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Daily Newsletter, Sunday, 04/04/2004

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The Option Investor Newsletter                   Sunday 04-04-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.

Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Blowout!
Futures Market: See Note
Index Trader Wrap: Vrrrt, squeak, rivet, crank, tweak....
Editor's Plays: Chip Rally?
Market Sentiment: On Your Mark
Ask the Analyst: See Note
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 04-02        WE 03-26        WE 03-19        WE 03-12
DOW    10470.59 +257.62 10212.9 + 26.37 10186.6 - 53.48 -355.47
Nasdaq  2057.17 + 97.15 1960.02 + 19.55 1940.47 - 44.26 - 62.90
S&P-100  558.10 + 14.58  543.52 -  0.16  543.68 -  6.24 - 18.53
S&P-500 1141.81 + 33.75 1108.06 -  1.68 1109.74 - 10.83 - 36.29
W5000  11202.42 +362.24 10840.2 - 12.80 10852.9 -115.20 -346.24
SOX      513.86 + 34.61  479.25 + 15.90  463.35 - 21.75 - 19.15
RUT      603.45 + 30.53  572.92 +  2.18  570.74 - 12.10 - 16.70
TRAN    2966.66 +130.76 2835.90 + 49.07 2786.83 - 76.26 - 29.98
VIX       15.64 -  1.69   17.33 -  1.82   19.15 +  0.85 +  3.82
VXO       15.56 -  1.65   17.21 -  1.95   19.16 +  0.44 +  3.92
VXN       21.35 -  1.69   23.04 -  2.95   25.99 +  0.69 +  3.22
TRIN       0.52            0.89            1.93            0.44
Put/Call   0.68            0.77            1.03            1.05
******************************************************************

Blowout!
by Jim Brown

The administration finally found all those lost jobs and
they eagerly took to the airwaves to pound their economic
drum. The markets exploded at the open with new highs for
the week across the board. After two attempts to sell off
the markets returned to the highs at the close. This was
a very bullish end to a bullish week.

The big news for the day was of course the blowout Jobs
report. The economy added +308,000 jobs in March according
to the Dept of Labor. They also conveniently "found" some
additional jobs for Jan and Feb. The Feb number was revised
up from 21,000 to 46,000 and the January number jumped from
97,000 to 159,000. The total new jobs for this release
totaled an amazing +395,000 jobs. This was nearly four
times the consensus estimates if you include the revisions.

Job Table - last ten months



Gains were broad based across all industries with service
companies adding +230,000 jobs. The unemployment rate rose
to 5.7% because there was a net increase to the unemployed
of +182,000 despite the strong job creation. This could be
from midterm graduates and returning national guard troops.
There were some strange side effects. The hours worked
index fell slightly and the Household Employment survey
showed a drop in employment for March. This survey has been
showing strong gains and the government has been pointing
to it as an example of entrepreneur growth. Overall the
jobs report was very strong and with the revisions proves
the wild whisper numbers were not as wild as analyst's
had thought.

Now the bad news. The massive jump in jobs wiped out bonds
with yields returning to early February levels. The cheap
interest rates available to spur home buying and refinancing
this spring are now history and the downhill trend was
completely erased. The chances for the Fed to reenter the
mix have increased dramatically. The Fed Funds Futures are
showing the chance of a hike is possible after the May
4th meeting. It could come as early as the two-day meeting
on June-29th. The Fed will likely wait for the May Jobs
number to see if we get a confirmation. That jobs report
is due out on May-7th, three days after the FOMC meeting.
If that number is another blowout the odds are good we
could see an inter meeting rate hike. This has been a
historical pattern when jobs suddenly explode.

Economists were quick to point out that the Jobs blowout
on Friday was exactly ten years to the day from the jobs
blowout in April 1994 when +468,000 jobs ended a long
drought. The economy was in the midst of another jobless
recovery after the first gulf war and each month analysts
were predicting strong gains but each month was a constant
disappointment. The April blowout broke the trend and
started a long string of months with strong job growth
that led into the late 90s economic boom. Investors are
hoping this repeat of the 1994 pattern will continue. This
was the largest single month job gain since April-2000.

One day too late to be another April fools prank MSFT and
SUNW kissed and made up. They buried their hatchets and
not in each others back. Steve Ballmer and Scott McNealy
shook hands and traded jokes at a news conference to
announce an end to lawsuits between the two companies
and a new ten-year agreement to cooperate. Scott was
especially happy from a nearly $2 billion windfall that
Microsoft agreed to pay to end the fighting and as an
advance on future deals.

With SUNW slowly slipping off the technology screen with
the advent of Linux and the growing IBM server threat the
deal was a life preserver for SUNW. Sun may not be in any
financial risk with $7 billion in cash but agreeing to
join Microsoft to take on the world was a good move. This
puts them on the winning team with the 800lb bully ready
to kick dirt on any competitors. The two are stronger
together than they are as adversaries and the market
celebrated with a +21% jump in SUNW stock. This is even
more amazing considering SUNW warned Friday morning that
they were not going to hit estimates for the 1Q and would
lose -23 to -25 cents when analysts were only expecting
them to loss -3 cents. They said they were cutting -3300
employees in a restructuring effort to return to profits.
The agreement should improve communications across networks
with SUNW servers and Windows PCs. It also removes even
more antitrust concerns from the cloud over Microsoft and
puts them several steps closer to emerging from the
constant threat of litigation.

The blowout on Friday was led by techs and the jump in
Microsoft and Sun Micro did not hurt. However the gains
were very broad based with advancers having better than
a 2:1 advantage over decliners. Nasdaq volume was much
stronger with 2.1B shares and 6:1 advancing over
declining. This was a very strong tech move and the
Nasdaq soared to close at the high of the day at 2054.

The Dow vaulted back to 10470 and a +97 point gain. This
capped a +463 point gain from last weeks lows. Traders
were somewhat disappointed with the less than +1% gain
on the Dow for the day compared to the +2.1% gain on the
Nasdaq and +3.74% gain on the SOX. The NYSE did trade
over 2B shares but the A/D numbers were almost equal and
the A/D volume was only 2:1. The challenge on the NYSE
was the large number of financial and stocks related
to home building that took serious hits on the jump in
interest rates. A +97 point gain is nothing to sneeze
at but the Dow definitely has an uphill battle from here.

From the March high at 10753 to the March lows at 10007
the Dow dropped -746 points. Friday's close was exactly
to the 61.8% retracement of those gains. For the prior
two days we were stuck at the 50% retracement level at
10380 and Friday's news blew that resistance away only
to come to a dead stop at the next higher level.

For next week we have a light economic schedule and the
calendar timing and Good Friday holiday will produce
very few earnings. The really heavy news on stocks will
not begin until the following week. This sets up next
week as a positioning week. With bonds likely to be
dead money for the foreseeable future there should be
some serious asset allocation back into stocks. What
better week to do it than the first week of a quarter
with retirement funds flowing into equities and with
a real signs the economy is growing. Earnings are still
expected to be strong and the positive jobs news will
give Bush a boost in the polls. All the stars are
aligning for an April rally. What is wrong with this
picture?

Emotionally nothing but technically it will not be a
walk in the park. For the Dow I mentioned the 61%
retracement level at 10468 and there is also the 50dma
at 10461. There is also strong horizontal resistance at
10525 and the Dow is very extended at +463 off the lows
with no real profit taking.

Dow Chart - Daily




The Nasdaq has exploded off the bottom with a +8.5% gain of
+160 points and no material profit taking. The close at 2057
is just below resistance at 2060 with additional resistance
at 2085. This sets up a very rough uphill road over the next
30 points.

Nasdaq Chart - Daily




On the surface it would appear the markets could struggle
next week. However there could be a strong bid under the
markets from asset allocation and from an affirmation of
the economic trend. One of the strongest indexes on Friday
was the SOX. The SOX bounce came from the strong year over
year gains in the Semiconductor Billings report also on
Friday. February billings only rose +0.2% over January but
this is normally a declining month. Chips usually decline
in Dec/Jan and remain weak due to seasonal patterns making
the even the minor gains a welcome change. When viewed on
a year over year basis February billings were up +31% and
the strongest gain since late 2000. Higher global spending
on IT equipment is credited with the surge in billings.
There are strong tax incentives that expire this year that
allows companies to depreciate an additional 50% of equip
and software if purchased by year end. The latest CIO
magazine poll showed CIOs plan to increase spending by
more than +7% this year and signs of an expanding economy
could push it higher.

The SOX rallied strongly on the news and this could help
keep a bid under techs next week. Also helping keep a bid
under the market is the mutual fund quarter end retirement
flows and the asset allocation shift out of bonds. This
could setup a really strong move. This may sound entirely
contrary to the prior resistance paragraphs. However if
you think back you will probably remember that some of the
strongest gains tend to come when the most factors predict
otherwise. Shorts begin loading up on the bearish technical
factors and the sudden buying catches them off guard. While
everyone is predicting a profit taking pullback the rally
just keeps getting stronger. We have seen this numerous
times in the past. I remember several vividly as I was
one of those ticking off the reasons why the markets
"should" be resting.

I watched the markets rise into the close on Friday from
a position of amazement. We were already severely extended
and at resistance with weekend event risk ahead. News
reports of terror warnings for the US failed to push anyone
to the sidelines. I am sure it was partially due to shorts
finally taking their lumps but there were also strong
internals suggesting buyers trying to get in ahead of
next week.

Tuesday is Passover and Good Friday is a market holiday.
Volume will be light on Tuesday and Thursday is loaded
up with economic reports.  This is typically a bullish
week but Monday will be the key. We have a strong running
start going into Monday and a strong open that does not
crumble could set the trend for the entire week.

I am definitely not going out on a limb and suggesting
that next week is going to see a continuation of the rally
but I am not going to bet against it either. For whatever
reason we had a normal correction in March and one that
was way overdue. This cleared the way for a new leg up
if conditions warranted it. This week we had a strong ISM
and strong jobs and bullishness is breaking out all over.
Next week could be the staging platform for any earnings
run and there are no bears in sight. This alone is a prime
reason to keep your eyes open for a sudden reversal but
don't fight any further gains. Go with the flow not
against it. Easy to say, hard to do.

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

Vrrrt, squeak, rivet, crank, tweak....

If you've ever been to commercial garage to get the tires
rotated, transmission checked, or get your car tuned up, you're
probably familiar with various sounds in this weekend's wrap.

Listen.... can you hear it?

That's the sound coming out of most economist's offices this
weekend as they try and fine tune their economic models to adjust
for Friday's blockbuster release of nonfarm payroll data, where
the Labor Department said the economy generated 308,000 jobs in
March, which was well above economists' forecast of 123,000.

Before we say "those economist's have their heads in the sand,
and wouldn't be able to forecast a rainstorm if it were already
raining," the Labor Department added that prior months data was
revised higher!

How could even the smartest of economists make an accurate
prediction when the base numbers, dating back to January, are
being revised?

Nonfarm Payroll Table - March 2004 thru September 2003.



While March's jobs growth was much higher than economists' had
forecast, even the Labor Department said it previously released
figures from 03/05/04 (February report) and 02/06/04 (January
report) were incorrect, and the economy added 87,000 more jobs
than was reported in the prior two periods.

It's a tough job to try and forecast something, when you base
data is constantly being changed.

In the larger scope of things, and upward revision of 87,000 jobs
in the prior two months is rather insignificant, but it makes an
economists, and stock/bond investors rather uncertain as to what
they are dealing with.

For an economist, they go back to the drawing board, plug in the
latest bit of data, rerun their economic models and see if it
spits out a relatively close ballpark figure to what was just
reported.

Investors have to do the same thing, and there was a lot of
refiguring, or adjustments being made to some financial models in
today's trade, where volumes at both the NYSE and NASDAQ were
heavy.

Market Snapshot / Internals - 04/02/04 Close



The major indices jolted higher at the open, but for the most
part, traded what I would consider to be a narrow range from that
point forward.  While there were some intra-day gyrations, they
were rather gradual after the initial bullish response.

I never really noticed, until preparing the final Market Snapshot
Internals, that while the NYSE Composite showed a growing number
of new highs from yesterday's final tally (308), Friday's 27 new
lows, in a rather bullish index trade found today's number of new
lows somewhat high to yesterday's count of 27.

Responses found among interest rate-sensitive sectors had banks
and homebuilders trading lower with the S&P Banks Index (BIX.X)
344.51 -1.32% and Dow Jones Home Construction Index (DJUSHB)
644.47 -4.26% diverging from broader equity gains.  Treasuries
found sharp selling as market participants began wondering if the
strong payroll data will have the Fed less patient with its easy
monetary policy of low fed funds.

10-year Treasury Bond YIELD ($TNX.X) - 5-minute intervals



Treasury bond prices were crushed just after the official release
of the nonfarm payroll data.  There was suspicious selling just
just prior to 08:30 AM EST, where bond traders suspect that
somebody may have leaked the nonfarm figures before illegally.

Did you know that the Bureau of Labor Statistics doesn't allow
the trash collector in its offices for a full week before the
release of the nonfarm payroll report?  That's how secretive and
market moving this data can be. (I didn't know this until today)

To put today's Treasury bond action in perspective, the Lehman 7-
10 year iShares (AMEX:IEF) $85.47 -1.84% dropped rather sharply.
While not an exact correlation, imagine that an investor BOUGHT a
10-year Treasury bond yesterday with the thought that a 3.9%
annual YIELD was a bargain.  They'll most likely collect that
3.9% per year, but suffered a -1.84% account loss on Friday.  If
nothing changes for the next 5-months, then the bond investor
that bought yesterday, will be back to break-even in about 5-
months after collecting their interest check.

S&P Depository Receipts (AMEX:SPY) - 5-minute intervals



While Treasuries found selling at the open, then traded rather
sideways, the SPY, which tracks the S&P 500 Index (SPX.X)
1,141.81 +0.84% jumped at the open, then traded a range from
roughly $114-$114.60 the remainder of the session.

We can't tell anything from just one session, but bond and stock
market reaction, and remainder of day's trade suggests a MARKET
thought that economy is strong (stocks) and that the Fed may now
be starting to consider raising its fed funds rate.  (DAILY and
WEEKLY levels were shown so traders utilizing the Pivot Matrix
would have some price/level reference).

10-year YIELD ($TNX.X) Chart - Weekly Intervals



It is time to really start monitoring Treasury YIELDS, as rising
YIELD could have potential near-term negative impact for
equities.  At the same time, the selling of Treasuries could have
incredibly bullish implications for stocks!

First, I would want to be alert to a 10-year YIELD that move
above trend.  Anytime a longer-term trend is broken (up or down)
it signals some type of shift in MARKET thought.

Near-term negative implications:  Why did Treasuries see a rather
sharp round of selling today, and this week?  Let's say it was
because the economy really looks to be adding jobs and that the
MARKET now sees a greater chance of the Fed raising its fed funds
rate sooner than some (even the Fed) has been suggesting.

The negative implication that I could foresee on a near-term
basis, is that Treasury bulls really begin stepping up their
selling, and YIELD breaks above longer-term trend, and even the
45.00, or 4.5% level.  How much CONFIDENCE do YOU have in the
Labor Department's statistics on what type of jobs the economy is
really generating?  How much CONFIDENCE do YOU have in
economists' forecasts, which can be used by market participants
when considering what stocks to be buying or selling?

Go back and review the nonfarm payroll table to see how much
CONFIDENCE anyone can have at this point.  To have CONFIDENCE, it
usually takes several observations to build a more predictable
trend.

Right now, I'd have to say the month-to-month nonfarm payroll
data is somewhat unpredictable.  The economy is generating jobs,
and just as President Bush, Fed Chairman Alan Greenspan and
Treasury Secretary John Snow predicted (for months) the economy
does look to be ramping up some job growth, but I'm not sure how
much CONFIDENCE there can be at this point.

What it usually takes to overcome higher interest rates,
especially in the early stages of economic recovery is CONFIDENCE
in many of the various economic trends, where job growth is
usually the last indicator to show improvement.

Friday's reaction from both the stock and bond markets would
appear to show some sign of optimism about jobs growth, which the
Fed has said might have it changing its views on the current
accommodative monetary policy.

Positive implications:  The positive implications of rising
Treasury YIELDS, which is only brought on by selling in the
underlying Treasury, is that the REWARD of owning these bonds
isn't worth the RISK, and should there be CONFIDENCE that job
growth is in an early ramp up stage, where jobs equals more money
available for consumer spending to further grow the economy, then
a rising Treasury YIELD, which will raise the borrowing costs for
YOU and I, can be absorbed actually offsets each other.

June Crude Oil Futures (cl04m) - Daily Intervals



I showed the above chart of June Crude Oil Futures (cl04m) in the
03/18/04 Index Trader Wrap after the recent Producer Price Index
figures were released, where concern regarding inflation was
thought to be responsible for stock's declining.  This week, OPEC
announced they would cut their daily production quota by 1
million barrels per day.  Oil ministers say that prices in the
futures market were not accurately depicting the current
supply/demand dynamics in the market and that if they didn't cut
their oil output, prices were going to fall sharply.

It may be hard to believe, but there has been talk for months
that Oil and oil futures have been bought to hedge currencies.
Despite OPEC announcing production cuts, oil prices in the
futures markets actually fell this week.

Now get this....

In Friday's Market Monitor, fellow analyst Jonathan Levinson, who
is always on the lookout for inflation noted that Georgia Pacific
(NYSE:GP) $34.15 +0.44% was raising Dixie Cup, plate and cutlery
prices 4% to 6%, and would raise paper towel, tissue and napkin
prices 6% to 9%.

We can begin to understand that this is inflationary at the
consumer level, and most likely, GP is raising prices to offset
the rise in fuel prices, which GP relies on to make its products.

I thought to myself, and posted a reply to Jonathan's comment
that this might be GOOD NEWS!  Actually, I was playing devils
advocate, when I made the comment that it was good news that GP
actually felt they could raise prices for their goods.  Hasn't
that been a NEGATIVE often mentioned?  That company's have no
pricing leverage?

I also wondered how long GP has been waiting to make this
announcement?  It might well be coincidence, but what better time
to announce a price increase, when the economy shows robust jobs
growth, while Oil prices are falling.

Could the scenario of raising the price for your product be a
positive for a company like GP, or other companies, if the
economy begins ramping up job growth, and oil prices fall?

OK... so maybe we need to keep tabs on oil prices and jobs data.
Think about not only the NEGATIVE implications, but also the
POSITIVE implications.  Jobs and oil/fuel prices were perhaps
this weeks top economic news events, where both can have
implications for what the Fed is thinking in regards to interest
rates, which could draw a reaction from the bond market, which
could then impact consumer borrowing costs, where selling in
Treasuries could have positive, or negative implications for
equities.

Pivot Analysis Matrix -



A quick note I want to make for the S&P Banks Index (BIX.X) is
that Friday's range of trade, was also the week's range of trade.
For such a move to take place, I would have to think the nonfarm
payroll data from Friday was a surprise, and most likely had some
banking bulls re-thinking some scenarios as it relates to
interest rates (where a sharp rise can become a negative) versus
the positives that jobs growth (still uncertain as to what type
of sustainability or stability of growth) could have on banks.

Up in the DAILY Pivots, to the far left, I quickly review
Friday's percentage changes for the S&P 500 Index (SPX.X) +0.85%,
the NASDAQ-100 Index (NDX.X) +2.55% and the S&P Banks Index
(BIX.X) -1.32%.

Those that have looked at a chart of the NDX.X or QQQ in recent
weeks or months will certainly understand that this tech-heavy
index had seen steeper percentage declines, where in just the
past 7 sessions, 62% of the mid-January to late-March decline has
quickly been erased.

One thing I do think traders/investors do need to come to grips
with is that we could well be seeing bullish rotation back to a
more "oversold" group of stocks.

With that said, I also want traders/investors in the SPX and OEX
to remember that roughly 25% of the SPX/OEX is comprised of
financial stocks.  This isn't just banks, but brokerage stocks as
depicted by the Broker/Dealer Index (XBD.X) 709.54 -0.10% and
insurance stocks, or the S&P Insurance Index ($IUX.X) 331.27
+1.04%.

Today's trade among the financial sectors was quite mixed.  One
reason the brokers were fractionally weak may be attributed to
Lehman Brothers (NYSE:LEH) $82.67 -1.77%, which has profited
greatly from bullish interest among Treasury bulls, and bond
bulls in general, where LEH is one of the largest bond
brokers/underwriters in the world.  It isn't so much the thought
that Treasuries fall out of favor that would impact trading
revenues (still a transaction to be had for buyer to meet
seller), but if Treasuries begin to lose favor among fixed income
investors and YIELDS rise, then there becomes thought that new
CORPORATE bond offerings, which translate to underwriting fees
for LEH, could begin to dry up.

Insurance companies would most likely WELCOME higher Treasury
YIELDS.  Why?  Insurance companies that take in revenue in the
form of premiums you and I pay, invest a large portion of those
premium in interest bearing securities, which are obligations of
the issuer (the government, companies, etc) where the interest
paid on those investments can be used to pay claims.  Basic
thought is that if properly managed, rising bond YIELDS can
actually help an insurance company's bottom line.

Here's a twist you may not have thought of.  What have your
insurance premiums been doing the past couple of years?  Going
up?  What have Treasury YIELDS been doing the past couple of
years?  Going down?  What if Treasury YIELDS rise, insurance
company's become more profitable and margins grow?  Could it be
that a rising YIELD then allows an insurance company to actually
LOWER insurance premiums for consumers?

Remember in a free market economy like we have in the U.S., when
profits in a certain segment of the economy become too great,
there will be new entrants to that business, looking to share in
the profits.  With new entrants comes competition.  With
competition comes lower prices.

While a mixed outlook for various financial sectors presents
itself should Treasury YIELDs rise, one mindset I think traders
should be refreshed on, is the importance of the financial
sectors, especially as it relates to the SPX/OEX.

Remember too, that the "real" name of the NDX.X is the NASDAQ-100
Non-Financial Index.

Again... one day's trade and percentage change I showed for
Friday's trade isn't necessarily indicative that money is going
to rotate out of banks and into technology, but Pivot Matrix
traders that are using the levels to help guide their trade,
might have to be prepared, or understand that a WEEKLY R1 for the
NDX/QQQ may not be directly tied to the BIX.X or SPX/OEX.

Traders of the SPX/OEX might have to begin thinking of these two
indices as an 8 cylinder car engine, where with 25% of its
weighting being tied to financial sectors, which can be impacted
by rising and falling Treasury YIELDS, may run on all 8 cylinders
one day, but 6-cylinders the next, as the MARKET tries to sort
out the impact of Friday's more robust jobs data.

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



During today's session I was making note that the small-cap
Russell-2000 Index ($RUT.X) was challenging new highs.  With the
SPX now boosted above its 50-day SMA, I would be keeping an eye
on the RUT.X, and should it make a break above current levels,
then I would have to think that the SPX's March 5 highs are in
play.

Russell-2000 Index ($RUT.X) - Daily Intervals



The RUT.X is back at 603 and after briefly violating a downward
trend in early March to just barely trade a new 52-week high, the
RUT.X found support at a conventional 80.8% retracement taken
from its All-time high to the bear market low.

With the RUT.X right at the upper end of what has been a trading
range, focus can be given to Stochastics, where this oscillator
is more informative for trading ranges.  Still, the longer-term
trend, as depicted by the regression channel, also taken from the
bear market low has traders observing MACD ramping higher and
back above zero, which looks very bullish.

This would be the major index to be monitoring for leadership.  I
would have to begin thinking renewed weakness only on a reversal
back below the starting to round up 21-day SMA of 492.55.

NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals



Friday's nonfarm payroll data saw the QQQ gap higher, and by
session's end, heavy volume of 128.2 million shares traded.
While the QQQ is also matching a March 5 relative high of $37.15
(the bar that tucks directly under the 50-day SMA, where QQQ
closed just above the current WEEKLY Pivot of $36.59) I would tie
current level of trade in the QQQ to the RUT.X.

Since the QQQ is more heavily traded buy bulls and bears, where
the RUT.X, keep a close eye on the RUT.X in sessions to come.

I would expect more shorting in the QQQ, but should the RUT.X be
breaking new ground higher to its all-time high, then QQQ could
launch further higher to WEEKLY R1.

Dow Industrials (INDU) Chart - Daily Intervals



Effective at the opening of trade on April 8, 2004, current Dow
Components T +1.55%, EK +0.27% and IP +1.16% will be replaced
with  are going to be replaced AIG +1.33%, PFE +1.15% and VZ
+0.92%, which may have the Dow Industrials trading somewhat
unnatural until the changes are completed.

In today's trade, I made note that both Intel (INTC) $28.12
+2.70% and IBM (IBM) $94.20 +1.98% showed what looked to be
reverse head and shoulder patterns on their charts, which I felt
could have bullish implications if played out to their pattern
objectives.  Both stocks broke above their horizontal necklines
in today's trade and both traded above average volume.

INTC's pattern objective is calculated at $30.00 (head $26,
neckline $28), while IBM's pattern objective is calculated at
$97.25 (head $90.28, neckline 93.80).

INTC is scheduled to announce quarterly earnings on April 13,
after the close.  Analysts estimates are for the company to earn
$0.27 per share compared to year-ago quarter $0.14.

IBM is scheduled to announce quarterly earnings on April 15,
after the close.  Analysts estimates are for the company to earn
$0.94 per share compared to year-ago quarter $0.79.

Jeff Bailey


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

Chip Rally?

The semiconductor billing report suggested that PC
sales on a global scale are blooming. The report
showed that year over year billings rose +31% and
it was the strongest gain since late 2000.

I reviewed the various chip stocks and decided Intel
may actually give us the best chance of an earnings
run into April. Intel will announce earnings after the
close on April-13th. This gives us a short fuse. Intel
has apparently put in a bottom at $27 and the Friday
rebound pushed them to just above $28. Intel did not
give an exciting mid quarter update and I suspect they
were being careful due to the weak January numbers. We
have the potential for an upside surprise with earnings
because nobody is expecting any good news.

Because we want to be out of the play before their
announcement or worst case the morning after the
release so I am going to use April options.

The April $27.50 call closed at $1.10 on Friday. This
is 58 cents in the money and should give almost a 90%
increase in value for every dollar gain in Intel. I
want to say right up front that this is a very high
risk play. It assumes we will go higher next week in
advance of earnings and there is continued improvement
in Intel stock.

I am not looking for a big jump in the price. Intel
has resistance at $30 and I would be surprised if it
moved over that level. Still a touch of $30 would make
the call worth $2.50 and I would be glad to see it.

There is no stop loss and we are going to let it all
hang out. I am going to set a profit target of $30 and
we will decide next Sunday if we are going to close it
before earnings of after earnings.

If we get a pullback at the open on Monday it would
provide a better entry point but I am not counting on
it. Just get long and let's hope we see $30 soon.

I chose Intel rather than some of the other chips
because it is still oversold and as a big cap could be
seen as a safer bet for funds with extra cash that want
a highly liquid stock. If PC growth is accelerating then
Intel is the primary beneficiary.

Intel Chart - Daily


SOX Chart - Daily





Best Laid Plans

The DJX put play did not survive the week. After being
triggered at 10300 on Monday strong rally the lack of
any pullback allowed the Dow to push over 10400 at
Wednesday's close. The April $102 put was trading at
85 cents when triggered at 10300 and 55 cents when
stopped at 10400.


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

On Your Mark
- J. Brown

Get set. Go!  Wow! What a week.  The markets turned in their best
percentage weekly performance since October of last year.  The
vast majority of the sector indices we follow have broken out
above technical resistance at their 50-dma's.  The INX Internet
index has broken out to new multi-year highs while the SOX
semiconductor index is above major resistance and should continue
to lead the NASDAQ higher.  Speaking of the NASDAQ it is now
firmly above resistance at the top of its descending channel and
the 2000 level.  More importantly the jobs number, which sparked
the rally, is the lagging indicator that many on Wall Street and
Main Street have been waiting for.  Not only will stocks benefit
from an asset allocation out of bonds but investors who have been
waiting on the sidelines for the jobs number to show up will be
trying to enter the markets as well.

You wouldn't know it but there was a bomb found on a Spanish
railroad on Friday but the markets shook it off with the strong
labor data. The 300K-job increase was the best improvement in
four years.  Right now the only risk to stocks would appear to be
a terrorist event.  Many "experts" are saying the up coming
earnings season should be positive enough to launch the next leg
of the bull market at least for the next couple of months.   How
we fare in mid-summer is another matter.

The major indices are short-term overbought but I believe that
after a bit of profit taking they'll be up and running into the
mid-April earnings season.  Don't tell anyone but secretly it
wouldn't surprise me to see the NASDAQ fill the gap from Friday
morning or at least pull back to the 2020 level.  You can bet
there will be investors waiting to buy the dip.  Be patient,
watch those stop losses and time your entries!


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8145
Current     : 10470

Moving Averages:
(Simple)

 10-dma: 10252
 50-dma: 10461
200-dma:  9848



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  862
Current     : 1141

Moving Averages:
(Simple)

 10-dma: 1114
 50-dma: 1133
200-dma: 1060



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1018
Current     : 1490

Moving Averages:
(Simple)

 10-dma: 1424
 50-dma: 1462
200-dma: 1388



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

Now that the markets are back in rally mode the volatility
indices are quickly fading back toward their multi-year lows.

CBOE Market Volatility Index (VIX) = 15.64 -1.01
CBOE Mkt Volatility old VIX  (VXO) = 15.59 -1.56
Nasdaq Volatility Index (VXN)      = 21.35 -2.06

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.68      1,154,470       788,367
Equity Only    0.53        994,736       531,671
OEX            1.55         37,515        57,994
QQQ            1.21        177,722       215,207


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

Bullish Percent Data

           Current   Change   Status
NYSE          73.1    + 1     Bull Correction
NASDAQ-100    50.0    + 6     Bear Correction
Dow Indust.   83.3    + 0     Bear Confirmed
S&P 500       76.6    + 2     Bear Confirmed
S&P 100       79.0    + 1     Bull Correction


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

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


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

 5-dma: 0.74
10-dma: 1.08
21-dma: 1.38
55-dma: 1.15


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    1612      2169
Decliners    1208       949

New Highs     201       184
New Lows       20         6

Up Volume   1378M     1821M
Down Vol.    568M      294M

Total Vol.  1961M     2167M
M = millions


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

Commitments Of Traders Report: 03/30/04

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

Not much change in the commercial traders' positions this
past week.  Small traders turned a little less bearish.


Commercials   Long      Short      Net     % Of OI
03/09/04      418,394   433,237   (14,843)   (1.7%)
03/16/04      454,635   449,505     5,130     0.6%
03/23/04      401,456   418,732   (17,273)   (2.1%)
03/30/04      407,987   420,624   (12,673)   (1.5%)

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
03/09/04      155,947    88,317    67,630    27.7%
03/16/04      159,054   115,023    44,031    25.3%
03/23/04      130,648    89,943    40,705    18.5%
03/30/04      130,112    81,937    48,175    22.7%

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


E-MINI S&P 500

Almost the same holds true here.  Commercial traders edged up
their short positions but not by much.  Small traders turned a
little less bullish.

Commercials   Long      Short      Net     % Of OI
03/09/04      431,623   485,268    (53,645)  ( 5.9%)
03/16/04      472,809   574,241   (101,432)  ( 9.7%)
03/23/04      268,647   294,930    (26,283)  ( 4.7%)
03/30/04      265,492   305,797    (40,305)  ( 7.1%)

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
03/09/04     135,233     76,558    58,675    27.7%
03/16/04     192,136     96,691    95,445    33.0%
03/23/04     131,879     59,210    72,669    38.0%
03/30/04     123,494     59,550    63,944    35.0%

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


NASDAQ-100

Whoa!  Commercials turned bearish on the NASDAQ just before
it broke out over resistance.  Unless that's a typo by the COT
it will be interesting to see how that number changes next
week.  Small traders turned more bearish.  It's been a painful
week for everyone here.


Commercials   Long      Short      Net     % of OI
03/09/04       57,368     46,082    11,286   10.9%
03/16/04       68,285     54,899    13,386   10.9%
03/23/04       52,014     34,017    17,997   20.9%
03/30/04       52,749     67,967   (15,218) (12.6%)

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
03/09/04       15,533     8,070     7,463    31.6%
03/16/04       27,859    18,333     9,526    20.6%
03/23/04        9,884    12,887    (3,003)  (13.2%)
03/30/04        8,928    16,551    (7,623)  (30.0%)

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

Very little change in commercial traders' positions while
small traders pared back their longs.  Remember, these numbers
are prior to the jobs report on Friday.


Commercials   Long      Short      Net     % of OI
03/09/04       26,867    12,845   14,022      35.3%
03/16/04       32,317    17,514   14,803      29.7%
03/23/04       23,048    22,119      929       2.1%
03/30/04       23,642    22,180    1,462       3.2%

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

Small Traders  Long      Short     Net     % of OI
03/09/04        7,053    19,159  (12,106)   (46.2%)
03/16/04       10,002    20,970  (10,968)   (35.4%)
03/23/04        8,344     6,734    1,610     10.7%
03/30/04        7,020     6,711      309      2.3%

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

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


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

Look for the Ask the Analyst column on Monday!


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

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

Symbol  Co               Date           Comment      EPS Est

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

None


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

AYI    Acuity Brands, Inc.   Tue, Apr 6  -----N/A-----        0.16
AA     ALCOA Inc             Tue, Apr 6  After the Bell       0.42
ISCA   Intl Speedway         Tue, Apr 6  Before the Bell      0.52
RI     Ruby Tuesday          Tue, Apr 6  After the Bell       0.47
UTIW   UTi Worldwide         Tue, Apr 6  Before the Bell      0.32


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

STZ    Constellation Brands  Wed, Apr 7  After the Bell       0.54
DNA    Genentech, Inc.       Wed, Apr 7  After the Bell       0.31
LI     Laidlaw International Wed, Apr 7  After the Bell       0.13
RIMM   Res In Motion Limited Wed, Apr 7  -----N/A-----        0.50
RPM    RPM International Inc Wed, Apr 7  After the Bell       0.06
YHOO   Yahoo, Inc.           Wed, Apr 7  -----N/A-----        0.10


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

ABT    Abbott Laboratories   Thu, Apr 8  Before the Bell      0.56
ADX    Adams Express         Thu, Apr 8  -----N/A-----         N/A
RAD    Rite Aid Corporation  Thu, Apr 8  Before the Bell      0.08
STI    SunTrust              Thu, Apr 8  Before the Bell      1.23


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

None


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

Symbol  Co Name              Ratio    Payable     Executable

TACT    TransAct Technologies Inc 3:2      Apr   2nd   Apr   5th
CACB    Cascade Bancorp           5:4      Apr   2nd   Apr   5th
UUU     Universal Security        4:3      Apr   5th   Apr   6th
DKS     Dicks Sporting Goods, Inc 2:1      Apr   5th   Apr   6th
FCFS    First Cash Finl Serv Inc  3:2      Apr   6th   Apr   7th
CRDN    Ceradyne, Inc             3:2      Apr   7th   Apr   8th
DWCH    Datawatch Corp            2:1      Apr   8th   Apr   9th
FOSL    Fossil, Inc               3:2      Apr   8th   Apr   9th
GBTS    Gateway Finl Holdings    21:20     Apr   8th   Apr   9th
CFC     Countrywide Financial Corp3:2      Apr  12th   Apr  13th
CBU     Community Bank System Inc 2:1      Apr  12th   Apr  13th
HIBB    Hibbett Sporting Goods    3:2      Apr  16th   Apr  19th
AVD     American Vanguard Corp    3:2      Apr  16th   Apr  19th
MSFG    MainSource Financial Group3:2      Apr  16th   Apr  19th
SHFL    Shuffle Master, Inc       3:2      Apr  16th   Apr  19th


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

Now that the jobs report is past Wall Street will focus on the
Q1 earnings season that is just around the corner.  This week
look for the ISM services number on Monday and the PPI on
Thursday.


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

----------------
Monday, 04/05/04
----------------
ISM Services (DM)          Mar  Forecast:    61.0  Previous:     60.8


-----------------
Tuesday, 04/06/04
-----------------
None


-------------------
Wednesday, 04/07/04
-------------------
Import Prices ex-oil (BB)  Mar  Forecast:     N/A  Previous:     0.4%
Consumer Credit (DM)       Feb  Forecast:   $7.6B  Previous:   $14.3B


------------------
Thursday, 04/08/04
------------------
Initial Claims (BB)      04/03  Forecast:     N/A  Previous:     342K
PPI (BB)         Date TBA  Mar  Forecast:     N/A  Previous:     0.1%
Core PPI (BB)    Date TBA  Mar  Forecast:     N/A  Previous:     0.1%
Wholesale Inventories (DM) Feb  Forecast:    0.2%  Previous:     0.1%


----------------
Friday, 04/09/04
----------------
None


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


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The Option Investor Newsletter                   Sunday 04-04-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: A Very Mixed List to Watch!
Dropped Calls: AVID, LXK, KBH
Dropped Puts: None


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

A Very Mixed List to Watch!

___________________________________________________________________

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.
___________________________________________________________________


Stryker Corp - SYK - close: 92.97 change: +2.97

WHAT TO WATCH: A positive upside earnings revision from rival ZMH
sent shares of SYK soaring on Friday.  After two and a half
months of consolidation between $85 and $92 this breakout might
be the real deal.  It produced a new buy signal on its P&F chart
and its MACD indicator.  We'd prefer to buy a dip back toward $90
or at least $91.00.  Our target is round-number psychological
resistance at $100.00.

Chart=


---

Scotts Co - SMG - close: 66.90 change: +0.70

WHAT TO WATCH: It's that time of year again.  Spring has sprung
and Americans are faced with the task of bringing the yard back
to life before their home owners association sends them a nasty
letter.  Who better to help them than SMG.  The stock recently
broke out over resistance at $65 on big volume.  We'd look for a
dip back to this level as a bullish entry point.  Happy weeding.

Chart=


---

Trimble Navigation - TRMB - close: 24.34 change: +1.22

WHAT TO WATCH: TRMB, a major player in the GPS navigation
industry, is really enjoying the strength in tech stocks.
Friday's 5% rally sent TRMB soaring above resistance at $23.50
and its 50-dma.  Even the close over the $24 mark is good news.
The $26 mark might be near-term resistance but it wouldn't
surprise us to see TRMB slowly climb back toward its January
highs.

Chart=


---

Kohls Corp - KSS - close: 46.97 change: -0.32

WHAT TO WATCH: We've been watching KSS for a bearish play entry
point for some time but the bullishness in the markets has made
us hesitant to jump in. Wednesday's close under its 50-dma looked
good but it rebounded up off its lows for the session.
Thursday's breakdown under its 50-dma and test of the 100-dma
look good too but the markets waited for the jobs report.  Sure
enough KSS soared with the markets at the open on Friday only to
lose it all within the first hour or two.  Now that we have a
very strong failed rally on rising volume we'd be willing to risk
it and buy puts.  The $45 level might act as support but the real
target is probably the $41-40 region.

Chart=


---

Sunoco Inc - SUN - close: 58.94 change: -0.60

WHAT TO WATCH: Look out below!  Shares of SUN have been strongly
under performing the market the last two days with no
participation the rally.  Contributing to its weakness was
Prudential's downgrade of SUN and two other oil refiners on
Friday to "under weight".  The drop on Friday broke SUN's
technical support at its 50-dma, which has held up for months.
Now we're a little hesitant to short oil refiners with business
so strong and oil demand growing but the daily chart suggests
that SUN should be vulnerable toward its 100-dma near $55.00.

Chart=



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

DE $70.18 +1.03 - DE is in the same boat as CAT.  Both are
enjoying strong sales due to the expanding global economies.
Fortunately for DE it's at near a new all-time high and shooting
higher after a bullish reverse Head-and-shoulders breakout.  We
would target $75.00.

ODFL $36.57 +1.20 - The transports are breaking out again and JP
Morgan upgraded some trucking stocks on Thursday.  ODFL was one
of them.  Friday's rally sent ODFL to a new all-time closing high
and a triple-top P&F breakout buy signal.

YUM $38.50 +0.45 - YUM is either about to breakout over
resistance at $39.00 or form a bearish double-top.  We'd bet on
the former since a handful of restaurants have been issuing
strong same-store sales numbers the past couple of weeks.

LEH $82.67 -1.49 - No participation in the rally on Friday looks
like bad news for LEH.  The stock is producing a trend of lower
highs and the next stop looks like support at $80.00. A breakdown
there and bears could target a move to its 200-dma.


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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
^^^^^

Avid Technology - AVID - cls: 46.74 change: -0.62 stop: 42.99

All right, we're throwing in the towel on AVID.  Friday marked
the third failed rally at the 200-dma in a week.  The rest of the
market was shooting higher and AVID actually manages a small
loss.  That's not the kind of relative strength we're looking for
in a bullish play.

Picked on March 29 at $ 47.35
Change since picked:   - 0.61
Earnings Date        04/15/04 (unconfirmed)
Average Daily Volume:     663 thousand
Chart =


---

Lexmark Intl. - LXK - close: 91.71 change: -0.04 stop: 89.50

We've had a nice run from LXK since the stock broke out above
the $86 level, but it appears that it is time to book our gains
and move on.  After once again failing to penetrate the $93
level on Friday, the stock dropped to close near its low of the
day and it looks like selling volume is starting to pick up ever
so slightly.  Not only that, but daily Stochastics are giving an
early Sell signal, while at the same time flashing bearish
divergence.  The lack of participation in Friday's broad market
rally is troubling and it's time to book the gain.  Aggressive
traders willing to hold on for one more attempt at a breakout
towards our $95 target should use a tight stop just under the
10-dma.

Picked on March 14th at      $85.77
Change since picked:          +5.94
Earnings Date               4/19/04 (unconfirmed)
Average Daily Volume =     1.04 mln


---

KB Home - KBH - close: 76.60 change: -3.60 stop: 76.95

Ouch!  Earlier we suggested that there was a possibility for the
homebuilders turning lower on a stronger jobs number but we
didn't expect it to be that sharp.  The entire group got smacked
with the DJUSHB index down 4.26%.  KBH was a little bit weaker
down 4.48%.  The stock gapped down and opened at $78.00 before
quickly trading lower and stopping us out at $76.95, although on
some charts there appears to be a bad tick near $72.  We'd keep
KBH on the watch list as the $75 level could be support and
Friday's pull back may end up being a buying opportunity.

Picked on March 30 at $ 80.88
Change since picked:   - 4.28
Earnings Date        03/16/04 (confirmed)
Average Daily Volume:     1.0 million
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.


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The Option Investor Newsletter                   Sunday 04-04-2004
Sunday                                                      3 of 5


In Section Three:

Current Calls: CAT, EBAY, MGG, NEM, NSM
New Calls: BBY, ESRX, PDCO, TK
Current Put Plays: AHC, UTSI
New Puts: None


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

Caterpillar - CAT - close: 81.20 change: +2.20 stop: 78.24*new*

Company Description:
For more than 75 years, Caterpillar Inc. has been building the
world's infrastructure and, in partnership with its worldwide
dealer network, is driving positive and sustainable change on
every continent. With 2003 sales and revenues of $22.76 billion,
Caterpillar is a technology leader and the world's leading
manufacturer of construction and mining equipment, diesel and
natural gas engines and industrial gas turbines. More than half
of all sales were to customers outside of the United States,
maintaining Caterpillar's position as a global supplier and
leading U.S. exporter. The company employs nearly 70,000 people
around the world. (source: company press release)

Why We Like It:
Ka-Boom!  The markets exploded upward on the strong jobs number
and shares of CAT out performed many of its Dow brethren with a
2.78% gain.  The breakout over the $80 mark looks great and CAT
should be poised to run toward the $85 level after four days of
consolidating between $78 and $80 last week.  Please make a
bookkeeping note.  Friday's gap open at $80.25 is above our
trigger at $80.05 so we have to adjust our official entry point
to the higher number.  We know that some of you might be
wondering why CAT performed so well.  The stronger jobs number
immediately cast the shadow of higher interest rates sooner than
previously expected and big construction equipment stocks like
CAT tend to do poorly in a higher interest rate environment.
Besides some pent up optimism we believe that CAT did well
because the jobs number was one of the last remaining indicators
to really cement in the minds of investors that the economy was
still on track.  Not only is the U.S. economy doing well but CAT
is also benefiting from the expanding global economy.  We've very
bullish here but there is headline risk that labor talks could
break down between CAT and the UAW union who extended the
negotiations until April 18th.

We'd be willing to go long at current levels but considering the
overbought market conditions it would not be a bad idea to look
for a dip back toward the $80.00 mark as a bullish entry point.
We're going to raise our stop loss from $77.49 to $78.24.  FYI:
point-and-figure chart fans will notice that the Friday rally
produced a new buy signal and a $98 price target for CAT.

Suggested Options:
We're going to suggest the May options since Aprils are due to
expire in three weeks.  Our favorite would be the May 75s if you
can afford them.  Otherwise the May 80s.

BUY CALL MAY 75 CAT-EO OI=2101 at $7.20 SL=5.20
BUY CALL MAY 80 CAT-EP OI=5273 at $3.70 SL=1.85

Annotated Chart:





Picked on April 02 at $ 80.25
Change since picked:   + 0.95
Earnings Date        04/22/04 (unconfirmed)
Average Daily Volume:     2.5 million
Chart =


---

eBay Inc - EBAY - close: 73.77 change: +1.52 stop: 68.25*new*

Company Description:
eBay is The World's Online Marketplace(TM). 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. (source: company press release)

Why We Like It: (Thursday's Original Write up)
We've been waiting and watching for a strong move in EBAY over
resistance at $70.00 for weeks.  Positive comments from Bear
Stearns, who raised their earnings estimates on EBAY's Q1,
sparked a rally that didn't stop until it had cleared March's
earlier high at $72.00.  Volume was almost double the average,
which suggests this move is for real this time.  The rally today
also produced a new bullish buy signal on its MACD oscillator.

We feel that EBAY should be able to make a decent earnings run
with their announcement just three weeks away on April 21st.  As
an end of day newsletter we're going to open the play at current
levels but we suggest traders look for a dip back toward the
$70.00 mark to initiate bullish positions.  We're going to start
the play with a stop loss at $67.00 even though we believe the
$70 level should now act as support.

Weekend Update:
Was it more short covering after the positive jobs number or just
over-eager bulls?  Whatever the case EBAY soared even higher on
Friday after Thursday's big breakout.  Boosting the stock was a
strong 2.65% performance in the INX internet index and positive
comments from CSFB who reiterated their "out perform" rating for
EBAY.  We're still hoping for a pull back but excited bulls might
not let EBAY dip toward the $70 level again.  We're going to
suggest that traders look for EBAY to pull back into the $71.00-
72.50 range to initiate entries.  We are going to raise our stop
loss to $68.25 near its simple 50-dma.  FYI: the gain on Friday
has extended EBAY's P&F chart buy signal and raised its bullish
price target to $93.00.

Suggested Options:
EBAY's earnings are the 21st of April and we don't plan to hold
over the event.  However, April options expire on the 16th.  So
we're going to suggest May calls.  Our favorite is the May 70s.
Remember, we're suggesting a buy on the dip so these should get
cheaper.

BUY CALL MAY 70 XBA-EN OI= 3113 at $5.70 SL=3.20
BUY CALL MAY 75 XBA-EO OI= 3527 at $2.80 SL=1.40

Annotated chart:



Picked on April 01 at $ 72.25
Change since picked:   + 1.52
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     7.0 million
Chart =


---

MGM Mirage - MGG - close: 46.77 change: +0.59 stop: 44.00*new*

Company Description:
MGM MIRAGE, one of the world's leading and most respected hotel
and gaming companies, owns and operates 12 casino resorts located
in Nevada, Mississippi, Michigan and Australia, and has
investments in two other casino resorts in Nevada and New Jersey.
The company is headquartered in Las Vegas, Nevada, and offers an
unmatched collection of casino resorts with a limitless range of
choices for guests. Guest satisfaction is paramount, and the
company has approximately 40,000 employees committed to that
result. Its portfolio of brands include AAA Five Diamond award
winner Bellagio, MGM Grand Las Vegas -- The City of
Entertainment, The Mirage, Treasure Island ("TI"), New York-New
York, Boardwalk Hotel and Casino and 50 percent of Monte Carlo,
all located on the Las Vegas Strip; Whiskey Pete's, Buffalo
Bill's, Primm Valley Resort and two championship golf courses at
the California/Nevada state line; the exclusive Shadow Creek golf
course in North Las Vegas; Beau Rivage on the Mississippi Gulf
Coast; and MGM Grand Detroit Casino in Detroit, Michigan. The
Company is a 50-percent owner of Borgata, a destination casino
resort at Renaissance Pointe in Atlantic City, New Jersey.
Internationally, MGM MIRAGE also owns a 25 percent interest in
Triangle Casino, a local casino in Bristol, UK. (source: company
press release)

Why We Like It:
Casino and gambling stocks continue their out performing ways
with the market's widespread rally on Friday.  Shares of MGG
jumped to another new all-time high after the strong jobs number.
Fellow casino operates also lifted the sector after Thomas Weisel
upgraded Boyd Gaming (BYD) and Caesars Entertainment (CZR) to
"out perform" on Friday.  As we see more and more evidence of an
improving U.S. economy we should see stronger numbers for the
leisure industry.  Major players like MGG have already reported
stronger pricing power for their rooms in Vegas compared to last
year and terrorism fears are likely to keep the strip pretty busy
since it's in our own "backyard".

We remain bullish on MGG but traders might want to look for a dip
back toward $45.50-46.20 range to initiate new positions.  Our
target is the $50 region.  We're going to raise our stop loss to
$44.00.

Suggested Options:
Earnings are coming up less than three weeks from now and we don't
plan to hold over the report.  That means we can probably get away
with using April calls, which expire two days after MGG reports.
More conservative traders may feel more comfortable using May or
June calls.

BUY CALL APR 40 MGG-DH OI= 188 at $7.10 SL=5.10
BUY CALL APR 45*MGG-DI OI=2031 at $2.20 SL=1.10
BUY CALL MAY 45 MGG-EI OI= 124 at $3.20 SL=1.65

Annotated Chart:




Picked on March 25 at $ 45.69
Change since picked:   + 1.08
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     597 thousand
Chart =


---

Newmont Mining - NEM - close: 45.88 change: -0.87 stop: 43.50

Company Description:
Newmont Mining Corporation is a holding company and is
principally engaged in gold mining.  As of the end of 2002, the
company had gold reserves of 86.9 million equity ounces and an
aggregate land position of approximately 63,000 square miles.
NEM has operations in North America, South America, Australia,
New Zealand, Indonesia, Uzbekistan and Turkey.  In 2002, the
company obtained more than 69% of its equity gold production
from politically and economically stable countries, namely the
United States, Canada and Australia.

Why we like it:
With strong job growth finally making its appearance in Friday's
economic data, bonds plunged and the dollar rallied in
anticipation that interest rates could be rising sooner, rather
than later.  Gold stocks naturally pulled back on the bullish
action in the dollar, with NEM coming back down to once again
test the bottom of last week's gap at the open and then spending
the remainder of the session trading in a tight range just below
$46.  Traders that didn't want to chase the stock higher on its
breakout over $46 are now getting their chance at a better
entry.  Entries look good on rebounds from above the $45 level,
while those traders preferring to enter on strength will now
need to wait for a break over the $47.40 level, taking out last
week's highs.  Maintain stops at $43.50, just under the 50-dma.

Suggested Options:
Shorter Term: The April $45 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 May $47
or $50 Calls, while the more conservative approach will be to
use the May $45 strike.  Our preferred option is the May $47
strike, as it is currently near the money and should provide
sufficient time for the play to move in our favor.

! Alert - April options expire in 2 weeks!

BUY CALL APR-45 NEM-DI OI=14849 at $1.65 SL=0.75
BUY CALL APR-47 NEM-DW OI= 9774 at $0.50 SL=0.25
BUY CALL MAY-45 NEM-EI OI= 3072 at $2.85 SL=1.40
BUY CALL MAY-47*NEM-EW OI= 6677 at $1.70 SL=0.80
BUY CALL MAY-50 NEM-EJ OI= 4596 at $0.85 SL=0.40

Annotated Chart of NEM:



Picked on March 28th at      $46.15
Change since picked:          -0.27
Earnings Date                2/04/04 (confirmed)
Average Daily Volume =     6.43 mln


---

National Semi. - NSM - cls: 47.24 chng: +1.78 stop: 43.00*new*

Company Description:
National Semiconductor Corporation designs, develops,
manufactures and markets an array of semiconductor products,
including a line of analog, mixed-signal and other integrated
circuits (ICs).  These products address a variety of markets and
applications, including amplifiers, personal computers, power
management, local and wide area networks (LANs and WANs), flat
panel and cathode ray tube displays and imaging and wireless
communications.  The Company's operations are organized in five
groups: the Analog Group, the Displays Group, the Information
Appliance and Wireless Group, the Wired Communications Group and
the Custom Solutions Group.

Why we like it:
In response to the bullish jobs data on Friday, the
Semiconductor index (SOX.X) had a stellar day, advancing through
more solid resistance and decisively breaking the descending
trendline that has been in place since January.  Not only did
the SOX clear the 50-dma, but it also pushed through the 100-dma
and ended at its high of the day with a 3.74% gain.  Our NSM
play continued to lead the way, adding to its strong gains from
Thursday, with a 3.9% advance.  Closing at its high of the day,
the stock closed at its best level since the latter half of 2000
and with volume continuing to run well above the ADV, it looks
like our $50 target could be reached next week.  Traders that
were waiting for a pullback for entry on Friday were sorely
disappointed, as the stock gapped higher and just continued to
run.  The best we can probably hope for in terms of a pullback
entry now is a dip to fill Friday's gap and test that breakout
level near $45.  Aggressive traders can still enter on a
breakout above Friday's high, but with the proximity of our
profit target, the risk-reward of such a move is significantly
diminished as compared to taking the initial breakout entry.
Note that we've significantly tightened our stop this weekend,
raising it to $43, right at the 10-dma.

Suggested Options:
Shorter Term: The April $45 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 May $50
Call, while the more conservative approach will be to use the
May $45 strike.  Our preferred option is the May $45 strike, as
it is currently in the money and should provide sufficient time
for the play to move in our favor.

! Alert - April options expire in 2 weeks!

BUY CALL APR-45 NSM-DI OI=10802 at $2.90 SL=1.50
BUY CALL APR-50 NSM-DJ OI= 1370 at $0.45 SL=0.20
BUY CALL MAY-45*NSM-EI OI=14301 at $4.30 SL=2.75
BUY CALL MAY-50 NSM-EJ OI= 2783 at $1.80 SL=0.90

Annotated Chart of NSM:



Picked on March 30th at      $44.43
Change since picked:          +2.81
Earnings Date                5/25/04 (unconfirmed)
Average Daily Volume =     4.12 mln



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

Best Buy Company - BBY - close: 53.92 change: +1.62 stop: 50.75

Company Description:
Best Buy Co., Inc. is a specialty retailer of consumer
electronics, home office equipment, entertainment software and
appliances.  The company operates retail stores and commercial
Websites as part of continuing operations under the brand names
Best Buy (BestBuy.com), Future Shop (FutureShop.ca) and Magnolia
Hi-Fi (MagnoliaHiFi.com).  BBY has two reportable operating
segments, Domestic and International.  Domestic includes United
States Best Buy and Magnolia Hi-Fi stores.  International
consists of Future Shop stores operating in Canada, as well as
Canadian Best Buy stores.

Why we like it:
After languishing in a bearish trend since early December,
shares of BBY got a fresh shot of adrenaline on Wednesday when
the company reported better than expected revenues and earnings.
That solid performance met with a trio of upgrades from CIBC,
Legg Mason and Buckingham Research and investors couldn't hit
the buy button fast enough once the opening bell rang.  BBY
surged higher at the open, gapping over both the 50-dma ($51.02)
and the 200-dma ($51.02) and the buying interest continued
unabated all the way to Friday's closing bell.  On Friday alone,
the stock gained more than 3% and is now closing in on key
resistance at $55.  Not only was this a consistent barrier ever
since the gap down in early December, but a trade at $55 will
generate a fresh PnF Buy signal and a minimum price target of
$74.  Obviously we don't expect to see that target reached in
the near-term, but it gives an idea of the strength of the rally
the stock has embarked upon in the past few days.

Keeping in mind the strength of that resistance at $55 and the
fact that currently the stock remains on a PnF Sell signal, we
need to use an entry trigger at $55.  Aggressive traders can
enter on the initial breakout, while bargain hunters may be able
to get a continuation entry on a subsequent pullback to test
support near $54.  The bottom of the December gap (just over
$55.50 may offer some slight resistance, but the first serious
resistance will be found at the top of the tap near $57.50.
Once clear of that obstacle, we can look for a continued rally
up to $60 resistance and quite possibly a test of the December
highs near $62.  We'll set our stop initially at $50.75, just
under the 50-dma and 200-dma.

Suggested Options:
Shorter Term: The April $55 Call will offer short-term traders
the best return on an immediate move, as it will be at the money
when the play is triggered.

Longer Term: Aggressive longer-term traders can use the May $60
Call, while the more conservative approach will be to use the
May $55 strike.  Our preferred option is the May $55 strike, as
it will be at the money when the play is triggered and should
provide sufficient time for the play to move in our favor.

! Alert - April options expire in 2 weeks!

BUY CALL APR-50 BBY-DJ OI=22981 at $4.00 SL=2.50
BUY CALL APR-55 BBY-DK OI=17800 at $0.60 SL=0.30
BUY CALL MAY-55*BBY-EK OI= 8982 at $1.85 SL=1.00
BUY CALL MAY-60 BBY-EL OI= 2218 at $0.50 SL=0.50

Annotated Chart of BBY:



Picked on April 4th at       $53.92
Change since picked:          +0.00
Earnings Date                6/16/04 (unconfirmed)
Average Daily Volume =     3.75 mln


---

Express Scripts - ESRX - close: 75.36 change: +1.01 stop: 72.00

Company Description:
Express Scripts provides health care management and
administration services on behalf of clients that include health
maintenance organizations, health insurers, third-party
administrators, employers and union-sponsored benefit plans.
The company's fully integrated pharmacy benefit management
services include network claims processing, mail pharmacy
services, benefit design consultation, drug utilization review,
formulary management, disease management, medical information
management services and informed decision counseling services
through its Express Health Line division.

Why we like it:
Following a very strong rally from the October lows, shares of
ESRX have been consolidating in a tight range and just below
their all-time highs for more than a month.  Rather than selling
off with the rest of the market during March, the stock held up
very well, putting in a mini-double bottom just above $72, and
working their way gradually higher over the past week.  Friday's
broad market rally got the bulls moving again and the stock
gapped higher and pushed up to the $75.50 level, just under the
all-time highs slightly above $76.  The PnF chart paints a very
bullish picture, as the stock is currently working with a
bullish price target of $93.  Of course, the stock has looked
ready to break out on more than one occasion recently, so we
want to force it to prove itself before we take action.

We're setting an entry trigger at $76.25, just over the highs
from early March and momentum entries above that level look
quite favorable.  More conservative traders might be able to nab
a better entry on a subsequent pullback to test support in the
$74-75 area before the rally really gets going, but be careful
not to miss the move.  Looking back in recent months, the stock
has made a habit of launching on roughly $10 rallies before once
again going into consolidation mode.  If that's what unfolds
here, we can expect the stock to rise towards the $85 level
before running out of steam.  If the upside has potential, we
really shouldn't see a break below the 30-dma ($73.46), but
we're going to set a more liberal stop (at least until the
breakout occurs) at $72, just under the trading floor put in
place last month.

Suggested Options:
Shorter Term: The April $75 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 May $80
Call, while the more conservative approach will be to use the
May $75 strike.  Our preferred option is the May $75 strike, as
it is currently at the money and should provide sufficient time
for the play to move in our favor.

! Alert - April options expire in 2 weeks!

BUY CALL APR-75 XTQ-DO OI= 769 at $1.95 SL=1.00
BUY CALL APR-80 XTQ-DP OI= 319 at $0.35 SL=0.00
BUY CALL MAY-75*XTQ-EO OI=1584 at $3.60 SL=1.75
BUY CALL MAY-80 XTQ-EP OI= 439 at $1.50 SL=0.75

Annotated Chart of ESRX:



Picked on April 4th at       $75.36
Change since picked:          +0.00
Earnings Date                4/28/04 (unconfirmed)
Average Daily Volume =     1.04 mln


---

Patterson Dental Co - PDCO - cls: 72.14 chg: +1.95 stop: 67.90

Company Description:
Patterson Dental Company is a value-added distributor serving the
dental, companion-pet veterinarian and rehabilitation supply
markets.  (source: company press release)

Why We Like It:
We've had our eye on PDCO for a long time.  The stock produced an
incredible run from the $35 region in April 2003 to the $70 level
in November 2003.  Since then it has been consolidating its gain
with most of the last four and a half months in the $65 to $70
range.  Fundamentally business sounds good.  PDCO's last earnings
announcement was late February and the company reported sales
were up 24% while profits rose 33%.  Technically it looks great.
The Thursday-Friday rally last week produced a strong breakout
over resistance at $70.00 and its previous all-time high at 71.50
from last November.  Its P&F chart also shows a fresh triple-top
breakout buy signal (actually its a quintuple top) pointing to an
$85 price target.

Traders can consider bullish entries here or on a pull back
toward the $70 level.  We're going to start the play with a stop
loss at $67.90 and a target of $77.50 to $80.00.

Suggested Options:
We don't have to worry about earnings for PDCO until May. So
we're going to suggest the May or July calls.  Our favorite is
the May 70s on a dip or the May 75s.

BUY CALL MAY 70 DOU-EN OI= 50 at $4.40 SL=2.25
BUY CALL MAY 75 DOU-EO OI= 11 at $1.75 SL=0.90
BUY CALL JUL 70 DOU-GN OI=274 at $5.70 SL=3.25
BUY CALL JUL 75 DOU-GO OI=554 at $3.10 SL=1.60

Annotated Chart:



Picked on April 04 at $ 72.14
Change since picked:   + 0.00
Earnings Date        02/19/04 (confirmed)
Average Daily Volume:     493 thousand
Chart =


---

Teekay Shipping - TK - close: 69.13 change: +1.22 stop: 65.95

Company Description:
Teekay Shipping Corporation is the leading provider of
international crude oil and petroleum product transportation
services, transporting more than 10 percent of the world's sea-
borne oil. With offices in 13 countries, Teekay employs 4,700
seagoing and shore-based staff around the world. The Company has
earned a reputation for safety and excellence in providing
transportation services to major oil companies, oil traders and
government agencies worldwide. (source: company press release)

Why We Like It:
Crude oil may have slipped this past week on profit taking now
that the OPEC news is finally out but demand for oil isn't
slipping anytime soon.  The expanding U.S. economy, the expanding
global economy and the red-hot Chinese economy are all raising
demand for oil to the highest level since 1997.  That means
demand for oil transportation is going to remain strong.  We like
the oil tanker industry because it (at least TK) endured the
downturn in the transport sector with little loss.  Now the
transports are on the move higher again and TK looks ready to
breakout over resistance at the $70.00 mark.

Both TK's daily chart and P&F chart show the same trend of higher
lows, which should eventually produce a breakout over resistance.
We think that might occur sooner rather than later so we're going
to use a TRIGGER at $70.05 to open the play for us.  More
aggressive traders might hope for a dip back toward the simple
50-dma where TK has technical support.  If we are triggered we'll
start the play with a stop loss at $65.95.

Suggested Options:
Earnings for TK should be in late May so we're going to suggest
the May or July calls.  Right now our favorite would be the May
70s on a breakout but the 65s look good, especially on a dip.

BUY CALL MAY 65 TK-EM OI=  26 at $6.00 SL=3.75
BUY CALL MAY 70 TK-EN OI= 371 at $2.95 SL=1.50
BUY CALL MAY 75 TK-EO OI=  72 at $1.25 SL=0.65
BUY CALL JUL 70 TK-GN OI=1189 at $4.70 SL=2.35

Annotated Chart:



Picked on April xx at $ xx.xx <-- see trigger
Change since picked:   + 0.00
Earnings Date        02/25/04 (confirmed)
Average Daily Volume:     374 thousand
Chart =



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

Amerada Hess Corp. - AHC - close: 62.70 change: -0.45 stop:
66.00

Company Description:
Amerada Hess Corporation explores for, produces, purchases,
transports and sells crude oil and natural gas.  These
exploration and production activities take place in the United
States, United Kingdom, Norway, Denmark, Equatorial Guinea,
Gabon, Indonesia, Thailand, Azerbaijan, Algeria, Malaysia,
Colombia and other countries.  The company also manufactures,
purchases, transports, trades and markets refined petroleum and
other energy products.  It owns 50% of a refinery joint venture
in the United States Virgin Islands, as well as another refining
facility, terminals and retail gasoline stations located on the
east coast of the United States.

Why we like it:
A positive reception of the very strong Jobs Report on Friday
was enough to kick off a respectable rally across most of the
broad market and even the Oil stocks managed to participate.
But the Oil Service sector (OSX.X) was a real laggard, barely
posting a fractional gain.  AHC mirrored the price action in the
OSX, but it was even weaker, ending with a fractional loss.  Key
support at the 50-dma ($62.05) was tested as expected and
managed to hold, with the stock clawing its way gradually higher
into the close.  The bulls are trying to hold above this measure
of support and we clearly have set our entry trigger at the
right point.  We need to see a crack below the $61.75 level
(which would be a clear violation of the 50-dma) before entering
the play, and more conservative traders may still want to wait
for a break under the $61 level for added confirmation.  After
our trigger is satisfied, a failed bounce below $63-64 can be
used for continuation entries, but keep in mind that bounce may
not occur.  Once below $61, AHC should quickly seek out next
support at $58 on the way to our $56 target, also the PnF
bearish price target.

Suggested Options:
Aggressive short-term traders will want to use the April 65 Put,
but with April options expiring in two weeks, this choice
carries greater risk.  Those with a more conservative approach
will want to use the May 65 put.  Aggressive traders looking for
more insulation against time decay can use the May 60 strike.
Our preferred option is the May 65 strike, as it is currently in
the money and should provide ample time for the play to move in
our favor.

! Alert - April options expire in 2 weeks!

BUY PUT APR-65 AHC-PM OI= 654 at $2.75 SL=1.40
BUY PUT MAY-65*AHC-QM OI= 261 at $3.70 SL=2.00
BUY PUT MAY-60 AHC-QL OI=1332 at $1.35 SL=0.75

Annotated Chart of AHC:



Picked on April 1st at        $63.15
Change since picked:           -0.45
Earnings Date                4/28/04 (unconfirmed)
Average Daily Volume =         898 K


---

UTStarcom, Inc. - UTSI - close: 29.54 change: +0.32 stop: 32.25

Company Description:
UTStarcom, Inc., headquartered in Alameda, California, is a
global provider of wireless and wireline access and Internet
protocol (IP) switching solutions.  The company designs,
manufactures, sells and installs an integrated suite of future-
ready access network and next-generation switching solutions.
It enables wireless and wireline operators in fast-growth
markets worldwide to offer voice, data and Internet access
services rapidly and cost effectively by utilizing their
existing infrastructure.  UTSI's products provide a seamless
migration from wireline to wireless, from narrowband to
broadband and from circuit- to packet-based networks by
employing next-generation network technology.  The company's
customers include public telecommunications service providers
that operate wireless and wireline voice and data networks in
rapidly growing communications markets worldwide.

Why we like it:
Dropping just far enough to activate our entry trigger on
Wednesday, shares of UTSI have been trying valiantly to put in a
credible bounce over the past couple days, but it doesn't look
good for the bulls.  Even with the broad market strength on
Friday and a very strong rally in Technology shares, UTSI barely
managed to kiss the $30 level before once again dropping back.
Now that our trigger has been satisfied, our preference for
opening new positions is on a failed rally below the 10-week
descending trendline, now at $31.50, right at the 30-dma
($31.51).  Traders preferring to enter on signs of renewed
weakness will want to wait for a break of last week's $28.73 low
before playing.  As noted previously, potential support will be
found first just below $28 and then again near $26 enroute to
our downside target near $23-24.  Maintain stops at $32.25.

Suggested Options:
Aggressive short-term traders can use the April 30 Put, but need
to be careful with April options expiring in two weeks.  Those
with a more conservative approach will want to use the May 30
put.  Aggressive traders looking for more insulation against
time decay can use the May 25 strike.  Our preferred option is
the May 30 strike, as it is currently at the money and should
provide ample time for the play to move in our favor.

! Alert - April options expire in 2 weeks!

BUY PUT APR-30 UON-PF OI=6192 at $1.40 SL=0.75
BUY PUT MAY-30*UON-QF OI=6605 at $2.50 SL=1.25
BUY PUT MAY-25 UON-QE OI=3003 at $0.65 SL=0.30

Annotated Chart of UTSI:



Picked on March 30th at       $29.38
Change since picked:           +0.16
Earnings Date                4/27/04 (unconfirmed)
Average Daily Volume =      3.67 mln



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

None


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The Option Investor Newsletter                   Sunday 04-04-2004
Sunday                                                      4 of 5


In Section Four:

Leaps: It's A Matter Of When, Not If
Option Spreads: Bought A Stock & Guessed Right?  Now What?


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*****
LEAPS
*****

It's A Matter Of When, Not If
By Mark Phillips
mphillips@OptionInvestor.com

Following the latest missives from the Bureau of Labor Statistics
(BLS), we are led to believe that job growth is finally kicking in
and inflation is still benign.  We know that job growth is the
last sign the Fed is looking for to kick in the next chain of
interest rate hikes and judging by the stellar move in the bond
market on Friday, we can assume that interest rates will be on the
rise sooner rather than later.

It looks like the BLS finally got their data manipulation machine
running properly last month, as the PPI report came in at just
0.1%, showing a marked decline from January's 0.6% figure, calming
fears of inflation.  Never mind the fact that we can see the
dramatic rise in the price of virtually everything other than
imported products, the statistics show benign inflation.

On top of that, the missing jobs that we've been promised would be
found, were.  Friday's jobs report showed a gain of 308,000 new
jobs, well above consensus estimates and igniting talk that the
job market is finally turning around.  Where this is important to
investors is in its impact on interest rate policy and the bond
traders voted loudly on Friday sending the yield on the benchmark
10-year Treasury note soaring back over 4.1%.  This is a
tremendous rise from the sub-3.7% level lf less than 2 weeks ago.
Friday's rise in the 10-year yield was the largest one-day gain in
since late 2001 and to ignore its very clear message is a very
risky move.  Simply put, interest rates are on the rise and with
another strong jobs report, the Fed will likely have no choice but
to set the gears in motion.  It isn't the first rate hike we have
to worry about, but how many of them there will be and over what
duration.  Obviously, we can't know any of those answers, but we
can reasonably infer that they will be rising and we should begin
to plan accordingly.  As this week's title states, it is now a
matter of when, not if.

Trying to outguess the market's reaction to news and economic data
is a game I try not to play, because we never really know what the
aggregate expectations are ahead of the news, so we don't know how
the market is likely to treat the news.  Friday is a perfect
example of this, as rising interest rates could be viewed as an
impediment to continued economic growth.  While that may be true
over the longer term, it appears the short term bullish action in
the market is being driven by the reality that selling of bonds is
freeing up cash that needs to be put to work and equities are
where than money is heading.

I know we cover a lot of varied terrain here on a weekly basis,
and my never-ending struggle is to try to tie together many of the
different pieces to form a coherent picture we can use in order to
navigate the market in the weeks and months ahead.  In the recent
past, we've spent a lot of time talking about inflation, interest
rates, currencies, commodities and precious metals.  I've
attempted to tie all of these various factors together to show how
they might impact the equity markets.

In a nutshell, here are the macro trends I see.  Inflation is much
higher than is generally reported, as the cost of all raw
materials has risen dramatically due to monetary inflation and
increasing demand from Asia, as those economies make rapid strides
towards full industrialization.  Monetary inflation is driving the
value of the dollar down, but other nations need to keep the value
of their currencies low relative to the dollar, so what we've seen
is a pattern of competitive currency devaluations.  The winner in
this game is precious metals, as these tangible assets continue to
rise against the fiat currencies around the world.  Over the years
ahead, I believe we'll continue to see the value of the dollar
(and other paper currencies) fall against gold and silver and
that's the primary reason why I think all portfolios should have
exposure to both physical gold and silver as well as the mining
stocks.

The U.S. equity market is in a major secular bear market and the
primary reason we've enjoyed this bullish run of the past year is
due to currency effects.  Stocks are denominated in dollars, which
is a depreciating asset.  As we've discussed at great length, when
we denominate the DOW, NASDAQ or S&P in terms of gold or crude
oil, we can clearly see that the market has gone nowhere for the
past 12 months.

Speaking of crude oil, I've got to hit on this very important
topic.  So many analysts talk of the dramatic rise in crude oil
prices as being a huge implicit tax on the overall economy.  That
part is correct.  But then the discussion is expanded to blame the
evil oil cartel (OPEC) and the oil companies for price gouging and
there are cries for the government to do something.  Talk about
focusing on the wrong enemy!  The root cause behind most of the
rise in the price of oil is directly traceable to the
irresponsible actions of our Federal Reserve, as Greenspan and
friends continue to destroy our currency by printing more and more
dollars in a desperate attempt to avoid having to pay for the
excesses of the 1990s that have never really been neutralized.
Virtually all oil sales worldwide take place in dollars.  Well, as
I've demonstrated in the past, the majority of the rise in the
price of oil in the past 2 years can be directly blamed on the
drop in the value of the dollar.  For that we have nobody to blame
but the Fed.  So if we want the government to "do something" it
ought to be to confiscate Ben Bernanke's keys to the printing
press.  These are the dots that analysts are supposed to be paid
to connect, but increasingly they seem to be falling into the trap
of revving their mouth up to full speed without taking the time to
put their brain in gear.  All right, rant off...

Much has been made of the issue of whether the real estate market
is a bubble.  Let me say that I firmly believe it is, primarily
because of the way it has been fueled by Easy Al's House of
Credit.  Will it become a crisis or can the Fed engineer a soft
landing?  I honestly don't know, but I'm beginning to sense some
desperation on the part of the Fed, with Uncle Alan himself
singing the virtues of adjustable rate mortgages.  When he spouts
such nonsense, why is it that nobody asks the obvious question,
"What happens to the poor slob with a 4% ARM when the interest
rate rises to 7% or higher?"  I'll answer the rhetorical question
by saying it will start the deflating of the real estate bubble as
more and more borrowers find themselves unable to make the
steadily rising debt-service payments.  Foreclosures rise, supply
of homes on the market rises and the price of that real estate
falls, both in real terms and in terms of the dollar.  Then you
have even more people (that have borrowed to the hilt) upside down
on their mortgage, unable to make their payments and going into
foreclosure or bankruptcy.  It's an ugly scenario and one that we
should hope never comes to pass.

But these are all issues that are further down the road.  I
mention them as a means to help keep us centered on how the
overall investment landscape is likely to change in the months and
years ahead.  Now let's turn our attention to the more immediate
issue of last week's developments in the market.

You'll remember that I eschewed setting up a bearish play on the
DOW via the DJX due to my expectation that we would see a breakout
and new PnF Buy signal created in the rebound from the recent
lows.  Indeed we did, as the DOW blasted through the 10,350 level,
and the new PnF Buy signal came complete with a bullish price
target of 11,300.  Lest you think that is some sort of prediction,
I think it is important to point out that PnF price targets are
guidelines and methods for measuring POTENTIAL risk and reward.
As a perfect example, last week, the DOW's PnF chart was bearish
with a price target of 9400.  Clearly that target wasn't achieved,
yet here we are back on a Buy signal.

We have a different lesson on the NASDAQ-100, as it's bearish
price target had been 1390, and that target was actually exceeded
with the index falling as low as 1368 before finding bottom. Now
the NDX's PnF chart is on a strong Buy signal, with the bullish
price target of 1740 (and growing).  I don't view the vertical
counts for either the NDX or the DOW as predictions of where they
ARE headed, but as a measure of how high they could run, giving me
a way to gauge risk and reward for both bullish and bearish
positions.  Right now, despite the still very extended bullish
percent readings (except in the case of the NDX), it appears the
bears are once again carrying the bulk of the risk in the near
term.

Was it really only 2 weeks ago that I said the bears were coming
out of hibernation?  Apparently they still need more sleep because
they weren't very active last week.  I think we can safely say
that we've just experienced a very healthy and natural pullback in
a strong uptrend.  March's drop was the first sizable pullback in
the past year and I think this view of the S&P 500 tells the
picture pretty clearly.

Daily Chart of the S&P 500



Rather than that selloff in the SPX being the beginning of a trend
reversal, I think we have to view it in its proper context, which
is that of a healthy and long-overdue retracement within the
overall bullish trend.  Isn't it simply uncanny how closely the
index retraced 38% of its rally from the summer lows?

There's another view that we really need to take the time to look
at this weekend.  Do you remember the monthly chart of the SPX
that we've looked at over the past several months, where I've
pointed out the POTENTIAL for some major bearish divergence?

Monthly Chart of the S&P 500



As you can see, we still have the potential for that major
divergence to play out in the bears' favor, but we won't have
confirmation of that potential until we get a bonified Stochastics
sell signal without price exceeding the early 2002 highs.  The
jury is still out on that one.

I don't think we should leave our discussion without at least a
token mention of the VIX.  Remember that fleeting foray over 20
and into the range of normalcy?  Well with the VIX back under 16,
that brief revival of fear has been completely wiped out as
investors are voting with confidence that downside risks are
minimal.  Who knows, they may be right and stocks may just
continue higher into the November election.  I think that's pretty
unlikely, but we'll let the market tell us what is happening,
rather than trying to dictate our expectations.  Right now, the
market is telling us that it wants to go higher and it's nice to
have our Portfolio aligned that way right now.  Speaking of which,
it's high time we looked at the week's developments on our
playlist.

Portfolio:

NEM - As exciting as last week was for our NEM play, this week was
rather uninteresting.  After four days of gradually climbing
higher along with the price of gold, the short-term trend reversed
on Friday on the heels of the much better than forecast Jobs
report.  Bonds plunged, yields soared and the dollar climbed
strongly, all to the detriment of gold, which fell back to the
$421 level.  So it should come as no surprise that NEM dropped
back, erasing a weeks worth of gains, as the stock ended very near
its breakout level from the prior week.  There's nothing to
suggest a major reversal here as we have strong bullish
indications from the weekly oscillators and the PnF chart.  We
should take advantage of any near-term weakness in NEM to initiate
or add to positions on dips that find support above the 50-dma.
Raise stops to $41, as that is well below the ascending trendline
(now just over $42) connecting the lows from February and March.
Not only that, but a trade at $41 would be a new PnF Sell signal
and change the technical picture significantly.

HD - Boring!  I can't ever remember having a play in the Portfolio
that did so little for such a long period of time.  HD has
continued to channel gradually higher within the lower half of the
rising channel we've been watching these past several weeks, while
at the same time it continues to bump its head on the top of the
long-term descending channel.  Actually, the stock broke briefly
above that channel line last week, but got smacked down hard on
Friday in response to the Jobs data, which was bad news for
interest rate sensitive stocks, particularly those tied to the
Housing sector.  Oscillators have become almost useless on the
weekly and even the monthly view, so we're left watching
resistance to see if it wins or the bulls do.  Stay the course,
with a stop at $41 and we'll see where she goes.

MLNM - There's no two ways about it, MLNM has not been acting well
these past few weeks and all we have to do is look at the BTK
index to see why.  It got pummeled down to strong support near
$500 just over a week ago, dragging MLNM down to almost the $16
level.  But with the BTK coming back strong last week and ending
with a bang on Friday (up 2.8%), MLNM finally got back in gear and
recovered a full 5% to close just under the $18 level.  That rally
took the stock right to the 50-dma resistance, as well as the top
of the nearly 2-month descending channel.  That's right, it looks
like MLNM is starting to turn around for us, but the bulls still
have some work to do.  The PnF chart is still on a Sell signal and
will need to break above $19.50 again in order to turn that view
bullish.  We'll stay the course, keeping our stop at $14 and let
the market be our voting machine.

CHK - Now that's more like it!  CHK finally showed what it was
made of last week, breaking back over the 50-dma and 100-dma in
the process of driving right back to key resistance near $13.50.
Scaling that level will be the first test for the bulls, but the
real key will be to see whether the stock can break out over the
$14 level.  Looking at the weekly chart, we can see the last time
the stock was above that point was back in 1997, and there's some
formidable resistance near that level.  But taking our cue from
the very bullish PnF chart, we see that $14-16 resistance should
only be a speed bump on the way to ever higher levels.  As long as
natural gas continues to be in the favorable demand-driven and
supply-constricted relationship, we can look for CHK to remain in
its long-term bullish trend.  Maintain stops at $11 until we get
the breakout over the $14 level.

SNDK - Well, what do you know?  It looks like we actually hitched
a ride on this Technology stock at just the right time.  The bulls
pushed price right up to the descending trendline at the close of
trading on Thursday and then with the broad market rally ignited
by the Jobs data, SNDK broke through that line for the first time
in many months.  At the same time, the stock broke over the March
highs and is right on the verge of either a breakout or a
rejection at the converged 100-dma and 200-dma near $30.55.  Call
me an optimist, but I think we're going to see a breakout,
although maybe not on the first try.  See, the PnF chart gave a
new Buy signal on Friday and with it comes a bullish price target
of $39.  There's no guarantee that level will be reached, but we
now have some concrete levels to work with.  Either the rally
continues, or we drop back and go back on a Sell signal.  It would
take a trade at $25 to give that Sell signal, so with our breakout
in progress, it seems wise to raise our stop to $25 this weekend.
Note that weekly oscillators are now solidly bullish and the
monthly Stochastics are just starting to poke out of oversold
territory.  All signs point up right now, so hang on for what
could be a wild ride.  One final note about the PnF chart -- the
column of X is still incomplete, so our bullish price target will
continue to move higher until we get a reversal into a column of
O.

LUV - What happened to the weakness in Transports and Airlines?  A
near-term drop in the price of fuel seems a pretty flimsy excuse,
but there's no denying the renewed strength there.  The $TRAN
absolutely exploded in the last week, taking out the early
February low on Friday and the XAL index has had a pretty solid
rise too, reaching the 50-dma on Friday and very near the 200-dma.
LUV spent most of the past week, drifting ever so slightly higher
after creeping through the top of the descending channel.  That
move was solidified on Friday, as the stock exploded higher to the
tune of 4%, closing right on the 50-dma.  This could just be an
oversold bounce, but we'll take what we can get on this aggressive
play.  The next major overhead obstacle is the $15.50 area and
then $16, before reaching the 200-dma just over $16.50.  Until we
see proof of greater strength, we'll maintain our very liberal
stop down at $11, with the real downside protection coming from
our protective put.

EBAY - One of the realities of trading is that no matter how hard
and fast your set of rules is, you have to be able to step aside
and realize when the rules don't apply.  Our EBAY play is a
perfect example of that reality.  It was incredibly difficult to
step up and enter that long play the week before last, right after
the stock had issued a fresh PnF Sell signal.  But analyzing the
stock's PnF chart, we could see a history of Sell signals being
bear traps and leading to subsequent breakouts to new highs.  I
gambled that would be the case once again and sure enough it was.
The stock continued to rebound for the first part of the week and
then absolutely exploded on Thursday, closing at a new all-time
high at $72.25.  Underscoring the strength of that move, the stock
continued its rally on Friday and now we're deep into breakout
territory.  Pity the bears that sold the apparent breakdown!  I
don't want to get too aggressive with our stop just yet, but it
should be quite safe to raise our stop to $64, below the bottom of
the recent dip.

Watch List:

TYC - I stood at the plate, watched the pitch go by and said to
myself, a better one will be along soon.  Wrong!  It looks like I
blew it by not jumping on that dip near the $26 level a couple
weeks ago, as the stock has been on a nice steady rebound for over
a week now.  Finally moving into the upper half of the rising
channel on Friday, TYC is once again beginning to look firm.  The
irony is that now I have to raise the entry target to $27, which
is currently the bottom of the rising channel -- if I had been
less stingy, we'd already be in at a lower level.  TYC is a fairly
slow-moving stock though, so I'm content to wait for the next dip
toward support to take an entry.

Radar Screen:

WMB - As this directionless consolidation pattern continues, I
grow less and less enthusiastic about a long-term bullish move in
shares of WMB.  Last week did see a bullish break from the near-
term wedge, but that still just places the stock right smack in
the middle of the consolidation zone of the past 7 months.  I'm
going to keep WMB on the bench for now, pending a clearer bullish
setup.

APA - Still nowhere near what I think is an actionable long-term
entry point, APA is still flirting with a solid breakout at the
$43.50 level.  I'm still content to wait for a better setup, and a
dip back to the $35-36 area would certainly do the trick,
especially with the very bullish fundamental picture in the
Natural Gas patch.

GM - The price action in GM was rather peculiar, as the stock was
completely unable to participate in the strength seen in the DOW
and then it got hit pretty hard on Friday.  Of course, the selling
on Friday makes perfect sense when we understand that GM no longer
makes money from building cars.  No, the company is now little
more than a huge finance company that also happens to make cars
and sell them at cost or even a small loss.  In that light, GM's
drop in response to the Jobs data makes perfect sense.  I find it
interesting that price rolled over right at the 50-dma, as well as
strong historical resistance (broken support) near $48.  I still
like the bearish prospects for old GM, but not right here, as the
weekly Stochastics are just starting to bottom in oversold.  We've
got some time to wait for the oversold condition to work itself
off and hopefully, we'll be able to nab a bearish entry near the
top of the long-term descending channel.

DJX - Talk about dodging a bullet, I'm glad I paid attention to
that little voice in my head.  There wasn't anything specific on
the charts, just an intuitive feel I had for the patterns that
were being put in place and it looked like we were going to get a
rally.  Sure enough, we did and the DOW went back on a PnF Buy
signal, with a target of 11,300!  I won't say that level will be
reached, but I'm certainly not going to step in front of this
stampede until the charts give me a credible reason to do so.
I'll leave the DJX on the Radar Screen for now and we'll continue
to monitor the situation, looking for an opportunity to play.

Closing Thoughts:
Last week we talked about the fact that things looked bearish, but
my gut feel was that we'd seem some renewed bullish action leading
into April earnings?  Boy, did we ever!  New PnF Buy signals on
the DOW, NDX and SOX, very strong job growth statistics and the
latest iteration of the PPI showing still benign inflation.  It's
no wonder the bulls were dancing in the streets!  Despite all the
bearish signs that were apparent a couple short weeks ago, it now
appears the bulls are going to do some serious frolicking over the
next few weeks as we grind through the April earnings season.

We're currently loaded up with bullish plays, most of which are
performing rather nicely.  At the same time, our bearish play
cupboard is very empty and quite honestly that's the way it ought
to be when the broad market action looks this strong.  It won't
stay that way indefinitely though, as the "Sell in May and Go
Away" impulse could be very strong after April earnings are out of
the way, especially with the election uncertainty continuing to
weigh on investors' minds.  No new plays this week, but we could
be adding quite a few in the weeks ahead, depending on the
performance of the market through the upcoming earnings season.

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   $27          JAN-2005 $ 30  ZPA-AF
                            CC JAN-2005 $ 25  ZPA-AE
                               JAN-2006 $ 30  WPA-AF
                            CC JAN-2006 $ 25  WPA-AE
                            PP JUL-2004 $ 25  TYC-SE



PUTS:
None


New Portfolio Plays

None

New Watchlist Plays

None


Drops

SMH $41.41 Our canary in the coal mine is dead.  Actually, our
stop hasn't been hit, but I now view that as a matter of when, not
if.  Let's look at the bullish factors.  The SMH broke above the
top of its descending channel and the 50-dma on Friday, gaining
more than 3% in the process.  The weekly Stochastics are turning
up from oversold, the SOX generated a fresh PnF Buy signal and the
SOX moved strongly through the $500 resistance level.  Oh and
let's not forget the strong Book to Bill number and the strong
likelihood of bullish continuation on Monday.  We spent 3 months
trying to catch a nice bearish play in the SMH and it just wasn't
there.  With conditions starting to turn bullish, it's time to cut
bait while we're near breakeven on the play.


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Option Spread Strategies
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Bought A Stock & Guessed Right?  Now What?
By Mike Parnos, Investing With Attitude

At the CPTI, we don’t advocate the ownership of stock.  Why spend
all that money on stock when there are LEAPS available?  When you
buy a stock (or even a LEAP), there’s only one way you can make
money – if it goes up.   Let’s try to apply some common sense to
this scenario – and hope it sinks in.

Invest In Some Insurance
We’ve talked about this at length.  If you own a stock, you need
to protect your investment. The simplest way to do this is to buy
a protective long term put.  At first, it may look expensive.
But, if you prorate it, it will seem like a bargain – especially
if the stock tanks.   If the stock is worth $50, then it’s worth
$53.  If you’re right and the stock moves up to $65, you’ll never
miss the cost of the insurance.  If you’re wrong and the stock
drops to $35, you may break your arm patting yourself on the back
for making a wise decision.

Maybe you’ve taken the passive approach to investing and put your
money into a mutual fund that tracks the S&P 500.  There is a
Vanguard index called the “Vipers” (VTI) that enables you to buy
puts to protect a mutual fund investment on a tracking stock.  If
you are in tech funds, there are many indexes that offer put
protection alternatives.  There are a number of sector indexes
that will mirror the holdings of many mutual funds.

GTFO
OK.  The easiest way to protect a profit is to simply sell the
stock (or fund).  If you bought 300 shares of a stock at $30 and
it’s increased to $45, and you still want to roll the dice, sell
200 of the shares, recoup your investment.  Then you can play
roulette with the market’s money.  Better yet, sell the damn stock
(and count your blessings).  Pocket the $15 points profit and go
on a cruise.

Tight Trailing Stops
This is the second best method of protecting your stock profits.
Using a tight trailing sell stop that is set about a quarter-point
BELOW the stock’s 10-day moving average.  That will gives the
stock the benefit of the doubt, without giving up too much in the
event of a technical breakdown.   If the damn thing breaks the 10-
day MA, it’s likely to test the 20-day.  Then, look out below.

Why is this the “second best” method?  If the stock gaps down over
your trailing stop, your sell order becomes a market order and
you’ll end up selling at what is often the lowest price of the
day.  A put may cost you a few cents a month, but, if you own a
put, you sacrifice nothing.  You are protected from the strike
price all the way down to zero.

A Little Cushion Is Better Than Nothing
If you own a stock or two that has gapped up 3-4 points and is
butting up against some resistance, sell some deep in-the-money
calls.  There’s a pretty good chance the stock will retrace and
attempt to fill that gap.  Why should you give up that profit?

If the stock does retrace, you can buy back the calls for much
less, lock in your profit, and be in position to participate in a
potential retry at the resistance.

Shorting Against The Box
What do the professional money managers do?  It’s called
"shorting-against-the-box." When you short-against-the-box, you
short the very same stock you are long in what is called a short
account, locking in the current value of the shares.  Apparently,
in some parallel universe, every trading account has a short
account attached to it.

For example: You own 1,000 shares of RMBS.  Not long ago, RMBS
closed one day at $25.84 and opened the next day at $35.90 (a
resistance level).   If you shorted RMBS that morning, you would
have locked in the $10+ gain.  Then, as RMBS worked its way back
down to $26+ (a support level), you could have covered your short
and banked your profit.  You would still be long your original
1,000 shares of stock and be in position for a potential bounce
off support.

Stock Or Options?
Remember, that most of the above asset protection strategies can
be used if you own stocks, funds or (surprise, surprise) options.
______________________________________________________________

The Next Two Weeks
Should be, at the very least, interesting.  The market is moving
up.  Again, it seems overbought and ready to pull back.  The jobs
report should put the fear of Greenspan into investor’s hearts and
we could be in for some selling.

The markets will be closed for Good Friday.  As premium sellers,
we love those long weekends.  The fewer days we’re exposed to the
daily market chaos, the better.

During the week of April 11 – 17, I will be sending in columns
from a different couch.  I got roped into going on a cruise.  A
Carnival ship (they don’t like to be called “boats”) will be
stopping at various islands where only three people speak English
and you’re bothered to buy 50-cent trinkets for $5.   I’ll need to
use all the self-discipline I can muster.  I won’t be tempted by
the trinkets.  It’s the ship’s 24-hour pizza window I’m worried
about.
____________________________________________________________

APRIL CPTI POSITIONS

April Position #1 – SPX Iron Condor – 1141.81
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 – 603.45
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 - $104.30
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 – $101.42
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 -- $37.10
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:
Oct. $33 puts and Oct. $34 calls – credit of $1,900. Nov. $34 puts
and calls – credit of $1,150. Dec. $34 puts and calls – credit of
$1,500.  Jan. $34 puts and calls – credit of $850.  Feb. $34 calls
and $36 puts – credit of $750. Mar. $34 calls and $37 puts –
credit of $1,150. 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
an efficient cash flow generating strategy.

ZERO-PLUS Strategy.  OEX – 558.10
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).
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.  Bought back
March 560 calls for $.15, locked in profit of $120 x 3 = $360.
Cash position is $3,320 ($1,620 plus the unused $1,700).

April Positions:
OEX Bull Put Spread - $558.10.  Sell 5 OEX April 515 puts and buy
5 contracts of April 505 puts for credit of  $.90 (x 5 contracts =
$450).
Sell call against long 540 call. Sell 5 OEX April 570 calls for
$1.35 (x 5 contracts = $675).

New cash position is $2,640 plus unused $1,700 = $4,340.
_____________________________________________________________

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, first look under "Education" on
the OI home page and click on "Traders Corner."  For more recent
columns, you can look under “Strategies” and click on
“Combinations.”  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.


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The Option Investor Newsletter                   Sunday 04-04-2004
Sunday                                                      5 of 5

In Section Five:

Spreads & Straddles: Rally In Progress!
Premium-Selling Plays: Naked Puts & Calls
Conservative Stock Ownership: Covered Calls


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*******************
SPREADS & STRADDLES
*******************

Rally In Progress!
By Ray Cummins

The major equity averages soared Friday after a favorable labor
report gave investors confidence about the recovering economy.

The Dow Jones Industrial Average finished up 97 points at 10,470
with 25 of the 30 blue-chip components posting gains.  The NASDAQ
Composite added 42 points to end at 2,057 on strength in chip and
computer hardware shares.  The broader S&P 500 Index rose 9 points
to 1,141, despite losses in interest-rate sensitive shares such as
brokerages, banks and homebuilders.  Advancing issues had only a
slight edge over declining stocks on the Big Board, while winners
swept past losers by a 22 to 9 margin on the technology exchange.
Volume was 1.6 billion shares on the NYSE, and 2.16 billion on the
NASDAQ.  The growth in jobs sent bond yields higher with the yield
on the benchmark 10-year Treasury note rallying to 4.14%.  For the
week, the Dow rose 2.5%, the NASDAQ gained 4.9%, and the S&P 500
Index climbed 3%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/02/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.


PUT-CREDIT SPREADS

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

APOL    77.82  90.97   APR  65  70   0.60  69.40   0.60   Open
BZH    111.90 102.30   APR  95 100   0.70  99.30   0.70   Open?
KBH     78.71  76.60   APR  65  70   0.55  69.45   0.55   Open
COF     73.50  74.99   APR  60  65   0.50  64.50   0.50   Open
HUG     52.95  53.65   APR  45  50   0.50  49.50   0.50   Open
SYMC    44.64  46.96   APR  37  40   0.35  39.65   0.35   Open
DNA    106.82 110.70   APR  90  95   0.60  94.40   0.60   Open
FDX     71.59  76.07   APR  65  70   0.85  69.15   0.85   Open
LLL     56.67  60.06   APR  50  55   0.50  54.50   0.50   Open
TASR    61.80  85.00   APR  45  50   0.60  49.40   0.60   Open
DE      68.23  70.18   APR  60  65   0.40  64.60   0.40   Open
FFIV    31.87  34.74   APR  25  30   0.55  29.45   0.55   Open
MRVL    42.67  46.98   APR  37  40   0.20  39.80   0.20   Open
CFC     95.90  91.25   APR  85  90   0.55  89.45   0.55   Open?
KBH     80.80  76.60   APR  70  75   0.40  74.60   0.40   Open?
NCEN    48.56  47.50   APR  40  45   0.45  44.55   0.45   Open

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

The position in Hughes Supply (NYSE:HUG), although positive, has
previously been closed to limit potential losses.  Positions in
Beazer (NYSE:BZH), Countrywide Financial (NYSE:CFC), and the new
KB Home (NYSE:KBH) spread are candidates for "early exit" on any
further downside movement.  New Century Financial (NASDAQ:NCEN)
is on the "watch" list.


CALL-CREDIT SPREADS

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

DISH    35.50  32.99   APR  42  40   0.30  40.30   0.30   Open
NVLS    31.15  33.67   APR  37  35   0.35  35.35   0.35   Open
VSEA    40.85  44.83   APR  50  45   0.60  45.60   0.60   Open?
SFA     31.96  34.16   APR  40  35   0.55  35.55   0.55   Open?
BBBY    39.04  39.61   APR  45  42   0.25  42.75   0.25   Open
MSTR    52.64  54.44   APR  65  60   0.60  60.60   0.60   Open
NTLI    53.12  59.14   APR  65  60   0.60  60.60   0.60   Open?
SINA    35.96  38.79   APR  45  40   0.70  40.70   0.70   Open
AFCO    27.85  29.67   APR  35  30   0.55  30.55   0.55   Open
CAM     43.90  43.91   APR  50  45   0.50  45.50   0.50   Open
CCMP    42.13  42.41   APR  50  45   0.45  45.45   0.45   Open
XLNX    37.76  39.97   APR  42  40   0.25  40.25   0.25   Open?

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

Bearish spreads on Adobe (NASDAQ:ADBE) and Cognos (NASDAQ:COGN),
which is positive, have previously been closed to limit potential
losses.  NTL Inc. (NASDAQ:NTLI) remains an "early exit" candidate
and is joined by Varian Semiconductor (NASDAQ:VSEA), Scientific
Atlanta (NYSE:SFA) and Xilinx (NASDAQ:XLNX).  Spreads on Applied
Films (NASDAQ:AFCO) and Sina Corp (NASDAQ:SINA) are now on the
"watch" list.


DEBIT STRADDLES

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

GLBC    13.86  20.44   APR    15    12     1.80    5.50    Open?
SNP     40.74  38.80   APR    40    40     5.70    5.70    Open?
CCMP    44.55  42.41   APR    45    45     5.90    5.75    Open?
AMX     35.66  39.50   MAY    35    35     3.65    5.00    Open
AIG     74.28  74.30   MAY    75    75     5.60    7.80    Open
SLB     65.13  61.79   MAY    65    65     6.75    6.50    Open
BSTE    30.63  33.85   JUL    30    30     6.00    6.50    Open
MKSI    23.10  25.94   JUL    22    22     4.70    5.25    Open

New straddle plays in MKS Instruments (NASDAQ:MKSI) and Biosite
(NASDAQ:BSTE) are off to a good start.  The speculative position
in Global Crossing (NASDAQ:GLBC) has provided a large short-term
gain for traders who paid a small premium to enter the straddle.
Prices for the new positions in American International (NYSE:AIG)
and Schlumberger (NYSE:SLB), as well as any potential gains (max.
value) for straddles in play during my recent absence from the
market, will not be accurate.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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 - 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.

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

PHTN - Photon Dynamics  $37.30  *** Upgrade = Rally! ***

Photon Dynamics (NASDAQ:PHTN) is a provider of yield management
solutions to the flat panel display (FPD) industry.  The company
also offers yield management solutions for the printed circuit
board assembly and advanced semiconductor packaging industries
and the cathode ray tube display and CRT glass and auto glass
industries.  The firm's test, repair and inspection systems are
used by manufacturers to collect data, analyze product quality
and identify and repair product defects at critical steps in the
manufacturing.

PHTN - Photon Dynamics  $37.30

PLAY (less conservative - bullish/credit spread):

BUY  PUT  APR-32.50  PDU-PZ  OI=193  ASK=$0.30
SELL PUT  APR-35.00  PDU-PG  OI=63   BID=$0.60
INITIAL NET-CREDIT TARGET=$0.30-$0.40
POTENTIAL PROFIT(max)=14% B/E=$34.70


__________________________________________________________________

RIMM - Research In Motion  $104.14  *** "Blue Sky" Territory! ***

Research In Motion Limited (NASDAQ:RIMM) is a designer, builder,
and marketer of wireless solutions for the mobile communications
market.  Through development and integration of hardware, software
and services, the firm provides solutions for seamless access to
time-sensitive information and communications, including e-mail,
telephone, messaging and Internet- and intranet-based applications.
The company's technology also enables a broad array of third-party
developers and manufacturers around the world to enhance their own
products and services with wireless connectivity.  RIM's portfolio
of products includes a family of wireless handhelds, the BlackBerry
wireless e-mail solution, embedded radio modems and a suite of
software development tools.  Earnings are due on 4/7/04.

RIMM - Research In Motion  $104.14

PLAY (less conservative - bullish/credit spread):

BUY  PUT  APR-85.00  RUP-PQ  OI=7214  ASK=$0.85
SELL PUT  APR-90.00  RUP-PR  OI=8943  BID=$1.50
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$89.35


__________________________________________________________________

YHOO - Yahoo!  $50.15  *** New 2004 High! ***

Yahoo! (NASDAQ:YHOO) is a global Internet business and consumer
services company that offers a comprehensive branded network of
properties and services to more than 200 million individuals
worldwide.  The company offers an online navigational guide to the
Internet via its www.yahoo.com Website, which is a guide in terms
of traffic, advertising and household and business user reach.
Through Yahoo! Enterprise Solutions, the firm also provides many
business services designed to enhance the productivity and Web
presence of its clients.  Yahoo! has offices in the United States,
Europe, Asia, Latin America, Australia and Canada.  Earnings are
due on 4/7/04.

YHOO - Yahoo!  $50.15

PLAY (less conservative - bullish/credit spread):

BUY  PUT  APR-45.00  YHQ-PI  OI=14221  ASK=$0.35
SELL PUT  APR-47.50  YHQ-PW  OI=11419  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$47.20



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

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.

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

PHM - Pulte Homes  $52.87  *** Sector Slump! ***

Pulte Homes (NYSE:PHM) is a holding company whose subsidiaries
engage in the homebuilding and financial services businesses.
The company's direct subsidiaries include Pulte Diversified
Companies, Inc. (PDCI), Del Webb Corporation and others that
are engaged in the homebuilding business.  PDCI's operating
subsidiaries include Pulte Home Corporation (PHC), Pulte
International Corporation and other subsidiaries that are
engaged in the homebuilding business.  The company also has a
mortgage banking company, Pulte Mortgage Corporation, which is
a subsidiary of PHC.

PHM - Pulte Homes  $52.87

PLAY (less conservative - bearish/credit spread):

BUY  CALL  APR-60.00  PHM-DL  OI=1177  ASK=$0.10
SELL CALL  APR-55.00  PHM-DK  OI=2394  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.55-$0.65
POTENTIAL PROFIT(max)=12% B/E=$55.55


__________________________________________________________________

XAU - PHLX Gold & Silver Index  $104.30  *** Gold Bears Only! ***

The PHLX Gold & Silver Sector (XAU) is a capitalization-weighted
index composed of the common stocks of 9 companies involved in
the gold and silver mining industry.  The XAU was set to an
initial value of 100 in January 1979; options commenced trading
on December 19, 1983.  For more information on the XAU, go to
www.phlx.com.

XAU - PHLX Gold & Silver Index  $104.30

PLAY (conservative - bearish/credit spread):

BUY  CALL  APR-115.00  XAV-DC  OI=2664  ASK=$0.25
SELL CALL  APR-110.00  XAV-DB  OI=9283  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.40-$0.50
POTENTIAL PROFIT(max)=8% B/E=$110.40



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

__________________________________________________________________

BRKS - Brooks Automation  $22.66  *** Cheap Speculation! ***

Brooks Automation (NASDAQ:BRKS) is a supplier of products for
automation and related solutions primarily for the worldwide
semiconductor market.  The company supplies hardware, software
and services to both chip manufacturers and original equipment
manufacturers, or OEMs, who make manufacturing equipment for
making semiconductor devices.  Brooks' offerings ranging from
hardware and software modules to fully integrated systems and
the system integration services to deploy its products on a
worldwide basis.

BRKS - Brooks Automation  $22.66

PLAY (very speculative - neutral/debit straddle):

BUY CALL  APR-22.50  BQE-DX  OI=72   ASK=$0.95
BUY PUT   APR-22.50  BQE-PX  OI=310  ASK=$0.85
INITIAL NET-DEBIT TARGET=1.60-$1.70
INITIAL TARGET PROFIT=$0.55-$0.90


__________________________________________________________________

LF - LeapFrog Enterprises  $19.67  *** Probability Play ***

LeapFrog Enterprises (NYSE:LF) is a designer, developer and seller
of technology-based educational products and related proprietary
content, dedicated to making learning effective and engaging.  The
firm designs its products to help preschool through eighth grade
children learn age- and skill-appropriate subject matter, such as
phonics, reading, math, spelling, science, geography, history and
music.  The company has also extended its product line downward in
age to reach infants and toddlers and upward in age to reach high
school students.

LF - LeapFrog Enterprises  $19.67

PLAY (conservative - neutral/debit straddle):

BUY CALL  JUN-20.00  LF-FD  OI=600   ASK=$1.65
BUY PUT   JUN-20.00  LF-RD  OI=1293  ASK=$1.95
INITIAL NET-DEBIT TARGET=3.40-$3.50
INITIAL TARGET PROFIT=$1.85-$2.40



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

SEE DISCLAIMER - SECTION 1

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


*****************************************
PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS
*****************************************

All of these issues have robust option premiums and favorable
technical indications.  However, current news and events as
well as market sentiment, will have an effect on these stocks
so review each position thoroughly and make your own decision
about its outcome.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 04/02/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

APPX     APR    33    32.48   44.43    0.90   5.98%   2.77%
NEOL     APR    15    14.65   20.00    0.35   5.57%   2.39%
OSTK     APR    25    24.30   32.34    0.70   7.25%   2.88%
APPX     APR    33    32.73   44.43    0.65   5.76%   1.99%
ASKJ     APR    25    24.15   37.94    0.85   9.04%   3.52%
CLZR     APR    11    11.07   14.12    0.17   4.72%   1.54%
JNPR     APR    22    21.85   27.10    0.65   7.82%   2.97%
NEOL     APR    15    14.65   20.00    0.35   6.74%   2.39%
PDII     APR    22    21.80   25.90    0.70   8.31%   3.21%
SWIR     APR    22    22.15   40.96    0.35   5.03%   1.58%
APPX     APR    33    33.03   44.43    0.35   4.71%   1.06%
BRCM     APR    35    34.55   41.40    0.45   4.64%   1.30%
ELN      APR    15    14.65   21.47    0.35   9.84%   2.39%
OSTK     APR    22    22.25   32.34    0.25   4.47%   1.12%
PCLN     APR    20    19.75   27.20    0.25   4.90%   1.27%
SYMC     APR    40    39.40   46.96    0.60   4.89%   1.52%
XMSR     APR    25    24.40   29.86    0.60   7.74%   2.46%
YHOO     APR    40    39.40   50.15    0.60   5.13%   1.52%
APPX     APR    35    34.45   44.43    0.55   6.27%   1.60%
ASKJ     APR    25    24.55   37.94    0.45   7.51%   1.83%
CMC      APR    30    29.60   31.60    0.40   4.72%   1.35%
CSGS     APR    15    14.65   17.35    0.35   7.65%   2.39%
ECLG     APR    17    17.20   21.53    0.30   6.26%   1.74%
JILL     APR    17    17.15   21.53    0.35   6.38%   2.04%
MGAM     APR    22    22.05   23.78    0.45   6.80%   2.04%
PBY      APR    25    24.50   28.41    0.50   5.97%   2.04%
SUPG     APR     7     7.15    8.62    0.35  16.86%   4.90%
AGI      APR    30    29.55   33.75    0.45   5.39%   1.52%
ASKJ     APR    25    24.60   37.94    0.40   6.62%   1.63%
ENDP     APR    20    19.75   26.65    0.25   4.98%   1.27%
NFLD     APR    12    12.15   15.81    0.35  12.17%   2.88%
PBY      APR    25    24.55   28.41    0.45   6.18%   1.83%
PLMO     APR    15    14.65   23.55    0.35   9.66%   2.39%
RSAS     APR    15    14.55   18.47    0.45  10.23%   3.09%
SHFL     APR    40    39.60   46.50    0.40   4.13%   1.01%
SYMC     APR    40    39.35   46.96    0.65   5.79%   1.65%
ASCA     APR    30    29.70   34.86    0.30   4.73%   1.01%
ASKJ     APR    30    29.40   37.94    0.60   9.72%   2.04%
ERJ      APR    30    29.40   32.45    0.60   8.22%   2.04%
IMM      APR    15    14.70   19.85    0.30  11.43%   2.04%
INSP     APR    30    29.70   39.26    0.30   5.70%   1.01%
MICC     APR    18    16.90   24.32    0.60  15.59%   3.55%
MNST     APR    22    22.20   28.26    0.30   5.95%   1.35%
TKTX     APR    15    14.50   17.14    0.50  17.25%   3.45%
APPX     APR    43    42.63   44.43    0.75   8.92%   1.76%
ASKJ     APR    30    29.70   37.94    0.30   6.44%   1.01%
COCO     APR    30    29.75   33.69    0.25   4.55%   0.84%
FWHT     MAY    17    17.15   21.60    0.35   4.27%   2.04%
MICC     MAY    17    17.15   24.32    0.35   4.39%   2.04%
MNST     MAY    22    21.95   28.26    0.55   4.48%   2.51%
PLMO     MAY    17    16.90   23.55    0.60   6.80%   3.55%
TTN      APR    17    17.25   20.06    0.25   8.43%   1.45%
TTWO     APR    35    34.55   36.99    0.45   6.40%   1.30%

Some of the new positions may not have been available at the
listed prices, due to the recent market rallies.  Plays on
Amylin (NASDAQ:AMLN) and Nektar (NASDAQ:NKTR), although
positive, have been closed to limit potential losses.


NAKED CALLS

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

SEAC     APR    20    20.40   15.84    0.40   7.86%   1.96%
ERES     APR    35    35.30   28.23    0.30   4.73%   0.85%
FARO     APR    30    30.40   23.70    0.40   7.33%   1.32%
AFCI     APR    25    25.50   22.87    0.50   8.84%   1.96%
FLSH     APR    22    22.75   21.07    0.25   5.62%   1.10%
ADTN     APR    35    36.30   31.36    0.80   9.56%   2.20%
DISH     APR    35    35.65   32.99    0.65   6.34%   1.82%
MTLM     APR    40    40.60   39.00    0.60   9.68%   1.48%
BRL      APR    50    50.40   47.50    0.40   4.08%   0.79%
OVTI     APR    30    30.50   28.81    0.50  10.89%   1.64%
SNDK     APR    32    32.75   30.00    0.25   6.38%   0.76%

The "early-exit" candidates listed on Wednesday: NII Holdings
(NASDAQ:NIHD) and Schnitzer Steel (NASDAQ:SCHN), were closed
to limit losses.  The bearish position in Career Education
(NASDAQ:CECO) has previously been closed.  M-Systems Flash Disk
(NASDAQ:FLSH), Omnivision Technologies (NASDAQ:OVTI) and Sandisk
(NASDAQ:SNDK) are on the "watch" list, and conservative traders
should consider closing the bearish position in Metal Management
(NASDAQ:MTLM).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.

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

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.

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

BARZ - Barra  $36.75  *** On The Rebound! ***

Barra (NASDAQ:BARZ) is an investment risk management firm that
provides solutions to financial professionals worldwide.  The
company's products and services support the business-critical
portfolio and enterprise-wide risk management needs of global
investment professionals and are designed to allow clients to
make strategic investment decisions with confidence.  Barra's
business is organized into two business units: core business,
which provides risk management solutions, and the ventures
businesses, which consist of investments, joint ventures or
significant licensing arrangements that leverage the ideas and
intellectual property of the core business.

BARZ - Barra  $36.75

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    QNB PG     210   0.65  34.35  12.1%   1.9% *


__________________________________________________________________

HNT - Health Net  $27.00  *** Bottom-Fishing Only! ***

Health Net (NYSE:HNT) is an integrated managed care organization
that administers the delivery of managed healthcare services.
The company's health plans and government contracts subsidiaries
provide health benefits through health maintenance organizations,
insured preferred provider organizations and point-of-service
plans to approximately 5.4 million individuals in 15 states
through group and individual programs.  The firm's subsidiaries
also offer managed healthcare products related to behavioral
health, dental, vision and prescription drugs.  In addition, the
firm offers managed healthcare product coordination for workers'
compensation insurance program through its employer services
group subsidiary.

HNT - Health Net  $27.00

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    HNT PE    1837   0.55  24.45  14.9%   2.2%
SELL PUT  MAY 22.5  HNT QX     675   0.50  22.00   4.8%   2.3% *
SELL PUT  MAY 25    HNT QE      72   1.15  23.85   7.5%   4.8%


__________________________________________________________________

IPXL - IMPAX Laboratories  $24.23  *** Multi-Year High! ***

IMPAX (NASDAQ:IPXL)) is a unique, technology-based pharmaceutical
firm focused on the development and commercialization of generic
and brand name pharmaceuticals, utilizing its controlled-release
and other in-house development and formulation expertise.  In the
generic pharmaceuticals market, IMPAX is primarily focusing its
efforts on selected controlled-release generic versions of brand
name pharmaceuticals.  The firm is also developing other generic
pharmaceuticals that present one or more competitive barriers to
entry, such as difficulty in raw materials sourcing, complex
formulation or development characteristics, or special handling
requirements.  In the brand-name pharmaceuticals market, IMPAX is
developing products for the treatment of central nervous system
disorders.

IPXL - IMPAX Laboratories  $24.23

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  UPR PX      87   0.50  22.00  15.0%   2.3%
SELL PUT  MAY 20    UPR QD     515   0.50  19.50   5.4%   2.6% *


__________________________________________________________________

SSNC - SS&C Technologies  $26.64  *** Consolidation Complete? ***

SS&C Technologies (NASDAQ:SSNC) is a provider of client/server
based investment and financial management software, application
service provider solutions and business process outsourcing
solutions.  The company's products and related services compete
in a variety of vertical markets in the institutional investment
management marketplace, including commercial lending, financial
institutions, hedge funds and family offices, institutional asset
management, insurance entities, pension funds, municipal finance
and real estate property management.

SSNC - SS&C Technologies  $26.64

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    QUN PE      16   0.60  24.40  15.8%   2.5%
SELL PUT  MAY 20    QUN QD      20   0.30  19.70   3.4%   1.5% TS
SELL PUT  MAY 22.5  QUN QX       0   0.90  21.60   7.9%   4.2% *


__________________________________________________________________

TINY - Harris & Harris Group  $19.60  *** A "NANO" Investor! ***

Harris & Harris Group (NYSE:TINY) is a venture capital investment
company that is operating as a business development company.  The
company's investment objective is to achieve long-term capital
appreciation, rather than current income, from its investments.
The company has invested a substantial portion of its assets in
privately held start-up companies and in the development of new
technologies in various industry segments.  These privately held
businesses generally tend to be thinly capitalized, unproven,
small companies based on risky technologies that lack management
depth and have not attained profitability nor have any history of
operations.

TINY - Harris & Harris Group  $19.60

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  QJT PW     251   0.30  17.20  12.6%   1.7%
SELL PUT  MAY 15    QJT QC      80   0.30  14.70   4.6%   2.0% *
SELL PUT  MAY 17.5  QJT QW      90   0.95  16.55   9.2%   5.7%


__________________________________________________________________

TRID - Trident Microsystems  $16.75  *** Entry Point? ***

Trident Microsystems (NASDAQ:TRID) designs, develops and sells
integrated circuits for video graphics, multimedia and digitally
processed television products for desktop and notebook personal
computers and the consumer television market.  In 2000, Trident
restructured its organization into two major business units: the
Graphics Division, which concentrated primarily on video graphics
for the PC market, and the Digital Media Division, which designs
integrated circuits for digitally processed television (DPTV) for
the consumer television market.

TRID - Trident Microsystems  $16.75

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    HVU PC     116   0.25  14.75  12.2%   1.7% *
SELL PUT  MAY 15    HVU QC       0   0.85  14.15   9.5%   6.0%


__________________________________________________________________

UTHR - United Therapeutics  $24.14  *** Drug Speculation! ***

United Therapeutics (NASDAQ:UTHR) is a biotechnology company
focused on the development and commercialization of therapeutics
to treat chronic and life-threatening diseases in 3 therapeutic
areas: cardiovascular medicine, infectious disease and oncology.
It has 5 therapeutic platforms: Prostacyclin analogs are stable
synthetic forms of a molecule that has effects on blood-vessel
health and function; Remodulin has been approved in the United
States for the treatment of pulmonary arterial hypertension in
patients with New York Heart Association Class II-IV symptoms;
Immunotherapeutic monoclonal antibodies are antibodies that
activate patients' immune systems to treat cancer; Glycobiology
anti-viral agents are a class of small molecules that may be
effective as an oral therapy for hepatitis C and other infections,
and Telemedicine involves portable digital devices that enable
physicians to remotely monitor patients' bodily measurements.

UTHR - United Therapeutics  $24.14

"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 22.5  FUH PX     300   0.45  22.05  13.5%   2.0% *


__________________________________________________________________

XMSR - XM Satellite Radio  $29.86  *** The Rally Resumes! ***

XM Satellite Radio (NASDAQ:XMSR) is America's #1 satellite radio
service with over 1 million subscribers.  Broadcasting live daily
from Washington, DC, New York City and Nashville, Tennessee at the
Country Music Hall of Fame, XM provides its loyal listeners with
over 100 digital channels of choice: 70 music channels, more than
35 of them commercial-free, from hip hop to opera, classical to
country, bluegrass to blues; and 31 channels of premiere sports,
talk, comedy, kid's and entertainment programming.  Compact and
stylish XM satellite radio receivers for the home, the car, the
computer and even a "boom-box" for on the go are available from
retailers nationwide.

XMSR - XM Satellite Radio  $29.86

PLAY (sell naked put):

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

SELL PUT  APR 27.5  QSY PY    3239   0.30  27.20   7.7%   1.1% *
SELL PUT  MAY 25    QSY QE     755   0.55  24.45   4.7%   2.2%



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

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.

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

HOV - Hovnanian Enterprises  $40.00  *** Sector Slump! ***

Hovnanian Enterprises (NYSE:HOV) constructs and sells single-family
detached homes and attached condominium apartments and townhouses
in more than 196 new home communities in New Jersey, Pennsylvania,
New York, Virginia, Maryland, North Carolina, Texas and California.
The firm offers a wide variety of homes that are designed to appeal
to first-time buyers; first- and second-time, move-up buyers; luxury
buyers; active adult buyers, and empty nesters.  In addition, the
company provides financial services, including mortgage banking and
title services to the homebuilding operations' customers.  The firm
does not retain or service the mortgages that it originates, but
rather sells the mortgages and servicing rights to investors.

HOV - Hovnanian Enterprises  $40.00

PLAY (sell naked call):

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

SELL CALL  APR 42.5  HOV DV    2666   0.40  42.90   7.3%   0.9% *
SELL CALL  APR 40    HOV DH    5573   1.25  41.25  18.4%   3.0%



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

SEE DISCLAIMER - SECTION 1

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


*******************************************
CONSERVATIVE STOCK OWNERSHIP: COVERED CALLS
*******************************************

Many of our readers find that writing "in-the-money" covered-calls
fits their criteria for a conservative, easy-to-manage investing
strategy.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Supplemental Covered Calls -- April 4, 2004
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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.  These positions will not be
included in the monthly summary.  A new selection of covered-call
candidates will be published on expiration week-end (4/18/04).
__________________________________________________________________

Sequenced by Target Yield (monthly basis)

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

OMCC   20.45  APR 20.00  UMK DD   1.35  60     19.10  12  11.9%
PLMO   23.55  APR 22.50  UPY DX   2.00  773    21.55  12  11.2%
AUDC   12.67  APR 12.50  QAS DV   0.70  159    11.97  12  11.2%
SUNW    5.06  APR  5.00  SUQ DA   0.25  74595   4.81  12  10.0%
CACS   12.80  APR 12.50  CQQ DV   0.75  142    12.05  12   9.5%
PXLW   17.70  APR 17.50  PUO DW   0.70  797    17.00  12   7.5%
AMD    17.45  APR 17.00  AMD DY   0.90  13372  16.55  12   6.9%
BRKS   22.66  APR 22.50  BQE DX   0.75  72     21.91  12   6.8%
AMAT   22.55  APR 22.50  ANQ DX   0.60  79337  21.95  12   6.4%
GNSS   18.17  APR 17.50  QFE DW   1.10  1195   17.07  12   6.4%
SWC    18.15  APR 17.50  SWC DW   1.05  69     17.10  12   5.9%
TER    25.36  APR 25.00  TER PE   0.70  1762   24.66  12   3.5%

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

SEE DISCLAIMER - SECTION 1

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


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