Option Investor

Daily Newsletter, Monday, 09/17/2001

Printer friendly version
PremierInvestor.net Newsletter                 Monday 09-17-2001
                                                  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: Treasuries hold firm in wake of nervous market
Market Sentiment: Down But Not Out
Play-of-the-Day: RF Micro Devices - RFMD (Bullish)

U.S. Market Numbers
MARKET WRAP  (view in courier font for table alignment)
       9-17-2001           High     Low     Volume Advance/Decline
DJIA     8920.70 -684.81  9580.32  8883.40  2.6 bln    471/2820
NASDAQ   1579.55 -115.75  1629.10  1579.28  2.3 bln    795/3174
S&P 100   529.10 - 29.48   558.58   527.83   Totals   1266/5994
S&P 500  1038.77 - 53.77  1092.54  1037.46
RUS 2000  417.67 - 23.06   440.73   417.67
DJ TRANS 2271.68 -404.81  2675.47  2267.01
VIX        44.77 + 10.17    47.70    39.76
VXN        73.26 +  9.42    99.32    70.96
TRIN        0.98 
Put/Call Ratio      1.14

Market Wrap

Treasuries hold firm in wake of nervous market
by Jeff Bailey

The U.S. Treasury Bond market once again becomes a key indicator 
for traders and investors to be following.  Perhaps this market, 
more than any other in the world will give future hint of what to 
expect going forward.  

Today's actions by the Fed and its 50-basis point interest rate 
cut is designed to stimulate economic activity as the Fed eases 
monetary policy, but it is also designed to perhaps make Treasury 
bonds less attractive going forward.  "Less attractive" as it 
relates to upside profit potential, but not necessarily as it 
relates to the MARKET'S perception of risk.

I've said before that the bond market by itself is not 
necessarily an indication going forward of how stocks will 
perform.  Traders that understand that the 30-year YIELD is the 
"riskiest" part of the treasury market may begin making some 
assumptions going forward.  One assumption by recent activity 
after the WTC and Pentagon bombings is that there is confidence 
longer-term (we didn't see YIELDS rise precipitously, which would 
have been indication of selling in this bond) when the 30-year 
bond market began trading again last week.  Today's action was 
rather tightly bound in the 30-year, giving hint that a lot of 
traders have yet to make a market moving decision as it relates 
to money invested here.  

I'd suggest that traders try and think of the 30-year as "the 
riskiest" of the treasury bonds.  As the maturities shorten (10-
year $TNX.X and 5-year $FVX.X) we get closer to the "less risky."  
Once you've got that mindset, then we start getting a better 
picture of how the MARKET perceives things.  As we do this, we'll 
want to watch other sectors that are sensitive to interest rates 
and the economy to begin making a more prudent "market call."  
Let's face it.  Recent activities have perhaps created a "new 
ballgame" and market environment that hasn't been seen for some 

The 30-year YIELD ($TYX.X) finished today's trading with a YIELD 
of 5.407%.  Some stock investors can take this as a partial 
positive that this YIELD has not violated its YIELD lows set back 
in March of 5.217%, but there are other factors/influences that 
traders need to be monitoring going forward.  I'd argue that a 
massive selling of these bonds (higher YIELD) would have 
indicated a lack of "trust" by the MARKET that the U.S. would be 
able to make its debt payments.  My thoughts are this.  If the 
riskiest bond remains relatively unchanged, then the MARKET at 
this point is thinking rationally and isn't worried at this point 
regarding the foundation of the underlying U.S. Government.  As 
long as that is intact, then there's always hope for the 
companies that reside on its shores and who's earnings are 
reported in U.S. dollars.  This is very basic, but the foundation 
from which we build going forward.  

30-year Treasury Bond YIELD - Weekly interval

If we look at the 30-year YIELD by itself, it sure doesn't look 
as if the MARKET is showing any type of dramatic worry longer-
term regarding the U.S. Governments ability to pay the stated 
rate of interest on bonds previously issued with a 30-year 
maturity.  Let's look at two reasons different scenarios for why 
this bond YIELD currently just sits here and hasn't made that 
much of a move.

Good Scenario:  As mentioned.  Under current market conditions 
and events, I would view the 30-year action as positive.  The 
MARKET hasn't pulled the plug on this bond (sold it) and the 
MARKET has scrambled to gobble it up either (buy it).  In 
essence, there is very little taking place in the past couple of 
trading sessions and the market appears to be acting rational.  
Eventually some type of trend will become more evident and there 
will be other sectors we will monitor to begin building some type 
of analysis.  

Bad Scenario:  We must now monitor direction in this bond.  I 
chose the 30-year ($TYX.X) only because it is perceived as the 
"riskiest" YIELD to be buying.  What we will want to monitor is 
its direction and then other groups of stocks that are interest 
rate and economic sensitive like banks, retailers and some of the 
deep cyclicals.  Once we get a directional move from the 30-year, 
we will immediately begin monitoring the 10-year YIELD ($TYX.X) 
and 5-year YIELD ($FVX.X).  As we get closer to maturity we can 
better understand what the market is saying about the bond MARKET 
as it relates to RISK in the bond market.  

The "Bad Scenario" could come in one of two forms.  One bad 
scenario would be that we see a rush of buying in these bonds as 
investors feel "this is the only investment I'm comfortable 
with!"  The other "Bad Scenario" is that we see a rush of selling 
in these bonds as market participants begin hoarding precious 
metals or simply running to cash.  This will be easily 
identifiable should it occur as depicted by supply/demand.  
Should other sectors we feel need to be acting strong, not show 
price appreciation, then we'll know that something "bad" is 


In last Friday's sector profile, we talked about gold stocks and 
the commodity itself.  We discussed how the "true hedge" was 
perhaps not found in gold stocks, but the commodity.  Based on 
past history dating back to the Persian Gulf War, we made note of 
the decline in gold stocks, even though the commodity itself 
moved higher during that time period.  Perhaps today's action in 
the October 2001 Gold contract and 5.37% gain gives hint that 
some short-term players were active here.  I believe a 
trader/investor MUST monitor the gold commodity, and then begin 
weighing its action against that found in the bond market.  I 
believe we would NOT want to see this commodity continue to make 
too much of a move above the $320 level.  I would note too, the 
bullish price objective for the October Gold contract is $291.  
Today's close at $290.30 is very close to a level that may have 
originally been "foreseen" by the market.  I'm not saying that 
the MARKET foresaw recent events here in the U.S.  However, if 
the MARKET believes there is little further reason to "hoard" the 
commodity, then those that bought lower, may well be sellers 
based on the knee-jerk reaction higher.  The Gold/Silver Index 
(XAU.X) of stock gained 2.5% today.  This looks very similar to 
past history for the moment (1 day into trading) and now we begin 
monitoring things here as it relates to Friday's commentary on 
the sector.


We've also talked about currency as it relates to the US$ versus 
other major currencies.  This relationship should also be 
monitored closely from here on out.  With the Fed aggressively 
cutting rates in the United States (to improve liquidity and 
stimulate the economic environment) US investors need to monitor 
the strength of their dollar vs. other major currencies.  We've 
discussed how a weaker US dollar may benefit some companies based 
here in the US that sell their products overseas, but we also 
need to understand what a weaker dollar may be saying about 
investor's "faith" in the greenback.  Will it continue to be one 
of the stronger currencies that investors around the world would 
want to hold?  

Many market participants view Switzerland and its government 
perhaps more "neutral" than any government when it comes to 
certain types of politics (this point can be argued, but its a 
general belief).  We've all heard about "Swiss Bank Accounts" 
that some investors hold where their assets are less likely to be 
seized by a government.  Some traders and investors monitor the 
US$ vs. Swiss Franc to get a feel for market psychology toward 
the US greenback.  As you can see from the chart that follows, 
last Tuesday's events had the September Swiss Franc futures 
contract (sf01u) jumping in strength vs. the US$.  As markets in 
the United States were halted for trading, perhaps that 
"uncertainty" had the Swiss Franc contract gaining further 

US$ vs. Swiss Franc (Sept. 2001 contract) 

Back in July, the Swiss Franc began gaining strength vs. the US$, 
perhaps due to the uncertainty of the US economy (break of 
downward red trend).  Investors/trader will note the sharp 
increase in value of the Swiss Franc vs. the US% when it jumped 
to $0.625 (taking $0.625 to buy 1 Franc).  At the end of that 
day's trading, the contract settled at $0.60, but when markets in 
the US remained halted, the Franc gained further (uncertainty in 
US markets?).  

My current analysis here is much like that of the commodity in 
gold.  I wouldn't want to see much of a move higher in this 
currency as it relates to world confidence in the US$.  This 
currency relationship will be worth monitoring to help us get a 
grip on market psychology as it relates to confidence in the US 

Other currencies

We discuss the Swiss Franc above mostly because of its 
governmental "neutrality" over history toward asset flows in 
times of uncertainty.  The thinking here is that any "belief" of 
any type of ongoing concern might be shown here.  Imagine if you 
will that you are a billionaire, have more money/assets than you 
know what to do with, but think there is some type of risk and 
want to move some assets toward Switzerland and its historic 
"neutrality."  To do this, you would have to convert your asset 
into Swiss Franc if you wanted to "benefit" from that neutrality.

Summary of today's events

Suffice it to say, that many chalkboards have been partially 
wiped clean as recent events here in the U.S. have many investors 
reviewing their game plans and previous investment strategies.  
No, they haven't been entirely wiped clean, but some damage 
control and contingency plans have most likely been put into 

It was obvious that airline stocks were going to get hit to the 
downside today, but nobody knew for certain how much.  The AMEX 
Airline Index (XAL.X) closed down 40% to 69.81 and finished at 
its session low.  Some reality checks came when Continental 
Airlines (NYSE:CAL) said it would not pay current debt interest 
payments.  Many believe that this is posturing by Continental's 
management as it awaits Congress' announcement regarding on any 
type of industry "bail out" news.  We've said before that "the 
market hates uncertainty" and there are plenty of uncertainties 
in the group that will not be answered for some time.

Perhaps today's announcement from Continental is little different 
than some insurance companies saying that they may not pay some 
insurance claims immediately, as they await some type of ruling 
as it relates to "acts of war" regarding insurance policy 
clauses.  The S&P Insurance Index (IUX.X) fell 4.84% to 653.

Right now, it is probably these two groups that face the most 
uncertainty going forward.  Both could be affected by government 
rulings in each of their industries.  This is why I feel it is 
important to once again take some time and get subscribers "up to 
speed" on what I feel are some of the basic building blocks of 
the Treasury bond market and currency markets.  For many 
financial markets, these two items become the foundation for what 
many stock prices and markets are built upon.

Without a strong foundation, then stock markets will become 
vulnerable.  Right now, it becomes important for subscribers to 
have a strong foundation of how we monitor the foundation.  We 
need to be aware of certain "cracks" that may develop.  Right 
now, I'd say there are a few cracks (as it relates to a weakening 
US$).  Today was basically the first day of a relatively "wiped 
clean" chalk board and it will take several days, if not weeks or 
months to begin getting a clearer picture of where things are 

The investor looking to "play it safe" in stocks is trying to 
come up with investment ideas that are somewhat removed from 
things.  Some ideas I had this morning in shares of Campbell Soup 
(NYSE:CPB) and Office Depot (NYSE:ODP) were just a couple of 
stocks that came to the top of my mind from past commentary.

Of course, "playing it safe" has done little to create wealth in 
our country.  I remember excerpts from several of Bill Gates' 
writings regarding the formation and concept of Microsoft 
(NASDAQ:MSFT).  There were several times of uncertainty and risks 
that he and his then private investors took before success was 
eventually found.  Each decision was based on risk/reward, with a 
timeframe in mind.  Each move/decision was strategic and not 
decided on a whim.  Each decision was monitored closely and 
success or failure was measured.

Today was the first day that investors/traders were able to trade 
after a four session halt.  There were some that needed to sell 
some stocks (sell risk) as it related to their strategies and 
account management.  We knew this going into the trading session.

Hopefully we've armed traders with some knowledge on how to hedge 
risk going forward should things begin to unfold unfavorably.  
Any trader that is hedging a position would rather lose money on 
the hedge than lose money on the underlying investment.

We need to understand that there was undoubtedly a lot of hedging 
taking place today as traders got some positions squared up.  For 
some market participants to not do so could have been damaging to 
their accounts longer-term.  As traders and investors we can now 
begin to better comprehend many things that took place today.  

All in all, I don't think there were many broader-market 
surprises.  Many market analysts expected declines of 8-10% for 
the major indices.  Many were "relieved" that the markets didn't 
drop more than they did.  Some were "disappointed" that the 
markets didn't finish the later hours of trading stronger.  I 
think both camps are willing to call today's trading a tie.

As it relates to a recent article regarding stop-market and stop-
limit orders, today's session made some sense.  I think there 
were many that lifted their stop market orders, digested things 
and when some of the broader markets did regain some earlier 
losses found at the open of trading, some hedge strategies or 
selling into what recovery there was then took place.

If trading and investing truly is an "endgame," then I do believe 
that cooler heads prevailed today and the market acted very 
rational given recent events.

Market Sentiment

Down But Not Out
by Jeffrey Canavan

The Dow posted its biggest point drop ever on heavy volume, but 
the fact that the trading went smoothly made today a success.

As expected, anything associated with travel sold off today.  
Airlines, cruise lines, online travel sites, nothing was exempt.  
So does a 40% drop make these stocks an attractive buy?  Based on 
US Airways cutting 20% of its workforce and reducing 23% of its 
flights, airline stocks might be flying low for a while.  But 
then there is the pending government bailout package.

Does that mean today's buying in teleconferencing stocks was 
justified?  There might be a small increase in the use of 
teleconferencing, but I doubt Avistar Communications' business 
will double.

Security stocks, anything that scans, X-rays, or detects, will 
most likely see an increase in orders, but probably not enough to 
justify Viisage Technology's 142% advance or ICTS International's 
113% one day climb. Perhaps on a pullback these stocks might be 
an interesting longer-term play. 

Gold stocks looked like a safe bet when they rose 6% out of the 
gate, but that fact that they only closed up 2.50% makes the 
safety of gold a little less safe.  

The safe stocks today were not just defense stocks, but defensive 
stocks.  Some of the S&P 500 stocks that closed in positive 
territory included Merck (MRK), Cardinal Health (CAH), Pepsi 
(PEP), Unilever (UN), Phillip Morris (MO), Proctor and Gamble 
(PG), and Heinz (HNZ).  

A defensive posture looks best for bulls and bears alike until 
market direction becomes a bit clearer.  

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

            Support                Close              Resistance
DJIA       | 8,650  |      |      | 8921 |      |      |   9,110|
NASD       | 1,490  |      |      | 1580 |      |      |   1,670|
S&P 500    | 1,000  |      | 1039 |      |      |      |   1,100|
Rus 2000   |   405  |      |  418 |      |      |      |     455|
Semis      |   453  |  463 |      |      |      |      |     538|
Biotech    |   445  |      |      |  461 |      |      |     475|
Internet   |    90  |      |      |   96 |      |      |     105|
Networking |   217  |      |  227 |      |      |      |     260|
Software   |   130  |  132 |      |      |      |      |     159|
Banking    |   565  |      |      |      |  586 |      |     595|
Retail     |   695  |      |  721 |      |      |      |     765|
Drugs      |   375  |      |  383 |      |      |      |     410|

Support and resistance levels have been reset due to Monday's trading.

Support Alerts: 
Resistance Alerts:
           |   Long    |   Short   |   Strength    | Relative   |
           |   Term    |   Term    |     of        | Strength   |
           |   Trend   |   Trend   |    Trend      | vs S&P 500 |
DJIA       |  Bearish  |  Bearish  | Strengthening |  Negative  |
NASD       |  Bearish  |  Bearish  |    Strong     |  Negative  |
S&P 500    |  Bearish  |  Bearish  |    Strong     |    --      |
Rus 2000   |  Bearish  |  Bearish  |    Strong     |  Neutral   |
Semis      |  Bearish  |  Bearish  | Strengthening |  Negative  |
Biotech    |  Bearish  |  Bearish  |     Weak      |  Neutral   |
Internet   |  Bearish  |  Bearish  |    Strong     |  Negative  |
Networking |  Bearish  |  Bearish  |    Strong     |  Negative  |
Software   |  Bearish  |  Bearish  |    Strong     |  Negative  |
Banking    |  Bearish  |  Bearish  |    Strong     |  Neutral   |
Retail     |  Bearish  |  Bearish  |    Strong     |  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    |  Falling |   Sell    |
Semis      | Oversold    |  Falling |   Sell    |
Biotech    | AP OS       |  Falling |   Sell    |
Internet   | Oversold    |  Falling |   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)

RF Micro Devices - RFMD Close:$23.09 change:+0.36 Stop:$19.50

Original Comments When Selected on September 7th:

Company Description:
RF Micro Devices designs, develops, manufactures and markets 
proprietary radio frequency integrated circuits for wireless 
communications applications, including cellular and PCS.  The 
shares have been bolstered by bullish comments from Merrill Lynch 
citing RF Micro shares as a good way to play a recovery in the 
wireless sector.  They cited the company's growing market share as 
a supplier to wireless equipment giants Siemens, Samsung and 

For the fiscal year ended in March 2001, net income decreased 
30-percent to $35 million on a 16-percent jump in sales to 
$335.4 million.  The company earned 20-cents per share.  
Revenues reflect increased demand for handset and broadband 
products.  Earnings were offset by increases in research & 
development, and marketing expenses. 

For the 2002 fiscal year, the company is expected lose 4-
cents per share on sales of $347 million and to earn 25-cents 
per share on $530 million in 2003.

Why We Like It: 
It's tough to select a bullish tech play in a plunging market.  
Still, active investors looking for something to keep in their hip 
pocket to play in a snap back rally should consider RFMD shares.  
The semiconductor sector has been performing well of late when 
compared to the general market and even managed to squeak out a 
slight .46-percent gain in Friday's market plunge.  RFMD shares did 
better with a 6-percent one-day increase.  This is consistent with 
the shares behavior since last April.  During down and up days the 
shares have performed well relative to the general market and 
semiconductor peers.  With the markets approaching the April lows, 
RFMD shares should outperform in a rally.  Another attractive 
feature of the shares is that a point and figure chart has them 
hovering just above their bullish trend line at $21.00.  With 
support so nearby, traders playing a bounce can limit risk by 
placing a stop at near $20.  We are placing our initial stop a hair 
lower at $19.50.   Should the market turn, even a short-lived 
traders rally could push the shares up to resistance at $26 and 
possibly $28 resulting in a nice gain.

Updated Comments:
Any tech play that can pull out a 36-cent gain on the ugliest of 
days deserves to be the Play-of-the-Day.  After joining the rest 
its tech peers with a much lower opening price of $20.15, the 
shares managed to push to a $24.40 session high before lunch.  
Although the shares gave back some of those gains, they managed to 
find support at $22.50.  This level held despite five intraday 
attempts by the bears to drive the shares lower.  The next few days 
ought to see some form of tradable tech bounce and the relative 
strength RFMD share are exhibiting should mean a solid performance 
is ahead. 

Picked on September 7th at $22.31
Gain since picked          + 0.77
Earnings Date               10/16 (Not Confirmed)

Watch List

Cisco Systems - CSCO - close: 14.00 change: -0.47

WHAT TO WATCH:  Effective immediately.  Those were the terms from
CSCO on last Thursday when they announced a two-year $3 billion
buy back program.  Based off of CSCO's September 10th close of
$14.47, the $3B would equal over 200 million shares.  As the volume
leader today on the NASDAQ, CSCO traded over 112 million shares
on Monday alone.  Obviously, the company is not going to spend
the money all at once.  The board gave themselves two years and
they can purchase stock from time to time as they see fit in the
open market.  This is still encouraging news for investors and 
hopefully this move by management will help put a bottom in the
share price.  Monday's low today was a little bit less than last
April's low (today's low was $13.00) but the stock managed a 
comeback to close at $14.  We would be watching the stock over
the next several days for a positive close over $15 or even better
a close over $16 as potential entries to consider a long position.


Nokia Corp. - NOK - close: 15.44 change: +1.69

WHAT TO WATCH:  Shares of NOK gained over 12% on Monday bucking the
trend on Wall Street including other cell phone makers.  As the
biggest maker of cell phone handsets, many investors believed that
the role cell phones took in last Tuesday's tragedy will confirm
American's belief that everyone needs a phone as a source of 
communication and as one news article put it a "security device".
Volume was very strong today and we would be watching for a 
confirmation of Monday's move.  The previous sell-off in August 
was so orderly there are several clear levels of potential 
support and resistance.  We can probably anticipation trading
resistance at each $1 level but there is stronger resistance
at $18 and again at $20.  Look for a close over $16 before 
evaluating a potential long play.


Check Point Software - CHKP - close: 30.60 change: -2.39

WHAT TO WATCH:  For those speculators out there, we wanted to
highlight CHKP.  One stock in an already very weak sector has
piqued our curiosity.  The GSO.X software index gapped down
below support of 140 and sold off from there to close at 131
and change.  CHKP also gapped down but at the market's worst,
support at $30 for the stock held up.  It's possible this may
be the bottom for CHKP.  The bears have been trying to get the
stock to stay under $30 for days and have not succeeded (yet).
Nimble traders might want to consider a potential trade to 
capture the trading range between $30 and $33.25.  If you're
looking out several days or weeks on the horizon, we could wait
for the stock to close above $33.50 (or $35) and see if the
stock can appreciate to $38 or $40.  We still need to keep an
eye on the GSO.  CHKP may have found a potential bottom for now
but if the sector keeps falling, buyers may not be able to 
support the stock forever.  We would probably qualify this as
a risky trade but a stop at $29 should be sufficient.


eBay Inc - EBAY - close: 49.40 change: -5.17

WHAT TO WATCH:  In a purely technical play, we see shares of 
EBAY under support of $50 and its 200-dma as strong weakness.
However, if the market rebounds tomorrow, the stock could 
bounce back to $53 or $54 which would be at or near the down
trending line of resistance.  If the stock doesn't respond,
the downside could be $45 or even $42.50 in the short-term.
On a fundamental note, some believe that EBAY's "Auction for
America" to raise $100 million in 100 days for the relief
effort might raise brand awareness and attract new clients.


Coca Cola Co - KO - close: 50.20 change: +0.25

WHAT TO WATCH:  You've probably heard it before.  In times of
market uncertainty investors usually flee to consumer staple
stocks who have strong steady earnings.  People may stop 
traveling for the time being but they will not stop drinking
sodas.  After the initial dip to just under the $49 level, 
shares of KO saw buying interest late in the day.  Price
resistance would be around $50.65 but the real hurdle for the
bulls is probably the 200-dma directly overhead at 50.45.
Volume was very high today at 10 million shares and a breakout
on another strong volume day could portend the next bullish
leg up for KO.  No one has accused KO's stock of being a real
fast mover lately but we might see a 10% gain in the next 
few weeks.  We would wait for the close over the 200-dma before
considering an entry point.

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

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:


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                  Monday 09-17-2001
                                                   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 Announcements: none
  New Plays: none
  Play Updates: none
  Closed Plays: Amerada Hess Corp - AHC

Net Bulls
  New Plays: none
  Bullish Play Updates: See Play-of-the Day RFMD
  Bearish Play Updates: Stops updated
  Closed Plays: Amgen Inc - AMGN

Stock Bottom / Active Trader
  New Plays: Campbell Soup Co - CPB (Bullish)
  Bullish Play Updates: none
  Bearish Play Updates: Stops Updated
  Closed Plays: PepsiCo, Inc. - PEP

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

ST Closed Plays

  Closed Split Candidate Plays

Amerada Hess Corp - AHC Close:$75.35 Change:-1.57 Stop:$75.80

As expected, the reopening of the equity markets brought a wave 
of selling that was broad based and indiscriminate.  Normally 
energy shares benefit from the higher prices that usually 
accompany global events, but this time even oil stocks sold 
off.  On Monday, AHC shares blew through their $76.09 200-day 
moving average and our $75.80 stop that was hiding just below.  
For traders who are riding out today's volatility, strong 
support exists near $74, but if the shares make it through this 
level the next area of support is at $70. 

Picked on August 15th @ $ 78.90
Gain since picked:      -  3.10
Earnings Date:             N/A  (not confirmed)

Net Bulls (NB) section

NB Play Updates

  NB Bullish Play Updates

See Play-of-the-Day RF Micro Devices (RFMD)

  NB Bearish Play Updates

Stops Updated:
   MedImmune (MEDI) from $39.44 to $37.86
   Minnesota Mining & Manufacturing (MMM) from $104.25 to $99.00
   Peoplesoft (PFST) from $30.25 to $28.65

NB Closed Plays

  Closed Long Plays

Amgen Inc - AMGN Close: 60.85 Change: -3.28 Stop: $62.00

Defense was the name of the game on Monday and high-priced biotechs 
were crushed as investors stampeded to safer areas of healthcare 
and to stuff money under their mattresses.  This represented an 
abrupt reversal for AMGN shares and it took out our $62.00 with a 
$61.03 open.  The only solace one can find for longs who were 
committed to riding out this anticipated volatility, was that the 
shares did manage to rebound off of their $59.75 session low and 
spent much of the day hovering near $60.80 support.  This suggests 
the shares may be in the process of regaining their footing.  

Picked on September 6th at $65.66
Gain since picked          - 4.63 
Earnings Date:              10/25 (Not Confirmed)

Stock Bottom / Active Trader (AT) section

AT New Plays

  New Long Plays

Campbell Soup Co -  CPB Close:$28.35 change:+0.09 Stop:$27.00

Company Description:
Campbell Soup is the sells more soup than anyone else in the world 
with a 70-percent share of the US market.  Yet this company is 
about more than just the condensed canned soup featured so 
prominently in Andy Warhol's art.  They also make ready-to-serve 
and microwaveable soups in resealable and pop-top containers, Pace 
picante sauce, Pepperidge Farm cookies and goldfish crackers, 
Godiva chocolates, V8 beverages, Prego spaghetti sauce, Swanson 
broths, and Franco-American sauces and SpaghettiOs.  Campbell's 
food service unit sells soup and buns to fast-food restaurants and 
cafeterias. Descendants of John Dorrance, who invented condensed 
soup, own about 50% of Campbell.

The company has been sacrificing some short-term earnings in 
exchange for using its strong cash flow to strengthen their 
competitive position through strategic acquisitions.  After 
earning $1.55 per share in the fiscal year ended July 2001, 
analysts anticipate the firm will earn $1.29 in 2002 and 
$1.35 in 2003.  CPB shares sell for a current P/E of 18 and a 
forward 2002 P/E of 22.  The industry average P/E is 25. The 
company has indicated an annual per share dividend of 90-
cents (or 3.17-percent).

Why We Like It: 
The fall and winter months bring consumers to soup and the bulls to 
shares of this soup maker.  The following tables show the total 
point gain or loss for Campbell by month and also the average gain 
or loss:

Total Point Gain by Month for Campbell Soup (1992-2001)

January   ($22.98)
February  ($ 2.08)
March      $ 3.65
April     ($ 5.29)
May        $ 5.66
June       $ 2.21
July      ($ 0.58)
August    ($ 9.94)
September  $ 7.31
October    $21.31
November   $16.50
December  ($ 1.88)

           Average Point Gain   Average Percentage Gain
January        ($2.30)                  (5.70%)
February       ($0.21)                  (0.21%)
March           $0.36                    1.31%
April          ($0.53)                  (1.79%)
May             $0.57                    2.04%
June            $0.22                    0.06%
July           ($0.06)                  (0.24%)
August         ($1.10)                  (1.80%) 
September       $0.81                    3.81%
October         $2.37                    7.26%
November        $1.83                    5.48%
December       ($0.19)                   0.39%

Clearly, September through November are the months to own a 
position in CPB.  However this year, the shares have been in a slow 
motion rally since mid-August. And despite Monday's record breaking 
drop in the DOW, Campbell Soup shares managed to squeeze out a 9-
cent gain.  It stands to reason that long investors looking for a 
defensive place to park some money will be looking favorably on a 
high dividend play such as Campbell Foods.  Traders should wait for 
a break above resistance at $28.75 or a dip back to $27.75 before 
taking a position.  On the upside path, significant resistance 
exists at the $29.77 200-day moving average and at the early-May 
high near $31.00.  If the shares can push through $31, we see a 
bullish target in the $33 to $34 range.  We will start this play 
with a stop at $27.00, which is just below the $27.33 50-day moving 
average and to the lower end of the late-June/early July 

Picked on September 17th at $28.35
Earnings Date                 9/06 (Confirmed)

AT Play Updates

  Short Play Updates

Stops Updated:
   AmeriCredit (ACF) from $44.00 to $38.96
   TCF Financial (TCB) from $43.25 to $43.00

AT Closed Plays

  Closed Long Play

PepsiCo, Inc. - PEP Close:$47.90 Change:+1.00 Stop:$46.50

This stinks.  A morning swoon to the session low just of $46.26 
just clips our $46.50 stop, before shares of this defensive play 
reverse direction and close out the ugliest of days with a $1.00 per 
share gain.  Fortunately, we were left with a 84-cent gain on this 
bullish selection.  We don’t plan on waiting long to add this solid 
defensive play back on the play list, but at this point it is best 
to wait to see if it can clear $48.00 resistance.  If it can, we 
believe these shares are still on track to make a good run through 
their $49.94 52-week high on their way to our $60 bullish price 
target.  An equally attractive entry point would be any dip to the 
$44 - 45 range.

Picked on August 10th at $45.66
Gain since picked        + 0.84
Earnings Date              7/19 (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
FTE       France Telecom Ads        28.70  +1.10
RJR       Rj Reynolds Tobacco       58.72  +1.10
FNF       Fidelity National Financial 25.40 +1.19
BPT       Bp Prudhoe Bay Royal Tr   16.51  +0.61
CDCY      Compudyne Corp            13.00  +4.75

   Breakout to Upside (Stocks $5 to $20)

Ticker    Company Name              Close  Change
NOK       Nokia Corp Ads            15.44  +1.69
BTI       British Amer Tob Plc      18.12  +1.22
WSH       Willis Group Holdings     19.25  +1.65
FAF       First American Corp       19.05  +1.40
VPI       Vintage Petroleum         19.95  +1.46

   Breakout to Upside (Stocks over $20)

Ticker    Company Name              Close  Change
FNM       Fannie Mae                77.60  +2.15
AHP       American Home Products    59.73  +1.56
WM        Washington Mutual         36.89  +1.95
LMT       Lockheed Martin           43.95  +5.63
GD        General Dynamics          82.90  +6.93

   Breakout to Downside (Stocks over $20)

Ticker    Company Name              Close  Change
XOM       Exxon Mobil Corp          40.15  -1.09
WM        Wal-Mart Stores           44.00  -2.23
C         Citicorp                  39.60  -2.85
TOT       Total Fina Elf Sa         69.60  -2.28
SGP       Schering-Pluogh Corp      35.95  -1.24

   Recently Overbought With Bearish Signals (Stocks over $20)

Ticker    Company Name              Close  Change
KFT       Kraft Foods Inc           32.90  -0.85
TLM       Talisman Energy           33.60  -5.88
SUN       Sunoco Inc                36.95  -0.89
MKC       Mccormick & Co            43.15  -2.15
NXY       Nexen Inc                 23.30  -2.30

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

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:


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.


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