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Daily Newsletter, Thursday, 08/02/2001

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PremierInvestor.net Newsletter                Thursday 08-02-2001
                                                  section 1 of 2
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In section one:

Market Wrap: The Six-Egg Omelet 
Market Sentiment: Sit Ubu, Sit.  Good Dog
Play-of-the-Day: NIKE Inc. - NKE (Bullish)
Watch List: More Bullish Possibilities

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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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        8-02-2001          High      Low    Volume Advance/Decline
DJIA    10551.18 + 41.17 10609.65 10513.47 1.22 bln   1781/1275	
NASDAQ   2087.36 + 19.00  2103.16  2061.75 1.66 bln   1853/1771
S&P 100   626.27 +  2.66   629.20   623.56   totals   3634/2986
S&P 500  1220.75 +  4.82  1226.27  1215.31             
RUS 2000  488.99 -   .25   491.89   486.53
DJ TRANS 2940.59 +  6.81  2941.71  2903.31 
VIX        23.28 +  0.30    23.80    22.57 
Put/Call Ratio      0.55
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===========
Market Wrap
===========

The Six-Egg Omelet by Jeff Bailey

The true appetite for a hungry bull in technology is measured by 
the bulls willingness to eat a six-egg omelet.  Perhaps the top 6 
weighted stocks in the NASDAQ-100 Trust (QQQ) (they make up about 
32% of the QQQ) and current field position will give hint of how 
strong this rally really is.  I feel that these 6 stocks as 
represented by their weighting and technical shape, can give the 
trader a good feeling of what to be looking for in the coming 
sessions.  As these observations unfold, a trader gets the 
feeling there's some upside potential still to be had.

For instance, shares of Microsoft (NASDAQ:MSFT) account for the 
largest weighting in the QQQ.  As of the end of trading August 1, 
Microsoft accounted for 10.56% of the QQQ.  For the past seven 
session, shares of MSFT have hardly budged from their $65-$68 
range.  This stock is sitting right on top of longer-term upward 
trend on its supply/demand chart and if it starts getting in the 
act and makes an upward move, its weighting in the QQQ could 
really have that security packing on some weight.  This is a 
stock I currently feel needs to show some gains.  It was one of 
the first big tech stocks to break longer-term downward trend 
back in April at $59 and recent trading near $66 is the first 
test of bullish support trend.

Microsoft Chart - $1 box



I think MSFT is a great stock for traders to be looking long at 
current levels.  My experience has been that institutions like to 
buy stocks that have made a major move off the bottom, when they 
first test the bullish support trend.  If the NASDAQ is going 
higher, look for shares of MSFT to lead the way.  The stock has 
had to digest a HUGE move from the $59 level.  Think of MSFT as a 
granite mountain and try to move it.  It takes a lot of buying 
power to get a stock like this to move from $53 to $71 without so 
much as a $3 reversal.  It shows the willingness to commit to a 
stock based on some type of belief.  If institutions are going to 
commit to this market, shares of MSFT should get a bounce here.

The second most heavily weighted stock is Intel Corporation 
(NASDAQ:INTC).  We discussed the technicals for this stock in 
yesterday's wrap.  This is a stock I felt the NASDAQ and the 
Semiconductor Index ($SOX.X) needed in order to continue a charge 
higher.  If it does, then that gives hint that the bull has an 
appetite.  Today's 4.42% gain didn't hurt things here at all and 
helped the Semiconductor Index pack on another 3% gain today.  
When you compare the technicals of MSFT to those of INTC, you can 
perhaps see what the future may hold for shares of INTC.  The 
beginning of a bull market usually show a chain reaction.  You 
get a stock like MSFT headed in the right direction, but that 
direction must continue.  Then another big named stock breaks 
downward trend and adds fuel to the fire.  The speed or rate of 
change in the move often gives hint of how much fuel is behind 
it.

Qualcom (NASDAQ:QCOM) has perhaps been the most overlooked stock 
of the NASDAQ.  Here's a stock that I'd argue may have started 
this whole NASDAQ rally.  QCOM accounts for a 5.12% weighting and 
its gap higher on July 27th to $63.22 has not been relinquished.  
After consolidating the past four sessions, the stock unleashed 
its fury today as the stock jumped by 4.54% and closed above its 
200-day moving average.  What's interesting about QCOM is how 
this stock recently tested bullish support trend at $57, then 
rocketed higher.  The first test of bullish trend is often the 
best buying opportunity.  Hmmm.... MSFT just tested its bullish 
support!

Qualcomm Chart - $1 box



Qualcomm (NASDAQ:QCOM) looks to be in a more advanced stage of 
bullishness.  Note the tendency of this stock to trade into 
bullish support (blue +) then give the "triple top" buy signal or 
variation thereof.  The last time the stock did that back in May 
at $53, the stock made a nice move higher.  Now we look for the 
same thing to happen.  If it doesn't, then we make the 
observation that the market isn't as bullish.  Would I trade the 
stock here?  Yes, but only a partial position.  I'd have wanted 
to have bought some back in May, but right now, we need to 
understand the risk involved should a pullback to support occur.  
A trader can still participate in the bullishness of the chart, 
but he/she need not go overboard!

Cisco Systems (NASDAQ:CSCO) is the fourth most heavily weighted 
stock in the QQQ at 4.55%.  Recently, shares of Cisco 
(NASDAQ:CSCO) broke above its long-term downward trend on its 
supply/demand chart at $19.50 (see July 27th wrap) and that was a 
positive sign.  Earnings are due out next week and volume has 
been relatively light.  It looks like institutions are just 
nibbling away right now and seem uncertain.  I get the feeling 
the thought here is "the stock used to trade $70 and there's 
plenty of time."  The technicals here show a very early stage of 
turn around in this stock, but the stock is quickly becoming a 
key piece of the QQQ puzzle.  As you look at and understand the 
bearish resistance in some of the above charts and the length of 
those trends, you hopefully understand just how long that 
downward trend for CSCO could and why the stock hasn't rocketed 
to $30.  There were a lot of investors and fund managers that 
thought CSCO would never trade under $50 several months ago.  
There's some warming up to be done still before they get the 
confidence to get aggressive with the stock.  Nonetheless, the 
fact that the stock got above bearish resistance will have some 
fires burning.

Rounding out the six-egg omelet are shares of Oracle 
(NASDAQ:ORCL).  I find the technicals on the supply/demand chart 
quite similar to those of Microsoft.  Right now, the stock is 
testing its bullish support trend at $17.50.  I think what we're 
seeing here (between Microsoft and Oracle) is the commonality of 
software.  The current technicals here are great to be 
monitoring.  My thinking is if the bull is hungry and has a 
favorable outlook for the future, both of these stocks should be 
gobbled up at support.  If Microsoft (MSFT) and Oracle (ORCL) are 
"bad eggs" they'll get spit out of institutional portfolios and 
will break their support.  These are two very good stocks to be 
monitoring here.  I do think that both of these stocks offer some 
of the best risk/reward trades in technology right now.

Oracle Corporation Chart - $0.50 and $1 box



I'd be more interested in trading bullish in MSFT than I would 
ORCL at this point.  While both stocks are at bullish support, 
the bullish support for ORCL is only 7 columns long, while MSFT 
bullish support is 17 columns long.  I do like the attractive 
bullish price objective and risk/reward in the stock at current 
levels.  This stocks field position is ideal for buying 1/2 
position long and then rounding to a full position on a break 
above $21.  I'd rate it a 3-star on a 5-star scale.

And finally the sixth egg of the omelet.  This egg is different 
than the other 5 as it represents the biotechnology group.  
Shares of Amgen (NASDAQ:AMGN) account for 2.59% of the weighting 
in the QQQ and this would be my representative stock for the 
biotechs.  The technicals here are tough to figure out at this 
point.  The only thing that has made sense to me here in the last 
few weeks is that this stock did reach a bearish price objective 
on its supply/demand chart that had been created back in June.  
The stock did have a bearish vertical count indicating a price 
objective of $55 and when the stock hit $54, it has jumped to the 
$63 level, but is now fighting with a rolling over 50-day and 
200-day moving average.  Right now I'd only be monitoring this 
stock and drawing from it the feeling of strength or weakness.  
Short-term, I don't think the stock can get above $66 as that is 
where bearish resistance and extension of old bullish support 
cross.  I get the feeling this stock has some basing to do before 
it can provide a further meaningful move to the upside.  What is 
compelling about this stock though is that it has given a buy 
signal at $62 on its supply/demand chart and current vertical 
count indicates a longer-term price objective of $76.  With the 
group getting close to an oversold level, this stock is showing 
the leadership one would expect from a representative stock in 
the biotechs.

Hopefully you can get a good feeling for how the above "Big 6" 
can impact the QQQ and the NASDAQ.  If you can at least monitor 
these stocks progress as time passes, you'll get a very good feel 
for how the NASDAQ can trade.  The big guys lead and these are 
all some bellwether stocks for the different types of technology 
they represent.

My feeling is this.  If the MARKET believes that we're turning a 
corner, then the market should be fairly aggressive buyers of 
MSFT and ORCL.  If not, then there's either something wrong in 
the group or there's still some bumps to be ironed out.  

Just now we got the bullish percent updates for the NASDAQ-100.  
The bullish percent reading is at 51%.  We needed a reading of 
52% to get into bull confirmed status.  Note that MSFT is one 
stock of the NASDAQ-100 that is NOT on a buy signal on its point 
and figure chart.  For it to add to the bullishness as things 
stand now, the stock needs to reverse course and eventually trade 
$74 without a reversal.  Can she do it?  Is it worth the $3 per 
share risk?  If she does do it, will it drive the NASDAQ.  I 
think the answers are Yes, Yes and Yes.


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

Sit Ubu, Sit.  Good Dog by Jeffrey Canavan

After throwing a stick, it's hard to keep a dog from instantly 
fetching it.  While trying to make the dog heel, his tail will 
start wagging, his legs start shaking, and he starts barking.  
When finally released, the dog explodes towards the stick.  

Bullish traders are trying to be patient, but their tails are 
starting to wag, and their legs are starting to shake.  Each time 
an economic report comes in better than expected, or another 
person quips that "the worst is over," bulls become more and 
more anxious.  Young pups rush in at the opening bell and bid 
stocks higher, but the older and wiser mutts step in and sell 
into the rallies, muting any significant gains.

Semiconductors continue to be the alpha male, gaining another 
three percent, and closing above key resistance at 650.  The 
major indices slightly retreated from resistance levels today, 
but remain within striking distance.  Biotechnology, today's runt 
of the litter, managed to recoup some of its losses, and closed 
above support at 510. 

With resistance levels starting to crack, and bullish percent 
data reversing into bull alert and bull confirmed status, it 
might be time for bulls to slowly start marking their territory.  
As long as traders are thrown a positive news bone every now and 
then, it certainly looks like the market wants to go higher.  But 
each day stocks become a little more overbought, so it might be 
wise to cautiously sniff around rather than blindly chasing 
stocks.  Ironically enough, tomorrow is the last trading day for 
August cattle options, will it be the last day of this mini bull 
run?

Tomorrow's Scooby Snack takes the form of the unemployment 
report, which is expected to show a 36,000 drop in payrolls, and 
an up tick to 4.6 percent in the unemployment rate.

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

Market Volatility
The VIX and VXN temporarily halted their 6-day decline.
 
VIX   23.28
VXN   48.53

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          Put/Call Ratio  Call Volume   Put Volume
Total           .55        660,924       363,290
Equity Only     .47        615,314       290,833
OEX             .95         10,603        10,055
QQQ             .25        120,228        29,656

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Bullish Percent Data

The S&P 500 has turned into bull confirmed status, and the 
Nasdaq-100 is one box away from going bull confirmed.

           Current   Change   Status
NYSE          34       -      Bear Confirmed
NASDAQ-100    50     +12      Bull Alert
DOW           36       -      Bull Alert
S&P 500       54      +6      Bull Confirmed  

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

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10-Day Arms Index  1.22  

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.

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        Advancers     Decliners
NYSE      1782           1279
NASDAQ    1849           1776

        New Highs      New Lows
NYSE      132             26
NASDAQ    113             61

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

Advisory Sentiment 

Bullish  Bearish  Correction   Net   Change 
  52.6%    23.7%     23.7%    28.9%   -0.4%

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. 

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Commitments Of Traders Report: 07/24/01
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
The three-week reduction in the net bearish position of 
commercials came to an end. This wasn't the result of new short 
positions being added, but rather more long positions being 
dropped than short positions.

Commercials   Long      Short      Net     % Of OI 
7/10/01      309,374   385,178   (75,804)   (10.91%)
7/17/01      336,836   403,561   (66,725)   ( 9.01%)
7/27/01      317,241   392,146   (74,905)   (10.56%)

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
7/10/01      135,587     59,889   75,698     38.72%
7/17/01      122,525     50,211   72,314     41.86%
7/24/01      141,372     61,665   79,717     39.26%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100
The net bearish position of institutions has increased for the 
third week in a row.  (11,802) is the third highest bearish 
reading of the year. 

Commercials   Long      Short      Net     % of OI 
7/10/01       26,688     34,640   ( 7,952)  (12.97%)
7/17/01       26,721     37,225   (10,504)  (16.43%)
7/24/01       27,396     39,198   (11,802)  (17.72%)

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
7/10/01        9,073     7,486    1,587       9.58%
7/17/01       11,680     8,183    3,497      17.61% 
7/24/01       12,170     7,744    4,426      22.23%

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 added a few more long positions, increasing their 
net bullish stance on the Dow.

Commercials   Long      Short      Net     % of OI
7/10/01       13,743    12,999      744      2.8%
7/17/01       14,145    12,963    1,182      4.4%
7/24/01       16,080    12,812    3,268     11.3%

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
7/10/01        5,048     7,835    (2,787)   (21.63%)
7/17/01        5,255     9,144    (3,889)   (27.01%)
7/24/01        5,599     9,526    (3,927)   (25.96%)

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 (Bullish)
=========================

NIKE Inc. - NKE Close:$49.79 Change:+1.98 Stop:$47.75 NEW

Original Comments When First Selected on July 14th:

Company Description:
The Beaverton, Oregon based firm is the world's largest athletic 
shoe and apparel maker.  It has over 40-percent of the entire US 
athletic shoe market.  The company also sells Cole Hann dress and 
casual shoes and a Nike-branded product line of athletic apparel and 
equipment.  The company also operates NIKETOWN stores and is opening 
JORDAN in-store outlets featuring Michael Jordan brand merchandise.  
As youth fashion tastes have moved toward hiking boots and other 
casual shoes, and consumer demand has slumped in Asia, NIKE has felt 
the pain.  To cut expenses, the firm has reduced athlete endorsements, 
downsized facilities, and released 6-percent of its employees.  The 
company, which relies on outside manufacturers, has taken steps to 
avoid more criticism of human rights violations in its factories.

Fundamentals: 
Analysts expect the firm to earn $2.34 per share on sales of $9.9 
billion in the fiscal year ending May 2002.  Last year, the company 
earned $2.16 per share on sales of $9.5 billion.   The company's 
earnings growth of 8-percent is inline with the industry average of 
7.8-percent.  The firm has a current P/E of 22 and a forward one of 
20, a premium over the industry average P/E of 15.   

Why We Like It: 
To gain a fuller understanding of why we like NKE shares please 
read Jeff Bailey's Market Wrap.  He discusses how the selling in 
Treasury bonds may not necessarily be needed for this stock to 
advance.  Bonds are the bank account for big money.  When they are 
buying bonds it often is because they are selling equities.  They 
reason it is better to be safe in bonds (and earn a little interest) 
than suffer equity losses.  Yet since March, Nike shares have been 
in a slowing ascending trading channel seemingly impervious to drops 
in the general market.  This suggests there is a lot of underlying 
strength in the shares.  Simply put, even when the market looks ugly 
money managers are not selling Nike shares to buy bonds.

What they (and we) are seeing is that this franchise company is 
making progress in reducing inventories and expenses, and 
improvements in future overseas orders are suggesting that historical 
double-digit growth is likely to return to Nike sometime next year.  

What is also improved is the short-term technical outlook for Nike 
shares.  For the last week and a half NKE shares have been 
consolidating between roughly $46 and $48.  On Wednesday the shares 
bounced off of this lower range on a slight rise in volume and 
followed through on Thursday with another jump in price and volume. 
 This indicates Nike shares are going to make a run at breaking 
through resistance at $48 and the upper trend line at 
approximately $48.75.  This would put the shares on a strong path 
to test subsequent level of resistance at $50, $52.50, $57.50 and 
$60.  We don't see this play as an aggressive short-term play, but 
rather a longer trending one.  Accordingly, we will start this play 
with a stop at $44, which is just below the 200-day moving average 
of $44.25.  

Updated Comments: 
Shares of Oakley got pummeled today after the company announced it 
was having a tiff with Sunglass Hut.  So how does that affect Nike?  
Sunglass Hut said that if Oakley doesn't want to play ball, it would 
look elsewhere, specifically Nike.  The news was just what Nike needed 
to catapult it out of its trading range.  Since $48 posed such stiff 
resistance, it should make for good support.  We are raising our stop 
to $47.75, just under that support level.

Picked on July 26th at $47.84
Gain since picked:      +1.95
Earnings Date            N/A (Not Confirmed)





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

Compuware Corp. - CPWR - close: 14.28 change: +0.32 

WHAT TO WATCH:  Is software ready to move?  The GSO index may
be inching higher but CPWR appears to be breaking out!  The
stock traded through resistance at $14 on very strong volume.
For aggressive traders this is a big green light!  More patient
traders may want to see shares close above $14.50 which has
proved too tough for the stock over the last year.  Once over
14.50 there is no clear resistance until the stock hits $20
from its gap down well over a year ago.  Frankly, the stock
has been basing so long, 14.50 may not mount much of a challenge
for it.




---

K Mart Corp. - KM - close: 12.28 change: +0.60

WHAT TO WATCH:  K Mart recently announced that they would 
complete their buy back of its failing BlueLight.com subsidiary.
While this has produced mixed reviews from the press at large,
KM's stock price has been steadily climbing these last several
days.  Buyers made a big push today sending the stock up 5%.
The stock is now at a turning point.  Do sellers step in and
take it back down to 10.50?  Or can the bulls push through
resistance and set new 52 week highs?  If you're interested
in following a retail stock under $20 this is one to watch.




---

Brocade Communications - BRCD - close: 38.08 change: +0.38

WHAT TO WATCH:  Volume has been average lately but BRCD 
just may have broken out to the upside.  Shares have been
in a descending channel since the middle of May.  Many traders
may feel that shares of BRCD are very overbought from its
recent lows near $28.  However, the renewed hope in tech
stocks may be able to keep the dream alive for BRCD investors.
The stock is trading at or above the top of its channel and
today's trading puts it right on the 50-dma.  Keep your eye
on the $40.75 level where the stock took a serious gap down
in early July.  This will be resistance if you're bullish.




---

Applied Materials - AMAT - close: 50.00 change: +1.70

WHAT TO WATCH:  If you're still watching the semiconductors or
if you're looking for stocks in that group, keep AMAT on the
list.  The upgrade by Merrill Lynch has helped the stock move
beyond resistance at 47.50.  Now the battle between the bulls
and the bears will continue as it sits at the psychological
level of $50.  If the rally continues, bulls can look for a
close over $50 as a potential trigger.  The stock could rally
to $55 given enough time.  If the stock pulls back, shares 
should find support at 47.50 now.




---

Motorola - MOT - close: 19.40 change: +0.26

WHAT TO WATCH:  Shares of MOT are showing a bullish pattern 
of higher lows.  Buyers were previously supporting the stock
price at 17 but they have since moved up their dip buying
to 18.50.  The last two days have seen the coil get even 
tighter.  Resistance appears pretty firm at 19.50 but a 
breakout feels imminent.  Shares can probably get to $21 before
stopping to rest again.  Look for the trigger on stronger
than average volume.




---

QUALCOMM - QCOM - close: 68.34 change: +2.97

WHAT TO WATCH:  Looking for a little more volatility?  An old
tech favorite may be making a move.  Shares of QCOM have been
fighting back from a sub-$50 share price for the last six weeks.
The stock seemed to hit a wall in the $67-$68 level until today.
In the last half-hour of trading buyers were able to push QCOM
up and through the $68 mark and above its 200-dma (67.88).
Aggressive traders may want to look at this as a potential
trigger to go long.  The rest of us will wait to see if shares
can breakthrough more resistance at $71 (established in mid-May).





-------------------------
-- 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.

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

PeopleSoft Inc. - PSFT - close: 43.85 change: -0.20

UPDATE: We're still watching PSFT to see if it can close above
$45.  Today's dip and bounce at $42 may be the runner's crouch
before the starting gun goes off.  Keep your eyes on it.

Wednesday, August 1st's write up:

WHAT TO WATCH:  If the technology sector can continue the rally,
then PSFT could be preparing to make an assault on $50.  The stock
has made a dramatic comeback from an intraday low near $30 after
falling on earnings fears and a potential lawsuit from an unhappy
client.  Looking at an intraday chart, buyers stepped back in
to buy the stock when it dipped to $40 on the 30th which should
be a strong support level for it.  A potential trigger to 
evaluate a long play would be a close over $45.






-------------------
POTENTIAL PLAYS NOW

These Watch List candidates have met yesterday's potential 
triggers and many could be great plays for the active trader
now.  We are going to watch list them for another day to see
if they confirm the move.  Choose your stop wisely if you
proceed to trade them.

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


Emulex Corp. - EMLX - close: 27.20 change: +0.64

UPDATE: Decisions, decisions.  Is this our entry point?  We did
get a dip to 25.86 as well as a close over $27.  We are keeping
it on the Watch List as it still looks like it could make it to
$30 (and hopefully beyond).  Don't forget, earnings are Monday.
Be careful.

Wednesday, August 1st's write up:

WHAT TO WATCH:  Frankly, chasing a stock that's already up 13%
today is not the strongest strategy.  EMLX appears to be making
a comeback from its intraday low near $20 last week.  Now that
the share price is over resistance at $25 we can look for our
entry point to try and ride it to $30.  Our preferred entry
would be a pullback to $25 again and then move in on the bounce
back up.  However, it's possible that we may not get that
kind of dip so one alternative would be to look for a close 
over $27.  Next resistance is $30 which would still be a 
decent gain on a short-term play.  Especially since earnings
are expected on August 7th and as you know we don't like to
hold a position over earnings without very good reason.




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PremierInvestor.net Newsletter                 Thursday 08-02-2001
                                                   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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In section two:

Split Trader
  Split Announcements: Matthews International - MATW
  New Plays: E.W. Scripps Company - SSP (Bullish)
  Play Updates: No active plays updates for Split Trader
  Closed Plays: AAS, THC

Net Bulls
  New Plays: Microsoft MSFT (Bullish) Citrix Systems CTXS (Bullish)
  Bullish Play Updates: AHAA, EMC, RFMD
  Closed Plays: eBay Inc. - EBAY 

Stock Bottom / Active Trader
  New Plays: Chevron Corp. - CHV (Bearish)
  Bullish Play Updates: GBCB, NKE, RAIL, SGU 
  Bearish Play Updates: PDII, RIG
  Closed Plays: No closed plays for Stock Bottom

Trading Ideas
  Value Plays With Bullish Signals
  Breakout to Upside (Stocks $5 to $20)
  Breakout to Upside (Stocks over $20)      
  Breakout to Downside (Stocks over $20)      
  Recently Overbought With Bearish Signals (Stocks over $20) 

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

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

Matthews Wakes Up the Dead with Stock Split Announcement

Mausoleum and memorialization products maker Matthews 
International Corporation (Nasdaq:MATW) declared a 2-for-1 stock 
split during regular trading today. Shareholders of record on 
August 16, 2001 will receive one additional common share for each 
one owned, payable on August 31, 2001.

On the execution date of September 3 there will be 30.4 million 
shares outstanding and a float of 19.2. There are 70 million 
shares currently authorized for issuance. Matthews announced its 
last 2-for-1 split in 1998 when the stock was at $45 and by the 
payable date of that run, shares were trading at $50.

Matthews also announced today that it has agreed to purchase 
coffin maker York Group (Nasdaq:YRKG) to the tune of about $90 
million.

MATW shares were trading down -0.07 today to $42.99 on average 
volume of 21,300.

About the Company:

Matthews International Corporation, headquartered in Pittsburgh, 
Pennsylvania, is a leading designer, manufacturer and marketer 
principally of custom-made identification products. The Company's 
products include cast bronze memorials and other memorialization 
products, cremators and cremation- related products; mausoleums; 
printing plates, pre-press services, and imaging systems for the 
corrugated and flexible packaging industries; and marking 
equipment and consumables for identifying various consumer and 
industrial products and containers. (company press release)

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

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

E.W. Scripps Company - SSP Close:$70.21 Change:+0.31 Stop:$66.40  

Company Description:
One of the nations oldest newspaper chains has 21 daily newspapers 
(Denver Rocky Mountain News, Memphis' The Commercial Appeal), a 
handful of weekly and semiweekly community newspapers, and the 
Scripps Howard News Service. Scripps' TV interests include 10 TV 
stations, cable network Home & Garden Television, Do It Yourself 
Network, a 64-percent interest in the Food Network, and a 12-percent 
stake in FOX Sports South.  The company's United Media syndicates 
more than 150 comic strips, including Peanuts.  In the fourth-quarter 
of 2001 the company intends to launch the Fine Living national 
network.  Trusts benefiting the Scripps family own 84-percent of the 
company.

Fundamentals: 
The analysts' consensus forecast is for the company to earn $2.13 
per share in 2001 on revenue of $1.7 billion and $2.72 on 
$1.8 billion in 2002.  Last year, the firm earned $2.19 on sales of 
$1.72 billion.  The company has indicated a 60-cent per share 
annual dividend.
   
Why We Like It: 
The company is looking good to investors with Disney's $5.2 billion 
deal to buy the Fox Family Channel from News Corp as this hefty 
price tag will boost the value of Scripps Home and Garden and Food 
Networks.  In addition, the company is benefiting from much higher 
advertising rates and decreased costs for its Denver Rocky Mountain 
News daily paper after the government approved its Joint Operating 
Agreement with longtime rival the Denver Post.  The technical 
picture of the shares reflects the promising outlook for the company.
The shares have been in a long-term up trend since March 2000.  
On Thursday they built on Tuesday's break of resistance at $69.69 
to set a new 52-week high.  Rising trading volume suggests bullish 
momentum will not end soon.  A point and figure analysis gives us 
an $85 price objective.  We start this play with a $66.40 stop.

Picked on August 2nd at $70.21
Earnings Date            07/12 (Confirmed)





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

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

Amerisource Health - AAS - close: $56.30 change: -0.89

Though shares traded through resistance at $59.00, AAS wound up 
losing the conviction to push it beyond psychological resistance 
of $60.00.  Yesterday's chip upgrades from Merrill Lynch and 
today's positive news from Intel likely contributed to cash 
flowing out of AAS and the Healthcare sector into other equities 
that are just above their short-term lows.  The next stop could 
be support just under $55.00 and if buyers return, perhaps we'll 
give AAS another look.

Picked on July 26th @ $57.50
Gain since picked:     -1.20 
Earnings Date:          7/26  

 

===

Tenet Healthcare - THC Close:$54.25 Change:-1.30 Stop:$53.00 

THC was never able to make it to our recommended *ideal* entry 
point of $56.50 and just to prove that we should have taken our 
own advice, the stock hiccoughed through our stop today. For 
those still in the play, it was encouraging to see that shares 
were dramatically revived at midday from the low of $52.49 and 
closed the day at a strong support level of $54.25. We still like 
this company and we'll watch for more opportunities as prices 
push towards $56.

Picked on July 31st at $55.51
Gain since picked:      -2.51
Earnings Date           07/11 

  


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

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

  --------------
  New Long Play
  --------------

Microsoft - MSFT Close:$67.45 Change:+0.98 Stop:$64.00  

Company Description:
Microsoft is the largest software developer in the world and has a 
number of revenue producing new products and upgrades hitting the 
street. Recently the company released a new upgrade to its Office 
Suite called Office XP.  The application software represents over 30-
percent of Microsoft's revenue.  With over 250 million users, this 
first upgrade of the software in two years should prove to be a nice 
pop to the bottom line.  Additional jumps should come from the 
October release of the Windows XP operating system and the xBox.  
Microsoft's new entry into the video game console market is 
scheduled to hit the shelves on November 8th and should end up being 
the hot Christmas toy this year.  

Fundamentals: 
For the fiscal year ending June 2002 analysts forecast the company 
would earn $1.94 per share and $2.19 in 2002.  Last year the company 
earned $1.80.   This gives the shares a P/E of 35 times forward 2001 
earnings.  The average P/E for this industry is 43.  Forecasts of 
fifteen brokers providing 12-month target prices for the shares 
range from a low of $65 to a high of $115 with a mean of $85.67.

Why We Like It: 
As the bulls begin to return to the tech sector, Microsoft shares 
find themselves making their first baby steps away from important 
support at $65.  The shares spent the early part of the day declining 
in reaction to minor bad news from their ongoing antitrust battle 
with the government.  After traders digested the legal non-event the 
shares began to turn bullish.  They rallied from about 2 PM EST and 
$66.28 into the close.  This may attract the attention of 
institutional money looking for safe tech plays to participate in a 
bullish market move.  Look for any sort of continuation of Thursday's 
momentum on Friday as bullish confirmation.  Although resistance 
exists at $70, we see a test coming of important resistance at $72.  
If the shares succeed here, a move to $80 would be the likely outcome. 
On the downside we can limit risk by placing a $64 stop just below 
the before mentioned $65 support.

Picked on August 2nd at $67.45
Earnings Date            07/19 (Confirmed)




===

Citrix Systems - CTXS Close:$36.69 Change:+1.20 Stop:$34.00

Company Description:
Citrix Systems, Inc. is a supplier of application server software 
and services that enable the effective and efficient enterprise-
wide deployment and management of applications, including those 
designed for Microsoft Windows operating systems. 

Fundamentals: 
For the 3 months ended 3/31/01, revenues rose 4% to $132.8M. Net 
income fell 25% to $28.9M. Results reflect new customer wins and 
the release of new products, offset by increased marketing 
expenses.  Analysts expect the company to earn 76-cents per share 
on revenue of $583 million in 2001 and $0.93 on $713 million in 
2002.  This gives the firm a current P/E of 73 and a forward 2001 
P/E of 39.

Why We Like It: 
CTXS is sitting just under its 52-week high, closing today at 
resistance of $36.69.  So many of its peers have succumbed to the 
volatility of the NASDAQ and, though CTXS has certainly seen days 
with wild price swings, the stock has been impressively resilient, 
climbing to new recent highs.  Earnings were announced after the 
close of the market on July 19th and were quite impressive.  
Despite the economic slow down, the company was able to post its 
fourth consecutive quarter of growth in revenue and earnings as 
well as sign on numerous customers.  We would look to the 52-week 
high of $37.19 as the next level of resistance.  CTXS's leadership 
role in its sector and its impressive financial results lend 
credence to a longer term holding period, if one was so inclined.  
If the shares can usurp the 52 week high and the NASDAQ cooperates 
by acquiescing with higher relative highs, we think that CTXS 
could see $40.00 by mid August.  Volatility suggests that a stop 
price of $34.00, just under today's low should allow for 
fluctuations in the share price without stopping us out.

Picked on August 2nd at $36.69
Earnings Date            7/19 (Confirmed)





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

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

Alpha Ind. - AHAA - close: 40.36 change: +1.28 stop: 37.00 

With the semiconductor sector in breakout mode, AHAA is looking
pretty strong.  We're actually more concerned over the SOX than
AHAA.  The Philadelphia SOX index is up over 100 points since
the 25th of July without much of a break.  There is strong 
overhead resistance at 700 for the SOX but one might expect 
it to pause (read "pull back") at least once before trading that
high.  Company specific news on AHAA has been quiet but the
stock's technicals look okay considering its bullish trajectory.
Traders should expect some resistance at $42 and again at $44.50.
The bottom of its trading channel looks to be near 37.20, its
10-dma is 37.18 right now.  Our stop at 37.00 may be too tight
for some investors but right now we'd rather protect our 
capital.  Bulls should be encouraged that that the share price
closed over $40 which is a positive for tomorrow's trading.

Picked on July 24th @ $36.00
Gain since picked:    + 4.36
Earnings Date:         10/17 (not confirmed)




---

E M C Corp. - EMC - close: 20.46 change: -0.44 stop: 18.50

There was a short article in Reuters today that quoted EMC
CEO, Joe Tucci, as having his "Plan B" ready if the company
sees a deep global recession hitting its business.  The 
company has already shaved costs in a number of areas and
the article left one guessing if Tucci planned to trim staff
to cut costs again if need be.  On a more positive note, 
traders can breathe a little easier with EMC's share price
back over $20.  If you're really an optimist then you might
be encouraged with today's trading.  Despite a day long 
downward drift the stock may have helped establish $20 as 
new support with a small bounce towards the close.  We're
going to leave our stop at 18.50 but cautious traders might
consider moving theirs up a notch if you feel a need to.

Picked on July 27th @ $20.01
Gain since picked:    + 0.45
Earnings Date:         07/18 




---

RF Micro Dev - RFMD - close: 31.53 change: +0.57 stop: 28.50 

Thank you, Merrill Lynch!  As you have probably heard, MER gave
their blessings on the semiconductor group while upgrading 
several individual stocks.  RFMD was one of those upgraded from
an "accumulate" to a "buy".  The stock rallied on the news and
cleared resistance at $30.  Today the rally continued but shares
were unable to hold on to Thursday's gains and drifted lower
before buyers stepped in again near the close.  Investors are 
probably looking at $35 - $37.50 as major resistance for this
stock but short-term traders should be looking at 32.50.  If
shares pullback, new players should consider entry points if
the stock bounces at $30.  

Picked on July 26th @ $27.79
Gain since picked:    + 3.74
Earnings Date:         07/17 





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

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

eBay Inc. - EBAY - close: 60.80 change: -0.82 stop: 59.50

Hmmm... EBAY isn't responding the way we had hoped it might
with PCLN's earnings a couple of days ago.  The stock price
isn't responding to the NASDAQ's continued climb.  Recent 
news about shareholder lawsuits against Morgan Stanley and
its analyst Mary Meeker for her recommendations on certain
Internet stocks, with eBay being one of them, is probably not
encouraging buyers into the stock either.  Looking at the 
chart one can see that it is becoming more and more bearish.
$59.50 - $59 is still support but once it is broken shares
could quickly trade down to $55.  We're going to close the
play and cut our losses now.

Picked on July 31st @ $62.57
Gain since picked:    - 1.77
Earnings Date:          N/A  





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

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

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

Chevron Corp. - CHV Close:$90.64 Change:-0.12 Stop:$93.00  

Company Description:
The third largest US integrated oil company (behind Exxon Mobil and 
Texaco) runs more than 8,100 gas stations and has proved reserves of
5 billion barrels of oil and 9.5 trillion cu. ft. of natural gas.  
It will expand even further by buying Texaco, and the new 
ChevronTexaco will be the world's fourth-largest integrated oil 
company, behind Exxon Mobil, Royal Dutch/Shell, and BP.  Overseas,
Chevron is pursuing an exploration and production strategy in such 
lucrative areas as Kazakhstan and Angola, and it holds a 50-percent 
stake in Caltex, a global refiner and marketer jointly owned by 
Texaco. Chevron has also combined its chemicals operations with 
those of Phillips Petroleum.

Fundamentals: 
Analysts forecast the company will earn $7.86 per share in 2001 and 
$5.98 in 2002.  Last year, the company earned $8.13 per share.  The 
company has a current P/E of 11 and a forward 2001 P/E of 12.  The 
average P/E for the industry is 14.  

Why We Like It: 
The shares are showing a topping pattern with consecutive trading 
sessions of lower closes and session highs.  After a sharp move up 
from $84.75 on July 24th the shares are over extended and ready to 
test lower levels.  The next support level is the 200-day moving 
average of $87.77.  Critical support exists for the shares at $85; 
if the bears pick up steam, a move through this level would make 
likely a test of $80.

Picked on August 2nd at $90.64
Earnings Date            07/24 (Confirmed)





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

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

GBC Bancorp GBCB Close:$34.00 Gain:+1.00 Stop:$32.40 

GBC Bancorp looked like in was in trouble after Wednesday's 
close, but the stock regrouped today, and closed above resistance 
at $33.  Keep an eye on the Banking Index (BIX.X), which is stuck 
at resistance at 674.  If the bank sector is unable to clear this 
level, GBCB may have trouble moving higher.

Picked on July 27th at $31.10
Gain since picked:      +3.90
Earnings Date            N/A




Nike NKE Close:$49.79 Gain:+1.98 Stop:$47.75 NEW

Shares of Oakley got pummeled today after the company announced it 
was having a tiff with Sunglass Hut.  So how does that affect Nike?  
Sunglass Hut said that if Oakley doesn't want to play ball, it 
would look elsewhere, specifically Nike.  The news was just what 
Nike needed to catapult it out of its trading range.  Since $48 
posed such stiff resistance, it should make for good support.  
We are raising our stop to $47.75, just under that support level.

Picked on July 14th at $47.84
Gain since picked:      +1.95
Earnings Date            N/A




RailAmerica RAIL Close:$12.97 Gain:-0.09 Stop:$12.00

Transports have had a rough go of it lately as crude oil prices 
jumped to $27.80 a barrel, and Rail America has been taken down 
with them.  Thursday's loss was limited to 9 cents, and the stock 
remains above support at $12.90.   

Picked on July 14th at $11.41
Gain since picked:      +1.56
Earnings Date            N/A




Star Gas Partners SGU Close:$20.29 Gain: +0.03 Stop:$19.50

Star Gas Partners reported a Q3 loss of $1.38 per share, compared 
to a $1.15 loss last year.  Sales did increase to $166.05 million 
from 130.16 million in the same quarter last year.  Star Gas also 
announced the $120 million acquisition of Meenan Oil, the nations 
third largest retail home heating oil company.  After all that news, 
the stock has dropped a total of $1.16.  Today the stock rallied 
off its low, and is hopefully getting ready to resume its up trend.

Picked on July 10th at $21.18
Gain since picked:      -0.89
Earnings Date           8/1/01





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

Professional Detailing PDII Close:$57.34 Gain:-5.16 Stop:$61.65 NEW

Traders want nothing to do with PDII.  Today traders flocked to 
dump their shares, and the stock finished down $5.16 on higher 
than average volume.  The brunt of the selling took place in the 
final two hours.  We are lowering our stop down to $61.65.

Picked on July 20th at $63.12
Gain since picked:      +5.78
Earnings Date            N/A




===

Transocean Sedco Forex RIG Close:$32.60 Gain:+0.13 Stop:$36.50

RIG falls into the oil service sector, and that group got a boost 
today as the House passed a bill that would allow drilling in the 
Alaska Artic wildlife refuge.  RIG does most of its drilling 
offshore, but got a small 13 cent gain nevertheless.  I would 
like to put a disclaimer on the next statement.  I would never 
wish for this to happen to any company, but Tropical Storm Barry 
is hovering near Florida, and is expected to move westerly into 
the Gulf of Mexico.  RIG has the largest fleet in the Gulf of 
Mexico, and operations could be seriously impact if this storm 
picks up.

Picked on July 31st at $32.29
Gain since picked:      -0.31
Earnings Date            N/A





==================
  Trading Ideas 
==================

This section contains stocks that meet criteria which may make 
them of interest to long and short side traders.  These are not 
recommendations, nor have they been reviewed by PremierInvestor 
editors for investment potential.  However, each of them has 
technical and fundamental characteristics that make them worthy 
of further review by traders and investors looking for fresh ideas. 
New stocks will appear daily following the market close.  

  ---------------------------------
  Value Plays With Bullish Signals
  ---------------------------------

Ticker    Company Name              Close  Change
SV    Stillwell Financial Inc.      31.80  +1.15
UCU   Utilicorp                     31.91  +0.61
SFA   Scientific Atlanta            27.30  +1.42
CXR   Cox Radio Inc                 26.15  +1.45
ARW   Arrow Elcts                   28.49  +0.94
ESIO  Electro Scientific Ind.       35.55  +2.90

  ---------------------------------------
   Breakout to Upside (Stocks $5 to $20)
  ---------------------------------------

Ticker    Company Name              Close  Change
None 

  ---------------------------------------
   Breakout to Upside (Stocks over $20)
  ---------------------------------------

Ticker    Company Name              Close  Change
INTC  Intel Corp                    32.11  +1.36
PMCS  PMC - Sierra, Inc.            36.72  +3.38
TXN   Texas Instruments             38.15  +1.52

  -----------------------------------------
   Breakout to Downside (Stocks over $20)
 -------------------------------------------

Ticker    Company Name              Close  Change
Q     Qwest Comm.                   23.10  -2.11
ADP   Automatic Data Procs.         48.34  -1.65
FDC   First Data Corp.              66.94  -1.06
TEVA  Teva Pharmaceutical           67.75  -2.15
SPC   St. Paul Co.                  42.41  -1.14


  ------------------------------------------------------------
   Recently Overbought With Bearish Signals (Stocks over $20)
  -------------------------------------------------------------

Ticker    Company Name              Close  Change
AVP   Avon Products                 45.60  -0.02
BRL   Barr Labs Inc                 80.73  -4.31
LH    Laboratory Corp               84.90  -1.45
DRMD  Duramed Pharmaceuticals       20.29  -1.16
GDI   Gardner Denver Inc.           22.60  -0.25
CBSA  Coastal Corp.                 34.53  -1.41


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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.

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Copyright  2001  PremierInvestor.net. and
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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.

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