The Option Investor Newsletter Sunday 04-25-2004 Copyright 2004, All rights reserved. 1 of 5 Redistribution in any form strictly prohibited. In Section One: Wrap: Bullish Close Futures Market: See Note Index Trader Wrap: TWO THINGS Editor's Plays: Internet Bubble? Market Sentiment: Investor Bravado? Ask the Analyst: Tendency to gravitate toward the pivot (Pivot Analysis) Coming Events: Earnings, Splits, Economic Events Posted online for subscribers at http://www.OptionInvestor.com ****************************************************************** MARKET WRAP (view in courier font for table alignment) ****************************************************************** WE 04-23 WE 04-16 WE 04-09 WE 04-02 DOW 10472.84 + 20.87 10451.9 + 9.94 10442.0 - 28.56 +257.62 Nasdaq 2049.77 + 54.03 1995.74 - 57.12 2052.86 - 4.31 + 97.15 S&P-100 556.80 + 1.86 554.94 - 1.18 556.12 - 1.98 + 14.58 S&P-500 1140.60 + 6.03 1134.57 - 4.76 1139.33 - 2.48 + 33.75 W5000 11150.42 + 72.34 11078.1 - 87.98 11166.1 - 36.36 +362.24 SOX 487.98 + 7.84 480.14 - 31.64 511.78 - 2.08 + 34.61 RUT 590.71 + 7.34 583.37 - 14.51 597.88 - 5.57 + 30.53 TRAN 3001.71 + 62.24 2939.47 + 12.59 2926.88 - 39.78 +130.76 ****************************************************************** Bullish Close by Jim Brown The markets closed at the high of the day, the day after a big gain and in front of a weekend. The Dow recovered all of its losses for the week and gained ground for the second consecutive week. The Nasdaq recovered 54 of the 57 points lost the prior week. It was a bullish close on the surface but the internals painted a slightly less bullish picture. Dow Chart - Daily Nasdaq Chart - Daily Russell 2000 Chart - Daily The only economic report on Friday was a bullish blowout with Durable Goods soaring +3.4% in March. This was a major win for the bulls with the headline number seven times the consensus estimate of only +0.5%. Not only was March a strong jump but February was revised up to +3.8% from +2.5%. The only component losing ground was communications equipment and that is no surprise to anyone. That component tends to be highly volatile with monthly swings from +46% to -64% in just the last five months. Headline orders hit their high for the year and completely erases any fears that economic growth may have peaked earlier in the quarter. Demand is now growing at better than a +10% pace over the year earlier period. Considering the good March number and the revision to February this was a very strong report. The strong Durable Goods rekindled the rumors that we could see a rate hike in May and bonds sold off once again. The dollar rose on the economic strength and will eventually put more pressure on earnings for international companies. The Fed mounted a solid front with multiple comments from different Fed heads. Moskow said "it is a question of timing as to when rates will actually rise". He added that the Fed has the luxury of being more accommodative in contrast to previous cycles. Analysts were quick to compare 2004 with 1994 when the Fed raised too quickly and tanked the bond market. Broaddus also made similar comments suggesting the Fed was not unduly concerned with inflation. He commented that jobs were likely holding onto gains and suggested we would see more gains in the May Jobs report. Broaddus also said he did not expect strong growth the remainder of the year but gains in the stock market would help spending. Fed Vice-Chairman Roger Ferguson said the deficit was not as troublesome as some recent news articles have suggested. This was in advance of the G7 meeting and he said the prospects for the U.S. economy as a result of the deficit were "not as apocalyptic as the ones you imagine." All of the commentators echoed the "disinflation risk has passed" refrain. Bernanke was the most constrained of the multiple speakers saying that labor market slack and high productivity growth would restrain inflation. He said he still felt the recovery was tentative. "Although the labor market appears to be sitting up and taking fluids, it has not hopped out of bed and begun a round of jumping jacks." Bernanke also repeated the "timing of rate hikes are dependent on the speed of the recovery" mantra. It almost appears the Fed is not planning on raising but are planning on a constant verbal onslaught to make us think they are. If they warn enough they hope the shock of the actual hike will be minimal because the market will have already priced it in. It all boils down to whom do traders believe. Are they going to believe the Fed has the luxury of waiting or will they lean in the direction of hike first wait later. I mentioned on Thursday that Wayne Angel was talking about a 50 point hike in May. While I don't think there is anybody who believes that is possible the cloud remains. The May Fed meeting is only six trading days away and the chance for a blowout rally before that meeting is slim. Institutions will want to be cautious just in case. The fund flows for the week came in at +$3.3B and marked a strong pattern change for a post tax week. One reader said a Schwab representative had commented about the strong cash inflows into brokerage accounts over the last couple weeks. I am beginning to believe that not only have the planets aligned in the bulls favor but they have been super glued in place. Microsoft gapped open to $27.50 on their strong earning Thursday night and held that level all day. Bill Gates was rewarded with a nearly $2B increase in his net worth based on the number of shares he is currently holding. Not a bad days work. The real key is what next? Will it continue to hold this level or shrink back to the $25.50 range it has traded for the last month? I would be thrilled to see it fill the gap back to $25.50 so I can buy some. I think the bad news is mostly over for Microsoft and they will make a big announcement before the July analyst meeting. It could be a very large one time dividend or just a highly increased dividend rate. Either way shareholders should reap a large benefit. I am betting against any material acquisitions due to the continued antitrust concerns. Symantec would be the only high visibility takeover target on my list. They could buy SYMC and have $40 billion left over and they need a quality virus solution. Microsoft may be about to get another windfall from an unlikely source. Google is expected to announce its long awaited IPO next Thursday and rumor has it that Microsoft has been a long time investor in Google. The IPO is expected to raise over $20 billion and would immediately push Google ahead of Amazon in market cap. It will also be a windfall for the two 30 yr old founders of the company. No financial info is known about Google but analysts now guess revenue is nearing $1 billion a year. You can see why YHOO and AMZN are jumping into the search engine business. Amazon did not jump into anything except trouble with its earnings report on Thursday night. The stock sold off on Friday to the tune of -2.57 but don't fret over the current holders. That is still above its Wednesday's close. I am a diehard Amazonian and while I think the concept will continue to improve I would hesitate to jump into the stock at this level. EBAY, the ranking Internet gorilla, gained +8 on Thursday to a new all time high of $83. It managed to hold most of that on Friday with a close just over $82. I am also an avid EBAY trader and while I may not agree with Meg Witman's estimate of a $1.5 trillion potential market I do think EBAY will continue to grow. They will see $32 billion in sales this year according to Meg. I alerted readers to a potential EBAY entry point back on March 23rd when it touched $65. I am going to reverse that today with a put recommendation in my Editors Play. Not because I don't like EBAY but I think the coming Google IPO could dampen demand for the current leaders. Friday was far from a strong day in the markets with the Dow negative for most of the day. It returned to positive only in the last 90 min of trading. It only gained +11.64 and MSFT accounted for the majority of that gain. For the majority of the day the A/D line was negative by nearly -2000 issues. In the end the Dow did manage to climb ever closer to the 10500-10550 resistance level. The working range for April has been 10300-10550 and we are very near the top of that range. The Nasdaq rebounded from the drop to 1973 on Wednesday and traded nearly +75 points above that low at Friday's close. Tech earnings have been mostly outstanding with only a few company specific problems. The Nasdaq is also closing in on the top of its range at 2075. The index that could cause the most trouble at the open on Monday is the NDX. It closed at 1496 on Friday with strong resistance at 1500. A break over 1500 at the open could set the stage for a decent day but it is strong resistance. I was encouraged by the positive close even though the actual points gained for the day were light. Remember we had a banner point day on Thursday and following it with another gain in front of a weekend shows strong underlying sentiment. I already mentioned the internals were negative but not enough to keep the indexes from closing positive. I think this is bullish for Monday and could provide a strong start for the week. Earnings have been nothing short of spectacular. According to First Call 50% of the S&P have reported and 78% beat estimates, 11% announced inline and 11% missed estimates. Historically about 58% beat and 20% miss. The Q1 earnings growth is currently +26% and well over the prior analyst forecasts. Some analysts suggest the strong surprise is due to the new financial regulations leading to very conservative guidance. Whatever the reason the fact remains that this will be the strongest quarter of the year. Analysts are raising their estimates for the rest of the year but they are still in the low to mid teens. Next year by most accounts is still expected to be even slower. One way of judging market direction is by the measurement of small cap earnings growth. For all of 2004 growth is projected to be 44%. This drops down to only 14% for all of 2005. Is this reality or is it the "conservative" viewpoint? The bottom line is an economy that appears to be suddenly booming and earnings growth for the first quarter could be a record. This presents a quandary for investors. Do they believe the forecasts for slowing earnings growth or the signs the economy is starting to explode? Are these two events mutually exclusive or will a potential exploding economy explode the earnings as well? This is the decision traders will face next week. Do they turn cautious with only six days until the Fed meeting or do they roll the dice and bet against the Fed and buy stocks. The sell in May and go away crowd must be going crazy. Had they done that last year they would have lost out on a strong bull market. Will they miss out on the same thing this year or does lightning really strike twice. Last year April 22nd was the breakout day on the Nasdaq and April 28th on the Dow. We all know what happened and that memory has got to be weighing on traders consciousness. They have been told time and again that this is the peak quarter but memories of past bull markets die hard. Do analysts really know what is ahead? Just a few weeks ago First Call was predicting earnings growth for Q1 at 15.9% with the potential to hit 20%. If they are wrong about the future quarters then stocks could actually be undervalued. You know I am just posing those questions for debate today but I am getting the feeling that investors may not be willing to give up without a fight. They may be just stubborn enough to hold on to stocks while hoping for a repeat of 2003. The next two weeks are going to be crucial to the markets. Beginning next Thursday we will have seven days of critical economic reports with a Fed meeting right in the middle. GDP, ISM, PMI, Factory Orders, Productivity and Jobs. The question we face is do we want strong economic growth and the risk of an early rate hike or weak growth and the risk of lower earnings. I personally will take two helpings of very strong growth with extra gravy please. We are going to have the rate hikes eventually so let's get this ball rolling and tell the earnings analysts get out their erasers. Obviously what we think or what we want is immaterial but how to play it is not. Despite the rebound for the week we are still range bound. That means as traders we sell the tops and buy the bottoms until a breakout or breakdown appears. A breakout for me would be defined as a Nasdaq over 2150 and the Dow over 10750. Obviously that would be the extremes and I would start getting excited with a move over 2100/10550. The real clue would be a Russell over 605. If fund managers are buying small caps then the stage is set. A breakdown for me would be a failure of the lows for the week at 1975/10250. With all the major economic news ahead, the Fed meeting and 26% of the S&P reporting earnings over the next week we could see a lot of volatility. Until we get a breakout or breakdown continue to buy the bottoms and sell the tops and avoid trading in the middle. Enter Very Passively, Exit Very Aggressively! Jim Brown ************** FUTURES MARKET ************** Futures wrap is not emailed due to the excessive number of charts. It may be read on the website at this address. http://www.OptionInvestor.com/indexes/futureswrap.asp ******************** INDEX TRADER SUMMARY ******************** TWO THINGS By Leigh Stevens lstevens@OptionInvestor.com THE BOTTOM LINE – It is pretty well impossible to figure out two things here – one is if the indices in general are going to achieve upside break outs of their sideways to lower trends; and two, if there is another down leg coming. No one can say – well, the pundits have plenty of opinions – either fundamentally or technically. Usually, those with a technical bent such as this writer, think they know what is happening – but hey, we're stymied too! That is because the patterns, both with Nasdaq and S&P, form triangles composed of downward and upsloping trendlines that haven't resolved themselves by a breakout either way. Usually, faced with an uncertain picture, I give the benefit of the doubt to the dominant longer-term trend, which is up. But, it remains to be seen if the trend can reassert itself anytime soon. The back and forth movement makes it tough to make money (in long calls or puts anyway) unless you catch some of these shorter price swings we're seeing. Right now, up against the trendlines – see details further on – I would again favor puts if I had to pick a side. And, with the market spooked – does this ever change!? – by the prospect of higher interest rates, well there's a bear thought for you. FRIDAY'S TRADING ACTIVITY – The S&P 500 (SPX) was up a scant tenth of 1 percent at 1,140.60 by the close and a half of a percent for the week. The Dow 30 – the new rejuvenated Dow average (adding AIG, PFE and VZ this month) was ahead by about 12 points to 10,472. Only up .02% for the week. The Nasdaq Composite (COMP) was the bigger winner, ahead by nearly 18 points (+.08%) to 2050. The tech-heavy Index was up nearly 3% for the past week. As noted in the media on Friday, both Indices are not up on the year. Don’t spend the money yet however! Winners: retailers, semiconductors and software sectors on Friday led by Microsoft and Intel. Telecom, Internet stocks, airlines and energy sectors didn't fare so well. Orders for new durable goods to U.S. factories jumped 3.4 percent in March, far ahead of the average 1 percent gain expected by the Street. The strength in the economy suggested by this latest reading and data met with a good news/bad news response from traders and investors. The tug is between the good news of a strong and strengthening U.S. economy and the negative view that the Market takes about the prospect this bring for higher (interest) rates. TECH HECK – Microsoft (MSFT) had a big rally, after a positive broker comment based on MSFT posting of earnings and sales that beat expectations. Hey, never count those guys out. Their revenues jumped 17% on the back of strong PC sales and broad strength in earnings from its other business groups. The analysis I saw was that going into Q4, an outlook for double digit sales growth based on new products and better IT spending. Back at the ranch however – Amazon.com (AMZN) fell nearly 7% at one point on Street concerns over its future growth prospects – this after Q1 earnings that were well above expectations. Hey, those analysts don't like to be WRONG for LONG. OTHER MARKETS – The dollar was lifted by the economic data based on just what the market fears - a rise in interest rates. The Euro was down 0.6 percent to $1.1838, while Pound slightly to 1.7723. Against the Japanese yen, the dollar dropped to 108.96 after a move to a new monthly high of 109.83 on Thursday night – while we were sleeping the gnomes of Zurich were trading. The 10-year T Note was off 18/32 to 96 13/32, to yield 4.46%. MY INDEX OUTLOOKS – S&P 500 Index (SPX) – Daily chart: The up and down sloping trendlines form something referred to as a symmetrical triangle – all it means is that the price action is typical of a back and forth movement ahead of a next significant move. The direction of the move, above or below the trendlines will then resolve the trend. Either the S&P is back into its uptrend and goes on to make a new high or there is a new down leg. Either way its pretty clear I think – an upside penetration above the red down arrow (around 1142) AND a move above the cluster of prior highs at 1148-1150. If that happens upside potential looks to be to 1160 (prior peak) or to the 1170 at the upper envelope line that has tended to contain many of the prior rallies. Conversely, on the downside, I consider it key for the S&P 500 (SPX) to hold the green arrow area below at 1105, with leeway to 1100. Call to put volume ratios for Equities are not at an extreme – the last extreme being bearish. More downside would suggest that the put volume would pick up and we might then see a bullish reading. The bulls want to take charge but don't find enough good reasons yet to keep throwing money at stocks. S&P 100 Index (OEX) – Daily chart: Key resistances are 558, then 562 in the S&P 100. On the downside, support implied by the trendline comes in around 540. A move to above resistance suggests at least a re-test of the prior highs – a drop below 540 suggests at least a "test" of support implied by the 200-day moving average. OEX is getting down toward an oversold stochastic reading but is not there yet. Stay tuned. S&P 100 Index (OEX) – Hourly chart: I like the hourly chart here for a quick glance as it shows even more clearly this pattern of lower rally highs, characteristic of a downtrend at least for now – 560 to 565 looks like formidable resistance. Even if the bulls move the ball to there, they still got to take it across the goal line and that will be tough – I lean to buying puts if OEX gets into the 560-565 zone. Dow Industrials (INDU) Daily: These charts all start to look alike after a while! 10,500, then 10,550 are the key near resistance levels. 10,300, then in the 10,200-10,180 area are the key supports. A close under 10,200 would suggest a move back to re-test the 10,050-10,100 area. This is one of those times where market action is indecisive – could that mean that WE are uncertain what lies ahead this year – well I am. Pretty neutral on the RSI here at mid-range. The trendlines are key to assessing the next direction for the intermediate term trend. The chart suggests more of a sideways to lower direction. If so, good to be a (option) premium seller than buyer. [For more on construction and use of trendlines, see my recent Trader's Corner article at - http://www.OptionInvestor.com/traderscorner/tc_041504_1.asp Nasdaq Composite (COMPX) Index – Daily: The Nasdaq, for a change, looks a lot like the S&P segment of the market. 2050-2070 is near resistance. A close above 2070 would suggest potential back up to the 2130-2140 resistance. Doubtful that this would happen without the NYSE stocks also in gear. Strong move in Microsoft (MSFT) and to recent rebound in Intel (INTC) is probably not enough to carry the market higher. Nasdaq Composite (COMPX) Index – Weekly: Nasdaq/Tech lovers unite! But the trend looks sideways as noted by the rectangular box. 2200 would be the top of what I could see a trading range ahead, with 1900 as key support – a move to 1800 would not destroy the long-range uptrend pattern however. The Composite Index could fall some distance before getting to an oversold level again – it may not, but a continued sideways to lower move will, over time, a least put the 13-week RSI closer to an oversold reading. Nasdaq 100 (NDX) Index – Daily: 1500 remains key resistance, at the trendline - a close over this level AND the ability to hold this area on pullbacks to it, would suggest at least a re-test of the prior 1520 high. 1550 is pretty major resistance. Doubtful the Nasdaq 100 (NDX) will clear this area anytime soon. How about AFTER the election?! Well, I've been wrong before. 1440 is near support, at the last (down) swing low. 1400-1405 is key, and major, support I think at this point. Nasdaq 100 tracking Stock (AMEX:QQQ)– Hourly: The hourly chart on the Q's show it best. A lot of resistance and selling interest is showing at 37.25-37.50. 38.25 – over time, this intersection is 38.50 – is the top end of the trading channel that is apparent on the hourly chart. I would sell in this area, keeping with the idea that QQQ is going to remain locked in a trading range on balance. 39 is probably the top of the range for a while, with 34 being the low of it. NOTE: I will be doing the Index Wrap comments this coming week, taking over for Jeff (Bailey), who is taking a well-deserved break from constant battle on the front lines. Good Trading Success! ************************Advertisement********************************** Option traders, check what PreferredTrade offers: - true direct access to each option exchange - stop and stop loss online option orders - contingent option orders based on the price of the option or stock - online spread order entry for net debit or credit - fast option executions - rates as low as $1.50 per contract ($14.95 min) PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC *********************************************************************** ************** Editor's Plays ************** Internet Bubble? While some are bubblier than others there is still a strong consensus for the future. EBAY is by far the leader with a real life gap up to a new 52-week high at $83 on Thursday. Great company, great stock but I think there is trouble ahead. Not in company performance but in stock price. The challenge is not with EBAY but with Google. Google will likely announce its IPO next week and it is expected to attract $20-$25 BILLION in cash. That means there is a very good chance some of that money will flow out of EBAY, AMZN and YHOO among others. Current market caps for YHOO $38B, EBAY $54B and AMZN $20B. Investors in those stocks, especially EBAY, may decide to hitch their fortunes to a new rising star and take profits on the old established companies. For EBAY at a new 52-week high and very extended at this point that could mean a drop in the $5-$7 range. That makes this a very simple play. We are going to buy the July $80 put and target $76 for an exit. The risk should be minimal once the Google IPO is announced because the attention will be on the new stock. Until the announcement which is expected next Thursday, we would be at risk for any continued market gains. With EBAY already riding a huge gap I think that risk is manageable. The problem is the IPO date. If it is announced on Thursday it could be well into the future before it is priced. The expectations for this IPO are so strong I would think they would hurry it to market and not risk the summer doldrums or an election gone bad. The July put is the recommended option. I included the June options as well because of event risk over the next two weeks. With the Fed, economic reports, etc, anything is possible and EBAY is very extended. Here are the potential puts. Jul $80 put XBA-SP currently $3.60 recommended Jun $80 put XBA-RP currently $2.85 Jun $75 put XBA-RO currently $1.35 I recommend the more expensive July $80 because it is very close to being in the money and a drop to our $76 target would nearly double it. EBAY Chart - Daily ********************** Taser Update Readers who took advantage of the TASR combination play last week are sitting pretty today. After a one day spike the stock has fallen and can't get up. The play was to sell both a call and put on either side of the price and then cover either side as the price moved in that direction. May $120 Call QUR-ED $10.30 bid last Friday May $110 Put QUR-QB $12.90 bid last Friday You would have received approx $23 in premium based on Friday's closing prices but in reality the call opened at $13.50 on Monday, the put at $10.80 for $24.30. Taser opened at $117 and rapidly ran to $128. You would have needed to cover the call almost immediately by going long the stock as it crossed $120 and remain covered until the middle of the day when it fell back below $120 and retraced its gains with a dip to $111. It peaked above $120 again later in the afternoon then closed just over $118. You should have been flat the stock at the close. On Tuesday TASR gapped down to $106 and then instantly rallied back to $111.50 but that was the last gasp. With the dip under $110 traders should have shorted the stock to cover the naked put. With the stock at $81 today it is -$39 from the open call which is currently trading at $1.20. I would close the call at this level and consider the $13.50 received -1.20 close as profit. Traders should be short the $110 put and the stock at $110 and waiting for expiration. You will be put the stock and that stock will cover your short. Assuming you changed stock positions three times for a cost of $1.00 each time and closed the call for $1.20 you should have a net profit today of about $20 and with TASR at $80 you are just waiting for the clock to run out. This is the best possible scenario. The stock is well under the strike price and we do not care what happens as long as it stays under $110. If TASR did happen to rebound to $110 you would cover your stock short and remain flat the stock as long as it is over $110. TASR Chart - Daily *********************** News Corp Update $38.11 Still waiting for a chance to fill the last one third of the position. Waiting until next week to sell calls against our current leaps. Still unfilled: Buy (2) Jan-2006 $40 Calls WLN-AH with a touch of 200dma (currently $34.89) http://members.OptionInvestor.com/editorplays/edply_041104_1.asp http://members.OptionInvestor.com/editorplays/edply_041804_1.asp **************** MARKET SENTIMENT **************** Investor Bravado? - J. Brown The volatility indices are supposed to measure investor optimism and/or fear. Lower numbers on the VIX/VXO mean less fear/more confidence for investors. A quick glance at Friday's readings at or near new multi-year lows would indicate investors are feeling pretty confident right now. But are they? With volatility indices near new lows why aren't the markets at or near new highs? Earnings certainly aren't the issue. Earnings have been great. On average they have come in well above expectations. Of course Jim has mentioned multiple times that year over year comparisons start to get a lot tougher going forward as companies compete with the very strong second half to 2003. That leaves us with interest rate fears, geo-political tensions and Iraq, and the Presidential election. Fortunately, Greenspan appears to have soothed the rate hike fears at least for now. The Iraq question is still up for grabs and that will have a direct influence on Bush's re-election campaign. We don't want to be political here but it is widely assumed that the markets want or are expected to do better with a Republican in the White House. However, unless things really begin to melt down in Iraq next week this probably won't be a short-term issue. This probably means that the rate fears will quietly loom in the background as the markets digest two big weeks of economic reports. Looking at some of the major sector indices I noticed the following. The Dow Transports index has broken out above resistance at 3000. Traditional Dow theory suggests that you can't have an extended rally/bull market without participation from the Transports so this is good news. Glancing through some of the tech sectors I noticed that the semiconductors are rebounding again. Fortunately, this short-term bottom also appears to be a "higher low" on its daily chart. Not quite doing so well are the hardware stocks. The GHA is stumbling along support and not showing much of a bounce on Thursday-Friday. Traders may also want to look through the Defense, Retail and Cyclical sectors for bullish plays. Defense and Retail are at new closing all-time highs while Cyclicals are also doing pretty well. On a side note check out the gold futures versus the dollar. The dollar has risen strongly in the past couple of weeks but the rally paused at resistance of its 200-dma. In reverse gold futures have fallen strongly but are holding support near their 200-dma. Both of these look ready to consolidate their recent moves. ----------------------------------------------------------------- Market Averages DJIA ($INDU) 52-week High: 10753 52-week Low : 8288 Current : 10472 Moving Averages: (Simple) 10-dma: 10412 50-dma: 10428 200-dma: 9942 S&P 500 ($SPX) 52-week High: 1163 52-week Low : 897 Current : 1140 Moving Averages: (Simple) 10-dma: 1132 50-dma: 1132 200-dma: 1070 Nasdaq-100 ($NDX) 52-week High: 1559 52-week Low : 1072 Current : 1497 Moving Averages: (Simple) 10-dma: 1469 50-dma: 1455 200-dma: 1405 ----------------------------------------------------------------- The VIX hit new multi-year lows and the VXO and VXN were close to doing the same on Friday as stocks rebounded into the afternoon. CBOE Market Volatility Index (VIX) = 14.01 -0.60 CBOE Mkt Volatility old VIX (VXO) = 14.22 -0.37 Nasdaq Volatility Index (VXN) = 20.68 -0.67 ----------------------------------------------------------------- Put/Call Ratio Call Volume Put Volume Total 0.70 750,552 526,044 Equity Only 0.63 649,924 409,471 OEX 0.44 29,197 12,750 QQQ 5.97 17,589 104,924 ----------------------------------------------------------------- Bullish Percent Data Current Change Status NYSE 78.0 + 0 Bull Confirmed NASDAQ-100 57.0 + 1 Bear Correction Dow Indust. 83.3 + 0 Bear Confirmed S&P 500 75.8 + 0 Bear Confirmed S&P 100 76.0 - 1 BEAR CONFIRMED Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend ----------------------------------------------------------------- 5-dma: 1.52 10-dma: 1.15 21-dma: 1.75 55-dma: 1.25 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 1009 1411 Decliners 1823 1654 New Highs 99 105 New Lows 69 16 Up Volume 665M 1207M Down Vol. 1021M 638M Total Vol. 1704M 1893M M = millions ----------------------------------------------------------------- Commitments Of Traders Report: 04/20/04 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 Commercials still not willing to place in big one-sided bets. The remain net short. Small traders upped their bearish positions by a couple of thousand contracts. Commercials Long Short Net % Of OI 03/30/04 407,987 420,624 (12,673) (1.5%) 04/06/04 409,429 419,471 (10,042) (1.2%) 04/12/04 412,827 419,910 ( 7,083) (0.9%) 04/20/04 409,729 421,456 (11,727) (1.4%) 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 03/30/04 130,112 81,937 48,175 22.7% 04/06/04 130,262 80,174 50,088 23.8% 04/12/04 135,840 89,090 46,750 20.8% 04/20/04 136,699 92,982 43,717 19.0% Most bearish reading of the year: (1,657)- 5/27/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 Commercials remain heavily net short the e-minis and small traders, who typically do the opposite, are right on track with heavy long positions. Commercials Long Short Net % Of OI 03/30/04 265,492 305,797 (40,305) ( 7.1%) 04/06/04 270,904 328,862 (57,958) ( 9.7%) 04/12/04 261,889 341,163 (79,274) (13.1%) 04/20/04 275,985 355,555 (79,570) (10.1%) 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 03/30/04 123,494 59,550 63,944 35.0% 04/06/04 148,737 46,235 102,502 52.6% 04/12/04 172,473 52,274 120,199 53.5% 04/20/04 186,799 69,137 117,662 46.0% Most bearish reading of the year: (77,385) - 09/02/03 Most bullish reading of the year: 449,310 - 06/10/03 NASDAQ-100 Very little movement in the NDX futures for commercial traders. The same can be said for small traders. Commercials Long Short Net % of OI 03/30/04 52,749 67,967 (15,218) (12.6%) 04/06/04 54,862 34,762 20,100 22.4% 04/12/04 54,144 34,432 19,712 22.3% 04/20/04 54,852 35,964 18,888 20.8% 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 03/30/04 8,928 16,551 (7,623) (30.0%) 04/06/04 7,971 20,721 (12,750) (44.4%) 04/12/04 8,297 20,746 (12,449) (42.9%) 04/20/04 8,538 19,431 (10,893) (39.0%) 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 Hmm... we're seeing a little bit of money getting shuffled around here. Commercials are slightly more bullish this week. Small traders, as expected, have turned more bearish. Commercials Long Short Net % of OI 03/30/04 23,642 22,180 1,462 3.2% 04/06/04 23,101 22,108 993 2.2% 04/12/04 23,501 22,748 753 1.6% 04/20/04 24,156 22,009 2,147 4.7% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 03/30/04 7,020 6,711 309 2.3% 04/06/04 7,316 8,085 (769) (5.0%) 04/12/04 6,136 7,450 (1,314) (9.7%) 04/20/04 5,997 9,631 (3,634) (23.3%) Most bearish reading of the year: (12,106) - 3/09/04 Most bullish reading of the year: 8,523 - 8/26/03 ----------------------------------------------------------------- ************************Advertisement********************************* Option Traders: Pay Attention Use the online options trading system built by option traders for options traders. Featuring direct access to each option exchange, stop and stop loss option orders, contingent option orders, online spreads, fast executions, and rates as low as $1.50 per contract ($14.95 min.). PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC ******************************************************************** *************** ASK THE ANALYST *************** Tendency to gravitate toward the pivot (Pivot Analysis) This week's question comes from a stock index swing trader, where the question was a complex one, and one I've really had to work at. The questions, which were quite complex, involves back testing, where some of our historical data from the weekly pivot analysis matrix might help us all get a better sense of how these markets have been trading, while at the same time, give us some insight as to what our expectations for profit, or price action might be over the period of a week or two, even three or four weeks. I love questions that I don't immediately have the answer to, and if I feel it is within my mental capacity to answer, I love a good challenge. The swing trader's question centered around his observation that on a week-to-week basis, the major indices seemed to gravitate toward, or around their weekly pivots, where even when fluctuations away from the pivot were found, there still seemed to be some type of gravitational pull, where swing trade profits could easily evaporate by the end of the week. Trader's Question #1: Is it just me, or is this really happening? Trader's Question #2: What type of range, or fluctuation is normal for the QQQ? It seems that there are periods of volatility that offer opportunity to profit, but many times, that opportunity must be captured quickly, or the gravitation back toward the pivot suddenly has paper profits suddenly missed. What type of swing trade profit on a week-to-week basis should I look for. Maybe my expectations are too high, thus some of my frustration. Trader's Question #3: After following the QQQ's trade on a week- to-week basis, it been my observation that some week's volatility or price fluctuation is much greater than others, but as you noted in last night's wrap, the QQQ has become a much more difficult security to figure out, as it is now blended with stocks other than pure technology related stocks. Of late, the QQQ hasn't necessarily been trading as much in unison with the semiconductors as it had in the past. Am I seeing things, or have the semiconductors lost some of their usefulness when trying to determine price direction of the QQQ? Wow! I could spout off some anecdotal answers to these three question, but that's no good. After thinking about this trader's questions for a few days, I thought I run a little experiment. Much like a scientist will do, I'll use some past data, make some observations, and see if we can't come up with some conclusions. Here's what I came up with. To get a grasp of what I was dealing with, I went back and compiled the last 12-weeks of WEEKLY pivot analysis data. I keep track of all the weekly pivot data I show in each night's Index Trader Wrap at OptionInvestor.com, so we can use actual data to begin addressing the trader's questions. The last 12-weeks data should give us a large enough data set for a swing trader to begin making some useful observations from. The periods I used are from February 2, 2004 to Friday's close of April 23, 2004. Here's how I hope to tackle some of the trader's question, and while I was at it, I included all of the various indices/securities we keep track of in the pivot analysis matrix. Data Table of Weekly Pivot Analysis - Here's how I went about tackling some of the trader's questions. Stick with me, and I think it will become clear, but with the resources I have at hand here's what I've done. The only way I could figure out how to display each week's trade, was to assign it a number. Since I'm using 12 weeks of data, I assigned each week a number of 1 thru 12. This is displayed at the bottom of the above table. As an example, for the week of 2/2 thru 2/6, I've assigned that week's trade as #1, then indexed up from there. Simple enough. Now comes the hardest part. I went back and looked at what the price was at each Friday's close for the particular week (1 thru 12) and then plotted that each Friday's close in the above table (rows 4-14) for the appropriate index/security we track in the WEEKLY Pivot Analysis table. Each week's closing value was plotted in relation to where the index/security closed with THAT WEEK'S weekly Pivot Analysis Matrix. For the purposes of this article, and as to try an make this article a broader educational on a broader market perspective, I used the S&P 500 Index (SPX.X) as my general market indicator of price direction. Still, a NASDAQ-100 (NDX/qqq), Dow Industrials (INDU/dia), S&P 100 (OEX), Semiconductor (SOX.X), or Banks (BIX.X) trader will be able to make some observations that they are interested in. Let's walk through the process of plotting the SPX (row 6) closing values for some of it's Friday closes. When we do so, consider the vertical blue line, which divides column D and E, the WEEKLY Pivot, which would be viewed as a potential mid-point of the week's trade. After the completion of each week's trade, we calculate a NEW weekly pivot for the next week's trade. As such, we KNOW that when the new week of trade begins (Monday) that the index/security we are looking to trade, will likely open for trading either side of the pivot. For example, the SPX will either open for trade above its Pivot and below R1 (resistance 1) or will open below its Pivot and above its S1 (support 1). At the markets close of 02/06 (#1), the SPX (row 6) CLOSED between is weekly and WEEKLY R1 for that week's (for 02/02-02/06) trade. I plot the #1 in row 6/column E. This gives me perspective of where the SPX CLOSED relative to a midpoint. Take special note that I stress CLOSED at a price between the Pivot and R1. During any given week, the SPX could have traded any of the levels in the WEEKLY Pivot Matrix, or no levels at all, as if stagnate. Now we progress to the week of 02/09-02/13 (#2), where that week, the SPX closed ABOVE its weekly pivot. I plot the #2 in row 6/column E. (Note: SPX traded as high as WEEKLY R2 of 1,155.01 +16 points this week, but never trade AT its WEEKLY Pivot, but closed up just 3.05 points for the entire week). We progress further to the week of 02/16-02/20 (#3), where that week, the SPX closed between its WEEKLY Pivot and S1. (Note: SPX traded as high as its WEEKLY R1 of 1,156.90 +11 points this week, but closed down 1.7 points for the entire week). Progressing further to the week of 02/23-02/27 (#4), we see that the SPX once again closed between its WEEKLY Pivot and S1. I plot the #4 in row 6/column D. For purposes of brevity, I continued this process for the remaining weeks of trade in an attempt to try and answer the trader's question #1. Answer to #1: After plotting each week's CLOSING trade, it does appear that CLOSING values, on average, tend to gravitate around the pivot, or at least between their WEEKLY S1 and WEEKLY R1, with Pivot in between. Based on 12 weekly observations, this would be true 75% of the time (9 out of 12 weeks). Trader's Question #2: I went back and calculated the AVERAGE weekly range of trade for the various indices/securities and posted the average range of trade (from each week's low to high) for the last 12 weeks. Answer to #2: Row 10/Column H would show that the AVERAGE range of trade for the QQQ is $1.35. A swing trader that holds a position no more than 5 trading days, would begin to understand that if they entered a QQQ trade at the PEAK inflection point (high or low) of that week, then they might look for a $1.35 per share gain on average. I don't know any traders that have been able to consistently buy and sell extreme peaks or inflection points in ANY security, but traders that can enter and exit within 15% of an inflection point on consistent basis would be considered a very good trader. In the context of $1.35, if missing the outlying 15% of $1.35 range on both end, this would still have the trader capturing 70% of the average range, or roughly $0.95 per share in 5-days. Perhaps a swing trader that only prefers capital exposure of 5-days or less, but has been targeting a $2.00 per share gain in any one direction, begins to understand that this type of opportunity would be outside the average weekly price fluctuation of the QQQ. Trader's Question #3: Has the QQQ and the SOX.X lost some of their correlativeness? To answer this, I'm going to separate out the last 12 weeks of trade (1 thru 12) in for both the QQQ and the SOX.X, and plot each week's close, within each security's weekly pivot matrix. QQQ and SOX.X weekly closes within their WEEKLY Pivot Matrix With no regard to the actual amount of price gain or decline, I've plotted the 12 weekly (1 thru 12) closes of both the QQQ and SOX.X against each other, where RED numbers would depict a certain price decline, numbers is BLUE would most likely depict a more fraction gain/loss or relative unchanged price, while GREEN numbers would depict a certain price gain. There does appear to be some lack of correlation, at times, between the QQQ and SOX.X. Note that in week #2, the QQQ appears to have been relatively unchanged, while the SOX.X would have closed below its WEEKLY Pivot, after having closed ABOVE the prior week's (#1) pivot. However, I will note that both the QQQ and SOX finished lower(QQQ= $-0.19, SOX= -8.84) by their close for the week of 02/09-02/13. Week #3, the QQQ would have closed BELOW its weekly pivot (fell $-0.08 this week, but did trade as low as its WEEKLY S1 of $36.57 before closing at $36.86) while the SOX.X closed below its WEEKLY pivot for a second-consecutive week (fell -0.77 points, no trade at its WEEKLY S1). Week #4 and #5 would most likely have shown fractional Friday to Friday closing changes. I checked the full RANGE of trade for week #5, which did show the QQQ's weekly range being $0.97, while the SOX.X witnessed a 22.71-point range. Week #6, shows that a notable downside move (to the left of pivot) was witnessed as both the QQQ and SOX.X closed BELOW their WEEKLY S2s. While the QQQ closed down $1.12, or 3.06%, its weekly range was $2.02. The SOX.X closed down 19.14 points, and its weekly range was 36.21 points. Week #7 was a certain price decline. Remember, that when each new week of trade begins, we KNOW that the index/security being measured in the pivot matrix resides somewhere between its S1 and R1, so a close between S2-S1 would have to represent a decline. This week, the QQQ saw a $0.76, or 2.14% decline and traded a range of $0.99, while the SOX witnessed a 21.75 point decline, or 4.48% loss, and saw a weekly range of 26.28 points. Week #8 may have been a marginal bullish week, but with a certain price advance. The QQQ gained $0.47 on the week (+1.35%) but saw a range of $1.58 (traded down to WEEKLY S2 of $34.01 with a weekly low of $34.00 before gravitating back above its WEEKLY Pivot) The SOX gained 15.90 points (+3.43%), and similar to the QQQ saw a wider range of 34.39. Week #9 saw prior week's gains build with the QQQ gaining $1.88 (+5.34%) while its weekly range was only $1.66. How can this be you might wonder? The QQQ started the week with a gap higher from its prior Friday's close. The SOX gained 34.61 points (+7.22%) and saw a weekly range of 35.27 points. It is weeks #11 and #12 where the trader begins to pick up on some recent lack of correlation between the QQQ and the SOX.X. Week #11 does find the QQQ and SOX.X moving lower, but the SOX.X outpacing a decline to close BELOW its Weekly S2, while the QQQ closes between its WEEKLY S1 and Pivot. This week, the QQQ finished down $0.85, or 2.3% and traded a range of $1.57. The SOX.X finished down 31.64 points, or 6.18%, and traded a range of 44.09 points. Week #11 would either depict that there was something overly "wrong/bearish" taking place in the SOX.X, or there was a few stocks, non-semiconductor, that were showing more bullishness among the QQQ. Week #12 would have found the QQQ with certain gain and this week's trade did find the QQQ closing up $1.12, or 3.10%, with a weekly range of $1.63. The SOX.X closed up 7.84, or 1.63%, and saw a ranged of 22.3%. Once again, we may note that either the SOX.X is seeing something "wrong/bearish" taking place, or there was a few stocks (I can think of MSFT's 6.12% gain on Friday) showing more bullishness among the QQQ. Answer #3: It would appear that some of the QQQ/SOX.X correlation has been lost, but only in the last two weeks. To be continued: Good gravy! It's 05:34 AM EDT and I'm still working on this article. I think I've "discovered" some things and I want to work on them some more. I will be on vacation all next week, and won't get a chance to continue my train of thought until May 9th Ask the Analyst, but will give me an opportunity to test a couple of things I think that I've discovered. Try giving yourself a rest right now, clear your mind, then come back and study, or re-read this article. Try applying a simple IF the index does this, then trade this level, with an expected average range of $x.xx, with a stop x% of the entry point. Since I will be out all next week, I want to post this upcoming and now updated WEEKLY pivot levels for 04/26-4/30, along with Monday's DAILY pivot levels, and current MONTHLY Pivot levels. Pivot Analysis Matrix - Here's what I really want to check against when I get back from vacation, but something you might want to do this week while I'm gone. Think about the AVERAGE range of trade we calculated in the first chart (column H). IF the average range for the QQQ is $1.35 over the past 12 weeks, this might have the QQQ capable of trading ($37.21 +/- $1.35) a MAX LOW on AVERAGE of $35.86 (that would be just below this WEEK's S1, or capable of trading a MAX HIGH on AVERAGE of $38.56, which would put the QQQ above its WEEKLY R2. Here is something I'm going to test when I get back. I didn't mark this correlative level in the Matrix, but do you see MONTHLY R1 at $37.34 and DAILY R1 of $37.35? Think of this as a KEY LEVEL OF RESISTANCE right now, where without help/strength from the SOX.X, it may be difficult for the QQQ to get above this level. After all, we KNOW that the QQQ traded this $37.34 level earlier this MONTH (MONTHLY R1 was traded BLUE UNDERLINED) and look where the QQQ LOW was this week ($35.63). On Monday, my thinking would be this, and this is a test. IF the QQQ trades above $37.34-$37.35, then go long (look for some strength in SOX.X) on break higher, STOP under DAILY Pivot, with a MAX WEEKLY AVERAGE gain target of $38.56. If QQQ trades WEEKLY R2 of $38.33, immediately raise stop to protect against gravitation back to the WEEKLY Pivot. The BEARISH traders looks for this. IF the QQQ trades $37.34-$37.35, but SOX.X lagging, then be patient, and should SOX.X begin to weaken the GO SHORT the QQQ on break below the DAILY Pivot, stop above the DAILY R1, with a MAX WEEKLY average bearish gain target of $35.86. If QQQ trades WEEKLY R1, immediately lower stop to protect against gravitation back to the WEEKLY Pivot. Jeff Bailey ************* COMING EVENTS ************* Earnings Calendar ----------------- Symbol Co Date Comment EPS Est ------------------------- MONDAY ------------------------------- ATE Advantest Corp Mon, Apr 26 -----N/A----- N/A AFC Allmerica Finl Mon, Apr 26 After the Bell 0.52 ABC AmeriSourceBergen Mon, Apr 26 Before the Bell 1.20 ASH Ashland Mon, Apr 26 Before the Bell -0.19 ASMI ASM Intl N.V. Mon, Apr 26 During the Market 0.11 BBV Banco Blbao Vzcy ArgntMon, Apr 26 -----N/A----- N/A BOH Bank of Hawaii Corp Mon, Apr 26 -----N/A----- 0.66 BNK Banknorth Group Inc. Mon, Apr 26 Before the Bell 0.56 SAM Boston Beer Co Mon, Apr 26 -----N/A----- 0.02 CSE CAPITALSOURCE INC Mon, Apr 26 After the Bell 0.20 CHK Chesapeake Energy CorpMon, Apr 26 After the Bell 0.37 CB Chubb Corp Mon, Apr 26 After the Bell 1.42 KOF COCA-COLA FEMSA Mon, Apr 26 -----N/A----- 0.57 CNXT Conexant Systems Inc. Mon, Apr 26 After the Bell 0.03 CUZ Cousins Properties IncMon, Apr 26 After the Bell 0.52 EDS Electronic Data Sys Mon, Apr 26 After the Bell -0.01 EEP Enbridge Enrg Part Mon, Apr 26 After the Bell 0.54 ENH Endurance Spec Hldng Mon, Apr 26 After the Bell 1.08 ETR Entergy Mon, Apr 26 Before the Bell 0.87 FCNCA First Cit BancShares Mon, Apr 26 -----N/A----- N/A FDG Fording Inc. Mon, Apr 26 -----N/A----- N/A GEMP Gemplus Intl S.A. Mon, Apr 26 -----N/A----- N/A HMC Honda Motor Co. Ltd. Mon, Apr 26 -----N/A----- 0.48 HUM Humana Inc. Mon, Apr 26 Before the Bell 0.41 KEM Kemet Mon, Apr 26 After the Bell -0.05 KIM KIMCO REALTY CORP Mon, Apr 26 After the Bell 0.85 KRON Kronos Inc Mon, Apr 26 After the Bell 0.26 LEA Lear Corp. Mon, Apr 26 Before the Bell 1.17 LRY Liberty Property TrustMon, Apr 26 After the Bell 0.81 LUX Luxottica Group Mon, Apr 26 -----N/A----- N/A MFC Manulife Finl Corp Mon, Apr 26 During the Market N/A NSANY Nissan Motor Co. Ltd. Mon, Apr 26 -----N/A----- N/A NRD NORANDA INC Mon, Apr 26 -----N/A----- N/A NHY Norsk Hydro Mon, Apr 26 -----N/A----- N/A NBP No Border Part Mon, Apr 26 -----N/A----- 0.62 IX Orix Corp Mon, Apr 26 -----N/A----- N/A PRE PartnerRe Ltd. Mon, Apr 26 After the Bell 1.64 PNR Pentair, Inc. Mon, Apr 26 Before the Bell 0.73 PPC Pilgrim's Pride Mon, Apr 26 Before the Bell 0.22 PBI Pitney Bowes Inc. Mon, Apr 26 After the Bell 0.56 PDG Placer Dome Mon, Apr 26 -----N/A----- 0.14 PHM Pulte Homes Inc. Mon, Apr 26 After the Bell 0.85 RCII Rent-A-Center Mon, Apr 26 After the Bell 0.62 RMD ResMed Inc. Mon, Apr 26 After the Bell 0.42 R Ryder System, Inc. Mon, Apr 26 Before the Bell 0.49 SHR Schering AG Mon, Apr 26 Before the Bell N/A SIE Sierra Health Serv Mon, Apr 26 After the Bell 0.67 SLAB Silicon Laboratories Mon, Apr 26 After the Bell 0.34 SWMAY Swedish Match Mon, Apr 26 -----N/A----- N/A SYY SYSCO Corp Mon, Apr 26 Before the Bell 0.30 TIN Temple-Inland, Inc. Mon, Apr 26 After the Bell 0.24 TPP Teppco Mon, Apr 26 After the Bell 0.44 SWK The Stanley Works Mon, Apr 26 -----N/A----- 0.64 TNB Thomas & Betts Mon, Apr 26 Before the Bell 0.14 TP TPG NV Mon, Apr 26 -----N/A----- 0.40 TSN Tyson Foods Mon, Apr 26 Before the Bell 0.27 VLI Valero L.P. Mon, Apr 26 Before the Bell 0.78 WRI Weingarten Rlty InvestMon, Apr 26 Before the Bell 0.61 ZMH Zimmer Inc. Mon, Apr 26 After the Bell 0.51 ------------------------- TUESDAY ------------------------------ ABGX Abgenix Tue, Apr 27 After the Bell -0.50 ACE ACE Limited Tue, Apr 27 After the Bell 1.24 AFL AFLAC Inc Tue, Apr 27 After the Bell 0.54 AGRa Agere Systems, Inc. Tue, Apr 27 Before the Bell N/A AGU Agrium, Inc. Tue, Apr 27 After the Bell 0.01 AAI AirTran Holdings, Inc.Tue, Apr 27 Before the Bell 0.03 AW Allied Waste Ind, Inc Tue, Apr 27 After the Bell 0.08 AMX America Movil, S.A. Tue, Apr 27 After the Bell 0.63 AMT Am Tower Corp. Tue, Apr 27 Before the Bell -0.16 AMKR Amkor Technology, Inc Tue, Apr 27 Before the Bell 0.10 AVZ AMVESCAP PLC Tue, Apr 27 Before the Bell 0.22 AXE Anixter Intl Inc. Tue, Apr 27 Before the Bell 0.34 AOT Apogent Technologies Tue, Apr 27 After the Bell 0.39 ABI Applied Biosystems Tue, Apr 27 Before the Bell 0.21 AGY Argosy Gaming Tue, Apr 27 Before the Bell 0.48 AJG Arthur J. Gallagher Tue, Apr 27 After the Bell 0.38 AUO AU Optronics Corp Tue, Apr 27 -----N/A----- 0.58 ANZ Aust and Nw Zlnd BnkngTue, Apr 27 -----N/A----- N/A AV Avaya Tue, Apr 27 After the Bell 0.07 ACLS Axcelis Technologies Tue, Apr 27 After the Bell 0.10 BHI Baker Hughes Inc Tue, Apr 27 Before the Bell 0.25 BN Banta Corp Tue, Apr 27 Before the Bell 0.53 BJS BJ SVCS CO Tue, Apr 27 Before the Bell 0.41 BXP Boston Properties Tue, Apr 27 -----N/A----- 0.97 BP Bp PLC Tue, Apr 27 Before the Bell 1.03 BTI British Am Tobacco Tue, Apr 27 Before the Bell 0.57 BC Brunswick Corp Tue, Apr 27 Before the Bell 0.38 BNI Burlington No Santa FeTue, Apr 27 Before the Bell 0.46 CBT Cabot Tue, Apr 27 After the Bell 0.47 CP Canadian Pac Railway Tue, Apr 27 Before the Bell 0.22 CAJ Canon Tue, Apr 27 Before the Bell N/A CBL CBL & Ass Properties Tue, Apr 27 After the Bell 1.16 CRA Celera Genomics Tue, Apr 27 Before the Bell -0.29 CME CHI MERCANTILE HLDGS Tue, Apr 27 Before the Bell 1.22 CIN Cinergy Corp. Tue, Apr 27 Before the Bell 0.75 CGI Commerce Group Tue, Apr 27 After the Bell 0.67 CFB Commercial Federal Tue, Apr 27 Before the Bell 0.41 CVH Coventry Health Care Tue, Apr 27 Before the Bell 0.78 DFG Delphi Finl Group Inc.Tue, Apr 27 After the Bell 0.78 XRAY DENTSPLY Intl Inc. Tue, Apr 27 After the Bell 0.53 DST DST Systems Tue, Apr 27 After the Bell 0.55 DD DuPont Tue, Apr 27 Before the Bell 0.95 EXP Eagle Materials Inc. Tue, Apr 27 After the Bell 0.74 EDMC Education Mgmt Corp Tue, Apr 27 After the Bell 0.32 ENB Enbridge Inc. Tue, Apr 27 -----N/A----- N/A ETM Entercom Comm Tue, Apr 27 Before the Bell 0.23 EXC Exelon Corp Tue, Apr 27 -----N/A----- 1.24 FHR Frmnt Htls & Rsrts Tue, Apr 27 -----N/A----- 0.10 FOE Ferro Corp Tue, Apr 27 Before the Bell 0.25 FLEX Flextronics Tue, Apr 27 -----N/A----- 0.11 FTI Fmc Technologies, Inc.Tue, Apr 27 After the Bell 0.17 FDP Frsh Dl Mnt Prdc Inc. Tue, Apr 27 Before the Bell 1.11 FBR Friedman Bills Ramsey Tue, Apr 27 After the Bell 0.54 HRS Harris Tue, Apr 27 After the Bell 0.50 HSIC Henry Schein Tue, Apr 27 -----N/A----- 0.63 IMCL ImClone Systems Inc Tue, Apr 27 -----N/A----- 0.20 JP Jefferson-Pilot Tue, Apr 27 After the Bell 0.93 JNY Jones Apparel Group Tue, Apr 27 -----N/A----- 0.60 KYO Kyocera Corp Tue, Apr 27 -----N/A----- N/A LLL L-3 Comm Holdings Tue, Apr 27 Before the Bell 0.64 LII Lennox Intl Tue, Apr 27 After the Bell 0.10 LPNT LifePoint Hospitals Tue, Apr 27 After the Bell 0.46 LMT Lockheed Martin Tue, Apr 27 Before the Bell 0.53 MMP Mglln Mdstrm Part Tue, Apr 27 Before the Bell 0.71 MRO Marathon Oil Corp Tue, Apr 27 Before the Bell 0.82 MXIM Maxim Integrated ProdsTue, Apr 27 After the Bell 0.31 MCD McDonalds Corp Tue, Apr 27 After the Bell 0.40 MHS Medco Hlth Solutions Tue, Apr 27 Before the Bell 0.48 MDP Meredith Corp Tue, Apr 27 Before the Bell 0.62 MNST Monster Worldwide Tue, Apr 27 After the Bell 0.10 MRH Mntplr Re Hldngs Ltd. Tue, Apr 27 After the Bell 1.22 NBR Nabors Ind Tue, Apr 27 Before the Bell 0.47 NFG Natl Fuel Gas Co Tue, Apr 27 After the Bell 0.87 NATI Natl Inst Tue, Apr 27 After the Bell 0.16 NHP Natwide Hlth Prop Inc.Tue, Apr 27 Before the Bell 0.40 NNDS NDS Group PLC Tue, Apr 27 Before the Bell 0.20 NET Network Ass Tue, Apr 27 After the Bell 0.11 ORLY O'Reilly Automotive Tue, Apr 27 After the Bell 0.44 ORI Old Republic Intl Tue, Apr 27 -----N/A----- 0.62 OMC Omnicom Group Tue, Apr 27 -----N/A----- 0.70 OSK Oshkosh Truck Tue, Apr 27 Before the Bell 0.53 PCAR PACCAR Tue, Apr 27 Before the Bell 0.88 PCZ Petro-Canada Tue, Apr 27 Before the Bell N/A PIO Pioneer Corp Tue, Apr 27 -----N/A----- N/A PLT Plantronics, Inc. Tue, Apr 27 -----N/A----- 0.33 PNM PNM Resources Tue, Apr 27 -----N/A----- 0.50 PPP Pogo Producing Tue, Apr 27 -----N/A----- 1.02 PSD Puget Energy Tue, Apr 27 After the Bell 0.61 QLTI QLT Inc. Tue, Apr 27 Before the Bell 0.24 QSFT Quest Software Inc. Tue, Apr 27 After the Bell 0.08 RHD R.H. Donnelley Corp Tue, Apr 27 After the Bell 0.59 RJR R.J. Reynolds Tob HoldTue, Apr 27 Before the Bell 0.97 RGC Regal Entert Group Tue, Apr 27 Before the Bell 0.15 RCI Renal Care Group, Inc.Tue, Apr 27 After the Bell 0.56 RFMD RF Micro Devices, Inc.Tue, Apr 27 After the Bell 0.04 ROK Rockwell Automation Tue, Apr 27 Before the Bell 0.38 COL Rockwell Collins, Inc.Tue, Apr 27 Before the Bell 0.37 SANYY Sanyo Electric Tue, Apr 27 -----N/A----- N/A SEM Select Medical Corp Tue, Apr 27 After the Bell 0.24 SEPR Sepracor Tue, Apr 27 -----N/A----- -0.45 SINA SINA CORP Tue, Apr 27 After the Bell 0.27 SNE Sony Corp Tue, Apr 27 -----N/A----- -0.47 STFC State Auto Finl Tue, Apr 27 Before the Bell 0.48 SYD Sybron Dental Spec Tue, Apr 27 After the Bell 0.42 TROW T. Rowe Price Tue, Apr 27 -----N/A----- 0.56 TCP Telesp Celular Partic Tue, Apr 27 -----N/A----- 0.05 MHP The McGraw Hill Co Tue, Apr 27 Before the Bell 0.24 SMG The Scotts Co Tue, Apr 27 -----N/A----- 2.13 TOC The Thomson Corp Tue, Apr 27 -----N/A----- -0.02 TMO Thermo Electron Corp Tue, Apr 27 After the Bell 0.27 RIG Transocean Inc. Tue, Apr 27 Before the Bell 0.03 TRMB Trimble Navigation Tue, Apr 27 -----N/A----- 0.21 TZA TV Azteca S.A. de C.V Tue, Apr 27 After the Bell 0.12 UPL Ultra Petroleum Corp Tue, Apr 27 After the Bell 0.22 UAG United Auto Group Tue, Apr 27 -----N/A----- 0.46 X United States Steel Tue, Apr 27 Before the Bell 0.40 UPM UPM-Kymmene Group Tue, Apr 27 -----N/A----- 0.11 UTSI UTStarcom Tue, Apr 27 After the Bell 0.39 WOOF VCA Antech, Inc. Tue, Apr 27 After the Bell 0.29 VVC Vectren Corp Tue, Apr 27 After the Bell 0.75 VZ Verizon Tue, Apr 27 Before the Bell 0.57 VFC VF Tue, Apr 27 -----N/A----- 0.87 BER W.R. Berkley Tue, Apr 27 After the Bell 1.04 WWY Wm. Wrigley Jr. Co. Tue, Apr 27 -----N/A----- 0.47 WMGI Wright Medical Group Tue, Apr 27 After the Bell 0.18 YCC Yankee Candle Tue, Apr 27 After the Bell 0.20 ------------------------ WEDNESDAY ----------------------------- AFCI Advanced Fibre Comm Wed, Apr 28 After the Bell 0.08 AES AES Corp Wed, Apr 28 Before the Bell 0.12 AMG Affiliated Mngrs GroupWed, Apr 28 -----N/A----- 0.92 AG AGCO Wed, Apr 28 Before the Bell 0.14 ATG AGL Resources Wed, Apr 28 Before the Bell 0.94 AEM Agnico-Egl Mns Lmtd Wed, Apr 28 After the Bell 0.09 APD Air Prod and Chem Inc Wed, Apr 28 Before the Bell 0.61 AKAM Akamai Technologies Wed, Apr 28 After the Bell 0.04 AMI ALARIS Medical, Inc. Wed, Apr 28 Before the Bell 0.14 ALD Allied Capital Corp Wed, Apr 28 Before the Bell 0.57 AHC Amerada Hess Wed, Apr 28 Before the Bell 1.67 BUD Anheuser-Busch Co Wed, Apr 28 -----N/A----- 0.64 ANT Anteon Intl Corp Wed, Apr 28 Before the Bell 0.34 ATH Anthem, Inc. Wed, Apr 28 Before the Bell 1.46 APPB Applebee's Intl Wed, Apr 28 After the Bell 0.51 ACGL Arch Capital Group Wed, Apr 28 After the Bell 1.09 ARI Arden Realty Inc Wed, Apr 28 After the Bell 0.64 ASTSF ASE Test Limited Wed, Apr 28 -----N/A----- 0.09 BRL Barr Pharm, Inc. Wed, Apr 28 Before the Bell 0.57 BOKF BOK Finl Wed, Apr 28 -----N/A----- 0.64 BOW Bowater Inc Wed, Apr 28 Before the Bell -0.61 BMY Bristol-Myers Squibb Wed, Apr 28 Before the Bell 0.39 BPO BROOKFIELD PPTYS CORP Wed, Apr 28 -----N/A----- 0.63 VNT C. A. Nacl Teli Vene Wed, Apr 28 After the Bell 0.18 CARS Capital Automotive Wed, Apr 28 Before the Bell 0.62 CRL Charles River Labs Wed, Apr 28 After the Bell 0.44 CBB Cincinnati Bell Inc. Wed, Apr 28 Before the Bell 0.03 CNH CNH Global N.V. Wed, Apr 28 Before the Bell -0.02 CCE Coca-Cola Enterprises Wed, Apr 28 Before the Bell 0.07 CMCSA Comcast Corp Wed, Apr 28 Before the Bell 0.07 COP ConocoPhillips Wed, Apr 28 Before the Bell 1.98 CEG Constellation Enrgy Wed, Apr 28 Before the Bell 0.56 CAM Cooper Cameron Wed, Apr 28 Before the Bell 0.25 COCO Corinthian Colleges Wed, Apr 28 Before the Bell 0.24 EXBD Corporate Exec Board Wed, Apr 28 After the Bell 0.29 CXR COX RADIO INC Wed, Apr 28 Before the Bell 0.11 CSX CSX Wed, Apr 28 Before the Bell 0.27 CFR Cullen/Frost Bankers Wed, Apr 28 Before the Bell 0.63 CYTC Cytyc Corp Wed, Apr 28 After the Bell 0.18 DNR Denbury Resources Wed, Apr 28 Before the Bell 0.39 DTE DTE Energy Co Wed, Apr 28 After the Bell 0.96 DRE Duke Realty Corp Wed, Apr 28 After the Bell 0.57 DYN Dynegy Inc. Wed, Apr 28 Before the Bell -0.01 ECA EnCana Corp Wed, Apr 28 -----N/A----- 1.01 ELE Endesa, S.A. Wed, Apr 28 Before the Bell N/A EGN Energen Wed, Apr 28 After the Bell 1.60 EQY Equity One Wed, Apr 28 After the Bell 0.38 EQR Equity Residential Wed, Apr 28 -----N/A----- 0.52 ESS Essex Property Trust Wed, Apr 28 After the Bell 1.04 ESRX Express Scripts, Inc. Wed, Apr 28 After the Bell 0.88 FSH Fisher Scientific IntlWed, Apr 28 After the Bell 0.57 FLR Fluor Corp Wed, Apr 28 After the Bell 0.52 FMC FMC Corp Wed, Apr 28 After the Bell 0.27 FMT Fremont General Wed, Apr 28 Before the Bell N/A FBN Furniture Brands Wed, Apr 28 After the Bell 0.56 GRMN Garmin Ltd. Wed, Apr 28 Before the Bell 0.37 GGP Genl Grwth Prop Inc Wed, Apr 28 -----N/A----- 0.60 GGB Gerdau S.A. Wed, Apr 28 -----N/A----- 0.72 GSF GlobalSantaFe Corp. Wed, Apr 28 Before the Bell 0.02 EKT Grupo Elektra S.A. Wed, Apr 28 After the Bell N/A TV Grupo Televisa, S.A. Wed, Apr 28 -----N/A----- 0.35 HAL Halliburton Co Wed, Apr 28 Before the Bell 0.30 HMY Harmony Gold Mining Wed, Apr 28 Before the Bell 0.04 HTV Hearst-Argyle Tele Wed, Apr 28 Before the Bell 0.17 HLT Hilton Hotels Corp Wed, Apr 28 Before the Bell 0.06 HIT Hitachi Limited Wed, Apr 28 -----N/A----- N/A HMT Host Marriott Wed, Apr 28 Before the Bell 0.15 ITY Imperial Tobacco GroupWed, Apr 28 Before the Bell N/A IMDC INAMED Wed, Apr 28 After the Bell 0.45 NDE IndyMac Bancorp, Inc. Wed, Apr 28 Before the Bell 0.70 INSP InfoSpace Wed, Apr 28 After the Bell 0.18 INGP Instinet Group Inc Wed, Apr 28 Before the Bell 0.04 JNS Janus Capital Group Wed, Apr 28 Before the Bell 0.18 JDSU JDS Uniphase Corp Wed, Apr 28 After the Bell -0.01 KEA Keane Wed, Apr 28 Before the Bell 0.13 KMG Kerr-McGee Wed, Apr 28 -----N/A----- 1.34 LPX LP Corp Wed, Apr 28 -----N/A----- 1.26 LSI LSI Logic Wed, Apr 28 -----N/A----- 0.05 MACR Macromedia Wed, Apr 28 After the Bell 0.15 MC Mtssht Elctrc Indl Wed, Apr 28 -----N/A----- N/A WFR MEMC Electronic Mat Wed, Apr 28 -----N/A----- 0.14 MX Metso Corp Wed, Apr 28 -----N/A----- N/A MLNM Millennium Pharm Wed, Apr 28 After the Bell -0.20 MUR Murphy Oil Corp Wed, Apr 28 After the Bell 0.97 NOI Natl Oilwell Wed, Apr 28 Before the Bell 0.27 NIPNY NEC (ADR) Wed, Apr 28 -----N/A----- N/A NJR New Jersey Resources Wed, Apr 28 -----N/A----- 1.50 NEM Newmont Mining Corp Wed, Apr 28 Before the Bell 0.35 NXTP Nextel Partners Wed, Apr 28 Before the Bell 0.01 NMR Nomura Holdings, Inc. Wed, Apr 28 -----N/A----- N/A ONNN ON Semicon Corp Wed, Apr 28 After the Bell 0.00 OKE ONEOK Inc. Wed, Apr 28 -----N/A----- 1.07 POG Patina Oil & Gas Wed, Apr 28 After the Bell 0.54 PD Phelps Dodge Wed, Apr 28 -----N/A----- 1.81 PAA Plains All Am PipelineWed, Apr 28 Before the Bell 0.35 PX Praxair Inc Wed, Apr 28 Before the Bell 0.46 QLGC QLogic Wed, Apr 28 After the Bell 0.36 RYN Rayonier Inc. Wed, Apr 28 After the Bell 0.27 RNWK RealNetworks Wed, Apr 28 After the Bell -0.04 O Realty Income Corp Wed, Apr 28 -----N/A----- 0.77 REG REGENCY CTRS CORP Wed, Apr 28 After the Bell 0.67 RSG Republic Services Wed, Apr 28 After the Bell 0.34 ROL Rollins, Inc. Wed, Apr 28 Before the Bell 0.19 ROP Roper Ind Wed, Apr 28 After the Bell 0.46 SEE Sealed Air Wed, Apr 28 -----N/A----- 0.58 SI Siemens AG Wed, Apr 28 Before the Bell N/A SWKS Skyworks Wed, Apr 28 After the Bell 0.04 SO Southern Co Wed, Apr 28 Before the Bell 0.37 SUG Southern Union Co Wed, Apr 28 Before the Bell 1.02 STA St. Paul Travelers Wed, Apr 28 After the Bell 1.05 SRCL Stericycle Wed, Apr 28 After the Bell 0.40 SEO Stora Enso Wed, Apr 28 -----N/A----- 0.03 SYMC Symantec Wed, Apr 28 After the Bell 0.34 TCO Taubman Centers Wed, Apr 28 After the Bell 0.45 TDK TDK Wed, Apr 28 -----N/A----- N/A TE TECO Energy Inc. Wed, Apr 28 Before the Bell 0.19 TDS Telephone Data Wed, Apr 28 -----N/A----- 0.60 TLSN TeliaSonera AB Wed, Apr 28 -----N/A----- N/A BA The Boeing Co Wed, Apr 28 -----N/A----- 0.43 EL The Estie Lauder Co Wed, Apr 28 Before the Bell 0.35 SVM The ServiceMaster Co Wed, Apr 28 Before the Bell 0.03 TWX Time Warner Inc. Wed, Apr 28 After the Bell 0.09 USM U.S. Cellular Wed, Apr 28 -----N/A----- 0.29 UL Unilever PLC Wed, Apr 28 Before the Bell N/A UMC United Microelect Wed, Apr 28 -----N/A----- 0.05 UCL Unocal Wed, Apr 28 -----N/A----- 0.80 VLO Valero Energy Corp. Wed, Apr 28 -----N/A----- 1.75 VAR Varian Medical Sys IncWed, Apr 28 After the Bell 0.57 VARI Varian, Inc. Wed, Apr 28 After the Bell 0.39 VTR Ventas Wed, Apr 28 After the Bell 0.41 VMC Vulcan Materials Wed, Apr 28 After the Bell 0.12 WAT Waters Corp Wed, Apr 28 Before the Bell 0.34 WON Westwood One Wed, Apr 28 Before the Bell 0.18 WGL WGL Holdings Wed, Apr 28 After the Bell 1.50 WSH Willis Grp Hldngs Ltd Wed, Apr 28 After the Bell 0.86 XEL Xcel Energy Wed, Apr 28 Before the Bell 0.32 ZBRA Zebra Technologies Wed, Apr 28 Before the Bell 0.52 ------------------------- THUSDAY ----------------------------- AD ADVO Thu, Apr 15 After the Bell 0.41 ABB ABB Thu, Apr 29 Before the Bell N/A ASX Adv Semicon Eng Thu, Apr 29 -----N/A----- 0.07 AET Aetna Inc. Thu, Apr 29 -----N/A----- 1.72 AC Alliance Cap Holding Thu, Apr 29 After the Bell 0.57 AAA Altana AG Thu, Apr 29 -----N/A----- N/A AEE Ameren Corp Thu, Apr 29 Before the Bell 0.46 AEP Am Electric Power Thu, Apr 29 Before the Bell 0.61 APCC Am Power Conversion Thu, Apr 29 After the Bell 0.19 AGP AMERIGROUP Corp Thu, Apr 29 After the Bell 0.69 AMIS AMIS HLDGS INC Thu, Apr 29 After the Bell 0.14 ANDW ANDREW CORP Thu, Apr 29 Before the Bell 0.11 AU Anglogold Limited Thu, Apr 29 Before the Bell 0.34 ASN Archstone-Smith Trust Thu, Apr 29 Before the Bell 0.45 AZN AstraZeneca PLC Thu, Apr 29 Before the Bell 0.53 AN AutoNation Thu, Apr 29 Before the Bell 0.30 AVE Aventis Thu, Apr 29 -----N/A----- 0.89 AVT Avnet Thu, Apr 29 After the Bell 0.27 BLL Ball Corp Thu, Apr 29 Before the Bell 0.78 STD Banc Sntndr Cntrl HspnThu, Apr 29 Before the Bell N/A BF BASF Thu, Apr 29 -----N/A----- N/A BMC BMC Software Thu, Apr 29 Before the Bell 0.23 BAK Braskem, S.A. Thu, Apr 29 -----N/A----- N/A BG BUNGE LIMITED Thu, Apr 29 Before the Bell 0.44 BOBJ Business Objects Thu, Apr 29 After the Bell 0.15 COG Cabot Oil & Gas Corp Thu, Apr 29 After the Bell 0.54 CRE Carramerica Rlty Corp Thu, Apr 29 After the Bell 0.77 CDX Catellus Development Thu, Apr 29 After the Bell 0.38 CBI Chicago Bridge & Iron Thu, Apr 29 Before the Bell 0.28 CSB Ciba Spec Chem Hldng Thu, Apr 29 -----N/A----- 0.50 CDL Citadel Broadcasting Thu, Apr 29 Before the Bell -0.05 CNA CNA Finl Corp Thu, Apr 29 Before the Bell 0.58 COLM Columbia Sportswear Thu, Apr 29 After the Bell 0.42 CHR Converium Holding Thu, Apr 29 Before the Bell N/A COX Cox Communications IncThu, Apr 29 Before the Bell 0.05 DADE Dade Behring Thu, Apr 29 After the Bell 0.34 DCX DaimlerChrysler Thu, Apr 29 -----N/A----- 0.67 DASTY Dassault Systemes SA Thu, Apr 29 -----N/A----- 0.25 DLX Deluxe Corp Thu, Apr 29 Before the Bell N/A DDR DVLPRS DVRSFD RLTY Thu, Apr 29 After the Bell 0.68 DP Diagnostic Products Thu, Apr 29 Before the Bell 0.51 DTC Domtar Inc. Thu, Apr 29 -----N/A----- N/A DUK Duke Energy Corp Thu, Apr 29 Before the Bell 0.37 DQE Duquesne Light Hldngs Thu, Apr 29 After the Bell 0.25 EMN Eastman Chemical Co Thu, Apr 29 After the Bell 0.33 XOM ExxonMobil Corp Thu, Apr 29 -----N/A----- 0.74 FIC Fair Isaac Corp Thu, Apr 29 After the Bell 0.42 FFH Fairfax Finl Holdings Thu, Apr 29 After the Bell 2.67 FNF Fidelity Natl Finl Thu, Apr 29 Before the Bell 0.81 FLA Florida East Coast IndThu, Apr 29 Before the Bell 0.14 FDRY Foundry Networks Thu, Apr 29 -----N/A----- 0.17 GTW Gateway, Inc. Thu, Apr 29 -----N/A----- -0.20 GNTA Genta Thu, Apr 29 -----N/A----- -0.21 GGC Georgia Gulf Thu, Apr 29 After the Bell 0.55 GP Georgia-Pacific Thu, Apr 29 -----N/A----- 0.59 GSK GlaxoSmithKline Thu, Apr 29 -----N/A----- 0.69 GR Goodrich Corp Thu, Apr 29 Before the Bell 0.36 GRP Grant Prideco Inc Thu, Apr 29 Before the Bell 0.08 HC Hanover Compressor Thu, Apr 29 Before the Bell -0.05 IKN Ikon Office Solutions Thu, Apr 29 Before the Bell 0.20 ICI Imperial Chemical Ind Thu, Apr 29 Before the Bell 0.24 IM Ingram Micro Thu, Apr 29 After the Bell 0.24 IDC Interactive Data Corp Thu, Apr 29 Before the Bell 0.19 IFF Intl Flavors & Frag Thu, Apr 29 -----N/A----- 0.52 IRF Intl Rectifier Thu, Apr 29 After the Bell 0.40 ISG Intl Steel Group Inc. Thu, Apr 29 Before the Bell 0.51 IRM Iron Mountain Inc Thu, Apr 29 Before the Bell 0.25 IVX Ivax Thu, Apr 29 Before the Bell 0.18 KROL Kroll Inc. Thu, Apr 29 Before the Bell 0.30 LANC Lancaster Colony Corp Thu, Apr 29 -----N/A----- 0.50 LVLT Level 3 CommunicationsThu, Apr 29 -----N/A----- -0.30 TVL LIN TV Corp. Thu, Apr 29 Before the Bell 0.03 LIZ Liz Claiborne Thu, Apr 29 -----N/A----- 0.62 LTR Loews Corp. Thu, Apr 29 Before the Bell 1.35 MXICY Macronix Intl Thu, Apr 29 -----N/A----- N/A MKL MARKEL CORP Thu, Apr 29 -----N/A----- 4.63 MCK McKesson Corp Thu, Apr 29 After the Bell 0.66 MRX Medicis Thu, Apr 29 After the Bell 0.31 MGM Metro-Goldwyn-Mayer Thu, Apr 29 -----N/A----- -0.08 MTD Mettler-Toledo Intl Thu, Apr 29 After the Bell 0.39 MTX MINERALS TECHNOLOGIES Thu, Apr 29 After the Bell 0.63 NBG Natl Bank of Greece Thu, Apr 29 Before the Bell N/A NCR NCR Corp Thu, Apr 29 Before the Bell -0.12 NKTR NEKTAR THERAPEUTICS Thu, Apr 29 -----N/A----- -0.39 NWL Newell Rubbermaid Thu, Apr 29 Before the Bell 0.18 NFX Newfield Exploration Thu, Apr 29 Before the Bell 1.36 GAS Nicor Inc. Thu, Apr 29 After the Bell 0.93 NIHD NII Holdings Thu, Apr 29 Before the Bell 0.40 NST NSTAR Thu, Apr 29 -----N/A----- 0.79 ORH Odyssey Re Holdings Thu, Apr 29 After the Bell 0.50 OLN Olin Thu, Apr 29 After the Bell 0.07 OCR Omnicare Thu, Apr 29 Before the Bell 0.61 OHP Oxford Health Plans Thu, Apr 29 Before the Bell 1.00 PHS PacifiCare Health Sys Thu, Apr 29 -----N/A----- 0.63 PTEN Patterson-UTI Energy Thu, Apr 29 Before the Bell 0.26 PRX Pharmaceutical Res Thu, Apr 29 Before the Bell 0.80 PT Portugal Telecom SGPS Thu, Apr 29 -----N/A----- N/A PDS Precision Drilling Thu, Apr 29 Before the Bell 1.22 PCO Premcor Inc. Thu, Apr 29 Before the Bell 0.68 PDE Pride Intl Inc. Thu, Apr 29 After the Bell 0.03 PLD ProLogis Trust Thu, Apr 29 -----N/A----- 0.53 PEG PSEG Thu, Apr 29 Before the Bell 1.16 STR Questar.com Thu, Apr 29 -----N/A----- 0.87 ROIAK Radio One Thu, Apr 29 Before the Bell 0.02 RTN Raytheon Thu, Apr 29 Before the Bell 0.22 RDA READERS DIGEST ASSN Thu, Apr 29 Before the Bell 0.01 RGA Reins Group of AmericaThu, Apr 29 After the Bell 0.83 ROH Rohm and Haas Co Thu, Apr 29 Before the Bell 0.44 RD Ryl Dtch Petro Co Thu, Apr 29 -----N/A----- 1.06 SRE Sempra Energy Thu, Apr 29 Before the Bell 0.69 SC Shell Trnsprt and TradThu, Apr 29 -----N/A----- 0.91 SHW Sherwin-Williams Thu, Apr 29 -----N/A----- 0.34 SHPGY Shire Pharm Group Thu, Apr 29 Before the Bell 0.42 SPIL SLCNWR PRCSN INDS Thu, Apr 29 -----N/A----- 0.08 SKM SK Telecom Thu, Apr 29 -----N/A----- N/A SKE Spinnaker Exploration Thu, Apr 29 -----N/A----- 0.40 SM St. Mary Land Explor Thu, Apr 29 After the Bell 0.68 SWC Stillwater Mining Co Thu, Apr 29 After the Bell 0.15 SLF Sun Life Finl Inc. Thu, Apr 29 -----N/A----- N/A SU Suncor Energy Thu, Apr 29 Before the Bell N/A TARO Taro Pharmaceutical Thu, Apr 29 -----N/A----- 0.53 TNE Tele No Leste Partic Thu, Apr 29 Before the Bell 0.19 TELK Telik, Inc. Thu, Apr 29 After the Bell -0.42 DOW The Dow Chemical Co Thu, Apr 29 Before the Bell 0.43 G The Gillette Co Thu, Apr 29 Before the Bell 0.29 UNP Union Pacific Thu, Apr 29 -----N/A----- 0.59 USTR United Stationers Inc Thu, Apr 29 After the Bell 0.72 UNA UNOVA Inc. Thu, Apr 29 After the Bell 0.02 USON US Oncology Thu, Apr 29 Before the Bell 0.20 VSEA Varian Semicon Eq Ass Thu, Apr 29 After the Bell 0.37 VVI Viad Corp Thu, Apr 29 -----N/A----- 0.32 WDR Waddell & Reed Finl Thu, Apr 29 Before the Bell 0.35 WMI Waste Mgmt Thu, Apr 29 Before the Bell 0.26 WCI WCI Communities, Inc. Thu, Apr 29 -----N/A----- 0.15 ------------------------- FRIDAY ------------------------------- ALA Alcatel Fri, Apr 30 -----N/A----- 0.09 AGN Allergan Fri, Apr 30 -----N/A----- 0.59 LNT Alliant Energy Fri, Apr 30 Before the Bell 0.20 AXL Am Axle & Manu Hldngs Fri, Apr 30 Before the Bell 0.92 APC Anadarko Petroleum Fri, Apr 30 Before the Bell 1.41 ADM Archer Daniels MidlandFri, Apr 30 Before the Bell 0.27 AVP Avon Products Inc. Fri, Apr 30 Before the Bell 0.59 BIIB Biogen Idec Inc. Fri, Apr 30 Before the Bell 0.34 BNN BRASCAN CORP Fri, Apr 30 -----N/A----- 0.50 CVX ChevronTexaco Fri, Apr 30 Before the Bell 2.01 CI CIGNA Fri, Apr 30 Before the Bell 1.83 EDP Elec de Portugal, S.A.Fri, Apr 30 Before the Bell N/A FUJIY Fuji Photo Film Fri, Apr 30 -----N/A----- N/A HR Healthcare Rlty Trst Fri, Apr 30 -----N/A----- 0.70 HME Home Properties, Inc. Fri, Apr 30 Before the Bell 0.61 THX Houston Exploration Fri, Apr 30 Before the Bell 1.18 KSE KeySpan Fri, Apr 30 Before the Bell 1.49 MLS Mills Corp Fri, Apr 30 Before the Bell 0.85 NTE Nam Tai Electronics Fri, Apr 30 After the Bell N/A NI NiSource Fri, Apr 30 Before the Bell 0.87 NVO Novo-Nordisk Fri, Apr 30 Before the Bell N/A PG Procter & Gamble Co Fri, Apr 30 Before the Bell 1.08 SPW SPX Fri, Apr 30 Before the Bell 0.48 WPO The Washington Post CoFri, Apr 30 -----N/A----- 5.91 TSM TSMC Fri, Apr 30 -----N/A----- 0.12 VRC Varco Intl, Inc. Fri, Apr 30 Before the Bell 0.19 WIN Winn-Dixie Stores Fri, Apr 30 Before the Bell -0.07 ---------------------------------------------- Upcoming Stock Splits In The Next Two Weeks... ---------------------------------------------- Symbol Co Name Ratio Payable Executable ARO Aeropostale, Inc 3:2 Apr 26th Apr 27th BKST Brookstone, Inc 3:2 Apr 26th Apr 27th NSSC NAPCO Security Systems 2:1 Apr 27th Apr 28th OMTL Omtool, Ltd 2:1 Apr 27th Apr 28th UCBI United Community Banks 3:2 Apr 28th Apr 29th TASR TASER Intl 2:1 Apr 29th Apr 30th TCBK TriCo Bancshares 2:1 Apr 30th May 3rd KENT Kent Financial Serv, Inc 2:1 May 3rd May 4th LACO Lakes Entertainment, Inc 2:1 May 3rd May 4th TLM Talisman Energy Inc 3:1 May 4th May 5th RBA Ritchie Bros. Auctioneers 2:1 May 4th May 5th BEBE bebe stores, Inc 3:2 May 5th May 6th -------------------------- Economic Reports This Week -------------------------- Markets will be digesting the second big week of Q1 earnings reports on top of a host of economic data. It's a busy schedule with Wednesday the only day without economic reports. Also listen for more talk from the Fed heads. ============================================================== -For- ---------------- Monday, 04/26/04 ---------------- New Home Sales (DM) Mar Forecast: 1168K Previous: 1163K Fed Governor Moskow speaks. ----------------- Tuesday, 04/27/04 ----------------- Consumer Confidence (DM) Apr Forecast: 88.3 Previous: 88.3 Existing Home Sales (DM) Mar Forecast: 6.20M Previous: 6.12M Fed Governor Greenspan speaks in Washington. ------------------- Wednesday, 04/28/04 ------------------- None ------------------ Thursday, 04/29/04 ------------------ Initial Claims (BB) 04/24 Forecast: N/A Previous: 353K GFP-Adv. (BB) Q1 Forecast: 5.0% Previous: 4.1% Chain Deflator-Adv. (BB) Q1 Forecast: 2.0% Previous: 1.5% Employement Cost Index (BB) Q1 Forecast: 0.9% Previous: 0.7% Help-Wanted Index (DM) Mar Forecast: 41 PRevious: 40 ---------------- Friday, 04/30/04 ---------------- Personal Inmcome (BB) Mar Forecast: 0.4% Previous: 0.4% Personal Spending (BB) Mar Forecast: 0.7% Previous: 0.2% Mich Sentiment-Rev (DM) Apr Forecast: 94.0 Previous: 93.2 Chicago PMI (DM) Apr Forecast: 60.3 Previous: 57.6 Fed Governor Parry speaks. Definitions: DM= During the Market BB= Before the Bell AB= After the Bell NA= Not Available ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. 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The Option Investor Newsletter Sunday 04-25-2004 Sunday 2 of 5 In Section Two: Watch List: What to Watch Next Week Dropped Calls: None Dropped Puts: None ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ********** Watch List ********** What to Watch Next Week ___________________________________________________________________ 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. ___________________________________________________________________ Kimberly Clark - KMB - close: 65.94 change: +0.26 WHAT TO WATCH: KMB just recently announced earnings that were in- line with expectations but investors are rewarding the stock anyway. The rally above $65.00 is a big breakout over resistance and traders bought the dip to $64.90 on Friday. The next logical target for the bulls is the $70.00 mark but be aware that there is some resistance in the $66-67 region from April-May 2002. Chart= --- Eaton Corp - ETN - close: 60.95 change: -0.10 WHAT TO WATCH: ETN has been slowly climbing higher since announcing earnings in mid-April that beat analysts' expectations. The stock is once again above the $60.00 level but has overhead resistance in the $62.00-62.50 range. Traders can also note that a move over $62.00 should produce a new bullish buy signal on its P&F chart. With earnings out of the way a trigger over resistance might be a good play. Chart= --- Navistar Corp - NAV - close: 48.38 change: -1.26 WHAT TO WATCH: The automakers and auto parts sectors have been doing pretty well lately. Unfortunately for NAV the stock is still struggling with resistance at $50.00. We'd keep NAV on the watch list for a breakout over resistance at $50.00. More aggressive traders can try and buy dips/bounces from its 50-dma near $47.00 but watch out. Right now its technicals are starting to look weak and the stock is currently on a P&F sell signal. Chart= --- Global Payments - GPN - close: 50.84 change: -0.29 WHAT TO WATCH: Here's another bullish stock that has recently broken out above major resistance near $50.00. Shares dipped back towards this level on Friday but as is typically the case old resistance becomes new support and traders bought the dip. The rally is starting to get a little long in the tooth from its breakout above $45 in late March to early April so consider the simple 10-dma as a guide to place stops. Chart= ----------------------------------- RADAR SCREEN - more stocks to watch ----------------------------------- VAR $92.13 +0.05 - The breakout over $90.00 looks great and bulls can target a run to $100 but watch out for earnings on April 28th. CME $118.85 +1.65 - The strength in shares of CME has been incredible. The stock looks ready to breakout over $120 but be careful. A pull back to the 10-dma is probably a better entry point. HAR $85.69 -0.71 - We're still keeping an eye on HAR and its recent breakout above $85.00. Earnings are expected on April 28th. PCAR $59.74 -0.08 - PCAR looks like a great candidate on a breakout above resistance at $60.00 but earnings are April 27th. ************************Advertisement************************* No time to follow the Market Monitor? 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The Option Investor Newsletter Sunday 04-25-2004 Sunday 3 of 5 In Section Three: Current Calls: BBY, BEC, MIK, MBG, UOPX, WFMI, ZBRA New Calls: BWA, DGX Current Put Plays: AMG, QLGC New Puts: COF ************************Advertisement************************* OneStopOption.com Trade: Securities, Stock Options, Futures Contracts Service: Experienced Brokers Personal Assistance Convenience of One Brokerage Online and Live Broker Trading Experience... The Difference OneStopOption.com 888-281-9569 *************************************************************** ****************** CURRENT CALL PLAYS ****************** Best Buy Co - BBY - close: 55.50 change: +0.55 stop: 51.99 Company Description: Minneapolis-based Best Buy Co., Inc. is North America's leading specialty retailer of consumer electronics, personal computers, entertainment software and appliances. The Company's subsidiaries operate retail stores and/or Web sites under the names: Best Buy (BestBuy.com), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com), and Magnolia Audio Video (Magnoliaav.com). The Company's subsidiaries reach consumers through more than 750 stores in the United States and Canada. (source: company press release) Why We Like It: (original play from Thursday) On your mark. Get set. Go! The RLX retail index has rallied right to resistance and looks poised to breakout to new all-time highs. This also looks like a good chance to capture a similar move in BBY as it readies itself for a breakout over resistance at $55.00. You may remember that BBY reported earnings on March 31st. The numbers were strong and the stock gapped up above resistance at $50.00 and its simple 200-dma. It has spent the last three weeks consolidating those gains and building what appears to be a reverse head and shoulders pattern. We're going to use a TRIGGER at $55.05 to capture a breakout over resistance. Such a move would be a bullish breakout of its reverse H&S pattern and produce a triple-top buy signal on its P&F chart. If the H&S pattern holds true then bulls can target a run to the $65.00 level. However, our first target is a much more reasonable move to resistance at $60.00. Weekend Update: Perfect! The RLX retail index broke out to a new all-time high on Friday and BBY followed suit with a breakout of its own over resistance at $55.00. We were triggered at $55.05. This move also produces a bullish breakout from the H&S pattern. Suggested Options: Short-term traders can choose between the May and June options. Our choice is probably the June 55s or the May 50s. BUY CALL MAY 50 BBY-EJ OI= 5147 at $6.00 SL=3.75 BUY CALL MAY 55 BBY-EK OI=16753 at $2.10 SL=1.05 BUY CALL JUN 55 BBY-FK OI=12035 at $3.30 SL=1.65 Annotated Chart: Picked on April 23 at $ 55.05 Change since picked: + 0.45 Earnings Date 03/31/04 (confirmed) Average Daily Volume: 3.6 million Chart = --- Beckman Coulter - BEC - cls: 57.16 chg: -0.79 stop: 54.75 Company Description: Beckman Coulter, Inc. is a leading manufacturer of biomedical testing instrument systems, tests and supplies that simplify and automate laboratory processes. Spanning the biomedical testing continuum -- from systems biology and clinical research to laboratory diagnostics and point-of-care testing -- Beckman Coulter's 200,000 installed systems provide essential biomedical information to enhance health care around the world. The company, based in Fullerton, Calif., reported 2003 annual sales of $2.2 billion with 64 percent of this amount generated by recurring revenue from supplies, test kits and services. (source: company press release) Why We Like It: The market-powered surge on Thursday to a new all-time high after three days of consolidation above $56 looks great. Frankly, considering the run from BEC's March low a little bit of profit taking on Friday was not unexpected. Our Thursday update suggested traders look for dips to $56 or $57 as possible entry points. BEC dipped to $56.65 before bouncing into the close. This could be another entry point but if you're the patient type we might see BEC pull back to its simple 10-dma currently near $56. Chart readers will note that all of BEC's technical oscillators are overbought. Thus it wouldn't take much for them to roll over into bearish signals so we need to be vigilant with our stop losses. Remember that our short-term target is $60.00. Suggested Options: This is a short-term play before BEC reports earnings in early May so we don't see a need to buy the longer-term calls. The May strikes should work fine. Our favorite is the May 55s. BUY CALL MAY 50 BEC-EJ OI=2016 at $7.60 SL=4.85 BUY CALL MAY 55*BEC-EK OI= 969 at $3.20 SL=1.65 Annotated Chart: Picked on April 18 at $ 56.16 Change since picked: + 1.00 Earnings Date 05/03/04 (confirmed) Average Daily Volume: 333 thousand Chart = --- Michaels Stores - MIK - cls: 51.98 chng: -0.33 stop: 48.50*new* Company Description: Michaels Stores, Inc. is an arts and crafts specialty retailer providing materials, ideas and education for creative activities. The company operates 770 Michaels retail stores in 48 states, as well as in Canada. The stores offer products for the do-it- yourself home decorator and arts and crafts supplies. The company also operates 153 Aaron Brothers stores in nine states, offering photo frames, a full line of ready-made frames, custom framing services and a wide selection of art supplies. In addition, the Company owns and operates Star Wholesale, a single- store wholesale operation located in Dallas, Texas, offering merchandise primarily to interior decorators/designers, wedding/event planners, florists, hotels, restaurants and commercial display companies. Michaels also owns and operates Artistree, a vertically integrated frame and molding manufacturing operation that supplies molding and framing to the Michaels and Aaron Brothers stores nationwide. Why we like it: The rally in shares of MIK is following a familiar and very encouraging pattern of breaking out, pausing and then continuing the upward journey. Obviously it can't continue indefinitely, but last week's breakout over the $50 level put the stock at all- time highs and at least for now it looks like the bulls are firmly in control. Friday's session was largely forgettable for the broad market and doubly so for MIK, as the stock traded in a very narrow range on barely half the average volume. Certainly, a pullback to find support near the $50 level is possible, and if followed by a rebound from that former-resistance-turned-support, it would make for a very nice entry point. Support there should be that much stronger due to the fact that it is backed up by the 10-dma ($50.35), which served as solid support to launch last week's breakout move. With daily oscillators now buried in overbought, that increases the likelihood of at least a token pullback or consolidation next week, diminishing our appetite for breakout entries at this altitude. Wait for the pullback for initiating new positions. We're inching our stop up to $48.50 this weekend, which is now below the 30-dma ($48.73) as well as the horizontal consolidation that preceded last week's breakout. Suggested Options: Shorter Term: The May $50 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the June $55 Call, while the more conservative approach will be to use the June $50 Call. Our preferred option is the June $50 strike, as it is currently in the money and should provide sufficient time for the play to move in our favor ahead of earnings. BUY CALL MAY-50 MIK-EJ OI= 390 at $2.65 SL=1.25 BUY CALL JUN-50*MIK-FJ OI= 633 at $3.40 SL=1.75 BUY CALL JUN-55 MIK-FK OI= 482 at $0.95 SL=0.50 Annotated Chart of MIK: Picked on April 20th at $51.23 Change since picked: +0.75 Earnings Date 5/26/04 (confirmed) Average Daily Volume = 423 K Chart = --- Mandalay Resort Group - MBG - cls: 60.55 chg: -0.47 stop: 58.99 Company Description: Mandalay Resort Group owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. The company also owns and operates Gold Strike, a hotel/casino in Tunica County, Mississippi. The company owns a 50% interest in Silver Legacy in Reno, and owns a 50% interest in and operates Monte Carlo in Las Vegas. In addition, the company owns a 50% interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5% interest in and operates MotorCity in Detroit, Michigan. (source: company press release) Why We Like It: (Original play from Thursday) America's economy is improving. That much is clear. So where are American's going to spend their leisure time? Many are choosing to do it in Vegas with the dollar so weak overseas and traveling to Vegas is perceived as safer than traveling overseas. MBG broke out to new highs in March only to surge again in early April with a positive earnings pre-announcement. MBG said its revenue per available room was rising strongly and slot machine revenues were up nearly 30%. The stock has spent the last two weeks consolidating its gains but now looks ready to run higher again with technical support at its 21-dma. We're going to use a TRIGGER at $61.51 to open the play so we can catch MBG breaking out over minor resistance at $61.50. More conservative traders might want to wait for a new high over $62.20. The stock is certainly long-term overbought, there is no denying it but we'll start the play with a stop loss under Wednesday's low (once we're triggered). MBG doesn't announce earnings for a while but look for several of its rivals to report this week and turn in good news! Weekend Update: Not much change here in MBG from Thursday. We are still not triggered as we wait for MBG to trade ad $61.51 or above. Suggested Options: We like the June calls. Our favorite would be the June 60s. BUY CALL JUN 60 MBG-FL OI= 862 at $3.30 SL=1.70 BUY CALL JUN 65 MBG-FM OI= 271 at $1.25 SL=0.65 Annotated Chart: Picked on April xx at $ 00.00 <-- see TRIGGER Change since picked: + 0.00 Earnings Date 06/03/04 (unconfirmed) Average Daily Volume: 1.1 million Chart = --- Univ. of Phoenix - UOPX - cls: 92.69 chng: -1.18 stop: 87.50 Company Description: University of Phoenix Online is the computerized, digital delivery system of the University of Phoenix. It is a provider of accessible, accredited educational programs for working adults. It began operations in 1989 by modifying courses developed by University of Phoenix' physical campuses for delivery via modem to students worldwide. UOPX offers accredited degree programs in business, education, information technology and nursing. A student can participate in UOPX's classes through a Pentium-class personal computer, a 56.6K modem and an Internet service provider. Students retrieve lectures, questions and assignments from instructors then review them offline. They also have access to online research libraries and services, as well as other professionals with whom they can share ideas, debate issues and learn from each other's experience. University of Phoenix is part of Apollo Group, Inc., the parent company of University of Phoenix. Why we like it: After Thursday's strong upside performance, it was only natural to expect a bit of a pullback in shares of UOPX and that's precisely what occurred, helped along by the consolidation in the broad market. Given that Thursday's gain was nearly $4, the pullback was mild and fortunately came on very light volume. Similar price action was seen in APOL (UOPX's parent company), although APOL did hold up a bit better. Recall from our initial write-up on the stock, that our preference for entry was to nab a pullback, possibly to the $92 area, but preferably down near the $90 level. With support at that level reinforced by the 10-dma ($90.48) and the 20-dma ($89.56), a bounce should be forthcoming if we do see a dip to that area. That isn't to say that breakout entries over $94 aren't viable, but that we'd prefer to see a pullback to support before chasing the stock higher. Once back into new high territory above $94, we're looking for a continued rally towards psychological resistance at $100. Maintain stops at $87.50 for now. Suggested Options: Shorter Term: The May $90 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the June $95 Call, while the more conservative approach will be to use the June $90 Call. Our preferred option is the June $95 strike, as it is currently just out of the money and should provide sufficient time for the play to move in our favor. BUY CALL MAY-90 UBY-ER OI= 108 at $4.70 SL=2.75 BUY CALL MAY-95 UBY-ES OI= 212 at $1.90 SL=1.00 BUY CALL JUN-95*UBY-FS OI= 26 at $3.90 SL=2.75 Annotated Chart of UOPX: Picked on April 22nd at $93.87 Change since picked: -1.18 Earnings Date 3/12/04 (confirmed) Average Daily Volume = 177 K Chart = --- Whole Foods Market - WFMI - cls: 80.52 chng: +1.27 stp: 77.90*new* Company Description: Whole Foods Market, Inc. owns and operates a chain of natural and organic foods supermarkets in the United States. As of September 28, 2003, it operated 145 stores in 26 states, the District of Columbia and Canada. Regional distribution centers, bakehouse facilities, commissary kitchens, seafood processing facilities, produce procurement centers and a coffee roasting operation support the Company's stores. WFMI's product selection has a heavy emphasis on perishable foods designed to appeal to both natural foods and gourmet shoppers. Its product categories include, but are not limited to, produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, specialty (beer, wine and cheese), whole body (nutritional supplements, vitamins, body care and educational products such as books), floral, pet products and household products. Why we like it: Somebody forgot to tell WFMI investors that the market was in consolidation mode on Friday. After stalling near the $80 level for the past few sessions, the stock blasted through that potential resistance and closed at new all-time highs, making good on its recent hints at a real breakout. If looking for the cause behind Friday's strength, Moody's is the answer. The credit rating firm upgraded their view of all the company's debt to Investment Grade. Traders that took advantage of the breakout move over the now-broken descending trendline near $76 are sitting in good shape here and should have stops trailed to no worse than break even. There's just over a week to go before the company releases its quarterly earnings results and investors seem intent on driving the stock higher ahead of that report. However, should a significant retracement develop, it's questionable that there would be enough time for a renewed push to new highs. Aggressive traders can still consider entries on a mild pullback near $79, but anything deeper than that should have us looking for the exit. In line with that thinking, we're aggressively tightening our stop to $77.90, just under the intraday lows of the past 3 sessions. Suggested Options: Shorter Term: The May $75 Call will offer short-term traders the best return on an immediate move, as it is currently in the money. Longer Term: Aggressive longer-term traders can use the May $80 Call, while the more conservative approach will be to use the June strike. Our preferred option is the May $80 strike, as it is currently at the money and should provide sufficient time for the play to move in our favor ahead of earnings. BUY CALL MAY-75 FMQ-EO OI= 706 at $6.60 SL=4.50 BUY CALL MAY-80*FMQ-EP OI=1252 at $3.00 SL=1.50 BUY CALL JUN-80 FMQ-FP OI= 27 at $4.00 SL=2.50 Annotated Chart of WFMI: Picked on April 15th at $76.01 Change since picked: +4.51 Earnings Date 5/05/04 (confirmed) Average Daily Volume = 698 K Chart = --- Zebra Technologies - ZBRA - cls: 74.11 chg: -1.77 stop: 72.50 Company Description: Zebra Technologies Corp. delivers innovative and reliable on- demand printing solutions for business improvement and security applications in 90 countries around the world. More than 90 percent of Fortune 500 companies use Zebra-brand printers. A broad range of applications benefit from Zebra-brand thermal bar code, "smart" label, receipt, and card printers, resulting in enhanced security, increased productivity, improved quality, lower costs, and better customer service. The company has sold more than three million printers, including RFID printer/encoders and wireless mobile solutions, and also offers software, connectivity solutions, and printing supplies. (source: company press release) Why We Like It: Wednesday and Thursday produced a $5.00 move in ZBRA so it was not too surprising to see some profit taking on Friday. Hopefully the $74 level will hold and bulls can drive ZBRA even higher ahead of its earnings report on Wednesday morning. Given our short timeframe we're going to set an official exit price of $77.00. However, we will be closing the play on Tuesday afternoon/evening to avoid holding over the earnings announcement on Wednesday. We are not suggesting new positions at this time. Suggested Options: We only have two trading days left before ZBRA announces earnings so we are not suggesting new positions at this time. Annotated Chart: Picked on April 11 at $ 73.26 Change since picked: + 0.85 Earnings Date 04/28/04 (confirmed) Average Daily Volume: 332 thousand Chart = ************** NEW CALL PLAYS ************** Borg Warner - BWA - close: 89.15 change: -0.51 stop: 86.00 Company Description: BorgWarner Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company operates manufacturing and technical facilities in 43 locations in 14 countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota, Honda, Hyundai/Kia, Caterpillar, Navistar International, Renault/Nissan, Peugeot and VW/Audi. (source: company press release) Why We Like It: Regular readers will note that we've had BWA on and off the watch list for quite a while now. Now we think it's time for us actually play it. The company pre-announced better Q1 earnings on April 8th and BWA delivered those earnings on Thursday, April 22nd. Results were $1.82 per share, which was a penny better than expected. Revenues soared to $903.1 million, well above the consensus estimates. Normally, we don't like to trade stocks this close to an earnings announcement but we're going to make an exception for BWA since the stock could still see a pre-split run up. Shares are due to split 2-for-1 on May 18th. To open the play we'll use a TRIGGER at $90.05. This gives us a chance to be patient and wait for BWA to breakout over resistance at $90.00. If triggered we'll use a stop loss at $86.00 although the $87 level might work too. Our first target will be the February highs in the $96.00-96.50 range but bulls can probably target the January highs near $98.50. Of course if you're really optimistic BWA's point-and-figure chart just produced a new buy signal and points to a $102 price target. Suggested Option: May options still have four weeks left but we'd probably prefer the June calls. Our favorite will be the June 90s. BUY CALL MAY 85 BWA-EQ OI= 77 at $4.90 SL=2.95 BUY CALL MAY 90 BWA-ER OI= 142 at $1.65 SL=0.85 BUY CALL JUN 90 BWA-FR OI= 115 at $2.95 SL=1.50 BUY CALL JUN 95 BWA-FS OI= 56 at $1.20 SL=0.65 Annotated Chart: Picked on April xx at $ 00.00 <-- see TRIGGER Change since picked: + 0.00 Earnings Date 04/22/04 (confirmed) Average Daily Volume: 275 thousand Chart = --- Quest Diagnostics - DGX - close: 86.15 change: +1.55 stop: 82.00 Company Description: Quest Diagnostics was the result of a 1996 Corning spinoff, and currently holds the title of the world's #1 clinical laboratory. DGX performs more than 100 million routine tests annually, including cholesterol, HIV, pregnancy, alcohol, and pap smear tests. Operating laboratories throughout the US and in Brazil, Mexico, and the UK, DGX also performs esoteric testing (complex, low-volume tests) and clinical trials. The company serves doctors, hospitals, HMOs, and other labs as well as corporations, government agencies, and prisons. Why we like it: Over the past several weeks, we've been looking for some sign of real strength from shares of DGX, as the stock certainly looked like it wanted to make a move higher. Unfortunately, we just couldn't get the move we wanted ahead of the company's earnings report and had to sit on our hands until that news event passed. From the price action following the report, it is apparent that we weren't the only ones waiting for earnings. The company clearly told investors what they wanted to hear Thursday morning, as the stock shot higher on the news, ending the day just above $84. Proving that it wasn't just a one-day wonder, the stock continued to move strongly higher on Friday, breaking out over the $86 level and successfully closing at levels not seen since the first half of 2002. This play does come with added risk though, since we're initiating it so soon after earnings. There's the possibility that Friday's breakout could see some initial profit taking, and we need to plan accordingly. With that in mind, we should have in mind the possibility of a near-term pullback to test the $83-84 area as support before the stock is able to continue its upward trek. That means we need to work with a fairly wide stop, which we're initially placing at $82, just under the bottom of Thursday's gap, and the 50-dma ($82.30). A pullback and rebound from the $84 level should provide a solid entry into the play, but traders looking to enter on strength may want to just wait for a breakout over Friday's high with a move over $86.50 before playing. The PnF chart looks to have a renewed bullish slant, as Friday's breakout completed a bullish triangle breakout and suggests significantly more upside to come. The 2002 highs at $95 look like a good target to shoot for, but we should expect some resistance to be found at the $90 level before achieving that goal. The post earnings breakout came on very strong volume, so traders entering the play on a continuation of that breakout will want to confirm strength by looking for continued strong volume. Suggested Options: Shorter Term: The May $85 Call will offer short-term traders the best return on an immediate move, as it is currently at the money. Longer Term: Aggressive longer-term traders can use the June $90 Call, while the more conservative approach will be to use the June $85 Call. Our preferred option is the June $85 strike, as it is currently just at the money and should provide sufficient time for the play to move in our favor. BUY CALL MAY-85 DGX-EQ OI=4345 at $2.40 SL=1.25 BUY CALL MAY-90 DGX-ER OI=2939 at $0.40 SL=0.20 BUY CALL JUN-85*DGX-FQ OI= 199 at $3.50 SL=1.75 BUY CALL JUN-90 DGX-FR OI= 42 at $1.30 SL=0.75 Annotated Chart of DGX: Picked on April 25th at $86.15 Change since picked: +0.00 Earnings Date 4/22/04 (confirmed) Average Daily Volume = 621 K Chart = ************************Advertisement********************************* Option Traders: Pay Attention Use the online options trading system built by option traders for options traders. Featuring direct access to each option exchange, stop and stop loss option orders, contingent option orders, online spreads, fast executions, and rates as low as $1.50 per contract ($14.95 min.). PreferredTrade, Inc. Call 888-889-9178 or Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC ******************************************************************** ***************** CURRENT PUT PLAYS ***************** Affiliated Mgrs - AMG - cls: 50.23 chng: -1.07 stop: 51.75*new* Company Description: Affiliated Managers Group, Inc. is an asset management company with equity investments in a diverse group of mid-sized investment management firms (the Affiliates). As of December 31, 2002, the Company's affiliated investment management firms managed approximately $70.8 billion in assets across a range of investment styles and in three principal distribution channels: High Net Worth, Mutual Fund and Institutional. In its investments in Affiliates, it typically holds a majority equity interest in each firm, with the remaining equity interests retained by the management of the Affiliate. The company's investment approach addresses the succession and ownership transition issues facing the founders and principal owners of many medium-sized investment management firms by allowing them to preserve their firm's entrepreneurial culture and independence and to continue to participate in their firm's success. Why we like it: Investors once again fled from shares of AMG on Friday, as the stock's weakness reasserted itself following Thursday's reflexive bounce from the $50 level. AMG has been behaving quite nicely for us over the past week, cracking below support early in the week and continuing down to the $50 level. Now we'll see whether there's enough of a downward push to get the stock down to our $49 target ahead of the company's earnings report. Recall that the company is set to release its quarterly results on Wednesday, so worst case, we'll be dropping the play on Tuesday ahead of the announcement. That means we're no longer looking for new entries, but instead are turning our focus to maximizing gains and not giving back too much on any rebound from here. Should the $50 level crack early in the week, we're still recommending an exit in the $49 area, which is just above both the 200-dma ($48.66) and the 62% retracement of the November-March rally. Getting aggressive with our stop means lowering it to $51.75, just over the top of Thursday's failed rebound. Suggested Options: We have not listed any current strikes this weekend, as we are not recommending new positions at this time due to AMG's scheduled earnings release next week. Annotated Chart of AMG: Picked on April 18th at $52.91 Change since picked: -2.68 Earnings Date 4/28/04 (confirmed) Average Daily Volume = 349 K Chart = --- QLogic Corp. - QLGC - close: 27.23 change: -0.91 stop: 28.75*new* Company Description: QLogic Corporation designs and develops storage networking infrastructure components sold to original equipment manufacturers (OEMs), resellers and system integrators. The company's products include the SANblade host bus adapters (HBAs), SANbox Fibre Channel Switches and SANsurfer Management Suite HBA and Switch management software. QLGC's Fibre Channel HBAs support small computer systems interface (SCSI) protocol, Internet protocol (IP), virtual interface (VI) and fiber connection (FICON) protocol. In addition, the company designs and supplies controller chips used in 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. Why we like it: Continuing to behave quite nicely, QLGC broke down from its 2-day consolidation near $28 on Friday, complete with an increase in selling volume. This confirms that the downtrend we've been riding is still very much intact. That said, this play is nearing an end due to the company's scheduled earnings release next Wednesday. We're looking for the stock to continue to deteriorate ahead of that announcement and ideally we'll see a drop down to the $25 support area early in the week. Should the stock trade that level, it should be a no-brainer of an exit point, as there clearly isn't enough time left on the clock to ride out more than a very feeble oversold bounce. With that in mind, we're also getting more aggressive with our stop this weekend, lowering it to $28.75, just over the intraday highs of the past three sessions, and likely above the 10-dma ($29.27) by the open on Monday. Suggested Options: We have not listed any current strikes this weekend, as we are not recommending new positions at this time due to AMG's scheduled earnings release next week. Annotated Chart of QLGC: Picked on April 13th at $31.00 Change since picked: -3.77 Earnings Date 4/28/04 (confirmed) Average Daily Volume = 3.57 mln Chart = ************* NEW PUT PLAYS ************* Capital One - COF - close: 68.85 chg: -1.80 stop: 70.58 Company Description: Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products and Capital One Auto Finance, Inc., offers automobile and other motor vehicle financing products. Capital One's subsidiaries collectively had 46.7 million managed accounts and $71.8 billion in managed loans outstanding as of March 31, 2004. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. (source: company press release) Why We Like It: We have multiple reasons to like COF as a put. A failed reversal pattern, a breakdown under support and a negative reaction to very positive earnings are all factors. The company recently announced earnings on April 21st. Analysts were looking for $1.52 a share. COF smashed the estimates with net profits soaring to $1.84 a share. However, COF failed to raise its guidance and that suddenly created a lot of doubt about the company's future quarters even though COF affirmed its current estimates. That was Wednesday and the stock produced a bullish one-day reversal "hammer" candlestick. Unfortunately for shareholders there was no follow through. Now the stock has broken down through the $70.00 level but is trying to maintain support at its simple 100-dma. We're going to use a TRIGGER at $67.99 to open the play for us. That means COF will have to break support at its 100-dma, break support at Thursday's low of $68.30 and breakdown through its February low at $68.00. That seems like a lot of ifs but COF's point-and-figure chart has fallen into a fresh sell signal and the stock showed no bounce on Friday afternoon when the rest of the market was rebounding. We're going to target a move to its simple 200-dma currently near $62.50. Suggested Options: Short-term traders can choose from the May or June options. Since there is still four weeks left for May options we'll suggest the May 70s. BUY PUT MAY 70 COF-QN OI= 7528 at $3.30 SL=1.70 BUY PUT MAY 65 COF-QM OI= 6264 at $0.95 SL= -- Annotated Chart: Picked on April xx at $ 00.00 <-- see TRIGGER Change since picked: - 0.00 Earnings Date 04/21/04 (confirmed) Average Daily Volume: 2.2 million Chart = ************************Advertisement********************************** Option traders, check what PreferredTrade offers: - true direct access to each option exchange - stop and stop loss online option orders - contingent option orders based on the price of the option or stock - online spread order entry for net debit or credit - fast option executions - rates as low as $1.50 per contract ($14.95 min) PreferredTrade, Inc. 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The Option Investor Newsletter Sunday 04-25-2004 Sunday 4 of 5 In Section Four: Leaps: Snow Job Option Spreads: Going Shopping? Get Some Bang For Your Buck! Traders Corner: The CCI Ghost Leads to Priceless Trading ************************Advertisement************************* Full Service Brokers Man Financial announces the formation of the OneStopOption Brokerage Group, addressing the demand for personalized, experienced service for both securities* and futures trading within the same firm. Licensed Option Principals Andrew Aronson and Alan Knuckman specialize in live assistance of stock*, option* and futures traders. The combination of the proven Man Financial global presence and the convenience of one group for all trading needs provide customers with the tools needed for success. Live Broker and Online Trading Available 888-281-9569 http://www.OneStopOption.com ************************************************************** ***** LEAPS ***** Snow Job By Mark Phillips mphillips@OptionInvestor.com Alan Greenspan took center stage again last week and officially proclaimed the end of the dangers of deflation. Now this is VERY interesting and I think you'll enjoy taking a little walk down Speculation Lane with me. It is now my belief that deflation was NEVER a serious concern, either for the Fed or for the Bush Administration. But it was vitally important to their plan to get the economy firing on all cylinders that the investing public -- by that I mean individual investors, institutions, bond traders and currency traders -- be convinced that deflation was a very real risk and that the Fed was using all of its resources to defeat it. By all accounts, they succeeded famously, as virtually every analyst and writer I have paid attention to over the past couple years has been talking about the risks of deflation. I certainly was drawn into the deception, as the evidence certainly pointed in that direction. The action of printing such an obscene amount of money while keeping interest rates at historic lows is the action that would be taken if we were really trying to ward off deflation. What the Fed needed to do was get enough credit flowing in the economy to get things growing again after the way things collapsed following the bursting of the Telecom bubble. There was a tremendous amount of money wiped out as that bubble collapsed and the Fed needed to find a way to get that money back into the hands of companies, so that the economic expansion could once again get underway. What better way than to print up oodles of cash and keep interest rates at multi-decade lows? The strategy had its desired effect, as low interest rates motivated homeowners to unlock an obscene amount of money from their real estate holdings and spend it in the real economy. After priming the economic pump for more than 2 years, the Fed is finally seeing the results in rising demand-driven inflation, the hoped for result of the aggressive monetary inflation. In another situation, the public would have seen the monetary inflation for what it was and the effect would have been absolute crash in the dollar and bond prices, not to mention equities as well. Falling bond prices would have been a serious problem, as long-term interest rates would have risen despite the actions and desires of the Fed. So the job of the Central Bank was to keep investors convinced that the Fed would take "whatever action was necessary" to keep interest rates at multi-decade lows for a "considerable period of time". What better way to convince investors across the globe that you're serious about keeping rates low than to convince them that you're deathly afraid of your economy slipping into deflation? The Fed did this job admirably, showing us in countless statements how afraid they were of the opposite of inflation -- so afraid in fact that they wouldn't even speak its name! This is group psychological manipulation elevated to an art form. The message conveyed was "We absolutely won't raise interest rates any time in the foreseeable future because that would provide food for this monster called...well, we really can't speak it's name, so we'll just call it an 'unwelcome fall in inflation'. We have to bring all of our resources to bear on slaying this terrible monster and we won't even think of raising interest rates until the monster is dead and buried." In hindsight, we can see the full-court press that was in effect for the past several months. Can you ever remember seeing such a parade of speaking appearances from so many of the Fed heads on such a regular and frequent basis? For much of the time, the message has been one of signs of economic recovery becoming more pronounced, while at the same time stating that risks were balanced between the forces of evil (the unnamed monster) and forces of light (economic growth and inflation). But that parade wouldn't have been enough to keep the wolves (savvy investors) from the door. It doesn't take a great deal of smarts to see that with the kind of monetary inflation going on, the Fed/Bush administration would have to present the image of still supporting a strong dollar policy. So even though it has become laughable in recent months every time Treasury Secretary Snow is trotted out like some sort of follically-challenged wind-up doll, the lies about a "strong dollar" policy served the purpose of fooling enough people for long enough about the fiscal policy in the U.S. Certainly, the dollar has fallen a long ways from its lofty heights in early 2002, but not nearly as far as it could have. Now inflation is starting to show up, even in the suspicious PPI and CPI reports, which typically mask inflationary effects. Remember that I've ranted in past columns about the incompetence at the BLS, that they couldn't even process the PPI data? What if it was an intentional delay to preserve the lack of clarity about the whole inflation/deflation debate as long as possible, to give the Fed maneuvering room? Remember, the Fed doesn't want to do anything that will impinge on the Bush administration's re- election efforts, because Uncle Alan wants to keep his job for another term. That means the Fed needs to postpone as much of the work of raising interest rates as possible to beyond the election. But at the same time, the data needs to come out showing that economic growth IS occurring and it is growing stronger well ahead of the election so that the Republican administration can use it as a campaigning point and the Democrats can't. Ah yes, politics. Whether we want to admit it or not, it is a very real part of what drives the action in the markets, especially in an election year. It's not just the actual data that can influence public opinion about the economy, but the body language and manner in which the data is presented. I believe it was Shakespeare that referred to life as poor actors strutting about a stage. That has been the Greenspan Fed's job throughout this process to provide the proper level of drama surrounding the inflation/deflation debate to keep us distracted while they have been in the process of getting economic growth going again. There have been many bit parts to be played out, not the least of which is that offered up by Treasury Secretary Snow. Their job is now complete and the entire financial arena has been adjusting over the past couple weeks to the reality that inflation is back and the concerns over deflation were radically overblown. Not only that, but the period of sub-par economic growth is now behind us. Greenspan himself delivered the final line in this drama last week and I believe many participants missed out on the import of that decisive final line. So what is it that has caused me to have such a radical change in attitude on this whole picture? Here's the money shot, straight from the horse's (Sir Greenspan) mouth from last week's testimony. "Threats of deflation, which were a significant concern last year, by all indications are no longer an issue before us." What did he say? Did you catch that? He actually spoke the dreaded "D" word! Every representative of the Fed has taken great pains over the past year to not issue the word 'deflation' and then last week, Greenspan used it in front of God and everyone. This is akin to a character in the Harry Potter series uttering the name "Voldemort", with the expected reaction that the rest of the characters would recoil in horror. There was a strong reaction in the market, but not nearly what it might have been a couple months ago, because the Fed heads have been busy on the speaking circuit in recent weeks, hinting at stronger-than-expected economic growth and the reality that the accommodative interest rate policy would be coming to an end. What changed? The Fed has won the battle against deflation and can now end the charade, revealing that the once-feared monster really wasn't that bad and has now been relegated to the realm of the vanquished. It's just like any good horror film -- the monster always seems more fearful and powerful until you can see it in the light of day. By speaking the "D" word, Greenspan turned the floodlights on high, showing that the scary shadow on the wall was really projected by a little mouse standing in front of a feeble light source near the door. We've seen some near-term dislocations occur in various markets over the past week in response to this new reality, at least in the manner that we now understand reality. Bonds are weakening significantly, factoring in the reality that short-term rates will be rising in the future. We've known all along that it was only a matter of time and what we know now is that the timetable has been moved up. But seriously, how much of a real impact will a 100 or even a 200 basis point rise in interest rates have on economic growth? That will still have the Fed Funds rate below 4% and in the historical context, that is still very cheap. I don't mean to suggest that we're going to see anywhere that level of a rise in interest rates, but I do want to point out that interest rates can move up a long ways from current levels before it really becomes a problem. A 25, 50 or even 75 basis point rise between now and the end of the year will have little impact other than psychological. About the only area of the economy that might be affected is Housing, which has been on a tear, both in terms of new construction and refinancing. That gravy train is coming to an end in the months ahead, but it doesn't matter. It has served its purpose of unlocking large amounts of cash and injecting it into the real economy to get things moving on a growth trend. We've seen equities and commodities rippled by some significant volatility in the past couple weeks as investors adjust to the new timetable on policy changes to interest rates, but once that volatility subsides, I believe we can look for the upward trajectory to resume. Inflation is back and is now being stimulated by the demand side of the equation. That means the Fed will be moving back into its comfortably familiar role of controlling interest rates in order to temper the rate of growth in inflation. I won't make any predictions about my expectations for the Fed's degree of success or failure in this venture, but I expect the perception of a return to normalcy will assuage investors' concerns and keep money flowing into the stock market, while at the same time it flows out of the fixed income market. If you think I've completely taken leave of my senses, you're certainly entitled to that opinion. I know on multiple occasions each week, my own wife would certainly side with you, but that's a different matter altogether. Yes, the stock market is still horrendously overvalued and buying most equities at current levels is not an issue of buying value, but of speculating on the "Greater Fool Theory", expecting that valuations will become even more stretched and that we'll be able to sell those same stocks for an even higher price to someone else. We're still in the midst of consolidating the strong bull market run over the past year, and I don't expect that we've seen the end of that consolidation just yet. But at the same time, I think it is overly pessimistic to expect the bottom to fall out at the end of this earnings season, or through the summer doldrums. I think the next several weeks will be a period of continued consolidation and when it is complete, I expect to see the broad market head higher again. Our job during this period of time will be to position ourselves appropriately to take advantage of that next bullish move when it arrives. Last week, we looked at the state of the major market indices and while we had a bit more weakening last week, I still have a hard time getting bearish, even for the near-term. Certainly, all three of the Bullish Percent readings are clearly in favor of the bearish thesis. The NDX is in Bear Correction at 57%, the SPX is Bear Confirmed at 74% and the DOW is Bear Confirmed at 83%. Those readings certainly suggest that bearish plays, especially on the broad-based ETFs like DIA, SPY and QQQ should perform well in the months ahead. But the standard PnF charts have a different story to tell. The PnF on the DOW is bearish, but only has a downside target of 10,000 in play. The PnF chart of the NDX has actually turned bullish and has an upside target of 1770 in place. Of course, if we turn to the 20-point box size on the NDX, we can see that the old bullish target of 1340 was easily met and the index is now churning in a broad 200-point consolidation zone. Recall that last week the SPX was still in a bullish alignment and that is still the case, with a drop under 1080 being required to turn it bearish. My expectation now is that the bearish bullish percent readings will be worked through, while the major averages consolidate in a trading range for the next few months. Once that work is done, I expect to see all of the major averages resume their upward trajectory. Whether it will be a failed rally attempt and we'll then break down or if we'll see strong breakouts to new recent highs, I don't know. But I don't think long-term directional bets on any of these indices in either direction make sense in terms of the risk to reward. Another factor shaping this opinion is the still very bullish action in the volatility indices, with the VIX plunging to a new intraday low of 12.89 on Friday before closing at 14.01, a new multi-year closing low. There's literally no fear of the downside in the current market and I'm reluctantly coming to the conclusion that this may be our fate for some time to come. I know this is a really bullish commentary this week and I do have a hard time accepting it. But this is what the market is telling me. Fortunately, we've been aligning our Portfolio more in line with the bullish case, and I think we're well positioned as we head into another week filled with earnings reports. So let's shelve the big picture commentary for now and take a look at the individual plays currently on our plate. Portfolio: HD - I'm getting really close to the end of my rope with HD. I mean, how long can a stock trade in such a narrow range without a directional break in either direction? For the record, the stock has been meandering in the $35.00-37.50 area since the first of the year and quite honestly I'm questioning whether it will be able to do so any time soon. We need a major catalyst to get the job done and maybe earnings will be the ticket. That event rolls around on May 18th, and if we don't get a directional break after that event, I'm inclined to just drop the play for lack of performance. Of course, I certainly wouldn't criticize anyone for taking the more cautious approach and just closing the play here. It obviously hasn't performed as expected. MLNM - Just when I was convinced that MLNM was about to break down, the bulls stepped up to buy the dip and the stock is now back near the $18 level. In hindsight, with tightening our stop to $16, last week I probably should have suggested closing our protective put as it was no longer providing much additional protection. So if we do see another drop near the $16 level, I'm going to suggest closing the put for close to our initial cost and then we'll let the price action unfold from there. For now, MLNM is bouncing around near $18 and we still need that break back over $19 to put it back in a bullish state. On the positive side, weekly Stochastics are starting to curl upwards and the consolidation may be just about over. Another positive factor is that the BTK index is wedging up just under resistance at $560 and a breakout there will likely have MLNM moving higher in sympathy. Hold the course for now. CHK - Over the past week, we saw the price of Natural Gas once again fall to test support at its 50-dma near $5.60 and attempt a rebound, but the weekly chart presents some problems with bearish Stochastics divergence looking likely. In light of that situation, our CHK play is looking pretty strong, as it continues to work on moving through that $14 resistance level. All signs are pointing towards a successful breakout and I like the way the stock is finding support now at former resistance near the $13.50 level. Once solidly through the $14 level, we can look for the stock to make steady progress towards the $16 level, as the stock continues to benefit from the still-elevated levels of gas prices. With the 200-dma nearing the $12 level, we're getting one more factor that should provide protection to our $12 stop in the weeks ahead. LUV - The Transports are back! It was a long road, but the $TRAN finally worked its way back over 3000 last week, for the first time since late January. Add in the fact that the Airline index (XAL.X) finally put in a higher low near $54 and conditions are definitely improving in the industry. This is occurring despite the price of crude oil holding near its recent highs and well above the 50-dma at $34.77. LUV appeared to finish its mild pullback, right at its own 50-dma and then launched higher on Wednesday and Thursday, closing over the $15 level and then relaxing a bit on Friday. So far, everything is on track and the stock's next objective will be for a move towards the 200-dma at $16.42. Maintain stops at $12.75, just under the March low. EBAY - Holy Upside Surprise, Batman! EBAY gave investors everything they hoped for and more in its earnings report last week, beating estimates by a nickel on a huge growth in revenue. The money-making auction machine continues to do just that -- make money. Sure it's richly valued, but as long as the company continues to deliver on expectations, we can look for the stock to remain in favor with the bulls. The post earnings explosion over $83 has the stock moving within $8 of our final target at $91 and with a near doubling of value in our 2006 LEAP since entry, we clearly need to take steps to lock in a portion of those gains. One approach would be to buy a higher put (say a $75 strike with July expiration) and keep a liberal stop. Another approach would be to put on a collar, selling a covered call and using the proceeds to purchase a protective put. Of course the simplest approach is to just tighten our stop. An argument could be made for just raising our stop to $73, just under the most recent low, but that still leaves us exposed to an awful lot of risk -- $10 risk and we're only looking for an additional $8 worth of upside. No thanks. The problem with a higher stop is that we run the very real chance of having our stop tripped on some normal profit taking before the stock continues its upward journey. I'm going to recommend a fairly tight stop at $77, which is just below Thursday's post-earnings low. That leaves us in a position with $6 of risk from the high and another $8 of upside potential to our target, keeping the reward to risk ratio greater than 1:1. Watch List: TYC - Alright, I'm willing to get more aggressive with our entry on TYC now. The key to my change of tune is that the weekly Stochastics are just starting to turn up for the first time since the first of the year. That suggests to me that the stock is going to make a move back into the upper half of its rising channel. However, I don't think this is the time to add it into the Portfolio, not with earnings just over a week away on May 4th. No, prudence demands that we wait for that event and then enter afterwards, so long as the price action is favorable. Ideally, we'll get a post-earnings dip to the bottom of the channel, currently near $28, with additional support from the 100-dma ($27.53). If it wasn't for the pending earnings announcement, I would have just gone for it this weekend and added the play to our Portfolio as of Friday's close, as TYC looks ready to break out to new highs. So for traders willing to assume the risk of initiating a position a week ahead of earnings, I would consider this a viable entry point, using an initial stop at $26. Radar Screen: GM - If there was any question as to the wisdom of just watching GM, rather than playing it, that question should have been clearly answered last week, with the stock breaking sharply higher following the company's earnings report. Weekly Stochastics are now in a confirmed bullish ascent and shares of the automaker are now headed back towards the top of its descending channel, currently just over $52. The action of the stock as it nears that firm barrier will tell us a lot about the viability of this as a potential bearish play beginning a few weeks from now. EK - Just like we expected, EK found some buying interest off the $25 support level, helped along by the company's quarterly earnings report. Of course, the buying wasn't stellar either in magnitude of the move or volume, but it has been enough to get the weekly Stochastics moving out of oversold territory and it looks like the next upward trek is getting underway. Due to the lethargic manner in which the stock normally trades, we clearly have some time until EK becomes a viable bearish play. Watch and wait for now and as the weekly Stochastics begin to look tired, we'll put this one on the Watch List, targeting entries on the next irrational upward spike on this stock that appears doomed to trade much lower in the months ahead. AIG - Earnings came and went without too much fanfare and AIG still has a bullish look to it. That means we're on course to play the upside and the stock shifts over to the Watch List this weekend. See below for details. Closing Thoughts: The heaviest week of earnings is behind us now and you've got to admit things have been pretty bullish. Sure there have been pockets of weakness in some of the Semiconductor names, but for the most part, earnings have been strong, there have been lots of upside surprises and most of the forward guidance is either in- line or being raised. Of course, the downside is that inflation is now clearly becoming a threat and as we've discussed here in recent weeks, it is only a matter of time before the Fed must act and raise interest rates. Regardless of when the first hike takes place, it will have little impact other than psychological until well into 2005. That tells me that the overall bullish case is still intact, even though the odds of a return to the normal summer doldrums this year seem high. We'll stick with what's working, jettison what isn't and try to add viable plays with good odds to pad the account prior to the resumption of the frolicking of the bulls after Labor Day. Have a great week! Mark LEAPS Portfolio Current Open Plays LEAPS Watchlist Current Possibles SYMBOL SINCE TARGET PRICE TARGETED LEAP SYMBOL CALLS: TYC 03/07/04 $27 JAN-2005 $ 30 ZPA-AF CC JAN-2005 $ 25 ZPA-AE JAN-2006 $ 30 WPA-AF CC JAN-2006 $ 25 WPA-AE PP JUL-2004 $ 25 TYC-SE AIG 04/25/04 $71-72 JAN-2005 $ 75 ZAF-AO CC JAN-2005 $ 70 ZAF-AN JAN-2006 $ 75 WAP-AO CC JAN-2006 $ 70 WAP-AN PP AUG-2004 $ 65 AIG-TM PUTS: None New Portfolio Plays None New Watchlist Plays AIG - American International Group $73.96 **Call Play** We've been waiting for AIG to release earnings before initiating coverage of the stock as a new play and fortunately that event passed without incident. The company released its results, beating estimates and while the stock did fall back towards the $72 level after the report, there hasn't been any price action that should dissuade us from attempting to play the upside. Recall that the stock is currently on a PnF Buy signal with an upside price target of $94. There is the issue that the recent pullback from the breakout over $76 has issued a High Pole Warning, so we do have some risk there. Looking at our weekly chart, we can see the Stochastics and MACD oscillators hinting at another downward move, and with the recent higher high in price, there could be some developing bearish divergence there. I bring up these two negative factors because I want everyone to understand that we are embarking on a play with a higher level of risk, but I think we can justify it by keeping things balanced with a very favorable risk to reward ratio. We'll target entries on a dip into the $71-72 area, as there should now be solid support near $72 and very strong support by the time we drop down to the $70 level. Assuming an entry at the top of that range at $72, that gives us $22 of potential upside on the play, while risk to our $68 stop is only $4. Better than a 5:1 reward-risk ratio is the kind of game we can play over and over, letting the law of averages work in our favor. Note that in addition to the historical support near $70, we have the 100-dma providing reinforcement at that level as well. Of course, there's always the risk that an unknown exogenous event could come out of left field and send the stock plunging overnight, so we've listed a protective August Put at the $65 level. This is inexpensive enough to have a minor impact on the overall performance of the play, while providing good protection in the event of a catastrophic price move. So long as the Financial sector recovers its footing and returns to its prior upward trend, I think we can expect to see AIG leading the pack. BUY LEAP JAN-2005 $75 ZAF-AO BUY LEAP JAN-2005 $70 ZAF-AN **Covered Call** BUY LEAP JAN-2006 $75 WAP-AO BUY LEAP JAN-2006 $70 WAP-AN **Covered Call** BUY Put AUG-2004 $65 AIG-TM **Insurance Put** Drops NEM $39.93 Alright, that was just downright irritating. After months of waiting to get the right entry point (or so I thought) it looked like NEM was finally ready to make a move higher a few weeks back with the breakout over $46 and new PnF Buy signal. But that was before more data indicating strengthening inflation and the Fed declared victory over deflation. Bonds have been getting killed and the dollar rising substantially on expectations that rising interest rates are just around the corner. It doesn't matter whether the long-term picture favors gold (I think it does), the shorter-term trade is to dump tangibles in favor cash, and we've seen that take place across the metals sector. With Sell signals and breaks of 200-dmas rampant throughout the gold universe, we've done the right thing by exiting NEM where we did with the $41 break of support. I think it is safe to say we'll be back to play this one again, but we'll need to see a healthier technical picture before doing so. ************************Advertisement************************* Live Securities Brokerage Service with Licensed Option Principals OCO Stop & Profit Orders OneStopOption All types of Spreads and Buy Writes 888-281-9569 Auto-Trade Market Monitor Signals Personal Service and Education **Services available for Foreign Traders including Canada** http://www.OneStopOption.com ************************************************************** ************************ Option Spread Strategies ************************ Going Shopping? Get Some Bang For Your Buck! By Mike Parnos, Investing With Attitude Today’s column originated from a tiny cabin on the high seas. Coincidentally, that was also my grade point average in high school. Though some might find that a little disturbing, others should find it very encouraging. Here you are, taking advice and learning from someone who is only slightly above average. It means, simply, that, if you focus, you can learn. If you can take that knowledge and add a dose of self-discipline, you can potentially become a profitable options trader. I was pondering, while on my cruise ship (they don’t like when you call it a boat) in the Pacific Ocean. We were slowly making its way to a variety of ports of call where I could buy $.50 key chains for only $5. Where I could buy a tasteless $15 flowered T- shirt for only $50. Destinations where I was going to have an opportunity to overpay for just about anything I see – AND in a foreign language! Do you see a parallel here? Isn’t it very similar to trading in the options market? If you’re going shopping for options, look at how many choices you have. If you’re new to options, it’s a must certainly seem like a foreign language. And, how different are market makers from the island entrepreneurs? Market makers are just salivating at the thought of your ship pulling into port. The ship will be carrying their next financial meal. They’re like buzzards circling fresh prey – ready to be swoop down and attack the helpless (uneducated) option trader and peck away until the carcass is stripped clean. How do you avoid being the next entrie for the flock of hovering market makers? By using your brain and harnessing your emotions. But, can we do that alone? We’ll understand and enlist the assistance of two friends of mine – the sensible Ms. Sarah Tonin and the stimulating Ms. Norah Drenaline. The average adult brain is three pounds of processing power, with 500 trillion synaptic connections organized into various "maps" governing language, movement, vision, hearing, and more. Chemicals called neurotransmitters carry messages from one brain cell to another. Two of these neurotransmitters tend to go wrong in people who are habitually poor traders – and/or serial killers. It’s fascinating how the same ingredients apply to both scenarios. Meet Sarah Tonin & Nora Drenaline There is a little bit both of Sarah Tonin and Nora Drenaline in all of us. With their help, let’s take a look at how our brains works. Sarah Tonin (a.k.a. serotonin) is the brain's "don't worry, be happy" juice. It's the body's own Prozac. At normal levels, serotonin helps the "reasonable" part of your brain maintain control over all sorts of primitive, but pretty useful, drives-- like sex, hunger, fear, and aggression (and making stupid and impulsive trading decisions). Serotonin doesn't prevent you from acting on these urges. It just puts the brakes on, giving the reasonable part of your brain enough time to say either warn you that "fools rush in where angels fear to tread" or "go for it." Not enough serotonin, and your brain has no brakes. Drives and emotions will rule. Too much, and you're an obsessive-compulsive anal wreck, agonizing over decisions and details. If serotonin puts on the brakes, Nora Drenaline (a.k.a. noradrenaline) steps on the gas. When external events (market conditions) command immediate action (SOGOTP), noradrenaline literally focuses the mind, preparing the brain for "fight or flight" decisions and triggering the production of adrenaline meant to give the body an edge. Yes, I’ve Been Reading Again Scientists point out that neither of these biochemical conditions is etched in stone. People with low serotonin may find it harder to control their impulses, but that doesn't mean they will always buy those overpriced options or not able to take profits when prudent. Low serotonin in your brain doesn’t mean you’re trading life is doomed. It takes far more than bad genes to make bad traders. In fact, neuroscientists say that when it comes to the brain, nurture is as important as nature. Though genetics play an important part, there’s more to it than that. Human beings don't contain anywhere near enough genes to build a working brain. Your genes simply ensure that you get all the mental material you need to get started (plus some extra). Your brain, interacting with the world around it, has to figure out for itself how to work. Within seconds of a newborn detecting its mother's scent for the first time, neural networks form to try and make sense of the experience. Such experiences constantly shape your brain. The Influences That Help Shape Your Life Moral lessons from Mom and Dad helped shape your brain, too, like so much Play-Doh. Similarly, when you learn about option trading from responsible individuals or organizations, you are being molded into a potential money-making machine. Infusions of morality affect one part of the brain in particular -- the prefrontal lobe. Located right behind your forehead, the prefrontal lobe is designed to keep you from doing stupid things. If shaped and strengthened by good experiences and positive influences, it adds a bit of wisdom to your impulsive desires and helps you make better decisions. A good frontal lobe prioritizes incoming information, considers all options, and comes up with viable alternatives – the logical approach required to be successful traders. The fleeting impulses can be headed off at the pass, allow you to weigh consequences and outcomes and, hopefully, decide to make appropriate life and trading decisions. Years ago, doctors tried to deal with the “impulsive” and “stupidity” problems with a surgical procedure. Hence, the old joke that says, “I’d rather have a bottle in front of me than a frontal lobotomy.” Then there was shock therapy. For an option trader, seeing 75% of his brokerage account disappear should be shocking enough, but often isn’t. Once we recognize, and get to know, Sarah Tonin and Nora Drenaline, we can work on reshaping the Play-Do through vigorous education to create that all important sense of awareness – with TLC, of course. Tomorrow As I got off the ship, as expected, the island population tried to tempt me with cheap jewelry and flowered shirts. They may have won at the Alamo, but, with Sarah Tonin at my side, I’ll was safe. When faced with trading decisions, I know I’ll also be safe. Monday, the options market will open. Trading will begin. The market makers will be waiting with $15 T-shirts. Will you be safe? ____________________________________________________________ MAY CPTI POSITIONS Remember, May is a five-week option cycle. Get comfortable. We’re going to exercise some patience and self-discipline. That’s the best kind of exercise. It beats the hell out of a Stairmaster. It’s more profitable, too – usually. May Position #1 – SPX Iron Condor – 1140.60 We sold 10 SPX May 1080 puts and bought 10 SPX May 1070 puts for a total credit of $1.90 ($1,900). Then we sold 7 SPX May 1175 calls and bought 7 SPX May 1190 calls for a credit of $1.40 ($980). Our total net credit and potential profit is $2,880. Our maximum profit range is 1080 to 1175. Maintenance: $10,500. May Position #2 – RUT Iron Condor – 590.71 We sold 10 RUT May 620 calls and bought 10 RUT May 630 calls for a credit of $1.20 ($1,200). Then we sold 10 RUT May 540 puts and bought 10 RUT May 530 puts for a credit of $1.30 ($1,300). Our total net credit and profit potential is $2,500. Our maximum profit range is 540 to 620. Maintenance: $10,000. May Position #3 – MNX Iron Condor - $149.70 We sold 10 MNX May $152.50 calls and bought 10 MNX May $157.50 calls for a credit of $.80 ($800). Then we sold 10 MNX May $140 puts and bought 10 MNX May $135 puts for a credit: $.95 ($950). Our total net credit and profit potential is $1,750. Our maximum profit range is $140 to $152.50. Maintenance: $5,000. May Position #4 – BBH Iron Condor - $150.50 We sold 10 BBH May $155 calls and bought 10 BBH May $165 calls for a credit of $.70 ($700). Then we sold 10 BBH May $135 puts and bought 10 BBH May $125 puts for a credit of $.70 ($700). Our total net credit and profit potential is $1.40 x 10 contracts = $1,400. Our maximum profit range is $135 to $155. Maintenance: $10,000. _____________________________________________________________ ONGOING POSITIONS QQQ ITM Strangle – Ongoing Long Term -- $37.21 We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts of the 2005 QQQ $29 calls for a total debit of $14,300. We make money by selling near term puts and calls every month. Here's what we've done so far: Oct. $33 puts and Oct. $34 calls – credit of $1,900. Nov. $34 puts and calls – credit of $1,150. Dec. $34 puts and calls – credit of $1,500. Jan. $34 puts and calls – credit of $850. Feb. $34 calls and $36 puts – credit of $750. Mar. $34 calls and $37 puts – credit of $1,150. Apr. $34 calls and $37 puts – credit of $750. May $34 calls and $37 puts – credit of $800. Total credit: $8,850. Note: We haven't included the proceeds from this long term QQQ ITM Strangle in our profit calculations. It's a bonus! And it's a great cash flow generating strategy. ZERO-PLUS Strategy. OEX – 556.80 In my Feb. 8th column, I outlined a strategy based on an initial investment of $100,000. $74,000 was spent on zero coupon bonds maturing in seven years at a value of $100,000. The principal $100,000 investment is guaranteed. We’re trading the remaining $26,000 to generate a “risk free” return on the original investment. Long Term: Bought 3 OEX Jan. 2006 540 calls @ $81 (x 300 = $24,300) March: Sold 3 OEX 585 calls @ $3.10 (x 300 = $930) March: 535/525 Bull Put spread for credit of $1.10 (x 300 = $330). Bought back 3 OEX March 585 calls for $.10 & sold 3 of March 560 calls for $1.35. A credit of $1.25 x 300 = $375.00. Bought back March 560 calls for $.15, locked in profit of $120 x 3 = $360. Cash position is $3,320 ($1,620 plus the unused $1,700). Our cash position as of April expiration is $2,640 plus unused $1,700 = $4,340. The April 570 OEX call expired worthless. The OEX 515/505 bull put spread also expired worthless. (Isn’t this fun?) New May Zero Plus BPS Position We sold 5 OEX May 530 puts and buy 5 contracts of May 520 puts for credit of $1.10 (x 5 contracts = $550). We sold a call against our long 540 call. We sold 5 OEX April 575 calls for $1.40 (x 5 contracts = $700). If both of these plays work out, we can add another $1,250 to our cash total – just a little bonus while we wait for the market to go up. ______________________________________________________________ New To The CPTI? Are you a new Couch Potato Trading Institute student? Do you have questions about our educational plays or our strategies? To find past CPTI (Mike Parnos) articles, first look under "Education" on the OI home page and click on "Traders Corner." For more recent columns, you can look under “Strategies” and click on “Combinations.” They're waiting for you 24/7. ______________________________________________________ Happy Trading! Remember the CPTI credo: May our remote batteries and self- discipline last forever, but mierde happens. Be prepared! In trading, as in life, it’s not the cards we’re dealt. It’s how we play them. Your questions and comments are always welcome. Mike Parnos CPTI Master Strategist and HCP ______________________________________________________ Couch Potato Trading Institute Disclaimer All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices or participated in these recommendations. The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable investor might receive utilizing these strategies. ************** TRADERS CORNER ************** The CCI Ghost Leads to Priceless Trading Jane Fox I recently read an article in the latest Active Traders Magazine called "The CCI Ghost" that intrigued me mostly because the CCI (Commodity Channel Index) had never been a part of my trader's toolbox but was a tool other analysts at OptionInvestor had used quite successfully. Now I find it has a ghost? I know my computer that keeps on rebooting whenever it wants to has a ghost but the CCI does also? One of best things about my association with OptionInvestor is doing research and learning new and different things about technical analysis. So I took this as my next quest, my next event, my next tool for my toolbox. However, I needed to start with finding out just what this darn CCI was and how it worked. So I googled it (went to www.google.com) typed in Commodity Channel Index and had more hits than Babe Ruth when he was playing for the Yankees. This indicator is more popular than I suspected but I dug through all the information and gleaned what I think is the most important. The Commodity Channel Index (CCI) measures the position of price in relation to its moving average and can be used to determine when a market is overbought/oversold or to signal when a trend is weakening. Don Lambert, who developed the CCI, states in his book Commodities Channel Index: Tools for Trading Cyclic Trends, the CCI is designed to identify cyclical turns in commodities. He assumed that commodities (or stocks or bonds) move in cycles, with highs and lows coming at periodic intervals. Lambert recommended using 1/3 of a complete cycle (low to low or high to high) as a time frame for the CCI but took care to note the a determination of the cycle's length is independent of the CCI. If the cycle runs 60 days (a low about every 60 days), then a 20-day CCI would be recommended. The calculation of the CCI is beyond the scope of this article but essentially it measures how far away the price is from the moving average and how fast it moved to get there. If price is right at the moving average, the CCI will be 0. A constant used to calculate the CCI will restrict 80% of the scores to within <+100 and >-100. Even though the indicator has no boundaries theoretically, +100 or -100 is considered extreme. It measures the variation of a market's price from its statistical mean. High values show that prices are unusually high compared to average prices whereas low values indicate that prices are unusually low. Contrary to its name, the CCI can be used effectively on any market, not just commodities. The CCI fluctuates above and below zero. The percentage of CCI values that fall between +100 and -100 will depend on the number of periods used. A shorter CCI will be more volatile with a smaller percentage of values between +100 and -100. Conversely, the more periods used to calculate the CCI, the higher the percentage of values between +100 and -100. When the CCI moves above +100, a market is considered to be entering into a strong uptrend and becoming overbought and Lambert claimed that long positions should be closed when the CCI moves back below +100. Conversely, when the CCI moves below -100, the market is considered to be in a strong downtrend and becoming oversold. Short positions should be covered when the CCI moves back above -100. The Commodity Channel Index is an oscillator style indicator that works best in a sideways market. It does not work well in trending markets and it's therefore recommended that it be used in conjunction with another, more directional indicator. An indicator such as the Directional Movement Index (DMI) can eliminate those disastrous times when you are faced with a signal to sell an overbought market in a bull market trend and the trend continues upward. Or when you are issued with a buy in bear market trend only to find the market was not yet ready to make a bottom. Interpretation There are two basic methods of interpreting the CCI: looking for divergences and as an overbought/oversold indicator. A divergence occurs when a market is making new highs while the CCI is failing to surpass its previous highs. This classic divergence is usually followed by a correction or rally in the market's price. Here is daily chart of the broad NYSE market. On March 24th the NYSE made a lower low but the CCI was not following in the same pattern and made a higher low. If you had taken a long when the CCI crossed back above the 0 line you would have had a profitable trade. You can also see this divergence on the SPX chart I have profiled below. Since the CCI typically oscillates between 1100, to use the CCI as an overbought/oversold indicator, readings above +100 imply an overbought condition (and a pending price correction) while readings below -100 imply an oversold condition (and a pending rally). Here is a daily chart of the SPX where I have noted with blue arrows each time CCI printed below -100 and then crossed back above the 0 line. After looking at the chart I see the better entry would have been when CCI crosses back above the -100 line and not the 0 line like I have profiled here. However, the difference looks to be very small and the cross above the 0 line just adds that little extra assurance price is moving in the right direction. I have not noted the prints above +100 for the chart would have been too cluttered. Also note the same divergence I profiled in the NYSE chart above. There are many other ways to use this indicator but we need to get back to the purpose of this article, The CCI Ghost. The CCI ghost is the indicator equivalent to the head and shoulders formation but not in price, in the indicator. It is called a Ghost because it is so easy to see it will jump out at you and say Boo. (Ok pretty lame but what the heh!) It consists of three peaks with the one in the middle higher (or lower), than the other two peaks. A move below (or above) the neckline is typically used to trigger a buy or sell in the market. Here is a recent example I found on the Russell 2000 e-mini futures contract 5-minute chart. In each case I have used the 0 line as my neckline but you could have used a trendline to join the shoulder highs just as well and maybe gotten in a little sooner. Whatever method you use, it would have been profitable as you can see from the above chart. The Ghost will also provide exit targets calculated the same way you would for a head and shoulders in price. Take the distance from the neckline to the top of the head (in CCI points) and add that to the neckline. Exit when the CCI gets to its target number. Let's examine the reverse head and shoulder I found on Thursday April 22. The head was formed at CCI=-210 and with a neckline at 0 the calculation is rather simple. You would exit when CCI reached +210. Here are the numbers; enter the Russell e-mini contract at 13:25 when ER was 591.30. Exit at 13:32 when CCI reached +210 or greater (actually reached +250) and ER2 was 592.5 for a 1.2 point move. ER2 is $100/point so you just made $120.00/contract in 7 minutes. If you had used the trendline instead of the neckline at 0 you may have entered a little sooner but I don't think it would have made too much difference. You can find this ghost pattern on all timeframes and all markets so experiment a little with it but for daytrading I would recommend at least a 5 minute chart to start looking for them. One thing about this CCI Ghost pattern is that is based entirely on the indicator and not price, which I know some traders could have difficulty with because most are focused exclusively on price (like me!) But trading without prices may help to eliminate the fear and greed we all feel as traders and investors. I call this priceless trading. Remember plan your trade and trade your plan Jane ************************Advertisement************************* No time to follow the Market Monitor? Tired of missing good Trades because you stepped away from your computer? OneStopOption Group can follow the Market Monitor for you. You choose the number of contracts, we take care of the rest!! Trade Stock Options, Stocks and ALL Futures with the same Group. Call us 888 281-9569 to see if you qualify to have us rebate your subscription cost. http://www.OneStopOption.com ************************************************************** ********** DISCLAIMER ********** Please read our disclaimer at: http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html ************************************************************** ADVERTISING INFORMATION For more information on advertising in OptionInvestor Newsletter, or any Premier Investor Network newsletter please contact: Contact Support
The Option Investor Newsletter Sunday 04-25-2004 Sunday 5 of 5 In Section Five: Spreads and Straddles: Earnings Spark Recovery Rally! Premium-Selling Plays: Naked Puts and Calls ************************Advertisement************************* Stock Option and Futures Brokerage OneStopOption teams the best trading technology with varying levels of professional assistance at very competitive prices. Commission costs are comparable to discount brokerage and tailored to individual customer needs. The power of one brokerage group with experience and expertise in the Securities* and Futures Markets offers unprecedented convenience for traders. Access To All Futures Markets Toll Free 888-281-9569 Stock Option Principals www.OneStopOption.com ************************************************************** ******************* SPREADS & STRADDLES ******************* Earnings Spark Recovery Rally! By Ray Cummins Stocks closed the week with a bullish bias as strong earnings from technology giant Microsoft and a host of other industry bellwethers overcame investor concerns about rising interest rates. The Dow Jones Industrial Average ended up 11 points at 10,472, just one day after enjoying a triple-digit rally and its best session in over a month. The NASDAQ Composite rose 16 points to 2,049 with Intel (NASDAQ:INTC) propelling the semiconductor group higher. The S&P 500 index finished the day unchanged at 1,140 amid weakness in REIT, gold, insurance, and oil service shares. Losers outpaced winners by almost 2 to 1 on the NYSE but only by a 6 to 5 margin on the NASDAQ. Trading volume was 1.4 billion on the Big Board and 1.9 billion on the technology exchange. Treasury prices slumped on the latest economic data with the 10-year benchmark note down 17/32 to 96 14/32, while its yield climbed to 4.45%. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SUMMARY OF CURRENT POSITIONS - AS OF 04/23/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 HSIC 75.81 78.41 MAY 65 70 0.45 69.55 0.45 Open NAV 49.90 48.38 MAY 40 45 0.60 44.40 0.60 Open DNA 112.00 118.22 MAY 95 100 0.50 99.50 0.50 Open EBAY 75.94 82.14 MAY 65 70 0.65 69.35 0.65 Open HDI 55.63 58.07 MAY 47 50 0.25 49.75 0.25 Open PDCO 74.97 77.01 MAY 65 70 0.65 69.35 0.65 Open CME 116.11 118.85 MAY 100 105 0.60 104.40 0.60 Open MATK 65.12 68.13 MAY 55 60 0.60 59.40 0.60 Open L/P = Long Put S/P = Short Put CB = Cost Basis G/L = Gain/Loss CALL-CREDIT SPREADS Symbol Pick Last Month L/C S/C Credit C/B G/L Status SOHU 25.46 22.84 MAY 35 30 0.60 30.60 0.60 Open SFNT 31.65 28.60 MAY 40 35 0.70 35.70 0.70 Open GENZ 46.40 46.46 MAY 55 50 0.60 50.60 0.60 Open PRX 55.25 44.00 MAY 65 60 0.65 60.65 0.65 Open MERQ 45.59 46.54 MAY 55 50 0.60 50.60 0.60 Open NEM 42.86 40.40 MAY 50 47 0.25 47.75 0.25 Open RYL 77.41 80.07 MAY 90 85 0.60 85.60 0.60 Open AMZN 45.20 46.29 MAY 55 50 0.65 50.65 0.65 Open BOBJ 27.85 29.10 MAY 35 30 0.75 30.75 0.75 Open L/C = Long Call S/C = Short Call CB = Cost Basis G/L = Gain/Loss Business Objects (NASDAQ:BOBJ) is on the "watch" list and further upside activity would suggest an early exit in the bearish spread. DEBIT STRADDLES Stock Pick Last Exp. Long Long Initial Max Play Symbol Price Price Month Call Put Debit Value Status SSYS 20.88 23.16 MAY 22 20 2.10 2.00 Open ZMH 80.84 82.82 MAY 80 80 4.90 6.15 Open COCO 32.46 35.37 MAY 32 32 4.10 4.70 No Play LF 19.67 23.25 JUN 20 20 3.50 5.25 Open BSTE 30.63 40.65 JUL 30 30 6.00 11.50 Open? MKSI 23.10 22.19 JUL 22 22 4.70 5.50 Open Biosite (NASDAQ:BSTE) has been the best performing position in recent weeks, but Zimmer Holdings (NYSE:ZMH), LeapFrog (NYSE:LF) and MKS Instruments have also been active, providing favorable short-term gains. The recent position in Corinthian Colleges (NASDAQ:COCO) was not available at the target entry price, due to the "gap-up" on the day after the straddle was listed as a new candidate. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ MTG - MGIC Investment $74.42 *** Rally Mode! *** MGIC Investment Corporation (NYSE:MTG) is a holding company that, through its wholly owned subsidiary, Mortgage Guaranty Insurance Corporation, provides private mortgage insurance in the United States to the home mortgage lending industry. Its products are primary mortgage insurance and pool mortgage insurance. Primary mortgage insurance may be written on a flow basis, in which loans are insured in individual, loan-by-loan transactions, or may be written on a bulk basis, in which a large portfolio of loans is individually insured in a single, bulk transaction. In addition to mortgage insurance on first liens, the firm provides lenders with various underwriting and other services and products related to home mortgage lending through other subsidiaries. MTG - MGIC Investment $74.42 PLAY (conservative - bullish/credit spread): BUY PUT MAY-65.00 MTG-QM OI=133 ASK=$0.25 SELL PUT MAY-70.00 MTG-QN OI=147 BID=$0.70 INITIAL NET-CREDIT TARGET=$0.50-$0.55 POTENTIAL PROFIT(max)=11% B/E=$69.50 __________________________________________________________________ SLAB - Silicon Laboratories $56.33 *** Strong Sector! *** Silicon Labs (NASDAQ:SLAB) designs and develops proprietary, analog-intensive, mixed-signal integrated circuits for use in a range of applications. The firm groups its products into two major categories: mobile handset products and broad-based, mixed-signal products. Its mobile handset products include the Aero transceivers and radio frequency synthesizers. Its broad based, mixed-signal products include silicon Direct Access Arrangement, ISOmodem, ProSLIC, digital subscriber line analog front end, clock chips, SiPHY, optical transceivers and clock and data recovery ICs, general purpose RF Synthesizers for non handset applications, as well as the Cygnal microcontroller family of products. SLAB - Silicon Laboratories $56.33 PLAY (less conservative - bullish/credit spread): BUY PUT MAY-45.00 QFJ-QI OI=846 ASK=$0.30 SELL PUT MAY-50.00 QFJ-QJ OI=3890 BID=$0.85 INITIAL NET-CREDIT TARGET=$0.60-$0.65 POTENTIAL PROFIT(max)=14% B/E=$49.40 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NTES - Netease.com $51.43 *** Premium-Selling Only! *** NetEase.com (NASDAQ:NTES) is an Internet technology firm that supports the interactive online and wireless community in China. The company's content channels offer users a range of local, regional and international Chinese language content, Web-based communication services and sophisticated search capabilities and provide a destination for Chinese Internet users to identify and access resources, services, content and additional information on the Internet. In addition, the NetEase wireless value-added services offer timely information, community interaction and games via wireless short messaging service. NTES - Netease.com $51.43 PLAY (conservative - bearish/credit spread): BUY CALL MAY-65.00 NQG-EM OI=625 ASK=$0.40 SELL CALL MAY-60.00 NQG-EL OI=1797 BID=$0.85 INITIAL NET-CREDIT TARGET=$0.50-$0.60 POTENTIAL PROFIT(max)=11% B/E=$60.50 __________________________________________________________________ VECO - Veeco Instruments $27.43 *** In A Trading Range? *** Veeco Instruments (NASDAQ:VECO) designs, manufactures, markets and services a line of equipment primarily used by manufacturers in data storage, semiconductor and telecommunications/wireless markets. The company's line of products allows customers to improve time to market of next-generation products. The firm's products are also enabling advancements in nanoscience and other areas of scientific and industrial research. The company offers two principal product lines, process equipment and metrology. VECO - Veeco Instruments $27.43 PLAY (conservative - bearish/credit spread): BUY CALL MAY-35.00 QVC-EG OI=73 ASK=$0.20 SELL CALL MAY-30.00 QVC-EF OI=1262 BID=$0.70 INITIAL NET-CREDIT TARGET=$0.55-$0.60 POTENTIAL PROFIT(max)=12% B/E=$30.55 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ DEBIT SPREADS ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ This strategy offers a risk-reward outlook similar to credit spreads, however there is no margin requirement as the initial debit for the position is also the maximum loss. Since these positions are based primarily on technical indications, traders should review the current news and market sentiment surrounding each issue and make their own decision about the outcome of the position. SUPPLEMENTAL CANDIDATES The following group of issues is a list of additional candidates to supplement your search for profitable trading positions. As with any investment, you must decide if the selections meet your criteria for potential plays. Only you can know what strategies and positions are suitable for your experience level, risk-reward tolerance and portfolio outlook. They will not be included in the weekly portfolio summary. __________________________________________________________________ CALL DEBIT SPREADS Stock Current Long Ask Short Bid Cost Spread Max Symbol Price Call Price Call Price Basis Debit ROI% ASKJ 41.33 AUKFF 12.20 AUKFG 7.70 34.50 4.50 11.1 CELG 56.94 LQHFI 13.00 LQHFJ 8.50 49.50 4.50 11.1 CLS 19.69 CLSFC 4.90 CLSFW 2.65 17.25 2.25 11.1 COH 44.00 COHFG 9.30 COHFH 4.80 39.50 4.50 11.1 LAMR 42.90 LJQFG 8.10 LJQFH 3.60 39.50 4.50 11.1 MOGN 65.59 QOGFK 12.00 QOGFL 7.50 59.50 4.50 11.1 NSM 46.21 NSMFG 11.60 NSMFH 7.10 39.50 4.50 11.1 OSTK 36.25 QKTFE 12.10 QKTFF 7.60 29.50 4.50 11.1 QCOM 66.98 AAOFK 12.50 AAOFL 8.00 59.50 4.50 11.1 UPL 34.01 UPLFE 9.30 UPLFF 4.80 29.50 4.50 11.1 WFMI 80.58 FMQFN 11.30 FMQFO 6.80 74.50 4.50 11.1 PUT DEBIT SPREADS Stock Current Long Ask Short Bid Cost Spread Max Symbol Price Put Price Put Price Basis Debit ROI% CMVT 18.64 CQVRX 4.10 CQVRD 1.90 20.30 2.20 13.6 IGT 41.65 IGXRJ 8.70 IGXRI 4.30 45.60 4.40 13.6 INTU 44.32 IQURJ 6.10 IQURW 3.90 47.80 2.20 13.6 NFLX 29.61 QNQRU 8.60 QNQRG 6.40 35.30 2.20 13.6 OVTI 26.86 UCMRG 8.60 UCMRZ 6.40 32.80 2.20 13.6 PTR 46.25 PTRRK 9.20 PTRRJ 4.80 50.60 4.40 13.6 TXN 27.94 TXNRZ 4.80 TXNRF 2.60 30.30 2.20 13.6 VECO 27.43 QVCRG 8.10 QVCRF 3.70 30.60 4.40 13.6 OIIM 16.45 XQQRD 4.00 XQQRW 1.80 17.80 2.20 13.6 N 32.81 NRH 7.50 NRG 3.10 35.60 4.40 13.6 CHA 31.97 CHARH 8.50 CHARG 4.10 35.60 4.40 13.6 BZH 102.06 BZHRC 14.40 BZHRB 10.00 110.60 4.40 13.6 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. _________________________________________________________________ AH - Armor Holdings $35.78 *** Recent Volatility! *** Armor Holdings (NYSE:AH) is a manufacturer and provider of security products, vehicle armoring systems and security risk management services. The company is organized and operated under three business segments: Armor Holdings Products, and Armor Mobile Security. The company's Armor Holdings Products Division manufactures and sells a wide range of branded law enforcement equipment such as concealable and tactical body armor, hard armor, duty gear, less-lethal munitions, anti-riot products, police batons, emergency lighting products, forensic products, firearms accessories and weapon maintenance products. The Armor Mobile Security Division manufactures and installs ballistic and blast protected armoring systems for military vehicles, commercial vehicles, military aircraft and missile components. Quarterly earnings are due May 10, 2004. AH - Armor Holdings $35.78 PLAY (very speculative - neutral/debit straddle): BUY CALL MAY-35.00 AH-EG OI=1119 ASK=$2.05 BUY PUT MAY-35.00 AH-QG OI=62 ASK=$1.20 INITIAL NET-DEBIT TARGET=3.00-$3.15 INITIAL TARGET PROFIT=$1.05-$1.70 _________________________________________________________________ QLTI - QLT Incorporated $29.60 *** Earnings Speculation! *** QLT Incorporated (NASDAQ:QLTI) is a bio-pharmaceutical company engaged in the development and commercialization of products in ophthalmology and oncology and in other fields where the product can be marketed by a focused specialty sales and marketing team. QLT is a provider in the field of photodynamic therapy, a field of medicine that uses photosensitizers in the treatment of many diseases. QLT is also actively developing drug products that do not employ photodynamic therapy. Visudyne, which is QLT's major commercial product, is a photosensitizer used to treat choroidal neovascularization in patients with the wet form of age-related macular degeneration. Quarterly earnings are due April 27, 2004. QLTI - QLT Incorporated $29.60 PLAY (very speculative - neutral/debit straddle): BUY CALL MAY-30.00 QLT-EF OI=560 ASK=$1.40 BUY PUT MAY-30.00 QLT-QF OI=267 ASK=$1.80 INITIAL NET-DEBIT TARGET=3.00-$3.10 INITIAL TARGET PROFIT=$1.00-$1.65 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* OneStopOption.com Trade: Securities, Stock Options, Futures Contracts Service: Experienced Brokers Personal Assistance Convenience of One Brokerage Online and Live Broker Trading Experience... The Difference OneStopOption.com 888-281-9569 *************************************************************** ***************************************** 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 04/23/04 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 FWHT MAY 17 17.15 23.02 0.35 4.27% 2.04% MICC MAY 17 17.15 27.80 0.35 4.39% 2.04% MNST MAY 22 21.95 28.70 0.55 4.48% 2.51% PLMO MAY 17 16.90 19.62 0.60 6.80% 3.55% HNT MAY 22 22.00 26.01 0.50 4.76% 2.27% IPXL MAY 20 19.50 24.65 0.50 5.43% 2.56% SSNC MAY 22 21.60 26.44 0.90 7.85% 4.17% TINY MAY 15 14.70 20.82 0.30 4.60% 2.04% ACCL MAY 17 17.25 17.65 0.25 4.08% 1.45% ADEX MAY 20 19.45 20.93 0.55 6.05% 2.83% IMM MAY 15 14.70 19.85 0.30 5.24% 2.04% IPXL MAY 20 19.65 24.65 0.35 4.93% 1.78% JBLU MAY 22 22.15 28.54 0.35 4.11% 1.58% LSCP MAY 22 21.95 33.46 0.55 6.11% 2.51% TINY MAY 17 17.00 20.82 0.50 7.27% 2.94% USG MAY 15 14.25 15.80 0.75 11.45% 5.26% XMSR MAY 25 24.50 27.82 0.50 4.90% 2.04% ASKJ MAY 30 29.50 41.33 0.50 5.42% 1.69% BRCM MAY 37 36.70 42.21 0.80 5.86% 2.18% CLZR MAY 15 14.25 16.79 0.75 12.47% 5.26% FWHT MAY 20 19.35 23.02 0.65 8.83% 3.36% IMM MAY 17 17.05 19.85 0.45 8.37% 2.64% INSP MAY 35 34.45 40.32 0.55 5.28% 1.60% MRVL MAY 42 41.55 44.40 0.95 6.00% 2.29% NFLX MAY 27 27.10 29.61 0.40 4.65% 1.48% ESIO MAY 22 22.10 23.77 0.40 6.15% 1.81% HOLX MAY 20 19.50 22.77 0.50 8.05% 2.56% GVHR MAY 25 24.65 27.37 0.35 5.85% 1.42% HSII MAY 22 22.25 24.94 0.25 3.81% 1.12% IMM MAY 17 17.25 19.85 0.25 6.08% 1.45% LF MAY 20 19.55 23.25 0.45 7.54% 2.30% TOMO MAY 12 12.25 12.68 0.25 6.96% 2.04% TSAI MAY 20 19.80 23.50 0.20 4.37% 1.01% TSO MAY 20 19.50 20.90 0.50 8.18% 2.56% APPX MAY 35 34.40 44.18 0.60 5.81% 1.74% BLDP MAY 10 9.75 11.46 0.25 6.55% 2.56% ELN MAY 17 17.30 23.53 0.20 4.01% 1.16% ERES MAY 25 24.50 34.52 0.50 6.05% 2.04% HOLX MAY 20 19.65 22.77 0.35 4.54% 1.78% LSCP MAY 22 22.10 33.46 0.40 5.49% 1.81% PDII MAY 22 21.75 27.03 0.75 8.99% 3.45% TELK MAY 22 22.20 28.53 0.30 4.32% 1.35% TNOX MAY 15 14.50 17.40 0.50 8.35% 3.45% APPX MAY 35 34.65 44.18 0.35 4.47% 1.01% EYE MAY 17 17.20 22.68 0.30 5.96% 1.74% JCOM MAY 22 22.30 25.25 0.20 3.37% 0.90% MGAM MAY 22 21.90 23.75 0.60 8.55% 2.74% MICC MAY 22 22.10 27.80 0.40 6.16% 1.81% NET MAY 17 17.10 19.04 0.40 7.30% 2.34% NIHD MAY 33 32.88 39.72 0.50 5.22% 1.52% PXLW MAY 17 16.95 20.17 0.55 9.31% 3.24% SNIC MAY 17 17.15 20.00 0.35 6.87% 2.04% Some of the new positions may not have been available at the listed prices, due to the recent volatile market activity. Conservative investors should consider closing positions in ADE Corporation (NASDAQ:ADEX), Multimedia Games (NASDAQ:MGAM), Pharmacopeia (NASDAQ:ACCL), Tom Online (NASDAQ:TOMO), Netflix (NASDAQ:NFLX) and USG Corporation (NYSE:USG). NAKED CALLS Stock Strike Strike Cost Current Gain Max Simple Symbol Month Price Basis Price (Loss) Yield Yield AFCI MAY 25 25.75 21.06 0.75 7.73% 2.91% QLGC MAY 37 37.95 27.14 0.45 4.22% 1.19% AVCT MAY 37 38.15 35.28 0.65 6.74% 1.70% INTU MAY 47 48.00 44.32 0.50 4.10% 1.04% PPCO MAY 20 20.30 16.11 0.30 10.11% 1.48% SINA MAY 45 45.55 35.83 0.55 6.61% 1.21% NANO MAY 20 20.40 14.58 0.40 10.66% 1.96% PHTN MAY 35 35.60 31.45 0.60 8.38% 1.69% SFA MAY 35 35.55 35.96 (0.41) 0.00% 1.55% SOHU MAY 25 25.75 22.84 0.75 13.84% 2.91% Conservative investors should consider closing the position in Scientific America (NYSE:SFA) after the company's "bullish" earnings report. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NEW NAKED-PUT CANDIDATES Stock Strike Strike Cost Current Max Max Simple Symbol Month Price Basis Price Profit Yield Yield CAMD MAY 15 14.60 16.78 0.40 10.87% 2.74% DNDN MAY 12 12.25 14.11 0.25 8.45% 2.04% FWHT MAY 20 19.60 23.02 0.40 8.79% 2.04% MICC MAY 25 24.45 27.80 0.55 8.98% 2.25% NIHD MAY 35 34.50 39.72 0.50 6.21% 1.45% OSTK MAY 30 29.25 36.25 0.75 12.07% 2.56% SNIC MAY 17 17.20 20.00 0.30 7.49% 1.74% TINY MAY 17 17.20 20.82 0.30 8.19% 1.74% UTHR MAY 20 19.65 23.74 0.35 8.30% 1.78% __________________________________________________________________ CAMD - California Micro Devices $16.78 *** Multi-Year High! ** California Micro Devices (NASDAQ:CAMD) designs and markets application-specific analog semiconductor products primarily for the mobile and computing markets, as well as for other markets, such as the light-emitting diode lighting market. The company also designs, sells and manufactures thin film resistor networks for the medical sector. The firm supplies application-specific integrated passive devices and offers a growing portfolio of active analog semiconductors, including power management and Universal Serial Bus transceiver devices. CAMD - California Micro Devices $16.78 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 CGQ QC 50 0.40 14.60 10.8% 2.7% * __________________________________________________________________ DNDN - Dendreon $14.11 *** Drug Sector Speculation! *** Dendreon Corporation (NASDAQ:DNDN) is dedicated to the discovery and development of novel products for the treatment of diseases through its manipulation of the immune system. The firm product pipeline is focused on cancer and includes therapeutic vaccines, monoclonal antibodies and small-molecule product candidates. The product candidates most advanced in development are therapeutic vaccines to stimulate a patient's immunity for the treatment of cancer. DNDN - Dendreon $14.11 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAY 12.5 UKO QV 694 0.25 12.25 8.4% 2.0% * __________________________________________________________________ FWHT - FindWhat.com $23.02 *** The Uptrend Resumes! *** FindWhat.com (NASDAQ:FWHT) operates online marketplaces that connect the consumers and businesses that are most likely to purchase specific goods and services with the advertisers that provide those goods and services. Online advertisers determine the per-click fee they will pay for their advertisements, which FindWhat.com and its private-label partners such as Terra Lycos's Lycos.com and HotBot distribute to millions of Internet users. Their network includes hundreds of distribution partners, such as CNET's Search.com, Excite, Webcrawler, NBCi, MetaCrawler, Dogpile, Go2Net and Microsoft Internet Explorer Autosearch. FWHT - FindWhat.com $23.02 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 HFQ QD 331 0.40 19.60 8.8% 2.0% * __________________________________________________________________ MICC - Millicom Cellular $27.80 *** Wireless Telecom Giant *** Millicom International Cellular S.A. (NASDAQ:MICC) is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. The company has a number of cellular operations and licenses in countries around the world and the group's cellular operations have a combined population under license of over 500 million people. In addition, MIC operates a GSM clearing house, provides high-speed wireless data services in various countries and has a licenses to develop high speed wireless data services in other areas. MIC also has a major interest in Tele2 AB, an alternative pan-European telecom firm offering fixed and mobile telephony, data network and Internet services. MICC - Millicom Cellular $27.80 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 CQD QE 978 0.55 24.45 8.9% 2.2% * __________________________________________________________________ NIHD - NII Holdings $39.72 *** Another 2004 High! *** NII Holdings (NASDAQ:NIHD) provides digital wireless communication services for business customers through four operating companies located in selected Latin American markets. The firm was formerly known as Nextel International. Its main operations are in major business centers and related transportation corridors of Mexico, Brazil, Peru and Argentina. It also provides analog specialized mobile radio services through two operating companies in Chile. NIHD - NII Holdings $39.72 PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAY 35 QHQ QG 35 0.50 34.50 6.2% 1.4% * __________________________________________________________________ OSTK - Overstock.com $36.25 *** Premium-Selling Only! *** Overstock.com (NASDAQ:OSTK) is an online "closeout" retailer offering discount, brand-name merchandise for sale primarily over the Internet. The company's merchandise offerings include bed-and-bath goods, kitchenware, watches, jewelry, electronics, sporting goods and designer accessories. Overstock offers its customers an opportunity to shop for bargains conveniently, while offering an alternative inventory liquidation distribution channel to its suppliers. The company typically offers around 5,000 non-media products and over 100,000 media products (books, CDs, DVDs, video cassettes and video games) in seven departments on its Websites, www.overstock.com, www.overstockb2b.com and www.worldstock.com. OSTK - Overstock.com $36.25 "SPECULATIVE" PLAY (sell naked put): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL PUT MAY 30 QKT QF 640 0.75 29.25 12.0% 2.6% * __________________________________________________________________ SNIC - Sonic Solutions $19.11 *** Earnings Speculation! *** Sonic Solutions (NASDAQ:SNIC) develops and markets computer-based tools that enable the creation of digital audio and video titles in the CD-Audio and DVD-Video formats, and in related formats. The company also licenses the software technology underlying its tools to various other companies to incorporate in products they develop. It has three business units corresponding to its three product categories: professional products, desktop products and technology products. SNIC - Sonic Solutions $20.00 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 QNI QW 42 0.30 17.20 7.4% 1.7% * __________________________________________________________________ TINY - Harris & Harris Group $20.82 *** Next Leg Up? *** 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 $20.82 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 282 0.30 17.20 8.2% 1.7% * __________________________________________________________________ UTHR - United Therapeutics $23.74 *** In A Trading Range? *** United Therapeutics (NASDAQ:UTHR) is a biotechnology company focused on the development and commercialization of therapeutics to treat chronic and life-threatening diseases in 3 therapeutic areas: cardiovascular medicine, infectious disease and oncology. It has 5 therapeutic platforms: Prostacyclin analogs are stable synthetic forms of a molecule that has effects on blood-vessel health and function; Remodulin has been approved in the United States for the treatment of pulmonary arterial hypertension in patients with New York Heart Association Class II-IV symptoms; Immunotherapeutic monoclonal antibodies are antibodies that activate patients' immune systems to treat cancer; Glycobiology anti-viral agents are a class of small molecules that may be effective as an oral therapy for hepatitis C or other infections, and Telemedicine involves portable digital devices that enable physicians to remotely monitor patients' bodily measurements. UTHR - United Therapeutics $23.74 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 FUH QD 334 0.35 19.65 8.3% 1.8% * ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ BEARISH PLAYS - NAKED CALLS Based on analysis of option pricing and the underlying stock's technical background, these positions meet our fundamental criteria for bearish "premium-selling" strategies. Each issue has robust option premiums, a well-defined resistance area and a high probability of remaining below the target strike prices. As with any recommendations, these positions should be carefully evaluated for portfolio suitability and reviewed with regard to your strategic approach and personal trading style. WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL! The sale of uncovered calls entails considerable financial risk, far more than the initial margin or collateral required to open the position. The maximum financial obligation for the sale of a naked option is the strike price (of the underlying stock) that is sold. Although this obligation is reduced by the premium from the sale of the option, a writer of options must have the cash or collateral equivalent of the sold strike price in reserve at all times. The simple fact is: stocks often experience large price swings, exponentially increasing the margin maintenance and very possibly causing a devastating shortfall in your portfolio. It is also important that you consider using trading stops on naked option positions to help limit losses when a stock price moves in a volatile manner. Many professional traders suggest closing the position when the underlying share value moves beyond the sold strike, or using a "buy-to-close" stop order at a price that is no more than twice the original premium received from the sold option. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ HOV - Hovnanian Enterprises $38.28 *** Sector Slump! *** Hovnanian Enterprises (NYSE:HOV) constructs and sells single-family detached homes and attached condominium apartments and townhouses in more than 196 new home communities in New Jersey, Pennsylvania, New York, Virginia, Maryland, North Carolina, Texas and California. The firm offers a wide variety of homes that are designed to appeal to first-time buyers; first- and second-time, move-up buyers; luxury buyers; active adult buyers, and empty nesters. In addition, the company provides financial services, including mortgage banking and title services to the homebuilding operations' customers. The firm does not retain or service the mortgages that it originates, but rather sells the mortgages and servicing rights to investors. HOV - Hovnanian Enterprises $38.28 PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL MAY 42.5 HOV EV 6064 0.30 42.80 3.8% 0.7% TS SELL CALL MAY 40 HOV EH 3643 0.85 40.85 8.5% 2.1% __________________________________________________________________ SWIR - Sierra Wireless $28.80 *** Disappointing Outlook? *** Sierra Wireless (NASDAQ:SWIR) is a leader in delivering highly differentiated wireless solutions that enable our customers to improve their productivity and lifestyle. Sierra Wireless develops and markets AirCard, the industry-leading wireless PC card line for portable computers; embedded modules for OEM wireless applications; the MP line of rugged vehicle-mounted connectivity solutions and Voq, a line of professional phones with secure, easy-to-use, products for mobile professionals. SWIR - Sierra Wireless $28.80 "SPECULATIVE" PLAY (sell naked call): Action Month & Option Open Last Cost Max. Simple Req'd Strike Symbol Int. Price Basis Yield Yield SELL CALL MAY 35 IYQ EG 724 0.60 35.60 13.7% 1.7% * SELL CALL MAY 30 IYQ EF 118 1.85 31.85 22.0% 5.8% ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEE DISCLAIMER - SECTION 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ************************Advertisement************************* OneStopOption.com Trade: Securities, Stock Options, Futures Contracts Service: Experienced Brokers Personal Assistance Convenience of One Brokerage Online and Live Broker Trading Experience... 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