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Daily Newsletter, Thursday, 10/04/2001

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PremierInvestor.net Newsletter               Thursday 10-04-2001
                                                  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
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In section one:

Market Wrap: May be a good time to think of refinancing
Market Sentiment: When the Tech Bulls Run
Play-of-the-Day: Lockheed Martin - LMT (Bullish)

-----------------------------------------------------------------
U.S. Market Numbers
-----------------------------------------------------------------
MARKET WRAP  (view in courier font for table alignment)
-----------------------------------------------------------------
      10-04-2001          High     Low     Volume Advance/Decline
DJIA     9060.88 - 62.90  9187.37  9045.38 1.53 bln   1493/1648	
NASDAQ   1597.31 + 16.50  1641.56  1581.08 1.73 bln   1380/2243
S&P 100   548.45 -  2.15   557.16   547.22   Totals   2873/3891
S&P 500  1069.62 -  2.66  1084.12  1067.82             
RUS 2000  417.04 +  3.82   420.57   413.22
DJ TRANS 2210.98 - 11.88  2238.43  2204.53
VIX        34.40 +  1.30    34.57    32.98 
VXN        61.94 -  0.23    63.98    60.47
TRIN        1.18 
Put/Call    0.46
-----------------------------------------------------------------

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

May be a good time to think of refinancing
by Jeff Bailey

If you've been giving some thought to refinance your mortgage, 
then now may be the opportune time to lock in rates.  If you're 
holding an adjustable rate mortgage, then now may be a good time 
to convert that to a fixed rate mortgage.  While we're not a 
"mortgage refinancing" service, the economic impact of 
refinancing and pulling equity out of a home is analogous to 
"sell high and buy low."  Realtor.com is posting 30-year fixed at 
6.41% and 15-year fixed at 5.99%.

Some will argue that a mortgage is a "liability" created from the 
underlying asset (the house).  As long as there's a mortgage, 
then the bank that owns the mortgage is the asset holder.  As 
long as you make the house payment, you get to live in the house.  
Miss a few payments and the house gets repossessed, the bank 
tries to sell the house for "market value" or for what's left on 
the mortgage balance.  Whatever is left over is returned to the 
note holder (you).  If there's still a deficit, then you owe the 
bank.

Let's imagine someone owns a house where comparable neighborhood 
dwellings are selling for $150,000.  The occupant has lived in 
that house for several years and owes about $100,000 on that 
mortgage.  In essence, he/she has about $50,000 in equity that's 
"just sitting there."  

What does one do if they think the economy is slowing and jobless 
rates are on the rise?  They might think that there will be fewer 
buyers in the housing market (demand) and single-family homes in 
their neighborhood might decline in value (supply, if listed for 
sale).  Should the next door neighbor lose his/her job, there 
house might go up for sale (more supply) and prices might fall 
further.

What's one to do?  Since the bank already owns the mortgage, it 
might make sense to sell some equity back to the bank (sell high) 
and do it at a low cost of borrowing (buy low).  

Many mortgage rates are tied to either the 30-year ($TYX.X) or 
10-year Treasury yield ($TYX.X).  Today's action in the 10-year 
bond gives hint that mortgage rates are about as low as they're 
going to get.  When you consider the 30-year YIELD was flat today 
and so was the 5-year, something is up as the "middle" yield 
jumped to 4.5%.  

10-year YIELD point and figure chart





Today's $6 billion sale of 10-year Treasuries at 4.519% YIELD may 
just be a coincidence with the bearish price objective from our 
YIELD chart, but we've only seen two times in recent history when 
the Treasury has auctioned debt in such an "unannounced fashion."  
Treasury officials have injected liquidity into the bond market 
like they did today.  Once was the Russian debt crisis of 1998 
(10-year YIELD fell to 4.1%) and the other time was when the U.S. 
nearly defaulted on its debt in 1994 (10-year YIELD rose to 8%).  

The move in 1998 was very similar to that found today.  The 
recent terrorist activities have seen many market participants 
running to the Treasury market for safety.  This rush to safety 
has significantly increased the demand for Treasuries and the 
result has been higher price (lower YIELD).

Officials made it clear that today's transaction had nothing to 
do with the need to raise cash to help fund the country's 
operations in the wake of the terrorist attacks, but was only to 
provide liquidity to the bond market and relieve pent up demand.

We should take note that past Treasury auctions like we saw today 
came at turning points in interest rates where significant 
reversals were soon found.

But don't tell institutional bond firms that!  

I've said before that institutional investors and those that sell 
to institutions are interesting to follow, or at least listed to 
from time to time.  One comment I find interesting or at least a 
trend is that institutions aren't trying to go out of their way 
to come up with any bond offering of their own, because RATES ARE 
TOO LOW!

To me, this is a very important statement from the MARKET.  If an 
institutional bond firm thought they could make a buck selling 
underwriting a low YIELD bond, they'd do it!  However, many firms 
aren't coming with any deals because they're afraid nobody will 
buy the lower yielding debt.

It's these kinds of comments from some institutions that hive 
hint we may be getting close to a bottom in YIELDS, and perhaps a 
good time to be locking in some lower rates.

Something to think about

For many American homeowners, they're faced with many decisions.  
How safe is my job?  What do I owe and what are my assets?  Are 
my assets (home, stocks and bonds) going to appreciate or 
depreciate?  Are these assets liquid or illiquid?

For some its "crazy" to even think of losing their job and 
possibly their home.  It's not a pleasant thought.  To not plan 
for such an event is perhaps even crazier.  

Some may think of refinancing their home as a way to save money.  
However, those that understand risk management and how to manage 
it, see refinancing their home as a "shifting of risk."  When a 
bank lends money, they assume the risk.  The borrower assumes a 
liability with a promise to pay back the money.

In areas where real estate prices have soared or increased 
significantly, and mortgage interest rates are at historical 
lows, it makes sense to some to perhaps pull some equity out of 
the house (sell high) and pay down some debt or generate some 
liquidity for a rainy day fund.

Rainy day fund

The "rainy day fund" is what many stock investors are more 
interested in.  No!!!!  Refinancing your mortgage is not a reason 
to further risk capital in the stock market!  Mortgage 
refinancing can however become an key player in how the economy 
grows or contracts from here.

Often times, many people that refinance their houses and pull 
equity from their homes use that money to pay down debt.  Those 
pesky monthly payments at 18% interest on the credit card, or 
that 10% loan on the two-year old car.  Lots of people pay down 
higher rate debts by borrowing at lower costs.  

Eventually, consumers find that once the debts are paid down, 
then cash flow turns more positive and there's money burning a 
hole in their pocket.  There are even those who feel comfortable 
with their job security and use the equity found from refinancing 
real estate to purchase some expensive items like durable goods.

Think of the banks or lenders

Today's 2.27% decline in the S&P Banks Index (BIX.X) now gets 
interesting.  Some weird things happened here today, but perhaps 
some of what we're seeing in the bond market and how it may 
relate to mortgage refinancing makes sense.

Banks that are big lenders right now are doing what?  As it 
relates to mortgages they're lending money at low rates and 
perhaps assuming great risk considering the economic climate.

Tomorrow, I'm going to have a close eye on shares of Fannie Mae 
(NYSE:FNM).  If the 10-year YIELD shoots higher, this stock could 
get "whacked" to the downside.  

Fannie Mae (FNM) - last eleven months





Should the 10-year YIELD ($TNX.X) rise tomorrow morning before 
the opening of stock trading, traders may want to keep an eye on 
shares of Fannie Mae (NYSE:FNM) as a stock that could see 
weakness.  I think we could see near-term level of $75, so I'm 
looking "out the money" and the November $80 puts (FNMWP) and 
they were offered $2.60 at today's close.

OK... maybe I'll take $260.00 from my mortgage refinancing and 
put it at risk.  But that's it!

Jeff 


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

When the Tech Bulls Run
Russ Moore

Tech bulls continued to snap up their favorite NASDAQ stocks 
after Dell Computer announced it would meet estimates.

Yesterday, it was Cisco Systems that sparked the tech rally and 
today’s gains, followed a reaffirmation of earnings by Dell 
Computer. The company saw its shares rise +8.13 percent and 
helped lift the NASDAQ to +1.1 percent gain.

For much of the day it looked as though the DOW would also finish 
in the green, but weakness in financial, consumer and retail 
sectors put a damper on the blue chip index which closed the 
session with a loss of –0.7 percent.

Volume was on the heavy side with 1.56 billion shares moving on 
the big board and 2.51 billion shares trading on the NASDAQ. 
Winners came out on top by an 18/13 count on the NYSE and 21/15 
margin on the NASDAQ.

Winning sectors on the tech side included chip, hardware, 
software, internet, and networking. Oil, oil service, insurance, 
utility, natural gas, and brokerages were all up, on the broader 
markets.

Jobless claims were 71,000 to 528,000, the largest jump since 
July 92’, and far higher than the 468,000 expected. The dismal 
data had little affect on the market performance. August factory 
orders came in above the –0.3 percent expected with a flat 
reading.

Today’s jobless number is a prelude to tomorrow’s employment 
rate. Economists are forecasting a rate of 5.0 percent. Following 
today’s data, investors are prepared for the worst, and, with 
investor sentiment currently leaning towards the bullish side, it 
will take a major downside surprise to affect market direction.






VIX 
Thursday 10/04 close: 34.40


VXN
Thursday 10/04 close: 61.94

30-yr Bonds
Thursday 10/04 close:  5.30


Total Put/Call Ratio: .60


Equity Option Put/Call Ratio: .47


Index Option Put/Call Ratio: 1.84


===

NASDAQ 100 Index (NDX/QQQ)
52-Week High: 103.51
52-Week Low:   28.19
Current close: 31.30

Volume/Open Interest
Maximum calls: 30/98,784
Maximum puts : 27/58,568

Moving Averages
 10 DMA 29
 20 DMA 31
 50 DMA 36
200 DMA 46

Fibanocci Retracements
Relative High: 51.95 (05/22/01)
Relative Low:  27.00 (09/21/01)
38% 36.60
50% 39.57
62% 42.59

===

S&P 100 Index (OEX)
52-Week High:  834.93
52-Week Low:   491.70
Current close: 548.45

Volume/Open Interest
Maximum calls: 600/6,860
Maximum puts : 440/6,240

Moving Averages
 10 DMA  526
 20 DMA  537
 50 DMA  579
200 DMA  632

Fibanocci Retracements
Relative High: 680.03 (05/22/01)
Relative Low:  480.07 (09/21/01)
38% 556.14
50% 579.65
62% 603.55

===

S&P 500 (SPX)
52-Week High:  1530.01
52-Week Low:    965.80
Current close: 1069.62

Volume / Open Interest
Maximum calls: 1050/26,651
Maximum puts : 1050/23,407

Moving Averages
 10 DMA 1027
 20 DMA 1051
 50 DMA 1131
200 DMA 1224

Fibanocci Retracements
Relative High: 1315.93 (05/22/01)
Relative Low:   944.75 (09/21/01)
38% 1086.75
50% 1130.62
62% 1175.23

==

DJIA (INDU)
52-Week High:  11,518.83
52-Week Low:    8,235.81
Current close:  9,060.88

Volume / Open Interest
Maximum Calls: 100/26,651
Maximum Puts   100/41,698

Moving Averages:
 10 DMA  8,756
 20 DMA  9,078
 50 DMA  9,945
200 DMA 10,398

Fibanocci Retracements
Relative High: 11,350.05 (05/22/01)
Relative Low    8,062.34 (05/21/01)
38%  9,308.92
50%  9,693.99
62% 10,085.60

==

Biotech Index (BTK)
52-Week High:  811.61
52-Week Low:   383.28
Current close: 459.08

Volume / Open Interest
Maximum Calls: 520/ 300
Maximum Puts:  440/2002

Moving Averages
 10 DMA 443
 20 DMA 466
 50 DMA 497
200 DMA 548

Fibanocci Retracements
Relative High: 811.61 (09/25/00)
Relative Low:  383.28 (03/22/01)
38% 546.22
50% 596.57
62% 646.71

==

Semiconductor Index (SOX)
52-Week High: 1280.84
52-Week Low:   362.00
Current close: 405.54

Volume / Open Interest
Maximum Calls: 450/1,025
Maximum Puts:  390/2,117

Moving Averages
 10 DMA 380
 20 DMA 434
 50 DMA 526
200 DMA 595

Fibanocci Retracements
Relative High: 710.78 (05/22/01)
Relative Low:  343.93 (09/27/01)
38% 484.50
50% 527.18
62% 570.57

==

Pharmaceutical Index (DRG)
52-Week High:  455.28
52-Week Low:   339.49
Current close: 389.48

Volume / Open Interest
Maximum Calls: 400/505
Maximum Puts:  360/628

Moving Averages
 10 DMA 380
 20 DMA 380
 50 DMA 388
200 DMA 397

Fibanocci Retracements
Relative High: 448.43 (12/29/00)
Relative Low:  339.49 (03/22/01)
38% 382.22
50% 395.69
62% 409.03

*****

CBOT Commitment Of Traders Report: Friday 09/28
Weekly COT report discloses positions held by small specs
and commercial traders of index futures contracts on the 
Chicago Board Of Trade. 

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 are not. 
Extreme divergence between each signals a possible market turn in 
favor of the commercial trader’s direction.   

S&P 500
Commercials   Long      Short      Net     %Change 
9/11/01      359,360   442,070   (82,710)     3.4%
9/18/01      406,387   471,823   (65,436)   (20.8%)
9/25/01      357,873   407,036   (49,163)   (24.9%)

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      %Change
9/11/01        156,500    69,090    87,410       2.7%
9/18/01        172,988   100,531    72,457      (5.6%)
9/25/01        122,613    71,721    50,892     (29.7%)

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

NASDAQ-100
Commercials   Long      Short      Net     %Change 
9/11/01       26,784    37,912   (11,128)   18.9%
9/18/01       35,497    45,731   (10,234)   (8.0%)
9/25/01       26,761    36,812   (10,051)   (1.8%)

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      %Change
9/11/01        15,263    12,555    2,708       6.8%
9/18/01        22,876    21,702    1,174     (56.6%)
9/25/01        10,699     6,580    4,119     251.0%)

Most bearish reading of the year:  (1,028) - 1/02/01
Most bullish reading of the year:   8,460  - 3/13/01

DOW JONES INDUSTRIAL
Commercials   Long      Short      Net     %Change 
9/11/01       25,445    13,033   12,412     32.6%
9/18/01       28,425    15,077   13,348      7.5%
9/25/01       20,013     7,806   12,207     (8.5%)

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      %Change
9/11/01        7,460    12,735    (5,275)     (8.9%)
9/18/01        7,335    15,044    (7,709)     46.1%
9/25/01        4,530    12,621    (8,091)      4.9%
 
Most bearish reading of the year:  (7,572) - 5/08/01
Most bullish reading of the year:   1,909  - 1/16/01


                    Small Specs               Commercials
S&P 500         (Current)  (Previous)     (Current) (Previous)
Open Interest
Net Value        +50,892     +72,457        -49,163     -65,436

Total Open
Interest %       (+26.19%)  (+26.49%)     (-6.43%)   (-7.45%)
                 net-long   net-long      net-short  net-short


                     Small Specs             Commercials
DJIA futures     (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value          -8091      -7709          +12207     +13348
Total Open
interest %       (-64.11%)    (-34.45%)      (+43.88%)  (+30.68%)
                 net-short   net-short     net-long    net-long


                     Small Spec              Commercials
NASDAQ 100      (Current) (Previous)    (Current) (Previous)
Open Interest
Net Value         +4119      +2708         -10,051    -11,128

Total Open
Interest %        (+23.84%)   (+9.73%)     (-15.81%) (-17.20%)
                 net-long   net-long      net-short net-short


What COT Data Tells Us
----------------------
Indices:.Both the Commercials and Small Specs held steady on 
their S&P net-short positions. The big move came on the DJIA 
where the Commercials added on to their net-longs while the Small 
Specs were loading up on net-short contracts.

Gold:.Talk about a shift in contracts    the Commercials went 
from 49,456 contracts net-short to 36,638 contracts net-long. 
Gold has been relatively flat since Tuesday so we’ll have to keep 
on eye on this one and see if they reverse their positions next 
week..

8/28  50,852 contracts net-short
9/04  49,839 contracts net-short
9/11  No Data.
9/18  49,456 contracts net-short
9/25  36,638 contracts net-long

Data compiled as of Tuesday 09/25 by the CFTC.


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

Lockheed Martin - LMT - close: $45.60 change: +0.20 stop: $42.00 

Original Comments When Selected on September 27th:

Company Description:
Lockheed is the largest weapons manufacturer in the world and the 
second largest defense and aerospace company (after Boeing). The 
company has five principal segments: systems integration (missiles 
and fire control), space systems (communication satellites and 
submarine-launched missiles), aeronautics (aircraft), technology 
services (management, engineering, and logistic services), and 
global telecommunications (satellites).  Well-known products 
include: the F-16 and F-22 jet fighters, the C-130J transport plane 
offensive missiles like the Trident II and defensive ones such as 
their Theater High Altitude Area Defense.  Over 70-percent sales 
comes from the US government.

Fundamentals: 
The company earned $1.07 per share on sales of $25.3 billion in 
2000.  This year, the company earned is expected to earn $1.44 per 
share on revenue of $24.6 billion and $1.71 on $26 billion in 2002.

Why We Like It:
On a fundamental basis, with a forward 2001 P/E of 30, LMT shares 
are not inexpensive.  However, as the leading recipient of US 
defense spending, it stands to reason the company and its shares 
are going to benefit well from the expected U.S. defense build up. 
This should make the shares resistant to the economic woes and thus 
a buy on any dip.  Prior to the events of September 11th, LMT had 
been consolidating for six months within a roughly $35 to $40 price 
range.  When the markets reopened, the LMT shares saw a $5.46 one-
day gain.  Too sudden to chase and too high to hold, profit-taking 
over the next few days brought the shares back to support in the 
$41 to $42.50 area.  On Thursday, a spike in volume and price 
suggests the shares are ready to put in a test of the $46.00 52-
week high. If the shares can maintain momentum through this level, 
a run at our bullish $56 6-month price target would be a reasonable 
expectation.  We will start this play with a $40 stop, although 
more risk averse traders probably could do as well with a stop just 
below last Friday's $41.00 session low. . 

Updated Comments:
The expected big-time defense buildup is not confined to US shores.  
Late Thursday, the US approved the sale to Gulf ally Oman $1.12 
billion in assorted defense products including 12 of Lockheed 
Martin's F-16's.  This is probably only the beginning of a deluge 
in orders.  As such these shares are a buy on any dip.  On 
Thursday, the shares dipped in the morning hours before ending 
strongly.  This portents a good result to LMT shares current 
assault on their $46 52-week high from mid-September.  New entrants 
to this play should wait for the break of $46 on solid volume 
(average is 2.1 million) or a dip to near $42.   


Picked on September 27th at $43.30
Gain since picked:          + 2.30
Earnings Date                10/25 (Not Confirmed)





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Do not duplicate or redistribute in any form.


PremierInvestor.net Newsletter                 Thursday 10-04-2001
                                                   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/100401_2.asp
=================================================================

In section two:

Split Trader
  New Plays: Tenet Healthcare - THC (Bullish)
  Play Updates: Chevron Corp. - CHV, Jacobs Eng. - JEC
  Closed Plays: none

Net Bulls
  New Plays: Engineered Support Systems - EASI (Bullish)
  Bullish Play Updates: none active at this time
  Bearish Play Updates: none 
  Closed Plays: DNA, GILD, SDS

Stock Bottom / Active Trader
  New Plays: none 
  Bullish Play Updates: BMET, LMT, MO, RMCI
  Bearish Play Updates: none active at this time
  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
==================================================================

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

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

Tenet Healthcare - THC - close:$60.22 change:+1.82 stop: $57.00 

Company Description:
This is one of the largest hospital chains in the US. Tenet owns 
or operates about 110 hospitals in 17 states, as well as one in 
Barcelona, Spain.  In addition, subsidiaries own or operate 
clinics, HMOs, a PPO, home health care programs, a managed care 
insurance company, outpatient surgery centers, and rehabilitation 
and specialty hospitals.  In response to decreased Medicare 
funding (more than 30% of Tenet's revenues), the company is 
closing its medical practice management business and is divesting 
facilities to cut costs.  Tenet has formed a joint venture with 
Ventro to sell medical supplies to health care providers on the 
Internet

Fundamentals: 
Analysts forecast the company will earn $2.84 per share in the 
current fiscal year ending May 2002 and $3.34 in 2003.  They 
project revenue of $13 billion for 2002.  In the fiscal year ended 
May 2001 the company earned $2.30 on sales of $12.1 billion.  The 
shares have a forward 2001 P/E of 21.  These are inline with the 
industry average P/E of 22.  On October 3rd, at its fiscal first 
quarter earnings report the company easily beat analysts 64-cents 
per share earnings estimates by 3-cents per share.  In addition to 
the quarterly earnings of 67-cents per share, the company reported 
a 14-percent jump in quarterly revenue to $2.89 billion as 
compared to the year-ago quarter.  Other first quarter metrics 
were equally positive from the year ago quarter, gross margins 
increased from 17 to 19-percent, cash flow from operations 
increased 80-percent, admissions were up 5.9-percent.  The company 
also raised earnings guidance citing "accelerating demand" for 
hospital services, as the baby boomer generation gets older.  The 
firm sees the year's earnings from operations growing by at least 
25 percent.   In July, the company forecast "high-teens" profit 
growth for fiscal 2002.  The company also reaffirmed it long-term 
growth rate in the mid-to-high teens.

Why We Like It: 
What's not to like about these shares.  Particularly in light of 
the stream of companies painting dour business pictures, for Tenet 
business couldn't be better, and an aging population says business 
will continue on an upswing for a long time.  What have also been 
going up for a long time are THC shares.  A monthly chart shows 
these shares have risen unabated since kissing $15.37 in August 
1999.  On Thursday, the sparkling earnings report pushed the 
shares through $60 resistance on above average volume.  In the 
short-term we have a $66.00 price target.  Short-term traders can 
use a stop at $57.00; investors in for the long-term can consider 
a $52 stop. 

Picked on October 4th at $60.22
Earnings Date              N/A (Not Confirmed)





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

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

Chevron Corp. - CHV - close: 87.11 change: +1.70 stop: 84.75 *new*

Tally Ho!  Shares of oil stocks have been on the rise and CHV's 
steady climb from late September has bulls feeling positive.
Wednesday, oil service stocks saw buying pressure as analysts
came out with comments saying the two-year low on the OSX index
makes several companies look pretty attractive on a valuation 
basis.  After closing at 85.50 on Tuesday, CHV dipped to 84.00
early Wednesday only to rally back towards 85.50 by the close.
Thursday, major oil companies were again on the gainers list.
There is growing expectation that OPEC will cut production to 
protect the price of oil and this fueled a rally in oil crude
futures which helped push oil stocks higher.  One OPEC leader
was quoted as saying the cartel would take "any measure necessary
to stabilize the world oil market".  According to one analyst
note, if the OPEC basket of oil prices stays below $22 for
10 consecutive days then it would trigger the cartel's agreement
to increase or decrease production by 500K barrels a day until
the price once again enters the $22 to $28 target range (CBSMW).
We were not surprised to find shares found a little resistance
at the $88 level.  $88 was the intraday support back in late
June and previous support typically becomes new resistance.
Unfortunately, the battle ahead for CHV could be tough.  The
stock should find even heavier resistance at $90 and just under
that is the 200-dma and the 50-dma at $89.  We would encourage
traders to start thinking about when you should take profits.
The newsletter is going to raise its stop to 84.75, which was
our entry price on Sept. 27th.  If the stock sees any profit
taking buyers should step in to provider support between $85.00
and $85.50.  Even so, it would be a shame to see this play 
stop out with a push.  New positions can be consider if the stock
comes back to above mentioned support level.  FYI, long-term
investors may like to know that at least one analyst has a 
bullish price target of $107 for CHV.

Picked on September 27th @ $ 84.75
Gain since picked:          + 2.36
Earnings Date:               10/25 (not confirmed)




---

Jacobs Eng. - JEC - close: 66.15 change: -1.82 stop: 64.25 

Wow, when we asked for a positive close over $65, JEC delivered
big time.  The broad market rally sparked a huge move in JEC.
Shares blasted through overhead resistance gaining almost 5 points
or 7.88% on Wednesday.  With such a gain profit taking was almost
a sure thing for Thursday but after the morning dip the bulls
took control again and almost reach $70 before a late afternoon
sell-off.  This should be a very encouraging development for
bullish traders.  The $65 - $66 area could have proved a tough
hurdle but shares are now over it and already the stock has
bounced at $65 re-establishing it as support.  Traders need to
be thinking when they plan to start taking profits.  The
newsletter is already up almost five points and active traders
could have captured even more.  At this point the plan for
new positions should be focusing on dips back to $65 or a
follow through bounce from its current position near $66.  
This would not be a big trade as $70 is likely to prove tougher
than resistance at $65.  However, given enough time, JEC might
reach $75 again.  Don't forget that investors have plenty of
time before the earnings report on November 1st.  Keep your
eye on the Dow for direction.  

Picked on September 25th @ $ 61.21
Gain since picked:          + 4.94
Earnings Date:               11/01 (not confirmed)





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

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

  -----------------------
  New Bullish (Long) Play
  -----------------------

Engineered Support Systems - EASI - close:$53.50 change:+5.12 stop: $48.25

Company Description:
Engineered Support Systems designs and manufactures military 
support equipment and electronics for the U.S. armed forces, 
material-handling equipment for the Post Office, and custom molded 
plastic products for commercial and industrial products.  Its 
defense products includes heavy military support equipment (tank 
transport, bridging, and load-management systems), electronics and 
automation systems (electronic warfare systems, fire support 
systems, and avionics test equipment), light military support 
equipment (generators, environmental control systems, and water 
systems), and plastic components (plastic faucets) to military 
specifications

Fundamentals: 
For the fiscal year ending in October 2000, the company earned 
$1.43 per share on sales of $361.5 million.  In the current October 
2001 fiscal year, analysts expect the company to earn $1.78 per share 
on $396 million and $2.18 per share in 2003 on $403 million.  This 
gives them a forward 2001 P/E of 31.  At their last earning report 
(Third Quarter) in August the company reported a 6-percent increase 
in revenue, 28-percent jump in net income, record YTD cash flow of 
$30.6 million and a backlog of $1 billion.  

Why We Like It:
With the increasing probability of US military action in the near 
future and the absolute probability of higher levels of defense 
spending, Engineered Support Systems' diverse and well positioned 
product line will likely put EASI shares on an extended bull run.  
Experts indicate that the war against terrorists will likely be a 
new type of warfare.  The September contracts alone suggest the 
company has the appropriate product line to support a 21st century 
battlefield.  These wins include; its Striker system ($3.3 million 
in revenue), which provides battlefield fire-support and 
econnaissance capabilities, Chemical/Biological Environmental 
Control Units ($72 million in revenue to date), which are portable 
battlefield shelters that include protection against chemical and 
biological agents, and portable generators ($175 million over 
10-years).

Since mid-September, EASI shares have been building a strong base 
between roughly $45 and $51.  On Thursday, these shares broke 
strongly out of this area with a $5.12 one-day gain.  Taking a 
position following an 11-percent gain requires some finesse and 
patience.  Still, our analysis produced a 6-month target of $77 and 
a short-term one of $60.  Given that defense is one of the few 
"safe" sectors in which to be a bull.  The question is not if but 
when to jump in.  We are looking for either a profit-taking dip to 
between $51 and $52, or additional evidence that the bulls are not 
done yet to give us the entry point we need.  Volume was strong at 
1.1 million (an average day is 334k), so another up day on this or 
greater volume would do the trick.  We'll initiate this play with a 
stop at $48.25, which is just a hair below Thursday's $48.57 session 
low. 

Picked on October 04th at $53.50
Earnings Date               N/A (Not Confirmed)





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

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

Genentech - DNA - close: 43.15 change: -2.55 stop: 43.25 

Honestly, we're a little disappointed in DNA.  The stock has
really underperformed the biotech sector Tuesday and Wednesday.
Now that the BTK.X was due for a pullback, shares of DNA just
lost it without even attempting to mount a midday rally
like the rest of the market.  Closing at the low for the
day at 43.15 does not bode well for Friday morning.  The
stock struggled for a week to try and overcome overhead
resistance at $46.50 but couldn't do it.  This sets a new
relative lower high.  The company may have strong revenues
but the bad press lately about Prozac for rival LLY could have
been too much to bear for skittish traders looking for any
excuse to take some money off the table.  We hate to say it
but the stock is likely to sell-off more.  Potential support
exists at $42, $40 and $38.  The newsletter was stopped out
at 43.25.

Picked on September 20th @ $41.20
Gain since picked:         + 2.05
Earnings Date:              10/10 (confirmed)





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

Gilead Sciences - GILD - close: 58.40 change: +1.78 stop: 58.00

As we expected, shares of GILD gapped up at the open on Thursday
after being halted for two day awaiting FDA approval on their
latest HIV treatment.  The FDA advisory panel praised the drug
on Tuesday due to its effectiveness on patients who had previously
showed little or no results with other treatments.  It was really
too bad for GILD shareholders that the stock had to reopen on
a day the Biotech index was due for some profit taking.  GILD
gapped up to almost 61.00 before coming back towards Monday's
close of 56.62.  However, once the gap was filled buyers started
stepping in despite the negative BTK.  Those looking to go long
the stock should probably wait for it to close over $60 or $61
which is heavy resistance.  A failed rally at these levels could
provide for another shorting opportunity but we'll need to keep
an eye on the sector as a whole.  Because of the gap open today
our stop at 58.00 was not as successful as we hoped.  The 
newsletter will show a loss of 4.79 points.

Picked on September 28th @ $56.17
Gain since picked:         - 4.79
Earnings Date:              10/18 (not confirmed)




---

SunGuard Data Sys - SDS - close: 21.00 change: +0.47 stop: 22.50

Our bearish play on SDS never really materialized.  We saw the 
big down day on Monday and believed that the breakdown of heavy
support would promote a new bearish trend as investors threw in
the towel and shorts piled on to ride it down.  Unfortunately
for the bears, buyers and with more than a little help from
SDS management managed to stem the loss to $20, which is now
new support.  Wednesday's trading was typical considering the
massive rally in the broader markets but today the stock showed
no signs of slowing down.  With SDS executing a $100 million
stock buyback between Oct. 1st and Oct 12th it could be tough
for the bears to really get their paws on this one.  The letter 
was stopped out at 22.50

Picked on October 1st @ $20.53
Gain since picked:      - 1.97
Earnings Date:           10/18 (not confirmed)





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

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

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

Biomet Inc - BMET - close: 30.77 change: -0.22 stop: 28.00

In our original write up on Tuesday we discussed how most analyst
believe medical device makers should be sheltered from any down
turn in the economy.  From the looks of BMET's chart, investors
began to believe them a couple of weeks ago.  The bad news is
the S&P Health Care index (HCX) has rolled over at overhead 
resistance of its 200-dma (824).  This is the second down day in
a row for the group putting the index at 810.  The good news is
BMET appears to be ignoring its sector mates for the moment.
We rarely recommend going long a stock if the sector is looking
weak because most stocks can't stand up to the pressure of a
sliding industry group.  However, occasionally a stock might be
able to hold off joining its peers if it has exceptional news
or other catalyst to keep shareholders from selling.  It's very
possible that the HCX is merely pulling back to regroup after
its strong run up (normal profit taking).  We would look for 
potential support in the HCX at 800 or 790.  Considering that BMET 
is showing relative strength against its sector the bulls might be 
on to something.  Looking for entry points the stock looks good 
here over the $30 mark.  However, if there is a dip, traders might 
want to consider buying at $30 or at $29 which should be strong 
support.  Confirm stock, sector and market direction before 
initiating any new plays.

Picked on October 2nd at $30.35
Gain since picked:        +0.42
Earnings Date             09/20 (confirmed)




---

Lockheed Martin - LMT - close: 45.60 change: +0.20 stop: 42.00 

The expected big-time defense buildup is not confined to US 
shores.  Late Thursday, the US approved the sale to Gulf ally 
Oman $1.12 billion in assorted defense products including 12 of 
Lockheed Martin's F-16's.  This is probably only the beginning of 
a deluge in orders.  As such these shares are a buy on any dip.  
On Thursday, the shares dipped in the morning hours before ending 
strongly.  This portents a good result to LMT shares current 
assault on their $46 52-week high from mid-September.  New 
entrants to this play should wait for the break of $46 on solid 
volume (average is 2.1 million) or a dip to near $42.   

Picked on September 27th at $43.30
Gain since picked:          + 2.30
Earnings Date                10/25 (Not Confirmed)




---

Phillip Morris - MO - close: 49.85 change: +0.40 stop: 47.75 *new*

They say patience is a virtue.  The stock market has proven
that maxim time and time again.  Yet it's frustrating for us
as optimistic investors to simply sit on our hands.  We're
talking about our comments on Tuesday to wait for shares of
MO to finally close over strong resistance at $50.  We were
elated that the stock closed over $49 on Tuesday but the real
test could be tomorrow.  Looking at the intraday charts for
Thursday one can see that the bulls were really bringing the
fight to the bears in that last 20 cents before the stock hits
$50.  You've heard it before and we'll probably repeat it
again but MO is not only seen as a strong defensive play in
a recession but its yield to investors makes it an attractive
investment in a low interest environment.  Just to show you
we're human too we're going to raise our stop.  We've been
trying to capitalize on MO since the end of August and now
that it's right at the turning point we're going to raise 
our stop to 47.75.  Our original entry price was 47.94.  At
this point in the game MO is likely to breakout like many
traders expect or we could see some profit taking (back to
$45 anyone?).  In the event that we fail to see either interested
traders can look for new entries at dips to $49 or $48.50.
Don't forget that MO is due to announce earnings on October
17th.  FYI, long-term players may be like to know that some
analyst have posted a bullish price target of $59 on MO.  To
help it get there Standard & Poor's announced today after
the close that they would select MO to replace Global Crossing
(GX) in the S&P 100 index.  Traditionally, this can produce
strong buying pressure as index funds make adjustments and 
add the new addition to their portfolios to accurately reflect
their tracking of the market.  Unfortunately, they don't have
to do it tomorrow and S&P does not place a time limit on their
activities.  Frankly, most of us were surprised that MO wasn't
already in the S&P 100.  This could be the catalyst needed to
really get a fire going under this stock!

Picked on August 30th at $47.94
Gain since picked:        +1.91
Earnings Date             10/17 (unconfirmed)




---

Right Mgmt - RMCI - close: 32.98 change: -1.07 stop: 31.75 

This stock just won't stop!  Interest in job transitions and
career management must be skyrocketing in the event of layoff
after layoff.  Volume continues to be huge and the stock 
produced a major move up on Wednesday from the 29.50 level
to 35.00.  We thought for sure profit-taking would finally 
hit.  After all, at $34.05, shares of RMCI were up over 12 points
from Sept. 18th's close of 21.72.  That's a gain of over 56%.
The newsletter picked it at 24.70 which was a difference of
$9.35 or 37.8%.  We chose to raise our stop to 31.75 in
Wednesday's letter believing we would be stopped out today.
Once again, RMCI has amazed us.  The stock actually traded
higher at the open before slowly coming back to settle near
the $33 area.  This can't go on forever folks.  Don't let
greed get in the way of a profitable trade.  Think about where
you plan to take some profits and hold yourself to it.  Now
just to test your resolve, one analyst produced a price
target of $61 for RMCI.  That's not going to happen tomorrow
so you'll have plenty of time to watch the stock for new
trades if you get stopped out.  We would not recommend any
new entries at this time.  RMCI is expected to announce
earnings on October 22nd, 2001.

Picked on September 20th at $24.70
Gain since picked:           +8.28
Earnings Date                10/22 (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
GS        Goldman Sachs Group       79.00  +2.31
APC       Anadarko Petroleum        50.70  +2.69
APA       Apache Corp               45.55  +2.80
AOG       Alberta Energy            35.34  +1.14
AMD       Advanced Micro Devices     9.00  +0.54

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

Ticker    Company Name              Close  Change
SEBL      Siebel Systems            18.81  +1.20
NXTL      Nextel Commnications       9.16  +1.80
JNPR      Juniper Networks          13.27  +1.27
LRCX      Lam Research              18.81  +1.22
MRVL      Marvell Technology Group  19.96  +1.65

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

Ticker    Company Name              Close  Change
TXN       Texas Instruments         27.05  +1.79
DELL      Dell Computers            22.32  +1.68
GS        Goldman Sachs Group       79.00  +2.31
RTRSY     Reuters Group             57.13  +1.88
VRTS      Veritas Software          24.61  +1.12

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

Ticker    Company Name              Close  Change
QCOM      Qualcomm                  42.00  -2.81
BGEN      Biogen Inc                52.94  -3.55
LNCR      Lincare Holdings          24.39  -1.54
HCR       Manor Care Inc            26.73  -1.78
AOT       Apogent Tech              23.10  -1.49

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

Ticker    Company Name              Close  Change
WM        Washington Mutual         37.41  -1.22
HMA       Health management Group   20.02  -0.26
IDXX      Idexx Laboratories        23.85  -0.49

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