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Daily Newsletter, Sunday, 06/13/2004

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The Option Investor Newsletter                   Sunday 06-13-2004
Copyright 2004, All rights reserved.                        1 of 5
Redistribution in any form strictly prohibited.
Entire newsletter best viewed in COURIER 10 font for alignment

In Section One:

Wrap: Let Those Bulls Loose!
Futures Market: See Note
Index Trader Wrap: IT'S A LEG
Editor's Plays: Back in Favor Again
Market Sentiment: Unmotivated
Ask the Analyst: Accenture, outsourcing, and politics
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 6-11         WE 6-04         WE 5-28         WE 5-21
DOW    10410.10 +167.18 10242.8 + 54.37 10188.5 +221.71 - 46.13
Nasdaq  1999.87 + 21.25 1978.62 -  8.12 1986.74 + 74.65 +  7.84
S&P-100  554.90 +  7.82  547.08 +  1.95  545.13 + 10.80 -  1.14
S&P-500 1136.47 + 13.97 1122.50 +  1.86 1120.64 + 27.08 -  2.10
W5000  11045.95 +109.64 10936.3 +  9.95 10926.4 +301.26 -  9.61
SOX      476.28 +  5.37  470.91 - 17.95  488.86 + 30.68 +  7.19
RUT      569.12 +  1.37  567.75 -   .53  568.28 + 22.47 +  2.05
TRAN    3024.71 + 32.43 2992.28 + 44.27 2948.01 + 82.26 + 12.86
******************************************************************

Let Those Bulls Loose!
by Jim Brown

That was the most remembered comment from President Reagan
when he last visited the NYSE. Multiple interviews with
floor traders this week brought tears to their eyes as
those words were remembered. To spark emotion from hardened
traders more than ten years after the fact is a stark
testimony to the strong feelings Americans had for him.

Holiday volume produced a surprise on Thursday with the
markets finishing positive for the day. I say a surprise
because the extreme event risk over the next three days
could have easily turned into selling as investors moved
to safety. Is this a sign that investors have completely
discounted the potential for future terrorist attacks?
More likely it is a sign that greed is still alive and
well.

Dow Chart - Daily


Nasdaq Chart - Daily


SPX Chart - Daily



Thursday started off with a jolt as Jobless Claims rose
to 352,000 for the week and a seven week high. The prior
weeks claims were revised up to 340,000. This pushed the
four week moving average to 346,000 and dangerously close
to the 350K mark where economists start getting worried.
The markets shook off the news very quickly on comments
that holiday adjustments probably skewed the number and
it will revert to lower levels next week. More importantly
continuing claims fell under 2.9 million and the lowest
level since the recovery began. This was a -106K drop
for the week. This suggests there are still jobs being
created and filled. The pace of job creation is expected
to slow over the summer months to something just over
125K and pickup again in the fall.

With the Fed meeting only two weeks away the Import and
Export Prices were viewed with inflation in mind. Import
prices jumped +1.6% mostly due to higher oil prices. The
core rate excluding energy still rose +0.4% and more than
expected. Export prices rose +0.3% with agricultural
prices slowing their upward sprint. With inflation seen
in almost every recent economic report there is no doubt
the Fed will hike at the end of this month. How high is
still up for discussion.

There was little stock news this week to produce major
moves. Once the decision was made on Monday to close the
exchanges the volume died for the rest of the week. Each
time a Reagan special coverage alert hit TV screens the
volume came to a halt until the event came to a close.
Thursday barely traded three billion shares despite the
Russell shuffle announcement coming on Friday and quarterly
option expiration ahead. While Friday is the official
day of mourning the entire week had a somber mood.

For the week the Dow gained +167 points but most of those
gains came on Monday and Tuesday. Wednesday and Thursday
were spent treading water at the 10400 level and exactly
where it managed to close for the week. As I said Tuesday
the 10400-10550 level is very strong resistance and nothing
has changed. The Dow did manage to blast through the 10325
resistance level I discussed last Sunday with a monster
gap on Monday morning. I had speculated that a futures
gap up on Monday could likely accomplish that feat where
the prior week of chipping away at resistance had failed.
With the Dow closing at 10400 ahead of weekend event risk
it appears we could be looking at another repeat performance
on Monday with no negative events.

The Nasdaq was not able to follow through on its resistance
test like the Dow. The Nasdaq stalled at 2020 and then fell
back below 2000 by Thursday's close. The major battleground
for the Nasdaq was the SOX and the Russell. The Sox failed
at the 100 dma three days last week at 487. There was a
significant bout of selling on Wednesday and the Sox
returned to languish at 475. Without the Sox the Nasdaq
cannot advance. Surprisingly the Semiconductor Industry
Association upgraded their estimates for chip sales for
2004 to record levels and it had no impact. The semi
sector appears to be priced to perfection when multiple
upgrades in one week cannot move it higher.

SOX Chart - Daily



Also impacting the Nasdaq and the Sox is the Russell
rebalancing coming at the end of June. This annual event
produces strong volatility in the small caps and the index
dropped -10 points on Wednesday in advance of the release.
The changes to the Russell indexes are normally announced
this Friday with two weeks until they take place at the
end of June. Because the change in the indexes is announced
two weeks in advance there is plenty of opportunity for
volatility as traders jockey for position.

The Russell 2000 is a very widely followed index and much
more so than the Russell 1000. Russell calculates the top
3000 largest market cap stocks and then splits them into
the top 1000 as big caps and next two thousand as mid/small
caps. Because of the methodology there are always a large
number of stocks which have grown their market cap moving
out of the lower 2000 and into the upper 1000. Obviously
those moving higher were already larger companies which
were already heavily weighted in the 2000 index. When they
move out of the index funds must sell them. Since the move
is announced two weeks in advance there is plenty of time
for aggressive funds to sell in advance of the actual
change in order to get out before the general fund groups
all dump on the same day. I have probably already confused
everyone but the bottom line is a volatile Russell for the
two weeks after the announcement. With the announcement
coming on a market holiday this week we saw selling in
the Russell leaders on Wednesday in advance of the Friday
announcement. This produced a -10 point drop on Wednesday
and a flat index on Thursday. Monday could see additional
volatility as funds react to the holiday announcement.

I went through this complicated explanation to show why
I think the Nasdaq may have trouble making headway next
week. The Russell typically drops over this period with
the drop from the pre announcement levels to the post
announce low averaging about 26 points over the last four
years. If the -10 point drop on Wednesday was part of this
then we could see a muted impact but still an impact.

Russell-2000 Chart - Daily



We still have the problem with the indexes at the bottom
of a very strong resistance range and the VXO at critical
reaction levels as I explained on Tuesday night. We had
the rally to these resistance levels on Tuesday and the
VXO hit a 52-week low. We followed that event with a sell
cycle but one that was weak and lacked any follow through.
The indexes simply rested from their run and consolidated
at the bottom of the resistance range. Thursday's small
rebound positioned them for takeoff next week and sent
the VXO back below 14 once again.

The stage is set for the state funeral on Friday and
for the markets to make a critical resistance test on
Monday. We know how the Reagan services will end with
the cameras staring at a California sunset on Friday.
We do not know how the resistance test will end on Monday.
There are no major economic reports on Monday and the
markets will be able to soar to their hearts content if
they are able. Tuesday is a different story. We have
several critical reports and Greenspan will testify
before the Senate Banking Committee on his confirmation
process. You can bet there will be some pointed questions.
I still feel the markets want to move higher but will have
trouble with the next hurdle. The week could boil down to
Monday's market action. A resistance failure on Monday
could trap us in a range for the rest of the week as the
economic reports begin to flow again and the earnings
warning cycle heats up.

I see strong Dow resistance from 10400-10550, Nasdaq
2020-2060, SPX 1140-1150. Those are big ranges and strong
resistance. However, support levels continue to rise and
selling pressure has moderated significantly. We are
definitely coming to a crossroads in the market and
Monday should be the next signpost. A wrong turn could
doom us to weeks of congestion as we approach June 30th.
The right turn could lead to a freeway above those levels
and a real breakout into a summer rally. Either way it
will be an interesting drive.

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

IT'S A LEG
By Leigh Stevens
lstevens@OptionInvestor.com

THE BOTTOM LINE –
My trading mentor used to say of a strong move, "it's a 'leg'".
(A market "leg" being more powerful than just a price "move".) It
looks like I should revise my upside objective for the S&P
portion of the market in terms of the S&P 500 (SPX) as, in the
just-ended trading week, SPX reached my 1140 target. SPX looks
poised to at least hit its early-April highs again at 1149-1150.

Strong up moves tend to occur when both a decent earnings trend
is present and there is significant disbelief in the sustaining
power of an advance – this "sentiment" was borne out by quite
bullish call-put numbers in my equities-only COBE options volume
indicator on Thursday, as put volume was greater than call volume
for the second end of the week trading day in the past two weeks.

As also anticipated, the Nasdaq was struggling to churn through
significant resistance around 2000 in the Composite (COMP). A
daily, and weekly, close above 2000 is needed to suggest that
COMP can eventually advance to 2052-2059 resistance around its
late-April rally peak as the Index was trending down. With the
Semiconductor stocks struggling it may be hard for the Composite
to get above 2020.

THURSDAY'S TRADING ACTIVITY –

The NUMBERS -
The S&P 500 Index (SPX) gained 5.14 points (0.5%) to close at
1,136.47 – putting it up 1.2% on the week

The Dow Jones Industrial Average (INDU) rose 41.6 points to
10,410.  21 of its 30 stocks were up on the day. INDU ended with
a 1.6% weekly gain.

The Nasdaq Composite Index (COMP) was up only 9 points to
1,999.87, so stayed under the key 2000 level. COMP was up
slightly over 1 percent for the week.

THE REPORTS -
Data showing import prices rose by the biggest amount in over a
year and a mixed jobless claims report did not provide any
noticeable influence on Thursday.  Many market professionals got
out of town for a 3-day weekend.

The U.S. Labor Department said import prices rose 1.6% in May,
the biggest increase in 16 months, due to higher oil prices

The Labor Department also said first-time claims for state
unemployment insurance rose 12,000 in the latest week to a 7-week
high of 352,000, versus expectations for a fall to 336,000. The
4-week average rose 4,750 to a 6-week high of 346,000.

THE TALK –
The low volume on both exchanges is seen as a problem in terms of
kicking this market into a stronger up trend – but this is not
likely to change ahead in the summer slow season. A relatively
light 1.2 billion shares traded on the New York Stock Exchange
and only 1.3 billion shares on the Nasdaq.

The announcement that Target (TGT) sold its Marshall Field's unit
to May Department Stores for $3.2 billion provided an early spark
to retail stocks these didn't last long – TGT ended up 0.3% but
was up nearly 4% to a 52-week high earlier in Thursday's trading.

The Semiconductor stocks was able to rally early, but the boost
from positive news – the Semiconductor Industry Association (SIA)
said late Thursday that it expected global 2004 sales to rise 29%
to a record $214 million due to strong chip demand for computers,
cell phones and other electronic gear – did not have a sustaining
impact.

OTHER MARKETS –
July crude futures ran up 91 cents to $38.45, after the
International Energy Agency raised its forecast on oil demand.
The backdrop to this is that by midweek, the nearby futures price
had dropped to a 6-week low of $36.45 intraday.

Bonds seesawed into positive territory after the U.S. Treasury's
10-year note auction was relatively well received. The yield on
the 10-year T-note was off by .023% to yield 4.79%.

Against the euro, the dollar dropped .6% to $1.21, after surging
1.7% on Wednesday. The yen rose sharply against the dollar, by
nearly a full percent, to 109.31, after Japanese machinery orders
for April were much stronger than expected.

MY INDEX OUTLOOKS –

S&P 500 Index (SPX) – Daily chart:

The key determinants of seeing the progression of the reversal
and subsequent rebound were the rebound from the 200-day moving
average, the decisive upside penetration of the 21-day (avg.),
then the 50-day and finally the down trendline (dashed blue
line).

Now what?  We have to look to the prior highs – red arrow – and
the upper trading envelope line as areas where the rally will
likely at least slow down or flatten out.  The 1150 area, if
reached, is not a place to necessarily buy Index puts – but is
sure a reasonable profit objective for calls bought at lower
levels.




I see key support as being at 1120.  A decline to and ability to
hold in this area would suggest a shallow correction only and a
still strong bull trend - a close below 1120 puts us on alert for
a correction to 1110; or, deeper, back to the 1100 area.

I opt for the shallow correction only view given this very
bullish – in my opinion – situation of heavy put activity after a
strong advance. A bullish reading on my Call to Put volume
indicator is a low ratio of daily call to put volume.

S&P 500 Index (SPX) – Hourly chart:

The S&P 500 Index was in a trading range prior to this past week
– the breakout above the upper end of this range was fairly
predictable as these things go – there was a next move up equal
to the prior range as highlighted on the hourly SPX chart below -




Key near support is at 1125-1127, with more major technical
support implied by the intersection of the up trendline at 1110
as noted by the green up arrow there.  If there is a close under
1125, a downside objective to 1110 becomes a good possibility.

S&P 100 Index (OEX) – Hourly chart:

The S&P 100 (OEX) broke out above its well-defined uptrend
channel as seen on the hourly chart below. The move to above this
channel now suggests an objective up to the area of prior highs
around 560.

Key near support is noted at the first green arrow, which is a
level equal to the last down swing low in the 552-553 area.

More major support I calculate to be at the lower end of the
prior uptrend channel at around 544-545.  Stay tuned on the next
move but I think its still higher before OEX comes back down
much!




I said last week to favor put purchases at 550-551 (exit on an
hourly/close above 552) and there was a quick exit if this trade
was taken.  The technical divergence that had been occurring with
higher (price) highs and a declining RSI did not foretell a
downside reversal – hourly price/RSI divergences are less
reliable (for trend reversals) than if seen on daily charts.

Dow Industrials (INDU) Hourly:

The Dow 30 (INDU) broke out above its key technical resistance at
its down trendline on its daily chart by the move above 10,360.
I found more to highlight this week on the hourly chart however -

There is well-defined uptrend price channel that is seen, with a
intersection at the upper end showing at 10,500 – I would take
this area as a next possible objective and next likely
resistance.  The Dow did fulfill the triangle objective at
10,370.

Recapping: a series of lower highs and higher lows from 5/12 to
5/24 formed a triangle – going back to the first low anchoring an
up trendline and drawing one side of a hypothetical triangle
gives a distance "A". Adding this distance to the breakout point
(above the down trendline) is line "B". The top of B (10,370)
becomes a minimum objective for the next advance.




Going back to the uptrend channel – support is implied at 10350
just under the lower channel line (green up arrow) and
resistance, as mentioned at the top of the channel (10,500) – but
we also have to keep an eye on whether prices clear last week's
high at 10,430.

A recent Trader's Corner article of mine covered "triangles" and
price objectives implied by triangle breakouts - see
http://www.OptionInvestor.com/traderscorner/tc_060304_1.asp

Nasdaq Composite (COMP) Index  – Daily:

Prices here are still more or less confined within its downtrend
pattern, although there were three highs (and two consecutive
closes) above the down trendline.  However, I like to see prices
stay above a trendline like this – otherwise any upside
"breakout" is a bit suspect.

Therefore my test for the Nasdaq Composite (COMP) is that it get
above and stay above 2000-2005. If there is a strong move above
this area, next resistance is at 2050; then at 2070-2075. The
Nasdaq is far from taking a lead role in this recent market
strength.

I estimate that key near support is now at 1960-1965.



As per my comments of a week ago – the Composite needs to
maintain closes above 2000 and then hold this area on subsequent
pullbacks to get the chart picture bullish.  Then the focus is
watching whether COMP can rally to, and ultimately above, its
prior highs in the 2050 and 2075 areas.

Nasdaq 100 (NDX) Index  – Hourly:

I noted back when that the rounding bottom that could be seen or
imagined by the pattern of hourly lows was the bullish tip off
that a strong rally could lie ahead.  Rounding bottoms and tops
are not seen that often but are reliable in suggesting trend
reversals. Again, comes the question, now what?




As long as the hourly up trendline is not penetrated by more than
a brief opening or closing period, chances are good that the
Nasdaq 100 (NDX) will re-test its prior highs around 1495 and
just under 1500 as noted at the dashed (red)level line. I think
that NDX can get up to the 1500 area, then my crystal ball gets
cloudy. There is likely selling interest (resistance) at 1520
next.

Nasdaq 100 tracking Stock Daily chart (AMEX:QQQ:

Last week I suggested having shorting interest in QQQ if the
stock got up to the 36.50 area but of course the stock got above
this after a sideways period of consolidation and a brief dip to
36.  The tip off on the last rally was the move above the prior
line of tops around 36.50 then the pullback to 36.50 – what had
been resistance "became" support, showing that the market wanted
to go higher.

I think that the Q's could advance again and make yet another new
high, around 37.50 or higher – even to equal the late-January top
that formed in the 38.50 area.  More important sometimes as a way
to trade the stock – rather than focusing on a price level,
making use of the 5 and 21-day hourly stochastic pairing – when
both are at the bottom look for a buy, when both at high extremes
look for a tradable top.




First support implied by the current hourly up trendline is
around 36.50.  36.00 is the key support implied by the last swing
low.  The chart picture turns mildly bearish if the Q's can't
stay above 36.

I was figuring QQQ to be in a broad range between 38 and 34 this
month.  Maybe less likelihood of 34, and the probably range
becomes 35.50 – 38.50.

Good Trading Success!


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

Back in Favor Again

I have profiled Providian Bank several times over the last
couple years with the most memorable back in 2002 at $3.00
with a long term hold of the stock. Since March of 2003 it
has been making steady progress back from the ranks of the
unloved and hit $14.85 last week.

Providian has been under attack on the legal front for the
last couple years as well as having their huge portfolio
of credit card debt called into question when the jobs
market was crashing.

On Monday they announced a settlement of their last class
action suit for $65 million with the proceeds to be paid
by insurance. (key word there = insurance) This frees them
up to concentrate on business once again.

With the jobs market recovering and credit defaults dropping
the PVN portfolio is doing great. Last week PVN sold $650
million in securitized debt backed by their portfolio.

In the last three months Jefferies, Legg Mason and Fulcrum
have all upgraded PVN to a buy.

Everything appears to be looking up for Providian. The
stock gapped up on the news of the suit settlement and
then saw profit taking from its month long gains the rest
of the week. A delayed sell the news event. The resolution
had been expected for some time.

I think PVN has the potential to go to $20 by year-end
with all the storm clouds fading. With PVN at $13.95 today
and the Jan-$15 calls at $1.05 I think they are a bargain.
They traded at $1.55 earlier in the week before the profit
taking set in.

This is a long term hold on a straight call option.

Buy Jan-$15 Call ZLA-AC $1.05
Target PVN $20.00

(The Jan-2006 $15 calls are only $1.95 and I could see
PVN back at $30 before then.)

PVN Chart - Weekly





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

DITC Put Update $21.21

DITC gapped up Monday over $21 and never looked back.
Chalk this one up as a loser and move on. The option
was 75 cents when profiled and closed at 25 cents on
Thursday.

http://members.OptionInvestor.com/editorplays/edply_053004_1.asp

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

TYC Call Update $31.70

New 52-week highs are beginning to be commonplace with TYC
moving over $32 during the week. Our $1 option traded over
$2.40. This is the last update on Tyco.

http://members.OptionInvestor.com/editorplays/edply_052304_1.asp


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


News Corp Update $36.04

NWS was all over the map this week with a spike to $37.08
and a gap up or down every day for the week. With DirecTV
selling positions in TIVO and its stake in Hughes Software
there was plenty of news. DirecTV is controlled by NWS.

Current position: Long (6) Jan-2006 $40 Calls WLN-AH @ $3.83

http://members.OptionInvestor.com/editorplays/edply_041104_1.asp

http://members.OptionInvestor.com/editorplays/edply_041804_1.asp


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

Unmotivated
- J. Brown

The markets have been very flat the last three days because there
is little reason for investors to move.  The major indices are at
or near significant resistance but there was no impetus to buy
stocks with the long weekend ahead of them.  What surprised us
was there was not much selling pressure ahead of the weekend
given the opportunity for what many are calling "event risk".
Any time there is a long weekend and one with national events
like the funeral tomorrow investors generally turn cautious and
minimize or hedge positions.

Investors are focused on more than just the weekend.  Next week
we have a number of fed governors offering comments so they can
prep the markets ahead of the two-day FOMC meeting at the end of
June.  We might get the PPI report out next week too if the
government can finish their calculations.  The PPI will cast more
light on the state of inflation and this could determine whether
or not we get a 25 basis point hike or more.  Most analysts are
only expecting a 25-point hike in June so this shouldn't change
if the PPI comes in near the estimate for a +0.05% jump in
prices.  Unfortunately, traders are unmotivated to make any moves
until after the FOMC meeting and the interest rate decision is
know.

What should be a concern for traders are the volatility indices.
The VXO or the old VIX is back under the 14 level again.  Jim
discussed the VXO and how it generally signals market tops in his
wrap on Tuesday.  Currently with the VXO this low it's signaling
that investors have almost no fear.  When everyone's leaning the
same direction it usually time for a change.  Interpreting the
volatility indices is more art than science and the signals can
be a few days off but we need to be careful when consider new
bullish positions.  The VIX and VXO can always trade lower, which
is something we've learned over the past year or two.



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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8871
Current     : 10410

Moving Averages:
(Simple)

 10-dma: 10290
 50-dma: 10266
200-dma: 10101



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  962
Current     : 1136

Moving Averages:
(Simple)

 10-dma: 1127
 50-dma: 1120
200-dma: 1090



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1180
Current     : 1481

Moving Averages:
(Simple)

 10-dma: 1470
 50-dma: 1448
200-dma: 1433



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

CBOE Market Volatility Index (VIX) = 15.04 -0.35
CBOE Mkt Volatility old VIX  (VXO) = 13.91 -0.85
Nasdaq Volatility Index (VXN)      = 21.23 -1.12


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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.15        486,746       559,901
Equity Only    1.01        364,599       367,379
OEX            1.16         27,569        31,867
QQQ            3.97         22,707        90,205


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

Bullish Percent Data

           Current   Change   Status
NYSE          65.8    - 1     Bear Confirmed
NASDAQ-100    40.0    + 0     BULL ALERT
Dow Indust.   70.0    + 0     Bear Confirmed
S&P 500       63.6    + 0     Bear Confirmed
S&P 100       63.0    + 0     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: 0.77
10-dma: 0.94
21-dma: 1.01
55-dma: 1.00


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    1607      1533
Decliners    1201      1472

New Highs      45        33
New Lows       24        31

Up Volume    844M      724M
Down Vol.    568M      578M

Total Vol.  1458M     1327M
M = millions


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

Commitments Of Traders Report: 06/01/04

! Please Come Back and Check the Market Sentiment on
Tuesday June 15th for New COT Figures & Commentary

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

Action in the large S&P 500 futures contracts has been slow.
Commercial traders remain net short but the bearish interest has
been declining for two weeks now.  Small traders' positions are
virtually unchanged.


Commercials   Long      Short      Net     % Of OI
05/11/04      401,365   421,672   (20,307)   (2.5%)
05/18/04      394,352   423,258   (28,906)   (3.5%)
05/25/04      400,713   420,764   (20,051)   (2.4%)
06/01/04      406,665   421,681   (15,016)   (1.8%)

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
05/11/04      135,534    76,987    58,547    27.5%
05/18/04      139,647    74,597    65,050    30.4%
05/25/04      136,086    79,060    57,026    26.5%
06/01/04      137,100    79,583    57,517    26.5%

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

Wow!  Commercial traders are completely undecided with a
dead heat between longs and shorts.  Meanwhile small traders
have turned bullish.


Commercials   Long      Short      Net     % Of OI
05/11/04      378,696   362,887     15,809     2.1%
05/18/04      390,484   357,157     33,327     4.5%
05/25/04      353,722   336,406     17,316     2.5%
06/01/04      325,865   325,274        591     0.0%

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
05/11/04      101,199     94,408     6,791     3.5%
05/18/04       62,216     87,269    25,053    16.8%
05/25/04       91,515    100,759   ( 9,244)  ( 4.8%)
06/01/04      111,484     90,625    20,859    10.3%

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


NASDAQ-100

Commercial traders have hit new bullish extremes we've not
seen in many months.  Right on track small traders have hit
bearish extremes.


Commercials   Long      Short      Net     % of OI
05/04/04       56,931     35,209    21,722   23.6%
05/18/04       58,376     37,528    20,848   21.8%
05/25/04       59,891     37,630    22,261   22.8%
06/01/04       59,944     34,784    25,160   26.6%

Most bearish reading of the year: (21,858)  - 08/26/03
Most bullish reading of the year:  25,160   - 06/01/04

Small Traders  Long     Short      Net     % of OI
05/11/04        9,716    21,072   (11,356)  (36.9%)
05/18/04        9,843    18,935   ( 9,092)  (31.6%)
05/25/04       10,184    20,653   (10,469)  (33.9%)
06/01/04        9,755    30,025   (20,270)  (51.0%)

Most bearish reading of the year: (20,270) - 06/01/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Not much action going on here with the commercial traders.
They remain slightly bearish on the Dow.  Small traders are
growing more bullish.


Commercials   Long      Short      Net     % of OI
05/11/04       22,614    21,507    1,107       2.5%
05/18/04       22,257    22,444   (  187)     (0.4%)
05/25/04       23,578    24,632   (1,045)     (2.2%)
06/01/04       23,397    24,393   (  996)     (2.0%)

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
05/11/04        7,009     7,640   (  631)   ( 4.3%)
05/18/04        9,098     6,591    2,507     16.0%
05/25/04        9,623     6,614    3,009     18.5%
06/01/04        9,000     6,021    2,979     19.8%

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

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


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

Accenture, outsourcing, and politics

My name is Mxxxxxx Bxxxxxx I have been a subscriber for more than
2 years.  I would like to know your opinion on ACN (Accenture).

I don't recall having ever received an e-mail from M.B, but with
my Ask the Analyst e-mail all but dried up as the seasonally slow
summer period is not in full swing combined with a long-time
subscriber asking for an opinion, let's look at Accenture Ltd.
(NYSE:ACN) $25.15 +1.28% and see what we can come up with.

Investors that have been wonder about "outsourcing" American jobs
overseas might want to read some of this article.  I think it may
help bring some insight into the whole outsourcing dynamic that
has been getting a lot of press in recent months.

Accenture Ltd. may not be a name many of us are familiar with.
Oh, I've heard of them, but I didn't know that Accenture was
formerly known as Andersen Consulting.  That's a name I remember
and associate with management consulting.

Sure enough, this Bermuda-based global management and technology
consulting firm has over 110 offices in 48 countries, and for a
fee, advises its clients on how best to utilize existing or new
technologies to formulate winning solutions under demanding time
constraints.

Heck.... sometimes I feel like I could use a helping hand during
the day, and I see that financial services is just one of the 18
industry groups Accenture provides consulting for.

Accenture is not a company I'm familiar with, but a cursory view
of their recent 10-Q quarterly report has the company looking
healthy, where business is certainly growing.  Some items noted
in their quarterly report also look to have the company
potentially benefiting on higher interest rates.

For the three months ended February 29, 2004 Accenture's revenues
grew 17% year-over-year (in U.S. dollars) before reimbursements
to $3.302 billion from $2.826 billion.

Why do company's incorporate in Bermuda?  One answer is to try
and mitigate tax liability.

Here's a http://biz.yahoo.com/e/040408/acn10-q.html to the Accenture's
most recent 10-Q if you're interested in reading all the
fundamental stuff, but something I'm learning is there's a
benefit to be found from rising interest rates!

For instance, while these are forecasts from Accenture, which I
would think the forecasts are based on some historical data, the
company touched on pension expenses.

In the United States and certain other countries, Accenture
maintains and administers defined benefit pension plans.  The annual
cost of these plans can be significantly affected by changes in
assumptions and differences between expected and actual experience.
Pension expense was $57 million and $34 million for the first six
months of fiscal 2004 and 2003, respectively.

What interested me when perusing Accenture's 10-Q was the
company's assumption that a one-percentage-point INCREASE in the
discount rate would decrease the company's annual pension expense
by $31 million, while a one-percentage point DECREASE in the
discount rate would increase the company's annual pension expense
by $5 million.

For those that may not know just what the Discount Rate is, it is
the interest rate charged by the Federal Reserve to member banks
for loans.  The Federal Open Market Committee is responsible for
adjustments to the Discount Rate, which is often raised or
lowered in conjunction with the more widely used Federal Funds
Rate.

Accenture then went on to say that SFAS 87 requires recognition
of a minimum pension liability if the fair value of pension
assets is less than the accumulated benefit obligation.  During
fiscal 2003, we (Accenture) recorded a charge to equity of $108
million representing an adjustment to increase our pension
liability by $180 million, net of a tax benefit of $72 million.
This charge was included in accumulated other comprehensive loss
in the shareholders' equity section of our balance sheet.
Additional charges to equity may be required in the future
depending on future contributions to our pension plans, returns
on pension plan assets and interest rates.

Don't you find Accenture's assumptions interesting?  Doesn't the
trend of outsourcing make some sense over the past couple of
years?  Doesn't it all tie in with the "mass outsourcing" issue
and "loss of quality jobs" during the past recession?

It makes sense doesn't it?  A pension plan is a liability at
first, as a company needs to make sure it is fully funded if it
is to eventually help supplement an employee's retirement.  As
the Fed has been cutting rates, then according to Accenture, and
probably every other company that provides a pension for
employee's, was most likely seeing their pension costs rise
as the Fed and other foreign government bankers were cutting
rates.

Wasn't it 9-months ago or so that GM was on the verge of
financial ruin as its pension liability was thought to be
insurmountable?  Then the stock market rocketed higher and
suddenly that HUGE pension plan GM has, was viewed as an asset!

Now I see why some economists are saying the U.S. could be on the
cusp of huge jobs growth in the months ahead.

If we believe, or at least think about Accenture's assumptions
that pension liabilities would FALL as the discount rate RISES,
then there might actually be an additional incentive for a
company to HIRE workers on a full-time basis.

Perhaps the Fed raising the fed funds rate from 1% and moving up
the discount rate from 2% has at least one potential positive
implication to shareholder's equity and a corporation's balance
sheet.

Let's get back to Accenture (ACN).....

One area I see accelerated growth at the top line has been the
company's "government" segment, where in U.S. dollar terms, its
government consulting business revenue jumped an impressive 29%
year-over-year for the recent quarter ended February 29, 2004,
where government contracts now account for just 13% of the
company's total revenue, but up from 11% in the year-ago quarter.
On a year-over-year basis, this 29% growth was the largest of all
business units, where communications/high tech was second,
showing 18% growth year-over-year.

This jump in government revenues serves as a nice transition to
some news this week (Wednesday, June 9, 2004) and a $10 billion
security contract that Accenture won for the U.S. Government's
Department of Homeland Security.

The news on Thursday is that the House Appropriations Committee
voted 35-17 to modify the Department of Homeland Security's $32
billion budget to prevent Accenture from implementing a program
that would track foreign visitors.

Good gravy!  Politics, politics, politics.

At issue is that some politicians now feel it is wrong for the
Department of Homeland Security to have awarded the contract to
Accenture, when this Bermuda-based corporation doesn't pay U.S.
taxes.

I want to scream!  Better yet... strangle some politicians as I
read different reports that say Accenture will pay taxes on the
awarded $10 billion contract.

Funny..... actually it isn't funny, but the other day somebody
was criticizing the Bush administration, I think there was a "D"
in front of his title, for moving too slowly on homeland security
issues.  Now it looks like a portion of homeland security is
going to be tied up as politicians argue if we should be awarding
contracts to non-US-taxpaying corporations.

Don't get me wrong.  I see the dilemma of whether a U.S.
taxpayer's dollar should be going to a foreign-incorporated
company that isn't paying U.S. taxes, but if something needs to
be done that could protect U.S. citizens, then let's get on with
it.  The Department of Homeland Security defended its awarding of
the contract to Accenture saying the company does have operations
in Reston, VA, and employees 24,000 U.S. citizens that do pay
U.S. taxes.

An Accenture (ACN) spokesman Jim McAvoy also said the contract
was awarded to the U.S. subsidiary of Accenture, or Accenture
LLP, which is based in Illinois and will pay U.S. taxes on the
Homeland Security contract.  Accenture LLP's government division
is based in Reston, VA.

Accenture (ACN) beat out Computer Sciences (NYSE:CSC) and
Lockheed Martin (NYSE:LMT) for the bidding, where the $10 billion
contract was awarded to Accenture to help administer the U.S.
Visitor and Immigrant Status Indicator Technology, which will
track foreign visitors using digital photographs, fingerprints
and other biometric information.

So there is a little fundamental background on ACN, and while I
don't see past fundamentals as being a "hyper growth" story at
this point, I am impressed with some of the growth rates the
company is seeing in its government contracting business.

The growth rates in the company's government business unit, which
has been the smallest revenue contributor on whole, now appears
to be a focus of the company, and that focus would certainly
appear to be showing some impressive top line results, excluding
the recent Homeland Security contract award.

Accenture shows it has earned $1.08 per share, which has the
company's stock trading at a P/E multiple of 23.2.  For fiscal
2004, the average estimate among 22 analysts covering the stock
is for the company to earn $1.15, which would have ACN trading at
a forward P/E multiple of 21.8-times 2004 EPS.  For 2005,
analysts currently forecast ACN earnings per share to grow 12.17%
to $1.29.  This would have the stock currently trading at a P/E
multiple of 19.49-times 2005 EPS.

Should ACN achieve analysts EPS growth rate of 12.17% for 2005,
that would exceed current growth estimates for S&P 500 companies,
where on average, analysts see the S&P 500 group of companies
growing earnings by 11%.

Accenture Ltd. (ACN) - Daily Intervals



Technicals for Accenture (ACN) show demand in control on the
point and figure chart, since May of 2003 when the stock traded a
triple top buy signal at $16.50.  First sign of weakness on the
point and figure chart would be a trade at $21.00.  Current
bullish vertical count associated with ANC's point and figure
chart is $29.  From current levels of trade ($25.15), risk/reward
to sell signal ($22) and bullish vertical count ($29) would be
unfavorable at roughly $3/$4.  While stocks can always exceed
bullish vertical counts, and may never achieve them, this would
be a starting point to assess an entry point.

Relative strength of Accenture versus the S&P 500 (SPX.X) is
bullish, with the stock outperforming this major market average.

The bar chart of ACN shows the stock trading above its longer-
term 200-day SMA, its intermediate-term 50-day SMA and its
shorter-term 21-day SMA.  These observations would all be viewed
as technically bullish.

ACN is currently battling with a downward trend, which isn't all
that different from observations made with other major market
averages.  As depicted by the regression channel on the above bar
chart, as well as a point and figure chart, ACN's overriding
trend is higher.

My views on ACN would be to hold the stock if you already owned
it, and would rate the stock "buy" on a pullback to $23.50.

ACN has shown a history of being a methodically paced stock and
in my opinion would be an excellent candidate for buying the
underlying shares, and writing covered calls against those shares
should the stock move to the upper-end of the rising regression
channel.

At the lower portion of the bar chart, I have projected three
different dates where ACN would achieve its current bullish
vertical count of $29, should the stock remain in its upward
trending bullish regression channel.

Jeff Bailey


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

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

Symbol  Co               Date           Comment      EPS Est

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

AHO    Koninklijke Ahold NV  Mon, Jun 14  -----N/A-----        N/A
ZQK    Quiksilver            Mon, Jun 14  After the Bell      0.46
URS    URS Corp.             Mon, Jun 14  After the Bell      0.50


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

CC     Circuit City Stores   Tue, Jun 15  Before the Bell    -0.07
FDS    FactSet Research Sys  Tue, Jun 15  Before the Bell     0.43
LEH    LEHMAN BROS HLDGS INC Tue, Jun 15  Before the Bell     1.90
LEN    Lennar Corporation    Tue, Jun 15  After the Bell      1.16
ORCL   Oracle                Tue, Jun 15  After the Bell      0.18
PIR    Pier 1 Imports, Inc.  Tue, Jun 15  Before the Bell     0.13


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

BSC    Bear Stearns          Wed, Jun 16  Before the Bell     2.23
BBY    Best Buy Co., Inc.    Wed, Jun 16  Before the Bell     0.33
JBL    Jabil                 Wed, Jun 16  After the Bell      0.26
JWa    John Wiley & Sons     Wed, Jun 16  Before the Bell     0.13
KBH    KB Home               Wed, Jun 16  After the Bell      2.09
MBT    Mobile Telesystems    Wed, Jun 16  07:00 am ET          N/A


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

ADBE   Adobe Systems         Thu, Jun 17  After the Bell      0.42
KMX    CarMax, Inc           Thu, Jun 17  -----N/A-----       0.31
CLC    CLARCOR Inc.          Thu, Jun 17  -----N/A-----       0.56
SJM    J. M. Smucker Company Thu, Jun 17  Before the Bell     0.52
RHAT   Red Hat, Inc.         Thu, Jun 17  -----N/A-----       0.04
SLR    Solectron             Thu, Jun 17  After the Bell      0.00
TIBX   TIBCO Software        Thu, Jun 17  After the Bell      0.05


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

None


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

Symbol  Co Name              Ratio    Payable     Executable

FELE    Franklin Electric Co      2:1      Jun  15th   Jun  16th
NARA    Nara Bancorp, Inc         2:1      Jun  15th   Jun  16th
IRM     Iron Mountain Inc         3:2      Jun  15th   Jun  16th
HSY     Hershey Foods Corp        2:1      Jun  15th   Jun  16th
APPB    Applebees Internatl Inc   3:2      Jun  15th   Jun  16th
RIMM    Research In Motion Ltd    2:1      Jun  17th   Jun  18th
PG      Procter & Gamble          2:1      Jun  18th   Jun  21st
CACH    Cache Inc                 3:2      Jun  18th   Jun  21st
WGR     Western Gas Resources, Inc2:1      Jun  18th   Jun  21st
EWBC    East West Bancorp Inc     2:1      Jun  20th   Jun  21st
NOC     Northrop Grumman Corp     2:1      Jun  21st   Jun  22nd
WCN     Waste Connections Inc     3:2      Jun  24th   Jun  25th



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

Wall Street is quickly approaching the quarter's end and that means
earnings season is around the corner.  It also means we need to
watch out for earnings warnings.  There are a lot of fed governors
speaking this week even so investors will be focused on the June 30th
FOMC interest rate decision and the Iraq handover.

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

----------------
Monday, 06/14/04
----------------
Trade Balance (BB)         Apr  Forecast: -$45.0B  Previous:  -$46.0B
Retail Sales (BB)          May  Forecast:    1.0%  Previous:    -0.5%
Retail Sales ex-auto (BB)  May  Forecast:    0.4%  Previous:    -0.1%


-----------------
Tuesday, 06/15/04
-----------------
Business Inventories (BB)  Apr  Forecast:    0.5%  Previous:     0.7%
CPI (BB)                   May  Forecast:    0.4%  Previous:     0.2%
Core CPI (BB)              May  Forecast:    0.2%  Previous:     0.3%
NY Empire State Index (BB) Jun  Forecast:    28.5  Previous:     30.2
Mich Sentiment-Prel. (DM)  Jun  Forecast:    91.0  Previous:     90.2
Fed governor Minehan speaks at fiscal policy conference
Fed Chairman Greenspan before his Senate nomination hearing.


-------------------
Wednesday, 06/16/04
-------------------
Housing Starts (BB)        May  Forecast:   1950K  Previous:    1969K
Building Permits (BB)      May  Forecast:   1965K  Previous:    2006K
Industrial Production (DM) May  Forecast:    0.6%  Previous:     0.8%
Capacity Utilization (DM)  May  Forecast:   77.3%  Previous:    76.9%
Fed's Beige Book (DM)
Fed governor Guynn speaks on economy
Fed governor Broaddus speaks on economy

------------------
Thursday, 06/17/04
------------------
Initial Claims (BB)      06/12  Forecast:     N/A  Previous:     352K
Leading Indicators (DM)    May  Forecast:    0.4%  Previous:     0.1%
Philadelphia Fed (BB)      Jun  Forecast:    25.0  Previous:     23.8
SEMI Book-to-Bill Report
Fed governor Moskow speaks on economic outlook

----------------
Friday, 06/18/04
----------------
Current Account (BB)       Q1   Forecast:-$139.6B  Previous: -$127.5B


! PPI NOTE:  The Bureau of Labor Statistics has delayed the May PPI
report until no sooner than next Wednesday but it could be delayed
even longer.  They will announce its release one day in advance.

PPI (NA) DELAYED           May  Forecast:    0.6%  Previous:     0.7%
Core PPI (NA) DELAYED      May  Forecast:    0.2%  Previous:     0.2%


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


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The Option Investor Newsletter                   Sunday 06-13-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: Internets to Defense to Drugs and more!
Dropped Calls: None
Dropped Puts: None


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

Internets to Defense to Drugs and more!

___________________________________________________________________

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.
___________________________________________________________________


Magna Intl - MGA - close: 82.90 change: +0.36

WHAT TO WATCH: We mentioned MGA in the MarketMonitor on Thursday.
The stock has been moving in a very wide trading range for the
past several weeks.  Currently shares are near the top of the
trading range with resistance at $84.00.  Bulls are probably
watching for a breakout above this level.  Bears are shorting it
with a tight stop and an eye on the bottom of the range near $74.
How you choose to play it depends on your view point but the
stock does look overbought with the three-week rally and
exhausted technicals.

Chart=


---

Ask Jeeves - ASKJ - close: 36.23 change: -2.22

WHAT TO WATCH: We looked at a number of Internet stocks today and
many of the larger cap Internet stocks look very short-term
overbought and due for a pull back (a.k.a. round of profit
taking).  ASKJ appears to have beat them to the punch and has
already sunk sharply in the last few sessions.  The breakdown
under $40.00 and its 50-dma is bad enough but Thursday's 5.7%
decline came on its strong volume since March 4th.  Traders might
want to watch for a move under $36.00 and target a drop to $30-
31.  Its P&F chart is very close to producing a new triple-bottom
breakdown sell signal.

Chart=


---

General Dynamics - GD - close: 98.80 change: +0.50

WHAT TO WATCH: We've been keeping an eye on GD in the
MarketMonitor.  The DFI defense index has been out performing the
market with a string of new highs.  Likewise GD has broken out to
new relative highs.  Traders could get aggressive here above $98
but it might be prudent to wait for a move above the $100 level.
Such a breakout could lead to a run toward its highs near $110.
Its P&F chart happens to have a recent double-top breakout buy
signal with a $113 price target.

Chart=


---

Career Education - CECO - close: 69.98 change: +0.88

WHAT TO WATCH: We came very close to adding CECO to the play list
this weekend.  The breakout above $68.00 and the new MACD buy
signal looks good.  Short-term technicals (RSI and stochastics)
are improving.  Its P&F chart has produced a very strong triple-
top breakout buy signal and $93.00 price target.  Using a trigger
above its recent highs near $70.70 to go long might be a good
idea.

Chart=


---

Forest Labs - FRX - close: 61.87 change: -0.67

WHAT TO WATCH: The action in FRX looks bearish.  Granted the
breakdown under its 200-dma and the $60.00 mark two weeks ago was
a huge bear trap but now that rally has run out of gas.  FRX
failed at the $65.00 level and its descending 40-dma.  Now its
struggling to hold support at its 200-dma again and its MACD is
about to turn negative.  The P&F chart points to a $52 price
target.  More aggressive traders could give it a go here with a
stop above its 40-dma and target $55.00.

Chart=



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

CME $127.00 +4.92 - This has been very volatile lately but the
rebound from support above $115 has seen a lot of volume.  CME
looks a lot stronger now above $125.

AUO $17.78 -1.57 - Ouch!  The 8.1% drop on Thursday was on the
strongest volume to date for AUO.  Look for a move under $17.50
and target $15.00.

OSIP $67.25 -1.19 - There it is!  The breakdown under $67.50 has
occurred.  Volume has been pretty strong during the recent sell
off.  The only problem now is OSIP looks very short-term oversold
and due for a bounce.  A roll over under $70-71 might work.

ETN $60.66 +0.69 - Keep an eye on ETN for a breakout over $62.00.

CVD & BCO - We mentioned both in the Monitor on Thursday as
potential covered call candidates due to their steady up trend.

SSP $108.13 -0.03 - Bulls can look for a breakout over $109.
Bears can speculate on aggressive positions now with a stop over
$109 and a target near $101.



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**************************
PICKS WE DROPPED THIS WEEK
**************************

Remember that historically, when we drop a pick it will go up
10 to 15% the very next week. It is part of Murphy's Law.
Just because we drop a stock as a pick does not mean we are
advocating a "sell" on any position you have. We are simply
dropping our recommendation as a new play. Existing plays
can and do continue on and are usually profitable.


CALLS
^^^^^

None


PUTS
^^^^

None


***********
DEFINITIONS
***********

! Please note changes to the Option Chains for new call and put
  plays.  We are no longer listing a "SL" or Suggested Stop Loss
  on individual options.  Most brokers offer the ability to list
  a stop loss for your option on the underlying stock.

  All of OptionInvestor.com's directional call or put plays list
  a suggested stop loss for the stock itself and if the stock
  trades at or below that stop on an intraday basis we will
  close any hypothetical play at that time.

OI  = Open Interest - the number of open contracts outstanding.
Last Trade @ = Indicates where the option traded last.
ITM = In the money
ATM = At the money
OTM = Out of the money
ADV = Average Daily Volume

The options with a "*" by the strike price are our choices from the
group. If the stock moves as expected we feel they have the best
chance to substantially increase or double in price with the best
risk/reward ratio compared to the other options for the same stock.
You must determine if they fit your risk profile for time and price.

RISKS of SELLING PUTS:
The risk of selling naked puts is always the possibility
of a catastrophic event that drops the stock below the
strike price and could result in the stock being PUT to you.
Always protect yourself with a "buy to cover" limit order
to take you out before this can happen.


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The Option Investor Newsletter                   Sunday 06-13-2004
Sunday                                                      3 of 5

In Section Three:

Current Calls: AIG, BA, BCR, DGX, ERTS, HSY, JNJ, MERQ, QCOM, ZMH
New Calls: GDW
Current Put Plays: KSS
New Puts: CCMP, SYMC


! Please note changes to the Option Chains for new call and put
  plays.  We are no longer listing a "SL" or Suggested Stop Loss
  on individual options.  Most brokers offer the ability to list
  a stop loss for your option on the underlying stock.

  All of OptionInvestor.com's directional call or put plays list
  a suggested stop loss for the stock itself and if the stock
  trades at or below that stop on an intraday basis we will
  close any hypothetical play at that time.


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

American Int'l Grp. - AIG - cls: 73.26 chng: -0.12 stp: 71.50

Company Description:
Engaged in a broad range of insurance and insurance-related
activities through its subsidiaries, AIG's primary focus is on
its general and life insurance businesses.  Additionally, the
company is growing its presence in financial services and asset
management.  Other operations include auto insurance, mortgage
guaranty, annuities, and aircraft leasing.  With operations in
130 countries, AIG generates more than half of its revenues
outside the United States.

Why we like it:
Monday's broad market rally pushed shares of AIG to its high of
the week, just pennies below the $75 level and the remainder of
the week saw price gradually deteriorating until hitting an
intraday low of $72.89 on Thursday afternoon, just above the 50-
dma ($72.77).  On one hand, we can view this pullback as a viable
entry point, giving us the ability to enter on a bounce from
strong support at the 50-dma.  On the other hand, this could be
the beginning of a large H&S topping formation, which has been
building since February.  It is difficult to see which way it
will play out, but with the PnF chart still looking bullish, odds
favor a bullish resolution, at least in the near term.  Look for
new entries in the $72 area, but only if a rebound has already
gotten underway.  The price action of the past couple weeks
reinforces our view that momentum entries are ill-advised for
AIG.  But the dips, and keep a tight stop at $71.50, just under
the 30-dma ($71.73).

Suggested Options:
Shorter Term: The July $70 Call will offer short-term traders the
best return on an immediate move, as it is currently in the money
and won't suffer time decay like the June strike over the next
week.

Longer Term: Aggressive longer-term traders can use the July $75
Call, while the more conservative approach will be to use the
August $75 Call.  Our preferred option is the July $75 strike, as
it is currently just out of the money and should provide
sufficient time for the play to move in our favor.

! Alert - June options expire next week!

BUY CALL JUN- 70 AIG-FN OI= 9561 last traded @ $3.50
BUY CALL JUL- 70 AIG-GN OI=  691 last traded @ $4.10
BUY CALL JUL- 75*AIG-GO OI= 7240 last traded @ $1.05
BUY CALL AUG- 75 AIG-HO OI=18054 last traded @ $2.00

Annotated Chart of AIG:



Picked on May 25th at        $72.00
Change since picked:          +1.26
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =     5.35 mln


---

The Boeing Company - BA - cls: 48.75 chng: +0.09 stop: 47.25*new*

Company Description:
One of the world's major aerospace firms, BA operates in three
principal segments: commercial airplanes, military aircraft and
missiles, and space and communications.  Commercial airplanes
operations involves the development, production and marketing of
commercial jet aircraft, principally to the commercial airline
industry.  The Military Aircraft and Missiles division is
involved in the research, development, production, modification
and support of military aircraft, including transport and attack
aircraft.  The Space and Communications segment is involved in
the research, development, production, modification and support
of space systems, rocket engines and battle management systems.

Why we like it:
What's not to like about our BA play?  After breaking out to new
multi-year highs on the back of the broad market strength on
Monday, the stock just kept charging higher, ending the week very
near its highs.  With the close at $48.75, our $50 profit target
is within sight and from here on out, it is going to be tough to
justify new entries.  Only aggressive traders should even
consider it, and then only on a pullback near the $48 level,
which should now be mild support.  For everyone else, our BA play
is now about maximizing our gain, while at the same time not
giving back too much on a bout of profit taking.  We're
tightening our stop this weekend to $47.25, which is just below
the top of last Monday's gap and also below where the 10-dma
(currently $47.19) will be on Monday.  Remember that $50 is
strong resistance on the weekly chart, so look for the exit door
as that price draws near.

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

! Alert - June options expire next week!

BUY CALL JUN- 47 BA -FW OI=2582 last traded @ $1.45
BUY CALL JUL- 47*BA -GW OI=5157 last traded @ $2.30
BUY CALL JUL- 50 BA -GJ OI=1185 last traded @ $0.90

Annotated Chart of BA:



Picked on May 27th at        $46.20
Change since picked:          +2.55
Earnings Date               4/28/04 (confirmed)
Average Daily Volume =     2.99 mln


---

Bard C R - BCR - close: 57.20 chg: +0.60 stop: 54.95

Company Description:
C. R. Bard, Inc. (www.crbard.com), headquartered in Murray Hill,
N.J., is a leading multinational developer, manufacturer, and
marketer of innovative, life-enhancing medical technologies in
the fields of vascular, urology, oncology, and surgical specialty
products. (source: company press release)

Why We Like It:
The Dow Industrials have chopped relatively sideways the last
three days and BCR has followed along.  Actually, BCR has churned
sideways in a $2.00 range ($56-58) for the last six sessions.
Technicals are mixed with this sideways action but we don't see a
reason to close this play just yet.  Originally we added BCR for
its relative strength and the anticipation of a stock split ramp
up.  We did get a small rally higher and we have not yet seen any
post-split depression and don't expect any now with the split 10
days ago.  We had previously suggested traders consider dips
toward $56.00 as potential entry points and the market bought the
dip on Tuesday.  Now we're suggesting investors consider a
breakout over $58.00.

Suggested Options:
We still like the July 55s but the July 60s look okay on a
breakout above $58.00.

! Alert - June options EXPIRE on Friday!

BUY CALL JUL 55.00 BCR-GK OI= 371 Last traded @ $3.20
BUY CALL JUL 57.50 BCR-GY OI= 134 Last traded @ $1.60
BUY CALL JUL 60.00 BCR-GL OI=  37 Last traded @ $0.65

Annotated Chart:



Picked on May 20 at $ 55.00 (post split)
Change since picked: + 2.20
Earnings Date      04/20/04 (confirmed)
Average Daily Volume:   386 thousand
Chart =


---

Quest Diagnostic - DGX - cls: 87.70 chg: +0.23 stop: 83.95

Company Description:
Quest Diagnostics Incorporated is the nation's leading provider
of diagnostic testing, information and services, providing
insights that enable healthcare professionals to make decisions
that improve health. The company offers the broadest access to
diagnostic testing services through its national network of
laboratories and patient service centers, and provides
interpretive consultation through its extensive medical and
scientific staff. Quest Diagnostics is the leading provider of
esoteric testing, including gene-based medical testing, and
provides advanced information technology solutions to improve
patient care. (source: company press release)

Why We Like It:
We like DGX because so far the stock has been reading its cue
cards perfectly.  There was three or four days of follow through
on the breakout above resistance near $87.00.  Now there's been
three days of consolidation of its big move off the lows from
May.  Shares have slowed their descent as it approached old
resistance at $87.00 since it should now be new support.  Plus
we're encouraged to see very light volume on the consolidation
after strong volume on the rallies.  DGX's technicals have
obviously flattened or dipped on the pull back but the stock
should be ready for the next leg higher.  We are suggesting that
traders look for the bounce before initiating any new positions.
A move up through $88.00 or $88.25 might work as entry points.
On Thursday DGX announced a deal with ESRX.  Here's an excerpt
from the company press release:
  DGX the nation's leading provider of diagnostic laboratory
testing, information and services, today announced that it has
entered into an agreement with Express Scripts, one of the
largest pharmacy benefit management companies in North America,
to provide physicians with online access to Express Scripts'
pharmacy benefit management services. The electronic prescribing,
or ePrescribing services, will be available through Quest
Diagnostics' eMaxx. electronic health record, developed by
MedPlus, the healthcare information technology subsidiary of
Quest Diagnostics. Terms of the agreement were not disclosed.

Suggested Options:
We're suggesting the July 85s and 90s but if you're eyeing the
$100 mark as your target the August 90 calls might work well.

! Alert - June options EXPIRE on Friday!

BUY CALL JUL 85 DGX-GQ OI= 104 Last traded @ $4.30
BUY CALL JUL 90 DGX-GR OI= 238 Last traded @ $1.50
BUY CALL AUG 90 DGX-HR OI= 799 Last traded @ $2.70

Annotated chart:



Picked on June 01 at $ 87.70
Change since picked:  + 0.00
Earnings Date       04/22/04 (confirmed)
Average Daily Volume:    603 thousand
Chart =


---

Electronic Arts - ERTS - close: 52.25 change: -0.40 stop: 50.00

Company Description:
ERTS creates, markets and distributes interactive entertainment
software for a variety of hardware platforms, including Sony's
PlayStation 2, the PC, Nintendo GameCube and the recently
launched Xbox.  The company's EA.com business segment is engaged
in the creation, marketing and distribution of entertainment
software which can be played or sold online, as well as the
ongoing management of subscriptions of online games and Website
advertising.

Why we like it:
Have you got game?  ERTS certainly appeared to have it early last
week, with the bullish action from Monday continuing on Tuesday,
giving us that PnF Buy signal with the print at $53.  While it is
a bit disappointing to see the rally start to roll over at the
end of the week, it isn't particularly surprising.  ERTS
occasionally puts in a strong rally like that seen in late March,
but most of the time the price action is composed of stair-step
action, as price takes two steps forward and then one step back.
ERTS is now headed back for a test of support and we're expecting
the 50-dma ($51.50), which was such stubborn resistance on the
way up to now act as solid support for the next leg up the chart.
Target new entries on a rebound from above $51.  More aggressive
traders can now consider breakout entries above last week's
highs, but keep in mind that there will be solid resistance
appearing at the March highs in the $55-56 area.  Maintain stops
at $50.

Suggested Options:
Shorter Term: The July $50 Call will offer short-term traders the
best return on an immediate move, as it is currently in the
money.  Note that June contracts expire next week.

Longer Term: Aggressive longer-term traders can use the July $55
Call, while the more conservative approach will be to use the
September $55 Call.  Our preferred option is the July $50 strike,
as it is currently in the money and should provide sufficient
time for the play to move in our favor.

! Alert - June options expire next week!

BUY CALL JUN- 50 EZQ-FJ OI=8812 last traded @ $2.70
BUY CALL JUL- 50*EZQ-GJ OI= 587 last traded @ $3.60
BUY CALL JUL- 55 EZQ-GK OI=3178 last traded @ $1.00
BUY CALL SEP- 55 EZQ-IK OI=1864 last traded @ $2.45

Annotated Chart of ERTS:



Picked on May 18th at        $49.60
Change since picked:          +2.65
Earnings Date               4/29/04 (confirmed)
Average Daily Volume =     3.85 mln


---

Hershey Foods - HSY - close: 91.50 chg: -0.37 stop: 89.25

Company Description:
Hershey Foods Corporation is the leading North American
manufacturer of quality chocolate and non-chocolate confectionery
and chocolate-related grocery products. Some of the company's
most popular products include Hershey's, Reese's, Hershey's
Kisses, York, Almond Joy, Mounds, Jolly Rancher, Twizzlers,
Swoops, Hershey's cocoa, and Hershey's syrup. The company also is
a market leader in the gum and mint category, with such well-
known brands as Ice Breakers, Breath Savers, Koolerz, and Bubble
Yum. (source: company press release)

Why We Like It: (Tuesday's Original Play)
Try as we might we cannot find any particular catalyst for
today's bullish breakout in shares of Hershey.  Not that we mind.
We've had our eye on HSY for just such a move.  The stock has
made it to our watch list/radar screen section in the last
several days.  Technically the stock looks pretty strong.  Its
MACD just produced a new buy signal.  Today's rally broke through
six weeks of resistance at the $90.00 mark on almost double the
normal volume.  Now that HSY has broken above $90 the
psychological round-number $100 level is going to act like a
magnet and pull it higher.  That's what we're counting on since
HSY's P&F target is only $93.  Fortunately, it's not uncommon to
see stocks trade past their P&F targets.  We're willing to open
positions at current levels with a stop loss at $89.25 (near its
10-dma) but patient traders might want to look for a dip back
toward $90-91 as an entry point.  However, take note of the fact
that HSY closed near its high for the session and that bodes well
for tomorrow.

Trading note!  Part of the excitement in HSY could be its
upcoming 2-for-1 split scheduled for June 16th.  That's only a
week away.

WEEKEND UPDATE:
We just recently added HSY to the call list on Tuesday and
suspected that its super strong close on Tuesday would lead to a
strong open on Wednesday.  Sure enough that's what we got but
with the market heading south on Wednesday traders decided to do
a little profit taking.  HSY continued to slip lower on Thursday
but the decline was very orderly as if buyers were merely waiting
for it to pull back before piling in again.  That's exactly what
we suggest investors do.  Look for a dip to $90.50-91.00 and buy
the bounce.

Suggested Options:
We like the July 90 calls but the 95s should work too.  Remember
that after HSY's 2:1 split on June 16th the strike price will
split as will the option value but you'll have twice as many
contracts.

! Alert - June options EXPIRE on Friday!

BUY CALL JUL 90 HSY-GR OI= 355 Last traded @ $3.10
BUY CALL JUL 95 HSY-GS OI= 209 Last traded @ $0.75

Annotated Chart:



Picked on June 08 at $ 92.22
Change since picked:  - 0.72
Earnings Date       04/22/04 (confirmed)
Average Daily Volume:    441 thousand
Chart =


---

Johnson & Johnson - JNJ - cls: 57.07 chng: +0.31 stop: 55.25*new*

Company Description:
Johnson & Johnson is engaged in the manufacture and sale of
products related to human health and well-being.  Through over
200 operating companies, it conducts business worldwide.  The
company's business is divided into three segments: Consumer,
Pharmaceutical and Medical Devices and Diagnostics.  The Consumer
segment manufactures and markets a range of products used in the
baby and child care, skin care, oral and wound care and women's
healthcare fields, as well as nutritional and over-the-counter
pharmaceutical products.  The Pharmaceutical segment's principal
worldwide franchises are in the antifungal, anti-infective,
cardiovascular, contraceptive, dermatology, gastrointestinal,
hematology, immunology, neurology, oncology, pain management,
psychotropic and urology fields.  The Medical Devices and
Diagnostics segment includes a range of products used by or under
the direction of physicians, nurses, therapists, hospitals,
diagnostic laboratories and clinics.

Why we like it:
Slow and steady, JNJ is performing exactly as we had hoped it
would.  Helped along by the broad market rally last week, the
stock moved through the $56.50 level and then used it as support
for its move above $57.  Resistance is looming not too far above
near $58 and conservative traders should be thinking about
locking in some gains before the next bout of profit taking gets
underway.  We're officially targeting a move to $60, but it would
be foolish to expect a move straight to that goal without another
pullback to consolidate over new support first.  That new support
should be seen just under the $56 level and a pullback and
rebound from that area can be used for new entries.  But remember
to wait for the rebound before playing.  Of course before that
happens, make sure to protect those gains that have accrued over
the past couple weeks, as a run of profit taking would seem
likely in the week ahead.  Raise stops to $55.25, which is just
under both the 20-dma ($55.58) and 30-dma ($55.32).

Suggested Options:
With June options expiring next week, the July $55 strike makes
the best choice for new positions.

! Alert - June options expire next week!

BUY CALL JUN-55 JNJ-FK OI=20539 last traded @ $2.20
BUY CALL JUL-55*JNJ-GK OI=45018 last traded @ $2.60

Annotated Chart of JNJ:



Picked on May 9th at         $55.30
Change since picked:          +1.77
Earnings Date               4/13/04 (confirmed)
Average Daily Volume =     7.34 mln


---

Mercury Interactive - MERQ - cls: 49.06 change: +0.49 stop: 46.25

Company Description:
As a provider of integrated performance management solutions that
enable businesses to test and monitor their Internet
applications, MERQ is looking for growing e-commerce demand to
continue to fuel its business.  The company's products perform
such tasks as analyzing and eliminating Web site performance
bottlenecks and automating quality assurance testing.  MERQ's
client base spans a wide range of industries including Internet
companies such as Amazon.com and America Online, infrastructure
companies Ariba and Oracle, as well as Apple Computer, Cisco
Systems and Ford Motor Company.

Why we like it:
Traders looking for some excitement last week certainly got it
from MERQ on Monday, as the stock vaulted higher with the rest of
the market, almost reaching the $50 level and posting a very
clear breakout over $48.  After a couple days of mild profit
taking, the bulls were back in charge on Thursday, pushing the
stock back over $49, albeit on light volume.  Following Monday's
breakout, we suggested a pullback near the $48 level looked good
for new entries, but alas, we never got that much of a drop.
With the 10-dma ($48.07) edging over that level, it looks doubly
good as a potential entry point.  Aggressive traders can enter on
a breakout over $50, but with next resistance at $52, such an
entry would have to be undertaken with aspirations of a rally all
the way up for a retest of the January highs near $54.  We're not
saying it's unachievable, just that it is a more aggressive
target.  Maintain stops at $46.25, just below the 6/03 intraday
low, as well as the 20-dma ($46.73).

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

! Alert - June options expire next week!

BUY CALL JUN- 47 RQB-FR OI=1917 last traded @ $1.90
BUY CALL JUL- 47*RQB-GR OI=2137 last traded @ $3.20
BUY CALL JUL- 50 RQB-GJ OI=1500 last traded @ $1.80

Annotated Chart of MERQ:



Picked on June 6th at        $47.56
Change since picked:          +1.50
Earnings Date               4/22/04 (confirmed)
Average Daily Volume =     2.38 mln



---

QUALCOMM - QCOM - close: 69.86 chg: +1.40 stop: 66.01

Company Description:
QUALCOMM Incorporated (www.qualcomm.com) is a leader in
developing and delivering innovative digital wireless
communications products and services based on the Company's CDMA
digital technology. Headquartered in San Diego, Calif., QUALCOMM
is included in the S&P 500 Index and is a 2003 FORTUNE 500.
company. (source: company press release)

Why We Like It:
Our strategy on QCOM hasn't changed it all since Tuesday.  The
relative strength in the stock looks great.  Shares were charging
toward resistance at $70.00 at the close in front of a long
weekend.  That's sounds bullish to us.  The $70 level was our
initial profit target for short-term traders.  They can still
consider taking some profit out of the play now.  We're looking
for the breakout and a target price of $74.00.  If QCOM can
breakout over $70.00 it would be a new triple-top breakout buy
signal on its P&F chart and that should scare some of the shorts
into covering.  In the last couple of days we've had two analysts
reiterate their positive outlooks.  Harris Nesbitt reiterated
their "out perform" while a S&P analyst reiterated their buy and
target price of $80.  The S&P analyst also issued positive
comments on QCOM's recent news that it was considering S. Korea
as an overseas chip foundry.  Two of its biggest handset
customers, Samsung Electronics and LG Electronics, are in S.
Korea and they both accounted for 26% of QCOM's sales in 2003
(source: S&P).  The BusinessWeek Online article also mentioned
that 75% of S. Korea's 48 million people use mobile phones and
they "tend to change handsets every one and a half years".

We're going to leave our stop loss at 66.01.  If you prefer to
buy the dip look for a dip to $68.50.  Right now we'd prefer new
entries on a breakout above $70.00.

Suggested Options:
Short-term traders should be looking at the June or July strikes.
Our favorites are the July 65s and 70s.

! Alert - June options EXPIRE on Friday!

BUY CALL JLY 65 AAO-GM OI=21207 Last traded @ $5.70
BUY CALL JLY 70 AAO-GN OI=21164 Last traded @ $2.25

Annotated Chart:



Picked on May 24 at $ 66.01
Change since picked: + 3.85
Earnings Date      04/22/04 (confirmed)
Average Daily Volume:   9.6 million
Chart =


---

Zimmer Holdings - ZMH - close: 87.14 chg: +0.49 stop: 84.25

Company Description:
Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is
the worldwide #1 pure-play orthopaedic leader in the design,
development, manufacture and marketing of reconstructive and
spinal implants, trauma and related orthopaedic surgical
products. In October, 2003, the company finalized its acquisition
of Centerpulse AG, a Switzerland-based orthopaedics company and
the leader in the European reconstructive market. The new Zimmer
has operations in more than 24 countries around the world and
sells products in more than 80 countries. As a result of the
acquisition of Centerpulse, reported 2003 sales were $1.9
billion. Full-year 2003 pro forma worldwide sales of Zimmer and
Centerpulse were approximately $2.6 billion. The new Zimmer is
supported by the efforts of more than 6,500 employees.
(source: company press release)

Why We Like It:
It's been a couple of weeks now since we added ZMH to the play
list and we're still bullish.  The fundamental picture for this
medical device maker looks great and the technical breakout over
resistance at $85 two weeks ago was too tempting to pass up.
We've seen a strong run to the $88 level but this level is
proving to be resistance.  We are suggesting that traders
consider buying a bounce from $86.00 or a breakout over $88.00.
We're encouraged by the Point-and-Figure chart and its triple-top
breakout buy signal with the $105 price target.  Remember that
our first target is $90.00 but we believe ZMH can trade even
higher.

We do find it interesting that ZMH's rival, Stryker Corp (SYK),
has been out performing ZMH the last few days.  It's about time
ZMH does a little catching up.  In the news ZMH said it would be
presenting at the Thomas Weisel Partners Growth Forum 6.0
Conference in California next Tuesday.

Suggested Options:
We are suggesting that traders consider the July calls.  Our
favorites would be the July 85s on a dip.

! Alert - June options EXPIRE on Friday!

BUY CALL JUL 85 ZMH-GQ OI= 219 Last traded @ $4.00
BUY CALL JUL 90 ZMH-GR OI= 674 Last traded @ $1.50

Annotated Chart:




Picked on May 27 at $ 85.20
Change since picked: + 1.96
Earnings Date      04/26/04 (confirmed)
Average Daily Volume:   1.2 million
Chart =



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

Golden West Fncl - GDW - close: 108.27 chg: +1.92 stop: 107.00

Company Description:
Headquartered in Oakland, California, Golden West is one of the
nation's largest financial institutions with assets over $85
billion as of April 30, 2004. The Company has one of the most
extensive thrift branch systems in the country, with 273 savings
branches in ten states and lending operations in 38 states.
(source: company press release)

Why We Like It:
Some of our readers might wonder why we're adding a banking stock
in the face of rising interest rates.  Traditionally financials
tend to under perform the market in a rising interest rate
environment.  We have three points to consider.  Number one,
interest rates are abnormally low right now and a few "measured"
rate hikes aren't likely to damage business that much in the
financials.  No 2, a few analysts believe that GDW might do
better than some of its financial brethren due to its strong
adjustable rate mortgage business.  Third, there is an
undercurrent of buying pressure in GDW because it and several of
the mid-cap banking stocks are considered takeover candidates for
further consolidation in the banking industry.

The technical picture doesn't look too bad either.  GDW's point-
and-figure chart appears to have moved from a "bear trap", where
it gives a sell signal and then reverses higher, into a new
double-top breakout buy signal with a price target of $129.  The
technical indicators on its daily chart are a bit mixed but the
stock appears to be in a bull flag pattern.  Aggressive traders
can try and buy a bounce from the bottom of the flag near $106 or
a breakout through the very top edge of the pattern near $109.00.
We're going to play it a little bit conservatively and look for a
move through $110.  Our TRIGGER to go long will be $110.01.  If
we are triggered our stop loss will be $107.00.  Our target is
the recent March high near $116-117.

Suggested Options:
We're going to suggest the July or August calls.  Our favorite
would be the July 110s.

BUY CALL JUL 105 GDW-HA OI=  55 Last traded @ $6.20
BUY CALL JUL 110 GDW-HB OI=1708 Last traded @ $3.30
BUY CALL JUL 115 GDW-HC OI= 422 Last traded @ $1.45

Annotated chart:



Picked on June xx at $xxx.xx <-- See TRIGGER
Change since picked:  + 0.00
Earnings Date       04/20/04 (confirmed)
Average Daily Volume:    694 thousand
Chart =



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

Kohl's Corp - KSS - close: 47.54 change: -0.48 stop: 50.01

Company Descriptions:
Based in Menomonee Falls, Wis., Kohl's is a family-focused, value
oriented specialty department store offering moderately priced
national brand apparel, shoes, accessories and home products. The
company operates 589 stores in 38 states.
(source: company press release)

Why We Like It:
Our KSS put play isn't off to the greatest start but we may be in
a better position now than when we listed it on Sunday.  Shares
of Kohl's managed to buck bad news but it couldn't push through
its declining simple 200-dma.  The bad news was an announcement
that its general merchandise manager for its footwear and
households business had resigned to become the president and COO
of Linens 'n Things (LIN).  We're encouraged to see KSS back
under its descending trendline of resistance, especially since it
never truly broke it with any conviction.  Plus, its MACD
indicator is very close to producing a new sell signal.  Short-
term technicals like the RSI and stochastics are already bearish.
Readers might remember that we listed this as somewhat
aggressive.  KSS is right at resistance and in this respect it
isn't aggressive but we're stepping in front of four weeks of
upward momentum.  Fortunately, it seems to have stalled.  Traders
might feel more comfortable waiting for KSS to breakdown under
the $47.00 level before initiating positions.  Our target is the
$41-42 range and we'll leave our stop at $50.01 for now.

Suggested Options:
It could take a few weeks to achieve our target so we're suggesting
the July puts.  Our favorites are the July 50s.

! Alert - June options EXPIRE on Friday!

BUY PUT JUL 50 KSS-SJ OI= 3080 Last traded @ $3.20
BUY PUT JLU 45 KSS-SI OI= 6448 Last traded @ $0.65

Annotated Chart:




Picked on June 06 at $ 47.45
Change since picked:  + 0.09
Earnings Date       05/13/04 (confirmed)
Average Daily Volume:    3.7 million
Chart =



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

Cabot Micro. - CCMP - close: 29.46 chg: -0.77 stop: 31.35

Company Description:
Cabot Microelectronics, headquartered in Aurora, Illinois, is the
leading supplier of CMP slurries for polishing various materials
used in semiconductor manufacturing processes. The company's
products play a critical role in the production of the most
advanced semiconductor devices, enabling the manufacture of
smaller, faster and more complex devices by its customers.
(source: company press release)

Why We Like It:
Wow! Investors have been rotating out of CCMP for a long time.
Shares topped out in August/September of 2003 near $67.50 and
traders have been selling the rallies ever since.  There was a
brief ramp up in January for its earnings report but the stock
promptly dropped back into its trend of new lows.  CCMP's most
recent earnings report on April 22nd was a disappointment.  The
company missed estimates by 7 cents with revenues down almost 4%
from the same period a year earlier.

CCMP has spent the last six weeks consolidating mostly sideways
after its steep April sell-off.  Now the stock looks ready for
the next leg down.  We do have a couple of caveats.  First the
stock has exceeded its P&F downside target of $33.00 but that
doesn't mean it can't (obviously) go lower.  Second, CCMP has
significantly high short interest.  The most recent data shows
that short interest measured 23% of the float.  Should anything
unexpectedly spark a rally there could be a lot of shorts trying
to cover at once to protect their gains.

Fortunately, the technical picture looks pretty discouraging if
you're a bull.  CCMP has been struggling with technical
resistance at its 40-dma for the last few days and lost.
Thursday's drop puts it back under the round-number $30.00 mark
and its MACD indicator is about to produce a new sell signal
again.  We're going to target a move toward the $26.00-25.00
region with an initial stop loss at $31.35.

Suggested Options:
Our favorite puts for short-term traders are the July 30s or the
35s if you can afford them.

BUY PUT JUL 30 UKR-SF OI= 1680 Last traded @ $2.20
BUY PUT JUL 35 UKR-SG OI= 1830 Last traded @ $5.90 (low premium)

Annotated chart:



Picked on June 13 at $ 29.46
Change since picked:  - 0.00
Earnings Date       04/22/04 (confirmed)
Average Daily Volume:    3.7 million
Chart =


---

Symantec Corp. - SYMC - close: 44.16 change: +0.31 stop: 47.50

Company Description:
Symantec Corporation provides content and network security
software and appliance solutions to enterprises, individuals and
service providers. The Company provides client, gateway and
server security solutions for virus protection, firewall and
virtual private network (VPN), security management, intrusion
detection, Internet content and e-mail filtering, remote
management technologies and security services to enterprises and
service providers worldwide. Symantec has offices in 36 countries
worldwide. The Company views its business in five operating
segments: enterprise security, enterprise administration,
consumer products, services and other activities.

Why we like it:
Standing out from the rest of the market right up until the end
of April, SYMC just refused to give up any ground, holding
stubbornly above its 50-dma, even as the overall Technology
sector sold off with gusto.  But that incredible relative
strength began to crack in early May, as the stock started
posting lower highs and then roughly a month ago, price fell
below the 50-dma, currently $47.04.  But due to the strength of
the stock in recent months, we wanted to see a failed rally below
that important average to convince us that there was enough
weakness to see a real downward move.  Last week gave us the
confirmation we were looking for, with price stalling just under
the 50-dma early in the week and then dropping hard on Wednesday.
Not only did that selloff crack the 100-dma ($44.26), but it also
created a fractional breakdown under the $44 support level.
April's drop to the $45 level created the PnF Sell signal, that
currently projects a drop to $39, and with the Relative Strength
chart (compared to the NASDAQ Composite) breaking to new multi-
month lows on Thursday, it looks like we have a potential winner
on our hands.

Due to the way the stock has been trading lately, momentum
entries do not seem to be the best choice.  Note how each break
to new lows over the past couple months has produced a rebound
back to resistance, producing the next lower high.  That means a
breakdown entry would have to be made with the understanding that
risk is to the site of the most recent high, in this case roughly
$47.  So the preferred entry strategy is for an entry on the next
failed rally, ideally in the vicinity of $46.  Any rollover from
below the 50-dma looks favorable as a bearish entry point.  While
there's some support near $42, we're going to target the $39-40
area for this play.  We'd expect to see the lower edge of that
range reached about the same time as the 200-dma (currently
$38.41) rises to near $39.  We'll initially place our stop at
$47.50, which is sufficiently above both the most recent swing
high and the 50-dma that if it were breached, would be a strong
sign that something is wrong.

Suggested Options:
Aggressive traders will want to use the July 40 Put while those
with a more conservative approach will want to use the July 45
strike.  Our preferred option is the July 45 strike, as it is
just in the money and should provide ample time for the play to
move in our favor.

BUY PUT JUL-45*SYQ-SI OI=4341 last traded @ $2.60
BUY PUT JUL-40 SYQ-SH OI=5472 last traded @ $0.80

Annotated Chart of SYMC:



Picked on May 13th at         $44.16
Change since picked:           +0.00
Earnings Date                4/28/04 (confirmed)
Average Daily Volume =      4.92 mln
Chart =



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The Option Investor Newsletter                   Sunday 06-13-2004
Sunday                                                      4 of 5

In Section Four:

Leaps: See Note
Option Spreads: Quickies – Let's Try To Give The Market A Little
    Haircut


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Option Spread Strategies
************************

Quickies – Let's Try To Give The Market A Little Haircut
By Mike Parnos, Investing With Attitude

We got lucky last month with our Quickie plays – real lucky.
Let's see if we can do it again.  I only found two decent
candidates this time around, but if they work, we'll be rollin' in
the green stuff.

As I do every month, let me remind you that these quickies are
quite risky.  They do seem to work out more often than not.
However, when they don't, it can cost you dearly.  Keep your risk
tolerance in mind before you establish any of these "hypothetical"
quickies.   If you wanna dance, you're gonna have to pay the band
– eventually.

June Quickie #1 – RUT Siamese Condor - $569.12
While I believe the QQQs might spike up, I think the market as a
whole will trade in a pretty tight range next week (but, again,
what do I know?).  Let's take advantage of it by establishing one
of our Siamese Condors.  We'll:
Sell 10 of the June RUT 570 calls @ $5.70 = $5,700
Sell 10 of the June RUT 570 puts @ $6.30 = $6,300
Total credit of $12,000

Now, we're going to have to, protect ourselves, or at least make
it seem like we're going to protect these short options.  So,
we'll:
Buy 10 June RUT 530 calls @ $.30 = $300
Buy 10 June RUT 600 puts @ $.30 = $300

Our net credit is $11.40 ($11,400).  Our ABSOLUTE bailout points
are 581.40 on the topside and $558.60 on the bottom.  We'll make
money if RUT closes anywhere in between.  The closer RUT closes to
570, the more money we'll make.  That's a pretty sizable range of
22.80 points.   The technical maintenance is a hefty $30,000 – but
it's only for a week and it's not really at risk if we know our
exit points – and WE DO!  You should adjust the number of
contracts based on your risk tolerance.

June Quickie Position #2 – SPX Iron Condor – 1136.47
Sell 10 June SPX 1120 puts
Buy 10 June SPX 1110 puts
Credit: $.80 ($800)

Sell 10 June SPX 1150 calls
Buy 10 June SPX 1160 calls
Credit: $1.00 ($1,000)

Total net credit of: $1.80 ($1,800).  Maximum profit range: 1120
to 1150.  Safety range 1118.20 to 1151.80.  Maintenance: $10,000.
_____________________________________________________________

Those Friendly Reminders
The premiums quoted on the above educational trades are based on
Thursday's closing bid/ask prices.  On Monday, the premiums will
be different due to market movement and/or the additional three
days of time erosion.  In a few instances, when the bid/ask spread
is wide, we figure you may be able to shave off a nickel here and
there.  Be careful.  If a stock gaps up or down, it may change the
entire dynamic of the trade.  Don't skydive without a parachute.
Just because you have a pulse and evidence of brain activity
doesn't mean you a trader.  And make sure you thoroughly know the
intricacies of a strategy before you trade.  The money you save
may be your own.
______________________________________________________________

Did You Hear About . . .
Did you hear about the dyslexic, atheist insomniac? He stayed up
all night wondering if there really was a Dog.
______________________________________________________________

JUNE POSITIONS
June Position #1 - SPX Iron Condor – 1136.47
We sold 5 SPX June 1150 calls and bought 5 SPX June 1170 calls for
a credit of $1.20 (x 5 contracts = $600). Then we sold 7 SPX June
1025 puts and bought 7 SPX June 1010 puts for a credit: $1.00 (x 7
contracts = $700). Our total net credit is $1,300. Maintenance:
$10,500. Maximum profit range of 1025 to 1150. Potential profit is
$1,300.

June Position #2 - BBH Iron Condor - $138.93
We sold 10 BBH $155 calls and bought 10 BBH $165 calls for a
credit of $.70 (x 10 contracts = $700). Then we sold 10 BBH $135
puts and bought 10 BBH $125 puts for a credit: $.90 (x 10
contracts = $900). Our total net credit is $1,550. Maintenance:
$10,000. Maximum profit range of $135 to $155. Potential profit:
$1,550.

June Position #3 - RUT - Iron Condor – 569.12
We sold 10 RUT 590 calls and bought 10 RUT 600 calls for a credit
of $.80 (x 10 contracts = $800). Then, we sold 10 RUT 490 puts and
bought 10 RUT 480 puts for a credit: $1.00 (x 10 contracts =
$1,000). Our total net credit is $1,800. Maintenance $10,000.
Maximum profit range of 490 to 590. Potential profit: $1,800.

June Position #4 - MNX - Iron Condor - $148.13
Sold 10 MNX 147.50 calls and bought 10 MNX 152.50 calls for a
credit: $.70 (x 10 contracts = $700). Then sold 10 MNX $132.50
puts and bought 10 MNX $127.50 puts for a credit: $.60 (x 10
contracts = $600). Our total net credit of $1,300. Maintenance:
$5,000. Maximum profit range of $132.50 to $147.50. Profit
potential: $1,300.
________________________________________________________________

ONGOING POSITIONS
QQQ ITM Strangle – Ongoing Long Term -- $36.84
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.
We rolled out the May $34 calls to the June $34 calls for a credit
of $.60 and then the May $37 puts to the June $37 puts for credit
of $.15.  The total net credit was $.75 ($750).  Our new total
credit: $9,600.

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 – 554.90
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.
Our current position:  We own 3 OEX December 2006 540 calls @ $81
(x 300 = $24,300).  Our cash position as of May expiration is
$4,390 plus unused $1,700 = $6,090.

June Zero Plus Positions.
A June OEX bull put spread 515/505, taking in a credit of $1.15 x
5 contracts = $575.  We also sold the June 560 call taking in a
credit of $1.20 x 5 contracts = $600.  If all goes well, we'll be
able to add an additional $1,175 to our cash position at June
expiration.

OSX Calendar Spread Plus - $99.51
Originally bought 10 OSX June $115 calls and sold 10 OSX April
$115 calls at a cost of $2.15 ($2,150). We also put on an April
$100/$90 bull put spread and took in an extra $.70 ($700) to
reduce the cost basis to $1.45 ($1,450). We rolled out our April
$115 call and took in $1.20 - further reducing our cost basis to
$.20. Then, aggressive traders (which we are in this strategy) put
on the May $100/$90 bull put spread and took in $.95. So, we were
a "plus" $.75 ($750).

The May $115 call expired worthless.  For June, on Thursday, we
sold the June $105 call for $.70 against the June $115 call we
still own.  We closed our May bull put spread for a loss of $3.25
and rolled it out to the June $95/$85 bull put spread for a credit
of $2.25.  We had to trade 15 contracts of the bull put spread to
cover what we spent to close the May $100/$90 bull put spread.

We now have a positive $1.45 ($1450) -- $750 from before and
another $700 from selling the $105 June call.  We bought ourselves
another month for the OSX to behave.  We're scrambling and I'll be
glad to be out of this damn trade with my butt still attached.
That'll teach me to try something directional.  Never fear, we
shall persevere.


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 ParnosCPTI Master Strategist and HCP

Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the
numbers represented here may have been achieved or beaten by our
readers, we make no representation that any individual investor
achieved these exact results. The tracking for the plays listed in
this section uses closing prices for the day the newsletter is
published and it is not meant to imply that any reader actually
received those prices or participated in these recommendations.
The portfolio represented here is hypothetical and for investment
education purposes only. It is only an illustration of what type
of gains a knowledgeable investor might receive utilizing these
strategies.


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The Option Investor Newsletter                   Sunday 06-13-2004
Sunday                                                      5 of 5

In Section Five:

Spreads and Straddles: Shares Recover But Inflation And Employment
    Concerns Remain...
Premium-Selling Plays: Naked Puts and Calls


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

Shares Recover But Inflation And Employment Concerns Remain...
By Ray Cummins

The major equity averages closed higher Thursday despite rising
import prices and an unexpected jump in jobless claims.

A multi-billion dollar retail deal and a positive outlook from
the semiconductor industry helped the market rally ahead of the
extended week-end for investors.  U.S. stock exchanges will be
closed Friday, as Americans observe a national day of mourning
for President Ronald Reagan.  The Dow Jones Industrials added
41 points to finish at 10,410, with leadership coming from 3M
(NYSE:MMM), ExxonMobile (NYSE:XOM) and General Motors (NYSE:GM).
The technology-laden NASDAQ Composite ended 9 points higher at
1,999, as gains in telecom stocks overcame selling pressure in
internet issues.  The S&P 500 was up 5 points at 1,136 with gold
and oil-related shares among the best performers.  In the broad
market, advancing stocks edged past decliners by a small margin
on the NYSE, but ended roughly even on the technology exchange.
Trading was very light, with 1.2 billion shares changing hands
on the New York Stock Exchange, while 1.3 billion shares crossed
on the NASDAQ.  Bonds were slightly weaker after the U.S. Labor
Department said import prices rose 1.6% in May, but the yield on
the benchmark 10-year Treasury note finished the session nearly
unchanged at 4.79%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 06/09/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

Stock   Pick   Last   Month L/P  S/P Credit   CB     G/L   Status

ERTS    51.88  52.65   JUN   45  47   0.35   47.15   0.35   Open
IMDC    61.17  58.35   JUN   50  55   0.50   54.50   0.50   Open?
GPRO    38.30  43.78   JUN   30  35   0.70   34.30   0.70   Open
MATK    68.01  59.86   JUN   55  60   0.65   59.35   0.51  Closed
ASD     35.96  38.45   JUN   32  33   0.16   33.17   0.16   Open
IMCL    71.36  80.63   JUN   50  55   0.50   54.50   0.50   Open
CSC     42.17  43.12   JUN   35  40   0.65   39.35   0.65   Open
GILD    62.54  62.97   JUN   55  60   1.00   59.00   1.00   Open
RIMM    49.99  55.86   JUN   40  42   0.22   42.28   0.22   Open
QCOM    65.40  68.46   JUN   55  60   0.45   59.55   0.45   Open
ZBRA    80.08  80.17   JUN   70  75   0.65   74.35   0.65   Open
BRCM    42.54  42.70   JUN   37  40   0.30   39.70   0.30   Open
EBAY    85.33  86.31   JUN   75  80   0.50   79.50   0.50   Open
AMZN    48.50  50.24   JUN   42  45   0.30   44.70   0.30   Open
EYET    44.32  41.35   JUN   35  40   0.50   39.50   0.50   Open?
RIMM    59.97  55.86   JUN   47  50   0.20   49.80   0.20   Open
AMZN    50.95  50.24   JUL   42  45   0.30   44.70   0.30   Open
YHOO    31.87  32.32   JUL   25  27   0.30   27.20   0.30   Open

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

The position in Martek Biosciences (NASDAQ:MATK) should have been
closed by conservative traders.  Inamed (NASDAQ:IMDC) and Eyetech
Pharmaceuticals (NASDAQ:EYET) are on the "watch" list.


CALL-CREDIT SPREADS

Stock   Pick   Last   Month  LC  SC  Credit   CB     G/L   Status

CTX     44.80  46.64   JUN   55  50   0.50   50.50   0.50   Open
IVGN    67.61  65.30   JUN   80  75   0.55   75.55   0.55   Open
VIP     91.45  92.55   JUN  110 105   0.50  105.50   0.50   Open
CERN    41.33  42.69   JUN   50  45   0.55   45.55   0.55   Open
SEPR    45.06  47.00   JUN   55  50   0.60   50.60   0.60   Open
BSC     80.02  81.92   JUN   90  85   0.50   85.50   0.50   Open
FRX     59.20  62.54   JUN   70  65   0.55   65.55   0.55   Open
MDT     47.66  49.72   JUN   55  50   0.60   50.60   0.60   Open
AZO     83.38  89.20   JUN   95  90   0.40   90.40   0.40   Open?
RYL     79.60  77.82   JUN   90  85   0.60   85.60   0.60   Open
VIP     92.25  92.55   JUN  105 100   0.60  100.60   0.60   Open
APPX    34.03  32.16   JUL   45  40   0.50   40.50   0.50   Open
OIH     65.40  66.09   JUL   75  70   0.65   70.65   0.65   Open

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

The position in NTL Inc. (NASDAQ:NTLI) has been closed to limit
potential losses.  Autozone (NYSE:AZO) is on the "watch" list.


DEBIT STRADDLES

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

KKD     19.63  21.42   JUN    20    20     3.00    2.80    Open?
RIO     49.38  48.84   JUN    50    50     2.65    2.50    Open
GRMN    32.60  34.35   JUL    35    30     2.15    2.35    Open
SNDK    22.90  21.70   JUL    22    22     3.40    3.20    Open

There was no additional volatility after Krispy Kreme (NYSE:KKD)
announced quarterly earnings, thus conservative traders should
consider an early exit in the position.

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

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

CFC - Countrywide Financial  $69.15  *** Rally Mode! ***

Countrywide Financial (NYSE:CFC), formerly Countrywide Credit
Industries, is a holding company that originates, purchases,
sells and services mortgage loans through its major subsidiary,
Countrywide Home Loans.  The company's mortgages are principally
prime credit first-lien mortgage loans secured by single one- to
four-family residences (prime credit first mortgages).  The firm
also offers home equity loans and sub-prime credit loans.  CFC,
through its other wholly owned subsidiaries, offers products and
services that are largely complementary to its mortgage banking
business, including lender-placed mortgage insurance, insurance
brokerage, mortgage-backed securities brokerage and underwriting,
brokerage of bulk servicing transactions, loan processing and
servicing in foreign countries, and retail banking.  The company
conducts its business through four segments: Insurance Segment,
Capital Markets Segment, Global Segment and Banking Segment.

CFC - Countrywide Financial  $69.15

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-60.00  CFC-SL  OI=3731  ASK=$0.75
SELL PUT  JUL-63.37  CFU-SW  OI=610   BID=$1.05
INITIAL NET-CREDIT TARGET=$0.35-$0.40
POTENTIAL PROFIT(max)=11% B/E=$63.02


__________________________________________________________________

QCOM - Qualcomm  $69.86  *** New Multi-Year High! ***

Qualcomm (NASDAQ:QCOM) is a developer and supplier of code division
multiple access (CDMA)-based integrated circuits and system software
for wireless voice and data communications and global positioning
system (GPS) products.  Qualcomm offers complete system solutions,
including software and integrated circuits for wireless handsets and
infrastructure equipment.  This complete system solution approach
provides customers with advanced wireless technology and enhanced
component integration and interoperability, as well as reduced time
to market.

QCOM - Qualcomm  $69.86

PLAY (conservative - bullish/credit spread):

BUY  PUT  JUL-60.00  AAO-SL  OI=10194  ASK=$0.25
SELL PUT  JUL-65.00  AAO-SM  OI=15782  BID=$0.65
INITIAL NET-CREDIT TARGET=$0.45-$0.55
POTENTIAL PROFIT(max)=9% B/E=$64.55


__________________________________________________________________

SWIR - Sierra Wireless  $33.83  *** On The Rebound! ***

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  $33.83

PLAY (aggressive - bullish/credit spread):

BUY  PUT  JUL-25.00  IYQ-SE  OI=1148  ASK=$0.40
SELL PUT  JUL-30.00  IYQ-SF  OI=469   BID=$1.30
INITIAL NET-CREDIT TARGET=$0.90-$1.00
POTENTIAL PROFIT(max)=22% B/E=$29.10



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

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.

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

INSP - InfoSpace  $34.71  *** Downtrend Underway? ***

InfoSpace (NASDAQ:INSP) develops and delivers a wireless and
Internet platform of software and application services to a
range of customers that span each of its wireline, merchant
and wireless business units.  Many of the company's products
and application services are offered to its customers, which,
in turn, offer these products and application services to
their customers as their own solutions.  InfoSpace provides
its services across multiple platforms, including personal
computers and non-PC devices.

INSP - InfoSpace  $34.71

PLAY (less conservative - bearish/credit spread):

BUY  CALL  JUL-45.00  IOU-GI  OI=426   ASK=$0.40
SELL CALL  JUL-40.00  IOU-GH  OI=1136  BID=$1.00
INITIAL NET-CREDIT TARGET=$0.65-$0.75
POTENTIAL PROFIT(max)=15% B/E=$40.65


__________________________________________________________________

GENZ - Genzyme  $41.93  *** Next Leg Down? ***

Genzyme Corporation (NASDAQ:GENZ) is a global biotechnology firm
that develops and markets therapeutic products and services for
serious diseases.  The company's product portfolio is focused on
rare genetic disorders, renal disease and osteoarthritis and
includes an array of diagnostic products and services.  Genzyme
researches into novel approaches to cancer, heart disease and
other areas of unmet medical need.  The company serves patients
in over 80 countries worldwide.

GENZ - Genzyme  $41.93

PLAY (conservative - bearish/credit spread):

BUY  CALL  JUL-47.50  GZQ-GS  OI=3052  ASK=$0.30
SELL CALL  JUL-45.00  GZQ-GI  OI=4064  BID=$0.55
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$45.30


__________________________________________________________________

WMS - WMS Industries  $28.75  *** Consolidation In Progress! ***

WMS Industries (NYSE:WMS) is engaged in the design, manufacture
and sale and lease of gaming machines and video lottery terminals.
Its machines feature advanced graphics, digital sound and engaging
game themes.  The company's gaming machines are installed in all
of the major regulated gaming jurisdictions in the United States,
as well as in 50 foreign gaming jurisdictions.  WMS generates
revenue in two principal ways: through sales of gaming machines,
conversion kits, parts, used equipment and original manufactured
equipment to casinos and other licensed gaming machine operators
and leasing of participation games and royalties it receives from
third parties under license agreements to use its games.

WMS - WMS Industries  $28.75

PLAY (less conservative - bearish/credit spread):

BUY  CALL  JUL-35.00  WMS-GG  OI=117  ASK=$0.25
SELL CALL  JUL-30.00  WMS-GF  OI=435  BID=$0.85
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$30.65



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

GDT - Guidant  $56.02  *** Stent Design Woes? ***

Guidant Corporation (NASDAQ:GDT) provides therapeutic medical
solutions of distinctive value for customers, patients and
healthcare systems worldwide.  The company develops, makes and
markets implantable defibrillator systems, implantable pacemaker
systems, coronary stent systems, angioplasty systems and cardiac
surgery systems.  Guidant's lifesaving medical technologies are
designed to extend the lives and improve the quality of life of
millions of patients suffering from life-threatening cardiac and
vascular disease.  Its products treat the heart, managing its
rhythms, clearing its arteries and permitting less-invasive
surgeries.

GDT - Guidant  $56.02

PLAY (very speculative - neutral/debit straddle):

BUY CALL  JUL-55.00  GDT-GK  OI=13764  ASK=$2.95
BUY PUT   JUL-55.00  GDT-TK  OI=4837   ASK=$1.90
INITIAL NET-DEBIT TARGET=$4.65-$4.75
INITIAL TARGET PROFIT=$2.25-$3.10



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

SEE DISCLAIMER - SECTION 1

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


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*****************************************
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 06/09/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

BCGI     JUN    10     9.65   10.43    0.35   7.73%   3.63%
LPNT     JUN    35    34.30   37.55    0.70   4.03%   2.04%
ASCA     JUN    30    29.35   32.39    0.65   5.02%   2.21%
DRIV     JUN    25    24.25   32.88    0.75   7.04%   3.09%
FARO     JUN    20    19.45   26.38    0.55   7.32%   2.83%
GIVN     JUN    30    29.25   31.53    0.75   7.01%   2.56%
MVSN     JUN    20    19.65   23.66    0.35   4.54%   1.78%
PDII     JUN    22    22.00   29.79    0.50   6.67%   2.27%
SMTC     JUN    20    19.50   23.92    0.50   6.25%   2.56%
CELG     JUN    45    44.40   54.77    0.60   4.75%   1.35%
ELN      JUN    17    17.05   21.98    0.45   8.73%   2.64%
FARO     JUN    20    19.45   26.38    0.55   8.04%   2.83%
FRO      JUN    25    24.50   38.45    0.50   6.48%   2.04%
IMMU     JUN     5     4.75    5.44    0.25  13.52%   5.26%
LNCR     JUN    32    32.05   33.46    0.45   3.60%   1.40%
MCK      JUN    32    32.00   34.84    0.50   3.76%   1.56%
NFLX     JUN    25    24.45   31.30    0.55   7.36%   2.25%
PHRM     JUN    20    19.65   39.70    0.35   5.67%   1.78%
RTN      JUN    32    32.00   34.10    0.50   3.62%   1.56%
VXGN     JUN    12    12.10   14.89    0.40  10.35%   3.31%
ARTI     JUN    22    22.00   25.90    0.50   6.11%   2.27%
AVID     JUN    45    44.30   52.50    0.70   4.62%   1.58%
BLUD     JUN    25    24.70   30.45    0.30   3.54%   1.21%
DRIV     JUN    25    24.60   32.88    0.40   5.37%   1.63%
ERES     JUN    17    18.11   22.98    0.22   3.85%   1.21%
NUE      JUN    55    54.25   65.63    0.75   3.96%   1.38%
PHRM     JUN    20    19.70   39.70    0.30   5.30%   1.52%
SPLS     JUN    25    24.60   28.63    0.40   4.24%   1.63%
YHOO     JUN    25    24.60   32.32    0.40   4.64%   1.63%
ARO      JUN    22    23.03   28.59    0.35   4.75%   1.52%
CRDN     JUN    25    24.65   36.39    0.35   5.57%   1.42%
ERES     JUN    18    18.63   22.98    0.30   6.61%   1.61%
FARO     JUN    22    21.85   26.38    0.65   9.88%   2.97%
ISPH     JUN    15    14.55   16.97    0.45  10.57%   3.09%
IDEV     JUN     5     4.70    7.07    0.30  17.36%   6.38%
PDII     JUN    22    22.20   29.79    0.30   5.83%   1.35%
SSYS     JUN    22    21.85   27.01    0.65   9.43%   2.97%
SLXP     JUN    25    24.70   26.87    0.30   4.85%   1.21%
ASKJ     JUN    35    34.40   38.45    0.60   6.85%   1.74%
ERES     JUN    20    19.80   22.98    0.20   4.60%   1.01%
FWHT     JUN    20    19.65   21.55    0.35   6.25%   1.78%
GPRO     JUN    35    34.45   43.78    0.55   5.54%   1.60%
MEE      JUN    22    22.15   24.92    0.35   5.66%   1.58%
SMTC     JUN    20    19.70   23.92    0.30   6.79%   1.52%
SWIR     JUN    22    22.20   31.21    0.30   6.05%   1.35%
YHOO     JUN    27    27.15   32.32    0.35   4.58%   1.29%
ASKJ     JUN    35    34.55   38.45    0.45   6.43%   1.30%
CRDN     JUN    30    29.45   36.39    0.55   8.32%   1.87%
ERES     JUN    23    23.03   22.98   (0.04)  0.00%   0.00%
NKTR     JUN    17    17.25   17.32    0.07   2.31%   1.45%
NSM      JUN    20    19.70   21.15    0.30   6.58%   1.52%
SMTC     JUN    22    22.20   23.92    0.30   6.21%   1.35%
YHOO     JUN    27    27.25   32.32    0.25   4.28%   0.92%
CVTX     JUL    15    14.60   16.10    0.40   5.63%   2.74%
DITC     JUL    17    16.80   20.93    0.70   8.40%   4.17%
JILL     JUN    20    19.70   21.45    0.30  10.05%   1.52%
NKTR     JUN    17    17.20   17.32    0.12   5.60%   1.74%
OSIP     JUN    65    64.50   68.71    0.50   6.89%   0.78%
SINA     JUN    35    34.50   39.65    0.50  10.37%   1.45%
SMTC     JUN    22    22.25   23.92    0.25   7.77%   1.12%
SYNA     JUL    17    16.85   18.76    0.65   7.48%   3.86%
TELK     JUN    20    19.75   22.88    0.25  10.33%   1.27%
USG      JUN    15    14.70   16.01    0.30  13.27%   2.04%
UTHR     JUN    22    22.15   22.97    0.35  10.38%   1.58%
PTIE     JUL     7     7.15    8.09    0.35   9.89%   4.90%

Au Optronics (NYSE:AUO), Drexler Technologies (NASDAQ:DRXR),
Nvidia (NASDAQ:NVDA), Silicon Storage Tech (NASDAQ:SSTI) and
Digene (NASDAQ:DIGE), which is currently profitable, have
been closed to limit potential losses.  Some of the obvious
issues on the "watch" list are: Boston Comm. (NASDAQ:BCGI),
eResearch Tech (NASDAQ:ERES); at $23.37, Nektar (NASDAQ:NKTR),
Given Imaging (NASDAQ:GIVN), United Therapeutics (NASDAQ:UTHR),
and Salix Pharmaceuticals (NASDAQ:SLXP), among others.


NAKED CALLS

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

IACI     JUN    32    33.15   30.45    0.65   5.22%   1.96%
OVTI     JUN    30    30.80   17.63    0.80  11.79%   2.60%
SLAB     JUN    55    55.50   48.36    0.50   4.93%   0.90%
PHTN     JUN    35    35.35   31.81    0.35   4.69%   0.99%
ENDP     JUN    25    25.70   21.21    0.70  11.16%   2.72%
IPXL     JUN    22    23.05   20.35    0.55   8.75%   2.39%
MMR      JUN    15    15.25   14.42    0.25   7.20%   1.64%
APPX     JUN    40    40.40   32.16    0.40   6.84%   0.99%
OVTI     JUN    27    27.25   17.63    0.25   6.69%   0.92%
WSM      JUN    32    33.00   31.63    0.50   5.64%   1.52%
ABAX     JUN    20    20.25   19.47    0.25   5.81%   1.23%
CHIC     JUN    20    20.35   19.83    0.35   8.70%   1.72%
USNA     JUN    30    30.40   27.93    0.40   6.29%   1.32%
ABGX     JUN    17    17.85   11.79    0.35  13.94%   1.96%
CREE     JUN    25    25.25   20.03    0.25   5.36%   0.99%
SSNC     JUN    25    25.50   20.09    0.50  10.41%   1.96%
DIGE     JUN    40    40.30   35.30    0.30   6.89%   0.74%
MDCO     JUN    30    30.70   28.09    0.70  15.46%   2.28%

Positions in Abaxis (NASDAQ:ABAX), Charlotte Russe Holdings
(NASDAQ:CHIC), McMoran Exploration (NYSE:MMR) and Williams-
Sonoma (NYSE:WSM) are on the "watch" list.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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    Stock   Option    Max.   Simple
Symbol  Month  Price   Basis   Price   Price    Yield   Yield

BCC      JUL   35.00   34.25   37.08    0.75    5.12%   2.19%
JILL     JUL   20.00   19.45   21.68    0.55    6.72%   2.83%
LSS      JUL   20.00   19.50   21.51    0.50    6.07%   2.56%
OI       JUL   15.00   14.65   16.05    0.35    5.64%   2.39%
NVTL     JUL   15.00   14.65   20.24    0.35    7.34%   2.39%
PDII     JUL   25.00   24.70   30.39    0.30    3.91%   1.21%
RSAS     JUL   17.50   17.05   18.80    0.45    6.22%   2.64%
STLD     JUL   25.00   24.45   26.72    0.55    5.33%   2.25%
UPL      JUL   30.00   29.55   34.06    0.45    4.14%   1.52%
USG      JUL   15.00   14.15   16.61    0.85   13.32%   6.01%

__________________________________________________________________

BCC - Boise Cascade  $37.08  *** Strong Sector! ***

Boise Cascade (NYSE:BCC) is a multinational contract and retail
distributor of office supplies and paper, technology products
and office furniture.  Boise Cascade is also a distributor of
building materials and a manufacturer and distributor of paper,
packaging and wood products.  The firm operates in four segments:
Boise Office Solutions, Contract; Boise Office Solutions, Retail;
Boise Building Solutions and Boise Paper Solutions.

BCC - Boise Cascade  $37.08

PLAY (sell naked put):

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

SELL PUT  JUL 35    BCC SG     54   0.75  34.25   5.1%   2.2%


__________________________________________________________________

JILL - J. Jill Group  $21.68  *** Bullish Retailer! ***

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

JILL - J. Jill Group  $21.68

PLAY (sell naked put):

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

SELL PUT  JUL 20    JUI SD      5    0.55  19.45   6.7%   2.8%


__________________________________________________________________

LSS - Lone Star  $21.51  *** Oil Service "Star" ***

Lone Star Technologies (NYSE:LSS) is a domestic manufacturer and
marketer of welded "oil country tubular goods," which are steel
tubular products used in the completion and production of oil and
natural gas wells.  Lone Star is a manufacturer of line pipe,
which is used in the gathering and transmission of oil and natural
gas.  In addition, the company is a manufacturer of specialty
tubing products used in power technology, automotive, construction,
agricultural and industrial applications.

LSS - Lone Star  $21.51

PLAY (sell naked put):

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

SELL PUT  JUL 20     LSS SD      5    0.50  19.50   6.1%   2.6%


__________________________________________________________________

OI - Owens-Illinois  $16.05  *** Asbestos "Deal" Speculation ***

Owens-Illinois (NYSE:OI) is a manufacturer of packaging products.
The company manufactures glass containers in North America, South
America, Australia and New Zealand and Europe, and is a worldwide
manufacturer of plastics packaging.  Plastics packaging products
manufactured by Owens-IL include consumer products (blow molded
containers, injection molded closures and dispensing systems) and
prescription containers.  Owens-IL has acquired 18 glass container
businesses in 18 countries since 1991, including businesses in
North and South America, Central and Eastern Europe and the Asia
Pacific region, and seven plastics packaging businesses operating
in 12 countries.

OI - Owens-Illinois  $16.05

PLAY (sell naked put):

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

SELL PUT  JUL 15    OI SC       5    0.35  14.65   5.6%   2.4%


__________________________________________________________________

NVTL - Novatel Wireless  $20.24  *** "Premium-Selling" Only! ***

Novatel Wireless (NASDAQ:NVTL) is a provider of wireless data
access solutions, including wireless data modems and software,
for use with portable personal computers (PCs) and with handheld
computing devices.  The company delivers comprehensive solutions
that help businesses and consumers to access personal, corporate
and public information through e-mail, enterprise networks and
the Internet.  Novatel also offers wireless data modems as well
as custom software and hardware engineering services and systems
integration services to its customers to facilitate use of its
products.

NVTL - Novatel Wireless  $20.24

PLAY (sell naked put):

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

SELL PUT  JUL 15    NVU SC     10    0.35  14.65   7.3%   2.4%


__________________________________________________________________

PDII - PDI Incorporated  $30.39  *** In A New Trading Range? ***

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

PDII - PDI Incorporated  $30.39

PLAY (sell naked put):

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

SELL PUT  JUL 25    PKU SE     18    0.30  24.70   3.9%   1.2% TS


__________________________________________________________________

RSAS - RSA Security  $18.80  *** Testing 2004 Highs! ***

RSA Security (NASDAQ:RSAS) is a provider of electronic security
(e-security) solutions that are designed to help organizations
ensure the authenticity of the people, devices and transactions
involved in e-business.  The company's core competencies are in
two-factor user authentication solutions, Web access management
software, digital certificate management solutions and encryption
software.  Through its RSA SecurID, RSA ClearTrust, RSA Keon and
RSA BSAFE product lines, the company directly addresses critical
e-security requirements for e-business.

RSAS - RSA Security  $18.80

PLAY (sell naked put):

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

SELL PUT  JUL 17.5  QSD SW    249    0.45  17.05   6.2%   2.6%


__________________________________________________________________

STLD - Steel Dynamics  $26.72  *** Entry Point? ***

Steel Dynamics (NASDAQ:STLD) is a steel manufacturing company.
The company owns and operates electric arc furnace mini-mills.
Its primary steel operations include the Flat Roll Division, the
Structural and Rail Division and the Bar Products Division.  The
company produces hot- and cold-rolled steel products, galvanized
sheet products, light gauge steel products, structural steel and
rails and joists and deck materials.

STLD - Steel Dynamics  $26.72

PLAY (sell naked put):

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

SELL PUT  JUL 25    RQL SE     56   0.55  24.45   5.3%   2.2%


__________________________________________________________________

UPL - Ultra Petroleum  $34.06  *** Uptrend Resumes! ***

Ultra Petroleum (NYSE:UPL) is an independent oil and gas company
engaged in the development, production, operation, exploration
and acquisition of oil and gas properties.  The firm's operations
are focused mainly in the Green River Basin of southwest Wyoming
and Bohai Bay, offshore China.  Ultra Petroleum also has working
interests in Texas and Pennsylvania.

UPL - Ultra Petroleum  $34.06

PLAY (sell naked put):

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

SELL PUT  JUL 30    UPL SF    114    0.45  29.55   4.1%   1.5%


__________________________________________________________________

USG - USG Corp.  $16.61  *** Volatility = Premium! ***

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

USG - USG Corp.  $16.61

"SPECULATIVE" PLAY (sell naked put):

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

SELL PUT  JUL 15    USG SC    666    0.85  14.15  13.3%   6.0%



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

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.

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

ASKJ - Ask Jeeves  $36.23  *** A Necessary Consolidation! ***

Ask Jeeves (NASDAQ:ASKJ) is a provider of Internet-wide search,
providing consumers with authoritative and fast ways to find
relevant information to their everyday searches.  Ask Jeeves
deploys its search technologies on Ask Jeeves (Ask.com and
Ask.co.uk), Teoma.com, and Ask Jeeves for Kids (AJKids.com).
In addition, to its internet sites, Ask Jeeves syndicates its
monetized search technology and advertising units to a network
of affiliate partners.  The company is based in Emeryville,
California, with offices in New York, Boston, New Jersey, Los
Angeles, London and Dublin.

ASKJ - Ask Jeeves  $36.23

PLAY (sell naked call):

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

SELL CALL  JUL 45    AUK GI     949   0.55  45.55   6.5%   1.2%


__________________________________________________________________

AMLN - Amylin Pharmaceuticals  $21.96  *** Range-Bound? ***

Amylin Pharmaceuticals (NASDAQ:AMLN) is committed to improving
the lives of people with diabetes and other metabolic diseases
through the discovery, development and commercialization of
innovative, cost-effective medicines.  Amylin has two primary
drug candidates in late-stage development for the treatment of
diabetes; SYMLIN (pramlintide acetate) and exenatide, formerly
referred to as AC2993 (synthetic exendin-4).

AMLN - Amylin Pharmaceuticals  $21.96

PLAY (sell naked call):

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

SELL CALL  JUL 25    AQM GE    4523   0.35  25.35   5.3%   1.4%


__________________________________________________________________

ICOS - ICOS Corporation  $26.74  *** New 52-Week Low! ***

ICOS Corporation (NASDAQ:ICOS) develops pharmaceutical products
with significant commercial potential by combining its unique
capabilities in molecular, cellular and structural biology,
high-throughput drug screening, medicinal chemistry and gene
expression profiling. The firm applies its integrated approach
to erectile dysfunction and other urologic disorders, sepsis,
pulmonary arterial hypertension and cardiovascular diseases, as
well as inflammatory diseases. The company has established
collaborations with pharmaceutical and biotechnology companies
to enhance its internal development capabilities and to offset
a substantial portion of the financial risk of developing its
product candidates.

ICOS - ICOS Corporation  $26.74

PLAY (sell naked call):

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

SELL CALL  JUL 30    IIQ GF    2437   0.45  30.45   5.3%   1.5%


__________________________________________________________________

OIIM - O2Micro  $15.88  *** Bearish Technicals? ***

O2Micro (NASDAQ:OIIM) designs, develops and markets innovative
power management and security components for mobile telecom,
communication, computer, information appliance, and LCD products.
Its unique products include AudioDJ, SmartCardBus for secure on
line e-commerce, Intelligent Lighting and Battery Management IC's.
O2Micro International also maintains an extensive portfolio of
intellectual property with thousands of patent claims granted,
and thousands more pending.

OIIM - O2Micro  $15.88

PLAY (sell naked call):

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


SELL CALL  JUL 17.5  XQQ GW     127   0.30  17.80   5.5%   1.7%



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

SEE DISCLAIMER - SECTION 1

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


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