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Daily Newsletter, Wednesday, 11/24/2004

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The Option Investor Newsletter                Wednesday 11-24-2004
Copyright 2004, All rights reserved.                        1 of 2
Redistribution in any form strictly prohibited.


In Section One:

Wrap: Turkey Run 
Futures Wrap: See Note
Index Trader Wrap: Flamethrower 
Combos/Straddles: Give Thanks Everyday -- Not Just Once A Year 


Posted online for subscribers at http://www.OptionInvestor.com
******************************************************************
MARKET WRAP  (view in courier font for table alignment)
******************************************************************
      11-24-2004           High     Low     Volume   Adv/Dcl
DJIA    10520.31 + 27.71 10527.40 10482.26 1.43 bln 2033/ 775
NASDAQ   2102.54 + 18.26  2103.80  2090.20 1.62 bln 1869/1139
S&P 100   562.70 +  1.41   563.55   561.22   Totals 3902/1914
S&P 500  1181.76 +  4.82  1182.46  1176.94
SOX       433.65 +  3.94   435.59   430.75
RUS 2000  629.50 +  4.97   630.29   624.41
DJ TRANS 3647.59 + 26.51  3651.41  3621.04
VIX        12.70 +  0.05    12.89    12.56
VXO (VIX-O)12.97 -  0.11    13.48    12.82
VXN        17.88 -  0.55    18.28    17.73
Total Volume 3,055M
Total UpVol  2,060M
Total DnVol    940M
Total Adv  3902
Total Dcl  1914
52wk Highs  575 
52wk Lows    26
TRIN       1.03
PUT/CALL   0.61
******************************************************************

Turkey Run
Jonathan Levinson

The markets opened and traded as scheduled, but hearts and minds 
appeared more acutely focused on the promise of turkey and 
trimmings. Light volume and slight ranges dominated the indices 
ahead of the (almost) long weekend.

Other than the absence of volume, it was a solidly positive day, 
as advancing volume more than doubled declining volume on the 
NYSE and almost did so on the Nasdaq.  There were 396 new NYSE 
highs for 3 new lows, 210:18 on the Nasdaq.  In light of these 
internals, it's surprising that the indices didn't advance 
further.



Daily Dow Chart


The Dow added 27.71 points to close at 10520.31, above this 
week's high but below resistance on the way to last week's high.  
This week has seen the first steps of an overdue daily cycle 
downphase, but without confirming followthrough.  Support is 
where indicated at 10425-30, 10360 and 10240-50.  A close below 
the 10425 level should be enough to get the daily cycles pointed 
more unambiguously south, but given the close near the highs 
today and the certain light, retail-dominated volume expected on 
Friday, bears will most likely have to wait for next week to see 
it.


Daily S&P 500 Chart


The SPX gained 4.82 to close at 1181.76.  The cycle picture 
matches that on the Dow, and bearish traders need a closing break 
of 1168 to be confirmed with a break of 1160 support.  


Daily Nasdaq Chart


The Nasdaq was relatively stronger than its peers, gaining .87% 
or 18.2 points to close at 2102.5.  The rally highs are spitting 
distance away, and Friday could see a light volume, high anxiety 
retest.  The daily cycle oscillators are trying to put together 
an upside whipsaw on today's gains.  The trouble with light 
volume moves is that they're more susceptible to reversal when 
volume returns.  While price is the only arbiter for traders, 
light volume price breakouts are the most likely to reverse, and 
for that reason we need to be careful in the event that the bulls 
pick up on Friday where they left off today.


Weekly TNX Chart


The Mortgage Bankers Association reported that its Mortgage 
Index, which measures weekly application for home mortgages in 
the US, declined 5.7% during the week ending November 19, 
engulfing the previous week's 4.3% gain.  This index can be very 
volatile from week to week, and the 5.7% drop would be 
uninteresting except that it occurred alongside a decline in 
interest rates, with the rate for a 30-year fixed mortgage down 
from 5.7% to 5.64% during the same period.  The Refi Index, which 
measures refinancing activity, declined 8.3%, while the Purchase 
Index lost 3.5%, posting its third consecutive week of declines.

Ten year note yields ($TNX) declined last week as well, with what 
appears to be a neutral pennant printing during the past 3 weeks 
in the early stages of the recently-commenced upphase.  If this
oscillator upphase is for real, the pennant should break to 
the upside, targeting next weekly resistance in the 4.4%-4.5% 
area.  The pennant of the past few weeks has reflected itself as 
a downphase in the shorter (ie daily) timeframes, which I've been
following nightly in the Futures Wraps.  That downphase has so 
far been corrective, and so long as the current consolidation 
does not violate 4.0% support, TNX bulls/bond bears should have a 
shot at the year highs above 4.8% on a break above 4.5%.  For the 
day, TNX finished higher by 1.1 bps at 4.195%.


Weekly chart of Crude oil


The Energy Department reported that crude oil inventories rose in 
the week ending November 19th by 100,000 barrels to 292.4M, their 
9th consecutive weekly rise.  Distillate supplies rose 1M barrels 
to 115.6M, while gasoline stocks rose 1.8M barrels to 202.7M 
barrels.  Later this morning, the American Petroleum Institute 
reported its own inventory figures, announcing that distillate 
inventories rose 1.8M barrels to 117.6M, crude oil inventories 
declined by 1.2M barrels to 293.2M, and gasoline rose 2.9M to 
204.1M barrels.  The Energy Department's and the API's figures 
are often at odds, as occurred with this week's crude oil data, 
and the disagreement as to whether crude stocks rose or fell is 
not particularly noteworthy.

Crude oil traded both sides of unchanged, bouncing from a low of 
47.775 per barrel to print an afternoon high at 49.65 and closing 
higher by 1.02% at 49.45.  The higher range so far this week sets 
up last week's doji hammer as a potential reversal candle.  
However, in light of the ongoing weekly cycle downphase 
(launching as it did from a bearish stochastic divergence), oil 
bulls will need to be vigilant for a lower bounce high, 
particularly in the 51-52 resistance zone.

At 8:30AM, the Labor Department released the initial claims data 
for the week ending November 20th, with 323,000 new claims for 
state unemployment benefits reported.  This figure was down from 
the previous week's 335K reading, and was lower than consensus 
estimates for 335K as well.  Continuing jobless claims declined 
29,000 to 2.76M, the lowest level since May 2001.  The 4-week 
moving average of initial claims also posted an encouraging drop 
of 6,750 to 332K, which is the lowest level since November 2000. 
The report indicated that 337K new jobs were added in October.

Also released at 8:30 was the Durable Orders report.  The 
Commerce Department reported that orders for durable goods fell 
0.4% in October, missing analyst expectations for a 0.5% rise.  
The data would have been even worse if not for strong military 
demand, as non-defense durable goods fell 1.5%, posting the sixth 
consecutive decline in 7 months.  By comparison, orders for 
military aircraft launched by 35.2% in October.  Ex-transport, 
durable orders were down 0.7%.   This bleak picture was somewhat 
mitigated by upward revisions to September's durable orders 
number from .2% to .9%.  

At 9:45AM, the University of Michigan announced that consumer 
sentiment as measured by the Umich sentiment index fell to 92.8 
in late November from its previous 95.5 reading released earlier 
this month.  The number fell short of analyst expectations for 
96, but remained above the October level of 91.7.

At 10AM, the Conference Board's Help Wanted Index, which tracks 
newspaper help-wanted ads in the US, rose to 37 in October from 
its September level of 36.

Also at 10AM, the Commerce Department reported a rise in New Home 
Sales of .2% to 1.226M units in October, the third highest level 
on record.  The data exceed analyst expectations by 26,000 units.  
The report further revealed an increase of 1% in the number of 
homes offered, which equates to 4.1 months' supply.  The median 
price of a new home rose from $203,300 in September to $221,800 
in October.

In corporate news, GE announced its agreement to purchase ION, 
manufacturer of water purification devices, for a price of $44 
per share comprised of 1.1B in cash and the assumption of ION's 
debt.  The $44/share purchase price represents a 48% premium on 
ION's previous closing price.  ION closed higher by 45.51% at 
43.29 while GE lost .42% to close at 35.66.

Insurer and financial manager AIG announced its agreement to pay 
126M in fines to settle ongoing federal investigations relating 
to its dealings with Brightpoint and PNC Financial Services Grp.  
The 126M figure is comprised of 46M to be paid to the SEC, and 
80M to the US Department of Justice.  AIG is not out of the 
woods, however, as a Wall Street Journal article reported that 
federal prosecutors are investigating allegations as to whether 
chairman Maurice Greenberg attempted to manipulate AIG's share 
price in 2001.  The alleged scheme would have sought to achieve a 
higher price for the stock in order to save money on its 23B deal 
to acquire American General.  AIG closed lower by 3 cents at 
64.17.

Overall it was a quiet day, with the treasury market closing 
early for the holiday.  The US Dollar got crushed to new lows for 
its multiyear decline, as commodities and foreign currencies 
rallied to new multiyear highs.  In the case of the CRB, it was 
nearly a 25 year high above 291.5.  In this environment, it's 
surprising that the degree of dollar selling hasn't corresponded 
with more weakness in treasury bonds, as the ten year yield has 
continued to mark time in the low 4% area.  As I've discussed at 
length in the Futures Wraps this year, the decline in the dollar 
has often coincided with rallies in everything else denominated 
in those dollars.  

Aggressive investors have sought protection from the depreciating 
dollar in commodities, real estate, metals, and equities.  Until 
we see pronounced selling anywhere but in the dollar, there's 
little reason to expect these intermarket trends to reverse.  
While the past month's rally in the indices looks toppy and ready 
for a correction, traders will want to see at least a few days' 
worth of weakness before assuming that the trend is changing.  
Recall that over the past month, we've seen 3 days' worth of 
weakness, and only one occasion during which there were 2 
consecutive days' worth of lower lows and lower highs.  If the 
markets feel toppy to you (as they do to me), ask yourself 
whether you believe that the USD Index is a buy at these levels-  
equities look almost as overbought on a daily chart as the USD 
Index looks oversold.  So far, the trend has maintained the 
dollar in opposition to dollar-denominated equities and while no 
trend is bulletproof, it's best to follow it as long as it lasts.

With the promise of a light volume session when trading resumes 
on Friday, traders are best to be mindful of the propensity of 
low volume markets to frustrate, obfuscate and whipsaw.  Have a 
safe and happy Thanksgiving.

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FUTURES MARKETS
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Futures wrap is not emailed due to the excessive number of charts.
It may be read on the website at this address.
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INDEX TRADER WRAP
*****************

Flamethrower

In what seemed like a very quiet pre-holiday session of trade, a 
stealth rally took hold among the major indices, but an all-out 
explosion took hold in the natural gas futures markets, which 
traders attributed as front-month contract expiration.

Yes, there was news that Viking Energy Royalty Trust, a Canadian 
investor in oil and natural-gas assets, agreed to buy Calpine 
Natural Gas Trust for $320.9 million (C$379 million), but that 
should in now way have had December Natural Gas futures (ng04z) 
$7.976 +17.41% surging more than $1.00.

The recently spotlighted Natural Gas Index (XNG.X) 295.62 +1.97% 
(see Monday's Index Trader Wrap) surged to its fourth-consecutive 
session all-time high with El Paso Corp. (NYSE:EP) $10.34 +5.72% 
and Williams Companies (NYSE:WMB) $16.44 +4.38% leading the 
sector's gains.

U.S. Market Watch - 11/24/04 Close - Major Energy Futures

 

It's hard to prove that front-month expiration was entirely 
responsible for the notable DIVERGENCE in natural gas futures 
contracts, but we all know that some weird things can happen as 
an expiration nears.  Today's EIA weekly inventory report, which 
encompasses crude oil, heating oil and unleaded gasoline found a 
much smaller response.

In a single day, Natural Gas futures erased what looks to have 
been a rather flat 5-sessions of trade.

In today's 03:15 PM EST update, I was scrambling to get a point 
and figure chart of January Natural Gas futures (ng05f) posted, 
but my analysis to look for resistance near the $9.00-$9.10 area 
should hold, if what we did see today was truly just some front-
month repositioning.  

Still, I get the impression that today's move in natural gas was 
a "surprise" to many, and buyers kept piling on toward today's 
settlement.

Energy futures markets are closed for trading on Thursday and 
Friday at the NYMEX, where next settlement won't be until Monday.  
The NYMEX did announce on Monday that it will permit trading of 
Brent/WTI spreads on its satellite trading floor in Dublin on 
Thursday and Friday, but I don't think equity traders here in the 
U.S. would find too much of an impact from energy markets in 
Friday's half-session.

Market Snapshot / Internals - 11/25/04 Close

 

The day before and after Thanksgiving is usually a day I write 
off as meaningless in the broader scope of things.  As I've 
discussed in years past, and again this week, things tend to be 
more bullish as any "sell side" activity has taken place earlier 
in the week, where the head honchos either don't show up for work 
on Wednesday, or take early leave at lunchtime.  Today's 
internals at the a/d line, if not the NH/NL indications may give 
some validity to this line of thinking.  

TRIN stayed pretty much around the 1.0 level, and with the a/d 
line improving throughout the session, I get the feeling that 
there wasn't a lot of sell decisions being made.

Volumes at the more institutionally held NYSE were the lightest 
this month, and lowest since October 11.

The lights were on (green), but nobody was really home.

U.S. Market Watch - 11/24/04 Close

 

It took every bit of bullish manipulation to get the 
Pharmaceutical Index (DRG.X) 298.77 +0.01% into the green by 
today's close, but all sectors ended in positive territory.

As the month of November grows old, the Stock Trader's Almanac 
notes some seasonally bullish tendencies for Oil and Gold/Silver.

I can't say why, but I'm growing a little jittery toward being 
long gold equities right now.  I've noted in the past that it can 
be a very bad sign when the equity your trading long is lagging 
the underlying commodity.  With the dollar looking very oversold 
and the U.S. Dollar Index (dx00y) now far-exceeding its bearish 
vertical count of 92.00 (0.20 box size) and building a looooong 
column of "O" from 92.60 to 88.80, its rare to not see some type 
of correction when the point and figure chart watcher sees more 
than 18 O's.

I will also note that I had written some covered calls on some 
Newmont Mining (NYSE:NEM) $47.86 -0.99% at $47.50 last week, that 
I had purchased in the low $40's this summer.  I can't say I'm 
overly disappointed at this point in time.  Something doesn't 
feel/look right that NEM can't get above $50 despite the dollar 
getting crushed, and gold itself having broken to new multi-year, 
and 52-week highs earlier this month.

Pivot Matrix - 

 

Friday's session for equities will be one-half day, and I 
wouldn't be expecting any "fireworks."  

The Dow Diamonds (AMEX:DIA) 105.02 +0.03% looked to me like they 
were being shorted all day near their WEEKLY Pivot and unless one 
of the components has some type of major news on Friday, I get 
the feel that Friday's trade for the majors is going to be rather 
tight.

While the Wednesday before Thanksgiving is usually an optimistic 
trade, it shows with the NDX/QQQ trading and closing above their 
WEEKLY R1s.

Jeff Bailey

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Combos/Straddles:  
*****************

Give Thanks Everyday -- Not Just Once A Year

By Mike Parnos

In the trading business, we're deal with turkeys on a daily basis –
- most of them masquerading as market makers.   Tomorrow is the one 
day of the year when families gather to give thanks.  But, why give 
thanks just one day a year?

Look In The Mirror And Say "Thank You"
As regular readers of this column know, I'm a firm believer that we 
are responsible for our own actions.  As a result, we need to take 
responsibility for both the good and bad things that happen to us 
in our daily lives (and, especially, in our trading).  I have 
little tolerance for a world full of whiners who look for 
scapegoats every time something goes wrong.

When you wake up every morning, while you're shaving or putting on 
your make-up (or both), take a moment and be a little 
introspective.  Think about all the wonderful things in your life 
and say "thank you" -- because it's OK to take credit.  Whatever 
good happened to you was your doing.  

You can pat yourself on the back, but don't break your arm doing 
it, because you're not done yet.  Now, look in the mirror again, 
take another moment and mentally review the things in your life 
that may not be going as well as you like.  Acknowledge to yourself 
that you are equally as responsible for the bad stuff and make a 
commitment to do something everyday to improve the situation.

A Lot To Be Thankful For
This past year I've had the opportunity to watch (and pay for) my 
daughter get married (and, yes, she's still married).  I've seen my 
son do incredibly well (as a daytrader).  I've had the privilege 
and pleasure to meet many of you readers in person and have spoken 
to many more on the phone.  I've watched (and hopefully contributed 
to) the maturation of many of you as traders.  I'm thankful that I 
haven't missed a meal (actually, had quite a few extra), have my 
health, have my kids.  I'll even go so far as to be thankful for my 
ex-wives (two great tolerant women).   There's more, but I won't 
bore you with the rest.  Just know that, if you take a close look, 
you'll find just as much (or more) in your lives to be thankful 
about.

I'm not a huge fan of turkey.  It's a lousy topping on pizza, but 
it makes a decent deli sandwich.  If you add a little gravy and 
stuffing, turkey can even be tasty at a family gathering.  I hope 
it will be this year.  
____________________________________________________________

A New Retirement Concept
Many CPTI readers have made great strides, in the last few years, 
in accumulating money for your retirement.  If you're just half as 
lazy as I am, here's something I read that you may find 
interesting.  Hate to cook?  Hate to clean?  Hate doing laundry?  
Like to travel?  Enjoy entertainment?

An assisted living facility in America averages about $28,500 per 
year.  For less than $5,000 more ($33,260) per year, you can live 
in a dedicated cabin aboard Royal Caribbean's Majesty of the Seas.   
Think about it.  Where can you go for less than $3,000/month and 
get all that?
___________________________________________________________

ALERT!! NEW DECEMBER CPTI POSITION

CPTI Position #3 -- SPX Iron Condor  (Part 1) - 1181.76
I've become very conservative -- even more so after our unpleasant 
experience in the November cycle.  I saw an opportunity to put some 
serious distance between a bull put spread and where the SPX was 
trading.   With the SPX at 1179, I noticed the January 1100/1090 
bull put spread would yield about $.70.  Being still somewhat 
bullish for the next few months, I was willing to go out to 
January.  I like that almost 80-point cushion and I'm willing to 
wait the eight weeks.  When the opportunity presents itself, we can 
always add the other side of the condor.
Sell 15 SPX January 1100 puts
Buy 15 SPX January 1090 puts
Credit of about $.70 ($1,050)
Maintenance: $15,000

Surprisingly, on Monday, only one additional strike price opened up 
(1235) for the December cycle.  And, just as surprising, as of now 
(Wednesday) with the SPX trading at about 1180, there are very few 
usable strike prices for the January cycle -- only the basic 25 
point increments.  If I had wanted to put on the bear call spread 
part of the Iron Condor, I would have been SOL.   When/if we tack 
on our bear-call spread, as long as we keep a 10-point spread (and 
the same number of contracts), no additional maintenance should be 
required.
____________________________________________________________

DECEMBER CPTI POSITIONS
December Position #1 -- SPX Iron Condor (Part 1) - 1181.76
We believe the market is taking a well deserved rest and will 
continue up.  Our new bull-put spread still gives us about a 45-
point cushion on the downside with the short strike near a support 
level.  

We sold 20 December SPX 1125 puts and bought 20 December SPX 1120 
puts for a credit of $.50 ($1,000).   Maintenance: $10,000.  When 
you're looking for your new position, the concept of getting much 
your profit from negotiating the bid/ask spread still applies. (see 
the Thursday, Nov. 18 column).

This position is just the bull-put portion of a potential Iron 
Condor.  We're going to wait until the smoke clears a little before 
looking for bear-call spread possibilities.  When the time comes to 
put on the bear call spread, as long as we create a 5-point spread, 
there will be no additional maintenance requirement.

December Position #2 -- SPX Sure Thing (Almost) Credit Spread – 
1181.76
Here we go again.  the end of last Friday's session, we saw an 
opportunity to sell the 1165 puts and buy the 1140 puts for a 
credit of $6.90.  We're still in a bullish trend and want to 
position ourselves to take advantage of it.  A quick reminder – 
only do this strategy if you have a LOT of maintenance available.  
You might need it.

We sold two SPX December 1165 puts and bought two SPX December 1140 
puts for a $6.90 credit ($1,380).
___________________________________________________________
ONGOING POSITIONS
QQQ ITM Strangle - Ongoing Long Term -- $39.33
We bought 10 contracts of the 2005 QQQ $39 puts and 10 contracts of 
the 2005 QQQ $29 calls for a total debit of $14,300. We make money 
by selling near term puts and calls every month. Here's what we've 
done so far: Oct. $33 puts and Oct. $34 calls - credit of $1,900. 
Nov. $34 puts and calls - credit of $1,150. Dec. $34 puts and calls 
- credit of $1,500. Jan. $34 puts and calls - credit of $850. Feb. 
$34 calls and $36 puts - credit of $750. Mar. $34 calls and $37 
puts - credit of $1,150. Apr. $34 calls and $37 puts - credit of 
$750. May $34 calls and $37 puts - credit of $800. June $34 calls 
and $37 puts -- total net credit of $750. We rolled out to the July 
$34 calls ($.20 credit) and $37 puts ($.60 credit) and took in a 
credit of $.80 ($800). We rolled to the August $34 calls and $37 
puts, taking in a credit of $900. We rolled to the Sept. $34 calls 
and $37 puts, yielding $.45 or $450 for the cycle. For October we 
took in $.45 ($450) rollout. We rolled to the November. $34 calls 
and $37 puts for $.70 ($700).  Last week we rolled in the December 
$34 calls and $37 puts for a total of $.50 ($500).  New total: 
$13,400.
Note: We haven't included the proceeds from this long term QQQ ITM 
Strangle in our profit calculations. It's a bonus! And it's a great 
conservative cash flow generating strategy. 
ZERO-PLUS Strategy. OEX - 562.70
In my Feb. 8th column, I outlined a strategy based on an initial 
investment of $100,000. $74,000 was spent on zero coupon bonds 
maturing in about seven years at a value of $100,000. The principal 
$100,000 investment is guaranteed. We're trading the remaining 
$26,000 to generate a "risk free" return on the original 
investment. We own 3 OEX December 2006 540 calls @ $81 (x 300 = 
$24,300). Our cash position as of August expiration was $8,390. In 
September we added another $975 for a total of $9,365. In October 
we added $650 for a new total of $10,675. 
Zero-Plus Position For December
Prior to expiration, we bought back our Nov. 555 calls and rolled 
it to six contracts of the January 580 calls for a credit of about 
$100.  We also put on five contracts of a December 540/530 bull-put 
spread for an $.80 credit ($400). 
 
Happy Trading! 
Remember the CPTI credo: May our remote batteries and self-
discipline last forever, but mierde happens. Be prepared! In 
trading, as in life, it's not the cards we're dealt. It's how we 
play them. 
Mike Parnos, Your Options Therapist and CPTI Master Strategist 
 
Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the 
numbers represented here may have been achieved or beaten by our 
readers, we make no representation that any individual investor 
achieved these exact results. The tracking for the plays listed in 
this section uses closing prices for the day the newsletter is 
published and it is not meant to imply that any reader actually 
received those prices or participated in these recommendations. The 
portfolio represented here is hypothetical and for investment 
education purposes only. It is only an illustration of what type of 
gains a knowledgeable investor might receive utilizing these 
strategies. 
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The Option Investor Newsletter                Wednesday 11-24-2004
Copyright 2004, All rights reserved.                        2 of 2
Redistribution in any form strictly prohibited.


In Section Two:

Watch List: A Cornucopia of Stock Picks Ideas
Stop Loss Updates: EBAY, EOG, MUR, SLB, QCOM
Dropped Calls: None
Dropped Puts: None
New Calls: None
New Puts: None

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

A Cornucopia of Stock Picks Ideas

___________________________________________________________________

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.
___________________________________________________________________


OSI Pharmaceuticals - OSIP - close: 49.41 change: -2.97

WHAT TO WATCH: Look out below.  The recent sell-off and technical 
breakdown in OSIP is getting worse.  Shares have now broken 
through round-number, psychological support at the $50.00 level 
on above average volume.  The next level of support appears to be 
the $40.00 region.  The bearish P&F chart points to $30.00.

Chart=


---

Patterson Companies - PDCO - close: 40.37 change: +1.39

WHAT TO WATCH: PDCO reported less than inspiring earnings this 
morning but revenues were above analysts' estimates.  The stock 
recovered from an early morning loss to rebound sharply and break 
out over major resistance at the $40.00 level.  Now that PDCO is 
through the top of its eight-month trading range bulls can watch 
for some follow through and target a move toward the $44-46 
region.  The bullish P&F chart points to $54.00.

Chart=


---

Capital One Financial - COF - close: 79.99 change: +0.52

WHAT TO WATCH: Shares of COF have spent the last ten days 
consolidating its strong October to November ally.  The stock 
continues to look overbought and extended but short-term COF 
looks ready to breakout over round-number, psychological 
resistance at $80.00.  A move above $80 would be a new all-time 
high.  Momentum traders may want to consider positions above $80 
but be aware that COF's P&F chart only points to an $82 target.  
These targets can be surpassed but it is a note of caution.

Chart=


---

Ingersoll-Rand - IR - close: 74.68 change: +0.90

WHAT TO WATCH: IR has spent the last two weeks digesting its 
early November gains under resistance at the $75 level.  Given 
the strength in the cyclicals and manufacturing sectors it 
wouldn't surprise us to see IR breakout over $75 to hit new all-
time highs.  The bullish P&F chart points to $83.   Use the 
breakout as an entry point and target a quick move to $80.

Chart=



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

AHC $87.77 +1.05 - AHC has been a big winner the past several 
days.  Watch for a dip and bounce from $85 as a new entry point.

HHH $68.21 +1.36 - Don't want the risk of an individual stock but 
like the Internet sector?  Then consider the holders.  Shares of 
the HHH just broke out over resistance at $68.00.

PD $98.17 +2.30 - This looks like a new all-time closing high for 
copper-miner PD.  Watch for the breakout over $100.

KBH $91.35 +1.73 - KBH just broke through resistance to close at 
new highs.

TOT $108.81 +0.77 - TOT is another oil-related stock that looks 
ready to breakout of its three-week trading range.


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

EBAY - call play -
  EBAY turned in a strong 1.99 percent gain and broke
  out to a new all-time high.  We are going to raise our
  stop loss from $102.49 to $104.99.
 
 EOG - call play -
  EOG has run from $68 to $75 very quickly.  We're still
  suggesting short-term traders consider taking some profits
  here.  We are going to raise our stop loss to $69.85.
 
 MUR - call play -
  MUR has rebounded from $78.00 to $85.00 in the last
  couple of weeks.  We're raising our stop loss to $79.85.
 
SLB - call play -
  Another oil-related stock, SLB has rallied over the past
  several days.  We're raising our stop loss to $61.99.
 
QCOM - call play -
  QCOM added 2.28 percent on Wednesday to hit its 
  highest close in four weeks.  We're raising our stop loss
  to $37.99.


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

None


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

None

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

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

None


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

None


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

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

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

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

To subscribe you may go to our website at

www.OptionInvestor.com

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

 "Contact Support"

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

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


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

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


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

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

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