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Daily Newsletter, Sunday, 07/18/2004

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The Option Investor Newsletter                   Sunday 07-18-2004
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: Five Months
Futures Wrap: See Note
Index Trader Wrap: ANY DAY NOW?
Editor's Plays: And the Winner Is?
Market Sentiment: Bulls Can't Get A Break
Ask the Analyst: Bullish % and NH/NL breadth analysis
Coming Events: Earnings, Splits, Economic Events


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
        WE 7-16         WE 7-09         WE 7-02         WE 6-25
DOW    10139.78 - 73.44   10213 - 69.61   10282 - 89.01 - 44.57
Nasdaq  1883.15 - 63.18 1946.33 - 60.33 2006.66 - 18.81 + 38.74
S&P-100  535.90 -  6.73  542.63 -  4.54  547.17 -  2.58 -  5.06
S&P-500 1101.40 - 11.41 1112.81 - 12.57 1125.38 -  9.05 -  0.57
W5000  10731.86 -110.82   10842 -154.87   10997 - 76.05 + 39.48
SOX      410.46 - 40.68  451.14 -  6.17  457.31 - 21.60 + 25.83
RUT      555.48 -  8.25  563.73 - 18.99  582.72 -  4.98 + 17.16
TRAN    3088.33 +  0.36 3087.97 - 58.20 3146.17 - 18.01 + 95.61
******************************************************************

Five Months
by Jim Brown

We have been trapped in this trading range for five months
but it appears we may be in for a change of confinement.
Instead of sitting in our cells staring at walls of charts
that never move we may be in for a change of scenery. That
change of scenery may include a lot more red if the current
market sentiment continues to decline.

Dow Chart


Nasdaq Chart




The markets roared out of the gate on the IBM earnings,
Dell guidance and a tame expected CPI. That opening blast
failed to hold and before the day was out we were trading
at new lows for the month. Welcome to July.

The market positive CPI at only +0.3% sent bonds soaring
on thoughts the Fed was on hold for the near future. The
CPI headline number was actually a little higher than
most analysts expected but only due to higher energy
prices. The core rate was only a minimal +0.1% for those
who don't use food and energy. Considering energy prices
are +17% higher than they were this time last year it is
amazing that the current annual headline inflation rate
is only +3.3%. Core inflation on an annual basis is only
1.9% and very tame. Raising the CPI for June was another
+3.1% jump in gas prices after a +8.1% jump in May. With
oil nearing $42 today the odds are good we will another
jump in the July report.

In the continuing saga of manufacturing surveys the
California numbers were announced today. The headline
number at 61.6 was still strong but well below the 66.9
high in the prior report. Unlike the other monthly
surveys this is a quarterly update. Still the same
trends we have seen in the others continued to appear
in the CA report. Production slowed to 65.3 from 71 and
New Orders fell to 58.4 from 71.3. Employment also
slipped slightly. These numbers are still in expansion
territory but indicate declining growth in the second
quarter.

The only other economic report Friday was the first take
on the July Consumer Sentiment. The headline number
barely moved at 96.0 from June's final at 95.6 but it
was the highest level seen since January's 103.8. May
saw the low for the year at 90.2 and this represents
two months of gains if it holds through the next update.
The present conditions component fell -2 points to 104.6
and the future expectations component rose +2 points to
90.4. Gas prices were given as the most negative input.

Don't look now but oil prices are still climbing. Oil
neared $42 once again and is showing no signs of easing.
The global demand continues to increase and OPEC is
already pumping at almost full capacity. This is a
recurring nightmare for consumers and becoming a very
large cloud on the future of earnings for corporations.
Recently the stock market has traded opposite the oil
market and today was no different. Keep your eye on oil
prices next week as we could see a new high.

Oil Chart



The combination of economics and high oil prices sent
bonds soaring to two month highs. The yield on the ten
year fell to 4.361% which is very good for the home
builder sector. They may get one more really good summer
selling season after all. The drop in the CPI and the
mixed economics all week sent the Fed funds futures
even lower and we are very close to dropping one of the
three remaining rate hikes that had been projected this
year. The August hike is still on the table but one of
the later hikes is on the verge of disappearing. The
Fed has been exceptionally quiet the last two weeks but
that will change soon. Greenspan gives what was formerly
known as the Humphrey Hawkins testimony before the House
and Senate committees on both Tuesday and Wednesday. I
expect that interest rates and the softness in the
economy will be high on the list for the Q&A session.
The dollar hit a four month low on Friday despite strong
assurances from the administration they support a strong
dollar policy. Obviously talk is cheap.

Ten-year Yield Chart



The markets opened higher on the strength of IBM
earnings but that bloom quickly wilted. IBM rose as
high as 86.50 but slowly dropped into the close at
84.40. Good news simply does not last past the first
coffee break in the current market.

Dell added to the opening excitement by raising guidance
by +2 cents and jumped nearly +$1 at the open. Dell said
those better earnings came from a better tax rate and
cost savings on components. Revenue guidance stayed the
same and that blunted the positive earnings news. Dell
gapped up almost $1 but kept only half that amount at
the close. First, traders do not really care about the
tax rate because it does not apply to growing sales.
Second, lower prices on components suggests there is
lower demand for components and could means weakness
in the overall sector despite the Dell gains. In some
cases gift horses really do have bad teeth.

I'll be back! Martha Stewart repeated those words twice
ala Terminator style at a press conference after she was
sentenced. The domestic diva managed to turn an apology
speech into a sales pitch for advertisers and customers
while standing on the court steps. The blatant sales
pitch just moments after being sentenced to five months
in prison, five months under house arrest and two years
probation was a little too much for some people. Most
wanted her to just say I am sorry and get the sentence
over so life at Martha Stewart Living could get back
to normal. There was nothing normal about the action
in MSO stock. Volume was about 50 times normal and it
spiked from yesterday's close at 8.73 to a high of
$12.29 and close at 11.81. The lighter than expected
sentence and the prospect of putting the whole affair
to bed brought the bargain hunters back to shop. Had
you bought the July $10 call for its 10 cent close on
Thursday it would have been the home run for the month
with a close at $1.90 on Friday and high of $2.30.

Despite IBM, DELL and MSO the markets still had trouble
holding down breakfast. Good news does not stick any
longer than hair spray in a Houston wind and the sellers
appeared once again. A study out Friday morning showed
foreign investors had been net sellers for the last
three months and the selling was continuing. This is
confounding analysts given the very respectable earnings
we have seen so far this cycle. With 77 S&P companies
already reported, a whopping 75% have beaten estimates,
19% reported inline and only 6% have missed estimates.
If the current rate and quality of earnings continue
we will post the fourth consecutive quarter of +20%
gains. This would be only the fifth time ever that the
market has seen a string of earnings this good. The
earnings parade continues next week with a huge number
of reporters. 170 S&P companies report along with
hundreds of smaller ones. We will have a much better
view of the future once those firms give guidance.

So why are the gains not translating into a market
rally? There are two main reasons and a bunch of little
ones. The two biggest culprits are future expectations
and event risk. Even the most optimistic expectations
for 2005 earnings is only +10% for the entire year. Not
10% per quarter but for the entire year. This is a very
big letdown from the high numbers we have been posting
and the market is having trouble digesting the future
outlook with a string of high risk events in our near
future.

I have mentioned it before and will not dwell on it but
the Democratic convention begins next week on July 26th.
This is the first high risk event followed by the
Republican convention and the Olympics over the next
60 days. These are prime terrorist targets and at this
point it make no difference if any attacks are even
contemplated. It is pure risk avoidance coupled with
decelerating earnings that is driving investor flight.

Fly they did. For the week semiconductors ended down
-9% but they are down -15.6% for the month. I missed
the fire alarm on semis on July 1st but evidently I
was the only one. The SOX closed at 411 on Friday and
well below the 420 support range. The bottom has fallen
out of the sector despite some positive earnings reports.
Next real support is 375-385. There is a fire sale in
progress and there will be some real bargains once the
smoke clears. October is normally the buying season
for semi stocks and that seems a long way off today.
Next week we will get the Semi Book-to-Bill numbers
for June and a drop from the 1.11 in May could actually
accelerate the selling.

SOX Chart




With the SOX imploding the Russell-2000 never had a
chance and when comparing 2003 gains there is far more
profit waiting in the RUT than there was in the SOX.
The Russell rebounded +85% off the Jan-2003 lows and
has consolidated in the 560-590 range since Jan-2004.
That consolidation appears about to resolve itself to
the downside dragged down by the SOX. We saw a strong
fight at 560 support but that level caved in at the
close. In May there was a profit taking dip to 535-540
and we seem destined to visit that level again next week.

Russell-2000 Chart




Semis were not the only sector to get knocked for a
significant loss. Airlines dropped -10% for the week
as the price of oil soared. Retail continued to be
weak as earnings warnings in the sector continued.
ISI released a survey that showed sales in July were
actually weaker than June and suggested the consumer
had taken a real vacation from consuming.

There was some serious market damage done Friday but
despite the drops we are still clinging to the recent
range. I say clinging because the Dow has broken its
200dma at 10197 and support for the last two weeks at
10160. The close at 10140 was the lowest close since
May 26th. Since January we have fallen from the highs
twice to trade in the 10000 range with the May drop
the worst with an intraday spike to 9852 but a close
back over 10K. The lowest close was 9906 with multiple
closes in the 9950-10000 range. Considering the event
risk ahead I can easily see the Dow back at the 10K
level next week. Hopefully this will remain the bottom
of our range as it has since January.

Dow Chart - Weekly



The Nasdaq is a different story. It closed on Friday
at 1883 and right on the edge of a serious break. 1900
has been headline support since October with brief
periodic dips to around 1875 which were always quickly
bought. With the SOX and RUT imploding the Nasdaq is
falling faster than a twin engine plane with both
engines out. The 1900 level barely provided a speed
bump to Friday's drop and with the SOX and RUT both
under critical support it appears the Nasdaq could
easily hit that 1875 level that has been a buy trigger
for the last eight months.

The only index that held support on Friday was the
SPX at 1100. Actually the 200dma at 1103.66 provided
support most of the afternoon but we did see it
pierced right at the close when several late day sell
programs stacked on top of each other. The SPX is the
most critical of the indexes to support tests. The
SPX is the most widely followed index for funds and
the most widely program traded index. The 200dma is
a critical support level for this index. It has held
as support since April of 2003. This sets up a rebound
potential for Monday morning. Since it has such a strong
following and has been such strong support there should
be some technical buying on Monday. It had better be
strong because the S&P moving under the 200dma is also
a sell signal for many speculative funds. Not a dump
signal but a sign to lighten up. Should we move much
below 1100 it could begin to get ugly very fast.

Where are we going from here? How many times have we
said the markets are at a crucial point and the next
week would be pivotal? Consider it said again. The
next week is going to be hectic to say the least. We
have the Greenspan testimony on Tuesday (2:30) and
Wednesday (10:00). Fortunately there are no major
economic reports to provide negative sentiment and
the few numbers we will get should be market neutral.
We have over 500 companies reporting earnings but if
the current trend continues 65% of those will beat
the estimates. So far this cycle the number has been
75% but we know it declines as the cycle matures to
include the smaller companies. Unfortunately good
earnings news has failed to impress the market and
the fire exits are still flashing red.

The motivating event next week, besides Greenspan,
will the coming Democratic convention on July 26th.
The odds of a sustained rally are almost zero in
advance of that event risk but we could see a rebound
on Monday from our current SPX support level. I view
any early bounce as only a short entry for the rest
of the week. Hopefully the fear factor surrounding
the convention will be much ado about nothing but the
markets cannot afford to ignore it. This does bring
up the potential for the Fed's Plunge Protection Team
to suddenly appear with a couple buy programs in the
interest of protecting the markets from overactive
speculation. This is exactly the kind of crisis that
they were created for under the Reagan administration.

As for me I am going to be watching for an uptick in
the futures at the Sunday night open to see if the
SPX support at 1100-1103 will hold. If so I am going
to be Long in the Futures Monitor with plans on
reversing to short when any rebound fades. Conversely
a break under SPX 1100 will have me looking for a short
opportunity. This is one of those rare instances where
the dividing line is so clear. For next week remain
short below SPX 1100 and sell any rally over 1100 as
it fails.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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

Futures wrap is not emailed due to the excessive number of charts.
It may be read on the website at this address.
http://www.OptionInvestor.com/indexes/futureswrap.asp


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

ANY DAY NOW?
By Leigh Stevens
lstevens@OptionInvestor.com

THE BOTTOM LINE –
What a drag tech makes - that and oil, now climbing above 41
dollars - with these factors, the market is no longer so focused
on an improving second half. Last week, the technical picture
gave me some reason to start thinking about doing some bottom
fishing - too soon! With a strong intermediate downturn
dominating, it looks like the market may get still more oversold
and extended on the downside, before a rebound develops.

As far as sectors, the Semiconductor index (SOX) is dragging down
Nasdaq and the Nas is being a drag on the S&P.  Some key levels
where support could develop and are areas to watch for signs of
buying interest coming in again: SOX around 400-405(Friday close:
410.5); Nasdaq Composite (COMP) in the 1875-1865 zone (Fri close:
1883); if the S&P 500 (SPX) can't hold 1100, then 1080, at prior
lows, is a target; if 535 is penetrated in the S&P 100 (OEX) then
530 is an objective (Fri close: 535.9); 34-34.5 looks to be, yet
again, the low end of a broad QQQ trading range (Fri close: 34.7).

FRIDAY'S TRADING ACTIVITY –
The Nasdaq (Composite) closed below 1,900 for the first time in
two months Friday.  The blue chip NYSE traded stocks gave up
early gains as rising oil prices and slowing demand in the tech
sector generated concern over just how good future economic
growth was going to be.

A weaker-than-expected consumer sentiment report undermined
investor confidence, and took the shine off tame inflation data
for June that was indicated in the latest CPI report.

THE NUMBERS –
The S&P 500 (SPX) was down 5.30 points by the close (-0.5%) to
1101 and was off 1% for the week. The Dow (INDU) ended around its
low for the day, -23.4 points (0.2%) at 10,139.78 - this after
getting up to as high as 10,238.37 after some IBM news and CPI
figures. INDU was off 0.7% on the week.

The Nasdaq Composite (COMP) fell sharply, off by 29.5 points (-
1.5%) and closed at 1,883.15, first time below 1900 since late-
May. The Composite fell slightly over 3% on the week - since the
start of the earnings reporting season a couple of weeks back,
COMP has fallen over 6%. The Russell 2000 (RUT), the market gauge
of small capitalization stocks, was off 1.2% by the close, which
was at 555.5

REPORTS & EARNINGS NEWS –
The good news of the day was the U.S. retail inflation data for
June - the Consumer Price Index (CPI) increased 0.3 percent in
June, slightly ahead of expectations of a 0.2 percent gain, but
the so-called "core inflation rate" dropped to its lowest rate of
2004. Core CPI, which excludes food and energy costs, rose only
0.1 percent.

The University of Michigan's consumer sentiment index for July
rose to 96.0 from a reading of 95.6 in June, but a bit under an
expected 96.4.

IBM gave some early support to the Dow early on, as the company's
chief financial officer backed consensus forecasts for Big Blue's
earnings in 2004 in the wake of Q2 results in which earnings
topped analyst expectations but sales narrowly missed the
Street's target.

The IBM CFO also predicted the technology industry will post its
best growth since 2000.

Elsewhere in tech land, Dell (DELL) Computer was buoyed after the
company indicated that its current quarterly earnings would rise
29% to 31 cents, topping its own target from before a couple
percent due to better operating profitability rather than by
growth in its previously estimated sales figures.

Pfizer (PFE) extended a sharp decline from Thursday as it
cautioned that 2004 sales would miss a $54 billion target set in
April by at least $1 billion.

OTHER MARKETS –
In bonds, prices gained sharply on the inflation data as traders
welcomed the prospect of moderate and measured rate increases.
The benchmark 10-year note fell in price to a closing (higher)
yield of 4.37%, versus 4.48% on the day prior day's trade.

In the FOREX market, the dollar fell against its major rivals on
the inflation data, as the speculation was that low inflation
boosted the odds for only a gradual hike in interest rates over
coming months, making holding dollars and dollar assets less
attractive.  The U.S. dollar was off 1.1% again the Yen, to
108.62 yen. The euro rose 0.8% to $1.246.


MY INDEX OUTLOOKS –

S&P 500 Index (SPX) – Daily chart:

Last week, I talked about the things I look for when an Index may
be setting up to reverse trend.  It looked to me like SPX was at
or near a bottom - WRONG! Or, at least early to suggest exiting
Index put position, at least all of them. Once the midweek rally
failed in the 1120 area, it was back to renewed selling pressure.
The close under the 200-day moving average was bearish.

Now is a watch for whether the S&P (500) Index can hold around
1100 in the coming week and can rebound to back above its 200-day
moving average, or if there will be another retreat to the 1080
area which I have highlighted at the dashed level line with a
green arrow in the daily chart below -




Call to Put Ratio - this is the above indicator (not labeled).
Once again, put activity in individual stock options, relative to
daily call volume, is at levels associated with an upcoming
rebound.  However, at times where there are new fundamental
market assumptions that call into question the major market trend
that has come before, bearishness can hit greater extremes - this
type of extreme I measure by my call to put indicator.  This was
the case in early to mid-May if you look at the Call/Put levels
there.

Am still intrigued by the possibility that if lows are made in
the 1090-1095 area, followed by a rebound, a possible head &
shoulder's bottom would be in place.

S&P 100 Index (OEX) – Daily chart:

The S&P 100(OEX) failed to hold the 540 area and the up trendline
that I thought might define support.  A bearish close under the
200-day average is also bearish, but the 100 index tends to slip
more under this key average than is the case with the 500 Index
(SPX) in a bullish trend - a good example was in May when the OEX
traded below it for several days.  This was not situation with
SPX as the 200-day average was not penetrated.

Near support is at hand now as I measure it - at 535; with the
next technical support comes in around 530, at the cluster of
lows that formed at the May bottom. Near resistance is at 542-545
- a rebound back above 543, that holds this area in subsequent
trading, is bullish.  Next resistance is around 548.




I would be alert in the coming week to signs of another upside
reversal and not overstay in index puts, as it seems doubtful
that there will be another whole new down "leg" here, given the
approach to an oversold RSI reading and nearness to prior lows.

Dow 30 Average (INDU) – Hourly close chart:

A decline to 10,100 would represent a 62% retracement of the last
upswing in the Dow, on an hourly closing basis.  If there is an
hourly and then daily close under 10,100 it would suggest then
that INDU was heading to a retest of 10,000 again - the most
bearish scenario is a "round-trip back to the lows in the low
9900 area. Once a retracement exceeds 62% to 2/3rds., a retreat
to the starting point of the last rally is common.

Key near resistance is at 10,175, then in the 10,250 area.



Using my longer length RSI setting ("21") on the hourly chart
suggests that the Dow as least is not yet down to a reading
suggesting an oversold extreme - not as much as in May on a
shorter-term basis as can be seen in the lower (Indicator)
portion of the above chart.

Nasdaq 100 (NDX) Index  – Daily:

1450 continues to look like key resistance, 1380, key technical
support. 1380 is a potential support area to watch. NDX could
sink to 1370 and simply be back to the low end of what might be a
broad trading range market.



For some months now, NDX puts have been a buy at or above 1500
and buying NDX calls was quite favorable in the 1370-1380 zone.
In my estimation, there is no major reason to suppose or
speculate yet that NDX has built a significant top - rather than
just having gone into a broad trading range.

A broad trading range market is ideal of course for Index options
traders - better than a strong trend higher or lower that offers
fewer places to get back in to a major trade.

Nasdaq 100 tracking Stock (QQQ) Daily:
Previously, I suggested buying the stock in the 35 area. I favor
purchases at 34-34.50, if reached, as an area to add to positions
or stake out a new one.  However, a close under 34.00 would be
more than I expect currently and my risk point on being long the
stock. Of course stop orders left in for automatic execution
can't be based on a close here - a 33.70 sell stop is an
alternative.

I anticipate support coming in at the 34-34.5 area and near
resistance at 35; then, at 35.50, which can be better seen
further on in the hourly chart, past the daily chart immediately
below -



Nasdaq 100 tracking Stock (QQQ) Hourly:
The hourly picture for the Q's is below.  The falling (downside)
wedge pattern that I have outlined, could be suggesting a type of
"compression" of buying and selling forces such that a "recoil"
effect may be coming - one that signals a rebound in the stock
price fairly soon.  So, far no signs of this - but reversals
rarely come with bells on them.  I keep waiting to hear that bell
ringing at either a top or bottom but haven't heard either yet!!





Good Trading Success!

TRADER'S CORNER ARTICLE NOTE:
I finished my series on Dow Theory last week – part 3, which
dealt with defining a trend as to minor, intermediate and long-
term (the major or primary trend), as well as a bit more on
bullish/bearish price/indicator divergences. If interested, see –
http://www.OptionInvestor.com/traderscorner/tc_071504_2.asp


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

And the Winner Is?

If you took my $20 bet on the Intel $25 put INQ-SE last
week you are a happy camper this weekend. That 20 cent
option close the week at $2.20 and a whopping 1000%
gain. The Intel earnings surprised everyone with the
inventory glut and the rest is history. Did anybody
realize that they almost doubled their profits from
last year? Doesn't matter once the spin doctors take
control. All you need is Dan Niles on CNBC saying
money in Intel is dead money for the next 3-6 months
and the lemmings rush over the cliff.

Conversely if you bet against me with the $27.50 call
you found no buyers on Wednesday morning and your call
expires worthless.

It was only a lottery play and high risk but I like
to profile a few of those when conditions warrant.
Unfortunately I did not profile the July $10 call on
MSO last week, which was selling for 5-10 cents up
until Thursday's close. It went out at $1.90 on Friday
after hitting a high of $2.30. Oh well, can't pick
them all.

Microsoft Update

On June 27th I profiled a combination play on Microsoft
in advance of their decision on cash disbursement due
out by July 29th. They are supposed to announce a plan
to give back that cash to the investors in some manner
that might include a one time cash dividend of several
dollars a share or a massive stock buyback or some yet
unknown scheme.

We entered a Aug-$27.50 Put MSQ-TY and the Aug $30 call
MSQ-HF for about $1.00 depending on your fill. MSFT
has declined to close at 27.47 on Friday. They announced
a massive cost cutting program last week aimed at cutting
$1 billion in costs. Things itemized on the list included
hundreds of mundane employee benefits that barely cost
more than a cup of coffee from the office vending machine.
The announcement caused speculation that Microsoft may
be hurting for earnings and needed to pinch pennies to
hit profit targets. This is not a good sign for the
cash disbursement project. Granted disbursing the cash
on hand will not impact earnings but if times are tight
it might make them much more tight fisted when the
announcement comes.

The put today is worth about 85 cents and the call 25
cents. I had hoped the stock would have moved higher
on speculation and the put would be meaningless before
now but the cost cutting announcement squashed that
idea.

We are now faced with a decision before the earnings
announcement on July 22nd. There is the possibility
they could announce their plan with earnings, especially
if earnings are not that good. The plan would be a
smoke screen to cover any earnings disappointment.

The challenge now is which one to hold over earnings.
If they announced a $2 per share cash disbursement
for the nearly 11 billion shares outstanding that
would use about one third of their cash and that may
be about all the boys want to part with. I believe it
would be a disappointment to those buyers who ran up
the stock from $25.50 when the date was announced. That
might bring the stock back down to the $26 level and
coupled with any earnings disappointment maybe lower.

Obviously this is all speculation. On the call side
for 25 cents I think it is worth holding. Who knows,
Microsoft might pull a rabbit out of their hat and
surprise everyone with a $50 billion share buyback
(1,818,181,818 shares) or 17% of the outstanding shares.
A buyback of this magnitude would be such a shock to
the market that we could see the stock shoot up to
$32 almost overnight on speculation. (+17%) Remember
not all shares are available for trading or for
buyback. This would shrink the available pool.

Again, only speculation but there is plenty of
potential for a move in either direction. I said
in the play profile we would decide before earnings
which option to hold and which to dump. I lied. I
am going to keep them both.

If they do announce some crazy plan that rockets
the stock or some earnings challenge and a wimpy
plan we should plan on selling on the spike in
either direction. If there is no easily recognizable
answer then we will discuss this again next Sunday.
I don't think there is a way we can lose money with
our August positions but then Murphy is alive and
well.

Microsoft Chart





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

News Corp Update $35.61

We saw a jump in NWS on Friday to $35.61 on an upgrade
from CSFB but there is still no movement on the long term
outlook. The company is putting the move to the U.S.
exchanges to a vote in Oct/Nov and the polls are running
strongly in favor. There is a vocal minority of Australian
shareholders screaming foul but few analysts expect them
to win.

The plan was to sell covered calls against this position
to offset our costs but we remain too far away from the
next strike to do any good. The $40 Aug call is only 10
cents. Definitely not worth the risk.

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


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

PVN Call Update $14.17

http://members.OptionInvestor.com/editorplays/edply_061304_1.asp


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

Bulls Can't Get A Break
- J. Brown

July has been a very tough month for stocks.  You might remember
our comments a couple of weeks ago quoting the Stock Trader's
Almanac that July was the beginning of the worst four months of
the year for the NASDAQ.  I hope it doesn't get much worse.  The
NASDAQ composite is down 8% on the month.  Driving the move has
been a 15% drop in the semiconductor index, a 13% drop in the
software index, and a 12% drop in the networking index.

The airlines are also getting crushed with a 19% drop for the
month as crude oil prices have surged back above the $40.00 a
barrel mark.  Don't look now but they closed at $41.25 on Friday
and oil was bouncing higher into the closing bell.  The rising
price of oil affects all of us not just the airlines.
Manufacturers have to deal with the high cost of oil and
consumers are feeling the pinch at the gas pump.  Higher gasoline
prices impact consumer spending, which supports more than 2/3rds
of our economy.

It was only a month ago that the market was intensely focused on
the last week of June with the FOMC meeting and rate hike, the
Iraq transfer of power and the jobs report.  Investors were
hoping that once those events passed the markets would move from
their trading range.  The hope was that those three events would
pass without any negative surprises and we could rally into what
was supposed to be a strong Q2 earnings season.

Since then we've endured a painful parade of earnings warnings
but most of them have been tech stocks.  Despite the rash of
warnings earnings are actually coming in higher than estimates
with 75% of those S&P 500 components reporting beating
expectations.  Some of the tech bellwethers are doing okay.
Granted Intel's report wasn't glowing but IBM managed to beat
estimates, APPL turned in a stellar quarter (okay not a
bellwether) and DELL raised estimates on Friday.  Yet investors
aren't inspired by the numbers as they look ahead to tougher year
over year comparisons in the third and fourth quarters.  Economic
growth for the third quarter of 2003 was at twenty-year highs.
There's no chance we'll be able to repeat that any time soon.

Yet the economic picture isn't bad.  General Electric's CEO said
the economy was the best he'd seen in years.  Most of the
economic data coming out confirms that we're still expanding.
Investors are just dealing with news that growth is slowing.  We
should be cheering that the economy is climbing at a moderate
pace because it keeps the Federal Reserve to their "measured
pace" plan for future interest rate hikes.  Hmm.. if we're not
worried about the economy or rising rates what could it be?

How about the fact that the third quarter will host the
Democratic and Republican conventions and the Olympics in Greece.
All three are high-profile terrorist targets. After recent
announcements from the Department of Homeland Defense about
terrorists already in our country planning something big to
disrupt our election process and Greece's inability to get their
power grid up and running for the Olympics much less handle
security... well you can see that investors would be negligent if
they didn't consider the implications of such attacks and plan
accordingly with their money (a.k.a. move to the sidelines).

Next week should be interesting.  Not only is it the peak in the
Q2 earnings season with 173 S&P 500 components reporting earnings
but hundreds of smaller companies will also report.  Plus, we'll
hear plenty of "Fedspeak".  Here are some of the highlights for
next week's calendar.  On Monday we'll hear from Dow-component
MMM for their Q2 earnings.  Tuesday brings Philly Fed President
Santomero as he speaks on the economy while Dow-component Altria
Group (MO) reports earnings.  Tuesday afternoon Alan Greenspan
appears before the senate banking committee to answer questions
and give testimony on the country's economic outlook.  Wednesday
we'll hear from Dow-components Honeywell (HON), Merck (MRK),
Pfizer (PFE) and United Technologies (UTX).  Plus, Wednesday
morning will showcase Greenspan's appearance before the House
financial services committee who will no doubt lob tougher
questions at the chairman after seeing his responses on Tuesday.

Thursday proves to be a massive day for earnings with dozens of
announcements.  We'll hear from Dow-components American Intl
Group (AIG), Caterpillar (CAT), Coca-Cola (KO), McDonalds (MCD),
Microsoft (MSFT) and SBC Communications (SBC).  On Friday we'll
hear more talk about the economy and monetary policy from Chicago
Fed President Moskow.

In summary traders should consider caution to be the better part
of valor here.  It might be tempting to try and catch some of the
falling knives with tech stocks so oversold but such attempts to
pick a bottom usually end up with painful injuries.  This is
probably not the best environment for bullish strategies.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8996
Current     : 10139

Moving Averages:
(Simple)

 10-dma: 10221
 50-dma: 10221
200-dma: 10197



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  960
Current     : 1101

Moving Averages:
(Simple)

 10-dma: 1113
 50-dma: 1117
200-dma: 1103



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1204
Current     : 1392

Moving Averages:
(Simple)

 10-dma: 1433
 50-dma: 1447
200-dma: 1446



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

CBOE Market Volatility Index (VIX) = 14.34 -0.37
CBOE Mkt Volatility old VIX  (VXO) = 15.35 -0.38
Nasdaq Volatility Index (VXN)      = 20.94 -0.74


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

          Put/Call Ratio  Call Volume   Put Volume

Total          1.12      1,003,161     1,124,042
Equity Only    0.93        812,201       758,206
OEX            1.54         41,676        64,088
QQQ            6.68         23,937       160,011


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

Bullish Percent Data

           Current   Change   Status
NYSE          64.7    + 0     Bear Confirmed
NASDAQ-100    43.0    - 2     Bear Confirmed
Dow Indust.   66.7    + 0     Bear Confirmed
S&P 500       60.0    + 0     Bear Confirmed
S&P 100       63.0    + 1     Bear Correction



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

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


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

 5-dma: 1.44
10-dma: 1.35
21-dma: 1.26
55-dma: 1.31


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    1368       895
Decliners    1414      2069

New Highs     102        26
New Lows       43       118

Up Volume    652M      245M
Down Vol.   1050M     1482M

Total Vol.  1712M     1741M
M = millions


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

Commitments Of Traders Report: 07/13/04

Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the
Chicago Mercantile Exchange and Chicago Board of Trade. COT data
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being
financial institutions. Commercials are historically on the
correct side of future trend changes while small specs tend
to be wrong.

S&P 500

Not much movement going on in the Commercial traders' positions
for the large S&P futures contracts.  They remain net bearish
but by a small margin.  Small traders remain net bullish but
have upped their shorts a bit.

Commercials   Long      Short      Net     % Of OI
06/22/04      407,842   415,462   ( 7,620)   (0.9%)
06/29/04      405,273   413,351   ( 8,078)   (0.9%)
07/06/04      402,952   416,526   (13,574)   (1.7%)
07/16/04      407,166   416,869   ( 9,703)   (1.2%)

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
06/22/04      124,985    89,934    35,051    16.3%
06/29/04      129,978    94,535    35,443    15.7%
07/06/04      132,423    90,748    41,675    18.7%
07/16/04      133,935    95,787    38,148    16.6%

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

Commercial traders have reduced their long positions in the
e-minis raising their net bearish positions several percentage
points.  Small traders are still very bullish.

Commercials   Long      Short      Net     % Of OI
06/22/04      229,290   446,974   (217,684)  (32.2%)
06/29/04      258,443   447,505   (189,062)  (26.7%)
07/06/04      287,442   423,583   (136,141)  (19.1%)
07/16/04      265,142   427,017   (161,875)  (23.4%)

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
06/22/04      243,444     58,389   185,055    61.3%
06/29/04      236,492     47,780   188,712    66.3%
07/06/04      219,321     58,567   160,754    57.8%
07/16/04      225,410     57,699   167,711    59.2%

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 upped their long positions a bit boosting
their bullish stature on the NDX.  Small traders reduced both
their longs and shorts but the drop in long positions actually
left them move bearish.

Commercials   Long      Short      Net     % of OI
06/22/04       40,397     37,413     2,984    3.8%
06/29/04       41,078     37,194     3,884    4.9%
07/06/04       42,245     37,343     4,902    6.2%
07/16/04       44,211     37,007     7,204    8.9%

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
06/22/04        9,311     9,950      (639)  ( 3.3%)
06/29/04        7,437    11,904    (4,467)  (23.1%)
07/06/04        9,345    16,527    (7,182)  (27.8%)
07/16/04        7,847    15,243    (7,396)  (32.0%)

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

Commercial traders are not making any big moves with their
INDU futures positions and they remain net bullish.  Meanwhile
small traders have turned a bit more bearish, the most we've
seen in weeks.

Commercials   Long      Short      Net     % of OI
06/22/04       26,808    19,752    7,056      15.2%
06/29/04       27,278    20,512    6,766      14.1%
07/06/04       27,214    20,775    6,439      13.4%
07/16/04       27,773    20,573    7,200      14.9%

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
06/22/04        5,626     7,798   (2,172)   (16.2%)
06/29/04        4,930     7,682   (2,752)   (21.8%)
07/06/04        5,969     8,227   (2,258)   (15.9%)
07/16/04        5,292     9,068   (3,776)   (26.3%)

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

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


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

Bullish % and NH/NL breadth analysis

Jeff:  Some of the indexes are thought to be near some support
levels, but the Bullish % and Summation charts are looking
ominous.

Up, down or stand aside?  I wish I knew.

Brian

This is an e-mail question I received on Monday, where the
trader/investor attached several charts of various major market
bullish %.

I'm not going to show all the charts that the trader sent me, but
you can find FREE bullish % charts at www.stockcharts.com for the
very broad (3000 + stocks) NYSE Bullish % ($BNYA) and NASDAQ
Composite Bullish % ($BPCOMPQ) in the same line chart as the S&P
500 Bullish % ($BPSX) the trader sent me, and shown below.

I'm showing the chart just as the trader sent me, where he is
using default RSI and MACD (which I have not used in past
analysis), as well as 200-day SMA and 10-day SMA.  I believe the
trader/investor changed the 50-day SMA to a 10-day SMA so it
might tie in with our "Market Snapshot" New High and New Low
indications we follow at the end of each trading day, where we
are using the NH/NL indications as a faster moving indicator of
bullish or bearish leadership.

Here's the S&P 500 Bullish % ($BPSPX) chart the trader sent me.

S&P 500 Bullish % ($BPSPX) - line chart



I'm proud that the trader is using the bullish % as an indicator
of internal strength/weakness, where despite his either hearing
or reading that "the indexes are thought to be near some price
support levels," the bullish % charts are looking ominous.

Now, I have never used the RSI (top of chart) indicator with the
bullish %.  I tend to use the bullish % charts as an indicator of
how much MARKET RISK there is (above 70% is considered longer-
term overbought and HIGH risk for bulls) and how strong or weak
the market internals are for the bullish % I'm interpreting.

Still, as I look at the RSI on the chart, it pretty much mimics
the line chart of the $BPSPX, where the "Bearish Divergence" I
point to would have had the RSI falling toward 30 when the $BPSPX
line was still above 85%.

Now, YOU the trader/investor can be the judge if the line chart
and use of simple moving averages is useful.  Remember that the
S&P 500 Bullish % ($BPSPX) is measuring point and figure charts
of 500 stocks and with 500 stocks, this broad measure of market
internals will most likely be SLOWER moving than a narrower-based
bullish % measuring 100 stocks.

Friday's trade saw a net loss of 2 stocks to a reversing lower
point and figure sell signal.  Imagine you have two stacks of
point and figure charts.  One stack has charts that show a "buy
signal" intact, while the other stack has charts that show a
"sell signal" intact.  At the end of each day, you would chart
any changes, using the 3-box reversal method of point and figure
charting.  Those charts that showed a reversing upward point and
figure buy signal (that negated the prior sell signal) move to
the "buy signal pile," while those charts that showed a reversing
down point and figure sell signal (that negated the prior buy
signal) move over to the "sell signal pile" of charts.

Right now, 300 of the 500 charts you are following with the
bullish % are currently in the "buy signal pile" while 200 are in
the sell signal pile.

Here was my reply, which I'm going to try and expand on in a
minute.

Reply:

I can make comment, but I think these moving average "crossovers"
are a duplication of what I've noted in the NYSE and NASDAQ 5-day
NH/NL and 10-day NH/NL indications.

Both signaled caution last week.

Right now the TEST is if the 5-day NH/NL and 10-day NH/NL "bottom
out" before the broader and slower moving bullish % actually
reverse lower.

Now... both the VERY BROAD NYSE and NASDAQ Composite bullish %
(3000 + stocks each) never have turned up like the broad S&P 500
did, or the NARROWER S&P 100 and NASDAQ-100 Bullish %.

In essence, the BIG RIVERS (NYSE and NASDAQ Composite) were still
flowing south, but the tributary rivers (SPX, OEX, NDX) were
starting to see some dry up of selling, and filling with a little
more bullishness.

With these "rivers" all heading in somewhat different directions
(the bullish %) that's what has created a tough market to trade,
as it has been more range bound.

So.... I've been trying to cover the NH/NL indications, as if
these are the SALMON swimming in the river.  When NH/NL breadth
is strong, then the salmon are swimming upstream (NH outnumbering
NL).  When the 5-day moves below the 10-day then the salmon no
longer have the bullish leadership, and they turn to swim
downstream.

Right now.... things seem to be moving downstream for not only
the faster moving 5-day and 10-day NH/NL indications, but like
you note, the slower moving bullish %, where you're using simple
moving averages to chart the combined daily average moves.

Did you see the charts I showed of the NYSE and NASDAQ NH/NL
indications in Friday's Market Monitor Archive?  This might give
some insight as to what you are also seeing in the bullish %
right now with your 10 and 200 day SMAs.

I might use your question for this weekend's Ask the Analyst
column.

End of reply

Now that we've looked at the chart Brian sent me, lets look at
the point and figure method (Xs and Os) of charting the line
chart.

When I look at the line chart, with the inflection low of 57.6%,
this IMMEDIATELY becomes a near-term RISK objective that you and
I need to be aware of.

S&P 500 Bullish % ($BPSPX) - 2% box size



When I look at the $BPSPX using the 3-box reversal technique and
conventional scale of 2% box size, Friday's trade would have this
bullish % chart reversing BACK DOWN to "bear confirmed" status.

In Brian's line chart, perhaps the 200-day SMA would have given a
"heads up" that the PnF Bullish % chart was vulnerable to giving
the "bear confirmed" reading at 72%.  Bear confirmed as the 72%
reading fell BELOW the 74% reading in early August of 2003 (red 8
is August).

Since trading a relative low reading (on the PnF chart) of 58%,
the %BPSPX reversed up to "bear correction" status, and Friday's
action, combined with previous session's trade, now has the
bullish % reversing back lower to "bear confirmed" status at 60%.

One reason I like to view the bullish % on the conventional PnF
chart, is to observe "meaningful" moves of 6% for reversals.

The line chart that Brian sends gives us a little more action as
we can see from the 10-day SMA.

Current RISK analysis:  With the broader S&P 500 Bullish %
($BPSPX) now reversing back lower to "bear confirmed" status, I
must at least assess downside risk to 58% bullish, and in the
context of PRICE for the S&P 500 Index (SPX.X) 1,101.39 -0.47%,
to its May relative lows of 1,080.

Now, here is where I want to bring in the NYSE and NASDAQ NH/NL
Indications, and tie them in with Brian's question, of "up, down,
or stand aside."

Trade observations:

On May 17, 2004 I profiled a BEARISH 1/2 position for the Dow
Diamonds (DIA) $101.70 and the JULY $100 puts (which expired on
Friday) when the DIA was trading $99.50.  Then at HIGHER price of
$103.90 on June 9, 2004 I profiled the additional 1/2 BEARISH
position.  While these puts were closed out prior to today's
expiration, the trade resulted in a loss.  Both of them.

LOSSES in a BEARISH index trade despite very broad NYSE Bullish %
($BPNYA) and NASDAQ Bullish % (COMPQ), as well as the OEX , SPX
and INDU all in "bear confirmed" status.  ONLY the NASDAQ-100
Bullish % ($BPNDX) was in a bullish phase at "bull alert" status,
which took place on May 27, 2004.

I'm going to critique my bearish trade profiles against
observations I make as it relates to the slower moving bullish %
indications, but ALSO the NYSE and NASDAQ NH/NL indications,
where I'm trying to learn from what apparently was a mistake.

Table - Bullish % and NH/NL breadth



In column B, I highlighted my bearish DIA trade profile dates.
The ONLY good thing I did on May 17 was profile 1/2 bearish
position instead of full position.

From column C-H I list the various bullish % readings for the
major indices.  In BLACK underscore, I mark what ended up being
inflection points.  I'm only marking inflection points AFTER a 3-
box reversal was observed (either to the upside, or downside).

The MAIN REASON I've been providing some focus to the NH/NL
indications (columns AE - AJ) is when I try to figure out "what
went wrong" with my bearish DIA trade, the NH/NL indications
might helped me avoid the 06/09/04 trade, if not the 05/17/04
trade when the NYSE NH/NL 5-day Average (column AE) had reached
an inflection point low of 3.7% on May 12 (not shown due to
vertical space limits on table).  In hindsight trading had I
waited one more day, the NYSE NH/NL 5-day average (12.5%) would
have moved above its 10-day average (10.8%) from a very low level
of NH/NL percentage.

In essence, I was CORRECT to only profile/trade 1/2 position at
what would be considered more "oversold" levels of NYSE NH/NL
indications, but I thought rather certain that the NASDAQ NH/NL
indications would continue their decline from slightly higher
levels, thus continuing to weigh on the major indices like the
Dow Industrials.  I was incorrect.

Now, what do I currently know, or observe as it relates to
Brian's comments regarding "some of the indexes are thought to be
near some support levels" while at the same time taking into
consideration Brian's "ominous looking" bullish % indications.

On May 25, in the OI Index Trader Wrap, I thought I observed the
"trimming of a hedge" based on Market Volatility (VIX.X) 14.34
and S&P 500 Index (SPX.X) June option activity, where combined
with SPX price action (SPX jumped from 1,095-1,113 and an 11-day
base).

If I benchmark that date and SPX price level, then Friday's close
(07/16/04) for the SPX.X 1,101.39 is right back in that
congestion low of mid-May.

I know, based on bullish % observations that I'm starting to see
a renewal of internals weakening (NDX Bullish % also reverses
back lower to "bear confirmed" from "bull alert").

Brian's uncertainty, but alertness that the bullish % were
"ominous" earlier in the week, would still have the bullish %
readings STRONGER than they were on May 25th.

By "STRONGER" I would mean that the SPX Bullish % is currently
reading 60% compared to 58.40% on May 20th.  That's not saying a
lot though is it?

I could make similar bullish % observations.

So just as Brian may be a bit uncertain, and wondering if it is
best to "stand aside" I've been trying to use past NH/NL
indications versus current NH/NL indications as a "tie breaker."

Based on my recent experience with the BEARISH profile in the
DIA's, I am admittedly trying NOT to repeat a what is obviously a
past mistake.  As such, I am looking for any signs of strength,
which is why I've been mentioning the NYSE NH/NL indications.

Note that the S&P 100 Bullish % ($BPOEX) rose 1% in Friday's
trade, with a net gain of one stock generating a reversing higher
point and figure buy signal.

In today's 01:00 Update, and I do think this is somewhat
important, is my "best guessing" that the bullish leadership
indication from the NYSE NH/NL 5-day ratio moving above it 10-day
ratio might be due to more energy, steel or industrial metal
stocks making new highs.

While not trading a new 52-week high today, it was oil service
provider Schlumberger (NYSE:SLB) $64.91 +0.06% that was the OEX
component generating a reversing higher point and figure buy
signal at $65.00 in Friday's session.

And this Brian, is where we've really got to monitor these NH/NL
breadth indications closely.  Are the signs of renewed bullish
leadership in the NYSE NH/NL indications (5-day moving above 10-
day) just due to energy-related stocks?  Or are there stocks in
other sectors showing a resumption of bullish leadership by
setting new 52-week highs?

Answer:  The broader bullish % are saying there aren't a lot of
stock generating new "buy signals" of late, and bullishness must
be more narrow.

However, caution (1/2 bearish positions) can be implemented,
using the NYSE NH/NL indications as a REASON to be cautious from
the bearish side.

Now, we've looked at Brian's line chart of the S&P 500 Bullish %
($BPSPX), we've looked at the PnF chart Bullish %, and we've
looked at the "raw data" where I think the NYSE NH/NL indications
gave me some confirmation that when I first traded bearish in the
DIA's, had I waited one day, then the NYSE 5-day NH/NL moving
above the NYSE 10-day NH/NL would have been a "tie breaker" that
could have kept me from making a mistake.

But, at some point, a trader/investor that has CONVICTION will
actually trade.  They'll stick their neck out, even with a 1/4 or
1/2 bullish position.  If a trader has NO CONVICTION to their
stated scenario and confirming technical analysis then they are
best served to sit on the sidelines in cash.

Let's look at the NYSE NH/NL point and figure chart.

With Xs and Os, we chart the 10-day NH/NL ratio.  I think this is
why Brian placed the 10-day moving average on his line chart of
the S&P 500 Bullish % ($BPSPX).

Recently, I've been adding a "twist" to this chart, by placing
the letter "f" on this chart, to add the observation of where the
5-day NH/NL ratio resides.  Here too, I will use the 3-box
reversal technique of PnF charting, so that I'm only recording a
6% reversal in this VERY SHORT-TERM moving average of NH/NL
ratio.

NYSE NH/NL Chart - 2% box size



The "f"ive-day NH/NL ratio has just reversed back up, signaling
some return of bullish leadership to the NYSE Composite, where
the number of new highs has started to build relative to the
number of stocks hitting new 52-week lows.

In mid-May, it could well have been that this indicator was
simply too "oversold" (below 30%) as the "f"ive-day plunged to 4%
with 10-day falling to 12%, but when the 5-day did cross above
the 10-day (green f) that was the true signal, or alert to a
resumption of bullish leadership.

I put GREATER weight in the major market bullish %, than I do in
an indicator like the NH/NL bullish % (, but we can see how the
NH/NL indicator will turn up and down much quicker than the
bullish % that is measuring buy and sell signals ($BPSPX, $BPNYA,
etc.)

Why would this be the case?  For the NYSE NH/NL indications,
Friday's trade had 145 stocks hitting new 52-week highs and 52
stocks hitting new lows.  Relative to over 3,000 stocks listed at
the NYSE, we're only sampling price action of 197 stocks.

For the NSADAQ NH/NL indications, 41 stocks hit new 52-week
highs, and 161 stocks hitting new lows.  Relative to a similar
3,000+ listed on the NASDAQ, we're only sampling price action of
202.

Are we in a range bound market right now?  The MARKET sure seems
to think so as it relates to what the NYSE and NASDAQ NH/NL
indications are doing.

What is the S&P 500 Index (SPX.X) 1,101 comprised of?  NYSE and
NASDAQ-listed stocks.

My thoughts are this Brian, and it extends beyond the bullish %
data we're discussing today, but I would have to become more
cautious from the bullish side.

Even though the regional banks (BIX.X) are strong, the Dow
Transports (TRAN) are strong, steel and industrial metal stocks
are stock, "junk bonds" have shown some sign of renewed strength,
and oil is back near all-time highs, all of which should be
signaling some type of market vote toward economic growth (U.S.
and global), the major market bullish % are once again turning
back lower, and these BROADER market internals are concerning to
a bull.

But after seeing breaks above downward trends on the recent move
up from the mid-May lows, I still think traders/investors should
be looking to trade a "range-bound" market, where we try and buy
near the lows of the range, and sell near the highs of the range.

Major index trading has been very tough so far this year, and
trading range-bound markets is tough as a trader really needs to
be bullish when things are looking bearish and testing, or
starting to break MAJOR near-term levels of support, then willing
to sell into some strength.

I do NOT think it wise to be trading "load the truck up" at any
point, especially when we're getting so many conflicting signals.

Conflicting signals that come in a range bound market.

To some, this seems to be "don't trade at all, don't take any
risk at all, don't stick your neck out at all."  I couldn't
disagree more.  There is always opportunity.

In my opinion, based on observation, I think traders should have
a more bullish bias right now for the major indices, and look to
trade the range.

We looked at the NYSE NH/NL chart, and while there are signs of
bullish leadership being renewed as we near support levels, the
follow up work I did prior to the 03:15 PM update at
OptionInvestor.com did show many of the new highs in the NYSE
coming from energy stocks, some banks and cyclical stocks.  It
was a quick look at didn't encompass all 145 stocks that did
trade a new 52-week high.

Here's a look at the NASDAQ NH/NL chart.  I think traders can be
short in here, but I think with the NYSE NH/NL showing some sign
of bullish leadership resuming, bears would be monitoring the
WEAKER NASDAQ NH/NL breadth.

NASDAQ NH/NL Chart - 2% box size



The NASDAQ NH/NL chart is notably weaker, or lacks bullish
leadership.

When comparing this chart to that of the NYSE NH/NL, what would
YOU be looking for, relative to what took place in mid-May?

I (Jeff Bailey) would be looking for a reversal in this
indicator.

If you review the table of figures I posted earlier, I'm marking
the inflection low in PINK for the "f"ive day on May 12.  I then
marked the 3-box reversal higher for the "f"ive day, which would
have been at 26% on May 19th.

For the 10-day (black Xs and Os) I mark the inflection low of
24%, which took place on May 20th, and its 3-box reversal higher
to 30% on May 25th.

Jeff Bailey


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

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

Symbol  Co               Date           Comment      EPS Est

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

MMM    3M Co               Mon, Jul 19  Before the Bell      0.96
AKZOY  Akzo Nobel N.V.     Mon, Jul 19  -----N/A-----         N/A
ASD    American Standard   Mon, Jul 19  Before the Bell      0.72
ARMHY  ARM Hldg Plc.       Mon, Jul 19  -----N/A-----        0.04
AVB    Avalonbay Commun    Mon, Jul 19  After the Bell       0.80
BNK    Banknorth Grp Inc.  Mon, Jul 19  Before the Bell      0.57
BSX    Boston Sci Corp     Mon, Jul 19  Before the Bell      0.48
CF     Charter One Fncl    Mon, Jul 19  -----N/A-----        0.72
CGNX   Cognex              Mon, Jul 19  After the Bell       0.23
CNB    Colonial BancGrp    Mon, Jul 19  -----N/A-----        0.32
DNB    D&B                 Mon, Jul 19  After the Bell       0.59
DOV    Dover Corp          Mon, Jul 19  After the Bell       0.48
DSL    Downey Fncl Corp.   Mon, Jul 19  Before the Bell      0.97
RE     Everest Re Grp, Ltd.Mon, Jul 19  After the Bell       2.66
FNFG   1st Niagara Fncl GrpMon, Jul 19  Before the Bell      0.16
HE     Hawaiian Electric   Mon, Jul 19  After the Bell       0.39
HU     Hudson Un Bancorp   Mon, Jul 19  After the Bell       0.70
ICBC   Ind Cmmnty Bank     Mon, Jul 19  After the Bell       0.72
KFT    Kraft Foods         Mon, Jul 19  -----N/A-----        0.46
LEE    Lee Enterprises, IncMon, Jul 19  -----N/A-----        0.54
LM     Legg Mason          Mon, Jul 19  Before the Bell      1.24
LXK    Lexmark Intl, Inc.  Mon, Jul 19  -----N/A-----        0.96
LNCR   Lincare Hldg        Mon, Jul 19  -----N/A-----        0.64
MAT    Mattel              Mon, Jul 19  -----N/A-----        0.05
NE     Noble Corp          Mon, Jul 19  -----N/A-----        0.25
NHY    Norsk Hydro         Mon, Jul 19  -----N/A-----         N/A
OXY    Occidental Petrol   Mon, Jul 19  Before the Bell      1.42
PKG    Pack Corp of AmericaMon, Jul 19  After the Bell       0.08
PRK    Park National       Mon, Jul 19  -----N/A-----        1.74
PCL    Plum Creek Timber   Mon, Jul 19  After the Bell       0.31
PCH    Potlatch            Mon, Jul 19  After the Bell       1.35
RGF    R&G FNCL            Mon, Jul 19  -----N/A-----        0.68
STLD   Steel Dynamics      Mon, Jul 19  After the Bell       1.12
TRBS   Texas Regional      Mon, Jul 19  Before the Bell      0.60
TMA    Thornburg Mortgage  Mon, Jul 19  After the Bell        N/A
UDR    Un Domin Rlty Trst  Mon, Jul 19  After the Bell       0.39

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

NDN    99 CENTS Only       Tue, Jul 20  -----N/A-----        0.05
ACXM   Acxiom              Tue, Jul 20  After the Bell       0.13
AFCI   Advanced Fibre Comm Tue, Jul 20  After the Bell       0.08
ATI    Allegheny Tech      Tue, Jul 20  Before the Bell     -0.21
MO     Altria Grp, Inc.    Tue, Jul 20  -----N/A-----        1.27
AMTD   Ameritrade Hldg CorpTue, Jul 20  -----N/A-----        0.15
AMCC   App Micro Circuits  Tue, Jul 20  -----N/A-----        0.00
AN     AutoNation          Tue, Jul 20  Before the Bell      0.35
AVY    Avery Dennison Corp Tue, Jul 20  Before the Bell      0.73
BXS    BancorpSouth, Inc.  Tue, Jul 20  Before the Bell      0.37
BVC    Bay View Capital    Tue, Jul 20  After the Bell        N/A
BLK    BlackRock, Inc.     Tue, Jul 20  Before the Bell      0.71
BCC    Boise Cascade       Tue, Jul 20  Before the Bell      0.33
BXP    Boston Properties   Tue, Jul 20  After the Bell       1.00
CHRW   C.H. Robinson WrldwdTue, Jul 20  After the Bell       0.37
BCR    C.R. Bard, Inc.     Tue, Jul 20  After the Bell       0.56
CNI    Can Natl Railway    Tue, Jul 20  -----N/A-----        0.72
CDWC   CDW Computer CentersTue, Jul 20  -----N/A-----        0.66
CNT    CENTERPOINT PPTYS TRTue, Jul 20  -----N/A-----        0.49
CEN    Ceridian            Tue, Jul 20  Before the Bell      0.19
CPS    ChoicePoint, Inc.   Tue, Jul 20  Before the Bell      0.40
CNF    CNF Inc.            Tue, Jul 20  After the Bell       0.57
CLP    Colonial Prop Trust Tue, Jul 20  -----N/A-----        0.86
CVG    Convergys Corp      Tue, Jul 20  After the Bell       0.20
CYMI   Cymer, Inc.         Tue, Jul 20  Before the Bell      0.29
ET     E*TRADE Grp, Inc.   Tue, Jul 20  -----N/A-----        0.19
EMC    EMC Corp            Tue, Jul 20  Before the Bell      0.08
ESV    ENSCO Intl          Tue, Jul 20  Before the Bell      0.09
F      Ford Motor Co       Tue, Jul 20  Before the Bell      0.50
FCX    Frprt-McMRan Cop GldTue, Jul 20  Before the Bell     -0.21
FULT   Fulton Fncl         Tue, Jul 20  -----N/A-----        0.32
GNTX   Gentex              Tue, Jul 20  -----N/A-----        0.38
GDW    Golden West Fncl    Tue, Jul 20  -----N/A-----        2.00
GPT    GreenPoint Fncl     Tue, Jul 20  Before the Bell      0.96
HCN    Health Care REIT    Tue, Jul 20  After the Bell       0.74
HMA    Health Mgmt Assoc   Tue, Jul 20  Before the Bell      0.36
HUBb   Hubbell Inc         Tue, Jul 20  During the Market    0.57
IFX    Infineon Tech AG    Tue, Jul 20  Before the Bell       N/A
IPCR   IPC Hldg            Tue, Jul 20  After the Bell       1.24
JCI    Johnson Controls    Tue, Jul 20  Before the Bell      1.15
JRN    Journal Comm, Inc.  Tue, Jul 20  Before the Bell      0.24
LECO   Lincoln Electric    Tue, Jul 20  Before the Bell      0.52
LLTC   Linear Tech         Tue, Jul 20  After the Bell       0.30
MAN    Manpower            Tue, Jul 20  Before the Bell      0.52
MATW   Matthews Intl       Tue, Jul 20  -----N/A-----        0.40
MDCO   MEDICINES CO        Tue, Jul 20  After the Bell       0.08
MEL    Mellon Fncl Corp    Tue, Jul 20  During the Market    0.44
MRBK   Merc Bankshares     Tue, Jul 20  Before the Bell      0.72
MCHP   Microchip Tech      Tue, Jul 20  After the Bell       0.26
MIL    Millipore Corp.     Tue, Jul 20  -----N/A-----        0.55
MOT    Motorola Inc.       Tue, Jul 20  After the Bell       0.18
NVS    Novartis Corp       Tue, Jul 20  Before the Bell      0.59
JNC    Nuveen Investments  Tue, Jul 20  Before the Bell      0.40
OMM    OMI Corp            Tue, Jul 20  After the Bell       0.42
OI     Owens Illinois      Tue, Jul 20  After the Bell       0.48
PLT    Plantronics, Inc.   Tue, Jul 20  After the Bell       0.39
PPP    Pogo Producing      Tue, Jul 20  -----N/A-----        1.32
PTZ    Pulitzer Inc.       Tue, Jul 20  Before the Bell      0.57
RSH    RadioShack Corp     Tue, Jul 20  Before the Bell      0.39
RFMD   RF Micro Devices    Tue, Jul 20  After the Bell       0.04
SAFC   Safeco Corp.        Tue, Jul 20  Before the Bell      0.80
SANM   Sanmina-SCI Corp.   Tue, Jul 20  After the Bell       0.06
STX    Seagate Tech        Tue, Jul 20  After the Bell       0.00
SSD    Simpson Manu        Tue, Jul 20  After the Bell       0.84
SLG    SL Green Rlty       Tue, Jul 20  After the Bell       0.94
TSFG   South Fncl Grp Inc  Tue, Jul 20  Before the Bell      0.48
SOV    Sovereign Bancorp   Tue, Jul 20  After the Bell       0.41
STK    Storage Tech        Tue, Jul 20  After the Bell       0.31
SUNW   Sun MicroSys        Tue, Jul 20  -----N/A-----       -0.04
TASR   Taser Intl, Inc.    Tue, Jul 20  Before the Bell      0.13
TER    Teradyne Inc.       Tue, Jul 20  After the Bell       0.37
TXN    Texas Instruments   Tue, Jul 20  After the Bell       0.25
CAKE   Cheesecake Factory  Tue, Jul 20  After the Bell       0.34
TRMK   Trustmark Corp      Tue, Jul 20  -----N/A-----        0.51
TSS    TSYS                Tue, Jul 20  -----N/A-----        0.18
USB    U.S. Bancorp        Tue, Jul 20  Before the Bell      0.53
UB     UnionBanCal         Tue, Jul 20  After the Bell       1.08
UBSI   United Bankshares   Tue, Jul 20  -----N/A-----        0.55
WFC    Wells Fargo & Co    Tue, Jul 20  Before the Bell      1.04
WABC   Westamerica BanCorp Tue, Jul 20  During the Market    0.76
XTO    XTO Energy Inc.     Tue, Jul 20  -----N/A-----        0.55


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

AGRa   Agere Sys, Inc.     Wed, Jul 21  Before the Bell      0.01
ALFA   Alfa Corp           Wed, Jul 21  Before the Bell      0.21
ALE    Allete              Wed, Jul 21  After the Bell       0.54
ADS    Alliance Data Sys   Wed, Jul 21  -----N/A-----        0.32
ALTR   Altera Corp         Wed, Jul 21  4:30 pm ET           0.17
ABK    Ambac Fncl Grp      Wed, Jul 21  Before the Bell      1.51
DOX    Amdocs Limited      Wed, Jul 21  -----N/A-----        0.30
AME    AMETEK Inc.         Wed, Jul 21  Before the Bell      0.38
APH    Amphenol            Wed, Jul 21  Before the Bell      0.42
AWE    AT&T Wireless       Wed, Jul 21  -----N/A-----       -0.01
ATML   Atmel Corp          Wed, Jul 21  After the Bell       0.03
BJS    BJ SVCS CO          Wed, Jul 21  Before the Bell      0.41
BOKF   BOK Fncl            Wed, Jul 21  -----N/A-----        0.65
BR     Burlington ResourcesWed, Jul 21  After the Bell       0.85
CSG    Cadbury Schweppes   Wed, Jul 21  -----N/A-----         N/A
CDN    Cadence Design Sys  Wed, Jul 21  After the Bell       0.15
COF    Capital One Fncl    Wed, Jul 21  After the Bell       1.50
CD     Cendant Corp        Wed, Jul 21  After the Bell       0.45
CERN   Cerner Corp         Wed, Jul 21  After the Bell       0.37
CHIR   Chiron              Wed, Jul 21  After the Bell       0.24
CTXS   Citrix Sys          Wed, Jul 21  After the Bell       0.18
CL     Colgate-Palmolive   Wed, Jul 21  -----N/A-----        0.66
COLM   Columbia Sportswear Wed, Jul 21  After the Bell       0.23
CYH    Cmmnty Health Sys   Wed, Jul 21  After the Bell       0.36
CVD    Covance             Wed, Jul 21  After the Bell       0.36
DHI    D.R. Horton         Wed, Jul 21  Before the Bell      0.87
DCN    Dana                Wed, Jul 21  -----N/A-----        0.49
DO     Dmnd Offshore DrllngWed, Jul 21  Before the Bell     -0.02
DBD    Diebold             Wed, Jul 21  Before the Bell      0.60
DST    DST Sys             Wed, Jul 21  After the Bell       0.55
EK     Eastman Kodak Co    Wed, Jul 21  Before the Bell      0.59
EBAY   eBay                Wed, Jul 21  After the Bell       0.27
EFII   Electronics Imaging Wed, Jul 21  After the Bell       0.24
ERES   eResearch Tech      Wed, Jul 21  After the Bell       0.14
ERICY  Ericsson LM Tele    Wed, Jul 21  -----N/A-----        0.29
FNM    Fannie Mae          Wed, Jul 21  Before the Bell      1.83
FDC    First Data          Wed, Jul 21  Before the Bell      0.53
FR     First Ind Rlty TrustWed, Jul 21  After the Bell       0.65
FMBI   1st Midwest Bancorp Wed, Jul 21  Before the Bell      0.53
FHN    First Tennessee NatlWed, Jul 21  Before the Bell      0.94
GD     General Dynamics    Wed, Jul 21  Before the Bell      1.40
GM     General Motors Corp.Wed, Jul 21  Before the Bell      2.24
GYI    GETTY IMAGES INC    Wed, Jul 21  After the Bell       0.40
GPN    Global Payments Inc.Wed, Jul 21  After the Bell       0.45
GG     Goldcorp            Wed, Jul 21  After the Bell       0.08
HET    Harrah's Entertain  Wed, Jul 21  -----N/A-----        0.79
HRH    Hilb Rogal & Hobbs  Wed, Jul 21  After the Bell       0.60
HON    Honeywell           Wed, Jul 21  Before the Bell      0.38
HMT    Host Marriott       Wed, Jul 21  Before the Bell      0.28
HCBK   Hudson City Bancorp Wed, Jul 21  Before the Bell      0.31
HYSL   Hyperion            Wed, Jul 21  Before the Bell      0.40
ITW    Illinois Tool Works Wed, Jul 21  Before the Bell      1.16
IMN    Imation Corp.       Wed, Jul 21  Before the Bell      0.51
IMCL   ImClone Sys Inc     Wed, Jul 21  -----N/A-----        0.22
IVGN   Invitrogen Corp     Wed, Jul 21  Before the Bell      0.74
JPM    J.P. Morgan Chase   Wed, Jul 21  Before the Bell      0.83
KMI    Kinder Morgan       Wed, Jul 21  -----N/A-----        0.83
NITE   Knight Trading Grp  Wed, Jul 21  Before the Bell      0.08
KNGT   Knight Transport    Wed, Jul 21  After the Bell       0.27
LRCX   Lam Research        Wed, Jul 21  After the Bell       0.26
LF     LeapFrog EnterprisesWed, Jul 21  After the Bell      -0.15
LEG    Leggett & Platt     Wed, Jul 21  After the Bell       0.38
LU     Lucent Technologies Wed, Jul 21  Before the Bell      0.02
MXO    Maxtor Corp         Wed, Jul 21  After the Bell      -0.17
MRK    Merck & Co., Inc.   Wed, Jul 21  Before the Bell      0.79
MERQ   Mercury Interactive Wed, Jul 21  -----N/A-----        0.25
MEOH   Methanex            Wed, Jul 21  -----N/A-----        0.42
MGG    MGM MIRAGE          Wed, Jul 21  Before the Bell      0.58
MLNM   Millennium Pharm    Wed, Jul 21  After the Bell      -0.10
MHK    Mohawk Ind, Inc.    Wed, Jul 21  After the Bell       1.30
NCEN   New Century Fncl    Wed, Jul 21  -----N/A-----        2.13
NYB    NY Cmmnty Bancorp   Wed, Jul 21  Before the Bell      0.50
NXTL   Nextel Comm         Wed, Jul 21  -----N/A-----        0.51
NTRS   Northern Trust      Wed, Jul 21  -----N/A-----        0.58
NCX    NOVA Chemicals      Wed, Jul 21  Before the Bell      0.16
PFCB   P.F. Chang's Chna   Wed, Jul 21  Before the Bell      0.32
PMTC   PARAMETRIC TECH CORPWed, Jul 21  Before the Bell      0.04
PNR    Pentair, Inc.       Wed, Jul 21  Before the Bell      0.52
PNC    PNC Fncl Serv Grp   Wed, Jul 21  Before the Bell      1.01
PGN    Progress Energy     Wed, Jul 21  Before the Bell      0.72
QCOM   QUALCOMM Inc.       Wed, Jul 21  After the Bell       0.53
RDN    Radian Grp          Wed, Jul 21  After the Bell       1.16
ROG    Rogers Corp         Wed, Jul 21  After the Bell       0.71
RCN    Rogers Wireless CommWed, Jul 21  -----N/A-----         N/A
RYL    Ryland Grp          Wed, Jul 21  After the Bell       2.52
SGP    Schering-Plough     Wed, Jul 21  Before the Bell     -0.01
SCHL   Scholastic          Wed, Jul 21  After the Bell       0.85
SRA    Serono S.A.         Wed, Jul 21  After the Bell       0.19
SEBL   Siebel Sys          Wed, Jul 21  After the Bell       0.03
SIE    Sierra Health Serv  Wed, Jul 21  After the Bell       0.82
SWKS   Skyworks            Wed, Jul 21  After the Bell       0.07
FON    Sprint FON Grp      Wed, Jul 21  -----N/A-----        0.18
SWMAY  Swedish Match       Wed, Jul 21  -----N/A-----         N/A
SYMC   Symantec            Wed, Jul 21  After the Bell       0.34
SNV    Synovus Fncl Corp.  Wed, Jul 21  -----N/A-----        0.34
TDS    Telephone Data      Wed, Jul 21  Before the Bell      0.61
TLAB   Tellabs             Wed, Jul 21  Before the Bell      0.06
TMK    Torchmark           Wed, Jul 21  After the Bell       1.05
TAC    TRANSALTA CORP      Wed, Jul 21  -----N/A-----         N/A
USM    U.S. Cellular       Wed, Jul 21  Before the Bell      0.33
VOLVY  Volvo AB            Wed, Jul 21  Before the Bell      0.68
WM     Washington Mutual   Wed, Jul 21  After the Bell       0.61
WHR    Whirlpool Corp      Wed, Jul 21  Before the Bell      1.49
WSH    Willis Grp Hldg LmtdWed, Jul 21  After the Bell       0.58
WPS    WPS Resources       Wed, Jul 21  -----N/A-----        0.33
WYE    WYETH               Wed, Jul 21  Before the Bell      0.59
ZION   Zions Bancorp       Wed, Jul 21  After the Bell       1.11


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

RKY    Adolph Coors, Co.   Thu, Jul 22  Before the Bell      1.99
ALB    Albemarle Corp      Thu, Jul 22  -----N/A-----        0.42
ACV    Alberto-Culver Co.  Thu, Jul 22  -----N/A-----        0.54
ARB    Arbitron Inc.       Thu, Jul 22  Before the Bell      0.27
AF     Astoria Fncl Corp   Thu, Jul 22  Before the Bell      0.79
AZN    AstraZeneca PLC     Thu, Jul 22  -----N/A-----        0.48
ALV    Autoliv             Thu, Jul 22  Before the Bell      0.88
AVID   Avid Tech, Inc.     Thu, Jul 22  After the Bell       0.43
BHE    Benchmark Elect     Thu, Jul 22  Before the Bell      0.37
CNP    CenterPoint Energy  Thu, Jul 22  Before the Bell      0.21
CHRT   Chrtrd Semicon Manu Thu, Jul 22  -----N/A-----        0.04
CME    CHI MRCNTL HLDGS INCThu, Jul 22  Before the Bell      1.64
CIT    CIT Grp             Thu, Jul 22  Before the Bell      0.80
CFB    Commercial Federal  Thu, Jul 22  Before the Bell      0.44
BVN    Co Minas Bnaventura Thu, Jul 22  -----N/A-----        0.38
ED     Consolidated Edison Thu, Jul 22  -----N/A-----        0.26
CFC    Countrywide Fncl    Thu, Jul 22  Before the Bell      2.30
CYT    Cytec Ind Inc.      Thu, Jul 22  After the Bell       0.71
ELNK   EarthLink           Thu, Jul 22  Before the Bell      0.15
ECL    Ecolab Inc.         Thu, Jul 22  Before the Bell      0.29
LLY    Eli Lilly           Thu, Jul 22  Before the Bell      0.68
EGN    Energen             Thu, Jul 22  -----N/A-----        0.58
ELAB   Eon Labs            Thu, Jul 22  -----N/A-----        0.26
EFX    Equifax Inc.        Thu, Jul 22  Before the Bell      0.39
FHR    Fairmont Htls & RsrtThu, Jul 22  -----N/A-----        0.36
FNF    Fidelity Natl Fncl  Thu, Jul 22  Before the Bell      1.12
FISV   Fiserv              Thu, Jul 22  Before the Bell      0.47
FLIR   FLIR Sys, Inc.      Thu, Jul 22  Before the Bell      0.39
FDRY   Foundry Networks    Thu, Jul 22  Before the Bell      0.14
BEN    Franklin Resources  Thu, Jul 22  -----N/A-----        0.76
GTW    Gateway, Inc.       Thu, Jul 22  After the Bell      -0.14
GLK    Great Lakes ChemicalThu, Jul 22  -----N/A-----        0.45
DA     Grpe Danone         Thu, Jul 22  -----N/A-----        0.48
GDT    Guidant             Thu, Jul 22  Before the Bell      0.58
HP     Helmerich & Payne   Thu, Jul 22  -----N/A-----        0.14
HSY    Hershey Foods Corp  Thu, Jul 22  Before the Bell      0.31
HNI    HNI Corp            Thu, Jul 22  -----N/A-----        0.41
IEX    Idex                Thu, Jul 22  Before the Bell      0.42
IR     Ingersoll-Rand Co   Thu, Jul 22  Before the Bell      1.30
IDTI   Integrated Dev Tech Thu, Jul 22  -----N/A-----        0.09
IDC    Interactive Data    Thu, Jul 22  Before the Bell      0.20
IGT    Intl Game Tech      Thu, Jul 22  -----N/A-----        0.33
SFI    iStar Fncl          Thu, Jul 22  -----N/A-----         N/A
ESI    ITT Edu Serv, Inc.  Thu, Jul 22  -----N/A-----        0.30
JNS    Janus Capital Grp   Thu, Jul 22  Before the Bell      0.17
JBLU   JetBlue Airways     Thu, Jul 22  Before the Bell      0.21
KMB    Kimberly Clark      Thu, Jul 22  Before the Bell      0.89
KRI    Knight Ridder       Thu, Jul 22  Before the Bell      1.06
LEA    Lear Corp.          Thu, Jul 22  Before the Bell      1.62
LYO    Lyondell Petrochem  Thu, Jul 22  Before the Bell      0.08
NST    NSTAR               Thu, Jul 22  -----N/A-----        0.68
PTV    Pactiv              Thu, Jul 22  After the Bell       0.39
PHLY   Phil Cnsldtd Hldg   Thu, Jul 22  -----N/A-----        1.06
RSAS   RSA Security        Thu, Jul 22  After the Bell       0.11
TSG    Sabre Hldg Corp.    Thu, Jul 22  Before the Bell      0.43
SBC    SBC Comm            Thu, Jul 22  Before the Bell      0.36
SHR    Schering AG         Thu, Jul 22  Before the Bell       N/A
POOL   SCP Pool Corp       Thu, Jul 22  Before the Bell      1.16
S      Sears, Roebuck Co.  Thu, Jul 22  -----N/A-----        0.72
SHW    Sherwin-Williams    Thu, Jul 22  -----N/A-----        0.86
SIAL   Sigma-Aldrich Corp  Thu, Jul 22  After the Bell       0.82
SIVB   Silicon Vlly BncshrsThu, Jul 22  -----N/A-----        0.39
SKYF   Sky Fncl Grp        Thu, Jul 22  Before the Bell      0.44
SFG    StanCorp Fncl Grp   Thu, Jul 22  Before the Bell      1.34
HOT    Strwd Htls & Rsrts  Thu, Jul 22  Before the Bell      0.37
SUN    Sunoco              Thu, Jul 22  -----N/A-----        2.39
SY     Sybase              Thu, Jul 22  Before the Bell      0.19
TKLC   Tekelec             Thu, Jul 22  After the Bell       0.09
TPX    Tempur Pedic Intl   Thu, Jul 22  After the Bell       0.18
TEX    Terex Corp          Thu, Jul 22  Before the Bell      0.81
TGN    Texas Genco Hldg    Thu, Jul 22  -----N/A-----         N/A
TXT    Textron Inc.        Thu, Jul 22  -----N/A-----        0.74
KO     The Coca-Cola Co    Thu, Jul 22  After the Bell       0.63
TBL    The Timberland Co   Thu, Jul 22  Before the Bell      0.18
TKR    The Timken Co       Thu, Jul 22  Before the Bell      0.32
TMS    Thomson             Thu, Jul 22  -----N/A-----         N/A
TRH    Transatlantic Hldg  Thu, Jul 22  -----N/A-----        1.64
TUES   Tuesday Morning CorpThu, Jul 22  Before the Bell      0.22
UHS    Universal Hlth Serv Thu, Jul 22  After the Bell       0.69
UST    UST Inc.            Thu, Jul 22  Before the Bell      0.77
VCI    Valassis Comm Inc.  Thu, Jul 22  Before the Bell      0.47
VRSN   VeriSign, Inc.      Thu, Jul 22  After the Bell       0.15
WFT    Weatherford Intl    Thu, Jul 22  Before the Bell      0.39
WEN    Wendy's Intl        Thu, Jul 22  -----N/A-----        0.62
XLNX   Xilinx, Inc.        Thu, Jul 22  After the Bell       0.28


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

BLC    Belo                Fri, Jul 23  Before the Bell      0.38
CNH    CNH Global N.V.     Fri, Jul 23  Before the Bell      0.65
CMI    Cummins Inc.        Fri, Jul 23  Before the Bell      1.34
DASTY  Dassault Systemes SAFri, Jul 23  -----N/A-----        0.33
DP     Diagnostic Products Fri, Jul 23  Before the Bell      0.63
EEP    Enbridge Enrgy PrtnrFri, Jul 23  Before the Bell      0.43
ENT    Equant NV           Fri, Jul 23  -----N/A-----         N/A
EYET   Eyetech Pharm       Fri, Jul 23  After the Bell      -0.40
FPL    FPL Grp             Fri, Jul 23  Before the Bell      1.38
IT     Gartner             Fri, Jul 23  -----N/A-----        0.10
IMY    Grupo IMSA, S.A.    Fri, Jul 23  -----N/A-----        0.60
HAL    Halliburton Co      Fri, Jul 23  Before the Bell      0.33
ITT    ITT Ind             Fri, Jul 23  Before the Bell      1.15
KB     Kookmin Bank        Fri, Jul 23  -----N/A-----         N/A
HCR    Manor Care Inc      Fri, Jul 23  Before the Bell      0.45
MYG    Maytag              Fri, Jul 23  Before the Bell      0.40
PCAR   PACCAR              Fri, Jul 23  -----N/A-----        1.14
PGL    Peoples Energy Corp.Fri, Jul 23  Before the Bell      0.31
R      Ryder System, Inc.  Fri, Jul 23  Before the Bell      0.69
SCG    SCANA               Fri, Jul 23  Before the Bell      0.43
SLB    Schlumberger        Fri, Jul 23  Before the Bell      0.48
SSCC   Smurfit-Stone Cont  Fri, Jul 23  Before the Bell     -0.08
STHLY  Stet Hellas Telecom Fri, Jul 23  -----N/A-----         N/A
TELN   Telenor ASA         Fri, Jul 23  -----N/A-----         N/A
TRP    TransCanada Corp    Fri, Jul 23  -----N/A-----         N/A
WY     Weyerhaeuser Co.    Fri, Jul 23  Before the Bell      1.10
XRX    Xerox Corp          Fri, Jul 23  Before the Bell      0.17


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

Symbol  Co Name              Ratio    Payable     Executable

BLUD    Immucor, Inc              3:2      Jul  16th   Jul  19th
KNGT    Knight Transportation Inc 3:2      Jul  20th   Jul  21st
CWTR    Coldwater Creek Inc       3:2      Jul  23rd   Jul  26th
VAR     Varian Medical Systems Inc2:1      Jul  30th   Aug   2nd
GTK     GTECH Holdings Corp       2:1      Jul  30th   Aug   2nd


--------------------------
Economic Reports This Week
--------------------------
This week is dominated by a tidal wave of earnings announcements
with the majority reporting between Tuesday and Thursday.  The
economic schedule is light and will be overshadowed by corporate
guidance looking forward.


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

----------------
Monday, 07/19/04
----------------
Semiconductor Book-to-Bill report


-----------------
Tuesday, 07/20/04
-----------------
Housing Starts (BB)        Jun  Forecast:   2000K  Previous:    1967K
Building Permits (BB)      Jun  Forecast:   2000K  Previous:    2097K


-------------------
Wednesday, 07/21/04
-------------------
Federal Reserve Governor Santomero speaks


------------------
Thursday, 07/22/04
------------------
Initial Claims (BB)      07/16  Forecast:     N/A  Previous:      N/A
Leading Indicators (BB)    Jun  Forecast:    0.3%  Previous:     0.5%


----------------
Friday, 07/23/04
----------------
None


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


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The Option Investor Newsletter                   Sunday 07-18-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: A Mixed List of Tech
Dropped Calls: ITT
Dropped Puts: None


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

A Mixed List of Tech

___________________________________________________________________

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.
___________________________________________________________________


Research In Motion - RIMM - close: 62.90 change: +1.29

WHAT TO WATCH: Feeling bullish?  RIMM has been slipping lower all
month like most tech stocks but its weakness may be giving us a
buy signal.  RIMM has filled the gap from late June.  Friday's
session turned in a bullish hammer (reversal signal) candlestick.
Aggressive traders could go long now and buy the bounce from
Friday's test of the $59-60 level.  The rest of us probably ought
to wait for a little confirmation and see RIMM trade above the
$65.00 mark before we consider bullish entries.  We would target
the highs near $72.

Chart=


---

eBay Inc - EBAY - close: 80.36 change: -3.10

WHAT TO WATCH: Ouch!  After spending several days consolidating
between $82-$85 underneath its simple 50-dma shares of EBAY have
broken out - to the downside.  The selling stalled at the $80.00
mark but it's arguable this level was saved by the closing bell.
The momentum monster EBAY is finally starting to show some
weakness as investors stare at its upcoming earnings report on
July 21st.  We would not suggest positions ahead of the report
unless it was some sort of straddle.

Chart=


---

L-3 Communications - LLL - close: 60.21 change: -0.15

WHAT TO WATCH: We strongly considering adding LLL to the put list
this weekend.  We like how the oversold bounce from its early
July drop to $60 stalled at the $62 level.  Now LLL looks ready
to breakdown under support at $60 and its simple 100-dma.  Its
P&F chart has produced a high-pole warning and a drop under $59
would produce a new sell signal.  We would target a move to the
$56-55 range but watch out for earnings on July 27th.

Chart=


---

Scientific Atlanta - SFA - close: 29.37 change: -0.84

WHAT TO WATCH: We also considered SFA for the weekend put list.
After 6 1/2 months of consolidating sideways between $30 and $36
SFA is finally breaking down through support.  The P&F chart
looks pretty bearish with a triple-bottom breakdown sell signal
and a $23 price target.  We see some support in the $26.50 region
but it may not hold.  Earnings are expected on July 27th.

Chart=



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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
^^^^^

ITT Industries - ITT - close: 81.22 chg: -0.52 stop: 80.95

Call us chicken but with the Dow Industrials falling to new two-
month lows and looking dead set on hitting the 10K mark we think
it's time to exit ITT.  More diehard bulls can still take courage
in the fact that ITT has not yet broken minor support at the
$81.00 level but if you're going to stick it out you might want
to put your stop under the $80.00 mark instead.  We'd love to buy
a bounce from its simple 100-dma currently near $79 but ITT is
due to report earnings on Friday and that doesn't give us much
time.

Picked on July 11 at $ 82.86
Change since picked:  - 1.64
Earnings Date       07/23/04 (confirmed)
Average Daily Volume:    532 thousand
Chart =



PUTS
^^^^

None


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


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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DISCLAIMER
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Please read our disclaimer at:
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The Option Investor Newsletter                   Sunday 07-18-2004
Sunday                                                      3 of 5

In Section Three:

Current Calls: AET, ATK, HUG, PD, SUN, ZBRA
New Calls: None
Current Put Plays: DISH, IRF, MGA, PG
New Puts: CEPH, GS


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

Aetna - AET - close: 87.16 change: -0.66 stop: 82.99


Company Description:
As one of the nation's leading providers of health care, dental,
pharmacy, group life, disability and long-term care benefits,
Aetna puts information and helpful resources to work for its
approximately 13.3 million medical members, 11.2 million dental
members, 8.1 million pharmacy members and 12.4 million group
insurance members to help them make better informed decisions
about their health care and protect their finances against
health-related risks. Aetna provides easy access to cost
effective health care through a nationwide network of more than
618,000 health care professionals, including over 370,000 primary
care and specialist doctors and 3,783 hospitals.
(source: company press release)

Why We Like It:
AET continues to flex its relative strength muscles as the stock
rallies from its lows near $80 two weeks ago.  We were triggered
on Wednesday's intraday rise to $86.55 and Thursday's performance
put AET solidly above the $86.50 level.  Now with the Industrials
sinking we could see AET pull back to test the $86.00 level as
support.  Traders can look for the dip as a potential entry point
to consider new plays but we would suggest you time your entry
when the broader indices aren't falling too sharply (i.e. if the
Dow is breaking under the 10,000 level we'd probably hesitate to
initiate new long positions).  Keep in mind we have just under
two weeks now for AET to hit our target area near $92.00.

Suggested Options:
We are going to suggest the August 80s, 85s and 90s even though
we do not plan to hold over the July 29th earnings report.

BUY CALL AUG 80 AET-HP OI=6059 Current Ask $8.30
BUY CALL AUG 85 AET-HQ OI= 600 Current Ask $4.60
BUY CALL AUG 90 AET-HR OI=7059 Current Ask $2.05

Annotated Chart:




Picked on July 14th at $86.55
Change since picked:   + 0.61
Earnings Date        07/29/04 (confirmed)
Average Daily Volume =   1.44 mln
Chart =


--

Alliant Tech - ATK - close: 65.62 chg: -0.06 stop: 62.99

Company Description:
ATK is an advanced weapon and space systems company with sales of
approximately $2.4 billion and strong positions in propulsion,
composite structures, munitions, precision capabilities, and
civil and sporting ammunition. The company is the world's leading
supplier of solid propulsion systems and the nation's largest
manufacturer of ammunition. ATK employs approximately 13,200
people. (source: company press release)

Why We Like It:
We can't complain with the action in ATK.  The stock charged
higher from the $62 level and almost hit the $67 mark before
finally feeling some profit taking.  We like how ATK is out
performing most of its peers in the DFI defense index.  It's
probably no coincidence that the recent pull back to the $65
level happened to be a 38.2% Fibonacci retracement of its July
rally.  Short-term technicals are mixed but we would still
consider bullish positions above the $65 level or even a bounce
from previous resistance now new support at $64.00.  ATK's P&F
chart remains bullish with a $79.00 price target. It will be
interesting to see if buying interest in defense stocks picks up
more steam as we head toward the Democratic convention on July
26th since the meeting is such a terrorist target.

Keep your eyes and ears open for news from larger defense
contractors GD and NOC.  GD is due to announce earnings on the
21st and NOC on the 29th.  Positive or negative reports could
influence trading in ATK.

Suggested Options:
We are going to suggest the August 60s and 65 calls.

BUY CALL AUG 60 ATK-HL OI= 371 Current Ask $6.20
BUY CALL AUG 65 ATK-HM OI= 432 Current Ask $2.35

Annotated Chart:




Picked on July 11 at $ 65.03
Change since picked:  + 0.59
Earnings Date       08/05/04 (confirmed)
Average Daily Volume:    335 thousand
Chart =


--

Hughes Supply - HUG - close: 60.19 change: +0.04 stop: 57.00

Company Description:
Hughes Supply, Inc., founded in 1928, is one of the nation's
largest diversified wholesale distributors of construction,
repair and maintenance- related products, with nearly 500
locations in 38 states. Headquartered in Orlando, Florida, Hughes
employs approximately 8,900 associates and generates annual
revenues of approximately $3.5 billion. Hughes is a Fortune 500
company and was named the #2 Most Admired Company in America in
the Wholesalers: Diversified Industry segment by Fortune
Magazine. (source: company press release)

Why We Like It:
We have no complaints here.  The Industrials have declined three
days in a row but HUG has managed to breakout over resistance at
the $60.00 level and trigger us at $60.51. We're encouraged that
HUG managed to hold the $60 mark even as the Dow broke to new
two-month lows on Friday.  A quick refresher on HUG...we added
the stock on Wednesday with a trigger to go long at $60.51, which
would be a new all-time high.  The company has been climbing on
stronger sales.  They've issued upside preannouncements ahead of
their Q1 earnings report and again on July 7th for their Q2
reort.  Same-store sales growth is in the 14-16 percent range and
profits should jump 41-48 percent.  Plus the stock has been
getting some positive press from IBD about its recent acquisition
and internal efficiency growth.

It's still very possible that HUG will tick lower next week if
the Industrials slip toward the 10K mark.  We'd look for a bounce
from the $59.00 level in HUG as a new entry point.

Suggested Options:
Our one big caveat with this play is the low option volume.
Be careful with your order placement.  We're going to suggest
the August 60s but the 55s look good if you can afford them.

BUY CALL AUG 55 HUG-HK OI=10 Current Ask $5.80
BUY CALL AUG 60 HUG-HL OI=68 Current Ask $2.25

Annotated Chart:




Picked on July 15 at $ 60.51
Change since picked:  - 0.32
Earnings Date       08/24/04 (unconfirmed)
Average Daily Volume:    288 thousand
Chart =


--

Phelps Dodge - PD - close: 80.50 chg: -0.20 stop: 77.49*new*

Company Description:
Phelps Dodge Corp. is the world's second-largest producer of
copper, a world leader in the production of molybdenum, the
largest producer of molybdenum-based chemicals and continuous-
cast copper rod, and among the leading producers of magnet wire
and carbon black. The company and its two divisions, Phelps Dodge
Mining Co. and Phelps Dodge Industries, employ more than 13,500
people in 27 countries. (source: company press release)

Why We Like It:
PD is in the final lap of the race with just six more trading
days to go before its pre-market earnings report on the 27th.
Fortunately, after several days of fighting with resistance at
the $80.00 level PD has managed to close above it.  Metal and
mining stocks continue to be pockets of strength for investors.
Money is rotating into the group due to strong global demand as
both east and west experience economic expansion.  This close to
earnings we probably wouldn't suggest new positions but if PD
dips and bounces from the $79 level it might be worthwhile for
nimble traders.  We're going to officially set our exit target at
$84.50 but we're probably going to exit next Friday to avoid any
surprises the following week.  We are going to raise our stop
loss from $75.49 to $77.49, under Thursday's low and its simple
10-dma.

Suggested Options:
We like the August $75 and $80 calls and that gives us time to
ride them into PD's earnings report in late July.

BUY CALL AUG 75 PD-HO OI= 593 Current Ask $7.10
BUY CALL AUG 80 PD-HP OI=1887 Current Ask $3.80

Annotated Chart:




Picked on July 07 at $ 78.75
Change since picked:  + 1.75
Earnings Date       07/27/04 (confirmed)
Average Daily Volume:    2.6 million
Chart =


---

Sunoco - SUN - close: 70.04 change: +2.78 stop: 66.49*new*

Company Description:
Sunoco, Inc., headquartered in Philadelphia, PA, is a leading
manufacturer and marketer of petroleum and petrochemical
products. With 890,000 barrels per day of refining capacity,
approximately 4,900 retail sites selling gasoline and convenience
items, over 4,500 miles of crude oil and refined product owned
and operated pipelines and 37 product terminals, Sunoco is one of
the largest independent refiner-marketers in the United States.
Sunoco is a significant manufacturer of petrochemicals with
annual sales of approximately five billion pounds, largely
chemical intermediates used to make fibers, plastics, film and
resins. Utilizing a unique, patented technology, Sunoco also
manufactures two million tons annually of high-quality
metallurgical-grade coke for use in the steel industry.
(source: company press release)

Why We Like It:
So far so good.  It's only taken six trading days for SUN to hit
the bottom edge of our suggested exit range at $70.00-72.00.  We
alerted readers in the MarketMonitor on Friday that SUN had hit
the $70 mark.  You may recall that SUN is benefiting from the
rise in oil prices, which allow SUN stronger margins in its oil
refinery business.  Plus, SUN is also winning with the huge
demand for steel products as it produces coke for steel
producers.  All told analysts are expecting a record quarter from
the oil refiners and major oil producers.  The suggested August
65 calls have risen from $3.50 to $5.90 (+68%) and the August 70s
have climbed from $1.10 to $2.40 (+118%).

We are not suggesting new bullish positions at this time since
SUN is already in our exit range and nearing its Q2 earnings
report on July 22nd.  We plan to exit at $72.00 or Wednesday
afternoon, which ever comes sooner.  SUN reports on Thursday
morning and estimates are $2.30 per share.

We are raising our stop loss to $66.49.

Suggested Options:
We're not suggesting new bullish positions at this time.  Readers
should consider taking profits now or preparing to exit.

Annotated Chart:



Picked on July 08 at $ 66.67
Change since picked:  + 3.37
Earnings Date       07/22/04 (confirmed)
Average Daily Volume:    973 thousand
Chart =


---

Zebra Tech - ZBRA - close: 82.40 chg: -0.50 stop: 79.85

Company Description:
Zebra Technologies Corporation delivers innovative and reliable
on-demand printing solutions for business improvement and
security applications in 90 countries around the world. More than
90 percent of Fortune 500 companies use Zebra-brand printers. A
broad range of applications benefit from Zebra-brand thermal bar
code, "smart" label, receipt, and card printers, resulting in
enhanced security, increased productivity, improved quality,
lower costs, and better customer service. The company has sold
more than three million printers, including RFID printer/encoders
and wireless mobile solutions, and also offers software,
connectivity solutions, and printing supplies.
(source: company press release)

Why We Like It: (Original update from Thursday)
We are adding ZBRA to the call list because shares have finally
pulled back to the bottom of its rising channel near its simple
50-dma.  Actually, it's more than that.  Yes, we've been waiting
for the appropriate entry point but ZBRA's 3 percent gain today
is a nice rebound from the $80.00 region and produces a bullish
engulfing candlestick.  Furthermore the gain was produced on
almost double the average volume.  On top of ZBRA's bullish
performance when the Industrials and NASDAQ were sinking into the
close the company announced a 3-for-2 split after the closing
bell.  Shares aren't trading too much higher after hours so we
should still be able to get a decent entry point tomorrow.  Our
initial target is the $90.00 region and we need to get there
before ZBRA's earnings report on July 28th.  We'll start the play
with a stop loss at today's low.

WEEKEND UPDATE:
Friday morning did see some follow through from Thursday's big
day but the rally failed near the $84 level and its 10-dma.
Readers can look for another bounce from the $80.00-82.00 levels
as a new entry point.


Suggested Options:
We're going to suggest the August calls.  Our favorite is the
August 80s.

BUY CALL AUG 80 ZBQ-HP OI= 178 Current Ask $4.80
BUY CALL AUG 85 ZBQ-HQ OI= 431 Current Ask $2.10

Annotated Chart:



Picked on July 15 at $ 82.90
Change since picked:  - 0.50
Earnings Date       07/28/04 (confirmed)
Average Daily Volume:    401 thousand
Chart =



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

None


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

EchoStar Comm. - DISH - close: 28.73 chg: -0.59 stop: 31.01

Company Description:
EchoStar Communications Corporation serves 10 million satellite
TV customers through its DISH Network(TM) and is a leading U.S.
provider of advanced digital television services. DISH Network's
services include hundreds of video and audio channels,
Interactive TV, HDTV, sports and international programming,
together with professional installation and 24-hour customer
service. DISH Network is the leader in the sale of digital video
recorders (DVRs). (source: company press release)

Why We Like It:
Strangely we haven't heard any more about the SEC letter
requesting data from DISH about their subscriber numbers.  It was
this news that initially attracted us to the stock.  Right now
DISH still qualifies as a put candidate due to its relative
weakness.  The CSFB "out perform" rating midweek wasn't enough to
power a rally through resistance at $30.00 and now DISH looks
poised to hit new lows.  Its P&F chart has done just that with a
new double-bottom breakdown sell signal currently pointing to an
$18 target.  We're still targeting the $25.00 level and
thankfully we have until some time in August before DISH
announces earnings because it's not moving very fast.

Suggested Options:
Our favorite is the August 30s.

BUY PUT AUG 32.50 UAB-TZ OI= 247 Current Ask $4.00
BUY PUT AUG 30.00 UAB-TF OI= 402 Current Ask $1.90
BUY PUT AUG 27.50 UAB-TY OI= 763 Current Ask $0.75

Annotated Chart:




Picked on July 09th at $28.99
Change since picked:   - 0.26
Earnings Date        08/11/04 (unconfirmed)
Average Daily Volume =    2.5 mln
Chart =


---

Int'l Rectifier - IRF - close: 33.90 chg: -0.68 stop: 35.61*new*

Company Description:
International Rectifier Corporation is a designer, manufacturer
and marketer of power management products and a worldwide
supplier of a type of power semiconductor, MOSFET (a metal oxide
semiconductor field effect transistor).  Power semiconductors
process electricity into a form more usable by electrical
products.  The company's products are divided among three broad
product categories: analog integrated circuits (ICs) and advanced
circuit devices, power systems and power components.  IRF's
products are used in a range of end markets, including consumer
electronics, information technology, automotive, aerospace and
defense, communications and industrial.

Why we like it:
The rotation out of semiconductor stocks continues.  IRF tried to
produce an oversold bounce this past week but it failed near
round-number resistance at the $35.00 level.  Coincidentally it
also happened to be the underside of its broken trendline (see
chart).  Readers can still consider new bearish positions but
watch your stop loss.  We're going to lower our stop to $35.61.
If you're already profitable in the play consider taking some
money off the table. We will continue to target a drop toward the
$31-30 range but we'll lean heavily toward exiting near $31.  We
have less than two weeks left before IRF's Q2 earnings report.

Suggested Options:
We're going to suggest the August 40s and August 35s.  If you
tend to be more of a gambling type the August 30s could work.

BUY PUT AUG 40 IRF-TH OI=2388 Current Ask $6.50
BUY PUT AUG 35 IRF-TG OI= 988 Current Ask $2.65
BUY PUT AUG 30 IRF-TF OI=  94 Current Ask $0.75

Annotated Chart of IRF:



Picked on July 6th at $37.00
Change since picked:  - 3.10
Earnings Date       07/29/04 (confirmed)
Average Daily Volume =  1.07 mln
Chart =


---

Magna Intl - MGA - close: 80.61 change: -0.92 stop: 84.51

Company Description:
Magna, the most diversified automotive supplier in the world,
designs, develops and manufactures automotive systems,
assemblies, modules and components, and engineers and assembles
complete vehicles, primarily for sale to original equipment
manufacturers of cars and light trucks in North America, Europe,
Mexico, South America and Asia. Magna's products include:
automotive interior and closure components, systems and modules
through Intier Automotive Inc.; metal body systems, components,
assemblies and modules through Cosma International; exterior and
interior mirror and engineered glass systems through Magna
Donnelly; fascias, front and rear end modules, plastic body
panels, exterior trim components and systems, greenhouse and
sealing systems, roof modules and lighting components through
Decoma International Inc.; various engine, transmission and
fueling systems and components through Tesma International Inc.;
a variety of drivetrain components through Magna Drivetrain; and
complete vehicle engineering and assembly through Magna Steyr.
Magna has approximately 75,000 employees in 212 manufacturing
operations and 47 product development and engineering centres in
23 countries. (source: company press release)

Why We Like It: (Original update from Thursday)
We like MGA because it's giving us another chance to play the
trading range.  Shares have been oscillating in a very wide
channel since last August.  Now MGA is rolling over again so it's
a simple play the move to the other side of its range.  Yes,
there are a host of moving averages between here at $81.53 and
our target near $75.00 but MGA has been virtually ignoring them
for months.  Furthermore today's high volume drop looks like a
good starting point for what could be a relatively quick trip
lower.  Please see the chart so further understand this play.

WEEKEND UPDATE:
Our range-trading play is off to a good start with MGA's 1.1
percent drop on Friday.  MGA has now broken its 10, 21, 40 and
50-dma's.  We might expect a little oversold bounce at $80.00 but
then again it might now.  It's not to late to consider plays with
our target at $75.00.  A failed rally under $82.50 would work
great.

Suggested Options:
We're going to suggest the August puts.  The August 85s or 80s
could work well.

BUY PUT AUG 85 MGA-TQ OI= 20 Current Ask $5.40
BUY PUT AUG 80 MGA-TP OI=203 Current Ask $2.00
BUY PUT AUG 75 MGA-TO OI= 20 Current Ask $0.70

Annotated Chart:



Picked on July 15 at $ 81.53
Change since picked:  - 0.92
Earnings Date       08/05/04 (unconfirmed)
Average Daily Volume:    182 thousand
Chart =


--

Progressive - PGR - close: 78.56 chg: -0.44 stop: 82.35

Company Description:
The Progressive group of insurance companies ranks third in the
nation for auto insurance based on premiums written, offering its
products by phone at 1-800-PROGRESSIVE, online at progressive.com
and through more than 30,000 independent agencies and insurance
brokers. (source: company press release)

Why We Like It: (Original play from Thursday)
Ouch!  Earnings rise by 35 percent compared to a year ago but
it's not enough to satisfy investors.  PGR reported earnings on
July 14th and only beat estimates by a penny.  As usually Wall
Street was looking for more.  After the report UBS came out to
reiterate their "reduce" rating.  Traders immediately sold the
stock this morning and PGR broke through major support at the
$80.00 mark on big volume.  This produced a new triple-bottom
breakdown on its P&F chart with a $69.00 target.

Recent reports suggest that auto insurance rates are going down
or at least rising at a slower pace across the country.
Investors may take PGR's recent results as a sign that business
really could be slowing.  After all there is a lot of room left
for profit taking when we're talking about a stock that was
trading at $15.00 in March of 2000.

It wouldn't surprise us to see a bounce but as long as it trades
under the $82.00 level and its 200-dma we should be okay.
Patient traders can wait for a potential bounce to initiate plays
on (preferably when the rally starts to fail).   For the rest of
us we'd consider positions as long as PGR trades under $80.
There could be support at the $75.00 mark but we're going to
target the $71-72 region.

WEEKEND UPDATE:
Friday was an excellent start to our new PGR put play.  The stock
tried to rally through the $79.50 level and couldn't and closed
near its lows for the session.  There is still a chance for an
oversold bounce next week but with the major indices falling the
odds are growing slimmer.

Suggested Options:
We're going to suggest the August or November puts but our
favorites would be the August 80s.

BUY PUT AUG 80 PGR-TP OI= 726 Current Ask $2.80
BUY PUT AUG 75 PGR-TO OI= 419 Current Ask $0.90

Annotated Chart:



Picked on July 15 at $ 79.00
Change since picked:  - 0.44
Earnings Date       07/14/04 (confirmed)
Average Daily Volume:    655 thousand
Chart =



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

Cephalon - CEPH - close: 49.87 change: -0.99 stop: 52.01

Company Description:
Founded in 1987, Cephalon, Inc. is an international
biopharmaceutical company dedicated to the discovery, development
and marketing of innovative products to treat sleep and
neurological disorders, cancer and pain. Cephalon currently
employs approximately 2,000 people in the United States and
Europe. U.S. sites include the company's headquarters in West
Chester, Pennsylvania, and offices and manufacturing facilities
in Salt Lake City, Utah. Cephalon's major European offices are
located in Guildford, England, Martinsried, Germany, and Maisons-
Alfort, France. The company currently markets three proprietary
products in the United States: PROVIGIL, GABITRIL, ACTIQ and more
than 20 products internationally. (source: company press release)

Why We Like It:
This is not a market for bullish plays but it's tough to find
bearish candidates that haven't fallen too far already.  We
decided to look through the biotech sector.  The BTK biotech
index has produced three failed rally attempts at its simple 200-
dma in the last six sessions.  Friday's failure looks very
bearish and we'd expect the index to fall through the 480 level
soon.  In a similar vein CEPH has been struggling under the
$52.00 level.  Shares of CEPH were very weak earlier in the month
when the BTK fell through its 200-dma.   CEPH produced an
oversold bounce from the $50.00 level but the rebound is failing
under the $52 mark and now shares have closed under the $50 level
for the first time since early January.

Now before we continue allow us to remind you that any time you
trade a biotech stock there is always headline risk.  The company
could come out for a cure to cancer or could fail some critical
FDA approval.  Either type of event would be disastrous if you
were on the other side.  Be sure to keep that in mind when you
consider how much risk you're willing to take.

We like CEPH for various reasons.  The last time the company
reported earnings on May 3rd they guided lower for the next
quarter.  Investors are likely to be cautious ahead of CEPH's
next report.  CEPH's P&F chart has produced a new triple-bottom
breakdown sell signal with a $41 target.  We're going to target
an initial drop to the $45.00 level and then re-evaluate.  One
concern is that CEPH is due to report earnings on August 3rd and
we do not plan to hold over the announcement.

If you're following the headlines you'll notice that the
CEPH/CIMA merger is almost complete but we do not expect it to
have any impact on the stock price.

Suggested Options:
We would suggest the August puts.  The 55s look great if you can
afford them, if not then try the 50s.

BUY PUT AUG 55 CQE-TK OI= 1253 Current Ask $5.60
BUY PUT AUG 50 CQE-TJ OI= 3642 Current Ask $2.00
BUY PUT AUG 45 CQE-TI OI= 1367 Current Ask $0.60

Annotated Chart:



Picked on July 15 at $ 49.87
Change since picked:  - 0.00
Earnings Date       08/03/04 (confirmed)
Average Daily Volume:    969 thousand
Chart =


--

Goldman Sachs - GS - close: 87.25 change: -1.08 stop: 92.01

Company Description:
Goldman Sachs is a leading global investment banking, securities
and investment management firm that provides a wide range of
services worldwide to a substantial and diversified client base
that includes corporations, financial institutions, governments
and high net-worth individuals.  Founded in 1869, it is one of
the oldest and largest investment banking firms. The firm is
headquartered in New York and maintains offices in London,
Frankfurt, Tokyo, Hong Kong and other major financial centers
around the world. (source: company press release)

Why We Like It:
We have been patiently waiting and watching GS to give the right
bearish breakdown for days.  This could be it.  Through most of
May and June GS traded range bound between $90-95.  After a bear-
trap drop through the $90 level GS rallied sharply higher after
beating earnings estimates.  The stock tried to breakout over the
top of the range at $95.00 but failed.  By then the sector
slowdown had begun.  Recent weakness in July for the XBD broker-
dealer index looks very bearish for the group.  Rival Merrill
Lynch's recent earnings report confirms a seasonal slow down in
the sector has begun that had not yet hit when GS reported
earnings.  That means when GS reports next its results will show
the same slow down.

The technical picture in GS looks bearish as well.  Its MACD is
in a sell signal.  The stock closed at new multi-month lows on
Friday, which confirmed the breakdown under $90.00 and also a
breakdown under $87.50 (June low).  It has broken a trendline of
support dating back to June 2003 (see chart).  Plus, its P&F
chart has failed at resistance and produced a "bull-trap".  A
drop under the $87.00 mark will produce a new sell signal.  We're
going to suggest new bearish positions now with a target at $80-
82 range.  Our initial stop will be  $92.01.

Suggested Options:
We are going to suggest the August puts.  Our favorite is the
August 90s although the 85s look good too.

BUY PUT AUG 90 GS-TR OI=4569 Current Ask $4.40
BUY PUT AUG 85 GS-TQ OI=3200 Current Ask $1.85
BUY PUT AUG 80 GS-TP OI=1832 Current Ask $0.70

Annotated Chart:



Picked on July 15 at $ 87.25
Change since picked:  - 0.00
Earnings Date       06/22/04 (confirmed)
Average Daily Volume:    4.0 million
Chart =



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The Option Investor Newsletter                   Sunday 07-18-2004
Sunday                                                      4 of 5

In Section Four:

Leaps: Going to be Really Picky


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*****
LEAPS
*****

Going to be Really Picky

With the potential for continued market weakness for the
rest of the summer I am going to be really picky about
adding new leaps on the call side. In reality market
weakness is the right time to add call leaps because
they are cheap but we as we near a potential market
breakdown at Dow 10150 we need to focus on story stocks
that have already been taken to the woodshed instead of
strictly fundamental plays.

As we go through this earnings cycle the opportunity
to buy stocks on negative earnings news should increase.
This week we saw Intel and Merrill Lynch knocked for
huge losses despite earnings that were not that bad.

I would not hesitate to add Intel this weekend except
that the SOX is threatening to drop even further.
Also, we know Intel has an inventory problem that
could take 1-2 quarters to work off and the stock
is likely to continue lower until that problem has
been resolved. Intel has broken two levels of support
and the next major level and my target for an entry
would be in the $20 range.

Intel Chart


SOX Chart




Merrill Lynch $49.35

Merrill is another stock that should be on our watch list
for a post summer entry. They earned over $1 billion last
quarter and prospects are great. They admitted they had
restricted risk trading due to the low volatility in the
market and I think that was a wise decision. Many firms
have been thrashing themselves to pieces trying to find
a profitable trade and instead suffering the death of a
thousand cuts.

Merrill has support in the $46 range and I would love to
buy leaps at that level after the Republican convention
and Olympic risk has passed. I am putting this on the
watch list for a $46 target. We will reevaluate it with
an eye on the calendar at that time.

Merrill Lynch Chart




Red Hat  $15.75

The one stock I am adding this weekend is Red Hat. This
is the most beat up stock on the market with a real
chance for a recovery. The stock took a hit about a
month ago when the CFO resigned to pursue other interests.
The market was immediately suspicious and the stock
tanked.

Last week it was announced that they were restating
earnings for the last three years due to a revenue
recognition problem. They were booking a full month
of income for subscription started in the middle of
the month. They were paid for the entire month but
their auditors they could not claim the income until
the end of the subscription when it was completely
earned.

To resolve this they were going to a daily accounting
method to account for revenue earned on a daily basis
and not on a payment basis. The company claims this
impacted less than 3% of their revenue and will have
no material impact on results.

Red Hat is a developer/provider of open source software
and services including the Red Hat Linux operating
system. For the fiscal year ended 2/29/04 they posted
a +39% increase in revenues, higher margins and lower
costs.

The key to this play is the outlook. The company
maintains a rosy outlook due to the growing move
to switch from costly Microsoft operating systems
to the considerably cheaper Linux model. There is
a rising tide of companies that have noticed the
price and speed improvements available with Linux
and it is only going to grow. We have moved to
Linux on several of our servers and they are much
faster, easier to maintain, are strongly virus
resistant and are almost free compared to the cost
for a comparable Microsoft system.

The stock has risen from $5 in Jan-2003 to a high
of $29 in June-2004. The CFO resignation on June
7th knocked -$8 off the price and the revenue
restatement last week took off another -$5 to
close on Friday at $15.

The Jan-2006 $20 LEAP Calls YFX-AD are currently
$3.00. I do not want to take a chance on the 2005
leaps with a weak summer ahead. The September $12.50
puts RCV-UV are 60 cents and will serve as our LEAP
insurance. $12.50 is also very strong support.

Entry trigger:

Because I expect market weakness next week I am
planning on putting a trailing stop on the stock
as an entry point. We will start it at $16.25 and
trail it down $1.00 behind the stock price. If the
stock continues to sell off with the market we will
get a better entry. If we are not stopped into the
trade we will enter on a touch of $13.00.

Red Hat Chart




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

CIEN $3.09

No, that is not the price of the LEAP, it is the price
of the stock. I know that seems like a strange stock
to buy leaps on but I have an ulterior motive.

There is a rumor making the rounds that CIEN is a
takeover target and at that price there can only be
upside.

Ciena designs, manufacturers and sells open architecture,
DWDM systems for fiber-optic communications networks and
optical networking solutions. The previously high flying
company needs help. For the six months ended 4/30/05 the
company saw sales drop -2% but its net loss narrowed by
-16%. It is making progress but nowhere near the revenue
levels from the Internet boom days.

CIEN has good products but it is carrying a load of
debt and slowly working out of its problem. The lack
of a boom like we see in Juniper has been due to a
lag getting new products to market.

I am not going to beat the drum about CIEN but only
suggest it is a pretty cheap lottery play as a takeover
candidate. A rumored suitor has been Siemens AG.
According to the rumor they are looking for a way to
get into the U.S. optical networking market and see
CIEN as a potential entry. It is just a rumor but it
could start other companies thinking in the same
direction.

The 2006 $5 LEAP Call YCD-AA is only 65 cents. The
$2.50 call is only $1.40 but if you were going to
spend that much money I would just buy the stock.
We are not going to put an insurance put on this
play because the Aug $2.50 put is 70 cents and
more than the cost of the call.

Side note: A cheaper way to play.

Another way to play this would be to sell
the August $2.50 put naked for 70 cents and hope you
are put. This would give you the stock for a net cost
of $1.80. If not put then sell the Sept $2.50 put and
do it again. If not put for three months you have
already recovered more than you could ever risk on
the stock. The risk in this method is that a buyout
occurs and the stock jumps several dollars and you
miss out on the upside. You can protect yourself
against this by purchasing the LEAP and selling the
puts as well. You have upside protection and at $2.50
you really do not need downside protection. If you are
really lucky you could sell the put for the next year
and profit well more than any buyout.


2006 $5 LEAP Call YCD-AA 65 cents

CIEN Chart - Daily


CIEN Chart - weekly





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

Closed plays

LUV $14.67

We were stopped on the LUV leap when the stock traded
$15 this week after the CEO suddenly stepped down. That
coupled with the rising oil prices was too much for the
stock to bear. We entered the play at $14.10 and were
stopped at $15.00.

2005 $15 LEAP Call LUV-AC $1.25 stopped - cost 1.35
2006 $15 LEAP Call WUV-AC $2.60 stopped - cost 2.50


AIG $69.01

I am dropping this play before the stop. The decline
is about to break a head and shoulders over the last
six months with the neckline at $69. It took a turn
for the worse in the last week and I see no reason
to keep it in the portfolio.

2005 $75 Call AIG-AO 2.35 Friday's close - cost 3.80
2006 $80 Call WAP-AP 4.80 Friday's close - cost 5.90


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

Current Portfolio

CHK Chesapeake Energy $15.97 **RAISE stop to $15.00**
Entry $12.22

2005 $12 LEAP Call CHK-AV $3.80 cost $1.50 +130%
2006 $12 LEAP Call WZY-AV $4.80 cost $2.25 + 98%
April $10 insurance put - expired - cost $.25

TYC Tyco $31.65 Stop $29.50
Entry $28.32

2005 $30 LEAP Call TYC-AF $3.50 cost $2.15 +37%
2006 $30 LEAP Call WPA-AF $5.50 cost $4.00 +24%
July $25 insurance put - expired - cost $.55

HD Home Depot $33.92  ** Lower Stop to 35.50 **
Entry $34.69

2005 $35 LEAP Put HD-MG $2.90 cost $2.95 -22%
2006 $35 LEAP Put WHD-MG $4.50 cost $4.50 -17%
May $40 Insurance put - expired - cost $.55

Summary Graph




LEAPS Watch List

MER - Merrill Lynch $48.77 target entry $46.00 or lower
      (wait for signal to enter)

2006 $50 LEAP Call WZM-AJ Currently $6.30 target $5.00

INTC - Intel $22.73 target entry $20.00

2006 $22 LEAP Call WNL-AX currently $4.10
2006 $25 LEAP Call WNL-AE currently $2.90


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The Option Investor Newsletter                   Sunday 07-18-2004
Sunday                                                      5 of 5

In Section Five:

Conservative Stock Ownership: Covered-Calls
Spreads and Straddles: A Bad Month For Market Bulls!
Premium-Selling Plays: Naked Puts and Calls


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

Many investors find that writing "in-the-money" covered-calls
fits their criteria for a conservative, easy-to-manage options
strategy.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW COVERED-CALL CANDIDATES
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following group of issues is a list of potential candidates
to supplement your search for profitable trading positions.  As
with any investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
and positions are suitable for your experience level, risk-reward
tolerance and portfolio outlook.  They will not be included in
the weekly portfolio summary.

__________________________________________________________________

COVERED-CALLS

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

SRDX   23.60  AUG 22.50  UZF HX  2.50  5447  21.10  33   6.1%
VTIX   16.00  AUG 15.00  QBP HC  1.70   385  14.30  33   4.5%
COSI    5.97  AUG  5.00  CQA HA  1.20    20   4.77  33   4.4%
DUSA   10.65  AUG 10.00  FDU HB  1.10   154   9.55  33   4.3%
SWC    16.15  AUG 15.00  SWC HC  1.70   395  14.45  33   3.5%
ISG    32.36  AUG 30.00  ISG HF  3.30   774  29.06  33   3.0%
FARO   24.60  AUG 22.50  QEJ HX  2.80   184  21.80  33   3.0%
PLMO   34.99  AUG 30.00  UPY HF  5.90  2861  29.09  33   2.9%

Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, TY-Target Yield (monthly basis).

__________________________________________________________________

SRDX - SurModics  $23.60  *** Earnings Speculation ***

SurModics (NASDAQ:SRDX) is a provider of surface-modification
solutions for medical device and biomedical applications.  Its
PhotoLink chemistry is the core technology platform on which
many of its surface-modification capabilities are based.  This
technology helps modify and enhance the surface characteristics
of medical devices and biomedical applications, thus improving
performance, and, in some cases, enabling the development of
new products.  The firm commercializes its surface-modification
technologies through licensing and royalty arrangements with
medical device manufacturers that apply coatings to their own
products.

AUG 22.50 UZF HX LB=2.50 OI=5447 CB=21.10 DE=33 TY=6.1%


__________________________________________________________________

VTIV - Ventiv Health  $16.00  *** Consolidation Complete? ***

Ventiv Health (NASDAQ:VTIV) is a provider of outsourced sales
and marketing solutions for the pharmaceutical, biotechnology
and life sciences industries.  The company offers a range of
integrated and standalone services, in a context of consultative
partnership that identifies strategic goals and applies targeted,
tailored solutions.  The firm's portfolio of offerings includes
integrated sales force recruitment, training and management;
standalone sales force recruitment and regulatory compliance
services; product, sample and literature fulfillment; product
and brand management; brand/portfolio analytics and forecasting,
and strategic and tactical planning.

AUG 15.00 QBP HC LB=1.70 OI=385 CB=14.30 DE=33 TY=4.5%


__________________________________________________________________

COSI - Cosi Inc.  $5.97  *** Entry Point? ***

Cosi Incorporated (NASDAQ:COSI) owns and operates 88 fast casual
restaurants in 11 states and the District of Columbia.  Cosi
restaurants are all-day cafes that feature signature bread and
coffee products.  The majority of the company's restaurants offer
breakfast, lunch, afternoon coffee, dinner and dessert menus.
Cosi operates its restaurants in two primary formats: Cosi and
Cosi Downtown.  Cosi Downtown restaurants, which are located in
non-residential central business districts, close for the day in
the early evening, while Cosi restaurants offer dinner in a
casual dining atmosphere.

AUG  5.00 CQA HA LB=1.20 OI=20 CB=4.77 DE=33 TY=4.4%


__________________________________________________________________

DUSA - DUSA Pharmaceuticals  $10.65  *** On The Rebound? ***

DUSA Pharmaceuticals (NASDAQ:DUSA) is a pharmaceutical company
developing drugs in combination with light devices to treat or
detect conditions in processes known as photodynamic therapy or
photodetection.  The firm is engaged primarily in the research,
development and marketing of its first drug, Levulan brand of
aminolevulinic acid HCl (ALA), for use in a range of medical
conditions.  When the company uses Levulan and follows it with
exposure to light to treat a medical condition, it is known as
Levulan photodynamic therapy (Levulan PDT).

AUG 10.00 FDU HB LB=1.10 OI=154 CB=9.55 DE=33 TY=4.3%


__________________________________________________________________

SWC - Stillwater Mining Company  $16.15  *** Own This One! ***

Stillwater Mining (NYSE:SWC) is engaged in the development,
extraction, processing and refining of palladium, platinum
and associated metals from a geological formation in Montana
known as the J-M Reef, a narrow but extensive mineralized
zone that contains the only significant (known) source of
platinum group metals inside the United States.  Stillwater
conducts its mining operations at the Stillwater Mine near
Nye, Montana, and at the East Boulder Mine near Big Timber,
Montana.

AUG 15.00 SWC HC LB=1.70 OI=395 CB=14.45 DE=33 TY=3.5%


__________________________________________________________________

ISG - International Steel Group  $32.36  *** Strong Sector! ***

International Steel Group (NYSE:ISG) is an integrated steel
manufacturing company.  ISG has an annual raw steel production
capability of about 18 million net tons and ships a variety of
steel products from 11 steel producing and finishing facilities
in six states.  The company's principal products include a range
of hot-rolled, cold-rolled and coated sheets, tin mill products,
carbon and alloy plates, rail products and semi-finished shapes
serving the automotive, construction, appliance, plate, rail,
container, tin and machinery markets.

AUG 30.00 ISG HF LB=3.30 OI=774 CB=29.06 DE=33 TY=3.0%


__________________________________________________________________

FARO - FARO Technologies  $24.60  *** Sales Are Up! ***

FARO Technologies (NASDAQ:FARO) designs, develops, markets and
supports portable, software-driven, 3-D measurement systems used
in a broad range of manufacturing and industrial applications.
The firm's principal products are the Faro-Arm Control Station
and Control Station Pro (articulated measuring devices), the Faro
Laser Tracker and Laser Control Station and their companion Soft
Check Tool and CAM2 software, respectively, which provide for
computer-aided design (CAD)-based inspection and factory-level
statistical process control.  Faro's products bring precision
measurement, quality inspection and specification conformance
capabilities, integrated with CAD software, to the factory floor.

AUG 22.50 QEJ HX LB=2.80 OI=184 CB=21.80 DE=33 TY=3.0%


__________________________________________________________________

PLMO - palmOne  $34.99  *** Testing 2004 Highs! ***

palmOne (NASDAQ:PLMO) develops, builds and sells Palm-branded,
hand-held devices, accessories and the Palm operating system
(Palm OS).  The company was historically organized into two
operating segments: the Solutions Group and PalmSource.  The
Solutions Group develops and markets hand-held devices and
accessories to provide the user with a simple, elegant and
useful productivity tool.  PalmSource developed and licensed
the Palm OS and related software, which is referred to as the
Palm platform.  The Palm platform is the foundation for Palm
devices, as well as for devices manufactured by third-party
licensees.

AUG 30.00 UPY HF LB=5.90 OI=2861 CB=29.09 DE=33 TY=2.9%



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

SEE DISCLAIMER IN SECTION ONE

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


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

A Bad Month For Market Bulls!
By Ray Cummins

Stocks ended the week on a bearish note amid concerns over the
slowing pace of the economy and the murky outlook for corporate
profits.

The Dow Jones Industrial Average declined 23 points to 10,139,
despite gains in Johnson & Johnson (NYSE:JNJ), which rose more
than 2% on news of more problems with Boston Scientific's heart
device.  Weakness in semiconductor-related shares helped drive
the NASDAQ Composite down 29 points to 1,883, its lowest close
in two months.  Rising oil prices weighed on the broader market,
with the Standard & Poor's 500 Index falling 5 points to 1,101
in a fifth consecutive week of losses.  Trading was active with
about 1.4 billion issues crossed on the New York Stock Exchange
and 1.8 billion shares changing hands on the NASDAQ.  Breadth
was roughly neutral on the Big Board, however decliners ousted
advancers more than 2 to 1 on the technology exchange.  In the
bond market, the 10-year note soared 31/32, while its yield fell
to 4.36%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 07/16/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

AMZN   50.95  47.10  JUL  42.5  45.0  0.30   44.70   0.30  Closed
YHOO   31.87  29.19  JUL  25.0  27.5  0.30   27.20   0.30  Closed
CFC    69.15  72.37  JUL  60.0  63.3  0.35   63.03   0.35  Closed
QCOM   69.86  68.28  JUL  60.0  65.0  0.45   64.55   0.45  Closed
SWIR   33.83  29.97  JUL  25.0  30.0  0.90   29.10   0.87  Closed
CTSH   24.25  24.92  JUL  20.0  22.5  0.27   22.23   0.27  Closed
NUE    69.54  79.50  JUL  60.0  65.0  0.75   64.25   0.75  Closed
SII    53.26  58.60  JUL  47.5  50.0  0.30   49.70   0.30  Closed
RJR    65.90  65.86  JUL  55.0  60.0  0.35   59.65   0.35  Closed
URBN   30.40  26.79  JUL  25.0  27.5  0.20   27.30  (0.51) Closed
FRE    63.57  67.24  AUG  55.0  60.0  0.55   59.45   0.55   Open
GILD   67.42  62.44  AUG  55.0  60.0  0.60   59.40   0.60   Open
POT    98.08  96.05  AUG  85.0  90.0  0.60   89.40   0.60   Open
UOPX   89.09  90.66  AUG  75.0  80.0  0.60   79.40   0.60   Open
FAST   54.74  60.82  AUG  45.0  50.0  0.60   49.40   0.60   Open
PD     79.00  80.50  AUG  65.0  70.0  0.60   69.40   0.60   Open
ATH    91.31  93.40  AUG  80.0  85.0  0.45   84.55   0.45   Open
WLP   112.90 114.85  AUG 100.0 105.0  0.50  104.50   0.50   Open

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

The position in Ishares Russell 2000 Index (IWM) was not available
at the recommended price.  Photon Dynamics (NASDAQ:PHTN), Maxim
Integrated Products (NASDAQ:MXIM), Amazon.com (NASDAQ:AMZN); at
the $50 strike, and Plantronics (NYSE:PLT) have previously been
closed to limit potential losses.


CALL-CREDIT SPREADS

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

APPX   34.03  26.39  JUL  45.0  40.0  0.50   40.50  0.50  Closed
INSP   34.71  30.96  JUL  45.0  40.0  0.65   40.65  0.65  Closed
WMS    28.75  29.30  JUL  35.0  30.0  0.65   30.65  0.65  Closed
GS     90.21  87.25  JUL 100.0  95.0  0.70   95.70  0.70  Closed
SYMC   42.42  40.56  JUL  50.0  45.0  0.65   45.65  0.65  Closed
FRX    56.32  52.16  JUL  65.0  60.0  0.60   60.60  0.60  Closed
CTX    47.34  43.70  JUL  52.5  50.0  0.30   50.30  0.30  Closed
SINA   35.60  24.67  JUL  45.0  40.0  0.45   40.45  0.45  Closed
CECO   44.45  42.25  JUL  55.0  50.0  0.55   50.55  0.55  Closed
RYL    75.80  72.99  JUL  85.0  80.0  0.60   80.60  0.60  Closed
LLTC   36.74  35.87  AUG  42.5  40.0  0.30   40.30  0.30   Open
XLNX   31.53  29.76  AUG  37.5  35.0  0.25   35.25  0.25   Open
MERQ   46.17  42.26  AUG  55.0  50.0  0.65   50.65  0.65   Open
SMH    34.58  32.00  AUG  42.5  40.0  0.30   40.30  0.30   Open
TLB    33.04  30.49  AUG  40.0  35.0  0.60   35.60  0.60   Open
VAR    77.24  66.30  AUG  90.0  85.0  0.50   85.50  0.50   Open
KLAC   43.33  39.36  AUG  50.0  47.5  0.25   47.75  0.25   Open
NVLS   29.23  27.29  AUG  35.0  32.5  0.20   32.70  0.20   Open

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

Positions in Genzyme (NASDAQ:GENZ) and the Oil Service Holdrs
(AMEX:OIH) have previously been closed to limit potential losses.


DEBIT STRADDLES

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

GRMN    32.60  34.13   JUL   35.00  30.00   2.15    2.35   Closed
SNDK    22.90  23.69   JUL   22.50  22.50   3.40    3.60   Closed
GDT     56.02  54.55   JUL   55.00  55.00   4.80    4.50   Closed
DNA     54.60  51.07   JUL   55.00  55.00   4.25    5.10   Closed
OVTI    15.50  12.14   JUL   15.00  15.00   2.70    4.00   Closed
MDC     64.77  66.85   JUL   65.00  65.00   4.00    5.00   Closed
DVN     69.40  70.40   AUG   70.00  70.00   5.00    4.80    Open

Straddle plays on Garmin (NASDAQ:GRMN), Sandisk (NASDAQ:SNDK) and
Guidant (NYSE:GDT) were closed early in the interest of "capital
preservation."  Genentech (NYSE:DNA), M.D.C. Holdings (NYSE:MDC)
and Omnivision (NASDAQ:OVTI) offered small profits.


CREDIT STRANGLES

Stock   Pick   Last   Exp.   Sold  Sold  Initial Current   Play
Symbol  Price  Price  Month  Call  Put   Credit   Debit   Status

NFLX    32.31  23.02   JUL   37.50 27.50  0.55    4.50    Closed

Netflix (NASDAQ:NFLX) endured a major sell-off Friday, despite
a relatively benign earnings announcement.  Traders who used a
"buy-to-close" stop on the option (or a sell-short order on the
stock) reduced the potential loss considerably, but the issue
was definitely more volatile than expected.


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

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

INDEX-BASED CREDIT SPREADS

As a trader, you may be familiar with options on individual stocks
where you have the right to buy (call option) or the right to sell
(put option) a particular stock at some predetermined price within
some predetermined time.  The buyer has the rights and the seller
the obligations.  With index options the basic ideas are the same.
Index options allow you to make investment decisions on a specific
industry group or on the market as a whole.  Spread strategies can
be made with index options similar to those made with individual
stock options and professional traders also employ index spreads
in common hedge strategies.  Traders who participate in OTM credit
spreads often utilize index-based options because they generally
contain favorable "premium" and provide an underlying instrument
less prone to huge, gapping moves.  These positions will not be
included in the portfolio summary.
_________________________________________________________________

UTH - Utilities Holdrs Trust  $82.42  *** Safety Sector! ***

The Utilities Holdrs Trust (AMEX:UTH) is a unique instrument
that represents an investor’s ownership in the stock of specified
companies in the utilities sector.  HOLDRS allow investors to
own a diversified group of stocks in a single investment that is
highly transparent, liquid and efficient.  Each HOLDR is a fixed
basket of 20 stocks (except the Telebras HOLDR, which holds 12
companies).  They work operate much like ADRs; American Depositary
Receipts, which allow U.S. investors to purchase foreign-owned
companies on the U.S. exchanges in dollar denominated amounts.  In
just the same way, the investor actually owns the shares of each
underlying company, receives dividends, proxies, and annual reports
from each.  The HOLDRs are not managed, and once the companies and
amounts have been determined they are fixed, no companies will be
substituted.  In this way, the HOLDRs differ somewhat from Spiders
(SPDRs), or Standard & Poor Depositary Receipts and other exchange
traded funds, which will add and delete stocks on a regular basis,
usually in conjunction with an index that they are tracking.

A complete explanation of this issue, including the companies that
make up each HOLDRS' particular industry, sector or group can be
found here:

http://www.holdrs.com/holdrs/main/index.asp?Action=Definition

UTH - Utilities Holdrs Trust  $82.42

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-75.00  UTH-TO  OI=1561  ASK=$0.20
SELL PUT  AUG-80.00  UTH-TP  OI=423   BID=$0.60
INITIAL NET-CREDIT TARGET=$0.45-$0.50
POTENTIAL PROFIT(max)=9% B/E=$79.55


_________________________________________________________________

OIH - Oil Service Holdrs Trust  $75.59  *** Oil Soars Again! ***

The Oil Service Holdrs Trust (AMEX:OIH) is a unique instrument
that represents an investor’s ownership in the stock of specified
companies in the oil service sector.  HOLDRS allow investors to
own a diversified group of stocks in a single investment that is
highly transparent, liquid and efficient.  Each HOLDR is a fixed
basket of 20 stocks (except the Telebras HOLDR, which holds 12
companies).  They work operate much like ADRs; American Depositary
Receipts, which allow U.S. investors to purchase foreign-owned
companies on the U.S. exchanges in dollar denominated amounts.  In
just the same way, the investor actually owns the shares of each
underlying company, receives dividends, proxies, and annual reports
from each.  The HOLDRs are not managed, and once the companies and
amounts have been determined they are fixed, no companies will be
substituted.  In this way, the HOLDRs differ somewhat from Spiders
(SPDRs), or Standard & Poor Depositary Receipts and other exchange
traded funds, which will add and delete stocks on a regular basis,
usually in conjunction with an index that they are tracking.

A complete explanation of this issue, including the companies that
make up each HOLDRS' particular industry, sector or group can be
found here:

http://www.holdrs.com/holdrs/main/index.asp?Action=Definition

OIH - Oil Service Holdrs Trust  $75.59

PLAY (conservative - bullish/credit spread):

BUY  PUT  AUG-65.00  OIH-TM  OI=1150  ASK=$0.25
SELL PUT  AUG-70.00  OIH-TN  OI=9359  BID=$0.70
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$69.50


_________________________________________________________________

BEARISH PLAYS - INDEX-BASED CREDIT SPREADS
_________________________________________________________________

OEX - S&P 100 Index  $535.90  *** Broad-Market Hedge ***

Standard & Poor's 100 Index is a capitalization-weighted index
of 100 stocks from a broad range of industries.  The component
stocks are weighted according to the total market value of their
outstanding shares.  The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding.  Trading in S&P-100
options will ordinarily cease on the business day preceding the
expiration date.  OEX options generally may be exercised on any
business day before the expiration date.

OEX - S&P 100 Index  $535.90

PLAY (less conservative - bearish/credit spread):

BUY  CALL  AUG-560.00  OEB-HL  OI=8528  ASK=$1.00
SELL CALL  AUG-555.00  OEB-HK  OI=2010  BID=$1.60
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$555.65


_________________________________________________________________

DIA - DOW DIAMONDS  $101.70  *** Doing The DOW! ***

DOW DIAMONDS (AMEX:DIA) represent ownership in the DIAMONDS,
Trust Series 1, a unit investment trust established to hold
a portfolio of the equity securities that comprise the Dow
Jones Industrial Average.  DIAMONDS seek investment results
that, before expenses, generally correspond to the price and
yield performance of the DJIA.

A complete explanation of this issue, including the companies
that make up the DOW DIAMONDS - DIA can be found here:

http://www.amex.com/?href=/etf/prodInf/EtPiOverview.jsp?Product_Symbol=DIA

DIA - DOW DIAMONDS  $101.70

PLAY (conservative - bearish/credit spread):

BUY  CALL  AUG-106.00  DIA-HB  OI=6653  ASK=$0.20
SELL CALL  AUG-105.00  DIA-HE  OI=6015  BID=$0.30
INITIAL NET-CREDIT TARGET=$0.10-$0.15
POTENTIAL PROFIT(max)=11% B/E=$105.10



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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.
_________________________________________________________________

TBL - The Timberland Company  $60.26  *** Retail Sector! ***

The Timberland Company (NYSE:TBL) designs, develops, engineers,
markets and distributes, under the Timberland and Timberland
PRO brands, footwear, apparel and accessories products for men,
women and children.  The company's products are sold primarily
through independent retailers, better-grade department stores,
athletic stores and other national retailers.  In addition, its
products are sold through specialty stores, Timberland factory
outlet stores, timberland.com and franchisees in Europe.  The
firm's products are sold throughout the United States, Canada,
Europe, Asia, Latin America and the Middle East.  Earnings are
due on July 22, 2004.

TBL - The Timberland Company  $60.26

PLAY (speculative - neutral/debit straddle):

BUY CALL  AUG-60.00  TBL-HL  OI=336  ASK=$2.60
BUY PUT   AUG-60.00  TBL-TL  OI=413  ASK=$2.25
INITIAL NET-DEBIT TARGET=$4.60-$4.75
INITIAL TARGET PROFIT=$2.10-$3.30



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

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 07/16/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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

CVTX     JUL    15.00   14.60   15.03    0.40   5.63%   2.74%
DITC     JUL    17.50   16.80   19.69    0.70   8.40%   4.17%
SYNA     JUL    17.50   16.85   16.98    0.13   1.50%   3.86%
PTIE     JUL     7.50   7.15    7.30     0.15   4.24%   4.90%
BCC      JUL    35.00   34.25   35.01    0.75   5.12%   2.19%
JILL     JUL    20.00   19.45   19.24   (0.22)  0.00%   0.00%
LSS      JUL    20.00   19.50   33.75    0.50   6.07%   2.56%
OI       JUL    15.00   14.65   15.76    0.35   5.64%   2.39%
NVTL     JUL    15.00   14.65   21.33    0.35   7.34%   2.39%
PDII     JUL    25.00   24.70   28.43    0.30   3.91%   1.21%
RSAS     JUL    17.50   17.05   18.64    0.45   6.22%   2.64%
STLD     JUL    25.00   24.45   33.10    0.55   5.33%   2.25%
UPL      JUL    30.00   29.55   41.75    0.45   4.14%   1.52%
USG      JUL    15.00   14.15   17.93    0.85  13.32%   6.01%
ATI      JUL    12.50   12.20   17.75    0.30   7.44%   2.46%
BJS      JUL    42.50   41.70   48.71    0.80   4.75%   1.92%
LCAV     JUL    25.00   24.35   27.48    0.65   6.85%   2.67%
NCRX     JUL    27.50   26.80   30.02    0.70   7.30%   2.61%
NVTL     JUL    17.50   17.05   21.33    0.45   8.97%   2.64%
SSYS     JUL    22.50   22.20   23.66    0.30   4.41%   1.35%
SWIR     JUL    30.00   28.85   29.97    1.12  10.38%   3.99%
SYNA     JUL    17.50   16.90   16.98    0.08   1.20%   3.55%
YHOO     JUL    30.00   29.20   29.19   (0.01)  0.00%   0.00%
AMHC     JUL    22.50   21.80   26.43    0.70   9.36%   3.21%
CTSH     JUL    22.50   22.20   24.92    0.30   4.34%   1.35%
CYBX     JUL    30.00   29.25   28.45   (0.80)  0.00%   0.00%
ERES     JUL    22.50   21.85   28.09    0.65   9.03%   2.97%
HLEX     JUL    15.00   14.65   13.39   (1.26)  0.00%   0.00%
MINI     JUL    20.00   19.65   25.45    0.35   5.89%   1.78%
NFI      JUL    30.00   29.30   42.41    0.70   9.77%   2.39%
PTIE     JUL     7.50   7.25    7.30     0.05   2.39%   3.45%
RIMM     JUL    50.00   49.15   62.90    0.85   6.57%   1.73%
SGTL     JUL    22.50   22.25   23.79    0.25   4.25%   1.12%
BRCM     JUL    40.00   39.30   37.32   (1.98)  0.00%   0.00%
CSGP     JUL    40.00   39.60   39.71    0.11   0.96%   1.01%
DHB      JUL    12.50   12.20   15.12    0.30   8.97%   2.46%
DY       JUL    25.00   24.65   25.80    0.35   4.63%   1.42%
ERES     JUL    22.50   22.20   28.09    0.30   4.97%   1.35%
FWHT     JUL    20.00   19.60   18.23   (1.37)  0.00%   0.00%
GVHR     JUL    22.50   22.20   21.22   (0.98)  0.00%   0.00%
IMH      JUL    20.00   19.75   22.44    0.25   4.41%   1.27%
NVTL     JUL    17.50   16.90   21.33    0.60  15.07%   3.55%
PLMO     JUL    25.00   24.55   34.99    0.45   7.28%   1.83%
USG      JUL    15.00   14.70   17.93    0.30   7.05%   2.04%
BCC      JUL    35.00   34.55   35.01    0.45   5.53%   1.30%
CHIC     JUL    20.00   19.65   20.44    0.35   7.68%   1.78%
CENX     JUL    22.50   22.00   24.31    0.50   9.64%   2.27%
ENDP     JUL    22.50   22.15   21.15   (1.00)  0.00%   0.00%
IFIN     JUL    37.50   37.05   43.87    0.45   5.93%   1.21%
TASR     JUL    30.00   29.65   40.24    0.35   6.39%   1.18%
USG      JUL    15.00   14.70   17.93    0.30  10.67%   2.04%
VSAT     JUL    22.50   22.20   19.01   (3.19)  0.00%   0.00%
AMED     JUL    30.00   29.50   29.13   (0.37)  0.00%   0.00%
CIMA     JUL    30.00   29.60   33.83    0.40   6.65%   1.35%
ERES     JUL    25.00   24.70   28.09    0.30   6.05%   1.21%
ISRG     JUL    17.50   17.25   20.01    0.25   7.04%   1.45%
NFLX     JUL    30.00   29.45   23.02   (6.43)  0.00%   0.00%
NSM      JUL    20.00   19.80   17.60   (2.20)  0.00%   0.00%
NKTR     JUL    17.50   17.15   17.60    0.35  10.49%   2.04%
SWIR     JUL    30.00   29.75   29.97    0.22   4.68%   0.84%
XMSR     JUL    25.00   24.65   25.19    0.35   6.82%   1.42%
NFI      AUG    30.00   29.20   42.41    0.80   5.99%   2.74%
NVTL     AUG    20.00   19.50   21.33    0.50   5.77%   2.56%
CBST     AUG    10.00   9.65    10.58    0.35   6.43%   3.63%
CACS     AUG    12.50   12.00   13.02    0.50   7.03%   4.17%
ARXX     AUG    12.50   12.10   11.79   (0.31)  0.00%   0.00%
TASR     AUG    30.00   29.15   40.24    0.85   5.67%   2.92%
PETD     AUG    25.00   24.35   28.01    0.65   4.86%   2.67%
CRDN     JUL    35.00   34.55   36.36    0.45   9.24%   1.30%
CRDN     JUL    35.00   34.70   36.36    0.30   7.43%   0.86%
NFI      AUG    30.00   29.40   42.41    0.60   4.68%   2.04%
NVTL     AUG    20.00   19.50   21.33    0.50   6.11%   2.56%
TASR     AUG    30.00   29.30   40.24    0.70   4.93%   2.39%
EYET     AUG    35.00   34.45   40.10    0.55   3.92%   1.60%
SCHN     AUG    30.00   29.00   33.04    1.00   6.53%   3.45%
MGAM     AUG    25.00   24.25   26.04    0.75   5.51%   3.09%
FRO      AUG    30.00   29.30   37.37    0.70   4.97%   2.39%
GIVN     AUG    30.00   29.45   37.15    0.55   4.21%   1.87%
ATI      AUG    15.00   14.50   17.75    0.50   7.89%   3.45%
BEIQ     AUG    25.00   24.00   25.60    1.00   7.61%   4.17%
NFLX     AUG    27.50   26.70   23.02   (3.68)  0.00%   0.00%
ESIO     AUG    25.00   24.20   24.33    0.13   1.05%   3.31%
AMHC     AUG    25.00   24.25   26.43    0.75   5.98%   3.09%
VTS      AUG    22.50   21.85   23.76    0.65   5.72%   2.97%
OSTK     AUG    30.00   29.40   35.05    0.60   5.60%   2.04%
KWK      AUG    30.00   29.50   33.98    0.50   4.09%   1.69%
ATI      AUG    15.00   14.75   17.75    0.25   4.68%   1.69%
EYET     AUG    30.00   29.55   40.10    0.45   3.85%   1.52%
ERES     AUG    22.50   22.15   28.09    0.35   4.50%   1.58%
CTSH     AUG    22.50   22.05   24.92    0.45   4.61%   2.04%
TECH     AUG    40.00   38.75   40.77    1.25   6.27%   3.23%
GPRO     AUG    40.00   39.10   42.63    0.90   5.00%   2.30%
ELN      AUG    20.00   19.70   24.91    0.30   4.31%   1.52%

As noted previously, many of the issues in the portfolio were
candidates for "early exit" and should have been closed last
week for smaller than published losses.  Steel Technologies
(NASDAQ:STTX), which finished the month profitable, Amedisys
(NASDAQ:AMED), and Micron (NYSE:MU) were among the positions
previously in this group, and Broadcom (NASDAQ:BRCM), Endo
Pharmaceuticals (NASDAQ:ENDP), National Semi (NYSE:NSM), Viasat
(NASDAQ:VSAT), and Findwhat.com (NASDAQ:FWHT) offered plenty
of opportunity to exit early with an acceptable loss.  The
only major surprise was Netflix (NASDAQ:NFLX), which tanked
after posting mediocre second-quarter earnings.  Fortunately,
traders who used a "buy-to-close" stop order on the option (or
a sell-short order on the stock) reduced the potential loss
considerably.


NAKED CALLS

Stock   Strike  Strike  Break  Current   Gain    Max    Simple
Symbol  Month   Price   Even    Price   (Loss)  Yield   Yield

ASKJ     JUL    45.00   45.55   30.29    0.55   6.50%   1.21%
AMLN     JUL    25.00   25.35   20.54    0.35   5.29%   1.38%
ICOS     JUL    30.00   30.45   22.52    0.45   5.26%   1.48%
OIIM     JUL    17.50   17.80   13.55    0.30   5.50%   1.69%
INSP     JUL    40.00   40.50   30.96    0.50   6.88%   1.23%
RHAT     JUL    25.00   25.60   15.15    0.60   9.08%   2.34%
CECO     JUL    65.00   65.90   42.25    0.90   7.19%   1.37%
ESI      JUL    45.00   45.50   34.50    0.50   5.47%   1.10%
FMT      JUL    20.00   20.40   18.38    0.40   8.75%   1.96%
NBIX     JUL    55.00   56.10   48.90    1.10   8.21%   1.96%
SLAB     JUL    50.00   50.75   40.90    0.75   6.39%   1.48%
AGIX     JUL    20.00   20.45   14.98    0.45   9.16%   2.20%
LEND     JUL    30.00   30.55   29.17    0.50   6.63%   1.64%
TSS      JUL    22.50   22.90   20.98    0.40   8.67%   1.75%
PAYX     JUL    35.00   35.40   30.20    0.40   4.97%   1.13%
FEIC     JUL    25.00   25.35   20.15    0.35   6.89%   1.38%
WM       JUL    40.00   40.30   39.50    0.30   3.79%   0.74%
IPXL     JUL    20.00   20.40   16.17    0.40  10.18%   1.96%
PSFT     JUL    20.00   20.25   17.68    0.25   6.99%   1.23%
SLAB     AUG    50.00   51.00   40.90    1.00   5.30%   1.96%
SINA     AUG    40.00   40.85   24.67    0.85   7.85%   2.08%
ATRS     AUG    30.00   30.85   22.44    0.85   6.52%   2.76%
MRVL     AUG    27.50   27.85   23.03    0.35   3.98%   1.26%
MACR     AUG    25.00   25.40   21.28    0.40   4.55%   1.57%
ISIL     AUG    20.00   20.45   17.34    0.45   5.72%   2.20%
ELAB     AUG    45.00   45.00   31.79    0.00   0.00%   0.00%
FLML     AUG    25.00   25.50   19.90    0.50   8.15%   1.96%
OTEX     AUG    30.00   30.65   25.38    0.65   6.12%   2.12%
TELK     AUG    25.00   25.45   20.68    0.45   5.60%   1.77%
ASKJ     AUG    40.00   40.50   30.29    0.50   5.97%   1.23%
DRIV     AUG    30.00   30.85   25.32    0.85   7.92%   2.76%
SINA     AUG    35.00   35.45   24.67    0.45   6.42%   1.27%

There was no premium available in Eon Labs (NASDAQ:ELAB), due
to the "gap-down" at the open on the day after the play was
offered.  Although currently profitable, the position in XM
Satellite Radio (NASDAQ:XMSR) has previously been closed to
limit potential losses.


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

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

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  Last    Option    Option Last Open Cost  Days Simple  Max
Symbol Price   Series    Symbol Bid  Int. Basis Exp. Yield  Yield

NFI    42.41  AUG 35.00  NFI TG 1.15  866 33.85  33   3.1%   9.9%
MSO    11.81  AUG 10.00  MSO TB 0.35  736  9.65  33   3.3%   9.9%
DHB    15.12  AUG 12.50  DHB TV 0.35  677 12.15  33   2.7%   8.5%
ISG    32.36  AUG 30.00  ISG TF 0.95 1256 29.05  33   3.0%   7.6%
SRDX   23.60  AUG 20.00  UZF TD 0.50 6588 19.50  33   2.4%   7.3%
LCAV   27.48  AUG 25.00  JVQ TE 0.65    2 24.35  33   2.5%   6.5%
FARO   24.60  AUG 20.00  QEJ TD 0.35   64 19.65  33   1.6%   5.8%
EENC   13.30  AUG 12.50  EMU TV 0.25  106 12.25  33   1.9%   4.8%
STLD   33.10  AUG 30.00  RQL TF 0.40  355 29.60  33   1.2%   3.5%

Company Descriptions

LB-Last Bid price, OI-Open Interest, CB-Cost Basis or break-even
point, DE-Days to Expiry, SY-Simple Yield (monthly basis without
margin), MY-Maximum Yield (monthly basis with margin), TS-Target
Shoot.
_________________________________________________________________

NFI - Novastar  $42.41  *** Recovery In Progress! ***

NovaStar Financial (NYSE:NFI) is a specialty finance firm that
originates, invests in and services residential nonconforming
loans.  NFI operates through three separate but inter-related
units: mortgage lending and loan servicing, mortgage portfolio
management and branch operations.  The company offers a range
of mortgage loan products to borrowers (nonconforming borrowers)
that do not satisfy the credit, collateral, documentation or
other underwriting standards prescribed by conventional mortgage
lenders and loan buyers, including government-sponsored entities
such as Federal National Mortgage Association (Fannie Mae) or
Federal Home Loan Mortgage Corporation (Freddie Mac).

NFI - NovaStar Financial  $42.41

AUG 35.00 NFI TG LB=1.15 OI=866 CB=33.85 DE=33 TY=3.1% MY=9.9%


_________________________________________________________________

MSO - Martha Stewart  $11.81  *** 16 Months For Martha... ***

Martha Stewart Living Omnimedia (NYSE:MSO) is an unique content
and commerce company that creates "how-to" content and domestic
merchandise for homemakers and other consumers.  The company's
products are generally sold under brand labels incorporating the
Martha Stewart brand name, which it leverages across a range of
media and retail outlets.  MSO primarily focuses on the domestic
arts, providing consumers with ideas, information, merchandise
and other resources.

MSO - Martha Stewart  $11.81

AUG 10.00 MSO TB LB=0.35 OI=736 CB=9.65 DE=33 TY=3.3% MY=9.9%


_________________________________________________________________

DHB - DHB Industries  $15.12  *** A Bullet-Proof Stock? ***

DHB Industries (NYSE:DHB) is a holding company consisting of two
major divisions: DHB Armor Group and DHB Sports Group.  The Armor
Group includes both Point Blank Body Armor and Protective Apparel
Corporation of America.  The Armor Group principally manufactures
three basic types of body armor: concealable armor, which is worn
beneath the user's clothing and designed to protect against less
serious weapons; tactical armor, which is worn externally and is
designed to protect against more serious threats, and modular
concealable/tactical armor, which allows the wearer to customize
the armor for either concealed or tactical use.

DHB - DHB Industries  $15.12

AUG 12.50 DHB TV LB=0.35 OI=677 CB=12.15 DE=33 TY=2.7% MY=8.5%


_________________________________________________________________

ISG - International Steel Group  $32.36  *** Strong Sector! ***

International Steel Group (NYSE:ISG) is an integrated steel
manufacturing company.  ISG has an annual raw steel production
capability of about 18 million net tons and ships a variety of
steel products from 11 steel producing and finishing facilities
in six states.  The company's principal products include a range
of hot-rolled, cold-rolled and coated sheets, tin mill products,
carbon and alloy plates, rail products and semi-finished shapes
serving the automotive, construction, appliance, plate, rail,
container, tin and machinery markets.

ISG - International Steel Group  $32.36

AUG 30.00 ISG TF LB=0.95 OI=1256 CB=29.05 DE=33 TY=3.0% MY=7.6%


_________________________________________________________________

SRDX - SurModics  $23.60  *** Earnings Speculation ***

SurModics (NASDAQ:SRDX) is a provider of surface-modification
solutions for medical device and biomedical applications.  Its
PhotoLink chemistry is the core technology platform on which
many of its surface-modification capabilities are based.  This
technology helps modify and enhance the surface characteristics
of medical devices and biomedical applications, thus improving
performance, and, in some cases, enabling the development of
new products.  The firm commercializes its surface-modification
technologies through licensing and royalty arrangements with
medical device manufacturers that apply coatings to their own
products.  Earnings are due Wednesday, July 21.

SRDX - SurModics  $23.60

AUG 20.00 UZF TD LB=0.50 OI=6588 CB=19.50 DE=33 TY=2.4% MY=7.3%


_________________________________________________________________

LCAV - LCA-Vision  $27.48  *** Seeing Is Believing! ***

LCA-Vision (NASDAQ:LCAV) is a developer and operator of laser
vision correction centers under the brand name LasikPlus.  The
firm's vision centers provide the staff, facilities, equipment
and support services for performing laser vision corrections
that use advanced technologies to help correct nearsightedness,
farsightedness and astigmatism.  LCA uses fixed-site excimer
lasers made by Bausch & Lomb, VISX and Alcon.  Its centers are
supported mainly by full-time, board-certified ophthalmologists
and optometrists, as well as other healthcare professionals.
Earnings are due Tuesday, July 27.

LCAV - LCA-Vision  $27.48

AUG 25.00 JVQ TE LB=0.65 OI=2 CB=24.35 DE=33 TY=2.5% MY=6.5%


_________________________________________________________________

FARO - FARO Technologies  $24.60  *** Sales Are Up! ***

FARO Technologies (NASDAQ:FARO) designs, develops, markets and
supports portable, software-driven, 3-D measurement systems used
in a broad range of manufacturing and industrial applications.
The firm's principal products are the Faro-Arm Control Station
and Control Station Pro (articulated measuring devices), the Faro
Laser Tracker and Laser Control Station and their companion Soft
Check Tool and CAM2 software, respectively, which provide for
computer-aided design (CAD)-based inspection and factory-level
statistical process control.  Faro's products bring precision
measurement, quality inspection and specification conformance
capabilities, integrated with CAD software, to the factory floor.

FARO - FARO Technologies  $24.60

AUG 20.00 QEJ TD LB=0.35 OI=64 CB=19.65 DE=33 TY=1.6% MY=5.8%


_________________________________________________________________

EENC - Enterra Energy  $13.30  *** Energy Sector Trust ***

Enterra Energy Trust (NASDAQ:EENC) is an open-ended investment
trust (unincorporated) whose main undertaking is to issue trust
units and to acquire and hold debt instruments, royalties and
other interests.  Enterra Energy is the principal operating
subsidiary of the Trust.  Enterra Production Partnership, which
was formed as a general partnership, holds all of the Trust's
producing crude oil and natural gas properties.  The partners
of the Partnership are New Enterra and Enterra Energy Partner.

AUG 12.50 EMU TV LB=0.25 OI=106 CB=12.25 DE=33 TY=1.9% MY=4.8%


_________________________________________________________________

STLD - Steel Dynamics  $33.10  *** Up, Up, And Away! ***

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  $33.10

AUG 30.00 RQL TF LB=0.40 OI=355 CB=29.60 DE=33 TY=1.2% MY=3.5% TS



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

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.

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

BSX - Boston Scientific  $37.40  *** Stent Recall = Sell-Off! ***

Boston Scientific (NYSE:BSX) is a global developer, maker, and
marketer of medical devices whose products are used in a range
of interventional medical specialties, including interventional
cardiology, peripheral interventions, neurovascular intervention,
electrophysiology, vascular surgery, endoscopy, oncology, urology
and gynecology.  The company's products are offered for sale by
two dedicated business groups, Cardiovascular and Endosurgery.

BSX - Boston Scientific  $37.40

PLAY (sell naked call):

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

SELL CALL  AUG 40    BSX HH    8938   0.60  40.60   4.3%   1.5%


_________________________________________________________________

ICUI - ICU Medical  $26.95  *** Mediocre Earnings Report! ***

ICU Medical (NASDAQ:ICUI) is a developer and manufacturer of
proprietary, disposable medical connection systems for use in
intravenous therapy applications.  The company's devices are
designed to protect healthcare workers and their patients from
exposure to infectious diseases such as Hepatitis B and C and
Human Immunodeficiency Virus through accidental needle sticks.
ICU Medical is also a provider of custom I.V. systems and low
cost generic I.V. systems, and it incorporates its proprietary
products on many of those custom I.V. systems.  ICU Medical
also manufactures and sells the Punctur-Guard line of blood
collection needles.

ICUI - ICU Medical  $26.95

PLAY (sell naked call):

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

SELL CALL  AUG 30    QPD HF     22    0.80  30.80   8.6%   2.6%


_________________________________________________________________

WMGI - Wright Medical Group  $32.38  *** Stuck In A Range? ***

Wright Medical Group (NASDAQ:WMGI), through Wright Medical
Technology, and other operating subsidiaries, is a global
orthopaedic medical device company specializing in the design,
manufacture and marketing of reconstructive joint devices and
biologics products.  Reconstructive joint devices are used to
replace knee, hip and other joints that have deteriorated
through disease or injury.  Biologics are used to replace
damaged or diseased bone, to stimulate bone growth and to
provide other biological solutions for surgeons and their
patients.

WMGI - Wright Medical Group

PLAY (sell naked call):

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

SELL CALL  AUG 35    QWM HG    158    0.65  35.65   5.5%   1.8%



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

SEE DISCLAIMER - SECTION 1

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


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