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Daily Newsletter, Tuesday, 07/24/2001

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PremierInvestor.net Newsletter                Tuesday 07-24-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
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In section one:

Market Wrap: Looking For Divergence
Market Sentiment: Tercio Del Muerte
Play-of-the-Day: CSG Systems - CSGS (Bearish)
Watch List: Pizza, Oil, and Technology what a Combo

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U.S. Market Numbers
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MARKET WRAP  (view in courier font for table alignment)
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       7-24-2001          High      Low     Volume Advance/Decline
DJIA    10241.10 -183.30 10423.80 10203.70 1.19 bln    975/2137
NASDAQ   1959.20 - 29.30  1994.03  1939.28 1.59 bln   1300/2410
S&P 100   603.88 - 10.25   614.41   600.44   Totals   2275/4547
S&P 500  1171.25 - 19.38  1191.03  1165.54             
RUS 2000  474.14 -  8.44   482.70   472.53 
DJ TRANS 2862.52 - 98.36  2961.81  2839.35 
VIX        27.62 +  1.50    28.83    26.39 
Put/Call Ratio      0.75
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===========
Market Wrap
===========

Looking For Divergence by Jeff Bailey

On a day like today, sometimes traders and investors are able to 
uncover future opportunity by looking for divergence.  With the 
Dow Industrials losing 183 points (-1.75%), the S&P 500 trading 
lower by 19 points (-1.62%) and the NASDAQ Composite shedding 29 
points (-1.47%) we immediately find divergence and perhaps 
opportunity!

One would have "thought" that a day when the markets were 
generally blood red across the board that the NASDAQ Composite 
(COMPX) would be the big loser.  After all, this index is loaded 
with all those high tech stocks that are still trading at lofty 
valuations even though most of them have been cut in half in 
recent months.  Heck, some stocks in technology have been cut in 
half in recent months.  Today however, the NASDAQ Composite was 
not the big loser.

This is even more baffling when you look at the CBOE Internet 
Index (INX.X) and its decline of 6.59% and haircut of 10 points 
to 152.  The Networking Index (NWX.X) wasn't working either as it 
lost 4.9% of its value by falling 16 points.  Add to that the 
Biotechnology Index (BTK.X) lost another 4.2% or 22 points to 
495.  With carnage taking place like this, how did the NASDAQ 
Composite (COMPX) manage to only lose 1.47% today?  Something had 
to go up!

One stock that continues to impress me is shares of Foundry 
Networks (NASDAQ:FDRY).  The broader market negativity seems to 
be keeping the stock in check, but today's 0.5% gain to close at 
$19.35 is still impressive.  Volume was relatively light with 
just over 1 million shares traded, but the stock remains on my 
bullish watch list and bullish action point at $21.  This stock 
"smells" of divergence and has been holding up well in the 
broader market pullback.  I classify the stock as a networking 
stock and this stock traded against the NASDAQ and Networking 
Index today.

Another stock in the Networking index that held up relatively 
well (this one really surprised me) is shares of Cisco Systems 
(NASDAQ:CSCO).  Next to the NASDAQ-100 Index Tracking Stock 
(QQQ), Cisco Systems (CSCO) was active with 50.9 million shares 
traded.  I find it hard to believe that the stock is trying to 
run ahead of an earning report scheduled for August 7.  The 
average estimate for its 4th quarter is for a profit of $0.02 a 
share and that will put the stock at a rather lofty 45 times 
earnings (at $0.40 for the year) at today's closing price of 
$18.38.  The technicals are shaping up for CSCO, but there's a 
lot of work to be done.

Cisco Systems Chart - $1 and $0.50 box



On occasion, a trader/investor may find it useful to study volume 
as it relates to supply/demand moves.  Remember, X's (excess 
demand) represent upward moves and O's are down (excess supply).  
It takes a 3-box reversal to equate to a "meaningful" reversal in 
direction.  As I look at the above chart, the market seems to be 
"coming to grips" with CSCO in the $16.50 to 18.50 range.  In 
March and April (red 3 and 4) we see big volume on the downward 
moves.  CSCO was in terrible technical shape at that time and 
everyone wanted out.  The broader NASDAQ was also in a state of 
decline and the stars were aligned for the stock to get creamed.

The last real "volume spike" on the above chart came on an upward 
move from $19 to $24.  That volume perhaps signifies a level of 
price where major disagreement occurred.  That move also came 
just near the end of the most recent NASDAQ advance.

With volume having calmed down recently on upward and downward 
moved, I begin to get the feeling that shares of CSCO are 
starting to find a level of equilibrium.  If the market is all 
knowing then this stock is at least being monitored closely in 
the current market environment.

For the most part, I know of, nor have read to many analysts 
looking for the moon from CSCO near-term.  However, the market is 
very much a forward-looking instrument.  I find it hard to 
believe that there would be money flowing into the stock on a 
bullish short-term basis, but perhaps longer-term is what I'm 
monitoring here.

I'd argue that "smart money" will start casting a pretty big vote 
in the not to distant future as it relates to CSCO over the next 
several months.  I don't think the market is looking for any type 
of surprise as it relates to what has happened in the quarter 
about to end.  What Cisco's President and CEO John Chambers is 
saying or has to say about the future is what matters most.

Again... I'll admit that the NASDAQ performance today surprised 
me.  This is the stock that surprised me most.  When I start 
thinking about some of the things that are looking bullish 
technically in shares of Foundry Networks (NASDAQ:FDRY) I become 
even more alert.  While today I saw divergence in how shares of 
CSCO and FDRY traded, relative to the NASDAQ composite.  I also 
find some divergence in how the NASDAQ Composite traded relative 
to the Dow Industrials and the S&P 500.  

The similarities I find are this.  Cisco Systems and Foundry 
Networks are both trading at levels where they've found 
formidable resistance in the past.  Should they both be able to 
get through these levels of resistance, then that too would be 
divergence.  The other similarity is the theme of networking.

I've learned, uncovered and profited more from divergence than I 
have from similarity.  Yes, there were a plethora of stocks that 
traded lower today.  In this morning's market commentary I 
mentioned a few stocks that would probably go lower.  Tomorrow is 
a new day and things can change quickly.

It seems ludicrous to even think that technology stocks are due 
to rally, but I've learned to never underestimate the market or 
take it for granted.  The worst thing a bearish trader can be 
right now is complacent.  Keep an eye on CSCO and FDRY.  For 
whatever reason, the market doesn't seem to be "scared" of these 
stocks right now.  Something might be up.


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

Tercio Del Muerte by Jeffrey Canavan

When a matador realizes a bull is weak and unable to charge much 
longer, he will reach for his killing sword to administer the 
death stroke.  The baby bull that was born on Wall Street two 
weeks ago isn't quite dead, but sellers are getting ready to 
administer the death stroke.

During last week's earnings onslaught, enough buyers could be 
found to, not necessarily push the markets higher, but at least 
keep stocks afloat.  This week those buyers look to be on 
vacation.  The way the rest of this week plays out should tell us 
if buyers are merely taking a break, or have said no mas.  

One ray of hope for bullish traders was the Nasdaq-100 Tracking 
Stock being able mount a small rally and close above $40.  It's a 
small victory, but the triple Qs are also 30 cent higher in after 
hours after some positive earnings from PeopleSoft.  Whether 
those gains can hold through the night, and past the first hour 
of trading tomorrow, will be the early test.  With call volume of 
119,837 and put volume of only 34,025 for the QQQs on Tuesday, 
perhaps traders are a bit too optimistic.  But perhaps OEX 
traders are a bit too pessimistic. A put/call ratio of 1.62 
suggests that sellers have gotten a little too rambunctious.  

Well that's just great, we have mixed data.  Can any other 
sentiment indicators help clear up the picture?  The VIX 
continues to move higher, but is well short of oversold levels.  
Advisory sentiment continues to climb, but that's a contrarian 
indicator.  A bullish percent status of bear confirmed still 
offers the best description - high risk if long.

CNBC was out in the office today, so we were subjected to MSNBC.  
Other than a fascinating story about a big python climbing into 
some ladies car in Florida, there was a story about a bear trying 
to get seeds out of a bird feeder.  He couldn't quite reach the 
food, so he just kept knocking the bird feeder around until it 
fell over and he could easily get the food.  Bears have the Wall 
Street birdfeeder teetering, but haven't knocked it over yet.

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

Market Volatility  
VIX   27.63
VXN   57.62

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

          Put/Call Ratio  Call Volume   Put Volume
Total           .75        700,804       523,180
Equity Only     .63        643,076       407,364
OEX            1.62         13,233        21,488
QQQ             .28        119,837        34,025

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

Bullish Percent Data

*The Dow has moved to bull alert status

           Current   Change   Status
NYSE          36       -      Bear Confirmed
NASDAQ-100    26       -      Bear Confirmed
DOW           36       -      Bull Alert
S&P 500       50       -      Bear Alert  

Readings above 70 are considered overbought, and readings below 
30 are considered oversold.

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

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

10-Day Arms Index  1.09  

Extreme readings above 1.5 are bullish, and readings below .85 
are bearish.  These signals don't occur often and tend be early, 
but when the do, they can signal significant market turning 
points.

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

        Advancers     Decliners
NYSE       963           2108
NASDAQ    1157           2445

        New Highs      New Lows
NYSE       50             51
NASDAQ     63            134

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

Advisory Sentiment 

Bullish  Bearish  Correction   Net   Change 
  52.5%     23.2%    24.3%    29.3%   +3.3%

A bearish reading of 25% to 30%, combined with a bullish reading 
greater than 55% is typically considered bearish by contrairians.  
A net percentage greater than 30% is also viewed as bearish. 

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

Commitments Of Traders Report: 07/17/01
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts at the 
Chicago Mercantile Exchange and Chicago Board of Trade. COT data 
can be found at www.cftc.gov.

Small specs are the general trading public with commercials being 
financial institutions. Commercials are historically on the 
correct side of future trend changes while small specs tend 
to be wrong.  

S&P 500
Institutions have lightened up on their net bearish for the second 
straight week, and the S&P 500 remains above 1,200.  Coincidence?  
The commercial sentiment is still bearish, but improving.

Commercials   Long      Short      Net     % Of OI 
7/03/01      316,543   395,410   (78,867)   (11.08%)
7/10/01      309,374   385,178   (75,804)   (10.91%)
7/17/01      336,836   403,561   (66,725)   ( 9.01%)

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     % of OI
7/03/01      133,098     54,865   78,233     41.62%
7/10/01      135,587     59,889   75,698     38.72%
7/17/01      122,525     50,211   72,314     41.86%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100
About face!  After slowly reducing their net bearish position for 
seven straight weeks, institutions abruptly switched gears.  Keep 
in mind this data is from 6/17/01, before the start of earnings 
week.  Perhaps some institutions sold some futures contracts to 
limit their risk.  This change could be a one or two week 
anomaly.

Commercials   Long      Short      Net     % of OI 
7/03/01       26,544     34,880   ( 8,336)  (13.57%)
7/10/01       26,688     34,640   ( 7,952)  (12.97%)
7/17/01       26,721     37,225   (10,504)  (16.43%)

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     % of OI
7/03/01       10,443     7,063    3,380      19.31%
7/10/01        9,073     7,486    1,587       9.58%
7/17/01       11,680     8,183    3,497      17.61% 

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


DOW JONES INDUSTRIAL
Institutions got slightly more bullish on the Dow for the second 
week in a row.  This is the only index with a commercial net 
bullish position, and the Dow was the only index to finish the 
week higher than it started.

Commercials   Long      Short      Net     % of OI
7/03/01       12,761    14,623   (1,862)    (6.8%)
7/10/01       13,743    12,999      744      2.8%
7/17/01       14,145    12,963    1,182      4.4%

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     % of OI
7/03/01        4,708     5,715    (1,007)   ( 9.66%)
7/10/01        5,048     7,835    (2,787)   (21.63%)
7/17/01        5,255     9,144    (3,889)   (27.01%)

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


===============
Play-of-the-Day
===============

CSG Systems - CSGS Close:$48.15 Change:-3.25 Stop:$51.20

Original Comments When Selected on July 12th: 

Company Description:
CSG Systems provides cost-effective customer care solutions for the 
communications industry.  Their full range of processing services, 
software and support services automate customer management functions 
such as billing, sales support, order processing, and invoice 
calculation.  CSG clients, who include telephony, high-speed Internet, 
and Internet service providers, benefit from having a highly scaleable 
system that can grow with the business, as well as access next 
generation technologies that adapt to changing needs.   

Fundamentals:
So basically, CSG provides software to telecoms and ISPs.  Unless 
their software helps to file the paperwork for chapter 11 
bankruptcies, I have a hard time seeing a bright future for their 
product and services.  Even if their customers are still in business, 
I doubt they have the capital expenditure budget to buy or upgrade 
their software.  CSG has somehow managed to grow revenues for the 
past 4 quarters, but the rate of growth is slowing.  Cash flows 
have also dropped into negative territory, primarily due to 
financing activities.  Salomon and CSFB must also smell a rat, 
since both of the brokerage houses have downgraded the stock.  

Strategy:
With investors buying everything in sight today, CSGS' $2.43 drop 
suggests that somebody wants out.  Perhaps it was Massachusetts 
Financial Services or Seligman J.W., CSG's top two institutional 
investors.  If the other institutions get a whiff of this, it may 
set off a snowball effect.  Conservative traders may want to wait 
for some confirmation of this, which would be signaled by a drop 
below $53.55.  This level has been recent support, and is the home 
of the 38.2% retracement bracket.  Once that is support is gone, 
CSG is primed to fall to $47.60, an 11% drop.  We'll start out with 
a stop at $57.75, but will continue to lower that to reduce risk or
most likely lock in profits.

Updated Comments:
Bearish momentum picked up in a big way on Tuesday after breaking 
through support at $52.50 on Monday.  Tuesday's $3.25 per share 
drop was on a spike in volume suggesting the selling sentiment has 
legs.  The shares look to have the oomph to push through mild 
support at $47.50.  This would give this Bearish selection a good 
shot at the next levels of support at $45, $43.75 and $40.00.  New 
entrants to this play should wait for this move below $47.50 before 
taking a position.  We are moving our stop to just above the session 
high at $51.20.    

Picked on July 11th $54.04
Gain Since Picked    +5.92
Earnings Date         7/30 (Confirmed)


 


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

CEC Entertainment - CEC - close: 45.90 change: -0.10

WHY WE LIKE IT:  Hmmm.. let us count the ways.  CEC or better 
known to most of us as Chuck E. Cheeses, operates about 328
company run restaurants (there are about 54 franchisee stores).
CEC announced their Q2 earnings today and they missed analysts
estimates of 50 cents a share by a full seven cents a share.
Comparable store sales were down 1.0% for the quarter.  The 
company says that a number of different factors attributed 
to the quarter's troubles including remodeling cost, higher
cheese costs, and an overall weak economic environment.

POTENTIAL TRIGGER EVENT:  A couple of days ago, shares of CEC 
where making a run for $50.  Unfortunately, it never got there.
The selling started at $49 on Monday and it accelerated into the
close to end the day near $46.  You don't suppose someone knew
about the earnings beforehand do you?  Uninformed bulls tried 
to take the stock higher this morning but they didn't last long
as the selling continued.  Despite it all, there was a bounce
near the close today and shares were only off 10 cents.  $45 is
the next level of support and anything below this would be a 
potential trigger for a short play.  Bears are likely to target
the next level of major support at $40.




---

Amerada Hess - AHC - close: 70.80 change: -1.98

WHY WE LIKE IT:  The Oil industry attempted a bounce a few days
ago but the market quickly nipped it in the bud before it could
really get any steam behind it.  AHC has fallen below its 200-dma
and Friday/Monday it tried to regain this level but failed to 
do so.  AHC's recent announcement to buy Triton Energy (an oil-
exploration company) for $2.7 billion and $500 million in debt
certainly increases its exposure to the oil sector's ups and
downs.  

POTENTIAL TRIGGER EVENT:  Traders should be looking for a close
under $70 as a potential trigger to short AHC.  With any luck 
shares could reach $65 and if the oil situation worsens AHC 
could fall as low as $60.




---

OpenWave Systems - OPWV - close: 23.24 change: +3.94

WHY WE LIKE IT:  Today's 20% gain is a bit much for us but that's
why we want to watch this stock.  Openwave just announced their 
earnings yesterday and shockingly the company's revenues rose
by more than 150% from $57 million to $144 million.  OPWV had a
significant increase in number of new customers and they continue
to see 10% to 20% growth.  Pretty exciting numbers not to mention
the positive outlook going forward.  Now we have to ask ourselves
if OPWV can keep it up.  Normally, no matter how strong a company
is, if the market is going down, its stock will decline as well.
Occasionally, an exceptional story or new twist can keep a great
company's stock bucking the trend despite the market downturn but
then the question is for how long. 

POTENTIAL TRIGGER EVENT:  We will look for a close over $25 as a
potential trigger for us to go long on OPWV.  Watch to see if the
stock can overcome this hurdle on decent volume.  Today's volume
was an astronomical 21 million vs. the normal 6 million.  




---

Qlogic Corp. - QLGC - close: 40.74 change: -1.39

WHY WE LIKE IT: We've been telling traders to watch QLGC for a
potential short position for a few days now.  As of Friday's
close, the stock is down over five points.  Unfortunately, we
were concerned that the company's earnings report could be a
trigger point for bulls to move back into the stock and we 
didn't want to be short over this announcement.  QLGC did report
this afternoon and performance was relatively inline with 
expectations but they warned that the next quarter would be
flat to down with the following quarter expected to be more 
positive.  Lately, talk like that has been the signal for another
round of selling.

POTENTIAL TRIGGER EVENT:  With earnings out of the way, all we
need to see now is a close under support at $40.  This is an 
important level the bulls want to see held and if the stock 
falls below it shares could potentially see $35 maybe even $30.





-------------------------
-- Continuing to Watch --
-------------------------

Some stocks on the Watch List will be carried over from one day
to the next if they continue to show potential but have not yet
breached the trigger point.  Some stocks have met our conditions 
for a trigger point but other factors hold us back from making it
a full-time stock pick.

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


Vodafone Group - VOD - close: 19.91 change: -0.90

UPDATE: Does anyone else have a feeling of deja vu?  It was
two days ago and shares of VOD had closed under $20 and looked
like they were going south in a hurry.  Of course Monday, rolled
around and the stock gapped up and managed to stay there before
selling off in today's session.  This was exactly the reason we
wanted to wait and watch list VOD to see if the stock would be
able to stay under the $20 level.  The last few days there has
been a few news articles about the industry and third generation
phones expected in the coming months but nothing to uplifting
for the stock.  Their Vodafone Pacific, the Australian arm
of the largest mobile provider in the world, reported that 
earnings were up 47% for the fiscal year ending 3/31/01 against
the year before earnings.  

Friday, July 20th's write up:

WHY WE LIKE IT:  We like it if you are thinking SHORT!  Shares 
of VOD have not closed on the south side of $20 since 10/05/98.
Vodafone's latest woes come from a lack of new handsets with
the proper technology to handle its GPRS networks - the next
level in wireless services.  This lack of phones is a major
decision to slow VOD's construction of these next generation 
networks.  In the NXTL write up you read that Lehman had cut
price targets on three wireless companies and the last few
days have seen analysts buzzing about Nokia's lack of guidance
for the next six months.  On a fundamental basis VOD may be
a stock worth looking into for a long-term hold but right now
the stock looks terrible and further weakness is almost assured.

POTENTIAL TRIGGER EVENT:  Normally, we don't like to short stocks
that are less than $20.  Therefore only more experienced traders
should look into this type of trade.  Another alternative would be
put options but that's another story altogether.  Shares of VOD
gapped down on Friday and the selling continued throughout the 
afternoon as it closed near its low for the day.  Traders should
take note that VOD is very prone to gapping up or down as the
parent stock trades in Britain and its ADR shares on the NYSE gap
to the appropriate value based on how trading went overseas.
As far as a potential trigger point, this is it.  Closing under
$20 is a major breakdown of support.  Our only concern is that back
in 1998 when shares closed under $20, looking equally bad as they
do today, the stock immediately gapped up the next day and never 
looked back.  We want to make sure this is not a one-day event.





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Do not duplicate or redistribute in any form.


PremierInvestor.net Newsletter                 Tuesday 07-24-2001
                                                   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
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To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/3765_2.asp
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In section two:

Split Trader
  Split Announcements: NEU, DXFI, SBIB
  New Plays: Alliant Techsystems - ATK 
  Play Updates: No play updates 
  Closed Plays: TRC Companies - TRR

Net Bulls
  New Bullish Play: Alpha Industries - AHAA
  New Bearish Play: Skillsoft Corporation - SKIL
  Bullish Play Updates: BEAS, PCLN
  Bearish Play Updates: BRCD, CHKP
  Closed Play: Take-Two Interactive Software - TTWO

Stock Bottom / Active Trader
  New Plays: No new SB plays
  Bullish Play Updates: APC, PATH, RAIL, SGU 
  Bearish Play Updates: ANF, PDII, CSGS
  Closed Plays: FLM, LH, THC


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

===================
Split Announcements
===================

Despite Earnings Drop, Neuberger Berman Declares Split, Increases 
Cash Dividend

Before today's opening bell, Neuberger Berman (NYSE:NEU) declared 
a 3-for-2 stock split, payable in the form of a 50 percent stock 
dividend on August 16, 2001.  Shareholders of record on August 1, 
2001 are eligible for one additional common share for every two 
common shares owned. On the execution date of August 17 the 
Company will have 73.5 million shares outstanding and 50.7 
million in the float. This marks Neuberger's first stock split 
since trading publicly in 1999.

The Board also approved a 12.5 percent increase in the quarterly 
cash dividends to 7 1/2 cents per share (post-split).  
Shareholders of record on August 1 will receive dividends on the 
payable date of August 16.

These announcements come just prior to the Company's second 
quarter earnings release, which reportedly dropped by 4 percent. 
Earnings of $33.7 million, or 68 cents per share, compared with 
$35.1 million, or 71 cents per share, for the year-ago period. 
The Company had lowered its second-quarter projections in early 
June but claims that it now expects to meet analysts' full-year 
2001 estimates of $2.94 per share.

NEU shares are currently trading down -1.59 to $65.12 on 
increasing volume of 375 thousand shares; the average volume is 
252.6 thousand. The 52-week trading range for the stock is   
$47.50 -85.69.

Neuberger Berman Inc. through its subsidiaries is an investment 
advisory company with $58.2 billion in assets under management as 
of June 30, 2001. For more than 60 years, the firm has provided 
clients with a broad range of investment products, services and 
strategies. Neuberger Berman Inc. engages in private asset 
management, wealth management services, tax planning and personal 
and institutional trust services, mutual funds and institutional 
management, and professional securities services for individuals, 
institutions, corporations, pension funds, foundations and 
endowments. (company press release)


 


===

Direct Focus Offers More Than Good Health

Bowflex and Nautilus company Direct Focus, Inc. (Nasdaq:DFXI) 
announced a 3-for-2 stock split, payable to common stock owners 
on August 13, 2001. Better late than never, PremierInvestor 
analysts had anticipated this announcement to occur July 17 with 
the Company's earnings release.  

DFXI currently has 23.4 million shares outstanding and a float of 
20 million. The stock is expect to trade on a split-adjusted 
basis on August 14 and will mark the second split executed by the 
Company this year.

Direct Focus reported second quarter earnings of $0.61 per 
diluted share, up 78% from $0.34 reported for Q2 of 2000. 
Quarterly sales increased by 56 percent to $75 million.

DFXI gapped up one point from yesterday's close of $48.01 and is 
currently trading at $48.40 by midday on Tuesday. Please check 
back for updates as PremierInvestor watches this split run for 
potential Play opportunities.

About Direct Focus, Inc. 

Direct Focus, Inc. is a marketing company for fitness and healthy 
lifestyle products with a direct business model. The Company 
currently markets its Bowflex line of home fitness equipment and 
Nautilus Sleep Systems directly to consumers, using an effective 
combination of television advertising, 800-call centers and Web 
sites. The Company also sells its Nautilus commercial fitness 
equipment directly to health clubs and other institutions, and 
its Nautilus consumer fitness products through retail athletic 
stores. (company press release)

 
 

===

A Sterling announcement

Sterling Bancshares, Inc. (Nasdaq: SBIB) announced during morning 
trading that its board of directors approved a 3-for-2 stock 
split, payable in the form of a 50 percent stock dividend on 
September 18, 2001. On the execution date of September 19, the 
Company will effectively have 39.45 million shares outstanding 
and a float of 30.3 million. The last split announced by Sterling 
was a 3:2 in 1998.

Additionally, Sterling declared a quarterly cash dividend of 
$0.055 per share, payable August 20 to shareholders of record on 
August 6.

Sterling Bancshares, Inc. is a Houston-based bank holding company 
that operates 33 community-banking offices in the greater metro 
areas of Dallas, Houston, San Antonio, and South Texas. The 
Company also provides mortgage-banking services through its 80 
percent-owned subsidiary, Sterling Capital Mortgage Company. The 
Company is currently undergoing a merger with Lone Star 
Bancorporation, which is expected to be completed on August 22, 
2001 with Lone Star's stockholder's approval.  

SBIB shares are currently trading at the day's opening price of 
$20.33. Volume is at half its 3-month average at 40.9 thousand 
shares.

 



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

  -------------------------
  New Split Candidate Play
  -------------------------

Alliant Techsystems - ATK Close:$95.44 Change:+1.52 Stop:$91.50

Company Description:
Alliant Techsystems is the Pentagon's largest ammunition supplier 
and the world's largest manufacturer of solid-fuel rocker engines.
This Hopkins, Minnesota-based firm has three business groups: 
aerospace systems, conventional munitions, and defense systems.  
The company's aerospace group makes solid propulsion systems for 
space vehicles, strategic missile systems, and reinforced composite 
structures for aircraft and spacecraft.  Its conventional munitions 
group makes ammunition ranging from small arms to tank ammunition 
for the M1A1 Abrams (the US's main battle tank).  Alliant 
Techsystems' defense systems group turns out smart munitions, 
electronic systems, and batteries. The US government (and its 
contractors) accounts for about two-thirds of the company's sales. 

Fundamentals: 
It's mid-2001 acquisition of Alcoa's Thiokol rocket engine unit 
should cause a 50-percent pop in revenue for the fiscal 2002 year 
ending in March.  Analysts forecast the firm will earn $5.34 per 
share in the current fiscal year on revenue of $1.6 billion.   Last 
year the firm earned $4.80 per share on sales of $1.1 billion.  
This gives the shares a current P/E of 19.8 and an estimated 2002 
P/E of 17.9.  This is inline with the industry average P/E of 17.07. 

Why We Like It:
We liked this stock when we first selected it in June, we liked it 
when we booked some profits on a dip and we still like it now that 
it is bouncing off of support.  The reason we are so bullish has not 
changed.  At their annual meeting on August 7th, shareholders are 
scheduled to vote on increasing the number of outstanding shares 
by 40 million from the current 14.2 million.  This sets the stage 
nicely for a stock split.  Another sign that encourages us that a 
split may be in the cards is historical.  In November 2000 the 
company split 3 for 2.  That split was declared when the stock price 
was $89.00 - below current levels.  Combine the company's strong 
fundamentals, a defense friendly political environment, bullish 
short-term technical momentum with split potential and there is much 
to be bullish about this stock.  Strong downside support is nearby at 
$92.50 and upside resistance at $100.00.  We will tighten up our stop 
when $100 comes near.  For now we will start this play with a stop 
just below support at $91.50.

Picked on July 24th at $95.44
Earnings Date            8/8 (Confirmed)





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

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

TRC Companies - TRR Close:$40.52 Change:-4.03 Stop:$42.00

Without any specific news to base the last two day's decline to, 
we'll have to thank over-all market weakness for the fate of 
this play. The company even got what would normally be a boost 
on Monday when Zacks analysts upgraded TRC as a Strong Buy. 
Ironically, TRR is now at a great looking entry point for 
those still interested in the stock or for those who haven't 
been stopped out yet. Nevertheless, we shall walk away licking 
our wounds.

Picked on July 19 at $45.99 
Gain since picked:    -3.99
Earnings Date          8/8 (Not Confirmed)





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

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

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

Alpha Industries - AHAA Close: $36.00 Change: +2.41 Stop: $32.50

Company Profile:
Alpha Industries, Inc. designs and manufactures gallium arsenide 
(GaAs) integrated circuits, silicon and GaAs discrete 
semiconductors and ceramic products for cellular telephones, 
global positioning systems and wireless equipment. For the FY 
ended 4/1/01, net sales rose 46% to $271.6M. Net income rose 86% 
to $33.4M. Revenues reflect increased demand for wireless and 
broadband products. Earnings also reflect increased interest 
income.

Fundamentals:
For the 2001 fiscal year the company's net income increased 86-
percent.  Analysts expect company earnings to rise from a loss of 
$0.10 in 2002 to a profit of $0.48 in 2003.  Because of the loss 
AHAA shares do not possess a current P/E.  However, the forward 
P/E is 75.

Strategy:
AHAA has rebounded nicely from the doldrums it sat in back in 
April.  And though it certainly wasn't uncommon for a tech stock 
to sink to its lows in April, recent performance from AHAA has 
been uncommon.  With a strong profit forecasted for the upcoming 
fiscal year end and recent upgrades from influential brokerage 
firms, AHAA could be ready to move.  The predominantly positive 
moves that have taken shape over the course of the month of July 
have typically aroused quite a bit of volume.  The intersection of 
the 20 and 200 DMAs on strong volume just days ago could indicate 
that the run will continue.

If you take a glance at the daily chart for AHAA, you'll 
undoubtedly notice that the stock has several gaps, both up and 
down.  The inherent volatility suggests that the stop be placed 
under the $33.00 support level at $32.50.  Significant support 
exists at $30.00, however, we are not prepared to risk a 
percentage loss of that magnitude.  For those leaning more toward 
a short-term time horizon, a $40.00 target above resistance of 
$36.00 would likely present the best exit price.  Those with a 
longer time horizon might look to the next level of resistance 
just above $44.00.  Keep in mind that the company caters to the 
cell phone industry and the battered sector may have most of its 
bad news out already.


Picked on July 24th $36.00
Earnings Date          10/17 (Unconfirmed)





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

Skillsoft Corporation - SKIL Close:$28.01 Change:-2.01 Stop:$31.00

Company Description:
Skillsoft is one of the dominant players in the fast growing e-
learning industry.  The company offers 624 web-based classes to 
over 330 clients including Microsoft, Coca Cola, Procter & Gamble 
and Anheuser-Busch.  The savings of web-classes over traditional 
instruction is causing cost constrained companies to flock to 
Skillsoft.  The company attracted 219 new clients in fiscal 2001 
and when they try e-learning they like it.  The renewal rate for 
clients is 97-percent.

Fundamentals: 
For their 2002 fiscal first-quarter the Company reported total 
quarterly revenue of $8.5 million, a 303-percent increase from 
$2.1 million in the 2001 first quarter.  Gross margin increased 
to 93.8-percent, compared to 89.4-percent in the year-ago first 
quarter. For the fiscal fourth quarter, gross margin was 93.5-
percent.  They also reaffirmed their intent to reach profitability 
by the fourth-quarter ending January 2002.  For the upcoming 
second quarter ending July 2001, analysts expect the company to 
lose 23-cents per share, an improvement over the 47-cents lost in 
the same period the previous year.  For the year, the consensus 
estimate is for the company to lose 62-cents per share and to gain 
64-cents in following year.

Why We Like It:
In late May, the company filed a registration statement with the 
SEC for a public offering of 2.8 million shares, with an option to 
increase the IPO by another 420k shares.  Between 800k and 855k of 
the shares will come from existing shareholders.  Presently, the 
company has 13.4 million shares outstanding with a float 
(unrestricted public shares) of 4.6 million.  Although the company 
has not announced a date for the offering, the prospect of 3.2 
million shares being dumped in the marketplace keeps a lid on this 
stock.  The shares have been slip sliding away since reaching $38.94 
in early June.  Last Friday, the shares began to break down again 
with a low-volume drop of $2.53. After bargain hunters pushed the 
shares up 20-cents on Monday, the bears took complete control on 
Tuesday tacking on a high volume drop of $2.02.  If the bearish 
momentum continues, a close below support at $27.50 would put the 
next support level of $23.35 well within reach.  Protection from a 
bullish reversal exists at $30 giving us a solid risk to reward 
ration.  We will start this Bearish selection with a stop at 
$31.00. 

Picked on July 24th at $28.01
Earnings Date            N/A (Not Confirmed)





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

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

BEA Systems - BEAS - closed: 21.18 change: +0.47 stop: 19.50

Ouch!  Talk about sell the news.  BEAS announced great news with
new strategic partner Intel and shares gapped up on Monday only
to sell-off throughout the day closing at their low.  BEAS and
Intel will cooperate to use BEAS' application software on Intel's
high-end server chips.  This should really be a great move for
BEAS in the long run but right now the stock is floundering with
the rest of the market.  The stock really needs to hold $20 as its
support level and right now it doesn't look so great.  Proceed
with caution.

Picked on July 20th @ $23.01
Gain since picked:    - 1.83
Earnings Date:         08/14 (not confirmed)




---

PriceLine.com - PCLN - close: 7.93 change: -0.52 stop: 7.45

Quick, someone call Will Shatner!  Priceline's shares fell another
6% today as the rest of the market headed South.  If there is any
good news here it is the low volume this drop occurred on (only 
2.8 million vs. the normal 6.3 million).  Unfortunately, the bad
news is that the price broke down under what was supposed to be
support at $8.00.  Remember that on Friday we edged our stop up
to 7.45.  This may be too far away for some traders so use your 
best judgement.  Wednesday will be the test.  If the stock 
rebounds then we might be okay.  If it doesn't then it may be 
time to ask Scotty to beam us up.

Picked on July 13th @ $ 8.70
Gain since picked:    - 0.76
Earnings Date:         07/31 (not confirmed)





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

Brocade Comm. - BRCD - close: 29.18 change: +1.07 stop: 31.13 *new*

The bounce in Brocade is cause for concern but don't panic yet.
This morning Morgan Stanley came out with an upgrade on the stock
to an outperform from a neutral rating.  Additional good news 
came straight from Brocade with their announcement of two new
offices in Europe and a handful of new resellers in the region.
Shares may be green today but not enough to make us worry too much.  
Monday's drop was the key.  Shares fell through support at $30
and today's good news couldn't push shares back above this 
critical level.  As long as BRCD remains under $30 then bearish
traders should be okay.  A continued drop is likely to stall at
$27.50 and then eventually hit $25.  However, if shares do rebound
we will want to protect ourselves.  Set a new stop at $31.13

Picked on July 16th @ $34.06
Gain since picked:    + 4.88
Earnings Date:         08/14 (not confirmed)




---

Check Point - CHKP - close: 37.87 change: +1.30 stop: 40.09 *new*

Warning!  Warning! Danger Will Robinson.  That's right short
sellers, this is one technology company that is reiterating 
its 30 to 50% growth for the year.  In a market where tech 
companies are slashing forecasts and earnings projections (if
they offer any guidance at all), CHKP is "excited about the
prospects" said CHKP's CEO, Gil Shwed.  The question we must
ask ourselves is whether we believe the current market 
environment can keep CHKP's share price down.  We picked it 
at $40 and saw shares fall to $35 but the earnings report has
provided potential fuel for a bullish fire.  At the moment, 
shares are just too wet under the market's deluge to ignite.
Some traders may decide to just take their $2 and go home.
We're going to move our stop down to cost at $40.09.  If the
stock can rally then we'll let it take us out.  If not, then 
we'll look for a retest of new support at $35 and hope shares
can fall even further.

Picked on July 18th @ $40.09
Gain since picked:    + 2.22
Earnings Date:         07/23 





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

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

Take-Two Interactive Software - TTWO - close: 18.69 change: -1.76

With the markets turning in a very disappointing day, TTWO followed
suit and traders took profits off the table as shares fell over
8%.  Fortunately, our stop was at $19.00.  One can see that TTWO 
suffered selling pressure from early this morning and it was steady
throughout the day.  It's too bad shares could not hold up better as
today was TTWO's shipping day for their much awaited Max Payne PC 
game.  

Picked on July 17th @ $19.96
Gain since picked:    - 0.96
Earnings Date:          N/A  (not confirmed)





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

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

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

Anadarko Petroleum APC Close:$52.39 Gain:-0.59 Stop:$50.00

Anadarko closed down 59 cents today, but what stock didn't?  The 
good news is that the gap that formed on Monday is still open.  
If we get one more close above the gap, it should be solid 
support.

Picked on July 20th at $51.51
Gain since picked:      +0.88
Earnings Date           7/26/01




===

AmeriPath PATH Close:$35.20 Gain:-1.50 Stop:$34.00

Biotechnology stocks lost 4.27% today, and AmeriPath was drug 
down with them.  If the selling spree continues into tomorrow, 
our stop at $34 runs the risk of getting hit.  At least that 
would lock in a gain of $3.05.

Picked on July 11th at $30.95
Gain since picked:      +4.25
Earnings Date           7/31/01




===

RailAmerica RAIL Close:$12.40 Gain:-0.35 Stop:$11.50 NEW

RAIL continues to have trouble getting above the $12.90 to $13 range, 
and today was the third failed attempt.  With transportation stocks 
getting pounded today, RAIL held up well, but we are still going to 
raise our stop to $11.50 to ensure this doesn't turn into a losing 
pick.  For that stop to get trigged, RAIL would have to fall below 
the 50-dma, and fill a gap formed on 7/16.

Picked on June 14th at $11.41
Gain since picked:      +0.99
Earnings Date            N/A




===

Star Gas Partners SGU Close:$21.15 Gain:-0.09 Stop:$19.50

SGU has been in a small four-day up trend, but can't crack through 
resistance at $21.50.  It resided above that level for a bit today, 
but sold off it the final two hours of trading.  We will leave our 
stop where it is at, for now.

Picked on June 17th at $21.18
Gain since picked:      -0.03
Earnings Date           7/26/01




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

Abercrombie and Fitch ANF Close:$40.10 Gain:-0.02 Stop:$42.50

Abercrombie doesn't look like it wants to move higher any time 
soon, but refuses to breakdown.  The Retail Index falling below 
877 might be the catalyst to start this stocks slide.

Picked on July 12th at $40.46
Gain since picked:      -0.36
Earnings Date           8/14/01 (unconfirmed)




===

Professional Detailing PDII Close:$65.24 Gain:+0.44 Stop:$68.25 NEW

With the widespread selling today, PDII should have tanked.  
Granted the stock was due for some profit taking, but just to be 
safe we are going to lower our stop to $68.25.  Resistance looks 
strong at $67.75, but our new stop still gives us some room if 
this stock wants to head lower.  

Picked on July 18th at $70.00
Gain since picked:      +4.76
Earnings Date            N/A





CSG Systems - CSGS - See our Play of the Day in section 1

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

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

Flemming - FLM Close:$35.11 Change:-1.80 Stop:$35.50

There was no company specific news impacting the shares, so 
we must assume the sudden onset of bearishness must be 
related to the general weakness in the overall market.  
Although the shares snapped our stop at $35.00, it was a 
bullish sign that the shares managed to close above $35 
even if ever so slightly.  If the shares need to 
consolidate some more before resuming their march north 
then strong support exist near $32.50.

Picked on July 19th at $37.30
Gain since picked:      -1.80
Earnings Date           8/1/01 (not confirmed)





===

Laboratory Corp of America - LH  Close:$85.62 Change:+0.48 stop:$84.50

After topping earnings expectations, our play still wasn't able 
to hold up to Monday's dip, which cruised past our stop on its 
way to the low of $82.40.  Recovering swiftly, Tuesday's close 
earned +0.48 on the day, showing some promise that it will 
continue to work its way back to resistance of $88.

Picked on July 13th at $83.98
Gain Since Picked       +0.52 
Earnings Date             N/A (Confirmed)




===

Tenet Healthcare - THC Close:$53.96 Change:-1.16 Stop:$53.75 

We reported that we thought these shares were beginning to look 
tired after a nice run up.  We closed play when it tripped our 
tight stop at $53.75 leaving us with a $2.66 per share gain.  We 
suspect the reason for the drop is the company's upcoming 
earnings release on Wednesday.  Some investors sitting on solid 
gains are deciding it would be prudent at this point to bank some 
profits before the release. 

Picked on June 17th at $51.09
Gain since picked:      +2.66
Earnings Date           7/25/01





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