Option Investor
Newsletter

Daily Newsletter, Friday, 06/29/2001

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter          Weekend Edition 06-29-2001
                                                    section 1 of 3
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/1873_1.asp
=================================================================

In section one:

Market Wrap: A new quarter begins
Play-of-the-Day: Pull back over, time to go.
Watch List: Retail, Telecom, Medical

------------------------------------------------------------------
U.S. Market Numbers
------------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
------------------------------------------------------------------
        WE 6-29          WE 6-22         WE 06-15          WE 6-08
DOW    10502.40 -102.19 10604.59 - 19.05 10623.64 -353.36  - 13.41
Nasdaq  2160.54 +125.72  2034.82 +  6.39  2028.43 -186.67  + 65.66
S&P-100  632.02 -  4.13   636.15 +  9.52   626.63 - 25.29  +  2.31
S&P-500 1224.38 -   .97  1225.35 + 10.99  1214.36 - 50.60  +  4.28
W5000  11407.15 + 94.70 11312.45 + 74.45 11238.00 -498.70  + 65.13
RUT      512.64 + 23.99   488.65 -  6.48   495.13 - 16.51  +  9.92
TRAN    2829.96 +153.47  2676.49 - 17.13  2693.62 -188.47  -  4.96
VIX       21.63 -   .87    22.50 -  3.83    26.33 +  4.92  -  2.55
Put/Call    .58              .69              .73              .54
------------------------------------------------------------------

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

A new quarter begins

Today marked the end of the second quarter and trading got dicey 
near the session end.  Late today, NASDAQ's trading network 
experience problems when a software upgrade was installed and 
that installation brought part of the network to its knees.  At 
that time, stocks were rallying to their session high, but when 
the network went down, many institutions were not able to 
complete some trades.  The NASDAQ then decided to extend trading 
an additional hour in hopes they could get the network up and 
running.

Any other day, the NASDAQ probably would have ceased trading at 
the normal time of 04:00 pm EST, but with mutual funds still 
trying to complete orders for their end of quarter positioning an 
extra hour of trading could have helped clear out the remaining 
unfilled orders.  That made sense, but by 05:00 pm EST, parts of 
the NASDAQ network were still not working and now some 
uncertainty had set in.

We watched shares of Dell Computer (NASDAQ:DELL), Applied 
Materials (NASDAQ:AMAT) and Cisco Systems (NASDAQ:CSCO) begin to 
give up ground as soon as the NASDAQ network began experiencing 
problems.  At 03:00 EST (just before the network outage), shares 
of Cisco Systems were trading at the $19.57 level.  By the close 
of the extended trading session, shares of Cisco Systems had 
fallen nearly 4.3% to $18.71.  The market dislikes uncertainty 
and there was plenty of that in the last two hours of trading for 
NASDAQ stocks.

This network outage that was experience late today, might be a 
short-term traders opportunity to pick up some bargains in stocks 
that had traded higher earlier in the session.  We're not sure 
how many orders are yet to be filled for some institutions that 
had to buy/sell certain stocks to get their portfolio's weighted 
properly against some of the major indexes, but we'd expect 
trading to be relatively brisk at the open on Monday.

One index that has market bulls somewhat concerned right now is 
the lackluster performance of the Dow Industrials.  Many market 
technicians (me included) don't like the fact that this index is 
starting to have trouble getting back above its 200-day moving 
average.  The Dow Industrials plays an important role in investor 
psychology and confidence and current action from this index 
could put a damper on broader market bullishness.  Market bulls 
would feel much better about the recent NASDAQ attempt at a rally 
if this index were acting better.

Dow Industrials Average - last eleven months



 

The technicals for the Dow Industrials (INDU) are starting to 
look similar to that found back in October 2000.  What a trader 
now looks for is continued similarity or DIVERGENCE.  A bullish 
trader wants to see the Dow Industrials get back above the 200-
day moving average and quick!  That kind of action should have 
the MACD oscillator turning higher.  If both of those happen from 
here, that would be DIVERGENCE and give hint that things are 
different this time.  However, bullish stock traders/investors 
should be cautious as the Dow Industrials play not only an 
important role in investor psychology, but also helps measure 
some of the worlds largest corporation's stock price.  If the big 
guys aren't cutting the mustard, then other stocks can become 
suspect to lower prices.

Bullish Percent for Dow Industrials - 2% scale




 

I love to use the bullish percent indicator to help me ascertain 
"risk" for a particular sector, index or market.  While the Dow 
Industrials only contains 30 stocks, we can get a feel for "risk" 
based on the percentage of stocks in this index that are giving 
supply/demand (point and figure chart) buy signals.  As you can 
see, in April (red 4) the Dow Industrials bullish percent had 
just reverse up to 16% bullish (5 stocks were on point/figure buy 
signals) and this indicated that strength was beginning to build 
from a very oversold level.  By May and June (red 5 and red 6) 
the bullish percent had skyrocketed to 80% (24 of the 30 stocks 
in the index had their point/figure charts giving buy signals) 
and was at a very high level.  Now we can simply look back at 
September and October of 2000 (red 9 and red A) to better 
understand the current level of risk that currently is present in 
the Dow Industrials.  A trader can also begin correlating these 
periods with the bar chart above and perhaps conclude that a 
further deterioration in the bullish percent might have the Dow 
Industrials testing the 10,000 level, but should the bullish 
percent reverse course and turn higher, then the Dow Industrials 
might just try and test a new high.

The reason I say this is because of the "field position" of the 
bullish percent chart as it relates to how the Dow Industrials 
are trading.  If I compare the lows on the bullish percent chart 
from April to the lows of the INDU bar chart, we note that the 
Dow Industrials were trading at 9,106.  If I then look at the 
recent high reading for the bullish percent in May and June and 
note the highs for the INDU at 11,350 I can perhaps draw this 
scenario.  The bullish percent has now retraced about 1/2 of its 
range, but the Dow Industrials have only retraced about 38.2% of 
its range.  This is very good sign as it relates to strength and 
has me believing that the Dow Industrials found a bottom in 
April!

I think the current condition still has a bullish trader 
exercising caution as the bullish percent has been declining 
(weakness), but they should be VERY alert and ready to 
take action should the bullish percent reverse up from current 
levels to the 50% level.  If you're thinking risk right now, your 
thinking that 44% of the risk (from the bullish percent chart) 
has been removed from the Dow Industrials.  After all, the lowest 
reading is 0% (no stocks giving buy signals).  While there is 
always risk associated with an index, in "relative terms" risk 
has been reduced to a greater extant than the point decline in 
the index.  This in itself is a sign of divergence and something 
we should be alert to!  Over the weekend, try giving this some 
thought and then start looking at the bullish percent chart for 
the S&P 500 ($BPSPX) and compare it to a bar chart or 
point/figure chart of the S&P 500.  It may very well give you a 
better feel for how the market is currently viewing risk/reward 
and potential strength in the markets.  You can get free 
point/figure charts at www.stockcharts.com.

Jeff Bailey
Senior Analyst
PremierInvestor.net



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

THC - Tenet Healthcare, Inc. $51.60 +0.24  Stop: $49.75

Company Description 
Tenet Healthcare, through its subsidiaries, owns and operates 111 
acute care hospitals with 27,300 beds and numerous related health 
care services. The company employs approximately 106,501 people 
serving communities in 17 states and services its hospitals from 
a Dallas-based operations center.

Original Write Up on June 17th, 2001

If you read the watch list yesterday, THC was one of the stocks 
we had on the list. We talked about the stock's impressive move 
since putting in the triple-bottom during late-April and mid-May. 
We also mentioned that shares had broken through key resistance 
near $47.50, had consolidated around the $48-$49 level for a 
couple of days, and would be a good long-play given a close above 
$50. Well today, that scenario came to fruition, and with 
authority. Not only did THC, the nation's No. 2 hospital chain, 
bust through the half-century mark with gusto, but also did it on 
no news and double the average volume, while putting in a new 52-
week high. Can the outlook for THC get much more bullish than 
this, particularly on a day in which the SPX drops 5, the Dow 
gives back 66, and the COMPX etches its worst weekly percentage 
drop since the first quarter? We mentioned on Thursday that 
short-term technical indicators looked very healthy, with MACD 
well above the trigger line (1.5) and stochastics over the 80-
mark. Things keep on getting better. We are now very enthusiastic 
about the prospects for THC, not to mention a few Wall Streeters 
who share the same opinion. Nineteen of the twenty firms covering 
the stock possess either Strong Buy or Buy ratings. To boot, THC 
is a 15% annual grower, just announced last Tuesday that it will 
likely exceed 4Q earnings estimates of 61 cents per share AND has 
no technical hurdles left to cross. With technology still a 
question mark regarding future growth rates and profitability, 
this stock seems like a no-brainer. It has great fundamentals, is 
showing extremely positive technical signs, just closed over $50, 
setting a new high in the process and resides in a sector that 
will only get bigger and likely more profitable, given our aging 
population. To be perfectly honest, this is one of the healthiest 
charts we've seen in a long time, no pun intended. As far as an 
entry point is concerned, how about yesterday?

Average Daily Volume = 1.7 mln. 
52-Week: High = $49.95 Low = $25.00 
Next Earnings: 07-16 est = 0.62 versus = 0.51

Most Recent Update on Friday, June 29th, 2001

$51.60 +0.24 Stop: $49.75

The healthcare/hospital sector is on absolute fire, and despite 
technology beginning to catch investor's attention, a small 
segment of traders actually care about earnings, pushing THC 
higher. With THC slated to grow earnings at a 22% clip for the 
quarter and 18% rate for the year, it's easy to see why interest 
is high in the stock. It is only a matter of time before this 
stock is again setting new 52-week highs. Yesterday's advance 
took us just above the flat line. It doesn't hurt that the stock 
closed at its high for the day. 52.00 is our next obstacle.






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


GYMB - Gymboree, Inc. $8.50 +0.55

WHY WE LIKE IT: The retailing sector has been in the process of 
forming a bottom, and opinions are all over the board as to when 
this group might finally start to recover. Children's apparel 
company Gymboree is making a nice slow but steady ascent up the 
chart, and appears to be fairly priced. Back on June 7th, GYMB 
reported same store sales were higher by 39%, and also reiterated 
their estimates to match consensus estimates of Q2 EPS of (0.18) 
to (0.20).

POTENTIAL TRIGGER EVENT: While the uptrend is definitely in force 
for GYMB, oscillating indicators tell us that a pull back might 
be likely near term. We would like to enter a trade in GYMB on a 
pull back to the $8.00 -$7.80 level (but we'll be looking for a
bounce from these levels).




---

SBC - SBC Communications, Inc. $40.06 +0.25  

WHY WE LIKE IT: With the Dow near firm support at the 10,400 
level, component stock SBC Communications could provide a nice 
bounce in the event the index finds buyers willing to place 
orders near this point on the chart. While the stock did set a 
new 52-week low this past week; the trading below $39.00 also 
confirmed a double bottom in shares.

POTENTIAL TRIGGER EVENT: Telecom is still in the tank. Despite 
this, there is some safety in picking up SBC on a break and close 
above $40.75, an event that would likely lead to a run to $44.00, 
representing gains of nearly 8%.  Watch for congestion at $42.




---

GDT - Guidant, Inc. $36.48 +0.12

WHY WE LIKE IT: Another leading company that appears to have 
found a bottom, Guidant shares appear to have found fair value 
near the $36.00 level. Recent reasons for higher prices include a 
rumor that JNJ would make a bid for the company. While GDT is in 
a earnings slump, slated to only earn 0.37 this quarter, a -8.3% 
YOY decline, the long term prospects for the company remain in 
tact, with 2002 EPS expected to grow at 17.9%. With a P/E of 21 
for 2002, the company represents an excellent value at current 
levels.

POTENTIAL TRIGGER EVENT: With the all-important 50-dma ($37.01) 
only about 50 cents away, it makes sense to wait for this hurdle 
to be cleared before getting on board the GDT train. In reality, 
it could be the GDT turtle, as this is not a stock that will fly 
unless the rumor turns out to be reality.  Conservative traders 
should also watch for resistance in the 38.00 to 38.50 level.
Any upside breakout on strong volume would be more comforting.



 




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

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

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

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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


Copyright  2001  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter         Weekend Edition 07-07-2001
                                                   section 2 of 3
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/5971_2.asp
=================================================================

In section two:

Split Trader
  New Plays: No new ST Plays
  Play Updates: Splits Hold Their Own - ATK, ESI
  Closed Plays: Bears Take Center Stage - BSYS

Net Bulls
  New Plays: ERTS (Bullish) and QCOM (Bearish)
  Long Play ALLTEL Corporation
  Bearish Play Updates: Great Day For The Bears
  Bullish Plays Update: Yahoo - YHOO
  Closed Plays: AMAT (Bullish), SFA (Bullish)

Stock Bottom / Active Trader
  New Plays: QQQ (Bullish)
  Long Play Updates: Testing Support
  Short Play Updates: Sellers in Charge
  Closed Long Plays: NBIX
  Closed Short Play: No closed short plays


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


===============
ST Play Updates
===============

  -----------------------
  SPLIT CANDIDATE Updates
  -----------------------

Alliant Techsystems - ATK $86.90 -0.60 Stop: $84.00

Alliant had been holding its own until it lost 34 cents in the
last half hour of trading.  Still, on a day filled with selling,
ATK only lost 60 cents.   For the past five days, ATK has traded
in a relatively tight $3 range on light volume.  A break above $90
on heavy volume would get this stock back on its bullish track,
but a break below $86.50 could be a sign of short-term weakness.

Picked on June 29th at $89.90
Gain since picked:      (3.00)
Earnings Date            N/A (Not Confirmed)




===

ITT Educational Services - ESI $44.90 +1.00  Stop: $41.88

ITT rallied into the close, and finished up $1.  11 more cents
would put the stock above a recent series of relative highs at $45,
and move it on its bullish ways.  We will leave our stop at its
current location to give ITT some room to breath.

Picked on June 12th at $43.70
Gain since picked:       1.20
Earnings Date            N/A (Not Confirmed)





===============
ST Closed Plays
===============

  -----------------------
  Closed Split Candidate
  -----------------------

The BISYS Group BSYS $58.82 -1.08  Stop: $58.50

BISYS continued its bearish ways today, losing another $1.05.
Volume continues to pick up, as this stock looks even more
top heavy.  Our stop was hit at $58.50, so we won't be around
for any further declines.

Picked on June 28th at $59.91
Gain since picked:      (1.01)
Earnings Date            N/A (Not Confirmed)





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

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

  --------------
  New Bullish Play
  --------------

Electronic Arts  ERTS $54.38 +1.39 Stop: $50.00

Company Description:
The Redwood City, California-based Electronic Arts is the worlds'
largest publisher of video games.  They have over 100 titles
including the popular John Madden football games, Command & Conquer
and SimCity.  Over half of company revenue comes from games developed
for console systems like the Sony Playstation (41-percent of sales),
the Nintendo N64 and Microsoft's soon to be released xBox.
Electronic Arts also acts as distributor for over 1,000 titles for
3rd party developers.  The company is diversifying its business by
operating a game channel for AOL and by creating its own EA.com
subscription game site.  However, it is the coming war between the
deep pocket game console developers that ought to bring a smile to
ERTS shareholders.

Microsoft has said it will spend $500 million to promote its xBox
console scheduled for release in early November.  You can be
certain the equally flush Sony will respond to protect their
lucrative Playstation franchise and to launch their new
Playstation 2.  As a games developer for all the platforms,
Electronic Arts is in a win-win situation.

Fundamentals:
In the fiscal year ended last March, the firm earned 4-cents per
share on sales of $1.3 billion.  The analysts' consensus forecast
for the current year is for earnings of 61-cents per share on
revenue of $1.6 billion.  They predict the good times will
continue the following year with earnings of $1.48 per share on
revenue of $2.2 billion.  Although the shares sport a high
current P/E of 89 and a forward one of 37 for 2001, the firm's
superior growth rate and recession resistant business model make
the valuation reasonable.

Strategy:
For five consecutive years ERTS shares have increased an average of
25-percent from July 1st to September 30th.  Taking out 1998's
anemic rise of 2-percent and the average becomes 31-percent.  This
makes sense, as this quarter is when retailers stock up for the
holidays.  As a beneficiary of the massive amounts of holiday
advertising in the hotly contested game console market, there is
little reason to think that ERTS sales and shares will not have a
similar rise this year.  As far as an entry point is concerned,
since last April $53 has proven to be a resilient support level and
it held up well last week.  On Friday, the shares went counter to
the bear market and rebounded off of this level on high volume of
2.6 million shares traded.  A good entry point would be following
a confirmation of this bullish breakout with a close above $54.84
on a similar spike in volume.  Our price objective is in the range
of $63 to $67.  To avoid getting whipsawed put we will set a stop
at $50.00.

Picked on July 7th at $54.38
Earnings Date           7/26 (Confirmed)




  ----------------
  New Bearish Play
  ----------------

Qualcomm  - QCOM $58.18 -3.23 Stop: $61.88

Company Description:
Qualcomm created the code-division multiple access (CDMA)
standard for wireless networks.  CDMA-based networks account for
12-percent of the worlds' mobile subscribers.  Qualcomm collects
royalties for CDMA use and makes CDMA-based products such as
chipsets and software.   Although, the US is a Qualcomm stronghold,
it is working hard to expand in Asia, in particular China, off of
its dominance in South Korea.  This effort got a big boost recently
when China Unicom, China's second largest wireless operator,
awarded $1.46 billion in contracts for equipment to build a cdma-
based network.  The Chinese adoption of cdma is seen as crucial
for Qualcomm, because as it is also critical for the adoption of
cdma throughout Asia.  Unfortunately, on the heels of the good
news was an announcement that Verizon Wireless was switching from
cdma to a rival technology based on wCDMA.  Rumors of this set
QCOM shares on a dive from the June 6th close of $65.00 to $48.45
on June 20th.  The shares recovered somewhat to reach a close of
$63.87 on July 3rd, fueling this boost was news that Qualcomm had
expanded their existing CDMA agreement with Nokia.  And this is how
it goes with Qualcomm shares, every news story of expanded or
delayed CDMA implementations causes wild swings in the stock price.

Fundamentals:
Analysts project the company, which earned $1.05 per share on
sales of $3.2 billion in the fiscal year ended September 2000,
will earn $1.03 in 2001 on sales of $2.8 billion and $1.33 per
share on $3.4 billion in 2002.  This gives the company a forward
2001 P/E of 56.  Fourteen brokers covering the company have a mean
12-month target price of $76.29, specific estimates range from a
high of $100 to a low of $65.

Strategy:
The two-day post holiday market slide has dropped QCOM shares from
a high of $64 to Friday's $58.18 close.  The catalysts were a string
of tech earning warnings that gave an overall bearish hue to the
market.  Also some profit taking when many traders decided that
there wasn't enough in the Nokia agreement to account for a 10-
percent spike in stock price.  Another catalyst may have been
Thursday's announcement by SK Telecom (South Korea) that it was
joining the rising chorus of telecom operators delaying the
implementation of costly third-generation technology.  Taken as a
whole, there was plenty of news to punish the stock.  The strength
of the bearish sentiment was in evidence when the shares broke
though significant support posed by a rising gap from $59.68 to
$61.30 that was created on the Nokia announcement.  An additional
test of the sellers' conviction will be if the shares can break
through support at $57.50 on solid volume.  If it accomplishes this
then a test of additional support at $52.50 is likely with a
possible shot at $48.50.

Picked on July 6th at $58.18
Earnings Date           7/26 (Not Confirmed)





=================
NB Long-Term Play
=================

Great Cash Flow - Great Prospects

During times of economic uncertainty, three key features make a
shares company's attractive to long-term investors.  First is a
defendable franchise - long-term investors love a company that
has established an unassailable market position.  The economy may
tank but McDonald's will still sell hamburgers, we will write
checks to our local utility company and drink Coca-Cola.  Second
is a strong balance sheet - Microsoft shares may react to changes
in economic conditions but with $30 billion in the bank their
business plans and operations are little effected.  The final
feature is failing rivals.  One truism is that the rich get richer.
This is doubly so during economic down turns.  So one feature
long-term investors like to see is when a company has rivals who
are so weak that they are leaving the field in droves.  This
week's selection, ALLTEL Corporation has these desirable features
in spades.

ALLTEL Corporation AT $999.999 on July 6th.

Company Description:
ALLTELL is a wireless and landline telecommunications giant.  The
Little Rock, Arkansas-based firm provides local phone service to
2.5 million customers in 15 states through mostly rural exchanges.
It has approval to provide competitive local-exchange carrier
(CLEC) services in 17 states and does so in 10 of them.  They
provide long-distance service to approximately 1 million customers
and paging services to 500,000.  It also is a big player in
wireless communication with over 6.4 million subscribers in
21 states.

Fundamentals:
Analysts forecast in 2001 the company will earn $2.87 per share
on sales of $7.8 billion and $3.26 on $8.4 billion in 2002.  Last
year, per share earnings were $2.72 on revenue of $7 billion.
This gives the firm a current P/E of 21 and a forward P/E of 19
for 2001.  These are below the industry average P/E of 28
suggesting the shares are undervalued against their peers.  Also
reflecting the company's reasonable valuation is a Price/Earnings
Growth (PEG) ratio of 1.41 (lower is better here).  The industry
average PEG is 2.23 and the average PEG of the S&P 500 is 1.80.
The company paid a quarterly dividend of 33-cent per share in June.
At its upcoming quarterly earnings report on July 27th, the
analysts' consensus estimate is for the firm to earn 71-cents on
sales of $1.9 billion.

Strategy:
The rapid deterioration of rival CLEC's and fiber optic network
carriers has reduced competitive pressures on balance sheet strong
carriers like ALLTEL.  In addition, ALLTEL's strong cash flow will
enable their acquisition minded management to go shopping for under
valued assets that ought to pay off big during an economic recovery.
AT shares have risen from a late April low of $50.01 to a high of
$63.03 earlier last week.  However, a look at the weekly chart
suggests the shares are sitting at a cusp.  Bulls and bears have
each taken their turn this week driving the shares up to $63.03 and
pushing them down to $59.75.  By weeks end the result was little
changed from the $60.75 beginning.  Although this is a solid long-
term play at current price levels, the short-term market dynamics
say that patience may reward with a more advantageous entry point.
Our first indication that the bears are winning the short-term tug-
of-war would be a close below $60 on a spike in volume.  This would
mean there is a likely return to support near $57.50 and a bounce
of off this level would be a good entry point.  If the bulls take
control with a close above $61.75 on a spike in volume, then a test
of resistance between $64 and $67 is the likely scenario and long-
termer's can still jump on the bandwagon at a fundamentally
good price.





===============
NB Play Updates
===============

  -----------------------
  NB Bullish Play Updates
  -----------------------

Yahoo! Inc. - YHOO $17.88 -1.31 Stop: $17.25

The market slumped and Yahoo went along.  We placed our stop of
$17.25 just south of support at $17.50.  We are maintaining that
stop as we wait to see if we can catch a rally going into Wednesday's
earnings announcement.  Our long-standing entry recommendation
stands - traders should wait for a break over $21 before taking a
position.  This breakout would confirm bullish momentum and place
resistance levels at $25.94 and $30 square in our sights.  If this
break does not occur, the shares are liable for a pullback.

Picked on June 25th at $19.77
Gain since picked       (1.89)
Earnings Date            7/11 (Not Confirmed)





  -----------------------
  NB Bearish Play Updates
  -----------------------

Computer Sciences Corporation CSC $33.36 -0.77 Stop: $35.00 New

Bearish sentiment keeps rising.   We are looking for a close
below $33.15 on solid volume to kick this Bearish selection into
high gear and put it in range of out $30 target.  We came close
on Friday.  We are moving our stop to $35.00.

Picked on June 21st at $35.00
Gain since picked:       1.64
Earnings Date            N/A (Not Confirmed)




===

Automatic Data Processing, Inc. ADP $51.10 -0.59 Stop: $52.90

ADP resumed its bearish move by falling out of congestion on
high volume of 1.4 million shares.  The daily average 1.3
million.  This gives us encouragement that this Bearish selection
is ready to put us back in the black.  We are maintaining our
stop at $52.90.

Picked on June 29th at $49.70
Gain Since Picked       (1.40)
Earnings Date            8/13 (Not Confirmed)




===

Emulex Corporation EMLX $29.06 -6.76  Stop: $35.00 New

Well this turned into one sweet Bearish selction in no time at
all.  We are now up $6.76 per share to date.  Emulex shares were
in a classic topping pattern, then fell hard on the heels of
repeated earning warnings from the tech sector.  The move through
the $30 support level on Friday is significant as it puts $27.50
as the next area of support.  We are going to protect our gains
by moving our stop to the top side of yesterday's gap at $35.00
to keep us from being whip-sawed out of this play.  You may
consider putting in a tighter stop.

Picked on July 5th at $35.82
Gain since picked:     $6.76
Earnings Date           8/02 (Not Confirmed)




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

  --------------------
  Closed Bullish Plays
  --------------------

Applied Materials - AMAT $45.30 -3.38 Stop: $48.10

A slew of earnings warnings hit late Thursday.  The most damaging
for AMAT shares was semiconductor manufacturer AMD.  This set the
entire chip sector and our Bullish selection on a steep Friday
slide.  The $47.98 open gapped our $48.10 stop so we close this
play at the opening price.

Picked on June 22nd at $49.05
Gain since picked       (1.07)
Earnings Date            8/14 (Not Confirmed)




===

Scientific-Atlantic  - SFA $41.62 -2.39 Stop: $41.50

This one hurts.  Friday's decline, although severe enough to trip
our $41.50 stop was on below average volume.  This leads us to
think the dip will not be severe, and the base the shares have
been building since mid-June will hold.  On a fundamental basis
we still hold these shares are undervalued.  This tempts us to
reduce our stop to $40, but we won't.  We prefer to reevaluate
the shares when this wave of tech selling subsides.

Picked on July 3rd at $44.45
Gain since picked      (2.95)
Earnings Date           7/19 (Confirmed)




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

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

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

Nasdaq-100 Series Trust - QQQ $41.65 -1.80 Stop: $40.00

Company Description:
The QQQ's are a pooled investment designed to emulate the results
of the Nasdaq-100 Index ($NDX).  This index contains the 100
largest companies in the Nasdaq Composite according to their market
capitalization.  As of the end of last year, the composition by
sector was: Technology (75.33-percent), Health Care (9.78-percent),
Communication Services (5.36-percent), Consumer Cyclicals (3.98-
percent), Consumer Staples (3.17-percent) and Basic Materials
(0.23-percent).  The 10 largest companies as of the end of last
year were: Cisco (6.36-percent of index), Microsoft (5.15-percent),
Qualcomm (4.80-percent), Intel (4.59-percent), Oracle
(4.39-percent), Sun (2.56-percent), JDS Uniphase (2.53-percent),
Veritas (2.27-percent), Siebel (2.27-percent) and Amgen
(1.99-percent).  Buying shares of the QQQ's, in effect enables
the holder to participate in the fortunes of 100 large companies.
In contrast to mutual funds, the QQQ's trade on the Nasdaq in the
same manner as the shares of any Nasdaq company.  Since the QQQ's
are tied to the tech laden Nasdaq 100, they are a good vehicle for
investors who want to take advantage of the current slump in
technology stocks, yet minimize the risks associated with owning a
particular company.

Strategy:

After an extended slumping market a rise in government bond yields
are giving us indications that the major money managers are building
cash to go stock shopping.  For a fuller explanation and analysis of
how we are coming to this conclusion read the weekend Market Wrap
prepared by our master market analyst Jeff Bailey.  For the impatient,
 the short version is this - bonds act as passbook savings accounts
for large money managers.  When the market slumps they sell stocks
and use the money to buy bonds, when they are optimistic about
stocks they raise cash by selling bonds.  One way to predict if the
big money boys are buying or selling bonds, hence getting ready to
sell or buy stocks, is to check the yield of bonds.  If they are
selling bonds, the yield (think interest rate) of bonds has to go
up to attract new buyers.  So, if the major money managers are
building a pile of cash to go equity shopping, often the yield of
bonds goes up.  We are currently experiencing a significant rise
in bond yields, even as the equity markets are dropping.  This
leads us to believe money managers are getting liquid.  As Jeff
describes in the Market Wrap, if the yield on the 30-year bond
goes over 5.8 from its current 5.75, we believe this signifies
enough cash is sitting on the sidelines that a major positive move
in the stock market is highly likely within the next two weeks.
The next few days should tell the tale as far as yields are
concerned.  One way to play that pop is by buying the QQQ's.
However, traders should wait for the yield in the 30-year bond
to exceed 5.8 before taking a position, otherwise we are not
getting the confirmation we need.  Because we are adding this
to our play list before this confirmation, we are instituting a
stop at $40.

Picked on July 6th at $41.65
Earnings Date           N/A (Confirmed)




===============
AT Play Updates
===============

  -----------------
  Long Play Updates
  -----------------

Corning GLW $15.13 -0.32 Stop: $14.50

Corning sold off in the first hour of trading, but slowly tried
to recoup its losses throughout the day.  When it was all said
and done, GLW lost 32 cents.  It did come within inches of
triggering our stop, but the intra-day rebound offers some signs
of strength.

Picked on June 28th at $15.80
Gain since picked:      -0.67
Earnings Date            N/A (Not Confirmed)




===

Intuitive Surgical ISRG $13.21 -0.14 Stop: $12.90

ISRG continues to consolidate just above $13 on light volume.
The fact that we weren't stopped out while the rest of the market
tanked hints that this stock wants to move higher.  We just need
the market to cooperate.

Picked on June 17th at $11.05
Gain since picked:      +2.16
Earnings Date            N/A (Not Confirmed)




===

Schuler Homes, Inc. SHLR $14.55 +0.15 Stop: $11.94

It was only a 15-cent gain, but a gain is gain today.  $15.25
remains overhead resistance and the 50-day moving average should
offer near-term support.

Picked on June 25th at $13.57
Gain since picked:       0.98
Earnings Date            N/A (Not Confirmed)




===

Tenet Healthcare THC $50.01 unchanged  Stop: 49.75

Investors are holding out for the earnings announcement.  At
least that's one explanation for THC stock's amazing resilience
given the Dow and NASDAQ's declines this week.  THC hasn't been
immune but the stock is only down 1.60 from last Friday's close.
CBSMarketwatch had a glowing article on Tenet Healthcare with
Andrew Heyward, an analyst at Wells Fargo.  He said he doesn't see
any potential problems that might cause THC to suffer over the
next several quarters.  In June THC said they would beat consensus
estimates of 61 cents a share.  This has probably given bullish
investors hope that the future really is bright for THC.  One
word of caution.  The CBSMarketWatch article mentioned that THC
was due to report earnings next week.  Other news sources don't
have THC due to report until July 25th.  Be careful.  If they
announce earnings and have any negativity in their conference
call shares could pull back sharply despite a good quarter.  For
the immediate future, $50 is the key.  If the stock can hold then
we're probably safe.  Otherwise the next support level is about
$47.50.

Picked on June 17th at $51.09
Gain since picked:      -1.08
Earnings Date            7/25 (Not Confirmed)




---

ViroPharma VPHM $28.51 -1.49  Stop: $27.50

The stock's price finally breaks out of a downward trend.  We
begin to think the company's products might have promise so we
make a decision to make it a long play.  That's when company
management decides now is the time to offer up to $300 million in
stock and/or debt securities and warrants for "general corporate
purposes".  We weren't the only ones who didn't appreciate the news
as the stock has bled over 9% since the announcement.  Yet to be
fair the  NASDAQ has lost 6% in the same time so VPHM's move has
probably been exacerbated by the market's broader decline.  Our
dollar plus gain has become a dollar plus loss.  Watch this one
closely as the stock should (we repeat should) have support at
$28.00 thus our stop is at 27.50.

Picked on June 22nd at $29.94
Gain since picked:      -1.43
Earnings Date            N/A (Not Confirmed)





  ------------------
  Short Play Updates
  ------------------

Qlogic - QLGC $49.91 -7.46  Stop: 53.00 *new*

QLGC suffered a mauling today as investors sold shares in a host
of tech stocks after EMC's earnings warning.  Qlogic's shares
gapped open and fell from there.  The stock has a lot of support
at the $50 level and the price began to gravitate toward this
level late in the afternoon.  More than one bull is probably
concerned that it failed to close over the magic $50 mark but
despite the negative implications we're going to tighten our
stop to 53.00 which is just north of the 50-dma at 52.15.

Picked on July 2nd at $62.53
Gain since picked:    +12.62
Earnings Date          N/A (Not Confirmed)




===

AstroPower - APWR $48.13 -0.46  Stop: 50.50 *new*

With almost a 1% lost today, shares of APWR actually made a late
day recovery.  News has been quiet since we picked this one in
Thursday's newsletter.  Bears were hoping that shares of APWR
might continue to fall once they traded under the 50-dma at
47.57 but the late day buying mentioned above put the stock about
half a point above it.  Since the trade is moving our direction
albeit slowly we're going to tighten our stop to 50.50 which is
just over the high of July 3rd's 50.45.

Picked on July 5th at $48.59
Gain since picked:    + 0.46
Earnings Date          7/31/01 (Not Confirmed)




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

  -----------------
  Closed Long Plays
  -----------------

Neurocrine Biosciences - NBIX $36.60 -0.90 Stop:36.00

Due to no fault of its own, shares of NBIX have dropped from a
high near $40 last Friday to a low of 35.72 today.  This has
been the work of the sudden and perilous drop in the Biotech
index (BTK).  In the last three days the BTK fell from 610 to
a low on Friday of 553 (its 100-dma).  The index completely
blew past strong support at 570 probably catching many by
surprise.  While some analyst argue that the group may be
oversold in the short-term we're still stopped out of our play
in NBIX.  The good news, if there is good news, is that NBIX
held up rather well compared to sector mates ABGX, AMGN, and
IDPH.

Picked on June 29th at $39.99
Gain since picked       (3.99)
Earnings Date            N/A





=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

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

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

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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


Copyright ) 2001  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.

PremierInvestor.net Newsletter          Weekend Edition 06-29-2001
                                                    Section 3 of 3
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/1873_3.asp
=================================================================

In section three:

Long-Term Tech Play: The Gloves Are Off
Expected/Likely Split Announcements For The Coming Week 
New Split Candidates: Three new candidates to add to the list.
Market Watch for Week of July 2nd - 6th:
   - Major Earnings
   - Board of Directors Meetings
   - Stock Splits
   - Economic Reports

=================================================================

=====================
New Long-Term Play
=====================

MSFT - Microsoft Corporation $73.00 on June 29, 2001

Microsoft's recent legal victory strengthens the future of the 
most dominant software developer in the world.  When the U.S Court 
of Appeals reversed the lower court decision that called for a 
breakup of the company, it ensured long-term investors that there 
would be a Microsoft and that the company would be free to continue 
their aggressive approach to product development and marketing.  Of 
course, the legal decision was not a complete victory - the court 
did agree with the finding that Microsoft monopolized the operating 
system market with its Windows product.  This may mean that 
Microsoft is still liable to private lawsuits from competitors such 
as Sun Microsystems, Apple and AOL-Time Warner.  However, these 
types of lawsuits are a normal course of business for Microsoft 
and with over $30 billion in cash and other liquid investments, 
are unlikely to have a significant effect on company operations.  

With this cloud lifted, the share price should receive repeated 
pops from a string of product releases scheduled for the remainder 
of the year.  These include the new operating systems upgrade 
Windows XP, the already released office suite upgrade Office XP, 
the new SQL Server 2000 and the likely hit of the 2001 holiday 
season, the xBox gaming platform.  

Looking beyond this year, the company's .Net strategy should ensure 
the company's dominance in the next generation of computer 
technology.  This strategy intends to wean computer users away 
from buying shrink-wrapped software to renting it over the Web.  
They also want to extend their influence beyond the PC with a group 
of online services called Hailstorm.  Hailstorm promises to 
integrate personal data such as email and addresses, regardless if 
it is stored on your PDA, cell phone or PC.  In short, .Net will 
use the web to connect all the high tech devices in your life and 
Hailstorm will make certain they are all speaking the same language.  
Of course all this new Flash Gordon technology is going to take some 
time to get into the hands of consumers, some say years.  In the 
meantime Windows monopoly (its official now) position in the PC 
world continues to produce lucrative results for Microsoft.  

For the fiscal year ending June 2001 the company is expected to 
earn $1.80 per share on sales of $25.2 billion  and $1.94 in on 
$28.8 billion in 2002.  Shares of this core tech holding are 
selling for 40 times 2001 estimated earnings and 37 times the 2002 
projection.  As investors begin to shift their focus past trying to 
determine how badly a company will be hit by the economic woes to 
which ones will benefit first in a recovery, they are beginning to 
view a company like Microsoft selling at 40-percent less than its 
2000 high as a good value.  A point and figure analysis suggests a 
shorter-term bullish price target of $95 and support at $66.00. 

Chart






=======================================================
Expected/Likely Split Announcements For The Coming Week
=======================================================
                                    Date Expected 
Symbol         Company              To Announce*
=================================================

No major splits expected for week of 7/2



=======================================
New Split Candidates to add to the List
=======================================

ATK - Alliant Techsystems

Alliant shares have experienced a recent pullback, but we've 
added this stock to our Split Candidates list due to some strong 
indications that point to a future announcement. On August 7 
the Company is holding an Annual Shareholders meeting at which 
time they will vote to increase the number of outstanding shares 
by 40 million, thereby allowing ample room for a stock split. The 
other sign that confirms our conviction is the fact that the last 
split announcement was declared at the stock price of $89; 
they're in that range at this time so stay tuned! 

chart = 


---

BSYS - The Bisys Group

BSYS announced their last stock split last September when shares 
were trading at $78 per share. At current levels, we've got some 
time before we reach that point again, but we don't want to miss 
out on any trading opportunities in the meantime. Shares keep 
reaching for new highs this month so we look forward to the next 
split announcement with the next major company event. In 
that respect, earnings are expected to be released on July 30. 
There are currently 58 million shares outstanding with 160 
million authorized.

chart = 


---

FRX - Forest Labs

We're keeping an eye on Forest Labs as the stock reenters 
historical split levels. Granted, the last announcement was given 
when prices were at a higher range of $135 in December 2000, 
however, we understand that the inflated conditions in the market 
at that period of time will probably not be reached again for a 
very long time. The previous splits announced in 1998 and 1991 
were at $60, which is already below current levels of $72.
We expect a possible announcement with the next earnings release 
on July 17 or with the annual shareholder meeting on August 13.

chart = 





==================================================
Market Watch for the week of June 25th - June 29th
==================================================

  ------------------------
  Major Earnings This Week
  ------------------------

Symbol   Company           Date         EPS Est   Comment

WDFC     WD-40             Mon, JUL 02  0.31      Before the Bell
RECN     Resources Connect Mon, JUL 02  0.20      After the Close


HB       Hillenbrand Ind   TUE, JUL 03  0.63      Before the Bell
ROAD     Roadway Express   TUE, JUL 03  0.18      Before the Bell

OCENY    Oce N.V.          THU, JUL 05  n/a       ----- n/a -----

AVX      AVX Corp          FRI, JUL 06  0.18      Before the Bell
STI      SunTrust          FRI, JUL 06  1.16      Before the Bell
STAR     Lone Star Steak.  FRI, JUL 06  0.24      After the Close
AA       ALCOA             FRI, JUL 06  0.45      ----- n/a -----
IBC      Intrst Bakeries   FRI, JUL 06  0.15      ----- n/a -----



  ------------------------------------
  Board of Director Meetings This Week
  ------------------------------------

Symbol     Company                 Date   

IVCO       IVC Industries          7/02
IR         Ingersoll Rand          7/05
CTIC       Cell Therapeutics       7/06


  -------------------------------
  Upcoming Stock Splits This Week
  -------------------------------

Symbol  Company Name                  Payable Date      Ratio

MTON - Metro One Telecom              06/29/2001        3:2  
LOW  - Lowe's Companies               06/29/2001        2:1  
ING  - ING Groep, N.V.                07/02/2001        2:1  
HOC  - Holly Corp                     07/06/2001        2:1  
FLGS - Flagstar Bancorp               07/12/2001        3:2  
RAVN - Raven Industries               07/13/2001        3:2  
XOM  - Exxon Mobil                    07/18/2001        2:1  
KG   - King Pharmaceuticals           07/19/2001        4:3  
TRH  - Transatlantic Holdings         07/20/2001        3:2  
TARO - Taro Pharmaceutical            07/26/2001        2:1  
MSCC - Microsemi Corp                 PENDING           2:1  
SFD  - SmithField Foods               PENDING           2:1  


  --------------------------
  Economic Reports This Week
  --------------------------

On the heels of this past week's tame 25 basis point cut,
the upcoming economic reports are expected to show modest 
slowing of spending in spite of increased unemployment and 
falling equity wealth.  Look for light trading volume 
throughout the week due to the holiday on Wednesday.


Date                             Forecast     Previous

Monday, 07/02/01
Auto Sales (Jun)                 6.4M         6.4M
Truck Sales (Jun)                7.1M         7.2M
Personal Income (May)            0.3%         0.3%
PCE (May)                        0.4%         0.4%
Construction Spending (May)      0.0%         0.3%
NAPM Index (Jun)                42.0%        42.1%


Tuesday, 07/03/01
Factory Orders  (May)            1.5%        -3.0%


Wednesday, 07/04/01
None scheduled


Thursday, 07/05/01
Initial Claims (May)             N/A          388K
NAPM Services (Jun)             46.5%        46.6%


Friday, 07/06/01
Nonfarm Payrolls (Jun)           -40K         -19K
Unemployment Rate (Jun)          4.6%         4.4%
Hourly Earnings (Jun)            0.3%         0.3%
Average Workweek (Jun)           34.3         34.3




=================================================================
To stop receiving this PremierInvestor.net Newsletter,
send email to Contact Support
=================================================================
DISCLAIMER
=================================================================

This newsletter is a publication dedicated to the education
of stock traders. The newsletter is an information service
only. The information provided herein is not to be construed
as an offer to buy or sell securities of any kind. The
newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding trading in stocks. It
is possible at this or some subsequent date, the editors and
staff of PremierInvestor.net may own, buy or sell securities
presented. All investors should consult a qualified professional
before trading in any security. The information provided has
been obtained from sources deemed reliable but is not
guaranteed as to accuracy or completeness. PremierInvestor.net
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due to
factors beyond our control.

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

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

For more information on advertising in PremierInvestor.net
Newsletter, or any Premier Investor Network newsletter please
contact Contact Support.

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


Copyright  2001  PremierInvestor.net. and
The Premier Investor Network.
Do not duplicate or redistribute in any form.



DISCLAIMER

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

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

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

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives