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Daily Newsletter, Wednesday, 11/03/2004

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The Option Investor Newsletter                Wednesday 11-03-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Hot Potato 
Futures Wrap: See Note
Index Trader Wrap: Stocks rally with some clarity (More of the Same) 


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
      11-03-2004           High     Low     Volume   Adv/Dcl
DJIA    10137.05 +101.32 10215.51 10037.43 2.13 bln 2165/ 655
NASDAQ   2004.33 + 19.54  2020.03  1992.70 1.93 bln 2048/ 936
S&P 100   546.73 +  6.08   549.47   540.65   Totals 4213/1591
S&P 500  1143.20 + 12.64  1147.60  1130.54
SOX       410.08 -  4.15   424.25   408.51
RUS 2000  595.33 +  9.89   596.59   585.44
DJ TRANS 3494.64 + 45.02  3496.33  3449.89
VIX        14.04 -  2.14    15.18    13.79
VXO (VIX-O)14.18 -  2.67    15.34    14.01
VXN        20.82 -  2.15    22.20    20.45
Total Volume 4,072M
Total UpVol  2,807M
Total DnVol  1,209M
Total Adv  4213
Total Dcl  1591
52wk Highs  415 
52wk Lows    40
TRIN       1.03
PUT/CALL   0.77
******************************************************************

Hot Potato
Linda Piazza

Traders in the pits must have had a busy morning Wednesday
morning, juggling the implications of election results and then
earnings and economic releases.  The recent relationships between
dollar strength, crude price, and equity behavior weren't holding
true just before the cash open, with crude higher, the dollar
dropping after its attempt to strengthen against the yen and
euro, and equity futures gaining.  Pit traders must have been
afraid they'd be left holding the hot potato as they tossed
around the implications of election outcomes and economic
releases.

They dropped that hot potato long enough to send the indices
soaring to their day's highs in the first ten minutes of trading,
but then picked it up again as they awaited economic releases and
Kerry's concession.  Tossing it back and forth, they kept the
indices trading in symmetrical triangles at the top of their
ranges.  Those triangles formed, widened, and reformed while the
October ISM Non-Manufacturing Index and Factory Orders numbers
and crude inventories were released.  

Annotated Three-Minute Chart of the OEX at 11:30 EST:

 

Hot potato issues included an unexpected decline in factory
orders for September.  Those orders fell 0.4 percent against an
expected rise of 0.4 percent.  Nondurable goods orders,
transportation equipment orders, and factory shipments fell while
unfilled orders and inventories rose.  Perhaps traders were too
busy juggling a better-than-expected service economy ISM number,
because indices seemed little affected and continued coiling. 
October's ISM was 59.8 percent, above the estimated 58.0 and
rising from September's 56.7 percent.  The employment component
gained.

Traders had to juggle information on crude prices, too.  Crude
prices had risen to $50.00 before the 10:30 release of
inventories numbers.  Those numbers showed crude and gasoline
inventories rising 6.3 million and 500,000 barrels, respectively,
according to the Department of Energy.  Distillate inventories
dropped 900,000 million barrels.  Despite an attack on a pipeline
in Iraq that could disrupt exports from the north for up to ten
days, a potential strike in Nigeria, and a statement from Yukos'
chief executive that the company was in danger of insolvency,
crude prices plummeted.  One market pundit suggested they would
fall below $40/barrel by the end of the year.  So far, however,
nothing too bearish for crude prices has occurred.  Crude prices
fell to the 50-dma and the 50 percent retracement of its latest
climb off the August 30 low before finding support.  

Annotated Daily Chart of Crude Futures for December Delivery:

 

Although the inverse relationship between crude costs and equity
performance sometimes disconnects, market bulls do not want crude
to continue climbing.

News sources began reporting Kerry's concession, and still the
OEX, SPX, Dow, and Nasdaq coiled.  The Russell 2000 wasn't going
to be a follower, but a leader, and it led to the upside.  The
SOX was performing a leadership role, too, but to the downside. 
The SOX was doing a swan dive, closing the morning's gap and
diving below the surface into negative territory.  

Annotated Daily Chart of the SOX:

 

QCOM and RIMM were drags on the Nasdaq, too, with QCOM diving
ahead of its after-the-close earnings report.  When it came after
hours, QCOM dropped further, with investors disappointed with the
company's outlook.  The TRAN was zooming everywhere, its intraday
chart defying categorization.

The juggling act finally became too hot for traders to handle.
The breakdown out of those symmetrical triangles came as Kerry
conceded but also as Nymex closed for the day, with crude closing
at $50.90, higher by $1.28.  It proved difficult to pinpoint the
decline on any one event.  As President Bush spoke following
Kerry's concession, markets climbed off their lows, perhaps
pointing to an election effect after all.  

Market pundits predicted a 1 percent rally if Bush won 
reelection.  Tuesday, the Dow closed at 10,035.73, with a 1
percent rally bring the index to 10,136.09.  Wednesday's high was
10,215.51. A 1 percent rally on the SPX would bring it up to
1141.87, with Wednesday's high at 1147.60.  A 1 percent rally on
the Nasdaq would bring it up to 2003.54.  Wednesday's high was
2020.03. Those figures and the pullbacks from the day's highs
prompt questions about whether the post-Bush-election rally
occurred and was finished within ten minutes of Wednesday's open. 
Let's see what charts have to say.
The SPX presents a confusing picture. 
Annotated Daily Chart of the SPX: 
 
The SPX punched above the October and June highs, breaking the
trend of lower highs, but it trades within a broadening
formation.  Those are notoriously difficult to trade because they
broaden.  Where's the upside breakout point?  Where's the
downside one?  When coming at the top of a climb, these are
typically bearish, and usually see two touches of the top
trendline and a third attempt before failing.  However, this
climb was not pronounced in relationship to the size of the
broadening formation, and chart patterns such as H&S's, wedges,
and broadening formations fail to follow through on expected
outcomes as more market participants recognize them.  They lose
some of their predictive abilities.

Still, the upside trendline's resistance coincides with the 50
percent retracement of the decline from the March 2000 high to
the October 2002 low.  A breakout above these trendlines appears
to be a bullish signal while a rollover from them appears to be a
possible site for a bearish entry.  Between the SPX's current
level and 1160 is a minefield because of the bearish nature of
such broadening formations and the bearish price/MACD divergence
on the daily chart.  It's possible that the SPX will never see
the 1160 level and will roll down soon, perhaps beginning a
rollover Wednesday morning.

One benchmark for a potential rollover might be found on the
SPX's 15-minute chart.

Annotated 15-Minute Chart of the SPX:

 

The Dow also pulled back from its day's high.

Annotated Daily Chart of the Dow:

 

Like the SPX, however, it's possible that the Dow will not see
the resistance pinpointed here.  Those looking for a breakdown
entry might watch the same averages pinpointed on the SPX's 15-
minute chart, as those averages also correspond to a rising
trendline on the Dow's chart.

Annotated 15-minute Chart of the Dow:

   

Using these averages as a benchmark for a breakdown entry on the
Dow ensures that the DOW has dropped below the 50-dma and 200-
ema, at 10,108 and 10,077, respectively, but it's an entry just
above known historical S/R on the Dow, presenting its own
difficulties.  This is particularly true since the 60-minute
chart shows the potential for a H&S to form with a neckline just
above 10,000.  An entry on a breakdown below the trendline and
the 15-minute 100/130-ema's might constitute a trap as the Dow
rises immediately into a right shoulder, so any considering such
a breakdown entry should be aware of the dangers.

Because of the same possibility of a H&S, any entering on a
bounce from those 15-minute averages should have profit-
protecting plans in mind for the potential right-shoulder area,
near 10,130. 

The Nasdaq did reach down to test those 15-minute averages, but
its action offers a caution for those considering buying other
indices on bounces from their 15-minute 100/130-ema's and latest
rising trendlines.

Annotated 15-Minute Chart of the Nasdaq:

 

Watch for the possibility that the Nasdaq could be turned back at
gap resistance, into a lower high.

As with the Dow, using those benchmarks presents a special
difficulty for those entering a bearish play.  That may
constitute an entry just ahead of a descending trendline off the
year's high, with that trendline perhaps crossing at about 1980,
depending on how thickly it's drawn.  A bearish entry on a roll
down from the top of the ascending regression channel, at today's
high, made a safer entry, but should have had profit protecting
plans in place as those 15-minute averages were approached.  

Annotated Daily Chart of the Nasdaq:

 

One other index bears watching tomorrow because of its
relationship to trading patterns in recent weeks.  That's the
IUX, the S&P Insurance Index.

Annotated Daily Chart of the IUX:

 

The SPX's broadening formation is echoed on the Wilshire 5000
(DWC), the broadest of our markets.  If some traders are
confused, they should at least feel consoled by the difficulties
of trading such formations or determining their implications. 
Breakouts are bought or sold, only to see the index reverse
course soon afterwards.  

Trade carefully.  Remain aware that such formations traditionally
had bearish implications and traditionally saw only two touches
of the upper, rising trendline, with the third attempt failing to
touch that trendline.  Multiple ugly daily candles on the
Wilshire, SPX, Dow and OEX should not be ignored when the two
broadest of our markets, the SPX and Wilshire 5000, trade within
potentially bearish broadening formations.  Perhaps a further
warning occurred when the TRAN did not follow the example of
other indices and print a new high today.

Ugly daily candles or not, bearish divergences or not, indices
have climbed. We've seen potential reversal signal after reversal
signal followed by higher prices. Remain open to the possibility
that an unexpected upside break could occur instead, as has
happened multiple times over the last year.  Points in the bulls'
favor include the OEX's close above its 200-sma, the SPX's and
Wilshire 5000's closes above their October highs and the Nasdaq's
close above 2000.  Bulls have much to cheer, too, and will not
easily give up.

After the bell, retailers began releasing same-store sales
figures, with retailers to continue releasing numbers Thursday
morning.  J. Jill Group (JILL) reported SSS higher by 4.7
percent, Starbucks (SBUX) by 11 percent and Men's Wearhouse (MW)
by 12.5 percent.  BOBJ, QCOM and SONS released earnings, with all
three falling in after-hours trade as this report was prepared. 
EDS delayed the release of its results for the third quarter,
dropping more than 4 percent after investors grew discouraged
with this second delay.   

Thursday's economic releases begin with the usual 8:30 release of
jobless claims along with the third quarter's Preliminary Non-
farm Productivity and Unit Labor Costs.  Natural gas inventories
have been gaining more attention and will be released at 10:30,
but looming Friday's nonfarm payrolls may assume more importance
than any of those numbers.  


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

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


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*****************
INDEX TRADER WRAP
*****************

Stocks rally with some clarity (More of the Same)

Aside from airlines and semiconductors, the major indices and 
sectors posted healthy gains as investors found some clarity from 
President Bush's successful run for a second term in office, 
where despite a very tight margin of vote, a quick resolution 
without a re-count also drew applause.

Of the three possible outcomes discussed in last night's Index 
Wrap, Bush's victory provides clarity in that market participants 
know what President Bush's policies are.

Should investors or traders not believe equity markets might view 
a Bush victory as a slight positive, you might want to review 
today's Market Monitor (futures and option) for a chronological 
real-time e-mini S&P futures (es04z) response from traders as 
various news agencies were predicting Bush and Kerry electoral 
wins.

If you'll read that commentary, I do think today's trade will 
make a little more sense.

When I turned off the lights last night, it was still uncertain 
if Bush would win the swing state of Ohio.  Here's where the e-
mini S&P futures were trading at my last post.  The retracement 
brackets shown were derived from my "5-minute Retracement" 
technique for short-term trading, and developing of levels.  

e-mini S&P 500 futures (es04z) - 5-minute intervals

 

My main point of following the e-mini futures last night was to 
solidify my belief, and perhaps that of the MARKET, that a Bush 
victory was perhaps "better" for the stock market than a Kerry 
Presidency was.  It would be my analysis, based on observation, 
that other market participants viewed yesterday evening's 
unfolding election results as somewhat bullish.

Do you see my note regarding 1,133 and 1,144?  That's from the 
Pivot Matrix and MONTHLY pivot retracement.  

This morning, the S&P 500 Index (SPX.X) opened at the 1,145 
level.  Now, if I can "predict" a 1,144 open should President 
Bush be declared the winner, then I'm sure a few other market 
participants could do the same thing.  If they were buying up 
futures last night, then I'd think quite a few bulls were selling 
them this morning.

Here's a screen capture of the e-mini S&P futures (es04z) I took 
this morning just before the opening bell.  On review, once the 
1,144.55 level (BLUE #12) was traded, do you see how price 
finally went two (2) levels back lower?  That's probably because 
even late night trade, PRICE finally met what the MARKET felt 
fully reflected that news event on a near-term basis.

e-mini S&P futures (es04z) - 5-minute intervals (11/3/04)

 

So there we were.  The opening bell rings, and as alluded to in 
this morning's 09:00 AM intra-day update, I would have been 
hesitant to "chase" this morning's open.  

U.S. Market Watch - 11/03/04 Close

 

Points of highlight are the opening reading of the TRIN at 0.15.  
Ferocious buying at the open as the pressure of what took place 
overnight unwinds.  A little "overbought" at the open?  I think 
so.

I tell you what.  I'm really liking the seasonal scenario for 
Russell 2000 Index bullishness and the 600 and 309 "Friday 
CLOSES" we developed.  If you're long either of these indices, 
you're not overly worried.  In fact, your probably PROFITABLE.  A 
bull would just like to see some closing confirmation.  Maybe on 
Friday after the nonfarm payroll numbers have been digested.  
Need a little more power to the engine right now.

Wow!  Look at today's high yield on the 10-year ($TNX.X) at 
4.160%.  But then the closing yield of 4.07%.  When we look at 
the 10-year yield ($TNX.X) in the pivot matrix, we're going to be 
assessing higher potential yield trade to WEEKLY R2 after a trade 
at WEEKLY R1 aren't we.  

If selling in Treasuries, which should free up cash to rotate to 
stocks is going to become the power to the bullish engine, then I 
still think oil prices and more jobs will be the driver.

Now.  Somebody mentioned today's rise in oil as a "reason" that 
stocks didn't just shoot higher from the opening tick.  

Aha!  But didn't we think we might see a bounce in oil from these 
levels.  

Here's the point and figure chart from StockCharts.com that we 
looked at in the 10/27/04 Index Trader Wrap titled "Oil Happens!"  
While this is a continuous tracking of oil price, its pretty 
darned close to what the current month oil futures contract will 
be trading.  I'm just trying to get a feel for oil, make some 
predictions, and continue to test these predictions based on my 
observation of supply/demand and "levels" that might be 
inflection points.

Oil - Light Crude- Continuous Contract ($WTIC) - $0.50 box

 

The above chart was what we were looking at on the evening of 
10/27/04.  .... "may lose bullish momentum to $49.50."

So let's get updated on the supply/demand chart.  Again, the 
conventional box size futures traders will use is the $0.25 box 
size.  But due to horizontal limitations, I show the $0.50 box 
size so we can bring in the important observations of what 
happened in the PAST, so we can know what to either look for in 
the future (history repeats) or DIVERGENCE (history doesn't 
repeat).  

From an economics point of view, oil prices are probably a little 
too high and putting a wet blanket on economic growth.  

Here's where we are at tonight's close.

Oil ($WTIC) - $0.50 box size (11/03/04)

 

Doh!  Oil traded $49.00 this morning.  Since we can only chart 
the "O" (supply) today that's all we get on the chart.  However, 
December Crude Oil futures (cl04z) did trade as highs as $51.00 
late in today's session.  Are we all that surprised?  Not from a 
supply/demand perspective.  If we think oil is going to trade 
down to its current bearish vertical count of $43.25 after such 
hungering demand drove price up to $55.50, then we need a reality 
check.

But just as encouraged as I (Jeff Bailey) was back in September 
(red 9) when oil prices looked to be abating at the $42.50 level, 
I've wised up a bit, and I think we've got a good test in place.  
We KNOW what to look for as far as higher PRICE.  We already 
discussed that in the 10/27/04 Index Trader Wrap.

Now, I've noted this week's WEEKLY Pivot Analysis levels for the 
December Crude Oil futures (cl04z) on the above chart.

in PINK horizontal lines, I used the pivot analysis algorithm, 
and calculated MONTHLY Pivot analysis levels for MONTHLY S1 
($48.49) and MONTHLY Pivot ($52.07).  As I place them on the 
point and figure chart, I get a decent perspective of a near-term 
range.

I don't know about you, but if I were long 10,000 barrels of oil 
at $53.00 and just saw $49.00, I might be a willing seller back 
at $52.00.

DIVERGENCE from the PAST as I see it would be an oil trade at 
$48.50, where we see a second consecutive sell signal.  I'm aware 
that $48.49 (say $48.50) could be a more institutional level of 
oil support, but if institutional size bulls don't buy it there, 
then further sign that oil prices are going to ease further.

Bottom line thoughts:

The election is out of the way.  Good!

Two important events are coming up.

One is what I'm going to call the "I told you so trade."  This 
will be Friday and the nonfarm payroll numbers.  An upside 
surprise has President Bush saying "I told you so...."  A 
downside surprise has Senator Kerry saying "I told you so."  

In today's 01:00 PM ET Intra-day update, I covered the bond 
market and tied the most recent October 8 release of nonfarm 
payroll numbers (September figures) with what the bond market 
response was to those numbers.

When I look at tonight's closing 5-year yield ($FVX.X) of 3.325%, 
where this shorter-dated 5-year bond's yield finished unchanged, 
I'd have to say the bond MARKET isn't looking for a 
blowout/strong nonfarm number.  We shall see as economists have 
raised their earlier forecast to 175,000 new jobs created.

Pivot Analysis Matrix - 

 

First thing I looked for in tonight's Pivot Matrix was something 
in the DAILY Pivots around 1,133.  It's "obscure." That's what I 
like about it.  If we get any trade tomorrow at 1,133 on the SPX, 
check your oil (pun intended).  If OIL is quiet, and the 10-year 
YIELD ($TNX.X) is ABOVE its correlative WEEKLY Pivot and DAILY 
S1, bulls that didn't "chase the open" should find a good entry 
point at that level.

Bears seem to be mounting a defense with correlative levels of 
resistance at DAILY R2 and MONTHLY R1.  

Two things I can think of to get the indices above that.  Jobs 
and lower oil!  

I'm running late on the update, but I also wanted to quickly post 
the MONTHLY Pivot levels for the Russell 2000 Index (RUT.X), the 
Russell 2000 Growth Index (RUO.X) and Russell 2000 Value Index 
(RUJ.X).

Russell 2000 Index  (549.99, 566.89, P=579.72, 596.62, 609.45)
Russell 2000 Growth (283.34, 292.39, P=298.79, 307.84, 314.24)
Russell 2000 Value  (815,42, 840.14, P=860.14, 884.86, 904.86)

Jeff Bailey


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The Option Investor Newsletter                Wednesday 11-03-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Watch List: Medical supplies to retail and more
Stop Loss Updates: ITT, LEH
Dropped Calls: None
Dropped Puts: None
New Calls: COP, TOT
New Puts: MMM

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

Medical supplies to retail 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.
___________________________________________________________________


Inamed Corp - IMDC - close: 54.44 change: +1.88

WHAT TO WATCH: The rebound in IMDC had stalled the last couple of 
weeks under resistance at its simple 200-dma.  Today shares broke 
out over the 200-dma and its simple 100-dma on above average 
volume.  This looks like a bullish entry point but IMDC still has 
some round-number resistance at the $55 level.  Watch this one 
for some follow through.  A move over $56 would produce a new P&F 
buy signal. 

Chart=


---

Kmart Holdings - KMRT - close: 91.59 change: +0.44

WHAT TO WATCH: The RLX retail index climbed to a new all-time 
high today in the post-election rally.  Yet shares of KMRT have 
been essentially round bound for the last six weeks.  That range 
does have a slight up trend to it but the stock isn't making much 
progress.  With earnings coming up on November 15th we suspect 
that KMRT is setting up for a big move one way or the other.  One 
could try a straddle by buying the December $90 put and $90 call 
but that's a little expensive.  It could still work but KMRT 
would need to move more than $10 by December 17th.  Instead 
consider buying the $85 put and the $95 call for a lot less 
money.  That way you don't care what direction KMRT moves as long 
as it moves!  

Chart=


---

Knight Ridder - KRI - close: 69.40 change: +1.38 

WHAT TO WATCH: Newspaper companies may still be suffering from a 
circulation scandal but shares of KRI are on the rebound.  The 
stock is now challenging resistance near $69.50 and its 
exponential 200-dma.  The P&F chart has reversed into a new buy 
signal with an $82 target.  While we might be tempted to go long 
over $70.00 bulls need to be wary of the simple 200-dma near $71.

Chart=


---

Henry Schein - HSIC - close: 63.34 change: +1.06

WHAT TO WATCH: HSIC has rebounded strongly from its October lows 
and news that it had to adjust its earnings lower after CHIR 
reported it would not deliver any flu vaccines to the U.S. this 
year.  Currently HSIC is trading in a range between $62 and $64 
with the upper band bolstered by its exponential 200-dma.  A 
breakout over $64 may be worth following.  It's probably no 
coincidence that HSIC is also challenging P&F resistance in the 
$63-64 level.

Chart=



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

FRX $42.26 +0.26 - This still looks like a bearish play 
candidate.  We're watching for a break under $41.00.

NFI $45.93 +0.88 - We're still bullish on NFI but we'd like to 
buy a bounce from $45 or $44.


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

ITT - call play -
  ITT has broken out above resistance at $81.50 and
  traded up and through our trigger at $81.51 opening
  the play.  Volume was almost double the norm.
 
LEH - call play - 
  LEH hit our initial price target at $85.00 this morning.
  We are going to keep the play open and look for some
  follow through.


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

None


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************
DROPPED PUTS
************

None

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

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In the last few weeks, we have pinpointed insider buying on six 
stocks that have the potential to deliver stratospheric gains. 

Click here for our SPECIAL REPORT on these 6 stocks insiders are 
buying and why you should too. 


http://www.insidermoves.com/default.asp?aid=618

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

*********
NEW CALLS
*********

ConocoPhillips - COP - close: 85.50 change: +2.07 stop: 81.50

Company Description:
ConocoPhillips is an integrated petroleum company with interests 
around the world. Headquartered in Houston, the company had 
approximately 35,800 employees, $89 billion of assets, and $129 
billion of annualized revenues as of Sept. 30, 2004.
 (source: company press release)

Why We Like It:
It looks like the recent pull back in oil and oil stocks may have 
been just a pause on the way up.  Anyone who has been following 
OptionInvestor.com's comments about the long-term issues of the 
global oil supply know that expensive crude oil prices are likely 
to be a permanent addition to the world economy.  That makes many 
of the larger oil concerns attractive candidates if you can get 
the right entry point.  It is very interesting to note the 
rebound from today's low in crude oil.  The December contract for 
crude bounced from its simple 50-dma.  This has been a technical 
level where oil has rebounded from several times in the past.  
Now that short-term technicals like RSI and stochastics are 
hinting at a new up turn in crude prices this could be a good 
chance to capture the next leg up in oil stocks.  COP is already 
hinting at a new move higher.  The stock's short-term technicals 
are rounding the corner to bullish signals and its MACD is 
suggesting a new buy signal in the next few days.  We are going 
to jump in early and suggest longs with today's move over $85.00.  
More conservative traders may want to wait for a move over $86.00 
or $87.00.  There is resistance at $90.00 but we suspect that COP 
can trade toward the $100 level.  The bullish P&F chart points to 
a $124 (long-term) target.  We'll start the play with a stop loss 
at $81.50.  Our time frame is six to eight weeks.

Suggested Options:
We are going to suggest the December and January calls.  Our 
favorites are the January's.

BUY CALL DEC 80 COP-LP OI= 231 current ask $6.60
BUY CALL DEC 85 COP-LQ OI= 954 current ask $2.95
BUY CALL DEC 90 COP-LR OI= 851 current ask $0.95

BUY CALL JAN 85 COP-AQ OI=2949 current ask $3.90
BUY CALL JAN 90 COP-AR OI=2859 current ask $1.65


Annotated chart:

 

Picked on November 03 at $85.50
Change since picked:     + 0.00
Earnings Date          10/27/04 (confirmed)
Average Daily Volume =      3.0 million 
Chart =


---

Total S.A. - TOT - close: 106.09 change: +2.54 stop: 102.00

Company Description:
As France’s largest corporation and the world’s fourth-ranked oil 
and gas company, Total is committed to meeting growing energy 
demand while consistently acting as a responsible corporate 
citizen.  Total operates in more than 130 countries across the 
oil industry chain, from oil and gas exploration and production 
to the gas downstream and refining, marketing, trading and 
shipping. We are also a world-class chemicals player.
(source: company website)

Why We Like It:
TOT is another chance to play any rally in the oil stocks and 
crude oil.  Unlike many of its American-based rivals shares of 
TOT didn't see that much profit taking in the month of October.  
Instead shares of TOT consolidated sideways between $101 and 
$106.  Today shares of TOT broke out over resistance at $106 to 
hit new all-time highs.  Combined with the bullish short-term 
technicals (RSI and stochastics) and the MACD indicator that is 
very close to producing a new buy signal this looks like an entry 
point.  The P&F chart confirms with a double-top breakout buy 
signal and d $129 price target.   We can't find an earnings date 
but our best guess might put the next earnings report in mid-
December.   Currently, we think traders can probably ride TOT 
into the end of the year.  Currently our target is $115.

Suggested Options:
There are November and December options available but we are
going to suggest the February calls, which have more open
interest.

BUY CALL FEB 100 TOT-BT OI= 119 current ask $7.50
BUY CALL FEB 105 TOT-BA OI=1258 current ask $4.20
BUY CALL FEB 110 TOT-BB OI=  52 current ask $2.05

Annotated chart:

 

Picked on November 03 at $106.09
Change since picked:      + 0.00
Earnings Date           00/00/00 (unconfirmed)
Average Daily Volume =       672 thousand   
Chart =



********
NEW PUTS
********

3M Company - MMM - close: 75.29 change: -0.59 stop: 78.01

Company Description:
Every day, 3M people find new ways to make amazing things happen. 
Wherever they are, whatever they do, the company's customers know 
they can rely on 3M to help make their lives better. 3M's brands 
include icons such as Scotch, Post-it, Scotchgard, Thinsulate, 
Scotch-Brite, Filtrete, Command and Vikuiti. Serving customers in 
more than 200 countries around the world, the company's 67,000 
people use their expertise, technologies and global strength to 
lead in major markets including consumer and office; display and 
graphics; electronics and telecommunications; safety, security 
and protection services; health care; industrial and 
transportation.  (source: company press release)

Why We Like It:
Warning bells should be going off for MMM shareholders.  The lack 
of participation in the Dow's rally today looks like very bad 
news for MMM.  The stock has been stuck in a trading range 
between $75 and $78 ever since its Oct. 18th earnings report.  It 
was in that report that MMM missed estimates by 1 cent and 
lowered guidance for the fourth quarter.  Now in the last couple 
of days we've seen MMM fail hard at each attempt to breakout over 
$78 on rising volume.  We are a little early with our bearish 
entry point but the bearish P&F chart currently points to a $65 
target.  More conservative traders may want to wait for MMM to 
trade under $75.00 before considering positions.  Our initial 
target is $70.00 because MMM has a long-term trendline of 
potential support there.  

Suggested Options:
We are going to suggest the December or January puts.

BUY PUT DEC 80 MMM-XP OI=1391 current ask $5.50
BUY PUT DEC 75 MMM-XO OI=2074 current ask $2.15
BUY PUT DEC 70 MMM-XN OI= 658 current ask $0.70

BUY PUT JAN 80 MMM-MP OI=4134 current ask $5.90
BUY PUT JAN 75 MMM-MO OI=6734 current ask $2.85 
BUY PUT JAN 70 MMM-MN OI=6655 current ask $1.20

Annotated chart:

 

Picked on November 03 at $75.29
Change since picked:     - 0.00
Earnings Date          10/18/04 (confirmed)
Average Daily Volume =      2.9 million 
Chart =


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