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Daily Newsletter, Monday, 06/25/2001

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PremierInvestor.net Newsletter                  Monday 06-25-2001
                                                   section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap: Internet and Advertising flexing some muscle 
Market Sentiment: The Market is a Paine by Jeff Canavan
Play-of-the-Day: Citrix Systems, Inc. CTXS (Long)
Watch List: BRCM, APPL, LH, JNJ

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       06-25-2001          High     Low    Volume Advance/Decline
DJIA    10504.22 -100.37 10644.24 10468.12 1.03 bln   1302/1780
NASDAQ   2050.87 + 16.03  2060.06  2026.40 1.48 bln   1893/1882
S&P 100   632.03 -  4.12   640.05   629.24   totals   3195/3662
S&P 500  1218.60 -  6.75  1231.50  1213.60           46.6%/53.4%
RUS 2000  484.19 -  4.46   490.20   483.75
DJ TRANS 2646.31 - 30.18  2685.98  2644.03
VIX        23.25 +  0.75    23.82    22.26
Put/Call Ratio      0.63
-----------------------------------------------------------------

===========
Market Wrap
===========

Internet and Advertising flexing some muscle.

For some, the picture that may come to mind with Internet stocks 
"flexing some muscle," might be similar to that of Alfalfa (the 
Little Rascal with the pointy hair) striking a muscular pose with 
both arms hoisted above his head.  While some may laugh at such a 
thought, this little group (what's left of them) may be turning a 
corner.  If you're looking for the leader of the group, look no 
further than eBay (NASDAQ:EBAY).  When I was a little kid, I 
rarely missed an episode of "The Little Rascals" and always 
wondered just how the group of rascals would get themselves out 
of the corner they had painted themselves into.  Don't look now, 
but the Internets might be doing just that, with shares of eBay 
leading the way.

One thing that might very well be taking place is that bearish 
traders are looking at eBay (NASDAQ:EBAY) and how well that stock 
has been holding up and deciding that the group itself is about 
to get out of what has seemed to be a troubling "fix."  We've 
written before how important it can be for traders to keep an eye 
on "big named stocks" in a sector as one stock can often times 
act like a tow truck and pull the rest of the group out of the 
gutter.  Four sessions ago, shares of eBay broke above major 
horizontal resistance at $66.50 and since that time, the CBOE 
Internet Index ($INX.X) has started to turn a corner.

eBay Inc. - last eleven months




One might begin to think, "as long as eBay can stay above $66.50, 
then there's hope for Internet stocks."  I like to see the leader 
lead and then begin pulling the rest of the pack forward.  That 
appears to be what is taking place with the CBOE Internet Index 
($INX.X) in recent sessions.

CBOE Internet Index - last eleven months




An upward move to the 50-day moving average at 198 is not out of 
the question.  For the INX.X that would represent a 10% gain from 
current levels and this can happen in just one trading session.  
Should the group continue to show strength above 200, then an all 
out assault could be launched on the 200-day moving average to 
250.  

What could be the catalyst for such an assault?  One thing that 
seems to be presenting itself is the possibility for a bottom to 
have been found in advertising spending.

While many think of the Internet as a way to disseminate news and 
information across a global network, it's also a way to generate 
revenue for Internet based advertising firms or Internet portals.  
Today, shares of Yahoo! Ind. (NASDAQ:YHOO) another "big name" in 
the Internet space jumped 13.9% to $19.73 after Safa Rashtchy, an 
analyst with U.S. Bankcorp Piper Jaffray said it appeared that 
the advertising market hit bottom in April.  Now... I'm not one 
to simply take Mr. Rashtchy's word for granted, but I have 
noticed a couple of things in recent weeks that has me thinking 
that somebody other than Mr. Rashtchy, namely the MARKET might 
also be thinking that advertising spending is turning a corner.

Dow Jones Co. - last eleven months




Dow Jones (NYSE:DJ) might be the "who's who" of advertising.  
Among its print offerings are The Wall Street Journal and 
Barron's.  It also owns a network of Television Stations as well 
as electronic publishing operations like Dow Jones Newswires.  I 
think they're very dependent on ad revenues.  

The reason I point out the above chart of Dow Jones (DJ) is that 
it is a great stock to at least be monitoring if you're a bullish 
trader in some Internet stocks that derive a large portion of 
their revenues from ad spending.  If the Internets are truly 
going to get themselves out of a corner, I think we may now begin 
to understand the plot.  Check out tomorrow's new bullish play in 
the NetBulls section of the web site.  It might make sense!

Jeff Bailey


================
Market Sentiment
================

The Market is a Paine

According to Paine Weber, their Index of Investor Optimism 
fell to a four-year low.  The reading came in at 104, which 
was well below May's reading of 113.  Basically, only 44% 
of the sample population is optimistic, compared to a 
reading of 51% last month.  The decline was mostly 
attributed to rising concerns over energy prices.

The Mickey Indicator, which measures the attendance at Walt 
Disney World as a gauge consumer sentiment, is currently 
down 7% for the current quarter.  

On the positive side, sales of previously owned home 
increased by 2.9%, while analysts were only expecting the 
number to come in flat.  The real estate market continues 
to hold up tremendously well in the face of a slowing 
economy.

Overall the market sentiment remains pensive ahead of the 
Feds announcement on Wednesday.  Perhaps it's just me, but 
it seems that there is a lot less hoopla ahead of this Fed 
meeting.  Could it be that we've become numb to Fed's rate 
cuts?

Commitments Of Traders Report: 06/19/01
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange. 

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
Commercials   Long      Short      Net     %Change  Open Interest
6/05/01      323,109   400,509   (77,490)    13.1%     510,122
6/12/01      353,074   423,257   (70,183)    (9.4%)    562,025
6/19/01      301,376   371,121   (69,745)    (0.6%)    457,618

Most bearish reading of the year: (111,956) - 3/6/01
Most bullish reading of the year: (41,144)  - 5/1/01

Small Traders   Long      Short      Net      %Change  
6/05/01        154,233    76,632    77,601      10.5%    
6/12/01        167,720   100,610    67,110     (13.5%)   
6/19/01        128,296    56,038    77,258      (7.7%)   

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01

Comments:
We've changed the way we present this data to give readers 
more information, but if the shock is too much, please let 
us know.  We've left in the previous two weeks data to give 
traders a better feel for how the data is trending.  For 
example, Commercial are still net bearish by 69,745 
contracts, but if we look at the past two weeks we can see 
that is a 10% improvement from the net bearish reading of 
77,490 on 6/05/01.  The next piece of data we've added is the 
number of contracts long, and the number of contracts short.  
This helps to give readers an idea of how the change in net 
position came to be.  This week the number of commercial short 
positions dropped from 423,257 to 371,121.  Things are looking 
good on the surface, since the institutions are shorting less.  
But if we look at the number of commercial long positions we can 
see that number also dropped from 353,074 to 301,376.  So the 
reduction of both long and short positions is more of a 
reflection of market indecision.  That brings us to our next new 
column, Open Interest.  Open interest is the total number of 
positions outstanding (keeping in mind that one long contract and 
one short contract equals one position).   The general theory 
behind this data is that a rising market should be supported by 
rising open interest (new positions being added).  The other new 
column is just the percentage change in net position.  Changes of 
5% or greater in commercial net position are generally regarded 
as significant.  Lastly, we've added the most bullish and bearish 
readings of the year to give readers an idea of where we stand 
from a historical perspective.

Nasdaq-100
Commercials   Long      Short      Net     %Change  Open Interest
6/05/01       25,098    36,433    (11,335)   (1.5%)    51,660
6/12/01       33,586    44,234    (10,648)   (6.1%)    68,245
6/19/01       23,480    34,097    (10,617)   (0.3%)    47,202

Most bearish reading of the year: (15,521) - 3/13/01
Most bullish reading of the year:  (1,825) - 1/02/01

Small Traders  Long      Short      Net      %Change  
6/05/01        11,217    10,062    1,155     (60.3%)
6/12/01        18,374    16,264    2,110      82.7%
6/19/01        14,284     8,403    5,881     178.7%

Most bearish reading of the year:  (1,028) - 1/02/01
Most bullish reading of the year:   8,460  - 3/13/01

Comments:
We can see that commercial traders have been slowly reducing 
their net bearish position, but the reduction in both long and 
short positions tells us that there is a general lack of 
conviction in either direction.  Small traders, ever optimistic 
about technology, and have increased their net bullish stance by 
178%.  Hmmm, if they tend to be on the wrong side?

Dow Jones Industrials

Commercials   Long      Short      Net     %Change  Open Interest
6/05/01       22,717    16,888    5,829      0.3%      35,257
6/12/01       37,886    22,611    6,239      6.6%      37,886
6/19/01       22,611    12,346    1,876    (232.6%)    22,611

Most bearish reading of the year: (8,322) - 1/16/01
Most bullish reading of the year:  8,925  - 5/22/01

Small Traders  Long      Short      Net      %Change  
6/05/01        3,881     8,132    (4,251)     (0.6%)
6/12/01        5,332     9,637    (4,305)      1.3%
6/19/01        3,884     7,555    (3,711)    (13.8%)

Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01

Comments:
Ahhhhhhhhhh!!!!!  A 232.6% drop in the net bullish position of 
commercial traders!  Actually the percentage change can be a bit 
deceiving since these contracts are thinly trade when compared to 
the S&P 500, but nevertheless the trend is disturbing.  Notice 
how institutions started dumping their long positions in the Dow 
just before the likes of Merck and Alcoa started to warn about 
earnings.


======================
Play-of-the-Day (Long)
======================

Citrix Systems, Inc. CTXS $30.14 +1.95  Stop: $26.50

Citrix Systems, Inc. is one of the leading suppliers of 
application delivery and management software and services that 
enable the effective and efficient enterprise-wide deployment 
and management of applications. The company's products permit 
organizations to deploy and manage applications without regard 
to location, network connection, or type of client hardware 
platform.

Recent upgrades, a potential bottom in the GSTI software index 
(GSO.X) and a fresh convergence of the 50 & 20 dma's all add up 
to reasons why Citrix Systems, ticker CTXS, gets the nod for a 
new long position this evening. Lets start with the fundamentals. 
A once high flyer, CTXS crushed its own groove back in June of 
2000 by saying that they would miss earnings estimates for the 
quarter and year-end. Traders and investors alike liquidated the 
stock en mass after the warning, but more recently, the pain that 
was felt has subsided and institutions have started to nibble at 
shares of this up-n-comer in software. Earnings are again on the 
rise, a merit badge for management considering the current 
economic environment. Citrix is slated to earn 0.18 cents per 
share this quarter and 0.74 cents for the year, EPS growth rates 
of 75 and 19.6 percent, respectively.  Yesterday, CSFB upgraded 
the company to Buy from Hold, saying that they believe the market 
for Citrix's products continues to accelerate, and the Windows XP 
upgrade cycle should only benefit the company further. 

Comments:

Last Friday, CTXS shares stopped right at important resistance at 
$31.00.  On Monday, the shares broke through, closing the day at 
$31.84.  Volume was solid at 3.4 million shares traded.  We see 
sight resistance at $32.00 and $33.50.  Stronger resistance 
should be encountered when the shares attempt to tackle the 
$37.19 52-week high.  Conservative traders can wait for a move 
through $32.00 before taking a position.  We have a stop loss 
implemented at $26.50.

Picked on June 20th at $30.14
Change since picked      1.68
Earnings Date            7/18 (Not Confirmed)





==========
Watch List
==========

BRCM – Broadcom, Inc. $35.49 +1.81  

WHY WE LIKE IT: We may have not seen the worst out of the 
communications chip companies,  but the bottoming process is 
definitely in process, and leaders in the field should begin to 
show signs of life soon. BRCM looks to have found support near 
the $30.00 level, and is seeing volume pick up in the past few 
session. It will be interesting to see how this afternoon's after 
the bell warning from peer AMCC affects shares in trading 
Tuesday.

POTENTIAL TRIGGER EVENT:  While shares have made good progress 
since last Monday's close at $30.41 (+14%), it would take a 
settlement north of $36.00 in order for us to get on board. This 
would undoubtedly clear the path for a run at the 50-dma at 
$37.78, and more likely the $40.00 level. With the FOMC sure to 
cut rates this week, BRCM should see higher ground by Friday.




===

AAPL – Apple Computer, Inc. $23.99 +1.73  

WHY WE LIKE IT: Despite the Nasdaq going basically nowhere in the 
past 5 sessions, shares of AAPL are displaying excellent relative 
strength as compared to the market as a whole. Today, AAPL took 
out both the 50 & 200 dma's, although the steep decline of the 
200-dma would scare us from adding the stock on the bullish 
crossover alone. Volume has also been only average in the past 
week or so, giving cause for doubting the technical progress 
achieved today.

POTENTIAL TRIGGER EVENT:  While we are more inclined to sell AAPL 
versus considering it for a long position, a closing above $26.50 
might entice us to give Steve Job's company a shot on the long 
side. This accomplishment would take out yearly highs set by the 
stock, and would probably lead to a process of filling of the gap 
formed in October 2000 when the company warned of lower earnings.




===

LH – Laboratory Holdings, Inc. $75.50 -3.80  

WHY WE LIKE IT:  While market uncertainty and earnings pressure  
has hurt even the strongest of tech companies in the market sell-
off, independent clinical laboratory company LH has been firing 
on all cylinders. A steady northerly progress is seen on the 
chart, and with the stock taking a break since running from 
$67.50 to $82.50, the time to get LH could be fast approaching. 
The declining volume seen in the 4.9% sell off should indicate 
that traders selling the stock are of the weak hands variety.

POTENTIAL TRIGGER EVENT:  We would love to see the stock continue 
to trade lower on lackluster volume and bounce off of the 50-dma, 
although the relative strength of the stock will probably negate 
this happening. Our bet is that bulls will line up near the 38% 
retracement bracket ($74.38), and thus we would like to see how 
shares react near this level. If volume were to be below the 1m 
level on this occurrence, LH would offer an excellent risk/reward 
scenario for a long trade.




===

JNJ – Johnson & Johnson, Inc. $51.60 -0.79

WHY WE LIKE IT:  JNJ has been sold lately in sympathy with the 
rest of the sector, as Merck's warning last week rocked an 
already shaky group. JNJ recently completed its acquisition of 
Alza Corp. and also took out its yearly closing high last 
Wednesday. While the sell-off has been swift and has come on 
fairly heavy volume, the up trend in the stock is firmly in place 
unless shares compromise $50.50.

POTENTIAL TRIGGER EVENT: As evidenced by the volume spike on 
Friday, the bulls appear to have drawn a line in the sand near 
$51.50. So long as this level, and certainly not $50.95 is not 
taken out to the downside, the forward momentum will be confirmed 
in JNJ. While oscillating indicators have started to roll over, 
shares could quickly rebound considering the more recent 
institutional interest in the company of late. We would prefer to 
wait for a closing north of $52.40 before considering the company 
as a long candidate.





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PremierInvestor.net Newsletter                  Monday 06-25-2001
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/4901_2.asp
=================================================================

In section two:

Split Trader
  New Play: Schuler Homes, Inc. SHLR

Net Bulls
  New Plays: Yahoo! YHOO (Long), Getty Images, Inc. GETY (Short) 
  Closed Play: Scientific-Atlantic SFA (Short)

Stock Bottom / Active Trader
  New Play: Rational Software, Inc. RATL
  Closed Play: Washington Mutual  WM (Long)


=================================================================
Split Trader (ST) section
=================================================================

============
ST New Plays
============

  -------------------------
  New Split Candidate Plays
  -------------------------

Schuler Homes, Inc. SHLR $13.57 +1.02  s/l $11.94

Sector – Semiconductors

SCHULER HOMES INC. develops residential housing in Hawaii. Co.'s 
developments primarily consist of single-family homes, multi-
family homes, such as condominiums and townhomes and, to a lesser 
extent, residential lots. Co.'s homes are generally priced at 
levels that either (i) are at or below ceilings established under 
applicable governmental land use policies, or (ii) represent the 
low to moderate end of the market for a home in a particular 
locality. Co. is generally required to sell its homes only to 
owner-occupants by lottery or on a first-come, first-served 
basis.

With existing home sales rising 2.9% today to a seasonally adjusted 
rate of 5.37 million in May from an upwardly revised pace of 5.22 
million in April, and interest rates for mortgages in steady decline 
thanks to an aggressive Federal Reserve, the housing market is 
continuing to hold steady as others area of the economy are still 
feeling the heat. Tomorrow, we get more information on the sector 
with the new home sales data for May, and should the numbers come 
in much like today's figures, we could see homebuilding stocks like 
SHLR 
benefit even further. Looking at the fundamental picture,  Schuler 
offered up an upside EPS surprise on 5/9/01 by posting $0.81 cents 
per share on revenue of $488 million and closings of 1594 new homes. 
Despite the positive report, Solomon Smith Barney decided that the 
appreciation in the group was reason to take profits, and on 5/16 
downgraded the sector, lowering shares of SHLR from Buy to 
Outperform. After selling off to an intraday low of $12.00 on 6/20, 
share of SHLR are now on the rebound, thanks to above average volume 
totals. In the past four trading sessions, SHLR has now twice seen 
participation north of 400k shares versus its 97k, 3 month average. 
The 30-day average volume trend is also rising, seen this evening 
at 121k per day. An important technical hurdle was also cleared 
Monday as shares climbed back above the key 50-dma at $13.51. 
Oscillating indicators are plotted firmly in the bull camp, with 
MACD offering up a very bullish crossover (60-Min) coupled with a 
move into positive territory due to the $1.02 or 8.13% move higher 
achieved in the session. With this resistance now acting as support, 
shares of SHLR should have very little trouble in achieving prices 
near the $15.00 mark. We've placed a stop down at $11.94 for the 
trade, but considering the positive bias in the sector combined with 
the constant flow of bad news emitting from the tech sector, we 
think the lows for SHLR have been seen near term. Look for this 
homebuilder to reassert its leadership position and command 
higher prices for its stock in the next few trading sessions.

Average Daily Volume = 97K
52-week:  High = $18.70 Low = $12.50
Next Earnings 08-09 est = 0.34 versus = N/A

 


==================================================================
Net Bulls (NB) section
==================================================================

============
NB New Plays
============

  --------------
  New Long Plays
  --------------

Yahoo! Inc. YHOO $19.77 +2.46  Stop: $17.25

To many people Yahoo is the Internet.  Each month 54 million 
people view 900 million pages of Yahoo sites daily.  They use 
Yahoo's search engine, chat rooms, email, news, finance tools, 
auctions and stores.  In December, the number of registered users
 increased to 180 million from 166 million in September.  As a 
victim of the dot-bomb the normally profitable Yahoo warned in 
March that the absence of visibility into future business 
conditions made it difficult to predict whether it would be 
profitable in 2001.  Analysts responded by slicing their 2001 
earning estimates from 37-cents a share to 4-cents.  For 2002, they 
forecast the firm to earn 15-cents per share.  They also project 
revenues to increase from $738 million in 2001 to $905 million in 
2002.

Yahoo shares jumped more than 14-percent on Monday due to positive 
comments from U.S. Bancorp Piper Jaffrey analyst Safa Ratschy.  
Ratschy said, "Given the expected positive Q2 results, the potential 
of positive announcements in the next few weeks, the bottoming of 
the ad market and the new CEO, we believe the stock is likely to 
trade up in the next few weeks."  These comments are consistent 
with mounting evidence that the ad market has hit bottom.  Last 
week, AOL-Time Warner CEO Gerald Levin said that advertising price 
have stabilized.  Although few analysts are predicting an imminent 
recovery for the industry, Yahoo! shares are beginning to attract 
the attention of bargain hunting investors. 

Monday's move pushed Yahoo's shares up against resistance between 
$20 and $20.50.  Bullish enthusiasm was evident with volume of 15 
million shares traded.  This well above the 11 million daily 
average.  The shares ended the day with the bulls clearly in control. 
We are optimistic that positive momentum will carry over into 
Tuesday's trading.  The next levels of upside resistance are at 
$23.75, $26.75 and $30.00.  Conservative traders can wait for 
additional confirmation of bullish momentum by waiting for a break 
above $21 before taking a position.  Support in the event of a 
bearish reversal exists at $17.50.

Picked on June 25th at $24.89
Earnings Date            7/11 (Not Confirmed)
 




  ---------------
  New Short Plays
  ---------------

Getty Images, Inc. GETY $24.89 -4.56  STOP: $27.00 

Getty is the largest provider of stock images for business and 
consumers has an archive of 70 million still images and 
illustrations and more than 30,000 hours of stock film footage.  
The Seattle-based firm targets four basic markets -- creative 
professionals (advertising and graphic design), the media (print 
and online publishing), other businesses, and consumers -- and has 
grown through the acquisition of such brands as Tony Stone Images,
 EyeWire, and rival Visual Communications Group in 2000.  Getty 
has distribution offices in 30 cities and continues to capitalize 
on the Internet and CD-ROM collections for distribution.  Over 40 
percent of its revenues come from outside North America.  

Last year, the firm lost $1.99 per share.  This year, analysts 
expect the firm to reduce those losses to 86-cents per share on 
sales of $512 million.  Next year, the analysts' consensus estimate 
for is for the company to lose 40-cents per share on revenue of 
$584 million.  In their first-quarter ending March 31st the firm 
lost 24-cents per share on a 20-percent increase in revenue from 
the same quarter the previous year of $14.6 million.  They 
attributed the revenue increase to improved sales across all 
geographies; and the reduced loss to a greater sales of higher 
margin product and the absence of debt conversion expenses.  

Technically, the shares broke down Monday due to negative comments 
from Thomas Wiesel.  The broker sees increasing risk to Getty's 
second-quarter and late-2001 estimates because of continued 
deterioration of print advertising spending.  In addition, they 
cited weakness in both the Euro and the British Pound.  Although 
Weisel remains bullish on the company's long-term prospects, they 
cautioned investors not to expect meaningful improvement in the 
second half of 2001.  

Gety shares had been stabilizing after a three-day bearish slide 
that ended on June 15th, however Weisel's negative comments 
re-energized the bears.  On Monday, the shares produced significant 
downside breaks of support at $26.45, the $26.78 50-day moving 
average and the $27.12 200-day moving average.  Confirming the 
bearish reversal was high volume of 1.2 million shares, well above 
the 493k daily average.  This degree of negative momentum is not 
likely to resolve itself quickly.  The next levels of support are at 
$23.00 and $20.00.  Resistance to a return of the bulls is 
at $26.45.      

Picked on June 25th at $24.89
Earnings Date            N/A (Not Confirmed)
 




===============
NB Closed Plays
===============

  --------------------
  Closed Bearish Play
  --------------------

Scientific-Atlantic SFA $40.00 0.00 Stop: $41.50

We are sorry to see this Bearish selection go.  Monday's $41.80 
high just barely tripped our $41.50 stop leaving us with a final 
gain to date of $9.18 per share.  The shares set this high in the 
early minutes of trading and spent the remainder of the session 
giving the $1.80 back.  This is encouraging for those still in 
this play.  The $40.00 level has turned into important support, 
if the shares can break through weak support at $38.60, the 
pril $35.02 low would be within target range. 

Picked on June 12th at $49.18
Change since picked      9.18
Earnings Date            7/19 (Not Confirmed)
 




==================================================================
Stock Bottom / Active Trader (AT) section
==================================================================

============
AT New Plays
============

  --------------
  New Long Plays
  --------------

Rational Software, Inc. RATL $27.14 +0.84  s/l $24.50

Sector – Software

Rational Software Corp. is a provider of integrated solutions 
that automate the software development process. Its integrated 
solutions include unified tools, software engineering best 
practices, and services that allow customers to successfully and 
efficiently develop and deploy software. The company's solutions 
help customers organize, automate, and simplify the software 
development process and enable them to gain a competitive 
advantage by being able to more quickly develop and deploy high-
quality, mission-critical software.

Will software lead the Nasdaq out of its current trough? Many 
have speculated that this will be the case, as uncertainty within 
the semiconductor space has caused investors to question whether 
the likes of MU, INTC and AMAT can pull the COMPX out of its rut 
this time. Despite both tech heavy indexes being below key 
support levels, names in the software group (GSO) have been 
displaying better relative strength lately than those in the 
Philadelphia Semiconductor Index (SOX), and this indicates to us 
that institutional accounts are more comfortable holding stocks 
in this sector going into Q2 earnings. We've chosen to add RATL 
as a long this evening for many reasons, not the least of which 
is an encouraging technical snapshot. While RATL is still within 
a tight trading range between $22 and $28, a pricing collar that 
has plagued its advance since late May, excellent support has 
formed and been tested twice since the stock surpassed the 50-dma 
back on 5/16. We like the way shares appear to be coiling near 
$27.50, ready to explode to the upside with any hint of positive 
news. With the  two-day FOMC meeting beginning tomorrow, the news 
needed could well be on the horizon in the form of a 50-basis 
point reduction in the fed funds target. Looking at the chart, 
RATL took out Friday's relative high with the $0.84 advance 
Monday, and also managed its highest settlement since 6/7 with 
the close at $27.14. Of concern was the meager participation, 
with only 1.4 million shares crossing the tape versus the 3.0 
million count that is typical over the prior 30-days. But support 
is strong as we previously mentioned near the 50-dma ($24.17), 
and we are willing to embrace the risk/reward scenario seen in 
the daily chart of the stock. In short, with $2.64 of downside 
risk and a minimum of $10.00 upside from current levels, the time 
to get long RATL is now. Whether the Fed lowers rates by 25 or 50 
basis points on Wednesday, it is clear that the liquidity 
injections by the FOMC are nearing an end, and thus gains to be 
achieved in fixed income, if any, should be very limited going 
forward. Combining all of this together with RATL's slow, up 
sloping chart and nice close near the highs of the day leads us 
to believe that higher prices are more likely than the converse, 
even with AMCC's warning after the bell. Our stop loss is set at 
$24.50, and while a breaching of this level would not break the 
up trend, it would likely send shares below the $23.00 mark, 
compromising recent support and handing the advantage over to 
those in the bear camp.

Average Daily Volume = 4.4 mln 
52-week:  High = $70.62 Low = $12.50
Next Earnings 07-11 est = 0.08 versus = 0.14

 


===============
AT Closed Plays
===============

  ----------------
  Closed Long Play
  ----------------

Washington Mutual  WM $37.00 -1.90 s/l $38.50

Friday's rumor that Washington Mutual was acquiring East Coast 
financial Dime Bancorp turned out to be a reality, as the merger 
was confirmed this morning by management. Under the terms of the 
agreement, Seattle-based Washington Mutual will pay $40.84 for 
each share of Dime Bancorp, a 10.7 percent premium over Dime's 
closing price of $36.88 on Friday. In typical merger price 
participation fashion, shares of WM sold off while shares of Dime 
moved higher. Our stop loss trigger was easily compromised in the 
sell-off, but not before we managed to capture $1.42 or 3.8% for 
our readers.

Picked on June 15th  @  $37.08
CLOSED OUT @            $38.50

Changed Since Picked   =  +1.42 or + 3.8%
Best Change            = + 2.72 or + 7.3%

 



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