Option Investor

Daily Newsletter, Wednesday, 09/05/2001

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PremierInvestor.net Newsletter               Wednesday 09-05-2001
                                                  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:

In section one:

Market Wrap: Brief-Squeeze Rallies
Market Sentiment: Microsoft Confirms, Manugistics Warns
Traders Corner: Rule 2520
Play-of-the-Day: PepsiCo, Inc. - PEP (Bullish)
Watch List: Signs of Life

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
      09-05-2001          High      Low     Volume Advance/Decline
DJIA    10033.27 + 35.78 10066.69  9885.88 1.36 bln   1248/1874	
NASDAQ   1759.01 - 11.77  1782.50  1715.86 1.92 bln   1319/2308
S&P 100   578.89 +  0.85   581.01   568.92   Totals   2952/3750
S&P 500  1131.74 -  1.20  1135.52  1114.86             
RUS 2000  462.51 -  4.45   466.95   458.78 
DJ TRANS 2835.17 -  0.48  2842.22  2812.12 
VIX        28.96 +  0.30    30.50    28.58 
Put/Call Ratio      0.75

Market Wrap

Tonight we have a guest market commentator on PremierInvestor.net.
Austin Passamonte is the editor for our sister site www.Indexskybox.
com If you'd like more information about trading in index options, 
please visit their website.  Our normal market wrap columnist, Jeff 
Bailey, is on vacation this week.


Brief-Squeeze Rallies by Austin Passamonte

Anyone who thought September's return would bring a halt to 
ceaseless market volatility may have changed their minds the past 
two days. We continue to be plagued by short-squeeze rallies that 
wipe out bearish plays within minutes, but call plays taken during 
these times have brief and narrow life spans as well. Is there an 
end to this in sight? More on that later.

I get frequent mail from readers who ask how I can waffle back and 
forth from bullish to bearish on what seems to be a daily basis. 
My market bias always depends on the time frame we are discussing 
to trade. Let's look at a bunch of different charts to see what 
the long, medium and near-term future all may have in store.

Did you expect one simple answer? If so, let today's action prove 
continual and persistent market uncertainty. First of all, we had 
plenty of bullish reversal warnings in our midst this session. 
Spiking VIX over 30 ushered in the afternoon short-squeeze event. 
Some say there was a bit of manipulation in the Dow today by 
shorts trying to run up the market on artificial buying so they 
could sell into it.

But all that's mere noise. Here's a broad view instead.

(Weekly/Daily Charts: SPX)

In the past twelve months SPX weekly stochastic values (left) 
have reached oversold extreme only three times before now. Note 
the results from there. Up 125 index points last fall, up 225 
points this spring and another 85 points in early summer. That is 
a lot of distance for the big index to cover for sure.

Now we have slow bar values nearing oversold for only the fourth 
event in one year. Care to buy puts and hunker down for weeks! 
Bear beware!

Four times since early July we've seen daily chart stochastics 
(right) reach oversold extreme as before now. Look what happened 
each time: would you feel better about having had long calls or 
puts at those events?

Realize that we appear near another market bottom right now but 
haven't yet turned the corner. When will markets turn? Obviously 
not today, but we must remain cognizant of the fact that they soon 
will in the same manner as before without exception. Is this then 
the ultimate bottom? Not in my opinion, but we'll save that 
discussion for last.

(60/30-Minute Charts: SPX)

Dialed down to intraday charts, we see a clear call play entry at 
2:00pm when price action sold off to new session lows and buried
stochastic values in oversold extreme reversed to head higher. 
Solid entry points were found above the descending trendline 
(green) on each respective 30-minute chart.

Yesterday saw price action break neutral wedges just past 10:00am 
and rally strong most of the session from there. The move held up 
very well indeed with no signs of looking back until 3:00pm EST 
when the rug got snatched out from under this rally and price 
action plunged.

I sat right in my chair watching 60/30 and 10/5 (not shown) minute 
chart signals all line up in bearish reversal fashion but 
dismissed the notion of loading up on puts. Stupid charts... it 
was 3:00pm and the Dow up +220 points. Who in their right mind 
would fade that?

I've seen this setup happen literally hundreds of times and ought 
to know better than to doubt such powerful alignments. So I set 
stops on open calls and played two measly put options just to have 
a toe in the water should things dip from there. Set my stops and 
took a brief nap to shake off utter exhaustion from our weekend 
road trip across the country.

I woke up 40 minutes later to see the puts had since swelled in a 
big way. Can you believe the Dow shed almost 200 index points in 
less than 40 minutes? I can and should have at the time. Chart 
signals supercede logic but heeding them is another matter of mind 
over emotion in itself.

So when today's selloff spiked the VIX above 30.00 and all 60/30 
and 10/5 minute charts went bullish from the lows, aggressive day 
traders had a green light to pounce on high-risk call plays. I 
happen to know that SPX 1150 calls were clearing at 9.50 when this 
happened, and they reached a high sale of 15.50 not long after 
when the afternoon surge rocketed from there.

Trust the charts!

(60/30-Minute Charts: Dow)

Right now the Dow seems poised to continue its late-day recovery 
from the lows. Thought we couldn't use Fibonacci values for 
intraday charts? Nonsense! Just look at how price action tends to 
magnetize at these values. We can also determine support when 
prices move back down as well.

The 30-minute chart at right shows two trendlines in place: 
support and resistance. This will also help us determine intraday 
strength and weakness tomorrow as well.

(60/30-Minute Charts: QQQ)

The QQQs continue to post ascending consolidations, which are 
bearish patterns. Hourly stochastic values (left) have plenty of 
room to ascend while thirty-minute signals (right) show the first 
little hint of weakness.

As these charts show, the QQQ has been a very tough index to trade 
lately in comparison to the S&Ps. While the OEX and SPX offer 
trades in both directions, the QQQ has moved continually down. By 
the same token it has been immune to numerous rogue spikes and 
dips to blow out directional trades, so put plays have worked 
quite well. 

(60/30 Minute Charts: OEX)

As with the SPX and Dow, the OEX looks to ascend on Thursday 
itself but plenty of overhead resistance exists. The 582 area lies 
at the lower trendline of the hourly bearish pennant and it also 
happens to be a 62% retracement bounce from Tuesday highs to 
Wednesday lows.

Wonder where these stochastic values might possibly make a bearish 
reversal? If 582 stalls price ascent out while stochastics turn 
down, buy puts with confidence!

(Monthly Charts: Dow & NDX)

Broadest picture of all. Monthly charts show the Dow and NDX 
recent history from "pre-bubble" until now.

The Dow remains relatively overbought on a historical basis or at 
the very least is far from oversold. Stochastic values are bearish 
and suggest the long-term decline has merely begun.

NDX is much farther along in the shakeout process but lacks any 
sign of bullish reversal itself. It has fallen from a historical 
high of 4,800 down to 1,400+ and stares at an uphill battle all 
the way from here. I would wager that 1,055 is more likely to be 
reached than 3,800 area by the end of 2002 or before.

Here is one reason I believe broad market action will continue to 
grind sideways to lower into the future, quite possibly for years. 
Those who think a bottom is in or right around the corner at most 
must be looking at other proof than I have to work with. Just like 
today's screaming put-play signals at 3:00pm that I refused to 
believe, monthly chart studies forecast what lies ahead for years 
to come.

Bullish? Bearish? Confused?
So to recap, I'm bearish for the near term as shown in 60/30 
minute charts. I'm bullish for the medium term as shown in 
weekly/daily charts. And I'm bearish for the long term as shown in 
monthly charts. Any questions?

One might reasonably ask how this can be. Why not just buy 
distant-month puts right now and take a much longer nap? Excellent 

What if you & I had done that the past four times weekly/daily 
chart signals were in oversold extreme since last October? How 
well would our put plays have done on the subsequent bear market 
rallies that follow a VIX above the 30.00 level? Not good at all. 
We need to trade the time horizons that affect our chosen 
vehicles. Just because I believe the markets will churn sideways 
to lower for years means nothing about next week. Markets could be 
at the zenith of another failed rally and we'd lose big money 
holding puts thru that.

Nothing frustrates most traders more than volatile, whipsaw 
markets like these. Just when a favored market bias is developed 
and backed by emotional comfort, markets lurch the other way. 
It remains a skilled day trader's market right now and all others 
who try to force buy & hold or part-time tactics on current 
action suffer. I don't like that fact at all, but the markets 
don't care about my preference nor do they even know I'm alive. 
All we can do is play in harmony with that which the markets have 
to offer.

You'll notice I've not mentioned anything about HWP & CPQ, MSFT 
reaffirming earnings smoke & mirrors, INTC's usual misguidance, 
Thursday's NAPM or any other details like that. I omitted them for 
a reason: they do not matter for more than a few hours at most. 
All we need to know is reflected in the charts as an actual 
measure of dollars at work in the market. Right now that 
reflection suggests lower prices at first, then higher prices 
ahead but only to a certain degree. Make sense? Each timeframe is 
a directional bias in itself. 

So, the warning remains in place: do not fall in love with either 
direction. We are destined to see plenty of both straight ahead, 
and sometimes in the same session as endured today!

Traders Corner

Rule 2520 By Eric Utley

Editor's Note: Eric had planned to publish Part 2 of his series
Ursus Arctos.  Instead, he thought it would be prudent
to make readers aware of the changes to NASD Rule 2520.

A few readers I have spoken with day trade with less than $25,000
and use margins.  Because of that, I thought it would be
appropriate to address a few changes in margin requirements for
day traders.

The National Association of Securities Dealers (NASD) filed with
the Securities Exchange Commission (SEC) to impose more strict
margin requirements on day traders.  The NASD has proposed to make
six changes to Rule 2520, which concerns margin requirements.

The first proposed change is to redefine who a day trader is.
The new rule will include anyone who a brokerage firm knows or
thinks will engage in day trading.  It will also include anyone
who trades four or more times over five business days.  The
exception is if that person's day trading activities don't
exceed six percent of their overall trading activity for that
given time period.  In short, if you trade more than three
times per week, you're a day trader.

The second proposed change is to require a minimum equity of
$25,000 to be deposited into an account in order for a customer
to day trade on margin.  The current minimum equity requirement
for margin is $2,000, which the NASD feels is not sufficient to
prevent day traders from continuingly generating losses.  They
feel that a $25,000 requirement would better address risks of
day trading on margin.

The third proposed change is certainly a benefit to those who
meet the initial $25,000 requirement.  The NASD has proposed to
permit up to four time buying power of a day trader's margin
excess.  That means instead of twice your available capital,
day traders will be made available up to four times their
capital.  Here again, the NASD feels that four times buying
power will better address the risks of day trading.

The fourth proposed change is to impose a margin call if day
trading buying power is exceeded.  The NASD would require day
traders to deposit additional funds to meet the margin call.
If the day trader doesn't meet the margin call, the account
would be restricted to trading on a cash only basis.

The fifth proposed change is to no longer allow meeting a
margin requirement with a cross guarantee.  Instead, only
resources within the account would be available to meet margin
calls, such as newly deposited funds.

The sixth and final proposed change would alter the classification
of holding a security over night, then selling or covering the
next day.  As it is now, buying a stock yesterday, selling today,
and buying the same stock back today is considered a day trade
insofar as the SEC is concerned.  The proposed changes would treat
that transaction as a liquidation and establishment of a new
position, or in other words, not a day trade.

Now, keep in mind that the new rules are only for those who day
trade on margin.  For those who trade on a cash only basis, the
new rules don't mean anything to you.  And remember that buying
and selling options is a cash only transaction.  But I have spoken
with plenty of readers who have small day trading accounts on the
side and do in fact use margin.  Because of the new rules, these
traders won't be able to employ margin unless the $25,000 is in
the account, which in my opinion is a disservice to individual

I tried, for the life of me, to get in touch with the appropriate
person at the NASD to discuss the rule changes further.  But
after spending about three hours on the phone, transferring from
the Denver office to D.C., and back again, the "right" person had
apparently gone home for the day.  From what I gathered from
various individuals at the NASD, the rule changes have already
been imposed on NYSE listed stocks.  And were going into effect
on NASDAQ listed stocks in late September.  But I haven't heard
anything from either of my two brokerages that I do business
with.  In fact, I called both of my brokers and neither could
lend a hand.

Anyway, I think the proposed changes - especially the requirement
for $25,000 - are bunk.  

Market Sentiment

Microsoft Confirms, Manugistics Warns by Jeffrey Canavan

The day started out with Merrill Lynch lowering estimates and 
downgrading anything that had to do with wireless technology.  
The selling then spread over to Internet stocks after concerns 
were raised about Amazon's ability to reach profitability.  Cisco 
CEO John Chambers didn't help the situation by saying that half 
the Nasdaq-100 might not be around in five years.  Granted he 
meant consolidation as well as bankruptcy, but it didn't help the 

Retailers Sears, Kohls, and Costco reported increases in same 
store sales, but retailers still sold off, as investors remain 
concerned about consumer spending.

Early on Biotechnology stocks were the best performing sector, 
but finally succumbed to selling.  Defensive sectors drugs and 
gold finished as today's top sectors.

Microsoft helped the Dow finish in positive territory, and kept 
the Software Index from melting down.  Speaking at an SG Cowen 
Technology Conference, CFO John Conners reaffirmed that Microsoft 
was on track to meet fiscal forecasts.

While Microsoft should carry more weight, an atrocious warning 
from Manugistics (MANU) might hurt the software sector tomorrow.  
The company was expected to earn $0.03 per share, but they now 
believe that a $0.14 loss is more likely. 

Texas Instruments confirmed its Q3 guidance, and should help the 
semiconductor index in its quest to hold at support.  

Retail should be the sector to watch tomorrow, since the 
remainder of August chain store sales will be released.  Wall 
Street is anxious to see how back to school sales went.

Sectors should continue to see chopping trading as they try to 
dodge a minefield of warnings, downgrades, and economic reports.  
Intel's mid-quarter update tomorrow after the bell is the biggest 
potential bomb on the horizon.

*************************Sector Watch****************************

            Support                Close              Resistance
DJIA       | 9,865  |      |10033 |      |      |      |  10,450|
NASD       | 1,710  | 1759 |      |      |      |      |   2,000|
S&P 500    | 1,100  |      | 1132 |      |      |      |   1,200|
Rus 2000   |   455  |      |  463 |      |      |      |     481|
Semis      |   535  |  535 |      |      |      |      |     660|
Biotech    |   473  |      |      |  528 |      |      |     575|
Internet   |   105  |  106 |      |      |      |      |     125|
Networking |   217  |      |  254 |      |      |      |     330|
Software   |   130  |      |      |  150 |      |      |     175|
Banking    |   625  |      |  639 |      |      |      |     685|
Retail     |   822  |      |  841 |      |      |      |     880|
Drugs      |   380  |      |      |  392 |      |      |     410|

Support Alerts: Dow, S&P 500, RUS 2000, Internet, Networking,    
Software, Retail Resistance Alerts:
           |   Long    |   Short   |   Strength    | Relative   |
           |   Term    |   Term    |     of        | Strength   |
           |   Trend   |   Trend   |    Trend      | vs S&P 500 |
DJIA       |  Bearish  |  Bearish  | Strengthening |  Positive  |
NASD       |  Bearish  |  Bearish  | Strengthening |  Negative  |
S&P 500    |  Bearish  |  Bearish  | Strengthening |    --      |
Rus 2000   |  Bearish  |  Bearish  | Strengthening |  Positive  |
Semis      |  Bearish  |  Bearish  |     Weak      |  Neutral   |
Biotech    |  Bearish  |  Neutral  |     Weak      |  Positive  |
Internet   |  Bearish  |  Bearish  |    Strong     |  Negative  |
Networking |  Bearish  |  Bearish  | Strengthening |  Negative  |
Software   |  Bearish  |  Bearish  |    Strong     |  Negative  |
Banking    |  Neutral  |  Bearish  |   Weakening   |  Negative  |
Retail     |  Bearish  |  Bearish  | Strengthening |  Negative  |
Drugs      |  Neutral  |  Neutral  |     Weak      |  Positive  |

           | Short-Term  |          | Point and |
           | Overbought/ | Momentum |   Figure  |
           | Oversold    |          |   Signal  |
DJIA       | Oversold    |  Falling |   Sell    |
NASD       | Oversold    |  Falling |   Sell    |
S&P 500    | Oversold    |  Falling |   Sell    |
Rus 2000   | Oversold    |  Flat    |   Sell    |
Semis      | Oversold    |  Falling |   Sell    |
Biotech    | AP OS       |  Rising  |   Sell    |
Internet   | Oversold    |  Flat    |   Sell    |
Networking | Oversold    |  Falling |   Sell    |
Software   | Oversold    |  Falling |   Sell    |
Banking    | Oversold    |  Falling |   Sell    |
Retail     | Oversold    |  Falling |   Sell    |
Drugs      | Oversold    |  Falling |   Buy     |
             AP OB = Approaching Overbought
             AP OS = Approaching Oversold


Play-of-the-Day (Bullish)

PepsiCo, Inc. - PEP Close:$47.80 Change:+0.65 Stop:$46.50

Original Comments When Selected on August 10th:

Company Description:
The Purchase, New York-based company produces the world's second 
most popular soft-drink brand, Pepsi, and other beverages such as 
Mountain Dew.  Over 60-percent of sales comes from its snack food 
maker Frito-Lay.  The firm's Tropicana Products leads the world in 
juice sales.  Although PepsiCo is number two to Coca-Cola it has 
begun adding non-carbonated beverages, such as its Aquafina bottled 
water, and beating Coca-Cola in this fast-growing segment: PepsiCo 
has also taken a majority stake in South Beach Beverage Co., maker 
of the SoBe brand of non-carbonated beverages.  In addition, 
PepsiCo's August 2001 purchase of The Quaker Oats Company added the 
dominant Gatorade sports drink brand (80-percent market share in the
 US) to its lineup. (However, as a concession to competition concerns, 
PepsiCo will not be allowed to distribute Gatorade in its own 
distribution system for 10 years. It is also selling its own sports 
drink, All-Sport, to make room for Gatorade. The Quaker Oats 
acquisition also added Cap'n Crunch cereal, Aunt Jemima pancake mix, 
and other brands to the PepsiCo product line. 

Analysts project the firm will earn $1.66 per share this year on 
sales of $25.1 billion and $1.86 on $32 billion in 2002.  Last year 
the company earned $1.45 on $20.4 billion.  This gives the firm a 
current P/E of 31 and a forward one of 27.5 for 2001.  The company 
has a 58-cent per share annual dividend. 

Why We Like It: 
A weaker dollar is beneficial for companies with a large export 
business such as PepsiCo.  In addition the acquisition of Quaker 
Oats makes the firm the fifth-largest food and beverage company in 
the world.  The combination is also expected to save "hundreds of 
millions of dollars in purchasing, manufacturing and distribution 
synergies," according to the PepsiCO CEO Steve Reinemund.  

With high levels of uncertainty in the stock markets it makes sense 
to reduce risk by looking for plays near significant support.  
PepsiCo shares fit the bill.  Solid support is nearby at $43 and 
this is where we will place our stop.  To the upside, a point and 
figure analysis gives us a long-term bullish price objective of $60.  
On the way, upside resistance exists at $47, $48.43 and $50.

Updated Comments:
PEP shares have been going up as investors look for a defensive 
place to park some money.  On Wednesday PEP got a further boost when 
their largest bottler, Pepsi Bottling Group (PBG) said it was on 
track to meet third quarter and full year earnings target.  In the 
short-term, a test of the $49.94 52-week high is looking probable.  

Picked on August 10th at $45.66
Gain Since Picked:       + 2.14
Earnings Date              7/19 (Not Confirmed)

Watch List

Americredit Corp. - ACF close: 44.57 change -0.83

WHAT TO WATCH: Shares of this sub-prime lender are reaching a 
monster support level.  A move through $43 would represent a 
breakthrough of a long-term bullish trend that has lasted since 
April 2000.  If the shares bounce off of this level ACF shares 
become a possible bullish play with short-term upside to $47-48. 
However, the real jackpot would be on a downside break.  The long 
up trend has left support far behind. If the shares hit $42, a point 
and figure analysis gives us a bearish objective of $29.  


Exxon Mobil - XOM close: 41.22 change +0.47

WHAT TO WATCH: The oil sector is starting to show signs of life and 
so are shares of one of the premier names in the industry.  XOM 
shares have put in two strong trading sessions in a row.  A 
continuation of this move should put in a test of resistance at 
$44 and $46.  Aggressive traders may decide to get in now, while 
more conservative players may want to wait for a close over $42 to 
provide confirmation of bullish momentum.    


Forest Labs - FRX close: 75.12 change +1.52

WHAT TO WATCH: Drug issues are benefiting from positive analysts 
comments and a move by investors to more defensive names.  Forest 
Labs bounced off of support at $72.85 on Tuesday and added to those 
gains with $1.52 pop on Wednesday.  Rising volume is confirming the 
bullish move.  These shares look ready to make a run at upside 
resistance at $77.25 and $82.00.   

-- 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.

NVIDIA Corp. - NVDA - close: 80.71 change: +1.68

UPDATE:  That might be the dip.  Any confirmation of Wednesday's 
late afternoon bullish strength should put these shares in the 
buying zone.

Friday, August 31st write-up:

WHAT TO WATCH:  Returning to hover near the $85 area, shares of 
NVDA are making a rebound from their Thursday lows.  Readers should
recognize NVDA as a recent long play for the stock split section.
The stock has a 2:1 split approaching on Sept. 11th.  The company
has great fundamentals in a growing industry.  Traders should be
able to capture the move back up to $90 which is current resistance.
If you're patient you might be able to pick an entry if the stock
dips to $80 or $81 again.  We would not hold this play over the
split on the 11th.


VERITAS Software - VRTS - close: 25.10 change: -2.45

UPDATE:  No change in outlook.  The software index (GSO) broke 
through the April lows and closed Wednesday at 149.95.  Veritas 
shares are following along and look shortable on any strength.  
Can't see a bottom from here. 

Friday, August 31st write-up:

WHAT TO WATCH:  I know we picked on the software sector on Wednesday
but this one is worth watching.  Shares of VRTS collapsed when the
GSO index (software index) fell through major support on Thursday
at 160.  In like fashion, VRTS gapped down below $30 and remained
there.  We were not the only ones picking on the software sector as
Goldman Sachs cut their outlook on the group on Thursday (they must
be readers of our letter).  The VRTS breakdown below $30 was a very 
bearish move and shares remain there going into the weekend.  If
you're going to trade VRTS you need to watch the GSO.  The GSO is
currently at or near its April lows of 155.  A breakdown from here
would be very bad and the down trend shows no signs of stopping.
But beware!  A new move up in the group would likely cause a violent
round of short covering.  Consider a short play in VRTS with a tight
stop above $30 or if you're bullish wait for a close back over $30
and consider a long with a tight stop under $30.


Vodaphone Group - VOD - close: 20.96 change: +0.95

UPDATE:  No change in outlook. The shares showed good late day 
strength on Wednesday.

Friday, August 31st write-up:

WHAT TO WATCH:  Shares of VOD look very tempting for a long play.
Has this extremely beaten stock finally found a bottom?  The stock
has been in a serious downtrend (just look at the 200-dma) for some
time now.  It's been a bumpy ride but maybe just maybe VOD put in
a bottom when it touched $18 on August 17th.  Since then shares 
have slowly been climbing which is contrary to what the market has
been doing.  Sounds like relative strength to us.  Even more 
interesting is the fact that the stock closed up after Morgan 
Stanley downgraded the stock Friday morning.  We would consider
this as a long play with our stop at just under $19 (a little over
5%).  Our target would be $22 or $22.50 or +10-12%.  If you need
further encouragement wait for the stock to close above its 50-dma
currently at 20.51.  Remember this is really an overseas stock and
it very prone to gaps up and down on the open.  Whatever happens 
in Britain on the FTSE will influence the VOD stock price.

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PremierInvestor.net Newsletter                 Wednesday 09-05-2001
                                                   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:

In section two:

Split Trader
  Split Announcement: Genesis Intermedia, Inc. - GENI
  New Plays: none
  Play Updates: Lennar - LEN Stop Updated
  Closed Plays: THQ Inc - THQI

Net Bulls
  New Plays: none
  Bullish Play Updates: none
  Bearish Play Updates: MMM, QCOM stops updated
  Closed Plays: none

Stock Bottom / Active Trader
  New Plays: Clorox Company - CLX (Bullish)
  Bullish Play Updates: none
  Bearish Play Updates: none
  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

Wednesday, September 05, 2001  11:28 AM ET

Geni's Looking for a Little Magic

GenesisIntermedia, Inc. (Nasdaq:GENI; Frankfurt:GIA) announced a 
3-for-1 stock split today in what some consider a desperate 
attempt to bolster the stock and to maintain the minimum 
requirements for its Nasdaq listing. Nevertheless, it would be 
difficult to argue that the Board's announcement is motivated by 
recent altercations with the SEC.

On Tuesday the Board issued a letter to the shareholders that 
reiterated current corporate endeavors and a reminder that the 
company had been added to the Russell 2000 Index in July. Sounds 
great until you get to the part that states their concern about 
the massive short selling of common shares. Chairman and CEO Ramy 
El-Batrawi encouraged shareholders to take their shares off the 
street and into certificates, stating, " By doing this, a short 
seller would not be able to borrow your stock for short sales 
without your permission. When your stock is held in a margin 
account, brokers can loan it out."

In a Bloomberg article that was also issued September 4, it was 
sited that Saudi financier Adnan Khashoggi (financial middleman 
in the Iran-Contra scandal) forfeited $7 million in inside trades 
to help GENI repay his loan. As the second-largest shareholder in 
the company, the SEC became aware of potential problems as 
Khashoggi's actions raised several issues under U.S. securities 
laws. According to a former SEC commissioner, using inside 
information would be the prime violation.

According to Bloomberg, Khashoggi's holding company Ultimate 
Holding Ltd. has lent as much as $49 million to Genesis, which 
currently maintains a $9.3 million negative net worth. During the 
first six months of this year Ultimate surrendered almost $7 
million in short-swing profits to Genesis. These are profits 
accumulated solely from buying and selling GENI shares. The 
article stated, " In an interview with Bloomberg News in January, 
Ramy El- Batrawi, chief executive of Genesis, said he has known 
Khashoggi for about 15 years and worked with him "on deals" 
between 1988 and 1993. He said the two speak "almost every day. 

El-Batrawi expressed surprise that Khashoggi's name had been 
listed on Ultimate's filings with the U.S. Securities and 
Exchange Commission. `It's strange that it came out,' the Genesis 
CEO said. `He wanted a low profile.' 

Genesis issued its last stock split just six months earlier. That 
split was also a 3:1 announced at the $19 level. At the execution 
date, shares began trading at $7.45 and continued to escalate to 
the current price of $17.70. There are currently 23.3 million 
shares outstanding and a float of 9.8 million - 20.6 percent of 
which is short interest. The current stock split is payable 
September 24, 2001.


ST Play Updates

  Split Candidate Updates

Update stop for Lennar Corp (LEN) from $41.25 to $42.50

ST Closed Plays

  Closed Split Candidate Plays

THQ Inc - THQI - close: 50.09 change: -0.87 stop: 49.75

The shares clipped our $49.75 stop in the morning hours on Wednesday 
before regaining their footing in the afternoon.  Longer-term 
investors should note that although the shares have been weak of 
late, it would take a move to $47.00 before their long-term bullish 
up trend line is violated.  

Picked on August 24th @ $ 51.45
Gain since picked:       - 1.80
Earnings Date:              N/A  (not confirmed)

Net Bulls (NB) section

NB Play Updates

  NB Bearish Play Updates

Stops Updated:
   Minnesota Mining and Manufacturing (MMM) from $111.00 to $108.00
   Qualcomm Inc (QCOM) from $59.59 to $56.00

Stock Bottom / Active Trader (AT) section

AT New Plays

  New Long Plays

Clorox Company - CLX Close: 38.42 Change: +0.41 Stop: $37.00

Company Description:
Although best known for the biggest selling bleach in the world, 
Clorox also makes laundry and cleaning products (Pine-Sol, Soft 
Scrub), insecticides (Combat), kitty litter (Fresh Step), car care 
products (Armor All), and charcoal briquettes (Kingsford).  About 
90-percent of its sales come from brands ranked first or second 
their markets.  Almost 40-percent of total sales comes from Glad 
plastic wraps, storage bags, and containers.  Clorox sells its 
products in more than 110 countries and rising international sales 
account for about 20-percent of its total.

Management recently raised guidance for fiscal first-quarter 
earnings from a range of 34 to 36-cents per share to 36 to 38-
cents. For all of fiscal 2002, the company expects a profit in the 
range of $1.57 to $1.62 a share, while estimates from analysts are 
for $1.52 to $1.61 a share, with a consensus of $1.57 a share. Last 
year, they earned $1.63 a share, on revenue of $3.9 billion.  The 
company has a stated 84-cent per share annual dividend.

Why We Like It:
With longs getting pummeled on the street, formerly non-sexy plays 
such as Clorox are looking more attractive every day.  On 
Wednesday, Clorox shares closed above big-time resistance at $38.00 
continuing their slow, steady climb from $29.95 last April.  More 
importantly, the break represented a double top breakout suggesting 
this move has legs.  There is little resistance to these shares 
continuing on to at least $42.00.  If they can reach $43, they 
should have a good bead on $48.00.    

Picked on September 5th at $38.42
Earnings Date:             N/A (Not Confirmed)

  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
SAH       Sonic Automotive Inc       18.45  +0.55
NVR       Nvr Inc                   166.75  +2.25
NFX       Newfield Exploration       34.51  +0.71
RJF       Raymond James Financial    29.37  +0.59
YELL      Yellow Corp                27.25  +0.54

   Breakout to Upside (Stocks $5 to $20)

Ticker    Company Name              Close  Change
RDEN      Elizabeth Arden           14.80  +1.35
MOGN      Mgi Pharma Inc            13.70  +1.03
GADZ      Gadzooks Inc              15.90  +1.01

   Breakout to Upside (Stocks over $20)

Ticker    Company Name              Close  Change
XOM       Exxon Mobil Corp          41.22  +0.47
WAG       Walgreen                  35.48  +0.49
FRX       Forest Laboratories       75.12  +1.52
ADLAC     Adelphia Communciation    32.96  +0.67
GT        Goodyear Tire & Rubber    25.11  +0.17

   Breakout to Downside (Stocks over $20)

Ticker    Company Name              Close  Change
TXN       Texas Instruments         30.84  -1.26
TEF       Telefonica Sa             32.30  -1.12
QCOM      Qualcomm Inc              53.21  -1.09
JPM       Jp Morgan Chase &Co       38.35  -1.48
AIG       American International Grp 73.99 -2.51
   Recently Overbought With Bearish Signals (Stocks over $20)

Ticker    Company Name              Close  Change
CSB       Ciba Speciality Chem Hldg  31.08  -0.57
TSCO      Tractor Supply             22.90  -0.60

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