Option Investor
Newsletter

Daily Newsletter, Tuesday, 09/04/2001

HAVING TROUBLE PRINTING?
Printer friendly version
PremierInvestor.net Newsletter                Tuesday 09-04-2001
                                                  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/4809_1.asp
=================================================================

In section one:

Market Wrap: Carly Hugs Michael!
Market Sentiment: The Rally that Almost Was
Play-of-the-Day: "Soft" certainly describes this stock

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
	  9-04-2001          High     Low   Volume Advance/Decline
DJIA     9997.49 + 47.74 10182.38 9894.88  1.18 bln 1626/1458 
NASDAQ   1770.78 - 34.65  1836.19 1770.76  1.50 bln 1417/2225
S&P 100   577.75 +   .64   590.71  574.34    Totals 3043/3693
S&P 500  1132.94 -   .64  1155.40 1129.06
RUS 2000  466.96 -  1.60   472.81  466.91
DJ TRANS 2835.65 + 22.24  2865.83 2807.76
VIX        28.55 +   .70    29.83   26.84
VXN        57.15 +  4.29    57.15   54.96
TRIN        1.09
Put/Call Ratio 0.83
-----------------------------------------------------------------

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

Tonight we have a guest market commentator on PremierInvestor.net. 
Jim Brown is well known for his market insight and option trading 
education in the Option Investor Newsletter.  If you'd like more 
information about Option trading, please visit their website, 
www.OptionInvestor.com. Our normal market wrap columnist, 
Jeff Bailey, is on vacation this week.

===========

Carly Hugs Michael!

The big news of the day was of course the merger of Hewlett
Packard and Compaq. The two companies agreed to merge in a 
$25 billion stock deal that will create an even bigger PC
giant for Dell to battle. Carly Fiorina and Michael Capellas,
CEO of Compaq, hugged for the cameras and beamed smiles for
all their shareholders. However the actual results were much
different than they wanted. HWP lost -4.21 to $19 and CPQ
lost -1.27 to $11.13. Nobody seemed to like this deal, most
of all the shareholders. 

Chart of the DJIA (daily)




Chart of the DJIA (15 minute)




Chart of the NASDAQ (15 minute)





The HWP/CPQ deal may prove to be a bonanza for another Michael,
Michael Dell. Since Compaq is still having indegestion over the
Digital Equipment acquisition last year, it is entirely possible 
that the CPQ/HWP deal will still be undone a year from now. Getting
past the regulators both here and in Europe will likely be a challenge.
Dell was up almost a dollar on the news. Lexmark however lost
almost $5 on the news with investors expecting Compaq to now
use HWP printers instead of Lexmark printers. Does the merger
of the two giants mean the price war is over? Not hardly but the
bigger infrastructure of the combined companies could actually
add to the costs of producing their computers and give Dell and
Gateway an even bigger target to aim at. The structure of the
new company has Carly as Chairman and Michael as President.
The Compaq brand would eventually go away but not before giving
SunMicro one more dose of hearburn. The combined companies would
impact the server side area where SUNW is already struggling to 
squeak out a profit. The server sale cycle is more suited to the
big business, multi pressure point, large company attack where
Dell and Gateway are specializing on the one on one individual
consumer/small business sale. Some analysts are even skeptical
that the deal will even close giving it only a 50/50 chance.

The HWP/CPQ news was not a positive factor to the Dow's +225
point gain at the open. The NAPM numbers were credited with that
spike. The NAPM number at 47.9 was much higher than the 43.9
that analysts expected. This was the thirteenth month of decline
but a significant jump over the low 40 numbers from the last 
seven months. The most encouraging portion of the report was
the new orders component which jumped to 53.1 from 46.3 in July.
This means there may actually be a bottom forming in the manufacturing
sector. The prices index fell to 33.9% in August which is the
lowest since 1998. There is no fear of inflation pressure for
the Fed. The market soared +225 points on the news but came to
a dead stop at 10180. After failing to break that ceiling
three times the bulls called an end to the rally and took their
chips off the table.

The severity of the sell off from the highs of the day were 
credited to several things. Dan Niles of Lehman Brothers, cut
estimates on Intel again in advance of their Thursday analyst
update saying he felt they would guide analysts lower. One of
the reasons was the news from the semiconductor assn which said
sales of chips in July were down -37% and the lowest level since
1998. They showed a continued weakness in computer chips but
a slight uptick in communication chips. Several analysts were
now calling for the rebound to not occur before 2Q 2002.

The uptick in communication chips is not helping Ericsson which
warned that the global slowdown was worse than they previously 
expected and would require harsher steps than they previously
announced in their restructuring. They said the high speed phones
had been selling slower than expected. They did say they expected
U.S. sales to pick up in the last quarter. (And what crystal ball
are they looking into?)

Sanmina, a contract manufacturer, said that the current quarter
will fall short of previously reduced expectations. The ongoing
slowdown in the capital equipment spending environment will
continue to hamper our performance. The warning also hit JBL,
SCI, SLR and CLS with serious drops. Ironically SCI is poised
to gain more business should the HWP/CPQ merger come to pass.

Financial markets were hit again after Providian warned that
it was cutting earnings estimates and long term growth rates.
The stock lost -$8.70 or -22% to $30.36 and the other two
major off prime card lenders fell as well. COF lost -2.85
and KRB -$2.00. These companies specialize in secured cards
and high interest rate cards to customers with previous credit
problems. Soaring unemployment and a weak job market could cause
loan losses for these lenders.

The economic calendar is still loaded with Productivity on
Wednesday and Nonfarm payrolls on Friday. Those along with 
the possible Intel warning on Thursday should keep a lid on
the markets this week. The Ericsson and Sanmina warnings from
today as well as the SIA chip sales news continued to paint the 
picture that things are not yet getting better and more warnings
are sure to be lurking in our future. 

The severity of the market drop from the days highs is a very
bad omen for Wednesday. The Nasdaq closed at the exact low of 
the day (-35) after being up +35 in early afternoon. The Dow
was even more dramatic with a 290 point range and almost a -200
point drop from the days high. The drop was so steep that the
VIX spiked to near 29 at the close and the VXN hit a five week
high of 57.15. Suddenly there is real fear starting to appear
in the markets and we still have September and October ahead of
us! 

Tomorrow conventional wisdom would have us expecting a weak 
open. SUNW will present at a tech conference at 8:AM in the
morning and will be only one of dozens to present this week
and next in the flurry of tech and biotech conferences. What
SUNW says, if anything, about the CPQ/HWP merger as well as
any further news on their recent warning will color the Nasdaq
for Wednesday. This looks like a real buying opportunity shaping
up for the buy and hold stock community but it could still be
several weeks before we get the bottom signal. Keep those put
plays coming! The rally today gave us some excellent exit points
for those counting on a post Labor Day rally and some great
entry points for those playing puts. While most readers may be
frustrated by the market direction there is still a lot of 
money to be made by trading the trend!

Definitely, enter passively, exit aggressively!

Jim Brown
Editor of OptionInvestor.com


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


The Rally That Almost Was

The merger of Hewlett Packard and Compaq couldn't get the market 
started, but the National Association of Purchasing Managers did.  
The NAPM Index rose more than expected in August to 47.9%.  The 
number still came in below 50, which marks the 13th straight 
month of contraction for manufacturing, but there are signs of a 
possible bottom.  One of those signs is new orders index, which 
rose for the first time in nine months to 53.1.

Construction spending dropped an expected 0.1%, but new 
residential completions and non-residential buildings continued 
to rise.  The biggest drop came from the residential improvements 
and remodeling category, which fell 3.6% in July. (Home Depot and 
Lowe's?)  

But that news was only good for about 6 hours worth of buying.  
As has been the pattern lately, economic news is good for a pop, 
but eventually the affects wear off.  And so it goes as investors 
have turned into dismal scientists.  

Nasdaq and S&P 500 10 Minute Charts




Perhaps it was some uninviting words from Sanmina (SANM) and 
Ericsson (ERICY), or maybe the 6.1% drop in chip sales, but the 
Nasdaq did not fully participate in the early rally.  While the 
Dow was up 200 points, the Nasdaq was struggling to keep up.  
Regardless, the bottom fell out of both indices at 3:00 p.m.  The 
Dow closed up a disappointing 47,and the Nasdaq finished 34 point 
lower. The Dow has support at 9,970, as well as Friday's low of 
9869, if the afternoon sell off continues tomorrow morning.  The 
Nasdaq has mild support at 1757.

30 and 10-Year Bond Yields




Today's sharp selling bonds almost had me believing that that 
this rally had a chance.  As money flowed out of bonds, the yield 
on the 30-year was pushed up to 5.493%, very close to the 
psychological 5.50%.  The 10-year did likewise, coming up just 
short of 5.00%.  The fact that the market sold off right as the 
bond market closed at 3:00 has me wondering if this was a short-
covering rally in bonds, or truly money coming out of bonds.

Tomorrow lacks any major economic news to move bonds, but 5.50% 
on the 30-year and 5.00% on the 10-year could hold the clues for 
stocks.  Intel's mid-quarter update on Thursday should also be a 
key event this week.

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

Market Volatility

VIX   28.55
VXN   57.15

-----------------------------------------------------------------
 
          Put/Call Ratio  Call Volume   Put Volume
Total           .83        499,747       415,164
Equity Only     .71        424,278       302,702
OEX            0.87         25,222        21,897
QQQ             .27         56,943        15,637

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

Bullish Percent Data

           Current   Change   Status
NYSE          34       -      Bear Confirmed
NASDAQ-100    24       -      Bear Confirmed
DOW           30       -      Bear Confirmed
S&P 500       44      -2      Bear Confirmed
S&P 100       36       -      Bear 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

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


 5-Day Arms Index  1.34
10-Day Arms Index  1.22
21-Day Arms Index  1.27
55-Day Arms Index  1.26

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      1625           1463
NASDAQ    1415           2228

        New Highs      New Lows
NYSE      134             77
NASDAQ     47            128

        Volume (in millions)
NYSE       918
NASDAQ   1,228
-----------------------------------------------------------------

Advisory Sentiment 

Bullish  Bearish  Correction  Net Bullish   Change 
  43.9%    30.6%     25.5%       16.7%       -3.4%

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: 08/28/01
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

Commercial traders increased their net bearish by 6.9%.  This 
isn't a drastic move, but (79,126) is the most bearish commercial 
traders have been since 3/13/01.

Commercials   Long      Short      Net     % Of OI 
8/14/01      337,327   411,504   (74,177)   ( 9.91%)
8/21/01      342,332   416,372   (74,040)   ( 9.76%)
8/28/01      342,742   421,868   (79,126)   (10.35%)

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
8/14/01      130,432     55,750   74,682     40.11%
8/21/01      134,280     58,785   75,495     39.10%
8/28/01      141,046     58,001   83,045     41.72%

Most bearish reading of the year:  36,513 - 5/01/01
Most bullish reading of the year:  91,122 - 3/06/01
 
NASDAQ-100

Commercial traders didn't add any long positions, but did dump a 
few short positions, so the net bearish position improved 
slightly.

Commercials   Long      Short      Net     % of OI 
8/14/01       29,909     37,822   ( 7,913)  (11.68%)
8/21/01       30,348     38,964   ( 8,616)  (12.43%)
8/28/01       29,255     36,551   ( 7,296)  (11.09%)

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
8/14/01       11,165     9,508    1,657       8.02%
8/21/01       10,499     7,576    2,923      16.17%
8/28/01       11,131     9,694    1,437       6.90%

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

Last week commercials came close to the most bullish reading of 
the year, but have pulled back this week.  

Commercials   Long      Short      Net     % of OI
8/14/01       21,652    15,856    5,796     15.5%
8/21/01       22,710    14,625    8,085     21.7%
8/28/01       22,141    14,959    7,182     19.4%

Most bearish reading of the year: (8,322) - 1/16/01
Most bullish reading of the year:  8,925  - 5/22/01

Small Traders  Long      Short     Net     % of OI
8/14/01        4,441     8,528    (4,087)   (31.51%)
8/21/01        5,059    10,410    (5,351)   (34.59%)
8/28/01        5,240     9,835    (4,595)   (30.48%)

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)
=========================

PeopleSoft - PSFT - close: 30.97 change: -3.51 stop: 36.00 *new*

Original Comments When Selected on August 31st, 2001

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. 

We have been in and out of this play in the past and we see it 
as time to jump back in. Software remains one of the weakest 
market sectors and despite the momentary pre-holiday respite 
from selling pressures, we believe Kodi the Bear is still at the 
helm. And lest we forget, we are entering earnings warning 
season. Although it is possible Friday's bullish action may 
carry over into Tuesday's trading session, we believe traders 
that like to work the short side should take advantage of this 
opportunity to establish their positions. This is where 
PeopleSoft shares fit in. 

After bouncing off a session low of $29.80 on July 20th, they 
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. The shares then dropped 
steadily until they closed at $31.95 last Thursday. Although 
Friday's $2.53 gain was on solid volume, further gains will need 
to maintain its close above the 50-percent retracement ($34.32) 
off its June high ($51.01), push through resistance at $37.00 
and the $37.56 200-day moving average. Given the sad state of 
the markets we don't believe PSFT shares can pull this off. A 
failure here would set up a test of the support at $30 and a 
possible run to the March low of $17.50. 

As an entry, traders should wait for either a move to between 
$36 and $37, or at the first sign of weakness if the bulls fail 
to show. Place your stop according to your entry point and 
tolerance for risk. We are going to start with a loose stop just 
above the 200-dma at $38.00.


Most Recent Update:
------------------

PeopleSoft is really outperforming - to the downside.  The stock
saw some volatile trading early in the day and after a couple of
hours trading sideways the bears took hold and didn't let go.
If you're looking for a short play, you should take note that 
PSFT did not participate in the morning rally for the tech sector.
You could interpret this as relative weakness in an already weak
group.  Shares were back to Thursday's lows by the close and the
outlook doesn't look healthy.  We would anticipate the stock to
bounce or at least stall at the $30 level and new positions should
probably wait until shares close under the $30 mark.  We are
moving our stop to $36 versus moving it to cost at 34.48 merely
because we expect PSFT could be on the play list as a short 
for some time to come and we don't want to get stopped out.
Considering that the play is already up over 10% don't hesitate
if you feel inclined to take some profits off the table.  You can
always re-enter the play later.  Keep your eyes on the GSO index
if you're going to trade PSFT.  The index is already below its
April lows and the slide shows no signs of stopping.

Picked on August 31st @ $ 34.48
Gain since picked:      +  3.51
Earnings Date:              N/A  







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

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

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

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

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

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


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



PremierInvestor.net Newsletter                 Tuesday 09-04-2001
                                                   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/4809_2.asp
=================================================================

In section two:

Split Trader
  Split Announcements: Forest City Enterprises, Inc. - (FCEa)
  Play Updates:  AHC, LEN, THQI, STJ
  Closed Plays: none

Net Bulls
  New Plays: VeriSign Inc (Bearish)
  Bullish Play Updates: ATRX
  Bearish Play Updates: MEDI, MMM, PSFT, QCOM
  Closed Plays: none


Stock Bottom / Active Trader
  Bullish Play Updates: MO, PEP
  Bearish Play Updates: FITB, TCB
  Closed Plays: NEM (bullish), PCAR (bearish)

Trading Ideas
    none today.
    We will continue with the Trading Ideas article 
    on Wednesday, Sept. 5th.


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

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

Tuesday, September 04, 2001, 11:20 AM ET

Forest City Announces Cash and Stock Dividends

The Board of Directors of Forest City Enterprises Inc.
(NYSE:FCEa) declared a 3-for-2 stock split and increased the
quarterly cash dividend by 7 percent.

 





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

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

Amerada Hess - AHC - close: 78.78 change: +1.07 stop: 75.80 

A new round of mergers for the oil sector help propel many in 
the group higher.  Devon (DVN) has agreed to purchase Canadian
Anderson (AXN) while Global Marine (GLM) and Santa Fe Intl (SDC)
will be merging into the second largest offshore driller.  Shares
of AHC rallied on the news bolstered by the early surge in the
Dow.  However, while the Dow sold off steeply in the afternoon,
AHC managed to hold on to most of its gains.  AHC did fail to 
close over the $79 mark and thus does not suggest to us that
this is an entry point to go long.  On the contrary, considering
the market atmosphere we'd be concerned that the stock, now at
the top of its trading channel, will roll over again and search
for support near $76.50.  Wait for that close over $79 if you
are looking for a long play.  

Picked on August 15th @ $ 78.90
Gain since picked:      -  0.12
Earnings Date:             N/A  (not confirmed)




---

Lennar - LEN - close: 45.09 change: +0.54 stop: 42.50 *new*

Lennar makes it four in a row.  Yup, I'm talking about positive
gains for the stock price.  Trading opposite of the Dow on Tuesday,
shares of LEN traded lower in the morning, bouncing at 43.50 
before making a late day rally to close over the $45 mark.
We still expect some resistance around $46 to $47 but after four
up days in a row it wouldn't hurt to have the stock pause and 
consolidate some of its gains.  We probably wouldn't initiate any
new positions in the play at this time unless the stock pulled
back and gave us a new entry point.  Look for a bounce at $43 or
its 50-dma.  We are raising our stop to $42.50, which is just over
last Thursday's low.  Currently, our play in LEN is up almost 
11% and traders who took advantage of the dip back to its 200-dma
in late August are doing better than that.  It is times like 
these that make it very tempting to take your gains now and just
look for another play later.  It never hurts to take a profit.

Picked on August 16th @ $ 40.66
Gain since picked:       + 4.43
Earnings Date:          09/19/01 (not confirmed)




---

THQ Inc - THQI - close: 50.96 change: -2.19 stop: 49.75 

Here's our chance.  In Friday's update we discussed waiting for 
a positive close over $55 or waiting for the stock to retrace
back to support near $50 and going long on a bounce.  Tuesday's
session was a scary one for investors as THQI fell like a rock
for about 30 minutes early in the day.  The stock bounced near
$51 and made a midday recovery before sliding again as the
NASDAQ made its own late day dive.  As depressing as Tuesday's 
chart might look this could be a decent risk/reward entry with 
a stop at 49.75.  However, please consider the market environment
before you decide to go long.  Everyone expects the markets to
aim for their April lows and THQI may not be able to stand up
to that kind of pressure.  If you're still game, confirm market
direction on Tuesday and look for that bounce.

Picked on August 24th @ $ 51.45
Gain since picked:       - 0.49
Earnings Date:              N/A  (not confirmed)




---

St. Jude - STJ - close: 69.31 change: +0.51 stop: 67.88 

There was big news in the medical world related to heart surgery
with the positive results from Johnson and Johnson's drug coated 
stent device for arteries.  Competitors of JNJ in this niche for 
stent or drug coated stents, which STJ is not, suffered fiercely 
from the news.  Shares of STJ actually rallied early this morning 
and fought in vain to breakthrough the barrier at $70 before 
selling off in the afternoon.  To repeat our comments from Friday,
STJ only looks like a long play if it can close above resistance
at $70.  We would expect the stock to trade back to 68.35 to 
68.25 if the broader markets continue to slip.  

Picked on August 30th @ $ 69.85
Gain since picked:       -  .54
Earnings Date:              N/A  (not confirmed)






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

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

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

VeriSign Inc - VRSN - close: 38.44 change: -2.61 stop: 41.50

Company Description:
VeriSign, Inc. is the leading provider of trusted infrastructure 
services to Web sites, enterprises, electronic commerce service 
providers and individuals. The company's Domain Name, digital 
certificate and payment services provide the critical Web 
identity, authentication and transaction infrastructure that 
online businesses require to conduct secure e-commerce and 
communications. VeriSign's services are available through its 
Web site www.verisign.com or through its direct sales force and 
reseller partners around the world. (source: co. press release)

Why We Like It:
The stock has been in a protracted downtrend with lower highs
and lower lows since late May.  Last Wednesday, the stock fell
sharply on rumored concerns over the company's expected revenue 
from the .info and .biz domain registration business that is 
expected to start soon.  Shares really did not rebound very much 
after the collapse last Wednesday and the stock did not participate
in the early morning rally for the NASDAQ and was only too happy
to give into the selling pressure this afternoon.  The $40 level
was expected to be significant support but after the lackluster
trading on Thursday/Friday last week remaining shareholders may 
be ready to throw in the towel.  With the stock under $40 we see
no reason to buy it and bears will likely target the $30 level
which was support back in March.  It's possible we might get some
strength near $35 but we don't expect it to hold.  We're starting
this play with a stop at $41.50 which has proved mild resistance
over the last few trading sessions.  Considering the decline in
the GSO software index, bearish traders will likely flock to 
software stocks. 

Picked on September 4th, 2001 @ $38.44
Change since picked:            + 0.00
Earnings Date:                10/25/01 (not confirmed)

 




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

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

Atrix Laboratories - ATRX - close: 26.35 change: -0.62 stop: 24.25

The breakout had begun for shares of Atrix as the stock began 
climbing this morning.  Once it had convinced the more skeptical
bulls that it had conquered resistance at $27 more buyers started
to step in sending shares up to 27.73.  That was until the NASDAQ
started melting in late afternoon trading.  ATRX couldn't stand
the heat and the stock lost all of its gains and then some in the
last half hour of trading.  The current market conditions are not
conducive to bullish trades and we would recommend that casual
investors not willing to short stocks sit out.  If you must be
long stocks, then ATRX has potential but timing your entry point
will be key.  Traders should look for any dip and bounce at $26
or $25.50 as potential entry points to go long.  These are clearly
defined areas of support and your best bet to reduce your risk.
Otherwise, more patient traders can just wait for that close over
$27 to consider a long play.  

Picked on August 31st @ $26.97
Gain since picked:      - 0.62
Earnings Date:             N/A  




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

MedImmune, Inc. - MEDI - close: 40.85 change: +0.70 stop: 42.75

Right on target!  The morning rally in the tech sector helped 
boost shares of MEDI and traders took it right up to its 200-dma.
The alternative plan we outlined on Friday was to look for a failed
rally at the 200-dma as a potential entry to go short.  This was
exactly what we got.  With many veteran traders chanting "sell
all rallies" it wasn't a surprise to see MEDI rollover this 
afternoon with the NASDAQ slipping into negative territory.  
The plan now would be to wait for the stock to close under support
at $40 before initiating a short position.  The only thing that
might concern us with this play on MEDI is the likelihood of the
stock stalling every $2 at $38, $36, $34 before it moves lower.

Picked on August 28th @ $40.46
Gain since picked:      - 0.39
Earnings Date:           10/24 (not confirmed)




---

3M - MMM - close: 104.55 change: +0.45 stop: 111.00

Was this your shorting opportunity?  Shares of MMM rallied as 
high as 107.50 with the Dow surging over 200 points before the
tide turned and bears yanked the carpet out from under the 
bulls.  Some claimed this morning was fueled by short covering
which is possible.  However, if the shorts did cover it looks
like a bunch of them started new positions as the selling began
to pick up speed in the late afternoon.  Today's action helped
solidify $108 as new resistance which is good news for those
traders that made their stop at 108.25 (see Friday's update).
With the Dow under 10K and MMM looking weak shorts probably 
feel confident that this will be a profitable trade.  Some
of you may want to wait for shares of MMM to close under $104
before initiating a position but remember that we expect to
hit support again in the $98 - $100 range.  We leave our stop
at $111 for the newsletter.

Picked on August 29th @ $106.75
Gain since picked:      +  2.20
Earnings Date:              N/A  




---

QUALCOMM - QCOM - close: 54.30 change: -4.55 stop: 59.59 *new*

Ouch!  Shares of QCOM really took a pounding today.  While the
NASDAQ was doing its best impression of a rally, QCOM was 
trading higher throughout the morning but it seemed to lag
behind the market's advance.  We were not surprised when QCOM
peaked midday and began to sell off.  The QCOM sell-off really
started to gain momentum once the NASDAQ's afternoon dive began
to pick up speed.  What we find interesting is that $55 was
expected to be some level of support and shares of QCOM didn't
even pause to catch their breath before slipping below it.
Obviously the stock is very oversold from its recent high of
$66 back on the 27th of August.  Could the stock bounce tomorrow?
Yes, but by the looks of it the selling will continue Wednesday
morning as QCOM closed near its low for the day.  At this point,
our short play is currently up about 8.8%.  That's not a bad
move for just a couple of days on the list.  We would expect
the bears to target support near $48 to $50 before they tried
to cover.  We're going to place our stop at cost of $59.59 only
because we don't want to get swung out if we make it any tighter.
If you're profitable, consider taking some money off the table
or maybe tighten your stop to where you think it's appropriate.

Picked on August 30th @ $ 59.59
Gain since picked:      +  5.29
Earnings Date:              N/A  




---

PeopleSoft - PSFT - close: 30.97 change: -3.51 stop: 36.00 *new*

PeopleSoft is really outperforming - to the downside.  The stock
saw some volatile trading early in the day and after a couple of
hours trading sideways the bears took hold and didn't let go.
If you're looking for a short play, you should take note that 
PSFT did not participate in the morning rally for the tech sector.
You could interpret this as relative weakness in an already weak
group.  Shares were back to Thursday's lows by the close and the
outlook doesn't look healthy.  We would anticipate the stock to
bounce or at least stall at the $30 level and new positions should
probably wait until shares close under the $30 mark.  We are
moving our stop to $36 versus moving it to cost at 34.48 merely
because we expect PSFT could be on the play list as a short 
for some time to come and we don't want to get stopped out.
Considering that the play is already up over 10% don't hesitate
if you feel inclined to take some profits off the table.  You can
always re-enter the play later.  Keep your eyes on the GSO index
if you're going to trade PSFT.  The index is already below its
April lows and the slide shows no signs of stopping.

Picked on August 31st @ $ 34.48
Gain since picked:      +  3.51
Earnings Date:              N/A  






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

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

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

Phillip Morris - MO - close: 47.94 gain: -0.54 stop: 45.00

Phillip Morris was close to breaking out of its congestion zone, 
but an afternoon sell off quashed that.  A 1.13% gain is still 
good, but it could have been so much better.  Now we're back where 
we started.

Picked on August 30th at $47.94
Gain since picked:         0.00
Earnings Date            10/17/01 (unconfirmed)




---

PepsiCo, Inc - PEP - close: 47.30 gain: +0.30 stop: 46.50

Pepsi was up 1.55% at one point, but sold off in the last hour.  
That puts the stock just below resistance at $47.65.  Even some 
NASCAR news could get the stock racing.  For the first time in 
18 years, Mountain Dew is going to sponsor a car in a Winston Cup 
race.  

Picked on August 10th at $45.66
Gain since picked:        +1.64
Earnings Date               N/A





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

Fifth Third Bancorp - FITB - cls: 57.60 gain: -0.70 stop: 62.00

FITB sold off in the first hour, rallied, consolidated, and then 
sold off in the last hour.   FITB's wild ride finally finished 
with the stock down 1.20%.  Tomorrow's task is to drop below the 
200-day moving average currently at 57.03.

Picked on August 28th at $59.30
Gain since picked:        +1.70
Earnings Date              N/A




---

TCF Financial - TCB - close: 45.33 gain: -0.07 stop: 47.25

Just when it looked like TCF Financial was going to fight through 
resistance, the stock promptly sold off.  Today's drop was only 7 
cents, but that's 7 cents closer to losing support at $44.58.  
Losing that level would help to open the floodgates.

Picked on August 24th at $47.60
Gain since picked:        +2.27
Earnings Date              N/A





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

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

Newmont Mining - NEM - close: 20.29 gain: -0.45 stop: 20.40

It went a little something like this.  Weakness in European 
telecommunication companies caused the dollar to strengthen 
against the Euro.  A stronger dollar caused gold futures to fall, 
which in turn led to gold stocks falling.  Newmont fell enough to 
trigger our stop.

Picked on July 14th at $20.50
Gain since picked:      -0.10
Earnings Date         11/1/01 (unconfirmed)





   --------------------
   Closed Bearish Plays
   --------------------

PACCAR - PCAR - close: 56.26 gain: +0.96 stop: 56.00

PACCAR was one of the top Nasdaq-100 stocks today.  Perhaps 
investors figured that if manufacturing was picking up, trucks 
would have to transport it.  Whatever the reason, we were stopped 
out of PACCAR at $56.

Picked on August 17th at $55.46
Gain since picked:        -0.54
Earnings Date              N/A






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

    none today.
    We will continue with the Trading Ideas article 
    on Wednesday, Sept. 5th.



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