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Daily Newsletter, Tuesday, 04/06/2004

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The Option Investor Newsletter                 Tuesday 04-06-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Wrong Number
Futures Markets: See Note
Index Trader Wrap: Nokia's warning gives reason for pause
Market Sentiment: Stocks Catch Their Breath


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      04-06-2004           High     Low     Volume   Adv/Dcl
DJIA    10570.81 + 12.40 10570.81 10505.11 1.79 bln 1175/2087
NASDAQ   2059.90 - 19.20  2068.27  2053.32 1.78 bln 1092/2076
S&P 100   561.58 -  1.28   562.86   559.07   Totals 2267/4163
S&P 500  1148.17 -  2.40  1150.57  1143.30
W5000   11239.80 - 40.10 11279.90 11200.54
SOX       508.07 - 10.60   518.70   502.36
RUS 2000  599.33 -  7.06   606.39   599.28
DJ TRANS 2974.84 + 19.20  2982.45  2947.97
VIX        15.32 +  0.35    15.53    15.07
VXO (VIX-O)14.49 +  0.61    14.96    14.34
VXN        22.23 +  1.12    22.24    21.28
Total Volume 3,786M
Total UpVol  1,242M
Total DnVol  2,474M
Total Adv  2494
Total Dcl  4637
52wk Highs  421
52wk Lows    58
TRIN       1.00
NAZTRIN    1.06
PUT/CALL   0.82
************************************************************

Wrong Number
by Jim Brown

Nokia dialed a wrong number for the markets on Tuesday and
the result was a serious drop in tech stocks. Apparently
more cell phone buyers are opting for the cheap phones
instead of those laden with expensive and profitable
features. This is simply a case of the market looking for
an excuse to take profits.

Dow Chart - Daily


Nasdaq Chart - Daily


Russell Chart - Daily


Wilshire 5000 - Chart



While it may sound strange to claim that the warning was
just an excuse I believe the facts are clear. Nokia said
their Q1 revenue would be almost $8 billion. That is a
lot of phones and it is only -2% below last years levels.
That may not seem like a positive sign but there were other
points that bear mentioning. Nokia said industry growth
rose +25% for the quarter. This is a huge number considering
the saturation level of phones already. Nokia was killed on
the news as well as chip companies supplying the internals
for the phones. The entire market was taken down a notch.

Think about it for a second. If the market grew +25% then
somebody got the business. Odds are good Motorola picked
up significant share with Ericsson and Qualcomm also
gaining points. The chip companies that were cut on the
news still produced chips for that +25% growth only they
did not sell them to Nokia. The problem as I see it is a
Nokia problem. They simply did not have the right product
mix and the little guys chipped away at their market share
and profits. If the sector grew at a +25% rate that cannot
be bad news.

The markets closed right at strong resistance yesterday
after more than a week of a strong rebound. The Asian
markets were not weak with the Nikkei hitting a 32 month
high overnight. The Nokia warning was just a trigger for
funds who were already nervous and had their finger on
the trigger.

The economic reports today were positive and did not add
to the negative bias. Retail Sales were weak at +0.3% but
still better than last weeks -1.9% drop. The better news
was the Challenger Layoff Report which showed layoffs
fell -12% in March to only 68,034 and the lowest level
since June-2003. This should be good for the April Jobs
report. The year over year change was a drop of -20%.
The sector with the biggest drop was not manufacturing
but financial services. This could be due to the wave of
acquisitions in the sector and the resulting layoffs.
Just yesterday Banc America announced a cut of -12,500
jobs as the result of the Fleet Boston merger. Cost
cutting is still the motivating factor and the current
productivity surge will continue to require fewer workers.
The continued drop in layoffs despite the rising growth
in productivity is a positive sign the economy is still
growing.

After the bell Alcoa missed estimates by two cents with
earnings that were +135% over the same period last year.
The stock dropped in after hours in yet another example
of traders looking for an excuse to sell. A +135% jump
in earnings and the stock was punished because analysts
were over aggressive with their estimates. The AA CEO
said demand for aluminum fabricated products was the
highest level in three years and that was driving prices
even higher. He said this trend would provide even higher
profitability in the second quarter. Alcoa's revenue
rose to $5.7 billion and the highest in nearly three
years. This was NOT a bad earnings report yet the
futures dove in after hours.

The biggest impact to the after hours futures drop came
from Seagate Technology. They are the biggest disk drive
maker for computers. STX warned for the second time in
the last five weeks and cut estimates to seven cents
from 20 to 30 cents they had predicted in January. This
is the killer comment. They said demand for computer
disk drives had fallen far below guidance primarily in
notebooks. They said notebook demand for the quarter was
one million drives less than previously expected. That is
a -7% drop from the 14-14.5 million drives and they said
the backlog from the weak demand would probably carry
over into the June quarter. Remember Intel getting killed
over the last month because of weak notebook sales? Looks
like the problem has not been resolved. They said full
size PC drives were also weak and could be another million
drives below plan.

This is a major blow to the expanding IT spending theory.
Removing two million drives from actual Q1 demand could
mean two million fewer PCs will be sold. Obviously this
is not a direct one-to-one correlation but it would be
close. The number of drives sold as components into the
retail market would be only a small fraction of the total
demand. We had other warnings from techs EPNY and BRKT
yesterday but this CTX warning is much higher profile.

The markets are showing a much weaker opening tomorrow
from the after hours news events above. That is not the
whole story. The markets ended weak today, far weaker
than the Dow was showing at +12 for the day and a close
right at the high of the day. The problem came from the
Russell. The Russell was also weak on Monday and only
rallied on a broad based buy program at the close. The
Nokia warning this morning intensified that weakness.

We talked all last week about the window dressing and the
strong rally in small caps from that dressing. We discussed
the potential for window undressing this week if retirement
fund flows were weak. The Nokia warning simply gave those
wanting to lighten up an excuse to hurry. The Russell had
closed at significant resistance on Monday and right at
the all time closing high. It has failed here on each
attempt since March of 2000. Many had high hopes it would
break through on this attempt and lead the rest of the
index higher into the April earnings period. After the
close today the STX warning sent the Russell futures
plunging even farther.

What I thought we were seeing on Tuesday was a rotation
out of small caps and into the big caps as evidenced by
the Dow breaking out to a new high while the Russell was
setting new lows. This would indicate that funds were
still interested in being long the market but were moving
to the safety of liquidity. That theory could be tested
on Wednesday if the big caps fall as well.

Another event after the bell was the 7E7 engine award by
Boeing. GE and Rolls Royce were awarded the contracts and
UTX Pratt and Whitney was the loser. This could put some
pressure on the Dow at the open with minor gains going
to GE because the size of the contract is still unknown.
It could put more pressure on UTX because it lost out on
what is expected to be more than 2,000 aircraft over the
life of the product. Because the Dow is price weighted
the impact to $89 UTX will more than offset the minor
gain to $31 GE. Boeing will likely be neutral. GE has
earnings on Thursday and that could weigh on the stock.

The Dow also should begin to see pressure from the Dow
rebalancing as funds increase selling in EK, IP and T.
There are not a lot of funds indexed to the Dow with
only about $20 billion according to current estimates.
By comparison there is $1.2 trillion indexed to the S&P
500. The changeover occurs on Thursday and $20B of EK,
IP and T is a lot of stock to sell.

Earnings due out tomorrow include DNA, YHOO, RIMM, CBK,
CKR and PERY. Clearly the big gun is YHOO and it was
downgraded on Tuesday. There are quite a few analysts
that think the increasing competition and over valuation
from the strong rebound will clash with their announcement
tomorrow night.

The Dow moved slowly closer to the 10600 level at the
close and very close to the 10600-10650 resistance range.
With the news after the close we probably will open much
closer to the 10500 range. The overhead resistance is
very strong and the cracks in the foundation could make it
tough to move higher. This suggests that should we actually
make a higher move it would be strong confirmation that the
bulls are back to stay.

The Nasdaq is going to be the weakest link on Wednesday
based on the STX. The Nasdaq closed at 2077 yesterday and
2057 today. The overnight decline in disk drives, chips
and PC stocks is going to make 2000 a real target if this
weakness catches on. The Russell failed at 605 and is
trading at the lows at 595 overnight. This is going to
be a real drag on the Nasdaq.

The key for the rest of the week is going to be expectation.
If the expectations for the April earnings have been damaged
then we have a rough road ahead. I think the Alcoa earnings
would be ignored and even cheered tomorrow but the STX stink
bomb could linger. While the Russell and Wilshire had been
rising to their highs the Nasdaq and Dow were still well
below equivalent resistance. There needs to be some strong
earnings performance over the next couple days to provide
assurance that these were random events or the house of
cards may crumble.

This is normally a bullish week with Thursday a strong day.
That sets up a potential for a dip buy at tomorrow's open
and a rally into Thursday afternoon. Then what? A late news
flash just said 12 marines were killed in Iraq in the
strongest fighting since the end of the war. There is talk
about sending more soldiers to Iraq instead of reducing the
force. This will not help sentiment going into the Easter
holiday. Also, what happened to the terrorist threat? Would
a three day Easter holiday provide an opportunity to strike
at the predominately Christian population in the US on a
high profile religious holiday? I am not speculating that
traders will dump stocks before the weekend with a strong
earnings schedule next week but it is possible. We saw no
fear last weekend on top of a week of gains but there was
no excitement on Friday either.

I am thinking we lost a lot of bullish sentiment over the
last couple days and the April earnings run could be losing
traction. That is not to suggest it won't return with a
bang on Monday but the rest of this week could be a coin
toss. I plan on buying the dip on Wednesday for a quick
two day trade but then my risk profile is different than
most. One thing I will not be doing is shorting TASR. The
stock was hit with a drop at 12:30 on news that some bad
guys hit with a Taser eventually died in custody. The
company quickly responded that NONE of the deaths had been
attributed to the Taser and there was no correlation. Then,
in what appeared to be a pure stock price manipulation
scheme they announced a 2:1 split 30 min later. The stock
jumped +$15 on the news and shorts got killed once again.
40% of the stock was short for the latest available period.
It currently has a PE of 247 and insiders are dumping stock.
The CFO just sold 100% of his according to one report today.
While this is a highly visible short target the company has
shown no reluctance to manage the price. I will pass.

Enter Passively, Exit Aggressively.

Jim Brown
Editor


***************
FUTURES MARKETS
***************

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



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

Nokia's warning gives reason for pause

A pre-market quarterly earnings warning from the world's largest
cell phone maker Nokia (NYSE:NOK) $17.21 -18.62% gave investors a
reason for pause, where the major indices saw a mixed to lower
trade, with technology sectors showing their first sign of rest
in over a week.

Market Snapshot / Internals - 04/05/04 Close



The Dow Industrials (INDU) 10,570.81 +0.12% scratched out a gain
by the close, while the small-cap Russell-2000 Index ($RUT.X)
599.33 -1.16%, which looked set to trade all-time highs never did
muster a gain, or show signs of follow through bullishness.

Treasuries did find some buying after sharp selling, which began
on Friday, with the 10-year YIELD ($TNX.X) falling 4.9 basis
points to 4.171%, while the longest-dated 30-year YIELD ($TYX.X)
edged back a more modest 2.7 basis points to 5.016%.

Despite the recent run higher for the Semiconductor Index (SOX.X)
508.07 -2.05%, an intra-day low of 502.36 found buyers holding
firm above its WEEKLY Pivot of 501.86.

Pivot Analysis Matrix



As the S&P Banks Index (BIX.X) 345.64 +0.31% tried to see trade
higher at its WEEKLY Pivot, the SOX.X came close to testing its
WEEKLY Pivot, with handset chipmakers seeing some defensive
selling on Nokia's warning.  I couldn't come up with any
correlative support levels in tomorrow's pivot matrix, but marked
those levels of resistance where some correlations can be found.

iShares Cohen & Steers Realty Majors (AMEX:ICF) - Daily Intervals



There was definitely some continued fallout, or negativity shown
to interest-rate sensitive stocks in today's trade, where the
iShares Cohen & Steers Realty Major (AMEX:ICF) $108.50 -4.44%
lead today's list of iShare percentage decliners.  I'm also
seeing where the NYSE-listed shares of Cohen & Steers REIT
(NYSE:RTU) $18.54 -3.98% traded a 52-week low, as did Apartment
Investment & Management Company (NSYE:AIV) $29.32 -2.91%,
Government Property (NYSE:GPP) $12.25 -3.92%, Capital Lease
Funding (NYSE:LSE) $12.35 -2.75%, Affordable Residential
Community (NYSE:ARC) $17.96 -1.75%.

One investor noted that many high yield closed end fund, similar
to Pacholder High Yield Fund (NYSE:PHF) $9.15 -3.37% have been
hit hard the past two sessions.  In this weekend's "Ask the
Analyst" column, I discussed the Pacholder High Yield Fund (PHF)
per a couple of e-mails received during the week.  I'm noting
tonight that today's trade did see a break below the $9.41 level,
where today's lows of $8.90 did find some buyers at the rising
200-day SMA ($8.96), but an investor that is starting to count
any investment's decline in "months of dividends gone" is
probably too OVERLEVERAGED in this asset class, and needs to get
things under control.

ANY investor that owns a closed-end fund, regardless of asset
class may want to review their asset by visiting
http://www.closed-endfunds.com where you can get a quick snapshot
glance at some of the funds top holdings.

While the Pacholder High Yield (PHF) is actively managed with a
portfolio turnover of 51% (meaning what's was there last year at
this time, half of it has probably been sold).  Pacholder High
Yield (PHF) as discussed previously has traded at a premium to
its current NAV (Net Asset Value) of $8.72 ($8.75 last week).
Top SECTOR weightings can be found for your holdings.  PHF's top
sector weighting is in media/telecom (27.23%).  I looked at one
of their top holdings where these company's trade publicly with
the underlying shares of Rural Cellular (NASDAQ:RCCC) $10.12
+3.79% gaining in today's trade, but Charter Communications
(NASDAQ:CHTR) $4.36 -2.24% fell back to test its 200-day SMA.

I also checked an OPEN-END high yield fund with the AIM High
Yield Fund (AMHYX) $4.42 (unch) and American Funds High-Income
Trust A (AHITX) $12.30 +0.16%, where there NAV's (Net Asset
Values) are tabulated each day.

Still, a weekly bar chart of the American Funds High-Income Trust
A (AHITX) shows the OPEN-END fund traded a high of $12.61 in mid-
January, where at today's close, would represent a 2.45% decline.

Here I might note a difference as it relates to the CLOSED-END
fund of PHF versus the OPEN-END fund AHITX, is that we may well
be seeing the PREMIUM of the PHF, which the MARKET built into
PHF, unwinding back to its published NAV (Net Asset Value).

Index traders and investors are urged to review a June 15, 2003
Ask the Analyst column "Sector/Index Trading with HOLDRs and
iShares," which lists some resources of information on these
products.  http://www.OptionInvestor.com/ask/ask_061503_1.asp

Dow Industrials (INDU) Chart - Daily Intervals



The Dow Industrials (INDU) 10,570.81 +0.11% came just shy of
testing its WEEKLY R1, but traded strong relative to the other
major indices.  Alcoa (NYSE:AA) $36.50 +1.69% traded strong, but
fell to $35.05 in extended hours after reporting quarterly EPS of
$0.41, which matched consensus estimates, on revenues that rose
11% year-over-year to $5.7 billion.

S&P 500 Index Chart - Daily Intervals



The morning lows found support at the MONTHLY 38.2% retracement,
where despite an earning's pre-announcement from Nokia (NYSE:NOK)
$17.21 -18.62%, which triggered profit taking among
Semiconductors (SOX.X) 508.07%, especially handset chip makers,
the SPX showed resilience.  Many analysts look for first quarter
earnings to be impressive, as there are some "easy" comparables
to last year, when the U.S. was just going to war with Iraq, and
corporate spending was very weak.

Everything looked fine for Nokia (NOK) as it had bounced from the
$19.50 to test its starting to round lower 50-day SMA of $21.25
in yesterday's trade.  Until they told analysts that earnings and
revenues were going to be shy of expectations.

NASDAQ-100 Tracking Stock (QQQ) - Daily Intervals



Yahoo! Inc (NASDAQ:YHOO) $48.77 -2.44% traded off its 52-week
high set on Monday after being downgraded based on "valuation"
and was first day YHOO traded below its prior session's low in 8
sessions.  Almost identical pattern to the QQQ.  Yahoo! reports
earnings after tomorrow's close, with consensus estimates at
$0.11 per share, compared to year-ago quarter's EPS of $0.08.  At
a 52-week high, there's usually little room for disappointment
and if tech decides to take a rest, a break below today's lows
could see the QQQ pull back to our WEEKLY 61.8% retracement,
which would tie in with the backfilling of the nonfarm payroll
gap higher.  I'm just noticing that Monday's gains came on some
very light volume, which might suggest there's not as much
interest in the QQQ up at these levels.

Jeff Bailey


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

Stocks Catch Their Breath
- J. Brown

Stocks finally paused after an eight-day sprint higher from their
late March lows.  Overall the profit taking, which was focused on
tech stocks, wasn't that bad and certainly overdue.  Wall
Street's focus is turning to earnings season and so far the first
stocks out of the gate are stumbling.  Aloca (AA) missed by 2
cents while Nokia (NOK) pre-announced an earnings warning that
profits would fall toward the low end of their guidance.  This is
not encouraging news but investors seem hopeful that these
"misses" are stock-specific.  Currently First Call predicts that
earnings this season will be up 17% to 20% over last year.

The focus tomorrow will be on YHOO's and RIMM's earnings reports
after the closing bell and GE's report on Thursday.  My concern
is that the market has bounced so strongly from its March lows
that investors will use any news (good or bad) as an excuse to
take profits.  Thankfully April is historically a bullish month
and a number of market forecasters believe positive earnings news
will actually fuel the next leg higher in stocks.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8145
Current     : 10570

Moving Averages:
(Simple)

 10-dma: 10352
 50-dma: 10458
200-dma:  9862




S&P 500 ($SPX)

52-week High: 1163
52-week Low :  862
Current     : 1148

Moving Averages:
(Simple)

 10-dma: 1125
 50-dma: 1133
200-dma: 1061



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1018
Current     : 1493

Moving Averages:
(Simple)

 10-dma: 1449
 50-dma: 1460
200-dma: 1390



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

Volatility indices gapped higher at the open but faded lower
through most of the session.  They remain near their lows and
suggest investors remain confidently bullish.

CBOE Market Volatility Index (VIX) = 15.32 +0.35
CBOE Mkt Volatility old VIX  (VXO) = 14.49 +0.61
Nasdaq Volatility Index (VXN)      = 22.23 +1.12

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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.82        846,971       692,316
Equity Only    0.69        728,128       505,325
OEX            1.61         18,173        29,200
QQQ            1.26        193,327       243,849


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

Bullish Percent Data

           Current   Change   Status
NYSE          74.1    + 1     Bull Correction
NASDAQ-100    53.0    + 3     Bear Correction
Dow Indust.   83.3    + 0     Bear Confirmed
S&P 500       76.8    + 0     Bear Confirmed
S&P 100       79.0    + 0     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: 0.78
10-dma: 0.76
21-dma: 1.31
55-dma: 1.14


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


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

Market Internals

            -NYSE-   -NASDAQ-
Advancers    1116      1015
Decliners    1721      2078

New Highs     129       127
New Lows       35        12

Up Volume    629M      540M
Down Vol.   1070M     1170M

Total Vol.  1716M     1768M
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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The Option Investor Newsletter                  Tuesday 04-06-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: None
Dropped Puts: None
Call Play Updates: BBY, CAT, EBAY, ESRX, MGG, NEM, NSM, PDCO, TK
New Calls Plays: None
Put Play Updates: AHC, UTSI
New Put Plays: CFC, LEH


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

None


PUTS:
*****

None


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within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

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********************
PLAY UPDATES - CALLS
********************

Best Buy Company - BBY - close: 53.47 change: -0.63 stop: 50.75

The rise in the broad market hasn't been enough to break BBY out
of its recent trading range and our $55 trigger remains untouched.
The Retail index (RLX.X) broke out to new highs yesterday and that
is one factor in favor of the bulls here, but we need to see that
breakout before committing to the play.  Wait for the breakout and
then enter according to your risk tolerance.  Aggressive traders
can enter on the initial breakout, while those with a more
conservative stance can look for either a subsequent pullback to
confirm $54 as new support or a continued breakout over $55.50,
which would move the stock into the December gap, paving the way
for a rally up to $58 and then the $60-62 area to test the recent
highs.  Our coverage stop remains at $50.75, just under the 50-dma
($51.05) and the 200-dma ($51.12).

Picked on April 4th at       $53.92
Change since picked:          -0.45
Earnings Date                6/16/04 (unconfirmed)
Average Daily Volume =     3.83 mln
Chart =


---

Caterpillar - CAT - close: 82.91 change: +0.50 stop: 78.95

CAT has been one of the better performers in the Dow these last
couple of days as its rally above the $80 mark continues.  We're
only a couple of points away from our planned exit point near
resistance at $85.00 so traders should be preparing for it.  If
by chance CAT does pull back again we'd look for new entry points
near the $81.00 level.  However, keep in mind that we only have
about two weeks before CAT announces earnings and we don't plan
to hold over the event.

Picked on April 02 at $ 80.25
Change since picked:   + 2.66
Earnings Date        04/22/04 (unconfirmed)
Average Daily Volume:     2.5 million
Chart =


---

eBay Inc - EBAY - close: 74.10 change: -0.03 stop: 68.95

Internet stocks, like most of the tech sector, hit some profit
taking on Tuesday but shares of EBAY stood their ground.  EBAY
has churned mostly sideways after gapping higher on Monday
morning.  Odds are investors are being cautious ahead of YHOO's
earnings report tomorrow after the close.  We suspect that YHOO
will see some "sell-the-news" profit taking on Thursday even if
earnings are good.  That could inspire some weakness in EBAY.
Even though we only have about two weeks before EBAY's earnings a
dip heading into the weekend is probably an entry point.  In the
news Deutsche Bank issued some positive comments on Monday
stating their expectation for EBAY's global listings will soar
46% in the second quarter over last year.

Picked on April 01 at $ 72.25
Change since picked:   + 1.85
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     7.0 million
Chart =


---

Express Scripts - ESRX - cls: 77.45 chng: -0.50 stop: 74.00*new*

Wasting no time, ESRX broke out strongly on Monday, vaulting
through the $76 level on solid volume.  Today's action was a bit
more muted, with the stock consolidating near the top of Monday's
range on very light volume.  That certainly looks like a good sign
for the bulls and traders that missed the initial breakout entry
can now look for a move over $78.75 (comfortably above today's
high) to join the party.  In the event of a significant pullback,
the $75 level should now offer strong support for traders willing
to buy a dip into the $75-76 area.  Note that we've raised our
stop to $74 today, which is just below the 30-dma ($74.17).

Picked on April 4th at       $75.36
Change since picked:          +2.09
Earnings Date                4/28/04 (unconfirmed)
Average Daily Volume =     1.05 mln
Chart =


---

MGM Mirage - MGG - close: 47.85 change: -0.72 stop: 46.75

MGG started the week off with a bang and shot to $48.57 on Monday
after rival Mandalay Resort Group (MBG) pre-announced a higher
earnings outlook.  Stronger slot machine revenues and a higher
revenue-per-available-room were cited as the positive influences.
Odds are good that if MBG is doing well so is MGG.  Today's 72-
cent drop in MGG is merely profit taking.  A dip to $47 would
fill the gap from Monday and offer more aggressive traders
another entry point.  Since we're only targeting $50 and MGG has
earnings in two weeks more conservative traders may want to avoid
new plays.  Yesterday we raised our stop loss to $46.75.

Picked on March 25 at $ 45.69
Change since picked:   + 2.16
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     597 thousand
Chart =


---

Newmont Mining - NEM - close: 45.30 change: +0.45 stop: 43.50

As would be expected, gold and gold shares got knocked back in
response to the rebound in the dollar caused by the blowout Jobs
numbers on Friday and that trade continued on Monday.  But as has
been the case lately, the dollar stalled today and gold shares
stabilized somewhat.  We've been looking for NEM to provide a
solid entry on a dip into the $44.50-45.00 area before continuing
its upward trek and that's precisely what we were handed this
week.  Yesterday saw NEM dip to exactly $44.50 before a feeble
rebound into the close and then the stock headed higher this
morning.  It wasn't a very strong rebound and faltered a bit at
the close, but this looks like a good area to establish bullish
positions ahead of the uptrend reasserting itself.  Traders
looking for more reassurance before playing may want to wait for a
renewed push over $46 before opening new positions.  Confirmation
of a resumption of the uptrend will come with a breakout over
$47.50 (clearing last week's highs) and setting the stage for the
move back towards the $50 resistance level we're targeting.
Maintain stops at $43.50, just under the 50-dma.

Picked on March 28th at      $46.15
Change since picked:          -0.85
Earnings Date                2/04/04 (confirmed)
Average Daily Volume =     6.46 mln
Chart =


---

National Semi. - NSM - cls: 47.10 chng: -0.39 stop: 45.00

After a very strong rebound from the March lows, Semiconductor
stocks decided to take a breather on Tuesday, with the SOX losing
more than 2% and coming to rest just above the $500-505 zone,
which should now act as support.  NSM plunged sharply at the open,
falling just far enough to fill the gap from last Friday before
bouncing strongly in the afternoon session, actually closing with
a fractional gain.  There were definitely some nervous moments
when it looked like our $45 stop might be tested this morning, but
by the closing bell, it was clear that the new stop location made
a lot of sense.  Aggressive traders could even have initiated new
positions on the morning dip once it looked like the rebound was
for real.  Now that we got the profit taking out of the way, the
next likely entry point will come on a breakout over yesterday's
high ($47.54).  By tomorrow, the 10-dma ($44.63) will be above $45
and that should help to protect our stop.  Remember, our target
for the play is $50 and we would suggest aggressively harvesting
gains if that level is traded.

Picked on March 30th at      $44.43
Change since picked:          +2.67
Earnings Date                6/10/04 (unconfirmed)
Average Daily Volume =     4.19 mln
Chart =


---

Patterson Dental Co - PDCO - cls: 75.07 chg: -0.79 stop: 69.99

Wow! The rally, powered by rising volume, that began last week
exploded on Monday with a big gain and a new high near $76.00.
PDCO closed above the $75 mark and within a couple of points of
our exit range ($77.50-80.00).  Adding fuel to the move was news
that PDCO was buying ProVet, a veterinary supply company, from
LexTron Inc.  ProVet would join PDCO's existing vet supply
company Webster Veterinary Supply.  A Reuters report said ProVet
should add $50-$60 million in annual sales.  We were very
encouraged by the move and today's intraday bounce off the $74
level but it makes is challenging to add new bullish positions.
If PDCO does pull back we'd probably look for a bounce from the
$72.50 region.

Picked on April 04 at $ 72.14
Change since picked:   + 2.93
Earnings Date        02/19/04 (confirmed)
Average Daily Volume:     493 thousand
Chart =


---

Teekay Shipping - TK - close: 67.40 change: -1.33 stop: 65.95

The consolidation between $65 and $70 continues and we remain un-
triggered in this play.  Remember that we're not suggesting new
long positions until TK can trade at or above $70.05.  However,
more aggressive traders might want to consider buying a bounce
from its 50-dma near the $65 mark.  In the news TK announced a
cash dividend this evening.  The Board of Directors approved a
dividend of 25 cents per share payable on April 30th, 2004 to
shareholders on record as of April 16th.

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 =



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

None


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*******************
PLAY UPDATES - PUTS
*******************

Amerada Hess Corp. - AHC - cls: 62.57 chng: -0.26 stop: 65.50*new*

Each of the past three days has seen AHC testing and holding
support at the 50-dma (now $62.27), but the rebounds certainly
have not looked convincing.  The price action continues to look
weak and gives the impression that the stock is setting up for
another leg down as soon as the near-term oversold condition is
worked off.  Our entry trigger at $61.75 is clearly doing its job
by keeping us out of the play until the bears prove they're
serious about driving the stock lower.  Entries still look
favorable on the initial break below that trigger, although more
conservative traders may want to wait for a break under the next
possible level of support at $61 before playing.  A subsequent
rebound and rollover below the $62-63 area after the initial break
is also a possible entry scenario, but given the way the stock has
been trolling along support the past few days, the initial break
may continue too far to allow such an entry.  Note that we've
slightly lowered our stop to $65.50 tonight, which is just over
the highs from last week.

Picked on April 1st at        $63.15
Change since picked:           -0.58
Earnings Date                4/28/04 (unconfirmed)
Average Daily Volume =         919 K
Chart =


---

UTStarcom, Inc. - UTSI - close: 30.25 change: +0.28 stop: 32.25

After last week's fractional dip below our $29 trigger, shares of
UTSI have been grudgingly working their way higher in what has all
the earmarks of an oversold bounce.  Volume is continuing to
decline, as price gradually rises to meet strong resistance, first
at the descending trendline ($31.10) and then at the 30-dma
($31.35).  The ideal setup for new entries will come on a rollover
below this band of resistance, as USTI resumes its downward trend.
Traders looking for more bearish conviction before playing will
wan to see a break below last week's low ($28.73) before opening
new positions.  For now, we'll maintain our stop at $32.25, just
over the most recent reaction high and the 50-dma ($32.47) is
steadily dropping to help reinforce that resistance at $32.  Once
UTSI decisively breaks the lows near $28.75-29.00, we'll look for
a drop through $28 and then $26 levels of support on the way to
our $24-25 target.

Picked on March 30th at       $29.38
Change since picked:           +0.87
Earnings Date                4/27/04 (unconfirmed)
Average Daily Volume =      3.69 mln
Chart =



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

Countrywide Financial - CFC - close: 88.50 chg: +0.58 stop: 91.51

Company Description:
Founded in 1969, Countrywide Financial Corporation is a member of
the S&P 500, Forbes 500 and Fortune 500. Through its family of
companies, Countrywide provides mortgage banking and diversified
financial services in domestic and international markets.
Mortgage banking businesses include loan production and servicing
principally through Countrywide Home Loans, Inc., which
originates, purchases, securitizes, sells, and services primarily
prime- quality loans. Also included in Countrywide's mortgage
banking segment is the LandSafe group of companies that provide
loan closing services. Diversified financial services encompass
capital markets, banking, insurance, and global, largely through
the activities of Countrywide Capital Markets, a mortgage-
related investment banker; Countrywide Bank, a division of
Treasury Bank, NA, a banking entity offering customers CDs, money
market accounts, and home loan products; Balboa Life and Casualty
Group, whose companies are national providers of property,
liability, and life insurance; Balboa Reinsurance, a captive
mortgage reinsurance company; and Global Home Loans, a European
mortgage banking joint venture in which Countrywide holds a
majority interest. (source: company press release)

Why We Like It:
We're suggesting a new bearish play in CFC mainly due to the
technical breakdown in the share price but the fundamental
picture may have changed as well.  Interest rate sensitive stocks
like mortgage lenders and homebuilders have been getting dumped
the last three sessions because last Friday's job's report
immediately sparked the threat of higher interest rates sooner
than expected.  Higher rates mean higher mortgage rates and that
should mean slower business for lenders like CFC.

The stock has already dropped $8.00 from its recent highs and
yesterday we felt it looked too short-term oversold even though
it broke down through support at $90.00 and its simple 50-dma.
However, today's action looks like a failed rally at $90.00 (now
new resistance) so we're willing to speculate on a move lower.
CFC has some support in the $81.50-82.50 region and that's where
we plan to target an exit point.  Currently its P&F chart is in a
bearish sell signal and points to a $77 price target.
Coincidentally CFC appears to have produced a (bearish) double-
top at $97.

Earnings are April 21st and we don't plan to hold over the event.
Traders should also note that CFC does have a 3-for-2 split on
April 13th but given the current environment we don't think it
will be a factor.

Suggested Options:
April options expire soon so we suggest using the May puts
even though we plan to close the play before April 21st.  Our
favorites are the May 90s.

BUY PUT MAY 90 CFC-QR OI= 653 at $5.60 SL=3.25
BUY PUT MAY 85 CFC-QQ OI= 793 at $3.30 SL=1.65

Annotated Chart:



Picked on April 06 at $ 88.50
Change since picked:   - 0.00
Earnings Date        04/21/04 (confirmed)
Average Daily Volume:     2.5 million
Chart =


---

Lehman Brothers - LEH - close: 81.77 change: -0.11 stop: 84.75

Company Description:
Through its subsidiaries, LEH constitutes one of the leading
global investment banks, serving institutional, corporate,
government and high-net-worth individuals clients.  The company
is engaged primarily in providing financial services, including
securities writing and direct placements, corporate finance and
strategic advisory services, private equity investments and
securities sales and trading.  Completing its array of banking,
research and trading capabilities, LEH also engages in the
trading of foreign exchange, derivative products and certain
commodities.

Why we like it:
Following the selloff into the March lows, the Brokerage sector
(XBD.X) staged a strong rebound from the $660 level and managed
to push through the $700 resistance level before beginning this
week's consolidation.  In sharp contrast to that bullish move,
shares of LEH stalled just below the 50-dma ($84.60) in its
rebound attempt and then sold off sharply on Friday in response
to the better than expected jobs data.  That weakness persisted
yesterday, with the stock falling almost to the $81 level before
the bulls attempted a feeble rebound.  This is the third time
since early February that LEH has tested support in the $80-81
area, but this time things look more favorable for the bears.
The key to that bearish view is the picture provided by the PnF
chart, which is currently on a Sell signal, with a bearish price
target of $72, just under the bullish support line.

In addition to the horizontal support at $80, LEH has potential
support in the form of the 100-dma ($80.31), making that level an
ideal point to place our trigger.  We're going to require a break
below $80 to trigger the play and momentum trades below that
level look favorable for a downside move at least to the 200-dma
(currently $74.04).  More conservative traders might want to look
for a subsequent failed bounce below the $82 level, as the 10-dma
($82.75) falls to reinforce that horizontal resistance.  A
downward move to the $72-74 area seems likely once support is
broken, with the bearish PnF price target of $72, the bullish
support line at $73 and the 200-dma at $74.  We'll err on the
side of caution and target a drop to the $74 level, which is the
first point where historical support should come into play.
Initial stops should be placed at $84.75, just over the top of
the last failed rally, as well as the 50-dma.

Suggested Options:
Aggressive short-term traders will can use the April 85 Put, but
with April options so close to expiration, the May strikes make
more sense.  The more conservative approach will be to use the
May 80 put.  Aggressive traders looking for more insulation
against time decay will want to utilize the May 75 strike.  Our
preferred option is the May 80 strike, as it will be at the money
when the play is triggered and should provide ample time for the
play to move in our favor.

! Alert - March options expire in less than 2 weeks!

BUY PUT APR-80 LES-PP OI=5484 at $0.75 SL=0.35
BUY PUT MAY-80*LES-QP OI=1791 at $2.35 SL=1.25
BUY PUT MAY-75 LES-QO OI= 825 at $1.00 SL=0.50

Annotated Chart of LEH:




Picked on April 6th at        $81.77
Change since picked:           +0.00
Earnings Date                3/16/04 (confirmed)
Average Daily Volume =      2.23 mln
Chart =



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**********

Please read our disclaimer at:
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Contact Support


The Option Investor Newsletter                  Tuesday 04-06-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Defense, Financial, Medical & Software
Spreads & Straddles: Time For A Breather...
Premium-Selling Plays: Naked Puts & Calls:
Traders Corner: How I find Support and Resistance.
Traders Corner: Assessing the key technical patterns and price "gaps"


**********
WATCH LIST
**********

Defense, Financial, Medical & Software

___________________________________________________________________

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.
___________________________________________________________________


Northrop Grumman - NOC - close: 101.30 change: +0.29

WHAT TO WATCH: We've watch listed NOC before but this time the
stock has broken out above resistance at the $100 mark and its
50-dma.  Its MACD is bullish and its short-term oscillators also
point higher.  This looks like an entry point for a run toward
resistance at $105 but dips back to $100 probably work too.
Earnings should be April 27th.

Chart=


---

Capital One Financial - COF - close: 76.82 change: +0.62

WHAT TO WATCH: Yes, we're still following COF.  The stock has
been consolidating in a tight $2 range after breakout out to new
highs a few days ago.  Technicals are a little mixed but its MACD
is in a buy signal and so is its P&F chart.  The company is due
to report earnings on April 21st.  We would consider bullish
positions at current levels or bounces above the $74 mark, target
$80.

Chart=


---

Guidant Corp - GDT - close: 68.14 change: +2.29

WHAT TO WATCH: GDT issued some positive earnings comments this
morning and sent the stock up another 3.47%.  This was a strong
follow through to Monday's breakout over resistance at $65.00 and
its simple 40 & 50-dma's.  Strong volume certainly lends the move
some credibility and its MACD just produced a new buy signal.
Traders can watch GDT for a dip back toward $66 as an entry point
for a run toward its March highs.  Earnings should be on April
22nd.

Chart=


---

Adobe Systems - ADBE - close: 41.46 change: +0.11

WHAT TO WATCH: When we consider bullish candidates ADBE continues
to come up for discussion but never seems to make to the play
list.  The stock tends to move a little slow for options so plan
your strategy accordingly.  Right now we like the bullish
breakout over the $40.00 level but there is some congestion and
possible resistance near $42.50.  Its P&F chart looks more
bullish with a breakout over resistance and a $54 price target.
Earnings are not until June.

Chart=



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

STJ $74.65 +1.07 - Medical device makers have been a strong group
and STJ might be setting up for a run toward $80.00, especially
with its MACD producing a fresh buy signal today.  However, be
careful.  A roll over from here and STJ will be painting what
could be the right shoulder on an H&S pattern.  Earnings are in
two weeks.

CBE $58.24 +0.14 - CBE has produced a big bounce from its March
lows and is quickly approaching resistance in the $59 region.  A
breakout would set new two-year highs.

GD $93.17 +1.51 - Like its sector-mate NOC, GD is in rally mode
and has broken out above resistance at its 50-dma.  This looks
like an entry point for a run toward its highs near $96.50 and
dips to $90.00 are probably entry points but earnings are in two
weeks.


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OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
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**************************************************************


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

Time For A Breather...
By Ray Cummins

Stocks ended mixed Tuesday amid mild profit-taking after wireless
telecom giant Nokia (NYSE:NOK) warned of declining sales.

The Dow Jones Industrial Average was up 12 points at 10,570 with
Alcoa (NYSE:AA), AT&T (NYSE:T) and Eastman Kodak (NYSE:EK) among
the best performers.  The NASDAQ dropped 19 points to 2,060 on
weakness in telecom-equipment and semiconductor shares.  The S&P
500 index fell 2 points to 1,143 with REITS enduring another day
of selling pressure.  Volume reached 1.4 billion on the New York
Stock Exchange and 1.79 billion on the NASDAQ.  Breadth was poor
on both exchanges with decliners ousting advancers nearly 2 to 1.
Treasury prices were almost unchanged in quiet trading, with the
yield on the 10-year treasury closing at 4.17%.

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

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

HSIC - Henry Schein  $75.81  *** New Multi-Year High! ***

Henry Schein (NASDAQ:HSIC) is a major distributor of healthcare
products and services to office-based healthcare practitioners
in the combined North American and European markets.  HSIC has
operations in the United States, Canada, the United Kingdom,
The Netherlands, Belgium, Germany, France, Austria, Australia,
Spain, and New Zealand, and conducts its business through two
segments, healthcare distribution and technology.  Healthcare
distribution consists of the dental, medical, veterinary and
international groups.  The international group is comprised of
the company's healthcare distribution business units located
primarily in Europe, and offers products and services to dental,
medical and veterinary customers located in their respective
geographic regions.  The technology segment consists primarily
of the company's practice management software business and also
certain other value-added products and services.

HSIC - Henry Schein  $75.81

PLAY (very conservative - bullish/credit spread):

BUY  PUT  MAY-65.00  HQE-QM  OI=0   ASK=$0.35
SELL PUT  MAY-70.00  HQE-QN  OI=18  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.45-$0.50
POTENTIAL PROFIT(max)=9% B/E=$69.55


__________________________________________________________________

NAV - Navistar  $49.90  *** Strong Sector! ***

Navistar International (NYSE:NAV) is a holding company for its
principal operating subsidiary, International Truck and Engine
Corporation.  Navistar operates in three industry segments:
truck, engine and financial services.  The truck segment is
engaged in the manufacture and marketing of Class Five through
Eight trucks, including school buses, and operates primarily
in the United States, Canada, Mexico and other selected export
markets.  The engine segment is engaged in the manufacture of
mid-range diesel engines and primarily operates in the United
States and Brazil.  The financial services segment provides
wholesale, retail and lease financing for sales of trucks sold
by the company and its dealers in the United States and Mexico.

NAV - Navistar  $49.90

PLAY (conservative - bullish/credit spread):

BUY  PUT  MAY-40.00  NAV-QH  OI=73   ASK=$0.30
SELL PUT  MAY-45.00  NAV-QI  OI=191  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.60-$0.65
POTENTIAL PROFIT(max)=14% B/E=$44.40



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

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.

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

SOHU - Sohu.com  $25.46  *** China Internet Slump! ***

Sohu.com (NASDAQ:SOHU) is an Internet portal in China.  The firm's
portal consists of sophisticated Chinese language Web navigational
and search capabilities, 15 main content channels, Internet-based
communications and community services, and a unique platform for
e-commerce and short messaging services.  Each of the company's
interest-specific main channels contains multi-level sub-channels
that cover a wide range of topics; news, business, entertainment,
sports and careers.  The firm also offers free Web-based e-mail.
Sohu.com offers a universal registration system, and the company's
portal attracts consumers and merchants alike.  One of its primary
features is a proprietary Web navigational and search capabilities
that reflects the cultural characteristics and thinking and viewing
habits of the People's Republic of China Internet users.

SOHU - Sohu.com  $25.46

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-35.00  UZK-EG  OI=102   ASK=$0.30
SELL CALL  MAY-30.00  UZK-EF  OI=1708  BID=$0.90
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$30.65


__________________________________________________________________

SFNT - SafeNet  $31.65  *** A Big "Down" Day! ***

SafeNet (NASDAQ:SFNT) designs, manufactures and markets network
security technology and systems.  The firm operates through two
security business units, the Embedded Security division and the
Enterprise Security division.  The Embedded Security division is
comprised of hardware, chips, software and intellectual property
designed and manufactured in the United States and Europe for
sale to companies that will embed SafeNet's products into their
products for ultimate sale to end users.  The Enterprise Security
division includes hardware, software and network security systems
designed and manufactured in the United States for direct sales
to end users.

SFNT - SafeNet  $31.65

PLAY (less conservative - bearish/credit spread):

BUY  CALL  MAY-40.00  UUI-EH  OI=0   ASK=$0.30
SELL CALL  MAY-35.00  UUI-EG  OI=32  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.70-$0.75
POTENTIAL PROFIT(max)=16% B/E=$35.70



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

__________________________________________________________________


No straddles or strangles today...

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

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 last 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.

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

ACCL - Pharmacopeia  $22.07  *** Near Multi-Year Highs! ***

Pharmacopeia (NASDAQ:ACCL) is engaged in enabling science and
technology that accelerates and improves drug discovery and
chemical development processes.  The firm's software segment,
Accelrys, develops and commercializes molecular modeling,
simulation, informatics and decision support software for the
life sciences and materials research markets.  The company's
Drug Discovery segment, Pharmacopeia Drug Discovery, integrates
proprietary small molecule combinatorial and medicinal chemistry,
high-throughput screening, in-vitro pharmacology, computational
methods and informatics to discover and optimize lead compounds.

ACCL - Pharmacopeia  $22.07

PLAY (sell naked put):

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

SELL PUT  MAY 17.5  ICQ QW      64   0.25  17.25   4.1%   1.4% TS
SELL PUT  MAY 20    ICQ QD       2   0.90  19.10   8.9%   4.7%


__________________________________________________________________

ADEX - ADE Corporation  $22.73  *** On The Rebound! ***

ADE Corporation (NASDAQ:ADEX) is engaged in the design, building,
marketing and service of production metrology and inspection
systems for the semiconductor wafer, semiconductor device,
magnetic data storage and optics manufacturing industries.  The
company's products have evolved from single instruments used in
offline engineering analysis to full, 100% inline, automated
metrology solutions throughout the wafer, semiconductor device
and hard disk drive manufacturing processes.  Its systems analyze
and report product quality at critical manufacturing process steps,
sort wafers and disks and provide manufacturers with certification
data upon which they rely to manage processes and accept incoming
material.  Semiconductor wafer, device and magnetic data storage
manufacturers use the firm's systems to improve yield and capital
productivity.

ADEX - ADE Corporation  $22.73

PLAY (sell naked put):

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

SELL PUT  MAY 20    QDE QD       0   0.55  19.45   6.1%   2.8% *
SELL PUT  MAY 22.5  QDE QX       0   1.60  20.90  11.6%   7.7%


__________________________________________________________________

IMM - Immtech International  $20.26  *** Drug Speculation! ***

Immtech International (NYSE:IMM) is a pharmaceutical company
focused on the development and commercialization of oral drugs
to treat fungal, parasitic, bacterial and viral diseases.  The
company has development programs that include fungal infections,
malaria, tuberculosis, hepatitis, pneumocystis carinii pneumonia
and tropical medicine diseases, including the African sleeping
sickness (a parasitic disease also known as trypanosomiasis) and
leishmaniasis (a parasitic disease that destroys the liver).  One
of its most significant research developments was the discovery
of oral drug delivery technology for dication drugs.  This unique
proprietary technology temporarily masks the positive charges of
the dication, enabling the active compound to move easily across
digestive membranes into blood circulation.

IMM - Immtech International  $20.26

PLAY (sell naked put):

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

SELL PUT  MAY 15    IMM QC     100   0.30  14.70   5.2%   2.0% *
SELL PUT  MAY 17.5  IMM QW     100   0.80  16.70   9.9%   4.8%


__________________________________________________________________

IPXL - IMPAX Laboratories  $25.24  *** Another 2004 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  $25.24

PLAY (sell naked put):

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

SELL PUT  MAY 20    UPR QD     565   0.35  19.65   4.9%   1.8% *
SELL PUT  MAY 22.5  UPR QX      82   0.90  21.60   8.3%   4.2%


__________________________________________________________________

JBLU - JetBlue Airways  $27.29  *** Recovery In Progress! ***

JetBlue Airways (NASDAQ:JBLU) is a low-fare, low-cost passenger
airline that serves point-to-point routes between destinations
in 11 states and Puerto Rico.  The company focuses on serving
underserved markets and/or large metropolitan areas that have
high average fares.  It has a geographically diversified flight
schedule that includes both short-haul and long-haul routes.

JBLU - JetBlue Airways  $27.29

PLAY (sell naked put):

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

SELL PUT  MAY 22.5  JGQ QX     616   0.35  22.15   4.1%   1.6% *
SELL PUT  MAY 25    JGQ QE    2722   0.85  24.15   6.8%   3.5%


__________________________________________________________________

LSCP - Laserscope  $27.01  *** Rally Mode! ***

Laserscope (NASDAQ:LSCP) designs, manufactures, sells and services,
on a worldwide basis, an advanced line of medical laser systems and
related energy devices for the medical office, outpatient surgical
center and hospital markets.  The firm pioneered development and
commercialization of lasers and advanced fiber-optic devices for a
variety of applications.  The company's product portfolio consists
of more than 150 medical laser systems and related energy delivery
devices.  The firm's primary medical markets include dermatology,
aesthetic surgery and urology.  Its secondary markets include ear,
nose & throat surgery, general surgery, gynecology, photo-dynamic
therapy and other surgical specialties.

LSCP - Laserscope  $27.01

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    LXQ PE      76   0.30  24.70  10.0%   1.2%
SELL PUT  MAY 22.5  LXQ QX      26   0.55  21.95   6.1%   2.5% *
SELL PUT  MAY 25    LXQ QE      18   1.35  23.65  10.1%   5.7%


__________________________________________________________________

PDII - PDI Incorporated  $27.35  *** New Trading Range? ***

PDI (NASDAQ:PDII) is an innovative healthcare sales and marketing
provider to biopharmaceutical and medical devices companies and
and the diagnostics industry.  Its three business units offer
service and product-based capabilities for companies seeking to
maximize profitable brand sales growth.  The three units include
PDI Pharmaceutical Products, PDI Sales and Marketing Services,
and PDI Medical Devices and Diagnostics.

PDII - PDI Incorporated  $27.35

PLAY (sell naked put):

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

SELL PUT  APR 25    PKU PE      10   0.45  24.55  15.0%   1.8% *
SELL PUT  MAY 22.5  PKU QX       1   0.65  21.85   7.3%   3.0%
SELL PUT  MAY 25    PKU QE       1   1.35  23.65  10.3%   5.7%


__________________________________________________________________

TINY - Harris & Harris Group  $21.28  *** Entry Point? ***

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  $21.28

PLAY (sell naked put):

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

SELL PUT  MAY 17.5  QJT QW      90   0.50  17.00   7.3%   2.9% *
SELL PUT  MAY 20    QJT QD     173   1.35  18.65  12.0%   7.2%


__________________________________________________________________

USG - USG Corp.  $17.92 *** Premium-Selling Only! ***

USG Corporation (NYSE:USG) produces a range of products for use
in new residential, new non-residential and repair and remodel
construction, as well as products used in certain industrial
processes.  Its operations are organized into three operating
segments: North American Gypsum, which manufactures Sheetrock
brand gypsum wallboard and related products in the United States,
Canada and Mexico; Worldwide Ceilings, which manufactures ceiling
tile in the United States and ceiling grid in the United States,
Canada, Europe and the Asia-Pacific region, and Building Products
Distribution, which distributes gypsum wallboard, drywall metal,
ceiling products, joint compound and other building products
throughout the United States.

USG - USG Corp.  $17.92

"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 17.5  USG PW     979   0.45  17.05  19.1%   2.6%
SELL PUT  MAY 12.5  USG QV    3968   0.20  12.30   4.0%   1.6% TS
SELL PUT  MAY 15    USG QC    4913   0.75  14.25  11.5%   5.3% *


__________________________________________________________________

XMSR - XM Satellite Radio  $29.56  *** Consolidation Underway! ***

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  $29.56

PLAY (sell naked put):

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

SELL PUT  MAY 25    QSY QE     855   0.50  24.50   4.9%   2.0% *
SELL PUT  MAY 27.5  QSY QY     402   1.15  26.35   8.0%   4.4%



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

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.

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

AFCI - Advanced Fibre Comm.  $22.59  *** In A Trading Range? ***

Advanced Fibre Communications (NASDAQ:AFCI) develops, manufactures
and supports a family of telecommunications access products and
services.  The firm's products and services enable the connection
between the central office switches of telecommunications service
providers and their end users for voice and high-speed Internet,
data and video communications.  Their products include integrated
multi-service access platforms, central office switching platforms,
optical add-drop multiplexers, integrated access devices, network
element management systems and cabinets, as well as many related
professional services.

AFCI - Advanced Fibre Comm.  $22.59

PLAY (sell naked call):

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

SELL CALL  MAY 25    AQF EE     516   0.75  25.75   7.7%   2.9% *
SELL CALL  MAY 22.5  AQF EX    3186   1.75  24.25  12.2%   7.2%


__________________________________________________________________

QLGC - QLogic  $32.25  *** A Recent Slump! ***

QLogic Corporation (NASDAQ:QLGC) designs and supplies storage
network infrastructure components and software for server and
storage subsystem manufacturers.  The company's products are
based on SCSI, iSCSI, Fibre Channel and Infiniband standards.
The company is the only end-to-end supplier of Fibre Channel
network infrastructure components that aid in the transfer and
acquisition of data within the SAN.  Their products include its
SANblade HBAs, SANbox Fibre Channel Switches and SANsurfer Tool
Kit management software.  QLogic is the only HBA vendor that
supports SCSI, Internet Protocol, Virtual Interface and FICON
protocols with the same Fibre Channel HBA.  In addition, the
company designs and supplies controller chips used in a variety
of hard drives and tape drives as well as enclosure management
and baseboard management chip solutions that monitor the health
of the physical environment within a server or storage enclosure.

QLGC - QLogic  $32.35

PLAY (sell naked call):

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

SELL CALL  APR 35    QLC DG    9108   0.20  35.20   5.9%   0.6% *
SELL CALL  MAY 37.5  QLC EU    2625   0.45  37.95   4.2%   1.2% TS
SELL CALL  MAY 35    QLC EG    4320   0.95  35.95   6.5%   2.6%



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

SEE DISCLAIMER - SECTION 1

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


**************
TRADERS CORNER
**************

How I find Support and Resistance.
By Jane Fox

I have been trading for over five years now and have come to
appreciate the value of watching price and price only. I have
used many different indicators and to tell you the truth I am
starting to lose faith in them. I have yet to find an indicator
or any combination of indicators that will give clear and concise
trading signals that are give me an edge or a greater probability
of profit than if didn't use them. But I digress for this article
is not about indicators it is about how I use price to determine
support and resistance.

I have developed a system I use to build support and resistance
zones each and every day that has been working so well it amazes
me.

High and lows Data Points

I start by keeping a database of all the INTRADAY highs and lows
and then clumping price levels together that have multiple data
points, highs or lows from different dates. This is what I do. At
the end of each day on an Excel spreadsheet I place a date by the
high and low in the NDX e-minis (NQ) and the S&P e-minis (ES).
When I see multiple dates clumped together at one or two prices I
build a "zone" and each data point is a layer. For example ES
currently has 10 different dates, ranging from February 9th to
April 5th, where price either made a high or a low within 1141-
1144. This is a zone. I call the zones my roadmap.

When I post my roadmap in the Market Monitor each morning I also
report the number of layers the zone currently has and the more
layer (dates) the more significant the zone. I currently only do
NDX and S&P e-minis for I have found the database does not work
for the DOW and Russell e-minis. There are just too many price
levels.

I have tried folding in the pivot points from daily, weekly and
monthly but found these to not add a lot to the analysis so I
quit and no longer try to use these numbers.

Overnight markers

Next I take note of the overnight high and low and see if they
confirm the zones I have already identified. You may know from
previous articles that I don't put a lot of importance to
overnight levels because the volume is so light but I will use
them if they confirm a zone or to build a zone once I see what
the first hour markers come in at.

First Hour (FH) Markers

In 90% of all trading days, a market's high or low will be made
within the FH and many days a market will only trade within this
range. With this kind of information in front of me I couldn't
ignore these very important levels and started using them to not
only verify the zones but to build new zones that did not show up
in the database. Let's take April 5th as an example. My database
showed a large number of layers between 1141-1144 but a three-
point zone is just a little wide for daytrading so I decided to
wait for the FH markers to redefine this zone. The FH high came
in at 1144.75 so I redefined the resistance zone as 1144-1145 and
pegged my support at FH lows of 1140.25. ES used this zone as
resistance until volume came into the market and it was able to
break through its resistance at 1:10PM ET. But just to show you
how important these FH levels are take a look at how well the FH
lows defined support. ES made a 1140.25 low at 9:35ET and did not
make another low before 10:30 so 1140.25 became the FH low. From
11:00 to 11:20 ES touched 1140.25 five times and never broke
through. Now that is well-defined support.





These are numbers you do not want to ignore.

Previous Day markers

The next thing I will fold into this analysis is the previous day
highs, lows and close. I have found when you have a FH and
previous day marker close together it is usually an excellent
resistance or support zone. On April 5th YM had a previous day
high at 10481 and a FH high at 10491 so I built a zone at 10481-
10491, which served to hold back price until 3:05ET when volume
came in and this resistance zone broke with a vengeance. You can
see this resistance in the next image.

How I use this information

First of all I look for reversal price patterns where I have
defined zones, price patterns like a head and shoulders or
reverse head and shoulders. Although I have found that these
patterns intraday are not has potent as they are on say a daily
or weekly chart, they become more important when they occur at a
resistance or support zone.

The other thing I will look for is divergences. Price divergence
to MACD is the one I use the most but you could use divergences
to stochs or RSI just as well. However, be careful of price
divergences to indicators for they don't always work or even work
often enough for me to trade them so I use them for information
only. Here is what I mean.





As I mentioned earlier, on April 5th I built a YM resistance zone
from previous day and FH highs at 10481-10491. Although price
bumped up against this resistance all day, MACD was telling us
failure was imminent because it was making lower highs and
heading down. if YM broke down below this resistance confirming
the MACD divergence I would have used that information to setup a
trade in the weakest market of the day. However, if you were only
looking at this divergence you may have been on the wrong side of
a trade for here is what happened.




So be careful with divergences and use them for information only
or to verify an observation.

What I use these levels for mostly is comparing the markets to
one another and determining which market is stronger or weaker.
On a 5-minute chart I draw a blue trendline at the previous day
high and low. I draw a cyan line at previous day close and
magenta lines for FH highs and lows. I then have one workspace
with four markets: NDX e-minis, S&P e-minis, Dow e-minis (YM) and
Russell 2000 e-minis (ER) and at a glance I can tell you where
the strength is.

Which market is strongest and which is weakest from this April
5th image?




YM was above the previous day high so above the previous day
range but still within the FH range. It was also above the
previous day close. NQ was above the previous day high so above
the previous day range but still within the FH range. It was also
above the previous day close. At this point NQ and YM were pretty
well neck and neck for strong market. ES was within its previous
day and FH range but above its previous day close so it came in
next for strength. Then bringing up the rear was ER, which was
below the FH range but still within its previous day range. It
was also below the previous day close.

Here's how the day ended.



I was expecting that price would stay within the FH range on
April 5th because it was the week before Easter and low volume
days tend to be sideways trading days and not trend. However, if
one market did break through its resistance, you would have to
wait for the others to break out also before you would make a
trade to ensure it was not a head fake, which we see many times.
YM broke out first then NQ almost at the same time. ES was a
little later but did break resistance also. ER never did break
out of its previous day range but did break the FH range.

This analysis is invaluable when you have a sideways day but
becomes useless in trending days because if a market is trending
it leaves these levels in the dust and will probably not revisit
them. However, studies have proven that we have about 2 trending
days a month so I'm not worried about them not working on those
few and far between trending days.

Remember plan your trade and trade your plan.

Jane Fox


**************
TRADERS CORNER
**************

Assessing the key technical patterns and price "gaps"
By Leigh Stevens
lstevens@OptionInvestor.com

OIN SUBSCRIBER QUESTION:
"You had an objective to 1900 in the Nasdaq for some time before
it got there, but to 1060 I think in the S&P and it only got to a
little under 1100. What was different in the way that you arrived
at one very accurate prediction versus the other which was not as
close?"

RESPONSE:
I usually find that the predictions that are most accurate will
use or take advantage of multiple ways of calculating possible
price targets.  When I get too focused on just one technique,
pattern or indicator, there is greater likelihood that the
prediction will not pan out or is a bit off as to a price target.

For example, with the suggestion that an S&P 500 (SPX) downside
target was to around 1060, I got focused on SPX falling back to
its 200-day moving average (wrong!) - which is what I thought the
Nasdaq Composite would do(right!). This idea also fit with this
same price area being an objective implied by a bear "flag"
pattern that got traced out.

It is easy to be mistaken if you think that Nasdaq will have the
same kind of move as the S&P in a mixed market like has been the
case with the divergent economic trends.  And, to figure an
objective based on mostly one chart pattern by itself.  More
chances to be wrong if the implied target doesn't jive with
other, even more reliable, longer-range chart considerations.

In the S&P I was looking at the upside down (bear) "flag" and
measuring the length of the first drop. Then saw a second
downswing that could be (more or less) equal to the first, once
SPX fell under the lower end of the outlined flag -




What was misleading about relying on this analysis alone was
that, to achieve an objective to as low as 1060 would mean that
SPX would have to break rather far under a trendline drawn from
the early-August to early-Oct lows.

There is a sort of ranking that you can do about chart patterns
 one that measures the longer term rate of change or the longer-
term uptrend ranks "higher" than short-term patterns.  Moreover,
a dip to 1060 was "too far" (to make sense) under a longer-term
weekly up trendline that intersected in the 1100 area -




Another thing that I could have paid more attention to is the
tendency for the even 100 levels to often mark turning points or
areas of significant support/resistance - 1100 in the case of the
S&P. The low was 1087 but it bobbed back above 1100 like a cork.

The even-1900 objective and the "test" of the 200-day moving
average in the Nasdaq Composite (COMPX) did mark the likely
bottom and a turning point in that Index.

The Composite had been falling more than the S&P Index, but it
had also gone up further in the months before also. From the Oct
'02 bottom to the Jan peak of this year the Nasdaq almost
doubled!  (In just 16 months, COMPX went from 1100 to 2150.)
Moreover the Composite seemed more likely to test its 200-day
moving average given its prior movement in relationship to this
key average -




When the Composite finally cleared and closed decisively above
its 200-day moving average in March-April of 2003, the moving
average then defined an area of buying interest (support) on the
first correction back to the area of the average - what was
resistance "became" support. A good chance that history would
repeat itself in regard to COMPX finding support at the 200-day
average.

1900 in the Composite was also the approximate area of some prior
relative highs and lows of significance and this price area was
where its longer-term weekly trendline intersected per the weekly
chart below -




There is a reason I do a post-mortem to see where downside or
upside objectives could have been more precisely predicted after
the fact.  I find that technical analysis nearly always can
pinpoint where a correction will get to and where the turning
points will come in - but, you have got to apply the right
analysis and the most predictable aspects of the chart or
indicators or a combination thereof.

It pays to go back and look for things that might have been
overlooked initially. Doing this look-back rear view mirror sort
of thing often makes for a sharper analysis next time and can
give that little extra bit of confidence.

If I am anticipating a bottom, or top, in a certain price area, I
am quicker to see the other signs of that top/bottom on the day
that it happens.  Hey, a small edge like this really helps! -
especially when buying Index options at a bottom, or puts at a
top, when the media talking heads are mostly suggesting more of
the same trend, not a trend reversal ahead.

CHART GAPS –
A day after the recent upside market reversal, there were price
"gaps" noticeable in the Nasdaq Composite and Nasdaq 100 (NDX)
Indexes. A price gap is formed when an index or stock has a low
that is the above the prior days high – an upside gap – or when a
stock or index high is below the previous day’s low, creating a
downside gap.

Gaps are price areas where no trading took place from one session
to the next.  This space between two consecutive day’s price
ranges, as seen on a bar or candlestick chart, has various
degrees of significance in terms of helping predict or confirm
what is going in with the trend.

Many price gaps occur on overnight news or news that came out
before the opening.  In the recent example, a report on a long-
anticipated job expansion (nonfarm payrolls) produced a sharp
jump in stock prices after its release.

The upside chart gap apparent on a daily chart of the Nasdaq
Composite was not seen on the S&P 500 index (SPX) or Dow
Industrial (INDU) daily charts – why?

Gap "events" caused a similar jump in many S&P stock prices
relative to the prior day. S&P futures prices will show a chart
gap.  Not so in the "cash" index.  When order imbalances show up
in a number of S&P stocks - in this recent case it involved
substantially more buy orders than sell orders - the specialist
(firm or individual) involved with making an orderly market for
that stock on the New York Stock Exchange, will often delay the
opening of the stock or stocks involved.

Since the specialists are charged with maintaining an "orderly"
market, they delay an opening to gain some time for more orders
to come in and/or so they can calculate what they have to buy or
sell to maintain an orderly market.  It's not uncommon to have
delayed openings for a number of key stocks in the S&P and Dow
30.

As the exchange also wants to publish an "open", the convention
for the S&P and the Dow is to calculate an index Open, that
accounts for stocks not immediately trading, by taking the
"last" price; i.e., the prior close.  Based on this convention,
there is typically no apparent chart "gap" in the S&P or Dow
"Open" as the opening price is at or very close to the closing
price.

The Nasdaq indices reflect an open based on the first trade of
the stocks that make up that index and on the daily chart of the
Composite, the recent (upside) chart gap looked like this -




GAP SIGNIFICANCE -
Generally, gaps below the market tend to act as support areas and
gaps above the market suggest resistance and areas of likely
selling interest. Since a consensus expectation is "built into"
the last traded price or close of every stock, index or
commodity, significant new influences affecting the market’s
perceptions of what the current and/or future price level for
that item should be, causes an immediate adjustment in the
opening price during regular exchange hours.

Buyers will either be willing to pay more and potential sellers
will want higher levels to induce them to sell or sellers will be
aggressive in offering the item at lower levels and buyers will
not be interested in purchasing unless prices drop especially in
the early trading (open) which often becomes the high or low.

Upside gaps are price areas where buyers were unable to make any
purchases, as selling occurred only above the gap area.  Downside
gaps are price areas where sellers were unable to make any sales
as they could only transact at levels below the gap.

This is what is behind the notion that gaps below the market will
tend to act a support and gaps above the market, will tend to act
as resistance.  A move back down to an upside gap often brings in
additional buying interest at this lower level from earlier.
Similarly a rebound back up to an overhead (downside) gap can
attract interested sellers that would have sold more, in the area
where prices had previously "gapped" down, had they been able to.

There is a common saying that gaps get "filled in".  After a
market settles down in subsequent days and weeks after the gap
"event", a trend correction may take prices back into the gap
area. It's better to say that gaps tend to get filled in – as
gaps don’t always get filled.

Where gaps do not get filled, is where the gap indicates a shift
or jump to a faster rate of upside or downside momentum. Gaps
here can signal where a correction to the prior trend (a
countertrend move) is definitely over. When there is this kind of
momentum shift, these gaps are sometimes referred to as runaway
or "measuring gaps.

Why "measuring"?  When gaps occur after the trend has been
underway for a time, it may measure about mid-point in a move. It
seems hard to believe that this could be the case in the Nasdaq
if you look at the move from the low of months ago and think that
the recent resumption of an uptrend could be halfway in an
advance to say 3000 in the Composite.

However, we could also just take this recent upside Nasdaq gap as
at least suggesting a test of the prior relative high in the 2150
area.  After a strong rebound from 1900 to 2025, followed by
appearance of a chart gap, it's not hard to then figure that the
current renewed uptrend would carry to at least 2150 or back to
test the prior top.

Sometimes gaps are part of a reversal pattern such as when buying
or selling interest gets exhausted and are called in fact,
"exhaustion gaps" - an example is seen in the Nasdaq chart above
of a type of exhaustion gap - I'm stretching the definition some
as this was not the end of a trend, only the end, or exhaustion
of, a correction.

Gaps that are part of ongoing trends and that tend to act as a
signal of an acceleration of upside or downside momentum are part
of "continuation" patterns. That is what I think was marked by
the gap above in the Nasdaq chart. The substantial upside gap
that occurred provided a pretty good clue technically that this
index was back in an uptrend.

Good Trading Success!


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

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

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Option Investor Inc
PO Box 630350
Littleton, CO 80163

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