Option Investor
Newsletter

Daily Newsletter, Tuesday, 08/28/2001

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                Tuesday 08-28-2001
                                                  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/4875_1.asp
=================================================================

In section one:

Market Wrap: Major averages show little signs of strength
Market Sentiment: Stocks and Confidence Drop
Play-of-the-Day: OM Group, Inc. - OMG (Bullish)

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
       8-28-2001          High      Low     Volume Advance/Decline
DJIA    10222.03 -160.32 10382.83 10214.34  .98 bln   1232/1868 
NASDAQ   1864.96 - 47.43  1916.28  1864.72 1.41 bln   1337/2303
S&P 100   594.13 - 10.09   604.59   593.95   Totals   3569/4171
S&P 500  1161.51 - 17.70  1179.68  1161.17             
RUS 2000  474.20 -  4.73   479.27   473.99
DJ TRANS 2831.13 -  0.78  2838.52  2807.81 
VIX        24.02 +  1.58    24.23    22.51 
VXN        48.74 +  1.52    49.46    47.79
Put/Call Ratio      0.88
-----------------------------------------------------------------

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

Major averages show little signs of strength by Jeff Bailey

Recent rallies for some of the broader market averages have been 
short lived and traders are left with a very range bound market.  
The Dow Industrials have held up relatively well, but look to be 
challenging recent lows yet again.  With MACD below the zero 
level, I'd remain very cautious for getting overly bullish as it 
looks like market bears were laying in wait on the recent rally 
to the 50-day moving average.  A break below the 10,120 low (July 
11th low) could see the Dow Industrials slip and test our 38.2% 
retracement of 9,983.

Dow Jones Industrial Average - last 10 months



With the Dow Industrials closing below the 10,250 level and our 
50% retracement, tomorrow becomes an interesting day for traders 
to be monitoring.  The recent rally looks like bears were in wait 
and sold stocks into the strength of the rally.  According to the 
Stock Traders Almanac, the last two days of August have been 
murderous the past four years in a row.

S&P 500 Index Chart - last 10 months



A comparison between the Dow Industrials (INDU) and the above 
chart of the S&P 500 shows us that the SPX has less sponsorship.  
Today's action has the SPX back below our long-term downward 
trend dating back to September 1, 2000.  The rallies above that 
trend have seemed dramatic when they've happened, but you sure 
get the feeling that those rallies were used as selling 
opportunities.  A dramatic sell-off here could have the SPX 
trading down to the 1,134 level at 80.9% retracement.  This also 
correlates relatively closely to the bearish price objective from 
our point and figure charts (10-point box) dating back to June.

NASDAQ Composite Index Chart - last 9 months



Yesterday's intra-day rally came close to our 50% retracement 
bracket level of 1,940.  This was a horizontal level that had 
been acting like support in July, but once broken now looks to be 
serving as resistance.  This should put many traders on the 
defensive if they were not already there.  A good short-term 
gutter washing could see this index retreat to the 80.9% 
retracement level of 1,753.

There were very few technology sectors that didn't show some 
weakness today.  With the NASDAQ Composite trading lower by 
2.48%, the GSTI Software Index (GSO.X) was today's downside 
winner as this index lost 3.76% and led the major sector 
decliners.  This is not unexpected in a declining market as we 
have noted in past sessions just how weak this sector is RELATIVE 
to the market (as characterized by the S&P 500).  

Semiconductor stocks (SOX.X) and Biotechs (BTK.X) lost 2.84% and 
2.22% respectively and their leadership was missed for the first 
time in 5 sessions.  In the near-term, equity bulls will get a 
good feel for where things go from here.  If one or both of these 
sectors are unable to lead, the I would expect continued 
weakening for the NASDAQ Composite.  

I continue to get the feeling that there are times when sectors 
like the semiconductors and biotechs want to show leadership, but 
their exertion of strength gets squashed by the poor performance 
from groups like the Internets (INX.X) (getting close to another 
52-week low), Networking (NWX.X) and GSTI Software Index (GSO.X).

The current game in technology is to continue to trade the 
Semiconductors and Biotechs for strength, while trading short/put 
the Internets, Networking and Software sectors on weakness.

I continue to like select names in some of the "old economy" 
types of stocks.  Shares of Nike (NYSE:NKE) make an attractive 
"strong stock on pullback" candidate as that stock has had a 
tendency to pull back in small increments, then makes a sharp 
move higher to a new relative high.  Office Depot (NYSE:ODP) just 
barely set a new 52-week high today of $14.06 after gapping 
higher back in mid-July at $12.  Deere Co. (NYSE:DE) traded lower 
by 0.59% today after the company announced plans to cut employees 
and close plants, yet the stock is up nearly 16% from its June 
and July lows.  

In a nutshell, there are stocks like those mentioned above that 
have been looking like they were gaining institutional 
sponsorship in recent months that continue to hold tough.  The 
longer they are able to hang in there, the greater potential they 
have for becoming the leaders on the next market advance.  I 
think the same is true with many biotech and semiconductor stocks 
as it relates to technology.  

While I'm not a big fan of networking stocks, there is one name 
that I'm impressed with.  The fundamental investor might want to 
do some homework on shares of SpectraLink Corporation 
(NASDAQ:SLNK) as earnings/sales are growing and the company has 
very little debt.  In essence, the company looks well positioned 
and managed considering other stocks in the sector.  Technicals 
show good relative strength vs. the S&P 500 and sector and a 
trade at $17.50 would have the stock giving a triple top buy 
signal above bullish support trend.  Today's announcement that it 
has joined Cisco's Architecture for Voice and Video Integrated 
Data "AVVID" helped the stock gain 3% and close at $16.55.  
Support looks to be firming at the $14 level.  A break above the 
$18.18 level puts the stock back at a 52-week high with overhead 
supply dating back to March 2000 from $20-$30.


*******************************************************************
***********************************************************
FREE ONLINE SEMINAR - Wednesday, August 29 at 10:00 Pacific

Online Spread Trading
***********************************************************
Here we go again - FREE, FREE, FREE

Last week was a huge success - here is another one!

PreferredTrade will be conducting a LIVE trading seminar
during the market hours on Wednesday. And it is FREE!!

Learn about online spread trading using the direct access
Preferred Trade system. Ask your questions LIVE.
Here are the instructions to attend:
No need to register all you have to do is show up.
1. Click on this link:
http://www.premierinvestorseminars.com/seminar/entrance.asp
2. Click on Join Meeting for the meeting titled: 
Trade using Online Spreads by PreferredTrade
3. The password is: spreads

It will be a good idea to sign on 15 minutes before the start.
*******************************************************************


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

Stocks and Confidence Drop by Jeffrey Canavan

A decline in consumer confidence was not what a jittery market 
needed, but that's what they got.  The Conference Board reported 
that consumer confidence fell to a four-month low of 114.3 in 
August amid concerns about unemployment.  

Wall Street was hoping for a slight increase in consumer 
confidence, and went into sell mode when they didn't get what 
they wanted.  Intel tried to inject some positive news into the 
market by saying they expect a seasonal improvement in second 
half demand, but the stock still closed down 50 cents. 

Nasdaq Composite Daily Chart



Intel couldn't help the Nasdaq Composite either, which lost 2.48% 
and closed on its low.  Today's drop erases most of Friday's 
gains, and sets up the composite for a test of last week's low at 
1817.   

S&P 500 Daily Chart



Just when it looked like the S&P 500 might be able to hold above 
1,177, it drops 1.50% and also erases all of Friday's gains.  
That puts the S&P 500 within 8 points of last weeks low.

While charts are nice, today's action was all about economic 
data, and tomorrow should be more of the same.  The tone will be 
set early when revised 2nd Quarter GDP numbers are released at 
8:30AM EST.  Expectations are for flat growth, and anything less 
could spark another selling spree.

Gateway may be able to help computer stocks tomorrow after 
announcing that they expect to be pretax profitable in Q4 by 
exiting the European market and cutting 25% of its global 
workforce.  The stock is up 49 cents in after hours trading.
 
-----------------------------------------------------------------

Market Volatility

VIX   24.02
VXN   48.74

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

          Put/Call Ratio  Call Volume   Put Volume
Total           .88        398,269       349,369
Equity Only     .80        349,708       278,525
OEX            1.12         10,697        12,021
QQQ             .89         37,260        33,106

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

Bullish Percent Data

           Current   Change   Status
NYSE          34       -      Bear Confirmed
NASDAQ-100    24       -      Bear Confirmed
DOW           36       +6     Bull Alert
S&P 500       48       -      Bull Correction  
S&P 100       38       -      Bull Correction  

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

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


 5-Day Arms Index  1.10
10-Day Arms Index  1.30
21-Day Arms Index  1.38
55-Day Arms Index  1.27

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      1230           1874
NASDAQ    1338           2301

        New Highs      New Lows
NYSE      100             50
NASDAQ     47             94

        Volume (in millions)
NYSE       982
NASDAQ   1,414
-----------------------------------------------------------------

Advisory Sentiment 

Bullish  Bearish  Correction  Net   Change 
  46.9%    30.2%    22.9%    16.7%   -3.2%

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: 08/21/01
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
Flat line.  Commercials' net position hasn't budged in three 
weeks.

Commercials   Long      Short      Net     % Of OI 
8/07/01      331,881   406,210   (74,329)   (10.07%)
8/14/01      337,327   411,504   (74,177)   ( 9.91%)
8/21/01      342,332   416,372   (74,040)   ( 9.76%)

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
8/07/01      128,454     53,191   75,263     41.43%
8/14/01      130,432     55,750   74,682     40.11%
8/21/01      134,280     58,785   75,495     39.10%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100
Commercials have gotten slightly more bearish.  It looks like a 
range is setting up between (8,000) and (10,000). See chart 
below.

Commercials   Long      Short      Net     % of OI 
8/07/01       28,867     38,956   (10,089)  (14.88%)
8/14/01       29,909     37,822   ( 7,913)  (11.68%)
8/21/01       30,348     38,964   ( 8,616)  (12.43%)

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

Small Traders  Long     Short      Net     % of OI
8/07/01        9,715     8,098    1,617       9.08%
8/14/01       11,165     9,508    1,657       8.02%
8/21/01       10,499     7,576    2,923      16.17%

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
Commercials are closing in on their most bullish reading of the 
year, 8,925 set back on May 22nd.

Commercials   Long      Short      Net     % of OI
8/07/01       18,644    13,733    4,911     15.2%
8/14/01       21,652    15,856    5,796     15.5%
8/21/01       22,710    14,625    8,085     21.7%

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
8/07/01        4,841     9,909    (5,068)   (34.36%)
8/14/01        4,441     8,528    (4,087)   (31.51%)
8/21/01        5,059    10,410    (5,351)   (34.59%)

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

COT Commercial Net Position Charts




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


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

OM Group, Inc. - OMG - close: 65.52 change: -0.28 stop: 63.00

Original Comments When Picked On August 21st:

Company Description:
OM Group produces metal-based specialty chemicals.  Their products 
(produced from cobalt, copper, platinum, gold, rhodium, and nickel) 
are used in airbags, circuit boards, batteries, paints, and memory 
disks.  In addition, the company makes coloring agents for 
pigments, ceramics, and glass, and specialty powders used for 
alloys in jet engines and to enhance the cutting edges of precision 
tools.  OMG has expanded into precious metals-based materials by 
acquiring Degussa Metals Catalysts Cerdec. 

Fundamentals: 
For the second-quarter ended last June the firm reported record 
earnings and sales per diluted share.  Net sales for the period 
increased to $216.6 million compared to $273.5 million a year ago, 
while net income jumped to $20.2 million, or $.83 per diluted 
share, from $18.4 million, or $.76 per diluted share, in the 2000 
second quarter.  The company predicts that excluding the effects of 
acquisitions, the firm will earn 83 to 87-cents per share in the 
third-quarter and $3.32 to $3.42 for 2001.  The company is 
undervalued when compared to its peers.  It has a forward 2001 P/E 
of 19 and a current one of 22.  The industry average P/E is 27.  In 
addition, it has a PEG of 1.32 as opposed to the industry average 
of 2.76.

Why We Like It: 
How can you not like a stock that so ignored the post-Fed cut 
market slide.  OMG shares not only gained $2.90 on the day, they 
broke through significant resistance at $63.40 and set a new 52-
week high.  This move was not a low volume rally.  The trading 
volume at 113k was well above the 101k daily average.   Considering 
the shares are still undervalued, our $73 price target is a 
reasonable goal.  Our $60 stop is appropriate for short-term 
traders; long-term investors may consider a stop at just below the 
$58.93 200-day moving average. 

Updated Comments:
This stock just keeps on chugging.  Who knew that metal-based
specialty chemicals would have such a draw?  Today's mild 28
cent loss really demonstrated the stock's strength again.  Chart
readers should notice that the shares have been trading in a
tight channel for the month of August.  If the trend continues
we might see a little more consolidation before the next move
up.  Technically we would consider it buy here but you might
get a better price if you wait for a dip to $64 which is near
the bottom of the channel.  Yesterday we moved our stop up to
$63 after the stock's positive close.

Picked on August 21st @ $ 64.50
Gain since picked:       + 1.02
Earnings Date:              N/A  (not confirmed)





=================================================================
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 08-28-2001
                                                   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/4875_2.asp
=================================================================

In section two:

Split Trader
  Split Announcements: Protein Design Labs, Inc. - (PDLI)
  New Plays: St Jude Medical. - STJ (Bullish)
  Play Updates:  NVDA, AAS, AHC, GD, LEN, OMG, THQI 
  Closed Plays: none

Net Bulls 
  New Plays: MedImmune Inc - MEDI (Bearish)
  Bullish Play Updates: Integrated Silicon - ISSI (Bullish) 
  Bearish Play Updates: none
  Closed Plays: ImClone Systems - IMCL (Bullish)


Stock Bottom / Active Trader
  New Plays: Fifth Third Bancorp - FITB (Bearish)
  Bullish Play Updates: NEM, PEP, ULTE
  Bearish Play Updates: PCAR, TCF
  Closed Plays: none

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

Tuesday, August 28, 2001, 5:16 PM ET

Protein Design Labs Surprises with a 2-for-1 Stock Split

After Tuesday's closing bell, Protein Design Labs, Inc. 
(NASDAQ:PDLI) announced its Board of Directors' approval of a 2-
for-1 stock split of its outstanding shares. The payable date is 
set for October 9, 2001 and the stock is expected to trade on a 
split-adjusted basis on October 10, 2001.  The number of 
outstanding shares will increase to approximately 88 million and 
the float will effectively double to 71 million. PDLI currently 
has 250 million shares authorized for issuance. 

Protein Design announced their last 2:1 stock split when shares 
were trading at $186.75.  At the current price of $59 it comes as 
a bit of a surprise that the Board would execute another split. 
Whatever the reason, you can't argue with the fact that it will 
make the stock more liquid. 

Earlier this month Lehman cut its outlook on the Company after 
PDLI reported lower Q2 profits.  Analyst Bill Tanner at SG Cowen 
also reduced profit targets but was also stated as being 
optimistic about PDLI as becoming "a dominant player" in their 
particular segment of biotechnology.

The Company has successfully developed breast cancer treatment 
medications and other drugs for the prevention of disease and 
infections.

Shares closed the day off 81 cents at $59.41 and slid to $59.01 in 
after hours trading.

 


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

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

St Jude Medical. - STJ Close: $69.85 change:+1.35 Stop:$65.50

Company Description:
St. Jude Medical designs, manufactures, and markets medical 
devices primarily for cardiac care. Products include heart valve 
disease management devices, cardiac rhythm management and 
interventional cardiology devices.

Fundamentals: 
For the 3 months ended 3/31/01, revenues rose 10% to $326.1M. Net 
income rose from $15.8M to $47.1M. Revenues reflect higher 
bradycardia and Angio-Seal products sales. Earnings also reflect 
the absence of a $26.1M special charge.  For the 2001 fiscal year 
the company's net income is expected to increase 21-percent.  
Analysts expect company earnings to rise from $2.20 in 2001 to 
$2.56 in 2002.  This gives STJ shares a current P/E of 36 and a 
forward P/E of 27.

Why We Like It: 
One month ago shares of STJ reached a 52-week high just over $72.00 
and investors cashed in, driving shares down -10% in a little over 
one week.  The declines came on strong conviction and took shares 
down to the 50 DMA of $63.82.  But that was as far as the shares 
would go.  Buyers stepped in to support the price as a continued 
shift into defensive sectors saw an influx of cash that has pushed 
the stock above short-term resistance just under $68.00.  Now we 
find out that consumer confidence is beginning to wane and the 
likelihood of a downward revision in the GDP looms prior to 
tomorrow's open.  STJ is well positioned, well run, and the stock 
looks to be a solid momentum play that can capitalize on the shift 
in investor's fortunes.

It's difficult to speculate if and when STJ will announce a stock 
split and it may not play any role in the direction of the shares 
over the coming weeks.  However, trading just under the 52 week 
high with the earnings date a month and a half away, the chances 
certainly exist.  While this play is intended for those with a 
longer-term focus, one could extrapolate a strategy that hones in 
on the short-term as well.  A retest of the 52-week high would 
likely be the best exit place, should this type of strategy cater 
to your liking.  A longer-term trade strategy might utilize 
psychological levels for one's target price and it is in this vein 
that we would look to $80.00 as a potential exit price.  The stop is 
under the 50 DMA at $65.50.

Picked on August 28th at $69.85
Earnings Date              10/17 (Not Confirmed)





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

  -----------------
  Split Run Updates
  -----------------

NVIDIA Corp. - NVDA - close: 87.08 change: -1.15 stop: 83.00 *new*

Shares of NVDA have finally completed their bounce from $80 to the
top of its current trading channel at $90.  The closest thing we
got to a dip was the Monday morning low near $83.  The stock 
traded higher on positive news with a new product for home-PC 
users and every technophile's desire to run DVDs, T.V. and their
own home movies on a computer.  The NASDAQ's late afternoon run up 
didn't hurt either.  The stock completed our short-term target of
$90 early this morning, okay it was $89.95 but that's close enough.
The 1.15 slide today wasn't bad in the face of a broad market 
sell-off.  We're still very bullish on NVDA but grow more concerned
about the market environment on a daily basis.  We're going to 
move our stop up to $83 which is just under Monday's low.  If 
you're interested on buying on a dip we suggest looking for a bounce
near the $85 level.  Traders could also wait for a positive close
over $90 which is current resistance.  Next major target will be
$100.  Remember, we will likely close this play before its Sept.
11th 2:1 stock split to avoid any post-split depression.

Picked on August 22nd @ $ 84.79
Gain since picked:       + 2.29
Earnings Date:             8/14 (confirmed)




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

AmeriSource - AAS - close: 64.60 change: -0.40 stop: 64.00 

Current long position holders could hardly get better news 
than Standard & Poor's decision to add AmeriSource to the 
S&P 500 index.  The stock gapped up on the news and traded in
a very narrow range Monday.  We slid our stop up to $64 on 
Monday to help protect our $5 gain in the play.  For those
traders new to the game, when a stock is added to the S&P 500
index, all the index mutual funds that track the market are
forced to buy shares of the new addition so their fund can
correctly say they are mirroring the S&P 500.  Now there isn't
any specific time period that these index funds have to buy
shares of the new addition but normally there is a strong 
surge of buying (and volume) when they announce and another 
surge when the stock is actually added to the index.  This will 
happen for AAS on August 29th.  Since there are so many index 
funds that track the S&P 500 there should be strong buying 
pressure for the next few weeks.  However, this is not a no-lose 
situation and more than once we've seen stocks plummet under 
weak market conditions despite the positive news.  Looking at 
today's action we saw the stock gap up to 66.50 before falling 
to what appears is potentially new support at 64.50.  Since most 
stocks have a tendency to fill gaps like the one created on Monday, 
we would be very cautious about new positions at this time.

Picked on August 17th @ $ 59.00
Gain since picked:      +  5.60
Earnings Date:             N/A  (not confirmed)




---

Amerada Hess - AHC - close: 77.90 change: -0.10 stop: 75.80 

If you are feeling optimistic you might say AHC has been showing
good relative strength versus the broader markets.  The stock 
remains in a tight trading channel and if you're really bullish 
you might argue the stock is trying to build on some higher lows.  
We're feeling somewhat neutral on AHC until it offers us a clean 
trigger point to go long again.  A decent close over resistance at 
$79 would be the green light.  If you missed the newsletter 
yesterday we moved our stop up to 75.80.

Picked on August 15th @ $ 78.90
Gain since picked:      -  0.59
Earnings Date:             N/A  (not confirmed)




---

General Dynamics - GD - close: 81.46 change: -1.14 stop: 79.00

Here we go again.  Shares of GD have clearly rolled over again.
This is not surprising with the Dow's decline weighing heavily
on investors minds.  This play is starting to feel a little 
more risky and traders are urged to use caution.  If you like
the company and believe the stock has good upside potential if
the market turns around then consider a short-term trade on a 
bounce.  We would be looking for a bounce at the $80 level.
This would make for a decent risk/reward entry point with our
stop at $79.  Unfortunately, at this point a bounce at $80 is
probably going to stall at $83.00 again.  More patient or
conservative investors should remain waiting for the positive
close over $85.

Picked on August 8th @ $  83.85
Gain since picked:      -  2.39
Earnings Date:         10/17/01 (not confirmed)




---

Lennar - LEN - close: 41.62 change: +0.01 stop: 40.66

Monday saw existing home sales come in slightly below consensus
estimates and the news sent a shudder through the housing sector.
The housing market has been a pillar of strength for the U.S.
economy and while most analysts believe it will remain healthy
any slow down will likely be yet another nail in the coffin for
any prolonged market rebound.  On Friday we warned of a small
consolidation and LEN's ability to hold steady on Tuesday showed
strength although volume was very light.  Yesterday we moved our
stop up to 40.66 (our entry) which is near the 10-dma.  The MACD
continues to strengthen for LEN and we're not quite ready to call
it quits based on one economic report.  The stock still has
bullish potential and a bounce at $41 may be a good new entry 
point.  With our new stop at 40.66 your potential risk should
be extremely limited.

Picked on August 16th @ $ 40.66
Gain since picked:       + 0.96
Earnings Date:          09/19/01 (not confirmed)




---

OM Group, Inc. - OMG - close: 65.52 change: -0.28 stop: 63.00

This stock just keeps on chugging.  Who knew that metal-based
specialty chemicals would have such a draw?  Today's mild 28
cent loss really demonstrated the stock's strength again.  Chart
readers should notice that the shares have been trading in a
tight channel for the month of August.  If the trend continues
we might see a little more consolidation before the next move
up.  Technically we would consider it buy here but you might
get a better price if you wait for a dip to $64 which is near
the bottom of the channel.  Yesterday we moved our stop up to
$63 after the stock's positive close.

Picked on August 21st @ $ 64.50
Gain since picked:       + 1.02
Earnings Date:              N/A  (not confirmed)




---

THQ Inc - THQI - close: 51.99 change: -0.18 stop: 46.00

The rebound for THQI continued on Monday but not before shares
traded down to $50 offering nimble investors a nice entry point
for the next leg up.  The stock seems to have hit a speed bump
at the 50-dma or $53.25.  Like many stocks on this list, shares
showed relative strength today in the face of market weakness.
Traders have several options to pick a bullish play on THQI.
Consider another bounce at the $50 mark if the NASDAQ slides
lower tomorrow or you can wait for the stock to clear one or
both of its two nearest hurdles - 53.25 or 55.00.  Our target
will be the $60 mark where bulls will find steep resistance.

Picked on August 24th @ $ 51.45
Gain since picked:       + 0.54
Earnings Date:              N/A  (not confirmed)





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

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

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

MedImmune Inc - MEDI Close:$40.46 Change:-1.13 Stop:$42.75

Company Description:
MedImmune is an unusual biotech firm -it is profitable and has five 
products on the market.  Its flagship product, the injectable 
Synagis (90-percent of sales), helps prevent respiratory syncytial 
virus (RSV), a major cause of pneumonia and bronchiolitis in 
infants.  Also on the market are RespiGam, another RSV treatment; 
CytoGam, which prevents and treats cytomegalovirus disease in 
kidney transplant patients; and Ethyol, which reduces damage caused 
by some chemotherapy agents. Products under development include 
vaccines for urinary tract infections, tissue transplant rejection, 
cancer, and two forms of human papillomavirus that are major causes 
of cervical cancer.

Fundamentals: 
Last year, the company earned 67-cents per share on sales of $540 
million.  This year, the consensus estimate is for earnings of 81-
cents on $630 million and $1.06 on $815 million.

Why We Like It: 
On a fundamental basis, MedImmune is one of the stronger biotechs.  
However, a bullish run has gotten the shares a head of themselves 
and they are now vulnerable to a pullback.  The shares sell for 50 
times their 2001 earnings estimate.  As a comparison, the industry 
average for profitable biotechs is 33.  This lofty valuation in the 
midst of a bear will make it difficult for the shares to gain 
traction.  With limited upside potential, we see a tradable bearish 
situation.

After setting a $33.20 session low on August 8th, the shares rose 
solidly but seem to have run out of gas at $41.70.  They have been 
bouncing against that level for the past four trading session.  The 
bulls' officially gave up control on Monday morning when the shares 
nearly kissed the $42.73 200-day moving average with the $42.69 
session high.  They've weakened since and broke the $40.98 50-day 
moving average on Tuesday.  We see it likely existing selling 
pressure will produce a short-term test of support in the $36 to 
$37 range.  If the selling picks up momentum, a close under $33 
would imply a test of our longer-term $28 bearish objective.  
Normally we would set our stop at $42, but since the 200-day moving 
average is so close we will take advantage of its protection with a 
$42.75 stop.


Picked on August 28th at $40.46
Earnings Date              N/A (Not Confirmed)





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

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

Integrated Silicon - ISSI - cls: 15.86 chg: -0.39 stop: 15.25 

The semiconductor index (SOX) may have added to its recent gains
on Monday but its 200-dma proved to be a tight lid on the sector.
Tuesday was no different with the 200-dma proving to be the top
for the SOX before the profit taking began knocking the index 
for a 2.84% loss and placing it under the 600 level.  ISSI showed
a similar pattern with a positive move up on Monday above key
resistance at $16 only to lose it again today.  We moved our stop
up to 15.25 on Monday to help protect our capital from any 
unexpected bad news in the sector.  Shares of ISSI have been 
outperforming its sector and thus bullish traders should continue
to watch it or potential trades.  We would look for a dip between
potential support at 15.50 and the stock's 10-dma at 15.37.  This
would provide a very tight risk/reward scenario on a new play.
However, more patient or conservative investors should wait for 
the stock to close over $16 again before considering a new long
position. 

Picked on August 16th @ $15.10
Gain since picked:      + 0.76
Earnings Date:             N/A  





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

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

ImClone Systems - IMCL - close: 51.88 change: -2.18 stop: 52.00

Don't say we didn't warn you.  The Biotech index (BTK.X) pulled
back on Tuesday after stalling in Monday's session.  If the 
sector follows a normal retracement pattern then we could see
the index continue to dip to 530 (a 38.2% retracement) or even
520 (really 521, a 50% retracement of the last week's rally but
including Monday's high).  Shares of IMCL outpeformed the index 
on Monday with a big day and a new recent high near $54 but that 
left shares vulnerable to a 4% round of profit-taking today.  
Depending upon your outlook we were fortunately or unfortunately 
stopped out today when shares traded through our stop at 52.00.  
We had moved the stop up to $52 in Monday's newsletter.  We still 
like the look of IMCL but bullish traders need to be patient.  Keep 
an eye on the BTK.X for a new level of support.  If you're lucky 
you might get a bounce at $51 for IMCL but another dip in the BTK 
index or even the NASDAQ could push IMCL shares down to $50.  Oh, 
and by the way, I'm eating my words from Friday's write up as we
speak.  

Picked on August 23rd @ $49.48
Gain since picked:      + 2.52
Earnings Date:             N/A  





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

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

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

Fifth Third Bancorp - FITB Close:$59.30 Change:+0.10 Stop:$62.00

Company Description:
Fifth Third Bancorp, through its affiliate banks, operates over 
1,000 branches in Florida, Arizona, Kentucky, Illinois, Michigan 
and Ohio.  The company also offers insurance (credit, health and 
accident), investment services (mutual funds, trust and brokerage) 
and processes credit card transaction.

Fundamentals: 
Last year, the company earned $1.88 per share on revenue of $3.3 
billion.  This year, the firm is expected to earn $2.37 on revenue 
of 3.7 billion and $2.77 on $4.3 billon in 2002.  It has a forward 
2001 P/E of 25, which is significantly higher than the industry 
average of 16.

Why We Like It: 
Regional banks in general are looking very weak.  Sector shares had 
been benefiting from a resilient real estate market and falling 
interest rates.   Traders are becoming concerned that the poor 
economy is finally reaching the home sale market and that the Fed 
may be nearing the end of this cycle of cutting interest rates.  
Having been driven up so far, banks are looking painfully 
overvalued.  FITB shares have moved from below $30 in March of 2000 
to a 52-week high of $64.77 on August 15th.  After stalling out at 
that level since then, the shares began tumbling from above $64.  
The bulls attempted to right reverse direction at the $59 support 
level, but after some initial success in the morning hours on 
Tuesday, the shares faltered badly.  Despite the 10-cent gain, it 
is clear the bears are in charge.  Downside support should occur at 
the 200-day moving average of $56.48.  We have a bearish price 
target of $53.  Aggressive traders can get in now; conservative 
ones should wait for the break below $59.  

Picked on August 28th at $59.30
Earnings Date             10/15 (Not Confirmed)





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

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

Newmont Mining NEM Close:$20.93 Gain:-0.56 Stop:$20.40

Gold came under pressure this morning as the dollar strengthened.  
The dollar eventually faded, but the damage was already done for 
gold and gold stocks.  The overall market weakness didn't help 
either.  The dollar is stuck at 113.  If it breaks down gold 
stocks should be golden, if not, Newmont might be fools gold.

Picked on July 14th at $20.50
Gain since picked:      +0.43
Earnings Date            11/1/01 (unconfirmed)




---

Pepsi PEP Close:$46.68 Gain:-0.20 Stop:$46.50

Pepsi keeps holding in there as the market sells off around it.  
Unfortunately each little decline brings this stock closer to our 
stop.  If the overall market has one or two more days like today 
might be too much for this soda stock to handle.

Picked on August 10th at $45.66
Gain since picked:        +1.02
Earnings Date               N/A




---

Ultimate Electronics ULTE Close:$28.05 Gain:-0.95 Stop:$27.25

Ultimate Electronics wasn't so ultimate today.  Granted a $1 drop 
wasn't too bad under today's market conditions, but we are not 
encouraged by the fact that the stock lost the support of the 
50-day moving average.

Picked on August 24th at $28.55
Gain since picked:        -0.50
Earnings Date               N/A





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

PACCAR PCAR Close:$54.05 Gain:-0.68 Stop:$56.00

PACCAR got back on track today by falling 1.24%.  Taking out some 
relative lows around $53 would be even better.  A few more days 
like today, and we'll be there.

Picked on August 17th at $55.46
Gain since picked:        +1.41
Earnings Date              N/A




---

TCF Financial TCB Close:$46.53 Gain:-0.08 Stop:$49.00

Bank stocks tried to rally after yesterday's decline, but finally 
finished the day in negative territory.  TCB has now broken below 
the 50-day moving average, and the fundamental outlook for banks 
doesn't look good.  

Picked on August 24th at $47.60
Gain since picked:        +1.07
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
FE        Firstenergy Corp          32.10  +0.60
NZ        Nz Corporation             7.90  +0.60

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

Ticker    Company Name              Close  Change
MIMS      Mim Corporation           11.73  +1.62
BSML      Britesmile Inc            10.75  +1.50
PCYC      Pharmacyclics Inc         19.95  +2.01
ESA       Extended Stay Amer Inc    16.87  +1.37
  ---------------------------------------
   Breakout to Upside (Stocks over $20)
  ---------------------------------------

Ticker    Company Name              Close  Change
ATVI      Activision Inc            37.56  +2.15
PII       Polaris Industries        50.90  +1.60
XL        XL Capital                79.70  +1.68
RVDP      Riverdeep Group           25.50  +2.79
ACTN      Action Performance        27.32  +1.21

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

Ticker    Company Name              Close  Change
MOVI      Movie Gallery             25.36  -2.39
BEN       Ben Franklin Resources    41.38  -1.24
EMN       Eastman Chemical          39.95  -1.01
CORS      Corus Bankshares          52.00  -4.43
SGY       Stone Energy              40.66  -1.74

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

Ticker    Company Name              Close  Change
NEM       Newmont Mining            20.93  -0.56
WWY       William Wrigley Jr Co     50.25  -0.65
GIS       General Mills Inc         44.53  -0.17
UTR       Unitrin Inc.              37.41  -1.00
TOT       Total Fina Elf Sa         72.98  -1.44

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