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Daily Newsletter, Tuesday, 11/09/2004

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The Option Investor Newsletter                 Tuesday 11-09-2004
Copyright 2004, All rights reserved.                       1 of 3
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Tension Mounting
Futures Markets: See Note
Index Trader Wrap: NASDAQ-100 Tracker gets new address December 1
Market Sentiment: Fed Waiting


Posted online for subscribers at http://www.OptionInvestor.com
************************************************************
MARKET WRAP  (view in courier font for table alignment)
************************************************************
      11-09-2004           High     Low     Volume   Adv/Dcl
DJIA    10386.37 -  4.90 10427.81 10368.59 1.83 bln 1812/1409
NASDAQ   2043.33 +  4.10  2049.77  2034.41 1.76 bln 1740/1372
S&P 100   556.90 -  0.40   559.45   556.06   Totals 3552/2781
S&P 500  1164.08 -  0.81  1168.97  1162.48 
SOX       415.80 -  2.80   419.52   413.79
RUS 2000  606.64 +  4.56   607.00   601.27
DJ TRANS 3587.71 +  5.70  3599.37  3576.59
VIX        13.61 -  0.19    13.96    12.89
VXO (VIX-O)13.64 -  0.28    14.18    13.49
VXN        19.19 -  0.03    19.50    18.84 
Total Volume 3,895M
Total UpVol  1,854M
Total DnVol  1,958M

Total Adv  4023
Total Dcl  3189
52wk Highs  449
52wk Lows    63
TRIN       1.10
NAZTRIN    1.46
PUT/CALL   0.68
************************************************************

Tension Mounting
by Jim Brown

After three days of trading at the highs but seeing no
forward motion there are quite a few traders beginning 
to worry that the bounce is failing. The Dow continues
to spike over 10400 but cannot seem to hold the high
ground. The SPX has posted three lower highs on its
attempts to break 1168. Is this a breakout waiting to
happen or a breakdown in progress?

Dow Chart

 
Nasdaq Chart

 

Economically there were no reports to add to the high
excitement from Friday's Jobs Report. The Job Opening
and Labor Turnover Survey (JOLTS) showed no real change
in hiring. However this report covered the September
time frame and was trumped by the later period Jobs
Report for October. However, because this jobs data 
comes from a different survey the lack of confirmation
from JOLTS does cause some concern. This less positive
picture showed an increase in separations that were not
matched by increased hiring trends. 

The Richmond Fed Manufacturing Survey showed a slowing
of manufacturing in the region to the slowest pace 
since July. At 14 the headline number still indicates
growth but well below the 22 posted in September. The
order backlog was -5 and only a minuscule improvement
from the -6 in September. New orders at +3 fell from
+8 to move very close to negative as well. Shipments
fell to a three month low at 14 from a six month high
of 22 in September. However, the six month outlook 
jumped to 35 from 21. Amazing that all the production
indicators can fall substantially but the outlook was
raised. There was no hiring in the region and the avg
workweek fell. 

Wholesale Trade rose less than expected at +0.5% and
well below the +0.9% from last month. Inventories also
rose +0.5% and less than the +1.1% in August. This was
the first time in five months that inventory expansion
failed to keep pace with sales. Inventory to sales
remains at 1.15 as it has for the last four months. 
The inventory component fell but is not expected to 
be a drag on GDP until 2005. There seems to be a 
common theme in the various reports that 2005 could
be an economic challenge. 

While the economics were mixed to weak most investors
were not focused on the boring reports. If anything 
they were focused on the FOMC meeting tomorrow and
the lack of a breakout after such a great post election
start. There is a 100% chance of a 25-point rate hike
that will bump the rate to 2.0%. The outlook statement
is more of a key than the rate hike unless they bump
it up +50 points. Because of the strong jobs report 
there is some concern the Fed could raise the stakes
with their statement or even vote for a 50 point hike
tomorrow. Almost nobody expects more than 25 points
but there is always the fear. The next meeting is on
Dec-14th and there is an 81% chance of another hike
to 2.25% at that meeting. There are two meetings in
Q1-2005, Feb-1st and Mar-22nd. There is nearly a 100%
chance of a hike in February and a 25% chance of a 
hike in March. If jobs remain strong that could put 
us back to 2.75% in March. Almost everyone expects
the hikes to quit in 2.50-3.00% range and all eyes
will be on the statement to see if this expectation
has changed. 

The fear of the Fed in light of the blowout jobs report
has put the bulls back in the corral. The major indexes
all screeched to a stop at critical resistance and have
failed to continue the monster bounce. In all fairness
they have failed to sell off as well but worry is 
beginning to weigh on the indexes. 

SPX Chart – Daily

 
SPX Chart – Weekly

 

The most visible is the SPX which finally broke the
50% bear market retracement level at 1161. Unfortunately
it came to a dead stop immediately after it crossed that
level. Beginning on Friday the SPX has now tried three
times to break through 1170 to no avail. There have
been two lower highs below 1170 but 1162.50 has held
as solid support. Considering the very strong gains
and the critical levels reached this is a very good
sign. 1172-1176 was the resistance high for all of
2002 and this is very strong resistance. When taken
together the 1160-1175 range is the highly visible
line in the sand that must be crossed for the rally
to continue and both sides know it. This would be the
key level to predict a failure if a failure was in the
cards. 

The Dow is facing a much smaller battle at 10400-10420
and compared to the last two months of Dow declines the
Dow is doing a very good job of holding the high ground.
The Dow has run nearly +700 points since the 9708 lows
back on Oct-25th. +700 points in nine trading days is
a very strong run that leads to very overbought 
conditions. Those conditions appear to have led to a
consolidation in place instead of a profit taking dip.

The Nasdaq is facing a task similar to the Dow at 2050.
This is the resistance high from late April and June
and while decent resistance it is not as critical as
the SPX is currently facing. The Nasdaq is actually 
showing more of an uptrend over the last three days
than the Dow/SPX. The Nasdaq is not being supported
by the SOX with that index hovering in a flat line 
around 415 and not showing any indications of moving
higher. No uptrend help there but 410 is strong
support that should keep the Nasdaq from imploding. 

SOX Chart

 
Russell Chart

 

The Nasdaq is gaining significant uptrend support from
the Russell. The Russell closed at an all time high
today at 606.64. This is above the 2000 bull market 
highs and should be a clear sign the rally is still
alive. This high was only a quarter of a point over
the prior record so it is not a resounding breakout.
Still it is a clear sign mutual funds are moving into 
the market while we wait on the Fed. 

TrimTabs.com said today that $2.4 billion came into 
U.S. equity funds for the first week in November. $1B
flowed into global funds and a whopping $3.6 billion
was added to exchange traded funds. The +$7B in new
cash helped produce our post election rally and we
are still seeing new cash flows hitting the small 
caps. At least it was today.

After the bell Cisco reported earnings inline with
estimates at +0.21 cents and said inventory problems
were beginning to ease. This should have been good
news but Cisco's outlook was less than exciting and
revenue was slightly lighter than expected. Orders
trailed shipments and Cisco said competition was
growing. They said revenues would increase only +1% 
to +3% over last quarter but that was below current
analyst estimates. Cisco only managed to report 
inline with estimates due to better than expected
cost savings and continuing stock buybacks. Cisco
said there was a growing impact by low cost Asian
competitors. Despite the cautious comments and outlook
Cisco still generated $1.5B in cash for the quarter
and raised their cash account to $17.7 billion. That
is nearly -$2 billion lower than last quarter due to
the aggressive share buy back program. Margins are
continuing to fall as a result of more sales in the
lower priced products. The company cut orders to 
suppliers for Q4 by -$106 million because of their
reduced outlook. Cisco also announced they were 
increasing their current share buyback program by
$10 billion. They must really expect Q4 to be a strong
challenge and need to drop the outstanding shares by
a bunch. Most analysts and probably most investors
would rather see them spend $10 billion on acquisitions
that would grow them out of their rut. 

The current earnings cycle is nearly over with Dell
and HPQ the only two major techs left to report. Dell
reports on Thursday and HPQ reports next Tuesday. The
running total for the 90% of the S&P that have reported
is +15.1% earnings growth and +11.9% revenue growth.
It the remaining 10% of the S&P reports inline the
total for the quarter will be +16.7% earnings growth.

Crude Oil Chart

 


The Cisco earnings tonight tanked the futures but the
dip was brief. They rebounded after Cisco said revenue
could rise slightly and it appeared to be a case of
expectations being worse than even the lukewarm results.
This suggests we could have yet another mixed session
at the open as we await the Fed statement at 2:15. Oil
prices have imploded with a $47.17 print overnight and 
a nearly -$2 drop intraday. The falling oil prices 
should be helping equities but stocks could not break
out of their range today. With Cisco behind us and the
Fed almost a footnote we could see the bids begin to 
pick up again. 

I remain bullish on the market but fully aware we could
see profit taking at any time. However, the last two
days would have been prime opportunities for sellers
to appear and they were conspicuously absent. I still
advocate buying the dips and should a breakout over
SPX 1170 appear I would not hesitate to go long there
as well. The official target for the year-end is SPX
1250 but what happens if we get there early is still
a guess. Mutual funds are very worried but it is not
about the weak dollar, oil prices, trade deficit or 
rising interest rates. They are worried they will miss
the rally and get beaten by somebody else in the great
returns race. We are facing true performance anxiety
and I believe that will provide the eventual end of 
year rally. I believe it is a breakout waiting to 
happen and funds will not allow us to breakdown. So 
far this year most funds are just barely positive and
they need to collectively juice the tape to produce 
gains everyone can feel good about advertising. 

Enter Passively, Exit Aggressively. 

Jim Brown
Editor

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

NASDAQ-100 Tracker gets new address December 1

The AMEX-listed NASDAQ-100 Tracker (AMEX:QQQ) $37.92 -0.21% will 
get a change of address beginning December 1, 2004, when the 
"triple-Qs" move their official listing to the NASDAQ.

John Jacobs, CEO of NASDAQ Financial Product Services said the 
move is a win for NASDAQ because "we list all the companies in 
the NASDAQ-100, so the ETF will trade side-by-side with its 
component stocks."

The AMEX will continue to trade the QQQ on the basis of unlisted 
trading privileges or UTP.  The move will not only boost the 
NASDAQ's trading revenue, but also the AMEX's bottom line because 
it will net the exchange additional revenue in market data fees.

Since its inception, the QQQ's daily trade volume has increased 
to 100 million per day from just 6.9 million in 1999 and 
currently represents roughly $22.1 billion in assets.  The Qs are 
the second-largest ETF behind the S&P 500 SPDRs (AMEX:SPY) 
$116.88.

When the Qs move to their NASDAQ listing, the symbol will change 
to NASDAQ:QQQQ.  

I've been trying out some nicknames, but "the Qs" will probably 
hold.  "Quad-q" sounded good, "QQ-squared" a bit long, and while 
"4-Q" is short and to the point, that nickname is just too 
similar to 4-H (a program of the US Dept. of Agriculture).

NASDAQ-100 Tracker (QQQ) Chart - Daily Intervals

 

While I'm still not sure the QQQ ever traded $39.00 on January 
20th (I think its a lasting bad tick, with $38.75 the recent 
high) I've placed a conventional retracement on the QQQ's chart 
and overlaid our MONTHLY Pivot analysis levels.  Near-term 
support after this impressive run looks to be $37.69-$37.73.

The QQQ seemed to go into a "funk" back in February, and for some 
bullish % perspective, I went back an looked at various bullish % 
cycles we've been moving through and the QQQ achieved "bear 
confirmed" status on February 23.  After that, we see the 50-day 
SMA suddenly became a point of resistance and the QQQ closed 
below that intermediate-term simple moving average for more than 
5 sessions.  I also went back to March 2003, and during the 
massive bull run from $25.00, the QQQ would violated the 50-day 
SMA on pullbacks, but always had a hard time closing below that 
intermediate-term SMA.

I've talked about the "3 strike rule" to trend, where after a 
trader draws three trends (up or down) and a security breaks our 
third-trend, its time to call it quits for the losing trend.  
It's probably just a coincidence, but the day after the NASDAQ-
100 Bullish % ($BPNDX) achieved "bull confirmed" status, my third 
trend (a cheater's trend) was broken to the upside.  

With the NASDAQ-100 Bullish % ($BPNDX) now achieving "bull 
confirmed" status, the point and figure chart's bullish vertical 
count of $45, which was established in November of 2002 looks to 
be back in play.  

A quick review of the Stock Trader's Almanac notes of 
historically bullish seasonality for the QQQ from October to 
January has shown an average gain of 13.9%.  From the September 
30 close of $35.14, a historical bullish target of $40.02 could 
be derive.  The Stock Trader's Almanac also covers a longer 
period from October to June and an average gain of 18.9%.  From a 
$35.14 benchmark, an additional upside target of $41.71 can be 
assessed.  Hey!  That might just mark end of the second leg of 
this bull market.

A couple of investors asked "why does this type of historical 
bullishness occur?"  I'm not certain, but my explanation in the 
past has been that company's establish annual budgets, and as the 
end of the year draws near, it becomes a "use it, or lose it" 
play for many managers.

I remember when I was working for Mobil oil, we'd have big 
battles between the Rocky Mountain/California Offshore team and 
our friends that shared the mid-continent office space, for who 
got their hands on the leftover budget funds in the fourth 
quarter.

Remember our discussion regarding productivity and new jobs (Ask 
the Analyst "Economics 101).  Should the rate of worker 
productivity ease and companies start hiring back more workers; 
we should see capital expenditures and budgets increase.  This 
would be more of a "fundamental" reason behind the major indices 
recent gains.

Market Snapshot / Internals - 11/09/04 Close 

 

It was a mixed trade for the majors today.  Those little small-
caps of the Russell-2000 Index ($RUT.X) held tough didn't they?

Shoot!  I messed up this morning's 11:00 AM update, but when we 
fixed it, that's messed up the 01:00 PM Update when I tried to 
show this chart of the Russell 2000 iShares Growth (AMEX:IWO) 
$62.85 +1.19%, and forward trade guidance.

iShares Russell 2000 Growth (AMEX:IWO) - Daily Intervals

 

After establishing a partial bullish position in the IWO 
yesterday (Monday), I wanted to use some of the same retracement 
tools and techniques we've discussed in recent updates. The BLUE 
retracement on the IWO is conventional use of retracement where 
I've anchored the 0% at the recent Augusts lows and 100% at the 
recent April 2004 52-week high of $65.00. Now, my PINK 
retracement is anchored at the October 29 close, and I'm dragging 
its 100% retracement higher to $67.74, which would approximate a 
12.9% historical average gain for seasonal bullishness that runs 
from November to the end of May. What this allows us to do is 
begin to look for areas that we might then add to our partial 
bullish position. Bulls like that "overlap" at $60.00 and right 
now, I'd view a "zone of resistance" from $62.52 to $62.96, which 
will be a next level to test for strength. Bulls can add to 
positions on any pullback near $60, or strength above $63.00. 

U.S. Market Watch - 11/09/04 Close

 

Oil settled at its lowest price since September 22, and I wanted 
to quickly update traders and investors (not just oil/energy 
traders) on the Continuous Oil Contract ($WTIC) from 
Stockcharts.com.  I also wanted to let investors know about the 
EIA's update to what it sees as average energy prices for heating 
oil, propane and crude as it would relate to the "tax" on 
consumers.

Remember!  Tomorrow morning we'll get the EIA's weekly inventory 
figures.  According to Bloomberg, the median estimate of energy 
analysts is for crude oil inventories to increase by 2 million 
barrels.  Distillate inventories (of which heating oil and diesel 
fuel are derived) are expected to rise by 400,000 barrels, the 
first increase in eight weeks.

The U.S. Department of Energy raised its forecast for winter 
heating oil, propane and crude oil prices in the U.S. from its 
outlook a month ago.

Heating oil expenses for a typical Northeastern home this winter 
are now expected to average about 37% above last winter, up from 
the EIA's previous projection of a 29% increase.  Residential 
heating oil prices are now seen averaging $1.88 a gallon from 
October to March.

Households using propane for heat are now seen paying about 26% 
more this winter, compared with the EIA's projection last month 
of 22% higher winter expenses.

Winter costs for natural gas-heated homes are expected to be 
around 15% higher than last winter.

Meanwhile, the Energy Department's statistics branch raised its 
projected fourth-quarter price for U.S. benchmark West Texas 
Intermediate crude oil by $5 to $51.09 a barrel.  That's about 
$20 a barrel above the oil price in the same period last year.

OK.... the "one number" we can perhaps key on is the EIA's 
average price of $51.09.  Let's use that as a psychological 
benchmark.  

But let's tie that number back in with our point and figure chart 
that we've been tracking.  Now, tonight I'm going to look at the 
conventional 25-cent box size.  Get a little more detailed than 
the 50-cent box size we last reviewed in Wednesday's Index Trader 
Wrap.

Oil - Light Crude - Continuous Contract ($WTIC) - $0.25 box

 

Same "yellow zone" and oil's trade pretty much as we predicted.  
Isn't it?  See where I mark the EIA's average quarterly price of 
$51.09.  I point to a lot of the same price levels we've 
discussed in the 50-cent box charts, but I want to take the EIA's 
estimates of $51.09 (say $51.00) a little further.

If the EIA's mid-point, or average price for the quarter is 
$51.00 and we've already seen a high of $55.50, then I've got to 
think the "low end" of the quarter's range is about $45.50.

Oil traders will probably use the EIA's estimates to try and 
position themselves around, and if the quarter's "low end" of the 
range is $45.50, then we might be alert for some type of support 
at that level.  The way I see the point and figure chart that 
darned 50-cent box size chart we looked at last Wednesday would 
have $45.50 as the bullish support trend, while my 25-cent chart 
above has support a little lower at $44.50.

I would think economists, and equity/bond market fundamentalists 
are also plugging in some of the EIA's quarterly energy estimates 
too.

Point here is that equity bulls that are monitoring oil prices 
along with their trades, they should be cognizant of some oil 
support from $44.50-$45.50.

Commodity traders are VERY supply/demand oriented.  Do you see 
how recent "sell signals" (O below a prior column of O) has found 
selling on "bounce" back.  This is a sign of net longs being a 
little more aggressive with their selling into rallies.  It will 
last until a sense of equilibrium is found, or a shift in demand 
is seen.  

First sign of meaningful strength on the 25-cent box scale is 
$49.75.  My "trouble" level for equities, if not MARKET 
psychology would still be $52.00 or above.  The $52.00 level is 
the "oh no, here we go again" level.

Pivot Matrix -

 

The Semiconductor Index (SOX.X) 415.80 -0.67% did see trade lower 
at its WEEKLY Pivot.  While the QQQ didn't find any pivot 
resistance, I would only note that last week's high of $38.16 did 
find sellers unwilling to flinch.

With the FOMC announcing its decision on interest rates, and then 
issuing a brief statement, I'm setting a "downside alert" below 
the BIX.X's DAILY S2.  The BIX.X traded in a very tight range, so 
I'll cut this interest rate sensitive group some slack where we 
still have WEEKLY Pivot and DAILY S2 correlation.  

I haven't had a chance to look at any of Cisco Systems' 
(NASDAQ:CSCO) $19.75 -1.10% quarterly results, but last tick in 
after-hours was $19.24, and with the SOX.X trading WEEKLY Pivot 
today, we might expect some "tech weakness" at tomorrow's open.  

Jeff Bailey

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

Fed Waiting
- J. Brown

Given the previous week's gains it's no surprise to see stocks 
pause ahead of Wednesday's FOMC meeting on interest rates.  
Stocks got a chance to rest while investors wait for what is 
widely expected to be a 25 basis-point increase in interest rates 
to 2 percent.  Despite the two-day stall in the bull run I would 
still look for a short-term dip before we move higher into any 
fourth quarter rally.  The short-term sentiment indicators like 
the ARMS index or TRIN's moving averages remain in near bearish 
reversal levels as do the volatility indices.  

Fortunately, the longer-term bullish percent data that turned 
positive late last week remains positive today.  The feeling on 
the street seems to be pretty positive especially for the fourth 
quarter.  One analyst commented that the street had pushed back 
most of its worries into the summer of 2005.  

Looking ahead to tomorrow I don't expect a lot of trading ahead 
of the FOMC meeting and its decision on rates that normally hits 
early afternoon.  Of course it's unclear how Wall Street will 
interpret the news that both Attorney General John Ashcroft and 
Commerce Secretary Don Evans both resigned from the President's 
cabinet, especially since the rumor mill had been expecting some 
resignations. Odds are this won't have much of an affect on 
stocks but the Cisco earnings news will.  

CSCO reported earnings that were in-line with analysts' estimates 
at 21 cents a share but the company missed the revenue and gross 
margin estimates.  This is likely to have a negative affect on 
tech stocks, especially the networkers unless it looks like 
Nortel and Juniper are somehow taking market share.  Considering 
the market's need to see some consolidation it may be a good 
thing that CSCO effectively "missed".  There are a lot of 
investors waiting for a dip and CSCO's earnings could be the 
spark to ignite a decent round of profit taking. 

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

Market Averages

DJIA ($INDU)

52-week High: 10753
52-week Low :  9585
Current     : 10386

Moving Averages:
(Simple)

 10-dma: 10174
 50-dma: 10124 
200-dma: 10245 



S&P 500 ($SPX)

52-week High: 1170
52-week Low : 1031
Current     : 1164

Moving Averages:
(Simple)

 10-dma: 1144
 50-dma: 1122
200-dma: 1119



Nasdaq-100 ($NDX)

52-week High: 1559
52-week Low : 1301
Current     : 1527

Moving Averages:
(Simple)

 10-dma: 1503
 50-dma: 1438
200-dma: 1437



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

CBOE Market Volatility Index (VIX) = 13.61 -0.19
CBOE Mkt Volatility old VIX  (VXO) = 13.64 -0.28
Nasdaq Volatility Index (VXN)      = 19.19 -0.03 


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

          Put/Call Ratio  Call Volume   Put Volume

Total          0.68        878,274       596,088
Equity Only    0.53        756,787       401,731
OEX            1.18         24,943        29,628
QQQ            1.56         17,762        27,821


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

Bullish Percent Data

           Current   Change   Status
NYSE          68.5    + 0.5   Bear Correction
NASDAQ-100    63.0    + 1     Bull Confirmed
Dow Indust.   60.0    + 0     Bear Correction
S&P 500       69.2    + 0.8   Bull Confirmed
S&P 100       69.0    + 0     Bull Confirmed


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

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


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

 5-dma: 0.86
10-dma: 0.83
21-dma: 0.97
55-dma: 1.04


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    1589      1690
Decliners    1220      1324

New Highs     167       123
New Lows       11        21

Up Volume    987M      784M
Down Vol.    810M      882M

Total Vol.  1821M     1700M
M = millions


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

Commitments Of Traders Report: 11/02/04

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

Considering the fact that the latest data was taken as of
election day, Nov. 2nd, it's no surprise to see both 
commercials and small traders hedging their bets.  The 
next round of data should be more informative. 

Commercials   Long      Short      Net     % Of OI
10/12/04      423,472   436,780   (13,308)   (1.5%)
10/19/04      432,945   441,041   ( 8,096)   (0.9%)
10/26/04      441,263   445,992   ( 4,729)   (0.4%)
11/02/04      446,192   441,676   ( 4,516)   (0.4%)

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
10/12/04      139,175   113,903    25,272     9.9%
10/19/04      147,148   124,827    22,321     8.2%
10/26/04      138,201   121,275    16,926     6.5%
11/02/04      136,290   132,040     4,250     1.5%

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

E-mini traders are not as humble as the larger S&P futures
traders.  Commercials remain bearish and small traders 
have pushed their bullish bias to new multi-week levels. 
Just remember, this data is post-election. 

Commercials   Long      Short      Net     % Of OI 
10/12/04      258,457   517,805   (259,348)  (33.4%)
10/19/04      264,860   531,541   (266,681)  (33.4%)
10/26/04      276,128   509,552   (233,424)  (29.7%)
11/02/04      307,053   580,081   (273,028)  (30.7%)

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
10/12/04      309,720     62,502   247,218    66.4%
10/19/04      353,903     66,027   287,876    68.5%
10/26/04      345,908     64,061   281,847    68.7%
11/02/04      395,029     63,746   331,283    72.2%

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


NASDAQ-100

Just as small traders pushed their bullish S&P bias to multi-
week extremes; they've done the opposite on the NDX with a 
new multi-week bearish extreme and a new low for the year.

Commercials   Long      Short      Net     % of OI 
10/12/04       52,572     32,775    19,797   23.2%
10/19/04       52,630     31,940    20,690   24.4%
10/26/04       53,233     31,323    21,910   26.2%
11/02/04       53,002     31,231    21,771   25.0%

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
10/12/04        8,756    24,400   (15,644)  (47.2%)
10/19/04       10,462    25,243   (14,781)  (41.3%)
10/26/04       10,521    25,388   (14,867)  (42.8%)
11/02/04        8,886    36,621   (27,735)  (61.3%)

Most bearish reading of the year: (27,735) - 11/02/04
Most bullish reading of the year:  19,088  - 01/21/02

DOW JONES INDUSTRIAL

Neither commercials nor small traders seem willing to place
any big bets but both are somewhat bullish on the Industrials.

Commercials   Long      Short      Net     % of OI
10/12/04       24,150    22,849    1,301       2.7%
10/19/04       25,385    24,213    1,172       2.3%
10/26/04       25,707    24,855      852       1.6%
11/02/04       25,319    24,261    1,058       2.0%
 
Most bearish reading of the year: (8,322) -  1/16/01
Most bullish reading of the year: 15,135  - 10/16/01

Small Traders  Long      Short     Net     % of OI
10/12/04        8,814     9,167   (  353)   ( 1.9%)
10/19/04        8,327     6,015    2,312     16.1% 
10/26/04        8,405     6,336    2,069     14.3%
11/02/04        7,952     6,306    1,261      8.8%

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


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The Option Investor Newsletter                  Tuesday 11-09-2004
Copyright 2004, All rights reserved.                        2 of 3
Redistribution in any form strictly prohibited.


In Section Two:

Dropped Calls: TOT
Dropped Puts: None
Call Play Updates: COP, DHR, EBAY, FDX, GDW, GS, IBM, ITT, ITW, LEH,   
                   OSK, SLB,  
New Calls Plays: None
Put Play Updates: APOL
New Put Plays: None 


****************
PICKS WE DROPPED
****************

When we drop a pick it doesn't mean we are recommending a sell
on that play. Many dropped picks go on to be very profitable.
We drop a pick because something happened to change its
profile. News, price, direction, etc. We drop it because we
don't want anyone else starting a new play at that time.
We have hundreds of new readers with each issue who are
unfamiliar with the previous history for that pick and we
want them to look at any current pick as a valid play.


CALLS:
*****

Total S.A. - TOT - close: 106.22 change: -0.18 stop: 105.00

Per our suggestion on Sunday we are closing TOT ahead of 
tomorrow's earnings report.  Readers still interested in playing 
this French oil conglomerate can watch for a bounce from the $106 
level tomorrow.  

Picked on November 03 at $106.09
Change since picked:      + 0.13
Earnings Date           00/00/00 (unconfirmed)
Average Daily Volume =       672 thousand   
Chart =



PUTS:
*****

None


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********************
PLAY UPDATES - CALLS
********************

ConocoPhillips - COP - close: 86.49 change: -0.28 stop: 81.99     

Crude oil prices continue to slide and yesterday's drop under 
technical support at the 50-dma may have sparked some profit 
taking in oil stocks.  COP slipped lower on Monday and is now 
testing the $86 level as minor support.  This dip may actually be 
the entry point patient traders have been waiting for.  Yet we 
can still wait another day or two.  COP may slip further and test 
the $85 region and/or its simple 40-dma.  Watch for the bounce 
and then consider bullish positions.  In the news COP announced 
its annual analyst meeting would be held November 17th.

Picked on November 03 at $85.50
Change since picked:     + 0.99
Earnings Date          10/27/04 (confirmed)
Average Daily Volume =      3.0 million 
Chart =



---

Danaher - DHR - close: 57.15 change: -0.24 stop: 52.99      

There is nothing new to report for DHR.  The stock is holding up 
pretty well with very little profit taking.  If shares do 
continue to consolidate lower watch for a bounce form the simple 
10-dma near $56.00.  In the news DHR announced that it would 
present at the Baird Industrial conference on November 10th.

Picked on October 27 at $54.99
Change since picked:    + 2.16
Earnings Date         10/21/04 (confirmed)
Average Daily Volume =     1.3 million 
Chart =


---

eBay Inc. - EBAY - close: 104.47 chg: +0.78 stop: 95.00

Our newly added EBAY managed to out perform the major indices 
today but we wouldn't get too excited.  The best strategy is 
probably to wait and watch for a dip back toward the $100-101 
levels.  That is where we would be eyeing a bounce to go long.   
Momentum players can ignore this suggestion and buy the new high.  
No change in our stop just yet.

Picked on November 80 at $103.69 
Change since picked:      + 0.78
Earnings Date           10/20/04 (confirmed)
Average Daily Volume =      10.4 million 
Chart =



---

Fedex Corp - FDX - close: 92.62 change: -0.70 stop: 87.49*new*

The Dow Jones Transportation index eked out its fifth gain in a 
row and its eleventh gain in the last twelve sessions.  Needless 
to say the sector is somewhat overbought here.  Watch the TRAN 
for a pull back toward the 3500 level.  In turn that can probably 
translate into a dip back toward  $90.00 for FDX.  We would watch 
a bounce from $90.00 as a new bullish entry point.  In the 
meantime we're raising our stop loss to $87.49. 

Picked on October 21 at $89.45 
Change since picked:    + 3.07
Earnings Date         09/22/04 (confirmed)
Average Daily Volume =     1.5 million 
Chart =


---

Golden West Financial - GDW - cls: 117.49 chg: +0.00 stop: 113.75

The banking indices traded relatively flat today but retain their 
bullish postures. Likewise shares of GDW look ready to breakout 
but have not yet mustered enough momentum to do so just yet. We 
remain untriggered as we wait for GDW to breakout over resistance 
at $118.00 and hit our entry point at $118.15.  

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           10/21/04 (confirmed)
Average Daily Volume =       583 thousand   
Chart =


---


Goldman Sachs - GS - close: 100.87 change: +0.66 stop: 94.50     

We have been anticipating some profit taking in the overbought 
XBD broker-dealer index and shares of GS but both have been slow 
fail.  That's probably a bullish sign if there is a distinct lack 
of sellers.  However, we suggest patience.  Odds are good that 
both the XBD index and GS will see some consolidation and we can 
buy the dip.  On Sunday we suggested watching for a move into the 
$97-98 range. That means short-term traders can do some profit 
taking now and then re-enter again. 

Picked on October 27 at $96.10
Change since picked:    + 4.77
Earnings Date         09/21/04 (confirmed)
Average Daily Volume =     3.2 million 
Chart =


---

Intl Business Mach. - IBM - close: 93.37 chg: +0.00 stop: 87.00     

Big Blue continues to lead stocks higher but even the leaders 
took a breather today.  IBM closed unchanged after testing 
resistance near $94 for the third day in a row.  We're very 
encouraged by IBM's strength and the lack of sellers this week 
following last week's gains.  Yet we don't suggest new positions 
right here.  Watch for a potential dip and then buy the bounce.  
We would watch for a dip into the $91.50-92.00 range as the next 
entry point.  No change in our long-term plan.  Short-term 
traders may want to take profits now and re-enter on the dip. 

Picked on October 27 at $90.00
Change since picked:    + 3.37
Earnings Date         10/18/04 (confirmed)
Average Daily Volume =     4.7 million 
Chart =


---

ITT Industries - ITT - close: 83.99 chg: -0.84 stop: 81.50     

As expected we're starting to see a little bit of profit taking.  
No change in our strategy.  We still plan to exit at $85.90 but 
ITT may dip back to $82.00 before making another rebound.  
Readers looking for entry points can wait for the dip to end. 

Picked on November 03 at $81.51
Change since picked:     + 2.48
Earnings Date          10/21/04 (confirmed)
Average Daily Volume =      460 thousand
Chart =


---

Illinois Tool Works - ITW - close: 94.44 chg: -0.21 stop: 89.99     

ITW is struggling under the $95.00 level now following Friday's 
failed rally under $96.00.  We want to reiterate our suggestion 
that more conservative traders do some profit taking now.  One 
can always re-enter on a bounce from $93.00, which is where we're 
looking for any profit taking to end.  Our exit point at $96.00 
hasn't changed.  We are not suggesting new positions at current 
levels.

Picked on October 27 at $90.89
Change since picked:    + 3.55
Earnings Date         10/19/04 (confirmed)
Average Daily Volume =     1.2 million 
Chart =


---

Lehman Brothers - LEH - close: 83.04 chg: -0.38 stop: 79.95     

If you read the GS update then you know that we've been looking 
for some profit taking in the XBD broker-dealer index to bring 
the group back from overbought levels.  There should be plenty of 
investors waiting to buy the dip and launch the sector into the 
next leg higher.  Just as LEH helped lead the group higher it 
could be leading the group lower into the suggested dip.  The 
stock is down three days in a row now and nearing support.  Watch 
for a bounce from $82.00 as a new bullish entry point.  

Picked on October 26 at $80.60 
Change since picked:    + 2.44 
Earnings Date         09/21/04 (confirmed)
Average Daily Volume =     2.0 million 
Chart =



---

Oshkosh Truck - OSK - close: 62.08 change: -0.24 stop: 57.00

Tuesday's early morning rally was met with some selling but 
traders defended the stock above the $61.50 level.  We're still 
willing to open new positions here but we'd suggest waiting for a 
pull back toward the $60.25-61.00 range.  The $60.00 level should 
be new support.  No change in our strategy or our stop loss. 

Picked on November 07 at $ 62.16
Change since picked:      - 0.08
Earnings Date           10/28/04 (confirmed)
Average Daily Volume =       205 thousand   
Chart =


---

Schlumberger - SLB - close: 62.63 change: +0.18 stop: 61.00

It would appear that the oil service stocks are struggling under 
the recent dip in crude oil prices.  Shares of SLB have turned 
lower and are trading near their simple 200-dma while they remain 
above the exponential 200-dma.  Short-term technicals look weak 
but we still see some momentum indicators suggesting SLB can 
bounce from this new low above $60.00.  Aggressive traders may 
want to consider long positions over $64.00.  We are still 
untriggered and waiting for SLB to hit our entry point at $65.05.  
If SLB breaks down under $60.00 we may jump into some 
(hypothetical) put positions. 

Picked on November xx at $ xx.xx <-- see TRIGGER
Change since picked:      + 0.00
Earnings Date           10/22/04 (confirmed)
Average Daily Volume =       3.9 million    
Chart =



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

None


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*******************
PLAY UPDATES - PUTS
*******************

Apollo Group - APOL - close: 66.51 chg: -0.63 stop: 68.51     

Ouch!  We knew APOL was looking oversold at less than $63.00 but 
we weren't expecting an oversold bounce back to resistance at 
$68.50.  That's exactly what happened.  Friday's move over $65.00 
put us on the defensive and Monday's follow through could have 
been a short-term panic by some shorts.  We suggested that new 
readers looking for positions watch for a failed rally and that's 
exactly what APOL has produced.  We're going to leave our stop 
alone since the downtrend remains intact.  Our target near $60.00 
remains.  

Picked on October 10 at $69.81
Change since picked:    - 3.30
Earnings Date         10/05/04 (confirmed)
Average Daily Volume =     3.3 million 
Chart =


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

None

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**********

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


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The Option Investor Newsletter                  Tuesday 11-09-2004
Copyright 2004, All rights reserved.                        3 of 3
Redistribution in any form strictly prohibited.


In Section Three:

Watch List: Healthcare to Conglomerates and more!
Spreads & Straddles: A Market On Hold...
Premium Selling Plays: Naked Puts & Calls


**********
WATCH LIST
**********

Healthcare to Conglomerates 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.
___________________________________________________________________



Sierra Health Services - SIE - close: 52.03 change: +1.45 

WHAT TO WATCH: The three-week rally in SIE isn't slowing down and 
shares have broken through resistance at the $50.00 mark.  These 
are new all-time highs and SIE's P&F chart is bullish with a $68 
target.  We would keep an eye on SIE for a pull back toward the 
$50.00 level, which should now act as support.  

Chart=


---

Guidant Corp - GDT - close: 66.10 change: +0.56

WHAT TO WATCH: Guidant has spent that last several weeks 
consolidating between $62 and $68 and some of its momentum 
indicators suggest it could be close to breaking out over the $68 
level.  Of course there is additional resistance near $70 but the 
P&F chart is bullish with a $96 (long-term) target.  We would 
definitely wait for the move over $68 or $70 before considering 
any positions.  

Chart=


---

Chicago Mercantile Exchange - CME - close: 191.11 change: +3.72

WHAT TO WATCH: The momentum train in CME is not slowing down 
either.  Shares have run from $120 to $190 less than 3 1/2 months 
and from $160 to $190 since October 26th.  We're not suggesting 
any positions here but odds are growing that CME will announce a 
stock split.  If this is too much volatility for a directional 
play consider an option-spread strategy.   

Chart=


---

Loews Corp - LTR - close: 63.88 change: +0.10 

WHAT TO WATCH: The momentum in LTR the past three weeks has been 
impressive.  The stock broke through resistance at $60.00 and 
again near $63.00 to hit new three-year highs.  Watch this one 
for a pull back and consider buying a bounce over $60.00.  The 
P&F chart shows a new spread triple-top breakout buy signal with 
an $81 target.

Chart=



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

BA $52.51 +0.64 - We continue to think BA looks like a bullish 
candidate here, especially with today's move over $52.00 and the 
50-dma.

LLL $68.65 -0.35 - LLL seems to be struggling under resistance at 
the $70.00 level.  Watch for shares to consolidate back toward 
round-number support near $65.00 and consider a bounce. 

CAH $50.29 +1.28 - The rebound continues in shares of CAH.  The 
stock is following yesterday's breakout over $48.50 and its 
simple 100-dma with a move over round-number resistance at 
$50.00.

STJ $76.91 +0.28 - Watch STJ for a breakout over resistance at 
$79-80.00. 


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


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

A Market On Hold...
By Ray Cummins

Stocks traded in a small range Tuesday as investors awaited the
Federal Reserve's upcoming decision on interest rates.

The Fed is widely expected to raise rates at Wednesday's meeting,
but the real question is what the FOMC will say about the future
outlook for the economy.  With no clear direction in that regard,
the major equity averages were destined to end the session nearly
unchanged.  The Dow Jones industrial average slumped 4 points to
10,386, while the NASDAQ added 4 points to close at 2,043.  The
Standard & Poor's 500 index finished where it started at 1,164.
Big board volume was 1.46 billion, with winners outpacing losers
6 to 5.  NASDAQ breadth was roughly 3 to 2 in favor of advancers,
on trading volume of 1.68 billion.  There was little activity in
the treasury market.  The benchmark 10-year note ended up 1/32,
with its yield at 4.21%.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 11/07/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of our subscribers, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The editor of this section does not take actual positions in any
published plays and the summary comments are simply a service to
help new traders understand when positions might be opened and
closed.  In most cases, actions taken based on the commentary
would be far too late to be effective, thus it is not intended
as a substitute for personal trade management nor does it in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


PUT-CREDIT SPREADS

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

BSC    94.16  96.63  NOV  80.0  85.0  0.65   84.35   0.65   Open
BTU    60.07  65.27  NOV  50.0  55.0  0.60   54.40   0.60   Open
MRVL   28.84  28.22  NOV  22.5  25.0  0.35   24.65   0.35   Open
COST   44.69  49.55  NOV  40.0  42.5  0.30   42.20   0.30   Open
NEM    46.25  49.05  NOV  40.0  42.5  0.30   42.20   0.30   Open
INSP   47.25  53.64  NOV  35.0  40.0  0.85   39.15   0.85   Open
BG     41.96  49.34  NOV  35.0  40.0  0.50   39.50   0.50   Open
ADBE   53.57  58.48  NOV  45.0  50.0  0.50   49.50   0.50   Open
VRNT   37.73  38.62  NOV  30.0  35.0  0.55   34.45   0.55   Open
GTRC   47.81  44.44  NOV  40.0  45.0  0.45   44.55  (0.11) Closed
OSTK   52.63  58.40  NOV  40.0  45.0  0.60   44.40   0.60   Open
MDC    76.00  76.69  NOV  65.0  70.0  0.50   69.50   0.50   Open
SPF    53.90  55.75  NOV  45.0  50.0  0.60   49.40   0.60   Open
NEM    47.52  49.05  NOV  42.5  45.0  0.35   44.65   0.35   Open
PD     87.54  92.69  NOV  75.0  80.0  0.50   79.50   0.50   Open
EBAY  100.66  99.68  NOV  90.0  95.0  0.60   94.40   0.60   Open
CTX    53.55  52.65  NOV  45.0  50.0  0.50   49.50   0.50   Open

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

Although both are currently profitable, positions in Pacificare
Health Systems (NYSE:PHS) and Celgene (NASDAQ:CELG) have previously
been closed to limit potential losses.  Guitar Center (NASDAQ:GTRC)
is also a candidate for early exit after the recent consolidation
in its stock price.


CALL-CREDIT SPREADS

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

AMZN   40.47  36.56   NOV  50.0  45.0  0.65   45.65  0.65   Open
PDX    55.00  61.50   NOV  65.0  60.0  0.60   60.60 (0.90) Closed
CHIR   37.98  32.48   NOV  45.0  42.5  0.30   42.80  0.30   Open
FLIR   54.52  57.74   NOV  65.0  60.0  0.70   60.70  0.70   Open
BIIB   59.82  60.86   NOV  70.0  65.0  0.65   65.65  0.65   Open
IFIN   36.50  39.04   NOV  42.5  40.0  0.30   40.30  0.30   Open
TTWO   32.55  34.76   NOV  37.5  35.0  0.30   35.30  0.30   Open?
SPW    37.40  42.50   NOV  42.5  40.0  0.30   40.30 (2.20) Closed
QCOM   39.50  38.27   NOV  45.0  42.5  0.30   42.80  0.30   Open
ESRX   64.01  72.00   DEC  75.0  70.0  0.60   70.60 (1.40) Closed
JCP    34.59  39.12   DEC  40.0  37.5  0.35   37.85 (1.27) Closed
SEPR   45.44  48.20   DEC  55.0  50.0  1.00   51.00  1.00   Open
TTWO   33.24  34.76   DEC  40.0  37.5  0.30   37.80  0.30   Open

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

Positions in J.C. Penney (NYSE:JCP), SPX Corp. (NYSE:SPW), and
Pediatrix Medical (NYSE:PDX) should have been closed earlier in
the week for smaller-than-published losses.  Positions in Aetna
(NYSE:AET), Beazer Homes (NYSE:BZH), Hartford Insurance (NYSE:HIG),
Cigna (NYSE:CI), Chubb (NYSE:CB), Mercury Interactive (NASDAQ:MERQ)
and Microchip (NASDAQ:MCHP) have previously been closed.  Take-Two
Interactive Software (NASDAQ:TTWO) is a candidate for early-exit
on any move above $35.50.  Investors Financial (NASDAQ:IFIN) and
Sepracor (NASDAQ:SEPR) are on the "watch" list.


DEBIT STRADDLES

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

NTES    40.00  48.76   NOV   40.0   40.0    5.00   10.50    Open?
NEW     55.15  59.12   NOV   55.0   55.0    4.70    6.00    Open

The speculative straddle in Netease.com (NASDAQ:NTES) has easily
exceeded all possible profit goals and the position should be
closed to "lock-in" gains.  New Century Finance (NYSE:NEW) has
already provided a favorable early-exit profit for conservative
traders.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW POSITIONS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.

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

BULLISH PLAYS - CREDIT SPREADS

These candidates are based on the underlying issue's technical
history or trend.  The probability of profit in these positions
may also be higher than other plays in the same strategy, due to
small disparities in option pricing however, each play should be
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and trading style.

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

VIP - Vimpel-Communications  $121.49  *** New All-Time High! ***

Vimpel-Communications (NYSE:VIP) is a provider of wireless
telecommunications services in Russia, operating under the
Bee Line GSM brand name.  The company offers wireless services,
such as voice telephony service, value-added services using
short message system, unstructured supplementary services data,
wireless application protocol, general packet radio service,
maintenance management system technologies, interconnections
with other networks and access to national and international
roaming service.  VimpelCom offers services to subscribers
under two types of payment plans: contract plans and prepaid
plans.

VIP - Vimpel-Communications  $121.49

PLAY (less conservative - bullish/credit spread):

BUY  PUT  DEC-105.00  VIP-XA  OI=29  ASK=$0.95
SELL PUT  DEC-110.00  VIP-XB  OI=30  BID=$1.60
INITIAL NET-CREDIT TARGET=$0.70-$0.75
POTENTIAL PROFIT(max)=16% B/E=$109.30


__________________________________________________________________

WLP - WellPoint Health  $113.90  *** Anthem Deal Approved! ***

WellPoint Health Networks (NYSE:WLP) is a managed healthcare
company with nearly 15 million medical members and almost 50
million specialty members.  Through its subsidiaries, the firm
offers network-based managed care plans to the large and small
employer, individual, Medicaid and senior markets.  Its managed
care plans include preferred provider organizations, health
maintenance organizations, point-of-service plans, other hybrid
plans and traditional indemnity plans.  In addition, WellPoint
offers managed care services, including underwriting, actuarial
services, networking, medical management and claims processing.
It also provides pharmacy benefits management, dental, vision,
life insurance, preventive care, disability insurance, COBRA,
behavioral health, and flexible benefits account administration.

WLP - WellPoint Health  $113.90

PLAY (conservative - bullish/credit spread):

BUY  PUT  DEC-100.00  WLP-XT  OI=121  ASK=$0.65
SELL PUT  DEC-105.00  WLP-XA  OI=32   BID=$1.10
INITIAL NET-CREDIT TARGET=$0.50-$0.55
POTENTIAL PROFIT(max)=11% B/E=$104.50



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

BEARISH PLAYS - CREDIT SPREADS

All of these positions are favorable candidates for "bear-call"
credit spreads, based on the current price or trading range of
the underlying issue and its recent technical history or trend.
The probability of profit from these positions may be higher
than other plays in the same strategy, due to disparities in
option pricing.  However, current news and market sentiment will
have an effect on these issues, so review each play individually
and make your own decision about its future outcome.

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

ERTS - Electronic Arts  $46.97  *** In A Trading Range? ***

Electronic Arts (NASDAQ:ERTS) develops, markets, publishes and
distributes interactive software games that are playable by
consumers on platforms, including home videogame machines, such
as the Sony PlayStation 2, Microsoft Xbox, Nintendo GameCube and
Sony PlayStation consoles; personal computers (PCs); handheld
game machines, such as the Game Boy Advance, and online, over
the Internet and other online networks.  The products designed
to play on consoles and handhelds, are published under license
from the manufacturers of these platforms, such as Sony for the
PlayStation and PlayStation 2, Microsoft for the Xbox and also
Nintendo for the Nintendo GameCube and Game Boy Advance.  The
company pays a fee to the console manufacturers for the right
to publish products on their platforms.

ERTS - Electronic Arts  $46.97

PLAY (conservative - bearish/credit spread):

BUY  CALL  DEC-55.00  EZQ-LK  OI=5245  ASK=$0.15
SELL CALL  DEC-50.00  EZQ-LJ  OI=4301  BID=$0.75
INITIAL NET-CREDIT TARGET=$0.65-$0.70
POTENTIAL PROFIT(max)=15% B/E=$50.65


__________________________________________________________________

GM - General Motors  $39.97  *** Downtrend Intact! ***

General Motors (NYSE:GM) participates in the automotive industry
through various activities.  The company designs, manufactures
and/or markets vehicles, primarily in North America, under the
following nameplates: Chevrolet, Pontiac, GMC, Oldsmobile, Buick,
Cadillac, Saturn and Hummer.  The company offers vehicles to its
international customers under the following nameplates: Opel,
Vauxhall, Holden, Saab, Buick, Chevrolet, GMC and Cadillac.  GM's
Financing and Insurance Operations primarily relate to General
Motors Acceptance Corporation, which provides consumer vehicle
financing, automotive dealership and other commercial financing,
residential and commercial mortgage services, automobile service
contracts, personal automobile insurance coverage and selected
commercial insurance coverage.

GM - General Motors  $39.97

PLAY (conservative - bearish/credit spread):

BUY  CALL  DEC-45.00  GM-LI  OI=12990  ASK=$0.15
SELL CALL  DEC-42.50  GM-LV  OI=13830  BID=$0.40
INITIAL NET-CREDIT TARGET=$0.30-$0.35
POTENTIAL PROFIT(max)=14% B/E=$42.80



~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
STRADDLES AND STRANGLES
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Based on analysis of the historical option pricing and technical
background, these positions meet the fundamental criteria for
favorable volatility-based plays.
_________________________________________________________________

No straddles or strangles today...

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

SEE DISCLAIMER - SECTION 1

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


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

All of these issues have robust option premiums and favorable
technical indications.  However, current news and events, as
well as market sentiment, will have an effect on these stocks
so review each position thoroughly and make your own decision
about its outcome.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SUMMARY OF CURRENT POSITIONS - AS OF 11/07/04
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following summary is a reasonable account of the positions
previously offered in this section.  However, no representation
is being made as to the actual performance of a position and in
fact, there are frequently large differences between the summary
results and those of our subscribers, due to the variety of ways
in which each play can be opened, closed, and/or adjusted.  In
addition, the summary might not be completely representative of
the manner in which the average trader would react to changing
conditions in a position and to the options market in general.
The editor of this section does not take actual positions in any
published plays and the summary comments are simply a service to
help new traders understand when positions might be opened and
closed.  In most cases, actions taken based on the commentary
would be far too late to be effective, thus it is not intended
as a substitute for personal trade management nor does it in
any way replace your duty to diligently monitor and manage the
positions in your portfolio.


MONTHLY YIELD FOR UNCOVERED OPTIONS: MAXIMUM & SIMPLE

The Maximum Yield (listed in the summary and with "naked" option
selling plays) is the greatest possible profit available in the
position.  This amount, expressed as a percentage, is based on
the initial margin requirement as determined by the Board of
Governors of the Federal Reserve, the U.S. options markets and
other self-regulatory organizations.  Although increased margin
requirements may be imposed either generally or in individual
cases by various brokerage firms, our calculations use the widely
accepted margin formulas from the Chicago Board Options Exchange.
The "Simple Yield" is based on the cost of the underlying issue
(in the event of assignment), including the premium from the sold
option, thus it reflects the maximum potential loss in the trade.
  
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 
NAKED PUTS

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

SIMG     NOV    12.50   12.10   14.18    0.40   5.95%   3.31%
NCRX     NOV    25.00   24.30   26.26    0.70   5.52%   2.88%
ANF      NOV    32.50   32.10   42.67    0.40   2.78%   1.25%
STTX     NOV    25.00   24.60   26.18    0.40   3.89%   1.63%
SNDA     NOV    22.50   21.85   30.50    0.65   7.78%   2.97%
IDBE     NOV    12.50   12.15   17.11    0.35   6.44%   2.88%
BVF      NOV    17.50   17.05   17.36    0.31   3.72%   2.64%
USG      NOV    17.50   16.90   28.80    0.60   6.84%   3.55%
SNDA     NOV    25.00   24.50   30.50    0.50   5.67%   2.04%
WEBX     NOV    20.00   19.60   23.63    0.40   5.75%   2.04%
ENER     NOV    15.00   14.40   17.94    0.60   8.11%   4.17%
DRIV     NOV    25.00   24.35   33.48    0.65   6.81%   2.67%
PLMD     NOV    30.00   29.55   35.05    0.45   3.33%   1.52%
CNCT     NOV    22.50   22.10   27.42    0.40   4.68%   1.81%
CCBI     NOV    22.50   21.90   22.01    0.11   1.01%   2.74%
EYET     NOV    35.00   34.45   42.48    0.55   5.17%   1.60%
USG      NOV    17.50   17.15   28.80    0.35   6.12%   2.04%
RIGL     NOV    22.50   21.85   26.00    0.65   8.14%   2.97%
MCD      NOV    27.50   27.15   30.06    0.35   2.99%   1.29%
FARO     NOV    20.00   19.60   24.86    0.40   5.67%   2.04%
NOVN     NOV    20.00   19.60   23.87    0.40   4.88%   2.04%
VRSN     NOV    20.00   19.65   27.53    0.35   4.40%   1.78%
SSNC     NOV    20.00   19.55   22.00    0.45   5.71%   2.30%
CKFR     NOV    30.00   29.40   31.66    0.60   4.91%   2.04%
OSTK     NOV    35.00   34.60   58.40    0.40   4.10%   1.16%
GBBK     NOV    30.00   29.40   31.12    0.60   5.01%   2.04%
KRON     NOV    45.00   44.50   49.56    0.50   3.10%   1.12%
DITC     NOV    20.00   19.70   17.15   (2.55)  0.00%   0.00% *
MRVL     NOV    23.75   23.35   28.22    0.40   5.59%   1.71%
AGIX     NOV    20.00   19.70   32.57    0.30   4.50%   1.52%
AFCO     NOV    20.00   19.55   23.69    0.45   6.68%   2.30%
TSRA     NOV    25.00   24.70   31.00    0.30   4.18%   1.21%
SRDX     NOV    25.00   24.50   27.96    0.50   5.79%   2.04%
ELN      NOV    22.50   22.05   27.88    0.45   6.53%   2.04%
XMSR     NOV    30.00   29.45   33.93    0.55   5.48%   1.87%
ENDP     NOV    20.00   19.55   20.89    0.45   6.72%   2.30%
LNG      NOV    20.00   19.45   26.68    0.55   8.61%   2.83%
USG      NOV    20.00   19.50   28.80    0.50   8.45%   2.56%
EDS      NOV    20.00   19.65   20.85    0.35   5.49%   1.78%
MANT     NOV    17.50   17.05   22.50    0.45   9.65%   2.64%
NTMD     NOV    17.50   17.25   25.68    0.25   6.12%   1.45%
A        NOV    22.50   22.10   25.21    0.40   5.86%   1.81%
SCHN     NOV    26.60   26.15   31.96    0.45   5.81%   1.72%
CYTC     NOV    25.00   24.60   25.69    0.40   5.27%   1.63%
USG      NOV    20.00   19.70   28.80    0.30   6.65%   1.52%
TSRA     NOV    22.50   22.30   31.00    0.20   5.12%   0.90%
FARO     NOV    22.50   22.10   24.86    0.40   7.61%   1.81%
NTAP     NOV    22.50   22.15   25.69    0.35   6.52%   1.58%
VAR      NOV    37.50   37.15   39.98    0.35   3.87%   0.94%
DOX      NOV    22.50   22.25   26.00    0.25   5.00%   1.12%
ROST     NOV    25.00   24.70   27.25    0.30   4.78%   1.21%
JNPR     NOV    25.00   24.70   27.84    0.30   4.89%   1.21%
LNG      NOV    22.50   22.15   26.68    0.35   8.04%   1.58%
SFNT     NOV    30.00   29.60   33.00    0.40   6.06%   1.35%
ELN      NOV    22.50   22.25   27.88    0.25   5.96%   1.12%
YHOO     NOV    35.00   34.60   36.35    0.40   5.30%   1.16%
XMSR     NOV    30.00   29.65   33.93    0.35   5.65%   1.18%
SHPGY    NOV    27.50   27.15   28.51    0.35   5.67%   1.29%
MRVL     NOV    25.00   24.65   28.22    0.35   7.34%   1.42%
ANF      NOV    35.00   34.55   42.67    0.45   6.35%   1.30%
  
Ditech (NASDAQ:DITC) was moved to our "bearish" candidate list
on Tuesday, and conservative traders should have closed the
position for a smaller than published loss.  Although currently
profitable, positions in Palomar Medical (NASDAQ:PMTI), Energy
Conversion Devices (NASDAQ:ENER); at the $17.50 strike, and
Telular (NASDAQ:WRLS) have previously been closed to limit
potential losses.


NAKED CALLS

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

BRCM     NOV    35.00   35.35   28.15    0.35   4.44%   0.99%
LLTC     NOV    40.00   40.60   38.28    0.60   3.74%   1.48%
SINA     NOV    35.00   35.35   32.94    0.35   4.56%   0.99%
IVX      NOV    20.00   20.75   14.21    0.75   9.51%   3.61%
PLMO     NOV    40.00   40.45   32.80    0.45   5.62%   1.11%
SLXP     NOV    20.00   20.65   15.88    0.65   8.83%   3.15%
AOC      NOV    25.00   25.25   20.60    0.25   3.93%   0.99%
CVH      NOV    50.00   50.60   44.01    0.60   4.46%   1.19%
ACF      NOV    20.00   20.70   20.02    0.68   8.07%   3.38%
DSPG     NOV    22.50   22.85   21.16    0.35   6.23%   1.53%
RNR      NOV    50.00   50.65   47.86    0.65   3.51%   1.28%
X        NOV    40.00   40.25   40.41   (0.16)  0.00%   0.00%
GIVN     NOV    40.00   40.45   30.12    0.45   5.86%   1.11%
ARW      NOV    25.00   25.40   24.57    0.40   5.82%   1.57%
TACT     NOV    30.00   30.50   24.97    0.50  10.16%   1.64%
NVTL     NOV    25.00   25.20   20.13    0.20   6.99%   0.79%
CBT      NOV    35.00   35.50   35.00    0.50   5.76%   1.41%
ASKJ     NOV    30.00   30.35   25.87    0.35   8.26%   1.15%
LSS      NOV    30.00   30.20   26.55    0.20   6.51%   0.66%
DITC     NOV    25.00   25.25   17.15    0.25   8.20%   0.99%
DISH     NOV    32.50   32.90   30.30    0.40   6.30%   1.22%

Positions in Ii-Vi (NASDAQ:IIVI), Lam Research (NASDAQ:LRCX),
Hyperion Solutions (NASDAQ:HYSL), UCI Inc. (NASDAQ:UICI), and
United Surgical (NASDAQ:USPI) have previously been closed to
limit potential losses.  Among the "watch" list issues are:
Arrow Electronics (NYSE:ARW), Americredit (NYSE:ACF), Cabot
(NYSE:CBT), DSP Group (NASDAQ:DSPG), and U.S. Steel (NYSE:X).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NEW POSITIONS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This following group of plays is simply a list of candidates to
supplement your search for profitable trading positions.  As with
any new investment, you must decide if the selections meet your
criteria for potential plays.  Only you can know what strategies
are suitable for your personal skill level, risk-reward tolerance
and portfolio outlook.  In addition, we recommend that you avoid
any trading techniques in which you are not completely comfortable
with the potential capital loss, the necessary adjustments, and
the common entry-exit strategies.

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

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered puts entails considerable financial risk,
far more than the initial margin or collateral required to open
a position.  The maximum financial obligation for the sale of a
naked put is the strike price (of the underlying stock) that is
sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of puts should have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  In addition, there is one very important rule when using
this strategy: Don't sell puts on stocks that you don't want to
own!  Why?  Because stocks occasionally experience catastrophic
declines, exponentially increasing the margin maintenance and
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock's price falls.
Many professional traders suggest closing the position when the
underlying share value moves below the sold strike, or using a
"buy-to-close" stop order at a price that is no more than twice
the original premium received from the sold option.

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

NEW NAKED-PUT CANDIDATES

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

UTHR   36.28  DEC 25.00  FUH-XE 0.95 2383 24.05  39   3.1%   9.0%
NFLD   17.24  DEC 15.00  DHQ-XC 0.55  210 14.45  39   3.0%   8.2%
SEAC   19.90  DEC 17.50  UEG-XW 0.55   48 16.95  39   2.5%   7.0%
IFLO   17.26  DEC 15.00  QIF-XC 0.45   98 14.55  39   2.4%   6.9%
ADLR   13.94  DEC 12.50  UAH-XV 0.40    4 12.10  39   2.6%   6.9%
VTIV   19.20  DEC 17.50  QBP-XW 0.45   14 17.05  39   2.1%   5.5%
MYGN   19.32  DEC 17.50  GSQ-XW 0.45   44 17.05  39   2.1%   5.5%
RIGL   27.60  DEC 20.00  QRG-XD 0.30   35 19.70  39   1.2%   4.0%

Abbreviations:

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

UTHR - United Therapeutics  $36.28  *** Remodulin Speculation ***

United Therapeutics (NASDAQ:UTHR) is a biotechnology company
focused on the development and commercialization of therapeutics
to treat chronic and life-threatening diseases in 3 therapeutic
areas: cardiovascular medicine, infectious disease and oncology.
It has 5 therapeutic platforms: Prostacyclin analogs are stable
synthetic forms of a molecule that has effects on blood-vessel
health and function; Remodulin has been approved in the United
States for the treatment of pulmonary arterial hypertension in
patients with New York Heart Association Class II-IV symptoms; 
Immunotherapeutic monoclonal antibodies are antibodies that
activate patients' immune systems to treat cancer; Glycobiology
anti-viral agents are a class of small molecules that may be
effective as an oral therapy for hepatitis C or other infections,
and Telemedicine involves portable digital devices that enable
physicians to remotely monitor patients' bodily measurements.

UTHR - United Therapeutics  $36.28

DEC 25.00 FUH-XE LB=0.95 OI=2383 CB=24.05 DE=39 TY=3.1% MY=9.0%


_________________________________________________________________

NFLD - Northfield Labs  $17.24  *** Rally Mode! ***

Northfield Laboratories (NASDAQ:NFLD) is engaged in the production
of a safe and effective alternative to transfused blood for use in
the treatment of acute blood loss.  Its PolyHeme blood substitute
product is a solution of chemically modified hemoglobin derived
from human blood.  PolyHeme simultaneously restores lost blood 
volume and hemoglobin levels and is designed for rapid, massive 
infusion.  PolyHeme requires no cross-matching and is therefore
immediately available and compatible with all blood types.  It
has an extended shelf life compared to blood.  Northfield Labs
purchases indated and outdated blood from The American Red Cross 
and Blood Centers of America for use as the starting material for
PolyHeme.  It uses a proprietary process of separation, filtration
and chemical modification to produce PolyHeme.

NFLD - Northfield Labs  $17.24

DEC 15.00 DHQ-XC LB=0.55 OI=210 CB=14.45 DE=39 TY=3.0% MY=8.2%


_________________________________________________________________

SEAC - SeaChange International  $19.90  *** New 2004 High ***

SeaChange International (NASDAQ:SEAC) is a developer, builder,
and marketer of video storage systems that automate the
management and distribution of long-form video streams, such
as movies or other feature presentations, and short-form video
streams, such as advertisements.  The company's digital video
systems provide storage and retrieval capabilities, multichannel
content delivery and highly-automated information and order
processing.

SEAC - SeaChange International  $19.90

DEC 17.50 UEG-XW LB=0.55 OI=48 CB=16.95 DE=39 TY=2.5% MY=7.0%


_________________________________________________________________

IFLO - I-Flow  $17.26  *** Medicare Coverage For PainBuster! ***

I-Flow (NASDAQ:IFLO) manufactures a line of compact, portable
infusion pumps, catheters and pain kits that inject medication
directly to the wound site, and administer local anesthetics,
chemotherapies, antibiotics, diagnostic agents, nutritional
supplements and other medications.  I-Flow sells and ships its
products throughout the United States, Canada, Europe, Asia,
Mexico, Brazil, Australia, New Zealand and the Middle East.
Through InfuSystem, a wholly owned subsidiary, I-Flow is also
engaged in the rental of infusion pumps on a month-to-month
basis for the treatment of cancer.

IFLO - I-Flow  $17.26

DEC 15.00 QIF-XC LB=0.45 OI=98 CB=14.55 DE=39 TY=2.4% MY=6.9%


_________________________________________________________________

ADLR - Adolor  $13.94  *** Bottom-Fishing! ***

Adolor (NASDAQ:ADLR) is a biopharmaceutical firm specializing in
the discovery, development and commercialization of prescription
pain management products.  Entereg (alvimopan), its lead product
candidate, is being developed to manage postoperative ileus, a
gastrointestinal side effect.  Entereg is being evaluated as an
oral dosage form for patients undergoing certain types of major
abdominal surgery.  It is also being developed to manage opioid
bowel dysfunction, which can negatively impact the quality of
life of patients using opioid analgesic products.  Entereg is
also being evaluated as a treatment for chronic constipation.
The company's next product candidate is a sterile lidocaine
patch in clinical development for treating postoperative
incisional pain.

ADLR - Adolor  $13.94

DEC 12.50 UAH-XV LB=0.40 OI=4 CB=12.10 DE=39 TY=2.6% MY=6.9%


_________________________________________________________________

VTIV - Ventiv Health  $19.20  *** Next Leg Up? ***

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

VTIV - Ventiv Health  $19.20

DEC 17.50 QBP-XW LB=0.45 OI=14 CB=17.05 DE=39 TY=2.1% MY=5.5%


_________________________________________________________________

MYGN - Myriad Genetics  $19.32  *** Favorable Earnings? ***

Myriad Genetics (NASDAQ:MYGN) is a biopharmaceutical company
focused on the development of novel therapeutic products and
the development and marketing of predictive medicine products.
The company's researchers have made important discoveries in
the fields of cancer, Alzheimer's disease, viral diseases (such
as HIV), depression and obesity.  Flurizan, the company's lead
therapeutic candidate for the treatment of prostate cancer, is
in a large, multi-center human clinical trial.  Myriad is also
conducting a Phase I human clinical trial for the evaluation of
Flurizan for the treatment of Alzheimer's disease.

MYGN - Myriad Genetics  $19.32

DEC 17.50 GSQ-XW LB=0.45 OI=44 CB=17.05 DE=39 TY=2.1% MY=5.5%


_________________________________________________________________

RIGL - Rigel Pharmaceuticals  $27.60  *** Drug Speculation ***

Rigel Pharmaceuticals (NASDAQ:RIGL) is engaged in the discovery
and development of a range of small molecule product candidates
for unmet medical needs.  The company is developing a portfolio
of product candidates and plans to take these candidates through
Phase II clinical trials, after which, it will seek partners for
completion of clinical trials, regulatory approval and marketing.
The company currently has three initial development programs:
allergy/asthma, hepatitis C and rheumatoid arthritis.

RIGL - Rigel Pharmaceuticals  $27.60

DEC 20.00 QRG-XD LB=0.30 OI=35 CB=19.70 DE=39 TY=1.2% MY=4.0% TS



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

BEARISH PLAYS - NAKED CALLS

Based on analysis of option pricing and the underlying stock's
technical background, these positions meet our fundamental
criteria for bearish "premium-selling" strategies.  Each issue
has robust option premiums, a well-defined resistance area and
a high probability of remaining below the target strike prices.
As with any recommendations, these positions should be carefully
evaluated for portfolio suitability and reviewed with regard to
your strategic approach and personal trading style.

WARNING: THE RISK IN SELLING UNCOVERED OPTIONS IS SUBSTANTIAL!

The sale of uncovered calls entails considerable financial risk,
far more than the initial margin or collateral required to open
the position.  The maximum financial obligation for the sale of a
naked option is the strike price (of the underlying stock) that
is sold.  Although this obligation is reduced by the premium from
the sale of the option, a writer of options must have the cash or
collateral equivalent of the sold strike price in reserve at all
times.  The simple fact is: stocks often experience large price
swings, exponentially increasing the margin maintenance and very
possibly causing a devastating shortfall in your portfolio.  It
is also important that you consider using trading stops on naked
option positions to help limit losses when a stock price moves in
a volatile manner.  Many professional traders suggest closing the
position when the underlying share value moves beyond the sold
strike, or using a "buy-to-close" stop order at a price that is
no more than twice the original premium received from the sold
option.

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

FOSL - Fossil  $27.76  *** Sales Warning = Sell-Off!  ***

Fossil (NASDAQ:FOSL) designs, develops, markets and distributes
contemporary, fashion watches and accessories.  The company's
brands in its line of fashion watches include Fossil (which it
developed), Relic, Zodiac, Burberry, Diesel, DKNY and Emporio
Armani.  It offers a range of accessories including small leather
goods, belts, handbags and sunglasses under the Fossil and Relic
brands, jewelry under the Fossil and Emporio Armani brands and
Fossil brand apparel.

FOSL - Fossil  $27.76

PLAY (sell naked call):

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

SELL CALL  DEC 30    FUA-LF     205   0.50  30.50   4.2%   1.6%


_________________________________________________________________

MNST - Monster Worldwide  $27.81  *** Premium-Selling Only! ***

Monster Worldwide (NASDAQ:MNST), formerly known as TMP Worldwide,
is a global provider of career solutions.  The company, through
its flagship Interactive product, Monster (www.monster.com), is
engaged in online career management. Monster Worldwide is also a
worldwide recruitment advertising agency through its Advertising
& Communications division and a yellow pages advertising agency
through its Directional Marketing division.
   
MNST - Monster Worldwide  $27.81

PLAY (sell naked call):

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

SELL CALL  DEC 30    BSQ-LF    7660   0.60  30.60   4.9%   2.0%


_________________________________________________________________

SLAB - Silicon Laboratories  $30.94  *** New Trading Range? ***

Silicon Labs (NASDAQ:SLAB) designs and develops proprietary,
analog-intensive, mixed-signal integrated circuits for use in
a range of applications.  The firm groups its products into
two major categories: mobile handset products and broad-based,
mixed-signal products.  Its mobile handset products include the
Aero transceivers and radio frequency synthesizers.  Its broad
based, mixed-signal products include silicon Direct Access
Arrangement, ISOmodem, ProSLIC, digital subscriber line analog
front end, clock chips, SiPHY, optical transceivers and clock
and data recovery ICs, general purpose RF Synthesizers for non
handset applications, as well as the Cygnal microcontroller
family of products.

SLAB - Silicon Laboratories  $30.94

PLAY (sell naked call):

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

SELL CALL  DEC 35    QFJ-LG    1526   0.55  35.55   4.8%   1.5%



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

SEE DISCLAIMER - SECTION 1

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


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