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Daily Newsletter, Monday, 06/07/2004

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The Option Investor Newsletter                   Monday 06-07-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Bulls Stampede Pushing NASDAQ Over 2000
Futures Wrap: See Note
Index Trader Wrap: "Tear down this wall!" and the Reagan rally....
Traders Corner: I'm Not Avoiding Intermarket Analysis Anymore


Posted online for subscribers at http://www.OptionInvestor.com
*******************************************************************
MARKET WRAP  (view in courier font for table alignment)
*******************************************************************
     06-07-2004            High     Low     Volume Advance/Decline
DJIA    10391.08 +148.26 10391.15 10243.31 1.45 bln   2331/ 516
NASDAQ   2020.62 + 42.00  2020.62  1991.42 1.46 bln   2181/ 874
S&P 100   555.69 +  8.61   555.69   547.08   Totals   4512/1390
S&P 500  1140.42 + 17.92  1140.54 1122.50
RUS 2000  578.90 + 11.15   578.91   567.75
DJ TRANS 3040.11 + 49.16  3040.15  2992.55
VIX        15.39 -  1.39    16.70    15.33
VXO        14.67 -  1.84    15.87    14.61
VXN        22.65 -  1.19    24.21    22.52
Total Volume 3,339M
Total UpVol  2,886M
Total DnVol    404M
52wk Highs     244
52wk Lows       64
TRIN          0.38
PUT/CALL      0.85
*******************************************************************

Bulls Stampede Pushing NASDAQ Over 2000
by James Brown

Stocks were off to a strong start this morning but not before
Wall Street honored the passing of President Reagan with two
minutes of silence.  The rally slowed a bit during the lunchtime
lull but picked up speed again heading into the afternoon.
Analysts are pointing to the renewed confidence in the U.S.
economic expansion, the pull back in crude oil prices and OPEC's
promise to pump more, and the positive numbers from last Friday's
non-farm payrolls report as the fuel for Monday's global market
rally.

Asian stock exchanges witnessed a big rally in equities with the
Japanese NIKKEI adding 311 or 2.8% to close at 11,439. It was the
NIKKEI's largest one-day percentage in six months.  The Hong Kong
Hang Seng index followed with a 304-point gain to close at
12,326.  The South Korea and Taiwan exchanges also turned in big
moves with 3.68% gains for the session.  European stocks shadowed
their Asian counterparts and closed in the green.  The German DAX
jumped 1.4% and broke through resistance at the 4000 level.  The
English FTSE added 37 points to close at 4491 and the French CAC
rose 23 points to close at 3722.

Here at home the rally was very broad-based with the BTK biotech
index as the lone sector closing in the red.  Investors were
pouring money into interest-rate sensitive and growth sectors
like homebuilders and tech stocks.  The DJUSHB home construction
index soared 5.24% to breakout over the 600 level and its simple
50 and 100-dma's.  There were plenty of new five-week highs
mirroring the gains in the major indices and several sectors
broke out over significant resistance.  The DFI defense index and
the RLX retail index hit new all-time highs.

The 3.67% rally to 487.93 in the SOX semiconductor index is
important because the chip sector tends to lead the NASDAQ higher
or lower.  Today's gain in the SOX put it just over its simple
200-dma but still under resistance at the 490 level and its
simple 100-dma.  Any follow through tomorrow would be good news
for tech stocks.  Hopefully, investors will choose to interpret
Texas Instrument's (TXN) mid-quarter update in a positive light.
TXN held its conference call after the bell tonight and gave a
modestly up beat forecast.  The chipmaker narrowed its revenue
forecasts from $3.09-$3.33 billion to $3.17-to-$3.29 billion.
Earnings per share are expected to come in at 24 to 26 cents per
share.  Last year TXN earned 7 cents per share on $2.34 billion
for the second quarter.  This year analysts are expecting 25
cents on $3.21 billion.

Chart of the SOX semiconductor index:



The 1.64% jump in the Dow Jones Transportation index (TRAN) is
important because traditional Dow Theory believes that we can't
have a meaningful rally in the Industrials without participation
by the transports.  The recent drop in oil plays an important
part in the Transports strength.  The July crude oil contracts
did trade lower on Monday and broke support at $38.00 a barrel
before rebounding in the afternoon to close up 17 cents at
$38.66.

Chart of the Dow Jones Transportation index:



Market internals were very bullish.  Advancing stocks flattened
declining stocks 23 to 5 on the NYSE and almost 22 to 9 on the
NASDAQ.  Up volume was more than 11 times down volume on the NYSE
and up volume was six times down volume on the NASDAQ.  These are
very big ratios and a positive sign for the bulls.
Unfortunately, overall volume for the session was still somewhat
light at less than 3 billion shares for both exchanges.

Thankfully the technical picture has improved.  The Dow Jones
Industrials' 148-point gain is a breakout over the 10,300 level
and its simple 100-dma.  The Dow is right at its descending
trendline of resistance from February and poised to breakout
above 10,400.  In the weekend wrap Jim outlined the 2000 and 2020
levels on the NASDAQ as crucial levels of resistance.  Today's
2.12% gain is a major breakout over the 2000 level, its simple
100-dma and its descending trendline of resistance.  Plus the
NASDAQ managed to close just over the 2020 mark.  This should put
bears on the defensive and give the NASDAQ room to run toward
2050.  Jim also listed the 1130 mark on the S&P 500 as an
important level to watch.  Monday's 1.59% gain to 1140 is a
convincing breakout and should give bulls a chance to run toward
the 1150 level of resistance.

Chart of the Dow Jones Industrials:



Chart of the NASDAQ Composite:



Chart of the S&P 500 Index:



What should really encourage traders is the fact that a Reuters'
story reported a new threat by Al-Qaeda to use U.S. based
passenger jets to strike at U.S. targets yet the markets hardly
seemed to acknowledge it.

Speaking of airplanes, Dow-component Boeing Inc (BA) made
headlines and a 52-week high (+2.6%) after reporting that
Singapore Airlines is considering an order to buy 50 planes from
either BA or its rival Airbus.  Company officials also announced
over the weekend that orders for their new 7E7 model could top
200 planes by the end of 2004.  Meanwhile Lehman Brothers
upgraded the stock from "equal-weight" to an "over weight" and
raised their long-term price target on Boeing.

Dow-components General Motors (GM) and Home Depot (HD) also made
headlines with their new push into China.  Actually, GM's
presence in China isn't new.  The company plans to spend $3
billion to double its manufacturing ability in China in an effort
to capitalize on the phenomenal growth in car sales.  Industry
experts already label China as the fastest growing market and
expect China to become the second largest market for vehicle
sales this year.  Meanwhile HD announced its plans to expand into
China but failed to say when their first store would open or how
many stores it was planning to build in China.

Biotech stocks were getting a lot of press today due to the
massive American Society of Clinical Oncology conference (ASCO)
in New Orleans this week.  Unfortunately for many biotech firms
investors seemed to be selling the news.  The BTK biotech index
was the only sector-specific index to close in the red on Monday.
Bucking the trend was Imclone Systems (IMCL), which added 12.2%
to close at $81.38, a new four-year high and a breakout over
resistance at $80.  Shares of IMCL soared on another round of
positive news for its Erbitux treatment and an upgrade from Smith
Barney from a "hold" to a "buy".  Traders shrugged off
disappointing news that IMCL's Phase III trials for its small
cell lung cancer treatment failed to hit the study's primary
goals.

It wouldn't be a Monday without some merger news.  Last Friday
shares of Mandalay Resort Group (MBG) soared from $54.62 to
$60.27 on what many believed was the company's outstanding
earnings report.  The company did announce earnings on Thursday
night and beat estimates by 18 cents.  Yet now many suspect there
was a leak of the upcoming merger announcement.  Late Friday
night MGM Mirage (MGG) issued a press release with its bid to buy
MBG for $7.65 billion, which includes MBG's $2.8 billion in debt.
The unsolicited $68 per share bid would make the combined company
the largest casino-gambling operation on the planet with ten
casinos on the Las Vegas strip, 33,000 hotel rooms and 2.5
million square feet of convention space.  Surprise,
surprise...shares of MBG soared to $72.80 before drifting back to
close at $70.23 (+16.5%) on Monday indicating that Wall Street
believes the bid is too low.  MBG's management said they would
evaluate the offer.

Most of today's news was focused on a tribute to America's 40th
president Ronald W. Reagan.  Reagan passed away on Saturday at 93
years of age after a ten-year battle with Alzheimer's disease.
To honor the former two-term president Friday has been chosen as
a national day of mourning.  Reagan's body will be flown to
Washington D.C. for the first state funeral in over three
decades.  Security will be very high with numerous world leaders
flying into the country to pay their respects.  Reagan is to
receive full military honors while current President Bush gives a
eulogy for Reagan.  Non-essential government services will be
closed on Friday and the financial markets have also elected to
close on Friday in honor of the president.  The Labor Department
has chosen to move its May PPI index release from Friday morning
to Thursday afternoon at 3:00 P.M. ET.  Meanwhile the Senate
Banking Committee has rescheduled Alan Greenspan's confirmation
hearing for his fifth term as Federal Reserve Chairman from
Thursday, June 10th to Tuesday, June 15th.

We will still hear from Greenspan this week as he speaks tomorrow
at the International Monetary Conference.  We'll also hear from
Fed governor Hoening tomorrow.  Tuesday will launch the three-day
G8 summit in Georgia with leaders from Britain, Canada, France,
Germany, Italy, Japan, Russia and the U.S.  Talks are set to
focus on the global economy, oil prices, rebuilding Iraq and
violence in the mid-east.


************
FUTURES WRAP
************

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

"Tear down this wall!" and the Reagan rally....

On June 12, 1987, standing before the people of West Berlin, the
late President Ronald Reagan delivered what some historians say
may have been his most powerful speech, when he called upon
Russia's General Secretary Gorbachev to "tear down this wall!"

It was an emotional day on Wall Street, where traders and
investors around the world observed a moment of silence after the
opening bell to honor former President Ronald Reagan.

Often referred to as the "great communicator," it didn't take
long for bulls to get out their sledgehammers, and tear down some
walls of their own.

Tonight, I'm going to touch upon some points from the Reagan era,
where after listening and reading about some of the things that
took place during his two-term presidency from 1981-1988, and
events that followed, investors dug in with a realization that
things might not be all that different today, than when President
Reagan was readying to run for a second-term.

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



In this morning's 11:00 AM EDT update we looked at the SPX as it
had just cleared its WEEKLY R1 of 1,130 and downward trend.  I
would argue that today's broad sector gains were largely driven
by what would be characterized as a patriotic rally, where
investors and traders reflected on the state of the current
economy, current geopolitical events today, compared them with
similar, but not nearly as troubled times as found in the late
1980's, and sent stocks higher.

A copy of President Reagan's "Tear Down This Wall" speech.
http://www.reaganfoundation.org/reagan/speeches/wall.asp

I took some time this afternoon to read the above speech.  It is
said that we can learn from history.  I'm old enough to remember
the 1980's and after reading above speech, current times seem
rather similar.  Can history repeat?

U.S. Market Watch - 06/07/04 Close



Was it President Reagan's rather optimistic outlook on life, or
his ideals that impacted today's trade?  I say YES!  I don't
think it was MGM Mirage's (NYSE:MGG) $44.84 -2.58% bid for
Mandalay Resort (NYSE:MGB) $70.23 +16.52%, or Wal-Mart (NYSE:WMT)
$57.50 +1.6% saying June same-store sales were tracking at the
low end of growth targets that would have triggered today's round
of bullish enthusiasm.  It certainly couldn't have been Al-
Qaeda's repeated threats of terrorism.

In the final 75-minutes of trade, the Biotechnology Index (BTK.X)
512.13 -0.03%, which had traded fresh session lows, rallied late
as bulls bid the bulk of sectors to their session highs by the
close.

Market Snapshot / Internals - 06/07/04 Close



The major indices did "stall" from 12:00 to 01:00 PM EDT.  Either
traders took a break for lunch, or the Reuters report just prior
to 12:00 that Al-Qaeda was warning about coming attacks to the
western U.S. and upon American (as in United States) airline
flights gave reason to pause.  Both the Tick and TRIN look very
"overgought" near-term, but certainly depict a bullish bias
toward today's close.

While A/D lines at both the NYSE and NASDAQ were decidedly
bullish, the expansion of new 52-week highs versus new 52-week
lows at both exchanges continues to build, with strong bullish
leadership present.

NYSE Composite ($NYA.X) Chart - Daily Intervals



I've placed a conventional retracement bracket on the NYSE
Composite ($NYA.X) chart from the 52-week high close of 6,780 to
the most recent relative low close of 6,231, where each break
higher and close above a level has refused to fall back below the
level just broken.  6,570 becomes the short-term level of
support, but as the 50-day SMA begins to round higher, 6,505,
downward trend, and 50% retracement have a more formidable look
as support.

NASDAQ Composite (COMPX) Chart - Daily Intervals



A quick WEEKLY Interval review of the NASDAQ Composite (COMPX)
2,020.62 +2.12% (from May 26 Index Trader Wrap), which broke
above the psychological/technical 2,000 resistance today, and now
challenges its downward trend.  Not nearly the bold break above
trend as seen in the NYSE Composite ($NYA.X) or the S&P 500 Index
(SPX.X), but the Berlin Wall didn't fall the day after President
Reagan's speech to West Berliners.

On November 9, 1989, the border separating Western from Eastern
Germany was effectively opened and is used by historians to
symbolize the end of the Cold War.

I must say, that when I was watching this weekend's historical
review of the Reagan presidency, I would have viewed current
times, though difficult, not nearly as tense as those found in
the 1980's, when the world seemed to be on the brink of nuclear
destruction.

Some will say that President Bush is currently shaping world
history in Iraq, perhaps the Middle East.

S&P 100 Index Chart - Daily Intervals



Similar to the SPX, the OEX broke and closed above its downward
trend, aided in part by the S&P Banks Index (BIX.X) 350.83
+1.31%.

S&P Banks Index (BIX.X) - Daily Intervals



Today's gains for the S&P Banks Index (BIX.X) is vastly different
than what we've seen after the past two nonfarm payroll reports,
where the BIX.X extended losses after both of those reports, as
Treasury YIELDs moved sharply higher on fears the Fed was going
to have to establish an AGGRESSIVE tightening mode, which would
send the economy back into recession.

When President Reagan implemented his strategy of tax cuts and
increased military spending, thus the highly criticized
ballooning deficit, the prime rate of interest stood at 14% in
1982, down from its record high of 21.5% as the Federal Reserve
made it easier to borrow money.  The unemployment rate stood at
10.1%, the highest since 1942.  By 1984, the unemployment rate
had fallen to 7.1%, as did interest rates.

Some key points/events during the Reagan era at this
http://userpages.umbc.edu/~cgehrm1/pres_site/presidents/rr.html

Pivot Analysis Matrix -



SPX/SPY/OEX all saw closing trade at their MONTHLY R1s, where it
would be confirming bullishness from the INDU above correlative
DAILY R1 (10,423) and MONTHLY R1 (10,432) that would lend itself
to further gains.

With NDX/QQQ/SOX moving ABOVE their WEEKLY Pivots, I would have
to think first sign of ANY weakness would come below today's
lows.

Jeff Bailey


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

I'm Not Avoiding Intermarket Analysis Anymore
By: Jane Fox

In the last article I wrote on Intermarket Analysis, "Avoiding
Intermarket Analysis",
http://www.OptionInvestor.com/traderscorner/tc_051304_2.asp I
alluded one of the principles of intermarket behavior that
commodity-related stocks usually peak before the commodity. I
would now like to expand on this statement and see if this is true
for Oil and Oil stocks and if so can we use it in other markets
like Gold.

Usually commodities and their related shares move in unison. When
Crude oil moves up the Oil Services Index (OSX, the most widely
used index for oil shares) should be moving up at the same time.
When gold moves up you would expect to see the Gold and Silver
Sector Index (XAU, the most widely used index for gold shares)
move up at the same time. But there are times when they do not
move in unison and this divergence can be an early warning of a
trend change. I believe we, as traders, could take advantage of
these divergences but first let's prove or disprove this theory.

I use Qcharts for charting and it does not give me a continuous
contract for oil so I will be using StockCharts.com continuous oil
contract symbol $WTIC. Here is a chart of Crude Light Oil back to
2001.




And here is the OSX.X.



Here are the two together using Stockcharts.com Perf charts. I
have put magenta boxes around three occurrence since 2001 of when
I saw the oil shares diverge from the Light Crude futures
contract.




I would now like to examine each of these divergences
individually. Please take note that when I zoomed in on each of
the divergences the scale on the pref chart changed so the
placement of each line will be a little different from the above
chart.




In September 2001 the OSX (blue line) hit a low of 59.38 then made
a higher low on November 15th marking the end of OSX's decline.
Light Crude (red line) on the other hand was in the process of
making a bottom but did not hit its ultimate low at $17.45/bbl
until the OSX made its higher low on November 15th. Oil
subsequently rallied from the November 15th lows at $17.45/bbl to
a high of $30.77/bbl on October 1st 2002.

How let's take a look at the second divergence I found.



Oil was in rally mode from November 2002 to March of 2003 when it
hit a high of $37.00/bbl.  However, the OSX was another story.
After making a series of higher highs from October to December
2002, OSX hits a high of 92.90 on December 16th 2002 but cannot
maintain its rally from there and makes a series of lower highs.
It tries another rally and tops out in March 2003 but lower than
the high made in December 2002.  This lower high should have been
a warning the rally in oil was just about over. From the high in
March 2003, oil started a decline that never ended until May 2003
when it bottomed at $25.00/bbl.




The last divergence I would like to take a look at is the one we
are currently seeing and to me it is the most blatant. OSX hits a
high of 110 in March 2nd 2004, then a lower high at 109.33 on
April 27th. Now not only is the OSX making lower highs it is also
making lower lows definitely an indication the OSX rally is over.
However, what is Light Crude Oil doing? It is hitting all time
highs, highs that have never been recorded before. Could this be
the end of Light Crude Oil's rally? Only time will tell for sure
but technically I would be willing to say yes. However, there are
other factors at work in the market that are not factored into
charts. Factors like the geopolitical climate and the ever-present
threat of terrorism. Any one of these factors could easily put
pressure on the price of oil and force it to still new all time
highs. But for now I will stick with the charts and look at the
situation from a technicians point of view.

With that said, from this analysis I think we can safety say this
theory works for Oil and Oil shares (at least it has since late
2001) but how do we profit from it? You could short the Light
Crude futures but most readers probably do not trade futures. Even
if you did trade futures I would not suggest it. I trade futures
and have wanted to short this contract many times in the last few
weeks. On three different occasions, when July Light Crude Oil
reached what I thought was good entry I chickened out. Why did I
chicken out? I don't know maybe because I had never traded this
commodity before and didn't have a feel for it, I truly don’t
know. All I know is my gut feeling to not trade was a wise
decision. Each time I would have put on a trade the contract
reversed on me and took out the stop I would have placed. That was
enough for me say I will stand aside. This contract has been one
wild ride lately so I think we may need another vehicle to profit
from this divergence.

We need a vehicle that most traders can trade. I realize there are
a lot of traders that do not short or have accounts that allow
shorting, so I will stick with vehicles that have options because
you need to be able to profit from these divergences up and down
and without shorting you need options to trade the downside. I
would like to add here also that I very rarely trade options on
individual stocks and usually stay with indexes or ETFs. The
reasons for this are a discussion for another time.

There are a few optionable index or ETFs you can use. One is the
iShare Dow Jones U.S. Energy Sector Index fund (IYE), another is
Oil Service Holders (OIH), the CBOE Oil Index (OIX) or the Oil
Services Index (OSX). Since we have been using the OSX for
comparison I will stay with this index.

Here is a PnF chart of the OSX.


First of all, as you can see it is a row of "O"s, a good start for
a bearish trade. Second a red downtrend has started to build.
Third it has a Bearish Price Objective of 80. From the PnF chart a
trade of 96 would be a double bottom breakdown and probably a good
bearish entry. How lets look at the bar chart.




This is a picture for bears if I ever saw one. First of all you a
MACD making a bearish cross below the 0 line, making the MACD
cross all the more bearish. Second you have a Head and Shoulders
formation with the neckline at 96, which matches our double bottom
breakdown from the PnF charts. However, the fly in the ointment is
the 200 MA sitting at 95.6, which could cause some trouble.
Looking back at the PnF chart I see an entry at 95 would be a
triple bottom breakdown and would get it past the 200MA and may be
a better entry. One more thing I would like to mention is for
readers to take a look the IYE and see if you can see a head and
shoulders forming on this ETF also, another bearish development
for the Oil shares.

I have spent more time here than I planned but I did promise to
look at Gold and the Gold shares so I will only examine the most
current divergence I found. Here is the stockcharts.com perf chart
comparing $Gold (continuous contract for Gold) and the XAU.




XAU made a double top on December 1, 2003 and then on January 5th
2004 at 112 then formed another double top but at a much lower
level. Gold made a high on January 9th at 426 but then a higher
high on April 1 at 428. If you had been looking at the XAU you
would have know the second top at 428 was probably the end of the
gold rally. This one was a little tricky because the high on
February 17th at 416 was a lower high and you could have been
tricked into thinking that was the Gold top. Unfortunately there
are no guarantees in the market.

Well there you have it, I think enough proof that commodity shares
can be a leading indicator to the commodity when the two diverge,
however, you do have to have a big picture view in order to see
these divergences.

Remember plan your trade and trade your plan.

Jane Fox


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The Option Investor Newsletter                   Monday 06-07-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Stop Loss Updates: AET, AIG, BA, ERTS, MERQ, ZMH
Dropped Calls: None
Dropped Puts: None
Watch List: Bulls Getting Bold


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STOP-LOSS UPDATES
*****************

AET - call play
Raise stop from $81.50 to $81.95

---

AIG - call
Adjust from $70.50 up to $71.50

---

BA - call
Adjust from $44.00 up to $45.25

---

ERTS - call
Adjust from $48.00 up to $49.60

---

MERQ - call
Adjust from $44.00 up to $45.25

---

ZMH - call play
Raise stop from $83.00 to $83.95


*************
DROPPED CALLS
*************

None


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DROPPED PUTS
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None


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

Bulls Getting Bold

Ryland Group Inc. - RYL - close: 82.67 change: +3.95

WHAT TO WATCH: Housing stocks led the broad market rally on
Monday, with the $DJUSHB index vaulting higher by 4.69%.  RYL put
in a stellar performance of its own, smashing through the 3-month
descending trendline and the 200-dma on solid volume.  Today's 5%
jump feels a bit large for a chase here, but a pullback to confirm
support in the $80-81 area looks like a solid bullish entry. While
there's potential resistance near $85, we're looking for a rally
up towards the $90 level.

Chart=


---

Lowes Companies - LOW - close: 55.97 change: +1.60

WHAT TO WATCH: Last week's consolidation in shares of LOW looked
like basing action ahead of a renewed bullish move and the
breakout on Thursday and Friday over near-term resistance
solidified that view.  With the help of today's broad market
advance, the stock completed the process moving strongly through
the 200-dma and closing just a whisker below the $56 level.  With
strong resistance just overhead and then again near $58, a
momentum play doesn't really make sense.  But a mild pullback to
confirm support at the 10-dma would make for a solid entry ahead
of the expected run at $58.

Chart=


---

Maxim Integrated Products - MXIM - close: 50.02 change: +1.35

WHAT TO WATCH: Despite a temporary setback last week that dropped
the stock back from its first breakout attempt over $50, MXIM
looks ready for another bullish move after today's solid gain.
The rebound off of dual support at the 50-dma and 200-dma confirms
there is solid support in the $48 area and with a bullish PnF
chart, this looks like the place to start scoping out bullish
positions.  Entries look favorable near current levels with a stop
just under last week's lows.  Momentum entries will come on a
break over $52 as the stock moves through its bearish resistance
line.  Target a rally to the January highs in the $55-56 area.

Chart=


---

Synopsis Inc. - SNPS - close: 30.50 change: +0.73

WHAT TO WATCH: After languishing for the past 3 months following
the big gap down move in late February, shares of SNPS are trying
to make a comeback and are one again nearing strong resistance
just over $31.  Use a trigger of $31.40, which is just over the
March highs and the 200-dma, and then look for a rally back over
$34 to fill that gap.

Chart=


---


===================
On the RADAR Screen
===================

IBM $88.64 - Throughout the broad market rebound of the past few
weeks, IBM has been notable for its lack of participation.  Even
today's gain looks anemic when compared to the rest of the market
and this suggests nothing more than an oversold bounce that is
setting up a bearish entry point.  Note that the stock has been
unable to break the bearish descending trendline of the past 3
months and the 50-dma is bearing down as additional resistance.
Look for entries on a rollover from below the 50-dma and target a
break below last month's lows.

SYMC $46.31 - Due to the manner in which SYMC has lost its
relative strength over the past several weeks, we've been
suggesting that a failed rally back near the 50-dma would make a
favorable bearish entry point.  That scenario seems to be playing
out right now, with the stock wholly unable to participate in
Monday's rally and still stuck below all its short-term moving
averages.  Initial support comes in near $44, but we're looking
for a breakdown below $42 to test strong support at $40 about the
time the 200-dma rises near that level.

CI $69.00 - After breaking out of its bull-flag pattern a couple
weeks ago, CI has been making steady progress in its ascent back
towards horizontal resistance near $70.  A breakout over the early
April highs should have the bulls driving the stock towards next
resistance in the $75-76 area.  Use a trigger above $70.60 for
entry.


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