________________________________________________

ABMD - Abiomed  $7.81  *** Bracing For A Rally? ***

Abiomed (NASDAQ:ABMD) is a developer, manufacturer and marketer
of medical products designed to safely and effectively assist or
replace the pumping function of the failing heart.  The company's
BVS (bridge-to-recovery) 5000 Biventricular Support System is a
heart assist device for the temporary treatment of all patients
with failing, but potentially recoverable, hearts in the U.S.
The company's first-generation AbioCor Implantable Replacement
Heart, a battery-powered implantable replacement heart system,
is the subject of an ongoing initial clinical trial that began
in July 2001.  The AbioCor is intended to extend life and provide
an improved quality of life for end-stage acute and chronic heart
failure patients.  The company is also engaged in research and
development relating to other devices to assist or replace the
pumping function of the heart.  ABMD has been in a lateral
consolidation for several months and investors who believe the
trend will continue can use this position to profit from that
outcome.

APR-7.50 IBU DU LB=0.75 OI=930 CB=7.06 DE=28 TY=6.8%


__________________________________________________________________

ADCT - ADC Telecommunications  $2.66  *** Cheap Speculation ***

ADC Telecom (NASDAQ:ADCT) is a supplier of broadband network
equipment, software and systems integration services that
enable communications service providers to deliver high-speed
Internet, data, video and voice services to consumers and
businesses worldwide.  The company offers its products and
services through two segments: broadband infrastructure and
access; and integrated solutions.  The broadband infrastructure
and access business focuses on broadband connectivity products
for a variety of communications network applications, digital
subscriber line offerings for the telecommunications industry
and IP-based offerings for the cable industry.  The integrated
solutions business focuses on systems integration services and
operations support system software.  Traders can speculate on
the near-term performance of the issue with this position.
Target-shooting a lower "net" debit will raise the potential
yield and increase the downside protection.

APR-2.50 TLQ DZ LB=0.30 OI=175 CB=2.36 DE=28 TY=6.4%


__________________________________________________________________

LGND - Ligand  $18.84  *** Earnings Rally ***

Ligand Pharmaceuticals (NASDAQ:LGND) discovers, develops and
markets new drugs that address critical unmet medical needs of
patients in the areas of cancer, pain, men's and women's health
or hormone-related health issues, skin diseases, osteoporosis
and metabolic, cardiovascular and inflammatory diseases.  LGND's
drug discovery and development programs are based on proprietary
gene transcription technology, primarily related to intracellular
receptors and signal transducers and activators of transcription.
The company markets five products in the U.S.: AVINZA for the
relief of chronic, moderate to severe pain; ONTAK for treatment
of patients with persistent or recurrent cutaneous T-cell
lymphoma (CTCL); Targretin capsules and Targretin gel for the
treatment of CTCL in patients who are refractory to at least
one prior systemic therapy, and Panretin gel for the treatment
of Kaposi's sarcoma (KS) in AIDS patients.  Ligand has rallied
sharply since reporting earnings in early March and investors
can use this position to speculate on the company's future share
value.

APR-17.50 LQP DW LB=2.00 OI=301 CB=16.84 DE=28 TY=4.3%


__________________________________________________________________

NANX - Nanophase Technologies  $9.01  *** Entry Point? ***

Nanophase Technologies (NASDAQ:NANX) is engaged in creating
and the engineering of nanocrystalline materials.  Products
include, among others, coated materials as ingredients for
sunscreens, Nanophase's largest application, and uncoated
materials as ingredients for personal care applications,
including anti-fungal aids, automotive catalytic converters
and abrasion-resistant flooring.  A growing new product area
for Nanophase is the production of engineered nanomaterials,
and their dispersion in a variety of media, for various
electronics polishing applications.  They work collaboratively
with various companies in meeting their application needs,
providing value-enhanced solutions for commercial applications
in multiple global markets.  The Nanotech industry has been on
fire, especially after President Bush's signing of the 21st
Century Nanotech Research and Development Act.  With the recent
consolidation in Nanophase, this position offers investors who
remain bullish in the industry a reasonable entry point near
technical support.

APR-7.50 NSY DU LB=1.75 OI=245 CB=7.26 DE=28 TY=3.6%


__________________________________________________________________

AKS - AK Steel Holding  $5.45  *** Steel Sector Gets Hot! ***

AK Steel Holding (NYSE:AKS) operates through its wholly owned
subsidiary, AK Steel Corp., as a fully integrated producer of
flat-rolled carbon, stainless and electrical steels.  The steel
operations of the company consist of 7 steelmaking and finishing
plants located in Indiana, Kentucky, Ohio and Pennsylvania that
produce flat-rolled carbon steels, including coated, cold-rolled
and hot-rolled products, as well as specialty stainless and
electrical steels that are sold in slab, hot band and sheet and
strip form.  Steel products are primarily for sale to the domestic
automotive, appliance, industrial machinery and equipment, as well
as construction markets.  Reasonable speculation on an emerging
sector with a cost basis near support.

APR-5.00 AKS DA LB=0.60 OI=375 CB=4.85 DE=28 TY=3.4%


__________________________________________________________________

TELK - Telik  $28.08  *** New Drug Speculation ***

Telik (NASDAQ:TELK) is a biopharmaceutical company working to
discover, develop and commercialize small-molecule drugs to treat
serious diseases, including cancer and diabetes.  Telik's most
advanced product development programs include TLK286, which it
expects to enter a Phase III registration trial beginning in the
1st-quarter 2003; TLK199, which is in a Phase I-IIa trial, and
TLK19781, which is in pre-clinical safety studies.  TLK286 is a
small-molecule tumor-activated cancer drug that the company is
evaluating initially to treat cancers that are resistant to
standard chemotherapy drugs.  TLK199 is a small-molecule bone
marrow stimulant being developed for the treatment of blood
disorders associated with low white blood cell levels.  TLK19781
is a proprietary, orally active small-molecule insulin receptor
activator for the potential treatment of Type II diabetes and
other conditions related to insulin resistance.  Investors who
like the company's drug pipeline can speculate on the near-term
performance of the issue with the potential of owning TELK at a
price near technical support.

APR-25.00 ZUL DE LB=3.80 OI=2366 CB=24.28 DE=28 TY=3.2%


__________________________________________________________________

Legend (for play descriptions above)

LB - Last Bid price
OI - Open Interest
CB - Cost Basis or break-even point
DE - Days to Expiration
TY - Target Yield (monthly basis)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Supplemental Covered Calls
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following group of issues is a list of additional candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.
__________________________________________________________________

Stock   Last   Option    Option  Last   Open   Cost  Days Target
Symbol Price   Series    Symbol  Bid    Int.   Basis Exp. Yield

IMM    15.59  APR 15.00  IMM DC   1.75  300    13.84  28   9.1%
MERX   21.58  APR 20.00  KXQ DD   2.60  2      18.98  28   5.8%
ENER    7.98  APR  7.50  EQI DU   0.85  59      7.13  28   5.6%
RHAT   19.22  APR 17.50  RCV DW   2.50  4575   16.72  28   5.1%
OSIP   38.81  APR 30.00  GHU DF  10.10  4968   28.71  28   4.9%
ELN    20.00  APR 17.50  ELN DW   3.20  10112  16.80  28   4.5%
IPXL   21.55  APR 20.00  UPR DD   2.35  997    19.20  28   4.5%
BMRN    8.08  APR  7.50  NUR DU   0.85  454     7.23  28   4.1%
TLCV   10.95  APR 10.00  TKU DB   1.30  1675    9.65  28   3.9%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

APPX - American Pharma Partners  $42.61  *** Another 2004 High! ***

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  $42.61

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 35    AQO PG    2245   0.55  34.45   6.3%   1.6%


__________________________________________________________________

ASKJ - Ask Jeeves  $30.73  *** A Strong Sector! ***

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  $30.73

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 25    AUK PE    1463   0.45  24.55   7.5%   1.8%


__________________________________________________________________

CMC - Commercial Metals  $34.14  *** Steel Stocks Rally! ***

Commercial Metals (NYSE:CMC) manufactures, recycles, markets and
distributes steel and metal products and related materials and
services through a network of locations located throughout the
United States and internationally.  The company's business is
organized into three major segments: manufacturing, recycling
and marketing and distribution. The manufacturing segment is made
up of the steel group and Howell Metal Company.  The recycling
segment processes secondary metals, or scrap metals, which will
be used as a raw material by producers of new metal products.
Products in the marketing and distribution segment are standard
commodity items.

CMC - Commercial Metals  $34.14

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 30    CMC PF     35    0.40  29.60   4.7%   1.4%


__________________________________________________________________

CSGS - CSG Systems  $16.66  *** Comcast Dispute Resolved! ***

CSG Systems International (NASDAQ:CSGS) provides next-generation
billing and customer care solutions for the cable television,
satellite, advanced Internet protocol services, next-generation
mobile and fixed wireline markets.  The company's combination
solutions, delivered in both outsourced and licensed formats,
enables clients to deliver customer service, improve operational
efficiencies and rapidly bring new revenue-generating products to
market.  CSG and its wholly owned subsidiaries serve more than
265 telecommunications service providers in over 40 countries.
The firm serves its clients through its two operating segments:
the Broadband Services Division and the Global Software Services
Division.

CSGS - CSG Systems  $16.66

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 15    QGA PC     559   0.35  14.65   7.6%   2.4%


__________________________________________________________________

ECLG - eCollege.com  $20.32  *** E-Learning Sector Rebound? ***

eCollege.com (NASDAQ:ECLG) is a provider of technology, products
and services that enable colleges, universities, primary and high
schools, grade schools and corporations to offer online classes
for distance, on-campus and hybrid learning.  The firm's unique
technology enables it's customers to reach students who wish to
take courses at convenient times and locations via the Internet.
Its customers can also use its technology to supplement on-campus
courses with an online environment.  In addition, the company
offers services to assist in the development of online programs,
including online course and campus design, development, management
and hosting as well as ongoing administration, faculty and student
support.

ECLG - eCollege.com  $20.32

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 17.5  EGU PW     91    0.30  17.20   6.3%   1.7%


__________________________________________________________________

JILL - J. Jill Group  $19.05  *** Rallying Retailer! ***

The J. Jill Group (NASDAQ:JILL) is a multi-channel specialty
retailer of women's apparel, accessories and footwear.  The
company markets its products through catalogs, retail stores
and an e-commerce website.  J. Jill has two business segments,
direct and retail, and each segment is separately managed and
utilizes distinct distribution, sales and inventory management
strategies.  The direct segment markets merchandise through its
catalogs and an e-commerce website.  The retail segment markets
merchandise through retail stores.  The firm's target customers
are active, affluent women ages 35 to 55, who want comfort and
styling, from relaxed career clothing to sophisticated casual
weekend wear, in a broad range of sizes.

JILL - J. Jill Group  $19.05

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 17.5  JUI PW     91    0.35  17.15   6.4%   2.0%


__________________________________________________________________

MGAM - Multimedia Games  $25.35  *** Entry Point? ***

Multimedia Games (NASDAQ:MGAM) is the leading supplier of
interactive electronic games and player stations to the rapidly
growing Native American gaming market.  The company's games are
delivered through a telecommunications network that links its
player stations with one another both within and among gaming
facilities.  Multimedia Games designs and develops networks,
software and content that provide its customers with a range of
gaming systems.  The company's development and marketing efforts
focus on Class II gaming systems and Class III video lottery
systems for use by Native American tribes throughout the United
States.

MGAM - Multimedia Games  $25.35

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 22.5  QMG PX    746    0.45  22.05   6.8%   2.0%


__________________________________________________________________

PBY - Pep Boys  $26.16  *** Next Leg Up? ***

Pep Boys -- Manny, Moe & Jack (NYSE:PBY) is engaged primarily in
the retail sale of automotive parts and accessories, automotive
maintenance and service and the installation of parts through a
chain of stores.  The company operated its stores in 36 states
and Puerto Rico and its primary operating unit is its Supercenter
format.  Its operates over 600 Supercenters and one Service and
Tire Center, having an aggregate of 6,527 service bays, as well
as 12 non-service/non-tire format Pep Boys Express stores.  The
Supercenters serve "do-it-yourself" (retail) and "do-it-for-me"
(service labor, installed merchandise and tires) customers.

PBY - Pep Boys  $26.16

PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 25    PBY PE     15    0.50  24.50   6.0%   2.0%


__________________________________________________________________

SUPG - SuperGen  $10.39  *** New Drug Speculation! ***

SuperGen (NASDAQ:SUPG) is a pharmaceutical company dedicated to
the acquisition, rapid development and commercialization of new
oncology therapies for solid tumors, hematological malignancies
and blood disorders.  The firm has three key compounds: Nipent,
Orathecin and decitabine.  Nipent is marketed the treatment of
hairy cell leukemia.  SuperGen is close to completing Phase III
studies for Orathecin, its lead drug candidate, and has submitted
the first two (out of three total) sections of a rolling New Drug
Application with the FDA.  SuperGen is also conducting Phase III
clinical studies of decitabine in myelodysplastic syndrome.  The
company's portfolio of products includes generic daunorubicin for
a variety of acute leukemias, Mitozytrex, cancer vaccine Avicine,
Partaject-delivered busulfan and inhaled versions of Orathecin
and paclitaxel.

SUPG - SuperGen  $10.39

"SPECULATIVE" PLAY (sell naked put):

Action    Month &   Option    Open   Last  Cost    Max.  Simple
Req'd     Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL PUT  APR 7.5   UQG PU    2230   0.35   7.15  16.9%   4.9%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Index-Based Credit Spreads

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
industry group or on the market as a whole.  Spread strategies can
be made with index options similar to those made with individual
stock options and professional traders also employ index spreads
in common hedge strategies.  Traders who participate in OTM credit
spreads often utilize index options because they generally contain
favorable "premium" and also provide an underlying instrument less
prone to huge, gapping moves.
__________________________________________________________________

OEX - S&P 100 Index  $543.68  *** Index Spreads ***

Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.  Trading in S&P-100
options will ordinarily cease on the business day preceding the
expiration date.  OEX options generally may be exercised on any
business day before the expiration date.

OEX - S&P 100 Index  $543.68

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-515.00  OEB-PC  OI=2642  ASK=$3.20
SELL PUT  APR-520.00  OEB-PD  OI=4633  BID=$3.50
INITIAL NET-CREDIT TARGET=$0.40-$0.45
POTENTIAL PROFIT(max)=8% B/E=$519.60


__________________________________________________________________

SPX - S&P 500 Index  $1109.78  *** Index Spreads ***

Standard & Poor's 500 Index is a capitalization-weighted index
of 500 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.  These are summed
for all 500 stocks and divided by a predetermined base value.  The
base value for the S&P 500 Index is adjusted to reflect changes in
capitalization resulting from mergers, acquisitions, stock rights,
substitutions, etc.  Trading in SPX options will ordinarily cease
on the business day (usually a Thursday) preceding the day on which
the exercise-settlement value is calculated.  SPX options generally
may be exercised only on the last business day before expiration.

SPX - S&P 500 Index  $1109.78

PLAY (conservative - bullish/credit spread):

BUY  PUT  APR-1050.00  SPQ-PJ  OI=34045  ASK=$6.00
SELL PUT  APR-1060.00  SPQ-PL  OI=1      BID=$6.70
INITIAL NET-CREDIT TARGET=$0.80-$0.90
POTENTIAL PROFIT(max)=8% B/E=$1059.20



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ADTN - Adtran  $31.43  *** In A Trading Range? ***

Adtran designs, develops, manufactures, markets and services a
broad range of high-speed network access products utilized by
providers of telecommunications services and corporate end users
to implement advanced digital data services over both public and
private networks.  The company's business is arranged with two
divisions, the Carrier Networks Division (CN) and the Enterprise
Networks Division (EN), to enable it to quickly respond to the
needs of the two important market segments that its products
address.  These two market segments are CN products for use in
the service provider's Local Loop, including central office,
remote terminal and customer premises, and EN products for use
at enterprise headquarters, remote offices and telecommuting
locations.  Adtran offers more than 500 products built around a
set of core technologies, and developed to address high-speed
digital communications over the last mile of the Local Loop.

ADTN - Adtran  $31.43

PLAY (sell naked call):

Action     Month &   Option    Open   Last  Cost    Max.  Simple
Req'd      Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL CALL  APR 35    RQA DG    1238   0.80  35.80   9.6%   2.2%


__________________________________________________________________

DISH - EchoStar  $33.10  *** The Downtrend Resumes! ***

EchoStar Communications (NASDAQ:DISH) operates through two major
business units, the DISH Network and EchoStar Technologies.  The
DISH Network offers a direct broadcast satellite subscription TV
service across the United States with millions of DISH Network
subscribers.  EchoStar Technologies Corporation is engaged in the
design, development, distribution and sale of DBS set-top boxes,
antennae and other digital equipment for the DISH Network and the
design, development and distribution of similar equipment for a
range of international satellite service providers.

DISH - EchoStar  $33.10

PLAY (sell naked call):

Action     Month &   Option    Open   Last  Cost    Max.  Simple
Req'd      Strike    Symbol    Int.   Price Basis  Yield  Yield

SELL CALL  APR 35    UAB DG    4437   0.65  35.65   6.3%   1.8%



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Index-Based Credit Spreads

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
industry group or on the market as a whole.  Spread strategies can
be made with index options similar to those made with individual
stock options and professional traders also employ index spreads
in common hedge strategies.  Traders who participate in OTM credit
spreads often utilize index options because they generally contain
favorable "premium" and also provide an underlying instrument less
prone to huge, gapping moves.
__________________________________________________________________

OEX - S&P 100 Index  $543.68  *** Index Spreads ***

Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.  Trading in S&P-100
options will ordinarily cease on the business day preceding the
expiration date.  OEX options generally may be exercised on any
business day before the expiration date.

OEX - S&P 100 Index  $543.68

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-575.00  OEB-DO  OI=3549  ASK=$0.85
SELL CALL  APR-570.00  OEB-DN  OI=5526  BID=$1.25
INITIAL NET-CREDIT TARGET=$0.45-$0.50
POTENTIAL PROFIT(max)=9% B/E=$570.45


__________________________________________________________________

SPX - S&P 500 Index  $1109.78  *** Index Spreads ***

Standard & Poor's 500 Index is a capitalization-weighted index
of 500 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.  These are summed
for all 500 stocks and divided by a predetermined base value.  The
base value for the S&P 500 Index is adjusted to reflect changes in
capitalization resulting from mergers, acquisitions, stock rights,
substitutions, etc.  Trading in SPX options will ordinarily cease
on the business day (usually a Thursday) preceding the day on which
the exercise-settlement value is calculated.  SPX options generally
may be exercised only on the last business day before expiration.

SPX - S&P 500 Index  $1109.78

PLAY (less conservative - bearish/credit spread):

BUY  CALL  APR-1170.00  SPT-DN  OI=3518  ASK=$2.00
SELL CALL  APR-1160.00  SPT-DL  OI=5523  BID=$2.90
INITIAL NET-CREDIT TARGET=$1.00-$1.10
POTENTIAL PROFIT(max)=11% B/E=$1161.00



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
__________________________________________________________________

This week we received a number of requests for conservative debit
straddles.  Unfortunately, with the recent market volatility, the
number of theoretically favorable candidates is quite low.  That
is not to suggest that you can't make money in the strategy, it
just means you cannot focus entirely on historical volatility as
a method of analysis.  In today's search, we have identified one
"speculative" debit-strangle candidate.
__________________________________________________________________

GLBC - Global Crossing  $13.86  *** A Recent Rebirth! ***

Global Crossing (NASDAQ:GLBC) offers telecommunications services
in business centers, serving corporations by providing a range of
managed data and voice products and services.  It provides many
telecommunications services over a global network that reaches
more than 200 major cities worldwide.  Through its Global Marine
Systems Limited subsidiary, the firm also provides installation
and maintenance services for subsea telecommunications systems.
In January 2002, Global Crossing and certain of its affiliates
filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code.  In December 2003, the firm
emerged from bankruptcy.

GLBC - Global Crossing  $13.86

PLAY (very speculative - neutral/debit strangle):

BUY CALL  APR-15.00  GQC-DC  OI=209  ASK=$0.85
BUY PUT   APR-12.50  GQC-PV  OI=35   ASK=$0.85
INITIAL NET-DEBIT TARGET=1.50-$1.60
INITIAL TARGET PROFIT=$0.45-$0.90



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SEE DISCLAIMER - SECTION 1

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