Option Investor
Newsletter

Daily Newsletter, Sunday, 07/25/2004

HAVING TROUBLE PRINTING?
Printer friendly version
The Option Investor Newsletter                   Sunday 07-25-2004
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: Ready, Set, Wait
Futures Wrap: See Note
Index Trader Wrap: Dow under 10,000 grabs attention!
Editor's Plays: Market Spread
Market Sentiment: The Democrats are coming!  The Democrats are
    coming!
Ask the Analyst: See Note
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 7-23         WE 7-16         WE 7-09         WE 7-02
DOW     9962.22 -177.56 10139.8 - 73.44   10213 - 69.61 - 89.01
Nasdaq  1849.09 - 34.06 1883.15 - 63.18 1946.33 - 60.33 - 18.81
S&P-100  530.38 -  5.52  535.90 -  6.73  542.63 -  4.54 -  2.58
S&P-500 1086.20 - 15.20 1101.40 - 11.41 1112.81 - 12.57 -  9.05
W5000  10553.82 -178.04 10731.9 -110.82   10842 -154.87 - 76.05
SOX      405.58 -  4.88  410.46 - 40.68  451.14 -  6.17 - 21.60
RUT      539.22 - 16.26  555.48 -  8.25  563.73 - 18.99 -  4.98
TRAN    3043.44 - 44.89 3088.33 +  0.36 3087.97 - 58.20 - 18.01
******************************************************************

Ready, Set, Wait
by Jim Brown

After a terrible week for the major indexes we closed at
critical support levels and very close to lows for the
year. The markets are poised to wait out the Democratic
convention in hopes it will pass uneventfully. If it does
we are poised for a rebound until the next event on August
13th when the Olympics begin. The waiting game for the
convention will begin on Monday.

There were no economic reports on Friday and I doubt the
markets would have paid attention anyway. The focus on
Friday was earnings and convention and both were negative.

Microsoft fell -1.00 to $28.05 and closed at the low for
the day as their earnings report was picked apart. The
big news was the anticipated decline in earnings due to
the drop in interest income after they make their big
payout. With $32 billion due to be paid out this year
Microsoft had to shift from longer-term instruments into
short term investments as they readied the cash for final
distribution. Their earnings reported nearly -$500 million
in derivatives losses for the quarter related to the money
shuffle. While that sounds like a lot of money it is only
a drop in the bucket for Microsoft. However after doling
out the cash Microsoft will lose one component of their
earnings for the future. Last year Microsoft reported a
+21% increase in earnings. Fully 10% of that number was
from interest income. This suggests future earnings must
overcome that 10% hit before breaking even. This was part
of the cause for Friday's loss. The stock has made a
complete round trip this week with a strong bounce on
Wednesday after the dividend news and the drop on Friday
took it all back.

Microsoft Chart




Another earnings disaster was Amazon, which dropped -5.84
on Friday after reporting earnings that missed estimates.
The challenge for Amazon was falling sales. Amazon said
sales in North America, its traditionally strongest
market, only rose +9% for the quarter. Sales actually
fell in some overseas markets for the first time in
recent memory. Amazon raised revenue guidance for Q3
but did not raise earnings guidance. This suggests
margins are being squeezed and the free shipping program
so critical as a sales tool is beginning to impact those
falling margins. Prudential reiterated their price target
of $30 on AMZN, -$9 from Friday's close. Piper Jaffray
rated the stock an underperform. Clearly the bloom is
rapidly fading from the Amazon rose.

Amazon Chart




Coke was yet another disappointment with sales growth of
only a meager +1% and earnings guidance well below estimates.
Coke was KO'ed for a loss of -3.80 on Friday and proved
that you do not have to be a tech stock to invoke investor
anger. Coke is also the target of a criminal investigation
into allegations of inflating overseas sales to make
earnings in the past.

Coca Cola Chart




Maytag reported sales revenue that dropped -1% on weak
appliance sales and a strong loss from cost cutting.
They posted only +9 cents a share and missed analyst
estimates by -30 cents. The weakness in appliance sales
is yet another sign that consumers are hoarding cash
and keeping their wallets on their hip. MYG dropped
-2.07 on the news to $19.17.

Maytag Chart




After Thursday's earnings 242 S&P companies have reported
earnings and 169 beat estimates, 47 reported inline and
26 missed estimates. Last year at this time the numbers
were 206, 7 and 29. Clearly there is a shift away from
the high end after expectations became too optimistic.
Earnings warnings on future guidance by numerous big
name companies have soured investor appetites for stocks.
It is not that earnings are bad, they are far from it at
+24.4% in year over year Q2 gains. These are very strong
gains but the challenge is not what companies are reporting
but what they are saying. It appears these earnings are
not sustainable and the decline back to single digits
could come faster than expected.

The gloom and doom from the earnings slow down pushed the
Dow to its lowest close since May-24th at 9962 and a new
intraday low for July at 9932. The Dow is only one sell
program away from making a new closing low for the year
at 9906. The Nasdaq has already performed this feat with
the 1849 close on Friday. Not only was it a new closing
low for the year but also a new low. Also jumping on the
bandwagon was the SOX with a new dual low for the year
at 405.

Dow Chart - Daily


Nasdaq Chart - Daily


SOX Chart - Daily



We all know this market depression is not based entirely
on earnings but also on the terror threat to the Democratic
convention next week. Headlining the news today was a FBI
announcement that there was a plot to disrupt media
coverage of the convention by blowing up and setting fire
to media vans. While this was discouraging it was far
from the critical event anticipated from groups like al
Qaeda. Reportedly the media attack was coming from a
domestic group and not overseas terrorists. The market
sold off all week purportedly on earnings but always with
an eye on coming events.

Not only do we have the Democratic convention next week
we have the Olympics beginning on August 13th, just two
weeks after the Democratic convention is over. In the
U.S. the convention is an important symbol but globally
the Olympics is a far bigger target and one far harder
to protect. With hundreds of thousands of attendees
heading to Athens the potential for multiple deadly
attacks is very strong. Right in the middle of these
events we have another Fed rate hike on the table on
August 10th. This is creating a virtual mine field for
the markets to traverse over the next four weeks.

Reports out on Friday suggested funds are sitting on
abnormally high amounts of cash both for protection
against an event drop and to be able to take advantage
of any opportunity an event creates. Several funds
currently sitting on piles of cash include Long Leaf
Partners at 29%, Clipper 26%, Weitz Value at 28% and
FBA at 30%. These funds have billions under management
and they are holding billions in cash. Multiply this
even in moderate terms over the 11,000 funds and you
have a virtual mountain of cash on the sidelines.
This cash is ready for a market event but what if
no event occurs?

It seems clear to me that a lot of this cash will be
put back to work in the market once the convention is
over with even more going into equities after the
Olympics. This is setting up a potential rebound from
these lows as soon as next week. With the convention
over on the 29th we have about a two week window where
we could see a summer rebound before the calendar
heats up again.

This does not mean we are going to the moon or even
back to the midrange of our recent travels. I am just
suggesting we could see some money put back to work
and I want to capitalize on that potential.

We still have some serious technical market problems
that have to be addressed. The S&P has been trading
under the 100dma for three weeks and Friday's close
at 1086 was a new two month low and -20 points under
the 200dma. These bearish technicals could continue
to keep pressure on fund entries. Don't forget Sept
and Oct are two of worst months of the year on a
historical basis. Unfortunately August has been the
worst month for the last 15 years on the Dow and SPX
and second worst on the Nasdaq. While September and
October are remembered for major bottoms August is
just remembered for being down. Over the last seven
years the markets have averaged a -4% lost in the
last five days of the month. Add in the August event
risk and the odds are good any post Democratic
convention rebound will not be earth shaking. We
have piles of cash on the sidelines but the majority
of that cash is likely frozen until September.

What this means for next week is the potential for a
range bound market on very low volume as everybody watches
the news channel rather than the stock channel. As the
week progresses we could begin to see some bargain hunting
which could accelerate if we get a further dip to the
May lows on the Dow. I hesitate to mention the potential
for a rebound because there are so many factors at work
but the potential is still there. The qualification
remains the terror risk. We all know that the convention
site is very well protected with major streets blocked
off on all sides for blocks in every direction. However,
terrorists do not have to hit the convention itself to
be successful. Putting an airplane in the side of the
John Hancock tower would bring everything to a crashing
halt. A few car bombs at critical intersections would
also make their point. It does not have to be an attack
on the fortress of the convention itself so investors
can't afford to be aggressive in reentering the market
until it is over.

This is a week for waiting and watching and praying and
not necessarily a week to rush into the markets. Keep
your eyes open for good stocks punished with the rest
of the crowd and be ready for an end of week uptick.

Enter Very Passively, Exit Very Aggressively!

Jim Brown


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

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


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

Dow under 10,000 grabs attention!
By Leigh Stevens
lstevens@OptionInvestor.com

MY OUTLOOK –
Does it mean anything to have the Dow back under 10,000? - maybe
not. The prior daily closing low at 9911 is a number to watch.
This past week did bring a new weekly closing low at 9962
relative to late-May at 9966.  This upcoming week is key now as
to whether buy money flows in again in this area. Or, are fund
managers too spooked by the upcoming elections and espcially now
to lowered earnings expectations. The oversold condition would
suggest some rally potential ahead - that and my up volume
indicator - more on this in a minute.

Tech, particularly the semiconductors (SOX), a driving "engine"
there, is still acting as a drag on the overall market as stocks
continued lower this past week. Oil is not backing off from a
price above the 40 dollar mark, which is scary to market mavens.

I tend to try to anticipate bottoms and tops for optimal index
option prices, but when the momentum shifts and sentiment is
still a wee bit too bullish, best to go with the flow and check
an impulse to start buying calls.

My options sentiment indicator indicates more of a rising bullish
bias as prices fell this past week.  Maybe traders and investors
are becoming more smart and buying areas of perceived value.
Perhaps. The market has been in a broad trading range from S&P
500 (SPX) 1140/1150 on the upside to around 1080 on the downside
since January. The question is whether the range gets blown.

The Nasdaq Composite (COMP) had been trading 2050/2075 on the
upside, 1870/1880 on the downside since earlier in the year -
however, COMP has fallen under the low end of this prior range
with a weekly close at 1849 - looks maybe headed to the 1800 area
as the SOX seems likely to get down to around 400/390 (wkly
close: 405.6).

FRIDAY'S TRADING ACTIVITY –

Stocks ended lower on Friday and sharply lower for the week, with
the  Nasdaq Composite falling to its worst closing level in many
months and blue-chip stocks hitting a 2-month low again on
concern over slowing corporate earnings growth.

As Larry Wachtel put it (forever the chief market strategist at
Prudential, now at Wachovia Securities and someone the Street
listens to): "We continue to get an inflow of negative guidance
from tech companies as it becomes evident that corporations
pulled in their new spending as the second quarter ended".

THE NUMBERS –

In the past week, the Dow and the Nasdaq both fell 1.8% - don't
annualize this figure if you own stocks.

The S&P 500 Index (SPX) closed 11 points lower, -1%, at 1,086.20.
for the week, SPX was off 1.4%. The Dow (INDU) was off 88 points,
-0.9%, to 9,962.2, the first time INDU has finished below 10,000
since late-May.

The Nasdaq Composite Index (COMP) was off over 2%, to close at
1849, a loss of 39.9 points. COMP last closed below this level
last October.

The Russell 2000 (RUT) as has been typical of the more favored
small cap sector, did not fall quite as much as the Composite, as
it closed the week at 539, off 1.3%.

REPORTS & EARNINGS NEWS –

Microsoft (MSFT) fell over 3% to $28 after the company reported
better-than-expected quarterly sales, but fell short of earnings
estimates, as investment income declined before a monster
dividend payout that is coming up. MSFT also forecast higher-
than-expected revenue for 2005 but lower earnings than analysts
were expectations. Technically, Microsoft is left with a so-
called "island top".

After disappointing news from eBay (EBAY) on Thursday, Internet
stocks were hit again when online mega-monster Amazon.com (AMZN)
posted Q2 earnings and revenue that missed consensus estimates -
- the stock fell nearly 13% to 39.98. The company indicated that
its slowdown in sales was due to an unfavorable comparison with
the same quarter in 2003, which was then buoyed by exceptional
sales of Harry Potter books and some associated products.  Blame
it on Harry Potter and he is supposed to be a wizard!

On the big board, Coke (KO) was the hardest hit of the Dow 30
components, dropping $3.80, almost 8%, to $45.17- this after its
earnings were reported. Analysts noted a volume shortfall in
Coca-Cola's German discount channel as a "dangerous long-term
challenge," and said a weak start for the company's lower-sugar
C2 soft drink was disappointing.  Well, I liked it!

Telecom bucked the down trend - Verizon (VZ) was up 2%
BellSouth (BLS) was up 1.7% and SBC Communications (SBC) was up
2.7% - this sector benefited after my old company, now UBS
brokerage, upgraded the telecom operators on their potential for
market share gains in residential local and long distance
business after AT&T (T) saying on Thursday it was mostly
abandoning those markets.

OTHER MARKETS –

Crude oil ended about one percent higher on the week, so is
holding comfortably above $40 a barrel - not a situation to make
stock market mavens happy.

Treasury bonds and notes were slightly higher on Friday, but were
down on the week, for the first time in several weeks.
Expectations remain for a series of Fed rate hikes over the
balance of this year

In the Forex market, the euro was down to a 3-week low of
$1.2119. Versus the Japanese yen, the dollar moved slightly up to
109.97, after Japanese industry output came out at the lower end
of forecasts.

MY INDEX OUTLOOKS –

S&P 500 Index (SPX) & my Up Volume indicator – Daily chart:

Major lows are often made only after a 10-day moving average of
daily up volume contracts to a "baseline" area.  In the past few
months, this has been around 530 million shares - see the level
green line in the lower portion of the chart below -




I've highlighted with green up arrows when the NYSE up volume has
dipped under this line, and liked it with a price low at or soon
after these points - see the "volume average" chart above. By
this measure, the market should not be far from a low.

Rather than say more here about the whys and wherefores of this
up volume indicator, I wrote more extensively it in my past
week's trader's corner article so, if interested, see -
http://www.OptionInvestor.com/traderscorner/tc_072204_2.asp

Another wrinkle with my up volume indicator is that timely
"signals" with this indicator have tended to occur along with
bullish sentiment readings, usually within 1-5 days prior to a
bottom.  This was not the case in the past week as can be seen
from the lower Indicator potion of the chart below -




On a price basis, the S&P 500 is approaching the low end of its
trading range - a price range that has been fairly consistent
this year. However, there are a lot of things out there that can
spook investors - among them the fact that in relationship to
possible terrorism, everyone is kind of holding their breath
ahead of the political conventions and the election.

S&P 100 Index (OEX) – Daily chart:

A key test of prior lows in the 526-530 area looks to be in the
offing this week.  The last low in the 530 region took a few days
to set up - if another low is setting up, this time may be
similar. I don't assess there being a lot of selling interest
below 525 in the S&P 100 - stay tuned on that.

545 is key overhead resistance, call it 525-526 on the downside.
There was a new closing low in OEX.  However, I will want to do
some index call buying in this area if reached on the basis of my
assessment of further downside risk relative to the reward
potential of even a moderate rebound. This market is nearing an
oversold extreme based on what can be seen with the 14-day
Relative Strength Index or RSI level below.




The mid week rally back to touch the 200-day moving average,
followed by a quick and steep drop to new lows, was bearish. The
buyers are still spooked easily.

Dow 30 Average (INDU) – Daily chart:

The Dow 30 Average (INDU) could fall to the 9800/9775 area if it
were to follow its hypothetical trend channel lower per the way I
have it highlighted on the chart below. Ability to stay above the
prior closing low at 9911 would offer a bullish note based on the
possibility of a double bottom.

Even more apparent with the Dow than with the OEX above, we can
see how clearly that the last cluster of lows occurred right
around the 200-day moving average - with it later defining the
opposite condition of selling interest/resistance.  Wednesday's
rally failed right at the 200-day average, followed by a sharp
downside move.  Buying interest just collapsed.




10,200 is key overhead resistance, 9900 is key near support. INDU
is oversold, almost at the lower line that tends to mark a real
extreme.  Not to say that the Dow won't sink still lower.  A move
to under 9900 would likely jump the level of bearish sentiment
and this is what we are not yet seeing.  Most significant lows
see traders more bearish than what I'm seeing with the tools I
use.

Nasdaq 100 (NDX) Index  – Daily:

1450 continues to look like key resistance, 1367-1370 now looks
to be an area of potential support IF the Nas 100 Index (NDX)
will continue to trade in the broad range its been in since
January. Based on the trading range concept, still the most
likely in my mind - I want to be ready to exit NDX puts and do
some call buying if further lows are made above 1360 and a bottom
appears to be forming.

A couple of closes at new lows would suggest that something
different was going on then a broad sideways trend such as the
way the charts look now - index options traders have excellent
opportunities when a market goes into a broad trading range, as
put and call purchase opportunities become well defined.




A broad trading range market is ideal for Index options trading
as I've said before - and will say again no doubt! Since its
ideal, my focus is to see if another bottom is going to be
established shortly and "confirm" this trading range.

Since we all get in and out too soon sometimes, this situation
gets more problematic with trade reentry during times of a strong
up or down trend as time premiums get rich on the side of the
dominant trend. Not so - if we get in too soon at the low/high
end of what turns out to be a broad trading range market, trade
reentry is still favorable as the chances are we got in near a
multiweek extreme.

Nasdaq 100 tracking Stock (QQQ) Daily:

If prices stabilize in the 34 area, or even a bit below, like
33.5/33.75, I want to be in the Q's by owning the stock or the
calls.  You can look at the QQQ daily chart below and figure that
a triple bottom might be setting up. I am still a bit cautious on
this score.

Unlike double bottoms, or tops, instances of triple lows or highs
are not as reliable a pattern - there is often one more spike
down, or up, before there is a meaningful trend change.




One more new low, such as to the 33 area followed by a rebound
would suggest covering short positions in the stock and exiting
puts - and, suggest a solid buying opportunity for buying the
stock or its calls.

If a new closing low set up without a similar lower low in the
RSI, a bullish price/oscillator divergence would be established
that might also signal a bottom. On balance, I'm prepared to move
and take trading action, but also ready to watch how things
unfold a while longer.

Good Trading Success!


************************Advertisement**********************************
Option traders, check what PreferredTrade offers:
-    true direct access to each option exchange
-    stop and stop loss online option orders
-    contingent option orders based on the price of the option or stock
-    online spread order entry for net debit or credit
-    fast option executions
-    rates as low as $1.50 per contract ($14.95 min)

PreferredTrade, Inc.
Call 888-889-9178 or
Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC
***********************************************************************


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

Market Spread

Unfortunately everybody is thinking the same thing about
the Dow. The odds of a multi hundred point move over the
next week are very good. If the convention ends with no
negative events then we could rebound back to the 10200
level very quickly. If the convention ends badly we
could easily see 9700 or lower. The problem comes from
the price of the options on the DJX.

With the DJX closing at 99.62 the August 101 call closed
at 90 cents on Friday. The August 98 put closed at 1.05.
To enter a combination play here would take $2.00 and we
would have to see a 150 point move to breakeven much less
make a profit.

I decided to switch directions and use the QQQ. The Qs
closed 34.20 and right on very strong support at $34.
The Qs have lost -4 points in just the last three weeks
and a break of the $34 level could setup a quick drop to
$32. Granted a $2 move on the Qs is a big move but they
are setup for either a major rebound off the $34 level
or a major crash. The $34 level has been support since
October of 2003 and a break here could setoff sell
signals across the world.

Because of the high volume on the Qs the options are
fairly priced on most days. The August $33 put is only
45 cents and the August $35 call is only 50 cents. A
one point move in the Qs will break us even and a two
point move would produce a nice profit on a combination
play. Still risky.

If we knew which direction we were going it would be
very easy to make some decent bucks because either
direction could easily see a two point move. If I had
to bet on one I would bet on the put. The $34 level is
hanging out like a red flag in front of the bears and
daring them to attack. With the next real support in
the $32 range we could easily drop sharply.

This is going to be a simple trade. I am suggesting
we buy the August $33 put at the open on Monday.
Hopefully we will see a dead cat bounce at the
open and we can get a better entry in the high $34
range. We will use $35.50 as our stop loss on the
put. We will look to double our money on the put and
hopefully before Friday. This gives us terrorist
insurance for the first four days of the week.

At Friday's open we will sell the put and buy the
$35 call. (assuming the Qs are under $35) We will
target a double on that premium as well.

The concept is to protect against a negative event
from Monday through the close of the convention on
Thursday night. Then we anticipate a relief rebound
for the following week.

August $33 QQQ Put QAV-TG
August $35 QQQ Call QQQ-HI

QQQ Chart




Microsoft Update

The Microsoft combination play is proceeding according
to plan. If you were following this recommendation you
should have exited the Aug-$30 call MSQ-HF on Wednesday
morning for about 75 cents. MSFT just could not get over
$30 despite the strong cash disbursement program.

We are left holding the Aug-27.50 Put MSQ-TY and after
MSFT missed earnings and guided lower Thursday night we
could see a return to sub 27.50 levels. It closed on
Friday at 28.05. Let's target $27.00 for an exit on the
put.

This play did not work out exactly as expected with the
market weakness keeping MSFT at the low end of the range
over the last three weeks. This kept the announcement
bounce to a minimum and prevented a break over $30. The
range for the week was $27.47 to $29.65. Clearly a round
trip for the entire range is in progress without breaking
out in either direction.

Microsoft Chart



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

News Corp Update $34.54

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 $13.81

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


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

The Democrats are coming!  The Democrats are coming!
- by Jeff Bailey

The major indices finished at their lows of the week, where an
FBI warning that its field office in Boston, Massachusetts,
received "unconfirmed" information that a domestic group is
planning to disrupt the Democratic National Convention by
attacking media vehicles with explosives or incendiary devices, did
little to improve negative market sentiment.

Starting Monday, and running through Thursday, the Democratic
Party is scheduled to hold its convention in Boston,
Massachusetts, where Senator John Kerry will officially receive
the party's nomination to run for the presidency against
President George W. Bush in the November elections.

Friday's FBI warning spooked investors and sent the dollar higher
against other major foreign currencies with the U.S. Dollar Index
(dx00y) 89.26 +0.91% reclaiming its trending lower 200-day SMA
(89.27) and correlative 50-day SMA (89.24).

Friday's FBI warning followed a warning weeks ago from The
Department of Homeland Security that it had gathered intelligence
from various Federal agencies that terrorist seemed intent on
launching a some type of attack on the homeland in an attempt to
influence this year's elections.

Treasuries finished at their highs of the session, but smack in
the middle of this week's range with the benchmark 10-year yield
($TNX.X) moving down 3.0 basis points on Friday to settle out
with a 4.432% yield.

It was a week that traders and investors seemed to be "focused on
the negative," where corporate outlooks after earnings were
largely positive, seemed to not meet loftier expectations of
investors, where the acceleration of earnings in percentage
terms, is now being revealed as at slower rates of growth.

I (Jeff Bailey) do think next week's Democratic Convention could
impact investor psychology.  Will the Democrat's message be
positive and clearly outline how a Kerry administration will be
an improvement over the current Bush administration?  Or will
Democrats tell America, and investors across the globe only about
problems?

It's politics, and I think we should expect not only some finger
pointing by the Democrats, but investors will want some clearly
outlined message as to what actions a Kerry administration would
put in place if elected.

Of late, the Kerry camp has been less inclined to fall back on
the "we were lied to..." rhetoric when discussing the war in
Iraq, after it was learned in late June that there was a link
between Iraq and Niger for Niger to have sold a large quantity of
yellow cake to Iraq.  The news gave credence that President Bush
wasn't lying in his state of the union address, nor was Prime
Minister Tony Blair regarding his country's intelligence.

There's an old saying, "the market hates uncertainty," and
there's clearly some mixed messages coming from the markets at
this point in time.  With polls showing nearly a dead heat
between Bush and Kerry, there are great differences between
current policy and those that have been discussed by the Kerry
camp.

The economy will undoubtedly be a topic of discussion at the
Democratic convention, as well as policy in the middle-east,
specifically in Iraq.

How does all of this impact market psychology/sentiment, and create
uncertainty?

Simple.  On one hand the market knows what it is dealing with (Bush
administration) and on the other hand, lets call it "the left
hand," there is hope of a fresh start, new policies, but the
uncertainty of what these new policies (to be outlined at the
Democratic convention) could have on global economies.

The last time I (Jeff Bailey) filled in for James Brown in this
Market Sentiment column, (May 18, 2004) "Pay at the Pump," June
Crude Oil futures were trading $40.50 after spiking to contract
highs of $41.85 that week.

On Friday, September Crude Oil futures (cl04u) settled at $41.71.

It was my thought on May 18, 2004 that higher oil prices were
weighing negatively on sentiment.

Sentiment, which is an EMOTION.

Some Facts from the Markets:

Trucker Yellow Roadway (NASDAQ:YELL) $41.56 +4.44% traded a new
52-week high this week, up 24.6% from its May 18 close, where
solid quarterly earnings had the company's CEO saying "the
economy is humming," and added that "oil prices not a factor,"
when asked if high fuel prices were a threat to transporters as
they pass along higher fuel prices to customers.

While factual earnings and strong statements from a trucking
company are making headlines, commercial airliner Delta
(NYSE:DAL) $5.59 is thought to be on the verge of bankruptcy as
it trades up 44 cents, or 8.5% from its May 18 close as a
competitive fare environment, heavy debt, and higher fuel prices
has the company burning cash reserves and losing money.

As a sector, the transports give a very mixed message toward the
ECONOMY, versus market SENTIMENT.  Truckers like YELL, CNF, air freight
transporters like Fedex (FDX) $80.57 -0.73%, all which traded 52-week
highs this week, seem to be saying that the economy is strong enough to
shrug off higher energy prices.

Commercial airliners, however do seem to be reflecting a base
consumer (you and I) showing some price sensitivity, where
perhaps, price increases, to offset higher fuel prices just isn't
an alternative for the commercial airliners at this point.

As a whole, the Dow Transportation Average (TRAN) 3,043 closed
just ABOVE it rising 50-day SMA (3,029) and well above its 200-
day SMA (2,937).  Market theorists will say the Transports give
important insight to the strength/weakness of an ECONOMY.

Meanwhile, the Securities Broker Dealer Index (XBD.X) 117.13
-0.87%, which market theorist's say give important insight to
strength/weakness of the equity markets, traded BELOW it 200-day
SMA (132), its 50-day SMA (124) and shorter-term 21-day SMA
(121), and not unlike the major indices, which now trade at their lows
of 2004.

Conclusions:

MARKET SENTIMENT IS NEGATIVE.  ECONOMY IS STRONG and GROWING

It is said that MARKETs are "all knowing", and are forward
looking.  I believe this to be true.

You can tell a 250 pound football player that he can lift a 25-pound
weight, but if HE doesn't believe he can lift it because the sports
reporter wrote "he can't carry the team, let alone a cheerleader's
pompom," then that same 250 pound football player isn't going to
attempt to prove you're correct, and that he CAN lift the 25-pound
weight.

Right now, stock MARKET sentiment is weak enough, it's not convinced it
can do any lifting.

This week, keep a very close eye on the VERY WEAK Securities
Broker Dealer Index (XBD.X) 117.13 as the Democrats outline what
they have in plan for U.S. citizens.

Will Wall Street get "comfortable" with a Democrat strategy?
Remember, Wall Street already knows what the Republican strategy
is, and has seen this strategy "at work" for over 3 years.  If I
(Jeff Bailey) were looking for a SENTIMENT indicator, it would be
the brokers.

While my May 18th Market Sentiment focused on higher oil prices
as being a major contributor toward negative market sentiment
(stocks did rebound from their May lows when oil fell to $36),
the economically sensitive truckers, if not the Dow
Transportation Average ($TRAN) as a whole, seem to be depicting a
STRONG economy, despite higher energy/fuel prices.

However, the brokers may well have, or continue to reflect,
current market SENTIMENT, as it relates to uncertainty
surrounding this year's elections.

It has been stated that roughly 80% to 90% of market participants
are "buy side" investors, meaning they either buy stocks to
profit from higher price action, or they sell stocks to only
raise cash, with no profit motive in mind, but as an aversion to
losses.

Please make what I feel an IMPORTANT distinction where the
brokers may be reflecting current and FUTURE SENTIMENT, where as
the transports may be reflecting ECONOMIC strength/weakness.

This week's key events:

The Democratic National Convention:  Impact= SENTIMENT -
Discussed above.  Impact is largely on MARKET sentiment.
Tone/message will be important.  If message is "Bush is taking
the U.S. (you, me, the economy, even the world) in the wrong
direction, then a vote for me (Mr. Kerry) is your next-best
alternative," then sentiment will likely remain negative.
However, if the tone/message is "These are the things we
(Democrats) look to change and these will be the benefits for
America," then market SENTIMENT could improve.

June Durable Orders :  Impact= SENTIMENT - On Wednesday, June
28th economists forecast a rebound in durable goods orders.
These are big-ticket items.  After falling 1.6% in May,
economists forecast a 2.5% gain in June.  Recent regional
manufacturing surveys showed a rebound in their July readings and
manufacturing activity, while June's 0.2% decline from the
Conference Board's leading indicators (released on Thursday)
sends a mixed message.  With talk of economic slowdown beginning
to surface so quickly after "Fed too stimulative, needs to
aggressively raise interest rates," a rebound in June durable
goods orders could ease negative SENTIMENT (see brokers) and give
some confirmation to what transports seem to be saying.

Advanced Q2 GDP:  Impact= SENTIMENT - On Friday, June 30th
economists are forecasting the economy grew at a 3.7% annual
rate, which would show slowing growth from the 3.9% annual rate
in Q1.  I (Jeff Bailey) would be BULLISHLY surprised if Q2 GDP
came in ABOVE the Q1 GDP of +3.9%.  In prior Ask the Analyst
columns and Index Trader Wraps, I discussed my (Jeff Bailey's)
forward looking thoughts as to the impact the rather sharp rise
in Treasury yield into early May (right in the middle of Q2 GDP)
might have on HELPING slow the then worrisome fast rate of
economic growth, and the then "fear of inflation."  I (Jeff
Bailey) would be BEARISHLY surprised if Q2 GDP came in below
3.5%.  I am NOT the market, but the markets might also respond
according should SENTIMENT worsen, or improve.

July Chicago PMI:  Impact= SENTIMENT - Also on Friday, June 30th,
economists look for the regional Chicago Purchasing Manager'
Index to rebound to 60.0 in July from June's 56.4 reading, and
echo recent July New York Empire and July Philadelphia Fed
rebounds.  Market participants put greater weight in the Chicago
PMI than the New York Empire reading ahead of the national ISM
Purchasing Managers' Index, where July's figures will be released
on August 2nd (forecast 61.5 vs. June's 61.5).

July Revised Univ. Mich. Sentiment:  Impact= SENTIMENT -  Also on
Friday, usually little changed from the preliminary release.
Economists' look for a fractional upward revision to 96.1 from
96.0.

Final comments:

This is a MUCH longer Market Sentiment column than you are
probably used to reading, but I'm combining some SENTIMENT
analysis with questions I received this week, that I would have
liked to address in the Ask the Analyst column.

Why are transports acting strong, despite higher oil prices?
Why are brokerage stocks weak, while regional banks have been
holding up?  Where would you look for a bullish entry on Bank of
America (BAC) ahead of its 2-for-1 stock split.  I am wondering
why you are writing covered calls on SWC with the stock now
testing its support line ($14.50)?  Are you thinking that SWC is
susceptible to recession talk and could lose its support?  Why
are stocks declining to their May lows, while junk bonds are
still holding well off their May lows.

Remember:  SENTIMENT is an emotion.  It doesn't always reflect
reality and like any emotion, can change quickly in the opposite
direction and bite you, or continue to levels unimagined (bullish
and bearish).

Judging or analyzing sentiment is analogous to petting a
unfamiliar dog.

You probably heard the joke about the guy named Jerry that walks
up to another guy named Jim, looks down at the dog sitting beside
Jim, and Jerry asks, "does your dog bite?"  Jim says, "nope."
Jerry then reaches down to pet the dog, and gets his hand bitten
by the dog.

"I thought you said your dog doesn't bite!" screams Jerry.  Jim
smiles and says, "That's not my dog."

OK... that's a heck of a story to try an put things in context,
but with the brokers trading below their May lows, and seemingly
pulling the major indices along for the ride lower, the brokers
may well be a SENTIMENT indicator we can visually follow.

You're right!  It doesn't make sense that transports can be
bucking higher fuel prices.  It doesn't necessarily make sense
that banks can be trading strong, while brokers trade weak.  It
doesn't make sense that high risk junk bonds can hold gains from
there May lows, while equities test those same lows.

And Jerry.... it doesn't make sense that you didn't ask Jim if
that was his dog.

Will SENTIMENT improve?  Maybe the brokers are the ones to ask.


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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  8997
Current     :  9962

Moving Averages:
(Simple)

 10-dma: 10126
 50-dma: 10211
200-dma: 10213



S&P 500 ($SPX)

52-week High: 1163
52-week Low :  960
Current     : 1086

Moving Averages:
(Simple)

 10-dma: 1103
 50-dma: 1116
200-dma: 1105



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1204
Current     : 1375

Moving Averages:
(Simple)

 10-dma: 1407
 50-dma: 1446
200-dma: 1447



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

CBOE Market Volatility Index (VIX) = 16.50 +0.75
CBOE Mkt Volatility old VIX  (VXO) = 16.63 +0.81
Nasdaq Volatility Index (VXN)      = 23.91 +1.47


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.81        566,657       460,356
Equity Only    0.63        473,413       297,719
OEX            0.94         19,878        18,635
QQQ            0.65         36,803        23,889


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

Bullish Percent Data

           Current   Change   Status
NYSE          62.1    - 1     Bear Confirmed
NASDAQ-100    35.0    + 0     Bear Confirmed
Dow Indust.   56.6    - 3     Bear Confirmed
S&P 500       55.4    + 0     Bear Confirmed
S&P 100       57.0    - 1     Bear Confirmed



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

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


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

 5-dma: 1.22
10-dma: 1.33
21-dma: 1.34
55-dma: 1.13


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     858       813
Decliners    1928      2184

New Highs      17        20
New Lows       74       199

Up Volume    335M      225M
Down Vol.   1241M     1423M

Total Vol.  1588M     1659M
M = millions


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

Commitments Of Traders Report: 07/20/04

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

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

S&P 500

Commercial traders have upped their short positions a tad while
reducing their longs by nearly the same amount.  Yet the change
is rather insignificant.  Small traders pared back their shorts
by a very small amount and remain net bullish.


Commercials   Long      Short      Net     % Of OI
06/29/04      405,273   413,351   ( 8,078)   (0.9%)
07/06/04      402,952   416,526   (13,574)   (1.7%)
07/13/04      407,166   416,869   ( 9,703)   (1.2%)
07/22/04      404,828   419,017   (14,189)   (1.7%)

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
06/29/04      129,978    94,535    35,443    15.7%
07/06/04      132,423    90,748    41,675    18.7%
07/13/04      133,935    95,787    38,148    16.6%
07/22/04      138,123    94,990    43,133    15.5%

Most bearish reading of the year:  (1,657)- 5/27/03
Most bullish reading of the year: 114,510 - 3/26/02


E-MINI S&P 500

There is some interesting action in the e-minis.  Commercial
traders significantly added to their long positions, which
reduced their overall net bearish stance to the lowest level
in weeks.  Small traders, in contrast, reduced their longs
and added to their shorts.  This could be viewed as a
bullish move in sentiment except institutional traders remain
net bearish.


Commercials   Long      Short      Net     % Of OI
06/29/04      258,443   447,505   (189,062)  (26.7%)
07/06/04      287,442   423,583   (136,141)  (19.1%)
07/13/04      265,142   427,017   (161,875)  (23.4%)
07/22/04      309,972   428,240   (118,268)  (16.0%)

Most bearish reading of the year: (354,835)  - 06/17/03
Most bullish reading of the year:  133,299   - 09/02/03

Small Traders Long      Short      Net     % of OI
06/29/04      236,492     47,780   188,712    66.3%
07/06/04      219,321     58,567   160,754    57.8%
07/13/04      225,410     57,699   167,711    59.2%
07/22/04      212,078     62,416   149,662    54.5%

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


NASDAQ-100

Very little action in the commercial traders with similar
additions to both longs and shorts.  Meanwhile small traders
upped their longs and reduced their shorts and that significantly
reduced their overall bearish posture.


Commercials   Long      Short      Net     % of OI
06/29/04       41,078     37,194     3,884    4.9%
07/06/04       42,245     37,343     4,902    6.2%
07/13/04       44,211     37,007     7,204    8.9%
07/22/04       45,069     37,975     7,094    8.5%

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
06/29/04        7,437    11,904    (4,467)  (23.1%)
07/06/04        9,345    16,527    (7,182)  (27.8%)
07/13/04        7,847    15,243    (7,396)  (32.0%)
07/22/04        9,398    11,776    (2,378)  (11.2%)

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

Almost no change in positions for commercial traders but
small traders have pared back their bearish positions.


Commercials   Long      Short      Net     % of OI
06/29/04       27,278    20,512    6,766      14.1%
07/06/04       27,214    20,775    6,439      13.4%
07/13/04       27,773    20,573    7,200      14.9%
07/22/04       27,957    20,389    7,568      15.7%

Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
06/29/04        4,930     7,682   (2,752)   (21.8%)
07/06/04        5,969     8,227   (2,258)   (15.9%)
07/13/04        5,292     9,068   (3,776)   (26.3%)
07/22/04        4,857     7,297   (2,440)   (20.1%

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

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


************************Advertisement*********************************
Option Traders:  Pay Attention
Use the online options trading system built by option traders for
options traders.
Featuring direct access to each option exchange, stop and stop loss
option orders,
contingent option orders, online spreads, fast executions,
and rates as low as $1.50 per contract ($14.95 min.).
PreferredTrade, Inc.
Call 888-889-9178 or
Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC
********************************************************************


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

Jeff would like readers to know that some of the Ask the Analyst
questions received this week were covered in the Market Sentiment!


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

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

Symbol  Co               Date           Comment      EPS Est

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

AFC    Allmerica Finl      Mon, Jul 26  After the Bell       0.58
AXP    Am Express Co       Mon, Jul 26  After the Bell       0.67
ANDW   ANDREW CORP         Mon, Jul 26  Before the Bell      0.13
ACI    ARCH COAL INC       Mon, Jul 26  Before the Bell      0.22
ASH    Ashland             Mon, Jul 26  Before the Bell      1.98
BBV    Banc Bilbao Vizcaya Mon, Jul 26  -----N/A-----         N/A
BOH    Bank of Hawaii Corp Mon, Jul 26  -----N/A-----        0.71
BEC    Beckman Coulter     Mon, Jul 26  Before the Bell      0.89
BLS    BellSouth Corp      Mon, Jul 26  Before the Bell      0.50
BSX    Boston Scientific   Mon, Jul 26  Before the Bell      0.45
CBT    Cabot               Mon, Jul 26  After the Bell       0.56
CSE    CAPITALSOURCE INC   Mon, Jul 26  After the Bell       0.23
CTX    Centex Corp         Mon, Jul 26  After the Bell       1.29
CHKP   Chk Pint Sftwr Tech Mon, Jul 26  Before the Bell      0.25
CTSH   Cognizant Tech Solu Mon, Jul 26  -----N/A-----        0.15
CCBI   Comm Capital BancorpMon, Jul 26  Before the Bell      0.24
CNX    CONSOL Energy       Mon, Jul 26  Before the Bell      0.23
MCM    Control Com MexicanaMon, Jul 26  After the Bell       0.28
EXBD   Corp Executive BoardMon, Jul 26  After the Bell       0.31
CVH    Coventry Health CareMon, Jul 26  Before the Bell      0.87
XRAY   DENTSPLY Intl Inc.  Mon, Jul 26  After the Bell       0.59
EXP    Eagle Materials Inc Mon, Jul 26  Before the Bell      1.20
ENH    End Spec Hldgs      Mon, Jul 26  Before the Bell      1.11
EPD    Ent Prod Partners   Mon, Jul 26  Before the Bell      0.23
FII    Federated Inv, Inc  Mon, Jul 26  After the Bell       0.46
FIA    Fiat S.p.A.         Mon, Jul 26  -----N/A-----         N/A
FCNCA  Frst Ctzns BncShrs  Mon, Jul 26  -----N/A-----         N/A
HMC    Honda Motor Co. Ltd Mon, Jul 26  -----N/A-----        0.36
HUM    Humana Inc.         Mon, Jul 26  Before the Bell      0.39
IP     Intl Paper Co.      Mon, Jul 26  Before the Bell      0.38
K      Kellogg Co.         Mon, Jul 26  Before the Bell      0.54
KRC    Kilroy Rlty Corp.   Mon, Jul 26  After the Bell       0.72
LRY    Liberty Prop Trust  Mon, Jul 26  After the Bell       0.81
NBP    No Border Partners  Mon, Jul 26  After the Bell       0.65
PRE    PartnerRe Ltd.      Mon, Jul 26  After the Bell       1.87
PSO    Pearson plc         Mon, Jul 26  Before the Bell      N/A
PBI    Pitney Bowes Inc.   Mon, Jul 26  After the Bell       0.61
PNM    PNM Resources       Mon, Jul 26  After the Bell       0.32
PFS    Provident Finl Serv Mon, Jul 26  Before the Bell      0.19
PVN    Providian Finl Corp Mon, Jul 26  -----N/A-----        0.22
PHM    Pulte Homes Inc.    Mon, Jul 26  After the Bell       1.43
RPM    RPM Intl Inc        Mon, Jul 26  Before the Bell      0.43
SLAB   Silicon Labs Inc.   Mon, Jul 26  After the Bell       0.38
SYD    Sybron Dental Spec  Mon, Jul 26  After the Bell       0.41
SWK    The Stanley Works   Mon, Jul 26  After the Bell       0.67
TNB    Thomas & Betts      Mon, Jul 26  After the Bell       0.28
TSN    Tyson Foods         Mon, Jul 26  Before the Bell      0.36
USPI   Un Surg Part Intl   Mon, Jul 26  After the Bell       0.35
UNA    UNOVA Inc.          Mon, Jul 26  Before the Bell      0.08
VLI    Valero L.P.         Mon, Jul 26  -----N/A-----        0.79
BER    W.R. Berkley        Mon, Jul 26  After the Bell       1.14
WRI    Weingarten Rlty Inv Mon, Jul 26  Before the Bell      0.61


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

ACE    ACE Limited         Tue, Jul 27  After the Bell       1.25
AFL    AFLAC Incorporated  Tue, Jul 27  After the Bell       0.56
AGU    Agrium, Inc.        Tue, Jul 27  After the Bell       0.48
AAI    AirTran Holdings    Tue, Jul 27  Before the Bell      0.16
AKAM   Akamai Technologies Tue, Jul 27  After the Bell       0.07
ALEX   Alexander & Baldwin Tue, Jul 27  After the Bell       0.56
AC     All Cap Mgmt HoldingTue, Jul 27  After the Bell       0.57
LNT    Alliant Energy      Tue, Jul 27  -----N/A-----        0.18
AIB    Allied Irish Banks  Tue, Jul 27  -----N/A-----         N/A
AW     Allied Waste Ind    Tue, Jul 27  After the Bell       0.18
AXE    Anixter Intl Inc.   Tue, Jul 27  -----N/A-----        0.39
ATH    Anthem, Inc.        Tue, Jul 27  Before the Bell      1.64
AJG    Arthur J. Gallagher Tue, Jul 27  After the Bell       0.47
ADP    Auto Data ProcessingTue, Jul 27  Before the Bell      0.35
AV     Avaya               Tue, Jul 27  After the Bell       0.12
BN     Banta Corp          Tue, Jul 27  After the Bell       0.62
ABX    Barrick Gold        Tue, Jul 27  Before the Bell      0.06
BP     Bp PLC              Tue, Jul 27  -----N/A-----        1.15
BTI    British Am Tobacco  Tue, Jul 27  Before the Bell      0.71
BNI    Brlngtn No Santa Fe Tue, Jul 27  Before the Bell      0.64
CECO   Career Education    Tue, Jul 27  After the Bell       0.34
CHH    Choice Hotels Intl  Tue, Jul 27  After the Bell       0.53
CB     Chubb Corp          Tue, Jul 27  After the Bell       1.58
CIN    Cinergy Corp.       Tue, Jul 27  Before the Bell      0.49
CHR    Converium Holding   Tue, Jul 27  Before the Bell       N/A
CREE   Cree Inc.           Tue, Jul 27  -----N/A-----        0.23
CSGS   CSG Systems, Inc.   Tue, Jul 27  After the Bell       0.23
DADE   Dade Behring        Tue, Jul 27  After the Bell       0.40
DFG    Delphi Finl Grp Inc.Tue, Jul 27  After the Bell       0.79
D      Dominion Resources  Tue, Jul 27  Before the Bell      0.80
RDY    Dr. Reddy's Labs    Tue, Jul 27  -----N/A-----         N/A
DD     DuPont              Tue, Jul 27  Before the Bell      0.80
EW     Edwards LifesciencesTue, Jul 27  After the Bell       0.41
ECA    EnCana Corp         Tue, Jul 27  Before the Bell      1.10
EC     Engelhard Corp      Tue, Jul 27  Before the Bell      0.48
EQY    Equity One          Tue, Jul 27  After the Bell       0.39
FOE    Ferro Corp          Tue, Jul 27  Before the Bell      0.35
FMC    FMC Corp            Tue, Jul 27  After the Bell       0.83
FTE    France Telecom      Tue, Jul 27  -----N/A-----         N/A
FDP    Fresh Del Monte ProdTue, Jul 27  Before the Bell      0.94
GGP    Gen Growth Prop     Tue, Jul 27  After the Bell       0.61
GSK    GlaxoSmithKline     Tue, Jul 27  -----N/A-----        0.74
HSC    Harsco Corp         Tue, Jul 27  Before the Bell      0.72
HHS    Harte-Hanks         Tue, Jul 27  Before the Bell      0.29
HSIC   Henry Schein        Tue, Jul 27  Before the Bell      0.85
IGL    IMC Global          Tue, Jul 27  Before the Bell      0.16
INGP   Instinet Grp Incorp Tue, Jul 27  Before the Bell      0.04
JKHY   Jack Henry & Assoc  Tue, Jul 27  After the Bell       0.19
JEC    Jacobs Engineering  Tue, Jul 27  -----N/A-----        0.51
JNY    Jones Apparel Grp   Tue, Jul 27  -----N/A-----        0.59
KIM    KIMCO RLTY CORP     Tue, Jul 27  Before the Bell      0.87
KRON   Kronos Incorporated Tue, Jul 27  After the Bell       0.33
LLL    L-3 Comm Holdings   Tue, Jul 27  Before the Bell      0.79
LPNT   LifePoint Hospitals Tue, Jul 27  After the Bell       0.46
LMT    Lockheed Martin     Tue, Jul 27  Before the Bell      0.61
LUX    Luxottica Grp       Tue, Jul 27  -----N/A-----         N/A
MMP    Magellan Midstream  Tue, Jul 27  Before the Bell      1.05
MRO    Marathon Oil Corp   Tue, Jul 27  Before the Bell      1.08
MWV    MeadWestvaco        Tue, Jul 27  Before the Bell      0.09
MHS    Medco Hlth SolutionsTue, Jul 27  Before the Bell      0.53
MOLX   Molex Inc.          Tue, Jul 27  After the Bell       0.28
MNST   Monster Worldwide   Tue, Jul 27  After the Bell       0.13
MRH    Montpelier Re Hold  Tue, Jul 27  After the Bell       1.24
MUR    Murphy Oil Corp     Tue, Jul 27  After the Bell       1.72
NATI   Natl Instruments    Tue, Jul 27  After the Bell       0.16
NHP    Ntnwd Hlth Prop     Tue, Jul 27  Before the Bell      0.43
MFE    Network Assoc       Tue, Jul 27  After the Bell       0.06
ORLY   O'Reilly Automotive Tue, Jul 27  After the Bell       0.60
OSK    Oshkosh Truck       Tue, Jul 27  -----N/A-----        0.79
PENN   Penn Natl Gaming    Tue, Jul 27  Before the Bell      0.53
PKI    PerkinElmer         Tue, Jul 27  After the Bell       0.20
PD     Phelps Dodge        Tue, Jul 27  Before the Bell      2.48
PUK    Prudential PLC      Tue, Jul 27  -----N/A-----         N/A
RGC    Regal Entertainment Tue, Jul 27  -----N/A-----        0.36
RGA    Reins Grp of Am, IncTue, Jul 27  After the Bell       0.88
RNR    RenaissanceRe HodngsTue, Jul 27  After the Bell       1.65
RCI    Renal Care Grp, Inc Tue, Jul 27  After the Bell       0.41
RCII   Rent-A-Center       Tue, Jul 27  Before the Bell      0.61
RTRSY  Reuters Grp         Tue, Jul 27  Before the Bell       N/A
COL    Rockwell Collins    Tue, Jul 27  Before the Bell      0.39
SWY    Safeway, Inc.       Tue, Jul 27  During the Market    0.37
SBTV   SBS Broadcasting SA Tue, Jul 27  After the Bell       0.71
SFA    Scientific-Atlanta  Tue, Jul 27  After the Bell       0.35
SEM    Select Medical Corp Tue, Jul 27  After the Bell       0.27
SIGI   SELECTIVE INS GRP   Tue, Jul 27  After the Bell       0.80
SEPR   Sepracor            Tue, Jul 27  Before the Bell     -0.81
SINA   SINA CORP           Tue, Jul 27  After the Bell       0.31
STFC   State Auto Finl     Tue, Jul 27  Before the Bell      0.43
STE    Steris              Tue, Jul 27  Before the Bell      0.25
TROW   T. Rowe Price       Tue, Jul 27  Before the Bell      0.62
TI     Telecom Italia      Tue, Jul 27  -----N/A-----         N/A
TEM    Telefonica Moviles  Tue, Jul 27  Before the Bell       N/A
TIN    Temple-Inland Inc.  Tue, Jul 27  Before the Bell      0.69
FAF    The First Am Corp   Tue, Jul 27  After the Bell       1.14
MHP    The McGraw Hill Co  Tue, Jul 27  Before the Bell      0.81
SMG    The Scotts Co       Tue, Jul 27  Before the Bell      3.05
TMO    Thermo Electron CorpTue, Jul 27  After the Bell       0.29
RIG    Transocean Inc.     Tue, Jul 27  Before the Bell      0.10
TRI    Triad Hospitals, IncTue, Jul 27  After the Bell       0.54
TRW    TRW Auto            Tue, Jul 27  Before the Bell      0.61
X      United States Steel Tue, Jul 27  -----N/A-----        1.53
UCO    Univ Comp Hldg      Tue, Jul 27  -----N/A-----        0.33
UPM    UPM-Kymmene Grp     Tue, Jul 27  -----N/A-----        0.13
UTSI   UTStarcom           Tue, Jul 27  After the Bell       0.33
WOOF   VCA Antech, Inc.    Tue, Jul 27  After the Bell       0.43
VTR    Ventas              Tue, Jul 27  After the Bell       0.43
VRTS   VERITAS Software    Tue, Jul 27  After the Bell       0.19
VZ     Verizon             Tue, Jul 27  Before the Bell      0.60
WPC    W. P. Carey & Co.   Tue, Jul 27  Before the Bell      0.91
WAT    Waters Corp         Tue, Jul 27  Before the Bell      0.41
WWY    Wm. Wrigley Jr. Co. Tue, Jul 27  -----N/A-----        0.61
WMGI   Wright Medical Grp  Tue, Jul 27  After the Bell       0.19


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

RNT    Aaron Rents, Inc.   Wed, Jul 28  After the Bell       0.35
AVO    Advanced Med Optics Wed, Jul 28  Before the Bell      0.25
ATE    Advantest Corp      Wed, Jul 28  -----N/A-----         N/A
AMG    Affiliated Managers Wed, Jul 28  -----N/A-----        0.98
AG     AGCO                Wed, Jul 28  Before the Bell      0.44
APD    Air Prod Chems Inc  Wed, Jul 28  Before the Bell      0.67
ARG    Airgas              Wed, Jul 28  After the Bell       0.29
ACL    Alcon Inc.          Wed, Jul 28  After the Bell       0.73
AGN    Allergan            Wed, Jul 28  Before the Bell      0.62
ALD    Allied Capital Corp Wed, Jul 28  Before the Bell      0.35
AHC    Amerada Hess        Wed, Jul 28  Before the Bell      2.45
AGP    AMERIGRP Corp       Wed, Jul 28  After the Bell       0.80
BUD    Anheuser-Busch Co   Wed, Jul 28  -----N/A-----        0.83
ANT    Anteon Intl Corp    Wed, Jul 28  Before the Bell      0.37
APPB   Applebee's Intl     Wed, Jul 28  After the Bell       0.33
ABI    Applied Biosystems  Wed, Jul 28  -----N/A-----        0.25
ARM    ArvinMeritor, Inc.  Wed, Jul 28  Before the Bell      0.72
ASKJ   Ask Jeeves          Wed, Jul 28  After the Bell       0.22
AVE    Aventis             Wed, Jul 28  -----N/A-----        0.99
AVP    Avon Products Inc.  Wed, Jul 28  Before the Bell      0.46
BRG    BG Grp              Wed, Jul 28  Before the Bell      0.50
BIIB   Biogen Idec Inc.    Wed, Jul 28  Before the Bell      0.32
BYD    Boyd Gaming         Wed, Jul 28  After the Bell       0.27
BPO    BROOKFIELD PPTYS    Wed, Jul 28  Before the Bell      0.60
BOBJ   Business Objects    Wed, Jul 28  After the Bell       0.18
VNT    C. A. Nacl Teli VeneWed, Jul 28  After the Bell       0.15
CAB    CABELAS INC         Wed, Jul 28  After the Bell        N/A
CAJ    Canon               Wed, Jul 28  Before the Bell       N/A
CRL    Charles River Labs  Wed, Jul 28  After the Bell       0.49
KOF    COCA-COLA FEMSA     Wed, Jul 28  Before the Bell      0.38
CMCSA  Comcast Corp        Wed, Jul 28  Before the Bell      0.10
COP    ConocoPhillips      Wed, Jul 28  Before the Bell      2.89
CAM    Cooper Cameron      Wed, Jul 28  Before the Bell      0.40
CCI    Crown Castle Intl   Wed, Jul 28  After the Bell      -0.17
CSX    CSX                 Wed, Jul 28  Before the Bell      0.58
CFR    Cullen/Frost BankersWed, Jul 28  Before the Bell      0.66
DNEX   Dionex              Wed, Jul 28  After the Bell       0.49
DRE    Duke Rlty Corp      Wed, Jul 28  After the Bell       0.61
DYN    Dynegy Inc.         Wed, Jul 28  Before the Bell     -0.07
EDS    Electronic Data Sys Wed, Jul 28  After the Bell      -0.03
ELE    Endesa, S.A.        Wed, Jul 28  Before the Bell       N/A
ENI    Enersis SA ADS      Wed, Jul 28  -----N/A-----        0.19
ERIE   Erie Indemnity      Wed, Jul 28  After the Bell       0.82
ESS    Essex Property TrustWed, Jul 28  After the Bell       1.04
EXC    Exelon Corp         Wed, Jul 28  Before the Bell      0.66
ESRX   Express Scripts, IncWed, Jul 28  After the Bell       0.94
FIC    Fair Isaac Corp     Wed, Jul 28  After the Bell       0.34
FRT    Fed Rlty Invstmnt   Wed, Jul 28  -----N/A-----        0.70
FSH    Fisher Scitific IntlWed, Jul 28  After the Bell       0.71
FLR    Fluor Corp          Wed, Jul 28  After the Bell       0.54
FBN    Furniture Brands    Wed, Jul 28  -----N/A-----        0.27
GRMN   Garmin Ltd.         Wed, Jul 28  Before the Bell      0.46
GEMP   Gemplus Intl S.A.   Wed, Jul 28  -----N/A-----         N/A
GSF    GlobalSantaFe Corp. Wed, Jul 28  Before the Bell      0.00
GRP    Grant Prideco Inc   Wed, Jul 28  Before the Bell      0.08
GTRC   Guitar Center       Wed, Jul 28  -----N/A-----        0.35
HAN    Hanson plc          Wed, Jul 28  -----N/A-----         N/A
HRS    Harris              Wed, Jul 28  After the Bell       0.54
HTV    Hearst-Argyle TV    Wed, Jul 28  Before the Bell      0.37
HLT    Hilton Hotels Corp  Wed, Jul 28  Before the Bell      0.18
IRGI   Inveresk Res Grp IncWed, Jul 28  After the Bell       0.33
JDSU   JDS Uniphase Corp   Wed, Jul 28  -----N/A-----       -0.01
JP     Jefferson-Pilot     Wed, Jul 28  After the Bell       0.92
KMT    Kennametal Inc.     Wed, Jul 28  Before the Bell      0.78
KMG    Kerr-McGee          Wed, Jul 28  -----N/A-----        1.08
LVLT   Level 3 Comm        Wed, Jul 28  -----N/A-----       -0.33
LNC    Lincoln Natl        Wed, Jul 28  After the Bell       0.93
LPX    LP Corp             Wed, Jul 28  Before the Bell      1.58
LZ     Lubrizol            Wed, Jul 28  Before the Bell      0.64
MACR   Macromedia          Wed, Jul 28  After the Bell       0.20
MMC    Marsh & McLennan Co Wed, Jul 28  Before the Bell      0.72
WFR    MEMC Electronic Mat Wed, Jul 28  -----N/A-----        0.17
MDG    Meridian Gold Inc.  Wed, Jul 28  Before the Bell      0.09
MET    MetLife Inc.        Wed, Jul 28  After the Bell       0.77
MX     Metso Corp          Wed, Jul 28  -----N/A-----        0.55
NFX    Newfield ExplorationWed, Jul 28  Before the Bell      1.30
NEM    Newmont Mining Corp Wed, Jul 28  Before the Bell      0.24
NXTP   Nextel Partners     Wed, Jul 28  Before the Bell      0.05
NSC    Norfolk So Corp     Wed, Jul 28  Before the Bell      0.46
PTNR   Partner Comm        Wed, Jul 28  Before the Bell       N/A
POG    Patina Oil & Gas    Wed, Jul 28  After the Bell       0.49
PAS    PepsiAmericas       Wed, Jul 28  Before the Bell      0.41
PIO    Pioneer Corp        Wed, Jul 28  -----N/A-----         N/A
PDG    Placer Dome         Wed, Jul 28  After the Bell       0.12
PX     Praxair Inc         Wed, Jul 28  Before the Bell      0.52
IQW    Quebecor World      Wed, Jul 28  -----N/A-----        0.26
QSFT   Quest Software Inc. Wed, Jul 28  After the Bell       0.09
STR    Questar.com         Wed, Jul 28  -----N/A-----        0.50
RHD    R.H. Donnelley Corp Wed, Jul 28  After the Bell       0.78
RYN    Rayonier Inc.       Wed, Jul 28  After the Bell       0.84
REG    REGENCY CTRS CORP   Wed, Jul 28  After the Bell       0.70
RSG    Republic Services   Wed, Jul 28  After the Bell       0.39
ROK    Rockwell Automation Wed, Jul 28  Before the Bell      0.44
ROH    Rohm and Haas Co    Wed, Jul 28  Before the Bell      0.51
ROL    Rollins, Inc.       Wed, Jul 28  Before the Bell      0.35
ROP    Roper Ind           Wed, Jul 28  After the Bell       0.62
STD    Santander Cent Hisp Wed, Jul 28  Before the Bell       N/A
SGMS   Scientific Games    Wed, Jul 28  After the Bell       0.21
SEE    Sealed Air          Wed, Jul 28  -----N/A-----        0.68
SPG    Simon Property Grp  Wed, Jul 28  After the Bell       1.00
SNE    Sony Corp           Wed, Jul 28  -----N/A-----        0.36
SO     Southern Co         Wed, Jul 28  -----N/A-----        0.48
SPF    Standard Pacific    Wed, Jul 28  After the Bell       1.41
SRCL   Stericycle          Wed, Jul 28  -----N/A-----        0.43
SEO    Stora Enso          Wed, Jul 28  -----N/A-----        0.06
SU     Suncor Energy       Wed, Jul 28  Before the Bell       N/A
SBL    Symbol Technologies Wed, Jul 28  After the Bell       0.09
TCO    Taubman Centers     Wed, Jul 28  After the Bell       0.44
TLSN   TeliaSonera AB      Wed, Jul 28  -----N/A-----         N/A
BA     The Boeing Co       Wed, Jul 28  Before the Bell      0.47
TDW    Tidewater           Wed, Jul 28  Before the Bell      0.24
TWX    Time Warner Inc.    Wed, Jul 28  Before the Bell      0.15
UL     Unilever PLC        Wed, Jul 28  Before the Bell      0.74
UAG    United Auto Grp     Wed, Jul 28  -----N/A-----        0.63
UMC    United Microelect   Wed, Jul 28  -----N/A-----        0.08
VARI   Varian, Inc.        Wed, Jul 28  After the Bell       0.40
VVC    Vectren Corp        Wed, Jul 28  After the Bell       0.13
VMC    Vulcan Materials    Wed, Jul 28  After the Bell       0.82
WON    Westwood One        Wed, Jul 28  Before the Bell      0.25
WFMI   Whole Foods Market  Wed, Jul 28  After the Bell       0.51
XEL    Xcel Energy         Wed, Jul 28  Before the Bell      0.18
XL     XL Capital Ltd      Wed, Jul 28  After the Bell       2.20
YCC    Yankee Candle       Wed, Jul 28  Before the Bell      0.16
ZMH    Zimmer Inc.         Wed, Jul 28  After the Bell       0.55


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

ABB    ABB                 Thu, Jul 29  Before the Bell      0.07
AES    AES Corp            Thu, Jul 29  Before the Bell      0.10
AET    Aetna Inc.          Thu, Jul 29  Before the Bell      1.66
ACS    Aff Computer Serv   Thu, Jul 29  -----N/A-----        0.70
ATG    AGL Resources       Thu, Jul 29  Before the Bell      0.31
ALA    Alcatel             Thu, Jul 29  Before the Bell      0.08
AWC    ALUMINA LTD         Thu, Jul 29  -----N/A-----         N/A
AEE    Ameren Corp         Thu, Jul 29  Before the Bell      0.63
AHM    Am Home Mrtg InvstmnThu, Jul 29  Before the Bell      0.81
AMMD   Am Medical Systems  Thu, Jul 29  After the Bell       0.24
APCC   Am Power Conversion Thu, Jul 29  After the Bell       0.19
AMIS   AMIS HLDGS INC      Thu, Jul 29  -----N/A-----        0.17
AU     Anglgld Ashnt Lmtd  Thu, Jul 29  -----N/A-----        0.20
APA    Apache Corp         Thu, Jul 29  Before the Bell      1.15
ACGL   Arch Capital Grp    Thu, Jul 29  After the Bell       1.16
AGY    Argosy Gaming       Thu, Jul 29  Before the Bell      0.59
BHI    Baker Hughes Incorp Thu, Jul 29  Before the Bell      0.31
BLL    Ball Corp           Thu, Jul 29  Before the Bell      1.43
BOL    Bausch & Lomb       Thu, Jul 29  Before the Bell      0.64
BZH    Beazer Homes USA IncThu, Jul 29  Before the Bell      3.99
BWA    BorgWarner, Inc.    Thu, Jul 29  Before the Bell      0.92
BAK    Braskem, S.A.       Thu, Jul 29  -----N/A-----         N/A
BMY    Bristol-Myers SquibbThu, Jul 29  -----N/A-----        0.39
BC     Brunswick Corp      Thu, Jul 29  Before the Bell      0.90
BTY    BT Grp PLC          Thu, Jul 29  Before the Bell       N/A
BG     BUNGE LIMITED       Thu, Jul 29  Before the Bell      0.77
COG    Cabot Oil & Gas CorpThu, Jul 29  After the Bell       0.58
CP     Can Pacific Railway Thu, Jul 29  Before the Bell      0.46
CARS   Capital Automotive  Thu, Jul 29  Before the Bell      0.51
CMX    CareMark Rx, Inc.   Thu, Jul 29  Before the Bell      0.30
CRE    Carramerica Rlty    Thu, Jul 29  After the Bell       0.76
CDX    Catellus DevelopmentThu, Jul 29  After the Bell       0.34
CBL    CBL & Assoc Prop    Thu, Jul 29  After the Bell       1.16
CTL    CenturyTel, Inc.    Thu, Jul 29  Before the Bell      0.56
GIB    CGI Grp             Thu, Jul 29  Before the Bell       N/A
CBI    Chicago Bridge Iron Thu, Jul 29  Before the Bell      0.08
CNA    CNA Finl Corp       Thu, Jul 29  -----N/A-----         0.6
CCE    Coca-Cola Enter     Thu, Jul 29  Before the Bell      0.61
CPO    Corn Products Intl  Thu, Jul 29  Before the Bell      0.61
COX    Cox Communications  Thu, Jul 29  Before the Bell      0.11
CW     Curtiss-Wright Corp.Thu, Jul 29  After the Bell       0.62
CYTC   Cytyc Corp          Thu, Jul 29  After the Bell       0.18
DCX    DaimlerChrysler     Thu, Jul 29  Before the Bell      0.93
DASTY  Dassault Systemes SAThu, Jul 29  -----N/A-----        0.33
DLX    Deluxe Corp         Thu, Jul 29  Before the Bell      0.89
DNR    Denbury Resources   Thu, Jul 29  Before the Bell      0.41
DDR    DVLPRS DIVERS RLTY  Thu, Jul 29  -----N/A-----        0.82
DUK    Duke Energy Corp    Thu, Jul 29  -----N/A-----        0.24
EMN    Eastman Chemical Co Thu, Jul 29  After the Bell       0.78
ENB    Enbridge Inc.       Thu, Jul 29  -----N/A-----         N/A
E      ENI SpA             Thu, Jul 29  During the Market     N/A
ETH    Ethan Allen InteriorThu, Jul 29  Before the Bell      0.57
XOM    ExxonMobil Corp     Thu, Jul 29  Before the Bell      0.87
FFH    Fairfax Finl HoldingThu, Jul 29  After the Bell       4.57
FLS    Flowserve Corp      Thu, Jul 29  Before the Bell      0.30
FMT    Fremont General     Thu, Jul 29  During the Market    1.13
GMT    GATX Corp           Thu, Jul 29  Before the Bell      0.29
GET    Gaylord Entertain   Thu, Jul 29  Before the Bell     -0.19
GGC    Georgia Gulf        Thu, Jul 29  After the Bell       0.90
GP     Georgia-Pacific     Thu, Jul 29  Before the Bell      0.92
GILD   Gilead Sciences     Thu, Jul 29  -----N/A-----        0.36
GFI    Gold Fields Limited Thu, Jul 29  -----N/A-----        0.07
GR     Goodrich Corp       Thu, Jul 29  Before the Bell      0.30
HCP    Health Care PropertyThu, Jul 29  Before the Bell      0.45
HR     Hlthcare Rlty Trust Thu, Jul 29  After the Bell       0.70
HPC    Hercules            Thu, Jul 29  Before the Bell      0.24
HEW    Hewitt Assoc        Thu, Jul 29  Before the Bell      0.32
HB     Hillenbrand Ind     Thu, Jul 29  Before the Bell      0.74
HIT    Hitachi Limited     Thu, Jul 29  -----N/A-----         N/A
IKN    Ikon Office Sltns   Thu, Jul 29  -----N/A-----        0.16
ICI    Imperial Chem Ind   Thu, Jul 29  -----N/A-----         N/A
IM     Ingram Micro        Thu, Jul 29  After the Bell       0.15
IFF    Intl Flavors & Frag Thu, Jul 29  -----N/A-----        0.63
IRF    Intl Rectifier      Thu, Jul 29  After the Bell       0.51
ISG    INTL STEEL GRP INC  Thu, Jul 29  Before the Bell      1.25
ISIL   Intersil Corp       Thu, Jul 29  After the Bell       0.20
IRM    Iron Mountain IncorpThu, Jul 29  Before the Bell      0.18
KLAC   KLA-Tencor          Thu, Jul 29  -----N/A-----        0.45
KNM    KONAMI CORP         Thu, Jul 29  -----N/A-----         N/A
LIHRY  LIHIR GOLD LTD      Thu, Jul 29  -----N/A-----       -0.06
LTR    Loews Corp.         Thu, Jul 29  Before the Bell      1.45
MGLN   Magellan Health ServThu, Jul 29  -----N/A-----        0.41
MKL    MARKEL CORP         Thu, Jul 29  Before the Bell      5.03
MVL    Marvel Enterprises  Thu, Jul 29  Before the Bell      0.19
MEE    Massey Energy Co    Thu, Jul 29  After the Bell       0.25
MC     Matsushita Elec IndlThu, Jul 29  -----N/A-----         N/A
MGM    Metro-Goldwyn-Mayer Thu, Jul 29  -----N/A-----       -0.11
MTX    MINERALS TECH INC   Thu, Jul 29  After the Bell       0.73
MGI    MoneyGram Intl      Thu, Jul 29  Before the Bell      0.26
MPS    MPS Grp             Thu, Jul 29  Before the Bell      0.08
NBG    Natl Bank of Greece Thu, Jul 29  Before the Bell       N/A
NFG    Natl Fuel Gas Co    Thu, Jul 29  After the Bell       0.32
NCR    NCR Corp            Thu, Jul 29  Before the Bell      0.36
NIPNY  NEC (ADR)           Thu, Jul 29  -----N/A-----         N/A
NXL    Nw Pln Excl Rlty TrsThu, Jul 29  Before the Bell      0.50
NWL    Newell Rubbermaid   Thu, Jul 29  Before the Bell      0.35
NJ     Nidec               Thu, Jul 29  -----N/A-----         N/A
NSANY  Nissan Motor Co. LtdThu, Jul 29  -----N/A-----         N/A
NRD    NORANDA INC         Thu, Jul 29  Before the Bell       N/A
NOC    Northrop Grumman    Thu, Jul 29  -----N/A-----        0.75
NFI    Novastar Finl       Thu, Jul 29  Before the Bell       N/A
ORH    Odyssey Re Holdings Thu, Jul 29  After the Bell       0.56
ORI    Old Republic Intl   Thu, Jul 29  -----N/A-----        0.61
OLN    Olin                Thu, Jul 29  After the Bell       0.07
OCR    Omnicare            Thu, Jul 29  Before the Bell      0.63
IX     Orix Corp           Thu, Jul 29  -----N/A-----         N/A
OSG    Overseas ShipholdingThu, Jul 29  Before the Bell      1.18
PHS    PacifiCare Hlth Sys Thu, Jul 29  After the Bell       0.78
PNP    Pan Pac Rtl Prop    Thu, Jul 29  -----N/A-----        0.88
PH     Parker Hannifin CorpThu, Jul 29  Before the Bell      0.92
PTEN   Patterson-UTI EnergyThu, Jul 29  Before the Bell      0.14
PCZ    Petro-Canada        Thu, Jul 29  Before the Bell       N/A
PKZ    PETROKAZAKHSTAN INC Thu, Jul 29  Before the Bell      1.14
PNW    Pinnacle Wst Cptl   Thu, Jul 29  Before the Bell      0.59
POT    Ptsh Crp Ssktchwn   Thu, Jul 29  -----N/A-----        1.12
PDS    Precision Drllng CrpThu, Jul 29  Before the Bell      0.13
PCO    Premcor Inc.        Thu, Jul 29  -----N/A-----        2.00
PLD    ProLogis Trust      Thu, Jul 29  Before the Bell      0.57
ROIAK  Radio One           Thu, Jul 29  -----N/A-----        0.10
RTN    Raytheon            Thu, Jul 29  Before the Bell      0.31
RDA    READERS DIGEST ASSN Thu, Jul 29  -----N/A-----        0.06
O      Rlty Income Corp    Thu, Jul 29  -----N/A-----        0.71
REP    Repsol YPF          Thu, Jul 29  Before the Bell       N/A
RTP    Rio Tinto PLC       Thu, Jul 29  -----N/A-----        2.95
SPP    Sappi Limited       Thu, Jul 29  -----N/A-----        0.14
SC     Shell Trans and TradThu, Jul 29  -----N/A-----        1.03
SHPGY  Shire Pharm Grp     Thu, Jul 29  Before the Bell      0.43
SI     Siemens AG          Thu, Jul 29  Before the Bell       N/A
SKM    SK Telecom          Thu, Jul 29  -----N/A-----         N/A
SNA    Snap-on Incorp      Thu, Jul 29  Before the Bell      0.44
SSI    SpectraSite, Inc.   Thu, Jul 29  Before the Bell      0.17
SKE    Spinnaker Explrtn   Thu, Jul 29  -----N/A-----        0.52
SLF    Sun Life Finl Inc.  Thu, Jul 29  -----N/A-----         N/A
SYT    Syngenta            Thu, Jul 29  Before the Bell       N/A
TLM    Talisman Energy     Thu, Jul 29  -----N/A-----        0.58
TDK    TDK                 Thu, Jul 29  -----N/A-----         N/A
TKP    Technip             Thu, Jul 29  Before the Bell      0.39
TE     TECO Energy Inc.    Thu, Jul 29  -----N/A-----        0.21
TNE    Tele No Lst Prtcp   Thu, Jul 29  Before the Bell      0.09
TIWI   Telesys Intl Wrlss  Thu, Jul 29  After the Bell       0.12
TLWT   Telewest Global Inc Thu, Jul 29  Before the Bell       N/A
TRLY   Terra Networks      Thu, Jul 29  -----N/A-----         N/A
DOW    The Dow Chemical Co Thu, Jul 29  Before the Bell      0.67
G      The Gillette Co     Thu, Jul 29  Before the Bell      0.41
PNX    The Phoenix Co, Inc.Thu, Jul 29  Before the Bell      0.16
RSE    The Rouse Co        Thu, Jul 29  -----N/A-----        1.01
TMIC   Trend Micro         Thu, Jul 29  -----N/A-----         N/A
TSM    TSMC                Thu, Jul 29  -----N/A-----        0.14
TXU    TXU Corp.           Thu, Jul 29  Before the Bell      0.49
UMBF   UMB Finl            Thu, Jul 29  -----N/A-----        0.54
UNEWY  United Bus Media    Thu, Jul 29  -----N/A-----         N/A
VLO    Valero Energy Corp. Thu, Jul 29  -----N/A-----        4.37
VRC    Varco Intl, Inc.    Thu, Jul 29  Before the Bell      0.22
VAR    Varian Medical Sys  Thu, Jul 29  After the Bell       0.58
VSEA   Vrn Semicon Equip   Thu, Jul 29  After the Bell       0.51
WDR    Waddell & Reed Finl Thu, Jul 29  Before the Bell      0.34
WMI    Waste Management    Thu, Jul 29  -----N/A-----        0.37
WDC    Western Digital CorpThu, Jul 29  After the Bell       0.15
YPF    YPF, S.A.           Thu, Jul 29  -----N/A-----         N/A


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

AEP    Am Electric Power   Fri, Jul 30  Before the Bell      0.44
AFR    Am Finl Rlty Trust  Fri, Jul 30  Before the Bell       N/A
APC    Anadarko Petroleum  Fri, Jul 30  Before the Bell      1.59
AHG    Apria Healthcare GrpFri, Jul 30  -----N/A-----        0.57
ADM    Archer Dan Midland  Fri, Jul 30  Before the Bell      0.24
BOW    Bowater IncorporatedFri, Jul 30  Before the Bell     -0.24
CCJ    Cameco              Fri, Jul 30  -----N/A-----         N/A
CVX    ChevronTexaco       Fri, Jul 30  Before the Bell      2.70
CEG    Constell Energy Grp Fri, Jul 30  Before the Bell      0.35
DTE    DTE Energy Co       Fri, Jul 30  -----N/A-----        0.45
EDP    Electricidade Port  Fri, Jul 30  -----N/A-----         N/A
FUJIY  Fuji Photo Film     Fri, Jul 30  -----N/A-----         N/A
NDE    IndyMac Bancorp     Fri, Jul 30  Before the Bell      0.84
KGC    Kinross Gold        Fri, Jul 30  -----N/A-----        0.03
LYG    Lloyds TSB Grp      Fri, Jul 30  -----N/A-----         N/A
NOI    Natl Oilwell        Fri, Jul 30  Before the Bell      0.25
PEG    PSEG                Fri, Jul 30  Before the Bell      0.55
SWN    Southwestern Energy Fri, Jul 30  -----N/A-----        0.51
WPO    The Washington Post Fri, Jul 30  -----N/A-----        8.32


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

Symbol  Co Name              Ratio    Payable     Executable

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

July 26th through the 30th is another huge week for
Q2 earnings season but we have passed the peak.  The week
also brings a number of economic data with new and existing
home sales, consumer confidence numbers, the Chicago PMI and
the Michigan Sentiment index.  Topping the list will be
the Fed's Beige book, the ECI and the advance GDP numbers.
Also grabbing headlines will be the Democratic convention
in Boston.


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

----------------
Monday, 07/26/04
----------------
Ewisting Home Sales (DM)   Jun  Forecast:   6.65M  Previous:    6.80M
Federal Reserve Governor Hoenig speaks on Monetary Policy
The Democratic National Convention in Boston in session.


-----------------
Tuesday, 07/27/04
-----------------
Consumer Confidence (DM)   Jul  Forecast:   102.0  Previous:    101.9
New Home Sales (DM)        Jun  Forecast:   1261K  Previous:    1369K
The Democratic National Convention in Boston in session.


-------------------
Wednesday, 07/28/04
-------------------
Durable Orders (BB)        Jun  Forecast:    1.5%  Previous:    -1.6%
Fed's Beige Book (DM)
The Democratic National Convention in Boston in session.


------------------
Thursday, 07/29/04
------------------
Initial Claims (BB)      07/23  Forecast:    340K  Previous:     339K
Employment Cost Index (BB)  Q2  Forecast:    0.9%  Previous:     1.1%
Help-Wanted Index (DM)     Jun  Forecast:      40  Previous:       39
The Democratic National Convention in Boston ends Thursday evening.


----------------
Friday, 07/30/04
----------------
GDP-Adv. (BB)               Q2  Forecast:    3.7%  Previous:     3.9%
Chain Deflator-Adv. (BB)    Q2  Forecast:    3.0%  Previous:     2.9%
Mich Sentiment-Rev. (DM)   Jul  Forecast:    96.1  Previous:     96.0
Chicago PMI (DM)           Jul  Forecast:    60.0  Previous:     56.4


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

************************Advertisement*************************

Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

Live Broker and Online Trading Available     888-281-9569

http://www.OneStopOption.com

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


FREE TRIAL READERS
******************

If you like the results you have been receiving we
would welcome you as a permanent subscriber.

The monthly subscription price is $49.95. The quarterly
price is $129.95 which is $20 off the monthly rate.

We would like to have you as a subscriber. You may
subscribe at any time but your subscription will not
start until your free trial is over.

To subscribe you may go to our website at

www.OptionInvestor.com

and click on "subscribe" to use our secure credit
card server or you may simply send an email to

Contact Support

with your credit card information,(number, exp date, name)
or you may call us at 303-797-0200 and give us the
information over the phone.

You may also fax the information to: 303-797-1333


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


The Option Investor Newsletter                   Sunday 07-25-2004
Sunday                                                      2 of 5

In Section Two:

Watch List: Insurance to Biotech and more!
Dropped Calls: AET
Dropped Puts: None


************************Advertisement*************************

Live Securities Brokerage Service with Licensed Option Principals

OCO Stop & Profit Orders                        OneStopOption
All types of Spreads and Buy Writes             888-281-9569
Auto-Trade Market Monitor Signals
Personal Service and Education


**Services available for Foreign Traders including Canada**

http://www.OneStopOption.com

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


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

Insurance to Biotech and more!

___________________________________________________________________

How to use this watch list:
  Readers can use the candidates below as a springboard for their
  own research.  Many are in the process of breaking support or
  resistance or in the process of starting new trends or
  extending old ones.  With your own due diligence these could be
  strong potential plays.
___________________________________________________________________


American Intl Group - AIG - close: 68.10 change: +0.87

WHAT TO WATCH: Dow-component and insurance stock AIG reported
earnings on July 22nd.  The company beat estimates by 2 cents and
shares managed a small bounce on Friday while the rest of the
market was falling.  Unfortunately, the bounce on Friday wasn't
enough to breakout over resistance at its 10 or 200-dma.
Furthermore the $69 level happens to be the neckline on a head-
and-shoulders pattern that AIG broke earlier this past week.  We
might consider a drop through the $67 level as a possible bearish
entry point.  The H&S target would be the $61-60 area.  The P&F
chart is bearish and points to $57 but it does show support near
$64.

Chart=


---

Genentech - DNA - close: 48.26 change: -0.24

WHAT TO WATCH: We considered adding DNA to the play list as a
put.  The BTK index looks weak and appears poised to test the 440
level.  In a similar vein DNA looks weak after breaking down
under the $50.00 mark and its simple 200-dma.  The bounce on
Friday may be the sort of uptick bears are looking for to short
this stock again.  Yet if it manages a test of the $50 level and
fails we'd really turn bearish.  Momentum traders may want to
consider a new relative low under Thursday's low.  The P&F chart
is bearish with a $39 price target.

Chart=


---

Jos. A Bank Clothiers - JOSB - close: 29.52 change: -0.82

WHAT TO WATCH: We strongly considered adding JOSB to the play
list as a put.  Shares appear to be trading in a relatively new
descending channel.  Likewise the short-term trend of lower highs
and lower lows has pushed it back under the $30 mark and its
simple 200-dma.  Plus the stock's P&F chart is bearish and points
to a $21 price target.  What made us pause was recent news that
JOSB's June store sales soared more than 26% and its comparable
store sales rose 10%.  This is impressive considering most of the
country saw a sales slow down in June.  One could argue that the
news is out and not helping the share price but we're concerned
that any bounce in the RLX retail index might inspire traders to
speculate with bullish positions in JOSB due to its impressive
numbers.  If you look at the RLX you can see that the sector
index is down four weeks in a row, testing support and overdue
for just the sort of bounce we're worried about.  FYI: should you
be brave enough to buy puts we'd target a drop to $25 before its
mid-August earnings report.

Chart=


---

Omnicom - OMC - close: 69.53 change: -0.95

WHAT TO WATCH: Uh-oh!  The oversold bounce in OMC is failing and
the stock is back under the $70 level.  We might consider a drop
under support at $68.00 as a bearish entry point but we want to
wait for OMC's earnings.  The company is due to report on July
27th and estimates are for $1.07 a share.  We do note that the
P&F chart is bearish and points to a $53 target.

Chart=



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

MSTR $35.21 -2.17 - Software stocks were hit hard again on Friday
after MSFT's earnings Thursday night.  MSTR broke down from its
recent trading range to test round-number support at $35.

NKE $70.27 -1.17 - Nike is testing support at the $70.00 level
and its simple 200-dma.  A breakdown could lead to a drop near
$66.

MBT $112.45 +2.05 - This is a Russian telecom stock.  Aggressive
traders might look for a failed rally near $115 as a potential
entry point or a momentum entry on a new relative low.  We'd
target the $100-99 range as the stock has been ignoring its
simple 200-dma.


************************Advertisement*************************

No time to follow the Market Monitor? Tired of missing good Trades
because you stepped away from your computer?

OneStopOption Group can follow the Market Monitor for you. You
choose the number of contracts, we take care of the rest!!

Trade Stock Options, Stocks and ALL Futures with the same Group.
Call us 888 281-9569 to see if you qualify to have us rebate your
subscription cost.

http://www.OneStopOption.com

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


**************************
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
^^^^^

Aetna - AET - close: 84.07 change: -1.42 stop: 83.49

We suspected that AET and the markets may have been weak on Friday
so we lowered the stop loss to $83.49 Thursday night.  Sure
enough AET dipped to $83.48 on Friday afternoon.  We can either
be frustrated that we're stopped out or we can be thankful that
we're out of the play. Considering how weakly the major indices
closed heading into next week AET being stopped out may be a
blessing.  Yes, we're disappointed that the stock didn't
show more relative strength but we probably don't want to
hold it now with a new MACD sell signal.  Earnings are expected
next Thursday.

Picked on July 14th at $86.55
Change since picked:   - 2.48
Earnings Date        07/29/04 (confirmed)
Average Daily Volume =   1.44 mln
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.


************************Advertisement*************************

Stock Option and Futures Brokerage

OneStopOption teams the best trading technology with varying
levels of professional assistance at very competitive prices.
Commission costs are comparable to discount brokerage and
tailored to individual customer needs.

The power of one brokerage group with experience and expertise
in the Securities* and Futures Markets offers unprecedented
convenience for traders.

Access To All Futures Markets            Toll Free 888-281-9569
Stock Option Principals

www.OneStopOption.com

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


The Option Investor Newsletter                   Sunday 07-25-2004
Sunday                                                      3 of 5


In Section Three:

Current Calls: FDX, HUG
New Calls: None
Current Put Plays: CEPH, DISH, GS, MGA, PGR
New Puts: IBM, STJ


************************Advertisement*************************

OneStopOption.com

Trade: Securities, Stock Options, Futures Contracts

Service: Experienced Brokers
         Personal Assistance
         Convenience of One Brokerage
         Online and Live Broker Trading

Experience...  The Difference

OneStopOption.com   888-281-9569

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


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

Fedex Corp - FDX - close: 80.57 change: -0.60 stop: 79.00

Company Description:
FedEx Corp. provides customers and businesses worldwide with the
broadest portfolio of transportation, e-commerce and business
services. With annual revenues of $25 billion, the company offers
integrated business applications through operating companies
competing collectively and managed collaboratively, under the
respected FedEx and Kinko's brands. Consistently ranked among the
world's most admired and trusted employers, FedEx inspires its
more than 240,000 employees and contractors to remain
"absolutely, positively" focused on safety, the highest ethical
and professional standards and the needs of their customers and
communities.(source: company press release)

Why We Like It:
We want to begin by reminding readers that this is NOT a market
environment to be considering bullish positions.  Wednesday's
drop was bad enough but Friday's decline failed to confirm
Thursday's intraday rebound.  Given the event risk with the
Democratic convention this coming week on top of the technical
damage in the major indices we don't see a lot of reasons to buy
stocks right now.  We're going to keep FDX on the play list
because we're impressed with its relative strength and ability to
hold support at the $80.00 level.  Yet keep in mind that FDX is
in jeopardy.  The failure to rebound from Thursday's bounce looks
very bearish for the Dow Jones Transportation index.  We would
not consider new plays on FDX until shares traded back above the
$82.00 level.

We're going to leave our stop at $79.00 for now but conservative
traders may want to put their stop under Friday's low at $79.99.

Suggested Options:
We like the August and September calls.  The $80 strike looks
good.  Remember, this is not a bullish environment.  Wait for
a bounce back above $82.00.

BUY CALL AUG 80 FDX-HP OI=1450 Current Ask $2.35
BUY CALL AUG 85 FDX-HQ OI=7255 Current Ask $0.50
BUY CALL SEP 80 FDX-IP OI=  65 Current Ask $3.20
BUY CALL SEP 85 FDX-IQ OI= 290 Current Ask $1.20

Annotated Chart:




Picked on July 20 at $ 82.81
Change since picked:  - 2.24
Earnings Date       06/23/04 (confirmed)
Average Daily Volume:    1.1 million
Chart =


--

Hughes Supply - HUG - close: 59.86 change: +0.78 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:
HUG is just teasing us.  We turned cautious on Thursday after
shares broke down and closed under round-number, psychological
support at the $60.00 mark.  We suggested readers wait to
consider new bullish positions on a move past $60.50 again.  HUG
managed to do just that Friday morning hitting $60.55 before
slipping back under $60 as the broader market fell lower.

We are impressed with HUG's relative strength but the close under
the $60.00 mark is still a bit unnerving.  With the major indices
hitting new relative lows on Friday we'd be very hesitant to
consider new bullish positions.  This is not the best environment
to be buying calls.

We're going to leave our stop loss at $57.00 but more
conservative traders might want to consider upping their stop to
$58.00 (or 57.99).

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=11 Current Ask $5.40
BUY CALL AUG 60 HUG-HL OI=68 Current Ask $1.55

Annotated Chart:



Picked on July 15 at $ 60.51
Change since picked:  - 0.65
Earnings Date       08/24/04 (unconfirmed)
Average Daily Volume:    288 thousand
Chart =



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

None


************************Advertisement*********************************
Option Traders:  Pay Attention
Use the online options trading system built by option traders for
options traders.
Featuring direct access to each option exchange, stop and stop loss
option orders,
contingent option orders, online spreads, fast executions,
and rates as low as $1.50 per contract ($14.95 min.).
PreferredTrade, Inc.
Call 888-889-9178 or
Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC
********************************************************************


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

Cephalon - CEPH - close: 49.39 change: -0.74 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:
Hmmm... the action in CEPH has been interesting or more correctly
the lack of action has been interesting.  The BTK biotech index
rolled over again on Friday cutting its oversold bounce from
Thursday short.  Amgen's lackluster earnings guidance probably
had a hand in the BTK's weakness.  We are somewhat surprised that
CEPH is holding up as well as it is.  The stock continues to
consolidate sideways but fortunately there are bearish clues to
be seen.  CEPH produced a new relative low on Friday.  It also
produced another lower high and the fourth failed rally at its
descending 10-dma in the last four days.  While there is no
guarantee it would certainly seem like CEPH is going to breakout
to the downside.  We remain bearish but more conservative traders
may want to look for more conviction and wait for a drop under
$48.50.  Thankfully the triple-bottom breakdown sell signal on
its P&F chart still looks good.


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= 1180 Current Ask $6.00
BUY PUT AUG 50 CQE-TJ OI= 5230 Current Ask $2.30
BUY PUT AUG 45 CQE-TI OI= 1615 Current Ask $0.60

Annotated Chart:



Picked on July 15 at $ 49.87
Change since picked:  - 0.48
Earnings Date       08/03/04 (confirmed)
Average Daily Volume:    969 thousand
Chart =


---

EchoStar Comm. - DISH - close: 28.90 chg: -0.27 stop: 29.55

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:
It has been a volatile week for DISH.  Shares hit new one-year
lows earlier in the week only to reverse sharply on Thursday
after SBC Communications announced positive sales numbers for
their bundled sales packages with DISH services.  The markets
seemed to completely ignore the typically bearish news that
DISH's CFO resigned for "personal reasons" on Wednesday evening.
We are encouraged to see technical resistance at the simple 21-
dma hold up the last two sessions and this may prove to be a new
entry point for bearish plays but we feeling cautious.  The
weekly chart for DISH shows a new hammer candlestick, which is
typically a bullish one-day reversal pattern.  We are
going to leave our stop loss at $29.55 for now.  We would not
suggest new bearish plays unless DISH fell below $28.50 or even
better at the $28.00 level.  Our target remains near $25.00.

Suggested Options:
We are cautious right now.  See play above for details.
Our favorite is the August 30s.

BUY PUT AUG 30.00 UAB-TF OI= 508 Current Ask $1.90
BUY PUT AUG 27.50 UAB-TY OI=1866 Current Ask $0.75

Annotated Chart:




Picked on July 09th at $28.99
Change since picked:   - 0.09
Earnings Date        08/11/04 (unconfirmed)
Average Daily Volume =    2.5 mln
Chart =


--

Goldman Sachs - GS - close: 87.55 change: +0.04 stop: 91.51*new*

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:
It has been a very volatile week for GS and the broker-dealer
index.  In the last several days GS has produced a new sell
signal and new relative low only to immediately reverse.  This
bullish reversal was followed by a bearish reversal near $90.00.
The next day (last Thursday) GS produced a decent intraday
bounce.  We have to count on the weekly chart and the Point-and-
figure chart to wade through all the noise and give us direction.
Fortunately both the weekly chart and P&F chart remain bearish
with the latter pointing to a $78 target.  We're only targeting a
drop to the $80-82 region.  We're going to lower our stop loss to
$91.51.


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=3520 Current Ask $3.80
BUY PUT AUG 85 GS-TQ OI=7182 Current Ask $1.40
BUY PUT AUG 80 GS-TP OI=3944 Current Ask $0.40

Annotated Chart:




Picked on July 15 at $ 87.25
Change since picked:  + 0.30
Earnings Date       06/22/04 (confirmed)
Average Daily Volume:    4.0 million
Chart =


--

Magna Intl - MGA - close: 80.67 change: +0.42 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:
Our simple trading the range play is holding in there.  MGA
weathered the market volatility this past week pretty well as it
consolidated above support at the $80.00 level.  Its trend of
lower highs suggest that bears will eventually push the stock
through support at $80.00 and/or its simple 200-dma and toward
the bottom of the range (and our target near $75).  A quick look
at the chart reveals our strategy and target.  Traders can choose
to consider a failed rally under $82 as a new entry point or a
drop through the $80 level as a new entry point for bearish
positions.  No change in our stop at $84.51 for now.

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= 15 Current Ask $5.20
BUY PUT AUG 80 MGA-TP OI=219 Current Ask $1.70
BUY PUT AUG 75 MGA-TO OI= 17 Current Ask $0.60

Annotated Chart:




Picked on July 15 at $ 81.53
Change since picked:  - 1.28
Earnings Date       08/05/04 (confirmed)
Average Daily Volume:    182 thousand
Chart =


--

Progressive - PGR - close: 76.25 chg: -1.04 stop: 80.01*new*

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:
The bearish post-earnings momentum continues for shares of PGR.
Sharp weakness in the IUX Insurance index bolstered by post-
earnings losses fro XL and RE have helped undermine any rebound
attempts in PGR.  The stock (PGR) has been consolidating lower
with a steady trend of lower highs.  Friday's close as a new
relative low is encouraging and we'd expected PGR to test the $75
level soon.  If we should see an oversold bounce we'd look for
potential resistance at $78 or its simple 10-dma near $79.  We're
going to lower our stop loss to $80.01.  There is no change in
our target in the $71-72 region.  Remember, we might see a bounce
from $75 so traders could wait for a possible bounce if you're
looking for a new entry point.

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= 848 Current Ask $4.30
BUY PUT AUG 75 PGR-TO OI= 467 Current Ask $1.40

Annotated Chart:




Picked on July 15 at $ 79.00
Change since picked:  - 2.75
Earnings Date       07/14/04 (confirmed)
Average Daily Volume:    655 thousand
Chart =



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

Intl Business Mach - IBM - cls: 84.85 chg: -1.21 stop: 86.51

Company Description:
IBM is the world's largest information technology company, with
80 years of leadership in helping businesses innovate. Drawing on
resources from across IBM and key business partners, IBM offers a
wide range of services, financing, solutions and technologies
that enable customers to take full advantage of the on demand
era. (source: company press release)

Why We Like It:
We have a simple technical play with IBM's bear-flag pattern.
With technology stocks growing weaker we should see IBM break out
through the bottom of its flag pattern soon.  We're going to use
a TRIGGER at $83.99 to open the play so until IBM trades at that
level we'll sit on the sidelines.  Once triggered we'll use a
relatively tight stop at $86.51 to keep our risk to a minimum.
The flag pole on the pattern suggests a $79.00 target, which
happens to coincide closely with IBM's $77.00 target on its
bearish P&F chart.

Suggested Options:
Traders are probably best served by the August or September puts.
We probably favor the August 85s since we don't expect IBM to
take that long to decline.

BUY PUT AUG 85 IBM-TQ OI=11332 Current Ask $1.75
BUY PUT AUG 80 IBM-TP OI= 8555 Current Ask $0.40
BUY PUT SEP 85 IBM-UQ OI= 1890 Current Ask $2.50

Annotated Chart:



Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked:  - 0.00
Earnings Date       07/16/04 (confirmed)
Average Daily Volume:    5.2 million
Chart =


---

St. Jude Medical - STJ - close: 66.75 chg: -0.60 stop: 70.00

Company Description:
St. Jude Medical, Inc. (www.sjm.com) is dedicated to the design,
manufacture and distribution of innovative medical devices of the
highest quality, offering physicians, patients and payers
unmatched clinical performance and demonstrated economic value.
(source: company press release)

Why We Like It:
After four and a half months of consolidating between $70 and $79
shares of STJ broke down sharply through support last week.  The
big drop broke down through the $70 level, actually real support
was at $69 and its simple 200-dma, which was at $68.50.  The move
was fueled by investor reaction to STJ's earnings report wherein
the company only reported results that were inline with
expectations.  As you know "inline" just doesn't cut it these
days, especially with expectations so high for Q2 results.  STJ
has seen somewhat of an oversold bounce but the entry point could
be the tricky part here.  The Point & Figure chart is very clear
with the new triple-bottom breakdown sell signal and $60 price
target.  Yet on the daily chart there is plenty of room for
movement.  We could see STJ bounce a bit more and test resistance
at its 200-dma ($68.71) or even the $69 level, which was old
support.  Or STJ could fall lower with the major indices as they
seem bent on trading lower.  We suggest patience and watching for
whichever entry point STJ provides.  A failed rally under $69.00
would be the preferred entry point but if it drops through $66
we'll take it.  As an end of day newsletter we need to add the
play now at current levels but you have the freedom to wait and
choose the entry that best fits your trading style.

We realize our stop loss at $70.00 is wide, especially since
we're only targeting a drop to the $60 region but we want to see
where STJ trades next before adjusting it.

Suggested Options:
The August or September puts look good with August options
providing more liquidity.  We suggest the August $70 on a
failed rally or the $65's on a breakdown through $66.

BUY PUT AUG 70 STJ-TN OI=2439 Current Ask $4.30
BUY PUT AUG 65 STJ-TM OI= 454 Current Ask $1.55
BUY PUT AUG 60 STJ-TL OI=  24 Current Ask $0.50 - higher risk
BUY PUT SEP 65 STJ-UM OI= 195 Current Ask $2.50

Annotated Chart:



Picked on July 25 at $ 66.75
Change since picked:  - 0.00
Earnings Date       07/21/04 (confirmed)
Average Daily Volume:    1.2 million
Chart =




************************Advertisement**********************************
Option traders, check what PreferredTrade offers:
-    true direct access to each option exchange
-    stop and stop loss online option orders
-    contingent option orders based on the price of the option or stock
-    online spread order entry for net debit or credit
-    fast option executions
-    rates as low as $1.50 per contract ($14.95 min)

PreferredTrade, Inc.
Call 888-889-9178 or
Click http://www.PreferredTrade.com/CF/Home.CFM?ID=OIN
Member NYSE, Other Principal Exchanges, NFA, MSRB and SIPC
***********************************************************************


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


The Option Investor Newsletter                   Sunday 07-25-2004
Sunday                                                      4 of 5

In Section Four:

Leaps: Market Lows Provide Opportunity


************************Advertisement*************************

Full Service Brokers

Man Financial announces the formation of the OneStopOption
Brokerage Group, addressing the demand for personalized,
experienced service for both securities* and futures trading
within the same firm. Licensed Option Principals Andrew Aronson
and Alan Knuckman specialize in live assistance of stock*,
option* and futures traders. The combination of the proven Man
Financial global presence and the convenience of one group for
all trading needs provide customers with the tools needed for
success.

Live Broker and Online Trading Available     888-281-9569

http://www.OneStopOption.com

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


*****
LEAPS
*****

Market Lows Provide Opportunity

The market weakness is pushing stocks to new six month
lows and in many cases even lower levels. Stocks with
less than blowout earnings are getting killed over the
next several sessions. PE multiples are dropping rapidly
and the investing environment is improving quickly.
Buying stocks when they are cheap is the cornerstone
of any investment plan.

Unfortunately I still expect further weakness over the
summer and for that reason I am hesitant to enter any
new positions today. I would rather work on filling up
the watch list with potential candidates so we can all
be ready when the next dip occurs.

The next 90 days, Aug/Sep/Oct are typically the weakest
period of the year, even in bull markets. While October
has the record for the most new lows it is actually
September that produces the weakest showing. October
is held up by the dramatic rebounds off its lows and
into the 4Q rallies. With the Democratic convention
next week, Olympics on August 11th and the Republican
convention at the end of August we have a very rocky
setup for the historical Sep/Oct drop. This could
produce an earlier than normal dip in August, which
coincidentally has been the worst month of the year
for the last 15 years for the Dow and S&P.

While we watch the calendar tick down we will target
some good companies at great prices and hope to get
filled on at least half of them before any end of year
post election rally begins.

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


EBAY $75.05

EBAY is a favorite stock of mine and I am an avid EBAYer.
I buy/sell several items per week and I am convinced the
market potential for EBAY has only been scratched. Their
recent earnings beat the street on a current basis but
there was a slowing in revenue growth. Earnings doubled
from the year ago period and EBAY raised estimates for
the full year to $1.17 but that was -2 cents below prior
analyst forecasts.

The stock was knocked for a serious loss on creeping
evidence of seasonality and slowing growth in the U.S.
Other geographies are still growing strongly. The
consumer slowdown in Q2 in the U.S. appears to have
impacted EBAY as well as the brick and mortar retailers.
The positive point in EBAY's favor is that weaker
economies send people to EBAY to sell unused items to
raise money and strong economies sees people going
to EBAY to buy things. Add in the PayPal payment
business that is exploding and you have an earnings
juggernaut that will continue to post gains far into
the future. Growth just may not be at the speed of past
growth. EBAY is expected to sell $3.2 billion in
merchandise this year and several analysts have predicted
they will eventually reach $10 billion per year. This is
great news for a company that has no inventory and receives
a commission just for listing items not just selling them.

EBAY has been a high flier and neared $95 in late May.
The recent market weakness, the weakness in YHOO and AMZN
earnings and the seasonality caution last week pushed
the stock to under $72 but it quickly rebounded to close
at $75 on Friday. The 200DMA is currently just over $70
and I would look for further summer weakness to test
that $70 level.

I am placing EBAY on the watch list with a target of
$70. Bear in mind that this is a very strong stock and
we may never get there. I have waited months trying to
get an entry on EBAY in the past and I am hoping this
will not be one of those occasions.

The problem with EBAY is expectations. Leaps are very
expensive. I am targeting the 2006 $80 LEAP Call YEU-AP
currently $12.50. I am hoping a dip to our target of
$70 on EBAY will knock that leap back to $10.

2006 $80 LEAP Call YEU-AP
Target EBAY at $70.00

EBAY Chart




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

JNPR - Juniper Networks $22.76

Juniper is an Internet infrastructure provider for ISPs
and other telecommunication providers. Put simply they
make very high capacity backbone routers specifically
designed for service provider networks.

Juniper blew away analysts estimates last week with an
eight cent gain when analysts were only looking for +4
cents. Sales soared +86% for the quarter and their
outlook continues to be very strong. Analysts raced to
upgrade estimates after Juniper predicted it would
continue to grow in excess of 20% through 2006. Pretty
strong words for the small company in a market dominated
by Cisco.

The company says it does not need to go head to head
with Cisco to be successful and by targeting specific
telecommunication needs instead of just making big
routers the company has not only been growing but is
rapidly expanding earnings. The company raised revenue
estimates for the rest of 2004 well over current analyst
predictions. They also announced a $250 million stock
buyback.

Juniper has been stuck between the $20-$28 level for the
last six months and the $20 level has been very strong
support and the bottom for the May decline. The current
market weakness has knocked JNPR back from its post
earnings high of $25 to trade at $22.75 on Friday. I
anticipate further market weakness over the next several
weeks and I am going to put a target for entry into JNPR
leaps at $20.00.

We are going to use the 2006 $25 LEAP Call WBW-AE which
is currently priced at $4.90. If the weakness continues
and we get our entry point I expect the leap to be under
$4.00. For insurance we are going to use the Oct-$17.50
put JUX-VW currently 50 cents. These prices will change
before we are triggered and are only for reference.

Entry trigger = JNPR at $20.00
2006 $25 LEAP Call WBW-AE currently $4.90
Insurance put Oct-$17.50 Put JUX-VW currently 50 cents


Juniper Chart





New Entries last Week:

Red Hat  $16.03

One of our new entries from last week was RHAT. We had
a trailing stop trigger on the stock at -$1. On Monday
we saw a drop to 13.81 and a rebound back to 16.62 on
Tuesday. Your trailing stop should have been hit at
$14.81 and the Jan-2006 $20 LEAP Calls YFX-AD should
have been entered in the $2.55-$2.75 range. For insurance
the September $12.50 puts RCV-UV should have been entered
at 55-60 cents at the same time.

We saw the second dip on Monday after the news related
drop from $21 the prior week. Our strong support level
at $12.50 was never touched and we saw a strong rebound
from the dip to 13.81. The rebound over $16 held through
the Wed/Thr market weakness and I am hoping we have seen
the bottom.

Current position:

2006 $20 LEAP Call YFX-AD cost $2.75
Sept $12.50 insurance put RCV-UV cost $0.55

Initial play description:
http://members.OptionInvestor.com/leaps/Lp_071804_1.asp


Red Hat Chart




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

CIEN $2.95

CIEN took a header under $3.00 on Friday after various
earnings warnings in the tech sector pushed the Nasdaq
back below 1870. We saw buyers appear but not in
volume. This is not a growth stock play and we are
not going to be concerned about the day to day price
fluctuations. This is a potential takeover play and
for our 70 cent entry price it is only a lottery
ticket for later in the year.

Current position:
The 2006 $5 LEAP Call YCD-AA cost 70 cents.
No insurance put

Initial play description:
http://members.OptionInvestor.com/leaps/Lp_071804_1.asp

Ciena Chart



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

Closed plays

CHK - $15.26 Stopped at $15.00 on Friday
Entry $12.22

Chesapeake Energy concluded four days of declines with
a dip below $15 on Friday which stopped us out on this
play. It has been a good run and a nice profit.

2005 $12 LEAP Call CHK-AV $3.00 cost $1.50 +100%
2006 $12 LEAP Call WZY-AV $4.25 cost $2.25 + 88%
April $10 insurance put - expired - cost $.25

CHK Chart




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

Current Portfolio

TYC Tyco $30.60 Stop $29.50
Entry $28.32

2005 $30 LEAP Call TYC-AF $3.10 cost $2.15 +12%
2006 $30 LEAP Call WPA-AF $5.00 cost $4.00 + 9%
July $25 insurance put - expired - cost $.55

RHAT Red Hat $16.01, stop $12.50
Entry $14.81

2006 $20 LEAP Call YFX-AD $3.50 cost $2.75 -4%
Sept $12.50 insurance put RCV-UV $0.30 cost $0.55

CIEN Ciena Corp $2.95, no stop
Entry $3.09

2006 $5 LEAP Call YCD-AA $0.65 cost 70 cents.
No insurance put

HD Home Depot $33.00   Stop 34.50
Entry $34.69

2005 $35 LEAP Put HD-MG $3.20 cost $2.95 -7%
2006 $35 LEAP Put WHD-MG $4.70 cost $4.50 -8%
May $40 Insurance put - expired - cost $.55

Summary Graph




LEAPS Watch List

**Editors Note** In the event of a market drop due to a
terrorist attack on U.S. soil all entry targets should be
immediately cancelled.


MER - Merrill Lynch $48.96 target entry $46.00
         (hard target now)

2006 $50 LEAP Call WZM-AJ Currently $6.40 target $5.00

http://members.OptionInvestor.com/leaps/Lp_071804_1.asp

INTC - Intel $22.73 target entry $20.00

2006 $22 LEAP Call WNL-AX currently $4.10
2006 $25 LEAP Call WNL-AE currently $2.95

http://members.OptionInvestor.com/leaps/Lp_071804_1.asp


EBAY - EBAY $75.00 target entry $70.00

2006 $80 LEAP Call YEU-AP currently $12.50

JNPR - Juniper Networks $22.73 target entry $20.00

2006 $25 LEAP Call WBW-AE currently $4.90


************************Advertisement*************************

No time to follow the Market Monitor? Tired of missing good Trades
because you stepped away from your computer?

OneStopOption Group can follow the Market Monitor for you. You
choose the number of contracts, we take care of the rest!!

Trade Stock Options, Stocks and ALL Futures with the same Group.
Call us 888 281-9569 to see if you qualify to have us rebate your
subscription cost.

http://www.OneStopOption.com

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



**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


The Option Investor Newsletter                   Sunday 07-25-2004
Sunday                                                      5 of 5

In Section Five:

Spreads and Straddles: Combos/Straddles - Strategy Selection
Premium-Selling Plays: The Covered-Write Strategy: A Winning Approach!


************************Advertisement*************************

Stock Option and Futures Brokerage

OneStopOption teams the best trading technology with varying
levels of professional assistance at very competitive prices.
Commission costs are comparable to discount brokerage and
tailored to individual customer needs.

The power of one brokerage group with experience and expertise
in the Securities* and Futures Markets offers unprecedented
convenience for traders.

Access To All Futures Markets            Toll Free 888-281-9569
Stock Option Principals

www.OneStopOption.com

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


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

Combos/Straddles - Strategy Selection
By Ray Cummins

One of the most common requests I receive from new readers is for
an explanation of the basic spread and combination strategies.
Since I am away from the market this week with my family, it's a
great time to review this subject.


Spread Trading - A Definition

A spread is a technique which involves the buying and selling of
simultaneous but opposing positions in different option series.
There are many different types of spreads, however they all have
one thing in common; your are "spreading" the risk when you use
them.  In most spread strategies, one of the options is a hedge,
making the long position cheaper or reducing the potential loss
from a short option.  Basically, spread trading is an attempt to
reduce the effects of short-term volatility that goes with any
market-related investment.  This type of approach benefits from
the law of probability by enabling a trader to hold options over
longer periods of time, with limited risk, while maintaining an
acceptable profit potential.


Spread Strategies - Vertical Spreads

When an investor focuses initially on the direction (bullish or
bearish) of the underlying stock, he tries to look for a spread
where the directional characteristics of the play are the primary
concern (volatility is of secondary importance).  These types of
spreads are better known as "vertical" spreads and they always
consist of a long (purchased) option and a short (sold) option,
where both options are of the same type (both calls or both puts)
and expire at the same time.  Both bullish and bearish positions
can be accomplished through the use of (long and short) calls or
puts and vertical spreads remain directional in spite of how the
underlying market conditions change.  Regardless of whether the
vertical spread consists of call or put, when a trader buys the
lower strike price and sells the higher strike price, the spread
is bullish; when a trader buys the higher strike price and sells
the lower strike price, the spread is bearish.  A vertical spread
at expiration will have a value between zero and the difference
between the strike prices, thus a trader can expect the profit of
a successful spread to be somewhere within this range.  A trader
who wants to open a vertical spread has essentially four choices:

Bullish: Call-Debit (bull-call) or Put-Credit (bull-put) spread.
Bearish: Call-Credit (bear-call) or Put-Debit (bear-put) spread.


Individual Spread Strategies

Call-Debit (or bull-call) Spread: The bull-call spread involves
the purchase of one call and the sale of a higher priced call.
There is no collateral requirement in this spread as the short
(sold) call is completely "covered" by the long (bought) call,
which are paid for in full when the position is initiated.  A
trader who opens a bull-call spread with out-of-the-money calls
for each leg of the spread would be considered aggressive.  The
more conservative investor might establish the spread with the
lower call in-the-money and the higher call at-the-money, where
the greatest amount of (sold) time premium exists.  An investor
can use this approach when the outlook for the underlying issue
is moderately bullish, but some amount of downside protection is
required.  In the newsletter, we prefer deep-in-the-money plays
for maximum downside protection with reasonable profit potential.
A call-debit spread is equivalent to a put-credit spread, and the
profit/loss graph for both strategies is inserted below.



Put-Credit (bull-put) Spread: The bull-put spread consists of
the purchase of one put, and the sale of another put with a
higher strike price.  A trader would use this strategy when he
believes the stock price will remain above the strike price sold
at the end of the option expiration period.  Opening the spread
will yield a credit (thus the name "credit" spread) and this is
the maximum amount of profit that can be earned with this spread
strategy.  Also, because it is a "credit" spread, a broker will
require collateral for the transaction.  This (margin) is the
maximum capital at risk in the position and it is equal to the
difference between the strike prices, minus the credit received.
The return on investment or profit potential in a credit spread
is simply the credit received divided by the collateral (margin)
requirement.  In the newsletter, we generally favor short-term,
deep-out-of-the-money spreads for low risk, conservative plays.
The put-credit spread requires the same amount of collateral as
a call-credit spread, and the profit/loss graph is similar to
the call-debit spread listed above.

Put-Debit (bear-put) Spread: The bear-put spread involves the
sale of one put with a lower strike price and the purchase of
another put with a higher strike price.  The sale of the lower
strike put reduces the amount of the initial debit, but also
limits the maximum profit potential of long position.  This is
a viable option trading strategy for investors who are bearish
on a particular equity.  In the aggressive bear-put spread, an
out-of-the-money put is sold because the investor believes the
stock price is going down significantly.  Our favored technique
involves the use of in-the-money options for both positions.  A
put-debit spread is equivalent to a call-credit spread, and the
profit/loss graph for both strategies is inserted below.



Call-Credit (bear-call) Spread: The bear-call spread involves
the purchase of a call (higher strike) and the sale of a lower
strike price call.  This spread also produces a credit and this
amount is the maximum potential gain available in the position.
The spread remains profitable if the underlying security closes
the expiration period below the lower (sold) strike price, thus
the objective is for the stock price to decline during the life
of the position.  This spread requires the same collateral as
the put-credit spread, and the profit/loss graph is similar to
the put-debit spread listed above.


Position Selection

With so many strike prices and the different time periods, just
how does a trader begin to choose the best vertical spread which
reflects the expected directional movement and also allows time
for price changes in the underlying to result in a profit from
those expectations?  The first step in this process is knowledge
of option pricing fundamentals and that's one reason many people
subscribe to our newsletter -- for a wide variety of candidates
and the capability to trade them effectively.  The OptionWriters
staff has written a plethora of great articles, covering almost
every imaginable option trading strategy commonly used by retail
investors.  At the same time, there is no way to produce a list
of specific guidelines or step-by-step techniques on opening and
closing spread plays, but the methods that should be used are
based on simple, proven money-management techniques; the most
important of which is "keep the losses small and your profits
will grow!"  Since many of our readers are new to the concept of
this type of trading, we'll take a quick look at the essentials
of position selection with vertical spreads.

Options have a limited life with a fixed expiration date, thus a
trader who wants to use options to take advantage of an expected
market move must first determine the appropriate time period.  A
trader will also have to decide just how bullish or bearish the
position will be.  Basically, is there extreme confidence in the
future movement and therefore a willingness to take an aggressive
directional position?  Or, are you less certain and only willing
to take a conservative position?   One of the factors that has a
significant effect on the total directional characteristics of a
vertical spread is its delta.  Recall that delta measures the rate
of change in an option's price compared to a one point movement
in the underlying security.  It can be thought of as a percentage
of the movement of the stock price.  If the stock price moves up
$2 while the option on that stock gains $1, it has a delta of 50
(or 50%).  An at-the-money (ATM) call option will typically have
a delta of 50.  In-the-money (ITM) calls will have higher deltas;
a greater percentage move, based on the change in the underlying
issue.  The opposite is true for out-of-the-money (OTM) calls;
their deltas are lower.  A deeply out-of-the-money call will have
a delta very close to zero.  In addition, call deltas are always
positive and put deltas are negative, reflecting the fact that
the put's price and the underlying stock price are inversely
related.

In a vertical spread, the delta value is determined by various
factors: time to expiration, volatility, and distance between
exercise prices.  For the most part, however, the greater the
distance between exercise prices, the greater the delta value
associated with the spread.  For example, a $25/$30 call-debit
spread will be more bullish (and more aggressive) than a $20/$25
call-debit spread.  The inverse is true for credit spreads; the
more distant strike prices are less aggressive.  The most common
approach for debit spreads is to focus on at-the-money options
for the sold (short) position in the spread, as the time value
or "premium" is usually highest at the strike nearest the price
of the underlying issue.  When opening or adjusting any type of
spread, it's important to take advantage of the highest relative
premium to create the best possible position.  The exploitation
of option pricing disparities is also paramount.  Traders should
strive to open new spreads when there is a disparity in pricing
(most likely excess value in the sold option).  This technique
allows you to enter plays with a theoretical edge, thus improving
the potential profit and probability of success.

After a trader decides which strike prices to use, he must then
determine the expiration month in which to take his directional
position.  Since stock prices are, for the most part, random in
nature, the majority of successful trading strategies are based
on the study of historical trends through technical analysis.
Examining past prices will yield an abundance of useful data,
however the most critical information for options traders is
volatility.  Volatility is the key variable in valuing options,
and it also a necessary component in assessing the probability
of a successful outcome in a specific position.  Unfortunately,
the future volatility of the underlying issue is usually a very
difficult value to accurately determine.  Professional traders
use several different timeframes to assess a stock's potential
movement.  In most cases, the 20-day historical volatility (hv)
provides a reasonable projection of the short-term volatility
of any instrument.  But, for longer-term strategies, the 50-day
and 100-day historical volatility values should also be studied
in order to identify any recent changes in the character of the
issue.  As you would expect, a sizable move in the underlying
instrument, due to an earnings report or an unexpected event,
can produce catastrophic losses, even in a limited-risk spread.
With that in mind, it's crucial to make a volatility estimate
prior to selecting the expiration month for any position and
experts suggest that 20-day, 50-day, and 90-day (occasionally,
1-year) periods are adequate timeframes to assess the magnitude
of movement that can be expected over the life of an option.

For the reader who is not familiar with spread trading, vertical
spreads offer an excellent opportunity to learn the basics in a
low risk environment.  The concept of vertical spreads is easy to
understand and once established, most positions can be managed
with little difficulty.  The occasional adjustments also provide
the necessary background for more advanced techniques and those
who enjoy aggressive directional trading can construct positions
to fit their style as well.  Although the potential for profit
is reduced, the limited downside exposure with spreads provides
a more favorable risk/reward ratio for the majority of investors.

Good Luck!


************************Advertisement*************************

OneStopOption.com

Trade: Securities, Stock Options, Futures Contracts

Service: Experienced Brokers
         Personal Assistance
         Convenience of One Brokerage
         Online and Live Broker Trading

Experience...  The Difference

OneStopOption.com   888-281-9569

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


*****************************************
PREMIUM-SELLING PLAYS: NAKED PUTS & CALLS
*****************************************

The Covered-Write Strategy: A Winning Approach!
By Ray Cummins

A new subscriber asked for an explanation of our approach to the
strategy of selling covered-calls.

Fortunately, someone with extensive experience trading options
has already described our technique thoroughly in a previous
publication and today's educational narrative is a reprint of
that article in its entirety.


Success With Covered-Calls

Commonly referred to as the "most conservative option strategy
available," this technique has cost uneducated investors billions
of dollars since options were invented.  Don't get me wrong:
writing covered calls can be a very profitable strategy when
implemented correctly.  The Covered-Call and the Naked-Put (an
equivalent strategy) sections of the newsletter are consistently
the most profitable sections.  It is all in the technique!

Generally, covered calls are written on stock an investor holds
in his portfolio.  The concept is to produce cash flow by selling
premium for income while obtaining downside protection.  The
underlying stock can be held in either a cash or margin account.
The advantage of trading on margin is that the potential return
on investment is doubled.  The disadvantage of using margin is
that additional capital (margin call) may be required in the
account if the portfolio value falls below a certain percentage,
usually 30%.

Many investors are very successful in this strategy because they
are not greedy.  They understand the "magic" of compound interest
and strive to consistently increase the value of their investment
portfolios each month.  Others constantly lose money by
implementing the technique incorrectly.

The term "covered" is used when describing the sold (short) calls
in this strategy because the investor owns the stock on which he
is writing the calls.  For every 100 shares of stock the investor
owns, he can "write" one (1) call-option contract.  Typically,
investors will pick the next strike price above the current price
of the stock to maximize the potential return on investment.  A
conservative investor will pick an in-the-money (ITM) strike
price, choosing an acceptable return that offers reasonable
downside protection.  Aggressive investors tend to focus on the
higher returns of using out-of-the-money (OTM) strike prices at
the expense of downside protection.  These OTM positions do offer
greater "potential" rewards, but depend on an increase in price
by the underlying stock and do not really benefit from writing
the call.


Return On Investment

The target-yield or return on investment (ROI) for covered calls
is determined by two circumstances: Return if Called (RC), and
return not called (RNC).  Most traders use the RNC to evaluate
plays since there is no assumption made on the movement of the
underlying equity.  To calculate the return, you take the net
premium received and divide it by the cost basis.  The cost
basis would be the price paid for the stock, minus the premium
received; this is the maximum amount of equity required for the
duration of the play (not using margin).  We use generally
accepted formulas to calculate the potential gain or "return on
investment" as shown below.

For an ITM covered call, the net premium would be the option
premium received minus the difference between the cost of the
stock and the strike price.  ITM RNC will be the same as RC,
since the sold strike is already "in-the-money," and is the
maximum return possible.

In-The-Money (ITM) example:

XYZ @ $12.00, strike = $10.00, option premium = $2.50
Net premium = 2.50 - (12 - 10) = 0.50
Cost basis = 12.00 - 2.50 = 9.50
RC = 0.50/9.50 = 5.26% after multiplying by 100.
RNC = the same.

For an OTM covered call, the net premium for a RC calculation
would be the option premium plus the difference between the
cost of the stock and the strike price and assumes the stock
price will move up to the sold strike!  An OTM RNC calculation
uses only the option premium and assumes the stock price remains
unchanged.

Out-Of-The-Money (OTM) example:

XYZ @ $12.00, strike = $12.50, option premium = $1.00
Net premium = 1.00 + (12.50-12) = 1.50
Cost basis = 12.00 - 1.00 = 11.00
RC = 1.50 / 11.00 = 13.64%
RNC = 1.00 / 11.00 = 9.09% (You do not get the benefit of the
stock price moving up to the strike price).

All of the candidates in the Covered Calls section are ITM, as
the goal is to obtain the highest probability of making an
acceptable (and consistent) return.  Using the above (ITM)
example of 5.26% and an expiration of 3 weeks (21 days), I
would calculate the target yield (TY) as follows:

TY = 5.26 / 21 * 365 / 12 = 7.61%.

Essentially the return is annualized and divided by 12.  This
helps people visualize the value of compounding a seemingly
small return over and over again.


Covered-Call Comparisons

Let's look at an example.  An investor holding a $16 stock
could possibly write three different calls: the $15 call for
$1.75; the $17.50 call for $1; and the $20 call for $0.50.
Notice the ITM position ($15 strike price) offers a maximum
return of 5.26%, even if the stock price dropped a $1.00.
Generally, when comparing covered call positions, investors
should concentrate on the return achieved if the stock price
remains unchanged.  In this manner, no assumption is made
regarding the future movement in the underlying equity and the
overall position reflects the benefit of just selling the call.

The cost basis is important as it identifies the break-even
point and the amount of downside protection.  As you can see,
the $17.50 strike offers a slightly higher “static” return but
only half the downside protection of the $15 strike.  Clearly,
the $15 strike offers the best of both worlds; a reasonable
return with acceptable downside protection.

Why would you choose OTM positions?   It simply depends on your
risk-reward tolerance.  But, if you're that good at forecasting
stock movement, wouldn't it be better to just trade the stock
instead of capping your potential profits with a covered-call?


Writing Covered Calls: The Drawbacks

Assume you bought a stock at $50 that had fallen substantially
(to the $20 range and you were trying to recover some of your
losses by writing OTM covered calls.  If the stock unexpectedly
rises above the sold strike price (for example, a $30 strike)
at expiration, the issue would be called away and you would have
"locked-in" a loss.

Or, assume you bought a stock at $10 a few months ago and now
you think it is going to $50.  You want to hold it for the long
term but you would also like some downside protection.  You sell
some short-term OTM calls to generate cash flow but the stock
climbs very quickly and is called away.  Not only did you lose
your stock, but incurred a short-term capital gain as well.  You
did make a profit but it is now taxable at a higher rate and
seller’s remorse sets in because the stock has probably doubled
from the price at which you wrote the calls.  You made a nice
profit but in reality, it was only about half of what you could
have made by simply holding the stock.  Obviously, if you are
extremely bullish on a company and do not want to lose the stock,
DO NOT sell covered calls.  Many investors discard the covered
call strategy because they cannot stand to limit their profits.

Of course, there are much worse things that can happen to a
covered-call writer than taking a small profit and missing out
on a bigger one.  A common idea is to write covered calls to
minimize losses on stocks that have become bearish and are
trending down.   I can't tell you how many times I have heard
the phrase: "I will just write calls on it until I get my money
back."  This is an interesting concept but a failing strategy in
my opinion, as the attempt to recover lost share value often
results in a locked-in loss.  If you become bearish on an issue,
it is usually best to simply buy back the calls and sell the
stock.  Why tie-up your money in a low-probability effort at
recovery.

If a stock drops $20 or $30, how many months do you have to write
calls on it until you get your money back?  Assume the stock has
fallen from $80 to $50 and you don't want to be called-out and
incur a loss.  With a $50 stock, you can expect the option
premium two strikes OTM to sell for about $3.  Thus, in the best
case scenario, you will have to write OTM calls (at $3 each) for
ten months AND NOT BE CALLED OUT in order to just BREAK EVEN.
That is ten months of more risk to achieve a break-even exit.
Your risk is not only being called-out but also the potential for
a future decline in the stock price.  How many months would you
have to write covered-calls on the stock below to recover your
money if your cost basis was $80?

RULE #1: NEVER PLAN ON WRITING COVERED CALLS AS AN ESCAPE PLAN!


Is it really a conservative strategy?

The Covered Call strategy isn't foolproof as there is risk in
all trading strategies.  It does have less risk than outright
stock ownership as the premium received reduces the cost basis
in the underlying issue.  Still, whether the covered-write
strategy is applied short-term or longer-term, it requires a
neutral to slightly bullish outlook on the underlying equity
and the overall market.  As with stock ownership, you are still
exposed to the risk of a drop in the stock price.  Almost every
week, there are several stocks that drop "double-digits" on a
negative news event.  The premium you receive for writing a
covered call may not be enough insurance to protect yourself
against this risk.  However, there are ways to profit from the
covered-call strategy with minimal risk.

At OptionInvestor.com, we favor a very conservative approach
and in my opinion, that is the only way to use the covered-call
strategy.  We always recommend writing ITM covered-calls as we
are not interested in stock ownership or bullish movement, but
prefer the higher probability of making a low yet reasonable
return.  The fact that we really can't predict stock movement
reinforces our reasoning for choosing to hedge stock ownership
with ITM covered writes.

We generally target a monthly return near 5% (10% using margin),
and of the 20 or so covered-calls we recommend each month, most
will expire profitably (in a neutral-to-bullish environment).
The ITM covered-call strategy usually requires a "buy-write"
order to open the position at or near the listed net debit (cost
basis), since trying to leg-in (buying the stock and selling the
call later) may only see the overvalued premium disappear before
the call is sold.  Generally, the newsletter recommendations
require a purchase of 500 to 1000 shares in order to reduce the
impact of commissions on the position.  On a 1000 share order,
the cost of commissions at E*trade (2 stock commissions plus 1
option commission) would be about $78.00, or $0.08 a share.


There are several things to remember when using covered calls:

1. Never buy a stock you don't want to own.
2. Never write calls on a stock you don't want to lose.
3. Never write calls as a cost-recovery tool on a stock you
   don't want to lose.
4. Always write covered calls on STOCK YOU BOUGHT FOR THIS PURPOSE.
5. Always plan on being called-out EACH month.
6. Always write in-the-money calls.
7. Always write calls on neutral to bullish stocks.
8. Always use sound money-management techniques.


A Winning Strategy!

Is there a correct way to write covered calls?  Yes!  The key is
to target short-term plays with large downside protection and a
reasonable profit potential.  Earning 5% per month may not seem
like "big" money but 60% per year is definitely better than the
average investor's return for 2001.  Many investors lose sight
of the magic of compound interest and start to focus on excellent
single transaction returns.  In short, they become greedy!

Again, the key points in this strategy are as follows:

1. Use only on stocks you buy for this purpose
2. Write in-the-money calls to minimize risk.
3. Plan on getting called-out every month.
4. Write calls only on neutral to bullish stocks.
5. Maintain stop-losses on the underlying equity whenever possible.


There Is Risk In All Trading

Remember, there is no “Holy Grail” in option trading.  Even with
this "conservative" strategy, it is possible to lose money.  The
probability of loss is lower with covered-calls but unforeseen
events do occur.  Whenever possible, maintain a (mechanical or
mental) stop-loss point on the underlying issue to limit losses.
Should negative news come out during the day, or if the stock
changes character, trading stops may save you from needless loss
and months of attempting to recover lost capital.

In the event of a catastrophic price drop, there is nothing that
will help.  To reduce the impact of these unavoidable, horrid
events, we recommend that you never invest more than 10% - 20%
of your overall portfolio in one stock.  This is an important
concept of money management -- so that one stock will NOT have a
significant impact on your overall portfolio value.  No one knows
what a particular stock is going to do in the future unless they
have "insider" information.  Therefore, you do not want to have
"one ship that sinks the whole fleet."

Even with one or two unanticipated, catastrophic events in a year,
we have found that a diversified ITM covered-call strategy, when
used in a disciplined manner, historically will generate a 30%-50%
annual return.  The ITM covered-write strategy is for conservative
investors who prefer to target the high probability of obtaining
an acceptable return, which correlates with a low risk-reward
tolerance.  Greed is for those other guys!

Jim Brown


************************Advertisement*************************

OneStopOption.com

Trade: Securities, Stock Options, Futures Contracts

Service: Experienced Brokers
         Personal Assistance
         Convenience of One Brokerage
         Online and Live Broker Trading

Experience...  The Difference

OneStopOption.com   888-281-9569

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


**********
DISCLAIMER
**********

Please read our disclaimer at:
http://www.OptionInvestor.com/page/oin/aboutus/disclaimer.html


**************************************************************
ADVERTISING INFORMATION

For more information on advertising in OptionInvestor Newsletter,
or any Premier Investor Network newsletter please contact:

Contact Support


DISCLAIMER

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

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

To ensure you continue to receive email from Option Investor please add "support@optioninvestor.com"

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives