Option Investor
Newsletter

Daily Newsletter, Tuesday, 08/07/2001

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                Tuesday 08-07-2001
                                                  section 1 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/3504_1.asp
=================================================================

In section one:

Market Wrap: It doesn't get any tougher than this
Market Sentiment: Finally
Play-of-the-Day: Transocean Sedco Forex - RIG (Bearish)
Watch List: ADBE, THC and SCUR are new.

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       8-7-2001          High      Low     Volume Advance/Decline
DJIA    10458.74 + 57.43 10472.72 10376.05  .97 bln   1702/1382	
NASDAQ   2027.79 -  6.47  2043.48  2013.75 1.28 bln   1741/1941
S&P 100   618.71 +  3.50   619.70   613.13   Totals   3443/3323
S&P 500  1204.40 +  3.92  1207.56  1195.64             
RUS 2000  480.33 -  0.63   481.19   477.49 
DJ TRANS 2921.46 + 13.19  2922.67  2898.05 
VIX        22.65 -  1.09    23.46    22.56 
Put/Call Ratio      0.81
-----------------------------------------------------------------

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

It doesn't get any tougher than this by Jeff Bailey

Believe me.  It's not just you and I that are having a tough time 
trying to figure out future market direction.  The market is 
having the same problem.  The chart of the S&P 500 may have a buy 
side bias, but it isn't much, and that makes for tough trading 
short-term.

The outside appearance of the patient, as depicted by the S&P 500 
couldn't be at more of a crossroads than it is right now.  If 
you're a shorter-term trader looking for a 20% gain in a stock 
that is a component of the S&P 500 (SPX.X) good luck.  The odds 
are slim that a trader will be able to find that type of move on 
a consistent basis.  As the retracement bracket shows, you've 
almost had to pick the high and the low to get a 4% move in the 
SPX over the past couple of months.  When it's come, its come 
quick and then evaporated nearly as fast (for bulls and bears).

S&P 500 Index Chart - last nice months



What bias there is to the S&P 500 from the market looks to be 
fractionally bullish.  The downward trend from the 09/01/00 high 
at 1,530 and attached to the high on 01/31/01 is the longer-term 
trend.  The SPX has had a tendency to rally above this trend 
(sign of strength), but then gravitate back toward it.  The 
upward trend on the chart was derived conservatively from the 
bottom found on 03/22/01 at 1,081 to the very next low of 
04/04/01.  Here too, the SPX tested this trend, broke slightly 
below, but then managed to get back above.  The past two 
sessions, we've seen the SPX test this "cradle" or crossing of 
trend.  Right now, the upward trend is the overriding trend and 
can still be traded bullish.  A close below today's low 
of 1,195 could see a test of 1,176 and 61.8% retracement.  
Today's close at 1,204 truly puts this broader market index at a 
crossroads (interesting trends) and 50% retracement.

Bullish Percent for S&P 500 - 2% box



The "internals of the patient" as depicted by the bullish percent 
chart of the S&P 500 ($BPSPX) remain in "bull confirmed" status 
after having just recently reversed back into a column of X's.  
Simply looking at the above chart and counting X's and O's, we've 
seen a reversal back into X's end up with a minimum of 4 X's in a 
reversal.  

The way a trader can be incorporating the bullish percent chart 
with their bar chart can be best explained by the retracement 
bracket on the bar chart.  First, if we correlate the recent low 
on the bullish percent chart at 38% bullish coinciding with where 
I have anchored the lower end of the retracement bracket on the 
S&P 500 at 1,091, then I've got a decent tile with low to low.  
The recent high for the bullish percent is also correlated with 
the appropriate highs found on the bar chart at 1,313.

While the bullish percent tells us very little about market 
direction, it speaks volumes about risk.  ONLY WHEN YOU 
UNDERSTAND MARKET/SECTOR risk are you able to get a feel for how 
to manage your trading and the potential for future market 
direction.

It makes sense to me that the recent turning of the bullish 
percent back into "bull confirmed" status is just that.  Early!  
Doesn't it make sense then that this is why the SPX deflected off 
of the 38.2% retracement level at 1,228 just recently?  The move 
from 1,176 to 1,228 represented a move of 4% in just 7 sessions 
(remember, as of today's close, the SPX is DOWN 8.78%) and there 
are going to be traders looking to book profits every time there 
is a hint of weakness.  

What we're finally starting to see is the bullish percent reach a 
new relative high and now hold above a new relative low.  This 
gives hint that a lot of repair is starting to take place and 
perhaps that market bears are getting less aggressive with their 
shorting of breakdowns for some of the bigger capitalized stocks 
in the S&P 500.  The only reason a bear is less hesitant to short 
a breakdown is that he/she feels that the risk/reward is 
unfavorable as the bulk of the damage has been done.  Don't take 
this wrong and start lifting your stops.  The stock that blows 
the trader/investor up, is the one they hold long/short that they 
didn't honor their stop on.  Meanwhile there capital is tied up 
in a losing proposition and the broader market moves away from 
them.

At the same time, a trade needs to have an realistic expectation 
and target for their trade.  The expectation comes from proper 
trade set-up and understanding the current market environment.  I 
STRONGLY suggest that traders continue to set their sight low and 
not lofty.  

I think yesterday's 01:00 EST Update is a perfect example.  I 
didn't just throw out Abercrombie and Fitch (NYSE:ANF) "testing 
bullish support" as an interesting topic.  The stock had achieved 
a level that we had discussed in the passed along with the 
bullish support trend.  In a range bound market, this stock had 
given the bearish trader an ample gain relative to the MARKET and 
it was time to take some chips off the table.  The only reason I 
would have bought ANF yesterday or today for that matter would be 
to lock in gains.  The stock had been losing relative strength 
for the past couple of weeks and looks to have lost favor.  With 
the bullish percent for the SPX in bull confirmed status, now is 
not the time to be swinging for the fences with shorts.  Should 
the stock rally back to the $40 level and bullish percent charts 
weaken again, this stock will rank high on my short list, I will 
have raised cash (and a profit) and be ready to reload.  

HAVE YOU BEEN FOLLOWING THE "Pivotal" stocks?

These were simply three stocks that were NASDAQ and S&P 500 
related stocks that were trading right at bullish support.  
Microsoft (NASDAQ:MSFT), eBay (NASDAQ:EBAY) and Oracle 
(NASDAQ:ORCL).  

On August 3rd (09:00 EST Update), we touched on all three of 
these stocks and felt they needed to show some strength from then 
traded levels.  How are they doing?  MSFT is down $1.10 and 
hasn't really budged.  There has been no action taken on its 
point and figure chart and it is still sitting on top of bullish 
support trend at $65.

Shares of eBay (EBAY) have risen by $3.50 since that morning 
update and threatens to give a buy signal should the stock trade 
$66.  What takes place there at the "buy signal" (should it 
happen) could give indication of just how aggressive the market 
really is.  We said before that there are probably some shorts in 
this stock that are getting anxious.  We made that observation or 
stated it, and with the stock up $3.50, bears are no more relaxed 
now than they were then.

Oracle (ORCL) looks to be the trouble child of the three, but 
I've seen worse.  Since August 3rd's open, the stock has fallen 
$1.07 (5.8%), given a double bottom sell signal, but did not 
trade at our "shouldn't trade $17 if institutions believe in 
technology or Oracle for that matter" (see 08/03 09:00 Update).  
Today's low trade for ORCL was $17.01.  It has not traded $17 yet 
(operative word is yet).  The sell signal at $17.50 did have this 
stock taking away from the NASDAQ-100 bullish percent by 1 
percentage point and must currently trade $21 for the stock to 
contribute positively to the bullish percent.  

Oracle is interesting now, even if you're just following it as 
one observation of many.  It's fairly simple.  A trade at $17 is 
sell and the stock settled at $17.24.  A 3-box reversal has the 
stock trading $19.  In essence, risk/reward for a bull is $0.25 
risk, $1.76 reward.  We never know for sure what kind of buyer is 
hanging around the $17.01 level.  You think $17.01 is just a 
quirk?  Think again.  The stock traded a low of $17.01 on 06/26 
before the stock traded an intraday high of $19.  Three sessions 
later the stock traded $20.  I'm watching that $17 level and 
today I think somebody else was too.  If nothing else, see if it 
holds to get a feel for how bullish/bearish this market can be.


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

Finally by Jeffrey Canavan

Finally we have the much awaited Cisco numbers.  No more relying 
on worker productivity data, analyst upgrades/downgrades, or 
Procter and Gamble's new cavity fighting gum for market 
direction.  Finally we have something we can sink out teeth into, 
or do we?

Cisco earnings came in at $0.02 a share, in line with estimates.  
Revenues were $4.3 billion.  25% lower than last year, but within 
the lower range of expectations.  Revenues for the next quarter 
are expected to come in flat to down 5 percent.  Inventory came 
in lower than the April quarter, but still remains high at $1.68 
billion.  Days sales outstanding fell to 31 from 38, but 
allowance for doubtful accounts rose to $288 million from $150 
million.

So what's it all add up to?  Short-term visibility is improving, 
but long-term outlook is still challenging, or as John Chambers 
himself said, "We are not there yet."  Not quite the stellar 
results everybody was hoping for.  

With Cisco down $0.37 and the triple Qs down $0.18 in after 
hours, it doesn't look like we got the bullish catalyst the 
market needed.  Most likely will we fall back into a pattern of 
drifting from one economic event to the next, waiting for that 
elusive signal that the bottom is here?  Bullish percent data is 
saying that it is safe to test the waters, and the low readings 
in the VIX and VXN tell us that bulls are unafraid.  But could 
these indicators also be telling us that everybody who is bullish 
is already in, and everybody else is waiting for some more good 
news?
 
Talk of a summer rally has turned into talk of a late-summer 
rally, and as August continues fade away, we may soon find 
ourselves waiting for the Great Pumpkin.  Until we get a string 
of positive news events, buying at support and selling at 
resistance continues to look better than a trend following 
approach.  

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

Market Volatility

VIX   22.65
VXN   48.76

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

          Put/Call Ratio  Call Volume   Put Volume
Total           .81        548,803       445,629
Equity Only     .73        479,427       351,277
OEX             .94          8,665         8,176
QQQ             .83         81,118        67,517

A total put/call reading above 80 is usually considered overly 
pessimistic.  An equity only reading above .75 is often viewed as 
bullish.  Not quite there, but close.

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

Bullish Percent Data

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

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

10-Day Arms Index  1.21  

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      1703           1383
NASDAQ    1734           1946

        New Highs      New Lows
NYSE      134             20
NASDAQ     81             57

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

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. 

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

Commitments Of Traders Report: 07/31/01
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
There were no significant changes in the bullish percent data this 
week.

Commercials   Long      Short      Net     % Of OI 
7/17/01      336,836   403,561   (66,725)   ( 9.01%)
7/24/01      317,241   392,146   (74,905)   (10.56%)
7/31/01      335,532   409,352   (73,820)   ( 9.91%)

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
7/17/01      122,525     50,211   72,314     41.86%
7/24/01      141,372     61,665   79,717     39.26%
7/31/01      129,648     54,552   75,096     40.77%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100
There were no significant changes in the bullish percent data 
this week.
 
Commercials   Long      Short      Net     % of OI 
7/17/01       26,721     37,225   (10,504)  (16.43%)
7/24/01       27,396     39,198   (11,802)  (17.72%)
7/31/01       28,009     39,613   (11,604)  (17.16%)

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
7/17/01       11,680     8,183    3,497      17.61% 
7/24/01       12,170     7,744    4,426      22.23%
7/31/01       11,216     8,938    2,278      11.30%

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
There were no significant changes in the bullish percent data this 
week.

Commercials   Long      Short      Net     % of OI
7/17/01       14,145    12,963    1,182      4.4%
7/24/01       16,080    12,812    3,268     11.3%
7/31/01       17,748    13,669    4,079     13.0% 

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
7/17/01        5,255     9,144    (3,889)   (27.01%)
7/24/01        5,599     9,526    (3,927)   (25.96%)
7/31/01        5,049     9,079    (4,030)   (28.52%)

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 (Bearish)
=========================

Transocean Sedco Forex - RIG Close Close:$31.05 Gain:-0.39 Stop:$36.50

Original Comments When Selected on July 31st:

Company Description:
This Houston, Texas-based firm is one of the world's largest 
offshore drilling contractors specializing in deepwater drilling. 
The company has over 170 mobile offshore drilling units and a 
fleet which includes 50 semisubmersibles, 58 jackup rigs, and 16 
drillships operating in the world's major offshore oil-producing 
regions. Transocean Sedco Forex also provides well management 
services. The company was formed in 1999 when Transocean Offshore 
merged with Sedco Forex, which had been spun off from 
Schlumberger. It has expanded with the acquisition of competitor 
R&B Falcon.

Fundamentals: 
On Tuesday the company reported strong quarterly earnings but 
warned that that it expects full-year earnings for 2001 and 2002 
to fall short of analysts' estimates.  The company blamed a recent 
downturn in Gulf of Mexico drilling activity and slow recovery 
elsewhere.  "Many of your forecasts are simply too aggressive on 
how fast all this is going to happen," CEO Michael Talbert told 
analysts during the conference call.  In a statement he said, 
"Although additional exploration and production dollars could be 
forthcoming, we are at present witnessing reduced customer 
spending," he added,  "This development is causing utilization and 
day rates for shallow water drilling rigs to decline."  Talbert 
gave guidance that he believes earnings will be at the bottom of 
First Call estimates.  Those estimates call for 2001 earnings from 
$1.02 to $1.50 per share (consensus is $1.28) and the 2002 range 
to be from $2.17 to $3.40 (consensus is $2.91). 

Why We Like It: 
Even at the current consensus estimates RIG shares are expensive. 
They give the company a forward 2001 P/E of 25 as compared to the 
industry average of 14.  Keep in mind; this consensus estimate is 
going to drop as the 26 analysts covering the company revise their 
estimates downward over the next few days.  This should keep solid 
selling pressure on the shares.  Look for a test of the $27.50 to 
$24.00 support range. Given the shares sharp drop on Tuesday, wait 
for a bargain hunter's bounce to present a more advantageous entry 
point.  We will start this play with a stop at $36.50.

Updated Comments:
Much like Chevron, RIG got an early morning boost, but sold off 
as the day progressed.  RIG finished the day in negative 
territory, and closed on its low.  The oil services sector got 
whacked for 2.35%, and it looks like the carnage could continue 
tomorrow. 

Picked on July 31st at $32.29
Gain since picked:      +1.28
Earnings Date            N/A




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

Adobe Systems, Inc - ADBE close: 34.42, change: -2.34

WHAT TO WATCH: This one screams bear run.  Tuesday's high volume 
sell off blasted through resistance offered by a gap from April 
10th.  A textbook low volume bargain hunters rally in the morning 
could offer an attractive entry point.  Of course so would an 
immediate meltdown if longs are AWOL.  Either way $30 looks doable.




---

Tenet Healthcare Corp - THC close: 54.74, change: +0.60

WHAT TO WATCH: After an extend bull run from $39.00, these shares 
are consolidating while volume tapers off.  Declining volume is a 
good sign the stock is getting ready to pop and we have no reason 
to believe it won't resume its well-established up trend.  Typical 
trading strategies would be to get in now because support is 
nearby, or wait for the break above $56.00 on a pop in volume.




---

Secure Computing Corp - SCUR close: 15.95, change: +0.25

This one's a mixed bag.  This company makes network security 
products such as firewalls.  At its last earnings report the 
company announced big time increases in sales and that it expects 
to reach profitability in the fourth-quarter 2001.  We normally 
don't like to jump on a play when it's in a sector that is getting 
clobbered, but this chart looks so sweet it may be worth a play.  A 
point and figure analysis shows this company breaking to the upside 
out of a bullish triangle.  When this happens the company is a buy 
on any dip.  True to the textbook, this stock has dipped back to 
long-term support while volume is dropping off.  Normally this is a 
no-brainer, great tech picture, improving fundamentals, but dang 
security stocks are suffering - your call.





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

---

St. Jude Medical - STJ close: $64.73, change: -0.96


UPDATE: Getting closer, but even if the shares drop to our target 
range, we won't jump in until we see volume drop off significantly 
indicating the selling is running out of steam.  Tuesday's trading 
volume of 1.4 million is way too much by twice.

Monday, August 6th write-up:

WHAT TO WATCH:  Despite recent weakness these shares are still on a 
bullish trend extending back to March.  This drop was caused by an 
expected decrease in payment rates for implantable cardioverter 
defibrillators due to changes in the rates hospitals receive from 
Medicare.  Once the market digests the news, investors ought to 
notice there is a lot of other good news surrounding company.  A dip 
to the $64 to $62 range would present a good entry point with long-
term support nearby at $62.  




---

Deere & Co. - DE close: 41.38 change: +0.02

UPDATE: No change in outlook

Friday, August 3rd write-up:

WHAT TO WATCH:  Ok, so maybe tractors are not the most glamorous of 
stocks, but this sector is so strong it could win a tractor pull at 
the county fair.  Our master strategist Jeff Bailey loves this 
stock and for many of us that’s as good as it gets.  Expect to see 
Deere as one of our active plays in the next few days.  The shares 
are on the verge of climbing out of a strong base and we see a 
price objective north of $50 as the likely end point.  Our trigger 
will be a close above $43 on increasing volume.  




---

QUALCOMM - QCOM - close: 67.56 change: +0.26

UPDATE: No change in outlook.

Thursday, August 2nd's write up:

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).





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

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

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

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

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

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


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


PremierInvestor.net Newsletter                 Tuesday 08-07-2001
                                                   section 2 of 2
Copyright  2001, All rights reserved.
Redistribution in any form is strictly prohibited.

The entire newsletter is best viewed in COURIER 10 for alignment
=================================================================
To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.PremierInvestor.net/htmlemail/3504_2.asp
=================================================================

In section two:

Split Trader
  Split Announcements: Philadelphia Suburban Corporation - PSC
  New Plays: Sterling Bancshares - SBIB (Bullish)
  Play Updates:  E W Scripps - SSP
  Closed Plays: Woodward Governor Co - WGOV

Net Bulls
  New Plays: PeopleSoft, Inc. - PSFT (Bearish)
  Bullish Play Updates: CTXS, EMC, MSFT, RFMD
  Bearish Play Update: SPOT
  Closed Plays: No closed plays for NetBulls

Stock Bottom / Active Trader
  New Plays: No new plays for Stock Bottom
  Bullish Play Updates: GCI, RAIL
  Bearish Play Updates: BZH, CHV, 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
===================

Utility Company Powers Up, Issues Cash and Stock Dividends

Philadelphia Suburban Corporation (NYSE:PSC) announced during 
morning trading that its Board of Directors approved a 5-for-4 
stock split and a 6.9 percent increase in the quarterly cash 
dividend.

The split is payable in the form of a 25 percent stock dividend 
and will be issued on December 1, 2001 to shareholders of record 
as of November 16, 2001.  The number of outstanding shares will 
effectively increase to approximately 67.63 million and the float 
will rise to 54.75 million.  There are currently 100 million 
shares authorized.

This marks the Company's fourth stock split in six years; the 
last split (August 2000) was also a 5:4 dividend, declared when 
shares were at the $22 level and rising by two points by the 
execution date.

The Board also authorized a 6.9 percent cash dividend increase 
that will be distributed December 1, 2001 to shareholders of 
record on November 16, 2001.  The regular quarterly dividend of 
$.155 will still be paid on September 1 to shareholders of record 
on August 17.

PSC shares are currently trading up +0.21 to $26.06, just off the 
52-week high of $26.25.  The average volume traded is 57.8 
thousand shares.

About the Company:

PSC is the holding company for regulated public utilities that 
provide water and wastewater services to approximately two 
million residents in Pennsylvania, Ohio, Illinois, New Jersey, 
Maine, and North Carolina. The company has been committed to the 
preservation and improvement of the environment throughout its 
history, which spans more than 100 years. (company press release)

 


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

  -------------------
  New Split Run Play
  -------------------

Sterling Bancshares - SBIB Close: $22.09 Change: +0.87 Stop:$20.00

Company Profile:
SBIB, a bank holding company, provides commercial and retail 
banking services primarily in the Houston metropolitan area. 

Fundamentals:
For the 3 months ended 3/31/01, total interest income rose 2% to 
$37.9M. Net interest income after loan loss prov. rose 7% to 
$23.2M. Net income rose 6% to $6.4M. Net interest income reflects 
increased average loans and higher interest margin. Higher income 
was partially offset by increased salaries and benefit costs.

For the 2001 fiscal year the company's net income is estimated to 
increase 14-percent, while it is anticipated that 2002 net income 
will rise by 14-percent.  Analysts expect company earnings to rise 
from $1.00 in 2001 to $1.14 in 2002.  The current P/E is 20 and 
the forward P/E is 17.

Why We Like It:
Higher highs, higher lows, and a reasonable price inside a 
currently favorable interest rate environment- that’s it in a 
nutshell.  SBIB is well positioned going into its 3 for 2 split 
effective September 19th and shares have climbed very nicely ever 
since the announcement was made.  Today's move beyond the 52 week 
high came on the second consecutive day of increasing upside 
volume and buyers are still hungry for more.  Stochastics have 
crossed over after the last two days of positive gains and MACD 
has mirrored the behavior.  At current valuations, this regional 
bank could be considered fairly priced despite the strong run in 
the stock price this year.

This recommendation is intended for the trader with a longer-term 
perspective.  As mentioned above, we believe that current levels 
represent a fair price for SBIB given the economic climate and the 
firm's ability to generate revenue.  Shares last split in February 
of 1998 at a ratio of 3 for 2 with the stock making a nice run 
into the share adjustment.  We're looking at a target price of 
approximately $25 and have protected our position with a stop at a 
nice round number of $20.00.

Picked on August 7th $22.09
Earnings Date          (Unconfirmed)





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

  -----------------------
  Split Candidate Updates
  -----------------------

E W Scripps - SSP - close: 70.05 change: -0.08 stop: 66.40

If this was an airline stock we'd say SSP was stuck in a holding
pattern.  Maybe we should say the bulls and the bears have writer's
block when it comes to writing the next chapter for SSP's stock
price.  News is still quiet and the stock is drifting sideways
as the market decides what direction it wants to go.  We're
not ready to give up yet so we'll leave our stop where it's at.
More concerned individuals should consider tightening their 
stops.

Picked on August 2nd @ $  70.21
Gain since picked:      -  0.11
Earnings Date:          7/12/01 





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

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

Woodward Governor Co - WGOV  close: 76.06 change: -1.88 stop: 74.00

Just a little too far.  Our fresh new play on WGOV was supposed to
last longer than a couple of days.  We anticipated a pullback but
the dip today was too sharp and traded through our stop.  Shares 
should have found some support in the $74.50-$75 area.  If you're
still interested in WGOV, watch for shares to trade above the $80
level.  Nimble short-term traders could watch for moves from 80 to
85 to 90.  At each milestone there is support and resistance that
could offer quick and dirty entry or exit points.  We're going 
to move on  but we'll be keeping an eye on WGOV.

Picked on August 3rd @ $  78.53
Gain since picked:      -  4.43
Earnings Date:             n/a  





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

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

  ---------------
  New Short Play
  ---------------

PeopleSoft, Inc. - PSFT Close:$42.38 Change:-0.31 Stop:$45.50

Company Description:
PeopleSoft is the third largest developers of enterprise resource 
planning (ERP) software after SAP and Oracle.  ERP software helps 
clients manage human resources, financial, manufacturing, 
purchasing, sales and inventory planning.  The Pleasanton, 
California-based company's vertical applications target the health 
care, financial services, public-sector, and communications 
industries.  PeopleSoft generates 65-percent of sales from related 
software maintenance, training, and consulting services. 

After six consecutive years of doubled sales, the company saw 
demand for its flagship ERP products diminish due to increased 
competition and a saturated market; it slipped into the red in 1999 
for the first time in the decade.  In response, the company 
launched an aggressive array of new products and services, 
particularly in the customer relationship management (CRM) 
industry. The company is counting on its Internet-based PeopleSoft 
8 CRM offering to make further inroads into competitor Siebel 
Systems' dominant market share. 

Fundamentals: 
Analysts forecast the company will earn 60-cents on sales of $2.1 
billion in the current fiscal year and 83-cents on $2.4 billion in 
2002.  Last year, the company earned 31-cents on sales of $1.74 
billion.  This gives the company a 2001 earnings growth rate of 93-
percent (industry average is 3.9-percent), a current P/E of 136 and 
a forward 2001 one of 71 (industry average is 43) and a PEG of 2.86 
(industry average is 2.18). For the fourth quarter, the company has 
said it was comfortable with analysts' current estimates of 19 
cents per share.

Why We Like It: 
PeopleSoft's emphasis on web-based applications have scored big 
with customers and enabled it to rebound after a tough 1999.  
However, the shares are richly valued making them vulnerable to 
dips during market pullbacks.  Although the company is predicting a 
solid year with license-revenue growth "slightly ahead" of the top 
of the 30-percent to 35-percent annual growth the company had 
projected, and that full year EPS would be at the "high end" of the 
company's 55 to 60-cent range, investors are still concerned.  They 
question whether the firm can maintain this robust growth when even 
the company admits the selling environment has become more 
difficult.  

After bouncing off a session low of $29.80 on July 20th , the 
shares put together an impressive run to a session high of $44.78 
on August 1st.  Unfortunately for longs, this high represented the 
second failed attempt to top $45 this month.   Since then, the 
shares have been noticeably weaker and seem poised to test lower 
levels.  On Tuesday, after opening at $42.41, longs managed to 
drive the shares in the morning hours to a session high of $44.26 
before a strong wave of selling pushed the shares lower for the 
remainder of the trading day.  This selling was on a spike in 
volume from Monday's 4.5 million shares traded to 6.8 million on 
Tuesday, suggesting the bears have momentum.  This makes likely a 
test the next level of downside support at the 200-day moving 
average of $38.41, and possibly support offered at $35 and the July 
$29.80 low.  We will start this Bearish play with a stop at $45.50, 
which is just above the thus far unreachable $45 resistance level.  

Picked on August 7th at $42.38
Earnings Date             N/A (Not Confirmed)





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

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

Citrix Systems - CTXS - close: 35.13 change: -0.09 stop: 34.00

CTXS shares slipped two days in a row following the lead set
by the GSO software index and the NASDAQ market.  However, 
despite the declines, CTXS is still holding above support in
the $35 range.  With the NASDAQ fast approaching the 2000 level
and the GSO at 190, bullish investors hope that the market will
respond positively to the CSCO earnings report and post-market
conference call tonight.  Confirm stock direction before entering
any new plays.

Picked on August 2nd @ $36.69
Gain since picked:     - 1.56
Earnings Date:          07/19 (not confirmed)




---

E M C Corp. - EMC - close: 19.58 change: -0.45 stop: 18.50

There is going to be a similar theme with all the major tech
players this week.  The NASDAQ's three day losing streak has
been weighing heavily investor sentiment.  A potential positive
for EMC is fellow hardware maker CSCO's earnings report tonight.
While CSCO is in the networking business and EMC in the storage
business, a positive conference call can re-energize the tech
stock buyers to have faith in the forthcoming recovery (even 
if it is still a ways off).  Confirm stock direction before
initiating any new plays.  Conservative traders should probably
wait for the stock to close over $20 again.

Picked on July 27th @ $20.01
Gain since picked:    - 0.43
Earnings Date:         07/18 




---

Microsoft Corp. - MSFT - close: 66.35 change: +0.22 stop: 64.00

Yet another page in the ongoing U.S. vs. Microsoft case was 
unveiled today.  MSFT is going to the Supreme Court.  The 
Court of Appeals declined MSFT's request to remove the monopoly 
finding.  The appeal was sent to the U.S. Supreme Court but the 
court's next session doesn't begin until October and the court 
would most likely make a decision to hear MSFT's appeal in 
November.  The dates are important for softie-watchers as 
MSFT's Windows XP is due to be released on October 25th.  Why 
should investor's care?  MSFT will no doubt bundle its XP 
software with other MSFT products which comes after the courts 
fight over MSFT's bundling practices of its Internet Explorer.  
Shares of MSFT have been showing relative strength compared to 
the NASDAQ and the GSO software index which have both been 
drifting downward.  Traders should wait for a clear signal 
before initiating a new play.  A close over $67 or $68 might do 
the trick if you've got a bullish bias.

Picked on August 2nd @ $67.45
Gain since picked:     - 1.10
Earnings Date:          07/19 (confirmed)




---

RF Micro Dev - RFMD - close: 29.92 change: +0.12 stop: 28.50 

It's up!  It's down!  It's up!  It's down!  Investors need to be
careful following the semiconductor sector.  Major brokers on
Wall Street can't seem to agree on whether now is the time to 
buy chip stocks or whether the downturn is far from over and thus
traders should shun the whole group.  Last Wednesday, the semis
rocketed on a group wide upgrade by Merrill Lynch.  RFMD was one
of the several stocks individually upgraded by the broker giant.
Today, after two days of declines in the SOX, Credit Suisse First
Boston announced a downgrade of the whole sector.  RFMD was not
named specifically but several stocks where downgraded to "hold"
from a "buy" rating.  Further pressuring chip stocks is the 
ongoing story that Dan Niles, an analyst with Lehman, believes
that Intel will be slashing prices on their top level Pentium 4
chips by the end of the month.  Shares of RFMD have shown strength
in front of this negative press and managed a small gain today.
We are keeping our stop tight at 28.50 but we're encouraged by
the stock's lack of selling pressure.  New plays could be consider
once shares close over $30 again.

Picked on July 26th @ $27.79
Gain since picked:    + 2.13
Earnings Date:         07/17 





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

PanAmSat Corp. - SPOT - close: 32.26 change: -0.23 stop: 34.00

SPOT now has 21 satellites in its network with its most recent
addition launching just yesterday.  Exciting news, yes, but most
of the headlines are focused on Colorado-based, EchoStar making
a $30 billion bid for Hughes Electronics (GMH).  GMH owns a 
majority stake in SPOT so a winning bid by EchoStar would net 
them control of PanAmSat as well.  However, there seems to be 
a lot of questions over whether a bid by EchoStar would pass
government approval.  Looking at the chart the last couple of 
days may have produced a failed relief rally at $32.25.  This 
could be a good entry point to begin a short position.  If 
you're looking for more confirmation, wait for shares to trade 
under $31.  Remember to play with stops.

Picked on August 3rd @ $31.58
Gain since picked:     - 0.68
Earnings Date:           N/A  





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

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

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

Gannett GCI Close:$68.91 Gain:-0.10 Stop:$65.00

Gannet has consolidated for the past two days, but given the current 
market conditions, not much else could be expected.  GCI remains above 
its previous congestion zone, and has the support of a two-month up 
trend.

Picked on August 3rd at $68.53
Gain since picked:       +0.38
Earnings Date             N/A




===

RailAmerica RAIL Close:$13.12 Gain:+0.17 Stop:$12.00

RAIL went on a wild train ride this morning, dipping within 3 cents of 
our stop.  The 200-period moving average on the 60-minute chart marked 
the low point, and the train conductor was able to get back control of 
the stock and finish 17 cents in positive territory.  That enable the 
stock to once again close above $12.90.

Picked on July 14th at $11.41
Gain since picked:      +1.71
Earnings Date            N/A





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

Beazer Homes BZH Close:$66.51 Gain:+1.43 Stop:$70.00

Beazer was down over $2 today, but managed to stage a late-day 
rally and finish up $1.43.  But BZH was unable to fill the down 
gap that formed on Monday, and as concerns about housing starts 
continue to mount, this stock could be in trouble.  With fellow 
homebuilder stocks like Pulte and KB Home getting hit today, 
Beazer's time will come.  

Picked on August 6th at $65.08
Gain since picked:       -1.43
Earnings Date             N/A




===

Chevron CHV Close:$90.68 Gain:-0.37 Stop:$93.00

Oil stocks got a slight bump as the price of crude oil climbed to 
over $28 a barrel, but Chevrons attempt a rally looked a little 
suspect.  After jumping in the first hour, Chevron slowly drifted 
lower into the close, giving about 50% of today's gains.

Picked on August 2nd at $91.05
Gain since picked:       -0.08
Earnings Date             N/A




===

Transocean Sedco Forex RIG Close:$31.05 Gain:-0.39 Stop:$36.50

Much like Chevron, RIG got an early morning boost, but sold off 
as the day progressed.  RIG finished the day in negative 
territory, and closed on its low.  The oil services sector got 
whacked for 2.35%, and it looks like the carnage could continue 
tomorrow. 

Picked on July 31st at $32.29
Gain since picked:      +1.28
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
IRWN      Irwin Financial Corp.     26.55  +0.90
FED       Firstfed Financial        32.60  +1.15
SBR       Sabine Royalty Tr Ubi     24.50  +0.95
GISX      Global Imaging Systems    16.80  +1.73
HKF       Hancock Fabrics Inc       11.05  +0.94

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

Ticker    Company Name                  Close  Change
BCF       Burlington Coat Factory Whse  15.65  +1.55
GISX      Global Imaging Systems        16.80  +1.73
OPTN      Option Care Inc               17.42  +2.92
ESLR      Evergreen Solar Inc           10.16  +1.01
PHLI      Pacifichealth Labs, Inc.       5.95  +1.83
ARRY      Array Biopharma Inc.          10.25  +1.25

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

Ticker    Company Name              Close  Change
BP        Bp Plc                    50.15  +1.33
XL        XL Capital Ltd.           78.65  +1.15
WON       Westwood One Inc.         28.85  +2.95
EXPD      Expeditors Int Wash Inc   57.05  +1.44
BWA       Borg Warner Inc.          54.50  +1.60
UAG       United Auto Group Inc.    20.81  +1.81

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

Ticker    Company Name              Close  Change
EPG       El Paso Corp              48.10  -1.85
MON       Monsanto Co               35.07  -1.44
ADBE      Adobe Systems             34.42  -2.34
BRW       Broadwing Inc             21.75  -1.45
DRI       Darden Restaurants        26.95  -2.90
DO        Diamond Offshore Drilling 27.50  -1.07


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

Ticker    Company Name              Close  Change
BA        Boeing Co                 57.50  -0.90
EPG       El Paso Corp              48.10  -1.85
KR        Kroger Company            25.88  -0.30
IP        International Paper       39.98  -0.58
CDWC      CDW Computer Centers      43.24  -2.58
SYMC      Symantec Corp             46.25  -2.12


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

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

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

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

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

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


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




DISCLAIMER

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

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

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

Option Investor Inc
PO Box 630350
Littleton, CO 80163

E-Mail Format Newsletter Archives